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P086508 |  ICRR 14479
Report Number : ICRR14479
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 10/23/2014
Country : Vietnam
Project ID : P086508 Appraisal Actual
Project Name : Vn-priority US$M ):
Project Costs (US$M): 218\.47 204\.21
Infrastructure
Investment Project
L/C Number : C4402 Loan/ US$M):
Loan /Credit (US$M): 152\.44 146\.24
Sector Board : Urban Development Cofinancing (US$M):
US$M ):
Cofinanciers : Board Approval Date : 05/22/2008
Closing Date : 06/30/2013 06/30/2013
Sector (s): Roads and highways (48%); Sewerage (28%); Flood protection (14%); General water
sanitation and flood protection sector (7%); Sub-national government administration (3%)
Theme (s): Urban services and housing for the poor (25% - P); Infrastructure services for private sector
development (25% - P); Municipal governance and institution building (24% - P); Pollution
management and environmental health (13% - S); Other urban development (13% - S)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Ranga Rajan Robert Mark Lacey Christopher David IEGPS1
Krishnamani Nelson
2\. Project Objectives and Components:
a\. Objectives:
The project development objective as stated in the Financing Agreement (Schedule 1, page 5) is as follows\. "to
improve the efficiency, effectiveness and sustainability of urban services in the City of Da Nang through urban
upgrading, environmental infrastructure improvements, and strategic road access construction in selected areas, and
institutional strengthening in investment planning and in the management of urban areas \."
The key associated outcome targets as stated in the PAD (page 27) are:
(a) An increase in the number of people who reported satisfaction with the access to new services in the low income
areas\.
(b) Increase in the actual annual payments made by households for waste water services \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
There were four components:
(A) Urban Area Upgrading : Tertiary Infrastructure Upgrading, Resettlement Sites and Housing Improvement Loan
Program \. (estimated cost US$ 52\.68 Million, actual cost US$ 36\.32 Million\.) This component aimed at improving the
living conditions of the low-income areas through improving service delivery (through on-site upgrading), improving
housing by making micro-finance loans available to householders, preparation of resettlement sites (land preparation
and infrastructure), and housing for project-affected households\.
(B) Environmental Infrastructure Improvement \. (estimated cost US$ 65 systems, and waste water treatment plants
serving the city center and the developing suburban areas \. This component aimed at enabling the city to address
more effectively the environmental deterioration that was occurring due to population growth and spatial expansion \.
Activities included upgrading and extending the drainage systems, waste water sewage systems, and and waste
water treatment plants serving the city center and the developing suburban areas \.
(C) Urban Roads and Bridges (estimated cost US$ 96\.15 million, actual cost US$ 105\.02 Million)\. This component
aimed at improving the road access through constructing two major road links in the southern part of the city
connecting the inner city and resettled sites to new residential and development areas, and places of employment \.
(D) Capacity Building and Project Implementation Support (estimated cost US$ 4\.22 million, actual cost US$ 1\.84
million)\. This component aimed at enhancing the capacity of the city department in the areas of housing and land
management, urban development, urban engineering infrastructure and municipal finance management \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Costs : At appraisal, the estimated total cost was US$ 218\.47 million, and at completion the cost was US$
204\.21 million, 93% of the appraisal estimate (ICR, page 23)\. There were, however, considerable cost escalations
during implementation due to a combination of factors - including higher costs than estimated for component B and
C project activities (which accounted for 85% of the total project costs) and high inflation during the period from 2008
to 2010\. Updated cost estimates incorporated alternative technical designs which were deemed to be more
appropriate for the needs of the city were used, but they were significantly more expensive (ICR, page 3)\.These cost
escalations would have increased the actual project costs by US$ 36\.9 million- 18% higher than estimated\. Based on
an understanding between the Government and the Bank, and in the interest of closing this project on time, it was
decided at the mid-term review that rather than seeking additional financing, some activities would be transferred to a
follow-on project (Sustainable City Development Project -- SCDP)\. Thanks to this reduction in project scope, the
actual amount at project closure was lower than the appraised estimate \.
Project Financing : The original approved IDA Credit was US$ 152\.44 million\. At project completion, the disbursed
amount was US$ 146\.24 million, and at project closure US$ 5\.52 million was returned to the Bank\. There were no
other external sources of financing \.
Borrower's Contribution : The Borrower's contribution was estimated at the appraisal stage to be US$ 66\.03 million\.
At completion, its contribution was US$ 57\.97 million\.
Dates:
Dates With the reduction in scope of project activities, the project closed on schedule on June 30, 2013\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
High
The project objective is relevant to the World Bank Group's strategy for Vietnam as set out in its Country Partnership
Strategy (CPS) for the Fiscal Years 2012-2016\. The three pillars of the CPS for which the project objective is relevant
are "strengthening Vietnam's competitiveness in the regional and global economy ", "increasing the sustainability of
Vietnam's development", and "broadening access to opportunity through improvements in the quality of and access
to urban infrastructure\." The project also addressed the cross -cutting themes of: (a) strengthening governance and
(b) improving city resilience in the face of natural disasters \.
The project objective was also relevant to the four pillars of the CPS for the Fiscal Years 2007: (i) ensuring that
municipal infrastructure and logistics and transport costs are less of a constraint to business development, (ii)
reducing urban poverty, (iii) reducing pollution and environmental degradation, and (iv) ensuring better links between
spending and plans\.
The project objectives are relevant to Government strategy as evidenced by the Socio -Economic Development Plan
(SEDP) for the 2006-2010 period, and the Government of Vietnam's Orientation for Urban development to Year 2020\.
b\. Relevance of Design:
Modest \.
The project development objective was clear and, in principle, measurable \. There is a reasonable causal link
between most of the activities planned under each component and the outputs they were intended to produce \. The
link to the development objectives is, however, more tenuous \. Design lacked a governing strategy despite the
existence of an approved Master Plan \. As the ICR (page 6) acknowledges, the approach was fragmented \. Activities
and investments were designed in isolation and later assembled \. Unsurprisingly, implementation âsuffered from a
lack of coordination and clear strategy \.â? Regarding the third sub-objective â " improved sustainability of urban
services" there is nothing in design to ensure that the operation and maintenance (O&M) of project-supported
infrastructure would be sufficiently funded nor any activities related to strengthening the institutional and technical
arrangements for O&M\. Activities related to financial sustainability â a tariff regime for wastewater, issuing of Land
Use Certificates â are partial, and there are no overall financial projections for the city for the period beyond 2011\.
Efficiency and effectiveness of urban services (the first two sub-objectives) are nowhere defined\. At times, the project
documents seem to equate them with outputs such as infrastructure constructed or resettlement schemes
completed\. It is not clearly explained how urban area upgrading could be expected to improve the efficacy of urban
services, nor how constructing road links and bridges could be expected to improve their efficiency \. Institutional
strengthening was compromised by lack of focus in the design of training activities, which were general, covering
many thematic areas, and lacking a clear link to the goals of the project \. The connection between the activities aimed
at preventing environmental degradation and the project development objective is obscure \.
4\. Achievement of Objectives (Efficacy):
The efficacy of the project objective -- to improve the efficiency, effectiveness and sustainability of urban
services in the City of Da Nang through urban upgrading, environmental infrastructure improvements, and
strategic road access construction in selected areas, and institutional strengthening in investment planning and in
the management of urban areas -- is assessed in relation to its three sub -objectives: (i) improve the efficiency of
urban services;(ii) improve the effectiveness of urban services; and (iii) improve the sustainability of urban services \.
Outputs
Project outputs, which were common to all three sub -objectives, were as follows:
Upgrading tertiary infrastructure in low income areas and construction of resettlement areas
According to the ICR (page 3), these activities were entirely completed as originally planned, although their cost,
at US$36\.33 million, was 31% lower than the appraisal estimate\.
More than 30 km of asphaltic concrete road, cement concrete in alleys; 33\.3 km of street lighting and 565
luminaries; 41\.4 km of water supply systems; 32\.9 km of drainage system and drainage connection; social
infrastructure including community housing, kindergartens and markets have been built in 13 low income areas\.
At project closure, 1,792 house improvement loans were disbursed to the households by the Housing
Improvement Fund for micro-credit\.
Three resettlement areas were constructed in a total of 18\.3 hectares: Thanh Khe Tay, Hoa Minh, and Hoa Quy \.
796 households were resettled, compared to 711 originally planned\.
Reducing and managing environmental degradation
There were significant shortfalls in completing the activities planned at appraisal, and works with an estimated
value of US$16\.6 million (25% of the appraisal estimate) have been transferred to the follow -on Sustainable City
Development Project (SCDP)\. Nonetheless, US$61\.02 million (93% of the appraisal estimate) were actually
spent on these activities \.
1,905 meters of canals, dredging of approximately 57,000 cubic meters of sludge, 3,285 meters of asphaltic
concrete road, 3,088 meters of rainwater drains and 5,943 meters of sewerage system, were completed in the
areas surrounding the Phu Loc River \.
A small pilot program was implemented and completed, providing 1,601 wastewater connections to the
upgraded tertiary wastewater system \. In the pilot areas, the connection rate increased from below 10% to
around 50-60%\.
9,375 kilometers of wastewater drains were built, reinforcing the sewerage system and reducing flooding \.
35\.16 kilometers of sewerage pipes and 16 pumping stations were built as part of a wastewater collection
system to the Hoa Xuan and Phu Loc wastewater treatment plants \.
However, the new Hoaxuan and Lienchieu waste water treatment plants, which were to have been built under
the project, required significant design modifications, which increased both their cost and required construction
time considerably\. Consequently, the plants had not been completed by project closure, and the work has been
transferred to the Sustainable City Development Project (SCDP)\.
Similarly, renovation and upgrade works at the existing waste water treatment plant of Son Tra had not been
completed by closure and had also been taken over by the SCDP \.
The city Peopleâs Committee decided to establish the Da Nang Drainage and Wastewater Management
Company as a public entity under the Department of Natural Resource and Environment with full responsibility
for operation and maintenance of drainage and wastewater services \.
Investments in strategic roads linking the city center with peri -urban areas \.
Works to the value of $20\.1 million were not completed as intended under the project and were transferred to the
SCDP\. The works that were completed cost US$ 105\.01 million, equivalent to a cost overrun of 38%:
One out of two intended road links with accompanying infrastructure (drainage systems and connections, street
lighting systems, and bridges ) was completed\. The link involved 6\.4 kilometers of road with a pavement width of
33 meters, 12\.5 kilometers of drainage system and connections, 6\.85 m of street lighting systems, and
construction of two bridges\. The link was opened on June 30, 2013, the same date as the closure of the project \.
The second link was still under construction at project closure and was transferred to the SCDP (about 60% of
the work was completed)\.
Institutional strengthening
The ICR states that these activities were âlargely completed\.â?
972 staff of the relevant government agencies were trained, inter alia through study tours; the target was 1,000
trainees\. Additional information provided by the team indicated that the training included study tours to other
cities in Vietnam on operation and maintenance of Wastewater Treatment Plans \. Training was provided in
procurement, disbursement, waste water treatment technologies, and environmental safety and management,
and in the thematic areas of housing and land management, urban development, urban engineering
infrastructure management and municipal financial management \.
4,112 people participated in training courses and took part in consultations and participatory activities \. The ICR
(page 2) notes that the participation of women in this activity was 60\.7%, as compared to the planned target of
50%\.
Outcomes
1\. Improve the efficiency of urban services : Modest \.
According to the ICR (page 14), on traffic flows on the constructed road link just after (31,000 PCU day)\. project
closure was 8,159 PCU (passenger car equivalent ) per day, about one third of the volume expected \. The ICR
reports that the traffic is gradually beginning to increase \. Subsequent information provided by the project team
indicated that one year after the inauguration of the road link, traffic had increased to 12,600 PCU/ a day\. This
was still well short of the originally expected traffic volume \.
The ICR (page 2) reports that the number of people with access to all season roads at project completion was
221,815 -- 6% more than expected at appraisal \.
No evidence is provided either of reduced vehicle operating costs or travel times resulting from the road
investments\. Nor is there evidence of improved efficiency in the delivery of other urban services supported by
the project\. There is thus little basis on which to determine the extent to which the sub -objective was achieved\.
2\. Improve the effectiveness of urban services : Substantial \.
According to the PAD, the key targets associated with this objective were : (i) increase in the number of people
who reported satisfaction with the access to new services in the low income areas; and (ii) increase in the actual
payments made by households for waste water services \.
The ICR reports that the number of project beneficiaries as of June 30, 2013, was approximately 403,000, about
80% of the appraisal estimate (at the mid-term review, the target was revised downwards to 402,000)\.
The annual payments made by households for waste water services increased from 5,000 VND million at the
baseline to 27,076 VND million at project closure as compared to the appraisal target of 25,000 million\.
By project closure, 95\.5% of urban households had access to on -plot piped water supply and 97\.5% had
drainage and waste water collection facilities as compared to the respective targets of 80% and 79%\.
The ICR (pages 39-40) reports that a Beneficiary Survey was conducted in June 2013, to collect information
about the quantitative and qualitative socio -economic situation in general, and in particular about the lives of
those affected by the project \. The Survey was based on 230 affected households in resettlement areas and 260
individuals\. Simultaneously, 170 âin-depthâ? interviews with beneficiary from the Project were conducted \. 76\.3%
of beneficiaries reported satisfaction with access to new services at the project closure stage as compared to the
revised target of 75% (375,000)\. The majority of households reported satisfaction with the resettlement process
and related compensation, while the socio -economic conditions of the affected population âshowed an upward
trend\.â? However, the sample size is very small â less than 0\.5% of the estimated number of project beneficiaries \.
Moreover, there was no control group or similar analysis that would have helped to establish attribution of
improved living standards to the project \. Also, it would appear that the Survey was restricted to the beneficiaries
of Component A (Urban Areas Upgrading: Tertiary Infrastructure Upgrading, Resettlement Sites and Housing
Improvement Loans)\.
According to the ICR, land values in the low income areas benefiting from the project increased to 6\.6 million
VND per square meter compared to a pre -project baseline of 0\.7 million VND per square meter\. This was short
of the target of 10 million VND per square meter; the average land price increased by less than anticipated due
to âdifficulties in the real estate market and low demand for land purchase â? (ICR Data Sheet, Table F)\.
Additional information provided by the project team indicates that 1,920 new homes were constructed in the
southern part of the city in 2013\.
The ICR (page 15) reports that the projectâs capacity building program was designed in response to specific
demands from the Municipality and without a detailed needs assessment \. This resulted in spreading the effort
over many areas, in turn compromising the quality of the training and the program âs ability to address specific
needs\.
3\. Improve the sustainability of urban services : Substantial \.
The ICR (page 31) reports that, according to a financial analysis of the municipality, Da Nang âs finances âare
assessed to be relatively strong \.â? The budget surplus rose from VND 1,464 billion (23% of revenues) in 2006 to
4,164 billion (21% of revenues) in 2011\.
Land use revenues rose from VND 1,352\.8 billion (21\.7% of total revenues) in 2006 to 5,763\.9 billion (29\.1% of
total revenues) in 2011\. It was estimated that15,500 land use certificates were issued by the municipality in
2013, almost double the target of 8,000\. The cumulative number of certificates issued over the life of the project
was 144,400, well in excess of the target of 73,000 set at appraisal\. Cumulative land use revenue had reached
VND 59,355 billion by project closure, compared to an appraisal target of 52,011 billion\.
For waste water management, it was determined at appraisal that tariff levels were very low and that services
depended on heavy subsidies from the Municipality \. The ICR (page 14) reports that the city approved a
schedule of tariff increases through 2015\. Collections were VND 17 billion in 2010, 39 billion in 2011 and 50
billion in 2012, with a preliminary estimate of 65 billion in 2013\. These collections were, by 2012, sufficient to
cover 97\.7% of the costs of waste water service provision, slightly below the 100% planned at appraisal\.
During preparation, an assessment was made of the affordability of waste water services based on the
combined costs of water supply and wastewater tariffs and assuming gradual increases in tariffs to the point
where costs were 100% covered\. The ICR prepared an updated assessment to reflect actual tariffs and
household incomes\. This assessment indicated that the monthly water and wastewater costs to households,
including low income families, were projected to remain within the 'affordability benchmark' of 5% of household
income\.
However, other than mentioning the establishment of the Da Nang Drainage and Wastewater Management
Company, there is no discussion in the ICR of the technical, institutional or financial dimensions of operations
and maintenance (O&M) of the infrastructure built under the project \. According to Table 4 of Annex 3 of the ICR
(page 31), the amount spent on infrastructure and environmental O&M rose from VND 186\.4 billion in 2009 to
327\.7 billion in 2011, but there is no indication of the sufficiency of these amounts \. O&M accounted for about 4%
of investment and development expenditure in 2011, down from 5% in 2009 (no figures are available for earlier
years)\.
Rates of repayment and interest of the Housing Improvement Fund âs loans were at almost 100% at project
closure, with only three borrowers short \.
5\. Efficiency:
⢠An economic analysis based on incremental costs and benefits was made ex ante and ex post for the first
three project components: Urban Upgrading, Environmental Management, and Urban Roads (together accounting for
99% of final project costs)\. The respective ex post economic rates of return were 44\.1 percent (49\.1% ex ante), 13\.7
percent (19\.7% ex ante), and 32\.7 percent (31\.6% ex ante)\. Benefits were assumed to come from : (a) reduced
expenditures on health and increased productive working time; \.(b) savings from reduced cost due to regularly
occurring flooding; (c) appreciation in land and property values; (d) income generation due to project construction
activities and growth; (e) savings from reduced time spent on water collection; (f) savings from forgoing tank
emptying costs and soak pit construction; (g) savings in drainage maintenance costs; and (h) reduced travel time and
vehicle operating cost due to expected daily flow of traffic \. The ICR does not clearly explain whether the values
attached to these benefits are assumed or derived from some research source \.
A financial analysis was made of the investments in waste water and sanitation (about 22% of total final project cost)\.
It was assumed that tariffs would increase to cover costs fully, and that subsidies would be phased out \. The
estimated ex post financial rate of return was 13\.5% compared to 10\.3% at appraisal\.
There were significant administrative and operational inefficiencies, including considerable cost overruns of between
25% and 38%\. At the time of appraisal, cost estimates were based on preliminary designs, and the actual costs of
the detailed technical design were higher than estimated \. As the project team pointed out, the cost overruns were
exacerbated by the very high inflation during the implementation period \. Project design had to be modified
substantially during implementation \. Both Component B (Environmental Infrastructure Improvement ) and Component
C (urban Roads and Bridges) were reduced in scope due to the cost overruns and, in the latter case, to inadequate
handling of land acquisition and relocation processes \. Although the project closed on schedule on June 2013, this
was only possible because some activities had been transferred to a follow -on operation\.
Efficiency is rated as Modest \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The project objectives remain highly relevant to the priorities of the country and the World Bank Group's strategy
for Vietnam\. The relevance of design is rated modest \. The efficacy of two out of the three objectives â improved
effectiveness and sustainability of urban services â is rated substantial\. There is evidence of enhanced effectiveness
(a high percentage of households with on -site water and sanitary connections, willingness to pay, high recorded
levels of satisfaction, sharp rises in land values )\. Regarding sustainability, services are considered to be affordable,
and the Municipalityâs financial situation looks solid enough to sustain the provision of services, though it is unclear
whether institutional arrangements and funding for operation and maintenance of the infrastructure financed by the
project are sufficiently robust \. Efficacy of the third sub-objective â improved efficiency of urban services â is rated
modest due to lack of evidence \. Efficiency is modest in view of significant cost overruns leading to reductions in the
project scope\. Overall outcome is assessed as moderately satisfactory \.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The following risks to development outcome are considered moderate :
At project closure, a significant portion of project activities related to the road and environmental / sanitary
improvements had not been completed, and there is a risk that they may not be completed on time or within
budget\.
Infrastructure and environmental enhancements supported by the project may not be adequately operated and
maintained by the city authorities \.
The costs of wastewater and drainage services may not be covered by future tariff increases, and the long term
tariff policy and adjustment regime may not be respected \.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
a\. Quality at entry:
According to the PAD (page 33), preparation benefited from lessons learnt from a prior Bank project (Vietnam
Urban Upgrading Project), and pilot operations (such as the Belgian Aid supported upgrading initiative in Ho Chi
Minh City, the United Nations Development Program (UNDP) assistance in five provincial towns, and projects
supported by Non-Governmental Organizations(NGOs) These lessons included: (i) the need for strong buy-in
and ownership from the cityâs political leadership as well as the municipality âs technical staff; (ii) that cost
recovery is crucial for financial sustainability; (iii) the need to ensure that tertiary infrastructure is properly
connected to the city networks; (iv) services need to be affordable; (v) active participation, and cost sharing, by
beneficiary communities increases the likelihood of buy -in and that objectives will be achieved and sustained;
and (vi) relocation and resettlement should be minimized \.
Preparation work included the identification of all low income areas in the city of Da Nang and possibilities of
geographic concentration that would create economies of scale \. An approach involving services from a range of
sectors was adopted; this was innovative for Vietnam \.
Risks directly associated with the Project were identified, including a substantial risk related to slow
implementation due to procurement processing delays, a lack of coordination among departments and
inadequate technical and financial resources \. Several mitigation measures were planned and the overall project
risk was rated as moderate\.
Preparation attempted to address potential problems of slow start -up through a project preparation advance,
through securing the city's commitment to pre -finance the preparation of design and bidding documents, and
through constructing the first resettlement site prior to the project negotiations \.
Environmental (though not social) safeguard and fiduciary compliance issues were adequately addressed at the
preparation stage (see section 11 below)\.
However, there were a number of significant shortcomings in Quality at Entry :
Preliminary costings at the design stage proved to be very inaccurate, leading to considerable cost overruns
and the consequent necessity to either seek additional financing or transfer activities to a follow -on operation
(the latter option was chosen )\. As the ICR (page 5) puts it, greater care at the preparation stage would have
"contributed to a better overall design that captured the best available technologies and construction features
at the start, thus reducing time spent in re -designing and partial re-scoping\.â?
In addition to the cost overruns, delays in implementation were to be caused by "a lack of recognition of all
the constraints related to construction, such as land acquisition, relocation and competing interests â? (ICR,
page 6)\. Had project implementation included upfront negotiation on land management, many of the delays
and impediments that were to be encountered may have been mitigated \.
There was no overall strategic approach governing design \. As noted in Section 3b above, activities and
investments were designed in isolation and later assembled \.
Insufficient provision was made for enhancing the capacity of the implementing agency and the Project
Management Unit, despite the fact that this project was larger and considerably more complex than its
predecessors in Vietnam\.
There were important weaknesses in M&E design (see Section 10a below)\.
at -Entry Rating :
Quality -at- Moderately Unsatisfactory
b\. Quality of supervision:
Supervision was challenging due to deficiencies in Quality at Entry \. From the beginning, the team had to
focus on solving problems related to costing, procurement, bidding and contracting, and the application of
relocation policies\. The fact that, despite these problems, the city benefited at project closure from a higher
quality of infrastructure and urban services, is due in considerable measure to the efforts of the supervision team \.
According to the Project Management Unit, the Bank Team were experienced specialists, gave timely solutions to
the Unit and to the City Government to ensure that the project complied with the World Bank's procedures and
agreed plans\. In addition to the twice a year missions, there were short missions for project implementation
support\.
However, the team took a considerable time to act on the issue of cost overruns, and the consequent necessity to
either obtain additional financing or to transfer activities to another project \. Cost estimates were updated only at
the mid-term review in October, 2011, and changes in project scope applied less than a year before closure \. It is
noteworthy in this respect that only two Implementation Status Reports were filed during the three years between
Board approval in May, 2008, and June, 2011\.
In total, six ISRs were filed, and in addition there were two follow -on missions for providing technical inputs and
project implementation support\. The ICR (page 21) notes that supervision missions were adequately staffed to
address and report on implementation issues as they emerged, though no information is provided on continuity \.
In view of the problems encountered, the ratings of progress towards Development Objectives (fully satisfactory
in all ISRs) and Implementation Progress (fully satisfactory in all ISRs except the first, which was moderately
satisfactory) would appear to lack candor \.
Notwithstanding poor preparation at the design stage with regard to social safeguards, the ICR reports
satisfactory compliance with safeguards policies \. Financial management was reported to be generally adequate,
and the procurement processes of the implementing agency were eventually harmonized with Bank procedures
(see Section 11 below)\.
Efforts were made to improve upon a weak M&E design through the incorporation of additional indicators, though
the ICR is unclear what these indicators were (see Section 10b below)\.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
According to the ICR (page 20), the overall commitment of the government was high for the development
objective, and the authorities (both at the national and at the local level ) provided strong support during both
project preparation and implementation \. The project at the national level had the backing of the Prime Minister \.
The local government had built consensus across the city's departments, communities and the related agencies,
and through this consensus, had developed the relevant strategies for the affected sectors \. The adoption of a
tariff regime aimed at cost recovery for waste water service provision is one important result of this
consensus-building work\.
The city government's commitment was demonstrated by its decision to pre -finance the preparation of design and
bidding documents, and the construction of the first resettlement site prior to the project negotiations \.
Counterpart funding was provided on a timely basis \.
Government Performance Rating Satisfactory
b\. Implementing Agency Performance:
The Da Nang People's Committee was responsible for project execution as well as for overall Project
management and oversight at the city level \. The City established a Board of Management chaired by the Vice
Chairman of the Peopleâs Committee and comprised of representatives of the Departments of Planning and
Investment, Natural Resources and Environment, Finance, Construction, Transport and Public Works, and the
Director of the Project Management Unit (PMU)\. The Da Nang Women's Union was designated to manage the
Fund for Housing Improvement\.
The PMUâs performance was mixed\. The ICR (page 21) notes that, while monitoring and reporting on the project
indicators were timely and the relevant social safeguard policies were complied with, there were, nonetheless, a
number of moderate shortcomings in the early years of implementation, which negatively impacted on the timely
completion of activities:
Several contracts were delayed due to the lengthy process of contract procurement in the initial years of the
project\.
There were weaknesses in the management of consulting services contracts (such as the failures to obtain
Bank no objections to some major modifications )\.
There were delays associated with negotiations of agreements for relocation, land acquisition and
resettlement\.
However, the ICR also points to the Unit âs willingness to learn new procurement techniques and to adopt them \.
Staff capacity was considerably enhanced during the course of implementation, and this permitted the Unit to
become far more effective in the latter years of the project \.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
Responsibility for M&E rested with the Project Management Unit (PMU), which was required to consolidate the
data at the project level, and produce annual reports to monitor progress through an integrated project
implementation performance audit\.
One significant shortcoming of M&E design was that the outcome indicators related almost exclusively to Component
A activities (Urban Areas Upgrading: Tertiary Infrastructure Upgrading, Resettlement Sites and Housing
Improvement Loans)\.
Baseline data were established for the output, intermediate outcome and restricted number of outcome indicators \.
b\. M&E Implementation:
The ICR (page 7) notes that the implementing agency monitored progress and outcomes and provided
semi-annual progress reports on the physical, financial, environmental, resettlement and land acquisition progress of
the project and regular updates of all key monitoring indicators \.
The ICR (page 7) states that âadditional indicators were introduced in the final stages to monitor the effectiveness of
all Components\.â? However, no details are provided of what these additional indicators were, or what âfinal stagesâ?
precisely refers to\.
There is discussion of a Beneficiary Survey and also a statement of overall beneficiary satisfaction with the services
provided under the project\. Presumably, the two are derived from the same exercise, but this is not clear \.
c\. M&E Utilization:
The ICR (page 8) reports that the project indicators are being used to monitor water quality and environmental
quality of the river basin\. Water quality in the canal and the river at the discharge point is also to be continually
monitored as part of the regular environmental surveillance to ensure that the pollution levels do not exceed the
established limits\. The core indicators are to be used after the completion of the project to monitor the sustainability
of the activities\.
M&E Quality Rating : Modest
11\. Other Issues
a\. Safeguards:
The project was classified as Category A for Environmental Assessment purposes, and hence a full assessment was
required\. In addition to Environmental Assessment (OP 4\.01), two safeguard policies were triggered : Involuntary
Resettlement (OP 4\.12), and Cultural Resources (OP 4\.11)\.
Environmental Safeguards :
\.Environmental
The ICR (page 9) notes that an Environmental Impact Assessment and an Environmental Management Plan were
prepared to address the environmental and social issues pertaining to OP 4\.01 and OP 4\.11, and public
consultations were carried throughout the implementation period with the representatives from local authorities,
Non-Governmental Organizations (NGOs) and the affected households \. The ICR reports that, by project closure,
there were no unforeseen adverse environmental impacts at the project closure stage \.
The ICR (page 9) states that compliance with OP 4\.01 was monitored and that: (i) there were no significant
environmental impacts during construction; \. (ii) contractors complied with environmental covenants built into their
contracts under the supervision of the project management unit, its supervision consultants and local communities;
(iii) âgreeningâ? measures were incorporated into the technical designs; and (iv) there were environmental benefits
such as reduced flooding and water pollution \. The ICR also notes that audit reports from the independent
environmental consultant and quarterly environmental management plan implementation reports were submitted
regularly to the Bank\.
The ICR (page 9) states that âthroughout Project implementation, the Bank's environmental safeguard policies have
been fully complied with\.â?
Social Safeguards :
The ICR (page 8-10) notes that at the design stage, efforts were made to minimize adverse social impacts through
design modifications and consultations with the affected people \. The project acquired around 189\.1 hectares of land
and affected 3,518 households of which 936 had to be resettled and 1,670 lost agricultural land\. The number of
households who had to be resettled increased by 12% as compared to the original estimates \. The reasons cited in
the ICR for the increase were that some households split their plots, and some households were voluntarily located
to better resettlement areas\.
The ICR states that a Resettlement Policy Framework (RPF) was prepared in accordance with local laws and Bank
policies for ensuring that the displaced people received compensation for their losses at replacement cost, and were
also supported by measures to assist them either to improve or at least maintain their pre -project living standards\. In
accordance with the RPF, three Resettlement Action Plans (RAPs) were prepared, each of which included a detailed
impact inventory and a socio -economic survey\. Consultations were held with the affected households and relevant
government agencies\.
The ICR (page 8) reports that, by project closure, the RPF and RAPs had generally been completed satisfactorily
(except for those acquisitions and resettlements which were transferred to a follow -on project)\. An Independent
resettlement monitoring consultant certified that âalmost all Project affected people have been able to restore
their lost assets and livelihoods \.â? The ICR further notes that Da Nang used many of the available resettlement sites in
the city so that the households could be relocated inside their vicinity and that the grievance system functioned well
in satisfactorily resolving the complaints received from the displaced people \.
Physical Cultural Resources safeguard policy \.
OP 4\.11 was triggered due to the relocation of some graves, the presence of two temples, and four houses of
worship located in the project area \. Consultations with the affected people at the appraisal stage indicated their
willingness to relocate, provided they were compensated, and alternate sites had been made available to them \. The
ICR (page 10) notes that there were no adverse impacts at project closure \.
b\. Fiduciary Compliance:
Financial management \.
At the appraisal stage, financial management software was installed and a financial management manual was
developed and adopted by the Project Management Unit (PMU)\. In addition, the Unit was required to maintain
financial management systems (including records and accounts ) and prepare financial statements in accordance
with applied accounting standards, and have the financial accounts audited by an independent auditor \.
At project closure, an independent performance audit showed that the project accounting standards were in order \.
The ICR (page 10) reports that quarterly financial reports of acceptable quality were submitted on time, and annual
externally audited financial reports were submitted to the Bank with unqualified audit opinion (with one exception in
the first Fiscal year 2008)\.
Procurement \.
The implementing agency's capacity to address procurement issues had been identified as a source of concern, and
a procurement capacity assessment was conducted at the appraisal stage \. A plan to mitigate procurement risk was
agreed upon to strengthen the agency's capacity to handle procurement issues \.
In the initial stages of implementation, procurement was a major source of delays due, in large part, to the subjecting
of contracts to a lengthy process, under which the PMU âs procurement decisions required clearance and approval
from both the Department of Planning and Investment and the People âs Committee\. The decentralization of
responsibilities from the Department of Planning and Investment to the Department of Transport improved the
timeliness of project execution \.
The ICR (page 7) notes that during implementation of the Hoa Xuan wastewater treatment plant the city proposed to
the World Bank to tender in the form of âDesign-Construction-Operation\.â? With a projected operation period of 10
years, this process allowed bidders to offer alternative technical solutions for some of the major systems of the plant \.
This form of bidding delivered better results and increased effectiveness \.
Although actions had been taken by the PMU to expedite and speed the procurement process and their performance
improved considerably during the project implementation phase, there were still a number of major contracts that
remained incomplete at the closing date, and which had to be transferred to a follow -on project\. However, the
responsibility for this has to be shared with incomplete costing work by the Bank at the design stage \.
Despite delays, procurement guidelines were generally complied with, and there were no reported cases of
misprocurement\.
c\. Unintended Impacts (positive or negative):
None
d\. Other:
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Satisfactory Satisfactory
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Satisfactory Moderately There were significant shortcomings in
Satisfactory Quality at Entry, including insufficient
attention to costing, inadequate
preparation of land acquisition and
relocation, and M&E design\. These
shortcomings were to lead to shortfalls
in implementation and the need to
transfer activities to a follow-on
operation\.
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Unsatisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The following lessons are taken from the ICR with some modification of language :
An integrated multi-sectoral approach that links each player âs actions and develops investments in several
sectors may be appropriate for urban sector projects, but only if it is integrated into a well thought out
coordinated development strategy \.
Adequate preparation work, that captures the best available technologies for country -specific conditions and
incorporates realistic cost estimates, reduces implementation time and increases the chances of completing
project investments as planned \.
Careful assessments of land acquisition and resettlement requirements help to avoid delays in project
implementation\.
Consensus and coordination among all stakeholders are critical for the success of a project benefiting
communities in low income urban areas \.
Appropriate decentralization of procurement responsibility can help in avoiding the delays during the
implementation phase\. At the early stage of this project, the procurement decisions were taken both at the
national and at the local level, and this contributed to delays \. Decentralization of procurement proved to be
effective in expediting procurement issues \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
On the positive side, the ICR provides a thorough analysis of the safeguard and fiduciary compliance issues, and is
quite candid about areas of weakness (especially project design)\.
However, there are several significant shortcomings :
There is a lack of clarity in a number of important areas, including the causal chain between the project activities
and the development objectives, the reasons for the need to transfer activities to a follow -on project (why was
the additional financing alternative rejected? ), the coverage of the Beneficiary Survey, and why, if the activities
of Component A were entirely completed as planned, did it cost 31% less\.
The ICR does not analyze the achievement of objectives systematically \. Its discussion is component -based\.
The discussion does not make a clear distinction between outputs and outcomes \.
There is no analysis of the efficacy of one of the three sub -objective â improved efficiency of urban services \.
Presentation of the evidence concerning the other two sub -objectives â improved efficacy and sustainability â is
fragmented and spread throughout the report, so that it is not organized in a way that the reader finds easy to
follow\.
The discussion of M&E, especially of implementation and utilization, is insufficiently detailed and argued \. There
is no information on the indicators added during implementation \.
The basis for arriving at the quantification of project benefits is unclear \.
The impact on efficiency of shifting activities to a follow -on project is not considered \.
The ICR reports an increase in the number of beneficiaries with access to all -weather road links, but it is unclear
whether this refers to the results of the one new road link that was opened on the day the project closed, or
whether there were other road improvements, supported by the project, which had this effect \.
There is almost no discussion in the ICR of the technical, institutional or financial dimensions of operations and
maintenance (O&M) of the infrastructure built under the project \.
On a presentational level, the reasoning behind the lessons learned belongs in the main text, not in an annex \.
a\.Quality of ICR Rating : Unsatisfactory | REVIEW |
P104041 | Document of
The World Bank
Report No: ICR00003841
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-H3650 IDA-H7520 TF-16319)
ON A
GRANT
IN THE AMOUNT OF XDR 73\.6 MILLION
(US$116\.95 MILLION EQUIVALENT)
TO THE
DEMOCRATIC REPUBLIC OF CONGO
FOR A
DRC GOVERNANCE CAPACITY ENHANCEMENT PROJECT
September 30, 2016
Governance Global Practice
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective June 27, 2016)
Currency Unit = CDF
XDR 1\.00 = US$1\.39
US$1\.00 = XDR 0\.71857148
FISCAL YEAR
January 01 â December 31
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank
ARMP Procurement Regulatory Body (Authorité de Regulation des Marchés
Publics)
CAS Country Assistance Strategy
COREF Committee for Public Finance Reform (Comité dâOrientation de la
Réforme des Finances Publliques)
CPD Decentralization Unit (Cellule pour la Decentralisation)
DFID U\.K\. Department for International Development
DGCMP Procurement Control Body (Direction Generale de Controle des Marchés
Publics)
DRC Democratic Republic of Congo
ERR Economic Rate of Return
EU European Union
GCEP Governance Capacity Enhancement Project
GDP Gross Domestic Product
HIPC Heavily Indebted Poor Countries
HR Human Resources
HRM Human Resources Management
ICR Implementation Completion and Results Report
IFI International Financial Institution
IFMIS Integrated Financial Management Information System
ISR Implementation Status and Results Report
IT Information Technology
M&E Monitoring and Evaluation
MEF Ministry of Finance
MIDS Ministry of Interior, Security, and Decentralization
MOB Ministry of Budget
MTR Midterm Review
PAD Project Appraisal Document
PCU Project Coordination Unit
PDO Project Development Objective
PEFA Public Expenditure and Financial Accountability
PER Public Expenditure Review
PFM Public Financial Management
PFMA Public Financial Management and Accountability
PI Performance Indicator (PEFA Indicator)
PIU Project Implementation Unit
PSM Public Sector Management
PTS Transitory Pay System
Senior Global Practice Director: Deborah Wetzel
Practice Manager: Renaud Seligmann
Project Team Leader: Jean Mabi Mulumba
ICR Team Leader: Fabienne Mroczka
DEMOCRATIC REPUBLIC OF CONGO
Governance Capacity Enhancement Project
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Development Objectives and Design \. 1
2\. Key Factors Affecting Implementation and Outcomes \. 5
3\. Assessment of Outcomes \. 11
4\. Assessment of Risk to Development Outcome \. 20
5\. Assessment of Bank and Borrower Performance \. 20
6\. Lessons Learned\. 23
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 25
Annex 1\. Project Costs and Financing \. 26
Annex 2\. Achievements by Objective and Outputs by Component \. 29
Annex 3\. Economic and Financial Analysis \. 42
Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 43
Annex 5\. Beneficiary Survey Results \. 45
Annex 6\. Stakeholder Workshop Report and Results \. 46
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 47
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 49
Annex 9\. List of Supporting Documents \. 50
MAP \. 51
A\. Basic Information
Congo, Democratic DRC Enhancing
Country: Project Name:
Republic of Governance Capacity
IDA-H3650,IDA-
Project ID: P104041 L/C/TF Number(s):
H7520,TF-16319
ICR Date: 08/02/2016 ICR Type: Core ICR
MINISTRY OF
Lending Instrument: SIL Borrower:
FINANCE
Original Total
US$50\.00 million Disbursed Amount: US$107\.06 million
Commitment:
Revised Amount: US$113\.85 million
Environmental Category: C
Implementing Agencies: Ministry of Interior
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 05/30/2007 Effectiveness: 08/23/2008 08/23/2008
Appraisal: 01/07/2008 Restructuring(s): 10/01/2010
Approval: 04/22/2008 Mid-term Review: 01/05/2015 01/05/2015
Closing: 02/28/2013 02/28/2016
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Substantial
Bank Performance: Satisfactory
Borrower Performance: Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Moderately Satisfactory
Implementing
Quality of Supervision: Satisfactory Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Satisfactory Moderately Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem
Quality at Entry
Project at any time Yes None
(QEA):
(Yes/No):
Problem Project at any Quality of
Yes None
time (Yes/No): Supervision (QSA):
DO rating before Moderately
Closing/Inactive status: Satisfactory
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central Government (Central Agencies) 50 50
Sub National Government 50 50
Theme Code (as % of total Bank financing)
Administrative and civil service reform 29 29
Decentralization 29 29
Other accountability/anti-corruption 14 14
Public expenditure, financial management and
28 28
procurement
E\. Bank Staff
Positions At ICR At Approval
Vice President: Makhtar Diop Obiageli Katryn Ezekwesili
Country Director: Ahmadou Moustapha Ndiaye Marie Francoise Marie-Nelly
Practice
Renaud Seligmann Anand Rajaram
Manager/Manager:
Project Team Leader: Jean Mabi Mulumba Antonius Verheijen
ICR Team Leader: Fabienne Mroczka
ICR Primary Author: Fabienne Mroczka
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
To enhance transparency and efficiency in central and sub-national public finance and
human resource management\. To establish and consolidate an equitable resource sharing
mechanism between central and sub-national government\.
ii
Revised Project Development Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
At least 35% of domestic revenue transferred regularly to sub-national
Indicator 1 :
government
Value
(Quantitative or Between 8â10% 30% 35% 46%
Qualitative)
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments Achieved\. Note that the actual value calculated includes the amounts transferred
(including % directly to the provinces, as well as the salary payments transferred to provincial
achievement) civil servants and the provincial capital investments\.
Integrated budget execution reports are published on the Ministry of Budget and
Indicator 2 :
Ministry of Finance websites on a regular basis, at central and provincial levels
Budget
execution
reports are
Budget execution
Budget execution published on a
reports are
reports are monthly basis
Budget execution reports regularly published
Value published on a on the
are produced, but are of on the Ministry of
(Quantitative or monthly basis on Ministry of
low quality and are not Budget and Finance
Qualitative) the Ministry of Budget and
made publicly available websites at central
Budget and Finance
and provincial
Finance websites websites at
levels
central and
provincial
levels
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
(including % Achieved
achievement)
Indicator 3 : Regular payment of at least 60% of provincial level civil servant salaries
Value Salary payments are
(Quantitative or regularly delayed and 60% 60% 100%
Qualitative) many staff are not paid
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
(including % Achieved
achievement)
iii
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Percentage of expenditures handled outside the "chaine de la depense" is lower
Indicator 1 :
than 10%
Value
(Quantitative 20% 10% 10% 7%
or Qualitative)
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
(including % Achieved
achievement)
Indicator 2 : Annual increase in tax revenues at central level
Revenue
Revenue
Value collection
Tax collection is at CFAF collection
(Quantitative increases by 6%
157\.5 billion (2006) increases by 10%
or Qualitative) 10% over
over previous year
previous year
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
Partially achieved\. Tax collection has increased from year to year, but the
(including %
increase in the last few years has been lower than 10%\.
achievement)
The difference between budgeted and executed expenditures decreases to less
Indicator 3 :
than 10% of total expenditures at the central level
Discrepancy between
Value
projected and real
(Quantitative 5% 5% 41%
expenditures is 21% in
or Qualitative)
2006
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
(including % Not achieved
achievement)
70% of civil servants at central level paid via a reformed and computerized
Indicator 4 :
payroll system
Payroll system
Value
implemented and includes
(Quantitative 70% 90% 97%
a portion of central level
or Qualitative)
civil servants
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
(including % Achieved
achievement)
The differences between budgeted and executed expenditures reduced in pilot
Indicator 5 :
provinces
iv
Value
Budget execution data are
(Quantitative 5% 10% 63%
erratic and not published
or Qualitative)
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
(including % Not achieved
achievement)
Indicator 6 : Annual increase in provincial tax revenues
Value
Tax revenues in the 3
(Quantitative 10% 10% 39%
pilot provinces for 2007
or Qualitative)
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
(including % Achieved
achievement)
At least 60% of provincial personnel in pilot provinces paid via reformed and
Indicator 7 :
computerized payroll system
No public service and
Value
payroll management
(Quantitative 60% 60% 97%
system exist at the
or Qualitative)
provincial level
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
(including % Achieved
achievement)
Procurement code is effectively applied throughout the territory of DRC and
Indicator 8 : competitive bidding is applied in at least 80% of all procurement processes with
a value exceeding US$200,000
No procurement code in
Value place\. Procurement code
(Quantitative is promulgated in April 80% 80% 80%
or Qualitative) 2010 and is in force since
October 2010
Date achieved 01/31/2008 09/30/2012 01/01/2016 12/31/2015
Comments
(including % Achieved
achievement)
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 06/30/2008 Satisfactory Satisfactory 0\.00
2 10/27/2008 Satisfactory Satisfactory 4\.00
3 03/14/2009 Satisfactory Moderately Satisfactory 4\.60
4 07/25/2009 Moderately Satisfactory Moderately Satisfactory 5\.68
5 12/21/2009 Moderately Satisfactory Moderately Satisfactory 7\.27
v
6 06/22/2010 Satisfactory Moderately Satisfactory 12\.55
7 04/02/2011 Satisfactory Satisfactory 21\.10
8 10/31/2011 Satisfactory Satisfactory 35\.91
Moderately
9 06/06/2012 Moderately Satisfactory 43\.57
Unsatisfactory
10 11/14/2012 Satisfactory Satisfactory 48\.33
11 11/04/2013 Moderately Satisfactory Moderately Satisfactory 52\.54
12 11/14/2014 Moderately Satisfactory Satisfactory 76\.27
13 06/29/2015 Moderately Satisfactory Satisfactory 92\.48
14 01/15/2016 Moderately Satisfactory Moderately Satisfactory 101\.37
H\. Restructuring (if any)
ISR Ratings at Amount
Board Restructuring Disbursed at
Restructuring Reason for Restructuring &
Approved Restructuring
Date(s) Key Changes Made
PDO Change DO IP in USD
millions
Add new activities to
Component 1 related to
procurement reform and
10/01/2010 N S MS 15\.63 increase the scope of the project
in Component 2 to implement
some activities in other
provinces
I\. Disbursement Profile
vi
1\. Project Context, Development Objectives and Design
1\.1 Country Context
Country Context
1\. At appraisal in 2007, the Democratic Republic of Congo (DRC) remained one of the
poorest countries in the world with a per capita gross domestic product (GDP) of US$130 (2006),
despite having access to vast reserves of natural resources, including oil, copper, coltan, gold, and
diamonds\. The dire economic situation of the country was a result of decades of mismanagement
under authoritarian rule and several years of armed conflicts\.
2\. Since the early 1990s, macroeconomic indicators steadily deteriorated in the DRC, which
was further exacerbated by four major conflicts between 1996 and 2011, which took an estimated
5 million lives\. Following the conclusion of a peace agreement in 2001, and with the support of
the international community, the Government launched the implementation of economic, financial,
and structural adjustment policies aimed at stabilizing the macroeconomic situation and the
creation of a climate conducive to private sector-led development\. As a result, real GDP growth
became positive in 2002, after 13 years of decline\.
3\. The year 2006 marked the successful completion of the presidential and parliamentary
elections in the DRC\. The success of the elections and the subsequent establishment of a coalition
government, with strong commitment toward enhancing the quality of governance, raised hopes
for a successful transition to a multiparty democratic rule\. However, clashes between armed
supporters of the runner-up in the presidential elections and the army in March 2007 and continued
security problems in the eastern provinces of the country showed that the democratic process
remained fragile\. Nevertheless, the chances of the development of a stable governance system,
based on democratic principles, remained the best the country had experienced since its
independence in 1960\.
Sector Context
4\. The successful completion of the presidential and parliamentary elections in 2006 provided
a unique opportunity of addressing deep-seated governance problems\. Governance in the DRC
lagged behind almost all other Sub-Saharan African states\. Inadequacies exist in virtually all
aspects of governance, including institutions, governance outcomes, and the business investment
climate\.
5\. The DRC has a long history of centralization and mismanagement of resources, which
greatly weakened public institutions at the central and decentralized level\. Though with different
justifications and characteristics, the central government dominated the execution of power during
both the colonial and the second republic, thus inhibiting the development of functional public
institutions at the decentralized level\. Even at the central level, public institutions have been
shattered by decades of neglect, mismanagement, corruption and war\. Most of the infrastructure
has been destroyed and public institutions had all but disappeared\.
1
6\. Recruitment for the civil service did not follow any transparent procedures but was often
based on kinship or political affiliation\. Hence, rather than serving the population, the civil service
frequently served the power that sustained it\.
7\. The key governance challenges in the DRC are summarized in the âContrat sur la
Gouvernanceâ or Governance Compact, which is part of the Government program\. The
Governance Compact sets out seven main priorities, divided into three sector governance priorities
(reform of state-owned enterprises, mining sector reform, and security sector reform), and four
crosscutting or horizontal priorities (enhancing transparency, decentralization, public financial
management [PFM] reform, and public sector management [PSM] reform)\. A Common Assistance
Framework has been agreed between the Government and the donor community to address these
and other strategic priorities in the Government program\. The Common Assistance Framework
constitutes the framework for the World Bank Country Assistance Strategy (CAS) approved in
December 2007 and remains relevant for the new FY13â16 CAS approved in May 2013\. Among
the four crosscutting areas outlined above, the decentralization process has been the Governmentâs
main priority in its first year\. In addition, the Governance Compact outlines a large reform agenda
in the areas of PFM and PSM\.
8\. With regard to the decentralization process, the 2006 Constitution stipulates a significantly
increased level of provincial autonomy, both in political and fiscal terms\. Specifically, the
constitution foresees that 40 percent of domestic revenues should be retained by the provinces and
that significant government functions (primary and secondary education, primary health care, and
agriculture) should be transferred to this level\. In reality, however, at the time of appraisal,
transfers in the first semester of 2007 amounted to less than 6 percent of domestic revenue, which
led to strong discontent among elected local leaders and posed a risk to political stability\. At the
same time, there is a recognition that the capacity of provincial governments to effectively absorb
a significant increase in resources and responsibilities and translate this into improved service
delivery remained in doubt\.
Rationale for World Bank Involvement
9\. The World Bankâs engagement was motivated by
ï the fact that improving the quality of governance was seen as crucial to ensuring the
conditions for sustainable economic growth and poverty alleviation, as well as
assisting in maintaining political stability;
ï the World Bankâs comparative advantage of leveraging of prior support in the DRC
in this sector, as the World Bank was at the center of the dialogue in governance since
the start of the peace process in 2003 and was viewed as one of the lead partners by
the Government; and
ï analytical work underpinning the projectâs relevance through studies carried out by
the World Bank and other donors (such as the Policy Notes on decentralization, the
Public Sector Wage Reform, and the Public Expenditure Review [PER] published in
2008)\.
2
1\.2 Original Project Development Objectives (PDO) and Key Indicators
10\. The original PDO is (a) to enhance transparency and efficiency in central and subnational
public finance and human resource management and (b) to establish and consolidate an equitable
resource sharing mechanism between central and subnational government\. The PDO outcome
indicators are the following:
1\. Evidence of domestic revenue transferred regularly to subnational government
2\. Evidence that Integrated Budget Execution Reports are published on the Ministry of
Budget and Ministry of Finance websites on a regular basis, at both central and
provincial levels
3\. Evidence or regular payment of provincial level civil servant salaries in target
provinces
4\. Evidence of increase in citizensâ satisfaction with public services in the pilot provinces
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
11\. Despite a project restructuring in 2010 and an additional financing in 2013, no revisions
were made to the original PDO\. The Results Framework was adapted during the restructuring
process by introducing two new intermediate results indicators to measure the outcome of the new
procurement activities and the replication of key elements of PFM and PSM systems to provinces
other than the three pilot provinces\. The Results Framework was also revised with the additional
financing by introducing changes to end targets to reflect the outcome of the scaled-up activities\.
1\.4 Main Beneficiaries
12\. The primary direct beneficiaries of the project were various agencies within the Ministry
of Interior, Security, and Decentralization (MIDS); the decentralization unit (Cellule pour la
Decentralisation, CPD), the lead ministry for the decentralization project responsible for the
implementation of the overall project; the Ministry of Budget (MOB) and the Ministry of Finance
(MEF), the lead ministries for the PFM reform; the Ministry of Public Service, the lead ministry
for the PSM reform; the Ministry of Planning; the governorates of the pilot provinces; and the
Public Administration Reform Technical Committee (Comite Technique pour la Reforme de
lâAdministration Publique)\. More broadly, the project had a positive impact on the entire public
as the decentralization process sought to bring the Government closer to the citizens and increase
the opportunity for citizens to directly influence decisions that pertain to key issues of social
service delivery\. In addition, the implementation of wage system reforms aims to address the
existing lack of equity and income predictability in the public sector and will have a positive impact
on civil servants at the central and provincial levels\.
1\.5 Original Components (as approved)
13\. To reflect that the project focuses on medium- and longer-term institution building, the
project was designed around two main components, with a third component to strengthen
3
governance reform implementation capacity, project implementation, and monitoring and
evaluation (M&E): (a) strengthening PFM and PSM at central government level, including
establishing a functioning system of intergovernmental fiscal relations and (b) building public
sector and financial management systems at provincial level (see annex 1 for details of approved
subcomponents and activities)\.
Component 1: Strengthening PFM and PSM at Central Government Level (US$21\.28
million)
14\. Considering the priorities expressed in the Government program as well as issues identified
in the Policy Notes on Decentralization and Public Sector Wages and in the PER, this component
focused on (a) supporting the MIDS in designing and implementing the decentralization process;
(b) supporting the Ministries of Budget and Public Service in implementing Public Sector Wage
Reforms, including the design of an integrated personnel and payroll management system; and (c)
supporting the Ministries of Budget and Finance in strengthening the budget process\.
Component 2: Building PFM and PSM Systems at Provincial Level (US$20\.72 million)
15\. As building effective and transparent PFM and PSM capacity at the provincial level was
recognized as one of the most urgent elements of the governance agenda in the DRC, this
component focused on (a) developing budget management systems and capacity at the provincial
level, (b) developing personnel and payroll management systems, (c) building regional
development project management capacity to enable provincial officials to formulate economic
development opportunities and supporting investments, (d) building capacity to design and
monitor performance indicators, (e) implementing a small capacity development facility which
will finance specific capacity development and demand-side activities, and (f) peer learning at
provincial level\. Originally, three representative pilot provinces (Bandundu, Katanga, and Sud-
Kivu) were selected by the Government to be covered by the project\.
Component 3: Governance Reform Implementation Capacity (US$7\.98 million)
16\. This component financed the implementation and monitoring of the project as well as the
broader M&E effort related to the implementation of the Governance Compact\.
1\.6 Revised Components
17\. A restructuring process was completed in October 2010 at the request of the Government
to (a) increase the scope of the project to allow for replication of critical elements of PFM and
PSM systems to provinces other than the pilot provinces and (b) expand the scope of project
activities in the area of PFM and add engagement on procurement reform\.
18\. An additional financing approved in April 2013 to (a) support the broadening of approach
on PFM, specifically support the financing of the Governmentâs PFM Strategic Action Plan
including scaling up provincial support and strengthening PFM and PSM reforms at central
government level, specifically acceleration of procurement reforms and the expansion of activities
related to public service reforms such as staff identification processes in the MEF, MOB, and the
Ministry of Public Service and (b) expand the scope of project activities to one additional province
(Kasai Occidental)\.
4
1\.7 Other Significant Changes
19\. The institutional arrangements for the execution of additional financing took into account
the need for reinforcing the fiduciary management capacities of the ministry in charge of
decentralization so that the risks of delaying decisions and execution of project activities were
reduced\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design, and Quality at Entry
20\. The project was designed to assist the Government in building or strengthening
critical elements of PFM and PSM systems at the central and decentralized level, thus
enabling it to build a strong base for further PFM and PSM reforms\. The project used the
decentralization process as an entry point to governance reform, as well as a prism through which
to approach central (policy and design) and provincial (implementation and capacity) level efforts
to strengthen the governance system reforms\. With regard to its approach, the project focused on
medium- and longer-term institution-building measures to build a strong base\.
21\. The project was designed around three principal interventions\. They were establishing
an equitable resource-sharing mechanism between the central and subnational governments,
strengthening PFM and PSM systems at the central level, and strengthening PFM and PSM
systems at the subnational level, particularly in the pilot provinces\. Thus, the project worked with
several agencies and provided seed funding for a broad set of activities related to the PFM, PSM,
and decentralization reforms\. While this could present coordination challenges, it also afforded
better coordination among the various reforms\.
22\. Components and activities under the project are extensively detailed in the Project
Appraisal Document (PAD), showing effective sequencing of activities, while keeping some
flexibility for adjustments\. Because of identified capacity constraints, emphasis has been placed
on sequencing activities, as well as on building in learning and evaluation opportunities\. In its first
phase, the project focused on supporting the design of essential legislation (decentralization, PSM,
and PFM reforms) and the enhancement of existing PFM and human resource management (HRM)
systems, including training and capacity building, at central level\. At the provincial level, initial
support focused on capacity development and the design of interim arrangements for financial and
public service management\. Information technology (IT) systems components were launched once
new legal frameworks and business processes were designed\.
23\. The design of components and activities were driven by prior analytical work (Policy
Notes on decentralization, the Public Sector Wage Reform, and the PER published in 2008),
discussions with government officials and other financing partners, similar experiences in other
African countries, and to complement the work of other financing partners\. The US$50 million
(and the subsequent additional financing) is an important contribution to the overall governance
program of the development partners in DRC, as presented in table 1 below\.
5
Table 1: Main areas of donor assistance in the governance and decentralization sectors
Donors Areas of Governance Reform
Belgium Decentralization and Local Governance (local level in selected provinces)
Support to Capacity Building
Focus on Kasai-occidental
French Cooperation PFM, Payroll System
Support to Capacity Building
Support to Administration and Finance Sections
South Africa Public Administration and Civil Service Reform (Census of Civil Service)
UNDP/DFID Building the provincial taxation system (technical and institutional support for
revenue collection)
Setting up the chain of revenues
Implementation of an automated chain of expenditures (procedures, circuit and
software)
Support to the rationalization of the provincial payroll
Revision of the legal framework for PFM
Capacity building for PFM and HRM at provincial level
Support to the planning and budgeting process (MTEF)
Focus on Kasai- Occidental, Nord Kivu and Equateur
European Commission Technical and institutional support to the provincial structures for revenue collection
Setting up the chain of revenues
Setting up of an automated chain of expenditures (procedures, circuit and software)
Rationalization of the provincial payroll
Revision of the legal framework for PFM
Capacity building for PFM and HRM at provincial level
Support to the planning and budgeting process (MTEF)
Focus on Nord Kivu and Kinshasa
USAID Capacity building of ECOFIN members at provincial level
Focus on Maniema, Bandundu and Katanga
AfDB Building the provincial taxation system (technical and institutional support for
revenue collection)
Setting up the chain of revenues
Implementation of an automated chain of expenditures (procedures, circuit and
software)
Rationalization of the provincial payroll
Revision of legal framework for PFM
Capacity building for PFM and HRM at provincial level
Support to the planning and budgeting process (METF)
Support to procurement law implementation at provincial level
Focus on Bas-Congo, Province Orientale, Maniema
24\. Under the preparatory activities for the project, training programs in leadership and
rapid results methodologies were conducted\. These initiatives initially helped identify a group
of change agents at both provincial and central government levels\. The project then relied on this
network of change agents to ensure that technical advice and training provided under the project
were effectively translated into behavioral change\. Experience in other African countries,
including Burundi and Kenya, had shown the viability of this approach in driving and
consolidating the implementation of key aspects of governance reform\. Training and networking
of this group of change agents continued to be facilitated under the project, both under the peer
learning network subcomponent and under the various training initiatives\.
6
25\. While the PAD provides a comprehensive discussion of risk and mitigation measures,
it appears to have understated the political and capacity risks related to the acquisition and
implementation of the integrated information system\. Delays experienced in the acquisition
and implementation of the integrated information system resulted in this activity not being fully
implemented\.
26\. A number of risks rated high were appropriately mitigated\. For example, the risk that
there would be a lack of leadership and coordination within the Government was rated high, yet
coordination among the key ministries was strong due to the efforts made by the project at the
beginning to build consensus around the reform program\. Similarly, the risk that funds at the
decentralized level may not be used in an efficient and economical way and exclusively for
intended purposes was rated high; yet this risk was appropriately mitigated due to the timely
intervention of the World Bank team\. This resulted in no issues with procurement or use of funds
at the decentralized level\.
27\. Risk rating related to capacity risks and implementation delays were identified at the
outset but given that the project was one of the first World Bank projects to be fully implemented
through an existing government structure rather than by a specially created Project Implementation
Unit (PIU), the risk of capacity constraints, which was originally rated moderate, was more
significant and materialized, creating initial delays in the implementation of the project\. It is
important to clarify that while the project was not implemented by a specially created PIU, it was
coordinated by a Project Coordination Unit (PCU), located within the CPD (MIDS)\.
2\.2 Implementation
28\. The overall project implementation arrangements were Satisfactory\. Overall, the
projectâs implementation strategy remained relevant and adequately responded to the
Governmentâs priorities and the limited capacity of the central and subnational government\. The
project effectively used the decentralization process as an entry point to governance reform, as
well as a prism through which to approach central (policy and design) and provincial
(implementation and capacity) level efforts to strengthen the governance system\. The
implementation strategy included assisting the Government in the preparation of the regulatory
framework, establishment of entities to carry out the new framework, including refurbishing of
buildings to house them and equipment (for example, the Procurement Control Body [Direction
Generale de Controle des Marchés Publics, DGCMP], Procurement Regulatory Body [Authorité
de Regulation des Marchés Publics, ARMP] and ministerial procurement units for procurement,
Committee for Public Finance Reform [Comité dâOrientation de la Réforme des Finances
Publliques, COREF] for public finance reforms, tax collection agencies in the subnational
government, and procurement units in the subnational government)\. The newly created units
benefited from training (for example, 1,048 people received training in procurement), and
technical assistance for 12 to 24 months\. The establishment of those units was successful, as those
units now continue to carry out their mandate satisfactorily\.
29\. Overall, the PCU played an effective role in coordinating the assistance provided by
the project, helped in each of the four pilot provinces by the small coordination units, which helped
coordinate the assistance provided by the project effectively at the subnational level\. Throughout
the project, the team also responded to the volatile context and new priorities by realigning project
7
activities, when needed, to ensure the achievement of the PDO\. The project had anticipated the
split of the 11 provinces into 26, which was to happen in February 2010, by putting aside some
funds to finance certain activities to allow the new provinces to become operational\. However, the
split did not happen until 2015 because of a shift in the political direction, toward the end of the
project, with local governments being installed by the end of 2015\. This did not allow the project
to execute its planned strategy for newly created provinces\. However, the Public Financial
Management and Accountability (PFMA) Project financed by the World Bank, U\.K\. Department
for International Development (DFID) and the Belgian Cooperation is taking over the activities
financed by the Governance Capacity Enhancement Project (GCEP)\.
30\. The project, originally planned for 4\.5 years, was extended once for a total of 7\.5 years\.
The project was approved by the Board on April 22, 2008 and it became effective on August 23,
2008 with the original closing date of February 28, 2013\. The project was extended with the
additional financing, which was approved by the Board on May 9, 2013 and became effective on
September 6, 2013, with an extended closing date of February 28, 2016\.
Figure 1\. Yearly Disbursements of the GCEP (source: DRC Government, MIDS)
31\. The project was slow to move forward in its first year of implementation (as
demonstrated in figure 1), mainly due to (a) political volatility including a change of Government
and a government reshuffle at the central level, which included several changes of supervising
ministers; (b) the fact that the project was one of the first World Bank projects to be fully
implemented through an existing government structure rather than by a specially created PIU; and
(c) the fact that this was the first World Bank project to directly support an elected subnational
government, which created a learning curve for the subnational authorities\. The pace of
disbursement picked up in 2010, slowed down in 2012 and 2013 while the additional financing
was being approved, and picked up again after the approval of the additional financing\. Hence,
after an initial period of being rated Moderately Unsatisfactory on implementation progress in
April 2012 due to the existing political environment, the project delivered satisfactory results on
both development objectives and implementation progress, as shown in the latest Implementation
Status and Results Report (ISR)\.
32\. Despite its successful implementation, the project suffered from political instability,
which underscored the challenging implementation environment\. From preparation to the
closing of the project, the project has had to work with three different prime ministers (the
president of the Steering Committee), six ministers at the MIDS responsible for the
8
decentralization process, six ministers at the Ministry of Public Service, four ministers at the MEF,
and five ministers at the MOB\. At the provincial level, the project has had to work with three
governors in the provinces of Bandundu, Kasai Occidental, and Sud-Kivu and two governors in
the province of Katanga\.
33\. The project suffered from several delays, which had an impact on its implementation:
(a) irregular meeting of the Council of Ministers resulting in a long delay for the approval of the
Grant Agreement and therefore, occasioning delays in the effectiveness of the project; (b) long
delay in the approval of new regulations in parliament necessary for the implementation of the
reform program; and (c) delays in the approval of the additional financing\.
34\. A Government reshuffle and the reorganization of the PFM and PSM reform teams
in 2010 contributed to a renewed political engagement on government-related reforms and a
renewed interest in furthering the initial progress made by the project at the national and provincial
levels\. Initially the project had a significant impact on the improvement of PFM and PSM at the
national and provincial level\. The implementation of the project helped create a platform for
development partner support to administrative and fiscal decentralization\.
35\. Another issue that was identified during the first annual review was the need to decentralize
more responsibility to the provincial units, which was subsequently done by creating the provincial
procurement specialists, paving the way for moving responsibility for procurement to the
subnational level\.
36\. While most of the activities were completed at project closure, the acquisition and
implementation of the integrated financial management information system (IFMIS) and the
human resources (HR) system was not completed by the end of the project1, mainly because
of delays in the procurement process and the lack of coordination within the administration which
may indicate a lack of commitment\. The HR system, which integrates payroll and personnel
information, was installed, but could not be tested before the end of the project, and the IFMIS
system was not acquired\. Those activities will be taken over by other governance projects in the
DRC (PFMA project for PFM activities and the Public Service Reform and Rejuvenation Project
for PSM activities)\. The PFMA project is currently preparing an additional financing to allow for
the inclusion of these activities under the project; the concept review meeting should happen in
late August\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
37\. While the PDO was clear and measurable, it was complex (with nine identifiable
objectives)\. The activities and outputs of each component and subcomponent had a clear link with
the objectives\.
1
While the integrated HR system was not completely implemented by the end of the project, a reformed
and computerized payroll system was implemented and fully operational\. In fact 97 per cent of civil
servants are currently paid through the reformed computerized payroll system financed by the project\.
9
38\. The relevance of the indicators chosen by the team was suitable to capture the
achievements of the project and allow attainment of the PDO\. Since the beginning of the
project, a change in behavior, in favor of more transparency in the DRC, correlates to the
publication of budget monitoring reports (from 2014) and with the changes in the management of
public procurement, with at least 60 percent (in 2012) of procurement processes going through
competitive procedures\. In addition, increased tax revenue and the decrease in percentages of
expenditures handled outside normal procedures were good proxies for measuring the increase in
efficiency of PFM both at the central and decentralized level\. Similarly, the increase in the regular
payment of civil servant salaries is a good proxy for measuring the efficiency gain in HRM\.
39\. The team could have been more thorough in updating the Results Framework to
facilitate monitoring of results\. Not every aspect of the PDO was measured in the Results
Framework\. For example, no direct outcome indicators were available for measuring transparency
in HRM at the central and subnational level\. An indicator was originally set for measuring citizensâ
satisfaction with public services in the pilot provinces, but it was later dropped because of the
unavailability of baseline data without a formal process\. Finally, there were several discrepancies
in the different Results Frameworks, for example, the Results Framework in the additional
financing still mentions a target of 60 percent of provincial-level civil servants salaries paid
regularly in the pilot province, while the ISR mentions a 95 percent target (although this probably
happened because the target was reached in 2012, which would seem to imply that the target should
have been adjusted for the additional financing)\. Another example is the percentage of
expenditures executed outside normal procedures at the central level, whose target in the Results
Framework in the additional financing paper is 5 percent, but is shown as 10 percent in the ISR\.
40\. However, given the weak capacity context, the PCU implemented an effective system
for M&E of project activities and results\. Serious investments were made to build an M&E
system, even if not perfect, across different levels of the Government, resulting in evaluation
reports of acceptable quality, related to the M&E systems being published quarterly\. All indicators
were updated on a regular basis, except indicators related to the implementation of the integrated
system\. The evaluation reports were validated by the beneficiaries to enhance their ownership and
ensure accuracy of data\.
41\. In the last ISR, the achievement toward the PDO was rated Moderately Satisfactory
because of the delays observed in the implementation of the integrated PFM and PSM information
systems\.
2\.4 Safeguard and Fiduciary Compliance
42\. The project did not trigger safeguard policies and there were no exceptions to World Bank
policies\. It was categorized as C for both\.
43\. The financial management and procurement activities were conducted in line with
the provisions in the legal agreement and were considered satisfactory\. The project was well
managed with no overdue audit report and financial information and reports of acceptable quality
were produced on time\. Reports were delivered on time, with the last audit report for December
31, 2014 having a clean opinion\. Significant progress was made by the project team to address
inadequacies related to the procurement management system at the beginning of the project\. More
10
procurement responsibility was transferred to the provincial level to respond to issues identified in
the early stages of project implementation\. As of the end of the project, the contract management
system was well functioning, with contract deadlines being broadly met\. The only remaining
problem was related to the delays experienced in the procurement and delivery of the integrated
PFM and PSM systems\.
2\.5 Post-completion Operation/Next Phase
44\. Many activities, including the remaining activities in the implementation of the
integrated PFM and PSM systems, continue to be financed under the existing governance
projects\. In addition, as the project was effective in building a platform for support of reforms at
the decentralized level, partners continue to finance support activities in financial management of
public resources at the provincial level\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design, and Implementation
45\. Relevance of the PDO\. The relevance of project objectives is rated High at design and
remained so throughout implementation\. As mentioned in previous sections, when the project was
designed and even now, with the newly installed provinces, the Governmentâs priorities remain
centered on the decentralization processes, with an increased level of provincial autonomy, in both
political and fiscal terms, as well as the need to address deep-seated governance problems in public
finance and HR administration\. Therefore, the PDO, as stated in the PAD, was and remains
relevant to the context and challenges in the DRC\. The PDO was seen as responsive to the
countryâs circumstances and development priorities at that time\. A majority of the indicators was
realistic and reachable, focusing on the outcomes for which the project could reasonably be held
accountable given its duration, resources, and approach\.
46\. Relevance of Design\. Project design is rated Substantial for financing key priorities and
systems of Government and providing assistance in much needed areas\. The design of components
and activities were not only designed to support key government priorities, but were also driven
by prior analytical work performed by the World Bank or other financing partners\. At project
design, the project was the only World Bank project in governance and was, thus, used to engage
in a large number of areas, at multiple levels (central and subnational), and with multiple
implementing agencies\. Component 1 focused on public finance and HRM at the central level and
financed key activities such as the drafting of key legal instruments for the rollout of the new
procurement policy and the new decentralization policy, the upgrade and rollout of the automated
payroll system, and the upgrade and rollout of the âchaine de la depenseâ, which contributed to
substantial improvements in the transparency and efficiency in PFM and PSM at the central level\.
Component 2 focused on similar activities at the subnational level, which contributed to substantial
improvements in the transparency and efficiency in PFM and PSM at the subnational level\. The
strengths of the design include the fact that by supporting various reforms (decentralization, public
finance, procurement, and HRM) the project was able to obtain an overall view of governance
issues and ensure better coordination among all those reform plans\. In addition, the fact that the
project not only assisted in the creation of the environment with the drafting of key legal
instruments, but also assisted in the implementation of those instruments with the setting up of
11
new institutions that were later fully integrated with the administration, ensured a sustainable way
to implement reform and strength governance\. Finally, the fact that the project received a large
additional financing which enabled it to expand the scope of intervention and that other donors
have started to also finance certain reforms, prove the relevance of design\.
3\.2 Achievement of Project Development Objectives
47\. The PDO is clearly defined in the PAD and additional financing paper and activities
under each component and subcomponent are closely linked to the achievement of each objective\.
The PDO can be broken down in to nine identifiable objectives:
(a) To enhance transparency in public finance at the central level
(b) To enhance transparency in human resource management at the central level;
(c) To enhance transparency in public finance at the sub-national level
(d) To enhance transparency in human resource management at the sub-national level;
(e) To enhance efficiency in public finance at the central level
(f) To enhance efficiency in human resource management at the central level;
(g) To enhance efficiency in public finance at the sub-national level
(h) To enhance efficiency in human resource management at the sub-national level;
(i) To establish and consolidate an equitable resource sharing mechanism between
central and subnational governments
48\. Annex 2 on the assessment of achievements by objectives captures the Results Framework
as in the PAD, while showing achieved outputs by components\. The sources of information include
information collected directly from the M&E unit and units directly responsible for the execution
of the project during an Implementation Completion and Results Report (ICR) mission, as well as
the borrower completion report, the 2008 (published) and 2012 (unpublished) Public Expenditure
and Financial Accountability (PEFA) reports, and the 2015 PEFA self-evaluation undertaken by
the Government\.2
49\. Objective 1, to enhance transparency in central public finance, is rated Substantial, as the
outcome indicator was fully achieved\. By the end of the project in 2015, budget execution reports
were published regularly on the MOB website, making the information available to the public and
thus enhancing transparency of public finance at the central level\. In addition, budget execution
2
The 2015 self-evaluation was undertaken by the Government under the PFM and accountability project, but was
not directly sponsored by donors and therefore, did not undergo in-depth review usually associated with a PEFA
exercise\.
12
reports now present information that is more comprehensive, allowing for better analysis\. At the
close of the project in February 2016, the Government and the World Bank sponsored a series of
meetings on governance and transparency in the DRC, which were very well received, and put
transparency at the forefront of the Government agenda\. According to the 2012 PEFA exercise
(conducted by the World Bank and DFID, but not published) the rating for Performance Indicator
10 (PI-10), public access to key fiscal information, increased from a âDâ in 2008 to a âCâ in 2012,
with notable efforts identified to provide key fiscal information to the public\. A self-evaluation
performed in 2015 by the Government of the DRC rated PI-10 a âBâ, with the publication of more
reports and information that is more comprehensive\. Finally, in addition to transparency in budget
information, there is greater transparency in procurement with procurement information published
periodically on the Procurement Authority website, making it available to the public\.
50\. Objective 2, to enhance transparency in central human resource management, is rated
Modest (the project is devoid of any transparency-related results indicator in HRM at the central
level)\. Transparency in HRM at the central level has improved over the eight-year implementation
period\. Recruitment for civil service personnel now follows a more transparent process which
includes an exam open to the public, whose results are published in the media\. The last recruitment
exam took place in September 2015 with 4,824 participants in Kinshasa and provinces\. The project
also supported the elaboration and adoption of standardized organization charts to help streamline
the structures of the ministries and institutions, thus, forcing more transparency in the appointment
of officials\. Furthermore, the project also supported the computerization of the HR system, as well
as the rollout of the transitory pay system (PTS) (payroll) reform\. Along with the computerization
of the payroll system, the use of electronic transfers for payroll resulted in more transparency and
control over the list of civil servants receiving salaries\. However, progress in this regard is partial
and can only be deemed sustainable if the Government implements the law on the General Statute
of Public Service (recently adopted by parliament) and if the integrated management software for
payroll and HR is effectively implemented, activities which will now be financed under the Public
Service Reform and Rejuvenation Projectâs additional financing\.
51\. Objective 3, to enhance transparency in subnational public finance, is rated Substantial,
as the outcome indicator was fully achieved\. By the end of the project in 2015, budget execution
reports for each province were published regularly on the MOB website, making the information
which was not available before the project, now available to the public and hence enhancing
transparency of public finance at the subnational level\. In addition, support to the assemblies in
the four pilot provinces yielded better transparency (in Sud-Kivu for example, a television channel
was created to make public the meetings of the assembly, including budget discussions)\. The
participatory budget that was implemented in the province of Sud-Kivu, which will be
implemented in other provinces, helped enhance citizenâs participation in the budget process and
increase transparency over the use of public resources\. Due to the participatory budget,
stakeholders including the provincial government, decentralized localities, civil society, and the
private sector started participating in the preparation of the provincial budget since 2012 through
a series of public meetings\.
52\. Objective 4, to enhance transparency in subnational human resource management, is rated
Modest (the project is devoid of any transparency-related results indicator in HRM at the
subnational level)\. The project contributed to providing the four pilot provinces with databases
following the 2012 biometric census, which enabled the pilot provinces to have a list of civil
13
servants working in the provinces, thus increasing controls over ghost employees and improving
transparency in HRM at the subnational level\. However, to enhance the sustainability of this action,
those databases need to be updated\. In the absence of a law on the General Statute of Decentralized
Public Service, recruitment criteria and promotion of local agents remain a contended issue\.
53\. In addition, as many civil servants at the subnational level are paid from the central level,
the support provided to the computerization of the HR system, as well as the rollout of the PTS
(payroll) reform at the central level and the use of electronic transfers for payroll, resulted in more
control over the list of civil servants receiving salaries at the subnational level\.
54\. Objective 5, to enhance efficiency in central public finance, is rated Substantial, as the
outcome indicators were mostly achieved\. This objective was mostly measured by looking at
the efficiency of spending, tax collection, and use of procurement procedures\. With respect to
spending efficiency, by the end of the project in 2015, with the 2010 manual on the âchaine de la
depenseâ available online from the MEF, there was a better clarity of spending procedures that had
to be applied\. As can be seen in figure 2, the implementation of the âchaine de la depenseâ at the
central level and the improvements made to the information system enabled an improvement in
the expenditures that were handled outside normal procedures\. The percentage of expenditures
handled outside normal procedures steadily decreased from 26 percent in 2009 to reach 7 percent
in 2015\.
Figure 2\. Percentage of Expenditures Executed Outside Normal Procedures at the Central Level (source:
DRC Government, MEF)
55\. In addition, the 2012 PEFA exercise recognized the improvements made through the
utilization of the âchaine de la depenseâ at the central level by changing the rating of PI-20,
effectiveness of internal controls for non-salary expenditures, from a âDâ in 2008 to a âCâ in 2012\.
56\. With respect to tax collection, tax collection at the central level showed a year-to-year
increase from CDF 1,427,534 million in 2009 to CDF 3,894,202 million in 2015, with a large year-
to-year increase from 2009 to 2012 and a leveling of the increase from 2012 to 2015\. In addition,
tax budgeting is becoming more accurate from 123 percent of realized taxes in 2009 to 106 percent
in 2015\.
14
Figure 3\. Annual Increase in Tax Collection at the Central Level (source: DRC Government, MEF)
57\. With respect to procurement efficiency, with the implementation of the new procurement
regulation, the regulatory environment for procurement considerably improved since 2010 with
the creation and operationalization of the DGCMP and ARMP\. Procurement processes are now
reviewed by the Procurement Directorate within the MOB and at the end of the project,
procurement became more efficient with 80 percent of contracts over US$200,000 following a
competitive process\. In addition, the percentage of direct contracts diminished from 43 percent in
2013 to 20 percent in 2015\. The 2012 PEFA exercise recognized improvements made in the
procurement area by changing the rating of PI-19, competition value for money and controls in
procurement, from a âDâ in 2008 to a âBâ in 2012\.
58\. Objective 6, to enhance efficiency in central human resource management, is rated
Substantial, as the outcome indicator was fully achieved\. The percentage of civil servants paid
through the reformed and computerized payroll system was very low (29 percent on average)
during the first three years of project implementation\. The acquisition of a large capacity server
and the access to the unique base of census of Public Service in 2011 has allowed the Payroll
Department (MOB) to accelerate the integration of new services in to the computerized system (an
average of 20 services per quarter according to the PEFA 2012)\. Significant progress has also been
made in efficiency of the control of staff and payroll, causing the 2012 PEFA score for PI-8 to
improve from a âDâ in 2008 to a âC+â in 2012\. The centralization of the payroll files combined
with the development of computer applications and security devices helped clean up the payroll
database and delete duplicates\. In 2015, 97\.74 percent of the agents and civil servants were paid
by the reformed computerized system\.
59\. With regard to the bonuses and allowances, 80â85 percent types of bonuses and allowances
have been set in the system according to the independent final evaluation report\. The report makes
no mention of the actual use of the system for the payment of these bonuses and allowances\.
Furthermore, an IFMIS for pay and personnel rolls was planned to be installed to improve HRM
but this software was installed but could not be tested before the end of the project\. The Public
Service Reform and Rejuvenation Project funded by the World Bank is financing the
operationalization of the software\. In the absence of integration of the pay and personnel rolls, the
payroll management by the MOB and the HRM by the Ministry of Civil Service remain
disconnected; there is no evidence that patronage in the recruitment and promotion of civil servants
has decreased\.
15
60\. Objective 7, to enhance efficiency in subnational public finance, is rated Substantial, even
though some of the selected outcome indicators were only partially achieved\. This objective
was mostly measured by looking at the efficiency of spending and tax collection\. For the central
level, the efficiency of spending was measured by the difference between real and budgeted
expenditures\. However, the project mainly financed reforms related to the implementation and
utilization of the âchaine de la depenseâ and substantial progress has been made in enhancing the
efficiency of public finance at the subnational level because of project intervention, which is not
being captured by the indicator mentioned above\. Looking at the execution of transfer for operating
expenditures at the subnational level (which are expenditures that are directly managed by the
provinces), an overall improvement can be seen in the execution of expenditures from 82 percent
of execution in 2011 to 90 percent in 2015 (there is no data available before 2011 for the provinces)\.
The trend is even more pronounced in the four pilot provinces which went from 76 percent in 2011
to 90 percent in 2015\. In addition, with the implementation of the âchaine de la depenseâ at the
subnational level, where none existed before, efficiency of expenditures has increased at the
subnational level\. In addition, at the subnational level, efficiency of spending was strengthened by
bringing the Government closer to the citizens through their involvement in participatory
budgeting\. This activity led to small projects that were financed by the subnational budget, such
as the construction of latrines in a neighborhood in Sud-Kivu, which were much needed by the
citizens\. Due to the positive results demonstrated in Sud-Kivu, participatory budgeting will be
implemented in other DRC provinces\.
Figure 4\. Execution of Transfers for Operating Expenditures at the Subnational Level (source: DRC
Government, MEF)
61\. With respect to tax collection, tax collection at the subnational level increased, especially
in the four pilot provinces, from 249 percent in 2010 (compared to 2009) as the project was
establishing tax collection administrations in the provinces and continued to improve until 2015
(39 percent increase over the previous year)\. In the province of Sud-Kivu for example, tax
collection increased from CFAF 4,027 million in 2010 to CFAF 5,821 million in 2015\.
62\. Objective 8, to enhance efficiency in subnational human resource management, is rated
Substantial, as the outcome indicators were fully achieved\. The 2015 ISR reports that 100
percent of the civil servants in the pilot provinces are paid by the reformed and computerized
system\. However, it should be noted that the staff of the decentralized sectors are not yet
transferred and continue to be paid by the central government with provincial resources\. The
16
biometric census conducted in 2012, with the support of the project, has allowed the creation of a
database, which needs to be kept updated\. In addition, it appears from the meetings with the
beneficiaries, that 100 percent of civil servants are paid; however, this percentage remains
impossible to verify as the number of civil servants and agents at the subnational level is still
unknown\.
Figure 5\. Transfer of Resources from the Central to the Subnational Government (source: DRC Government,
MEF)
63\. Objective 9, to establish and consolidate an equitable resource sharing mechanism
between central and subnational governments, is rated Substantial, as the outcome indicator was
fully achieved\. A key objective of the project, as stated in the PAD, was the establishment of a
more equitable resource-sharing mechanism between the central and subnational governments\.
The project assisted in the establishment of the formula for resource sharing between the central
and provincial governments which is still in use and has lessened tension between the central and
provincial governments\. In the 2012 PEFA exercise, the rating for PI-8, transparency of
intergovernmental fiscal relations, recognized the improvements in the relations between the
central and provincial governments by improving the rating of the indicator from a âDâ in 2008 to
a âD+â in 2012\. This increase in the rating was mostly due to better and more equitable allocation
of resources between the central and provincial governments and better communication between
the central and provincial governments\. Transfer of resources to the provincial governments has
undoubtedly increased since 2009 as can be seen in figure 53 above\.
3\.3 Efficiency
Rating: Substantial
64\. The return on investments under the project is Substantial, even under conservative
assumptions\. Table 1 summarizes the key results for the project\. Under quite conservative
assumptions, where GDP would grow at 10 percent and 11 percent in 2017 and 2018 (as is
3
Note that the actual value calculated includes the amounts transferred directly to the provinces, as well as the
salary payments transferred to provincial civil servants and the provincial capital investments
17
currently forecasted), then at 7\.4 percent until 2038, the economic rate of return (ERR) would be
91 percent\.
Table 2\. ERR for the Project
Project Components Cost (US$) ERR %
1\. Strengthening PFM and PSM at Central
38,080,158
Government Level
2\. Building PFM and PSM Systems at Provincial
41,044,471 91
Level
3\. Governance Reform Implementation Capacity 29,892,771
Total 109,017,400
65\. With respect to decentralization, the project contributed to the establishment of an
equitable resource-sharing mechanism between the central and subnational governments\.
Since 2009, transfer of resources to provincial governments increased, to 49 percent of collected
revenue in 2015\. This transfer of resources enabled provinces to maximize necessary resources to
fund their development and contributed to the improvement of public services delivered, thus
having a positive impact on the population living condition\.
66\. With respect to Public Sector Wage Reform, the project contributed to the regular
payment of civil servant salaries at the central and subnational levels (97 percent of agents
and civil servants are receiving regular payments through the reformed and computerized system)\.
The resultant spending made by civil servants would have a significant impact on reviving the
economy and reducing poverty levels\.
67\. With respect to public finance reform, the project contributed to an increase in tax
collection at the central and subnational levels, which resulted in the Government having more
available resources and improving the availability and quality of public services\. In addition, the
project also contributed to better performing public institutions capable of employing finances and
HR in a more effective, transparent, and accountable way\. More efficient execution of budgetary
transactions, reduced delays in payments, and improvement in procurement practices, will lead to
reduction in the cost of goods and services to the Government\.
3\.4 Justification of Overall Outcome Rating
Rating: Satisfactory
68\. The overall outcome rating of Satisfactory is based on the individual ratings for
relevance, efficacy, and efficiency as shown in table 2\.
Table 3\. Calculation of the Overall Project Outcome Rating
Relevance of: Efficacy: Objective Overall
Efficiency
Objectives Design 1 2 3 4 5 6 7 8 9 Outcome
High Substantial S M S M S S S S S Substantial S
69\. The project had a significant impact in three important areas: decentralization,
public wage reform, and public finance reform\. Since the start of implementation in August
2008, the project had a significant impact on the improvement of PFM and PSM at the central and
provincial level in a difficult and volatile environment\. Furthermore, the implementation of the
18
project has helped create a platform for administrative and fiscal decentralization of public services
and financial management of public resources, which are now being taken over and deepened by
projects financed by the World Bank and/or other donors\. The project contributed to the more
equitable transfer of resources to the provincial level\. While some shortcomings in efficacy
surfaced during implementation, the evidence available indicates that they were minor, given the
many achievements of the project and the very fragile context of the operation\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
70\. The strategic importance of improved governance in providing reliable data to inform
policies aimed at poverty reduction and social inclusion is well recognized\. Through the
establishment of a more equitable resource-sharing mechanism between the central and
subnational governments, the project ensures that resources are shared among richer and poorer
provinces\. In addition, by strengthening participation of citizens in the budgeting process through
participatory budgeting, the project allows the population not only to access information about
public finances but also provides better access to basic services, such as sanitation services (with
the construction of latrines, for example, in a neighborhood in Sud-Kivu)\.
(b) Institutional Change/Strengthening
71\. The governance project is essentially an institutional strengthening project\. Today, the
DRC benefits from better trained and highly capable staff, both at the central and subnational levels,
thanks to the intervention of the governance project\. Many newly created bodies, such as the
DGCMP, ARMP, provincial governments, provincial assemblies, and CPD, became and continue
to be operational owing to the assistance (training, equipment, and technical assistance) of the
project\. The project made effective use of technical assistance to strengthen key units and
ministries\. The governance project was instrumental in operationalizing the reform process in the
DRC\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
72\. With the training and technical assistance provided by the project (for example 1,048
people were trained in procurement), many units in the Government of the DRC, particularly in
the prime ministerâs cabinet, the MEF, MOB, MIDS, as well as in provinces are staffed with highly
trained and skilled individuals\. The project, therefore contributed to creating a more robust civil
service\.
73\. The implementation of the new procurement regulation, supported by the project,
contributed to helping the DRC to reach the completion point under the heavily indebted poor
countries (HIPC) initiative assistance in 2010, resulting in the cancellation of its external debt of
approximately US$10 billion\. This allowed the DRC to allocate more resources to core sectors,
such as health and education over the last few years\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
Not applicable
19
4\. Assessment of Risk to Development Outcome
Rating: Significant
74\. The overall risk to the development outcome is rated Significant\. The project had
significant results and was a major contributor to increased governance in the DRC\. In particular,
the project was a key contributor to the implementation of the Governmentâs decentralization
policy by providing the new provincial governments and administrations the necessary tools and
training to function, increasing the transparency and efficiency of management of public finance
and collection of taxes\. The policy of decentralization in the DRC is likely to remain a Government
priority, as it is reflected in the 2006 Constitution\. However, one significant risk to the achieved
development outcome is the split of the 11 initial provinces into 26 in late 2015, toward the end of
the project life\. The risk is that the capacity gains experienced in the 11 initial provinces will be
greatly diminished or lost because of the split\. This risk, however, is mitigated by the continued
involvement of other donors in the provinces (DFID and African Development bank [AfDB]) and
other World Bank-financed projects such as PFMA project and the Public Service Reform and
Rejuvenation Project\. These projects continue to finance activities to enable efficient operation of
provinces (DFID and the World Bank cover 20 provinces and AfDB the remaining 6 provinces)\.
Another significant risk is the ability to retain existing capacity at the subnational level in the
absence of an implemented civil service reform, as with each new government there is an
opportunity to start with all new staff\. However, this risk is mitigated by the existence of
established procedures and systems which remain and the continued support of the World Bank
and other donors\.
75\. Another major achievement of the project is the improvements made in increasing
transparency and efficiency in government procurement\. With respect to this activity, the risk to
the achieved development outcome is Moderate as agencies supported under the project have now
been operational for a few years, while demonstrating visible results and are fully embedded in
government procedures\.
76\. The project achieved the establishment of a more equitable formula for resource sharing
between the central and provincial governments, which is still in use and has lessened tension
between the central and provincial governments\. For this reason, with respect to this activity, the
risk to the achieved development outcome is Moderate\.
77\. The project made a significant impact in increasing the transparency and efficiency in PFM
and contributed to the establishment of a group of highly trained and skilled staff in many
government units in the DRC\. While tools and procedures will remain in place, it is now the
responsibility of the Government to retain those staff\.
78\. Finally, the improvement made in HRM can be at substantial risk if the Government does
not live up to its commitment of linking payroll to the HR system\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
20
(a) Bank Performance in Ensuring Quality at Entry
Rating: Satisfactory
79\. The project drew on extensive analytical work performed in the DRC PEFA/PER 2008,
which sets out a comprehensive reform agenda on PFM reforms; the programmatic series of Policy
Notes on Decentralization, jointly designed with the European Union (EU); the Public Sector
Wage Reform (2008); the HIPC/Africa Action Plan (2004); Country Financial Accountability
Assessment (2005); the Institutional and Governance Review (2005); the Country Procurement
Issues Paper (2005) and sector related analytical work with governance aspects, notably the
Governance Note produced as part of the preparation of the Education Sector Reform Project and
the Mining Sector Study\.
80\. The project design drew on several lessons and good practices in similar projects in
the DRC and World Bank-wide projects\. The project, which was prepared in a postconflict
environment, specifically supported the implementation of the Governmentâs priorities in
enhancing the quality of governance\. It built flexibility into the project design to accommodate for
changes in reform priorities over the medium term\. It focused on supporting small steps in the right
direction in governance reforms, which has been recognized to work better than grand designs\.
The project provided technical support, focusing on implementation practicalities, in particular at
the provincial level, which became the linchpin between the central government and the
community levels, based on the decentralized design of the DRC Constitution\. Finally, the project
took into consideration the need to coordinate with other donors, especially when faced with the
extensive work program involved in increasing the capacity at the subnational level\.
81\. The project was the first project in the governance sector in the DRC and as such
included various aspects of governance, working at the central and subnational levels, as well as
various beneficiary entities\. However, the projectâs governance structure was put in place to ensure
effective coordinating of those various reforms\.
(b) Quality of Supervision
Rating: Satisfactory
82\. Between 2008 and 2015, the World Bank conducted 14 formal supervisory missions,
documented in ISRs with formal supervision missions and corresponding Aide Memoires\. These
missions covered approximately six-month periods and included reviews of the technical aspects
of the project, as well as the aspects relevant to procurement, financial management, and social
and environmental safeguards, when applicable\. The close supervision and day-to-day support by
the field-based team allowed for effective implementation and disbursement\. Bottlenecks and
challenges were flagged and were addressed on time\.
83\. The first midterm review (MTR) took place in November 2010 after the restructuring of
the project in October 2010\. It highlighted the need for the additional financing, which was not
approved until April 2013\. The results of the 2010 MTR were, however, taken into account for the
additional financing in 2013 with the inclusion of the fourth province to ensure coverage of all
provinces by development partners and the scaling up of PFM activities\. The second MTR took
place in March 2015\. It highlighted the deficiencies in procurement of the GCEP and enabled the
21
team to take corrective actions to speed up the procurement process of certain activities, including
procurement activities related to the purchase of the integrated HR system\.
84\. During the course of the project, the World Bank team provided regular technical
supervision and hands-on assistance focused on proactively identifying and resolving threats
to the achievement of the PDO\. These supervision missions were conducted with the support of
various specialized technical experts and jointly with the Government\. This created a real dynamic
environment for the project, promoting the sharing and implementation of good practices and
initiatives\. The team went out of its way to work directly with clients and provide hands-on support
in very difficult conditions and remote locations with challenges of access\.
85\. The Government counterparts consistently praised and greatly appreciated the
commitment, support, and technical assistance provided by the World Bank team at all levels
of the Government\. In almost every single meeting, both at the central and at the subnational
levels, the World Bank team was recognized for having provided high quality implementation
support and troubleshooting a number of complex issues that had the potential to derail some
activities\.
86\. The team could have been more thorough in updating the Results Framework to
facilitate monitoring of results\. Even though the team did a thorough job in regularly monitoring
the Results Framework, not every aspect of the PDO was measured in the Results Framework and
there are several discrepancies among the different Results Frameworks, which could have been
addressed by the team during the restructuring of the additional financing\.
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
87\. The overall Bank performance is rated Satisfactory based on the ratings for quality at entry
and quality of supervision\. The ICR author questioned whether the impact would have been greater
had the project focused only on a few reforms\. However, the consistent feedback received from
counterparts was that the design of the project, although complex and covering multiple levels and
actors, was well prepared and responded to the needs of each agency\. In addition, the availability
of permanent resources in-country, the regularity of the supervision missions, and the efforts made
to increase dialogue at all levels of the Government are elements that contributed to reinforcing
the partnership between the DRCâs Government and the World Bank\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Moderately Satisfactory
88\. A consistent finding from the evaluation was the high level of commitment from the
Government to the objectives of the project, its components, and subcomponents\. This can be
measured by the fact that the performance of the beneficiary units increased and that most
objectives were achieved\. However, the Governmentâs performance is rated Moderately
Satisfactory because of the inability to complete the testing of the integrated HR system and the
acquisition of the IFMIS, mainly due to a lack of commitment from the Governmentâs side\. This
lack of commitment stemmed from a political issue (certain reforms are not understood the same
22
way by institutional players supposed to facilitate their preparation and implementation, thus
impeding the participation of officials and members of political cabinets in evaluation committees)
which resulted in substantial delays in procurement processes\.
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
89\. One of the recognized positive elements was the performance of the coordinating unit, both
at the central and subnational levels\. At the central level, the coordinating unit collaborated
effectively with beneficiary entities for the implementation of activities and performed its fiduciary
role satisfactorily\. In addition, the fact that the coordinating units were used by the governor as an
advisor in the four pilot provinces underlies the effectiveness of its performance\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
90\. Overall, the coordinating unit and the beneficiary agencies performed effectively in a very
challenging environment that was marked by political instability\. However, considering the
noncompletion of the IFMIS system, the overall borrower performance is rated Moderately
Satisfactory\.
6\. Lessons Learned
91\. In a fragile context, to ensure ownership and relevance, a governance project needs
to participate in the process of consensus building, as well as build strong relationships with
all levels of Government\. As the Government took power after the 2006 elections, its mandate
was to build a more stable and transparent State, the project facilitated a consensus building process
among Government officials on how to build such a stable and transparent State, by devoting some
resources for workshops\. This ensured that the project remained relevant and fully aligned to
Government objectives\. In addition, the World Bank team concentrated much effort on building
strong relationships with all levels of government by maintaining a fluid communication with them,
ensuring they understood the objectives of the project, how these objectives contributed to the goal
of the new Government, and thus, allowing for the delivery of the activities under the project\.
92\. In a context of ever changing Government officials and priorities, a project needs to
remain flexible and adaptable in order to remain relevant, as well as strong implementation
arrangements\. It is important to periodically perform in-depth reviews, such as MTRs (the World
Bank Team performed two such reviews), as well as more regular supervision to make appropriate
adjustments to project activities, and use appropriate avenues such as restructuring (the project
was restructured once to allow for additional activities to be included in the project)\. Given the
high turnover of Government officials, both at the central and provincial level, it is important to
put in place strong implementation arrangements to keep the institutional memory (for example,
in the provinces, the implementation units set up for the project, although may seem costly, were
in fact essential as they became advisors for new elected officials ensuring continuity in project
implementation)\.
93\. Supporting delegation, devolution, or decentralization in a weak capacity context can
provide greater accountability and better results in governance\. In a context of weak human
23
and institutional capacity, the approach taken to strengthen central systems, while laying the
foundation of the system at the decentralized level ensured sustained client capacity building and
provided for better results at the decentralized level\. For example, by giving the provinces more
autonomy in the collection of taxes and at the same time strengthening the provincial tax collection
agencies, local tax collection has seen an increase of 250 percent from 2009 to 2010 as the project
put in place tax collection administrations in the four pilot provinces, and continued to increase
year over year until the end of the project\. In addition, with the assistance provided by the project
on the utilization of the resources (with the implementation of the âchaine de la depenseâ and
participatory budgeting), provinces became more accountable and were able to provide better
services to the population\. Thus, in the presence of significant disparity between the central and
decentralized levels, even in cases of weak capacity, such an approach enables the pooling of
available resources and ensures a minimum functioning of public services and greater
accountability in the poorest localities\.
94\. Designing a project that is anchored on previous analytical work greatly facilitates
implementation\. Many of the activities planned at the outset of the project came from the
extensive analytical work that was done before project preparation (PEFA/PER 2008, which sets
out a comprehensive reform agenda on PFM reforms; the programmatic series of Policy Notes on
Decentralization, jointly designed with the EU, United Nations Development Programme, and the
Belgium Technical Cooperation; the Public Sector Wage Reform (2008); the HIPC/Africa Action
Plan (2004); the Country Financial Accountability Assessment (2005); the Institutional and
Governance Review (2005); the Country Procurement Issues Paper (2005); and sector-related
analytical work with governance aspects, notably the Governance Note produced as part of the
preparation of the Education Sector Reform Project and the Mining Sector Study)\. This provided
a path to organize the reform dialogue with the Government responding to its specific needs in a
coordinated manner\.
95\. Designing a project that fits and supports the countryâs reform agenda pays off in the
medium term\. Design might take longer than usual and additional efforts are needed to find
consensus with the Government and other international financial institutions supporting the
country, to align the projectâs content with the countryâs reform agenda\. This is all the more
relevant when the implementation periods on average are long and outlive different political
administrations\. This project did just that by assisting the Government to put in place the required
regulatory framework following the reform agenda, then the establishment of entities to carry out
the new framework (for example the DGCMP, ARMP, and ministerial procurement units for
procurement, COREF for public finance reforms, tax collection agencies in subnational
governments, and procurement units in subnational governments)\. These efforts contributed to
greater ownership and stronger partnership between the country and the World Bank, as well as
other international financial institutions\. It also translated into a project whose PDO and
components were not modified over time\. Finally, it enhanced the ability of the team and the
project to remain flexible/adaptable by responding to new Government priorities and financing
new and urgent activities that may not have been planned at the outset\.
96\. Interinstitutional collaboration and civil society participation are key for the
successful implementation of governance reform programs\. Strengthening governance, at the
central and decentralized levels, can only be achieved as a government effort, with the
collaboration of all sectors and joint support from international financial institutions\. In efforts to
24
strengthen governance at the decentralized level, strengthening the MIDS was crucial\. However,
in the case of the project, it did not end there, as the project promoted coordination with and
strengthening of the MEF, MOB, Planning, and Public Service, and other agencies involved in the
governance reform process such as COREF and the Public Administration Reform Technical
Committee (Comite Technique pour la Reforme de lâAdministration Publique)\. The collaboration
was an integral part of the successes and the progress reached during the life of the project\. In
addition, strong cooperation between development organizations such as the World Bank, DFID,
AfDB, United Nations Development Programme, and the EU was also a factor of success,
especially in the context where leadership and donor coordination by the Government was
inadequate\. The GCEP project illustrated how cooperation under a win-win framework
emphasized the adding up of the comparative advantages of these entities, especially in a context
of decentralization, where one donor may not be able to do everything\. Finally, greater
participation of the civil society in the governance reform program would lead to an even better
result, particularly at the decentralized level\.
97\. Considering the behavioral element of reforms and implementing a national
communication campaign to build awareness when new or transformational strategies are
implemented is crucial to facilitate implementation\. To ensure that new procedures, systems,
or institutions are utilized, there is a need to ensure that the project takes into account the behavioral
aspect of change, as well as build awareness of the new or transformational elements of the reform\.
An example could be to offer economic incentives for the utilization of new procedures, systems,
or institutions created by new reforms or tie activities of the project to prior actions, or output of
budget support, or an agreed upon economic framework\.
98\. Considering power elements when providing support to IT elements in subnational
governments can ensure sustainable results\. For example, the supply of electricity in many
provinces is unpredictable, affecting the efficient use of computerized systems\. One option is to
consider the purchase of alternative energy sources (such as solar panels) when making
investments in computerized systems in subnational governments\. In fact, given the early
experience in the provinces, the GCEP project applied this lesson in its intervention in the Kassai
province by exploiting solar energy for the implementation of the âchaine de la depenseâ\. Similarly,
when making investments in computerized systems, it is important to consider maintenance of
those systems for sustainability purposes\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
Not applicable
(b) Cofinanciers
Not applicable(c) Other partners and stakeholders
Not applicable
25
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in US$, millions equivalent)
Total
Actual/
Appraisal Additional
Latest Percentage
Components Estimate (US$, Financing (US$, Total
Estimate (US$, of Appraisal
millions) millions)
millions)
Component 1: Strengthening PFM
and PSM at Central Government 21\.28 35\.16 56\.44 38\.08 67\.5
Level
Component 2: Building PFM and
20\.73 13\.43 34\.16 41\.04 120\.1
PSM Systems at Provincial Level
Component 3: Governance Reform
7\.99 18\.36 26\.35 29\.89 113\.4
Implementation Capacity
Actual/Latest Estimate (US$,
50\.00 66\.95 116\.95 109\.02 93\.2
millions)
Physical contingencies 0\.00 â â 0\.00 0\.00
Price contingencies 0\.00 â â 0\.00 0\.00
Total Project Costs 0\.00 â â 0\.00
Front-end fee Project Preparation â
0\.00 â 0\.00 0\.00
Fund
Front-end fee IBRD 0\.00 â â 0\.00 0\.00
Total Financing Required 50\.00 66\.95 116\.95 109\.02
(b) Financing
Appraisal Actual/Latest
Type of Percentage of
Source of Funds Estimate Estimate
Cofinancing Appraisal
(US$, millions) (US$, millions)
Borrower NA 0\.00 0\.00 0\.00
IDA Grant NA 116\.95 109\.02 93\.2%
(c) Approved Project Components, Subcomponents and Activities
Component 1: Strengthening PFM and PSM at Central Government Level (US$21\.28
million)
1\.1 Supporting the MIDS in designing and implementing the decentralization process
ï Key decentralization laws and decrees
ï Legal instruments to roll out decentralization including to the split of the provinces
foreseen in 2010
ï Training and dissemination of legislation and policies
26
1\.2 Supporting the MOB and Ministry of Public Service in implementing Public Sector Wage
Reforms, including the design of an integrated personnel and payroll management system
ï Amendments to public service legislation
ï Design and implementation of public sector payroll and pension reform
ï Upgrade and rollout of the automated payroll system, creation of a civil service
register and assuring their effective linkage
ï Comprehensive training needs assessment
ï Support to the restructuring and adaptation of six selected line ministries most affected
by the decentralization process
1\.3 Strengthening of public financial management
ï Reform and reinforcement of the legal and institutional framework for budget
management
ï Design and implementation of a Medium-term Expenditure Framework, including
capacity-building support to line ministries and support for change management
ï Reform of tax policy and administration
ï System support for PFM through the implementation of an integrated system
Component 2: Building PFM and PSM Systems at Provincial Level (US$20\.72 million)
2\.1 PFM systems at the provincial level
ï Provincial budget procedures
ï Provincial-level tax and fiscal agencies
ï System support to PFM
2\.2 Personnel management and payroll systems at the provincial level
ï Development of model organizational structures at the provincial level, including
accountability arrangements
ï Design and installation of a simplified database system for provincial public service,
with a link to the central systems and roll out of the automated pay system to the
provinces
ï Implementation of a comprehensive training program in HRM and PFM
27
2\.3 Capacity building for regional economic planning
ï Capacity building for the development of regional plans and evaluation of project
proposals
2\.4 Monitoring indicators
ï Design and monitor performance indicators to track provincial government
performance
2\.5 Capacity development facility
ï Financing under the capacity development facility for proposals submitted by
provincial institutions relating to the core objectives of the project
2\.6 Rollout strategy and monitoring
ï Rollout strategy which will serve as a framework for donor coordination on capacity
development activities at the provincial level
ï Information and practice-sharing activities between provinces
Component 3: Governance Reform Implementation Capacity (US$7\.98 million)
ï Building project implementation capacity
ï Monitoring and evaluation
ï Building demand for governance reforms
28
Annex 2\. Achievements by Objective and Outputs by Component
Table 2\. 1\. Achievement by Objective
Objective 1 : Enhance transparency in public finance at central level
Rating: Substantial (achieved or nearly achieved)
PDO Outcome Actual Statu Data
Baseline Target Comments
Indicator (2015) s Source
1\. Integrated Budget Budget Budget Achie MOB and ï Report published on
Budget execution execution execution ved MEF the MOB website on a
Execution reports are reports reports are websites at monthly basis in 2015
Reports are produced provide regularly central and ï February 2016 series
published on the but are of reliable published on provincial of meetings on
Ministry of low quality information the MOB and levels governance and
Budget and the and are not and can be MEF transparence in the
Ministry of made readily websites at DRC budget execution
Finance websites publicly obtained central level reports present more
on a regular available from the comprehensive
basis at central MOB and information allowing
level MEF for better analysis
website at ï In addition to
central transparency in budget
level information, there is
greater transparency in
procurement with
procurement
information published
periodically on the
Procurement Authority
website
ï According to the 2012
PEFA exercise
(conducted by the
World Bank and
DFID, but not
published) the rating
for PI-10, public
access to key fiscal
information increased
from âDâ in 2008 to
âCâ in 2012 with
notable efforts to
provide key fiscal
information to the
public
ï A self-evaluation
performed in 2015
further rating PI-10 âBâ
with the publication of
more reports and more
comprehensive
information
Objective 2: Enhance transparency in human resource management at central level
Rating: Modest (partially achieved)
29
PDO Outcome Actual Statu Data
Baseline Target Comments
Indicator (2015) s Source
No indicator ï No indicator
ï Recruitment for civil
service personnel now
follows a more
transparent process
which includes an
exam open to the
public, whose results
are published in the
media\. The last
recruitment exam took
place in September
2015 with 4824
participants in
Kinshasa and
provinces
ï Adoption of
standardized
organization charts to
help streamline the
structures of the
ministries and
institutions
ï Computerization of the
HR system
ï Use of electronic
transfers for payroll
resulted in more
transparency and
control over the list of
civil servants receiving
salaries
Objective 3: Enhance transparency in public finance at subnational level
Rating: Substantial (achieved or nearly achieved)
PDO Outcome Actual Statu Data
Baseline Target Comments
Indicator (2015) s Source
30
1\. Integrated Budget Budget Budget Achie ï Report published on
MOB and
Budget execution execution execution ved MEF the MOB website on a
Execution reports are reports reports are websites at
semester basis in 2015
reports are produced provide regularly ï Support to the
central and
published on the but are of reliable published on provincial
assemblies in the four
Ministry of low quality information the MOB and levelspilot provinces yielded
Budget and the and are not and can be MEF better transparency (in
Ministry of made readily websites at Sud-Kivu for example,
Finance websites publicly obtained the a television channel
on a regular available from the subnational was created to make
basis at MOB and level public the meetings of
subnational level MEF the assemblies,
website at including budget
the discussions)
subnational ï Implementation and
level utilization of a âchaine
de la depenseâ in
provinces to allow for
more efficient and
transparent use of
resources
ï Participatory budget
implemented in the
four pilot provinces
helped enhance
citizen's participation
in the budget process
and increased
transparency over the
use of resources
Objective 4: Enhance transparency in human resource management at subnational level
Rating: Modest (partially achieved)
PDO Outcome Actual Statu Data
Baseline Target Comments
Indicator (2015) s Source
No indicator ï No indicator
ï The project contributed
to providing the four
pilot provinces with
databases following
the 2012 biometric
census
Objective 5: Enhance efficiency in public finance at central level
Rating: Substantial (Achieved or nearly achieved)
PDO Outcome Actual Statu Data
Baseline Target Comments
Indicator (2015) s Source
31
1\. Percentage of 30% Less than 7% Achie Budget ï There is a better clarity
expenditures 10% ved execution of procedures to apply
handled outside report with the 2010 Manual
of the âchaine de on the âchaine de
la depenseâ is depenseâ available
lower than 10% online from the MEF
at the central level
ï The 2012 PEFA
exercise recognizes the
improvements made
through the utilization
of the âchaine de la
depenseâ at the central
level by rating PI-20,
effectiveness of
internal controls for
non-salary
expenditures, from âDâ
in 2008 to âCâ in 2012
ï The implementation of
the âchaine de la
depenseâ at the central
level and the
improvements made to
the information system
enabled an
improvement in the
expenditures handled
outside normal
procedures; however,
an average of 10% of
commitments still
continue to be handled
outside normal
procedures
ï A reduction in
expenditures handled
outside normal
procedures from 26%
in 2009 to 7% in 2015
2\. Procurement 30% in 2011 80% 80% Achie ARMP ï Procurement processes
code is effectively ved report are now reviewed by
applied the Procurement
throughout the Directorate within the
territory of the MEF
DRC and ï 80% of contracts over
competitive US$200,000 in 2015
bidding is followed a competitive
applied in at process
least 80% of all ï Percentage of direct
procurement contracts have
processes with a diminished from 43%
value exceeding in 2013 to 20% in 2015
US$200,000 ï The 2012 PEFA
exercise recognized the
32
improvements made in
the procurement area
by improving the
rating of PI-19,
competition value for
money and controls in
procurement, from âDâ
in 2008 to a âBâ in
2012
ï The regulatory
environment for
procurement was
considerably improved
since 2010 with the
creation and
operationalization of
the DGCMP and
ARMP\.
3\. Annual Tax 10% 6% Partia Budget ï Tax collection has
increase in tax collection is increase lly execution increased year to year
revenue at CFAF 175\.5 year to year achie report from CDFF 1,427,534
central level billion in ved million in 2009 to
greater than 2006 CDFF 3,894,202
10% million in 2015, with a
large increase year to
year from 2009 to
2012 and a leveling of
the increase from 2012
to 2015
ï In addition, tax
budgeting is becoming
more accurate from
123% of realized taxes
in 2009 to 106% in
2015
4\. The difference 21% in 2006 Less than 41% Not Budget ï Even though the
between 5% achie execution difference between
budgeted and ved report budgeted and executed
executed expenditures at the
expenditures central level is still
decreases from high (41% in 2015),
21% in 2006 to the trend, for example,
less than 10% of shows an improvement
total from 65% in 2010;
expenditures at ï Even though the rating
the central level for PI-1, expenditure
out-turn compared to
original approved
budget, remains the
same at âDâ from 2008
to 2012 and the self-
evaluation in 2015,
there is an evolution
from 2008 to 2015
(PEFA 2008 included
33
2004: 70%, 2005:
120\.9% and 2006:
116\.1%; PEFA 2012
included 2009: 16\.3%,
2010: 34% and 2011:
29%; and self-
evaluation 2015
included 2013: 28\.2%
and 2014: 21\.5%)
ï PFM reforms still
under implementation
aim to refine the
budgeting process and
improve accuracy of
budgeting\.
Objective 6: Enhance efficiency in human resource management at central level
Rating: Substantial (achieved or nearly achieved)
PDO Outcome Statu Data
Baseline Target Actual Comments
Indicator s Source
1\. At least 70% 28% in 2008 70% 97\.70% Achie Payroll ï The single file payroll
of civil servants ved report introduced by the PTS
at central level reform in 2008 to
paid through a allow for transparency
reformed and and a better control of
computerized the wage bill is still
payroll system under constitution
ï The independent final
evaluation report
mentions that between
80% and 85% of
bonuses and
allowances have been
set in the system but
makes no mention of
the actual use of the
system for the payment
of these bonuses and
allowances
Objective 7: Enhance efficiency in public finance at subnational level
Rating: Substantial (achieved or nearly achieved)
PDO Outcome Statu Data
Baseline Target Actual Comments
Indicator s Source
1\. The difference 31% Less than 63% Not Provincial ï As for the central level,
between 10% achie budget the difference between
budgeted and ved execution budgeted and executed
real expenditures report expenditures at the
does not exceed provincial level is still
10% of total high (63% in 2015)
expenditures at ï PFM reforms still
the provincial under implementation
level aim to refine the
budgeting process and
improve accuracy of
budgeting
34
2\. Annual 28% in 2009 Annual 39% Achie Provincial ï Tax revenue and
increase in tax increase ved budget collection has
revenues at execution increased in the
provincial level report provinces (in the four
pilots) from 250% in
2010 (compared to
2009) as the project
was establishing tax
collection
administrations in the
provinces and
continued to improve
until 2015
ï In the province of Sud-
Kivu for example, tax
collection increased
from CDF 4,027
million in 2010 to CDF
5,821 million in 2015
Objective 8: Enhance efficiency in human resource management at subnational level
Rating: Substantial (achieved or nearly achieved)
PDO Outcome Statu Data
Baseline Target Actual Comments
Indicator s Source
1\. Regular Salary 60% 100% Achie Provincial ï Currently 100% of
payment of at payments ved budget public servants in the
least 60% of are regularly execution pilot provinces are paid
provincial level delayed and report by the reformed and
civil servant many staff computerized system\.
salaries are not paid However the staff of
the decentralized
sectors are not
transferred yet and
continue to be paid by
the central government
2\. At least 60% No PSM and 60% 97\.74% Achie Budget ï 100% of civil servants
of public payroll ved execution are paid according to
servants in pilot management report the budget report;
provinces are system however, this
paid via a exists at the percentage remains
reformed and provincial impossible to verify
computerized level because the number of
payroll system civil servants and
agents working at the
subnational level is
still unknown
Objective 9: Establish and consolidate an equitable resource-sharing mechanism between central and
subnational government
Rating: Substantial (achieved or nearly achieved)
PDO Outcome Statu Data
Baseline Target Actual Comments
Indicator s Source
35
At least 35% of Between 8% 35% 46% Achie Budget ï The project helped
domestic revenue and 10% in ved Execution establish the formula
transferred January Reports for resource sharing
regularly to sub- 2008 between the central
national and provincial
government governments which is
still in use and has
lessened tension
between the central
and provincial
governments
ï Transfer of resources
to the provincial
governments has
undoubtedly increased
since 2009
ï In the 2012 PEFA
exercise, the rating for
PI-8, transparency of
intergovernmental
fiscal relations
recognized the
improvements in the
relations between the
central and provincial
governments by rating
the indicator a âDâ in
2008 and a âD+â in
2012; this increase in
the rating was mostly
due to the allocation of
resources between the
central and provincial
governments and better
communication
between the central
and provincial
governments
Table 2\. 2\. Output by Component
Project Achieved/Not Explanation if Not
Output at Completion PDO
Components/Activities Achieved Achieved
Component 1: Strengthening PFM and PSM at Central Government Level (US$56\. 44 millions)
Subcomponent 1\.1: Supporting the MIDS in designing and implementing the decentralization
process
1\. Key decentralization Studies on the Partially Critical activities which 3 ,4, 7, 8, 9
laws and decrees development of achieved remain incomplete are
decentralization laws and the following: Adoption
decrees; studies on of the Law on the Statute
budgetary decentralization of Central, Provincial
and territorial and Local Public
decentralization; several Service, adoption of a
laws and decrees adopted Law on the National
Equalization Fund,
36
Project Achieved/Not Explanation if Not
Output at Completion PDO
Components/Activities Achieved Achieved
adoption of a bill for
clarification of
concurrent jurisdiction
between the central
government and the
provinces\.
2\. Legal instruments to Outreach campaign on Achieved â 3, 4, 7, 8
roll out decentralization legal instruments
3\. Training and Experience sharing and Achieved â 3, 4, 7, 8
dissemination of training of roughly 20
legislation and policies staff of the Ministry of
Decentralization
Subcomponent 1\.2: Supporting the Ministries of Budget and Public Service in implementing
public sector wage reform, including the design of an integrated payroll management system
4\. Amendments to public Production of legal texts Achieved
service legislation and application decrees on
public service reform â 2
5\. Design and Studies on pay reform; Achieved
implementation of public Institutional audits for the
sector payroll and establishment of standard
pension reform directions in the ministries â 2
and other public
institutions
6\. Upgrade and rollout of The PTS was Partially The critical activity
the automated payroll implemented; acquisition- achieved which remains
system with civil service HRM payroll software; incomplete is the
register pending integrated HR and implementation of the 6
payroll system integrated HR and
payroll management
system\.
7\. Training needs 100 IT professionals Achieved â 6
assessment trained in system
development
8\. Support to the Acquisition of furniture Achieved â 6
restructuring of six line and hardware for the
ministries affected by the MEF, Ministry of
decentralization process Decentralization, MOB,
and CTAD; Rehabilitation
of Buildings UADS;
development of a website
for the MEF; studies on
the interconnection of
governmentâs websites;
recruitment of 540 agents
for the Ministry of
Agriculture
37
Project Achieved/Not Explanation if Not
Output at Completion PDO
Components/Activities Achieved Achieved
9\. Implementation of Development of a Achieved â 6
biometric staff database of the
identification system decentralized sectorâs civil
servants
Subcomponent 1\.3: Strengthening of Public Financial Management
10\. Reinforcement of Production and Achieved â 1
legal and institutional dissemination of the
framework for budget organic law on public
management finance
11\. Implementation of a Development of the Achieved â 5
Medium-term National Strategic
Expenditure Framework Development Plan 2017â
2021
12\. Reform of tax policy Support for tax reform Achieved â 5
and administration (value added tax and
several laws)
13\. Implementation of Assistance for the Partially Integrated financial 5
IFMIS implementation of the achieved management software
computerization of public was not acquired; Terms
finance; of Reference were
IT support to Materials to prepared through the
improve the computerized project
system of execution of
public expenditure
Subcomponent 1\.4: Procurement reforms
14\. Procurement reforms About 1000 workers Achieved
trained in procurement;
furniture and IT
equipment acquisition for
â 5
ARMP; Audit of Public
Procurement (FY2011);
adoption of the Law on
Procurement
Component 2: Building PFM and PSM Systems at Provincial Level (US$34\.16 millions)
Subcomponent 2\.1: Public Financial Management Systems at Provincial Level
15\. Provincial budget Establishment of Achieved
procedures minimum standards of
â 3
PFM; Several technical
assistances in PFM
16\. Provincial-level tax At least 750 agents Achieved
and fiscal agencies recruited and trained in
â 7
revenue mobilization
techniques;
38
Project Achieved/Not Explanation if Not
Output at Completion PDO
Components/Activities Achieved Achieved
rehabilitation of buildings
for the provincial revenues
authorities; office
rehabilitation of the
provincial assemblies;
studies on provincial
revenue collection system;
Elaboration of a directory
of taxpayers
17\. System support to Installation of âChaine de Achieved
public finance la dépenseâ in four pilot
management provinces; at least 600 â 7
agents trained for the use
of âChaine de la dépenseâ
Subcomponent 2\.2: Personnel management and payroll systems at provincial level
18\. Development of Review of legal and Partially Legal texts have been
organizational structures organizational framework achieved prepared but are still
at provincial level, in provinces and awaiting adoption by the 4
including accountability preparation of legal texts parliament
arrangements
19\. Implementation of Census of provincial staff Achieved The decentralized staff
database system for and creation of a database continue to be monitored
provincial public service for provincial at the central level 4
and automated pay
system
20\. Implementation of Basic training in IT, Achieved
training programs in training in revenue
HRM and PFM mobilization techniques,
public finance and
â 7, 8
procurement;
experience sharing
between the provincial
assemblies
21\. Implementation of Biometric staff Achieved
biometric staff identification conducted in â 8
identification system 2012
Subcomponent 2\.3: Capacity building for regional economic planning
22\. Capacity building for Training provided on Achieved
regional development participatory budgeting,
planning leadership, and so on;
technical assistance â 7
provided for the
preparation of local
development plans
Subcomponent 2\.4: Monitoring indicators
23\. Performance Establishment of Achieved
indicators to track performance indicators to
provincial government track provincial â 7, 8
performance government performance
and training
Subcomponent 2\.5: Capacity development facility
39
Project Achieved/Not Explanation if Not
Output at Completion PDO
Components/Activities Achieved Achieved
24\. Capacity Implementation of Achieved
development facility for investment projects of
provincial initiatives public-private partnership
between provinces and
private investors;
supporting budgetary
conferences; supporting
provincial assemblies
open houses events for â 7, 8
civil society; training in
participatory budget for
decentralized territorial
entities (entités
territoriales
décentralisées);
capacity building in
leadership
Subcomponent 2\.6: Roll out strategy and monitoring
25\. Roll out strategy and Communication campaign Achieved
monitoring for experience sharing â 7, 8
among the provinces
26\. Information and Experience sharing Achieved
practice sharing among the provincial
â 7, 8
activities between assemblies
provinces
Component 3: Governance Reform Implementation Capacity (US$26\. 35 millions)
27\. Implementation Furniture, equipment, and Achieved
capacity in the Cellule supplies and capacity
pour la Decentralization building for PCU and the â 1, 9
CPD
28\. Capacity building in Support to governance for Achieved
M&E for the the presidency
Governance Department (Governance Department)
â 1, 9
under the administration
of the president
29\. Strengthening Support to governance for Achieved
implementation capacity the prime minister
on the Governance
â 1, 3, 9
Compact in the Prime
Minister's Office
30\. Design and No outcome listed
implementation support
for a government
â â
communication policy
40
Project Achieved/Not Explanation if Not
Output at Completion PDO
Components/Activities Achieved Achieved
31\. Balanced scorecard No outcome listed
surveys (3 over the
duration of the project)
â â
41
Annex 3\. Economic and Financial Analysis
1\. The impact on GDP is computed as the value of disbursement per year assuming that government consumption increases by that
disbursement value, therefore increasing GDP by the same amount (%) and there are no other positive externalities\. Under the
assumption that the project has a positive impact on GDP of 0\.035 percent on average over its life cycle and beyond (30 years total,
which is the standard for World Bank loans to IBRD or IDA countries, that is, 2008â2038), using a 11 percent discount rate, which is
the midpoint between 10 percent and 12 percent usually used in World Bank projectsâ appraisal, gives the following results:
Period 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017â2038
Financial
flows (641,752) (5,769,435) (10,194,447) (20,170,179) (10,566,804) (8,312,696) (25,188,537) (5,396,943) (7,688,070) 15,696,078
(US$)
NPV â â â â â â
(14,144,788) â â â
(US$)
ERR 9% â â â â â â â â â
Note: NPV = Net Present Value
2\. Now assuming that after the project is completed (2016), GDP growth is at 10 percent and 11 percent in 2017 and 2018
respectively (as is currently forecast), then at 7\.4 percent until 2038, the project would yield the following result:
Period 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017â2038
Financia
l flows (641,752) (5,769,435) (10,194,447) (20,170,179) (10,566,804) (8,312,696) (25,188,537) (5,396,943) (7,688,070) 5,003,788,649
(US$)
NPV â â â â â â â â â
11,628,100,395
(US$)
ERR 91% â â â â â â â â â
42
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team Members
Responsibility/
Names Title Unit
Specialty
Lending
Maurice Adoni Senior Procurement Specialist GGO07 Procurement
Monthe Bienvenu Biyoudi Senior Operations Officer AFCW2 Operations
Jean Charles Amon Kra Sr Financial Management Specialist GGO13 Financial Management
AFTP3 -
Emilie Ayaza Mushobekwa Economist Economic Analysis
HIS
Herimpamonjy Mavoarisoa
Operations Analyst GGO13 Operations
Ranaivoarivelo
AFTP1 -
Dieudonne Randriamanampisoa Senior Economist Economic Analysis
HIS
Janette Uhlmann Senior Program Officer MNCMI Operations
Antonius Verheijen Country Manager ECCYU Operations
Supervision/ICR
Bourama Diaite Senior Procurement Specialist GGO07 Procurement
Jean Charles Amon Kra Sr Financial Management Specialist GGO13 Financial Management
Philippe Mahele Liwoke Senior Procurement Specialist GGODR Procurement
AFTME -
Gaspy Gedeon Muanda E T Consultant Operations
HIS
Jean Mabi Mulumba Senior Public Sector Specialist GGO25 TTL
Evariste Niyonkuru Consultant GGO13 Governance
Thomas Jeffrey Ramin Senior Operations Officer DFGPE Operations
AFTP1 -
Dieudonne Randriamanampisoa Senior Economist Economic Analysis
HIS
Arleen Cannata Seed Senior ICT Policy Specialist GTI11 ICT
(b) Staff Time and Cost
Staff Time and Cost (World Bank Budget Only)
Stage of Project Cycle US$, thousands (including
No\. of Staff Weeks
travel and consultant costs)
Lending
FY07 123\.10
FY08 337\.87
Total: 460\.97
Supervision/ICR
FY07 0\.00
FY08 0\.00
FY09 290\.07
FY10 222\.46
FY11 148\.98
FY12 83\.54
FY13 186\.56
43
FY14 120\.45
FY15 72\.04
FY16 146\.91
FY17 12\.09
Total: 1,283\.10
44
Annex 5\. Beneficiary Survey Results
Not applicable
45
Annex 6\. Stakeholder Workshop Report and Results
Not applicable
46
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
1\. The evaluation of the DRC - Enhancing Governance Capacity Project was undertaken over
the month of February 2016 by an independent evaluator\. The project was originally approved by
the Board on April 22, 2008 with a closing date of February 28, 2013 and was extended until
February 28, 2016 by the additional financing approved on May 9, 2013\. The project was
structured in three components whose activities were targeting the performance indicators of the
log frame of the financial agreement approved on June 8, 2013\.
2\. Over a total funding estimated at US$116\.95 million, the project has disbursed US$102\.33
million, approximately 87\.50 percent\.
3\. Component 1 was dedicated to strengthening PFM and PSM at the central government
level\. At the end of the project, most of the activities planned were completed\. Such activities as
the adoption of key decentralization laws, the implementation of the integrated HR and payroll
management system did not happen because of political reasons (Legal texts prepared are still
awaiting adoption by parliament) and administrative/procedural delays in contracting\.
4\. Component 2 was aimed at building public sector and financial management systems at
the provincial level, based on 12 planned activities\. At the end of the project, 10 activities were
fully completed and 2 activities, the development of organizational structures at the provincial
level and implementation of database system for provincial public service and automated pay
system, were partially achieved\.
5\. With regard to Component 3 on enhancing governance reform implementation capacity,
over five planned activities, three were fully achieved\. Design and implementation support for a
government communication policy did not happen, nor did the three balanced scorecard surveys
planned over the duration of the project\.
6\. On the relevance\. The design stage the DRC-Enhancing Governance Capacity Project was
developed on the basis of identified needs and priorities of the Poverty Reduction Strategy Paper
and the Country Strategy Paper 2013â2016 to improve governance\. The project formulation
considered the objectives, policies, and strategies of the Governmentâs guiding documents defining
the need to strengthen governance with the backdrop of improved transparency in public finance
and the public sector\. The activities were also properly designed to support the achievement of the
PDOs\.
7\. On the effectiveness\. The DRC-Enhancing Governance Capacity Project has delivered
substantial non-quantifiable benefits of improving governance capacity at the central and
subnational level\. The cost-effectiveness of the project relates to its relevance to enable the country
to have better trained and highly capable civil servants, both at the central and subnational level\.
8\. On the impact\. Significant positive impact of the project has been noticed through its role
in capacity building played by the World Bank experts\. These made a real and lasting capacity
impact for the DRCâs inadequate public service\. The supervision missions conducted, with the
support of experts have created among civil servants, an incentive to implement best practices and
develop new initiatives to promote transparency and good governance\.
47
9\. The evaluation noted that the project has played an important role in supporting capacity
building and improving governance in the DRC\. These results, reflect efforts made by the PIU,
and implementing agencies and their effective involvement despite the difficult implementation
environment\. In effect, the Government was supposed to exercise its oversight through the steering
committee meetings; however, meetings were held only sporadically\. Overall, only 33 committee
meetings were held, out of the initially planned 140 meetings, throughout the period of
implementation of the project at central level and in the four provinces\. In addition, the few
committee meetings failed to address the project's strategic orientation issues\.
10\. Furthermore, frequent changes of the head of key implementing ministries and unstable
provincial governments have contributed to slow down the implementation of some activities; with
new officials continuously reconsidering decisions made by their predecessors\.
11\. The PIU (36 staff members) takes credit for the sound implementation arrangements that
contributed to the good results\. The creation of local coordinating entities in the four provinces to
coordinate the activities of the project and ensure monitoring, reflects the achievements at the
subnational level\. Effective coordination, timely funding of activities; adoption of annual work
plans and budgets; and submission of progress indicators echo the PIUâs effective performance in
project coordination\.
12\. IDA performance was characterized by multiple supports including joint (IDA-
Government) supervision missions for harmonious implementation\. These supervision missions
conducted, with the support of experts have helped to develop transparency and good governance
in PFM and HRM\.
48
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
Not applicable
49
Annex 9\. List of Supporting Documents
Loi N 08/012 portant principes fondamentaux relatifs à la libre administration des provinces
(July 31, 2008) RDC
Loi N 10/010 relative aux marches publics (April 27, 2010) RDC
Analyse de la situation administrative et financière et de la livraison des services publics des
entités territoriales décentralisées (ETDs) (February 28, 2011) World Bank-USAID-EU
Plan stratégique de réforme des finances publiques (March 2010) RDC
Evaluation finale indépendante du projet PRCG (February 2016) RDC
Mesure de la performance de la gestion des finances publiques en RDC, selon la méthodologie
PEFA (March 2008) EU
Mesure de la performance de la gestion des finances publiques en RDC, selon la méthodologie
PEFA (2012) World Bank-DFID
Exercice dâauto évaluation de la gestion des finances publiques de la RDC, selon la
méthodologie PEFA (2015) COREF/RDC
Rapport annuel PRCG (2014) RDC
Evolution des dossiers des marches examinés a la DGCMO suivant le mode (2016) RDC
50
MAP
51 | REVIEW |
P000198 | Document de
LA BANQUE MONDIALE
POUR USAGE OFFICIEL
Rapport No\. 16095
REPUBLIQUE DU BURUNDI
RAPPORT DE FIN D'EXECUTION
PROJET DE DEVELOPPEMENT DU SECTEUR DE L' EDUCATION
(Crédit 1881 BU)
ler Novembre 1996
Direction des opérations pour le Burundi
Bureau régional Afrique
Le présent document fait l'objet d'une distribution restreinte et ne peut être utilisé par ses destinataires
que dans l'exercice de leurs fonctions officielles\. Son contenu ne peut être divulgué qu'avec
l'autorisation de la Banque mondiale\.
PARITES MONETAIRES
Unité monétaire = Franc Burundais (FBU)
(Moyenne en FBUJ pour I dollar E\.U\.)
1988 1989 1990 1991 1992 1993 1994 1995 1996
140 159 171 181 208 243 253 276 285*
A la date du 31 janvier 1996\.
POIDS ET MESURES
Système métrique
ANNEE SCOLAIRE DE L'EMPRUNTEUR
septembre - juin
ANNEE BUDGETAIRE DE L'EMPRUNTEUR
ler janvier - 31 décembre
ABREVIATIONS ET SIGLES
BEET Bureau d' Etudes de 1' Enseignement Technique
BEPES Bureau d' Etudes et des Progranmmes de 1' Enseignement Secondaire
BER Bureau d' Education Rurale
BPE Bureau des Projets Education
CCAP Comité de Coordination des Activités Pédagogiques
CRPD Centre Régional de Pédagogie et de Documentation
DCS Direction des Constructions Scolaires
DPE Direction de la Planification de 1' Education
EFI Ecole de Formation d' Instituteurs
MEBAA Ministère de l'Enseignement de Base et de l'Alphabétisation des Adultes
MEN Ministère de 1' Education Nationale
MESSRS Ministère de lEnseignement Secondaire, Supérieur et de la Recherche Scientifique
PDP Programme de Dépenses Publiques
PIP Programme d' Investissements Publics
PNUD Programme des Nations Unies pour le Développement
RPP Régie des Productions Pédagogiques
UNICEF Fonds des Nations Unies pour 1' Enfance
REPUBLIQUE DU BURUNDI
RAPPORT DE FIN D'EXECUTION
PROJET DE DEVELOPPEMENT DU SECTEUR DE L'EDUCATION
(CREDIT 1881-BU)
TABLE DES MATIERES
PREFACE \.i
RESUME DE L'EVALUATION \. iii
1\. EVALUATION DE L'EXECUTION DU PROJET \.1
A\. HISTORIQUE \.1
B\. DEFINITION ET EVALUATION DES OBJECTIFS \.4
C\. REALISATION DES OBJECTIFS \. \. \.5
D\. FACTEURS IMPORTANTS AYANT AFFECTE LE PROJET \. 13
E\. VIABILITE DES RESULTATS \.14
F\. PERFORMANCE DE LA BANQUE \. 15
G\. PERFORMANCE DE L'EMPRUNTEUR \. \. \. 16
H\. EVALUATION DES RESULTATS \. 17
1\. OPERATION FUTURE \. 18
J\. PRINCIPAUX ENSEIGNEMENTS \. 18
2\. DONNEES STATISTIQUES \. 20
TABLEAU 1: RESUME DES EVALUATIONS \. \. \. 20
TABLEAU 2: PRETS/CREDITS CONNEXES DE LA BANQUE \. 22
TABLEAU 3: CALENDRIER DU PROJET \. 23
TABLEAU 4: DECAISSEMENTS DU CREDIT: PREVISIONS ET MONTANTS EFFECTIFS \. 23
TABLEAU 5: INDICATEURS DE PERFORMANCE \. \.24
TABLEAU 6: INDICATEURS CLES DE L'OPERATION FUTURE \. 28
TABLEAU 7: ETUDES INCLUSES DANS LE PROJET \. 29
TABLEAU 8A: COUTS DU PROJET \. \. 30
TABLEAU 8B: FINANCEMENT DU PROJET \. \. 31
TABLEAU 9: COUTS ET AVANTAGES ECONOMIQUES \. 31
TABLEAU 10: RESPECT DES CLAUSES JURIDIQUES \. 32
TABLEAU 11: RESPECT DES DIRECTIVES DU MANUEL OPERATIONNEL \. 35
TABLEAU 12: RESSOURCES DE LA BANQUE - PERSONNEL \. \. \. 35
TABLEAU13: RESSOURCES DE LA BANQUE - iSSIONS \. 36
3\. ANNEXE \.37
RAPPORT DE SYNTHESE DU GOUVERNEMENT \.38
REPUBLIQUE DU BURUNDI
RAPPORT DE FIN D'EXECUTION
PROJET DE DEVELOPPEMENT DU SECTEUR DE L'EDUCATION
(Crédit 1881 BU)
PREFACE
1\. Le présent document est le rapport de fin d'exécution du Projet de Développement
du Secteur de l'Education au Burundi, pour lequel le Crédit 1881 BU, d'un montant de
31,5 millions de dollars, a été approuvé le 23 février 1988\. Le Crédit est entré en vigueur
le 20 juillet 1988\.
2\. Le Crédit a été clôturé le 31 décembre 1995 après prorogation à deux reprises de
la date initiale fixée au 30 juin 1994\. Le dernier décaissement du Crédit a eu lieu le 29 mai
1996 et le montant non décaissé (0,6 millions' de dollars EU, soit 1,9 % du Crédit) a été
annulé le 19 juin #996\. Le Programme des Nations Unies pour le Développement
(PNUD) et le Fonds des Nations Unies pour l'Enfance (UNICEF) ont participé au
financement du Projet respectivement pour 0,6 millions et 1,0 millions de dollars EU,
respectivement\.
3\. Ce rapport a été établi par M\. Magaye Gaye, Consultant, avec la contribution de
M\. Pamphile Kantabaze, Chargé des opérations (AF3BU)\. Il a été révisé par M\. Daniel
Viens, Chargé de projet (AFTH2) et fait l'objet d'observations de la part de MM\. David
Berk, Chef a\.i\. de la Division AFTH2 et Nils Tcheyan, Direction des Opérations pour le
Burundi\. Sa préparation a débuté avec la dernière mission de supervision de la Banque
qui a séjourné au Burundi du ler au 15 février 1995\. Une autre mission s'est rendue dans
le pays du 18 au 29 mars 1996 afin de collecter des données et de recueillir des
informations dans la perspective du présent rapport\. Celui-ci est basé sur le Rapport
d'Evaluation initial, l'Accord de Crédit de Développement, les rapports de supervision, le
rapport sur la Revue des Dépenses Publiques du 28 juin 1994, le rapport de la Banque sur
la Stratégie d'Assistance au Pays du 2 mai 1995, les correspondances entre la Banque et
l'Emprunteur et autres documents concernant le projet\. L'Emprunteur a préparé sa propre
évaluation du projet, qui a été reçue par la Banque le 29 mai 1996 (Annexe B)\.
l Un solde non décaissé de DTS 398,860 a été annulé et le crédit a été clôturé le 19 juin 1996\.
REPUBLIQUE DU BURUNDI
RAPPORT DE FIN D'EXECUTION
PROJET DE DEVELOPPEMENT DU SECTEUR DE L'EDUCATION
(Crédit 1881 BU)
RESUME DE L'EVALUATION
Situation macro-économique
1\. Le Burundi fait partie des pays les plus pauvres du monde avec un revenu par tête
d'habitant de 150 dollars en 1994\. Sa superficie est de 27\.834 km2 sur laquelle vit une population
de 5, 8 millions d'habitants augmentant aux taux de 3,1 % par an\. La densité au km2 est de 208
habitants et représente dix fois la moyenne de celle des pays africains au Sud du Sahara\.
L'agriculture contribue pour près de 50 % au Produit Intérieur Brut, 90 % à l'emploi et plus de 80
% aux recettes d'exportations\. Le secteur privé représentait seulement 16 % des investissements
bruts en capital au cours des 15 dernières années, principalement dans les petites exploitations
agricoles et le transport\. Le secteur public domine l'industrie manufacturière, l'énergie, les
infrastructures, le secteur financier et les autres activités du secteur moderne et contribue pour
plus de 50 % à l'emploi formel (40\.000 employés)\. Environ 80 % des investissements sont
financés sur ressources extérieures\.
Rôle de la Banque dans le secteur de l'éducation
2\. Les opérations de la Banque dans le secteur de l'éducation du Burundi ont commencé avec
le Premier Projet Education (Cr\. 679 BU signé le 29 avril 1977 et clôturé le 31 mars 1983)\. Ce
projet comprenait une assistance pour l'amélioration quantitative et qualitative de l'enseignement
primaire par la construction d'écoles primaires, la formation des enseignants pour l'enseignement
des matières pratiques, la préparation de nouveaux programmes scolaires et la production de
matériels didactiques\. Le Second Projet Education (Cr\. 976 BU signé le 23 avril 1980 et clôturé
le 30 juin 1985) assista le Gouvernement dans l'extension et l'amélioration de son programme
d'enseignement technique, principalement pour former des ouvriers spécialisés et des techniciens
dans les domaines de la construction, du commerce, des travaux publics, de la mécanique, du
dessin, de la dactylographie et de la comptabilité\. Le Troisième Projet Education (Cr\. 1358 BU
signé le 9 juin 1983 et clôturé le 31 mars 1988) a fourni une assistance pour l'extension et
l'amélioration de l'enseignement primaire formel et informel et la formation dans les zones rurales,
pour l'extension de l'enseignement du premier cycle du secondaire, pour l'amélioration de la
formation des enseignants et le renforcement du département du Bureau d'Education Rurale
(BER) responsable du développement des manuels scolaires et de la production des matériels
didactiques pour l'enseignement primaire\.
iv Projet de Développement du Secteur de l'Education
3\. Les premier, second et troisième projets d'éducation ont été achevés dans les délais prévus
et sont considérés comme satisfaisants\. La particularité du Quatrième Projet Education est qu'il
comporte une assistance au Gouvernement pour l'adoption et la mise en oeuvre de politiques
sectorielles destinées à réduire les coûts de l'éducation à tous les niveaux et à répartir le budget de
l'éducation en faveur du niveau primaire\.
Objectifs du Projet
4\. Les objectifs du Projet étaient de: (a) mettre en oeuvre des mesures visant à limiter les
coûts et à faciliter l'ajustement du secteur de l'éducation; (b) renforcer les capacités de
planification, de budgétisation et de contrôle des coûts du Ministère de l'Education Nationale
(MEN); (c) améliorer la qualité et l'efficacité de l'enseignement primaire et secondaire; et (d)
améliorer l'accès à l'éducation\.
5\. Le Projet comprenait les composantes suivantes:
(a) Coûts de lEducation: (i) un programme d'ajustement sectoriel comprenant 29 mesures
spécifiques pour réduire les coûts unitaires et permettre une réallocation du budget de
l'éducation en faveur du niveau primaire; et (ii) une assistance au MEN pour couvrir les
coûts résultant de l'augmentation temporaire du budget des bourses pour l'année scolaire
1987/88;
(b) Renforcement des Capacités du MEN: (i) renforcement de la Direction de la Planification
de l'Education (DPE) pour lui permettre de mettre en oeuvre et de suivre le Programme et
de préparer des plans d'ajustement sectoriel, et d'élaborer des mesures de coût-efficacité,
incluant les Programmes de Dépenses Publiques (PDP) et les Programmes
d'Investissements Publics (PIP) et des études connexes sur l'éducation; et (ii) renforcement
et coordination de l'administration et de la planification scolaires;
(c) Amélioration de la Qualité et de lEfficacité de l'Enseignement: (i) renforcement du rôle
des inspecteurs, des formateurs d'enseignants et des directeurs d'établissements scolaires
pour les aider à fournir aux enseignants un soutien pédagogique et administratif, (ii)
formation d'instituteurs et d'enseignants du secondaire; (iii) amélioration de l'enseignement
des sciences et de la technologie dans les écoles secondaires grâce à la fourniture
d'installations et de matériels adéquats; (iv) renforcement de la Régie des Productions
Pédagogiques (RPP), y compris par la fourniture de matériels et d'équipement; et (v)
attribution de bourses de formation à l'étranger à des spécialistes de l'enseignement
primaire et secondaire;
(d) Accès à l'Education: (i) renforcement de la capacité du MEN à construire, remettre en
état et entretenir les établissement scolaires par la réorganisation du BPE: (ii) construction
de 55 écoles primaires et remise en état de 55 existantes avec fourniture de mobilier et
d'équipement; (iii) construction de 3 écoles d'enseignement secondaire du premier cycle et
Evaluation de l'Exécution du Projet v
remise en état de 10 écoles secondaires existantes; (iv) réalisation et suivi d'un programme
d'entretien scolaire\.
Réalisations des objectifs
6\. La plupart des objectifs du Projet ont été atteints et quelquefois même dépassés\. Les
objectifs liés aux politiques sectorielles, au renforcement de la capacité institutionnelle et au
développement du secteur privé ont été atteints partiellement\. Le Projet a eu un impact faible sur
les objectifs financiers, institutionnels et de réduction de la pauvreté\. Durant la période 1987-
1993 qui a précédé les événements d'octobre 1993 (assassinat du Premier Président élu), l'accès à
l'enseignement de base s'est amélioré comme le témoignent les effectifs du primaire qui n'ont
cependant pas augmenté au rythme prévu dans le Programme\. Le Projet a financé des activités de
développement des ressources humaines en formant des enseignants, des directeurs
d'établissements et des inspecteurs des écoles primaires et secondaires\. Le volet construction et
remise en état des écoles primaires et secondaires a été exécuté comme prévu et quelquefois les
réalisations dépassent les prévisions\. En somme, l'évaluation des résultats est généralement
satisfaisante\.
7\. Durant les troubles d'octobre 1993, du matériel, du mobilier et des bâtiments de certaines
écoles primaires et secondaires ont été endommagés, d'où la nécessité de réparer ces dégâts\. Le
coût (790\.000 dollars) de réhabilitation et de rééquipement de ces écoles --qui n'était pas prévu
dans le Crédit-- a pu être financé grâce aux économies réalisées par le Projet\. A la rentrée
scolaire 1993/94, plus de 25 % des élèves du primaire et du secondaire ne sont pas retournés à
l'école et le taux de scolarisation du primaire est passé de 68 % en 1992/93 à environ 50 % en
1994/95\. On estime que 25 % des enseignants du primaire et 42 % du secondaire n'ont pas
rejoint leurs postes depuis le début de l'année 1994\.
Viabilité des résultats et opération future
8\. Après une période de démarrage difficile entre juillet 1988 et juillet 1990, la DPE a repris
ses activités entre août 1990 et juin 1994\. Cependant, depuis cette date, la Direction s'est
effondrée et la préparation des PEP et des annuaires statistiques, ainsi que la mise à jour du
tableau de pilotage ont été interrompues faute de ressources humaines et financières\. En
conséquence, il y a un besoin urgent de renforcer les services de la DPE\. En ce qui a trait aux
objectifs d'amélioration de la qualité et de l'efficacité de l'éducation, plus du quart des résultats
atteints avant octobre 1993 ont été perdus à travers la disparition de manuels d'enseignement, le
départ ou l'absence des instituteurs dans certaines zones rurales (en raison de l'insécurité) et le
manque d'enseignants aux niveaux secondaire et supérieur\. La Régie des Productions
Pédagogiques (RPP) a réapprovisionné, en grande partie, les manuels scolaires en maintenant le
ratio d'un manuel pour deux élèves\. Par contre, au niveau secondaire, le BEPES n'a pas été en
mesure de réapprovisionner les établissements pour retrouver un ratio de 1 manuel pour deux
étudiants\. Les inscriptions risquent de baisser pendant un certain temps, à l'exception des collèges
communaux\. Le niveau des taux de scolarisation observés en septembre 1993 pourrait être atteint
vi Projet de Développement du Secteur de l'Education
de nouveau si la paix sociale et la stabilité politique étaient restaurées, mais seulement après que
les personnes déplacées (instituteurs et élèves) aient regagné confiance au régime en place et
rejoint leurs domiciles\. Les constructions scolaires aux niveaux primaire et secondaire sont
généralement de très bonne qualité\. Cependant, l'entretien des bâtiments et des équipements fait
défaut, en particulier dans les établissements secondaires\. Certains bâtiments nouveaux ont besoin
de peintures ou de réparations des installations de plomberie ou d'électricité afin de contrer une
détérioration rapide due à un usage intensif
9\. En somme, la viabilité des résultats du Projet dépend, en grande partie, du retour à la paix
sociale et de la stabilité politique, de l'engagement des deux ministères chargés de l'éducation pour
redonner à la DPE son rôle important, et de l'allocation de ressources publiques suffisantes pour
l'entretien des écoles\. L'atteinte de ces résultats est cependant incertaine en raison des problèmes
politiques que connait le Burundi\.
10\. L'éducation demeure l'un des secteurs prioritaires pour le lancement d'actions de
réconciliation et le retour à la paix\. Cependant, dans le contexte actuel, il est peu probable que la
Banque supporte des investissements massifs dans le secteur avant un retour à la paix\. Une forme
d'assistance plus appropriée pourrait être un appui, modeste certes, à des campagnes
d'information, à l'éducation à la paix et à d'autres activités qui contribueraient à améliorer l'accès
équitable à un enseignement de base et secondaire de qualité\.
Enseignements
Il\. L'expérience de ce projet démontre qu'il n'y a pas de réponses toutes faites au problème de
la formulation des conditions dans des projets d'éducation\. Cette expérience montre qu'il faut
exercer un bon jugement, à savoir, une flexibilité dans l'interprétation, combinée au respect de
certains principes de base\. Les principaux enseignements de ce projet sont résumés dans les
propos suivants\.
12\. Les conditions de décaissement basées sur l'atteinte de résultats découlant de politiques
sectorielles ne devraient être utilisées que dans des cas où le changement de politique constitue un
pré-requis nécessaire pour la justification ou l'utilisation rentable de l'investissement qui fait l'objet
de la condition\.
13\. Les conditions devraient être structurées de façon à encourager les bénéficiaires à
respecter ces conditions\.
14\. Les conditions devraient éliminer toute ambiguité et être comprises parfaitement par
toutes les parties\. Dans les cas où des conditions à caractère plus général sont jugées appropriées
(plutôt que des conditions spécifiques), celles-ci devraient définir des critères explicites de
performance\. Le tableau de pilotage, et ses indicateurs, est utile\. Cependant, il ne doit pas faire
l'objet d'un contrat formel\.
Evaluation de l'Exécution du Projet vii
15\. Le calendrier de la revue des conditions devrait coïncider avec des événements-clés à
l'intérieur de l'année scolaire ou du cycle budgétaire, de façon à permettre au Gouvernement
d'adopter des actions nécessaires sans pour autant bloquer des investissements qui dépendent de
l'achèvement de ces conditions\.
16\. Bien qu'il soit difficile d'entrevoir des changements politiques majeurs ou des crises
sociales comme celles qui sont survenues au Burundi durant la mise en place de ce projet, les
projets sectoriels devraient avoir la flexibilité de s'adapter aux besoins d'urgence\. A travers l'usage
des économies réalisées grâce à la gestion efficace du projet, le Gouvernement a pu financer une
partie importante de son programme de reconstruction d'urgence pour des écoles endommagées
au cours des événements qui ont suivi la crise d'octobre 1993\.
17\. Enfin, les opérations financées par le PNUD et l'UNICEF devraient être reflétées dans les
états financiers du Projet même quand ces fonds ne sont pas gérés par la Banque\. Cette lacune est
contraire au principe d'exhaustivité de la Banque qui veut que toutes les ressources et dépenses
d'un projet soient comptabilisées\. A l'avenir, des arrangements devront être faits pour que les
opérations financées parallèlement puissent être comptabilisées par l'agent d'exécution du Projet\.
REPUBLIQUE DU BURUNDI
RAPPORT DE FIN D'EXECUTION
PROJET DE DEVELOPPEMENT DU SECTEUR DE L'EDUCATION
(Crédit 1881 BU)
1\. EVALUATION DE L'EXECUTION DU PROJET
A\. HISTORIQUE
Situation macro-économique
1\.1 Le Burundi fait partie des pays les plus pauvres du monde avec un revenu par tête
d'habitant de 150 dollars EU en 1994\. Sa superficie est de 27\.834 km2 sur laquelle vit
une population de 5,8 millions d'habitants augmentant au taux de 3\.1% par an\. La densité
au km2 est de 208 habitants et représente dix fois la moyenne de celles des pays africains
au Sud du Sahara\. L'agriculture contribue pour près de 50% au Produit Intérieur Brut,
90% à l'emploi et plus de 80% aux recettes d'exportations\. En 1993, le secteur secondaire
représentait seulement 19% du Produit Intérieur Brut et 11% des exportations\. Malgré
une croissance relativement forte depuis 1985 (moyenne annuelle de 5%), le secteur
moderne n'a pas été capable d'absorber la main d'oeuvre rurale excédentaire\. Le secteur
privé a financé seulement 16% des investissements bruts en capital durant les quinze
dernières années, principalement dans les petites exploitations agricoles et le transport\. Le
secteur public domine l'industrie manufacturière, l'énergie, les infrastructures, le secteur
financier et les autres activités du secteur moderne et contribue pour plus de 50% à
l'emploi formel (40\.000 employés)\. Environ 80% des investissements sont financés sur
ressources extérieures\.
Préparation du Projet
1\.2 Durant la période 1986-1988, les effectifs du primaire ont augmenté au taux
annuel de 18% suite à une politique vigoureuse de la double vacation destinée à améliorer
l'accès à l'éducation de base\. Au niveau du secondaire, les effectifs ont évolué à un
rythme plus lent en raison de mesures strictes de contrôle de l'accès au premier cycle du
secondaire\. Durant la même période, les effectifs des enseignants du secondaire général et
pédagogique ont augmenté de 13%, alors que ceux de l'enseignement technique
professionnel ont diminué de 9%\. Dans l'enseignement supérieur, les effectifs de
l'Université du Burundi et des Instituts Supérieurs augmentèrent de 8%\. Les taux bruts de
scolarisation du primaire (69%), du secondaire (5%) et du supérieur (1%) se comparaient
valablement à ceux de l'Afrique au Sud du Sahara: 75%, 20% et 1%\. L'enseignement
privé se développe particulièrement au niveau secondaire et principalement dans les zones
urbaines et comprend tout l'enseignement informel dispensé dans les centres
confessionnels\.
2 Burundi: Projet de Développement du Secteur de l'Education
1\.3 En 1988, les problèmes suivants restaient encore à résoudre dans l'enseignement
primaire: malgré des augmentations remarquables au niveau des effectifs, l'accès était
encore limité dans les zones rurales désavantagées où les taux bruts de scolarisation
étaient inférieurs à 50% comparés à ceux de plus de 100% des zones urbaines; rendement
interne faible avec un taux moyen de redoublement de 26%; pénuries de livres et autres
matériels didactiques et d'équipement; difficulté à attirer et retenir des enseignants qualifiés
à cause surtout de l'incapacité des organismes de formation à recruter des candidats
motivés et aussi à cause de conditions de travail pauvres: support professionnel, logement
et accès aux lieux de travail; accès à l'enseignement secondaire limité à une petite portion
d'élèves (environ 10%) qui terminent le programme d'enseignement des six années du
primaire\. Dans l'enseignement secondaire, les problèmes majeurs se résument ainsi:
surcharge des infrastructures existantes, faiblesse de la charge horaire hebdomadaire du
personnel enseignant, importance des effectifs du personnel non-enseignant et mauvaise
répartition des ressources publiques en faveur des services non-académiques (internat
principalement)\.
1\.4 Dans le domaine de la formation professionnelle, l'enseignement technique
secondaire et tertiaire aussi bien que l'enseignement technique supérieur sont caractérisés
par une participation limitée ou inexistante du secteur privé et des employeurs\. Les
organes de formation sont mal équipés pour répondre aux réformes structurelles majeures
sur lesquelles le Gouvernement s'est engagé et leurs programmes et méthodes d'insertion
ont besoin d'être révisés pour s'adapter à un environnement qui évolue\.
1\.5 Durant la période 1986-1988, la part du budget allouée à l'enseignement primaire a
diminué de 46 à 44%, celle de l'enseignement général, pédagogique et technique est restée
stationnaire (30%), tandis que celle de l'enseignement supérieur a augmenté de 22 à 25%\.
1\.6 Durant la période 1988-1993, l'accès à l'enseignement de base s'est amélioré
comme le témoignent les effectifs du primaire augmentant au taux de 7% par an, soit le
double du taux de croissance de la population\. Le taux brut de scolarisation du primaire
atteignait 68% en 1993\. A ce moment éclata la crise du 21 octobre 1993 (assassinat du
Premier Président élu) dont les conséquences continuent d'affecter le secteur jusqu'à ce
jour\. Le matériel, le mobilier et les bâtiments de certaines écoles primaires et secondaires
ont été endommagés durant les troubles d'octobre 1993, d'où la nécessité de réparer ces
dégâts\. A la rentrée scolaire 1993/94, plus de 25% des élèves du primaire et du
secondaire ne sont pas retournés à l'école et le taux de scolarisation du primaire est passé
de 68% en 1992/93 à environ 50% en 1994/95\. On estime que 25% des enseignants du
primaire et 42% du secondaire n'ont pas rejoint leurs postes depuis le début de l'année
1994\.
Rôle de la Banque dans le secteur de l'éducation
1\.7 La première opération de la Banque dans le secteur de l'éducation du Burundi a
commencé avec le Premier Projet Education (Cr\. 679 BU signé le 29 avril 1977 et clôturé
le 31 mars 1983)\. Ce projet comprenait une assistance pour l'amélioration quantitative et
qualitative de l'enseignement primaire par la construction d'écoles primaires, la formation
Evaluation de l'Exécution du Projet 3
des enseignants pour l'enseignement des matières pratiques, la préparation de nouveaux
programmes scolaires et la production de matériels didactiques\. Le Second Projet
Education (Cr\. 976 BU signé le 23 avril 1980 et clôturé le 30 juin 1985) assista le
Gouvernement dans l'extension et l'amélioration de son programme d'enseignement
technique, principalement pour former des ouvriers spécialisés et des techniciens dans les
domaines de la construction, du commerce, des travaux publics, de la mécanique, du
dessin, de la dactylographie et de la comptabilité\. Le Troisième Projet Education (Cr\.
1358 BU signé le 9 juin 1983 et clôturé le 31 mars 1988) fournit une assistance pour
l'extension et l'amélioration de l'enseignement primaire formel et informel et la formation
dans les zones rurales, pour l'extension de l'enseignement du premier cycle du secondaire,
pour l'amélioration de la formation des enseignants et le renforcement du département du
Bureau d'Education Rurale (BER) responsable du développement des manuels scolaires et
de la production des matériels didactiques pour l'enseignement primaire\. Le Tableau 2
présente les crédits connexes de la Banque dans le secteur de l'éducation\.
1\.8 Les premier, second et troisième projets d'éducation ont été achevés dans les délais
prévus et peuvent être considérés comme satisfaisants\. Selon l'évaluation du Département
de d'Evaluation des Opérations de la Banque, les résultats des trois projets sont mixtes\.
L'extension a été réalisée dans l'enseignement primaire, secondaire et
technique/professionnel\. La composante formation des enseignants du primaire du
Troisième Projet augmenta les effectifs du secondaire mais, comme les élèves ne
choisissent pas la carrière enseignante, ces effectifs sont restés inférieurs aux prévisions\.
Les résultats de l'enseignement informel ont été négatifs\. Dans le domaine du
renforcement institutionnel, ces projets ont permis de mettre en place une unité
compétente des programmes du primaire (BER) et de renforcer la production des manuels
scolaires\.
Le Projet de développement du secteur de l'éducation
1\.9 Les objectifs du Projet étaient de: (a) mettre en oeuvre des mesures visant à limiter
les coûts et à faciliter l'ajustement du secteur de l'éducation; (b) renforcer les capacités de
planification, de budgétisation et de contrôle des coûts du Ministère de l'Education
Nationale (MEN); (c) améliorer la qualité et l'efficacité de l'enseignement primaire et
secondaire; et (d) améliorer l'accès à l'éducation\.
1\.10 Le Projet comprenait les composantes suivantes:
(a) Coûts de l'Education: (i) un programme d'ajustement sectoriel comprenant 29
mesures spécifiques pour réduire les coûts unitaires et permettre une réallocation
du budget de l'éducation en faveur du niveau primaire; et (ii) une assistance au
MIEN pour couvrir les coûts résultant de l'augmentation temporaire du budget des
bourses pour l'année scolaire 1987/88;
(b) Renforcement des Capacités du MEN (i) renforcement de la Direction de la
Planification de l'Education (DPE) pour lui permettre de mettre en oeuvre et de
suivre le Programme et de préparer des plans d'ajustement sectoriel, et d'élaborer
4 Burundi: Projet de Développement du Secteur de l'Education
des mesures de coût-efficacité, incluant les Programmes de Dépenses Publiques
(PDP) et les Programmes d'Investissements Publics (PIP) et des études connexes
sur l'éducation; et (ii) renforcement et coordination de l'administration et de la
planification scolaires;
(c) Amélioration de la Qualité et de l'Efficacité de l'Enseignement: (i) renforcement
du rôle des inspecteurs, des formateurs d'enseignants et des directeurs
d'établissements scolaires pour les aider à fournir aux enseignants un soutien
pédagogique et administratif, (ii) formation d'instituteurs et d'enseignants du
secondaire; (iii) amélioration de l'enseignement des sciences et de la technologie
dans les écoles secondaires grâce à la fourniture d'installations et de matériels
adéquats; (iv) renforcement de la Régie des Productions Pédagogiques (RPP), y
compris par la fourniture de matériels et d'équipement; et (v) attribution de bourses
de formation à l'étranger à des spécialistes de l'enseignement primaire et
secondaire;
(d) Accès à lEducation: (i) renforcement de la capacité du MEN à construire,
remettre en état et entretenir les établissement scolaires par la réorganisation du
BPE: (ii) construction de 55 écoles primaires et remise en état de 55 existantes
avec fourniture de mobilier et d'équipement; (iii) construction de 3 écoles
d'enseignement secondaire du premier cycle et remise en état de 10 écoles
secondaires existantes; (iv) réalisation et suivi d'un programme d'entretien scolaire\.
B\. DEFINITION ET EVALUATION DES OBJECTIFS
1\.11 Le but du projet était d'accélérer l'accès à l'enseignement de base et de stimuler le
développement qualitatif de l'enseignement primaire et secondaire tout en maintenant la
part du budget de l'État allouée au secteur de l'éducation à environ 20%\. De façon plus
spécifique, le projet visait une croissance annuelle des effectifs compatible avec les
ressources financières et techniques du Gouvernement (et qui permettraient d'atteindre la
scolarisation universelle en 1995-96), le renforcement de la capacité institutionnelle du
Gouvernement pour le contrôle de la croissance quantitative et qualitative, et une
amélioration de la qualité de l'éducation par la révision des programmes et des matériels
didactiques\.
1\.12 Une caractéristique importante du projet résidait dans l'assistance au
Gouvernement pour l'adoption et la mise en place de politiques et de mesures sectorielles
pour l'atteinte de ces objectifs\. Ces mesures étaient regroupées dans quatre champs: la
réduction des coûts unitaires par élève, la réduction des subventions aux secteurs
d'enseignement secondaire et supérieur, l'amélioration du recouvrement des coûts et
l'amélioration de l'accès à l'enseignement de base\. Afin d'éviter une spécificité trop pointue
dans l'Accord de Crédit, ces indicateurs ont été distillés dans deux mesures synthétiques
qui devaient refléter les effets de la mise en place de toutes les mesures prévues\. Ces deux
mesures synthétiques sont une réduction annuelle des coûts unitaires à tous les niveaux
d'enseignement et un rythme de croissance de la part du budget affecté à l'enseignement
primaire\.
Evaluation de l'Exécution du Projet 5
1\.13 Les objectifs du Projet ainsi que les moyens à mettre en oeuvre pour les atteindre
étaient clairement définis et répondaient aux priorités du Gouvernement dans le secteur\.
Cependant, il y a lieu de noter qu'il n'existe pas à proprement parler une stratégie de
développement du secteur de l'éducation\.
C\. REALISATION DES OBJECTIFS
1\.14 Tel qu'illustré dans le Tableau résumé de l'évaluation (Section 2, Tableau 1), les
objectifs physiques ont été atteints et même dépassés\. Les objectifs liés aux politiques du
secteur, à la gestion du secteur public et au développement du secteur privé ont été
partiellement atteints\. Le projet a eu un impact négligeable sur les objectifs financiers,
institutionnels et de réduction de la pauvreté\. La viabilité des résultats est incertaine, en
particulier depuis 1993 qui a marqué le début d'une crise sociale et politique profonde\.
Les performances de la Banque et de l'Emprunteur ont été satisfaisantes, à l'exception du
non-respect de certaines conditions par le Gouvernement\. En résumé, l'évaluation des
résultats est généralement satisfaisante\.
1\. Les mesures d'ajustement sectoriel
1\.15 Le suivi de la mise en place des mesures d'ajustement sectoriel et des indicateurs
synthétiques correspondants (coûts unitaires et redistribution de la part du budget de l'État
par niveau d'éducation) s'est avéré une tâche beaucoup plus complexe qu'elle n'était
envisagée au moment de l'évaluation 2 \. Au cours de la période 1988-1992, les tendances
relatives à l'application des conditions spécifiées dans l'Accord de Crédit ont été les
suivantes\.
1\.16 Coûts unitaires\. Aux niveaux primaire et secondaire, les salaires des enseignants
qui constituent la plus grande partie des dépenses ont augmenté moins rapidement que le
rythme de l'inflation, et le ratio maître:élèves ont été respectés\. En conséquence, les coûts
unitaires pour l'enseignement primaire et secondaire ont été réduits à des niveaux qui
s'approchaient (sans toutefois correspondre parfaitement) de ceux qui avaient été spécifiés
dans l'Accord de Crédit\. Cependant, alors que les coûts unitaires dans l'enseignement
supérieur national baissaient, l'augmentation rapide du nombre et du coût des bourses
d'études à l'étranger a eu pour effet d'augmenter les coûts unitaires de l'enseignement
supérieur au-delà du niveau stipulé dans l'Accord de Crédit\.
1\.17 Redistribution de la part du budget\. Les effectifs de l'enseignement primaire
ont augmenté plus lentement que prévu, alors que les effectifs de l'enseignement supérieur
ont augmenté plus rapidement\. Cependant, les effectifs à l'Université et le nombre des
boursiers à l'étranger ont augmenté beaucoup plus rapidement que prévu\. La conjugaison
de ces facteurs avec les tendances d'évolution des coûts unitaires (paragraphe 1\.17) n'a pas
2 Les paragraphes qui suivent reflètent les enseignements tirés de la revue à mi-parcours et, en
particulier, un mémorandum préparé par le Conseiller aux opérations principal du Bureau du Vice-
Président régional en date du 11 avril 1991\.
6 Burundi: Projet de Développement du Secteur de l'Education
permis au Gouvernement de respecter le second engagement stipulé dans l'Accord de
Crédit -- accroître la part des dépenses publiques à l'enseignement primaire et réduire la
part de l'enseignement supérieur\.
1\.18 En somme, bien que les tendances observées pointent dans la direction de certains
objectifs spécifiés dans l'Accord de Crédit, aucune des cibles identifiées n'a été atteinte\. La
revue à mi-parcours (mars 1991) a conclu, au vu de l'ambiguïté dans la mesure des
indicateurs, une interprétation de "l'esprit de la loi" était appropriée\. La mission a
également conclu qu'en ce qui concerne l'enseignement primaire et secondaire, l'esprit des
conditions avait été respecté puisqu'il y avait des progrès importants dans les domaines de
l'amélioration quantitative et qualitative de l'éducation\.
1\.19 L'expérience de ce projet démontre qu'il n'y a pas de réponses toutes faites au
problème de la formulation des conditions dans des projets d'éducation\. L'usage de
mesures synthétiques (e\.g\. la redistribution du budget) présente l'avantage de permettre de
laisser au Gouvernement une certaine latitude sur les moyens de réaliser cet objectif Par
contre, cet indicateur est susceptible d'échec si l'une des composantes du budget dérape ou
si le budget alloué à l'éducation croît à un taux différent de celui qui avait été projeté lors
de l'évaluation\. Egalement, des conditions très spécifiques tout comme des conditions à
caractère assez vague (par exemple une "performance satisfaisante") portent certains
risques\. D'un côté, des conditions vagues risquent d'être interprétées différemment par le
Gouvernement et la Banque notamment en ce qui concerne la qualité des performances\.
Ainsi, il est important de définir explicitement les critères à utiliser afin de minimiser les
mésinterprétations\. Par ailleurs, des conditions très spécifiques sur certains points
principaux peuvent ne pas refléter un développement sain du système d'éducation: un
gouvernement peut ne pas atteindre une cible donnée tout en se dirigeant dans la bonne
direction\.
1\.20 Cette expérience montre qu'il faut exercer un bon jugement, à savoir, une flexibilité
dans l'interprétation, combinée au respect de certains principes de base\. Les principaux
enseignements de ce projet sont résumés dans les propos suivants\. Les conditions de
décaissement basées sur l'atteinte de résultats découlant de politiques sectorielles ne
devraient être utilisées que dans des cas où le changement de politique constitue un pré-
requis nécessaire pour la justification ou l'utilisation rentable de l'investissement qui fait
l'objet de la condition\. Les conditions devraient être structurées de façon à encourager les
bénéficiaires à respecter ces conditions\. Les conditions devraient éliminer toute ambiguïté
et être comprises parfaitement par toutes les parties\. Dans les cas où des conditions à
caractère plus général sont jugées plus appropriées que des conditions spécifiques, celles-
ci devraient définir des critères explicites de performance\. Le tableau de pilotage, et ses
indicateurs, est utile\. Cependant, il ne doit pas faire l'objet d'un contrat formel\. Le
calendrier de la revue des conditions devrait coïncider avec des événements-clés à
l'intérieur de l'année scolaire ou du cycle budgétaire, de façon à permettre au
Gouvernement d'adopter des actions nécessaires sans pour autant bloquer des
investissements qui dépendent de l'achèvement de ces conditions\.
Evaluation de l'Exécution du Projet 7
Evaluation détaillée des indicateurs de performance
1\.21 Les paragraphes qui suivent présentent une évaluation détaillée des indicateurs de
performance définis dans le Tableau de pilotage du Rapport d'évaluation du projet, tel
qu'illustré dans le Tableau 5 (Section 2) qui résume les résultats atteints pour chacun des
29 indicateurs\.
1\.22 Primaire: Avant octobre 1993, (i) le rythme d'accroissement des effectifs
(indicateur no\.1) est légèrement inférieur aux prévisions (631\.039 élèves inscrits en
1991/92 comparés à une projection de 781\.000), en raison notamment de l'insécurité dans
des zones rurales éloignées; (ii) le rendement interne (indicateur no 5); ne s'est pas
amélioré en raison de la baisse du taux de promotion (71% en 1991/92 comparé à une
projection de 85% et à un taux de 75% en 1986/87, reflétant l'incapacité du MEN de
réduire le nombre de redoublements en fin de cycle); (iii) le ratio maître:élèves (indicateur
no\. 7) a augmenté moins rapidement que prévu (1:66 en 1991/92 comparé à une
projection de 1:70); (iv) le niveau de la charge horaire hebdomadaire (indicateur no\. 11)
est resté conforme aux prévisions; (v) la diminution du taux de suppléance (indicateur no\.
15) (la proportion du nombre de suppléants représentait 9% du personnel en 1991/92
comparée à une projection de 6%), justifiée par la féminisation de la profession
enseignante, et seules les anomalies concernant la concentration des suppléants en zone
urbaine pourraient réellement faire l'objet de mesures correctrices; (vi) la diminution du
rapport non-enseignants/enseignants (indicateur no\. 16) a été atteinte; et (vii) aucune
augmentation n'avait été appliquée sur le minerval (indicateur no\. 20) dont la valeur en
monnaie constante avait baissé de 25% entre 1987 et 1991\.
1\.23 Après octobre 1993, (i) les effectifs ont baissé en 1994/95 jusqu'à un niveau
légèrement inférieur à celui de 1987/88 et ont ensuite augmenté de 20% (base 1987) en
1995; (ii) après avoir légèrement diminué en 1994, le rendement interne a retrouvé son
niveau d'avant octobre 1993, à savoir 64%; et (iii) le ratio maître:élèves qui était de 1:63
en 1993 a chuté à 1:52 en 1995\.
1\.24 Secondaire: Avant octobre 1993, (i) les effectifs dans l'enseignement secondaire
général (indicateur no\. 2) et technique (indicateur no\. 3) ont augmenté plus rapidement
que prévu (42\.332 élèves au secondaire général en 1991/92 comparé à une projection de
30\.000; 5\.403 élèves au secondaire technique comparé à une projection de 4\.000), en
raison de l'ouverture des collèges communaux à partir de 1990; (ii) l'augmentation du ratio
élèves/maître (indicateur no\. 8) a été conforme aux prévisions; (iii) on observe un
dérapage dans les recrutements d'enseignants (indicateur no\. 25) (1\.701 enseignants en
1991/92 comparé à une projection de 1\.200) et une mauvaise utilisation corollaire de ces
enseignants en termes de charge horaire (indicateur no\. 12); de même, aucune amélioration
n'a été enregistrée s'agissant du personnel adrninistratif hors internat (indicateur no\. 17),
dont les effectifs demeurent excessifs; (iv) le maintien du statu quo des effectifs d'internes
(indicateur no\. 19) à un niveau supérieur aux prévisions (82% en 1991/92 comparé à une
projection de 71%) et celui du ninerval des internes à son niveau nominal de 1987
(indicateur no\. 21) conduisent à une impasse financière et à une situation très critique pour
les internes, dont les conditions de vie se sont gravement dégradées\.
8 Burundi: Projet de Développement du Secteur de l'Education
1\.25 Après octobre 1993, les effectifs de l'enseignement secondaire pédagogique ont
légèrement diminué de 9% par rapport à leur niveau d'avant octobre 1993, à cause de la
crise issue des événements de 1993\. Les données ne sont pas disponibles pour les charges
horaires des enseignants, les effectifs du personnel administratif hors intemat et les
internes\.
1\.26 Université: Avant octobre 1993, (i) les effectifs (indicateur no\. 4) ont connu une
forte croissance avec une augmentation de plus de 51% par rapport à l'année 1987 (année
de base), alimentée par l'absorption de la quasi-totalité des sortants homologués de
l'enseignement secondaire par l'université\. Si la programmation initiale était excessivement
restrictive (stabilisation des effectifs), il n'en reste pas moins que cette évolution traduit
une perte du contrôle des flux d'étudiants, et une pression insoutenable sur les structures
d'accueil, sans pour autant répondre à une demande claire de l'économie moderne; (ii) les
taux de redoublement (indicateur no\. 6) ont diminué plus rapidement que prévu (18% en
1991/92 comparé à une projection de 30%), bien que des varient beaucoup entre les
Facultés et les Écoles; (iii) le ratio maître-temps plein:étudiants (indicateur no\. 10) a été
légèrement inférieur aux prévisions (1:11 en 1991/92 comparé à une projection de 1:10),
en raison notamment de la croissance rapide des effectifs; (iv) la part du personnel
administratif (indicateur no\. 18) a été réduite plus rapidement que prévue (66% en
1991/92 comparé à une projection de 75%); (v) faute d'être ajusté comme prévu, le prix
du ticket de restaurant (indicateur no\. 22) avait déjà perdu 26% de son pouvoir d'achat en
1991 comparé à celui de 1987; et (vi) au lieu de diminuer, le nombre de bénéficiaires de
bourses nationales à l'étranger (indicateur no\. 23) (122 étudiants comparés à une
projection de 40), accompagné d'une augmentation substantielle du budget pour
l'enseignement supérieur\.
1\.27 Après octobre 1993, (i) les effectifs de l'université ont augmenté de 7% par an
depuis cette date; (ii) les taux de redoublement restent stationnaires au lieu de diminuer;
(iii) le ratio maître-temps plein:étudiants a augmenté en passant de 1:11 en 1991/92 à 1: 16
en 1994/95 à cause du départ de la plupart des coopérants étrangers; (iv) le nombre de
bénéficiaires de bourses nationales à l'étranger (indicateur no\. 23) a beaucoup diminué en
passant de 143 en 1993/94 à 20 en 1994/95\.
2\. Renforcement des capacités du MEN
1\.28 Cette composante devait être financée conjointement par le Programme des
Nations Unies pour le Développement (PNUD) et l'IDA, de façon parallèle\. Le PNUD
devait financer les services d'un assistant technique en planification et administration de
l'éducation (30 personnes-mois), des frais de formation (41 personnes-mois), du matériel
de bureau et de l'équipement\. Le Crédit IDA devait financer les services d'un spécialiste
en informatique, du mobilier et du matériel pour la DPE\.
1\.29 Le Don PNUD d'un montant de 600\.000 dollars EU a servi à financer l'assistance
technique (364\.000$EU), la formation (186\.000$EU) du matériel de bureau (13\.500$EU)
et de l'équipement (69\.500$EU), ce qui fait apparaître un excédent de financement de
33\.000 dollars\.
Evaluation de l'Exécution du Projet 9
1\.30 Le Crédit IDA a pris en charge la prolongation de l'assistance technique en
planification et administration de l'éducation pour la période allant de novembre 1991 à
juin 1994, soit 32 personnes-mois\. Par contre, la Banque n'a pas financé l'acquisition du
matériel informatique destiné à la DPE pour mauvaise procédure de passation de marché\.
Elle annula ce marché d'un montant de 467\.000 dollars le 18 mai 1990 parce que celui-ci
n'a pas été attribué au soumissionnaire le moins disant\.
1\.31 Les travaux qui relèvent de la responsabilité de la DPE sont ceux d'un bureau de
statistiques et peuvent se résumer comme suit: (i) réalisation des PDP; (ii) mise à jour du
tableau de pilotage; (iii) rationalisation et informatisation des procédures d'orientation
scolaire, (iv) informatisation de la gestion des bourses; (v) confection de l'annuaire
statistique et réalisation d'études connexes sur l'éducation\. Les fonctions de planification,
suivi et évaluation ne sont pas précisées à la DPE et ni ailleurs de façon explicite\. Pour
produire le PDP, la DPE a élaboré un modèle de planification informatisé\. Les PDP de
deux périodes successives ont été préparés en 1990 pour celui de 1991-93 et en 1991 pour
celui de 1992-94\. A partir de 1992, l'élaboration des PDP a été confiée à un bureau
d'études privé auquel furent associées deux cellules, chaque ministère ayant sa propre
cellule composée de deux cadres et rattachée au cabinet du Ministre\. Le consultant a
produit un nouveau modèle de planification et le PDP 1993-95 a été préparé sans la
participation de la DPE qui n'a pas de liens précis avec les deux cellules\. Le tableau de
pilotage qui contient les mesures à prendre durant la vie du Projet et les indicateurs de
performance prévus a pu être rapproché facilement avec la réalité jusqu'en 1992/93\. Pour
les années académiques 1993/94 et 1994/95, les indicateurs de performance réalisés ont
été déterminés sur la base d'estimations à cause des troubles qu'a connus le pays à partir
d'octobre 1993, rendant difficile la collecte des données concernant certaines régions et
aussi à cause de départs de personnel constatés au niveau de la DPE\. La rationalisation et
l'informatisation des procédures d'orientation scolaire a été réalisée\. L'informatisation de
la gestion des bourses a été confiée à un consultant national mais le travail commencé par
ce dernier n'a pas été finalisé suite à un contentieux survenu entre lui et la DPE\. Les
annuaires statistiques des années 1991/92 et 1992/93 ont été réalisés\. Sur le plan des
études, la DPE a produit deux documents portant respectivement sur la stratégie de
développement des collèges communaux (1992) et la stratégie de développement et de
financement de l'éducation (1993)\.
1\.32 Parmi les travaux non réalisés par la DPE, on peut citer: la préparation du PDP de
1989, et les annuaires statistiques des années 1993/94 et 1994/95\. En ce qui concerne le
PDP de 1989, tous les participants aux différentes phases de préparation du Projet avaient
été transférés à d'autres postes, et les nouveaux responsables, aussi bien au PNUD qu'au
Gouvernement, n'ayant pas eu le temps de prendre connaissance de tous les documents,
ignoraient le cadre d'intervention de la mission de l'UNESCO\. Le premier Conseiller
Technique Principal financé par le PNUD (il y en a eu deux) semblait ignorer totalement le
rôle qu'il avait à jouer dans le cadre du Projet\. Le Directeur de la Planification ignorait
également que l'UNESCO (agent d'exécution du PNUD) devait l'assister pour la maîtrise
des problèmes liés en particulier, au financement et à la préparation des futurs budgets de
l'éducation\. Cela a entraîné l'absence totale de préparation du PDP de 1989\. Pour ce qui
est des annuaires statistiques, aucun n'a été élaboré après celui de 1992/93 pour les raisons
10 Burundi: Projet de Développement du Secteur de l'Education
suivantes: événements d'octobre 1993, grande mobilité du personnel au sein de la DPE,
manque de moyens matériels et financiers\. Les événements d'octobre 1993 (assassinat du
premier Président élu) et les troubles civils que connaît le pays jusqu'à ce jour ont
provoqué une crise sans précédent et instauré un climat d'insécurité permanente\. La
conséquence qui en a résulté est la difficulté d'obtenir des données et des informations de
l'intérieur du pays\. Après le départ de l'assistant technique en planification et
administration de l'éducation en juin 1994, la DPE a enregistré les départs de trois cadres
nationaux en l'espace d'une année: un Directeur, un Directeur Adjoint et un cadre\. A
l'origine de ces départs, il y a le manque de motivation financière et l'insécurité\.
Actuellement, il existe seulement deux cadres au sein de la DPE: un Directeur nommé
depuis août 1995 et un autre cadre capable de manipuler le modèle de planification\. A
cette pénurie de ressources humaines vient s'ajouter celle des ressources financières\. En
effet, le budget de fonctionnement de la DPE est tellement limité qu'il ne lui permet même
pas de réparer le matériel qui est en panne et de recruter ponctuellement des enquêteurs\.
1\.33 Après le PDP 1993-95 préparé en 1993 par le consultant et les deux cellules
ministérielles, aucun PDP pour les années ultérieures n'a été préparé\. La formation du
personnel à l'utilisation du nouveau modèle de planification n'a pas été assurée et les
cellules PDP ne sont pas fonctionnelles\. Les commentaires négatifs de la DPE sur le PDP
1993-95 ont été les suivants: informations erronées, absence d'un tableau d'indicateurs, pas
de comparaison avec le précédent PDP\.
3\. Amélioration de la Qualité et de l'Efficacité de l'Enseignement
1\.34 Cette composante devait être financée conjointement par le Fonds des Nations
Unies pour l'Enfance (UNICEF) et par l'IDA de façon parallèle\. L'UNICEF financerait
une partie de la formation en cours d'emploi des instituteurs par l'organisation de
séminaires durant les deux premières années du Projet et l'amélioration du programme de
l'enseignement primaire\. Le Crédit IDA financerait les éléments suivants: équipement des
16 Centres Régionaux de Pédagogie et de Documentation (CRPD); achat de 15 véhicules
pour les inspecteurs régionaux; 6 personnes-mois de consultation pour la formation locale
des inspecteurs et 65 personnes-mois de bourses et de voyages d'études pour des
spécialistes locaux; environ 760 personnes-années de formation en cours d'emploi des
instituteurs, 10 personnes-années de formation des inspecteurs, 60 personnes-années de
formation des directeurs d'écoles et 30 personnes-années de formation des formateurs des
instituteurs\.
1\.35 L'UNICEF a financé des séminaires de formation d'instituteurs et de directeurs
d'écoles, du matériel informatique (deux ordinateurs), l'achat de deux véhicules et la
production de manuels scolaires\. Il n'a pas été possible d'obtenir auprès de l'UNICEF le
montant réellement décaissé sur l'enveloppe prévue à cause d'un problème d'archivage des
pièces comptables et de changement de l'Administrateur du programme éducation\. Cette
information n'est également pas disponible au niveau du BPE car celui-ci n'a pas
comptabilisé dans ses livres les opérations de l'UNICEF et du PNUD faute d'avoir reçu les
pièces justificatives\.
Evaluation de l'Exécution du Projet 11
1\.36 L'ensemble des activités financées par la Banque s'est déroulé de manière
satisfaisante\. Qu'il s'agisse des stages de directeurs d'écoles ou d'inspecteurs ou de la
formation plus longue (55 jours) des instituteurs, tout a été accompli selon les prévisions,
et sous le contrôle efficace du CCAP à l'exception des activités des CRPD\.
1\.37 Les activités du CCAP ont dépassé les prévisions\. Il a organisé 94 stages de
formation continue sur 59 initialement prévus et 14 journées pédagogiques au profit des
enseignants du primaire et du secondaire (3 929 participants au total sur la période 1988-
92)\. Il a réalisé en juin 1995 deux études portant sur "l'évaluation qualitative de
l'enseignement primaire et secondaire" d'une part, et sur "les résultats du concours national
et des tests nationaux de 10ème et de lère année des humanités" d'autre part\. Ces études
restent à finaliser faute de financement après la clôture du Crédit\. En ce qui concerne la
première étude, l'évaluation de la seconde moitié du primaire et l'évaluation du secondaire
restent à faire\. Quant à la seconde étude, il reste à déterminer sur le terrain les raisons des
réussites dans les meilleures écoles et celles des échecs dans les moins bonnes écoles\. Par
ailleurs, compte tenu du rôle efficace que joue le CCAP dans la coordination des activités
du BER, du BEPES et du BEET, celui-ci serait plus performant s'il était institutionnalisé
en tant que structure\.
1\.38 En ce qui concerne les activités de la RPP, la Banque a financé l'acquisition d'une
machine d'imprimerie et un équipement de photocomposition\. Les aspects techniques
n'appellent que des jugements favorables puisque la production est bien organisée\. Les
livres commandés sont fournis dans des conditions d'impression d'une excellente qualité et
la gestion générale semble efficace\. Pour ce qui est du BER, la Banque a financé l'achat
de 6 minibus pour l'encadrement sur le terrain des enseignants et l'acquisition de 15
camionnettes pour les inspecteurs régionaux\.
1\.39 Les CRPD ont reçu chacun un fonds documentaire de 1 040 livres, une machine à
écrire et un duplicateur à stencil\. Ils n'ont pas fonctionné convenablement pour les raisons
suivantes: manque de structure et d'organisation, et aussi d'engagement de la part des
responsables pour la rationalisation des ressources humaines\. Certains livres et matériels
pédagogiques ont fait l'objet de dégâts suite aux événements de 1993 d'où la nécessité de
les remplacer et d'augmenter leur nombre\.
1\.40 En 1990, le Gouvernement a initié une stratégie de développement des collèges
communaux (CC) censés se substituer progressivement aux collèges publics pour le
premier cycle du secondaire\. Cette stratégie visait à accroître légèrement le taux de
scolarisation secondaire alors égal à 6,5%\. Le principe est de confier la construction et
l'entretien des nouveaux collèges dits communaux aux communes, collectivités locales et
éventuellement ONG, tandis que le fonctionnement courant de ces collèges est financé par
les parents d'élèves via le minerval, et que l'État assure celui des salaires des enseignants et
administratifs ainsi que celui des équipements didactiques\. Par ailleurs, cette stratégie, qui
implique une multiplication des établissements, permet d'éviter le recours à l'internat et par
là de diminuer le coût unitaire, notamment à la charge de l'État\. Dès l'origine de
l'expérience, 5 collèges communaux furent crées en 1990/91\. Actuellement, les 114
communes du Burundi comptent 155 collèges comrnunaux dont 61 ont été ouverts durant
12 Burundi: Projet de Développement du Secteur de l'Education
la seule année scolaire 1995/96\. Parmi les communes il y en a 4 qui n'ont pas encore un
collège communal\. Durant la période 1991-96, il y a eu un développement parallèle du
premier cycle du secondaire dans les collèges publics et communaux et non un transfert
des effectifs des collèges publics vers les collèges communaux\. Le développement des CC
a été plus rapide que prévu et s'il n'est pas contrôlé à court terme, l'État ne pourra plus
assurer les charges qui lui incombent\. Le Gouvernement envisage d'arrêter l'ouverture de
nouveaux collèges communaux dans les communes qui en possèdent déjà, mais aucune
décision officielle n'est encore prise\.
4\. Accès à l'Education
1\.41 Le programme de construction de 55 écoles primaires et de remise en état de 55
existantes, de construction de 3 écoles d'enseignement secondaire du premier cycle et de
remise en état de 10 écoles secondaires existantes a été réalisé en totalité et parfois même
dépassé\. 82 écoles primaires ont été construites (dont 11 par des entreprises privées) en
comparaison du nombre de 55 prévu au départ\. 65 écoles primaires ont été remises en
état au lieu des 55 initialement prévues\. Deux écoles d'enseignement secondaire ont été
construites en plus des 3 qui étaient prévues\. Sur les 10 écoles secondaires réfectionnées,
le privé en a réalisé 3\.
1\.42 Le Projet prévoyait que les communes devait participer au financement de la
construction et de l'équipement des écoles primaires\. Cette participation consistait en la
fourniture des matériaux de gros oeuvre (moellon, gravier, sable, briques) et la
rémunération de 20 manoeuvres\. Le degré de participation a été satisfaisant dans
l'ensemble jusqu'avant les événements d'octobre 1993\. En 1994, les communes n'ont
effectué aucune contribution suite à la conjoncture économique\. Celle-ci a été
exceptionnellement prise en charge par le BPE moyennant environ FBU 750\.000 (3\.000
dollars) par chantier\.
1\.43 L 'entretien des écoles primaires relève de la responsabilité des collectivités locales\.
Compte tenu de la nature solide des constructions (toitures en tôle, murs en briques
apparentes ne nécessitant pas de peinture), l'entretien des établissements primaires ne pose
généralement pas de problèmes\. Par contre, la situation se présente avec beaucoup plus
d'acuité pour les établissements secondaires qui reçoivent annuellement de l'État des
dotations d'entretien insuffisantes prélevées sur le minerval et variant entre FBU 200\.000
et FBU 400\.000 suivant les effectifs\. En particulier, le mobilier et les sanitaires des
internats nécessitent des fonds d'entretien plus importants à cause de leur détérioration
rapide causée par l'augmentation du nombre des internes: parfois les effectifs prévus au
départ ont été par la suite multipliés par deux ou par trois\. Il y a lieu de mentionner que le
BPE a élaboré un guide de maintenance et l'a présenté lors de deux séminaires des
directeurs des établissements secondaires\. Mais il reste à imprimer et à diffuser ce guide\.
1\.44 Durant son exécution, le Projet a bénéficié des services de 10 assistants techniques
financés par la Banque, le PNUD et la Coopération Belge\. Les membres de cette
assistance technique étaient spécialisés dans les domaines suivants: passation de marchés,
architecture et travaux publics, ingénierie, planification et administration de l'éducation,
Evaluation de l'Exécution du Projet 13
imprimerie\. De manière globale, l'assistance technique a été bénéfique au Projet puisque
les nationaux ont progressivement pris la relève et continué les activités du Programme
sauf à la DPE\. Le nombre des assistants techniques a été réduit à 2 avant la fin du Projet
en décembre 1995 grâce à la vigilance du BPE et de la Banque en ce qui concerne la
formation du personnel local\. Cela n'a pas été facile dans certains cas, où l'assistance
technique a voulu se substituer au personnel local prétextant du manque d'aptitude des
nationaux\.
1\.45 Dans le domaine de la formation, 15 agents du Projet (5 pour le BPE, 8 pour le
BER et 2 pour la RPP) ont reçu une formation à l'étranger dans les domaines suivants:
passation des marchés, gestion des projets, construction d'écoles, comptabilité et finances,
gestion des imprimeries et photocomposition\. La durée des séminaires et stages a varié
entre un et sept mois\. Une vingtaine d'employés du BPE a reçu une formation locale en
informatique pour l'utilisation de divers logiciels\.
D\. FACTEURS IMPORTANTS AYANT AFFECTE LE PROJET
1\.46 L'exécution du Projet a été affectée par un certain nombre de facteurs qui ont
dévié l'intérêt des partenaires et entraîné des retards, à savoir: la non-performance du
premier Conseiller Technique, l'annulation de l'appel d'offres pour l'informatisation de la
DPE, le non-respect en mars 1991 par le Gouvernement des conditions de passage à la
seconde phase du Projet, la grande mobilité du personnel au niveau de la DPE et le
manque de moyens matériels et financiers, les campagnes électorales de juin 1993 et les
événements d'octobre 1993\.
1\.47 Le premier Conseiller Technique financé par le PNUD semblait ignorer totalement
le rôle qu'il avait à jouer au niveau de la DPE par manque de communication: réalisation
des PDP, mise à jour du tableau de pilotage, confection de l'annuaire statistique, etc\. Il fut
remplacé par un second Conseiller en août 1990\. Les conséquences qui ont résulté de la
non-performance du premier Conseiller est la non-préparation du PDP de 1989 et le retard
de trois ans accusé au départ dans la production de l'annuaire statistique\.
1\.48 L'annulation par la Banque pour vice de procédure (le 18 mai 1990) de l'appel
d'offres pour l'acquisition de matériel informatique destiné à la DPE a entraîné du retard
dans la production des statistiques par celle-ci\. En effet, il a fallu attendre que le
Gouvernement finance l'achat de ce matériel sur ses propres ressources\.
1\.49 Après le constat de la mission de la Banque de mars 1991 que les conditions de
passage à la seconde phase du Projet n'étaient pas réunies, les décaissements sur les
catégories correspondant à la deuxième phase du Crédit 1881 BU ont été retardés de trois
mois en attendant de recevoir la lettre d'engagement du Gouvernement et le PDP incluant
l'enseignement supérieur\.
1\.50 Après le départ de l'assistant technique en planification et administration de
l'éducation en juin 1994, la DPE a connu une grande mobilité de personnel\. En l'espace
d'une année, trois cadres nationaux ont quitté cette direction: un Directeur, un Directeur
14 Burundi: Projet de Développement du Secteur de l'Education
Adjoint et un cadre\. A l'origine de ces départs, il y a le manque de motivation financière et
l'insécurité causée par la crise socio-politique qui sévit dans le pays depuis les événements
d'octobre 1993 et d'avril 1994\. A cela s'ajoute le fait que le budget de la DPE est devenu
très limité ce qui ne lui permet pas de réparer du matériel en panne ou de recruter
ponctuellement des enquêteurs\.
1\.51 Les élections présidentielle et législatives de juin 1993 ont entraîné une
démobilisation de la part des autorités parce qu'elles constituaient une première dans
l'histoire du pays\. Cette démobilisation s'est manifestée par des retards dans la prise de
certaines mesures de réforme\.
1\.52 Les conséquences de la crise de 1993 ont entravé l'exécution du Projet dans les
domaines suivants: (i) difficultés pour obtenir des données et informations de l'intérieur du
pays pour la production des statistiques de 1994 et 1995: tableau de pilotage, annuaire
statistique; (ii) accentuation de la crise en ressources humaines selon l'estimation que 25%
des enseignants du primaire et 42% du secondaire n'ont pas rejoint leurs postes depuis le
début de l'année 1994\. La plupart de ces enseignants sont morts, ou réfugiés, ou sont
rentrés chez eux, au Zaïre ou au Rwanda\. En outre, presque tous les directeurs d'écoles
avaient été remplacés avant cette date par "promotion politique"; (iii) dégâts de manuels
scolaires surtout au niveau du secondaire où le ratio livre/élève est passé de 1/2 avant
octobre 1993 à 1/3 actuellement; (iv) retard dans la réfection du Lycée de Gitega dû à la
lenteur des études et des procédures de passation des marchés trop longues; et (v)
nécessité de réfectionner et de rééquiper certaines écoles primaires et secondaires
endommagées et dont le coût n'était pas prévu dans le Projet\.
E\. VIABILITE DES RESULTATS
1\.53 Après avoir connu une période de léthargie entre juillet 1988 et juillet 1990, la
DPE a connu un regain d'activités entre août 1990 et juin 1994\. Depuis, c'est presque
l'effondrement total et la préparation des PDP, des annuaires statistiques et du tableau de
pilotage accuse deux années de retard à cause d'un manque de ressources humaines et
financières\. Par conséquent, il existe un besoin pressant de renforcement de la DPE et des
cellules PDP\.
1\.54 En ce qui concerne l'amélioration de la qualité et de l'efficacité de l'enseignement,
plus de 25% des résultats atteints avant octobre 1993 ont été effacés du fait de la
destruction de certains manuels scolaires, de la pénurie d'enseignants du primaire à
l'intérieur du pays (pour cause d'insécurité) et de celle des enseignants du secondaire et du
supérieur\. Pour ce qui est des manuels scolaires du primaire, la RPP a déjà remplacé ceux
qui étaient détruits en maintenant le ratio normal de la double vacation qui est de un livre
pour deux élèves\. Par contre, s'agissant des manuels scolaires du secondaire, le BEPES
n'a pas encore retrouvé le ratio livre/élèves qui était de 1/2 en septembre 1993\. Les
inscriptions risquent de baisser pendant un certain temps, à l'exception des collèges
communaux\. Le niveau des effectifs du primaire et du secondaire de septembre 1993
pourrait être atteint de nouveau à condition que la paix sociale et la stabilité politique
Evaluation de l'Exécution du Projet 15
reviennent, mais seulement après que les personnes déplacées (instituteurs et élèves) aient
regagné confiance au régime en place et rejoint leurs domiciles\.
1\.55 La construction et la réhabilitation des écoles primaires et secondaires ont été de
bonne qualité\. Cependant l'entretien des locaux et des équipements est un problème
crucial dans les établissements secondaires\. Bien que récents, certains bâtiments ont déjà
besoin de peintures extérieures et de réparation des sanitaires et des installations
électriques pour éviter une dégradation rapide\.
1\.56 En résumé, la viabilité à long terme des réalisations auxquelles le Projet a donné
lieu dépend en grande partie d'un retour à la paix sociale et à la stabilité politique, de la
volonté des deux ministères de l'éducation de donner à la DPE la place qui lui revient et
de l'allocation par le Gouvernement de fonds suffisants pour l'entretien des écoles
secondaires\. C'est incertain d'atteindre ces résultats du fait des problèmes politiques au
Burundi\. L'atteinte de ces résultats est cependant incertaine en raison des problèmes
politiques que connaît le Burundi\.
F\. PERFORMANCE DE LA BANQUE
1\.57 La durée du Projet était initialement prévue pour cinq ans et demi\. La date de
clôture du Crédit a été prorogée à deux reprises, ce qui a eu pour effet de prolonger la vie
du Projet de deux ans\. La Banque a consacré des ressources considérables aux diverses
étapes du cycle du projet, à raison de 185 semaines de travail, pour un coût d'environ
474\.200 dollars EU(voir Tableau 12 dans la Section 2)\. Le coût de ces ressources
représente 1,6% des fonds décaissés (30,4 millions de dollars EU)\. En termes de temps,
l'apport de la Banque se décompose ainsi: (i) 37 semaines pour la préparation du projet;
(ii) 24 semaines pour l'évaluation et l'approbation par le Conseil; (iii) 11 semaines pour
l'entrée en vigueur du Crédit; (iv) 107 semaines pour le travail de supervision, étalé sur six
ans et demi, au rythme de 16 semaines par an sur le terrain et au siège; et (v) 8 semaines
pour l'achèvement du projet\.
1\.58 L'identification et la préparation du projet ont débuté en novembre 1986\. La
manière dont la Banque s'est acquittée de ce travail de préparation est jugée, dans
l'ensemble, satisfaisante, en raison de l'effort mené pour faire coïncider les objectifs du
Projet avec les priorités du Gouvernement dans le secteur de l'éducation\.
1\.59 Parmi les trois risques identifiés au départ deux se sont produits: (i) le risque lié au
manque de contrôle de la croissance des effectifs du secondaire et du supérieur et à
l'absence d'une mise en place d'un système de recouvrement des coûts de l'éducation; et
(ii) le risque lié à l'augmentation des bourses du second cycle du secondaire et de
l'enseignement supérieur\. Par contre, les événements d'octobre 1993 n'étaient pas
prévisibles\.
1\.60 La performance de la Banque durant la phase de supervision est jugée satisfaisante\.
Les missions régulières de supervision du Projet ont permis de conseiller le Gouvernement
sur des politiques et des mesures permettant d'atteindre les objectifs du secteur, en
16 Burundi: Projet de Développement du Secteur de l'Education
particulier au cours de 1991 et 1992 lors de la revue à mi-parcours du Projet\. Egalement,
les missions de supervision ont répondu avec diligence à des besoins non anticipés, en
particulier pour la reconstruction et la réfection des locaux endommagés suite à la crise
d'octobre 1993\. La Mission Résidente a joué un rôle important de suivi entre les missions
de supervision, en particulier depuis 1994\.
G\. PERFORMANCE DE L'EMPRUNTEUR
1\.61 La performance de l'Emprunteur durant la phase d'identification et de préparation
a été jugée satisfaisante, compte tenu de la part et de l'initiative qu'il a prises en vue
d'identifier les composantes du projet\.
1\.62 Au stade de l'exécution, sa performance est jugée satisfaisante jusqu'en septembre
1993 avant le déclenchement de la crise socio-politique qui constitue un facteur externe
ayant affecté l'exécution du Projet\. Suite à la crise d'octobre 1993, le BPE a continué de
jouer un rôle critique dans la mise en place d'un programme d'urgence et dans
l'achèvement des activités du Projet\. Cependant, les résultats atteints en termes de
développement institutionnel n'ont pu être maintenus faute de départs massifs
d'enseignants, des directeurs d'établissement et du personnel du MEN\.
1\.63 Avant la crise de 1993, la DPE a préparé deux années de PDP, deux annuaires
statistiques et a mis à jour le tableau de pilotage jusqu'en 1993\. Le CCAP a su
coordonner les activités du BER, du BEPES, du BEET et contrôler efficacement la
formation continue des enseignants du primaire et du secondaire, des directeurs d'écoles
et des inspecteurs\. Le BPE s'est montré performant dans la construction et la remise en
état des établissements scolaires\. Le programme qui était initialement prévu a été réalisé à
temps à l'exception de la réhabilitation du Lycée de Gitega confiée à une entreprise privée
et dont les travaux ont été achevés en juin 1995\. Une étude comparative du BPE et du
secteur privé dans la construction des infrastructures scolaires réalisée en mai 1994
reconnaît à l'actif du BPE que: (i) la qualité des constructions est généralement bonne et il
n'y a pas de différence notable avec le privé; (ii) les coûts et délais d'exécution ont été
dans l'ensemble inférieurs aux estimations\. En ce qui concerne les coûts, l'étude parle
d'une différence de 38 à 50% en faveur du BPE\. L'effet conjugué de cette compétitivité
des coûts et des deux dévaluations du Franc Burundais a permis de réaliser des économies
sur le Crédit IDA de l'ordre de 200 millions de FBU (790\.000 dollars)\. Dans le domaine
de l'entretien des bâtiments et des équipements, le BPE a élaboré un guide de maintenance
et initié en 1993 l'octroi de prix aux 5 premières écoles secondaires qui se sont distinguées
dans l'entretien physique du patrimoine scolaire\. Par contre, le BPE chargé de la gestion
administrative et financière du Projet n'a pas été performant dans le respect du délai de
transmission des rapports d'audit dans les six mois qui suivent la clôture de l'exercice\.
Tous les 6 rapports d'audit des exercices 1989 à 1994 ont été transmis à la Banque avec
du retard (voir Tableau 10)\.
1\.64 Le Gouvernement n'a pas rempli, à proprement parler, les deux conditions
majeures pour le démarrage de la seconde phase du programme d'investissement\. Tel
qu'indiqué au paragraphe 1\.18, la Banque a autorisé les décaissements sous la seconde
Evaluation de l'Exécution du Projet 17
phase après avoir reçu confirmation par le Gouvernement des décisions sur la mise en
place de politiques dans l'enseignement supérieur et la production d'un PDP pour le sous-
secteur, et sur la base du constat que le programme était mis en place dans l'esprit de
l'Accord de Crédit de façon satisfaisante, en dépit des événements inattendus\. Trois
conditions liées à l'entretien des établissements n'ont été respectées que partiellement, en
particulier depuis 1993\. Enfin, les six rapports de vérification ont été soumis en retard,
bien que la gestion financière du Projet ait été jugée satisfaisante\.
H\. EVALUATION DES RESULTATS
1\.65 La plupart des objectifs du Projet ont été atteints et quelquefois même dépassés,
exception faite en ce qui concerne la plupart des mesures de rationalisation du secteur
(Tableau de Pilotage et Indicateurs de Performance) et le renforcement des capacités des
ministères de l'éducation\. Compte tenu de la crise qui sévit dans le pays depuis les
événements d'octobre 1993, les résultats concernant l'exécution du Projet et les objectifs
de développement sont mitigés\. Durant la période 1986/87 à 1992/93, l'accès à
l'enseignement de base s'est amélioré, bien qu'à un taux inférieur aux prévisions\. A la
rentrée scolaire 1993/94, plus de 25% des élèves du primaire et du secondaire ne sont pas
retournés à l'école\. En se basant sur des hypothèses optimistes, le niveau du taux brut de
scolarisation du primaire atteint en 1992/93 (68%) pourrait être atteint de nouveau en
1996/97\. Les effectifs aux niveaux secondaire et supérieur ont augmenté plus rapidement
que prévu, entraînant une hausse importante de la part du budget public alloué à ces
niveaux\. Le Projet a financé deux études d'évaluation d'impact en 1995; elles doivent être
finalisées ((paragraphe 1\.37)\.
1\.66 Le Projet a financé des activités de développement des ressources humaines en
formant des enseignants, des directeurs et des inspecteurs des écoles primaires et
secondaires\. On estime que 25% des enseignants du primaire et 42% du secondaire n'ont
pas rejoint leurs postes depuis le début de l'année 1994\. Au milieu de l'année 1994, le
Gouvernement lança un programme d'urgence pour recruter et former des étudiants du
niveau secondaire inexpérimentés et non-qualifiés en vue de remplacer les enseignants du
primaire alors que du personnel administratif fut reconverti pour enseigner dans le
secondaire\.
1\.67 Le volet construction et remise en état des écoles primaires et secondaires a été
exécuté comme prévu et quelquefois les réalisations dépassent les prévisions\. Néanmoins,
l'entretien des écoles secondaires demeure un problème crucial à cause des effectifs
disproportionnés aux capacités d'accueil et de l'insuffisance des ressources mises
annuellement à leur disposition par l'État pour leur entretien\. L'assistance technique a
associé les cadres nationaux aux travaux qui lui étaient confiés et la relève a été
généralement bien assurée\. L'échec constaté au niveau de la DPE est beaucoup plus
imputable à la mobilité du personnel local et à un manque d'attention de la part des
responsables politiques\. Sur 9 études commencées durant la vie du Projet, 7 ont été
achevées et 2 restent à finaliser (voir Tableau 7)\.
18 Burundi: Projet de Développement du Secteur de l'Education
L\. OPERATION FUTURE
1\.68 Afin d'assurer le suivi de l'évolution des principaux indicateurs du secteur, le
Gouvernement s'est engagé à rebâtir la capacité institutionnelle de la DPE pour préparer
des annuaires statistiques et des PEP\. Le MEN a déjà demandé une assistance de la
Banque dans le cadre du Crédit d'Urgence et de d'autres donateurs\. Par contre, il n'y a pas
de programmes précis pour la suite des deux études d'évaluation d'impact puisqu'une
grande proportion des enseignants, des directeurs d'établissements et des conseillers qui
ont bénéficié de formations ne sont plus en poste ou ne travaillent plus dans le secteur\.
Les établissements construits ou réhabilités dans le cadre du Projet seront utilisés aux fins
prévues\.
1\.69 La Banque, en collaboration avec le Gouvernement, avait commencé la
préparation d'un Cinquième Projet Education depuis octobre 1992\. Le 8 mars 1996, le
Gouvernement a crée un Groupe de Réflexion chargé d'identifier les actions prioritaires à
mener dans le secteur de l'éducation\. Ces actions concernent: la scolarisation universelle
au niveau primaire, l'appui au développement de l'enseignement général secondaire,
technique et professionnel, le développement de l'enseignement supérieur, le
développement de l'enseignement privé, l'appui au renforcement institutionnel dans
l'administration de l'éducation, les conditions de travail des enseignants et les stratégies de
financement de l'éducation\. Les premières ébauches ont été publiées en mai 1996\.
1\.70 L'éducation demeure un des secteurs clés pour le lancement d'actions visant la
réconciliation nationale et le retour à la paix\. Cependant, dans les circonstances actuelles,
il est peu probable que la Banque finance des investissements massifs dans le secteur avant
un retour à la paix\. Des formules d'assistance plus appropriées pourraient comprendre un
appui modeste à des campagnes d'information, d'éducation à la paix et d'autres activités
prioritaires qui pourraient contribuer à assurer un accès équitable à l'enseignement de base
et secondaire\.
J\. PRINCIPAUX ENSEIGNEMENTS
1\.71 L'expérience de ce projet démontre qu'il n'y a pas de réponses toutes faites au
problème de la formulation des conditions dans des projets d'éducation\. Cette expérience
montre qu'il faut exercer un bon jugement, à savoir, une flexibilité dans l'interprétation,
combinée au respect de certains principes de base\. Les principaux enseignements de ce
projet sont résumés dans les propos suivants\.
1\.72 Les conditions de décaissement basées sur l'atteinte de résultats découlant de
politiques sectorielles ne devraient être utilisées que dans des cas où le changement de
politique constitue un pré-requis nécessaire pour la justification ou l'utilisation rentable de
l'investissement qui fait l'objet de la condition\.
1\.73 Les conditions devraient être structurées de façon à encourager les bénéficiaires à
respecter ces conditions\.
Evaluation de l'Exécution du Projet 19
1\.74 Les conditions devraient éliminer toute ambiguité et être comprises parfaitement
par toutes les parties\. Dans les cas où des conditions à caractère plus général sont jugées
plus appropriées que des conditions spécifiques, celles-ci devraient définir des critères
explicites de performance\. Le tableau de pilotage, et ses indicateurs, est utile\. Cependant,
il ne doit pas faire l'objet d'un contrat formel\.
1\.75 Le calendrier de la revue des conditions devrait coïncider avec des événements-clés
à l'intérieur de l'année scolaire ou du cycle budgétaire, de façon à permettre au
Gouvernement d'adopter des actions nécessaires sans pour autant bloquer des
investissements qui dépendent de l'achèvement de ces conditions\.
1\.76 Bien qu'il soit difficile d'entrevoir des changements politiques majeurs ou des crises
sociales comme celles qui sont survenues au Burundi durant la mise en place de ce projet,
les projets sectoriels devraient avoir la flexibilité de s'adapter aux besoins d'urgence\. A
travers l'usage des économies réalisées grâce à la gestion efficace du projet, le
Gouvernement a pu financer une partie importante de son programme de reconstruction
d'urgence pour des écoles endommagées au cours des événements qui ont suivi la crise
d'octobre 1993\.
1\.77 Enfin, les opérations financées par le PNUD et l'UNICEF devraient être reflétées
dans les états financiers du Projet même quand ces fonds ne sont pas gérés par la Banque\.
Cette lacune est contraire au principe d'exhaustivité de la Banque qui veut que toutes les
ressources et dépenses d'un projet soient comptabilisées\. A l'avenir, des arrangements
devront être faits pour que les opérations financées parallèlement puissent être
comptabilisées par l'agent d'exécution du Projet\.
2\. DONNEES STATISTIQUES
Tableau 1: Résumé des évaluations
A\. Réalisation des objectifs Substantielle Partielle Négligeable Sans objet
Macropolitiques 1
Politiques sectorielles J
Objectifs financiers 1
Développement institutionnel /
Objectifs matériels 1
Réduction de la pauvreté
Problématique hommes/femmes
Autres objectifs sociaux
Objectifs environnementaux /
Gestion du secteur public
Développement du secteur privé
Autres (préciser)
B\. Viabilité du projet Probable Peu probable Incertaine
Données Statistiques 21
C\. Performance de la Banque Très Satisfaisante Insuffisante
Satisfaisante
Identification l
Aide à la préparation J
Evaluation J
Supervision J
D\. Performance de Très Satisfaisante Insuffisante
l'Emprunteur Satisfaisante
Préparation J
Exécution J
Respect des clauses J
Fonctionnement J
E\. Evaluation des Résultats Très Satisfaisante Insuffisante
Satisfaisante
J
22 Burundi: Projet de Développement du Secteur de l'Education
Tableau 2: Prêts/Crédits connexes de la Banque
Titre du Prêt/Crédit Objectif Année Situation
d'approbation Siuto
Opérations antérieures
* Crédit 679 BU Amélioration quantitative et qualitative de 1977 Clos en 1983
Premier projet éducation l'enseignement primaire, formation des
enseignants pour l'enseignement des
matières pratiques, préparation de
nouveaux programmes scolaires et
production de matériels didactiques\.
* Crédit 976 BU Extension et amélioration du programme 1980 Clos en 1985
Deuxième projet éducation d'enseignement technique, formation
d'ouvriers spécialisés et de techniciens dans
les domaines suivants: construction,
commerce, travaux publics, mécanique,
dessin, dactylographie et comptabilité\.
* Crédit 1358 BU Extension et amélioration de 1983 Clos en 1988
Troisième projet éducation l'enseignement primaire formel et informel,
extension de l'enseignement du premier
cycle du secondaire, renforcement du
Bureau d'Education Rurale (BER)\.
Opérations parallèles
* Crédit 2494 BU Encouragement de la population à 1993 En cours:
Programme d'Action Sociale s'engager dans de petites activités de priorité a été
génération de revenus; amélioration des donnée aux
conditions de vie par la création d'emplois, infrastructures
l'amélioration des services sociaux et des sociales dont
infrastructures; encouragement des la construction
collectivités locales à participer dans des des écoles
activités de développement similaires; et représente
renforcement des capacités de l'Emprunteur 80% de la
à évaluer et contrôler les tendances des demande de la
conditions de vie de la population\. population\.
* Crédit 2668 BU Réhabilitation des secteurs de la santé, de 1994 En cours
Programme d'Action d'Urgence l'éducation, de l'agriculture, des
infrastructures, du secteur privé et
réalisation d'audits et d'études\.
Opérationfuture Les objectifs du Projet sont en cours de Sans objet En prépa-
Cinquième projet éducation définition par un Groupe de Réflexion créé ration
le 8 mars 1996 par les deux ministères de
l'éducation\.
Données Statistiques 23
Tableau 3: Calendrier du projet
Etapes du cycle du projet Date prévue Date effective
Identification Novembre 1986 Novembre 1986
Préparation Décembre 1986 Décembre 1986
Evaluation Avril 1987 7-21 avril 1987
Négociations Décembre 1987 7-11 décembre 1987
Approbation par le Conseil Février 1988 23 février 1988
Signature n\.d\. 28 mars 1988
Entrée en vigueur Avril 1988 20 juillet 1988
Revue à ml-parcours 1991 12-22 mars 1991
Achèvement du Projet 31 décembre 1993 31 décembre 1995
Clôture du Crédit 30 juin 1994 19 juin 1996*
* Correspond à la date d'annulation du solde non décaissé du Crédit\.
Tableau 4: Décaissements du Crédit: prévisions et montants effectifs
(milliers de dollars)
Exercice 1988 1989 1990 1991 1992 1993 1994 1995 1996
Prévisions (REP) - 3\.500 8\.500 14\.500 20\.500 26\.500 31\.500 -
Réalisations - 3\.066 8\.181 14\.770 19\.567 23\.718 26\.835 29\.741 30\.725
Réalisations/Prévis\. - 88% 96% 102% 95% 89% 85% -
Date du dernier décaissement: 29 mai 1996
24 Burundi: Projet de Développement du Secteur de l'Education
Tableau 5: Indicateurs de Performance
Nbre Objet Niveau Mesures/Actions Repère Projection Actuel Récent Commentaires
(1986/87) (1991/92) (1991/92) (1994/95)
1 Effectif Primaire atteindre la 446,000 781,000 631,039 537,795 Croissance moins rapide que prévue due
d'élèves scolarisation élèves en particulier à l'insécurité dans les zones
universelle rurales\.
2 Secondaire Linuter l'accès dans 21,000 30,000 42,220 39,676 Expansion très rapide à partir de 1990-91
Général les écoles publiques élèves avec l'ouverture des collèges communaux\.
3 Secondaire Stabiliser les 3,600 4,000 5,403 4,569 Croissance plus rapide que prévue due
Technique effectifs aux étudiants aux pressions sociales\.
environs de 4000
étudiants
4 Supérieur Maintenir le niveau 2,500 2,500 3,787 4,628 Croissance incontrôlée en réponse aux
actuel étudiants pressions sociales
5 Rende- Primaire Accroître le taux de 75% 85% 71% 64% Piètre performance due à l'incapacité de
ment promotion limiter le nombre des redoublements en fin
inteme de cycle\.
6 Supérieur Diminuer le taux de 43% 30% 18% 16% Meilleure performance que prévue, avec
redoublement en des variations importantes entre facultés et
premiere année écoles\.
7 Ratio Primaire Augmenter le ratio 1:63 1:70 1:66 1:52 Ratio acceptable compte tenu de la
Maître: dimension des classes et de la double
élèves vacation\.
8 Secondaire Augmenter le ratio 1:21 1:25 1:25 1:26 Atteint\.
Général
9 Secondaire Augmenter le ratio 1:11 1:15 1:13 1:11 En raison de la croissance moins rapide
Technique __que prévue des effectifs d'élèves\.
10 Supérieur Augmenter le ratio 1:8 1:10 1:11 1:16 Atteint et même dépassé en raison de la
_ __ _croissance rapide des effectif d'élèves\.
Données Statistiques 25
i Charge Primaire Maintenir au niveau 37 heures/ 37 37 NA Objectif atteint\.
de actuel semaine
travail
des
12 enseigna Secondaire Augmenter 16 heures/ 21 18 NA De nombreux enseignants continuent d'être
nts Général graduellement semaine affectés à des postes administratifs\.
13 Secondaire Augmenter 16 heures/ 18 15 NA Objectif pas atteint\.
Technique graduellement semaine
14 Supérieur Augmenter 204 heures/ 240 220 NA L'augmentation de 204 à 220 heures a été
graduellement année mise en place plus tard que prévu (en
1991/92)\.
15 Ensei- Primaire Réduire le nombre 10\.6% des 6% 9% NA Pas atteint\. Il existe une grande
gnants des vacataires\. enseig- proportion de femmes qui bénéficient de
vacatair nants congés (maternité par exemple)\.
es
16 Personn Primaire Réduire la 8% du 5% 5% NA Atteint\.
el non- proportion entre personnel
enseigna personnel enseignant non-
nt et non-enseignant\. enseignant
17 Secondaire Réduire le ratio non- 1:65 1:85 1:44 NA Pas atteint\.
enseignant:
étudiants\.
18 Supérieur Réduire la 97% du 75% 66% NA Pas atteint\.
proportion entre personnel
administrateurs et admis\.
enseignants\.
19 Intemats Secondaire Réduire la 86% des 71% 82% 85% Les données n'incluent pas les effectifs des
proportion des étudiants collèges communaux qui n'ont pas
intemes\. d'intemats\.
26 Burundi: Projet de Développement du Secteur de l'Education
20 Recou- Primaire Augmenter le 200 FBU 400 FBU 300 FBU 300 FBU Pas atteint\.
vrement minerval (FBU par élève (courant) (courant)
des constants 1987) par année
coûts\.
21 Secon-daire Augmenter les frais 6,000 FBU 9,000 FBU 9,000 NA Atteint\.
général et pour les intemes\. par FBU
technique étudiant, (courant)
par an\.
22 Bourses Supérieur Réduire le nombre de 120 40 122 20 Pas atteint\. Le Gouvemement estimait
d'études bourses nationales à bourses qu'il avait besoin de plus de diplômés\.
l'étranger\.
23 Supérieur Augmenter les frais 100 FBU 150 FBU 150 FBU 128 Pas atteint\. Augmentation récente fait
de repas\. par jour partie des mesures de rationalisation\.
24 Impact Primaire Augmenter le 7,140 11,200 9,582 10,285 Pas atteint\. Du à la croissance moins
sur le nombre d'enseignants ensei- rapide que prévue des effectifs d'élèves\.
person- gnants
nel
enseign\.
25 Secon-daire Augmenter le 1,000 1,200 1,701 1,759 Pas atteint\. Du au besoin de recruter des
nombre d'enseignants ensei- enseignants pour les collèges
gnants communaux\.
26 Supérieur Maintenir le nombre 270 ensei- 270 356 283 Pas atteint\. Récente diminution due au
d'enseignants gnants départ de plusieurs enseignants après la
_ ___ _crise de 1993\.
Données Statistiques 27
27 Allocati Primaire Augmenter la part de 45% 54% 44% 41% Atteint partiellement\. Tendances récentes
on l'enseignement montrent une diminution importante de la
budgétai primaire\. part de l'enseignement primnaire\.
re par
sous-
secteur\.
28 Secon-daire Réduire la part de 30% 27% 28% 29% Atteint partiellement\.
l'enseignement
secondaire\.
29 Supérieur Réduire la part de 22% 17% 25% 27% Pas atteint\. L'augmentation incontrôlée
l'enseignement des effectifs d'étudiants risque de mettre
supérieur\. en péril les efforts d'universalisation de
l'enseignement de base\.
AI Coût Primaire Réduire les coûts 4,200 FBU * 3,800 à mi- 4,900 8,340 FBU Pas atteint\. L'augmnentation récente
unitaire unitaires par élève par année parcours FBU (courant) reflète les hausses de salaires et des
(FBU constant * 3,500 en (courant) bénéfices\.
indicate 1987)\. 1992
ur
synthéti
que
A2 Secon-daire Réduire les coûts 43,200 * 40,000 mi- 38,200 65,800 FBU Atteint, mais les données plus récentes
général unitaires par FBU par parc\.; FBU (courant) montrent une tendance à une
étudiant, par année\. année * 37,000 en (courant) augmentation rapide\.
1992
A3 Secon-daire Réduire les coûts 86,500 * 80,000 mi- 76,600 131,800 Atteint\.
technique unitaires par FBU par parc\.; FBU FBU
étudiant, par année\. année * 73,000 en (courant) (courant)
1992
A4 Supérieur Réduire les coûts 303,000 * 270,000 443,620 645,420 Pas atteint\. Du à l'augmentation
unitaires par FBU par mi-parc\.; FBU FBU incontrôlée des effectifs de l'Université et
étudiant, par année\. année * 240,000 en (courant) (courant) des coûts unitaires\.
1__ _ _ __ __ 1992 _ O
28 Burundi: Projet de Développement du Secteur de l'Education
Tableau 6: Indicateurs clés de l'opération future
Il importe de noter que le prochain projet n'a pas encore fait l'objet d'évaluation pour déterminer les
indicateurs\. Cependant, le Gouvemement devra continuer le suivi des indicateurs clés par la collecte
et l'analyse des statistiques de l'éducation et par la préparation annuelle du programme triennal des
dépenses publiques\. A cette fin, le Ministère de lEducation entend renforcer la capacité
institutionnelle au sein de la Direction de la Planification de lEducation\. Les études sur la qualité
continueront, notamment en ce qui conceme l'évaluation au terme du cycle primaire\.
Données Statistiques 29
Tableau 7: Etudes incluses dans le projet
Etude Objet Situation Impact
1\. Etude comparative du BPE et du secteur Etude de restructuration Etude réalisée en mai 1994: Faible: début d'exploitation par une
privé dans la construction des infrastructures conclusions non encore restructuration au niveau du Conseil de Gestion;
scolaires adoptées mise en place prochaine d'un service de
patrimoine appuyé par une mission de l'UNESCO\.
2\. Etude financière et institutionnelle de
2'ietéude financière etfrcmn innstitute de EFaible parce que la majorité des recommandations
l'Université du Buundi Renforcement institutionnel et Etude réalisée en mars 1995 n'est pas encore appliquée (analyse en cours du
de la gestion Groupe de Réflexion)
3\. Etude sur la stratégie et le plan d'action Réalisation en décembre 1995\. Etude pas encore exploitée, en cours d'analyse au
pour le développement de l'enseignement Plan de développement du Rapport définitif produit en mveau du Groupe de réflexion
secondaire communal, technique et de la e e ucabon avril 1996
formation professionnelle
4\. Etude sur la Revue desAmélioration des finances Réalisation en décembre 1995\.
Publiques pubhques Rapport définitif produit en
avril 1996
5\. Etude sur l'avenir institutionnel et Etude de restructuration Rapport final produit en février Adoption du nouvel organigramme et début de
financier de la RPP 1993 mise en place des recommandations
de l'esigne primairet qai\.atve Evaluation de l'impact de la \. \. \. Reste à finaliser\. Le Gouvernement a l'intention
de l'enseignement primaire et secondaire formation des enseignants et du de soumettre une rèquete de financement pour
matériel didactique fourni achever cette étude\.
7\. Etude des résultats du Concours natonal Analyse scientifique et Etude réalisée en juin 1995 Reste à finaliser\. Le Gouvernement a l'intention
et des tests natonaux de 10 ème et de pédagogique des résultats des 3 de soumettre une rêquete de financement pour
\.etùde natna des 10m meité d dernières sessions du Concours achever cette étude\.
national et des tests nationaux
8\. Etude sur les conditions de passage de Réglementation de l'accès en Analyse faite dans l'audit de Création récente d'une commission chargée de la
l'enseignement secondaire à l'enseignement fonction de la capacité l'Université mise en application des recommandations
supérieur d'accueil
30 Burundi: Projet de Développement du Secteur de l'Education
Tableau 8a: Coûts du projet
(en millions de dollars)
Prévions (REP)| Coûts effectifs
Coûts Coûts en Total Coûts Coûts en Total
locaux devises locaux devises
1\. Planification de
l'Education 0,4 1,3 1,7 0,2 0,9 I,I
2\. Amélioration
Qualitative
a) Primaire 2,8 3,2 6,0 1,4 1,6 3,0
b) Secondaire 0,5 1,4 1,9 0,5 1,3 1,8
3\. Amélioration
Quantitative
a) Primaire 2,2 5,7 7,9 1,7 4,4 6,1
b) Secondaire 2,8 10,4 13,2 1,9 7,4 9,3
4\. Administration du
Projet 0,2 0,7 0,9 1,6 6,9 8,5
5\. Bourses 0,2 1,3 1,5 0,2 1,3 1,5
6\. Provisions
a) Aléas matérials 0,5 1,5 2,0 _
b) Aléas financiers 1,5 0,9 2,4 -
TOTAL 11,1 26,4 37,5 7,5 23,8 31,3*
* Ne comprenant pas les fonds décaissés par l'UNICEF dont le montant n'a pas été communiqué\.
Données Statistiques 31
Tableau 8b: Financement du projet (en millions de dollars)
Prévisions (REP) Montants effectifs
Source Coûts Coûts en Total Coûts Coûts en Total
locaux devises locaux devises
BIRD 6,3 25,2 31,5 7,5 23,8 31,3
Gouvernement 4,5 - 4,5 4,4 - 4,4
UNICEF 0,3 0,7 1,0 n\.d\. n\.d\. n\.d\.
PNUD - 0,5 0,5 0,6 0,6
TOTAL 11,1 26,4 37,5 n\.d\. n\.d\. n\.d\.
Tableau 9: Coûts et avantages économiques
Comme aucune estimation de la valeur actuelle nette (VAN) ou du taux de rentabilité
économique (TRE) n'a été tentée lors de l'évaluation, on n'a pas de données de référence
permettant de faire une réestimation pour les besoins de l'évaluation rétrospective\. De plus,
aucun paramètre n'a été fourni à l'évaluation sur le plan du rapport coût-efficacité\.
32 Burundi: Projet de Développement du Secteur de l'Education
Tableau 10: Respect des clauses juridiques
Section de Type de clause Respect Date Date Desription de la clause Commentaires
l'Accord de prévue modifiée
Crédit
3\.02 (a) Politique Non Echanges de vues avant le 31 mars La réduction des coûts unitaire
sectorielle de chaque année sur la réduction des prévue n'a pas été respectée jusqu'en
coûts unitaires par élève, de l'ordre 1992/93\. Les données des années
de 9,1% dans le primaire, 7% dans 1993/94 et 1994/95 ne sont pas
le secondaire général, 7,5% dans le complètes à cause de la crise qui a
secondaire technique et 10% dans le commencé depuis octobre 1993\.
supérieur
3\.02 (b) Politique Partiel Echanges de vues avant le 31 mars Budget atteint jusqu'en 1993\.
sectorielle de chaque année sur la répartition
du budget: primaire 45-50%;
secondaire: 30-28%; supérieur: 22-
20%\.
3\.03 Exécution Partiel Préparation et soumission à l'IDA Les PIP et PDP de 1989/91 n'ont pas été
pour approbation: a PIP pour préparés ainsi que ceux postérieurs à
1989/91 pas plus tard qu'au 30 l'année 1993\.
septembre 1988; un PDP pour
1989/91 pas plus tard qu'au 31
décembre 1988; et, ensuite des PIP
et PDP pas plus tard qu'en
septembre et décembre de chaque
année, respectivement\.
3\.03 (d) Exécution Oui Tout nouvel investissement d'un Des documents concernant un prêt de
montant supérieur à 0,5 million de la BAD ont été soumis à l'IDA en
dollars doit être préalablement 1993 pour accord\.
examiné et accepté par l'IDA\.
3\.04 (a) Exécution Oui Réorganisation du BPE et La réorganisation fut terminée en
constitution de la DSC\. avril 1988\.
Données Statistiques 33
Section de Type de clause Respect Date Date Description de la clause Commentaires
l'Accord de prévue modifiée
Crédit
3\.04 (c) Exécution Oui Prendre toutes les dispositions
nécessaires pour s'assurer les
services des bénéficiaires de bourses
une fois leurs études achevées\.
3\.05 (a) Exécution Oui Soumettre un plan annuel de
constructions scolaires pas plus tard
que le 30 septembre de chaque
année\.
3\.05 (b) Entretien Partiel Concours du BPE pour le contrôle Contrôle fait en 1992 par le BPE pour
de l'utilisation des fonds d'entretien les écoles secondaires et suivi de la
par les administrateurs des remise de prix aux 5 écoles les mieux
collectivités locales et par les entretenues\.
directeurs d'établissement\.
3\.05 (c) Entretien Partiel Assurance par le Gouvernement Dans certaines écoles, la contribution
qu'une partie suffisante de la des parents est suffisante pour
contribution des parents soit l'entretien\.
réservée pour financer l'entretien
des écoles primaires\.
3\.05 (d) Entretien Partiel Assurance par le Gouvernement
que des fonds adéquats du budget
annuel de fonctionnement des
écoles secondaires soient réservés à
l'entretien de ces dernières\.
3\.06 Passation des Oui La passation des marchés portant Avec une exception concernant l'appel
marchés sur les fournitures, travaux et d'offres du matériel informatique destiné
services de consultants est régie par à la DPE et qui a été annulé par la
les dispositions de l'Annexe 4 de Banque\.
l'Accord de Crédit\.
34 Burundi: Projet de Développement du Secteur de l'Education
Section de Type de clause Respect Date Date Description de la clause Commentaires
l'Accord de prévue modifiée
Crédit
4\.01 Comptabi- Partiel L'Emprunteur fournit à l'IDA dans Tous les six rapports d'audit de la
lité/Audit (avec du les six mois qui suivent la clôture période 1989 à 1994 ont été transmis
retard) de chaque exercice le rapport avec du retard\. Le démarrage de l'audit
d'audit (incluant les états certifiés de 1995 est prévu en avril 1996\.
de dépenses) se rapportant à cet
exercice\.
Annexe 1 Déboursement Partiel Aucun retrait ne sera effectué au La mission à mi-parcours (Mars 1991)
titre des catégories 2 et 4 de a recommandé la flexibilité dans
l'Annexe 1 à moins que l'examen des progrès réalisés par
l'Association soit satisfaite (a) des l'Emprunteur et des actions à
progrès réalisés par l'Emprunter entreprendre par le Gouvernement\. Les
dans l'exécution du programme et déboursements au titre des catégories 2
(b) que les actions décrites à et 4 ont été autorisés au début de 1992\.
l'annexe 3 soient entreprises\.
Annexe 3 Déboursement Partiel Actions reprises aux para\. 3(b) de Voir Section 2, Annexe 5 pour le
l'Accord de Crédit": 1\. réduction en compte détaillé des progrès réalisés au
termes réels du budget par étudiant titre de ce programme
de 9,5% au niveau primaire, 7% au
niveau secondaire, 7,5% au niveau
secondaire technique et 10% au
niveau supérieur, par rapport au
budget 1986-1987; et 2\.
restructuration du budget de
l'éducation en changeant la
répartition des dépenses publiques
effectives comme suit: (a)
augmentation du budget du
primaire de 45% à 50%; (b)
réduction de celui du secondaire de
30 à 28%; et (c) réduction de celui
du supérieur de 22 à 20%\.
Données Statistiques 35
Table 11: Respect des directives du Manuel opérationnel
Titre et numéro de la Directive Commentaire
1\. D\.O\. 13\.05 Supervision des projets (par\. 4) La Banque a effectué une seule mission de
supervision durant l'année 1990, ce qui est
inférieur à la moyenne générale\.
Table 12: Ressources de la Banque - Personnel
(en semaines)
Etape du Mle du projet Nombre prévu Nombre modifié Nombre effectif
Semnaines $EU (en Semaines $EU (en Semaines $EU
milliers) rnilliers) (en (en
\.milliers) milliers)
Jusqu'à l'évaluation (préparation, 37,1 90,1
préévaluation)
Evaluation -* Conseil 24,0 58,2
Conseil -* Entrée en vigueur 11,0 27,4
Supervision 38,0* 70,5** 30,0* 41,3** 106,9 291,6
Achèvement 9,0 8,0 6,2 6,9
Total 47,0 1 38,0 185,2 474,2
* Pour les années fiscales 1994, 1995 et 1996\.
** Pour les années fiscales 1995 et 1996\.
36 Burundi: Projet de Développement du Secteur de l'Education
Table 13: Ressources de la Banque - Missions
Nota"ion de la performance
Etapes du cycle Mois/ Nbre de Nbre de Spécllites Etat d'avan- Impact sur Types de
du projet année per- jour sur représentées cenuet le dévelop- problèmes
SOes le terrin pement
Jusqu'à 06/86 2 11 A,E
l'évaluation
11/86 3 11 ES,A,E
04/87 3 ES,A,E
Evaluation - 10-11/87 3 11 ES,A,E
Conseil
Supervision 09/88 1 8 A i -
Supervision 12/88 1 5 E
Supervision 02/89 1 11 ES I I M
Supervision 11/89 2 15 ES,A M 2 M
Supervision 02-03/90 1 8 A M 1 M
Supervision 03/91 4 11 ES,A,E(2) 3 2 M
Supervision 07/91 1 18 A Pas de notation Pas de
notation
Supervision 01/92 3 12 ES,A,E 2 I M
Supervision 09-10/92 4 18 ES,A,E,C I 1 M
Supervision 05/93 3 12 ES,A,E 1
Supervision 09-10/93 5 19 ES(2),A,C(2) 1 1 M
Supervision 03/94 4 6 ES(2),A,OO 2 2 M
Supervision 02/95 2 15 ES(2),00 S S-
Achèvement 03/96 1 14 C M
A = ARCHITECTE TYPES DE PROBLEMES
C CONSULTANT F = DISPONIBILITE DES FONDS
DC = CHEF DE DIVISION S = ETUDES
DDC = CHEF DE DIVISION ADJOINT M = GESTION
SE = SPECIALISTE DE L'EDUCATION O = SITUATION D'ENSEMBLE
E = ECONOMISTE, TA = ASSISTANCE TECHNIQUE
FA = ANALYSTE FINANCIER
ES = SPECLALISTE DE LA MISE EN OEUVRE NOTATION DES PERFORMANCES:
PES/PIS = SPECIALISTES DE L'EXECUTION DES PROJETS I = AUCUN PROBLEME OU PROBLEMES
MINEURS,
OO = CHARGE DES OPERATIONS 2 = PROBLEMES MODERES
RS = SPECIALISTE DE LA FORMATION 3 = PROBLEMES MAJEURS, SOLUTION EN VUE
TTS = SPECLALISTE DE L'ENSEIGNEMENT TECHNIQUE 4 = PROBLEMES MAJEURS, PAS DE SOLUTION
EN VUE
(NEANT AU TITRE DE CE PROGRAMME)
S =SATISFAISANT
ANNEXE
38 Burundi: Projet de Développement du Secteur de l'Education
RAPPOPT - SYNTHESE
A\. LE PROJET
Le IVe Projet de Développement du secteur de l'e-ducation financé par le crédi t
IDA n° 1881-BU était guidé par les objectifs principaux suivants :
- mise en oeuvre des mesures visant à limiter les couts et à faciliter
l'ajustement du secteur ; -
- renforcement des capacités de planification budgétisation et contrôle des
coûts du Ministère de tutelle
- amélioration de la qualité et l'efficacité de l'Enseignement primaire et
secondaire
- amélioration de l'accès par l'augmentation de la capacité d'accueil\.
L'Accord signé le 28 mars 1988 prévoyait deux co-financiers à câté de l'IDA,
le Gouvernement participant directement sous forme de l'apport des collectivités
bénéficiaires sur le volet génie-civil des écoles primaires\.
Financements extérieurs : 57\.6l\.000 S dont IDA 31\.591\.100 S
PNUD 6'8\.200 5
UNICEF :l\.!'4\.O00 S
Un montant de 351\.000 DTS réservé à l'acquisition de matériel infcrmatique
a été annulé suite aux difficultés liées à la conclusion du marché\.
Dans la situation de 1987, période à laquelle le projet a été évalué, ces
objectifs étaient très pertinents et le restent actuellement surtout si l'on considère
que la crise socio-politique dans laquelle notre pays se débât depuis bientôt 3 ans
a remis en question les progrès réalisés Cans certains domaines\.
Les actions programmees en vue d'atteindre les objectifs susmentionnées, et qui
figurent plus haut dans ce rapport sont des différentes natures
- construction de 55 écoles prirnaires et réfection de 55 autres avec la
participation des com-lunautês Locales pour la fourniture des matériaux
ce gros oeuvre et quelques manoeuwres (une vingtaine)\.
39
Rapport de S-nthèse du Gouvernement
- uut, rucL u i dr 'u (UiL` u '~tlut'i;tx et dend::t\.aL : de ID tIyces
- 7ormation conLirjue dec enseiunanLs eL 2npui divers er o Un\.Itures de matérie\.
scien':fipue, l\.Lvres pou\. bibl:othèques du pri,maire e' du secondaire, équ:JPe-
nent in-crm,\.atique pour la planification, achat de véhicules d'encadrement,
bourses, assistance technique et autres\.
Le ?NUD a cofinancé l'équipement et l'Assistance technicue de lE Planification
tandis cue »'UNiCEF a pris en charge les stages du prima:re\.
Un tableau de pilotaoe et des indicateurs de perFormances ont été prévus pou:
suivre les zroores réalisés en cours d'exécution en ce qui concerne les mesures
d'accompecnement tendant vers l'ajustement du secteur éducatif lequel venait compléter
le prororm\.ne olus larce d'ajustement structurel adopté par le Gouvernement\.
Le 5PE desicné comme agence d'exécution devait se réorcaniser en une Direction
des constructions scolaires, suivre avec la DPE la mise en oeuvre des mesures visant
à promouvoir -l maintenance scolaire et associer le secteur privé cans la construction
avec Possi-Iité de comparer les coDts de ce dernier à ceux de la Régie\.
Le reliquat dégagé sur le financement, a éÈ- affecté de commun accord à
d'autres priorités movennant prorocation de la date d'achèvement\. Ceci e oermi
notamment de ,econstrui\.e certaines écoles endommagés lors de la crise et de mener
des études de préparation de projets Futurs\.
B\. REALISAÀIONS
Dans l'enserole, les réalisations au niveau quantilatif et qualitatif ont
dépassé les Drévisions méme si quelques insuffisances ont été relevées ici et là en ce
qui concerne entre autres le volet bourses, la reduction/répart\.iion de certains coDts
Par niveau d'e\.ioeTent\. la planiFication dans ses asoe-ts tecniqpes, firar-riers et bdoetaîes\. la rrun-
ter\.are des in,a-trcues\.
La crise qu: a éclaté en octobre 1993 et qui perdure a eu des efFets négatifs
sur la progress:on de certaines composantes Que ce soit au niveau de la dualîte\. de
I'acc~-s ou de la planification\.
40 Bwrundi: Projet de Développement du Secteur de l'Education
Xou- rep:,eflorlu ci-der;J\. !';:ente des; r \.S! so oils c ,-:
programmne :rkti\.a ou' :inanr ur D)nen er, L\.: qUi cuncerme e eDn:e \.; -cm2;-n
et les études\.
;
CODMPOSANIE PROGRAMME INIIlAL ALi-\.'110NS
1\. Génie Civil
: - ~r:2iie - Construction :\.66
- RéhabiliLation 191,6 375,9
- Reconstruction : -1:0,
: Secondaire
- Construction * ll,3 : E , 7
- Réhabilitation :858,6 : l 3\.:
- Reconstruction 9 -5\.7
2\. Staces
: - Primaire : 283\.1 : 2\.O
: - Secondaire 35,2 1' 3
3\. Sou\.ses
- Etrancers 38,1
* d\. Etudes 1'8\.3
' 5\. Appui divers 1\.82t\.! 2\.583\.6
4\.109 6\.042,2
Ouoique les réalisations soientsupérieures aux prévisions en ce qu- concerne
certaines composantes comme le Génie Civil et les stages, la crise a fail reculer le
niveau atteint dans différents secteurs signalé plus haut\. à cause de la violence qui
l'accompagnait et qui a occasionné des décès importants au sein du corps enseignants
tout en limitant l'activité et le temps passé en classe dans les régions touchees par
les troubles\. Ce prcblè\.me a eée accentué par le déDart du Dersonne! ètranger et le one-
nomène de déplacement des populations fuyant les z5nes per-urbées v compris les enseqg-
nants cui préFèrent exercer dans les z5nes dites de sécur:é relative\. Cec a lzmité
For\.ement les amélirations attendues au n:veau de l'acc-s, la qualité Ce !'Enseigne-
ment comme :mpact des actions menées mais aussi en ce qui concerne les mesures d'accom-
paonement cu proiet oui peuvent être difficilement suivi avec rigLeur en oe7ode de
Rapport de Synthèse du Gouvemement 41
Au cours de l'exàcct or du P! ojel ! des actions de sensili s2 tion ort te
menées à l'intention des gestionnaires d'établ\.ssements scolaires à *rave-s trois
sén::naires et une tournec rjênérole eilc lues dans les écoles secondaire pour uér:Fer
le suivi des recommandations en matière de propreté et de maintenance\.
Le constat fait à l'issue des visites était que le niveau de réalisations en la matière
était encore très bas\. La cr:se et les destruction qui i'accomaC\.nent ont contribué à
accentuer les difficultés\.
Tout les intervenants conviennent qse l'effort est à poursuivre par les premiers
concernés pour oue les Jnvestissements soient perennes\. les moyens de l'Etat n'étant
pas suffisant pour subvenir à tous les besoins\. Un service du patrimoine pourra etre
mis en place à l'avenir pour assurer un meilleur suivi de toute la situation des
infrastructures scol2ares\.
Planification sco\.al1e
------------------
Au re-ard des différentes étapes parcourues jusqu'au mois de juin 1994, on peut
constater qu'il v a eu de reels progrès avec l'appui de l'IDA même si des faiblesses
ont été relevées notamment au niveau institutionnel, et ur la d:;s=iiilité des dDries actLelles\.
Sionalons que le mois de juin 1994 correspond à la fin du mandat de l'Assistance
Technicue et avec elle l'appui matériel qui n'a pas pu etre remplacé\. Deouis cette
période aussi, l!e bureau a enregistré des départs parmi ses cadres à commencer par la
Direction\. Ceci est venu s'ajouter aux autres difficultés nées avec la crise comme
celles liées à la collecte des données et partant\. la mise à jour de certains indicateurs
qui constituent en ces mmetts la prenière Priorité pour pemettre de mix ca-rmitre la situaticn actuelle
et de projeter les resures rncessaires au pilotage du secteur\.
Aussi\. la mesure concernant le PIP et PDP n'a été réalisée que partiellement
;ur toute la durée du projet si l'on considère aussi la période couverte par 12 proro-
,ation de la date d'achèvement\.
esures d'ajustement sectoriels
\.------------:-----------------
Le tableau ce p:lotage des mesures à prencre et les indicateurs de perro mances
rees lors ce la préparation du projet devaient etre m:s à jour régulièrement par le
'reau ce la Planification de lEducation\.
42 Burundi: Projet de Développement du Secteur de l'Education
Cela a pu se ten cIt r k irli ~1, 1 in \.OSt J:I3dS\.i e IUScPJ ½ 'ei e; i ? de - -\. se\.
Dans l'ensernDle la procre stn a è'e bonne r-is r pa7t ouelques mezjnes ?" on; c-nnu
un certain dérapage\. La vers!in IF DIus récente tu tableau acconpaonie des commentaires
-e la planification fgu-re en annexe du présent \.appor\.
Activités du C\.C\.A\.P\.
---------------------
Dans le cadre de l'exécution, le C\.C\.A\.P\. a etè charoé du suivi des actions
d'amélioration qualitative en collaboration avec les différents bureaux pédagogirques
qui ont été directement mpl:ies dans l'organisation\. Ils ont bien accompli'>f- t\.avæl
si l'on considère le travail qui a été réalisé et la taille des effectifs qui ont é é
touchés à travers la Formation continue\.
S'agissant des CRPD, les objectifs n'ont pas êté atteints au niveau du râle
quils étaient appelés à jouer dans le milieu dimolan:ation\. Une relance s'impose
ainsi qu'une réorganisation des comités de gestion pour su-rmonter les difficultés\.
C\. PERrFRMANCES DANS LA IISC EN OEUVRE
C\.l\. De manière générale\. l'exécution du projet a été satis,faisante c:n\.e s; alé pl sait\.
L 'Assista-ce Teznicue aui a acouyé l'exL-,tion au coté cdi perse-rel r:o-cra a ;wreste da façnsa;-is-
sante sauf pcur deux unitès pcur JesqJe\.les la relè-\.e et le trasFert des crreisa--ces n'cnet pas été
aisés\. Les constructions ont été réalisées avec diligence et la quasité vculues tandis
que les stages des enseignants pilotées par le CCAP ont permis de toucher avec succès
une population de 9\.0O0 enseignants du primaire et du secondaire\. De méme l'exploita-
tion des supports d'enseignement comme les livres et matériels des sciences ont per\."i
sans contesLe d'améliorer la qualité de l'enseignement, ajouté au perfectionnement des
maitres\. Par contre, les CRPD n'ont pas atteint les résultats escomptés au niveau du
rayonnement vers les écoles primaires par l'organisation des activités péda2ogiques de
Formation continue\. Le Fond documentaire et les autres matériels a étê plus exploité
Par les seuls enseignants des écoles secondaires cù se trouvent installés ces Centres\.
De l'avis même du CCAP, cette action mérite c'etre redynamisée en vue
d tte±ndre les onjectiFs et la réussite dépendra essentiellement de la mot:vaî\.on
des responsables appelés à gérer ces centres\. laquelle constitue un élément cèterimnant
cans la conduite de touLe activité\.
j\. \./\.
Rapport de Sy-nthèse du Gouvernement 43
S'arj, ssant des cuoj),ncis qIu: éaioent atLendues de la Planfi;cat:cn a t,avers
lappui a20Dze r\. ce service, el!es ont ete; reelles jusqu'en juin 199' méme s: des
LFLfculté5s on, été sicnalées par moment au niveau institutionnelle nais aussi le
risoue DU :_ v avàît a retomber dans le besoin à la l:n ce l'assistance technique et
du soutien ce fonctibnnement qui était associé à cette aern:ere\.
- L'éclatement de la crise eh 1993 avec ses mauvaises consequences occasionnés
par l'însecr::ê, a été suivi du départ de l'assistance et la mobilité des cadres
notamment au niveau de la Direction et des autres agents\. Ces difFicultés eL le désor-
dre crée pa: la crise ont rendu difFicile aussi la réalisation de ce\.taines mesures
préconisées au niveau de l'ajustement de l'Education comme on pourra le constater sur
-le tableau de pilotage et les indicateurs de performr-nces\.
Tous ces fi\.ts ont remis en question les progrès réalisés à tel point que le
service a besoin d'un auLre appui matériel et en for\.ation des ressources humaines
pour rem?lIr convenablement sa mission, mais aussi une analyse instt'uticnnelle allant
dans le sens de reduire la arande mobilité au profit de la carrière et partant d'un
soutien erficace à la politicue de l'Education\.
C\.2\. Au nive-u de la Bancue
-------------------;--
Le projet a toujours bénéficié des missions \.e supervision fréquentes de la
part de cette dernière lesquelles ont permis d'évaluer chaque 'ois les procrés et les
difficultés survenues en cours d'exécution en vue d'v réméder à temps\. Ceci constitue
un gage de bonne exécution\.
Aussi\. des inFormations utiles ont été régulièrement communiquées aux gestion-
naires des Projets à travers des séminaires en ce qui concerne les grandes orientations
de la Sanque mais aussi pour recueillir Les avis etconsidérations des bénéficiaires
sur certaines stratégies à mettre en oeuvres pour un réel développement et aLLeindre
l'nojectif de lutter contre la pauvreté\.
iou; au long du projet, le Gouvernement a dener:ce d'un ree soutien
en ce ou: concerne les nouvelles priorités comme les programmes compiémentaires
ce cnstruc'^n/rehab:l:tat:on et reconstruction après l'é-'atement de la crise mais
aussi Les nouvelles études dont les requêtes de non objection et de prorogation de la
date d'ecnèvenent ont été analysées favorablement en général\.
44 Burundi: Projet de Développement du Secteur de l'Education
Le su-, ou r1v ,au cJ ! p\.l wm dcs ,'- éz ' de\. nrirJn5e - 'JD;» :--en: 1 e
satissasan: -*e!!e en-eZine C le bu,eau dexé uL:c- n'- ,art S e er L - --':es
a e: ses a\.-' een 'e r Lou rnsseurs e 7 e-es taeurs de se:- U:-s
2ien plus\. e I Ve Projet d'Educat on a sve rv nct: e emen\. de suoporp aux
autres projets ou services divers que le SPE a rendu aux autres services ministériels
et promoteurs dans le secteur de l'Education\. C'est le cas pour ce\.tains Financements
d'autres bailleurs et étudies reai:soes sans frais de fonctionnement au siJce (K:W -
A'CCT - HCR, é[udes diverses-\.) et qui aDportée leur au\. 2 évelccemen: de
I 'Education\.
IBRD 28085
CAMEROON 0 CEN FR!CAN REPUj1\._, SUDAN ETHIOPIA3000 030
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MAKAMA- Port
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Chef-Lieux des Province
National Capital
Capitale Nationale
Province Boundaries
Frontières des Province
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la | REVIEW |
P050880 |  ICRR 13525
Report Number : ICRR13525
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 04/29/2013
PROJ ID : P050880 Appraisal Actual
Project Name : Rural Poverty US$M ):
Project Costs (US$M): 40\.0 80\.5
Reduction Project -
Pernambuco
Country : Brazil Loan/ US$M):
Loan /Credit (US$M): 30\.1 56\.9
Sector Board : ARD Cofinancing (US$M):
US$M ):
Sector (s): Other social services
(35%)
Roads and highways
(25%)
General agriculture
fishing and forestry
sector (20%)
Power (10%)
Sub-national
government
administration (10%)
Theme (s): Participation and civic
engagement (25% - P)
Rural services and
infrastructure (25% -
P)
Rural non-farm income
generation (24% - P)
Rural policies and
institutions (13% - S)
Other social
development (13% - S)
L/C Number : L4625
Board Approval Date : 06/26/2001
Partners involved : Closing Date : 06/30/2005 01/31/2010
Evaluator : Panel Reviewer : Group Manager : Group :
John R\. Heath Ridley Nelson IEG ICR Review 1 IEGPS1
2\. Project Objectives and Components:
a\. Objectives:
(I) ORIGINAL PROJECT
The statement of project development objectives in the Project Appraisal Document (PAD) is similar but not identical
to that in Loan Agreement (LA)\.
According to the PAD, "The project aims to assist the State of Pernambuco to reduce currently high levels of rural
poverty by: (a) improving well-being and incomes of the rural poor through better access to basic social and
economic infrastructure and services and support for productive activities, using proven community-driven
development (CDD) techniques; (b) increasing the social capital of rural communities to organize collectively to meet
own needs; (c) enhancing local governance by greater citizen participation and transparency in decision-making,
through creation and strengthening of community associations and Municipal Councils; and (d) fostering closer
integration of development policies, programs and projects at the local level, by assisting Municipal Councils to
extend their role in seeking funding, priority-setting and decision-making over resource allocation" (pp\. 2-3)\.
According to the LA, "The objectives of the Project are: (a) to increase social and economic opportunities for the
Municipalities' rural poor by improving access to basic, social and economic infrastructure through Community
Subprojects; (b) to increase the social capital of rural communities to organize collectively and meet their own needs
; and (c) to foster local governance and citizenship through creation and strengthening of Municipal Councils, at the
same time forging links with governmental and nongovernmental agencies, civil society, financial institutions and the
private sector" (Schedule 2, page unnumbered)\.
(II) ADDITIONAL FINANCING
The additional financing that was approved in March 2007 had the same objectives as the original project\. The
statements of project development objectives in the Project Paper and the Loan Agreement were identical\.
According to the Additional Financing LA, "The objectives of the Project are: (a) to increase social and economic
opportunities for the Municipalities' rural poor by improving access to basic, social and economic infrastructure
through Community Subprojects; (b) to increase the social capital of rural communities to organize collectively and
meet their own needs ; and (c) to foster local governance and citizenship through creation and strengthening of
Municipal Councils, at the same time forging links with governmental and nongovernmental agencies, civil society,
financial institutions and the private sector; and (d) to scale up the impact of the Original Project by using the social
capital created by the Original Project to further increase incomes of the rural poor and by fostering closer integration
of development policies, programs and projects in rural areas at the local level, by assisting Municipal Councils to
extend their role in seeking funding from, setting priorities for and making decisions concerning the allocation of
resources from other programs beyond the Project" (Schedule 1, p\. 5)\.
IEG evaluates the project against the statement of objectives contained in the PAD, because this makes
clear that the project's overarching objective is to reduce rural poverty: sub-objectives (a)-(d) in the PAD are
treated as intermediate outcomes; all five outcomes will be assessed\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
1\. Community Subprojects
(Expected cost at appraisal, US$34\.3 million; Additional financing, US$31\.2 million; Actual cost at closing, US$67\.9
million)\.
This component provided matching grants to rural community associations to identify infrastructure, social and
productive investments (subprojects) that would improve community well-being, each subproject costing a maximum
of US$50,000\.
There were three separate channels for financing subprojects:
State Community Schemes (PAC)\. Rural communities submitted their investment proposals directly to the
State Technical Unit (the project implementing agency), which screened and approved them and released funds
to the beneficiary associations\.
Municipal Community Schemes (FUMAC)\. Decision-making on investment proposals was delegated by the
State Technical Unit to project Municipal Councils, composed of community members and representatives of
civil society and municipal authorities\. At least 80 percent of Council voting members were potential project
beneficiaries and civil society representatives\. The Municipal Councils discussed, and sought to build
consensus on priorities and approve community proposals, in the context of an indicative annual budget amount
determined by the state\.
Pilot Municipal Community Funds (FUMAC-P)\. The State Technical Unit established an annual budget
envelope, according to a distribution formula based on clear and measurable criteria (rural population, poverty
levels and previous year's performance)\. Based on this budget, Municipal Councils submitted an Annual
Operating Plan (Plano Operativo Anual) for review by the State Technical Unit\. Upon approval, funds were
transferred to the Municipal Council, which was then responsible for managing their distribution to community
associations and assisting them with implementation of subprojects\.
2\. Institutional Development
(Expected cost at appraisal, US$2\.7 million; Additional financing, US$5\.4 million; Actual cost at closing, US$7\.8
million)\.
This component financed technical assistance and training to build the capacity of the Community Associations, the
Municipal Councils and the implementing agency\. It also included modest funding to support state institutional
modernization and reform related to poverty reduction programs and policies\.
3\. Administration, Supervision, Monitoring and Evaluation
(Expected, US$1\.0 million; Additional financing, US$1\.7 million; Actual cost at closing, US$4\.5 million)\.
This component financed the costs (excluding salaries) of project administration and coordination including
supervision, monitoring and impact evaluation\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Costs
Under the original project, the total cost was estimated as US$40\.0 million at appraisal, rising to US$40\.7 million at
closing\. Under the additional financing, the total cost was estimated as US$40\.0 at appraisal, and was US$39\.5
million at closing\.
Financing
The loan agreement was amended twice to accommodate reallocation of funds between components and
extensions of the closing date; none of these amendments involved Board approval\. In 2005, US$8\.0 million from
the original project was reallocated, mainly involving a shift of funds from the Pilot Municipal Community Funds
(FUMAC-P) subproject window (explained in Section 1c above) to the Municipal Community Schemes (FUMAC)
subproject window\. Under additional financing, a further US$1\.3 million was reallocated between components, partly
to allow for increased spending on operating costs and supervision\.
Borrower Contribution
Adding funding from the original project to the additional financing, the expected Borrower contribution was US$19\.9
million, and the actual contribution was US$21\.1 million\. The Borrower contribution included both the counterpart
from the state government and the funds contributed by Community Associations; the ICR does not give their
respective shares\.
Dates
For the original project, the expected loan closing date (June 30, 2005) was extended twice: first, to June 30, 2006;
and then to January 31, 2007\. The first extension sought full disbursement of the Bank loan that was financing the
original project\. The second extension provided a bridge from the original project until the additional financing
proposal was presented to the Board\. The closing date of the additional financing was not extended and it closed at
the end of its allotted three years\.
3\. Relevance of Objectives & Design:
Relevance of Objectives (Rating: Substantial)
Throughout the implementation period the relevance of this projectâs objectives was consistently endorsed in the
Borrower and Bank's strategy\. The overarching objective of rural poverty reduction was relevant because, when the
project was appraised in 2001, 65 percent of rural families in the state of Pernambuco lived in poverty\. Data from
1999 showed that 87 percent of rural households in Pernambuco lacked piped water supply, 54 percent were without
sanitation, and 20 percent had no electricity\. The Borrower attached particular importance to the aim of using the
subproject process to leverage financing from sources outside the project (sub-objective (d) in the Project Appraisal
Document)âa new departure for this series of community-driven development projects, one that was relevant
because it increased prospects for sustaining the drive to reduce poverty\.
The Bankâs FY2001-03 Country Assistance Strategy (dated May 24, 2001) identified poverty and inequality reduction
as the core of Bank assistance efforts and stressed well-targeted, decentralized programs, social capital formation
and local integration of programs\. The Additional Financing accorded with the FY2004-07 CAS (dated November 10,
2003), which called for successive projects under the Northeast community-driven development program to finance
basic infrastructure for the rural poor, support income generation, and promote closer integration of state and federal
rural initiatives in participating municipalities\.
The Country Assistance Strategy that was current when the loan closed (covering the period 2008 to 2011)
acknowledges the validity and the success of the series of Northeast community development operations of which
this project is a part, "both in building social capital and in enabling poor communities to get access to water and
electricity" (p\. 10)\.
However, the FY08-11 CAS did signal a change of emphasis, indicating that in response to demands from state
governments in the Northeast, the Bank would henceforth address the development needs of rural municipalities by
prioritizing the promotion of productive subprojects connected to high-value supply chains (e\.g\. contracts with
supermarkets)\. This signaled a shift of emphasis away from the rural community infrastructure investments,
promotion of which was central to the project\.
Relevance of Design (Rating: Substantial)
Design relevance was enhanced by the incorporation of lessons learned from the two earlier community-driven
development projects in this series of operations for Pernambuco\. The project components were sufficiently few in
number, clear in conception, and flexible in implementation to make it more likely that the objective and intermediate
outcomes would be achieved\. Attainment of project objectives was facilitated by a process that promoted community
commitment to the investments by involving would-be beneficiaries in identifying subprojects, choosing between
investment alternatives, and cofinancing of the subprojects that were selected\. The components included the training
and technical assistance to Community Associations and Municipal Councils that was needed to make them more
effective and more sustainable agencies for local planning\. Equally important was the âleaning by doingâ? that
implementation entailed\. The availability of a pre-existing menu of tried and tested subproject options helped to
make these small-scale investments more feasible\. The existence of three distinct windows for sub-project financing
made it possible to tailor the project process to the institutional capacity of the various communities, with greater
delegation of decision-making to communities with greater capacity (using the FUMAC and FUMAC-P windows,
explained in Section 2c above)\. The transparent and participatory process of subproject selection helped to ensure
that decisions reflected the will of the majority of would-be beneficiaries, reducing the scope for elite capture
(although possibly limiting the opportunity for targeting investments to the poorest members of each
community)\.Project design ensured that around 90 percent of project funds flowed directly to beneficiaries,
increasing the scope for attaining the overall objective of poverty reduction\.
4\. Achievement of Objectives (Efficacy):
(a): Improve well-being and incomes of the rural poor through better access to basic social and economic
infrastructure and services and support for productive activities, using proven community-driven
development (CDD) techniques\. (Rating: Substantial)
Outputs
Adding the results under the original project to those achieved under additional financing, 96,398 families were
served (65 percent of the combined target) and 2,248 subprojects were approved and financed (86 percent of the
combined target), from among the 2,541 proposals\. Subprojects were distributed among the following categories:
infrastructure (59 percent), social (35 percent) and productive (6 percent)\. Household water cisterns accounted for
the largest number of subprojects (38 percent), followed by household sanitation (28 percent) and communal water
supply (13 percent)\. Subprojects were selected from a menu of tried and tested options, helping to ensure they were
technically sound\. Ninety percent of subproject proposals were approved for financing following appraisal\. A
physical performance study in 2010 confirmed that, in most cases, subprojects were being soundly operated (ICR, p\.
21)\. Under additional financing, beneficiaries reported that 60 percent of the subprojects delivered had satisfactory
arrangements for operation and maintenance\.
The project team reported that, taking the two financing phases together, targets were not met because the average
cost of subprojects was higher than expected owing to exchange rate changes and inflation; and also because the
number of eligible families had been overestimated\.
Outcomes
With respect to targeting, across the two phases of financing, 70 percent of the subprojects were implemented in
Area 1, which comprised 110 of the poorest municipalities in the project area (61 percent of all municipalities served
by the project) (ICR, pp\. 30-31)\.
The ICR (p\. 15) says that âpreliminary resultsâ? showed an average increase of 22 percent in incomes between
August 2003 and July 2004 (but this accounts for only one year in the eight years between loan effectiveness and
closing; and it is not clear how much of the increase can be attributed to the project)\. Only 6 percent of the
subprojects fell into the "productive" category, reducing the scope for increasing incomes and employment\. The
employment increment from productive subprojects (agricultural mechanization, agroindustry, grain processing and
fish breeding) amounted to 9,507 jobs (ICR, p\. iii)\. A 2009 survey of 300 productive subprojects reported that âthese
subprojects had significant impact on quality of life of the beneficiaries, although this did not always translate into
increased incomeâ? (ICR, p\. 43)\. Survey evidence from IPEA (2012) shows that in Pernambuco during 2001-09, rural
household per capita income rose from R$121 to R$193\. This would include project areas and other rural areas in
Pernambuco; it is unclear how much of the improvement would be due to the project as opposed to general
improvements in the economy or other social protection programs\.
According to the Campinas Economic Foundation (FECAMP) survey of 2004, 86 percent of project beneficiaries
reported significantly improved living conditions from 2000 (pre-project) to 2002/2003 (ICR, p\. 15)\. The same study
found that the provision of safe water access reduced water-borne diseases by 50 percent\. The project team
subsequently provided evidence that access to potable water in rural Pernambuco doubled from 2004-2009, from
roughly 20% to 40%; this would include project areas and other rural areas in Pernambuco and reflect both results
from the project and other government programs in improve access to water\.
(b): Increase the social capital of rural communities to organize collectively to meet own needs\. (Rating:
Substantial)
Outputs
The number of Community Associations and Municipal Councils formed under the project, and the training they
received, may be construed as evidence of increased collective organization\. Combining results under the original
project and additional financing, 2,216 Community Associations were created (there was no target; there were
around 4,500 communities in the project area)\. 101 Municipal Councils were created, against a target of 38\. The
number of training courses delivered to Community Associations and Municipal Councils by project end was more
than eight times larger than the target\.
Outcomes
The ICR (p\. 16) says that âsocial capital is displayed in social solidarity, confidence, mutual cooperation, linkages,
access to diverse institutions and to the resources and information of a range of assistance programs outside the
Bank-supported project\.â? A Social Capital Index was part of the project design but the necessary data were not
collected to assess change between the start and finish of project implementation\. Most of the evidence presented
for social capital formation consists of beneficiary opinions, and is sometimes mixed up with assessments of the
benefits from subprojects\. In 2004, the Campinas Economic Foundation (FECAMP) survey, which covered 8,602
beneficiary families and 493 control families, found that over 85 percent of beneficiaries agreed that subproject
execution contributed to unify the community and 90 percent of the interviewees reported that the subprojects
encouraged the participation of members during implementation and afterward\. Also, beneficiary Community
Associations compared with non-beneficiary Community Associations were more capable of: (i) resolving internal
conflicts; (ii) responding to communal demands; (iii) effectively advocating for their membership; (iv) solving local
problems for the community; and (v) mobilizing financial and human resources\.
(c): Enhance local governance by greater citizen participation and transparency in decision-making, through
creation and strengthening of community associations and Municipal Councils\. (Rating: Substantial)
Outputs
Women and indigenous groups were adequately represented in the Municipal Councils\. Under the additional
financing, the Councils became independent legal entities and there was a state-wide process of unifying the
councils that had been generated by separate programsâ98 percent of the councils are now unified\. However, none
of the Municipal Councils created were of the FUMAC-P type (see Section 2c above for explanation), which was,
according to the project design, the most advanced model of decentralized decision-making and administration; the
target was to create 14 of these councils\.
Outcomes
There is some overlap with the previous objective with respect to the participation element\. A survey with use of
appropriate controls found that over 85 percent of interviewees were persuaded that communities had been unified
by the project; other evaluations found that 85 percent of Community Associations view Municipal Councils as
representing community interests\. According to beneficiary surveys, community members said they were better
represented and that decision making about municipal planning was more transparent\. The capacity of Community
Associations to represent the community and resolve community problems was rated highly in 80 percent of cases
(ICR, p\. 19)\. The ICR (p\. iv) cites evaluation studies which found that 85 percent of Community Associations view
Municipal Councils as effective in representing community interests and channeling project information; 65 percent
of Associations said that their operations had been strengthened through the work of the Municipal Councils\. On the
other hand, the most decentralized model of Municipal Councils (FUMAC-P) was not implemented\. This the ICR
attributes to â(i) poor results on the ground; (ii) the Borrowerâs reticence in delegating sub-project prioritization and
financing to Municipal Councils; and (iii) institutional roadblocks (legal and procurement) making FUMAC-P
non-viableâ? (pp vi-vii)\.
(d): Foster closer integration of development policies, programs and projects at the local level, by assisting
Municipal Councils to extend their role in seeking funding, priority-setting and decision-making over
resource allocation\. (Rating: Modest)
Outputs
"About 70 percent of the more advanced Municipal Councils were actively deliberating the resources from other
programs" (ICR, p\. 20)\.
Outcomes
Data from the ICR (p\. 17) show that the project leveraged some US$25 million under its integration objective: less
than envisioned at appraisal yet nonetheless 41 percent of the combined loans under the Original Project and
Additional Financing\. The project team subsequently reported that only about 6 percent of the Municipal Councils
had actually received funding from other programs\. Also, the ICR states (p\. 18) that only 16 percent of Community
Association members had established links with other associations\. "There is no evidence that during project
implementation the proposed partnership with credit institutions worked as planned" (ICR, p\. 6)\.
(e) Assist the State of Pernambuco to reduce currently high levels of rural poverty\. (Rating: Substantial)
The project team provided additional evidence that the incidence of extreme rural poverty declined from 37 percent
to 22 percent of the population in Pernambuco\. There are no doubt many factors affecting this reduction â including
the expansion of social safety net and rural water supply programs and a general economic improvement in Brazil\.
However, the extent of targeting and the evidence of improved access and incomes suggest that the project
activities likely contributed to poverty reduction in the project area\.
5\. Efficiency (not applicable to DPLs):
Given the demand-driven nature of the projects in this series the distribution of funds between the various categories
of subproject could not be known in advance, explaining why a project-wide economic rate of return was not
estimated at appraisal\. The PAD (p\. 14) makes it clear that efficiency should be assessed on the basis of: (a) cost
effectiveness (logically, of infrastructure and social subprojects) ; (b) the financial rate of return to productive
subprojects; and (c) the fiscal savings reaped from not providing infrastructure through other, less cost-effective,
public programs\.
Benefit-cost analysis\. At closing, the ICR reports that a financial rate of return was estimated for 29 subproject "case
studies" (equal to 1 percent of all subprojects financed), comprising the four most common subproject types: water
supply, domestic sanitation, farm tractors, and honey production\. However, the cases were not randomly sampled;
the project team noted that the cases represented subprojects considered by knowledgeable people to be
moderately successful\. Although the sampled units were not limited exclusively to very successful subprojects, they
excluded unsuccessful projects and the overall share of successful projects is not known\. For the cases studied, all
of which were at least moderately successful, under different cost scenarios for productive subprojects, the financial
rate of return for tractors was 39-61 percent and for honey 54-82 percent\. The ICR estimates the benefit stream for
water supply and home sanitation by imputing a value to the time of family members freed from having to fetch
water, the incremental employment generated by water availability, reduced disease burden, and the increased
value of houses due to the investment\. The financial rate of return thus estimated was 53-83 percent for water
supply and 8-11 percent for home sanitation\. The project team confirmed that operation and maintenance
projections were included in the rate of return calculations\.
Fiscal savings\. There is some evidence of the projectâs fiscal impact\. Foregone expenditure for water distribution via
tanker trucks are significant in those communities where water supply subprojects were executed\. Some 49,000
families benefited from water supply subprojects at a combined investment cost of US$32\.9 million\. For virtually all of
these families, the only viable alternative for water supply would have been tanker trucks at an overall monthly
recurrent cost of US$2\.4 million\.
Cost-effectiveness\. The region provided some comparative cost figures suggesting that public investments of a
similar type were more costly than the investments made by communities\. Project costs were reported to be between
47% and 77% of the non-project cases\. However, it has been difficult to assess the comparability of these estimates
to what was actually implemented for this particular project\.
Area targeting reduced the scope for âleakageâ? of project funds to the non-poor\. The actual cost of project
management (Component 3) was 6 percent of total project cost, consistent with claims in the PAD about the limited
overheads involved in this approach to community-driven development\. The price benchmarks that the implementing
agency used for labor and building materials were market-based (ICR, p\. 21)\. On the other hand, combining original
and additional financing, actual spending on subprojects (US$66\.9 million) was 102 percent of the expected amount,
but only 65 percent of the expected number of families benefited from the project\.
Efficiency is rated modest\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The overall objective of reducing rural poverty was substantially relevant in terms of conditions in Pernambuco, and
in relation to Bank and Borrower strategy\. The relevance of design was also substantial, because the project
components were tried and tested, and they were appropriate for reducing poverty\. Although questions about
attribution to the project remain, new evidence shows that rural poverty in the state did fall and a plausible case can
be made that the various elements in the results chain were consistent with poverty reduction\. Two of the four
sub-objectives were, on balance, substantially achieved\. However, there are weaknesses in the efficiency analysis
particularly concerning the representativeness of the subproject sample\.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Subprojects were selected from a tried and tested menu of options, increasing the prospect that they would be
sustainable\. Environmental screening processes were apparently adequate\. Provisions for operation and
maintenance were included in the contract between the Community Association and the State Technical Unit\. Based
on beneficiary self-report, 60 percent of the subprojects approved in the additional financing phase had adequate
provision for operations and maintenance (ICR, p\. v)\. The largest group of subprojects was for household water
cisterns: it is reasonable to assume that families will have adequate incentive to maintain these; and, moreover, the
costs and technical knowhow required for maintenance of these individual systems is undemanding\.
Unification of the various Municipal Councils set up by different programs (see intermediate outcome (c) in Section 4
above) may have helped to counter the tendency toward creating parallel structures that often weakens
community-driven development\. But the evidence that Municipal Councils have leveraged funds outside the project
is insubstantial, reducing the likelihood that the projectâs benefits will be sustained\.
The lack of sound technical assistance during project implementation, and âthe pervasive issue of scant technical
support in the rural Northeastâ? (ICR, p\. 7), raises concerns about the long-term viability of some project investments,
particularly for productive subprojects\. There are particular doubts about the sustainability of the productive
subprojects, given the drought-prone nature of this region, and the limited availability of credit\. At the ICR Review
meeting, the project team told IEG that it was not clear what proportion of the Community Associations had obtained
credit from commercial banks, acknowledging that the implementing agency did not actively pursue linkage of
Community Associations (or individual members) to banks\. On the other hand, in this Pernambuco operation,
productive subprojects accounted for only 6 percent of all subprojects, for which reason risk is rated "moderate"
rather than 'significant"\.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
Quality at Entry
The project's objectives were relevant to Borrower and Bank strategy at the time of appraisal and afterwards; and
its design was relevant to the attainment of those objectives\. The Bank developed fruitful working relations with
the state government during project preparation\. The provision for targeting the poorest municipalities was
sound\. The Management Information System inherited from the previous project was strengthened (see Section
10 below)\. In support of the broad thrust toward decentralization of planning capabilities, the project set up eight
Regional Technical Units in strategic locations statewide\. The closeness of these units to the beneficiaries
increased the speed and flexibility of project procedures and facilitated subproject supervision, helping to ensure
that the expected outcomes were realized\. The establishment of a management fee, equal to 1 percent of the
budget of each subproject, made a modest contribution to funding the work of the Municipal Councils during
project implementation\.
Quality at entry had three shortcomings\. First, there was a lack of clarity about rules for the âgraduationâ? of
Community Associations: it was not clear whether this meant that Community Associations had matured to the
point where they could stand alone without further funding; or whether it meant simply that Community
Associations would not be eligible to receive funding for more than one productive subproject (a more limited
definition; one that did not, moreover, rule out the possibility of successive rounds of funding for the same
Community Association as long as this was for subprojects not classified as productive)\. Second, there was
incomplete specification of baselines and targets and the provision for measuring the projectâs contribution to
poverty reduction was limited\. Third, there was no provision made for recruiting salaried Technical Advisors
during project implementation, potentially compromising subproject viability (particularly for productive
subprojects)\.
Supervision
The locally-based Bank team made regular visits to randomly picked Community Associations, Municipal
Councils and subprojects, helping to ensure that there was close oversight of funding\. There was good follow up
on financial management and procurement problems\. However, the Bank could have pressed for a mid-term
review during implementation of additional financing, it should have included a water and sanitation expert in the
supervision team given the large volume of small-scale water infrastructure financed under the project, and it
could have pushed the implementing agency harder in order to secure the follow-up survey that was needed to
provide sufficient data for the impact evaluation\.
at -Entry :Moderately Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
Government
The Borrower was the state government (the federal government acted as guarantor)\. The state government
remained committed to project objectives and approach throughout the period of preparation and
implementation, despite three changes of administration\. The state government underscored its commitment by
leveraging US$25 million from other programs to expand project coverage and intensify the focus on the most
vulnerable groups\. At appraisal concern was expressed that the state government might not honor its
counterpart funding promises; but an adequate level of counterpart funding was maintained throughout
implementation\.
Implementing Agency
The State Technical Unit (STU), which was the primary implementing agency, underwent a radical restructuring
during project implementation, devolving responsibilities to eight Regional Technical Units scattered across the
state\. This process of decentralization made the project process more flexible and agile, speeding up subproject
disbursements\. The rotation of state governments led to some loss of continuity\. To its credit, the STU took the
lead in exploring new approaches to productive investments under the Fair Trade initiative and also in seeking to
extend project coverage to communities (quilombos ) composed of the descendants of escaped slaves\. But the
implementing agency did not promote productive projects as actively as it could have done and was lukewarm in
its support for the impact evaluation that the Bank had proposed\.
a\. Government Performance :Satisfactory
b\. Implementing Agency Performance :Moderately Satisfactory
c\. Overall Borrower Performance :Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
Design
Insufficient attention was paid to the results framework: performance indicators were poorly designed and not
enough provision was made for impact evaluation\. The project had a good Management Information System (MIS),
which produced the data needed for sound monitoring; but evaluation was weak\. The MIS was designed to give
on-line access to the Regional Technical Units and the program coordinating unit in Recife and a website was set up
to provide information to the public on project implementation\. Data could be entered locally by Community
Associations, allowing for real-time monitoring of the entire subproject cycle\. The MIS for this project improved on
the approach taken in previous projects: first, by registering leveraged (i\.e\., non-project) resources from partnerships
with others programs; second, by tracking the share of the rural poor receiving grant financing for productive
subprojects; and, third, by recording Community Associations obtaining commercial loans\. For purposes of
evaluation, the project financed several studies, including a baseline and intermediate results study\. The aim was to
follow up with a second field survey that would allow for project impact to be estimated\.
Implementation
The MIS was implemented according to plan and performed satisfactorily\. Evaluation proceeded less smoothly\. The
follow-up survey was delayed owing to staffing changes in the project management unit and the state government
and slow progress with competitive contracting of the study\. The follow-up survey was initially deferred until
implementation of the Additional Financing but had not gone ahead by loan closing so the anticipated formal impact
evaluation never materialized\. The governments in the various Northeast states resisted the multi-state evaluation
that the Bank envisaged and it proved impossible to agree on a common design\. As a partial substitute some other
studies were implemented, including reviews of the physical performance of selected subprojects and estimates of
economic and financial rates of return\.
Use
The MIS was an invaluable adjunct to project management, data collection and analysis feeding directly into decision
making\. Thanks to the MIS, monitoring was exemplary\. But assessment of the project's contribution to poverty
reduction was impeded by failure to complete the anticipated formal impact evaluation\. Given the size of the overall
program of which this project is a part and the length of time it has been running, this pushes the M&E rating to
modest\.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Safeguards
The project was Category B, with an Environmental Management Plan, which remained the same under additional
financing\. All subprojects were vetted for compliance with the Operational Manual, which included the Bank's
Environment and Social Safeguards\. Subprojects were also assessed against state and federal environmental laws\.
The staff of the implementing agency included an environmental specialist\. No safeguard violations were reported\.
Financial Management
With one exception, financial management supervision missions rated the project "satisfactory": in June 2003,
Brazil-wide fiscal constraints affecting most of the Bank's portfolio, led to a downgrade in the financial management
rating to "unsatisfactory\." The final financial management supervision (April 2010) concluded that the State Technical
Unit's fiduciary performance was "satisfactory"\.
Unintended Impacts
No unintended impacts are reported in the ICR\.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Satisfactory Satisfactory
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES
NOTES:
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
Lessons suggested by the ICR include the following:
Community-driven development (CDD) can promote social capital formation if subprojects are rigorously and
transparently selected and adequate training is given: "Tangible benefits from subproject investments
strengthen collective capacity, generate a sense of citizenship, and raise the bar for local government
accountability" (p\. 28);
Delegating responsibility for routine supervision to project monitoring unit regional offices (of which there were
8 in this project) helps increase project visibility at the local level, making the project more accountable to
beneficiary families; and
Productive subprojects are more likely to succeed if they are supported by business plans, allow for training
and assess potential demand for the product\. They are more likely to be sustainable if provision is made for
linkage to banks\.
IEG adds:
A complete assessment of the efficiency of CDD projects involves reviewing the evidence for
cost-effectiveness, showing how this varies between subproject categories, and the extent of variation
between the average for the project and the average obtained under other public programs\.
Intermediate outcomes, such as social capital, need to be properly quantified with well-designed indicators,
baselines and targets\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The report is well written and comprehensive, distinguishing clearly between what was achieved under the original
project and under additional financing\. There is a thorough assessment of project design\. A number of specific and
informative lessons are proposed\. Given the project objective of reducing high levels of rural poverty in the state,
there is limited evidence presented on poverty outcome (perhaps reflecting the weak M&E)\. The economic analysis
should have included data on subproject unit costs relative to other programs and the efficiency analysis should
have been based on a larger number of subprojects and not excluded those that were unsuccessful\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P129563 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: ICR00005308
IMPLEMENTATION COMPLETION AND RESULTS REPORT
IBRD-75471
ON A
LOAN
IN THE AMOUNT OF US$100 MILLION
TO THE
PEOPLE'S REPUBLIC OF CHINA
FOR THE
ANHUI YELLOW MOUNTAIN NEW COUNTRYSIDE DEMONSTRATION PROJECT
December 21, 2020
Urban, Resilience and Land Global Practice
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its
contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective June 30, 2020)
Currency Unit = Chinese Yuan (CNY)
CNY 7\.06 = US$1
FISCAL YEAR
January 1 â December 31
Regional Vice President: Victoria Kwakwa
Country Director: Martin Raiser
Regional Director: Benoit Bosquet
Practice Manager: Francis Ghesquiere
Task Team Leaders: Ahmed A\. R\. Eiweida, Minghe Tao
ICR Main Contributor: Mansha Chen
ABBREVIATIONS AND ACRONYMS
CPF Country Partnership Framework
CPS Country Partnership Strategy
ECOP Environmental Code of Practice
EIA Environmental Impact Assessment
EIRR Economic Internal Rate of Return
EMP Environmental Management Plan
FM Financial Management
FYP Five-year Plan
GDP Gross Domestic Product
GoC Government of China
HMG Huangshan Municipal Government
ICR Implementation Completion and Results Report
ISR Implementation Status and Results Report
IRI Intermediate Results Indicator
M&E Monitoring and Evaluation
MDRC Municipal Development and Reform Commission
MIS Management Information System
MTR Midterm Review
NSCS New Socialist Countryside Scheme
O&M Operation and Maintenance
PAD Project Appraisal Document
PCR Physical Cultural Resources
PDO Project Development Objective
PIU Project Implementation Unit
PMO Project Management Office
PMP Pest Management Plan
PMU Project Management Unit
RAP Resettlement Action Plan
RF Results Framework
RPF Resettlement Policy Framework
TEG Technical Expert Group
WTP Water Treatment Plant
WWTF Wastewater Treatment Facility
TABLE OF CONTENTS
DATA SHEET \. 1
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 6
A\. CONTEXT AT APPRAISAL \.6
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION \.10
II\. OUTCOME \. 13
A\. RELEVANCE OF PDOs \.13
B\. ACHIEVEMENT OF PDOs (EFFICACY) \.13
C\. EFFICIENCY \.19
D\. JUSTIFICATION OF OVERALL OUTCOME RATING \.20
E\. OTHER OUTCOMES AND IMPACTS \.20
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 23
A\. KEY FACTORS DURING PREPARATION \.23
B\. KEY FACTORS DURING IMPLEMENTATION \.24
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 25
A\. QUALITY OF MONITORING AND EVALUATION (M&E) \.25
B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \.26
C\. BANK PERFORMANCE \.28
D\. RISK TO DEVELOPMENT OUTCOME \.29
V\. LESSONS AND RECOMMENDATIONS \. 30
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 32
ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 49
ANNEX 3\. PROJECT COST BY COMPONENT \. 51
ANNEX 4\. EFFICIENCY ANALYSIS \. 52
ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 57
ANNEX 6\. SUPPORTING DOCUMENTS \. 58
ANNEX 7\. RESULT STORIES \. 59
ANNEX 8\. PHOTOS OF PROJECT RESULTS\. 62
ANNEX 9\. PROJECT MAP \. 72
The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
DATA SHEET
BASIC INFORMATION
Product Information
Project ID Project Name
Anhui Yellow Mountain New Countryside Demonstration
P129563
Project
Country Financing Instrument
China Investment Project Financing
Original EA Category Revised EA Category
Partial Assessment (B) Partial Assessment (B)
Organizations
Borrower Implementing Agency
Huangshan Municipality development and Reform
People's Republic of China
Commission
Project Development Objective (PDO)
Original PDO
The objective of the Project is to improve the quality of services and income generating opportunities available to
rural households in selected villages of Huangshan Municipality\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)
World Bank Financing
100,000,000 96,579,192 96,579,192
IBRD-83090
Total 100,000,000 96,579,192 96,579,192
Non-World Bank Financing
0 0 0
Borrower/Recipient 0 0 0
Local Govts\. (Prov\., District,
45,190,000 32,180,000 30,820,000
City) of Borrowing Country
Sub-borrower(s) 0 0 0
Total 45,190,000 32,180,000 30,820,000
Total Project Cost 145,190,000 128,759,192 127,399,192
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing
27-Dec-2013 30-May-2014 20-Feb-2017 30-Jun-2019 30-Jun-2020
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions
19-Dec-2016 22\.94 Change in Results Framework
Change in Components and Cost
Change in Financing Plan
Reallocation between Disbursement Categories
Change in Disbursements Arrangements
Change in Procurement
Change in Implementation Schedule
26-Jun-2019 76\.30 Change in Results Framework
Change in Components and Cost
Change in Loan Closing Date(s)
Change in Implementation Schedule
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
KEY RATINGS
Outcome Bank Performance M&E Quality
Satisfactory Satisfactory Substantial
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual
No\. Date ISR Archived DO Rating IP Rating Disbursements
(US$M)
01 07-Apr-2014 Satisfactory Satisfactory 0
02 26-Oct-2014 Satisfactory Satisfactory 2\.40
03 30-Apr-2015 Satisfactory Satisfactory 4\.79
04 06-Jun-2015 Moderately Satisfactory Moderately Satisfactory 5\.29
05 04-Nov-2015 Moderately Satisfactory Moderately Satisfactory 8\.80
Moderately
06 24-Jun-2016 Moderately Unsatisfactory 13\.73
Unsatisfactory
Moderately
07 11-Nov-2016 Moderately Unsatisfactory 18\.94
Unsatisfactory
08 16-Apr-2017 Moderately Satisfactory Moderately Satisfactory 29\.95
09 05-Dec-2017 Moderately Satisfactory Moderately Satisfactory 33\.10
10 25-May-2018 Moderately Satisfactory Moderately Satisfactory 43\.33
11 23-Dec-2018 Moderately Satisfactory Moderately Satisfactory 59\.96
12 26-Jun-2019 Moderately Satisfactory Moderately Satisfactory 76\.30
13 13-Dec-2019 Satisfactory Satisfactory 85\.10
14 15-May-2020 Satisfactory Satisfactory 90\.34
15 30-Jun-2020 Highly Satisfactory Highly Satisfactory 98\.85
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
SECTORS AND THEMES
Sectors
Major Sector/Sector (%)
Public Administration 6
Sub-National Government 6
Social Protection 18
Social Protection 18
Transportation 19
Rural and Inter-Urban Roads 19
Water, Sanitation and Waste Management 38
Other Water Supply, Sanitation and Waste
38
Management
Industry, Trade and Services 19
Other Industry, Trade and Services 19
Themes
Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
Private Sector Development 100
Jobs 100
Finance 6
Finance for Development 6
Agriculture Finance 6
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Human Development and Gender 20
Health Systems and Policies 20
Health Service Delivery 10
Adolescent Health 5
Child Health 5
Urban and Rural Development 75
Rural Development 56
Rural Markets 6
Rural Non-farm Income Generation 11
Rural Infrastructure and service delivery 39
Cultural Heritage 19
ADM STAFF
Role At Approval At ICR
Regional Vice President: Axel van Trotsenburg Victoria Kwakwa
Country Director: Klaus Rohland Martin Raiser
Director: John A\. Roome Benoit Bosquet
Practice Manager: Mark R\. Lundell Francis Ghesquiere
Ahmed A\. R\. Eiweida, Minghe
Task Team Leader(s): Rabih H\. Karaky
Tao
ICR Contributing Author: Mansha Chen
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A\. CONTEXT AT APPRAISAL
Context
1\. Since 1978, China has embarked on a series of economic reforms, leading to economic growth at
a remarkable annual rate of about 10 percent and more than 600 million people lifted out of poverty by
the time of appraisal of the Anhui Yellow Mountain New Countryside Demonstration Project (the
âprojectâ) in 2013\. To sustain this rapid pace of development, China had to address a number of
challenges, among them, high inequalities in incomes, opportunities, and quality of life between rural and
urban areas\. In 2010, the average per capita disposable income among rural residents was less than one-
third that of urban residents\. One key program to tackle these challenges was the âNew Socialist
Countryside Schemeâ (NSCS), launched by the Government of China (GoC) under the 11th Five-year Plan
(FYP, 2006â10) and continued through the 12th FYP (2011â15)\. The NSCS aimed at increasing farmersâ
incomes, diversifying their employment opportunities, improving their livelihoods and productivity levels,
enhancing their living conditions and the overall management of their rural environment, and
strengthening their institutions for self-governance within harmonious communities\.
2\. At the time, Anhui Provinceâs economy was lagging behind many other provinces in Chinaâs
eastern region because of higher concentration on low-productivity agriculture and a lagging service
sector\. As a result, in 2010, Anhuiâs per capita gross domestic product (GDP) was less than 40 percent that
of neighboring Zhejiang and Jiangsu Provinces, and its average per capita rural income was considerably
lower than the national average\. The Anhui Provincial Government had been actively implementing the
NSCS through several schemes, 1 with strong focus on Huangshan Municipality, whose economy depended
heavily on the agriculture and tourism sectors 2 owing to its beautiful natural environment and abundant
Huizhou cultural architecture\. These efforts were successful to some extent, with improvements to the
economy and the living conditions in rural areas; however, several challenges remained, including (a)
insufficient investments in infrastructure, especially for roads, water, and sanitation (for example, 70
percent of Huangshan Municipalityâs villages lacked wastewater systems); (b) shortage of funding to
preserve cultural heritage assets; (c) low productivity in agriculture; (d) limited employment opportunities
in the non-farm sector; (e) underdeveloped tourism infrastructure and services in the villages; and (f) lack
of capacity and skill set of the institutions and stakeholders to improve quality of services and create
economic opportunities\. Recognizing these constraints and their impact on rural communities, the
Huangshan Municipal Government (HMG) made it a priority to promote rural development by
substantially increasing investments in infrastructure, preserving cultural heritage, and developing
tourism in rural areas\.
3\. Rationale for World Bank involvement\. The World Bank was well positioned to help the HMG in
its efforts to promote rural development, given its past engagement in similar projects, such as the Ningbo
1 For example, the âThousand Villages and Hundred Towns Demonstration Schemeâ, which included 165 villages in the
Huangshan Municipality\.
2 Huangshan Municipalityâs agriculture sector employed more than 42 percent of the labor force in 2010\. Its tourism revenue
represented nearly 65 percent of its total GDP\.
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
New Countryside Development Project (P106956, 2010â16) and the Chongqing Urban-Rural Integration
Project (P086446, 2010â17)\. Furthermore, the World Bank was experienced in cultural heritage
protection owing to its engagement in the Gansu Cultural and Natural Heritage Protection and
Development Project (P091949, 2008â15), the Guizhou Cultural and Natural Heritage Protection and
Development Project (P091950, 2009â17), and the Shandong Confucius and Mencius Cultural Heritage
Conservation Project (P120234, 2011â17)\. This experience was documented in a 2011 report, âConserving
the Past as a Foundation for the Future: The China-World Bank Partnership on Cultural Heritage
Conservationâ\. 3 With this experience at hand, the World Bank was able to explore new approaches to rural
development that integrated infrastructure upgrading, cultural heritage conservation, and enhancement
of economic opportunities in rural tourism and agriculture\. This multisectoral approach and the emphasis
on skill training, economic development, and preservation of local culture set the Anhui Yellow Mountain
New Countryside Demonstration Project discussed in this report apart from the majority of rural
development projects in China at that time that focused exclusively on infrastructure\.
4\. Project contribution to higher-level objectives\. The project was aligned with both strategic
themes of the World Bank Group Country Partnership Strategy (CPS) for China for FY2013â16 (Report No\.
67566), namely supporting greener growth and promoting more inclusive development\. It contributed to
achieving a number of outcomes set in the CPS, including promoting sustainable agriculture practices,
demonstrating sustainable natural resource management approaches, and enhancing opportunities in
rural areas and small towns\. The project also contributed to improving the quality of life, raising farmersâ
incomes, and constructing the âNew Socialist Countrysideâ in line with the objectives of the 12th FYP\.
Theory of Change (Results Chain)
5\. The Theory of Change is illustrated in figure 1\. It is derived from the project description in the
Project Appraisal Document (PAD, Report No\. 75471-CN)\.
6\. The project design included multisectoral interventions in infrastructure improvement,
conservation and development of tourism assets, promotion of modern agriculture industries, skill
building for rural residents, and institutional strengthening for local government staff\. Assuming that the
investments reflected local needs and infrastructure services were affordable and properly maintained,
investment in rural infrastructure was expected to improve the quality of infrastructure services available
to rural residents, thus contributing to reduced inequalities in quality of life between rural and urban areas
in the long term\. Better conserved and developed tourism assets, including tangible and intangible
cultural heritage and tourism facilities, and enhanced residentsâ skills in conserving cultural heritage and
providing tourism services were expected to increase the quality of tourism services, attract more tourists,
and create jobs and income-generating opportunities in tourism\. Improved irrigation conditions,
development of green and higher value-added agriculture production bases and market facilities, and
enhanced farmer skills in applying new agriculture technologies were expected to increase agricultural
productivity, integrate more farmers into the modern agricultural value chain, and create jobs and
income-generating opportunities in agriculture production and related services\. Assuming sufficient
demand for agricultural and tourism products, improved income-generating opportunities in tourism and
agriculture was expected to increase incomes of rural residents, thus contributing to reduced income
3Ebbe, Katrinka, Guido Licciardi, and Axel Baeumler\. 2011\. âConserving the Past as a Foundation for the Future: China-World
Bank Partnership on Cultural Heritage Conservation\.â Urban Development Series Knowledge Papers No\. 12\. World Bank\.
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
inequalities between rural and urban areas in the long term\. Strengthened institutional capacity of local
government staff in planning new countryside development, cultural heritage conservation and tourism,
and operation and maintenance (O&M ) of public assets were expected to improve asset management of
infrastructure and management of cultural heritage conservation, tourism, and agriculture industries,
contributing to improved quality of services and increased income-generating opportunities for rural
residents\.
Figure 1\. Theory of Change
Activities Outputs PDOs/Outcome Long-term Outcomes
Improving roads, ⢠Roads, drains, sewers, water PDO 1: Improved quality of
water supply, supply, streetlights, and river services in project villages
drainage, revetment completed
wastewater ⢠Wastewater treatment facilities PDO indicators:
collection and completed ⢠Number of beneficiaries
treatment, river ⢠Public spaces completed with improved
revetment, and infrastructure services in
other rural project villages\.
infrastructure
⢠Historic buildings restored and
adaptively reused
Restoring historic ⢠Tourism facilities completed Reduced
buildings and ⢠Exhibitions and/or performances inequalities in
developing tourism held incomes and
facilities ⢠People trained in traditional arts quality of life
and techniques between rural and
PDO 2: Improved income-
⢠People trained in tourism urban areas
generating opportunities for
services rural households
⢠Tourism associations supported
PDO indicators:
⢠Number of tourists visiting
⢠Production bases completed project villages
Improving irrigation ⢠Land with improved irrigation ⢠Value of agriculture
and developing conditions production in project
agricultural ⢠Market facilities and exhibition villages
production bases centers for agriculture products
and facilities and handicrafts completed
⢠Farmers trained in new
agricultural technologies
⢠Agriculture associations
supported Critical Assumptions:
1\. Investments reflect
⢠PMO/PMUs/PIUs staff trained in beneficiariesâ needs
project management 2\. Local authorities and village
Improved communities maintain
⢠Government agencies and village management of
organizations trained in O&M constructed assets for continued
Strengthening cultural heritage use
institutional ⢠Studies and plans on new conservation, tourism, 3\. Infrastructure services are
capacity countryside development, and agriculture affordable
cultural heritage conservation, industries; improved 4\. There is sufficient demand for
and rural tourism completed asset management agriculture and tourism products
including O&M\.
Note: PDO = Project Development Objective; PMO = Project Management Office; PMU = Project Management Unit; PIU =
Project Implementation Unit\.
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Project Development Objectives (PDOs)
7\. The PDO, as articulated in the Financing Agreement and the PAD, was to improve the quality of
services and income-generating opportunities available to rural households in selected villages of
Huangshan Municipality\.
8\. The project focused on 68 villages in the Huangshan Municipality\. They were selected based on
specified criteria that emphasized buy-in and participation from villages, a balance of assessed needs and
existing potential (tourism, cultural, and so on), and adequacy of resources and institutional arrangements
for meeting O&M needs\.
Key Expected Outcomes and Outcome Indicators
9\. The PDO consisted of the following two outcomes and key indicators at appraisal:
⢠PDO 1 âImprove the quality of services available to rural households in selected villagesâ; the
key PDO indicator was âNumber of beneficiaries with improved infrastructure services in
project villagesâ (target: 145,357)
⢠PDO 2 âImproved income-generating opportunities available to rural households in selected
villagesâ; the key PDO indicators were (a) âNumber of tourists visiting project villagesâ (target:
10,013,000) and (b) âValue of agriculture production in project villagesâ (target: CNY
88,633,000)
Components
10\. The project financed four components as detailed in the following paragraphs\.
Component 1: Infrastructure Improvement (original allocation: US$66\.46 million 4, of which IBRD US$57\.28
million; actual cost: US$74\.78 million, of which IBRD US$62\.95 million)
11\. This included investments in (a) village roads, bridges, sidewalks, domestic and tourism pathways,
streetlights, and associated sub-surface infrastructure services (such as power and telecommunication
cables); (b) piped water supply either from mountain springs or town water supply plants; (c) drainage
systems, sewer networks, and low-cost and environmentally appropriate wastewater treatment and
disposal facilities; (d) river revetment upgrading; and (e) rehabilitation of small dams, ponds, and irrigation
and drainage canals\.
Component 2: Cultural Heritage Conservation (original allocation: US$20\.72 million, of which IBRD
US$18\.25 million; actual cost: US$15\.58 million, of which IBRD US$13\.17 million)
12\. This component financed (a) restoration of historical buildings; (b) installation of signage for
restored buildings; (c) preparation of cultural heritage conservation plans; (d) provision of sub-grants to
owners of private historic buildings to restore their properties; and (e) provision of equipment, show
4Component costs mentioned in this section and para\. 18-22 exclude costs related to land acquisition and resettlements, O&M
funds for built assets, project overheads, contingencies, and front-end fees\. This accounts for the difference in counterpart
funds presented in the datasheet, on the one hand, and this section and annex 3, on the other\.
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
centers, and skills training for protecting and utilizing intangible cultural heritage assets\. These
investments targeted 40 villages that had historic buildings and 16 villages that had intangible cultural
heritage\.
Component 3: Enhanced Economic Opportunities (original allocation: US$21\.47 million, of which IBRD
US$18\.92 million; actual cost: US$20\.90 million, of which IBRD US$17\.40 million)
13\. This component financed (a) improvement of farm roads and provision of production materials
for special agricultural bases such as tea, mulberry, flowers, herbs, and grapes; (b)
improvement/construction of market facilities and exhibition centers for agriculture products; (c)
provision of sub-grants to agriculture associations and training of farmers in modern agriculture
practices; 5 (d) retrofitting of existing buildings along tourism routes into Huizhou architecture; (e)
provision of tourism ancillary facilities such as tourist service centers, exhibition and performance spaces,
parking lots, public toilets, and improvements to public spaces such as squares and exercise facilities; and
(f) provision of sub-grants to tourism associations and training of villagers in tourism service skills\.
Component 4: Institutional Support (original allocation: US$5\.29 million, of which IBRD US$5\.29 million;
actual cost: US$2\.81 million, of which IBRD US$2\.81 million)
14\. This component supported (a) strategic research and planning of new countryside development
and rural tourism development; (b) development of capacity for management and O&M of project
outputs of relevant government agencies; (c) raising of awareness and building skills of project
stakeholders and beneficiaries in new countryside development opportunities; (d) establishment of
effective financial and project management information systems (MIS) and a project monitoring and
evaluation (M&E) system; (e) the purchase of systems hardware and software for the PMO and PMUs and
training of PMO and PMU staff on how to effectively utilize the systems; and (f) other project-related
studies and consultancies, including for construction supervision\.
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION
15\. The project underwent two Level II restructurings, in December 2016 and in June 2019\.
Revised PDOs and Outcome Targets
16\. There was no revision to the PDO; however, the wording and targets of the three PDO indicators
underwent changes in both restructurings\. In 2016, PDO Indicator 1 (Number of beneficiaries with access
to improved infrastructure services in project villages) was expanded to add a gender-disaggregated
breakdown indicator, along with sub-indicators on access to all-season roads, improved water sources,
and improved sanitation, and its target was reduced\. 6 PDO Indicator 2 (Number of tourists visiting project
villages) was revised to focus on villages that benefitted from cultural heritage conservation investments,
and its baseline and target were reduced accordingly\. PDO Indicator 3 (Value of agriculture production in
project villages) was revised to measure the number of new jobs generated as a result of investments in
5 Such as integrated pest management, soil fertility management, and green and organic certification\.
6 Two indicators on access to improved water sources and improved sanitation were moved to PDO indicators from
intermediate results indicators (IRIs); baselines of these two indicators were revised to 0 and targets modified to reflect the
increase (that is, difference between the original target and baseline at appraisal)\.
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
enhanced economic opportunities in 2016\. In 2019, the targets of the three PDO indicators were increased
to account for outcomes of additional activities funded by loan savings and other unallocated funds, owing
mainly to changes in exchange rate and lower costs from competitive biddings\.
Revised PDO Indicators
17\. Consequently, the revised PDO indicators and their targets were as follows (see annex 1):
⢠PDO Indicator 1: Number of beneficiaries with access to improved infrastructure services in
project villages, of which women (target: 145,400; 66,972)
o Number of beneficiaries with access to an all-season road within 500 m range (target:
127,131)
o Number of beneficiaries with access to improved water sources (target: 32,011)
o Number of beneficiaries with access to improved sanitation (target: 21,000)
⢠PDO Indicator 2: Number of tourists visiting project villages which have implemented the
cultural heritage conservation component of the project (target: 3,669,000)
⢠PDO Indicator 3: Number of enhanced economic opportunities related jobs created (target:
4,550)
Revised Components
18\. The components and their respective costs were revised in both restructurings:
Component 1: Infrastructure Improvement (2016: US$70\.91 million, of which IBRD US$65\.33 million; 2019:
US$71\.59 million, of which IBRD US$69\.27 million)
19\. Two rural roads were added in 2016, eleven rural infrastructures were added in 2019\. Some works
that had been fully financed by counterpart funds and completed before loan effectiveness were taken
out during project implementation\.
Component 2: Cultural Heritage Conservation (2016: US$15\.24 million, of which IBRD US$14\.04 million;
2019: US$18\.31 million, of which IBRD US$17\.71 million)
20\. In 2016, some of the planned activities (for example, restoration of some historic buildings) were
financed under government grant programs and removed from the scope of the project\. Sub-grants of
US$1\.08 million initially planned to be allocated to villagers for rehabilitating privately owned houses were
reduced and eventually cancelled due to low participation\. 7 Additional activities for historic building
restoration were added in 2019\.
Component 3: Enhanced Economic Opportunities (2016: US$18\.01 million, of which IBRD US$16\.59 million;
2019: US$10\.61 million, of which IBRD US$10\.26 million)
7The amount of sub-grants was reduced from US$1\.08 million to US$110,000 in 2016 and further decreased to US$86,000 in
2019\.
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
21\. The cost of this component was reduced in 2016 mainly due to procurement savings and the
elimination of some low-priority activities\. Two special agriculture bases were added in 2019\.
Component 4: Institutional Support (2016: US$3\.79 million, of which IBRD: US$3\.79 million; 2019: US$2\.51
million, of which IBRD: US$2\.51 million)
22\. The technical assistance work on the âBeautiful Village Development Master Planâ was removed
from the project scope as it had been covered under another government program\. A socioeconomic
impact study and beneficiary survey were added in 2019\.
Other Changes
23\. Intermediate Results Indicators (IRIs)\. In 2016, Component 1 IRIs measuring outputs of water
supply and wastewater treatment were added, and the indicator measuring the area of flood protection
construction was dropped\. Component 2 IRI measuring the number of idle historic buildings adaptively
reused was dropped\. Under Component 3, the target for area of developed production bases was reduced
by 27 percent and its unit of measure was adjusted from mu to hectare, 8 and the indicator measuring the
number of village houses with a changed façade was dropped\. In 2019, the targets of six IRIs were
increased compared to their original targets, to reflect the expanded scope of works\.
24\. Disbursement arrangements\. In 2016, the disbursement percentage for the civil works category
was increased from 86 percent to 100 percent\. This also resulted in changes in the financing plan and
reallocation between disbursement categories, with loan proceeds allocated to the works category
increased, and loan proceeds allocated to the categories for goods, consultant services, training, and sub-
grants reduced\. In 2019, the disbursement allocations to the categories for goods, consultant services,
training, and sub-grants were reduced, and the reduced amounts were added to the works category\.
25\. Procurement Plan and implementation schedule\. In both restructurings, the Procurement Plan
and the implementation schedule were revised based on the actual status of implementation and the
changes to project activities\.
26\. Project extension\. The loan closing date was extended by 12 months from June 30, 2019, to June
30, 2020\.
Rationale for Changes and Their Implication on the Original Theory of Change
27\. The main reasons for changes were (a) more activities were added to utilize substantial loan
balance (US$30 million as of project restructuring in 2019) mainly due to changes in US dollar to Chinese
yuan exchange rate 9 and lower costs from competitive bidding, (b) some activities were canceled to avoid
duplication with government-funded activities, (c) the sub-grants for rehabilitating privately owned house
façades did not generate much interest as the amount allocated to each family was insufficient to meet
rehabilitation costs and were eventually cancelled, (d) the disbursement percentage for the civil works
category was increased to alleviate the budgetary pressures faced by project counties as a result of the
8 1 hectare=15 mu\. Mu, or mou, is a Chinese unit of land measurement that varies with location but is commonly 806\.65 square
yards (0\.165 acre, or 666\.5 square meters)\.
9 The US dollar to Chinese yuan exchange rate was 6\.12 at appraisal and 6\.92 on June 15, 2019\.
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
slowdown of the Chinese economy, and (e) the project duration was extended to complete the
construction activities that were delayed mainly due to unusually inclement weather conditions in 2018
and the added activities\. Overall, these changes facilitated the achievement of project outcomes because
they increased the scope of relevant activities, removed activities which were less relevant to the
outcomes or had a lower chance of success due to low demand, and improved the ability of the project
to link activities to outcomes\.
II\. OUTCOME
A\. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating
Rating: High
28\. At appraisal, the project was fully consistent with the two strategic themes of the CPS for FY2013â
16 (Report No\. 67566), namely supporting greener growth and promoting more inclusive development\.
At closing, the PDO was highly relevant to the World Bank Group Country Partnership Framework (CPF)
for FY2020â25 (Report No\. 117875) as it supported two of its three engagement areas: âPromoting
Greener Growthâ (Engagement Area 2) and âSharing the Benefits of Growthâ (Engagement Area 3)\.
Specifically, the project responded to CPF Objectives 2\.2 (to reduce air, soil, water and marine plastics
pollution) by improving sanitation services, 2\.3 (to demonstrate sustainable agriculture practices and
improve food system quality and safety) by promoting environmentally friendly agriculture practices and
improving the quality of high-value agricultural production, and 3\.2 (to enhance the quality of early
learning and skills development programs) by training farmers on tourism services, cultural heritage
conservation, and agriculture industries\. The PDO was also aligned with Chinaâs development priorities as
articulated in the 13th FYP (2016â20), particularly agricultural modernization and countryside
development\. The PDO was also consistent with the Rural Revitalization Strategy put forward by the
Chinese Government in 2018, which prioritized investments in agriculture, rural areas, and farmers to
promote the integrated development of urban and rural areas, strengthen rural governance systems, and
ensure food security\. The cultural heritage conservation activity of the project was fully aligned with the
Circular on Strengthening the Daily Maintenance of Ancient Buildings issued by the State Administration
of Cultural Heritage in 2015\. The projectâs emphasis on environmental and ecological protection of rural
areas was closely aligned with Chinaâs priority on green development as articulated in the three-year
Action Plan for the Improvement of Rural Human Settlement Environment issued in 2018\.
29\. More broadly, the PDO was closely aligned with the World Bankâs twin goals of eliminating
extreme poverty and boosting shared prosperity through economic growth among the bottom two
quintiles\. The project specifically targeted rural households in 68 villages whose per capita annual
disposable income was only about one-third of their urban counterparts and are therefore more
vulnerable to external shocks, such as natural disasters and change of market conditions\.
B\. ACHIEVEMENT OF PDOs (EFFICACY)
Assessment of Achievement of Each Objective/Outcome
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
30\. The efficacy analysis assesses the two PDO outcome statements: (a) improve the quality of
services available to rural households in selected villages and (b) improve income-generating
opportunities available to rural households in selected villages using the relevant PDO indicators, IRIs, and
other results not measured by the Results Framework (RF)\. Annex 1\.C shows the achievement of PDO
indicators and IRIs against the original and revised targets\. This project was the main one active in the
project villages during the project duration\. Where applicable, results were compared to ten non-project
villages in the same municipality that had not benefitted from major investments in rural infrastructure,
cultural tourism, and agricultural production in the past five years\. All data, unless otherwise stated, came
from the borrowerâs project completion report and socioeconomic impact beneficiary survey report,
which were reviewed and accepted by the World Bank team\.
Outcome 1: Improve the quality of services available to rural households in selected villages
31\. The project supported services related to basic infrastructure, tourism, and agriculture\. Service
quality was improved as detailed in the following paragraphs\.
32\. Improved quality of basic infrastructure services\. Infrastructure investments under the project
focused on constructing and upgrading basic infrastructure in 68 project villages, including (a) village
roads, bridges, and quays; (b) drainage and sewage systems; (c) water supply systems; (d) streetlights,
power, and telecommunication facilities; (e) riverbank protection; small dams; and dredging of rivers,
ponds, and canals; (f) wastewater treatment and disposal facilities; and (g) fitness squares and other
public spaces\. The project also provided garbage trucks, small sweepers, and equipment for garbage
sorting facilities\.
33\. Access to all-season roads\. The project constructed and upgraded 426 km of roads (137 percent
of the original target of 308\.6 and 115 percent of the revised target of 370)\. A total of 136,566 people
(107 percent of original target of 127,131) now have access to wider and better-quality roads within 500m
from their homes\. Before the project, some villages did not have vehicle access due to their location in
high mountains or separation by rivers or lakes, and goods and materials could only be transported by
manpower or ferry\. In other villages, existing roads were mostly earth or sand gravel, in poor condition,
and easily damaged by rain\. Some remote villages lacked river-crossing bridges, or their bridges were in a
dilapidated state and unsafe (see annex 8)\. Owing to the support of the project, the time it took for
vehicles and bicycles to access villages from outside was reduced from 1â2 hours to 5â30 minutes,
respectively\.
34\. In addition, streetlights were provided along the upgraded alleys to improve safety and
visibility\. Before the project, most villages did not have public lighting, which prevented villagers from
safely traveling at night and there was frequent occurrence of injury from tripping or drowning\. The
installation of streetlights and guardrails along rivers have greatly enhanced the sense of security for
villagers, especially for women, the elderly, and children\.
35\. Access to improved water sources\. The project installed 256 km water supply pipeline (117
percent of the target of 219 set in 2016 and 106 percent of the revised target of 241), added 11,715 m3
of daily water supply (323 percent of the target of 1,141,500 tons per year set in 2016 and 115 percent of
revised target of 10,226 m3 per day, see footnote 31 for conversion), and provided 35,622 people with
metered water supply connections (125 percent of the target of 28,530 set in 2016 and 111 percent of
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revised target of 32,011)\. The coverage of tap water supply increased by 16 percent, from 82 percent
before the project to 98 percent in 2019 (slightly higher than 96 percent in the non-project villages)\.
Before the project, in villages that did not have tap water, villagers had to use self-built mountain spring
supply facilities or manual wells, which lacked quality water treatment equipment\. Some wells were
polluted due to contamination of groundwater from infiltration of pit latrines, posing health risks\. As a
result, some villagers had to either buy bottled water or travel two to three miles for mountain spring
water\. Water supply from the original sources failed to meet increasing demand, especially during the
peak tourist season\. The project provided safe and reliable piped water supply either from mountain
springs or town water supply plants with appropriate treatment technologies\. As a result, villagers now
have 24/7 access to higher pressure and better-quality water\. Women and the elderly, who often head
households in the absence of young adults working in cities, now have access to tap water, reducing the
time and effort involved in fetching water and freeing up time for engaging in home-based business or
other economic opportunities\.
36\. Access to improved sanitation\. The project added 1,921 m3 of daily wastewater treatment (188
percent of the target of 322,500 tons per year set in 2016 and 115 percent of revised target of 1,663 m3
per day) and provided 24,286 people with connection to sewage system (125 percent of the target of
19,450 set in 2016 and 115 percent of the revised target of 21,000)\. The coverage of centralized
wastewater treatment increased from 11 percent before the project to 46 percent in 2019 (almost three
times the rate of 16 percent in the non-project villages)\. Before the project, domestic sewage in some
villages was directly discharged into rivers, causing pollution; the widespread use of pit latrines resulted
in pollution of wells, an important source of drinking water then\. The project greatly improved the quality
of the overall environment in the villages and their sanitation by constructing low-cost and low-impact
wastewater treatment and disposal facilities and collection networks, removing pit latrines (villagers
replaced them with water-flush toilets), and constructing public toilets for tourists\. The project also
provided some villages with equipment for solid waste collection and sorting\. Because 51 of the 68 project
villages are located upstream of a strategic water source for Eastern China (Qiandao Lake), the improved
sanitation status of the villages contributed to better water quality in the wider region\.
37\. Access to improved drainage and flood control\. The project provided 4,198 ha of land with
improved irrigation and drainage services (103 percent of the original target of 4,065 and 101 percent of
the revised target of 4,151)\. Before the project, due to clogging of rivers by garbage, lack of a drainage
system, and poor river bank protection, some villages (for example, Shuxi Village and Yongfeng Village in
Huangshan District) were flooded twice a year for up to three months, and houses were often submerged
by more than 1 m during the rainy season\. As most of the rivers near the project villages are small, they
had not been maintained by the national government, resulting in siltation and riverbank erosion, leading
to human and livestock accidents\. The project financed the construction of drainage systems, river
revetment, and dredging of river and ponds, greatly increasing the villagesâ resilience to flooding, reducing
riverbank erosion and riverbed siltation, and enhancing safety\. The construction of irrigation channels
mitigated the impacts of floods and droughts and contributed to increasing agricultural harvests\. In recent
years, there have been several heavy rain seasons in the project area, but no major flooding occurred in
the project-supported villages\.
38\. Access to public spaces\. Although not measured by the RF, the project also financed the
construction of public spaces, such as 39 public squares with fitness equipment, playgrounds, and parking,
for the public to exercise, socialize, and participate in community events\.
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39\. Improved quality of services for tourism\. Before the project, the local tourism sector was
underdeveloped due to lack of connectivity of the villages with regional road network, insufficient facilities
to accommodate tourists, disrepair of cultural heritage sites, and low quality of tourism services\. The
infrastructure investments financed by the project greatly improved these conditions: the project
restored 58,062 m2 of historic buildings (124 percent of the original target of 46,788 and 100 percent of
the revised target of 57,935), and it constructed 301 tourism facilities (172 percent of the original target
of 175 and 140 percent of the revised target of 215), such as parking lots, public toilets, cultural squares,
landscaping, and tourism reception centers\. The project also supported the villages to develop tourism
plans and promotional materials, conduct research about protection of tangible and intangible cultural
heritage, purchase equipment and organize festivals for traditional arts, establish/strengthen tourism
associations, and train villagers in tourism service management\. The project introduced a new approach
to preservation of tangible and intangible cultural heritage, such as integration of restoration and adaptive
reuse of historic buildings, and many of the previously dilapidated and idle buildings were put into new
use (for example, as community places, museums, and tourist facilities) after their renovation (see annex
8)\. Three provincial historic buildings were upgraded to national cultural heritage sites after the project\.
These activities contributed to a significant increase in the number of tourists to the project villages\. From
2013 to 2019, the number of tourists in project villages increased by 78 percent (much higher than the
growth rate of 44 percent in Huangshan Municipality as a whole), from 3\.03 million to 5\.4 million\. In the
30 project villages where cultural heritage conservation investments took place, the number of tourists
reached 3\.754 million annually (104 percent of the target of 3\.61 million set in 2016 and 102 percent of
the revised target of 3\.669 million)\. Some tourist attractions, such as Yangjiazhai in Shuxi Village of
Huangshan District, experienced a fivefold increase in the number of tourists\. 10 Number of audiences
attending exhibitions and performances increased to 54,284 (220 percent of the original target of 24,600
and 100 percent of the revised target of 54,000)\. Better infrastructure and services for tourism
development with a focus on cultural heritage conservation has also increased the project-supported
villagesâ ability to more sustainably manage the exponential increase in domestic tourism that has
occurred in the last decade, especially around the Yellow Mountain area\.
40\. Improved quality of services for agricultural industries\. The project financed the construction of
access roads and irrigation channels, rehabilitation of small dams and construction of 11 agriculture
markets, 29 agricultural production bases for indigenous products (for example, products used as
traditional Chinese medicine, tea, and bamboo), one processing factory, three fresh-keeping warehouses,
and two exhibition centers\. Consequently, the total area of production bases reached 684 ha (83 percent
of the original target of 12,377 mu or 825 ha, 105 percent of the revised target of 649 ha) and benefited
a total of 27,980 people\. The project also supported the operation of 19 agriculture associations and
trained 4,831 farmers (105 percent of the target of 4,600), including 2,191 women (100 percent of the
target of 2,180) in new agriculture technologies, including green and organic agriculture\. According to a
2019 survey of 79 small and micro enterprises that received support from the project, 11 99 percent of
businesses were âvery satisfiedâ or âsatisfiedâ with the project, especially with aspects of improved
infrastructure and the overall business environment\.
10 There were only 37,000 visitors visiting Yangjiazhai in 2013\. This number exceeded 180,000 in 2018 and reached 220,000 in
2019\.
11 These enterprises mainly engage in agricultural production and tourism\.
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Outcome 2: Improve income-generating opportunities available to rural households in selected villages
41\. The project improved agricultural productivity, engaged farmers in higher value-added agriculture
production, and promoted rural tourism to create new employment opportunities and diversify the
sources of income for rural residents\. Overall, the project created 4,565 local jobs that resulted from
investments in tourism and agriculture (114 percent of the target of 4,000 set in 2016 and 101 percent of
the revised target of 4,550)\. In tourism, examples are jobs in transportation, hotel services, catering,
cleaning, and other tourist services such as ticketing and public toilets\. In agriculture, the project
generated jobs in production, processing, and trade\. In addition, 11,000 person-months of local labor
were hired for small and medium-size construction activities financed by the project, generating total
salary incomes of more than CNY 30 million (US$4\.2 million) for the local farmers\. Although not directly
supported by the project, 178 new small and micro enterprises were established in the course of the
project in response to the improved business environment, generating more than 1,900 new jobs\. The
following paragraphs provide more information about the efficacy of the second outcome in each of the
two sectors\.
42\. Improved income-generating opportunities in tourism\. The project financed the training of 1,409
people in traditional arts and craftsmanship (156 percent of the target of 900) and 2,401 villagers,
including 1,361 women, in the provision of tourism services (100 percent of the target of 2,400 and 101
percent of the target of 1,350 women)\. The investments in tourism increased the number of employees
in tourism by 240 percent, from 1,554 in 2013 to 5,295 in 2019\. 12 In some villages, owing to the increase
in the number of tourists, tourism spots became a key source of employment and local revenue (see annex
7, box 7\.1)\. More than half of the people receiving tourism training were women and some of them
decided to start their own farmhouse businesses using the knowledge and skills gained from the training
(see annex 7, box 7\.2)\. These businesses increased their income significantly and allowed them to stay at
home and take care of the elderly and children\. In Changxi Village in Changxi Township, Shexian County,
there was only one guesthouse before the project, while ten were available in 2019\. Half of these
farmhouses are operated by villagers who received training in tourism management\.
43\. Improved income-generating opportunities in agriculture\. Farmersâ income-generating
opportunities improved in several ways:
(a) The new agricultural production bases created 1,017 new permanent jobs and many more
temporary jobs, providing additional income for the villagers\. Some of these jobs were
offered to women and the elderly who could not afford to work elsewhere due to their
family duties or physical conditions (see annex 7, box 7\.3);
(b) The improved infrastructure and application of new technologies led to increased
productivity and revenue (for example, revenue increased by CNY 200â300 or US$28â42 per
12Regarding the ânumber of enhanced economic opportunities-related jobs created in project villagesâ by the project, there are
two sources of data\. According to the socioeconomic study in 2019, the total number of jobs created was 4,758, including 3,741
tourism-related jobs and 1,017 agriculture-related jobs\. According to the project M&E report, the total number of jobs created
was 4,565, including 3,750 tourism-related jobs and 815 agriculture-related jobs\. The borrowerâs project completion report
used the data from the socioeconomic study while the RF used data from the M&E report\. The discrepancy was due to different
methods and time in data collection\.
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kilo of tea)\. 13 As a result, these agricultural bases generated an additional annual revenue of
CNY 16 million (US$2\.3 million) for the farmers and village collectives (see annex 7, box 7\.4)\.
44\. Long-term socioeconomic outcomes\. The project also generated positive long-term
socioeconomic outcomes for the rural households in the project villages\. According to the local statistical
data, the per capita net income of the project villages increased by CNY 7,330 (US$1,038), or 12\.4 percent
annually, from CNY 9,852 (US$1,395) in 2013 to CNY 17,184 (US$2,434) in 2019\. This annual increase rate
is higher than the 10\.5 percent annual growth rate of the 10 non-project comparison villages and
significantly higher than the 8 percent annual growth rate of per capita rural income of Huangshan
Municipality during the same period\. Owing to the faster increase in rural households disposable income
compared to their urban counterparts, the rural-urban income gap in Huangshan Municipality became
narrower from 2\.36 times in 2010 to 2\.18 times 14 in 2018, a gap that was smaller than the national average
of 2\.69 times\. 15
Justification of Overall Efficacy Rating
Rating: High
45\. The project fully achieved and exceeded its expected outcomes as measured by the three PDO
indicators and their respective original and revised targets, and all 15 IRIs except for one\. At completion,
the number of beneficiaries with improved infrastructure services in project villages reached 145,788,
slightly exceeding the original target of 145,357 and the revised target of 145,400\. According to the
beneficiary survey conducted in 2019, the villagers' overall satisfaction with infrastructure in their villages
has increased significantly by 74\.8 percent from 4\.78 before the project to 8\.33 (on a scale of 0 to 10)\. At
completion, the number of tourists visiting project villages that have implemented the cultural heritage
conservation component of the project reached 3,754,000 annually, slightly exceeding the original target
of 3,610,000 and revised target of 3,669,000, and the number of enhanced economic opportunities-
related jobs created in project villages was 4,565, exceeding the original target of 4,000 and the revised
target of 4,550\. In addition, the project generated positive long-term socioeconomic outcomes for the
rural households in the project villages\. The per capita net income of the project villages increased 12\.4
percent annually from 2013 to 2019, higher than the increase rate of 10 non-project comparison villages
and significantly higher than that of Huangshan Municipality\. Owing to the faster increase in rural
households disposable income, the rural-urban income gap in Huangshan Municipality reduced from 2\.36
times in 2010 to 2\.18 times in 2018\.
46\. One original PDO indicator and three original IRIs were dropped\. As these results were neither
directly relevant to the PDO nor were captured in other IRIs, they were not considered in the efficacy
13 According to the socioeconomic study in 2019, these projects all generated substantial economic benefits, with an internal
rate of return of between 20 percent and 30 percent based on an operation period of ten years\.
14 In Huangshan Municipality, the average per capita disposable income was CNY 15,834 (US$2,243) for urban residents and
CNY 6,716 (US$951) for rural residents in 2010, and CNY 33,551(US$4,752) for urban residents and CNY 15,391 (US$2,180) for
rural residents in 2018\.
15 In China, the average per capita disposable income was CNY 39,251(US$5,560) for urban residents and CNY 14,617
(US$2,070) for rural residents in 2018\.
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rating\. As the PDO remained unchanged and its scope was expanded (see para\. 23, 27, 50, 51), a split
rating is not applied in this Implementation Completion and Results Report (ICR)\. 16
C\. EFFICIENCY
Assessment of Efficiency and Rating
Rating: Substantial
47\. Economic analysis\. At appraisal, an economic analysis was conducted for project investments
under Components 1, 2, and 3, including cost effectiveness analysis for infrastructural investments, and
cost-benefit analysis for irrigation, agriculture, and tourism activities\. The economic benefits were
assumed to consist of (a) reduced journey times and vehicle operating costs on access roads; (b) increased
agricultural production due to flood mitigation, irrigation, and improved production technology; (c)
increased value of agriculture production, including through improved access to agricultural land; (d)
increased value of agriculture products due to improved production technology and certification; (e)
reduced losses in agriculture product processing and marketing; and (f) increase in the number of tourists
and in the output of sale of goods and services in the tourism sector; as well as other intangible benefits\.
The evaluation indicated that investments in infrastructure and water supply were cost effective; the
economic internal rates of return (EIRRs) of investment in flood control, irrigation, special agricultural
industry, and cultural heritage were estimated at about 27 percent, 18 percent, 24 percent, and 33
percent, respectively, that is, the investment in these activities was economically viable\.
48\. At completion, economic analysis was performed to assess the economic viability of the project
based on actual costs, number of beneficiaries, and a broader set of estimated benefits, using approaches
similar to the ones used at appraisal\. The updated economic analysis confirms that investments in roads,
water supply, wastewater treatment, and other infrastructure were cost effective: the investment unit
cost in the project was about 75â90 percent of similar projects in China, while the quality of the project
was considered higher than other projects based on beneficiary feedback from the socioeconomic study\.
Investments in flood control, irrigation, the special agricultural industry, tourism, and cultural heritage
were economically viable with the EIRR higher than the discount rate of 12 percent, in the range of 16
percent to 30 percent (see annex 4), which are in line with the EIRRs at appraisal\.
49\. Financial analysis\. No financial analysis was conducted at appraisal\. The main revenue-generating
services in which the project invested were water supply and wastewater treatment, and these
investments represented 9 percent of the projectâs cost\. At completion, it was not feasible to separate
O&M costs for project items from the overall activities of utility companies\. Nevertheless, data collected
from water treatment plants (WTPs) showed that most of the WTPs that supplied water to the project
villages were small-scale township-level WTPs, and because the development of the economy and
production in the project villages had increased local and tourist consumption, water fees collected were
adequate for regular O&M\. The daily O&M for wastewater treatment facilities (WWTFs) costs CNY 5,000-
10,000 (US$708âUS$1,416) per year and is paid by villages collectively\. As shown in annex 7, box 7\.4,
16According to the World Bank ICR Guidelines issued on March 2, 2020, para\. 60, in the case that âscope of the project
expanded\. If the project became overall more ambitious, generally a split rating is not applied regardless of whether project
funding increased (say through Additional Financing), decreased (say through cancellation), or remained the same â unless
good reasons can be presented as to why a split rating makes sense in a specific case\. Generally, the operation can be assessed
on the basis of the more ambitious revised outcomes and outcome targets\.â
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through leasing out tourism, agriculture facilities, or other village collective properties, and conducting
agriculture production, annual revenues of some project villages increased by CNY 100,000â300,000
(US$14,164âUS$42,493)\. In addition, the district and county governments subsidize each project village
by CNY 50,000 (US$7,082) per year through O&M funds\. This shows that the costs of O&M are affordable
to the villages\. The fees that need to be collected from villagers for the constructed infrastructure are
relatively small, mainly water tariff\. Interviews with beneficiaries suggested that the current water tariffs
were affordable\. With an average water tariff of CNY 1\.5 (US$0\.2) per m3, water consumption takes up
about 0\.5 percent of the average household income\. This was substantially lower than the affordability
limit of 5 percent normally used by the World Bank in its assessments\.
50\. Efficiency of implementation\. The project was extended by one year, mainly because of delays in
construction works due to extreme weather events in 2018 and implementation delays in the first half of
the project\. During the extended project lifetime, the scope of outcomes was expanded beyond the
original targets by using substantial savings from procurement (final bid prices were about 27 percent less
than estimated costs based on Chinese cost norms) and changes in currency exchange rate\. As a result,
all but one original target was exceeded at closing (that is, set at appraisal or in 2016 for added indicators),
and all revised targets were exceeded as well\. Even with the extension, project management costs at
closing were still substantially lower compared to the plan (see annex 3)\. Project implementation
encountered difficulties in the first three years, but these were overcome in the latter part of the project
(see para\. 62, 63, 64 and 65), which resulted in implementation being accelerated, targets exceeded, cost
savings well utilized, and project management costs lower than planned\. The one-year closing date
extension is less than the average closing date extension in the current China portfolio (18 months)\.
Therefore, on balance, the shortcomings on implementation efficiency did not have a significant
detrimental impact\.
D\. JUSTIFICATION OF OVERALL OUTCOME RATING
Rating: Satisfactory
51\. The relevance of the PDO was High at closing, as was the efficacy in achieving the PDO\. The
efficiency was Substantial despite the factors that affected implementation efficiency, as discussed above\.
In particular, the 12-month extension of the closing date allowed for net efficiency gains because project
cost savings were used during this time to expand the scale of results\. Overall, the project exceeded
original expectations and the restructurings facilitated the achievement of project outcomes because they
increased the scope of relevant activities, removed activities which were less relevant to the outcomes or
had a lower chance of success due to low demand, and improved the ability of the project to link activities
to outcomes\. However, given the history of the early implementation years, it cannot be stated that there
were no shortcomings at all in the operationâs achievement of its objectives, in its efficiency, or in its
relevance (per the definition of Highly Satisfactory Overall Outcome in the World Bank ICR Guidelines),
the overall outcome was therefore assessed as Satisfactory\.
E\. OTHER OUTCOMES AND IMPACTS
52\. Gender\. There was no specific gender-targeted activities in the original project design, but the
participatory approach of the project ensured equal rights for both men and women to participate in
project activities and provided equal opportunities for men and women to access and benefit from
services supported by the project\. Further, womenâs expectations from the project, as identified by a
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gender-disaggregated analysis conducted during project preparation, were incorporated in the designs of
investments\. During implementation, women participated in construction supervision groups and 44
percent of trainees were women\. About 49 percent of the direct beneficiaries were women, benefiting
from infrastructure improvement and economic opportunities brought by the project\. Before the project,
women in these villages rarely went out of the mountains, mainly because of the poor and unsafe road
conditions\. The project improved connectivity to some isolated villages and made it more convenient for
women to go out to work or do business\. Women who could not go out to work because of household
responsibilities were hired for construction activities and were employed either permanently or
temporarily in tourism and agricultural production\. Some started new businesses or expanded their
existing businesses, which increased their income (see annex 7, box 7\.2, and box 7\.3)\.
53\. Institutional strengthening\. This was the first World Bank-financed project implemented by the
PMO of Huangshan Municipal Development and Reform Commission (MDRC), the PMUs at the
county/district level, and the PIUs at the township/village level\. Therefore, when the project started, most
PMUs and PIUs showcased very low technical and managerial capacities\. The project strengthened their
capacity mainly in three areas:
(a) Project management\. After a slow start, training and hands-on support provided by the
World Bank team as well as recruitment of consultants, greatly improved the capacity and
performance of project management staff as demonstrated in the gradual improvement of
project management ratings in the World Bank Implementation Status and Results Reports
(ISRs) since 2017\. Most of the staff were retained to implement the Asian Development
Bank-financed Xinâan River Basin Ecological Protection and Green Development Project
(approved in November 2019) owing to their improved skills\.
(b) Asset management\. The project ensured that proper institutional and funding
arrangements for O&M were put in place to improve the sustainability of project
investments\. Most of the infrastructure constructed by the project is managed and used at
the village level which often lacks technical and managerial capacity\. The project developed
technical guidelines for construction and O&M of the different infrastructure (for example,
sewage, sludge disposal, water supply, roads, bridges, squares, and small water conservancy
facilities), and held trainings for township and village-level management units on O&M\.
Huangshan MDRC together with district and county governments formulated special
provisions to specify the organization, personnel, and funds for O&M of the different types
of public assets; each village was required to formulate their âInfrastructure O&M Planâ and
have dedicated personnel for O&M\. It was agreed that the O&M cost of village-level
infrastructure will mainly come from the operating income of the village collectives, and the
township government will also provide supplementary funds\.
(c) Participatory approach\. The project enhanced the capacities of the local governments and
villagesâ leadership to plan and implement infrastructure investments with clearly defined
roles for the various village organizations and a participatory process of engaging with
communities\. This contributed to a highly satisfactory rating in the beneficiary survey (see
paragraph 44)\. As the project progressed and the participatory process was shown to be
effective, the local governments began to consider the local communities as partners in
development instead of passive recipients of support\.
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54\. Improved community participation\. One key principle of the project was community
participation\. During project preparation, the construction plan in each village was widely consulted and
villagers were encouraged to contribute ideas and suggestions, and where possible, such feedback was
reflected in the project design and implementation\. Selection of village-level investments was decided
jointly by the villagers in public meetings\. Villagers learned how to participate in the project and that
experience was carried on to the implementation stage of the project, such as participating in monitoring
of construction and completion acceptance, which contributed to improving the quality of construction\.
After project completion, each village has hired full-time administrators to carry out daily operation,
maintenance, and management of project assets\. The 27 agriculture and tourism associations supported
under the project were actively engaged in disseminating project information, providing feedback,
participating in construction supervision and O&M, and serving as liaisons between the community and
the village collectives\. According to the survey in 2019, over 90 percent of the villagers in the project
villages had âvery clearâ and âclearâ knowledge about the project, and they gave a satisfaction rating of 8\.9
out of 10 for the project implementation process\.
55\. Mobilization of private capital\. The project created favorable market conditions and improved
the business environment for private investments\. Owing to improved connectivity and infrastructure of
villages and increased demand for tourism and agricultural production, 356 new small and micro
enterprises were established between 2013 and 2018, generating more than 1,700 new jobs\. Among the
79 small and micro enterprises surveyed, the number of employees increased from 396 in 2013 to 1,084
in 2018 and the monthly income of employees increased from CNY 2,074 (US$294) to CNY 3,022
(US$428)\. The increase in number, employees, and output value of these small and micro enterprises
(73 percent, 75 percent and 59 percent respectively) are all higher than those in the non-project
comparison villages (50 percent, 43 percent, and 52 percent respectively) over the same period\. Villages
were able to attract investments from private companies, such as in the case of Jiekou Village of Shexian
County, where an investor plans to invest CNY 130 million (US$18\.4 million) to establish a training base
for traditional Chinese medicine in this mountainous area\.
56\. Poverty reduction and shared prosperity\. Although poverty reduction was not explicitly part of
the PDO, the project did contribute to improvement of incomes and livelihoods as shown in the efficacy
section\. Before the project, the incidence of poverty in the 68 project villages was 3\.85 percent; this figure
dropped to 2\.26 percent in 2019, representing a 42 percent reduction, showing better progress compared
to the non-project comparison villages\. 17 Among the 145,788 people directly benefitting from the
project, 4,902 (3 percent) were poor according to local standards\. Some of the poor were lifted out of
poverty status (see annex 7, box 7\.5)\.
Other Unintended Outcomes and Impacts
57\. Revitalization of villages\. Owing to increased economic opportunities that resulted from project
investments, many young adults who used to work outside the project villages now chose to start
businesses or find employment in their hometowns\. This revitalized the villages that used to be hollowed
out as younger adults migrated out to find jobs in the city and left behind the old and the children\. In
17During the same time, the incidence of poverty in the non-project comparison villages dropped by 38 percent from 4\.10
percent to 2\.54 percent\.
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Huaqiao Village in Xiuning County, for example, 85 percent of young people who worked outside the
village before the project were able to find jobs in the village\.
58\. Project investments contributed to the Governmentâs preparedness for future disease
outbreaks\. Although the project villages were not at the epicenter of the COVID-19 pandemic, project
investments in water and sanitation are expected to be instrumental in preventing disease outbreaks and
protecting human health during infectious disease outbreaks with fecal-oral transmission\. In addition,
project investments in tourism and agriculture contributed to the post-COVID-19 economic recovery of
the province and increased the villagesâ overall economic resilience to future pandemics\.
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A\. KEY FACTORS DURING PREPARATION
59\. Strategic alignment and government commitment\. The project was very well aligned with the
Governmentâs national and local priorities at appraisal, which generated strong commitment from the
HMG and its leadership team\. The HMG actively engaged in World Bank preparation missions, while the
MDRC, the lead project implementing agency, mobilized resources and ensured line bureausâ participation
in the design and preparation of project activities\. The participating district/country/town governments
and village organizations also demonstrated strong commitment and a high level of readiness for
implementation and a number of retroactively financed packages for civil works and consultancies had
already been commissioned before the project became effective\.
60\. Quality of the project design\. The project aimed to demonstrate new approaches to regional
development that integrated multiple sectors\. Its design incorporated lessons from similar projects in
China and elsewhere and from various studies\. 18 These included the value of integrating cultural heritage
preservation with tourism and skills development, the importance of community participation throughout
the project cycle, the adoption of least life-cycle cost and technically sound options for rural
infrastructure, and the value in defining clear asset management and O&M arrangements from the outset
and in minimizing resettlement impacts\. The selection process of participating villages was appropriate
and effective, with well-defined criteria, full participation of stakeholders, and demand driven\.19 The PDO
statement was realistic, and the projectâs interventions supported its achievement\. The RF was overall
well designed, however one original PDO indicator was considered not relevant and replaced by another,
and another PDO indicator and some IRIs needed revision in their wording or baseline values during the
restructuring in 2016\. The sub-grants for rehabilitating privately owned house façades were not well
18 These include the Ningbo New Countryside Development Project (P106956, 2010â16), the Chongqing Urban-Rural Integration
Project (P086446, 2010â17), the Gansu Cultural and Natural Heritage Protection and Development Project (P091949, 2008-
2015), the Guizhou Cultural and Natural Heritage Protection and Development Project (P091950, 2009â17), the Shandong
Confucius and Mencius Cultural Heritage Conservation Project (P120234, 2011â17), and the World Bank report on âConserving
the Past as a Foundation for the Future: China-World Bank Partnership on Cultural Heritage Conservationâ (Urban Development
Series Knowledge Papers No\. 12, 2011)\.
19 Selection of villages were based on 20 considerations including buy-in and participation from villages, a balance of assessed
needs and existing potentials (tourism, cultural, and so on) and adequate resources and institutional arrangement for meeting
O&M needs\. Selection of investments was based on 56 criteria in 15 categories which emphasized alignment with national
strategies and local plans, needs and support of beneficiaries, minimization of resettlement impacts, and technical soundness\.
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designed, resulting in low interest of community members to participate; the amount was substantially
reduced and an IRI associated with this activity was dropped during the 2016 restructuring\.
61\. Risk assessment and mitigation measures\. The overall risk rating at appraisal was assessed as
Moderate, with capacity being the only Substantial risk\. The Substantial risk rating was explained by the
lack of experience of the project implementing agencies in preparing and implementing World Bank-
financed projects\. The design risk factor was rated Moderate given the large number and diverse nature
of the planned investments\. Mitigation measures were built into the project design, including, among
others, training PMO and PMU staff on World Bank policies and procedures; engaging experienced
technical staff from line departments and expert teams to provide technical guidance, reviews, and
approvals during project preparation and implementation; and designing cost-effective and technically
sound interventions\. While the capacity risk was appropriately assessed as Substantial, the Moderate risk
rating of the design appears to have been underestimated\. In particular, the risk associated with the
cultural heritage conservation activities was not sufficiently assessed, including the availability of
specialized expertise and complex government approval procedures for restoration of historic buildings\.
B\. KEY FACTORS DURING IMPLEMENTATION
62\. Institutional and project management capacity\. The PMO and PMUs did not have experience
with World Bank projects and their capacity, especially that of the PMUs at the county/district level and
PIUs at the township/village level, to implement a complex multisectoral World Bank project that included
large number of investments was relatively low\. Some PMUs lacked project management staff and
technical expertise in engineering, agrobusiness, and cultural heritage conservation, and the mobilization
of support consultants was delayed\. Several PMUs experienced frequent turnover of staff\. In addition,
government procedures for the design approval of cultural heritage conservation activities and for
acquiring collective land in national park areas were cumbersome and took longer than expected\.
Consequently, the project was delayed in the first three years\. The change of the PMO director in 2015,
which coincided with the handover of the World Bankâs task team leadership, also temporarily affected
progress\. Performance improved, starting in 2017, as staff gained operational and technical experience
and with the support of training and consultants\. The 2019 closing date extension provided the extra time
needed to catch up on past delays and implement scaled-up activities\.
63\. Commitment, leadership, and coordination\. After the slow start, the HMG demonstrated its
continued strong commitment and leadership by explicitly making project progress an integral part of the
performance evaluation system of district/county leaders\. Provincial agencies extended technical support
to the Huangshan MDRC, where the PMU was located\. This was particularly instrumental for a project
that covered multiple sectors and several layers of jurisdictions\. Coupled with intensified support from
the World Bank, performance improved greatly starting in early 2017\.
64\. Availability of counterpart funds\. Before the 2016 restructuring, some project counties had
difficulty in providing the required counterpart funds for civil works due to the accumulated local
government debt and slowdown of the Chinese economy\. This slowed down implementation and
payment to contractors\. The 2016 increase in the World Bank disbursement percentage for works (from
86 percent to 100 percent) helped to release the fiscal pressure of the counties and accelerated project
implementation\.
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65\. Utilization of loan savings and other unallocated funds\. The PMO forecasted in 2017 that there
would be around US$17 million of funds available upon completion of all proposed activities as a result of
procurement savings and dropping of some activities that had been financed by other sources\. 20 Loan
savings continued to occur owing to successful bidding processes in 2017â18\. By end of 2018, there was
a balance of US$30 million available in the project, mainly due to (a) change in currency exchange rate of
Chinese yuan to US dollars (US dollar:Chinese yuan from 6\.12 at appraisal to 6\.90 in mid-2017) and (b)
effective competitive bidding combining with an overestimation of costs 21 resulting in final bid prices
being about 27 percent less than estimates on average\. It was agreed to use these funds to scale up some
existing investments and finance additional complementary small-scale infrastructure and services\. The
additional activities were identified quickly because they were included in the feasibility studies and had
been evaluated during preparation in case additional resources became available\. The 2019 restructuring
formalized these changes and implementation was quick thereafter, allowing an expansion of the
projectâs scope within the one-year extension\.
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A\. QUALITY OF MONITORING AND EVALUATION (M&E)
Rating: Substantial
M&E Design
66\. In general, the projectâs Theory of Change established clear links between project activities,
results, and the PDO\. The RF presented measurable indicators with clearly defined baselines and targets,
which were in line with the M&E capacity of the client and the expected availability of data\. The RF also
measured several results in a gender-disaggregated manner and more disaggregated targets were added
in the 2016 restructuring\. However, several indicators were dropped or revised during the restructuring
in 2016\. One PDO indicator âValue of agriculture production in project villagesâ did not capture well the
expected project outcome on improved income-generating opportunities and was replaced by a new PDO
indicator âNumber of enhanced economic opportunities related jobs created in project villagesâ and
another PDO indicator âNumber of tourists visiting project villagesâ was revised to âNumber of tourists
visiting project villages which have implemented the cultural heritage conservation component of the
projectâ to strengthen the link between the cultural heritage conservation component and project
outcomes\. The IRI âNumber of village houses changed with Hui-style façadeâ was removed due to
cancelation of sub-grants intended for rehabilitation of privately owned houses and another IRI âNumber
of idle historic buildings adaptively reusedâ was dropped due to different interpretation of what is
considered âadaptively reusedâ between the World Bank team and the client\. In addition, targets of several
indicators were overestimated at appraisal and were also revised in the restructuring\. The M&E system
was comprehensive and included an MIS to track physical and financial progress, and a socioeconomic
impact study and beneficiary survey were added in the 2019 restructuring\. It also put in place appropriate
20Project Restructuring Paper, 2019\.
21It is commonly seen in World Bank projects in China that cost estimates based on government-regulated cost norms are in
general higher than market prices due to the tendency to reserve abundant contingency\. While it is difficult to quantify the
impacts of the different factors, both the World Bank team and the client are of the opinion that the lowest cost bidding
method (that is, contract is awarded to the lowest evaluated responsive bid) adopted in the project was a key factor
contributing to the procurement savings\.
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arrangements for data collection and reporting with information flowing from county/district PMUs to
the municipal PMO for compiling, verification, and reporting on a semiannual basis to the World Bank\.
M&E Implementation
67\. A good system was in place for M&E implementation\. An MIS was developed and used from the
onset, integrating the functions of investment planning, project progress monitoring, contract
management, withdrawal application and payment, capital budgeting, and financial management (FM)\.
The PMO and each PMU had a dedicated officer in charge of M&E to monitor and collect data on indicators
as planned, and their capacity to carry out M&E and the quality and timeliness of progress reports
submitted to the World Bank were generally good\. After some delay, M&E consultants were mobilized to
support the PMO and PMUs in conducting surveys and monitoring progress\. The consultants set up
research groups in each of the project districts/counties to conduct onsite investigation, surveys, and
interviews as planned, feeding important information to the MIS\. The PMO with support from the M&E
consultants provided a thorough midterm progress report, with information on physical and financial
progress and status of achieving the PDO-level and intermediate outcome-level indicator targets,
contributing significantly to identifying the main issues for discussion during the midterm review (MTR)\.
A comprehensive socioeconomic impact study and beneficiary survey were commissioned by the PMO
and completed in 2018 (see annex 7)\. These data allowed a meaningful assessment of project outcomes
and attribution for the ICR\.
M&E Utilization
68\. Monthly reports were generated by the PMUs using the MIS to assess the physical, procurement,
and financial progress in each village, rank its performance, and identify outstanding issues\. The monthly
and semiannual M&E reports were used by the World Bank, PMO, and PMUs to track implementation
progress on an ongoing basis and identify issues and potential risks, particularly those related to
counterpart fund allocations, delays in site clearance, and any contract management issues\. These reports
and the comprehensive midterm evaluation directly informed the two restructurings\. The PMO used the
M&E reports to update the Project Leading Group on progress monthly and highlighted critical issues for
its coordination and support\. This reporting was particularly useful in timely obtaining the GoCâs
agreement to restructure the project\.
Justification of Overall Rating of Quality of M&E
69\. The overall quality of project M&E was Substantial given the comprehensiveness of the M&E
systemâs design, the efforts taken by the client to collect, evaluate, and report on progress on time and
with high quality, and the usefulness of M&E efforts in the identification of implementation issues and
their resolution\. The RF weaknesses were timely corrected through the restructurings and therefore did
not affect the overall M&E efforts\.
B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
70\. Environment safeguards\. The project was classified as Environmental Assessment Category B
(Partial Assessment) and triggered five environmental safeguards policies: Environmental Assessment
(OP/BP 4\.01), Natural Habitats (OP/BP 4\.04), Pest Management (OP 4\.09), Physical Cultural Resources
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(OP/BP 4\.11), and Safety of Dams (OP/BP 4\.37)\. During project preparation, an Environmental Impact
Assessment (EIA) was conducted and an Environmental Management Plan (EMP) was developed to
manage the project-related environmental risks/impacts following the policy requirements\. 22 The EIA and
EMP included Environmental Codes of Practices (ECOPs) for construction activities, a Pest Management
Plan (PMP), and a Physical Cultural Resources (PCR) Management Plan, respectively, responding to the
requirements of OP 4\.09 and OP/BP 4\.11\. A Dam Safety Action Plan was prepared as part of the Project
Operational Manual to address dam safety issues\. The EIA and EMP were disclosed locally and in the World
Bankâs InfoShop before project appraisal\. 23
71\. Environmental safeguards policies were complied with\. The environmental monitoring reports
from the independent environmental monitoring consultant indicated that the project complied with the
environmental safeguards policies, with ECOP and contract-specific mitigation measures incorporated
into the tendering documents and contracts of civil works and well implemented\. Regular environmental
monitoring did not find any noncompliance during construction, and there was no reporting of
environmental complaints or occupational health and safety accidents throughout project
implementation\. The effluent quality of 16 village-level WWTFs was regularly monitored as needed, and
the measures specified in the EMP, PMP, PCR, and Dam Safety Action Plan were satisfactorily
implemented\. Beyond safeguards, project activities such as soil improvement, restricted use of chemical
fertilizers and pesticide, and reduced discharge of untreated wastewater, contributed to environmental
improvements in the project areas\.
72\. Social safeguards\. Social safeguards policies were complied with\. Because the project involved
land acquisition in all seven counties/districts, the client prepared a Resettlement Policy Framework (RPF)
for the entire project and Resettlement Action Plans (RAPs) for the counties/districts\. 24 The RPF and RAPs
were disclosed locally and in the World Bank InfoShop before project appraisal\. 25 The resettlement
activities were carried out consistent with the RPF and RAPs as confirmed by the independent social
monitoring reports, and legal land entitlements that were identified at appraisal were strictly followed\. 26
Various measures were undertaken to minimize resettlement impacts, such as the innovative land
exchange schemes implemented in several villages\. 27 Consequently, although the project supported a
large number of facility improvements, only 22 ha of farmland were acquired at closing and there was no
physical relocation of affected persons\. The 1,914 affected persons were compensated as required\.
73\. Grievance redress mechanisms were established as planned in each county/district, within the
PMUs, and at village committees to respond to concerns or complaints\. The social monitoring reports by
the independent social monitoring consultants showed that the resettlement agencies at the city,
district/county, and township levels did not receive complaints about land acquisition and resettlement\.
22 Environmental Assessment Report No\. E4228\.
23 The Environmental Assessment and EMP and their revisions were locally disclosed for four rounds during December 2012â
June 2013, and the English versions were disclosed at the World Bankâs InfoShop in June/July 2013\.
24 Resettlement Plan RP1415\.
25 The RPF and Resettlement Plan were publicly disclosed in the Huangshan Municipality and counties/districts on March 6,
2013, and in English in Washington, DC on May 30, 2013\.
26 Based on the Chinese Land Law 2004, village committees terminate land contracts with farmers (that is, acquire farmersâ
land) if the contracted land is used for village public interests and farmers receive proper compensation\.
27 In Sanhe Village of Huangshan District, farmers were given reserved farmland owned by village collectives in exchange of
their own farmland to facilitate the implementation of the Xiyi drinking water works\.
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74\. Procurement\. The World Bank procurement policies and procedures were followed in most
transactions\. Procurement activities were conducted by the municipal PMO and the seven county/district
PMUs, and their performance varied considerably\. In some cases, the unawareness of the relevant World
Bank policies and tendency to adopt local practices resulted in noncompliance with requirements, and
the PMO and PMUs took necessary remedial actions as suggested by the World Bank\.
75\. FM\. The World Bank FM policies and procedures were complied with\. The projectâs FM
arrangements, including FM staff, planning and budgeting, and internal control procedures were properly
maintained throughout implementation\. The PMO and all the seven PMUs had adequate qualified FM
staff with accounting and internal control systems in place\. A contract management system was properly
maintained\. Interim unaudited financial reports were consolidated and regularly submitted to the World
Bank with acceptable quality\. Project audit reports with unqualified (clean) opinions were submitted on
time to the World Bank, and issues identified by the auditors were properly addressed by the PMO\.
76\. Legal covenants\. The legal covenants requiring the borrower to maintain a Technical Expert Group
(TEG) at the municipal level to be responsible for advising the PMO and PMUs on technical and
institutional matters relating to project implementation were partially complied with from project
effectiveness to December 2018 28 and fully complied with since 2019 as reported in the ISRs\.
C\. BANK PERFORMANCE
Rating: Satisfactory
Quality at Entry
77\. The World Bank task team took the project from Project Concept Note/identification to Board
approval in 16 months, which is in line with the average processing time of projects in China\. The
composition of the task team was appropriate for the design of the project, with operational and technical
specialists with experience in rural development projects in China (see annex 2)\. The task team made sure
to closely align the objectives of the project with the national agenda and the World Bank's CPS and
incorporated lessons from other projects in China and international experiences in the project design\. The
task team took the necessary steps to conduct social impact assessments and assessment on sustainability
of water utilities and O&M arrangements\. The findings of these studies informed the technical designs,
O&M plans, and social safeguards\. The project allocated sufficient funding for technical assistance
activities, training, capacity building, and implementation support to the PMO and PMUs, and delivered
trainings during project preparation on World Bank policies and requirements to address identified
capacity risks\. However, the design of some indicators in the RF did not appear to be appropriate in
measuring the expected project outcomes, and the design of the sub-grants on renovation of private
house façade seemed inadequate in generating demand, and these were addressed during restructurings\.
Quality of Supervision
78\. The World Bank undertook regular supervision with a total of 13 full implementation support
missions (two per year on average) and many short technical missions in between, producing candid and
28The TEG was mobilized for four out of seven counties/districts by 2017, however mobilization of the TEG was delayed in the
three remaining counties/districts\.
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comprehensive mission reports and ISRs\. Although the task team leaders changed twice during project
implementation, this did not appear to slow down project implementation as the co-task team leader and
most team members were located in Beijing and were able to interact with the PMO and PMUs on a day-
to-day basis\. The World Bank teamâs composition was adequate to effectively support the client, and
additional international expertise was mobilized to advise the team on rural development during the MTR
in 2017\. Fiduciary, environmental, and social safeguards specialists consistently participated in the
missions and carried out just-in-time technical missions as needed, and they diligently followed up on
identified fiduciary/safeguard weaknesses and worked with the PMUs to resolve them\. The World Bank
continuously organized hands-on training and experience-sharing workshops that significantly
strengthened the PMOâs and PMUsâ technical and operational capacities\.
79\. In view of issues related to technical designs, institutional capacity and counterpart funding that
slowed down initial project implementation, the World Bank team downgraded the project key
performance ratings to Moderately Unsatisfactory in June 2016, and the overall risk rating was increased
from Moderate to Substantial\. The World Bank team closely monitored and evaluated project risks and
weaknesses and supported the client in mitigating them, including by timely processing the two
restructurings\. Given the improved project management and implementation progress, the ratings were
upgraded to Moderate Satisfactory in April 2017 right after the MTR, and eventually to Highly Satisfactory
in June 2020 to reflect the full achievement of PDO\.
80\. The borrowerâs project completion report assessed the World Bankâs overall support to the client
as âSatisfactoryâ especially in terms of timely communication, proactiveness in identifying and solving
issues, professional technical advice, and sharing management experiences with the project management
staff\.
Justification of Overall Rating of Bank Performance
Rating: Satisfactory
81\. The World Bank supported the client in designing a project that was relevant and technically
sound, followed implementation progress closely to address institutional and technical challenges, and
took proactive measures to ensure weaknesses and challenges were resolved timely\. Weaknesses at entry
were addressed proactively through the restructurings\.
D\. RISK TO DEVELOPMENT OUTCOME
82\. Key risks to the projectâs development outcome are discussed in the following paragraphs\.
83\. Natural disaster and climate change\. Natural disasters such as flooding and landslides could have
a detrimental impact on project assets\. Most project villages are located in mountainous areas that are
susceptible to landslide and some villages also suffer from regular flooding\. The engineering design of
project investments properly considered these potential natural disasters and climate change, and the
investments in drainage, landslide protection, flood control, and soil conservation increase the resilience
of project villages\. Investments in sanitation improvement and development of organic agriculture also
reduced pollution and contributed to climate change mitigation\.
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84\. O&M\. Another potential risk is the sustainability of the institutional capacity involved in O&M of
both the physical and intangible assets\. As discussed in the efficacy section, many village collectives saw
their revenue increase substantially from land lease, agriculture production, tourism, and other public
assets, sufficient to cover the O&M needs\. However, given the diverse economic profile of the project
villages, there is a risk that some villages may not have the fiscal and technical capacity to carry out proper
O&M, 29 especially for the few centralized WWTFs that require a higher level of technical know-how in
O&M and those infrastructure assets that do not generate user fees\. Villages may need to consider ways
to raise O&M funds, such as through charging user fees from beneficiaries for the irrigation facilities\. The
agriculture and tourism associations supported and trained under the project are expected to play an
active role in O&M, but they may require policy support to sustain their role and operation beyond the
project\. It is also uncertain if the local government will continue to carry out skills trainings (for example,
in traditional arts, new agriculture technologies, and tourism services) to ensure the socioeconomic
impacts generated by the project will sustain in the long run\.
V\. LESSONS AND RECOMMENDATIONS
85\. Key lessons and recommendations are detailed in the following paragraphs\.
86\. Integrating âhardâ infrastructure with âsoftâ skill building and economic promotion helps to
maximize socioeconomic impacts\. Before the project, government-funded rural development programs
placed more emphasis on infrastructure development over human capital and institutional capacity,
limiting beneficiariesâ access to economic opportunities to fully take advantage of the improved
infrastructure\. The multifaceted approach introduced by the project that combined infrastructure
improvement, development of tourism assets, including cultural heritage, and promotion of modern
agriculture industries and skill building, proved to be effective in creating economic opportunities and
nurturing entrepreneurship while improving communitiesâ living conditions, contributing to the social,
economic, and environmental sustainability of the villages\. This integrated approach is now endorsed in
the Rural Revitalization Strategy put forward by the Chinese Government in 2018 and being adopted by
many local governmentsâ rural development programs\.
87\. Proper institutional and funding arrangements for asset management are essential for the
sustainability of investments\. Local authorities need to place a high priority on asset management,
especially for public assets at the village level where capacity and resources are often a challenge\. This
important issue was repeatedly highlighted to the local authorities throughout the project cycle\. During
project preparation, technical assistance was provided to develop asset management manuals of different
types of assets; the designs of investments such as selection of wastewater treatment/disposal
technologies and restoration of historic buildings should consider the availability of the required technical
expertise and costs during the O&M stage\. Before project closing, local authorities had to develop their
respective asset management plans to ensure that the organizational, personnel, and funding
arrangements for O&M of the different types of public assets are appropriate to the capacity and
resources at the village level\.
29 Field work in 30 villages in 2019 found that only two village collectives did not have a reliable income while the other 28 villages
already had stable and reliable source of collective income\.
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88\. An adaptive approach to selection of investments proves to work better under the rapid rural
development context in China\. In anticipation of unforeseen circumstances that may arise during project
implementation, the project feasibility studies and relevant safeguards documents tried to cover all
necessary investments identified in the project villages, including reserved items that were not included
in the project initially\. This greatly facilitated the process of identifying and appraising additional activities
to utilize the loan savings during project implementation as these investments were already included in
the feasibility studies and appraised during the project preparation\.
89\. Having an easily accessible and integrated MIS streamlines data collection and reporting and
improves efficiency in project management\. As the project was implemented by one PMO, seven PMUs,
and 68 PIUs, having an MIS with easily accessible and integrated information on physical progress,
contract management, and FM greatly facilitated project monitoring, reporting, information sharing, and
communication among different implementation agencies\. This saved project management costs and
improved implementation efficiency\. Villages were ranked in the MIS and results were shared monthly
among all implementing agencies, generating incentives to improve their performance\. The efficiency of
the MIS was well recognized by the relevant government agencies who intended to adopt a similar system
in other projects\.
90\. The trade-off between maximizing the demonstration effect of a project and increasing its
geographic coverage should be carefully considered\. The project supported a large number of villages
(68) primarily to meet the local governmentâs objective of ensuring equitable development of as many
people as possible\. This could have hampered the scale of interventions in each village and the
demonstration effect of its integrated model\. A good balance was reached through a careful village
selection process, making sure that the selected villages were located along major tourist routes and well
connected with the regional economy for maximum impact\. However, monitoring and supervising the
numerous scattered investments still resulted in relatively high efforts for both the client and the World
Bank, especially considering the relatively low institutional capacity at the lower administrative level\. For
future projects that cover a wide geographic area with a large number of small-scale investments, a more
flexible, results-based approach may be considered to reduce the transaction costs and achieve similar
objectives\.
\.
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS
A\. RESULTS INDICATORS
A\.1 PDO Indicators
Objective/Outcome: Improve the quality of services available to rural households in selected villages
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Indicator One: Number of Number 0\.00 145357\.00 145400\.00 145788\.00
beneficiaries with access to
improved infrastructure 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
services in project villages
Indicator one (i): Number of Number 0\.00 127131\.00 127131\.00 136566\.00
beneficiaries with access to
an all season road within
500m range
Indicator one (ii): Number Number 0\.00 28530\.00 32011\.00 35622\.00
of beneficiaries with access
to improved water sources\.
Indicator one (iii): Number Number 0\.00 19450\.00 21000\.00 24286\.00
of beneficiaries with access
to improved sanitation\.
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Indicator One: (0) Number Number 0\.00 61023\.00 66972\.00 71609\.00
of beneficiaries with access
to improved infrastructure
services in project villages
of which women
Comments (achievements against targets):
The result has been achieved by 100\.2% compared to the final target\. This is an original indicator of PAD\. The result is in line with the PDO to improve the
quality of services to rural households in selected villages\. This was achieved by financing in upgrading infrastructure services, including roads, drains,
sewers, water supply, street lighting, river revetment, and wastewater treatment facilities\.
Objective/Outcome: Improve income generating opportunities available to rural households in selected villages
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Indicator Two: Number of Number 2580\.00 10013\.00 3669\.00 3754\.00
Tourists visiting project (Thousand)
villages which have
implemented the cultural 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
heritage conservation
component of the project\.
('000)
Comments (achievements against targets):
The result has been achieved by 102% compared to the final target\. This is an original indicator of PAD, but the final target was revised in the first and
second restructuring\. The result is in line with the PDO to improve the income-generating opportunities available to rural households in selected villages\.
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This was achieved by financing in restoring and preserving the existing cultural heritage assets, including restoring historic buildings and improving tourism
facilities\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Indicator three: Number of Number 0\.00 4000\.00 4550\.00 4565\.00
enhanced economic
opportunities related jobs 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
created
Comments (achievements against targets):
The result has been achieved by 100\.3% compared to the final target\. This is a newly added indicator in the first restructuring\. The result is in line with the
PDO to improve income-generating opportunities available to rural households in selected villages\. This was achieved by financing in supporting agricultural
associations and tourist associations, training farmers in new agricultural technologies, training in traditional arts and techniques, training in tourism
services\.
A\.2 Intermediate Results Indicators
Component: Component 1 Infrastructure Improvement
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 1-1: Increased length of Kilometers 0\.00 308\.60 370\.00 426\.00
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roads 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
constructed/rehabilitated
under the project
Comments (achievements against targets):
The result has been achieved by 115% compared to the final target\. This is an original indicator of PAD\. The result is under the first component
(infrastructure improvement) and in line with the PDO to improve the quality of services to rural households in selected villages\. This was achieved by
financing in constructing and repairing roads in the project villages\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 1-2: Length of water Kilometers 0\.00 219\.00 241\.00 256\.00
supply pipeline installed
under the project\. 30-Dec-2013 30-Jun-2019 30-Jun-2019 25-Jun-2020
Comments (achievements against targets):
The result has been achieved by 106% compared to the final target\. This is an indicator that was introduced in the first restructuring\. The result is in line
with the PDO to improve the quality of services to rural households in selected villages\. This was achieved by financing in installing water supply pipeline in
the project villages\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 1-3 :Increased daily Cubic 0\.00 1141500\.00 10226\.00 11715\.00
production of quality water Meter(m3)
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
supply under the project 30-Dec-2013 30-Jun-2019 30-Jun-2019 25-Jun-2020
Comments (achievements against targets):
The result has been achieved by 115% compared to the final target\. This is an indicator that was introduced in the first restructuring\. The result is in line
with the PDO to improve the quality of services to rural households in selected villages\. This was achieved by financing in improving the daily production of
quality water supply in the project villages\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 1-4: Increased daily Cubic 0\.00 322500\.00 1663\.00 1921\.00
capacity of wastewater Meter(m3)
treatment and disposal
facilities under the project 30-Dec-2013 30-Jun-2019 30-Jun-2019 25-Jun-2020
Comments (achievements against targets):
The result has been achieved by 115% compared to the final target\. This is an indicator that was introduced in the first restructuring\. The result is in line
with the PDO to improve the quality of services to rural households in selected villages\. This was achieved by financing in improving the daily capacity of
wastewater treatment and disposal facilities\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 1-5: Land area with Hectare(Ha) 0\.00 4065\.00 4151\.00 4198\.00
improved access to irrigation
and flood control with 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
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improved irrigation and
drainage services
Comments (achievements against targets):
The result has been achieved by 101% compared to the final target\. This is an original indicator of PAD and the final target was revised to a higher value in
the restructuring\. The result is in line with the PDO to improve the quality of services to rural households in selected villages\. This was achieved by
financing in improving irrigationand drainage services in the project villages\.
Component: Component 2 Cultural Heritage Conservation
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 2-1: Area of historic Square 0\.00 46788\.00 57935\.00 58062\.00
buildings restored Meter(m2)
30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
Comments (achievements against targets):
The result has been achieved by 100\.2% compared to the final target\. This is an original indicator of PAD and the final target was revised to a higher value
in the restructuring\. The result is in line with the objectives to improve employment opportunities in tourism\. This was achieved by financing in restoring
historic buildings in the project villages\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
IOI 2-2: Increase in number Number 0\.00 24600\.00 54000\.00 54284\.00
of audience attending
exhibitions and performanes 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
Comments (achievements against targets):
The result has been achieved by 100\.5% compared to the final target\. This is an original indicator of PAD and the final target was revised to a higher value
in the restructuring\. The result is in line with the objectives to improve income-generating opportunities and employment opportunities in tourism\. This
was achieved by financing in supporting exhibitions and performances in the project villages\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 2-3: number of successors Number 0\.00 900\.00 900\.00 1409\.00
trained for traditional arts
and techniques 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
Comments (achievements against targets):
The result has been achieved by 156% compared to the final target\. This is an original indicator of PAD\. The result is in line with the objectives to improve
employment opportunities in tourism\. This was achieved by financing in training in traditional arts and techniques\.
Component: Component 3 Enhanced Economic Opportunities
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 3-1: Area of production Hectare(Ha) 0\.00 12377\.00 649\.00 684\.00
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
bases developed in project 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
villages
Comments (achievements against targets):
The result has been achieved by 105% compared to the final target\. This is an original indicator of PAD\. The result is in line with the objectives to improve
the employment opportunities and economic values of agriculture products\. This was achieved by financing in developing production bases in the project
villages\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 3-2: Farmers trained in Number 0\.00 4600\.00 4600\.00 4831\.00
new agriculture technologies
30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
IOI 3-2: (i) Farmers trained Number 0\.00 2180\.00 2180\.00 2191\.00
in new agriculture
technologies of which 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
women
Comments (achievements against targets):
The result has been achieved by 105% compared to the final target\. This is an original indicator of PAD\. The result is in line with the objectives to improve
the employment opportunities and economic values of agriculture products\. This was achieved by financing in training farmers in new agricultural
technologies\.
Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Target Completion
IOI 3-3: Rural residents Number 0\.00 2400\.00 2400\.00 2401\.00
trained in provision of
tourism services 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
IOI 3-3: (i) Rural residents Number 0\.00 1350\.00 1350\.00 1361\.00
trained in provision of
tourism services of which 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
women
Comments (achievements against targets):
The result has been achieved by 100% compared to the final target\. This is an original indicator of PAD\. The result is in line with the objectives to improve
the employment opportunities and economic values of agriculture products\. This was achieved by financing training in tourism services\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 3-4: Increase in number Number 0\.00 175\.00 215\.00 301\.00
of tourism facilities
30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
Comments (achievements against targets):
The result has been achieved by 140% compared to the final target\. This is an original indicator of PAD\. The result is in line with the objectives to improve
the employment opportunities and economic values of agriculture products\. This was achieved by financing in improving tourism facilities\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Component: Component 4 Institutional Support
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 4-1: Staff from various Number 0\.00 2600\.00 2600\.00 2908\.00
line departments trained -
men and women 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
IOI 4-1 (i): Staff from Number 0\.00 1080\.00 1080\.00 1119\.00
various line departments
trained - of which women 30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
Comments (achievements against targets):
The result has been achieved by 118% compared to the final target\. This is an original indicator of PAD\. The result is in line with the objectives to support
and develop the capacity of institutions to implement the project and to sustainably manage, operate, and maintain the outputs of investments\. This was
achieved by financing in providing training sessions to staff from various line departments on cultural heritage conservation, tourism, agriculture industries,
project management, and etc\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 4-2: PMO and PIU Staff Number 0\.00 1500\.00 1500\.00 2110\.00
trained
30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
Comments (achievements against targets):
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
The result has been achieved by 140% compared to the final target\. This is an original indicator of PAD\. The result is in line with the objectives to support
and develop the capacity of institutions to implement the project and to sustainably manage, operate, and maintain the outputs of investments\. This was
achieved by financing in providing training sessions to staff from PMO and PIU staff on financial management, project construction management, and etc\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
IOI 4-3: Number of units Number 0\.00 68\.00 68\.00 95\.00
trained in O&M
30-Dec-2013 30-Jun-2019 26-Jun-2019 25-Jun-2020
Comments (achievements against targets):
The result has been achieved by 140% compared to the final target\. This is an original indicator of PAD\. The result is in line with the objectives to support
and develop the capacity of institutions to implement the project and to sustainably manage, operate, and maintain the outputs of investments\. This was
achieved by financing in providing training sessions on asset management and O&M\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
B\. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1: Improve the quality of services available to rural households in selected villages
Number of beneficiaries with access to improved infrastructure services in project villages, of
which women
Outcome Indicators ⢠Number of beneficiaries with access to an all-season road within 500 m range
⢠Number of beneficiaries with access to improved water sources
⢠Number of beneficiaries with access to improved sanitation
1\. Increased length of roads constructed/rehabilitated under the project
2\. Length of water supply pipeline installed under the project
3\. Increased daily production of quality water supply under the project
4\. Increased daily capacity of wastewater treatment and disposal facilities under the project
5\. Land area with improved access to irrigation and flood control with improved irrigation and
Intermediate Results Indicators drainage services
6\. PMO and PMU staff trained
7\. Number of units trained in O&M
8\. Area of historic buildings restored
9\. Increase in number of tourism facilities
10\. Area of production bases developed in project villages
Component 1: Infrastructure Improvement
1\. 426 km of new or improved roads
2\. 256 km of new water supply pipeline
3\. 11,715 m3 of water supply constructed
Key Outputs by Component
(linked to the achievement of the 4\. 1,921 m3 of wastewater treatment and disposal facilities constructed
Objective/Outcome 1) 5\. 4,198 ha of land with improved access to irrigation and flood control
6\. 136,566 people with access to an all-season road within a 500 m range
7\. 35,622 people with access to improved water sources
8\. 24,286 people with access to improved sanitation
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Component 2: Cultural Heritage Conservation
1\. 58,062 m2 of historic buildings restored
Component 3: Enhanced Economic Opportunities
1\. 301 tourism facilities constructed
2\. 684 ha of production bases developed
Component 4: Institutional Support
1\. 2,110 person-months of PMO and PMU staff trained
2\. 95 units of government departments trained in O&M of infrastructure assets built/improved
by the project
Objective/Outcome 2 Improve income generating opportunities available to rural households in selected villages
1\. Number of tourists visiting project villages
Outcome Indicators
2\. Number of enhanced economic opportunities related jobs created
1\. Increase in number of audiences attending exhibitions and performances
2\. Number of successors trained for traditional arts and techniques
Intermediate Results Indicators 3\. Farmers trained in new agriculture technologies, of which women
4\. Rural residents trained in provision of tourism services, of which women
5\. Staff from various line departments trained
Component 2: Cultural Heritage Conservation
1\. 1,409 person-time successors trained on traditional arts and techniques
Component 3: Enhanced Economic Opportunities
1\. 4,831 person-months of farmers trained in new agriculture technologies (including 2,191
Key Outputs by Component
person-months of women)
(linked to the achievement of the
2\. 2,401 person-months of rural residents trained in provision of tourism services (including
Objective/Outcome 2)
1,361 person-months of women)
Component 4: Institutional Support
1\. 2,908 person-months (men) and 1,119 person-months (women) of staff from line
departments trained on cultural heritage conservation, tourism, and agriculture industries
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
C\. ACHIEVEMENT OF PDO INDICATORS AND IRIS
Revised Revised Percent of Percent of
Baseline Original Actual
Indicators Target Target Original Target Revised Target
Value Target Completed
(2016) (2019) Achieved Achieved
PDO Indicators\. Outcome 1: Improved the quality of services available to rural households in selected villages\.
P1 Number of beneficiaries with access to
improved infrastructure services in 145,357 127,131 145,400 145,788 100\.3 100\.3
project villages 0
Of which women n\.a\. 61,023 66,972 71,609 n\.a\. 107
P1\.1 Number of beneficiaries with access to
0 n\.a\. 127,131 127,131 136,566 n\.a\. 107
an all-season road within 500 m range
P1\.2 Number of beneficiaries with access to
0 n\.a\. 28,530 32,011 35,622 n\.a\. 111
improved water sources
P1\.3 Number of beneficiaries with access to
0 n\.a\. 19,450 21,000 24,286 n\.a\. 115
improved sanitation
PDO Indicators\. Outcome 2: Improve income generating opportunities available to rural households in selected villages
P2 Number of tourists visiting project
villages which have implemented the 3,806
10,013 3,610 3,669 3,754 104 102
cultural heritage conservation (2,580)
component of the project (000) 30
Original Value of agriculture production in
72,167 88,633 n\.a\. n\.a\. n\.a\. n\.a\. n\.a\.
P3 project villages (CNY 10,000)
P3 Number of enhanced economic
0 n\.a\. 4,000 4,550 4,565 n\.a\. 101
opportunities related jobs created
IRIs\. Outcome 1: Improve the quality of services available to rural households in selected villages
I\.1\.1 Increased length of roads 0 308\.6 309 370 426 138 115
30This indicatorâs definition was changed in 2016 from ânumber of tourists visiting project villagesâ to focus only on the project villages that have implemented the cultural
heritage conservation component, resulting in change in baseline and targets\. The target set in 2016 is considered the original target when compared with the actual achieved\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Revised Revised Percent of Percent of
Baseline Original Actual
Indicators Target Target Original Target Revised Target
Value Target Completed
(2016) (2019) Achieved Achieved
constructed/rehabilitated under the
project villages(km)
Original Number of beneficiaries with access to
I\.1\.2 improved water sources in project 94,670 123,200 n\.a\. n\.a\. n\.a\. n\.a\. n\.a\.
villages
1\.1\.2 Length of water supply pipeline
0 n\.a\. 219 241 256 n\.a\. 106
installed under the project (km)
Original Number of beneficiaries with access to
9,700 29,150 n\.a\. n\.a\. n\.a\. n\.a\. n\.a\.
I\.1\.3 improved sanitation in project villages
1\.1\.3 Increased daily production of quality 1,141,500
water supply under the project (cubic 0 n\.a\. (tons per 10,226 (m3) 11,715 (m3) 323 115
meter) 31 year)
1\.1\.4 Increased daily capacity of wastewater 322,500
1,663 1,921
treatment and disposal facilities under 0 n\.a\. (tons per 188 115
(m3) (m3)
the project (cubic meter) year)
I\.1\.5 Land area with improved access to
irrigation and flood control with
0 4,065 4,065 4,151 4,198 103 101
improved irrigation and drainage
services (ha)
Original Improved flood protection
0 843,506 n\.a\. n\.a\. n\.a\. n\.a\. n\.a\.
I\.1\.5 construction (m2)
IRIs\. Outcome 2: Improve income generating opportunities available to rural households in selected villages
I\.2\.1 Area of historic buildings restored (m2) 0 46,788 41,560 57,935 58,062 124 100
Original Number of idle historic buildings
0 96 n\.a\. n\.a\. n\.a\. n\.a\. n\.a\.
I\.2\.2 adaptively reused
31 For both 1\.1\.3 and 1\.1\.4 added in 2016, unit of measure was adjusted from ton per year to m3 per day (1 m3 per day = 365 tons per year) in 2019\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Revised Revised Percent of Percent of
Baseline Original Actual
Indicators Target Target Original Target Revised Target
Value Target Completed
(2016) (2019) Achieved Achieved
I\.2\.3 Increase in number of audience
attending exhibitions and 0 24,600 54,000 54,000 54,284 220 100
performances
I\.2\.4 Number of successors trained for
traditional arts and techniques 0 900 900 900 1,409 156 156
(Person-time)
I\.3\.1 Area of production bases developed in 12,377
0 602 649 684 83 105
project villages (ha) 32 mu
I\.3\.2 Farmers trained in new agriculture
4,600 4,600 4,600 4,831 105 105
technologies 0
of which women 2,180 2,180 2,180 2,191 100 100
I\.3\.3 Rural residents trained in provision of
2,400 2,400 2,400 2,401 100 100
tourism services 0
of which women 1,350 1,350 1,350 1,361 101 101
I\.3\.4 Increase in number of tourism
0 175 175 215 301 172 140
facilities
Original Number of village houses changed
0 292 n\.a\. n\.a\. n\.a\. n\.a\. n\.a\.
I\.3\.5 with Hui style façade
I\.4\.1 Staff from various line departments 2,600 2,600 2,600 2,908 112 112
trained - Men and women (person 0
months) 1,080 1,080 1,080 1,119 104 104
I\.4\.2 PMO and PMU staff trained 0 1,500 1,500 1,500 2,110 140 140
I\.4\.3 Number of units trained in O&M 0 68 68 68 95 140 140
Note: P = PDO indicator, I = IRIs\.
Indicators in red: removed during 2016 restructuring; indicators in green: newly added indicators during 2016 restructuring; indicators in purple: moved from
32 Unit of measure was adjusted from mu to hectare (1 ha = 15 mu) in 2016\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
IRIs to PDO indicators during 2016 restructuring, baselines of these two indicators were revised to 0 and targets modified to reflect the increase (that is,
difference between original target and baseline at appraisal)\.
Targets in red: reduced target values during 2016 restructuring; target in green: increased target values during 2019 restructuring\.
Percentages in red: actual achieved < original or revised target; percentages in green: actual achieved > original or revised target\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A\. TASK TEAM MEMBERS
Name Role
Preparation
Rabih H\. Karaky Task Team Leader, Senior Agricultural Economist
Zheng Liu Procurement Specialist
Yi Geng Financial Management Specialist
Kingsley Robotham Regional Development Consultant
Julian Abrams Local Development Consultant
Ximing Zhang Dam Safety Specialist
Zhefu Liu Social Specialist
Feng Ji Environmental Specialist
Eddie Humm Engineer
Supervision/ICR
Ahmed A\. R\. Eiweida, Minghe Tao Task Team Leaders
Zheng Liu Procurement Specialist
Haixia Li Financial Management Specialist
Zhefu Liu Social Specialist
Yan Zhang Procurement Assistant
Xiaodan Huang Environmental Specialist
Xiao Wu Institutional Strengthening and M&E
Eddie Humm Engineer
Mansha Chen ICR Author, Urban Specialist
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
B\. STAFF TIME AND COST
Staff Time and Cost
Stage of Project Cycle
No\. of staff weeks US$ (including travel and consultant costs)
Preparation
FY12 8\.750 32,468\.75
FY13 38\.725 196,933\.73
FY14 9\.058 54,316\.11
Total 56\.53 283,718\.59
Supervision/ICR
FY14 8\.555 55,066\.04
FY15 18\.178 105,252\.52
FY16 13\.118 81,024\.27
FY17 17\.659 109,291\.38
FY18 18\.550 148,539\.71
FY19 23\.023 164,058\.80
FY20 15\.902 115,288\.72
Total 114\.99 778,521\.44
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
ANNEX 3\. PROJECT COST BY COMPONENT
Revised at Revised at
Actual at Percentage
Amount at Approval 2016 2019
Components Project Closing of Approval
(US$, millions) Restructuring Restructuring
(US$, millions) (%)
(US$, millions) (US$, millions)
Counterpart
IBRD a IBRD CF IBRD CF IBRD CF
Fund (CF)b
Infrastructure
57\.28 9\.18 65\.33 5\.58 69\.27 2\.32 62\.95 11\.83 113
Improvement
Cultural
Heritage 18\.25 2\.47 14\.04 1\.20 17\.71 0\.60 13\.17 2\.41 75
Conservation
Enhanced
Economic 18\.92 2\.55 16\.59 1\.42 10\.26 0\.35 17\.40 3\.50 97
Opportunities
Institutional
5\.29 0\.00 3\.79 0\.00 2\.51 0\.00 2\.81 0\.00 53
Support
Subtotal 99\.75 13\.94 99\.75 7\.95 99\.75 3\.02 96\.33 17\.74c â
Total 113\.94 107\.95 103\.02 114\.07 100
Note: a\. All IBRD figures exclude front-end fee of US$250,000\.
b\. All CF figures of the four components exclude costs related to land acquisition and resettlements, O&M funds
for built assets, project overheads and contingencies, unless otherwise stated\.
c\. Including US$10\.9 million from contingencies\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
ANNEX 4\. EFFICIENCY ANALYSIS
Introduction
1\. At appraisal, an economic analysis was conducted for project investments under Components 1,
2, and 3, including cost-effectiveness analysis for infrastructural investments and cost-benefit analysis for
irrigation, agricultural, and tourism activities\. The economic benefits were assumed to consist of (a)
reduced journey time and vehicle operating costs on access roads; (b) increased agricultural production
due to flood mitigation, irrigation, and improved production technology; (c) increased value of agriculture
production, including through improved access to agricultural land; (d) increased value of agriculture
products due to improved production technology and certification; (e) reduced losses in agriculture
product processing and marketing; and (f) increased number of tourists and output of sale of goods and
services in the tourism sector, as well as other intangible benefits\. The evaluation indicated that
investments in infrastructure and water supply were cost-effective; the economic rate of return of
investment in flood control, irrigation, special agricultural industry, and cultural heritage were estimated
at about 27 percent, 18 percent, 24 percent, and 33 percent, respectively, that is, the investment in these
activities was economically viable\.
2\. At completion, economic analysis was performed to reassess the economic viability of the project
based on actual costs, number of beneficiaries, and a broader set of estimated benefits, using similar
approaches used at appraisal\.
Methodology and Assumptions
3\. Due to the large number, small scale, and diverse types of investments that were scattered in 68
project villages, different approaches were used: (a) cost-effectiveness analysis was conducted for
infrastructures such as rural roads, bridges, water supply, drainage, and wastewater with strong public
welfare attributes, due to the wide range of benefits and many factors involved; (b) cost-benefit analysis
was conducted for four types of investments, namely flood control, irrigation, tourism, and special
agriculture, which generate economic benefits and can be easily measured by outputs; and (c)
investments in cultural heritage protection in this project are expected to generate diverse benefits, not
only contributing to economic income for tourism but also generating many intangible benefits\.
4\. It is also noted that only a âbefore-and-afterâ approach was applied in the cost-benefit analysis,
while the measurement of benefits against a âwithout-projectâ counterfactual was not conducted\. Owing
to nationwide implementation of various government-funded rural development programs, the overall
economic and social situation has been substantially improved in the whole municipality and region; as a
result, the âwith-projectâ and âwithout-projectâ analysis was not conducted\.
5\. The economic analysis for the project followed the methodologies of the World Bank and Chinese
standards and regulations\. Prices in costs and benefits were market prices without large deviation from
its economic values, so shadow price and conversion coefficient were not used\. Economic costs and
benefits were calculated based on the constant price level of 2014\. When available, retrospective data for
variables at the sub-project level were utilized for the first five years (2014â19) and projected forward for
the remaining ten years (2020â30)\. For other variables, data at the sub-project level were extrapolated
using available data points\. The social discount rate is assumed to be 12 percent\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Economic Benefits
6\. The main economic benefits derived from the cost-benefit analysis of the project include the
following:
(a) Flood control\. By comparing âbefore-projectâ and âafter-projectâ scenarios, it is estimated
that the flood control facilities constructed under this project helped avoid about 10 days of
flooding each year and reduced the economic losses by CNY 400 (US$57) per mu\. Taking the
O&M costs into account, the EIRR of investment in flood control is estimated to be about 22
percent over a benefit period of 10 years\.
(b) Irrigation\. The irrigated arable land in the targeted villages is mainly used to grow rice,
oilseed rape, soybean, corn, and so on, and some is used to grow economic crops, such as
tea trees, to get higher returns\. Based on information collected from field interviews and
taking O&M costs into account, the EIRR of investment in irrigation is estimated to be about
16 percent over a benefit period of 10 years\.
(c) Tourism\. The project invested a total of CNY 122\.8 million (US$17\.4 million) in constructing
tourism supporting facilities (CNY 56\.1 million or US$7\.9 million) and cultural heritage
protection (CNY 66\.6 million or US$9\.4 million)\. By comparing âwith-projectâ and âwithout-
projectâ scenarios, the EIRR of investment in tourism is estimated to be 27 percent, and the
economic net present value is estimated to be CNY 243\.8 million (US$34\.5 million)\. Due to
difficulty of carrying out large-scale tourist surveys, âwillingness to payâ is not available to
calculate consumer surplus\.
(d) Special agriculture\. The project invested CNY 96\.7 million (US$13\.7 million) in constructing
agricultural infrastructures, such as irrigation, drainage, and farm roads; special agriculture
production bases (for example, traditional Chinese medicine, vegetables, aquatic products,
tea, oilseed rape, flowers, fruit trees, seedlings, and Lei Bamboo); and agriculture product
trading markets\. These investments improved the agricultural production and income of
farmers\. The 28 production bases supported by the project benefited 26,080 people, created
1,017 new jobs, and increased the annual revenue by CNY 16 million (US$2\.3 million)\. An
input and output analysis of some of these projects shows that significant economic benefits
have been achieved, with EIRR ranging from 20 percent to 30 percent for a 10-year operating
period (table 4\.1)\.
7\. Other economic benefits of the project include the following:
(a) Roads\. The project invested CNY 356\.5 million (US$50\.5 million) in constructing 426 km of
roads, including roads inside villages, roads connecting villages, and roads for production\. A
total of 360,339 people directly or indirectly benefited from these roads, including 136,566
people living within 500 m of the roads\. Unit cost per km and unit cost per beneficiary in the
project were about 93 percent and 76 percent of those in similar projects in China,
respectively\. With the construction of the roads, travel efficiency has greatly improved\.
Travel time by car between some villages has been shortened from one to two hours in the
past to five to ten minutes nowadays\. Meanwhile, the improved connectivity also facilitated
the development of tourism and special agriculture in the project villages\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
(b) Water supply\. The project invested CNY 35\.6 million (US$5\.0 million) in constructing 256 km
of water supply pipes, adding water supply capacity of 1,715 m3 per day\. A total of 138,166
people directly or indirectly benefited from the water supply investments\. Unit cost per km
and unit cost per beneficiary in the project were about 80 percent and 90 percent of those
in similar projects in China, respectively\. The drinking water supply is directly connected to
the village households, which solves drinking water safety issues for the rural residents\.
(c) Wastewater collection and treatment\. The project invested CNY 26\.0 million (US$3\.7
million) in constructing 16 WWTFs and 108 km of drainage and sewage pipes\. With these
investments, sewage is no longer discharged directly into water bodies, contributing to a
healthier environment and protection of water resources\. The living environment of rural
residents was greatly improved, which also promoted the local rural economy\.
8\. The updated economic analysis confirms that investments in roads, water supply, wastewater
treatment, and other infrastructure were cost effective: investment unit cost in the project was about 75â
90 percent of similar projects in China, while the quality of the project was considered higher than other
projects based on beneficiariesâ feedback from the socioeconomic study\. Investments in flood control,
irrigation, special agricultural industry, tourism, and cultural heritage are economically viable with the
EIRR higher than the discount rate of 12 percent, in the range of 16 percent to 30 percent, generally
consistent with the estimate at appraisal\.
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The World Bank
Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Table 4\.1\. Economic Benefits of Selected Special Agricultural Investments
Investment
amount
Projects Description Direct Benefits Indirect Benefits EIRR (%)
(CNY
10,000 )
Ginkgo 45 mu of 282\.47 With the support of the project, 50 mu of The business is operated by Zhejiang 30\.67
Greenhouse greenhouse greenhouses is constructed\. Cultivate small sweet Xiaoxiangshu Co\., Ltd\., which employs 40
Characteristic and 310 mu potato seedlings and plant small sweet potatoes on local villagers on a daily basis, with a wage
Agriculture of base a 310 mu planting base\. Small sweet potatoes are of CNY 100 per day\. It brings about CNY
harvested in two seasons each year, 3,500â4,000 jin 800,000 labor income for local villagers
(a unit of weight = 0\.5 kg) of small sweet potatoes every year\.
are harvested per mu per season, at a price of CNY
2 per jin\. Compared with similar local products, the
profit increased by CNY 0\.5 per jin\.
Sanhe Village 50 mu of 100 With the support of the project, Sanhe Village It recruits 200 people in the 15-day tea 25\.16
Tea Garden base and reclaimed idle land to build 15 mu of Taiping picking season each year, and the ratio of
230 mu of Houkui Garden, promoted 35 mu of new varieties, male to female workers is 9:1\. The daily
tea garden and improved 230 mu\. After the improvement, the wage of male workers is CNY 220 and
output of the tea gardens has increased year by female workers is CNY 150\. Every year, it
year, and the quality has improved, reaching creates about CNY 550,000 of labor
maturity in 3â5 years\. The yield of tea per mu is income for local villagers\.
increased by 10 jin, and the income for 0\.5 kg of tea
can be increased by CNY 100â150\.
Xingcun Rose 200 mu of 150 The project supported Huangshan Rose Valley Spice It recruits 70 people (mainly local elderly 25\.98
Garden rose garden Co\., Ltd\. to build a rose garden base\. The land for people and women over 60 years old)
the rose garden was obtained through transfer with during the 20 days of the flower picking
a cost of CNY 552 per mu per year\. Rose syrup is season each year, and the daily wage is
extracted from the Damascus roses grown in the about CNY 120\. Every year, it creates
rose garden\. During the mature period, the rose about CNY 168,000 of labor income for
garden produces 600 kg of flowers per mu, with a local villagers\.
profit of CNY 5 for 1/2 kg\.
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Investment
amount
Projects Description Direct Benefits Indirect Benefits EIRR (%)
(CNY
10,000 )
Xinjiang 160 mu of 494\.06 The project constructed 160 mu of greenhouses for Employment of 20 villagers (mainly local 23\.56
Village greenhouse watermelon and cantaloupe, whose growth cycle is elderly and women over 60 years old)
Greenhouse and 260 mu between 3 and 5 months\. Vegetables are grown at during the harvest season and 10 for other
of base other times\. The annual net income per mu is more seasons\. The male-to-female ratio is about
than CNY 10,000\. Compared with the local rice 7:3\. The daily wage for men and women is
planting before, the annual profit increased by CNY CNY 80\. Every year, it creates about CNY
6,000 per mu\. 400,000 of labor income for local villagers\.
It brings CNY 40,000 collective income to
the village\. The per capita income of the
village increased by CNY 1,000\.
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ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
1\. The World Bank team shared the ICR with the PMO for comments on November 23, 2020, and
PMO responded on behalf of the Borrower via email on December 4, 2020 confirming that they have
discussed the ICR and have no comment on it\.
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ANNEX 6\. SUPPORTING DOCUMENTS
⢠Project Appraisal Document\. World Bank\. November 2013\.
⢠Loan Agreement\. World Bank\. March 2014\.
⢠Country Partnership Strategy for China 2013â2016\. World Bank\. October 2012\.
⢠Country Partnership Framework for China 2020â2025\. World Bank\. November 2019\.
⢠Aide Memoires (various) and Management Letters (various)\. World Bank\. 2014â20\.
⢠Implementation Status and Results Reports (various)\. World Bank\. 2012â18\.
⢠Restructuring Papers, 2016, 2019\.
⢠Anhui Yellow Mountain New Countryside Demonstration Project Completion Report\. Prepared by
Beijing Helison Information Consulting Co\., Ltd\. on behalf of Huangshan PMO\. June 2020\.
⢠Anhui Yellow Mountain New Countryside Demonstration Project Socio-Economic Impact Assessment
Report\. Prepared by Wuhan University Research Group on behalf of Huangshan PMO\. May 2020\.
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ANNEX 7\. RESULT STORIES
1\. To capture the project results, a socioeconomic impact study was carried out by the PMO
consultants in 2019\. The study included (a) beneficiary survey and focus group discussions in 30 out of 68
project villages and 10 non-project comparison villages, (b) interviews of small and micro enterprises
supported by the project in the 30 selected project villages, and (c) interviews of tourists in the 11 project
villages that implemented tourism projects\. Boxes 7\.1 to 7\.5highlight some of the result stories that
emerged from this study\.
Box 7\.1\. Tourism Increased Employment and Revenue
Yangjiazhai is a tourist attraction in Shuxi Village of Huangshan District\. The project rebuilt Shibichen Bridge in
Shuxi Village and constructed new roads, river revetment, tourist public toilets, and other tourist facilities\. In
the past, Shibichen Bridge, the only external passageway in the village, was inaccessible for about three months
every year due to flooding\. After the project, the villageâs connectivity with the outside world greatly improved\.
The scenic spot of Yangjiazhai has become an internet star\. Its fishing festival has become a major brand of rural
tourism\. At the beginning of the project in 2013, the number of visitors was only 37,000; it exceeded 180,000 in
2018 and is expected to exceed 220,000 in 2019\. Now the scenic spot of Yangjiazhai employs 120 local villagers
to engage in various management and service work, promoting the development of local upstream and
downstream industries\. The scenic spot provides more than CNY 200,000 (US$28,329) for the collective
economy of the village every year, becoming an important pillar of economic development of Shuxi Village\.
Box 7\.2\. Women Started New Business
Ms\. Jiang is the owner of Bishuige Farmhouse in Bishan Village, Yi County\. Before the project, Ms\. Jiang worked
in the county to earn money to support her family\. At that time, she had to travel back and forth between the
factory and her home, which was exhausting both physically and mentally, and her income was limited\. The
improvement of the village road and its environment promoted the development of local rural tourism\.
Therefore, she decided to return home to start a business\. She opened a farmhouse and homestay services in
her own house, and her life is getting much better\. Compared with the previous work, her income has increased
significantly, she is able to stay home and take care of the elderly and children, and family life is happy and
comfortable\. During the peak tourist season, she even needs to hire her neighbors as waiters at a salary of CNY
2,000 per month, which not only increases the income but also benefits the neighbors around\.
Ms\. Li is the hostess of the Youhao Farmhouse of Daguling Group\. She participated in the tourism service
training organized by the county twice and obtained the junior and intermediate professional qualification
certificates\. Using the knowledge from the training, she transformed her own house into a farmhouse,
becoming a well-known farmhouse run by a âgirl from Anhuiâ, and was promoted by tourism websites such as
Ctrip and Yilong\. The farmhouse has received numerous messages from tourists inside and outside the province
and even overseas, which compliment the service of Ms\. Li's farmhouse\.
Box 7\.3\. New Employment for Women and Elderly
In Rao Village, Huangshan District, interviewed women talked about the benefits from the project in the village\.
First, the project boosted the business of Tanjia Courtyard Company\. At present, Tanjia Courtyard employs a
dozen women in the village all year round\. For these people, it is something that they did not even think of in
the past as employment and now they have a stable and guaranteed source of income without leaving the
village\.
Second, the Rose Garden Project supported by the project has continuously expanded its planting scale in
recent years\. Currently, 70â80 villagers are employed locally, including women and a few men who are not
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suitable for working outside the village\. According to an elderly person, no contractor would like to employ
people over 60 or 70 years in construction sites\. Yet, women are now able to earn CNY 80 a day weeding in the
rose garden\. That is, they have an annual income of over CNY 100,000\. This job not only helps them exercise but
also increases their income\. Women who are too old to go out for work or are busy with household duties now
have opportunities to work in the neighborhood\.
Third, after the infrastructure was completed, the traditional hand-made jewelry in the village became another
important channel for women to generate income\. Companies outside regularly drive into the village to
purchase commodities\. Some women in the village who cannot go out due to the needs to cook at home and
take care of their children can make handicrafts such as headwear using their spare time so as to increase their
income\.
Box 7\.4\. Improved Agriculture Production Increased Employment and Local Revenue
With support from the project, Houkeng Village of Huangshan District reclaimed unused land to construct 15
mu (1 ha) of a Taiping Houkui tea tree garden, developed 35 mu of new varieties, and improved productivity of
230 mu of existing ones\. After the improvement, the yield of tea per mu increased by 5 kg, and the income per
kilogram of tea increased by CNY 200â300 (US$28â42)\. Annually, the revenue of the Taiping Houkui tea
production demonstration base increased by CNY 1\.4 million (US$198,300) and raised the income of the village
collective by CNY 300,000 (US$42,493)\. With the growth of the collective economy, some public services in the
village were gradually developed\. For example, the cost for garbage collection in the village was fully borne by
the village\. In 2018, the village used collective funds to support some villagers' medical and social insurances\.
The construction of a vegetable base in Xinjiang Village of Tunxi District attracted large farm owners in the
surrounding areas\. The villagers also leased the land to build vegetable greenhouses to obtain rental income\.
The large farm owners employed local villagers to grow vegetables, melons, and fruits, which provided
additional employment opportunities and labor pay for the villagers\.
The project supported the construction of a 45 mu greenhouse and a 310 mu small sweet potato production
base in Baiguoshu Village of Huangshan District, which raised the revenue by CNY 900,000 (US$127,479)
annually and increased the income of the village collective by more than CNY 100,000 (US$14,164)\. The small
sweet potato production base employed 40 villagers all year round and 70â80 temporary employees during the
peak production period\. Most of these temporary employees were women who were unable to seek
employment or engage in trade far from home and men who were of relatively senior age\.
Box 7\.5\. Poor Households Lifted Out of Poverty
In the Zhongtan Group of Houkeng Village in Huangshan District, two senior villagers who used to plant and sell
tea in a restricted manner, due to the inconvenience of transportation, benefitted from the road infrastructure
supported by the project\. In previous years, their sales of tea were poor, which caused difficulties in their living\.
The project built roads to their village, which brought many customers and big merchants\. One of the
merchants particularly liked the hand-made tea prepared by the elderly villagers and agreed with them to have
exclusive right to purchase their tea\. Now their trade has continued for three consecutive years\. In this way,
these two senior villagers now have a guaranteed source of income\.
Mr\. Cui is nearly 70 years old and lives in Rao Village, Huangshan District, with his daughter and son-in-law\. As
his daughter and grandchild are disabled and his son-in-law works outside the village, Mr\. Cui could not go out
to work, and the family lived in poverty\. The development of local tourism and the increase in the number of
visiting tourists promoted the surrounding homestays and related industries and offered Mr\. Cuiâs family
employment in the village\.
The number of guests received at the Tan Family Courtyard near Rao Village doubled year after year since
project investments were implemented\. According to Ms\. Huang, the reception manager of the company, in the
first half of 2020, during the COVID-19 epidemic, the number of guests received still increased by 50 percent
over the same period last year\. The Tan Family Courtyard provided employment opportunities for more than 10
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senior villagers and women in Rao Village, including Mr\. Cuiâs family\. The Tan Family Courtyard provided Mr\. Cui
with part-time job opportunities with flexible schedule, earning about CNY 100 (US$14) a day\. Calculated
according to the actual working hours, it increased the income of the family by more than CNY 20,000
(US$2,833) every year, and the household is no longer poor\.
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ANNEX 8\. PHOTOS OF PROJECT RESULTS
Component 1: Infrastructure Improvement
Access Roads in Xinjiang Village Tunxi District before and after the Project 33
Roads in Rao Village Huangshan District before and after the Project
33 All photos came from the borrowerâs project completion report\.
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River and Revetment in Xing Village Huangshan District before and after the Project
Guanyin Bridge in Wanxin Village Xiuning County before and after the Project
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Component 2: Cultural Heritage Conservation
Wang Ancestral Hall in Baiguoshu Village Huangshan District before and after the Project
Su Ancestral Hall in Yongfeng Village Huangshan District before and after the Project
Wushidi in Huang Village Xiuning County before and after the Project
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Zhongxiandi in Huang Village Xiuning County before and after the Project
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Component 3: Enhanced Economic Opportunities
Vegetable Base in Xinjiang Village Tunxi District
Tea Production Base in Houkeng Village Huangshan District
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Greenhouse in Rao Village Huangshan District
New Vegetable Base in Hongqin Village She County
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Tea Production Plant in Tianli Village Xiuning County
Huizhou-style Buildings Project in Guo Village Huangshan District
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Xianyuan Che Gong Dian Square in Longshan Village Huangshan District before and after the Project
Cheng Ancestral Hall Tourist Parking Lot in Xing Village Huangshan District before and after the
Project
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Anhui Yellow Mountain New Countryside Demonstration Project (P129563)
Component 4: Institutional Support
Cultural Heritage Database
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Project Management Information System
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ANNEX 9\. PROJECT MAP
Page 72 of 72 | REVIEW |
P001043 |  ICRR 10514
Report Number : ICRR10514
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID :
OEDID: C2416
Project ID : P001043
Project Name : Energy II Project
Country : Republic of Guinea
Sector : Distribution & Transmission
L/C Number : C2416-GUI
Partners involved : GTZ, EIB, AfDB, SIDA, FED/CEE, JICA, CFD, USAID, KfW
Prepared by : George T\. K\. Pitman, OEDST
Reviewed by : Alain A\. Barbu
Group Manager : Gregory K\. Ingram
Date Posted : 08/18/1999
2\. Project Objectives, Financing, Costs and Components :
Project Objectives : The primary objective was to ensure the sustainability of the electric power sector through a
comprehensive reform and privatization program \. A second objective was to establish a regulatory framework to
oversee the privatized petroleum product distribution system \. Both objectives were in accord with an agreed IMF
macroeconomic adjustment program\. These objectives were to be achieved by creation of an appropriate policy
framework, disengagement of government while strengthening its regulatory and policy functions, creation of
incentives to attract private investors and financing the transition from the public to the private sector \.
Financing and Costs : Approved in 1992 and made effective June 1993 for a total cost of US$161\.0 million, actual
project costs at project completion in December 1998 (one year late) were US$135\.1 million of which the Bank
disbursed US$47\.0 million\. A consortium of 8 partners cofinanced the project for US$ 70\.0 million (in US$ millions:
EIB 25\.0; AfDB 16\.6; CFD 11\.1; SIDA 7\.7; JICA 7\.4; FED/CEE 6\.7; KfW 2\.2 and USAID 1\.0)\.
Components : There were four: (1) an institutional reform program to (a) facilitate privatization (assisted by TA) of
the Enterprise Nationale d'Electricite de Guinea (ENELGUI) and provide a joint venture to manage it through the
transition period, (b) reorganize the Ministere des Resources Naturelles, de L'Energie et de L'Environment
(MRNEE) and strengthen its policy formulation ability and (c) development of national strategies /plans to provide
electricity to the interior; (2) a priority investment program to raise service standards and support privatization
(rehabilitation and expansion of generation and distribution facilities, telecommunications, vehicles and equipment );
(3) TA to assist government to develop and manage a regulatory framework for petroleum product distribution; and
(4) provision of goods and services to support ENELGUI's operation and maintenance function \.
3\. Achievement of Relevant Objectives :
The primary objective to make the electric power sector sustainable through well regulated privatization was not
achieved\. However, the secondary objective to provide a regulatory framework for the petroleum distribution was
successfully implemented\.
4\. Significant Achievements :
All the physical components were completed (including the addition of a 30 MW generating plant at Tombo) even
though there were significant design and procurement problems \. System reliability has increased and power
availability has risen from 2 to over 23 hours a day\. National strategies and plans to provide electricity to the interior
were developed and discussed at two workshops \. Government appears strongly committed to a deregulated,
decentralized rural electrification program and has issued a sub -sector policy letter that has stimulated preparation of
a project\. Government enacted the Electricity law of 1993 that limits its role to policy making and regulation and
allows the private sector to have a major role in management and operations \. It also enacted a series of decrees
governing the power sector (mainly hydroelectricity), but the only one to become effective is that preserving and
protecting electricity consumers' rights \. Government signed a concession agreement to manage ENELGUI with a
private sector operator (SOGEL) in 1994 but did not follow-through with essential enabling actions \.
5\. Significant Shortcomings :
Despite the significant physical and legislative achievements, government was internally divided on the issue of
privatization\. The ICR makes the case that the Bank is partly responsible for this lack of unity because its Letter on
Sector Development Policy undermines the project's emphasis on reform and privatization, and gives a higher
priority to physical extension of the system \. The Borrower states that they were forced into the privatization process
by the donors as a condition for implementation before they had time to fully examine the options or understand the
risks involved\. In consequence, the co -management concession finally agreed made the privatization unworkable \. It
did not allow the private operator full responsibility for operations and the demarcation of responsibilities between it,
ENELGUI and government was unclear \. Staff of ENELGUI were unaware of the scope of the project and this led to
fragmented implementation\. Resistance to privatization strengthened following award of the concession and
reduction of ENELGUI's staff from 1350 to 65, and ENELGUI management was preoccupied by its own fate \.
Government reneged on key covenants necessary to make the privatization arrangement effective \. It was very lax in
paying its own electricity bills and arrears, and did not support enforcement of penalties for non -payment by others,
illegal connections and high-level fraud\. As a result, the billing rate declined form 55% in 1994 to 43% in 1998
(compared with the appraisal target of 80%) and the private operator received revenue for only 40% of the electricity
it generated\. Not surprisingly, at the end of the project the private operator was near bankruptcy \. Indeed, since 1994
the sector has registered a cumulative deficit of US$ 40 million\.
Essential environmental safeguards (except a change to low sulfur fuels ) were not implemented due to the
borrower's financial constraints \.
Bank appraisal and supervision was deficient \. Appraisal failed to learn lessons from the Bank's experience
elsewhere and thus the prerequisites for successful privatization : the importance of ownership and governance \.
Supervision was woefully inadequate given the innovative nature of the project (even though it improved markedly
after mid-term review) and was not helped by four changes of task manager \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Unsatisfactory Unsatisfactory
Institutional Dev \.: Negligible Negligible
Sustainability : Unlikely Unlikely
Bank Performance : Deficient Unsatisfactory
Borrower Perf \.: Deficient Unsatisfactory
Quality of ICR : Exemplary
7\. Lessons of Broad Applicability :
Ownership is key to successful privatization of utilities \. Premature project approval to implement before the
government fully understands the prerequisites and risks of privatization are likely to be counterproductive \.
Similarly, successful private sector ownership requires clearly defined responsibilities and full authority to operate
the utility\. Private sector co-managment with government does not work \.
8\. Audit Recommended? Yes No
Why? This was the first power sector privatization in the Africa Region and some of the problems
highlighted in the ICR need deeper examination \. There is clearly a lot to learn\.
9\. Comments on Quality of ICR :
Although the ICR is longer than the norm and contains a number of typos, it is an exceedingly thorough review of the
problems and lessons of this operation \. There is a particularly useful discussion of how this project relates to sector
development policy and the CAS and the Aide Memoire and summary of the Borrower's comments are very
illuminating\. The only real failing is that the role of the 8 cofinanciers has to be deduced from the tables in the
appendix (7 provided goods and equipment, USAID provided TA to assist institutional development and reform )\. | REVIEW |
P051741 |  ICRR 12942
Report Number : ICRR12942
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 09/05/2008
PROJ ID : P051741 Appraisal Actual
Project Name : Second Health Sector Project Costs (US$M):
US$M ): 44\.38 69\.51
Support Project
Country : Madagascar Loan /Credit (US$M
Loan/ ):
US$M): 40\.0 58\.0
Sector Board : HE US$M ):
Cofinancing (US$M): 0 0
Sector (s): Health (96%)
Central government
administration (4%)
Theme (s): Health system
performance (29% - P)
Other communicable
diseases (29% - P)
Nutrition and food
security (14% - S)
Population and
reproductive health
(14% - S)
Participation and civic
engagement (14% - S)
L/C Number : C3302
Board Approval Date : 12/02/1999
Partners involved : Closing Date : 12/31/2006 12/31/2007
Evaluator : Panel Reviewer : Group Manager : Group :
Denise A\. Vaillancourt Soniya Carvalho Monika Huppi IEGSG
2\. Project Objectives and Components:
a\. Objectives:
The projectâs overall development objective was to contribute to the improvement of the health status of the
population through more accessible and better quality health services \. Specific development objectives were to :
(i) improve the quality of and access to primary health services with a focus on rural areas;
(ii) support priority health programs with emphasis on endemic infectious diseases, reproductive health (including
family planning, sexually transmitted diseases and HIV /AIDS) and nutrition; and
(iii) strengthen sector management and administrative capacity within the Ministry of Health (MoH), and at provincial
and district levels, to enable successful decentralization and sector reform \.
The above statement of project development objective comes from the PAD \. The statement in the DCA concurs with
this statement, but is less clear \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
Part A : Development of District Health Services , including: development implementation of a Health Infrastructure
Development Plan, including rehabilitation of existing health facilities (health centers and district hospitals ) and
construction and equipment of new ones; construction of infrastructure for decentralized health administrations;
drugs and logistical support for health facilities functioning; studies, and training of service providers \.
Part B : Infectious Disease Reduction Program (IDRP) IDRP ), including: developing an IDRP focusing in particular on
malaria, plague, schistosomiasis and tuberculosis through technical advisory services; inputs and supplies for IDRP
implementation (drugs, insecticides and impregnated bed -nets); technical refinements to improve the detection,
prevention and control of plague outbreaks and establishment of a surveillance system; and screening campaigns,
drugs, and laboratory equipment to identify and treat schistosomiasis \.
FP ) and Reproductive Health (RH)
Part C : Family Planning (FP) RH) Services , with a special emphasis on three
underserved provinces (Fianarantsoa, Mahajanga and Tiliary ) including (1) development and implementation of a
national RH program to (a) promote safe motherhood and improve management of high risk pregnancies; (b)
increase access to FP services through provision of contraceptives; and (c) information, education and
communications activities aimed at adolescents â sexuality and risks associated with sexually transmitted disease,
including HIV/AIDS; and (2) provision of logistical support for FP and RH service delivery (drugs, laboratory
equipment, diagnostic tools)\.
Part D : Child Nutrition Services : In complement to a major national community -based prevention program (financed
by IDA and others under separate projects ), provision of advisory and institutional strengthening services, training,
supervision, program monitoring, refurbishing health centers and goods to improve nutrition rehabilitation services for
severely malnourished children in all 111 districts in Madagascar\. Workshops and studies leading to common
protocols and procedures will also be supported, along with strategic planning and management capacity building \.
Part E : Strengthening of Institutional Capacity , including studies, technical assistance, training and other support
to: strengthen the sector reform process, including sector coordination, decentralization of decision -making,
promotion of private sector activities; improve sector resource management, including planning and budgeting,
human resources development, financial management and accounting, physical accounting and maintenance and
monitoring and evaluation; and oversee sector performance, including beneficiary assessment and other selected
studies\. Support for program and project implementation (technical assistance, equipment, supplies, operating
costs) were also included\.
While the project objectives or key associated outcome targets were not changed, p roject components were
amended to address the effects of two unanticipated crises \. In 2000, only a few months after effectiveness, following
a series of major cyclones that hit Madagascar, the first component was limited to the rehabilitation /reconstruction of
damaged facilities and new construction was dropped \. In 2003, project restructuring allowed for the financing of
district health administration, as well as services, and also provincial /regional administration and services \. The cost
recovery policy was temporarily lifted by government to mitigate the impoverishing effects of the political and
socio-economic crisis in 2001-02\. In response, the project supported the financing of more drugs than originally
anticipated to cover these costs \. In addition, in 2003 the credit agreement was amended to allow for the financing of
health district non-salary recurrent costs\. As other (especially Global Fund) financing became available for infectious
disease control, the project stopped financing of STI /HIV/AIDS in 2003, malaria in the coastal areas in 2004, and
tuberculosis in 2005\. A supplemental credit was approved in 2005 to provide the project with the funds needed (in
light of emergency expenditures responding to the crises ) to achieve the original project objectives \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The projectâs actual cost was 154 percent of its original cost\. Project funding was used to provide emergency
assistance following major cyclones and political crisis that undermined health services and exacerbated poverty \. A
supplemental IDA credit, a Japanese Trust Fund and additional counterpart financing supported these substantial
cost overruns\. Total IDA support to this project amounted to US$ 58\.0 million (41\.3 million SDRs), of which US$40\.0
million (29\.0 million SDRs) was for the initial project and US$18\.0 million (12\.3 million SDRs) was for the
supplemental credit\. Both the original and supplemental credits were 100 percent disbursed\. In addition, 0\.77 million
SDRs were disbursed against a 1\.06 million SDR Japanese Trust Fund approved during implementation to provide
Government with implementation assistance; and the balance (0\.29 million SDRs) was cancelled\. According to the
PAD for the original credit, Government was estimated to contribute US$ 4\.38 million in counterpart financing\. Its
contribution for the supplemental credit is not specified in the design documents or in the ICR \. Actual counterpart
financing is US$9\.78 million\.
3\. Relevance of Objectives & Design:
The relevance of project objectives is substantial \. Improving health services quality and access, controlling
malaria, reducing maternal and child mortality, controlling the spread of HIV /AIDS and implementing an effective
family planning strategy are some of the commitments of the Madagascar Action Plan (MAP) 2007-2012 (a second
generation poverty reduction strategy )\. The Bank's CAS 2007-2011 aims at contributing to these goals by helping to
improve access and quality of services \. The original project aimed at these same goals \. However, the relevance of
project design is modest\. While the project appropriately focused on the priority diseases and health issues in
Madagascar and was fully supportive of Government's policy to decentralize the health sector through strengthening
health districts and provinces, project design had two important shortcomings \. First, the project's target for improving
access focused only on a geographic goal (population living within a 5 km radius of a health facility), and not on the
equally, if not more, pressing issue of financial access (affordability)\. Second, the capacity building objective was not
grounded in a clear strategy, nor were targets or indicators established to track progress in achieving this goal \.
Changes in the design right after effectiveness (particularly the limitation of civil works to the rehabilitation of facilities
damaged by the end-2000 cyclones), were appropriate, but should have led to changes in selected performance
indicators\. Overall relevance is substantial\.
4\. Achievement of Objectives (Efficacy):
Overall efficacy is substantial\.
[Note: Demographic and Health Survey (DHS) data, where used, is cited\. All other data is from Government/MoH
sources\.]
Outcomes by Objective:
(i) Improve the quality of and access to primary health services with a focus on rural areas : modest
The share of the population living within 5 km of a health facility was maintained (57 percent in 2000 and 58
percent in 2007)\. While falling short of the project target of 85 percent, the 58 percent coverage is a notable
achievement considering the devastation of three major cyclones occurring shortly after effectiveness, which
severely damaged one third of all of Madagascar's primary health facilities \. The use of project resources to
rehabilitate destroyed health facilities prevented a potentially dramatic decrease in geographic access in the
aftermath of the cyclones\. The project financed the rehabilitation /reconstruction of 192 health facilities,
especially in remote, hard-to-reach rural areas, complementing efforts of other financiers to rehabilitate some
facilities in more easily accessible areas \.
Coverage of key services was maintained and /or improved between 2000-2006, according to MoH service data,
with antenatal care coverage increasing from 65 to 75 percent, and assisted deliveries increasing from 20 to 26
percent\. While these trends are positive, results fall below the respective project targets of 80 percent (for
antenatal care) and 60 percent (for assisted deliveries)\. (Trends in general utilization rates provided in the ICR
are not disaggregared by type of service and thus are not useful in assessing the coverage and quality of priority
services\.)
The project financed critical inputs for service quality, including the provision of equipment and supplies for
health facility functioning, non -salary recurrent financing in all public facilities from 2004-07, motorbikes for
supervision, and drugs and staff training for primary and first -referral facilities\. Some indications of improved
service quality are shown under Objective (ii) below\.
ii) Support priority health programs with emphasis on endemic infectious diseases, reproductive health and
(ii)
nutrition : substantial
Performance indicators for infectious diseases control reveal positive trends, although some outcomes fell
short of targets
DPT3 coverage rose from 83 percent in 2000 to 95 percent in 2006 (a proxy for full immunization for which
recent data are not available )\.
The hospital fatality rate among children under five being treated for severe malaria fell from 14\.9 percent to 7\.1
percent, falling short of the target of 3 percent, but a positive trend, nonetheless \. Malaria incidence fell from 9\.4
percent in 2000 to 5\.4 percent in 2006, almost reaching the target of 4\.5 percent\. Investments in prevention
(indoor spraying, surveillance, bednets ) and treatment (home treatment kits) prior to Global Fund support, which
started in 2004, are likely to have facilitated this decline, although data sources and reliability are not assessed \.
The cure rate for TB cases increased from a baseline of 70 percent in 2000 to 75 percent in 2006, falling short of
the target of 84 percent, but a positive trend, nonetheless \. Project support up to 2005 (when Global Fund began
covering these expenditures ) included training, drugs, laboratory and other diagnostic supplies, supervision and
IEC campaigns\.
Fatality rate among plague cases fell from a baseline of 20 percent in 2000 to 7\.8 percent in 2006\. The number
of new plague cases also fell dramatically from a baseline of 1334 in 2000 to 328 in 2006\. No targets had been
set for these indicators, but these outcomes are significant\. The project (the only source of financing for this
intervention) supported and facilitated improved surveillance, diagnosis, prevention and treatment \.
Reproductive health services improved with regard to family planning and antenatal care, while assisted
deliveries remain very low
Contraceptive prevalence rates increased from 9\.7 percent (DHS) to 24 percent in 2006 (PSI), exceeding the
target of 17 percent\. The project financed training and contraceptives, with a particular focus on a new
long-duration method of easy insertion especially convenient to rural and remote areas and generating high
demand\. The number of facilities/locations offering family planning services increased from 1,645 in 2003 to
2,389 in 2007\.
According to DHS data, the antenatal coverage rate increased from 71 percent in 2000 to 81 percent in 2003
(the approximate mid-point of project implementation)\. MoH data on ante-natal care indicate lower coverage,
but, nonetheless, corroborate the overall positive trend : 65 percent in 2000; 61 percent in 2001; 64 percent in
2002; 70 percent in 2003; 68 percent in 2004; 58 percent in 2005; and 75 percent in 2006\. The project target
was 80 percent\.
The percentage of deliveries attended by a skilled health provider increased from a baseline of 47 percent in
2000 to 54 percent in 2003 (DHS)\. MoH data show lower levels, and very little change in coverage, except for
the last year (2006): 21 percent in 2000; 18 percent in 2001; 20 percent in 2002; 24 percent in 2003; 23 percent
in 2004; 20 percent in 2005; and 26 percent in 2006\. To this end the project invested in training, kits, equipment,
infrastructure upgrading and other inputs to improve the quality of delivery services and referral services \. The
increase in coverage in the last year may be attributable to community -level awareness raising financed under
the project\.
Nutrition rehabilitation activities culminated in positive outcomes
Hospital fatality rate among malnourished children being rehabilitated in hospitals fell from a baseline of 20
percent to 6\.5 percent in 2006, exceeding the target of 10 percent\.
The proportion of children severely malnourished, who left the intensive nutritional recovery centers cured,
increased from 63 to 87 percent, a positive trend, but no target had been set for this indicator \.
The project financed these services (contracted through NGOs) to ensure that they would be available free of
charge to the population\.
iii ) Strengthen sector management and administrative capacity within MoH to enable successful decentralization
(iii)
and sector reform : substantial
At end of project all districts had produced district development plans and annual work plans; and
implementation rates of annual plans increased from 71 percent (actual expenditures as a share of plan budget )
in 2004 (first year of plan financing) to 89 percent in 2007\. This is an indication of strengthened district planning
and implementation capacity\.
Project financing of non-salary recurrent costs, net of pharmaceuticals, allowed districts to finance essential
costs of doing business (e\.g\., operating costs, supervision )\.
The project supported the establishment of 22 regional health bureaus in 2005, replacing the six provincial
health bureaus, with a view to underpining a further decentralization of the health system \.
Only 20 of 104 electronic data equipment, purchased and installed under the project, are still used for
transferring data, although the others are still used for their radio functions \.
Support to central MoH did not emanate from a comprehensive strategy or specific goals \. The project financed
the development of several policy and planning documents, including the Human Resources Development Plan
and the Hospital Policy\. It also supported the preparation of the National Health Policy 2003-2006, the Sector
Development Plan and a health map, all to strengthen MoH planning capacity \. Workshops and meetings for
internal coordination and some rehabilitation work were also financed \. Policy and planning documents appear
to have set the stage for a move to a Sector -Wide Approach (supported under an ongoing operation ), and the
HR plan has brought to light key issues requiring attention to ensure adequate staffing, but the extent to which
central-level MoH capacity has been strengthened, if at all, has not been adequately tracked \.
Impacts:
While it is acknowledged in the project design documents that declines in mortality and fertility are affected by other
factors outside of the health sector, specific goals for reducing infant and maternal mortality and fertility were
included in the project logframe, to which the project was expected to contribute \. "Actual" data are from the 2003
DHS and show averages for the previous five years (1999-2003) for mortality and the previous three years for fertility \.
Trends for the last four years of project implementation are not known \. Given that disbursements were modest
during the project's initial years, attribution of any of these changes to the project is somewhat weak \.
Infant mortality rate was reduced from 96/1000 to 58/1000, exceeding the project target of 80/1000\. Nutrition
rehabilitation, high immunization rates, antenatal care and early malaria interventions may have contributed, but,
again, were at early stages of implementation in 2003\.
Changes in the maternal mortality rate from a baseline of 488 to 469 are not significant and fall short of the
project target of 400\. Antenatal care coverage did increase almost to the target level, while assisted deliveries
increased only modestly with project support \.
Total fertility rate fell from a baseline of 6\.0 in 2000 to 5\.2 in 2003 (DHS), exceeding the project target of 5\.5\.
Increases in the availability of family planning services and in contraceptive prevalence, although at early stages
of implementation in 2003, may have contributed\.
5\. Efficiency (not applicable to DPLs):
Project efficiency is substantial\. It supported activities focused on cost -effective interventions aimed at the causes
of Madagascar's high disease burden \. It also supported public goods, including prevention, public health and public
information\. It also addressed inequities in access to services, by focusing on rural areas, especially those which
were particularly remote\. The Social Fund was requested to, but would not, take on the job of
rehabilitating/rebuilding rural health centers destroyed by the cyclones, because of the considerable expense of
these works\. Thus, the project assumed this support, which helped restore services to the more devastated and
deprived areas (ICR p\. 9 and interview with TTL)\. The ICR's economic analysis questions, however, the justification
for establishing basic dental services, even though dental problems do represent a burden on the rural population \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal % %
ICR estimate % %
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Overall outcome rating is satisfactory, based on substantial relevance, efficacy and efficiency \.
a\. Outcome Rating : Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Given the low public expenditure on health in the country (about $7 per capita), it is not clear whether enough
resources will be allocated to non -salary recurrent expenditures to ensure smooth functioning of health facilities \. The
follow-on (SWAp) project is likely to support these costs in the short -term, but the ability of Government to gradually
assume the financing of these costs is not assured \. Maintenance of infrastructure tends to be underfunded \.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
The project design does not address demand -side issues, especially financial access /affordability\. The
monitoring and evaluation design and framework was not fully developed during preparation, especially with
respect to the capacity building objective \. On the positive side, the Bank was flexible in using the project to
address issues caused or exacerbated by the cyclones and political and socioeconomic crisis \. It was also
instrumental in supporting the building blocks of a SWAp (now under implementation)\. Government in its
comments values the technical advice and support provided by the Bank, in addition to the financial support
provided under this project\. The M&E framework was never formally changed to correctly assess and follow the
progress of the project and to reflect the changes in project support following the cyclones and political and
socio-economic crises, and also as a result of the decision to stop financing HIV /AIDS, malaria and tuberculosis
control in light of Global Fund financing \.
at -Entry :Moderately Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
The failure to deposit counterpart funds delayed the implementation of the project at several points in time \.
However, one of the main reasons behind the successful (albeit delayed) implementation of the project was the
capacity, flexibility and hard work of the project implementation unit and its adherence to the Bank's fiduciary
requirements\.
a\. Government Performance :Moderately Satisfactory
b\. Implementing Agency Performance :Satisfactory
c\. Overall Borrower Performance :Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
The M&E framework was not sufficiently developed during preparation, especially with regard to the capacity
building objective; and targets and indicators were never changed to reflect the changes in project support \. During
implementation data collection and analysis were not given adequate attention by GoM /MoH, due in significant part
to their preoccupation with the cyclones and political and socio -economic crisis (interview with TTL)\.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
In its environmental assessment, the project was rated C in the PAD, partly in anticipation of the use of
environmentally friendly insecticides (pyretroids) in limited areas for indoor spraying \. However, at the start of
implementation it became apparent that the Government wanted to continue the use of DDT and not pyrethroids for
indoor spraying (for malaria control) and DDT was procured\. The Bank's supervision team originally opposed the
procurement of DDT with the credit\. However, the Government insisted on using it as WHO had given poor countries
a 10-year timeframe (starting in 1998) to continue its use\. At effectiveness DDT was the least expensive alternative
and Government had at least 6 months' supply of it\. Eventually the Bank's team accepted the procurement of DDT
on the condition that a study would be conducted on possible alternatives so that other insecticides could be used
before the 10-year timeframe was over\. DDT procurement was always done through WHO and many measures
were taken to ensure an environmentally sound use of this insecticide \. By 2004 the project started to procure
alternatives to DDT and by 2005 it stopped all DDT procurement\.
During appraisal, this issue should have been identified and a detailed assessment of the Government's capacity to
use DDT in an environmentally safe manner should have been carried out \.
12\. Ratings :
12\. ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Satisfactory
Risk to Development Moderate Significant The ICR notes that an ongoing SWAp
Outcome : is supporting recurrent costs, but raises
questions about the Government's
ability to eventually assume these
costs with its own budget\. It also raises
the neglect of maintenance of
investments\.
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Satisfactory Moderately IEG agrees with ICR subratings:
Satisfactory moderately satisfactory government
performance; and satisfactory
implementing agency performance\.
Harmonized guidelines require a
moderately satisfactory rating if one of
the subratings is satisfactory and one is
moderately satisfactory\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
Flexibility within a Bank-financed operation can be critical for rapidly and effectively mitigating the adverse
effects of unanticipated crises \. However, such flexibility needs to be reflected in a revised M&E framework \.
Rehabilitation/reconstruction of health facilities, rather than building new facilities, and allowing the Global
Fund to assume the grant financing of priority disease programs made sense \. But these were not reflected in
the M&E framework, which still included indicators to increase geographic coverage and to measure
outcomes of infectious disease programs \.
Utilization of facilities is not likely to increase as desired if the underlying reasons for low utilization are not
assessed and addressed \. In Madagascar, because of very difficult roads and mountainous terrain, living
within 5 km of a health facility does not guarantee physical access \. Furthermore, inability to pay for drugs and
services is likely to continue to depress utilization if it is not addressed \.
14\. Assessment Recommended? Yes No
Why? The eventual availability of end -of-project data through a planned DHS in 2008 or 2009 would shed new
light on the efficacy of this project, since most recent (DHS 2003) data on many indicators do not capture trends in
the project's last four years \. It would also be interesting to trace how the building blocks of this project have
supported the move toward the (ongoing) SWAp\.
15\. Comments on Quality of ICR:
The ICR is of satisfactory quality overall, providing a candid assessment of project performance and making good
use of available (albeit incomplete) data\.
A few shortcomings include:
Failure to cite data sources systematically \. A follow-up discussion with the ICR author established that all data
not cited came from Government sources \.
Incomplete cost and financing data \. Data on project costs and financing (Annex 1, page 21 of ICR) show original
costs and financing breakdowns and actual financing, but do not show revised costs by component and
financing plan, estimated at the time of approval of the supplemental credit \.
The ICR might have been more systematic in assessing achievement of project development objectives as they
are stated in the PAD (and in Section 5 of this ICR Review)\. The third objective (strengthening sector
management and administrative capacity ), especially, is only addressed under the discussion of that
component\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P106663 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
Report Number : ICRR0020150
1\. Project Data
Project ID Project Name
P106663 BR Sao Paulo Feeder Roads Project
Country Practice Area(Lead) Additional Financing
Brazil Transport & ICT P118077
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IBRD-76880,IBRD-78370 30-Jun-2014 923,195,000\.00
Bank Approval Date Closing Date (Actual)
09-Jul-2009 30-Jun-2015
IBRD/IDA (USD) Grants (USD)
Original Commitment 493,425,000\.00 0\.00
Revised Commitment 493,425,000\.00 0\.00
Actual 493,425,000\.00 0\.00
Sector(s)
Rural and Inter-Urban Roads and Highways(100%)
Theme(s)
Rural services and infrastructure(100%)
Prepared by Reviewed by ICR Review Coordinator Group
Victoria Alexeeva Robert Mark Lacey Christopher David Nelson IEGSD (Unit 4)
2\. Project Objectives and Components
a\. Objectives
The project objective was âto improve the efficiency of the Borrowerâs [the State of São Paulo, Brazil] paved municipal road networkâ (Loan
Agreement, p\.7; Project Appraisal Document (PAD), p\.vii)\.
The PAD (p\. vii) specified that efficiency was to be improved as a result of improvements to the institutional framework used by the Borrower
in four key areas to deliver adequate transport conditions to users (planning, environmental licensing, participation of private sector, and
execution), combined with improvements in the condition of the paved municipal road network\.
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
b\. Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components
1: Feeder Roads Rehabilitation (appraised US$477\.04 million, actual US$1,010\.25 million) included (a) rehabilitation works of about 100
km of the stateâs paved road sections, and 1,500 km of particular sections of the stateâs municipal paved road network, and b)
consolidating the State Road Administrationâs (DER-SP) capacity to manage its road investment programs, including the Government's
municipal paved road rehabilitation program (the Pró-Vicinais Program)\.
2: Institutional Strengthening (appraised US$23\.8 million, actual US$10\.17 million) included (a) support to the structure and
management of the state investment program (Economy and Planning Secretariat); (b) modernization of the stateâs environmental
management system (Environment Secretariat); (c) consolidation of planning and logistics capacity in the transport sector (Transport
Secretariat); and (d) improved public sector execution capacity in the road sector (State Road Department)\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Cost: The total project cost increased twofold from US$477\.04 million to US$1,010\.25 million by project closure, due to cost
overruns and additional works\.
Financing: The original IBRD loan in the amount of US$166\.65 million was complemented by Additional Financing (AF) in the amount of
US$326\.78 million, to total US$493\.43 million\. At closure, the loan disbursed at exactly the same amount of US$493\.43 million\. The AF
was approved on August 3, 2010 to cover cost overruns of rehabilitation works on about 700 km of the 1,500 km of road sections
financed under the original loan as well as to scale up the project by adding another 1,200 km paved feeder roads for rehabilitation\.
Borrower Contribution: The Borrower (the State of São Paulo) contributed US$527\.42 million in total, up from the original commitment
of US$429\.77 million and additional commitment of US$82 million during AF in 2010\.
Dates: The original project closing date was extended by one year at a Level 2 restructuring in 2014 from June 30, 2014 to June 30,
2015, due to delays in the institutional strengthening activities\. The additional financing in 2010 that included additional works did not
trigger revision in the project closing date\.
3\. Relevance of Objectives & Design
a\. Relevance of Objectives
The State of São Paulo is the most populous state of Brazil with the highest gross domestic product, which accounts for about 40% of Brazilâs
GDP and surpasses that of Chile\. At the time of appraisal, the State Multi-Year Expenditures Program (PPA) for 2008-2011 set as priorities
increasing the Stateâs competitiveness and improving inter-regional equity within the State through a combination of interventions, including
infrastructure\. Its regional development agenda focused, among other areas, on transport and logistics to reduce transport costs through
improvement of accessibility to the State's core paved road network (supported by the State's municipal paved roads rehabilitation program
(the Pro-Vicinais Program))\.The World Bank Groupâs (WBG's)Country Partnership Strategy (CPS) at appraisal (FY 2008-2011) identified poor
transport infrastructure as a major bottleneck in Brazil and placed emphasis on addressing logistical growth constraints, through support to
roads, among others\. At closure, the objectives remained relevant to the Stateâs priorities set out in PPA for 2012-2015 and the WBGâs CPS
FY2012-2015, which also targeted improvements in transport and logistics\.
Rating
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
High
b\. Relevance of Design
The statement of the objective to improve the efficiency of the paved municipal road network was not specific\. While the PAD p\.10 indicated
that the improved efficiency would be monitored on the delivery side during implementation of the Pro-Vicinais Program (through intermediate
indicators), the project development outcomes would measure improved efficiency on the demand side (i\.e\. gains accruing to users), through
reduction of economic costs to users on the paved municipal road network and the degree of satisfaction of road users\. Moreover, several
selected intermediate indicators in the results framework were not fully capturing the efficiency gains directly related to the road network
management at the municipal level but at the state level, including other sectors\. The activities related to improving the efficiency of public
sector management were well beyond the subject of municipal roads, and this was not fully captured in the project development objective (ICR,
p\.19)\.
Rating
Modest
4\. Achievement of Objectives (Efficacy)
PHREVISEDTBL
Objective 1
Objective
To improve the efficiency of the State of São Paulo's paved municipal road network\.
Rationale
Outputs
⢠A total of 3,300km of municipal road sections were rehabilitated under the project, out of a total of 11,968 km of municipal roads
rehabilitated under a four-phase Pro-Vicinais Program\. As a result of the Pro-Vicinais Program, 97\.6% of the paved municipal road
network were in good condition (IRI<3\.5) at project closure, up from 23\.6% in 2009 and well above the targeted 83%\.
Under the institutional strengthening activities:
⢠In support of planning, the agenda of the State Logistics Development Plan (SLDP) along the Tiete River was prepared and agreed,
involving both public and private sectors (the target was the overall agenda of public and private sector actions to reduce logistics
bottlenecks); two studies were produced on freight demand and aspects of the stateâs transport planning that provided inputs for the State
Plan for Logistics and Transport 2030 (PDLT), which was under preparation at the ICR stage\.
⢠In support of environmental licensing, the environmental geo-reference system (DATAGEO) was developed that integrated various data
related to land use and environmental information on the same map, and an on-line Integrated & Unified Environmental Licensing System
(GAIA) was installed in 2015 to assist potential applicants in the process of permit requests, although the modules related to the actual
issuing of licenses were still being tested at project closure\.
⢠In support of private sector participation, a toolkit for processing PPPs and an on-line platform were developed in all infrastructure
sectors to increase the efficiency and transparency of the process\. The platform was institutionalized by a government decree 61371 of
July 25, 2015\. While private and external investments toward the stateâs projects in 2011-2014 increased to R$25\.6 billion in total
(including metro, highway, and energy projects), as compared to R$11\.6 billion in 2009 and surpassing the target, this is influenced by
many factors beyond the project contribution (ICR, Resultâs Framework)\.
⢠In support of efficiency and improved public sector management capacity in the road sector, the Pavement Management System (PMS)
was partially developed and was not yet operational at project closure\. The progress included the database system of the road inventory
and geo-references of the state and municipal road network installed by DER-SP, a statewide traffic volume survey, and introduction of the
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
Highway Development and Management Model (HDM-4)\. The structuring and management of the State Investment Program was
cancelled\. The project helped pilot the monitoring and evaluation frameworks of âbudget by resultsâ (performance-based budget
management) related to government expenditures on education and penitentiaries for the state administration secretariat in 2014 and the
education secretariat in 2015\.
Outcomes
⢠The rehabilitation of the municipal roads under the Pro-Vicinais program resulted in an estimated reduction of economic costs to users
of 7\.7% between 2011 and 2014, surpassing the target of 5\.7%\.
⢠91% of road users reported that they were satisfied with the road improvements, surpassing the target of 75%\. The results are based on
the interview surveys of road users of the paved municipal road network that was improved under the 3rd and 4th phases of the Pro-
Vicinais Program\. The survey was carried out by DER-SP in 2015 and involved 2,047 users (2,078 light vehicles and 380 heavy vehicles)\.
The reason for lack of satisfaction was the fact that some roads do not have a shoulder lane, which was not included in the programâs
scope due to low cost effectiveness, as explained by the ICR p\. 14\.
⢠With regard to improved efficiency at the institutional level, efficiency gains were reported in evaluation of the environmental licensing
requests for medium and small projects: the turn-around time was 120 days at project closure, improving from 240 days in 2009 and
surpassing the target of a 30% improvement\. The efficiency indicator related to the reduction of the average delay in civil works contracts
under the Pro-Vicinais Program was dropped and not reported\. The ICR explains that the duration period of contracts was short, and
external factors beyond the control of DER-SP could affect their implementation, for example the wet season\. The ICR does not provide
other evidence that the efficiency related to the municipal roads network improved at the institutional level\. While most of the outputs were
delivered as planned, some were clearly in support of the Stateâs capacity in handling projects in infrastructure and other sectors at the
state level, rather than at the municipal level\. The planned support to municipalities in defining and implementing mechanisms for
sustainable maintenance of municipal networks was not carried out\. Overall, the implementation of the institutional strengthening activities
was less efficient, affecting the expected results, in particular with respect to development of the new pavement management system,
which was still not operational at project closure\.
Rating
Substantial
5\. Efficiency
The ex-post Economic Internal Rate of Return (EIRR) for the 3rd and 4th phases of the entire Program was estimated at 36\.6% with NPV of
R$620 million at a 12 percent discount rate at a 2010 price\. The economic analysis was conducted on the sample of road sections of 1,053 km
that represented 17% of all sections under the 3rd and 4th stages\. It followed the methodology used during the Additional Financing (AF), which
assessed the 3rd and 4th phases of the Pro-Vicinais program\. Using the Highway Development and Management Model (HDM-4), the benefits
were calculated for the reduction of vehicle operating costs and passenger time costs, along with the reduction of maintenance costs to the road
agency, when compared to a âdo minimumâ\. At the time of the AF, the EIRR for the 3rd phase was estimated at 40\.7% with an NPV of R$885
million and the EIRR for the 4th phase was 20\.5% with an NPV of R$544 million at a 12% discount rate\. A slight decrease in the NPV value as
compared to the AF estimate was explained by a lower traffic growth rate applied to the ex-post evaluation (1%) compared to the one at the AF
(3%)\. An ex-ante economic analysis was done for the road sections of the 2nd phase based on the assumption of its homogeneity to the 3rd
phase in terms of the road characteristics\. The estimated ex-ante EIRR was 35\.2% with NPV of R$ 521 million, at a 12 % discount rate\. The
analysis used the HDM-4\.
The project implementation period was one year longer than planned due to delays in the institutional strengthening activities,
while the road works were completed as scheduled\. There was a high cost overrun on the road works, which triggered the Additional Financing
to cover half of the originally planned volume of roads works (700 km out of 1500 km)\. The cost overrun is explained by an unfavorable
exchange rate during the first year of project implementation and the increased work due to the application of heavier than originally estimated
solutions as a result of the improved engineering standard developed under the project to increase the sustainability of the municipal road
assets (ICR, p\.5)\. As explained by the AF Project Paper (p\.4), there was underestimation of the costs of works at the preparation stage that
were based on the prices of the Program's earlier phases\. Technical solutions had therefore to be adjusted to the more deteriorated conditions
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
of the roads\.
Efficiency Rating
Substantial
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated
value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
0
Appraisal ï¼ 35\.20
ï¾Not Applicable
0
ICR Estimate ï¼ 36\.60
ï¾Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
The relevance of objectives is rated high, and that of design is substantial\. The project achieved its objective of improving the efficiency of the
paved municipal road network to a substantial extent, albeit with minor shortcomings at the institutional level\. Efficiency is assessed as
substantial\.
a\. Outcome Rating
Satisfactory
7\. Rationale for Risk to Development Outcome Rating
⢠The municipal roads under the Program are reported to be maintained by the municipal governments, according to their agreement with the
State, which was one of the requirements for participating in the Program\. The ICR (p\.19), however, adds that financing of the municipal
roads continues to raise doubts in terms of the capacity of the local governments to live up to the actual needs of future maintenance\.
Although municipal governments are responsible for municipal roads, historically DER-SP has been in charge of developing and maintaining
the network, as explained by the ICR\.
⢠The outcomes of the technical assistance activities under the institutional strengthening component are likely to be sustainable as they are
being incorporated into the operational processes in the state agencies\.
a\. Risk to Development Outcome Rating
Modest
8\. Assessment of Bank Performance
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
a\. Quality-at-Entry
The project was seen at the time of appraisal as an opportunity for the Bank to re-engage with the state of Sao Paulo in the inter-urban
transport sector (the last operation had closed in the 1980s)\. The project design relied on the government-led program and responded to
the middle-income countries (MIC) agenda by providing high value technical support to a sophisticated client\. At the time of appraisal,
works under the Pro-Vicinais Program's 1st phase (2,100 km financed by the Borrower at a total cost of US$175 million) were near
completion, works under the 2nd phase (2,550 km at a cost of US$117 million financed by the Borrower and with a US$180 million loan
from the Inter-American Development Bank) were ongoing, and under the 3rd phase, bidding of civil works (3,100 km) was underway and
was to be supported by the project\.
While most risks were assessed appropriately and mitigation measures were identified, one risk related to the preparation of complex
information management systems was not identified at the time of appraisal and eventually led to delays in the institutional strengthening
component\. The cost estimates were underestimated at the preparation stage, as the condition of roads had deteriorated, thus requiring a
different technical design, as acknowledged in the AF Project Paper (p\.4)\. The fiduciary and safeguard arrangements proved to be
adequate, while the projectâs results framework had shortcomings (see Section 3)\.
Quality-at-Entry Rating
Moderately Satisfactory
b\. Quality of supervision
Supervision missions were carried out more than twice a year on average\. The projectâs mid-term review was advanced by about six
months, as the disbursement exceeded 50% of the loan amount within the first two years of project implementation\. Overall, the officials
interviewed for the ICR confirmed that the presence of the Bank provided helpful technical advice, and that in some cases it was
instrumental in ensuring a bidding process lead to the best choice of consulting firms (p\.20)\. The project team was active in supporting the
institutional activities, emphasizing the need to speed up the launching of technical assistance activities under the project; however with a
one- year extension of the project closing date, the pavement management system was not yet operational at project closure\. The ICR (p\.
20) points out that the Bank could have been more proactive in supporting municipalities on the sustainable maintenance mechanisms of
municipal networks\.
Quality of Supervision Rating
Moderately Satisfactory
Overall Bank Performance Rating
Moderately Satisfactory
9\. Assessment of Borrower Performance
a\. Government Performance
The Borrower was the State of São Paulo, represented by its Finance Secretariat\. The São Paulo Government's commitment was strong
throughout the project implementation\. It provided the necessary funding as per commitments\. The Pro-Vicinais Program supported by the
State was implemented in less than five years and improved about 12,000 km of municipal roads\.
Government Performance Rating
Satisfactory
b\. Implementing Agency Performance
The State Road Administration (DER-SP) was the implementing agency of civil works under the program, and was also responsible for
the coordination of information gathered from the State Secretariat of Planning and Regional Development (SPDR), the State Secretariat
of Logistics and Transport (SLT) and the State Environment Secretariat (SMA) on procurement planning, certification of bills, progress
monitoring and reporting on the indicators\. The DER-SP performed well in the implementation of civil works and management of the
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
project (technical, fiduciary, and safeguards)\. However, the implementation of the Pavement Management System was delayed until late
into the project execution period and was not operational by project closure\. The SMAâs performance was rated by the ICR as highly
satisfactory; at the same time, the ICR (p\.25) notes with regard to the development of a pilot system of collecting site survey data that the
strategy changed and the services were cancelled in the middle of contracts\. SLT and SPDR dropped some of the original proposed
studies, and it took time before the final scope of their components were defined\. There were also some minor shortcomings in financial
management (see Section 11 below)\. On balance, performance is assessed as Moderately Satisfactory\.
Implementing Agency Performance Rating
Moderately Satisfactory
Overall Borrower Performance Rating
Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization
a\. M&E Design
The results framework included two outcome indicators and six intermediate indicators, and most had baselines and targets set at
appraisal (PAD, Annex 3)\. The outcome indicators were clear and measurable, though some intermediate indicators were not clear (i\.e\.,
the agenda of public and private sector actions to reduce logistics bottlenecks agreed with key stakeholders) or attributable (i\.e\.,
private/external capital mobilized for financing state investment programs)\. The ICR (p\.10) adds that the indicators could have included
an indicator to measure enhanced capacity of municipalities that are principally responsible for maintenance of municipal roads
considering its importance in sustainability\. At the time of the AF in 2010, the indicator on the average percentage delay in the execution
of civil works contracts was found to be unsuitable for measuring the efficiency in the implementation of civil work contracts as these had
a short execution period, and was replaced by the Bankâs core output indicator related to the number of km of roads rehabilitated\.
b\. M&E Implementation
The ICR (p\.10) reports that the monitoring and evaluation (M&E) was implemented as planned\. Semi-annual reports were regularly submitted
to the Bank on time and in a proper form\. The measuring result indicators included a satisfaction survey of 2,467 users of light and
commercial vehicles\. The userâs satisfaction survey was part of the study supported by the project to assess the impact of the Pro-Vicinais
program, however, as the ICR p\.15 explains there were challenges in insolating the impact of the road investments from other external
factors, and the study was not finalized\.
c\. M&E Utilization
The ICR does not report on the M&E utilization but it is apparent that it was used for the evaluation of the achievement of its project's
objective\.
M&E Quality Rating
Substantial
11\. Other Issues
a\. Safeguards
This was a âCategory Bâ project as rehabilitation and maintenance work was foreseen on existing roads and no significant negative impacts
were expected\. The PAD (p\.23) reports that three Bank safeguard policies were triggered: Environmental Assessment (OP4\.01), Physical
Cultural Resources (OP4\.11), and Involuntary Resettlement (OP 4\.12)\. No new safeguard policies were triggered during AF (AF Project
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
Paper, p\.8)\.
Environmental Assessment\. The ICR (p\.11) reports that the Bank accepted Brazilâs procedures for the identification, prevention, and
mitigation of the environmental impact of road rehabilitation, and DER-SP hired an environmental specialist to ensure that proper procedures
were closely followed\. The ICR further states that there were no major impacts or safeguard compliance issues arising during project
implementation\. The ICR does not report on the mitigation measures, if any, implemented during the project duration, and does not have an
explicit statement of the project's compliance with this Bank safeguard policy\.
Physical Cultural Resources\. The ICR does not report on this safeguard, which was triggered at both appraisal and at the time of the AF\.
Involuntary Resettlement\. The ICR p\. 11 reports that Bank missions confirmed that the management of the risks and impacts identified
under the Involuntary Resettlement safeguard policy was conducted in a satisfactory manner, and that there were no indigenous peoples
present in, or with collective attachments to, the project area\. There was no land acquisition or physical displacement because all civil works
and support activities were conducted on lands situated within the existing right of way\. The marginal widening of a road shoulder to improve
road safety or drainage did not result in any adverse social effects on the land owners present in the project area\. The ICR (p\.11) also adds
that very few indigenous peoples remain in the state of São Paulo - approximately 60,000 in all, or 0\.2 percent of the total population - and
most of these live in urban areas\. None of the project roads are located in the vicinity of lands legally occupied or claimed by indigenous
peoples\.
b\. Fiduciary Compliance
Procurement: The ICR p\.11 reports there were no procurement issues reported, and the procurement of goods, works, and services was
carried out satisfactorily in accordance with agreed procedures\. Procurement processes of complex information technology services were
lengthy and meticulously reviewed by the supervision team\. The Borrower (p\.35) mentions that there were disagreements between the Bank
and DER-SP related to the legal principle of public works and services contracts due to the differences between the Bankâs guidelines and
the recommended procedures of the external Supervising and Advisor Organizations to DER-SP\. This led to numerous discussions between
the DER-SP procurement team and the Bankâs procurement experts, and eventually resulted in the delay of some bidding processes\. There
were no reported cases of misprocurement\.
Financial Management (FM)\. The Financial Management Specialist stationed in Brasilia periodically carried out formal FM supervision\. The
ICR (p\.11) reports that the FM performance was downgraded from satisfactory to moderately satisfactory after August 2011 when some
shortcomings were observed that included inconsistencies between the designated account balances presented by the project and the
account balances observed by the external auditors through the stateâs Integrated Financial Administration System (SIAFEM)\. Another
shortcoming was the delay of DER in implementing the controllership department (hiring internal auditors)\.The audit reports were rated as
satisfactory, although they were sent with delays, and in most cases included unqualified opinions about financial statements, except for
2013, as mentioned by the ICR p\.12 without further details\.
c\. Unintended impacts (Positive or Negative)
---
d\. Other
---
12\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Outcome Satisfactory Satisfactory ---
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
Risk to Development Outcome Modest Modest ---
Due to moderate shortcomings
during Quality at Entry and
Bank Performance Satisfactory Moderately Satisfactory
Supervision (please, see
relevant sections)\.
Performance of the
Implementing Agencies was
assessed as Moderately
Borrower Performance Satisfactory Moderately Satisfactory Satisfactory due to delays in
implementation of the
institutional strengthening
activities\.
Quality of ICR Substantial ---
Note
When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted
beginning July 1, 2006\.
The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\.
13\. Lessons
Two lessons from the ICR are highlighted with some adaptation:
⢠There is a need for sufficient lead-time and resources for consensus building on introducing new management systems involving complex
procedural changes\. During the initial years of this project implementation, the internal deliberations on strategies and goals and definition
of specifications for the management systems took significant time, leading to delays and subsequent extension of the project closing date\.
⢠Sustainability of local road assets could be enhanced through assisting state-level institutions in supporting local governments\.
While working with state-level government on implementing a program on rehabilitation of the local road network, there is an opportunity to
be more proactively engaged at the local level to ensure sustainability of results\.
14\. Assessment Recommended?
No
15\. Comments on Quality of ICR
The ICR offers good insights into the project implementation experience and important details on the project design, activities, and
monitoring\. Some aspects, however, are not clearly described or analyzed, in particular with regard to the institutional set-up on maintenance
responsibilities for the municipal road network (for example, the ICR makes statements such as âAlthough municipal governments are
responsible for municipal roads, historically DERSP has been informally in charge of developing and maintaining those networksâ )\. Lessons
are informative; though it would be advisable to maintain consistency in terminology for the types/classifications of roads between the text in
the ICR and corresponding lessons\. The Project Cost and Financing Table (a) in Annex 1 has errors in cost calculation as the percentage of
appraisal estimate\. The ICR also does not discuss if any issues which arose during implementation and does not report on the projectâs
compliance with the Bankâs Environmental Assessment safeguard policy\. The ICR omits that the project triggered a safeguard policy
Physical Cultural Resources OP4\.11 and does not report on it\. It also says (p\. 11) that âNeither OP 4\.12 on Involuntary Resettlement nor OP
4\.10 on Indigenous People were triggered by the projectâ, while OP4\.12 was triggered at appraisal and at the time of the AF\.
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Sao Paulo Feeder Roads Project(P106663)
a\. Quality of ICR Rating
Substantial | REVIEW |
P157923 |  Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: ICR00005129
IMPLEMENTATION COMPLETION AND RESULTS REPORT
TF-A2340
ON A
STATE AND PEACE BUILDING FUND (SPF) GRANT
IN THE AMOUNT OF USD 4\.90 MILLION
TO THE
Government of Central African Republic
FOR
Local Connectivity Emergency Project (P157923)
March 30, 2020
Transport Global Practice
Africa Region
Regional Vice President: Hafez M\. H\. Ghanem
Country Director: Jean-Christophe Carret
Regional Director: Riccardo Puliti
Practice Manager: Nicolas Peltier-Thiberge
Marc Marie Francois Navelet Noualhier, Aguiratou
Task Team Leader(s):
Savadogo-Tinto
ICR Main Contributor: Shruti Vijayakumar
ABBREVIATIONS AND ACRONYMS
CAR Central African Republic
CEMAC The Central African Economic and Monetary Community
CPF Country Partnership Framework
DPF Development Policy Financing
ESIA Environmental and Social Impact Assessment
EU European Union
FCV Fragile, Conflict, and Violence
FER Fonds dâEntretien Routier, Road Fund
FPA Fiduciary Principles Accord
FY Fiscal Year
GBV Gender-Based Violence
GP Global Practice
GDP Gross Domestic Product
GNI Gross National Income
GRM Grievance Redress Mechanism
ICR Implementation Completion and Results Report
IDA International Development Association â World Bank
LCEP Local Connectivity Emergency Project
LIPW Labor-Intensive Public Works
M&E Monitoring and Evaluation
MoU Memorandum of Understanding
MINTP Ministère des Travaux Publics, Ministry of Public Works
MINUSCA UN Multidimensional Integrated Stabilization Mission in the Central African
Republic
NGO Non-Governmental Organization
OP Operational Policy
PAP Project-Affected Persons
PDO Project Development Objective
RAP Resettlement Action Plan
RCP Rural Connectivity Project
RCPCA Plan National de Relèvement et de Consolidation de la Paix en Centrafrique, Plan
for Recovery and Peace-Building
RN8 Route Nationale No\. 8 â National Road No\. 8
SCD Systematic Country Diagnostic
SPF State and Peace-Building Fund
TF Trust Fund
TTL Task Team Leader
UN United Nations
UNOPS United Nations Office of Project Services
USD United States Dollars
WB World Bank
WBG World Bank Group
TABLE OF CONTENTS
DATA SHEET \. ERROR! BOOKMARK NOT DEFINED\.
1\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 4
2\. OUTCOME \. 9
3\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 15
4\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 17
5\. LESSONS LEARNED AND RECOMMENDATIONS \. 19
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 22
ANNEX 2\. PROJECT COST BY COMPONENT \. 30
ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 31
ANNEX 4\. PHOTOGRAPHS \. 32
ANNEX 5\. SUPPORTING DOCUMENTS \. 36
ANNEX 6\. MAP OF PROJECT INTERVENTION \. 37
The World Bank
Local Connectivity Emergency Project (P157923)
DATA SHEET
BASIC INFORMATION
Product Information
Project ID Project Name
P157923 Local connectivity emergency project
Country Financing Instrument
Central African Republic Investment Project Financing
Original EA Category Revised EA Category
Partial Assessment (B) Partial Assessment (B)
Organizations
Borrower Implementing Agency
Government of Central African Republic United Nations Office for Project Services
Project Development Objective (PDO)
Original PDO
The PDO is to reconnect the population of the Northeast CAR to urban centers and local markets by rehabilitating
the Kaga-Bandoro â Mbrès â Bamingui â Ndélé road\.
The project will contribute to the State and peace building efforts by ensuring basic transport connectivity between
poorly connected areas in districts situated in the lagging regions (North-East)\. This should contribute to: (a)
revitalize local economy by providing temporary employment at local level; (b) facilitate the movement of goods
and domestic trade; and (c) State redeployment for development through the Ministry of Equipment and Transport,
Civil Aviation, and Integration (Ministère de lâEquipement et des Transport, de lâAviation Civile et du
Désenclavement â METACD) decentralized civil servants along the targeted road\.
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The World Bank
Local Connectivity Emergency Project (P157923)
FINANCING
FINANCE_TBL
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)
Donor Financing
TF-A2340 4,900,000 4,900,000 4,900,000
Total 4,900,000 4,900,000 4,900,000
Total Project Cost 4,900,000 4,900,000 4,900,000
KEY DATES
Approval Effectiveness Original Closing Actual Closing
03-Apr-2016 15-Apr-2016 30-Sep-2019 30-Sep-2019
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions
15-Jan-2018 3\.24 Change in Components and Cost
KEY RATINGS
Outcome Bank Performance M&E Quality
Moderately Satisfactory Satisfactory Modest
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual
No\. Date ISR Archived DO Rating IP Rating Disbursements
(US$M)
01 07-Feb-2017 Satisfactory Moderately Satisfactory 1\.81
02 17-May-2017 Satisfactory Moderately Satisfactory 1\.81
03 23-Oct-2017 Satisfactory Moderately Satisfactory 3\.24
04 29-May-2018 Satisfactory Moderately Satisfactory 4\.90
05 14-Dec-2018 Moderately Satisfactory Moderately Satisfactory 4\.90
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The World Bank
Local Connectivity Emergency Project (P157923)
06 21-Oct-2019 Moderately Satisfactory Moderately Satisfactory 4\.90
ADM STAFF
Role At Approval At ICR
Regional Vice President: Makhtar Diop Hafez M\. H\. Ghanem
Country Director: Paul Noumba Um Jean-Christophe Carret
Director: Pierre A\. Guislain Riccardo Puliti
Practice Manager: Nicolas Peltier-Thiberge Nicolas Peltier-Thiberge
Marc Marie Francois Navelet
Marc Marie Francois Navelet
Task Team Leader(s): Noualhier, Aguiratou Savadogo-
Noualhier, Abel Paul Basile Bove
Tinto
ICR Contributing Author: Shruti Vijayakumar
Page 3 of 37
The World Bank
Local Connectivity Emergency Project (P157923)
1\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
1\.1 Context at Appraisal
1\. The Central African Republic (CAR) is one of the poorest and most fragile countries in the world\. As a landlocked
country bordered by unstable neighbors, it has a long history of violence and conflict\. With a Gross National Income
(GNI) per capita of US$581 in 2014, it ranked 187th out of 188th in the 2014 UN Human Development Index\. Since
early 2013, CAR has experienced a massive political-security crisis, creating unprecedented humanitarian needs\. The
conflict has had a negative effect on the fundamental underpinnings of society in the country, including the collapse
of the economy, the erosion of the stateâs capacity to reach and care for the population, and large-scale forced
displacement\.
2\. The challenges faced by CAR are long-standing, and conflict and political violence predate the 2013 crisis\. The crisis
is believed to be a result of long-lasting, structural fragility fueled by inadequate public sector governance and
dysfunctional and weak institutions\.1 In 2015, the World Bank Group (WBG) and other donors prepared a Fragility
Assessment of CAR, which concluded six drivers of conflict and fragility to explain how the crisis developed a cyclical
aspect: (i) a lack of social cohesion at every level of society; (ii) political power concentrated in a very small elite with
very little legitimacy; (iii) social and regional disparities between Bangui, the capital, and the periphery and between
the East and the rest of the country; (iv) elite capture of scarce natural resources; (v) imputing and lack of prosecution
of criminals; and (vi) a lasting state of insecurity\.2 The 2013 crisis was unprecedented in scale and had a particularly
devastating impact, as half of the countryâs GDP was lost\.3 Over 20 percent of the countryâs population was displaced
and 2\.7 million, over half of the population, needed humanitarian support\.4
3\. The crisis prompted a large-scale international response\. Peacekeeping interventions followed by the African Union
(AU), France, the European Union (EU) and the United Nations (UN) forces as well as emergency relief by UN agencies
and non-governmental organizations (NGOs)\. As the crisis deepened, the country descended into localized violence
based on ethnic-religious lines\. The need to reinforce peacekeeping led to the 2014 UN Security Council Resolution
2149, which authorized the deployment of a 12,000-men strong UN peacekeeping force, known as the UN
Multidimensional Integrated Stabilization Mission in the Central African Republic (MINUSCA), which replaced the
former African Union peacekeeping mission (formerly MISCA) in September 2014\.
4\. National elections were held in February 2016, but challenges remain, and the conflict is not considered to be
over\. The situation has continued to deteriorate with a rise in violence and fragmentation of armed groups in parts
of the country\. At the time the project was prepared, there seemed to be clear consensus among local authorities
about the priorities for the country: peace, reconciliation, security, followed by good governance, the provision of
basic services, and economic development\.5
1 Systematic Country Diagnostic (SCD) for the Central African Republic, Report No\. 125268-CF, June 19, 2019
2 Ibid\.
3 Ibid\.
4 Local Connectivity Emergency Project, Project Paper, Report No\. PP1759, March 2016
5 SCD, June 2019
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The World Bank
Local Connectivity Emergency Project (P157923)
5\. The World Bank (WB) was one of the main development partners to reengage\. The intervention was well-aligned
to the main objectives of the WB\. The WBâs span of engagement included the CAR First State Consolidation
Development Program (DPF, P160123), the CAR Policy Notes (P157806), the CAR Recovery and Peacebuilding
Assessment (P160202), and the Turn Around Facility which led to the US$2 billion pledge in Brussels in November
2016\. As elaborated in the Country Engagement Note for the CAR FY 2016-20176, the priorities were to (i) restore
core public sector institutions; (ii) provide basic support to livelihoods; and (iii) enhance basic social service delivery\.
The operation was also aligned to recent WB analytical underpinning and strategies in Fragile, Conflict, and Violence
(FCV) countries, notably the 2011 World Development Report on Conflict Security and Development\. The operational
implications included a focus on deepening partnerships and plans for enhanced implementation of the UN-World
Bank Partnership Agreements\.
6\. The State- and Peace-Building Fund (SPF) Trust Fund (TF) was able to quickly mobilize financing for this critical
operation for rapid infrastructure reconstruction in the CAR\. The multi-donor TF was created in 2008 to finance
innovative approaches to state and peacebuilding in regions affected by FCV\. It supports measures to improve
governance, institutional performance, and reconstruction and development in countries emerging from, in, or at
risk of sliding into crisis or arrears\. In particular, the TF supports pilot innovative initiatives that address the challenges
of fragility and create a foothold for wider development involvement\. The SPF remains an important part of the WBâs
broader efforts to address the drivers and impacts of FCV, and to contribute ultimately to peace, stability, and
prosperity\. The project was processed under WB emergency procedures given the urgency of the needs\.
7\. At the time the project was prepared, the infrastructure deficit in CAR was enormous, particularly its road
network\. Although the road network formed the backbone of the transport system in CAR, it remained
underdeveloped and in poor condition\. Road density was low at only 1\.5km per 100km2 compared to an average of
15km per 100km2 for Sub-Saharan Africa\.7 Transit times remain high and many roads are only accessible for some
months of the year\. Many communities were left isolated, exacerbated by the rainy season due to damaged and
flooded roads and bridges\.
1\.2 Theory of Change (Causal Chain)
8\. The underlying logic of the proposed emergency intervention was clear\. The project was intended to ensure basic
transport connectivity between poorly connected areas in districts situated in the lagging region of the Northeast of
the country, which would contribute to peacebuilding and development efforts\. The project aims to reopen the
section of the National Road No\. 8 (Route Nationale No\. 8, RN8) between the city of Kaga-Bandoro to the Northeast
city of Ndélé, a gravel/earth road section of about 333km long\. RN8 was prioritized and selected as the main
intervention of the project, and is the lifeline that runs through the Northeast of the country, from Sibut via Kaga-
Bandoro, Ndélé and Birao to the Sudanese border\. It has a high symbolic value as it reconnects the capital Bangui to
the marginalized Northeast, a hotspot following the 2013 rebellion\.
6 Country Engagement Note for the CAR FY 2016-2017, Report No\. 96209-CF, July 13, 2015
7 Project Paper, March 2016
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Local Connectivity Emergency Project (P157923)
9\. The rehabilitation of RN8 enables the isolated rural populations of Northeast CAR to be physically connected to the
countryâs other urban centers, particularly the capital Bangui\. This would help to (i) revitalize the local economy by
providing temporary employment and related cash transfers; (ii) facilitate the movement of goods and internal trade;
(iii) make local governance more inclusive by engaging stakeholders and local communities in maintenance; (iv)
redeployment of state authority through civil servants\.
10\. The intervention focuses on tangible outputs (i\.e\. improvement of roads, bridges, drainage etc\.) using Labor-
Intensive Public Works (LIPW)8 where feasible\. This approach goes beyond infrastructure-building, to promote social
cohesion and economic inclusion of the vulnerable populations, while fostering community ownership and reviving
territorial connectivity along a humanitarian corridor\.
8Labor-Intensive Public Works (LIPW) tasks include clearing brush, manually opening diches, curing channels, and dealing with certain critical
points as they arise\.
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The World Bank
Local Connectivity Emergency Project (P157923)
1\.3 Project Development Objectives (PDOs)
11\. The Project Development Objective (PDO), as stated in the Grant Agreement, is to reconnect the rural population of
the Northeast part of the Central African Republic to urban centers and local markets by rehabilitating the Kaga-
Bandoro â Mbrès â Bamingui â Ndélé road\.
1\.4 Key Expected Outcomes and Outcome Indicators
12\. The PDO indicators were as follows:
⢠Number of direct beneficiaries (including share of women) provided with an all-season access to the
Kaga-Bandoro â Mbrès â Bamingui â Ndélé road within a 2 km range under the project;
⢠Average daily traffic (all types of vehicle included); and
⢠Number of man-days created through Labor Intensive Public Works activities (including share of man-
days created for women)\.
13\. Main beneficiaries\. The main intended beneficiaries were the villages along the Kaga-Bandoro â Mbrès â Bamingui
â Ndélé road\. Reopening the road was expected to benefit 74 villages, accounting for more than 37,000 people and
the recovery of traffic along the road\. The population would also benefit from the temporary employment generated
through the LIPW and light maintenance, helping to revitalize the local economy\. The population would benefit
directly from increased state presence and supervision through the redeployment of the Ministry of Public Works
(Ministère des Travaux Publics, MINTP) civil servants in Kaga-Bandoro and Ndélé\. Furthermore, the reopening of this
road, RN8, a commercial road linking Bangui to the border with Sudan, was of strategic importance for MINUSCA
and was expected to also contribute to improving security along the road and fostering domestic and foreign trade
along the corridor\.
1\.5 Components
14\. The US$4\.9 million Local Connectivity Emergency Project (LCEP) consisted of four components:
a\. Component 1: Drainage Improvement (US$ 2\.8 million)\. This component finances the improvement of
drainage, road signaling, and rain barriers along the Kaga-Bandoro â Mbrès â Bamingui â Ndélé road (333
km), including (a) the rehabilitation and construction of bridges, and box and pipe culverts; (b) the
construction of ditches; (c) the provision and installation of rain barriers; (d) the provision and installation of
road signaling through LIPW\. This projectâs main activity and accounting for 51 percent of project costs, this
component finances the construction of a new metal bridge over the Bamingui River to allow the crossing of
the river during all seasons\.
b\. Component 2: Road Protection and Maintenance (US$0\.5 million)\. This component includes the
management of rain barriers, and the setting of light maintenance systems involving communities
(âcantonnageâ?) to ensure the protection and maintenance of the full length of road (333 km) during project
implementation\.
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The World Bank
Local Connectivity Emergency Project (P157923)
i\. Sub-Component 2\.1: Management of Rain Barriers (US$0\.15 million)\. This sub-component finances
the management of 14 newly-installed rain barriers (one every 20-25km), provided and installed
under Component 1, for the protection of the road\. The activities will contribute to restoring the
national operating system of rain barriers, by (a) recruiting and training local agents; (b) restoring
supervision from the MINTP at the local and national level; (c) setting a payment system
ii\. Sub-Component 2\.2: Light Maintenance Systems (US$0\.35 million)\. This sub-component finances
the implementation of a light maintenance system on the full length of the road (333 km)\. This
system will allow the day-to-day local maintenance of the road for the duration of the project and
progressively following road rehabilitation\. The system would be composed of segments of 20-25
km, each managed by a team composed of a chief cantonnier whom would manage 10 cantonniers\.
It would include setting up a payment system and recruiting, training, and compensating local
workers\. Local maintenance committees will be set up and trained in order to encourage the
sustainment of the light maintenance system, which will be handed over to the MINTP for
supervision and payment once the project ends\.
c\. Component 3: Institutional Strengthening and Capacity Building (US$0\.4 million)\. This component focuses
on carrying out a program of activities aimed at redeploying the Chefs de Services Préfectoraux to ensure
proper supervision and monitoring of the project, including the rehabilitation and reconstruction of offices
and supervision-related training for the Chefs de Service, and carrying out studies and workshops to identify
lessons learned from project-related activities and assess the project impact\.
i\. Sub-Component 3\.1: Redeployment of the Chefs de Service Préfectoral of the MINTP in the sous-
prefectures (US$0\.3 million)\. This sub-component finances (a) the rehabilitation and re-equipment
of MINTP offices in the sous-préfectures of Kaga-Bandoro and Ndélé; (b) job-related expenses
(excluding salaries and compensations) for the Chefs de Service who will be in charge of the
monitoring of the project; (c) the training of the Chefs de Service in order to be able to conduct
proper supervision of the project\.
ii\. Sub-Component 3\.2 Lessons Learned (US$0\.1 million)\. This sub-component will finance a study and
a workshop for stakeholders, building on lessons learned from the project and other similar
initiatives\. A baseline and impact study, taking into account the indicators of the project and the
impact on economic activity once the project is completed will also be financed\.
d\. Component 4: Project Management and Contingency Fund (US$1\.2 million)\. This component will finance
the direct and indirect costs necessary for the implementation of the project\. The Fiduciary Principles Accord
(FPA) provides 7 percent for indirect cost\. Direct costs related to project implementation by United Nations
Office for Project Services (UNOPS) will be financed under this component\. Project management will also (a)
include the hiring of a social specialist and a community facilitator to ensure the project implementation is
well coordinated with local authorities; (b) a rapid development assessment at the community level to gather
necessary data for successful project implementation; (c) inclusive engagement with local stakeholders and
setting up a Grievance Redress Mechanism (GRM); (d) the provision of contingency funds to cope with
unpredictable challenges during project implementation (US$0\.5 million)\.
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Local Connectivity Emergency Project (P157923)
15\. Initial project costs and project costs at completion are included in Annex 2\.
1\.6 Other Significant Changes
16\. Restructuring\. A Level 2 restructuring was approved on January 16, 2018\. The restructuring was intended to
reallocate costs to cover the additional costs involved in the construction of the Bamingui Bridge, the main activity
under the project (see Annex 2)\. It did not affect the theory of change for the project nor the originally expected
outcomes\.
2\. OUTCOME
Assessment of Achievement of Each Objective/Outcome
2\.1 Relevance of PDOs
Rating: High
17\. At the time when the operation closed, the development objectives remained consistent with the Bankâs strategy\.
The Country Partnership Framework (CPF), currently under preparation, is based on the major findings of the
Systematic Country Diagnostic (SCD) published in June 2019\. The CAR SCD concludes that improved mobility is a
critical aspect of an enabling environment for service delivery and income generation, whilst also helping to reduce
the rural-urban divide that might otherwise emerge when state presence is limited to mostly urban areas due to
security concerns\. To address the low levels of security, emergency investments in road corridors (for example,
through labor-intensive programs) is specifically mentioned\. Moreover, while upsurges of violence and instability can
be expected, creating an accountable state presence across the territory continues to be critical to addressing spatially
inequitable service delivery\. In this regard, the operation continues to be highly relevant as it sought to address all
three binding constraints defined in the SCD: (i) low levels of security; (ii) grievances and spatially inequitable service
delivery; and (iii) inadequate growth and job creation\. To put CAR in a trajectory towards poverty reduction and
growth, the need to address the countryâs structural challenges including regional imbalances, weak institutions, and
lack of state presence outside the capital remains highly relevant\.
18\. The project remains fully aligned with the Governmentâs Plan for Recovery and Peace-Building (Plan National de
Relèvement et de Consolidation de la Paix en Centrafrique, RCPCA), which was enacted in late 2016, during project
implementation\. The RCPCA identified the widening gap between the elite and the rest of the population, and the
total neglect of large parts of the rural population, as root causes of the crisis\. It emphasized the need to improve
road infrastructures across the country especially in rural areas\. The project remains relevant as it helped to open
remote areas and foster access to market and trade\. CARâs post-crisis transportation policy also outlines the
importance of strengthening the capacity of sectoral institutions, especially outside the capital, and enhancing the
rural transportation network and services to open-up remote areas and promote national cohesion\.9
9 Rural Connectivity Project, Project Appraisal Document, Report No\. PAD2199, June 2017
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19\. Recognizing the ongoing need to close the infrastructure gap, the operation paved the way for preparation of the
$45 million IDA-financed Rural Connectivity Project (RCP)\. This is testament to the relevance of the projectâs
objectives, design, and implementation arrangements\. Given the emergency nature of the intervention, RCP is
consolidating works in the same geographic area, while incorporating the lessons learned\. Reconnecting the isolated
Northeast region of the country by reopening a key section of the RN8 remains a key objective of the follow-on
operation, including the use of LIPW to create employment opportunities for vulnerable populations, which is
contributing to reconciliation and stabilization efforts\. An additional financing for RCP is currently under preparation\.
2\.2 Achievement of PDO (Efficacy)
Rating: Substantial
20\. The PDO of the project is to reconnect the rural population of the Northeast part of the Central African Republic to
urban centers and local markets by rehabilitating the Kaga-Bandoro â Mbrès â Bamingui â Ndélé road\. This
essentially entailed the physical improvements on the gravel/earth road to ensure connectivity, including improving
the drainage system, the installation and maintenance of road signage and rain barriers, and the installation of a light
maintenance system throughout the road section\. On the institutional and capacity building side, the project
rehabilitated and equipped the MINTPâs prefectural service chief offices in both Kaga-Bandoro and Ndélé to ensure
proper supervision\.
21\. By project closure, the objective of reopening the road had been met\. Two of the three PDO indicator target values
had been achieved:
a\. Direct project beneficiaries\. The number of targeted beneficiaries was met\. The reopening of the Kaga-
Bandoro â Ndélé road directly benefited 74 villages along the road, accounting for more than 37,000 people\.
The works have improved the traffic conditions\. Some parts of the road still do not have all-weather access
as mechanized works were not completed on the entire stretch\. The main bottleneck on the road, Bamingui
Bridge, was successfully constructed\.
b\. Average daily traffic (vehicles per day)\. The number of vehicles per day recorded at project closure was 20
vehicles, well below the target of 120\. Although it did not meet the intended target, there is a significant
improvement from the baseline of 3 vehicles\. Security conditions in the region is a major factor for the limited
number of vehicles travelling on the corridor\. Generally, vehicle ownership in CAR remains very low and
consists primarily of intermediate means of transport (bicycles, animal carts, motorcycles), especially in
remote and isolated areas\. The number of registered vehicles and transport permits and overall traffic levels
have declined dramatically because of looting and insecurity\. This has discouraged transport firms from
operating in CAR\. In addition, overloading of vehicles has increased\. The benefits of the passable road may
take some time to materialize in view of the limited number of transport vehicles and high levels of insecurity
in the project area\. This indicator also highlights the difficulty in setting realistic baselines and forecasts in
such FCV environments with crucial lack of data and connectivity, and high insecurity\.
c\. Number of man-days created through the Labor-Intensive Public Works (including share of man-days
created for women)\. At project closure, 100,830 man-days had been recorded, well exceeding the target of
75,000\. However, the sub-indicator on the share of man-days created for women was only 27 percent, and
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below the intended target of 33 percent, despite measures taken such as sensitization and awareness raising,
and putting in place lotteries for employment, etc\. Workers employed under the project to conduct LIPW
have been empowered through employment generated by the project\. More than 50 percent of the LIPW
beneficiaries surveyed attested that these revenues have enabled them to obtain basic necessities
(mattresses, beds, cooking utensils, clothes, radios, and telephones); 26 percent said they used it to build a
decent home; 19 percent to provide health care for their families; 16 percent for food; and 13 percent for the
childâs schooling\. 35 percent of beneficiaries surveyed invested in agricultural activities (e\.g\. acquisition of
seeds and other inputs) and 32 percent have used it to purchase livestock\.10
22\. Beyond the chosen project indicators, the following are illustrative outputs that bear testimony to the projectâs
achievements with a limited amount of funds (photographs are included in Annex 4):
a\. Construction of Bamingui Bridge: The main achievement of the project was the construction of a 45-meter
and 4\.20-meter wide bridge over the Bamingui River\. The bridge, which was completed in May 2019, links the
locality of Bamingui to Ndélé, an axis which is heavily used by MINUSCA, merchants from Sudan, South Sudan
and Bangui\. Before the project, it was identified as a major bottleneck as the road had been almost impassable
during the rainy season because of the rising waters from the Bamingui River\. The bridge was constructed
using a participatory and inclusive approach through LIPW, mobilizing about 1,200 people and creating 11,000
man-days of employment over 9 months\.11 This approach has revitalized the local economy and ensured the
construction has the full support of the surrounding communities\. One beneficiary woman who worked on-
site commented\. âWhen it rains, the old bridge is flooded\. This makes it invisible and therefore impractical\.
The construction of the bridge has really boosted the economy, since the work began, Iâm selling better, and
my business is doing well\.â?12 The completion of the bridge is a notable achievement particularly given the
challenges faced around the precarious security conditions in the area, the low capacity of enterprises in the
area, and the excessive rain which disrupted works during the construction period\. Photographs of the bridge
are included in Annex 4\.
b\. Rehabilitation of Bridges and Culverts: Priority was given to critical points along the 333km road section\. Out
of 78 structures identified by UNOPS for potential intervention, a total of 81 have been
constructed/rehabilitated under the project\.
c\. Supply and Installation of Rain Barriers and Road Signs: The project built and laid 12 barriers along the road,
out of the 14 initially planned\. In addition, UNOPS installed 56 road signs in strategic points\. These were made
according to safety and traffic code standards enforced in CAR\.
d\. Rain Barrier Management: For the management of the 12 installed rain barriers under the project, 12
managers were recruited and trained (3 women and 9 men)\. Given the objective is to re-establish the national
system of operating rain barriers, MINTP will take over supervision following project closure\. At the time of
project closure, 11 of the 12 barriers were functional; and 1 is occupied by armed groups\.
e\. Establishment of Community Maintenance System (âcantonnageâ?): The project set up 13 maintenance
teams, composed of 143 people, consisting of 159,660 man-days for light maintenance along the 333-km
road\.
10 Ibid\.
11 UNOPS, Rapport Narratif Final, September 30, 2019
12 Ibid\.
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f\. Institutional Strengthening of MINTP: Given responsibilities are handed over to MINTP following project
closure, it was necessary to rehabilitate and equip the offices of the prefectural services in Kaga-Bandoro and
Ndélé as well as strengthen the technical capacity\. Under the project, two offices were rehabilitated (see
photographs in Annex 4)\. They were equipped with adequate working equipment (computers, furniture,
office supplies, motorcycles, etc\.), however utilization of offices was low given security problems\. Four
training workshops for MINTP managers were held on (i) procurement; (ii) management of infrastructure
projects; (iii) management of safety, health, environment, and social aspects; and (iv) road maintenance\.
g\. The reopening of the road has stimulated activity along the road, including access to markets and other
social services\. In contrast to project initiation, when activity along the road was limited, according to data
collected at project closure, there are 12 markets on the road section, of which 9 are currently functional\. Of
the 49 schools along the road section, 44 are currently in operation, consisting of 88 school buildings and 177
classrooms, serving 16,053 pupils, 6,212 of which are girls\. 23 of the 26 health facilities are operational,
serving an average of 5,077 patients per month\.
23\. Despite the challenges faced, the project substantially achieved its overall outcome of reestablishing connectivity
with the Northeast region in an emergency context\. This was primarily achieved with the completion of the
construction of Bamingui Bridge, the projectâs main activity, and a critical point on the RN8 between Kaga-Bandoro
and Ndélé\. Looking forward and given the emergency nature of the intervention, the results achieved under the
project would need to be consolidated by follow-on operations to ensure the sustainability of investments and to
ensure all-weather access on the entire stretch of road\.
2\.3 Efficiency
Rating: Substantial
24\. No cost-benefit analysis or estimate of the economic rate of return was undertaken during preparation, given the
emergency nature of the project and the general lack of recent data for most of the territory\. The project design
was based on cost effectiveness, i\.e\. maximizing the Bankâs added value and minimizing costs without forfeiting the
quality of outputs\.
25\. From the outset, it was recognized that a business-as-usual approach would not work in the given context\. Private
companies possessing the necessary equipment, machinery and skills were hard to come by, and were unlikely to go
beyond the capital without security ensured, resulting in a high-risk premium\. This would impact value-for-money
and imply procurement challenges\. UNOPS was already engaged in the scale-up of activities in CAR, and had the
capacity and means to implement the project swiftly\. Overall project costs were not known as part of the works were
undertaken by MINUSCA through force account\. Therefore, standard models (e\.g\. Road Economic Decision (RED)
model) do not apply\.13 Moreover, as experienced under the LONDO Project (P152512), the use of labor-based method
was proven to be a cost-effective alternative to equipment-based methods for road maintenance\.
13 Project Paper, March 2016
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26\. The project faced some shortcomings during project implementation due to competing priorities of MINUSCA and
the worsening security situation\. Mechanized works under the project were to be carried out by MINUSCA, however
they were hampered due to the low quality of work and lack of alignment with MINUSCAâs schedule and itinerary\.
MINUSCA was unable to complete the full 333 km because of the worsening security situation and diversion of
resources, and therefore UNOPS had to find an alternative solution to complete the works\. Since mechanized works
needed to be done upstream, this impacted other project activities such as the LIPW and the installation of the rain
barriers\. The completion of the construction of Bamingui Bridge was prioritized\.
27\. The change in the design of the Bamingui Bridge was the primary reason for the escalation in project costs\.
Following the completion of technical studies (hydraulic, geotechnical, topographical, structural, environmental, and
economic), the design of the bridge was amended from 23m to 45m in length and included a pedestrian walkway\.
This new and more robust design of the bridge was validated by the projectâs technical committee\. The financial
impact was an increase of $400,000 (US$1\.6 million versus US$1\.2 million)\. A project restructuring was undertaken
so primarily the projectâs budget contingencies could be used to cover the additional costs\.
28\. The overall rationale for the project of improving connectivity and development in the region remains valid\. At the
time of project closure, traffic remains extremely limited on the road\. However, as mentioned earlier, activity is
picking up along the road including the operation of markets, schools, and health facilities\. The main socio-economic
benefits include reduced transport costs, improved access to services such as schools, markets, and health clinics,
employment creation through construction activities, and greater state presence\. Despite the lack of data, anecdotal
evidence collected through interviews with beneficiaries point to the broader social and economic impacts of the
project, which go beyond the individual to stimulate the recovery of communities\. According to one beneficiary
interviewed, âWe the people of Bamingui had never seen such a project in the area\. The bridge will really benefit the
whole community\.â?14 In addition, the project enabled greater state presence thanks to the rehabilitation and the re-
equipment of the MINTP offices in Kaga-Bandoro and Ndélé\.
29\. The substantial rating is justified as even with a relatively small amount ($4\.9 million), the project was able to have
a large impact\. Despites its challenges, without the project it is likely the Northeast region would continue to be
isolated from the rest of the country\. The construction of Bamingui Bridge has transformed the region, and
improvements along the road has reduced travel times, benefiting approximately 37,000 beneficiaries\. Without the
project, it would have remained unpassable during part of the year particularly during the rainy season\.
2\.4 Overall Outcome Rating
30\. The overall outcome is rated Moderately Satisfactory\. The project achieved substantial efficacy, substantial
efficiency, and remained highly relevant throughout its duration\.
14 UNOPS, Rapport Narratif Final, September 30, 2019
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2\.5 Other Outcomes and Impacts
31\. The LCEP supported the mobilization of additional funding and strengthened the dialogue with the Government
and donors\. The pilot led to the preparation of a larger project, the $45 million IDA-financed Rural Connectivity Project
(RCP)\. This project was designed to further strengthen the results achieved under the emergency grant in the
Northeast basin, and incorporate the lessons learned\. Replicable best practices and implementation arrangements
had been developed under the grant which facilitated preparation of the new operation\. The project served as a pilot
for other projects and reflects how operations should be envisioned in such contexts â simple design, flexible and
pragmatic execution, adaptable in high-risk environment, with a satisfactory result\. The team engaged on the project
were closely involved in the policy dialogue with the Government and contributed to the preparation of Development
Policy Financing (DPF), the SCD, CPF, and the RCPCA for CAR\. Moreover, the WB team has played a critical role as
convener in coordinating with other donors in the transport sector to ensure alignment and to develop a broader
road sector program for the country (under RCP)\. Sectoral engagement, implemented in parallel to the project,
complemented the project and contributed in further strengthening institutional capacity\.
32\. The LIPW has helped affected populations to reduce their vulnerability and contributed to the reconciliation
process\. Amid the crisis, the works was an effective way to stabilize critical areas by providing a source of
employment, where security and government presence was weak\. The public lottery method ensured equal
treatment with a view of empowering vulnerable groups\. Women were encouraged to submit their nominations\.
Although womenâs participation was generally low due to the scarcity of women working in infrastructure (27 percent
share of man-days created for women versus a target of 33 percent), opportunities were given to women to work on
sites, for example in food preparation, as part of the overall strategy to encourage womenâs involvement in the
project\.
33\. The project intervention area is highly exposed to Gender-Based Violence (GBV), and the project incorporated best
practices in implementation\. Due to the remoteness of the area and the general security context, there was already
a high incidence of GBV\. UNOPS, who was already well advanced on the matter, implemented specific provisions
based on their own internal practices and on the recommendations of the WBâs Good Practice Note for Addressing
GBV in Investment Projects Involving Major Civil Works (June 2018), as well as the CARâs legal framework, the national
strategy to combat GBV developed by the Ministry for the Promotion of Women, Family, and Protection of Children,
with the involvement of other departments such as the Ministries of Justice, Health, and Education, in partnership
with other UN agencies\. During implementation, attention was paid to both GBV and compliance with Occupational
Health and Safety, which was included in the subcontract provisions\. There were no incidents of GBV reported during
implementation of the project\.
34\. With a project component dedicated for institutional strengthening, the intervention has contributed to enhancing
the longer-term development of CARâs capacity and institutions\. Specifically, the rehabilitation and reequipment of
MINTP offices in Kaga-Bandoro and Ndélé, the training of the Chefs de Service, and the redeployment of MINTP staff
to conduct proper supervision of the project will enhance the Governmentâs ability to manage and supervise such
projects in the future\. In addition, UNOPSâ On-Track approach was executed during project implementation, whereby
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hands-on technical assistance and inclusion of the government counterpart were part of the execution and
monitoring of the project\. This would also ensure the sustainability of project investments\.
3\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
35\. The project was prepared under challenging circumstances amid civil unrest and growing tension\. The
project aimed to mitigate the geographic divide between the isolated Northeast part of CAR by reopening the
strategic RN8 between Kaga-Bandoro and Ndélé\. This was intended to prevent the de facto partition of the
country and to re-establish state presence and security, ultimately contributing to reconciliation and
stabilization efforts\. Humanitarian relief had been largely confined to stable areas, thereby reinforcing the
disparity\. The projectâs intervention area and targeted beneficiaries were therefore considered appropriate\.
36\. The team overcame multiple challenges during preparation\. The crisis and insecurity prevailing in the project
area meant there was a general lack of data obtained from the Government\. Key pieces of information, such
as an updated map of access constraints in the country, were obtained by expanding consultations to UN
agencies and NGOs\. A map of the project intervention is included in Annex 6\. Furthermore, the joint
WB/UNOPS/MINUSCA survey of the Kaga-Bandoro to Ndélé road during preparation15 allowed the team to fill
core gaps including the need for the construction of the Bamingui Bridge and the overall costing of the project\.
Partnerships and synergies between the Government, UNOPS, MINUSCA, and the World Bank were
formalized during the implementation through Memorandums of Understanding (MoUs)\.
37\. The lack of state presence shaped the projectâs design and activities\. At the time of preparation, many
regional representatives of the MINTP were based in Bangui due to security concerns as well as the lack of
proper facilities and equipment to work in the field\. This added to the challenge of supervising projects
financed by the Government in those regions\. This was the key rationale for the capacity building activities
financed under Component 3 of the project\.
38\. Given the low capacity of the Government, it was agreed to use the Fiduciary Principles Accord (FPA) which
enables a UN agency to implement the project on behalf of the Government\. Under the FPA, the WB
contracted UNOPS to implement the project according to UN fiduciary, procurement, and environmental and
social safeguards policies, as stipulated in the FPA\. UNOPS was selected as the implementer of the project due
to (i) the general lack of state presence in the targeted area; (ii) the availability of UN facilities and resources;
(iii) the capacity of UNOPS for rapid deployment in the area; (iv) UNOPSâ expertise in conflict areas and
infrastructure, as the UN agency mandated in this field of expertise\. Having UNOPS carry out these works was
beneficial also for security reasons because the road passes through territory under control of different armed
groups\. A MoU was signed between the Government, MINUSCA, and the WB on August 4, 2016\. This
arrangement was designed to enable UNOPS to leverage MINUSCAâs presence and security support to
implement the project in a highly volatile context\. MINUSCA would also undertake the mechanized works for
the project using their equipment\. MINUSCA was assessed as the most optimal and available option that could
15 The preparation mission took place from February 2 to 10, 2016\.
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provide a balance of expertise, machinery, and security necessary to carry out the force account works under
the projectâs budget constraints, and in an extremely volatile security environment of the project\. Reopening
the same road was also identified as a priority for MINUSCA following the 2016 rainy season\.
39\. Considering the urgent needs in CAR, the project was prepared under emergency procedures (Operational
Policy (OP) 2\.30 Development Cooperation and Conflict, OP 8\.00 Rapid Response to Crises and Emergencies,
and OP 10\.00 Paragraph 12 Situations of Urgent Need of Assistance\. From initiation to effectiveness, the
total project preparation time was only four months, and the first disbursement followed two months later\.
The project benefited from an expedited and simplified approval process which shortened the overall
preparation time\.
40\. Key lessons from other WB engagements in CAR were considered during preparation\. Given the successful
implementation of the LONDO Project, which provides temporary employment through LIPW throughout the
country, the project utilized the same approach\. This provided the opportunity to revive the local economy,
engage with local stakeholders, and foster community ownership\. The project also incorporated lessons from
existing WBG activities in CAR including the Emergency Public Services Response Project, the Emergency
Urban Infrastructure Project, and the CEMAC Transport and Transit Facilitation Project\.16
41\. The project was recognized as a high-risk intervention at the outset\. Three of the main risks identified at
preparation eventually materialized during implementation: (i) technical issues emerging from the
construction of Bamingui Bridge; (ii) stakeholder risk and the need to coordinate closely among civil and
military actors, notably with MINUSCA for the provision of military escort and mechanized works; and (iii) the
volatile security environment\.
42\. With these risks in mind, an appropriate set of stakeholders (WB, MINTP, MINUSCA, UNOPS) were engaged
during preparation and implementation of the project, underscoring the importance of collaboration in a
fluid environment\. The projectâs technical coordination and steering committees ensured information sharing
among the main actors and provided a platform for issues to be identified and resolved swiftly\. Following the
first MoU between the WB, MINUSCA, and the Government on August 4, 2016 to frame a common
understanding of the collaboration required during implementation, a second MoU was signed between
UNOPS and MINUSCA on December 22, 2016 to outline the technical description and quality of tasks to be
completed by each party\.
43\. During implementation the country experienced an upsurge in clashes between armed groups competing
for territory and access to resources\. Each episode of violence brought more casualties and displacement,
overstretching MINUSCAâs resources across the country, to the detriment of the project timeline and delivery\.
In practice, the MoU did not work well and MINUSCA was unable to fulfill its obligations\. The mechanized
works and the treatment of critical points undertaken by MINUSCA was incomplete and accounted for only
70 percent, or 230km of the road, with the quality standards below those agreed with UNOPS and referred to
in the MoU\. Furthermore, MINUSCA deviated from the agreed itinerary on RN8 and carried out works on the
16 Project Paper, March 2016
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Kaga-Bandoro-Balakete/Azene-Bamingui- Ndélé route, isolating the locality of Mbrès\. Given the security
situation, the costs of the mechanized works that was proposed by local companies to complete the works
significantly exceeded the available budget set aside for the work\. Given the burden fell on UNOPS, it was
decided to concentrate efforts on finalizing the major works (e\.g\. Bamingui Bridge and the two large concrete
box culverts in Mbrès) which would still achieve the project objective of restoring connectivity\. The rains have
also damaged sections of the road where there had been no mechanized works\. In view of the lack of financial
resources and the emergency nature of the interventions, this project will be followed by a consolidation
phase along the Kaga-Bandoro â Mbrès â Ndélé section under the currently ongoing WB Rural Connectivity
Project (P160500, RCP)\.
44\. High insecurity hindered project execution and results\. Dozens of armed groups operated in the Kaga
Bandoro â Ndélé, making works even more challenging, and prevented the full operation of the rain barriers
along the entire road\.17 For example, the construction of the large concrete box culverts in Mbrès involved
multiple unsuccessful call for tenders due to the deteriorating security situation in the work area\. The contract
was finally signed with a local company in June 2018 but works began only in December 2018\. The project
financed the rehabilitation and re-equipment of offices in both Kaga-Bandoro and Ndélé, and training on
maintenance and management of rain barriers\. However, the Chef de Service position in Kaga-Bandoro
remained vacant for extended periods of time, despite promises made by the Ministry, and the Ndélé position
was never filled\. Reports indicate armed groups have reportedly taken control of some offices\.18 These
examples highlight the unique challenges of operating in FCV\.
4\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
4\.1 Bank Performance
Rating: Satisfactory
45\. The Bank played a major role in facilitating preparation and recovery during the post-conflict transition\. The
preparation time of just four months from initiation to approval was highly compressed\. Despite the tight
timeframe, the quality at entry was considered adequate for an emergency operation with a focus on simple
design and objectives\. The Bank brought sound technical design and expertise and recognized the capacity
challenges on the ground, engaging an appropriate set of stakeholders\.
46\. Supervision was effectively undertaken from the World Bank side\. On average, two supervision missions
were undertaken a year\. The Aide Memoires and Implementation Status Reports (ISRs) present clear
recommendations for project implementation\. Task Team Leader (TTL) turn-over was low, with the same TTL
in charge for the project lifetime which helped ensure continuity, particularly as the UNOPS team leader in
CAR changed three times over the course of the project\. The Bank also took advantage to participate in
sessions of the steering committee when they coincided with the missions\.
17 UNOPS, Rapport Narratif Final, September 30, 2019
18 Ibid\.
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47\. Field visits remained a challenge as basic logistics and planning took a lot of coordination and planning with
UNOPS and MINUSCA\. Kaga-Bandoro and Birao are considered to be hotspots of violence\. Most areas require
the use of armed escorts, lodging on the MINUSCA base and the use of armored vehicles\. In addition, the
timing of field missions was almost always dependent on the UN and/or MINUSCA flight schedules and
availability, which changed frequently\. Supervision remains costly and challenging given the security
constraints\.
4\.2 Compliance Issues
48\. Environmental and social safeguards, and fiduciary responsibilities were transferred to UNOPS under the
FPA\. An Environmental and Social Impact Assessment (ESIA) and Environmental and Social Management Plan
(ESMP) and a Resettlement Action Plan (RAP) were prepared for the project\. A team of experts from MINTP
carried out monthly monitoring and missions to ensure mitigation measures were effectively being
implemented according to the reports\. General reporting, including on environmental/social safeguards
compliance, was generally satisfactory, and provided essential required information, although it was succinct
and would have benefited from being more exhaustive\.
49\. The compensation of Project-Affected Persons (PAPs) took time to implement, particularly as a re-
evaluation of the PAPs was carried out to take into account the new design of Bamingui Bridge\. The span
increased from 22m to 45m, generating new loss of assets by the local populations\. The ESMP and RAP were
updated to reflect this change\. Financing for compensation, to be borne by the Government, finally came from
the Fonds dâEntretien Routier (FER), the road fund\.
50\. To facilitate implementation, the project put in place a robust communication and community mobilization
plan\. Information and community awareness raising covered complaint mechanisms, dangers on the road,
HIV/AIDS prevention, sensitization on the need to install rain barriers and prevent the deterioration of the
road, and explanation on the criteria for selection for the LIPW and the equipment made available\. These
mechanisms helped to ensure trust was built among community and between the community and project
stakeholders\. (See photographs in Annex 4)\.
4\.3 Quality of Monitoring & Evaluation (M&E)
M&E Rating: Modest
51\. Design\. The PDO was too ambitious in its wording: âreconnect the rural population of the Northeast part of
the Central African Republic to urban centers and local marketsâ?\. The project seemed to concentrate on
connectivity to urban areas even though one of the PDO objectives was to also increase connectivity to
markets\. The PDO indicators were not well-developed vis-a-vis the objectives as there were no PDO indicators
for market connectivity\. In addition, the PDO was not constructed well enough to incorporate the institutional
support and capacity building aspect of the project\.
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52\. Implementation\. One of the main weaknesses in the M&E system was the challenging circumstances to collect
data on-the-ground\. As noted during preparation, the main risk identified for the M&E framework was limited
resources as data needed to be collected in the field and would require monitoring on a large scale of territory
(e\.g\. number of beneficiaries)\. The security situation in the project area limited the collection of detailed
information such as the socio-economic impacts of the project and indicators were not reported on regularly\.
53\. Utilization\. The project was not able to demonstrate improved market connectivity, access to social services,
or the capacity building activities as this information was not captured in the PDO indicators\. Assessment of
the project relies heavily on limited data, physical completion of works (e\.g\. the bridge) and anecdotal
evidence, given the shortcomings in the M&E framework\. In addition, there was no comprehensive post-
project impact assessment\. The project would have benefited from more systematic beneficiary surveys to
capture the wider socio-economic benefits, as well as the use of remote monitoring tools\.
4\.3 Risk to Development Outcome
54\. The overall risk to development outcomes is rated High\. The project closed against a backdrop of sporadic
and uneven improvement in the security situation in the country\. The recurrence of large-scale outbreaks of
violence, if this were to happen, are likely to affect project investments\. About 75 percent of the countryâs
territory remain under control of rebel groups\. The social contract remains weak with no or little state
presence in a large part of the country\. Although the project funded capacity building activities, attacks are
constantly being reported, included some targeting civil servants, presenting problems for staff retention\. The
probability that results will be maintained also depend on the ability of the Government to maintain the road
and sustain LIPW\. The lack of history of maintenance, the limited devoted funding, and a constrained macro-
economic context presents an overall risk\. However, through its engagement in the DPF and the RCP (which
is preparing an additional financing), the WB is supporting CAR to improve its maintenance practices\.
Improved maintenance would be required to fully support the continued flow of benefits from the
rehabilitated roads in the longer term\. The project was not necessarily designed for sustainability of
outcomes, given the emergency nature and the rapid response intended, but the project sought to assure it,
where possible, by emphasizing a hands-on approach and technical assistance for counterparts\.
5\. LESSONS LEARNED AND RECOMMENDATIONS
55\. A pilot project, such as this one, is an effective method to scale up small, targeted investments to
incrementally build a larger portfolio\. This $4\.9 million investment led to the preparation of the $45 million
IDA-financed RCP\. The project design was developed based on this pilot, and the same team was involved in
the preparation both on the government and WB side, therefore leveraging efficient use of resources and
carrying forth institutional knowledge and key lessons learned\.
56\. A simple, flexible, and focused project design works best in fragile and evolving contexts\. In an emergency
context with low capacity in-country, even simple, concrete interventions can have a substantial impact on
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the population\. The project also benefited from the shortened processing timeline and simplified procedures,
with overall positive development outcomes, despite the small dollar amount\. Flexible project arrangements
are important in achieving results\. It is with this modular perspective in mind that the new RCP was designed
to include two different geographies, involving both UNOPS and the Government as implementing partners\.
The use of contingency funds to account of the design changes on the Bamingui Bridge highlights the
importance of allocating and maintaining a contingency budget from the beginning, particularly for projects
operating in volatile and data-scarce contexts such as CAR\.
57\. Collaboration across Global Practices (GPs) and institutions is important, particularly early in the
preparation and design stages\. Important cross-GP collaboration and field missions during preparation
allowed the team to (i) tailor interventions based on specific criteria (e\.g\. security situation and prospects,
accessibility to sites, costing within budget); (ii) find, link and select key partners for the project (MINTP,
MINUSCA, UNOPS), and (iii) address the data gap with consultations with UN agencies and NGOs, as well as
the carrying out of a field mission facilitated by UN peacekeeping logistics and security\. On this project, the
Governance and Social, Urban, Rural and Resilience (SURR) GPs as well as the FCV Cross-Cutting Solutions
Areas added value in both the design and the implementation of the project, thanks to their respective
knowledge and lessons learnt of (i) CAR environment of Civil Society Organizations/NGOs; (ii) the LONDO
Project (including LIPW); and (iii) UN system, UN Department of Peacekeeping Operations (DPKO), and
security requirements to operate in such environment\.
58\. Institutional strengthening and capacity building take time to realize benefits\. The project had a capacity
building component, yet for the initial investment to pay off requires long-term engagement to ensure that
institutional support is secured over more than one short project lifecycle\. The RCP provides a good platform
to continue institutional strengthening and building the capacity with the same set of stakeholders\. There is
a balance between realization of activities in a short amount of time and investment on capacity building for
sustainability\. Keeping this in mind, projects should consider how capacity can be transferred to national
authorities following closing so that governments can decrease reliance on external assistance over time\. This
would also ensure greater ownership within the government\.
59\. The Bank has an important role to play as a convener and in coordinating donor efforts\. This is key
particularly when a large amount of funds is flowing in from multiple donors as the country emerges from
conflict\. The Bank is playing a vital role in CAR in the transport sector\. At a strategic level, the WB continues
to participate in donorâs conferences (e\.g\. the Brussels Conference which took place on November 17, 2016
US$2\.06 billion was pledged for CAR)\. At an operational level, the follow-on RCP is financing a study to develop
a road sector investment program which will be relevant for other donors in the sector to ensure
complementary and efficiency in investments\.
60\. The security constraints in FCV settings require innovation in monitoring and supervision, as well as during
the design stage\. When circumstances make it difficult for TTLs to undertake supervision in certain areas,
other WB projects have contracted out third-party monitoring firms, however this remains a very costly
option\. Given the challenges of organizing and conducting field visits, teams operating in fragile and conflict
settings can consider innovations such as the WBâs Geo-Enabling Initiative for Monitoring and Supervision
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(GEMS) and integrating its remote supervision capacities into the M&E framework\. This would also help
ensure improvement of M&E usefulness and accuracy\. It could also help to administer perception/beneficiary
surveys and help capture results on intangible outcomes such as social cohesion\. In addition, the absence of
project team staff in-country also presented challenges both in high supervision costs and monitoring of
project progress\. Recognizing the constraints, the transport team has since filled a full-time staff member
based in Bangui\. Moreover, security problems hampered the road project and therefore needs to be
thoroughly assessed and considered during project design\. Most of the failures in this project result from the
security conditions which did not allow smooth project implementation or the attainment of the objectives in
terms of traffic, state redeployment, and road rehabilitation\.
61\. In a difficult and unstable environment and context, road infrastructure projects should focus on essential
works including spot improvement or building critical bridges to restore connectivity, instead of trying to
reopen/rehabilitate a maximum road length\. The main achievement of this project was the construction of
Bamingui Bridge\. The target of improving 333 km of road was not reached\. This is not the only road project
which at the end shifted from road spot improvement to bridge construction because of difficult
circumstances\. In addition, bridges are considered more sustainable since they often require less frequent
maintenance compared to earth roads\.
62\. A stronger partnership with peacekeeping forces (e\.g\. MINUSCA) is needed to fully embed them in the
project design\. The WB did not have enough leverage to alter MINUSCAâs itinerary and work program to fulfill
its obligations as agreed during preparation\. MINUSCAâs responsibilities, as spelled out in the MoU, was not
fully fulfilled\. This had a detrimental impact on the project and required alternative solutions to complete the
project objectives\. Despite the signed MoU and several meetings with high-level officers, including the Chief
Commander, it was difficult to gain leverage for project implementation as the incentives and strategic
priorities of MINUSCA were not aligned perfectly with the WB\. The lack of institutional knowledge and
leverage with the DPKO refrained the implementation team in being more effective\.
\.
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Local connectivity emergency project (P157923)
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS
A\. RESULTS INDICATORS
A\.1 PDO Indicators
Objective/Outcome: The PDO is to reconnect the population of the Northeast CAR to urban centers and local markets by rehabilitating the Kaga-Bandoro
âMbrès â Bamingui â Ndélé road\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Direct project beneficiaries Number 0\.00 37000\.00 37000\.00 37000\.00
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Female beneficiaries Percentage 0\.00 50\.00 50\.00 50\.00
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
The target was fully achieved\.
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Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Average daily traffic (all types Number 3\.00 120\.00 120\.00 20\.00
of vehicle included) (vehicle per
day) 01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
The target was not fully achieved\. Security conditions in the region is a major factor for the limited number of vehicles travelling on the corridor\. Generally,
vehicle ownership in CAR remains very low and consists primarily of intermediate means of transport (bicycles, animal carts, motorcycles), especially in
remote and isolated areas\. The number of registered vehicles and transport permits and overall traffic levels have declined dramatically because of looting
and insecurity\. This has discouraged transport firms from operating in CAR\. In addition, overloading of vehicles has increased\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of man-days created Number 0\.00 75000\.00 75000\.00 100830\.00
through the Labor Intensive
Public Works activities 01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
(including share of man-days
created for women)
Share of man-days created for Percentage 0\.00 33\.00 33\.00 27\.00
women
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
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The target was exceeded\. However, the sub-indicator for share of man-days created for women was only partially achieved despite measures taken
including awareness raising, sensitization, and lotteries for employment\.
A\.2 Intermediate Results Indicators
Component: Component 1: Drainage Improvement
Component 2: Road Protection and Maintenance
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of bridges Number 0\.00 13\.00 13\.00 12\.00
rehabilitated
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
The target was largely met\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of bridges constructed Number 0\.00 1\.00 1\.00 1\.00
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
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The target was fully achieved\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of culverts Number 0\.00 49\.00 49\.00 25\.00
rehabilitated
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
The target was only partially met (~50%) due to the diversion of MINUSCA's resources and the prioritization of the construction of Bamingui Bridge\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of culverts Number 0\.00 57\.00 57\.00 57\.00
constructed
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
The target was fully achieved\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
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Number of ditches Meter(m) 0\.00 200000\.00 200000\.00 63000\.00
constructed
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
The target was only partially met due to the diversion of MINUSCA's resources and the prioritization of the construction of Bamingui Bridge\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of rain barriers Number 0\.00 14\.00 14\.00 12\.00
constructed
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
The target was largely achieved\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of functioning rain Number 0\.00 14\.00 14\.00 12\.00
barriers
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
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The target was largely achieved\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of kilometers of road Kilometers 0\.00 333\.00 333\.00 333\.00
maintained under the project
01-Mar-2016 01-Mar-2016 01-Mar-2016 12-Oct-2018
Comments (achievements against targets):
The target was essentially met as even though only 234km of the road was subject to mechanized works (due to the diversion of MINUSCA's resources), the
full length of the road (333km) was manually maintained by UNOPS and community-based maintenance schemes\.
Component: Component 3: Institutional Strengthening and Capacity Building
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of MINTP offices Number 0\.00 2\.00 2\.00 2\.00
rehabilitated and re-equipped
01-Mar-2016 01-Mar-2016 30-Sep-2019 12-Oct-2018
Comments (achievements against targets):
The target was fully met\.
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Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of technical assistance Number 0\.00 4\.00 4\.00 4\.00
workshops delivered to MINTP
01-Mar-2016 01-Mar-2016 30-Sep-2019 12-Oct-2018
Comments (achievements against targets):
The target was fully achieved\.
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B\. ORGANIZATION OF THE ASSESSMENT OF THE PDO
Objective/Outcome 1 The PDO is to reconnect the population of the Northeast CAR to urban centers and local markets by rehabilitating the
Kaga-Bandoro â Mbrès â Bamingui â Ndélé road\.
1\. Direct project beneficiaries (including women)
2\. Average daily traffic
Outcome Indicators
3\. Number of man-days created through the Labor-Intensive Public
Works activities (including share of man-days for women)
1\. Number of bridges rehabilitated
2\. Number of bridges constructed
3\. Number of culverts rehabilitated
4\. Number of culverts constructed
5\. Number of ditches constructed
Intermediate Results Indicators
6\. Number of rain barriers constructed
7\. Number of functioning rain barriers
8\. Number of km of road maintained under the project
9\. Number of MINTP offices rehabilitated and re-equipped
10\. Number of technical assistance workshops delivered to MINTP
Component 1 and 2:
1\. Km of roads rehabilitated/maintained
2\. Number of bridges constructed/rehabilitated
Key Outputs by Component 3\. Number of culverts, ditches, rain barriers constructed/rehabilitated
(linked to the achievement of the Objective/Outcome 1) 4\. Number of man-days created (temporary jobs)
Component 3:
5\. Number of MINTP offices rehabilitated and re-equipped
6\. Number of workshops delivered to MINTP
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\.
ANNEX 2\. PROJECT COST BY COMPONENT
Amount at Approval Actual at Project Closing
Component Name
(US$M) (US$M)
Component 1: Drainage Improvement 2\.80 3\.37
Component 2: Road Protection and
0\.50 0\.46
Maintenance
Component 3: Institutional
0\.40 0\.37
Strengthening and Capacity Building
Project Management and Contingency
0\.86 0\.36
Fund
UNOPS General Management Support 0\.34 0\.34
Total Project Cost 4\.90 4\.90
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ANNEX 3\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
UNOPS: A draft of the ICR was shared with UNOPS\. Minor comments were provided in track changes and were
incorporated in the document\.
Government: A draft of the ICR was shared with Government\. The following comments were received:
Bonjour Madame le Chargé de Projet,
Nous avons bien pris connaissance du rapport d'achèvement du Projet d'Urgence de Connectivité Locale
et nous apprécions hautement la qualité du rapport qui retrace les points forts et les faibles du dispositif
ayant permis le déploiement des activités programmées\. Nous souhaitons vivement que les
enseignements tirés et les recommandations faites de la réalisation de ce projet puissent être capitalisés
et bénéficiés au nouveau projet de connectivité qui se met résolument en oeuvre dans la même zone et
dans les mêmes circonstances\.
Au nom du Coordonnateur Intérimaire, nous approuvons ce rapport et demandons que sa version finale
approuvée nous soit communiquée pour toutes fins utiles\.
Bien cordialement,
Bigué-Kola Reginald
Expert Principal en Passation des Marchés
English Translation:
Good Morning Project Manager,
We have taken note of the completion report of the Local Connectivity Emergency Project and we highly
appreciate the quality of the report, which describes the strengths and weaknesses of the system that
enabled the deployment of the planned activities\. We sincerely hope that the lessons learned, and the
recommendations made during the implementation of this project can be capitalized and benefit the
new connectivity project which is being resolutely implemented in the same area and under the same
circumstances\.
On behalf of the Interim Coordinator, we endorse this report and request that its final approved version
be communicated to us for all purposes\.
Yours sincerely
Bigué-Kola Reginald
Senior Procurement Expert
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Local connectivity emergency project (P157923)
ANNEX 4\. PHOTOGRAPHS
Old Bamingui Bridge prior to Construction:
Bamingui Bridge during Construction:
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Completed Bamingui Bridge:
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Labor-Intensive Public Works:
Community mobilization/awareness-raising and public lottery activities:
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Old and Rehabilitated Office in Kaga-Bandoro:
One of the Constructed Rain Barriers:
Training Workshops:
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ANNEX 5\. SUPPORTING DOCUMENTS
⢠UNOPS, Rapport Narratif Final, September 30, 2019 (UNOPS Completion Report) available at:
http://wbdocs\.worldbank\.org/wbdocs/drl/objectId/090224b0876e745f
⢠Systematic Country Diagnostic (SCD) for the Central African Republic, Report No\. 125268-CF, June 19, 2019
⢠Local Connectivity Emergency Project, Project Paper, Report No\. PP1759, March 2016
⢠Country Engagement Note for the CAR FY 2016-2017, Report No\. 96209-CF, July 13, 2015
⢠Rural Connectivity Project, Project Appraisal Document, Report No\. PAD2199, June 2017
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ANNEX 6\. MAP OF PROJECT INTERVENTION
Kaga-Bandoro â Mbrès â Bamingui â Ndélé Road and Drainage Status (February 2016)
Source: Local Connectivity Emergency Project, Project Paper, Report No\. PP1759, March 2016
Page 37 of 37 | REVIEW |
P115486 | IEG
Report Number: ICRR14665
ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted: 06/24/2015
Country: Armenia
Project ID: P115486 Appraisal Actual
Project Name: Lifeline Roads Project Costs (US$M): 30\.40 126\.07
Improvement Project
L/C Number: C4549; L7751 Loan/Credit (US$M): 25\.00 101\.49
Sector Board: Transport Cofinancing (US$M):
Cofinanciers: Board Approval Date : 02/24/2009
Closing Date: 12/31/2010 12/31/2013
Sector(s): Roads and highways (98%); Public administration- Transportation (2%)
Theme(s): Rural services and infrastructure (100% - P)
Prepared by: Reviewed by: ICR Review Group:
Coordinator:
Ranga Rajan Midori Makino Christopher David IEGPS1
Krishnamani Nelson
2\. Project Objectives and Components:
a\. Objectives:
The project development objective as stated in the Financing Agreement (Schedule 1, page 4) and in the Emergency
Project Paper (page 5) prepared in lieu of the Project Appraisal Document (PAD) was "to upgrade selected sections of
the lifeline road network and create temporary employment in road construction"\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives/key associated outcome targets?
Yes
Date of Board Approval: 08/27/2009
c\. Components:
Component One\. Rehabilitation of the Lifeline Road Network (appraisal estimate US$30\.00 million and actual cost
$123\.99 million)\. This component planned to rehabilitate about 1OO km of the lifeline road network (defined as roads
that connected rural communities to an interstate road) located in seven Marzes (administrative divisions)\. Activities
included; (i) civil works for road rehabilitation; (ii) consultancy services for the construction and supervision and
technical auditing of rehabilitation works; (iii) updating of the original Millennium Challenge Corporation (MCC)
financed 2007 designs and environmental documents; and (iv) project implementation expenses including funding
project audits, incremental operational implementation costs and additional costs for intensified project supervision\.
The scope of this component was expanded (discussed below) through two additional financing in the amount of
$42\.12 million (2009) and $45\.80 million (2010)\.
Component Two\. Technical Assistance (appraisal estimate US$0\.40 million and actual cost US$1\.88 million)\. This
component aimed at technical assistance for strengthening of the Armenian Roads Directorate (ARD)\. Activities
included; (i) financing a study to review low cost pavement options for Armenia which was to explore options for
different pavement types and ways to increase labor based activities; (ii) updating of designs for about 100 km of
lifeline roads for a potential project; and (iii) vehicle for supervision and related training\. The scope of this component
was expanded (discussed below) through two additional financing in the amount of for $0\.87 million (2009) and $0\.62
million (2010)\.
Through the two additional financing that were approved within the first two years of project effectiveness the following
changes were made to the project components and indicators (ICR, page 4)\.
At the first additional financing on August 27, 2009:
ïThe number of roads to be rehabilitated was increased by an additional 140 km (from 100 km to 240 km)\.
ïA "safe village" program was to be implemented for supporting rural communities in implementing road safety
measures, recommended by road safety audits and by the National Road Safety Strategy\.
ïAdditional indicators were incorporated for monitoring the total classified roads and the share of rural population with
access to all season road\.
At the second additional financing on July 15, 2010:
ïThe number of roads to be rehabilitated was increased by an additional 190 km (from 240 km to 430 km)\.
ïTechnical assistance component was to include development of new road geometric standards, feasibility studies,
designs of future investments and procurement of road data collection equipment\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Costs: The original appraisal cost (including costs of contingencies and front end fee) was US$30\.40 million\.
With the first and the second additional financing which took place on August 27, 2009 and July 15, 2010, the cost
estimates went up to US$76\.12 million and then to US$126\.10 million\. The actual cost at completion was US$126\.07
million\.
Project Financing: At appraisal, the Bank's contribution was through an US$25\.00 million IDA grant\. The Bank's
subsequent additional financings were through IBRD loans of US$36\.60 million and US$40\.00 million\. With these, the
total Bank financing was estimated at US$101\.60 million\. At closure, the Bank's actual contribution was US$101\.51
million\. There were no co-financiers\.
Borrower's Contribution: At appraisal, the borrower contribution was estimated at US$5\.40 million\. Their contribution
increased by an additional US$9\.12 million following the first additional financing, and by an additional US$9\.98
million with the second additional financing totaling $24\.50 million\. At closure their actual contribution was US$ 24\.58
million\.
Dates: With the first additional financing, the project closing date was extended by one year from December 31, 2010
to December 31, 2011, and with the second additional financing, by two more years to December 31, 2013\. The
project closed on December 31, 2013\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
Relevance of Objective : High\.
The objective was relevant to the Government's Lifeline Road Development Program launched in 2008, which
identified a priority network for providing at least one access road to Armeniaâs 960 communities\. The objective
continued to be relevant to the current Government Strategy\. The Armenia: Transport Sector Development Strategy
2020, included an investment plan for the road sector, and identified priority investments on the interstate and rural
road network for the 2010-2020 period\.
At appraisal the Country Assistance Strategy (CAS) for the fiscal years 2004-2008 identified the need for promoting
private sector growth by reducing infrastructure bottlenecks, and this CAS and Progress report specifically mentions
improving road transport infrastructure as a key outcome indicator\. The Country Partnership Strategy (CPS) for the
fiscal years 2014-2017 period, highlighted the need " for strengthening competitiveness and supporting job creation\."
The CPS for the fiscal years 2009-2013 period, highlighted the need for continued investments in lifeline road
rehabilitation, for building the foundations for competitiveness and medium term growth (PAD, page 8)\.
b\. Relevance of Design:
Relevance of Design: Substantial\.
The statement of the project objective is clear, and the causal chain between the project activities, outputs, and
outcomes are logical\. Upgrading of the selected sections of the lifeline road network could be expected to improve
their conditions\. The institutional dimension of the project, in areas such as implementing road safety measures,
developing new road geometric design standards, and establishing a data collection management unit, can be
expected to improve the capacity of the Armenian Roads Directorate (ARD)'s to manage the lifeline road assets of
the country\. The civil works associated with road rehabilitation could be expected to create temporary employment in
road construction\.
4\. Achievement of Objectives (Efficacy):
Both the first objective, to upgrade selected sections of the lifeline road network, and the second objective of
creating temporary employment in road construction, were rated substantial\. Since the first objective was output
focused and the second objective was outcome focused, they are assessed together below\.
Output:
ï 446 km of lifeline roads were upgraded at the project closure stage as compared to the target of 430 km\. The
average roughness of the project roads measured by the International Roughness Index (IRI) reduced from 11\.1,
m/km to 3\.1 IR (ICR, page 17)\.
ï According to the independent technical auditors, 51\.5% of the lifeline road network was reported to be in good or
good condition at the project closure stage, as compared to 32\.2% before the project (ICR, page 44)\.
ï A Road Safety Audit Manual was developed in 2010 as targeted\. The staff of the Ministry of Transport and
Communication, Armenian Roads Directorate, the Project Implementation Unit, traffic police and design consultants
were trained in the principles of road safety audit by an international consultant (ICR, page 28)\.
ï The Armenia's Road Safety Secretariat was established with support from a grant from the Bank administered
Global Road Safety Facility (GRSF), with a director and full time staff (ICR, page 11)\.
ï A data collection unit was established in the Armenian Road Directorate as targeted (ICR, page iv)\.
ï A Double Bituminous Treatment (DBST) pavements contract (including for rehabilitation works and routine and
winter maintenance was piloted on two sections covering 16\.5 km of roads\. The ICR (page 12) reports that this
pavement standard was relatively inexpensive, as compared to the traditional asphalt concrete standards and
pavement layers\.
ï One Pilot "safe village" program was implemented as targeted for supporting rural communities to implement road
safety measures\. The program supported the villages in installing road safety measures, by making them eligible for
funding, only if they had prepared and implemented road safety awareness campaigns\. (ICR, page 6)\.
ï The new road geometric design standards which was included at second additional financing was cancelled\.
Outcome:
ï 39,855 person day/month of temporary construction jobs were created as compared to the target of 36,650 person
day/month\. Of these 60-70% went to people from local villages and 70% of them were unskilled, Since on average
US$ 500 per month was paid to the workers, this represented a direct income transfer of approximately US$5\.0 million
to workers (ICR, page 17)\. Nine of the 23 contractors chosen did not have any other contracts than those offered
under the stimulus package provided to mitigate the impact of the global financial package, and rural roads contracts
accounted for 22 to 27% of the gross revenue of the contractors\. (ICR, page 5)\.
ï The travel time on the rehabilitated roads decreased by 58\.5% as compared to the target of 20%\.
ï Transport costs, measured using the Highway Development and Management Model (HDM) indicated that these
costs decreased by 25\.8% as compared to the target of 20%\.
ï 51\.5% of the rural population had access to all season roads at project closure although the baseline data was not
available\.
ï According to the statistics provided by the team, in 2013 the number of fatal casualties as a result of road accidents
was 316 as compared to 315 in 2012 and 327 in 2011\. Although the decrease does not seem to be significant, the
team leader clarified that more crashes were being reported as a result of the introduction of a compulsory motor
vehicle insurance for supporting insurance claims\. The team also reported that road crashes were recorded by video
cameras (90% of which were installed in Yerevan as part of the project), and that the number of fatal crashes was 29
between January - March 2014, as compared to 39 between January- March 2013\. ï A qualitative social assessment
survey was conducted at project closure on 48 focus group in eight rural communities in eight regions\. (ICR, page
36-38)\. The methodology was to compare peopleâs views in the regions that benefited from the projects and those of
the regions that did not benefit from the project\. While 51% of the former group reported the roads to be in good or
excellent condition, as compared to 12% of the latter group\. 41% of the former reported the transportation services in
the rehabilitated roads to be good or excellent as compared to 22% of the latter\. 91% of the former group reported
improvement in market access as compared to 71% of the latter group\. 88% of the former group reported that the
rehabilitated roads facilitated their visits to shops and other purposes as compared to 72% of the comparison group\.
5\. Efficiency:
An economic analysis was done using the Highway Development and Management Model (HDM-4) on
approximately 153 km of lifeline roads both at appraisal and at completion\. The main economic benefits were
assumed to come through vehicle operating costs and travel time savings\. The ex post Economic Rate of Return was
18\.1%, very close to the ex-ante EIRR of 18\.4%\. The unit transport costs trucks computed using the HDM for the ex
post valuation were US$ 0\.40 per vehicle Km for with the project, as compared to US$ 0\.54 for without the project\.
This represented a 25\.8% reduction in transport cost for medium trucks as compared to the target of 20% (ICR, page
17)\. There were no cost overruns, and although the project closing date was extended by three years, this extension
was for completing the expanded scope of the project, and therefore did not affect the efficiency of the project\.
Efficiency is rated Substantial\.
a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the
re-estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 18\.4% 44%
ICR estimate Yes 18\.1% 44%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Overall outcome is rated as Satisfactory\. The relevance of the objective is high and relevance of design is
Substantial\. Both efficacy and efficiency are rated as Substantial\.
Although the outcome targets were revised twice during implementation, the split rating method was not applied
because this did not affect the overall outcome rating\.
a\. Outcome Rating: Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
There is a risk that the project development objective may not be sustained due to inadequate allocation of funds
for routine and periodic maintenance of the rehabilitated roads\. Although the Ministry of Transport and
Communication has been increasing its budgetary resource allocation, it is not clear whether the amount allocated
would be sufficient for both routine and periodic maintenance needs since in 2012 the amount allocated was
insufficient for covering routine maintenance, let alone periodic maintenance\.
Also, although there have been positive steps taken on addressing road safety issues (such as approval of a National
Road Safety strategy, adoption of a five year plan etc\.) it is not clear if these activities would be implemented in view
of the weak institutional arrangement, such as the under funding and under staffing of the Road Safety Secretariat
(ICR, page 21)\.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
a\. Quality at entry:
Quality at entry is rated as Satisfactory\. Since the original project had to be prepared fairly quickly in response
to the urgent request from the Government in the wake of the global financial crisis, it required an experienced
team\. The project preparation which was initiated in late 2008, and approved by the Board on February 24, 2009,
became effective about two months later on April 20, 2009\. The project roads to be rehabilitated had already been
identified by the Millennium Challenge Corporation (MCC) as priorities and were in areas facing increasing
unemployment\. Road designs prepared by MCC were adapted to current road conditions and traffic surveys, and
revised to conform to the standards of European roads (ICR, page 8)\.
Appropriate risk mitigation measures were incorporated through a covenant included in the loan agreement- such
as requiring the government to deposit 20% of the counterpart funding within two weeks after the ratification of the
Loan Agreement, to address the possibility of delays associated with counterpart funding (ICR, page 11)\. The
World Bank ensured project readiness by having an implementing agency which was experienced in managing
World Bank and other transport projects financed by International Financial Institutions (ICR, page 9)\.
According to the ICR the Safeguard policies were adequately addressed at the appraisal stage (discussed in
section 10a)\.
Quality-at-Entry Rating: Satisfactory
b\. Quality of supervision:
Quality of supervision is rated as Satisfactory\. Since it was IDA Fast Track Facility operation requiring fast
disbursements, supervision was intensive and the project was closely monitored during the project implementation
phase (ICR, page 8)\. While the initial road rehabilitation activities responded to the emergency needs of creating
temporary employment in the wake of global crisis, the supervision team helped in expanding project scope to
include road safety and institutional strengthening dimension through two successive additional financing in a
short time (ICR, page 8)\.
The supervision team was fully engaged with the client during the implementation phase\. In keeping with the
emergency nature of the original project, supervision missions were more frequent in 2009 (about three missions)\.
Missions since then were on average twice a year, The supervision team addressed the implementation problems
in a proactive manner (ICR, page 22) but they could have engaged more with the Government to ensure the
sustainability of the roads through provision of adequate maintenance funds\.
The supervision team had as many as five task team leaders which affected continuity and the Bank could have
reduced the processing burden by combining the two additional financing in a single operation (ICR, page 22)\.
Quality of Supervision Rating : Satisfactory
Overall Bank Performance Rating : Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
Government Performance is rated as Moderately Satisfactory \. The Government was highly committed to the
project development objective right from the preparatory phase\. This enabled the project to be prepared and
approved by the Board within two months\. Since the government had already adopted a Rural Infrastructure
Strategy and Action Plan and had identified the priority lifeline rural roads for rehabilitation, the project could be
implemented immediately after effectiveness\. During implementation, when counterpart funds were delayed due
to the quicker than anticipated implementation of civil works, the Government resolved the issue through larger
counterpart allocations\. The government commitment was further evidenced by their request for a follow up project
to further rehabilitate 170 km of lifeline roads that was approved by the Board on January 31, 2013 (ICR, page 10)\.
The Government however was not able to make available adequate budgetary resources for road maintenance as
stipulated in the legal covenant (ICR, page 10)\.
Government Performance Rating Moderately Satisfactory
b\. Implementing Agency Performance:
Implementing Agency Performance is rated as Satisfactory\. Although the Ministry of Transport and
Communication (MoTC) had the overall responsibility for implementing the project, the Ministry had delegated the
responsibility to a Transport Project Implementation Unit\. This institution had experience in implementing both
externally financed projects and transport projects executed with local financing (ICR, page 9)\. The unit was
headed by an experienced engineer with knowledge of both Bank and Armenian procedures\. The implementing
agency handled the safeguard and fiduciary issues with no major problems (discussed in section 11)\.
During the implementation phase when unit became overburdened with additional responsibilities (unrelated to
Bank funded projects) and hence could not respond expeditiously to the Bank requests, the unit resolved the issue
through hiring additional staff (ICR, page 11)\.
Implementing Agency Performance Rating : Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
Responsibility for the M&E rested with the Transport Project Implementation Unit\. The M&E design which included
specific and appropriate indicators for both the physical works component and the institutional strengthening were
fairly simple and easy to collect\.
Two sector indicators were introduced in 2009 as per Bank requirements (roads in good or fair condition as a share of
total classified roads and share of rural population with access to an all season road)\. (ICR, page 13)\. The M&E did
not include any indicators related to providing for road maintenance\.
b\. M&E Implementation:
The only details provided in the ICR on M&E implementation were quarterly and semiannual reports on
implementation progress submitted to the Bank\.
c\. M&E Utilization:
While the ICR does not provide details on M&E utilization, the task team clarified that the data collection unit
established by the Armenian Roads Directorate continues to collect and monitor data on the condition of road
networks\.
M&E Quality Rating: Modest
11\. Other Issues
a\. Safeguards:
The project was classified as Category B for Environmental Assessment purposes (OP/BP 4\.01), and partial
assessment was required\. In addition, one safeguard policy was triggered: Involuntary Resettlement (OP/BP 4\.12)\.
The ICR (page 14) reports that an Environmental Management Plan (EMP) was developed at the project preparation
stage, and site-specific EMPs were discussed with local communities residing close to road sections to be
rehabilitated, and appropriate features were incorporated in the project design\.
There was an incident in 2009 when some shortfalls in the compliance of the EMP in the quality of arranging drainage
infrastructure and sidewalks but the issue was adequately addressed\. The ICR (page 14) reports that there was no
resettlement or land acquisition\.
b\. Fiduciary Compliance:
Financial Management : According to the ICR (page 15), the implementing agency's financial management
performance was deemed to be adequate\. Annual financial audits were unqualified\. The government provided the
counterpart funding for the most part in a timely fashion, except in 2010 when there were some delays due to the
delayed approval of the budget\.
Procurement: Arrangements: According to the ICR (page 15), all procurement activities related to works contracts
were deemed to be satisfactory and there was no case of misprocurement\.
c\. Unintended Impacts (positive or negative):
d\. Other:
12\. Ratings: ICR IEG Review Reason for
Disagreement/Comments
Outcome: Satisfactory Satisfactory
Risk to Development Significant Significant
Outcome:
Bank Performance: Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR: Satisfactory
NOTES:
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
\.The ICR draws the following lessons:
ï¬ Project readiness could enable quick implementation of civil works and thereby contribute to providing
temporary employment and quick economic support to rural areas hit by financial crisis\.
ï¬ Incremental improvements can be made during project implementation (such as incorporating road safety
features) by adjusting to changing conditions\.
ï¬ Road safety audits can be successfully incorporated with road construction and rehabilitation works when there
is government ownership\. And support for road safety programs can be obtained from communities, which
consider road safety a major problem\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR systematically reported both outputs and outcomes of the project, and its assessment of the achievement of
the project development outcome was evidence based\. The ICR was also concise and consistent with the guidelines\.
However, there are areas where the ICR could have provided more details, for instance, the important road safety
features of the project which was very brief\. The overall quality of the ICR is rated as Satisfactory\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P040808 |  ICRR 12871
Report Number : ICRR12871
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 03/27/2008
PROJ ID : P040808 Appraisal Actual
Project Name : Native Forests & US$M ):
Project Costs (US$M): 30\.0 20\.9
Protected Areas
Project
Country : Argentina Loan/ US$M):
Loan /Credit (US$M): 19\.5 15\.8
Sector Board : ENV Cofinancing (US$M):
US$M ):
Sector (s): Central government
administration (47%)
Other social services
(22%)
Roads and highways
(22%)
General agriculture
fishing and forestry
sector (5%)
Law and justice (4%)
Theme (s): Law reform (25% - P)
Export development
and competitiveness
(25% - P)
Biodiversity (25% - P)
Environmental policies
and institutions (25% -
P)
L/C Number : L4085
Board Approval Date : 09/05/1996
Partners involved : Closing Date : 06/30/2005 06/30/2007
Evaluator : Panel Reviewer : Group Manager : Group :
Ramachandra Jammi Kris Hallberg Soniya Carvalho IEGSG
2\. Project Objectives and Components:
a\. Objectives:
The objectives of the project as stated in the SAR were : a) help the Secretariat of Natural Resources and Human
Environment prioritize its actions dealing with native forests; b ) facilitate the development of an incentive and
regulatory framework to encourage decision makers; both public and private, to more fully internalize within their
decision making processes the full range of social costs and benefits associated with their decisions and actions
affecting native forests; c ) develop a plan for transforming the National Parks Administration into a world - class park
management organization; and d) increase the environmentally sustainable level of tourism in four national parks \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
a) Generation and dissemination of research and information consisting of policy, legal and regulatory reform, a
national inventory of native forests and establishment and operation of a related database; and applied research and
studies to facilitate management and conservation of native forests and protected areas (US$13\.4m at appraisal;
US$9\.8m actual)\.
b) Protected areas comprised of the development of a plan for the modernization of the National Parks Administration
and specific infrastructure development and management strengthening in four Patagonian Region parks (US$10\.3m
at appraisal; US$9\.5m actual)\.
c) Project implementation (US$2\.2m at appraisal; US$1\.5m actual)\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost, Financing and Borrower Contribution : Actual project costs were 69 percent of appraisal estimates \.
According to the ICR, the majority of expenditures were denominated in pesos, which depreciated against the U \.S\.
dollar, explaining the lower project cost and financing required \. In 2003, amendments were made to the loan
agreement to reflect reallocations of funds to specified sub -components and cost-sharing between IBRD and the
borrower\.
Dates: The project had 3 extensions of 12, 9, and 3 months for a total of 24 months beyond the original closing date,
mainly due to slow progress during the fiscal and political crises of 2001 â 2003\. The first extension contained
triggers for the second and were primarily directed at the subcomponent of infrastructure works in component B,
though other subcomponents also benefited from the extensions \. The third extension was for residual infrastructural
works\.
3\. Relevance of Objectives & Design:
Objectives: The project internalized findings from a 1991 IEG (then OED) evaluation study and a Forestry Sector
Review (1992) that identified the sector as a promising growth area as the country emerged from a period of
hyperinflation and uncertainty, while pointing out gaps in information, economic analysis and institutional factors that
were necessary to develop a sound policy framework for the sector \. The 1995 CAS covered improvement of
management and the regulatory framework for forestry under one of its three pillars \. The 2004 and 2006 CASs
support regulatory guidance and oversight over a growing forestry industry and promoting sustainable forestry
management in general\.
Design: The project design internalized findings from a comprehensive sector report (1995) that pointed out
shortcomings in the sector policy framework, institutional structure and capacity, research capacity and extension
services, plantation management and environmental sustainability \. Major risks and uncertainties in terms of
government commitment and insufficient capacity on the part of implementing agencies were mitigated by providing
for appropriate training, capacity -building and external expertise \.
4\. Achievement of Objectives (Efficacy):
Objective 1: Help the Secretariat of Natural Resources and Human Environment prioritize its actions dealing with
native forests\. Achievement-substantial\.
Argentina now has an updated and comprehensive native forest inventory which has provided the foundation for an
informed and substantive policy discussion on native forest issues that has led to a new legal framework for forest
management and forest incentives, and sets the stage for forestry reform in the future \. A computerized database has
been made available on the internet, and a Forestry Atlas of Argentina has been published \. The data inventory,
whose quality has been vetted by independent parties including the US Forest Service, is also being utilized by
NGOs and the general public\.
Objective 2: Facilitate the development of an incentive and regulatory framework to encourage decision makers, both
public and private, to more fully internalize within their decision making processes the full range of social costs and
benefits associated with their decisions and actions affecting native forests \. Achievement-modest\.
By developing a reliable forest inventory, conducting several policy studies and examining existing laws and
regulations, the project helped draft the "Ley de Presupuestos Minimos para la Proteccion Ambiental de Bosques
Nativos" which was ratified by Argentina's Senate in November 2007\. The law helped establish a fund to pay for
forest environmental services drawn from a portion of agricultural export tax, a national budget provision, and
donations from other sources \. Nevertheless, the ICR does not provide information on whether decision -makers,
especially those in the private sector, have actually internalized social costs and benefits in their decision -making\.
Objective 3: Develop a plan for transforming the National Parks Administration into a world - class park management
organization\. Achievement-modest\.
The project commissioned several studies and developed a reform agenda for modernizing the National Parks
Administration (APN), but was not able to make sufficient progress due to intervening events that included the
transfer of APN from the Secretariat of Natural Resources and Human Environment (SRNyHA) to the Ministry of
Tourism, the economic crisis, and several changes in APN's leadership \. In April 2007, APN approved a
Modernization Plan, which now serves as the basis for strengthening the agency \.
Objective 4: Increase the environmentally sustainable level of tourism in four national parks \. Achievement-
substantial \.
The project undertook infrastructure investments and management training in four high visibility parks in Patagonia --
Lanin, Los Alerces, Nahuel Huapi, and Glaciares -- that resulted in significant increases in visitation rates and
revenues, though this was also partly due to the devalued peso which made tourism attractive to foreigners \.
5\. Efficiency (not applicable to DPLs):
The SAR did not attempt an economic cost -benefit analysis, but the ICR attempts it in a qualitative manner and
predicts potential gains from sustainable forestry and integrated livestock production; and stimulation of small
businesses from increased tourism \. The ICR undertakes a limited financial analysis from revenues and expenses at
the four major national parks in Patagonia yielding FIRRs between 13% and 57% for which a simple average is
provided below\. The overall efficiency of the project was negatively affected by the two year delay in implementation
of the project\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 19% 45%
ICR estimate Yes 25% 45%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The project scope and design was satisfactory and continues to be relevant in terms of country priorities and
strategy\. Despite the challenges posed by the intervening economic crisis, the project managed to make substantial
progress on almost all objectives, resulting in new legislation, a national forest inventory, an action plan for
modernization of APN; and several infrastructure works, policy studies and capacity building through training \.
However, there were gaps in achievements in some specific works in the parks, and training and research projects \.
Also, the outcomes from the recently approved legislation and implementation of the modernization plan for APN are
yet to be seen\. In the balance, the overall outcome of the project is considered Moderately Satisfactory \.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Even though project implementation was delayed on several fronts, the project finally helped to pass new
legislation and finalize a modernization plan for APN \. Also, the national inventory of forest data puts future
policy-making and implementation on a sound footing \. The new legislation also provides for a dedicated fund for
forest management with identified sources of revenue \. Given these developments and the fact that the project
overcame major difficulties during the economic crisis which served to underline government commitment, the risk to
development outcome is considered low \.
a\. Risk to Development Outcome Rating : Negligible to Low
8\. Assessment of Bank Performance:
Quality at Entry: The Bank team included economists, forest specialists, protected areas specialists and other
technical experts including staff from FAO -CP who worked with their national counterparts in project formulation \.
Project design was based on an appropriate diagnosis of the state of forest management and a focus on
strengthening the institutional and human resources of the relevant sectors \. However, the Bank underestimated
the complexity of legislative reform and implementation arrangements in APN at appraisal, resulting in the slow
startup some portions of the project \.
Supervision: Supervision missions were carried by diverse teams of specialists two to three times an year, and
brought to bear experience in addressing similar issues in other countries \. The Bank team displayed flexibility in
working with their counterparts during the economic crisis in order to keep up some momentum in the project \.
at -Entry :Moderately Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
In general, the government gave priority to forestry development and conservation, and collaborated with the
Bank\. During the crisis years, the government provided counterpart funds to the extent possible, and helped the
line agencies when called upon to do so \. The implementing agencies (PIUs) were composed of qualified
technical professionals and administrative staff and were generally efficient in their work \. Within the constraints
experienced during implementation, the line agencies are to be commended for their focus and commitment to
bring the majority of work to closure \.
a\. Government Performance :Satisfactory
b\. Implementing Agency Performance :Satisfactory
c\. Overall Borrower Performance :Satisfactory
10\. M&E Design, Implementation, & Utilization:
Design: The project does not provide any significant outcome indicators ( the project was appraised several years
prior to the recent emphasis placed on outcome indicators ) but contains a long list of output indicators which are
quite clear and measurable in most cases (e\.g\. policy studies; training programs; number of trainees; creation of
databases etc\.)\.The M&E effort was a first for both APN and the Secretariat of Environment and Sustainable
Development (SAyDS)\.
Implementation: Data for most output indicators is provided in a satisfactory manner \.
Utilization: The PSRs and ISRs were regularly updated with monitoring information, which was particularly useful in
the crisis period to identify gaps in implementation and to establish priorities \.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Safeguards: This project was classified as Category "B" and invoked OP 4\.01 (Environmental Assessment); OP
4\.04 (Natural Habitats); OP 4\.36 (Forestry); and OP 11\.03 (Cultural Property)\. Relevant environmental assessments
were prepared, and were reviewed and cleared by the Bank's team that included biologists, foresters and
environmental specialists\. APN complied with the Bank's safeguards for Natural Habitats as well as Forestry even
though provisions for the latter were formalized during the project's implementation \. The project also improved
protection and performed appropriate restoration of cultural properties in the project parks \.
Fiduciary Issues: The overall financial management and procurement performance is considered satisfactory \. Four
independent fiduciary missions were conducted during the project \. Some errors were noted in the application of
exchange rates during the financial crisis in 2000-2002, but they were eventually resolved \.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately
Satisfactory Satisfactory
Risk to Development Negligible to Low Negligible to Low
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
Flexibility on the part of both the Bank and the borrower, while keeping their focus on overall objectives, can
pay off in the face of difficult country circumstances such as fiscal crises or institutional changes \.
Investing time and resources in developing a sound technical, social and legal knowledge base can help
underpin a sound sectoral legislative and regulatory framework \.
Applied research projects that are attempted on a large scale in different regions and levels should take into
account local capacity to ensure acceptable quality, and if necessary should be supplemented by outside
expertise\.
14\. Assessment Recommended? Yes No
Why? The project attempted important policy and regulatory reform in Argentina's forestry sector with potentially
far-reaching impacts\. The project also managed to stay broadly on course during the country's financial crisis in the
early 2000s\. It will be instructive to review the outcomes of these experiences and relate them to project design, and
the strategy employed during implementation in the face of uncertainties arising from the financial crisis \.
15\. Comments on Quality of ICR:
The ICR is informative, and is written in a clear and fairly balanced manner \. It tends to be too descriptive and
process-oriented in some places, especially in the section on achievement of PDOs, where the narrative could be
more tightly organized around outcomes \. The Borrower's contribution to the ICR should have been translated into
English\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P001718 |  ICRR 10403
Report Number : ICRR10403
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID:
OEDID : C1906
Project ID : P001718
Project Name : Office du Niger Consolidation Project
Country : Mali
Sector : Irrigation & Drainage
L/C Number : C1930
Partners involved : Governments of Germany, Netherlands, France, USAID
Prepared by : Robert C\. Varley, OEDST
Reviewed by : George T\. K\. Pitman
Group Manager : Gregory K\. Ingram
Date Posted : 06/30/1999
2\. Project Objectives, Financing, Costs and Components :
The broad objective was to reduce poverty, increase agricultural production and reduce government subsidies and
support for agriculture by providing strong incentives to farmers to increase production, improving the efficiency of
irrigation management and creating mechanisms for sustainable irrigation development \. This was to be achieved
thorough reform of the irrigation agency (Office du Niger or ON), rehabilitation and modernization of irrigation
canals/structures, and agricultural policy reforms (rice price/market liberalization and land tenure \.) Sub-objectives
were to: (i) divest ON's commercial activities to strengthen and narrow its focus on infrastructure management and
agricultural services; (ii) forge stronger ON/GOM (Government of Mali) partnerships though performance contracts,
training and improved financial management; and (iii) rehabilitate and modernize irrigation networks and perimeters
and increase farmer involvement in water fee determination and management of maintenance \.
Source of Finance : $million Appraisal Estimate Actual /Latest
IDA 48\.8 48\.8
Government of Germany 19\.0 28\.9
French Aid Agency 2\.4 34\.8
Government of Netherlands 1\.3 87\.2
GOM 4\.1 16\.1
3\. Achievement of Relevant Objectives :
i\. Liberalization of the rice trade and markets have been achieved and sustained;
ii\. The ON was restructured, its financial health restored and the investment program successfully implemented;
iii\. Reduction in milling costs saved GOM $ 1\.6 million/annum and reduced milling costs to farmers /consumers by $6
million/annum;
iv\. Rice production increased from 98,000 to 271,000 tons;
v\. Water fee collection rate increased from 60% to 97%;
vi\. Increased production of non -rice crops such as onions (71,000 tons), garlic (800 tons) and pepper (600 tons);
vii\. Real per capita income increased by $ 70/annum and production exceeded targeted level by 37%;
viii\. 57 km of canals and main drains were rehabilitated and modernized \.
4\. Significant Achievements :
i\. The success of the project led other donors to finance even more perimeters in successive tranches - the Bank's
investment leveraged 250% more investment from other donors;
iii\. Yields increased from 1\.8 to 5\.5 MT/ha while the ex-post ERR was 30%, compared to 16% at appraisal;
iv\. GOM was able to push through difficult institutional reforms involving divestiture and staff layoffs;
v\. Participation was strengthened through farmer membership on management committees and overseeing
performance contracts;
vi\. The project transferred credit responsibility from ON to the State Agricultural Bank and stimulated private
investment in farm infrastructure\. Credit was initially used for equipment, oxen and fertilizer, with repayment rates of
over 95% ;
vii\. Water fees are retained in the areas where they are collected; at least 50% are used for maintenance while only
10-12% are transmitted to Head Office for general use \.
5\. Significant Shortcomings :
i\. No capital cost-recovery despite a 20% target\. Primary infrastructure maintenance is still funded entirely by GOM \.
ii\. The promised focus of ON on delivery of agricultural services, improved resource management, agricultural
training and extension either did not materialize, or was not sustainable;
iii\. Programs to promote village associations through training in functional literacy, book keeping, input purchase
and output marketing strategies were not executed;
iv\. Real cost-recovery of O&M costs declined by 14% but was offset by ON's reduction in operating cost (fee
declined from 18% to 6% of rice crop value);
v\. Despite an increased farmer role in negotiation, fees are still fixed by order of government;
vi\. GOM's recent deferment of a water fee increase because of election considerations (1997/98) is a threat to
increased cost recovery in the future \.
vii\. Natural resource management was only partially successful - 40% of the area still requires soil mapping,
volumetric management of water is still rudimentary but is needed to enable volume based water billing that will lead
to increased water use efficiency, and environmental monitoring (water quality, health, drainage) and maintenance
(tree planting, crop diversification, pasture regeneration ) received little attention\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Substantial Substantial
Sustainability : Likely Likely
Bank Performance : Highly Satisfactory Satisfactory Lack of consideration of alternatives and
involvement of beneficiaries in design; no
explanation for partial achievement of
environmental objectives, little social /
stakeholder analysis\.
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Exemplary
7\. Lessons of Broad Applicability :
i\. Sector reforms require a conducive macroeconomic framework including realistic currency valuation and liberal
trade policy;
ii\. Complementary sectoral investments and policy reforms are required in order to have a major impact;
iii\. A well coordinated multi-donor effort is essential for high impact investments which utilize potential synergy and
complementarity within and between sectors;
iv\. Farmer empowerment is essential for water -fee recovery and sustainability, and the fee setting mechanism
should be an independent and transparent process, based on clear needs and free from government interference;
v\. Greater transparency in land management increases farmers' land security, even in the absence of land titles;
vi\. Institutional reforms should be headed by an independent agency outside the concerned ministries /agencies;
vii\. The design of canals has to be adapted to the maintenance regime utilized;
viii\. Farmer involvement in digging tertiaries requires organization and monitoring by a consulting company to
ensure quality\.
8\. Audit Recommended? Yes No
Why? The project appears to have been successful in overcoming institutional problems which have
been identified as key constraints to the improvement of O&M performance in other countries \. The ON is described
as having become transformed from a bloated bureaucracy to a lean and efficient organization accountable to both
users and government\. Lessons learned need to be confirmed and more widely disseminated \. The relative role of
the devaluation/price liberalization on the demand side and the institutional reform / physical rehabilitation on the
supply side, need to be assessed \.
9\. Comments on Quality of ICR :
Exemplary - a concise, comprehensive and well written report which contains good supporting annexes \. | REVIEW |
P010406 |  ICRR 10122
Report Number : ICRR10122
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID :
OEDID: C2430
Project ID : P010406
Project Name : Sunsari Morang Headworks
Country : Nepal
Sector : Irrigation & Drainage
L/C Number : C2430
Partners involved : None
Prepared by : George T\. K\. Pitman, OEDST
Reviewed by : Alice Galenson
Group Manager : Roger Slade
Date Posted : 06/29/1998
2\. Project Objectives, Financing, Costs and Components :
Approved: November 1992, Effective: January 1993, Closed: December 1997 (on schedule)
Project Costs (US$ million) Appraisal Actual Canceled
Total 29\.7 26\.3
IDA credit 28\.0 23\.8 4\.2
Objectives:
â Provide the irrigation system with silt -free water during the monsoon through construction of a desilting
basin equipped with continuous dredging facilities \.
* Eliminate dry season blockage of the intake through construction of a new intake \.
Components:
â Construction of the new intake 1\.3 km upstream and linking it by a culvert to a new pre -settling basin in front
of the existing intake\.
* Modification of the existing intake \.
* Improvements in the desilting basin constructed under the Sunsari Morang second phase project \.
* Provision of electrically powered dredgers and a micro -hydropower plant\.
* Management, O&M, and training\.
* Technical assistance for construction, supervision, and training in dredger and water management \.
3\. Achievement of Relevant Objectives :
The project fully achieved its objectives of providing reliable and silt free water \. The civil engineering works were
completed satisfactorily and project staff were trained in the operation of the dredger equipment and in water
management of the rotational water supply system \.
4\. Significant Achievements :
Water Supply : The project proved the wisdom of forming a panel of Experts to impartially review the technical
viability of the dredger solution that had been the subject of debate with government since IDA's first credit for
Sunsari Morang in 1978\.
Water User Groups (WUGs): The project rejuvenated farmers' interest and confidence \. Extension officers and
consultants embarked on a more participatory approach to forming WUGs \. Over 90 percent of the project's WUGs
have joint management agreements with the project authorities for operation and management (O&M) of the tertiary
level distributary system, a third of which have been fully handed over to WUGs \.
5\. Significant Shortcomings :
Management : Frequent changes of senior staff jeopardize the successful management of this technically complex
project\. The project's O&M budgeting system has no priorities and disbursement is ad hoc and some essential O&M
tasks are not done\. The micro-hydro station has not been taken over by the Nepal Electricity Authority \.
Dredger Operations : The current operational policy for the dredgers is unsatisfactory : it decreases the basin's
trapping efficiency and increases the risk of siltation should one of the dredgers fail \. Importation of spare parts is a
problem\.
Budget for O&M : Once IDA funding ceased it fell to half of needs in 1997/98\.
Cost Recovery : Only 26 percent of the 1995-96 assessment was collected and has since declined \. About a third of
farmers refuse to pay water charges because adjacent areas are not asked to pay, and penalties are not enforced by
project management despite covenants in the credit \. A recent court decision challenged the WUGs' right to manage
water and undermines their authority and effectiveness \. Part of project management's indifference to water charges
is that it does not directly benefit : half goes to the usersâ groups and half to the central revenue \. Keeping all fees
collected within the project would be a substantial incentive and improve funding for O&M \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Partial Substantial Participatory institution strengthening
efforts were introduced (leaning from the
failures of the preceding credits ), WUGs
cover almost all the project area and are
effective at managing O&M\.
Sustainability : Uncertain Uncertain
Bank Performance : Satisfactory Satisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
* WUGs will not be sustainable unless government and project management uphold WUGs' authority to manage
water and collect irrigation service fees \.
* The Bank must be more vigilant in imposing covenants regarding water user fees and their recovery \.
* Incentives to induce cost recovery apply to WUGs and project management, and it is essential these are fully
explored and agreed at appraisal \.
8\. Audit Recommended? Yes No
Why? To determine the factors leading to the eventual success of the Sunsari Morang project under the
headworks project compared with the two preceding credits that were unable to resolve the water and sediment
problems nor form viable water user groups \. A cluster audit of the two earlier projects and this project was
undertaken in January 1998\.
9\. Comments on Quality of ICR :
Very thorough\. It would have been difficult to understand this project without a good knowledge of the problems
highlighted by the preceding credits \. Fortunately, the ICR gives a concise account of how the headworks project
evolved and, unusually, also calculates the ERR for several scenarios including not treating the earlier investments
as sunk costs\. Under all scenarios the ERR is greater than 20 percent, and for the stand alone project it is estimated
at 49 percent\. | REVIEW |
P004589 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 22153
IMPLEMENTATION COMPLETION REPORT
(CPL-36070; SCL-3607A)
ONA
LOAN
IN THE AMOUNT OF US$ 51\.3 MILLION
TO THE
REPUBLIC OF THE PHILIPPINES
FOR A
SECOND IRRIGATION OPERATIONS SUPPORT PROJECT (IOSP II)
June 13, 2001
Rural Development and Natural Resources Sector Unit
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of their
| official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective for January-May 2001)
Currency Unit = Peso (P)
I Peso = US$ 0\.020
US$ 1 = 50\.0
FISCAL YEAR
Government: January 1 - December I
ABBREVIATIONS AND ACRONYMS
AFMA Agriculture and Fisheries Modemization Act (Republic Act 8435)
AO Administrative Order
BAS Bureau of Agricultural Statistics
CAS Country Assistance Strategy
CIA Council of Irrigators' Associations
DA Department of Agriculture
ERR Economnic Rate of Return
GOP Govemment of the Philippines
IA Irrigators' Association
ICR Implementation Completion Report
IMIS Irrigation Management Information System
IMT Irrigation Management Transfer
IOSP I First Irrigation Operations Support Project
IOSP II Second Irrigation Operations Support Project
IPM Integrated Pest Management
ISF Irrigation Service Fee
LGU Local Government Unit
MRIIS Magat River Integrated Irrigation System
NDC-5 North Diversion Canal-5 in MRIIS (pilot for IMT and for modality of operation)
NIA National Irrigation Administration
NIS National Irrigation System
NPV Net Present Value
O&M Operation and Maintenance
SAR Staff Appraisal Report
Vice President: Jemal-ud-din Kassum, EAPVP
Country Manager/Director: Vinay K\. Bhargava, EACPF
Sector Manager/Director: Mark D\. Wilson, EASRD
Task Team Leader/Task Manager: Syed Husain, EASRD
FOR OFFICIAL USE ONLY
PHILIPPINES
SECOND IRRIGATION OPERATIONS SUPPORT PROJECT (IOSP II)
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 4
5\. Major Factors Affecting Implementation and Outcome 10
6\. Sustainability 10
7\. Bank and Borrower Performance 12
8\. Lessons Learned 13
9\. Partner Comments 14
10\. Additional Information 15
Annex 1\. Key Performance Indicators/Log Frame Matrix 16
Annex 2\. Project Costs and Financing 18
Annex 3\. Economic Costs and Benefits 20
Annex 4\. Bank Inputs 27
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 29
Annex 6\. Ratings of Bank and Borrower Performance 30
Annex 7\. List of Supporting Documents 31
Annex 8\. Beneficiary Survey Results 32
Annex 9\. Borrower's ICR 46
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not be otherwise disclosed without
World Bank authorization\.
Project ID: P004589 Project Name\. IRRIG OPER SUPP 11 _I_
Team Leader: Syed Husain TL Unit: EASRD
ICR Type: Core ICR Report Date\. June 13, 2001
1\. Project Data
Name: IRRIG OPER SUPP 11 L/C/TF Number\. CPL-36070;
SCL-3607A
CountryIDepartment: PHILIPPINES Region: East Asia and Pacific
Region
Sector/subsector: Al - Irrigation & Drainage
KEY DATES
Original Revised/Actual
PCD: 03/27/1992 Effective: 09/07/1993 10/15/1993
Appraisal: 11/16/1992 MTR: 12/05/1995 03/31/1997
Approval: 05/20/1993 Closing: 06/30/1999 12/31/2000
Borrower/lImplementing Agency: REPUBLIC OF THE PHILIPPINES/NIA
Other Partners:
STAFF Current At Appraisal
Vice President: Jemal-ud-din Kassun A\. Karaosmangolu
Country Manager: Vinay K\. Bhargava Rolando Arrivillaga
Sector Manager: Mark D\. Wilson Pamela Cox
Team Leader at ICR: Syed Husain C\. Gunasekara
ICR Primary Author: Alvaro Bueno (FAO)
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: M
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective\.
The project's principal objective was to achieve sustainable improvement in the operational efficiency of
national irrigation systems (NIS) and thereby help increase agricultural production (mainly rice) and small
farmers' incomes, expand rural employment opportunities, and contribute to rural poverty alleviation\. The
project, to be implemented from mid-1993 to end-1998, was to finance the second phase of the program
launched under the Irrigation Operations Support Project (IOSP I, Loan 2948-PH, approved on June 2,
1988)\. A distinctive feature of the project was its emphasis on participation of beneficiaries in identifying
irrigation system improvement works, sharing in improvement costs through labor contributions, and
assuming operations and maintenance (O&M) responsibility for laterals and sub-laterals after completion
of improvement works\.
The main objective of improving irrigation efficiency was clear and in line with the Bank's Country
Assistance Strategy (CAS) of restoring economic growth, while reducing poverty and improving equity,
through, inter alia, accelerated and environmentally sustainable rural development and support to
infrastructure\. It was also consistent with the high priority given by the Government of the Philippines
(GOP) to expanding irrigated agriculture as an instrument for increasing food security, raising small
farmers' incomes and alleviating rural poverty\. The project, as originally designed, was moderately
demanding for the implementing agency\.
3\.2 Revised Objective:
The project's principal objective remained unchanged during implementation\. However, the scope of the
systems improvement sub-component and the institutional development component was considerably
expanded after the mid-term review in March 1997 (details in sections 3\.5 and 4\.2)\.
3\.3 Original Components:
The project had four major components: (a) improvement of 18 selected NIS; urgent repair of 22 structures
in 14 NIS; construction of three pilot sedirnent exclusion structures and a few improved pilot water control
structures on a selected lateral; and erosion prevention measures in critical areas within and in the vicinity
of existing NIS; (b) support to sustain the improved system-level O&M achieved under IOSP I; (c)
institutional development through support to the Irrigators' Associations (IAs) and the National Irrigation
Administration (NIA); and (d) strengthening of agricultural support services\. The components were
well-related to the project objective and to the capacity of the implementing agency\.
3\.4 Revised Components:
The major components remained the same during implementation\. However, the number of NMS improved
was eventually 17, as one system was financed under another program\.
3\.5 Quality at Entrv:
Quality at entry is rated satisfactory in view of the clear main objective, which was consistent with the
Bank's CAS and GOP policies and strategies for the sub-sector\. Project design and components were
coherent, incorporated valuable lessons from IOSP I (Loan 2948-PH), and gave due consideration to the
implementing capability of NIA\. For the five NIS where improvement works were to commence in the first
year, NIA had prepared before negotiations a detailed program of work, supported by relevant engineering
data and cost estimates\. Although an increase in rice yield was not a project objective, the project did
include a small agricultural support services component (1% of project cost)\. The component was
appropriately kept small since, at the time of appraisal, the responsibility for agricultural extension was
being transferred from the Department of Agriculture (DA) to the local government units (LGUs) under the
Local Government Code of 1991, and there was considerable uncertainty about the organisation, staffing
- 2 -
and funding of the devolved agricultural support services\. Moreover, the Bank at that time was discussing
with the Government a second agricultural support services project (ASSP II), which was expected to
provide services to both irrigated and non-irrigated areas\. Although the ASSP II did not materialise, the
DA eventually implemented the component through a Memorandum of Agreement with the LGUs\. In
addition, the DA's larger national programs, such as the Grains Production Enhancement Program,
provided support services in most of the project areas during the implementation period\.
One significant question relating to quality at entry that can be raised in retrospect, and was indeed raised
during the Staff Appraisal Report (SAR) review process within the Bank, is whether project design was
substantive and innovative enough, considering the long experience with rehabilitation and improvement of
NIS and water users' involvement with system O&M in the Philippines\. To address this issue, and to use
the project as a vehicle for initiating long-term irrigation sector reforms in the Philippines, substantial
additions to project content were introduced after the mid-term review\.
The additions to project content were made within a comprehensive framework: (a) The first step was to
introduce technical change: rehabilitation and improvement of the existing NIS within the framework of an
Irrigation System Improvement Plan (ISIP) prepared by NIA for each system included for improvement\.
The ISIP aimed at increasing the irrigated area, and, at the same time, ensuring equitable distribution of
water by changing the modality of operation from the old labor-and-management-intensive gated water
control and distribution system to a new system requiring little or no operation, based on long-crested weirs
for water level control, and proportional dividers and/or reduced pipe sizes (in proportion to the area
irrigated) at turnouts for water distribution\. (b) The technical change was accompanied and followed by
institutional change: empowerment of irrigation water users through forrnation or strengthening of the
Turnout Service Area Groups, LAs, IA Federations, and Council of lAs (CIAs), and signing of an irrigation
management transfer (IMT) contract by NIA with the IAs/CIAs, which transfers to them the responsibility
for O&M of the secondary canals in larger irrigation systems (also mandated by the Agriculture and
Fisheries Modemization Act (AFMA) of 1997), and O&M of the entire NIS for smaller systems (less than
3,000 ha), as agreed under the follow-on Water Resources Development Project (WRDP - Loan
41 10-PH)\. (c) The institutional change was accompanied by changes in cost recovery policies: the IMT
contract replaced the earlier cumbersome system of sharing of the irrigation service fee (ISF) collection
between NIA and the IAs/CIAs by a straightforward negotiated share (usually 50/50); this sharing system
also has drawbacks (the lAs frequently complain of late remittance of their share by NIA)\. and is envisaged
to be gradually replaced by a lump sum payment system, either on a per ha basis or based on volume of
water supplied by NIA (volumetric pricing)\. The volumetric pricing pilot, which had been agreed under
WRDP to have started by December 31, 1999, started in late 2000 on two pilot laterals, and will start on
another pilot lateral in the next wet season (June 2001)\. (d) The above interventions were accompanied by
efforts to establish self-sustaining systems for O&M and rehabilitation of irrigation schemes: this was
aimed at overcoming the long-standing problem of deferred maintenance, which leads to deterioration of
irrigation systems, which then require rehabilitation prematurely, thus consuming scarce resources which
could have otherwise been used for expansion of the irrigated area\. This element of reform has been
partially achieved (establishment of trust funds), while discussions on earmarked O&M funds are
continuing (details in section 6\.1)\. (e) To adddress the problem of NIA staff redundancy resulting from the
progress of the IMT program, a proposal for downsizing of NIA was formulated (details in section 4\.5)\.
The actual downsizing has not yet started due to lack of funds for early retirement of NIA staff\. (f) The
elimination of direct and indirect O&M subsidies to NIA was to follow NIA downsizing\. Several
elements of the reform program (a to d) made significant progress during project implementation\.
However, since the original IOSP II design had not addressed the NIA overstaffing issue (e above),
discussions on this issue started only in year 2000 after the extent of redundancy resulting from the IMT
- 3 -
program implementation was known\. Neither NIA downsizing nor elimination of O&M subsidies had
started by mid-2001 (see further section 4\.5)\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective\.
The outcome of the project in terms of its contribution to food security and incomes of small farmers is
rated satisfactory\. However, there was a delay of about two years in project implementation, and the Bank
loan closing date had to be extended from June 30, 1999 to December 31, 2000\. This delay was due to a
variety of reasons, including: (a) inadequate budgetary allocation in the first three years of the project
(1993-95), when only 49% of the amount projected in the SAR and requested by NIA was allocated by the
Government; (b) expansion in the scope of the systems improvement sub-component and the institutional
development component (section 3\.5), which necessitated a time-consuming process of consultation and
agreement with the LAs; (c) a considerable delay in the recruitment of consultants for the design of modality
of operation and the DMT program, primarily due to the long time taken by the Government to approve the
use of Bank loan proceeds for TA (although it was already included in the Loan Agreement); and (d) the
lack of knowledge and experience among the NIA design and field staff of the new technology promoted for
water level control and modality of operation, and the consequent delays from trials and errors\.
Overall, at Bank loan closing, the project is estimated to have benefited 504,850 farm families (110% of
the SAR estimate of 460,000), with about 45,300 families benefiting from rehabilitated areas, and about
10,700 from restored and generated areas in 17 improved NIS; and the rest in NIS provided with
incremental O&M support\. An additional 10,000 farm families are expected to benefit when the restored
areas reach full development in year 2003\. The main benefits accrued to farmers in restored and generated
areas, as these were converted or will be converted from rain-fed to irrigated areas\. The incremental rice
production at full development of irrigated areas in year 2003 is estimated at about 94,000 t/year,
compared to the appraisal estimate of 93,000 tons\. The project has a highly satisfactory ERR (section 4\.3)
and the net financial return to beneficiaries is expected to be higher than that estimated at appraisal (section
4\.4 and Annex 3)\.
The project objective of increased operational efficiency of NIS was substantially achieved through a
higher cropping intensity and technical changes in modality of operation in 17 NIS (see section 4\.2)\.
Moreover, greater equity in water distribution, not envisaged at appraisal, was achieved through changes in
modality of operation\. The project also supported formation and/or strengthening of lAs and CIAs,
achieved participatory planning and implementation of improvement works, and initiated a major IMT
program covering 17 improved NIS under the project and other NIS being improved under the follow-on
WRDP (Loan 4110-PH)\.
4\.2 Outputs by components:
Improvement and Urgent Repair of Selected NIS\. The performance of the component, which accounted
for about 50% of project costs at appraisal and 52% at completion, is rated satisfactory overall, although
its implementation was considerably delayed due to reasons explained in section 4\.1\. All major
improvement works on the 17 selected NIS were completed by the Bank loan closing date\. Since minor
tertiary and farm-ditch works by farmers are in progress, full development of incremental irrigated areas is
expected in year 2003\.
The SAR targeted improvements on 78,655 ha in 18 NIS with a service area of 95,944 ha\. The improved
- 4 -
area included both rehabilitated and incremental irrigated area, but the figures for the two were not
specified\. During implementation, as a result of parcellary mapping and exclusion of one NIS, the
firmed-up service area of 17 NIS was determined to be 86,913 ha\. Further, after agreement with the
August/September 1999 Bank supervision mission, improvement targets were revised upwards to 84,200
ha in both wet and dry seasons (97% of the firmed-up service area)\. The improved area target included: (i)
rehabilitation of about 61,580 ha in the wet season and 60,000 ha in the dry season; and (ii) incremental
irrigated areas, consisting of restored areas of about 22,470 ha in the wet season and 24,000 ha in the dry
season, and new/generated areas of about 200 ha in both seasons (rehabilitated, restored and generated
areas are defined in Annex 3, para\. 5)\. As some incremental irrigated areas were achieved in the early
years of the project due to other funding available to NIA, the incremental area to be achieved through
project funds alone was projected at about 16,900 ha in the wet season and 17,700 ha in the dry season\.
By the end of year 2000, about 73,000 ha in the wet season and 72,000 ha in the dry season had been
improved in the 17 selected NIS\. This represented about 92% of appraisal expectation, and about 86%
of the revised higher target\. The achievement of rehabilitated and generated areas was 100% of the
respective revised targets\. However, the restored area was about 11,700 ha in the wet season (52% of the
revised target) and 12,200 ha in the dry season (51% of the revised target)\. The relatively low achievement
of restored areas was due to the fact that many tertiary works by farmers were still in progress at the end of
year 2000 when NIA completed the improvement works on main and secondary canals\.
Since, in addition to the system improvement and repair component, the project provided incremental O&M
support to all existing 165 NIS, the SAR target for irrigated cropping intensity (increasing from 140%
without project to 150% with project) referred to the entire service area of 620,000 ha\. Although the
irrigated area in year 2000 was about the same as expected at appraisal, the irrigated cropping intensity
was 144%, lower than that projected at appraisal, since the service area had increased to 646,000 ha
without a commensurate increase in irrigated area (see Annex 3 for details)\. However, for the 17 NIS
included in the system improvement component, the irrigated cropping intensity increased from 149% in
without project situation to 167% by the end of 2000, and is expected to reach 194% at full development in
year 2003 (compared to 164% projected at appraisal)\.
The results of the survey undertaken for the ICR show that 80% of the farmers and CLA/IA officials
reported timely delivery and equitable distribution of water after the project, compared to only 40% before
the project (a summary of the survey results is at Annex 8, and details are available in Annex 9 of the
Borrower's ICR in Project Files)\. This and other findings in the survey clearly demonstrate the view held
by an overwhelmning majority of beneficiaries that there were significant improvements in irrigation service
in the 17 NIS brought about by the project\.
The positive views of the beneficiaries are corroborated by a technical evaluation, which shows that water
level control through long-crested weirs and changes in the modality of operations (proportional weirs and
modified pipe sizes, or a combination of the two), greatly simplified operation, thus reducing the labor and
management inputs required from both NIA and CIAs/lAs, shortened the time required for land soaking
and preparation, and improved timeliness, adequacy and equity of water delivery (details of the technical
evaluation are in Annex 8 of the Borrower's ICR in Project Files)\. Further attention to improving the
planting calendar and on-farm water management is needed to reap full benefits of the new technology\.
Appraisal targets for repairs to major structures were exceeded, as 28 structures in 17 NIS were repaired
compared to 22 structures in 14 NIS envisaged at appraisal\. Works included repair of diversion dams and
sluice gates, additional sluices, river protection works, etc\. Two of the three planned silt excluders were
constructed; and erosion control measures (vetiver grass, gabion or rip-rap) were implemented in 52 NIS or
- 5 -
163% of SAR target (see section 6\.1 for further discussion on the siltation problem)\.
Incremental O&M\. All activities were substantially completed, and the output of the component
(accounting for 36% of project costs both at appraisal and completion) is rated satisfactory\. By the end of
year 2000, the project had provided nation-wide incremental funding for O&M activities covering 181 NIS
with a service area of about 646,000 ha, including canal maintenance (desilting and repair of embankment),
maintenance of service roads, maintenance of control structures and gates, and incremental personnel costs
for the Institutional Development Officers\. Targets for physical improvements under this component were
not specified in the SAR, but achievements included over 1,600 km of de-silting of canals and gravelling or
grading of service roads, and repair/replacement of some 4,700 structures\.
The project also sought to close the gap between O&M expenditures and NIA's revenues from ISF
collection and thus ensure sustainability of the improved system-level O&M services achieved under IOSP
I (Loan 2948-PH)\. While NIA was expected to maintain in 1992 constant terms the O&M expenditure
level (Peso 822/ha) achieved under IOSP I, sections of NIS were to be turned over to the lAs for O&M,
and ISF collection was to be increased in tenns of efficiency (from 60% of collectibles in 1991 to 70% by
project completion) as well as net collection (from Peso 317 million in 1991 to Peso 757 million in 1999 in
current terms), so that at least 95% of the O&M cost in 1999 was met through ISF collection\. NIA
succeeded in maintaining the O&M expenditures in 1992 constant terms, and in implementing a major IMT
program\. However, the objective of increasing net ISF collection, which was being achieved until 1997,
received a major setback when the then President announced "condonation" of ISF during his State of the
Nation Address in July 1998\. As a result, many farmers stopped paying ISF\. To control the damage done
by the Presidential announcement, a compromise solution was worked out, embodied in the Administrative
Order No\. 17 (AO 17) of August 31, 1998, establishing "socialised" ISF rates based on size of holdings,
which were substantially lower than the previous rates\. The net ISF collection in 1998 declined to Peso
316 million from Peso 455 million in 1997, and the collection efficiency to 49% from 63%\. However,
there was a marked improvement in 1999 and 2000, and net ISF collection improved to Peso 398 million
and the collection efficiency to 67% (71% in the 17 improved NIS) by the end of year 2000 (unaudited
figures)\. While the collection efficiency in year 2000 was thus close to the appraisal target of 70%, the net
ISF collection was about 87% of the 1997 level and only 53% of the appraisal target in current terms\.
Moreover, the net ISF collection in year 2000 met only about 54% of the O&M expenses (compared to
95% expected at appraisal)\. The remaining O&M expenses in year 2000 were met from NIA's equipment
rental income and government budgetary allocations (further discussion in section 6\.1)\.
Institutional Development\. The project continued the institutional development efforts initiated under
IOSP I for strengthening of lAs and NIA, through improvement in the ISF collection process (parcellary
mapping and preparation and updating of irrigation fee registers), staff training, support to the Irrigation
Management Information System (IMIS), technical assistance, and provision of equipment and materials\.
The achievement of the component (accounting for 13% of project costs at appraisal and 11% at
completion) was satisfactory overall\.
The project initiated the implementation of a major IMT program in 17 NIS improved under the project\.
The institutional efforts focused on reorganization and strengthening of Turnout Service Area Groups and
then LAs, and eventually organizing CIAs\. This process was piloted in the North Diversion Canal (NDC)-5
of MRIIS, with signing of the IMT contract in December 1998, and later replicated in other 17 NIS\. As of
end-2000, O&M responsibility under the new IMT contract in these NIS was turned over to 23 CIAs and
17 lAs, covering an area of 44,715 ha and 36,726 farmers\. In addition, management by lAs under existing
Stage II and III contracts covered 9,571 ha (33 lAs) and 2,308 ha (3 UAs), respectively\. The total area
under CIA/IA management, as of end-2000, was, therefore, 56,594 ha, or 71% of the 80,240 ha targeted
- 6 -
for farmer management (80,240 ha is derived by excluding from the total service area about 6,670 ha
served by main canals in large NIS, which are expected to remain under NIA management)\. The IMT
program in MRIIS was halted in mid-2000 due to resulting redundancies of NIA staff and lack of financing
for their early retirements\. However, negotiations for the signing of IMT contracts in the other systems are
continuing, and the total area under farmer management is expected to increase to about 68,000 ha by the
end of 2001 (85% of the area targeted for farmer management)\.
As regards the overall institutional development program in 181 existing NIS, achievements for organising
new lAs, registering them (as well as the backlog of lAs) with the Securities and Exchange Commission,
and providing them with O&M contracts, fell short of appraisal expectations (Annex 1), primarily due to
the decision to devote intensive efforts to the IMT program in the 17 NIS rather than extensive efforts in
other NIS\. However, about 80% of the total NIS service area is now under various forms of participatory
irrigation management (compared to about 62% at appraisal in 1992)\. The number of farmers and IA
officers trained (166,260) in all NIS far exceeded the appraisal target of 79,900\. This training covered
basic leadership, financial and system management, improved rice farming, and integrated pest
management (IPM)\.
Local training was provided to NIA staff, except for two NIA staff, who were sent on a study visit to
Mexico to observe the IMT program in that country\. One of the foremost authorities on the Mexico IMT
program also provided consultancy assistance to NIA\. His recommendations were consistent with the
thrust of the on-going IMT program and improved O&M services\.
The IMIS did not make much progress as the IMT program and the changed modality of operation required
a new set of indicators and monitoring arrangements\. This had not been finalized at the time of Bank loan
closing\. However, data for most of the monitoring indicators specified at appraisal were provided by NIA
to Bank supervision missions\. The one exception was gender-disaggregated data relating to lAs and
training activities\. Although some benchmark information on IA women members and officers was
collected, and some Gender and Development training provided to NIA staff, the efforts were not
systematic\. Moreover, targeting of training programs to increase participation of women in IA activities,
envisaged at appraisal, was not implemented\.
Agricultural Support Services\. The achievements of this component (accounting for about 1% of project
costs both at appraisal and completion) were close to targets (Annex 1)\. Activities under the component
consisted of demonstration trials of appropriate technologies; IA-based seed multiplication and distribution;
and training of farmers in soil and water management, integrated pest mnanagement (IPM), improved rice
production technologies, crop diversification, seed production, rice-fish culture, etc\. All support provided
by the component was channelled through the lAs, in coordination with the extension services of the
concerned LGUs\.
Average yield (weighted by service area) of palay (paddy) in the 17 improved NIS, reported for the year
2000 in the survey for the ICR, was 3\.92 tlha in the wet season and 4\.39 t/ha in the dry season (a detailed
discussion on yields is at Annex 3, para\. 7)\. As regards fertiliser use, the survey results showed that,
consistent with DA's recommendation, the farmers applied an average of 335 kg/ha (about 7 bags) of
conmuercial mixtures (appraisal expectation was 4-6 bags)\. The effect of the training on IPM was reflected
in the reduced expenditure on pesticides\. The average cost of pesticide application reported in the survey
was P 1,140/ha for the dry season and P 1,234/ha for the wet season, compared to P 1,920/ha and P
2,004/ha in 2000 constant prices, respectively, estimated during project preparation\.
- 7 -
4\.3 Net Present Value/Economic rate of return:
Following appraisal methodology, the NPV and ERR were re-estimated for the system improvement and
urgent repairs component only, including 100% of costs for institutional development and agricultural
support services\. These costs account for 64% of total costs\. For the incremental O&M component, which
accounts for the remaining 36% of total costs, the NPV and ERR were not recalculated since, as stated in
the SAR, the component was designed to maintain, and in fact did maintain, the O&M expenditures
achieved under IOSP I in 1992 constant terms, and, its ERR is, therefore, the same as for IOSP I (the ERR
for IOSP I was estimated in the SAR for IOSP II at 21%, but was re-estimated at 28-35% in the
subsequent OED Performance Audit Report No\. 18034 of June 19, 1998 for IOSP I)\. For the system
improvement and urgent repairs, only the benefits of incremental irrigated areas in 17 NIS were included,
and benefits of rehabilitation as well as urgent repairs, which are significant but difficult to quantify, were
not included\. Similarly, in the without project situation, there could have been a decline in the irrigated
areas due to further system deterioration, but this possible decline has not been taken into account in the
analysis\. The re-estimated NPV and ERR are thus conservative\. Incremental production benefits were
estimated on the basis of weighted average yields of 3\.92 t/ha and 4\.39 t/ha for the irrigated areas in the
wet and dry seasons, respectively, as reported in the ICR survey (compared to 4 t/ha for both seasons
assumed in the SAR), and 2\.2 t/ha for the rain-fed areas (compared to 2\.8 t/ha in the SAR), as reported by
the Bureau of Agricultural Statistics (BAS) for the year 2000\. The weighted average yields for irrigated
areas are heavily influenced by relatively high yields in MRIIS, which accounts for about 75% of the
service area in the system improvement sub-component\. The higher yields in MRIIS are mainly due to the
fact that it is a reservoir-backed system with more stable water supplies, compared to the other NIS under
IOSP II which are run-of-the-river systems (except for four pump systems with a relatively small total
service area) with highly variable water supplies from year to year (details in Annex 3, para\. 7)\. The
average official exchange rate of Peso 50=US$I, which prevailed from late 2000 to mid-2001, and a
Standard Conversion Factor of 1\.0 for local costs were used for the base case ERR\. Based on the above
assumptions, the ERR is re-estimated at 21% (and NPV at Peso 1,251 million at a discount rate of 10%),
compared to 17% estimated in the SAR\. Separate ERRs calculated in the Borrower's ICR show about 26%
for system improvement and 18% for urgent repairs\.
The major factor contributing to the relatively high ERR at completion is the farmgate economic price of
palay (paddy), which was projected at P 3\.78/kg for year 2000 in 1992 constant terms (Peso 6\.8/kg in
2000 constant terms) in the SAR, but was estimated at P 8\.7/kg or about 28% higher in real terms at
end-2000, principally resulting from the steep exchange rate depreciation over the last few years (from
Peso 25\.5=US$1 in December 1992 to an average of Peso 44 in year 2000, and further to Peso 50 in the
first half of 2001), which has made import substitution of commodities like rice economically very
attractive\. Sensitivity analyses show that the project is economically viable in several adverse scenarios\.
The ERR is most sensitive to the level of achievement of full development targets for incremental irrigated
area and to world rice prices: if only 50% of the incremental irrigated area was achieved, the ERR would
decline to 12%, and if world rice prices decline by 20%, the ERR would be 14%\. With an assumed
irrigated paddy yield of 3\.75 t/ha for both seasons over the 30-year period of analysis (the assumption
made in the OED Performance Audit Report on IOSP I), the ERR would still be 16%\. If the incremental
irrigated area starts declining at 3% per annum from year 2001 onwards due to inadequate O&M
(historically, the decline has been much less even with inadequate O&M), the ERR would remain at 21%,
although the NPV at 10% discount rate would decline a little to Peso 1,146 million (see Annex 3 for details
of financial and economic analyses)\.
4\.4 Financial rate of retutrn:
It is estimated that, at full development of irrigated areas in the 17 NIS improved under the project (194%
irrigated cropping intensity), net returns for share-tenants and owner-operators would be about Peso
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21,600/ha/year and Peso 44,100/ha/year, respectively (US$430 and 880, respectively)\. This represents
increases of 19% and 21%, respectively, over the without project situation\. These returns are also higher
than those expected at appraisal (see Annex 3 for details)\. The increased farm incomes would have direct
poverty alleviation effects, since the beneficiaries are small owner-operators and share-tenants\.
4\.5 Institutional development impact:
Although significant institutional reform efforts were initiated under the project, beginning in 1998, and, in
particular, considerable progress on IMT was made, several issues remain to be addressed relating to the
financial viability of NIA, and the lack of political conmnitment to pursue irrigation sector reforms\. The
institutional development impact of the project at the time of Bank loan closing is, therefore, considered
modest\.
The IMT program is a positive step towards empowerment of farmers, and a critical element of the
irrigation reform process in the Philippines\. It has encouraged more active involvement of beneficiaries in
decision-making relating to irrigation systems management and CIA/IA operations\. It has several desirable
features, which distinguish it from the earlier turnover programs followed by NIA: (i) the IMT contracts
are signed after improvement works are completed; this greatly improves sustainability of O&M after the
tumover, and since the improvement works are aimed at simplifying operation, the CIAs/lAs can
concentrate almost exclusively on maintenance after turnover; (ii) larger organisations (CIAs or
Federations) are encouraged; this facilitates more professional management (like in Mexico); (iii) the earlier
cumbersome arrangements for sharing of ISF between NIA and the CIAs/JAs are replaced by a simple
sharing formula (section 3\.5); and (iv) monitoring by NIA of CIA/IA performance in O&M during a
two-year transition period after signing of the IMT contract, based on a set of technical, financial and
organizational indicators, is built into the IMT contract\. However, the IMT contract needs further
refinement, since it does not have a self-sustaining mechanism to ensure proper O&M by the CIAs/IAs, and
the sharing of ISF is still fraught with problems (see sections 3\.5 and 6\.1)\.
Although the IMT program made good progress until mid-2000, it was halted in MRIIS as staff
redundancy became an issue\. At the Bank's urging, NIA established a Task Force in mid-2000 to assess
the impact of IMT on staffing\. According to the Task Force report, some Peso 143 million was needed in
the first phase for about 300 staff willing to retire in the NIS covered by IOSP II, WRDP and the
ADB-supported ISIP II\. Unfortunately, the Government's acute budgetary problems since last year make
it unlikely that funding for early retirement of NIA staff will be available soon\. While serious efforts
should continue to be made to secure funding from the Government for already-identified NIA staff willing
to retire, the Task Force should expand its exercise to cover all the other NIS, Regional and Provincial
offices, and the central office, so that a phased streamlining program can be formulated to ensure NIA's
long-term viability\. A Streamlining Plan, which did not consider the implications of the IMT program, was
submitted by NIA to the Department of Budget and Management (DBM) in January 2000\. The Plan
proposed a 50% reduction in authorized NIA monthly positions (from 11,451 to 5,701), with the
consequent reduction in personnel costs from Peso 1\.64 billion to Peso 0\.95 billion\. However, since only
5,816 positions were filled at that time, the Plan implied an actual net reduction of 115 positions, with
virtually no change in the actual personnel cost of about Peso 0\.9 billion\. No decision on the Plan has been
taken by the DBM so far\. Clearly, the reduction in NIA monthly positions needs to be much larger than
that proposed in the Plan, particularly if the IMT program is taken into account\. There should also be a
significant reduction in the number of dailies (about 700 are charged to the NIA operating budget, and
about 7,400 to various on-going projects)\.
In addition to a significant downsizing of NIA, continued efforts to improve ISF collection would be
necessary to overcome the setback to NIA's financial viabilitv caused by the Presidential "condonation" of
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ISF in 1998 (see further section 6\.1)\. It is essential, for the Government to assist NIA in streamlining its
staffing and organization, and thereby improving its financial viability\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors ouitside the control of government or implemnenting agency:
Improvements and repair in some NIS were affected by occurrence of typhoons and flooding during the
construction period, resulting in increased cost and delayed implementation\.
5\.2 Factors generally subject to government control:
Implementation of the key components (system improvement and institutional development) was affected
by delays in the release of counterpart funds, and the Government's reluctance to use loan funds for TA
(see further section 7\.5)\.
5\.3 Factors generally subject to implementing agency control\.
NMA's efficiency in equipment procurement declined considerably in the last three years of the project\. As
a result, USS3 million of the Bank loan, which was planned to be used for procurement of pump equipment
and accessories for MRIIS, was cancelled\. NIA could also have made more concentrated efforts to
accelerate implementation of improvement works and the IMT program\.
5\.4 Costs andfinancing:
The total project cost at appraisal was estimated at US$69\.6 million (Peso 2,081\.3 million), and the Bank
loan of US$51\.3 million was to finance 74% of the project cost\. At completion, the total project cost is
estimated at US$68\.9 million (Peso 2\.2 billion), with Bank financing of US$47\.3 million, or 69% of total
costs (Annex 2)\. US$3 million of the Bank loan was canceled on January 5, 2001, and the remaining
US$1\.0 million on April 30, 2001\.
6\. Sustainability
6\.1 Rationalefor sustainability rating:
Sustainability, using the Bank's prevailing definition (the likelihood of the project generating a flow of
benefits large enough to exceed the expected marg&nal costs of operation and maintenance), is considered
likely\. The sensitivity analysis reported in section 4\.3 and Annex 3 shows that the economic returns from
the project would be attractive in many adverse scenarios, including the scenario of insufficient O&M
expenditures leading to a 3% per annum decline in irrigated areas (ERR of 21%)\. If the capital costs are
excluded from the analysis (treated as sunk costs), and only the post-project O&M costs are included, the
ERR and NPV would be very high\.
While sustainability is thus rated likely, a few steps should be taken by the Government and NIA to ensure
proper O&M of systems and thereby maximise project benefits\. The current average annual O&M
expenditure per ha for the 17 MS improved under the project is estimated at Peso 1,500 (US$30)\. The
desirable O&M expenditure per ha, as calculated in a recent consultant study (funded by ADB) on cost
recovery mechanisms for NIS, is Peso 2,300 (US$46)\. The desirable expenditure level would be lower as
the IMT program progresses, since the LAs/CIAs with IMT contracts would have their own staff whose
salaries and wages are much lower than those of NIA staff\. Even with the desirable average expenditure of
Peso 2,300/ha, eight of the 17 NIS are not expected to face any problem in meeting the O&M requirements
from the ISF income alone (a detailed system-by-system analysis is in section 6 of the attached Annex 9 -
Borrower's ICR - and in Annex 7-Ga of the Btorrower's ICR in Project Files)\. For the others, a
combination of increased ISF collection and reduction of O&M cost through IMT will be necessary\. It
* 10-
should be pointed out, however, that apart from ISF, NIA has other sources of funds for O&M, including
equipment rental income, annual budgetary allocations under the locally-funded programs for repair and
rehabilitation and drainage of NIS, and O&M subsidy of Peso 145 million per annum (Peso 220/ha) being
received from the Government since 1998\. The prospects of sustainability of O&M expenditures are,
therefore, much better than they would appear if one considered ISF alone, although, in the ideal situation,
ISF collection should at least provide for routine O&M, and the other sources of funds should be reserved
for repair and rehabilitation\.
The annual O&M expenditures, a significant proportion of which is for silt removal, can be further reduced
if a solution is found to the siltation problem\. The silt reduction measures adopted under the project, and
continued under the follow-on WRDP (Loan 41 10-PH), appear promising\. A preliminary evaluation
carried out by NIA last year in four selected NIS showed favorable technical and economic results\. In the
case of Tumauini, where a settling basin was constructed under IOSP II, the volume of sediments removed
declined by about 35% (from the pre-project annual average of 9,997 cubic meters to 6,450 cm)\.
However, substatial additional data is needed to arrive at a definitive judgement on the cost and technical
effectiveness of sediment reduction measures\. The data is expected to be generated under the on-going
sediment monitoring sub-component of WRDP\. Moreover, a complementary, broader watershed
management program is included under WRDP, and would be continued under the proposed (FY04) River
Basin and Watershed Management Program (likely to be an Adaptable Program Loan)\.
To further improve sustainability of O&M expenditures on headworks and main canals in larger systems
(>3,000 ha), which, as stipulated under AFMA, will remain with NIA even after IMT, NIA should
continue its program of increasing ISF collection (including efforts to re-instate the pre-1998 ISF rates) and
reducing its operating costs, particularly by persuading the Government to allocate sufficient funds for
early retirements of NIA staff\. The current costly practice of collecting ISF from hundreds of thousands of
farmers (water retailing) should be replaced by direct billing to the lAs (wholesaling)\. Moreover, a move
from the present system of sharing of ISF based on uniform national rates to a lump sum, system-specific,
and negotiated payment (including volumetric pricing, if found feasible under the on-going pilots) should be
seriously considered, as it will be advantageous to both NIA and the CIAs/IAs\.
To improve sustainability of O&M expenditures on smaller systems (<3,000 ha), which are to be
completely managed by CIAs/IAs after IMT, and on laterals and sub-laterals of larger systems already
transferred or to be transferred to the CIAs/lAs, monitoring by NIA of actual O&M expenditures during
the transition period after signing of the IMT contract should be given due attention\. Since continued
monitoring by NIA after the transition period is uncertain, establishment of earnarked O&M funds from
the share of the CIAs/lAs in ISF collection (such funds have already been established in some countries
which have IMT programs) should be seriously considered\. These earmarked funds are necessary because
the IMT contract does not have any in-built mechanism or assurance that there will be proper maintenance
in areas covered by IMT\. The exact proportion to be earmarked would depend on the O&M cost, and is
likely to differ from lateral to lateral and system to system\. The earmarked portion could be supplemented,
as necessary, by voluntary labor by the farmers or additional funds from the IA's share of ISF collection\.
The earmarking of O&M funds could be done by changing the bylaws of the lAs\. The IMT contracts
could also be modified accordingly\. The modified IMT contract with an earmarked O&M fund could then
combine the desirable features of earlier contract systems followed by NIA: it would retain the
independence of CIAs/lAs, and, at the same time, provide for a self-sustaining mechanism for proper
O&M\.
The earmarked O&M fund, to be available with the CIAs/lAs, would supplement the trust fund, currently
kept by the Regional Managers of NIA, which was established for each NIS improved under IOSP II from
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the equity contribution of farmers for improvement works (25% of labor cost for improvement of
secondary canals and 100% of labor cost for tertiary systems)\. Guidelines for the utilization of the trust
fund were finalized by NIA and circulated to its field offices in April 2001\. These should be disseminated
to the CIAs/lAs immediately, so that they can access the funds for their priority needs\.
The CIAs/IAs should also consider setting their own ISF rates, since they are not bound by AO 17\. A
higher collection of ISF would help ensure proper O&M and capital build-up for their other needs\.
6\.2 Transition arrangement to regular operations\.
Since development of incremental irrigated areas and institutional processes required for IMT were still in
progress in several NIS at the time of Bank loan closing, transition arrangements to regular operation are
extremely important\. The most important objective would be to ensure that conversion of rain-fed to
irrigated areas proceeds as planned, and is completed by year 2003, since the ERR is highly sensitive to
this development (scc section 4\.3)\. NMA should monitor this development and should prepare six-monthly
progress reports\. Several steps should also be taken to ensure the sustainability of the improvement works
and the IMT program: (i) close monitoring of the performance of CIAs/IAs as regards O&M in IMT areas
is necessary; (ii) monitoring of the functionality and impact of changes in the modality of operation should
be continued; (iii) the O&M plans for the systems and laterals transferred or to be transferred, which were
being translated into local dialects at the time of Bank loan closing, should be delivered to the CIAs/IAs
without further delay; (iv) the prototype manual for IMT, which was produced by the TA team, should be
polished by incorporating improvements based on the experience gained in different NIS; (v) the cascading
approach to technology transfer proposed by the TA team (training the IA officers, who would, in turn,
train farmers) and followed in the IMT pilot area (NDC-5), should be implemented in other IMT areas to
facilitate rapid capability build-up of ClAs/IAs; and (vi) efforts should continue to establish earmarked
O&M funds (section 6\.1)\.
As regards performance indicators to help monitor future operations and impact of the project, current
activities of NIA field offices and BAS in collecting yield data should continue\. The monitoring format
produced by NIA and regularly used by Bank supervision missions should also be maintained and updated
every year\. The format includes indicators for service area, irrigated area in wet and dry seasons, irrigated
cropping intensity, benefited area in wet and dry seasons, ISF collectibles and gross and net collection,
other income used for O&M, O&M expenses, and net income (deficit) for O&M\. The monitoring table
used during supervision showing the achievement of targets for rehabilitated, restored and generated areas
under the project should be updated regularly until full development is reached\. NIA should also have
regular rather than sporadic gender-disaggregated data collection related to CIA/IA activities and
leadership\.
7\. Bank and Borrower Performance
Bank
7\.] Lending
Bank performance during the design, preparation and appraisal processes was generally satisfactory\.
However, there was scope for a more substantive and innovative project design (section 3\.5)\.
7\.2 Supervision:
Bank supervision is rated satisfactory\. The supervision missions had an appropriate skill mix and staff
continuity, and reviewed project progress every six months\. The Bank helped NIA initiate a reform
program for the irrigation sector (section 3\.5), not envisaged at appraisal\. The Bank also played a decisive
role in ensuring technological change in the 17 NIS (structures for water level control and improved
modality of operation), expanding the IMT program coverage and content (including complete transfer of
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small systems to the CIAs/lAs, not envisaged at appraisal), initiating the discussion on earmarked O&M
funds, and helping initiate volumetric pricing pilots\. The Bank also assisted the Government in resolving
the problem of shortage of counterpart funds by establishing a Project Special Account (PSA) and a 90-day
advance facility from the PSA to field offices to expedite implementation of works\. An 1 8-month extension
of the loan closing date facilitated completion of major physical works by NIA\. The Quality Assurance
Group (QAG) of the Bank reviewed this project in the third Rapid Supervision Assessment (FY99), and
gave a satisfactory rating to focus on development impact, supervision of fiduciary aspects, adequacy of
supervision inputs and processes, and overall quality of supervision, and a highly satisfactory rating to
realism of project performance ratings\.
7\.3 Overall Bankperforrnance:
The overall Bank performance is rated satisfactory in the light of discussion in sections 7\.1 and 7\.2 above\.
Borrower
7\.4 Preparation:
Project preparation by NIA was satisfactory\. Detailed arrangements for first year civil works and other
activities were in place before negotiations\. A notable feature of project preparation was the high level of
participation by the LAs in identifying and agreeing to the improvement works to be undertaken in the
selected NIS\. Equity participation by the farmers through contribution of labor in improvement works was
a good idea as it led to accumulation of funds which can be used by the CLAs/LAs for priority activities\.
7\.5 Government implementation performance:
The implementation perfornance of the Borrower is rated unsatisfactory due to several reasons: (a)
insufficient budgetary allocation to the project in the first three years of implementation; (b) long delay in
approving the use of Bank loan proceeds for TA; (c) "condonation" of ISF by the then President; and (d)
lack of initiative to implement IMT (see further section 8)\. The above actions and inactions considerably
delayed project implementation and benefits, and undermined irrigation sector reform efforts\.
7\.6 Implementing Agency:
Overall, the performance of the implementing agency, NIA, was satisfactory\. Detailed and regular
monitoring of project progress was undertaken, and the draft ICR on behalf of the Borrower was submitted
to the Bank in time\. No significant problems relating to accounts and audits were encountered\. However,
equipment procurement performance was unsatisfactory in the last three years of the project (section 5\.3)\.
7\.7 Overall Borrower performance\.
Despite the problems mentioned in section 7\.5, the overall performance of the Borrower is rated
satisfactory since most project objectives were substantially achieved by the loan closing date\.
8\. Lessons Learned
* Political commitment is essential for irrigation sector reform\. (a) Although AFMA (Republic
Act 8435) of 1997 mandated IMT and stipulated its completion within five years, that is, by the end of year
2002, no initiative was taken by central agencies to implement this requirement\. The IMT program, which
commenced under IOSP II, was based entirely on the agreement between the Bank and NIA, and the central
agencies have so far not addressed the issue of NIA staff redundancy and financing requirement for early
retirements\. As a result, the IMT program remains stalled in MRIIS, and its future progress in MRIIS and
other large NIS remains uncertain\. (b) An equally serious evidence of the lack of political comniitrnent was
the populist action taken in mid-1998 when payment of ISF by the farmers was publicly "condoned" by the
then President of the country\. As a result, many farmers stopped paying ISF, and ISF collection declined
dramatically\. This action seriously undermined the efforts which had been made in the Philippines over the
- 13-
last two decades to improve cost recovery, increased budgetary subsidies to NIA in the short term but
jeopardized NIA's long-term financial viability, weakened the lAs as their share of ISF declined with the
overall decline in ISF collection, and diminished the capability of lAs and NIA to undertake proper O&M
of irrigation systems\. A strong political commitment is urgently needed if efficiency and equity are to be
improved in the irrigation sector, and if the AFMA provisions relating to IMT are to be implemented\.
* A program approach is needed for irrigation sector reform and NIS improvement\. The
system improvement and IMT models developed under IOSP 11, and the sequence of IMT following
improvement works, showed promising results in terms of improvement of both efficiency and equity in
irrigation services and generation of greater farmer involvement in planning and implementation of
improvement works and in O&M of irrigation systems\. Moreover, rehabilitation, repair and improvement
of existing NIS proved to be a cost-effective way to increase irrigated areas, as the average cost of
incremental irrigated area under the project was only about US$1,500/ha equivalent, which is much lower
than the cost/ha of new construction\. However, only a small number of NIS were covered under IOSP II
and other externally-supported projects, including WRDP (Loan 4110-PH)\. Since the gap between the
service area and the actual irrigated area of NIS is over 200,000 ha, a big potential exists to close the gap
at a relatively low cost by replicating the model developed under IOSP II in the remaining NIS\. This, along
with implementation of other elements of the irrigation sector reform program initiated under IOSP II
(section 3\.5), necessitates adoption of a 10-15 year program approach\. The proposal recently submitted by
NIA to the central agencies for improvement of the remaining NIS should be seriously reviewed by the
central agencies, and they, along with NIA, and with the support of extemal agencies, if necessary, should
ensure that the reform momentum is not dissipated\.
- 'The borrowing policy for TA should be decided early in the project cycle\. Although the Loan
Agreement included a disbursement category for TA, the Government, given its general policy to minimise
borrowing for TA, took a long time during the implementation phase to approve the use of the loan
proceeds for TA required for the design and piloting of modality of operation works and IMT\. This
seriously delayed project implementation and benefits\. The borrowing policy for TA should be decided
early in the project cycle, so that alternatives for project implementation can be considered before
appraisal\.
Participatory system evaluation improves sustainabiity of improvement works\. The NIS
Assessment undertaken by NIA, with the participation of the [As, for each system prior to improvement,
proved to be a valuable tool for identifying the performance deficiencies and improvement needs of the
system\. The participatory evaluation ensured acceptability by the lAs of the specific improvement works
undertaken, particularly changes in the modality of operation, and thereby improved prospects for
sustainability of the improvement works\.
9\. Partner Comments
(a) Borrower/implementing agency:
Comments from NIA
We have no objection on the presentations in the ICR\. In fact, they have provided a clearer picture of
details that effectively substantiate the factors, constraints, lessons and items for sustainability\.
One minor thing we only want to elaborate pertains to the last paragraph of Institutional Development in
- 14 -
section 4\.2 "\.targetting of training programs to increase participation of women \. was not implemented"\.
We wish to explain that while this did not happen as envisaged in the SAR, this aspect was mainstreamed
into our programs and strategies\. We encouraged the adoption of LA policies to ensure that there are
women BOD members\. In the conduct of training programs, we ensured that there are women participants
as much as possible\. Further, and since the situation in our country is different from other countries, we
realize that it is not increasing women participation that we need but providing the opportunities\. The
improved modality of operations gave more opportunities for women to occupy operations - related
positions because the control structures are easy to operate and monitor\.
For more than six years span of Systems Improvement under IOSP II offered immeasurable opportunities
for physical and institutional advancement on 17 NIS's\. Achieving the goal at the highest level becamne
difficult at a time when political climate is less cooperative\. The needed strong political commitment has
been disturbed by internittent changes in the agency leadership within the period of implementation\.
Nevertheless, what was achieved sufficiently justifies nurturing similar efforts in the future\. With lessons
leamed accumulating and political situation ripening, the needed efficiency and equity to improve irrigation
sector is more appealing as ever\.
To ensure a successful replication of the physical improvements and improved modality of operation,
design and construction of weirs and proportional dividers must be completed simultaneously before
operations\.
(b) Cofinanciers:
Not applicable
(c) Other partners (NGOs/private sector):
Not applicable
10\. Additional Information
The project's environmental category was appropriately rated B at appraisal\. While there is no evidence of
any significant increase in application of fertilisers due to the project, the survey undertaken for the ICR
preparation shows that pesticide use has actually declined in project areas since appraisal (see discussion
on Agricultural Support Services in section 4\.2)\.
- 15-
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome / Impact Indicators:
tndicatorMatrix Projecte in ta estPSR ActuaULatest Estimate
Farmers benefited (No\.) 460,000 504,850
Farm (rice) net income (P/ha/year)
Share tenants 19,104 21,600
Owner-operators 38,209 44,100
Incremental rice production (t/year) 93,000 94,000
Output Indicators:
IndiirlMatrix Projected in te PSR Actua/Latest EstImat*
A - Improvement and urgent repairs
Number of NIS for system improvement 18 17
Service area (ha) 95,944 86,913
Improved area (ha)*
Rehabilitated - Wet season 61,577 61,147
- Dry season 59,970 59,644
Restored - Wet season 22,463 11,705
- Dry season 24,020 12,144
Generated -Wetseason 210 210
- Dry season 210 210
Incremental irrigated area (ha)-
Wet season 22\.673 11,915
Dry season 24,230 12,354
No\. of NIS for urgent repairs 14 17
No\. of structures for repair 22 28
Silt excluders (No\.) 3 2
Erosion cortrol (No\. NIS) 32 52
Pilot water control structure 1 1
B- Incremental O&M
Numberof NIS 165 181
Irrigated cropping intensity* 150 144
ISF collection efficiency 70 67
Canal maintenance (km) Not quantified 1\.640
Control gates and structures repaired Not quantified 4,707
C- Institutional development
No\. of new lAs organised (overall) 47 29
No\. of lAs registered with the SEC (overall) 347 130
No\. of lAs with O&M contracts (overall) 536 226
No\. of IMT contracts in 17 NIS Not quantified 40
Ha under farmer management in 17 NIS Not quantified 56,594
No\. of IA officerstfafners trained (overal) 79,900 166,260
0 Agricultural support services
Number of demonstraton farms 421 345
Numberof IPM-Fanmer Field Schools 18 17
Farming systems demonstraton (No\.) 11 12
Fertiliser demonstrations (No\. sites) 120 102
Variety trials (No\. sites) 7 7
Rice/fish cuture (No\. sites) 18 9
Grain drying pavements (No\.) 4 4
Seedling nursery (No\.) 1 1
Field days (No\.) 98 43
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Seed production (No\. 40 kg bags)
Foundation seed procured 126 100
Registered seed procured 2,863 2,259
Foundation seed dstributed 126 100
Registered seed cistributed 1,908 1,395
Registered seed produdion 12,960 8,272
Certified seed production 284,600 124,000
Certified seed distribution 205 267
Farmers' training (No\. participants)
Rice production/pest management 261 189
Farmer field school 3,087 2,743
Crop diversffication 44 43
Seed producion 540 370
Farming systems technology 50 20
Capital build up 27 14
Rice/fish culture 50 25
End of project
Note: The column 'Projected in last PSR' refers to projections in SAR, Mid-Term Review or last PSR, as
the case may be\.
* For a definition of rehabilitated, restored and generated area, see Annex 3, para\. 5\.
** The incremental irrigated area is the total of restored and generated area\. The achievement of restored
and generated areas as of end-2000 was 11,915 ha in the wet season and 12,354 ha in the dry season, as
shown above\. Full development of the targeted 22,673 ha in the wet season and 24,230 ha in the dry
season is expected by early 2003\. Some incremental irrigated area was achieved through other funding
sources in the early years of the project\. The targets to be achieved through project funding alone are
estimated at about 16,900 ha in the wet season and 17,700 ha in the dry season at full development in
2003\.
"** The figures refer to overall intensity for the entire service area of NIS\. For the 17 NIS selected for
improvement (18 at appraisal), the target irrigated cropping intensity was 164%, the achievement by
end-2000 was 167%, and projected by full development in early 2003 is 194%\.
- 17 -
Annex 2\. Project Costs and Financing
Project Cost by Component\. (in US$ million equivalent)
ra i -sal Actual/Ls Percentage of
one l~~Esimae Etm pria
000j:jPrw$ectL Cost Bytiti|X ECoponent0 US$ m ;0;0 0jU illion; 0 tUS$ millilon;0;
Improvement and Urgent Repair of NIS 29\.10 36\.15 103
Support to System-level O&M 22\.20 24\.66 100
Institutional Development 7\.90 7\.25 82
Agricultural Support Services 0\.80 0\.80 89
Total Baseline Cost 60\.00 68\.86
Physical Contingencies 3\.40
Price Contingencies 6\.20
Total Project Costs 69\.60 68\.86
Total Financing Required = 69\.60 68\.86
Note: In the column 'Percentage of Appraisal', appraisal costs are inclusive of contingencies\.
Project Costs by Procurement Arran ements (Ap raisal Estimate) (US$ million equivalent)
Eedttr atgV IB 0 0NCB Otet ;;\.F MTd ta lgF Cos
1\. Works 0\.00 14\.40 21\.60 0\.00 36\.00
(0\.00) (1311\.40) (20\.10) (0\.00) (33\.50)
2\. Goods 3\.60 1\.00 0\.00 0\.00 4\.60
(3\.20) (0\.90) (0\.00) (0\.00) (4\.10)
3\. Services 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
4\. Incremental O&M 0\.00 6\.20 18\.50 0\.00 24\.70
(0\.00) (2\.40) (7\.00) (0\.00) (9\.40)
5\. Institutional 0\.00 0\.00 4\.30 0\.00 4\.30
Development & T\.A\. (0\.00) (0\.00) (4\.30) (0\.00) (4\.30)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (o\.00) (0\.00) (0\.00) (0\.00)
Total 3\.60 21\.60 44\.40 0\.00 69\.60
(3\.20) (15\.70) (31\.40) (0\.00) (51\.30)
- 18 -
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
Expenditure Category Procurement Method N\.8\.F\. Total Cost
N4C8 Other' _ _ _ _ _ _ _ _
1\. Works 0\.00 15\.30 21\.65 0\.00 36\.95
(0\.00) i(13\.02) (18\.42) (0\.00) (31\.44)
2\. Goods 3\.00 1\.35 0\.00 0\.00 4\.35
(3\.00) (0\.96) (0\.00) (0\.00) (3\.96)
3\. Services 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
4\. Incremental O&M 0\.00 4\.20 20\.46 0\.00 24\.66
(0\.00) (1\.53) (7\.43) (0\.00) (8\.96)
5\. Institutional 0\.00 0\.00 2\.90 0\.00 2\.90
Development & T\.A\. (0\.00) (0\.00) (2\.90) (0\.00) (2\.90)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00
Total 3\.00 20\.85 45\.01 0\.00 68\.86
(3\.00) I(15\.51) (28\.75) (0\.00) (47\.26)
Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\.
v Includes civil works and goods to be procured through national shopping, consulting services, services of contracted
staff of the project management office, training, technical assistance services, and incremental operating costs related to
(i) managing the project, and (ii) re-lending project Rinds to local government units\.
Project Financing by Component (in US$ million equivalent)
Pereeatage of Appraisal
Component Appraisal Estimate Actual/Latest Estimate _ _
Bank I Govt\. CoF\. Bank Govt\. CoF\. Bank Govt CoF\.
Improvement and Repair 32\.70 2\.40 30\.75 5\.40 94\.0 225\.0
Incremental O&M 9\.40 15\.30 8\.96 15\.70 95\.3 102\.6
Institutional Development 8\.40 0\.50 6\.85 0\.40 81\.5 80\.0
Agric\. Support Services 0\.80 0\.10 0\.70 0\.10 87\.5 100\.0
Total 51\.30 18\.30 47\.26 21\.60 92\.1 118\.0
-19-
Annex 3: Economic Costs and Benefits
Pree;t ValueofFaws(2000 Con t Te
Appraisal Latest Estimate Appra 0isa La \ test Estimate
Economic rate of 17 21
return (%)
Net return
(P/ha/year)
-Share-tenant 19,104 21,600
-Owner-operator _ 38,209 44,100
NVP at 1O % (Peso 292\.1 1,251\.4
million) I I
Note\. Netfinancial returns and NPVat appraisal have been converted to 2000 constant terms using the
consumer price index\.
FINANCIAL AND ECONOMIC ANALYSIS for ICR
A\. Introduction
1\. The analysis presented here re-estimates the economic rate of return (ERR) calculated in the Staff
Appraisal Report (SAR), using updated prices, actual project costs, and latest information on crop
production\. The impacts of the project on agriculhtual production and farmers' incomes are also
re-estimated\.
2\. The framework of the analysis follows, as far as possible, that of the SAR\. Project costs and
physical areas covered were based on project records and are considered fairly accurate\. The crop yield
estimates are based on a survey conducted towards the end of year 2000 by the consultants who prepared
the Borrower's ICR\. Since yield projections over a 30-year period of analysis for the ERR calculation are
always subject to uncertainties, a sensitivity analysis, based on a lower yield level, was also undertaken to
test project economic viability in an adverse scenario\.
B\. Project Benefits
3\. The project's major objective was to achieve a sustainable improvement in the operational
efficiency of the National Irrigation Systems (NIS)\. The main benefit of the project was an increase in
irrigated area or irrigated cropping intensity, which, in turn, has and would help increase palay (paddy)
production, farm incomes and employment\.
4\. Since, in addition to the system improvement and repair component, the project provided
incremental O&M support to all existing 165 NIS the SAR target for irrigated cropping intensity
(increasing from 140% without project to 150% with project) referred to the entire service area of 620,000
ha\. The wet season irrigated area was expected to increase from 446,000 ha to 483,000 ha, and the dry
season irrigated area from 421,000 ha to 446,000 ha\. The latest data provided by NIA show that the
- 20 -
appraisal figures were not entirely accurate: although irrigated cropping intensity was 140% in 1991, it had
already declined to 134% in 1992, the appraisal year, and was the same in 1993, the year of project
commencement\. The latest data also show that the irrigated area in year 2000 was about 478,000 ha in the
wet season and 450,000 ha in the dry season\. These figures are almost the same as expected at appraisal\.
However, the irrigated cropping intensity in year 2000 at 144% was lower than that expected at appraisal,
since the service area had increased to 646,000 ha without a commensurate increase in irrigated area\.
However, for the 17 NIS included in the system improvement component, the irrigated cropping intensity
increased from 149% in without project situation (1992) to 167% by the end of 2000, and is expected to
reach 194% at full development in year 2003 (compared to 164% expected at appraisal)\. The SAR
estimated the annual incremental rice production at about 100,000 tons (93,000 tons, to be precise,
converting the 144,000 tons of paddy at 65%)\. This was projected on the basis of the overall NIS service
area of 620,000 ha\. For the ICR, the incremental production at full development in year 2003 is projected
at about 94,000 tons of rice (145,000 tons of paddy)\. This projection is based on the incremental
production from the 17 NIS improved under the project\. The production projection is about the same as at
appraisal, since the yields of irrigated paddy are assumed to be higher and of rain-fed paddy lower than
those at appraisal (see para\. 7 below for a detailed discussion)\. If the appraisal yields were assumed, the
production projection would be somewhat lower in the ICR than that in the SAR\.
5\. For the 18 NIS to be improved under the project, the SAR targeted 78,655 ha out of a service
area of 95,944 ha\. The improved area included both rehabilitated and incremental irrigated area, but the
exact figures for the two were not shown\. During implementation, as a result of exclusion of one NIS and
parcellary mapping, the firmed up service area of 17 NIS was reduced to 86,913 ha\. Further, after
agreement with the August/September 1999 Bank supervision mission, improvement targets were revised
upwards at 84,200 ha in both wet and dry seasons (97% of the firmed-up service area)\. The improvement
targets were disaggregated into rehabilitated areas (existing irrigated areas where irrigation structures
and/or water availability are improved as a result of the project), restored areas (area within the firmed-up
service area which was not irrigated before or not irrigated for the past few years, and is now irrigated as a
result of the project), and new or generated areas (new areas over and above the firmed-up service area
which are brought under irrigation as a result of the project, and thus lead to a higher firmed-up service
area)\. The targets for rehabilitated areas were about 61,580 ha in the wet season and 60,000 ha in the dry
season, for restored areas about 22,470 ha in the wet season and 24,000 ha in the dry season, and for
new/generated areas about 200 ha in both seasons\. However, part of the areas restored in the early years of
the project were due to other funds available to NIA for the 17 NIS, and the incremental area targeted for
achievement through project funds alone is about 16,900 ha in the wet season and 17,700 ha in the dry
season\. The August/September 1999 Bank supervision mission also agreed with NIA that project
contribution would be measured primarily in terms of restored and new/generated areas, and the ERR
would be estimated on the basis of these areas only\. Benefits from the existing areas, which were
rehabilitated under the project, were to be regarded as additional benefits but not included in the ERR
calculation\. The rationale for this methodology was that restored and generated areas could be clearly
ascribed to the project, whereas benefits in rehabilitated areas, which would be mainly in terms of yield
increases, were difficult to ascribe to the project alone, since many other factors, including weather, could
have affected the yields, and yields would have fluctuated from year to year because of those factors\.
6\. By the end of year 2000, about 73,000 ha in the wet season and 72,000 ha in the dry season
had been improved in the 17 selected NIS\. This represented about 92% of the appraisal expectation, and
about 86% of the revised higher target\. The achievement of rehabilitated and generated areas was 100% of
the respective revised targets\. However, the restored area was about 11,700 ha in the wet season (52% of
the revised target) and 12,200 ha in the dry season (51% of the revised target)\. The relatively low
achievement of restored areas was, in general, due to the delay in the start of improvement works, and, in
-21 -
particular, due to the envisaged introduction of improved structures, which were completely new in the
irrigation sector in the Philippines (long-crested weirs for water level control and proportional dividers and
reduced pipe sizes for modality of operation), and which started only in 1999 after a time-consuming
process of consultation and agreement with the lAs and after technical trials and errors\. The remaining
restored areas are expected to be fully irrigated by early 2003 as tertiary works and farm ditches are
completed by farners\.
C\. Major Assumptions for Financial and Economic Analysis
7\. Project benefits were computed on the basis of the incremental irrigated areas only\. Estimates of
outputs in the irrigated areas covered by the project were based on the survey of beneficiaries in all the 17
NIS conducted for the Borrower's ICR by consultants\. Production costs for rain-fed areas were based on
the 1999 Bureau of Agricultural Statistics (BAS) average regional data converted to 2000 prices using the
consumer price index (CPI)\. The average yield (weighted by service area) of palay (paddy) for the
rehabilitated, restored and generated areas in the 17 improved NIS, as reported in the survey carried out by
consultants for the Borrower's ICR, was 3\.92 t/ha in the wet season and 4\.39 tlha in the dry season (see
table below)\. This was 2% lower in the wet season and about 10% higher in the dry season than the yield
levels estimated in the SAR (4 t/ha for both seasons)\. As expected, these yield levels were relatively higher
than the average of 3\.48 t/ha for irrigated areas reported by BAS for the year 2000, since BAS figures are
the average of IOSP II and non-IOSP II areas, and the latter generally did not have the improved facilities
provided to the 17 selected NIS\. The survey yield figures show a huge variation among the 17 NIS, from
2\.52 tlha in the dry season in Pongso and 2\.62 t/ha in the wet season in Barit to 5\.40 t/ha in the dry season
in MRIIS District 3\. The weighted average yield is heavily influenced by relatively high yields in the three
Districts of MRIIS, which account for about 75% of the service area\. The higher yields in MRIIS are
mainly due to the fact that it is a reservoir-backed system with more stable water supplies, compared to the
other NIS under IOSP II, which are run-of-the-river systems (except for four pump systems with a
relatively small total service area) with highly variable water supplies from year to year\. The relatively
high yields in MRIIS for the year 2000, reported in the survey, are consistent with those reported by NIA
field offices for MRIIS over 1992-2000 (average 3\.96 t/ha and 4\.34 t/ha in the wet and dry season,
respectively)\. There were also significant annual variations in yields of all 17 NIS from 1992 to 2000, as
reported by NIA field offices, and as would be expected from the vagaries of weather and other natural
phenomena in the Philippines\. The average yield used for the financial and economic analysis (in the base
case) is 3\.92 t/ha in the wet season and 4\.39 t/ha in the dry season, as reported in the consultant survey\.
This implies a wet season incremental yield over rain-fed yield (2\.2 tlha, as reported by BAS for the year
2000) of 1\.72 t/ha and dry season incremental yield of 4\.39 t/ha (as there was no rain-fed crop in the dry
season)\.
- 22 -
Yield Per Hectare (kg) - Survey Data for Year 2000
Bonga 1 4,805\.64 4,805\.64
Bonga 2 4,517\.34 4,535\.51
Bonga 3 3,780\.00 3,780\.00
Cura 2,801\.78 2,801\.78
IAAPIS 2,750\.00 3,681\.08
Baggao 3,484\.16 3,572\.74
MRI1S District I 3,828\.95 4,254\.06
MRIIS District 3 4,528\.51 5,396\.83
MRIIS District 4 4,425\.36 5,017\.29
Agos 3,054\.50 3,829\.19
Matogdon 4,473\.25 4,076\.62
Barit 2,620\.04 3,135\.87
Sta\. Maria 3,081\.11 4,228\.42
Pongso 3,390\.49 2,517\.64
Maranding 3,807\.51 4,065\.12
Malasila 4,573\.61 4,049\.76
Cantingas 2,843\.71 3,012\.70
Weighted Average 3,920\.29 4,387\.46
8\. The above reported yields in year 2000 are lower than the potential with good irrigation and
drainage services, management, and adequate agricultural support services\. However, for the financial and
economic analyses, no further increases have been assumed over the 30-year period of analysis\. Further, a
sensitivity analysis for the ERR was undertaken, assuming an average yield of only 3\.75 t/ha in both the
wet and dry seasons over a 30-year period of analysis (the yield figure of 3\.75 t/ha was assumed in the
OED Performance Audit Report No\. 18034 of June 19, 1998 for the preceding IOSP - Loan 2948-PH)\.
Similarly, in the without project situation, there could be a decline in irrigated areas in both seasons due to
further system deterioration\. This possible decline has also not been taken into account in the economic
analysis\.
D\. Financial Analysis
9\. Farmers' Income\. The financial attractiveness of the project to fanners was evaluated using crop
budgets and farrn models\. To determine the impact of the project on the individual farrners, detailed
financial crop budgets were prepared and typical farm models were analysed\. The results of the survey by
the consultants, who prepared the Borrower's ICR, show that the majority of the farmers in project areas
are owner-operators, representing 64% of farmers, with an average holding of 1\.5 ha\. The rest are
predominantly share tenants, cultivating about 1 ha per household\. The most common arrangement for the
tenants was equal sharing of the net harvest after deducting the expenses for inputs and planting costs\.
Based on crop budgets, and two indicative farm models with average farm size of 1 ha and 1\.5 ha under
different types of tenure (share-tenant and owner-operator, respectively), the full development annual
incomes of farmer beneficiaries estimated at appraisal and completion are summarised below:
- 23 -
Annual Income Projections for Farmers (Peso '000)
, ICR with :roject X *\.R with projec' 3 Without prjec
1 ha share-tenant 21\.6 19\.1 18\.1
1\.5 ha owner-operator 66\.1 57\.3 54\.6
** Adjusted to 2000 price using CPI
At full development of irrigated areas, which is to be achieved by early 2003, net returns for a one hectare
share-tenant and 1\.5 ha owner-operator would have increased by 19% and 21%, respectively, compared to
the without project situation\. Assuming (as at appraisal) 82 person-days/ha required for farmning in
irrigated areas, net returns per person-day of family labor per ha would be Peso 538 for an owner-operator
and Peso 263 for a share-tenant\. These returns are very attractive, compared to the prevailing rural wage
rate of Peso 60-100/person-day\. The higher farmer's income now projected at full development compared
to that at appraisal is due to the higher cropping intensity (194%), higher farm-gate prices, and higher
yields (4\.39 ton/ha) for irrigated areas in the dry season, compared to the cropping intensity, farm-gate
price, and yield estimated in the SAR\. However, the net return figures in the ICR are not comparable to
those in the SAR, because the SAR figures were calculated on the basis of an overall irrigated cropping
intensity of 150% and average yields of 4 ton/ha over the entire project service area of 620,000, whereas
the ICR estimates are based on the irrigated cropping intensity and yields on the 17 NIS irnproved under
the project\.
10\. Poverty reduction impact\. As mentioned above, most of the farmers benefiting from the
project are smallholders/share-tenants\. Project benefits, as reflected in increased farm incomes, would,
therefore, have direct poverty alleviation effects\.
E\. Economic Analysis
11\. At appraisal, the ERR was calculated for the system improvement sub-component on the basis
of costs and benefits of five NIS where improvement works were to commence in the first project year\.
The ERR for the sub-component was 19%\. For the urgent repairs sub-component, the ERR (28%) was
calculated for 20 structures in 14 NIS\. The overall ERR for the project was 17%\. At completion, the ERR
for the system improvement sub-component covers all the 17 NIS under the project\. For the urgent repairs
sub-component, the ERR (calculated in the Borrower's ICR) covers 13 of the 17 NIS repaired\.
12\. Investment costs\. Project costs used in the analysis were based on actual costs incurred\. All
costs were included in the analysis except incremental O&M costs\. For the incremental O&M component,
which accounts for 36% of total costs at completion, the NPV and ERR were not recalculated since, as
stated in the SAR, the component was designed to maintain, and in fact did maintain, the O&M
expenditures achieved under IOSP I in 1992 constant terms, and its ERR is, therefore, the same as for
IOSP I (the ERR for IOSP I was estimated in the SAR for IOSP II at 21%, but was re-estimated at
28-35% in the subsequent OED Performance Audit Report on the project)\. For the economic analysis of
IOSP II at completion, costs in current Pesos were converted to 2000 prices by applying the Consumer
Price Index to the local costs and the MUV Index to the foreign costs\. The foreign exchange component
was estimated at 20% of the total costs\. Project investment costs in constant financial prices were
converted into economic prices by applying the Standard Conversion Factor (SCF) of 1\.0 to local costs\.
The average official exchange rate of Peso 50=US$1, which prevailed from late 2000 to mid-2001, was
used in the base case ERR\. However, since there has been a considerable exchange rate volatility over the
last few years, and the average exchange rate in year 2000 was Peso 44=US$1\.00, a sensitivity analysis
- 24 -
was also undertaken at that exchange rate with a SCF of 1\.0\. At appraisal, the SCF used was 0\.83 (or a
shadow exchange rate 20% above the market exchange rate), and the opportunity cost of unskilled labor
was estimated at 60% of the prevailing market wage rate\. At completion, the SCF applied to the financial
labor costs (both hired and family labor) is 1\.0, since there appear to be no significant distortions in the
rural labor market\.
13\. O&M and Other Recurrent Costs for 17 NIS\. For the restored and generated areas
included in economic analysis, an 0 & M cost of Peso 1,500/ha, which is the estimated actual for year
2000, was used through the year 2001\. From the year 2002 onwards, the desirable O&M expenditure level
of Peso 2,300/ha, as estimated in a recent consultant study, was used\. Economic costs of trade-able farm
inputs were valued at border (parity) prices\. For economic costs of non-tradeable farm inputs and labor, an
SCF of 1\.0 was used\. Savings in cost of operation for pump systems, which were included in the ERR
calculation in the Borrower's ICR, were not considered in the Bank's ERR calculations\.
14\. Benefits\. Project benefits, as mentioned earlier, are based on the incremental irrigated
(restored and generated) area in the 17 NIS\. The areas restored due to other funding sources were
excluded, and only areas attributable to project funding were included in the economic analysis (16,900 ha
and 17,700 ha in the wet and dry season, respectively, at full development)\. The economic farm-gate price
of paddy is based on import parity\. In the Borrower's ICR, the ERR for the urgent repairs sub-component
was calculated separately, and the benefits included were: reduction of future repair costs; restoration and
increase of irrigated areas; prevention of loss of irrigated areas; savings in O&M costs; prevention of
health hazards; and prevented upstream flooding and facilitated releases downstream\.
15\. Re-estimation of the ERR\. The ERR of the project was based on all project costs (except
that of the incremental O&M component) and incremental production benefits in restored and generated
areas in 17 NIS\. The ERR was re-estimated at 21% and NPV at Peso 1,251 million at a discount rate of
10%, as compared with the ERR of 17% in the SAR\. The ERR of 21% is conservative, since no benefits
of rehabilitation and urgent repairs were included in the economic analysis, even though the corresponding
costs were included\. The Borrower's ICR also estimates ERRs separately for the systems improvement
sub-component (about 26%) and the urgent repairs sub-component (about 18%, compared to 28%
estimated at appraisal), and individual ERRs for the 17 NIS with system improvement and 13 NIS with
urgent repairs\. The individual ERRs for the system improvement sub-component range from a low of
about 7% for Bonga Pump #3 and Cura to a high of 115% for Malasila\. Of the 17 NIS, only three had
ERRs of less than 10%\. For the urgent repairs sub-component, the individual ERRs range from a low of
4% for the Pagbahan intake to a high of 63% for the M'lang Diversion Dam\. Of the 13 NIS analysed, only
three had ERRs of less than 10%\. The overall ERR for the urgent repairs sub-component (18%) was lower
than that at appraisal (28%), principally because delayed and staggered fund releases led to increases in
costs, slower implementation and the consequent reduction in actual and potential benefits\. The details of
individual system ERRs are in Annexes 7 and 11 of the Borrower's ICR in Project Files\.
16\. A relatively high ERR is to be expected for projects of this nature where incremental benefits
are generated at a relatively low cost through improvement and rehabilitation\. The cost of an incremental
irrigated ha under the project at full development is estimated at only Peso 75,000 or US$1,500 (the total
cost of system improvement works and associated costs of agricultural support services, IA/CIA
development, technical assistance, parcellary mapping, NIA staff training, and equipment and materials,
was Peso 1\.279 billion in 2000 constant terms, and the expected full development incremental irrigated area
in year 2003 is about 17,000 ha)\. Moreover, the steep exchange rate depreciation over the last few years
has made import substitution of commodities like rice economically very attractive\. The ERR at
completion is also higher than at appraisal due to the following major factors: (i) the irrigated cropping
- 25 -
intensity at full development in the 17 NIS is projected to be higher than that estimated in the SAR; (ii)
yield in the irrigated areas in the dry season is assumed to be higher than that in the SAR; and (iii) the
economic farmgate price of palay (paddy), which was projected at Peso 3\.78/kg for year 2000 in 1992
constant terms (Peso 6\.8/kg in 2000 constant terms) in the SAR, was estimated at Peso 8\.7/kg or about
28% higher in real terms at end-2000, principally resulting from the steep exchange rate depreciation over
the last few years (from Peso 25\.5=USS1 in December 1992 to an average of Peso 44 in year 2000, and
further to Peso 50 in the first half of 2001)\.
17\. Sensitivity Analysis\. Several sensitivity analyses were undertaken\. (i) At an exchange rate of
Peso 44=-US$1 and an SCF of 1\.0 for local costs, the ERR would decline to 17% and the NPV at 10%
discount rate to Peso 710 million\. (ii) At an assumed paddy yield in irrigated areas averaging only 3\.75
t!ha over the 30-year period of analysis, the ERR would decline to 16% and the NPV at 10% discount rate
to Peso 642 million\. (iii) If only 50% of the targeted incremental irrigated area is achieved at full
development, the ERR would be only 12% and the NPV at 10% discount rate only Peso 163 million\. (iv) If
the incremental irrigated area starts declining at 3% per annum from year 2001 onwards due to inadequate
O&M (historically, the decline has been much less even with inadequate O&M), the ERR would remain at
21%, although the NPV at 10% discount rate would decline a little to Peso 1,146 million\. (v) With a 20%
decline in world rice prices, compared to the currently projected level of US$250-270/ton over 2000-2010
in 2000 constant terms, the ERR would be 14% and NPV Peso 407 million at a discount rate of 10%\. The
major sensitivity results are shown below:
With paddy With 50% achievement of full With irrigated With world rice price decline of
yield of 3\.75 development irrigated area area declining at 20%
t/ha target 3% p\.a\.
16% 12% 21% 14%
The sensitivity results show that the project is economically viable and relatively robust, although quite
sensitive to the level of achievement of full development targets for incremental irrigated area and to world
rice prices\.
- 26 -
Annex 4\. Bank Inputs
(a) Missions: _
Stage of Project Cycle No\. of Persons and Specialty Performnce Rating
(e\.g\. 2 Economists, I FMS, etc\.) Implementation Development
MontvYear Count Specialty Progress Objective
Identification/Preparation
Aug/1991 4 C(2), B, E
Nov/1991 2 C(2)
May/1992 2 C, B
Appraisal/Negotiation
Pre-Appr: 4 B(2), C, E
Sepl 1992
Appraisal: 6 A, B(2), C(2), E
Dec/1992
Supervision
Jul/1993 I C S S
Jan/1994 1 C S S
Jun/1994 I C S S
Feb/Mar/1995 4 A, B, C, D S S
Mar/1996 3 A, B, C S S
May/1996 I C S S
MTR - 3 B, C, E S S
Mar/Apr/1997
Jun/1997 2 B, C S S
Oct/Nov/1997 3 B, C, G S S
Mar/1998 2 B, C S S
AuglSep/1998 5 B(2), C, F, G S S
Mar/1999 2 B, C S S
Sep/1999 3 B, C, D S S
Mar/2000 3 B, C, D S S
Sep/2000 4 B, D, E, F S S
ICR
Feb/2001 3 A, B, C
Specialty: A: Agronomist
B: Economist
C: Engineer
D: Financial Analyst
E: Institutional Development Specialist
F: Procurement Specialist
G: Operations Officer
- 27 -
(b) Staff
| Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 110\.00 243\.9
Appraisal/Negotiation 33\.10 80\.4
Supervision 77\.01 224\.6
ICR 10\.00 60\.0
Total 230\.11 608\.90
Above includes Bank-financed and Trust Fund consultants\.
- 28 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
O Macro policies O H OSUOM O N * NA
[II Sector Policies O H OSUOM O N * NA
O Physical O H *SUOM O N O NA
O Financial O H OSUOM * N O NA
n Institutional Development 0 H 0 SU * M 0 N 0 NA
O Environmental O H OSUOM O N * NA
Social
El Poverty Reduction O H O SU * M O N O NA
El Gender O H OSUOM * N O NA
M Other (Please specify) * H OSUOM O N O NA
Stakeholder participation
O Private sector development 0 H O SU O M 0 N 0 NA
n Public sector managementH 0 0 SU 0 M 0 N 0 NA
C0 Other (Please specify) O H OSUOM O N O NA
- 29 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank perfornance Rating
0- Lending OHS OS OU OHU
E Supervision OHS OS OU OHU
Q Overall OHS OS O U O HU
6\.2 Borrowerperformance Rating
Q Preparation O HS * S OU O HU
E Government implementation performance 0 HS O S 0 U 0 HU
O Implementation agency performance O HS * S O u O HU
Q Overall OHS OS 0 U O HU
- 30 -
Annex 7\. List of Supporting Documents
Back-to-Office Report of the ICR Mission (April 9, 2001)
Aide-Memoire of the ICR Mission (February 26, 200 1)
Borrower's ICR and Annexes (March 30, 2001)
Financial and Economic Analyses
QAG Report on the Third (FY99) Rapid Supervision Assessment
- 31 -
Additional Annex 8\. Bene ficiary Survey Results
1\. Although a beneficiary survey is not required for Core Accountability ICRs, a survey of 17 NIS
improved under the project was carried out by the consultants as a part of preparation of the Borrower's
ICR\. The survey had respondents from CIA/IA officers, farmers and NIA staff\. The detailed results of the
survey are in Annex 9 of the Borrower's ICR in Project Files\. Given the significance of the survey results
for a proper understanding of project impact, a summary of the major findings relating to perceptions of
CLIA officers and farmers is provided below\.
2\. A pre-determined sample of 1,400 farmers was taken from the 17 NIS improved under IOSP II\.
The sample was further stratified into farmers in IMT areas (those CIA/IAs who were under contract as of
1999; the year 1999 was chosen so that two cropping seasons after contract signing could be captured) and
farmers in areas with IOSP II interventions but without IMT contract\. Within the lAs, sample farmers
were further stratified as farmers within the rehabilitated area and farmers within the restored and
generated areas\. The percentage sample was selected at random within the sub-stratum\.
Major Survey Findings
1) CIA/IA Officers
a) Knowledge and Perceptions of IOSP Il/IMT
Modality of Operation
3\. When asked whether they were farniliar with how the modality of operation installed in their
system operated, a big majority of 341 (97%) said yes\. In terms of satisfaction of the members of the
LA/CIA with irrigation service performance as a result of the new modality of operation, 251 (74%) gave a
satisfaction rating of 7-10\. The main reason given was that the system was functioning well and majority of
members were satisfied, as mentioned by 136 (40%) of the respondents\. Seventy one (21%) respondents
gave a rating of 4-6 while 17 (5%) did not respond to the question\. Among the reasons given for the lower
ratings were: (a) unequal water distribution; (b) not all structures/facilities installed; (c) unrepaired
damaged canals and structures; and (d) some farms not irrigated during the dry season (Tables I & la)\.
- 32 -
Table 1\. Knowledge and Perception of the Modality of
Operation Installed
1\. Knowledge of how
the modality operates
Yes 341 97
No 9 3
No answer 3 1
Total 353 100
2\. Are you and the members of the
LAJCIA satisfied with the
modality?
Yes 341 97
No 12 3
Total 353 100
If yes, rating given:
I -3 2 1
4 - 6 71 21
7 -10 251 74
No answer 17 5
Total 341 100
Table la\. Reasons for the Satisfaction Rating on Modality of Operation
1\. System is fanctioning well and majority of members
are satisfied 136 40
2\. Adequate water is provided at the right time 19 6
3\. Un-repaired damaged canals and structures 17 5
4\. Not all structures/facilities have been installed 23 7
5\. Some farms are not irrigated, especially during dry season 13 4
5\. Unequal water distribution 32 9
6\. Late water delivery 4 1
7\. Target ISF collection of 90-100% not achieved 16 5
8\. Some members are uncooperative and cannot accept the new system 7 2
9\. Farm located downstream 16 5
10\. Farm located midstream 12 4
11\. Noanswer 46 13
Total 341 100
Impact of IOSP II/IMT on Irrigation Services
4\. Table 2 presents the perceptions on the irrigation system performance before and after IOSP II in
terms of timeliness, equity of water distribution and adequacy\. An almost equal number of respondents
- 33 -
indicated that timeliness of water delivery and adequacy of irrigation water had improved significantly\. In
terms of equity of water distribution, more than half (52%) of the respondents thought that with IOSP II,
there was more equitable water distribution\.
Table 2\. Impact of IOSP [ LMT on Irrigation Services
1\. Timeliness
Just right 130 37 235 67
Delayed 193 55 58 16
Advance 14 4 44 12
No answer 146 41 16 5
Total 353 100 353 100
2\. Equity of Distribution
Equitable 88 25 182 52
Just right 93 26 120 34
Not equitable 149 42 33 9
No answer 23 7 18 5
Total 353 100 353 100
3\. Adequacy
Adequate 134 38 236 67
Not adequate 167 47 86 24
More than adequate 29 8 19 5
No answer 23 7 12 3
Total 353 100 353 100
b) Institutional Development and Strengthening
CIA/IA Strenjthenina Activities Implemented
5\. The real challenge of IMT is the development of strong and self-reliant Irrigators' Associations
with the capability to manage the irrigation system on a sustainable basis\. The activities undertaken by
NIA in preparation for CIA organization, and participation by CLA/IA officers and their perceptions, are
detailed in Table 3\.
- 34 -
Table 3\. Activities Undertaken for CIA Strengthening
1 Situation Analysis 242 69 18 5 190 54 7 2
2\. Consultative Workshops 281 80 5 I 211 60 5 1
3\. Information/Dissemination re: IMT 287 81 5 1 225 64 7 2
4\. Setting of CLA/IA Vision, Mission,
Objectives 265 75 12 3 204 58 5 1
5\. Establislmuent of CIA/IA CBL 213 60 22 6 158 45 4 1
6\. Preparation of CIA/IA O&M Plan
and Budget 253 72 18 186 53 4 1
7\. Assessment of Irrigation Structures 225 64 20 6 167 47 3 1
8\. Training 250 71 8 2 184 52 8 2
Total 353 * 353 * 353 * 353 *
*There were multiple responses
6\. Training\. Majority of the respondents attended one or more training conducted by NIA or by other
government agencies such as the Department of Agriculture\. Financial Management and Basic Leadership
training was attended by 196 (5 6%) and 180 (51%) respondents, respectively\.
Table 4\. Training Attended, Adequacy of Training, and Adoption of Lessons Learned
Basic Leadership 180 5 1 1 |0 164 46| l
Systems Management 73 21 2| 1 70 20 11| 0
Financial Management 196 56 4 l 185 l 52l 3 11
Operations and Management 25 7 22 6
Gender 45 13 40 11
Value Formation 62 18 56 16
Irrigation Management 99 28 2 1 90 25
Water Management 8 2 8 2
PMES 12 3 12 3
IPM 49 14 2 1 39 11
Rice Production 25 7 25 7
Modem Farming 15 4 12 3
Others ** 23 7 23 7
Total 353 * 353 * 353 * 353 *
* There were multiple
responses\.
** Others include: Aquaculture, crop protection, cooperative, livelihood, grains
classification, etc\.
- 35 -
c) ISF Collection and Payment
7\. When asked whether the CIA/IA management believed that all the O&M expenses had to be
recovered to be able to continue providing irrigation service, 85% said yes (Table 5)\. Only 12 (2%)
respondents believed otherwise, while 42 (12%) did not give any answer\.
8\. Of the officers interviewed, 330 (93%) claimed that they paid their ISF voluntarily\. They added
that among the members, 55% voluntarily paid ISF, 37% waited for the collector and 17% did not pay ISF
at all\. A big majority of the respondents did not answer this question\. These percentages, as reported by the
CIA/IA officers, closely coincide with the responses obtained from the farmers where 75% reported that
they paid the ISF and 14% said that they did not pay ISF\. The reasons given for non-payment of ISF were:
low yield, sale from harvest not enough for family needs, insufficient water and late water delivery, among
others\.
9\. The ISF collected by the IA is remitted to the CIA who immediately remits the collection to the
NIA\. However, as reported by 64% of the respondents, NIA is not able to give the CIA share of the ISF
even if all the required documents have been complied with\. This situation seemed to have caused
frustration and distrust among farmers in relation to NIA's sincerity in pursuing its commitment to the
ClA/IA as expressed in the Memorandum of Agreement\.
10\. Collection rate improved after IMT according to 226 (68%) respondents (Table Sa)\. Fifty four
(16%) did not think that there was any increase in ISF collection\. AO 17, which was issued by the
Philippine President in mid-1998, was identified by 33% as among the causes of the non-improvement in
the ISF collection even after IMT\. AO 17 is the adoption of a socialized irrigation service fee, which
established new ISF rates based on farm size\. Non-payment of ISF by some farmers is another reason cited
by 19% of the respondents who claimed that ISF collection did not improve\.
11\. To improve ISF collection, a number of ways have been devised by the CIAIA\. Foremost among
the assistance provided by the officers is an intensive collection drive, as indicated by 159 (69%)
respondents (Table 5b)\. Information dissemination on the importance of payment, and collection by group,
were cited by 48 (21%) and 38 (17%) respondents, respectively\. Another 16 respondents (7%) mentioned
good irrigation service as a means of improving collection\.
Sharing Arrangaements
12\. Less than half (47%) of the respondents expressed satisfaction with the present sharing
arrangement for ISF, while 36% said they were not satisfied (Table 5)\. The reasons given for the
dissatisfaction was the inability of NIA to give the CIA share immediately (35%) and the misunderstanding
of the sharing basis indicated in the Memorandum of Agreement signed by both parties\.
- 36 -
Table 5\. ISF Collection
Does the CIA/IA Management believe that, to
be able to continue irrigation service, all the
O&M expenses have to be recovered?
Yes 299 85
No 12 3
No answer 42 12
Total 353 100
Do you voluntarily pay your ISF?
Yes 330 93
No 4 1
No answer 19 5
Total 353 100
What percent of the members:
a\.) Voluntarily pays the ISF 55 17
b\.) Waits for the collector 37 11
c\.) Does not pay ISF 17 5
d\.) No answer 221 67
Total 330 100
Was the ISF collection remitted immediately
to CIA or NIA?
Yes 284 86
No 7 2
No answer 39 12
Total 330 100
Was the CIA/IA share given back by NIA?
Yes 70 21
No 210 64
No answer 50 15
Total 330 100
Are you satisfied with the sharing arrangement?
Yes 155 47
No 118 36
No answer 57 17
Total 330 100
If no, what do you suggest?
50-50 from total cash collection as under -
stood from old MOA 35 30
IA share must be given back immediately 35 30
Give honorarium 1 1
Completion of canal lining 1 1
No answer 46 39
Total 118 100
- 37 -
d) Operation
Adequacy of Water Supply
13\. A majority (84%) of the respondents reported that at least 88% of members received adequate
irrigation water\. On the other hand, 52% said that about 16% of members did not get adequate supply of
water in their farms\. It was also claimed that fanns of nine percent (9%) of members did not receive any
water at all\. It may be because some farms are in high locations or are located downstream\. It may also be
because efficiency of irrigation water delivery through the lateral decreased in some areas since some
structures remained incomplete or were damaged (1Table 6)\.
Table 6\. Adequacy of Water Supply
Are all members given adequate water?
- With adequate supply 295 84 88
- With inadequate supply 182 52 1 6
- With no w 150 42 9
Total 353
Why are there members not receiving enough
water?
- Farm located upstream 42 33
- Incomplete/damaged structure 27 21
- Farm located downstream 25 20
- Inadequate water 9 7
- No discipline among farmers 4 3
- No farm ditch 4 3
- Existence of illegal turn-out 3 2
- Canal not in proper level 2 2
- Irrigation water overflows 2 2
- Drainage problem 2 2
- Wrong placement of turn out 2 2
- Shallow canal 1 I
- Water was given to other CIS 1 1
- Because of reduced pipe size 1 I
- El Nino/dry season 1 1
- Forced irrigation 1 1
Total 127 100
* There were multiple responses\.
Participation in Systems Operation
14\. According to a big majority of respondents (65%), there is a System Management Committee
(SMC) for the NIS, with the CLA/IA as a member\. As to whether NIA involved the CLI/IA in the
- 38 -
preparation of the Operation Plan, 77% said that they did participate in this activity\.
Water Distribution and Monitoring
15\. According to a majority (77%) of the respondents, the CIA/IA was in-charge of water distribution
and monitoring in the areas covered by the lateral\. However, almost one-half (47%) of the respondents were
not aware what measuring device was used in monitoring the volume of water available for distribution\. On
the other hand, 40% mentioned staff gauge as the most common measuring device used\. In terms of being
able to follow the water distribution schedule, 273 (77%) respondents said that the organization was able to
adhere to the schedule (Table 7)\.
Table 7\. Adherence to Water Distribution Schedule
Is the water distribution schedule being followed?
Yes 273 77
No 29 8
No answer 51 14
Total 353 100
If no, why?
Farm located downstream 5 17
Late repair 4 14
Damaged canal 3 10
Water availability 2 7
Wrong schedule 2 7
Damaged equipment 2 7
Blocked passage 1 3
Schedule mo na inaagaw pa 1 3
No answer 9 31
Total 29 100
e) Repair and Maintenance
Maintenance Activities
16\. Vegetative clearing and canal clearing are the two activities that are participated in by majority of
the members with an average attendance of 74% and 71%, respectively, according to the respondents\. A
big number of members also participate in canal reshaping and repair of service road (Table 8)\.
- 39 -
Table 8\. IA Members' Participation in Maintenance Activities
2 ) I
What are the maintenance activities participated
in by members?
- Vegetation clearing 221 63 74
- Repair/cleaning of farm 164 46 73
- Canal clearing 306 87 71
- Canal reshaping 155 44 67
- Repair of service road 132 37 67
- Desilting 161 46 63
Walk thru inspection 206 58 61
Total 353 * *
* There were multiple responses\.
2) Farmers
a) Participation of Family Members in Farming Activities
17\. When asked if there were members of the family who were involved in farmning activities, less than
half or 47 percent of the respondents reported that at least one male member was helping full time in
farming\. On the other hand, only 9 percent reported that a female member was involved full time in
farming (Table 9)\. This low involvement of family members in farming activities could be attributed to the
fact that some of them were still studying or were working outside of the farm\. This also explained the
present dependence of farmers on hired labor\. As expected, the survey also revealed that women are
actively involved in food preparation for farm labor, particularly during planting season, as reported by 69
percent of the respondents\. More than 30 percent of the respondents also reported that women are involved
in choosing seeds/variety to plant, planting, drying and selling of palay\. Other activities reported were
harvesting, threshing and winnowing\.
- 40 -
Table 9\. Family Members' Participation in Farming Activities (1399 Farmers, 17 NIS)
Family Members Involved in Farming Activities
Full time: Male 658 47 1\.20
Female 140 9 1\.17
Part time: Male 261 19 1\.42
Female 363 26 1\.16
Participation of Women in Farming Activities
Use of seeds 482 34
Food preparation 967 69
Threshing 179 13
Drying 539 39
Vegetables planting 492 35
Planting palay 449 32
Harvesting 358 26
Winnowing 273 20
Selling 563 40
Others (weeding) 30 2
b) IA Membership and IMT
Participation in IA Activities
18\. IA farmer members participate in three major activities of the IA: planning, meetings and irrigation
canal maintenance\. Results of the survey showed that farmer members participated in IA planning activities
as indicated by 75% of the respondents\. Those who did not participate were either not aware of the activity
(18%), busy (19%) or believed that planning activities were only for officers (23%)\. With regards to
maintenance activities, the CIA/IA officers interviewed reported that vegetative clearing and canal clearing
were the two activities that were participated in by majority of the members with an average attendance of
74% and 71%, respectively\. A big number of members also participated in canal reshaping and repair of
service road as gleaned from the responses of the CIA,IA respondents when asked the same question\.
Knowledge and Perception of IOSP II/IMT
19\. A majority (70%) of the farmer respondents claimed that they knew what IOSP II/IMT was (Table
10)\. However, when asked what they knew, 21% did not give any answer while the responses given by 22%
indicated that they were not completely familiar with the project\. Responses included: no more illegal
turnout, NIA project, increased production, training/meeting, etc\. This would imply that information
dissemination about IOSP II/IMT to the farmer members was not adequate\.
20\. Those, who said that they did not know what IOSP II/IMT was, were asked if they were aware of
any improvements in irrigation facilities and managernent\. A majority (69%) acknowledged that there had
been improvements such as : better irrigation servize, repair and/or lining of canals, improved control
points, etc\. (Table 10)\. More than one-third were not aware of any improvement done while a small
minority did not give any answer\.
- 41 -
Changes in the IA Due to IOSP II/IMT
21\. Generally, in all of the 17 IOSP II systems, the farmer members indicated their satisfaction with
the improved irrigation service, particularly in terms of reliable and adequate water supply brought about
by system improvement (Table 10)\. However, some noted that system improvement had not been
completed, and, according to them, this could bring about maintenance problems\. Some noted that
members had become more cooperative, active and responsible, although there were also those who said
that one of the problems of the IA was the lack of cooperation among the members\.
Table 10\. Knowledge and Perception of IOSP II/IMT
1\. Do you know IOSP II/IMT
Yes 977 70
No 422 30
Total 1399 100
If yes, what do you know about it?
Transfer of management of irrigation to IA 398 41
Irrigation improvement, i\.e\. adequate water 158 16
No more illegal TO 109 11
NIA Project 48 5
Increased Production 18 2
Training, meeting 10 1
Road construction, service road 13 1
IA collects ISF 6 1
Seed Production 3 1
Financial support 4 1
Good rules and regulation 2 1
Maintenance of farm ditch I I
No answer 207 21
Total 977 100
If no, do you know of any improvements done in your
irrigation facilities/management?
Yes 256 61
No 166 39
Total 422 100
If yes, what are these
Repair of canalUcanal lining 161 33
Better irrigation service 203 41
Improved control points 68 14
Increased Production 6 1
No more illegal turn out operation 33 7
No answer 21 4
Total 492 100
Impressions On IMT
22\. Varied responses were obtained when respondents were asked about their impression on IMT\.
More than half (55%) said that IMT was beneficial to farmers\. This may be related to improved water
-42 -
supply as a result of improvement of irrigation facilities as articulated by 11% of the respondents\. Others
looked at IMT as a channel by which farmers could become more responsible and cooperative\. However, a
number of respondents did not look at IMT positively but rather believed that IMT may bring about
maintenance problems because of the non-completion of system improvement\. A small percentage (3%)
was not satisfied with IMT and suggested that this was difficult to manage\. Still others thought that even
with IMT, NIA needs to provide support to the farmers (Table 11)\.
Table 11\. Impressions on IMT
WI,
1\. Beneficial to farmers 769 55
2\. Systems improvement brought about improved water supply 150 11
3\. May bring about maintenance problem because of incomplete 41 3
systems improvement
4\. Farmers will become more responsible and cooperative 32 2
5\. Improvement in ISF collection 16 1
6\. Fair ISF payment 7 1
7\. Good rules and regulations 4 1
8\. Still needs NIA's support 10 1
9\. Not satisfied/difficult to manage 46 3
10\. Easy to manage 6 1
I1\. No answer 297 21
c) Impact of IOSP Il/IMT on Irrigation Service
23\. The farmers were asked if they observed improvements in the irrigation service vis-a-vis timeliness
of water delivery, equity of distribution and adequacy of water supply after project implementation\. As
shown in Table 12, improvements were observed by a significant number of respondents\. With regards to
timeliness of water delivery, farmers in areas without IMT contract reporting timely delivery increased
from 29 percent before project to 69 percent after the project\. Simnilarly, in IMT areas, 70 percent of the
farmers reported satisfaction after the project as compared to only 44 percent who said they were satisfied
before the project\. For all areas on the average, 39 per cent of farmers reported timely and advanced
delivery of water before the project and 77 percent after the project\.
24\. As regards equity of distribution, improvement was reported by farmers both with and without
IMT contracts\. Satisfied farrners increased from 45 percent to 76 percent in non-IMT areas and from 62 to
84 percent in IMT areas\. Overall, the satisfaction before the project was reported by 53 percent of farmers
and that after the project by 80 percent of farmers\.
25\. As to the adequacy of the water delivered to their farms, the number of respondents who said it was
adequate/more than adequate increased from 40 percent before the project to 76 percent after the project
and from 54 to 84 percent for non-IMT and IMT areas, respectively\. Overall, the proportion of
respondents reporting adequate to more than adequate water supply increased from 46 percent before the
project to 80 percent after the project\.
26\. These observations of the farmer respondents were consistent with the observations of the officers
of the CIAs and LAs\. The officers reporting that there was a timely/advance delivery of water increased
from 41 percent before the project to 79 percent after the project\. Similarly, those who observed an
equitable distribution of water increased from 41 percent before project to 86 percent after the project,
while those reporting adequate water supply increased from 46 percent before the project to 72 percent
- 43 -
after the project\.
27\. The observations reported above clearly demonstrate the view held by a majority of beneficiaries
that there have been significant improvements in irrigation service brought about by the project\. However,
considering that there are still about 20 to 30 percent of the farmers who did not report having benefited
from the project, there is a need to continue improvement of irrigation facilities and to have better
information dissemination relating to project interventions\.
-44 -
Table 12\. Impact of the Project on Irrigation Service
Areas without IMT Contract _
1\. Timeliness of Water Delivery \.
Just Right 235 29 552 69
Delayed 513 64 170 21
Advance 22 3 55 7
2\. Equt of Distribution_
Equiitable 161 20 356 44
_Just Right 205 25 258 32
Not Equitable 396 49 131 16
3\. Adequacy
Adequate 256 32 555 69
Not Adequate 442 55 165 21
More than Adequate 66 8 59 7
Areas with IMT Contract
1\. Timeliness of Water Delivery
Just Right 263 44 414 70
Delayed 287 48 108 18
Advance 25 4 55 9
2\. Equity of Distribution
Equitable 214 36 343 58
Just Right 154 26 157 26
Not Equitable 200 34 73 12
3\. Adequacy
Adequate 306 51 481 81
Not Adequate 246 41 84 14
More than Adequate 15 3 18 3
All Areas
1\. Timeliness of Water Delivery
Just Right 498 36 966 69
Delayed _ _ 800 57 278 20
Advance 47 3 110 8
2\. Equity of Distribution
Equitable 375 27 699 50
Just Right ___ 359 26 415 30
Not Equitable 596 43 204 15
3\. Adequacy
Adequate 562 40 1036 74
Not Ad e 688 49 249 18
More than Adequate 81 6 77 6
- 45 -
Additional Annex 9\. Bo rrower's ICR
Borrower's Implementation Completion Report
On The
Second Irrigation Operations Support Project (IOSP II)
(Prepared by NIA)
1\. Assessment of Development Objective and Design, and Quality at Entry
1\.1 Original Objective:
The Project's primary objective is to improve and sustain the operational efficiency of the National
Irrigation Systems (NISs) thereby, help increase agricultural production (mainly rice), expand small farmer
incomes and rural employment opportunities and contribute to rural poverty alleviation\. Specifically, the
project aims to: 1) undertake intensive improvements for priority NISs, urgent repairs, improved water and
erosion control measures; 2) support the improved system-level O&M services achieved under IOSP-I; 3)
institutional development through: IA organization, training and development, strengthening of NIA
through improvements in collection process, staff trainings on O&M and appropriate engineering design
techniques, and provision of high priority O&M equipment and materials; and 4) improved agricultural
support services\.
A distinctive feature of the project is its appraisal process\. Emphasis was placed on participation of
beneficiaries in identifying irrigation improvement requirements and increasing responsibility for O&M of
the portions of the system serving them\.
The objectives were clear, realistic and in line with the Bank's Country Assistance Strategy (CAS) of
restoring economic growth, while reducing poverty and improving equity, through accelerated and
environmentally sustainable rural development and support to infrastructure\. The objectives were likewise
consistent with the Government's objectives for the agricultural sector of: (a) increased productivity and
real incomes of small farming families, (b) ensuring productivity of the agricultural resource base, and (c)
attaining self-sufficiency in rice and com for food security\.
1\.2 Revised Objective
The project objectives remained unchanged during implementation\.
1\.3 Original Components:
The project has four (4) major components: (a) System Improvement; (b) Incremental O&M; (c)
Institutional Development; and (d) Agricultural Support Services
1\.4 Revised Components:
The project design remained unchanged throughout implementation\. However, changes were made on
specific NISs covered, for example, Hanagdong RIS was excluded in the coverage of NISs for system
improvement in view of duplication of donor Agency for civil works in adjacent scheme\. This, therefore,
reduced to 17 the number of systems covered by IOSP HI\. Additional three (3) NISs were covered by urgent
repairs\. These changes duly passed the approval process\.
1\.5 Quality at Entry:
Quality at entry is rated satisfactory in view of clear and realistic project objectives and consistency with
the Bank's CAS and GOP priorities for the sub-sector\. Project design was coherent, incorporating lessons
from the preceding Irrigation Operations Support Project (IOSP I, Loan 2948-PH), and was consistent with
the capability of the implementing Agency\.
- 46 -
2\. Achievement of Objective and Outputs
2\.1 Outcome/achievement of objective:
The outcome of the project in terms of its contribution to the Governnent's goals of poverty alleviation and
food security is rated satisfactory\. Overall, the project is estimated to have benefited about 504,850 farm
families (110% of the SAR estimate of 460,000 families to be benefited within the systems included in
IOSP II), with about 45,294 families benefiting fiom rehabilitated areas, 10,710 from restored and
generated areas in the 17 systems and the rest from systems with incremental O&M\. The incremental rice
production under the project is about 66,101 tons/year or about 66% of the appraisal expectation of
100,000 tons/year\.
In terms of net revenue per hectare of palay production per year a farm family generated an average
revenue of P28, 756 at an average cropping intensity of 163%\.
For the restored and generated areas, and factoring/considering cropping intensity, a total yearly net income
of P27, 899 was realized\. On the other hand, P27,570 was obtained from rehabilitated areas-P13, 570 and
P20, 138 for the wet and dry seasons, respectively, which is still higher than the estimated net revenue at
project preparation\.
The project also provided support aimed at increasing IA participation in identification of improvement
needs, as well as increased level of participation in O&M\. lAs already organized prior to the project were
mobilized for participatory identification of improveiment works, implementation of works at secondary
level and assumption of O&M responsibility to sustain improvement works\.
2\.2 Output by components:
Systems Improvement and Repair\. The output for civil works is rated satisfactory\. The SAR envisaged
intensive improvement of 18 NISs covering 95,782 ha but was reduced to 86,913 ha after firming up of SA
and exclusion of Hanagdong RIS from the original IOSP II coverage\. Based on the survey, improvements
in the irrigation service vis-a-vis timeliness of water dlelivery, equity of distribution and adequacy of water
supply was observed by a significant number of respondents\. For all areas surveyed, farmers reporting
timely and advanced delivery of water increased from 39 percent before the Project to 77 percent after the
project\. Similarly, CLA/IA officers reporting timely delivery of water increased from 41% before the
project to 79% after the project\. In addition, officers who observed an equitable distribution of water
increased from 41% before the project to 86% after the project\. These findings revealed that there were
significant improvements in irrigation service brought about by the project\.
At completion, the total irrigated areas during wet season was 69,509 compared to 82,958 ha expected at
appraisal, and 72,068 ha compared to 83,725 at appraisal stage during dry season for an average of 85%
accomplishment\. Cropping intensity nationwide decreased from 140 in 1992 to 138% in 2000\. However, if
we consider only the 17 NISs with improvements, the cropping intensity increased from 149 in 1992 to
163% in year 2000\.
Activities related to improved modality of operations wvere planned in order to improve equitability of water
delivery and distribution\. This led to the technical change in irrigation operation through adoption of water
control structures that are easy to operate and require less labor\. Proportional weir, modified pipe sizes, or
a combination of the two (2) schemes have been tested in the 17 systems\. As of ICR preparation date, an
assessment of pilot areas for modality of operations adopting the different schemes showed initial successes
on equitable water distribution\. It was observed that there was a shorter required time for land preparation
and wider areas irrigated\. For pump irrigation system, a low energy cost/hectare was also noted\. The
operation, however, would need further attention on optimization of water supply through timely planting
calendar scheduling and institutional measures for sustainability\. Both the NIA field staff and IAs need to
- 4,7 -
fully understand the interrelationships of technical adjustments and irrigation operation, and the necessity
of strict maintenance of farm level facilities to ensure wider irrigated area (as in the case of IAAPIS)\.
The project envisioned to provide for urgent repairs of 22 river diversion structures in 14 National
Irrigation Systems (NISs)\. This involved repair of major structures which when not attended to will
compromise stability of the structures and may ultimately result to their collapse\. Aside from preventing
total damage of structures, the intervention was deemed to prevent more costly repairs and to increase
irrigated areas\.
At project completion, the component has accomplished repair/restoration works of 28 structures in 17
NISs despite the 3-year delay in the initial release of fumds as programmed\. Works included repairs of
diversion dams, sluice gates, protection works, provision of sluiceway and river protection works, and other
interventions to restore and/or protect the major structures\.
A total of P1264\.5 M was expended, representing 122% of total original SAR allocation of P1036\.9\.
Changes in allocations were mainly due to force majeure that affected the initially accomplished works in
the course of implementation, complemented with the intensification of the degree of physical damage
before the repairs are completed as well as in delays in the flow of funds\. A prominent example of this case
is the Balanac RIS with a dramatic increase of POWs from P6\.0 M when the substantially completed
works were washed out by unusually strong flash floods in November, 1995\. Among other NISs which
have substantial changes in Programs were Cabadbaran, Pagbahan and Magasawang tubig\.
The interventions facilitated the restoration of the structures thereby caused savings in costs for future
repairs, restored irrigated areas in some NISs and prevented loss of irrigated areas in other NISs\. Economic
analyses of 13 NISs show EIRR of ten (10) NISs ranging from 11\.56% to 53\.35%\. In three NISs,
however, EIRR fell below 10%\. Overall, however, economic benefits prove to be satisfactory as compared
to a scenario where repair of structure should have been delayed by 3 years and/or structures would have
been totally damaged if repair works were not implemented\.
Rating of the sub-component is satisfactory in view of the actual interventions provided and the number of
NISs covered and works done\.
Urgent repair works must be given more emphasis so as not to compound the damage\. The project gave
more emphasis on Incremental O&M but in the occasion of limited funds, this component should give way
to urgent repair which could give more benefits on specific NIS basis, and would prevent higher cost of
interventions\.
Incremental O&M\. The rating is satisfactory\. In all NISs the project supported the incremental O&M
activities which included canal maintenance (desilting and repair of embankment), maintenance of service
roads, control gates and structures, and incremental personnel costs (particularly IDOs)\. It is also
envisioned to reduce the gap between O&M expenditures and revenues from ISF collections by turning
over NIS sections to LAs and, thus, increase their participation in O&M, broaden the base for ISF
collection, and improve ISF collection\. The project succeeded in broadening the base for ISF collection and
increasing IA participation particularly in the 17 NIS with system improvement\. However, the nationwide
target collection of 70% was not attained (actual CE was 67% in CY 2000) but this was because of factors
outside the implementing Agency\. Government pronouncement on non-payment of ISF during the State of
the Nation Address of the President in July 1998 and the succeeding issuance of Administrative Order No\.
17 (Socialized ISF rates) in September 1998 dampened the farmers' willingness to pay ISF and caused a
drastic reduction in collection efficiency\. A\.O\. 17 reduced the collectibles by 40% and significantly affected
the collection efficiency\.
Institutional Development\. Institutional development and strengthening activities varied in intensity
among the systems included in IOSP II\. Overall, rating is satisfactory in terms of facilitating the
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progressive turnover of NIS infrastructure to lAs for O&M, mobilizing lAs for self management of
financially viable IA, improvements in the collection process and indication of increased participation of
women in IA activities\. The Technical Assistance component (whose implementation was delayed for about
two years, due to factors external to the implementing agency) facilitated major institutional change
through irrigation management transfer or IMT which was not envisioned at appraised\. IMT provided for
the transfer of O&M of NISs or parts of NIS based on hydrologic control point (per lateral) for NMSs of
more than 3,000 ha and of the whole of smaller NISs (3,000 ha or less)\. As of completion date, 44,715 ha
out of 86,913 ha have been turned over to lAs under the IMT or Stage 111 scheme\. A major deterring
factor, however, is the issue on staff redundancy and the reduced ISF collection base and efficiency
resulting from the socialized ISF rate based on A\.O\. 17\. A study on affected personnel has been done
recently and support for acceptable retrenchment package is being pursued\.
IA development programs focused on IA and TSAG/FIG reorganization and strengthening, CIA
organization and preparatory activities towards IMT which were part of the IMT Process developed in the
IMT pilot area in NDC-5 of District III in MRIIS\. Activities such as Consultative workshops, Planning
workshop and Core Group Formation, orientation on IMT and presentation of CBL, Articles of
Incorporation and IMT Contract were conducted in some systems, notably in MRIIS and Agos, but sadly
lacking in other systems\. The project also supported the regular IA activities such as BOD and General
Assembly meetings, conferences, functionality survey and information dissemination\.
Training and upgrading of skills for both the CIA/IA officers and the general membership were similarly
provided by the project\. These are recognized by the members as primary interventions towards
strengthening the CIA/IA\. Among the trainings conducted were Basic Leadership Training, Financial
Management, System Management, Values Formation, IA Collectors' Training, Rice Production and
Integrated Pest Management\. Based on available data, a total of 166,259 CIA/IA officers and members
participated in the training at a total cost of P18,799,000\. It is to be noted, however, that training continued
to be provided by NIA rather than taken over by the CIA or IA as its responsibility\. The cascading strategy
for capability development as conceptualized and adopted in the IMT piloting activities in NDC-5 of
District III in MRIIS through the Technical Assistance was envisioned to facilitate the learning process
through the assistance of CIA and IA officers in the conduct of training activities for their members\. This
strategy is based on capability build-up by actually doing the activity and learning on-the-job\. The
available data on institutional development activities imply that this strategy was not operationalized in the
IMT replication areas\.
As of December 2000, 22 of the 37 CIAs in MRIIS Districts I, III and IV with a membership of 26,422
fanners have signed the IMT contract, representing about 36,770 ha or 42\.3% of the total area of 86,913
ha to be benefited under IOSP II\. In the smaller systems with service area of less than 1000 ha (Bonga I, 2
& 3, Cura, Cantingas, Matogdon and Pongso) 12 IAs/CIA have signed the IMT contract covering an area
of 2,957 hectares and farner-members of 4,638\. Baggao, which has a total service area of 2,300 ha has
one IA with IMT contract which covers 707 ha and 1218 farmers\. In Agos, one IMT contract has been
signed covering an area of 175 ha with a membership of 500\. In Malasila four IMT contracts have been
signed covering a combined area of 4106 ha and a combined membership of 3948 farmers\. In IAAPIS, Sta\.
Maria-Mayor, Barit and Maranding IA contracts remain to be either Stage 3, Type 1 or Type I and 2
although preparatory activities towards IMT have been initiated and IMT contracts set to be forged with
IA/CIA\.
Overall, 40 IMT contracts have been signed with a total area of 44,715 ha which is 51\.4% of the target
area (86,913 ha) and a total membership of 36,726 farmers (refer to Annex 10A)\.
Of the 302 lAs in the 17 systems, 213 have existing contracts with NIA\. Of this, 149 lAs have Type 1 and
2 contract, 24 have Type 2 contract and 33 with Stage 2 contract (refer to Annex lOB)\.
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NIA Staff Training and Workshops\. Orientation and review and planning workshops were the major
activities conducted within 1993 to 1996\. As a preliminary activity to the preparation for system
improvement and NIS performance, technology transfer sessions on NIS assessment were conducted by the
PMO\. These were aimed at providing the staff with the appropriate skills in identifying gaps and measures
that should be considered in the design and implementation of improved modality of operation\.
As an offshoot of the Technical Assistance, which started in April 1997 and was completed in 1998,
majority of trainings and allied activities centered on Modality of Operation, generally through on-the-job
training (OJT) and Irrigation Management Transfer\. However, replication of the OYT on modality in the
other IOSP systems was not carried out as programmed\. Delays in project implementation resulted to
delays in system improvements, which consequently affected the implementation of the OYr scheme for the
NIA staff\. Project Review and Consultation Sessions were likewise given more emphasis in the later part of
project life\.
By and large, trainings on O&M and Technical Design were conducted on-the-job (OJT)\.
Two NIA staff were sent on a Study Visit to Mexico in the later part of CY 2000 to observe and study the
Irrigation Management Transfer program in Mexico\.
To develop the intemal capability of NIA in project preparation, on-the-job skills training on the
participatory project preparation procedures adopted in IOSP II was conducted through actual project
preparation for NISPOP in 14 pilot NISs in 14 regions\.
Agricultural Support Services\. The agricultural support services component of IOSP II aims to support
only the essential interventions and farmer/extension staff training to provide farm families under the
System Improvement Program the best available technologies in order to maximize yields and incomes\.
These consist of the setting up of verification and demonstration trials of new and appropriate technology
packages, IA-based seed multiplication and distribution, training of IA members on soil and water
management and agricultural production practices, and the conduct of IPM-Farmer Field Schools\.
Whenever possible, all the support provided by the program was channeled through the lAs\. The lAs
coordinated with the Municipal Agricultural Officer (MAO) and Agricultural Technicians (ATs) of the
concerned LGUs through their Sub-Committee for Agricultural Production\. During the first year of project
implementation, the component was piloted in three schemes along with the implementation of systems
improvement and based on the results, implementation was expanded with necessary modifications\.
A number of verification and demonstration trials were established covering all the systems under IOSP II\.
These consist of demonstrations on appropriate palay production technologies, farming systems
technologies, variety trials and IPM\. A total of 482 demonstration trials (81% of target) were established
until project completion involving a total of 473 farmer cooperators\. Limited agricultural support facilities
were also provided consisting of a nursery and four (4) multi-purpose drying pavement (100% of target) in
Region I benefiting 416 farmers\. The seed production and distribution sub-component was able to
distribute a total of 1,495 (73% of target) bags of foundation and registered seeds, respectively, producing
a total of 132,272 bags (44% of target) of registered and certified seeds\. A total of 1,402 farmers (75% of
target) were benefited by this scheme\. In addition, 267 bags of certified seeds (130% of target) were
distributed directly to 279 farmers (104% of target)\. Overall this component is rated satisfactory\.
The institutional strengthening sub-component provided training on a wide variety of subject matter which
include rice production technologies, pest management, crop diversification, seed production, rice-fish
culture and other farming system technologies, assistance to organization of self-financed group involving a
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total of 3,464 farmner participants (75% of target)\.
Improvements in yield levels for both the dry and wet season were observed only in 9 out of the 17 systems\.
Despite the decline in yield levels of the other systems, overall, the 17 systems posted an average yield level
of 3\.92 MT and 4\.39 MT for the wet and dry season, respectively\. During project preparation (1992) yield
levels were 3\.87 MT for the wet season and 3\.97 MT for the dry season\. This gives a yield increment of 50
kilos per hectare for the wet season and 420 kilos during the dry season\. The NISs reporting relatively high
yield levels include MRIIS Districts 3 & 4 and Bonga Pumps I & 2\.
As expected, these yield levels are also relatively higher than the average yield of 3\.37 MT and 3\.45 MT
for the wet and dry season for irrigated areas, respectively, as reported by the Bureau of Agricultural
Statistics (BAS) since BAS survey covers both IOSP and non-IOSP areas\. On the other hand, the average
estimated yields reported by the NIA field offices were lower than the projected yields and the survey
results at 3\.58 MT and 3\.92 MT for the wet and dry season, respectively\. Although on a per system basis,
seven (7) systems were reported to have attained slightly higher yields than the survey results\.
For the rehabilitated areas, the average yield attained was 3\.89 MT and 4\.41 MT for the wet and dry
season respectively\. Compared to the 1992 level of 3\.87 MT and 3\.97 MT for the wet and dry season, the
increase in the wet season of 20 kilos was compensated by the substantial increment of 440 kilos in the dry
season\. On the other hand, for the restored and generated areas, the average yield reported was 3\.96 MT
and 4\.25 MT for the wet and dry season, respectively\. This brought about an incremental yield of 1\.82 MT
for the wet season over the average yield of non-irrigated rice as per BAS data for 1999 of 2\.4 MT\.
In terms of fertilizer usage, the farmers reported an average usage of 6\.71 bags, which approximates the
recommended package of the Department of Agriculture\. It is interesting to note, that the use of organic
fertilizer was reported in most of the systems, albeit in small quantities\.
The effect of the training on IPM, one of the inputs of the Agricultural Support Component, was reflected
in the relatively small expenditure on chemical applications\. The expenditure on chemicals as reported in
the survey consists of chemical applications to control pest and diseases and snail infestation\. The average
cost of chemical applications for all the system was P1,140 for the dry season and P1,234 for the wet
season as compared to 1992 levels of P1,920 and P2,004 (adjusted to 2000 price using the CPI)\. The bulk
of the present chemical usage went to the high cost of chemical to control snail (P1,100/li) as reported by a
majority of the respondents in all areas\.
2\.3 Net Present Value/Economic rate of return:
A re-estimation of the EIRR was done the following the NEDA guidelines used in project preparation and
using updated information gathered from the survey and reports from the systems\. These include actual
project costs incurred by the NIS and incremental areas by season (as of project completion), crop yields,
input use and prices (based on the survey)\.
For systems improvement component, despite the delays in project implementation, the resulting EIRR for
all the 17 NIS of 25\.57% is highly acceptable\. It is significantly higher than the SAR estimate of 19\.1%
although lower that the FS estimate of 33\.6%\. This is understandable since the SAR estimate considered
only the five systems and the assumptions used were different\. The major reasons for the good project
performance are the high incremental yield levels attained by MRIIS which accounted for majority of the
area and the low investment but high incremental benefits of Malasila which more then compensated for
the marginal performance of the other systems\. The estimated NPV and BCR at 15% discount rate are
P690 million and\. 2\.02, respectively\.
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A sensitivity analysis of the project showed that even if only 25% of discrepancy between the target and
accomplished incremental areas as of December 2001 could be attained by 2003, overall, the project will
still be viable with a computed EIRR of 16\.8%\.
For the urgent repairs component, EIRR re-estimation was done for 13 out of 17 systems repaired using
IOSP funds\. Despite the delays in implementation, which resulted to higher repair costs, all the resulting
EIRRs are at acceptable levels, except for Nasisi Dam, Pagbahan and Lasang\. The average (weighted)
EIRR for the 13 systems is 18\.21% which is lower than the 28% ETRR for the 20 systems as per SAR\.
2\.4 Financial rate of return:
A cost and returns analysis per hectare of palay production reveals that irrigated palay production still
generates attractive revenue for the owner operators\. On the average, an owner operator generated a net
return per hectare of P16,012 and P19,213 for the wet and dry season, respectively, or a total net revenue
of P28,756 for one year at an average cropping intensity of 163% (0\.83 for dry and 0\.8 for wet)\. The
imputed cost of family labor amounting to an average of P2,192 per year was included in the expenses\.
Adding back to the net revenue, the farm family has actually generated an average revenue of P30,948
from farming\.
For the rehabilitated area, the average net revenue reported was P13,570 and P20,138 for the wet and dry
season, respectively, for an average net revenue of P27,570 per hectare per year and considering/factoring
the effect of cropping intensity\. For the restored and generated areas, the average net revenue generated was
P15,898 for the wet season and P18,290 for the dry season for a total yearly net income of P27,899\.
The estimated net revenue of P14,638 and P21,196 (excluding family labor) for the wet and dry season,
respectively, in the rehabilitated area is still higher than the estimated net revenue during project
preparation of P13,104 and P20,331 for wet and dry, respectively (P7,268 for the wet and P1 1,276 for dry
adjusted to Year 2000 using the CPI)\. The total incremental benefit for the year is P865 for the dry season
and P1,534 for the wet season\. For the restored areas, the incremental net return per hectare (over the
rainfed crop of P4,496 (BAS 1999 regional data adjusted to 2000)) is about P11,650\.
For the 17 NIS, the average incremental net revenue generated was P3,183\.72 for the wet season and
P3,854\.92 for the dry season\.
2\.5 Institutional development impact:
Survey results showed that there was a high percentage of participation by the CIA/IA officers in
organizational activities such as in the formulation of Operations Plan together with NIA, planning
activities for improved ISF collection scheme and preparation of cropping calendar\. The IA members have
also taken on a more active participation in planning meetings to strengthen the CIA/IA as well as in
planning for income generating activities\.
Results also indicated that the CIA/IA officers consulted with members before making decisions on certain
issues such as on matters related to finance, water distribution schedule and cropping calendar\. This
implies that as an offshoot of the institutional development and strengthening activities, members are now
more recognized as active partners and participants rather than mere recipients in the irrigation
development and management process\.
With IMT there has been a more organized and focused management by the CIA/lAs at the lateral level\.
With the transfer of the O&M responsibilities as part of the IMT contract, the CIA/lAs have taken on an
increased role in O&M particularly in the area of monitoring of water delivery, identification of irrigation
facilities that need repair, canal clearing and vegetative clearing at the lateral level\. Similarly, the officers
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have taken an active role in ISF collection\. This is a positive step towards empowerment and a realization
of the vision that as IMT progresses and farmers take on the responsibility to make decisions for the
improvement of the irrigation service, not only in the area of O&M but in organizational and institutional
areas as well, there is a corresponding decrease in interventions provided by the NIA\. The project also
facilitated increased capability through the participation of the lAs in system improvement and this
provided the lAs the financial capability to put up their share for system improvement which is now kept as
trust fund for future repair\.
Generally, in all of the 17 IOSP systems, the members have indicated their satisfaction with the improved
irrigation service particularly in relation to reliable and adequate water supply\. There were also indications
that members have become more cooperative, active and responsible\. Officers of the CiA/IA have also been
observed to be more critical and wanting in information that will enable them to make informed decisions\.
They see their role in varied ways in relation to the success and sustainability of the project in terms of
efficient performance of their duties and responsibilities as officers, punctual payment of ISF and
assistance in ISF collection, fostering of cooperation with and among the CIA-IA officers and NIA as well
as providing support in the implementation of programs and policies\.
3\. Major Factors Affecting Implementation and Outcome
3\.1 Factors outside the control of government or implementing agency:
The implementation in a number of NISs was affected by the occurrence of typhoons during the
construction period and crop maintenance\. The repairs to the damage increased cost and resulted to delays
in implementation\.
3\.2 Factors generally subject to government control:
Civil works implementation was affected by the delays in the release of support funds, particularly during
the first three (3) years of implementation\. These delays caused uncoordinated implementation of
components and lowered the overall performance rating\. Moreover, the sensitivity analysis that was
conducted in the SAR showed that the Project's ERR will decrease from 16\.7 to 12\.3 with a three-year
delay in implementation\.
The promulgation of R\.A\. 8435 (Agriculture and Fisheries Modemization Act) best enforces the objectives
of the Project and plays a vital support to its achievements\. However, presidential pronouncements and
issuances (particularly, A\.O\. 17) resulted to difficulty in attaining the desired CE level and was cause for
apprehensions by both the field staff and IAs\.
Furthermore, the Project and the Agency also faced difficulties in acquiring approval for the TA component
in view of Government policies to undertake TA using grant funds only\. Approval was acquired only in
1997 resulting in the delay of TA-dependent activities\.
3\.3 Factors generally subject to implementing agency control:
Untimely release of funds was resolved by the Agency through the conscientious reprogramming of
activities, which considered the interdependent aspects and implementation of action programs\. With
assistance of the Bank, the Agency was able to source grant funds for four (4) out of six (6) studies
affected by the non-approval of the TA and further sought reconsideration for the remaining two (2)
sub-components\.
3\.4 Costs andfinancing:
The total project cost at completion is estimated at P2,211\.6 million equivalent to US$ 67\.86 million (SAR
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estimate was P2,081\.3 million)\. Of this total, 71 percent came from the loan proceeds equivalent to
P1,574\.7 million (US$ 46\.5 million) while government counterpart amounted to P636\.9 million equivalent
to US$ 21\.3 million (see Annex 2 for details by component)\. The average cost for incremental irrigated
area in NIS as of November 2000 was P63,146/ha (US$1,503\.00)\. On the other hand, the rehabilitation
cost/ha in NIS (which also included incremental irrigated area) was P 12,571 (US$299\.00)\.
4\. Sustainability
The sustainability of the irrigation service hinges on the proper mnaintenance and operation of the facilities
and the preparedness of the CIA/IA to manage the systems either fully or at the lateral level\. The eventual
transfer of management of the laterals to the CIA/1A carries with it the responsibility for operations and
maintenance\. The IMT contract between NIA and the CIAs/IAs defined the sharing anrangement when it
comes to ISF collection and the responsibility on the operations and maintenance of the system but as
pointed out by previous Bank review mission, there is no built-in mechanism or assurance that the lateral
will maintained properly\. The CIA/IA should be able to determine the level of expenditures for maintenance
requirements of the lateral and set aside sufficient funds for the purpose\.
NIA records show that from 1993 to 2000, the average cost of O&M per hectare for the 17 systems under
IOSP 11 is P2,297 per hectare\. It ranges from a low of P79 per hectare for Cantingas to as high as P3,862
per hectare for Sta\. Maria\. This wide disparity in O&:M expenses necessitate a per system sustainability
analysis\.
Given this average per hectare costs, the total O&M expenses per system was computed and compared to
the ISF collectible under the old rate and the socialized rate\. ISF collectible was further computed under
four conditions: a) at presently irrigated area; and upon attainment of the balance of the target incremental
areas at b) 25%; c) 50%, and d) 100%\.
It is encouraging to note that eight (8) NIS have more than enough collectibles even at socialized rate to
sustain the O&M expenses with the present irrigated area\. However, the analysis also reveals that the ISF
collectible both at the old and socialized rates, even at the maximum area attainable for Agos, Barit and
Pongso will not be sufficient to sustain the present O&M expenses\. The rest of the systems can survive
only if the ISF will be reverted to the old rate (See Amnex 7Ga)\.
With the IMT program, it is envisioned that NISs with service area of 3,000 hectares and below shall be
fully tumed-over to the lAs\. In fact, some of these snrall systems have been turned-over to the lAs but are
still being supported by NIA\. At full turnover, the O&M expenses shall be fully shouldered by the lAs
technical supervision by charging a management fee of 10-15% of the collectible ISF to cover the salaries
of the personnel who will supervise the system\. Full turnover will mean a lower O&M costs since it is
known fact that government expenditures, particularly salaries and wages, are usually higher (40-70%) that
if it will be performed by the lAs\. Furthermore, the IAs are expected to be more effective in ISF collection
and could also make adjustments in the ISF rates if the sustainability of the system will be affected\. For
pump systems with high operations costs, NIA has to provide financial assistance to LAs (soft loan) to
sustain their operations until such time when they could be on their own\.
For Agos, Barit and Pongso, NIA has to seriously study all possibilities to reduce the O&M costs to make
the tumover acceptable to IAs\. This should be not only through the retirement or transfer of IMT affected
personnel but also reduction of the direct costs of O&M\.
For example, for Agos O&M cost could be reduced if the affected personnel will be retired or transferred to
other projects since almost all of the COB went to Iheir salaries and wages\. Only two relevant position
may be absorbed by the CIA/LAs (1 Engineer A and I WRFT) with a total basic salary of P274,056\.
Administrative costs to the IA will amount to P1\.3M plus the maintenance costs of P1\.13M\. The total
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operation and maintenance costs will amount to P2\.71M, which could sufficiently be covered by the
potential ISF only at the old rate\. This cost could be reduced further when the lAs take over the operations\.
Taking MRIIS District 1 as a case for partial turnover, the 0 & M cost could be reduced by as much as
P4\.28 M by retiring the willing affected personnel and by another P1\.85 M with the expenses on canal
maintenance contracts with lAs\. This will reduce the COB from P23\.92 to P17\.8 M\. Adding one-half of
the expenses coming from other local funds of P4\.1 M, the total 0 & M expenses to be shouldered by NIA
will be P21\.9 M\. This could be sufficiently met by the potential ISF at socialized rate (at 50-50 sharing
arrangement) of P23\.43 million\. Since MRIIS is collecting at socialize rate, collection efficiency should
therefore not go below 93%(at the present irrigated area) to make it sustainable or at a lower efficiency of
84% if 100% of the target irrigated area under IOSP II could be attained\.
On the side of the CIA/lAs, the 0 & M costs to be shouldered is estimated at P9\.5 M consisting of the
following: a) the salaries and wages of displaced personnel at basic rate amounting to P2\.46M; b) one-half
of the expenses coming from other local sources of P4\.1 M; c) the costs of IA contracts formerly being paid
by NIA in the amount of P1\.85 M; and d) an assumed administrative cost of 15% or P1\.24 M\. Of the 50%
share from the ISF collectible equivalent to P23\.43 M, the CIA need to earmark 40% for 0 & M\. IMT
therefore is favorable to the CIA/lAs in MRIIS since they could accumulate funds from their share after 0
& M which could be used for other income generating activities of the associations and for future
rehabilitation of the system\.
It is therefore important that he CIAs/LAs understand that under the IMT program, the share in the ISF
collection is actually intended to cover operation and maintenance responsibilities that will be turned over
to them\. The commitment and responsibility of the CIAs/IAs for the maintenance and operation the
irrigation facilities has to be clearly defined not only in the IMT contract but should also be part of the
by-laws of the association\.
The sustainability of the systems improvement under IOSP-II is likely, however, this would need further
support to IMT in terms of the following:
a) establishment of CIA/IA self-sustaining mechanisms in O&M\. there is an indication that funds for
maintenance and operation are allocated in the CIA/IA budget but strict operationalization of the plans has
to be observed, monitored and evaluated\. Furthermore, NIA and CIAs have to ensure that sufficient funds
are allocated based on actual needs of the systems and strictly disbursed for the purpose\. This has to be
explicit in the NIA-CIA/IA Contract, in the CIA/IA By-Laws, and supported with intemal rules,
procedures and mechanisms\.
b) Refinement of IMT policies in accordance with the provisions or AFMA (RA 8435) particularly
those pertaining to affected personnel\. Since the goal of IMT is sustainability of both NIA and [As, proper
attention given this issue will assure long-term success\. There is really a need for unrelenting enforcement
of NIA's organizational streamlining program\. Streamlining is an imperative to achieve corporate viability\.
Corollary to this, definite guidelines on IMT specifying manpower requirement vs NIA and CIA roles has
to be finalized\. This will conscientiously define the manpower requirement during IMT, such that O&M is
given due attention\. With successful IMT, assurance of sustainable O&M will also be attained\.
c) M&E of IMT performance should be done intensively during the transition period in order to
ensure sustainability\. Mechanism for M&E and IMT sustenance which have been introduced in pilot NISs,
have to be assessed and if necessary refined and thereafter, replicated in all the areas\.
d) Implementation of other transition measures in order to complete the transfer of technologies to
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lAs, particularly for some aspects of O&M\. This should adopt and on-the-job (OJT) approach\. Likewise,
the proper reorientation of NIA-ISO and staff roles, duties and skills is also necessary\.
e) Institutional strengthening measures should ensure that the capabilities and skills required to be
able to effectively manage the system are installed among the officers and the necessary internal
reorientation among the general membership is effected to ensure continued member participation and
cooperation in the activities of the organization\.
5\. Bank and Borrower Performance
Bank
5\.1 Lending:
The Bank lending performance was highly satisfactory\. Despite the delays in the provision of counterpart
funds and in the recruitment of consultants, the Bank continued to provide support to the Project\.
Moreover, the Bank even granted an extension of the loan closing date from June 30, 1999 to December 31,
2000 to allow the institutional component to have a significant impact on the Project beneficiaries\.
5\.2 Supervision:
Bank supervision was satisfactory\. The supervision missions reviewed the progress of work almost every
six months\. Apart from reviewing progress of work, technical details, factors, constraints and prospects
were likewise probed through interactions and field visits\.
5\.3 Overall Bank performance:
The overall Bank performance was satisfactory\. The Bank was flexible in administering the loan and
assisted the GOP in resolving shortage of counterpart funds\. Upon the GOP's behest, the Bank established
the Project special account (PSA) and later agreed to a request for the use of a 90-day facility to expedite
works implementation\. The Bank provided quick responses to queries and requests, including requests for
specific modifications and an 18-month extension of the loan closing date\.
Borrower
5\.4 Preparation:
The preparation by the Borrower of the different components for project appraisal was satisfactory\. The
Borrower completed the participatory project preparations before the final negotiations, involving the active
participation of beneficiary lAs\. All components, particularly those in the 17 NISs with S\.I\. were
implemented in a coordinated manner\.
5\.5 Government implementation performance:
The performance of the Borrower may not be considered satisfactory with regards to availability of
counterpart funds that made it difficult for the Project to conscientiously pursue programmed activities\.
However, the situation slightly improved in 1998 but this was still insufficient to meet the requirements in
terms of volume and timeliness\.
5\.6 Implementing Agency:
Overall, the performance of the implementing agency (NIA) was satisfactory\. The investigations and
surveys were adequate with the incorporation of improved participatory procedures that strengthened
socio-technical coordination in system improvement\. The accomplishments would not have been substantial
if not for the efficient reprogramming in view of delays in support funds\. Strict implementation of policies
and guidelines for works implementation that ensured benefits was carried out\. In addition, the
implementation of joint civil works implementation at secondary level to assure IA participation with
improvement share deemed to install ownership were also undertaken\. This scheme, further, assured the
- 56 -
availability of some funds for emerging repair works and are kept as trust funds for such\.
5\.7 Overall Borrower performance:
Despite the delays in counterpart funds, overall borrower performance is rated satisfactory\. This is in view
of the ability to attain objectives substantially\.
6\. Lessons Learned
* ,The technical change under modality of operations and all the underlying principles would warrant
sustainability of project benefits\. However, knowledge and skills have to be appropriately transferred to
NMA field personnel and lAs\.
* Urgent repairs should be done at the soonest time possible, in order to realize its objective in the
most cost-effective manner\. Late start implementation could give way to further deterioration of the
structures that make them prone to damage in time of calamities, hence, increases in cost requirement as in
the case of Balanac\. It is a recognized fact that NISs naturally deteriorate at a certain rate/year\. And
structures identified for urgent repair have more sensitive condition\. Thus, fund support should be released
as per program/schedule\.
* The IMT likewise caused institutional change as in the assumption of more responsibilities by
ClAs/IAs\. The immediate implication is the staff redundancy issue for which any implementing agency
should have corresponding programs before vigorously pursuing the program\.
* Improvements on technical design and O&M are better facilitated by on-the-job trainings\. As in the
case of Technical Design Workshops, outputs were immediately used for the design of modality of
operations\. This enables immediate application and evaluation\.
Participatory system evaluation as in the case of NIS Assessment enables wholistic identification
of performance gaps and ensures measures acceptable to both parties (NIA and lAs)\. The strategy ensures
acceptability and provides better prospect of sustainability\.
The timing of all components is critical to project implementation\. The bulk of activities were
conducted after start of IMT development and more needs have been identified thereafter\. This validates the
fact that institutional interventions should have a lead time, closely coordinated with technical interventions\.
The appropriate timing of detailed interventions, however, boils down to factors extemal to the
implementing Agency\. (Late approval of the Technical Assistance Component on the part of the GOP)\.
* The new rates promulgated by AO 17 resulted to significantly lower total ISF collectibles but
much higher collectibles from big landowners\. Many of those with big landholding (>5\.0 ha) have, in the
past, incurred ISF back accounts and have been difficult to convince to pay ISF\. If this trend continues the
projected collection efficiency will be affected\.
The cascading theory of technology transfer must be implemented to facilitate capability build-up
and allow the participants to develop personal sense of confidence and openness to new learning\. This is
also meant to facilitate farmer empowerment by providing assistance to the limited NIA field personnel
tasked with providing the support services necessary in effective group participation and change\.
There is no doubt that coordinative implementation of components abates the repercussion of
delayed financial support for works\. More benefits could have been attained if financial allocations were
provided on time\.
- 57 -
While substantial activities have been conducted, the introduction of IMT, with inputs from other countries
necessitate further interventions that were not covered in the original project design\. There are activities
identified but completion of project duration did not warrant its implementation\. Among these are:
Polishing of IMT manual, which cover: operations planning, design of modality of operations,
technology transfer for both NIA and LAs, and monitoring and evaluation\. A prototype manual was
produced under TA but polishing of the manual would provide opportunities for incorporating
improvements based on experience of the different NISs\. Likewise, the manual should emphasize on the
coordination of all components, which should be well contextualised at operations level\. Thereafter,
translation into the vemacular may be done and should be included in the documents to be transferred to
lAs\.
* Policy Deliberation Workshops for IMT\. The program has implications on IA policies -
manpower, extent of transfer coverage, financial and institutional change towards sustainability\. Series of
policy deliberation workshops would enable management to intensify consultations with affected personnel
and offices, such that policy issuances would expedite in more conscientious manner, maximizing synergy
within the Agency\.
* IMT Advocacy Workshops\. The implication of IMT on NIA personnel is a threat to Program
success\. However, the knowledge and experiences from the project would benefit other projects\. IMT
Advocacy Workshops would enable dissemination and sharing towards a unified direction in participatory
irrigation development\. NIA may use its experienced personnel and/or invite external resources, if
necessary\.
7\. Additional Information
Additional data and information are supplied in the supporting annexes of this Implementation Completion
Report (ICR)\.
- 58 - | REVIEW |
P069857 |  ICRR 13332
Report Number : ICRR13332
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 05/04/2010
PROJ ID : P069857 Appraisal Actual
Project Name : Tuberculosis And US$M ):
Project Costs (US$M): 76\.4 55\.76
Hiv/aids Control
Project
Country : Ukraine Loan/ US$M):
Loan /Credit (US$M): 60\.0 38\.67
Sector Board : HE Cofinancing (US$M ):
US$M): 0 0
Sector (s): Health (75%)
Law and justice (15%)
Other social services
(5%)
Central government
administration (5%)
Theme (s): Tuberculosis (50% - P)
HIV/AIDS (25% - S)
Health system
performance (25% - S)
L/C Number : L4682
Board Approval Date : 12/19/2002
Partners involved : Closing Date : 06/30/2007 09/30/2009
Evaluator : Panel Reviewer : Group Manager : Group :
Judith Hahn Gaubatz Susan A\. Stout IEGSE ICR Reviews IEGSE
2\. Project Objectives and Components:
a\. Objectives:
According to the Project Appraisal Document (PAD) and the Loan Agreement (LA), the project objectives were : (i) to
reduce tuberculosis (TB) and; (ii) to reduce HIV/AIDS morbidity and mortality\. These were to be achieved through
implementing the National Strategy for TB Control Adapted to the World Standard and an HIV /AIDS program focused
on prevention of transmission among high -risk groups\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
The project supported TB and HIV /AIDS control activities in the general population and high -risk groups,
coordinated by the Ministry of Health (MOH), as well as a separate set of TB and HIV /AIDS control activities in the
prison population coordinated by the State Department of Prisons (SDP)\. Although activities under the MOH and
SDP components were similar, a separate implementation arrangement was designed due to the self -contained
institutional nature of the prison system \.
(1) Control of Tuberculosis - MOH (Appraisal: US$28\.7 million, Actual: US$19\.9 million ): Activities included training
and education in the detection, treatment, monitoring and supervision of TB; equipment and development of technical
guidelines for diagnosis; drugs for treatment; media campaigns to increase public awareness of TB; and monitoring
and evaluation\.
(2) Control of HIV/AIDS - MOH (Appraisal: US$32\.2 million, Actual: US$25\.1 million): Activities included prevention
interventions among intravenous drug users (IDUs), commercial sex workers (CSWs), and men having sex with men
(MSM); blood safety; information campaigns (IEC) for the general population; prevention of mother -to-child
transmission (PMTCT); opportunistic infection (OI) treatment; and psycho-social care and support for People Living
with HIV/AIDS (PLWHAs)\.
(3) Control of TB and HIV/AIDS â SDP (Appraisal: US$12\.7 million, Actual: US$9\.1 million ): Activities included
training, equipment, and drugs for TB diagnosis, treatment and monitoring, as well as HIV prevention interventions
(IEC, condom distribution, and disinfectant distribution ), PMTCT services, and treatment of infants born to HIV +
mothers in the prison\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The loan was amended for the first time in November 2005 to allow more flexible procurement processes and to
allow SDP to manage their portion of the loan separately from the MOH \. It was amended for the second time in May
2008 to cancel US$12\.5 million of the loan (as the Bank and Government agreed the funds could not be used by the
closing date and thus the cancellation would save the country from paying commitment fees on the undisbursed
funds) and reallocate funds between expenditure categories, most notably US$ 26\.5 million towards OI treatment
drugs and supplies, compared to the original estimate of US$ 2\.0 million\. Another loan cancellation of US$ 4\.15
million occurred in December 2008\.
Loan disbursements were suspended between April 2006 and November 2006 due to non-compliance by the
Government\. Three actions required of the Government had not been taken at that point : (i) endorsement of the
National TB control training modules; (ii) acceptance on using UN agencies for several tasks; and (iii) development of
a plan to ensure the integration of the project implementing unit (PIU) into the MOH structure and the creation of a
"sector" in the MOH solely responsible for the management of the project \.
The closing date was extended four times from December 2008 to September 2009 primarily to allow time for
delivery of contracts with UN agencies \.
Shortly after project approval, in January 2003, the Global Fund (GF) approved HIV/AIDS grants to Ukraine totaling
US$99\.12 million for a period of five years, for activities including treatment, care and support, targeted prevention,
and IEC for the general population \. Subsequently, a decision was made that the Bank project would not provide
antiretroviral drugs (ARVs) for PMTCT\. The GF temporarily suspended the grant in Jan 2004 due to concerns about
slow implementation and ineffective management \.
3\. Relevance of Objectives & Design:
The relevance of the project objectives is rated High\. The goal of bringing the TB and HIV /AIDS epidemic under
control was, and remains, highly relevant to Ukraine's development priorities and the well -being of its population\. The
TB situation had grown considerably worse from the 1990s to the 2000s, with significant increases in the TB case
notification rate (doubling from 31\.9 to 66\.9 cases per 100,000 people) and mortality rates (tripling from 8\.1 to 22\.2
cases per 100,000 people)\. At the end of 1999, UNAIDS had estimated that Ukraine was the worst HIV affected
country in the region\. The current Country Partnership Strategy identifies âimproved quality of public health and
health servicesâ? as a major element of its program\. Although the prevention activities would have been more likely to
impact longer-term outcomes (beyond the time frame of the project, given the long asymptomatic period following
infection), the treatment activities for OIs and TB would likely have impacted morbidity and mortality rates in the
short-term\.
The relevance of the project design is rated Negligible\. The project addressed two growing epidemics within a
single project, which was appropriate given that HIV infection is a major factor contributing to the spread of active TB \.
There was also a separate component focused on the prison population, also appropriate given that about 30% of all
TB patients are in the prison system \. Interventions were based on a relatively well -established information base of
the TB and HIV/AIDS situations in the country, such as the need to target HIV prevention activities towards IDUs,
CSWs and prisoners\.
However, the project design did not adequately identify or take account of critical policy and institutional development
constraints\. Given the fragile level of commitment of the borrower to a new TB -control approach (based on the
internationally-accepted Directly-Observed Treatment, Short Course (DOTS)), the project design should have had
more explicit measures to ensure that this critical shift in strategy was carried out \. Adoption of the DOTS approach
and progress in its implementation could have been included as specific key project indicators or project milestones \.
Moreover, given that this was the first health sector operation in the country and that Borrower staff had very limited
experience with Bank regulations and procedures,insufficient attention was given to capacity -building activities or the
need for international technical assistance \. The risk assessment did not include the challenges involved in relying on
NGOs to reach high-risk groups given the high degree of stigma and discrimination in the country, nor of operating
within a highly political, unstable and bureaucratic environment \. Lastly, the project design did not identify adequate
mechanisms for coordinating activities between the two implementing agencies \.
4\. Achievement of Objectives (Efficacy):
Objective 1: To reduce tuberculosis
Achievement is rated Modest\. Although the TB prevalence rate in the general and prison population decreased,
other related indicators did not improve \. (Note: Data below on TB prevalence and incidence are presented per
100,000 individuals\.)
General population :
Outputs:
Provision of 1st and 2nd line treatment drugs, in the amount of $ 13\.7 million\.
Adoption of a National Program on TB Control (based on the internationally-accepted DOTS approach) in 2006\.
56 trainer-of-trainers from MOH and 61 SDP staff participated in TB retraining courses \. However, these were
based on voluntary attendance and did not include certifications \.
Only 30% of laboratories needing upgrades were equipped and made operational for diagnostic functions \.
The laboratory network was not full developed, nor a national reference laboratory for monitoring quality \.
Outcomes:
The TB prevalence rate decreased 15%, from 224\.9 cases in 2004 to 192\.2 in 2008\.
The number of new TB cases (77\.5 cases in 2003 to 84\.1 in 2005 to 77\.8 in 2008) did not decrease\. TB
mortality (21\.8 in 2003 to 22\.1 in 2008) did not decrease significantly during the same period \. Therefore, it is
unclear whether the decreased TB prevalence is more due to increased deaths or decreased incidence \.
DOTS coverage increased from 15% in 2004 to 60% in 2007 and the case detection rate was 56% in 2008\.
However, there is no data on successful completion of or quality of treatment \.
Prevalence of multi-drug resistant TB (MDR-TB) increased significantly (2\.5% in 2003 to 7% in 2008)\.
Prison population :
Outputs:
Provision of 1st and 2nd line treatment drugs, in the amount of $ 3\.56 million, as well as drugs to treat clinical
side-effects of TB\.
85 first-level units and 10 3rd level hospitals received laboratory equipment and supplies \.
5 seminars on TB were conducted, attended by 61 staff\. However, this represented only 10% of planned
training activities\.
Outcomes:
The TB prevalence rate decreased 22%, from 5,744 cases in 2004 to 4,491 cases in 2008\.
The number of new TB cases decreased from 2013\.7 in 2003 to 938\.6 in 2008\.
The TB mortality rate decreased from 103 in 2003 to 71 in 2008\.
Objective 2: To reduce HIV /AIDS morbidity and mortality
Achievement is rated Modest\. Key indicators of the status of the HIV /AIDS epidemic did not improve over the project
period\. Although data on intermediate outcomes, such as changes in risky behavior, show some positive impact, it is
unlikely to be due to the project âs activities as the ICR reports that the project âs planned actions in the areas of
targeted prevention to high-risk groups, treatment and care were not implemented \. Moreover, the extent of
attribution to the Bankâs support is unclear, given the significant contribution of the Global Fund \.
General population :
Outputs:
The number of facilities offering VCT increased from 214 to 300\.
Pilot IEC campaigns were conducted , although the planned expansion of IEC beyond the pilot phase was not
carried out\.
Infant formula was provided to HIV+ mothers, though there is no information on level of coverage \.
14 million condoms were distributed to IDUs and CSWs \.
Drugs for the treatment of OIs were provided in the amount of $ 19\.3 million, though there is no information on
level of coverage of types of OIs treated \.
11 new AIDS centers were established and equipped \.
Outcomes:
The number of AIDS deaths increased from 1,285 in 2003 to 2,710 in 2008\.
Knowledge of methods of preventing HIV transmission increased among 15-24 year olds from 14% in 2003 to
40% in 2008\.
The percentage of IDUs who used a condom during their last sexual encounter increased from 21% in 2004 to
55% in 2008\. The percentage who used sterile injecting equipment at the last injection increased from 50% in
2004 to 84% in 2008\.
The percentage of CSWs who reported using a condom in their last sexual encounter increased slightly from
80% in 2005 to 86% in 2007\.
There is no information provided on the outcomes of OI treatment activities \.
Prison population :
Outputs:
Provision of 600,000 condoms and 120,000 lubricants\.
Provision of drugs to treat OIs \.
2 seminars on HIV/AIDS, attended by 40 medical professionals, and 34 seminars on HIV transmission, attended
by 340 trainers of prisoners, were conducted \.
Studies completed included a behavioral survey in 10 prisons, a study on HIV infection among TB patients, and
a survey of MDR-TB in 6 prison hospitals\.
Some elements of âharm reductionâ? activities were carried out in prisons (i\.e\. provision of disinfectants, training for
SDP staff, peer education activities ); however, programs such as needle -syringe exchange and substitution therapy
were not carried out\. The ICR reports that despite efforts made under the project, there was still âsome degree of
resistanceâ? towards the introduction of such programs \.
Outcomes:
The number of AIDS deaths increased from 70 in 2004 to 138 in 2008\.
Knowledge of methods of preventing HIV transmission increased modestly from 39% to 43%\.
Knowledge of methods of preventing HIV transmission increased slightly from 39% in 2003 to 43% in 2008\.
5\. Efficiency (not applicable to DPLs):
Efficiency is rated Negligible\. Given the fact that the most cost -effective project activities - the targeted HIV/AIDS
interventions to high risk groups and the DOTS approach to TB control - were not implemented in a timely or
effective manner, the cost-effectiveness of the project as implemented was less than the original design \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re -estimated value at evaluation :
re-
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Based on High relevance of objectives, but Negligible design relevance, Modest efficacy, and Negligible efficiency,
project outcome is rated Unsatisfactory \.
a\. Outcome Rating : Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
Risk to Development Outcomes is rated Significant\. Some of the institutional changes supported by the project
may provide a better environment for the project's activities, such as the establishment of a Presidential Commission
on HIV/AIDS, the creation of a separate Center for Monitoring and Evaluation in the National AIDS Center, and an
agreement between the WHO and the TB Institute on reporting forms \. However, major weaknesses - such as weak
capacity and agreement on the use of NGOs - impeding the effectiveness of activities were not squarely resolved by
the project's closing, and leadership and commitment by government at the highest levels remains inconsistent \.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
at -entry is rated Unsatisfactory\. A significant amount of resources was invested in the preparation of
Quality -at-
the project, in terms of time (2\.5 years), the number of preparation/appraisal missions (12), and background
studies (assessment of TB and HIV/AIDS control needs, social assessment for M&E program, and economic and
financial analysis)\. However, this intense preparatory work overlooked some critical issues, such as the weak
government commitment to adopting the DOTS approach and the risks involved in using NGOs to reach highly
vulnerable groups, as well as the difficulties of working in the prevailing bureaucratic and political environment \.
Indeed, the ICR notes that the preparation period was lengthy in part due to delays in implementing the
preparation grant and lack of consensus on the project design \. The Bank had specified certain conditions for
bringing the project to the Board for approval, but some were not enforced, namely the creation of a dedicated
project implementation unit (PIU) in each agency\. In addition, weaknesses in Borrower capacity which had
became apparent prior to appraisal were not sufficiently addressed \. Capacity that had been built during the
preparation period was lost due to the departure of original project staff during the long interval between project
approval and effectiveness since there was no bridge financing to retain staff \.
Supervision is rated Unsatisfactory\. The Bank's attempts to address the significant difficulties the project faced
during implementation were unsuccessful \. Although various issues were recognized and flagged, several reviews
initiated to address implementation problems (including a study on the direct and indirect costs of the HIV
epidemic in Ukraine, an in-depth fiduciary review, and a TB strategy review ), and efforts made to improve donor
coordination through working groups, these were insufficient to turn the project around \. A Quality Enhancement
Review, dated December 8 2005, criticized both the Bank and the Borrower \. Shortcomings in Bank performance
included poor project design, high staff turnover, inflexible interpretation of rules, and lack of real engagement
with key partners working in the same area \. The Government reported additional difficulties in working with the
Bank, citing instances of inconsistency and "moving goal postsâ?\. For example, the ICR states that in October
2005, when the project appeared to be âon the verge of turning the corner â?, Bank management (which had just
completed a review of the Bankâs portfolio in Ukraine and concluded that a number of unsatisfactory projects had
to be restructured) issued a letter to the Government which âessentially claimed that the project was not working
and failing to meets its objectives â? and called for âradical measuresâ? including disbanding the PIU\. The Bank's
efforts to improve donor coordination were ineffective -- the ICR alludes to several UN agencies â statements that
they were taken by surprise in the tasks they were called on to perform, sometimes outside their respective areas
of comparative advantage\. Country staff were cited expressing the view that some of the Bank âs proposals were
not thoroughly researched and detailed before being presented to the Government (such as the use of UNICEF
to implement IEC campaigns which, a year later, was determined to be contractually infeasible ), and that while
the Bank constantly claimed that it would not agree to extensions of the closing date, the project was in fact
extended four times despite consistently unsatisfactory ratings \.
Lastly, project implementation, which was already hampered by weak country capacity, was made more difficult
by the frequent turnover in Bank staff (as evidenced by six different TTLs ) and some decisions by the Bank such
as the refusal to allow training for the PIU due to presumed experience and capacity \.
at -Entry :Unsatisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Unsatisfactory
c\. Overall Bank Performance :Unsatisfactory
9\. Assessment of Borrower Performance:
Government performance is rated Unsatisfactory\. There were major shifts in government commitment on
critical elements of the project, which led to significant disruptions in implementation \. During project preparation,
the highest levels of government (including MOH, SDP and Parliament) were committed to introducing DOTS\.
However, the new MOH minister in mid-2000, along with the TB Institute, medical practitioners and other vested
interest groups (i\.e\. pharmaceutical companies) opposed DOTS and the Government adopted a national TB
program for 2002-2005 that did not use or refer to DOTS\. The Government did not follow through with all
agreements in a timely manner, including the creation of a dedicated PIU in MOH and the contracting of NGOs to
reach high-risk groups\. For example, the Government wrote a letter to the Bank the day before Board
presentation which said that the PIUs would be established, yet only the SDP carried out its commitment in a
timely manner\. A Supervisory Council which was to provide leadership and oversee project implementation
never became functional\. In addition, top leadership changed frequently, with the Prime Minister changing seven
times during the entire project period \. Lastly, the Government insisted on focusing on hardware components
rather than "soft" components such as technical assistance or training which were essential for addressing critical
capacity weaknesses\.
Implementing agency performance is rated Unsatisfactory\. There were frequent changes in leadership at the
MOH - including at the Deputy Ministry level, which was directly responsible for project oversight - affecting both
logistics and substance of project implementation \. The ICR cites one PIU director who described the changes as
"extremely disruptive because every time a new Minister or Deputy Minister arrived, the essence and the design
of the project were put into question and explanations needed to be provided for why this project is necessary,
etc\." In addition, there was limited coordination between the MOH and SDP (exacerbated by low commitment by
the MOH in carrying out the project activities ), which contributed to delays given the MOH's responsibility for
managing the project account for both agencies \.
However, the SDP, which retained its top leadership and level of commitment throughout the project period, was
able to implement a number of activities and to achieve some positive outcomes \.
a\. Government Performance :Unsatisfactory
b\. Implementing Agency Performance :Unsatisfactory
c\. Overall Borrower Performance :Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
M&E Design is rated Negligible\. The extensive list of indicators to be tracked reflected the numerous facets of the
project (i\.e\. impact on the general population vs \. prisons, changes in mortality and incidence, behavior changes,
institutional capacity)\. However, it was too lengthy (Annex 1 of the PAD lists 11 outcome indicators and 34 output
indicators), given the weak M&E capacity of the country staff and the lack of detailed implementation arrangements in
the project design\. There were few baseline or target figures provided \. As noted previously, the key indicators on
HIV prevalence and mortality rates were not appropriate due to the nature of the interventions (focused on
prevention) and the time lag in seeing any impact \.
M&E Implementation is rated Modest\. The ICR reports some M&E activities that were implemented, including a
behavioral survey in 10 prisons, a study on HIV infection among TB patients , a survey on MDR -TB in 6 prison
hospitals, and the hiring of an M&E officer (albeit four years after the project became effective )\. Although the Bank
team revised the list of indicators to include more relevant and time -appropriate indicators (such as behavior change
among high risk groups) and updated some baseline and target figures, there was still no systematic monitoring
taking place aside from that already taking place at the national program level \. The ICR notes that project-specific
M&E was "persistently one of the weakest areas and no complete set of indicators was ever produced with updated
information\."
M&E Utilization is rated Negligible\. The ICR reports M&E activities of various government entities that were used to
inform decisions about the overall national TB and HIV /AIDS programs\. However, there is little evidence that the
limited M&E activities implemented by the project per se were used to inform policies \.
a\. M&E Quality Rating : Negligible
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Procurement: Procurement performance was problematic for the greater part of the project period \. Particularly in
the first two years of implementation, PIU staff had very limited procurement experience, which was reflected in
the poor quality of, and frequent revisions to, procurement documents \. Moreover, the "dual review process"
which persisted almost throughout the project (in addition to the standard project evaluation committee, all
documents also had to be cleared by an internal MOH committee ) added to delays\.
Financial Management: Financial management performance was generally weak for most the project, initially
due to low capacity but subsequently due to non -compliance with Bank reporting and auditing requirements \.
The Bank team's recommendation of installing an automated accounting system was not implemented, and
financial reports and audits were often submitted late \.
A Special Integrated Review (SIR), initiated by the Bank, was conducted in June 2006, due to questions from the
media regarding impropriety on fiduciary issues \. The SIR covered procurements, receipts for goods and
services, payments, accounting, reporting, and loan withdrawal application processes for 75% of all contracts
awarded up to May 31, 2006\. Although the SIR noted a number of weaknesses due to low capacity, no
instances of misuse of funds were identified \. Recommendations about the need to implement a robust
accounting system and improve financial management were, however, strongly reiterated by the SIR \.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Unsatisfactory Unsatisfactory Based on High Relevance of
Objectives, Negligible Design
Relevance, Modest Efficacy and
Negligible Efficiency\.
Risk to Development Significant Significant
Outcome :
Bank Performance : Unsatisfactory Unsatisfactory
Borrower Performance : Unsatisfactory Unsatisfactory
Quality of ICR : Exemplary
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
Strong political commitment is particularly essential for implementing a vastly different approach to a health
issue (i\.e\. DOTS), including taking into account the interests of vested stakeholders who may be opposed to
the changes\.
The Bank should ensure that both management and task teams are pursuing a consistent approach to a
countryâs program, rather than risk sending mixed or contradictory messages to the Borrower \.
There needs to be effective coordination among multiple implementing agencies, as one less committed
agency could render other more committed agencies less effective \.
When relying on significant support from other donor agencies, there needs to be a clear understanding of
roles and responsibilities of the different donors \.
Arrangements for project staffing during the interval between project approval and effectiveness should be
carefully considered (including financial arrangements ) to ensure that capacity built during the preparation
period is retained for the project implementation period \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
ICR quality is rated Exemplary\. Although project-specific data were very limited, the ICR team drew upon data from
other sources in an extensive effort to compile missing information and assess the project's achievements \. The
extensive discussion of the project's shortcomings and overall implementation history can serve as critical
background information should the Bank decide to engage the country on health issues in the future \. Furthermore,
the contribution the ICR can make to lesson -learning is valuable\. All HNP staff working in communicable diseases
can benefit from its reading before embarking on a new project \.
a\.Quality of ICR Rating : Exemplary | REVIEW |
P000783 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No\. 15695
IMPLEMENTATION COMPLETION REPORT
GABONESE REPUBLIC
ECONOMIC RECOVERY LOAN
(LOAN 3759-GA)
June 11, 1996
Country Operations I
Central African and Indian Ocean Department
Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
Currency Unit = CFA franc (CFAF)
The CFA franc is pegged to the French Franc at the rate of FF I =CFAF100
Fiscal Year US$l=CFAF
1994 555\.20
1995 506\.50
SYSTEM OF WEIGHTS AND MEASURE: METRIC
Metric U\.S\. Equivalent
I meter (m) = 3\.2 feet (ft)
1 kilometer (km) = 0\.62 miles (mi)
I square kilometer (km2) = 0\.39 square mile (sq mi)
I hectare (ha) = 2\.47 acres (a)
I metric ton (t) = 2,205 pounds (lb)
I kilogram (kg) = 2\.2046 pounds (lb)
FISCAL YEAR
January I - December 31
ABBREVIATIONS AND ACRONYMS
CFAF : Franc of the Central African Financial Cooperation
ERL : Economic Recovery Loan
FTID : Levy for Computerized Processing of Customs
MTNECOFfN : Ministry of Economy and Finance
GR : Gabonese Republic
SEEG : National Water and Electricity Company
UDEAC : Customs Unions of Central African States
VAT : Value Added Tax
FOR OFFICIAL USE ONLY
IMPLEMENTATION COMPLETION REPORT
GABONESE REPUBLIC
ECONOMIC RECOVERY LOAN
Loan 3759-GA
Table of Contents
Page
Evaluation Summary \.i
PART I\. PROGRAM IMPLEMENTATION ASSESSMENT
INTRODUCTION \.1
Country Background \. 1I
The Devaluation and the Economic Recovery Loan \.1
1\. STATEMENT A ND EVALUATION OF OBJECTIVES \.2
11\. ACHIEVEMENT OF THE OBJECTIVES \.3
1\. Macroeconomic Policy \.3
2\. Structural Reforms \.4
3\. Sectoral Policies \. 6
111\. MAJOR FACTORS AFFECTING THE PROJECT \.7
A\. Factors under the Control of the Authorities \.7\.7
B\. Factors Beyond the Control of the Authorities \.8
IV\. ASSESSMENT OF OUTCOME AND SUSTAINABILITY \.8
V\. PERFORMANCE OF THE BANK AND THE GOVERNMENT \. 9
Bank Performance \.9
Borrower Performance \. 10
VI\. FUTURE OPERATIONS \.10
VII\. MAJOR LESSONS AND CONCLUSIONS \. 10
This document has a restricted distribution and may be used by recipients onry in the performance of their
official dudies\. Its contents may not otherwise be disclosed without World Bank authorization\.
PART H\. BORROWER CONTRIBUTION TO THE ICR \. 12
Annex 1 Action Matrix \. 24
Annex 2 Social sectors - Public expenditures \. 27
PART HI\. STATISTICAL INFORMATION \. 28
Table 1: Summary of Assessments\. 28
Table 2: Related Bank Loans 29
Table 3: Project Timetable \.30
Table 4: Loan Disbursements \.31
Table 5: Key Indicators for Project Implementation \.32
Table 6: Key Indicators for Project Operation 34
Table 7: Studies Included in Project\. 34
Table 8a: Project Costs \.35
Table 8b: Project Financing \.35
Table 9: Economic Costs and Benefits \.36
Table 10: Status of Legal Covenants in Loan Agreement 37
Table 11: Bank Resources - Staff Inputs 38
Table 12: Use of Bank Resources - Missions\. 39
APPENDIXES \. 40
A\. Actions taken by the Government as conditions of disbursement
B\. Map
IMPLEMENTATION COMPLETION REPORT
GABONESE REPUBLIC
ECONOMIC RECOVERY LOAN
LOAN 3759-GA
PREFACE
This is the Implementation Completion Report (ICR) for the Economic Recovery Loan
(ERL) to the Gabonese Republic, for which Loan 3759-GA in the amount of $30 million
was approved on June 21, 1994 and made effective on September 16, 1994\. The credit
was released in its entirety upon effectiveness\. It was fully disbursed on October 17,
1994\.
The ICR was prepared by Mr\. Lionel Laurant, Consultant (AF3CO) and reviewed by Mr\.
Jerome Chevallier, Country Operations Division Chief and Ms\. Nichola Dyer Cisse,
Country Economist\. The Borrower provided its own assessment of the project which is
included as part II of the ICR\.
The ICR is based on material in the project file\. The Borrower contributed to the ICR by
providing its own evaluation of the project's preparation and execution\.
IMPLEMENTATION COMPLETION REPORT
GABONESE REPUBLIC
ECONOMIC RECOVERY LOAN
LOAN 3759-GA
EVALUATION SUMMARY
Background
1\. Gabon is a Central African country with a population of just over I million
growing at an annual rate of 2\.5 percent\. It is well endowed with natural resources,
including timber, manganese, uranium, and oil\. The country, however, is confronted with
deep-rooted financial and structural imbalances and is still striving to promote sustainable
economic and social development, as well as to diversify its export base\. The sharp
decline in world oil prices during 1976-77 and again in 1986-87 caused major disruptions
in economic activity and government spending, and contributed to a steep expansion in
external public debt and government payments arrears\. Adversely impacted by the
growing overvaluation of the CFA Franc, compounded by a significant decline in the
terms of trade, Gabon's overall financial situation deteriorated\.
2\. The Government adopted a Development Policy program in the aftermath of the
devaluation of the CFA franc (effective January 12, 1994)\. The program's objectives
were to restore the competitiveness of the economy and lay the basis for growth and
poverty alleviation\. It was supported by an Economic Recovery Loan of US$ 30 million,
as well as an lNfF Stand-by arrangement\. The ERL was appraised, negotiated and
brought to the Board in three months, following exceptional procedures\. To consolidate
the early gains from the devaluation, it was made available in one tranche after
effectiveness\.
Loan Objectives
3\. The loan was designed to provide emergency support for the Government's
program of economic recovery to complement the parity adjustment of January 12, 1994\.
The program covered: (i) macroeconomic policies designed to re-establish the conditions
for balanced growth; (ii) structural reforms to promote free and efficient markets, redefine
the role of government and minimize the impact of the devaluation on the social sectors;
and (iii) sectoral policies to reduce government involvement in the economy and
strengthen its capacity to provide basic services to the population\. In coordination with its
partrers in the regional economic and customs union (UDEAC), the authorities undertook
a far-reaching tax and tariff reform aimed at simplifying the tax system and reducing
imporL tariffs\. The Government fulfilled a number of conditions prior to disbursement (see
Appendix A)\.
ii
Implementation Experience and Results
4\. Program implementation was satisfactory overall, although weaknesses in
administrative capacity resulted in delayed implementation of structural measures and left
Gabon's reform agenda unfinished\. The economy responded positively to the
improvement in competitiveness that followed the devaluation\. Fiscal performance
improved appreciably under the program, while the increase in the civil service wage bill
was contained at 10 percent as targeted\. A value added tax was introduced in April 1995
to replace all other domestic indirect taxes on domestically produced goods\. The
authorities were successful in carrying out ambitious trade and fiscal reforms, and
preliminary action was taken to improve public enterprise performance and reduce the
burden of these enterprises on public finances\.
Sustainability of Results and Future Operations
5\. Sustainability of results hinges on the pursuit of appropriate macroeconomic
policies and the implementation of a program of supporting reforms that will consolidate
the gains in external competitiveness, stimulate private sector growth, and strengthen the
capacity of government to deliver basic services to the population\. The ERL-supported
program has re-established a real exchange rate consistent with economic competitiveness,
while substantial tax and tariff reforms were implemented to unleash Gabon's growth
potential in the non-oil private sector and create an environment propitious to private
investment\.
6\. Ongoing projects include a Transport/Urban Technical Assistance Project and a
Forestry and Environment Project\. The Bank is preparing a Public Enterprise Reform
Technical Assistance Operation to assist the Government in the disengagement from
productive activities, and preparations are under way for a Pilot Agricultural Extension
Services project\.
Lessons and Conclusions
7\. The Economic Recovery Loan aimed to support the Government's program to
restore the competitiveness of the Gabonese economy and lay the basis for growth and
poverty alleviation\. Program results were satisfactory overall\. Most of the requirements
established under the ERL were met, laying the basis on which deeper reforms could be
built\. Despite close monitoring by the Bank, however, program implementation was
affected by weaknesses in administrative capacity and financial management on the part of
the authorities\.
8\. The ERL implementation record suggests that administrative and social rigidities
may significantly hinder the actual fulfillment of agreed measures\. Weaknesses in
implementation capacity and resistance to reform are best addressed through early
investment in: (i) setting up appropriate institutions and mechanisms to monitor progress
iii
and implement measures; and (ii) building consensus on reform and mobilizing the support
from socio-economic groups critical to program implementation\.
IMPLEMENTATION COMPLETION REPORT
GABONESE REPUBLIC
ECONOMIC RECOVERY LOAN
LOAN 3759-GA
PART I: PROGRAM IMPLEMENTATION ASSESSMENT
INTRODUCTION
Country Background
1\. Gabon is a Central African country with a population of just over I million
growing at an annual rate of 2\.5 percent\. After gaining independence in 1960, Gabon
opted for a single-party system of government, which prevailed until multiparty
presidential elections were held in December 1993\. Municipal and legislative elections are
scheduled for 1996, followed by Presidential elections in 1998\.
2\. Gabon is well endowed with natural resources, including timber, manganese,
uranium, and oil\. The country, however, is confronted with deep-rooted financial and
structural imbalances and is still striving to promote sustainable economic and social
development, as well as to diversify its export base\. The sharp increase in world oil prices
in the early 1970s and 1980s boosted government revenue which, along with heavy
recourse to foreign borrowing, accommodated an ambitious public investment program, a
generous pay policy for civil servants and other public sector employees, and recurring
extra-budgetary outlays\. At the same time, the "oil syndrome" contributed to the
crowding out of other industries in the tradable goods sector\. The sharp decline in world
oil prices in 1976-77 and again in 1986-87 caused major disruptions in economic activity
and government spending, and contributed to a steep expansion in external public debt
(from I percent of GDP in 1965 to 54 percent by 1993) and government payments
arrears\. Gabon, however, remains at the top of the per capita income bracket in sub-
Saharan Africa (US$ 3,770 in 1994)\.
The Devaluation and the Economic Recovery Loan
3\. The adjustment of the Gabonese economy to the worsening external environment
during 1985-93 was relatively modest, relying mainly on a deflationary policy that led to a
stagnation of real GDP, despite a strong increase in oil output\. The strategy entailed large
cuts in government investment and a reduction in the budget deficit, but failed to achieve
significant progress in lowering the high labor costs\. Adversely impacted by the growing
overvaluation of the CFA Franc, compounded by a 46 percent decline in the terms of trade
during the period, Gabon' s overall financial situation deteriorated\.
4\. The Government adopted a Development Policy program in the aftermath of the
devaluation of the CFA franc (effective January 12, 1994)\. The program's objectives
were to restore the competitiveness of the economy and lay the basis for growth and
2
poverty alleviation\. It was supported by an Economic Recovery Loan of US$ 30 million,
as well as a twelve-month Stand-by arrangement approved by the IMF on March 30,
1994\. Bank assistance was justified by: (i) the necessity to support the Government's
post-devaluation reform program; (ii) the need for a rapid intervention to ensure that the
price and incentive effects of the exchange rate action would be accompanied by
appropriate measures to achieve a lasting improvement in competitiveness and growth;
and (iii) the opportunity to break with a period of several years during which Bank
involvement in Gabon had been limited by the absence of a sustainable macroeconomic
framework and weak commitment to reforms\. The ERL was appraised, negotiated and
brought to the Board in three months, following exceptional procedures\. To consolidate
the early gains from the devaluation, it was made available in one tranche after
effectiveness\.
I\. STATEMENT AND EVALUATION OF OBJECTIVES
5\. The loan was designed to provide emergency support for the Government's
program of economic recovery to complement the parity adjustment of January 12, 1994\.
The program covered: (i) macroeconomic policies designed to re-establish the conditions
for balanced growth; (ii) structural reforms to promote free and efficient markets, redefine
the role of government and minimize the impact of the devaluation on the social sectors;
and (iii) sectoral policies to reduce government involvement in the economy and
strengthen its capacity to provide basic services to the population\. The Government
fulfilled a number of conditions prior to loan disbursement (see Appendix A)\. Notably, in
coordination with its partners in the regional economic and customs union (UDEAC), the
authorities undertook a far-reaching tax and tariff reform aimed at simplifying the tax
system and reducing import tariffs\.
6\. The scope of the ERL's objectives was commensurate with the extent of the
economic and financial crisis confronting the country\. The deflationary process in recent
years, triggered by adverse external conditions (50 percent drop in oil prices in 1986,
overvaluation of the CFAF) compounded by poor economic management, had left Gabon
with legacies incompatible with sustainable development: an overextended and deficit-
ridden public sector; a deteriorating physical and human capital base and declining
productivity; and deepening poverty\. The ERL was also well in line with the Country
Assistance Strategy, and provided a consistent response to the parity change of the CFAF\.
7\. Swift availability of funds was justified by the need to capitalize on the momentum
created by the devaluation\. It remains uncertain, however, whether the Gabonese
economy, served by oil reserves that turned the country into the richest nation in
continental sub-Saharan Africa, was in need for immediate Bank support following the
devaluation\.
3
II\. ACHIEVEMENT OF OBJECTIVES
8\. Gabon's performance under the ERL-supported program was satisfactory\. Within
a much improved macroeconomic framework, the authorities were successful in carrying
out ambitious trade and fiscal reforms\. The traditional export sector (oil, timber, mining)
responded positively to the improvement in competitiveness that followed the devaluation,
while preliminary action was taken in the public enterprise sector to improve performance
and reduce the burden of these enterprises on public finances\. Implementation of the
structural reforms suffered substantial delays, however, and the reform agenda remains
unfinished\.
1\. Macroeconomic Policy
9\. Agenda: Macroeconomic objectives under the Government's post-devaluation
reform program included: re-establishing the conditions for balanced growth through
realization of the potential competitiveness gains of the devaluation; stabilizing the debt
ratio by 1995 through primary budget surpluses (4\.1 percent of non-oil GDP in 1994 and
14 in 1995); maintaining the new parity of the CFA franc with the French franc without
undue compression of credit to the economy; and controlling inflation (expected to reach
about 33 percent in 1994)\.
10\. Results: The economy responded positively to the improvement in competitiveness
that followed the devaluation (the real effective exchange rate, based on relative consumer
prices, declined by 30 percent in 1994)\. The inflation rate was contained at 36 percent in
1994 (only slightly above the program target), thus limiting the erosion in exchange rate
adjustment\. Overall, the structure of relative prices and economic incentives improved
markedly, as reflected in an unprecedented current account surplus of 7 percent of GDP in
1994 (from a 1\.1 percent deficit in 1993)\.
11\. Fiscal performance improved appreciably in 1994\. While total government
expenditure was kept significantly below program levels, higher-than-expected oil revenue
more than offset a shortfall in non-oil revenue\. As a result, the primary, budget surplus
rose from 1\.9 percent of non-oil GDP in 1993 to 9\.5 percent in 1994 (facilitating
repayments to the banking system and of domestic arrears), and the overall deficit as a
percentage of GDP was cut by more than two thirds to 1\.8 percent in 1994\. Strong
activity in the non-oil sector and higher oil exports boosted government revenue in the
first half of 1995, but significant fiscal slippages during the period (large repayments of
domestic arrears and high government expenditure) more than offset the revenue surplus
and resulted in an accumulation of external payments arrears\.
12\. Monetary developments in 1994 were marked by a strong recovery in money
demand and a substantial improvement in the net foreign assets position of the banking
system\. In the face of an improved profit and liquidity position of the private sector and a
contraction in industrial output, bank credit to the private sector declined modestly during
1994, but picked up strongly in early 1995\. After a strong acceleration in the first months
4
following the devaluation, inflationary pressures abated, owing mainly to wage restraint
and the accompanying measures implemented by the Government\. Despite the
introduction of an 18 percent value-added tax in April, as well as upward adjustments in
public utility rates and retail petroleum product prices, inflation is projected to reach 5\.8
percent in 1995 -- a level more consistent with the fixed exchange rate with the French
franc\.
2\. Structural Reforms
13\. Agenda: Gabon's post-devaluation reform program entailed measures to grant
greater freedom to markets and redefine the role of Government\. In pursuit of this
objective, reforms to be implemented under the ERL included: fostering competition;
liberalizing external trade; establishing more efficient energy pricing; minimizing the
impact of the devaluation on the social sectors; establishing a less penalizing tax system
and introducing a value added tax; organizing consultations with employers and unions for
a possible revision of the Labor Code; limiting the increase in the wage bill to 10 percent
in 1994; and simplifying and reducing the cost of approval and other administrative
procedures involved in the establishment of small and medium enterprises (SMEs) and
industries (SMIs)\.
14\. Results: Compelition - Measures to strengthen competition on the domestic
market were largely implemented\. Substantial price and trade liberalization was achieved
prior to loan disbursement, and a redrafted Law on Competition is awaiting Parliament
approval\. However, quantitative restrictions on sugar imports were not lifted by January
1996 as targeted\.
15\. Trade policy - The external trade regime was liberalized significantly\. In the wake
of the parity change, and in the context of UDEAC reforms, import tariffs were reduced
sharply to a range of 5-30 percent (the average tariff dropped from 27\.4 percent in 1993
to 19\.2 percent in 1994); several tax exemptions were eliminated; the system of
import/export licenses was revoked; import quotas were abolished (except for sugar); and
export taxes were eliminated (except for wood and mineral products) or simplified (for
wood)\. To complement these reforms, tax and customs duty exemptions granted to
certain enterprises under special agreements are being renegotiated with a view to
broadening the tax base, and no new exemptions have been granted\. Elimination of
exemptions will require concerted action at the sub-regional level\.
16\. Finally, while the levies on imports to finance the CGC (Conseil Gabonais des
Chargeurs) and CGCE (Centre Gabonais du Commerce Exterieur) were abolished, a bill is
to be passed that re-introduces the provisions of a 1992 ordinance requiring the payment
of fees by managers of ore and oil tankers\. Further, the authorities failed to reduce the
customs data processing fee (FTID) from 2 percent to 0\.5 percent of c\.i\.f\. value as
targeted\. The upholding of the FTID tax on imports is not consistent with the trade
liberalization undertaken in Gabon under the program and, despite overall satisfactory
implementation, remains an important outstanding issue\.
5
17\. Fiscal reform - A value added tax system has been in place since April 1, 1995, at
a single rate of 18 percent\. It replaces all other domestic indirect taxes (with the exception
of certain excise taxes) on domestically produced goods and, to that extent, supports local
production\. The next step is to expand the base of firms participating in the VAT (about
600, the largest in terms of sales, have been included)\. As conditions of loan
disbursement, and to establish more efficient energy pricing, fiscal levies on petroleum
products were lowered and prices paid to the refinery were linked to import parity prices\.
Reflecting the introduction of the value added tax, and as a way to obviate the need for
government subsidies, electricity charges were raised by roughly 15 percent and prices of
petroleum products by an average of 7 percent\.
18\. Labor sector - The increase in the civil service wage bill was contained at 10
percent in 1994 as targeted, while wage increases in the private sector averaged about 15
percent, contributing to the satisfactory inflation rate recorded in 1994\. The Labor Code
had been aimed at liberalizing the modalities for hiring and releasing labor by private and
public enterprises (while providing for adequate safeguards)\. However, it was
substantially amended by the National Assembly, and the revised version has not removed
all constraints to labor mobility and job growth\. The Government has committed itself to
remedy these deficiencies\.
19\. Better efficiency of the labor market has been aided by the Office National de
l'Emploi and the Fonds d'Insertion et de Reinsertion\. These counseling and financing
bodies, which began operating in early 1994, aim at: (i) monitoring labor supply and
demand and ensuring the widest possible dissemination of information on employment
opportunities, and (ii) providing those seeking employment with guidance in line with their
skills and market needs\. The functioning of the Fonds d'Insertion et de Reinsertion has
been seriously hampered, however, by a lack of financing by the Government\.
20\. Social sectors - As condition of loan disbursement, the budget allocations to
National Education and Public Health were adjusted to reflect cost increases resulting
from the parity change\. These sectors, however, remain affected by a low efficiency of
public expenditure due to inadequate internal allocation, as reflected in relatively low
social indicators\.
21\. Facilitationi - No progress was made on simplifying and reducing the cost of
approval and other administrative procedures involved in the establishment of enterprises\.
Even if account is taken of the abolishment of the system of import/export licenses under
the program, as well as ongoing preparations for the revision of the business legislation
and the establishment of a new Investment Code, the Gabonese authorities have yet to
show significant action to improve the institutional and legal framework for private sector
development\.
6
3\. Sectoral Policies
22\. Agenda: The authorities' post-devaluation reform program entailed sectoral
policies designed to: (i) develop output in the key sectors of the economy (agricultural and
forestry sectors, energy sector, social sectors) and improve performance; (ii) set
administered prices at levels that reflect real costs; and (iii) reduce the burden of public
enterprises on public finances\.
23\. Results: The structure of relative prices and economic incentives improved
markedly under the program\. A decline in real household disposable income following the
devaluation gave rise to a sharp contraction in real domestic demand and non-oil output,
but a strong pickup in oil production allowed for an increase of 1\.7 percent in total GDP
in 1994\. Benefiting from improved competitiveness and increased foreign demand,
forestry exploitation remained buoyant in 1994; production of manganese increased by
11\.3 percent while, with a stabilization of output in agriculture, value added in the primary
sector grew by an estimated 9\.2 percent in real terms\. In contrast, reflecting a reduced
real household disposable income, real output dropped in the secondary and tertiary
sectors by 4 percent and 3 percent respectively\.
24\. In addition to the liberalization measures discussed above, producer prices were
raised by 33 percent for cocoa and 50 percent for coffee for the 1994 season\. Further,
emergency programs aimed at reducing operating costs and introducing rates adjustments
were put in place by the Government to improve the financial performance of the four
public enterprises deemed most exposed to the impact of the parity change (Air Gabon,
the electricity and water company SEEG, the oil refinery company SOGARA, and the post
and telecommunication company OPT-TIG)\. As a result of these measures, the total
losses incurred by these enterprises in 1994 were contained at CFAF 23\.2 billion, less than
half the devaluation-induced increase in costs (estimated at some CFAF 51 billion) for the
year\. In addition, with assistance from the Bank, a far-reaching program of public
enterprise reform has been adopted by the government, entailing the preparation of a
privatization law (approved by the National Assembly in January 1996), the restructuring
or divestiture of key public utilities and firms in which the Govemment has a minority
interest, the elimination of government subsidies, and the clearing of cross-debts and
arrears\.
25\. Output growth and improvement of social indicators in Gabon remain predicated
on the definition of clear sectoral policies by ministries\. Notwithstanding some progress in
the preparation of a new Investment Code, aimed at enhancing the transparency of the
existing framework for promoting private investment (particularly in the mining and
forestry sectors), the lack of a clearly defined line of conduct in this respect remains an
impediment to private sector development and efficiency of the economy\.
7
III\. MAJOR FACTORS AFFECTING THE PROJECT
Factors under the Control of the Authorities
26\. Weaknesses in implementation capacity and financial management, reflecting a
failure to sufficiently internalize the program and create an effective mechanism for
forceful and timely government action, affected program implementation in four different
respects:
(i) no progress was made toward the introduction of simplified administrative
procedures for the establishment of enterprises, and the customs data processing
fee (FTID) was not reduced as targeted;
(ii) although fiscal performance in 1994 was broadly on track, resulting in a significant
improvement in the fiscal position, a shortfall in non-oil receipts was recorded in
the period, resulting from a slower-than-expected expansion in the tax base
(particularly taxable imports) and delays in eliminating customs exemptions
granted to certain enterprises under special agreements and adjusting export taxes
on wood and manganese\. Delays were also recorded in: (a) eliminating the levy on
imports to finance the Conseil Gabonais des Chargeurs and Centre Gabonais du
Commerce Exterieur contributions; (b) applying the VAT to oil company imports
(despite intense efforts by the authorities), as well as to the subcontractors of
companies benefiting from tax exemptions; and (c) adapting public enterprises to
the post-devaluation environment;
(iii) the quantitative restriction on sugar imports was not lifted by January 1996 as
targeted\. In any event, this restriction is to be replaced for a three-year period by a
surcharge of 30 percent, so that the degree of liberalization in the sector will
remain tenuous for the period (the surcharge, combined with the normally
applicable import duties, would actually bring duties to a total 83 percent of the
c\.i\.f value)\. Indeed, a recent FAO estimate (December 1995) shows that, even if
account is taken of the proposed surcharge, the retail price of imported sugar
would be over 25 percent below that of domestically produced sugar\. A
nationwide controversy, nourished by the fear of bankruptcy of the local producer,
jeopardizes the chances of a possible lifting of the quota as targeted - despite
potentially substantial cost cuts (from 30 to 40 percent according to the FAO);
(iv) weaknesses in transparency and effectiveness of use of public financial resources
exacerbated concerns about governance during program implementation,
contributing to the shortfall in nonproject external assistance in 1994\. These are
being remedied in the context of the three-year program approved by the IMF in
late 1995\.
8
Factors beyond the Control of the Authorities
27\. Program implementation was also affected by a devaluation-induced fall in income
and the limits imposed by regional economic integration: (i) a decline in real household
disposable income following the devaluation resulted in a sharp contraction in domestic
demand (8\.6 percent)\. As a result, non-oil output declined by an estimated 3 percent,
affecting fiscal performance under the program; (ii) the necessity for concerted action at
the sub-regional level affected progress in eliminating tax and customs duty exemptions\.
On the other hand, economic performance was helped by favorable world market oil
prices, contributing to the higher-than-expected oil revenue under the program\.
IV\. ASSESSMENT OF OUTCOME AND SUSTAINABILITY
28\. The ERL-supported program has re-established a real effective exchange rate
consistent with economic competitiveness (with a substantially lower rate of inflation),
improving substantially the structure of relative prices and economic incentives\. It has
resulted in significant fiscal reforms (including the introduction of a value added tax) and
progress toward more efficient energy pricing\. Most government controls on prices have
been lifted, and substantial trade liberalization has been undertaken to unleash Gabon's
growth potential in the non-oil private sector and create an environment propitious to
private investment\. Preliminary action was taken in the public enterprise sector to
improve performance and reduce the burden of these enterprises on public finances\.
29\. Gabon's performance under the program was satisfactory overall, providing a
necessary base on which deeper reforms could be built\. Sustainability of results remains
heavily dependent on the pursuit of appropriate macroeconomic policies and the
implementation of a program of supporting reforms that will consolidate the gains in
external competitiveness, stimulate private sector growth, and strengthen the capacity of
government to deliver basic services to the population\.
30\. Consolidation of the gains from the ERL-supported program also hinges on the
improvement of public financial resources management\. The fiscal slippages that occurred
in the first half of 1995, and came to light later during the year, illustrate the fragility of the
progress toward more transparency and efficiency in government financial management\.
With technical assistance from the IMF, however, measures to improve budgetary
procedures and strengthen the authorities' monitoring capacity are now being
implemented\.
9
V\. BANK AND BORROWER PERFORMANCE
Bank Performance
31\. The Bank's performance in the design and monitoring of the Economic Recovery
Loan was satisfactory overall:
(i) Design: the Economic Recovery Loan provided a consistent response to the parity
change of the CFA Franc, contributing to the establishment of a solid base on which
deeper reforms could be built\. It was also well in line with the Country Assistance
Strategy\. The Bank's performance in the design of the project, however, may have failed
to fully appreciate the administration's capacity limitations\. Program ownership and
administrative coordination would have been served by strengthened high-level
committees to focus on the implementation and monitoring of the program\.
Swift availability of funds was justified by the need to capitalize on the momentum created
by the devaluation\. The Loan provided a pragmatic response to the parity change, but
could not fully address the deep-rooted rigidities of the Gabonese economy:
(a) the management of public financial resources remains affected by insufficient
transparency and discipline in government financial management, as well as
weaknesses in effectively monitoring overall fiscal developments;
(b) the development of the non-oil private sector remains impeded by rigidities in the
institutional and legal framework, strong government involvement in productive
activities, and large government domestic payments arrears;
(c) the social infrastructure and services remain inappropriate, and protection of the
most vulnerable groups from the negative impact of the devaluation could have
been strengtherned by reforming the pharmaceutical distribution system, or
implementing labor-intensive public works (as in the ongoing Urban/Transport
Technical Assistance project);
(d) the civil service remains inefficient and overextended\.
(ii) Monitoring: close monitoring by the Bank was instrumental in focusing assistance on
key activities for the success of the program\. In addition to three supervision missions,
program implementation was monitored in the context of a joint Bank/IMF Public
Expenditure Review and the preparatory work for technical assistance to privatization\.
10
Borrower Performance
32\. Government performance under the program was satisfactory overall\. Despite
early progress in meeting up-front conditionalities (notably, Gabon took the leadership
within UDEAC in reducing tariff protection immediately after the devaluation),
weaknesses in administrative capacity and financial management, compounded by a legacy
of heavy-handed public intervention in the economy, affected program implementation\.
The exceptional procedures under which the ERL was appraised, negotiated and brought
to the Board may have prejudiced consensus building and program internalization\.
Reflecting these conditions, the authorities' failure to create an effective mechanism for
forceful and timely government action and overcome resistance to reform resulted in
delayed implementation of the agreed measures and left Gabon's structural reforms
agenda unfinished\.
VI\. OTHER OPERATIONS
33\. The ERL-supported program set the stage for deeper reforms that will consolidate
the gains in competitiveness, improve economic incentives and promote efficient markets\.
As identified in the Bank's Country Assistance Strategy, Gabon's unfinished agenda
includes: poverty alleviation, promotion of private sector growth, reduction of the
country's vulnerability to oil-related shocks, capacity building and human resource
development, and adoption of a sound forestry policy to ensure the conservation and
sustainable use of existing forests\.
34\. Ongoing projects include a Transport/Urban Technical Assistance Project
(PAPSUT), aimed at defining the strategies and investment programs in those sectors, as
well as a Forestry and Environment Project\. The Bank is preparing a Public Enterprise
Reform Technical Assistance Operation to assist the Government in the disengagement
from productive activities, and preparations are under way for a Pilot Agricultural
Extension Services project\. Based on the conclusions of the PAPSUT project, Bank
operations are envisaged in the Urban Infrastructure and Transport sectors\.
VII\. MAJOR LESSONS AND CONCLUSIONS
35\. The Economic Recovery Loan aimed to support the Government's program of
economic recovery initiated through the devaluation of the CFA franc on January 12,
1994\. The program entailed: (i) macroeconomic policies designed to re-establish the
conditions for balanced growth; (ii) structural reforms to promote free and efficient
markets, redefine the role of government and minimize the impact of the devaluation on
the social sectors; and (iii) sectoral policies to reduce government involvement in the
economy and strengthen its capacity to provide basic services to the population\.
I1
36\. The Economic Recovery Loan provided a consistent response to the parity change
of the CFA franc\. Program results were satisfactory overall\. Most of the requirements
established under the ERL were met, laying the basis on which deeper reforms could be
built\. Despite close program monitoring by the Bank, however, weaknesses in
administrative capacity and financial management on the part of the authorities hindered
implementation of the agreed measures\. The authorities have yet to define a coherent
structural reform program based on the transition to a competitive, market-based
economy\.
37\. The ERL provided the opportunity to strengthen the policy dialogue with Gabon,
following a period of several years during which Bank involvement in the country had
been constrained by the absence of a sustainable macroeconomic framework and weak
commitment to reforms\. It remains uncertain, however, whether the Gabonese economy,
served by oil reserves that turned the country into the richest nation in continental sub-
Saharan Africa, was in need for immediate Bank support following the devaluation\.
38\. The ERL's implementation record suggests that administrative and social rigidities
are liable to significantly hinder the actual fulfillment of agreed measures\. Weaknesses in
implementation capacity and resistance to reform are best addressed through early
investment in:
(i) building appropriate institutions and mechanisms to monitor progress and
implement reforms, so as to strengthen the authorities' ability to overcome
conflicting political interests and forestall weaknesses in administration (lack of
appropriate administrative structure and lack of institutional coordination and
organization)\. Program ownership and administrative coordination may be better
served by creating high-level committees to focus on program implementation and
monitoring; and
(ii) building consensus on reform by involving civil society - fulfillment of program
targets is predicated on the mobilization of support from socio-economic groups
critical to program implementation (private sector, government officials and civil
servants, trade unions, other key representatives of civil society)\.
12
PART II: BORROWER CONTRIBUTION TO THE ICR
I\. THE DESIGN OF THE PROGRAM
From initial thinking on a medium-term development strategy to a specific operation
dictated by multilateral commitments assumed in the aftermath of the devaluation of the
CFA franc\.
Mired for six years in an economic and financial crisis, Gabon has been seeking
since the end of 1992 to formulate a new development strategy based on an overall
review, including a long-term approach and reexamination of certain determining sector
policies\. The World Bank had supported this undertaking and offered its technical
support in the form of an Economic Memorandum and identification of sector adjustment
programs in agriculture, transport and the restructuring of parapublic enterprises\.
On January 12, 1994, the Franc Area countries decided on a 50% devaluation of
the CFA franc, and the donors undertook to put in place programs designed to mitigate
the impact of this measure, which was something new for the countries concerned\. A
Stand-By arrangement was accordingly approved by the International Monetary Fund on
March 30, 1994, and an Economic Recovery Loan (ERL) was obtained from the World
Bank at the end of April of that year\.
The ERL was thus an individual operation, but one that was based on an analysis
of the Gabonese economy made in the course of 1993 by World Bank and Gabonese
Government experts, and lies within the scope of a wider-ranging review including sector
adjustment plans' with a medium-term horizon\.
The review of the evolution of the Gabonese economy presented as an
introduction to the "Strategy Letter" resulted from the study made and set forth the
strategic thrusts of the policy to be implemented based on:
divestiture by the State in favor of the private sector, and refocusing of its role on
its essential functions,
* combined with a search for a replacement for public expenditure as motor for the
economy, thus implying reestablishment of competitiveness\.
l The project concerning the transport sector was on the point of being negotiated, that for
agriculture was under preparation and that for restructuring of the parapublic sector had been the
subject of an urgent request, as evidenced by the minutes of the negotiations: "The Gabonese
party expressed its intention to request Bank assistance in the form of a quick-disbursing project
to support the restructuring of the public enterprises\. Said party also reiterated its desire to
receive financial and technical support from the Bank for the preparation of the restructuring of
the enterprises of the agroindustrial and transport sectors"\. Minutes of Negotiations,
Washington, April 26, 1994\.
13
The ERL is inseparable from the IMF Stand-By arrangement\. The Bank had
participated in the preparation of the latter, with inclusion in it of a certain number of
structural elements to be developed further in the ERL\. while the ERL adopted the
framework and the macroeconomic objectives of the Stand-By\.2 Moreover, right from
the start it was intended that the Stand-By would be followed by a three-year Extended
Fund Facility (EFF) to bring Gabonese economic policy back to a medium-term
perspective, after the uncertainties connected with the real consequences of the
devaluation had dissipated\.
II\. THE CONTENT AND EXECUTION OF THE ERL PROGRAM
Aside from the macroeconomic framework resulting from the IMIF program, the
ERL as defined in the "Letter of Development Strategy" focuses on two main areas:
structural reforms
sector policies
11\.1 Structural reforms
These result from the diagnosis of the barriers to economic development and the
factors behind Gabon's lack of competitiveness\. Five primary topics are involved:
liberalization of domestic and foreign trade, energy prices, the institutional environment of
the private sector, reform of indirect taxation, and mitigation of the negative impacts of
the devaluation on the poorer segments of the population\.
II\. I \. 1 Liberalization of domestic and foreign trade
The protectionist framework that has made the going easy for enterprises and
helped to maintain the high level of costs and prices is directly attacked, in particular by
the lowering of quantitative or tariff barriers:
abolition of the last quantitative restrictions (five products), by means of a
temporary and degressive (30%, 3 years) surtax in order to give the enterprises the
time needed to implement the restructuring plan,
lowering of the customs tariff in the context of the Central African Customs and
Economic Union (UDEAC), so as to reduce the protection rates\. As implemented
after the devaluation, however, trade liberalization became more a policy of
controlling inflationary pressures,
elimination of tax and customs exemptions granted in the context of the
Investment Code, so as to avoid distorsions among industries and enterprises,
2 This completion rcport will not directly considcr the macroeconomic aspects\.
14
reduce the adverse impact of protection on productivity, and offset the revenue
loss incurred as a result of lower import tariffs;
l iberalization of profit margins after a temporary period (6 months) of strict price
control to prevent post-devaluation speculation\.
It should be noted that the lowering of the customs tariff and the elimination of the
exemptions allowed by the Investment Code have the effect of reducing the gains in
competitiveness derived from the devaluation\.
By and large these measures were adopted and implemented in accordance with
the agreed schedule\. However, three points caused or are still causing difficulties:
* the establishment of the legislative and regulatory framework for ensuring free
competition, which prompted reformulation of the Law on Competition which
accompanied SAP I of 1989\. The new law and its implementing decrees have been
adopted by the Government\.
* the abolition of protection for the sugar industry, whose low competitiveness
(50%)3 in an international market characterized by dumping (the major producers'
domestic prices "subsidize" their exports, which are generally effected at a loss or
at marginal cost) would have entailed disappearance of the enterprise concerned
(SOSUIHO) without there being time to devise replacement solutions4 for
converting SOSUHO's considerable land and facilities for other uses\. To offset
these delays in the designing of the restructuring or conversion plans (delays that
also occurred in the rest of the agroindustry sector), the elimination of quantitative
protection for sugar originally scheduled for January 1, 1995, had to be twice
deferred and was ultimately reprogrammed for the end of 1996, in accordance with
the revised EFF schedule\.
* the elimination of advantages granted through establishment agreements whose
contractual nature excludes any purely regulatory action\. Pending UDEAC
directives, the renegotiation of the agreements concerned was deferred to the
beginning of 1996\. The decisions taken then concern the parapublic sector
enterprises where the State has authority to act as owner (in accordance with the
EFF, March 1996 revision)\.
50S% deficiency (World Bank mission, of March 30, 1994)\.
4World Bank missions of March 1994 and June 1994, Agriculture and Forestry Sector Review,
February 24\. 1995\.
15
I\. 1\.2 Energy prices
The price of energy, petroleum products and electricity is a decisive factor in the
production costs of enterprises and, directly or indirectly, in household budgets\. The
general objective of the measures included in the program was to lead the producing
enterprises (SOGARA and SEEG) to improve their performance:
Oil products
Demand for oil products is covered by the national refinery (SOGARA), which
processes a small proportion of Gabon's crude production (750-800,000 tons/year)\. The
domestic market is currently less than 500,000 tons and the rest is exported\. The specific
objective for this subsector was to index SOGARA's ex-refinery prices to international
prices after incorporation of the impact of the devaluation and without subsidies\.
In an initial stage, fuel taxes were adjusted to temporarily stabilize prices at the
pump\. Then, when VAT was introduced, the structure of prices was modified in
accordance with the IMF's recommendations\. SOGARA's ex-refinery prices were raised
by 12%; the nominal level of taxes remained basically the same -- with a different
breakdown (shift from the consumption tax to VAT and the equalization tax) --; and
distributors and retailers' margins remained constant in nominal value\. As a result of the
deductibility of VAT, the industrial diesel oil category (tax-free fuel for fixed industrial
installations) was abolished\.
It should be noted that indexing on import parities runs into the practical difficulty
of establishing a basic reference price\. While it is possible to ascertain the prices of
products offered on the international market, it is not so easy to define a realistic price for
delivery in Gabon, freight rates being extremely dependent on the quantities delivered and
these quantities themselves being dependent on available storage capacities (which are
currently limited in Gabon)\. On the other hand, following exceptional bitumen imports
connected with road projects, it was found that SOGARA's prices were competitive\. The
prices of the other products appear to be essentially the same as the cost of possible
imports\.
Electricity
Electricity prices were not adjusted to incorporate the effects of the devaluation
until December 1994, when an average increase of 13% went into effect\.
The price reform adopted by the Government in the context of the redefinition of
public service concessions introduced two elements in the tariff-setting: installed power
and consumption\. Billing also reflects generation costs according to region\. The reform
was introduced gradually, starting with the big medium-voltage consumers, and the initial
tariff studies were updated\. The low-voltage tariffs were also revised recently\.
16
The Law Establishing the National Water and Electricity Council was adopted by
the National Assembly\. This Council determines the special charges for water and
electricity which are added to the energy price proper and are intended for financing
system maintenance and expansions for which local authorities are responsible\.
Beyond the tariff reforms, the most significant step forward in regard to water and
electricity is the decision to make water and electricity service the subject of a private
concession, i\.e\. to privatize the state company currently holding the concession\.
11\.1\.3 Reform of indirect taxation
VAT was introduced on April 1, 1995, as agreed under the ERL\. From the
standpoint of its fiscal performance, the results obtained have exceeded expectations\.
However, in view of its limited sphere of application, the hesitancy of certain
parapublic enterprises which fear its impact on the prices of certain sensitive products, and
the difficulties connected with certain establishment agreements, application of VAT
creates certain distortions in the economy\. These will, however, be resolved by extension
of its application to all sectors and products\. To this end, the human resources and
equipment of the authority responsible for administering VAT will have to be
strengthened\.
11\. 1\.4 Reforms of the institutional framework
These reforms concern the legislative and regulatory framework in which the
enterprises operate, their objectives being to eliminate the obstacles to proper functioning
of the labor market, to implement an enabling environment and a review of the Investment
Code, to revise the country's business legislation and to ensure equity and transparency in
its application\.
In these fields, the years 1994 and 1995, i\.e\. the period covered by the ERL, were
devoted to gaining a better understanding of the problems to, consultations between the
private sector and the authorities and preparation of proposals to be submitted to the
Government\. These reforms are not expected to be completed until some time in 1996,
according to the new EFF program agreed on with the IMF\.5
They envisage:
a revision of the Labor Code which, although adopted in 1994, does not provide
the flexibility necessary for development of the employment market, and the
introduction of implementing legislation and specialized institutions\. At the same
time, the National Employment Office (Office National de l'Emploi - ONE) has
been made operational with the establishment of an employment-monitoring unit,
The Extended Fund Facility (EFF) was prepared with the collaboration of the World Bank\.
17
and identification and implementation of training programs for retraining of the
unemployed or the young graduates, so as to equip them to work where
employment is available\. The ONE's actions will have a decisive impact in the
further application of the policy on privatization and restructuring of the parapublic
sector\.
adoption of a new law on investments based among other things on equal
treatment of all operators, security of investments and establishment of a
facilitation mechanism, with particular reference to enterprise creation\. The law
will be rounded out with sector codes in the priority sectors specifying the
technical conditions for activity and the particular incentives applicable\.
modernization of business legislation and its harmonization within the Franc Area\.
11\.1\.5 Minimization of the impact of the devaluation on the social sectors
In the short term, the inflation induced by the devaluation and the deterioration of
the employment market have greatly reduced consumers' purchasing power\.
After having slumped sharply in 1994, private consumption appears to have
continued to contract in 1995 notwithstanding the slowing of inflation (measured by the
index for 125 articles) to 3\.4% in 1995 compared with 47% in the preceding year\.
Paid employment outside government declined by 3\.5% in 1994 despite the
acceleration of the recovery in the forestry sector begun in 1993 and a slight improvement
in construction and public works due to public investments\. Increasing unemployment will
therefore aggravate the fall in the standard of living\.
Being aware of the importance of a reduction in real wages for the competitiveness
of the economy, the Government has maintained a rigorous wage policy in which it has
itself set an example\. Public service pay was only raised by 10% in 1994 and was kept at
the same level in 1995, and it is estimated that private sector pay increases remained
within the 15% limit recommended\.
It is clear that these negative developments weigh proportionally heavier on the
poorest segments of the population\. To mitigate the impact on them several approaches
have been adopted:
maintaining control over price increases\. After the temporary controls imposed to
deter speculation, an agreed price policy was instituted with the collaboration of
the producers as regards staple items\. In addition, taxation (customs duties and
VAT) was reduced on certain sensitive products such as school books and
medications\.
18
partially offsetting the fall in living standards by an improvement in social services\.
The funding for the education and health sectors was increased after the Amending
Finance Law of 1994 in order to maintain the real level of expenditures as set
before the devaluation\. While the funding from national resources has been used,
there have been considerable delays in disbursements from loan funds\. For these
two sectors, the capital expenditures executed in 1995 were double those of 1994,
and this level has been maintained for 1996 (see annexed table)\.
definition of a policy in favor of the disadvantaged groups\. To accomplish this,
Gabon has undertaken a study on poverty with Bank assistance\. The field surveys
were conducted in the first half of 1995 and the report is in process of finalization\.
It will include the definition by the Gabonese party of a strategy to combat poverty
and a governmental action plan\.
III\. SECTOR POLICIES
Beyond general economic policy measures designed to create an environment
better suited to development of the private sector, the post-devaluation strategy had to
define the directions to be given to the sectors that are motors of or necessary for growth\.
These sectors are dominated by the state enterprises (to a lesser extent for the
wood sector)\. This is why the restructuring of the parapublic enterprises is a key element
in the sector policies to be redefined\. The fact is that the production enterprises will have
to face international competition as they progressively lose the protections that have
sheltered them to date (quotas, elimination of tax advantages)\. They have been given a
three-year period, by means of a temporary and degressive surtax (30%), to adapt to the
new context\. To facilitate the changes they will have to make, technical and financial
support was sought from the World Bank, to consist of a restructuring component for the
agroindustrial enterprises in the context of an agriculture sector project,6 a restructuring
component for the transport enterprises (operation and infrastructure) in the context of a
technical assistance project for the transport sector,7 which was itself to prepare a
transport sector project, and, more generally, a future project to support restructuring of
the public enterprises\.
In the event, only the transport sector project (PATRANS, later PAPSUT)
materialized when the ERL was set up (negotiations in August 1994)\. Unfortunately its
actual startup was delayed by a certain number of administrative and material difficulties
and it did not in fact become truly operational until the last quarter of 1995\. The
agriculture project is still in gestation with changes being made by the parties involved,
6 Cf\. para 32 of the Strategy Letter
7 Cf\. paras\. 38 and 39 of the Strategy Letter\.
19
while the parapublic sector project may perhaps see the light of day in 1996, as an
accompaniment (post-synchronized) to the measures included in the IMF's EFF program\.
In addition to their public enterprises component, these sector projects were
intended to help with formulation of strategies and policies in the two basic sectors --
agriculture and transport infrastructure -- with the aim of profiting from the devaluation-
induced stimulus for the first-named sector and improving the quality and cost of transport
sector\.
Despite these ups and downs certain positive developments in the different sectors
warrant noting:
111\.1 Production sectors
Agriculture
The emphasis in the public programs in favor of advisory and extension services
for farmers was reflected in the capital expenditures, especially the IFAD and IGAD
projects and the village-scale components of the rubber and cattle-raising programs\.
Moreover, the upgrading and paving of the north-south highway will progressively
improve the conditions for marketing food crops\. Unfortunately, the urban structures
(markets) have been left in their dilapidated state and it is not unlikely that the additional
costs due to losses are a source of discouragement for merchants and local producers\.
Following the devaluation there was a distinct shift in trade in foodstuffs toward
the countries of the subregion, and even South Africa, and away from Europe\. The
response of local production is presently hard to quantify, but in light of price movements
it would seem that food products are more plentiful in the markets\. The studies made by
the Bank (Agriculture and Forestry Sector Review, 1995) express a certain optimism
taking into consideration the appreciable productivity gains that can be expected in the
food sector and the shortfall to be filled between domestic consumption and national
production\.
Regarding cash crops the situation is one of contrasts\. The devaluation and the
upward movement of prices are working to the advantage of the rubber sector, which is
pursuing its efforts to improve productivity\. Coffee production, on the other hand, is still
in decline while the slight rise in cocoa production is well below what was hoped in view
of the higher incomes for growers resulting from devaluation and the higher international
prices\. The producer prices for these two products were increased by 50% and 35%
respectively at the time of signature of the ERL\.
20
Fishery
Although there is a sustained demand, catches are held down by technical factors:
the poor condition of the industrial fishery equipment, and the departure of a large number
of the nonindustrial fishermen from western Africa\.
Forestry
The forestry sector benefited from an improvement in the world market in 1993\.
The devaluation enabled significant gains that were shared between the operators,
OCTRA and the State\. However, in the course of 1994 this very favorable situation and
the CFAF profits generated by the devaluation led to an unrestrained and uncontrolled
scramble for "'green gold" just as the market trends reversed themselves\. The outcome
was production quotas that sharply reduced the level of utilization of the newly acquired
production capacities\. Recent events in this sector have underscored two phenomena:
one negative, regarding the management of permits and production, with
detrimental effects on the country's forest resources despite the objectives of the
forest/environment program;
the other positive, with the development of local processing started by the major
European groups operating in the sector\.
In light of these observations, the Government has undertaken a study in
partnership with the operators on management of the wood sector and development of
industrial processing\. The conclusions of the commission formed for this purpose have
been submitted to the Government and in the coming months a new policy should be
implemented in the sector aimed at better management and development of the resources
and promotion of a preliminary processing industry that accounted for no more than 7% of
total production in 1994\.
Mining
The mining sector, like all other export sectors, has experienced an upturn in its
profitability, but the expansion of its exports is still entirely dependent on international
market demand that is unaffected by purely national policies\.
111\.2 Infrastructure
Despite the marked increase in the cost of imported inputs, the road investment
program has been maintained in order to provide the country with the communication
infrastructure necessary for development of productive activities, agriculture and forestry
in particular\.
21
The PAPSUT project already referred to should enable improved operation of the
transport services as a result of (i) adjustment measures involving the public enterprises in
particular; and (ii) the formulation of a coherent investment program aimed, among other
things, at better intermodal complementarity\. A certain number of studies are under way
and the privatization of the railway operation was initiated at the end of 1995\.
111\.3 The social sectors
The changes in budgetary appropriations confirm the State's withdrawal from the
production sectors and the emphasis now placed on infrastructure for transport,
production and energy distribution and on meeting social needs, especially in education
and health\.
Despite a low execution rate in 1994, investments in education are continuing on a
sustained basis\. In accordance with the program, allocations from national resources have
been increased by nearly 30% to maintain the volume of construction programmed before
the devaluation\. Operating expenditures, in which salaries feature very largely, have been
increased by 15%\. Actual expenditures in 1995 were more than double those of 1994\.
The investments made and the recruitment carried out mean that in primary education in
Libreville the number of students per classroom was brought down from 104\.6 in 1990 to
76 in 1995, and the student-teacher ratio from 72\.7 to 48\. Although favorable
development of these parameters is one of the prerequisites for improvement of the
education system, strengthening of management capacities in this sector nevertheless
remains essential if its efficiency is to be improved\.
In this connection, a public expenditure review covering the main sectors has been
started with World Bank assistance\. This will make it possible to define budget
appropriations and the procedures for executing expenditures better\.
Regarding health, besides the increase in investments and operating funds, a reform
of the institutional framework has been carried out with a new Framework Law designed
to harmonize the supply of the health system, restructure its management methods and
ensure the system's financial equilibrium\.
In addition to improving access to education and health and the efforts to reduce
poverty, the authorities' action has been reoriented to focus on improving living conditions
in the urban centers, where over 70% of the population is concentrated\. Programs to
improve the sewerage systems have been started, together with an experiment in labor-
intensive road works in the context of the PAPSUT project which also aims to reformulate
urban management concerning infrastructure\. A law on decentralization designed to
better define the role and strengthen the means of the local authorities is in the process of
being adopted\.
22
IV\. CONCLUSION
The adjustment and economic recovery measures included in the ERL program
have for the most part been implemented, although certain of the reforms are still in the
gestation stage\. As regards economic growth, the impact of these measures is not yet
apparent, as is demonstrated by the modest growth of the nonoil GDP (1\.5% in 1995)
notwithstanding the 30% increase in the public investment program, while consumption
posted a further contraction\.
It is undeniable that the export sector enterprises have appreciably improved their
position as a result of the devaluationi\. However, none of the major sectors has gained
new market shares\. The increase in oil production derives from investments made in the
past\. Traditional mining and forestry products are riesponding to the same market
movements as before\.
At the same time the agriculture sector has not yet seized the opportunities
provided by the devaluation and a large part of the industrial sector has been adversely
impacted by the application of the regional reform program\.
The devaluation of the CFA franc and the measures to liberalize the economy have
not so far provided vigorous enough signals for a reordering of economic activity\. The
institutional reforms, preparation of which was started during the program period, need to
be implemented and sector strategies must be developed that will attract private
investment in the lead sectors such as agriculture, mining and wood\.
Beyond the review of sector policies and actions to promote the private sector
with a view to reactivating growth, greater attention will have to be paid to the
macroeconomic framework and the management of public finances\.
The fact is that the Gabonese economy is driven by the oil sector and utilization of
that rent as recycled by the State\. In this respect, the devaluation heightens the
importance of the external sector and increases the public resources\. The increased
utilization of these resources must be controlled so as to prevent the oil revenues from
fuelling public consumption to the detriment of the investment that should accompany
growth\. It is in the context of these concerns that the new studies (such as the public
expenditure review and the administrative reform) are taking place\. They will ultimately
permit better dimensioning of the government apparatus on the basis of its redefined
purposes and an optimization of public expenditure, the results of which are inconsistent
with the volume of resources employed\.
On the other hand, in the short and medium term the surpluses expected from the
export sector are largely consumed by the impact of the devaluation on the public debt\.
Only the interest on the debt now exceeds the public investment program\. The
rescheduling recently obtained from the Paris Club have made it possible to balance the
budget, but the projections of future debt service indicate a steadily growing need in terms
23
of budget funds to cover past commitments\. It is therefore vital to put in place a medium
and long-term debt policy that will make it possible to sustain the macroeconomic
framework and the equilibrium of the public finances\.
24
Annex 1: Action Matrix
TRADE POLICY Es\.timatedDate ActualDate C mment
Application of four customs tariff rates February 1\. 1994 Done Measure implemented in the
(5%, 10%, 20% and 30%) in line with aftermath of the devaluation,
UJDEAC categories before the ERL
To be confirmed in the revised Budget Law Mav/June 1994 Done Confirmed in the Revised
1994 Budget Law No\. 05/94 of
Section Ill - Customs
arrangements
Elimination of customs exemptions under February 1994 Done Measure implemented at the
the Investment Code or by virtue of SME same time as the new customs
status or other special exemption provisions tariff
To be confirmed in the revised Budget Law IM,ay/June 1994 Done Confirmed in the Revised
1994 Budget Law No\. 05/94 of
Section III - Customs
arrangements
No new exemptions, under conventions or Permanent Done No new convention was
other agreements, to be granted, no renewal granted as specified by the
of exemptions under existing conventions Revised Budget Law 1994
after their expiration date
Renegotiate existing conventions to 1994/95 Done Measure adopted under the
eliminate any exemptions which depart IMF Extended Financing
from common law Facility; renegotiation initiated
in February 1996; delays were
caused by a lack of instructions
from UDEAC
Fix a ceiling of 0\.5% of cif value on the Revised Budget Completed Circular letter from
FTID and on the rate for contributions to Law 1994 except FTID MINECOFIN (Ministry of
the Conseil Gabonais des Chargeurs and Economy and Finance)
the Centre Gabonais du Commerce addressed to the relevant bodies
ExtLrieur
Eliminate the levy on imports to finance the January 1, 1995 Done The levy was eliminated under
Conseil Gabonais des Chargeurs and the the 1995 Budget Law\. The
Centre Gabonais du Commerce Extcrieur VAT replaces the contributions
contributions (Revised Budget Law 94)
Eliminate exit duty on exports except for Revised Budget Done Measure was implemented in
wood and mineral products Law 1994 the context of the Revised
Budget Law No\. 05/94, Section
111- Customs arrangements
(Article 10, p\.31)
Simplify the tax and duties structure on Revised Budget Done Article 11, p\.31
wood products for export Law 1994
Increase the producer prices of coffee and May 1994 Done Decree of 8/19/94 + 35% for
cocoa in the wake of the devaluation (35% cocoa and 50% for coffee
for the current season)
25
Elimination of quantitative restrictions on June 1994 Done Decree 546/PR of 7/5/94
imports and of monopolies on vegetable eliminating quantitative
oils, soap, bottled water, and cement restrictions on imports
Elimination of restrictions on sugar imports January 1995 Postponed Initially agreed upon in the
context of decree 546, modified
by Budget Law 95: postponed
until 96\. Decree of February 96
postpones elimination by 2
years
Pevoke the system of import/export licenses May/June 1994 Done Abrogated by decree 772/PR of
(Decree 766 of 6/1183) 8/23/94
STRENGTHENING COMPETITION ON THE DOMESTIC MARKET
Decree in application of the 1989 Law on 1994 Postponed Technical discussions with the
Competition until 1996 Bank in 1996 led to a revision
of the entire competition
framework, including the law\.
Law adopted by Council of
Ministers on 2/28/96
Elimination of margin controls (Decree 168 1994 Done Eliminated by decree 547/PR of
of 1/31/94) July 5, 1994
Liberalization of the price of vegetable oils, June 1994 Done Included in decree 547
soap, bottled water, and cement
(Amendment of Decree 541 of 5/24/89)
Liberalization of sugar prices (Amendment January 1995 Postponed Included in decree 547, but
of Decree 541 of 5/24/89) postponed by 1995 Budget Law
and by decree of February 1996
FISCAL REFORM
Application of the Value Added Tax which March 1995 Done | Implemented on April 1, 1995
will replace all other indirect taxes with the
exception of customs and excise duties
RFFORM OF ENERGY PRICES
Set e:x-refinery prices with reference to June 1994
import parity prices
Reduce taxation to keep pump prices June 1994 Done From January 94 to May 95
constant if this can be done without subsidy
(except household kerosene)
Simplification of fuel price structures, March 1995 Done May 95, decree 414 MEBP
indexing to import parity prices and (Ministry of Economy and
application of VAT to fuels _ Budget)
26
Application of new electricity tariff June 1994 Done December 1995
reflecting costs
Full pricing study before any increases Done September 1995
indexing tariffs to costs are made
LABOR POLICY
Consultations with employers and unions 1995 Postponed Joint commission emplovers/
on possible revision of the Labor Code until 1996 administration under the aegis
Start operations of the Office National de 1994 Done
I Emploi and the Fonds d'Insertion et de
Reinsertion
FACILITATION
Simplify approval and other adrinistrative 1994 Postponed Postponed until 1996 in the
procedures involved in establishment of an until 1996 context of the revision of the
eitterprise and reduce cost investment code
BUDGET ALLOCATIONS TO THE
SOCIAL SECTORS
Adjust allocations to National Education Revised Budget Done Revised Budget Law 1994
and Public Health in light of cost increases Law 1994
resulting from the devaluation
27
Annex 2: Social Sectors - Public Expenditures
1994 1995
Initial Budget Final Actual Final Actual
Allocation Budget Expenditures Budget Expenditures
Allocation Allocation __ _
Investment
Education 9518 15637 6543 15811 12901
Health 2909 3908 1764 5827 3981
Compensation for 1675 1564
the devaluation
Total Gabonese 12427 19545 8307 21638 16882
Republic (GR) +
External Financing
of which domestic
financing
Education 3400 3336 3308 9212 9101
Health 1910 1808 1764 4327 3981
Compensation for 1675 1564
the devaluation
Total GR 5310 6819 6636 13539 13082
Increase (%) 28\.42 98\.55
Increase in actual 97\.14
expenditures 95/94
(%) I
Current
Expenditures
Education 36493 40853 40850 45746 45740
Health 20251 24361 24300 27410 27410
Total 56744 65214 65150 73156 73150
Increase (%) 14\.93 12\.29
Increase in actual 12\.28
expenditures 95/94
Total GR 62054 72033 71786 86695 86232
Investment &
Current
expenditures
Increase (%) 16\.08 20\.35
Increase in actual 20\.12
expenditures 95/94 I
(%/)i
PART mH: STATISTICAL INFORMATION 28
Table 1
Summarv of Assessments
(A) Achievement of Ohiectives Substantial Partial Nealirjible Not applicable
Macroeconomic Policies x j
Sector Policies
Financial Objectives I r
Institutional Development X
Physical Objectives j___j _ j_j_j_ X
Poverty Reduction j X
Gender Issues x
Other Social Objectives W
Environmental Objectives I _ I I L X
Public Sector Management X
Private Sector Development x
Other (specify) _ ____i__X_
(B) Proiect Sustainability Likely Unlikelv Uncertain
Highly
(C) Bank Performance Satisfactorv Satisfactorv Deficient
Identification X
Preparation Assistance
Appraisal X
Supervision ______X___j_j
Highly
(D) Borrower Performanec Satisfactory Satisfactor' Deficient
Preparation X
Implementation W i
Covenant Compliance | X
Operation (if applicable)
Highly Highly
(E) Assessment of Outcome Satisfactorv Satisfactory Unsatisfactory Unsatisfactorv
w w
29
Table 2
Related Bank Loans
Credit Credit Purpose Year of Status
Title Number Approval
Preceding operations
1\. Technical Assistance Project 3 114-GA Support the Government's adjustment program over a three-year period by 1989 Closed
strengthening its key ministries in critical areas ofeconomic management\.
Key components included civil service reform, training and skills transfer
to local counterparts, and medium-scale enterprise development\.
2\. First Structural Adjustment Loan 2933-GA (i) initiate a program ofpuiblic enterprise rchabilitation and rationalization, 1988 Closed
(ii) strengthen public sector resource management tlhrough better control
over the investment budget and wagc reduction; and (iii) liberalize the
policy environment in order to stimulate private sector initiative
30
Table 3
Project Timetable
Date Date actual/
Steps in Project Cycle Planned \2 latest estimate
Identification (Initiating Memorandum) [January 10-14, 1994
Preparation _3 months
Appraisal March 21 - April 8, 1994 March 21 - April 8, 1994
Negotiations lApril 25-26, 1994 ; April 25-26, 1994 __
Letter of Development Policy [April 26, 1994 jApril 26, 1994
Board June21, 1994 _ June 21, 1994
Signing _ June 23, 1994
Effectiveness June 30, 1994 September 16, 1994
Project completion
Credit closing June 30, 1995 June 30, 1995
\2 As provided in the President's Report\.
31
Table 4
Loan Disbursements
Estimated and Actual
FY
1995
(US$ millions, unless indicated otherwise)
Appraisal estimate 30\.0
Actual disbursement 30\.0
Actual as % of estimate 100%
Date of final disbursement October 17, 1994
32
Table 5: Key Indicators for Project Implementation
Estimated Date Actual Date
TRADE POLICY
Application of four customs tariff rates (5%, 10%, 20% and 30%) in line February 1, 1994 Done
with UDEAC categories
To be confirmed in the revised Budget Law 1994 May/June 1994 Condition
Elimination of customs exemptions under the Investment Code or by February 1994 Done
virtue of SME status or other special exemption provisions
To be confirmed in the revised Budget Law 1994 May/June 1994 Condition
No new exemptions, under conventions or other agreements, to be granted, Permanent Done
no renewal of exemptions under existing conventions after their expiration
date
Renegotiate existing conventions to eliminate any exemptions which 1994/95 Under way
depart from common law
Fix a ceiling of 0\.5% of cif value on the FTID and on the rate for Revised Budget Law Not completed
contributions to the Conseil Gabonais des Chargeurs and the Centre 1994
Gabonais du Commerce Exterieur
Elimix,ate the levy on imports to finance the Conseil Gabonais des January 1, 1995 April 1, 1995
Chargcurs and the Centre Gabonais du Commerce Exterieur contributions
Eliminate exit duty on exports except for wood and mineral products Revised Budget Law Condition
1994
Simplify the tax and duties structure on wood products for export Revised Budget Law Done
1994
Increase the producer prices of coffee and cocoa in the wake of the May 1994 August 1994 (33%
devaluation (35% for the current season) for cocoa and 50%
for coffee)
Elimination of quantitative restrictions on imports and of monopolies on June 1994 Condition
vegetable oils, soap, bottled water, and cement
Elimination of restrictions on sugar imports January 1995 Not completed
Revoke the system of import/export licenses (Decree 766 of 6/1/83) May/June 1994 Condition
STRENGTHEN COMPETITION ON THE DOMESTIC MARKET
Decree in application of the 1989 Law on Competition 1994 Redrafted Law on
Competition is
awaiting Parliament
-approval
Elimination of margin controls (Decree 168 of 1/31/94) 1994 1994
Liberalization of the price of vegetable oils, soap, bottled water, and At the time Condition
cement (Amendment of Decree 541 of 5/24/89) quantitative
restrictions on
imports are lifted
________________________________________________________________ (June 1994)
33
Liberalization of sugar prices (Amendment of Decree 541 of 5/24/89) At the time Not completed
quantitative
restrictions on sugar
imports are lifted
(January 1994)
FISCAL REFORM
Application of the Value Added Tax which will replace all other indirect March 1995 at the April 1995
taxes with the exception of customs and excise duties latest
Reform of energy prices: promote competitiveness of the economy by
reducing fiscal surcharges and taking account of opportunity costs
a) Fuel Prices:
Set ex-refinery prices with reference to import parity prices May/June 1994 Condition
Reduce taxation to keep pump prices constant if this can be done without May/June 1994 Condition
subsidy (except household kerosene)
Simplification of fuel price structures, indexing to import parity prices and March 1995 at the May 1995
application of VAT to fuels latest
b) Electricity Prices
Application of new electricity tariff reflecting costs | May/June 1994 | Condition
Full pricing study before any increases indexing tariffs to costs are made December 1994 Done
LABOR POLICY
Conisultations with employers and unions on possible revision of the Labor 1995 Government has
Code committed itself to
remedy deficiencies
of Labor Code
Start operations of the Office National de 1'Emploi and the Fonds 1994 Done
d'Insertion et de Reinsertion
FACILITATION
Simplify approval and other administrative procedures involved in 1994 Not completed
establishment of an enterprise and reduce cost
BUDGET ALLOCATIONS TO THE SOCIAL SECTORS
Adjust allocations to National Education and Public Health in light of cost Revised Budget Law Condition
increases resulting from the devaluation 1994 l l
34
Table 6
Key Indicators for Project Operation
Not applicable
Table 7
Proiect Studies
Not applicable
35
Table 8a
Project Costs
Not applicable
Table 8b
Project Financing
Appraisal estimate Actual/Latest estimate
Item (US$ mil) (US$ mil)
l\. IDA 30\.0 30\.0 _
2\._Other 0\.0 0\.0
TOTAL 30\.0 30\.0 -
36
Table 9: Economic Costs and Benef'its
COSTS ($ million) BENEFITS
30 Improvement in the economy's competitiveness and correction of
macroeconomic imbalances\. Substantial price and trade liberalization\.
Introduction of a value added tax\. Progress toward more efficient
energy pricing and public enterprise restructuring\. Budget allocations
to the social sectors maintained in real terms\.
37
Table 10
Status of Leeal Covenants in Loan Aereement
Section Covenant Present Fulfilment Date Description of Covenant Comments
Type Status Original Actual
3\.01 9 C continuous Borrower to submit project progress report periodically and
exchange views with the Bank on the basis of this report
3\.02 3 C continuous Procurement guidelines
3\.03 (a) 1 C continuous Maintain records and proper accounts of expenditures
under credit
3\.03 (b,c) I C continuous Have records and accounts audited; furnish audit/other
information to IDA
5\.01 (a) 12 C Prior to Enact the Loi de Finances Rectificative for 1994, containing
effectiveness regulations concerning trade liberalization and budgetary
provisions for the social sectors
5\.01 (b) 12 C Prior to Enact laws or promulgate regulations to eliminate remaining
effectiveness quantitative restrictions, abolish import/export licenses,
eliminate price and margin controls, and modifs tariffs and
taxes on petroleum products
5\.01 (e) 12 C Prior to Restructure the electricity rates
I____I_____ effectiveness
Covenants types: 10= Project implementation not covered by categories 1-9 Present Status:
I= Accounts/audits 11 = Sector or cross-sector budgetary or other resource allocation C = Covenant complied with
2= Financial performance/revenue generation from beneficiaries 12= Sector or cross-sector policy/regulatory/institutional action CD= Complied with after delay
3= Flow and utilization of project funds 13= Other CP= Complied with partially
4= Counterpart funding NC= Not complied with
5= Management aspects of the project or executing agency
6= Environmental covenants
7= Involuntary resettlement
8= Indigenous people
9= Monitoring, review and reporting
38
Table 1 1
Bank Resources
Staff Inputs
Stage of Planned Actual
Project Cycle Weeks US$ (OOOs) Weeks US$ (OOOs)
Preparation to
Appraisal 12\.2 29\.9
Appraisal _ 9 24\.6
Negotiations through
Board Approval 11\.9 28\.3
Supervision 23\.8 53\.7 14\.3 34\.6
Completion 5 15 3\.4 2\.7
Total 50\.8 120\.1
39
Table 12
Use of Bank Resources: Missions
Stage of Month/ Number of Days in Specialized Performance Rating Types of
Project Cycle Year Persons Field staff skills Implementation Development Problems
represented status objectives
Through Appraisal
Appraisal through Board Approval Mar-Apr, 1994 8 19 EC, FA, LEG, CONS 2 2
Board Approval through Effectiveness
Supervision June-July, 1994 1 7 EC 2 2
Mar-Apr, 1995 1 19 EC 2 2
May-June, 1995 1 28 EC 2 1
Completion I
Key to specialized staff skills Key to Performance Rating Key to Problems
EC = Economist LEG = Legal I = Problem Free AF = Availability of funds
IE = Infrastructure Engineer CONS = Consultant 2 = Moderate Problems CLC = Compliance with legal covenants
FA = Financial Analyst STE = Senior Transport Engineer 3 = Major Problems FP = Financial Performance
CC = Computer Consultant MFA= Municipal Financial Analyst 4 = Major Problems - PMP = Project management performance
UP = Urban Planner UFS = Urban Financial Specialist Corrective Action to be taken PP = Procurement progress
TRE = Traffic Engineer YP = Young Professional SP = Studies progress
TEC = Transport Economist
40
APPENDIXES
ACTIONS TAKEN BY THE GOVERNMENT AS CONDITIONS OF
DISBURSEMENT
(i) agreement on, and implementation of, a major trade reform that includes a four-rate
import tariff structure (5, 10, 20 and 30 percent import tariff, according to the
classification agreed upon in the context of the UDEAC reform), the elimination of export
duties on all exports (except mineral and wood products), and the elimination of fiscal
exemptions under special regimes (Investment Code, Single Tax, Medium and Small-Scale
Enterprises regime, Forestry Regime);
(ii) price liberalization and the elimination of four of the five remaining quantitative
restrictions on imports (the last remaining restriction, on sugar imports, was to be
eiiminated in early 1995 as part of the program), and of the requirement for import
licenses;
(iii) reform of the pricing system for energy products, so as to improve the
competitiveness of Gabonese products\. For petroleum products, the objective of the
reform was a) to reduce the excess cost of petroleum products by lowering the fiscal
levies on them; and b) to increase efficiency by linking the prices paid to the refinery to
import parity prices\. For electricity, the immediate measures aimed to establish
differentiated tariffs reflecting the specific cost conditions of the different grids supplying
power to different locations; and
(iv) adjustment of the 1994 budgetary allocations to the social sector (health and
education) to prevent any reduction of the real resources available to these sectors due to
the increased prices of goods and services\. The budgetary allocations in the revised
Budget Law for 1994 were adjusted to correspond fully to the budgetary allocations of the
pre-devaluation allocation in terms of purchasing power\.
10 12' ii\.
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____ _ ___ - IX Iz -;M J-0
IMAGiNG
Report No: 15695
Type: ICR | REVIEW |
P090375 | Document of
The World Bank
Report No: ICR00003237
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-48640 TF057757)
ON A
LOAN
IN THE AMOUNT OF US$173 MILLION
AND A
GLOBAL ENVIRONMENTAL FACILITY GRANT
IN THE AMOUNT OF US$5 MILLION
TO THE
PEOPLEâS REPUBLIC OF CHINA
FOR A
SECOND LIAONING MEDIUM CITIES INFRASTRUCTURE PROJECT
December 23, 2015
Water Global Practice
China and Mongolia Country Management Unit
East Asia and Pacific Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective November 30, 2015)
Currency Unit = RMB
1\.00 = US$ 0\.156
US$ 1\.00 = 6\.40
FISCAL YEAR
January 1 â December 31
ABBREVIATIONS AND ACRONYMS
AMP Asset Management Plan
APL Adaptable Program Loan
AWSC Anshan Water Supply Company
BOD Biological Oxygen Demand
CDB China Development Bank
CLG City Leading Group
CNAO China National Auditing Office
CMDB Chinese Model Bidding Documents
EA Environmental Assessment
EDZ Economic Development Zone
EMP Environmental Management Plan
EPB Environmental Protection Bureau
FIP Financial Improvement Plan (for utilities)
FIRR Financial Internal Rate of Return
FMS Financial Management Specialist
FWC Fushun Wastewater Company
GEF Global Environment Facility
GEO Global Environment Objectives
GIS Geographic Information System
GPA Global Program of Action (for the Protection of Marine Environment from
Land-Based Activities
HWSC Haicheng Water Supply Company
IBRD International Bank for Reconstruction and Development
ICB International Competitive Bidding
ID Institutional Development
ISR Implementing Status Report
IW International Water
LA Loan Agreement
LEP Liaoning Environmental Project
LIEPP Liaoning Integrated Environmental Protection Program
LMC-2 Second Liaoning Medium Cities Infrastructure Project
LME Large Maritime Ecosystems
LPDRC Liaoning Provincial Development and Reform Commission
LPDF Liaoning Provincial Finance Department
LPDHURC Liaoning Provincial Department of Housing and Urban-Rural
Construction
LPLG Liaoning Provincial Leading Group
LRBP Liao River Basin Project
LUCRPO Liaoning Urban Construction and Renewal Project Office
M&E Monitoring and Evaluation
NCB National Competitive Bidding
MTR Mid-term Review
NDRC National Development and Reform Commission
O&M Operation and Maintenance
OP Operational Program
PA Project Agreement
PAD Project Appraisal Document
PDO Project Development Objectives
PEMSEA Partnerships in Environmental Management for the Seas of East Asia
(GEF/UNDP/IMO Regional Program on Building Partnerships)
PIU Project Implementing Unit
PMO Project Management Office
PPP Public Private Partnership
RAP Resettlement Action Plan
SO Strategic Objective
SS Suspended Solids
SW Solid Waste
TA Technical Assistance
TN Total Nitrogen
TP Total Phosphorus
WWTP Wastewater Treatment Plant
Regional Vice President: Axel van Trotsenburg
Country Director: Bert Hofman
Senior Global Practice Director: Junaid Kamal Ahmad
Practice Manager: Ousmane Dione
Project Team Leader: Khairy Al-Jamal
ICR Team Leader: Khairy Al-Jamal
CHINA
Second Liaoning Medium Cities Infrastructure Project
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Development and Global Environment Objectives Design \. 1
2\. Key Factors Affecting Implementation and Outcomes \. 6
3\. Assessment of Outcomes \. 15
4\. Assessment of Risk to Development Outcome and Global Environmet Outcome \. 24
5\. Assessment of Bank and Borrower Performance \. 25
6\. Lessons Learned \. 28
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 30
Annex 1\. Project Costs and Financing \. 32
Annex 2\. Outputs by Component \. 34
Annex 3\. Economic and Financial Analysis \. 44
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 51
Annex 5\. Beneficiary Survey Results \. 53
Annex 6\. Stakeholder Workshop Report and Results\. 54
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 60
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 74
Annex 9\. List of Supporting Documents \. 75
Annex 10\. Project Pictures\. 76
MAP â IBRD34896
ii
A\. Basic Information
China-Second Liaoning
Country: China Project Name: Medium Cities
Infrastructure Project
IBRD-48640, TF-
Project ID: P092618, P090375 L/C/TF Number(s):
57757
ICR Date: 12/16/2015 ICR Type: Core ICR
PEOPLE'S REPUBLIC
Lending Instrument: SIL, SIL Borrower:
OF CHINA
Original Total USD 173\.00M, USD 161\.03M,
Disbursed Amount:
Commitment: USD 5\.00M USD 4\.80M
Environmental Category: A, A Focal Area: I
Implementing Agencies:
LUCRPO
Cofinanciers and Other External Partners:
B\. Key Dates
China-Second Liaoning Medium Cities Infrastructure Project - P092618
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 09/20/2005 Effectiveness: 12/04/2007 12/04/2007
04/01/2008
12/30/2013
Appraisal: 10/27/2006 Restructuring(s):
04/04/2014
12/23/2014
Approval: 06/26/2007 Mid-term Review: 10/18/2010
Closing: 12/31/2013 06/30/2015
China-GEF-Liaoning - P090375
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 09/20/2005 Effectiveness: 12/04/2007 09/19/2007
05/24/2012
Appraisal: 10/27/2006 Restructuring(s): 04/04/2014
12/23/2014
Approval: 06/26/2007 Mid-term Review: 10/18/2010
Closing: 12/31/2013 06/30/2015
i
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes Moderately Satisfactory
Risk to Development Outcome Moderate
Bank Performance Moderately Satisfactory
Borrower Performance Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry Moderately Satisfactory Government: Moderately Satisfactory
Implementing
Quality of Supervision: Satisfactory Moderately Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Moderately Satisfactory Moderately Satisfactory
Performance Performance
C\.3 Quality at Entry and Implementation Performance Indicators
China-Second Liaoning Medium Cities Infrastructure Project - P092618
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem
Quality at Entry
Project at any time No None
(QEA)
(Yes/No):
Problem Project at any Quality of
Yes None
time (Yes/No): Supervision (QSA)
DO rating before Moderately
Closing/Inactive status Satisfactory
China-GEF-Liaoning - P090375
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem
Quality at Entry
Project at any time No None
(QEA)
(Yes/No):
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA)
GEO rating before Moderately
Closing/Inactive Status Satisfactory
ii
D\. Sector and Theme Codes
China-Second Liaoning Medium Cities Infrastructure Project - P092618
Original Actual
Sector Code (as % of total Bank financing)
Flood protection 6 4
Solid waste management 17 10
Sub-national government administration 1 1
Wastewater Treatment and Disposal 34 30
Water supply 42 55
Theme Code (as % of total Bank financing)
City-wide Infrastructure and Service Delivery 40 53
Pollution management and environmental health 40 29
Water resource management 20 18
China-GEF-Liaoning - P090375
Original Actual
Sector Code (as % of total Bank financing)
Solid waste management 29 24
Sub-national government administration 59 58
Wastewater Collection and Transportation 6 9
Wastewater Treatment and Disposal 6 9
Theme Code (as % of total Bank financing)
Municipal governance and institution building 40 52
Pollution management and environmental health 40 42
Water resource management 20 6
iii
E\. Bank Staff
China-Second Liaoning Medium Cities Infrastructure Project - P092618
Positions At ICR At Approval
Vice President: Axel van Trotsenburg James W\. Adams
Country Director: Bert Hofman David R\. Dollar
Practice
Ousmane Dione Keshav Varma
Manager/Manager:
Project Team Leader: Khairy Al-Jamal Greg J\. Browder
ICR Team Leader: Khairy Al-Jamal
ICR Primary Author: Heinrich K\. Unger
China-GEF-Liaoning - P090375
Positions At ICR At Approval
Vice President: Axel van Trotsenburg James W\. Adams
Country Director: Bert Hofman David R\. Dollar
Practice
Ousmane Dione Keshav Varma
Manager/Manager:
Project Team Leader: Khairy Al-Jamal Greg J\. Browder
ICR Team Leader: Khairy Al-Jamal
ICR Primary Author: Heinrich K\. Unger
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The project development objective is to improve the performance and sustainability of
water supply, wastewater, and solid waste services in the Second Liaoning Medium Cities
Infrastructure Project (LMC-2) cities\.
Revised Project Development Objectives (as approved by original approving
authority)
The PDO was not revised\. However, it was phrased differently in the approved Loan
Agreement\. The PDO in the Loan Agreement is to assist Liaoning Province in improving
the performance and sustainability of the wastewater, water supply, and solid waste
services through: (i) construction of infrastructure in the Project Cities; and (ii) improving
utility management and regulatory practices in Liaoning Province\.
Global Environment Objectives (from Project Appraisal Document)
The global environmental objective of the LMC-2 project with the GEF enhancements is
the reduction of land-based pollution into the Bohai Sea through investments in wastewater
and solid waste infrastructure and improved utility regulation, planning and management
in the LMC-2 cities and throughout Liaoning Province\.
iv
Revised Global Environment Objectives (as approved by original approving
authority)
The GEO was not revised\. Moreover, the GEO in the Grant Agreement was identical with
the PDO in the approved Loan agreement\.
(a) PDO Indicators
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
1
Indicator 1 : Wastewater utility cost recovery ratio in four cities
Yingkou 1\.0 Yingkou 1\.1 Yingkou 1\.0 Yingkou 1\.1
Value
Panjin 0\.6 Panjin 1\.1 Panjin 1\.0 Panjin 1\.0
(quantitative or
Fushun 0\.5 Fushun 1\.1 Fushun 1\.0 Fushun 1\.0
Qualitative)
Gaizhou 0\.0 Gaizhou 1\.1 Gaizhou 1\.0 Gaizhou 1\.0
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
Revised target 100% achieved: Panjin, Fushun and Gaizhou received subsidy
(incl\. %
from local government to operate their respective WWTPs\.
achievement)
Indicator 2 : Water supply utility cost recovery ratio for five cities
Yingkou 1\.0 Yingkou 0\.80
Yingkou 0\.9 Yingkou 1\.2
Panjin 1\.0 Panjin 0\.80
Value Panjin 0\.8 Panjin 1\.2
Anshan 1\.0 Anshan 0\.93
(quantitative or Anshan 1\.0 Anshan 1\.2
Haicheng 1\.0 Haicheng 1\.0
Qualitative) Haicheng 0\.8 Haicheng 1\.2
Xingcheng 1\.0 Xingcheng 1\.0
Xingcheng 0\.9 Xingcheng 1\.2
Fushun 1\.0 Fushun 0\.9
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Partially Achieved: Haicheng and Xingcheng achieved the revised target\.
Comments
Yingkou has more debt service; Yingkou and Panjin had higher operations costs;
(incl\. %
Xingcheng received local government subsidy\. Fushun was added at
achievement)
restructuring (no subsidy)\.
Indicator 3 : Solid Waste Disposed in Landfill (tons/day) in three cities
Value Panjin 0 Panjin 450 Panjin 450
Panjin 630
(quantitative or Fushun 0 Fushun 360 Fushun 360
Fushun 1000
Qualitative) Yingkou 0 Yingkou 492 Yingkou 0
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments Target exceeded: Revised target exceeded to reach 140% for Panjin and 278%
(incl\. % for Fushun\. However, Yingkou SWM subproject was dropped during
achievement) restructuring due to land availability related issues\.
1
According to the PAD, a cost recovery ratio applied to all wastewater and water supply companies
for this project was defined as operating and non-operating revenues (including subsidies) divided
by total operating expenses and the greater of depreciation or debt service\. See Section 3\.3 for
more details\.
v
Indicator 4 : Comprehensive Cost Accounting System and MIS
Value
(quantitative or No Yes Dropped N/A
Qualitative)
Date achieved 06/26/2007 12/31/2013 04/04/2014 06/30/2015
This indicator was dropped during the 2014 restructuring\. However the activity
Comments
was implemented and utility staff were better equipped to deal with financial
(incl\. %
achievement)
aspects, especially cost recovery and tariff collection by project closing
(see Section 3\.2)\.
Indicator 5 : Decrease in Non-Revenue Water (NRW)
Yingkou 45% Yingkou 36%
Value Panjin 46% Panjin 37%
Indicator
(quantitative or Anshan 37% Anshan 30% N/A
dropped
Qualitative) Haicheng 47% Haicheng 38%
Xingcheng 55% Xingcheng 44%
Date achieved 06/26/2007 12/31/2013 04/04/2014 06/30/2015
Comments
This indicator was dropped during the 2014 restructuring but substantial
(incl\. %
reductions in NRW were achieved (see Section 3\.2)\.
achievement)
(b) GEO Indicators
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
New wastewater treatment plant BOD removal (tons/year) in four cities
Indicator 1 : (Yingkou, Panjin, Fushun, Gaizhou)
Value
(quantitative or 0 5,750 N/A 17,629
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
(incl\. % Target exceeded\. 306% achieved\.
achievement)
New wastewater treatment plant total nitrogen (TN) removal (ton/year) in
Indicator 2 : four cities (Yingkou, Panjin, Fushun, Gaizhou)
Value
(quantitative or 0 1,100 N/A 4,978
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
(incl\. % Target exceeded\. 452% achieved
achievement)
New wastewater treatment plant total phosphorus (TP) removal (ton/year)
Indicator 3 : in four cities (Yingkou, Panjin, Fushun, Gaizhou)
Value 0 210 N/A 509
vi
(quantitative or
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
(incl\. % Target exceeded\. 242% achieved\.
achievement)
(c) Intermediate Results Indicators
Indicator 1 : Direct project beneficiaries (number)
Value
(quantitative or 0 5,100,000 3,000,000 2,900,000
Qualitative)
Date achieved 06/26/2007 12/31/2013 12/23/2014 06/30/2015
Comments
Revised target substantially achieved\. 97% achieved\. This core indicator was
(incl\. %
revised during December 2014 restructuring\.
achievement)
Indicator 2 : Percentage of female beneficiaries (number)
Value
(quantitative or 0 46\.1 N/A 50
Qualitative)
Date achieved 06/26/2007 12/31/2014 06/30/2015
Comments
Target exceeded: 108% achieved\. This core indicator was added after April
(incl\. %
2014\.
achievement)
Indicator 3 : Wastewater treatment plant (WWTP) capacity (m3/day)
Value
(quantitative or 450,000 650,000 N/A 700,000
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
Target exceeded\. 107% achieved\. Additional 50,000 m3/d (above the target)
(incl\. %
was added to Panjin WWTP\.
achievement)
Indicator 4 : Total new or rehabilitated drainage pipelines (km)
Value
(quantitative or 0 145 N/A 116
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
Target partially achieved\. 80% achieved because of a dropped subcomponent
(incl\. %
due to the changes in some city plans\.
achievement)
Indicator 5 : Length of new or rehabilitated pipelines for water supply (km)
Value
(quantitative or 0 440 NA 495
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments Target exceeded\. 112% achieved\.
vii
(incl\. %
achievement)
Indicator 6 : Number of Water Meters installed
Value
(quantitative or 0 185,200 145,000 184,332
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Revised target exceeded\. 127% achieved\. The target was revised because of
Comments
implementation delays\. However, the project implementation caught up and
(incl\. %
exceeded the revised target by project closing\.
achievement)
Industrial and municipal waste disposal capacity created under the project
Indicator 7 : (ton/day)
Value
(quantitative or 0 2,170 1,050 1,800
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
Revised target exceeded\. 171% achieved\. The landfill in Panjin has a capacity
(incl\. %
of 600 ton/day, and Fushun 1,200 ton/day\.
achievement)
Indicator 8 : Training for public utilities program (person-days)
Value
(quantitative or 0 100 NA 226
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
Target exceeded\. 226% achieved\. With the support of GEF activities, the
(incl\. %
project exceeded the target\.
achievement)
Indicator 9 : Number of solid waste master plans completed
Value
(quantitative or 0 3 4 4
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
Revised target 100% achieved: The cities of Fushun, Yingkou, Gaizhou, and
(incl\. %
Panjin completed SW master plans
achievement)
Indicator 10 : Number of wastewater master plans completed
Value
(quantitative or 0 3 2 2
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
Revised target 100% achieved: The cities of Panjin and Gaizhou completed
(incl\. %
WW master plans\. WW masterplan for Huludao was dropped from the project\.
achievement)
Indicator 11 : Number of water utilities that the project was supporting
Value 0 6 N/A 6
viii
(quantitative or
Qualitative)
Date achieved 06/26/2007 12/31/2013 06/30/2015 06/30/2015
Comments
Target 100% achieved\. The water utilities of Yingkou, Panjin, Anshan,
(incl\. %
Haicheng, Xingcheng, and Fushun were supported by the project
achievement)
Indicator 12 : Annual provincial utility benchmarking program
100% of LMC-2 100% of GEF PIUs
Value cities 100% of GEF
are presented at the
(quantitative or None PIUs
city benchmarking
Qualitative) 50% of other cities system
in Liaoning
Date achieved 06/26/2007 06/30/2011 06/30/2015 06/30/2015
Revised target 100% achieved and PIUs are focussed in utilizing the
Comments
benchmarking as driver for the utility performance improvement\. Two provincial
(incl\. %
agencies monitoring services & performance of all WS& WW utilities\.
achievement)
Summary data available on web2\.
2
This indicator has not been reported in the previous Implementation Status Reports\. However, it is
captured in the ICR report\.
ix
G\. Ratings of Project Performance in ISRs
-
Actual
Date ISR Disbursements
No\. DO GEO IP (USD millions)
Archived
Project 1 Project 2
1 06/29/2008 MS MS MS 0\.00 0\.00
2 06/25/2009 MS MU MS 10\.00 0\.00
3 01/21/2010 MS MU MS 10\.00 0\.00
4 06/27/2011 MS MS S 38\.65 0\.00
5 04/08/2012 MS MS MS 47\.10 0\.00
6 05/16/2013 MU U MU 78\.08 0\.00
7 03/03/2014 MU MU MU 94\.27 1\.00
8 06/25/2014 MS MS MS 113\.86 2\.49
9 12/08/2014 MS MS MU 130\.12 3\.44
10 06/14/2015 MS MS MS 153\.33 5\.00
x
H\. Restructuring (if any)
Amount Disbursed
ISR Ratings at
Board Approved at Restructuring in Reason for
Restructuring Restructuring
USD millions Restructuring & Key
Date(s)
PDO GEO Changes Made
DO GEO IP Project1 Project 2
Change Change
(i) Reallocation of
loan proceeds
necessary for
capitalization of the
front end fee; (ii)
reduction of loan
allocation for
consultant services by
04/01/2008 0\.00
$1 million; and (iii)
correction of an error
in the Project
Agreement of the date
for submission to the
Bank by each utility of
their financial
improvement plan\.
Amendment of project
05/24/2012 N MS MS 0\.00 scope and
dissemination
Extension of closing
12/30/2013 N MU MU 89\.20
date\.
(i) Revision of the
project scope for some
project cities; (ii)
project costs and
financing plan update;
(iii) reallocation of
04/04/2014 N MU MU 97\.48 Loan proceeds among
categories; (iv)
amendment of the
Results Framework;
and (v) amendment of
certain covenants in
the Project Agreement\.
Extension of closing
04/04/2014 N MU MU 1\.00
date
Extension of closing
date and revision of
12/23/2014 N MS MU 130\.12
Intermediate Outcome
Indicator 1
Extension of closing
12/23/2014 N MS MU 4\.39
Date
xi
I\. Disbursement Profile
P092618
P090375
xii
1\. Project Context, Development and Global Environment Objectives Design
1\.1 Context at Appraisal
Country and Regional Context
1\. Over the past 30 years, China had become an international symbol of economic
growth and poverty alleviation but the medium-sized cities in Liaoning Province had
benefited to a lesser extent from this prosperity than many other parts of the country\. Before
the initiation of market oriented reforms of the late 1970s, Liaoning was one of the
countryâs major industrial centers, focusing on heavy industry and mining\. The province
became one of Chinaâs most urbanized provinces with 53 percent of the residents living in
urban areas\. Much of the urban population settled in a number of medium cities with their
economies anchored around a small number of state-owned industrial and mining
enterprises\. Such enterprises have had mixed success in the transition to a market economy,
and many found themselves under severe financial pressure\. This weakened the economic
base of these cities and, as a result, at a time when many of the cities in Chinaâs coastal
region â including the two large cities of Shenyang and Dalian in Liaoning â were investing
heavily in infrastructure, the medium cities of Liaoning were suffering from systemic
underinvestment and deferred infrastructure maintenance despite continued urban growth;
this resulted in an accelerated deterioration of the asset base necessary for the provision of
urban services\.
Project Context
2\. Much of the existing water supply infrastructure in Liaoningâs medium cities was
in urgent need of renovation, caused by a severe deterioration of the urban water supply
pipelines\. Non-revenue water ranged from 37 percent to 55 percent, mainly due to pipeline
leakage\. This exacerbated the financial difficulties of the water companies since financial
sustainability was a major issue with revenues from user fees falling short of meeting the
costs of service provision\.
3\. In addition, Liaoningâs medium cities were just starting to develop their wastewater
management programs\. The collection of wastewater fees from large self-supplied water
users, discharging into the municipal drainage system, was a major challenge\. Similar to
the water supply sector, drainage pipelines were in a state of disrepair and in urgent need
of renovation as well as expansion\. Wastewater utilities had been established in most cities
in Liaoning, but given the limited financial resources in the sector, the utilities were
operating rather as government departments and not as commercial enterprises\.
4\. Many of the medium cities did not have a sanitary landfill and solid waste was
disposed of in open dumps that posed hazards to public health and the environment because
the collection and transport of municipal solid waste was often incomplete and inefficient\.
Cost recovery levels for solid waste services were low, and fees were collected in an
uncoordinated manner\. Moreover, solid waste management functions were provided in a
fragmented manner at the district and municipal level; this prevented the adoption of
1
comprehensive solid waste management and cost recovery strategies\.
5\. As a consequence, the urban environment of these cities was in serious decline\. An
investment climate study conducted by the Bank in 2005 found that âlivabilityâ concerns
had become a significant factor undermining the investment climate in Liaoningâs medium
cities\. The absence of serious efforts to properly maintain and rehabilitate the urban
infrastructure had become a significant constraint to the future economic prospects of
Liaoning Province\. Some cities in Liaoning turned to the private sector to provide urban
environmental services but, in the absence of increased sector funding and better utility
regulation, these efforts had mixed success and were not financially sustainable\. Therefore,
it was clear that Liaoningâs medium cities and their residents would benefit greatly from
investments that supported rehabilitation and upgrading of the urban infrastructure, and in
particular urban environmental services\.
The Bohai Sea
6\. The Bohai Sea, located in the northwest corner of the Yellow Sea is one of the most
ecologically important, and stressed, bodies of water in the region\. Its fishery resources are
vital to China, and North and South Korea\. More than 40 rivers discharge into the Bohai
Sea, of which the Yellow (Huang), Hai, and Liao Rivers are the most significant\. The Bohai
Sea is a large, shallow embayment of the Yellow Sea which is itself a shallow continental
sea of the northwest Pacific Ocean\. The open water environment in the Bohai Sea supports
diverse marine life including invertebrates, fish, marine mammals and birds\. In the past,
the Bohai Sea was a major source of larvae and juvenile fish for the East China Sea, but
this function has steadily diminished\. Therefore, the ecological condition of the Bohai Sea
is critically important for maintaining fish stocks and biodiversity in East China coastal
waters\. It is generally accepted that over-fishing, pollution, reduction of freshwater inflows
and habitat loss have contributed to a reduction of these ecosystem functions\.
7\. The Liao River is the main river in Liaoning Province, discharging into the Bohai
Sea which is partly surrounded by Liaoning Province\. Before the project, the Liao River
had become one of the most polluted river systems in China with more than 68 percent of
the river reaches classified as polluted in 2004; 40 percent of these reaches were classified
as at or above Class V (worst pollution category)\. In addition, there were a number of
medium and small sized cities along the Bohai Sea coastline in Liaoning Province that
discharged wastewater directly into the sea\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)
8\. According to the loan agreement (LA), the objective of the Project was to assist
Liaoning Province in improving the performance and sustainability of the wastewater,
water supply, and solid waste services through: (i) construction of infrastructure in the
Project Cities; and (ii) improving utility management and regulatory practices in Liaoning
Province\.
2
9\. On the other hand, the PDO in the Project Appraisal Document (PAD) was to
improve the performance and sustainability of water supply, wastewater, and solid waste
services in the Second Liaoning Medium Cities Infrastructure (LMC-2) project cities\.
10\. The two different versions of the PDO are identical in spirit\. For the purposes of
the ICR report, the legally agreed LA version PDO is used\.
11\. The key indicators are listed in sub-sections F(a), (b) and (c) of the ICR Datasheet;
they are grouped as institutional and environmental indicators as follows:
(a) Institutional: (i) wastewater utility cost recovery ratio in Yingkou, Panjin, Fushun
and Gaizhou; and water supply utility cost recovery ratio in Yingkou, Panjin,
Anshan, Haicheng and Xingcheng; and (ii) development of comprehensive cost
accounting system and MIS for solid waste services\.
(b) Environmental: (i) percentage of non-revenue water in Yingkou, Panjin, Anshan,
Haicheng and Xingcheng; (ii) tons of annual BOD reduction, and (iii) solid waste
disposed in landfill site in tons/day in Yingkou, Panjin and Fushun\.
1\.3 Original Global Environment Objectives (GEO) and Key Indicators (as approved)3
12\. The GEO in the Grant Agreement is identical to the PDO in the Loan Agreement\.
In the PAD, the GEO is specified as the LMC-2 project with the Global Environment
Facility (GEF) enhancements was the reduction of land-based pollution into the Bohai Sea
through investments in wastewater and solid waste infrastructure and improved utility
regulation, planning and management in the LMC-2 cities and throughout Liaoning
Province\. The GEO stated in the PAD were used for this ICR report together with the
relevant indicators listed below\.
13\. The GEO key indicators specified in the PAD were (i) the amount of biological
oxygen demand (BOD) removal in tons/year by the new wastewater treatment plants
constructed in Yingkou, Panjin, Fushun and Gaizhou; (ii) new wastewater treatment plant
total nitrogen (TN) removal (ton/year) in the four cities, and (iii) new wastewater treatment
plant total phosphorus (TP) removal (ton/year) in the four cities\.
1\.4 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
14\. The PDO were not revised but, as part of the restructuring finalized in April 2014,
the original five key indicators were consolidated into the following three indicators that
fully reflect the level of achievement of the PDO: (i) wastewater utility cost recovery ratio
3
The PDO in the Loan Agreement and the GEO in the Grant Agreement are identical as follows:
The objective of the Project is to assist Liaoning Province in improving the performance and
sustainability of the wastewater, water supply, and solid waste services through: (i) construction of
infrastructure in the Project Cities; and (ii) improving utility management and regulatory practices
in Liaoning Province\. The project descriptions in the two agreements are also identical\.
3
in Yingkou, Panjin, Fushun and Gaizhou; (ii) water supply utility cost recovery ratio in
Yingkou, Panjin, Anshan, Haicheng and Xingcheng; and (iii) solid waste disposed in
landfill site in tons/day in Panjin and Fushun\. Also, the following two core indicators were
added: (i) number of direct project beneficiaries (further amended as part of the April 2014
restructuring), and (ii) percentage of female beneficiaries\. Also, target figures for the
results indicators were revised primarily to reflect implementation delays and revisions of
scope and outputs for certain subcomponents\. In several cases, indicators for individual
cities were consolidated into one for the whole project area to simplify reporting\.
Additionally, cost recovery ration indicator targets for water supply and wastewater
utilities were revised to more realistic levels in line with updates financial projections\.
1\.5 Revised GEO (as approved by original approving authority) and Key Indicators, and
reasons/justification
15\. Neither the GEO nor the key indicators for the GEF program were revised\.
1\.6 Main Beneficiaries,
16\. The PAD was silent on the main beneficiaries of the project and the GEF program
but the PDO and GEO made it clear that the majority of the urban populations of the seven
project cities would benefit to varying degrees from improved urban wastewater
management, water supply and solid waste services\. A core indicator, added as part of
project restructuring, set a target of 3 million beneficiaries\. In addition, the reduction of
pollution into the Bohai Sea and improvements to Bohai Sea water quality would mainly
benefit populations involved in fisheries and recreation\.
17\. Additionally, the project was expected to benefit the staff of the municipal utilities
in the project cities through the implementation of the institutional development (ID)
component of the Project, mainly by strengthening project management, monitoring
safeguards implementation and technical assistance (TA) for the public utility
improvement program, solid waste (SW) master planning, and water pollution control
planning\.
1\.7 Original Components (as approved)
18\. The original components defined in the PAD were as follows:
Component 1: Wastewater Infrastructure (US$129\.9 million)\. This component covered
four cities (Panjin, Yingkou, Fushun and Gaizhou) and included: (i) the construction of
new and rehabilitated wastewater collection systems in four cities; (ii) the construction of
new wastewater treatment plants in Yingkou, Panjin, and Gaizhou; and (iii) the
construction of river embankment works in Fushun\.
Component 2: Water Supply Infrastructure (US$132\.2 million)\. This component covered
six cities (Panjin, Yingkou EDZ, Fushun, Anshan, Haicheng and Xingcheng) and included:
(i) the renovation of water distribution pipelines in all cities; (ii) installing around 185,000
water supply meters; (iii) upgrading treatment plants in Anshan and Haicheng; and (iv) the
construction of a new water treatment plant and transmission lines in Yingkou\.
4
Component 3: Solid Waste Infrastructure (US$55\.6 million)\. This component included: (i)
the construction of new sanitary landfills in three cities (Panjin, Fushun and Yingkou
EDZ); (ii) closure of existing open dumps in Fushun and Yingkou; and (iii) solid waste
collection vehicles and transfer works and equipment\.
Component 4: Institutional Development (US$7\.7 million)\. This component covered the
following activities: (i) technical assistance (TA) for design and construction; ii) public
utility improvement program; iii) solid waste (SW) master planning; and iv) water
pollution control planning\. The last three activities were to be financed through the GEF
grant\.
The GEF project components, as set out in the GEF grant agreement, were identical to the
above project components but GEF funding was only applied to Component 4 â
subcomponents (ii) to (iv)\.
1\.8 Revised Components
19\. As part of the April 2014 restructuring, the following revisions were made:
1) Due to evolving needs and requirements in the project cities Component 3 was revised
as follows to allow the expansion and modification of subcomponents: Component 3:
improving the infrastructure and management of solid waste services in the project
cities through: (i) constructing and/or expanding solid waste collection and transfer
systems, sanitary landfills with leachate control and treatment (newly required by
government regulations), closure of open dumps, and other associated works; and (ii)
strengthening solid waste management practices, including development of integrated
and city-wide solid waste management programs, dedicated cost accounting systems,
and management information systems; and improved cost recovery through user fees\.
2) The solid waste subproject in Yingkou EDZ was dropped from the project because no
suitable location for a new landfill could be secured and the city opted to build a waste
incinerator\.
3) Subcomponents (ii), (iii) and (iv) of Component 4 were substantially expanded,
described in much more specific detail and revised as follows: (ii) Public Utility
Management: Providing technical assistance with respect to: (a) a capacity building
program for public utility functions in water for Yingkou, Anshan, Panjin, Haicheng
and Fushun cities, and wastewater for Panjin and Gaizhou cities; (b) data collection
and development of an information management system for Anshan, Yingkou, and
Haicheng urban water distribution networks; and (c) studies on ecology service
function and basin ecology compensation mechanism of Dahuofang reservoir; (iii)
Solid Waste Master Planning: Providing technical assistance to Fushun, Yingkou EDZ,
Gaizhou and Panjin for solid waste management planning and its implementation with
respect to: (a) development of solid waste master plans; (b) institutional development;
(c) landfill site assessment and engineering design; (d) procurement assistance; (e)
landfill construction supervision; and (f) training of personnel for effective operation
of solid waste management systems; (iv) Water Pollution Control Management:
Providing technical assistance to Panjin and Gaizhou for water pollution control
management, including: (a) institutional development and financial sustainability; (b)
5
wastewater master planning; (c) industrial water pollution control; and (d) sludge
management\.
20\. To maintain coherence, compatible revisions were made to the GEF program\.
These changes include: (i) inclusion of support for geographic information systems (GIS)
implementation by water utilities; (ii) increased emphasis on non-revenue water
management within the public capacity building program; and (iii) the inclusion of the
Dahuofang reservoir ecological study, whilst the public utility capacity building program
was downsized by removing the support for the planned private sector participation (PPP)
pilot, and the original content on strengthening sector regulation\. These changes became
necessary because the startup of the GEF component had been delayed and the citiesâ needs
had evolved by the time the GEF program was eventually launched\.
1\.9 Other significant changes
- Restructuring in 2008 to (i) reallocate loan proceeds for the capitalization of the front-
end fee; (ii) reduction of loan allocation for consultant services by $1 million and
reallocation of loan proceeds to works and goods categories; and (iii) correction of an
error in the Project Agreement (in paragraph 15 of Annex A to the Schedule) of the due
date for submission to the Bank by each utility of their financial improvement plan\.
- Restructuring in April 2014 to : (i) require the provision of resettlement action plans
(RAPs) for new and / or expanded subcomponent investments in Gaizhou, Fushun and
Panjin, (ii) preparation of environmental assessments (EAs) and implementation of
environmental management plans (EMPs) in the same three cities, (iii) preparation of
comprehensive solid waste (SW) strategic sector plans plus detailed action plans for
implementation, and (iv) require water supply and wastewater utilities to prepare and
make public annual water and wastewater utility performance reports\. Also, the loan
proceeds were reallocated with some cities and sectors being increased and others
having their allocations reduced to deal with capacity increases and cost overruns of
some subcomponents, self-funding by some cities, and reduced subcomponent scope
due inability to complete works\.
- Targets of some results indicators were revised to reflect implementation delays and
revisions of scope and outputs for some subcomponents\. In several cases, indicators for
individual cities were consolidated into one for the whole project area\. Additionally,
cost recovery ratio indicator targets for water and wastewater utilities were revised to
more realistic levels in line with updated financial model\.
- Two extensions of the project closing date to December 31, 2014 and subsequently to
June 30, 2015\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
Rationale for Bank involvement
21\. As part of a program to revitalize the industrial base in the countryâs northeast, the
6
Government of China had programmed a series of Bank urban infrastructure investment
projects in Liaoning\. The provincial government had asked the Bank to support urban
transport, environment and energy investments in high-priority medium sized cities\. The
LMC-2 project, focusing on urban environment, was the second in a series of three
projects\.4
22\. The Bank was well positioned to help Liaoningâs medium cities address their urban
environmental challenges, due to the Bankâs competitive advantage in financing and policy
advice and its strong, long-term relationship with Liaoning province\. The Bank had been
Liaoningâs development partner for over fifteen years, and could apply its long experience
of working in China on urban environment issues\. Bank assistance provided the project
cities and the provincial government an opportunity to gain from the Bankâs extensive
China and global experience with institutional development and sector policies\.
23\. In June 2001, the Liao River Basin Project (LRBP) had been approved and it closed
in December 2008\. The LRBP had a similar PDO, i\.e\. to assist with the environmental
recovery of the Liao River Basin through investments in wastewater collection and
treatment\. While the physical investments were completed satisfactorily (according to the
June 2009 ICR report), tariff increases and institutional reforms of the wastewater /
drainage companies made less progress\. In fact, the ICR report had expected the LCM-2
project, as the follow-on project to the LRBP to continue the institutional reforms over
time\.
Rationale for GEF grant support
24\. Liaoning province had not only requested Bank support for LMC-2 project but also
expressed an interest in additional support from GEF to demonstrate innovative approaches
to reducing land-based sources of pollution into the Bohai Sea\. With co-financing from
GEF the project was able to fund a set of institutional development activities to address the
key regulatory, management, and planning issues that would have negatively affected the
sustainability of the physical investments in pollution control activities in strategic âhot
spotsâ close to the Bohai Sea\. It was expected that the lessons learned from these
institutional innovations could then be disseminated locally and nationally\.
25\. In 2007, the GEF had financing available through the Strategic Partnership
Investment Fund for Pollution Reduction in the Large Marine Ecosystems of East Asia
(âthe Fundâ) that operated under GEFâs Operational Program (OP)10, the contaminant-
4
The first Liaoning Medium Cities Infrastructure Project dealt with urban transport and was
approved in June 2006 and closed in October 2013; and the Third Liaoning Medium Cities
Infrastructure Project dealt with urban heating and gas distribution; it was approved in 2008 and is
expected to close on June 30, 2016\.
7
based OP\. It stressed the removal of barriers to pollution reduction, which LMC-2 targeted
by addressing institutional and planning constraints in a holistic way\. The GEF activity
was also in line with GEF Strategic Objectives (SOs) in the International Waters (IW)
Focal Area\. It was in conformance with SO1 (catalyze reform and investment) as it aimed
to improve utility regulation and management throughout Liaoning Province, and
contributed to planning and investment in pollution control infrastructure in the project
cities\. With respect to SO3 (innovative demonstration), this GEF activity was to
demonstrate: (i) provincial level utility benchmarking programs â the first of their kind in
China; (ii) new approaches to solid waste management (SWM) which was a significant
source of non-point source pollution from uncollected garbage and point source pollution
from unsanitary dumps; and (iii) industrial pollution control within the context of overall
municipal wastewater management\. The GEF activity was expected to generate a mix of
local and also regional benefits by reducing pollution (BOD and nutrients) to the East
China Sea, in accordance with one of the four new strategies in the IW Agenda for GEFâs
fourth replenishment period: to address land-based pollution (especially nitrogen) that
creates anoxic âdeadâ zones in coastal waters\.
Incorporation of lessons learned
26\. During preparation a number of important lessons, mainly from the 2007 Bank
study on âImproving the Performance of Chinaâs Urban Water Utilitiesâ, were
incorporated in the project design: (i) strengthen financial sustainability through the
requirement of financial improvement plans (FIPs) to be updated and reviewed annually;
(ii) improve utility regulation and oversight of municipal utility companies through
building the capacity of local and provincial governments to do performance benchmarking,
initiate PPPs, improve utility regulations and introduce competitive utility management;
and (iii) improve the performance of pipeline networks for wastewater collection and water
supply distribution through TA for asset management plans to guide pipeline inspection
and renovation work\.
27\. A 2005 Bank study on âWaste Management in Chinaâ had highlighted the need to
take a comprehensive approach to solid waste management, and the project scope included
financing for all aspects of solid waste management (SWM), i\.e\. collection, transfer,
closure of open dumps and construction of new sanitary landfills\. Counterpart funding in
an earlier urban environment project in Liaoning had been a major problem, and therefore
this project was designed with 60% Bank financing of works and 100% for goods\.
28\. However, lessons from the still ongoing Liao River Basin Project (LRBP) which
was being implemented from 2002 to 2008 came too late to influence design\. The June
2009 ICR report (Report No\. 0000 01101) specifically discourages over-ambitious targets
and covenants for institutional and financial reforms of Liaoningâs medium cities utilities\.
Design for project sustainability
29\. Past experience in Liaoning province suggested that the investment program was
likely to be constructed to high-quality standards and completed on schedule\. Long-term
8
sustainability of the water supply, wastewater and solid waste services would, however,
depend on financial sustainability of the utilities providing the services and their ability to
operate, maintain, renovate, and expand the infrastructure\. Experience over the previous
decade with Bank projects had indicated that many cities in Liaoning were still struggling
with utility financial sustainability issues\. The Project addressed this issue through a variety
of measures: (i) requiring each city to have FIPs which would be closely monitored during
implementation; (ii) a large, province-wide utility regulatory and management capacity
building program; (iii) a provincial benchmarking program to provide competitive pressure
on cities and their utilities to improve financial and operational performance; and (iv)
comprehensive solid waste strategic sector studies to establish the institutional and
financial framework for sustainable services\.
30\. The project, through GEF funding, included outreach activities to disseminate
experience and knowledge learned from the GEF-funded institutional development
component to the entire Liaoning province, East Asia, and globally\. Key experiences to be
replicated included: (i) planning and implementing a utility regulatory and capacity
building program, including utility benchmarking; (ii) sustaining solid waste services to
reduce non-point source pollution and landfill leachate run-off; and (iii) wastewater
management planning for cities with complex industrial and municipal pollution sources
and limited financial resources\. Dissemination was to take place mainly through
involvement in GEF and Partnerships in Environmental Management for the Seas of East
Asia (PEMSEA) sponsored workshops and websites\. The replication potential in Liaoning
and throughout China was considered to be high\.
Risks and their mitigation
31\. Several substantial risks were identified during preparation and appropriate risk
mitigation measures â similar to the lessons that were incorporated â were applied: (i) the
risk to financial sustainability was mitigated through up-front tariff increases and the
requirement for FIPs and annual updates; (ii) the risk to the sustainability of solid waste
services was mitigated through the requirement to prepare strategic solid waste studies
early during project implementation; (iii) the risk of lower than targeted reductions in non-
revenue water was mitigated through TA for asset management plans (to determine the
most effective loss reduction actions) and financing of metering programs to improve
billing\. Lastly, the risk of insufficient provincial leadership in the public utility program
was addressed through close Bank interaction with provincial leaders and the establishment
of a strong provincial leadership group\.
32\. While in general, the counterpart fund met the commitment at appraisal, the risk of
inadequate counterpart funds for some cities was underestimated during project appraisal;
it should have been rated as âsubstantialâ instead of âmoderateâ\. For example, the shortage
of counterpart funds had significant impacts on the implementation of the Fushun
component, and the Liaoning Finance Department, LUCRPO and the Bank had to
intervene several times with the Fushun Mayors to ensure implementation of the Fushun
component as appraised earlier\. Lack of sufficient counterpart funds for land acquisition
and / or resettlement also caused some subprojects to be dropped or reduced in scope\. Bank
9
appraisal had not identified the risk of slow project startup of implementation, and therefore
not even preliminary designs had been prepared prior to project approval\.
Project design
33\. Project design considered a number of options, such as an adaptable program loan
(APL) and three multi-sector projects (each covering urban environment, urban transport
and energy) focusing on a selected number of medium cities\. The APL option was
dismissed because of the likely difficulty to define appropriate triggers for the second and
third projects and the length of time needed for the approval of the follow-on projects\. A
series of single-sector projects was eventually used as the most suitable packaging because
it would complement the sector investments with sector-specific and institutional reforms\.
The reduced complexity of a single-sector project was another key consideration for the
chosen project design; in fact, the water supply, wastewater and solid waste management
utilities involved in seven medium cities presented considerable challenges to coordinate
and supervise\. The design decision to focus on renovation and service improvements in
existing urban areas â rather than investing in new satellite cities and industrial parks as
had been proposed by the government â was definitely correct since many of the new
developments are not fully occupied at this stage\.
PDO and key indicators
34\. The indicators selected for the monitoring the achievement of the GEO were
designed to measure the reduction of pollution loads rather than â directly or indirectly â
measuring the water quality of the Bohai Sea, the target of the GEF intervention\. Few
appraised KPI targets were found to be impractical and therefore revised during loan
restructuring, and some legal covenants required by the Bank did not adequately take
account of the local institutional, financial and policy constraints\.
2\.2 Implementation
Implementation arrangements
35\. The Liaoning Provincial Leading Group (LPLG), chaired by a Vice Governor of
Liaoning, provided high-level guidance to the project, and coordinated all policy and
institutional issues related to the project\. A well-established office under the Liaoning
Provincial Department of Housing and Urban-Rural Construction (LPDHURC), called the
Liaoning Urban Construction and Renewal Project Office (LUCRPO), provided
continuous day-to-day project management, coordination and liaison\. The Liaoning
Provincial Department of Finance (LPDF) was responsible for integrated management of
the Project on behalf of LPLG, including providing guidance to LUCRPO and the project
cities; they managed the designated Project Account\. The Liaoning Provincial
Development and Reform Commission (LPDRC) is responsible for providing overall
infrastructure planning management in Liaoning and developing policies to promote
economic reform and development; the LPDRC was closely involved throughout the
project implementation\. Each participating city established a City Leading Group (CLG)
in which local government leaders took part\. The CLGs were responsible for providing
10
high level direction and oversight for project implementation activities in the respective
cities\. Each city also established a project management office (PMO) to coordinate project
implementation activities within its jurisdiction and provide linkages with LUCRPO and
the LPLG\. The CLG assigned either the existing public utility company or a suitable
government department as the project implementing agency (PIA) for each individual sub-
component with the responsibility for the implementation of that particular sub-component\.
Implementation problems and delays
36\. After a long preparation period the project got off to a slow start, and six months
after Effectiveness some disbursement conditions (signing of subsidiary LAs and some
safeguard documents) still had not been met\. In fact, there was a yearâs delay between
Effectiveness and start of any significant implementation activities\. The construction
management consultants were hired at that point but after two years they still had not been
paid and threatened to quit\. Eleven contracts that had been earmarked for retroactive
financing were completed some four years later only due to: difficulties with land
acquisition / resettlement, inadequate counterpart funding, procurement delays and slow
internal clearances\. New requirements for the mandatory installation of leachate treatment
facilities at landfill sites caused more problems, and local governments scrambled for funds
to finance such facilities\. The TA proposed for the GEF grant funding kept being delayed
by uncertainty about the scope of GEF activities and the content of the TORs, and there
was no real champion to move things along\. A special procurement review was carried out
by the Bank to finally allow the award of construction contracts that had been held up due
to supposed irregularities; these turned out to have been minor in nature\.
Mid-term review and project restructuring
37\. The Bankâs on-time mid-term review in October 2010 readily determined that the
project needed to be restructured on an urgent basis to drop a few subcomponents, add
some new items such as leachate treatment facilities, reallocate funding accordingly, and
also re-design the GEF components\. However, it took almost three years before the
restructuring, formally, took place in April 2014\. Earlier in 2013, the Bank had made the
restructuring conditional upon satisfactory progress on some key activities and also
delivery of some outstanding safeguard actions\. This approach worked well, and following
the restructuring, the project acquired a new momentum; this applied in particular to the
GEF component: newly designed studies and TA, responding to the then current needs,
and executed without further delays\. This work contributed much to the successful
completion of the project â with an 18 months extension â which was concluded with a
very productive dissemination workshop in June 2015 (see section 3\.6 below and also
Annex 6)\.
38\. Despite the late restructuring all contracts were successfully completed\. About
USD12 million were canceled, mainly due to some significant contract savings\. Also, about
USD0\.2 million of the GEF grant were canceled after satisfactory implementation of all
grant-funded TA, training and dissemination activities\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
11
Design
39\. The results framework was logically conceived, with an appropriate balance of
indicators to measure institutional and environmental outcomes\. The results framework
was closely linked to the project supported activities and measures used to assess progress
were fairly standard for this type of project\. Given that the project worked in a large
number of cities, data collection demands were significant, but this was to be expected in
a multi-city project\. One shortcoming was that the cost recovery targets were ambitious,
given the fact that the utilities in the project cities of Liaoning do not have full control of
tariff adjustments â they are imposed by the local governments\. However, there is a
provision for local governments to subsidize wastewater and solid waste services, if cost
recovery is not adequate\. At appraisal it was expected that wastewater, and even some
water supply companies would have a continuing need for subsidies âduring a transition
period\.â
Implementation
40\. M&E reporting was part of the Borrowerâs semi-annual progress reports, and these
comprehensive reports listed the updated indicators\. As a result of the slow start-up of the
M&E system in May 2008, information was generated either through the LRBP-supported
TA program or the Provincial EPB but there was no comprehensive reporting on the status
of key legal covenants and monitoring indicators except by Bank staff in the Bankâs own
implementation status reports (ISRs); it is therefore rated as Modest\. The results indicators
were modified and simplified as part of the restructuring\. The GEF-funded TA was to
support setting a utility benchmarking system, eventually to cover 75% of all provincial
utilities in Liaoning\. Due to delays of the TA, the GEF support was modified to focus the
on use of benchmarking as driver of performance improvement at the utility level\. In
addition, two 2 provincial agencies were set up by government to monitor services &
performance of all WS& WW utilities in Liaoning province\. Summaries of these
monitoring data are available on the web\.
Utilization
41\. M&E was intensively and very effectively used especially in safeguard
implementation where independent external agencies were employed to monitor, and
report on, the management and mitigation of environmental and social impacts, especially
land acquisition\. Detailed environmental data and information were gathered and used to
monitor and manage ambient conditions, especially during construction to minimize
negative impacts on, and resultant complaints from, the local populations\. The M&E
system is at moderate risk of being abandoned after the completion of the project\. This has
been mitigated through building the IAsâ capacity and the good practice established over
the past four years\. The provincial system, set up for monitoring utility performance and
service, will also contribute to continuing M&E of WS and WW companies\.
2\.4 Safeguard and Fiduciary Compliance
Environment
42\. LUCRPO was responsible for supervision and review of all environment
management activities such as training, coordination, and reporting; it also reviewed
12
implementation of the EMP\. Each Project Implementation Unit (PIU) set up a separate
environment management division during the early stages of the project\. For each
component, environment management organization members addressed environment-
related issues, took charge of environmental protection of sites, coordinated with relevant
government departments, and ensured that all contractors fulfilled their environmental
obligations by implementing all necessary mitigation measures during construction\. It was
found that when environmental education of the local population was done ahead of
implementation, and good communication was maintained throughout the actual
implementation stage, there was minimal complaints and resultant delays\.
43\. During implementation, both internal and external routine environmental
monitoring was conducted to ensure that all contractors implemented effective
environmental management measures as stipulated in the respective EMPs and contracts\.
Each PIU hired qualified external local environmental monitoring agencies to conduct
regular environment monitoring\. All monitoring results met national environmental
standards and there were a minimal number of complaints\. Based on the EMP, the
following key environmental impact mitigation measures were employed: (i) control of air
pollution, (ii) control of water contamination, (iii) control of the spreading of solid waste,
and (iv) minimizing traffic conflicts\. Bank supervision made sure that environmental
safeguard requirements were complied with, such as in the case of Gaizhou were the
extension of the closing date for the entire project was made conditional on the city
submitting a satisfactory EIA\.
Land acquisition
44\. There were problems initially when three landfill site locations had been selected
without sufficiently broad public consultation, especially ignoring the concerns and
objections of the adjacent population\. The local people eventually rejected the initially
selected sites with the result that one subcomponent had to be dropped and two others had
to find new sites\.
45\. The main resettlement agencies had local offices and a well-trained full-time
workforce\. All staff members were proficient in operations and policies on land acquisition
(LA) and temporary land occupation; they also had good experience in compensation and
resettlement for LA\. Consequently, they ensured the smooth implementation of land
acquisition and resettlement\. All LA was implemented in strict conformity with the
applicable policies, compensation rates and resettlement programs\. Temporary land
occupation for construction activities was also dealt with and appropriate compensation
was provided; efforts were made to minimize the length of temporary land occupation\. As
the implementation proceeded and further to the initial problems with landfill sites, the
local resettlement implementing agencies attached great importance to the participation of,
and consultation with, project-affected people (AP)\. Many announcements were released
and many mobilization meetings were held to collect comments and opinions from the APs\.
The grievance redress and appeals mechanisms were established and well publicized\.
46\. Based on the available records, all APs were properly resettled, and most opted to
take monetary compensation; many of those initiated their own livelihood restoration
measures, such as exporting labor and job training\. Most of APs responded positively to a
13
sampling âsatisfaction surveyâ\. There was regular monitoring and review of all LA by an
independent external agency, and detailed reports are available\. A good precedent of
creative land acquisition was set in Fushun where the local government allocated a former
state-owned coal mine waste dump site for the new sanitary landfill, thereby avoiding all
resettlement â it would otherwise have required the resettlement of 238 rural HHs\.
47\. With regard to overall safeguard compliance, project restructuring in 2014 was
made conditional upon the Borrower first completing, submitting and disclosing
satisfactory EIA and RAP documents for all delayed existing, and one new component (in
Panjin)\. Compliance was achieved very promptly\.
Procurement
48\. All procurement was undertaken in accordance with Bank guidelines and there
were no incidents of mis-procurement\. However, strict adherence to Bank procurement
procedures caused serious delays in some cases, such as the GEF studies where the Bank
carried out a special procurement review due to supposed irregularities; these turned out to
be minor and the contracts were eventually awarded\. There also were long delays with
awarding eleven contracts that had been earmarked for retroactive financing, and
procurement issues were given as one of the reasons for these delays\. In all cases, though,
the Bankâs procurement specialists provided advice and assistance to resolve issues and
expedite procurement decisions\.
Financial management
49\. Audits consistently received clean opinions, and there were no outstanding audits\.
The project coordination office had an adequate financial management system (FMS) in
place that provided accurate and timely information on implementation progress and Bank
loan uses\. However, FM capacity varied among different PIUs, and most PIUs required
some training in FM and guidance on project accounting and financial reporting from the
LUCRPO\. Therefore, in the later stages of implementation, the project management
consultants were tasked to assist LUCRPO with financial management (FM) aspects; this
led to substantial improvements in FM by the local PIUs\.
50\. During the earlier years of project implementation, disbursement progress was a
serious concern until the old paper-based payment requisitioning and disbursement system
was upgraded by the PIU to an electronic online system in 2012\. This new system
enhancement resulted in substantive efficiency improvements to the processing of
disbursement requests\.
2\.5 Post-completion Operation/Next Phase
51\. All new infrastructure facilities constructed under the project are being well
operated and maintained, and each municipal government is providing sufficient budget
funds to ensure these operations are fully financed\. However, tariffs are not at a level that
provide for financial sustainability and in the case of some sub-components low income
collection rates are also a threat to financial sustainability\. This situation may change in
14
the future as in late 2013 the PRC national government announced new policies which
recognized the need to increase water supply charges as a water conservation measure,
however as yet this has not filtered down to the LMC-2 project cities and subsidies have
increased significantly over the life of the project\.
52\. The three municipal WWTPs have made a largely trouble-free transition to regular
operations5\. Panjin has signed an outsourcing contract for the O&M of their WWTP with
an experienced contractor to assure high operational and effluent quality standards\. The
operational procedures developed jointly between the PIUs and the GEF consultants were
used for improving operations of two new WWTPs in Panjin and Yingkou, and the GEF-
funded TA was instrumental in resolving operational issues with the Ghaizhou WWTP\.
53\. The only sanitary landfill constructed under LMC-2 was in Fushun whose
sanitation department also benefited from GEF-funded technical assistance, and the landfill
is being operated to the required standards that could still be improved, especially placing
an adequate daily cover\. The new Panjin sanitary landfill constructed under BOT
arrangements is considered an LMC-2-associated project and, based on local EPB
inspections, is also being operated within the set standards\. This project financed collection
vehicles, transfer stations and sanitary landfill equipment to improve overall sanitary
conditions in Panjin\.
54\. With regard to a follow-on operation, in April 2015 the Liaoning PDRC submitted
a proposal to the NDRC to consider an application for funding from the Bank as a follow-
on urban water supply project â termed âa safe and sustainable development and
demonstration projectâ\. Building on the long-standing relationship between Liaoning and
the Bank, the province wants to deepen policy reform, move forward with institutional
innovation (âmixed ownershipâ), and achieve modern utility enterprise management
objectives\. The needs to be addressed by the new project are: (i) low per capita water
resources in Liaoning, (ii) aging networks with high losses, excessive energy use,
insufficient HR capacity, and (iii) poor management and financial performance\. The Bank
has received the request officially from the Government in September 2015, and it is under
review for possible financing\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
Relevance of Objectives
5
There were initial start-up problems at Gaizhou, caused in part by the current low hydraulic
loading of the WWTP\. However, Gaizhou benefitted from GEF-funded operational support TA,
and the WWTP eventually passed EPB inspection that it complied with the set effluent standards\.
15
Rating: High
55\. The projectâs objectives were consistent with the 2006 to 2010 Country Partnership
Strategy (approved by the Board in May 2006) which sought, among other objectives, to:
(i) improve the competitiveness of the various regions of China and the overall investment
climate, and (ii) address the needs of disadvantaged groups and underdeveloped areas
through financing infrastructure\. Specifically, the project supported the objectives of: (a)
reducing poverty, inequality, and social exclusion; (b) financing sustained and efficient
growth; and (c) improving public and market institutions\.
56\. The Project is also consistent with the current Country Partnership Strategy (CPS)
for 2013-2016\. The CPS highlights the high level of pollution in the water bodies in China
that necessitate better management of environmental pollutants from wastewater and solid
waste\. The CPS also recognizes the need for high-quality public services; need for better
water resources management; integration of rural-urban growth; promoting an integrated
approach to water and environmental management; expanding safe water supplies to
smaller cities; supporting private sector investment in water and sanitation; improving
sanitation, solid waste and other basic urban services in selected second-tier cities;
addressing environmental management; enhancing opportunities in rural areas and small
towns through high quality water and sanitation services; enhancing urban environmental
services through improved water supply, wastewater collection treatment and disposal, and
solid waste collection and disposal; and enhancing opportunities in rural areas and towns
through improved services\.
57\. The project is also relevant to China's current 12th Five Year Plan (2011-2015)6
which aims to forcefully address environmental and social imbalances through the
development of services measures to set targets for reduction of pollution and increased
energy efficiency\.
58\. GEF assistance was and still consistent with (i) Chinaâs strategy for reducing
municipal water pollution, and (ii) various international agreements, including the
recommendations of the PEMSEA, the Bankâs partner in the Fund\. The GEF activity
further was consistent with the aims and objectives of the World Summit on Sustainable
Development to which GEF subscribes\. The Project also had direct relevance for the
Global Program of Action (GPA) for the Protection of the Marine Environment from Land-
based Activities through the proposed improvements of the Bohai Sea coastal and marine
environment\.
Relevance of design and implementation
Rating: Substantial
59\. The design of the project built on the lessons learned from past projects and was
6
The current CPS and the 12th Five Year Plan were informed by the joint study, China 2030,
prepared by the Bank and the Development Research Center of the State Council\.
16
based on a solid intervention logic\. The link between the objective and the areas of
intervention was clear\. The subprojects were carefully selected to ensure that their impacts
were aligned with the project objectives, and the performance indicators facilitated the
measurement of such achievements\. The project design could not fully anticipate the
dynamic development situation in China in general, and Liaoning Province in particular\.
The rapidly changing requirements and needs would have benefited from a number of pre-
screened stand-by âspare subprojectsâ (as suggested by one of the PIUs) that could have
replaced the dropped subprojects\.
60\. Project preparation for the institutional development component resulted in a
design that responded to the needs of Liaoning\. The appraisal decision was confirmed
subsequently by more recent research and the sector planning and policy documents issued
by national authorities, many of which are aligned with the original program objectives\.
The relevance of the design of the GEF component was high\.
61\. The original design also included a management structure for the program that was
agreed by all parties at the time of appraisal, and the risks to the program were identified
and assessed\. However, two shortcomings were identified during implementation: (i)
failure to identify and enlist a senior level âchampionâ within the provincial government
with the ability and commitment to implement the program as intended; and (ii) a relatively
low level of consultation on the design of the program with the city level agencies\. These
shortfalls delayed the public utility capacity building program in particular since it was
designed as a provincial level initiative\.
3\.2 Achievement of Project Development Objectives and Global Environment Objectives
Rating: Substantial
(i) Improving Performance and Sustainability of Wastewater Services
Sub-rating: Substantial
62\. The project has greatly improved the performance of the wastewater services by
meeting all physical infrastructure targets: (i) construction of 250,000m3/day new
wastewater treatment capacity; (ii) installation of ten new and seven upgraded wastewater
pumping stations; and (iii) construction of 60 km of new interception and collection sewer
pipelines in Fushun, Yingkou, Panjin and Gaizhou\. The expanded wastewater collection
systems and increased treatment capacities improved the overall performance of the
wastewater utilities; they served more people and lowered the annual pollution and
nutrients loads to the surrounding environment, including the Liao River and the Bohai Sea,
by about 17,629 tons of BOD, 4,978 tons of TN, 509 tons of TP â far exceeding the
performance indicators targets\. These works also helped to increase coverage of sewage
collection and treatment, thereby reducing the risks of local flooding\. Below is a summary
listing of the beneficial outcomes of improved wastewater services performance:
- in Panjin, wastewater treatment coverage comprises 722 ha with an estimated
population of 283,000 and the coverage rate has increased to 85%
- in Yingkou, wastewater treatment coverage increased to 90% and now covers a
population of 420,000 and the wastewater treatment rate increased from 45 to
90%
17
- in Gaizhou, river banks have been stabilized and bank erosion has been halted
over a section of 3\.3 km
- in Panjin and Yingkou, substantive treated effluent re-use by municipality and
industry
- cleaner, less polluted surface water for irrigation, fisheries and recreation
- cleaner urban environment and decrease of unsanitary conditions
- reduction of pollution load entering â directly or indirectly â the Bohai Sea
- conservation of economic activities in the Bohai Sea, i\.e\. fishing and tourism
- improved investment climate
63\. In terms of improved sustainability of wastewater utilities, the cost recovery of the
targeted four utilities in Yingkou, Panjin, Fushun and Gaizhou increased significantly from
between 0\.5 and 1\.0 to reach the range of 1\.0 to 1\.1; and in Yingkou, wastewater tariffs
and collection performance are satisfactory\. While business plans (identifying financing
needs arising from growing service demands) were prepared for four cities, two wastewater
master plans were also completed\. The master plans update the previous wastewater plans;
they include an updated service demand forecasts, the extent and timing of infrastructure
improvements needed, and broad financing estimates\. They also include a specific strategy
for the separation of existing wastewater and storm water collection networks\. The master
plans are essential for city authorities to update their own planning documents and to guide
detailed infrastructure planning\.
64\. Equally important for sustainability, staff capabilities and skills have increased very
significantly and measurably through the following measures:
- operator training, compilation of training material and an operational manual
- domestic study tours to relevant sites and facilities
- optimization and efficiency savings reviews
- completion workshop on innovative approaches to utility planning, design,
operation and management
- increased monitoring of utility performance and service and posting of results\.
(ii) Improving Performance and Sustainability of Water Supply Services
Sub-rating: Substantial
65\. The project financed construction of (i) installation of 260,000 m3/d new water
treatment capacity; (ii) construction of 540 km of new transmission and distribution
pipelines; and (iii) the purchase and installation of more than 180,000 new household water
meters\. The increased drinking water supply and treatment, the installation of more than
180,000 household water meters and the replacement / rehabilitation of water distribution
pipelines improved the water supply utility performance to a great extent\. Some specific
benefits of the physical investments are:
- in Anshan, 250,000 households benefited directly from improved water service as
a result of pipe replacements
- in Yingkou the service area was increased by about 2,000 ha with an estimated
population of 105,000
18
- reliable 24-hour water supply covering the entire urban areas in all project cities
at adequate pressure
66\. While water supply tariffs are not yet at adequate levels for full financial
sustainability7, local governments have been consistent in their budgetary support for water
supply operations and debt service\. Despite a general reluctance to increase tariffs (due to
social and political reasons), Government policy is expected to catch with tariff increases;
this will assure the financial sustainability of the water supply utilities in the future\. At this
stage, the water supply companies are considered to be operationally sustainable only\.
Moreover, the capacity building provided by the project and GEF-funded TA, has
developed and grown staff skills considerably resulting in:
- development of network mapping by a computer-based geographic information
system (GIS) in Yingkou, Anshan and Haicheng
- improved operations, leakage control and systems optimization through well-
trained and highly competent operators and users of GIS mapping
- three cities now have and utilize a state-of-the-art GIS for more effective
monitoring, upgrading, expanding and repairing their water supply networks
- resulting in considerable revenue increases and efficiency gains
- optimal decisions for priority repairs, upgrading or new construction of pipes
- higher quality of treated water through operator training and operational manuals
- more accurate billing of customers, increased tariff collection and higher revenues
for the water utilities
67\. Moreover, non-revenue water (NRW) was reduced significantly in most of the
project cities, which resulted in having more water available for sale, although it was
formally dropped from the PDO indicator\. Under the GEF TA activity, pilot NRW
programs were implemented in five cities: Anshan, Yingkou, Panjin, Haicheng, and
Xingcheng\. Although scope and size of the pilot activities varied among the cities, all the
participating cities benefited from the program by reducing water production loss, lower
operating costs, reduced leakage and NRW, sold more water and increased revenues\.
Moreover, the intervention had positive influences over the utilitiesâ capabilities for system
operation and management, gained from better data collection and analysis through
installed GIS systems\. Some cities, such as Xingcheng, established a dedicated team for
leakage detection to further continue NRW reduction efforts\. Overall, all the five cities
gained NRW reduction experience and motivated to continue the efforts\. The table below
summarizes the scope and the results in NRW reduction\.
City NRW
Condition Intervention
Name 2012 2015
Anshan 18 communities Replace 91 km of pipes 53% 19\.5%
7
Despite improvement in cost recovery, the utility companies in Yingkou, Panjin, Anshan and
Fushun are still lagging slightly in cost recovery and will need to increase their revenue base
through tariff increases and / or the local government support
19
High losses Install 65,000 new meters
Yingkou Average 50% losses Network rehabilitation 54% 13%
2 pilot communities Meter replacement 39% 12%
Panjin Old network from 1950s Reconstructed ~50% of 51% 41%
network
Replaced 45,000 meters
Haicheng 78 communities Demand monitoring & 26% Not
Worked in 2 pilot areas measurement known
Data analysis yet
Leakage detection &
repair
Xingcheng One pilot district Rehabilitated pipes 55% 35%
Relocated many meters (35%) (25%)
(iii) Improving Performance and Sustainability of Solid Waste Services
Sub-rating: Substantial
68\. The project achieved the physical targets for SWM infrastructure: (i) the
construction of two new sanitary landfills in Fushun and Panjin with a combined capacity
of 2,000 t/d including the associated landfilling equipment; (ii) installation of one leachate
treatment plant; (iii) closure of one old dump site; (iv) supply of 50 compactor-type solid
waste collection vehicles; (v) installation of one solid waste transfer station; and (vi) the
establishment of a large number of local refuse pick-up points in three cities\. These
investments created a cleaner environment and provided new solid waste disposal capacity
of some 2,000 tons/day, including the treatment of highly contaminating leachate at the
landfill sites8\.
- reduced odor and visual nuisance of open dump sites, especially in Fushun where
several scattered uncontrolled dump sites were closed
- less potential for groundwater contamination through landfills
- cleaner urban environment and decrease of unsanitary conditions for both cities
- reduction of pollution load entering â directly or indirectly â the Bohai Sea
- conservation of economic activities in the Bohai Sea, i\.e\. fishing & tourism\.
69\. The GEF-funded TA contributed importantly to achieving the completion of the
targeted SWM master plans which addressed institutional, financial, cost recovery,
technical and infrastructure planning issues in the solid waste sector in three cities\. Key
positive outcomes for sustaining fully adequate SWM services in the future are as follows:
- Gaizhou and Panjin have better designed landfill sites and associated facilities
with minimal negative environmental impacts
8
Leachate collection and treatment below solid waste landfill sites is especially important for the
protection of ground water resources
20
- these two landfill sites have proper groundwater monitoring wells to prevent the
spreading pollution into important water resources
- new operational manuals assist with safe and efficient operation of sanitary
landfills
- utility staff are better informed on collection, transfer, disposal and management
options thus contributing to a cleaner & healthier urban environment
- utility staff are better equipped to deal with financial aspects, especially cost
recovery and tariff collection
- SWM utility staff are better equipped to plan for future expansion
- Gaizhou, Fushun & Panjin have separate SWM master plans to guide future
development
- Panjin was enabled to operate a well-designed pilot project of integrated urban-
rural solid waste management\.
70\. The GEO were largely achieved (rated moderately satisfactory) because important
investments in wastewater and solid waste management infrastructure were put into
operation that are reducing the pollution loads into the Bohai Sea through (i) effective city-
wide wastewater collection and treatment, and (ii) solid waste collection and disposal in
fully engineered sanitary landfill sites (including leachate treatment plants) that minimize
groundwater and surface water pollution to reach rivers and eventually the sea\. The positive
outcomes of the GEF component were demonstrated by the fact that the GEO indicators of
reduced BOD, TN and TP â all indicating a decrease in pollution loads â were all exceeded
by a factor of at least 2\.5\.
71\. The GEF-funded activities, modified after initial delays, responded well to the key
sector issues that arose\. The grant financed several highly relevant studies, technical
assistance and training activities that contributed greatly to the development and
strengthening of the utility companies in planning, monitoring, water supply system
network mapping investment projects management, metering and NRW management\. All
the above-mentioned activities contributed to the improved performance of the targeted
urban services\. Moreover, the achievement of wastewater and solid waste utilitiesâ cost
recovery is expected to ensure the sustainability of these services\. Lastly, the dissemination
activities held in 2015 assure that study findings will be used widely (see Annex 6 for
details)\.
3\.3 Efficiency
Rating: Modest
72\. Detailed financial projections were carried out at appraisal for the project water
supply and wastewater companies, focusing on (i) utility tariffs, their adequacy and
affordability; (ii) the financial performance of the utility companies, especially cost
recovery ratio and debt service coverage ratio; and (iii) the fiscal sustainability of the local
governments for supporting the water supply and wastewater companiesâ budgets as
needed\. Annex 3 provides details of the financial analysis done at the time of project
completion\. Tables 3\.2 and 3\.3 in Annex 3 demonstrate that the affordability of utility
tariffs has increased significantly since appraisal as a result of rapid economic growth
whilst over the same time period there have only been very limited, if any, increases in the
21
tariffs charged for these services\. The financial performance of the utility companies is
summarized in Table 3\.5, also in Annex 3\. It shows that varying levels of tariff increases
are needed to achieve full financial sustainability, i\.e\. no operating subsidy from the local
government\. In China, it is a common practice that the local government provide subsidies
to wastewater and water supply companies that are meeting performance targets imposed
by the government\. These subsidies are counted as non-operating revenues, and they are
incorporated in the calculation of a cost recovery ratio\. In this context, the situation of the
wastewater companies is more complex because low collection rates and inadequate tariffs
often impair the prospects for financial sustainability except in Yingkou where tariff
collection performance is satisfactory\. With regard to the fiscal sustainability of the local
governments, there has been significant growth in municipal revenues since appraisal as
shown in Table 3\.4\. In view of these impressive growth rates and also in consideration of
the fact there has been no major cost escalation during the LMC-2 implementation, it is
apparent that the local governmentsâ fiscal sustainability is now stronger than what it was
at appraisal when it was considered to be adequate\.
73\. At appraisal, subproject-level economic cost-benefit analysis was not considered to
be appropriate but all subprojects had used a standard least-cost / cost effectiveness
methodology that incorporated technical, environmental, financial and social criteria into
the design and decision-making process and an open, competitive bidding process that was
used throughout\. It is evident that the project investments provided good value for money
and can be considered to be substantially efficient\. As an example from the city of Panjin,
the specific unit price to construct a large WWTP has remained almost the same â it
increased only slightly from RMB 2751\.9 /t to 2899\.5/t over a time span of ten years, i\.e\.
less than 5% which is considerably much less than inflation (28% over 10 years from 2005
to 2014)\. This means that in real terms the costs actually decreased while the plant
developed under this project meets higher treatment standards (Class A) compared to the
plant built ten years with financing from the LRBP treated sewage to Class B standards
only\.
74\. Although not readily quantifiable, the project generated economic benefits through
improved utility service delivery, higher water use efficiency, reduction of non-revenue
water, and better sanitation\. The latter improvements contributed important health,
environmental and aesthetic benefits\. Although there are no data to measure the direct
economic impacts of the project, it is interesting to note â as shown in Annex 3 â that the
project implementation period witnessed significant economic growth in the benefiting
cities: per capita Gross Domestic Product (GDP) increased by factors ranging from 1\.6 to
3\.6 between 2007 and 2015\. The project generated large increases in service areas and
benefiting populations, such as in Fushun where 250,000 HHs have benefited directly from
water supply services improvements, and in Panjin where the added wastewater treatment
capacity covers an area of 722 ha with an estimated population of 283,000; the overall
wastewater treatment rate in Panjin increased from 45 to 85%\. The urban environmental
infrastructure improvements also improved â in a significant way â the local investment
climate, thus contributing further non-quantifiable economic benefits\.
22
75\. The non-revenue water (NRW) projects supported by the GEF grant generated
important efficiency gains\. For example, in one pilot community of Xingcheng city, NRW
volume was reduced from 55 to 35%, and water revenue increased almost five-fold\. In
addition, power consumption was reduced and there were fewer customer complaints\. As
a result, Xingcheng has set up a NRW team to continue getting further efficiency gains
system-wide\. In Anshan city, similar results were achieved, i\.e\. a NRW reduction by about
one third and a three-fold revenue increase\.
3\.4 Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
76\. As discussed above, the project was and still is highly relevant to the Bank-China
Country Partnership Strategy and also to Chinaâs strategy as described in section 3\.1\. The
PDO and GEO were substantially achieved as described above, and the efficiency of the
investments was assured through the least-cost approach for selecting and design the
priority improvements\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
77\. The urban poor have definitely benefited to a greater extent from the project
interventions since â before the project â they would have had less access to municipal
services, such as reliable clean water supply and garbage pick-up, and would have been
more negatively affected by discharges of untreated wastewater\. Table 3\.3 in Annex shows
that the current utility charges are readily affordable by the poorer households, too\. The
project benefited both genders equally although women usually appreciate the improved
sanitary conditions more highly\. Regarding social development, the participating local
government agencies gained valuable practical experience in the implementation of fair
land acquisition with adequate compensation and restoration of livelihoods (in case of
resettlement) that were supported by grievance redress and appeals mechanisms\.
(b) Institutional Change/Strengthening
78\. The capacity of provincial, local government and utilities staff was strengthened
significantly, not only through well-targeted capacity building TA, but also by acquiring
practical on-the-job experience in project and financial management, strict and fair
procurement procedures, and innovative technical solutions\. Staff capacity also was
increased â through training and study tours â for operations and management of the newly
built facilities\. The project also pushed local governments towards increasing
commercialization, especially the wastewater, drainage and solid waste departments\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
79\. The revisions of the GEF grant subcomponents as part of the 2013 project
restructuring provided an opportunity to conceive new TA, based on actual needs at that
stage\. These changes produced an ecological study of the Dahuofang Reservoir, installation
of advanced GIS for the three water supply companies, and master plans for urban
23
wastewater and SWM\. The dissemination workshop in June 2015 not only demonstrated
the value of this revised TA but also served as a â previously unplanned â stakeholdersâ
project closing workshop\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
80\. A GEF dissemination workshop was held on June 12, 2015 in Shenyang\. The
principal objective of the workshop was to disseminate the lessons learned and information
on specific GEF outputs to some 80 public utility managers and relevant government
officials across Liaoning Province\. The gathering also took the place of a stakeholder
workshop\. It dealt with the two main components of the project: i) urban water supply and
wastewater management and ii) municipal solid waste management, for which the GEF
program had provided the TA for the associated ID\.
81\. The GEF component had been successfully implemented in the later years of LMC-
2 implementation in accordance with a revised design\. The goals of the GEF program were
largely achieved: (i) better public utility management and operations; (ii) up-to-date
wastewater sector plans, (iii) some public- private sector partnerships were initiated; (iv)
municipal solid waste management was greatly improved, including sector planning and
financing, optimization of garbage collection and transportation, landfill operations and
training, dump closure plans, and integration of urban and rural waste collection and
disposal services; and (v) good asset management was introduced, with particular emphasis
on the management of non-revenue water, water leakage reduction, and the implementation
of GIS\.
82\. As well as benefiting the cities and utilities that directly participated in the different
GEF initiatives, a very important additional objective of the GEF component was to
disseminate best practices and lessons learned from the GEF work to other cities of
Liaoning and potentially beyond\. The workshop was an important part of that process and
achieved the additional objective very well\. See Annex 6 for a detailed report\. There was
no beneficiary survey\.
4\. Assessment of Risk to Development Outcome and Global Environment
Outcome
Rating: Moderate
83\. The table below summarizes risks identified at project closing to the sustainability
of the achievements / results of the PDO and how they are expected to be mitigated after
project completion\.
Risk factors Mitigation
Operation & maintenance of facilities is O&M Staff are well trained, and seem to
poorly executed be competent and highly motivated
Equipment fails to perform as expected Superior equipment and construction
and designed quality were employed to prevent failure
24
Tariff collection rate is too low and Improved municipal service delivery will
utilities lack revenues motivate customer to pay tariffs\. Water
supply tariff collection rates are
improving but WW and SW charges and
collection systems remain inefficient\.
GEF work suggested reforms for SW
charges which are now under
consideration by LGs
Tariffs are not increased sufficiently to National policies are supportive of tariff
cover operations and debt service reforms but policy implementation is
lagging\. LGs recognize need for tariff
increases but most are awaiting direction
from higher levels of government\.
Local governments fail to provide enough Some local governments are committed &
subsidy to make up revenue shortfalls national policies are expected to change
Institutional reform and Institutional and commercialization
commercialization stalls reforms progressing well at national level
but absence of enabling regulations to
date have impeded policy implementation
at local level
Momentum for reform and further Liaoning Province has already applied to
improvements slows down or is lost the Bank for a follow-on project
84\. On the basis of the brief analysis above, the risk to development outcome has been
assessed as Moderate because despite several significant risk factors, there are a number of
positive mitigation factors that reduce the overall risk to a moderate level\. The analysis
applies equally to Development and GE outcomes\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Satisfactory
85\. PDO and GEO were well formulated and focused foremost on improvements in
service and sustainability and on reducing environmental pollution, mainly of surface water
and the marine environment, although it would have been impossible to devise a suitable
indicator to monitor Bohai Sea water quality directly\. Strategically, the project was highly
relevant and the approach to implementation was well thought out\. The indicators used
could be measured, but their number could have been reduced\.
86\. Project preparation took more than two years from concept to Effectiveness and
caused some of the proposed investments to be outdated by the time implementation
eventually started\. Project design was too ambitious in terms of expecting local wastewater
utilities to become managerially and financially independent â even though at the time of
preparation the ongoing LRBP had experienced difficulties in this regard\. On the positive
25
side, the original investment plan was substantially implemented by project closing\. While
the technical and financial aspects of the project design were well prepared, the economic
analysis was lacking\. Safeguard and fiduciary aspects were appropriately covered during
preparation, and adequate monitoring processes were included in the design\.
87\. As mentioned in section 3\.1, project preparation for the institutional development
component resulted in a design that responded to the needs of Liaoning\. However, it was
not implementable in its intended form due to a number of factors: (i) a lack of âbuy-inâ
from the project cities, (ii) a minimum of consultations, and (iii) the rapidly changing
infrastructure needs and priorities of the cities\. This problem was addressed by the original
design of the GEF component which responded to the more relevant key issues in the
management of the water, wastewater and solid waste sectors in Liaoning, and indeed, in
many other parts of China\.
88\. While local governments succeeded in adjusting their investment priorities, the
project design had not anticipated the dynamic development situation in China in general,
and Liaoning Province in particular\. The rapidly changing requirements and needs would
have benefited from a number of pre-screened stand-by âspare subprojectsâ (as suggested
by one of the PIUs) that could have replaced the few dropped subprojects\.
(b) Quality of Supervision
Rating: Satisfactory
89\. Although not very effective in the early stages of project implementation to assist
the Borrower to overcome initial problems and substantial delays, following the mid-term
review, Bank supervision fully supported the Borrowerâs request for a project restructuring
and cooperated with Government to complete the project by the extended closing date\.
Also, Bank supervision paid particular attention to fiduciary, environmental and
resettlement safeguard aspects\. Bank completed a Special Procurement Review in May
2011 and found only minor deviations of from Bank guidelines; this was done to allow the
implementing agencies to proceed with some badly delayed contract awards\. They
contributed helpful technical advice and innovative solutions for the infrastructure
investments\. The Bank was also very supportive in assisting with project restructuring and
the re-design of the GEF grant funded sub-components\. Bank staff also allowed a fine-
tuning of their content in 2014 to utilize grant savings and satisfy emerging needs in
relation to sector planning and policies, the commercialization of public utility services,
and urban-rural service integration\. Bank staff made restructuring and loan closing date
extension conditional upon (i) delivery of outstanding safeguard documents for revised /
additional subcomponents, and (ii) achievement of important progress actions, which
proved to be effective incentives\. Lastly, Bank supervision helped to ensure that adequate
transition arrangements to regular operation were in place and also stressed the importance
of good asset management\. Overall, Bank supervision had focused on development impact
and was fully adequate in terms of frequency and filed regular and candid reports on project
performance\.
(c) Justification of Rating for Overall Bank Performance
26
Rating: Moderately Satisfactory
90\. Based on the above assessments, Bank performance is rated a solid Moderately
Satisfactory despite the above mentioned issues with project preparation and problems
during the early part of implementation\. Bank staff made persistent efforts to get project
implementation back on track through a successful restructuring, and with an adequate
closing date extension, see it through to completion\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Moderately Satisfactory
91\. Both the central government and LPG showed great commitment to the project and
worked hard to secure the necessary counterpart funds, process the PAs and SLAs, and
maintain good project records\. They also complied with the loan re-payment schedule, met
the legal covenants, and fully cooperated with the Bank\.
92\. In the early stages of implementation there was poor coordination and cooperation
between LUCRPO and LFD\. This poor working relationship had impeded the progress of
implementation and also seriously delayed the request for a badly needed project
restructuring which the MTR mission had agreed upon in October 2010\. However, the LPG
is to be commended for their decision in 2012 to make radical changes in the management
team of the PDRC and LFD; they also changed the staffing of LUCRPO\. These changes
led to a greatly improved implementation performance from 2012 onwards\.
93\. Some government actions actually interfered with a smooth implementation: a
Liaoning provincial requirement to have full wastewater treatment capacity by 2010, and
national requirements â introduced in 2008 â for leachate treatment at all sanitary landfills
led to changes in project scope as local governments scrambled to meet the new
requirements\.
94\. Lastly, LPGâs slow progress with implementing national utility tariff policies
discouraged local governments from enacting the covenanted tariff increases in a timely
manner\.
(b) Implementing Agencies Performance
Rating: Moderately Satisfactory
95\. In general, the IAs embraced the project and aspired to its outcomes\. They procured
a total of 84 goods and works contracts, of which 79 were completed as planned, four were
27
completed with reduced scope 9 , and one dropped 10 \. The pace of implementation was
varied; some cities managed to complete the construction of their subprojects in 2013, but
others implemented very slowly, especially during the first few years so that after two years
of implementation the project was 12 months late\.
96\. In general, there was a stubborn disbursement lag throughout implementation (due
to slow processing of withdrawal applications at the IA and the provincial levels) although
physical progress was much better, especially during the later years\. By 2010 the key
construction management consultants had not been paid (due to an unreasonable payment
procedure) and threatened to leave the project â three years after Effectiveness\. Bank
management called the project âat a critical stageâ\. Just prior to the project restructuring in
2013, DO and IP ratings were downgraded to Moderately Unsatisfactory, and the GEO
rating was Unsatisfactory\.
97\. In view of the impressive recovery of implementation progress after the
restructuring, and the efforts made to expedite the processing of all pending payments, the
IAs performance overall is rated as Moderately Satisfactory\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
98\. Since both Borrower and IAs were rated Moderately Satisfactory, the overall rating
is also Moderately Satisfactory; this rating reflects a slow start with many problems and
delays but good efforts on the part of the Borrower to overcome the difficulties, complete
the project successfully and achieve the PDO and GEO as well as the full counterpart fund
disbursement\.
6\. Lessons Learned
(a) Partnership engagement and ownership
99\. Build strong partnership between all stakeholders including the Bank, the
Borrower and the implementing agencies while recognizing their cultural diversity\. The
Bank teamâs emphasis on strong partnership increased the trust between the parties\. The
simple act of sitting with the Borrowerâs team on their side of the table helped greatly to
build trust\. This was reported by LUCRPO to the top management of LFD and LDRC, and
Liaoning shared the concept for a follow up project with the Bank team; that concept was
later submitted to the Bank for possible future financing\.
9
Two works and goods contracts were reduced due to a land availability issue for the Dawa solid
waste transfer station (which is now proposed for construction with funding from the local
budget) and the other two are related to Haicheng water distribution pipelines\.
10
This is related to the cancellation of water supply pipelines in Haicheng that were not needed
anymore due to changes in the cityâs masterplan\.
28
100\. Ensure the availability of counterpart funds before project Effectiveness\. This
would expedite the pace of implementation and avoid unnecessary delays\.
101\. Build strong local commitment and buy-in early on during project preparation
and the early part of the implementation period\. Implementation proceeded smoothly in
Xingcheng where local buy-in was secured early on but there were delays and setbacks
with the GEF component due to a lack of sufficient local commitment and buy-in\.
(b) Institutional and financial
102\. Identify institutional weaknesses that may impede the pace of implementation\.
This should be carried out at a very early stage in close cooperation with the government
and the implementing agencies involved\. Thanks to the LPGâs intervention, the serious
delays at the beginning of the project that were caused by the unworkable implementation
arrangements and procedures were compensated for by the fast progress after the radical
changes in the management teams of LFD, LDRC and LUCRPO in 2012\.
103\. During project preparation and start-up focus the institutional and capacity-
building efforts on those cities with no prior Bank experience\. The cities that were new
to Bank financing had considerable start-up problems and delays, but cities with experience
from earlier Bank projects performed much better during the early implementation period\.
104\. Do not set targets that are unlikely to be achieved in view of the prevailing policy
environment and precedents\. The cost recovery indicators for the project cities were not
well selected since the utilities in the project cities of Liaoning do not have control of tariff
adjustments â tariffs are usually imposed by the local governments\.
(c) Operational
105\. Aim for a simple project and proper packaging of the investments to expedite
implementation\. The project financed 84 works and goods contracts\. Given their similar
nature, the contracts could have been packaged differently to reduce their number and thus
the management efforts\. However, the complexity of contracting was exacerbated by the
wide project scope: eleven IAs covering three distinct infrastructure sectors, and seven
widely separated cities\.
106\. Once the need for project restructuring has been identified and agreed upon,
proceed expeditiously to actually restructure the project\. The very much delayed
restructuring of this project caused serious disbursement lags due to category allocation
limits\.
107\. Expect changes and therefore build flexibility into a project that supports local
government investments\. Fast-growing local governments insisted on their autonomy to
make decisions when faced with changing needs and new regulatory and policy
requirements\. Such situations led to a number of scope changes, some subcomponents were
dropped but no substitutes were ready, and a major restructuring became necessary\.
29
108\. Make sure to actually implement the risk mitigation measures that were proposed
for all risks identified during the appraisal process\. Mitigation measures for risks related
to design, fiduciary aspects and institutional capacities were not fully implemented and this
caused a number of problems and delays\.
109\. Have some detailed designs for subprojects ready by the start of implementation
and also develop some pre-screened standby spare subprojects\. The lack of completed
detailed designs at start-up caused serious implementation delays\. Moreover, the project
design should have anticipated for the dynamic development situation and develop some
pre-screened standby âspare subprojectsâ that could have replaced the dropped subprojects\.
(d) Capacity building and technical assistance
110\. Maximize the benefits of the TA and expedite TA implementation during the early
stages of the project\. All studies and TA activities under the loan and GEF have been
completed, albeit late, but it would have been preferable to start these activities during the
early stages of the project\. This would have given the IAs the opportunity to fully practice,
apply and use the acquired skills and adapt or scale them up to respond to specific needs\.
111\. Whenever available, seek grant assistance to finance additional TA for complex
technical / institutional projects\. The GEF grant funds â after restructuring â provided an
opportunity to mobilize additional, special TA to address the complex institutional,
financial and technical challenges faced by the IAs\. The GEF grant also allowed the
Borrower to reduce loan funding for TA by USD 1 million\.
(e) Other Lessons for specific aspects of implementation
112\. Carry out full geotechnical investigations before finalizing bidding documents to
ensure good engineering design of foundations and structures\. Lack of complete
technical, especially geotechnical, information for the construction of WWTPs
necessitated later design changes and variations that caused cost increases and delays in
contract completion\.
113\. Do broad and intensive public consultations early in the landfill site selection
process and consider all objections and concerns, especially from adjacent populations\.
Three landfill site locations that had been selected early in the land acquisition process
were later rejected by the local population; this caused project delays, and the cancellation
of one of the SWM components\.
114\. Include sub-metering of electric power consumption within WWTPs\. The absence
of detailed data made the monitoring and control, and subsequent reduction, of power usage
difficult to achieve\.
115\. Conduct targeted environmental training of project participants early during
project implementation; later, during construction, communicate effectively with the
local population with regard to potential environmental and social impacts\. Timely and
30
appropriate environmental training helped project participants to better understand the
importance, requirements and implementation approach of the EMPs\. Also, where good
communication with directly affected populations was done, it contributed considerably to
smooth project implementation and avoided complaints and construction delays\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
116\. Liaoning Province, in its project completion report (PCR) which was prepared by
LUCRPO and is summarized in Annex 7, expressed great satisfaction and pride with the
projectâs outcomes\. The entire implementation process has been a valuable experience for
all agencies involved, and much capacity building of the PIUs has been achieved that will
help them with their ongoing operations, planning and implementation of future projects\.
117\. LUCRPO is also very satisfied with the level of support they received from the
Bank during project identification, preparation and implementation; the facilitation of
procurement and timely reviews and approval for contract re-packaging and the project
restructuring following the MTR discussions; and the re-design at MTR of the GEF grant
funded sub-components, and in fine tuning of their content in 2014 to satisfy the needs of
emerging sector policies in relation to marketization of public utility services and urban-
rural service integration\.
118\. LUCRPO emphasized that the Bank loan and GEF grant have not just simply
helped to finance the Project, but have also introduced advanced management practices for
project implementation, strategic sector planning and enterprise operation\. Bank project
implementation rules and procedures for procurement, contracts management and
construction supervision have been broadly accepted as being fair and giving greater
assurance of a satisfactory outcome\. Good experience has been gained by applying these
rules and procedures, which have been replicated on similar projects not financed by the
Bank\.
119\. LUCRPO acknowledged that the GEF-funded capacity building activities have laid
a good foundation for improved performance of Liaoning public utilities, in strategic sector
level planning and the use of public private partnerships (PPP)\. In addition; (i) greater
knowledge has been obtained of the ecology of the Dahuofang reservoir watershed, which
is the key water resource of the Province, and draft mechanisms were developed for its
preservation; and (ii) a pilot system of urban-rural integration of solid waste collection and
disposal has been designed for implementation in Panjin, which it is hoped can become a
model for future integration of public utility services across the urban-rural divide\.
120\. The Bank concurs with LUCRPOâs assessment regarding (i) the importance of the
counterpart funding for smooth implementation; (ii) the importance of comprehensive
project design that takes into account the site conditions and the local land use plans to
avoid variations and delays; (iii) the need for proper arrangements for electricity
consumption audits in all water and wastewater installations to be able to develop better
energy management plans; (iv) the recognition that cost recovery covenants cannot be
viable without considering institutional reforms, as in case of Panjin and Yingkou; (v) the
31
importance of leadership to facilitate timely implementation of the capacity building
activities under GEF; (vi) the great need to do more capacity building in PPP (a PPP pilot
was dropped from the GEF component); and (vii) the need for proper asset management,
sustainability of the project outcomes and the scaling up of the project activities to further
improve the water and wastewater services in Liaoning\.
(b) Cofinanciers
N/A
(c) Other partners and stakeholders
N/A
32
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
China-Second Liaoning Medium Cities Infrastructure Project - P092618
Actual/Latest
Appraisal Estimate Percentage of
Components Estimate (USD
(USD millions) Appraisal
millions)
Wastewater infrastructure 129\.90 124\.36 95\.7
Water supply infrastructure 132\.20 145\.63 110\.2
Solid waste infrastructure 55\.60 36\.35 65\.4
Institutional Development 2\.70 2\.78 102\.9
Total Baseline Cost 320\.40 309\.12 96\.5
Physical Contingencies 0\.00 0\.00 -
Price Contingencies 0\.00 0\.00 -
Total Project Costs
PPF 0\.00 0\.00 -
Front-end fee IBRD 0\.43 0\.43 100
Total Financing Required 320\.83 309\.55 96\.5
China-GEF-Liaoning - P090375
Actual/Latest
Appraisal Estimate Percentage of
Components Estimate (USD
(USD millions) Appraisal
millions)
Public utility program 2\.35 0\.00 N/A
Solid waste master planning 1\.50 0\.00 N/A
Water pollution control planning 1\.00 0\.00 N/A
Dissemination & training 0\.15 0\.05 33\.3
Public utility capacity building N/A 0\.78 -
Water networks GIS systems N/A 1\.59 -
Study of ecology of Dahoufang
N/A 0\.30 -
Reservoir
Urban solid waste management N/A 1\.14 -
Strategic planning for urban
N/A 0\.92 -
wastewater management
Total Baseline Cost 5\.00 4\.78 96\.0
Physical Contingencies 0\.00 0\.00 -
Price Contingencies 0\.00 0\.00 -
Total Project Costs 5\.00 4\.78 96\.0
PPF 0\.00 0\.00
Front-end fee IBRD 0\.00 0\.00
Total Financing Required 5\.00 4\.78 96\.0
Note: Due to the delayed start-up of the GEF-financed studies, the first three components were
completely revised and replaced by five new components\. Total GEF expenditures do not add up
to total amount disbursed due to rounding errors\.
33
(b) Financing
P092618 - China-Second Liaoning Medium Cities Infrastructure Project
Appraisal Actual/Latest
Type of Estimate Estimate Percentage of
Source of Funds
Financing (USD (USD Appraisal
millions) millions)
Borrower 147\.83 148\.52 100\.5
GLOBAL ENVIRONMENT -
5\.00 4\.80 96\.0
Associated IBRD Fund (Grant)
International Bank for
173\.00 161\.03 93\.1
Reconstruction and Development
Totals 325\.83 309\.55 96\.5
P090375 - China-GEF-Liaoning
Appraisal Actual/Latest
Type of Estimate Estimate Percentage of
Source of Funds
Financing (USD (USD Appraisal
millions) millions)
Borrower 0\.00 0\.00 -
Global Environment Facility (GEF) 5\.00 4\.80 96
Note: Local funds were converted at the exchange rate of RMB1\.00 = USD0\.157
34
Annex 2\. Outputs by Component
Components 1, 2 and 3 of the project generated a large number and range of physical
outputs with many general and some city- or site-specific outcomes\. The main outputs
and their clear linkages to outcomes are shown in matrix format below\.
CITY OUTPUTS OUTCOMES
Component 1 â Wastewater infrastructure
Fushun - 10\.8 km of new sewers in Liushan & - cleaner urban environment
Zhang Dan districts - decrease of unsanitary conditions
- no more wastewater discharges or
over-flows into rivers & lakes
Yingkou - new 100,000 m3/d WWTP - cleaner, less polluted surface water
- drainage & interceptor sewers for irrigation, fisheries & recreation
- 7 new sewage pump stations - in Panjin & Yingkou, substantive
- 1 sewage pump station was upgraded treated effluent re-use by municipality
& industry, respectively
- reduction of pollution load entering â
Panjin - new 100,000 m3/d WWTP directly or indirectly â the Bohai Sea
In two districts of Panjin: - conservation of economic activities
- 18\.8 km sewer lines rehabâd in the Bohai Sea, i\.e\. fishing & tourism
- 2 new sewage pump stations - reduction of pollution load entering â
- 6 sewage pump stations were directly or indirectly â the Bohai Sea
rehabilitated - improved investment climate
- in Gaizhou, river banks have been
stabilized & bank erosion has been
Gaizhou - new 50,000 m3/d WWTP (using halted over 3\.3 km
extended aeration A/O process) - in Panjin wastewater treatment
- new 7 km sewage interceptor coverage comprises 722ha with an
- 3\.4 km of new main sewers estimated population of 283,000 and
- 1 new sewage pump station coverage rate has increased to 85%
- 3\.3 km new riverbanks improvement - in Yingkou wastewater treatment
works coverage increased to 90% and an
covers a population of 420,000 and the
wastewater treatment rate increased
from 45 to 90%
Component 2 â Water supply infrastructure
Anshan - new 120,000 m3/day water treatment
plant (WTP)
- 120 km distribution lines either
upgraded or newly constructed
- 65,250 water meters purchased - non-revenue water was reduced
Haicheng - 10,000 m3/d capacity expansion of significantly in all project cities &
existing WTP more water is available for sale,
- 60,000 m3/d capacity expansion of resulting in better service for
existing water distribution plant customers & revenue increases for the
- 74 km of water distribution pipes utilities
newly constructed or upgraded - more accurate billing of customers
35
CITY OUTPUTS OUTCOMES
- plan to purchase 25,000 water meters - increased tariff collection & higher
later (using non-Bank funds) revenues for the water utilities
Yingkou - new raw water intake and - due to GIS, more efficient
31\.3 km transmission line management of distribution system
- 70,000 m3/d capacity WTP - optimal decisions for priority repairs,
- construction or upgrading of upgrading or new construction
125\.9 km water distribution lines - higher quality of treated water
Panjin - construction of 33 km of water - better investment climate because of
distribution pipelines availability of reliable and good
- water loss monitoring and water quality water supply
metering equipment: - in Anshan 250,000 HHs benefited
- 205 bulk meters directly from improved water service
- 92,262 water meters as a result of pipe replacement
- 6,212 u/g meter chambers - in Yingkou the service area increased
Fushun - construction of large diam\. 15 km by about 2,000ha with an estimated
raw water transmission main line population of 105,000
- construction & upgrading of 125\.9km
water distribution lines
- purchase of water loss monitoring
equipment
Xingcheng - construction of 17\.5 km of - availability of 24-hour adequate
distribution network pressure throughout the distribution
- purchase of water loss monitoring system while before the project there
equipment was low pressure & intermittent water
- purchase of 2,200 water meters rationing
Component 3 â Solid waste infrastructure
Fushun - sanitary landfill with capacity of - cleaner urban environment
1,400 t/d (NBF) - decrease of unsanitary conditions
- one leachate treatment plant\. - reduced odor & visual nuisance of
- landfill operating equipment open dump sites
- closure of old open dump - reduced potential of groundwater
- 30 rear compaction vehicles contamination
Panjin - sanitary landfill with capacity of 600 - reduction of pollution load entering â
t/d (by BOT â not using Bank directly or indirectly â the Bohai Sea
financing) - conservation of economic activities
- 20 rear compaction vehicles in the Bohai Sea, i\.e\. fishing & tourism
- One transfer station w/associated - improved investment climate
vehicles - in Fushun, closure of several
scattered uncontrolled dump sites
Component 4 (i) â TA for design and construction
- review bidding documents - a well-managed project
- assist with project management - timely and informative reports
- review of payment applications - project was able to get back on track
- site inspections and training for after serious problems & delays
supervision activities - effective construction supervision
- assistance with financial - good documentation & dissemination
management, accounting, and of studies and TA outputs
safeguards monitoring - an effective FMS
- good safeguards monitoring with
36
CITY OUTPUTS OUTCOMES
minimal problems & complaints
- significantly increased inst\. capacities
Component 4 (i) was implemented between 2008 and 2015\. The TA consultant provided
advisory services to the PIUs and LUCRPO for bidding documents review, project
management, payment review and asset management\. All bidding documents were
reviewed by the consultant before submission to the Bank for âno objectionâ (prior review)
or to LUCRPO for approval (post-review)\. All payment applications (including VOs) were
also reviewed by the consultant and submitted to LUCRPO, with appropriate comments\.
The consultant did site inspections to construction sites during the construction period\. The
consultant also provided advice and training to LUCRPO and PIUs, relating to
management of contracts, safety issues, and quality and cost control\.
In 2013, due to progress and financial reporting problems, additional tasks were added to
the package A1 work scope in relation to financial management, accounting, environmental
and resettlement safeguards monitoring\.
The consultant also provided TA support for implementation of 11 retro-actively financed
contract packages scheduled for implementation between September 2007 and March
2008\. The TA consultant provided services to the relevant PIUs and LUCRPO for bidding
documents review, and project management for these 11 packages\. However, due to the
delay in implementing some of the packages, the services were not actually completed until
December 2012\.
Outcomes: Increased project management capacity of project agencies
Through the support of the consulting team all 12 project implementing entities developed
as effective project implementation agencies and the procurement and the construction
phase of all project components were generally well managed\. Most construction contracts
were completed ahead of schedule, although some delays occurred, notably in Gaizhou,
Haicheng and Panjin\. All PIUs acquired solid experience in project management and in
the particular requirements of implementing a Bank-funded project, such as open and
transparent procurement, and effective controls over contract variations and procedures for
the handling of contractorsâ claims\. The fact that the project was generally implemented
successfully, with performance improving as time went on, demonstrates this capacity
building was successful\.
In view of the large number of studies, initiatives and reports generated by the GEF
component, a summary of objectives, outputs and related outcomes is presented below\.
Component 4 (ii) to (iv) â GEF-financed Studies and their dissemination
Ref\. Objectives Outputs Outcomes
B1 Public Utility Capacity Building
B1-2 Leakage Control and Water balances prepared for
Management Report each participating utility\.
Strategies for reducing leakage
levels developed and
implementation commenced\.
37
Component 4 (ii) to (iv) â GEF-financed Studies and their dissemination
Ref\. Objectives Outputs Outcomes
B1-3 Operational Management and Potential optimization and
Optimization Report efficiency savings identified
for each utility and managers
briefed on potential follow-up
- Provide leadership in the actions\.
B1-4 design and supervision of Final Benchmarking Report Improved awareness of staff of
the start-up of the potential benefits from
Liaoning Public Utility benchmarking, relevant
Improvement Program methodologies and
implementation issues\. Utility
managers now better
understand the importance of
proactive performance
management and the
techniques involved\. All
participating utilities are to
publish annual performance
reports in future\.
B1-5 Capacity Building Design Comprehensive compilation of
Report and Training Material all training material available
in hard and electronic format\.
Several participating utilities
started to incorporate this
material into their internal
training programs\.
7 utilities benefited from this program: Anshan City WS General
Co; Fushun City WS Co; Haicheng City Water Supply Co; Panjin
City WS Gen\. Co\.; Panjin Urban Drainage Mgt Co Ltd; Yingkou
Water Affairs Co\. Ltd; and Gaizhou Drainage Co\. (GDC)\.
B2 GIS Systems for Water Supply Networks
B2-1 - Provide leadership in Data Base of Water Network Three cities â Yingkou,
design & supervision of Assets Anshan and Haicheng â now
B2-2 the start-up of Information Mapping Database have and utilize a state-of-the-
B2-3 Management Systems Inception Report art GIS for more effective
B2-4 (IMS) of Urban Water Pipe network hydraulic model monitoring, up-grading,
B2-5 Supply for scientific Training Materials expanding & repairing their
B2-6 management & optimize Final Completion Report water supply networks\. GIS
water distribution\. facilitates improved operations,
leakage control and systems
optimization\. Operators &
users are well trained & highly
competent\.
B3 Study of Ecology of Dahuofang Reservoir
B3-1 - Quantify the ecological - availability of more accurate
service values in the values of ecological service
Dahuofang watershed Report on values of ecological functions value generated by
services of Dahuofang Reservoir forests, reservoirs, farms and
- Promote the other types of ecosystems in
B3-2 improvement of the the surrounding areas
ecological environment Report on proposals for - ecological compensation
and water quality of ecological compensation policies can be developed
38
Component 4 (ii) to (iv) â GEF-financed Studies and their dissemination
Ref\. Objectives Outputs Outcomes
Dahuofang Reservoir mechanisms for the Dahuofang based on eco-compensation
Reservoir watershed index
- Clarify overall goals, - based on above, a system for
basic principles, then ecological governance can be
design ecological developed & implemented
compensation mechanism - case study available for use
by other regions
C Urban Solid Waste Management
C-1 Inception Report - Gaizhou & Panjin have better
C-2 Design of Gaizhou proposed designed landfill sites &
solid waste facilities with minimal
C-3 Panjin priority projects and plan negative environmental
for the expansion of waste impacts
- Assist the selected cities collection systems - the 2 landfill sites have
C-4 to prepare strategic solid Report on the design of the new proper groundwater monitoring
waste plans that address landfill of Yingkou EDZ wells to prevent spreading
C-5 institutional, financial, Financial Management, Cost pollution
cost-recovery and Recovery, and Management - SW utility staff are better
infrastructure planning Model Report equipped to plan for future
C-6 issues Planning consultation report on expansion
Fushun urban waste collection - Gaizhou, Fushun & Panjin
and transportation system have separate SW master plans
C-7 Report on the proposals for to guide future development
integrated urban-rural mgt\. of - utility staff are better
solid waste in Panjin informed on SW collection,
C-8 Final SW Master Plans transfer, disposal &
C-9 Final Operational Manuals management options thus
C-10 Final Report (includes capacity contributing to a cleaner &
building activities) healthier urban environment
- utility staff are better
equipped to deal with financial
aspects, especially cost
recovery & tariff collection
- new operational manuals
assist with safe & efficient
operation of sanitary landfills
- Panjin is enabled to operate a
well-designed pilot project of
integrated urban-rural solid
waste management
D Strategic Planning for Urban Wastewater Management
D-1 Inception Report - staff have updated practices
D-2 Gaizhou Operational Manual & procedures for plant
D-3 Panjin Operational Manual - wastewater utility staff in
D-4 Gaizhou General Business Plan Gaizhou & Panjin are better
D-5 - Assist Panjin and Panjin General Business Plan informed about future instâl &
D-6 Gaizhou to develop Gaizhou Wastewater and ownership options
sustainable wastewater Drainage Master Plan - specific recommendations are
D-7 management systems Panjin Wastewater and Drainage available to guide planning &
Master Plan design for future needs &
39
Component 4 (ii) to (iv) â GEF-financed Studies and their dissemination
Ref\. Objectives Outputs Outcomes
D-8 Report on potential for market- expansion of plants
oriented (commercial) operation - staff have knowledge of
of urban infrastructure options for technical facilities
D-9 Final Report (includes capacity & wastewater treatment
building activities) systems
- staff are better trained &
equipped to operate & manage
existing facilities
E Dissemination and Training Activities
- Facilitate learning & Dissemination workshop for 80 - all utility staff in Liaoning
replication staff in June 2015 in Shenyang Province are better informed
- Import relevant best Publication of detailed on innovative approaches to
practices proceedings of workshop utility
planning, design, operation and
management\. Staff are better
informed on best practices,
esp\. national practices
To supplement the above matrix of the GEF component outputs and outcomes a summary
of outputs, outcomes and benefits by sub-component is presented below\.
Sub-component â Public utility capacity building
The two main pillars of the technical assistance were: (i) improved operational
performance, focusing on reducing the NRW of water supply utilities and the opportunities
for operational efficiency and effectiveness improvements (especially via systems
optimization) of water and wastewater utilities, and (ii) improved public utility
management, with a particular focus on performance measurement, including performance
benchmarking\.
Reduction of Non-revenue Water (NRW)
ï A water balance was prepared for each participating water supply utility in close
conjunction with water supply operations managers\. Each utility should now be
able to repeat this exercise and update their water balance\.
ï Strategies for reducing water leakage levels and other aspects of NRW were
developed and their implementation was commenced\.
ï A pilot exercise to assess the effectiveness of meter replacement in Panjin
demonstrated that such replacement programs can achieve increased water sales of
up to 40%\.
Operational Efficiency and Systems Optimization Improvements
ï Potential optimization and efficiency savings were identified for each utility and
managers briefed on potential follow-up actions\.
ï Specific applications in the use of supervisory control and data acquisition
(SCADA) were introduced and explained, and how these could be utilized in
conjunction with the new GIS implemented under sub-component B2\.
40
ï Opportunities for pressure optimization both as a means of leakage reduction and
service level improvement were identified and explained, and are being actively
followed up by the concerned utilities\.
ï Pumping optimization and potential energy efficiency improvements were
identified and explained; and
ï For each participating WWTP, a detailed study of treatment efficiency and
effectiveness was conducted and specific opportunities explained to local
operational managers for their follow-up action\.
Improved Performance Management of Public Utilities
ï Through capacity building sessions and discussions with each participating utility
managers now better understand the importance of proactive performance
management and the techniques involved\.
ï All participating utilities have been enabled to publish annual performance reports
in future â this will improve transparency in the required service standards and the
actual performance of the utilities concerned which is likely to lead to a more
informed and supportive customer base\.
ï The use of performance benchmarking and its potential benefits and shortcomings,
alternative approaches and benchmarking systems, and a history of its use in China
was provided to the participating utilities, and the IBnet system supported by the
World Bank was identified as being most suitable for use in Liaoning\.
Sub-component â Implementation of water network GIS
This sub-component has resulted in fully operational GIS for the water networks of Anshan,
Haicheng and Yingkou water supply companies\. Specific benefits obtained or anticipated
are as follows:
ï Provision of mapping databases for the water supply areas of each of the
participating water utilities, training in database use and maintenance and handover
to the utilities,
ï Provision of operational water network asset databases for each utility, training in
database use and maintenance, and handover to the utilities for future updating
ï Provision of a hydraulic model of each utilitiesâ water network, and training in its
use\.
ï The systems and tools provided will lead to undoubted improvements in asset
management and in the operation of water distribution systems, including leakage
reduction;
ï Use of hydraulic modelling will allow plans for future investments to strengthen
existing networks or their extension to be optimized,
The GIS, although currently operating as stand-alone systems, can later be readily
integrated with other IT systems, such as SCADA, work scheduling, financial and
inventory systems, to enhance operational efficiency and service levels\.
Sub-component â Study on ecology of Dahuofang Reservoir
41
The study is utilized by the Liaoning Province Dahuofang Water Resource Management
Office for developing ecological compensation policies, and the development of a
âDahuofang Reservoir basin ecological compensation systemâ\. The research associated
report provided a theoretical and value basis for the development of related ecological and
environmental governance systems, and is of reference and promotion value to other PRC
regions on how to carry out basin ecological service value assessments\. Specific benefits
arising from the study included:
ï a current situation assessment of ecological environment protection, and economic
and social development in the Dahuofang Reservoir catchment,
ï a proposed methodology, together with a specific quantification of the ecological
service values in the Dahuofang watershed
ï identified problems, clarified overall goals and basic principles, and made specific
proposals for building and perfecting an ecological compensation system for the
watershed, and\.
The study also advocated for the improvement of the ecological environment and water
quality of Dahuofang Reservoir\.
Sub-component â Strategic planning of solid waste disposal
Construction Plan for monitoring wells at the new SW sanitary landfill in Gaizhou\.
The plan was established taking account of related standards, engineering, geological and
hydrogeological surveys, and has been adopted by Gaizhou city\.
Priority projects and plan for the expansion of waste collection systems in Panjin
Based on the current situation and taking account of future service needs, a well-designed
SW collection and transfer expansion plan was prepared for Panjin and has been adopted
by the local government\.
Report on the design of the new landfill of Yingkou EDZ
A comprehensive design report was prepared covering: (i) engineering, geological, and
hydrogeological survey of the landfill site; (ii) the liner system; (iii) leachate collection and
treatment; (iv) gas collection; (v) final cover and closure arrangements; (vi) control of
leachate level; (vii) monitoring of leachate leakage, and (viii) requirements for
underground water monitoring wells\.
Financial management, cost recovery, and management model report
Provides a guide for the project cities to develop and realize a highly efficient and
sustainable solid waste management system capable of delivering the service according to
agreed targets in a planned, cost effective and transparent way using most appropriate
technology\.
Planning consultation report on Fushun waste collection and transportation system
Based on the current situation and taking into account the future service needs, a well-
designed SW collection and transfer system was prepared for Fushun\.
Proposals for integrated urban-rural (URI) management of solid waste in Panjin
Three reports prepared under the TA contract deal respectively with (i) a specific plan for
URI; (ii) financial management of the system; and (iv) URI administrative management\.
42
The overall outcome is that a URI pilot system has been instituted and so far is operating
satisfactorily\.
Final MSW Master Plans
Separate master plans and supporting reports provided for each of Gaizhou, Fushun, and
Panjin cities and the Yingkou EDZ\. Each master plan (i) confirmed and evaluated the
current situation; (ii) provided a development forecast (iii) set strategic targets, (iv)
developed master plans for MSW collection, transportation and treatment; (v) identified
required investments needed; and (vi) safeguard actions needed for system sustainability\.
These plans are being used by city authorities to update their own planning documents and
to guide detailed infrastructure planning\. Where applicable these master plan reports are
compatible with the recommendations of other relevant TA outputs\.
Final Operational Manuals
These manuals provide for the safety and efficient operation of landfills\. They provide
standard guidelines and quantitative regulations for operation, facilities, quantification
information, environment and safety of solid waste sanitary operations in two parts: (i)
MSW landfills and (ii) SW transfer stations\.
Report on SW Institutional Framework and management information system\.
Provides the analysis, a framework and specific recommendations to MSW management
authorities to enable them to better manage all aspects of the MSW \.service; this includes
suggestions on how PPP outsourcing might be used\.
Construction Plan for monitoring wells at the new LMC-2 funded landfill in Fushun
This plan was established taking account of related standards, engineering, geological and
hydrogeological surveys\.
Closure plan for the Taiyangsheng MSW dumping site in Gaizhou\.
Provides detailed closure design plans, including shaping and treatment of the dumps,
cover system, leachate collection system, landfill gas collection system, surface water
control system, and underground water monitoring, taking account of the specific local
situation\. The plan facilitates a safe, environmentally sound means of dump closure\.
Sub-component â Strategic planning of urban wastewater management
Gaizhou and Panjin Operational Manuals
The scope of the manuals was restricted to the operations and maintenance requirements
of the WWTP in Gaizhou and Panjin constructed under the LMC-2 project and took
account of the actual treatment process and the inventory of installed treatment equipment\.
These manuals, together with the detailed content of manuals supplied by equipment
manufacturers, provide comprehensive guidance for use by local WWTP managers to
revise and update their practices and procedures\.
Gaizhou General Business Plan
43
Provides a development path and identifies the financing needs for the Gaizhou Drainage
company assuming service demands are as forecast in the revised city master plan
prepared under this same TA (see below)\.
Panjin General Business Plan
Provides a development path and identifies the financing needs for the management of
wastewater services in Panjin, assuming service demands and associated infrastructure
improvements take place as forecast in the revised city master plan prepared under this
same TA\.
Gaizhou and Panjin Wastewater and Drainage Master Plans
These plans update the previous city wastewater master plans and integrate the planning of
wastewater management with the prevention of water-logging in the cities\. The plans
include an updated forecast of service demand, the extent and timing of infrastructure
improvements needed, and broad financing estimates\. These plans also include a specific
strategy for the separation of existing wastewater and storm pipes, where this is necessary
to ensure effective drainage of an area\. The plans are being used by city authorities to
update their own planning documents and to guide detailed infrastructure planning\.
Report on potential for market-oriented operation of urban infrastructure
Provides an analysis of the legal and regulatory environment for the marketization of
wastewater services in the PRC and lessons from past marketization experience\. Identifies
actions needed, and suggests a delineation of responsibilities, to facilitate the more
effective use of marketization in the wastewater sector\.
44
Annex 3\. Economic and Financial Analysis
Economic analysis
In accordance with the PAD, all project components utilized the standard least-cost which
incorporated technical, environmental, financial, and social criteria into the decision-
making process\. At subproject level economic cost-benefit analysis was not considered to
be appropriate because: i) the water supply, wastewater and solid waste treatment
investments were driven by the Chinese national standards; and, ii) a significant portion of
the investments consisted of renovation of existing pipeline assets\. A major innovation
under the project was the use of an asset management planning approach for network
rehabilitation, which generated the most economic approach for these types of investments
by allowing for strategic assessment of the highest priority investments on an ongoing
basis\.
Although not quantifiable â due to the inherent difficulty in quantifying precisely and
meaningfully the benefits in environmental projects, particularly those relating to public
health and environmental improvements â the project generated substantial economic
benefits through:
- greater urban coverage with water supply, wastewater and solid waste services
- increased treatment capacities for water supply, wastewater and solid waste, facilitating
future urban and industrial investments and growth
- improved utility service delivery providing safe and reliable 24-hour water supply,
benefiting businesses in particular
- higher quality of treated water
- higher water use efficiency achieved through metering and NRW reduction initiatives
- increased revenue for water companies resulting from metering and lower NRW,
strengthening the utility companies
- expanded wastewater collection, treatment and disposal, including some economic re-
use of effluent
- higher quality wastewater effluent
- better sanitation through improved wastewater and solid waste collection and disposal\.
The beneficial improvements listed above also provided important health, environmental
and aesthetic benefits\.
Highlights of environmental benefits:
ï Additional 250,000 m3/d of WWTP treatment capacity has been added in the project
cities, with an approximate reduction in total COD discharge of 12,000 tons per
annum (2013)\.
ï In Panjin, 30,000 m3/d of treated wastewater effluent is now being re-used for
municipal management purposes (irrigating green space and street cleaning)\.
ï In Yingkou, effluent from the wastewater treatment plant is supplied to
Zhongyejingcheng (Yingkou) Equipment and Technology Co\. Ltd\. for use as
production water\.
45
ï Sanitary municipal solid waste landfills in Panjin and Fushun provide for the daily
disposal of 2,000 t/d of solid waste disposal, with full leachate treatment provided
in accordance with national standards\.
ï The new SW facilities have allowed the closure of the old waste dump sites
resulting in environmental benefits at those locations\. (Professional support on the
closure of these existing facilities was provided as part of the GEF component)\.
ï Water quality in the Bohai Sea in the coastal areas of Yingkou and Panjin (the two
municipalities where WWTP were constructed) showed a decline in the period up
to 2011, but has since improved\.
ï No significant environmental management issues arose during project
implementation and all WWTP and Sanitary landfills constructed under the project
at being operated in accordance with the EMP and are in compliance with relevant
national operating standards\.
The participating local governments also reported that the urban environmental
infrastructure improvements improved â in a significant way â the local investment
climate, thus contributing further non-quantifiable economic benefits\. Lastly, the project
investments â by reducing seawater pollution â also contributed to the preservation of
economic activities, i\.e\. fisheries and tourism, in the Bohai Sea\.
Financial analysis
Introduction
This section of the annex reviews the financial performance of the project entities in
relation to the following:
ï Utility tariffs levied in the project cities
ï Tariff affordability
ï Financial performance of the water and wastewater companies, including
compliance with financial covenants
ï Fiscal sustainability of local government guarantees and subsidies
Each of these aspects is considered in turn using the data recorded in the project appraisal
document PAD as a baseline and comparing the current situation with the appraisal
forecasts\.
Utility Tariff Analysis
Information on the current tariffs levied by the LMC-2 PIUs is set out in Table 3\.1 below
and is compared with the tariffs at appraisal and projections made in the PAD for the level
of tariff needed to result in financial sustainability\. There was little change in the tariffs
charged for the utility services provided by the utilities during the implementation
period and therefore, given the increased costs resulting from the LMC-2 project and
ongoing price inflation, there is now increased rather than decreased reliance on
government subsidies\. The financial position of each company is discussed further below
under the heading Financial performance\.
Table 3\.1: Tariff Comparisons for Water, Wastewater and Solid Waste services
46
Sub-Component 2006 2010 2010actual 2015 2015 Notes
actual projected proj actual
Water Supply Sub-
components
Anshan, (yuan/m3) 1\.6 2\.0 2\.0 2\.3 2\.0
Fushun, (yuan/m3) 1\.1 n/a 1\.35 n/a 1\.65 2, 5
Haicheng, (yuan/m3) 1\.6 1\.9 1\.7 2\.1 1\.7
Panjin, (yuan/m3) 1\.6 1\.9 1\.85 2\.3 1\.85
Xingcheng, (yuan/m3) 1\.5 1\.7 1\.73 2\.3 1\.8 4
Yingkou, (yuan/m3) 2\.0 2\.6 2\.13 2\.6 2\.56
Wastewater Sub-
components
Fushun Wastewater, 0\.5 0\.8 0\.6 1\.05 0\.6
yuan/m3
Gaizhou Wastewater, 0\.35 n/a 0\.35 n/a 0\.35 2
yuan/m3
Panjin Wastewater, yuan/m3 0\.6 0\.8 0\.6 1\.1 0\.6
Yingkou Wastewater, 0\.5 1\.2 0\.5 1\.3 0\.6
yuan/m3
Solid waste sub-
components
Fushun Solid Waste, 4\.0 n/a 4\.0 n/a 4\.0 3
yuan/hh/mth\.
Panjin Solid Waste, 0\.0 n/a 3\.0 n/a 3\.0 3
yuan/hh/mth\.
Notes:
1\. All water supply tariffs include the water resource fee (where separately charged)\.
2\. No financial projections to estimate future tariff requirements were made at the time
of appraisal\.
3\. At appraisal, financial analysis was undertaken in respect of service costs but no
assumptions on service financing were made at that time\. Instead, sector financing
was to be studied under the GEF\.
4\. Tariff increased in Oct 2010, so tariff shown for 2010 is pro-rata\.
5\. In Fushun a rising block water tariff applies\. The blocks were in the range 1\.1 to
3\.0 yuan/m3 at appraisal and have subsequently risen to a range of 1\.65 to 3\.3
yuan/m3\. Only the tariff for the basic block, which accounts for the majority of
domestic consumption, is included in this table\.
Tariff Affordability
The general affordability of water and wastewater tariffs has improved very significantly
during the period of project implementation, as shown in Table 3\.2 below\. This is a result
of rapid economic growth (a general proxy for overall earnings growth) whilst over the
same time period there have only been very limited, if any, increases in the tariffs charged
for these services\.
47
Table 3\.2: Comparison of Tariff Increases with GDP growth
City 2006 Domestic Tariffs 2014 Domestic Tariffs % Total % GDP
tariff per
Increase Capita
increase
Water Waste Total Water Waste Total
water water
Anshan 1\.6 0\.5 2\.1 2\.0 0\.6 2\.6 23\.8 158\.01
Fushun 1\.5 0\.5 2\.0 1\.65 0\.6 2\.25 12\.5 268\.77
Gaizhou 1\.6 0\.35 1\.95 1\.65 0\.35 1\.95 0\.0 364\.09
Haicheng 1\.6 0\.5 2\.1 1\.7 0\.6 2\.3 9\.5 158\.01
Panjin 1\.6 0\.6 2\.2 1\.85 0\.6 2\.45 11\.4 254\.22
Xingcheng 1\.5 none 1\.5 1\.8 0\.6 2\.4 60\.0 219\.88
Yingkou 2\.0 0\.5 2\.5 2\.56 0\.6 3\.16 26\.4 364\.09
Notes:
1\. In Fushun the domestic water tariff operates on a rising block basis â the tariff
above is the charge applied to the first block\. So the minimum tariff increase is
12\.5%, with high water consumers facing larger increases dependent on the amount
they consume\.
2\. Haicheng and Gaizhou are assumed to have the same GDP as their parent city (i\.e\.
Anshan and Yingkou) as this was the assumption made during the project
preparations, to avoid double counting\.
Where sufficient data was readily available the affordability of water and wastewater
charges has been computed as a percentage of earnings for both the average and low
income households\. The results as presented in Table 3\.3 show that the current
charges are readily affordable by even the poorer members of society when compared
to the international yardstick, as referred to in the PAD, that affordability concerns start to
arise if charges exceed 5% of disposable earnings\.
Table 3\.3: Results of City Affordability Computations
City Average household costs Low income household
as percentage of costs as percentage of
disposable earnings disposable earnings
Anshan 0\.6% 0\.9%
Fushun 0\.3% 0\.5%
Gaizhou 1\.0% 1\.2%
Haicheng 0\.6% 0\.9%
Panjin 0\.5% 0\.9%
Xingcheng (see note) 0\.2% 0\.4%
Yingkou 0\.7% 1\.1%
Note: Xingcheng has yet to introduce a wastewater fee for domestic users and therefore
the calculation is based on water usage only, and reflects relatively low per capita usage\.
48
Fiscal Sustainability
At appraisal the participating local governments had adequate fiscal capacity for both, debt
service and incremental recurrent costs needed for the sustainable operations and
maintenance of the project facilities\. The fiscal capacity assessment assumed all LMC-2
costs would fall on the local government even where the PIU was a corporate entity with
access to its own funds and intended to be financially autonomous; this assessment was
very conservative\. There has been significant growth in municipal revenues since appraisal
as shown in Table 3\.4 below\. In view of these impressive growth rates and also in
consideration of the fact there has been no major cost escalation during the LMC-2
implementation, it is apparent that fiscal sustainability is now stronger than when it
was assessed and considered adequate at appraisal\.
Table 3\.4: Growth in Municipal Revenues over past 10 years
City 2005 2013 Percentage Annual
Revenues Revenues Increase Revenue
(RMB billion) (RMB (%) Growth
billion) (%)
Anshan 6\.303 37\.965 502% 55\.82%
Fushun 4\.719 14\.887 215% 35\.05%
Gaizhou 0\.682 6\.246 813% 90\.64%
Haicheng 1\.411 9\.364 564% 62\.61%
Panjin 3\.401 n/a n/a n/a
Xingcheng 0\.355 4\.744 1236% 137\.36%
Yingkou 4\.782 8\.920 73\.4% 8\.15%
Financial Performance of Covenanted PIUs
Financial projections have been prepared based on the terms of the LMC-2 project
agreement (PA) signed between Liaoning Province and the Bank\. The projections use the
available financial data to the end of 2013 (there was no time to update all projections using
the end of 2014 financial data)\. These projections assess the medium term financial
sustainability of the PIUs, and therefore, the use of 2013 data is considered to be acceptable
as no major unforeseen changes in the financial situation of the utilities occurred during
2014\. The main provisions of the PA were that, commencing in 2008 and each year
thereafter, the Anshan, Fushun, Haicheng, Panjin, Xingcheng and Yingkou water supply
companies, together with the Panjin and Yingkou wastewater companies need to achieve a
simple cost recovery ratio of 1\.0 and a debt servicing ratio of 1\.3\.
It is worth noting that the wording of the PA requirements does not exclude government
subsidies within the definitions provided and hence government subsidies are included
rather than excluded when calculating whether or not covenants have been complied with\.
The LMC-2 solid waste PIUs were not required to prepare annual financial projections\. In
addition Gaizhou Drainage Company was excluded from the definition of âProject
Companyâ as it was not an operational entity at that time, and Fushun Wastewater
Company also was not included in that definition\. Thus there is no requirement for either
Gaizhou or Fushun wastewater companies to meet the stated financial targets, although
49
they were required to prepare Financial Improvement Plans (FIPs) and update these
annually â which was done\.
Although at the time of the PAD it was stated that the Fushun Wastewater Company would
be the project owner for the Fushun wastewater component, in reality the Fushun Urban
Construction Bureau through the Fushun PMO managed the implementation of this sub-
component and Fushun Finance Bureau is providing the resources to service the debt\.
Summary of Results
The results of the financial projections exercise are summarized in Table 3\.5 below\. The
last column in the table gives an indication of the tariff increases, relative to the 2014 tariff
rate, that is needed to achieve full financial sustainability, i\.e\. no operating subsidy from
the local government\. In this context, the situation of the wastewater companies is more
complex because low collection rates and inadequate tariffs often impair the prospects for
financial sustainability\. This is the case in Gaizhou and Panjin, but is not a problem in
Yingkou where tariff collection performance is reported as being satisfactory\.
Table 3\.5: Summary Results of Financial Projections
Company Cost Recovery Debt Service Ratio Approximate
Ratio tariff
Increase needed
2013 2014 2015 2013 2014 2015
Anshan Water Supply 0\.93 0\.93 0\.96 0\.51 0\.03 1\.55 30%
Fushun Water Supply 0\.88 0\.90 0\.88 15%
Haicheng Water 0\.95 1\.00 1\.05 0\.53 0\.96 1\.73 55%
Supply
Panjin Water Supply 0\.75 0\.80 0\.99 1\.00 1\.02 1\.01 120%
Panjin Drainage See note 2 below\. 140%
Company
Xingcheng Water 0\.79 1\.00 0\.51 100%
Supply
Yingkou Water 0\.82 0\.80 0\.72 0\.65 0\.44 0\.51 35%
Supply
Yingkou Wastewater 1\.15 1\.1 1\.05 0\.88 0\.90 1\.06 0%
Notes:
1\. As stated above there was no requirement for Fushun or Gaizhou wastewater
companies to meet specific financial targets\.
2\. No financial projections for Panjin Drainage Company were prepared as that
company no longer has any responsibility for wastewater operations, and simply
operates as a project office\. Using a sector approach the future financing needs for
wastewater management in the city estimated that tariff increases of approximately
140% are needed to achieve full cost recovery\.
3\. 2014 and 2015 figures are based on assumptions made in the 2013 projections\.
4\. The 2015 estimate for Xincheng excludes any subsidy from the local government,
as no decision on subsidy had been made at the time the financial projections were
50
prepared\. However, based on past experience the local government will provide
subsidies necessary to ensure the companyâs financial viability\.
Conclusions
Each municipal government is providing sufficient budget or operating subsidy to ensure
all operations are fully financed\. However, tariffs are not at a level that provide for full
financial sustainability and in the case of some sub-components low tariff collection rates
are also a threat to future financial sustainability\. This situation may change as the national
government has announced new policies that recognize the need to increase water supply
charges as a water conservation measure, however this has not yet filtered down to the
LMC-2 project cities11\. Moreover, local government subsidies have increased significantly
over the life of the project as there is a marked reluctance to increase tariffs\.
The financial analysis undertaken during the last year of project implementation has
revealed that most of the entities face some financial challenges at present, and in several
cases receive operating subsidies from the local government; this means the financial
indicators in table 3\.5 above look better than their underlying financial performance and
sustainability\. Therefore, the financial autonomy of the water supply companies is
compromised by the continuing reliance on government subsidy due a widespread failure
on the part of the project city governments to increase the water and wastewater tariffs\.
11
In China it is typical that utility tariffs are increased infrequently but when they do increase, the
amount of increase is often substantial\. This is largely due to the long and complex application
and approval processes for tariff adjustments, and also because of the understandable reluctance
on the part of local politicians to impose unpopular measures\. However, given that in most cases
the tariffs have increased very little over the past 10 years whilst affordability has improved
significantly, there is clearly scope for most PIUs to achieve a position of financial sustainability
with just one sizable increase\. Specifically, with regard to water supply, central government
policy is for water utilities to operate on a commercial basis and, generally, subsidies should not
be provided\. Increasing water tariffs to economic levels is seen as an important water
conservation measure, and the introduction of rising block tariffs as already implemented in
Fushun is being actively encouraged\. Such reforms take time to plan and implement successfully,
but they also present opportunities to enhance financial sustainability\.
51
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Greg Browder Task Team Leader EASUR TTL
Hao Zhang Sanitary Engineer EASUR Wastewater Mgt
Axel E\. Baeumler Senior Economist EASUR Economic aspects
Hardy Wong Solid Waste Specialist Consult\. SWM
Eddie Hum Environmental Engineer Consult\. Envât & Urban
Patrick McCarthy Financial Specialist Consult\. Fin\. Mgt\. & FIRR
Terrence Driscoll Environmental Engineer Consult\. Environment
Yue Ma Environmental Engineer Consult\. Environment
Chaogang Wang Sr\. Social Scientist EASSD Land acquisition
Chongwu Sun Sr\. Environmental Specialist EASEN Environment
Zhentu Liu Sr\. Procurement Specialist EAPCO Procurement
Haixi Li Financial Management Specialist EAPCO FM
Mei Wang Senior Counsel LEGEA Legal matters
Anne Harrison Program Assistant EASUR Team support
Raja Iyer LMC Program Advisor EASUR Review & advice
Supervision/ICR
Chongwu Sun Senior Environmental Specialist GENDR Environment
Greg J\. Browder Lead Water Resource Management GWADR TTL (early)
Suhail Jmeâan Sr Financial Specialist EASWE TTL (later)
Guangming Yan Urban Specialist GSURR Urban issues
Guoping Yu Senior Procurement Specialist GGODR Procurement
Hiromi Yamaguchi Consultant GFADR
Jiang Ru Senior Environmental Specialist GENDR Environment
Eddie Hum Environmental Engineer Consult\. Envât & urban
Wastewater
Mingyuan Fan Sr Sanitary Engineer GWADR
&SWM
Vellet E\. Fernandes Temporary GWADR Team support
Xuemei Guo Country Program Assistant EACPQ Team support
Xujun Liu Consultant GSURR
Zhefu Liu Senior Social Development Spec\. GSURR Social Safeguards
Khairy Al-Jamal Sr\. Infrastructure Specialist GWADR TTL (most recent)
Toyoko Kodama Urban Specialist GWADR Indicators & ISR
Haixia Li Sr Financial Management Spec\. GGODR FM Specialist
Aimin Guo Social Development Specialist GSURR Social Safeguards
Yan Li Economist Consult\. Economist
Heinz Unger Municipal Engineer Consult\. ICR Prim\. Author
52
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
2005 23\.53 144\.55
2006 63\.88 321\.19
2007 42\.36 190\.58
Total: 129\.77 656\.32
Supervision/ICR
2008 12\.67 86\.83
2009 13\.06 77\.74
2010 17\.15 66\.51
2011 13\.91 74\.21
2012 14\.65 86\.18
2013 7\.77 43\.96
2014 23\.59 132\.13
2015 26\.45 166\.82
Total: 129\.25 734\.38
53
Annex 5\. Beneficiary Survey Results
No beneficiary survey was done\.
54
Annex 6\. Stakeholder Workshop Report and Results
GEF Stakeholder Dissemination Workshop12 â June 12, 2015 in Shenyang
1\. Summary of proceedings from urban water supply and wastewater management
Session 1: Public Utility Management and the Use of Benchmarking
This presentation included (i) distinguishing attributes of high performing public utilities
globally, (ii) the process of performance management, (iii) use and benefits of business
planning where utilities operated on a fully or quasi-commercial basis, and the use of
performance benchmarking to improve utility performance (with the World Bank IBNET
system described in detail, and key cost drivers for water and wastewater utilities\.
Points and best practices identified from the GEF work for broader dissemination were:
ï The performance issues faced by Liaoning water sector utilities are broadly the
same as anywhere else in the world, thus best practices from elsewhere are often
highly relevant;
ï Customers should be viewed as the key stakeholder group and consultative efforts
should be re-directed accordingly;
ï Water sector utilities were rarely in direct competition with each other and it was
often mutually beneficial to exchange views, compare and analyze performance,
and cooperate in making improvements;
ï As fixed assets represented a very high percentage of total capital investment in
water and wastewater systems, greater attention needed to be given to improving
asset performance, and optimizing asset life\. More attention than hitherto should
be given to asset maintenance systems, and asset rehabilitation as an alternative
to asset replacement;
ï Commercially- orientated integrated business planning was difficult to
implement in utilities that were necessarily locked in to a government planning
system that was functionally compartmentalized, as in Liaoning, although it
made sense where water supply companies (in particular) were given commercial
freedom and could benefit, in the right circumstances, both a utility and its
government regulators;
ï There was little sense in Liaoning developing its own bespoke benchmarking
system but local adjustments and enhancements to an established system were
likely to make sense
ï Earlier work in Shandong and pilot testing in several Liaoning utilities suggested
the IBNET set of indicators would be a practical set for use in Liaoning;
ï Fragmented institutional arrangements for wastewater management made the
introduction of a sector wide system of performance indicators and establishing
benchmarking partnerships difficult to achieve at the utility level\.
12
The dissemination workshop was held in lieu of a stakeholder workshop; it achieved
comparable outcomes\.
55
ï To avoid benchmarking being viewed as a threat, participation should be
voluntary rather than compulsory; and
ï Energy consumption is a key cost driver for both water supply and wastewater
operations and therefore improved energy management needs to be a key priority
in any cost reduction/efficiency improvement strategy\.
Session 2: The Use of Public Private Partnerships for Public Utilities
This presentation included (i) the definition and features of a PPP and some of the different
structures (models) used; (ii) existing PPP policies of central PRC government, including
recent 2015 guidelines and regulations of relevance to PPP implementation; (iii) case
studies of PPP both in China and overseas, that identify good and bad practices; and (iv)
details of the PPP work undertaken by the LMC2 GEF component and the conclusions
drawn\.
Points and best practices identified from the GEF work for broader dissemination were:
ï Better ways of mobilizing private financing are needed and this is very much the
situation in China as emerging government policies recognize\. Performance-based
approaches that push service providers to innovate and to deliver higher quality
services at lower cost are therefore called for in order to meet these challenges;
ï PPP is strongly supported by central government and being increasingly promoted
and supported by government guidelines and regulations;
ï A PPP center has been created within the Ministry of Finance and Liaoning has
also established a PPP center to promote PPP and provide guidance to public sector
organizations;
ï PPP should not be viewed as just an alternative financing vehicle but also as a driver
of improvements in service levels and the efficiency of service provision;
ï To be sustainable over a long contract period of up to 30 years, a PPP contract has to
create a win-win situation for both parties and trust between the parties needs to be
established with each understanding their role in the arrangement\.
ï The governments with the most developed PPP markets focus on using the market to
enable the public sector to achieve value-for-money, which is driven primarily by:
ï Risk transfer: relieving government of the cost of asset-based risksâthat is,
risk directly associated with build or operating assets
ï Whole-of-life costing: through whole-of-life costing the government can
achieve optimization between capital costs and operating and maintenance
costs\.
ï Innovation: providing wider opportunity and incentive for innovative
solutions as to how service requirements can be delivered
ï Asset utilization: developing opportunities to generate revenue from use of
the asset by third parties\.
ï Key success factors to establishing a conducive environment and facilitating a
successful arrangement include:
ï strong government support;
ï meaningful stakeholder consultation;
ï a stable legal and regulatory framework, that ensure both public and private
interests are met;
ï a contractual framework that reflects the economics of the project,
56
ï the rational allocation of risk among parties; and\.
ï well-understood and fair exit mechanisms\.
ï Currently, the principles of PPPs are not well understood in China and a significant
number of PPP contracts of different types have failed to meet their objectives or
run into other problems due to:
ï inadequate due diligence by one or both parties;
ï a lack of transparency and competition in the procurement process;
ï insufficient attention given to risk allocation;
ï contracts that are biased in favor of one party; and
ï contracts are not sufficiently detailed to allow changes in circumstances to be
readily managed or to protect the interests of both parties\.
Session 3: The use of Geographic Information Systems (GIS)
This presentation included (i) an overview of GIS and its application to improving the
management water supply networks, (ii) details of the GIS system development work
undertaken for Anshan, Haicheng and Yingkou Water Supply Companies, (iii) an
explanation of the systems installed, (iv) the functionality of the software package (v)
potential applications that will improves standards or efficiency of water supply provision,
and (vi) the key success factors in a successful water network GIS implementation\.
Points and best practices identified from the GEF work for broader dissemination were:
ï Water and wastewater utilities are best advised to engage specialist support to help
them with the design and implementation of a network GIS system\.
ï Under the GEF, separate contracts were let for (i) system design, software
acquisition, implementation and initial training and support; and (ii) data gathering,
verification and system input\. This split in contractual responsibilities worked well
being aligned with the expertise and experience of the different contractors\.
ï Data verification is a crucial process in ensuring the output from the implemented
system has user confidence\.
ï Ongoing data management is equally important and utility procedures and record â
keeping systems often need to be re-engineered to ensure GIS data update is fully
integrated with day-to-day procedures\.
ï It is envisaged GIS systems in each of the 3 client companies will continue to evolve
and integrating GIS with other utility business systems will be explored to give
expanded benefits in the medium term (e\.g\. links with planned preventative
maintenance, customer billing, operations SCADA, and financial management
systems, as well as network modeling software)\.
Session 4: The Management of Non-Revenue Water (NRW)
This presentation included (i) the benefits to be obtained from NRW reduction (ii) the
composition of NRW; (iii) developing a systematic approach to NRW reduction via 5 key
questions (iv) establishing a water balance and other best practices to answer the key
questions below; (v) the four pillars of leakage management; (vi) use of performance
indicators to evaluate progress in NRW reduction; and (vii) using asset management and
GIS to support NRW reduction efforts\.
Points and best practices identified from the GEF work for broader dissemination were:
57
ï Liaoning suffers from extremes and rapid changes in climate placing great stress
on water networks, and many cities have areas of old and poorly installed pipe
networks;
ï Under such a situation Liaoning is very unlikely to ever achieve best practice results
and the inherent situation dictates that active NRW management will need to be a
continuing priority;
ï Assessments made during the GEF work confirmed that the participating LMC2
water utilities were indeed very poorly performing and all need (and are) treating
NRW reduction as a high priority; and
ï The five key questions to answer in addressing NRW management problems, in the
correct sequence are:
1) How much water is being lost?
2) Where is it being lost from?
3) Why is it being lost?
4) What actions can we take to reduce losses?
5) How can we evaluate our progress?
ï Priority based replacement of water meters in older apartment buildings in Panjin
had been assessed as leading to a 40% improvement in water sales\.
ï Improved pressure management within water distributions systems is often a key
contributor to reduced leakage;
ï Specialist leakage control technology and equipment requires skilled trained
operators to make best use of it\. This in turn suggest the creation of specialist
leakage detection teams within each water utility;
ï Link NRW reduction with other programs like Asset Management and GIS\.
Session 5: Technology utilization and Case Studies in NRW Management\.
This presentation included (i) a snapshot of the NRW and water leakage challenges faced
by Chinese water utilities, (ii) an introduction to some modern technology that could assist
water utilities in their NRW management; and (iii) some specific case studies in China
where such technology had brought good results\.
Points and best practices identified for broader dissemination were:
ï China has 20% of the World population but only 7% of the usable water resources;
ï Even this statistic understates the water management challenge as water resources
are unevenly distributed across China with some of the more densely populated
areas having the least per capita resources\. Liaoning was in this situation and makes
water conservation a priority;
ï Modern technology can greatly support a systematic management strategy to
reduce levels of non-revenue water; and
ï Specialist suppliers are available to advise and support local water utilities and will
provide necessary user training
Session 6: General Discussions and Questions Session
The main areas of delegate interest, exchanges of view and questioning were as follows:
(i) Recent announcements on PPP policy, regulations and guidelines by central
government, and how to select a suitable PPP models for specific cases;
(ii) Specific questions on NRW technology and systems;
58
(iii) Concerns that use of performance indicator systems meant more work for
ordinary staff without any obvious reward for them â this made gaining their
cooperation difficult\. It was suggested that systems first be piloted on a small
scale and then built into enhanced MIS designs, thus largely automating the
process â this potentially had the benefit of enriching job content rather than
increasing workloads; and
(iv) An exchange of views on GIS implementation and the key factors in getting it
right, especially the importance of the data verification process to ensure
systems output could be trusted and used with confidence\.
2\. Summary of proceedings from municipal solid waste management
Session 1: Project Summary of Strategic Planning of Urban Solid Waste Disposal
This presentation gave an overview of the LMC-2 â âStrategic Planning of Urban Solid
Waste Disposal: Fushun, Panjin, Yingkou EDZ and Gaizhou Cityâ, introducing project
background, objectives, project activities implementation process and outputs and
outcomes\. Also, the results and best practices internationally and domestically were
disseminated and the technical and administrative staff from local waste management
departments in Liaoning provincially trained\.
Session 2: Urban-Rural Integrated Solid Waste Management
(i) Sophisticated solid waste management and waste separation
(ii) Urban-rural solid waste collection and transportation system
- National policies and standards for rural waste treatment;
- Solid waste collection and transportation principles and methods;
- Urban-rural integrated (URI) waste management in Switzerland\.
(iii) URI Solid Waste Management Plan for Panjin City\.
- Present situation and evaluation of solid waste management system;
- Development Forecast;
- URI solid waste management mode;
- Plan of solid waste sorted collection;
- Plan of URI solid waste collection, transportation and treatment;
- Investment plan of solid waste treatment;
- Safeguards and benefit analysis\.
Session 3: Current Status and Outlook of Waste to Energy in China
(i) Solid waste management and utilization in China
- Social problems caused by municipal solid waste;
- Current status of waste generation in China;
- Solid waste treatment method in China;
- Waste management hierarchy;
Recycling or waste-to-energy (WTE) â Principles of efficiency\.
(ii) Current status of WTE in China
- Advantages of WTE;
59
- Traditional WTE methods: landfill gas utilization and heat or power from incineration
& landfill gas, incl\. introduction to this technology in China;
(iii) New WTE methods based on waste separation
- Organic waste: biogas and fertilizer;
- High heat value waste: incineration/gasification/RDF\.
Session 4: Current Status and Trend of Solid Waste Incineration
- Environmental policy system and waste incineration in Europe;
- Waste incineration in North America;
- Waste incineration in Japan and South Korea;
- Waste treatment and incineration in developing countries;
- General condition of waste treatment in China;
- Construction of waste incineration plants in China;
- Waste incineration standards in China;
- New features of waste incineration industry in China;
- Outlook of waste incineration industry\.
Session 5: Leachate Treatment Technologies and Typical Cases in China
- Characteristics of leachate;
- Standard and regulations on leachate treatment;
- Current technologies and case studies of leachate treatment;
- Main issues existing in current technologies;
- New process for leachate treatment;
- Concentrated leachate treatment technologies;
- Operational management and construction modes\.
Session 6: Rural Solid Waste Management in China
- Current status of rural SWM: almost no management or simple disposal;
- Where does the rural waste come from and where does it go?
- Serious problems of rural waste in China;
- How do the developed countries cope with rural solid waste?
- Waste recycling: a way out?
3\. Other Observations
The workshop â although fairly brief â also provided a useful opportunity for
representatives of the different city utilities to network amongst themselves, and to discuss
issues of mutual concern and interest\. A comprehensive set of documentation was issued
to all delegates, and a name list and contact details of all delegates is being made available
by LUCRPO to support further networking in the future\.
Report prepared by LUCRPO â June 2015
60
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
The following summary is the main text of the Borrowerâs ICR dated October 2015
1\. ASSESSMENT OF PROJECT OBJECTIVE AND QUALITY AT ENTRY
Original Project Objectives
As defined in the Project Appraisal Document (PAD) Report No\. 38278-CN, dated May
15, 2007, the project development objective was to improve the performance and
sustainability of water supply, wastewater, and solid waste services in the LMC-2 cities\.
Enhanced wastewater and solid waste services will also help reduce pollution into the
Bohai Sea and contribute to improving Bohai Sea water quality\.
The Global Environment Objective of the LMC-2 project with the GEF enhancements is
the reduction of land-based pollution into the Bohai Sea through investments in wastewater
and solid waste infrastructure and improved utility regulation, planning and management
in the LMC-2 cities and throughout Liaoning Province\.
1\.1 Revised Objectives
Although there have been changes in project content and in detailed design of some
components during implementation, there has been no change in the project objectives
during implementation, which have remained as stated in the appraisal document\.
1\.2 Original Components
The project was structured as four separate components with the project scope of each
described in Schedule 1 of the loan agreement: (A) wastewater management; (B) water
supply management; (C) solid waste management; and (D) institutional development\.
The cities participating in the different components were expected to be:
a) Wastewater interception & treatment sub-components in 4 cities of Panjin, Yingkou,
Fushun and Gaizhou;
b) Water treatment and distribution sub-components in 5 cities of Anshan, Haicheng,
Panjin, Yingkou and Xingcheng;
c) Solid waste management sub-components in 3 cities of Panjin, Fushun and Yingkou
EDZ;
d) Institutional development, comprising institutional capacity building, technical
assistance and training was intended to benefit all cites with dissemination and
replication within Liaoning and across China as appropriate\. This component was
to be financed in part by the loan (package A) and in part by GEF grant (packages B,
C, D & E)\.
1\.3 Project Changes
Significant changes that occurred within the scope of infrastructure components included:
(1) Fushun wastewater sub-component was reduced in size and scope at the MTR; (2) the
Yingkou EDZ solid waste sub-component was dropped; and (3) Panjin added a new project
of Comprehensive Urban and Rural Area Solid Waste Collecting System\.
61
Changes were also made to the institutional development component of the project,
especially to the GEF funded packages, with the most significant of these affecting the
proposed public utility capacity building program\.
1\.4 Project Delays
The original closing date of the loan was December 31, 2013\. However, implementation
of Gaizhou wastewater, Haicheng and Fushun water supply were slower than expected,
and the Panjin solid waste sub-component was extended in scope, meaning that additional
time was required to complete the physical works\. In addition there were design issues and
serious procurement delays in respect of the GEF funded technical assistance packages
forming a large portion of institutional development component of the project\. In order to
maximize loan utilization and ensure the achievement of development objectives, the loan
closing date was therefore extended to June 30, 2015 with the agreement of the PRC
Ministry of Finance, and the Bank
In addition not all contracts earmarked for early completion under retro-active financing
arrangements were implemented early as envisaged in the project implementation program,
with extensive delays in implementing package HWS/1\.3\. This was due to late domestic
approval of the preliminary design for Haicheng water supply, which was not obtained
until October 2011\.
1\.5 Quality at Entry
Project preparation of the physical investments at appraisal has been proved largely
satisfactory\. The feasibility studies and engineering design for each project component (as
well as for the overall project) proved to be appropriate\. Most of the technical designs
employed advanced yet commercially available technologies that proved to be fit for
purpose\. The procurement plan, as appraised, proved to be executable, but some of the
contracts earmarked for retro-active financing were delayed indicating preparations and /or
the need for these were not as advanced as claimed by the relevant PIUs at Appraisal\.
However, some of the appraised KPI targets were found to be impractical and therefore
revised during loan restructuring, and some legal covenants required by the Bank did not
adequately take account of the local situation\.
Project preparation for the Institutional Development resulted in a design that can be
considered to have responded to the needs of Liaoning\. However, unfortunately, it did not
prove to be implementable in its intended form due in part to a lack of âbuy-inâ from the
project cities and their rapidly changing needs\.
2\. ACHIEVEMENT OF OBJECTIVE AND OUTPUTS
2\.1 Outcome / Achievement of Objective
1) Wastewater Component
The municipal wastewater sub-components in Panjin and Yingkou are already in operation
achieving their design capacity (100,000 m3/d in each case) and producing effluent that
62
meets the required quality standards\. A wastewater sub-component in Gaizhou is in
operation and producing effluent that meets the required quality standards, but is not yet
achieving its design capacity (50,000 m3/d), due to the cityâs wastewater collection network
being incomplete\. All the three new WWTP have passed examination and acceptance
testing by Liaoning EPB\.
The Project has constructed wastewater treatment facilities with design capacity of 250,000
m3/d, and made BOD discharge reduction of 3,500 t/a in year 2014\. Total BOD discharge
reductions contributed by 6 WWTPs in 4 project cities with Bank loan financing is about
17,629 t in year 2014\. This will contribute significantly to protecting water quality in the
Bohai Sea and the component can be considered to have fully achieved its objectives\.
Indeed, since the new WWTP in Panjin and Yingkou were commissioned there is evidence
of some quality improvements in those receiving coastal waters\.
2) Water Supply Components
The Anshan and Yingkou WTPs are already in operation achieving their design capacity
(120,000 and 70,000 m3/d) and producing water that meets the PRC urban water supply
quality standards\.
The extensions to the Haicheng WTPs are capable of meeting their increased design
capacity (100,000 and 30,000 m3/d respectively and are producing water that meets the
PRC urban water supply quality standards\. Average demand is currently only 65,000 m3/d
but can rise to between 85,000 to 90,000 m3/d during winter peak time\. The most significant
reason for this shortfall in demand is that Haicheng is no longer required to export water
to Anshan due to the extensive development and increased utilization of the Dahuofang
surface water resource and conveyance system\.
The Project has constructed water treatment capacity of 260,000 m3/d in total, installed
184,330 water meters, and constructed 495 km of pipelines, with a benefiting population
of 1\.85 million in the service area\. The component can be considered to have substantially
achieved its objectives\.
3) Solid Waste Components
The solid waste sub-component in Fushun is already in operation with a design capacity of
1,400 t/d\. Currently it is receiving on average some 1,000 t/d\.
The solid waste landfill in Panjin was taken out of the project, but was successfully
implemented under the BOT mode of implementation, rather than with Bank funds; LMC2
Loan funds provided associated equipment and vehicles to improve solid waste collection
and conveyance\. This has contributed significantly to improving urban sanitation in the
two districts\. Construction of Panshan transfer station and procurement of vehicles has
been substantially completed, but 3 types of trucks were identified as technical deviation
and could not be accepted\. Dawa transfer station has been cancelled from contract
PSW/21\.2 (after receiving âno objectionâ from the Bank) because the proposed proved to
be unsuitable\. It will now be constructed later by local funding once a suitable site has been
identified\.
63
2\.2 Output by Components
(a) Fushun Wastewater (RMB 219\.3 million PAD; RMB 73\.7 million after MTR, RMB
42\.4 million by completion)
This sub-component was implemented between 2009 and 2013, in accordance with the
reduced scope agreed by the Bank during the MTR\.
(b) Yingkou Wastewater (RMB 376\.7 million PAD; RMB 331\.3 million by completion)
This sub-component has been satisfactorily implemented as appraised between 2008 and
2013\. It is now providing 100,000 m3/d of secondary treatment capacity, and about 90% of
total municipal wastewater flow from the city is now being treated in compliance with the
relevant national discharge standard (class 1A)\.
(c) Panjin Wastewater (RMB 319\.3 million PAD; RMB 292\.5 million by completion)
This sub-component has been satisfactorily implemented between 2008 and 2015 in
accordance with the revised FSR agreed by the Bank\. It is now providing 100,000 m3/d of
secondary treatment capacity, and about 90% of total municipal wastewater flow is now
treated in compliance with the relevant national discharge standard (Class 1A)\.
(d) Gaizhou Wastewater (RMB 123\.7 million PAD; RMB 119\.3 million by completion)
This sub-component was implemented as appraised between 2008 and 2015\. It is now
providing 50,000 m3/d of secondary treatment capacity, and about 70% of total municipal
wastewater flow from the city is now being treated in compliance with the relevant national
discharge standard (Class 1B)\.
(e) Anshan Water Supply (RMB 240\.6 million PAD; RMB 186\.8 million by completion)
This sub-component was satisfactorily implemented between 2009 and 2013, in
accordance with the revised FSR agreed by the Bank\. It is now providing 120,000 m3/d of
potable water to the local residents\.
(f) Haicheng Water Supply (RMB 117\.1 million PAD; RMB 76\.1 million by
completion)
This sub-component was implemented between 2012 and 2015, with reduced scope for
pipeline as agreed with the Bank during implementation\. It is now capable of providing
an additional 70,000 m3/d of potable water to the local residents, bringing the total capacity
to 30,000 m3/d\.
(g) Yingkou Water Supply (RMB 289\.9 million PAD; RMB 310\.1 million by
completion)
This sub-component was satisfactorily implemented between 2009 and 2013, in
accordance with the PAD\. It is now capable of providing an additional 70,000 m3/d of
potable water to the local residents\.
(h) Panjin Water Supply (RMB 160\.4 million PAD; RMB 74\.5 million by completion)
This sub-component was implemented between 2010 and 2014, with reduced scope as
agreed with the Bank during implementation\. This was because the remaining residential
area where it was planned to install new pipelines and water meters (as per the PAD), was
replaced by new buildings and water meters by property developers\.
64
(i) Fushun Water Supply (RMB 213\.6 million PAD; RMB 251\.5 million by completion)
This sub-component was implemented between 2011 and 2014, in accordance with a
revised plan as agreed with the Bank during implementation\.
(j) Xingcheng Water Supply (RMB 36\.0 million PAD; RMB 29\.9 million by
completion)
This sub-component was satisfactorily implemented between 2008 and 2010, with minor
change to that in the PAD\.
(k) Fushun Solid Waste (RMB 87\.8 million PAD; RMB 118\.0 million by completion)
This sub-component was satisfactorily implemented between 2010 and 2015, in
accordance with a revised plan as agreed with the Bank\.
(l) Panjin Solid Waste (RMB 264\.9 million PAD; RMB 302\.7 million after MTR; RMB
113\.2 million by completion)
This sub-component was implemented between 2010 and 2015, except for the Dawa
transfer station which â due to site complications â is still to be completed by local funding
(NBF), once an alternative site is found\.
(m) Institutional Development (RMB 21\.6 million PAD; RMB 14\.48 million by
completion)\. This component was fully implemented between 2008 and 2015, but with
changes to the GEF subcomponent made as agreed at the MTR\. The reduced cost of this
component is largely due to changes in the RMB: USD exchange rate and procurement
savings and not any significant downsizing of component scope\.
Project Management & Asset Management (Package A)
Based on the PAD this sub-component was to be implemented between 2007 and 2013,
and involved four TA packages (A1, A2, A3 and A4)\. Package A2 and A4 subsequently
became non-banked financed (NBF)\. Packages A1 (as revised in agreement with the Bank)
and A3 were satisfactorily implemented between 2007 and 2015\.
GEF Funded Technical Assistance to support the Global Environmental Objective
The appraised design of this technical assistance comprised 6 contracts and was to be
implemented from 2008 to 2013\. This part of the component was restructured following
the MTR and was satisfactorily implemented in 10 contract packages between June 2013
and December 2014\.
2\.3 Economic Benefits
The nature of the works and benefits created methodological challenges and benefit
quantification difficulties during project preparations\. Therefore, taking account of the
clear objectives of the project, the original economic analysis used for appraisal of the
project comprised of: i) a qualitative description of benefits; and ii) least cost analysis\.
All the physical project outputs have been important as facilitating environmentally
sustainable growth in the project cities and Liaoning Province\. Economic growth in
Liaoning has increased from 221\.43 billion RMB in 2006 to 695\.6 billion RMB in 2013,
an average increase of 229%\. Specific economic benefits include substantial benefits in
terms of service quality, water use efficiency and improved sanitation; resulting in
65
important health, environmental and aesthetic benefits, and the preservation of economic
activities in the Bohai Sea, such as fisheries, that are water quality dependent\.
2\.4 Financial Performance
The financial viability of the Project water and wastewater components was assessed based
on the ability of the water and wastewater tariff to generate sufficient revenues for the
project companies to meet their principal financial targets\. These targets were a cost
recovery ratio of at least 1\.0 and debt service coverage of at least 1\.3, set on the assumption
that all water and wastewater charges revenues are retained by, or transferred to the project
companies\.
This reform has yet to take place for wastewater companies, and therefore both wastewater
project companies (Panjin and Yingkou) are technically non-compliant with the related
loan covenants\. However, in all four cities with wastewater sub-components, the municipal
government is providing adequate financial resources to ensure the full operation of the
new WWTPs, as well as other wastewater infrastructure\.
2\.5 Institutional Development
The project implementation units (PIUs) for all the LMC-2 water and wastewater sub-
components are legally autonomous state-owned enterprises established under PRC
company law, although the wastewater companies, especially, have negligible financial or
managerial autonomy\. Solid waste services in the project cities continue to be directly
provided by government agencies\. Institutional development initiatives focused primarily
on: (i) project management support and capacity building; (ii) strategic sector planning;
and (iii) public utility capacity building, with specific attention paid to the management of
non-revenue water, asset management, and operational efficiency and systems
optimization\.
2\.6 Procurement
All procurement was undertaken in accordance with WB guidelines and there were no
incidents of mis-procurement during LMC-2 implementation\. All bidding documents were
subject to review by TA consultants and approval by LUCRCPO, or the WB âprior reviewâ
procedure\. These arrangements operated successfully\. Some relatively minor procurement
issues arose from time to time during the implementation which were dealt with in an open
and transparent manner and by involving the Bankâs procurement specialists as needed\.
2\.7 Poverty Alleviation and Social Impacts
Whilst poverty alleviation and social impact were not primes objectives of the project, the
water, wastewater and solid waste components have directly provided significant local
temporary job opportunities during construction and over 300 permanent jobs on the water
and waste treatment plants and disposal facilities\.
The water supply improvements in Xingcheng have provided for 24-hour supplies to all
parts of the urban area, and also increased service reliability during the peak tourist season,
with tourism critical to the local economy and the livelihoods of many residents\.
66
The significant reduction in the discharge of untreated wastewater and improved solid
waste collection and disposal have improved the urban environment and living conditions
in the cities, reduced the risk of health concerns due to groundwater contamination and
helped preserve the viability of the Bohai Sea fishery resource\. As a facilitator of
sustainable economic development, the Project will have continuing beneficial poverty
alleviation and social impacts, because economic growth has been shown to be the most
influential factor in reducing poverty and improving livelihoods\.
2\.8 Environmental Impact
No significant environmental management issues arose during project construction and the
environmental management plans prepared to mitigate potential adverse environmental
impacts resulting from the Project activity were implemented in full\. The Project is set to
fully achieve the beneficial impacts that were identified in the PAD Environmental
Assessment, and although it will only be possible to assess the full environmental impact
some years after project completion, specific benefits are already apparent\.
2\.9 Land Acquisition and Resettlement
All land acquisition and resettlement of affected persons was successfully dealt with in
accordance with the resettlement plans approved by the Bank\. Some construction delays
did arise as a result of land acquisition and resettlement issues, most notably in Gaizhou
and Panjin\.
2\.10 GEF Activities
GEF funded capacity building activities have laid a foundation for improved performance
of Liaoning public utilities, in strategic sector level planning and the use of public private
partnerships (PPP)\. In addition; (i) greater knowledge has been obtained of the ecology of
the Dahuofang reservoir watershed, which is the key water resource of the Province, and
draft mechanisms developed for its preservation; and (ii) a pilot system of urban-rural
integration of solid waste collection and disposal has been designed for implementation in
Panjin, which it is hoped can be a model for future integration of public utility services
across the urban-rural divide\.
2\.11 Monitoring and Evaluation Systems
LUCRPO, supported by the project management consulting team, established and
subsequently operated a comprehensive monitoring, and reporting system for the project\.
The system included (i) the monitoring of key implementation progress milestones; (ii)
Land acquisition and resettlement; (iii) procurement (planning, bidding and contract
awards); (iv) construction progress and contract completions; (v) environmental
compliance; and (vi) key output performance indicators\.
Customized templates were prepared and issued to individual PIUs to collect information
and the updated progress status on a half-yearly basis, and the completed templates were
then used to prepare half-yearly progress reports to the Bank\.
67
2\.12 Financial Management
Financial record-keeping and project accounting has been conducted in accordance with
relevant guidelines of the PRC Ministry of Finance as apply to all sovereign foreign loans,
including those of the Bank\. At project commencement project management manuals were
prepared and issued by the Liaoning Provincial Department of Finance (LPDF), and
included procurement, payment and disbursement procedures\.
Aggregated project accounting statements were prepared on a six monthly basis\. The
annual project accounts were audited (by Liaoning Provincial Audit Office on behalf of the
China National Audit Office) as required in the loan agreement and submitted to the Bank,
together with the audit report\. No significant audit issues arose during project
implementation\.
During the course of project implementation the old paper-based payment requisitioning
and disbursement system was upgraded to an electronic online system\. This new system
enhancement resulted in big efficiency improvements to the processing of loan
disbursement claims\.
3\. MAJOR FACTORS AFFECTING IMPLEMENTATION AND OUTCOME
3\.1 Factors Outside the Control of Local Government or the Implementing
Agency
(a) The exchange rate of US$ with RMB was 1:6\.8 at the time of appraisal (2007), by
January 2010 the rate had fallen to 1:6\.3 and by June 2014 stood at 1:6\.15\. This
significantly reduced the real value of WB loan and increased the level of counterpart
funding required as most contracts were denominated in Chinese RMB\. The need for
unanticipated supplementary financing created difficulties for some of the project
companies, exacerbated by budgetary constraints, and caused some payment delays to
contractors\. The Fushun and Xingcheng water supply sub-components were delayed
and/or downsized at least in part due to failures in providing counterpart funding as needed\.
(b) Revised eligibility criteria established by the national government meant it was not
feasible to implement many of the overseas training programs that had originally been
designed into the project\.
3\.2 Factors Generally Subject to Local Government Control
(a) Approval of the preliminary design for Haicheng water supply was delayed by some 3
years as the original FSR endorsed expanded use of groundwater sources, as the preferred
option\. This conflicted with a new provincial water resources policy to restrict groundwater
use and required special investigation and justification, before the proposals were allowed
to proceed\.
(b) In 2010, Panjin city decided to utilize a BOT contract in place Bank funding for
construction of the sanitary landfill, this was disappointing, given the efforts made by both
Liaoning and the Bank to prepare and appraise this sub-component for inclusion in LMC2\.
68
However, there has been no detriment to the intended outcome and the BOT contract is
operating satisfactorily\. At the same time Panjin proposed a new project of
âComprehensive Urban and Rural Area Solid Waste Collecting Systemâ in 2011, to
achieve integration of solid waste management in urban and surrounding rural areas\. This
innovative proposal received strong support from Liaoning and the Bank, but changed the
original scope of the sub-component and resulted in an extended project period being
required\.
(c) Yingkou EDZ proposed a change of the project scope by introducing an incineration
facility in 2009\. This proposal could not be supported by Liaoning Province nor the Bank
and the sub-component was therefore deleted during the MTR\.
(d) Counterpart funding issues, and a decision to change the site for the new solid waste
landfill, caused initial delays for the Fushun solid waste sub-component\.
(e) The redesign of the GEF funded capacity-building sub-components and changing needs
of the project cities delayed the implementation by a total of 5 years\.
(f) Policy decisions by LPG to (i) develop and actively promote the Dahuofang water
resource and transfer scheme; and (ii) impose stringent controls on groundwater abstraction
for urban water supplies resulted in major changes in design and in some cases delays and
impacts on outcomes in respect of the Anshan, Haicheng and Panjin water supply sub-
components and the urban water supply strategies of those cities\.
(g) Other political decisions, often resulting from changes in personnel, led to some delays
and changes of scope in several other sub-components, especially Gaizhou and Fushun
wastewater sub-components\.
(h) The complexity of the disbursement procedure for consulting services package A1
impaired the efficiency of the services, and therefore contributed to procurement and
construction delays\.
(i) Despite the agreements reached with the Bank at the time of appraisal, local government
has not complied with financial covenants due to a failure to increase user charges\.
3\.3 Factors Generally Subject to local Project Company Control
Most of the engineering design had been based on sound engineering information and
proved satisfactory\. However, upon the request of some project companies for the
purpose of speeding up project implementation, some of the engineering designs were
prepared without detailed site and geotechnical information resulting in unnecessary
and preventable variations, and delays during construction\.
Land acquisition and resettlement of LMC2 were generally satisfactory, however, in a
few cases, such as Gaizhou River Rehabilitation Project (GWW/1\.4), Panjin pumping
station (PWW/1\.3), and Dawa transfer station (PSW/1\.3), the land acquisition and
resettlement process resulted in a delay in project implementation\.
Poor knowledge of Bank-financed contract conditions by contractors, construction
supervisory staff, and some PIUs led to some difficulties in processing contract
69
variations and it was a principal cause of disbursement delays due to submission of
poorly documented claims\.
Changes to the scope or detailed design during implementation, or poor coordination
with local planning created problems leading to delays and/or higher costs\. This was a
particular problem in Gaizhou and Haicheng\.
Poor cost estimation in the original preparation for the Gaizhou wastewater component
led to major cost escalation, requiring significant parts of the planned sewage
interception facilities to be shelved and removed from the project\. As a consequence,
the new Gaizhou WWTP constructed under the project, remains only about 50%
utilized\.
In contrast, the Panjin wastewater company, following a review of wastewater demand,
argued successfully to increase the capacity of the proposed new Shuangtaizi WWTP
from 50,000 m3/d to 100,000 m3/d and this has resulted in a significantly increased rate
of wastewater treatment in that district of the city, than would otherwise have been the
case\.
3\.4 Costs and Financing
(a) Costs
A breakdown of project cost by component is provided in Annex 1 where final expected
costs are contrasted with those at Appraisal\. Total project cost at the appraisal was RMB
2562\.90 million, to be partly financed by US$173\.00 million of WB loan\.
The completion cost of LMC2 is currently estimated at RMB 1954 million which is 76\.3%
of the estimated project cost at appraisal\. There were three major reasons for this cost
variation:
ï Water supply sub-components: The Anshan sub-component was re-designed, whilst
the sub-components in Panjin and Haicheng were downsized\.
ï Wastewater sub-components: The main variation relates to the very significant
downsizing of the Fushun sub-component\.
ï Solid waste sub-components: The cost variation arises from the cancellation of the
Yingkou EDZ sub-component and the implementation of the Panjin landfill facility
using BOT financing rather than WB loan\.
(b) Financing
The necessary counterpart funds were provided through a mixture of state bonds,
commercial borrowing, the resources of the municipal governments and implementing
agencies self-financing\. The final financing split is expected to be 51\.9 % (Bank Loan
funds) to 48\.1 % local funding (assuming the exchange rate of USD1\.00 to RMB6\.3),
compared to the 57\.1% Loan to 42\.9% local funding estimate at the Appraisal (with
exchange rate of 1:7\.7)\.
70
4\. SUSTAINABILITY
4\.1 Prospects for Sustainability
We recognise sustainability of the Project needs to be viewed in terms of (a) whether an
appropriate institutional arrangement has been set up to provide for managerial autonomy
and sustainability; (b) the ability to operate and maintain the facilities; and (c) financial
sustainability\. In our view the overall Project can be considered partly sustainable against
these criteria\. The new infrastructure constructed under the project is all being well
operated and maintained, and each municipal government is providing sufficient budget to
ensure these operations are fully financed\. However, tariffs are not at a level that provide
for financial sustainability and in the case of some sub-components low income collection
rates are also a threat to financial sustainability\.
This situation may be set to change as in late 2013 the PRC national government announced
new policies which recognized the need to increase water supply charges as a water
conservation measure\. However as yet this has not filtered down to the LMC2 project
cities and it is not unusual in China for some detailed policy announcements to take an
extended period before detailed regulations are formulated at provincial level and
implementation proceeds\. In the meanwhile, subsidies have increased significantly over
the life of the project\.
4\.2 Transition Arrangements to Regular Operation
Wastewater
All three of the municipal wastewater treatment plants have made a largely trouble-free
transition to normal operations, although there were initial teething problems at Gaizhou,
caused in part by the current low hydraulic loading of the WWTP\. However, Gaizhou
benefitted from GEF funded operational support TA (packages B1 and D), and the WWTP
has now passed EPB inspection and demonstrated it can meet required standards\.
As it did for No\.1 WWTP constructed under LRBP, Panjin has signed an outsourcing
contract for the operation and maintenance of the WWTP with an experienced contractor
to give assurance over operational standards\. In all three cities, use has been made of
operational procedures developed jointly between the PIUs and the GEF consultants\.
Water Supply
All new treatment facilities were constructed by well-established water supply companies,
no significant issues were encountered, and all are operating well\.
Solid Waste
The only sanitary landfill constructed under LMC2 was in Fushun, whose Sanitation
Department also benefited from GEF funded technical assistance (package C)\. The landfill
is being operated to required standards, although following concerns expressed by the Bank
71
during their ICR mission, LUCRPO has asked the PIU that detailed procedures for
providing daily cover were reinforced\.
The new Panjin sanitary landfill constructed under the BOT mode is considered an LMC2
associated project and based on local EPB inspections it is also being operated to required
standards\.
5\. BANK AND BORROWER PERFORMANCE
5\.1 Bank
The Bankâs performance is considered to be satisfactory both during the design and
implementation phases\. The support of WB staff during their missions to Liaoning, was
appreciated by LPG, LURPCO and all the PIUs involved\. During the phase of
identification, preparation and appraisal for the project, Bank staff provided helpful
guidance to assist LUCRPO and the PIUs in project preparation\. During the
implementation phase, the Bank deployed supervision missions (on average twice a year)
to help Liaoning to achieve project objectives\. Generally, the bidding documents & bid
evaluation reports (subject to prior Bank review) were reviewed and approved by the Bank
in a timely manner with no delays\. The Bank has also done its best to provide guidance in
dealing with (i) changing circumstances, such as timely approval for contract re-packaging
and the project restructuring following the MTR discussions; and (ii) implementation
issues that arose from time to time\.
The Bank was also very supportive in assisting with the re-design of the GEF grant funded
sub-components at MTR, and in fine tuning of their content in 2014 to satisfy the needs of
emerging sector policies in relation to marketization of public utility services and urban-
rural service integration\.
5\.2 Borrower
The national and provincial governmentâs commitment to the project remained strong and
supportive during all phases of the Project\. The provincial government supported the
Project by directing and coordinating the implementation efforts, with the LPDF as the lead
agency\.
The LUCRPO, the project cities and the PIUs all performed active project management
functions throughout the implementation with the municipalities making great efforts to
designate necessary resources for component execution\. As a result, most of the main
physical components were completed in good time, well in advance of the original loan
closure deadline\. The Project has been implemented in accordance with WB procedures on
procurement and contract management, although there have been some procurement and
implementation delays and issues, and disbursement progress was a serious concern for
large parts of the implementation period\.
Despite the extensions to the loan closure date, some investments in Haicheng and Panjin
remained incomplete at loan closure\. In Haicheng the principal cause was urban planning
issues, including the forecasting of future water demand that resulted in some works not
72
being proceeded with\. In Panjin, the site for the Dawa transfer station was belatedly found
to be unsuitable due to the presence of a nearby natural gas pipeline\.
It must be acknowledged that the project citiesâ failure to increase tariffs means they have
performed less well in the implementation of the institutional and financial reforms that
had been agreed with the Bank at the time of Appraisal\.
6\. LESSONS LEARNED
The LMC2 project has been very successful and achieved most of its original objectives,
especially in respect of the physical interventions\. The entire implementation process has
been a valuable experience for all the agencies involved, and much capacity building of the
PIUs has been achieved that will help them with their ongoing operations, with planning
and in implementing future projects\.
The WB loan and GEF grant have not just simply helped financing the Project, but have
also introduced advanced management practices for project implementation, strategic
sector planning and enterprise operation\. WB project implementation rules and procedures
on procurement, contracts management and construction supervision have been broadly
accepted as being fair and giving greater assurance of a satisfactory outcome\. Good
experience has been gained by practicing these rules and procedures, which have been
replicated on similar projects not financed by WB\. Specific lessons learned include:
1ï¼Government support, such as fulfilment of covenants, cooperation and timely approval
from domestic authorities of various levels, and a strong and stable project management
organization are crucial for success in project implementation\.
2ï¼Major changes after appraisal and loan effectiveness should be avoided\. Such changes
need review and evaluation by domestic procedures and the Bank, and will inevitably
result in delays in implementation and additional cost, with the worst case scenario
being under-utilization of the loan\. Under LMC2 most major changes resulted from
local political decisions or changes to city master plans, rather than component design
failings\.
3ï¼Before engineering design, designers should have adequate site inspection for local
planning and geotechnical data, and incorporate that information into drawings and bill
of quantities, to reduce unnecessary and preventable variations, and to avoid delay and
cost over-run during construction\.
4ï¼The absence of sub-metering of electricity within the WWTP makes the monitoring
and control of power consumption difficult to achieve and is something that should be
rectified in future projects\.
5ï¼The readiness of contract packages to proceed under retro-active financing needs to be
carefully appraised\. The inclusion of Gaizhou contract GWW/1\.1 seems to have been
particularly ill-advised, due to the state of preparations and readiness for the whole of
that sub-component at the time of appraisal\.
6ï¼The inclusion of the cost-recovery covenants for the Panjin and Yingkou wastewater
companies without any matching commitment to institutional reform was a major
73
mistake\. These seem to have been included because the WB Board would have
expected them to be included, rather than there being a real prospect of them being
complied with\. Under existing institutional arrangements for wastewater service
provision, a cost recovery covenant needs to apply at the city sector level and not at the
utility level\.
7ï¼The GEF capacity building program lost its impetus in the early stages of
implementation due to: (i) the lack of a program âchampionâ within provincial
government (ii) the absence of project city âbuy-inâ; and (iii) changes in local
circumstances\.
8ï¼Unintended beneficial outcomes have included the opportunity to explore urban ârural
systems of MSW service integration in Panjin as a result of the change in financing of
the proposed landfill to BOT modality, the upsizing of Shuangtaizi WWTP, and also
the implementation of successful water network GIS as a result of GEF component
restructuring\.
9ï¼Unintended adverse outcomes have been over-capacity created in the Gaizhou
wastewater and Haicheng water supply sub-components\.
10ï¼ The dropping of the full PPP pilot from the GEF component resulted in a lost
opportunity for Liaoning to gain experience in PPP implementation with expert
consulting support and under Bank guidance\. Given the current emergence of PPP this
could have given very useful experience, indeed, if it had gone ahead\.
74
Annex 8\. Comments of Co-financiers and Other Partners/Stakeholders
N/A
75
Annex 9\. List of Supporting Documents
The World Bank\. Project Appraisal Document, Report No\. 38378-CN\. May 15, 2007\.
Loan Agreement and Project Agreements (and Amendments)\. September 19, 2007\.
GEF Grant Agreement (and Amendment)\. September 9, 2007\.
The World Bank\. Aide Memoires, ISR Reports and Management Letters\. May 2008 to
June 2015\.
The World Bank\. Project Restructuring Paper, Report No\. RES12485\. March 20, 2014\.
Liaoning Urban Construction & Renewal Project Office (LUCRPO)\. Borrowerâs
Implementation Completion Report â 2nd Draft\. June 2015\.
Note: The following seven studies were financed by the GEF Grant\.
AECOM Asia Limited Company\. Capacity Building of Public Utilities â Project Finish
Report\. December 2014\.
Shenyang Jinjian Digital City Software Ltd\. Consulting Service of Network Geographic
Information System (GIS) for Yingkou Water Supply â Project Completion Report\.
December 2014\.
Shenyang Jinjian Digital City Software Ltd\. Consulting Service of Network Geographic
Information System (GIS) for Anshan and Haicheng Water Supply â Project completion
Report\. December 2014\.
Liaoning Province Finance Society\. Research on the Value of Dahuofang Reservoir
Ecosystem Service and Data Collection\. November 2014\.
Liaoning Province Finance Society\. Research of Ecological Compensation Mechanisms
for Dahuofang Reservoir Basin â Final Report\. November 2014\.
China Urban Construction Design & Research Institute Co\., Ltd\. Strategic Planning for
Urban Solid Waste Disposal: Fushun, Panjin, Yingkou EDZ and Gaizhou City â Project
Finish Report\. December 2014\.
HJI Group Corporation\. Strategic Planning of Urban Wastewater Management of Panjin
and Gaizhou Cities â Project Completion Report (Volume 1)\. December 2014\.
76
Annex 10: Project Pictures
Anshan Water Supply: Water Treatment Plant â Treated Water Pump house
Fushun Water Supply: Water Treatment Plant â Transmission Pipe
77
Yingkou Water Supply â Water Treatment Plant
Yingkou Water Supply â Water Treatment Plant
78
Panjin Water Supply â Water Meter Box
Ghaizhou Wastewater: Rehabilitated Urban Drainage
79
Yingkou Wastewater Treatment Plant
Ghaizhou Wastewater Treatment Plant
80
Panjin Wastewater Treatment Plant
Panjin Wastewater Treatment Plant
81
Panjin Solid Waste â Garbage Collection Vehicles
Panjin Solid Waste â Waste Transfer Station
82
Fushun Solid Waste â Waste Compactor
Fushun Solid Waste â Leachate Treatment Plant
83
IBRD 34896
R U S S I A N F E D E R AT I O N
CHINA
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LIAONING MEDIUM CITIES
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YUNNAN GUANGXI GUANGDONG Philippine MAIN CITIES AND TOWNS
PROVINCE BOUNDARIES
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INTERNATIONAL BOUNDARIES VIETNAM
MACAO PROVINCE CAPITALS
Bay of LAO
HAINAN PHILIPPINES
B e n g a l P\.D\.R\. PROVINCE BOUNDARIES
INTERNATIONAL BOUNDARIES
120° E
This map was produced by the Map Design Unit of The World Bank\.
The boundaries, colors, denominations and any other information
shown on this map do not imply, on the part of The World Bank 122° E 124° E 126° E
Group, any judgment on the legal status of any territory, or any
endorsement or acceptance of such boundaries\.
GSDPM
Map Design Unit
NEI MONGOL
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Changtu
Kangping Xifeng
Kaiyuan
Faku Tiefa
Zhangwu
Tieling
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42° N
42° N
Xinmin
Fushun
Beipiao SHENYANG WS WW SW Xinbin
Heishan
Chaoyang Beizhen LIAONING GEF GEF
Yi Xian
Dengta
Jianping Tai'an
Huanren
Lingyuan Liaoyang Benxi
Jincheng Panjin
Jinzhou WS WW SW
Anshan
Harqin
WS
GEF GEF Dawa
GEF
Jianchang Kuandian
Huludao Haicheng
Yingkou WS
Xingcheng
WS WW GEF
WS GEF Fengcheng
GEF
Suizhong Gaizhou Xiuyan
HEBEI
WW GEF
Dandong DEM\. PEOPLE'S
Bo Hai GEF 40° N
40° N
REPUBLIC
Donggou
OF KOREA
Zhuanghe
Fu Xian
Xinjin
Jin Xian Yellow Sea
Dalian
120° E 122° E 124° E
DECEMBER 2015 | REVIEW |
P093806 |  Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: ICR00002979
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-43420, IDA-43430, IDA-43480, IDA-H3200, and IDA-H3210)
ON THREE PROPOSED CREDITS IN THE AMOUNT OF
SDR 6 MILLION (US$9 MILLION EQUIVALENT)
TO THE REPUBLIC OF BENIN
SDR 11\.9 MILLION (US$18 MILLION EQUIVALENT)
TO THE REPUBLIC OF MALI AND
SDR 88\.6 MILLION (US$135 MILLION EQUIVALENT)
TO THE FEDERAL REPUBLIC OF NIGERIA AND
ON TWO PROPOSED GRANTS IN THE AMOUNT OF
SDR 6 MILLION (US$9 MILLION EQUIVALENT)
TO THE REPUBLIC OF GUINEA AND
SDR 9\.9 MILLION (US$15 MILLION EQUIVALENT)
TO THE REPUBLIC OF NIGER
THE NIGER BASIN AUTHORITY
FOR A
NIGER BASIN WATER RESOURCES DEVELOPMENT AND SUSTAINABLE ECOSYSTEMS
MANAGEMENT PROJECT
June 28, 2018
Water Global Practice
Africa Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 31st, 2017)
Currency Unit =
SDR 1\.00 = US$ 1\.42
US$ 1\.00 = SDR 0\.70
FISCAL YEAR
July 1 - June 30
Regional Vice President: Makhtar Diop
Country Director: Rachid Benmessaoud
Senior Global Practice Director: Guang Zhe Chen
Practice Manager: Steven N\. Schonberger
Task Team Leader(s): Pierrick Fraval
ICR Main Contributor: Taibou Adamou Maiga
ABBREVIATIONS AND ACRONYMS
AFD French Development Agency (Agence française de développement)
APL Adaptable Program Lending
CBA Cost-benefit Analysis
CBN Central Bank of Nigeria
CER Certified Emission Reduction
CIDA Canadian International Development Agency
CSCRP Growth and Poverty Reduction Strategy (Cadre Stratégique pour la Croissance
et la Réduction de la Pauvreté)
ELD Economics of Land Degradation
EIRR Economic Internal Rate of Return
ERPA Emission Reduction Purchase Agreement
ESMP Environmental and Social Management Plan
EU European Union
GIZ German Agency for International Cooperation (Deutsche Gesellschaft für
Internationale Zusammenarbeit)
ICR Implementation Completion and Results Report
ISR Implementation Status and Results Report
M&E Monitoring and Evaluation
MESL Mainstream Energy Solutions
MWRD Multipurpose Water Resources Development
NBA Niger Basin Authority
NFS National Focal Structure
NIA National Implementation Agency
NPV Net Present Value
O&M Operations and Maintenance
PAD Project Appraisal Document
PAG Government Action Plan
PDO Project Development Objective
PDES Social and Economic Development Strategy (Plan de Développement
Economique et Social)
PHCN Power Holding Company of Nigeria
PMCU Project Management and Coordination Unit
PMU Project Management Unit
PWC1 Permanent Water Commission
RAP Resettlement Action Plan
SDAP Sustainable Development Action Plan
SVP Shared Vision Process
TCN Transmission Company of Nigeria
TSA Treasury Single Account
TTL Task Team Leader
VC Videoconferencing
WRDSEM Water Resources Development and Sustainable Ecosystems Management
1 The permanent Water Commission is now named in the water charter âthe Permanent Water Technical Committeeâ?
TABLE OF CONTENTS
DATA SHEET \. ERROR! BOOKMARK NOT DEFINED\.
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 6
A\. CONTEXT AT APPRAISAL \.6
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) \. 10
II\. OUTCOME \. 14
A\. RELEVANCE OF PDOs \. 14
B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 16
C\. EFFICIENCY \. 22
D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 23
E\. OTHER OUTCOMES AND IMPACTS \. 23
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 25
A\. KEY FACTORS DURING PREPARATION \. 25
B\. KEY FACTORS DURING IMPLEMENTATION \. 27
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 29
A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 29
B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 30
C\. BANK PERFORMANCE \. 33
D\. RISK TO DEVELOPMENT OUTCOME \. 34
V\. LESSONS AND RECOMMENDATIONS \. 34
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 38
ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 49
ANNEX 3\. PROJECT COST BY COMPONENT \. 51
ANNEX 4\. EFFICIENCY ANALYSIS \. 52
ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 69
ANNEX 6\. SUPPORTING DOCUMENTS \. 70
The World Bank
Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
DATA SHEET
BASIC INFORMATION
Product Information
Project ID Project Name
Niger Basin Water Resources Development and
P093806
Sustainable Ecosystems Management Project
Country Financing Instrument
Western Africa Investment Project Financing
Original EA Category Revised EA Category
Full Assessment (A) Full Assessment (A)
Organizations
Borrower Implementing Agency
The Niger Basin Authority Niger Basin Authority (NBA)
Project Development Objective (PDO)
Original PDO
The project development objective is to achieve a sustainable increase in the overall productivity of existing water
resources to foster economic development in selected countries of the Niger River Basin\.
Revised PDO
The (new) WRD-SEM APL 1 Development Objective is: to enhance regional coordination and improve water
resources management in theNiger River Basin\.
PDO as stated in the legal agreement
to enhance regional coordination, development and sustainability of water resources management in the Niger
River Basin
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The World Bank
Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)
World Bank Financing
9,000,000 8,993,034 8,978,134
IDA-43420
18,000,000 15,860,471 15,483,330
IDA-43430
135,000,000 133,584,298 131,236,002
IDA-43480
15,000,000 14,732,657 14,852,647
IDA-H3200
9,000,000 8,743,448 8,372,877
IDA-H3210
Total 186,000,000 181,913,908 178,922,990
Non-World Bank Financing
Borrower 0 0 0
African Development Bank 34,000,000 0 33,660,000
CANADA: Canadian
International Development 4,720,000 0 3,776,000
Agency (CIDA)
EC: European Commission 3,540,000 0 3,540,000
Total 42,260,000 0 40,976,000
Total Project Cost 228,260,000 181,913,908 219,898,990
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing
03-Jul-2007 08-Nov-2007 16-May-2011 31-Jan-2013 31-Dec-2017
23-Nov-2011 01-Dec-2011 31-Dec-2019 31-Dec-2019
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The World Bank
Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions
06-Jun-2011 20\.37 Change in Loan Closing Date(s)
23-Dec-2014 130\.02 Change in Implementing Agency
Change in Project Development Objectives
Change in Results Framework
Change in Components and Cost
Change in Loan Closing Date(s)
Reallocation between Disbursement Categories
Change in Safeguard Policies Triggered
Change in Implementation Schedule
KEY RATINGS
Outcome Bank Performance M&E Quality
Moderately Satisfactory Moderately Satisfactory Modest
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual
No\. Date ISR Archived DO Rating IP Rating Disbursements
(US$M)
01 12-Dec-2007 Satisfactory Satisfactory 1\.32
02 19-May-2008 Satisfactory Satisfactory 10\.64
03 04-Dec-2008 Satisfactory Satisfactory 11\.64
04 28-May-2009 Satisfactory Moderately Unsatisfactory 13\.69
Moderately
05 09-Oct-2009 Moderately Unsatisfactory 14\.01
Unsatisfactory
Moderately
06 17-Mar-2010 Moderately Unsatisfactory 14\.85
Unsatisfactory
Moderately
07 09-Jan-2011 Moderately Unsatisfactory 17\.44
Unsatisfactory
Moderately
08 22-Sep-2011 Moderately Unsatisfactory 37\.69
Unsatisfactory
09 27-Nov-2011 Moderately Satisfactory Moderately Satisfactory 37\.69
10 11-Jun-2012 Moderately Satisfactory Moderately Satisfactory 42\.00
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The World Bank
Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
11 01-Jan-2013 Moderately Satisfactory Moderately Satisfactory 46\.71
12 17-May-2013 Moderately Satisfactory Moderately Satisfactory 54\.25
13 26-Jul-2013 Moderately Satisfactory Moderately Unsatisfactory 57\.03
14 03-May-2014 Moderately Satisfactory Moderately Unsatisfactory 100\.66
15 23-Nov-2014 Moderately Satisfactory Moderately Satisfactory 127\.81
16 16-Jun-2015 Moderately Satisfactory Moderately Satisfactory 147\.85
17 28-Mar-2016 Moderately Satisfactory Moderately Satisfactory 163\.93
18 30-Jun-2016 Satisfactory Satisfactory 167\.18
19 30-Dec-2016 Satisfactory Satisfactory 175\.76
20 29-Jun-2017 Satisfactory Moderately Satisfactory 176\.67
21 16-Jan-2018 Moderately Satisfactory Moderately Satisfactory 177\.52
SECTORS AND THEMES
Sectors
Major Sector/Sector (%)
Agriculture, Fishing and Forestry 10
Irrigation and Drainage 5
Other Agriculture, Fishing and Forestry 5
Public Administration 12
Central Government (Central Agencies) 12
Energy and Extractives 59
Renewable Energy Hydro 59
Water, Sanitation and Waste Management 19
Other Water Supply, Sanitation and Waste
19
Management
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The World Bank
Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Themes
Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
Urban and Rural Development 8
Rural Development 8
Land Administration and Management 8
Environment and Natural Resource Management 91
Renewable Natural Resources Asset Management 16
Biodiversity 8
Landscape Management 8
Environmental policies and institutions 25
Water Resource Management 50
Water Institutions, Policies and Reform 50
ADM STAFF
Role At Approval At ICR
Regional Vice President: Obiageli Katryn Ezekwesili Makhtar Diop
Country Director: Mark D\. Tomlinson Rachid Benmessaoud
Senior Global Practice Director: Eustache Ouayoro Guang Zhe Chen
Practice Manager: Eustache Ouayoro Steven N\. Schonberger
Task Team Leader(s): Ousmane Dione Pierrick Fraval
ICR Contributing Author: Taibou Adamou Maiga
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The World Bank
Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A\. CONTEXT AT APPRAISAL
Context
1\. Covering 1\.5 million km2 in nine riparian countries (Benin, Burkina Faso, Cameroon, Côte
dâIvoire, Guinea, Mali, Niger, Nigeria, and Chad), the Niger River has a total length of 4,200 km\. This area
is characterized by high population growth2\. The livelihoods of more than 72 percent of the basin
population depend directly on its water resources and 85 percent of the population live in rural areas\. The
effects of climate change coupled with the use of archaic and inefficient methods of land, water, and flora
management contribute to severe ecosystem degradation which in turn has a direct negative impact on
rural communities\.
2\. The river basin is endowed with huge water resources development potential but this potential
is poorly used and managed\. Even though additional water infrastructure is needed to mitigate the
seasonal and annual variability of the Niger River, the existing infrastructure is suffering from inadequate
operation and poor maintenance, hindering the long-term sustainability of these expensive and important
assets that improve the welfare of the population\. In addition, the poor land and water management
practices coupled with high water variability in the basin had heavily contributed to the ecosystem
degradation and the income reduction of the population\. Therefore, optimizing benefits from existing
water infrastructure and adequately managing the water resources will lead to increased productivity and
income generation\.
3\. In 2004, the nine riparian countries committed to regional cooperation for joint development
and sustainable management of shared water resources through coordinated multisectoral
investments and common water governance rules\. This initiated the Shared Vision Process (SVP) that led
to a basin-wide Sustainable Development Action Plan (SDAP) piloted by the Niger Basin Authority (NBA)
which was approved in 2007\. Its pillars are (a) socioeconomic infrastructure (development of cascade
storage dams for irrigation and hydropower), (b) ecosystem conservation and natural resource protection,
and (c) capacity building and stakeholder participation, including a strengthened legal and regulatory
framework\. The SDAP comprises a set of interventions/investments distributed across the three pillars
and countries\. The countries decided to empower and enable the NBA, so that it could deliver on the SDAP
and build the legal instruments and institutional mechanisms for cooperative development of water
resources in the basin\. The World Bank, together with five other donors, accompanied the SVP and
committed to align their futureâor ongoingâfinancial assistance to the pillars of the SDAP\. The NBA
lacked operational capacity\. Therefore, supporting the NBAâs institutional strengthening and capacity
building at all levels (headquarter and country focal structures) was key to promoting regional cooperation
and growth in the basin area\.
4\. The project was aligned with the World Bankâs Africa region strategy to support regional
integration efforts\. It is a response to a special request from NBA riparian countries to the World Bank,
considering its convening power to gather other donors who can support large investment needs\. The
2Population growth in the Niger Basin was estimated at 2\.8 percent and the population was estimated to be 110 million in
2006\.
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The World Bank
Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
World Bankâs involvement in the renewal of the collaborative framework and the successful reform of the
NBA have inspired the ownership and strong commitment of the riparian country\. The coordinated and
integrated approach can be a powerful instrument to (a) prevent potential conflicts associated to
unilateral development of riverâs resources, (b) promote regional integration, and (c) increase
opportunities for poverty reduction through the management of shared resources\. The World Bankâs
regional and worldwide experience in preparing and funding similar water resources management
projects (Senegal River Basin Project, P093826) has been a critical determinant in its selection as lead
agency under the donorâs collaborative framework to support the NBA for this project\.
5\. The project was the first of an Adaptable Program Lending (APL), focused on the five countries
that share the main course of the River Niger\. The APL1 was focus on Benin, Guinea, Mali, Niger and
Nigeria\. Moving to APL2, with an extension of the financing to the other member countries, was
dependent on the countries being able to meet some defined policy, institutional, and legal triggers\. These
triggers are as follows: (a) the finalization of the water charter on Niger Basin, (b) the adoption of the
Niger Basin Regional Environment code, (c) the development and adoption of legal instruments for joint
management and optimization of large infrastructure, dispute resolution, and arbitrage enforcement by
riparian countries, and (d) the creation of a Permanent Water Commission (PWC)\. In addition, a technical
trigger was that the Power Holding Company of Nigeria (PHNC) has met the expected output in terms of
availability of the rehabilitated units 5, 6, and 12 of Kainji power plant\.
6\. The effectiveness of some of the abovementioned triggers feed the legal instruments target set
in the Results Framework\. This target contributes to the measurement of the achievements on the
regional coordination for water resources management in the Niger River Basin\. The legal instruments to
be adopted are (a) the Niger Basin Regional Environment code, (b) the Agreement on Common Guarantee
of Infrastructure, (c) the Agreement on Joint Management of Infrastructure, and (d) the Agreement on
Dispute Resolution and Arbitrage\. Setting this trigger-based approach in the project implementation has
the objective of establishing incentives to quickly put in place the required instruments to enhance
regional coordination, development, and sustainability of water resources management in the Niger River
Basin\.
Theory of Change (Results Chain)
7\. To address the issues mentioned in the previous section, the project intended to fulfill three
main objectives in the Niger River Basin: first, enhance regional coordination for water resources
management according to the jointly developed basin-wide plan (SDAP) by reinforcing the capacity of the
regional institution, NBA, and its country-level focal structures; second, enhance development of water
resources through the water infrastructure rehabilitation works and preparation studies and/or
realization of new water infrastructure; and third, enhance sustainability of water resources by
implementing the ecosystemsâ regeneration activities\.
8\. The lack of sufficient robust legal instruments along with the NBAâs weak leadership had led to
competitive unilateral development of riverâs resources\. To address the issue of regional coordination
for water resources management in the Niger River Basin, the project sought to (a) enhance regional
coordination for the implementation of planned activities according to the SDAP and (b) empower the
NBA with legal instruments and an institutional mechanism for water resources management\.
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The World Bank
Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
(a) Regional coordination for the implementation of activities according to SDAP\. These activities
aimed to enable the NBA to set up an overall performance evaluation system, to strengthen
communication and practices to share information, knowledge, and experience, and to manage
and supervise the project, on one hand\. On the other hand, it aimed to enable the NBA National
Focal Structures (NFSs) and National Implementation Agencies (NIAs) to manage and implement
investment programs according to SDAP\. The project built the capacity of key stakeholders,
starting with the NBA itself, NFS, and NIA through trainings, equipment, and establishing an
overall monitoring and evaluation (M&E) system\.
(b) Empowering the NBA with legal instruments and institutional mechanisms for water resources
management\. The project had supported the elaboration/validation process of legal instruments
through specific studies on quality enhancement and validation workshops\. In addition, the
project had supported the finalization of the basin water charter and the creation of supporting
committees of this charter that set the institutional mechanisms for the development and
management of water resources\.
9\. There was inadequate operations and maintenance (O&M) of existing water infrastructure due
to delays in maintenance and unutilized development potential in the Niger River Basin\. To address the
issue of the regional development of water resources in the river basin, the project sought to contribute
by financing rehabilitation works for the Kainji and Jebba hydropower plants to increase energy
production in Kainji and secure existing energy production in Jebba\. In addition, feasibility studies of dams
were envisaged in Nigeria, Niger, Mali, and Guinea, and small dams and small irrigation schemes
rehabilitation were planned\.
10\. The poor land and water management practices coupled with high water variability in the basin
had heavily contributed to the ecosystem degradation and the income reduction of the population\. To
contribute to the sustainable management of water resources, the project had planned activities of
watershed restoration and agroforestry, income generation, and fish production\.
Figure 1\. Schematic Overview of the Projectâs Theory of Change (Results Chain)
Note: PDO = Project Development Objective; * After 2014 project restructuring, these two PDO outcomes were simplified to âimprove water
resources management in the Niger River Basin\.â?
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The World Bank
Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Project Development Objectives (PDOs)
11\. PDOs\. The PDO as stated in the legal agreement was to âenhance regional coordination,
development and sustainability of water resources management in the Niger River Basin\.â? The original
projectâs PDO is the same as the program PDO\.
Key Expected Outcomes and Outcome Indicators
12\. Key expected outcomes and outcome indicators\. Key outcome indicators at approval were linked
to all the parts of the PDO and contributed to the SDAP\. Three outcomes come out from the PDO and
every PDO outcome has a set of indicators as shown in table 1\.
Table 1\. Key Expected Outcomes and Outcome Indicators
PDO Outcomes Outcomes indicators
Enhance regional coordination for Water resources ⢠Percentage of activities implemented according to
management in Niger River Basin Niger Basin SDAP
Enhance regional development of water resources ⢠Hydropower capacity (MW) rehabilitated at Kainji
in the Niger River Basin and Jebba hydropower plants
⢠Hectares of rehabilitated or additional irrigated
surface in Mopti region (Mali), Tillaberi region
(Niger) and Karimama and Malanville districts
(Benin)
Enhance sustainability of water resources in the ⢠Percentage of watershed areas in Faranah region
Niger River Basin (Guinea), Mopti region (Mali), Dosso and Tillaberi\.
regions (Niger) and Alibori region (Benin) using
agroforestry, river bank stabilization, silt and
sedimentation control
Components
13\. At approval, the project was composed of three components\.
Component 1: NBA institutional strengthening and capacity building (E3\. US$7\.77 million; A4\. US$10\.73
million)
14\. The objective of this component was to enhance the capacity of the NBA and its NFSs including
other national institutions involved in implementing the First Phase Project of the Niger Basin Program\.
This was to be achieved through (a) the NBA institutional strengthening and its capacity building, (b)
strengthening and capacity building of national water resources management institutions, and (c)
institutional support and strengthening of regional water resources management and planning\. After the
2014 project restructuring the project Component1âs cost was increased from US$ 7\.77 million to
US$10\.73 million\. This increase is done because US$7\.77 million was provided to only cover 5-year
3 E\. Estimated at Appraisal
4 A\. Actual After the last project restructuring of December 2014\.
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
activities of capacity building and project management and supervision, and with the project end date
extension to December 2017 it is fair to expect such an increase\.
Component 2: Rehabilitation, optimization and development of regional infrastructure (E\. US$ 138\.45
million; A\. US$ 134\.62 million)
15\. The objective of this component was to support the rehabilitation and upgrading works of
existing large water infrastructures of regional importance and the regional planning framework \. This
objective was to be achieved through (a) the rehabilitation works of the Kainji dam and hydropower plant,
(b) the rehabilitation works of the Jebba hydropower dam, and (c) the assessment of the optimization and
the management options for the development of regional water infrastructure\. Some activities were
cancelled with the 2014 restructuring (see section B on significant changes)\. This reduction in works scope
explains the change in resource allocation for the component\.
Component 3: Sustainable management of selected degraded ecosystems and rehabilitation of small
water infrastructure (E\. US$ 39\.78 million; A\. US$ 40\.65 million)
16\. The objective of this component was to combine the rehabilitation of small water infrastructure
and ecosystems management to support income-generating activities\. Considering technical, social, and
political criteria, the areas and related activities were selected in a participatory process to engage the
communities for the sustainable management of the water resources\. Selected areas included the upper
basin in Guinea (region of Faranah), the headwaters tributaries in Benin (upper Alibori, Goungoun, Sota,
and Goroubi - Karimama and Malanville Districts), the Inner Delta in Mali (Circles of Mopti, Douentza,
Djenne, and Tenenkou), and the Niger River middle section in Niger Republic (regions of Tillabéri and
Dosso)\. The selected activities were as follows: (a) rehabilitation and diversification of small dams in Niger
and Benin, (b) rehabilitation and extension of small irrigation schemes (Benin, Niger, and Mali), (c)
supporting development of traditional fisheries (Niger and Mali), and (d) supporting watershed
restoration and agroforestry (Benin, Guinea, Mali, and Niger)\. There is a light increase in the resource
allocated to this component, while some activities were cancelled in Benin, Guinea, and Niger with the
2014 restructuring\. At appraisal the activitiesâ costs were underestimated, and, in addition, the safeguards
compliance costs were not considered\. This explained the increase in resource allocation for the
component\.
B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)
Revised PDOs and Outcome Targets
17\. The December 2014 restructuring led to changes in (a) the PDO, (b) the end date, (c) cancellation
of specific activities found not necessary and (d) safeguards, as OP 4\.09 (Pest Management) was
triggered\. The new PDO became âto enhance regional coordination and improve water resources
management in the Niger River Basinâ\. The PDO was revised because the scope of the project was reduced
to ensure a good link between the project target indicators, achievements, and activities\. The PDO as
stated, can be unpacked as follows: (a) âenhance regional coordination in the Niger River Basinâ and (b)
âImprove water resources management in the Niger River Basinâ\.
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Revised PDO Indicators
Table 2\. Revised Outcomes and Outcome indicators
PDO Outcomes Outcomes indicators
Enhance regional ⢠Percentage of activities implemented according to the Niger Basin
coordination in Niger River Sustainable Development Action Plan
Basin ⢠Number of legal instruments adopted by riparian integrated water countries
for integrated water resources management at regional level
Improve water resources ⢠Generation capacity of hydropower rehabilitated under the project
management in the Niger ⢠Land area where sustainable land management practices
River Basin ⢠Direct project beneficiaries
⢠Female beneficiaries
Revised Components
18\. Revised components\. With the 2014 restructuring, the project components were not
fundamentally changed in terms of headings\. The changes operated had reduced the scope of
components by cancelling some activities or downscaling/modifying the number of tasks under
Components 1, 2, and 3\. The previous description of the components are valid for the revised
components\. In fact, the deletion/modification of some activities did not have a significant impact on the
project PDO\.
Component 1: NBA institutional strengthening and capacity building
19\. In this component, the change was done in Subcomponent 1-c\. Three out of eight activities in
Subcomponent 1-c were cancelled\. These activities are: (i) support the establishment of a Regional
Consultative Group to build a participatory consensus on water infrastructure development in the Niger
Basin; (ii) prepare legal instruments for joint management and optimization of large infrastructure,
dispute resolution, and arbitrage enforcement by riparian countries; and (iii) establish sub-basin
commissions to apply the required subsidiary principles to implement the SDAP\. The reasons of this choice
are: (a) the cancellation of these activities happened in a context of budget constraints as the allocated
budget for the activities was underestimated, (b) activities indicated in (i) and (iii) had not started at the
time of the project restructuring so it was agreed to plan for them in APL2, and (c) for the activity indicated
in (ii), the project had financed the studies but the quality of the studies was not satisfactory for the
countries and the NBA\. The firm in charge of the studies (TRACTEBEL) was unable to address comments
received from the NBA\. At the time of the restructuring it was agreed to cancel it from APL1 and plan for
it in APL2 project\.
Component 2: Rehabilitation, optimization, and development of regional infrastructure
20\. Modifications were undertaken in the three subcomponents of Component 2 of the original
project\. Safeguards consideration to comply with World Bank operational policy, procurement
processing, and contracts management issues have increased the projected costs in planned activities\.
This led to some adjustments in the scope of work\.
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Subcomponent 2-a: Rehabilitation of Kainji hydropower dam
21\. The rehabilitation works of the navigation lock was cancelled\.
Subcomponent 2-b: Rehabilitation of Jebba hydropower dam
22\. Rehabilitation of electromechanical equipment: (a) major spare parts were modified; (b)
transformer parts were cancelled; and (c) penstocks and scroll cases were cancelled\. Civil works: works
on the tailrace spillway channel and grouting of auxiliary dam no\. 3 were modified and works on
rehabilitation of the navigation lock were cancelled\. Prevention of tree invasion: (a) the removal of
submerged tree logs and debris around turbines and spillway intakes (200 m upstream from dam axis)
was modified, and (b) the removal of dead trees in the reservoir was cancelled\.
Subcomponent 2-c: Supporting options assessment for regional water infrastructure development
23\. Zungeru studies in Nigeria: feasibility and detailed studies for Zungeru dam site in Nigeria was
cancelled and replaced by a new activity, âscreening of potential hydropower sites in the Niger Basin
within Nigeria and preparation of a master plan of Benue sub-basin in Nigeria\. Niger Kandadji dam
studies: (a) updates on the resettlement action plan (RAP) of the first wave out of two were agreed and
(b) the detailed engineering design of Kandadji dam was cancelled because it was conducted by other
development partners\. Taoussa dam in Mali: complementary studies were cancelled because they were
financed by another donor\.
Component 3: Sustainable management of selected degraded ecosystems and rehabilitation of small
water infrastructure
24\. All the four subcomponents were affected by changes in the scope of their activities compared
to the original projects\. The reasons for works scope reduction are similar to Component 2, in addition
the costs at appraisal was underestimated\. Changes are described in the following paragraphs\.
Subcomponent 3-a: Rehabilitation and diversification of small dams
25\. The number of small dam rehabilitations in Benin is reduced from 12 to 7 dams and the activity
related to the diversification of agricultural activities was cancelled\. Activities related to the rehabilitation
of Aboka dam in Niger were cancelled\.
Subcomponent 3-b: Rehabilitation and extension of small irrigation schemes
26\. The rehabilitation of the irrigation scheme of Kourani and the one of Lossa Kokomani in Niger
were cancelled due to lack of funds\. Development of small irrigation schemes in Benin was modified\. This
activity increased to 1,500 ha from 250 ha\.
Subcomponent 3-c: Support the development of traditional fisheries
27\. The promotion of sustainable fishing practices and fish production processing was modified\. The
number of fish pools and fish-farming ponds in Mali were reduced to 120 pools and 20 fish farming ponds
due to limited funding available\.
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Subcomponent 3-d: Watershed restoration and agro-forestry
28\. The activity related to river bank stabilization and erosion control in Mali and Niger was modified
from 6 km of dykes and 9 km of vegetation in Mali to 2 km of mechanical protection and 9\.3 km of
biological protection\. Stabilization of 200 km of Korisâ embankments in Niger was modified to stabilization
of 6 km of Korisâ embankments\.
29\. Reforestation and revegetation in Niger was modified from 6 million plants produced and planted
to 32 plant nurseries\.
Other Changes
30\. Implementation period\. The implementation period of the project at appraisal was 5 years with
January 31, 2013 as the end date\. A first level 2 restructuring was made in June 2011, to extend the project
end date from January 31, 2013, to December 31, 2014\. The reasons for this restructuring are (a) delays
in the technical studies of Component35, (b) the need to relaunch the procurement process of the
rehabilitation contract of Kainji hydropower plant, and (c) the slow pace at which the NBA itself to
supervise the implementation of the investments\.
31\. A second restructuring (level 1) extended the implementation period to December 31, 2017\.
The World Bank supervision team had noticed and recommended to the NBA and beneficiary countries,
the need to extend the project end date since early 2014\. It was anticipated that the planned activities
could not be delivered by the closure date of December 31, 2014\. After an evaluation of the time required
for completion of activities in each country, the following closure dates for every country were decided
during the restructuring: (a) Niger closure date December 31, 2015; (b) Benin, Mali, and Nigeria closure
date June 30, 2016; and (c) Guinea closure date December 31, 2017\.
32\. Pest Management (OP 4\.09) was triggered to comply with the safeguard policies\. The policy on
pest management was not triggered at appraisal when irrigation and agriculture activities were planned
in Niger, Benin, Mali, and Guinea\. However, during implementation, before restructuring, all activities
were compliant with safeguard policies, including Pest Management\. Pest Management Plans were
prepared and disclosed in 2012: in Guinea (August 29, 2012), Mali (August 23, 2012), Niger (January 16,
2012) and Benin (August 28, 2012)\. The 2014 restructuring had triggered this policy to formally comply
with safeguards\.
33\. Revision of the triggers for Phase 2 of Niger Basin Water Resources Development and
Sustainable Ecosystems Management (WRDSEM)-APL1\. At the time of the 2014 restructuring, significant
progress was made to facilitate the regional coordination\. The water charter was in implementation after
its effectiveness in July 2010, three triggers out of four were achieved, and the Kandadji program in Niger
had progressed more rapidly than expected\. Therefore, advancing the beginning of WRDSEM-APL2A,
which was related to IDA contributions to the Kandadji Program in Niger\. The achieved triggers are as
follows: (a) the finalization of the water charter on Niger Basin (achieved), (b) the adoption of the Niger
Basin Regional Environment code (achieved), and (c) the creation of PWC6 (achieved)\.
5 The project design did not did not allocate appropriate time for these studies according to NBA\.
6 PWC is now the Permanent Water Technical Committee according to the Water Charter\.
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Rationale for Changes and Their Implication on the Original Theory of Change
34\. Change in the PDO\. The rationale for the revision of the PDO was to respond to the need to reduce
the scope of the project to ensure a good link between the project target indicators, achievements, and
activities\. The Results Framework was revised and some targets were changed\. Despite these changes,
the impact on the original theory of change was negligible\. The regional coordination outcome is the same
with the original project; and the two outcomes âenhance regional development of water resources in the
Niger Basinâ and âenhance sustainability of water resources in the Niger Basinâ of the original project were
simplified to âimprove water resources management in the Niger River Basinâ\.
35\. Change in triggers\. The rational for adjusting the triggers as part of the 2014 restructuring was to
ensure they are relevant to the overall program\. For WRDSEM-APL2 only the three triggers that were
achieved were relevant\. The remaining institutional trigger will be essential when the three dams
(Kandadji - Niger, Taoussa - Mali, and Fomi - Guinea) are operational\. The technical trigger on the three
units 5, 6, and 12 is not relevant\. This change did not affect the theory of change\.
36\. Pest management\. The rational for triggering the pest management as part of the 2014
restructuring was to comply with the safeguard policy\. This change did not affect the theory of change\.
37\. Extension of the implementation period\. The rationale for this closing date extension was to
allow appropriate time to effectively deliver the planned activities and achieve the project objectives\. The
period extension did affect the theory of change\.
II\. OUTCOME
A\. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating
Rating: High
38\. The development objective of the WRDSEM Project at closing was âto enhance regional
coordination and Improve water resources management in the Niger River Basinâ? \. As discussed earlier,
the enhance regional development of water resources in the Niger Basinâ and âenhance sustainability of
water resources in the Niger Basinâ of the original project were simplified to âimprove water resources
management in the Niger River Basinâ\.
39\. The original and revised PDO is fully consistent with the World Bankâs current7 Country
Partnership Strategy (CPS)/Country Partnership Framework (CPF) with each of the five countries (CPS
[2013â2017] - Benin; CPS [2014â2017] - Guinea; CPF [2016â2017] â Mali; CPS [2013â2016] - Niger; and
CPS [2014â2017] - Nigeria\. This relevance of the PDO is highlighted through the contribution of the project
to the respective following areas: (a) Benin CPS pillar 1: Increasing Sustainable Growth; (b) Guinea CPS
strategic area of engagement 2: Stimulate growth and economic diversification; (c) Mali CPF area of focus
2: Create Economic Opportunities; (d) Niger CPS pillars 1 and 2: Promoting resilient growth and reducing
7 âCurrentâ is referring to the World Bank strategy at the time of project closure\.
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vulnerability; and (e) Nigeria CPS first strategic cluster: Federally led structural reforms for growth and
jobs\.
40\. The PDOs are also in compliance with the objectives and pillars of the Niger Basinâs SDAP, in that
all planned outputs of the project components are contributing to this SDAP\.
41\. Benin\. The Government of Benin had set (a) acceleration of economic growth and (b)
development of infrastructure as two important pillars out of five pillars of its Growth Strategy for Poverty
Reduction\.8 The World Bank CPS contributes to these two pillars through its pillar 1 which intended to
âImprove Natural Resource Managementâ among other actions\. The project component implemented in
Benin is contributing to this objective\. Considering this alignment, the PDO relevance rating is considered
High\.
42\. Guinea\. In Guinea, the WRDSEM Projectâs Components 2 and 3 are contributing to Guineaâs
development agenda Poverty Reduction Strategy Paper 3 (PRSP3) which planned to foster inclusive and
sustainable growth\. These two components of the project are in compliance with the World Bank CPS
through its strategic area of engagement 2, which intends to improve the electricity sector and agricultural
productivity\. Consequently, the PDO relevance rating is considered High\.
43\. Mali\. The Government of Mali has developed its Strategic Framework for Growth and Poverty
Reduction (CSCRP9 2012â2017)\. However, following the political and security crisis of 2012â2013, the
transition government, in place between April 2012 and September 2013, was replaced by the newly
elected government in August 2013\. Afterwards, the CSCRP was supplemented by the Plan for the
Sustainable Recovery of Mali (2013â2014) and the Government Action Plan (PAG) (2013â2018)\. These
two documents are intended to consider the new challenges that emerged during the multidimensional
crisis affecting Mali\. This PAG is structured around six priority areas, two of which are (a) construction of
an emerging economy, and (b) implementation of an active social development policy\. These two focus
areas are in alignment with the WRDSEM Project\. The Mali CPF, in its area of focus 2, has the objective to
improve productive capacity and marked integration of farmers and pastoralist\. The PDOs are still relevant
for both the CPF and the PAG, so the relevance rating of the project PDO is High\.
44\. Niger\. The development of regional infrastructure and sustainable management of degraded
ecosystems are part of the Niger CPS and Niger Government Social and Economic Development Strategy
(PDES10)\. The CPS, in its pillar 1, had promoted resilient growth through increased agricultural productivity\.
This was done by using underground water or building water infrastructure on international waterways
(Niger River and its tributary rivers)\. On the other hand, pillar 2 of the World Bank CPS had contributed to
reducing vulnerability through increased adoption of climate resilient actions including watershed
restoration, among others\. The PDO remains relevant to both the CPS in Niger and the country PDES\. The
relevance rating of the project PDO is considered High\.
45\. Nigeria\. Nigeriaâs Government Vision 2020 intends to optimize the countryâs human and natural
resource potential to achieve rapid economic growth among others action\. The World Bank CPS
contributed to part of this vision through its first strategic cluster which intends to federally lead structural
8 Stratégie de Croissance pour la Réduction de la Pauvreté
9 CSCRP: Cadre Stratégique pour la Croissance et la Réduction de la Pauvreté
10 PDES: Plan de Développement Economique et Social
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
reforms for growth and jobs\. In this first cluster, the CPS actions included (but are not limited to) (a)
increasing installed power generation and transmission capacity and improving the efficiency and
governance of electricity delivery and (b) boosting agricultural productivity, improving farmersâ links with
agro-processors, and scaling up Nigeriaâs resilience to current and future climate variability\. These two
actions are in alignment with the PDO, mainly with the implemented actions in Component 2\. The
relevance rating of the project PDO is High\.
B\. ACHIEVEMENT OF PDOs (EFFICACY)
Assessment of Achievement of Each Objective/Outcome
Rating: Before restructuring - Substantial; After restructuring - Substantial
Achievement
of the original Evidences of the level of achievement and of the level of directness of
Rating
PDOs/ demonstrated connections between project activities and outcomes/PDO
outcomes
Enhance The objectives of enhanced regional coordination for water resources Substantial
regional management were to be achieved through the capacity reinforcement/building
coordination activities\. These activities included: (a) equipment and training to modernize the
for water implementation capacity as well as specific trainings meant to enhance inter-
resources ministerial collaboration; (b) the establishment of an overall M&E system; (c) the
management assistance to establish and finance the yearly convening of the Regional Steering
in the Niger Committee, a platform during which planning and performance assessment were
Basin done and discussions held with donors to synergize existing programs or to help
formulate and speed up the implementation of other investments of the SDAP of
the project than those directly financed by the project; (d) development and/or
endorsement of legal instruments for integrated water resources management
at regional level; and (e) the support of specific training for technical experts
involved in the use of modeling tools for water allocation\. The objectives of these
activities were to (a) enhance regional coordination for the implementation of
planned activities according to the SDAP and (b) empowering the NBA with legal
instruments and an institutional mechanism for water resources management\.
Therefore, indicators defined in the Results Framework at intermediate results
and PDO outcome levels are all contributing to the achievement of the PDO
outcomes\.
a\. Enhance regional coordination for implementation of planned activities
according to the SDAP
The abovementioned capacity reinforcement/building in planning, M&E,
technical trainings, and equipment had enabled the shared vision among basin
actors and implementation of basin water resources development according to
the basin-wide action plan (SDAP)\.
At the end of the project, 100 percent of activities implemented under the project
are aligned with the Niger Basin SDAP\. This alignment contributed at a percentage
of 59 percent to the activity areas of the SDAP as there are 34 activity areas
planned in the SDAP, and all activities implemented under the project, fell in
alignment with 20 out of 34 activity areas of the SDAP\. Aligning countriesâ
activities with the basin-wide action plan coordinated by the NBA, denotes the
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Achievement
of the original Evidences of the level of achievement and of the level of directness of
Rating
PDOs/ demonstrated connections between project activities and outcomes/PDO
outcomes
strengthening of regional coordination in relation to the sustainable management
of resources in the Niger Basin\. The monthly and/or annual water resources
information database is now publicly available on the NBAâs website\. The
availability of water resources data to inform riparian countries on the River Basin
and water resources status, will call for coordinated actions, experience sharing
and coordinated management of critical situations (flooding, drought, and so on)\.
These two indicators of the Results Framework are fully achieved under the
project\.
b\. Empowering NBA with legal instruments and institutional mechanism for
water resources management
Four legal instruments were defined to be achieved in the Results Framework\.
These instruments are (i) the adoption of the regional environment code; (ii) the
Agreement on Common Guarantee of Infrastructure; (iii) the Agreement on Joint
Management of Infrastructure; and (iv) the Agreement on Dispute Resolution and
Arbitrage\. In addition to these four instruments, the Results Framework had set
the number of meetings held by the PWC annually as another indicator measuring
the achievement of regional coordination\.
Working in a complementary manner with other donors (French Development
Agency [Agence française de développement, AFD], Canadian International
Development Agency [CIDA], European Union [EU], and German Agency for
International Cooperation [Deutsche Gesellschaft für Internationale
Zusammenarbeit, GIZ]) under the leadership of the NBA, the project supported
several activities to clarify and operationalize the legal context that stems from
the basin-wide water charter\. It financed key advocacy missions of the NBA to
speed up ratification in the countries\. The water charter was adopted by riparian
countries since November 2009 and became effective in July 2010, following its
ratification by all nine countries\. This charter provides a very strong foundation
to build upon, notably to develop subsequent legal instruments: on mechanisms
to protect the environment, for common guaranty of infrastructure, coordinated
management of infrastructure of common interest, and for dispute resolution
and arbitrage\. As a result, five annexes to the charter were planned\. These
annexes are as follow:
(i) Annex 1 - âRegional environment codeâ?: This annex corresponds to the first
legal instrument mentioned above\. The project supported the studies on the
regional environment code\. These studies led to the drafting of the regional
environmental code which was endorsed by riparian countries and adopted
on October 1st, 2011; the target is fully achieved\.
(ii) Annex 2 - âRules governing the coordinated management and optimization
of regional water infrastructureâ?: This annex matches with the third and
fourth legal instruments indicated above as part of the Results Framework\.
The studies to prepare annex 2 of the charter were jointly financed by the
World Bank project and the EU\. These studies intended to clarify the legal
instruments for joint management of water infrastructure, dispute resolution
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Achievement
of the original Evidences of the level of achievement and of the level of directness of
Rating
PDOs/ demonstrated connections between project activities and outcomes/PDO
outcomes
and arbitrage enforcement\. These studies included the preparation of a legal
text as well as the development of a computerized model meant to inform
water release envelopes within the legal boundaries set in the annex 2, itself
a legally binding document\. When reviewed by countries, the model was
found to have several shortcomings and notably it could not accommodate
flexibility in the features of the (future) dams whereas these features (volume,
height, and so on) are not fully confirmed; the legal text was found to be
incomplete and hard to operationalize\. As the consultant was unable to
finalize the agreed documents that accommodate the riparian countries, it
was agreed to end the contract before the 2014 restructuring\. With the 2014
restructuring, due to the unavailability of sufficient funds in the project, it was
agreed to finalize the work done through the Cooperation International Water
in Africa (CIWA) supported project (ongoing P149714)\. So, the two legal
instruments (âAgreement on Joint Management of Infrastructureâ? and
âAgreement on Dispute Resolution and Arbitrageâ?) will be achieved under the
other project, which is also financed by the World Bank\. Importantly, even
though the model was not approved since it could not fully accommodate the
objective of coordinated management of the dams, it is noted that the
objective was politically endorsed by the countries\. Given this and the fact
that the study was done and only needs to be supplemented justify that we
can fairly consider that the target was Partially achieved\. Considering that the
continuation of the studies will be done under an active project under the
same project management and coordination unit (PMCU), knowing that NBA
and riparian countries are willing to have the effectiveness of all legal
instruments governing the water charter, the annex 2 of the charter that
captures the two legal instruments is likely to be achieved\.
(iii) Annex 3 - âNotification of planned measuresâ?: This annex covers the issues
related to planned infrastructure or activities that may have significant
negative impacts on at least one country\. It makes it mandatory to riparian
countries to notify planned similar interventions\. The elaboration of this
annex 3 was supported by CIDA\. It was adopted since December 17, 2014\.
(iv) Annex 4 - âCosts and benefits sharingâ?: It regulates cost and benefits sharing
of common infrastructure and common interests\. The studies related to this
annex were financed through the GIZ\. The annex 4 of the water charter was
adopted and became effective as of March 31, 2017\. The legal instrument
covered by annex 4 is not among those highlighted in the project Results
Framework\. However, it complements annex 5, that intends to address the
question of the âAgreement on Common Guarantee of Infrastructureâ\.
(v) Annex 5 - âStatus of common facilities of common interestsâ?: The AFD had
financed a comprehensive study on the âasset management and ownership
responsibility for the projects and programs in the Niger River Basin\.â? This
study was adopted by the basin head of states summit held on September
16th, 2010 in Abuja\. This study contributes to annex 5 which captures the
âAgreement on Common Guarantee of Infrastructureâ\. Despite this study with
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Achievement
of the original Evidences of the level of achievement and of the level of directness of
Rating
PDOs/ demonstrated connections between project activities and outcomes/PDO
outcomes
AFD support, the indicator was not achieved\. Nevertheless, after the delivery
of annex 4 which may complement annex 5 as mentioned in the previous
paragraph, it is now planned that annex 5 will be also supported by the GIZ\.
Knowing the studies will be now financed by the GIZ in 2019, the likelihood
of the achievement of this indicator seems strong\.
A text establishing a PWC based on the one in force in the Senegal River Basin
was drafted in 2013\. This commission is supposed to make strategic water
allocation decisions on an annual basis\. It would be the one deciding on the water
allocation resulting from the model associated with the aforementioned annex 2\.
It never met because, unlike the Senegal basin where the PWC is dealing with an
existing transboundary dam, there is none yet in the Niger basin\. It is therefore
logical that no such meeting took place even though on average two meetings
were expected annually\.
Taking into consideration the two dimensions of the regional coordination
mentioned in previous sections\. The dimension on âimplementation of planned
activities according to the SDAPâ is fully achieved and the dimension on âlegal
instrumentsâ is partially achieved but with strong likelihood to be achieved, the
rating of the outcome for regional coordination substantial\.
Enhance The achievement of enhanced regional development of water resources in the Substantial
regional Niger Basin was expected to be done through the implementation of energy
development production/securing activities and feasibility studies of dam construction and
of water rehabilitation of small-scale irrigation and small dams activities\. These activities
resources in led to an increase in energy production, irrigated areas, and availability of water
the Niger for various purposes\.
Basin
The project contributed to the restoration of 340 MW of hydropower generation
capacity per the target\. (340 MW was restored from Kainji hydropower plant
rehabilitation works and securing the production of existing 578 MW for Jebba)\.
About 2,125 hectares of area were rehabilitated or provided with irrigation
services in Mopti region (Mali - 5 ha), Tillabéri region (Niger - 620 ha), and
Karimama and Malanville Districts (Benin - 1,500 ha), more than double the
original target of 1,000 ha\. There were four dam sites with completed feasibility
studies, with three out of four studies completed under the project and the fourth
site done by another donor (one in Nigeria with a hydropower master plan in
Niger basin located in Nigeria, one in Niger with Kandadji dam, and one in Guinea
with Fomi dam)\. The targeted feasibility study of the dam site in Nigeria has been
achieved, though the Feasibility Study of Zungheru Hydropower Plant according
to the original project Results Framework was replaced by the Screening for
Hydropower Plant Sites in Niger Basin in Nigeria\. Indeed, at the project
effectiveness date, the Feasibility Study of Zungheru Hydropower Plant was
already committed to another donor\. In Mali, the studies planned for Taoussa
were done by other donors\. Six out of 14 small dams were rehabilitated\. After the
completion of feasibility studies, it was realized that the allocated budget was not
enough to finance the fourteen dams\. With the 2014 restructuring, the target of
14 was reduced to 8 (one in Niger and seven in Benin)\. The one rehabilitated in
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Achievement
of the original Evidences of the level of achievement and of the level of directness of
Rating
PDOs/ demonstrated connections between project activities and outcomes/PDO
outcomes
Niger collapsed before its technical acceptance\. The Government of Niger had
committed to rebuild the collapsed dam\. In Benin, while the bidding documents
reflected the rehabilitation of 7 dams, the contract issued could only rehabilitate
5 dams with the available budget\.
Enhance the The objectives of enhanced sustainable management of water resources were to High
sustainability be achieved through activities of watershed restoration, agroforestry and income
of water generation\. These complementary activities had contributed to the adoption of
resources the sustainable land management practices and ecosystems improvements\.
management
Percentage of watershed areas in Faranah region (Guinea), Mopti region (Mali),
in the Niger
Dosso and Tillabéri regions (Niger), and Alibori region (Benin) using agroforestry,
Basin
river bank stabilization, and silt and sedimentation control\. The project target was
2,250 ha while the achievement was 10,620 ha, representing more than four
times the end-project target\. The target for this indicator is very low compared
to total planned area which was 11,260 ha\. This was fully achieved and even
exceeded\. In Benin, 2,360 ha were planned and only 1,115 ha were realized\. In
Guinea, 900 ha planned and 950 ha realized under the project\. In Mali, 500 ha
planned, 590 ha realized under the project, and more than 700 additional
hectares realized by the population\.
Additional evidence\. This includes income-generating activities (agroforestry and
fish production) in involved countries\. In Mali, the pasture land restoration was
expanded by the beneficiaries themselves without project money, from 590 ha in
2014 (realized by the project) to more than 1,000 ha in 2017\. Anecdotal facts from
the NFS and NIA stated that this activity has improved fish production as a result
of the ecosystemsâ restoration along the river in the interior Niger River delta
where the activity was implemented\. The activity is now being continued by
fishermen in place of the population in charge of livestock\. Around 2,500 active
persons, mainly fishermen, are continuing the extension of bourgou production\.
In Benin, beehives for honey production are being expanded by beneficiaries who
had been exposed to the approach before the project was implemented\. So, the
project has contributed to this, but all the benefits are not attributable to only
the project financed by the World Bank\. In Niger, the fish production activity is
really expanding and the beneficiaries are having close control of this\. The
Implementation Completion and Results Report (ICR) team had witnessed the
interest with which the beneficiaries are taking care of desilting ponds or lakes to
continue fishery and other activities around them\.
Justification of Combining these three ratings the overall PDO efficacy rating is SUBSTANTIAL\. Substantial
the original
PDO
Achievement of
Evidences of the level of achievement and of the level of directness of
the revised Rating
demonstrated connections between project activities and outcomes/PDO
PDOs/outcomes
Enhance regional Since the PDO remained the same, the same rating is applicable\. Substantial
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Achievement of
Evidences of the level of achievement and of the level of directness of
the revised Rating
demonstrated connections between project activities and outcomes/PDO
PDOs/outcomes
coordination in
the Niger Basin
Improve water As explained at the point 34\. âChange in the PDOâ?, the outcome âimprove Substantial
resources water resources management in the Niger Basinâ is a simplification of the
management in following outcomes: âEnhance regional development of water resources in the
the Niger Basin Niger Basinâ and âEnhance the sustainability of water resources management
in the Niger Basinâ\. Based on this assumption, the objectives of this o utcome
were expected to be achieved through the implementation of energy
production/securing activities, feasibility studies of dam construction,
rehabilitation of small-scale irrigation and small dams activities, and through
activities of watershed restoration, agroforestry, and income generation\.
These activities intend to support the achievement of a sustainable increase
in the overall productivity of water resources to contribute to the
improvement of the living conditions of the involved countriesâ pop ulation
and the environment by ecosystem regeneration\.
In addition to the indicators discussed under the PDO aspects of âenhance
regional development of water resourcesâ and âenhance the sustainability of
water resources management in the Niger River Basinâ, the following
additional indicators, that is, (a) land area where sustainable land
management practices were adopted as a result of project, (b) area afforested
for ecological or income-generation practices and (c) irrigation schemes
rehabilitated\. In addition, the mandatory corporate indicator on the number
of direct beneficiaries (of which female) was added\.
About 10,620 of land area was brought under sustainable land management
practices against a target of 13,439 ha\. This indicator was substantially
achieved at 79 percent of the end target (Benin - 1,815 ha of which 1,115 ha
was improved; Niger - 7,500 ha of which 7,965 ha delivered; Mali - 2,866 ha
planned and 590 ha improved; and Guinea - 950 ha planned and 950 ha
delivered)\. About 2,655 ha was afforested for ecological or income-generation
purposes, exceeding the project target of 2,205 ha\. However, 2,125 ha of
irrigation schemes were rehabilitated falling short of the target of 5,005 ha\.
The project was unable to realize the irrigation schemes in Djambakourou
(more than 2,000 ha) as the population had refused this option at the end of
the social evaluation of the project, so the non-achievement of this target was
not due to the project counter performance\.
The restructuring of December 2014 added a new PDO indicator to reflect the
number of beneficiaries\. However, the proposed target was 55 million people
mainly based on the assumption that electricity generation from dam
rehabilitation and refurbishment would benefit to all the population living in
the River Basin in Nigeria\. Basically, the simplistic assumption theorizes that
any KWH produced into the grid would automatically generate as many
beneficiaries as inhabitant in the River Basin\. With hindsight, the ICR proposes
a more realistic and rigorous approach to estimate the number of
beneficiaries from electricity generation based on a minimum energy
consumption of 250 Kwh per capita per year recommended by the
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Achievement of
Evidences of the level of achievement and of the level of directness of
the revised Rating
demonstrated connections between project activities and outcomes/PDO
PDOs/outcomes
International Energy Agency\. Considering that, the project enabled the
production of incremental electric energy estimated at 796, 977 MWh per
year, the number of beneficiaries are objectively estimated at 3,187,908
people\. In Benin, 1,500 people benefitted from irrigation while 2,335
benefitted from other income-generating activities\. The total number of
direct beneficiaries is estimated at 3,835 people of which 2,335 are females\.
In Guinea, the number of beneficiaries is estimated at 1,600 people half of
whom are females\. In Mali, 200 people benefitted from river bank protection
training, 1,700 women from Burgu production, and 7,000 people from training
sessions\. The total number of beneficiaries is estimated at 8,900 people of
which 1,700 are females\. In Niger, the project benefited at least 8,875 people
of which 4,438 are females\. In total, the project beneficiaries are estimated
at 3,211,118 people of which 1,580,912 females\. Using this more rigorous
approach still provides a strong economic rate of return contributing to the
rating\.
Justification of The two outcomes rating are both Substantial so the overall PDO efficacy
the revised PDO rating is SUBSTANTIAL\. SUBSTANTIAL
C\. EFFICIENCY
Assessment of Efficiency and Rating
Rating: Modest
46\. Economic analysis\. The economic analysis of the project is based on cost-benefit analysis (CBA)
of the different subprojects implemented in the five project countries\. The overall economic analysis
accounts for 100 percent of the project expenditure\. The analysis captures the combined benefits and
costs from hydropower generation, irrigation, fisheries, fodder production, reforestation, and
agroforestry\. The analysis covers 30 years, including the implementation period and a 25-year stream of
benefits and costs\. The analysis follows the same methodology as the PAD for the hydropower generation
subproject\. However, for the other subprojects the PAD does not provide sufficient details on the
approach used to be comparable with the ICR analysis\.
47\. At 5 percent and 8 percent discount rates, the analysis shows that the project had positive net
present values (NPVs) for subprojects in all the countries except for the irrigation subproject in Guinea\.
Apart from the lowland development subproject in Guinea, all the subprojects analyzed exhibited an
economic internal rate of return (EIRR) higher than 5 percent, ranging from 11\.3 percent to 75\.5 percent\.
However, there is significant variability from one subproject to another\. Fisheries, fodder production, and
income-generating activities are, generally, the most economically performing subprojects\. Irrigation
infrastructure rehabilitation in Niger was the less economic activity mainly because of the higher-than-
expected cost associated with this subproject\. The irrigation subproject in Benin exhibited high
performance explained by higher number of areas developed than initially planned and the choice to grow
high-value vegetables\. The lowland irrigation subproject in Guinea suffered from two major factors: (a)
the high per area investment cost of the irrigation infrastructure and (b) the moderate increase in rice
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yield probably due to a lack of appropriate water management knowledge\. The overall EIRR of the project
is estimated at 27\.6 percent (lower than the PAD estimate of 51 percent) and the NPV, at a 5 percent
discount rate, is US$914,826,012 and, at an 8 percent discount rate, US$541,958,802 (tables 4\.1 and 4\.16
at annex 4)\. Further, sensitivity analysis shows that the project remains economically viable even with a
combined 20 percent increase in the costs and a 20 percent reduction in benefits with an EIRR of 21
percent (annex 4)\.
48\. Administrative efficiency\. In terms of administrative efficiency, the project suffered from
significant delays due to slow progression of activities and the Ebola outbreak in Guinea\. The reasons
for delays are further discussed in the section on âKey Factors affecting Implementationâ\. Through two
formal restructurings, the project closing date was extended by about 5 years (59 months)\. Efficiency is
rated as Modest pre-and post-restructuring based on the mixed results in terms of EIRR among the
activities of the different subprojects as well as delays in implementation\.
D\. JUSTIFICATION OF OVERALL OUTCOME RATING
Rating: Moderately Satisfactory
49\. The relevance of original and revised development objectives of the project is rated High\. The
achievement of the PDOs at completion is rated Substantial both pre- and post-restructuring\. Efficiency is
rated Modest\. Consequently, the overall outcoming rating of the project is Moderately Satisfactory\. A split
evaluation is conducted below since the PDO was revised\. However, since the ratings remained same pre-
and post-restructuring, it has no implications when weighted by disbursement percentage and the overall
outcome rating remains Moderately Satisfactory\.
Rating the Outcome of Operations with Revised Objectives
Rating: Moderately Satisfactory
Table 3\. Calculation of Weighted Outcome Rating
Pre-restructuring Post-restructuring Overall
Relevance of Objectives High High â
Efficacy Substantial Substantial â
Efficiency Modest Modest â
Rating Moderately Satisfactory Moderately Satisfactory â
Rating Value 4 4 â
Weight 0\.7 0\.3 â
Weighted Value 2\.8 1\.2 4\.0
Final Rating Moderately Satisfactory
E\. OTHER OUTCOMES AND IMPACTS
Gender
50\. Poverty impacts, gender aspects, and social development\. Component 2 did not directly target
poverty alleviation, gender equality, or social development in any particular group\. The main focus was
the quantity and reliability of electricity supplied to the grid\. However, it is expected that the project will
ease the hardships of several households by alleviating power shortage\. Even those households without
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electricity may benefit from the general increase in economic activity brought about by a reduction in the
destructive load shedding and power failures that currently beset the region\. Studies have been done on
the economic effects of unserved electricity\.11 The value of unserved electricity varies greatly depending
on customer category, sector, time of year, duration of outages, and so on, and on the methodology of
calculation, but it is many times the cost of production\. Any relief from power interruptions alleviates
economic damage, financial loss, and social impacts\.
51\. Component 3 implemented activities (small water infrastructure and ecosystems management)
to support communities through income generation, and some indications were provided in the
countriesâ ICRs\. In Niger, 519 persons benefited from capacity reinforcement in fish production, including
149 women\. In Benin, 1,308 persons benefited from small irrigation schemes and 176 communities,
among which 33 percent were women who benefited from other income-generating activities\. In Mali,
small-scale irrigation benefited 1,700 women\. In Guinea, 26,845 persons benefited of which 13,790 were
women\.
Institutional Strengthening
52\. Institutional change/strengthening\. The regional context of the Niger Basin WRDSEM Program
reinforced the institutional mindset in relation to:
(a) Taking a basin perspective, rather than a country perspective, in the optimal and sustainable
management of a river system;
(b) Taking a regional perspective in developing electricity infrastructure to capture economies
of scale, manage reserve margin and power shortages more effectively, and deliver system
ancillary services more efficiently;
(c) Underlining the long-term benefits of cross-border cooperation through the international
context of the program, although the activities in Jebba and Kainji were located wholly
within the Nigerian territory; the links between the institutions of the riparian countries
were strengthened by the collaboration of the Niger Basin WRDSEM Program;
(d) Significantly improving the capacity of Transmission Company of Nigeria (TCN)-Project
Management Unit (PMU) to manage large and complex projects\.
53\. The project coordination and procurement staff benefited from the formal training components
and, more particularly, the workplace experience of administering a wide variety of contract types (works,
goods, and consultants) and procurement methods (International Competitive Bidding, National
Competitive Bidding, Shopping, Direct Contracting, Quality- and Cost-Based Selection, and Individual
Consultants)\.
11Cost of unserved energy â October 2015 â Ulrich Minnaar; Addressing the electricity access GAP â June 2010 â World Bank;
Power outages and economic growth in Africa No7/2012 â Thomas Barnebeck Andersen and Carl-Johan Dalgaard; State of
electricity access report â 2017 â World Bank\.
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Mobilizing Private Sector Financing
54\. Other unintended outcomes and impacts, including mobilizing private sector financing\. The
award of a concession to Mainstream Energy Solutions (MESL) to operate and maintain the Kainji and
Jebba hydropower plants for 15 years (with right of renewal for a further 15 years) involves an unintended
shift in the nature of the benefits accruing to the country from the Kainji and Jebba investments\.
(a) The financial benefits of the sale of electricity from the refurbished plants were accrued by
the concessionaire rather than the state-owned utility
(b) Compensating for this loss, the total cost of refurbishment works in Kainji and Jebba were
reflected in the proposals received from bidders for the concession\. This would have
translated into increased benefits received by the Government as follows:
(i) Higher block concession payments payable under the Concession Agreement;
(ii) Increased revenue stream for the Governmentâs 10 percent share of electricity
payments;
(iii) Higher royalty payments (as more water will be turbined at Kainji); and
(iv) Increased receipts from MESLâs company tax payments\.
55\. Carbon credit\. As a parallel project to the rehabilitation of Kainji dam and hydropower plant, the
IBRD, as trustee of the Umbrella Carbon Facility Tranche 2, signed an Emission Reduction Purchase
Agreement (ERPA) with Power Holding Company of Nigeria (PHCN) PLC in December 2011 for the
purchase of 2,447,650 Certified Emission Reductions (CERs) to be generated by the Kainji hydropower
rehabilitation project between the commissioning date and the end of 2018 (Kainji Hydro Power Plants
Rehabilitation [P111179])\. Due to delays in commissioning, no CERs were certified and issued under the
above-named ERPA by the project\. Following the privatization process of the Nigerian energy sector,
PHCN PLC ceased its activities in late 2013\. The Kainji project was acquired by MESL\. As a result of the
change in ownership, the trustee and MESL agreed and signed an ERPA amendment in June 2017 for the
purchase of a reduced volume of CERs (1,446,411) between the actual project commissioning date
(August 2015) and the end of 2018\. A pre-verification site visit is scheduled to take place in April 2018 to
assess the projectâs compliance with the requirements under the Clean Development Mechanism of the
United Nations Framework Convention on Climate Change\. A verification is expected to take place in late
summer 2018\. This parallel project is scheduled to close by December 31, 2019\.
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A\. KEY FACTORS DURING PREPARATION
56\. Soundness of background analysis\. The project design built on multiple analytical works across
the Niger River Basin that identified relevant and strategic priorities and demonstrated effective benefits
of multi-country and multipurpose activities\. It also built on lessons learned from regional-, national-, and
local-level experiences, ranging from integrated Multipurpose Water Resources Development (MWRD) to
ecosystems management and income-generating activities associated with environmental protection\. The
World Bankâs long-term involvement in the Niger River Basin has been instrumental in promoting regional
and coordinated approaches in the development of natural resources in the river basin that involves nine
countries\. The Kainji and Jebba hydropower plants were in poor condition and offered a cost-effective
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vehicle for furthering many of the development priorities of the Government and the World Bank\. The
design of Subcomponents 2-a and 2-b was based on advice received from operating staff on the most
urgent needs of the two facilities and reflects the lessons learned from similar hydropower refurbishment
projects and the recommendations of previous studies\.
57\. Project design\. The project design was sound and built on the following considerations: (a)
coherence of approach and sustainability at national and regional levels; (b) institution strengthening and
capacity building, (c) infrastructure development and climate variability, (d) regional common goals and
national constituencies, and (e) lessons and experiences from other regional infrastructure APL programs\.
However, safeguards consideration to comply with World Bank operational policy was not estimated in
the project cost at appraisal\. This led to some adjustments in the scope of work to consider the activities
related to safeguard compliance\. The design of the project built on lessons learnt from Global
Environmental Facility operations which did the groundworks for the institutional strengthening of the
NBA\. The design also incorporates the lessons learned from decades of World Bank engagement in river
basins development in Africa and regional projects such as the Niger Basin Reversing Land and Water
Degradation Project (P070256), Senegal River Basin Multipurpose Water Resources Development
(P093826), Hydropower Rehabilitation in Zambia (P035076), and Loess Plateau Watershed Rehabilitation
in China (P056216)\. The institutional setup was designed to ensure ownership and accountability of
institutions/community-based organizations at regional, national, and communities levels\. Additionally,
capacity-building/-strengthening activities were aimed at improving capacities of implementing agencies
which lacked appropriate experience to implement complex projects like the WRDSEM Project\. All of
Component 1 is dedicated to this activity at both regional and country levels\.
58\. Coherence of approach and sustainability\. The project institutional arrangements opted for an
overall project coordination by a unit anchored at the regional level through the NBA\. At country level,
two Government institutions ensured the coherence and the sustainability of actions - the NFS and the
NIA\. The project has been designed such that regional and national activities are developed consistently
and complement each other in terms of generated benefits\.
59\. Regional common goal and national constituencies\. The shared vision supported by the SDAP
constitutes a robust framework for optimal cooperation and coordinated water resources management\.
Activities planned in the project combined (a) institutions strengthening and capacity building at all levels,
(b) ecosystems management, and (c) water infrastructure development, leverage to consolidate the
national agenda, and promotion of regional common goals\. For example, afforestation of upper sources
in Guinea benefited infrastructure in Mali\. Similarly, erosion control and silt reduction in Mali and Niger
positively affected existing water infrastructure in Nigeria\. Conversely the planned injection of 340 MW
of electricity in the grid from the rehabilitation works in Kainji is benefiting Niger and Benin\.
60\. Lessons and experiences from other regional infrastructure APL programs\. The project team has
preferred using the APL instrument which ensures long-term commitment and sustainability in water
resources development and ecosystems management in the Niger River Basin\. The project team has
learned from the design of other APL programs with a regional agenda such as the West Africa Power Pool
and the Senegal River Basin MWRD Program\. The main takeaways from previous APL programs that have
influenced the project are as follows:
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(a) The design of APL programs proving regional umbrella for multifaceted, multicountry
infrastructure projects should be focusing on achieving regional goals/objectives assigned to
regional institutions\. In addition, a subsidiary principle should be applied for activities of
national interest by using the most effective institutions of each beneficiary member state
covered by the program\. These principles applied well for the Niger River Basin WRDSEM
Project\.
(b) The generation of tangible benefits for the stakeholders is important to maintain the full
ownership and for consensus building\. The project has learned from the Loess Watershed
Rehabilitation Project in China\. The activities related to rehabilitation and diversification of
small dams, rehabilitation and extension of small irrigation schemes, support to the
development of traditional fisheries, and watershed restoration and agroforestry are
inspired from these lessons and experiences\.
61\. Adequacy of Government commitment\. None of the governments of the five participating
countries has contributed counterpart funding for the first phase of the Niger Basin WRDSEM Program\.
Nonetheless, the outcomes of project components are adding value and improved systems benefits, both
in critical need in the five countries\. The commitment of the beneficiary countries to the program is
evident in the resources applied to the administration and monitoring of the execution of the works\.
However, some mistakes were observed in Niger with dam failure and in Guinea where the dike collapsed
in Kissidougou (see lesson learned section)\.
Risks and Mitigation Measures
62\. At appraisal, the overall risk of the Niger Basin WRDSEM Project was rated as High\. These high
risks were mainly associated to issues related to additional costs that might have occurred during the
partial rehabilitation of 40-year-old Kainji hydropower plant\. The other risks are related to the fact that a
multisectoral and multi-level scope led to a project design that was both ambitious and complex in a
context of weak governance at regional and country levels institutions\. The design of implementation
arrangements was adapted to the different mandates of organizations and to allow the project to work
on regional, national, and local levels dependent on the ultimate beneficiary\. Institutional strengthening
and capacity-building activities were implemented at all levels to allow involvement and ownership of
actors at national and communities levels on sound regional agenda\. In addition, specific safeguards and
fiduciary trainings have been instrumental in supporting involved implementation teams at regional and
national levels to achieve the expected outputs\.
B\. KEY FACTORS DURING IMPLEMENTATION
63\. Governments commitments and implementation arrangements\. In a complex project like the
WRDSEM Project, of safeguard category A, it is expected to have safeguard issues hindering
implementation\. However, from 2008 to 2013, no critical safeguard issue was raised in Implementation
Status and Results Reports (ISRs), and from 2013 to June 2016, the safeguard compliance rating was
Satisfactory in all ISRs\. However, the midterm review aide memoire raised the issue of delays in preparing
the environmental and social management plan (ESMP) for works planned for Kainji and Jebba\. The
environmental and social risks of Fomi dam studies were rated Moderate in 2016 and in 2017 ISRs\. The
safeguard trainings facilitated by the World Bank supervision team and the project regional management
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and coordination unit to countriesâ implementation agencies had contributed to tackle safeguard
compliance problems before and during investment works implementation\. The project was restructured
twice to consider the low pace implementation speed related to fiduciary issues (procurement and
financial management)\. The first challenge was the first withdrawal and low quality of the project financial
report\. Then at several times, the issue of delays in procurement was experienced by beneficiary
countries, mainly Nigeria in Kainji and Jebba hydropower plant contracts, where about 56 percent of the
project money was allocated\. At regional coordination level, the project team had suffered from the
absence of an internal auditor and the lack of implementation of recommendations from external audits
and the World Bank Financial Management Specialist during supervision mission\. In two beneficiary
countries, (Benin and Guinea) the poor quality of terms of reference has caused delays in procurement
agenda\.
64\. Project implementation\. The project was initially designed to be implemented in five years, but
it took 10 years to close the project\. The project was extended twice to address implementation
challenges, mainly those related to procurement issues, financial management, and safeguards
compliance\. In addition to these challenges, some external factors such as coup dâétats and Ebola
outbreak in Guinea also had an impact on the implementation time of the project\. The project was
managed by five successive task team leaders (TTLs) over its implementation period (representing an
average of two years for every TTL)\. This has also adversely affected the project implementation\. Further,
the delays had negative bearings on the economic efficiency of the project\.
65\. Internal reasons of delays\. The project had faced issues that have delayed its implementation
period\. The first problem was about procurement that caused important delays in the project
implementation mainly on Nigeria power plants rehabilitation works (Kainji and Jebba) which represent
more than 70 percent of project financing\. The first procurement process on the rehabilitation works of
units 5, 6, and 12 of Kainji hydropower was unsuccessful\. The civil works contract for Kainji was signed
only in June 2011 (after more than two years of project implementation)\. In addition, the lack of an ESMP,
at the early stage of the Nigeria part of the project, had also contributed to the project delays\. The
procurement management coupled with safeguards compliance have also caused some delays in
Component 3 of the project\. The project team had alerted the NBA and countries through aide memoires
and management letters on these issues\. Monthly videoconferencing (VC) and ad hoc training were
organized by the project team for close follow-up and capacity reinforcement to improve implementation
conditions\. The two project restructurings mentioned above were done to allow the necessary
adjustments and full implementation of agreed activities\.
66\. External reasons for delays\. Three countries out of five had experienced a coup dâétat (Guinea in
December 2008, Niger in February 2010, and Mali in 2012)\. In addition to these coups, Guinea experienced
the outbreak of Ebola in early 2014\. It was only in end December 2015 that the country was declared
Ebola free\. Both the coup and Ebola has significantly delayed the project implementation\. During the two
events in Guinea, the supervision of the project was done only by VC\. The five countries were affected
differently by the shortcomings mentioned above\. The end project date in Niger was December 2015
(almost 8 years of implementation) and in Benin, Mali, and Nigeria the project ended in June 2016 (8\.5
years of implementation)\. Guinea with the coup and Ebola, implemented the project in 10 years\. It can be
easily seen that external factors had influenced Guinea more than the other two countries (Niger and
Mali), leading to more time to implement the project in Guinea
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67\. World Bank performance\. Since the effectiveness of the project in November 2007 to December
2017, the World Bank team has closely provided implementation support to the project\. At least 20
supervision missions and video conferences were organized to support the project implementation\. An
average of two supervision missions were conducted every year\. This close follow up helped readjust, as
appropriate, the extension of the project, the management of safeguard compliance upstream, and during
the implementation of the works\. For example, at appraisal it had been planned to develop 250 ha
irrigation schemes in Benin, on the basis of the agricultural development option\.12 The supervision team
changed this option and proposed small irrigation schemes with small pumps for every beneficiary
household\. This approach increased the area up to 1,500 ha (six times the original area)\. The close
supervision also facilitated the complex rehabilitation works on Kainji hydropower plant\. In Mali, the non-
acceptance of the population to have more than 2,000 ha irrigation by controlled submersion in
Djambacourou had led to the use of funds for additional activities for fish production\.
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A\. QUALITY OF MONITORING AND EVALUATION (M&E)
Overall rating of M&E: Modest
M&E Design
68\. Quality of M&E design\. The M&E design is described in the PAD\. The M&E system considers the
multisectoral regional nature of the Niger Basin WRDSEM Program by specifying a system that is
decentralized to facilitate data collection in each of the five participating countries\. Under the institutional
arrangements, the NBAâs observatory has overall responsibility for M&E and reports to the regional
Steering Committee and to the NBAâs Council of Ministers\. The Results Framework indicators (PDO and
intermediate outcome indicators) are well aligned with the PDO as shown in the theory of change\.
69\. The M&E system operates at two levels of planning and implementation: regional level (NBA)
and country level (NFS and NIAs)\. The main NIA coordinates the actions of many other subnational
implementers\. In terms of the monitoring and reporting structure, the subnational implementers provide
monthly and quarterly reports to the NIA\. The NIA consolidates these reports and provides quarterly
reports to the NFS who will in turn send consolidated quarterly, half-yearly, and yearly reports to the NBA\.
70\. The M&E data collection system was designed to allow the progress monitoring against the
Results Framework to track PDO outcome and intermediate outcome indicators as defined in the PAD
and in the subsequent Restructuring Paper of December 2014\. Responsibilities for data collection were
specified in annex 6 of the PAD\. The design of the M&E system was sufficient to assess the achievement
of the original PDO and test the links in the results chain\.
M&E Implementation
71\. Quality of M&E implementation\. During the project implementation, the monitoring and
reporting structure followed the designed structure, mainly in the beneficiary countries\. Data information
were provided monthly and quarterly to the respective main NIA from subnational implementers\. The NIA
12 At appraisal, the agricultural development option was community-based with large pumping stations and irrigation channels\.
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prepared and submitted quarterly reports to the NFS who in turn sent quarterly, half-year, and yearly
reports to the NBA regional project coordination unit\. It often happened that reports were not sent on
due time by involved countries but at least an annual report was sent annually\. The data collected allowed
the World Bank supervision missions to inform the ISRs\. The PMCU at the NBA had played the role
assigned to the NBA observatory in M&E\.
M&E Utilization
72\. Quality of M&E utilization\. The M&E system is being used to inform the project regional Steering
Committee and NBA management about progress during the annual meetings of the institution\. As
mentioned in the previous section, it also informed the World Bank ISRs and aide memoires\. However,
the observatory, which is supposed to play the role of department M&E and report all project activities
to the regional Steering Committee and to the NBAâs Council of Ministers, is not taking care of this
responsibility\. Projects including WRDSEM are not sending their data to the observatory; the NFS yearly
reports are sent to the regional project management coordination unit and all projectsâ data information
are kept at this level\. The platform that exists at the observatory is not fed with project information and
data collected from riparian countries, while the planned capacity reinforcement activities to the
observatory were delivered\. This raises the issue of sustainability and future use of these data after the
closure of the projects (WRDSEM and other projects managed and coordinated by the NBA)\.
Justification of Overall Rating of Quality of M&E
73\. Shortcomings highlighted in the design, the implementation and utilization are important\. The
overall rating of M&E is Modest\.
B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
74\. Environmental compliance\. The project is classified as category A in the Environmental
Assessment classification of the World Bank, primarily due to the preparation of studies for regional water
infrastructure in Nigeria, Niger, Guinea, and Mali (Zungeru, Kandadji, Fomi, and Taoussa)\. The subprojects
financed by the project are not expected individually to have significant environmental and social impacts;
nevertheless, accumulative impacts may be more severe\.
75\. At appraisal, seven environmental safeguard policies were triggered by the project, including:
(a) Environmental assessment (OP/BP 4\.01), (b) Natural Habitats (OP/BP 4\.04), (c) Physical Cultural
Resources (OP/BP 4\.11), (d) Involuntary Resettlement (OP/BP 4\.12), (e) Forests (OP/BP 4\.36), (f) Safety
of Dams (OP/BP 4\.37), and (g) Projects on International Waterways (OP/BP 7\.50)\. The policy on Pest
Management (OP 4\.09) was triggered during the 2014 project restructuring\. The World Bank April 2007
guidelines on environment, health, and security are also applicable to the project\.
76\. The PMCU has appointed a safeguards specialist in the core team, and in the respective
beneficiary countries, the NFS/NIA has at least one focal person for the safeguard issues\. Specific
trainings were delivered to implementation agencies and to the PMCU to mainstream safeguard issues
before works execution and during their implementation\.
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77\. OP/BP 4\.01 (Environmental Assessment)\. Safeguard activities were planned from the beginning
of project activities in 2008\. To ensure compliance, the project conducted specific studies and created an
action plan in accordance with respective countries and World Bank safeguards policies\. For Kainji and
Jebba rehabilitation works, environmental and social audits were conducted and an ESMP established for
works implementation\. Many other environmental studies were conducted for regional water
infrastructure at Kandadji (Niger) and Fomi (Guinea)\.
78\. In the case of Component 3, the project has established the Environmental and Social
Management Framework and the Resettlement Policy Framework in accordance with respective
countriesâ safeguard policy frameworks\. Environmental and social systems assessments in beneficiary
countries were conducted and safeguard clauses were included in all bidding documents\.
79\. OP/BP 4\.04 (Natural Habitats)\. The activities funded under the project did not affect critical
natural habitats\. As part of the project implementation, environmental and social assessments were
prepared for Components 2 and 3 and measures to protect, maintain, and rehabilitate natural habitats
have been reflected in the ESMPs, in accordance with OP/BP 4\.01 (Environmental Assessment)\.
80\. OP/BP 4\.09 (Pest Management)\. The project financed small irrigated areas with very limited use
of pesticides\. To meet the requirements of this safeguard policy, environmental and social impact studies
have been carried out and, among the proposed mitigation measures, public awareness sessions on good
management practices and use of pesticides by the concerned operators have been provided to minimize
specific potential negative effects on human and animal health and the environment and to promote
integrated pest control\.
81\. OP/BP 4\.36 (Forests)\. The project financed activities for participatory development of classified
forests and reforestation\. In accordance with OP 4\.01, environmental and social assessments have been
prepared and measures have been taken to reduce deforestation, enhance the contribution of forested
areas to the environment, promote afforestation, combat poverty, and promote economic development,
all of which were reflected in these reports\.
82\. OP/BP 4\.37 (Safety of Dams)\. The project financed small dams in Benin and Niger\. It also financed
the rehabilitation works of the Kainji and Jebba dams in Nigeria\. At the level of small dams, appropriate
measures have been taken to ensure the safety of these small dams, in accordance with Article 1 of this
safeguard policy\. Generic safety measures designed by qualified engineers have been proposed in
accordance with Article 4 of OP 4\.37\. The environmental and social impact study carried out made
recommendations to ensure the quality of the design, execution of works, and monitoring and
maintenance of small dams to ensure good maintenance\. In addition, a management strategy for
rehabilitated small dams has been developed to allow users to better manage the infrastructure\. These
measures have been reflected in the ESMP in accordance with OP/BP 4\.01\.
83\. For rehabilitation work on the Kainji and Jebba dams in Nigeria, measures were also taken to
ensure the safety of the two existing dams in accordance with the provisions of this safeguard policy\.
During project preparation, an environmental and social audit was carried out for the Kainji and Jebba
dams\. During the implementation of the project, the ESMP of the two dams was updated and
supplemented by a rapid social assessment in 2010â2012\. To implement the updated ESMP
recommendations, another study on the implementation of the Kainji and Jebba Dam Safety System and
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the development of an epidemiological survey of waterborne diseases in the areas of both dams was
commissioned in 2013\.
84\. OP/BP 7\.50 (Projects on International Waterways)\. In accordance with the provisions of this
safeguard policy, notification to riparian states has been made\. It has been verified that there are
agreements between the NBA and its member states and that they have been informed and have not
objected to the project interventions\. As the regional executing agency for the project, the NBA has
consulted all its member countries and received their approval at the 2006 Council of Ministers\. It has also
informed all the member countries by official correspondence since the start of the first phase of the
project and the âno objectionâ condition was received before project negotiations\.
85\. Social compliance\. To consider possible resettlement in the project, OP/BP 4\.12 was triggered\.
Nevertheless, activities implemented in the project did not cause involuntary resettlement of the
population as key activities are about existing infrastructure rehabilitation owned by the Government
(Kainji, Jebba) or by communities (irrigation schemes, small dams)\. The realization of remaining activities
for traditional fishery, watershed restoration, and agroforestry was done in participatory approaches and
agreed by all\. Any resettlement was identified and land losses are minimal and accepted by the
population\.
86\. However, in the planned irrigation by controlled submersion in Djambacourou (Mali), safeguard
studies have shown economic and social impacts of the project that led to issuing an RAP to mitigate
the project impact\. By the end, the population has rejected the implementation of the project in
Djambacourou and funds were used to scale up fish production and commercialization\.
87\. With respect to physical cultural resources, a âfortuitous discoveryâ procedure has been
implemented and followed in case of discovery of cultural and archaeological remains during dam
rehabilitation works in accordance with the requirements of OP 4\.11\.
Fiduciary Compliance
88\. Financial management\. The overall project financial management can be rated Modest\. The
PMCU at the NBA has, in the project team, an accountant and an internal control person for the overall
project financial management\. It is worth noting that the internal control person resigned in July 2012 and
was not replaced until the end of the project\. An external auditor is recruited for the annual financial
audit\. At country level, the NFSs and NIAs also have an accountant for each structure\. However, since the
beginning, until approximately the end of project implementation, issues of compliance of the project
financial management were highlighted\. The financial management risk rating was Substantial during the
project implementation\. The key issues were mainly noncompliance and reporting\.
89\. Procurement\. The overall procurement management rating is Modest\. The PMCU at the NBA has
a regional procurement specialist; in addition, there is a procurement specialist in the core team of every
country NIA\. During the project implementation, the World Bank team conducted specific procurement
reviews of the PMCU and NIAs to improve procurement processing and contract management\.
Alternatively, the overall supervision missions were also an opportunity to review procurement issues\.
Globally the project procurement questions were well-managed; however, many issues have caused
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
implementation delays in almost all the beneficiary countries (Benin, Guinea, Mali, and Nigeria)\. The key
issues were mainly the repetitive delays in procurement processes and contracts signing\.
C\. BANK PERFORMANCE
The overall rating of the Bank performance is Moderately Satisfactory (MS)
Quality at Entry
90\. The project was consistent with the regional, national, and World Bank strategic priorities\. It
supports the Niger Basin regional integration efforts that (a) have economic and social benefits, (b)
present clear evidence of both country and regional ownership, and (c) provide a platform for high-level
policy harmonization\. The project is a response to a request from riparian countries, demanding the
support of the World Bank, based on its convening power to gather other donors who can finance large
investment needs\. The World Bank team supported a complex, multi-country joint water resources
development that promotes shared benefits and fosters regional integration\. This requires layered
intervention, with responsibilities at the regional, national, and community level, which amplified the
toughness of the project during implementation\. The World Bank team did the project design in a way
that benefited both women and young people by income-generating activities at community level through
Component 3 of the project\.
91\. There were some shortcomings in the quality at entry, especially in underestimation of costs
and risks consideration\. These shortcomings were remedied at the midterm evaluation in 2011 and at
the 2014 project restructuring\. On the issue of the budget, the project has downscaled the scope in Niger,
Benin, and Nigeria\. The political and security situation was not adequately considered at preparation as a
risk to implementation\. Monitoring the outcome and intermediate outcome of the Development Policy
Operation was well-designed\. However, the project design did not include, in the M&E system, how the
number of beneficiaries should be monitored on a quarterly basis\.
Quality of Supervision
92\. The World Bank team has shown continuous and valuable support to the project through
dedicated training on safeguards and appropriate advice on fiduciary and technical aspects\. The project
was restructured twice to consider its implementation challenges that had caused delays in activitiesâ
execution\. The World Bankâs team identified the project shortcomings on time and proceeded with
appropriate measures (restructurings, alerting clientâs decision makers, and technical support)\. Strong
supervision by World Bank safeguard and procurement/financial management teams assisted specialists
in the PMCU to build capacity\. The PMCU was then able to build capacity in the NIA and NFS in a sort of
cascading effect\.
93\. One of the shortcomings in the supervision is the continuous change of TTLs\. In a 10-year
supervision, the project has had five TTLs, meaning, on average, a different TTL every two years\. However,
this shortcoming was moderated by the fact that the tasks team was almost the same\.
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Justification of Overall Rating of Bank Performance
94\. The World Bank performance rating is Moderately Satisfactory (MS) as shortcomings are
identified at entry and during the project implementation\.
D\. RISK TO DEVELOPMENT OUTCOME
95\. The project development outcomes can be classified in three-areas\. Some are under the direct
responsibility of the regional organization, NBA\. One is under the Nigerian Governmentâs responsibility,
and two others are under the responsibility of the benefiting communities\.
96\. Risk engaging the NBA\. The sustainability of the development outcome related to âregional
coordinationâ (almost achieved) under the project is under the responsibility of the NBA\. The threat on
this development outcome is when the leadership of the NBA management becomes weak\. A continued
weak leadership of NBA management leads to friction and mistrust at the higher level of riparian countries
and inefficiencies of the NBA\. In this case, the tendency to go back to competitive unilateral development
from countries becomes important\.
97\. Risk engaging the Nigerian Government\. The Nigerian Government was responsible for the
outcome âImproved performances of rehabilitated hydroelectric plants in targeted areasâ? (fully achieved)\.
The Nigeria Government had appointed a private operator (MESL) to run the rehabilitated Kainji and Jebba
hydropower plants through a concession contract\. It is expected that MESL will continue to invest in the
two power plants; however, since issuing this concession contract in February 2013, no important
investment was made by MESL to extend the energy production\. The ICR team understands the
concession contract is aiming at the sustainable maintenance and development of Jebba and Kainji
production in the medium and long term\.
98\. Risk engaging beneficiary communities\. The development outcomes directly involving the
beneficiary communities are as follows: âImproved irrigated agriculture in targeted areasâ? which is fully
achieved and âImproved watershed management in targeted areasâ? which is almost fully achieved under
the project\. The major threat for sustainability of development outcomes is the weakness of the
managerial, organizational, and technical capacities of farmersâ organizations regarding the production
process as well as the commercialization of the marketable part\.
V\. LESSONS AND RECOMMENDATIONS
99\. The project was faced with a set of related challenges revolving around the following question:
how to design a regional project that accommodates at the same time local, national and regional agendas
considering the disparity of approaches and existing capacities? The first challenge was to check whether
the regional institution, the NBA, had the technical and institutional mechanisms to implement a project
that satisfy all\. The second challenge was the alignment of the regional development priorities with the
country-level priorities of riparian countries\. The third challenge was how to setup a country-level
organization that ensures both country and regional ownership of activities to be implemented\. These
challenges were adequately considered in the project design\.
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100\. Need for adequate technical and institutional capacity\. The organizational reform conducted in
2005 had led to the reorganization of the institution during the project preparation\. The training and
equipment needs were identified and actions planned under the project to enforce the readiness of the
NBA to coordinate the development of the basinâs water resources\. This, together with the strong
complementarity of donorsâ support demonstrates that the setup was correct and the inputs (training,
equipment, and processes) well thought out\. However, and it was quite inevitable, the organization that
took up the project in 2007 was young and many of its staff had been recruited only recently\. Was there
a way to do it differently? Probably not because (a) the NBA had to begin a development phase after
having successfully piloted a planning phase, and (b) only training in implementation can really build the
capacity\.
101\. Alignment of the regional priorities with those of riparian countries\. The SDAP is well aligned
with the countriesâ priorities\. In addition, the project design was done in a way that project activities in
the countries are aligned with both the SDAP and the World Bank Country Strategy of the respective
countries\. This comprehensive approach had facilitated the buy-in of all involved actors\. The combination
of ecosystems management and water infrastructure development provide leverage to consolidate
national agendas and promote a regional common goods approach\. For example, activities planned in
Component 2 and those in Component 3 are a good illustration of local, national, and regional agendas\.
Watershed restoration in Niger and Benin will benefit dam reservoirs from siltation in Kainji and Jebba in
Nigeria and conversely energy production in Jebba and Kainji will benefit Niger and Benin\. These five
countries, like all countries are engaged in a development agenda on numerous fronts (like ECOWAS) or
large donor-funded programs\. One of the interesting questions is: 10 years after they were formulated,
how many of the non-implemented activities of the SDAP appear relevant to finance today or in the
future? Two conflicting logics can be identified: on the one hand, the NBA considers itself as the guarantor
of the regional plan (and of its discrete activities and investments), and on the other hand, countries may
want to suggest other activities that still match the criteria of the plan\. They tend to favor a certain degree
of flexibility\. The institutional communication should be set up in such a way that it helps reconcile these
two perspectives\.
102\. Organization to ensure both country and regional ownership\. As a regional project, its objectives
were articulated around objectives assigned to the NBA and to countries by extension\. NBA was
responsible for the overall implementation and coordination of the project while the subsidiary principle
was applied and activities planned for countries were implemented by national agencies embedded in
national institutions (Components 2 and 3)\. The project implementation arrangements were articulated
around the NBA, its NFSs and NIAs, where the creation of the NFSs responded to the need of the riparian
countries to have a permanent technical arm of the NBA\. The NIAs directly executed activities according
to their area of expertise\.
103\. Risks inherent in working with multi-countries, including some fragile states\. When dealing with
a complex project involving many countries, including fragile states, it is important to consider the risks
assessment of the externally driven delays and provision of a contingency plan to mitigate accordingly to
the risk\. In the current project this risk was not assessed properly\. Unfortunately, the coup dâétat in
Guinea, Niger, and Mali and Ebola outbreak in Guinea occurred without any contingency plan\. The result
is known, this had contributed in the project extension to 10 years of project implementation instead of
5\.
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104\. Need for adequate supervision\. Project implementation requires periodic field presence and
continuous follow-up by task teams and continuity in the team leadership\. The close follow-up of project
implementation by the task team had help keeping the project in acceptable shape in compliance with
World Bank policies in terms of safeguards, financial management, and procurement\. However, the
frequent changes of TTL did not help\. An in-depth diagnosis of the social aspect during the project
preparation of the development of the plain of Diambacourou could have amplified the effectiveness of
the project in Mali\. In Benin, the project had started very slowly because of inefficient institutional
arrangements, with bottlenecks linked to the fact that the contracted staff recruited for project
management are much better paid than those responsible for the NIA and NFS\. For phase 2, a reflection
is needed to unlock this kind of constraint\. Some political or regional decisions may threaten the project
implementation\. In Guinea, for example, the Government conducted some reforms which has withdrawn
(de facto withdrawal) from the DNGR13, the NIA, its prerogatives in terms of the selection of consulting
companies and contractors, and also in the works supervision for the benefit of the Public Major Project
Controlling/Procurement Authority\. In Nigeria, the Government implemented a Treasury Single Account
(TSA) policy which closed all Government accounts in commercial banks and transferred the money to the
Central Bank of Nigeria (CBN)\. The process of opening a TSA account with the CBN by the PMU took over
five months\. The urgent need for more rigorous technical supervision of studies and work\.
105\. Importance of setting reasonable levels of ambition to build a track record of success with basin
authorities: the original project was ambitious relative to its implementation period in terms of both the
legal reforms and some of the infrastructure activities\. This resulted in the project quickly falling behind
in its original implementation plan and tensions between NBA and its member states and partners\. As a
relatively new entity working in a complex, multi-country context, it would probably have been more
constructive to set less ambitious goals with a higher probability of achievement to build a track record of
success leading into the following phase\.
106\. Bidding Documents for Plant Refurbishment: Refurbishment of an electromechanical plant
within a âliveâ operating facility is expected to encounter unforeseen needs as parts are removed and
anticipated repairs may not provide the results expected\. In these situations, the World Bank Standard
Bidding Documents need to be adapted to build into the contract the flexibility and mechanisms to deal
with issues that typically arise in such projects\.
107\. Successes that Need Replication and Improvement in Next Projects: Activities implemented in
Component 3 are directly benefiting the communities in Benin, Guinea, Mali, and Niger\. A wide range of
these activities has successfully achieved the expected development outcomes and even exceeded the
initial targets (traditional fishery, watershed restoration and agroforestry, and small-scale irrigation)\.
These successful activities deserve to be continued and intensified in future projects\. These activities not
only boost the local economy but also contribute to improving the environment through the regeneration
of ecosystems\. The managerial, organizational, and technical capacities reinforcement activities
implemented by the project for beneficiaries and their organizations, regarding the production process as
well as the commercialization of the marketable part, have been a key factor for sustaining development
outcomes\. The inclusion of such capacity-building activities in similar projects is therefore a decisive step
for the viability of development actions\.
13 DNGR: Direction Nationale du Génie Rurale
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108\. Water Resources Management regulatory triggers (covenants) and large investments to speed
up the establishment of a regulatory framework: the project contributed to create in a very short time a
complete Integrated Water Resources Management regulatory framework in the Niger Basin based on
the Water Charter that was ratified in less than two years\. It is recognized as one of the most
comprehensive ones in Africa\. This is owed to a large extent to (a) the inclusion of some of them as dated
covenants; (b) the fact that the project financed large water resources investments (notably the Kainji et
Jebba dams)\. The use of such mechanisms is interesting\. It should however be accompanied by a thorough
enough political process so that countries really own and enforce this legal framework they get to agree
upon\.
\.
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS
A\. RESULTS INDICATORS
A\.1 PDO Indicators
Objective/Outcome: Enhance regional coordination for Water resources management in Niger River Basin (original project PDO)
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Number of legal instrucments Number 0\.00 4\.00 4\.00 1\.00
adopted by riparian
integrated water countries 29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
for integrated water
resources management at
regional level\.
Comments (achievements against targets): the adoption of one out of four legal instruments for integrated water resources management at regional level
by riparian countries\. the adopted instruments are: (I) regional environmental code\. The three other legal instruments were not adopted during the
project lifetime, However, good progress were made on the studies leading to the adoption of two legal instruments\. "the Agreement on Joint
Management of Infrastructureâ? and âthe Agreement on Dispute Resolution and Arbitrageâ?\. With the 2014 restructuring, due to the unavailability of
sufficient funds in the project, it was agreed to finalize the work done through the CIWA supported project (ongoing P149714)\. The "Agreement on
Common Guarantee of Infrastructure" was not achieved neither, but GIZ is willing to finance the studies related to legal instrument in 2019\. In Conclusion:
(i) the legal instrument on "Regional environmental code" was achieved; (ii) good progress is maid in the achievement of the following legal instruments
with strong likelihood, "the Agreement on Joint Management of Infrastructureâ? and âthe Agreement on Dispute Resolution and Arbitrageâ?; (iii) the
"Agreement on Common Guarantee of Infrastructure" was not achieved but the studies related to this agreement will be financed by GIZ\.
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Objective/Outcome: Enhance regional development of water resources in the Niger River Basin (Original project PDO)
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Generation Capacity of Megawatt 0\.00 340\.00 340\.00 340\.00
Hydropower constructed or
rehabilitated under the 29-Nov-2012 29-Nov-2007 31-Dec-2017 11-Dec-2017
project
Generation Capacity of Megawatt 0\.00 578\.00 578\.00 578\.00
Hydropower rehabilitated
under the project (Jebba) 29-Dec-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Generation Capacity of Megawatt 0\.00 340\.00 340\.00 340\.00
Hydropower rehabilitated
under the project (Kainji) 29-Dec-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Comments (achievements against targets): hydropower capacity increased to 340 MW, rehabilitated or reinforced under the project (340 MW for Kainji
rehabilitation and securing the existing production of 578 MW for Jebba)
Objective/Outcome: Enhance regional coordination in Niger River Basin (Revised PDO)
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Percentage of activities Percentage 0\.00 100\.00 100\.00 100\.00
implemented according to
the Niger Basin Sustainable 29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Development Action Plan
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Comments (achievements against targets): At the end of the project, 100 percent of activities implemented under the project are aligned with the Niger
Basin SDAP (there are 34 activities planned in the SDAP and all activities implemented under the projects are in accordance with 20 activities of the SDAP)
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Number of legal instrucments Number 0\.00 4\.00 4\.00 1\.00
adopted by riparian
integrated water countries 29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
for integrated water
resources management at
regional level\.
Comments (achievements against targets): the adoption of one out of four legal instruments for integrated water resources management at regional level
by riparian countries\. the adopted instruments are: (I) regional environmental code\. The three other legal instruments were not adopted during the
project lifetime, However, good progress were made on the studies leading to the adoption of two legal instruments\. "the Agreement on Joint
Management of Infrastructureâ? and âthe Agreement on Dispute Resolution and Arbitrageâ?\. With the 2014 restructuring, due to the unavailability of
sufficient funds in the project, it was agreed to finalize the work done through the CIWA supported project (ongoing P149714)\. The "Agreement on
Common Guarantee of Infrastructure" was not achieved neither, but GIZ is willing to finance the studies related to legal instrument in 2019\. In Conclusion:
(i) the legal instrument on "Regional environmental code" was achieved; (ii) good progress is maid in the achievement of the following legal instruments
with strong likelihood, "the Agreement on Joint Management of Infrastructureâ? and âthe Agreement on Dispute Resolution and Arbitrageâ?; (iii) the
"Agreement on Common Guarantee of Infrastructure" was not achieved but the studies related to this agreement will be financed by GIZ\.
Objective/Outcome: Improve water resources management in the Niger River Basin (Revised PDO)
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Generation Capacity of Megawatt 0\.00 340\.00 340\.00 340\.00
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Hydropower constructed or 29-Nov-2012 29-Nov-2007 31-Dec-2017 11-Dec-2017
rehabilitated under the
project
Generation Capacity of Megawatt 0\.00 578\.00 578\.00 578\.00
Hydropower rehabilitated
under the project (Jebba) 29-Dec-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Generation Capacity of Megawatt 0\.00 340\.00 340\.00 340\.00
Hydropower rehabilitated
under the project (Kainji) 29-Dec-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Comments (achievements against targets): hydropower capacity increased to 340 MW, rehabilitated or reinforced under the project (340 MW for Kainji
rehabilitation and securing the existing production of 578 MW for Jebba)
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Land area under sustainable Hectare(Ha) 0\.00 2250\.00 13439\.00 10620\.00
landscape management
practices 29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Comments (achievements against targets): The project achievements are 10,620 ha of land where sustainable practices were adopted\. the distribution is
as follow: (Benin - 1,815 ha of which 1,115 ha was improved; Niger - 7,500 ha of which 7,965 ha delivered; Mali - 2,866 ha planned and 590 ha improved;
and Guinea - 950 ha planned and 950 ha delivered)\.
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Direct project beneficiaries Number 0\.00 0\.00 55\.00 3\.20
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(millions) 29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Female beneficiaries Percentage 0\.00 0\.00 31\.90 1\.57
29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Comments (achievements against targets): The restructuring of December 2014 added a new PDO indicator to reflect the number of beneficiaries\.
However, the proposed target was 55 million people mainly based on the assumption that electricity generation from dam rehabilitation and
refurbishment would benefit to all the population living in the River Basin in Nigeria\. Basically, the simplistic assumption theorizes that any KWH produced
into the grid would automatically generate as many beneficiaries as inhabitant in the River Basin\. With hindsight, the ICR proposes a more realistic and
rigorous approach to estimate the number of beneficiaries from electricity generation based on a minimum energy consumption of 250 Kwh per capita per
year recommended by the International Energy Agency\. Considering that, the project enabled the production of incremental electric energy estimated at
796, 977 MWh per year, the number of beneficiaries are objectively estimated at 3,187,908 people\. In Benin, 1,500 people benefitted from irrigation while
2,335 benefitted from other income-generating activities\. The total number of direct beneficiaries is estimated at 3,835 people of which 2,335 are females\.
In Guinea, the number of beneficiaries is estimated at 1,600 people half of whom are females\. In Mali, 200 people benefitted from river bank protection
training, 1,700 women from Burgu production, and 7,000 people from training sessions\. The total number of beneficiaries is estimated at 8,900 people of
which 1,700 are females\. In Niger, the project benefited at least 8,875 people of which 4,438 are females\. In total, the project beneficiaries are estimated
at 3,211,118 people of which 1,580,912 females\.
A\.2 Intermediate Results Indicators
Component: Component 1: NBA institutional strengthening and capacity building
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Component 1: Percentage of Percentage 0\.00 100\.00 100\.00 100\.00
monthly and/or annual water
resources information 29-Nov-2007 29-Nov-2007 31-Dec-2017 16-Jun-2017
database publicly available
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on NBA website\.
Comments (achievements against targets): 100 percent of monthly and/or annual water resources information database publicly available on the NBAâs
website
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Component 1: Number of Number 0\.00 2\.00 3\.00 0\.00
water management meetings
held per year by the 29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Permanent Water
Commission (PWC)\.
Comments (achievements against targets): the PWC was supposed to hold at least three water management meetings per year\. This PWC was in place
since 2013, but since then no meeting was held\.
Component: Component 2: Rehabilitation, optimization, and development of regional infrastructure
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Component 2: Number of Number 0\.00 10\.00 9\.00 9\.00
Kainji hydropower units
rehabilitated and Jebban 29-Nov-2007 29-Nov-2007 31-Dec-2017 16-Jun-2017
units reinforced
Comments (achievements against targets): Nine units rehabilitated/reinforced in Kainji and Jebba hydropower (three units rehabilitated in Kainji and six
units in Jebba) representing 100 percent of planned units to be rehabilitated/reinforced
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Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Component 2: Kainji dam Text Faulty Full replacement or Full replacement or Faulty
monitoring and instrumentation and repair of recording repair of recording instrumentation and
instrumentation equipment monitoring equipment instrumentation and instrumentation and monitoring equipment
updated in Kainji and Jebba at Kainji and Jebba monitoring equipment monitoring equipment at Kainji and Jebbah
at Kainji and Jebba\. at Kainji and Jebba\. repaired and
commissioned \. 100 %
achieved
29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Comments (achievements against targets): The targeted updating of dam monitoring and instrumentation equipment has been achieved\. There are no
remarks on post commissioning faults/underperformances of the systems
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Component 2: Number of Number 0\.00 4\.00 3\.00 3\.00
dam sites with completed
feasibility studies\. 29-Nov-2007 29-Nov-2007 31-Dec-2017 19-Dec-2016
Comments (achievements against targets): 100 percent of dam sites had the feasibility studies completed (one in Nigeria with a hydropower master plan
in Niger basin located in Nigeria, one in Niger with Kandadji dam, and one in Guinea with Fomi dam)\. The revised end project target is three sites with
feasibility studies
Component: Component 3: Sustainable management of selected degraded ecosystems and rehabilitation of small water infrastructure
Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at
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Target Completion
Component 3: Hectares Hectare(Ha) 0\.00 1000\.00 2205\.00 2655\.00
afforested for ecological or
income generation purposes\. 29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Comments (achievements against targets): 2,655 ha afforested for ecological or income generation purposes (1115 ha in Benin, 950 ha in Guinea and 590
ha in Mali) while the end project target was 2,205 ha
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Component 3: Hectares of Hectare(Ha) 0\.00 1200\.00 5005\.00 2126\.00
irrigation schemes
rehabilitated\. 29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Comments (achievements against targets): 2,126 ha of irrigation schemes rehabilitated (620 ha in Niger, 1500 ha in Benin and 6 ha in Mali) with end-
project target of 5,005 ha, corresponding to 42 percent of the expected target
Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Number of small dams Number 0\.00 12\.00 8\.00 6\.00
rehabilitated in Niger and
Benin\. 29-Nov-2007 29-Nov-2007 31-Dec-2017 16-Jun-2017
Comments (achievements against targets): Six small dams out of eight rehabilitated in Benin and Niger\. It should be noted that the small dam
rehabilitated in Niger collapsed before the formal acceptance of works\. The Government of Niger had committed to rebuild the collapsed dam but to date
it is still not rebuilt\.
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Formally Revised Actual Achieved at
Indicator Name Unit of Measure Baseline Original Target
Target Completion
Component 3: Hectares of Hectare(Ha) 0\.00 2250\.00 2250\.00 8555\.00
areas stabilized against
erosion\. 29-Nov-2007 29-Nov-2007 31-Dec-2017 11-Dec-2017
Comments (achievements against targets): 8,555 ha (7965 ha in Niger and 590 ha in Mali) of areas stabilized against erosion while the end project target
was 2,250 ha\.
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B\. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1: Enhance regional coordination in Niger River Basin
1\. Percentage of activities implemented according to the Niger Basin
Sustainable Development Action Plan
Outcome Indicators
2\. Number of legal instruments adopted by riparian countries for
integrated water resources management at regional level
1\. Percentage of monthly and/or annual water resources information
database publicly available on the NBA's website\.
Intermediate Results Indicators
2\. Number of water management meetings held per year by the
Permanent Water Commission (PWC)
1\. Capacity reinforcement/building activities
Key Outputs by Component 2\.
(linked to the achievement of the Objective/Outcome 1) 3\.
4\.
Objective/Outcome 2: Improve water resources management in the Niger River Basin
1\. Generation capacity of hydropower rehabilitated under project
2\. Land area where sustainable land management practices were
Outcome Indicators adopted as a result of project\.
3\. Direct beneficiaries from the project\.
4\. Female beneficiaries\.
1\. Number of Kainji hydropower units rehabilitated/reinforced in
Kainji and Jebba hydropower
2\. Kainji dam monitoring and instrumentation equipment updated in
Intermediate Results Indicators Kainji and Jebba
3\. Number of dam sites with completed feasibility studies
4\. Hectares afforested for ecological or income generation purposes
5\. Hectares of irrigation schemes rehabilitated
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6\. Number of small dams rehabilitated in Niger and Benin
7\. Hectares of areas stabilized against erosion
1\. Activities for energy production/securing and dam sites feasibility
studies
Key Outputs by Component
2\. Activities for small-scale irrigation and small damâs construction
(linked to the achievement of the Objective/Outcome 2)
3\. Activities for watershed restoration and agroforestry
4\. Activities for fish production
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ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A\. TASK TEAM MEMBERS
Name Role
Preparation
Supervision/ICR
Pierrick Fraval Task Team Leader(s)
Alpha Mamoudou Bah, Sylvain Auguste Rambeloson, Ibrah Procurement Specialist(s)
Rahamane Sanoussi
Josue Akre Financial Management Specialist
Vincent Roquet Team Member
Amadou Soumaila Team Member
Abdoul Wahabi Seini Social Safeguards Specialist
Federico Ciampitti Team Member
Jean Vincent Koua Team Member
Medou Lo Environmental Safeguards Specialist
Amos Abu Team Member
Taibou Adamou Maiga Team Member
Mariama Yaye Mme Gamatie Team Member
Caroline Plancon Team Member
Laura Bonzanigo Team Member
Nicolas Jean Marie Sans Team Member
Mohamed Nanzoul Team Member
Yoro Sidibe Team Member
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B\. STAFF TIME AND COST
Staff Time and Cost
Stage of Project Cycle
No\. of staff weeks US$ (including travel and consultant costs)
Preparation
FY05 22\.399 91,339\.33
FY06 43\.149 173,494\.30
FY07 95\.743 584,085\.45
FY08 -\.004 0\.00
Total 161\.29 848,919\.08
Supervision/ICR
FY07 0 4,833\.03
FY08 41\.579 309,452\.58
FY09 35\.706 369,602\.13
FY10 36\.063 437,984\.12
FY11 61\.592 782,522\.24
FY12 41\.492 625,383\.26
FY13 36\.791 526,562\.13
FY14 34\.746 372,505\.19
FY15 35\.476 132,539\.78
FY16 43\.128 182,972\.77
FY17 9\.132 40,661\.20
FY18 31\.833 191,027\.06
Total 407\.54 3,976,045\.49
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ANNEX 3\. PROJECT COST BY COMPONENT
Amount at Amount at 2014
Actual at Project Percentage of
Components Approval Restructuring
Closing (US$M) Approval (US$M)
(US$M) (US$M)
Component 1: NBA 7\.77 10\.73 12\.37 159%
Institutional
Strengthening and
Capacity Building
Component 2: 138\.45 134\.62 126\.09 91%
Rehabilitation,
Optimization and
Development of Regional
Infrastructure
Sustainable Management 39\.78 40\.65 47\.54 120%
of selected degraded
ecosystems and
rehabilitation of small
water infrastructure\.
Total 186\.00 186\.00 186\.00 100%
PROJECT COST BY COUNTRY
Amount at Approval Amount at 2014 Restructuring
Country/Institution
(US$M) (US$M)
Benin 9\.00 9\.00
Guinea 9\.00 9\.00
Mali 18\.00 18\.00
Niger 15\.00 15\.00
Nigeria 135\.00 135\.00
NBA
Total 186\.00 186\.00
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
ANNEX 4\. EFFICIENCY ANALYSIS
Economic and Financial Analysis
Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project
A\. Project Objectives and Scope
1\. The economic analysis of the project is based on CBA of the different subprojects implemented in
the five project countries\. The analysis captures the combined benefits and costs from hydropower
generation, irrigation, fisheries, fodder production, reforestation, and agroforestry\. The analysis covers
30 years, including the implementation period with a 25-year stream of benefits and costs\.
2\. At appraisal, the PDO was âenhance regional coordination, development and sustainability of
water resources management in the Niger River Basin\.â? After the second restructuring in 2014, the scope
of the project was reduced\. The PDO became âenhance regional coordination and improve water
resources management in the Niger River Basin\.â? Project activities took place in five countries of the River
Basin: Benin, Guinea, Mali, Niger, and Nigeria\. Table 4\.16 shows the nature of the activities for which CBA
was performed\.
3\. At appraisal, an ex-ante economic assessment based on a CBA was performed\. The analysis
considered three main types of quantifiable benefits in the five project countries: (a) sustainable
management of degraded environments; (b) rehabilitation of national water infrastructure; and (c)
rehabilitation of regional water infrastructure\. Table 4\.1 shows a summary of the results of the economic
analysis\.
Table 4\.1\. Economic Analysis at Appraisal - Summary of Results
Sustainable
Rehabilitation of Rehabilitation of
Management of
National Water Regional Water Total
Degraded
Infrastructure Infrastructure
Environments
NPV (US$, IRR (%) NPV (US$, IRR (%) NPV (US$, IRR (%) NPV (US$, IRR (%)
thousands) thousands) thousands) thousands)
Guinea 4,267 33 â â â â â â
Mali 7,957 21 2,046 35 â â â â
Niger 537 32 1,838 24 â â â â
Benin 485 27 3,693 22 â â â â
Nigeria â â â â â 54 â â
Total â â â â â â 893,874 51
B\. Ex post Economic Analysis of the Subprojects and the Overall Project
I\. Approach of the Cost-benefit Analysis
4\. The project ex post CBA relies on the identification of economic benefits and costs generated by
different activities\. Incremental benefits are calculated considering the âwithâ project and the âwithoutâ
project situations\. Project benefits are estimated following different methodologies depending on the
type of benefit considered\. These methodologies are explained for each subproject\. The benefit stream
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does not consider some of the environmental benefits (reduced sedimentation in the river) or some
nutritional benefits related to increased nutritional outcomes for local communities that rely on fish
consumption for protein intake\. Therefore, the results of the economic analysis should be viewed as
conservative lower-bound values\. Project costs are calculated considering investment and O&M costs\.
Investment costs are derived from the project financial reporting documents and O&M costs are
estimated according to the nature of each activity and reference values either from other similar projects
or adopted in the relevant published literature\. An ex post economic analysis has been performed in each
country and each quantifiable subproject after following adapted methodologies\.
II\. Nigeria
5\. At appraisal, activities in Nigeria were planned to focus on the rehabilitation and upgrading of
existing large water infrastructures of regional relevance\. These infrastructures included the Kainji
hydropower dam and the Jebba hydropower dam\. For the Kainji dam, planned activities included:
(a) Rehabilitation of productive electromechanical equipment to restore the available capacity
from the current 480 MW up to a total installed capacity of 760 MW;
(b) Rehabilitation of auxiliary services;
(c) Rehabilitation of the navigation lock;
(d) Upgrading instrumentation and monitoring equipment;
(e) Improvement of the flood warning systems and development of a decision support and
management system;
(f) Implementation of the Environmental Action Plan to mitigate any potential impact of the
rehabilitation of Kainji and Jebba sites; and
(g) Operational support and reinforcement of the PHCN and NFS in Nigeria\.
6\. Following the restructuring of December 2014, the activity âRehabilitation of the navigation lockâ
was cancelled\.
7\. For the Jebba dam, activities included:
(a) Selected rehabilitation of electromechanical equipment to ensure the availability of the
entire installed capacity of 578 MW;
(b) Rehabilitation of auxiliary services;
(c) Civil works for stabilization of the tailrace channel and rehabilitation of upper navigation
lock;
(d) Upgrading of instrumentation and monitoring equipment;
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(e) Prevention of tree invasion; and
(f) Reinforcement of the maintenance workshops\.
Kainji Dam hydropower production
Benefits
8\. Economic benefits are derived from the incremental generation from replacement or
refurbishment of generating units that were decommissioned or de-rated (that is, Units 5, 6, and 12)\. The
post-refurbishment incremental energy generated by Kainji was estimated using the limited available
operational data\. Unit 12 was commissioned and entered commercial service on May 28, 2016\. The
analysis is based on generation data for the 18-day period from May 29 to June 15, 2016 when Units 5, 6,
and 12 were fully operational\. The generation in this period is compared to the generation in the same
period in 2011 before the refurbishment works commenced\. The reservoir was spilling during both
periods\. The incremental energy over the 18-day period is estimated at 40,987 MWh\. The annual energy
generation is estimated at 796\.977 MWh considering 15 daysâ outage per year for maintenance\. The ex
post CBA tests two values of energy cost in this analysis\. In the baseline scenario, the value adopted in the
economic analysis conducted at appraisal in 2007 is considered (refer PAD, annex 9), which is US¢7\.80 per
kWh\. A sensitivity analysis is then performed with the levelized cost of generation from a base load proxy
unit estimated at US¢6\.90 per kWh\.
Costs
Investment Cost
9\. The investment cost is equal to the total costs of studies and works for the rehabilitation of Kainji
Units 5, 6, and 12, estimated at US$85,648,073\. The construction period extended from 2012 to 2016 (five
years)\. Disbursement occurred over these five years in proportion to the disbursement schedule for
Component 2\.
Incremental O&M Cost
10\. The additional O&M costs incurred in operating and maintaining the refurbished and replaced
units is probably small given that the scope of the main refurbishment contract also included updating
common systems which would reduce maintenance effort in the future\. Nonetheless, the incremental
O&M cost is conservatively assumed to be 1\.5 percent of the capital cost of the refurbishment\. Therefore,
O&M costs are estimated at an annual amount of US$1,265,916\.
Cost-benefit Analysis Approach
11\. A standard CBA is used\. The time horizon considered in the analysis is 30 years\. Investment costs
were incurred the first five years of the project implementation\. NPV was calculated for discount rates of
8 percent and 5 percent\.
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Results
Table 4\.2\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$, millions) NPV (US$, millions) EIRR
Assumption
Discount Rate of 8 percent Discount Rate of 5 percent (Percentage)
Baseline scenario 380\.8 609\.28 35\.7
Sensitivity analysis 328\.0 524\.8 33\.0
12\. This subproject generated an EIRR of 35\.7 percent under the baseline scenario (33 percent for the
sensitivity analysis) which is much higher than the opportunity cost of capital\. This economic performance
is comparable to that of other hydropower projects\.14
13\. The results confirm the expectations of the PAD economic appraisal\. The economic returns on the
investment are attractive and underline the quality of Subcomponent 2-a of the Niger Basin WRDSEM
Program\.
Jebba Hydropower Dam
14\. At appraisal, the project was expected to improve the dam electricity generation capacity through
the rehabilitation of selected electromechanical equipment\. However, this activity was modified during
the second restructuring of the project\. At completion, capacity of the Jebba hydropower plant was not
increased by the project intervention and there is therefore no incremental energy\. Instead, the project
financing focused on safety of structures (spillway channel upgrade and dam instrumentation
improvements), service life extension (rehabilitation of concrete structures, 110 kV battery bank, and
sequence of events recorder) and improving O&M efficiency (reequip workshop and supply vehicles)\.
Attributing a monetary value to the economic benefits deriving from these expenditures would be difficult
to rigorously quantify\. However, the economic justification of such investments is easily recognizable
considering that they ensured compliance with national and international standards\. The improvements
are also expected to reduce future O&M costs, extend the service time of the dam, and increase its safety\.
III\. Benin
15\. At appraisal, the following activities were planned under the project:
(a) Rehabilitation of 12 small dams in Benin and diversification of agricultural activities
(b) Development of small irrigation schemes in Benin
16\. At ICR, the project achieved the following results:
(a) Full rehabilitation of five small dams in Borgou and Alibori region
14 See, for example, Renewable Energy Development and Power Sector Rehabilitation Project (RRP SAM 46044)\.
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(b) Completed development of 1,500 ha of small irrigation schemes at low cost in Karimama
and Malanville
(c) Building of two warehouses with a capacity of 1,000 tons each in Karimama and Malanville
(d) Land restoration and reforestation of 1,125 ha
(e) Development of income-generating activities for 2,335 direct beneficiaries in Karimama,
Malanville, and Kalalé
17\. The economic analysis focuses on three main activities: (a) land restoration and reforestation, (b)
small irrigation schemes, and (c) development of income-generating activities\.
Land Restoration and Reforestation
18\. Land restoration and reforestation activities covered several degraded areas across the northern
areas of Benin\.
19\. Agroforestry activities covered several municipalities located in three main departments (Alibori,
Atacora, and Borgou)\. The municipalities include Kérou, Sinendé, Kandi, Karimama, Malanville,
Bembèrèkè, Kalalé, and Péhunco\. A total of 686,012 seedlings were planted covering an area estimated
at 474 ha (an average of 1,447 seedlings per ha)\. Kérou experienced the lowest survival rate of seedlings,
estimated at 50 percent, while Sinendé, Karimana, and Péhunco experienced the highest survival rate,
estimated at 95 percent\. The average survival rate is 85\.6 percent\. This implies a potential of 1,238 trees
per ha over 474 ha\.
20\. Rehabilitation and reforestation activities focuses on 590 ha and included fruit crops\. The
representative fruit crop is the cashew (A\. Occidentale) which produces high-value comestible nuts\.
Several studies have demonstrated the high profitability of cashew farming both on the African continent
and elsewhere in the world\.15
Benefits
21\. Land restoration and reforestation provide a large range of ecosystem services that render
substantial benefits to communities\. These benefits include reduced soil erosion, fodder protection,
carbon sequestration, soil moisture storage, and in some cases, nitrogen fixation, depending on the type
of trees planted\. These benefits have been well-documented through several studies\.16 However,
literature quantifying the benefits are scant\. The Economics of Land Degradation (ELD) Initiative has
undertaken recent studies that evaluate different dimensions of the economic value of land restoration
and reforestation in different countries\. Methodologies used in ELD studies have been validated by a
growing body of literature\.17 The estimation of the benefits will rely on the study performed in Mali as the
15 See, for example, Lawal et al\. (2011) and Wongnaa (2013)\.
16 Refer to ELD Initiative studies\.
17 See, for example, Etter, Gerhartsreiter, and Stewart\. (2017)\.
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agroecological conditions are similar\.18 To be conservative, the CBA only considers benefits related to soil
erosion, sales of cashew nuts, fodder production, and carbon sequestration\.
22\. Benefits from avoided soil erosion are estimated using avoided cost valuation method\. Based on
relevant literature, soil erosion leads to substantial opportunity costs in terms of loss of crop yield\.19 The
opportunity cost of the incremental loss of a representative crop (maize) is used to estimate the benefits\.
23\. Benefits from cashew sales are estimated using a market-based approach since cashew has a
market value\. A similar method is used to estimate the benefits derived from fodder\. Benefits from carbon
sequestration is estimated using the method proposed by the technical report on the social cost of carbon
of the White House Interagency Working Group\. This method integrates a simplified climate model and a
simplified economic model into a cohesive numerical model to capture the feedback effects between the
two\. The report provides the projected value of CO2 for a period of 30 years considering the monetary
estimate of the associated avoided damage\.
Costs
24\. Costs include investment costs and maintenance costs (surveillance, pruning, and so on)\. The bulk
of the costs are incurred during the first years when the maintenance of seedlings is critical\. Investment
cost areas are estimated at US$1,225,848 and O&M costs are estimated at US$66,667\. O&M costs
represent about 5\.4 percent of investment costs\.
25\. Reforestation costs were estimated at US$612,595 (US$574,427 as investment costs and
US$38,168 for maintenance costs) representing US$1,038 per hectare\. Reforestation costs were
estimated at US$682,385 (US$653,760 as investment costs and US$28,626 for maintenance costs)
representing US$1,440/ha\. These costs are higher compared with other studies where farmer-managed
natural regeneration methods are applied\. In these studies, costs have been estimated to range from
US$267 per hectare to US$316 per hectare\.
Results
Table 4\.3\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$) NPV (US$)
Assumption EIRR (percent)
Discount Rate of 8 percent Discount Rate of 5 percent
Baseline scenario 35,609,787 63,155,433 48\.2
Small Irrigation Schemes
26\. The project financed the development of 1,500 ha of land for rice and vegetables growing: 800 ha
in Birni-Lafia, 400 ha in Monnin, and 300 ha in Garou\. Pumps were provided to several young farmers to
enable the start of their activities\. This subproject directly benefited 1,500 persons and their households\.
Subproject Benefits
18 Refer to Sidibé, Myint, and Westerberg (2014)\.
19 See Diao and Sarpong (2007)\.
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27\. Survey undertaken at the field level in 2015 has shown that agricultural activities have generated
rice production and high-value vegetable crops including onion, pepper, tomato, and okra\. Table 4\.4
summarizes the financial results for the crops mentioned\.
Table 4\.4 Financial Results by Crop Type (FCFA, per ha)
Crop Type Onion Pepper Tomato Okra Rice
Yield (t/ha) 26\.4 23\.8 10 7\.2 6
Volume of fuel (L) 672 252 224 128 300
Cost of fuel used (CFAF) 336,000 126,000 112,000 64,000 150,000
Crop sales price (CFAF 167 200 105 167 170
per kg)
Sales Revenue (CFAF per 4,400,000 4,760,000 1,050,000 1,200,000 1,020,000
ha)
Other farm costs (CFAF 1,555,000 1,872,000 620, 000 500,000 600,000
per ha)
Total farm costs (CFAF 1,891,000 1,998,000 732,000 564,000 750,000
per ha)
Net farm benefits (CFAF 2,509,000 2,762,000 318,000 636,000 270,000
per ha)
Source: Research SU DOM SE-ONG, fields survey, June 2016\.
Subproject Costs
28\. The project financed about US$1,752,660 in the agricultural component in Benin\. Most of this
investment was used to develop land for irrigation and acquire pumps for irrigation purposes\. Other costs
will include O&M and equipment renewal costs conservatively estimated at 20 percent of investment
costs\.
Result
Table 4\.5\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$) NPV (US$)
Assumption EIRR (Percentage)
Discount Rate of 8 percent Discount Rate of 5 percent
Baseline scenario 58,588,574 87,752,166 107\.9
29\. The results indicate a very strong economic performance of irrigated systems\. This achievement
is mainly due to the relatively low cost of irrigation development using low-cost pumps (approximately
US$500 per pump)\.
Development of Income-generating Activities
30\. The project supported the achievement of several types of income-generating activities through
numerous villages\. Table 4\.6 shows the details of the achievement\.
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Table 4\.6\. Data on Income-Generating Activities supported by the project
Number of Annual Production Annual Sales Value
Income-generating Activities
Villages Capacity (CFAF)
Apiculture 27 11,340 liters 49,744,800
Mustard (Brassica nigra) 23 16,560 kg 24,840,000
Soy cheese 30 216,000 kg 140,400,000
Vegetable farming 29 91,350 kg 146,160,000
Seedling development 14 250,000 plants 25,000,000
Shea butter 35 94,500 kg 113,400,000
Cow milk cheese 19 213,800 kg 277,940,000
Total estimate â â 778,068,000
Source: Research SU DOM SE-ONG, fields survey International Building and Trade, June 2016\.
Benefits
31\. A wide range of benefits resulted from the income-generating activities\. For example, apicultural
production enabled several households to produce and market honey and honey-related products\. Nere
fruits (Parkia biglobosa) are transformed into local high-value products and sold on local markets\. An
estimated 80 percent of the beneficiaries of the income-generating activities are women\.
32\. Since most of the products have market value, the market price and quantities sold were
considered in the calculation of the economic benefits of income-generating activities (table4\.6)\.
Costs
33\. The project supported income-generating activities in several ways including awareness
campaigns, simple management plans, and the provision of kits consisting of equipment that allowed
women to initiate activities\. The financing costs are estimated at US$782,891\. Subsequent O&M and
renewal costs are estimated at a conservative 20 percent of investment costs\.
Result
Table 4\.7\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$) NPV (US$)
Assumption Discount Rate of 8 Discount Rate of 5 EIRR (Percentage)
percent) percent
Baseline scenario 10,071,175 15,675,019 52
Note: The activity generated a solid economic rate of return\.
Other Project Benefits
34\. The project in Benin generated several other benefits that could not be reliably quantified\. These
benefits include training provided to womenâs groups to perform income-generating activities and
training of seedling producers who continue their activities beyond the duration of the project\. The project
also generated substantial local employment during its implementation\.
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IV\. Niger
35\. In Niger, the project financed the following activities:
(a) The eight complementary studies for Kandadji dam in Tillabéri region have been fully
completed;
(b) 621 ha of small irrigation schemes in Djambala, in Tillabéri region have been fully completed;
(c) The project has restored 10,738 ha of plateau and watershed degraded lands in Tillabéri and
Dosso regions;
(d) 1,955 ha in Tillabéri and Dosso regions have been completely reforested; and
(e) The traditional fishery system in Tillabéri and Dosso regions have been improved through
the organization of fishermen in groups; the project also supported beneficiaries with fishery
equipment\.
36\. The economic analysis in Niger focuses on three key activities including (a) rehabilitation of
irrigation schemes, (b) afforestation activities, and (c) traditional fisheries\.
Rehabilitation of Irrigation Schemes
37\. The project initially planned to rehabilitate three irrigation schemes: Djambala scheme (689 ha),
Kourani scheme (693 ha), and Sona-Lossa-Kokomani scheme (406 ha)\. Only Djambala scheme was
rehabilitated as the other schemes were added to other projects\.
Benefits
38\. The main benefit derived from the rehabilitation of the Djambala scheme relates to sustainable
production of rice and the income generated by this activity\. Before the rehabilitation of the scheme, the
drainage system was clogged by substantial sedimentation\. This situation made the scheme vulnerable to
recurrent flooding that caused damage to crops and impeded regular access of farmers to the scheme\. As
a result, crop yield fell\. Several actions were undertaken to rehabilitate the scheme including the
reconstruction of the drainage canals, the reconstruction of the irrigation canals (primary and secondary),
and protection of the infrastructure\.
39\. The benefits are estimated as the value of the incremental yield resulting from the rehabilitation\.
Average yield increased from 4\.5 t/ha before the rehabilitation to 6\.7 t/ha after the rehabilitation\.
Costs
40\. The project financed an estimated amount of US$3,666,190 in studies, works, and supervision of
the irrigation subproject in Niger representing about US$5,755 per hectare\. O&M costs are assumed to
represent an annual amount of 5 percent of the rehabilitation costs\.
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Result
Table 4\.8\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$) NPV (US$)
Assumption Discount Rate of 8 Discount Rate of 5 EIRR (Percentage)
percent percent
Baseline scenario 712,760 2,044,842 11\.3
41\. The economic performance of the irrigation is acceptable\. The performance has been affected by
the relatively high cost of rehabilitation (US$5,755 per hectare)\.
Improvement of Traditional Fisheries
42\. Traditional fishery systems in Tillabéri and Dosso regions have been improved through the
introduction of different species of fishes into more than 20 ponds, the organization of fishermen in
groups\. The project also supported beneficiaries with fishery equipment including small boats, fishing
nets, and fish conservation equipment\.
Benefits
43\. Benefits are directly derived from the sale of fish caught from the main ponds in Tillabéri and in
Dosso\. In Niger, fish has high value in small towns and cities\. Table 4\.9 provides data on fish production
and value\.
Table 4\.9\. Data on Fish Production and Value
2009 2010 2011 2012
Area with fish introduced (ha) 360 1734 952 1020
Quantity of fish produced (t) 40\.636 64\.136 67\.265 70\.649
Value of fish produced (CFAF) 13,565,600 28,045,400 37,465,250 40,849,750
Costs
44\. The project supported the costs for fish introduction into ponds, trainings for fishermen groups,
and provision of fishing equipment\. Costs are estimated at CFAF 287,298,118 (US$548,279)\. Other costs
include day to day O&M costs incurred by fishermen in the course of their activity\.
Result
Table 4\.10\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$, millions) NPV (US$, millions)
Assumption Discount Rate of 8 Discount Rate of 5 EIRR (Percentage)
percent percent
Baseline scenario 386,712 722,606 18\.4
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Reforestation
45\. Reforestation activities covered an estimated area of 6,310 ha\. Different species were planted to
limit erosion\. Different adapted techniques were used to ensure the survival of seedlings\. These
techniques include âDemi-luneâ\.
Benefits
46\. Estimation of benefits follow the same methodology as in Benin\.
Costs
47\. Investment costs are estimated at US$4,668,710\. O&M costs are considered negligible\. By
experience, once the trees have reached a certain height, the need for O&M becomes minimal\.
Result
Table 4\.11\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$, millions) NPV (US$, millions)
Assumption EIRR (percent)
Discount Rate of 8 percent Discount Rate of 5 percent
Baseline scenario 68,926,627 124,042,774 36\.9
V\. Mali
48\. In Mali, the project activities included:
(a) Seven fishponds being fully developed and functional in Gao and Asongo;
(b) Development of a 5 ha garden for women in Diambacourou;
(c) Implementation of a biological protection of banks against erosion on 9 km with Vetiver
grass; and
(d) Development of 720 ha of bourgou for pasturage in five villages in Mopti Region\.
49\. The economic assessment in Mali focuses in bourgou production\.
Animal Fodder Production - Bourgou
50\. Around 720 ha of bourgou for pasturage in five villages in Mopti Region have been entirely
developed\. Bourgou (Echinochloa stagnina) is a highly nutritive herbaceous plant that grows in shallow
water\. It is widely used as feed for cattle and other animals in several Sahel countries\. Once dried, it has
high value in local markets\.
Benefits
51\. The benefits are estimated following a market-based valuation approach\.
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Costs
52\. The costs of this subproject are estimated at US$1,400,372\. Recurrent costs are US$1,470 per
hectare based on a study by Réseau National des Chambres dâAgriculture du Niger (RECA)\.
Results
Table 4\.12\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$) NPV (US$)
Assumption EIRR (percent)
Discount Rate of 8 percent Discount Rate of 5 percent
Baseline scenario 67,010,779 105,096,566 75\.5
Fisheries
53\. Fishery infrastructures, including fish market, fish smoking and drying equipment, and so on in
Gao and Ansongo, have been completed\. The project also supported the procurement of two refrigerated
wagons of 100 tons and fishery equipment for Gao and Tombouctou communities\. The five villages in
Mopti region received 100 heifers, 5 sires, 30 oxen, and 40 donkeys and completed the construction of
four cattle enclosures\. The benefits of these investments could not be quantified due to the lack of reliable
quantitative data\.
VI\. Guinea
54\. The following activities have been achieved in Guinea:
(a) Technical and safeguard studies for the multipurpose Fomi dam
(b) Development of 450 ha of lowlands with irrigation schemes in Faranah and Kissidougou,
which were fully completed
(c) Development of 500 ha under agroforestry system in Faranah and Kissidougou
55\. In Guinea, the CBA focuses on the economic performance of lowlands irrigation development
activities and agroforestry activities\.
Development of Lowlands for Irrigated Agriculture
56\. The project developed irrigation schemes in prefectures of Faranah and Kissidougou\. The land is
mainly used for rice production\. The project intervention resulted in an increase in rice yield\. However,
capacity building and strengthening for farmers may be insufficient as they have not received training
regarding O&M and adequate water management\.
Benefits
57\. As for irrigation schemes rehabilitated in Niger, the main benefits derive from increased crop
production\. The irrigation schemes have experienced an increase in production from 3 t/ha without the
project to 3\.5 t/ha with the project intervention\. The yield increase is modest probably due to the lack of
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agricultural water management knowledge\. Paddy rice has high value in local markets\. The farmgate price
fluctuates around US$0\.44 per kg\.
Costs
58\. The project investment costs were estimated at US$3,959,738\. This represents a per area
investment cost of US$8,800 per hectare\. This cost is relatively high compared to the unit cost expected
from investments in lowland development\.20 O&M costs are estimated to represent an annual 5 percent
of investment costs\.
Results
Table 4\.13\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$) NPV (US$)
Assumption EIRR (Percentage)
Discount Rate of 8 percent Discount Rate of 5 percent
Baseline scenario â2,765,840 â3,262,499 Not calculated
59\. The irrigation subproject in Guinea exhibits a negative NPV\. The EIRR could not be computed as
is often the case when the NPV is negative\. This subproject was hampered by high investment costs and
probably by the lack of appropriate knowledge regarding agricultural water management\.
Development of Agroforestry System
60\. The project financing supported the development of 500 ha under the agroforestry system in
Faranah and Kissidougou\. Different native species were planted including acacia, palm, and orange trees\.
Benefits
61\. The agroforestry system provides several benefits including soil protection from erosion,
provision of palm oil which is an essential ingredient in several areas in Guinea, nitrate fixation in the soil
especially by acacia trees\. Because of the limitations of data availability, the analysis will conservatively
focus on benefits from avoided soil erosion, fodder production\. and carbon sequestration focusing on the
acacia as the representative tree\. The method used is similar to that applied for agroforestry development
in Benin and in Niger\.
Costs
62\. Investment costs are estimated at US$844,787\. O&M costs are considered negligible\. By
experience, acacia plantations need only limited O&M once they reach three years\.
20You (2008) estimates that investment costs in intercommunity small-scale irrigation range from US$3,000 to US$8,000 per
hectare for Sub-Saharan Africa\.
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Results
Table 4\.14\. Summary of the Results of the Economic Analysis of the Subcomponent
NPV (US$) NPV (US$)
Assumption EIRR (Percentage)
Discount Rate of 8 percent Discount Rate of 5 percent
Baseline scenario 843,997 2,006,010 13\.1
63\. The results show positive NPV at both 5 percent and 8 percent discount rates\. The subproject was
economically justified\.
VII\. Economic Analysis of the Overall Project
64\. The overall economic analysis considers all quantifiable project benefits and all project costs\. This
includes the costs of supporting activities such as project coordination, studies, and environmental and
social assessment\. Table 4\.15 presents the results\.
Table 4\.15\. Summary of the Results of the Economic Analysis of the Overall Project
NPV (US$) NPV (US$)
Assumption EIRR (Percentage)
Discount Rate of 8 percent Discount Rate of 5 percent
Baseline scenario 541,958,802 914,826,012 27\.6
65\. Although the EIRR is lower than the expectations at appraisal which was estimated at 51 percent,
the results indicate a good economic performance of the project even when all supporting costs are
included\.
C\. Conclusion
66\. At 5 percent and 8 percent discount rates, the analysis shows that the project had positive NPVs
in subprojects in all the countries except for the irrigation subproject in Guinea\. Apart from the lowland
development subproject in Guinea, all the subprojects analyzed exhibited an EIRR higher than 5 percent,
ranging from 11\.3 percent to 75\.5 percent\. However, there is significant variability from one subproject
to another\. Fisheries, fodder production, and income-generating activities are, generally, the most
economically performing subprojects\. Irrigation infrastructure rehabilitation in Niger was the less
economic activity mainly because of the higher-than-expected cost associated with this subproject\. The
irrigation subproject in Benin exhibited a high performance explained by higher areas developed than
initially planned and the choice to grow high-value vegetables\. Lowland irrigation subproject in Guinea
suffered from two major factors: (a) the high per area investment cost of the irrigation infrastructure; and
(b) the moderate increase in rice yield probably due to a lack of appropriate water management
knowledge\. The overall EIRR of the project is estimated at 27\.6 percent, an NPV of US$914,826,012 at 5
percent, and an NPV of US$541,958,802 at 8 percent\. Further, sensitivity analysis shows that the EIRR
remains economically viable with a 10 percent increase in costs or a 10 percent decrease in benefits\. The
project remains economically viable even with a combined 20 percent increase in the costs and a 20
percent reduction in benefits with an EIRR of 21 percent\.
67\. The ICR uses a similar approach and assumptions as the PAD in estimating the benefits from
hydropower generation\. However, the ICR did not include benefits from Jebba dam since at project closing
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the World Bank financing did not result in incremental energy production at that dam\. Assumptions for
irrigation and fishery development are also similar, as the methodology relies on projected yields in the
PAD and on actual yields in the ICR\. For agroforestry and income-generating activities, the economic
analysis in the ICR includes benefits associated with increased availability of animal fodder, the reduction
of soil erosion, and carbon sequestration\. Such benefits, although important, were not explicitly
accounted for at appraisal\.
Table 4\.16\. Summary of the ICR CBA
Reforestation,
Income-
Agroforestry, Irrigation Fishery Hydropower
generating Overall Project
and Fodder Development Development Production
Activities
Production
NPV (US$, IRR NPV (US$, IRR NPV (US$, IRR NPV (US$, IRR NPV (US$, IRR NPV (US$,
IRR (%)
thousands) (%) thousands) (%) thousands) (%) thousands) (%) thousands) (%) thousands)
Guinea 2,006 13\.1 â â â3,262 n\.a\. â â â â â â
Mali 105,096 75\.5 â â â â â â â â â â
Niger 124,042 36\.9 â â 2,044 11\.3 722\.6 18\.4 â â â â
Benin 63,155 48\.2 15,675 52 87, 752 107\.9 â â â â â â
Nigeria â â â â â â â â 609,280 35\.7 â â
Overall â â â â â â â â â â 914,826 27\.6
project
Table 4\.17\. Summary of the ICR CBA - Sensitivity Analysis of the Overall Project Results
NPV (US$, thousands) at 5 percent
IRR (%)
Discount Rate
Sensitivity analysis on costs
Costs increase by 10 percent 899,931,377 26\.0
Costs increase by 20 percent 885,036,743 24\.5
Sensitivity analysis on benefits
Benefits decrease by 10 percent 808,448,776 25\.8
Benefits decrease by 20 percent 702,071,540 23\.8
Combined sensitivity analysis
Combined costs increase by 20 672,282,271 21\.0
percent and benefits decrease by
20 percent
Table 4\.18\. Key Assumptions used in the CBA
Data Type Value Unit Source
Nigeria
Hydropower Production
Assumption on benefits See âBenefitâ Client ICR Nigeria
section for Nigeria
Benin
Reforestation and Agroforestry
Total area under agroforestry or reforestation 1064 Ha Client ICR Benin
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Data Type Value Unit Source
Average soil erosion in Northern Benin 12\.3 t/ha/year Senahoun,
Heidhues, and
Deybe (1999)
Loss in maize yield due to soil erosion 52 kg/ha Diao (2007)
Price of maize 165 CFAF/kg LISA - SAP N° 319
Adult height of Anacardium Occidentale 10 m
Survival rate of trees 85\.6 percent Client ICR Guinea
Irrigation
Area under irrigation 1,500 ha Client ICR Benin
Cropping intensity 2 Client ICR Benin
Assumption on benefits See table 4\.4 in the Client ICR Benin
âBenefitâ section
for Benin irrigation
Income-generating Activities
Assumption on benefits See table 4\.6 in the Client ICR Benin
âBenefitâ section
for Benin income-
generating
activities
Niger
Reforestation and Agroforestry
Total area under agroforestry or reforestation 6310 Ha Client ICR Niger
Loss in maize yield due to soil erosion 52 Kg/ha Diao (2007)
Price of maize 165 FCFA/kg LISA - SAP N° 319
Density of tress 740 Number/ha Client ICR Niger
and team
calculation
Survival rate of trees 90 Percent Client ICR Niger
Irrigation
Irrigated area rehabilitated 637 ha Client ICR Niger
Yield before the rehabilitation of Djambala 4\.5 T/ha Client ICR Niger
scheme (t/ha)
Yield after the rehabilitation of the Djambala 6\.7 T/ha Client ICR Niger
scheme (t/ha)
Price of rice (paddy) farmgate 120,000 FCFA/T Bulletin
économique sur le
marché des
céréales en
Cropping intensity 1\.89 Client ICR Niger
Fodder price 112 FCFA/kg Jarial (2017)
Fisheries
Assumption on benefits See table 4\.9 in the Client ICR Niger
âBenefitâ section
for Niger fisheries
Mali
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
Data Type Value Unit Source
Fodder Production
Area cultivated 720 ha Client ICR Mali
Yield of bourgou âEchinochloa stagninaâ 20 to 30 (25 is t/ha Zwart et al\. (2006);
used here) Reca (2018)
Production costs of bourgou 300,000 CFAF/ha Agence Nationale
de la Météorologie
(2012)
Proportion of green to dry matter 20 Percent RECA (2018)
Costs for cutting, drying, and storing bourgou 770,000 CFAF/ha RECA (2018)
Price of dried bourgou 1,500 CFAF/kg RECA (2018)
Guinea
Lowland Irrigation Development
Area under irrigation 450 ha Client ICR Guinea
Yield without project 3 t/ha Client ICR Guinea
Yield with project 3\.5 t/ha Client ICR Guinea
Paddy rice price 6000 FGN/kg Guinée (2017)
Agroforestry
Area under agroforestry 500 ha Client ICR Guinea
Representative tree species Acacia Client ICR Guinea
Density of trees 100 100 trees/ha Client ICR Guinea
and ICR team
estimation
Survival rate of trees 50 Percent Client ICR Guinea
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
Comments on the draft ICR were received from the Niger Basin Authority\.
There was some additional information and clarifications provided which were addressed and integrated into
the present version of the report\.
The Borrower also suggested to upgrade the rating of the PDO outcome âEnhance regional development of
water resources in the Niger Basinâ? from Substantial to High\. Given the reasons provided in the ICR and OPCS
evaluation methodology, the team believes that âSubstantialâ is more appropriate\.
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Niger Basin Water Resources Development and Sustainable Ecosystems Management Project (P093806)
ANNEX 6\. SUPPORTING DOCUMENTS
1\. Project Appraisal Document on Five Proposed Credits/Grants, Niger Basin Water Resources
Development and Sustainable Ecosystems Management (WRDSEM) Project, May 3, 2007\.
2\. Niger River Basin Authority, Niger Basin WRDSEM Project Implementation Manual, July 2007\.
3\. Project Information Document, NB-WRDSEMP, Appraisal Stage, Report â 43582, June 7, 2007\.
4\. Operations Policy and Country Services, Implementation Completion and Results Report,
Guidelines, August 2006, updated October 5, 2011\.
5\. Niger Basin WRDSEM projectâs Implementation Status and Reports, December 2008âDecember
2017\.
6\. New Country Partnership Strategy in Nigeria Set to Spur Growth, Less Poverty, World Bank
paper, May 2014\.
7\. Regional Integration Assistance Strategy for Sub-Saharan Africa, Report No\. 43022-AFR, IDA and
IBRD, March 2008\.
8\. Country Partnership Strategy FY13â17 for the Republic of Benin; March 5, 2013\.
9\. Country Partnership Strategy FY14â17 for Guinea; September 4, 2013\.
10\. Country Partnership Framework FY16â19 for the Republic of Mali; November 3, 2015\.
11\. Country Partnership Strategy FY13â16 for the Republic of Niger; March 29, 2013\.
12\. Country Partnership Strategy FY14â17 for the Federal Republic of Nigeria; March 13, 2014\.
13\. Financing Agreement, NB-WRDSEMP (Credit No\. 4348-UNI), July 26, 2007\.
14\. Niger Basin â WRDSEM project, Amendment to the Financing Agreement (Credit No\. 4348-UNI),
letter to Hon\. Dr\. Ngozi Okonjo-Iweala, Minister of Finance Federal Republic of Nigeria from
Marie Francoise Marie-Nelly, Country Director, Nigeria, IDA, 29 December 2014\.
15\. Restructuring Paper on a proposed restructuring of Niger Basin â WRDSEM Project, Report No\.
61998-AFR, June 6, 2011\.
16\. Restructuring Paper on a proposed restructuring of NB-WRDSEMP, Report No\. RESI-16175,
December 12, 2014\.
17\. Subsidiary Agreement to the Financing Agreement (Credit No\. 4348-UNI), July 26, 2007\.
18\. Service Contract between NBA and PHCN (TCN), July 26, 2007\.
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19\. Annual Work Plan and Budgets for 2012 to 2016 inclusive\.
20\. Procurement Plans and Procurement Reviews for 2012 to 2016 inclusive\.
21\. âStatus of WRDSEMP Contract - February 29, 2016â?, May 2016\.
22\. Niger Basin WRDSEM project APL1 FM and Procurement reports\.
23\. ICR of Senegal River Basin multi-purpose water resources development project, APL, September
25, 2013\.
24\. ICR of Dam Operational Improvement and Safety Project (DOISP) For Indonesia, October 2016\.
25\. BRL study on the âSustainable Development Action Plan of the Niger Basinâ? â 2007\.
26\. Client ICRs on Niger Basin WRDSEM PL1 of Niger â December 2015, Nigeria â June 2016, Mali â
August 2017, Guinea â December 2017 and Benin â July 2016\.
27\. Agence Nationale de la Météorologie\. 2012\. Evaluation des besoins technologiques et plan
dâaction technologique dâadaptation aux changements climatiques au mali\. 103p\.
28\. African Cashew Initiative\. 2010\. Analysis of the Benin Cashew Sector Value Chain\.
29\. Aymeric, R\., M\. M\. Myint, and V\. Westerberg\. 2015\. An economic valuation of sustainable land
management through agroforestry in eastern Sudan\. Report for the Economics of Land
Degradation Initiative by the International Union for Conservation of Nature, Nairobi, Kenya\.
Available at: www\.eld-initiative\.org
30\. Becker, M\., and D\. E\. Johnson\. 2001\. Improved water control and crop management effects on
lowland rice productivity in West Africa\. Nutrient Cycling in Agroecosystems, 59(2), 119-127\.
31\. Bulletin économique sur le marché des céréales en Afrique\. 2017\. Les cereraliers\. 13p\.
32\. Diao, X\. 2007\. Cost Implications of Agricultural Land Degradation in Ghana\. IFPRI Report\.
33\. ELD Initiative\. 2015\. Report for policy and decision makers: Reaping economic and
environmental benefits from sustainable land management\.
34\. ELD Initiative\. 2015\. The value of land: Prosperous lands and positive rewards through
sustainable land management\. Available at: www\.eld-initiative\.org
35\. Etter, H\., T\. Gerhartsreiter, and N\. Stewart\. 2017\. Economics of land degradation: achievements
and next steps\. In International Yearbook of Soil Law and Policy 2016 (pp\. 263-281)\. Springer,
Cham\.
36\. Guinée\. 2017\. Perspectives sur la sécurité alimentaire\.
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37\. Interagency Working Group on Social Cost of Carbon\. 2013\. Technical Update of the Social Cost
of Carbon for Regulatory Impact Analysis\.
38\. IUCN (International Union for the Conservation of Nature)\. 2006\. Hidden cost is value lost: The
economic importance of dryland goods and services in the IGAD region, IUCN Policy Brief\. Gland,
Switzerland: IUCN\.
39\. Jarial, S\. 2017\. Price quality relationships in fodder trading in Niger with special regards to
comparison of cowpea and groundnut haulms with concentrates collected shrubs and grasses\.
40\. Lawal, J\. O\., O\. O\. Oduwole, T\. R\. Shittu, and A\. A\. Muyiwa\. 2011\. Profitability of Value Addition
to Cashew Farming Households in Nigeria\. African Crop Science Journal, 19(1)\.
41\. LISA â SAP N° 319\. 2015\. Lettre dâinformation pour la sécurité alimentaire dans le cadre de
lâalerte précoce\.
42\. Myint, M\.M\., and V\. Westerberg\. 2014\. An economic valuation of a large-scale rangeland
restoration project through the Hima system in Jordan\. Report for the ELD Initiative by
International Union for Conservation of Nature, Nairobi, Kenya\. Available at: www\.eld-
initiative\.org
43\. Reca\. 2018\. Fiche technique: Aménagement de bourgoutières\. Retrieved http://www\.reca-
niger\.org/IMG/pdf/Fiches_Amenagement_de_bourgoutieres___version_1\.pdf in February 2018\.
44\. Schreckenberg, K\. 2004\. The contribution of shea butter (Vitellaria paradoxa CF Gaertner) to
local livelihoods in Benin\. Forest products, Livelihoods and conservation, 91â104\.
45\. Senahoun, J\., F\. Heidhues, and D\. Deybe\. 1999\. Structural adjustment programs and soil erosion:
a bio-economic modelling approach for Northern Benin\. Grauer\.
46\. Sidibé, Y\., M\. Myint, and V\. Westerberg\. 2014\. An economic valuation of agroforestry and land
restoration in the Kelka Forest, Mali\. Assessing the socio-economic and environmental
dimensions of land degradation\. Report for the Economics of Land Degradation Initiative, by
International Union for Conservation of Nature, Nairobi, Kenya\. Available at: www\.eld-
initiative\.org
47\. Wongnaa, C\. A\. 2013\. Profitability analysis of cashew production in Wenchi municipality in
Ghana\. Botswana Journal of Agriculture and Applied Sciences, 9(1)\.
48\. Yegbemey, R\. N\., H\. Kabir, O\. H\. Awoye, J\. A\. Yabi, and A\. A\. Paraïso\. 2014\. Managing the
agricultural calendar as coping mechanism to climate variability: A case study of maize farming
in northern Benin, West Africa\. Climate Risk Management, 3, 13â23\.
49\. You, L\. Z\. 2008\. Africa: Irrigation Investment Needs in Sub-Saharan Africa\.
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50\. Zwarts, L\., P\. V\. Beukering, B\. Koné, E\. Wymenga, and D\. Taylor\. 2006\. The economic and
ecological effects of water management choices in the Upper Niger River: development of
decision support methods\. Water Resources Development, 22(1), 135â156\.
Page 73 of 74 | REVIEW |
P117087 | Document of
The World Bank
Report No: ICR00002833
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-44510; IDA-44520; IDA-44530; IDA-46500)
ON
CREDITS (4)
IN THE AMOUNT OF SDR6\.00 MILLION
(US$9\.60 MILLION EQUIVALENT)
TO THE COMMONWEALTH OF DOMINICA, GRENADA,
ST\. LUCIA AND ST\. VINCENT AND THE GRENADINES
FOR THE ORGANIZATION OF EASTERN CARIBBEAN STATES (OECS)
E-GOVERNMENT FOR REGIONAL INTEGRATION PROJECT
IN SUPPORT OF THE FIRST PHASE OF THE OECS E-GOVERNMENT FOR
REGIONAL INTEGRATION PROGRAM
December 29, 2014
ICT Sector Unit
Transport and ICT Global Practice
Caribbean Country Management Unit
Latin American and the Caribbean Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 16, 2014)
Currency Unit = EC$
1\.00 = US$0\.37
US$ 1\.00 = EC$2\.7
FISCAL YEAR
January 1 â December 31
Vice President: Jorge Familiar Calderon
Country Director: Sophie Sirtaine
Senior GP Director Pierre Guislain
Practice Manager: Randeep Sudan
Project Team Leaders: Doyle Gallegos/Anat Lewin
ICR Team Leader: Anat Lewin
ICR Main Author Maria Rosa Puech
n
Dominica, Grenada\. Saint Lucia, Saint Vincent and the Grenadines
OECS E-GOVERNMENT FOR REGIONAL INTEGRATION PROGRAM
Table of Contents
Abbreviations and Acronyms \. iv
Data Sheet \. vi
A\. Basic Information \. vi
B\. Key Dates \. vi
C\. Ratings Summary \. vii
D\. Sector and Theme Codes \. vii
E\. Bank Staff\. viii
F\. Results Framework Analysis \. viii
G\. Ratings of Project Performance in ISRs \.xv
H\. Restructuring (if any) \.xv
I\. Disbursement Profile \. xvi
1\. Project Context, Development Objectives and Design \.1
1\.1 Context at Appraisal \.1
1\.2 Original Project Development Objectives (PDO) and Key Indicators \.2
1\.3 Revised PDO and Key Indicators, and reasons/justification \.2
1\.4 Main Beneficiaries \.3
1\.5 Original Components \.3
1\.6 Revised Components \.4
1\.7 Other significant changes \.4
2\. Key Factors Affecting Implementation and Outcomes \.5
2\.1 Project Preparation, Design and Quality at Entry \.5
2\.2 Implementation \.7
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization \.11
2\.4 Safeguard and Fiduciary Compliance \.12
2\.5 Post-Completion Operation/Next Phase \.13
3\. Assessment of Outcomes \.14
3\.1 Relevance of Objectives, Design and Implementation \.14
3\.2 Achievement of Project Development Objectives \.15
3\.3 Efficiency \.23
4\. Justification of Overall Outcome Rating \.23
3\.5 Overarching Themes, Other Outcomes and Impacts \.24
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops \.25
4\. Assessment of Risk to Development Outcome \.25
5\. Assessment of Bank and Borrower Performance \.27
5\.1 Bank Performance \.27
5\.2 Borrower Performance\.28
6\. Lessons Learned \.29
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \.32
Annex 1\. Project Costs and Financing\.33
Annex 2\. Outputs by Component \.34
Annex 3\. Economic and Financial Analysis \.44
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \.47
Annex 5\. Beneficiary Survey Results \.49
Annex 6\. Stakeholder Workshop Report and Results \.56
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \.57
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \.68
Annex 9\. List of Supporting Documents \.69
Annex 10\. Rating of Project Outcome \.70
Annex 11\. PAD and Restructured M&E Indicators \.71
Annex 12\. Map of EGRIP-Supported Community Health Clinics in Saint Lucia \.72
Abbreviations and Acronyms
APL Adaptable Program Loan
ARV Antiretroviral
ASYCUDA Automated System for Customs Data
CARCIP Caribbean Communications Infrastructure Program
CARICOM Caribbean Community
CARTAC Caribbean Regional Technical Assistance Centre
CAS Country Assistance Strategy
CBS Country-Based Specialist
CDB Caribbean Development Bank
CIDA Canadian International Development Agency
CTU Caribbean Telecommunications Union
DFID Department for International Development (UK)
ECCB Eastern Caribbean Central Bank
e-Government Electronic Government
EGRIP E-Government for Regional Integration Project /
Program
EPPS Electronic Pharmaceuticals Procurement System
e-Tax Electronic Taxation
EU European Union
FY Fiscal (Financial) Year
IBRD International Bank for Reconstruction and
Development (World Bank)
ICB International Competitive Bidding
ICT Information and Communications Technologies
IDA International Development Association (World Bank)
IDB Inter-American Development Bank
IDR Inland Revenue Department
KPI Key Performance Indicator
MOH Ministry of Health
MPID Multi-Purpose Identification System
NCB National Competitive Bidding
NGO Non-governmental Organization
NSC National Steering Committee
OAS Organization of American States
OECS Organisation of Eastern Caribbean States
PAD Project Appraisal Document
PDO Project Development Objective
PFM Public Financial Management
PPP Public Private Partnership
PPS OECS Pharmaceutical Procurement Service
PRIMS Performance of Routine Information Management
System
RCIS Regional Customs Information System
REGU Regional E-Government Unit
RDDS Regional Digital Development Strategy
RHIS Regional Health Information System
RHMIS Regional Health Management Information System
RTC Regional Technical Committee
SDR Special Drawing Rights
SIGTAS Standard Integrated Government Tax Administration
System
SVG St\. Vincent and the Grenadines
TA Technical Assistance
TAL Technical Assistance Loan
TCO Total Cost of Ownership
VAT Value-Added Tax
Data Sheet
A\. Basic Information
OECS E-Government
OECS Countries:
for Regional Integration
Dominica, Grenada, St
Countries: Projects Name: Project in support for
Lucia, St Vincent and
the EGRIP Program
the Grenadines
(APL)
IDA-44510, IDA-
P100635
Projects ID: L/C/TF Number(s): 44520, IDA-44530,
P117087
IDA- 46500
ICR Date: 10/22/2014 ICR Type: Core ICR
Governments of
Dominica, Grenada, St\.
Lending Instrument: Series of Projects Borrowers:
Lucia, St\. Vincent and
the Grenadines
Original Total SDR 6\.00M
Disbursed Amount: SDR 6\.00M
Commitment:
Revised Amount: N/A
Environmental Category: C
Implementing Agencies: At regional level: OECS Secretariat, Regional E-Government Unit
(REGU)\. At national level: ICT/E-Government Units in each country, acting as national focal
points\.
Co-financiers and Other External Partners: Caribbean Development Bank (CDB)
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
09/01/2008 06/18/2009
Concept Review: 05/02/2007 Effectiveness:
01/15/2010 04/15/2010
03/17/2008 04/19/2012
Appraisal: Restructuring(s):
04/27/2009 07/31/2013
05/27/2008
Approval: Mid-term Review: 10/10/2011 10/17/2011
12/09/2009
06/30/2012
Closing: 02/28/2014
08/31/2013
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Moderately satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Moderately satisfactory
Borrower Performance: Moderately satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Moderately
Quality at Entry: Government: Moderately satisfactory
unsatisfactory
Implementing
Quality of Supervision: Moderately satisfactory Moderately satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Moderately satisfactory Moderately satisfactory
Performance: Performance:
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem Project Quality at Entry
No None
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No None
time (Yes/No): Supervision (QSA):
DO rating before Moderately
Closing/Inactive status: satisfactory
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 100 100
Theme Code (as % of total Bank financing)
Administrative and civil service reform 25 25
Public expenditure, financial management and
24 24
procurement
Regional integration 25 24
Tax policy and administration 13 13
Trade facilitation and market access 13 13
E\. Bank Staff
Positions At ICR At Approval
Vice President: Jorge Familiar Calderon Pamela Cox
Country Director: Sophie Sirtaine Yvonne M\. Tsikata
Senior GP Director: Pierre Guislain
Philippe Dongier
Practice/Sector Managers: Randeep Sudan
Nick Manning
Doyle Gallegos Juan Navas-Sabater
Project Team Leaders:
Anat Lewin Roberto Panzardi
Anat Lewin
ICR Team Leader:
ICR Primary Author: M Rosa Puech
F\. Results Framework Analysis
Project Development Objective
The overall development objective of the project was to promote the efficiency, quality,
and transparency of public services through the delivery of regionally integrated e-
government applications that apply economies of scale\.
Revised Project Development Objectives
The PDO remained unchanged while the key performance indicators (KPIs) were
modified twice during the life of the Project (see Annex 11 for a table of KPIs at the PAD,
the 2012 and 2013 restructurings)\.
(a) PDO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Indicator 1 Average number of days to complete VAT tax filing\.
Value
1 day
(qualitative or n/a n/a 20-30 minutes
quantitative)
Date achieved 2011/2012 06/30/2012 07/31/2013 02/28/2014
Comments Achieved\. This indicator was modified in the 2013 restructuring to
(incl\. % replace: âAverage number of days to prepare the annual budgetâ\. The
achievement) PAD did not include specific targets for the outcome indicators\. These
were to be defined after effectiveness through a survey\. The revised
targets were not formally included in the restructuring document\.
Nevertheless, the M&E consultant hired by the Project and the Bank
agreed on a target of 20 percent\.
Average amount of time to process a Pharmaceutical procurement
Indicator 2
requisition order\.
Value
Average of 30
(qualitative or 5 to 7 days n/a n/a
minutes
quantitative)
07/31/2013
Date achieved 2011/2012 06/30/2012 02/28/2014
Comments Achieved\. This indicator was introduced in the 2013 restructuring\. The
(incl\. % PAD did not include specific targets for the outcome indicators\. These
achievement) were to be defined after effectiveness through a survey\. The revised
targets were not formally included in the restructuring document\.
Nevertheless, the M&E consultant hired by the Project and the Bank
agreed on a target of 20 percent\.
Indicator 3 Number of new e-government applications offered or upgraded under the
Project
Value
14
(qualitative or 0 15 9
quantitative)
Date achieved 2010 06/30/2012 07/31/2013 02/28/2014
Comments Surpassed\. The target for this indicator was modified during the 2013
(incl\. % restructuring\. The systems are: 1 Multipurpose ID system in each
achievement) participating country; 1 E-Tax front end filing system in each
participating country; 1 regional E-Pharmaceutical Procurement Services
System; Upgrade to SmartStream in each country; Implementation of the
HIS system in Dominica\.
Indicator 4 Quality measured through focus groups by end users of the following
three systems: Procurement System for PPS, Tax e-filing System and
Multipurpose Identification (MPID) System\.
Value EPPS â 9
(qualitative or N/A N/A N/A E-Tax- 8
quantitative) MPID- 8
Date achieved 2008 06/30/2012 07/31/2013 02/28/2014
Comments Achieved\. This indicator was modified during the 2013 restructuring to
(incl\. % replace: âQuality measured through focus groups by end users of the
achievement) following three systems: Public Financial Management System, Regional
Customs Information System and MPID Systemâ\. Focus groups carried
out before project closing\. See Annex 5 for detailed description of
outcomes\. Values are average based on a 10-point scale system with 1
Poor and 10 Excellent\.
Indicator 5 Online publication of Pharmaceutical procurement awarded contracts\.
Value
0 n/a n/a 19
(qualitative or
quantitative)
Date achieved 2011/2012 06/30/2012 07/31/2013 02/28/2014
Comments Achieved\. This indicator was introduced in the 2013 restructuring to
(incl\. % replace: âCreation of four national Public Finance Management websites
achievement) with open and transparent PFM data setsâ\. The outcome reflects 4
contracts from the antiretroviral (ARV) procurement cycle and 15
contracts from the general drugs medical supply cycle\.
Indicator 6 Publication of an OECS e-government regionally harmonized legislation
bill by the first quarter of 2012 approved by the OECS Authority\.
E-Government
harmonized
legislation
Publication of Publication approved by the
Value OECS
the of the
(qualitative or 0 Authority in
quantitative) harmonized harmonized January 2012
legislation\. legislation\. and published
in the OECS
Secretariat
website\.
Date achieved 2008 06/30/2012 07/31/2013 02/28/2014
Comments Achieved\. This indicator was introduced in the 2013 restructuring to
(incl\. % replace: Establishment of Regional E-Government Desk at the OECS
achievement) Secretariat, hiring of the Senior E-Government Specialist to staff the desk,
design a business plan for sustainability of the regional e-government
desk are completedâ\.
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Regional consensus by OECS countries on a CARICOM e-Government
Indicator 1 Strategy, to which OECS countries have contributed, is reached through
OECS country agreement to the strategy reports at CARICOM meetings\.
Value
(qualitative or 0 1 1
1
quantitative)
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments Achieved\. A regional eGovernment Strategy lead CARICOM, with the
(incl\. % partnership of CARICAD, and entitled âImproved Government\. Better
achievement) Service: CARICOM eGovernment Strategy 2010-2014â was adopted by
EGRIP participating countries through OECS country agreement\.
Indicator 2 Publication of OECD e-government regionally harmonized legislation by
first quarter of 2012 approved by the OECS Authority\.
Set of
legislation
approved by the
OECS
Authority (body
of Prime
Value Ministers and
(qualitative or 0 1 1 Chief Ministers
quantitative) for the OECS)
in January
2012\.
Publication in
the OECS
Secretariat
website\.
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments Achieved\. The harmonized legislation can be found at
(incl\. % http://www\.oecs\.org/publications/cat_view/205-egrip-publications/206-
achievement) oecs-harmonized-e-government-legislation\.
This indicator was included in the 2012 revision of Key Performance
Indicators as an intermediate indicator and included as an outcome
indicator in the 2013 restructuring\.
Indicator 3 Definition and publication of regional e-government standards, enterprise
architecture, interoperability framework\.
Published in the
OECS Secretariat
website: (i) the e-
government
harmonized
legislation, (ii)
regional e-
government
Value Consultancies Consultanci
standards, (iii)
(qualitative or 0 done and es done and enterprise
quantitative) published published architecture,
interoperability
framework and
(iv) total cost of
ownership
documents\.
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments Achieved\. These documents are available at:
(incl\. % http://www\.oecs\.org/publications/cat_view/205-egrip-publications/207-
achievement) oecs-regional-e-government-standards-enterprise-architecture-and-
interoperability-framework
Indicator 4 Regional consensus by EGRIP countries on the approval of the new
institutional framework is reached at an EGRIP meeting\.
Value
Consensus Consensus
(qualitative or 0 Consensus
quantitative) reached reached reached
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments Achieved\. A consultancy explored different options for the institutional
(incl\. % framework for e-government\. Participating countries agreed on the
achievement) preference for a Regional e-Government Center of Excellence, creating an
interim e-Government desk that could evolve into the Center of
excellence\. After Project completion, the OECS Secretariat was moving
forward to implement the ICT/E-Government Desk and had hired an e-
government specialist for three months\.
Indicator 5 Detailed design and implementation of a multipurpose ID system (MPID)
linked to core user agencies, including issuance of ID numbers\.
5
MPID system
successfully
designed,
delivered to and
installed in all 4
countries\. The
Value systems started
(qualitative or 0 4 8 to operate in all
quantitative) four countries
with tests
groups of
population\.
MPID system
linked to 2 core
agencies in
Dominica\.
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments Partially Achieved\. This indicator awards two points to each country
(incl\. % (giving a total of 8 points) that has successfully implemented the
achievement) multipurpose ID system (one point) and connected it to between two
core user agencies (e\.g\. Civil Registry and Electoral Office) (one point)\.
St\. Lucia foresees to have carried out the interface with two agencies
by July 1, 2014; St\. Vincent had successfully connected the MPID with the civil
registry and will connect in the electoral and health systems in the near
future\. Grenada is working to complete interfaces with the civil registry
and the National Insurance System\.
Indicator 6 Percentage of population in participating EGRIP countries covered in the
MPID
Value
40% 10% per
(qualitative or 0 See below\.
quantitative) regionally country
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments Not achieved\. The MPID system had started to be rolled out in all for
(incl\. % countries between November 2013 and February 2014\. This explains the
achievement) lower than agreed percentage of population enrolled in the system or that
the actual enrollment of citizens has not yet started but there has been
progress towards the roll out of the system by the time of this ICR\.
Enrollment in the system is expected to continue and increase beyond the
ICR timeframe\. Dominica: 7\.82%; Grenada: 0\.8%; St\. Lucia: Roll out of
civil servants started by ICR end and St\. Vincent and the Grenadines:
Enrolment has not yet been initiated, pending Cabinet approval\.
Indicator 7 Completion of standard PFM reports and SmartStream operating
procedures in each country
Value 3
(qualitative or 0 n/a 4 Dominica, St
quantitative) Lucia, Grenada\.
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments Partially achieved\. This indicator replaced âCompletion of e-government
(incl\. % service upgrades to the Public Financial Management System, as well as
achievement) interfaces with other systemsâ\. By the project closing date, Dominica,
Grenada and St Lucia were successfully applying the application upgrade,
implementing the SmartStream Reporting Module\. In the case of SVG,
the reports for the HR Module were created, but data could not inputted
before Project completion\. Caribbean Development Bank is providing
resources to buy equipment and to hire staff to upload the data that will
allow testing the HR module\.
Indicator 8 Number of people trained in generating standard SmartStream reports
Dominica- 6
Grenada -4
Value
St\. Lucia-16
(qualitative or 0 n/a 19
St\. Vincent and
quantitative)
the Grenadines-
3
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments
(incl\. % Surpassed\. This indicator was introduced during the 2013 restructuring\.
achievement)
Indicator 9 Tax declarations filed online through the tax e-filing system as a
percentage of total tax declarations filed (VAT)
St\. Lucia:
15\.47%
St\. Vincent and
the Grenadines:
30%
Value
Grenada: 140
(qualitative or 0 10% 10%
VAT
quantitative)
declarations
submitted
online\.
Dominica: 36
VAT filing
returns online\.
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments
Achieved\. Dominica and Grenada had not submitted information on the
(incl\. %
percentages of VAT declarations online by the time of ICR completion\.
achievement)
Indicator 10 Number of new suppliers registered through Electronic Procurement for
Pharmaceutical System (EPPS)
Value 21 new
10%
(qualitative or 0 N/A suppliers
quantitative) registered
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments Achieved\. This indicator replaced âIncrease in the volume of transactions
(incl\. % of OECS Pharmaceutical Procurement Service E-tendering Systemâ in the
achievement) 2013 restructuring\. New suppliers refer to those suppliers who registered
for the first time in the EPPS, though they could have participated
previously in PPS\.
Indicator 11 Reduction of administrative cost of OECS Pharmaceuticals procurement
Value
(qualitative or 56 days n/a n/a 23 days saved
quantitative)
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments Achieved\. This indicator replaced âReduction in the cost of
(incl\. % pharmaceuticals procuredâ in the 2013 restructuring\. A target percentage
achievement) number was not included at restructuring\. The PPS at the OECS
Secretariat estimated a reduction of costs by saving 23 days of
administrative work, through the use of the EPPS\. It estimated a cost of
$75 per day (Unit-cost\. See Annex 3)\.
Indicator 12 Implementation of an open source Health Information System (HIS) in
Dominica
Value
0 n/a 1
(qualitative or 1
quantitative)
Date achieved 05/28/2008 06/30/2012 08/31/2013 02/28/2014
Comments
(incl\. % Achieved\. This indicator was added during the 2013 restructuring\.
achievement)
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 11/22/2008 Satisfactory Satisfactory 0\.00
2 06/24/2009 Satisfactory Satisfactory 0\.00
3 12/04/2009 Satisfactory Satisfactory 0\.54
4 06/29/2010 Satisfactory Satisfactory 0\.54
5 02/27/2011 Moderately Satisfactory Moderately Satisfactory 0\.85
6 07/05/2011 Moderately Satisfactory Moderately Satisfactory 1\.28
7 02/12/2012 Moderately Satisfactory Moderately Satisfactory 1\.85
8 09/30/2012 Moderately Satisfactory Moderately Satisfactory 2\.19
9 06/20/2013 Moderately Satisfactory Satisfactory 6\.30
10 02/12/2014 Moderately Satisfactory Satisfactory 6\.93
P117087
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 03/06/2010 Satisfactory Satisfactory 0\.00
2 02/27/2011 Moderately Satisfactory Moderately Satisfactory 0\.28
3 07/11/2011 Moderately Satisfactory Moderately Satisfactory 0\.41
4 02/12/2012 Moderately Satisfactory Moderately Satisfactory 0\.61
5 11/04/2012 Moderately Satisfactory Moderately Satisfactory 0\.97
6 08/06/2013 Moderately Satisfactory Satisfactory 1\.75
7 02/12/2014 Moderately Satisfactory Satisfactory 2\.31
H\. Restructuring (if any)
ISR Ratings at Amount
Board Restructuring Disbursed at
Restructuring Reason for Restructuring
Approved Restructuring
Date(s) & Key Changes Made
PDO Change DO IP in USD
millions
(i) Modify the Projectâs
indicators to align them
04/19/2012 No MS MS 2\.40
with the Projectâs
outcomes and outputs; and
(ii) Extension of the
closing date of the Credit
Agreements for Dominica,
Grenada and St\. Lucia to
August 31 2013 to align
them with St Vincent and
accommodate the closing
date to the completion of
activities for the two
projects\.
The Project was
restructured to (i) extend
the closing date of all
credits by six months; (ii)
drop selected activities
07/31/2013 No MS S 4\.68 and reallocate their
funding to other ongoing
activities under the
Project; and (iii) adjust
the M&E to reflect these
changes\.
I\. Disbursement Profile
1\. Project Context, Development Objectives and Design
This ICR covers a horizontal APL program that is composed of two lending projects
(P100635 and P117087) of different start dates, covering four countries (St\. Lucia,
Grenada, St\. Vincent and Dominica; four IDA credit numbers) and two restructurings,
one of which included an extension of the first project to align its closing date with the
second project\. The funding between the countries and projects varies slightly\.
Facilitating the analysis in this ICR is that once the second project was approved, the two
projects were managed as one, with virtually all pooled procurement, one management
structure, one implementation process, one disbursement and FM process, and one
reporting structure, until project closing\. This ICR follows a split evaluation before and
after restructurings, and the analysis for sequencing, financing, disbursement, ratings
and overall assessment are of the program as a whole\.
1\.1 Context at Appraisal
1\. At the time of appraisal, OECS countries 1 were facing a number of common
challenges, in a context of increasing global competitiveness\. They had high fiscal
imbalances and debt ratios, while being exposed to external shocks as small island
developing states\. OECS countries were focusing on new sources of growth to reduce
vulnerability\. Similar to small states in other regions, OECS countries embraced an
approach that emphasized improved governance, public sector modernization and
enhanced regional integration\. The countries were looking into how to reinvigorate and
sustain growth, reduce high unemployment, lower the poverty rate, restore fiscal and debt
sustainability, diversify their economies and secure a sustainable external position\.
2\. Public sector modernization was identified as key to improving efficiency and
competitiveness in the region\. Up to then, the public sector had focused on controlling
inputs and compliance of rules, rather than on quickly and effectively delivering expected
outputs2\.
3\. OECS countriesâ public sector strategy at the time placed emphasis on using
Information and Communication Technologies (ICT) to improve internal efficiency,
delivery of public services, coordination among agencies and transparency and
accountability of the public sector, with the overall objective of contributing to regional
integration\. Selected OECS countries (Grenada, Dominica and St\. Lucia and St\. Vincent)
1
The OECS has a membership of 9 states: Grenada, Anguilla, Antigua and Barbuda, The British Virgin
Islands, Dominica, Montserrat, St\. Kitts and Nevis, St\. Lucia and St\. Vincent and the Grenadines\.
2
OECS Institutional and Organizational Capacity Review of the Core Public Sector (IOCR)\. The public
sector was perceived as inefficient and poorly managed\. Citizens deemed the quality of selected public
services as unsatisfactory\. This was due to institutional deficiencies, weak accountability and ineffective
enforcement mechanisms\.
1
had already been working in the direction of public sector reform with support from the
EU and CIDA\.
4\. The Electronic Government Regional Integration Project (EGRIP) consisted of two
projects: the first one, financed by three credits, included three OECS countries:
Dominica, Grenada and St\. Lucia\. The second project was financed by a credit to St\.
Vincent and the Grenadines\. EGRIP was conceived as a horizontal and a vertical
Adaptable Program Loan (APL)\. On the horizontal axis, it started with three of the
countries, followed by St\. Vincent\. On the vertical or temporary axis, the program was
structured in two phases\. The first one corresponded to the project evaluated in this ICR\.
The second phase was expected to expand the regional e-Government program into other
sectors\. EGRIP was an innovative project, the first regional ICT project supported by the
Bank for small island states\.
1\.2 Original Project Development Objectives (PDO) and Key Indicators
5\. The PDO was to promote the efficiency, quality and transparency of public services
through the delivery of regionally integrated e-Government applications that would take
advantage of economies of scale\.
6\. The PAD included the following general key performance indicators (KPIs) to
measure the achievement of the PDO:
ï Government financial savings in areas such as public financial management, tax
administration, customs and procurement due to new e-Government systems;
ï Estimated usersâ time and cost-savings;
ï Increase in the number of electronic transactions processed by regional e-
Government applications;
ï Increase in e-Government services offered or upgraded;
ï Improvement of ratings in areas of functionality, accuracy and usability of e-
Government services as reported by users through satisfaction surveys;
ï Improvement of ratings in areas of openness and access to relevant information,
as reported by users through satisfaction surveys;
ï New regional institutional framework is created with adequate capacity to provide
new regionally integrated e-Government services, in accordance with regionally
harmonized policies and regulations\.
7\. The PAD indicated that specific parameters of indicators and baseline values were to
be determined and collected shortly after Project effectiveness through a study funded by
the Project\.
1\.3 Revised PDO and Key Indicators, and reasons/justification
8\. The PDO remained unchanged while the key performance indicators were modified
twice during the life of the Project\. The key performance indicators were formally revised
in April 2012, after the mid-term review, to adjust a number of the original PAD
2
indicators that did not reflect the evolution of the Project\. The revised KPIs were the
following:
ï Average number of days to prepare annual budget;
ï Regional health information system and regional customs information system are
installed and operational;
ï Number of new e-Government applications offered or upgraded under the Project;
ï Quality measured through focus groups by end users of the public financial
management, regional custom information and Multi-purpose ID systems;
ï Creation of 4 national PFM websites with open and transparent PFM data sets;
and
ï Establishment of Regional E-government desk at OECS Secretariat, hiring of the
senior E-government specialist, design the business plan for sustainability of the
E-government desk\.
9\. In June 2013, the Key Performance Indicators were revised as part of the Projectâs
restructuring to reflect the changes to the Projectâs scope (see section 1\.7 below) and to
better assess the achievement of the PDO:
ï Average number of days to complete the VAT filing;
ï Average amount of time to process a Pharmaceuticals procurement requisition
order3;
ï Number of new e-Government applications offered or upgraded under the project;
ï Quality measured through focus groups by end users of the e-Tax, e-Procurement
and Multipurpose Identification Systems;
ï Online publication of Pharmaceutical procurement awarded contracts;
ï Publication of an OECD e-Government regionally harmonized legislation bill by
first quarter of 2012 and approved by the OECS authority\.
1\.4 Main Beneficiaries
10\. The Project aimed to benefit citizens, businesses, consumers and the public sector as
a whole in the participating countries\.
1\.5 Original Components
11\. The Projects had the following components:
Component 1-Horizontal E-Government Interventions (US$3\.54 million)\. This
component aimed to strengthen and harmonize national and regional e-Government
processes, operational ICT platforms and frameworks; to promote more efficient
regionally-based ICT developments and strengthen capacity, and to provide an enabling
3
âThe process quantified is the time from the requisition to be ordered by a country, to the successful
procurement under the systemâ
3
environment to achieve Public Administration objectives in a globally competitive
context to better serve citizens, business and consumers in the region\. It had five
subcomponents: (i) Policy and Strategy Implementation; (ii) Legal and Regulatory
Framework Implementation; (iii) ICT standards and Total Cost of Ownership
Optimization; (iv) Regional E-Government Institutional Framework Strengthening; and
(v) Automated Registries and Multi-purpose Identification Systems\.
Component 2-Vertical E-Government Interventions (US$4\.93 million)\. This
component aimed to harmonize and improve key e-Government systems by focusing on
specific interventions in core areas of public finance\. It had the following sub-
components: (i) E-Government in Public Financial Management; (ii) E-Government in
Tax Administration; (iii) E-Government in Customs; (iv) Electronic Government
Procurement; and (v) E-Government in Health and Other Social Productive Sectors\.
Component 3-Project Management (US$650,000)\. This component would finance the
creation of the Regional E-Government Unit (REGU) directed by a Project Manager\. The
REGU would include specialized staff located in the agencies identified in each country
as focal points for the project\.
12\. A total of US$480,000 (5 percent of total project cost) was unallocated to allow for
flexibility in complementing activities under the Project\. This amount was later required
to offset the SDR exchange rate deficits\.
1\.6 Revised Components
13\. The Project components were not modified, although some activities were
dropped as explained in section 1\.7\.
1\.7 Other significant changes
14\. In April 2012, there was a restructuring to: (i) extend the closing dates of the Credit
Agreements for Dominica, Grenada and St\. Lucia to August 31 2013, to align them with
the closing date of the St Vincent and the Grenadines Credit; and (ii) to revise the KPIs
deemed too broad, ambitious or difficult to attribute to the project\. In June 2013, the two
Projects were restructured in order to achieve the PDO by: (i) extending the closing date
of all credits by six months; (ii) canceling some activities foreseen in the PAD and
reallocating funds to ongoing activities; and (iii) adjusting the KPIs to reflect these
changes\. The cancellation of activities was due to:
ï The need to prioritize among the major e-Government systems to be financed by
the Project, due to costs being significantly higher than foreseen at appraisal\. The e-
Government application for the preparation of the national budget was dropped due to its
high cost; the estimate had been US$300,000, while the lowest negotiated price resulting
from the procurement process was US$2\.2 million\. Further discussion of the disparity
between appraised and actual costing is in the ICRâs Implementation section\.
4
ï Unsuccessful procurement processes due to the lack of bidders or inadequate
offers that did not meet the required criteria\. The hiring of the e-Government specialist at
the OECS Secretariat was dropped due to the lack of candidates\. The Customs
application was cancelled due to two unsuccessful procurement procedures and
inadequate time remaining to conduct another round\.
ï Activities being carried out with alternative financing or expected to be financed
with alternative resources, such as the development of PFM websites and related
hardware (the countries had in the interim acquired those); the acquisition of software
additions to SmartStream 4 ; and activities related to harmonization of policies and
strategies under subcomponent 1\.1\.
ï Activities having been carried out by one of the countries, then shared the product
and its adaptation with the other countries\. The interfaces between the main financial
system (SIGTAS) to SmartStream and from the main customs system - ASYCUDA
World - to SIGTAS, were developed by Dominica and shared with the other countries\.
The development of a manual of the PFM system was dropped, as it could be subsumed
under another consultancy (for development of standard PFM reports and Smart Stream
Operating Procedures), also financed by the project\.
ï Activities that the countries ultimately did not consider themselves ready to tackle
regionally, but decided to strengthen the national systems first, such as in the case of the
e-Government in Health application, for which the Project had envisaged a Regional
Health Integration System (RHIS)\.
ï The June 2013 restructuring was undertaken after it was decided at MTR, based
on a decision by the projectâs Regional Steering Committee (with representatives at
Permanent Secretary level) to ascertain the true (not appraised) price of the components
by completing the procurement process of each component and enabling an informed
prioritization of the activities\. The Bank received the last of the official requests for the
restructuring from the four countries in June 2013, at which point the restructuring had
been fully prepared, and could be formally processed\. Had additional funds been
available under the project, a better approach may have been extend the project for a
longer timeframe, and allow it to benefit from another year, given its complexity,
regional nature and innovation\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
4
SEMCAR (Supporting Economic Management in the Caribbean was a Canadian grant for Cdn$20
million to support reforms in Tax, Customs, Public Financial Management and related ICT areas in 12
Caribbean countries\. IN 2012-2013, SEMCAR was providing support to the OECS countries in negotiating
a regional Enterprise for the SmartStream application\.
5
15\. Regional approach informed the overall design\. Advancing regional integration
was at the top of the OECS agenda at the time of preparation in 2007\. A regional
approach to e-Government was seen as a way to reap the benefits of economies of scale\.
It was projected that the participating countries, which were participating in the formation
of an Economic Union in the Eastern Caribbean, would benefit from harmonizing
legislation and implementing common e-Government services\. This was at the core of the
Projectâs design as a horizontal APL and at the definition of regional implementation
arrangements, with a regional body - the OECS Secretariat - as the implementing agency\.
The Bank used a regional IDA envelope to help finance the Project\.
16\. Lessons were taken into account at the time of preparation\. The importance of
considering a gradual approach and the limited institutional capacity in small states were
considered at design\. Recommendations from the Country Partnership (CPAR) for the
OECS States and the Public Sector Modernization project for Grenada informed design
regarding the main areas to be reformed\. E-government experiences from other countries,
where available, were considered in the design5\.
17\. Preparation was participatory at national and regional levels\. Two workshops in
February and May 2007 were carried out to inform the Projectâs design\. In advance of the
workshops, stakeholders at the national levels defined the priority areas of intervention
from their countriesâ perspective\. These priorities were discussed and matched during the
workshops\. The preparation team consulted with the OECS Secretariat to gather
information on the regional priorities\. Consultations with the private sector were carried
out to support efforts to cost the project\. While estimating the cost of equipment was
feasible at the time of appraisal, it was a challenge to cost the systems, as there were no
precedents, comparisons and references for regional implementations\. It was assumed
that there would be payment for one regional license (rather than four) and project design
assumed the OECS Secretariat as the buyer\. Project credits, however, were given to the
countries per Bank standard practice\.
18\. The innovative nature of the Project combined with relatively short preparation
time, given the scope of the Project\. At the time of preparation, EGRIP was a highly
innovative project, both in its subject matter in that it was a pioneering e-Government
project at the Bank, and in that no other e-Government lending project had been regional
before, or since\. It included activities, such as the regional MPID system, for which there
were few international examples to draw on\. This influenced the difficulties to accurately
cost the Project activities\. The project would have benefitted from a longer preparation
time (a year from PCN approval to appraisal), given the broad scope and pioneering
nature of its activities\. However, the Bank attempted to prepare the Project in time to be
able to access a regional envelope of IDA credit that otherwise would have expired\. This
5
Operational experience in Grenada showed the importance of taking a strategic and incremental approach
to public sector modernization\. The Projectâs design focused on addressing primarily the core finance area
and attempting to achieve economies of scale through regional cooperation\. Moreover, the Project was
conceived as a two-phase APL to allow for flexibility to coordinate with donors and allow for longer
adjustment periods\.
6
led to a trade-off between the benefit of longer preparation time and that of leveraging
regional IDA credits for the project\.
19\. Assessment of risks was adequate\. The PAD highlighted the Projectâs complexity
and the capacity of the participating institutions to coordinate across countries and
agencies as substantial risks\. Procurement and financial management were identified as
high risks as well\. Mitigation measures were included in the design of the Project to
address these risks\. These were overall adequate to manage the risks, in particular for
procurement and financial management\.
20\. In spite of the above, the Projectâs quality at entry is rated as Moderately
Unsatisfactory\. The main reason for this rating is that the Project was not fully prepared
at the time of approval\. Project preparation was affected by a lack of adequate level of
funds for preparation\. The Project did not benefit from a Project Preparation Facility
(PPF) to finance gap analyses, needs diagnoses and activity-defining consultancies during
preparation\. This translated into broadly defined activities and selected M&E indicators
that did not have specific parameters, baselines or targets\. As part of its first year
activities, the Project financed, after effectiveness, a significant number of consultancies
to better define the scope of the components and produce technical specifications\. A PPF
could have undertaken some of these consultancies and brought the REGU team,
including the project manager, on board before effectiveness\. The Project design was also
too ambitious in terms of the scope of activities included in the PAD, given the available
resources to finance activities\. The costing of the major e-Government systems was
underestimated at appraisal\. While accurate estimates of the cost of equipment were
feasible, it was a challenge to appraise the regional e-Government systems\. The broad
project scope was carried out with the assumption that that there would be good potential
for economies of scale and that savings would be realized through a regional approach\.
While these assumptions were partly realized, they turned out to have been optimistic\.
2\.2 Implementation
Factors that negatively affected implementation
21\. Delays in starting the Project\. The Project experienced a 13-month delay between
approval (May 2008) and effectiveness (June 2009) due to processes required to be
completed by each of the participating countries\. During that time, the lack of a PPF
prevented proceeding with some activities, which would have otherwise allowed for a
faster implementation pace after effectiveness\. The hiring of the Project Coordinator and
team by the OECS Secretariat formed part of these delays\. The Regional e-Government
Unit (REGU)âs team was hired, trained and ready for implementation in June 2010\.
22\. Limited resources to finance all Project activities included in the PAD\. Given the
broad scope of activities included in the PAD, the implementation team and the Bank
realized that there was a shortage of resources available to finance the full content of the
PAD\. Early in implementation (2010), the Project management sought additional funds
from the CDB for all four countries, which per CDB guidelines also included St\. Kitts
and Nevis and Antigua and Barbuda\. A CDB grant of US$2\.5 million was approved in
7
2010 and started disbursement in 2012, supporting activities under Component 1: (a) 1\.3
ICT standards and the Total Coast of Ownership Optimization and (b) 1\.4 Regional e-
Government Institutional Framework Strengthening; and project management\. In
addition to this initial shortfall, as the activities and systems were being procured in 2012,
the cost of the major e-Government systems was found to be significantly higher than
appraised and budgeted\. After the mid-term review, priorities among Project activities
had to be defined (see section 1\.7) and there was a need to restructure the Project to
reduce the number and scope of activities\. Finally, the evolution of the exchange rate
SDR/$ negatively affected the availability of project resources, at times reducing the
budget by over half a million dollars\.
23\. Procurement was challenging\. Procurement processes were challenging throughout
the life of the Project due to several factors: (i) limited capacity of local firms and
individual consultants; (ii) lack of attractiveness to international firms due to size, scope
and budget of activities in the Caribbean; (iii) lack of firmsâ knowledge of the Bankâs
procurement rules and documents; (iv) delays in obtaining feedback and responses from
stakeholders for non-objections, comments and approvals; and (v) lack of specialized
procurement training and detailed proactive guidance from the Bank for the large IT
systems\. The REGU invested significant time and efforts in resolving challenges and
driving the procurement processes forward, with Bank support\. It split goods packages
into lots, based on the capacity of the local firms to enable their participation and to target
suppliers; the Bid security requirement was replaced by a security bid-declaration to
reduce the financial and logistical challenges on the firms and there was wide and
multiple advertisement in the region, at times directly to firms, to prevent the multi-
country procurement processes from being deserted\. The Project Management team put
much work into the preparation of procurement processes, which was time consuming\.
Despite the challenges, the procurement processes for all components were carried out, to
identify the costs of the systems\. After the cost of all e-Government systems was known,
choices were made as to which systems to prioritize and finance\.
24\. Countriesâ slow pace of response to REGU\. It took long periods of time to obtain
responses, feedback and sign-offs from stakeholders in the participating countries\. This
was due to the multiple institutions involved in the different areas of the Project across
four countries and the eagerness of countries to get e-Government systems with Project
support rather than consultancies, which were often viewed as not providing tangible
results\. The Project financed a significant number of consultancies during its first years of
implementation (2010-2011), as foreseen in the PAD\. These were key for: (i) providing
detailed diagnostics of the countries contexts and systems; (ii) carrying out consultations
with stakeholders; (iii) defining the systems and preparing technical specifications to
launch the procurement processes and ascertain the actual market cost of the systems; and
(v) creating consensus among the participating countries\. For example, the MPID
consultancy included a consensus-building workshop for multiple agencies across the
four countries, including civil registries, electoral offices, police, and other agencies\. The
countries were, at times, dismayed by the length of time needed to get the much-
anticipated systems\.
8
25\. Higher than estimated cost of e-Government systems\. The procurement processes
carried out during 2012 showed that the cost of equipment was along the original PAD
estimates, while the cost of the systems was much higher than expected\. Firms looked at
the relationship with each participating country as a separate one and cost each
implementation separately, rather than providing a volume discount for pooled
procurement\. Offers proposed by vendors during contract negotiations exceeded the
estimated budget available for some of the larger e-Government systems\. Pertinent
examples are provided in the table below\.
e-Government Application Procurement Plan Lowest Negotiated Price
Estimate at after Competitive
Negotiation (US$) Procurement Process (US$)
Multi-Purpose ID System $0\.95 million $3\.14 million
Software for National Budget $300,000 > $ 2\.2 million
Preparation
e-Tax Filing System $1\.05 million $1\.5 million
Electronic Procurement of $440,000 $526,000
Pharmaceuticals System
26\. Except for the EPPS, which was implemented as a single regional instance managed
by the OECS Secretariat, implementations and training for the e-Tax filing system and
the MPID system were undertaken at four country-levels\. Firms perceived the systems as
four separate implementations, and this reduced the expected savings through economies
of scale\. Given the size of these economies, there was little room for negotiation with the
private firms and the Bank could not influence this situation to a greater economic
advantage to the participant countries\. This led to a restructuring in June 2013 that
canceled activities and reallocated funds among prioritized e-Government systems\.
27\. Challenges in the roll out and use of the MPID system: There were numerous
challenges to roll out the MPID system in the four countries before Project completion\.
Once the system was installed and operational acceptance was granted (November 2013),
countries needed to define their strategies for deploying the system, introduce the ID
cards and decide on the systems with which it would interface\. Several challenges
surfaced within each country\. In St Lucia, there were problems in creating an MPID
vetting unit, to find a space to locate it, and staff it\. A strategy for enrollment and
issuance of cards was developed shortly after Project closure, and kick-started the
systemâs roll out\. There were bottlenecks at the civil registry related to the reliable and
timely issuance of source documents that are critical to enrollment, such as the provision
of marriage and birth certificates\. In the case of Grenada, the governance committee
created to provide guidance to the Ministry of ICT ceased to meet in June 2013, failing to
provide the guidance on rolling out and implementing the system\. The focal point
switched from the Civil Registry to the ICT Ministry\. This Ministry lacked previous
experience and trained staff to administer such a system\. There were challenges to define
registration and issuance locations before Project closure\. In St\. Vincent, the vetting,
9
verification and reconciliation of identity were a challenge while the system was being
rolled out\.
Factors that contributed positively to implementation
28\. Implementation arrangements worked well and were key to achieving the PDO\.
At the regional level, two institutions were created to implement the Project\. The
Regional e-Government Unit (REGU) was created at the OECS Secretariat to manage the
Projectâs implementation\. Additionally, a Regional Technical Committee (RTC) was
created to provide overall policy guidance to the REGU and to define priorities\. The RTC
was comprised of country representatives at the level of Permanent Secretary and
representatives of the OECS Secretariat\. At national level, Country Based Specialists
(CBSs) were hired as members of REGU to support implementation in each of the
participating countries\. Each country had a focal point (an ICT or e-Government unit
representative), providing assistance to REGU to implement the Project\. The
collaboration of the national and regional levels was successful, even if time consuming,
in implementing the project with a regional focus while integrating national priorities\.
29\. Strong Project Management consistently advanced Project implementation\. The
REGU displayed strong leadership in implementing the Project\. It worked closely with
the countries, through the CBSs, to obtain stakeholdersâ responses and perspectives in an
effort to shorten feedback time\. CBSs presented summaries of the consultancy reports to
stakeholders, and elicited feedback in these presentation meetings, rather than waiting for
feedback on the consultantsâ at times lengthy analytical reports\. The REGU implemented
a strategy to negotiate on contracts as part of the procurement process and secure more
value for money (i\.e\. by extending the systems guarantees for a year, after the systems
were given to the countries)\. The REGU showed strong resourcefulness to operationalize
the systems, in light of lack of or delays in passing the requisite e-Government
harmonized legislation (i\.e\. the REGU used consent forms from individuals in the
absence of passed legislation on fingerprints to start using the MPID system)\. The REGU
took the initiative to bring in CDB grants to complement the IDA credits to achieve the
PDO\. The REGU, in the framework of the implementation arrangements, carried out
consensus building, fostered ownership of the Project in each participant country, while
being guided by the regional focus of the Project\. For example, a workshop in September
2011 discussed and defined the concept and requirements of the MPID system across a
myriad of agencies in four countries, and found consensus before moving forward\.
30\. Scope of activities adapted to the countriesâ priorities and needs (national
diversity within a regional project)\. While emphasizing the regional nature of EGRIP,
the Project sought to adapt to the countriesâ realities and needs\. In the case of the MPID
system, Dominica, use the MPID system to enhance the electoral registration, which
fostered greater acceptance of the system in this country\. St\. Vincent and the Grenadines
focused on the use of the MPID system for the modernization of the business and civil
registries, since the electoral office had been implementing a new ID card\. Quick win
projects were introduced to achieve country-specific reforms and achieve: in St\. Lucia,
the Project financed the Governmentâs online portal, and Dominica opted for the
10
implementation of an open source Health Information System (HIS), as a preparation for
its future participation in a regional HIS\.
31\. The Project adjusted to the changes in context after preparation\. As mentioned in
section 1\.7, selected activities were canceled to adjust to changes in the implementation
context\. This was the case with the strategic review and update of national and regional
OECS e-Government strategies, which became unnecessary6\. Countries had defined their
national ICT strategies, and CARICOM had carried out work to define the Regional
Digital Development Strategy (RDDS)\. Other activities were dropped to adjust to budget
shortfalls (i\.e\. activities related to PFM and e-customs)\. The institutional framework at
regional level favored by the countries (the Regional e-Government Center of Excellence
for which the countries agreed to establish the e-Government desk at the OECS
Secretariat) was not implemented due to the challenges of hiring an e-Government
specialist, after two unsuccessful rounds of bids and afterwards, to financial constraints\.
The OECS Secretariat intends to set up the e-Government desk after Project completion\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
Design
32\. The Projectâs original results framework was Moderately Unsatisfactory before
restructuring; and Moderately Satisfactory after both restructurings\. A few of the original
PAD indicators didnât include definition, baselines and targets, and it was indicated that
these would be clarified with the completion of analytical consultancies in the first year
of the project\. A consultant was hired in mid-2010 to carry out a baseline exercise,
completed by August 2010, to gather information at the beginning of the Project\. 7
Through this exercise, baseline values were defined, where possible, for the original PAD
indicators, through surveys and a desk review\. The PAD mentions a budget for the M&E
results surveys, but resources were not allocated for this task and surveys could not be
undertaken\.
33\. The M&E framework evolved, as reflected in the 2012 and 2013 restructurings, to
introduce revised and new outcome indicators, to ensure the monitoring and evaluation of
the project and better monitor the Projectâs achievements, and was finalized towards the
end of the Projectâs implementation\. While steps were carried out to successfully define
the M&E framework, the fact that the indicators were finalized and data collected at a
6
The countries no longer required it because of (i) the existence of National ICT Policy and Strategies (ii)
the 2010-2014 CARICOM E-government Strategy and (iii) the CARICOM regional Digital Strategy\. Page
19 of the SLU CBS report\. SVG completed its National ICT Policy, Strategy and Action Plan 2010-2015,
supported by the EU Special Framework of Assistance (SFA) 2005 and an E-Government Development
Strategy\. The Draft CARICOM E-government 2010-2014 and the CARICOM Regional Development
Strategy 2011-2014 were completed as well\.
7
11
later stage contributed to not using the M&E online dashboard developed under the
project\.
Implementation
34\. The REGU regularly carried out the monitoring and evaluation of the Project\.
Progress monitoring reports were prepared quarterly, with financial and procurement
information to follow the physical and financial progress of the Project\. Information to
update outcome and intermediate outcome indicators was regularly gathered, with
support of the CBSs, whenever it was available\. Indicators were changed to better
measure the progress towards the PDO in light of the prioritization of activities within the
Project\. An M&E online dashboard (a web-based M&E system) intended to be used to
monitor this Project was financed by the Project\. The REGU and specifically the M&E
consultant provided initial information and participated in the acceptance of the system\.
The system was given to each participant country and staff was trained on its use\. The
system was tested and worked with several browsers, but it showed some limitations with
all of them except for one\. Focus groups were carried out before Project completion to
gather information towards the achievement of outcomes\. This exercise was led by
REGU, specifically by the M&E consultant\. The focus groups gathered information on
quality, user satisfaction and functionality of the e-Government systems supported by the
Project (e-Procurement, MPID and e-Tax system)\. Participants included stakeholders
who had interaction with the systems, both internal and external users\. Its key findings
are included in Annex 5\.
Utilization
35\. The M&E results framework was used to measure the progress towards the
achievement of outcomes and the PDO\. It guided the efforts of the management team
during the last phase of implementation in supporting the countries to roll out all systems
and in particular the e-Tax filing and the MPID systems\.
2\.4 Safeguard and Fiduciary Compliance
36\. Financial Management\. No internal control issues were brought up in the external
audit reports, which were all unqualified\. Disbursement rates reflected the Projectâs
design and the nature of e-Government Projects, for which the first activities to be
financed are consultancies and the acquisition and implementation of systems follow\. The
REGU adequately managed the financial uncertainty created by the SDR exchange rate
versus the dollar\. The REGU closely monitored the evolution of the exchange rate to
ensure the availability of funds to meet the financial commitments under the Project, in
particular the MPID system, implemented towards the end of the Project\.
37\. Procurement\. Procurement was an issue throughout the Project\. REGU worked hard
and invested significant time to move the processes forward, through intense regional
advertisement, support from the Bank and creative actions\. Some procurement processes
did not receive bids while others faced challenges to be successfully completed\. This was
the case in the procurement of the e-Government specialist position after two
unsuccessful recruitment/procurement processes\. In the case of the Public Financial
12
Management component, one of the procurement processes attracted no bidders, and the
second received one bid that did not meet the technical criteria\. Lack of familiarity with
the Bankâs procurement processes and the size of the Caribbean economies adversely
affected procurement activities\.
2\.5 Post-Completion Operation/Next Phase
38\. EGRIP was structured such that a second phase of the project could be conceived,
and this was requested by the OECS Secretariat at project closing\. The Bank is currently
not considering a follow up operation to this Project due to the competing priorities
identified by the countries in the FY15-19 Regional Partnership Strategy process\. The
Caribbean Communications Infrastructure Program (CARCIP, active in Grenada, St\.
Lucia, and St\. Vincent & the Grenadines) will address the countriesâ priorities and
concerns regarding broadband capacity\. However, this will not follow up on regional or
national e-Government activities\.
39\. By project completion, the OECS Secretariat intended to create a regional e-
Government desk and hire an e-Government specialist to staff it\. Through this desk, the
OECS Secretariat plans to create an awareness of the Projectâs achievements, in an effort
to enhance the use of the systems and achieve greater results\. The OECS Secretariat
website published all of the reports produced during the life of the Project as well as
information on achievements\.
40\. By project completion, all three major systems financed by the Project had been
completed, transferred to the countries and were in use or in the early stages of roll out\.
In the case of the EPPS, one procurement cycle for ARV was completed and the second
procurement cycle of a larger group of medical supplies was underway\. The system is
expected to be used and maintained by the OECS Secretariat, specifically by the
Pharmaceutical Procurement Service (PPS)\. In the case of the e-Tax system, the
respective countriesâ Inland Revenue Departments (IRD) have accepted the system and
citizens and firms are using it to file their taxes and make tax payments online\. The
MPID is being rolled out in each country\. Dominica was the furthest advanced of the four
countries, having enrolled the highest percentage of its target population by Project
completion\. St\. Lucia is focusing on removing bottlenecks in the civil registry,
establishing vetting arrangements and initiating the roll out starting with government
employees\. By Project completion, it was waiting for Cabinet approval for the full roll
out and issuance of the cards\. St\. Lucia funded ID cards for its population under the
CARCIP project\. In St\. Vincent and the Grenadines, a comprehensive document with the
strategy to roll out the MPID system and its role in the Identity Management and sharing
of ID data among the major government information systems has been prepared and
submitted by the MPID Governance Committee to Cabinet for its approval\. In Grenada,
the system initiated its roll out by first registering public sector employees, and the
Government will take steps to register the general population after this phase is
completed\.
13
41\. The OECS Secretariat, the IRDs, the ICT Ministries and responsible agencies have
assumed maintenance of the systems\. Warranties for the systems were assured for a year
post delivery to the countries\. There were some concerns related to back up of systems
and replacement of equipment (in particular, computers) in the medium-term future\.
42\. The online M&E dashboard is expected to be used by the same countries in the OECS
for other projects, notably CARCIP\. The regional partner of the CARCIP project, the
Caribbean Telecommunications Union (CTU), will input its project-level M&E data into
the dashboard so that countries can follow results in real time\. The OECS Secretariat also
plans to use it to monitor the OECS economic development strategy\.
43\. Some of the participating countries would like to scale up the ePPS system to develop
regional e-procurement for additional public goods\. SVG and St\. Lucia have requested
funds from the CDB to work on amending the regional legal framework in this respect\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
Rating: Substantial
44\. Relevance of PDO: Pre-2012 restructuring: high\. 2012 restructuring: high; 2013
restructuring: high\. The PDO remains consistent with the regional and national ICT
strategies\. It is in line with the 2010-2014 CARICOM e-regional strategy, the draft
Regional Digital Development Strategy (RDDS) developed by CARICOM and the
revised Basseterre Treaty establishing the OECS economic union in 2011\. The treaty
seeks the free movement of citizens and goods across boundaries, and EGRIP supports
this goal, by contributing applications and setting up platforms for the free movement of
people and goods\. The PDO remains in line with the OECS Development Strategy
approved in November 2013 8 \. The Projectâs PDO supports the OECS development
strategy regarding governance for the economic union\.
PDO Element EGRIP Deliverables
Efficiency The e-Tax Filing System will deliver time efficiencies in filing taxes online
rather than manually/in person\. The regional procurement of
pharmaceuticals will reduce time to complete a pharmaceuticals requisition
order in four countries\.
Quality The Multi-purpose ID system will provide a unique personal identifier
where often 5+ different identifier numbers exist\. End users of the e-Tax
Filing system and pharmaceuticals procurement system are expected to
experience an improved experience of government service delivery\.
Transparency The e-Government system for pharmaceuticals will publish tender and
contractual information online\. A web-based M&E system can be adapted
by the OECS Secretariat to monitor donor projects and progress towards the
economic union\. The e-Government system serves as a pilot for larger
regional common electronic procurement systems that countries are
8
CARICOM E-Regional Strategy 2010-2014; Revised Basseterre Treaty 2011; OECS Development
Strategy, November 2013\.
14
planning to pursue, e\.g\. for textbooks and other products\.
Regional integration A suite of legislation for e-Government is harmonized across the region\.
Harmonized technical standards for e-Government, interoperability
frameworks and Enterprise Architecture are established at a regional level\.
The Multi-Purpose ID system generates unique personal identifiers across
participating countries\. The e-Government system for pharmaceuticals
pools procurement across OECS\. Government video conferencing facilities
were set up to improve connectivity among participating countries\. These
systems support the economic union\.
Economies of Scale The total cost of ownership of e-Government systems was clarified, with
the practice of pooled procurement of licenses across the region
implemented\. The regional procurement of software systems produced
economies of scale, particularly where one implementation was undertaken
for several countries\.
45\. Relevance of Design: Pre-2012 restructuring: modest\. 2012 restructuring:
substantial; 2013 restructuring: substantial\. The projectâs components and activities
proposed in the PAD were adequate to achieve the PDO\. The Project put emphasis on
consensus building among the countries, following the Projectâs regional approach\.
While the Project design was conceived as broad and flexible, to retain agility to respond
to the innovative nature of the sector, there were significant shortcomings: (i) the scope
of the Project was ambitious, aiming to finance a broad range of e-Government systems
with limited budget and in a limited period of time; (ii) the Project lacked a PPF to
finance the initial background analyses to implement the systems early on in the project
and accomplish more implementation within the life of the Project (these analyses were
carried out later through consultancies under the project); (iii) the estimate of the e-
Government systemsâ costs was optimistic and inaccurate\. There was an assumption that
significant economies of scale could be realized through a regional implementation, not
foreseeing that the adaptations of the systems to each one of the countries would render
each commercial relationship separate and not provide the expected savings for the
countries; (iv) though the risk assessment included the complexity of the Project as one of
the risks, this did not translate into a narrower scope or sufficient time to implement the
Project\. Though a regional Project, the fact that each country signed a credit translated in
reality into four projects and not enough time for accommodating consultations,
consensus building and accompanying of systems was available\.
46\. Relevance of implementation\. Pre-2012 restructuring: modest\. 2012 restructuring:
substantial; 2013 restructuring: substantial\. The REGU and the Bank worked hard from
the beginning to move the project forward and overcome the challenges in design and
initial implementation\. The mid-term review in 2012 was used to adjust the Project and
restructure it\. The 2013 restructuring served to adapt to changes in context and priorities,
as explained in section 2\.2, as some activities had been financed by other sources, had
already been carried out, were too costly for the available resources or could not be
implemented given the remaining timeline of the Project\.
3\.2 Achievement of Project Development Objectives
15
47\. To assess the overall outcome of the Project, the ICR uses a split evaluation approach
following Appendix B of the ICR guidelines 9\. Separate outcome ratings for the three
dimensions of the PDO (quality, efficiency and transparency) are measured against the
original PAD indicators, the revised indicators in 2012 and the 2013 restructured KPIs\.
Annex 10 includes tables of the outcome and intermediate outcomes in the PAD and after
the revision of KPIs in April 2012\.
48\. By Project completion, the Project interventions had directly contributed to the
promotion of greater quality, improvements in efficiency and transparency in the
provision of public services\. These outcomes were measured by indicators that captured
the development and use of new and upgraded government applications in the areas of e-
Tax filing, e-procurement and harmonization of ID systems; the improvements in
efficiency through the reduction of the time to do transactions and the reliability of the
information provided by the e-Government systems supported by the Project; and the
enhancement of transparency in the provision of public services through greater access to
the results of the procurement processes in the public sector and the harmonization of
legislation related to e-Government systems\.
Achievement of outcomes before the 2012 restructuring\.
49\. The achievement of the PDO for this period is rated as Moderately Unsatisfactory,
measured by the outcomes indicators proposed in the original PAD\. The reasons are the
initial slow pace of implementation and the fact that the Project financed mostly
consultancies during its first years (2010-2011)\. The progress towards achievement of
outcomes during this period is difficult to measure with the original PAD indicators,
since several indicators had no baselines or targets\. By April 2012, while none of the
original PAD outcome indicators had been achieved as most of them were expected to be
achieved further along in the Project life, there was progress towards the PDO, as the
Project financed specific consultancies that were geared towards improving quality,
efficiency and transparency in the delivery of public services\. Intermediate outcome
indicators â 10 out of 28 - showed progress for each dimension of the PDO (see Annex
10)\.
Table 1: OECS EGRIP PAD Outcome Indicators
Outcome/Indicator Baseline10 End-target Actual Value
9
Appendix B of the ICR Guidelines: âFor projects whose objectives (as encompassed by the stated PDOS
and the key associated outcome targets) have been formally revised â through approval by the Bank
authority that approved the original loans/credits/grants â project outcome will be assessed against both the
original and revised project objectives\. To assist in arriving at an overall outcome rating following this
principle, separate outcome ratings (against original and revised project objectives) will be weighted in
proportion to the share of the actual loan/credit disbursements made in the periods before and after
approval of the revision\.
10
The PAD stated that the baseline and target indicators were to be determined by a survey/study to be
launched shortly after effectiveness, to be completed during the first year of the Project \. An M&E
consultant hired by REGU completed this task by August 2010\. This exercise was challenging due to: (i)
the expectations set in the PAD; (ii) participating countries did not routinely collect and store the data
16
August 2010 April 2012
i Promote Quality of Public Services
Increase in the number of electronic transactions 0 20% 0
processed by regional e-Government applications\.
Improvement of ratings in areas of functionality, n/a Activity due n/a
accuracy and usability of e-Government services as before
reported by users through satisfaction surveys completion
ii Promote Efficiency of Public Service
Government financial savings in areas such as n/a n/a n/a
public financial management, tax administration,
customs and procurement due to new e-Government
systems
Estimated usersâ time and cost-savings n/a n/a n/a
iii Promote Transparency of Public Services
Improvement of ratings in areas of openness and n/a Activity due n/a
access to relevant information, as reported by users before
through satisfaction surveys completion
New regional institutional framework is created 0 1 0
with adequate capacity to provide new regionally
integrated e-Government services, in accordance
with regionally harmonized policies and regulations
50\. The following achievements were accomplished with support from the Project:
ï The legislation related to e-Government was developed and presented to the
OECS authority;
ï The design of a regional e-Government institutional framework was completed;
consultations held and the proposal for establishing an e-Government desk at the
OECS Secretariat had been agreed by the RTC;
ï Consultations and consensus on moving forward with the design for the MPID as
well as a detailed design and implementation plan for the MPID system had been
completed;
ï A PFM financial reporting module (Smartstream budget) had been prepared and
was ready to be implemented;
ï The e-Tax filing system and had been designed; an effort to procure it was
attempted and its requirements were simplified to be able to start with VAT filing,
with other tax types to follow;
ï The Regional Customs Information System (RCIS) had been designed; efforts had
been deployed to procure the implementation of a RCIS through procurement
process and negotiations;
ï Consultancies on a regional e-procurement system had been carried out and
procurement of a system was under preparation\.
required by the PAD\. The project did not allocate funds for surveys on customer satisfaction, efficiency and
quality, which were important outcome indicators\. In-country visits were carried out between June-August
2010 and data were collected with the help of the CBSs\.
17
ï Assessment of the existing health management information systems had been
carried out and training to national teams had been carried out to decide on how to
move forward on the RHMIS\.
51\. The Project succeeded in implementing quick win projects during this phase: namely,
an upgrading of web portal for the Government of St\. Lucia, the provision of video-
conferencing equipment for St\. Vincent and the Grenadines and Dominica and a local
network for the Prime Ministerâs office in Grenada\. Procurement processes for goods and
equipment, which were critical for the implementation of the e-Government systems had
been launched\. The fact that the first two and a half years of the project were
concentrated on financing consultancies, which were needed to define the applications
and systems was the reason for not showing stronger progress towards the achievement
of the three dimensions of the PDO, which could not be further seen at this stage\.
Achievement of outcomes after the 2012 restructuring\.
52\. The progress towards the achievement of outcomes is rated as Moderately
Satisfactory for the period of April 2012- March 2013\. While progress under the outcome
indicators was very low (progress in two out of five indicators), three intermediate
outcome indicators were achieved and five were partially achieved (out of sixteen
indicators): (i) a regional Electronic Pharmaceuticals Procurement System (EPPS) was
approved; (ii) harmonized legislation had been approved by the OECS Authority and
published; (iii) regional e-standards, total cost of ownership, enterprise architecture and
interoperability framework had been defined; (iv) regional consensus on the institutional
framework for e-Government had been achieved; (v) the design of the MPID had been
completed; and (vi) the conceptual design of the RHMIS had been completed (see Annex
10 )\.
53\. Critical work was carried out during this period (April 2013-June 2013) to find out
what systems could be afforded by the countries; to set priorities and to take steps to
implement the main systems to be in the end supported by the Project\. These were: (i) a
jointly procured e-Tax filing system to allow citizens and business to file their taxes
online; (ii) the EEPS to automate the joint procurement of pharmaceuticals and (iii) the
MPID system to provide the citizens of the region with a unique identifier across
countries\. By the end of this period, the contracts for the major e-Government
applications had been signed and were under implementation\. The consultancies and the
procurement processes carried out in 2012 had shown the need to concentrate on a
smaller number of attainable systems\. The PDO seemed achievable at the time\.
Table 2: OECS EGRIP Outcome Indicators as per April 2012 restructuring
Outcome/Indicator Baseline End-target Value
March 2008 March 2013
i Promote Quality of Public Services
New government applications offered or upgraded 0 15 1
under the Project
Quality measured through focus groups by end 0 1 0
users of the following systems:(i) public financial Activity due
18
management system; (ii) regional custom before
information system and (iii) MPID system*11\. completion
ii Promote Efficiency of Public Services
Average number of days to prepare annual budget 120 90 120
Regional health information system and regional 0 2 0
customs information system are installed and
operational
iii Promote Transparency of Public Services
Creation of 4 national PFM websites with open and 0 4 0
transparent PFM data sets
Establishment of Regional E-government desk at 0 2 1
OECS Secretariat; hiring of the senior E-
government specialist; design the business plan for
sustainability of the E-government desk completed
Achievement of outcomes after the 2013 restructuring\.
54\. The Project succeeded in achieving its PDO\. The table below shows the Projectâs
achievement for each of the PDOâs dimensions: quality, efficiency and transparency in
the provision of public services\. A total of 9 out of 11 intermediate results indicators were
achieved or surpassed and 2 were more partially achieved\.
Table 3: OECS EGRIP Outcome Indicators as per 2013 restructuring
Outcome/Indicator Baseline End-target Actual Value
i Promote Quality of Public Services
New government applications offered or upgraded 0 9 14
under the Project\.
Improved quality as perceived by end-users for the 0 Quality of Quality
EPPS, the e-Tax filing system and the MPID services improved for
system, measured through focus groups to be provided two of the
carried out before Project completion\. improved three systems
ii Promote Efficiency of Public Services
Average numbers of days to complete VAT tax One day n/a 30 minutes
filing
Average amount of time to process a 5 days n/a 20-30 minutes
Pharmaceutical procurement requisition order
iii Promote Transparency of Public Services
Publication of procurement awards online\. 0 n/a 19
Publication of an OECS government regionally 0 Legislation OECS
harmonized legislation bill by first quarter of 2012, published authority
approved by the OECS authority approved it
and published
Promoting the Quality of Public Services
55\. By Project completion, the scope of public services upgraded to e-Government
systems had been enlarged, promoting quality improvements in the delivery of these
services\. Dominica, Grenada, St\. Lucia, St\. Vincent and the Grenadines had received a
11
*This indicator was to be captured by Project completion\.
19
total of 14 new or upgraded applications for e-Government systems: the e-Tax-filing
system and the MPID system for the four countries; one regional E-pharmaceutical
Procurement Services system12; a reporting facility for the SmartStream application in
each of the countries and the implementation of the Health Information System in
Dominica\. All applications and systems were delivered to and received by the countries;
relevant staff had been trained on their use and maintenance\. The systems and
applications were overall in use in all four countries by Project completion\. Additionally,
by Project completion, all four countries had received additional tools to inform their
decisions regarding e-Government and help them improve the quality of public services
with regional harmonization: e-Government standards, enterprise architecture, inter-
operability framework and total cost of ownership\. These tools were defined, made them
available and published by the OECS Secretariat\.
56\. The regional procurement of pharmaceuticals became fully automated13 through the
use of the EPPS\. The EPPS was successfully used for the procurement of ARVs in 2013
and for a larger acquisition of medical supplies (July 2013- August 2014) that includes an
estimated six thousand items\. As indicated by OECS staff and bidders through focus
groups and interviews, the automated process of the EPPS has enhanced the quality of the
acquisition of pharmaceuticals in several aspects: accuracy has improved (and quality as
a result) in the request for forecasts from the countries, in the collation of the forecast
from each country (the system does it automatically now); in objectivity during the
invitation to companies to bid has improved; in the possibility of waiting until the last
minute to close tenders, objectively closing the time to present the bids at the same time,
reducing the claims from bidders and risks of different treatment among them; and in the
qualitative preparation of the evaluation report\. Quality has also improved in the process
as now all bidders receive the same responses to their questions\.
57\. Increased quality in tax administration was improved with the rollout and use of the
e-Tax system by the Inland Revenue Departments of all four countries providing citizens
and companies with the ability to file and eventually, pay taxes online\. Except for
Grenada, the countries had not yet done much advertising of the e-Tax system\. By Project
completion, the system was in full use in all countries\. Grenada was the most advanced,
having managed to receive e-payment (collecting close to US$200,000) as well as tax
filing declarations for VAT, income and property taxes\. The e-Tax filing system was
rated as high quality by the IRD departments in the four countries and by end users\.
Annex 5 provides detailed information on the focus groupsâ feedback on the quality of
the system\.
12
The EPPS is a regional system which includes all OECS countries, including those not participating in
EGRIP, such as Antigua, Barbuda, St\. Kiss and Nevis, and Monserrat\.
13
All of the steps that can be automated have been automated\. One approval from the respective Ministers
of Health is required, --the only manual step left in the EPPS process, and which could be divested in the
future through last procedural reforms\.
20
58\. Though the MPID system was developed and given to each of the countries by
Project completion (hardware, software, training and system guarantees), its roll out and
registration is ongoing in all four countries\. The objective is to create harmonized ID
systems that can be used through other e-Government platforms, integrated with other
systems at national and regional levels\. Dominica rolled out the system by project
completion and linked the MPID with the Electoral Office System to verify votersâ IDs,
and the Inland Revenue Department System to verify tax ID and driverâs licenses\.
Dominica completed enrollment of public servants, statutory organizations and most
schools, registering close to 4,000 persons, with enrollment of the general public to
follow\. St\. Lucia is implementing the first roll out phase with the registration of
Government employees (5 percent of the total population)\. The MPID will interface with
the Electoral System and the National Insurance Corporation System as first
interoperable agencies\. Grenada registered an estimated 800 civil servants in its initial
phase to roll out the system\. Work is underway to interface the MPID with the Civil
Registry and the National Insurance System\. St\. Vincent and the Grenadines linked the
MPID to the Civil Registry and was tested by Project completion\.
59\. The Project supported these outcomes by financing the development of the e-
Government systems and their adaptation to the countriesâ context, through the delivery
of training for each of the systems, providing hardware and software for their
implementation and the continuous support, encouragement and guidance to the countries
to implement them\.
Promote efficiency of public services
60\. Regarding e-Government in tax-administration, all four OECS countries had rolled
out and were implementing the e-Tax filing system\. All four countries had achieved
improvements in efficiency measured by the average number of days needed to file the
VAT tax as well as other taxes, notably income taxes\. All four countries had shortened
the period of time needed for filing taxes from 1 day to an average of 30 minutes\.
Efficiency had improved as the e-Tax system allows taxpayers to file taxes any day at
any time\. Furthermore, efficiency was realized as tax payers did not have to come to the
IRD offices, find parking in busy cities, and wait to fulfill this obligation\. The IRD in
each country indicated that the e-Tax system has removed the need to renovate more
space and install cashiers during each tax-peak payment season\. Annex 3 provides details
on the efficiency gains through the use of the e-Tax filing system\.
61\. Grenada had also succeeded in collecting also property tax payments, which does not
require filing as it is requested through an invoice\. The public awareness campaign had
led citizens to channel these payments through the e-Tax system without being prompted
or guided to do so\. Annex 2 includes information by country on the number of e-Tax
filings by type of tax\.
62\. Efficiency has improved with the implementation of the e-Procurement system,
measured by the âreduction in the average time to process a requisition to purchase
orderâ\. The implementation of the EPPS has brought improved efficiency in other
moments of the procurement of medicines and medical supplies: at collate of the forecast,
21
at the bid evaluations, sending the invitation, closing in tenders and evaluation (see
Annex 3, table 1)\. The EPPS had been used by Project completion for the acquisition of
ARVs in 2013, a procurement process that successfully generated efficiency during
various procurement stages\. A larger procurement process of pharmaceutical in the
OECS countries started in 2013 and will conclude in August 2014 with the arrival of the
pharmaceuticals in the countries\.
63\. The addition of a reporting module to the SmartStream system is allowing the
preparation of reports directly by users, which were previously unavailable, unless
prepared by IT staff\. This upgrade to the Human Resources module, which involved data
entry funded under the Project, enables making informed decisions in these areas and
management of these resources\. St\. Vincent had uploaded 300 records to its database\. St\.
Lucia encountered challenges when trying to use this software and was working to
overcome them by Project completion\. Grenada has been inserting information on
teachers, reaching an approximate 75 percent of records by Project completion\.
64\. Upgrades in the Health Information Systems (HIS) at national level contributed to the
promotion of efficiency under the Project\. By Project completion, software for new
modules had been developed and tested in St\. Vincent and the Grenadines for patient
registration and discharge data, billing, access and emergency department\. These
modules were developed by consultants in close cooperation with the St\. Vincent and the
Grenadines team\. The modules work in an open source environment and store critical
information in a friendly format\. The modules were piloted in one health center and one
clinic\. In the case of SLU, the country made progress in the roll out of the national HIS
and supported 11 wellness centers around the country by installing hardware (computers,
generator bought and installed in Vieux Fort and Banonneau) for the national HIS 14\. A
map at the end of the PAD indicates the locations of the clinics supplied with required
hardware and software\.
65\. The Project contributed to this outcome through the financing of the e-Government
systems, the training and the follow up to the implementation and use of each of these
systems\. The Project provided financing for the consultantsâ work to prepare diagnostics
and assessments, software, hardware, and for consultations and consensus building,
monitoring through implementation\.
Transparency in the delivery of public services
66\. By Project completion, harmonized e-Government legislation had been approved by
the OECS Authority - the body of Prime Ministers and Chief Ministers for the OECS
member countries - in January 2012: Electronic transactions, electronic funds transfer,
electronic filing rules, electronic evidence bill, and electronic crimes and data protection\.
The publication of the legislation bill took place in February 201415\.
14
St\. Lucia had established 11 wellness centers around the country with CDB support\. By Project
completion, there were 22 facilities around the country, with 8 more to be established in the future\.
15
http://www\.oecs\.org/our-work/projects/egrip
22
67\. These bills served as the guidelines to each country to draft and pass their own
legislation\. This achievement is a significant step in improving efficiency of public
services across the region\. Of these, Grenada had enacted the electronic crimes bill,
which contributed to its gaining the EU status of visa free country; it had passed other
legislation, which had allowed the e-payment of taxes\. Dominica had approved
legislation on E-filing, E-Evidence, E-fund transfers and E-transactions\. St\. Lucia is
waiting for Cabinet approval of these pieces of legislation\. The e-Transaction law was in
Parliament by Project completion, expecting to be approved in 2014\. In St Vincent and
the Grenadines, the legislation is with the office of the Attorney General and needs to be
approved by Cabinet, before going to Parliament\.
68\. The transition to an automated EPPS has contributed to promote transparency by: (i)
providing access to the same information to all potential suppliers and consistent answers
to questions asked on-line; and (ii) the publication of information of the results of the
procurement process\. A total of 19 awarded contracts for procurement of pharmaceutical
were published online before Project completion\.
69\. The Project contributed to this outcome through the support of workshops and
preparatory work to carry out the draft e- legislation, training staff and financing the
acquisition of the necessary equipment to implement these pieces of legislation\. It
provided equipment, training and the development, acquisition, and implementation of
the EPPS\.
3\.3 Efficiency
70\. Efficiency is rated as Modest\. The rating is based on the following: (i) though the
Project lasted longer than foreseen in the PAD, the actual time to procure and implement
the systems was two years (from January 2012 till completion in February 2014); and (ii)
some of the efficiency gains and savings through the Projectâs achievements have not yet
been maximized or have not yet been quantified as it may be too early to measure them\.
The true impact of efficiencies will become more apparent several years post project
closure\. The evidence of the efficiency gains visible now are the access to public services
twenty-four hours per day, seven days per week, as indicated by beneficiaries during the
focus groups\. More time for implementation would have given the Project the
opportunity to realize efficiency gains\. There were no cost overruns in this Project\. The
costs for the systems were higher than foreseen, due to the challenges of costing at
appraisal\. The REGU optimized the use of resources, negotiating hard and succeeding in
getting good value for the price of the systems, during the procurement process and
implementation of activities\.
4\. Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
23
71\. The overall achievement of outcome is rated as Moderately Satisfactory\. The
relevance of the PDO remained high before and after restructuring, while the relevance of
design evolved from modest to substantial by Project completion\. There were positive
achievements during implementation: (i) after two restructurings, the Project reflected a
reduced number of priority activities that were well implemented to achieve the PDO; (ii)
the results framework included updated relevant indicators, which provided evidence of
the progress towards the achievement of the PDOs; (iii) the three e-Government systems
prioritized under the Project had been developed and were in use in all four countries\.
There were shortcomings: (i) the restructurings took place later on in the life of the
Project, maintaining a results framework that showed limited progress towards the PDO;
(ii) the Project was extended for six months on an exceptional basis to allow the
achievement of the PDO and may have benefited from a longer extension, had financial
resources to sustain it been available or requested by the countries; (iii) the e-Government
systems were implemented late in the life of the Project, also with an extension not
providing sufficient time to accompany their roll out for an extended period of time to
capture the potential efficiency gains\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
N/A
(b) Institutional Change/Strengthening
72\. The Project strengthened the regional aspect of e-Government through the analysis of
the regional and national legislation carried out with Project support, the continuing
consensus building and discussions that resulted in the approval at regional level by the
OECS Authority of a harmonized set of laws for e-Government, as well as on a regional
perspective to the design and adoption of e-Government systems\.
73\. The Project contributed to strengthening the institutional framework for e-
Government\. It financed the analysis of the existing OECS institutional framework as
well as other possible frameworks\. As a result of this analysis, several options were
proposed and considered by the countries\. The Project financed the development of a
business plan to develop an e-Government desk to be absorbed by the OECS and staffed
by an e-Government specialist\. By Project completion, an interim e-Government desk
within the OECS Secretariat was created and temporarily staffed\.
74\. The Project contributed to strengthening capacity through significant training of
beneficiaries in several areas\. Training for the three main e-Government systems was
supported by the Project\. Capacity was strengthened on M&E framework development,
data collection, training and reporting system\. Around 99 participants benefited from the
training over 17 workshops, including stakeholders, public sector personnel and
beneficiaries, OECS and REGU staff\. Staff was trained in all 4 countries under EGRIP on
the upgrade of SmartStream software, the user manuals on the upgrade of the system and
on the reports that can be produced now for daily use\. Training took place on the HIS
24
management tools, at the time of preparation of regional HIS\. Training was provided on a
regional HIS to personnel of the MOH of the different countries on assessment tools
(Health Metric Assessment (HMA) and the Performance of Routine Information
Management System (PRIMS) tools) and these tools were used with support from the
EGRIPâs consultants to prepare the diagnostic of each countryâs HIS\.
75\. The implementation of the MPID system is contributing to the revision and
improvement of business processes\. All countries were emphasizing cleaning out the
registries that are the source of information to feed the MPID system\. In the case of St\.
Lucia, the Civil Registry has carried out a revision of its processes to make them more
efficient, to support the cleaning up of records and improve the data provided to the
MPID system\. By May 2014, records were being issued in one day, significantly
improving from the previous two weeks period\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
N/A
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
76\. Before Project completion, a series of focus groups was carried out in order to capture
improvements in quality in the provision of services for the three major systems
supported by the Project\. Overall, beneficiaries gave positive feedback and ratings to the
systems, providing insightful information on challenges, key changes and achievements\.
In scale of 1 to 10 where 10 the top score, beneficiaries gave the e-Tax filing system an 8
for quality and satisfaction and a 7 for functionality\. Beneficiaries gave the EPPS a 9 for
quality, satisfaction and functionality\. Beneficiaries in Dominica gave the MPID an 8 for
quality and satisfaction and a 7 for functionality\. A summary of the findings is included
in Annex 5\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
77\. The development outcomes achieved with Project support are expected to be
sustained based on the following:
ï The enactment of the harmonized e-Government legislation is well underway in
each of the participating countries, which indicated enforcement would take place
in the near future\. As a result of the approval of the electronic crime bill, Grenada
will benefit from a visa-free status for its citizens travelling to the EU\. Such
measures are fostering further future efforts towards approving the e-legislation at
national level\. While the process is slow, the legislation continues to be processed
and is expected to eventually be enacted in all four countries\. While national legal
review processes may change the legislation somewhat so that it is not verbatim
identical, the contents of the legislation remain harmonized across the four
countries\.
25
ï The EPPS has performed in a highly satisfactory manner and it will continue to be
used for regional procurement processes for medical supplies\. The countries plan
to scale up the regional e-Procurement experience by expanding the system to
undertake pooled procurement for other products, such as textbooks;
ï The e-Tax system is being used not only for VAT but for other types of taxes and
has been welcomed by tax payers and Inland Revenue Departments\. All countries
are working to achieve agreements with the appropriate financial institution to
allow for e-payments of filed taxes;
ï The MPID systems are being rolled out by all participating countries, which are
following their implementation strategies to complete their targets to enroll
groups of citizens, testing the enrollment process and overcoming the challenges
in interfacing with other systems\. Roll-out and adoption of the systems will
require time to reach impact, as the countries register all citizens and finalize
cabinet approval of underlying legislation\. Ongoing support to the countries under
other projects (CARCIP or TA) would support the countries as they maximize
EGRIPâs full potential over this time\. Other countries in the region who are not
part of EGRIP are exploring joining the MPID formats for their electronic
identification;
ï System implementations were undertaken with maximum transfer of knowledge
to local IT managers, hands-on implementation and with creating a network
among the system managers across the countries, so they may assist each other
during the life cycle of the system\. Continued training on the use and maintenance
of the different systems will contribute to their sustainability\.
ï Contracts for the systems were designed to include maintenance and support from
the vendors for several years beyond project closure\.
78\. Nevertheless, there are challenges to be addressed in the future:
(i) Ensuring that local capacity to enforce the enacted e-legislations is built in the
participating countries in a timely manner;
(ii) Regarding the e-Tax system, which is a module that sits on top of the main tax
system, SIGTAS, it will be important to ensure that infrastructure and
hardware of the main tax system, does not prevent the systems from working
adequately\. The main serversâ capacities to handle the systems are perceived
as a potential limitation to the sustainability of the system, as indicated by the
participating countries\. The participating countries may receive an overall tax
system upgrade under the Canadian funded and World Bank implemented
SEMCAR Phase 2 Project that, if rolled out, will contribute to consolidate the
Projectâs achievements\. The e-Tax filing system has been designed to
interoperate with future systems that may replace the existing system,
SIGTAS\.
26
(iii) Continued focus on strengthening the institutional and governance framework
for e-Government development at regional and national level is critical for the
sustainability of outcomes and for the realization of achievements that were
not yet fully reached (i\.e\. MPID)\.
(iv) Additional work is necessary to implement the recommendations and best
practices in the consultancies produced with Project support (regarding legal
and regulatory framework, policy and strategy and architecture standards and
total cost of ownership)\. The countries will need to continue to work on
EGRIPâS outcomes to realize the benefits of the Project\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Unsatisfactory
79\. The performance of the Bank during preparation is rated as Moderately
Unsatisfactory\. The Bank worked closely with the OECS Secretariat and the countries to
prepare the Project\. It carried out well-staffed preparation missions, ensuring that
preparation was participatory and lessons from previous projects or other regions were
taken into account\. There were contextual challenges to which the Bank had to adapt and
deliver the design more amenable within the circumstances at the time\. There was a set of
constraints self-imposed by the Bank that the team accommodated to\. There was also
strong interest by the countries to maximize the Projectâs components within a relatively
small budget, due to the size of the regional envelope and the financial limits to borrow
by the countries\. The main shortcomings were: (i) the ambitious Project design given the
relatively limited creditsâ amount; (ii) the insufficient period of time and limited amount
of resources to adequately prepare an innovative project, the first regional e-Government
project prepared by the Bank\. The team was under pressure to meet the deadline to be
able to use the IDA funds under the regional envelope; (iii) an M&E for the Project that
was vague and, though on purpose, left detailed definition to be done during the first
years of implementation; and (iv) the inaccurate costing and estimates for the Projectâs
activities\. This weighted heavy during implementation, though the REGU, the countries
and the Bank worked together to overcome these issues\.
(b) Quality of Supervision
Rating: Moderately Satisfactory
80\. Once implementation started, the Bank worked hard to achieve the PDOs\. The Bank
carried out regular well-staffed supervision missions a minimum of twice a year\. The
Bank regularly monitored the Project, working with REGU and the M&E consultant to
gather information to better assess the Projectâs achievements\. During the mid-term
review, the Bank supported the REGUâs proposals to restructure the Project, once it was
clear that not all activities included in the PAD could be financed under EGRIP\. The
Bank provided support in procurement and financial management to REGU when needed,
contributing to move the Project forward and overcoming issues during bids and
27
providing suggestions when some bids were deserted or did not succeed\. There were
changes of TTL during implementation and the Bank made an effort to make this
transition smooth\. The Bank also made efforts to work with the REGU since the Project
was innovative and both the Bank and the participating countries were new to an ICT
regional e-Government project\. Though the Bank worked with the REGU to restructure
the Project twice, restructurings came late during implementation, affecting the overall
assessment of outcomes\.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
81\. The Bank performance is rated as Moderately Satisfactory, based on the Moderately
Unsatisfactory rating for its preparatory work, the Moderately Satisfactory quality of
supervision, in light of the Bankâs focused work, the flexibility to adapt to changes and to
overcome the shortcomings derived of the Projectâs design and its implementation
context\.
5\.2 Borrower Performance
(a) Governments Performance
Rating: Moderately Satisfactory\.
82\. The performance of the Governments of Dominica, St, Lucia, Grenada and St\.
Vincent and the Grenadines during preparation is rated as Moderately Unsatisfactory, as
the responsibility for Project preparation was shared with the Bank\. Their performance
during implementation is rated as Moderately Satisfactory\. The governments showed
commitment to the Projectâs PDO during implementation\. The Governments, through the
RTC members, played a critical role in guiding implementation and working with REGU
to make strategic decisions on what the Project would focus on and finance\. RTC
meetings took place regularly and attendance by the countriesâ representatives was
satisfactory\. Despite these positive actions, there were shortcomings during
implementation\. The Governments often took a long time to provide feedback and
respond to the REGU, which delayed implementation\. The country-by-country
institutional framework to implement the project was challenging, as there were several
departments working with ICT, dispersed in each country\. In general, with support from
the CBSs, it was manageable\. Ownership of the Project was weak, in some cases weaker
than others and particularly weak in St\. Vincent and the Grenadines (during the
implementation period when a lot of consultancies were financed and the systems seemed
not to come as soon as the countries wanted; the MPID system was reviewed as not really
âownedâ by the countries)\. There was a lack of knowledge of the Bank procurement rules
and lack of understanding of the role of the stakeholders\. In St\. Vincent and the
Grenadines, the horizontal coordination of the institutional framework was challenging
and undermined the ownership of the project\. The ICT council and the steering
committee did not communicate well, which negatively affected implementation\.
(b) Implementing Agency or Agencies Performance
Rating: Moderately Satisfactory
28
83\. The OECS Secretariat required time to hire the REGU coordinator and set the
conditions for launching the projectâs implementation\. The regional organization worked
to promote regional integration and synergies in e-Government, a pioneering field for the
participating countries when the project was launched\. This task is not easy, and the
manifestations of success will require time and additional, sustained efforts on the part of
the Secretariat to become apparent\. The overall implementing agency performance is
rated as Moderately Satisfactory\. Within the Secretariat, the REGUâs performance is
rated as Satisfactory\. Well-staffed, the REGU was led by a strong Project Coordinator
who, with support from her competent team, showed determination, leadership and
resourcefulness in overcoming obstacles to implement the project\. It displayed strong
commitment and dedication to negotiate and accommodate each of the countriesâ needs
and requests, while maintaining the regionalization as a guiding force for the project\.
84\. The CBSs performed a crucial role in linking the REGU at national level, reinforcing
ownership, providing critical information on the Projectâs implementation to the national
teams, supporting and guiding national stakeholders and facilitating dialogue and
consensus building\.
85\. The CDB provided critical support to allow the Project to move forward, in a context
of shortage of resources, showing flexibility and contributing the strengthened the
regional dimension of the Projectâs achievements, as Antigua and St\. Kitts and Nevis
were included in the activities financed by CDB\. Dialogue with the CDB team was
fruitful\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory
86\. The overall Borrower performance is rated as Moderately Satisfactory based on the
combined performance of the participating Governments and the implementing agency\.
6\. Lessons Learned
Design
87\. Too broad a design risks to diminish/distort the focus of a project during
implementation\. While a broad design might have been chosen to allow for a flexible
scope of activities during implementation and to have room of maneuvering given the
innovative nature of the Project, it distracted implementation\. It is important to carry out
extensive background work during preparation to know to the best extent possible the
sector context, the costs and to set priorities, given the budgets and the implementation
time\. Though it might be necessary to postpone such work that should have been
undertaken during preparation and relegate it to the first years of project implementation,
this caused delays to launch the project implementation; it ultimately used resources that
were not utilized by the project (e\.g\. M&E dashboard) and then lose relevance if not used
by other donors or agencies or the Borrowers in the future (several consultancies)\.
29
88\. Adequate project preparation time versus other considerations must be explicit\. The
Projectâs preparation was constrained by the existing timing to be able to use regional
IDA resources for the OECS region\. While this was the decision at the time, it was not
clearly acknowledged that project readiness was affected by the limited preparation time\.
While the team did the best possible in that context, taking up to three years to complete
the consultancies and procurement and leaving a two-year period to implement the
systems, it shortened the time to implement the e-Government systems, particularly the
MPID system\. The Bank should avoid setting self-imposed deadlines to take projects to
the Board, which might prevent carrying out quality project preparation\. Envelopes for
regional financing once identified and approved, should not be the deciding factor to set
Board dates\.
89\. A regional approach for ICT projects for small island states shows strengths and
weaknesses to be considered at the time of design\. In the case of EGRIP, a regional
approach had advantages such as: (i) harmonizing the e- legislation and the design of the
e-Government systems by carrying out consultancies for all countries; (ii) carrying out
pooled procurement to the maximum extent possible for goods and systems, achieving
economies of scale, efficiencies and savings; and (iii) sharing knowledge among
participating countries, through a demonstration effect that fostered implementation (case
of Dominica in e-Taxes and MPID)\. Choosing a regional implementation institution can
be a strength if the PIU is effective in moving a project forward, as it was the case of
REGU for EGRIP\. The OECS Secretariatâs capacity in e-Government needs to be
addressed by countries; Capacity needs to be strengthened in order to be more effective
and play a regional leadership role\. A regional approach entails a slower pace of
implementation as more time and efforts are required for consensus building and
countries responses\.
Implementation
90\. Importance of establishing mechanisms to generate and maintain countriesâ
commitment to the Project, throughout the project\. In a regional project like EGRIP, it
was important to ensure the commitment of the countries for a project that was to be
implemented by a regional body â OECS Secretariat\. Ensuring that commitment and
ownership were maintained was crucial for the successful implementation of the project,
for its credibility, being the Project part of the regional effort it bowed to support\. It
required serious work, consensus building, and intense follow up by REGU\. These efforts
paid off\. This hard work contributed to maintain the regional focus and regional interests
in the framework of the Project, versus the sometime short-term countriesâ demands\. The
Country Based Specialist system set up by EGRIP worked well and informed the design
of other projects in the region such as CARCIP\.
91\. Good project management is key\. The Projectâs management was a strength that
deserves to be highlighted, as it was key in all of the projectâs achievements and in
driving the regional and consensus building process forward through the Project\. Efforts
to realize outcomes and ensure implementation of the systems as much as possible must
continue for as long as possible, while the Project is still under implementation\. Though
30
countries showed commitment throughout the lifetime of the Project, the PCUâs support,
monitoring and perseverance contributed greatly to enhanced implementation and
outcomes\.
92\. Importance of providing training to successfully achieve the PDO\. Training of
stakeholders is key to ensure that Project activities are implemented and outcomes are
achieved during the life of the Project\. In the case of the Project, some of the staff trained
have left the agencies\. For future sustainability, encouraging some loyalty arrangements
so people trained remain in the public sector for a relevant period of time would be
helpful\.
93\. Continuous training and awareness building is crucial to successfully implement
legislation, after the Projectâs completion\. Training of key personnel in the police force,
the judiciary, registrars, and senior government officials will be needed to actually
implement these laws\. Training on electronic forensics and investigations electronic
systems, networks and computers, electronic contracting, security issues and data
protection among other training areas will be critical to fully realize the Projectâs
achievements\.
94\. Governance arrangements can significantly contribute to successful implementation:
Finding the appropriate institution to champion a reform or a new system can be critical
to its rapid success\. The e-Tax system had a champion while the MPID system did not
have a clear one in each participating country\. This made a difference in fostering
ownership of the system and embracing the changes its implementation would bring\.
95\. Need for implementation of the national ICT policies in order to support EGRIPâs
outcomes\. The development and implementation of national ICT policies, which were not
under the scope of the EGRIP project, proceeded at different rhythms in the participating
countries and they were not necessarily sequenced with the progress of the Project\.
Challenges related to coordination among institutions at national level, the need to
identify a champion or the leader capacity of a steering committee, affected the
implementation of these policies in the participating countries\. Developing
implementation plans, specific deliverable and focusing on implementation of ICT
national strategy can contribute to further promoting the PDO\.
96\. Project coordination affects implementation\. The existence of competing projects
required extensive consultations and slowed implementation down\. This was the case of
HIPCAR ITU legal project and EGRIP OECS e-legislations, both supporting e-
legislation update and implementation\. While efforts were put into using outputs from
HIPCAR as input for EGRIP, it was costly since both projects used different experts with
different opinions\. In terms of coordination, the Projectâs implementation showed the
importance of consolidation among ICT sectors within government, to use economies of
scale, synergies, clear delineation of duties and responsibilities and authority\.
97\. A programmatic approach should be considered to support ICT projects\. In order to
work with countries in a fast-changing and innovative sector such as ICT, a
31
programmatic approach should be considered to frame the Bankâs commitment in a
consistent manner over the long term\. In the case of this Project, a second phase was
foreseen to provide continuity and further support\. Nevertheless, the consultancies
financed by the Project took almost two years of the Projectâs life to be carried out and
little time was left for the actual implementation of the e-Government systems\. Thus, by
completion time, the countries had not had enough time to reap the extent of the benefits
of the e-Government systems and opt for a second phase of this Project\. This creates
uncertainties at completion and undermines the Bankâs investments in a country and
sector\. There is a need for continued and strong push for the countries to further roll out
the systems\. A follow up operation could provide the tools to do this\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
98\. The REGU and the countriesâ contributions are included in Annex 7\.
(b) Cofinanciers
N\.A\.
(c) Other partners and stakeholders
N\.A\.
32
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Appraisal Restruct\. Actual/Latest
Percentage of
Components Estimate (USD (USD Estimate (USD
Appraisal
millions) millions) millions)
Component 1
3\.54 4\.88 4\.78 135
Horizontal e-Government intervention
Component 2
4\.93 3\.33 3\.31 67
Vertical Government Interventions
Component 3
0\.65 0\.86 0\.95 146
Project Management
Unallocated 0\.48 0\.53 0\.38 79
Total Project Costs 9\.60 9\.60 9\.45 98
Clarify that in SDR the Project spent SDR6 million (100 percent of the resources approved)\. The
appreciation of the SDR against the dollar negatively affected the availability of funds for the project\.
(b) Financing
Appraisal
Actual/
Type of Co- Estimate Percent\.
Source of Funds Latest Estimate
financing (USD of Appraisal
(USD millions)
millions)
Borrowers 0\.00 0\.00 n\.a\.
International Development 9\.45
9\.60 98%
Association (IDA) (confirm)
CDB Parallel financing 0\.00 1\.77** n\.a
Total 9\.60 11\.37 118%
*Country contributions were in-kind\. They are estimated to have been US$0\.95 million
**SDR exchange rate to the dollar explanation
***CDB contributed a total of US$2\.5 million including the other OECS countries (St\. Kitts and Nevis
and Antigua and Barbuda)\. The CDB Grants finances 3 consultancies, hardware and software for the
National E-government/ICT Units and Project Management\. The grant will close in August 2014\.
33
Annex 2\. Outputs by Component
Component 1 â Horizontal E-Government Interventions\.
1\.1 Policy and strategy implementation\.
This subcomponent aimed at assisting the countries in the implementation of their
national e-Government strategies; supporting the updating and harmonization of e-
Government policies and strategies and providing a framework for regional e-
Government cooperation activities\. The scope and activities carried out under this
subcomponent was adjusted where planned activities related to defining the e-
Government and strategies had already been carried out at national or regional level\.
This subcomponent financed the M&E activities of the Project: the assessment and
revision of the Projectâs M&E framework, the definition of specific indicators to measure
the Projectâs outputs and outcomes, the preparation of a manual on the Projectâs M&E,
the definition of baselines and the first and following measurements to update indicators
and to assess the Projectâs progress, and the revision of the M&E framework after the
mid-term review\. It also financed the preparation of an M&E Manual and training for the
stakeholders to improve indicator collection at the national level\.
This subcomponent also financed the design, development and implementation of the
Web-based M&E System\. It financed training of REGU staff and stakeholders in the
participant countries and delivered final Userâs and System Administration Manuals\. The
system was conceived to monitor EGRIPâs implementation\. Given that the system was
not designed in time to be used to monitor the projectâs implementation, and that the
M&E framework was restructured (in April 2012 after the MTR and then, in 2013 after
restructuring), the M&E dashboard is a product for future project monitoring such as
CARCIP\. The M&E online system was handed over to the OECS Secretariat and
countries when EGRIP ended\. M&E System training was provided to countries\.
1\.2 Legal and regulatory implementation\.
This sub-component contributed to the harmonization of the legal and regulatory
frameworks for electronic transactions, focusing on implementation and complementing
previously EU-supported efforts\. It involved the provision of support for complementary
law drafting and provision of equipment, software and training for implementation of the
legislation\. It achieved the approval of the OECS Harmonized E-Government Legislation
by the OECS Authority on January 2012\. The main outputs were:
(i) Diagnosis (and gap analysis) and Report on Best Practices, Recommendations
and Action Plan for ICT legislation in OECS countries;
(ii) Report on the Institutional and ICT Infrastructure Requirements, which
detailed the training and equipment required to support the implementation of
the E-government Legislation\.
(iii) Elaboration of the draft and final implementable versions of the OECS
Harmonized E-government Legislation, given the technical and financial
34
resources at the national level\. The pieces of legislation were: the Data
Protection Bill; the Electronic Crimes Bill, the Electronic Filing Bill; the
Electronic Evidence Bill; the Electronic Filing Rules and Regulations; the
Electronic Funds Transfer Bill and the Electronic Transaction Bill\.
(iv) Review meetings held with Chief Parliamentary Counsels and Attorney
Generals to provide support and explain the legislation, which facilitated
knowledge transfer for the enactment at the national level\.
This subcomponent also financed the provision of hardware and software to support
implementation of the harmonized legislation, in particular the electronic signature\. The
project financed the acquisition of hardware, software and training for the police force
(except in Dominica) and for the Department of Public Prosecutions (DPP)\. In the case of
St Lucia, the Royal St Lucia Police Force received the following equipment to roll out its
Crime Management System: 20 desktop computers; 20 multifunction printers; 10
scanners; 20 signature pads; 10 color printers; 1 Digital SLR camera\. In the case of St\.
Vincent and the Grenadines: nine desktop computers and two multifunction printers were
received by the offices of the DPP and the Police\.
The laws passed by each country were the following:
St\. Lucia: During 2013, the Division of Public Sector Modernization (DPSM)
coordinated the consolidation of the harmonized EGRIP draft legislation with the existing
legislation 16 and with HIPCAR drafts to finalize the legislation\. The amended e-
transaction legislation is in Parliament and it expected to be passed before the end of
2014\. The other pieces of legislation will be sent to Parliament in 2014\.
Grenada: Grenada has enacted in 2013 the Electronic Evidence Bill; the Data Protection
Bill; the Electronic Funds Transfer Bill; the Electronic Filing Bill and the E-Filing Rules
and Regulations Bill\. In October 2013 the Electronic Transactions Act and the Electronic
Crimes Act were assented by the Governor General and officially published\.
Dominica: The country revised existing draft laws to reflect the Regional Harmonized e-
Government legislation\. The following four bills were passed into Law on November
2013: e-Transactions bill, the e-Evidence bill; the e-Funds Transfer bill; the e-Crimes and
e-Filing bills\. Two bills are pending: the Data Protection Bill and e-Crimes Bill\.
St Vincent and the Grenadines: The legislation has not yet been passed\. All pieces are
being revised by the attorney general and the Cabinet before they are debated by
Parliament\. Additionally, the countryâs existing Electronic Transactions Act 2007 was
updated based on current best practices, to limit the cost of implementation (it required
the establishment of a Certification Authority)\.
16
In March 2011 three pieces of e-legislation were passed: (i) the Computer Misuse Act, related to crimes
committed by the use of any electronic devise and it includes cyber terrorism, identity theft and
unauthorized access to secure data; (ii) the Data Protection Act and (iii) the Electronic Transaction Act\.
35
1\.3 ICT standards and the cost of ownership optimization\.
This subcomponent supported the improvement of the countriesâ e-Government standards
and architectures and the public sectorâs ICT management and investment practices\. CDB
financed these activities for Antigua and Barbuda and St\. Kitts ad Nevis\.
The following outputs were produced:
(i) An assessment of the current E-government standards, enterprise architecture
and interoperability frameworks;
(ii) A report on the harmonized e-Government standards, interoperability
framework, enterprise architectures;
(iii) An assessment of ICT Management and Investment Practices;
(iv) Development of the Total Cost of Ownership (TCO) analysis and
optimization;
(v) Identification of potential savings and strategy for pooled procurement of
software and licenses and assistance for pooled procurement of software
licenses on a pilot basis; and
(vi) Capacity Building workshops to provide training on standards, service
architecture, open source software and TCO optimization\.
1\.4 Regional E-government institutional framework strengthening\.
This subcomponent provided assistance to strengthen the regional institutional
framework for e-Government among OECS countries\. The PAD foresaw the creation of a
self-financing sustainable Regional e-Government Center of Excellence to provide
participating countries with policy advice and guidance and technical assistance in the
implementation of ICT system in government\. However, at a regional consensus building
workshop, the countries decided to implement an e-Government desk at the OECS
Secretariat\.
This subcomponent financed a consultancy to explore a regional e-Government
institutional framework\. The main products of the consultancy were:
ï Report on Review of Regional E-government Institutional Framework;
ï Report on the Business Plan, Strategic Institutional Design and Implementation
Plan for the Regional Institutional Framework;
ï Report on the Strategic Institutional Design and Implementation Plan; and
ï Draft TOR for e-Government Specialist\.
The business plan included different options for an institutional framework, including
creation of the Center of Excellence or of an interim e-Government Desk within the
OECS Secretariat, among other possibilities\. The countries decided to reallocate the
funds for this activity to other activities due to: (i) two unsuccessful attempts to hire an e-
Government specialist, the preferred option by participating countries; and (ii) the
countries sentiment that there was no guarantee of finding a candidate who would satisfy
the requirement with the remaining project timeframe at the time\. By Project completion,
36
the OECS Secretariat had established the position for an e-Government specialist and was
recruiting to fill it\.
Quick Win Projects under this subcomponent
The Project supported the following: (i) Dominica: it financed the acquisition of video-
conferencing equipment; (ii) St Lucia: it financed video-conferencing equipment; the
upgrade of the Web Portal content for the Government of St Lucia and the elaboration of
manuals and training of stakeholders\. The Project financed the acquisition of software
and hardware and training for DPSM and the Ministry of Public Service, Information and
Broadcasting\. It financed: 17 laptop computers with accessories, 1 server, 7 tablets,
security software and appliances to support 900 users and one year license; 2 Windows
Server 2012 standard licenses and 25 client access licenses and 14 Microsoft Visio
Professional 2013 licenses; (iii) Grenada: it financed the acquisition of key computer and
accessory equipment for the Department of ICT to support Institutional Strengthening
and IT networking equipment for the office of the Prime Minister in Grenada; and (iv) St\.
Vincent and the Grenadines: it provided support to the E-Government unit, financing the
acquisition of video conferencing equipment (software and hardware)\.
1\.5 Automated registries and multi-purpose identification systems (MPID)\.
This subcomponent financed a harmonized multi-purpose e-identification system for the
four participating countries, as a shared service to be used throughout all e-Government
platforms and integrated with other key information systems at national and regional
level\. The system provides a unique identifier for citizens across the four participating
countries, key for the free movement of people and goods in the OECS economic union\.
The MPID systems were developed by 3M Innovates Properties Company and
implemented in countries by October 2013\. The Project financed two key consultancies:
a review of the status of the existing key government registries and the development of
the system\. The consultant provided technical support to link two core agencies with the
MPID System\.
Significant in-country and cross-country consultations and consensus building took place
during implementation, with the Projectâs support, for the design of the MPID systems\.
By Project completion, the MPID system was rolled out in all four countries: (1)
Dominica rolled out the system and linked the MPID with the Electoral Office System to
verify votersâ IDs, and the Inland Revenue Department System to verify tax ID and
driverâs licenses\. Dominica completed enrollment of public servants, statutory
organizations and most schools, enrolling close to 4,000 persons\. Enrollment of the
general public will begin in June 2014\. (2) St\. Lucia is implementing the first roll out
phase with the registration of Government employees (5 percent of the total population)
to be completed by July 2014\. Its MPID will interface with the Electoral System and the
National Insurance Corporation System; tests have been carried out and it will be
completed by the end of June 2014\. Grenada enrolled an estimated 800 civil servants in
its initial phase to roll out the system\. Work is underway to interface the MPID with the
Civil Registry and the National Insurance System\. St\. Vincent and the Grenadines linked
the MPID to the Civil Registry and was testing it by Project completion\.
37
The main outputs of the first MPID consultancy were:
ï A Gap Analysis and needs assessment report;
ï A conceptual design, and business process reengineering Report;
ï A Detailed System Design for the MPID;
ï A risk assessment and action plan report for the implementation of the system\.
ï A Stakeholder workshop with all participating countries (September 2011) in St\.
Lucia to present and consider the detailed technical design for the MPID\.
ï A Detailed specification document prepared after the decision to adopt the MPID
system by the OECS Heads in January 2012\.
The main outputs of the second MPID consultancy were:
ï A Management Plan for the Development and Implementation of the MPID
system;
ï Supply, installation, system integration, training, support and maintenance of all
technologies, hardware, software and related components of the MPID System\.
(Turnkey solution)\.
ï A standard Application Program Interface (API) for the MPID system to interface
with existing identity systems\.
ï Technical support to interface the MPID system with the existing Civil Registry
and the Election systems / processes in each participating country, including
during the guarantee period\.
Other outputs include:
ï Hardware and software procured for the MPID system\.
ï Launch workshop in Grenada on January/February 2013\. Training was divided in
three modules: Module A â System Administrator System; Module B â
User/Operator/Supervisor training; and Module C â Technical/Engineer/Data
Base Administrator\.
ï Project Launch, Inception Workshop, Steering Committee Meeting and Site Visits
to the participating countries completed on 5 February 2013\.
Component 2 â Vertical E-Government Interventions\.
2\.1 E-Government in Public Financial Management (PFM)
This subcomponent financed upgrades to the standard PFM reports and SmartStream
operating procedures in all four participating countries\. This activity contributed to
promoting greater efficiency of public services by: (i) allowing the preparation of reports
directly by users and (ii) providing access to information human resources in the public
sector through the upgrade in the HR module, enabling better management through
informed decisions\. The Department of Information Technology and E-Government
Services of Anguilla (DITES) designed the software for reports, based on each country
needs and requirements\. It produced manuals and trained staff in their use\. The main
outputs under this subcomponent are the following:
38
Regarding the Development of Standard PFM Reports
ï Assessment of PFM Systems: PFM Gap Analysis Report and PFM action Plan;
ï PFM Workshop which identified PFM activities to be funded under EGRIP and
workshop Report;
ï EOI and Specifications for Budget Module;
ï EOI and TOR for PFM standard reports and the SS standard operating procedures;
ï Evaluation of bids for PFM standard reports and the SS standard operating
procedures;
ï EOI and TOR PFM websites;
ï Evaluation of Bids, EOIs and Proposals\.
Regarding the SmartStream (SS) Operating Procedures:
ï Inception Report;
ï SmartStream report software, the operating instructions and Operating Procedures
Manual;
ï Installation and testing of SmartStream report software, the operating instructions and
Operating Procedures Manual;
ï Four-hour seminar on SmartStream Standard Operating Procedures and Manual\.
2\.2 â E-Government in Tax Administration
This subcomponent financed the development and implementation of an on-line module
for tax filing for all participating countries\. Through this activity, the Project promoted
greater efficiency of public services\. By Project completion, citizens were able to file and
pay their taxes on line\. The project focused on VAT declarations and payments, but saw
that in most countries, citizens and businesses filed for other tax types as well\.
The main outputs financed by this sub-component were:
ï An initial report to assess the tax context in each country and to serve a background
materials to prepare the draft bidding documents for the e-Tax system;
ï A workshop to launch the front-end e-Tax filing system and summary report;
ï Design, Development, Installation and Training for a front-end e-Tax filing system:
o E-users Registration
o E-Registration of Taxpayers
o E-filing of Tax declarations
o E-payment
ï Development of the interface of the SIGTAS to e-Tax filing system, with
SmartStream and Asycuda World by Dominican officials, and shared with other
EGRIP participating countries\.
ï Acquisition of software and hardware for each country;
ï Training of local IT staff involved in the development of the system and trained to
maintain the system in each of the participating countries\.
39
ï The on-line front-end e-Tax filing system will interface, in principle, with any
underlying core tax administration system, and will allow for integration with the
banking system for payments and refunds\.
St\. Lucia
In St\. Lucia both corporations and individuals had registered to file taxes online\. By
Project completion, electronic filing of VAT taxes reached above 15 percent of the total
VAT declarations\. Besides VAT e-filing, tax payers had started to file their income tax
online\.
Registered taxpayers for e-Tax filing:
ï Corporations: 96
ï Individuals: 569
Online Declarations:
St\. Lucia VAT Tax Filing
Period Total Online Percentage
Declarations Declarations online
March 2014 1173 158 13\.47%
(submitted in
April)
April 2014 1183 183 15\.47%
(submitted in
May)
Personal Income Tax (2013): 215
Corporate Income Tax: 0
Grenada
The tables below show the number of tax payers who have filed and paid their taxes
electronically by Project completion\. As shown below, in Grenada also tax-payers have
electronically filed and paid taxes other than the VAT\.
Number of taxpayers who have paid electronically by tax type
Tax TYPE Number of Tax Payers Totals
VAT 18 $444,460\.22
Personal Income Tax 8 $18,184\.14
Other License 2 $16,653\.08
PAYE 4 $373201\.93
Property Tax 20 $13,061\.15
Corporate Income Tax 6 $173,225\.18
Annual Stamp Tax 10 $25,869\.35
Total 68 $1,064,835\.05
Number of taxpayers who have filed electronically by tax type
TAX TYPE Number Submitted Number Approved
40
Declarations Declarations
VAT 140 121
PIT 25 25
PAYE 2 2
CIT 3 3
AST 9 9
TOTALS 179 160
St\. Vincent and the Grenadines
As it is the case of St Lucia and Grenada, tax-payers have filed taxes electronically for
several types of taxes\. The figures below show the number of e-filing declarations,
compared to the total number of tax declarations by type of taxes\.
Total Number of VAT Online Submissions: 836
Total Number of VAT Submissions (Online & paper based): 2768
Total Number of Personal Income Tax Online Submissions: 497
Total Number of Personal Income Tax Submissions (online & Paper based): 10,211
Total Number of Corporate Income Tax Online Submissions: 5
Total Number of Corporate Income Tax Submissions (Online & Paper based): 313
Total Number of PAYE Annual TD6 online Submissions: 2
Total Number of PAYE Annual TD6 Submissions (Online & paper based): 1958
2\.3 E-Government in Customs\.
Activities under this subcomponent were reduced, due to lack of resources and the need
to prioritize the Projectâs activities\. UNCTAD was the only agency presenting a proposal
for implementation of the Regional Customs Information System (RCIS)\. REGU and
UNCTAD were not able to reach an agreement on a contract for implementation\. The
main outputs were:
ï Customs gap analysis report: this included an assessment of the existing custom
system, which included the requirements of capacity building;
ï Specifications for the RCIS and an implementation action Plan\. This could be
used by the OECS countries in the future;
ï Draft TORs for the implementation of the RCIS and procurement work to seek
expressions of interest (EOI) to implement the RCIS\.
2\.4 - Electronic Government Procurement\.
This subcomponent aimed at supporting the improvement of the OECS public
procurement systems as a key step towards regional integration\. Though it could not
finance the breath and depth of the activities foreseen originally in the PAD, it
successfully financed the development of an e-procurement platform to which the OECS
41
Pharmaceutical Procurement Service (PPS) could connect\. It financed the design and
implementation of an e-Tendering System for OECS PPS to improve the efficiency at
OECS PPS\. The system went live on 1 July 2013\. It financed an assessment of the current
procurement environment of the participating countries\. This activity contributed to
improving the quality and efficiency of public services through the automation of the
regional procurement process for pharmaceuticals\.
This subcomponent financed the following outputs:
Consultancy on e-procurement platform for OECS
ï Report on Assessment of the current procurement environment of the participating
countries;
ï Report on conceptual and technical design of the regional e-procurement platform;
ï Report on Assessing alternative implementation options, such as using a Public
Private Partnership framework for e-procurement;
ï Revised Detailed Action Plan for the implementation of a partial e-Tendering System
for OECS PPS (public procurement system) and specifications\.
Consultancy for e-tendering system for OECS Pharmaceutical Procurement Services
(e-PPS)
ï Initial workshop to launch the consultancy and report on the workshop;
ï Report on the design of the electronic procurement platform for the OECS;
Pharmaceutical Procurement Services (PPS) using an e-Tendering system (EPPS);
ï Implementation of the Electronic Tendering System to assist the OECS
Pharmaceutical Procurement Service (PPS) to carry out its pooled procurement
mandate\. The consultant firm implemented the ePPS, providing training, and relevant
support / maintenance during a two-year warranty period\. The Project financed the
hosting of the system for two years as well\.
ï Provision of Training (June 2013) to users:
ï§ OECS PPS / Chief Medical Store Managers
ï§ Policy Makers
ï§ Suppliers
The content of the training concentrated on the e-PPS system including the core PPS
âpooled procurementâ flow; the use of the system for other types of procurements and its
benefits\.
ï Key documents produced: End-users Buyers, Suppliers and Administrators Manuals
and documents on support procedures\.
2\.5 - E-Government in Health and other Social Productive Sectors\.
This subcomponent provided an assessment of the health information systems in the
participating countries, the requirements for the establishment of a regional HIS and the
requested support for each participating country to strengthen their national HIS\. It
42
financed individual country projects, identified as quick wins by the national teams under
this subcomponent\. The main outcome of this activity was to strengthen the national HIS
in each country as perceived by the Borrowers, as a key previous step to a future regional
HIS\.
The Project financed the following outputs:
ï An Assessment and Conceptual Design of a Regional Health Management
Information System (RHMIS);
ï A Report on the Assessment of the Current and Proposed Systems in the four
countries and a Summary Assessment at the Regional level;
ï Report on Conceptual Design and Requirements Definition, with options for Free and
Open source system;
ï Detailed Technical Design of the RHMIS;
ï Technical Specifications for bidding documents for the acquisition and
implementation of the RHMIS\.
ï Identification of resources to assist the national Health Information System (NHIS)\.
o For Dominica and Grenada: the implementation of an Open Source National
Health Information System (NHIS)\.
o For Saint Lucia: procurement of equipment to support the NHIS\.
o For St\. Vincent and the Grenadines (SVG): consultants for Policy
Development, Legal Framework Assessment and Regulations and training for
health staff\.
Equipment
ï Upgrading the Infrastructure for Governmentâs Web Portal SVG -(Firewalls, Routers,
Servers and rack);
ï Expansion of the St\. Vincent and the Grenadines Governmentâs Intranet Backbone\.
ï Equipment for Roads, Buildings and General Services Authority of St\. Vincent & the
Grenadines (BRAGSA): networking equipment, computers and printers and
personnel training\.
ï Equipment For National Health Management Information System (NHIS)-
GRENADA computers;
ï Equipment for National Health Management Information Systems (NHIS) â for St\.
Lucia and Dominica (networking equipment and computers)\.
ï Network servers for Grenada and St\. Lucia\.
ï Networking equipment for the Ministry of Health of St\. Lucia and Grenada\.
Component 3 â Project Management\.
This subcomponent financed: (i) renting office space, equipment (computers) and
furniture for the REGU; (ii) operating costs and salaries of REGU staff (Project Manager,
Country Based Specialists, FM and procurement specialists and secretary); (iii) annual
external audits; and (iv) communication and outreach activities\.
43
Annex 3\. Economic and Financial Analysis
The PAD did not include a calculation of the NVP, ERR or FRR for the program or the
project as a whole because it was not deemed pertinent for a program of this nature\.
Instead, it focused on laying out the overall economic relevance of the program for the
region and carried out a selected cost-benefit analysis\. The PAD focused on the broad
economic impact on the OECS region of this Project; on how EGRIP would contribute to
create the necessary conditions for broader economic reforms\. The PAD mentioned that
the economic impacts would not be attributable exclusively to the Project and they would
be influenced by externalities\.
Efficiency gains through the e-Tax filing system: The implementation of the e-Tax filing
system, in its first months of implementation, has shown the following benefits:
(i) Savings in time for tax payers to file the tax returns\.
(ii) Reductions of costs for tax payers (physical filing of taxes and payments in person,
cost of transportation, looking for parking in busy cities, time spent in lines);
(iii) Savings for the Inland Revenue Departments, which will not need additional spaces
or hire staff around peak tax time;
(iv) Greater accuracy of tax data through the reduction of human error; and greater access
to accurate and standardized information requested by taxpayers that is readily available;
(v) Greater potential savings from redeployment of staff members who will not need to
work on tax paperwork (mentioned in St Lucia)
Participating countries had not yet quantified these expected savings by Project
completion\. The IRDs in each country stated their interest in doing so, to allocate savings
to other tasks\.
Reduction in Administrative Cost of OECS Pharmaceutical Procurement:
The use of the EPPS allowed a reduction in administrative costs (defined as the number
of days saved, multiplied by daily administrative cost)\. The PPS at the OECS Secretariat
provided an estimated cost of US$75\.00 daily and a savings of 23 days\. Also included is
an estimated US$800 for travel and per diem for countries participating in the evaluation
process, per procurement cycle\. The PPS estimated that total savings by the reduction in
the administrative cost of procurement of pharmaceuticals by using the e-procurement
system would reach 66 percent of the previous administrative costs of this process\.
Table 1: Reduction in Administrative cost of OECS Pharmaceuticals Procurement
Activity Without With e- Difference Original Cost %
e-PPSS PPSS (days) Cost Savings Savings
(days) (days) (USD) (USD)
Request/Collate Forecast 20 10 10 1500 750 50%
44
Collate- Bid Invitation 5 2 3 375 225 40%
Send Invitation-Close 5 1 4 375 300 20%
Tenders
Open Tenders-TAC 1 0 1 875 75 91%
Meeting
Evaluation 10 5 5 750 375 50%
Approval-Contract Award 15 15 0 1,125 0 100%
56 33 23 5,000 1,725 66%
Source OECS PPS (Feb 2014)
Efficiency gains from value for money: The REGU made great efforts to maximize the
outputs of the Project through the well-managed procurement of goods and services\. It
negotiated systematically to attain the maximum possible in the services and goods
contracts\. As an example, the REGU succeeded in obtaining guarantees and maintenance
services for the three main systems to be active, after they were installed and the Project
was completed\. This was critical for the MPID system, given the completion of the
Project by the end of February 2014\.
The Project most likely had a smaller impact than what was envisioned in the PAD, as
the number of systems that was feasible to finance was smaller than foreseen, due to the
systemsâ cost, the available implementation time and the readiness and priorities of the
participating countries\. Of the several overarching goals considered in the PAD, the
Project prioritized interventions that would support in the medium to long term the
regional goals of creating a common labor market, the development of the private sector
development and fiscal harmonization\.
The Project contributed to advancing momentum towards the Economic Union for the
OECS countries\. For the first time in the ICT sector, the OECS countries, with the Project
support, carried out pooled procurement for the development of the e-Government
systems and the equipment to implement them\. This regional coordination allowed the
countries to realize savings in the acquisition of equipment\. The Project backed a regional
approach to e-Government that was perceived as a meaningful support to the regional
economic integration\. This perception was confirmed during the ICR mission interviews
with the leadership of the OECS Secretariat as well as with the members of the RTC and
key stakeholders\.
45
Contributing to the goal of fiscal harmonization, the PAD highlighted that the OECS
Economic Union would benefit from the implementation of a joint system to monitor and
collect VAT\. The PAD addressed a regional tax system to be supported by the project, to
reap advantages and avoid the multiplication of costs of national systems\. By Project
completion, all countries were using a common on-line model for e-Tax filing system,
designed for all four countries with national adaptations\.
Contributing to the goal of private sector development, the Project contributed to the
creation of a common legal environment, as foreseen in the PAD\. With the simplification
and harmonization of legislative and regulatory framework at national and regional level,
the Project visibly contributed to a key dimension of the OECS political and economic
union\. Harmonization of e-legislation was a key step to enable the implementation of e-
Government applications and to operationalize e-Government\. Legislation was passed for
six areas: electronic transactions, electronic funds transfer, electronic filing rules,
electronic evidence bill, electronic crimes and data protection\. The legislative
achievements are key steps for improvement of quality of the provision of public
services; of increased transparency; of increased regionalization; and a key step for
enabling regional economic development\. Though adopted at regional level, the countries
need to complete the enactment and implementation of all pieces of the harmonized
legislation to reap the benefits for the public and private sectors\.
Contributing to the goal of creating of a Common Labor Market, the Project supported
the development and implementation of the MPID system, which is providing a unique
personal identifier to citizens across the four countries\. A national identification system is
considered key for the full free movement of people and goods and to enable a simplified
and more agile business environment in the region\. Since the MPID system is still in the
stage of registration, the economic impact is yet to be realized\.
46
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Lending
Juan Navas-Sabater Task Manager TWICT
Roberto Panzardi Co-Team Leader LCSPS
Kashmira Daruwalla Senior Procurement Specialist CITPO
Tanya Gupta RM Officer LCSPS
Svetlana Klimenko FM Specialist LCSFM
Wolfgang Koehling Economist LCSPS
Enrique Fanta Sr\. Public Sector Specialist LCSPS
Anat Lewin Operations Analyst CITPO
Daniel Cooper Junior Professional Associate LCC3C
Badrul Haque Sr\. Country Officer LCC3C
Rachel McGolgan Communications Officer LCC3C
Rolande Pryce Country Lawyer LEGLA
Miguel-Santiago Oliveira Finance Officer LOAFC
Randeep Sudan e-Gov\. Practice Leader CITPO
Snezana Mitrovic Lead Procurement Specialist LCSPT
Patricia Macgowan Sr\. Procurement Specialist LCSPT
Cletus Bertin Consultant CITPO
Theodore Gering Consultant CITPO
Samia Melhem Peer Reviewer CITPO
David Gray Peer Reviewer LCSDE
Supervision/ICR
Juan Navas-Sabater Co-Task Manager, Sector Leader ECSST
Co-Task Manager, ICT Policy
Anat Lewin TWICT
Specialist
Co-Task Manager, Lead ICT
Doyle Gallegos TWICT
Policy Specialist
Alan Carroll Operations Advisor TWICT
Sandra Monica Tambucho Senior Financial Officer CTRLN
Gurchuran Singh Senior Procurement Specialist TWICT
Lead Financial Management
Svetlana Klimenko LCSFM
Specialist
Kerry Crawford Financial Management Specialist LCSFM
Edith Ruguru Mwenda Senior Counsel LEGAM
47
Martiza Rodriguez De
Pichardo Financial Management Specialist LCSFM
Eva Clemente Miranda Junior Professional Officer TWICT
LCSFM
Julia Conter Ribeiro Senior Financial Assistant
Tatiana Cristina O\. de
Abreu Souza Finance Analyst CTRLN
Tasneem Rais Program Assistant TWICT
Janina Flores Ramirez Program Assistant IFC
Batzul Dashdorj Program Assistant TWICT
Samia Benbouzid Program Assistant TWICT
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY07 17\.68
123,681\.73
FY08 39\.15 226,913\.63
FY09 1\.80 9,417\.34
FY10 6\.00 31,058\.92
Total: 64\.63 391,071\.62
Supervision/ICR
FY09 20\.85 114,301\.42
FY10 24\.40 129,389\.36
FY11 19\.70 110,004\.54
FY12 20\.94 107,741\.35
FY13 22\.68 95,652\.96
11\.63
FY14 65,447\.72
Total: 121\.12 622,537\.35
48
Annex 5\. Beneficiary Survey Results
The PAD foresaw carrying out surveys to collect results data as part of the M&E
framework\. These could not be done due to resource constraints under the project\.
Instead, results and outcomes were captured through focus groups meetings, held on
February 3rd, and 4th and 10th\. The focus groups gathered data on the quality, user
satisfaction and functionality of existing e-Government systems in an effort to compare
the systems prior and post Project interventions\.
The focus groups covered the three systems supported by the Project: the EPPS, the E-
Tax System and the MPID system\. They included stakeholders in each country who had
had interactions with the systems\. The focus groups included a sufficient number of
internal users\. The number of external users was limited in the case of all three systems,
given the timing of implementation of the e-Government systems and the need to carry
out the focus groups before Project completion\. In the case of MPID, the systems was in
the early stages of roll out; in the case of the EPPS, it was being used for the first larger
procurement of medical supplies and this process was not yet completed and in the case
of the e-Tax filing, the system was in the initial phases of implementation\.
The focus groups concentrated on two themes: (i) a description of the service experience
prior to and after the implementation of a new system and (ii) the stakeholders concerns
and recommendations\. The stakeholdersâ concerns about technical issues raised in the
focus groups were communicated to and addressed to the maximum extent possible by
REGU\.
Main Focus Groups Findings
E-Tax filing system
Participants unanimously agreed that the OECS and Norway Registers Development
(NRD) requested and considered all input for the development of the E-Tax system from
the inception of the design phase through to its development and testing phases\. The
final end product met expectations, which gave countries the ability âto easily sell to staff
to encourage use\.â Overall feedback of the system was positive\. Participants rated
quality, satisfaction and functionality from 7-9 using a ten-point scale where zero is poor
and ten excellent\. The Data Sheet and the Achievement of Outcome sections contain
information on the ratings of each aspect of the system\.
The front-end e-Tax filing system was being rolled out in all four countries when the
focus group was conducted\. Participants highlighted the following positive
experiences and advantages of the E-tax filing System:
ï Dramatic increase in the speed with which applications can be filed for both external
and internal user perspectives;
49
ï Ability to file 24 hours a day, seven days a week, making it possible to receive a
filing date on days the IRD is officially closed and extending the time for filing on
any given day up until midnight;
ï Virtually instantaneous provision of filing receipt;
ï Flexibility in payment options: either credit/debit cards or account-to-account
transfers when this option becomes available\. At the time of the focus group, only
Grenada offered on-line payment;
ï Money saving because electronic applications are created, reviewed and filed
electronically using the internet,
ï More accurate filing receipt information because it is transferred directly from the
database containing the information entered by the applicant, which is validated and
does not require manual reentry;
ï There is more efficient review of the applications because they are in a standard
format\.
ï Increased productivity in some areas\.
Across all focus groups in the four countries, participants reported satisfaction with the
system and positive feelings about its implementation\. As noted by a respondent who
participated;
âAlthough I have not used the VAT to file online, I have used it to do my personal income
tax and it was really fast and easy\. Cantât wait to do the VAT\.â
Similarly, another respondent who works at the IRD stated when asked if the system met
with expectations said:
âI do not miss the data entry, so yes it did meet my expectations!â
Participants were asked to rate the quality of the E-Tax filing system using a scale from
1-10 where zero is poor and ten is excellent\. Of the seventeen participants, two chose to
abstain from the evaluation process on account of their limited interaction with the
system\. This is the rounded average based of the scoring system by participants\.
Quality Functionality Satisfaction
8 7 8
Main Issues and Concerns
In all focus groups, participants discussed a variety of factors that either fostered or
impeded the functioning or quality of the system in any way\. The main ones are quoted
or reflected below:
Persons who do not conduct business any place or who do not have a fixed address for
the business, the system does not provide an option to file\.
50
Seventy percent of participants commented that the âValidateâ button was confusing and
a little ambiguous and âCalculateâ would have been a better option\. In some case s the
âregisterâ and âvalidateâ buttons are not seen\.
I do not like the way the forms are validated\. Only when you are finished it will point out
the mistakes\.
Participants chose to highlight aspects of the system not being evaluated but are
important to emphasize\. Six participants did share this respondentâs comment:
We have an increase in productivity with the VAT because we do not have to do the data
entry but the PAYE is terrible\. It is easier for those on the front end and they can do it in
one day\. But we on the back end are having the trouble because the system is not
accepting the uploads and we have to do the input manually because of some technical
problems\.
Database administrators are very alarmed that IT and Office administrations are on an
equal level:
I have been in IT so long and I have never seen anything like this\. I find it ridiculous that
an office administrator has the same rights as me\. They can change passwords, assign
levels of security\. If there is one thing I do not like it is this\.
Participants highlighted that the system invalidates VAT after a certain date or calculates
late fees for personal income tax because a due date is not included on the form\. Asked
whether changes can be made to the form the following was the response:
Of course changes can be made but the software used for the form development is very
heavy and in my opinion unnecessary⦠there should be red flags on user registration to
let me know if there are any forms pending\. I always have to go into the system to see if
any are pending to validate\.
One area of concern was the lack of succession plans for the newly acquired skill set of
technical staff and the probability that the trained staff will leave for other lucrative jobs\.
Grenada in an attempt to address this has hired a local company to look at the different
aspects of the database and plan for code modifications if needed by the government\.
The E-Pharmaceutical Procurement Services System (EPPS)
Before Project completion, the system was used for the Antiretroviral (ARV) Medicines
procurement cycle and the Pharmaceuticals and other Medical Products procurement
cycle, though this procurement cycle had not been completed\. All users - the Chief
Medical Stores Managers and Pharmacists, the PPS and the pharmaceutical suppliers -
expressed extreme satisfaction with the system\.
51
Positive System Experience as expressed by participants:
ï The collation and manipulation of spreadsheets from forecast requests is now
automatic;
ï The time taken to prepare requisition and purchase orders has been significantly
reduced;
ï Improved efficiency through automated contract awards;
ï There is a virtual elimination of paperwork and paper handling;
ï Significant reduction in errors and increased productivity;
ï The entire bidding process is completely transparent;
ï Disqualifications are automated\.
The EPPS, in comparison to the e-Tax filing system and the MPID system generated the
most excitement among users\. In addition to the many advantages of the system, Focus
group participants commented on how comfortable they were with the new system and its
ease of use\. Suppliers in particular, expressed that all their concerns and fears over the
years have been fully resolved with the advent of the system\. The EPPS has resolved the
Suppliersâ suspicion regarding PPS award of contracts:
What I really like about the system is that the bids are opened simultaneously and I can
see where I stand in relation to other suppliers\.
I really like the fact that I do not have to travel any more\.
I donât even have a problem with the disqualification process because the system shows
me why I was disqualified\.
The costs savings is beneficial to all stakeholders\. The PPS no longer has to invite
selected countries to its head office to verify bids\. Suppliers no longer need courier
services or travel to deliver bids\. There is no longer any pressure on the PPS to accept
late bids from suppliers\.
We had a big problem with suppliers sending their bids at the last moment â¦\. I think
that they thought that we tampered with the bids and sometimes like if there was a
problem with the weather or delays with the courier the bids will come in late and by law
we can only accept a late bid if the postal service goes on strike\. â¦\.now they have up to
midnight on the deadline to send their bids and have no one to blame but themselves if
they are late\.
The steps involved in awarding contracts for ARV and Pharmaceutical and other medical
products are long and tedious\. Preparation of requisition orders and purchase orders was
also very time consuming\. One respondent related it to being:
â\.An arduous nightmare that I never look forward to⦠but now I can click a button and
I am happy\.â
52
The purchase orders are generated from requisition orders automatically once the
requisition is approved by the Ministry of Health\. This can take as much as five to seven
working days based on country policy and procedural guidelines and falls outside the
purview of the system\. The system has improved the quality of work, efficiency and
resulted in time-savings because some requisition orders have as many as two hundred
(200) items\.
Overall participants indicated that they participated in the development of the system
from start to finish\. It was very user friendly and the training provided was thorough with
very detailed manuals\. The system met and in most cases surpassed expectations\. Users
were âdelightedâ that the system provides ease of retrieval of information and data\. There
were no supplier requests for information on tenders/bidding process/drugs during the
last procurement cycle to the PPS because the information is readily available on-line due
the transparent nature of the EPPS\.
Issues and Concerns
The only issue for concern to all users is that the platform is based on Cost Insurance
Freight (CIF), which accommodates budgeting and does not allow for Free on Board
(FOB)\. FOB affects purchases of small quantities as the application of insurance and
freight will vary\.
One supplier using an Apple Computer could not access the system switched to a PC to
gain access\. Another supplier also using Apple computers reported no issues\.
Participants were asked to rate the quality of the EPPS system using a scale from 1-10
where zero is poor and ten is excellent\. This is the rounded average based of the scores
by Twenty-four (24) participants\.
Quality Functionality Satisfaction
9 9 9
Multipurpose Identification Systems (MPID)
The focus groups on the MPID were carried out for all four countries though the
questions on the systems use focused on Dominica, which the only country with had
successfully linked the MPID System to the Electoral Office System and to the IRD
system\.
Focus groups participants had been involved from the inception of the system
development and received training that was considered adequate and effective\. One of the
most interesting aspects of the focus group meetings for the MPID system was the feeling
of the lack of ownership of the system from some countries\. Participants gave the
following comments:
53
We know there is a target we have to reach for the bank of forty percent for data entry
and we will have to try to see what we can do to get there\.
When asked when the system will be rolled out:
I do not know\. I am not sure what is planned\.
The station was set up in the office, but we have not used it yet for registration or made
any links\. We intend to use it but I donât know when\.
The focus group meeting surfaced that there was some ambiguity with the objective of
the MPID system with a minority of participants:
My understanding was that the system was to be used to reform the Civil Registry, births,
deaths and so on and replace what is there now with something feasible so that we could
follow a person from the time of their birth on to death\. So I must say that the system did
not meet my expectations\.
Another respondent did provide the following:
I always viewed the system as a means to harmonize all other systems\. It has met my
expectations in that I know what it can do because of the training we did, but I have not
used it since our training finished\.
System Operations
Dominicaâs focus group discussion focused on the MPID System implementation in the
country\. Overall the system has met expectations\.
âIt is doing what it is supposed to do⦠helping the public and providing secure identities
through biometrics\.â
The successful implementation of the MPID System has forced the office to seek larger
accommodation\. This move will be to the new Electoral Office, which has the required
space to meet the demand\.
The few systems bugs are most evident when the office is busy with enrollees\. Issues
range from scanner hang ups, to camera not responding or the inability to save because of
general system failure (freezing)\. These issues are being addressed and should be
resolved within six to eight weeks\. Have they been resolved? This is the one dislike from
Staff and users because reboots are time consuming\.
I must say when the system is not working properly it is so embarrassing dealing with the
people that [are] there and I always have to call [IT personnel] for help\.
54
The MPID system end users knew what was required to register in the system\. There was
some understanding that it was important to do\. However, just one of the nine
participants17 was able to truly describe the benefits of obtaining the ID and card:
Not too sure of the benefits to me\.
Was asked to go because it was our ministryâs turn\. Not sure what the benefits are right
now but I am sure there are⦠I know I will need one (card)\.
The national ID will allow me to facilitate travel in the region\. It will keep me safe from
someone trying to use my ID â¦\.
The focus group tried to measure the Quality of the MPID system measured through
focus groups\.
Although not in use in three countries quality, functionality and satisfaction were still
ranked high\. This is the rounded average based of the scores by nineteen (19)
participants\.
Quality Functionality Satisfaction
8 7 8
17
The focus group report indicates that, despite its many advantages focus groups are not without
limitations\. Findings from this discussion are not quantitative, nor can they be generalized to the target
population as a whole\.
55
Annex 6\. Stakeholder Workshop Report and Results
N\.A\.
56
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
The Borrowersâ comments section includes inputs from REGU and three of the four
Borrowing countries\. Comments by Grenada were not received\.
REGUâS Comments
I - Main Challenges
Issue 1: Insufficient funds in Project Budget
Resolution 1:
⢠CDB grants for the four IDA countries, Antigua and Barbuda and St\. Kitts and
Nevis\.
⢠Approval given by World Bank at the Mid-Term Review for the reallocation of
funds\.
⢠Approval given by World Bank for restructuring of Project\.
Issue 2: Costs of goods and services were based on industry prices determine during
design\. Actual costs were higher than the budgeted costs\.
Resolution 2:
⢠Outputs /deliverables from similar ICT or E-government Projects were used
EGRIP input\.
⢠Notices were circulated as widely as possible\.
⢠BIDs Negotiated to get value for money\.
⢠Activities were prioritized based on consultations with the stakeholders\.
Issue 3:Delays in receiving timely responses from stakeholders\.
Resolution 3:
⢠Discussed impact of delays with stakeholders\.
⢠CBSs followed-up and liaised directly with national representatives to get timely
responses\.
⢠The REGU followed-up and liaised directly with the World Bank and the OECS
Secretariat to get timely responses\.
⢠Workshops, meetings and consultations held at key decision points\.
Issue 4: Lack of enactment of Legislation\.
Resolution 4:
⢠Provided support to operationalize systems:
â Grenada enacted all the legislation, except the Electronic Crimes Bill\.
â Dominica enacted all the legislation, except the Data Protection Act\.
â Use of existing tax legal framework and the User Agreement for the e-Tax
filing System\.
â User Agreement developed for the Electronic Procurement System for
OECS PPS\.
â Developed Consent forms for fingerprints\.
57
II - Lessons learned
ï Consultations were held with all stakeholders to develop the strategic priorities,
implementation plan, procurement plan and budget\. These initial consultations
were important to align the project activities to the national priorities and build
consensus and ownership with the stakeholders\.
⢠On the job training and coaching were provided to the members of the REGU
team\. This increased their technical skills and competencies to perform their
duties\.
⢠Country representatives were required to participate in the procurement processes
(approval of specifications, bidding documents and contracts above specified
thresholds), which resulted in ownership of the activities\.
⢠Focal teams were identified for each beneficiary institutions and meetings held at
decisions points\. This increased the level of support and commitment at the
national and regional levels\.
⢠The quarterly meetings of the RTC and the composition (one representative from
each participating country, the OECS Secretariat and the CDB as an Observer)
provided:
â Support for the removal of bottlenecks;
â Alignment of the project to the national priorities and policies;
â The resolution of issues; and
â The successful implementation of project activities\.
⢠The Country Based Specialists (CBSs) played an important role in coordinating
activities at the national level and worked closely with the stakeholders to ensure
that the project activities were implemented on time and within scope\. The use of
a CBS is recommended for other regional projects\.
⢠The budget was managed to ensure that there were sufficient funds for the
implementation of the major e-Government systems\. Therefore, the disbursement
rate was low during the implementation of the consultancies and then increased
during the implementation of the major e-Government systems\.
⢠Targeted support was required for the implementation and utilization of all the
major e-Government systems\. This included Monthly Senior Steering Committee
meetings, which were held via Cisco Web Ex for the MPID System, meetings of
the Tax Focal Team (Champion and technical staff) and meetings with the Team
for the Electronic Procurement Process for the EPPS (PPS and the Chief Medical
Stores Managers / Pharmacists)\.
⢠The OECS Secretariat provided significant technical support to the REGU in
terms of the utilization of the staff to review procurement documents, financial
reports / statements and provide legal / technical advice\. It is recommended that
for future projects that this support is quantified so that it can be attributed to the
OECS Secretariat in terms counterpart resources for time spent on project
activities\.
⢠The scope of future E-government / ICT projects, i\.e\. the number and complexity
of the activities, must be used to realistically determine budget and duration\.
58
⢠The budget for future projects must be determine by conducting market research
on the cost of goods and services in the relevant region (example the OECS and
the Caribbean) and then adding ten to fifteen percent for future increases in
market prices given that the loan approval process is two to three years\.
⢠All projects should have a Project Preparation Facility (PPF) to (i) establish the
Project Implementation Unit, (ii) achieve the conditions precedent to the project
and (iii) complete the also to develop the TORs / technical specifications for the
various activities\.
⢠The project implementation duration should begin after the completion of all
activities under the PPF\. This will enable the successful completion of the project
within the implementation duration\.
⢠Future projects must include process re-engineering, change management and
public relations activities to facilitate a greater pace of utilization of the e-
Government systems\.
⢠The calculation of the project duration must factor the election cycle of the
participating countries and the delay in project implementation when there is a
change in government and Senior Public Servants\.
⢠Funds must be made available to hire additional resources (temporary staff so that
core beneficiary staff can be seconded on a full time basis) to assist at the
beneficiary institution to focus primarily on the implementation of the e-
Government / ICT solutions\.
⢠The Loans and /or grants should be denominated in a stable currency (example
USD) to prevent adverse rate changes, which cause deficits in the budget\.
Dominicaâ Comments
I -Main project outcomes and achievements by project completion:
Policy and Strategy Implementation â the work undertaken in this area has contributed
to the strengthening of e-Government policies and processes\. Dominica has been shifting
focus from public sector reform to public sector transformation, utilizing e-Government
and ICTs as the platform to foster and create the enabling environment for increased
growth and development\. The policy formulation and development activities involved a
range of stakeholders who will play a key role in implementation of the recommendations
and guidelines\.
Legal and Regulatory Framework Implementation â Dominica has received the suite
of E-Government Legislation and has passed in Parliament the Electronic Transaction
Act, Electronic Filing Act, Data Protection and Security Act,\. In recent times, in addition
to the EGRIP systems, significant reorganizing and modernizing initiatives have been
undertaken, both sector-specific as well as cross-cutting public administration\. The e-
Government legislation is critical to provide the legal and regulatory framework for
effective and sustained implementation\. Currently, Government is working with the
Commonwealth Secretariat in advancing work in cyber security and the legislation will
support the efforts in identifying and combatting criminal activity within our networks\.
59
ICT Standards and Total Cost of Ownership Optimization
Total Cost of Ownership (TCO) has now provided the government with an understanding
of the factors that influence the costs of operating IT assets\. Due to TCO, the
government can now see the avenues for cost saving as it relates to IT assets\. In the past,
the Government of Dominica would purchase IT Infrastructure without giving
consideration to the full range of costs associated with operating or implementing that
particular infrastructure\. The TCO model is allowing the government to move beyond a
straight line comparison of infrastructure cost i\.e\. comparing cost of infrastructure by
manufacturer or seller to a more realistic examination of all the cost (tangible and
intangible) associated with implementing and operating the infrastructure\.
ICT Equipment
Procurement of the ICTs Equipment for use in the ICT Unit has provided tremendous
benefit to the work of the Unit\. Through the new technologies of video-conferencing
system and CISCO WEBEX, communication with stakeholders internally and externally
has improved\. There has been in a reduction in the cost of attending meetings overseas,
productivity has increased as the video conference system provides real time discussions
and decisions making opportunities\. Systems are more secured with the procurement of
the hardware and software firewalls\. The ICTU is better able to bring its e-Government
applications to the wider public with the use of the laptops and the multimedia projectors\.
Multi-purpose Identification System (MPID)
The MPID is viewed as an effective system for official national identification\.
Registration commenced with Government workers and employees of Statutory Bodies\.
The total to date is 2, 930\. Registration for the private sector and the general public will
commence shortly\. The financial institutions are in agreement that the MPID card would
now become the official identification card and it is anticipated that revenue could be
generated from verification of the card on-line\. The Dominica Social Security has no
objection to utilizing the card for social security purposes\. However, the Dominica
Social Security Act would have to be amended since the Act gives the Director the
authority to issue cards\. The MPID card will also be used for electoral purposes\. The
Government of Dominica had committed itself to the introduction of voting cards and
hence cost savings have been realized since Government did not have to expend new
resources to implement a separate system\. Additional revenue collection measures to
sustain the system are being considered such as fees for replacement cards and for lost or
damaged cards\. Amendment to the Elections Act is being finalized to allow the Electoral
Office to issue the cards\.
E-Tax Filing System
To date, the system has recorded 391 users\. Filing returns for VAT, Personal Income
Tax and Corporate Tax are 36, 163 and 3 respectively\. Feedback from persons filing on
line indicates that the system is easy to use as well as significant reduction in completion
time and errors since the system is self-calculating\. The greatest challenge now for
sustainability of the system is the introduction of the electronic payment component,
which has been delayed pending the finalization of the agreement with the bank\.
60
Open MRS
The Open MRS has the functionality and interoperability standards to integrate with that
architecture\. Ninety (90%) of the hardware has been deployed, including computers,
laptops, wireless routers and network equipment\. The software application, Open MRS,
has been customized and is currently undergoing final review and testing in preparation
for complete deployment\. Relevant departments are also reviewing Standard Operating
Systems (SOPs) and processes in preparation for complete roll-out of the system\. A full
demonstration of the system was conducted in April 2014\. Open MRS covers the basic
needs of the doctors and administrators with the added benefit of easy to customize to
suit the needs of health services in Dominica\. Dominica has embarked on a plan to create
a national e-Health architecture\.
Conclusion
The main challenge with implementation of the EGRIP had been coordinating with all
the stakeholders to ensure that timelines were met for the various activities\. However,
the engagement of Country Based Specialists was critical in facilitating the timely
implementation of the project\.
Saint Luciaâs Comments
I â Project Outcomes and Achievements
The overall development objective of the E-Government for Regional Integration Project
(EGRIP) was to promote the efficiency, quality, and transparency of public services
through the delivery of regionally integrated e-Government applications that apply
economies of scale\. The Project focused on cross-sectorial e-Government issues and on
specific applications in the public finance area (including Public Financial Management
(PFM), tax, customs and procurement), as well as in health\. At the national level, the
project was expected to assist in creating an enabling environment, which would facilitate
the leveraging of ICTs to improve Government service delivery and the ease of doing
business\. This is in keeping with the current administrationâs aim âto modernize our
economy and society and bring Saint Lucia fully into the international economy\.â
Moreover, the project would relate directly with the vision of the Government of Saint
Lucia for ICT, captured in the draft National ICT Policy and Strategic Plan 2010 - 2015
as follows:
âImprove the quality of life in Saint Lucia by embracing ICT to promote
development, innovation and global competitiveness thereby enabling sustainable
social and economic growth\.â
Despite the reduction in project scope, due primarily to the limitations in funds available,
the EGRIP is still being heralded as a success having completed and implemented the
more critical activities and systems\. The key successes in Saint Lucia include:
Automated Systems:
61
Through the EGRIP, Saint Lucia was able to benefit from the implementation of three (4)
systems at the national and regional levels:
ï E-Tax Filing System â which revolutionized the way in which taxpayers
conducted business with the Inland Revenue Department commencing in the latter
part of 2013 with Value Added Tax (VAT) declarations and then with Income
Tax declarations early in 2014\. By April 2014, the Department could boast of a
13\.47% rate of taxpayers submitting VAT declarations via the online system\.
ï Multipurpose Identification System â The system gained operational acceptance
in November 2013 and steps are being undertaken towards having the go live and
the issuance of MPID cards to replace the Electoral ID cards currently in
circulation\. It is anticipated that this system, when adequately populated, will
become established as the authoritative system in terms of the identification of
persons in Saint Lucia\.
ï PFM Reporting System â This reporting system interfaces with the currently used
Public Financial Management system, SmartStream, and provides the
convenience of easily produced reports for the purposes of accounting, budgeting,
and human resource management among others\.
ï At the regional level there was the implementation of the e-Tendering system for
the OECS PPS which could be considered the regionâs pilot e-tendering system\.
The resulting benefits have already begun to accrue to Saint Lucia as one of the
participating countries in the pooled pharmaceutical procurement\.
Equipment:
Besides the equipment associated with the systems implemented, the EGRIP provided
much needed equipment to the Ministry of Health, to facilitate the rollout of the National
Health Information System, and to the Royal Saint Lucia Police Force, to facilitate the
rollout of its Crime Management System\. In both instances, the equipment provided has
been used to furnish wellness centers/stations around the island to expand the access to
the automated systems supporting the institutions and ultimately to improve their service
delivery\.
Legal and Operational Frameworks:
EGIRP delivered draft legislation regulations necessary to create the ideal environment
for e-business\. This legislation covered the areas of electronic transactions, data
protection, electronic crimes and electronic evidence, among others\. In 2013, the
Division of Public Sector Modernization (DPSM), through additional assistance provided
by ITU, coordinated consolidation of the draft EGRIP legislation with existing and
HIPCAR drafts to finalize the legislation in preparation for tabling in Parliament\. Thus
far, the Electronic Transactions Bill has been tabled while other legislation is expected to
be brought before the House later in 2014\.
Saint Lucia also benefitted from the frameworks and reports developed and training
conducted\. The areas of e-Government Institutional Framework, Government Enterprise
Architecture, Total Cost of ownership, Pooled Procurement and Monitoring and
62
Evaluation, as well as for the establishment of a Regional Customs Information System,
Regional Health Information System were covered among others\. These tools are already
being used as input into the various ICT and e-Government policies and strategies being
developed by the DPSM through the e-Government Taskforce, ensuring that fundamental
principles, best practices and lessons learned are factored in\.
II â Main Implementation Challenges
During EGRIP implementation, challenges faced by Saint Lucia were mainly at the
decision making level in terms of continuously re-prioritizing as the shortfalls in
financing became apparent\. These shortfalls were primarily due to the underestimation of
the costs associated with the planned project activities and was compounded due to the
unfavorable fluctuation in the exchange rate of the SDR\. In addition to forgoing some
project activities and reallocating funds to those identified as higher priority, the
Government of Saint Lucia would have contributed to reducing costs wherever possible\.
In the case of the MPID implementation, assumptions were made regarding preparedness
of the Civil Status Registry\. However, the modernization of the Registry is still a work in
progress with records being cleaned up and processes automated\. Additionally, the is the
issue of staffing a Vetting Unit which requires an innovative response due to the current
economic situation in which the option of additional employees may not be feasible\.
The need for the revision of business processes was a recurring issue being highlighted\.
In some cases business processes are antiquated and do not lend themselves to the proper
implementation and efficient operation of the electronic systems\. Unfortunately, process
reengineering was beyond the scope and budget of the EGRIP\. However, the intention is
to review and address business processes issues as part of the DPSM work programme\.
III â Lessons Learned
The initial scope of the EGRIP had to be reduced quite a bit\. Some systems and a few
project activities which were initially planned had to be forgone due to costs being
significantly underestimated and, as a result, the agreed financing being inadequate\. This
experience highlights the need for more diligence and in-depth analyses in arriving at
cost estimates during the project appraisal stage of future projects\. The result would be a
smoother and more efficient implementation and the greater likelihood of success in
achieving all project objectives\.
The Project underscored the importance of coordination and the savings and benefits
which are possible through coordination, such as economies of scale or reduced
duplication of effort\. For a small island state, such coordination at the regional level,
both with other countries and with regional agencies, and even more importantly at the
national level is critical to maximizing investment and efficiency\.
One area in which the Project fell short was the absence of activities to address any
necessary revision of business processes\. Future projects should factor in BPR/BPM
activities as this is critical to the adoption and satisfactory utilization of systems\.
63
The EGRIP was quite a complex and ambitious project which not only included multiple
participating countries but also involved multiple government agencies within each
country and diverse groups of stakeholders\. Nonetheless, it was successfully managed
and implemented and this can be attributed primarily to the implementation arrangements,
which involved coordination by a regional body (the OECS Secretariat) through the
establishment of a project implementation unit (the REGU), which reported to the
beneficiary countries and coordinated decisions through the RTC\. Further, the
implementation unit maintained an in-country presence by way of the deployment of
Country Based Specialists to properly coordinate implementation at the national levels\.
This model has been tried and proven through the EGRIP and may be considered a âbest
practiceâ framework for future projects of similar nature\.
IV â Sustainability of Project Achievements in the Future
Work at the national level is ongoing with respect to the full rollout and utilization of the
systems and the adoption and implementation of the delivered frameworks, legislation
and recommendations\. Resource persons would have been made available for the
capacity building activities hosted by the EGRIP to minimize any costs associated with
future maintenance of the systems\. In the case of the MPID system, the system will be
replacing the current Electoral System and the equipment for these two systems are quite
similar\. It is therefore anticipated that costs for maintenance and consumables would be
similar\. As such, budgetary allocations already made for the Electoral System should be
sufficient to maintain the MPIS system\.
In terms of institutional arrangements and strengthening, the Division of Public Sector
Modernization (DPSM) was established in 2012 with its primary objectives including:
ï Providing support to ensure that appropriate systems and processes are in place to
optimize the use of the human resource capacity in transforming the operations
and improving the levels of the Public Sector service delivery\.
ï The application of innovative solutions through the use of ICTs to improve
productivity, enhance efficiency and streamline Public Sector service delivery\.
In December 2013, ICT personnel within the Public Service (with the exception of those
assigned to the Police, Correctional Facility, and the Inland Revenue and Customs
Departments) were reassigned so that they all fall under the purview of the Division of
Public Sector Modernization\. In addition, the DPSM has been established as authority to
approve all Government investments in ICT\. This has created an environment which
makes it much easier to coordinate ICT initiatives, implement policies and ensure that
standards are adhered to\.
St\. Vincent and the Grenadinesâ Comments
Main project outcomes and achievements by project completion
The following are the major achievements and benefits for St\. Vincent and the
Grenadines over the period of implementation:
ï The delivery, installation and use of a Video Conferencing System\.
64
ï The delivery of hardware to support the Governmentâs web portal which allowed
for the provision of increased internet bandwidth
ï The extension of the Government Fibre Optic backbone to several other
government departments allowing for reduction in recurrent cost for individual
internet services
ï The delivery of hardware and training to BRAGSA for the integration of their
information systems
ï The delivery of a Web-Based Monitoring and Evaluation Information System and
the provision of an operation manual and training delivered to stakeholders in
monitoring & evaluation and the use of the system\.
ï The delivery of OECS ratified harmonised draft e-Government legislations and
hardware support to the Office of the DPP and Criminal Investigations
Department of the RSVGPF to support cybercrime investigation and prosecution\.
ï The delivery of Gap Analysis, Assessment Reports, Recommendations and
Capacity Building for E-Government Standards, General Enterprise Architecture
and Total Cost of Ownership Optimization\.
ï The Strengthening of the E-Government framework through the delivery of a
Business Plan, Strategic Institutional Design and Implementation plan for an E-
Government Desk at the OECS to serve the member states\.
ï The provision of hardware, software and other ICT management tools through the
support of the World Bank and the CDB to strengthen the institutional capacity of
the ITSD and Government in general â for example, 5-year Enterprise Antivirus
for 500 users
ï The delivery of hardware to support and enhance human resource management in
the Public Service
ï The delivery of Standard Operating Procedures and the installation of a online
PFM Reporting System which interfaces SmartStream to provide general and
departmental reports\.
ï The delivery of PFM Gap Analysis Assessment reports, SmartStream Enterprise
Agreement document and Specifications document for a Budget Preparation
Software\.
ï The delivery of a Multipurpose Identification System for the purpose of vetting
and verification of identity with the ability to interface other e-Government
systems\.
ï The installation of a front-end e-Tax filing System with an E-Payments Gateway
for the electronic filing payment of taxes\.
ï The delivery of Gap Analysis, Assessment Reports and recommendations for
strengthening the procurement environment at the national and sub-regional levels
especially as it relates to e-procurement\.
ï The delivery of an Electronic Tendering System for the OECS Pharmaceutical
Procurement Service (E-PPS) currently being used for the Central Medical Stores
ï The delivery of a Business Plan for the customization of the E-PPS to be applied
to the electronic procurement of other goods and services at the national and
regional levels\.
ï The delivery of Draft HIS Policy and Legal and Regulatory Framework to support
65
the Health Information System in St\. Vincent and the Grenadines\.
Main Challenges Faced during Implementation
In spite of the successful implementation of the sub-components of the project, several
challenges existed during the implementation at the national level\. These challenges
included but were not limited to the following:
ï Inadequate institutional framework for the implementation of the project
ï Late responses and feedback to comments on the reports
ï Information sharing has at times been difficult to acquire between
ministries/departments hindering progress\.
ï Lack of understanding of the World Bank procurement guidelines and policies\.
ï Most stakeholders did not feel that they own the project but that of the
implementig ministry\.
ï Difficulty at times to get requesitions signed off after tasks/activities have been
completed\.
Key Lessons Learned
ï An assessment of the National ICT policy, strategy and action plan outlined
several e-Government initiatives being implemented to improve and
modernize the delivery of Government services; however these initiatives
while in themselves essential seemed to be detached from the broader
goal/programme of public sector reform, modernisation and transformation\.
Stakeholders were not fully aware of the National ICT Policy, Strategy and
Action Plan and any accompanying implementation plan\.
ï While activities stated in the plan have been and are being implemented, there
is no structured monitoring and evaluation framework in place to assess
outcome and impact
ï The National ICT policy, strategy and action plan was further reviewed and
assessed by the Mr\. Anthony Minn â Commonwealth Secretariat and Miss\.
Bernadette Lewis â Caribbean Telecommunications Union (CTU) in July and
September 2011 respectively\. Both recognized the role of a Champion to
deliver successful E-Government interventions and recommended that the
Prime Minister champions the implementation of the overall E-government
agenda given its centrality to the efficient and effective delivery of
government services\. In addition, the following were identified as critical for
the successful implementation of the strategy:
1\. Initiatives and activities must contribute to a coherent whole
2\. Manpower planning in terms of the quality and quantity of Human
66
Resources
3\. Review of business processes before systems are implemented or
upgraded
4\. Road map or implementation plan
ï The National (EGRIP) E-Government Steering Committee also noted the need
for a âwhole of governmentâ approach to the implementation of E-
Government initiatives and activities\. The Governance framework (National
ICT Forum), was not in place to guide, support and monitor the
implementation of the policy and strategy\.
ï Monies borrowed must be in a single currency so as to mitigate loss of funds
while transferring from SDR to USD\.
ï When activities are assessed, more National Input is required\.
ï Agencies promoting projects needs to be realistic in the budgetary allocations
with respect to projected implementation practices and costs\.
ï Change management must be included where necessary in any project
proposed\.
ï More open-source applications/solutions should be promoted in future project
proposals
Sustainability of the project's Achievements in the future
There are a number of activities that are necessary for the sustainability of the project's
achievements, these include:
1\. Continuous training of the TCO and GEA throughout the government service for
decision makers for ICT implementation\.
2\. Recommend and institute proper ICT governance framework government wide\.
Ensure Cabinet formed committee meets regularly to continuously monitor and
recommend changes as deemed necessary\.
3\. Closer collaboration with each island's personnel who may have specialized skills\.
67
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
CDB comments to the draft ICR to be included in this section\.
68
Annex 9\. List of Supporting Documents
ï Project Appraisal Document for Projects P100635 and P117087
ï Aide Memoires 2007-2014
ï Implementation Status Reports 2007-2014
ï Credit Agreements IDA-44510, IDA-44520; IDA-44530; and IDA-46500
ï Amendments to the Credit Agreements
ï Restructuring paper (June 2013)
ï âEGRIP Monitoring and Evaluation End of Project Reportâ\. Milva Edmunds-
Jerome\. February 2014\.
ï âEGRIP Grenada End of Project Report\.â Alice Naola Bain\. January 2014\.
ï âEGRIP Commonwealth of Dominica Final Project Reportâ\. Geneta Williams\.
January 2014\.
ï âEGRIP St\. Lucia End of Project Reportâ\. Kervyn Tobias\. January 2014
ï âEGRIP St\. Vincent and The Grenadines End of Project Reportâ\. Winston George\.
January 2014\.
ï Power Point Presentations by REGU management and accountant\. January 2014\.
69
Annex 10\. Rating of Project Outcome
The PDO was not modified during the life of the Project while KPIs were formally
modified twice, in April 2012 and in June 2013\. The decision to revise the KPIs was
agreed upon during the mid-term review mission in November 2011, to adapt the
indicators to the Project changes during implementation and better assess the progress
towards the PDO\. Several indicators were dropped because they were deemed too broad
and not adequate to measure outcomes attributable to the Project\. A second restructuring
formally took place on June 2013, after carrying out the procurement process of some of
the key systems in 2012, once the participating countries reached an agreement of the
systems to be financed under the Project, in light of their cost and the remaining
implementation time\.
The achievement of PDOs is rated overall as Moderately Satisfactory, as shown in the
table below, weighting the ratings for each period\. The M&E Framework with the 2013
restructured indicators are included in the data sheet\.
Against Against Against Revised Overall
Original Revised PDOs/KPIs
PDOs/KPIs PDOs/KPIs 2013
2012
Rating Moderately Moderately Moderately Moderately
Unsatisfactory Satisfactory Satisfactory Satisfactory
Rating value 3 4 4
Weight 26% 40% 34% 100%
(% disbursed )
Weight value 0\.80 1\.60 1\.36 3\.78
Final rating
70
Annex 11\. PAD and Restructured M&E Indicators
Outcome Indicators
PAD Indicators 2012 Restructuring 2013 Restructuring
Government financial savings in Dropped
areas such as public financial
management, tax administration,
customs and procurement due to
new e-Government systems
Estimated usersâ time and cost- Revised\. Average number of Revised\. Average number of
savings days to prepare annual budget\. days to complete the VAT filing\.
New\. Average amount of time to
process a Pharmaceuticals
procurement requisition order\.
Increase in the number of Revised\. Regional health Dropped\.
electronic transactions processed information system and regional
by regional e-Government customs information system are Number of new e-Government
applications installed and operational\. applications offered or upgraded
under the project
Increase in e-Government Revised\. Number of new e- Revised\. Target: 9\.
services offered or upgraded Government applications offered
or upgraded under the Project*
Total: 15\.
Improvement of ratings in areas Revised\. Quality measured Revised\. Quality measured
of functionality, accuracy and through focus groups by end through focus groups by end
usability of e-Government users of the: (i) public financial users of the MPID, e-Tax filing
services as reported by users management system; (ii) regional and EPPS systems\.
through satisfaction surveys custom information system and
(iii) MPID system\.
Improvement of ratings in areas Revised\. Creation of 4 national Revised\. Online publication of
of openness and access to PFM websites with open and Pharmaceutical procurement
relevant information, as reported transparent PFM data sets\. awarded contracts\.
by users through satisfaction
surveys
New regional institutional Revised\. Establishment of Revised\. Publication of an OECD
framework is created with Regional E-government desk at e-Government regionally
adequate capacity to provide new OECS Secretariat; hiring of the harmonized legislation bill by
regionally integrated e- senior E-government specialist; first quarter of 2012 approved by
Government services, in design the business plan for the OECS authority\.
accordance with regionally sustainability of the E-
harmonized policies and government desk completed\.
regulations
71
Annex 12\. Map of EGRIP-Supported Community Health Clinics in Saint Lucia
72 | REVIEW |
P004589 |  ICRR 10977
Report Number : ICRR10977
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 08/07/2001
PROJ ID : P004589 Appraisal Actual
Project Name : Irrig Oper Supp II (IOSP II) Project Costs 69\.60 68\.86
US$M )
(US$M)
Country : Philippines Loan/ US$M ) 51\.30
Loan /Credit (US$M) 47\.26
Sector (s): Board: RDV - Irrigation and Cofinancing
drainage (99%), US$M )
(US$M)
Agricultural extension and
research (1%)
L/C Number : L3607
Board Approval 93
FY)
(FY)
Partners involved : Closing Date 06/30/1999 12/31/2000
Prepared by : Reviewed by : Group Manager : Group :
Robert C\. Varley George T\. K\. Pitman Alain A\. Barbu OEDST
2\. Project Objectives and Components
a\. Objectives
The project objective, from the SAR, was "to improve and sustain the operational efficiency of the NIS [National
Irrigation System], thereby helping increase agricultural production (mainly rice), expanding small farmer incomes
and rural employment opportunities, and contributing to rural poverty alleviation \."
b\. Components
Total project costs of $ 68\.86 million comprised:
1\. Improvements to 18 selected NISs, 22 urgent repairs for structures in a further 14 NIS, the construction of 3
sediment exclusion structures, improved water control structures on a pilot basis and erosion prevention
measures in critical areas (52%\.)
2\. Continued budgetary support for measures to ensure the sustainability of system level operation and
maintenance (O&M) improvements achieved under IOSP I (36%\.)
3\. Institutional development through strengthening :
Existing Irrigation Associations (IA), establishing new IAs, and financial /management training to facilitate IMT
(Irrigation Management Transfer);
The National Irrigation Administration (NIA) to improve Irrigation Service Fee (ISF) collection, training in O&M,
design and financial aspects of system management, TA for studies and development work, as well as O&M
equipment and materials (11%)
4\. Agricultural Support Services (1%\.)
Comprehensive sector reforms, reflected in an Irrigation System Improvement Plan (ISIP) and Agriculture and
Fisheries Modernization Act (AFMA) in 1997, led to additions to project content during implementation \. At mid-term
in 1997 the scope of both systems improvements and institutional development were expanded \.
c\. Comments on Project Cost, Financing and Dates
The exchange rate fell from 25 to 50 Peso per US$ between appraisal and completion \. This increased the
purchasing power of the $ for the largely local currency components \. Some $4 million of the Bank loan was cancelled
in January and April 2001\.
3\. Achievement of Relevant Objectives:
1\. The project achieved its main objective and estimated increases in agricultural production are realistic - the ICR
contains unusually comprehensive, survey -based data and sound, conservative, economic analysis of impact \.
On balance, sustainability seems likely and the assumption that these incremental changes in production will
lead, through increased farmer income and rural employment prospects, to poverty alleviation, is highly
plausible\. The Incremental O&M component (unchanged in concept since IOSP I ), comprised 36% of project
costs and was estimated in OED's audit report of IOSP I to yield a return of 28-35% (compared to the 21% in the
SAR for IOSP II\.) For the system repair and improvement component, accounting for the balance of 64% of
costs, the ERR was re-estimated at 21% compared to 17% in the SAR\.
2\. 505,000 farm families have benefited (110% of SAR target) with incremental rice production at full development
94,000 tons/annum\.
3\. The project supported the formation of IAs and CIA \.
4\. The project provided incremental O&M support to all 165 NIS resulting in an increase in cropping intensity of 7%;
for the 17 NIS the increase was even greater with the that at full development estimated to reach 30% over the
baseline of 149% (compared to an SAR target of only 18% increase\.)
5\. In a major ICR survey involving 1,400 farmers, some in the 17 project NIS, and others in control areas, the
proportion of farmers giving top ratings for irrigation services increased by nearly 100%\. Timeliness, Equity of
Distribution and Adequacy were rated "just right", "equitable" and "adequate" by 67%, 52% and 67% of the
farmers (compared to 37%, 25% and 38% before IMT\.)
6\. 80% of the farmers and CIA/IA officials reported timely delivery and equitable distribution of water after the
project, compared to 40% before\.
4\. Significant Outcomes/Impacts:
Measured against the overall performance of the irrigation sector, the most significant impact of the project was its
contribution to momentum for reforms\. These changes took place during implementation and were embedded in
new supportive legislation as well as a follow -on Water Resources Development Project (WRDP): (i) technical
change - of the modality of operation from gated water control and distribution system to one based on long -crested
weirs for water control, and proportional dividers at turnout for water distribution; (ii) institutional change -
empowerment of IAs and establishment of CIAs (Federations and Council of IAs ) and, employing a contractual basis
for the division of labor between farmers and the NIA for secondary canal O&M \. AFMA mandated this transfer of
responsibility for O&M of secondary canals in larger irrigation systems (> 300 ha) ; (iii) Changes in cost -recovery
policy - negotiated shares of ISF collections and pilots to introduce volumetric measurement and wholesaling of
water to IAs; (iv) Self sustaining systems for O&M and rehabilitation to break the vicious circle of poor maintenance
and premature rehabilitation, by introducing stronger financial controls to ensure that ISF collections are applied
efficiently; (v) a proposal for downsizing NIA was formulated; and (vi) Elimination of direct and indirect O&M
subsidies to NIA was introduced as a long-term goal\.
The signing of IMT contracts between IAs and NIA after the completion of improvement works (a stronger foundation
for future farmer commitment to ISF), and the establishment of some CIAs (incorporating experience from Mexico's
successful IMT program) were milestone achievements\.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
1\. The agency's seeming lack of strong commitment to the reforms ( no initiative was taken by the NIA to
implement AFMA) was aggravated by the executive's (the President) mid-1998 populist decision to condone
nonpayment of ISF by the farmers \. This has seriously undermined two decades of efforts to increase
cost-recovery\. While budgetary commitments have increased to compensate NIA, this does not help its
long-term financial viability\. The ISF collections were only 53% of the appraisal target (less in real terms) and
met only 54% of O&M expenses, compared to 95% expected at appraisal\. The IA's share of ISF has declined \.
While the trend has been reversed, the net effect has been to diminish the capability of both IAs and the NIA to
undertake proper O&M of irrigation systems \.
2\. The project design was not very innovative, especially given the long experience and involvement of the Bank in
the political economy of irrigation reform \. While progress has been made, the sector is still dominated by an
overstaffed NIA and inadequate incentives and institutional design to support full implementation of the Bank's
water resource management policy \. Changes introduced in 1997 were designed to address some of these
concerns, but NIA has yet to experience any downsizing, and the financial control of funds collected through the
ISF (partially used to finance NIA) is still prone to bureaucratic capture and misuse of the funds (which may not
be translated into efficient main system O&M by the NIA but used to sustain NIA's staff establishment \.) While
some empowerment has been facilitated by project, the reform process is far from complete \.
3\. Consultant estimates of the desirable rate for O&M expenditures is $ 45/ha whilst that presently spent on the 17
NIS areas is only $30/ha\. While this is offset by substitution of lower cost IA /CIA labor for NIA inputs, the ICR
considers that 9 of the 17 NIS will still need some combination of increased ISF and reduced costs, to achieve
efficiency and sustainability \. The contribution of NIA resources (in the form of its commercial income and
budgetary allocation) can only be considered a short -term support to sustainability and would be threatened by a
rationalization of NIA size and function \.
4\. There was an 18-month delay in project closing due to inadequate budgetary allocations and a two year delay in
use of Bank loan proceeds for TA \. But the expansion in the scope of systems improvements and institutional
development was partly responsible for the delay \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Modest Modest
Sustainability : Likely Likely "Uncertain" would be a more appropriate
characterization given its dependence on
essentially unpredictable political
circumstances\. THe region's judgement is
that recommitment to reform by the new
government is likely\.
Bank Performance : Satisfactory Satisfactory The region has addressed some of the
concerns raised in the PPAR for IOSP I \.
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTE:
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
7\. Lessons of Broad Applicability:
1\. Despite two decades of irrigation sector reform, supported by other donors, the process is incomplete in the
Philippines\. A valid comparison is the "big bang" approach in Mexico which has made more progress in a
shorter time\. Even with a span as wide as the 6 years of IOSP II, intermittent changes in agency and political
leadership have seriously retarded the slow progress towards the achievement of policy goals \.
2\. A program approach is needed for irrigation sector reform and NIS improvement \. The IMT program, which
commenced under IOSP II, was based entirely on project specific agreements between the Bank and NIA for the
17 NIS\. IMT progress in other systems (for instance the Magat River Integrated Irrigation System ) has stalled,
and in other large NISs it remains uncertain \.
8\. Assessment Recommended? Yes No
9\. Comments on Quality of ICR:
This was a very good quality ICR and the economic analysis and survey results will help sustain the policy and
advocacy efforts of the Bank as it tries to implement the global water resources management policy \. Annex I is of
limited use - firstly the so called Log Frame Matrix is misnamed and secondly, even in a more modest role, it is of
little use to compare the "Actual/Latest Estimate "of an indicator to that "Projected in last PSR\." One would expect
the two values to be close whatever the baseline was \. It would be better not to pretend a Logframe of results is
presented if no baseline is available and the causal chain of "Inputs/ Outputs/ Outcomes/ Impact" are not elaborated\.
Unfortunately the format used in this ICR has been almost universally adopted by all the regions \. | REVIEW |
P035823 | Document of
The World Bank
Report No: ICR00001457
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(TF-28408)
ON A
GRANT
IN THE AMOUNT OF SDR 7\.831 MILLION
(US$ 10\.08 MILLION EQUIVALENT)
TO THE
GOVERNMENT OF THE ISLAMIC REPUBLIC OF PAKISTAN
FOR A
GEF-PROTECTED AREAS MANAGEMENT PROJECT
June 8, 2010
Environment, Water Resources, and Climate Change Sector
Sustainable Development Department
South Asia Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective February 28, 2001)
Currency Unit = Pakistani Rupee (Rs\.)
US$ 1\.00 = 57\.58
FISCAL YEAR
July 1 June 30
ABBREVIATIONS AND ACRONYMS
AJK Azad Jammu and Kashmir
CAS Country Assistance Strategy
CBO Community based organization
FMR Financial Monitoring Report
FPA Fund Protected Area
FY Fiscal Year
GA Grant Agreement
GDP Gross Domestic Product
GEF Global Environment Facility
GEO Global Environmental Objective
GOP Government of the Islamic Republic of Pakistan
ICR Implementation Completion Report
IP Indigenous Peoples
IPDP Indigenous Peoples Development Plan
ISR Implementation Status Report
LAC Local Advisory Committee
MELGRD Ministry of Environment, Local Government and Rural Development
M&E Monitoring and evaluation
MOE Ministry of Environment (formerly MELGRD, Ministry of Environment, Local
Government and Rural Development
MTR Mid-term review
NGO Non-government organization
NWFP North West Frontier Province
OD Operational Directive
OP Operational Policy
PA Protected Area
PAMP Protected Areas Management Project
PAD Project Appraisal Document
PDO Project Development Objective
VCC Village Conservation Committee
WVCC Women's Village Conservation Committee
ii
Vice President: Isabel M\. Guerrero
Country Director: John Wall
Sector Manager: Gajanand Pathmanathan
Project Team Leader: Malcolm A\. B\. Jansen
ICR Team Leader: Valerie Hickey
ISLAMIC REPUBLIC OF PAKISTAN
Protected Areas Management Project
CONTENTS
Data Sheet
A\. Basic Information\. vi
B\. Key Dates \. vi
C\. Ratings Summary \. vi
D\. Sector and Theme Codes\. vii
E\. Bank Staff \. vii
F\. Results Framework Analysis \. ix
G\. Ratings of Project Performance in ISRs \. xii
H\. Restructuring (if any) \. xii
I\. Disbursement Profile \.xiii
1\. Project Context, Global Environment Objectives and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes\. 8
3\. Assessment of Outcomes \. 14
4\. Assessment of Risk to Development Outcome\. 17
5\. Assessment of Bank and Borrower Performance \. 18
6\. Lessons Learned\. 21
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 22
Annex 1\. Project Costs and Financing\. 23
Annex 2\. Outputs by Component\. 24
Annex 3\. Economic and Financial Analysis \. 28
Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 29
Annex 5\. Beneficiary Survey Results \. 31
iii
Annex 6\. Stakeholder Workshop Report and Results\. 32
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 33
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 38
Annex 9\. List of Supporting Documents \. 39
MAP: IBRD 31282
iv
A\. Basic Information
Protected Areas
Country: Pakistan Project Name:
Management Project
Project ID: P035823 L/C/TF Number(s): TF-28408
ICR Date: 06/14/2010 ICR Type: Core ICR
Lending Instrument: SIL Borrower: GOP
Original Total
USD 10\.1M Disbursed Amount: USD 9\.4M
Commitment:
Revised Amount: USD 10\.1M
Environmental Category: B Global Focal Area: B
Implementing Agencies:
Ministry of Environment
Department of Tourism, Wildlife, Archaeology and Fisheries
Department of Wildlife
Environment, Livestock, Wildlife, Forests and Tourism Department
Cofinanciers and Other External Partners:
B\. Key Dates
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 10/17/1994 Effectiveness: 11/19/2002 10/25/2002
Appraisal: 12/01/1997 Restructuring(s): 07/13/2006
Approval: 04/24/2001 Mid-term Review: 07/22/2005 09/01/2005
Closing: 12/31/2007 12/31/2009
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Moderately Satisfactory
Risk to Global Environment Outcome Moderate
Bank Performance: Satisfactory
Borrower Performance: Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory
Implementing
Quality of Supervision: Satisfactory Moderately Satisfactory
Agency/Agencies:
Overall Bank Overall Borrower
Satisfactory Moderately Satisfactory
Performance: Performance:
i
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Indicators Rating
Performance (if any)
Potential Problem Project Quality at Entry
No None
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No Satisfactory
time (Yes/No): Supervision (QSA):
GEO rating before Moderately
Closing/Inactive status Satisfactory
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
General agriculture, fishing and forestry sector 56 60
General public administration sector 5 10
General transportation sector 7
General water, sanitation and flood protection sector 7 5
Other social services 25 25
Theme Code (as % of total Bank financing)
Biodiversity 20 40
Environmental policies and institutions 20 20
Export development and competitiveness 20
Participation and civic engagement 20 20
Rural policies and institutions 20 20
E\. Bank Staff
Positions At ICR At Approval
Vice President: Isabel M\. Guerrero Mieko Nishimizu
Country Director: Asif Faiz John W\. Wall
Sector Manager: Gajanand Pathmanathan Ridwan Ali
Project Team Leader: Malcolm A\. B\. Jansen Najib Murtaza
ICR Team Leader: Valerie Hickey
ICR Primary Author: Valerie Hickey
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F\. Results Framework Analysis
Global Environment Objectives (GEO) and Key Indicators(as approved)
The development objective of the project is to achieve the sustainable conservation of
globally and nationally significant habitat and species within three protected areas
(Chitral Gol National Park in NWFP, Hingol National Park in Balochistan and Machiara
National Park in AJK) in Pakistan by the active involvement of local communities\. This
objective is to be specifically achieved through the following interventions: (i) Protected
Area Biodiversity Conservation Management, which includes the following sub-
components: (a) integration of custodial committees in park management and
conservation; (b) preparation and implementation of park management plans; (c)
improvement of park infrastructure; (d) improvement of park operations; (e) baseline
resource inventory, research, habitat improvement and wildlife enrichment; and (f) public
awareness and outreach; (ii) Sustainability of park management; (iii) Human resource
development; and (iv) Project coordination and monitoring\.
Revised Global Environment Objectives (as approved by original approving authority)
and Key Indicators and reasons/justifications
(a) GEO Indicator(s)
Original Target Formally Actual Value
Values (from Revised Achieved at
Indicator Baseline Value
approval Target Completion or
documents) Values Target Years
Reduction in loss of species and vegetation in the three protected areas by end of
Indicator 1 : project period (i) improvement in cover density (ii) selective single species
numbers increased
(i) CHITRAL -
(i) Increase in
markhor population
cover density;(ii)
from 370 to 800 (ii)
markhor
MACHIARA -
population in
musk deer (35 to
Chitral; musk deer,
72), Grey Goral
grey goral, western
(100 to 384),
Value tragopan and
Western Tragopan
(quantitative or monal pheasant
(75 to 122) and
Qualitative) populations in
monal pheasant
Machiara; and
(238 to 436);(iii)
Ibex,Urial and
Hingol-Ibex (1400
Chinkara
to 2000),Urial (350
population in
to 500) and
Hingol stable at
Chinkara (150 to
end of project,
200)\.
Date achieved 11/01/2001 10/15/2009
Comments Cover density was considered diffucult to measure and attribute to a project of
iii
(incl\. % relatively short duration\. Changes in population numbers were measured as
achievement) these provided a more direct and useful means to measure the impact of the
project\.
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Reduction of unregulated grazing and timber/fuelwood collection within core
Indicator 1 :
zones of protected areas by 20% by mid-term and 40% by end of project
CHITRAL: 90%
grazing reduction
;90% fuelwood
Reduction of
reduction and 100%
unregulated
reduction in timber
grazing and
collection
timber/fuelwood
Value HINGOL: 45%
collection within
(quantitative or livestock reduction
core zones of
Qualitative) (26,000)
protected areas by
MACHIARA - 61
20% by mid-term
% of pasture lands
and 40% by end
under controlled
of project
grazing regimes;
and 40% reduction
in fuelwood use
Date achieved 11/01/2001 10/15/2009
Comments
(incl\. % All targets for threat reduction were exceeded during the life of the project\.
achievement)
Indicator 2 : Reduction in poaching by 30% by mid-term and 60% by end of project
Based on sample
Reduction in site assessment
Value poaching by 30% poaching reduced
(quantitative or by mid-term and by 95% in Chitral;
Qualitative) 60% by end of 100% reduction in
project Machiara and 60%
reduction in Hingol
Date achieved 11/01/2001 10/15/2009
Comments
(incl\. % Reduction of poaching targets were exceeded\.
achievement)
Number of village conservation committees effectively implementing
Indicator 3 :
conservation related outcomes
Value 57 village 51 village
(quantitative or committees and conservation
Qualitative) cluster community committees
iv
organizations effectively
functioning in all implementing
three national conservation
parks activities and
cluster community
organizations
established in
Chitral, Machiara
and Hingol
Date achieved 11/01/2001 10/15/2009
Comments
a few villages were clustered for implementation simplification but all
(incl\. %
households were covered through the 51 VCCs
achievement)
Indicator 4 : Changes in incomes of households affected by restrictions in resource use
Based on sample
site assessment
Value 10% change in
incomes increased
(quantitative or households
between 0-20% of
Qualitative) incomes
sampled VCC
members
Date achieved 11/01/2001 10/15/2009
Comments
(incl\. %
achievement)
Additional non-project resources channeled to Village Committees in project
Indicator 5 :
area for conservation and development activities
i) MACHIARA -
PKRs\. 525\.09
million for
community
activities
(irrigation, health,
skills devt); (ii)
Value
HINGOL - PKRs
(quantitative or none
20 million for
Qualitative)
community activity;
and \. (iii)
CHITRAL - PKRs
4\.3 million for
sewerage systems,
irrigation channel
rehab\. etc (iii)
Date achieved 11/01/2001 10/15/2009
Comments
This was an indicator added during the project ot reflect the effectiveness and
(incl\. %
usefulness of VCCs beyond the project\.
achievement)
v
G\. Ratings of Project Performance in ISRs
Actual
Date ISR
No\. GEO IP Disbursements
Archived
(USD millions)
1 10/19/2001 Satisfactory Unsatisfactory 0\.00
2 05/10/2002 Satisfactory Unsatisfactory 0\.00
3 10/30/2002 Satisfactory Satisfactory 0\.00
4 01/21/2003 Satisfactory Satisfactory 0\.10
5 06/11/2003 Satisfactory Satisfactory 0\.20
6 12/22/2003 Satisfactory Satisfactory 0\.46
7 06/17/2004 Satisfactory Satisfactory 0\.65
8 12/06/2004 Satisfactory Satisfactory 0\.81
9 06/06/2005 Unsatisfactory Moderately Satisfactory 1\.22
10 11/19/2005 Unsatisfactory Moderately Satisfactory 1\.88
11 05/05/2006 Satisfactory Satisfactory 2\.23
12 08/01/2006 Satisfactory Satisfactory 2\.86
13 03/09/2007 Satisfactory Satisfactory 3\.65
14 08/14/2007 Satisfactory Satisfactory 4\.27
15 04/02/2008 Satisfactory Moderately Satisfactory 4\.90
16 11/28/2008 Moderately Satisfactory Moderately Satisfactory 5\.49
17 03/19/2009 Moderately Satisfactory Moderately Satisfactory 7\.72
18 09/29/2009 Moderately Satisfactory Moderately Satisfactory 8\.30
H\. Restructuring (if any)
ISR Ratings at Amount
Board Restructuring Disbursed at
Restructuring Reason for Restructuring &
Approved Restructuring
Date(s) Key Changes Made
GEO Change GEO IP in USD
millions
To reallocate funds from
existing unutilized funds
available in the Ministry of
Environment (MOE) and
07/13/2006 N S 2\.73
Balochistan budget line items
to consolidate ongoing activities
and provide additional funds to
AJK\.
vi
I\. Disbursement Profile
vii
1\. Project Context, Global Environment Objectives and Design
1\.1 Context at Appraisal
a\. Country Background\. With its dramatic geological history, broad latitudinal
spread and immense altitudinal range, Pakistan spans a remarkable number of the world's
broad ecological regions\. These range from the coastal mangrove forests of the Arabian
Sea to the spectacular mountain tops where the western Himalayas, Hindu Kush and
Karakoram ranges meet\. This variety of habitats also supports a rich variety of different
species which contributes to the overall biological diversity (biodiversity) of the country\.
The project context was determined by the principal role that natural resources
play in driving Pakistan's rural economy and in providing livelihoods to a majority
of its population\. The Government of Pakistan (GOP) was aware that the pursuit of
rapid, decentralized economic growth, as was then happening, might occasion the loss of
natural resources on which economic development ultimately depended\. As such, they
acknowledged the need to marry better resource stewardship to the execution of its
development strategy\. In the absence of environmental sustainability, economic policies
would further widen inequalities and force rural people and others to exploit biodiversity
at rates that would not be sustainable\. As a result, processes such as deforestation,
overgrazing, soil erosion, and salinity would escalate and have increasing and immediate
implications for the nation's development in general and for the survival of rural
communities in particular\.
b\. Sector Background\. Natural resources land, forests, fisheries, mineral wealth
and tourism potential featured prominently in Pakistan's development prospects\. At the
same time, government capacity to sustainably manage these resources was limited\.
Deforestation threatened the forests and was the primary environmental issue of the day\.
The resource conservation that did exist was chiefly donor-executed, uncoordinated,
unaccountable to the Ministry of Environment, Local Government and Rural
Development (MELGRD) and often implemented with the provincial governments
playing only minor supporting roles\. MELGRD was restructured during the project
period to become the Ministry of Environment (MOE), but it retained oversight for the
project throughout its lifespan\.
The primary issues in the sector involved the rapid loss of quantity and quality of
natural habitat leading to the depletion of species, populations and genetic diversity\.
Habitat loss, fragmentation and degradation caused by deforestation for commercial
and agricultural purposes, grazing of rapidly increasing livestock populations, fodder
collection and soil erosion resulted in a high rate of extinction\. Deforestation had
reduced natural forests (coniferous, riverine and mangrove) to just 4% of the land area,
and remaining woody biomass was declining at a rate of 4-6% annually\.
Species were also adversely affected by poaching and other factors that reduce
population viability\. Hunting, for which there continues to be a strong tradition in
1
Pakistan, had seriously affected several charismatic species, including threatened bird
populations, such as the Houbara Bustard\. Over-fishing and rampant and unregulated by-
catch problems were underlying causes of species loss in the marine environment\.
Although the GOP had established environmental agencies at both national and
provincial levels, these were relatively new, lacked clarity over implementation
responsibilities, faced a severe shortage of properly trained personnel and had little
enforcement capacity\. The protected area (PA) system, in particular, was an apt
example of these weaknesses\. Of the 189 PAs in Pakistan at that time, most existed only
on paper\. Management plans were few and far between, and where they did exist they
were almost invariably technically deficient\. Further, management of PAs was widely
seen as a policing matter with little or no active participation of local communities\.
Physical demands on existing staff and equipment levels were also high for example,
the ratio of area conserved per staff member reached up to 7,537 ha per ranger in
Balochistan\.
The lack of adequate baseline information on natural resources in PAs was another
factor that hindered biodiversity conservation\. No inventories of plant and animal
species had been undertaken\. This restricted an accurate analysis of populations of key
species, which meant that it was impossible to capture changes in their numbers over a
period of time or to understand the effect of conservation initiatives\. Awareness building
mechanisms for increasing public support toward conservation issues were minor\. They
were mostly driven by non-government organizations (NGOs) who targeted narrow
audiences in ad hoc manners\.
c\. Existing Government Initiatives\. GOP's strategy on conservation of biodiversity
had largely been defined by the establishment of an institutional framework, development
of legal and policy infrastructure, and the establishment of a PA system\.
The institutional framework was divided into two parts\. At the federal level, the
Government, specifically the Ministry of Environment (MOE), was responsible for
overall policy and planning, inter-provincial and territorial coordination and
international liaison for environmental concerns\. Wildlife and Protected Areas issues
are coordinated through its National Council for Conservation of Wildlife, established in
1974\. Its office of the Inspector General of Forests conducts all policy, coordination and
liaison matters related to forests, rangeland and wildlife management\.
Actual conservation and management of biodiversity remained the responsibility of
the provincial administrations\. Institutions at this level varied in terms of structure,
budgets and implementation capacity\. In North-West Frontier Province (NWFP),
Balochistan and Northern Areas, wildlife continues to be administered through the
Forestry Department's Wildlife Division\. In Azad Jammu and Kashmir (AJK), this
responsibility falls to the Department of Tourism, Wildlife, Archaeology and Fisheries\. In
Sindh, the Wildlife Conservation Board oversaw all wildlife management and
conservation issues\. After Punjab, Sindh had the highest budget for wildlife management
(Rs\.29 million in FY 1998), followed by NWFP (Rs\.21 million)\.
2
The federal government's principal policy instrument on biodiversity conservation
is the National Conservation Strategy, developed in 1992, which called for
(i) developing a national policy on wildlife management; (ii) strengthening the protected
area system; and (iii) improving the legal and policy architecture to promote
conservation\. This built on the updated Forestry and Wildlife Policy of 1991 that had
emphasized the need to reduce deforestation, conserve forests and biological diversity,
promote social forestry and contain environmental degradation in watersheds and
catchment areas\. In 1999, the Government completed its first Biodiversity Strategy and
Action Plan that set out a strategy for action under thirteen main components which
corresponded to the Articles of the CBD: planning and policies, legislation, identification
and monitoring, in-situ conservation, ex-situ conservation, sustainable use, incentive
measures, research and training, public education and awareness, environmental impact
assessment, access issues, exchange of information, and financial resources\.
This policy framework was operationalized in legislation enacted at the provincial
level, including through the Sindh Wildlife Protection Ordinance (1972), the Punjab
Wildlife Act (1974), the Balochistan Wildlife Protection Act (1974), the NWFP Wildlife
Act (1975), the Northern Areas Wildlife Protection Act (1975), the Azad Jammu and
Kashmir Wildlife Preservation Act (1975), and the Islamabad Wildlife Ordinance (1979)\.
Pakistan's protected area system consisted of ten national parks, 82 wildlife
sanctuaries, 83 game reserves and 14 private unclassified reserves\. In FY1998, all
provincial governments combined planned to spend Rs\. 170 m managing their respective
PAs\. Often, these budgets were considered fungible and the first to be reduced in the face
of economic stresses\.
d\. Country Assistance Strategy\. The Country Assistance Strategy (CAS, 1999)
identified the deterioration of Pakistan's natural resources as a key concern, and rough
estimates attributed partial costs of environmental damage and pollution to the economy
at about 3% of GDP per year\. The conservation of Pakistan's natural resources, including
biological diversity, was named an urgent priority\. The Protected Areas Management
Project (PAMP) was fully consistent with the CAS and indeed complemented it by filling
an important niche in the existing program of activities, particularly in the natural
resources sector\.
e\. Rationale for Bank Assistance\. Endangered species and threatened critical
habitats were most likely to continue to decline in the absence of the project\. GOP lacked
the resources to invest in biodiversity conservation despite its professed stake in
conserving natural resources because of their key role in sustaining rural livelihoods and
driving national economic opportunities\. Staff skills would remain weak, and
communities would remain excluded from decision making about the very natural
habitats that formed the source of their livelihoods\.
Moreover, the World Bank had a long-standing and productive partnership with
Pakistan since the early 1990s, mainly through supporting programs aimed at
3
stewarding natural resources through improved land and water management\. Based
on this, the Bank's involvement was a logical continuation of such partnership, and was
instrumental to the decision to pilot this ambitious conservation project in three provinces
to serve as a catalyst to mobilize and reorient the Government's conservation programs
towards co-management with local communities who were most immediately at risk
should these resources disappear\.
1\.2 Original Global Environment Objectives (GEO) and Key Indicators (as
approved)
The project development objective (PDO) of the project was to achieve the sustainable
conservation of globally and nationally significant habitat and species within three
protected areas in Pakistan (Chitral GoI National Park in NWFP, Hingol National Park in
Balochistan and Machiara National Park in AJK) through the active involvement of local
communities\.
This objective was to be specifically achieved through the following interventions:
(a) integration of custodial committees in park management and conservation;
(b) preparation and implementation of park management plans; (c) improvement of park
infrastructure; (d) improvement of park operations; (e) baseline resource inventory,
research, habitat improvement and wildlife enrichment; and (f) public awareness and
outreach\.
The Project Appraisal Document (PAD) included slightly inconsistent project
performance indicators (one set in the main text and a less explicit one in the Project
Design annex)\. This Implementation Completion and Results Report (ICR) uses the
indicators as presented in the main text, since this version was agreed during negotiations
and was subsequently used, with some modifications, for Implementation Status Reports
(ISRs), a Global Environment Facility (GEF) evaluation and for overall assessment of the
outcome of the project\.
These key outcome indicators for measuring the achievement of the project development
objective was presented as: Reduction in loss of species and vegetation in the three
protected areas by the end of the project period, by showing (a) an improvement in cover
density, and (b) an increase in numbers of an indicator species\. Intermediate indicators
included (i) Reduction of unregulated grazing and timber/fuelwood collection within core
zones of protected areas by 20% by mid-term and 40% by end of project; (ii) Reduction
in poaching by 30% by the project's mid-term and 60% by its end; (iii) Number of village
conservation committees (VCCs) effectively implementing conservation related
outcomes; (iv) Changes in incomes of households affected by restrictions in resource use;
and (v) Additional non-project resources channeled to VCCs in the project area for
conservation and development activities\.
This final intermediate indicator was added, and subsequently monitored, only towards
the end of the project period\. In terms of the outcome indicator on improvement in cover
density, this was subsequently considered to be too difficult to measure, and more
4
importantly, impossible to attribute to the project within its life span\. As such, it was
considered that monitoring the changes in selected species was a more accurate measure
of the health and conservation status of the individual protected areas\. As a result, this
indicator (along with the intermediate indicators that monitored any reduction in
timber/firewood collection, grazing and/or poaching) was considered sufficient to
measure progress towards achievement of the project development objective\.
The two additional indicators that appeared in the Annex of the PAD, namely (i) active
Village Conservation Committees achieving reductions in wildlife and management
conflicts within PAs and buffer zones; and (ii) local awareness of linkages between PA
management, biodiversity conservation and community/household welfare were tracked
using existing intermediary indicators, namely reductions in unregulated grazing and
timber/fuelwood collection and reductions in poaching\. These twin indicators provided a
measurable and verifiable means of assessing the effectiveness of VCCs in the
management of conflicts within PAs, and their understanding and appreciation of the
explicit linkages between biodiversity conservation and local welfare\.
1\.3 Revised GEO (as approved by original approving authority) and Key Indicators,
and reasons/justification
The original objective was not modified and the associated outcome targets remained
unchanged throughout the duration of the project\. However, the Grant Agreement (GA)
was amended following the Mid-term Review (MTR) to extend the closing date from
December 31, 2007 to December 31, 2009\. Additionally, on May 22, 2009, the GA was
further amended in order to reallocate funds from existing unutilized funds available in
the Ministry of Environment (MOE) and Balochistan budget line items to consolidate
ongoing activities and provide additional funds to AJK\. Additional details are provided in
Section 2\.2 (Implementation)\.
1\.4 Main Beneficiaries
a\. Primary target group\. Primary stakeholders included affected communities that
were resident in and around the PAs who made use of resources within core and buffer
zones\. In Machiara, these numbered around 2,800 households, in Chitral Gol about 1,900,
and in Hingol around 750\. Among this primary target group, women, poor households
and indigenous people (e\.g\. the Kalash community in Rumboor valley, bordering Chitral
Gol PA) were to be paid special attention to ensure that the project provided particular
benefits to them due both to their dependence on resources in the parks and buffer zones,
and their vulnerability\.
b\. Other key stakeholders\. Other important stakeholder groups consisted of NGOs,
community-based organizations (CBOs), governmental agencies, and the private sector\.
NGOs were an important stakeholder group, particularly in the Chitral Valley, because of
their active involvement in biodiversity conservation and social mobilization\. Other
potential stakeholders included the private sector, particularly individuals and business
concerns that had a direct or indirect interest in biodiversity conservation, nature tourism
5
and resource extraction\. The benefit of involving private businesses and individuals,
particularly with regard to ensuring sustainability, was a major reason for including them
as important stakeholders\. There were also foreign-funded development projects in the
area, including the Chitral Area Development Program and the Environmental
Rehabilitation Program, which were semi-governmental in nature, and with whose
project implementation units PAMP engaged\.
1\.5 Original Components (as approved)
Component 1\. Protected area biodiversity management\. This component consisted of
six sub-components, as follows:
Process framework for participation of custodial communities in park management
and conservation\. Since the exact social impacts of village level investments were
only be identified during project implementation, the Process Framework was to
ensure that mitigation of any negative impacts deriving from restrictions on access by
local communities to resources in the PAs would be based on participatory resource
mapping involving the affected stakeholders, and on their consent regarding the scale
of the restrictions and the type of mitigation measures to compensate any loss of
income\. This was to comply with the Bank OD 4\.30 on Involuntary Resettlement (OP
4\.12 today) and OD 4\.20 on Indigenous Peoples (OP 4\.10 today)\.
Formulation of detailed park management plan and strategy\. The project planned to
strengthen park management through integrated activities leading to the development
and implementation of a five-year detailed Management Plan and Strategy for the
three parks\. Since a draft management plan existed for Machiara, the entry point for
project-related management support was at the updating stage, but other management
planning actions such as training in park planning and management, data gathering,
field surveys, research studies and community-based socioeconomic assessments and
base-map preparation were still relevant and supported under the project\.
Improvement of park infrastructure\. In order to improve the management of the PAs,
the project was to provide limited support for the improvement of park infrastructure,
including trails, bridges, trekking huts, camp sites with outdoor toilets, cooking
facilities, wildlife observation posts, small road maintenance works and repairs, water
and waste disposal facilities, signage and patrol huts\. The type of infrastructure works
would vary from PA to PA and would not include all of the above facilities in each\.
Improvement of park operations\. Depletion of species populations by hunting and
poaching represented the primary threat to biodiversity in all PAs\. Toward this end,
the project planned to support the installation of surveillance measures, increase law
enforcement, improve monitoring of species, habitat conditions and disturbances as
well as enhance community appreciation of biodiversity and participation in
conservation\.
6
Baseline resource inventory, research, habitat improvement and wildlife enrichment\.
In order to achieve the project objectives, an understanding and appreciation of the
underlying ecological and human systems and processes operating within and around
each PA was required to carry out baseline resource inventory, research and other
management activities\. In all three project PAs, there was a paucity of information on
the ecological and socioeconomic issues, making it necessary to mount a serious
effort to generate critical baseline information required for PA management and
results monitoring\.
Public environmental awareness and outreach\. Biodiversity conservation can only be
sustained if the will exists at all levels of society to act in a concerted and organized
manner to ensure environmentally sensitive resource use and management\. The
project planned to implement an awareness campaign targeted at politicians, leaders
of industry, foreign hunters, the military, the Pakistan Coast Guard, local schools and
communities to build this will\. Nearby urban centers also represented important
elements in securing public support, as exemplified by the City of Karachi (the source
of many hunters and fishermen who visited Hingol whether for legitimate or unlawful
purposes)\. Environmental awareness and outreach programs needed to be very site-
specific, so that the activities developed highlighted the special significance of the
particular PA, its role in conserving global biodiversity and the importance of
community-based management and conservation in achieving both short-term and
long-term objectives and goals\.
Component 2\. Sustainability of park management\. In order to ensure long-term
sustainability beyond the life of this GEF grant, the project promoted public/private
cooperation in the achievement of long-term biodiversity conservation by assisting with
technical assistance and limited cost-sharing arrangements, private sector activities,
income-generation activities (e\.g\., improved agricultural output activities, ecotourism,
and user entrance fees) and nonprofit fund-raising activities\. Given the limited tourist
visitation levels for the foreseeable future given the security situation, the project
proposed the establishment of a non-profit entity, the Park Association, to capitalize and
manage a trust fund to complement efforts to strengthen institutional capacity,
community participation and enforcement, surveillance and park management in order to
ensure sustainability\.
Component 3\. Human resource development\. The project was to support a strong
training program to build capacity within the requisite wildlife departments for improved
park management\. Elements of the training program ranged from "on-the-job" training by
international specialists to workshops and study tours covering a range of topics from
legal and policy reform to tourism management\. The Smithsonian Institution was to be
requested to conduct a special 5-7 week training course in Conservation Biology and
Wildlife Management based on the many workshops it had held in the region\. The project
was also to support diploma and certificate courses as well as Master's degree courses in
Pakistan (2 slots per PA) and overseas (one slot)\.
7
Component 4\. Project coordination and monitoring\. Although the field-level
execution of the project was to be the responsibility of the respective Provincial
Governments through their wildlife or forestry departments, some level of coordination
would be necessary at the federal level\. The most important aspect of this coordination
role was facilitating the development of policy and legislation relating to protected areas
and ensuring that standardized systems were established at each level\. The project was to
provide support for a full-time Facilitator and short-term National Legal Specialist to
provide guidance and advice on wildlife policy and legal reform\. In addition, technical
assistance services were to be available for the design of the Park Association and to
conduct a Tourism Feasibility Study and Strategy for the three parks\.
1\.6 Revised Components
The components were not modified during implementation\.
1\.7 Other significant changes
Ongoing supervision missions, confirmed by the Mid-Term Review, revealed (a) a glut of
savings in the Balochistan budget line item due to slow start up of activities that reduced
spending on consultants, (b) the dearth of international consultants available to develop
an ecotourism strategy at the federal level under the supervision of the MOE, and (c) the
need to avoid community return to exploitation of PA natural resources in a post-
earthquake situation and to re-affirm their continued engagement in conservation\. As a
consequence the following changes were made: (i) an extension of the closing date until
December 31, 2009; and (ii) a reallocation of funds from the MOE and Balochistan
budget line items mainly to consolidate activities in AJK related to community revolving
funds and rural micro-enterprises\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
Following the Millennium Summit of 2000 and the 2002 World Summit on Sustainable
Development, poverty reduction had become the overriding focus that guided
international assistance to conservation\. Accordingly, international support for
biodiversity conservation was increasingly driven by social and economic objectives, and
especially by its touted ability to contribute to poverty reduction\. This project was
premised on this model and was well prepared in light of the available information, at
that time, on maximizing development and conservation gains\.
a\. Lessons learned and reflected in the project design\.
Establishing clear linkages between economic benefits and resource conservation\. The
benefits of long-term sustained economic resource flows from conservation such as
through tourism and employment in PA management were found to be essential to ensure
sustainability in several conservation projects at the time, particularly in the India
8
Ecodevelopment Project\. This project also highlighted that support for alternative
livelihoods and provision of alternative means to meet benefits derived from PAs was
contingent on cost sharing by local communities\. This lesson was incorporated in the
proposed project at the PDO level by focusing on community co-management and at the
sub-component level by establishing reciprocal agreements with communities regarding
continued limited resource use that provided them alternative financial flows to mitigate
their loss of resource access in PAs\.
Building understanding and consensus among stakeholders\. A key lesson from other
projects in the sector illustrated the need to build consensus among stakeholders on
project objectives, activities and roles\. In the proposed project, mechanisms for consensus
building created at the preparation stage such as the local advisory committees were
built upon and continued during the implementation phase\.
Planning for long term sustainability\. Providing start up funding, appropriate asset
management arrangements and assessing the legal framework for the establishment of a
trust fund were important lessons that had begun to appear in the sector\. At the time of
project preparation, conservation trust funds (such as the Bhutan Trust Fund for
Environmental Conservation) were beginning to take shape internationally\. Experience
with these funds highlighted the value of having reliable funding available during the
initial stages of a trust fund to begin investing in activities before investment income
becomes available\. PAMP planned its activities around the notion of establishing a Park
Association early in the project that would be capitalized with $2 m in seed funding\.
However, the Association was established late in the project and the opportunity to bridge
its beginnings until it was flush with investment income was squandered\.
b\. Design flaws\. Allocating equal budgets to each park despite disparate political
environments, level of apparent support and status and origin of threats to the resource
base did not provide the project with sufficient flexibility to meet the specific needs of
each park\. Similarly, the focus on establishing a trust fund as the key mechanism to
ensure the financial sustainability of the community co-management architecture and the
park infrastructure more broadly, coupled with the failure to operationalize this idea early
in the project, burdened the project with a relatively unrealistic component from the very
beginning\. Moreover, the size of the trust fund, at US$2 million, was a gross
underestimation of what would be needed to earn the investment income that could
realistically continue project activities in each park\.
In addition, the monitoring framework developed at the appraisal stage of the project
(Annex 1 of PAD) was vague and had to be modified during projects negotiations
(revised monitoring framework in main text of PAD) and later in the project
implementation to enable a more realistic assessment of implementation progress\. The
revised monitoring framework included a specific indicator "reduction in loss of selected
threatened species in the three protected areas" that enabled a more realistic assessment
of success of the project in the conservation of the globally important species (and
indirectly their habitats) in the three protected areas\. This replaced an earlier indicator on
9
forest cover\. The monitoring of the revised indicators was regularly undertaken and
reported\.
c\. Risk assessment\. Risk identification was both comprehensive and objective, and
resulted in an overall rating of Substantial\. It covered generic risks from community
participation and ownership to lack of financial resources in the long term, but also
highlighted early on two risks that could have derailed the project\. The project team
worked with the responsible parties to affect policy change prior to the approval of the
project to reduce the likelihood of these risks undermining the project, and continued to
monitor the situation throughout the life of the project\.
The first of these concerned a part of the Chitral Valley that was disputed by the ex-
Mehtar (chief) of Chitral\. To mitigate the risk, the project worked with the GOP to
change the law gazetting Chitral National Park such that (i) private lands within the park
boundaries remained under their current status, and (ii) without prejudice to the objective
of biodiversity conservation, the rights of the owners of private lands within the Park
would be fully respected under the laws of Pakistan\. Until such time as these changes
became law, this risk became a reality, slowed project activities and made community
consensus all that much more difficult at the start-up of the project\.
The second such risk concerned ongoing logging activities in Machiara National Park
financed by an AJK parastatal Azad Kashmir Logging and Sawmill Corporation\.
However, following a rapid review of the practice by the project team, the provincial
government terminated all logging operations as of December 31, 1999, prior to the
commencement of the project\.
Notwithstanding the project's commendably frank assessment of risk, there was one
glaring admission\. While the Park Association trust fund was designed to mitigate the
risk of a lack of available resources to sustain project outcomes and continue to engage
local communities, it was poorly designed and the risk of it failing given the potentially
fragile political and financial environment in Pakistan and the lack of trust fund
experience in similar environments was never assessed\.
2\.2 Implementation
Key factors that affected implementation included:
The project's new approach to PA management, based on increased community
consultation and participation, increased ownership and capacity building, but
slowed implementation considerably as government staff took on new roles and
engaged a larger number of stakeholders than they had traditionally\.
The implementation of a significant portion of the project through provincial
governments fostered (even required) more rapid capacity development than donor-
executed conservation projects typically required in Pakistan, but their limited
conservation and project management experience remained a constraint to
10
implementation at the initial stages of the project\. However, with improved capacity
building and training, implementation progressed rapidly in the second half of the project\.
The implementation of a significant portion of the project through provincial
governments vaccinated the federal authorities against learning lessons at the site-
level that could have been applied more broadly to community co-management projects
throughout Pakistan\. The decision to move significant aspects of project implementation
to the provincial governments was deliberate on account of the very weak capacity at the
federal level and the understanding that overall responsibility for management of wildlife
and forests rested with the provincial governments\.
Provincial authorities in Balochistan were slow to buy into the objectives of the
project, leading to slow start up of activities, a lag in disbursement, and a delay in
consolidating village institutions\.
The remote location and difficult field conditions, particularly related to security
concerns, affected oversight and supervision\. This also resulted in limited
communications between the three parks and between each park and the federal
government\. These conditions also severely limited World Bank supervision and the
recruitment of adequate technical assistance to guide activities\.
The massive earthquake in AJK in 2005 resulted in a sudden shift in provincial and
community priorities away from long term resource stewardship and towards more
immediate survival concerns\. However, the strong community institutions created by the
project in the earthquake-affected areas enabled the effective and timely mobilization of
post earthquake assistance and support to the affected communities and ensured that
long-term conservation goals were not compromised\.
The slow start to the project, partly based on issues arising from the proposed
development of a hydropower facility in Hingol, affected staff morale and focused
management attention on problems in some areas rather than on outputs and outcomes
in others, resulting in some activities being delayed\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
The outcome indicators in the Appraisal PAD (Annex 1) were relevant but not
precise, and changed over the life of the project\. The most precise indicators (in the
main section of the PAD) were developed and agreed during project negotiations, and
modified further during early project implementation to allow for more accurate tracking
of effectiveness of conservation management, monitoring of village community
institutions and improvements in household incomes\. These indicators were then
monitored regularly during the project period\.
The most precise indicators relate to the reduction of external pressures and changes in
population of selected species, based on a weak threat analysis and incomplete
environmental baseline information\. Other indicators particularly those relating to VCCs,
11
referred to unspecified levels of improvement, though they were backed by strong data on
livelihoods\.
M&E is rated as Moderately Satisfactory\. Internal and external monitoring and
reviews largely took place as scheduled based on the revised monitoring framework and
indicators refined and developed during early project implementation\. The quality of
biodiversity and socio-anthropological M&E was raised to international standards with
the assistance of a number of expert NGOs (e\.g\. WWF, IUCN)\. However the absence of
a complete biodiversity baseline at the start of the project meant that considerable effort
was needed to establish and refine baseline indicators during the early period of the
project\. Moreover, in order to reduce dependence on external TA for scientifically sound
M&E, PA patrol and monitoring staff required considerably more field training than
given to ensure accurate detection, analysis and estimation of species abundance\.
Nonetheless, the team was able to assess implementation progress by systematically
tracking current numbers as part of supervision and they reported regularly on them
through the Implementation Status Reports\.
2\.4 Safeguard and Fiduciary Compliance
a\. Safeguards compliance\. The project complied with World Bank safeguard
policies indicated in the PAD: (i) Environmental Assessment (OP 4\.01); (ii) Involuntary
Resettlement (OP 4\.12); and (iii) Indigenous Peoples (OP 4\.10)\. Although the Forestry
(OP 4\.36) and Natural Habitats (OP 4\.04) policies were not triggered at the time of
approval, the project applied the principles of both safeguards\.
Environmental Assessment\. Though the project recognized that some of the community
investments and park infrastructure activities may have environmental impacts, these
were considered to be clearly small in scale and narrow in scope\. While, there was no
overriding framework with an assigned budget for environmental impacts' mitigation and
management, the participatory framework for custodial communities in park management
and conservation that was designed and implemented in the three protected areas ensured
that park investments adequately identified and addressed such impacts\.
Involuntary Resettlement\. A Process Framework to mitigate against restricted access to
resources in the three PAs was made a sub-component under component 1\. As such it had
clear budgetary and institutional arrangements, and was successfully prepared and
implemented in each of the three parks\. It was also included in the project's legal
covenants\.
Indigenous Peoples\. As spelled out under OD 4\.20, a separate Social Assessment was not
mandated\. Nonetheless, the project carried out a stakeholder assessment during project
preparation to identify and engage potentially project affected peoples in and around the
parks\. However, despite the presence of indigenous peoples (IPs) in the project areas, an
Indigenous Peoples Development Plan (IPDP) to prescribe demographic, institutional and
legal framework for including IPs in the project was not prepared\. The IPDP was
necessary to comply with the OD (and OP 4\.10 that supplanted the OD in March 2005)\.
12
Nonetheless, the project complied with the spirit of the policy, particularly by
recognizing IP rights of access to parks and protected areas and their equitable
participation in benefits from development of natural resources on lands owned, used or
occupied by them\. The project also worked to solicit broad community support for
proposed activities and IP Village Conservation Committees (VCCs) had full access to,
and decision-making power over, the natural resources they relied upon\.
Natural Habitats and Forestry\. Because the project affected for the better the
management of natural habitats and natural forests (not commercial plantations), the
spirit of these policies was applied in each of the three project sites\. In addition,
community investments were disqualified where they proposed conversion of critical
natural habitat or commercial forestry\.
b\. Fiduciary compliance\. The project mostly failed to comply with financial
management requirements with the main weaknesses/noncompliance being in respect to
(a) weak FM capacity with lack of/or quick turnaround of accounting staff; (b) poor
maintenance of books of accounts/records, (c) delays in release of counterpart funds, and
(d) failure to submit timely acceptable audited financial statements\. The failure to submit
audit reports in accordance with the required timeframes also resulted in temporary
discontinuation of disbursements for Balochistan and AJK\. Although it was initially
designed that the project could potentially move to FMR (Financial Monitoring Reports)
based disbursement after one year from inception of the project, this was not considered
appropriate as most FMRs were still received late and contained deficiencies\. These
issues generally continued till the end of the project\.
2\.5 Post-completion Operation/Next Phase
Unfortunately, because the trust fund component of the project was not fully operational
at the time of project closure, there remains a real urgency to identify additional co-
financing for the trust to make it viable in the long term\. While VCCs were largely
dependent on park budgets (in a quid pro quo fashion where they participate in park
management and engage in sustainable use practices in return for park support to village
infrastructure and other activities) during the project period to refrain from returning to
unsustainable resource use, each of the three parks require follow-on support to
consolidate the very real gains made during the implementation of this project\.
Some follow-on support has already been secured from the provincial governments\. For
example, in both NWFP and AJK, project activities have been extended beyond the
project closing date until June 30, 2010\. In addition, the provinces have prepared PC1s
(project proposals) and submitted them to the MOE to support a consolidated project
proposal that would enhance federal funding to the three project PAs\. MOE is in
discussion with the Ministry of Planning about securing this funding\. This funding would
support the technical assistance necessary for continued engagement of park authorities
with the VCCs, which is particularly important given that significant funds remaining in
the revolving accounts of the VCCs that could provide a valuable resource to sustain
community interest and participation in conservation into the future\.
13
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
Project development and global objectives remain relevant in Pakistan, regionally
and globally\. The threats to Pakistan's biodiversity remain high and natural resources
continue to play an essential role in the country's growth-oriented economic strategy\.
The Bank's proposed CAS (2010-2013) focuses on, among other things, providing
support that strengthens the environmental and social sustainability of development,
particularly to support pro-poor growth\. This builds on the approach taken by the project
in protecting the resource base on which rural communities depended for their livelihoods
and for opportunities to attract investment\.
The relevance of the project's objectives was high\. The objectives comply with the
GEF Operational Strategy in the following respects: (i) priorities were country driven and
the selection of sites followed a participatory evaluation process to determine biodiversity
value of PAs according to biogeographic representation, socio-economic considerations,
degree of threat and feasibility of intervention; (ii) the project aimed to leverage long
term financing through the establishment of an endowment fund; and (iii) the project
targeted nationally, regionally and globally important biodiversity contained with forest,
semi-arid, mountain and marine ecosystems\.
The relevance of project design was high with respect to: (a) protecting the three
national parks; (b) strengthening voice and customary rights of neighboring communities;
(c) strengthening provincial capacity to steward natural resources and manage conflict
with local communities; and (d) transferring international conservation practices to
Pakistan\.
The relevance of project implementation was high, though it suffered from inflexible
sequencing which meant that the short timeframe of the project, especially when taking
account of the difficulties of social mobilization and institutionalization, meant that the
VCCs were not fully mature enough in at least one of the parks to be self-sustaining at
the end of the project, particularly since the suite of microfinance activities intended to
nurture the VCCs were not introduced until late in the project\.
3\.2 Achievement of Global Environmental Objectives
Project objectives were achieved to a large extent\. Being of a clear innovative nature,
outcomes of the project provided useful lessons, particularly in the area of local
institutional development and community co-management\. The handling of unexpected
situations, particularly the failure of Balochistan to engage with the project, the
earthquake in AJK and the larger security situation, were managed in a positive way that
ensured that the project's GEO was met\.
More specifically, the project made significant contributions towards achievement of the
project objectives in the following areas:
14
y Protection of key forest areas in the three parks\. For example, in (i) Chitral Gol, there
was a 90% reduction in grazing and fuelwood reduction and a 100% reduction in
timber collection; (ii) in Hingol, there was a 45% reduction in livestock grazing in the
park; and (iii) in Machiara, 61 % of pasture lands were successfully put under
controlled grazing regimes and there was a 40% reduction in fuelwood use\.
y A significant increase in selected threatened species\. For example, in (i) Chitral Gol
the markhor (Capra falconeri) population increased from 370 individuals at the start
of the project to more than 800 individuals, a significant increase in an endangered
species; (ii) Machiara the number of Musk deer (Moschus chrysogaster), grey goral
(Naemorhedus goral bedfordi), western tragopan (Tragopan melanocephalus) and
monal pheasant (Lophophorus impeyanus) individuals increased from 35 to 72, 100
to 384, 75 to 122 and 238 to 436 individuals respectively, well above the baseline;
and, (iii) Hingol the Ibex (Capra sibirica hemalayanus) population increased from
1400 to 2000 individuals, the Urial (Ovis orientalis vignei) from 350 to 500, and the
Chinkara (Gazella bennettii) from 150 to 200\. This was helped by a significant
improvement of the existing biodiversity monitoring systems with participation of the
local communities\. It was also complemented by a reduction in poaching by 95% in
Chitral Gol, 100% in Machiara and 60% in Hingol\.
y Increased support for protected areas in the project area, especially among local
communities who hitherto only consumed resources from the park\. At the end of the
project, 51 village conservation committees were effectively implementing
conservation activities in Chitral Gol, Machiara and Hingol\. Their support was based
in part on the increased emphasis on environmental education and capacity building
of local communities regarding biodiversity conservation and sustainable use of
natural resources, and in part on the up to 20% improvement in village incomes based
on park support\. The VCC institutional structures have been effective and useful
beyond park management activities, as has been demonstrated by their ability to
secure significant additional resources (equivalent of US$7\.3 million) from other
donors and NGOs for community development\. It also resulted from the successful
implementation of an integrated approach to management, biodiversity conservation
and sustainable use of protected areas that includes collaboration and complementary
work between conservation and consumption agendas, in close interaction with local
communities and stakeholders;
y Successful implementation of research and management projects, coupled with
demonstration plots, aimed at key management needs\. Each park has developed
community-based monitoring guidelines that could enable the continued and regular
monitoring of selected species populations, reductions in pressures on PA resources,
as well as other proxies for community participation\. In addition, the project has
resulted in the development of performance indicators for the management of PAs in
Pakistan, indicators that can be used more extensively in the country\.
15
3\.3 Efficiency
As required for a full-sized GEF project, an incremental cost analysis was done during
the project preparation\. No formal economic analysis was completed for project
implementation\. However, the cost-effectiveness of park management under the project
was comparable with that elsewhere in the region\. (See Annex 3 for details\.)
3\.4 Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
The overall PDO/GEO outcomes are rated moderately satisfactory\. The PDO/GEO
remains highly relevant\. Most planned outputs and additional relevant outputs added
during implementation were delivered efficiently and cost effectively, at least in two of
the three provinces\. Government counterparts (initially in AJK and NWFP, and later in
Balochistan) have demonstrated and maintained commitment supported by continuity in
project management staff\. The consultation process supporting community ownership
has been effective, indicated by the strong and functional community structures that have
been established in the three parks\. Institutional capacity development and staffing has
been positive, with a renewed commitment by two of the three provincial governments to
maintain park staff numbers beyond the life of the project\. Awareness creation has been
exemplary with policy makers, clergy, media, school children, and local communities
having a good understanding of the linkages between conservation and the sustainable
maintenance of local agriculture and ecological systems\. The management of the three
parks have been substantially improved, which is manifested by the substantial (in most
cases over two fold) increases in populations of key and threatened species in these areas\.
Over 750,000 hectares of biodiversity rich habitat is being effectively managed in the
three parks, with enhanced management interventions, surveillance and community
participation\. The shortcomings rest in the mixed success achieved at the federal level
with engaging MOE, and in the delay of the project to activate the proposed mechanism
to ensure long term financial sustainability of the protected areas\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
The project specifically targeted women in each park, and provided support for the
establishment of Women Village Conservation Councils (WVCCs) to meet cultural needs
and promote women's empowerment\.
(b) Institutional Change/Strengthening
Government agencies engaged with the local community at all levels\. The project
established local infrastructure to give local communities and non-government actors a
voice in decision-making over natural resources in and around each park\. This
institutional interface is invaluable for continued conservation\. Moreover, the
16
infrastructure has reduced park-people conflict as a result of the move towards
participatory management of park resources\.
(c) Other Unintended Outcomes and Impacts
There were no other significant outcomes or impacts\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
There was no formal beneficiary survey or stakeholder workshop held\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
The risk that the PDO and GEO outcomes will not be sustained is assessed as
moderate\. Few PAs in the world are self-financing, and park funding generally relies on
a mix of sources\. Government budgetary support to PA management in general and to
the three parks in particular was insufficient in the past and recent improvements in their
management has relied heavily on resources provided through the project\. Since
continued international support to the parks is threatened by the recent destabilization in
security in these provinces, mechanisms for sustaining the PDO and GEO have to be
supported within the existing institutional and financial constraints that operate in these
provinces\. To this end, the provinces have made specific efforts to ensure that project
gains are sustained\. Two of the provinces have extended the project period by six
months with their own financial resources and committed efforts are underway to obtain
federal funding to continue to provide oversight and technical support to the parks to
build on, and consolidate achievements made under the project\.
Specific risks to development outcomes are linked to the following factors:
The sustainability of this project rests on the trade-off between local income
enhancement opportunities and the costs and effort incurred in restricting their own
use of natural resources in the PAs\. Communities admit that this trade-off is fragile,
and its sustainability is predicated on some level of continued investments flowing to
communities to compensate them for restricted access\. While the proposed mechanism
the Park Association trust fund to sustain project interventions is not operational as of
present, the community assets created under the project and the substantial financial
resources available in the VCC revolving accounts, can continue to provide supplemental
incomes to local communities and ensure their active participation in conservation of the
park environment into the future\.
Although limited, some attention was paid to the legal and policy base of
participatory and co-management processes of PA decision-making\. Though
legislation was recently passed in AJK which allows for sustainable use of resources
within PAs by custodian communities, and legislation now recognizes the participation of
17
communities in Chitral Gol and Hingol national parks, their empowerment and continued
involvement cannot be taken for granted\. Nonetheless, all three Project Directors are very
confident that conservation activities in their respective parks will continue despite the
closure of the project because of the strong and functioning community structures that are
in place and the strong commitment within the respective wildlife departments to
continue to engage communities in conservation of the park resources into the future\.
Moreover, the VCC infrastructure has been found useful beyond park management
activities (e\.g\. in the case of the aftermath of the 2005 earthquake) in being able to
manage and oversee significant additional financial resources from other donors\. As a
result, the VCCs will likely remain in existence in the medium to long term\.
Staff positions have been regularized in two of the three parks, providing some level
of comfort that capacity of provincial authorities to manage the parks will not disintegrate
after project closure\. In NWFP, about 80% of the project staff positions have been
approved by the Government and discussions are ongoing in AJK to do the same\. In the
third park, Hingol, all thirty nine project contracted staff positions have been approved by
Government and are in position\. An additional 20 new staff positions in the field are
anticipated to be approved in the next fiscal year\. The presence of sufficient staff in the
parks is a critical factor in ensuring that the GEO and PDO are sustained\.
Nevertheless, the real biodiversity outcomes achieved provide more stable
populations within each park that will help absorb some of the expected increase in
resource use without endangering the GEO\. The significant build up of populations of
key animal species within the three parks, the solid co-management architecture that is in
place, the substantial funds available in VCC revolving accounts in support of their
continued engagement in conservation, and strengthened institutional management
capacity of project staff is likely to be adequate to sustain the GEO and PDO over the
medium to long term\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Satisfactory
The project was designed according to best practice at the time, but the Bank effort to
ensure quality at entry was mixed and had significant shortcomings\. Strengths included
facilitating the selection of highly relevant objectives, encouraging a leading role for
local communities and resource users and supporting active provincial government
involvement\. The revolutionary nature of the project may also have led to inadequate
attention being paid to sustainability at the time of project preparation\. Significant
shortcomings in assessing sustainability continued to hamper implementation during the
life of the project\. The quality of monitoring framework at project approval and lack of a
18
comprehensive baseline prevented a full assessment of the impact of the project\.
Shortcomings in realistically assessing project readiness for implementation, leading to
flawed site-selection, was a very real shortcoming, especially in Balochistan province
where no buy-in to the project existed, but there were ongoing land tenure conflicts\. The
team's failure to adequately deal with problems identified prior to effectiveness, in
particular land rights in Chitral Gol meant that implementation got off to a rocky start
and these problems reoccurred during the early life of the project\.
(b) Quality of Supervision
Rating: Satisfactory
Actions taken by the Bank during supervision were mostly appropriate, timely and
adequate, with some areas of notable achievement\. Critical risks such as with the lack
of progress in Balochistan or the earthquake in AJK or threats to the integrity of the park
in Balochistan were appropriately flagged and addressed in a timely manner through
relevant channels, even if resolution was not always immediately forthcoming\. The task
team made routine visits (when security permitted) to Chitral Gol, Machiara and Hingol
and to the Ministry of the Environment offices and successfully followed each visit with
detailed aide-memoires that flagged actions for follow-up\. The team was also ready to
engage the relevant expertise (e\.g\. legal) when problems arose that required such
expertise\. The team effectively raised issues affecting the project to management's
attention and management responded actively and speedily to issues raised\. These
interventions had succeeded in effectively addressing problems that arose\.
The team's ratings of GEO and IP were based on realistic assessment of the ground
situation\. The team was very proactive in resolving implementation lapses in the project,
as was the case in helping move the project from "unsatisfactory" to "satisfactory" status
in 2005/2006, through a very structured action plan to deal with the serious shortcomings
of the Balochistan component, and then actively following up to ensure that these were
resolved in a timely and comprehensive manner\. The downgrading of the GEO to
"marginally satisfactory" status in 2008 was based on a realistic assessment of the
potential for the Fund for Protected Areas (FPA) becoming an effective and timely
instrument for financing of the three protected areas at the closure of the project, on
account of the delay of GOP to mobilize adequate co-financing for the FPA\.
The team adopted the monitoring indicators to allow for more accurate tracking of
impacts on species and reduction of threats on the three protected areas to compensate for
the weak monitoring framework at design\. The mid-term review (MTR) was well-timed
and addressed key issues with quality inputs, particularly in its frank assessment of the
failure of activities in Balochistan\. In addition, the country team was involved in the
project despite its relative small size in the overall country portfolio\. Nonetheless, the
task team did continue to rely on the poorly designed idea of the trust fund to ensure
financial sustainability and continued community engagement\.
19
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
Except for project activities in Balochistan and the failure of the project's proposed
mechanism to ensure long term financial sustainability through the Park Association, the
Bank made considerable implementation progress in a very difficult environment, where
security concerns, remoteness of locations and difficult terrain were impediments to
providing effective supervision and oversight\. This was particularly true at the park level,
though less so at the central level where project activities were given less weight than the
park activities\.
5\.2 Borrower
(a) Government Performance
Rating: Moderately Satisfactory
At the beginning, federal level coordination through MOE was very weak\. In the first
few years of the project, high staff turnover led to loss of institutional memory,
ineffective management and inconsistent commitment to the project\. Upon transfer of
responsibilities to the Inspector General of Forests, this coordination role improved
significantly, though too late to fully implement some of the activities that were housed at
this level (e\.g\. the ecotourism study and the Park Association trust fund)\. However, the
government was slow to absorb lessons from the pilot sites and apply them to the
protected area system more broadly\.
Moreover, weak financial management continued throughout the project, despite using
the Government's own financial and accounting systems, and despite moving to an FMR-
based disbursement system after 2007\. FMRs were still received late and contained
deficiencies\.
(b) Implementing Agency or Agencies Performance
Rating: Moderately Satisfactory
MOE, originally tasked with implementing the other three components, showed a
reluctance to implement project activities in a timely fashion\. As a result, and given
MOE's continued intransigence, the attention paid to the activities under Component 1 in
the three provinces began to predominate\.
Borrower commitment to field activities varied sharply between the various provincial
institutions involved in implementing Component 1\. In two Provinces AJK and NWFP
the authorities displayed strong commitment from the beginning\. Activities occurred
early and by the end of the project, park infrastructure and co-management architecture
20
was very solid\. However, in the third, Balochistan, key stakeholders lacked commitment
and successive supervision missions had to exert substantial pressure for change to even
kick-start project activities\. Nonetheless, by project end, co-management models were up
and running in Hingol though the park hugely underspent its original budget, some of
which was transferred to other budget line items\.
(c) Justification of Rating for Overall Borrower Performance
Rating: Moderately Satisfactory\.
Given the failure of the government in Balochistan to engage in a timely manner with
park activities coupled with the reluctance of MOE to coordinate the project in a
consistent manner or implement their own-managed activities in the early stages of
project implementation, the borrower performance rating is only saved by the excellent
commitment and actions of the NWFP and AJK governments\. In addition, when the
federal government responsibilities were transferred from MOE to the Inspector General
of Forests, these activities finally began to take shape and improve towards the end of the
project\.
6\. Lessons Learned
An effort should be made to ensure that key stakeholders share the vision of park
management and protection before project effectiveness and throughout project
implementation\. Decisions about PA management often elicit strong opinions from a
range of stakeholders\. To build and maintain a common understanding across national,
provincial and local levels, PA managers must engage stakeholders in discussions of key
goals and strategies before project effectiveness\. Otherwise stakeholder support is often
just congealing at the end of the project when investments and resources dry up too soon
to cement the new support\. In AJK the park's commitment to building local awareness of
project activities, the importance of biodiversity to local and national economies, and the
role of communities in co-management established the groundwork for a very successful
project (this was not guaranteed; during the Bank's first supervision mission, local
communities in AJK prevented the mission from visiting the park) and for the
government to extend project activities beyond the Bank's involvement\.
Projects which aim to move away from a conflictual model of PA management to a
co-management model must take action from an early stage to ensure the realistic design
and early activation of mechanisms to secure financial sustainability of the improved
environmental management model to maintain faith with community co-managers who
are not in a position to give up resource use without compensation in some form (e\.g\.
through the VCC investments)\.
Co-management models must be housed within larger entities that can provide
technical assistance and support\. The VCCs were confederated at each park and linked
to local government, NGOs and related rural support agencies through Local Advisory
Committees (LACs) that provided village members with comfort that their actions were
21
consistent with agreed principals, and ensured a more holistic co-management approach
rather than a village-based piecemeal approach\.
More attention must be paid to M&E\. Adequate attention to M&E design,
implementation and utilization is important for every operation, but is essential for
a project that proposes to test a new modality for park management that would
serve as the model for other parks\. Capturing baselines against which to measure
progress and test effectiveness are a critical part of project preparation, and should not be
left until later in the project, when this could delay measuring success and cause the
project to capture an inflated baseline rather than the without-project scenario\.
Safeguard policies should be applied proactively\. Applicable safeguard policies must
be triggered and applied in all projects, including those whose explicit objectives aim to
protect people and the environment\.
A five-year project lifespan is not appropriate\. PA projects in remote areas with weak
institutions, inconsistent community support, a fragile financial base, poor communities
who depend on PA resources for their livelihoods and uncertain political support need to
be recognized as long-term engagements\.
Flexibility is important in a dynamic context\. One of the important challenges in
Pakistan during the life of the project was the rapidly changing political and security
environment\. Flexibility in project design can make implementation more robust by
allowing projects to take advantage of opportunities as they arise and to modify the
structure and nature of project elements if needed\. Moreover, task teams need to be
prepared and empowered to take actions necessary to address inadequate project design\.
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
(b) Cofinanciers
There were no cofinanciers for this project
(c) Other partners and stakeholders
(e\.g\. NGOs/private sector/civil society)
No comments received from civil society partners
22
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in US$ Million equivalent)
Appraisal Actual/Latest
Percentage of
Components Estimate (US$ Estimate (US$
Appraisal
millions) millions)
PROTECTED AREA
BIODIVERSITY 7\.05 6\.93 98%
MANAGEMENT
SUSTAINABILITY OF
2\.13 2\.01 94%
PARK MANAGEMENT
HUMAN RESOURCE
0\.36 0\.26 73%
DEVELOPMENT
PROJECT COORDINATION
0\.46 1\.01 219%
AND MONITORING
Total Baseline Cost 10\.00 10\.21 102%
Physical Contingencies 0\.27
Price Contingencies 0\.48
Total Project Costs 10\.75
Project Preparation Facility
0\.00
(PPF)
Front-end fee IBRD 0\.00
Total Financing Required 10\.75
(b) Financing
Appraisal Actual/Late
Type of Estimate st Estimate Percentage
Source of Funds
Cofinancing (US$ (US$ of Appraisal
millions) millions)
Borrower 0\.67 1\.08 161%
Global Environment Facility
10\.08 9\.13 91%
(GEF)
23
Annex 2\. Outputs by Component
The following components were envisaged at appraisal: (A) Protected Area Biodiversity
Management; (B) Sustainability of Park Management; (C) Human Resource
Development and (D) Project Coordination and Monitoring\. The outputs by each of the
above components are discussed in detail below:
Component A\. Protected Area Biodiversity Management
Process framework for participation of custodial communities in park management and
conservation: The main achievement in this component has been the establishment of a
robust consultative framework to involve local communities in decision making on
protected area management and community investments in the three protected areas\.
Over 5,000 families living in, and around the three protected areas have participated in
the consultative process and project related activities\. The consultation process
supporting community ownership was effective as indicated in the strong community
structures that seem to be functioning well at the three parks\. Specific guidelines and
rules were developed and used for community mobilization, mapping of community
resource utilization, formation of VCCs, development of PA resource management
strategies and mitigation, and participatory monitoring\. The individual provinces intend
to use these tested guidelines for enhancing community participation in other PAs within
their respective areas\.
Formulation of detailed park management plan and strategy: PA Management planning
has undergone a fundamental shift during the project with participatory processes now
mainstreamed in the management strategy\. All three parks have new or updated
management plans that have been developed with the engagement of the wider
community and focuses not only on enforcement, but also management interventions that
engage and benefit local communities\. There is enhanced capacity in the three PAs to
prepare and update their management plans\. In each park, revised legislation now
recognizes the participation of communities in park management and sustainable use of
resources within the parks\.
Improvement of park infrastructure: Park infrastructure has improved noticeably through
the project\. New and strategically useful infrastructure such as park staff housing,
administrative buildings, trail networks, water supply schemes and patrol tents have been
established under the project, and have helped improve park management and
surveillance\. The project created park administration facilities in Machiara and Chitral,
and staff quarters in Hingol will enable the continued provision of management and
administrative oversight for activities in the respective parks\. In addition, a number of
trail networks were created or improved in Machiara and Chitral and irrigation and water
supply schemes developed in these two PAs\. At the community level, the VCCs at all
three PAs have been able to solicit new and improved community infrastructure in the
form of water supply and irrigation systems, solar lighting, fuelwood distribution and
24
liquid propane gas outlets, local health dispensaries and health staff, housing
improvements and trail upgrading from non-project funding sources\.
Improvement of park operations: The purchase of equipment such as binoculars,
communication and other field equipment has enhanced surveillance and enforcement at
each park\. Additionally, surveillance and enforcement capacity has also been enhanced
with community participation\. Communities have recognized the economic value of
protecting their resources from exploitation from outsiders and developed and improved
surveillance and management structures to manage them\. Staff and community capacity
to reduce illegal activities has greatly improved\. Almost 700,000 hectares of biodiversity
rich habitat is now more effectively managed in the three parks, with improved
management intervention, surveillance and community participation\.
Baseline resource inventory, research, habitat improvement and wildlife enrichment:
Development of geographic information systems based topographic and ecological
databases for all three parks that provided a valuable tool for protected area management
planning\. These databases provide information on distribution and habitat types within
the parks and are helpful in monitoring wildlife changes through time\. Baseline research
on vegetation, ornithology, rangelands, socio-economic conditions and wildlife are
helping park staff define interventions for improving management of park resources\.
Periodic monitoring of key wildlife species and their distribution has provided valuable
information on the status of species and the health of the ecosystem\. Each park has
developed community based monitoring guidelines that will enable a continued and
regular monitoring of the status of key species populations, PA management
effectiveness, community participation and other related aspects\.
Public environmental awareness and outreach: The project has made a remarkable
contribution to public awareness by targeting communities, politicians and, importantly
religious leaders\. VCCs members have emphasized that they have learnt about the
importance of conservation through the project\. They seem to now have a strong sense of
ownership and pride in the uniqueness of their natural resources\. Signboards are
widespread around the surroundings of the parks, newsletters in local language and
leaflets are available, information about study and exposure visit and training workshops
for staff and communities are widely circulated and a number of nature clubs for children
are functioning\.
Component B\. Sustainability of Park Management
The sustainability of project interventions as outlined in the Appraisal PAD was to be
achieved through: (i) a Fund for Protected Areas (Park Association, or FPA);
(ii) establishment of VCCs, which would empower local communities to conserve
biodiversity within PAs; (iii) improved capacity within provincial wildlife departments
for effective management of PAs; and (iv) creating awareness of the importance of
conservation\. The FPA has been established with legal status, governed by a board of
directors, with defined rules and regulations and financial procedures, and management
and fund raising expertise\. However, the FPA is not fully operational\. To be fully
25
operational, it is expected to generate matching funds from in-country sources\. MOE is
in discussion with the government to solicit public funds to enable the FPA to become
fully functional\. In the meantime, a PC1 (project proposal) has been developed to seek
federal government resources to continue some level of support (namely technical
assistance and training) to the three PAs until such time as the FPA is functional and
generates sufficient resources to support the PAs\.
VCCs have been empowered and co-federated at the PA level into larger district or sub-
district entities to give the VCCs a greater voice and status\. The implementation of the
VCC revolving funds and microfinance initiatives give reason to believe that some, if not
all conservation activities will continue on the medium and longer term\. Project staff
positions have been regularized in two of the three PAs (and discussions are ongoing to
do the same in the third park) that will provide the institutional capacity to continue to
manage the PAs and engage the local communities\. Awareness raising has had a very
positive outcome and will no doubt contribute significantly to future conservation efforts\.
Component C\. Human Resource Development
The capacity of the staff in the three PAs has been substantially enhanced technically and
physically and has helped facilitate and guide park management\. Collaboration with TA
teams and participation in courses at local and foreign universities has built technical
capacity, and physical capacity has improved by purchase of equipment, vehicles and
construction of park headquarters to help coordinate their activities\. The increase in
populations of selected key species and reduction in the number of illegal and
unsustainable activities is indicative of the enhanced capacity of the staff to manage the
parks as well as carry out monitoring and community development activities\. The
approval of 80% of project staff at Chitral and all of the project staff at Hingol will
significantly help them to continue and sustain conservation activities\. The Wildlife
Departments of AJK and NWFP have shown interest in replicating the project
participatory model in other protected areas in their respective provinces, and the
enhanced capacity and experience developed through the project would be beneficial in
this respect\.
Component D\. Project Coordination and Monitoring
Although the field level execution of the project was the responsibility of the respective
provincial governments through their respective wildlife and forestry departments, some
limited level of coordination was envisaged at the federal level\. While, not fully
successful, the MOE helped facilitate the development of legislation relating to PAs and
management plans at the provincial level and ensuring that there was some
standardization across each level\. The MOE also helped organize regular technical
meeting and site visits to enable the PA staff to share experiences and learning\. Building
on experiences in the three PAs, the MOE facilitated the development of performance
indicators for PAs in Pakistan that can be used more widely throughout the country\.
MOE also facilitated an independent review and impact assessment of the project that
assessed whether planned project outcomes and objectives have been met\. However,
26
some studies such as the ecotourism study was not commissioned due to the non-
availability of suitable local expertise\. Further, the initial lethargy (subsequently rectified
by the transfer of the project to the Inspector General of Forests) delayed the design and
operationalization of the Park Association\.
27
Annex 3\. Economic and Financial Analysis
The project did not undertake an economic analysis\. Instead, as required for a full-sized
GEF project, an incremental cost analysis was prepared during project preparation,
assessing the total cost of GEF alternative at US$10\.8 million\. This was also the actual
cost of the project\. A rough assessment of cost-effectiveness is possible on the basis of
comparing PA management cost per unit area with other countries\. Considering the total
project cost of US$10\.8 million and the total hectares managed under the project
(619,043 ha in Hingol; 7,750 ha in Chitral Gol; and 37,147 in Machiara), the project
provided a degree of park protection and management for eight years of its duration,
which translates to about US$2/ha/year (or US$185 per km² per year)\. Correcting for the
cost of the three components not focused solely on management activities, the annual cost
of PA management was about $1\.5/ha/year\.
This was broadly consistent with a mean budget of PA budgets from developing
countries during 1990s, which was US$1\.57/ha/yr (James et al, 1999)\.
28
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/
Names Title Unit
Specialty
Malcolm Jansen Senior Environment Specialist SASDI TTL
Ethel Sennhauser Sector Manager Agriculture LCSAR Past TTL
Senior Natural Resource
Najib Murtaza Past TTL
Specialist
Nadim Khouri Senior Agriculturist Past TTL
Social and
Senior Social Development
Zia Al Jalaly SASDS participatory
Specialist
aspects
Anwar Ali Bhatti Financial Analyst SACPK Disbursement
Senior Rural Development
Kevin John Crockford SASDA
Specialist
Sr\. Financial Management Financial
Hasan Saqib SARFM
Specialist Management
Asif Ali Sr\. Procurement Specialist SARPS Procurement
Valerie Hickey Environment Specialist LCSDE
Riaz Mahmood Financial Management Analyst SARFM Disbursement
Tekola Dejene Consultant AFTAR
Hasan Masood Mirza Consultant SARPS Procurement
Financial
Naveed Saeed Consultant SARFM
Management
Shabir Ahmed Program Assistant SASDO
Ghulam Ali Program Assistant SASDO
Shahnaz Meraj Team Assistant SASDO
Cecilia Belita Sr\. Program Assistant SASSD
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle US$ Thousands
No\. of staff weeks (including travel and
consultant costs)
Lending
FY94 n\.a\. 27\.62
FY95 n\.a\. 27\.33
FY96 n\.a\. 29\.57
FY97 n\.a\. 106\.47
FY98 n\.a\. 133\.34
29
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle No\. of staff weeks US$ Thousands
(including travel and
consultant costs)
FY99 n\.a\. 76\.15
FY00 17\.22 43\.91
FY01 39\.82 71\.00
FY02 \.47 2\.44
Total: 509\.77
Supervision/ICR
FY02 32\.17 31\.65
FY03 23\.44 75\.93
FY04 15\.07 51\.78
FY05 9\.37 22\.63
FY06 16\.69 68\.95
FY07 8\.51 31\.56
FY08 10\.14 40\.88
FY09 5\.15 22\.39
FY10 7\.76 40\.25
Total: 128\.30 386\.02
*n\.a\. not available
30
Annex 5\. Beneficiary Survey Results
Neither the project nor the ICR exercise carried out a formal beneficiary survey at the end
of the project\. However, an independent evaluation did interview individuals and families
involved in two of the three PAs\. The main feedback was that Village Conservation
Committees (VCCs) were well received and their institutional development considered a
real benefit of the project\. However, Women's Village Conservation Committees
(WVCCs) did not necessarily thrive and many women involved felt that they were still
marginalized in decision-making, largely by the other VCCs\. In addition, the VCCs
related to the parks on a strict quid pro quo basis, supporting conservation outcomes
when they were provided direct benefits in the form of micro-credit or alternative
incomes\.
31
Annex 6\. Stakeholder Workshop Report and Results
A formal stakeholder workshop was not organized\.
32
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
Background
Protected Areas Management Project (PAMP) was implemented in Pakistan between
January 1, 2003 and December 31, 2009\. The project was funded by Global Environment
Facility (GEF) under a Trust Fund Grant Agreement (TFGA) through the World Bank
(WB) with a cost of US$10\.750 million including a contribution of US$0\.670 million by
a Government of Pakistan\. It addressed conservation of globally important habitats and
species of three Protected Areas (PAs) of the country including Hingol National Park
(HNP) in Baluchistan Province, Chitral Gol National Park (CGNP) in the North West
Frontier Province (NWFP) and Machiara National Park (MNP) in Azad Jammu &
Kashmir (AJK)\. These Protected Areas represent marine, estuarine, arid range land,
mountain and forest ecosystems and contain species of national, regional and global
significance\.
The Project was implemented by the Ministry of Environment, GoP (Grant Recipient),
GoB, GoNWFP and GoAJK\. The Project had 4 major components including Protected
Area Biodiversity Management, Sustainability of park management, human resource
development and project coordination and monitoring\. Major interventions of the project
included integration of custodian communities in the Park management and conservation;
preparation of Park Management Plans for three Protected Areas; Development of Park
infrastructure; improvement of Park operations; carrying out baseline inventories,
research, habitat improvement and wildlife enrichment; Public environment awareness
and Human resource development\.
Overall assessment of Project Outcomes
PAMP implementation has rendered numerous useful outcomes\. Integration of custodian
communities in the Park management has resulted in emergence of community
institutions at the grass root level\. The process of community organization culminated in
formation of Village Conservation Committees, Cluster Organizations, Local Support
Organizations and District Conservation Committees\. Park Management Teams came
into being and Village Conservation & Development Plans were prepared through a
participatory process\. Village Conservation Funds were established for implementation of
these plans\. The capacity of community institutions and the staff of Park Administration
was developed\. Management Plans were prepared for Hingol, Chitral Gol and Machiara
National Parks with the participation of custodian communities, the PMTs and other
stakeholders\. These plans are now available to the Park Managers to pursue the
prescribed Park Management\. The Management Plans not only provide management
strategies but also form basis for future projects and readily provide data on Park
resources\. The improvement of Park infrastructure has resulted in a network of trails,
mountain huts, Rangers stations, roads, bridges, office & residential buildings etc\. This
has ensured the presence of Park staff within the Park premises and has enhanced their
mobility in the Protected Areas thus improving their surveillance against poaching and
illegal exploitation Park resources\. Improvement of Park infrastructure has also benefited
the communities and has enhanced visitor's moment in the P\.As thus promoting
33
ecotourism\. Improvement of Park operations has benefited Park surveillance through
improved communication between the field staff and Park headquarters\. Establishment of
Ranger Stations and field hut has facilitated staff accommodation in the far flung areas of
the Park as a measure against poaching\. Appointment of Community Wildlife Watchers
has provided jobs to community members at the local level and has acted as an incentive
for their participation in conservation\. The reports and studies physical and biological
resources of the Pars are now available for management planning, education and
monitoring of trends\. The programme of conservation education and awareness raising is
in progress and the professional capacity of Park staff and communities has been
enhanced\. The institutions for P\.A management are now in place with scientifically
prepared management plans, supportive communities\. Trained and well equipped staff
with good park infrastructure and operational capacity\.
Project Performance
The Project has been completed successfully\. The overall performance of the project was
satisfactory\. The targets set for each of the three Protected Areas have been achieved\. The
objectives of community organization and integration of custodian communities into Park
management was successfully achieved\. The Park infrastructure in the project area was
effectively improved and capacity of the Park staff was successfully improved for
effectiveness of Park operations\. Management Plans were prepared for Hingol, Chitral
Gol and Machiara National Park and baseline inventories of the Park resources were
conducted\. The habitat improvement works, research studies and wildlife enrichment
program was also carried out on schedule\. The comprehensive program of Public
environment awareness was addressed and mechanism for sustainability of Park
Management was outlined\. Human resource development was also carried out for
building capacity of the Park staff and communities\. All the project interventions were
carried out despite belated start of the project, delayed release of funds due to procedural
constraints, disastrous earthquake in Machiara National Park, heavy floods in Hingol
National Park and lake of trained staff for project implementation\. All the implementing
agencies worked in complete harmony for a successful completion of PAMP\.
Statement of expenditure
Expenditure incurred by Project implementing agencies on implementation of PAMP is
shown in table below\.
Implementing GEF TFG Allocation Local Component
Agency ( Million Rupees) (Million Rupees)
Allocation Expenditure Difference Allocation Expenditure Difference
MoE
22\.494 24\.281 +1\.787 3\.900 1\.374 -2\.526
Hingol National
220\.918 180\.170 40\.748 25\.730 30\.438 +4\.708
Park
Chitral Gol National
Park 193\.805 208\.950 +15\.145 19\.406 19\.622 +0\.216
34
Machiara National
Park 207\.434 257\.931 +50\.479 15\.900 19\.400 +0\.500
Lesson Learned
The PAMP has been highly useful in conservation of biodiversity and P\.A management
in Pakistan and has been received by communities and implementing agencies with
particular interest and enthusiasm\. The Project was a demonstration of good team work of
all the implementing agencies\. Integration of communities into P\.A management, there
empowerment and provision of legal and financial incentives were key to successful
participatory management of P\.As\. The process of community organization for
participatory natural resource management is highly sensitive, complex and lengthy\. It
requires specially trained manpower to carry it out\. All the implementing agencies
therefore require capacity building of their staff for the purpose\. The project
implementation period of 5 years was too short for implementation of PAMP\. Extension
of the project period by 2 years was a blessing\. The implementation of such a project
should be preceded by a preparatory phase of 1-2 years to cater for the initial staff
orientation courses, opening of special accounts and community organization\. The
planned project period was not enough for the maturity of community institutions which
still require considerable time to get going\. The custodian communities had high
expectation about incentives in the form of jobs and village development program but the
amount of VCF was quite limited\. However the project has built capacity of communities
to tap other sources for micro-enterprise development\. Capacity building of the Park staff
should be a continuous process\. Emphasis should be placed on long term courses instead
of several short term trainings\. Rapid turns over in T\.A Teams affected the project
adversely\. This situation needs to be overcome in future projects\. A number of
constraints and bottle necks were faced in project implementation\. It has been
experienced that dedication, team work and endurance by the implementing agencies can
overcome all the hurdles\. Apart from the field work, financial management of the project
is highly important\. The staff of the project needed through training in World Bank
Accounting Procedures\.
Assessment of Sustainability
Sustainability of P\.A management in the post project period is of vital importance to take
this unique model of participatory management to maturity and institutionalize it as a
future practice\. The prospects of sustainability of P\.A management are encouraging\.
Financial sustainability of the program will be ensured partially through Fund for
Protected Areas (FPA) an endowment established for this purpose\. The amount of FPA
needs to be enhanced by contribution of GoP share and fund raising from other sources\.
Windows of Provincial Development Programme are also open and the respective
implementing agencies can tap these windows\. Prospects of attracting other donors to this
programme also exist\. Replenishment of Village Conservation Fund (VCF) is also
important for implementation VCDPs\.
The sustainability of institutions including the Wildlife and Forestry Departments as well
as community institutions will also determine the sustainability of P\.A management\.
35
There is great likelihood that these institutions will live long\. The GoNWFP and GoB
have already regularized several positions in Chitral Gol and Hingol National Park
respectively and the Govt of AJK is expected to do in same these in June 2010\. Support
to community institutions by the Govt and other donors will ensured their sustainability
Technical Sustainability will be ensure by the respective Wildlife & Forest Departments
who are fully capable of managing Protected Areas on the lines of PAMP\. Since the
Project Directors are still serving as heads of these institutions, technical support for the
programme will be available\. Maintenance of Park infrastructure is the responsibility of
implementing agencies\. The importance of this maintenance needs emphasis\. Since the
Park operations form a part of regular programme of the Wildlife Department and the
heads of Park Administration in Baluchistan, NWFP and AJK are staunch advocates of
P\.A management, the sustainability of this programme is ensured\.
Future Direction
The PAMP should be adapted as a model for P\.A management\. It should be replicated
and extended to other Protected Areas in the country\. The GEF, World Bank and the
Ministry of Environment should seriously consider launching of a Phase-II of PAMP to
stabilize the achievements of the concluded project, strengthen VCCs and other
community institutions and make P\.A management sustainable\. This project should
preferably be for a period of 7-10 years and should keep in view the lessons learnt in
PAMP implementation\. The MoE may expedite contribution of the share of GoP towards
the FPA and make the fund operational\. Funds may also be arranged for administrative
expenses of FPA including hiring of a full time Chief Executive\. The World Bank may
also relax the condition of linking of operation of FPA to receipt of GoP contribution\.
The unspent amount of TFG may also be transferred to the FPA\.
The community institutions should be strengthened\. The Park Administration should
keep constant liaison with the communities and help them in securing donor assistance
for their micro enterprise development and Village Conservation and Development Plans\.
All the project staff should be retained in their respective positions and kept mobile and
busy with the same routine functions that they performed earlier\. Community Wildlife
Watchers must not be laid off and should continue performing their duties as in the
project\.
The Project Implementing Agencies should regularized the services of project staff for
the post project period and place them on recurring expenditure\. Special conservation and
development projects should be prepared and launched in the three Protected Areas to
implement Park Management Plans developed under the PAMP\.
The other government departments and the NGOs should be encouraged to focus there
conservation and development program on the villages in and around the Protected
Areas; through custodian communities\.
It is proposed that GEF/ World Bank may make arrangements to continue providing
technical advice and coordination service to the Project Implementing Agencies of
36
Hingol, Chitral Gol and Machiara National Park as a support to sustainability of PAMP
achievements\.
37
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
Not applicable
38
Annex 9\. List of Supporting Documents
World Bank documents
Project Appraisal Document
Aide-memoires
ISRs
Quality Assurance Group Evaluation, 2006
Audited financial reports
Other
IUCN, 1996\. Biodiversity Action Plan and Protected Areas Management Project
Interim Report
Dunira Strategy, 2009\. Third Party Evaluation
Management Plans for Machiara, Hingol and Chitral
Community based monitoring reports for Machiara, Hingol and Chitral
Revised Wildlife Protection Acts for Machiara, Hingol and Chitral
Performance Indicators for Management of Protected Areas in Pakistan (2002)
Proceedings of Media Workshop on Environmental Journalism (2004)
Operational Manual of Community Participation (Machiara)
Manual for Training in Fuel Efficient Stoves for Women (2004)
Community Microplans
Sustainability Plan for Chitral Gol
Framework for Monitoring of Park Management Performance for Hingol (2006)
Fund for Protected Areas: Baselines, Structure, Powers and Operational Manual
James, A\., Gaston, K\., & Balmford, A\. 1999\. Balancing the earth's accounts\.
Nature 401: 323324\.
Project Progress and Completion Reports
Machiara National Park (March 2003-December 2007; January 2008-December
2009)
Hingol National Park (2005-2006; July 2008-March 2009)
Chitral Gol National Park (MTR report)
Machiara National Park (Project Completion Report)
39
IBRD 31282
60° 65° UZBEK\. TAJIK\. CHINA
TURKMENISTAN
PA K I S TA N CHITRAL GOL
NATIONAL PARK
PROTECTED AREAS MANAGEMENT PROJECT
MACHIARA 35°
CHITRAL GOL, HINGOL, AND MACHIARA NATIONAL PARKS 35° NATIONAL
PARK Approx\. Line
Kabul Peshawar of Control
NATIONAL PARK BOUNDARIES PAKISTAN N\.W\.F\.P\.
AFGHANISTAN Islamabad
BUFFER ZONE BOUNDARIES
VILLAGES R\.
lum
ISLAMIC Jhe
RIVERS AND STREAMS Lahore
REP\. OF
INTERNATIONAL BOUNDARIES
OF IRAN
This map was produced by the Map Design Unit of The World Bank\. PUNJAB
The boundaries, colors, denominations and any other information shown 30°
on this map do not imply, on the part of The World Bank Group, any 30°
judgment on the legal status of any territory, or any endorsement or
acceptance of such boundaries\.
PA K I S TA N
71°30' 71°45' 65°30' 66°
BALOCHISTAN R\.
us
CHITRAL GOL NATIONAL PARK HINGOL NATIONAL PARK Ind
I N D I A
HINGOL NATIONAL PARK SINDH
Darun
25°
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60° 65° 70° 75°
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73°30' 73°45'
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Zargarandeh Goldoor Chatha/Mohri/Panjnad
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Kalash Valley Kundrach Ac Phor Coast
25°30' Sacha East
Chandargop Khari Serina/
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0 5 10 KILOMETERS KILOMETERS
KILOMETERS
71°30' 71°45' 65° 65°30' 66° 73°30' 73°45'
JUNE 2010 | REVIEW |
P008958 |  Industrial schools project
Report No: ; Type: Report/Evaluation Memorandum ; Country: Turkey; Region: Europe And Central Asia; Sector: Education Adjustment; Major Sector:
Education; ProjectID: P008958
Turkey: Industrial Schools Project (Loan 2536-TU)
The Turkey Industrial Schools project, supported by Loan 2536-TU for US$57\.7 million, was approved in FY85\. The
loan was closed on December 31, 1994, after two one-year extensions, at which time the balance of US$1\.98 million
was canceled\. (The balance was partly a result of cost savings\.) The Implementation Completion Report (ICR) was
prepared by the Europe and Central Asia Regional Office\. The borrower's full report on the implementation and
achievements of the project is appended to the ICR\.
The project was designed to support government vocational programs to improve industrial productivity and promote
overall economic growth through: (a) enhancing the quality of training programs, (b) increasing the quantity of trained
industrial manpower, and (c) improving the planning and management capacity of the Directorate of Technical and
Vocational Education in the Ministry of National Education (MNE)\. To achieve these objectives, the project financed
equipment, curriculum development, textbook production, teacher training, and studies\.
The project's objectives were partially fulfilled\. Targets for equipping schools were surpassed, and enrollments in the
industrial schools were considerably higher than expected\. However, since most students of these schools were
eligible for entry to higher education, few actually entered the market as technical workers in their specialty\.
Objectives intended to improve instructional quality proved difficult to implement\. Partly because of incorrect advice
by the Bank, curriculum development focused on old rather than emerging technologies\. Specializations were
narrowly defined and focused excessively on vocational skills training, and did not give students the basic skills
needed for effective work performance in any vocation\. Establishing linkages with industry also proved to be
difficult, in part because project management was too centralized\. The management improvement (institutional
development) objective proved difficult, due to the moderate technical assistance resources provided under the project
in proportion to MNE needs\.
The Operations Evaluation Department (OED) rates project outcome as satisfactory because training targets were
accomplished despite methodological design problems\. Bank performance is rated unsatisfactory (satisfactory in the
ICR)\. During preparation, the Bank paid insufficient attention to methodological issues, management requirements,
scheduling of project activities, terms of reference for consultants, and budget monitoring\. Ownership by stakeholders
was also neglected\. According to borrower statements, advice during implementation was not very effective in
providing solutions to problems\. In accordance with the ICR, OED rates institutional development as moderate\.
However, OED rates sustainability as uncertain (likely in the ICR), given the lack of training and funds to make
equipment operational as well as the out-of-date curricula that were developed\.
The project shows that vocational education is best implemented when the responsible agency is strong and well
prepared to forge linkages with industry and develop curricula that offer students and employers information on state-
of-the art technology\. Provision of equipment without training and support may be insufficient to improve the quality
of instruction\. To increase trained manpower in a country, graduates must be willing to enter the labor market rather
than pursue higher studies\.
The ICR is satisfactory, providing a clear and comprehensive account of project implementation\. It also provides a
detailed set of actions the government plans to carry out in order to overcome project weaknesses\. The ICR includes
borrower comments which provide a candid criticism of project performance\. An audit is planned\. | REVIEW |
P010413 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 20260
IMPLEMENTATION COMPLETION REPORT
(19870; 19871)
ONA
CREDIT
IN THE AMOUNT OF SDR 163\.5 MILLION (US$216\.9 MILLION EQUIVALENT)
TO THE
ISLAMIC REPUBLIC OF PAKISTAN
FOR THE SECOND KARACHI WATER SUPPLY AND SANITATION PROJECT
June 21, 2000
Infrastructure Sector Unit
South Asia Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective March 1, 2000)
Currency Unit = Rupee (Rs\.)
Rs\. 1\.00 = US$ 0\.0192
US$ 1\.00 = Rs\. 51\.89
FISCAL YEAR
July I June 30
ABBREVIATIONS AND ACRONYMS
ADB = Asian Development Bank
CDC = Commonwealth Development Corporation
GOP = Government of Pakistan
GOS = Government of Sindh
IDA International Development Association
KMC = Karachi Metropolitan Corporation
KWSB = Karachi Water and Sewerage Board
KSDP = Karachi Special Development Project
ODA = Overseas Development Administration (now called Department for International
Development-- DflD)
Vice President: Mieko Nishimizu
Country Manager/Director: John W\. Wall
Acting Sector Manager/Director: Jonathan S\. Kamkwalala
Task Team Leader/Task Manager: Manuel G\. Mariffo
FOR OFFICIAL USE ONLY
PAKISTAN
SECOND KARACHI WATER SUPPLY AND SANITATION PROJECT
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings I
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 4
5\. Major Factors Affecting Implementation and Outcome 10
6\. Sustainability 11
7\. Bank and Borrower Performance 13
8\. Lessons Learned 15
9\. Partner Comments 16
10\. Additional Information 17
Annex 1\. Key Performance Indicators/Log Frame Matrix 18
Annex 2\. Project Costs and Financing 22
Annex 3\. Economic Costs and Benefits 24
Annex 4\. Bank Inputs 27
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 29
Annex 6\. Ratings of Bank and Borrower Performance 30
Annex 7\. List of Supporting Documents 31
Annex 8\. Comments on ICR from the Borrower 32
Table 1 6
Table 2 8
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not be otherwise disclosed without
World Bank authorization\.
Poje,ct ID: P010325 Project Name: KARACHI WATER & SANI
TemLeader: Manuel G\. Marino TL Unit: ECSIN
IC :ye Core ICR Report Date: May 19, 2000
1\. Project Data
Aame: KARACHI WATER & SANI L/C/TFNumber: 19870; 19871
CountryIDepartment: PAKISTAN Region: South Asia Regional
Office
Sector/subsector: WU - Urban Water Supply
KEY DATES
Original Revised/Actual
PCD: 10/28/86 Effective: 08/24/89 12/13/89
Appraisal: 12/09/87 MTR:
Approval: 02/28/89 Closing: 06/30/98 06/30/99
Borrower/lImplementingAgency: Government of Pakistan/KARACHI WATER & SEWERAGE BOARD (KWSB)
Other Partners:
STAF'F Current At Appraisal
Vice PDresident: Mieko Nishimizu W\.P\. Thalwitz
Country Manager: John W\. Wall H\. Eberhard Kopp
Sector Manager: Jonathan S\. Kamkwalala Yoshiaki Abe
Team Leader at ICR: Hiroaki Suzuki Neil E\. Boyle
ICR Primary Author: Manuel G\. Marifno; Omar Hayat;
Herman J\. Nissenbaum
2\. Principal Performance Ratings
(HS=1ighly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: U
Sustainability: UN
Institutional Development Impact: M
Bank Performance: U
Borrower Performance: U
QAG (if available) ICR
Quality at Entry: U U
Project at Risk at Any Time: Yes
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
Inefficient, inadequate provision of water had long been a glaring problem in Karachi,
Pakistan's fast growing, largest city\. This was aggravated by low water pressure and intermittent,
sometimes contaminated supply\. When the Second Water Project (K2) was conceived, the city's
piecemeal supply system was not meeting demand, and its sources were gradually diminishing\.
The oldest one, the Dumlottee wells, neared exhaustion, and the newly completed Hub River dam
system was only expected to meet some 26 percent of projected demand\. Thus, with the city's
already substantial population doubling about every twelve years, there was urgency in relying
more on the Indus River and Kinjher Lake\. These factors stimulated the decision to supplement
the 320 million gallons per day (mgd) then drawn from the Indus and 100 from Hub dam\.
K2's main objectives were to help: (a) increase Karachi's potable water supply by 100
mgd; (b) expand sewerage treatment capacity; and (c) improve the financial viability, organization
and management of the Karachi Water and Sewerage Board (KWSB)\. These clearly set out goals
followed from the Government's recognition that significantly expanded infrastructure and
reduced water losses were needed to meet the scarcity of supply sources and the projected
demand increase, as well as to modernize the sewer network\. It also realized that KWSB's
management capacity required upgrading\.
3\.2 Revised Objective:
Ref\. para\. 3\.4\.
3\.3 Original Components:
The project had three components:
(a) Water Supply: a 30-km canal and a 70-km conduit to bring water from the Indus to
Dhabeji; four main pumping stations; two direct filtration treatment plants; storage reservoirs; 40
km of primary distribution mains; 10 km of steel pumping main; and expansion/rehabilitation of
the distribution network;
(b) Sanitation: three new sewage treatment plants, together with associated trunk sewers;
repair and cleaning of existing sewers; small-bore sewers for low-income neighborhoods; and
(c) Institutional strengthening: technical assistance, training and studies to improve the
organization and management of KWSB; technical and management services and equipment to
introduce financial planning, improve multi-year budgeting, reporting and commercial practices;
and equipment and technical assistance to help KWSB plan and execute large-scale projects,
improve operations and maintenance, and improve and extend sanitation in the City and coastal
areas\. The project did not include work on the strengthening or reform of the regulatory
framework in which KWSB operates\.
The scheme called for parallel external financing arrangements for 80 percent of the
estimated near US$333 million Project\. IDA and United Kingdom aid sources (ODA, CDC)
would help finance the water supply component while the Asian Development Bank (ADB) would
help cover the second component\. No provisions were made to coordinate assistance with ADB
-2 -
(save for the cross-effectiveness of the respective financing agreements), and financing and
implementation of sewerage investments were carried out independently from the water supply
and institutional components, which were implemented by the World Bank\. Data on the results of
the sewerage component are presented in chapter 2\.4 (d) of the Borrower's contribution to this
ICR\. Therefore, this part of the report deals solely with the water supply and institutional
strengthening components\.
3\.4 Revised Components:
The basic objectives of the Project remained constant throughout its execution and did not
change when the Project was amended in 1993, but it became necessary to scale down its scope
(ref\. 'para\. 3\.5)\. Components involving some 27 percent of the original project cost for the water
component were deferred\. The primary water distribution mains were cut from about 50 km to
10 km and one of the three water treatment plants was eliminated\. Conversely, the amendments
included the addition of the repair of the Hub River main\. Also, increased emphasis was placed
on leak detection and water loss reductions, along with enhanced revenue mobilization and
opening opportunities for new service delivery methods\. The Project components were
accordingly amended to include services for preparation of a KWSB corporate plan, expansion of
its computer stock, measures to increase collections and educate consumers and examination of
the possibilities of private finns' participation in sector activities\. These amendments formed the
basis for the 1993 supplemental Credit (ref\. para\. 5\.4)
3\.5 Quality at Entry:
Unsatisfactory\.
The Project's preparation was deficient, especially by today's "quality assurance"
standlards\. Appraisal of the works was based on only preliminary engineering designs along with a
somewhat ambiguous definition of the works' final scope\. The construction unit rates selected
proved to be invalid because of reliance on inaccurate figures\. Early in project execution as a
result, examination indicated a cost underestimation of about 20 percent for civil works, and
about 42 percent for plant and equipment\. Moreover, the final design studies showed the
necessity for conveyance system changes and some construction expansion\. The initial Project's
base cost was estimated to have then increased by approximately 73 percent\.
The design also concentrated on physical engineering and financial matters compared with
institutional and regulatory issues, although the Board's serious deficiencies and the inadequacy of
the regulatory framework in which it operated were well known then\. Remedial measures for
these issues were rather narrowly treated in the appraisal report, as was the proposed funding
support for their implementation\. The organizational and management component attempted to
strengthen KWSB through poorly designed and aimed technical assistance, without fully
addressing the reasons for poor performnance\. Furthermore, with a US$1\.5 million budget,it
received less than \.005 percent of total base costs\.
- 3 -
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
Unsatisfactory\.
The outcome is judged "unsatisfactory\." Although it achieved substantial, greater than
forecast economic benefits (22% ERR), the Project is considered "unsatisfactory" because it lacks
sustainability and did not address regulatory and institutional issues adequately\.
The Project had three objectives: (i) to increase the supply of potable water; (ii) to
improve sanitary conditions in the city of Karachi (including its low income and coastal areas)
through the improvement of the sewerage services; and (iii) to improve the financial viability,
organization and management of KWSB\. The Project was successful in increasing the supply of
potable water to Karachi and in the short term helped reduce the impact of a potentially critical
water supply shortage (ref\. 4\.2 A)\. However, its achievements in reducing the deficit are still far
off from the SAR expectations and lack sustainability (ref\. 6\.1)\. Achievement of the second
development objective is discussed in the Borrower's contribution to this ICR (ref\. annex 8)\. The
third objective was only partially achieved too\. KWSB organizational improvements were
modest, partly reflecting unfavorable circumstances, like the inadequate regulatory framework and
the acute law and order disruption of recent years, but still constructive\.
The current situation, with many unresolved problems, indicates that, despite KWSB
efforts and the strong commitment to development from its management, more profound
institutional reform and regulatory issues are still required, including management capacity
strengthening (par\. 4\.2B)\. The services are still unsatisfactory despite many years of local and
external efforts (including K2's added contribution), as well as large sums of international
assistance, which have been devoted to upgrading the city's water system networks and building
capacity\. No effective solution has yet been found to the low availability of water, and ensuring
an adequate supply is not in sight\. The 1987 appraisal concluded that overall gross water demand
then exceeded supply by about 78 mgd\. By contrast, KWSB in November 1999 estimated the
shortfall then at 213 mgd\. Service remains intermittent and has in fact deteriorated, while
complaints about its inequality prevail\. Moreover, the aging water distribution system suffers
numerous bursts and leakage, clearly indicating that more substantial efforts are needed on
maintenance and rehabilitation\. Nevertheless, works were completed only one year longer than
forecasted, notwithstanding numerous obstacles\.
While reliable data on the Karachi situation are limited, it seems to represent a case of
essential services only being available at heavy social costs\. The Board concedes that its
distribution system is unbalanced, particularly in the wake of sizable unplanned growth in many
areas\. Reportedly, a much larger percent of high-income rather than low-income residents have
adequate supplied connections\. In the slum areas (katchi abadis), there is no proper water supply
service to serve about half of Karachi's city population--these areas have grown at 9 percent
annually, almost twice the overall rate\. Their residents therefore have had to buy water from
private venders at high costs\. However, this situation would be much worse without the Project's
contribution though\. According to the data supplied by KWSB, the Project did have a significant
impact on poor areas as intended at appraisal, even though KWSB has only relatively recently
-4 -
completed the civil works and it is much too early to evaluate which areas wereserved by the new
distribution mains\. Besides, with the sizable, continuing migration into Karachi, the figures
available are not apt to capture accurately the lack/availability of water service in areas
distinguished by different income levels/social strata\. In any case, KWSB has done its earnest
best in the past few years (through the subsidized tanker provisions) to overcome the Hub
shortfall where the Board felt social needs were pressing\.
4\.2 Outputs by components:
A\. Works: Satisfactory
The main works came into operation in mid-1998 and reached full capacity at year's end,
providing 19,480 more cubic meters per day than projected (ref\. Annex 1)\. KWSB also
completed these in only one year longer than forecast at project reformulation, a commendable
accomplishment considering their several delays\. Full appreciation of the impact of these works
has to take into consideration the unprecedented depletion of water storage at the Hub Dam
reservoir late in the project period and the impact this had on the overall water system\. Hub's
supply declined to almost nothing during the first eight months of 1999 due to a succession of dry
years\. As a result, in May 1999, KWSB was only capable of distributing about 23 mgd on
alternate days from Hub, which almost offset the additional supply that K2 provided\. Therefore,
even after the latter's commissioning, the majority of KWSB's customers still only received
spasimodic supply\. The northeast Karachi areas dependent on Hub remained particularly water
short although the Board diverted Indus water provided through the newly commissioned K2
scheme to them, together with limited free tanker supply to deficient areas on an emergency basis\.
So, in the final analysis, in the short term K2 helped alleviate the emergency situation, but its
resullts are short of those expected at appraisal and lack sustainability\.
Instead of controlling losses or managing the demand, to mitigate the emergency, KWSB
proposed constructing an additional trunk main to divert some of the water provided to the
Pakistan steel facility, which was only using a third of its supply\. KWSB sought to use Project
funds for this purpose, which IDA rejected because of the Board's deficiencies in fulfilling agreed
measures\. Instead, KWSB carried out a project fully financed by KWSB and the Government of
Sindh which added 17 mgd to the total available supply\. Additionally, KWSB later commissioned
a special operation which successfully added another 40 mgd, helping serve the areas not
benefiting from K2\. These actions have had only a limited impact and do not resolve the supply
deficit and associated bad service quality the city suffers\.
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Table I
KWSB: Water Supply and Demand 1985-1999
700 -
650- 60
600 -
550 - Demand
450\.1 - -Actual
400 \.u , \.
350 * --- -
300- ,_,,
1985 1990 1995 1999
B\. Institutional Strengthening: Unsatisfactory
Unsatisfactory management capacity in KWSB remains the major impediment to
improving service quality and increasing its sustainability\. This situation is worsened by the lack
of a regulatory framework for the service and the insufficient management autonomy KWSB
suffers\. KWSB operates under inadequate institutional arrangements and incentives leading to a
generally unsatisfactory performance, marked by episodes of short-term localized improvements
resulting from the actions of above-average managers\. Significant and sustainable operational
improvements are likely to be achieved only with a combination of adequate institutional
arrangements and incentives, and a qualified independent management team\.
KWSB only came into existence some five years before the Project, amalgamating three
organizations with different service rules and benefit plans, which had not yet coalesced\. Further,
its enabling legislation was only enforced in 1996, simultaneous with the Sindh Province's
assumption of control of KWSB from the municipality\. These factors hampered the
implementation, and limited the usefulness, of the Project assistance aimed at institutional
strengthening, even though the Credit helped the Board become somewhat more modern and
capable\. The creation and expansion of its Development Wing gave it some additional ability to
carry out contract administration, bid evaluation, contract negotiation and award, construction
management and works supervision\. However, KWSB still depended on extemal advisors,
particularly for the more technical engineering and economic tasks, reliance on whom has only
slowly diminished\. Also, although the Board has increasingly gained competence in financial
administration with the computerization of the Finance Department, this too is heavily dependent
on consultants\.
The unsatisfactory outcome of this component is not without several important
accomplishments, mainly due to the Board's appointment in February 1995 of a new managing
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director, whose forceful manner and adroit use of strong political skills appear to have energized
the institution to a more forceful level\. This was fortunate since efforts to achieve the Project's
institutional strengthening objectives had slowed by then\. Moreover, the Managing Director won
a delegation of greater operating powers, facilitating the reduction of union interference and
tightening of operating expenses and investments\. With IDA pressure and under the leadership of
the Managing Director, KWSB took other constructive measures, most notably a 46 percent staff
cut in 1995-96, an important accomplishment by all measures\. Others included some steps
toward increasing and rationalizing the Board's tax base and more persistently pressing local
government on reducing its agencies' late water bill payments\. Recently, KWSB solved this
long-standing problem with the city electricity corporation\. Also, its settlement of a meter
ownership dispute allowed it to disconnect consumers that refused to be metered, and helped
accelerate meter replacement and installation\. There were also the widespread introduction of
computerization within KWSB and the first steps toward formulating a corporate plan and
impleimenting systematic manpower development\.
But these strides were--and still are--overshadowed by continued shortcomings in essential
operational matters\. KWSB has an inadequate knowledge or control of water resources because
of lack of proper measurement and monitoring devices\. It does not meter domestic consumption,
which it justifies by the intermittent nature of water supply\. It appears to pay no particular
attention to the environmental or health consequences of water availability (or its absence)\. Nor
has it curbed the "water mafia", which runs the tanker sales\. Water losses are estimated to be in
the 30-40 percent range, and maintenance activities are not yet adequate\. Staff training in repair
methods has only been gradually introduced\. In addition, the aforementioned upgrading of the
Board's project management capabilities has only enabled it to perform this task at a relatively
modest level\. Pakistan Army engineers' involvement was instrumental in the achievement of the
recent 40 mgd supply increase, that was implemented without major KWSB input\.
Similarly, the Board's financial administration strides have not advanced its management of
these matters to a level of commercial expertise, achieving only limited improvements in its
commercial and financial management practices\. In their absence and without significant
organizational reform, the Board's decision-making practices remain too hierarchical while
political factors and union pressures excessively affect routine management matters\. Further,
nothing was achieved towards engaging private enterprise in sector activities nor in the
development of an strategy and agenda for the role of the private sector\.
C\. Financial: Unsatisfactory
The Board is still at considerable distance from attaining a firm financial footing\. Over the
later years of the project period, KWSB registered gains in financial performance (see financial
data in Annex 3 and table below), but the Credit targets were not accomplished\. It thus fell short
of re\.alizing the federal authorities' desires for provincial government assumption of financial
responsibility for sector services\. KWSB survived through the 1990s on subsidies, and has only
recently managed to run an operating surplus\. KWSB has suffered from chronic failures to collect
receivables, and the arrears have grown to alarming proportions recently (see annex 3)\. Although
KWSB projects improved financial results over the next ten years, these projections depend on
- 7 -
assumptions about increases in tariffs, billings, and collections that are not supported by historical
performance, and are suspect at best\.
There seems to be some noteworthy progress though in financial discipline\. KWSB
accounts reflect positive net operating results in FY96-98, with small profits in the first two years
and a more substantial one at the end\. Following its staff cuts, the Board has contained staff costs
(labor costs in 1997-98 were lower than in 1994-97)\. Also, the overall level of direct expenses
for 1997-98 shown on the income and expenditure statement was below the 1994-95 sum\.
Meanwhile, water and sewerage revenues in 1997-98 were three times greater than in 1992-93
and over a third greater than in 1996-97\. In the commercial management area, KWSB carried out
a survey of unconnected customers and reclassified some connected customers, linked its revenue
department to the MIS system, created a collection center, and mobilized external help for
producing monthly accounts\. KWSB accounts have been audited in recent years\. However,
although the auditors concluded that "KWSB accounts give a true and fair view of the state of the
Board's affairs", the ICR mission detected errors in the report and has serious concerns about the
validity and reliability of the Board's accounting and financial management information\.
Table 2: Key Financial Performance Indicators
1990-91 1995-96 1998-99
Water Production 348\.0 388\.0 525\.0
in mcd
Operatine Ratio 1\.0 0\.9 0\.7
Income Per 000 3\.9 10\.0 14\.2
Gallons
Expenditure per 4\.1 9\.1 10\.2
000 Gallons
Debt Servicine 0\.1 -
Debt Servicing 0\.0 -
000 Gallons
Cost Recovery 0\.8 0\.9 1\.2
Ratio
Self Financing 6\.4% 2\.6% 6\.2%
Ratio (cap\.
Investment)
Annual Billing 496\.4 1,416\.1 2,723\.2
(Rs\. million)
Annual Collection 399\.0 1,266\.0 1,778\.0
(Rs\. in million
Collection Ratio 80\.4% 89\.4% 65\.3%
Collection Period 411\.0 517\.1 1\.035\.0
- 8 -
It is also believed that KWSB made a commendable effort in the final years to reduce
arrears despite its lack of success in increasing collection rates and the delays of scheduled
payments from the provincial and local governments, as well as KDA\. However, the arrears still
remain high, unsurprising given the difficulties of cracking down hard on collections during
periods of water scarcity, as well as the recurrent law and order emergencies in Karachi\. In
paiticular, KWSB has lost ground in its collection efforts, despite significant improvements in
other aspects of its commercial management: water tariffs roughly doubled from FY91 to FY99
in real terms, and billings increased by more than 150 percent in real terms\. Although because of
increased tariffs and increased billing collections of about 89 percent in the same time, the average
collection period has doubled, from about 525 days throughout FY91 to FY96, to about 1,066
days in the past three years (see lessons in paragraph 8 for further comments on this subject)\.
Therefore, more protracted financial improvements remain necessary, particularly to
further advance the important initiatives on collections and related issues\. KWSB deferred action
on domestic metering and thereby nullified the benefits of the metering study it carried out\.
Similarly, there was no follow-up of the aforementioned survey of unconnected customers and
new areas, whose prospective billings therefore did not fully materialize\.
In retrospect, the Government, as well as the Bank, clearly had unduly high expectations
of KWMSB's revenue-generating capability at the outset\. Financial covenants of the Credit were
designed to help KWSB improve its financial standing, and to provide convincing measures of the
improvement\. However, KWSB consistently failed to meet these requirements\. The primary one
was ihat KWSB should generate, in each year, total revenues to cover the sum of: (a) total
operating expenses; (b) debt service requirements; (c) increases in net working capital other than
cash; and (d) not less than 20% of KWSB's capital expenditures\. Not only has KWSB failed to
generate funds to cover the sum of these items, it instead: (a) failed to cover operating
expenditures before FY96; (b) failed to meet debt service obligations since FY96; and (c)
gene]rated cash from operations sufficient to cover only about six percent, not twenty percent, of
capital expenditures\. Despite improvement in the last four years of the Project in operating ratios,
the overall financial performance during the Project has been one of clear failure\. These
shortcomings are to some extent understandable in view of the substantial Project cost increases
over the initial estimates (which were not of KWSB's doing and lead to a Supplemental Credit in
1993), but equally if not more important, this raises questions about the realism of the Project
financing plan\.
4\.3 Nret Present Value/Economic rate of return:
22 percent
The January 1993 Memorandum of the President (MOP) for the Supplemental Credit
estimated the economic internal rate of return (EIRR) at 11 percent\. Retrospective analysis of
data provided by KWSB shows that the realized economic rate of return was much higher: 22
percent (see annex 3 for details) under the assumption that physical losses are 35% (a
conservative estimate according to all consulted sources) and water is valued at two-thirds of
present tanker supplied water prices that the population has been shown willing to pay\. The
Project economic returns exceeded expectations, partly because of cost savings in construction
-9-
(against the cost estimates used in the Supplemental Credit), and partly because of questionable
conservative financial projections\. Additionally, O&M costs are lower than the MOP assumed 5
percent of capital costs, and market prices for water, estimated in the MOP to be constant over
the life of the Project in real terms, have instead been slowly increasing\.
4\.4 Financial rate of return:
N/A
The SAR did not include a financial IRR for the project\.
4\.5 Institutional development impact:
Modest
On balance, the Project failed to improve KWSB management capacity and institutional
setting far beyond its condition at the end of previous IDA-supported activities\. The Board did
not substantially upgrade its competence in planning, project execution or service delivery as a
result of the technical assistance provided\. It has barely changed to become more independent
and competent\. Also, it does not have the required capacity to gather or analyze essential data
and its information system is not comprehensive\.
Little management capacity, despite the enthusiasm and commitment of most Board
members, combined with insufficient autonomy and lack of an independent, adequate regulatory
framework to carry out essential management decisions, such as tariff fixing, are the main
obstacles faced by KWSB to improve the quality and financial sustainability of its service\.
5\. Major Factors Affecting Implementation and Outcome
5\. Factors outside the control of government or implementing agency:
The Project was scheduled over an eight-and-a-half-year period in recognition of the fact
that it was larger than the First Project (Cr\. 1374)\. In the end it was concluded in nine years\.
Project implementation before the adoption of a revised plan (ref\. para\. 3\.4) and supplemental
credit was marred by the emergence of cost overruns over the initial estimates (ref\. para\. 3\.5)\.
Overall, the Project took between PCD approval and Appraisal and Closing date 12 and 11 years
respectively\. This large span weakened the leverage the Project could exert to facilitate
institutional reforms and the development of an adequate environment for sector improvement\.
Little interest by foreign contractors in bidding for the civil works was mentioned in the
supervision reports among project execution difficulties\. Contracting was also slowed because
ODA/CDC procurement requirements complicated matters (and incidentally hiked plant and
equipment costs)\. Too frequent government changes in Sindh Province and law and order
problems in Karachi hampered Project implementation as well\.
5\.2 Factors generally subject to government control:
KWSB's limited autonomy within the Municipality and Province caused significant
implementation problems\.
Cumbersome approval and review procedures in Pakistan caused initial delays in project
- 10-
execution while the tardy effectiveness of the supplemental Credit impeded contract awards\.
Additionally, the Government's replenishment of the counterpart revolving fund grew irregular,
thereby delaying contractor payments\. Furthermnore, KWSB's finances persistently suffered from
high levels of public sector arrears\. Consequently, KWSB was unable to generate sufficient
contributions to capital or cover the mounting debt service problems\. The provincial as well as
local government and KMC should have done more to reduce their overdue payment arrears, as
well as to improve KWSB's management capacity and autonomy\.
5\.3 Factors generally subject to implementing agency control:
KWSB desired to employ local contractors in the works in order to increase their
experience in such activities\. But this laudable objective had adverse consequences\. The works
were obstructed by these firms' inexperience in such operations and their limited capital
resources, several of which required corrective measures\. Consequently, save for a tunnel bypass
activity, no contract was completed within its original schedule\. Only the pipeline contracts were
completed within their extended deadlines\. Although management capacity, including financial
management, was weak in KWSB and only achieved limited improvements, this was not a major
reason for these delays\.
5\.4 Costs andfinancing:
The Project downscaling (ref\. para\. 3\.4) led to a revised funding plan which reduced the
cost estimate while the projected foreign exchange component increased\. IDA's portion thus was
programmed to rise from $125 million to $217 million with the help of the Supplemental Credit,
while local sources' portion increased from $38\.5 million to $66 million\. ODA/CDC were
scheduled to continue to finance a significant share of the foreign costs\. IDA thereby assumed a
far greater share of total costs, rising from 38 percent to 67 percent, while the co-financing share
dropped from 42 percent to 15 percent\. At project completion, the actual figures were below
these estimates, except for IDA's larger contribution (ref\. Annex 2)\.
6\. Sustainability
61 Rationale for sustainability rating:
Sustainability: Unlikely
The K2 works are completed and functioning\. But the prospects for their sustainability as
those of the other project achievements are full of uncertainties\. Because of the rush to make the
K2 works operational, many of the technical tasks were not fully carried out\. Some of the minor
works (employees' housing, the walls surrounding the Dhabeji pumping station and the water
treatment plant) were not completed, and the conduits, pumps and the water treatment plant
untested\. These tasks are likely to be finished in time, but KWSB's record of poor operations and
maintenance practices pose concerns about the durability of, and obtaining full benefits from, the
Project investments\. Inspection, flow measurement, cleaning and maintenance of the water
systemn have been infrequent over the years\. And KWSB does not have accurate data on pump or
rising main performance\. Further, the four 40-year-old pumping stations are beyond their design
life and already rely on their standby pumps\.
6\.2 Transition arrangement to regular operatiosns:
In light of these deficiencies, several Bank missions recommended that KWSB involve a
- 11 -
private operator to ensure quality functioning of its new assets\. Nothing came of this proposal at
the time\. During the ICR mission though, new Government authorities expressed interest in
enlisting IDA funding for such a scheme to help provide a basis for continuing effective operation
of the Project\. However, even success in achieving the latter would only partially alleviate sector
conditions --and still not adequately address the basic Karachi water problems, such as excessive
leaks, in-efficient allocation of water among users, control of water "mafias" and adequate
commercial practices\.
There are substantial grounds to judge that the solution to Karachi's water problems
should not depend as exclusively as initially perceived on supplementing the city's gross supply\.
Important as have been the efforts to augment the latter, there should be more weight given to
improving management capacity and providing the adequate regulatory and institutional
framework to allow it to improve efficiency and operation, as well as introduce demand
management measures\. As mentioned, KWSB has failed to significantly cut its high water losses\.
Moreover, the known deficiencies in the distribution system are considered substantial enough to
crimp the realization of the full benefits of the additional water from K2\.
On these accounts, it appears clear that a fundamental management and regulatory change
is needed, rather than to continue pursuing incremental KWSB improvements along the past
approaches\. Some of the steps on the path to follow can be suggested from the experience and
lessons learned with the execution of this project:
* One might be to implement a coherent decentralization of some water sector services in a
manner that opens a substantial role for private enterprise\. Engaging more market-disciplined
operators appears necessary for replacing KWSB's outdated management practices and
responding to demands more agilely\.
- A second element is to put greater emphasis on water distribution, reduction of water losses,
introduction of demand management and better and more equitable allocation, with less focus
on production\.
* A third element is to recognize that Karachi's economic and social conditions do not lend
themselves to solutions dependent on market-level financial performance\. Full (or even quite
high) recovery of water charges is dubious in the short term at such low income levels\.
* Another would be to draw on international successes in effective civil society collaboration
with local government and private operators in meeting essential urban services, which
Karachi in fact provides\. Its low-income Orangi settlement and a local research and training
institute have evolved a partnership scheme that has helped overcome sewerage problems for
over 15 years\. It has since been replicated in over 45 other settlements in Karachi and 7 other
cities\. To be sure, there are great differences between the Orangi's experience in building
flush latrines and secondary sewers compared with the construction and operation of far more
costly, complex centralized water system infrastructure\. However, the partnership model has
been shown globally to confirm the willingness and ability of local groups (along with NGOs)
to help organize and even assist in managing public service facilities-as well as to invest in
these measures\.
- 12 -
The success of the suggested reform path outlined above depend on many unresolved
issues though\. These refer mainly to the existence of sufficient agreement among the different
actors in the society (both official and non-official, particularly through the local NGOs, some of
which have been a vocal opponent to the involvement of the private sector) on the reform path
and the subsequent development of an appropriate regulatory framework\. Governance, adequate
treatment to low-income areas, social acceptability of the PSP model to use and improvement of
financial management practices should be the priority issues to address\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Unsatisfactory
The shortcomings in project appraisal and preparation discussed in para\. 3\.5 were
supplemented by the inadequate appreciation during these processes of the extent of Karachi's
sizeable infrastructure backlog\. The Project did not address the lack of an adequate regulatory
framework that could facilitate the reforms and developments needed to improve service quality
in a sustainable way\. There should have been a stronger appreciation that the 20 percent capital
expeniditure coverage target was unrealistic and an inappropriate motif of the Credit's financial
conditions\. The team also appeared to have made a too optimistic assessment of the commitment
of the government and KWSB's capacity-strengthening prospects\.
7\.2 Supervision:
Unsatisfactory
Although the Bank accurately and fairly judged, rated and reported project implementation
progress and performance, it failed to appreciate the importance that institutional reform and
adoptiion of an adequate regulatory reform had to achieve project objectives in a sustainable
manner, inappropriately stressing physical achievements over overall service development\. On the
positive side, it gave helpful technical advice to KWSB and the government in very supportive
ways\. It maintained a positive balance between rigorously enforcing Credit covenants (which was
instrumental in KWSB's staff reduction and cutting the payment arrears of Karachi government
agencies) and showing flexibility when needed\. At a critical juncture, the Bank demonstrated
notable cooperation by significantly increasing funding support for the Project, which served to
offset the Borrower's and Government's failures to provide their scheduled contributions\. It did
the same also in agreeing to cut the sum required for replenishing the counterpart revolving fund\.
Also\., at one point, the IDA team carried out a helpful participatory-type examination of KWSB's
institutional problems and exploration of options for its strengthening (abetted by ODA and
PHIRD support), although KWSB did not implement them\.
- 13-
With hindsight, it can be considered that project closing date was correctly extended to
complete on-going works and allow the entrance into operation of the expanded system\. Despite
the sustainability issues referred to above and the lack of advance in the institutional development
of KWSB, the completed works proved critical to, in the short term, avert a huge water crisis
with its related social and political costs\.
Both the initial appraisal report and the MOP for the supplemental credit state that the
Project's civil works are almost exclusively in desert areas or in land already owned by the
Government/Board, and therefore KWSB did not need to relocate or resettle any local people\.
No reference on resettlement have been found in the project records --even though US$930,000
was spent on land acquisition--, and Bank safeguard policy on resettlement seems to have been
properly complied with\.
7\.3 Overall Bank performance:
Unsatisfactory
The overall Bank's performance is judged unsatisfactory primarily because its contribution,
instrumental for the completion of the physical works, failed to achieve their sustainability\.
Although attention during supervision was also given to some factors that affect the financial
viability of KWSB, such as adequate tariffs and staffing levels, and advances can be seen in these
areas, it failed to adequately address essential issues related to the regulatory and institutional
framework and the Government's commitment to the Project's concept and objectives (ref\. paras\.
7\.5 below)\. This is despite the recognition of the importance of the completed works and their
impact on the preservation of essential water supply volumes for Karachi's needs in a critical
period\. These would not have been accomplished --and Karachi's condition could have been
more perilous-- without IDA's help\. Similar assessment applies to KWSB's organizational
improvements\. However, it bears noting the abundance of IDA's resources devoted to alleviating
Karachi's water problems\. From January 1984 until December 1989, three IDA projects
addressing these problems were being implemented (Karachi Water Supply I, Credit 1374,
US$25\.0 million; elements of the Karachi Special Development Project, Credit 1652, US$70
million, and K2, US$217 million)\. A fourth project was prepared (but ultimately foundered)
during K2's execution\.
Borrower
7\.4 Preparation:
Satisfactory
Within the limits of its technical capabilities, KWSB ably contributed to project
preparation\.
7\.5 Government implementation performance:
Unsatisfactory
Government support was particularly deficient in not providing a suitable policy
environment for its desired decentralization of sector financial responsibilities, including the
- 14 -
development oif an adequate regulatory framnework for the service that delegated management
autonomy to K'WSB\. As a result, KWSB's --and Karachi's municipal-- officials were too closely
engaged in day-to-day operations and management decisions more suitably left to technically
skilled KWSB personnel\. Additionally, the absence of consistently timely, adequate counterpart
funds caused costly problems\.
7\.6 Implementing Agency:
Unsatisfactory
KWSB performed well in comrpleting the civil works largely on time, bettering its past
operations\. However, this was overshadowed by its limited progress in upgrading other aspects
of its functions and meeting Project commitments (ref\. paras\. 4\.2 B and C, 4\.5, 5\.3, 6\.1)\.
Additionally, it showed poor project financial management, including a lack of adequate financial
controls as reflected in qualified audit reports and insufficient follow-up of significant audit
observations\.
7\.7 Overall Borrower performance:
Unsatisfactory (for the reasons indicated in paras\. 7\.5-7\.6)
8\. Lessons Learned
Three main lessons can be drawn from this project's implementation: (i) the need for an
adequate regulatory framework that provides sufficient management autonomy and a path for
reform that guarantees sustainability; (ii) the limitations of financial covenants and conditionality
without the former; and (iii) the need to incorporate in project design valuable local experiences,
particularly when they specifically address poverty alleviation\.
Project results show the importance of addressing the lack of a regulatory framework,
together with the strengthening of the institution and the execution of physical works\. No action
on the regulatory framework that would give KWSB management the autonomy to undertake the
changes--private sector involvement sector, tariff adjustments, collection enforcement through
service disconnection and demand management, among others-prevented its capacity to improve
service quality in a sustainable manner\. Without this regulatory framework in place, KWSB's
management team ability and possibilities to make full use of the support provided by the project
to strengthen the institution were greatly constrained\. Apart from limiting the sustainability,
subsequent management capacity shortcomings prevented the full realization of the project
benefits, as the increased supply achieved was partially offset by continued leaks, no demand
management and inequality in the allocation of the scarce resources available\. Related to this, the
project also shows wrong beliefs that tariff increases reduce collection efficiency\. KWSB's
collections kept pace with billings through the first half of the decade, through nominal tariff
increases of 50 percent and (twice) 30 percent\. However, real collections stagnated and the
collection ratio declined, from 1997 to 1999, when no tariff increases took place\. Rather than
tariff rates, collection efforts and commercial management capacity--and ultimately the existence
of an adequate regulatory framework-\.-explain poor collection performance\.
- 15-
This project provides yet another example of the limitations of financial covenants when
the implementing agency does not have de facto full authority to take all the actions needed to
assure full compliance\. It also calls into question the usefulness of focusing on financial
undertakings in designing Bank loan conditionality when the fundamental problems concern other
issues\. They were in this instance the obstacles to deal with "tanker mafias" and ensure the
adequacy of water supply (particularly to low-income customers comprising large portions of the
service market); lack of governance; and an adverse environment for commercial incentives\.
Third, the reasons for the unsatisfactory outcome of the Project show the importance of
incorporating in project design the valuable local experiences available\. The Orangi experience,
with its lessons of community involvement and responsibility sharing, would have been of great
value in giving more attention to the issues of leak's control and equitable allocation of resources,
which have a significant impact on the poor communities of the city\.
Weak management, including poor financial management, is the main factor that prevented
KWSB from performing more efficiently\. Some lessons can be drawn from this experience: (i)
for a project that put so much emphasis on the utility's gaining financial self-sufficiency, the
design/appraisal of the financial management capability was entirely inadequate, with a too small
budget ($1\.5 million) for TA, and only limited provisions in the TA description for this purpose;
(ii) while KWSB finally got a clean audit report, the ICR mission's discussion with the auditors
(from the private sector and well regarded) raised numerous questions about their capabilities,
thus, even though the Bank can't check out auditors in the normal course of project
preparation/supervision/ICRs, some form of control of their work might be necessary; and (iii) to
devise a suitable strategy for making/keeping itself more financially viable, KWSB lacked --and
needed as a priority-- to bring together its sorry tracking of losses/collections/UFW and assess
(from a financial management standpoint) their collective picture\.
Finally, although the scope and complexity of the works to be financed and the weak
implementation capacity of KWSB recommended a long implementation period, its excessive span
(12 years from PCD approval to completion) made it more difficult still to achieve the institutional
objectives of the project\. It also hindered the possibility to identify --and address-- issues not
properly identified during preparation, such as the need to improve the regulatory framework for
the sector\. A series of projects, with smaller project implementation periods, might be more
efficient to address the complicated issues and sector development difficulties in situations like
this of Karachi\.
9\. Partner Comments
(a) Borrower/implementing agency:
KWSB stated that its principal lessons from the project experience were:
(i) the utility of having established a separate executing entity (the Development Wing) to
administer foreign-aided projects;
(ii) the benefit of having delegated full authority for the Project to an internal steering
committee;
- 16 -
(iii) the benefit of international consultants' support from the very initial stages to assist
the Board in planning the implementation of the Project, monitoring and evaluating it, providing
monthly reports on its progress, and assisting in sorting out disputes during its implementation;
(iv) the usefulness of having procedural manuals and updating them, as well as maintaining
project databases, during project execution; and
(v) the benefits of linking Government requirements for payments with IDA audit
requirements\.
More detailed comments are included in Annex 8\.
(b) Cofinanciers:
The Bank team preparing this ICR asked for comments from ADB and DFID in response
to the references made by KWSB to their participation in the project\. These comments had not
been received at the time of going to press\. If received, they will be added to the project files\.
(c) Other partners (NGOs/private sector):
As part of project evaluation, a workshop with all involved stakeholders took place in
Karachi, from June 28 to 29\. The conclusions of this workshop will be available after this ICR
goes to press\. They will be added to project files
10\. Additional Information
n/a
- 17 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome / Impact Indicators:
1\. Water Transmission and Distribution
Construction of about 150km water Provision of about 1 OOkm of second The works constructed began at Guijo, some
transmission system conveyance system for 100mgd more raw 90km southeast of Karachi, from where the
Indus water to new treatment facility at water gravitates 30km to Dhabji\. From there,
northeast Karachi the water is pumped to High Point and again
gravitates in a conduit some 50km to the
northeast Karachi treatment plant\. Water
treated there either gravitates or is pumped
into the distribution system through new
pipelines\. The new system was brought to
full capacity (496,480 m3/d) by December
1998, The works included:
-Built new headworks at the tail of the
Kinjhar/Guijo canal\. They were connected to
the existing canal system (without disruption
to water supply) in April 1998\.
-Installed some 9\.8km conduit and road
crossing under National Highway and 2km
pipe to cross Gharo creek
-Built forebay structure at
High Point; reinforced conduit of 3\.85km
and, 13km conduit; buiKt pipes for crossing
Sukkur Nallah; and built an additional 13km
concrete box conduit
-Built a twin rising main 4\.6km long, along
with major road and railways crossing
-Constructed 6km pipelines to transmit
320,000 m3/day to University Reservoir
-Constructed 4\.4km long pipeline designed
to transmit 140,000 m3/day of treated water
to central Karachi
-Installed 130 meter and 6,565 meter
pipelines to improve distribution to northeast
Karachi zone
-Installed 2,914 meter and 35 meter
pipelines to improve distribution to central
Karachi zone
-Built concrete reservoir of 45,460 ,m3
capacity within site of NE treatment works
-Strengthening of the primary distribution -Reduction of distribution mains to some
system through provision of about 50km of 10km; elimination of mains in southeast
new mains in northeast, southeast and Karachi
central Karachi
-Repaired and plugged 2,235 joint in Hub
-Addition of repairs to Hub system main main (which were 30 years old and leaking
badly)\. Works were canied while supplies
partially continued via a parallel main during
dosure period
-Kinjher/Guijo canal was remodeled
-Upgrading Koti Feeder and Kinjher Lake
works
-K3 engineenng not
-Preparation of detailed engineering for accomplished
Karachi IlIl Project (K3)
- 18-
2\. W\ater Treatment
-Expansion, construction and equipping -Elimination of expansion of treatment -Constructed 450,000m3/day works in
treatment facilities at Pipri, Manghopir and facilities northeast Karachi for direct sand filtration,
northeast Karachi -Construction of facilities limited to northeast with pump stations, administration building,
Karachi standby generator house and site works
-Installed complementary plant and
equipment at northeast Karachi treatment
site for manufacture, installation and
commissioning of equipment
-Built treatment plant works boundary and
staff housing
-Expansion of pumping station at Dhabeji -Expanded the Dhabeji station to capacity
477,000m3/d; constructed its boundary wall
and staff housing; installed equipment for its
mechanical and electdrical plant; installed
rising main, major road and railway
crossings\.
-Computerize data systems for water -Deletion of provision for introduction of -System management study partially carried
operations computer-based inventory of water network out
and improved mapping of water system
-Study on improving water system -Addition of preparation of study for -Consultants assisted in the preparation of
management privatization of water distribution functions in privatization proposals, which were set aside
high income areas
-IDA support provided for carrying out
detailed study of Karachi's overall water loss
reduction and system strengthening needs\.
A project addressing these was prepared\.
However, it did not advance because of
problems over the proposed privatization
measures\.
3\. Institutional Strengthening
-Modifying KWSB's organizational structure; -Added preparation of a corporate plan and -Some restructuring was carried out and
systems and procedures; training senior an agenda and strategy for a private sector elements of a corporate plan were prepared\.
managers and key technicians; role As indicated above, a strategy for a private
sector role was designed but this was not
implemented\.
-Establishing Development Wing -Achieved
-Study metering and preparation of metering -Study canied out but recommended
program program was not implemented due to
problems regarding metering equipment
-Train KWSB staff in engineering, -Board staff received considerable
;procurement, operations and management on-the-job training in these fields
-Build and manage training center -Attempts were undertaken to build the
center but these uitimately were abandoned
-Increase collections -Added provision for fumishing collections
division with PCs
- 19-
-Complete computerization of billing and -Added provision for upgrading mainframe -Progress on computerization of financial
collections; upgrade financial planning and computer operations
budgeting
-Review tariff structure and implement -There were some analyses of tariffs but
recommendations their condusions were not comprehensively
implemented\. Tariff adjustments were only
ad hoc
-Develop and manage consumer education -Relatively little was carried out
program
-Computerize information system for -Not done
operations and inventory of sewerage maps
-Equip KWSB for industrial effluent survey -Industrial effluent monitoring equipment
and monitoring installed and KWSB's laboratory is
operational
-The Sindh Protection Agency was
established, but it proved to be ineffective,
partly for lack of funds\.
-Strengthen KWSB/GOS to enforce -The KWSB and KMC Council passed
environmental ordinances; establish Sindh sewage by-laws\. These are being considered
Protection Agency; begin actions on priority by the Karachi Council\.
environmental issues
Output Indicators:
-Potable water supply was increased by -The project's successful addition of 105
about 100 mgd mgd
(19,480 more cubic meters per day than
projected) increased water production for
Karachi's needs\. However, there was a
depletion of Hub reservoir supply at the same
time\. Normally 100 mgd, it now fumishes
only some 15 mgd)\. Thus, K2's production
provided less of a net increase than an offset
for Hub's reduced supply-although it was
very tmely and helped avert a more serious
tightening of supply\.
-Reduce water wastage -The reception of the new supply has been
favorable in the areas most directly supplied
by it, whose previous volumes were poor\.
-Water transmission system investments
listed above:
(a) provide control facilities to divide water
flow between KWSB system and new canal
works;
(b) new pipelines enhance distribution in
urban areas
(c) Kinjher/Guijo canal remodeling permits
conveyance of entire Federal water allocation
from Indus to head of project works at Guijo
-Northeast Karachi treatment facility
provides first stage of facility aimed to
ultimately have capacity of 200 mgd
- 20 -
-KWSB acivities to reduce leakages in hts
system included the above noted repairs in
the 66 inch diameter trunk main carrying
water from Hub reservoir\. These are
estimated to save some 6-8 mgd of water\.
-Metering program had no impact
-KWSB collections improved to 90 percent -KWSB progressively lost ground in
of billings, and water bills are settled within collection effidency\. The average collection
three months peiiod rose from some 525 days in FY91-96
to about 1,066 days in past three years\.
-K'NSB achieve a self-financing ratio of at -KWSB survived through the 1990s through
least 22 percent subsidies; has only recently run an operating
surplus\.
-KNSB generate funds sufficient to cover
20 percent of capital expenditures beginning
in FY92
-KVVSB achieve debt service coverage of no -KWSB has failed to meet debt service
less than 2\.3 requirements since FY96\.
-KWSB's billings rise from Rs\. 510 million -Billings in real terms increased by over
in '1988 to Rs\. 1,332 million in 1993\. 150%\.
-KWSB's annual collections exceed Rs\. 1\.3 -Real collections increased about 89 percent
million in FY91-99\. However, arrears remain high\.
-KWSB reduce its personnel and not -KWSB cut staff 46 percent in 1995-96 and
increase its manpower costs in real terms contained staffing costs thereafter\. In
addition, KWNSB's 1997-98 direct expenses
were below those for 1994-95\.
End of project
- 21 -
Annex 2\. Project Costs and Financing
Pro ect Cost by Comr nent (in US$ million e uivalent)
Civil Works 192\.70 213\.60 110\.84
Equipment and Installation 65\.90 74\.52 113\.08
Institutional Strengthening 18\.40 19\.71 107\.12
Engineering and Supervision 22\.60 17\.03 75\.35
Land Acquisition 3\.70 0\.93 25\.14
Total Baseline Cost 303\.30 752\.99
Physical Contingencies 15\.00
Price Contingencies 13\.40
Total Project Costs 331\.70 752\.99
Total Financing Required 331\.70 752\.99
*Revised estimate (Ref\. MOP, January 14, 1993)
Project Costs b Procurement Arran ements (A raisal Estimate) (US$ million equivalent)
1\. Works 216\.20 0\.00 0\.00 0\.00 216\.20
(173\.00) (0\.00) (0\.00) (0\.00) (173\.00)
2\. Goods 0\.00 1\.10 0\.00 67\.70 68\.80
______ __ (0\.00) (0\.90) (0\.00) (0\.00) (0\.90)
3\. Services 0\.00 0\.00 43\.00 0\.00 43\.00
(0\.00) (0\.00) (43\.00) (0\.00) (43\.00)
4\. Miscellaneous 0\.00 0\.00 3\.70 0\.00 3\.70
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 216\.20 1\.10 46\.70 67\.70 331\.70
(173\.00) (0\.90) (43\.00) (0\.00) (216\.90)
- 22 -
roject Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
Procument Method\.
Expedfture Ctgory ICP rNCF Oter \. Total Cost
1\. 'Works 213\.60 0\.00 0\.00 0\.00 213\.60
(188\.77) (0\.00) (0\.00) (0\.00) (188\.77)
2\. Goods 0\.00 0\.30 0\.00 74\.22 74\.52
_____________________ (0\.00) (0\.24) (0\.00) (0\.00) (0\.24)
3\. Services 0\.00 36\.74 0\.00 36\.74
_____________________ (0\.00) (0\.00) (36\.74) (0\.00) (36\.74)
4\. Miscellaneous 0\.00 0\.00 0\.93 0\.00 0\.93
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
_____________________ (0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
_____________________ (0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 213\.60 0\.30 37\.67 74\.22 325\.79
_____________________ (188\.77) (0\.24) (36\.74) (0\.00) (225\.75)
4\. 1Miscellaneous=Land Acquisition
" Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\.
2 2\. Goods -- N\.B\.F\. figure cofinanced in parallel by ODA/CDC: procured in accordance with ODA and CDC
regulations\.
- 23 -
Annex 3: Economic Costs and Benefits
Net Present Value/ERR: 22 percent
The January 1993 MOP for the Supplemental Credit estimated the economic internal rate
of return (EIRR) at 11 percent\. Retrospective analysis of KWSB's data provided by KWSB
shows that the realized economic rate of return was much higher: 22 percent\. The Project
economic returns exceeded expectations, partly because of cost savings in construction (against
the cost estimates used in the Supplemental Credit), and partly because of questionable
conservative financial projections\. Additionally, O&M costs, which the MOP assumed would be
equal to 5 percent of capital costs, are lower, and market prices for water, estimated in the MOP
to be constant over the life of the Project in real terms, have instead been slowly increasing\.
To be in the conservative side, the analysis assumes that: (1) KWSB will fail to reduce
system water losses to below 35 percent in the next twenty years; and (2) realized benefits, even
for delivered water, would be only two-thirds of observed tanker prices that the population has
been shown to be willing to pay\. In addition, the EIRR calculation limits the time horizon to the
year 2018, instead of extending it to the full forty-year span of the Project\.
- 24 -
PAKISTAN
SECOND KARACHI WATER AND SANITATION PROJECT
ECONOMIC INTERNAL RATE OF RETURN
(ICR)
Costs | Benefits
Project O&M Incremental Incremental Incremental Net
Capital Cost Production Delivery Revenues Benefit
Year Rs Ml Rs\. Milf MGD3 MGD4 Rs\. Mil5
Pre-93 842 (842)
1993 686 (686)
1994 768 (768)
1995 807 (807)
1996 1,155 (1,155)
1997 946 (946)
1998 860 303 55 36 1,353 285
1999 508 329 100 65 2,507 1,620
2000 329 100 65 2,556 2,177
2001 329 100 65 2,605 2,226
2002 329 100 65 2,655 2,276
2003 329 100 65 2,706 2,327
2004 329 100 65 2,759 2,380
2005 329 100 65 2,812 2,433
2006 329 100 65 2,866 2,487
2007 329 100 65 2,921 2,542
2008 329 100 65 2,978 2,599
2009 329 100 65 3,035 2,656
2010 329 100 65 3,094 2,715
2011 329 100 65 3,153 2,774
2012 329 100 65 3,214 2,835
2013 329 100 65 3,276 2,897
2014 329 100 65 3,339 2,960
2015 329 100 65 3,404 3,025
2016 329 100 65 3,469 3,090
IRR 22\.03%
NPV@10% 5,229 1,862 | 15,236 7,947
- 25 -
Notes:
Water values were estimated at two-thirds of estimated tanker prices for water\.
Observed tanker prices were: (I) Rs\.100/1,000 gallons in 1990; and (2) Rs\.300-400/1,000 gallons in 2000\.
A water value of Rs\.350/1,000 gallons was used in the analysis\. This value was converted to 1993-equivalent prices\.
The real growth rate in the value of water was calculated at 1\.9 percent per year from 1990 to 2000\.
This growth rate was assumed in the 1 990s and for the remainder of the project\.
Source: Karachi Water and Sewerage Board
-26 -
Annex 4\. Bank Inputs
(a) Missions:
S_age of Project Cycle No\. of Persons and Specialty Performnn Rai
(e\. 2 Economists, I FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
n/a n/a n/a
n/a n/a n/a
Appraisal/Negotiation
December 1987 na n/a
March 1992 4 1 SE; 1 Ec; I Eng; I Consultant;
(supplemental credit -- 1 FA
Cr\. 1987-1)
Supervision
n/a n/a n/a
July 1989 4 1 OS, 2 SE, I FA HS HS
December 1989 2 1 SE, I FA HS HS
July 1990 I I SE HS HS
February 1991 2 1 SE, 1 FA HS HS
July 1992 2 1 Eng, I Consultant S HS
December 1992 2 1 Ec, I SE HS S
July 1993 3 1 OS, I SE, I FA HS S
February 1994 3 1 SE, I OS, I FA HS S
June 1994 3 1 FA, I OS, I SE HS S
October 1995 2 1 MFS, I SE S S
May 1996 2 1 MFS, I SE S U
October 1]996 2 1 MFS, I SE U U
August 1997 2 1 MFS, I EE U U
May 1998 2 1 WSE, I MFS S S
May 1999 1 IWSE S U
ICR
January 2000 3 1 WSE, 1 FA, 1 Consultant S U
Key:
Ec=Economist
EE=Environmental Engineer
FA=Financial Analyst
MFS=Municipal Finance Specialist
OS=Organizational Specialist
S]E=Sanitary Engineer
WSE=Water/Sanitary Engineer
- 27 -
(b) Staff\.
Stage of Project Cycle Actual/Latest Estimate
:::______________ _ :I No\. Staff weeks US$ (,000)
Identification/Preparation n/a n/a*
Appraisal/Negotiation n/a 253\.8*
Supervision 499\.5
ICR 38\.2
Total 791\.5
*Includes costs of Identification/Preparation/Appraisal/Negotiation\.
- 28 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=-High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
FMacro policies O H O SU O M O N * NA
FSector Policies O H OSUOM *N O NA
ZE Physical O H * SU O M O N O NA
F Financial O H O SU O M * N O NA
z Institutional Development 0 H 0 SU * M 0 N 0 NA
IEnvironmental O H OSUOM * N O NA
Social
f Poverty Reduction O H OSUOM O N * NA
NGender OH OSUOM ON *NA
FE Other (Please specify) O H OSUOM ON * NA
F Private sector development 0 H O SU O M 0 N 0 NA
i Public sector management 0 H O SU O M 0 N 0 NA
M Other (Please specify) O H OSUOM ON * NA
-29 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
61 Bank performance Rating
1Z Lending OHS Os *U OHU
Z Supervision OHS OS *U OHU
H Overall OHS Os * u O HU
6\.2 Borrower performance Rating
Preparation OHS *S OU O HU
Government implementation performance O HS O S 0 U 0 HU
Implementation agencyperformance OHS OS * U O HU
Overall OHS OS * U O HU
- 30 -
Annex 7\. List of Supporting Documents
Available in Project files:
1\. ICR mission Aide Memoire
2\. Staff Appraisal Report
3\. President's Memo
Armex 8 -- Borrower's Comments
- 31 -
Annex 8: Borrower's Comments
Karachi Water and Sewerage Board\.
The Second Karachi Water Supply and Sanitation Project\.
(Credit 1987-1 PAK)
Borrowers Contribution to the Implementation Completion Report\. (ICR)
1\.0 Introduction\.
This evaluation statement has been prepared in compliance with the requirements of the IDA ICR preparation
procedures BP 13\.55 April 1994\. The statement is based the presentations of departments of KWSB and other
concerned authorities to the IDA ICR Mission of November 1999 but without repetition of facts and data already
contained in the IDA Implementation Completion Report\.
'The Federal Government allocation of water from the River Indus for the water supply of Karachi is 1200 cusecs
(approxirnately 650 million gallons per day (mgd))\. The Second Karachi Water Supply and Sanitation Project (KII)
was a step towards development of the water supply infrastructure serving Karachi, to convey and introduce into
the existing water distribution system, the balance of the federal allocation, This balance was of the order of 230
mgd\.
in parallel with and complementary to this development, the capacity of the sanitation infrastructure of the city was
to be increased\.
During the process of project preparation, increasing project costs and financial constraints led to decisions to
implement the project with a nominal capacity of 100 mgd but designed to facilitate future development of the
remaining balance of the federal allocation (130 mgd)\. In addition, full treatment of the 100 mgd scheme was to be
provided together with development of existing water treatment facilities to provide full treatment to all water
supplied to the city\.
From the inception of the project, the need for strengthening the institutional integrity and administrative capability
of the recently established KWSB was identified\. In addition, the distribution system required strengthening and
water loss reduced\. In consequence, components were introduced into the project to start to address these issues\.
The Project commenced against a background of preparatory work\. In particular, the locally funded Balance
Conveyance Scheme (nominally 42 mgd) and the rehabilitation of the KG Canal funded jointly by the IDA (Credit
1652) and the GOP under the Karachi Special Development Project I\. (KSDP 1) and the institutional strengthening
work carried out under IDA Credits 1652 and 1374\.
The most significant event during Project implementation was agreement on the reformulation of the project
definition and enhanced funding formalised in the Supplemental Credit Funding Agreement of 1993\. By this
agreement, the objectives of the Project were modified and the scope of the Project works reduced\. Specifically,
some physical works, mainly those associated with additional water treatment facilities at existing treatment works,
were deferred, increased emphasis was placed on leak detection and water loss reduction, revenue collection efforts
were to be enhanced, and an in depth examination of possible options for public/private sector participation in the
provision of water and sanitation services undertaken\.
-32-
Independently, preparation procedures for the funding of the sanitation element of the project by the Asian
Development Bank led to a reduction in the proposed treatment capacity from 94 MGD to 80 mgd to be provided by
two treatment works located at Mauripur (54 mgd ) and Korangi (26 mgd)\. Ultimately, funding constraints led to
the deferment of the Korangi plant and the work proceeded under the title of The Greater Karachi Sewerage Project
- Phase I (Stage 1)\.
It is against the objectives and definition of the reformulated projects of the IDA Supplemental Credit Agreement
and the ADB loan that this evaluation is made\. However, the opportunity is taken for observations regarding the
original scope of works\.
2\.0 The Project Objectives and Evaluation\.
2\.1 (a) To increase potable water supply by 100 mgd (about 31%) and further augment water
availability by strengthening loss reduction measures\.
The physical works of the water supply element of the Project were commissioned at full capacity in October 1998\.
These works which provide a new and complete 100 mgd water supply facility to the City of Karachi were a major
undertaking across some 120 kilometres from Gujjo in the east to the heart of the City distribution system\. The
measured discharge of the Dhabeji pump station with three duty pumps in operation (the design condition) was 107
mgd\. \.All elements of the bulk conveyance system proved capable of sustained operation at this flow, the water
treatment works proved capable of treating the flow to the specified standards, and the new primary distribution
mains successfully introduced the new water into the existing distribution system\.
The objective of development of the water supply infrastructure has been fully achieved\. However, the
comnissioning of the scheme coincided with an unprecedented reduction in the supply of water from the Hub River
source and was crucial to averting severe water shortage in the city\. As a consequence, the overall enhancement of
the water supply to Karachi has yet to be realised and its impact evaluated\.
Early work on the water loss reduction and leak detection in the context of the primary credit agreement assisted in
indicating extent and nature of the problem\. As a consequence, and consistent with the revised scope of the project,
repair of the Hub Trunk Main was included in the physical works programme of the project works redefined in the
Supplemental Credit Agreement\. In addition, under Part C:(c) of the project description, the Project Consultants
were commissioned to prepare a dedicated water loss reduction and system strengthening project, for appraisal by
the IDA\.
Repair of the Hub Trunk Main comprised the repair of approximately I Okm of 66 inch diameter (1 \.7m) prestressed
concrete pipeline using a proprietary joint repair system\. The contract period was four months from the instruction
to cornmence the work\. The work was in fact completed over a period of two years\. Primary reasons for the delay
were time taken to develop working techniques, the difficulty, given the already limited daily supply of water in the
area to give a series of closely spaced closures of the pipeline, and departmental interfacing within the KWSB\.
Following completion of the work subsequent inspections of the ground surfaces and drainage channels adjacent to
the main indicated that leakage from the barrel of the 66 inch main had been reduced almost to zero\. Proposals to
perform a drop test in the Hub Reservoir to measure residual leakage in the main were not performed due to the
continuing necessity to avoid disruption to water supplies\. Nevertheless, the performance of the work gave useful
inforrnation regarding the difficulties, organisational requirements, physical condition of large diameter water pipes,
and cost effectiveness of repair work which should be of use in future planning\.
-33-
The Water Loss Reduction and System Strengthening Project was prepared and available for appraisal by the IDA,
by June 1996\. No Appraisal was performed\. This component of the of the Project, intended to provide a spring
board to the implementation of work in this crucial area of neglect, has therefore not precipitated the progress hoped
for\.
2\.2 (b) Improve the financial viability of KWSB through increased revenues, cost reductions, and
greater operational efficiency\.
Measures introduced as a result of the terms of the Credit agreement (improved revenue collection and regular tariff
increases\.) resulted in a significant increase (approximately six fold) in revenue from the sale of water and related
charges over the life of the Project\. This improved performance continues\. However, revenue remains well below
both billed and potential revenue\. Increases in water charges have been resisted by the Government at each stage
and have been approved only as a result of pressure of potential consequences of default on agreements with the
IDA in the context of the Credit agreement\.
The requirement for the KWSB to reduce costs by reducing the total number of personnel engaged was tackled with
great difficulty\. Never the less, a substantial reduction was achieved, by a combination of both disciplined
application of terms of employment and a scheme to encourage personnel to leave the their employment\. The
personnel of the KWSB was reduced from approximately 14,000 to approximately 8500\.
While assisting materially with the financial management of KWSB it is not perceived that operational efficiency in
the KWSB has improved as a consequence of these achievements\.
2\.3 (c) To improve the organization and management of KWSB\.
Consequent upon earlier studies and actions, particularly those resulting from Credits 1374 and 1652, the
organisational structure of KWSB was reformed\. The KII Project built on this restructuring by confinning the
identity and enhancing the performance capability of some departments\. In particular, the establishment of the
Development Wing as a dedicated unit in its own separate offices and the capability finance department\., training
exposure and computerisation of the accounts department\.
The Development Wing was successfully established in new offices under the Director of Foreign Aided Projects\. It
played a crucial role in the performance of the Borrowers obligations and in coordination, administration,
supervision, and ultimately the completion of all aspects of the Project\.
By working as part of the construction supervision organisation of the Project Consultants, or interfacing with them
in the performance of the obligations of the Employer under contracts for the procurement of physical works, staff
of the Development Wing gained significant first hand experience of construction supervision and contract
administration
The improved performance of the Finance Department is clearly demonstrable in the increasing billing and
collection of water charges and operation of disbursement procedures and rapidly available financial data\. In
addition, the Department prepares its accounts annually to a standard conforming with International Audit Standards
(IAS)\.
Except as a result of steady strengthening of the capability of the Development Wing and the performance of the
Finance Department, there have been no significant improvements in the organisation and management of KWSB
which are attributable to the Project\.
2\.4 (d) To improve sanitation in the City including its low income and coastal areas by increasing
sewerage coverage by 232 mgd and treatment capacity by 94mgd\.
-34-
Independent of the Water Supply Component, preparation procedures for the funding of the sanitation element of
the project by the Asian Development Bank led to revision in the proposed treatment capacity from 94 mgd to 80
mgd\. This additional capacity was to be provided by two treatment works located at Mauripur (54 mgd ) and
Korangi (26 mgd)\. Ultimately, funding constraints led to the deferment of the Korangi plant and the work proceeded
under the title of The Greater Karachi Sewerage Project - Phase I (Stage 1)\.
The Mauripur treatment works was commissioned in December 1997 with a capacity of 54 mgd\. In addition, the
Lyari Trunk sewer having a capacity of 138 mgd was laid together with some 31\.25 km of trunk and secondary
sewers in the Baldia area\. These sewers serve significant low income areas but not coastal areas\. The Project did not
include extensive tertiary sewers\. The KWSB are working to connect existing upstream networks to the Project
trunk mains and to construct improvement works to increase the load delivered for treatment at Mauripur\. These
works are being funded from local sources and by this means the area effectively served is steadily being increased\.
Throughput at Mauripur treatment works is currently of the order of 35 mgd\.
The primary physical objectives of the Project have been substantially achieved though the full benefit through
ongoing expansion of the sewerage system is yet to be achieved\.
Primary project covenants to increase the Sewerage Tax and increase revenue by improved tax collection have been
partially achieved\. The sewerage tax is levied on all water consumers who have been reluctant to pay the tax before
the benefit of the expanding sewerage system is available to them\.
3\.0 Implementation Record and Major Factors affecting the Project\.
3\.1 Physical Works\.
Water Component\.
The implementation of the Project was not performed within the time frame of the original credit\. The time frame
was extended by two years from June 1995 to June1997 in the Supplemental Credit Agreement and subsequently to
June 1998 by which time the physical works were substantially complete\. A further one year extension was granted
to permit the completion of outstanding works and to facilitate discharge of the final contractual obligations of the
KWSB\.
The principal reasons contributing to delay were-
(i) The initial inadequacy of project funding which became apparent shortly after award of the early
construction contracts\. This led to delay in the award of further contracts until the Supplemental
Credit Agreement was made effective in 1993\. The principle reasons for the inadequacy of
funding are presented in the IDA Report P-5794-PAK dated January 1993\. These reasons were
changes in the scope of some civil works, escalation in prices of construction materials, currency
exchange rates, low contingency provisions, and a mixed response from foreign contractors\.
(ii) Following the Establishment of the Supplemental Credit and as a consequence of the quality of
response resulting from the initial contract procurement procedures, the IDA required that these
procedures should be reviewed and revisions approved before further contract procurement could
proceed\.
The results of the review were development of a strategy to promote participation in the bidding
process of local contractors, revision of the prequalification documents from a subjective points
system to a simple pass/fail system against non subjective criteria and the appointment of the
Project Consultants as the Engineer rather than an officer of the KWSB\.
-35-
Consequent upon the Review and implementation of its results, bidding for the nine remaining
contracts, including all the trunk distribution mains to be laid in urban Karachi, was not
commenced until December 1994 leading to award of the contracts in September 1995\.
(iii) Following award of the pipe line contracts the Pakistan Steel Corporation, a protected industry in
Pakistan, was unable to supply hot rolled steel coils for conversion into welded steel pipe\. These
unforeseeable circumstances led to conflict with the IDA Procurement Procedures which in turn
required renegotiation of affected materials supply clauses of the concerned contracts\. As a
consequence, contractors were unable to place orders for pipework until September 1996\.
(iv) The construction contracts awarded prior to revision of the contract procurement procedures were
all significantly late in completion\. The principal reasons appeared to be poor construction
management, and the use of sub-contractors of dubious status\. Also, because of delays to
commencement in other works, some Contractors appeared to become complacent as it was clear
completion of their contracts did not threaten commissioning of the Project as a whole\. The later
contracts, with the exception of staff housing, performed significantly better\.
In the case of contracts for the civil works construction of the NEK Treatment Works and the
Dhabeji Pump Station (bid prior to the Supplemental Credit Agreement but as a condition
enforced by IDA, not awarded until immediately after it) the delays in completion led to
consequential delay in commencement of erection of electrical and mechanical plant, and
ultimately, commissioning, and significant justifiable claims from the plant contractor\.
Sanitation Component\.
The implementation of the Sanitation Project was delayed by approximately nine months due to suspension of the
Loan on account of KWSB having not settled accounts with the KESC\. In addition, some further delay was
attributable to contractor=s performance for reasons similar to the Water Component\.
Ultimately, due to local political perceptions towards the end of the Project, KWSB requested alteration to some
components of the Works\. This proposal was not acceptable to the ADB and in consequence some sewer laying was
not commenced and ultimately the opportunity to construct these works was lost\.
3\.2 Project Funding\.
Provision of counterpart funding (GOS/GOP) frequently fell short of both the projected funding requirement and the
actual demand\. In consequence, disbursement from the IDA Credit was on occasions withheld\. Ultimately, full
counterpart funding was provided which enabled all financial settlements to be made in respect of works funded
from the Credit before its closure\.
The funding provided in the Supplemental Credit Agreement of $216\.9 together with counterpart funding from the
GOP of some Rs 2360 M, proved adequate for the project elements to which it was applied\. On closure of the
Credit, a balance of some $10\.OM of the Credit remained unutilised\.
Parallel funding for electrical and mechanical plant at Dhabeji Pump Station, Pipri Filter Plant and North East
Karachi Treatment Works was provided through a British Government Grant and a loan (L27470 1) from the
Commonwealth Development Corporation (CDC)\. As with the IDA funding, the initial provision was inadequate
for the works contemplated and the scope of the works financed was reduced to fit the available funds\. The result
was that the funding was applied to plant at Dhabeji Pump Station and North East Karachi Treatment Works only\.
Hub Treatment Works and the extension of the Pipri Treatment Works were deferred\.
-36-
These funding facilities were extended in line with the extended period of the IDA Credit\. However, in September
1998, disbursement from the CDC loan was stopped due to default by the GOP in payment of interest and some
capital repayment\. Shortly after this event the loan validity period expired\. No resolution of the loan servicing
default has been achieved\. In consequence, available project funding has been reduced by the unutilised balance of
the loan of some , 3\.2 million\. As the estimated cost of the contract works approximate to the originally available
funding, there is an unexpected shortfall in available funding of the order of, 3\.0 million\. As a consequence
KWSB are in substantial default on contract payments\. The contract is effectively suspended and this vital element
of the 1 00, mgd system, though in operation, has not been brought to satisfactory completion\.
ADB funding was adequate for the Project works undertaken, but on closure of the loan a balance of some 10,000
dollars remained undisbursed\.
3\.3 Compliance with Covenants and other Elements and Objectives of the Project\.
Project Consultants were engaged and arrangements made for the retention of their services throughout the
implementation period of the project\.
Water and sewerage tariffs have been levied, generally in line with the levels agreed at successive stages with the
IDA\. The latest increases announced as effective from April 1998 have not been applied pending restoration of the
Hub source\.
Staffing levels have been significantly reduced from approximately 14000 to approximately 8500\.
Designs and bidding documents were prepared for up-grading of the Kotri Barrage Feeder Canal and Kinjhar Lake
impounding embankments\. No funding has been made available for the commissioning of these works to proceed\.
These works are crucial to the security of the water supply from the Indus Source and its subsequent further increase
to the full federal allocation\.
Detailed designs were prepared for the Hub and Pipri treatment works and south east Karachi primary distribution
system st-engthening\. These are the works deferred in the Supplemental funding Agreement\. The treatment works
have subsequently been funded by the Government of Pakistan and the Japanese funding agency JBIC\. The project
is ongoing\.
Neverthe]Less, and not withstanding what was achieved inj strengthening some departments of the KWSB, lack of a
clear and consistent policy for reform of Karachi municipal authorities in successive governments throughout the
implementation period of the project, has impeded progress towards a number of project objectives associated with
institutional strengthening and administrative reform\. In particular -
Strengthening the management of operational departments within the reorganised structure\.
The capability for training facilities were enhanced by the establishment of a training centre
headed by a Director of Training\. Never the less, implementation of training programmes has
been impeded by limited budget provisions\.
The development of systems and procedures manuals\.
The Training and Pilot Privatisation Project\.
4\.0 Project Sustainability\.
4\.1 Physical works\.
-37-
The sustainability of the physical works of the Project depends on the level and competence of maintenance
provided\. Water Board staff remain technically (technical competence and material resources) ill equipped to
operate and maintain the infrastructure assets of the Board including those of the KII Project\. This problem is
common to all staff levels and prevents the formulation of effective operation and maintenance practices and their
implementation\.
For reasons indicated in section 9 below, KWSB were unable to benefit from facilities provided under the Project
contracts for the training of staff at Dhabeji Pump Station and North East Karachi Treatment Works\.
At Dhabeji Pump station, urgent remedial works are required to correct aberrant pressure pulse generation from the
impellers of the pumps installed, which excites heavy vibration throughout the installed plant\. These remedial works
are delayed primarily due to the effective suspension of the contract consequent upon the funding agency (CDC)
suspending disbursement from their loan\. The consequences of the vibration are seriously aggravated by the
continued operation of the pump station to meet the water demand in Karachi in the face of depleted supplies from
the Hub River source\.
-38-
At Mauripur Treatment Works (STP 3\.) an operations and maintenance contract has been awarded to a local
contractor funded from KWSB resources\. It is hoped that this initiative can be sustained and extended to the
operation and maintenance of water works\.
4\.2 Financial\.
Improved revenue collection and more realistic tariff levels implemented in compliance with the covenants of the
IDA Credit are now yielding encouraging results\. The increased revenue promotes the opportunity to invest in
improved maintenance\.
However, the continuation of improved revenue collection and its application to the needs of the KWSB remain
dependent on uncertain political will and policy\.
4\.3 Institutional Strengthening
Consequent upon the project implementation, some departments of the KWSB have improved their working
performaance\. This is particularly the case in the Finance Department and the Development Wing\. Generally
however, Bulk Water Supply, Water Distribution and service departments have not been strengthened as a result of
the project\. The performance of these departments is vital to both the sustainability of the project works and the
benefits to flow from them\. These operational departments remain largely the domain of political and union
influence\.
4\.4 Conclusion\.
Given the continued lack of a clear and consistent government policy for reform and support of KWSB, the
sustainability of the project works, the benefits resulting from them, and improvements in the performance of the
KWSB are not assured\.
In the short term, the new I OOmgd water supply is seriously threatened by failure of the pumps at the new Dhabeji
Pump Station consequent upon suspension of the plant contract caused by premature closure of the CDC Loan\.
5\.0 Bank Performance\.
IDA Task; Managers and other personnel, particularly those of the permanent Pakistan Country Mission in
Islamabati worked closely with the KWSB throughout the implementation stage of the Project\. The support and
advice of Task Managers and their sometimes forceful pursuit of Project objectives and compliance with the
covenants of the Credit before the Government of Sindh, were of particular value in maximising what could be
achieved given the external constraints and pressures on the Government of Sindh\.
The constructive attitude of the Bank at the preparation of the Supplementary Funding Agreement, and subsequent
extensions of the effectiveness of the Credit were crucial to satisfactory completion of all works financed from it\.
The essential need for strengthening of the water distribution system and water loss reduction within it, to maximise
the benefit of the additional 100 mgd of water to consumers, was a corner stone of policy in justifying investment in
the project\. This aspect of policy was strengthened still further in the terms of the Memorandum and
Recommendations of the Bank Report P-5794-PAK, upon which the Supplemental Funding Agreement was based\.
As a consequence preparation of the proposed Water Loss Reduction and System Strengthening Project was funded
and prepared for appraisal by the Bank\.
No appraisal was performed despite close involvement in the project preparation by IDA mission staff\. Instead, a
policy shift towards privatisation/private sector participation in the Karachi water supply operations was launched
-39-
by the IDA\. In consequence, the momentum towards direct improvement of the distribution system and its operation
to maximise the benefit of the anticipated 100 mgd of additional water, was stalled and remains stalled\.
While appreciating that the issue of privatisation is an option in considering the future of the water supply of
Karachi, stalling of the proposed Water Loss Reduction and System Strengthening Project has been detrimental to
realisation of the full benefits of the KII Project and created a vacuum in which ad hoc development has flourished
in its place\.
6\.0 Borrower Performance\.
We believe Borrower performance on completion of the project should be judged as creditable, given the weakening
of the national economy, the previous limited experience of large internationally funded projects and the political
instability in the country, particularly Karachi, throughout the project period\.
The provision of counterpart funding, while subject to serious constraints was ultimately adequate\. Despite a
pattern of failure to meet budgeted requirements and some administrative impediments, available counterpart funds
were generally adequate for actual requirements and were not an impediment to the progress of the Project works\.
Covenants of loan agreements, in particular the introduction of increasing tariffs, improved revenue collection and
staff reduction were ultimately met\. Much of the this achievement was accomplished in the late years of the Project\.
These matters were all politically sensitive and achieved despite almost continuous civil strife in the City\.
A serious default in servicing the CDC Loan agreement by the GOP led to suspension of disbursement and
ultimately premature closure of the loan\. In consequence, there is a funding deficit of some , 3\.OM and rising
default in contract payments\.
Procurement of the works through competitive bidding was conducted with increasing competence, transparency
and professionalism by the KWSB Development Wing\.
7\.0 Assessment of Outcome\.
The City of Karachi is now served by an additional supply of treated water of some 100 mgd as a result of the
Project\. This is a considerable asset\. Supply of water into the city water distribution system has been enhanced by
some twenty percent\. The fact that the impact of the additional water was not felt as directly as it might have been
due to the reduced supplies from the Hub River Source, does not lessen the significant benefit resulting from the
scheme\.
In addition, the position of the KWSB has been strengthened by enhanced revenue collection, reduced costs and an
increased capability to manage development projects\. However, the need for improved management of operational
departments, strengthening of the water distribution system and water loss reduction remain to tackled \.
8\.0 Future Operation\.
The future operation and management of the infrastructure of water supply and sanitation in the City of Karachi is
the subject of current but inconclusive debate\. It is foreseen however, that in this important aspect of the provision
of city services, progress will only be achieved in partnership with international funding agencies\.
-40-
9\.0 Key Lessons Learned\.
9\.1 Lack of International Interest in Bidding Procedures and Consequences\.
All invitations to bid were characterised by a lack of interest from truly commercial international contractors\.
Typically the response to invitations to bid has been from the local market and from companies from the Peoples
Republic of China\. The one commercially independent international contractor who has consistently bid and has
won two contracts, had established a long term presence in Pakistan prior to the commencement of the Project\.
The contract documents for IDA funded works, are with two exceptions, dedicated to International Competitive
Bidding\. 'Bids by local contractors with only local experience and aspirations, limited overheads and commercial
responsibilities, and the Chinese Corporations with their qualified commercial status, introduce into the procurement
of the works, a large measure of incompatibility with the principles upon which the contractual responsibilities and
expectations are based\. This incompatibility is prejudicial to a response from truly commercial international
contractors\. Ultimately, it leads to the award of contracts to contractors who, while accepting the contracts with
good intent, have an inherent and fundamental lack of commitment to performance as contracted\.
The consequences are lower contract values at the cost of reduced quality and delayed completion\.
9\.2 Division of the Works\.
From the outset, the project works were divided into relatively small contracts reflecting types of construction\. eg -
a pump house, a canal, a conduit\. In consequence most contracts were relatively small in value\. Later, as part of the
re-appraisal of procurement strategy conducted by the IDA, the original contract packages were broken down still
further\. The fragmentation of the physical works into more and smaller contracts led to greatly increased contact
administration which stretched the resources available for contract supervision to an extent that effected overall
project management\.
It was a fact that the three smallest contracts suffered the greatest delays in proportion to their contracted time for
completion, and of these, two (the LCB contracts) delivered the poorest quality work\.
It is concluded that larger contract packages are to be preferred\.
9\.3 Security of the Completed Works\.
Consequent upon completion, elements of the Project works, in particular, the canal and conduits in rural areas, and
the NEK treatment works, have been subject to immediate vandalism and theft of anything that can be removed or
abused irnmediately following departure of the contractors from the sites\. These circumstances threaten the
effectiveness of the project works and even the works themselves\. KWSB are unable themselves to provide the
required level of security\.
The issue of security of the water supply infrastructure throughout its entirety is an issue to be addressed by the
Government as a matter of national policy\.
9\.4 Politically Motivated Interference in the Management of the Project\.
Throughout the implementation of the project there has been significant politically motivated interference in the
management of the KWSB\. The influence of this has had both direct and indirect effects on the Project\. In the
context cf the Project, such actions may well have been well intentioned, but on many occasions were made
without em appreciation of consequential ramifications\. In consequence, the interests of the project, in particular
-41-
contractual discipline, the long term service of physical elements of the Project and institutional strengthening have
not always been promoted\.
Of particular note in this context are directives to commission works in the final stages of their completion,
prematurely\.
For the sake of a few weeks, additional costs were needlessly incurred while, more significantly, the long term
performance of structures and plant was prejudiced in the headlong rush to comply with a chairman=s demands for
early commissioning\. The principal effect of such demands, was to cause contractors to abandon all contractual
responsibility on the excuse of compliance with unrealistic demands\.
A failure of one of the rising mains from Dhabeji Pumps station shortly after commissioning was directly
attributable to this cause\.
In addition, the KII (100) mgd water supply project was commissioned on the 26th of June 1998 at a nominal level
of 30mgd\. This commissioning was premature (albeit, precipitated by the reduced the supply from the Hub river
source)\. The early commissioning of the project works and delivery of additional water to Karachi at a time of acute
shortage, was achieved at the cost of delay in bringing many contracted works to full completion\. In some cases,
because access was no longer available, outstanding or remedial works were never completed\. In particular, as once
commissioned, the supply of water through the system was maintained, there has been no opportunity to carry out
adjustments, modifications or additional works where the need for these became apparent following early operation\.
Nowhere have the negative consequences of this early commissioning been more seriously manifest than at Dhabeji
Pump Station\. The plant was put to use before commissioning trials of individual pump sets, satisfactory testing of
the pipework and performance of the contractual requirement of the 30 day full scale operation test, had been
performed\.
Whereas, from the outset, the hydraulic characteristics of discharge from the pumping plant was in accordance with
design expectations, significant vibration in the pipework was observed\. By August 1998 the matter was the subject
of concern and written communication between the consultants, the Contractor and the KWSB\. By March of 1999
because of the continuing use of the pumps the Consultants advised the KWSB that conditions were such that
operation of the pumps should only be permitted in circumstances of the most compelling necessity pending
rectification of operating characteristics\. They remain in operation\.
The KIT Project works are more sophisticated than any other works operated by the KWSB to date\. Despite
provision in the Contracts for the training of personnel at Dhabeji Pump Station and NEK Treatment Works, the
opportunity provided by these provisions was, for the most part not taken advantage of\. This was principally
because of union or political influence\. Staff appointments were either not made, or staff were appointed who had
no intention of attending the works as part of the work force\. As a result of these circumstances the plant contractor,
at the request of KWSB operated the pump station and treatment works for a year as an additional duty\. The
contractor ceased this service in June 1999 since when these key installations have been operated by KWSB staff
who have had no Aworks specific@ training\.
Due to a change of political priority, proposals were made to the ADB for revisions to the programme of works\.
These proposals were ultimately refused as being contrary to the loan agreement\. As a consequence, some project
works of the Sanitation Component were lost and full utilisation of available funding not achieved\.
It is concluded that the direction and administration of the KWSB should be depoliticised and union actions set
within enforceable limits\.
-42-
9\.5 Coordination with the Sindh Government\.
Throughout the implementation of the Project, administration of contracts and the Credit Agreement have been
hampered by apparent conflict with the administrative procedures of the Sindh Government\. Although many of the
consequent difficulties were resolved, solutions were for the most part achieved at the cost of delay and additional
cost\. More particularly, the solutions were artificial, avoiding but not resolving fundamental incompatibilities which
thus remain pitfalls to other and future international contracts and credit agreements\.
Problems of this sort are particularly obvious in the processing of contract payments\. The contracts provide that the
Employer (KWSB) shall pay the Contractor within a stated period of receipt of an Interim Payment Certificate\. The
KWSB accounting procedures reflect the procedures of the Sindh Government and are audited against these rules by
the Government auditor\. These rules provide that payments are made only on the basis of the Measurement Book, a
document prepared and signed off by an Executive Engineer\. Preparation of interim certificates by the Engineer and
the measurement book by the XEN (a relatively junior officer) are based on entirely different concepts\. The one
being a general valuation conferring no degree of acceptance for work done and issued to promote fnancial
turnover\. The other, essentially signifying acceptance of specific work done and custodial to the interests of a
government department\. Preparation of these documents reflect their provenance and are in consequence,
incompatible\.
A careful[ examination by most senior and appropriately experienced executives of concerned departments and their
advisors, of the administrative interface problems between the provincial government and executive agencies such
as KWSE should be conducted\. The purpose being to establish appropriate procedures to facilitate works based on
FIDIC type contracts and International funding agreements\.
9\.6 Coordination of Funding Agencies\.
The suspension and subsequent closure of the CDC loan has prejudiced the new IDA financed 100 mgd water
supply facility\. The sanitation element of the project suffered a delay of some nineteen months and consequential
contract costs due to the cessation of disbursement from the ADB Loan pending settlement of KWSB indebtedness
to the Karachi Electricity Supply Corporation (KESC)\. Also, a concentration of effort by IDA to promote
privatisaition led to stalling of the physical improvement of the Water Loss and Distribution Strengthening Project\.
There appears to be a clear need for a formal joint agreement between funding agencies co-funding a project of the
size and scope of the Second Karachi Water Supply and Sanitation Project\. Such agreement should bind the
agencies to act in concert for the promotion of the project, provide commitment to uniformity of approach and
emphasis, and provide a vehicle to act in concert to address circumstances which threaten the beneficial application
of their separate funds to a Project\.
-43-
2ND KARACHI WATER SUPPLY & SANITATION PROJECT UNDER
IDA CREDIT 1987-1 PAK
IMPLEMENTATION COMPLETION REPORT (ICR)
KWSB'S PARAWISE COMMENTS ON DRAFT ICR # 20260 DATED 26-4-2000
3\.0 ASSESSMENT OF DEVELOPMENT OBJECTIVE & DESIGN AND OF QUALITY AT ENTRY
3\.1 Original Objective:
The objectives of the K-II water could not be fulfilled by the World Bank under IDA credit 1987 and the
major objective of "Strengthening Loss Reduction Measures" with a view to augment the water supply system could
not be taken up, although pre-appraisal is done\.
Similarly during negotiation for the supplemental loan for Second Karachi Water Supply and Sanitation
Project, the scheme was reformulated and some of the water supply components were deferred which includes the
water treatment (direct filtration plant) at Hub and partly primary distribution mains so as to meet the financial
provisions give in the IDA's
re-formulated scheme and the project cost\.
The writeup is not understandable by a reader unless the objective reproduced below & given in SAR are
commented in specific terms\.
The objective of the project (a) increase potable water by 31 % (100 million gallons per day) and further
augment availability by strengthening loss reduction measures; b) improve financial viability of KWSB through
increased revenues, cost reduction & increased operational efficiency c) improve the organization & management of
KWSB; d) improve sanitation in the
City, including its low income and coastal area by increasing sewerage coverage by 232 mgd and treatment capacity
by 94 mgd\.
The achievement of the objectives (a) to (d) can be analyzed as under for some assessment of performance
rating\.
Objective (a) 100% physical achievement not sustainable (reasons to follow) 25% achieved by
strengthening and implementing loss reduction measures through the leak detection program\.
Objective (b) 25% achieved in the increased revenue (i) 50% achievement in operational efficiency (ii)
Staff cost reduction 100% implemented\. (Exemplary due to IDA/KWSB coordination)\.
Objective (c) improve the organization & management of KWSB; A considerable improvements by the
creation of Development Wing to take up the additional responsibilities independently\. KWSB's re-organization
plan also implemented as outcome of in depth O&M study\.
Objective (d) 30% achievement in the improvement in sanitation of the city\.
Second Karachi Water Supply & Sanitation Project with IDA financing for the water supply and the
Institutional components while ADB financing arrangements for Karachi Sewage & Sewerage disposal scheme
under ADB loan 1001 & 1002 although the loan was once frozen for a period of 2 years and even the project was
completed\. IDA never reviewed PCR/ICR of ADB\. KWSB faced problems in implementation\.
50% of these targets achieved & 100% physical implementation done\. US$ 10 million surrendered in IDA
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Credit 1987-1 Pak and without improving the coverage due to political environment at that time\.
The original objectives are not analyzed by the original formulators, the appraisal mission of World Bank
and the Task Manager, who remained involved for maximum duration\. The Master plan report of water as well as
SAR clearly mentioned that Indus Source is the only potential & reliable source for Karachi water supply and they
recommended a project of 240 mgd\. IDA in consultation with KWSB bifurcated this project into two phases of 100
mgd each due to fmnancial constraints and to restrict a cost within $ 100 million & later it was agreed for $ 125
million, the additional $ 25 million due to inclusion studies to be carried out by international consultants\.
Thus, it is suggested that para 3\.1 based on Part 11 ICR of KWSB as agreed by IDA may please be seen for
background information and the Bank Staff who remained involved for the maximum period of the project shall be
consulted\.
3\.2 Revised Objective:
Refer comments for 3\.4\.
3\.3 Original Components:
The scheme of Second Karachi Water Supply and Sanitation Project has got a parallel financing from ODA
Grant-UK & CDC Loan-UK, to accomplish the water supply components\. During the process of the supplemental
financing of the K-II project it was agreed between IDA and Co-financier M/s\. CDC/ODA that the effectiveness of
the IDA Credit 1987-I will prevail on whole of the financing plan\.
Unfortunately, CDC has failed to fulfill the commitment on the loan closing of IDA Credit 1987-1 Pak
dated 30-06-1999\. Moreover, CDC has stopped payments effective from September 1998 in consequence KWSB is
in default of making payments on two contracts (WI 8 & W19) which includes the supply and installation of the
water treatment plant and pumping station at NEK and Dhabeji\. It was agreed with the donors during loan
negotiations that:
a\. IDA portion of loans will be exclusively used for the civil works and the institutional components
of the project\.
b\. ODA grant and CDC loan will finance the plant and equipment component of the project\.
C\. ADB financing will include the development works for the sewerage and sewage disposal
schemes\.
As mentioned the borrowers contribution is given in 2\.4(d) of the report there was a coordination of
KWSB/ADB but not IDA because for this IDA have not reviewed ADB PCR/ICR of loan 1001 & 1002\. Similarly,
IDA did not help coordination with CDC/ODA in resolving the payments of M/s\. PWT by CDC or contributing
from the surrendered money of US$ 10\.0 million of IDA Credit 1987-1 Pak although the components of WI 8 &
W19 i\.e\. Dhabeji pumping station & NEK water treatment works the electrical & mechanical funded by CDC /
ODA & civil works by IDA coherent to each other, this non cooperative behavior is the main cause of un-
sustainability of the project\.
3\.4 Revised Components:
In general the comments are acceptable further it should also be taken into account that IDA has assumed a
larger contribution by increasing its share from 38% to 67%, while CDC/ODA have dropped their shares from 42%
to 15% and even not fulfilling their commitments and obligations by unilateral decision of suspension of the CDC
Loan in September 1998 and against the conditions of the supplemental loan wherein it was agreed that the
-45-
effectiveness of the CDC Loan & ODA Grant will remain the same as the effectiveness of the IDA Credit 1987-1
Pak\. To achieve the basic objectives, project components were amended to include some more additional service
and the fate of some of those services still remains in deed, such as Loss Reduction, PSP, Consumer Education
Program etc\.
3\.5 Quality at Entry
Declared unsatisfactory by IDA\.
In this connection kindly refer minutes of negotiations for supplemental loan which has given the reasons
very clearly\.
The quality at entry was deficient due to the ambiguity created by IDA\. The PCD in the first instance
considered a project of 240 mgd which IDA has curtailed to 100 mgd due to financial constraints & the cost
curtailment was applied in the estimates\.
KWSB did not agree to these estimates and immediately invited two bids for the assessment of market rates
in 1991 & requested for supplemental financing IDA suspended project invitation activities for almost 2 years &
allowed bidding after the effectiveness of supplemental credit\. Regarding regulatory framework, nowhere in the
SAR this word has been used or even discussed\. A small component of PSP was mentioned and on that basis PSP
study was carried out through PHRD grant which identified requirement of a regulatory framework\. Draft
regulation were prepared and PSP Steering Committee was formed by GOS & then it was sabotaged by NGO's &
political environment at that time in the absence of IDA monitoring\.
4\.0 ACHIEVEMENT OF OBJECTIVE & OUTPUTS
4\.1 Outcome / Achievement of Objective:
Heavy social cost concept is confused when we say that larger percent of higher income rather than low
income percentage has adequate supply connections\. Katchi abadis considered as low income areas should not be
compared because its 50% of existing population it is to be believed that they are not paying any water tax, there is
un-authorize occupation of land, the 9% increase per annum of Katchi Abadis means that 50% of city population is
receiving water free of charge\. The major reasons of the agencies / personals involved in this mushroom unplanned
growth are the NGO's using self help terminology or the political environment where the system is laid on political
pressure\. The major example is Orangi where un-authorize occupation is common, the people are living and
encroaching every day even up to the extent of hill tops or to the bottom of river beds/nallahs\. To further reinforce
please refer IDA Credit 1652 where a provision for Katchi Abadis component was taken on the concept &
understanding that the beneficiary has to pay for the services utilized, spend minimum, provide community water
taps, provide community latrines, establish a revolving fund etc\. But in the current Credit, IDA has no provision of
that component i\.e\. development of Katchi Abadis, IDA's assistance in providing additional conveyance system for
the treatment of bulk water supply system is praise worthy but impact of the system could not be demonstrated
because IDA has not devoted to upgrading the city water system network, strengthening primary distribution
system, IDA has realized that substantial efforts are needed for the rehabilitation of the old water distribution system
in order to reduce the intermittent-brusts & leakages but due to financial constraints could not be implemented\.
4\.2 (a) Outputs by Components:
In line 5 of the third paragraph the word Karachi Development Association may be deleted & corrected as
KWSB/GOS\.
4\.2 (b) Institutional Strengthening:
-46-
This shall be declared 'MODEST' instead of unsatisfactory\.
4\.2 (c) Financial:
This shall be declared 'MODEST' because there are commendable efforts made by KWSB in the financial
discipline of its fnance & accounts management\.
4\.3 Net Present Value / Economic Rate of Return:
No comments\.
4\.4 Financial Rate of Return:
Agreed\.
4\.5 Institutional Development Impact:
Agreed\.
5\.0 MAJOR FACTORS AFFECTING IMPLEMENTATION AND OUTCOME
5\.1 Factors Outside the Control of Government or Implementing Agency:
Agreed, also mention IDA Credit 1652\.
5\.2 Factors Generally Subject to Government Control:
No further comments\. In line 8 of second para the word KDA may be corrected/replaced by 'KMC'\.
5\.3 Factors Generally Subject to Implementing Agency Control:
Whereas the local contractors have performed well\. The foreign contractors involvement have increased
the foreign currency payment this needs more clarification\. However, KWSB has desired to encourage the local
construction industry but has failed in promoting the object due to the improper coordination, understanding of the
problems of the local contractors and their solutions by the international consultants M/s\. Mott Macdonald
International Limited - UK whereas they were provided the support of local consultants as well\. The selection of the
contractors was entirely based on the World Bank procurement guidelines which is through pre-qualification, the
process of evaluation of pre-qualifications was done by the international consultants MMIL\. The concurrence of the
shortlisting of the firms by IDA was given on the basis of consultant independent evaluation report, as such there
were never any choice for employment of local contractor by KWSB\.
5\.4 Cost & Financing:
This upward revision by 74% was done after 2 years when the project was taken up and the work was in
full swing\. It needs to be analyzed as to why the cost of the project had to be almost doubled when the project was
almost half way through\. What were the major reasons for the consultants for firming up the cost at the time of
original approval and clearance by ECNEC and then again the cost had to be revised and the World Bank/KWSB
had to sign a supplemental credit\.
Consequent upon signing the supplemental credit, the entire financial projections prepared at the time of
starting the project based on original cost had to be revised upward\. The repayment schedule increased exorbitantly\.
The principle and the interest amount increased\. The targets set out under the covenants were therefore increased
tremendously and therefore it became next to impossible for KWSB to meet this covenants\.
In order to analyze the position in its true perspective, it is necessary to determine as to, on what basis the
consultants firmed up the original estimates which were approved by ECNEC and then what were the reasons for
the consultants to enhance and revise the estimates by 75% when the project was almost in the middle of
-47-
completion\.
This analysis will help in determining if the expenditure incurred on this project was within reasonable
limits or it has surpassed the limit of reasonability\. It will also help in determining as to on which component the
expenditure was higher and whether the ratio of expenditure on different components was compatible and
reasonable\.
After analyzing the above issue it will then be easy to determine as to why KWSB could not meet its
financial covenants\.
6\.0 SUSTAINABILITY
6\.1 Rationale for Sustainability Rating:
The minor works on the housing & boundary wall at Dhabeji and NEK is not directly affecting the
operational works\. The suspension of the CDC loan in September 1998 has largely affected the project in the sense
that the international contractor M/s\. PWT Projects Limited have delayed the trial of individual pumpsets,
satisfactory testing of the pipe works and the performance of the plant & equipment before commissioning of the
system\. A significant vibration in the pipework of Dhabeji pump station was observed in August 1998 & the same
could not be rectified till date due to suspension of CDC loan in September 1998 and IDA did not bother\.
KWSB suggested to IDA not to fmalise ICR & come forward to resolve this matter so as to make the
project sustainable which can be achieved through IDA support only by all co-financer involvement with GOP
because in the present circumstances of Hub crisis any breakdown at Dhabeji will deprive of 100 mgd which now
cannot be avoided for single day and may create havoc\.
IDA requested to stop ICR activity where sufficient work has already been done, instead they should come
forward to resolve this issue on priority\.
6\.2 Transaction Arrangements to Regular Operations:
Agreed, no comments\.
Refer in the last paras of section 6\.2 for steps on the path to follow the experience & lessons learned I & 2
are agreeable, lesson 3 must be deleted, because poverty alleviation or NGO's involvements was not included
anywhere in the project objectives & guidelines\. International successes in effective civil society collaboration with
local government is misconceived in Pakistan\. Low income group related with Orangi settlement, local research &
training institute has been pictured to IDA without making them understand the 15 years sewerage problem being
tackled by this institute\.
-48-
It has not constructed any flush latrins or secondary sewers rather misconceived the sewerage engineering
as excreta is sitting on the streets\. Excreta when open or even if covered without flow, allows disease to spread\.
Epidemic: hazards may occur as "Shelley once wrote that hell is city much like London"\. Sewers, the conduits
beneath the street carry away the unmounted excreta to a point of treatment & disposal, un-doubtly have done more
to improve the quality of life in a community than any other social or technological advance, with the possible
exception of water supply\. They have improved the communities quality of life more than art or architecture,
literacy or drama\. Such facilities given in Orangi on self help basis no doubt has given a facility on one hand
moving excreta from on house to another house by misuse of storm water drainage system but on the other hand the
disease of un-authorize occupation of land is wide spread and the encroacher now spreading over hilltops and in
river beds\. There is no appropriate technology application i\.e\. what they can afford and no concept of pour-flush
latrin, aqua privies, septic tank community latrines is known to the society\. Previous World Bank reports in this
connection may be referred and avoid such NGO's partnership which may bring health hazard not known to poor
people\. This last paragraph may please be deleted\.
7\.0 BANK & BORROWER PERFORMANCE
7\.1 Lending:
This section shall be considered 'MODEST' because poverty issue & regulatory framework are not
mentioned in SAR or during supervision mission reports anywhere and are not included in the objective of the
project\.
Recommended for reconsideration and declaring 'MODEST'\.
7\.2 Supervision:
This shall be declared 'Modest' instead of unsatisfactory because supervision was in accordance with the
bank guidelines and fulfilling all criteria, terms and condition of the IDA's Credit Agreement and the Project
Agreement\. The bank has tried to accomplish the original objective which could not be achieved due to financial
limitations as such could not implement the concept of institutional reforms & the regulatory reforms\.
7\.3 Overall Bank Performance:
It should be noted that the bank has strongly pursued the privatization of KWSB and have provided
techniical as well as the financial assistance in the preparation of the strategy/feasibility reports and the selection of
the options in respect of the privatization of water & sewerage sector of Karachi\. Moreover, the PSP in KWSB was
ultimately the key factor in the abandonment of the implementation of this water loss Reduction & System
Strengthening Project named as the "fourth project"\. Implementation of this fourth project would have been greatly
enhanced the operation of the distribution system and helped towards to equitable distribution of water
simultaneously with the 100 mgd KII water supply scheme\. We suggest that still if this project is implemented in
future, would bring fruitful results\.
The following four indicators have been selected to declare satisfactory or un-satisfactory, the overall bank
performa,nce in respect of the bank funded schemes\.
1\. Karachi Water Supply Credit 1374\.
2\. Karachi Special Development Program\. Credit 1652\.
3\. Second Karachi Water Supply Scheme\. Credit 1987-1 Pak\.
4\. Water Loss Reduction & system Strengthening Project\. IDA pre-appraised\.
Three have been achieved, the fourth one not achieved but partially achieved with a sense that the concept
was clearly understood by KWSB although it was not the major objective of the project\. The achievement is
-49-
therefore more than 25% in this sector\. The concept of previous IDA credits as mentioned could not bring any
fnancial viability in KWSB but identified clearly future requirements where a future strategy can be established
easily\. IDA Credit 1374 & 1652 actually identified mainly dealing with improvement and rehabilitation works
where policy reform was not the major objective except identifying improvement of income of KWSB and water &
sanitation requirements upto 2025\. IDA Credit 1987 included several studies which also included identification of
the fourth project i\.e water loss reduction & system strengthening project which was pre-appraised by IDA and then
IDA failed to take up this matter due to harsh financial covenants which were achievable only with a clear concept
by GOP/GOS\.
This section therefore falls in a 'MODEST' category with a clear version in the writeup given\.
7\.4 Borrower Preparation:
Satisfactory\.
7\.5 Government Implementation Performance:
This shall be declared 'MODEST instead of unsatisfactory because this is first time that although delayed,
counterpart funds were arranged by GOS & thus the final accounts were settled within the closing dates of IDA
Credit 1987 i\.e\. June 30, 1999\.
7\.6 Implementation Agencies:
This shall be declared 'MODEST' instead of unsatisfactory because lot of project commitments were
fulfilled also except the tariff increase which was not possible due to Hub drawn down situation\. The reasons are
also explained in paras 4\.2B & C, 4\.5, 5\.3, 6\.1\.
7\.7 Overall Borrower Performance:
This shall be declared 'MODEST in the light of the explanations provided in the above paras 7\.5 and 7\.6\.
8\.0 LESSONS LEARNED
No Comments\.
-50-
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PREYIOASLY FINANCED
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1P SlArCb= SL9 ; W!- obTA t : NLm ;d | REVIEW |
P084219 |  ICRR 13377
Report Number : ICRR13377
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 05/24/2010
PROJ ID : P084219 Appraisal Actual
Project Name : Second Financial US$M ):
Project Costs (US$M): 75\.5 57\.91
Sector Restructuring
Project
Country : Nepal Loan/ US$M):
Loan /Credit (US$M): 75\.5 57\.91
Sector Board : FPD Cofinancing (US$M):
US$M ):
Sector (s): Banking (100%)
Theme (s): State enterprise/bank
restructuring and
privatization (67% - P)
Standards and
financial reporting
(33% - S)
L/C Number : C3864; CH074
Board Approval Date : 02/24/2004
Partners involved : Closing Date : 09/30/2009 09/30/2009
Evaluator : Panel Reviewer : Group Manager : Group :
Valeriano F\. Garcia Jorge Garcia-Garcia Ismail Arslan IEGCR
2\. Project Objectives and Components:
a\. Objectives:
The overarching objectives of the operation were to support the on-going efforts to improve the
financial sector in Nepal which intermediates funds more efficiently and effectively to the benefit of all
segments of society in a manner which supports private sector development, increased investment,
and faster growth\.
The specific objectives were to:
Improve corporate governance through provision of management support to the two large
commercial banks\.
Improve market structure by reducing the state-owned segment of the banking system\.
Sustain and deepen the banking reforms\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
The project had four major components:
1\. Voluntary Retirement Scheme (VRS)
Regarding the two State Owned Banks that were to be readied for privatization the component
envisaged a significant reduction in their personnel \. The target was reducing staff by more than 40
percent, focusing first on those who have had more than 20 years of service followed by those in the
15-19 years bracket to achieve the target of retiring roughly 4,700 staff (appraisal $56\.5 million; actual
$53\.63 million)
2\. Hiring of Sales Advisors (funded from IDA grant)\.
It sought to assist in the ultimate sale of the two State Owned banks ensuring that, at the end of the
readiness process, they are sold to "fit and proper" investors\. The advisors would undertake due
diligence, prepare prospectus and lead a road show to bring the targeted banks to their point of sale
to fit and proper private sector investors; (appraisal $3\.00 million; actual $ 0\.00 million\.)
3\. Second Phase of Nepal Rastra Bank (NRB, Central Bank) Re-engineering
It supported strengthening the Central Bank through the following sub-components:
(a) Human Resource Re -engineering \. It supported restructuring the Human Resource Department
(HRD) and policies resulting in the implementation of merit -based advancement; a time-in-grade
criteria and developing a structured training plan;
(b) Accounting Support \. It supported modernizing the Accounting Department to assist the Central
Bank in meeting the IMFâs Safeguard Assessment milestones; also to help the Bank in producing an
international audit of the bankâs accounts to international accounting standards (IAS)\.
(c) Bank supervision and regulation \. It supported the work of the bank supervision department in the
form of additional desk top computers, lap top computers for on-site examiners, international experts
to assist with on-the-job training (for the complete two year examination cycles of all the commercial
banks), and classroom training in areas related to bank supervision, computing, and English (report
writing)\.
(d) Upgrading the Bank âs Information Technology (IT) IT)\. It supported doing so through the following
sub-components: (i) developing a Management Information System (MIS); (ii) developing a
computerized General Ledger system (GL) system; (iii) provisioning additional computers and
software for on-site examiners and international experts to assist with on -the-job training in areas
related to bank supervision and regulation (total for component at appraisal $8\.00 million; actual $0\.28
million)\.
4\. On-Going Management Support Team
It supported the continuation of the management team in charge of bringing the banks to point of
privatization\. A significant expected outcome was the reduction in the non-performing loans ratio by
50 percent\.(appraisal $6\.00 million; actual $3\.85 million)
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
IDA agreed (on June 4, 2004) to make available to the borrower SDR 47,600,000 (Credit) and SDR
4,900,000 (Grant)\. The loan became effective on July 25, 2004\. On June 5, 2008 the government
requested closure of the FSRP and restructuring of the FSTA project to include some of the key
activities envisaged in the former loan \. To this end undisbursed funds totaling SDR 8,566,000 of IDA
credit and SDR 4,531,000 of IDA grant were cancelled\.
3\. Relevance of Objectives & Design:
The objectives of the loan were very relevant to the development of a healthy and growth enhancing
financial sector\. They addressed the major fault lines of the system namely the Central Bank and the
two major State Owned banks\. The Central Bank depended on the ministry of finance and had limited
autonomy\. It was institutionally weak and lacked the capacity to adequately regulate and oversee the
banking system\. The financial system was shallow and dominated by two public banks (NBL and
RBB) which comprised a large share of total banking assets (more than 50 percent\.) The Bank
strategy fitted in the country context and its culture of slow changes and improvement made
one-step-at-a time only\. However, the country context also included high instability which meant that
government commitments could easily change\.
The project design was relevant and embedded in the countryâs slow-change cultural context and
consisted in a two prong strategy: the first was the institutional strengthening of the Central Bank and
the second was the downsizing and privatization of the two largest commercial banks \. By all accounts
those banks were not only bankrupt but also involved in questionable lending practices (bordering
with outright corruption\.) One of those banks (RBB) had about 71 percent of its loans in
non-performing status while the other bank (NBL) had non-performing loans close to 60 percent of its
total loans\. While best international practices unequivocally indicate that under these circumstances
banks should be: (a) swiftly liquidated and whatever assets are left should be used to pay severance
and depositors, or (b) broken into a "bad" bank and a "good" bank, privatizing the former and
liquidating the later, the project was designed under a different paradigm \. Such design took into
account the relevance of one of the countryâs most significant characteristics : changes are made, but
very slow\. However, by taking this time-intense approach in its design the project disregarded the
other significant characteristic : changing commitments and great political instability \.
Thus in an effort to customize the project design to the cultural demands of the country, the
privatization strategy for the public banks did not follow best international practices for bankrupt (and
corrupt prone) banks\. The alternative path was rejected under the presumption that outright
liquidation would have been politically challenging \.
Political instability, however, ended -up being the Achilles' heel of the loan design: according to the
ICR "at the time of project inception, the key policy makers in the GON had full commitment to reduce
the government ownership and control from the two banks\." With the benefit of hindsight this means
that a golden opportunity may have been missed to address the issue of the two large insolvent banks
in the way indicated by best international practices \.
Summing up, this review finds that the relevance of objectives was very high but the relevance of
design was modest\.
4\. Achievement of Objectives (Efficacy):
1\. To improve corporate governance in the banking sector
The PAD defined three outcomes indicators for this objective \. For the first one it was established that
high profile non-repayment cases, in which corruption is suspected, would be referred to the
Commission for the Investigation of the Abuse of Authority (CIAA)\. Of the at least five high profile
default cases in which against them was taken and resolved by CIAA, only one was forwarded to
CIAA, but no legal action was taken and the case was finally dropped \. The second indicator was to
establish a debt recovery tribunal (DRT) that would enforce decisions according to set guidelines : 150
days for turnaround and 90 days to resolve appeals\. The DRT enforced decisions slowly and in an
unsatisfactory manner, and failed to meet the turnaround and appeal timelines \. The third indicator
was to enforce the "Blacklisting Directive " but its enforcement was not satisfactory\. Efficacy in
achieving this objective was negligible \.
2\. To improve the structure of the financial markets
The PAD defined three outcome indicators for this objective \. In the first one it was expected a
retrenching of staff of both NBL and RBB by 40 percent and rationalization of branch network to
reduce cost structure\. While the staff in the NBL was reduced by 45 percent (from 5,270 to 2,900) and
in RBB by 48 percent (from 5,222 to 2,862), NBL increased by 138 its branch network and RBB
reduced it by 123\. The ICR notes that despite the reduction in staff, staff costs in both banks almost
doubled as a result of the rise in civil service pay made in 2009\. The second outcome indicator,
outsourcing of non-core activities, was not achieved\. The third outcome indicator, privatize NBL and
RBB, was not achieved as the government failed to decide what to do with the two banks\. Efficacy in
achieving this objective was modest \.
3\. To strengthen the oversight capacity of the Central Bank
Regarding bank supervision, NRB on-site and off-site supervision capabilities improved during the
project but the bank supervision sub-component remained stalled\. After a CIAA charge against the
Governor the Central Bank staff became demoralized and did not proceed with any further
procurement\. The hiring of a new HR advisor to assist in the streamlining of recruitment, training,
transfers and promotion did not take place\. The IT component did not make any progress through the
project\. This activity was transferred to the FSTA\. Efficacy in achieving this objective was negligible \.
5\. Efficiency (not applicable to DPLs):
This type of project is not apt for calculating specific numbers in relation to ERRs or FRR \. However on
a qualitative basis the project was moderately efficient because its main objectives were only partially
achieved\.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal % %
ICR estimate % %
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The FSRP sought very relevant objectives but its efficacy was limited \.
a\. Outcome Rating : Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
While the PDO were not entirely achieved there was progress in downsizing both, the NBL and RBB
while their NPL was substantially reduced \.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
The initial design of the loan was not appropriate to fully achieve the PDO \. Such design was
time-intense and necessarily bound to take a long time to implement \. In the context of fluid political
conditions, typical of Nepal, the winds changed and new political realities changed previous
commitments not favoring the achievement of the PDO\. Once the project became effective the
Bank pursued closely its progress and carried out due dialogue with all stakeholders \. The ISR
reports show that the Bank was keenly aware of the extremely difficult problems facing the
progress of the loan (for example ISR 11/26/2006\.) However, only the final ISR rated the PDO as
Unsatisfactory\.
at -Entry :Unsatisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Moderately Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
The Government worked with the Bank in the design of the loan and agreed to its targets,
intermediate steps, and time-line\. Evidently the government, along with the Bank, miscalculated
the reform effort in the context of a fluid political environment \. The government did not honor its
commitments as signed in the Letter of Financial Development dated December 9, 2003 regarding
the ultimate resolution of NBL and RBB, putting into risk the gains achieved in the restructuring of
both banks\. In general the government did not do enough to assure that the implementing agency,
which was under its aegis, complied with the loan âs road map\.
a\. Government Performance :Moderately Unsatisfactory
b\. Implementing Agency Performance :Moderately Unsatisfactory
c\. Overall Borrower Performance :Moderately Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
Bank M&E: The Bank design of its M&E was appropriate and in line with standard Bank procedures
for these operations and included a mid-term review by mid 2007\. The implementation was achieved
by timely bi-annual ISR; The utilization of these reports was dependent on the problem flagged\.
However, during 2004-2007 the ISR rated the PDO âSâ? and most of the IP as âS or MS"\. Only by end
2007 both indicators were rated âModerately Unsatisfactoryâ?\. It was surely earlier in the process that
IP had been lagging and signals of failing DO were not timely and properly evaluated and urgently
flagged\. This may have prevented the senior management from utilizing the ISR early enough in the
process to look for changes or put more pressure on implementation \.
Government M&E
In its design M&E was not followed at the project level\. This flaw prevented close follow-up,
implementation and utilization\. Also, there were frequent changes in project coordinators and other
staff and consequently institutional memory, drive and skills were lost at the Coordination Support
Team (CST) level\.
In summary while the Bank's monitoring was appropriate, its evaluation was faulty and prevented its
timely use by senior management\. The borrower's M&E design was flawed, and had little room to use
it for proper implementation or utilization \.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
12\. Ratings :
12\. ICR IEG Review Reason for
Disagreement /Comments
Outcome : Unsatisfactory Unsatisfactory
Risk to Development Significant Significant
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Unsatisfactory Unsatisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
In politically volatile countries, when there is a window of opportunity to implement substantial
policy changes, the time-line of the whole operation should not involve several years \. As the
political tide changes, a long to implement operation poses the risks of commitment reversal \.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR presents a very good description of the project design, implementation and lack of
achievement\. However it does not emphasizes the "quality at entry" issue -which was the Achilles
heel of this loan\. Also it does not emphasizes the until very late ISR reports rated PDO as satisfactory
when at the end none of the main objectives were achieved\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P079156 |  ICRR 13747
Report Number : ICRR13747
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 08/03/2012
Country : Indonesia
Project ID : P079156 Appraisal Actual
Project Name : Third Kecamatan US$M ):
Project Costs (US$M): 630\.3 747\.7
Development Project
L/C Number : C3806; L4710; L7750 Loan/ US$M ):
Loan /Credit (US$M): 384\.2 378\.9
Sector Board : Social Development US$M):
Cofinancing (US$M ):
Cofinanciers : Board Approval Date : 06/26/2003
Closing Date : 12/31/2008 12/31/2009
Sector (s): Sub-national government administration (25%); Irrigation and drainage (20%); Water supply
(20%); Roads and highways (20%); Primary education (15%)
Theme (s): Decentralization (23% - P); Rural policies and institutions (22% - P); Participation and civic
engagement (22% - P); Social safety nets (22% - P); Rural services and infrastructure (11%
- S)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Robert Mark Lacey Ridley Nelson Soniya Carvalho IEGPS1
2\. Project Objectives and Components:
a\. Objectives:
The projectâs development objectives (PDO) as stated on page 2 of the Project Appraisal Document (PAD) were as
follows: âKDP-3 [the third Kecamatan* Development Project] has overall development objectives of reducing poverty
and improving local-level governance in rural Indonesia \. It is part of a long-term village governance program that
began with the first Kecamatan project in 1998\. Specific development objectives for KDP -3 include: (i)
institutionalizing participatory processes in local government; (ii) the cost effective provision of basic social and
economic infrastructure; (iii) strengthening the capacity of the micro -finance institutions developed under KDP -1 and
KDP-2 to manage and monitor funds sustainably \.â?
The PDO as stated in the original IBRD Loan Agreement and IDA Development Credit Agreement, and unaltered in
all subsequent additions to, and amendments of, these documents (see Section 2d below), were to: âassist the
Borrower in reducing poverty and improving local level governance in rural villages, including (i) institutionalization of
participatory processes in local government; (ii) cost-effective provision of basic social and economic infrastructure;
and (iii) strengthening of the capacity of micro -finance institutions to manage and monitor funds in a sustainable
manner\.â?
In December 2005, a further objective was added : âreconstruction of communities in areas affected by natural
disasters\.â? This was in response to the need for reconstruction in Aceh and North Sumatra following the earthquake
and tsunami of January, 2004, and was financed by reallocation of funds within Component 1 (Block Grants to
Kecamatan -- see Section 2c below)\. The ICR states that the reconstruction sub -objective was to be achieved in a
manner compatible with the projectâs CDD principles, design, and implementation arrangements \. The legal
agreements were subsequently amended to include the reconstruction sub -objective\.
Additional financing, in the form of an IDA credit of US$ 127\.9 million (KDP-3B-AF), was approved in May 2007 and
became effective in August, 2007\. It was to assist in the launching of a national KDP program, which the Government
had announced in 2006\. Project objectives were not changed \.
This Review is based on the PDO statement in the PAD (plus the reconstruction sub -objective) as it is more
monitorable\.
*A Kecamatan is a sub-district containing, on average, 20 to 25 villages\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
Yes
If yes, did the Board approve the revised objectives /key associated outcome targets?
Yes
Date of Board Approval: 05/15/2007
c\. Components:
There were six components:
1\. Block grants to Kecamatan (US$473\.5 million at appraisal, US$582\.3 million at closure)\. The block grants were
transferred directly from the Special Account to the sub -districts participating in the program \. They financed
infrastructure and planning\. A third sub-component, for reconstruction grants for communities devastated by natural
disasters was added subsequently \.
2\. Community Development (US$68\.6 at appraisal, US$70\.0 at closure) to support activities to strengthen local
government councils formed under the decentralization laws \. Most resources allocated under this component
financed the operations of community and technical facilitators and their training \.
3\. Support to Village Microfinance Institutions (US14\.2 million at appraisal, US$15\.0 million at closure), providing
support for the organizational and financial development of local financial institutions that manage the revolving funds
accumulated through participation in KDP projects \.
4\. Implementation Support (US$64\.5 million at appraisal, US$66\.0 million at closure) to finance the provision of
technical assistance for project administration at the national, provincial and district levels \.
5\. M&E and Studies (US$5\.1 million at appraisal, US$8\.0 million at closure) to fund the Management Information
System; a program of poverty impact assessments using both quantitative and qualitative methods; continuation of
the Justice for the Poor program initiated under KDP -2; pilot programs for community based monitoring; and a long
term maintenance study to determine village capabilities \.
6\. Incremental Operating Costs (US$3\.9 million at appraisal, US$6\.4 million at closure) to finance KDP field visits and
consumables by Ministry of Home Affairs and KDP National Secretariat officials, as well as the cost of workshops and
study tours\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Financing and Cost\.
Cost Proposed World Bank financing for the originally appraised project was US$ 249\.8 million,
consisting of an IBRD loan of US$204\.3 million, and an IDA credit of US$45\.5 million\. About one year after Board
approval, but before effectiveness, the loan and credit amounts were significantly scaled back to US$ 95\.7 million
(US$45\.5 million IBRD and US$50\.2 million IDA)\. This became effective on January 20, 2005, and is designated
KDP-3A in the ICR\. The scaling back was due to the political and legal uncertainties created by proposed
parliamentary revisions to Indonesia âs decentralization law\. Had the tabled revisions come into effect, sub -national
projects, such as KDP-3, could not have been implemented by government agencies (ICR, page 1)\. By the end of
2005, the uncertainties had receded \. Funding was, therefore, increased again by US$ 160\.6 million (US$80\.0 million
IBRD and US$ 80\.6 million IDA)\. The ICR calls this KDP-3B\. It became effective in December, 2005\. The total project
amount, at US$256\.3 million, was hence restored to slightly more than the originally approved loan and credit \. In
2006, the Government announced its intention to launch a national KDP program (known as PNPM-Mandiri)\. To
facilitate the transition to this program, Additional Financing, in the form of an IDA credit of US$ 127\.9 million
(KDP-3B-AF), was approved and became effective in August, 2007\. The approved loan and credit amounts, the
effectiveness dates and disbursements corresponding to each designation are summarized in the following table
(taken from page 2 of the ICR)\.
Designation Approved amount Effectiveness date Disbursed Closing date
KDP-3A US$95\.7 million 01/20/2005 US$90\.9 million 12/31/2009
KDP-3B US$160\.6 million 12/13/2005 US$156\.5 million 12/31/2009
KDP-3B-AF US$127\.9 million 08/21/2007 US$131\.5 million 12/31/2009
TOTAL US$384\.2 million US$378\.9 million
This Review covers the whole project as described by the three designations in the table \.
Cofinancing \. There was no cofinancing, though important bilateral parallel grant financing was provided, notably by
Australia, Canada, Japan and the United Kingdom, with eleven separate trust funds totaling US$ 24\.5 million\. There
were multi-donor contributions to the PNPM program \.
Borrower contribution \. According to Annex 1 of the ICR, the total Borrower contribution was US$ 368\.9 million,
compared to an appraisal estimate of US$ 256\.3 million\. This included a local government budget contribution of
US$65 million (ICR, page 28)\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
High
High\.
The 2009-2012 Country Partnership Strategy (CPS), current at project closure, states on page 26 that
Community Development and Social Protection is the third of five core areas of engagement for the World Bank
Group in Indonesia\. Specific reference is made to Bank collaboration in the national PNPM, âwhich is based on
the well-performing Kecamatan Development Project (KDP) and the Urban Poverty Project (UPP) modelsâ? (CPS,
page 27)\. The KDP program is also a key component of Bank support for poverty reduction and decentralization
in Indonesia\.
The projectâs objectives were consistent with what the ICR describes as âthe Governmentâs massive
decentralization program\.â? Their relevance to national policy was underlined by the Government âs adoption of
KDP as the basis for its country -wide community empowerment program (PNPM)\.
The statement of project objectives was clear \.
b\. Relevance of Design:
Substantial \.
The causal chain between the project components and the intended outcomes was generally clear, though the
sub-objective of institutionalization of participatory processes in local government is not fully supported by the
planned activities\. While training and enhanced management skills are important, and were provided for, there is
also a significant policy dialogue dimension to achieving more effective local autonomy \.
Design built on the lessons learned in KDP -1 and KDP-2, including the need for more technical training and
oversight (including enhanced external monitoring ), reduced technical complexity, improved monitoring and
evaluation (M&E), increased sustainability of micro -finance institutions, and more effective incentives, sanctions
and support for formal procedures to strengthen governance \.
Exogenous factors that could affect project outcome were mostly well -considered\. However, the large scaling up
of KDP-3, in the context of adoption of the national community development program, was not fully anticipated in
design, and was the cause of implementation delays \.
4\. Achievement of Objectives (Efficacy):
The project was more successful in reducing poverty than in improving local level governance, although the latter
sub-objective was, according to the PAD, meant to be the main focus of the operation \. KDP-1 and KDP-2 had
addressed sectoral issues with respect to community development, technical capacity and fiduciary concerns \. KDP-3
was intended to focus on "giving village empowerment a more solid legal and administrative foundation, and
providing a rationalized management framework for community microfinance â? (PAD, page 8)\.
A\. Reducing Poverty in Rural Indonesia \. Substantial \.
The ICR reports (page 15) that âa quantitative impact evaluation study conducted between August /October 2007
(baseline) and February/March 2010 (end line) showed real consumption gains in households in KDP /PNPM
areas to be five to ten percent higher than in non -KDP/PNPM areas\.â? The ICR argues that, since KDP-3 and the
PNPM program were being implemented in parallel for a period of time, and were overlapping, it is not possible
to separate the outcomes\. Nonetheless, the results of the study are âconsidered to fairly reflect outcomes from
KDP-3â? (ICR, page 15)\. The ICR further notes that âhouseholds [benefiting from the project] that were poor in
2007 had about a 2\.5 percent higher likelihood of graduating from poverty than households [in the control
group]\.â?
B\. Improving Local Level Governance in Rural Indonesia \. Modest \.
This was to have been achieved through the three specific development objectives :
(i) Institutionalizing participatory processes in local government \. Modest \.
The ICR states that KDP made âmajorâ? contributions to institutional strengthening, though these âare difficult to
quantify\.â? Before the start of the KDP programs, Indonesia had âlittle experience of, or interest in, community
developmentâ? (ICR, page 17)\. Now, however, âcommunity development [has] become an organizing principle for
the Governmentâs overall medium term expenditure plan as well as its national strategy for poverty reduction \.â?
The ICR acknowledges that KDP is not the only factor behind this change in outlook, but was nonetheless an
important one\.
However, participatory and transparent processes which âare used to good purposeâ? in the context of project
activities, âdo not usually spill over to other areas of village development and governance â? (ICR, page 18)\. Thus,
the quality of participation of women and the poor is limited, and much decision making remains within the
villagesâ elite power structures\. The ICR attributes this to the failure of facilitators to focus on the empowerment
of non-elite groups\.
Progress in institutionalizing participatory processes has also been limited because the adoption of local
regulations and by-laws to (a) strengthen non-elected village councils, and (b) underpin the local development
process, especially for community -driven development (CDD)-type projects, did not take place as anticipated \.
âAlthough part of the original outcome indicators, monitoring of these actions has been abandoned â? (ICR, page
18)\. The ICR does not elaborate on the reasons for this failure \.
(ii) The cost effective provision of basic social and economic infrastructure \. Substantial \.
According to the ICR, more than 18,000 villages implemented some 28,000 sub-projects, and there were more
than 18 million beneficiaries\. The ICR reports that the âphysical targetsâ? of providing âcost effective
infrastructureâ? were âexceeded,â? although this is not backed by evidence since no such targets are specified in
either the PAD or the ICR\. 2\.4 million people were employed and 16\.2 million work days were generated\. The
sector breakdown of the sub -projects implemented is shown in the following table (taken from page 27 of the
ICR)\.
Type of KDP-3 other than Post disaster Total (number of
infrastructure post disaster reconstruction sub-projects)
reconstruction (number of
(number of sub-projects)
sub-projects)
Road projects 5,583 497 6,080
Bridges 1,429 175 1,604
Clean water supply 2,469 133 2,632
systems
Public washing 1,078 82 1,160
facilities
Irrigation systems 2,589 244 2,833
New markets 215 6 221
Market 42 35 77
rehabilitation
Village 273 1 274
electrification
Other 5,685 957 6,642
infrastructure
New and 1,643 156 1,799
rehabilitated
village health
clinics
New and 3,462 463 3,925
rehabilitated
schools
In addition, there were over a thousand health sector activities not involving construction, while in the education
sector, nearly 25,000 students received scholarships \.
The ICR states that the sub-projects were implemented in a transparent and participatory manner, and that this
contributed to improved local governance \. Little evidence is provided to support this, other than a citation from
the Stakeholdersâ Workshop Report to the effect that âKDP-3 was lauded for high transparency that helped to
minimize corruption (misuse of funds) and the strong focus on poverty alleviation â? (ICR, page 37)\.
Sub-projects were handed over to the villages immediately upon completion \. An operations and maintenance
(O&M) committee was formed, often comprising the same members as the committee which had implemented
the sub-project\. Training was provided to the committee members \. âDespite these efforts to establish adequate
O&M capacities, especially for roads (the most popular infrastructure investment and also the most difficult and
costly to maintain with community resources alone ), no formal institutional arrangements were made, nor were
there any budget provisions for ongoing maintenance and repairs â? (ICR, page 13)\. A 2009 review indicated that
water systems were an exception to this rule, finding that sub -project maintenance was good \. However, the
review also identified issues related to poor design and construction of water facilities \.
Regarding cost effectiveness, the ICR does present some evidence of lower unit costs resulting from community
rather than contractor implementation, but there is no evidence of comparability of construction quality (see
Section 5 below)\.
(iii) Strengthening the capacity of the micro -finance institutions developed under KDP -1 and KDP-2 to manage and
monitor funds sustainably \. Modest \.
Microfinance activities were mainly focused on womens â savings and loan groups\. Funds were channeled
through some 25,400 groups and reached over 634,600 beneficiaries\.
According to the ICR, the groups consistently achieved a repayment rate of about 94%\.
However, it appears to have been difficult to target the poor with small loans (ICR, page 16)\.
Despite high repayment rates, the ICR notes (page 14) that strengthening the capabilities of the savings and
loan groups was âless successful\.â? No further details are provided, except that a risk analysis of microfinance
institutions performed at the end of 2006 showed that 24% of all active institutions were not sustainable based
on evaluations of their financial reserves, repayment rates, income potential and general management (ICR,
page 28)\.
C\. Reconstruction of Communities in Areas Affected by Natural Disasters \. Substantial \.
As the table above shows, more than 2,500 project-financed activities took place in the disaster -affected areas\.
The ICR reports that only a small proportion of the funds reallocated were actually used as the Government
preferred to use grant funds for reconstruction, such as those made available by the Multilateral Donor Fund for
Aceh and Nias\. However, the readiness of external donors to provide grant financing was enhanced by the
Bank-support adoption of KDP principles and methods in the affected areas \.
5\. Efficiency:
No cost benefit analysis was carried out at appraisal, since the demand -driven nature of the project made it
impossible to know in advance what types of investments would be financed \. Instead, a SWOT framework (Strength,
Weakness, Opportunity, Threats ) was used (PAD, Annex 4, pages 56-58)\. Ex ante, it was found that the strengths
would outweigh the weaknesses \. The opportunities for improving village development programs were weighed
against the threats posed by elite capture, capture by district governments, and opposition by private contractors,
though no firm conclusion was drawn \. Economic rates of return averaging 68% were cited for sub-projects financed
under KDP-1\. The ICR attempts no ex post economic analysis of a sample of sub -projects\. Instead, it quotes a 2005
study, conducted for KDP-2, which âshowed that typical KDP-type infrastructure achieved EIRRs well in excess of
30% with an average of 53%\. The lack of an analysis for KPD -3 is because âNothing significant has changed since
2005 in the way projects have been selected, prioritized, planned, and implemented \. Therefore, the results of the
2005 economic evaluation are likely to remain valid â? (ICR, page 15)\. In addition, the ICR reports that KDP
investments are cost-effective â significant savings were realized through the use of village labor and construction
management, rather than relying on contractors \. It is estimated that, on average, community -implemented KDP
infrastructure sub-projects cost between 30% and 56% less than those executed by contractors \. However, evidence
provided on construction quality is insufficient to confirm that the comparison is between works of the same standard \.
It is also uncertain if budgetary provision for O&M would be sufficient to sustain the longer term beneficiary stream \.
On balance, efficiency is rated substantial \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re -estimated value at evaluation :
re-
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
While the evidence indicates that the project achieved the objective of reducing poverty in rural Indonesia, the goal
of improving local level governance â described in the PAD (page 8) as the issue that the project was meant
specifically to address â was attained only to a modest extent \. Efficiency is substantial, since â although the ICR did
not carry out a cost-benefit analysis of a sample of KDP -3 sub-projects â it seems likely that the high returns recorded
for KDP-2 would be repeated\. Evidence indicates, moreover, that KDP infrastructure investments are cost effective \.
Relevance of objectives is high and that of design substantial \. Outcome is assessed as moderately satisfactory \.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
IEG concurs with the ICRâs rating of a moderate risk to development outcome :
The KDP/PNPM program is now well established and its implementation is being continued \.
Risk mitigating factors include the high economic impact of community sub -projects, vigorous community
engagement in, and ownership of, project -funded activities, and strong government commitment to the program
at both local and national levels \.
However, a moderate risk is posed by the less -than-satisfactory technical quality of some infrastructure
construction, the lack of formal arrangements and budget provision for O&M, the weaknesses of a significant
proportion of microfinance institutions, and the failure, to date, to institutionalize fully participatory processes in
local government\.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
a\. Quality at entry:
The Bankâs preparation team built successfully on the experience of the two previous KDP operations \.
The intended intermediate and final outcomes â higher household expenditure rates and improved access to
economic and social services, the economic rate of return as a measure of sub -project efficiency and cost
effectiveness, beneficiary satisfaction levels with services, improved local governance indicators (percentage
of poor and vulnerable persons and groups involved in the planning, implementation, operation and
maintenance of sub-projects, use of new skills by local governments to fulfill their governance functions ), the
adoption of local regulations and by -laws to facilitate the institutionalization of participatory processes in local
government, and possession of the appropriate skills by sub -district micro-finance institutions to carry out
their credit activities efficiently and sustainably â are all relevant, closely linked to the objectives, and
appropriate measures of their attainment \.
Technical, financial, and economic dimensions were appropriately addressed, as well as issues relating to
fiduciary and safeguards compliance \. Fiduciary aspects, in particular, were tackled through enhanced
financial management capacity and a comprehensive anti -corruption plan\.
The poverty, gender and social dimensions of the KDP program were incorporated into the design of this
operation\.
The particular focus on enhanced local governance and institutional strengthening was appropriate in order
to consolidate the success of the two previous projects in identifying and implementing sub -projects using a
participatory, community-driven process\.
Implementation arrangements were workable as they were an improved version of those put in place and
tested during KDP-1 and KDP-2\.
M&E design focused mainly on attempting to improve the system in place for the earlier projects \. The team
did not appear to be aware of the risks posed by the proposed parliamentary amendments to Indonesia âs
decentralization laws and regulations which necessitated a scaling back of the project before Effectiveness \.
at -Entry Rating :
Quality -at- Satisfactory
b\. Quality of supervision:
Eight formal supervision missions took place during the six years between Board approval and closure \.
Three of these were prior to Effectiveness in January, 2005\. However, the number of formal missions since
Effectiveness (averaging about one per year ) understates the intensity of the supervision effort, since there
was ongoing supervision by a dedicated KDP /PNPM office based in Indonesia\.
The Bank responded swiftly and effectively to the period of legal and political uncertainty during the
parliamentary passage of the decentralization law, and also subsequently, when the uncertainty had
receded, and the project was substantially expanded (with additional financing)\.
The team also responded well to the needs of disaster -hit areas; although only a small proportion of the
reallocated funds were used, the Bank -supported application of KDP principles and methods attracted
substantial bilateral and multilateral donor participation in the disaster -hit areas\.
Arrangements for the roll out of the national PNPM program, which overlapped with KDP -3, were fully
adequate and helped to ensure a smooth transition \.
Appropriately in the light of experience during KDP -1 and KDP-2, considerable attention was paid during
supervision to fiduciary aspects, in particular financial management, local procurement and anti -corruption
safeguards and measures\. A complaints mechanism was put in place \. However, the mechanism did not work
satisfactorily â there was reluctance to report problems, and nearly half the cases were still unresolved by
project closure (see Section 11 below)\.
The extent to which concerns raised earlier about due process where land acquisition is required for project
purposes have been fully addressed remains unclear (see Section 11 below)\.
There was an important effort to train communities in O&M and set up community organizations to handle it \.
Nonetheless, these arrangements were not formalized and no budget provision for O&M was made \.
The quality and candor of reporting were adequate, though there were only five Implementation Status
Reports (ISR) since Effectiveness\. Documentation was also often late, thereby reducing its usefulness to
management\.
Despite the projectâs strong focus on improving local level governance, a number of issues (including the
necessary adoption of local government by -laws and regulations) remained unresolved\.
The ICR (page 20) reports that follow-up on issues identified during supervision often took the form of
"intense engagement with the executing agency almost to the point of micro -management rather than
escalation to higher level Indonesian authorities for resolution \.â? However, that approach is considered to
have facilitated smooth processing of the additional financing in parallel with continued implementation \.
The ICR notes that, although a large share of Bank lending in Indonesia over the project period was for CDD
operations, projects were supervised individually rather than as a portfolio \. Consequently, communications
with Government were not always consistent and sometimes failed to take account of overall trends \.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The Government displayed high commitment to, and ownership of, the KDP and its objectives, as reflected in
its adoption as Indonesiaâs national community empowerment and poverty alleviation program \.
Adequate counterpart funding was provided, fiduciary covenants were fully complied with and government
audits, that also reviewed procurement, were carried out in an adequate and timely manner \.
The relationship with, and coordination among, foreign donors were good, as evidenced by the existence of
eleven linked trust funds totaling US$ 24\.5 million from four bilateral agencies\.
The ICR reports, nonetheless, some weaknesses in government performance :
Initially, there were delays with regard to the legal framework for decentralization, although since these
originated with Parliament, it is unclear to what extent they were within the Administration âs control\.
The institutionalization of participatory processes at the local level did not progress as well as had been
anticipated at appraisal\.
There were delays in key staff appointments to the implementing agencies, as well as in release of budgeted
funds for project activities\.
According to the ICR, there was âover-reliance on Bank supervision, " though few details are provided (there
may be a link here to the issue of âmicro-managementâ? mentioned above in connection with Bank
supervision performance)\.
Government Performance Rating Moderately Satisfactory
b\. Implementing Agency Performance:
The implementing agency was the Directorate General of Community Development (PMD) in the Ministry of
Home Affairs\. The ICR reports that PMD and its regional offices were fully committed to the project âs
development objectives\.
Positive aspects of PMDâs performance included (i) the high level of consultation with the beneficiary
communities, thereby contributing to their high degree of participation in project -supported activities (ii) good
coordination with the international donor agencies and both local and foreign NGOs involved in
project-related or ancillary activities; and (iii) an important role in ensuring smooth transition from KPD -3 to
the national PNPM\.
On the negative side: (i) there were delays in resolving implementation issues, including those related to the
M&E and Management Information System (MIS); (ii) poor budget planning led to a high level of budget
revisions that adversely affected implementation and contributed to delays in budget releases from central
and local authorities; (iii) despite the strengthened arrangements for impeding corruption and receiving
complaints, acting on such complaints was, at times, slow; (iv) PMDâs management frequently showed
reluctance to address poor staff performance issues; and (v) the agency did not participate fully in the
preparation of project performance reviews for use in joint Bank -Government discussions; consequently,
these discussions were at times not as conclusive as they might have been \.
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
According to the PAD (page 30), KDP-3âs ârobust program for monitoring and evaluation â? has as its core the KDP
programâs Management Information System (MIS) that was developed on the basis of lessons learned during KDP -1
and KDP-2\. âMIS information is aggregated and used in each of the regional management units, with a master
system maintained by the national oversight team \. External monitoring is provided through contracts to independent
provincial NGOs and a blind contract with the association of independent journalists \.â? However, the PAD also notes
the need to address weaknesses in the MIS to improve its application in KDP -3, including (i) delayed field entries
meaning that available information is some 2-3 months out of date; (ii) slow and inappropriate national responses to
field reports; and (iii) unwieldiness resulting from over-proliferation of documents\. To help deal with these
weaknesses, the PAD proposes the inclusion in the project of âconcentrated inputs of international technical
assistance to enhance statistical data collection and analysis as well as reporting â? The project would also
commission a study to evaluate the impact of the local government reforms introduced through the program \.
b\. M&E Implementation:
The ICR reports that the MIS was established without anticipating the rapid scaling up of the program, presumably
referring to the rolling out of the PNPM supported by the additional financing \. Even before the expansion, however,
the MIS continued to suffer âfrom a number of systemic issues, including lack of clarity on key indicators to be
monitored; staffing issues; issues with customization of software; and hardware problems \. Although detailed project
data were readily available at the local level, the information did not flow up smoothly, and there was also a lack of
level-by-level consolidation checks on data quality \.â? A detailed examination of the MIS was made during the mid -term
review (MTR) mission of September 2006, and a series of detailed recommendations made regarding strengthening
of staff, improvement of hardware, and the integration of the information into a single data base \. These
recommendations were intended to enable the system to cope with the scaling up of the operation, which took place
in 2007\. There is no indication in the ICR as to whether these recommendations were acted upon \. M&E
implementation also suffered from other weaknesses : two proposed studies on matching grants and options for
sustainable financing were not carried out; (ii) there was no calculation of the ERR on any of the sub -projects
financed by KDP-3, although this was cited as an indicator of cost effectiveness; (iii) no beneficiary survey for KDP -3
appears to have been carried out, since the ICR (page 35) cites results from âa 2005 survey and evaluation of KDP
projects across Indonesia \.â?
c\. M&E Utilization:
The ICR (page 28) states that the MIS data and the findings of those studies that were completed were âused to
improve project design and implementation of new and ongoing KDP operations \.â?
M&E Quality Rating : Modest
11\. Other Issues
a\. Safeguards:
Environment \. The project was classified as Category âBâ? for purposes of OP 4\.01\. The ICR states (page 11) that, due
to the âvery small scale of the infrastructure sub -projects involvedâ? (there were some 28,000 sub-projects; the final
cost of the block grants for infrastructure was US$ 536 million, yielding an average cost per sub -project of
US$19,143), no formal environmental impact analyses were required \. The ICR reports that environmental and social
impacts of the sub-projects were, nonetheless, considered \. Checklists of potential impacts were prepared at
identification and follow-ups were routinely conducted during and after implementation \. Although âthere was no
systematic monitoring and reporting relating to the implementation of environmental safeguards, an extensive sample
review conducted between 2006 and 2008 showed that only a very small proportion of cases involved serious
negative environmental impacts\."
Social Safeguards \. The ICR states that there were no reports of involuntary land acquisition or loss of assets \. âIt is
very likely that such cases would have been brought to light through KDP âs effective complaints mechanism â? (page
11)\. At the sub-project identification stage, a checklist of potential compensation needs was prepared for any land or
asset losses resulting from implementation \. âIn most cases, such assets are donated voluntarily by the owners, who
perceive the benefits for themselves and the community as outweighing any potential loss â? (ICR, page 11)\. These
issues are discussed in the inter -village meeting fora, and âwithout mutually satisfactory agreements, the sub -project
would not be permitted to proceed \.â? The ICR further reports only âa very limited amount of private land is sometimes
utilized for sub-projects\.â? However, it is unclear if the concerns raised in the March 2006 Project Performance
Assessment Report (PPAR) for the Second Village Infrastructure Project (Loan 4100) and Kecamatan Development
Project (Loan/Credit 4330/3453) have been fully addressed \. These concerns, which the PPAR describes as
"carry[ing] through into the KDP 3 [i\.e\. this project] Annex 13 Guidelines" (PPAR, footnote 48, page 30), focus on lack
of clarity in cases where a villager does not voluntarily donate land; lack of definition of an "affected person;"
"acceptable" in-kind compensation without specifying acceptable to whom; and allowing certain elements of the
procedure to be waived where less than 20% of the land is involved\. "Overall, the process seems to be open for a lot
of community pressure on affected persons " (ibid)\.
b\. Fiduciary Compliance:
Financial Management and Audits \. According to the ICR, fiduciary compliance was generally good \. External audit
reports by the Central Government âs audit agency were all unqualified except for that of 2005 which identified some
payments errors and an under -statement of the Special Account \. 75% of these issues were reportedly dealt with by
the end of 2006\. Nonetheless, âfindings related to financial reports from 2007 and 2008 drew attention to internal
control weaknesses and some problems with community records and payment verification â? (ICR, page 12)\. There
were also issues related to overpayments, non -compliance with the conditions attached to some block grant
disbursements and inadequate monitoring of consultants â work\. The ICR states that both government agencies and
the Bankâs financial management supervision monitored the resolution of these issues \.
Anti-corruption measures \. The ICR reports that KDP-3 introduced a comprehensive complaints mechanism to deal
with corruption related issues \. By 2007, specialists had been attached to each provincial management consultant
office\. However, ââ¦there was still a reluctance to report problems \. In addition, facilitators and other project actors
lacked the skills required to handle complaints well \. Out of approximately 1,900 cases⦠the complaints handling unit
was able to close 56%\.The outstanding cases are still being pursued, including a portion that are slowly making
their way through the police and court system â? (ICR, pages 12-13) This would indicate that some of the governance
concerns raised in the PPAR referred to in Section 11a above (see especially the discussion on page 22) remain to
be fully addressed\.
Procurement \. The same procurement system as in KDP -1 and KDP-2 was adopted â a competitive bidding process
was used for consulting firms to provide administrative and logistical support to 140 oversight consultants at the
district and sub-district levels, while âthe proven system of community procurement â? (ICR, page 12) was continued for
village infrastructure sub-projects\. The ICR reports no procurement-related issues\.
c\. Unintended Impacts (positive or negative):
The decision by the Indonesian Government to rebrand KDP as PNPM and transform it into a major, national
program was an important, unintended outcome \.
Three autonomous provinces (Aceh, Papua and West Papua ) decided to adopt a KDP-style approach and
allocated significant budget resources to sub -projects which were identified and implemented using KDP
facilitators and planning processes \.
d\. Other:
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Moderately The goal of improving local level
Satisfactory governance was attained only to a
modest extent\.
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Moderately
Satisfactory Satisfactory
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The following lessons are taken from the ICR with some adaptation of language :
CDD projects which are popular and have demonstrated success in rural poverty reduction are likely to
survive even major political change, to be adopted by national governments, and supported by local ones with
contributions from their own budgetary sources \. Success also attracts bilateral donor participation \.
A participatory and transparent approach, together with an effective complaints mechanism, can help
safeguard against financial mismanagement \. Although, in this case, financial management issues were
limited, the complaints mechanism did not work as well as anticipated \. Means need to be found to increase
the publicâs willingness to use the system, while facilitators and other actors require substantial specialized
training\.
Rapid scaling up of a programmatic operation can lead to the capacity of both the relevant institutions and of
the MIS/M&E system being exceeded\. To the extent that such expansion can be foreseen, it should be
anticipated in project design \.
Regular, in-depth evaluation studies are essential tools for improving design and implementation of follow -on
operations\.
14\. Assessment Recommended? Yes No
Why? A Project Performance Audit Report (PPAR) has already been carried out for KDP 1\. Nonetheless, a
combined assessment of the three KDP operations in the light of subsequent implementation of the nation -wide
PNPM program would yield important lessons related to CDD -type projects\. The assessment could also determine
the degree of degree of compliance with safeguard issues, and the actual satisfaction of all parties concerned with
the voluntary donation of assets \. The effectiveness of managing compliance with fiduciary policies, and that of the
anti-corruption measures, can also be assessed \.
15\. Comments on Quality of ICR:
The ICR is clearly written\. A cost-benefit analysis should have been completed for a sample of KDP -3 sub-projects
rather than relying on a previous study of earlier operations \. An explanation as to why the anticipated changes to
local government did not materialize, and an indication of whether the MTR recommendations regarding the MIS
were implemented or not, would have been useful \. A fuller discussion of safeguards and fiduciary issues would have
been helpful\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P145410 |  Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: ICR00004878
IMPLEMENTATION COMPLETION AND RESULTS REPORT
TF017709
ON A
SMALL GRANT
IN THE AMOUNT OF USD 2\.75 MILLION
TO THE
ChildFund International - Guatemala
FOR
Pilot to Improve the Development and Nutrition of Young Children in Poor Rural
Areas in Guatemala (P145410)
December 27, 2019
Social Protection & Jobs Global Practice
Latin America And Caribbean Region
This document has a restricted distribution and may be used by recipients only in the performance of their official
duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
Acting Regional Vice President: J\. Humberto Lopez
Country Director: Yaye Seynabou Sakho
Regional Director: Luis Benveniste
Practice Manager: Pablo Gottret
Task Team Leader(s): Hugo Martin Brousset Chaman
ICR Main Contributors: Karla J\. McEvoy / Claudia P\. Rodriguez Alas
Director: Luis Benveniste
Senior Global Practice Director: Michal J\. Rutkowski
Practice Manager: Pablo Gottret
Task Team Leader(s): Hugo Martin Brousset Chaman
ABBREVIATIONS AND ACRONYMS
ACODIHUE Association of Integral Development Cooperation of Huehuetenango (Asociación de
Cooperación al Desarrollo Integral de Huehuetenango)
ASQ-I Ages and Stages Questionnaires-Inventories
CEDRO Cooperation for Western Rural Development (Cooperación para el Desarrollo Rural
de Occidente)
CEO Evaluation and Orientation Houses (Casas de Evaluación y Orientación)
COCODE Community Development Council (Consejos Comunitarios de Desarrollo)
CODEDE Provincial Development Council (Consejos Departamentales de Desarrollo)
COMUDE Municipality Development Council (Consejos Municipales de Desarrollo)
COMUSAN Municipal Council for Food and Nutritional Security (Comisión Municipal de
Seguridad Alimentaria y Nutricional)
CF ChildFund
CPS Country Partnership Strategy
CSO Civil Society Organizations
DMS Municipal Health Districts (Distritos Municipales de Salud)
ECD Early Childhood Development
IE Impact Evaluation (Evaluación de Impacto)
ENSMI National Survey of Maternal and Child Health (Encuesta Nacional de Salud
Materno Infantil)
FM Financial Management
ICR Implementation Completion and Results Report
IPP Indigenous Peoplesâ Plan
IRI Intermediate Results Indicator
ISR Implementation Status and Results
ITT Intention to Treat
JSDF Japan Social Development Fund
MAGA Ministry of Agriculture, Livestock and Food Security (Ministerio de Agricultura,
GanaderÃa y Alimentación)
MDAT The Malawi Developmental Assessment Tool
MIDES Ministry of Social Development (Ministerio de Desarrollo Social)
MINEDUC Ministry of Education (Ministerio de Educación)
MSPAS Ministry of Public Health and Social Assistance (Ministerio de Salud Pública y
Asistencia Social)
NGO Non-governmental Organization
NNLS Our Smart and Healthy Children (Nuestros Niños Listos y Sanos)
PDO Project Development Objective
PS Procurement Specialist
SESAN Secretariat of Food Security and Nutrition (SecretarÃa de Seguridad Alimentaria y
Nutricional)
s\.d\. standard deviation
TOT Treatment on the Treated
SDG Sustainable Development Goals
WASH Water, Sanitation and Hygiene
TABLE OF CONTENTS
DATA SHEET \. 1
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 4
II\. OUTCOME \. 15
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 22
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 27
V\. LESSONS LEARNED AND RECOMMENDATIONS \. 29
ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 33
ANNEX 2\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 45
ANNEX 3\. IMPACT EVALUATION METHODOLOGY \. 46
ANNEX 4\. DESCRIPTION OF THE NUESTROS NIÃOS SANOS Y LISTOS (NNSL) PILOT PROJECT \. 49
The World Bank
Pilot to Improve the Development and Nutrition of Young Children in Poor Rural Areas in Guatemala (P145410)
DATA SHEET
BASIC INFORMATION
Product Information
Project ID Project Name
Pilot to Improve the Development and Nutrition of
P145410
Young Children in Poor Rural Areas in Guatemala
Country Financing Instrument
Guatemala Investment Project Financing
Original EA Category Revised EA Category
Not Required (C) Not Required (C)
Organizations
Borrower Implementing Agency
ChildFund International - Guatemala ChildFund Guatemala
Project Development Objective (PDO)
Original PDO
The Development Objective is to strengthen the capacity of parents and communities to improve and monitor child
development outcomes (physical, cognitive, socio-emotional and linguistic skills) for children under two in project
intervention areas\.
Page 1 of 53
The World Bank
Pilot to Improve the Development and Nutrition of Young Children in Poor Rural Areas in Guatemala (P145410)
FINANCING
FINANCE_TBL
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)
Donor Financing
TF-17709 2,750,935 2,704,667 2,704,667
Total 2,750,935 2,704,667 2,704,667
Total Project Cost 2,750,935 2,704,667 2,704,667
KEY DATES
Approval Effectiveness Original Closing Actual Closing
07-Nov-2014 18-Mar-2015 07-Nov-2018 30-Jun-2019
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions
21-May-2018 2\.01 Change in Results Framework
Change in Components and Cost
Change in Loan Closing Date(s)
Reallocation between Disbursement Categories
Change in Procurement
Change in Implementation Schedule
KEY RATINGS
Outcome Bank Performance M&E Quality
Moderately Satisfactory Satisfactory High
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual
No\. Date ISR Archived DO Rating IP Rating Disbursements
(US$M)
01 08-Dec-2015 Satisfactory Moderately Satisfactory 0\.30
Page 2 of 53
The World Bank
Pilot to Improve the Development and Nutrition of Young Children in Poor Rural Areas in Guatemala (P145410)
Moderately
02 22-Dec-2016 Moderately Satisfactory 0\.56
Unsatisfactory
Moderately
03 23-Oct-2017 Moderately Satisfactory 1\.55
Unsatisfactory
04 21-Sep-2018 Moderately Satisfactory Satisfactory 2\.38
05 25-Jun-2019 Moderately Satisfactory Satisfactory 2\.71
ADM STAFF
Role At Approval At ICR
Regional Vice President: Jorge Familiar Calderon J\. Humberto Lopez
Country Director: J\. Humberto Lopez Yaye Seynabou Sakho
Director: Luis Benveniste Luis Benveniste
Practice Manager: Mansoora Rashid Pablo Gottret
Task Team Leader(s): Lucy Katherine Bassett Hugo Martin Brousset Chaman
ICR Contributing Author: Karla J\. McEvoy
Page 3 of 53
The World Bank
Pilot to Improve the Development and Nutrition of Young Children in Poor Rural Areas in Guatemala (P145410)
I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
Context at Appraisal
1\. At the time of project appraisal, Guatemala faced one of the highest levels of poverty and inequality in
Latin America\. With a GNI per capita of US$3,130, Guatemala was considered a lower middle-income country
in 2012; however, its social indicators remained low compared to other middle-income countries within and
outside the region\. Poverty had increased from 51 to 53\.7 percent in 2011 due to the global food, fuel, and
financial (FFF) crisis\. Child malnutrition was one of the highest in the world: stunting and anemia rates were
49\.8 and 47\.7 percent, respectively, affecting nearly half of all children under five\. Under-five mortality was 30
per 1,000 live births, higher than the regional Latin American average of 19 per 1000 live births\. Within
Guatemala, there were deep regional and ethnic disparities in child outcomes\. Children in rural areas suffered
disproportionally from malnutrition; about 59 percent of children 3-59 months in rural areas were stunted,
compared to 34\.4 percent in urban areas\. The northwestern departments were the most affected by chronic
malnutrition, with rates as high as 70 percent of children 3-59 months\. As indigenous children mostly live in
rural areas, their stunting and underweight rates were almost twice that of non-indigenous children according
to the Encuesta Nacional de Salud Materno Infantil (ENSMI) 2008-09\.
2\. Socioeconomic status, social and political exclusion, geographic isolation and cultural practices are key
determinants of nutrition outcomes in Guatemala\. As previously stated, indigenous people live mostly in rural
areas, many in isolated locations that lack public services\. Moreover, studies show that nutrition and hygiene
habits also determine malnutrition in the first months of life\. According to the ENSMI 2008-09, only 49\.6 percent
of children 0 to 6 months were exclusively breastfed, and the average month of breastfeeding for infants was
only 3\.4 months\. Coffee, on the other hand, is introduced early among the poorest and indigenous populations\.
The poor hygiene and sanitary conditions in which the poor live cause childhood diseases such as diarrhea and
respiratory infections, and these conditions are exacerbated by malnutrition\. Even though malnutrition
decreased from 54\.5 percent in 2002 to 49\.8 percent in 2008-09 (ENSMI 2008-09), at that rate, it was estimated
that it would take four decades to eradicate chronic malnutrition in Guatemala\.
3\. Early childhood stimulation, in particular, is a critical input to maximize the impacts of nutritional
interventions\. Children who are stunted or otherwise malnourished will benefit from effective nutritional
interventions, especially before the age of two, but they cannot catch up with well-nourished children in overall
human development (including growth, cognitive, language, social, and motor development) if they do not
receive proper stimulation in the early years\. In some cases, children who have access to adequate nutrition fail
to eat and to grow properly because of the lack of stimulation and attention they experience at an early age\.
This condition may be called "failure to thrive" when children refuse to eat and, as a result, do not grow properly\.
Or it may be called "deprivation dwarfism" when children eat but still fail to grow because the emotional and
stimulation deprivation that they face depresses the endocrine system and inhibits the production of pituitary
growth hormones, a substance known to be essential for the normal growth and development of body cells
(World Bank, 2009)\.
4\. The cumulative benefits of the combined approach of early childhood nutrition and early childhood
stimulation interventions have been empirically proven in several contexts\. The leading general medical
Page 4 of 53
The World Bank
Pilot to Improve the Development and Nutrition of Young Children in Poor Rural Areas in Guatemala (P145410)
journal, The Lancet, found that poor caring and parenting practices during the first 1,000 days of life, or the
âwindow of opportunity,â? also have an important impact on malnutrition and child development\. Apathy, lower
levels of play, and more insecure attachment are associated with underweight and stunting in young children
and with more problems with conduct, poorer attention, and poorer social relationships at school age\. Evidence
from Bangladesh and Uganda (Lancet, 2011), demonstrates that community based-psychosocial stimulation,
with or without food supplementation, can improve child-rearing practices of mothers of severely malnourished
children and the quality of their home environment\. Evidence from Jamaica (World Bank, 2009) shows that
stunted children ages 9 to 24 months who received the benefits from a combination of nutrition supplements
and stimulation were, in the short term, able to catch up to non-stunted children faster than those only receiving
nutrition supplements, and in the long term, were able to show cognition benefits at ages 11 years and 17 years,
while those only receiving nutrition supplements were not\.
Theory of Change and Results Chain
5\. Given the above, achieving improvement in childhood wellbeing in indigenous areas in Guatemala
required an innovative approach that combined nutrition and stimulation\. The Nuestros Niños Sanos y Listos
(NNSL) pilot project was a culturally relevant project that placed mothers and caregivers at the center of their
childrenâs development by giving them the tools to stimulate and monitor their childrenâs physical, cognitive,
socio-emotional, and linguistic skills\. The project was designed to complement ongoing interventions by the
Government1 and other partners by piloting a set of community-based nutrition and parenting/early childhood
stimulation interventions aimed at: (i) improving caretakersâ interactions with young children to enhance their
physical, cognitive and emotional development outcomes; (ii) encouraging caretakers to adopt optimal caring
and feeding practices for young children; and (iii) increasing community participation in monitoring child
development indicators\. The Grant was made to ChildFund (CF) (the implementing agency), who in turn hired
two local NGOs (the Association of Integral Development Cooperation of Huehuetenango â ACODIHUE; and the
Cooperation for Western Rural Development â CEDRO) to carry out the work in the communities\. The two NGOs
hired social workers, who, in cooperation with indigenous community governing structures (COCODES),
identified volunteer females they could train in early stimulation concepts and exercises\. These volunteers were
known as Madres GuÃas, and they worked directly with parents and caregivers to educate them on the
importance of early stimulation and activities to engage their children\. The use of volunteer mothers from the
communities to deliver these services (home visits) is part of similar Government-funded programs, such as the
Cuna Más program in Peru\.
1The project complemented the then- current public interventions to improve child nutrition, especially the Hambre Cero (Zero Hunger)
Program\. This program was the central initiative of the Governmentâs social policy\. It aimed to reduce the prevalence of chronic
malnutrition in children under-five and child mortality through the coordination of multisectoral interventions\.
Page 5 of 53
The World Bank
Pilot to Improve the Development and Nutrition of Young Children in Poor Rural Areas in Guatemala (P145410)
Activities Outputs Outcomes Long-term Outcomes
Develop and integrate Diagnostic of
early child stimulation Households with
practices/beliefs enhanced early
activities into community
nutrition activities around early childhood stimulation practices
stimulation
Cultural adaptation of the Increased community
childhood stimulation Implementation of awareness on
programs, and monitoring Ventana de la Vida parenting/early
tools program early childhood stimulation
stimulation and and development
Validate early stimulation
parenting sessions
messages
through group Parents/caretakersâ Improved physical,
Train social workers, modality) caring and feeding cognitive and
Madres GuÃas, and health practices for young emotional
staff on parenting/early Implementation of children is improved development of
stimulation Reach Up program beneficiary children
(early stimulation and Increased community
Train parents & parenting sessions
communities on parenting outreach by
through home visits) COCODES, health and
& early stimulation
nutrition institutions
Sensitize the COCODES Monitoring Tool to track through community
and other government and child development fairs
civil society organizations
on the importance of early Community Fairs
childhood stimulation Parents, caretakers,
and communities
Train midwives in Baseline and endline monitoring child
exclusive breastfeeding data development
and early childhood
stimulation Impact Evaluation
Develop messages to
promote positive child care
& feeding practices
Establish impact
evaluation baseline and
endline
Evaluation of
pilot/dissemination of
findings
Project Development Objectives (PDOs)
6\. The Project Development Objective (PDO) was to strengthen the capacity of parents and communities
to improve and monitor child development outcomes (physical, cognitive, socio-emotional, and linguistic
skills) for children under two in Project intervention areas\.
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Key Expected Outcomes and Outcome Indicators
7\. The PDO level results indicators were the following:
(a) Percentage of children achieving the expected development level for their age
(b) Percentage of participating households with adequate early stimulation in the home
(c) Percentage of participating parents that recognize and value key activities for infant and child
nutrition and development
(d) Percentage of communities regularly monitoring child development outcomes
Components
8\. Component 1: Promotion of physical, cognitive, linguistic and socio-emotional development through a
parenting and early stimulation intervention (US$1,865,111\.62)\. This component was delivered through three
subcomponents: 1\.1 Mapping early stimulation practices in (and applicable to) the participating communities;
1\.2 Developing and integrating a parenting/early child stimulation component into community nutrition
activities that were already being carried out (e\.g\., the Hambre Cero program); and 1\.3 Sensitization of state,
municipal, and local staff, health facilities staff, and civil society organizations (CSOs) on the importance of the
integrated approach to Early Child Development (ECD) and the roles of each entity to promote it through, inter
alia, the carrying out of training, seminars, workshops, and the provision of technical assistance\.
9\. Component 2\. Enhanced social and behavior change communication to achieve improved child nutrition
and development (US$129,359\.37)\. This component had three subcomponents: 2\.1 Investigation of current
child feeding and caring behaviors; 2\.2 Development of an enhanced social and behavior change mode; and 2\.3
Roll out of social and behavior change approach\. It is important to note that this type of nutrition-related
behavior change activity was also to be carried out under the World Bankâs Crecer Sano project (P159213),
approved on March 24, 2017, which was being prepared at the same time as the JSDF Grant\. The Crecer Sanoâs
PDO is to improve selected practices, services and behaviors known to be key determinants of chronic
malnutrition (with an emphasis on the first 1,000 days of life) in the intervention areas\. Despite this, the Grant
team decided to proceed with financing the nutrition activities, since it was likely that Crecer Sano would not be
implemented in time to overlap with the JSDF Grant\.
10\. Component 3\. Project management and administration\. Monitoring and evaluation, and knowledge
dissemination (US$756,464\.01)\. This component included two subcomponents: 3\.1 Project management and
administration; and 3\.2 Monitoring and evaluation and knowledge dissemination\.
Significant Changes during Implementation
11\. The Grant was restructured twice2:
⢠In January 2015: to add an expenditure category, and to re-allocate Grant proceeds among expenditure
categories; and
2Only the second restructuring appears in the ICR datasheet, because the information platform for trust funds was only established
after January 2015 â so the first restructuring was processed by email and does not appear in the trust funds platform\.
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⢠In May 2018: to (1) eliminate some nutrition communication and behavior change activities for families;
(2) add nutrition-related communication and behavior change activities at community fairs, to promote
nutrition sensitive activities;3 (3) reallocate resources across components and across disbursement
categories; (4) extend the Grantâs closing date from November 7, 2018 to June 30, 2019, to allow
implementation of the activities that were delayed, to ensure a more robust impact evaluation and to
allow more children to receive the project benefits for a longer period; (5) change in procurement
arrangements to allow remaining procurement to be carried out under the new World Bankâs
Procurement Regulations for Borrowers under Investment Policy Financing, approved in July 2016 and
revised in November 2017; and (6) change the Results Framework\.
12\. While the PDO was never modified, some new indicators were added to measure activities that directly
contributed to the achievement of the PDO, while others were dropped to reflect the elimination of several
nutrition activities under Component 2\. In addition, some outcome indicator targets were revised downward
to reflect the slow start of Grant activities, and to be in line with what the improved measurement tools
indicated was more realistic to achieve in terms of outcomes\. Tables 1 and 2 summarize the changes made to
PDO and intermediate indicators\.
Table 1\. Summary of Original and Revised PDO Indicators
Indicators Revisions Justification
PDO Indicator: Percentage of New end target: 60% The end target was adjusted
children achieving the expected because, once the Barrilete and
development level for their age\. other tools to measure early
stimulation practices in families
End Target: 70 % had been adapted to the
Guatemalan indigenous context
and applied to the pilot, it was
clear that the original target was
not in line with international
evidence from other similar
interventions, and that it could
likely not be reached even within
the extended Grant
implementation period\.
3Agencies such as Secretariat of Food Security and Nutrition (SESAN) and the Ministry of Public Health and Social Assistance (MSPAS)
provided training on several issues including WASH, minimum nutrition packages, etc\., during the community fairs\.
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PDO Indicator: Percentage of Percentage of The new articulation of the
participating households with participant households indicator (âenhanced early
adequate stimulation at home\. with enhanced early stimulation practicesâ) more
stimulation practices accurately reflects the
comprehensive set of skills that
End Target: 70% New End Target: 40% are supported under the Grant\.
The downward revision of the
target was due to the fact that: (1)
many families migrated during
certain seasons for work and so
did not remain consistently within
the program; and (2) attrition,
given that program attendance
was based purely on motivation
and not by any monetary
compensation\.
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PDO Indicator: Percentage of Dropped The activities this indicator was
participating parents that meant to measure were scaled
recognize and value key activities down under the Grantâs second
for infant and child nutrition and restructuring\. Activities were
development\. dropped because it had become
clear that ChildFund had more
End Target: 70% expertise in delivering parenting
practices at the community level,
whereas it would have to develop
nutrition activities from scratch
(including adaptation of
measurement tools), and that
would have entailed collaborating
with MSPAS and NGOs, which
would delay implementation even
more\. The Bank and ChildFund
teams decided therefore to drop
most of the nutrition activities, to
focus on early stimulation, since
ChildFund had a comparative
advantage and could make an
impact, and leave it to the Crecer
Sano project to carry out the bulk
of nutrition activities\. Doing this
ensured that ChildFund could
carry out quality work while still
maintaining an integrated
approach to combating childhood
malnutrition\.
PDO Indicator: Percentage of Dropped Under the second restructuring,
communities monitoring child Grant activities focused on
development outcomes\. working with parents instead of
community monitoring\.
End Target: 70%
Number of children that are direct New indicator This core indicator was added to
beneficiaries of the Project\. monitor the final number of
children receiving benefits
End Target: 5,500 children through the Project\.
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Table 2\. Summary of Original and Revised Intermediate Result Indicators
Component Original Indicators Revised indicators Justification
IRI_1: Diagnostic of early No changes
childhood development
beliefs and practices in
beneficiary communities is
completed
IRI_2: Monitoring tool to No changes
track child development is
developed
IRI_3: Early stimulation Dropped Other early stimulation
Component 1: package of activities packages in the results
Promotion of developed framework â specifically,
physical, cognitive, participation in Ventana
linguistic and socio- End Target: Yes de la Vida and Reach Up
emotional pilot programs â are
developments better able to measure
through a parenting progress on early
and early stimulation stimulation activities, and
intervention were already developed\.
IRI_4: Percentage of project Number of project The indicator was re-
communities implementing communities worded to precisely
activities with caretakers implementing articulate the type of
Level 1 (Ventana activities that were being
End Target: 100% de la Vida) and measured\.
Level 2 (Reach Up)
methodologies
End Target: 100 %
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IRI_5: Percentage of local Percentage of Indicator was revised to
and municipal leaders and COCODES more accurately reflect
health facility staff (Consejos project activities\. The end
sensitized on the Comunitarios de target was revised
importance of ECD Desarrollo) downward, however,
implementing because (despite multiple
End Target: 100% activities in favor sensitization efforts)
of childhood in some COCODES would
their communities not allow the pilot to be
implemented in their
End Target: 70% communities, nor start
their own initiatives\.
IRI_1: Summary of key Dropped Grant was restructured
constraints to optimal child to focus on early
feeding and caring stimulation activities (see
Component 2: behaviors is completed explanation in Table 1,
Enhance behavior above); therefore, the
change End Target: Yes indicator was no longer
communication to relevant\.
achieve improved
child nutrition and IRI_2: Behavior change Dropped Ibid
development approach defined
End Target: Yes
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IRI_3: Percentage of Number of The indicator was
municipalities community fairs changed to reflect the
implementing social and implemented with inclusion of training on
behavior change an ECD approach early stimulation and
communication with target good nutrition practices
groups End Target: 188 during community fairs\.
community fairs This ensured that some
End Target: 100% nutrition activities
remained in the Grant,
while others originally
intended to be financed
by the Grant, were to be
carried out under the
Bankâs Crecer Sano
project\.
IRI_1: Baseline survey No changes
conducted
IRI_2: Quarterly progress Revised end Target increased to align
reports completed target:16 reports with extension of closing
date\.
End Target: 14 reports
IRI_3: Mass events hosted Revised end As previously stated, the
Component 3: for departmental health target: 2 events mass events were
Project management systems dropped under the Grant
and administration, and would instead be
monitoring and End Target: 16 events carried out by the Crecer
evaluation, and Sano Project\. The revised
knowledge end target reflects what
dissemination had already been carried
out before the second
restructuring of the
Grant\.
IRI_4: Final survey Final Impact Revised indicator
conducted Evaluation survey references the type of
conducted survey (Impact
End Target: Yes Evaluation)\.
End Target: Yes
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IRI_5: Final Report Dropped Child Fund reported
Completed by ChildFund progress quarterly;
therefore, a final report
End Target: Yes was no longer relevant\.
IRI_6: Number of Madres New New indicator is relevant
GuÃas (MG) trained to apply to monitor early
level 1 methodology stimulation activities of
(Ventana de la Vida) Ventana de la Vida\.
End Target: 595 MG
IRI_7: Number of Madres New New indicator is relevant
GuÃas trained to apply level to monitor early
2 methodology (Reach Up) stimulation activities of
Reach Up\.
End Target: 450 MG
IRI_8: Number of children New New indicator is relevant
participating in level 1 to monitor early
activities (Ventana de la stimulation activities of
Vida) within âCasas de Ventana de la Vida\.
Evaluación y Orientaciónâ?-
CEO's strategy
End Target: 4,480 children
IRI_9: Number of children New New indicator is relevant
participating in level 2 to monitor early
activities (Reach Up) stimulation activities of
Reach Up\.
End Target: 1,920 children
IRI_10: Percentage of New New indicator is relevant
Madres GuÃas with quality to monitor early
implementation of level 1 stimulation activities\.
and level 2 activities ChildFund had developed
a tool to assess quality of
End Target: 70 MG implementation\.
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IRI_11: Number of CEOs New New indicator is relevant
implemented to monitor early
stimulation activities
End Target: 80 CEOs under Ventana de la
Vida\.
IRI_12: Number of New New indicator is relevant
midwives in project to monitor activities to
catchment areas trained in be provided to midwives
exclusive breastfeeding and as they are the main
opportune stimulation by maternal health care
the social workers providers in the
communities of
End Target: 900 midwives intervention\.
Other changes
13\. The Grantâs legal agreement was modified to reflect the above changes, as well as the payment of social
workersâ salaries for the period between April 2016 and June 2019\.
Rationale for changes and their implication for the original theory of change\.
14\. The changes to Grant activities and the subsequent reallocation of resources reflected the realization
that ChildFund did not have capacity to deliver both the stimulation and the nutrition activities, and was in
fact better equipped to provide the former\. The Bank and implementing teams added training in early
stimulation and good nutrition practices (the latter provided by the Ministry of Public Health and Social
Assistance - MSPAS) at community fairs, to ensure that some limited nutrition training for the community and
particularly for midwives, would take place\. The decision to scale down nutrition activities was also justified by
the finalization of the preparation of the IBRD Project Crecer Sano, which included nutrition-related activities
that the Grant team believed could be provided to Reach Up and Ventana de la Vida beneficiaries\. The
restructuring also allowed the financing of social workersâ salaries, which had to be approved by the donor
country, which was key to achieving the Grantâs objectives\. The revisions to Grant activities did not have
implications for the theory of change\.
II\. OUTCOME
A\. Relevance of PDOs
Rating: High
15\. The NNSL project was in line with Guatemalaâs Country Partnership Strategy (CPS) FY13-16\. One of that
CPSâs pillars was to provide support for improved results in social sectors\. This included ensuring the
sustainability of achievements of the ongoing health, nutrition and education projects that came to an end
during the CPS period\.
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16\. The Grant objectives continue to be relevant, in line with Guatemala Country Partnership Framework
for FY17-204 and with the Guatemalan governmentâs national priorities\. The Grant contributes to Pillar 1
(Fostering Inclusion of Vulnerable Groups) of the Country Partnership Framework, and the administration that
took office in January 2016 placed health, education, stronger economic growth, and increased transparency at
the center of its policy agenda\. Recognizing the important role that human capital development plays in
contributing to economic growth (and vice versa), the Governmentâs 2016-2020 Plan emphasizes the need for
improvements in health and education, and reduction of chronic malnutrition\. In February 2016, the
Government established the Commission to Reduce Chronic Malnutrition, and in March 2016, the President
officially launched the National Strategy to Prevent Chronic Malnutrition 2016-2020\. The Government also
recently updated its Primary Health Care (PHC) Model, adopting a multidimensional (individual-family-
community) approach and integrating complementary aspects of traditional Indigenous health beliefs and
practices\.
17\. The Project is aligned with the WBâs twin goals to reduce poverty and promote shared prosperity, and
the WB Human Development Strategy\. Pillar 2 of the Human Development Strategy calls for investments to
promote âa strong healthy start for all\.â? Likewise, the intervention is well aligned with multisectoral
interventions promoted by the WBG group to invest in the early years, and which call for a comprehensive
approach to invest in the first 1,000 days\. The recently launched Human Capital project also refers to the
potential gains that countries can secure by investing in key education and health and nutrition services at an
early age, contributing to maximize the potential productivity of children when they reach adulthood, if
Governments secure appropriate service delivery networks, including investments such as the ones promoted
under the NNSL pilot\.
18\. The Project comes at a critical juncture in global efforts to reduce malnutrition\. The Projectâs objectives
are in line with the Sustainable Development Goals (SDG) to end malnutrition by 2030, including achieving
internationally agreed targets on stunting and wasting in children under five years of age\. The Project also
supports SDG 3, to ensure healthy lives and promote well-being for all, and SDG 10, to reduce inequalities within
countries\. Guatemala is also participating in the Scaling Up Nutrition Movement\.5
4 Report No\. 103738-GT\.
5 The Scaling Up Nutrition (SUN) Movement was launched in September 2010 by individuals from governments, civil society, donors,
United Nations, business and researchers\. It is an effort to eliminate all forms of malnutrition under the principle that everyone has a
right to food and good nutrition\. From https://scalingupnutrition\.org/
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ACHIEVEMENT OF PDOS (EFFICACY)
Rating: Substantial
19\. A rigourous impact evaluation to measure the effectiveness of two delivery modalities was carried out
and its preliminary results show that both modalities were successful at improving parental practices on child
stimulation, increasing the variety of play material and the play activities conducted by the caregiver\. In terms
of the PDO indicators, one of the three revised PDO indicators was achieved, and the other two revised ones
were partially reached\.
20\. A clustered randomized control trial was implemented in the departments of Huehuetenango, San
Marcos, Quiche and Totonicapán where 113 communities were randomly assigned to one of the three groups:
(T1) home visits, (T2) group meetings or (C) control group\. Baseline data was collected between October 2016
and January 2017 on 2,022 households and 2,022 children up to 24 months\. Households were revisited two
years later between showing a low attrition rate of 13 percent\. The program reached approximately 50 percent
of the children in each treatment groups (T1 and T2)\. The impact of the program is measured based on intention-
to-treat (ITT) effects to avoid a selection bias in the comparison between treatment and control groups\.
Treatment on the treated has also been estimated to reflect the impact on those that effectively received the
treatment (TOT)\.
⢠Family Care Indicators
21\. Preliminary analysis using ITT method shows that the size of the impact on play activities between the
caregiver and the child was of 0\.12 standard deviations (s\.d\.); this increases to 0\.37 s\.d\. under the TOT method\.
When measured as a percentage change under the ITT method, Ventana de la Vida participants reported a 6\.27
percent increase in play activities compared to the control group, while Reach Up reported an increase of 3\.6
percent\. Under the TOT method, families in Ventana de la Vida report a 11\.7 percent increase in play activities
while Reach Up shows a 7\.48 percentage increase\.
22\. Parental practices on child stimulation also improved\. The magnitude of the impact is 0\.16 s\.d\. (ITT
method) and 0\.37 s\.d\. (TOT method)\. Compared to the control group, Ventana de la Vida, with the ITT method,
led to slightly higher results than Reach Up (3\.10 and 2\.72 percent improvement in parent practices,
respectively)\. Both program modalities show about a 5\.6 percent increase in improved parental practices under
the TOT method\.
⢠Child Cognitive Indicators
23\. Preliminary estimations show that both program modalities had an impact on childhood cognitive skills\.
For Ventana de la Vida, the size of the impact was 0\.27 s\.d\. (ITT) and 0\.6 s\.d\. (TOT)\. For Reach Up, this impact
was 0\.20 s\.d\. (ITT) and 0\.46 s\.d\. (TOT)\. This confirms that the improvement in parental care, including play,
translates into improved childrenâs cognitive fine motor and language skills\.
24\. Children in Ventana de la Vida show a 1\.65 percent increase in fine motor skills compared to the control
group while Reach Up children show a 1\.38 percent increase (ITT method)\. This impact is higher under the TOT
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method: cognitive and fine motor skills for children in Ventana de la Vida increased by 3\.01 percent compared
to the control group, while those skills increased by 2\.82 percent for children in Reach Up\.
25\. In terms of language skills, children in Ventana de la Vida show a 2\.06 and 3\.75 percent improvement
when measured by the ITT and TOT methods, respectively\. For children in Reach Up, language skills improved
by 1\.25 percent (ITT) and by 2\.55 percent (TOT), compared to the control group\.
26\. As shown in table 3, the magnitude of the changes is statistically significant for all domains\. Most effects
for Ventana de la Vida are highly significant at the 1 percent level, independently of the method\. The size of
the effects is medium, according to international standards\.6 The intervention had no impact on nutritional
outcomes, in line with results from international evidence\.7
27\. In conclusion, the IE shows that, despite the continued high level of stunting of children (60 percent at
baseline, 73 percent endline), the Guatemala pilot was successful in improving cognitive fine motor and
language skills, thereby ensuring children will be better prepared to learn once they start school\. By preparing
them to learn better in school, the NNSL intervention is helping young kids to catch up on cognitive skills that
should help them to change their life path\.
Table 3\. Size of the Effects of NNSL Program as Percentage Change (preliminary results)
Intent-to-Treat Effects Treatment on the Treated
(ITT) Effects (TOT)
Ventana de la Ventana de la
Reach Up Reach Up
Vida Vida
Family Care Indicator
FCI Play Activities with Adults Scale 6\.27% *** 3\.66% * 11\.47% *** 7\.48% *
Family Care Indicators Overall Scale 3\.10% ** 2\.72% ** 5\.66% ** 5\.61% **
Cognitive Outcomes, MDAT
Fine motor, MDAT 1\.65% *** 1\.38% ** 3\.01% *** 2\.82% **
Language, MDAT 2\.06% *** 1\.25% * 3\.75% *** 2\.55% *
Note: * p<0\.10, **p<0\.05, ***p<0\.01
Source: Trias, Julieta and Irma Arteaga (2020) âHome visitation or group intervention? Effects of early stimulation on child
wellbeing in rural Guatemala: A cluster randomize control trialâ? World Bank mimeo \.
6Effect sizes of 0\.3 -0\.6 s\.d\. are considered in the literature as medium-size effects, while effects above 0\.6 s\.d\. are considered high\.
7 The international evidence on parenting programs for child stimulation is mixed\. These programs, when successful, have shown
improvements in parental practices for child stimulation and child development, notably cognitive and language skills\. Effects on
cognitive and language skills range between 0\.35 to 0\.47 standard deviations (Rao et al\. 2014, Aboud et al\. 2015, Britto et al\. 2017)\.
For parental practices, while the evidence is thinner, the reported effects range between 0\.40â?0\.55 standard deviation (Aboud and
Akhter, 2011; Nahar et al\. 2012, Aboud et al\. 2013 for Bangladesh, Walker et al\. 2004 for Jamaica, and Attanasio et al\. 2014 for
Colombia)\. In addition, these programs have been less successful in improving nutritional outcomes\.
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Efficiency (economic analysis, aspects of design and implementation)
Rating: Substantial
28\. An economic analysis was not carried out during Grant preparation\. An economic evaluation was,
however, conducted as part of the overall assessment of the two early stimulation models, with the objective
of estimating the total cost over the entire four-year program, the monthly ongoing cost while the program was
fully operational in all targeted areas, and the cost-efficiency of each modality measured as the average cost
per child beneficiary\. This study took a provider perspective of the financial costs, meaning that only the costs
to the program implementers were included rather than all direct and indirect costs to the wider society\.
However, a basic estimation of the imputed cost of the volunteer Madres GuÃas was done as this is an important
element in the sustainability of the implementation methodology\. Financial costs were estimated using
accounting data provided by the implementing organizations in the form of detailed account ledgers\.
29\. At a cost of US$267 for Ventana de la Vida and US$173 for Reach Up, the cost per registered child
beneficiary per year is relatively similar between the two methodologies\. However, when the cost-efficiency
metric of cost per child is calculated based on number of active children in the program the difference in cost
per child is much larger, with Ventana de la Vida at US$268 per child per year and Reach Up at US$420\. Ventana
de la Vida has a very low rate of attrition of children beneficiaries (1 percent) meanwhile the rate is much higher
in Reach Up (59 percent)\. The attrition rate will be an important factor when interpreting the impact\. When
bringing together the impact and cost per impact, it may be more useful to evaluate the program based on cost
per active child rather than cost per registered child\. Based on the preliminary results and the costing exercise,
group meetings are the modality most cost-effective for scaling up\.
30\. While strict cost comparisons between countries are difficult, Colombiaâs implementation of the Reach
Up program cost US$500 per child\. In any case, cost-efficiency is only one factor that should be considered
when evaluating a program to make recommendations for the future\. Differentials in impact, sustainability,
acceptability, and issues of equity should also take into consideration, alongside cost differentials\.
31\. Other dimensions of efficiency\. The Grant was extended one time, for approximately 8 months, to account
for a delay in starting activities because of the time it took to adapt the Reach Up programâs materials and
assessment and monitoring tools to the Guatemalan indigenous context\. The cumulative supervision costs for
this Grant represented 9 percent of the total Grant amount\.
32\. Given that the cost of both models is within international parameters, and that administrative costs,
excluding social workersâ salaries, was in line with appraisal estimates, efficiency is rated Substantial\.
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Overall Outcome Rating: Moderately Satisfactory
33\. Because the Grant was restructured to revise some PDO targets, the outcome rating for the project was
assessed against the original and revised project development indicator targets\. Tables 4 demonstrates the
calculation of PDO before and after the restructuring\.
Table 4: Calculation of Overall Outcome Rating
Original Restructured
Relevance8 High
Efficacy Modest Substantial
Efficiency9 Substantial
#1: Outcome ratings Moderately Unsatisfactory Satisfactory
#2: Numerical value of 3 5
outcome ratings
#3: Disbursement 2\.01 million \.74 million
#4: Share of disbursement 74% 26%
Weighted value of the 2\.22 1\.30
outcome rating (# 2 x # 4)
Final outcome rating 3\.52(rounded up to 4\.0) = Moderately Satisfactory
34\. The Moderately Satisfactory (MS) rating is further supported by the preliminary results of the impact
evaluation carried out under the Grant which, as previously indicated, shows that NNSL improved parental
practices for early childhood stimulation and increased childrenâs cognitive fine motor and language skills\.
These impacts are expected to help children learn better in school and increase their human capital
development\.
Other outcomes
Gender
35\. Beneficiary women in both programs reported a change in their approach to motherhood\. Women
learned the development milestones they should expect their children to achieve, how to identify their
childrenâs needs by the way they cry; how to teach their children concepts of space, forms and texture; to play,
sing and dance with their children; to practice good hygiene; and to understand the objectives behind the toys
and to create toys from materials around the house\. Because of the program, mothers report that they are, in
general, more involved with all their children, including their older ones\. Female and male social workers also
reported having learned to be better parents\.
8 One rating for relevance in line with the ICR guidelines\.
9 One rating for efficiency in line with the ICR guidelines\.
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36\. Womenâs perceptions of their childrenâs development\. Mothers reported that because of the program
their children are less fearful, less timid, socialize better with other children, learn to walk and talk faster than
their older siblings; they play, sing and dance, and are in general smarter\.
37\. Women were empowered by the program and gained respect in the community\. Women in these
communities face multi-layers of marginalization\. They are poor, they live in rural areas - many in remote and
isolated places-, and they are indigenous\. Most of them have little or no education\. The program gave them
the opportunity to learn and to have a voice\. Madres GuÃas became leaders, and the ones who implemented
Ventana de la Vida and led the CEOs learned to facilitate group meetings\. According to their perceptions, both
Madres GuÃas and beneficiary mothers in both programs learned to socialize, became less timid, increased their
self-esteem, learned to express themselves, and started to have a voice in other areas of society, such as their
childrenâs school and during community meetings\. They became role models for other women in the
community, and they claim that the program transformed their lives\.10
38\. The NNLS created new spaces where women could come together to share experiences in parenting\.
The CEOs, in particular, became spaces for women to gather and learn from each other\. In many cases these
spaces -exclusively for women and mothers- had been non-existent in the communities prior to the pilot\.11
Some fathers also participated in CEOs and gained interest in participating in their childâs development\.
Communities (COCODES) in general gained interest and some of them decided to continue with the activities
even when the project closed\.
Community
39\. The program generated changes in the household and in the community\. Children older than two also
benefited from the programs\. They learned the same songs and activities and benefited from their motherâs
new way of relating to her children\. Mothers reported that these children became proud of their mothers and
started to help them in the program activities\. For example, older children of Madres GuÃas sometimes assisted
their mothers during household visits or CEOs\. They would help them read the guidelines when their mothers
were illiterate\. Mothers reported that while playing with their children, they forgot about their own problems
and were happier\. Husbands were also happier when they noticed the changes in their wives and children\.
Beneficiary mothers shared their new knowledge with other women who were not part of the program\. Even
women without children asked to be Madres GuÃas because they recognized the importance of childrenâs
development\. COCODES also learned to respect the work of Madres GuÃas and to recognize the rights of
children\. Community leaders realized that they had often prioritized infrastructure projects and did not think
of children as important stakeholders\. In the aftermath of the program, at least one COCODE requested funds
from COMUDES for childrenâs projects\.
Institutional strengthening
40\. The community fairs helped to create synergies among government institutions and the NNLS program
to sensitize the broader community\. Community fairs were implemented as an opportunity to sensitize and
train community members that were not participating in the NNLS program, including parents, community
10 Systematization document, August 2019\.
11 Ibid\.
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leaders, or other community members in general\. The community fairs also facilitated interinstitutional
collaboration, as different institutions came together to staff the fair\. Some of the institutions that collaborated
with the program are the Municipal Council for Food and Nutritional Security (COMUSAN), Municipal Health
Districts (DMS), Ministry of Agriculture, Livestock and Food Security (MAGA), Ministry of Public Health and Social
Assistance (MSPAS), and the Secretariat of Food Security and Nutrition (SESAN)\. The collaboration extended
outside the fairs and became helpful resources\. For example, during CEOs, the DMS would refer families to the
NNLS to start the ECD program\. Or if a Madre GuÃa identified during the Barrilete assessment12 that a child
needed medical assistance, she would refer the child to the Health Center\. Through collaboration with MSPAS,
some communities that initially had rejected the program, opened up to it\.
III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
Preparation
41\. Initial objectives and targets for beneficiary population were too ambitious\. The original project
document stated that the project was expected to reach 12,200 poor indigenous children\. However, that
number proved to be too high in practice\. A list of eligible children (age 2 and under) had been drawn from
birth records and community referrals\. As implementation began, however, it became clear that there was not
such a high number of children fulfilling age eligibility in the target communities\. In addition, from the existing
eligible children, some had to be part of the control group for the impact evaluation and could not receive the
program; other families with eligible children simply did not want to participate in the program\. Unlike typical
cash transfer programs, where there is usually an over demand for the program, NNLS did not provide a transfer
but a learning program\. Therefore, community leaders had to be persuaded about the benefits of the program
to let it start, then families had to be persuaded to participate\. As a result, target numbers were adjusted to
5,500 children in the mid-term restructuring\.
Implementation
Factors under implementing agencyâs control
42\. At the beginning of the project there were significant delays due to ChildFundâs inexperience with World
Bank procurement and financial procedures\. This caused lengthy and complex hiring processes\. There was a
lack of annual planning documents to assist with monitoring, there were weaknesses in internal control,
including non-compliance with payment policies and procedures, inaccuracies in the auxiliary records, and
incomplete documentation of expenditures\. There were also deficiencies in the preparation of SOEs and
financial reports\. The World Bank therefore provided training on financial management (FM) and procurement
12 The Barrilete is an assessment tool to monitor the development of children aged 0-36 months\. The tool consists on a questionnaire
aimed to measure 5 areas of development: i) gross motor skills, ii) fine motor skills, iii) language and communication, iv) socio-emotional
skills, and v) cognitive development\. The tool is divided in 8 phases of 3 months each: 0-3 months, 3-6 months, and so on up to 24-36
months\. Depending on the childâs age the social workers and Madres GuÃas evaluated the level of development of the child and assigned
a score based on a traffic light scale: red if the child could not do any of the activities in the 5 areas assessed; yellow if the child could do
some of the activities; and green if the child was able to complete all the activities\. Depending on the score, the social workers and
Madres GuÃas provided recommendations to the parents or caretakers\. This evaluation was conducted to each beneficiary child every 6
months (Systematization document)\.
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issues and carried out close supervision of both\. In addition, ChildFund hired a FM person with prior experience
in Bankâs FM and procurement systems, which helped improve its performance in this area\.
43\. Staff changes in implementing agency caused delays\. There were a few staff changes in ChildFund during
program implementation\. The program coordinator was dismissed in August 2015 without a handover of
records and plans, causing delays during a critical implementation period\. During the program life, the program
coordinator changed three times\. The M&E and financial positions also changed once\. The technical staff (social
workers) had on average 1\.5 changes during the life of the project (although by the end of the implementation,
both CDRO and ACODIHUE had consolidated strong and permanent teams of social workers, which helped
strengthen project performance during the final stage of implementation, when more communities joined,
more children were reached, and results started to materialize)\. These changes created a lack of continuity in
community activities, diminished supervision to Madres GuÃas, and placed more work load on social workers
who had to cover gaps until a new person was hired\.
44\. Difficulties with the survey firm hired to conduct the baseline\. There were several quality issues with
the firm hired to conduct the baseline evaluation\. Specifically, there were delays with the delivery of products,
incomplete information on numeratorsâ credentials, and failure to provide access to a data dashboard for World
Bank staff to monitor progress\. The quality issues were exacerbated by the lack of direct communication
between the baseline firm and World Bank staff (ChildFund, given the Grantâs design, had contracted the firm
and the firm therefore wanted to work only with ChildFund staff)\. With a lot of supervision and pressure from
the World Bank, the baseline was delivered\. To avoid further problems, a different firm was hired to conduct
the endline\. The firm was hired directly by the World Bank so that Bank staff could supervise the work\.
45\. Initially it was hard to find staff that met the technical profile required for the program \. Both NGOs,
CEDRO and ACODIHUE, had issues filling the positions of program coordinators\. There was a shortage of
psychometrists that could understand and measure the indicators in the indigenous context, as well as a dearth
of early childhood educators that could implement the two curricula\. These capacities had to be created among
social workers and numerators through intense and continuous training which took considerable time not
originally anticipated in the project design\.
46\. The NNLS pilot project was appropriately adapted to the Guatemala Mayan indigenous rural context\.
More than 90 percent of NNLS beneficiaries were indigenous, and the following tasks were carried out to ensure
the cultural appropriateness of Grant activities:
o An Indigenous Peoplesâ Plan (IPP) was prepared in 2014 and updated in 2018\. It provided: i) a review of
positive and negative impacts of the pilot and mitigating measures; ii) a plan and framework to respect
local indigenous governance, language preference and traditions; iii) a protocol for consultation during
implementation; and iv) detailed Grievance and Redress Mechanisms (GRM)\.
o Program implementation respected indigenous governance\. The NNLS was introduced to communities
only after getting acceptance from the local indigenous authorities\. The program was first presented
through all levels of government structures: the Provincial Development Council (CODEDE), the
Municipality Development Council (COMUDE) and finally to the Community Development Council
(COCODE)\. Social workers introduced and explained the program to the COCODES during their traditional
community assemblies with the participation of all community members\. The COCODEs had the authority
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to grant or deny approval for the introduction of the program in the community\. If the COCODE agreed
to introduce the program, volunteer Madres GuÃas were recruited or appointed by indigenous leaders
during the assemblies\.
o Program implementers were from the local communities\. The implementing agency, ChildFund
Guatemala, partnered with two local non-governmental organizations (NGOs) to run the program on the
ground: the Association of Integral Development Cooperation of Huehuetenango (ACODIHUE) and the
Cooperation for Western Rural Development (CEDRO)\. These two NGOs had presence and extensive work
in the program communities\. ACODIHUE and CEDRO hired field workers that were from the communities
and spoke the local languages Mam and Kâicheâ to interact with the mothers and children\. Madres GuÃas
were at the heart of program implementation, as they were in charge of teaching and executing the two
ECD program modalities\. The Madres GuÃas were trained in the two ECD modalities by the social workers,
so they could then implement the program with the mothers\. The trainings and implementation of the
curricula were done in Mam and Kâicheâ\.
o ECD curricula and training materials were socio-culturally adapted\. The Reach Up methodology, created
by the University of West Indies for an urban and mestizo context, was adapted to the Guatemalan rural
indigenous setting\. The curricula were edited to incorporate illustrations depicting Mayan people, local
songs and native animals\. Toys were also recreated to emulate familiar objects made of local recycled
materials\. The guidelines were simplified and included more illustrations, rather than text so they could
be more easily understood by Madres GuÃas with low education levels13, including some who were
illiterate\. One problem was that the guidelines were only in Spanish, which meant that the Madres GuÃas
had to simultaneously translate from Spanish to Mam or Kâicheâ when conducting the activities\. In addition
to the curricula, the Barrilete tool for monitoring child development had to be adapted so Madres GuÃas
and mothers would understand the goals they were working toward\.
o Monitoring and evaluation tools were also adjusted with support from experts from the University of
Missouri\. Tools for the impact evaluation also had to be adapted to the indigenous rural context\. During
the data collection for the baseline, the evaluation team initially tried to adapt the Ages and Stages
Questionnaires-Inventories (ASQ-I) as a technique to collect information on childrenâs developmental
stage\. Focus groups were conducted to adapt and validate the questionnaires\. However, after much
testing the team concluded that the ASQ-I was not a cultural relevant tool to collect information from a
rural, indigenous population, with high incidence of poverty, malnutrition and low levels of education\. A
quest for a non-western tool that would work in such settings was found in The Malawi Developmental
Assessment Tool (MDAT)\. The MDAT was developed as a culturally appropriate tool for rural Malawi to
reliable identify children with delayed development and neurodisabilities\. The evaluation team conducted
two pilots to culturally and linguistically adapt the MDAT tool to the indigenous Guatemalan setting
(including translation to Man and Kâicheâ)\. After intense training and piloting of the evaluation firms, the
MDAT was used to conduct the baseline and endline of the impact evaluation\.
47\. Continuous training was paramount to the implementation of NNLS and generation of local capacities\.
The social workers were trained directly from the experts in the two ECD modalities being implemented\.
13 According to the systematization document, 17 percent of Madres GuÃas never attended school, 34 percent did not finish elementary
school and only 22 percent finished Elementary school\.
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ChildFund trained and certified social workers in the Ventana de la Vida technique, and staff from the Jamaican
University of West Indies, trained and certified them in the Reach Up program\. The training consisted of four
10-day workshops and the grade point average to get certified was 80 out of 100\. The training included the
curricula but also on the monitoring of child development using the adapted Barrilete tool\. The trainings
included interactive sessions, demonstrations and dramatizations so they could replicate them in the trainings
for Madres GuÃas\. Subsequently, social workers trained Madres GuÃas using andragogical techniques, including
demonstrations of the concepts and encouraging active participation\. Concepts and activities were practiced
over and over through interactive exercises and plays until the skills were mastered\. Madres GuÃas were also
trained to facilitate workshops, since they were the ones to apply the curricula directly with mothers and
children\. Madres GuÃas continued to receive feedback from social workers during the implementation of the
program\. Trainings were repeated as some Madres GuÃas quit and new ones came onboard\.
48\. The commitment of program staff (ChildFund, NGOs, and social workers) and volunteers was at the
heart of program success\. ChildFund has a long trajectory implementing Ventana de la Vida which gives them
the necessary experience to work in the Guatemalan indigenous context\. Its staff is knowledgeable, committed
and show passion for the work\. The two NGOs, CEDRO and ACODIHUE, are grassroots local organizations with
ample knowledge of the field\. Their staff, including the social workers were members of the communities and
spoke the indigenous languages\. This gave them an advantage to introduce the program in a cultural
appropriate manner with a truly understanding of the ground\. It is also important to understand that this
program was mostly run by volunteers\. At the center of program implementation were the Madres GuÃas, who
voluntarily donated their time and effort to learn the ECD program curricula and taught it to other mothers\.
They were self-selected or appointed by leaders\. They worked out of conviction that they were contributing to
their communities, and thus were responsible and reliable in their duties\.14 Even though they did not receive a
monetary remuneration, program managers provided them with other incentives such as public recognition at
community events, materials to facilitate their activities and recreational field trips twice a year as an
opportunity to get together with other Madres GuÃas\.
49\. The perseverance and commitment of social workers were also key for success\. Social workers played a
central role since they were in charge of training and supervising Madres GuÃas as well as monitoring childrenâs
development\. They had to overcome many challenges such as sensitizing the community leaders from the
COCODEs to obtain approval for the project and building Madres GuÃasâ capacities\. They struggled with invisible
barriers, with existing traditions and paradigms for child bearing, as well as machismo at the household and
community levels\. They had to manage frustration, solve problems and be creative to help Madres GuÃas to
learn despite their low schooling\. They needed to be consistent and constant with the methodology and know
how to provide appropriate feedback to the Madres GuÃas\. They had to be dynamic and inspiring to motivate
and bring the application of the curricula to life\. One legacy of the NNLS program, therefore, is the skills and
capacities generated in social workers and Madres GuÃas\.
50\. Respecting the governance of the indigenous communities helped legitimize program activities in the
communities\. The COCODEs played a key role during the life of the project, as they granted approval to initiate
14When women were asked about their motivation to be a Madre GuÃa, they responded: they enjoy seeing childrenâs development,
they gain the respect of the community, other mothers and children, and their own children\. They like to support first time mothers,
they like to share information in the CEOs, it makes them happy to work with children and to teach other women\.
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program activities, mediated grievances, facilitated communications during community fairs, provided
recognition to Madres GuÃas and participated in closing activities\.
Factors outside implementing agencyâs control
51\. The time needed to adapt curricula and impact evaluation tools was underestimated\. During early
program stages, a second treatment arm, the Reach Up Early Childhood Parenting Program, was introduced\.
Reach Up is an internationally recognized and well-evaluated program from Jamaica\. ChildFund decided to pilot
it, as it would be a good opportunity to test the impact and cost efficiency of both programs\. However,
introducing Reach Up involved training the implementation agency in the new methodology, and adapting its
materials to Guatemalaâs indigenous context\. In addition, the surveys and monitoring tools had to be translated,
contextualized and tested, all of which took longer than expected\.
52\. To gain acceptance program staff had to overcome barriers including changing the community
âmindset\.â? The expectation of beneficiary communities was to receive a transfer or infrastructure project, as
is the case with traditional government programs\. People were not familiar with programs that required them
to organize and learn without any apparent economic compensation\. In addition, the program had to compete
with domestic and economic activities that mothers may have considered as âmore productiveâ? than playing
with their children\. Many women were skeptical at the beginning until they started to notice the changes the
program was generating in their children\.
53\. The existence of a macho culture and patriarchal traditions was an obstacle in some communities\.
Program participants expressed that this issue was more prevalent in the Mam communities, where community
leaders and husbands decided if the women could participate in the program\. Some COCODEs would not let
the program start in their communities\. Even if the program was available in the communities, some husbands
would not let their wives participate\.
54\. There was attrition of program participants due to agricultural cycles and migration\. In Huehuetenango
in particular, families temporarily migrate each year for about six months to participate in agricultural activities
in other regions\. There is also a lot of permanent migration to the United States\. Even if families did not migrate,
the number of absences in the CEOs increased during the harvest season\.
Factors under Bankâs control
55\. The ability to be flexible, incorporate feedback and learn from mistakes kept the program operating
smoothly\. Day to day operations benefited from constant feedback and adaptation\. Processes were adjusted
along the way to improve implementation\. Examples of changes introduced are:
o Hiring social workers to focus exclusively on interinstitutional relations, as the additional task of
cultivating relations with different Ministries and local authorities, which had not been envisaged
during the projectâs design but the need for which became evident during implementation, proved to
be too much for the social workers focusing on the training and supervision of Madres GuÃas\.15
15The social workers for institutional relations coordinated all the inter-institutional activities\. They created and nurtured relations at
the departmental (provincial) and municipal level with community leaders, municipalities and central government agencies and
ministries such as SESAN and MSPAS\. They also provided support to the social workers in the field working with Madres GuÃas and
produced educational materials\.
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o Adapting the numbers and distribution of families assigned to Madres GuÃas\. Instead of assigning
equivalent numbers per person, ranges were established to allow flexibility to assign families based
of geographical dispersion\.
o A package of non-monetary incentive was provided to Madres GuÃas
o Given that the Reach Up modality did not include a community meeting, it was decided to organize
meetings every three months to gather groups of three Madres GuÃas and their beneficiary mothers
and children to share experiences\.
o For the Ventana de la Vida modality, another volunteer mother was assigned to the Madre GuÃa to
entertain the older siblings that also attended the CEOs\.
IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A\. QUALITY OF MONITORING AND EVALUATION
Rating: High
56\. Design\. The project design included monitoring and evaluation and knowledge dissemination through: (i)
the carrying out of monthly monitoring and analysis of Project progress and status of child development and
behaviors; (ii) financing process evaluations; (iii) the elaboration of an experimental impact evaluation design
and the carrying out of baseline and follow-up surveys using a representative sample of young children in
treatment and control communities; and (iv) the dissemination of lessons learned from the Project process
evaluation and evidence of impact among stakeholders and government decision-makers to encourage
sustainability and scale-up\.16
57\. Implementation\. The Bank team carried out regular field visits to Guatemala City and to the communities
where the two programs were being implemented\. Regular missions, which always included field visits, were
critical to providing timely technical feedback to ChildFund, which allowed them to implement corrective
measures throughout implementation\. Examples of how feedback affected implementation include how both
modalities were implemented, adjustment of M&E tools, implementation of the community fairs and changes
to their content (messages to be included, adding Wash, Sanitation and Hygiene (WASH), etc\.), community
validation and implementation of grievance mechanisms, among others\.
58\. The findings from these missions led to two restructurings\. In addition, an ICR mission was included in
the last supervision mission before the Grantâs closing\. Most critically, the impact evaluation included in the
Projectâs design was completed as envisaged, and its preliminary results are shared in this report\.
59\. Utilization\. As a result of implementation support missions, process evaluations, and ChildFundâs progress
reports, adjustments were made to program design during implementation\. Examples of such adjustments
include the introduction of the Reach Up modality; the revision of Reach Upâs curriculum to adapt to the
16Through LEGO, the Reach Up and Ventana de la Vida modalities are being reviewed, and one intervention being considered merges
both (home visits plus group sessions)\. There are also discussions with MINEDUC to utilize the model, as this has already been tested for
these areas in Guatemala\.
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Guatemalan context; the adaptation of the IPP; the introduction of checklists for social workers to measure how
well Madres GuÃas were performing; increasing the frequency of encounters between social workers and
Madres GuÃas; standardizing a supervision mechanism for social workers; and changes to the Barrilete, among
others\.
60\. Justification of overall M&E rating\. The M&E rating is High, given that the design was appropriate, the
work was carried out and is of good quality, and results of the work are being used to inform other ECD
initiatives\.
B\. ENVIRONMENTAL, SOCIAL, FIDUCIARY COMPLIANCE
61\. Because most beneficiaries were indigenous, the Indigenous Peoples (OP 4\.10) safeguard should not
have been triggered, but instead the project should have been considered an indigenous project\. However,
project documents indicate that the preparation team did trigger it and therefore an IPP was prepared\. The IPP
was supervised and monitored by the Bank team throughout implementation\. The IPP helped ensure that
indigenous beneficiariesâ cultural practices and societal structures were carefully considered at every step\. As
previously stated, program material was adapted to fit the Guatemalan context, and two local non-profit
organizations were hired to help gain access to these traditional communities\. There were no environmental
impacts resulting from the project\. Regarding fiduciary compliance, while the implementing agency initially
struggled to follow Bank policies and practices, by the end performance was satisfactory\.
C\. BANK PERFORMANCE
Quality at entry: Moderately Satisfactory
62\. The Grant design was based on international best practices, and carefully considered how it would fit
within other Guatemalan initiatives to improve nutrition and overall development of poor children\. However,
as noted earlier, PDO indicator targets were too ambitious, which was evident once the adapted Barrilete
instrument and other measurement tools were introduced\. In addition, the time to adapt the ECD curricula and
assessments tools to the indigenous Guatemalan context was underestimated, leading to implementation
delays\. A well-respected NGO that had deep experience in indigenous communities, and that knew and
respected local customs and practices, was selected to implement the grant\. However, the fact that ChildFund
had never implemented a World Bank project should have signaled the need for intense training and supervision
during preparation and initial stages of Grant execution\. Instead, implementation took some time to take off
as ChildFund climbed the learning curve\. In addition, because the team had not learned about Guatemalaâs
labor laws, it took more time to hire the Program Coordinator, also affecting the initial implementation phase\.
Had the Bank team learned of the particularities of Guatemalaâs labor laws, it may have also avoided the halt to
implementation that took place while the issue of social workersâ payment was resolved\. The Bank team,
however, successfully obtained a waiver to pay for social workersâ salaries on an exceptional basis, readjusted
the Grant through a comprehensive restructure, and provided needed training and support to get ChildFund up
to speed and the pilot project on track\. Because of these initial issues at entry, quality is rated as MS\.
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Quality during implementation: Satisfactory
63\. The Bank team carried out regular supervision missions and worked diligently, in between those
missions, to resolve implementation bottlenecks identified during those visits \. One example is the
restructuring of the Grant to drop nutrition activities under Component 2: when it became clear that ChildFund
did not have the capacity to deliver high quality instruction in this area in addition to early childhood stimulation
activities within a limited timeframe, the Bank team added a nutritional component at the community fairs,
and counted on Crecer Sano activities to salvage the nutrition part of the community interventions\. Another
example was the issue of ineligible expenditures caused by the hiring of social workers as regular employees,
instead of consultants\. In 2017, the FM specialist noted that the social workers hired by the local organizations
for carrying out subprojects were appointed under a permanent employment contract instead of under
consultant services\. Initially this was considered to be against the operational manual and in violation of the
sub-grant agreement signed with Child Fund\. ChildFund explained that this arrangement was made to comply
with Guatemalaâs Labor Law, which stated that when a person is hired for more than a year, is provided with a
physical work space, tools and equipment to perform a job, and reports to a supervisor, that person is
automatically considered an employee (Implementation Status and Results, December 2017)\. The team sought
approval from the donor (Government of Japan) for these exceptional expenditures, based on the Bank teamâs
argument that social workers were key to the achievement of the PDO and did not contradict overall Bank
guidelines on eligibility of expenditures\. The Japanese government approved this request in January 2018\. The
ability to make practical, rational, and timely decisions in these two cases, showcases the good judgment and
flexibility of the Bank team which was key to the successful outcome of the Grant\.
64\. Most importantly, the success of the two modalities helped ChildFund to win a grant from the Lego
Foundation to continue work on early stimulation interventions\. The Lego grant is considering merging the
two modalities (home visits and group sessions) and has required a Memorandum of Understanding (MOU) to
be signed between ChildFund and the Ministry of Education, which should strengthen ties between the NGO
and central government interventions\. The Crecer Sano project and MIDES are also potential spaces to try to
secure continuity and sustainability, although when new authorities are in place will there be progress in this
area\.
V\. LESSONS LEARNED AND RECOMMENDATIONS
65\. By generating local capacities, the NNLS empowered people, particularly women, to be the managers
of their own development, which bodes well for the sustainability of the initiative\. Traditionally indigenous
communities are presented with top down models, reminiscent of colonial dominance and that are referred by
indigenous people as mere assistance, where they are only passive recipients of social handouts\. NNLS was not
an extension program either, where an external organizer come to the communities and implements without
generating capacities\. The NNLS had mothers carrying out the program and teaching their peers, which at the
end resulted in increased capacities, self-esteem and determination, increasing the social capital of these
communities, using as a common narrative the wellbeing of their children\.
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66\. To work with indigenous communities, it is critical to respect their societal structures and to hire social
workers from the community to ensure smooth implementation\. Because these communities have a long
history of being marginalized and because of years of societal unrest, the only way to gain entry to them is to
work with organizations who the indigenous trust\. The two NGOs hired by ChildFund met these criteria, and
each understood the indigenous governance structure\. This was key to knowing with whom to meet and
establish agreements, and even with that, there were a few communities that refused to participate in the pilot\.
In addition, it was crucial to hire local social workers that spoke the Mayan languages Mam or Kâicheâ because
they had to train the Madres GuÃas and being able to interact with beneficiary mothers and children to monitor
child development\. Some children or mothers did not speak Spanish, and some concepts do not translate
directly between Spanish and the Mayan languages, so the social workers needed to interpret and explain the
concepts more accurately in the Mayan language\. There were also variations between the same Mam language
from different locations, so the social workers needed to be familiar with these differences\. Without this
language mediation of the social workers, the program would not have had the same degree of success\.
67\. Stipends to cover costs incurred by the Madres GuÃas should be considered, as having their performance
based on altruism and personal commitment may not be sustainable in the long run\. Madres GuÃas spent
time training, preparing the program and walking long distances to do house visits, particularly in the Reach Up
modality\. Any change in their life may alter their availability to volunteer\. This issue came up in all interviews
conducted with Madres GuÃas during the ICR research\. In each interviewed group, there was at least one Madre
GuÃa who expressed that they should receive an in-kind or monetary compensation\. To this, program managers
responded that if Madres GuÃas were to be paid, that would change the incentives for which the work is done\.
However, Madres GuÃas and their families live in such poverty and have competing responsibilities that it would
make sense to provide some amount of compensation for their volunteer work\.
68\. Implementing pilots, and incorporating feedback mechanisms is critical to incorporating lessons learned
in a timely manner\. Doing so helped NNLS adjust and improve implementation during the pilot\. Since the ECD
program curricula was new, program implementors had to pilot and test not only the contextualization of
methodologies and monitoring tools, but also had to learn and adjust during the implementation process\.
Program managers therefore included feedback mechanisms into implementation\. Periodic revision meetings
were conducted, and social workers and Madres GuÃas were given voice to suggest and make changes\. A
consultation process for beneficiaries was established at the community fairs and a grievances redress
mechanism was established\. In terms of the impact evaluation, the piloting of the ASQ-I helped determine that
this was not an appropriate tool to be implemented in rural indigenous contexts, which to the adoption of the
MDAT assessment instead\. Feedback and flexibility resulted in dynamic operational processes that improved
Grant execution\.
69\. When JSDF grants are executed by NGOs/CSOs, particular attention should be given to building
procurement and financial capacity within these organizations\. ChildFund was inexperienced with World Bank
financial systems as most NGOs/CSOs would be since they are not the traditional implementing agencies of
World Bank projects\. The Bank should implement an upfront fiduciary assessment and develop a formal
FM/procurement immersion program to build capacity JSDF grantsâ recipients\. Some hand-holding and
accompaniment should be provided until the grant implementors are comfortable with the procedures\. In the
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case of ChildFund, it made a difference to hire a procurement specialist with significant experience on World
Bankâs FM policies and procedures\.
70\. It is important that World Bank teams review national labor regulations before any project to guarantee
that Bank FM policies do not supersede them\. The Guatemalan Law did not allow contracting the social workers
as consultants\. By not realizing this before going into implementation, the Bank spent time and energy resolving
the issue, and requesting an exception from the Grant donor\.
71\. The Bank should standardize FM and procurement policies for all its trust funds, so they do not conflict\.
Under the WBâs Investment Project Financing (IPF), contracting social workers as permanent staff would not
had been an issue\. The issue was with JSDF financial policies\. Putting these FM policies in line would have
avoided the violation of grant policies\.
72\. In low capacity environments, the Bank should take responsibility for impact evaluations to ensure
independence of assessments and also quality\. In the case of Guatemala, ChildFund contracted the survey firm
for the baseline, but when there were problems with the quality of the firmâs work, it was difficult for the Bank
to work directly with the firm to resolve those problems\. The Bank could not assume a supervisory role and had
to rely on ChildFund to interact with the firm\. The Bank team addressed this issue by directly hiring a different
firm to collect the endline data, once the baseline firm had completed its work\. Fortunately, the Bank had
piloted and adapted the assessment tools before the firms were contracted, so the quality of the data was not
compromised\.
73\. How the survey firm reaches out to the households could affect the future engagement for the program\.
In a few cases, the survey firm collecting the baseline told households that the pilot program would bring other
services to them, which was never part of the project design\. This led to a rejection of the program from some
families/communities, and it could have ramifications if future work is to be carried out in those areas\.
74\. Close collaboration between the operational and research teams is key for allowing flexibility in the
design of the evaluation to respond to realities in the field\. For example, the adaptation of the instruments
and the preparation of the survey firm were taking longer than expected, but the program needed to start the
intervention\. The research team therefore reviewed the list of communities and separated those that could be
used for the first phase, and those that were going to be part of the impact evaluation\. This allowed the
operational team to start the implementation in areas outside the study without the need to wait for the
baseline completion\.
75\. Given the high rates of stunting and malnutrition in the country, the World Bank should take advantage
of the pilot experience to disseminate the lessons learned and to show case it internationally as a reference
for other Latin American countries with indigenous populations\. The Grant generated capacities in
psychometrics and in the implementation of culturally appropriate ECD curricula by people from the same
indigenous communities\. With NNLS, Guatemala became a pioneer in the socio-cultural adaptation of the
internationally recognized Reach Up and MDAT tools to a rural indigenous context\. The program spent
significant time and resources adapting Reach Up, the respected early childhood parenting program from
Jamaica, and MDAT, the alternative assessment tool for childhood development in rural Africa\. Other World
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Bank-funded projects such a Crecer Sano currently under first stages of implementation in Guatemala, should
absorb the majority of these lessons and material produced, to also ensure sustainability of this experience\.
\.
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ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS
A\. RESULTS INDICATORS
A\.1 PDO Indicators
Objective/Outcome: Increase community participation in monitoring child development indicators
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Percentage of children Percentage 0\.00 70\.00 60\.00 64\.00
achieving the expected
development level for their age 18-Mar-2015 07-Nov-2018 30-Jun-2019 30-Mar-2019
Comments (achievements against targets):
Baseline: No data available at that time\.
Objective/Outcome: Improve caretakers' interactions with young children to enhance their physical, cognitive and emotional development outcomes
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Percentage of participating Percentage 0\.00 70\.00 40\.00 32\.00
households with enhanced
early stimulation practices 18-Mar-2015 07-Nov-2018 30-Jun-2019 30-Mar-2019
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Comments (achievements against targets):
A new measurement tool was added to better reflect this outcome; target updated\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of children that are Number 0\.00 5500\.00 5500\.00 4506\.00
direct beneficiaries of the
Project 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
Comments (achievements against targets):
This is a new indicator included as part of the restructuring\.
A\.2 Intermediate Results Indicators
Component: Component 2\. Enhanced social and behavior change communication to achieve improved child nutrition and development
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of community fairs Number 0\.00 188\.00 188\.00 230\.00
implemented with an ECD
approach 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
Comments (achievements against targets):
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Component: Component 3\. Project management and administration\. Monitoring and evaluation, and knowledge dissemination
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Baseline survey conducted Text No Yes Yes Yes
20-Oct-2015 01-Jun-2016 01-Jun-2016 01-Mar-2017
Comments (achievements against targets):
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Quarterly progress reports Number 0\.00 16\.00 16\.00 16\.00
completed
18-Mar-2015 07-Nov-2018 30-Jun-2019 30-Mar-2019
Comments (achievements against targets):
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Mass events hosted for Number 0\.00 16\.00 2\.00 2\.00
departmental health systems
18-Mar-2015 07-Nov-2018 30-Jun-2019 30-Mar-2019
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Comments (achievements against targets):
activities were scaled down as part of restructuring
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Final Impact Evaluation survey Text No Yes Yes No
conducted
18-Mar-2015 07-Nov-2018 30-Jun-2019 30-Mar-2019
Comments (achievements against targets):
Component: Component 1: Promotion of physical, cognitive, linguistic and socio-emotional development through a parenting and early stimulation
intervention
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Diagnostic of early childhood Text No Yes Yes Yes
development beliefs and
practices in beneficiary 18-Mar-2015 30-Nov-2015 30-Nov-2015 15-Jun-2018
communities is completed
Comments (achievements against targets):
Indicator Name Unit of Baseline Original Target Formally Revised Actual Achieved at
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Measure Target Completion
Monitoring tool to track child Text No Yes Yes Yes
development is developed
18-Mar-2015 01-Apr-2016 01-Apr-2016 15-Jun-2018
Comments (achievements against targets):
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of project Number 0\.00 100\.00 100\.00 94\.00
communities implementing
Level 1 (Ventana de la Vida) 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
and Level 2 (Reach Up)
activities
Comments (achievements against targets):
This is a new intermediate indicator included in the restructuring\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Percentage of COCODES Percentage 0\.00 70\.00 70\.00 76\.00
(Consejos comunitarios de
Desarrollo) implementing 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
activities in favor of childhood
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in their communities
Comments (achievements against targets):
Baseline: Data not available at that time\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of Madres Guias Number 0\.00 595\.00 595\.00 371\.00
trained to apply level 1
methodology (Ventana de la 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
Vida)
Comments (achievements against targets):
This new intermediate results indicator was included in the restructuring\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of Madres Guias Number 0\.00 450\.00 450\.00 523\.00
trained to apply level 2
methodology (Reach Up) 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
Comments (achievements against targets):
This new intermediate results indicator was included in the restructuring\.
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Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of children Number 0\.00 4480\.00 4480\.00 2833\.00
participating in level 1 activities
(Ventana de la Vida) within 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
CEO's strategy
Comments (achievements against targets):
This new intermediate result indicator was included in the restructuring\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of children Number 0\.00 1920\.00 1920\.00 1673\.00
participating in level 2 activities
(Reach Up) 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
Comments (achievements against targets):
This new intermediate results indicator was included in the restructuring\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
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Percentage of Madres Guias Percentage 0\.00 70\.00 70\.00 47\.00
with quality implementation of
level 1 and level 2 activities 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
Comments (achievements against targets):
This new intermediate results indicator was included in the restructuring\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of CEOs implemented Number 0\.00 80\.00 80\.00 79\.00
18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
Comments (achievements against targets):
Unit was changed to Percentage at final ISR dated June 25, 2019\. This new intermediate results indicator was included in the restructuring\.
Unit of Formally Revised Actual Achieved at
Indicator Name Baseline Original Target
Measure Target Completion
Number of midwives in the Number 0\.00 900\.00 900\.00 1473\.00
catchment areas of the project,
trained in exclusive 18-Mar-2015 30-Jun-2019 30-Jun-2019 30-Mar-2019
breastfeeding and oportune
stimulation by the social
workers
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Comments (achievements against targets):
This new intermediate results indicator was included in the restructuring\.
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B\. ORGANIZATION OF THE ASSESSMENT OF THE PDO
Objective/Outcome 1: To strengthen the capacity of parents and communities to improve and monitor child development
outcomes (physical, cognitive, socio-emotional, and linguistic skills) for children under two in Project intervention areas\.
1\. Percentage of children achieving the expected development
level for their age\. End Target: 60 % (revised from original target
of 70%)
2\. Percentage of participant households with enhanced early
Outcome Indicators
stimulation practices\. End Target: 40% (revised from original
target of 70%)
3\. Number of children that are direct beneficiaries of the
Project\. End Target: 5,500 children
Component 1: Promotion of physical, cognitive, linguistic and
socio-emotional development through a parenting and early
stimulation intervention
IRI_1: Diagnostic of early childhood development beliefs and
practices in beneficiary communities is completed
IRI_2: Monitoring tool to track child development is developed
Intermediate Results Indicators IRI_4: Number of project communities implementing Level 1
(Ventana de la Vida) and Level 2 (Reach Up) methodologies\. End
Target: 100 %
IRI_5: Percentage of COCODES (Consejos Comunitarios de
Desarrollo) implementing activities in favor of childhood in their
communities
End Target: 70%
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Component 2\. Enhanced social and behavior change
communication to achieve improved child nutrition and
development
IRI_3: Number of community fairs implemented with an ECD
approach
End Target: 188 community fairs
Component 3\. Project management and administration\.
Monitoring and evaluation, and knowledge dissemination
IRI_1: Baseline survey conducted
IRI_2: Quarterly progress reports completed\. End Target: 16
reports
IRI_3: Mass events hosted for departmental health systems\. End
Target: 2 events
IRI_4: Final Impact Evaluation survey conducted
IRI_6: Number of Madres GuÃas (MG) trained to apply level 1
methodology (Ventana de la Vida)\. End Target: 595 MG
IRI_7: Number of Madres GuÃas trained to apply level 2
methodology (Reach Up)\. End Target: 450 MG
IRI_8: Number of children participating in level 1 activities
(Ventana de la Vida) within âCasas de Evaluación y Orientación-
CEO's strategy\.
End Target: 4,480 children
IRI_9: Number of children participating in level 2 activities
(Reach Up)\.
End Target: 1,920 children
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IRI_10: Percentage of Madres GuÃas with quality
implementation of level 1 and level 2 activities\. End Target: 70
MG
IRI_11: Number of CEOs implemented\. End Target: 80 CEOs
IRI_12: Number of midwives in project catchment areas trained
in exclusive breastfeeding and opportune stimulation by the
social workers\. End Target: 900 midwives
1\.
Key Outputs by Component 2\.
(linked to the achievement of the Objective/Outcome 1) 3\.
4\.
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\.
ANNEX 2\. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
1\. ChildFund provided comments to the draft ICR in December 2019\. These comments were fully
incorporated into the final report\.
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ANNEX 3\. IMPACT EVALUATION METHODOLOGY
1\. The objective of the evaluation is to measure the impact of each of the implementation modalities
(home visits and group meetings) on children's development and parents' behavior\. More specifically, the
evaluation seeks to answer the following questions:
1\. Does the program improve children's cognitive development (problem solving, communication, and
fine motor skills)? Does the program improve nutritional indicators?
2\. Does the program help to promote changes in perceptions, behaviors in parents that lead to
improved early childhood stimulation in the home? Does the program contribute to reducing
mothers' levels of depression and strengthening their empowerment?
3\. Which modality of the program (home visits or group sessions) is most cost-effective?
2\. The evaluation seeks to capture the causal effects of the intervention through an experimental design
based on a randomized controlled trial (RCT)\. 115 communities located in the departments of
Huehuetenango, San Marcos, Quiche and Totonicapán in which the program had the capacity to operate,
were randomized into three groups:
- Treatment 1: Home visits (38 communities)
- Treatment 2: Group meetings (38 communities)
- Control: No child stimulation program (39 communities)
Baseline Survey
3\. Within each community, approximately 20 children under 12 months, pregnant women plus a maximum
of 5 replacements were selected to participate in the baseline survey using an ad hoc census collected prior
to the baseline survey and also information from the community\.
4\. The baseline was collected between October 2016 and January 2017\. The final sample collected includes
2,022 households and 2,022 children up to 24 months in 113 communities\.
End-line survey
5\. The endline survey was collected between February and May 2019 on 113 communities and 2,022
households\.
Analysis
6\. Given that not all households in the treatment group received NNSL, the impact of the program is
measured based on intention-to-treat (ITT) effects to avoid a selection bias in the comparison between
treatment and control groups\. Treatment on the treated was estimated to reflect the impact on those that
effectively received the treatment (TOT)\.
7\. The study will estimate the ITT and the TOT effects\.
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Intent-to-Treat (ITT) Analysis
Ordinary least squares (OLS) models were ran to examine the effects of random assignment to Reach Up or
home visits (HV) and Ventana de la Vida or group meetings (GM)\.
í µí±¦í µí±í µí±? =í µí»¼0 + í µí»¼1 í µí°»í µí±í µí±í µí±? + í µí»¼2 í µí°ºí µí±í µí±í µí±? + í µí»¼3 í µí±í µí±í µí±? + í µí»¼4 í µí»¾í µí±? + í µí¼í µí±í µí±?
Treatment on the Treated (ToT) Analysis
To understand the effects of âparticipation in HVâ? and âparticipation in GMâ?, the lottery assignment was
used as an instrument
í µí±?í µí±í µí±í µí±¡í µí°»í µí±í µí±í µí±? = í µí»½0 + í µí»½1 í µí°»í µí±í µí±í µí±? + í µí»½2 í µí±í µí±í µí±? + í µí»½4 í µí»¾í µí±? + í µí¼í µí±í µí±?
í µí±?í µí±í µí±í µí±¡í µí°ºí µí±í µí±í µí±? = í µí»¿0 + í µí»¿1 í µí°ºí µí±í µí±í µí±? + í µí»¿2 í µí±í µí±í µí±? + í µí»¿4 í µí»¾í µí±? + í µí¼í µí±í µí±?
Ì í µí±í µí±? + í µí»¼3 í µí±í µí±í µí±? + í µí»¼4 í µí»¾í µí±? + í µí¼í µí±í µí±?
Ì í µí±í µí±? + í µí»¼2 í µí±?í µí±í µí±í µí±¡í µí°ºí µí±
í µí±¦í µí±í µí±? =í µí»¼0 + í µí»¼1 í µí±?í µí±í µí±í µí±¡í µí°»í µí±
8\. The team also explored the distance to the center of the community as that could have affected the
probability of participating in the program\.
Selected Instruments
1) Child development: Malawi Developmental Assessment Tool (endline), Age and Stages Inventory
(baseline)\.
2) Instruments for measuring early childhood stimulation in the home\.
a\. Short version of "Home Observation for the Measurement of the Environment (HOME-SF)\.
b\. Family Care Indicator (FCI)
3) Maternal Knowledge on child development: KIDI
4) Maternal Depression: Center for Epidemiologic Studies Depression Scale-Revised (CESD-R)\.
Validation of the methodology
9\. Balance among groups were exhaustively tested to validate the randomization process (106 variables),
see figure 5\.1\. The team tested 22 variables for family characteristics, 13 child characteristics (age, gender,
language, premature, birthweight, breastfeeding), 20 economic indicators (employment, hours worked,
salary), 17 variables for nutrition (intake of proteins, dairy, fruits, cereals, vegetables, sugars, etc\.), 21
intermediate outcomes (all subtests of home, fci, maternal depression, and time spent with children), 13
outcome variables (weight for age, height for age, stunting, extreme stunting, underweight, fine motor,
problem solving, communications)\.
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Figure 5\.1\. Baseline Balance
100%
80%
60%
40%
20%
0%
Child is low Maternal Percentage in Father is Caregiver can Protein Stunting
birth weight depression poverty employed read intake
Control Group Ventana de la Vida Reach Up
60
50
40
30
20
10
0
Communications Fine Motor Problem solving
Control Group Ventana de la Vida Reach Up
Note: Outcome variables are reported as raw scores\.
Source: Trias, Julieta and Irma Arteaga (2020) âHome visitation or group intervention? Effects of early
stimulation on child wellbeing in rural Guatemala: A cluster randomize control trialâ? World Bank mimeo
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ANNEX 4\. DESCRIPTION OF THE NUESTROS NIÃOS SANOS Y LISTOS (NNSL) PILOT PROJECT
1\. Nuestros Niños Sanos y Listos (NNSL) is a pilot project implemented by ChildFund Guatemala together
with CEDRO and ACODIHUE, two local NGOs with extensive work experience in the areas of intervention\. The
projectâs main objective was to strengthen the capacity of parents and communities to improve and monitor
child development outcomes (physical, cognitive, socio-emotional, and linguistic skills) for children under two
in intervention areas\.
The Project had two intervention modalities:
2\. Ventana de la Vida (Group intervention)
The methodology has been developed and implemented by ChildFund for about a decade\. It consists of group
meetings held twice a month in which a Madre GuÃa would train between 10 to 15 mothers in early childhood
stimulation\. The meetings took place at a community center or at the house of the Madre GuÃa and lasted for
about an hour\. The meetings began with a welcoming message and a song, introduction of the topic by the
Madre GuÃa, demonstration of the activities, games and exercises\. The mothers practiced the activities with
the children and the meeting ended with a group discussion summarizing a couple of key messages\. The
mothers committed to practice, at home, the activities they learned at the group meetings\. Educational
materials and toys were made available at each session\. The meetings venues were called Casas de Evaluación
and Orientación (Houses for assessment and orientation), or CEOs\.
3\. Reach Up (Individual home visits)
Reach Up is an internationally recognized early childhood parenting program developed by Jamaicaâs
University of the West Indies and backed by over 30 years of research\. The program consists of forty-five
minute home visits, in which a Madre GuÃa shows mothers simple ways of interacting with their children using
recycled toys, books, songs and personal interactions\. At each visit the Madre GuÃa introduces a topic,
demonstrates the activities and explains the objectives of the toys and how to use them\. The Madre GuÃa
observed the caregiver practicing with the child and provided feedback, the visit typically ended with a song\.
The toys were left at home until they were replaced with different toys at the next session, since they were
topic- and age-specific\. In order to have a group experience, this modality combined the home visits with a
group session every 3 months so mothers could share and discuss what they had learned in the program\.
4\. Both modalities include agendas or guides for the Madres GuÃas to deliver the topics at each session\.
The content and presentation of these materials were adapted to the indigenous Guatemalan context\.
Assessment Tool
5\. To monitor the development of the children, both modalities used an assessment tool called â El
Barrileteâ? (the Kite)\. The tool is designed to monitor the development of children 0-36 months in the following
five areas: gross motor skills, fine motor skills, language and communication skills, socio-emotional skills and
cognitive skills (see figure 6\.1)\. Each of these areas represented a side of the kite, and an analogy was made
that if one of the sides of the kite was not functioning properly, the kite would not fly well\. Similarly, a child
needed to develop all the five areas in order to thrive\. The Barrilete has eight phases of evaluation according
to the age of the child: 0-3 months; 3-6 months; 6-9 months; 9-12 months; 12-16 months; 16-20 months; 20-
24 months and 24-36 months\.
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6\. The Barrilete used a traffic light color code to assess the child: red if the child could not do any of the
activities in the five areas assessed; yellow if the child could do one or two activities in each of the areas; and
green if the child could do all the activities in the five areas being evaluated\. The Barrilete was implemented
by the Madres GuÃas and social workers\. Based on the results, they would offer the parents feedback to
strengthen the areas that needed more development\. In addition to the Barrilete, the Madres GuÃas and
social workers also measured weight and height of the child and checked the vaccination schedule\.
Figure 6\.1\. Barrilete Assessment Tool (0-3 Months)
Targeting and Eligibility Criteria
7\. NNLS was implemented in 100 communities in the Departments of Huehuetenango, Quiché, San Marcos
and Totonicapán (see figure 6\.2)\. These Departments have the highest levels of malnutrition (more than 70
percent) and poverty (80 percent) in the country according to the ENSI\. Within these Departments,
municipalities with the highest level of chronic malnutrition were chosen, which were also prioritized by the
Hambre Cero (Zero Hunger) Program, a government flagship program\.
8\. About five to six communities were selected in each municipality considering the incidence of children
under two years, geographical feasibility to facilitate supervision and absence of other nutrition and childhood
development interventions\. One hundred and fifty communities were selected in total\.
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Figure 6\.2\. Geographical Distribution of the NNSL Pilot Project
NNSL COVERAGE BY DEPARTMENTS
Quiche Totonicapán San Marcos Huehuetenango
11%
15%
49%
25%
Source: NNSL Infographics, ChildFund 2019
Beneficiary profile
9\. In total 4,161 children benefited from the project (51 percent boys and 49 percent girls)\. The caretakers
that participated in the program were almost exclusively women (99 percent), with their average age ranging
from 28 to 31 years old depending on the Department\. About 95 percent of the beneficiaries were Mayan
from the K´iché (62 percent) and Mam (33 percent) ethnic groups\. The level of education of the caretakers
was low\. About 20 percent of the beneficiary caretakers did not have any schooling, while 43 percent did not
finish elementary school\. About 77 percent of the caretakers were stay-at-home mothers while 9 percent
worked in the informal sector\.
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10\. The program trained 965 Madres GuÃas but only 849 were certified\. About 98 percent of them were
Mayan also from the K´iché and Mam ethnic groups\. The average age of the Madres GuÃas was about 32 years\.
About 17 percent of them were illiterate and 34 percent did not finish elementary school\. Most Madres GuÃas
were stay-at-home mothers and about 90 percent did not receive any other social program\. To get certified,
Madres GuÃas received six days of four-hour sessions\. The trainings were conducted in the local language and
were adapted to the context and low level of education of the Madres GuÃas, using andragogic techniques\.
Other Program Areas
Community Fairs
11\. The community fairs were implemented to sensitize and train the broader community on issues of
childhood development\. During the fairs, community members and leaders who were not receiving any of
the two modalities of the NNSL program could participate\. The fairs were conducted every two to three
months and were structured in âCentersâ?, or stands, featuring four main areas:
1\. My world of toys\. This center focused on sensitizing about the importance of playing to stimulate
childrenâs brain development\. This center usually included an activity to create a toy out of recycled
materials\.
2\. Food of love -breastfeed, give life\. This center emphasized the importance of exclusive breast feeding
during the first six months of life, including the benefits of the colostrum\. This center would train
mothers on how to effectively breastfeed\.
3\. Water, sanitation and adequate food management\. At this center, participants are sensitized about
adequate sanitation to reduce the incidence of infectious gastrointestinal and respiratory diseases
that affect childrenâs development\. Participants were trained on sanitation best practices and
effective management of waste\.
4\. My favorite menu\. The objective of this center was to learn the nutritional value of healthy food, many
of it already planted and harvested by the families\. Participants learned about healthy recipes using
local produce\.
12\. Project staff coordinated with government institutions for some of the specialized content delivery at
the community fairs\. Some topics were prepared in coordination with MAGA, SESAN, DMS, MSPAS, MIDES as
well as local and municipal authorities\.
13\. Community Fairs also combined cross-cutting issues of interest for the community such as childrenâs
rights, parenting with love and disaster risk management\. The activities at the centers followed the Decroly
method, a pedagogical approach developed by Belgian Ovile Decroly (1871â1932)\. The Decroly method
organizes educational content based on centers of interest and educative games\. The centers delivered the
content based on three activities: 1) observation: the participant needs to have direct contact with object and
situations; 2) association: the participant should relate the space and content with his/her own situations\.
S/he should be able to identify a cause and effect; and 3) expression: the participant should execute an activity
such as reading, writing, drawing, estimating or working on a craft\.
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Training to Midwives
14\. The NNLS also coordinated with health districts to train midwives as they are the first line of maternal
health care providers in the communities of intervention\. Every three months, one-hour trainings were
provided to about 50 midwifes on pre-natal and early childhood stimulation\. The project trained 611 in total
midwives\.
Consultation process and grievance mechanisms
15\. As established in the IPP, the NNSL developed a community consultation process, on program
performance\. At the community fairs, along with the traditional four centers, a consultation center was added
in which community members were asked to provide feedback about the program\. The consultations were
conducted in the local language and asked three specific questions: what has been good about the NNLS
project? What has been bad? How can the project be improved? The questions had to be answered from the
perspective of the children, the families and the community\. Madres GuÃas also held their own consultation
process during their evaluation or âstrengtheningâ? meetings\.
16\. A grievance mechanism was also established and communicated to the community during the
consultation process\. This mechanism included phone numbers of technical staff who could be contacted to
submit complaints\. There were also channels to scale complaints to NNSL leadership and community
authorities if necessary\.
Page 53 of 53 | REVIEW |
P069947 |  ICRR 12575
Report Number : ICRR12575
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 03/16/2007
PROJ ID : P069947 Appraisal Actual
Project Name : Ain Temouchent US$M ):
Project Costs (US$M): 112\.85 109\.13
Emergency
Earthquake Recovery
Project
Country : Algeria Loan /Credit (US$M
Loan/ ):
US$M): 83\.5 78\.6
Sector Board : UD US$M ):
Cofinancing (US$M): 0 0
Sector (s): Housing construction
(56%)
Other social services
(26%)
Central government
administration (10%)
General water
sanitation and flood
protection sector (6%)
Roads and highways
(2%)
Theme (s): Natural disaster
management (100% -
P)
L/C Number : L7023
Board Approval Date : 06/22/2000
Partners involved : Closing Date : 12/31/2003 05/31/2006
Evaluator : Panel Reviewer : Group Manager : Group :
Anna Amato Peter Nigel Freeman Alain A\. Barbu IEGSG
2\. Project Objectives and Components:
a\. Objectives:
To restore normal functioning of communities damaged by the December 22, 1999 earthquake in the region of Ain
Temouchent and to increase national preparedness for future disasters \.
The objective would be reached by :
- strengthening the capacity to disaster response of the civil protection entities;
- strengthening of the existing system of earthquakes monitoring and studies;
- strengthening the guidelines for para -seismical design and control of construction;
- promoting risk coverage, specially insurance, to reduce the financial impact of disaster on the national budget;
- supporting the government for the construction of durable housing units in the earthquake affected area;
- restoring the essential urban services (drinkable water, sewage, roads );
- rebuilding the public social equipment for education, health, and administration \.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components (or Key Conditions in the case of DPLs, as appropriate):
A\. Disaster Organization and Risk Management (App\.US$9\.37 million; Actual US$6\.67)\. This includes purchase of
emergency response equipment, construction of civil protection facilities, assessment of communications systems
used in civil protection, upgrading of communication and information systems used in civil protection, seismic risk
assessment and monitoring network upgrades, assessment of building code enforcement, assessment of natural
hazard insurance programs\.
B\. Housing (App\. US$65\.78 million; Actual US$48\.42)\. This includes the building or reconstruction of 3400 rental
units and 800 single unit homes\.
C\. Technical Infrastructure (App\. US$8\.39 million; Actual US$3\.81) This includes the repair of water supply and
sewerage systems and construction of a wastewater treatment plant; repair or reconstruction of 45 kms\. of roads;
D\. Social Infrastructure (App\. US$26\.78 million; Actual US$49\.22) This includes repair of 12 schools, 8 small health
centers and construction of a 240 bed hospital; and the reconstruction or repair of 17 public buildings (post offices,
court house, etc\.)
E\. Project Implementation (App\. US$1\.69; Actual US$0\.17) This includes the establishment of an Interministerial
Committee for Coordination and Follow-Up for the Ain Temouchent Disaster Area and of a Project Coordination Unit \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The GOA requested cancellation of non -committed funds of US$0\.79 million and an additional US$4\.07 million
was not disbursed\. Almost one fourth of the loan amount, US$ 17\.4 million dollars, was shifted from the Housing
Construction Component to the Social Infrastructure Component, specifically the construction of the new hospital \. It
is not explained explicitly in the ICR but it appears to have been for the unexpected costs of building a hospital but
did not affect completion of the housing component, which came in under budget \. Because the project was prepared
as an Emergency Recovery Loan, it is covered by OP 8\.50, with the terms and conditions applicable at that time,
specifically that the project be completed within 3 years\. The original closing date was already half a year beyond
policy limitations, and the project was extended yet another two and a half years beyond that due to delays in
effectiveness, procurement delays and completion of major infrastructure projects \.
3\. Relevance of Objectives & Design:
The project objectives were in line with the CAS, which includes protection of vulnerable groups and transition to a
market economy\. They were also relevant to a clear need which was affirmed by both federal and local agencies for
better disaster prevention in a seismically active country which also regularly has flooding and pest infestation
problems\. And of course, repairing homes and infrastructure after an earthquake are relevant to the economy and
well-being of the people of the stricken area, most of whom were poor \.
The primary design problem, in retrospect, was including large scale infrastructure in an instrument (ERL) designed
for short-term (3-year) completion\. Large scale infrastructure subcomponents (a new hospital and a new wastewater
treatment plant) were included in the project\. These were not a direct response to the emergency situation : no water
treatment plant was damaged in the event and the hospital that did receive damage was reparable and was repaired
by the government\. Most of the delays occurred due to these subcomponents \.
4\. Achievement of Objectives (Efficacy):
The objectives were substantially achieved, but with the following problems noted :
1\. Two subcomponents under Component A were not completed : (i) Assessment of communications system for the
Civil Protection Directorate was not completed (ii) Purchase of upgraded communications and information
management systems\. These subcomponents were not completed due to procurement problems and lack of
consultants with this expertise \.
2\. The Social Infrastructure Component included the construction of a hospital, which had significant delays due to
approvals needed by the Ministry of Health, and cost overruns \.
3\. The proposed water waste treatment plant was not built upon recognition that it would cost too much and take too
long\. The government has planned and budgeted to do this on its own, starting in 2006\.
4\. Only the first phase of a study for stabilization of a major reservoir was completed, because of procurement
delays\.
5\. Efficiency (not applicable to DPLs):
Because this was an ERL, economic and financial analyses were not done \. However, the project did achieve cost
savings over appraisal estimates for almost all components \. The cost of construction was deemed to be 10% to 15%
lower than similar investments in others parts of the country, due to the use of small and medium -sized local
contractors and the availability of materials from factories close to the worksites \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-estimated value at evaluation :
re-
Rate Available? Point Value Coverage/Scope*
Appraisal % %
ICR estimate % %
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
All of the housing, all of the schools and all of the health centers were completed \. Other than the wastewater
treatment plant and the stabilization of the reservoir, all the technical infrastructure was satisfactorily completed \. So
the first objective of restoring normal functioning of communities damaged by the earthquake has been satisfied \.
Five of the 7 subcomponents for the natural disaster preparedness subcomponents were completed, so the second
objective of increase national preparedness for future disasters was mostly met as well\.
a\. Outcome Rating : Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
Most of the construction was done to higher seismic standards and capacity in earthquake monitoring and disaster
management has increased\.The awareness of disaster prevention and management for everyone from the central
government to the population as a whole in Algeria is high \.
a\. Risk to Development Outcome Rating : Negligible to Low
8\. Assessment of Bank Performance:
Including large construction projects (building of a new hospital, and a wastewater treatment plant ) in a short
term emergency project was questionable \. Although the project was approved in three months, it took an
additional six months after Board approval for effectiveness to occur -- that is, 9 months before any money was
available to assist the implementing agencies to recover from this emergency event \. This is an indication that
quality at entry had shortcomings \. Also, procurement was problematic\. Otherwise, the indications from the ICR
show that Bank staff were responsive and supervision was satisfactory \.
at-Entry :Moderately Satisfactory
a\. Ensuring Quality -at-
b\. Quality of Supervision :Satisfactory
c\. Overall Bank Performance :Moderately Satisfactory
9\. Assessment of Borrower Performance:
The government was highly committed to the project and they were able to mobilize the resources needed for the
project\. There were minor problems with annual reports not being on time \. The PCU was a bit weak\.
a\. Government Performance :Satisfactory
b\. Implementing Agency Performance :Satisfactory
c\. Overall Borrower Performance :Satisfactory
10\. M&E Design, Implementation, & Utilization:
Indicators based on the components were developed but, as presented in the ICR, the indicators were not robustly
documented\. Monitoring during the project with weekly meetings and quarterly reporting appears to be adequate \.
Since it was an emergency operation, a monitoring and evaluation system to evaluate longer -term outcome was not
developed\.
a\. M&E Quality Rating : Modest
11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
Relocation of affected persons was done well \. Living conditions improved for those affected by the earthquake \.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Satisfactory
Risk to Development Negligible to Low Negligible to Low
Outcome :
Bank Performance : Satisfactory Moderately Quality at entry is rated "Moderately
Satisfactory Satisfactory" due to the delays in
disbursement, project design that was
not fully consistent with with ERL
guidelines for length of implementation,
and the inclusion of subcomponents
that were not wholly emergency in
nature and contributed to the serious
delays to which this project was
subject\. The current Harmonized ICR
Guidelines developed by OPCS, IEG
and the Regions stipulate that if a
project is rated "Moderately
Satisfactory" on either Entry or
Supervision, then Overall Bank
Performance has to be rated
"Moderately Satisfactory\."
Borrower Performance : Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to
arrive at a clear rating, IEG will downgrade the relevant ratings as
warranted beginning July 1, 2006\.
- The "Reason for Disagreement/Comments" column could
cross-reference other sections of the ICR Review, as appropriate \.
13\. Lessons:
1\. Large,complicated investment components should not be included in ERLs \. In this case, the hospital and
wastewater treatment plant added time, money and problems and were not directly related to the project
objectives\. Local authorities seized the opportunity to address long -standing problems through an emergency
project\.
2\. Up-front training and effort should be put into procurement methods \. This is a frequent problem in ERLs\.
3\. Leadership of the Wali (governor) ensures the effective implementation of an emergency project \.
14\. Assessment Recommended? Yes No
Why? The housing component was done well and it would be good to check out whether the seismic construction
code enforcement and other disaster prevention activities are sustainable \.
15\. Comments on Quality of ICR:
The description of the outputs accomplished could have been more specific and descriptive \. The language was very
vague and it was hard to align the outputs described with the subcomponents listed in the original appraisal \. No
mention was made of the decision to reallocate a large share of the project funds from one component to another \.
There were no Borrower Comments\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P074525 |  ICRR 14181
Report Number : ICRR14181
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 09/17/2013
Country : Africa
Project ID : P074525 Appraisal Actual
Project Name : Waemu Capital US$M ):
Project Costs (US$M): 408\.6 252\.7
Market Development
Project
L/C Number : C3863; CB005 Loan/ US$M):
Loan /Credit (US$M): 102\.6 100\.6
Sector Board : Cofinancing (US$M):
US$M ): 242\.3 152\.09
Cofinanciers : CIDA, AFD, MIGA, Board Approval Date : 02/26/2004
France, Borrower, Closing Date : 09/30/2009 06/30/2012
Local Sources of
Borrowing Country
Sector (s): Capital markets (58%); Roads and highways (42%)
Theme (s): Regional integration (67% - P); Other financial and private sector development (33% - S)
Prepared by : Reviewed by : ICR Review Group :
Coordinator :
Brian Ames Fareed M\. A\. Hassan Christopher D\. Gerrard IEGPS2
2\. Project Objectives and Components:
a\. Objectives:
The Project Development Objective (PDO) of the West Africa Economic and Monetary Union (WAEMU) Capital
Market Development Project (CMDP) as presented in the Project Appraisal Document (PAD) is to develop the
capital markets in the WAEMU region, and mobilize public and private financing for the region âs infrastructure
development\.(PAD, page 3)\. The PDO reported in the Development Credit Agreement (DCA) was to assist the
Borrower -- the Banque Ouest-Africaine de Développement (BOAD) -- in developing the UEMOA (Union
Economique et Monetaire des Etats de 1 âAfiique de IâOuest) capital market and in mobilizing public and private
financing for the infrastructure development in such region \. (DCA, page 18)\. Hence, there is a minor difference
in language regarding the PDO as presented in the PAD and the DCA, with the later emphasizing âto assist the
borrower in developing the capital markets â? versus the direct aim âto develop the capital markets â?\. This review
uses the objectives in the credit agreement as the benchmark for the evaluation
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
The CMDP originally consisted of a Technical Assistance (TA) component (US$3\.52 million), a line of credit
(LOC) component (US$89\.00 million), a Guarantee Facility (GF) component (US$US$70 million) supported by
the International Development Agency (IDA), the Multilateral Investment Guarantee Agency (MIGA), and the
French Development Agency (AFD), and a Project Implementation component (US$3\.2 million)\. However, due
to persistent implementation problems, the project underwent a Level I restructuring in June 2008, in which the
Guarantee Facility component was eliminated, several of the activities in the other components were readjusted,
the Monitoring and Evaluation (M&E) framework was revised to reflect these changes, and the closing date was
extended to September 30 2011\. The project went through a subsequent Level II restructuring in September
2011 in which the closing date was extended until June 30, 2011 in order to allow sufficient time for the
restructured project to be implemented \. The components of the restructured project are set forth below :
Component 1\. Technical Assistance and Institutional Support (cost estimated at appraisal : US$13 13 \.0 million;
US$ 13\.
US$X \.XX million; actual cost : US$X\.
cost estimated at restructuring : US$X\. US$X \.XX million ): This component provided
technical assistance to strengthen the regulatory framework for regional capital market operations and technical
assistance and training to help strengthen the capacity of the key institutions responsible for regulating and
overseeing regional capital markets \. TA to the West Africa Development Bank (Banque Ouest-Africaine de
Développement or BOAD) aimed to improve its productivity, facilitate the development of a reference rate for
bonds issued within the region, and prepare sub -projects to be covered under the GF \. TA to the capital markets
regulator (Conseil Régional de lâEpargne Publique et des Marches Financiers or CREPMF) focused on
improving the regulatory framework for equity and bond markets \. TA and training to the West African regional
central bank (Banque Centrale des Etats de l âAfrique de lâOuest or BCEAO) aimed to facilitate training seminars
for market participants\. TA to the West Africa Economic and Monetary Union (WAEMU) Commission focused on
studying the harmonization of the tax regimes across the region for medium -term bonds and other financial or
capital market instruments, and to the Regional Stock Exchange (Bourse Régionale des Valeurs Mobilières or
BRVM) to carry out training for its staff and market participants \. Although this component remained unchanged
following the Level I restructuring, the RF was consolidated to focus more specifically on outcomes \.
US$ 163\.
163 \.1 million; cost estimated at restructuring :
Component 2\. Line of Credit (cost estimated at appraisal : US$163
US$XX \.XX million; actual cost : US$XX\.
US$XX\. US$XX \.XX million ): This component extended a credit line to promote
economic integration among WAEMU countries by providing necessary long -term resources to fund the foreign
currency portion of projects which fostered regional integration \. IDA funding would be allocated to the public
sector components of selected investment projects that required preferential and /or long-term financing\. BOAD
would on-lend the resources on preferential terms (25-year maturity, 7-year grace period, and 2 percent per
annum interest rate) and transfer the foreign exchange risk of the credit to the borrower \. During the Level I
restructuring, this component was modified to align it with market demands by increasing the ceiling for financing
individual projects to US$20 million and expanding the eligibility criteria to include non -road infrastructure
projects and cross-border projects related to food security \.
Component 3\. The Guarantee Facility supported by IDA, MIGA, and AFD (cost estimated at appraisal :
US$ 227\.
227 \.3 million; cost estimated at restructuring : US$0
US$227 US$ 0 million ): This component
US$ 0 million; actual cost : US$0
was originally intended to target the financing gap for private projects by catalyzing private investments in small -
and medium-sized infrastructure projects, including privatizations, by mitigating critical risks which constrained
investorsâ interest, and by facilitating access to these instruments for relatively small projects \. As a
well-positioned intermediary within the region, BOAD would help in accelerating the identification and processing
of small to medium size infrastructure projects \. The IDA guarantee would be deployed in riskier
sectors/transactions when one or several of its features were considered to be critical from a risk management
and/or market perspective\. During the Level I restructuring , this component was modified with the guarantee
facility being cancelled, MIGA agreeing to analyze and provide guarantees to projects presented by BOAD
based on MIGA's own guidelines and procedures, and strengthening of BOAD âs capacity to develop its own
guarantee product\.
Component 4: Project Coordination, Management, Monitoring &Evaluation (cost estimated at appraisal :
US$ 2\.1 million; cost estimated at restructuring : US$X\.
US$2 US$X \.XX million ): This
US$X \.XX million; actual cost : US$X\.
component was intended to ensure overall project coordination, management, and administration through a
Project Coordination Unit (PCU) within BOAD, Project Component Managers, and a Steering Committee \. The
component also provided TA to improve coordination and synergy between the key regional institutions \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
The WAEMU CMDP was a Financial Intermediary Loan (FIL) financed by an IDA credit in the amount of SDR
67\.0 million (US$96\.39 million equivalent) to BOAD for the benefit of the eight WAEMU countries (Benin, Burkina
Faso, Cote d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo ) which share the same currency (the CFA
franc), the same central bank (BCEAO), and the same development bank (BOAD)\. The credit was appraised on
June 4, 2003; approved by the Bank Board on February 26, 2004; became effective on July 29, 2005; was
restructured on June 18, 2008; had a mid-term review on January 29, 2008; and was closed on June 30, 2012
(33 months after the expected closing date at appraisal )\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
The PDO of the WAEMU CMDP is consistent with the development objectives of WAEMU governments to
remove infrastructure constraints, develop the human and economic potential of the region, attract private
investment in infrastructure, and promote economic integration \. Having put in place key laws, regulations, and
institutions in support of the development of a regional capital market, regional government authorities are now
placing priority on deepening the financial sector through an action plan aimed at enhancing regional capital
market activities, including by strengthening the key institutions, such as BOAD, CREPMF, BCEAO, BRVM, and
the WAEMU commission\. The PDO is also relevant to the objectives of the World Bank âs Regional Integration
Assistance Strategy (RIAS) and individual country strategies \. The RIAS aims to help develop a unified regional
financial market, promote region-wide infrastructure services, and create an enabling environment for private
investment based on greater financial market integration, unfettered capital movements, and a harmonized tax
policy\. Member statesâ CASs identify the development of infrastructure through public /private partnerships as a
priority objective\. Finally, the CMDP is consistent with the Bank âs Africa Strategy (March 2011), which places
emphasis on reducing the infrastructure gap and improving the business environment in member countries \.
The relevance of objectives rating is high \.
b\. Relevance of Design:
The design of the WAEMU CMDP was consistent with its PDO \. The project was intended to assist in
strengthening the regulatory framework for regional capital market operations, improving the capacity of
institutions involved in the regional capital market, providing medium - and long-term financing for public
infrastructure projects, and providing political and commercial risk mitigation instruments to catalyze longer term
financing of small and medium-sized regional infrastructure projects \. This was to occur through the provision of
technical assistance and institutional support, lines of credit, and guarantees to mitigate private investors â risks\.
Alternative project designs were considered, including financing projects under credit lines through Bank country
assistance programs in individual countries, limiting the scope of the project to a LOC to BOAD without links to
strengthening of the capital market, and separating the operation into two parallel projects, one with TA and a
LOC and the other with a guarantee facility \. These options were rejected due to concerns about project
coordination across country programs, the importance of developing capital market instruments, and the need to
ensure synergy among the project components \. However, the project design was overly optimistic given the
limited institutional capacity of regional countries and institutions \. The technical assistance component did not
include an adequate stakeholder analysis and severely underestimated the importance of market intermediaries
for project implementation\. Pre-design work was limited and did not include a detailed demand analysis for the
LOC nor took into account regional priorities for non -road infrastructure projects \. And the guarantee facility
required the identification of strong and capable intermediaries prior to the commencement of operations \.
Although the Level I restructuring addressed many of these design problems, it happened late in the process \.
The relevance of design is rated modest \.
4\. Achievement of Objectives (Efficacy):
Although the CMDP included an overarching PDO and PDO -specific indicators, the indicators were weak, not
directly relevant to the PDO, and suffered problems of attribution \. In addition, the project did not define any
intermediate objectives and instead established intermediate performance indicators around each of the project â
s components\. As a consequence, the weak link between the intermediate output indicators and the PDO
indicators, as well as between the PDO indicators and the PDO itself, impeded the ICR âs assessment of causal
connections\. It is also unfortunate, as pointed out in the ICR, that the problems with the indicators were not
addressed during the restructuring \. As a result, the ICR had to resort to providing alternate evidence to assess
the achievement of the PDO since they were not captured by the Results Framework (RF)\. While laudable, the
ICRâs assessment unfortunately still mixed outputs (means to an end) with outcomes (the end result)\.
Efficacy in achieving the project âs objectives prior to restructuring was unsatisfactory for the reasons stated in
the ICR\. Although there was success in deploying the project âs TA component, implementation of the LOC and
Guarantee Facility remained poor and fraught with delays \. Up to the point in time when the CMDP was
restructured, no infrastructure projects had been financed under the LOC and no guarantees had been issued
under the Guarantee Facility\. Moreover, none of the PDO or intermediate indicators had been met and the
projectâs disbursement rate was only 2%\. Efficacy in achieving all three objectives prior to restructuring was
Unsatisfactory\.
The assessment below is conducted on the basis of the achievement of each of the project âs three objectives
after restructuring\.
PDO Objective : Develop the Capital Markets in the WAEMU region
Performance with regard to achieving this objective was substantial following the projectâs restructuring\.
Although the number of companies listed in the regional stock market (PDO indicator 2) did not increase
measurably, the number of companies issuing bonds in the regional market (PDO Indicator 1) increased from 25
(baseline) to 48 by the projectâs closing (just below the target of 50)\. BOAD over-performed regarding achieving
the target of issuing at least CFAF 10 billion in bonds per year in the regional market (intermediate outcome
indicator 1) and adopted a new prudential framework in line with international best practices (Intermediate
outcome indicator 4)\. However, it did not achieve the target of being rated by international ratings agencies
(intermediate outcome indicator 3) at closing\. CREPMF achieved 86% of its target of inspecting all commercial
financial intermediaries, the regional stock exchange, the central depository, and the settlement bank
(intermediate outcome indicator 2)\. The monetary authorities met the target of putting in place new rules and
regulations for credit ratings in relation to the removal and substantial relation of bank guarantee requirements
(intermediate outcome indicator 5)\. And the WAEMU Commission partially achieved the target of adopting
harmonized tax regimes on financial products, as six out of the eight member countries implemented the regime
by closing (intermediate outcome indicator 6)\. As the ICR rightfully concluded, despite the project âs poor design
and inadequate RF, the regulatory framework and cost structure of the regional financial market has improved
and the credibility and capacity of the regional regulatory body has been strengthened \.
Efficacy in achieving the first intermediate objective is rated Substantial \.
PDO Objective : Mobilize Public and Private Financing for the Region âs Infrastructure Development
This objective was broadly achieved \. By the closing date, the project âs line of credit was fully disbursed to
regional infrastructure projects in compliance with IDA âs fiduciary system (intermediate outcome indicator 7)\.
Altogether, 11 sub-projects were financed resulting in the construction of key portions of four regional corridors
amounting to 953\.8 kilometers of interstate roads\. In addition, the port of Lomé was upgraded\. Importantly, the
projectâs LOC was able to leverage resources from BOAD, donors, and the private sector at a ratio of 1 to 6 in
support of regional infrastructure development \. BOAD has also been transformed into a strong regional
institution that, going forward, will be able to extend public and private project finance (as well as TA) to regional
member countries\.
High \.
Efficacy in achieving the second objective is rated High\.
5\. Efficiency:
Both the PAD and the ICR argued that it is not possible to quantify the economic and social benefits of the
project as a whole due to the nature of some of the activities and the problem of attribution \. Hence, a cost
effectiveness and financial analysis was not carried out at appraisal and the ICR did not attempt to quantify the
expected gains to be had from the project \. Instead, both the PAD and ICR made qualitative inferences regarding
the projectâs expected economic and social gains \. These included: (1) increased investment and growth arising
from greater availability of long-term capital and financial market integration; (2) improved competitiveness on
account of a reduction in transport costs and greater access to the regional market; and (3) transformation of the
BOAD into a more profitable regional development finance institutions with a larger stock of capital and a
benchmark issuer of bonds in the regional market \. Both the PAD and the ICR noted that economic and financial
analysis conducted for each of the infrastructure investments financed under the project âs LOC indicated an
economic rate of return in excess of 12 percent\. Efficiency gains under the project also included a halving of the
time required to process the listing and issuance of bonds in the regional market, a reduction in cumulative
transit time (by 16 hours) and maintenance cost (by up to 35 percent) along the improved road corridors, and a
30 percent increase in the volume of activity at the port of Lom é (2007-11) despite the number of vessels using
the port remaining constant\.
Efficiency in achieving project âs objectives is rated Modest \.
ERR )/Financial Rate of Return (FRR)
a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the
re-
re -estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal No
ICR estimate No
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
The ICR rated the projectâs outcome on the basis of a weighted average of the achievement of the project âs
objectives prior to restructuring (which it rated âUnsatisfactoryâ?) and after restructuring (which it rated
âModerately Unsatisfactoryâ?), with the weights being a function of the relative disbursement levels at each point
in time (2 percent versus 98 percent)\. Based on this approach, the ICR rated the overall outcome of the project
as âModerately Unsatisfactoryâ?\.
This ICR Review concurs that achievement of the project âs objectives prior to restructuring was âUnsatisfactoryâ?,
but it rates efficacy after restructuring as being âModerately Satisfactoryâ?\. While it is true that limitations in project
design resulted in significant delays in implementation and the eventual need to drop some of the project âs
activities, the restructured project nevertheless broadly achieved its development objectives, with efficacy of the
first objective being âsubstantialâ? and of the second objective being âhighâ?\. Moreover, in addition to efficacy
(achievement of objectives), the overall outcome rating takes into account the âhighâ? relevance of the projectâs
objectives and the âmodestâ? relevance of the projectâs design and efficiency in achieving the project âs objectives\.
In light of the above, and using a weighted average of efficacy up to and after restructuring, the overall outcome
is rated âModerately Satisfactoryâ?\.
a\. Outcome Rating : Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The PAD considered the project as âmodest riskâ? due to concerns that: (1) the regional policy makers,
regulators, and intermediaries could fail to implement key reforms and provide the investment capital necessary
for a well-functioning regional bond market; (2) the lack of institutional capacity could undermine project
implementation; and (3) there could be shortfalls in donor co -financing\. Although there were delays in
co-financing arrangements, these risks were largely mitigated through assurances at the highest political level in
the region, the provision of TA and institutional support, and donor coordination \. As pointed out in the ICR, the
projectâs main deliverables were with regard to the provision of regional infrastructure, institutional capacity
building, and financial market regulatory framework \. Roads and port infrastructure developed under the project
are largely irreversible once constructed and the existence of road maintenance funds in most WAEMU member
states should contribute to the maintenance of this infrastructure \. While it is true that timely follow up regarding
institutional capacity building and regulatory reforms will be important to maintain the gains achieved, the
WAEMU Commission and its members have approved a Regional Economic Program which includes a strong
commitment to deepen the regional capital markets and to provide the necessary resources to sustain the
projectâs institutional changes\. Finally, implementation capacity at BOAD is expected to be sustained long after
the projectâs closing as experts recruited under the PCU have been permanently hired \.
a\. Risk to Development Outcome Rating : Moderate
8\. Assessment of Bank Performance:
a\. Quality at entry:
The Bankâs performance regarding quality at entry was unsatisfactory \. There were substantial flaws in
project design as evidenced by the fact that the project required significant restructuring due to delays in the
implementation of activities, the lack of demand for the guarantee facility, and the lack of disbursement of the
LOC facility\. The ICR rightly points out that project design was too complex relative to the limited institutional
capacity to manage and coordinate the plethora of activities and beneficiaries \. Delays arose in part due to
the need to receive approval of the guarantee facility by the various national parliaments and judicial
opinions from their respective supreme courts \. Internal procedures of each of the various co -financiers
contributed to delays in the implementation of the LOC \. And delays in the signing of agreements between the
Bank and both CIDA and BOAD delayed the roll out of the TA component \. Other key deficiencies included
inadequate assessment of demand for the guarantee facility, failure to identify capacity deficiencies at
BOAD, insufficient flexibility to include non -road infrastructure, and the lack of identification of key risks and
the required mitigating measures\. The RF was also poorly designed and specified, with poorly defined and
relevant PDO indicators, no intermediate objectives, and a lack of clear links in the causal chain between the
projectâs inputs, outputs, outcomes and objectives \.
at -Entry Rating :
Quality -at- Unsatisfactory
b\. Quality of supervision:
The quality of supervision was unsatisfactory \. Bank supervision was severely deficient \. Although there were
regular supervision missions, the generally satisfactory ratings given in the Implementation Status Reports
up through mid-2007 were overly optimistic and masked the depth and scope of poor project implementation
(i\.e\., delays in the implementation of the TA component, a 2 percent disbursement rate for the LOC
component, and the lack of demand for the guarantee facility component )\. According to the ICR, this was
due to inadequate skill mix and lack of pro -activeness of the task team \. Had there been more effective
supervision, the restructuring of the project could have taken place much earlier and project objectives could
have been achieved in a timelier manner \. In this regard, the mid-term review should have been programmed
and taken place earlier in the project cycle \. The restructuring of the project did address many of the main
design flaws (i\.e\., refocusing and alignment of project activities in line with the borrower âs institutional
capacity, cancelation of the guarantee facility, revision of the eligibility conditions of the LOC to include
non-road infrastructure projects and increasing the ceiling for individual projects, and increased TA to BOAD
for risk mitigation)\. And the measures taken to improve disbursements under the LOC paid off, with nearly
full disbursement achieved by the project closing date (which had to be extended twice )\. However, the Bank
failed to address the deficiencies in the design of the RF during the restructuring with a view to better align
the outcome indicators with the PDO\. As a result, it is difficult to properly assess whether the project
achieved its objectives without resorting to information outside of the RF \.
Quality of Supervision Rating : Unsatisfactory
Overall Bank Performance Rating : Unsatisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
There was strong commitment on the part of the WAEMU commission and the member countries within the
region to deepen the financial market \. Member governmentsâ national parliaments ratified the credit
guarantee and the eight Supreme Courts provided the corresponding legal opinions required for project
effectiveness, albeit with some delay \. There were also delays by member countries in approving and
procuring finance for the individual sub -projects\. In addition, capacity constraints at the country -level project
implementation units contributed to delays in disbursement of the project âs LOC component\. Following the
political turmoil in Cote dâIvoire, which affected the activities of both the regional stock exchange and the
regional capital markets regulator based in Abidjan, the regional authorities took timely decisions to relocate
these bodies to Bamako\.
Government Performance Rating Moderately Satisfactory
b\. Implementing Agency Performance:
BOAD was the principal regional agency responsible for project implementation \. The senior management
was committed to overall project implementation and was instrumental in ensuring the implementation of the
specific institutional reforms within BOAD \. However, as the ICR pointed out, although the changes in BOAD
management did not significantly impact the project, the layers of hierarchy within BOAD undermined the
ability of the project coordinator (who was a low level BOAD staff member) to make decisions\. The PIU did
have good quality technical staff and key technical experts hired under the project were retained by BOAD \.
Unfortunately, there were delays in securing M&E specialists which undermined project monitoring \. There
were no substantive procurement problems, however, and the unethical action by a project accountant was
handled in a timely manner
Implementing Agency Performance Rating : Moderately Satisfactory
Overall Borrower Performance Rating : Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The PAD discussed the institutional framework for monitoring and evaluating project performance (PAD, pp\.
17-18), including with regard to the structure, location, and responsibilities of the PCU and the guidance to be
received from the PSC, which consisted of representatives of all project beneficiaries and one person
representing all of the governments \. Although key performance indicators for each of the three project
components were listed in the text of the PDO (PAD, p\. 3) and in Project Design Summary (PAD, Annex 1),
there was no explicit and comprehensive RF that linked inputs to outputs to outcomes and to objectives and that
discussed the causal links between each of the indicators \. Moreover, several of the outcome indicators posed
problems regarding attribution (i\.e\., the number of firms listed on the regional stock exchange, the number of
companies issuing bonds, and the value of bonds of bonds issued in the regional currency )\.
b\. M&E Implementation:
In addition to being constrained by the poor design of the M&E framework, M&E implementation was affected by
delays in recruiting M&E specialists and overly optimistic performance ratings in the initial Implementation Status
Reports (ISRs)\. The ICR did not discuss in any detail the positive and /or negative institutional experience of the
PCU in overseeing the implementation of the M&E framework \. It also did not elaborate upon the experience in
collecting data and in measuring performance outcomes \. It is clear from the ISRs that the review of the various
performance indicators during project implementation was done in a selective and uneven manner \.
c\. M&E Utilization:
The delays experienced in the implementation of the project âs activities and in the progress of key performance
indicatorsâparticularly that regarding the LOC disbursement rate âwere used as the basis for restructuring the
project\. However, as indicated in the ICR, the Bank and the borrower missed an important opportunity during the
project restructuring to strengthen the M&E framework to ensure better and more direct linkage between the
indicators and the projectâs objectives\. Instead, the indicators related to the guarantee facility were dropped,
resulting in the remaining two outcome indicators being linked only to the capital market development aspect of
the PDO with none capturing the infrastructure development aspect \.
M&E Quality Rating : Negligible
11\. Other Issues
a\. Safeguards:
As indicated in the PAD and ICR, BOAD prepared an Environmental and Social Management framework whose
procedures were in compliance with World Bank Safeguard Policies and screened sub -projects for environmental
and social impacts\. The project supported the development of environmental and social units within BOAD that were
responsible for the management of the safeguard policy for all projects financed by BOAD \.
b\. Fiduciary Compliance:
As indicated in the PAD, BOAD has an acceptable financial and accounting system with well -qualified staff and
extensive experience in managing projects financed by donors \. Its financial statements were regularly prepared
in accordance with International Accounting Standard and were audited annually by the BCEAO and an
internationally recognized auditing firm \. BOADâs procurement capacity was assessed at entry \. While
considerable capabilities existed, there was a need to update BOAD âs procurement procedures and a
procurement specialist was recruited before the credit became effective \. Although there were delays in
procurement related to the LOC in the early stage of the project, procurement management was significantly
improved after project restructuring \. The unethical practice on the part of an accountant assigned to the PCU
was addressed and the individual âs contract was terminated\.
c\. Unintended Impacts (positive or negative):
Neither the PAD nor the ICR identified any unintended impacts nor does there appear to be any \.
d\. Other:
n\.a\.
12\. Ratings :
12\. ICR IEG Review Reason for
Disagreement /Comments
Outcome : Moderately Moderately Both the ICR and IEG Review rated
Unsatisfactory Satisfactory outcome before restructuring as
unsatisfactory, However, the IEG
Review rates outcome after
restructuring as satisfactory (compared
to the ICR's rating of moderately
unsatisfactory) since the project
broadly achieved its objectives --albeit
with delay and with the removal of one
of its components--with relevance of
the objectives rated high, and
relevance of design and efficiency
rated modest\.
Risk to Development Moderate Moderate
Outcome :
Bank Performance : Moderately Unsatisfactory Bank performance in terms of quality at
Unsatisfactory entry and quality of supervision were
both highly deficient\. The project was
restructured very late in the process
and required two extensions of the
closing date in order to allow sufficient
time for disbursements to occur and the
objectives to be achieved \.
Borrower Performance : Moderately Moderately
Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The four main lessons learned from the implementation of the CMDP are :
1\. Effectiveness conditions should be realistic \.It took the CMDP a year and a half to become effective \. This
was mainly due to cross-conditionality between the development credit and the guarantee facility agreements
and by requirement that the credit guarantee be ratified by the eight national Parliaments with corresponding
legal opinions from the eight Supreme courts \. The Bank should ensure that effectiveness conditions can be
realistically met within a reasonable time frame or else project implementation will be delayed \.
Multi -donor operations require a streamlined implementation arrangement \.The CMDP experienced
2\. Multi-
delays in implementation due to conflicting funding procedures and inconsistent procurement procedures
between key donors\. The establishment of a common account managed by a lead donor and a system of
parallel financing (versus co-financing) can be more efficient and avoid duplication of procedures that delay
project implementation\.
Ex -ante demand analyses and stakeholder assessments can improve project outcomes \. Project design
3\. Ex-
did not include demand and stakeholder assessments \. As a result, the guarantee facility was never activated
(on account of a lack of demand ) and the LOC initially excluded important non -road regional infrastructure
projects (due to a lack of stakeholder assessment )\. Demand analyses and stakeholder assessments should
become a routine part of project design and monitoring \.
4\. Comprehensive RFs ensure that project outcomes are measurable and achievable \. The CMDPâs RF was
severely deficient, with the causality between inputs, outputs, and outcomes not well specified and the PDOs
too high level and not solely attributable to the project \. Well specified RFs and M&E frameworks ensure that
outcomes are attributable to project activities and allow for mid -course corrections when performance is not in
line with expectations\. Efforts should be redoubled to ensure that all Bank projects have adequate RFs at
entry\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR was comprehensive and its tone candid \. It included a useful and detailed assessment of the key factors
that affected project implementation and outcomes \. It also appropriately underscored the deficiencies in M&E in
general, and in Bank design at entry, particularly regarding the less -than-adequate RF\. In this regard, it made a
valiant effort to âfill the gapâ? by identifying results that could be directly linked to the achievement of the PDO, but
that were not fully reflected in the M&E framework \. The ICR needed to make a stronger case for its relatively
lower overall outcome rating after restructuring and relatively higher rating of quality of supervision versus
quality at entry, given the equally severe deficiencies involved at entry and during supervision \. It also could have
benefited from some edits\. For example, outcome is rated as moderately unsatisfactory in the text on page 12, but moderately
satisfactory in Table 3 on page 17\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P050601 | Document of
The World Bank
Report No: 33703
IMPLEMENTATION COMPLETION REPORT
(IDA-31790 IDA-31791 PPFI-Q1100)
ON A
CREDIT
IN THE AMOUNT OF US$25 MILLION EQUIVALENT
TO THE
KINGDOM OF CAMBODIA
FOR A
SOCIAL FUND II PROJECT
December 19, 2005
Human Development Sector Unit
East Asia and Pacific Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 18, 2005)
Currency Unit = Cambodian Riel
Riel = US$ 0\.0002392
US$ 1 = 4,181 Cambodian Riels
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
AAfC - American Assistance for Cambodia
CAS - Country Assistance Strategy
ITBA - Independent Technical and Beneficiary Assessment
IAU - Internal Audit Unit
ICR - Implementation Completion Report
MOEF - Ministry of Economy and Finance
MoU - Memorandum of Understanding
NGO - Non-Government Organization
NPV - Net Present Value
OPEC - Organizational of Petroleum Exporting Countries
PAD - Project Appraisal Document
PSC - Project Support Committee
RGC - Royal Government of Cambodia
SFI - Cambodia Social Fund Project
SFII - Cambodia Social Fund II Project
SFKC - Social Fund of the Kingdom of Cambodia
SPU - Sustainability Program Unit
UCD - Unit Cost Database
Vice President: Jemal-ud-din-Kassum, EAPVP
Country Director Ian C\. Porter, EACTF
Acting Sector Director Tamar Manuelyan Atinc, EASHD
Task Team Leader/Task Manager: Minna Hahn, EACTF
CAMBODIA
Social Fund II Project
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 4
5\. Major Factors Affecting Implementation and Outcome 7
6\. Sustainability 8
7\. Bank and Borrower Performance 8
8\. Lessons Learned 11
9\. Partner Comments 12
10\. Additional Information 14
Annex 1\. Key Performance Indicators/Log Frame Matrix 15
Annex 2\. Project Costs and Financing 17
Annex 3\. Economic Costs and Benefits 20
Annex 4\. Bank Inputs 21
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 23
Annex 6\. Ratings of Bank and Borrower Performance 24
Annex 7\. List of Supporting Documents 25
Project ID: P050601 Project Name: Social Fund II Project
Team Leader: Minna J\. Hahn TL Unit: EACTF
ICR Type: Core ICR Report Date: December 14, 2005
1\. Project Data
Name: Social Fund II Project L/C/TF Number: IDA-31790; IDA-31791;
PPFI-Q1100
Country/Department: CAMBODIA Region: East Asia and Pacific
Region
Sector/subsector: Primary education (30%); Other social services (20%); Irrigation
and drainage (20%); Roads and highways (20%); Water supply
(10%)
Theme: Conflict prevention and post-conflict reconstruction (P); Other social
protection and risk management (P); Rural services and
infrastructure (P); Participation and civic engagement (P)
KEY DATES Original Revised/Actual
PCD: 11/05/1998 Effective: 04/30/1999 07/07/1999
Appraisal: 01/15/1999 MTR: 06/30/2001 09/20/2002
Approval: 03/23/1999 Closing: 12/31/2002 03/31/2005
Borrower/Implementing Agency: Kingdom of Cambodia/Social Fund of the Kingdom of Cambodia
Other Partners: Organization of Petroleum Exporting Countries, American Assistance for
Cambodia
STAFF Current At Appraisal
Vice President: Jemal-ud-din Kassum Jean-Michel Severino
Country Director: Ian C\. Porter Ngozi N\. Okonjo-Iweala
Sector Director: Tamar Manuelyan Atinc Kristalina I\. Georgieva
Team Leader at ICR: Minna J\. Hahn Christopher Chamberlin
ICR Primary Author: Minna J\. Hahn
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,
HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: M
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
As the Social Fund I (SFI) project neared completion, the Royal Government of Cambodia (RGC)
requested continued World Bank support to the Social Fund of the Kingdom of Cambodia
(SFKC)\. As stated in the Project Appraisal Document (PAD), the Social Fund II (SFII) project
aimed to: (i) provide small-scale, community-based subprojects in the areas of social and
economic infrastructure with emphasis on the poor; (ii) create short-term employment
opportunities to absorb the increase in unemployment associated with post-crisis reverse
migration of workers from Thailand and the demobilization of Cambodian army units; (iii)
strengthen the capacity of communities to implement development projects and sustain them; (iv)
improve donor coordination and financing; and (v) improve poverty and district targeting\.
The SFII responded to the country context and the RGC's development priorities\. At the time of
project preparation, government attention was shifting from emergency relief to nationwide
reconstruction and longer-term development goals\. The project supported RGC priorities as
outlined in the National Program to Rehabilitate and Develop Cambodia (1994), the Triangle
Strategy (1998), and the National Royal Government's Platform on Second Term (1998-2000)\.
These objectives, aimed at reducing poverty, included: developing rural areas, building human
capacity, and strengthening infrastructure\. The SFII was also consistent with the objectives of the
Country Assistance Strategy (CAS) which mirrored those of the RGC: enhancing rural
development and natural resources management; improving human resources and reducing
poverty; and supporting critical infrastructure rehabilitation\.
The project's primary objective responded to a key immediate constraint to Cambodia's social
and economic development: the substantial backlog of basic investment requirements in
small-scale infrastructure following years of conflict and neglect\. The inclusion of other
objectives such as improved donor financing and poverty targeting made the project more
complex\. Building on the lessons of SFI, the SFII placed greater emphasis on improving local
participation and sustainability and shifted sectoral allocations into more technically complicated
sectors in which the SFKC had less experience\. These changes also increased project complexity
and the demands on the SFKC but were important and appropriate adaptations to the evolving
development of Cambodia\.
3\.2 Revised Objective:
In May 2001, one year before the expected completion of the SFII, the Bank approved a Flood
Rehabilitation Supplemental Credit (US$10 million equivalent) which provided additional
resources to the SFKC to address emergency needs in rebuilding small-scale infrastructure
damaged in heavy flooding during 1999-2000\. Given the similar objectives of the two credits, no
revision to the SFII credit agreement was required\.
3\.3 Original Components:
The project was comprised of three components\. The Subproject Grants component financed
sub-grants for small-scale infrastructure and services subprojects proposed by communities, local
groups, NGOs, and other entities\. Eligible subproject types included: irrigation systems, bridges
and culverts, water supply and sanitation systems, schools, vocational training centers and
training, and health centers\. The Institutional Support component financed the costs of staffing,
- 2 -
equipping, operating, training, and assessing the SFKC\. Approximately 1% of the credit was left
in the Unallocated component to provide flexibility during implementation\.
These components are standard to most social fund projects and were linked directly to the
achievement of SFKC objectives\. Design features--particularly the introduction of three new
"programs of change" to improve the technical quality of subprojects, give more attention to
economic analysis in the appraisal of subprojects, and strengthen subproject
sustainability--reflected the findings of technical and beneficiary assessments of SFI as well as
evaluations of Bank experience with social funds in Latin America and Africa\. As noted above,
these changes significantly increased demands on the SFKC\. Its capacity was to be strengthened
through the hiring of new staff with social development experience, recruitment of a long-term
sustainability advisor, and the creation of a Monitoring and Post Handover unit\.
3\.4 Revised Components:
No changes were made to the original components of the project\. The components of the Flood
Rehabilitation Supplemental Credit mirrored those of the SFII\.
3\.5 Quality at Entry:
Quality at entry is rated as satisfactory\. Bank support for the SFII project was justified given:
the substantial backlog of basic infrastructure needs, as evidenced by the accumulation of eligible
subproject applications from SFI totaling US$50 million; the direct linkages with RGC
development priorities and CAS objectives; and the satisfactory performance of SFI\. Project
design--including significant changes to the SFKC's structure and operational procedures to
improve local ownership and sustainability, technical quality, cost-effectiveness, and coordination
with other partners--was an appropriate adaptation to evolving country circumstances and
reflected the lessons of experience from SFI\. One important innovation was the addition of the
"new coordination mechanism" under which the SFKC could enter into Memorandum of
Understanding (MoU) agreements to facilitate co-financing and cooperation arrangements with
NGOs and other development organizations who could stimulate demand for high priority
subprojects in high priority districts\. In terms of safeguard policies, although no significant
adverse environmental impacts were identified under SFI, dated covenants in SFII included the
preparation of improved environmental assessment procedures\.
Quality at entry could have been strengthened by: a greater emphasis on outcomes, particularly in
terms of project targets; the inclusion of incentives for hiring returning workers from Thailand and
demobilized soldiers, in line with the project's objectives; and the establishment of a coherent
targeting mechanism\. Project design also did not include a strategy for the SFKC's exit,
transformation, or handover of responsibilities at the end of the project\. In addition, although
both the RGC's development plans and CAS emphasized the importance of strengthening the
capacity of government institutions, the SFII--which was implemented by the SFKC, an
autonomous agency created to manage the Social Fund--did not specifically address these
objectives\. However, the decision to create a separate agency rather than work through line
agencies or local governments was appropriate at the time of project preparation given that
national and local government institutions did not have the capacity to address the country's
pressing small-scale infrastructure needs\.
- 3 -
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
The overall achievement of project objectives and outputs is rated as satisfactory\. Although the
lack of targets for key performance indicators makes evaluation more difficult, the project
financed numerous beneficiary, technical, and other assessments which provide information on
outcomes and impact and in part compensate for the lack of defined targets\.
Regarding the first objective of providing small-scale, community-based social and economic
infrastructure subprojects with emphasis on the poor, the SFII appears to have delivered
substantial benefits\. The project financed 1,416 small- to medium-sized economic and social
infrastructure subprojects (total value US$31\.5 million) throughout the country, which benefited
over 5 million people according to SFKC estimates\. In the Independent Technical and
Beneficiary Assessment (ITBA) completed in late 2004, interviewees reported that subproject
benefits included: increased school enrollment, particularly among girls; safer school
environments; improved access to schools and markets; decreased impacts from flooding;
enhanced trade in agriculture and other local products; and added income from employment
opportunities\.
In terms of creating short-term employment opportunities to absorb the increase in
unemployment associated with post-crisis reverse migration of workers from Thailand and the
demobilization of Cambodian army units, the SFKC created nearly 52,000 person-months of
short-term employment, of which approximately 84% was for unskilled labor\. The SFKC focused
on providing higher quality infrastructure facilities, which required relatively less labor inputs than
more basic facilities but would be likely to last longer, a key consideration given the vulnerability
of the country's infrastructure to devastating floods\. The project did not include special
incentives or provisions for hiring returning workers or former military personnel, and the
backgrounds of employees hired was not tracked\. Therefore, the degree to which the project may
have absorbed the increase in unemployment mentioned in the objective was not assessed\.
The extent to which SFII strengthened the capacity of communities to implement development
projects and sustain them is more difficult to quantify, but the project appears to have had a
positive impact\. The ITBA concluded that community involvement--as measured by time spent
in meetings and donations of land, labor, and materials--increased during SFII and resulted in
high levels of ownership\. Community contribution as a percent of total subproject cost averaged
11% over the life of the project, above the 10% agreed at appraisal\. In addition, 60% of the
community Project Support Committee (PSC) members interviewed for the ITBA stated that
after implementation of their SFKC subprojects, they went on to participate in other community
development activities, including health promotion and HIV/AIDS awareness, food security
programs, and village action planning\. Of this group, over 80% mentioned that they had used
skills they gained through the SFKC experience in other development activities\.
In terms of improving donor coordination and financing, the SFKC mobilized almost US$10
million (about 20% of total project financing) at the institutional level from American Assistance
for Cambodia (AAfC) and the Organization of Petroleum Exporting Countries (OPEC)\. At the
- 4 -
subproject level, MoU partnership agreements signed with 10 NGOs and donor organizations
raised an additional US$4 million\. The ITBA concluded that MoU partners, as intended, helped:
channel resources to some of the most remote and impoverished districts; improve the overall
quality of outputs; and strengthen community capacity building efforts, thereby helping to ensure
the sustainability of facilities financed\.
Regarding improving poverty and district targeting, the SFKC did not fully meet its objectives\.
Targeting on a per capita basis resulted in a wide distribution of investments throughout the
country (177 out of 183 districts), with nearly 92% of sub-projects in rural areas\. However, while
the level of per capita investment was highest in the poorest 10% of districts, the next highest
level was in the second wealthiest decile\. Targeting was constrained by insufficient
socio-economic data for certain areas of the country and by lack of a coherent targeting
mechanism, as the SFKC used a set of different and competing prioritization tools\. Targeting
improved over time as a result of better procedures and more extensive outreach activities\.
4\.2 Outputs by components:
Subproject Grants\. From July 1999 to March 2005, the SFKC completed 1,416 sub-projects
(total value US$31\.5 million), including the rehabilitation or construction of 592 schools, 414
bridges and 2,610 culverts, 5,133 wells and 1,290 latrines, and 88 irrigation systems\. Over
one-third of these subprojects were implemented under MoU partnerships, in which partner
agencies helped identify local priorities and assist communities in submitting subproject
applications to SFKC\. After approval of the subprojects, MoU partners provided field support
for implementation as needed and helped mobilize communities for maintenance of the facilities\.
According to the ITBA, improved subproject designs and appraisal and supervision procedures,
combined with stronger community capacity to oversee procurement and construction and
increased contractor performance, resulted in better technical quality of all major subproject types
under SFII\. Although quality varied among subproject types, 90% of SFII investments were rated
to be of `fair' to `good' quality\. This conclusion was substantiated by other project assessments
which found SFKC subprojects to be of average or above-average technical quality compared to
similar donor- and government-funded programs\. Subproject quality was correlated with levels of
beneficiary satisfaction, which were consistently high throughout the project\. According to the
ITBA, 90% of respondents indicated that investments addressed the communities' priority
development needs\.
Average processing times were long for subproject applications entering the SFKC system
through normal channels, such as directly through communities or local groups\. For these
subprojects, the time lag between screening and construction "ground-breaking" averaged 3\.73
years, with a maximum of 8\.5 years\. In contrast, flood rehabilitation applications and applications
for subprojects supported by MoU partnerships received priority treatment and were sent directly
to appraisal after screening, resulting in shorter average lag times of 1\.05 and 1\.24 years,
respectively\. This two-tiered system likely lengthened the time lag for normal applications,
although it should be noted that the SFKC was not fully responsible for the delays\. Oftentimes
insufficient information in the applications delayed the appraisal process, and some subprojects
required re-bidding and multiple re-bids to keep the bidding process transparent\.
- 5 -
Institutional Support\. With the shift in objectives from SFI to SFII, the SFKC initiated major
changes to its structure, policies, and procedures\. Key institutional innovations during design and
implementation included: the creation of a Sustainability Program Unit (SPU) and the hiring and
effective use of a sustainability advisor; recruitment of staff with social development experience;
the establishment of a regional office; and the creation of an Internal Audit Unit (IAU) in response
to transparency concerns\. Under this component, the project also financed a number of
beneficiary, technical, procurement, and other assessments which were instrumental in improving
procurement procedures, technical designs and construction standards, capacity building efforts,
and other aspects of the project\.
4\.3 Net Present Value/Economic rate of return:
The NPV of the project was not calculated during appraisal or at completion\. Standard rate of
return analysis is not readily applicable to a large number of small, demand-driven, and disparate
subprojects\. On the benefit side, the SFKC used estimates of potential beneficiaries to calculate
return\. For larger economic infrastructure subprojects, relatively simple economic rate of return
calculations were applied\. Average subproject costs in current dollars increased during SFII from
about US$13,000 in 1996 to over US$18,200 in 2004, reflecting in part the greater complexity
and size of an increased percentage of rural economic infrastructure subprojects\. Operational
costs were contained to the agreed 8% of total project costs, lower than other public agencies and
below the average of social funds included in a recent Bank comparative study (10-13%)\.
To ensure cost effectiveness, SFKC introduced new cost-effectiveness ratios in the appraisal
process and used a unit cost database (UCD) to calculate unit construction costs across different
regions\. The UCD helped keep average unit costs at or significantly below those of similar
investment projects built under other programs\.
4\.4 Financial rate of return:
N/A
4\.5 Institutional development impact:
Although the SFKC succeeded in building capacity at the community level, its overall institutional
development impact was modest\. Through its eligibility criteria, operational procedures,
partnerships, and the shift from direct contracting for civil works to a community-managed
competitive bidding process for all subprojects, the SFKC enhanced community involvement and
ownership and improved community capacity to oversee procurement and construction\. The
benefits of this increased capacity appear to have extended to other community development
projects, as described above\.
Although capacity building of government agencies was not a project objective, the project could
have been used to influence relevant programs and policy reforms\. The SFKC's institutional
development impact was reduced in part by its institutional autonomy, although this autonomy
helped protect the SFKC from political pressures and allowed it more flexibility in making
changes to increase its effectiveness\. Due to limited contact and collaboration at the provincial
and national levels, the SFKC had little direct impact on those authorities and line ministries\.
Demonstration or "learning-by-doing" effects were restricted by the lack of mechanisms to
introduce SFKC approaches to other agencies and organizations\. Despite continuous urging from
- 6 -
Bank supervision teams, the SFKC did not widely disseminate the lessons learned from its
experience in local development, community capacity building, good governance, and partnerships
until the end of the project\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
Flooding in Cambodia during the 1999-2000 rainy season was the worst in 30 years\. The Bank
responded in part with a US$10 million supplemental credit to the SFKC which financed,
relatively quickly, the rebuilding of high-priority facilities in 212 communities\. The additional
credit justified a one-year extension of the closing date\.
5\.2 Factors generally subject to government control:
Like nearly all Bank-funded projects in Cambodia, the activities of the SFKC and preparation of
SFII suffered delays from July 1997 to December 1998 due to political uncertainties\. Retroactive
financing of US$400,000 from a Project Preparation Facility allowed SFKC operations to
continue prior to project effectiveness, albeit at a reduced level\. It was not until May 2000--10
months after project effectiveness--when operations again reached the level of activity achieved
during SFI\.
5\.3 Factors generally subject to implementing agency control:
In addition to the factors described above, the introduction of new procedures delayed the initial
implementation of SFII and in part necessitated an extension of the closing date to March 2005\.
However, these changes were crucial to the achievement of project objectives\. In response to
circumstantial evidence of procurement irregularities in mid-2000, the SFKC instituted a
"transparency program" to address any possible risks of corruption, which included: the cessation
of direct contracting and adoption of local shopping procedures for subprojects valued below
US$250,000, establishment of the IAU, and other measures to increase community responsibility
for procurement\. A number of approved subprojects had to be re-bid due to unfamiliarity with
the new procedures and more stringent IAU procurement prior reviews, and revised designs and
appraisal and supervision procedures also caused delays\. However, these changes helped increase
community ownership and capacity, prevent procurement mismanagement, improve the technical
quality of subprojects, and enhance sustainability\.
In terms of partnerships, the SFKC's introduction of MoU agreements with other development
organizations helped facilitate local participation and generate quality sub-project proposals\. As
noted in the project's Partnership Assessment (2004), the effectiveness of MoU partnerships
could have been enhanced further by increased awareness of and appreciation for their respective
responsibilities by both the SFKC and partner organizations, consistent and more frequent
communication, and compliance with reporting obligations\.
5\.4 Costs and financing:
The Flood Rehabilitation Supplemental Credit increased Bank support to the SFKC from US$25
million to US$35 million\. At project close, the total amount disbursed from the SFII and
Supplemental Credit was US$33\.83 million or 97% of the approved total\.
- 7 -
6\. Sustainability
6\.1 Rationale for sustainability rating:
Overall project sustainability is rated as likely\. In terms of subproject sustainability, although
maintenance problems plague most development projects in Cambodia, available evidence
suggests that many of the indicators for continued sustainability are in place for SFKC
subprojects: in the ITBA, nearly 90% of SFII subprojects were assessed to be of good or fair
quality; over 90% of community respondents indicated that the subprojects addressed the
community's priority development needs and that they were satisfied or very satisfied with the
outcome; community contributions exceeded the required percentage of subproject costs; and
utilization of assets is reportedly high\. The ITBA found significant evidence of
community-initiated maintenance and repairs, particularly for school and rural road subprojects\.
Although the SFKC did not specifically require the creation of a maintenance committee, over
60% of community PSC members reported that maintenance committees had been established for
their subprojects\. In addition, by 2002, the percentage of beneficiary respondents who believed
that subproject maintenance should be the responsibility of the community had increased to nearly
90%\. The sustainability of MoU subprojects appears to be even more likely given the added
attention to community mobilization by MoU partners, the higher prevalence of maintenance
committees, and strong community support for undertaking maintenance\.
Given its mandate as a transitional organization, the sustainability of the SFKC as an institution is
given less weight in the project rating than the sustainability of benefits created\. The SFKC was
established by Royal Decree as a temporary institution to respond to the country's pressing
emergency and reconstruction needs, filling a major gap at a time when national and local
government capacity to provide small-scale infrastructure was still low\. The SFKC's current
support from other sources will be completed by the end of 2005\. Regarding the approaches,
procedures, and systems developed by the SFKC, the Social Fund experience appears to have had
some indirect influence on similar programs, but no mechanisms were put in place to facilitate and
ensure such transfers, as discussed above\.
6\.2 Transition arrangement to regular operations:
The explicit intent of Bank support to the SFKC was to help Cambodia in the initial phase of
rebuilding infrastructure at a time when implementation capabilities were weak\. Notably, the
previous CAS did not envision continued funding for the SFKC and stated that "the next
generation of Bank projects would be implemented through, and help strengthen the capacity of
line ministries\." No future Bank funding has been requested for the SFKC\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Bank performance during project preparation and appraisal was satisfactory\. The appropriate
skills mix of the Bank's task team and the continuity of its team leader, lead consultant, and other
members who had been involved in SFI contributed to the efficient preparation and appraisal of
the project\. The Bank team worked closely with the SFKC to adapt the design of the SFII to the
evolving country context and to reflect lessons learned from SFI implementation and other
operations\. At the appraisal stage, the Bank team focused on providing needed technical
- 8 -
assistance for the "programs of change" to be introduced under SFII to increase the SFKC's
effectiveness and impact\. Bank support to the SFKC also helped mobilize over US$15 million in
co-financing, and the Bank's approval of Project Preparation Facility funds helped sustain the
SFKC's operations until the effectiveness of the SFII\.
As suggested above, Bank performance could have been improved by: placing greater emphasis
on outcomes and impact, particularly in developing targets for key indicators; building in
mechanisms to ensure that the valuable procedures, systems, and lessons learned from the Social
Fund would be disseminated and transferred; and specifying whether or how Bank support to the
SFKC would be phased out by the end of the project\. It should be acknowledged that at the time
the SFII was prepared, the Bank in general was placing much less emphasis on indicators and
mechanisms for monitoring and evaluation, compared to the strong focus the Bank now has on
measuring outcomes and impact\.
7\.2 Supervision:
With intensive supervision and their familiarity with the different stages of project implementation,
Bank task team members were able to identify and effectively deal with problems arising during
implementation\. When complaints concerning the management of direct contracting were raised,
the task team recommended the introduction of measures to improve the competitiveness and
transparency of procurement that were implemented successfully by the SFKC\. Bank missions
consistently conducted field visits and emphasized financial stewardship and administration
through audits of statements of expenditure and procurement documentation\. Support was also
provided in the form of "refresher" training for staff of the implementing unit\. Management
support was provided by the Country Director as well as sector managers who communicated
with counterparts and commented on project status reports\.
Supervision reporting would have benefited from consistent tracking of performance indicators
and their use in justifying development objective ratings\. Few PAD indicators were monitored
during implementation, and even those indicators were tracked sporadically\. In addition, Bank
staff could have looked for opportunities to use the Social Fund experience to influence emerging
developments at the local level--most notably, the RGC's decentralization reforms\.
7\.3 Overall Bank performance:
The Bank's overall performance was satisfactory\. Bank staff worked unusually closely with
counterparts and used design and supervision to help the SFKC introduce needed reforms and
improve project implementation\. The task team also consistently tracked adherence to the new
rigorous procedures for promoting transparency\. Although a series of assessments was carried
out under the project, increased attention to monitoring outcomes and evaluating impact was
needed during design and supervision\.
Borrower
7\.4 Preparation:
Based on the achievements of SFI, Government requested additional support for the SFKC\. The
Ministry of Economy and Finance was engaged in the preparation process but delegated detailed
design decisions to the SFKC\. The SFKC demonstrated continued ownership throughout project
preparation, for example in undertaking beneficiary and technical assessments of SFI to help
- 9 -
inform changes that would increase its effectiveness for SFII\.
7\.5 Government implementation performance:
The risk of political interference in SFKC operations identified during appraisal did not
materialize\. The Ministry of Economy and Finance (MOEF) continued to delegate all financial
management responsibilities to the SFKC and did not exercise its prior review procedure for
SFKC procurement\. Provision of counterpart funds--comprised largely of the required
community contributions for sub-projects--was timely\.
However, the RGC did not fully comply with its responsibilities regarding the governance of the
SFKC\. By statute, the SFKC's Board was to be comprised of 11 members representing a
cross-section of stakeholders, yet all members were representatives of the two major political
parties\. Although it was to meet every six months, the Board convened only three times between
1995 and 2004 and played a minimal role in establishing and approving operating policies and
procedures and organizational changes\. Executive Committee meetings, during which subproject
approvals were ratified, were attended by three members of the ruling party and one member of
the main opposition party, contributing to perceptions of party influence over the decision-making
process\.
7\.6 Implementing Agency:
The high degree of continuity among SFKC management and staff during SFI and SFII, combined
with the effective use of technical assistance and a series of assessments, contributed to successful
project implementation\. The SFKC used its Sustainability Programming Unit (SPU), created
under SFII, to conduct activities which fostered community ownership and capacity\. In response
to allegations of interference in the procurement process, the SFKC adopted difficult reforms to
help ensure transparency, including the creation of the IAU and disciplinary action against several
staff members\. Extensive photographic documentation of subprojects helped improve contractor
performance and provides a lasting record of SFKC activities\.
Given the number of actors involved in the local development process, the SFKC could have
placed more emphasis on communication and coordination with stakeholders at all levels\.
Although the SFKC held a well-attended workshop in late 2004 to share its experiences, the
SFKC's impact could have been augmented by earlier and regular dissemination of lessons
learned, participation in government policy forums and sectoral working groups, and the
establishment of mechanisms to transfer knowledge\.
Greater attention to pipeline management was also needed\. The SFII inherited a backlog of 3,800
sub-projects from SFI which were pending review and appraisal\. Although the SFKC conducted
a revalidation exercise for pending applications and stopped accepting new applications in 2002,
the pipeline still contained over 3,000 eligible applications at the end of SFII\. Despite the
backlog, the SFKC did not return or refer pending applications to other organizations, even with
strong urging by Bank supervision missions, and it did not communicate consistently with
subproject applicants regarding the status of their applications\.
7\.7 Overall Borrower performance:
Although communication and coordination with other Government agencies and stakeholders
- 10 -
could have been strengthened, the Borrower's overall performance was satisfactory\. The
Borrower demonstrated a high degree of ownership, and the SFKC was effective in managing
project activities and implementing difficult changes\.
8\. Lessons Learned
Key lessons learned from the project include:
Weigh short-term and long-term needs in a post-conflict situation\. Post-conflict
countries often face the urgent challenge of rebuilding critical infrastructure and restoring basic
services\. If government capacity is low, it may not be possible to work through existing
government institutions or build the necessary capacity quickly enough to deliver support at a
time when needs are greatest\. Such circumstances may warrant a project design that focuses
more on addressing pressing needs than on building longer-term institutional capacity\.
Tackle transparency issues systematically\. An effective and transparent procurement
process requires: well-defined procedures, adequate training, rigorous internal monitoring,
regular independent external evaluations, and appropriate and enforceable penalties and a
commitment to invoke them\. Continuity of Bank task teams, field-based task team members, and
frequent site visits made possible by the decentralization of Bank staff help facilitate a deep
knowledge of country context and project activities, close working relationships, and rapid
response times, which in turn increase the effectiveness of supervision\.
Monitor outcomes and evaluate impact\. Project design should focus on developing
results-based monitoring and evaluation systems\. To assess development effectiveness, input and
output indicators (e\.g\., amounts disbursed and number of subprojects completed) should be
supplemented by outcome indicators (e\.g\., subproject sustainability and benefits)\. Targets should
be set and tracked consistently throughout implementation\. The schedule of evaluations should
include not only technical, procurement, and beneficiary assessments which inform procedural
changes during implementation but also an impact evaluation to determine whether the project has
achieved significant and measurable improvement in people's lives\. For projects benefiting a large
proportion of the population, the possibility of using existing national-level instruments such as
household surveys to monitor impact should also be explored\.
Find mechanisms to ensure appropriate targeting\. Projects aimed at supporting poor
communities and specific beneficiary groups should have a coherent targeting mechanism in place\.
For a large-scale, nationwide project, one possible approach would be to link the project to
national-level targeting efforts\. National-level poverty maps, for example, could be used to help
identify priority geographic areas for project support\. In addition, indicators that measure
whether project benefits are reaching the target groups should be developed and monitored
closely to facilitate any necessary adjustments during implementation\.
Build capacity through decentralization\. Decentralizing project responsibilities such as
procurement can be an effective means of building local capacity\. While the initial stages can be
challenging and potentially costly, empowering communities to manage key tasks can bring
longer-term benefits in enabling them to handle their own development beyond the project itself\.
- 11 -
Use partnerships to increase effectiveness\. Partnerships with other development
organizations can be used to facilitate local participation, improve reach to poorer and more
remote communities, and help ensure sustainability\. Such partnerships must be maintained
actively, with a clear delineation of roles and responsibilities, recognition of respective
contributions, and regular communication to develop trust and respect among partners and foster
longer-term collaboration\.
Communicate\. Communication with all stakeholders is critical to achieving sustained
impact by: promoting understanding of social fund objectives and activities; developing effective
partnerships; and encouraging the adoption of social fund approaches, practices, and lessons
learned\. Regular and consistent dialogue requires resources and a commitment to external
relationship building\.
Plan for handover\. To help ensure lasting institutional development impact, social fund
projects should include mechanisms to ensure that the valuable processes, skills, and systems
which are developed can be adopted by and/or passed on to national and local institutions\. Such
transfer mechanisms are particularly important in cases where the social fund enjoys a high degree
of autonomy and should include channels for effective dialogue, data sharing and integration, and
technical assistance and training\.
Seek opportunities to extend impact\. Although day-to-day implementation challenges
may demand immediate attention, larger country context issues relevant to the project should be
closely tracked and accommodated as needed to increase project impact and sustainability\. Social
fund experience holds valuable lessons for decentralization and local development, in particular,
and project activities can help foster such efforts if appropriately designed\.
9\. Partner Comments
(a) Borrower/implementing agency:
Below is an excerpt from the Executive Summary of the Borrower's ICR\. The full document can
be found in the project files\.
The Social Fund of the Kingdom of Cambodia (SFKC) was established in 1995 as an autonomous
agency to assist, based on a demand-driven approach, in the rapid rehabilitation of social and
economic infrastructure facilities\. Since its inception, the SFKC has been an entirely locally
managed agency with minimal non-Cambodian technical and managerial inputs\. The second
phase of SFKC operations (SFII) commenced in July 1999 and completed by March 2005\. The
accomplishments of SFII, reviewed in conjunction with Social Fund I (SFI) experiences, were:
SFKC's experience illustrates that institutional autonomy eliminated many of the
bureaucratic constraints, as sub-projects were appraised and approved months ahead of normal
government channels, completing more civil works, making extensive use of decentralized
methods of management, and the development of technical supervision and skills of private
contractors, than other agencies were able to do in the same period\. However, institutional
independence did not necessarily lead to community-based, demand-driven projects from the
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poorer and the most vulnerable sections of society, because demand was first expressed by
communities with the skills necessary to prepare proposals (e\.g\., middle poor and marginally
non-poor communities) and gain access to the fund and further, at times this demand was
expressed by local elite or contractors themselves\.
The SFKC has gained significant levels of internal efficiency as it has been able to deliver
services at a lower overhead (about 8% of the total) cost compared to other public agencies and
evidence shows a comparatively lower per-unit cost for infrastructure facilities built, with savings
as high as 20% in specific cases\. As the recent work of SFKC in providing rehabilitation
assistance to communities affected by flooding illustrates, the social fund model has been effective
in appraising, approving and completing civil works within a reasonable time-frame, while
maintaining low per-unit project costs, and in doing so, SFKC has shown its ability to respond
quickly and efficiently to the needs of the beneficiary target groups\.
The SFKC's demand-driven approach and targeting methods have yielded mixed results\.
In general, sub-projects have served the middle-poor and underserved communities in Cambodia\.
As SFKC's experience proved, the success of this approach demanded considerable
pre-investment in outreach, training, and technical assistance, without which SFII may have
missed critical sections of their intended target groups\.
Available information indicates that SFKC sub-projects could generate modest levels of
short-term employment for the local population, and most of the local employment was for
unskilled labor at wages equal to the minimum wage in the region\. With a total expenditure for
labor of not more than 8% of the investment, the labor component was not sufficient to move
people out of poverty\. Additionally, there is a persistent contradiction between building quality
projects and using local labor\. Thus, the impact of social fund sub-projects in generating
wage-employment is necessarily modest, because their emphasis on medium-term project facilities
that may not be labor-intensive\. There is evidence, however, that where the social fund has
worked with partner agencies, which pursue labor-intensive projects, higher levels of short-term
employment have been created\.
As several independent assessments have noted, the lack of adequate community
participation in the design or management of social fund projects, particularly in procurement and
contracting was minimized through decentralized, community-managed contracting methodology\.
However, it should be acknowledged that the influence of external sources in the selection of
contractors for public works contracts is rife in Cambodia\. Local communities often have little
say in selection procedures and are in fact generally overwhelmed with the new role and
responsibility\. This, in some cases, had a knock-on effect on sustainability of the facilities created\.
These issues were much greater in the first phase of social fund projects and were addressed in the
second phase by introducing new tasks in the project cycle and including provision of greater
support to the training of communities in development and management principles and
community-managed contracts\.
The partnership portfolio of SFKC, implemented through the MoU arrangements,
enhanced community participation, assumed community responsibility into project
- 13 -
implementation, improved the quality of SFII outputs, and increased service delivery to
traditionally marginalized groups\.
Overall, the work of SFKC demonstrated the will of the government to combat internal strife and
regain the trust of civil society, had a favorable impact on education, and generated a positive
capital flow in the rural areas and modest levels of short-term employment for the local
population\. The SFII coincided with a return to political stability which gave impetus to a new
range of development work at the national, provincial and local levels\. This phase was oriented
more towards medium to long-term development, with sustainability, eligibility criteria for
sub-projects types and sectors, poverty targeting, project quality, design standards, operation and
maintenance receiving more attention\. However, SFKC's visibility aroused misplaced
expectations and experienced a complex transition from the rehabilitation of infrastructure in the
emergency phase to compensating for the continued structural deficiencies in the public
administration\.
Clearly, the social fund model has many strong points and weaknesses, as often happens with
development programs whether they are growth-oriented or equity-oriented\. There is nothing
singularly wrong within SFKC\. However, it was not a panacea for all the problems that Cambodia
had as it gradually emerged from years of civil strife and struggled with many difficult
development issues\. The substantive issue is whether the SFKC approach is a worthwhile
endeavor on balance\.
Given the institutional experience and technical competence which has been gained, the social
fund model can place greater emphasis, in the medium to longer-term, on the public works
component\. Working in coordination with other labor-intensive sub-projects, it will have a
significant impact with regard to revitalization of the local economy, thus in reality contributing to
the poverty alleviation policies and the Triangular Strategies of the Royal Government of
Cambodia\.
(b) Cofinanciers:
Inputs and comments from co-financiers have been incorporated into the above Bank assessment
of the project\. Co-financiers did not provide specific comments on the ICR\.
(c) Other partners (NGOs/private sector):
Inputs and comments from MoU partners have been incorporated into the above Bank assessment
of the project\. Detailed feedback is provided in the Partnership Study 2004, which can be found
in the project files\.
10\. Additional Information
- 14 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome / Impact Indicators:
1
Indicator/Matrix Projected in last PSR Actual/Latest Estimate
Provincial targeting coefficient Provincial allocations (US$ m): Provincial allocations (US$ m):
Banteay MeanChey 1\.1 Banteay MeanChey 0\.8
Battambang 1\.4 Battambang 1\.2
Kampong Cham 2\.8 Kampong Cham 4\.3
Kampong Chhnang 0\.8 Kampong Chhnang 1\.1
Kampong Speu 1\.1 Kampong Speu 2\.1
Kampong Thom 1\.2 Kampong Thom 0\.7
Kampot 1\.1 Kampot 1\.4
Kandal 1\.9 Kandal 2\.7
Koh Kong 0\.2 Koh Kong 0\.7
Kratie 0\.4 Kratie 0\.6
Mondolkiri 0\.08 Mondolkiri 0\.1
Phnom Penh 0\.8 Phnom Penh 3\.1
Subprojects in priority districts as percentage not available Percentage of subprojects in
of total approvals post-conflict/reconciliation areas: 23\.6%
Man-months of employment generated by Total man-months of employment generated Total man-months of employment generated:
SFII activities (Jan-Aug 2004): total 4,290 (skilled 1,118; total 51,907 (skilled 8,316; unskilled 43,591)
unskilled 3,172)
Co-financing as percentage of total value of not available MoU partnership subprojects value as
subprojects percentage of total subprojects value: 30\.5%
Proportion of total approvals with community not available not available
contribution delivered at ground breaking
Community contribution as percentage of 10% (target agreed at appraisal) 11%
total value of sub-projects
Total community contribution as percentage not available not available
of applicant counterpart
Number of handover subprojects with Percentage of total subprojects visited in year Percentage of school subprojects visited with
maintenance problems over total number of 2002 and 2003 with maintenance problems maintenance problems during year 1 of use
past handover projects visited, by age of during year 1 of use (post construction): (post construction): 15%; during year 2 of
sub-project, by sector 12%; during year 2 of use: 14% use: 30%
Percentage of rural road subprojects visited
with maintenance problems during year 1 of
use (post construction): 10%; during year 2
of use: 20%
Percentage of water supply subprojects
visited with maintenance problems during
year 1 of use (post construction): 25%
Economic infrastructure subprojects Percentage of subproject approvals under Percentage of bridge and culvert, community
approved as percentage of total approvals SFII (as of March 2004): 56\.2% water supply, and irrigation subproject
Percentage of subproject approvals under approvals: 45%
supplemental credit (as of March 2004):
61\.6%
Notes:
1\. Unless otherwise indicated, the totals provided in this table include both Social Fund II and the Supplemental
Credit\.
2\. Because no projections were provided in PSRs, the "Projected in last PSR" column reflects actual information
from the last PSR if available\.
3\. For indicators that were not tracked during implementation, actual/latest estimates of similar or related
indicators are provided\. Therefore, projections and actual/latest estimates may not be comparable across columns\.
- 15 -
Output Indicators:
1
Indicator/Matrix Projected in last PSR Actual/Latest Estimate
Average unit cost of sub-projects completed; Average unit costs by subproject type (US$): Average unit costs by subproject type (US$):
number of infrastructure, agriculture, Commune Clinics 16,109 Irrigation Systems 31,439
education and training, health, social affairs, Irrigation Systems 30,488 Schools 23,928
capacity building, equipment and other Latrines 1,912 Rural Roads 20,135
subprojects completed Primary Schools 22,298 Water and Sanitation 9,643
Rural Roads 20,782
Vocational Training Centers 17,755 Number of subprojects completed by
Water Supply 5,320 subproject type:
Agriculture 77
Education 607
Health 9
Social Affairs 2
Transport 386
Water and Sanitation 335
Time lag between subproject cycle steps not available For regular subproject applications: 3\.73
years between screening and construction
groundbreaking
For flood rehabilitation and MoU subproject
applications: 1\.05 years between screening
and construction groundbreaking
Average subproject technical quality not available Percentage of subprojects rated "fair" to
"good" quality by independent technical and
beneficiary assessment: 90%
1End of project
Notes:
1\. Unless otherwise indicated, the totals provided in this table include both Social Fund II and the Supplemental
Credit\.
2\. Because no projections were provided in PSRs, the "Projected in last PSR" column reflects actual information
from the last PSR if available\.
3\. For indicators that were not tracked during implementation, actual/latest estimates of similar or related
indicators are provided\. Therefore, projections and actual/latest estimates may not be comparable across columns\.
- 16 -
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
Appraisal Actual/Latest Percentage of
Estimate Estimate Appraisal
Component US$ million US$ million
A\. Sub-Projects 24\.46 22\.96 93\.87
B\. Institutional Support 3\.00 2\.62 92\.25
C\. Unallocated 0\.31 0\.00 0
Total Baseline Cost 27\.77 25\.58
Total Project Costs 27\.77 25\.58
Total Financing Required 27\.77 25\.58
Notes:
1\. This table provides Project Cost by Component for the Cambodia Social Fund II Project\.
2\. Under Appraisal Estimate, the Total Project Cost of US$27\.77 million includes Government financing/co-financing/contingencies\.
Bank financing
for the project was US$25\.00 million (equivalent to 17,900,000 XDR)\.
3\. Under Actual/Latest Estimate, the Total Project Cost of US$25\.58 million is the total actual cost including Government
financing/co-financing/contingencies\.
Appraisal Actual/Latest Percentage of
Estimate Estimate Appraisal
Component US$ million US$ million
A\. Sub-Projects 9\.00 8\.73 97\.00
B\. Institutional Support 1\.10 1\.96 178\.19
C\. Unallocated 0\.00 0\.00 0
Total Baseline Cost 10\.1 10\.69
Total Project Costs 10\.10 10\.69
Notes:
1\. This table provides Project Cost by Component for the Flood Rehabilitation Supplemental Credit\.
2\. Under Appraisal Estimate, the Total Project Cost of US$10\.10 million includes Government financing/co-financing/contingencies\.
Bank financing
for the project was US$10\.00 million (equivalent to 7,900,000 XDR)\.
3\. Under Actual/Latest Estimate, the Total Project Cost of US$10\.69 million is the total actual cost including Government
financing/co-financing/contingencies\.
- 17 -
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
1
Procurement Method
Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost
Other
1\. Works 0\.00 1\.16 18\.03 0\.00 19\.19
(0\.00) (0\.00) (19\.81) (0\.00) (19\.81)
2\. Goods 0\.00 0\.15 1\.48 0\.00 1\.63
(0\.00) (0\.10) (1\.10) (0\.00) (1\.20)
3\. Services 0\.00 0\.00 2\.05 0\.00 2\.05
(0\.00) (0\.00) (0\.59) (0\.00) (0\.59)
4\. Miscellaneous 0\.31 0\.00 1\.82 0\.00 2\.13
(0\.00) (0\.00) (1\.62) (0\.00) (1\.62)
5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 0\.31 1\.31 23\.38 0\.00 25\.00
(0\.00) (0\.10) (23\.12) (0\.00) (23\.22)
Note: This table provides Project Costs by Procurement Arrangements for the Cambodia Social Fund II Project\.
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
Expenditure Category Procurement Method 1 Total Cost
ICB NCB Other 2 N\.B\.F\.
1\. Works 0\.00 0\.00 8\.34 0\.00 8\.34
(0\.00) (0\.00) (8\.49) (0\.00) (8\.49)
2\. Goods 0\.00 0\.00 0\.15 0\.00 0\.15
(0\.00) (0\.00) (0\.37) (0\.00) (0\.37)
3\. Services 0\.00 0\.00 0\.88 0\.00 0\.88
(0\.00) (0\.00) (0\.70) (0\.00) (0\.70)
4\. Miscellaneous 0\.00 0\.00 0\.65 0\.00 0\.65
(0\.00) (0\.00) (1\.06) (0\.00) (1\.05)
Total 0\.00 0\.00 10\.02 0\.00 10\.02
(0\.00) (0\.00) (10\.61) (0\.00) (10\.61)
Note: This table provides Project Costs by Procurement Arrangements for the Flood Rehabilitation Supplemental Credit\.
1/Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\.
2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff
of the project management office, training, technical assistance services, and incremental operating costs related to (i)
managing the project and (ii) re-lending project funds to local government units\.
- 18 -
Project Financing by Component (in US$ million equivalent)
Percentage of Appraisal
Component Appraisal Estimate Actual/Latest Estimate
IDA Govt\. CoF\. IDA Govt\. CoF\. IDA Govt\. CoF\.
A\. Sub-Projects 22\.01 2\.45 20\.76 2\.19 94\.3 89\.4
B\. Institutional Support 2\.68 0\.32 2\.45 0\.17 91\.4 53\.1
C\. Unallocated 0\.31 0\.00 0\.0
Total 25\.00 0\.32 2\.45 23\.22 0\.17 2\.19 92\.9 53\.1 89\.4
Note: This table provides Project Financing by Component for the Cambodia Social Fund II Project\.
Component Appraisal Estimate Actual / Latest Estimate Percentage of Appraisal
IDA Govt\. Cof\. IDA Govt\. Cof\. IDA Govt\. Cof\.
A\. Sub-Projects 9\.00 8\.73 97
B\. Institutional Support 1\.00 0\.1 1\.88 0\.08 188 80
C\. Unallocated 0\.00 0\.00 0\.0
Total 10\.00 0\.1 10\.61 0\.08 106\.1 80
Note: This table provides Project Financing by Component for the Flood Rehabilitation Supplemental Credit\.
- 19 -
Annex 3\. Economic Costs and Benefits
An economic rate of return was not calculated for this project at appraisal, nor was it calculated at closure\.
- 20 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Appraisal/Negotiation
12 Feb 1999 7 MISSION LEADER (1)
COMMUNITY
PARTICIPATION (1)
FINANCE AND
ACCOUNTING (1)
PROCUREMENT (1)
SOCIAL FUND
OPERATIONS (2)
OPERATIONS AND
BUDGET (1)
Supervision
2 Dec 1999 3 PROGRAM TEAM S S
LEADER (1)
TECHNICAL (1)
SUSTAINABILITY (1)
26 June 2000 5 TASK LEADER (1) U S
FINANCIAL MANAGEMENT
(2)
PRINCIPAL PROCUREMENT
SPECIALIST (1)
PROCUREMENT SPECIALIST
(1)
7 Sep 2000 3 TASK MANAGER (1) U S
EXTERNAL AFFAIRS
OFFICER (1)
OPERATIONS OFFICER (1)
12 Dec 2000 4 MISSION LEADER (1) S S
PROCUREMENT SPECIALIST
(1)
FINANCIAL MANAGEMENT
SPECIALIST (1)
SUSTAINABILITY (1)
25 April 2001 3 MISSION LEADER (1) S S
PROCUREMENT OFFICER (1)
SOCIAL SECTOR SPECIALIST
(1)
14 Aug 2001 4 MISSION LEADER (1) S S
PROCUREMENT SPECIALIST
(1)
FINANCIAL OFFICER (1)
ECONOMIST (1)
24 Jan 2002 3 MISSION LEADER (1) S S
PROCUREMENT SPECIALIST
(1)
- 21 -
FINANCIAL OFFICER (1)
11 Oct 2002 4 TASK TEAM LEADER (1) S S
PROCUREMENT OFFICER (1)
FINANCIAL OFFICER (1)
PROGRAM ASSISTANT (1)
22 May 2003 7 MISSION LEADER (1) S S
SOCIAL PROTECTION (2)
PROCUREMENT (2)
FINANCIAL MANAGEMENT
SPECIALIST (1)
PROCUREMENT AND
FINANCIAL MANAGEMENT
(1)
4 Dec 2003 N/A N/A S S
8 Mar 2004 7 MISSION LEADER (1) S S
SOCIAL PROTECTION,
IMPLEMENTATION (1)
SOCIAL PROTECTION (1)
PROCUREMENT (2)
FINANCIAL MANAGEMENT
(1)
PROCUREMENT AND
FINANCIAL MANAGEMENT
(1)
22 Sep 2004 N/A N/A S S
ICR
16 Dec 2004 4 MISSION LEADER (1) S S
PROCUREMENT (1)
FINANCIAL
MANAGEMENT (1)
IMPLEMENTATION (1)
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Appraisal/Negotiation N/A 133\.67
Supervision 85\.1 422\.19
ICR
Total N/A 555\.86
No\. of Staff weeks and Actual expenses for Supervision and ICR stages are combined\.
- 22 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies H SU M N NA
Sector Policies H SU M N NA
Physical H SU M N NA
Financial H SU M N NA
Institutional Development H SU M N NA
Environmental H SU M N NA
Social
Poverty Reduction H SU M N NA
Gender H SU M N NA
Other (Please specify) H SU M N NA
Private sector development H SU M N NA
Public sector management H SU M N NA
Other (Please specify) H SU M N NA
- 23 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending HS S U HU
Supervision HS S U HU
Overall HS S U HU
6\.2 Borrower performance Rating
Preparation HS S U HU
Government implementation performance HS S U HU
Implementation agency performance HS S U HU
Overall HS S U HU
- 24 -
Annex 7\. List of Supporting Documents
Aide Memoires and PSRs:
Appraisal/Negotiations mission Aide Memoire and PSR - February 12, 1999
Supervision mission Aide Memoire and PSR - July 2, 1999
Supervision mission Aide Memoire and PSR - December 2, 1999
Supervision mission Aide Memoire and PSR - June 26, 2000
Supervision mission Aide Memoire and PSR - September 7, 2000
Supervision mission Aide Memoire and PSR - December 12, 2000
Supervision mission Aide Memoire and PSR - April 25, 2001
Supervision mission Aide Memoire and PSR - August 14, 2001
Supervision mission Aide Memoire and PSR - January 24, 2002
Supervision mission Aide Memoire and PSR - October 11, 2002
Supervision mission Aide Memoire and PSR - May 22, 2003
Supervision mission Aide Memoire and PSR - December 4, 2003
Supervision mission Aide Memoire and PSR - March 8, 2004
Supervision mission Aide Memoire and PSR - September 22, 2004
Supervision/ICR mission Aide Memoire and PSR - December 16, 2004
Assessments
Beneficiary Assessment Report - Marilou Pantua-Juanito, December 2000
Independent Technical and Beneficiary Assessment - Robert Deutsch and Peter Feldman,
October 2004
Independent Impact Assessment - Robert Deutsch, 2002
Institutional Assessment (Final Report) - David Ayres, November 2004
Partnership Study (Final Report) - Mercedes Logarta et al, June 2004
Procurement Assessment 2003 - Declan O'Leary and Associates, June 2004
SFII Irrigation Assessment - Aruna Technology, December 2002
Sustainability Training End of Mission Report - Marilou P\. Juanito, May-July 2001
Technical Assessment Mid-Term Report - Declan O'Leary and Associates,
November 2000
Technical Assessment of 120 Projects - Ko ter Hofstede and Ou Sochivy, July 1998
Technical Assessment Report - De Spiegler Associates, February 1997
Bank systems:
Integrated Controller's Systems: disbursement information
SAP: budget information
Project documents:
Development Credit Agreement of Cambodia Social Fund II Project - April 19, 1999
Fund Agreement of Cambodia Social Fund II Project - May 27, 1999
Minutes of Negotiations of Cambodia Social Fund II Project - February 17, 1999
- 25 -
Project Agreement of Cambodia Social Fund II Project - April 19, 1999
Project Appraisal Document of Cambodia Social Fund II Project - March 3, 1999
Staff Appraisal Report Cambodia Social Fund Project - May 11, 1995
World Bank Documents:
Assessment of the Interim Poverty Reduction Strategy Paper
Country Assistance Strategy - January 28, 1997
Country Assistance Strategy - February 7, 2000
Cambodia Country Assistance Evaluation (OED) - November 16, 2000
Cambodia Poverty Assessment - November 22, 1999
CPPR Mission (May 13-21) report (SF extract)
Memorandum to the President for Supplemental Credit
IAD Report on an Audit of Procurement of Goods, Works and Consultants in
EAP - March 4, 2002
Implementation Completion Report for Social Fund I Project - February 28, 2001
Poverty Alleviation through Geographical Targeting: How Much Does Disaggregation
Help?
Poverty Reduction Strategy Paper Annual Report and Joint Staff Assessment -
August 17, 2004
Poverty Reduction Strategy Paper and Joint Staff Assessment - January 22, 2003
QAG Assessment of Bank Supervision Quality during FY1998
World Bank Group in Cambodia: World for a Cambodia Free of Poverty
Social Fund of the Kingdom of Cambodia
SFKC National Workshop (November 11, 2004) - Fostering Local Development and
Reaching out to Communities: Experiences of the SFKC
SFKC A Report for the Period July 1999 to October 2000
SFKC Annual Report of Development Credit Implementation No\. 2739KH on Year 1998
SFKC Finance and Administration Manual SFI - September 1999
SFKC Finance and Administration Manual SFII - July 1999
SFKC Finance and Administration and O & D Manual for Regional Offices -
February 2000
SFKC First Semester Report 1999 of DC Implementation No\. 2739KH - 1999
SFKC Implementation Completion Report (Phase I: 1995-1999) - April 2000
SFKC Operations Manual SFI - November 1995
SFKC Operations Manual Social Fund Phase II - July 1999
SFKC Project Overview (blue covered publication undated)
SFKC Promoting Community Participation and Sustainability in SF Projects - March 2000
SFKC SFII First Semester Report - July 2004
SFKC SFII Mid-Term Report on July 1999-June 2001
SFKC SFII Report Project Implementation of DCA No\. 3179KH on July 1999-July 2000
SFKC SFII Third Quarter Report 2001
Staffing Plan for 2004
- 26 -
The Work of the Social Fund in Cambodia: A Review of Experiences and Options
for the Future
Other
Commune Councils and Civil Society - January 2004
- 27 -
- 28 - | REVIEW |
P099924 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
Report Number : ICRR0020161
1\. Project Data
Project ID Project Name
P099924 CAPSAP
Country Practice Area(Lead)
Azerbaijan Governance
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IDA-44050,TF-57849,TF-98323 31-Dec-2012 24,000,000\.00
Bank Approval Date Closing Date (Actual)
27-Mar-2008 30-Jun-2015
IBRD/IDA (USD) Grants (USD)
Original Commitment 11,000,000\.00 4,865,000\.00
Revised Commitment 11,000,000\.00 4,847,561\.57
Actual 10,567,744\.80 4,847,561\.57
Sector(s)
General finance sector(74%):Central government administration(19%):General industry and trade sector(7%)
Theme(s)
International financial standards and systems(50%):Corporate governance(25%):Public expenditure, financial management and
procurement(25%)
Prepared by Reviewed by ICR Review Coordinator Group
Jose M\. Rodriguez Alvarez Clay Wescott Lourdes N\. Pagaran IEGEC (Unit 1)
2\. Project Objectives and Components
a\. Objectives
According to the Financing Agreement (p\. 5) the Project Development Objective (PDO) was âto strengthen accountability and transparency in
financial reporting for the public and corporate sectors in line with international best practices, and to support institutional strengthening to
sustain reformsâ\.
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
b\. Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components
The project originally comprised four components, two of which were revised in the first restructuring in 09/23/2011 and three in the
11/19/2013 second restructuring\.
The original components were the following:
Component 1: Corporate Sector Accountability, costing US$4\.57m at appraisal, US$0\.25m at completion, including:
(1\.1) Assist Public Interest Entities (PIEs) in embedding International Financial Reporting Standards (IFRS), in compliance with the
Accounting Law;
(1\.2) Establishing appropriate legal and institutional frameworks and capacity for translation, adoption and enforcement of IFRS and
National Accounting Standards for Commercial Organizations (NASCO); and
(1\.3) Improve statutory framework and building capacity to regulate and oversee the audit function
Component 2: Public Sector Accountability, costing US$3\.64m at appraisal, US$12\.92m at completion\.
This component aimed to enhance public sector accountability through the implementation of the governmentâs public sector
accounting reform strategy, in part by implementing the section of the 2004 Accounting Law requiring budgetary organizations and off-
budget state funds to prepare financial statements in accordance with National Accounting Standards for Budgetary Organizations,
(NASBOs) based on International Public Sector Accounting Standards (IPSAS)\.
Component 3: Strengthening accounting, auditing and financial management capacity, costing US$10\.58m at appraisal and
US$5\.56m at completion\. This component aimed to build long-term capacity in accounting, auditing and financial management, bringing
both corporate and public sector compliance into alignment with accounting and auditing standards\.
Component 4: Project Management, costing US$0\.76m at appraisal, US$1\.39m at completion\.
This was to provide support to the government to implement the project through a Project Management Unit (PMU) at the Ministry of
Finance (MOF)\.
The first restructuring (09/23/2011) and the second restructuring (11/19/2013) included the following changes in components 1, 2 and 3:
Component 1: Corporate Sector Accountability\.
Under the first restructuring, sub-component 1\.3 on âImproving the statutory framework and building capacity to regulate and oversee
the audit function,â was cancelled\. The activities to support the Chamber of Auditors of Azerbaijan (CoAA) were also cancelled to focus
instead on establishing an agency within the MOF to regulate the audit profession\. Under the second restructuring, the transfer of the
audit oversight from the profession to MOF was cancelled\.
Three sub components were revised in the second restructuring in November 2013 as follows:
- Cancellation of sub-component 1\.1 on âAssisting the Public Interest Entities (PIEs) in embedding IFRSâ
based on the governmentâs request and decision to finance directly the envisioned activities\.
- Modification of sub-component 1\.2 and 1\.3 to reflect emphasis on the establishment of the Association of Professional Accountants of
Azerbaijan (APAA)\. This would enable APAA to develop appropriate legal and institutional frameworks and capacity for translation,
adoption and enforcement of IFRS and NASCOs\.
Component 2: Public Sector Accountability\.
Under the first restructuring, a new sub-component 2\.3 for âUnified automated accounting system for line ministries and budgetary
organizationsâ was added to support the implementation of the NASBOs and help the government to achieve effective control over
spending of budget funds, and to generate reliable consolidated financial statements\.
Under the second restructuring, sub-components10 2\.1, 2\.2 and 2\.3 were modified to reflect recent developments in the execution of
the Chamber of Accounts and the automated accounting software called âFinancial and Accountability Reporting Application for
Budgetary Institutionsâ (FARABI)\. Modifications included:
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
- Sub-component 2\.2, CAPSAP was to continue financing the implementation of the Chamber of Accountsâ Strategic Development Plan
(SDP), but there were changes in the areas that the Project Appraisal Document (PAD) indicated the SDP would undertake, including
focusing on four major themes: enhancing financial audit; introducing performance audit; improving legal and standards framework; and
strengthening human resource practices\.
- Sub-component 2\.2, the activities pertaining to the introduction of Public Internal Financial Control (PIFC) in Azerbaijan were dropped,
since the Government of Azerbaijan (GOA) was expected to develop an Internal Financial Control Framework outside the CAPSAP\.
- Sub-component 2\.1 and 2\.3, the establishment of a Maintenance and Support Centre for FARABI was added to ensure due
maintenance and technical support of the system\.
Component 3: Strengthening accounting, auditing and financial management capacity
Under the second restructuring, revisions were made to bring the PAD language more in line with the direction the project had taken
since the first restructuring\.
- The original PAD activity of âfinancial assistance, in the form of part-payment or subsidies of the costs of professional qualifications in
accounting and auditing will be provided to successive staff of public and private sector accountants to encourage the retooling
programâ was cancelled, with new emphasis placed on institutionalizing and accrediting the National Accounting Qualification Program\.
The âestablishment of an international advisory panel of experts in accounting and auditing,â which was envisaged in the original
project design, was deleted\. The APAA was to establish structures responsible for the activities initially envisaged for the international
advisory panel of experts\.
The major reason for the substantial differences between appraised and actual costs for the projectâs components are the following:
Component one (Corporate Sector Accountability): After the first restructuring, activities related to the Chamber of Accounts on
improving the statutory framework and building capacity to regulate and oversee the audit function under sub-component 1\.3 were
cancelled\. In addition, under the second restructuring, sub-component 1\.1 on assisting the PIEs in embedding IFRS was also
cancelled\. These led to a significant drop in the expenditure under component one although the establishment of the Association of
Risk Professional Accountants of Azerbaijan (ARPA) was added under the component\.
Component two (Public Sector Accountability): After the first restructuring, a new sub-component 2\.3 was added on unified
automated accounting system for line ministries and budgetary organizations (FARABI)\. Under the second restructuring, the
establishment of a maintenance and support center for FARABI was added to subcomponent 2\.3\. This significantly increased the cost
of the component\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Approval was 03/27/2008, effectiveness was 12/19/2008, the mid-term review was 06/10/2012, and the closing date was 30/06/2015\.
Initial project implementation delays as well as modifications to project components that required time to implement resulted in two
project extensions\. The first restructuring, approved 09/23/2011 extended the projectâs closing date for 12 months from December 31,
2012 to December 31, 2013\. The second restructuring, approved 11/19/2013, extended the closing date by 18 months to June 30, 2015
for the International Development Association (IDA) (Credit 44050) and Japan PHRD (TF 57849), while the Swiss Government/State
Secretariat for Economic Affairs (SECO) (TF 98323) was extended by 12 months to December 31, 2014, as the parent Trust Fund was
due to close by June 30, 2015\. The second restructuring also increased the IDA credit from 60% to 100%\.
The appraised cost was US$ 24m\. IDA provided US$11million of the estimated total project cost at the appraisal, US$10\.56 million,
actual\. Co-financing came from Japan Policy and Human Resource Development (PHRD) (TF-57849), US$3m at appraisal, the same
amount actual; and a SECO Grant (TF-98323) US$1,86m at appraisal, US$1,85m actual\. The SECO Grant TF 98323 was not signed
until June 14, 2011, delaying the implementation of sub-component 2\.2 on external audit reforms with the Chamber of Accounts\.
The Government of Azerbaijan committed to fund US$8 million, but disbursed only US$7\.15m by the projectâs end\. The Government ICR
notes that the balance of US$845,042\.12 is attributable to US$644,437\.70 related to exchange rate losses as well as US$200,604\.42
that was on the project bank account but fully committed to be utilized under the project\.
3\. Relevance of Objectives & Design
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
a\. Relevance of Objectives
CAPSAP was an important component of the World Bank Groupâs Country Partnership Strategy (CPS) for 2007 to 2010\. In particular, the first
pillar of the CPS aims to strengthen financial management and procurement systems, and establish proper public sector and corporate
governance, accounting and auditing frameworks\.
The project directly contributed to the first of the CPS objectives through: (i) strengthening financial management; and (ii) proper corporate
governance, accounting and auditing, and indirectly support the other three objectives through its impact on key public institutions and private
actors\. Transparency and accountability in financial reporting were essential for enhancing the management of public funds\.
The projectâs PDO is also highly relevant to the 2016-2020 Country Partnership Framework (CPF), which supports the priorities in Azerbaijanâs
Vision 2020\. The CPF states that the governance agenda will be supported in the CPF program by enhancing transparency and accountability
in public sector management and service delivery, strengthening the rule of law, promoting financial inclusion, and creating a level playing field
for businesses\. Furthermore, one of its priority lines of action, within the objective of an effective fiscal management, is the strengthening the
structures of governance by building credible and accountable institutions, with the capacity to enforce fiscal rules and a medium term fiscal
framework while planning for sustainability\.
With respect to the government program, the project aimed to support the GOAâs implementation of the 2004 Accounting Law, which
mandated the use of accounting standards based on international best practices\. The GOA is committed to continue implementing the
activities that will strengthen public and corporate sector accountability and transparency, bringing them in line with international best
practices\. For example, the President of Azerbaijan has endorsed the rollout of FARABI as one of MOFâs key reforms, aiming to improve
internal control systems and ensure ministries and budget organizations produce financial statements that comply with IPSAS\. The MOFâs
strong focus on the education of accountants in Azerbaijani will strengthen the accounting skills of the public sector civil servants and provide
affordable training of professional accountancy courses for the corporate sector\.
Rating
High
b\. Relevance of Design
The project design clearly stated the PDO, and the results framework provides a clear causal chain between Bank financing and the expected
outcomes\. The significant changes in the three components during the two restructurings affected the results framework; while it remained
relevant and there were some additional improvements in the design, the scaling back of component 1 weakened the results chain\. This
component was reduced after the second restructuring to a single subcomponent related to the establishment of Association of Professional
Accountants of Azerbaijan (ARPA)\. Moreover, ARPA would find a better emplacement in Component 3 (Strengthening accounting, auditing and
financial management capacity)\.
The investment lending instrument was appropriate for a project designed to assist the borrower in strengthening accountability and
transparency in financial reporting for public and corporate sectors in line with international best practices, and to support institutional
strengthening to sustain reforms\. In principle, support to the Government could be provided through policy-based lending; however, taking into
account the weak institutional capacity and the current level of success of Government reform efforts in the sector, an investment lending
operation with targeted capacity building activities was finally considered more appropriate\.
In summary, the relevance of the design is in the low side of substantial\.
Rating
Substantial
4\. Achievement of Objectives (Efficacy)
PHREVISEDTBL
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
Objective 1
Objective
The PDO comprises two objectives: (i) Strengthen accountability and transparency in financial reporting for the public sector in line with
international best practices; and (ii) Strengthen accountability and transparency in financial reporting for the corporate sector in line with
international best practices\. The PDO also refers to supporting institutional strengthening to sustain reforms\. This is a more general, cross-
cutting objective that could be included in the two mentioned ones, since the different components of the project and their activities are in
general oriented to the institutional strengthening of both the public sector and the corporate one\.
Objective 1: Strengthen accountability and transparency in financial reporting for the public sector in line with international best practices
Rationale
Significant results were achieved within this objective\. The FARABI system was rolled out to 99 ministries and budget organizations,
which together covered 40 percent of the total budget expenditure, and the government expects to scale up to additional 900 institutions,
although this plan has not been implemented so far\. The system has gained ownership at both political and technical levels of government,
as well as the support from the countryâs President\. Institutions using FARABI produce timely financial statements compliant with IPSAS\.
The 2015 Open Budget Survey confirms that in-year, year-end and audit reports are now publicly made available, where they were not in
2008\. Also the 2012-2014 Strategic Development Plan (SDP) of the Chamber of Commerce has been met in all its items, including
improving financial audits; introduction of performance audit capabilities; enhancement of legal and standards framework; and upgrading of
the human resource and training systems\. A number of NASBOs close to the target established in the project were translated into
Azerbaijani\. The advancements were also significant in training, with 4,838 students trained by the Financial Science and Training Center
(FSTC); three accredited training programs were implemented, focused on the public sector that will strengthen accountability and
transparency in public sector; 36 trainers were accredited; and 1 new accounting and audit textbook was produced\.
On the downside, there is a relevant shortcoming, because the Chamber of Accounts (CoA) did not audit any budget expenditure using the
new methodology since the financial and performance audits depend on the CoA revised draft law, not passed by the Parliament yet\. The
CoA only carried out two pilot audits to develop its capacity, but these documents have not official recognition\.
To summarize, there are important advances in the implementation of integrated financial management system, in the Strategic
Development Plan of the CoA, and in training activities, and despite the mentioned shortcoming, the efficacy of this objective can be rated
as substantial\.
Rating
Substantial
PHREVISEDTBL
Objective 2
Objective
Objective 2\. Strengthen accountability and transparency in financial reporting for the corporate sector in line with international best
practices
Rationale
With respect to this objective, the initial Component 1, specifically related to the Corporate Sector, was reduced after the two restructurings
of the project and, finally, one single subcomponent remained\. This subcomponent included the establishment and the capacity building of
an Association of Professional Accountants of Azerbaijan, finally called âAccounting and Risk Professionals Associationâ (ARPA), that
should become a member of the International Federation of Accountants (IFAC) to guarantee the accountability and transparency in
financial reporting for the corporate sector in line with international best practice\. According to the second restructuring, the Association
should be a self-regulating body that is responsible for ensuring operational and ethical quality in the industry, and this change should
âreflect the emphasis the project has placed recently on the establishment of the Association of Professional Accountants of Azerbaijanâ,
and âthe achievement of international accreditation for the National Accounting Qualification, expected to be completed in the first half of
2014, would make Azerbaijan the first country in the South Caucasus to have a professional accounting qualification program that is
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
internationally recognizedâ\. This was also one of the reasons for the extension of the project\.
This association has been created and registered with the Ministry of Justice, but by the closing of the project was not yet a member of
IFAC because ARPA had complied only with 7 of the 47 actions required by the IFACâs Self-Assessment Questionnaire, as pointed-out in
the ICR (page ix)\.
On the positive side, there are other activities included in the project with positive inputs in the corporate sector, in particular the translation
of 41 IFRSs; the training of 137 Accounting staff in the National Accounting Qualification (NAQ), and 3,759 Bookkeepers; the introduction
of two accredited training programs for NAQ and Bookkeepers; the existence of a number of accredited trainers to teach students to
comply with corporate sector financial reporting standards; and the publication of ten new books that also will train students to comply with
IFRS\.
In summary, the efficacy of this objective is modest\. Although there are some advances in the activities related to the training to comply
with corporate sector financial reporting standards, the key professional association that should support the professionals responsible for
ensuring such standards has not been internationally recognized yet because it has not reach the required standards and only 7 of the 47
actions required by the IFAC have been complied with\.
Rating
Modest
5\. Efficiency
A financial and economic analysis was conducted at appraisal, but the assumptions include activities that were cancelled during the two
restructurings\. Furthermore, the cost-benefit analysis of CAPSAP is difficult to quantify, as acknowledged at appraisal\.
The ICR provided an efficiency analysis of the project with respect to training accountants, FARABI, strengthening the Chamber of Accounts
(CoA), and establishing of the Accounting and Risk Professionals Association of Azerbaijan (ARPA)\. According the ICR, students previously
had to travel abroad for training, and the project generated potential cost-savings by training students locally â estimated by the ICR at
US$15\.9 million for 4,843 students due to FSTCâs low fees per course and savings in travel and accommodation costs\. Students also
benefited from training in their native language and avoided uneven training standards\. The training activities used the same books as used
abroad, translated to the national language, and the trainers have been accredited, which means that the training activities achieve the
required basic standards\. However, the ICR did not provide evidence that the quality of the training delivered in the country has the same
level of quality that the training previously delivered abroad\.
With respect to FARABI, the cost of the software, hardware and installation of FARABI for 99 institutions was US $11 million\. These costs are
modest compared to FMIS in other countries, taking onto account the FARABIâs functionality\. Finally, it should be pointed out that there is
local capacity to support its maintenance\.
On the downside, the project experienced significant delays for a total of 2\.75 years, with a slow disbursement flag and was a problem project\.
Project management cost increased as a result of implementation delays\. In addition there are outputs that have not been delivered under
objectives 1 and 2, which suggest inefficient use of project resources\.
In summary, the project supported the provision of in-country training, but there is no evidence on the quality of the training compared to the
previous situation\. The project provided good value for money in implementing FARABI\. There was also cost related to the implementation
delays and outputs not delivered under components 1 and 2\. On balance, IEG rates efficiency as modest\.
Efficiency Rating
Modest
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated
value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
0
Appraisal 0
ï¨Not Applicable
0
ICR Estimate 0
ï¨Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
Relevance of objective is high and that of design is substantial\. The objective was well aligned with Bank and country strategies and relevant
given the country conditions and circumstances\. The causal chain between PDO, components and expected outcomes is generally convincing\.
Efficacy in the first sub-objective is rated substantial and it is rated modest in the second sub-objective\. Main shortcomings are the non-
achievement of international recognition by the professional association that should guarantee the accountability and transparency in financial
reporting for the corporate sector, and the inability of the Chamber of Accounts to officially audit budget expenditures, using new methodology
until the enactment of amendments to the CoA Law, not presented at the Parliament at the moment of the projectâs closing\. Efficiency is rated
modest\.
a\. Outcome Rating
Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating
The risk of MOF not implementing FARABI in about 1,000 ministries and budget organizations is low, since there is funding from central
government and the President of Azerbaijan institutionally supports the project\. In order to ensure that MOF improves on the usage of FARABI,
the MOF will create and maintain a user-friendly web portal for continuous training and education\. There is also low risk that the accountancy
training will be discontinued, since MOF has committed to funding the functioning costs of FSTC, and revenues from the professional
accountancy course (NAQ) are expected to grow due to the increase in the studentsâ number\. The ICR emphasizes that the only risk is that
students prefer the course to be internationally accredited\. There is some risk that ARPA will not become a member of IFAC, since membership
depends on ARPA receiving endorsement from an existing IFAC member in Azerbaijan, which is the CoAA\. However, ARPA has recently
established good relations with CoAA, and it is expected that the endorsement will be given\. Finally, there is some risk that the CoA will not
perform financial and performance audits according to the new methodology, since CoA audits depend on the final approval of the revised law of
the CoA, which is expected in 2016\. But now the MOF has supported and reviewed the draft law, which at the closing of the project was at the
Office of the President for review (ICR, p\.22) and its first reading in Parliament is expected in 2016\.
a\. Risk to Development Outcome Rating
Modest
8\. Assessment of Bank Performance
a\. Quality-at-Entry
The preparation of the project and appraisal of the operation was facilitated by the Bank team, in order to achieve the planned development
outcomes\. Risks and mitigation measures, implementing entity, and beneficiaries were appropriately identified, and the Bankâs fiduciary
measures were properly taken into consideration\. However, the team could have provided more resources in the initial design to Component
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
Two (Public Sector Accountability) for FARABI, a significant activity to improve accountability and transparency, rather than to Component
One (Corporate Sector Accountability), which aimed to facilitate the implementation of IFRS in three specific SOEs\. This is because SOEs
tend to use their own resources to computerize FMIS, as the same government recognized later\. This issue only was addressed during the
first restructuring in 2011, when FARABI was included as part of the project, and the plan for FMIS in three specific SOEs was dropped
because the government decided to let SOEs fund the new systems using their own resources\.
Quality-at-Entry Rating
Moderately Satisfactory
b\. Quality of supervision
Bank supervision took place on a regular basis, and the bank team provided timely and appropriate advice and observations\. The aide
memoires and ISRs provide evidence of the regular and continuous advice given by the Bankâs team\. In particular, the Bank responded in a
timely and adequate manner to the two restructuring requests made by the government, which contributed to the projectâs development
outcome, particularly through the inclusion in the first restructuring of FARABI and its enhancement in the second restructuring\. Fiduciary
policies were well managed\. On the downside, the team could have made in the first restructuring a better and more realistic risk analysis
about the feasibility of a complete international recognition of ARPA before the project closing\.
Quality of Supervision Rating
Satisfactory
Overall Bank Performance Rating
Moderately Satisfactory
9\. Assessment of Borrower Performance
a\. Government Performance
The Government of Azerbaijan (GOA) supported the project throughout its different phases (preparation, appraisal and implementation)\.
When Japanâs PHRD Grant (TF 56724) closed on March 26, 2008, the PMU was disbanded, but MOF made a commitment to fund the
PMU, and attracted experienced candidates to key project positions, so that the PMU was fully staffed by December 2009\.
The major challenge was when the GOA decided to prioritize an FMIS for the ministries and budget organizations, instead of building
capacity for three SOEs to comply with IFRS, but at this stage there was a good coordination with the Bank, which also helped to
synchronize GOAâs new strategy after the first restructuring in September 2011, and thereafter project implementation significantly scaled
up\. In general, during the project there was an adequate coordination of GOA with the Bank and SECO\. At project closure, GOA remained
committed to continue the implementation of projectâs objectives and activities, such as the support to the dissemination of FARABI, the
financing of the training activities, and support to ARPA and the new draft law for the CoA\.
The stakeholdersâ workshop and beneficiary survey provided also positive feedback in relation to the performance of the government in this
project\.
Government Performance Rating
Satisfactory
b\. Implementing Agency Performance
All key staff of the PMU were appointed by MOF\. However, as the Project Director was not appointed until December 2009, one year after
the effectiveness of the project, in the meantime the Deputy Minister of Finance acted as the Project Coordinator\.
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
The PMU timely resolved the implementation issues related to the project\. This activity was more effective after the first restructuring, when
the GOA harmonized its strategy with the project\. At the beginning of the project some fiduciary aspects struggled, when implementation
arrangements were still in flux, but they became satisfactory over time\. The PMU established M&E arrangements with the beneficiary
institutions, as well as a coordination mechanism, and the stakeholders relied on reports for decision-making\. There was a good
coordination of PMU with the Bank, SECO and all its beneficiary institutions\.
Implementing Agency Performance Rating
Satisfactory
Overall Borrower Performance Rating
Satisfactory
10\. M&E Design, Implementation, & Utilization
a\. M&E Design
The indicators, baselines and targets were identified and set up at the outset, in the PAD, as well as the data collection and reporting
arrangements (Annex 3: Results Framework and Monitoring)\. The indicators were in line with the PDO and were revised during the second
restructuring after changes were made to activities within the components\. The indicators were simple and easy to ascertain amongst the
beneficiaries by a monitoring and evaluation (M&E) Specialist working with the PMU\. However, on the downside, PDO indicators are more
output than outcome oriented\.
b\. M&E Implementation
The PMU, responsible for the M&E of the project activities, collected periodically appropriate data from the beneficiaries\. The M&E specialist
was the responsible for the collection and consolidation of the required information and its consolidation to track progress against the
monitoring plan included in the projectâs Results Framework\. The data proved reliable when validated\. As the indicators were simple, in
general terms the information was easy to acquire\.
c\. M&E Utilization
M&E was effectively used for decision making, and even after the project closing a significant number of indicators are still used in different
areas\. The PMU evaluated and used up-to-date data to assess the speed of implementation, and particularly to achieve targets that were
lagging behind, since they helped measure progress in addressing some of the institutional weakness of the sector\. After the project closing,
the MOF decided that FSTC will continue to use the current indicators for the training program\. Also the current indicators will be used by
the Accounting Policy Division to monitor the translation of accounting standards into Azerbaijani; and the Modern Technology and
Automation Information Systems Department will expand on the current indicators used for FARABI, by using periodic beneficiary surveys to
identify problem areas\. Also other beneficiaries, including the CoA and APRA, will continue to maintain M&E data\.
M&E Quality Rating
Substantial
11\. Other Issues
a\. Safeguards
The category C project did not trigger any safeguards\.
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
b\. Fiduciary Compliance
Financial management was satisfactory, as well as procurement despite a slow start\. All Financial Management covenants were complied with
in accordance with the Financing Agreement\. All audit reports were received and all had unqualified audit opinions, and there were no major
issues raised in the audit reports\.
A revised procurement plan was quickly prepared and implemented after the projectâs restructuring\. The project complied with the Bankâs
procurement guidelines, and comprehensive procurement plans were prepared and submitted to the Bank for approval\. Approved procurement
plans were published on a regular basis and updated when needed, and the Bank staff carried out ex ante or ex post previews of the
procurement process, reviewed and cleared procurement documents, contract awards, and amendments, always according to the provisions of
the Financing Agreements
c\. Unintended impacts (Positive or Negative)
None
d\. Other
None
12\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Efficacy was rated modest in one
objective and substantial in
another\. There are shortcomings
related to (i) the international
recognition of the Accounting and
Outcome Satisfactory Moderately Satisfactory Risk Professional Association of
Azerbaijan, and (ii) the Court of
Accountsâ legal powers to
undertake financial and
performance audits using the new
methodology\.
Risk to Development Outcome Modest Modest ---
Quality at entry was only
moderately satisfactory because
the project could have provided
more resources to Component
Bank Performance Satisfactory Moderately Satisfactory Two to computerize FMIS in the
public sector, a significant activity
to improve accountability and
transparency in the public sector
finance management\.
Borrower Performance Satisfactory Satisfactory ---
Quality of ICR Substantial ---
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
Note
When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted
beginning July 1, 2006\.
The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\.
13\. Lessons
Three main lessons from this ICR are the following:
⢠Financial Management Information Systems are a key element of Public Finance Management and a critical tool for appropriate financial
auditing\. In the case of this project, this tool (FARABI) was only included after the first restructuring and it was one of the most successful
project achievements\. This system even had the advantage that its cost was modest compared with similar systems in other countries\.
⢠Substantial training is essential to improve institutional capacity for implementing new tools\. This project devoted significant resources to
deliver quality training in Azerbaijan drawing on best practices and international standards on financial auditing\.
⢠The inclusion of new activities through project restructuring requires a deep evaluation and a risk analysis of their feasibility before the
projectâs closing, especially when their final achievement depends on external decisions\. In the case of CAPSAP, the inclusion of the
establishment of an association of professional accountants (ARPA) that follows international standards depended not only on the creation of
an internal registry of the association, but also on the recognition by IFAC\. Furthermore, at the closing of the project ARPA only complied with
7 of the 47 actions required by IFAC, which is one of the main shortcomings of this project\.
14\. Assessment Recommended?
No
15\. Comments on Quality of ICR
The ICR provided a clear and candid assessment of the operation\. It is, in general, consistent with Bank guidelines and reasonably concise\.
On the downside the ICR has some inconsistencies, for example:
⢠On page x it is said that the first element of PDO indicator number 2 (percent of total budget expenditures audited, using new methodology by
Chamber of Accounts was partially achieved, when it was not achieved (baseline: 0%, target 10%, actual value: 0%)\. The same was the case
on page xii, with respect to the intermediate outcome indicator number 7\.
⢠On page 12, in section 3\.2 (Achievement of Project Development Objectives), it does not mention in the heading the rating of PDO 1, which
was âpartially achievedâ, although the correct rating is mentioned in the text
⢠On page 16 it is said that PDO Indicator 1, related to the establishment of ARPA following international standards, was fully achieved -target
exceeded, when this PDO was only partially achieved, as indicated on page ix\.
The ICR could have also provided more information about the main shortcomings, for example, why ARPA does not achieve all the
requirements needed for its international recognition, and the reasons for the delay of the amended law on the CoA\. Evidence to compare the
quality of the training activities with those previously delivered abroad was also not provided, which IEG had to clarify in an interview with the
team\.
The quality of the ICR is on the low side of substantial\.
a\. Quality of ICR Rating
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CAPSAP (P099924)
Substantial | REVIEW |
P079140 | IEG
Report Number: ICRR14677
ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted: 06/03/2015
Country: Papua New Guinea
Project ID: P079140 Appraisal Actual
Project Name: Png-smallholder Project Costs (US$M): 68\.8 25\.41
Agriculture
Development
L/C Number: C4374 Loan/Credit (US$M): 27\.50 23\.26
Sector Board: Agriculture and Rural Cofinancing (US$M): 0\.0 0\.0
Development
Cofinanciers: Board Approval Date : 12/18/2007
Closing Date: 12/31/2012 12/31/2013
Sector(s): Roads and highways (66%); Crops (21%); Agricultural extension and research (8%); Other
social services (3%); Sub-national government administration (2%)
Theme(s): Rural services and infrastructure (67% - P); Participation and civic engagement (33% - S)
Prepared by: Reviewed by: ICR Review Group:
Coordinator:
Hassan Wally Soniya Carvalho Christopher David IEGPS1
Nelson
2\. Project Objectives and Components:
a\. Objectives:
The Financing Agreement (p\. 5) and the Project Appraisal Document (p\. 3) stated the project development objective
as:
"increase, in a sustainable manner, the level of involvement of targeted communities in their local development
through measures aimed at increasing oil palm revenue and local participation\."
This Review evaluates the project against this objective\.
b\.Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components:
1\. Smallholder Productivity Enhancement (Appraisal cost: US$59\.2 million, Actual cost: US$15\.72 million)\. This
component would support: (a) smallholder oil palm development; (b) road works; and (c) agricultural extension\. It is
estimated that 9,000 ha of oil palm would be established on vacant blocks of village land along existing access roads
(in-fill planting) within the area already covered by existing oil palm infrastructure\. The project would finance land
preparation, purchase of seedlings, fertilizers, basic tools and other inputs provided to smallholders by the mills as
suppliersâ credit\. About 550 km of existing provincial access roads serving the oil palm catchment area would be
upgraded (reconstruction)\. The project would finance construction and maintenance contracts and the purchase of
non-routine maintenance equipment\. A Road Maintenance Trust Fund (RMTF) would be established in each
smallholder oil palm scheme, financed by smallholders, palm oil milling companies and provincial governments\. The
existing oil palm extension and research services would be upgraded to generate and disseminate productivity
improvements\. The project would also finance technical assistance and training to support the management of oil
palm smallholdings during and after the project duration\.
2\. Local Governance and Community Participation (Appraisal cost: US$3\.1 million, Actual cost: dropped)\. This pilot
component would support the improved provision of local services and infrastructure in the two project provinces of
Oro and WNB through participatory processes (CDD)\. The component would finance small community grants,
technical assistance and training to Local Level Government and communities\. The grants would finance small scale
community infrastructure and services through sub-projects\. The implementation steps would include: (a) capacity
building of community-based organizations (CBOs), ward development committees, Local Level Governments and
province/district administrations; (b) community mobilization, supported by local facilitators; (c) identification and
prioritization of sub-projects through transparent processes at ward or community level; (d) participatory planning and
budgeting at Local Level Governments level; (e) provision of funding, with conditions to ensure accountability and
effective use of funds by recipient communities; and (f) design and implementation of sub-projects by the communities
themselves, with support from district and Local Level Governments, local CBOs, non-governmental organizations
(NGOs) and service providers\.
3\. Project Management and Institutional Support (Appraisal cost US$6\.5 million, Actual cost: US$9\.69 million)\. The
Oil Palm Industry Corporation (OPIC) would take overall responsibility for project management, coordination and
performance of the project components\. The implementation of component 1 would be undertaken through OPIC and
its field offices with the support of the palm oil milling companies and PNG Oil Palm Research Association\.
Component 2 would be implemented by a management agency contracted by OPIC: (a) to set up Local Coordination
Teams (LCT) at provincial level; (b) to select and contract consultants and service providers to carry out all
capacity-building activities; (c) to carry out M&E activities for the component; and (d) to transfer the grants and
manage the grant accounts at the LLG levels, and to transfer funds for sub-project activities to the Sub-project
Implementation Teamsâ (SITs) accounts at the LLGsâ request\. Component 3 would strengthen OPICâs capacity to
manage the project and to provide extension to growers\. OPIC would also provide support to and coordinate with
existing HIV/AIDS awareness/prevention campaigns in the project areas\. Environmental monitoring would be
supported in close coordination with the Department of Environment and Conservation (DEC)\.
Revised Components
Component 2 was dropped at the time of the first restructuring in September 2012\. The ICR (p\. 4) reports three main
reasons for this: first, OPIC's weak capacity has undermined program implementation and contributed to substantial
delays; second, at the time of the first project restructuring (September 2012), it was deemed that even if OPIC were
to recruit the management agency to implement Component 2, it would have already been too late to obtain a
meaningful result under this Component before the projectâs revised closing date of December 31, 2013 and third,
given the delays in other critical project activitiesâroad rehabilitation and in-fill plantingâit was decided that all project
efforts would be concentrated on these activities and on improving extension service delivery\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
Project Cost\. The total project cost at appraisal was US$68\.8 million including US$5\.3 million taxes and duties
(PAD, Annex 5)\. Actual project cost was US$25\.41 million (ICR Annex 1)\. According to the ICR (p\. 5) "the reduction in
total project cost reflected the fact that the Road Maintenance Trust Fund (RMTF) concept would not be implemented
within the remaining project time frame\. Under the original project design, the West New Britain and Oro Provincial
Governments, together with the palm oil milling companies and project area smallholders, were to contribute US$23\.7
million to the RMTF\."
Financing\. At appraisal the project was expected to be financed through a US$27\.50 million IDA Loan\. According to
the ICR (Annex 1) the actual disbursed amount at project completion was US$23\.26 million and US$0\.3 million was
cancelled\.
Borrower Contribution \. The Borrower was expected to contribute US$7\.4 million of counterpart funding\. The ICR
(Annex 1) reports that the borrower contributed US$2\.15 million of counterpart funds which is about 39% of the
appraisal estimate\. According to the PAD (p\. 3) the West New Britain Provincial Government, the Oro Provincial
Government, palm oil milling companies, smallholder oil palm growers and the PNG Sustainable Development
Program were expected to contribute US$7\.20 million, US$3\.5 million, US$5\.7 million, US$7\.3 million, and US$10\.20
million, respectively, totaling US$33\.9 million\. The ICR provides no information on actual contribution from these
sources\. The ICR (p\. 33) also notes that: "the financial reporting system does not record information on all the other
financiers identified at appraisal, namely the milling companies, smallholder farmers, PNG Sustainable Development
and local governments in Oro and West New Britain provinces\."
Dates\. The project was restructured twice, the first was a Level 2 restructuring carried out in June 2012 and became
effective in September 2012\. The amount disbursed was US$4\.61 million\. This restructuring involved: (i) modifying a
number of results indicators to reflect changes in the scope of the project, (ii) scaling back activities under component
1 due to local currency appreciation, revision in the Bank financing share due to insufficient counterpart funding and
sharp increase in local costs, and dropping component 2 as discussed above; (iii) total project cost was revised
downwards to US$40\.2 million; (iv) reallocation of credit among disbursement categories; and (v) extension of closing
date of the project by one year from December 31, 2012 to December 31, 2013\. According to the ICR (p\. 5) this
extension was to allow sufficient time for completion of planned road works and implementation of the in-fill planting
program and extension activities\. The second restructuring was also a Level 2 carried out on November 2013\. The
amount disbursed was US$20\.77 million\. This restructuring mainly involved reallocation of expenditures from the â
Consulting Services and Trainingâ category, which had unspent funds to the âGoodsâ category\. This was necessary to
strengthen road maintenance capacity in each of the three project areas through the procurement of three graders\.
The ICR (p\. 5) reports that: "all three graders have been purchased and received at the three project sites\." The
Midterm Review was conducted in September 2010\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
High\.
At project completion, objectives remain highly relevant to Papua New Guinea's current needs of economic and social
development\. The objectives are consistent with the World Bank's current (2013-2016) Country Partnership Strategy
(CPS)\. The CPS (p\. 16) calls among other things for supporting improved productivity and profitability of small holders
growing cash crops, productivity gains for rural households growing food crops, improved sustainability and resilience
to price and weather volatility, and improved market chain infrastructure\.
At project appraisal, objectives supported GoPNGâs Medium-Term Development Strategy 2005 â 2010 (MTDS) and
were also consistent with IDAâs overall goals as stated in the Interim Strategy Note (ISN-Report No\. 31790-PG, March
18, 2005)\.
b\. Relevance of Design:
Substantial\.
Design included a statement of objectives that clearly describes the intended outcome, the beneficiaries and the
means through which the project would reach its objective\. The PAD (Annex 3) includes a Results Framework that
shows a logical causal chain between the activities to be supported, the outputs expected and the intended outcomes\.
The design of component 1 was simple and straightforward; however, component 2 seemed more complex\. The
objectives would be directly supported by small holder productivity enhancement activities which were expected to
expand the cultivated areas, improve productivity and increase farmers' income\. The second component would
contribute to the achievement of the objectives through financing small community grants, technical assistance and
training to Local Level Government and communities to increase participation in local development\. One notable
design shortcoming is over estimating the capacity of the Oil Palm Industry Corporation which could have benefitted
from more attention to capacity building measures\. Also, component 2 was designed as a pilot with no clear plan to
scale up which casts doubt on the relevance of design\.
4\. Achievement of Objectives (Efficacy):
The degree of achievement of the objectives stated in the Financing Agreement--increase, in a sustainable manner,
the level of involvement of targeted communities in their local development through increasing oil palm revenue and
local participation -- is rated modest\.
Outputs
By project completion the following outputs /intermediate outcomes were achieved :
ï¬ Small holder oil palm yields reached 23\.4 tons/ha compared a baseline of 15\.2 tons/ha\. This represents an
increase in the yield by 54% compared to an appraisal target of 15 to 19%\.
ï¬ 231 km of roads serving oil palm catchments were upgraded compared to an original target of 550 km and a
revised target of 190 km\.
ï¬ Three social and environmental audits were completed compared to a target of two\.
ï¬ 1500 growers received training on sustainable production practices\. The ICR (p\. viii) notes that this indicator was
only introduced at the time of restructuring in order to incorporate a core sector indicator\.
ï¬ 1,006 ha were planted with oil palm trees compared to an appraisal target of 9,000 ha and a revised target of
2,500 ha\. This activity suffered from poor communication between OPIC and the milling companies\.
ï¬ Extension service at OPIC was upgraded through recruiting an international extension expert and 28 new
extension staff\. The project also provided training and improved the communication and mobility of extension
agents through financing the purchase of new vehicles and motorcycles and promoting the use of mobile phones\.
ï¬ Several studies were completed under the project including the environmental and social audits; the effluent
baseline study and follow-up audit; a smallholder engagement strategy and the stream arthropod indicator study
undertaken by PNG Oil Palm Research Association; and the Road Maintenance Trust Fund design study\. It is not
clear how the results/findings of these studies were utilized by the project\. In a further communication, the project
team explained that "the effluent baseline study was used to prepare effluent management plans for mills in the 3
project areas; and these plans were implemented to ensure compliance with PNG effluent discharge
requirement\. The Road Maintenance Trust Fund study helped design and study and conduct extensive
consultations in preparation of setting up the TF, should the Government of PNG, the milling companies and the
farmers provide the require resources for setting up the fund\. The stream arthropod indicator would help monitor
water quality downstream of the mills\."
Outcome
ï¬ The project achieved limited success on the agricultural side, and fell short of meeting the majority of its appraisal
targets\. Project areas saw an increase in smallholder income from palm oil production from 75\.1 million Kina in
July 2006 to 204 million Kina in September 2012, compared to the end target of 96 million Kina\. Such increase in
smallholder income was "primarily due to the increase in palm oil prices (ICR, p\. 19)\." Project efforts benefitted
small holders through provision of extension advice including better management practices, facilitating fertilizer
distribution and ensuring regular fruit bunch collection\. The project also achieved some progress with regards to
rehabilitation of roads and in-fill planting, however, it was "too late and were too little with respect to the original
targets (ICR, p\. 18)\." There is no evidence provided in the ICR on the impact of road rehabilitation on both
decreasing transport cost and loss related to delays in fruit transport\.
ï¬ There is no evidence that the project achieved its stated objective of increasing the involvement of targeted
communities in local development\. The cancellation of activities under component 2 jeopardized the design of the
project and limited its ability to achieve the stated objective\. Overall, implementation suffered from weak capacity
at OPIC and lack of management oversight, procurement delays, rising costs due to currency appreciation, and
an uneasy relation between OPIC and the milling companies\. According to the ICR (p\. 10) "the milling companies
were very aggrieved due to the Inspection Panel process and the Effluent Audits and, as a result, were less than
supportive of SADP (the project's) activities\." Finally, the ICR (p\. 11) highlights that the Inspection Panel process
negatively impacted the relation between the World Bank, GoPNG, OPIC and the milling companies and this in
turn further undermined implementation\.
5\. Efficiency:
Financial and Economic efficiency
Ex ante
The PAD (Annex 9) includes a detailed financial and economic analysis of the small holder oil palm for each of the
project areas (Hoskins, Bialla and Oro) based on a two hectare oil palm in-fill planting model\. The analysis estimates
the Financial Rate of Return (FRR) for smallholders in Hoskins, Bialla, and Oro to be 27%, 24% and 22% respectively\.
The differences in FRR among the three schemes reflect the differences in the oil palm yield and oil palm price\. The
analysis estimates returns over a 23 year period\. The Economic Rate of Return (ERR) for Hoskins,
Bialla and Oro are estimated to be 18\.3%, 13\.2%, and 17\.2%, respectively\. The overall project ERR is 16\.7%\. The Net
Present Values (NPV) for Hoskins, Bialla and Oro are US$5\.6 million, US$0\.6 million, and US$4\.7 million,
respectively, and US$11\.0 million overall\.
Ex post
The ICR (Annex 3) includes an ex post analysis that estimates the FRR for the regions covered by the project to be
27\.9% in Hoskins, 23% in Bialla and 22\.6% in Oro with an overall average of 24\.6%\. The projectâs Economic Rate of
Return was 18\.4% and the Benefit: Cost ratio was 1\.35\. The Net Present Value of project investments worked out to
US$12\.7 million\. Sensitivity analyses show that these returns remain robust with drought induced fall in yields and
market-induced fall in prices\. The ex post analysis and the reported FRR and ERR estimates are consistent with the
ex ante analysis in the PAD\. The analysis should have included a treatment area and a control group (to enable a
difference-in-difference evaluation)\. This would have provided a more accurate attribution of outcomes to project
activities\.
Institutional and Administrative efficiency
The project suffered from implementation delays and the closing date was extended by 12 months\. There was also a
14 month delay between Board approval and Credit effectiveness which according to the ICR (p\. 8) was "largely due
to the difficult relationship between GoPNG and the Bank following the cancellation of the Forestry Conservation
Project\." After project effectiveness, implementation suffered from delays on several fronts, including delays in
recruiting consultants for key project management positions, social and environmental audit consultants, procurement
advisors, extension specialist and road engineers\. There were also delays in purchasing key assets to support project
management operations\. Implementation also suffered from delays stemming from poor communication between
project sites and headquarters\. In addition, delays in the provision of counterpart funding exacerbated the situation
and eventually contributed to a reduction in the scope of the project\. Procurement process was also slow due to
inefficiency in preparing bidding documents, poor quality of documents submitted to the Bank, misaligned
procurement activity relative to implementation schedule, internal staff conflicts within the implementing agency and
frequent changes in the procurement specialist\. Financial management was also weak\.
Finally, the actual cost of component 3 (Project Management and Institutional Support) was US$9\.62 million
compared to an appraisal estimate of US$6\.2 million (i\.e\. 155% of appraisal target)\. In a further communication, the
project team explained that "this increase must be assessed against the background of substantial appreciation of the
local currency and increase in domestic costs\."
On balance Efficiency is rated modest\.
a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the
re-estimated value at evaluation :
Rate Available? Point Value Coverage/Scope*
Appraisal Yes 16\.7% 100%
ICR estimate Yes 18\.4% 95\.5%
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome:
Relevance of objectives was rated high and relevance of design was rated substantial\. Efficacy was rated modest
as the project did not achieve its stated objective of increasing the involvement of targeted communities in local
development and fell short of meeting majority of its appraisal targets\. Efficiency was rated modest due to major
shortcomings on the project's institutional and administrative side including delays related to hiring staff, procurement
and financial management weaknesses\.
a\. Outcome Rating: Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating:
The sustainability of the project development objective is dependent on the regular pick up and transport of fresh
fruit bunches from the farms to the mills\. This in turn requires regular maintenance of the roads through the Road
Maintenance Trust Fund (RMTF)\. However, it is not clear whether the RMTF would be properly institutionalized and
operational\. There is also concern regarding the sustainability of OPIC's extension services to oil palm growers\. OPIC
does not receive funds from GoPNG for its recurrent budget and relies on the levies paid by growers and the milling
companies\. In the absence of Bank funding after project completion, it is likely that OPIC will face a serious financial
threat by 2015 (ICR, p\. 25)\. In a further communication, the project team highlighted that "OPIC has continued its
activities since the project closed, with resources from both levies and the Government\. While the RMTF is not yet
functional, the project facilitated the purchase of 3 graders that are being used in the 3 project areas for road
maintenance\. The graders are managed by milling companies\."
a\. Risk to Development Outcome Rating : High
8\. Assessment of Bank Performance:
a\. Quality at entry:
ï¬ The Bank identified an operation that was consistent with Government priorities and the Country Partner Ship
strategy\.
ï¬ Design included a relevant objective that is appropriate to the current needs of Papua New Guineaâs social
and economic development\.
ï¬ Design featured activities that would lead to increasing the area of oil palm, improve productivity and facilitate
transporting of the produce to the mills\. However, it is less clear how design would improve the involvement of
communities in local development through pilot activities with no clear plan on scaling up such activities\.
ï¬ Design incorporated a number of useful lessons from the Oro Smallholder Oil Palm Development Project and
the Australian Agency for International Development, most notable of which was the need of regular
maintenance to provincial roads to enable regular fresh fruit bunch collection from small holders\.
ï¬ Although several risks were correctly identified at appraisal, the limited capacity of OPIC to implement project
activities was not adequately assessed\. This contributed to various problems that undermined the project
implementation\. Also, the withdrawal of support for the project by private milling companies was overlooked\.
In a further communication, the project team explained that "OPIC implementation capacities were
adequately assessed and proper mitigation measures identified\. Implementation difficulties stem from the
lack of Government oversight, which was much more serious than anticipated\."
ï¬ Design should have included effective safeguard measures to manage potential environmental impacts
associated with additional Palm Oil Mill Effluent (POME)\.
ï¬ M&E design could have benefited from measuring the project's impact on incomes in project areas to better
reflect the project impact\.
Quality-at-Entry Rating: Moderately Unsatisfactory
b\. Quality of supervision:
According to the ICR (p\. 26) supervision had enough budget and staff resources\. The project received
intensive supervision and close monitoring\. The project team prepared Aide-Memoires on a timely basis and
alerted the Government and OPIC to problems with the project\. The team also recommended solutions in
accordance with Bank procedures\. The Implementation status Reports (ISRs) were realistic and ratings reflected
the performance of the project in terms of achievement of objective and progress of implementation\. The task
team also monitored fiduciary and safeguard compliance and managed the Inspection Panel review process and
recommended an action plan\. The Bank also provided support and training on fiduciary and safeguards aspects to
OPIC staff to ensure compliance\. However, the project suffered from weaknesses in both procurement and
financial management\. More attention should have been given to mitigation measures to counter the
environmental impacts associated with potential increase in Palm Oil Mill Effluent\. In a further communication, the
project team pointed out that project supervision gave substantial amount of attention to implementation, including
the management of the Inspection Panel process, and to issues related to Palm Oil Mill Effluent Management,
however, the team fully acknowledged that more attention should have been given to the Palm Oil Mill Effluent
issues during project design, which was more than compensated during implementation\.
Quality of Supervision Rating : Moderately Satisfactory
Overall Bank Performance Rating : Moderately Unsatisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The Government of Papua New Guinea was not committed to the project (ICR, p\. 26)\. This was demonstrated
by the long delay between Board approval and Credit effectiveness (about 14 months)\. The ICR (p\. 26) attributes
this delay to the difficult relation between the Government and the Bank on the heels of cancelling the Forestry
Conservation Project\. Further, OPIC's Board was not operational during the first few years of project
implementation because the Government neither appointed a General Secretary nor the Board members\. In
addition, the Project Steering Committee, which was supposed to provide guidance to resolve project problems,
never met up to the time of the Midterm Review in 2010\. The ICR (p\. 27) highlights that the communication
between the Government and OPIC was inadequate\. Finally, the provision of counterpart funding was usually late
and amounts were insufficient\. This contributed to implementation delays since inception and led to scaling back
the scope of the project\.
Government Performance Rating Unsatisfactory
b\. Implementing Agency Performance:
The project was implemented under the Oil Palm Industry Corporation (OPIC)\. Project management was weak
throughout implementation (ICR, p\. 27)\. OPIC suffered from weak staff capacity, delays in recruitment of key staff
including OIPC's Secretary General and a procurement advisor for the project\. There was poor coordination of
field activities in general, except for road activities which were under Road Engineers Unit\. OPIC also suffered
from lack of management oversight at all levels\. This contributed to lack of confidence by the milling companies in
OPIC's delivery capacity on project activities--especially with the setbacks in the in-fill activities\. Procurement was
unsatisfactory and continued to be slow even after a procurement advisor was hired due to delays by the Central
Supply and Tender Board\. Financial management was also weak and suffered from delays in audit reports\. The
ICR (p\. 28) highlights that entity audits of the 2011, 2012 and 2013 financial statements are yet to be completed\.
Finally, OPIC failed to provide regular monthly reports to the World Bank\.
Implementing Agency Performance Rating : Unsatisfactory
Overall Borrower Performance Rating : Unsatisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The PAD (Annex 3) includes a detailed Results Framework that lists two outcome indicators and seven Results
indicators\. The indicators seem adequate and would capture the project's progress and reflect the achievement of the
project development objective\. Design would have benefitted from including an indicator to measure the project's
impact on incomes\. Also, the baseline survey design should have included a treatment area and a control group (to
enable a difference-in-difference evaluation)\. This would have provided a more accurate attribution of outcomes to
project activities (ICR, p\. 12)\.
b\. M&E Implementation:
Implementation was the responsibility of OPIC\. According to the ICR (p\. 13) OPIC had its own monitoring system\. It
is unclear why OPIC did not follow the project's M&E arrangements\. In a further communication the project team
explained that "OPICâs monitoring system was simple, Excel-based, and designed solely to monitor key project
performance indicators\. OPIC was reluctant to set up a new MIS\. Instead, it installed a customized software package
called OMP that enables data on smallholders to be shared between the milling companies and OPIC\. This software
was already in use by the milling companies\. However, this software was only installed in Oro province\. The OMP
system catalogs agronomic and economic data for smallholders such as fertilizer usage and fruit production\. OPIC is
able to continue to use these data in Oro for identifying low production blocks and âskipâ harvesting for targeted
extension work\." While the quality of data collected by OPIC was good, the two baselines surveys conducted were of
unsatisfactory quality\. During restructuring indicators pertaining to component 2 were dropped and other indicators
were scaled back because initial targets were ambitious\. OPIC was expected to conduct two impact evaluations, one
at the mid-term and the other by the end of the project, however, it is not clear if either was carried out\.
c\. M&E Utilization:
The M&E data collected by OPIC included a detailed asset management database containing the inventory,
condition and indicative repair cost of the entire network of smallholder access roads in the 3 project areas comprising
approximately 2,000 km and data on the roads rehabilitated under the project and the in-fill areas planted\. According
to the ICR (p\. 13) the afore mentioned data was used for planning and decision making purposes, however, there is
limited evidence on how the findings impacted implementation\.
M&E Quality Rating: Modest
11\. Other Issues
a\. Safeguards:
According to the PAD (p\. 16) the project triggered the following safeguard policies: OP/BP/GP 4\.01 (Environmental
Assessment); OP/BP 4\.04 (Natural Habitats); OP 4\.09 (Pest Management); OP/BP 4\.36 (Forests); OD 4\.20, being
revised as OP 4\.10 (Indigenous Peoples); OP/BP 4\.12 (Involuntary Resettlement)\. The Environmental screening
category was "partial assessment" and safeguard screening was "limited impact" (PAD, p\. vi)\. In a further
communication, the project team explained that the project was Category B\.
Environmental Safeguards
ï¬ Stream health was monitored to help track changes in water quality over time\. The monitoring methodology used
water quality metrics computed from survey data on aquatic invertebrate assemblages on selected sites\. The ICR
does not discuss the results of stream monitoring\. In a further communication, the project team explained that d
uring the project period sample points were identified and mapped in West New Britain and Oro which helped
establish a baseline and water quality continues to be measured against these baselines\.
ï¬ Land use and forest cover were also monitored under the project through a Bank partnership with the European
Space Agency\. Monitoring results were used to confirm that there was no destruction of primary forests due to oil
palm cultivation in Oro since 2005\. The maps produced were also used in the final environmental and social audit
to identify and inspect high risk blocks in the project area\.
ï¬ The ICR (p\. 14) reports that one road construction site was closed due to a lack of gravel pit rehabilitation\.
ï¬ There were issues with inadequate documentation for in-fill sites\. By end of project a legally reviewed standard
Clan Land Users Agreement and a standard Plantation Approval Form had been implemented\.
ï¬ The Plantation Approval Form required evidence that applicants have attended a grower workshop as one of the
criteria for grower readiness There were instances of new growers had not been trained, as required Plantation
Approval Form, prior to the planting of seedlings on their blocks\. The ICR (p\. 15) notes that compliance improved
in the second half of 2013\.
ï¬ The ICR (p\. 15) reports that there were poor cultivation practices where farmers needed to improve the upkeep of
their block, with the early establishment of cover crop and installation of drains where required\. However, it is not
clear how extensive the problem was\.
ï¬ There was also one incident of inadequate buffer establishment\. The ICR (p\. 15) reports that such incident was
addressed and the buffer was returned to natural vegetation\.
ï¬ The work on Palm Oil Mill Effluent baseline started late due to delays in recruiting the Social and Environmental
Audit consultants\. The 2013 effluent audit concluded that âoverall, the palm oil mill effluent systems across all
mills were operating adequately to ensure PNG regulatory compliance is achieved at each mill most of the time\.â
In addition, relevant mills are implementing a number of actions and mitigation measures that were
recommended by the audits and a study\. By project completion, most actions were completed as planned while
some would be completed in 2014\.
ï¬ According to the ICR (p\. 13) environmental safeguard compliance was moderately satisfactory\.
Social Safeguards\.
Project activities did not cause any physical or economic displacement and Social safeguards in the Standard
Operating Procedures (SOPs) were generally complied with during implementation (ICR, p\. 13)\. All road upgrading
projects had undergone consultations with the affected communities and Community Consent Agreements were
secured prior to their implementation\. There were only a few crop damage claims due to road construction in Oro and
these were settled in accordance with the process provided in the project's Resettlement Policy Framework\. Garden
food production was not disrupted in any of in-fill blocks\. According to the ICR (p\. 13) compliance with social
safeguards requirements was moderately satisfactory\.
Project Inspection
On December 17, 2009, the Inspection Panel registered a Request for Inspection submitted by the Center for
Environmental Law and Community Rights (CELCOR), acting as a representative of the Ahora/Kakandetta Pressure
Group, other claimants from the Oro Province and affected smallholders within the three project areas\. The Claimants
Request contained claims that according to the Panel may constitute violations by the Bank of various provisions of its
policies and procedures\. In response to the Request, management took a number of actions as detailed in the ICR (p\.
12)\. The Inspection Panel process was completed in December 2011 and Management issued its first progress report
to the Bankâs Board of Directors in January 2014\.
b\. Fiduciary Compliance:
Financial management\. The Bankâs entity audit requirements were not complied with by OPIC\. It also did not adhere
to the timetables agreed upon with IDA in the audit action plan as part of the 2012 project restructuring\. At the time
the project closed on December 31, 2013, OPIC had received the audit certificates for 2009 and 2010, while the 2011
and 2012 OPIC audits remain outstanding (ICR, p\. 15)\. The project management did not have a dedicated Financial
Controller as envisaged at appraisal\.
Procurement\. According to the ICR (p\. 27) procurement was unsatisfactory and continued to be slow even after a
procurement advisor was hired due to delays by the Central Supply and Tender Board\. There were no incidence of
misprocurement reported\.
c\. Unintended Impacts (positive or negative):
none\.
d\. Other:
By the end of the project, cultivation of peanuts was introduced as an alternative income generation product and for
enhancing soil fertility\.
12\. Ratings: ICR IEG Review Reason for
Disagreement/Comments
Outcome: Moderately Unsatisfactory Efficacy was rated modest as the
Unsatisfactory project did not achieve its stated
objective of increasing the involvement
of targeted communities in local
development and fell short of meeting
majority of its appraisal targets\.
Efficiency was also modest due to
major shortcomings on the project's
institutional and administrative side\.
Risk to Development High High
Outcome:
Bank Performance: Moderately Moderately Quality at Entry was weak where the
Satisfactory Unsatisfactory implementation capacity of OPIC was
overestimated and safeguard concerns
with regards to Palm Oil Effluent
Management were overlooked\. In
addition, procurement and financial
management were both weak\.
Borrower Performance : Unsatisfactory Unsatisfactory
Quality of ICR: Satisfactory
NOTES:
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
The ICR includes eleven lessons, seven were general and four were project specific\. The following four lessons
are emphasized with some rearrangement:
ï¬ Project relevance alone does not guarantee implementation success in an environment where commitment
and ownership are lacking on the part of the government and stakeholders \. The project experience
demonstrated that good relationships between the government, implementing agencies, and the Bank are
critical factors for the success of a project\. Strong government oversight to ensure that implementation issues
are tackled in real time in order to keep a project on track is even more important\. Critical decisions such as
nominating members of OPICâs Board could have been made a condition of effectiveness so that the Board
would have been operational from the beginning of project implementation\.
ï¬ Adequate consultation with all stakeholders is a very important pre -requisite during project preparation and
implementation\. Equally important is the proper documentation of the consultation process and feedback, not
only for administrative reasons, but also to record consent and smooth the path of implementation, especially
in environments where land rights are highly contested\.
ï¬ An effective communication and outreach strategy is important to generate awareness and participation at
the community level \. This would help farmers understand the benefits of a project and not be misguided by
external influences\.
ï¬ Adequate staff capacity within the implementing agency is important for successful implementation \. It is
important to carefully evaluate the capacity and staffing needs of the implementing agency during project
preparation, so that adequate capacity is in place for implementation\. Implementation readiness is critical for
the success of projects, and stronger measures should be built in design to address lack of counterpart
performance\. Issues of salary differentials between project and non-project staff within an organization are
potential source of conflicts that may cripple the organization if they are not effectively handled, and in the case
of the project OPIC fell a victim of that\.
14\. Assessment Recommended? Yes No
Why? To verify ratings by field based evidence\.
15\. Comments on Quality of ICR:
The ICR provides thorough yet concise account of project activities\. It also reports candidly on various project
shortcomings\. It includes eleven lessons that reflect the project experience and four them could be generalized to
other projects\. The ICR also provides a relevant discussion on the achievement of project outcomes although
assessment of outcomes was limited by the weaknesses in the implementation of the projectâs M&E framework\. The
ICR does not report on contributions from Local communities, Papua New Guinea Sustainable Development Program,
Local sources of Borrowing country and footnotes for Annex 1 b are confusing\. Finally, at 31 main text pages, the ICR
is relatively long\.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P003614 | Document of
The World Bank
Report No: ICR0000529
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-43290)
ON A
LOAN
IN THE AMOUNT OF US$ 200 MILLION
TO THE
PEOPLE'S REPUBLIC OF CHINA
FOR A
GUANGZHOU CITY TRANSPORT PROJECT
June 26, 2008
China Sustainable Development Unit
East Asia and Pacific Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 2007)
Currency Unit = Renminbi (RMB)
RMB 1\.00 = US$ 0\.135
US$ 1\.00 = RMB 7\.4
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
CAS Country Assistance Strategy
CD Country Director of the World Bank
ERR Economic Rate of Return
GCCTP Guangzhou City Center Transport Project
GEPB Guangzhou Environment Protection Bureau
GIRR Guangzhou Inner Ring Road
GMG Guangzhou Municipal Government
GREEO Guangzhou Road Expansion and Engineering Office
GCCTCC Guangzhou City Center Transport Construction Company
GPAO Guangdong Province Audit Office
GURCC Guangzhou Urban and Rural Construction Commission
GUTS Guangzhou Urban Transport Strategy
IRR Internal Rate of Return
MoF Chinese Ministry of Finance
MVEC Motor Vehicle Emissions Control
PAD Project Appraisal Document
PAP Project affected People
PDO Project Development Objective
PLG Project Leading Group
PO Project Office
PIP Project Implementation Plan
RAP Resettlement Action Plan
RR Ring Road (i\.e\., Guangzhou Inner Ring Road)
RSMS Road Surface Management System
SAB State Audit Bureau
SCATS Sydney-Coordinated Adaptive Traffic System
VP Vice President of the World Bank
TA Technical Assistance
TOR Terms of Reference
Vice President: James Adams
Country Director: David Dollar
Sector Manager: Ede Jorge Ijjasz-Vasquez
Project Team Leader: Shomik Mehndiratta
ICR Main Authors: Georges Darido/Graham Smith
PEOPLE'S REPUBLIC OF CHINA
Guangzhou City Transport Project
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Project Performance in ISRs
H\. Restructuring
I\. Disbursement Graph
1\. Project Context, Development Objectives and Design\. 1
2\. Key Factors Affecting Implementation and Outcomes \. 5
3\. Assessment of Outcomes\. 12
4\. Assessment of Risk to Development Outcome\. 17
5\. Assessment of Bank and Borrower Performance \. 17
6\. Lessons Learned \. 20
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 21
Annex 1\. Project Costs and Financing\. 23
Annex 2\. Outputs by Component \. 24
Annex 3\. Economic and Financial Analysis\. 28
Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 31
Annex 5\. Beneficiary Survey Results\. 33
Annex 6\. Stakeholder Workshop Report and Results\. 34
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 35
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\. 50
Annex 9\. List of Supporting Documents \. 51
MAP IBRD 29423
A\. Basic Information
CN-Guangzhou City
Country: China Project Name:
Transport
Project ID: P003614 L/C/TF Number(s): IBRD-43290
ICR Date: 06/26/2008 ICR Type: Core ICR
PEOPLE'S REPUBLIC
Lending Instrument: SIL Borrower:
OF CHINA
Original Total
USD 200\.0M Disbursed Amount: USD 152\.4M
Commitment:
Environmental Category: A
Implementing Agencies:
Guangzhou City Center Transport Project
Cofinanciers and Other External Partners:
B\. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 09/28/1994 Effectiveness: 09/23/1998 09/23/1998
Appraisal: 01/14/1998 Restructuring(s): 04/21/2003
Approval: 05/29/1998 Mid-term Review: 06/15/2001
Closing: 12/31/2003 12/31/2007
C\. Ratings Summary
C\.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Development Outcome: Moderate
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Satisfactory Government: Satisfactory
Quality of Supervision: Moderately SatisfactoryImplementing
Agency/Agencies: Moderately Satisfactory
Overall Bank Overall Borrower
Performance: Satisfactory Performance: Satisfactory
C\.3 Quality at Entry and Implementation Performance Indicators
Implementation QAG Assessments
Performance Indicators (if any) Rating
Potential Problem Project No Quality at Entry Satisfactory
i
at any time (Yes/No): (QEA):
Problem Project at any Quality of
No Moderately Satisfactory
time (Yes/No): Supervision (QSA):
DO rating before
Satisfactory
Closing/Inactive status:
D\. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
General transportation sector 25 25
Roads and highways 75 75
Theme Code (Primary/Secondary)
Access to urban services and housing Primary Primary
Municipal governance and institution building Primary Primary
Other urban development Primary Secondary
Pollution management and environmental health Primary Secondary
E\. Bank Staff
Positions At ICR At Approval
Vice President: James W\. Adams Jean-Michel Severino
Country Director: David R\. Dollar Yukon Huang
Sector Manager: Ede Jorge Ijjasz-Vasquez Jeffrey S\. Gutman
Project Team Leader: Shomik Raj Mehndiratta Richard G\. Scurfield
ICR Team Leader: Shomik Raj Mehndiratta
ICR Primary Author: Georges Bianco Darido
Graham Smith
F\. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The project development objective is to improve the accessibility of the city center of
Guangzhou by promoting the efficient use of the urban transport system in an
environmentally sustainable way\.
The following outcomes and key performance indicators will be monitored to meet this
development objective:
Outcome 1: Improved level of service and reduced congestion on the City Center road
network as a result of:
ii
1\. completion of the Guangzhou Inner Ring Road (GIRR);
2\. traffic management\.
Outcome 2: Increased throughput (in terms of passengers) of public transport corridors
within the City Center as a result of:
1\. improved management of bus priority lanes; and
2\. development of bus priority lanes\.
Outcome 3: Reduction in relative levels of air pollution as a result of:
1\. the traffic management measures; and
2\. improved coordination amongst responsible agencies\.
Outcome 4: Reduction in the relative levels of accidents per capita as a result of:
1\. the introduction of unleaded gasoline; and
2\. a vehicle emissions control program\.
Outcome 5: Improved effectiveness and efficiency of road maintenance as a result of:
1\. introduction of modernized road maintenance equipment; and
2\. development of a road maintenance system\.
Outcome 6: Strengthened management capacity of municipal agencies responsible for
urban transport as a result of:
1\. technical assistance support and on-the-job training during project
implementation; and
2\. classroom training and study tours\.
Revised Project Development Objectives (as approved by original approving authority)
(a) PDO Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Revised Achieved at
approval Target Completion or
documents) Values Target Years
Indicator 1 : Traffic Flows to city center (as bounded by IRR) [Outcome 1]
Value
quantitative or 138,990 -10% +13%
Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2001
Comments Traffic counts in 1999 and 2000 showed reductions by 14% and 6%,
(incl\. % respectively, but by 2001 were 13% above baseline and were expected to rise\.
achievement) The Bank and the client agreed to discontinue because of the rising trend and
high cost of collecting the data\.
Indicator 2 : City Center (Cross-town speeds) on N-S corridor (p\.m\. peak) [Outcome 1]
Value 24km/hr +15% +33%
iii
quantitative or
Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2001
Comments
(incl\. % The target was achieved in 2001, but speeds were not monitored after that year
achievement) for the same reasons as in Indicator 1\.
Indicator 3 : City Center (Cross-town speeds) on E-W corridor (p\.m\. peak) [Outcome 1]
Value
quantitative or 24km/hr +15% +49%
Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2001
Comments
(incl\. % The target was achieved in 2001, but speeds were not monitored after that year
achievement) for the same reasons as in Indicator 1\.
Indicator 4 : Bus Speeds on N-S corridor [Outcome 2]
Value
quantitative or 11\.2 km/hr +43% +63%
Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2006
Comments
(incl\. % Bus speeds have been consistently at or above the target since 2003\.
achievement)
Indicator 5 : Bus Speeds on E-W corridor [Outcome 2]
Value
quantitative or 11\.2 km/hr +43% +63%
Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2006
Comments
(incl\. % Bus speeds have been consistently at or above the target since 2003\.
achievement)
Indicator 6 : Increased Public Transport corridors: Percentage Share of Trips [Outcome 2]
Value
quantitative or 16% 22% 23%
Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2006
Comments
(incl\. % Represents mode share in the 10 districts\. Mode share in the 8 original districts
achievement) is 35%\.
Indicator 7 : Reduction in Air Pollution: Ambient Air Quality, NOx [Outcome 3]
Value
quantitative or 0\.151 mg/m(3) -10% -23%
Qualitative)
Date achieved 06/30/1998 12/31/2006 12/31/2006
Comments The target has been achieved and sustained since 2002\. The monitoring program
(incl\. % was changed around 2002 to include 9 sites (instead of 6) and NO2 (instead of
achievement) NOx)\.
Indicator 8 : Reduction in Air Pollution: Ambient Air Quality, CO [Outcome 3]
Value 2\.89 mg/m(3) -10% -46%
iv
quantitative or
Qualitative)
Date achieved 06/30/1998 12/31/2006 12/31/2006
Comments
(incl\. % The target has been achieved and sustained since 2002\. The monitoring program
achievement) was changed around 2002 to include 9 sites (instead of 6)\.
Indicator 9 : Improved Road Maintenance: % roads in good condition or better/High-speed
[Outcome 5]
Value
quantitative or 50% 60% 91%
Qualitative)
Date achieved 06/30/1998 12/31/2006 12/31/2006
Comments This indicator has achieved its target\. The monitoring methodology was changed
(incl\. % after appraisal to better conform with local practice, so the original baseline of
achievement) 31% was revised to 50%\.
Indicator 10 : Improved Road Maintenance: % roads in good condition or better/Primary Roads
[Outcome 5]
Value
quantitative or 50% 60% 91%
Qualitative)
Date achieved 06/30/1998 12/31/2006 12/31/2006
Comments This indicator has achieved its target\. The monitoring methodology was changed
(incl\. % after appraisal to better conform with local practice, so the original baseline of
achievement) 31% was revised to 50%\.
Indicator 11 : Improved Road Maintenance: % roads in good condition or better/Secondary and
Access Roads [Outcome 5]
Value
quantitative or 80% 96% 83\.5%
Qualitative)
Date achieved 06/30/1998 12/31/2006 12/31/2006
Comments This indicator has improved but did not fully achieve its target\. The monitoring
(incl\. % methodology was changed after the appraisal to better conform with local
achievement) practice, so the original baseline of 34% was revised to 80%\.
Indicator 12 : Traffic accidents per capita (10,000 persons) [Outcome 4]
Value
quantitative or 0\.85 -10% -25%
Qualitative)
Date achieved 06/30/1998 12/31/2006 12/31/2006
Comments
(incl\. % This indicator has been achieved\.
achievement)
Indicator 13 : Traffic fatalities per capita (10,000 persons) [Outcome 4]
Value
quantitative or 0\.11 -10% -55%
Qualitative)
Date achieved 06/30/1998 12/31/2006 12/31/2006
Comments
(incl\. % This indicator has been achieved\.
v
achievement)
(b) Intermediate Outcome Indicator(s)
Original Target Formally Actual Value
Indicator Baseline Value Values (from Achieved at
approval Revised Completion or
documents) Target Values Target Years
Indicator 1 : % of inner ring road completed
Value
(quantitative 0% 100% 100%
or Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2007
Comments
(incl\. %
achievement)
Indicator 2 : % of traffic management and safety improvement program completed
Value
(quantitative 0% 100% 100%
or Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2007
Comments
(incl\. %
achievement)
Indicator 3 : % of Public transport improvement program completed
Value
(quantitative 0% 100% 100%
or Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2007
Comments
(incl\. %
achievement)
Indicator 4 : % of Motor vehicle emission control facilities completed
Value
(quantitative 0% 100% 80%
or Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2007
Comments
(incl\. % The scope of this component was reduced\.
achievement)
Indicator 5 : % of Road maintenance facilities completed
Value
(quantitative 0% 100% 95%
or Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2007
Comments
(incl\. % The remaining item is the implementation of the road maintenance information
achievement) management system to be completed with local funds\.
vi
Indicator 6 : % of institutional strengthening improved
Value
(quantitative 0% 100% 100%
or Qualitative)
Date achieved 06/30/1998 12/31/2003 12/31/2007
Comments
(incl\. % All elements of the institutional component were completed\.
achievement)
Indicator 7 : % of Guangfo road completed
Value
(quantitative 0% 100% 100%
or Qualitative)
Date achieved 06/30/2003 12/31/2004 12/31/2007
Comments
(incl\. % This indicator was added after project restructuring in 2003\.
achievement)
G\. Ratings of Project Performance in ISRs
Actual
No\. Date ISR
Archived DO IP Disbursements
(USD millions)
1 06/15/1998 Satisfactory Satisfactory 0\.00
2 10/13/1998 Satisfactory Satisfactory 0\.00
3 04/06/1999 Satisfactory Satisfactory 8\.00
4 06/16/1999 Satisfactory Satisfactory 8\.00
5 12/08/1999 Satisfactory Satisfactory 27\.39
6 12/17/1999 Satisfactory Satisfactory 31\.61
7 05/17/2000 Satisfactory Satisfactory 57\.08
8 06/06/2000 Satisfactory Satisfactory 57\.08
9 10/19/2000 Satisfactory Satisfactory 57\.08
10 05/03/2001 Satisfactory Satisfactory 69\.19
11 06/12/2001 Satisfactory Satisfactory 69\.19
12 12/21/2001 Satisfactory Satisfactory 69\.19
13 05/14/2002 Satisfactory Satisfactory 69\.19
14 12/11/2002 Satisfactory Satisfactory 70\.46
15 06/30/2003 Satisfactory Satisfactory 70\.46
16 12/29/2003 Satisfactory Satisfactory 79\.69
17 04/15/2004 Satisfactory Satisfactory 79\.69
18 12/20/2004 Satisfactory Satisfactory 83\.12
19 06/16/2005 Satisfactory Satisfactory 93\.55
20 07/29/2005 Satisfactory Satisfactory 97\.19
21 12/13/2005 Satisfactory Satisfactory 97\.19
22 12/08/2006 Satisfactory Moderately Satisfactory 128\.36
23 01/14/2008 Satisfactory Moderately Satisfactory 138\.15
vii
H\. Restructuring (if any)
ISR Ratings at Amount
Restructuring Board Restructuring Disbursed at Reason for Restructuring &
Date(s) Approved Restructuring
PDO Change Key Changes Made
DO IP in USD
millions
(i) the allocation of the loan
savings of US$40 million for a
new Project component;
(ii) the further reallocation of
US$12 million of loan proceeds
04/21/2003 N S S 70\.46 for expanding the traffic
management component;
(iii) cancellation of US$20
million from the loan; and
(iv) extension of the loan
closing date to December 31,
2004\.
I\. Disbursement Profile
viii
1\. Project Context, Development Objectives and Design
1\.1 Context at Appraisal
1\. The Guangzhou project was the Bank's third stand-alone urban transport investment
in China following two loans in Shanghai\. The strategic framework for the project was
the Guangzhou Urban Transport Studies begun in 1994\. The project was designed to
support three goals of the Country Assistance Strategy (February 25, 1997) by promoting
growth with economic stability, alleviating infrastructure constraints, and safeguarding
the environment\. While the CAS evolved over the period of implementation, essentially
the same goals are relevant at the time of completion\. The rationale for Bank
involvement was and remains the concern for the negative impacts of rapid urbanization
and preserving the livability of China's third largest city\. The Bank offered experience in
five key areas: (i) strategic planning of multi-modal urban transport systems, (ii) impacts
of motorization, (iii) public transport operations, (iv) traffic management, and (v)
transport environmental issues\.
2\. In 1997, Guangzhou's city-proper population was 4\.6 million and growing rapidly
due to a continuing influx of unregistered workers from rural areas\. The population
density was extremely high, exceeding 20,000 inhabitants per square km\. The vehicle
fleet in 1997 was under 200,000, but growing at over 20% per year, with the number of
motorcycles growing at 30% per year\. The decline of the walk mode share was a source
of concern for transport planners\. Use of the bicycle, the traditional mode of transport in
Chinese cities, was becoming increasingly restricted and dangerous due to the
progressive expansion of road space for motor vehicles\.
3\. By the mid 1990s, traffic congestion was becoming an important constraint to
Guangzhou's productivity, as evidenced by increased travel times and higher vehicle
operating costs\. Guangzhou lacked a functional hierarchy of streets, which complicated
the task of separating fast-moving from slow-moving traffic\. Although the City's first
underground metro line started operating in July 1997 and two other lines were planned
or under construction, road-based public transport (a potentially efficient mode of
passenger transport) was hindered by lack of capacity, slow operating speeds and
outdated equipment and practices\. Air pollution from vehicle emissions was a concern
for the health of the urban population\. The road accident rate was high with pedestrians
and cyclists especially at risk\. The accident rate per million inhabitants was growing at
10 percent per year\.
4\. The project attempted to address these challenges by promoting a cost-effective and
environmentally-balanced framework for urban transport development\. The project was
to add needed infrastructure, promote safer and more efficient use of existing road
capacity via traffic management and improved public transport, and mitigate the
environmental impact\. In addition, the project included the strengthening of the capacity
of local institutions to better manage the sector\. The project was fully consistent to the
Bank's sector strategy ("Sustainable Transport," 1996), which emphasized the integrity of
1
economic, social, and environmental dimensions of a sustainable transport policy\. These
priorities were also consistent with the Bank's urban transport strategy for China
articulated at a major national symposium in Beijing in 1995\.1
1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)
5\. The principal PDO was to improve the accessibility of the city center of Guangzhou
by promoting the efficient use of the urban transport system in an environmentally
sustainable way\. The following outcomes and key performance indicators were included
in the PAD:
1) Improved level of service and reduced congestion on the City Center road
network as a result of:
Completion of the Guangzhou Inner Ring Road
Traffic management\.
2) Increased throughput (in terms of passengers) of public transport corridors within
the City Center as a result of:
Improved management of bus priority lanes; and
Development of (new) bus priority lanes\.
3) Reduction in relative levels of air pollution as a result of:
The introduction of unleaded gasoline; and
A vehicle emissions control program\.
4) Reduction in the relative levels of accidents per capita as a result of:
Traffic management measures; and
Improved coordination amongst responsible agencies\.
5) Improved effectiveness and efficiency of road maintenance as a result of:
Introduction of modernized road maintenance equipment; and
Development of a road maintenance system\.
6) Strengthened management capacity of municipal agencies responsible for urban
transport as a result of:
Technical assistance (TA) support and on-the-job training during project
implementation; and
Classroom training and study tours\.
6\. Under Outcome 1, the completion of the Guangfo Radial Road was added as a key
indicator when the project was amended in April 2003\. Specific baseline and targets for
each indicator were not included in the PAD, but were qualitatively described relative to
a "no project" scenario\. The definition of the indicators, along with baseline and target
values (presented in Section F of the Data Sheet), were established or refined during
negotiations as follows:
a\. "Increased passenger and freight throughput" was monitored by traffic flows
(cordon counts) to the city center as bounded by the RR\.
1China's Urban Transport Development Strategy: Proceedings of a Symposium in Beijing, November 8-10,
1995\. (Editors: S\. Stares and Liu Z\.)
2
b\. "Reduced journey times" was monitored using cross-town speeds on a major
north-south and a major east-west corridor in the p\.m\. peak period
c\. "Reduced per capital accident rates" was measured by accidents and fatalities per
10,000 people\. An additional indicator for the percentage of accidents involving
pedestrians or bicyclists was contemplated but never monitored\.
d\. "Increased average bus speeds" was measured along a major north-south and a
major east-west corridor\. Public transport "modal share" was originally
monitored in 8 districts and then 10 districts after 2001\. No target was set for
public transport "ridership" and therefore it is not reported\.
e\. "Reduced tailpipe emissions" was altered to measure annual average "ambient air
quality" in milligrams per cubic meter of NOx and CO, at first in 6 and then 9
monitoring sites\.
f\. "Increased sales of unleaded gasoline" was never monitored despite being
included in the PAD\.
g\. "Reduced unit costs of road maintenance" was never monitored despite being
included in the PAD\.
h\. "Increased percentage of roads in good condition" was refined to distinguish
between high-speed, primary, secondary and access roads and the methodology
was changed after appraisal to better conform to local practices\.
i\. "Project agencies' satisfaction with training and services received" and "improved
efficiency and effectiveness of public service delivery" were not monitored
quantitatively\.
1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
reasons/justification
Not applicable\.
1\.4 Main Beneficiaries
7\. The project was proposed to benefit all residents of Guangzhou to some degree, but
especially those who lived and worked in the city center\. Those who traveled into or out
of the city each day would benefit most from the reduction in travel times compared to
what they would have been without the project\. About 60% of the Project's economic
benefits were expected to come from travel time savings\. The PAD also outlined:
The main beneficiary of the Guangzhou Inner Ring Road (RR) were private
vehicle users
The beneficiaries for the traffic management component were private vehicle
users, bus passengers, bus operators, cyclists and pedestrians
Air quality improvements would benefit especially those who lived and worked
on the most heavily congested streets
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1\.5 Original Components (as approved)
8\. The original components are summarized below\. Additional details are provided in
Annex 2\.
Part A: Inner Ring Road - Construction of the Inner Ring Road, including
resettlement, rehabilitation of and compensation for people affected by the project\.
Part B: Traffic Management and Safety - Traffic management civil works and
road safety measures, including the provision of equipment, services and training\.
Part C: Public Transport - Implementation of bus information, management and
maintenance programs, including program equipment, consultant services and
training, and a bus maintenance depot at Longxi\.
Part D: Vehicle Pollution Control - A program to control and reduce air pollution
from mobile sources through the provision of equipment, consultant services and
training\.
Part E: Road Maintenance - Provision of equipment, consultant services and
training to include undertaking of a comprehensive inventory of maintenance
requirements and updating of the maintenance expenditure requirements\.
Part F: Institutional Development - Strengthening of the managerial, technical,
planning and implementation capacity of the municipal agencies through the
provision of equipment, consultant services and training, and studies to assist
Guangzhou to formulate plans and policies\.
1\.6 Revised Components
Project Restructuring
9\. In November 2002, the MoF formally requested: (i) the allocation of the loan savings
of US$40 million for a new Project component (Guangfo Road); (ii) the further
reallocation of US$12 million of loan proceeds for expanding the traffic management
component to include channelization at major road intersections and installation of the
Sydney Coordinated Adaptive Traffic System (SCATS); (iii) cancellation of US$20
million of the loan due to unused funds (see cost variations in Section 2\.2), and (iv)
extension of the loan closing date from December 31, 2003 to December 31, 2004\. The
size of the cancelled loan and the scope of these other changes in relation to thresholds at
the time required the project team to seek World Bank Board approval, which it received
on a no-objection basis allowing the loan and project agreements to be amended in April
2003\.
10\. The new component consisted of the first section of the Guangfo (Guangzhou-Foshan
Road) Radial Road (5\.5 km), connecting the city center of Guangzhou with the nearby
city of Foshan\. It formed part of the proposed urban highway network recommended in
the 1994 Guangzhou Urban Transport Strategy study (GUTS) and supported the PDO\. It
was fully appraised and found to be economically justified and technically,
environmentally and socially sound\. Preparation of the proposal required a full
environmental assessment in accordance with Bank safeguard policies\.
4
11\. The vehicle pollution control component had the objective to introduce unleaded
gasoline in Guangzhou but was overtaken by a decision of the central government in
1999 to begin phasing out leaded gasoline\. As a result, TA funds for this component
were reallocated to purchase of equipment for automatic noise monitoring along the Ring
Road\. The final decision to delete the vehicle emissions research function in 2006
reflected the national government's new role in emissions research and standards
development in Beijing\. When the project was designed a decade earlier, the national
government's role in setting emission standards had not yet been clearly established\.
1\.7 Other significant changes
12\. There were four approved extensions (the second extension being provisional),
moving the project's closing date a total of four years: (i) from 12/31/03 to 12/31/04,
approved by the Board in April 2003; (ii) from 12/31/04 to 6/30/05, approved by CD on
12/29/04; (iii) from 6/30/05 to 12/31/06, approved by VP on 6/27/05; and (iv) from
12/31/06 to 12/31/07, approved by VP on 12/15/06\.
13\. First extension: The first extension for one year (from December 2003 to December
2004) was approved to allow the use of the loan savings to help finance construction of
the Guangfo Road and complete the third phase of the traffic management program and
the information technology-based systems for bus management, ring road monitoring and
road maintenance\. While amending the project agreement, the Bank emphasized to the
City the full scope of the resettlement and environmental requirements triggered by the
addition of Guangfo Road\.
14\. Second extension: By September 2004, three months before the closing date
corresponding to the first extension, all procurement was complete except the double-
glazing of windows to reduce noise from the Ring Road, traffic signals, three important
computer-based management systems (traffic control, bus dispatching and tracking, and
road maintenance), and the latest urban transport strategy study (GUTS4)\. As
disbursement was still very slow, the mission urged the construction commission and the
municipal finance bureau to speed up their review of withdrawal applications\. An audit
report for 2003 by the Guangdong Province Audit Office (GPAO) qualified its opinion
for lack of sufficient financial documentation of the Ring Road resettlement activities,
which were financed by the city using counterpart funds (see Section 2\.4 under fiduciary
issues)\. As a result, the Bank granted a provisional 6-month extension to June 2005\.
15\. Third extension: The Bank approved the one-year extension to December 2006 after
the delivery of an "unqualified" (clean) audit report for 2004\. The second and third
extensions were motivated by the disruptions caused by the SARS epidemic in 2003,
which restricted activities in Guangzhou for half a year, and to allow more time to
finalize design of the three management systems\. Neither side had foreseen the technical
complexities and delays involving system design and procurement (further described in
Section 2\.2)\.
16\. Fourth extension: A final extension of one year was requested and approved in
December 2006, which moved the closing date to December 31, 2007\. This extension
5
was requested to allow the client to fully utilize the loan and complete four remaining
components deemed important to the achievement of the development objective: (i)
provision and installation of air quality inspection equipment (US$2\.8 million), (ii)
construction of a noise barrier adjacent to the Guangzhou City Zoo (US$0\.9 million), (iii)
consultants services for the second phase of the Guangzhou Urban Transport Strategy
(US$2\.0 million), and (iv) provision and installation of the traffic control and surveillance,
bus dispatching and monitoring, and road asset (maintenance) management systems
(US$7\.2 million)\. The Bank also agreed in August 2006 to increase civil works
disbursement percentages from 43% to 85% at the client's request, although the
remaining amount of civil works was small\.
2\. Key Factors Affecting Implementation and Outcomes
2\.1 Project Preparation, Design and Quality at Entry
17\. The quality of the project at entry was satisfactory\. This was also the conclusion of
QAG's overall assessment of quality at entry in 1999 (QEA2), although it rated the "lack
of any assessment of executing agencies' capacity" as unsatisfactory\. Lessons from
earlier operations (notably the two urban transport projects in Shanghai) and early
preparation activities (e\.g\. GUTS) were taken into account in designing a comprehensive
package of urban transport components\. Risks associated with GMG's limited
experience with public transport reforms, emissions testing, and traffic management were
noted in project documents\. The project design attempted to address the required
capacity building by including an institutional development component and various
studies under each of the other components (see Annex 2)\. An adequate participatory
process involving project affected people, road users, neighborhood and working groups
was used to mitigate risks\.
18\. It took nearly four years from the first mission to loan negotiations in 1998\. Project
preparation was suspended when senior officials in the national government questioned
whether it was appropriate for Guangzhou to take on an international loan for urban
transport, which would not directly generate revenue for repaying the loan\. During this
time the City prepared its first urban transport strategy (GUTS), followed by a more
detailed strategy (GUTS2), with substantial help from an international consultant and
extensive Bank supervision\.
19\. The executive project summary (i\.e\., project concept note), and later the PAD, made a
cogent case for a comprehensive approach to addressing Guangzhou's transport problems
and the national government eventually approved the approach\. The project documents
also stressed that a sustainable coordination mechanism across the many City agencies
would be essential to the success of the project\. It gave traffic management and road
safety pride of place in the project composition\. The implementation of the first phase of
the traffic management improvements was covered by a dated covenant (18 months from
the date of loan signing to completion)\.
6
2\.2 Implementation
20\. The implementation of the project was generally very successful, but it is important to
note the significant delays with non-road components and cost variations\. The Ring
Road (representing over 80% of the investment) was largely complete and open to traffic
in January 2000, less than 2 years after construction began\. The last ramps were opened
by mid-2000\. The original schedule allowed five years for project implementation, but
soon after construction started the City decided that faster implementation would reduce
the exposure of residents to construction noise and traffic disruptions and offered the
contractors substantial financial bonuses as incentives for early completion (including
sizeable overtime)\. Bank supervision specialists were initially concerned by the
accelerated implementation plan because (i) it was decided upon without prior
consultation with the public or the Bank (per agreement), (ii) it could negatively affect
the quality, cost, and environmental impact of construction, and (iii) it could affect the
progress of the other project components\. Nevertheless, later supervision missions rated
the overall construction quality as "commendably high" and the project was responsive to
requests for noise mitigation measures and detailed cost documentation\.
21\. On the other hand, the construction of Guangfo Road experienced initial delays
because of (i) funding eligibility and (ii) late possession of site due to resettlement issues,
which were eventually resolved (see Section 2\.4 for more detail), and (iii) technical
complications with bridge construction and geological conditions\. Guangfo Road
included the construction of four large bridges across the Zhu (Pearl) River, a viaduct
across an island in the middle of the river, bus priority lanes, and lanes and intersection
arrangements for cyclists\. Guangfo Road was completed in 2005, about one year behind
the original schedule\.
22\. The Ring Road experienced significant cost variations from appraisal to completion\.
The total bid price was less than 50% of the engineering estimate used in the project
appraisal\. This difference was due to the use of Chinese Government unit costs for civil
works (rather than actual market prices) and the Bank's suggested method of
incorporating contingencies for price and physical quantities\. Until 2005, inflation had
been less than expected so contracts awarded in the later years of project implementation
were at lower prices than had been expected at appraisal\. However, the final construction
cost was about 50% higher than the bid price primarily because of: (i) major design
changes including two additional lanes of traffic and structural redesign; (ii) low-noise
porous asphalt concrete was used throughout instead of only at sensitive locations as
originally planned; (iii) additional geotechnical work; (iv) additional payments to
contractors for overtime work; and (v) incentives to contractors for quality and advanced
completion\. Nevertheless, the cost overrun from bid price to completion did not affect
the EIRR of the project as it was still less than the estimate at appraisal\.
23\. There were significant schedule delays with most non-road infrastructure components
because of technical problems and an initial lack of capacity\. A Quality of Supervision
Assessment in 2006 (QSA7) also concluded that a lack of ownership by the borrower
"turned out to be a shortcoming that was later to affect implementation of the non-civil
works components of the project\." The mid-term review in April 2001 focused on the
7
progress and challenges to the traffic management, public transport, vehicle pollution
control, road maintenance, and institutional components\. The SARS epidemic in 2003
affected the planned supervision of these components, justifying two extensions\. The
repeated delay of most of these "soft" components was the justification for a reduction in
the implementation progress rating to "moderately satisfactory" in December 2006\. The
most important factors influencing the implementation of the non-road components are
described below\.
a) Unexpected technical issues or challenges
(i) Traffic Management -- the Ring Road traffic control system went through an
extended decision-making period of over one year to define an implementation
approach that would reconcile the proprietary technology of the existing traffic light
system with open bidding for its expansion\. The project considered the adoption of
North American or United Kingdom interface standards, which would affect the
eligible suppliers and the technical compatibility with the current system and future
generations of traffic signals, but in the end, adopted no international standard for its
two centers\.
(ii) Bus Depot - Technical problems, clearances, and new building codes for a waste
water treatment facility and refueling station at the Longxi Bus Depot caused repeated
delays\.
(iii) Geological conditions-- Construction of the bridges for Guangfo Road was
complicated by the discovery, during detailed geotechnical investigations, of a
number of karst caves in the river bed beneath the intended bridge foundations\.
b) Contractual and procurement issues
(i) Traffic Management and Surveillance -- The design was initially delayed by
performance problems with the local consultant hired to prepare the technical
specifications\. The systems were also delayed by a discussion of the procurement
approach that lasted well over one year\. The City's consultant recommended a
design-build contract, whereas the Bank team questioned whether bids for
construction could be feasible and effective before the design was finalized\.
(ii) Maintenance Management Systems After a prolonged discussion period of over
one year, the City decided to package the road, bridge and drainage maintenance into
a single integrated system but procurement was split into three contracts: (1)
equipment for the initial development phase, (2) design consulting services, and (3)
equipment for long-term system use\. In the end, the Bank provided an experienced
international consultant to assist with procurement\.
(iii) Pollution Control -- Although not financed by the Bank loan, the construction of
the motor vehicle emissions control building affected the installation of the Bank-
financed monitoring equipment due to repeated delays in site preparation and the
bidding of design and consulting services\. It was eventually completed in March 2005\.
Bank missions identified a lack of PO staff for this component as one reason for the
delay\.
8
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
24\. The M&E program was designed on a comprehensive set of indicators corresponding
to six outcomes (summarized in Section 1\.2)\. The loan and project documents specified
the following M&E activities in addition to regular supervision missions by the Bank,
which were generally observed by the PO:
Annual project reports with performance indicators (see Section F of Data Sheet)
Joint review of progress annually and near project mid-term (2001)
Submittal of monthly progress and disbursement reports, and quarterly reports of
planned and actual progress for each component (cost and physical works)
25\. The project was being implemented in a city undergoing unprecedented levels of
change (annual growth of 12% from 2000 to 2005 resulting in a doubling of the GDP per
capita to US$8,500)\. The administrative boundaries of the urban area were changed in
2001 resulting in a 35 percent net increase in population\. In the case of the Inner Ring
Road, the performance indicators were structured to measure the impact of the road in
reducing traffic in the city center\. In reality, economic development patterns in
Guangzhou eclipsed all expectations and by 2001, traffic volumes into the City Center
were above projections\. In fact, the Bank and PO agreed to stop monitoring the indicators
for improved level of service and reduced congestion (#1, 2 and 3) after 2001 because of
their limited usefulness in the context of overwhelming growth and high cost\. Though the
Ring Road diverted some through traffic, economic development generated additional
traffic into the center\. It is safe to say that the Ring Road played a role in facilitating the
continued economic development and congestion today would have been much worse
without the project\. In hindsight, a performance indicator that focused on the amount of
traffic diverted to the Ring Road from the city center (rather than the absolute levels of
traffic into the city center) may have been a better proxy for capturing the facilitating
impact of the Ring Road\.
26\. Utilization of the M&E data was somewhat limited because of: (1) problems with
realism or reliability of the data and (2) the reports were sometimes submitted late or
incomplete\. A Quality of Supervision Assessment in 2006 called for "a more critical
examination of the realism of the indicators and interpretation of data\."
2\.4 Safeguard and Fiduciary Compliance
27\. The project was classified as a Category "A" because of substantial new construction
and involuntary resettlement\. Environmental Assessments (EA) were carried out for the
RR, Guangfo Road, and the Longxi Bus Depot, and were reviewed by both the Chinese
State Environmental Protection Agency and the World Bank\.
Environmental Impacts
28\. Although there were initial concerns about the environmental impact of the
accelerated construction of the Ring Road, the Project has met all requirements and
greatly expanded the scope of the mitigation measures from appraisal\. The widening of
the RR design from 4 lanes to 6 lanes in some segments caused noise levels for nearby
9
residents in excess of design standards, requiring installation of additional noise barriers\.
This took several years to complete, partly because the City wanted to investigate
alternative designs\. Noise barriers are now widely used in China but were new at that
time and, as such, these investigations were not unreasonable\. The noise barriers
recommended in the original EAP totaled 1,860m, but were expanded many times over
using local funds to accommodate design changes during construction and requests from
those affected\. In early 2002, the City, in response to continued complaints, adopted the
policy to pay for double-glazing windows and improved ventilation in the remaining
residential units where the noise standards were not met, eventually installing these in
about 5,000 housing units\. New trees, shrubs, flowers and grass were planted at ground
level below the Ring Road to improve the aesthetics\. Air quality monitoring showed
marked decreases in the ambient levels of NOx and CO concentrations\. Residents have
expressed full satisfaction with these measures\.
Resettlement
29\. The mid-term review praised the high quality of the resettlement actions taken and
satisfactory indicators\. It achieved the basic objectives of: (i) compensating Project
Affected People (PAPs) for their losses at replacement cost prior to the actual move; (ii)
assisting with the move and providing rehabilitation during the transition period in the
resettlement site; and (iii) assisting PAPs in their efforts to restore their former living\.
The key factors supporting the favorable outcome were:
Good institutional arrangements and capacity of staff
Supportive leadership and availability of funds
Effective coordination with major agencies and stakeholders
Systematic program of consultation with PAPs and their participation
An innovative computer program that facilitated implementation
30\. On the other hand, the financial and internal management of the resettlement program
was inadequate\. The original plans expected construction of the Ring Road to take four
years, but it was actually built in less than two years\. Resettlement activities had to be
completed in 1999 before the civil works could start, but internal processes and financial
controls were not in place\. Fifteen thousand households, shops and businesses were
moved in less than one year\. Though the vast majority of displaced persons were satisfied
with the outcome, audits found that financial controls were lacking as a consequence of
the expedited schedule (see fiduciary section below)\.
31\. The total cost of implementing the RAP reached US$525 million-- more than three
times larger than the US$161 million estimated at appraisal\. It is important to note that
all resettlement work was funded by the client\. One reason for the cost increase was a
rapid rise in land costs, but a 2003 financial management audit of the resettlement
program also pointed to the following reasons, which have been largely addressed in the
City's current resettlement practices:
Initial differences between the compensation policies of the World Bank and the
local government, which were appropriately reconciled
Lack of appropriate resettlement management and supporting systematic
regulations and procedures
10
Lack of effective internal controls, communications, and training for the multi-
layer organizational set-up
Lack of proper financial management structure and disbursement arrangements,
or effective internal and external monitoring mechanisms
Fiduciary
32\. While there were no issues with the financial management of Bank-financed works,
the audit for 2003 conducted by GPAO flagged serious shortcomings in the financial
management of resettlement activities financed by the borrower\. These shortcomings,
which have since been resolved, included:
Lack of land certifications for certain areas to which the households were moved
Lack of housing certifications and supporting evidence
Discrepancies between the reported size of land areas paid for and what actually
changed hands
Lack of supporting documents for the resettlement contracts with affected people
and the compensation amounts paid
33\. The audit for 2004, although unqualified, pointed out that the Guangzhou Road
Expansion and Engineering Office (GREEO) had acquired new housing (apartment
buildings) to receive the displaced people but not all units had been occupied by
households displaced by this project\. The Bank's financial management review
(including the 2004 audit) concluded that record keeping was adequate and financial
management of the loan was satisfactory\. By the time that the Bank was reviewing the
request for the final loan extension in 2006, an unqualified audit for 2005 had been
accepted by the Bank's financial management specialists and the issue was closed\.
Procurement
34\. Procurement was generally successful and fully compliant with Bank rules\. However,
there were significant issues and contract variations (described in Section 2\.2), due in part
to the client's unfamiliarity with the implementation of new and complex technologies
(including for road maintenance, traffic management and public transport) and the Banks'
procurement guidelines\. There were several unsuccessful procurements or contracts for
consulting services that did not meet or deliver on the requirements, including a road user
education program, air monitoring equipment (eventually replaced by noise monitoring
equipment), and hybrid buses for a demonstration project (eventually scrapped)\. The
difficulties in designing and procuring three computer-based management systems were
only resolved with the involvement of Bank-hired specialists with international
experience with such complex systems\.
35\. Guangzhou made the Bank aware of one particular case of fraudulent procurement
practice for a small sub-component during a supervision mission in February 2007\. The
case involved the use of sub-standard materials by the contractor for a pedestrian
information system\. The client cancelled the contract as part of a zero-tolerance policy
on fraud and corruption (valued at about US$2\.7 million) and barred the contractor from
participating in future bids for contracts financed by Guangzhou Construction
Commission\. By the time the contract was cancelled, the closing date was imminent and
11
the contract was ultimately not financed by the Bank\. The Bank's task team supported
the client's investigation by (i) hiring a consultant to provide evidence and (ii) reporting
the case internally on October 25, 2007, although no subsequent Bank action has been
taken\.
2\.5 Post-completion Operation/Next Phase
36\. The important road network investments financed by the project (including the Ring
Road and Guangfo Road) are being successfully operated and maintained\. The budget
for operations and maintenance is adequate\. However, several contracts remained open
after the project closing date including (i) the GUTS4 implementation study, (ii) traffic
management equipment, and (iii) the road and bridge management system\. GMG agreed
to take responsibility for completing these contracts and for contract payments related to
activities undertaken after the closing date\.
37\. Well before the original completion date, the City expressed interest in a second
Bank-supported urban transport project\. It would require an update of the City's urban
transport strategy, analysis of the new demand for urban transport reflecting the shift in
modal shares (more cars, less biking and walking), and review of the strengths and
weaknesses of current practices\. In April 2005 the head of the PO formally conveyed to
the Bank its interest in securing a second loan to support Guangzhou's urban transport
development plans, but no formal decision by the central government was made\. The
Bank has agreed to review the GUTS4 study once completed (expected by end of 2008)\.
38\. In 2007, Guangzhou entered into dialogue with the Bank's GEF-supported program
for urban transport development in China and qualified as one of the demonstration cities\.
Given that the amount of the GEF grant is relatively limited, the program is intended to
carry out key studies and pilots that can help demonstrate the positive impacts of
innovative practices in mitigating GHG emissions and help pave the way for scaling up
those initiatives through major investments\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
39\. The project was and remains fully consistent with the country's development
priorities to relieve infrastructure bottlenecks and foster economic growth\. It was also
consistent with the Bank's urban transport strategy ("Cities on the Move," 2001) and,
later, with the most recent China urban transport strategy ("China: Building Institutions
for Sustainable Urban Transport," 2006)\. Both of these Bank documents emphasized that
the impacts of rapid motorization can be dealt with on a sustainable basis only by a
comprehensive set of actions, going beyond new road infrastructure, all of which were
included in the design and implementation of the project:
Improvement of public transport services,
Facilities for pedestrians and cyclists (particularly the poor and other vulnerable
groups),
12
Non-physical ways to derive greater flow capacity from existing streets (traffic
management),
Restraints on car use (such as paid parking), and
Institutional development\.
3\.2 Achievement of Project Development Objectives
40\. The project is rated satisfactory because it was generally successful in delivering the
anticipated objective of promoting the efficient use of the urban transport system in an
environmentally sustainable way, as detailed below\.
a) Improved level of service and reduced congestion on the City Center road
network-- Satisfactory
41\. The project has successfully achieved this objective by implementing an elevated
Ring Road within schedule and under budget, without sacrificing quality or environment
for nearby residents\. Guangfo Radial Road was also successfully implemented\. The level
of service in the city center has improved as measured by indicators of cross-town speeds
in north-south and east-west corridors during the p\.m\. peak (33-49% increase from 1998
to 2001)\. Congestion however does not appear to have been reduced as traffic volumes
in the city center bound by the Ring Road were already above forecast in 2001\. The
performance indicator for congestion was undermined by higher than expected economic
growth resulting in faster than expected motorization\.
42\. Traffic management measures are working satisfactorily\. Observers report a distinct
improvement in the general discipline among Guangzhou's road users, due in part to the
channelized intersections and coordinated traffic light systems\. Left turns (the most
disruptive of traffic movements) are appropriately restricted by median dividers or
controlled at intersections by having their own green phase in the traffic light cycle, with
left-turn bays so that vehicles waiting to turn do not obstruct other vehicles\. The
channelization at intersections carried out under the first phase of the Traffic
Management component was one of the first demonstrations of such low-cost and
effective techniques in China\.
b) Increased throughput (in terms of passengers) of public transport corridors
within the City Center-- Satisfactory
43\. Public transport mode share of total trips has grown from 16% to 23%, meeting the
target\. Average speeds in bus corridors have increased by 63%, greatly surpassing the
targets\. This was due to improved management of existing bus lanes and development of
new bus lanes\. The adoption of the fleet management system in Guangzhou has been
exemplary\. The implementation included revisions to business practices and institutional
arrangements, and has achieved outstanding results in terms of the reliability and
sustainability of operations\. The system is currently owned and managed by the city,
which gets information from it to help monitor operations\. All the operators use the
system for planning and monitoring, and passengers have benefited from the improved
performance\. This kind of "win-win" situation requires very careful structuring, and the
Bank's role in nurturing it reflects real value-added\.
13
c) Reduction in relative levels of air pollution-- Satisfactory
44\. Measured ambient concentrations of nitrous oxide and carbon monoxide have been
reduced well beyond the original target reduction of 10%\. Observers have also noted that
the exposure of people to air pollution from the traffic in the city center has probably
been reduced because vehicles on the elevated ring road are farther away from the people\.
One can also deduce that vehicles are traveling at closer to ideal speeds and steady flow
conditions (i\.e\., less `stop-and-go' traffic) thus emitting fewer pollutants\. These outputs
can be attributed in part to the additional infrastructure and traffic management measures
(including better road maintenance practices) implemented by the project that helped
enhance traffic flows and efficiency (such as channelization and signalization) and
general driving conditions\.
d) Reduction in the rate of accidents per capita-- Satisfactory
45\. Provisions for cyclists and pedestrians required some fine-tuning but have been
successful\. Pedestrians are safer at intersections due to dedicated traffic lights and signal
phases, raised `islands', and footbridges\. The benefits are confirmed by the reduction in
the number of per capita traffic accidents by 25% and fatalities by 55%, which have
surpassed their targets\.
e) Improved effectiveness and efficiency of road maintenance-- Satisfactory
46\. The shares of primary and secondary city roads in `good' or better condition have
both increased to 91%, although the measurement methodology changed during
implementation\. The share of primary roads in particular has surpassed its target as a
result of the introduction of modernized road maintenance equipment and the
development of a road asset (maintenance) management system\.
f) Strengthened management capacity of municipal agencies responsible for urban
transport--Satisfactory
47\. The institutional rationale for the project to help the City coordinate the many
agencies implementing different parts of this comprehensive project has been largely
achieved despite delays early on (see also Section 3\.5(b))\. A Project Leading Group
(PLG), chaired by a vice-mayor, initially performed the coordination role though it lost
momentum and focus with time\. The Construction Commission eventually drove much
of the project implementation, which was dominated by the Ring Road\. While this
arrangement was not initially effective in advancing non-road components, the
Construction Commission eventually formed productive relationships with line authority
agencies including the traffic police, managers of bus services, environmental protection,
and resettlement\. For example, missions noted that working relations with the
Guangzhou traffic police, the lead agency for the traffic management component, were
excellent\.
48\. The project also financed extensive amounts of training (both on-the-job and
classroom) and study tours (domestic and international) that had the desired effect of
strengthening the capacity of the personnel and agencies involved\. In all, this project
component financed 28 technical assistance contracts, 15 investigations, and 191 training
14
events (including to Curitiba, Brazil and Bogotá, Colombia)\. Hundreds of senior and
mid-level officials have directly benefited from Bank training\.
3\.3 Efficiency
49\. A traditional cost-benefit analysis was used by the Bank at appraisal to evaluate the
two largest components of the project investment, the Guangzhou Inner Ring Road and
the Traffic Management Component\. The economic efficiency measures for both are
shown in the table below\. The decrease in the net present value and economic rate of
return for the RR is attributed to the large increases in the scope and costs of civil works
(widening of Ring Road and addition of Guangfo Road), resettlement program, and
environmental mitigation (see Sections 2\.2 and 2\.4 for additional details)\. Annex 3
provides more detail on the economic analysis\.
PAD ICR
Guangzhou Inner Ring Road
NPV (12% discount) US$351 million US$147\.9 million
ERR 34\.1% 14\.3%
Traffic Management Component
NPV (12% discount) US$49 million US$15\.2 million
ERR 35% 18\.3%
50\. The economic evaluation in the PAD and at completion used traffic forecasts from a
typical four-stage urban transport model with fixed trip matrices developed by
consultants for a "do-nothing" and "with project" scenarios\. The PAD also described the
sensitivity analyses carried out separately for the Traffic Management and Inner Ring
Road components with respect to the some key variables: (i) the level of motorization;
(ii) rate of economic growth for the city; (iii) delays in completion of construction; (iv)
cost overruns; and (v) alternative design standards (4 lanes or 6 lanes of traffic
throughout)\. No values of these key variables were found to produce a negative NPV or
an economic rate of return of less than 12%\.
51\. The analysis of the fiscal impact of the project found GMG's financial capacity
adequate to meet implementation cost (including debt finance and ongoing maintenance
costs) and it continues to be the case with ongoing operations and maintenance costs\.
3\.4 Justification of Overall Outcome Rating
Rating: Satisfactory
52\. The combination of the project relevance, achievement of PDOs and efficiency
described above justify an overall outcome rating of satisfactory\. The project has
substantially achieved its main objective of promoting the efficient use of the urban
transport system in an environmentally sustainable way despite considerable delays\.
Though their utility is limited by the unprecedented changes in context during the
extended project period, the performance indicators for traffic safety, air pollution, public
15
transport generally confirm the project's success\. The projects institutional objectives
were also substantially achieved\.
3\.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
53\. Nearly 10,000 households and 4,800 shops and enterprises were relocated as part of
the resettlement of the project\. This was the biggest resettlement project in the history of
urban construction in Guangzhou\. Almost all PAPs were pleased with their new and
larger apartments, which, for the first time for many households, had their own kitchen
and bathroom\. The new dwellings were on average 20-35% larger than the old homes
(16 m2 more floor space)\. The new communities had better environmental conditions (air
quality and vegetation, etc\.) as well\. Restoration of livelihood was at least as good as the
control group, except initially for a small number of unskilled workers and small
shopkeepers\. The financial management issues were eventually resolved to the Bank's
satisfaction\. The scale and quality of the standard of living improvements as a result of
the resettlement program have been substantial\.
(b) Institutional Change/Strengthening
54\. The institutional capacity of Guangzhou to successfully implement a large and
complex project was also greatly improved by the following developments:
a\. GUTS was the foundation of the investment and urban development strategy for
Guangzhou for nearly a decade and a model many other Chinese cities have emulated\.
The follow-on efforts (GUTS2, 3 and 4) demonstrate a great deal of city ownership
and the sustainability of the strategy\. The current GUTS is expected to be completed
in 2008 and will embody three principles fully consistent with the Bank's
development partnership strategy for China\.: (1) comprehensive urban planning, (2)
demand management to help solve transportation problems, and (3) `putting people
first' (the title of the current Chinese government policy on urban transport)\.
b\. The discussions with the Bank team during preparation laid the foundation for
Guangzhou's public transport reform\. The adoption of a franchised model regulated
and controlled by the city is more or less what the Bank had envisioned and reflects
international best practice\.
c\. The traffic management component reflected the first time in China that the police
and construction personnel worked out solutions to traffic problems in a coordinated
manner\. This was a model not just for Guangzhou, but other Chinese cities as well\.
d\. The resettlement management software was a major innovation, which has been used
elsewhere in Guangzhou in other projects\.
e\. Guangzhou greatly values the capacity built in the PMO with respect to project
management, financial management (particularly for resettlement), and procurement\.
The office is now in charge of special projects and is seen by the Bureau for
Municipal Management (where it is now housed) as an important asset\.
f\. The project showed the need to plan for dealing with environmental impacts not just
during the construction phase of infrastructure but on a continuing basis during
operation\. As late as June 2005, five years after the Inner Ring Road was opened to
traffic, new noise mitigation cases were still being reported by residents and a health
16
care facility\. As a result, the City needed to retain the capacity to respond
appropriately many years after the RR had opened to traffic\.
(c) Other Unintended Outcomes and Impacts (positive or negative)
Not applicable\.
3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
Not applicable\.
4\. Assessment of Risk to Development Outcome
Rating: Moderate
55\. Guangzhou is becoming an international city of great importance, but it faces some
uncertainties with regard to the project's objectives as it continues to grow\. First, traffic
volumes will continue to increase as more people and cars crowd the roads\. Growing
congestion in the ring road is almost certain, but would have been far worse without the
project\. The indicators suggest that the project struck an appropriate balance of
increasing the supply of roads with public transport and traffic management investments\.
Further capacity building and balanced urban transport investments will be required to
ensure that the mobility and accessibility in the city center are not degraded over time\.
Second, the impact of motorization on the supply and safety of facilities for non-
motorized and public transport modes is also an issue that requires the continued
attention of the public authorities\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Satisfactory
56\. The quality of the Bank performance at entry was satisfactory\. The project's
objectives and design were closely aligned with both the government and World Bank
strategies for urban transport\. The Bank facilitated the planning and preparation of a
balanced and comprehensive project\. The project's technical assistance components have
brought about great progress in terms of institutional capacity and plans\. A few minor
deficiencies are also noted in the following:
The PAD correctly recognized but perhaps could have better mitigated the risk of
delays in implementing non-road investments in a complex project in light of the
experience in Shanghai where, " \. supporting traffic management and public
transport facilities have so far seen only limited implementation\. Weak
implementation of these components is partly due to lack of ownership of designs
produced largely by foreign consultant assistance and partly due to the fragmentation
of responsibility across agencies\." Other critical risks identified in the PAD, while
appropriate, were not thoroughly described\. For example, the risk for "local
government support for any project activity erodes" is vague and went unrated\.
A Quality at Entry report from 1999 observed that there had been "no assessment of
executing agencies' capacity\." The complexity of the project design required 13
17
different agencies to implement the project\. Given the tendency in China for
effective vertical interaction but poor horizontal cooperation, this arrangement ran the
risk of inertia after project preparation as the interest of the various stakeholders
waned and the PLG did not sustain the necessary commitment, coordination and
momentum\.
(b) Quality of Supervision
Rating: Moderately Satisfactory
57\. The Bank's supervision was deemed moderately satisfactory given the overall success
of the project with moderate shortcomings\. The Bank approved the project in May 1998
and was declared effective in September 1998\. The frequency of supervision missions
was appropriate and specialists with relevant skills were brought in as needed, although
the outbreak of SARS in 2003 hindered supervision for a period of time\. Back-to-office
reports and management letters were generally comprehensive, and usually action-
oriented\.
58\. While the project's implementation was rated satisfactory on all ISRs from 1998
(project start) until 2005, a Quality of Supervision Assessment in 2006 (QSA7) had an
overall rating of "moderately satisfactory" and concluded that the Bank could have been
more proactive in finding solutions to the problems that delayed implementation, perhaps
with more effective use of field office staff for supervision\. For example, disbursements
early on were slow because staff were unfamiliar with the Bank's procedures and rules,
and contractors were slow in filing invoices\. Even after the original loan closing date had
passed, less than US$80 million had been disbursed from the loan out of the US$180
million remaining after the restructuring\. This is a common problem for a new borrower
and could have been dealt with sooner through: (1) a targeted workshop at project launch
focusing on financial management and disbursement issues, and (2) more proactive
interventions when it became clear that the Guangzhou Finance Bureau was contributing
to the delays of withdrawal applications\. In retrospect, the Bank's supervision should
also have identified the value of certain indicators that appeared overly optimistic,
particularly those with impact areas beyond the project\.
59\. Though the financial management shortcomings of the borrower's resettlement
program were significant (see Section 2\.4), the audit process complemented by the
Bank's supervision effectively addressed the problems\. The Bank found shortcomings in
the financial control structure, but no evidence of fraud or wrong-doing\.
60\. The Bank also showed due flexibility in discussing alternative approaches to allow
Guangzhou to use the savings, both as regards additional components consistent with the
original project developmental objective and in raising the disbursement percentage for
the final loan extension\.
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
18
61\. The Bank's overall performance was satisfactory based on the quality of the project at
entry and during supervision\. There has been substantial completion of the project
without compromising environmental, social, or financial safeguards\. The design and
implementation also ensured the delivery of a majority of the project development
objectives\.
5\.2 Borrower Performance
(a) Government Performance
Rating: Satisfactory
62\. The performance of the government was satisfactory considering the complexity of
the project design and novelty of some interventions\. The primary investment, the Ring
Road, was completed in record time (18 months opposed to scheduled 5 years) with high
quality, within budget, and featuring state-of-the-practice environmental mitigation
measures (noise-dampening pavement, over 22 one-way km of noise barriers and double
glazed windows for 5000 households)\.
63\. The resettlement program epitomizes the unprecedented complexity of the
development challenges in China\. Fifteen thousand households, shops and businesses
were moved in less than one year to minimize the disruption from the construction and to
deal with a very rapidly growing congestion problem\. It is unlikely that there are many
projects in the history of development (Bank-financed or otherwise) of this dimension
and speed\. In the end, the program was considered very successful and the Bank's
review concluded that the issues raised were not so much with the substance of the
resettlement actions, but the regulation, management and internal control systems needed
to govern such a financially large undertaking\. From all accounts, Guangzhou has taken
on this lesson and moved to address the gaps\.
(b) Implementing Agency or Agencies Performance
Rating: Moderately Satisfactory
64\. The performance of the implementing agencies was moderately satisfactory\. Nearly
all components were completed as planned, but the project was very slow to disburse, had
to be restructured (including the cancelling of US$20 million), and the loan was extended
by four years\. Progress on the smaller components in particular was considerably
delayed and four extensions of the closing date were required for substantial completion\.
65\. Project governance, including the PLG, was often inconsistent on non-road
investments, which greatly contributed to delays\. However, institutional development
and implementation improvements have been continuous\. For example, the third phase
of the traffic management program was a considerable improvement over the first two
phases, reflecting continuous learning by the City\. It recommended incorporation of the
latest international thinking on bus lanes and bus rapid transit, channelization and
pedestrian safety islands, and physical separation through curbs and `green islands'\. The
extended duration of the project coupled with regular turnover necessitated additional
institutional strengthening and training\.
19
(c) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory
66\. The satisfactory rating is justified by performance of the government and
implementing agencies, including the adoption of institutions, policies and programs in
support of the project objectives described above\.
6\. Lessons Learned
67\. Project design and governance should carefully consider the institutional capacity for
each component and recognize that progress may not occur in parallel\. Major
challenges were experienced with the "softer" components due to weaker institutional
capacity\. The role of a project leading group is essential to ensure that the various
components are implemented in a coordinated fashion, but sustaining their interest and
effective functioning is difficult to achieve\. Moreover, setting up institutional capacity
for what may be a short but intensive resettlement or a prolonged environmental
mitigation program demands special care\. For example, the Project showed the need to
deal with noise mitigation not just during the construction but on a continuing basis
during operation\.
68\. Computer-based management systems require exceptional inter-disciplinary
coordination and specialized experience for procurement\.2 The technical complexity of
these systems, which often involve intellectual property rights embodied in proprietary
software, is complicated by the procurement policies that aim to promote competition\.
Close coordination is needed between specialists who understand the business processes
being computerized, technology options, and procurement\. A technical and functional
architecture encompassing the project is also needed to ensure current and future system
interoperability\. Guangzhou's GPS-based bus dispatching and monitoring system, which
also provides real-time passenger information, was eventually scaled up to the entire bus
fleet and is a model for other cities\.
69\. Formulating a comprehensive strategy with government ownership is crucial to
institutional reform and implementation of innovative urban transport initiatives\. A
lengthy but very successful urban transport strategy effort and project preparation period
anchored transport investments in Guangzhou for over a decade\. Guangzhou is a model
for other cities in the effective demonstration of low-cost traffic management investments,
representing the first instance in China where the traffic police collaborated with planning
and municipal engineering bureaus to design and implement such schemes\. Furthermore,
the Project initiated important institutional reform in the structure and operation of bus
services\. Discussions during preparation resulted in a successful, state-of-the-practice
model of publicly-controlled (but franchised) and privately-operated bus operations\.
2The Bank's task team is distilling this lesson and additional experiences from the technology
implementation and related institutional issues in a technical note (to be published) entitled "Bus Fleet
Management Systems: Improving Public Transport in China\."
20
7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
70\. A Bank ICR mission was undertaken in Guangzhou on June 10-11, 2008\. The
Project Office commented that the Bank's ICR made a true and precise description of the
project, and a fair and objective appraisal of the outcomes\. A summary excerpt of the
borrower's ICR is included in Annex 7\.
21
(b) Cofinanciers
None\.
(c) Other partners and stakeholders
(e\.g\. NGOs/private sector/civil society)
None\.
22
Annex 1\. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent)
Appraisal Estimate Actual/Latest
Components Percentage of
(USD millions) Estimate (USD
millions)* Appraisal
INNER RING ROAD 431\.5 1,037\.5 240%
TRAFFIC MANAGEMENT &
SAFETY 27\.7 45\.6 165%
PUBLIC TRANSPORT 19\.0 19\.7 104%
VEHICLE POLLUTION
CONTROL 7\.6 11\.6 152%
ROAD MAINTENANCE 6\.7 14\.0 208%
TECHNICAL ASSISTANCE 9\.4 10\.2 108%
GUANGFO ROAD Added 64\.9 n/a
Total Baseline Cost 501\.8 1,203\.4 240%
Physical Contingencies 36\.0 n/a
Price Contingencies 48\.2 n/a
Total Project Costs 586\.1 1203\.4 205%
Project Preparation Fund 0\.00 n/a n/a
Front-end fee IBRD 0\.00 n/a n/a
Total Financing Required 586\.1 1203\.4 205%
* The actual costs reflect a much expanded scope of the project in civil works (widening of Ring
Road and addition of Guangfo Road), expanded resettlement program, and environmental
mitigation (22 km of noise barriers)\.
(b) Financing
Appraisal Actual/Latest
Source of Funds Type of Estimate Estimate Percentage of
Cofinancing (USD (USD Appraisal
millions) millions)
Borrower 386\.1 1122\.8 291%
International Bank for Reconstruction
and Development 200\.0 103\.0 51%
23
Annex 2\. Outputs by Component
Components PAD At Project Completion
Part A: Inner 1\. Construction of the Inner Ring Road including: 1\. All work completed\.
Ring Road (a) construction of 15\.5 km of an elevated Changes included:
highway, with grade-separated interchanges, - additional 2 lanes of
primary roads and access ramps to the street traffic in sections with
network, and (b) upgrading of 15\.5 km of existing 4 lanes
ground level roads underneath the elevated - addition of the
highway; and (c) provision of noise barriers and Guangfo Radial Road
traffic management equipment for said sections (5\.5 km)
of the Inner Ring Road\. - 67,478 m2 of
2\. Resettlement, rehabilitation of and insulated windows
compensation for people affected by the project\. - 22\.1km of noise
barriers and 800,000
sq\.m\. of sound
isolation windows
2\. All work completed\.
24
Part B: 1\. Carrying out of a program of traffic 1\. All work competed,
Traffic management in Guangzhou through civil works except pedestrian
Management and the provision of equipment, consultant information system
and Safety services and training to include: (dropped from project, to
a) establishment of a bus lane network of 5 be locally funded)
km;
(i) pedestrian facilities consisting of 2\. All work completed,
sidewalks and footpaths of 2 km, 30 except for ongoing
pedestrian crossings equipped with training activities\.
refuges, signal controls and special
facilities for the aged and the
handicapped; and
(ii) segregated bicycle routes of about 2
km\.
b) installation and replacement of traffic
signals and controllers;
c) monitoring and control of traffic on the
Inner Ring Road; and
d) parking management\.
2\. Carrying out of a program of road safety,
through the provision of equipment, consultants
services and training to include:
a) updating of the traffic accident
management computer software;
b) undertaking of an analytical review of
accident information collection
procedures; and
c) implementation of accident reduction
measures\.
25
Part C: 1\. Construction of: (a) a bus maintenance depot at 1\. All work competed\.
Public Longxi, (b) a related waste water treatment plant;
Transport and (c) provision of maintenance equipment for 2\. All work completed:
said maintenance depot\. - Bus dispatching and
2\. Carrying out of a program to develop public monitoring system
transport in Guangzhou, through the provision of covering entire fleet
equipment, consultant services and training to (8374 buses) installed
include: in 2006
a) development of information systems for - A single advanced
the location, operational and financial pilot bus was procured
control, regulatory management and
service planning of buses;
b) establishment of a pilot system for bus
operations and management;
c) carrying out of a program to test selected
buses with more advanced and
environmentally benign specifications on
the main routes for purposes of
determining the most suitable types to be
operated in Guangzhou; and
d) carrying out of a program of maintenance
of public transport buses\.
Part D: Carrying out of a program to control and reduce All work completed,
Vehicle air pollution from mobile sources in Guangzhou except:
Pollution through the provision of equipment, consultant - Vehicle emissions
Control services and training, such program to include: research center was
(i) initiation of the distribution of unleaded cancelled in 2006 as
gasoline; standards set by the
(ii) strengthening of the vehicle inspection national government\.
and maintenance (I/M) system; - I/M equipment
(iii) strengthening of the vehicle emission subcomponent
research centre; and (iv) improvement cancelled and financed
of the air pollution monitoring network\. using local funds
- Noise monitoring
equipment added
Part E: Road Carrying out of a program of road maintenance Pavement and bridge
Maintenance management in Guangzhou through the provision management system
of equipment, consultant services and training to procured and installation
include: undertaking of a comprehensive will continue after
inventory of maintenance requirements and project closing using
updating of the maintenance expenditure local funds\.
requirements\.
26
Part F: 1\. Strengthening of the managerial, technical, 1\. All work competed\.
Institutional planning and implementation capacity of the 2\. All work completed,
Development municipal agencies involved in aspects of city except contracts for
transport, through the provision of equipment, studies to remain open
consultant services and training\. after project closing:
2\. Carrying out of studies to assist Guangzhou to - Guangzhou Urban
formulate plans and policies in respect of, inter Transport Improvement
alia, motor vehicle pollution control, traffic Implementation
demand management, bus operations and Schemes\.
management\. - Guangzhou Project
Management Information
System and Guangzhou
Transport GIS System\.
- Operational Project
Management Study
27
Annex 3\. Economic and Financial Analysis
Tables A and B are the economic analyses for the Ring Road and Traffic Management
components, respectively, using the benefits and costs presented in the borrower's ICR
from May 2008\. The remaining components under the project were smaller in cost and
less amenable to a quantitative cost-benefit analysis, but international experience has
shown that these types of investments are cost-effective\.
The main assumptions used in the economic analysis were:
The local economy would continue to grow at about 8 percent per year over the
evaluation period and motorized vehicle ownership would grow at about the same
rate\.
The value of time for passengers was assumed to be equal to the wage rate and
vehicle operating costs were consistent with those used recently in other highway
projects in China\.
The traffic management component of the project was assumed to result in a
suppression of 20 percent of the motorized trips that would otherwise be made to the
central area\. The associated metro and outer area highway developments would take
place as planned\.
28
Table A: Guangzhou Inner Ring Road Economic Analysis
Benefits (million RMB) Costs (million RMB)
Travel Acciden Residu
VOC time t al Invest- O&M Net
Year savings savings savings value Sum ment costs Sum Value
1998 1,112 1,112 (1,112)
1999 4,360 4,360 (4,360)
2000 573 289 4 866 1,584 102 1,686 (820)
2001 657 331 5 993 397 117 514 479
2002 733 369 5 1,107 100 130 230 877
2003 784 395 5 1,185 100 139 239 945
2004 837 421 6 1,264 25 149 174 1,090
2005 857 432 6 1,294 152 152 1,142
2006 813 409 6 1,228 145 145 1,084
2007 837 422 6 1,265 149 149 1,116
2008 666 545 6 1,218 153 153 1,064
2009 530 705 6 1,241 158 158 1,084
2010 422 911 6 1,339 162 162 1,177
2011 491 930 7 1,428 165 165 1,263
2012 573 949 7 1,528 169 169 1,359
2013 667 968 7 1,642 172 172 1,470
2014 777 988 7 1,772 176 176 1,597
2015 906 1008 7 1,921 179 179 1,742
2016 1007 1026 7 2,040 182 182 1,858
2017 1119 1045 7 2,172 186 186 1,986
2018 1245 1064 7 2,316 189 189 2,126
2019 1384 1083 8 2,474 192 192 2,281
2020 1538 1102 8 1535 4,184 196 196 3,988
Total 17,417 15,392 132 1,535 34,477 7,677 3,362 11,040 23,437
NPV (@12%) 1\.094 Billion RMB
NPV (@12%, US$1=8 RMB) US$147\.9 Million
IRR 14\.3%
29
Table B: Traffic Management Component Economic Analysis
Millions of RMB
Sum of Investment O&M Sum of
Year Benefits* Costs costs Costs Net Value
1998 - 25 25 (25)
1999 - 50 50 (50)
2000 6 50 4 54 (48)
2001 7 50 5 55 (47)
2002 16 37 5 42 (26)
2003 32 25 10 35 (3)
2004 43 25 12 37 6
2005 85 25 25 50 34
2006 86 25 25 50 35
2007 115 25 35 60 55
2008 123 35 35 88
2009 132 35 35 96
2010 141 36 36 105
2011 151 36 36 116
2012 162 36 36 127
2013 175 36 36 139
2014 188 36 36 152
2015 203 36 36 167
2016 219 36 36 183
Total 1,883 337 443 780 1,103
* Sum of Benefits includes all relevant benefits calculated in the borrower's ICR using
standard Chinese methodologies, including time, accident, and other savings from traffic
improvements due to SCATS, junction channelization improvements, and bus lane
efficiency improvements\.
NPV (@12%) 112\.6 Million RMB
NPV (@12%, US$1=8 RMB) US$15\.2 Million
IRR 18\.3%
30
Annex 4\. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Richard Scurfield Task Team Leader EACCF
Peter Midgley Former Task Team Leader EASTR
Stephen Stares Former Task Team Leader EACCF
Hoon Mok Chung EASFP
Mary Judd EASSD
Hoi-Chan Nguyen Sr\. Counsel LEGEA
Richard Leonard EASTR
Robin Carruthers EASTR
John Flora TWUTD
Zhi Liu Lead Infrastructure Specialist TWUTD
Yan Zong Transport Specialist EACCF
Anil H\. Somani Consultant EASTE
Tilly Chang
Rodney J\. Stickland Consultant EASTE
Supervision/ICR
Jitendra N\. Bajpai Adviser EAPVP
Christopher R\. Bennett Sr\. Transport\. Specialist EASTE
Edward B\. Dotson Consultant EASTE
Boping Gao Consultant EASUR
Yi Geng Financial Management Specialist EAPCO
Dahong Li Consultant EASTE
Zhefu Liu Sr\. Social Development Specialist EASSO
Graham Smith Consultant EASTE
Anil H\. Somani Consultant EASTE
Rodney J\. Stickland Consultant EASTE
Roy L\. Sumner Consultant ECSIE-
HIS
Peishen Wang Environmental Spec\. EASRE
Dawei Yang Procurement Spec\. EAPCO
Yan Zong Transport Specialist EACCF
Shomik Mehndiratta Sr\. Transport Specialist EASCS
Georges Bianco Darido Young Professional EASTE
31
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle
No\. of staff weeks USD Thousands (including
travel and consultant costs)
Lending
FY93 4\.51
FY94 4\.21
FY95 109\.91
FY96 210\.55
FY97 167\.31
FY98 232\.03
FY99 5\.74
FY00 0\.00
FY01 0\.00
FY02 0\.00
FY03 0\.00
FY04 0\.00
FY05 0\.00
FY06 0\.00
FY07 0\.00
Total: 734\.26
Supervision/ICR
FY93 0\.00
FY94 0\.00
FY95 0\.00
FY96 0\.00
FY97 0\.00
FY98 10\.51
FY99 79\.04
FY00 26 93\.29
FY01 17 46\.30
FY02 16 93\.64
FY03 14 52\.28
FY04 12 62\.14
FY05 19 41\.72
FY06 19 58\.32
FY07 8 37\.59
Total: 131 574\.83
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Annex 5\. Beneficiary Survey Results
Not applicable
33
Annex 6\. Stakeholder Workshop Report and Results
Not applicable
34
Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR
Excerpt from Borrower's ICR dated June 4, 2008:
"Through ten years joint efforts of World Bank and Guangzhou, the predetermined target,
was fulfilled, which are as follow:
1\. To improve center road network service level and reduce congestions\. The
evaluation indicators of this objective are shown in Annex 1 table1 and table 2\. Screen-
line surveys in 1999 and 2000 showed that traffic volume decreased by 14% and 6%
respectively\. But in 2001, traffic volume was 13% above the base year and was predicted
that the rising would continue\. Considering ever-increasing trend of traffic volume and
limitation of charges, GCCTPO and World Bank codetermined not to carry out screen-
line surveys\. Compared with base year, the speed of through traffic in central district on
N-S corridor increased by 33% in 2001 while on E-W corridor the speed increased by
49% \.
2\. To improve capacity of public transport corridors in city center\. The evaluation
indicators of this objective are bus speed and percentage share of bus trips, as shown in
Annex 1 table4\. Compared with base year's 11\.2km/h, the bus speed increased by 63% in
2006, while the percentage share of bus increased from 16% to 22\.3%\. The
predetermined target has been achieved\.
3\. To reduce air pollution relatively\. The indicators of this objective are shown in
Annex 1 table 6\. Compared with base year, NOX decreased to 0\.117mg/m3 in 2006 from
0\.151 mg/m3 , dropping by 23%,while CO decreased to 1\.55 mg/m3 from 2\.89 mg/m3 ,
dropping by 46%\.The predetermined target has been achieved and sustained\.
4\. To reduce per capita traffic accident rate relatively\. The indicators of this
objective are shown in appendix 1 table 3\. Traffic accidents per 10,000 persons dropped
from 0\.85 in base year to 0\.67 in 2006, while traffic fatalities per 10,000 persons dropped
from 0\.11 in base year to 0\.05 in 2006\. The predetermined target has been achieved\.
5\. To improve the effectiveness and efficiency of road maintenance\. The evaluation
indicators are shown in Annex 1 table 7\. The availability rate of major arterial road rose
from 50% in base year to 91% in 2006, while the availability rate of minor arterial road
and collectors rose from 80% to 83\.5%\. The predetermined target has been achieved\.
6\. To strengthen management ability of urban transportation institutions\. More
than 1000 person times, in 180 groups accumulatively were arranged to take inspection
and training\. The ability of management, research and technology of government
institutions which administrate urban transportation were improved greatly\.
predetermined target has been achieved\.
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The project content were carried out according to original items, both sides have adjusted
and increased a batch of sub-projects according to in-depth request during the
implementation\. The implementation and evaluation of each sub-project are as follows:
I\. Inner Ring Road
7\. The inner ring road is an express viaduct belt road, which is built on the original road
of central area\. The total length is 26\.7km\. According to the traffic demand and
implementation conditions, some sections of viaduct are dual 6 lanes; some are dual 4
lanes with emergence stop area, others are on the ground\. There are 12 interchanges, 13
ramps and 3 over-river bridges along IRR in total \.The running speed of main line is 60
km/h\.
8\. Land acquisition and resettlement of IRR: on January 5 1998, Guangzhou Urban
Housing Units Management Office announced demolition bulletin of inner ring road first
phase project-Dongshan interchange\. In mid-May of the same year, Guangzhou
municipal Party Committee and municipal government proposed to shorten IRR project
period from 5 years to 2 year\. Subsequently, they proposed that inner ring road must be
finished within one year\. At the beginning of July, the second, third, fourth phase
removal of IRR were at preparatory stage; the whole IRR removal and resettlement
work was fully carried out from October and demolition of civil works was finished
smoothly under the guidance of GMCC and GREEO on March, 1999\. At this time, the
total amount of demolition was 14737 households involving 44,000 persons, while area
was 759,700 square meters\.
9\. Demolition engineering of IRR created four "first" in Guangzhou demolition history\.
It was the first project that international financial organization (World Bank) participated
in; it was the first time that independent supervisor was designated by international
institution; it was the first time that computer was introduced to demolition project
management; and it was the first time that detailed public participation and consultation
plan was covered\. Meanwhile, it was the largest demolition project with shortest period
and least complaint\.
10\. On April 8, 1999, the IRR was in full-scale construction\. According to geographical
location and construction organization, it was divided into four parts namely west ring
road, north ring road , east ring road and south ring road in which west ring road and
north ring road were built with cooperation of World Bank ( eight sections in all) and the
others were invested by Guangzhou independently (12 sections in all)\. On December 25,
1999, the main project of IRR was completed\. On January 1, 2000 it was open to public
and on January 28 of the same year it was completely open to traffic\.
11\. The construction management and operation of IRR was implemented by GTPCC\.
All sections of IRR project were bid for according to the international common practice\.
The civil works design of IRR was undertaken by GMEDRI and Guangdong
Construction Design and Research Institute which are both national designing institutes
of first rate\. Construction unit for IRR project was chosen through public competitive
bidding (PCB) and national competitive bidding (NCB), and their procedure was
according to World Bank procurement guidelines\. The bid of IRR civil works was got by
36
21 construction enterprises at the national first class including the Guangzhou Municipal
Civil Engineering Group Co\., Ltd\., CHINA Hong Kong Fourth Flight Operations
Engineering Bureau, Guangzhou Municipal Construction Machinery Co\., Ltd\. and so on\.
12\. The construction of IRR was stressed on not only speed but also quality and the
quality were not influenced by the short project period\. To ensure project quality,
GCCTPO insisted on testing and inspecting every link, every process and every kind of
material strictly, and invited road and bridge experts to carry out construction technical
guidance\. Municipal quality supervisors and municipal engineering supervisors
monitored the quality of IRR project and formed a "three-pronged" which was self-
inspection of construction enterprises, the independent Commissioner recheck and quality
supervision units further, therefore the project quality was under omni-directional
monitoring\. Ultimately, through final completion acceptance and verifying check by
Guangzhou Quality Supervision Station, all designs met requirements and quality
conformity rate was 100%\.
13\. IRR was put into use in January 2000 completely and the social and economic
benefits can be summarized as follows:
a\. IRR played a connection role between city center and outlying area\. Through
construction of IRR, four lateral and four longitudinal major arterial roads (four lateral
major arterial roads : Huanshi Road, Dongfeng Road, Zhongshan Road, Yanjiang road; 4
longitudinal major arterial roads: Liwan Road, Renmin road, Jiefang Lu, Donghaoyong
Viaduct) have been linked organically and form new layout- square and radiation, so road
network of central area have been optimized\.
b\. Traffic capacity was improved by implementation of IRR\. It provided 210,000 vehicles
-kilometers capacity for central district which accounted for 30% of artery capacity in
2001\.
c\. IRR alleviated traffic pressure inner and outside area, especially city center\. The
saturation of IRR increased seriously\. For example: in 2001, saturation of IRR was just
0\.48, in 2005, it increased to 0\.85\. By contrast, the network saturation of central area in
the same period is only 0\.8 and 0\.88\. Because of IRR undertaking a lot of traffic, the road
services of central area remained at acceptable level\. So IRR contributed a lot to central
area\.
d\. Construction of IRR accelerated land development and optimization of surrounding
areas\. IRR construction promoted the optimization of land use of central area constantly\.
There was stratification and decentralization trend in the central area\. For example, coast
of the Pearl River (Ersha Dao, Binjiang Road area) emerged new high living area;
Yuexiu and Dongshan districts also emerged living grade improving and location
concentration\. In addition, traditional commercial advantagearea status and
characteristics were enhanced\. And there was commercial leisure and tourism
integration trend\. For instance, some areas began to concentrate on original commercial
maturity like Shangxia jiu Road, Beijing Road, Nonglin Middle Road and Zhongshan
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Road and so on\. As a result, Hill pattern commercial network was formed and became the
backbone of Guangzhou City\. Some office areas like Huanshi Road and Dongfeng Road
were also further strengthened\. And Pearl River coastal region will become the new
regional office\. As the same time, pedestrian area, in which commerceleisure and
tourism were integrated, also emerged\. The combination of modern and custom
recreation areas along Pearl River and large commercial facilities, commercial area (Such
as the Beijing Road, Shangxia jiu Road) in center was a good example\.
e\. Traffic environmental impact of IRR\. IRR construction made certain environmental
impact on alongside, but improved environmental quality of centre area generally\. The
residents reflected that the more prominent issues were IRR large capacity, high-speed
and large noise effect\. In order to solve the noise problem, soundproof windows were
installed and achieved good effect\. Guangzhou's climate is humid, sunshine is very
critical\. After the construction of IRR, the duration of sunshine shorted, several residents
reflect a great affect; the majority reflected declining of sunshine but not affecting normal
life\. On the other hand, because part of IRR passed through old town, by demolitions, the
old, dirty, and chaotic appearance was changed\. On this extent, completion of IRR
improved people's living environment\.
f\. Economic benefits evaluation of IRR
According to economic assessment indicators in this report: EIRR is 18\.49%, ENPV is
9\.63272 billion yuan, EBCR is 2\.31, EN is 9\.02\. Under the worst circumstance-
investment increased by 20% and benefits decreased by 20%, EIRR is 12\.11%, ENPV is
4\.12042 billion yuan, EBCR is 1\.40 and EN is 15\.4\. All indicators meet requirements\.
This shows that the project is reasonable\.
II\. Traffic Management and Safety
14\. Traffic Management and Safety included four phases\. The former two were originally
planned while the later two were added\. The first phase, as a demonstration project,
mainly transformed junctions of old city center; the second phase paid more attention to
junctions of Liwan, West Mountain, Yuexiu districts and so on\. Meanwhile, because the
former two phases had achieved good effect on traffic improvement, World Bank and
GCCTPO agreed with adding third and fourth phases to expand implementation effect
continuously\. In particular, the third phase implementation range was the built-up areas
around city ring expressway, especially Haizhu, Tianhe, Fangcun district\. The fourth
phase-SCATS system was added to further expand sub-project on March, 2006\. In a
word, this sub-project contained two parts: Traffic facility improvement and Road user's
safety education\.
15\. Traffic facility improvement mainly included: civil works, SCATS procurement and
installment project, CCTV procurement and installment project, traffic information
induction variable message board, and GIS procurement\.
Civil works: It contained three phases, including reforms of more than 350 junctions
and 20 arterial roads\. This project has been finished in June, 2006\. ( including : Bus
priority network, Pedestrian facilities improvement, and reform of traffic black spot
and so on)
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SCATS procurement and installment: The purpose was to extend traffic control
system of Guangzhou\. The specific work was operating the latest RTA PC SCATS
software so as to realize intercommunication between a control center and 5 sub-
control centers\. The finished time was December 2007\.
CCTV procurement and installment: The main work of this project was introducing
CCTV system\. Detailed work was installing 30 videos in city center\. Monitoring
pedestrians and vehicles in real time, it controlled urban traffic on the whole to make
sure traffic diverging reasonably and traffic violation descending, and further promote
urban traffic management level\. These works have been finished in August, 2006\.
Traffic information induction variable message board and GIS procurement: Main
work of this part was installing traffic information induction variable message boards
on main skeleton road network in Guangzhou\. Based on real-time traffic data,
through various variable limit speed device, variable information board, parking
information inducing card and so on, traffic real time condition and control programs
could be sent out timely to induce the traffic flow, evacuate blocking, so that people
could reach their destinations rapidly and safely\. These equipments have been
installed in June, 2006\.
Road user's safety education: The main purpose was improving traffic quality of
citizens by kings of propaganda methods\. Since December 2003, the project has
carried out 8 TV propagandas, 31 media notices and wall charts, manuals, cards and
other forms of materials a total of 2\.62 million\. It has been finished August 2005, and
achieved good effects\.
16\. The implementation of World Bank's traffic management and safety promoted road
traffic management level to a new step\. The project has improved the relationship
between people and car, especially citizens' quality\. The project was building with the
principle of "people-oriented" and concerned about disadvantaged groups in society, and
produced far impact on the harmonious transport, thus prompted harmonious
development of Guangzhou city\.
17\. The implementation of this project regulated traffic order, improved about 30% of
motor vehicle average speed in centre\. Bus lane average speed has reached to 15 km/h
and increased by 20% in comparison with that of 1998\. In addition, Number of traffic
fatality also decreased by 336, about 18\.2%\.The passenger volume of public transport
increased from 10\.4million in 1997 to 20\.77 million in 2005\. Meanwhile, the proportion
of public transport also increased to 22\.31%, ranked the first in various auto modes,
which increased by 19\.6% in comparison with that of 1998\. Social economic evaluation
also shows, until 2007, the project saved passengers' time 80 million hours, which was
equality to 3\.51 million Yuan\. Benefits of accident loss and public transport operation
reducing were 2\.27 million Yuan and 2\.30 million Yuan\. The total economic benefits
were about 12\.25 million Yuan, and this project relieved the traffic congestion in
Guangzhou urban area, ensured the traffic safety\. In particular, the implementation of
Road user's safety education changed concepts of traffic participants such as traffic
departments and road users, improved citizen's traffic consciousness, and gradually
promoted traffic management to a new step\.
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III\. Public Transport Improvement
18\. Public Transport Improvement Project, as an important composition of Guangzhou
City Center Transport Project, obtained great emphasis of provincial and municipal
governments and World Bank\. There were three parts: Bus Automatic Monitoring and
Dispatch System, Longxi Depot, Environmental Protection Demonstration Car\. In order
to improve public transport services level, Bus Automatic Monitoring and Dispatch
System could monitor, track and schedule 64 city bus lines and 1424 buses real-timely by
GPS (Global Positioning Satellite) technology, and also provided bus information
timely with 310 electronic stops (200 intermediates stops and 110 Terminus)\. The
specific work plan was as follow: Contract about system development and installation
was signed on May 22, 2006\. This project has finished in October 2007\. Now it has been
put into operation\.
19\. Longxi Depot provided three types of maintenances and parking services for 620
buses from southwest of Guangzhou\. It has been finished in October 2007 and transferred
to GTC\.
20\. A pilot Bus has been purchased by introducing international bus with up-to-date
technology\. It provided reference for Guangzhou about vehicle type selection in future\.
21\. The implementation result of the project is basically satisfactory\. Bus Automatic
Monitoring and Dispatch System and Longxi Depot have basically reached the
predetermined target\. The intellectual deployment system of public transit has improved
the overall service level and intelligent intensity of urban public transport, and
successfully changed from line dispatch to area dispatch\. With the sub-project
implementation, public traffic become attractive, while the private traffic reduced and
traffic jam and environmental pollution were also alleviated\. Take the Second
Automobile Company as an example; there were four bus routes such as 283, 297, 527
and 803, which have realized intellectual dispatch\. Assumed that travel distance was not
added, comparing with same period of last year, income has increased by 12\.98% and the
income per thousand car-kilometers increases by 13\.49% in May to July, 2007\. The
accomplishment of Longxi Depot has filled the blank field of Fangcun district in
Guangzhou, and reduced the deadhead kilometers\. At the same time, as the depot located
out of the centre district, it had great contribution to improve transportation efficiency of
public transit, utilize the land resource effectively, and relieve traffic pressure in city
centre, so that the traffic condition in centre was improved\.
IV\. Motor Vehicle Emission Control
22\. The final implementation contents of MVEC included IRR automated noise
monitoring system and automated motor vehicle pollution monitoring system\.
23\. GCTP lasted 9 years, under the situation of changes such as the regulation and
standard of motor vehicle in China, the social economic level of Guangzhou,
environmental monitoring ability construction, etc\. the contents of project were adjusted,
particularly, the construction of motor vehicle emission centre and the system of motor
40
vehicle monitor and maintenance were cancelled\. Although some sub-project contents
were cancelled, World Bank thought some Guangzhou motor vehicle emission control
work had already exceeded the origin contents, and environment protection work had
been forefront among Chinese cities\. This sub-project perfected networks of environment
monitoring, improved ability of environment detecting, and could provided reasonable
data for research on reducing pollution\.
V\. Road Maintenance
24\. Guangzhou Municipal Engineering Maintenance Department was responsible for
specific implementation\. This project mainly carried out Road and Bridge Facilities
Management Systems and three batches of road maintenance equipments procurements
as well as new addition equipments procurements\.
25\. Implementation of Road Maintenance promoted road maintenance work of
Guangzhou\. It kept road in good condition of arterial road more than 90% from 2001 and
minor arterial more than 83%\. These efficiently improved road avail ability rate and
evenness, accelerated efficiency of maintenance work, and further improved road
maintenance quality and scientific and technological innovation ability of Guangzhou\. In
addition, purchasing and using road maintenance equipments made Guangzhou road
maintenance equipment level, engineering level and management level reach to domestic
leading level, and realized modernization of equipment and technology maintenance\.
VI\. Technical Assistance
26\. The functions of this project were making the relevant personnel who participated in
project construction trained, improving equipment ability and staff technical and
management level of sub-project and relevant units by providing local and overseas
trainings and consultation so that the whole project could be implemented on planned
schedule\.
27\. The project has been implemented for about ten years and covered numerous sub-
projects, total including 110 domestic trainings, 81 abroad trainings, 28 local and
international consultant services and 15 science researches\.
28\. The benefits of Technical assistance were mainly as follows:
a\. The popularization of science research achievements overcome technical difficulties
during implementation of GCTP, improved construction methods, reduced number of
staffs and equipment investment, shortened construction time and decreased cost\. For
example, the application of external prestressing technology on IRR Bridge did not only
reduce time and cost, but also created domestic construction precedence of reinforced
concrete overlay beam\. In addition, incremental launching method and simulation
analysis technology and relevant technological research results were popularized in
Guangfo Road Construction, also became new technology representatives\.
41
b\. TA project provided technical support for other sub-projects, especially difficulties of
design and implementation so as to promote other sub-projects smoothly\.
c\. The implementation of trainings and inspections, improved personnel quality and work
efficiency, accelerated implementation progress\. In addition, expert consultations reduced
project risks and unnecessary expenses\.
29\. In short, Technical Assistance provided technical support for other sub-projects\.
Regardless of project quality, progress and staff cost, it achieved good social and
economic benefits\.
VII\. Guangfo Road
30\. Guangfo road, as west export of Guangzhou 7 radiation lines, was an important
composition of Guangzhou express way network\. Its complementation fundamentally
improved traffic capacity of Guangzhou west export, relieved along traffic congestion
and promoted Fangcun region's socio-economic coordinated development\.
31\. Guangfo road started from Zhongshan 8th road, passed Zhujiang East Bridge and Da
Tansha district, ended to Fangcun road \.Particularly, A and B viaducts were set up along
sides of Sanmao railway\. Full range of one direction length was about 2\.5km\. Line A is
2\.598km while line B is 2\.459km\. There are 4 east and west dual over river bridges and
Fangcun interchange with altogether dual 6 lanes\.
32\. GCCTPO was responsible for this project\. The design unit was Guangdong
Architectural Design and Research Institute\. Guangfo first phase civil works and
supervision units were chosen by international competitive bidding and national
competitive bidding respectively\. The final construction units were Guangzhou
Municipal Engineering Company, Wuhan Municipal Engineering Company, Anhui Road
and Bridge Company and China 16th Railway Engineering Bureau\. Final supervision unit
was Guangzhou Guangda Project Management Limited Company\.
On July 1, 2003, the civil engineering started\. On February 16, 2005, four over Pearl
River Bridges and main line were open\.
33\. In 2005, Guangfo Road was open to operation\. The average traffic volume of all lanes
would reach to 75819pcu per day\. In 2007, the average traffic volume of all lanes would
reach to 92700pcu per day, and average speed was 55km/h, which was in accordance
with the standard design speed\. Influenced by various factors, the project failed to finish
constructing on December 31, 2004 according to the original plan, but the total
construction quality was better, and it played have much effect on relieving traffic
pressure of the west export of the city\.
34\. Through national economic benefits calculation and sensitivity analysis, we can find,
the project EIRR was 24\.51%, ENPV was 1444\.46 million Yuan, EBCR was 2\.17 and
EN was 7\.69\. Under the worst circumstance-investment increased by 20% and benefits
decreased by 20%, EIRR became 18\.68%, ENPV became 9399\.93million Yuan, EBCR
42
became 2\.07, and EN became 10\.6\. All indicators meet request and proved that decisions
of this project were correct and implementation was rational\.
B\. Evaluation of project executing agency
Evaluation of World Bank
35\. The evaluation result to World Bank's performance is satisfactory\. The World Bank
has done massive difficult and effective work, which promoted the preliminary work of
the project progressing powerfully\. Since 1995, the World Bank had sent out the World
Bank Investigation Group, which was made up of experts with rich experience in urban
transportation to take preliminary work inspection for four times, and meanwhile, the
World Bank tried their best to make Guangzhou Municipal Government understand the
World Bank's relevant policies\. They identified and evaluated the Project on the basis of
experience which was gathering from transportation project implemented in china\.
36\. On the basis of full consideration of Chinese national situation and Guangzhou real
traffic situation, the World Bank demonstrated and analyzed the optional loan project
carefully to choose the highly efficient project of solving urban transportation problem\.
During preparation stage, The World Bank not only provided a loan, but also brought
Guangzhou advanced idea and methods like TMS, the public transport institutional
reform, advanced experience of road maintenance to promote urban transportation
development\. Meanwhile, in view of ability training of executing department, technical
assistance project was set up to strengthen relevant departments' ability\. During the
project appraisal, the World Bank evaluated management and consultation institution
construction, project funds, load and loan repayment, EIA, resettlement and public
participation, and provided suggestions\.
37\. The World Bank's inspection team performed its duty carefully and handled various
changes of the project flexibly and responsibly during the project implementation\. The
delegation, conducted by project manager visited Guangzhou a total of 27\. During the
inspection, the World Bank experts provided many constructive suggestions about TMS,
resettlement, environmental protection and so on, and discussed the design and
construction difficulties of Inner Ring Road and Guangfo Road\. At the same time, the
World Bank cared about project progress, required Project Office to provide project
progress report on time and added explanation if the project was delayed\. Except for the
delegation's inspection, the World Bank office in China gave a lot of help about project
procurement, payment, financial management and operation to support Project Office's
work\. Since SARS took place in 2003, the World Bank's supervision degree over the
project decreased because of the condition limitation\.
38\. The World Bank fund management surveillance system is also perfect\. After signing
contract, the World Bank, according to the contract treaty, paid the loan amount on time\.
In contract executing phase, if that the project changed or non-predicative case took place
resulted in increase of loan, a detailed written explanation material should be submitted
according to World Bank stipulated procedure\.
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39\. In this cooperation between World Bank and Guangzhou, there were also some
problems\. For example, in the examining and approving work, the project usually needs
the World Bank and domestic examination and approval dually, thus examination and
approval time was too long, the enterprise beard bigger risk and pre-payment time was
too long\. We suggest the World Bank integrate its procedure with domestic examination
and approval procedure, simplify procedure, and enhance efficiency to reduce the
examination and approval time under the premise of maintaining quality and quantity\.
Meanwhile, considering Chinese actual condition, it needs to use more flexible
procurement way rather than the way of minimum price to win a bid only\.
Evaluation of Project Implementation Unit
40\. The evaluation result of Guangzhou project Implementation unit's performance is
satisfactory\. GCTP is the second urban transportation project which World Bank carries
on in China\. Guangzhou municipal government pays much attention to this project
first-phase preparation of the project moved forward well, and the preparation was very
perfect and effective\. Since March, 1993, Guangzhou municipal government carried out
subject study about "Guangzhou Urban Transport Study (GUTS1)"and "Guangzhou
Urban Central Area Traffic Improvement Execution Scheme (GUTS2)"\.This was the
foundation of prophase preparation for Guangzhou City Center Transport Project (World
Bank) loan\. The research team had made success: the financing and repayment of loan
plan was deeply researched, technical support service system was reasonable\. In a word,
the preparation work was totally good, and met the World Bank's requirements\.
41\. The project concrete implementation organization used three-class management
system, which consisted of leading group, project office and sub-project office\.
GCCTPO ,which was in charge of project implementation was a full-time project office,
employed enough staffs, could consult with the leading agency effectively, and did
properly with each sub-project office in the coordination and communication work\.
GCCTPO took the World Bank inspection team carefully, feedback their opinions and
questions timely, solved difficulties that sub-project offices were faced with,
simultaneously reported problems founded without delay\. In order to assure
communication with the sub-project office and other participation units, GCCTPO with
the sub-project office also launched regular meeting each month to hear parties' reports
about project progresses and difficulties\.
42\. GCCTPO financial management is satisfactory, it established plan-fund department to
manage project finance\. Simultaneously, in Technical Assistance project, GCCTPO also
sent corresponding staffs to participate in inspection and training, and the professional
ability improved gradually\. Problems occurred was able to deal with correctly, and the
whole efficiency was improved much\.
43\. As direct executing agency, the sub-project office complied with procedure strictly,
cooperated with GCCTPO actively, and also promoted personnel's quality continually
through the Technical Assistance and training\.
44
44\. In sum, during the past ten years of project implementation, World Bank made joint
efforts with related institute in Guangzhou\. Good cooperation took place in every respect
including project preparation, identification and implementation and so on\. GCTP has
brought Guangzhou advanced international experience and given security for sustainable
development of urban transport\.
C\. Main experiences and lessons
I\. Experiences
1) Leaderships' focus and efficient organization are the foundation of project
implementation\.
45\. GCTP is a large-scale comprehensive traffic improvement project\. It involved wide
area, and was urgent, difficult to coordinate\. In order to organize the project efficiently,
the project took PLG-GCCTPO- Implementation Units management mode to monitor
project among entire process\. Many miracles were created\. Take the IRR as example, its
original construction time was 5 years, while it was open to traffic only in 1 year through
adopting some measures such as "green channel", "two-way choice of demolition and
resettlement", "public participation" and so on\. It created "high efficient"," high
quality"," comprehension", "struggle" spirits and became a high quality miracle in
Guangzhou municipal engineering history\.
2) Being familiar with World Bank Loan policy, coordinating domestic and World
Bank procedure are critical for project progress\.
46\. The World Bank loan project does not only need to follow policy and procedure of
World Bank, but also regulation and requests of domestic relevant departments\. Being
familiar with these procedures and requests; and setting up several important time nodes
could guarantee consistence of progress\. Being familiar with loan policy and procedure
of World Bank is helpful for us to make preparation reasonably, maximally reduce
commitment fee and increase quality of fund-use\.
3) Introduction of new ideas, new concepts, and raising management level are
important conditions for project promotion\.
47\. People-oriented and all-round developments are new management ideas\. This
project paid attention not only to construction process, but also to management system
establishment, overall benefits and environment sustainable development\. From project
plan to implementation process, people-oriented and all-round development concepts
were manifested everywhere\. For example, through sub-projects implementation, related
systems were established, bus priority was developed, use ratio of road resources was
improved efficiently, road management level was improved, so goal of environment
improvement was realized\. In addition, demolition and resettlement realized society's
prosperous life through guiding idea varying from "resettlement" to "re-housing", and
"two-way choice of material object and currency compensation"\.
45
48\. This project provides platforms of experience exchange and propaganda
promotes innovation idea\. From the perspective of management innovation, all projects
implemented by GCCTPO have referred to international advanced contract management
pattern, adopted international general FIDIC articles, introduced contract management,
and established inspection mechanism\. From the perspective of project implementation
process , through exchange and cooperation with local and overseas experts, international
advanced management experience and equipments, project cycle and construction cost
were reduced, technical level of correlation departments was impelled to improve, city
competitive power was enhanced\. In addition, drawing support from the World Bank is
also helpful for expanding influence power\.
49\. The project provides strict procedure and management experiences\. For World
Bank loan project, there are a set of management procedures adapting with project
determination, appraisal, loan activation, implementation procurement, withdrawals
account and payment, post evaluation and so on\. These procedures have intense principle,
policy, standard and pertinence\.
50\. Establishing good communication and coordination relationship is basis of
project success\.
During the implementation, there were variable changes, which the loan agreement and
project agreement cannot include and solve\. Therefore, it needs to communicate with and
ask instructions for project manager, officials and experts of World Bank in Chinese
Representative Office\. So that they understood project further\. World Bank gave
vigorously support on many aspects such as procurement, contract variations and
payment and so on\.
51\. Comprehensive traffic improvement platform is established successfully\.
52\. Through project implementation, GCCTPO did not only integrate many fields such as
infrastructure construction, traffic management, environment protection, public transport
and road maintenance, but also established a comprehensive traffic improvement
platform in Guangzhou successfully, which was the immaterial asset of Guangzhou urban
transport\. It mainly manifested as follow:
53\. It improved field management level\. This is an important cooperation target of
municipal government and World Bank\. By implementation, advanced management
ideas have been fully absorbed; open bidding, engineering finance management and project
management and so on are developed in local front row\.
54\. It enhanced Guangzhou traffic technique level\. This project is an important platform,
by which Guangzhou urban transport technology development can realize well
connection with international\. And Guangzhou municipal government realized the goal
consciously\. Project setup is foresighted, practically impels local transportation
technology development\.
46
55\. It strengthened talent cultivation\. Based on talent cultivation mechanism and strategy,
Technical Assistance Sub-project provided 180 batches, more than 1000 people
inspections and trainings for GMCC, GTC, GEPB, TPDGPSBTraffic Planning
Research Institute and so on\. GCTP introduced advanced urban traffic management ideas,
and cultivated modern management and technical talented persons who were familiar
with international management procedure and could connect with international\.
II\. Main lessons
1) Decision-makingmanagementorganization institute for traffic integration
should be guaranteed\.
56\. PLG was cancelled a period during project implementation\. Without its organization,
project work progress was slow-down, and there were some communication problems
between GCCTPO and Sub-Project Office\. So suggest enhancing coordination, holding
meeting regularly to improve traffic decision-making and coordinated ability\.
2) In order to guarantee the project development smoothly, GCCTPO's construction
should be strengthened\.
57\. Majority of contents were already implemented but parts of following work need
continue to develop\. Moreover, because Guangzhou new-round transport strategy
planning has been carried out, GCCTPO needs to further strengthen its ability
construction to promote sustainable development of Guangzhou transport\.
3) Management procedures of World Bank and local should be better coordinated
and simplified\.
58\. World Bank's payment procedure is extremely strict, its examination and approval
procedure is different from Chinese, and its payment time is longer, so that expected
funds can not be used ultimately\. In addition, it is usually complicated and long-term\.
With these differences, when a project is urgent to implement, World Bank's loan can't
meet its demands, so some contents cannot obtain World Bank's approval and loan can't
be fully used in project certainly\. Thus, when World Bank and Chinese government
choose World Bank Loan project, they should coordinate, simplify procedure and
accelerate payment process together according to Chinese actual conditions World
Bank's requests\.
D\. Further actions of Guangzhou urban transportation system
59\. Guangzhou will be constructed into a modern metropolis which leads Guangdong
province, radiates southern China, impacts Southeast Asia, and becomes a city suitable
for living and business, and will support 16th Asian Sports Meeting in 2010 and a new
round revision of the urban overall planning\. Under these backgrounds, it is crucial to
provide a good transportation system\. In 2006, Guangzhou timely launched a new round
"Guangzhou Urban Transport Strategy Planning" (GUTS3)\. The first-stage study
summarized traffic implementation after 10 years since the first round of traffic
development strategic planning, scientifically diagnosed key points to current urban
47
transportation problems, deeply analyzed situation, opportunities and challenges that
Guangzhou urban traffic faced\. Based on resident trip survey in 2005, it also established
traffic strategic model and put forward transport development strategy objectives, tasks,
policies, layout and recent action plan\. Its achievements have obtained approvals of local
and abroad experts and have pointed out directions for next urban transport development\.
60\. In September 2006, Guangzhou Municipal Planning Bureau proposed the city
development goal: "health and safety for all" at "Urban Traffic Forum"\. In December,
Guangzhou municipal government added "center adjustment" to original urban
development strategy: "South Extension, North optimization, east progress, West Union"\.
"Center" means Guangzhou city center, and "adjustment" means perfection and
promotion\. The new concept shows that gravity of Guangzhou city development began to
change from "development" to "promotion "\.
61\. Along with the improvement of living standards and promotion of scientific, balanced
and harmonious development, as a city circle system, traffic supports "Center Adjustment
" strategy strongly, and insures realization of city development goal-every person is
healthy and safety\. In order to carry out, deepen and carry out achievements of
"Guangzhou Urban Transport Strategy Planning", to alleviate traffic pressure in city
center, to improve road safety, to promote scientific, balanced and coordinated
development of all fields, to ensure Asian Games held smoothly, Guangzhou municipal
government will further cooperate with World Bank about research of a new round
"Guangzhou Urban Central Area Traffic Improvement Execution Scheme" (GUTS4)\. By
means of travel and network models, this research will get the current and future trends,
and form traffic-related standards used for sorting strategic programs\. The specific
improvement programs should be around but not limit to the following aspects:
(1) Road network improvement
perfect road network structure and external connection, improve traffic nodes,
adjust layout of connectors
optimize and adjust traffic function of main corridors
propose traffic organization optimized programs for key areas or nodes
make road network planning for Asian Games stadiums
Analyze future city road sections
(2) Public transport improvement
propose distribution programs of pedestrian transfer facilities with integration of
rail transportation and conventional public transit
Bus priority/ traffic management integration
BRT network
bus stationoperationdepot
integration of fare and service
passenger information
improvement of public transport management and engineering methods
48
(3) Programs of slow traffic improvement
sidewalkpedestrian crossing facilities and pedestrian street
bicycle network and parking facilities, especially the transfer between bicycle and
bus or metro
(4) Road safety management program, including motor and non-motor traffic
guidance
(5) Implementation programs of public parking
propose public parking development policy and management measures of on-road
or sidewalk parking according to parking demand management and parking
industry development
develop off-road parking facilities, ride-parking public facilities
(6) Implementation plan for improving freight transportation
make plan for organization and operation
study the relationship between goods transportation and urban transport
put forward the planning of goods transportation passages
(7) Study of the external contact of urban passenger and goods
(8) Implementation programs of ITS
propose method for traffic signal coordinated controlparticularly in critical
regions
make programs for ITS
make ITS application programs to traveler information and traffic management
(9) Implementation programs of traffic demand management
propose programs and measures of congestion pricing in center and other areas
conduct parking management by charging
(10) Implementation programs of traffic environmental management
popularize policy and measures for using clean energy and controlling vehicle
emission to reduce air pollution
62\. `Except for GUST3 and GUST4, in 2007, Guangzhou participated in urban traffic
development plan, which is sponsored by World Bank with Global Environment Funds
(GEF)\. Guangzhou obtained the qualification of demonstration city\. As purpose of this
plan is alleviating loan cost and stimulating traffic policies about reducing greenhouse
gas by using IBRD loans and GEF\. Guangzhou will carry out Transport Demand
Management research to balance traffic demand, to save energy and reduce emission, and
finally keep Guangzhou traffic sustainable development\.
49
Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders
Not applicable\.
50
Annex 9\. List of Supporting Documents
Guangdong Provincial Audit Office\. Memoranda on Audit Report\. 2003-2006\.
Guangzhou City Center Transport Project Office (prepared by Beijing ZZZD Traffic
Engineering Technology Co\., Ltd\.)\. "Borrower's Implementation Completion Report\."
Draft dated June 4, 2008\.
Guangzhou City Center Transport Project Office (prepared by Beijing ZZZD Traffic
Engineering Technology Co\., Ltd\.)\. "Details of Economic, Financial Cost-benefit
Analysis\." June 15, 2008\.
The World Bank, Guangzhou City Center Transport Project: Project Appraisal Document,
Report No\. 17745-CHA, May 4, 1998\.
The World Bank, Guangzhou City Center Transport Project Aide-Memoires and
Implementation Status and Result Reports, 1998-2007\.
The World Bank, Guangzhou City Center Transport Project Minutes of Negotiation,
March 23, 2000\.
The World Bank, Guangzhou City Center Transport Project: Loan Agreement and Project
Agreement, Loan No\. 4329-CHA, June 26, 1998 (Amended April 21, 2003)\.
The World Bank\. Quality of Supervision Assessment (QSA7), 2006\.
The World Bank\. Quality at Entry Assessment (QAE), 1999\.
51
CHINA
GUANGZHOU CITY CENTER TRANSPORT PROJECT
INNER RING ROAD: CONFIGURATION (NUMBER OF LANES)
W\.
RD\. The Overpass of The Overpass
the Railway Station of Hengfu Rd\.
Guangzhou (Reserved)
Railway
Staton The Overpass
GUANGYUAN of Luhu Rd\.
Xichang W\.
ZENGCHA Overpass RD\. RD\.
Center of Guangzhou HENGFU MEIDON
Color T\.V\. YONGFU G
RD\. HUANSHI The overpass of RENM HUANSHI
RD\.
ZENGBU Guangyuan Rd\. W\. IN RD\. LUHU \.
BRIDGE RD C\. RD\. RD\.N\.
\. LIE RD
D
DONGFENG XIAN
ROA JIEFAN RD\.
RD\.
r W\. G
RD E\. HUANSHI RD\. E\.
RD\. The Overpass
lRive NAN'AN \. XIAOBEI GU NG of Meidong Rd\.
DONGFENG RD\. E\.
The Overpass of
Pear No\. 8 Zhongsan Rd\. (Elevated)LLYRD EIDO
\. M
No\. 2
ZHUJIANG No\. 8 ZHONGSHAN RD\. ZHONGSHAN RD\. 1 ZHONGSHAN RD\.
BRIDGE
NEW VIADUCT (3 LANES) TOTAL LENGTH = 17\.34 KM
Ruyifang ZHEN'AN No\.
RD\. QI
N RD\. YIRD\. WE
NDE S\. NEW VIADUCT (2 LANES) TOTAL LENGTH = 23\.17 KM
Overpass RD\. RENMI HAIZHU RD\.
RD
\. Dongshankuo REBUILD EXISTING VIADUCT (3 LANES)
DUOBAO RD\. DONGHUA RD\. Overpass TOTAL LENGTH = 0\.93 KM
REBUILD EXISTING VIADUCT (2 LANES)
HANG The Overpass of RD\. TOTAL LENGTH = 1\.44 KM
Planned Zhen'an Rd\. DONGHU
Entrance HAIZHU JIANGWAN
with SHA NEW GROUND ROAD (MAIN LINE, 3 LANES)
BRIDGE AVE\. YANJIANGG BRIDGE BRIDGE
TOTAL LENGTH = 0\.19 KM
AN
LIU'ERSAN HAIYIN
Connected RD\. JIAFBRIDGE RD\. NEW GROUND ROAD (MAIN LINE, 2 LANES)
RUYIFANG BRIDGE
AO
HAIB TOTAL LENGTH = 2\.85 KM
BRIDGE BINJIANG
EXISTING ROAD & RIVER CROSSING BRIDGE
RENMIN RD\. N\.) TOTAL LENGTH = 3\.3 x 2 KM
HUANGSHATUNNEL BRIDGE
(BAOGAT13 NG
RD\. E\. RIVER CROSSING BRIDGE EXPANDED STRUCTURE
W\. Sushe TOTAL LENGTH = 0\.5 x 2 KM
T13 RD\. NANTIAN RD\.
Overpass \. The Overpass of
Planned JIANG
with RD Southern Side of
BRIDGE Haiyin Bridge
Connected BAO MONGOLIA JILIN
ZHOUTOUZUI NAN XIAO Sea of
Ramp of JAPAN
Hongde Rd\. GONGY Ramp of Japan
MONGOL D\.P\.R\. OF
Baogang GANG RD\. DONG LIAONING
NEI BEIJING
RD\. KOREA
BEIJING
Pear E AV TIANJIN
REP\. OF
E\. HEBEI
RD\. Yellow KOREA
lRive ANG SHANXI SHANDONG Sea
NINGXIA
r CHANGG JIANGSU
GANSU
SHAANXI HENAN
ANHUI SHANGHAI
HUBEI East
HEDONG SICHUAN
ZHEJIANG
BRIDGE China
CHONGQING
JIANGXI Sea
HUNAN
GUIZHOU FUJIAN
YUNNAN TAIWAN
GUANGDONG PACIFIC IBRD
This map was produced by the Map Design Unit of The World Bank\. GUANGXI Guangzhou OCEAN
JULY The boundaries, colors, denominations and any other information HONG KONG
shown on this map do not imply, on the part of The World Bank 29423R
MACAO
2008 Group, any judgment on the legal status of any territory, or any LAO VIETNAM
endorsement or acceptance of such boundaries\. P\.D\.R\.
HAINAN PHILIPPINES | REVIEW |
P046051 | Document of
The World Bank
Report No: 33720
IMPLEMENTATION COMPLETION REPORT
(SCL-44740 IDA-32130 TF-25682)
ON A
LOAN IN THE AMOUNT OF US$20 MILLION AND A CREDIT
IN THE AMOUNT OF SDR36\.8 MILLION (US$50 MILLION)
TO THE
PEOPLE'S REPUBLIC OF CHINA
FOR A
HIGHER EDUCATION REFORM PROJECT
April 5, 2006
HUMAN DEVELOPMENT SECTOR UNIT
EAST ASIA AND PACIFIC REGION
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 29, 2005)
Currency Unit = Yuan (Y)
Y1 = US$ 0\.12
US$ 1\.00 = Y8\.1
FISCAL YEAR
JANUARY 1 DECEMBER 31
ABBREVIATIONS AND ACRONYMS
APR Annual Progress Report FDAN Fudan University PAD Project Appraisal Document
BISC Baotou Iron and Steel College HIT Harbin Institute of Technology PIs Partner Institutions
BIT Beijing Institute of Technology HEAP Higher Education Advisory Panel PKU Peking University
BNU Beijing Normal University HED Higher Education Development PKUHSC Peking University Health
Science Center
BUAA Beijing University of Aeronautics HUST Huazhong Institute of PPI Project Performance Indicators
and Astronautics Technology
BUST Beijing University of Science & ICR Implementation Completion PUs Project Universities
Technology Report
COU China Ocean University ISR Implementation Status and SARS Severe Acute Respiratory
Results Syndrome
CUMT China University of Mining and IDF Institutional Development Fund SNNU Shaanxi Normal University
Technology
CUST China University of Science and ICB International Competitive SJTU Shanghai Jiaotong University
Technology Bidding
CERNET Chinese Education and Research JLU Jilin University SCU Sichuan University
Network
CEP Chinese Expert Panel JUT Jilin University of Technology SEU Southeast University
CQU Chongqing University LCBPT Laboratory Center for Basic TJU Tianjin University
Physics Teaching
CAD Computer-assisted Design LZU Lanzhou University TSING Tsinghua University
CAI Computer-assisted Instruction MIS Management Information System USTB University of Science &
Technology Beijing
CAS Country Assistance Strategy MTUC Mining and Technology WHU Wuhan University
University China
DLUT Dalian University of Technology MOE Ministry of Education WREP Work Review and Evaluation
Report
EAP East Asia and Pacific M&E Monitoring & Evaluation XJTU Xi`an Jiaotong University
EOP End of Project NJU Nanjing University YNU Yunnan University
FILO Foreign Investment Loan Office NKAI Nankai University ZJU Zhejiang University
Vice President: Jeffrey Gutman (EAPVP)
Country Director David Dollar (EACCF)
Education Sector Manager Christopher Thomas (EASHD)
Task Team Leader/Task Manager: Dingyong Hou (EASHD)
CHINA
Higher Education Reform
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 5
5\. Major Factors Affecting Implementation and Outcome 18
6\. Sustainability 20
7\. Bank and Borrower Performance 21
8\. Lessons Learned 22
9\. Partner Comments 23
10\. Additional Information 26
Annex 1\. Key Performance Indicators/Log Frame Matrix 27
Annex 2\. Project Costs and Financing 39
Annex 3\. Economic Costs and Benefits 42
Annex 4\. Bank Inputs 43
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 45
Annex 6\. Ratings of Bank and Borrower Performance 46
Annex 7\. List of Supporting Documents 47
Annex 8\. Additional Data on Components 1 and 2 49
Annex 9\. Partnership Implementation Issues 55
Annex 10\. Policy-Based Research Studies 56
Annex 11\. Development of Textbooks and Electronic Materials 59
Annex 12\. Lanzhou University Student Loan Pilot Scheme 61
Annex 13\. List of Project Universities and Partner Institutions 62
Project ID: P046051 Project Name: Higher Education Reform
Team Leader: Dingyong Hou TL Unit: EASHD
ICR Type: Core ICR Report Date: April 5, 2006
1\. Project Data
Name: Higher Education Reform L/C/TF Number: SCL-44740; IDA-32130;
TF-25682
Country/Department: CHINA Region: East Asia and Pacific
Region
Sector/subsector: Tertiary education (98%); Central government administration (2%)
Theme: Education for the knowledge economy (P); Social analysis and monitoring (S)
KEY DATES Original Revised/Actual
PCD: 08/10/1998 Effective: 09/30/1999 10/06/1999
Appraisal: 12/15/1998 MTR: 10/21/2002
Approval: 05/18/1999 Closing: 07/31/2005 09/30/2005
Borrower/Implementing Agency: PRC/Ministry of Education
Other Partners:
STAFF Current At Appraisal
Vice President: Jeffrey Gutman Jean-Michel Severino
Country Director: David R\. Dollar Yukon Huang
Sector Manager: Christopher Thomas Alan Ruby
Team Leader at ICR: Dingyong Hou Hena G\. Mukherjee
ICR Primary Author: Hon Chan Chai
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,
HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: HL
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The overall objective was to improve the quality and relevance of undergraduate basic science and
engineering programs through integrated reform activities in curriculum and teaching methodology\. The
project investment, targeted at the first and second year studies, was designed to provide the impetus for
embedding the reforms across all four years of undergraduate science and engineering programs\.
Specifically, the project sought to: (a) enable Project Universities (PUs) to improve teaching and learning
through restructuring the curriculum, reduction of narrow specializations, and introduce integrative
interdisciplinary courses; (b) enable the PUs, through a collaborative partnership program, to disseminate
the reforms they developed to their poorer Partner Institutions (PIs); and (c) strengthen institutional
planning and administration and central coordination\. The effectiveness of the teaching/learning process
was to be improved by adopting student-centered strategies, and making the laboratories, computer
facilities and library services more readily accessible to students and staff\. Annex 13 provides a list of
project universities, their codes, partner institutions, and implementation completion reports, dates and
length\. The project universities are identified by their code, as appropriate\.
3\.2 Revised Objective:
The project's development objectives were not revised\. Adherence to the original objectives was a
reflection of the broad consensus among the PUs on the reform priorities for their institutional development\.
The consensus was significant considering the variation in institutional history of the PUs and levels of
socioeconomic development of the eleven provinces and four municipalities in which the PUs were located\.
At appraisal, there were three municipalities: Beijing, Tianjin and Shanghai; subsequently Chongqing
became the fourth municipality\.
3\.3 Original Components:
The project components were designed to meet the project objectives\. Clearly defined implementation
responsibilities were shared between the PUs, which would execute project activities at the institutional
level, and the Ministry of Education (MOE)/Foreign Investment Loan Office (FILO) at the central,
overarching level\. The MOE/FILO was assisted by the Higher Education Advisory Panel (HEAP, also
referred to as the "Chinese Expert Panel" or CEP) which carried out advisory and oversight functions in
relation to the PUs\. Each PU, in turn, had its own mini-FILO and advisory team to assist in the
implementation of institutional project activities\.
The three main components supported the improvement of the quality and relevance of undergraduate basic
science and engineering programs by reforming the curriculum, teaching-learning methodology, and the
examination system\. All components were judged to: (a) have direct relevance to the project's objectives;
(b) be well within the capabilities of the implementing agencies; and (c) have been designed with the
incorporation of `lessons learned' from previous World Bank (the Bank) projects in China and the East
Asia and Pacific (EAP) Region\. The components, as implemented, were as follows:
Component 1: Achieving Improvement in Teaching and Learning (Base Cost: US$84\.0 million)
The PUs would restructure the curriculum to provide broader, integrative interdisciplinary courses in
science and engineering, with improved student-centered teaching-learning strategies, more accessible
laboratories and workshops, computer facilities and library services\. New equipment would be provided:
(a) to complement the new expanded and modernized physical facilities for first and second year science
and engineering programs; and (b) to establish integrated laboratory centers for new type of laboratory
- 2 -
experiments which would include open-ended and research-design-oriented projects\. The aim was to meet
employers' demand for graduates who, having acquired a broad knowledge base, would be more practical,
creative and skilled in team work\.
The component's overall objectives would be achieved through four sub-components:
(a) Restructuring of Academic Programs through continuous curriculum development to ensure the
relevance of academic programs to modern market demands\. Activities would include: (i) improving the
relevance of academic programs and curricula through practical linkages between universities and
employers by means of external and industrial advisory committees and graduate tracer system to gather
feedback from graduates and employers; (ii) supporting continuous curriculum development and
improvement through a feedback process linking inputs from students, graduates and employers and
committees responsible for program-specific curriculum development; and (iii) restructuring of academic
programs by reorganizing and broadening the content of science and engineering programs and
strengthening each subject's fundamental concepts and practical aspects, which would be effected by
reducing the number of specialized courses and the amount of scheduled time in each program to provide
students more time for individual and group learning\.
(b) Reforming Learning Strategies\. The above reforms would include support to teaching staff,
evaluation of teaching reforms and dissemination of outcomes to other institutions; and integration of new
equipment with reformed approaches to teaching-learning\. The reforms would be achieved through: (i)
adoption of student-centered teaching-learning methods; (ii) improving the quantity, quality and relevance
of laboratory experimental work through improved laboratory equipment, increased student access to
laboratories, and changing the balance between directed, "verifying" and/or repetitive experiments and
open-ended, design-oriented laboratory projects; (iii) ensuring a safe and conducive laboratory environment
through renovated facilities; and (iv) reforming student examinations through more student-centered testing
and evaluation strategies and a flexible course credit system\.
(c) Improving Learning Opportunities and Conditions\. This would be achieved by facilitating more
self-directed learning by: (i) improving and updating textbooks and other teaching-learning materials; (ii)
improving the conditions for self-directed learning through reduction of time for traditional lectures and
increase of time for student self- or group-study enabled by open access to laboratories, enhanced computer
facilities, and library resources; and (iii) improving learning-support services through improved
teaching/learning and campus networks linked to Chinese Education and Research Network (CERNET)
and the Internet\.
(d) Upgrading teachers and staff to support the reforms would be achieved by short- and long-term
(local or overseas) training of administrators, teachers and laboratory support staff in higher education
planning and management, and teaching-learning strategies\. (For further details on Component 1, see PAD
Report No\. 19146-CHA, dated April 14, 1999, Annex 2 pp\. 32-36\.)
Component 2: Using Partnerships and Networks to Spread Reforms (Base Cost: US$5\.3 million)
This component linked the 28 PUs with their less-developed Partner Institutions (PIs) to share the benefits
of project investments in physical and human resource development and to widen the impact of the higher
education reforms initiated in the PUs\. This would be achieved by disseminating the curriculum reforms
and academic program and course development and improved teaching-learning strategies in basic science
and engineering courses\. The partnership core elements would include: (a) training PI staff in higher
degrees and/or courses in science and engineering content and teaching methods; (b) training and/or
- 3 -
exchange of students between institutions to participate in teaching-learning programs and generally for the
PI staff and students to use the better equipment and teaching-learning resources of the PUs; (c) sharing
resources, reforms in curricula, teaching-learning methods, good practice in institutional management; and
(d) development and use of electronic teaching-learning materials and routine electronic communication
between teaching staff and students through CERNET and other networks\.
Quality improvements in reforms would be monitored by HEAP or CEP\. Good performance by PUs would
be rewarded by MOE under five categories of partnership activities: (i) sharing facilities; (ii) staff training;
(iii) joint research and development programs; (iv) technical assistance; and (v) donations (equipment,
software, publications)\. PU staff would be expected to help their PI counterparts to adopt the new teaching
methods developed under the project\. (For further details on Component 2, see PAD Report No\.
19146-CHA, dated April 14, 1999, Annex 2 pp\. 36-37\.)
Component 3: Supporting Institutional Capacity for Change (Base Cost: US$4\.3 million)
Aimed at strengthening institutional planning and administration and central coordination, activities under
this component, implemented by MOE, were organized under four main groups\.
I\. National-Level Technical Assistance Activities included staff training and study tours with
follow-up dissemination seminars: (a) staff training would focus on project, financial, and procurement
management to ensure effective project implementation; (b) the study tours to various foreign universities
would familiarize senior university staff with current good practices in: (i) reform of institutional
management and implementation of teaching reform (for university presidents); (ii) reform of curricula,
textbooks, teaching methods and the institutional examination system (for directors of teaching affairs); (iii)
improving financial management (for finance division directors); (iv) reform of laboratory management (for
equipment division directors); and (v) reform of laboratory teaching and management (for chiefs of the
experiment centers)\.
II\. Policy-Based Research Studies on five research themes identified by MOE/HED, in collaboration
with university experts\. The themes were: (a) development of a system for quality assessment in higher
education; (b) establishment of a textbook renewal mechanism appropriate for a socialist market economy;
(c) managerial autonomy of institutions under legislation; (d) development of a graduate tracer study; and
(e) comprehensive assessment of financial management in higher education institutions\.
III\. Textbooks and Electronic Materials reform and development activities were coordinated by MOE
to ensure adequate dissemination of the most innovative results to all universities in the country\. MOE
planned to produce 400 textbooks on 200 basic courses which would include those not covered by the
project, with the aim of spreading the reforms beyond the PUs and PIs\. The development of management
software would fall under the overall Management Information System (MIS) development activities of
MOE and the various universities, while the development of teaching software would be associated with
curriculum reform and teaching practice improvement under the project's Component 1\.
IV\. Student Loan Pilot Scheme for Lanzhou University, a pilot scheme funded by a US$100,000
PHRD Grant to Lanzhou University, was a study of an alternative student loan scheme\. (For further details
on Component 3, see PAD Report No\. 19146-CHA, dated April 14, 1999, Annex 2 pp\. 37-40\.)
3\.4 Revised Components:
There were no revised components\.
3\.5 Quality at Entry:
The project was not subject to a QAG review or rating at entry\.
The ICR rating for quality at entry is satisfactory\. The rating is based on the following findings: (a) from
- 4 -
the beginning, the project was strongly focused on agreed-upon development objectives, and this concensus
remained through the duration of the project; (b) the thrust of the project was closely aligned with the
Borrower's higher education sector development priorities as described in China Higher Education Reform
(June, 1997), an in-depth sub-sectoral analysis jointly conducted by MOE and the Bank; (c) the project
design was consistent with the Bank's Country Assistance Strategy (CAS, R98-107 dated May 6, 1998);
and (d) the Borrower clearly considered the project to have been timely, and had shown strong ownership\.
It was implemented at a time when the demand for high level scientific and technological workers was at a
critical stage in the nation's economic growth, and the sub-sector could have suffered a development
set-back if the project had not been implemented\. The project design was formulated on the basis of a well
researched and documented study (referred to above) and lessons learned from previous higher education
Bank projects in China and the region\. The project components were designed to be fully sustainable by
the PUs and MOE\. Finally, the cost estimates in the original project design were proven to be reasonably
accurate, with no significant shortfall in local funding of the project\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
The project was judged to have met and, in many aspects, exceeded its overall development objectives\.
This assessment was based on: (a) satisfactory to highly satisfactory project outcomes and outputs
pertaining to all the targeted reforms; (b) strong PU and MOE commitment and participation throughout
the implementation of the project; (c) highly conducive student learning environment in the new laboratory
experiment centers; (d) highly satisfactory graduate employment rates; (e) effective implementation by the
PUs and implementation oversight by MOE/FILO, supported by HEAP; (f) strong indications of PU and PI
satisfaction with the overall implementation of the project and its outcomes; and (g) positive indications of
continued sustainability of project investments\. These indications are most apparent when the Borrower
continues to place strong priority on continued improvements in, and dissemination of, higher education
reforms, particularly in laboratory experiment centers, the key to achieving higher levels of
teaching-learning in science and technology\. Based on these indicators, the overall outcomes of the project
are rated as satisfactory\.
4\.2 Outputs by components:
Component 1: Achieving Improvement in Teaching and Learning
(a) Restructuring of Academic Programs\. This sub-component is rated highly satisfactory\.
At the end of the project (EOP), 1,486 majors were reformed and 4,203 courses were updated (126% of the
target of 3,340, MOE/FILO PPI, Tables 2 & 10) including new majors and non-specialized courses for
providing undergraduate students with a broad based and flexible education program through wider range
of choices\. Each PU carried out the restructuring according to its needs, guided by the overall objective of
deepening the reform of undergraduate science and engineering curricula, course content and
teaching-learning methods\. Nankai University's experience provides an insight to the general approach to
academic program restructuring taken by the PUs\. In Nankai (NKAI), whose reform focused on four lab
teaching centers (biology, chemistry, physics and electronics), the restructuring process started with
rationalization of the schools of science, followed by reforming the lab management system by integrating
the teaching lab resources and establishing the basic lab teaching centers according to education objectives,
lab classification and teaching-learning content\. The University realized that reforming the experiment
teaching system was inextricably linked to providing quality education for undergraduates\. Thus, issues
- 5 -
were thoroughly examined and debated among teachers and administrators to arrive at a consensus on
institutional and academic objectives and strategies for achieving them (NKAI, ICR)\.
Infrastructure supporting teaching/learning reforms\. A prerequisite for restructuring the academic
programs was the provision of new or renovated lab experiment facilities, up-to-date equipment and
precision instruments, computer/multimedia and library support services\. All the PUs improved and/or
expanded these facilities, with the largest lab area increase in Jilin University (JLU), whose lab space was
increased by 264% from 11,365 square meters in 1999 to 29,967 square meters at EOP\. Total PU lab
areas increased by 162% from 258,000 square meters in 1999 to 419,000 square meters in 2005 (PPI,
Table 3-a)\. The 28 PUs (including JUT, which had merged with JLU) had a total of 117 new or
restructured lab experiment centers, averaging 4\.2 centers per institution, ranging from six centers (PKU,
TSING, and SCU) to two (USTB)\. Science centers accounted for the highest proportion (53%), followed
by engineering (36%) and multimedia and language centers making up 11% (Annex 8, Table 1)\. The
completion reports by each PU provides extensive details of experiment centers and the reformed
teaching/learning they embodied\. The new laboratories with modern equipment provided the necessary
support for educational reforms\.
The experiment centers became the focal points of the university reforms and provided the platforms for the
implementation of the new approach to teaching-learning science and engineering, which was facilitated by
the installation of new equipment collectively valued at US$57\.32 million and RMB264\.5 million, and the
acquisition of 97,000 new science and engineering books (increased by 74% from 55,700 in 1999)\.
Teaching and learning in the experiment centers were supported by 5,539 lab instructors, increased by 31%
from 4,225 in 1999 (PPI, Table 4)\. The successful establishment and equipping of the lab centers,
language labs, libraries and other learning resource centers had significantly improved the PUs' health and
safety learning environment and broadened the opportunity for students to test their creativity and fulfill
their development potential\.
(i) Improving the relevance of academic programs and curricula\. This sub-component is rated highly
satisfactory\.
The reformed undergraduate curriculum typically consisted of a combination of required common basic
courses, specialized compulsory courses, optional courses, general education optional courses, and
common optional courses\. Within these requirements, students had varying degrees of freedom of choice,
depending on the departments they were enrolled in\. The reforms, originally focused on the first and
second year science and engineering programs, had spread to the entire undergraduate curriculum at the
PUs, and through the PUs to their partner institutions\. The dissemination of reform ideas had a leavening
influence on the quality of graduates, with beneficial impact on the graduate employment rate, a key
indicator of the relevance of academic programs and curricula\. The new skills, developed under the
project, are in high demand locally and globally\. The increasing involvement of industry (e\.g\., participation
in Boards of Trustees established during sector work just before the project) in educational activities and
management at the PUs helped to strengthen the relevance of science and engineering education to the labor
market\. This is evidenced (in early 2004) by the establishment of 438 laboratories with industry built
either in the PUs or in university-linked enterprises (FILO draft APR 2004, p\. 2)\. Selected PUs, using a
survey instrument developed by SJTU under the leadership of MOE/FILO, conducted a survey of graduate
employment for three years (details of the graduate tracer study are given in Component 3, below)\. The
results from ten PUs showed graduate employment rates to be high but with not unexpected variation
between institutions and changes between 1999 and 2005 (Annex 8, Table 2)\.
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The graduate employment mechanism which linked employers' requirements and the universities'
preparation of students for a socialist market economy had to balance graduates' abilities and expectations
with labor market demands\. Generally, local government state enterprises offered lower salaries, while the
new private enterprises, particularly foreign or foreign-linked, offered higher salaries\. According to BIT
(ICR p\.17), employers were becoming more diverse\. Up to the end of the 1990's, BIT graduates were
employed by traditional state enterprises, scientific research institutes, and national departments, but since
the turn of the century, graduates increasingly have been sought by multinational and joint-venture
enterprises\. In 2004, about 28% of total BIT graduates were employed by foreign enterprises\. In 2005,
foreign companies accounted for one-third of employment units advertising for graduates in BIT\. A survey
by HIT in 2004 to gauge the quality of education and training students received showed that those who
graduated in 1998 or earlier and those who graduated in 1999 or later differed markedly (close to 0\.1
significance level) in computer competence, hands-on work ability, and organizational and management
ability\.
The high enrollment increases from 1999 produced the first sharp increase in output of graduates of 2\.12
million in 2003, an increase of 6\.5 times over the 1999 output of 322,400\. The situation suggested three
main trends: (i) the increase was a response to the changing demands for skills in public sector and fast
expansion of private enterprises; (ii) industrial specialties (e\.g\., telecommunications, medical technology,
automobile manufacturing) became the preferred majors, and the output of high-quality and broadly trained
graduates was a response to the needs of these sectors; and (iii) a growing number of graduates moving to
post-graduate studies, a direct result of the enriched curricula as well as an increasingly sophisticated labor
market signaling its preference for workers with a post-graduate degree\.
(ii) Supporting continuous curriculum development and improvement\. This sub-component is rated
highly satisfactory\.
Continuous curriculum development is necessary to improve design and to respond to new technologies in
science and engineering and the changing labor market demands\. The increased emphasis within the
reformed programs in the PUs on basic scientific and technological concepts, instead of narrow
specializations, is likely to facilitate continuous updating of curricula\. The PUs have institutionalized
various processes for continuous curriculum development and improvement, using feedback from students
and graduates, as well as employers, to sustain the process of reviewing and improving curricula and
related activities\. An illustration is provided by the experience of Fudan University, a research-focused
institution, whose major responsibility, like that of other PUs, is to build up undergraduate disciplines that
meet the needs of the 21st century\. The University encourages departments and colleges "to boldly
undertake reforms in laboratory curriculum consistent with academic characteristics and the
talent-development needs" (FDAN, ICR, p\.6)\. At the management level, a course credit system
development team, headed by the University President, and four curricular design expert teams,
respectively for humanities, science, medicine, and comprehensive education, were set up to address the
reform of curricular structures\. The resultant comprehensive education policy combined all four discipline
areas in the systematic development of advanced student talents (FDAN, ICR, p\. 24)\. For other examples,
see Annex 8, Table 2\.
(iii) Restructuring of academic programs\. This sub-component is rated highly satisfactory\.
Historically, science faculties in China's universities evolved from physics and chemistry laboratories
affiliated to basic (teaching) faculties\. The specialty faculties only conducted research, while the basic
faculties only conducted teaching\. Thus, the arbitrary division between research and teaching adversely
affected the improvement of teachers' competency and the improvement of basic teaching quality (USTB,
- 7 -
ICR Part 2, Reports by the Experimental Centers, p\. 6)\. The project reform objective was achieved
through the integration of basic teaching and research, reflected in the administrative integration of
experiment labs\. In turn, the restructured academic programs were reflected in the PUs' increased
allocation of laboratory time to students who were free to choose their experiments (see (b) Reforming
Learning Strategies, below)\. During the project period, student use of the lab centers totalled 30\.88
million person-hours per year, 27% higher than the plan to provide 24\.30 million person-hours\. Parallel to
student use was the total lab openning hours per week increased from the average of 40 hours to 80 hours\.
The experiment centers served about 462,000 students, about 29% more than the planned 356,000
students\. The above statistics (PPI, Table 3-b) reflect the opportunities accorded to students to do their
experiments at their own convenience as part of the restructured academic programs\.
The foundation for the restructured academic programs was provided by the renewed/updated lab
experiments for basic science and engineering courses, of which the PUs in 2005 had achieved a total of
7,779 (65\.3%) of the 11,906 total lab experiments\. The experiment centers served 3,368 majors, 115%
more than the planned 3,021 to be served (for further details, see MOE/FILO PPIs for PUs, Table 3-a)\.
(b) Reforming Learning Strategies\. This sub-component is rated satisfactory\.
To achieve the reforms in learning strategies, special emphasis was placed on raising the number and
quality of academic staff\. At the end of the project, the PUs had a total of 23,556 teachers with a Master's
degree, and 21,556 with a doctoral degree, 40\.2% and 36\.8% respectively of the total of 58,585 full-time
(FT) teachers\. In 2005, the student enrollment was 867,142, giving a student-faculty ratio of 15:1 (PPI,
Table 1)\. (At appraisal, the corresponding ratio was 11:1; thus, the situation in 2005 suggested an
improvement in staff utilization, implying increased efficiency\.)
The academic staff training achieved mixed results\. About half of the PUs aimed to attain at least 50%
teachers with a Master's degree, but in actuality, only four (14%) of the PUs reached that target on project
completion\. By contrast, 20 (74%) of the PUs reached or surpassed their targets for staff with a doctoral
degree\. At EOP, the overall picture showed the majority of PUs did not reach their targets for teachers
with Master's degree or doctorates\. This shortfall, however, was compensated by a 36% improvement in
the average student-full-time teacher ratio (see "Trained Teachers" below)\. Details of the results from
selected universities are given in Annex 8, Table 3\.
Apparently, one reason that caused the PUs to underachieve the targeted number of higher degree faculty
was due to the fact that staff aged 45 or older were ineligible for higher degree training\. Nevertheless, the
project's staff development program was a catalyst for many PUs to establish their own program for
training younger staff\. For example, to raise teaching standards, Wuhan University (WHU, ICR p\.18), like
many universities in China, required young teachers to undergo pre-job training, two rounds of teaching
assistance, teaching preparation, and trial teaching before they started independent teaching\. Both young
and mid-career teachers were encouraged to study for a Master's or doctoral degree, with the employing
university subsidizing the tuition fees or providing support for overseas studies\. Significantly, the training
included an introduction to educational theories and modern educational technologies\. All the above
indicate an enlightened policy far in advance of many foreign higher education institutions where teaching
staff are seldom required to have any training in pedagogy\.
All the PUs embraced the student-centered teaching/learning strategy\. The reduction in the lecture mode of
teaching, which had no reported negative effects, provided students more time for individual laboratory
work, team activities and, most important of all, for individual thinking and reflection\. Examination
reforms reduced the demands of the past for extensive memorization\. Traditional "cook-book" lab
- 8 -
activities wherein students were required to follow prescribed experiments to verify known results have
mostly been abolished and replaced by experiments of greater scientific interest and learning value\. They
give students more individual responsibility, require higher-level reflection and challenge their innovative
skills\. In BUAA, for example, the updated physics lab experiment courses and the re-grouped chemistry
courses were matched by a reduction of lab "verification" experiments and a corresponding increase in
activities designed to focus on developing students' creative thinking and innovative abilities (BUAA, ICR
p\. 4)\. Most courses in PUs provided for peer evaluation of staff teaching effectiveness as well as student
evaluation of their teachers' instructional competence\. Good practices in teaching/learning were shared
with other institutions through seminars and workshops, and through the university partnership program\.
Updated Courses\. The target total for the PUs was 3,340 updated courses by EOP, with an average of 124
courses per PU to be updated\. The actual achievement was 4,203 or 126% of the target, with an average
of 157 courses updated per PU\. With the exception of JLU and SCU, all the PUs exceeded 100% of their
targets\. Among the highest achievers were MTUC (204 updated courses, 334% of its target), NJU (250
updated courses, 333% of its target), and TJU (141 updated courses, 282% of its target)\. (MOE/FILO
ICR, PPI Table 2)\.
Courses with Reformed Examinations\. The main thrust of reformed examinations was to replace the
traditional written examination with multiple modes of testing and evaluation of student learning
achievement\. The reformed examinations focused on students' creativity, independence, scientific thinking,
team work ability, skill in gathering information from the Internet and library, and overall capacity to learn\.
The PUs planned to produce 7,861 examination-reformed courses\. The actual achievement was 9,434
(120% of the target)\. LZU with 1,560 (137% of target) had the highest number, followed by SEU, with
1,300 (130% of target)\. The lowest number 20 from PKUHSC was, however, 100% of target\. Overall,
the PUs achieved 120% of the target for reforming examinations of basic courses, ranging from 67% (JLU
and SNNU) to 312% (NJU) and 304% (MTUC)\. In the case of JLU, the original target of 300 courses
was for JLU and JUT (the latter having merged with JLU in 2000), and the actual score of 200
examination-reformed courses was a substantial achievement\. All the above reflect the PUs' highly
satisfactory achievement in improving the conditions for more progressive teaching/learning strategies\.
Details of updated courses and courses with reformed examinations in selected universities are shown in
Annex 8, Table 4\.
(c) Improving Learning Opportunities and Conditions\. This sub-component is rated highly
satisfactory\.
The PUs reached or surpassed their targets for improving the learning conditions and opportunities, as
demonstrated by the number of updated/developed textbooks, library open-shelf books, and annual library
borrowed volumes (details shown in Annex 8, Table 5)\. These were in addition to the numerous computer,
language and multimedia centers established and/or extended by the PUs\. The above-mentioned courses
with reformed examinations, as an outcome, produced other outcomes in the form of new courses to meet
the objectives of the reformed examinations\. An example is CUMT's establishment of a course on
creativity aimed at enabling students to master the general principles and methods of developing creativity
and innovation (MOE/FILO ICR, p\. 68)\.
Fudan University's experience provides an example of improved learning opportunities and the widening
range of innovative approaches to student-centered learning\. The University's Laboratory Center for Basic
Physics Teaching (LCBPT) initiated a succession of distinctive experiment programs, such as "Experiment
Gardens," "Self-Taught Experiment," and "Open Experiment," designed to stimulate students' higher-level
thinking and motivate their creativity\. The Experiment Garden is a "zero-credit" study site which has no
- 9 -
access time restriction and offers free entry to first and second year students to try out their favorite
experiments (FDAN, ICR p\.10)\.
Updated Textbooks\. The project achievement was 6,827 textbooks updated or developed, 157% of the
target 4,331\. All the PUs reached or exceeded their targets, except JLU which produced 139 (75% of its
target of 185) updated textbooks\. Six universities (BUAA, BNU, HUST, NJU, SNNU, SJTU, TJU)
achieved over 200% of their targets (for details, see Annex 8, Table 5)\.
Access to Library Resources\. Along with increased service hour of the libraries, the old practice to lock
up books and journals in the closed section of the library was abolished\. Now twenty-three (85%) of the
PUs had at least 50% of their books on open shelves for students to access these resources more easily\.
The achievements, in percentages, ranged from 100% for seven universities (BUAA, PKUHSC, SEU,
LZU, SJTU, XJTU, MTUC) to 37% (BNU)\. A commendable case was HIT, which set a modest target of
15%, but actually achieved 78% open-shelf books\.
Library Books Borrowed\. Twenty-three (85%) of the PUs reached or exceeded their targets for annual
number of borrowed books\. Seventeen (63%) of the PUs achieved 50% and higher of book borrowings,
and six (22%) PUs had 30-49% borrowings (see Annex 8, Table 5 for details)\. While the above indicators
are important measures of the relative openness of PUs and their accessibility to learning resources for
students, their importance should be viewed in conjunction with other factors, such as the availability of
reading rooms and carrels in the libraries and colleges that may have reduced the need for open-shelf or
take-away books\. Many PUs, such as Lanzhou University with nearly 72,000 square meter of library floor
space and 39 reading rooms the largest library in northwest China had greatly expanded their library
facilities\.
In addition to the above library-based reforms and establishment of computer and multimedia centers, most
PUs had developed their own campus intranet with access to CERNET and the Internet so that students had
access to virtually all the available websites for their online research\. All the above facilities and services
testify to the improving conditions and opportunities in the PUs that are conducive to self-directed student
learning\.
Laboratory Safety and Environmental Standards\. By the end of the project, all PUs had achieved 100% of
their lab safety and environmental standards (PPI, Table 3-a)\. Many PUs were initially skeptical about the
need for strict standards, but the project's focused attention to this issue helped change the attitude of the
skeptics\. By mid-term the PUs had reached 90% compliance in the new labs which established
international safety and environmental standards\. These standards provide the benchmark for students'
practice and behavior after graduation when they might be responsible for handling large quantities of toxic
materials in factories and industrial laboratories\. It is noted that they might also disseminate these lab
safety and environmental good practices in their workplaces\.
(d) Upgrading Teachers and Staff to Support the Reforms\. This sub-component is rated satisfactory\.
At project completion, 26,430 teachers (under various long- and short-term, in-job and off-job training
programs), 4,472 laboratory staff and 2,517 library management staff had received training to upgrade
their professional qualifications (PPI, Table 8)\.
Trained Teachers\. In 2005, there were 21,745 teachers in all the PUs teaching undergraduate Year 1 and
Year 2 courses\. The majority (88%) of PUs reached or surpassed their targets for the teachers to be
trained\. The actual achievements ranged from 170% (SEU) to 23% (SJTU) of the planned numbers\. The
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PUs had 14,055 trained teachers, representing 64\.6% of staff teaching Year 1 and Year 2 courses (Annex
8, Table 6 and PPI, Table 2)\. The increase in the proportion of trained teachers to that of at the beginning
of the project was indicative of the higher quality academic staff, which in turn would translate into
improved quality of teaching/learning in the classrooms and experiment laboratories\. The above
achievements in updated courses and teaching-learning methods, and courses with reformed examination
methods provided the teachers with the academic content and learning-assessment tools to continuously
raise the quality of teaching-learning\.
Another aspect of support for reforms is the ratio of students to full-time teachers\. In 2005, the PUs had a
total enrollment of 867,142 students and 57,585 full-time (FT) teachers, giving an average student-FT
teacher ratio of 15:1, a 36% improvement over the average PU ratio of 11:1 at appraisal\. This should
result in lower per-student costs and therefore overall system efficiency\. Technology programs, which are
apt to use more CAI tools for basic instruction, tend to have higher ratios (e\.g\., Dalian), while medical
training would have lower ratios (e\.g\., PKUHSC)\. The ratios of students to full-time teachers ranged from
21:1 (DLUT) and 20:1 (COU), to 8:1 (XJTU) and 5:1 (PKUHSC)\. Annex 8, Table 7 provides further
details\.
Component 2: Using Partnerships and Networks to Spread Reforms
This component aimed at spreading reforms through partnerships and networks is rated satisfactory\. The
reforms carried out by the PUs were spread in various ways to the Partner Institutions (PIs), and through
them to many local tertiary institutions\. The partnership program contributed to the "Chinese Great
Western Development Strategy," strengthening the ties and balancing higher education development
between the interior underdeveloped regions and the coastal developed urban centers\. The cooperative
activities' spin-off effects included stimulating the development of teacher education, education of
minorities, private education, as well as distance education (MOE/FILO, 2004 draft APR, p\. 5)\.
Implementation, however, was uneven because the planning and coordination of project activities varied
among the PUs and their partner institutions\. According to the plan, each PU was to allocate 15% of their
counterpart funds to the partnership program\. The total planned budget was RMB37\.47 million, averaging
RMB1\.34 million per PI (excluding LZH, which had a planned budget of RMB1\.82 million and four PIs,
so that the average per PI was RMB0\.46 million)\. The actual expenditure was RMB37\.79 million,
averaging RMB 1\.48 million per PI\. Most PUs carried out their planned activities, but actual expenditure
varied widely among the PUs, ranging from 146\.6% for PKU to 10\.9% for WHU\. About 75% of PUs
reached or exceeded their planned expenditure\. One PU had no information on their expenditure, and five
PUs (18%) fell short of their planned expenditure (Annex 8, Table 8 provides details)\. The expenditure
variation was evidenced by non-allocation for books, software and other items among many partnerships,
while the largest allocation was for equipment, which accounted for 64% of the total value of materials
donated to PIs\. The PIs were handicapped by lack of access to project financing and by being dependent
entirely on whatever development funds were available\.
The partnership program suffered from a slow start caused partly by the PUs being more concerned
initially about implementing their own institutional project activities\. Poor communication between
partners, described by the Chinese Expert Panel as the program's "weak link," PU personnel transfers, and
arbitrary alteration of partnership program plans hampered implementation\. Differences in the level of
institutional development and differing orientations of staff and students made it difficult for various
partners to work together smoothly\. In some cases, distance between PUs and PIs made it impracticable to
implement certain cooperative activities, such as opening library and lab center facilities to PI staff and
students\.
- 11 -
Notwithstanding these implementation problems, which tested the ability of the PUs to adjust and adapt to
difficult partnership conditions, the partnership program achieved its main and most important objective:
enabling the weaker PIs to adopt and incorporate into their undergraduate programs the new
teaching/learning methods developed and shared by the stronger PUs\. This is illustrated by the fruitful
cooperation between the universities of Fudan and Yunnan in designing and developing Yunnan
University's Department of Electronic Science and Engineering, upgrading its equipment, updating the lab
experiment courses, course content, and reforming teaching methodology (FDAN ICR, pp\. 28-34); USTB
and Baotou Iron and Steel College in improving reforms in course content and teaching methods, and
management of teaching, library and laboratory services (USTB ICR, pp\. 17-21); Nankai and Yunnan
Normal in working methods of science lab construction, lab teaching content, methods, and textbooks, and
staff development (NKAI ICR, pp\. 26-28); and USTC and Anhui Normal in restructuring the latter's
laboratory system, establishing a course credit system, and assisting in staff higher degree training (USTC
ICR pp\. 50-53)\. These partnership activities testify to the realization of the outcomes of the benefits of
higher education reforms\. (Further details are provided in Annex 9, "Partnership Program Implementation
Issues\.")
(a) Higher degree training for staff\. This sub-component is rated satisfactory\.
Higher degree training for PI staff was part of the broader program of staff development\. It facilitated the
process of merging small specialty institutions to establish broad-based universities that could offer more
comprehensive academic and professional programs through a more broadly and well trained faculty base\.
The staff training program was a major factor in contributing to the spreading of reforms as trained staff
were the effective instruments of change and innovation\. A total of 499 PI staff were trained in degree
programs\. The numbers varied widely among institutions, from 81 (HIT and Heilongjiang College of
Science and Technology); 75 (TSING and Yunnan University of Industry); and 66 (SEU and Yancheng
Engineering College), to zero (BUAA and Guizhou Industry University, and FDAN and Yunnan
University)\. Non-degree training yielded 604 staff, and 1,071 teachers were trained under a short-term
program (Annex 8, Table 9)\. With the spread of teaching reforms, many teachers began to feel the need to
update their academic and professional qualifications, thus creating the demand for higher degree training,
which in time would lead to higher quality undergraduate education and training\.
(b) Training and/or exchange of students\. This sub-component is rated satisfactory\.
Under this scheme, 42,317 PI students were beneficiaries in various short-term, non-graduating programs
in the host PUs where they participated in lab experiments and related courses\. The largest numbers were
hosted by Southeast University, which received 15,000 students from Xichang Agricultural College, and
China University of Mining and Technology which took in 21,658 students from Xuzhou Vocational
University (Annex 8, Table 9)\. An example of particular good practice, Wuhan University supported 30
students from Yunyang Teachers' College in Hubei Province by placing them in Wuhan's 3rd Year
bachelor's degree programs so that they graduated after two years' studies\.
(c) Sharing resources\. This sub-component is rated satisfactory\.
The quantitative aspect of "sharing" comprised mainly donations by PUs to their partners valued at
RMB42\.32 million\. All PUs and partners participated in the sharing of resources\. The largest item
"shared" in terms of value was equipment which was valued at RMB18\.4 million\. The largest donation
valued at RMB3\.11 million was from Peking University to Inner Mongolia University, followed by Fudan
University whose equipment donation to Yunnan University was valued at RMB1\.23 million\. Other items
- 12 -
included books (RMB1\.19 million); software (RMB2\.92 million); and "others" (RMB6\.15 million)\. In
Annex 8, Table 8, the qualitative aspects, by far the most important outcomes of the partnership program,
covered the key reforms described in the preceding sections of this ICR\.
(d) Development and use of electronic teaching/learning materials\. This sub-component is rated
satisfactory\.
A number of updated courses and updated textbook titles were developed under two distinct activities:
through cooperation and through the efforts of PIs\. Under the partnership program, 2,284 updated courses
were produced; and under PIs' own efforts, 259 courses\. Regarding updated textbooks, the partnership
program produced 1,937 titles, and PIs on their own produced 186 titles (Annex 8, Table 9)\.
Outcomes
Although achievements across the PIs were uneven, the expected outcome of Component 2 was achieved\.
The achievements included the transfer by the PUs and the adoption by the PIs of the reforms in
curriculum, textbooks and other teaching/learning materials; student-centered teaching/learning
methodologies; methods of testing and evaluation of student learning achievement; management of lab
experiment centers; and staff development programs\.
The partnerships deepened the substance and strengthened the traditional "hand-in-hand" inter-institutional
program\. The initial collaboration, covering relatively easy to implement activities, such as training
teachers, staff and student exchange, provision and sharing of material resources and experience of best
practices, etc\., evolved, toward the EOP implementation, to joint efforts to improve the quality of
undergraduate courses and develop institutional capacity for quality assessment\. The change came from
the need to transcend the simple transfer of equipment and learning materials, and from a shared concern
for ensuring the achievement of high value-added education\. Practically every PU ICR testified to the
transfer of new ways to organize and manage the lab experiment centers and of the reformed
teaching/learning methods used in lab experiments\. The transfer of teaching technology, representing a
revolutionary change of educational philosophy and practice, was the most fruitful outcome of the
cooperative relationship which both the PIs and the PUs strongly wished to maintain and further develop\.
The benefits generated by the PUs spread to other departments within the PIs, as well as to other colleges
and universities\. The partnership program convinced the CEP that the strategy initiated by the project was
the key to accelerating the development of universities in China's remote areas (CEP, WREP, p\. 21)\. The
benefits served as a catalyst for gradually changing narrowly-focused institutions, such as Heilongjiang
Mineralogy College, Guizhou Industry University, and Baotou Iron and Steel College, into more
comprehensive universities capable of meeting the needs of the 21st century\. The overall rating for
Component 2 is satisfactory\.
Component 3\. Supporting Institutional Capacity for Change
All the project activities were implemented as planned\. The overall rating for this component is
satisfactory\. Summaries of the outputs/outcomes of this component are entered in Annex 1 (Key
Performance Indicators/Logframe Reference)\. The following paragraphs provide detail on this
component's achievements\.
I\. National-level Technical Assistance Activities\. This sub-component is rated as satisfactory\.
(a) Project Management Training\. The initial training in 1999 of 112 staff responsible for overall
- 13 -
project management ensured the smooth implementation of activities that required an early head-start, such
as equipment procurement and financial planning, apart from the day-to-day administration of the project\.
Between May 2000 and December 2002, MOE and HED conducted seven follow-up training sessions for
364 staff to reinforce the management skills dealt with in the initial training\. Training sessions were held in
Beijing, Dalian, Nanjin, Chongqing and Guilin\. As of June, 2004, the total training outputs included 84
staff trained in project management, 56 in financial management, and 336 in equipment procurement
management\. However, since the last training session in December 2002, FILO reported a total of 550
staff had been trained as of July 2005, but there was no details provided on the training content for the
additional 74 staff who received training after June 2004 (MOE/FILO ICR, p\. 42)\.
(b) Domestic Training\. This was accomplish through study-tours of universities in China, including
Hong Kong\. They focused on experiment-based teaching-learning in science and engineering laboratories,
including the design and operation of such laboratories\. In addition, the multimedia teaching-learning
centers established in the PUs were used for upgrading the pedagogical skills of teaching staff\. These
included basic IT knowledge on Internet access, web- page designing and development, the relevant
technologies related to computer usage in teaching and general communication, laboratory and staff
management, facilities use and maintenance\.
(c) Overseas Study Tours\. MOE/FILO implemented 21 study tours in key thematic areas specially
related to the project for PU administrative and academic staff\. The tours were followed up by
dissemination seminars to share information and new ideas gained from overseas institutions\. A total of
210 (versus the planned 217) staff participated in the study tours to Europe, North America, Australia,
Malaysia and Singapore\. The participants comprised 29 university presidents, 89 division directors and 92
laboratory experiment center chiefs\. The participants studied institutional, teaching and financial
management; science laboratory development and management; and multimedia/language laboratory
teaching and management\. The tours helped to deepen understanding of the advances achieved by
international universities in the content and methods of teaching/learning science and technology, and to
reinforce the growing conviction that the reforms were vitally important to the further development of
China's universities and their contribution to the growth in China of the knowledge economy\.
(d) Dissemination Seminars\. A total of 12 seminars of 5-6 days duration each were held between
August 2003 and July 2005 in various provincial cities\. They involved 1,764 PU participants that
included university presidents, division directors, and lab and equipment directors, as well as 207 personnel
from 98 other (non-project, non-partner) universities\. The seminar topics were related to project and
institutional management, and science and engineering lab development and management\. The 64 national
and three international specialists conducted the seminars\. A final seminar, focusing on "Teaching Reform
Achievements" was held in Xinjiang during July 4-8, 2005\.
II\. Policy-based Research Studies\. This sub-component is rated as satisfactory\.
All the research studies on thematic areas, which were identified by MOE at appraisal as having a special
bearing on higher education policy formulation, were completed\. The reports, in Chinese, including
executive summaries in English for four of them, were on the following topics: (a) development of a
system for quality assessment in higher education entitled "Research on Chinese Higher Education
Evaluation"; (b) establishment of a textbook-renewal mechanism appropriate for a socialist market
economy, with an English summary report entitled "Teaching Material Renovation Mechanism under
Condition of Socialist Market Economy"; (c) managerial autonomy of higher education institutions (no
English summary report); (d) development of a graduate tracer study (English summary report entitled
"University Graduates' Information Tracking and Investigating System"; and (e) comprehensive assessment
of financial management in higher education institutions (English summary report entitled "A Report of the
- 14 -
Study on the Comprehensive Assessment of College Finance"\.) The following is a summary of the reports,
details of which are given in Annex 10\.
Developing a System for Quality Assessment
The study produced five sub-reports on various aspects of quality assurance\. The study outcomes
included: (a) the implementation of a five-year evaluation cycle, using 7 primary and 18 secondary key
indicators and 38 "observation points" to monitor and evaluate three key aspects of higher education
(operating conditions, the educational process, and institutional efficiency); (b) establishment of data
collection system on undergraduate programs and an evaluation agency under MOE; and (c) development
of a cadre of evaluation experts and a task force for future work\.
Establishment of a Textbook Renewal Mechanism
The study contained three parts: (i) the textbook renewal mechanism; (ii) textbook development/reforms
under the 10th Five-Year Plan; and (iii) an evaluation system for higher education textbooks\. There were
five recommendations focusing on: (a) strengthening the role of publishers; (b) increasing textbook choice;
(c) introduction of competitive bidding for textbook development; (d) establishing indicators for quality
assurance; and (e) developing electronic materials to diversify textbook provision\. The recommendations
were adopted by MOE for systemwide implementation\.
Managerial Autonomy of Higher Education Institutions
In a three-phase study, the first phase involved designing a framework for higher education institutional
reforms which was piloted in the universities\. The second phase, involving the introduction of reforms in
2000, showed that institutional autonomy required a major system restructuring\. The actual study was
carried out in the third phase which was completed in mid-2003 and the draft report reviewed in mid-2004\.
The issues identified in the study included: (i) the legacy of public ownership of higher education
institutions and its attendant problems; (ii) the need to promote institutional autonomy; (iii) the need for
institutional reforms to be implemented within the framework of political reform; and (iv) potential
obstacles to reforms\. Two key recommendations were to privatize some of the public higher education
institutions, and restructure resource allocation to give institutions greater autonomy\.
Graduate Tracer Study
The study, developed by Shanghai Jiaotong University and tested in all project institutions, generated a
questionnaire and a software for tracking student\. By early 2004, the study had: (i) completed a survey of
graduate employment, including employer information; (ii) identified/formalized key indicators; and (iii)
developed the software for the survey of graduates and employers\. The study was completed in July 2004\.
The results of the evaluation that followed the study were integrated into the present evaluation system\.
While no formal report was issued, several PUs reported results from their own surveys\. The findings of
two PUs have been cited in the ICR text (para\. 4\.2 (a) (i) )\. Additional information was provided by
HUST, ICR pp\. 26; HIT, ICR pp\. 23-24\. For further details, see MOE/FILO ICR, Annex 4\.
Assessment of Higher Education Financial Management
The study was completed in 2003\. The findings confirmed the suitability of the existing financial
management system for the current reforms\. The software for the study, developed for use by higher
education institutions, contained 38 key indicators divided into three groups to monitor and evaluate
financial management\. The key indicators dealt with: (i) total income of the system to be measured; (ii)
operational efficiency (e\.g\., teacher-student ratios, expenditure on equipment per student and for faculty
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research, etc\.); and (iii) risks, such as loans/borrowings by institutions, year-end balances, expenditure
versus income, fixed assets versus liabilities, etc\. Following a trial run, the software was being used by 76
higher education institutions under MOE\.
III\. Textbooks and Electronic Materials\. This sub-component is rated as highly satisfactory\.
The target was to produce 400 textbooks on 200 basic courses through a cooperative effort between the
PUs and MOE/HED which produced the guidelines for the innovative approach of having the universities
bid for contracts on a competitive basis\. A 120 expert-member review panel approved 333 proposals from
170 institutions from 31 provinces, regions and municipalities\. Significantly, 22% of the successful bids
came from "disadvantaged" universities in poorer areas\. Under MOE's leadership, the PUs were successful
in developing and implementing new curricula, textbooks, teaching-learning methods for undergraduate
core foundation, compulsory and elective courses, supported by a variety of multimedia software\. At EOP,
4,203 key courses had been updated and 6,827 textbooks renewed or developed, approximately 126% and
157%, respectively, of the targets\. At the same time, there were 9,434 examination-reformed courses,
120% of the project target\. (For details, see Annex 1, key performance indicators under Component 1;
Annex 8 Tables 4 and 5; and MOE/FILO PPI, Table 2)\.
Management Information System (MIS) Development
At the outset of project implementation, MOE/FILO established a MIS to support its overall project
coordination responsibilities\. Several factors contributed to the development and application of the system:
(i) the project universities' management; (ii) the development of IT; (iii) the heavy burden of daily routine
work for information dissemination; and (iv) the urgent need for communication among project
stakeholders\. Management staff of PUs could access the project website email box with the given user
name and password, while an email link was established between MOE/FILO and PUs\. All data
transmission, collection and processing were done through computers\. Regular visits to the project website
became a part of the PU FILO's work which strengthened communication between the PUs and
MOE/FILO\. The project website, as an information-sharing and multi-channel communication platform,
was an indispensable tool for project management and coordination (MOE/FILO 2004 draft APR, p\. 9)\.
The Severe Acute Respiratory Syndrome (SARS) crisis presented an unexpected opportunity for the MIS
to demonstrate its efficacy as a information-sharing and communication support system\. MOE/FILO and
the PU leaders responded to the crisis by: (a) creating off-site and online communication to maintain
inter-university contact; (b) quickly establishing, in cooperation with CERNET, a public distance education
platform that was rapidly expanded with courseware by PUs; (c) using video-conferencing for institutional
administration and academic exchanges; and (d) exchanging project information and progress reports
through the website created by the MIS (see para\. 5\.1, below)\.
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Outcomes
Under Component 3, the domestic training and overseas study tours, together with the dissemination
seminars, were crucial to the reform process because they primed the senior university officials for the
leadership roles they would play in implementing all the key aspects of the reforms\. Seeing for themselves
how undergraduate science and engineering programs were conducted in the "world class" universities
provided the university leaders with a vision of what China's higher education institutions could achieve
and needed to achieve\. All the project universities have institutionalized the principles of student-centered
teaching-learning methodologies; students' choice of courses within academic programs; and adoption of a
range of flexible methods of assessing student learning achievement through team as well as individual
projects, written assignments, standard closed-book and open-book tests/examinations, etc\. The reformed
curricula emphasize stimulating students' creativity and innovative abilities\. Science and engineering
laboratories are open for students' use after regular scheduled sessions, subject to first-come, first-serve
advance bookings through their teachers\. Reforms in curricula and instructional methods have led to the
institutionalization of regular skill upgrading and professional training for administrative, technical and
academic staff\.
Key outcome indicators of the reforms may be seen in the national as well as university presidential prizes
awarded to numerous student papers for their excellence, to staff for their distinction in teaching, and to
institutions for establishing excellent laboratory centers as well as developing excellent innovative basic
undergraduate courses\. For example, Nankai University's four lab centers won the first ever title
"Excellent Teaching Labs" in Tianjin Municipality, and in Peking University, four teachers cited for their
excellence were recognized as "National Excellent Teachers" in 2003\. Similar awards were conferred upon
several universities\. The logical outcome of excellence in teaching is student learning achievements\.
Nankai University provided the example of one of its students, Zhang Lei, of the Chemistry College
winning a special innovation award for his article Luminous Zinc Nanometer Molecule in the 7th National
Challenge Cup for College Student Scientific Works in 2001\. The only undergraduate to receive the
award, Zhang Lei subsequently had five articles accepted for publication by international journals (NKAI
ICR, p\. 18)\.
An important outcome with potential long-term impact is the development of multimedia teaching-learning
through the establishment in the majority of project universities of multimedia centers which are used for
professional staff training and for extracurricular courses for students\. The multimedia-based teaching has
not only significantly reduced the conventional instructional time, but also effectively promotes
student-centered learning in which students have relatively more time to study and carry out research on
their own\. A potentially far-reaching outcome is the introduction of courses in English or bilingual
(Chinese/English), as an important first-step towards increasing the internationalization of Chinese higher
education\. An expanding number of universities offer bilingual (English-Chinese) courses in science and
engineering\. Indeed, in some universities, selected science courses are specifically taught in English to
reinforce students proficiency in the language and to familiarize them to the scientific concepts and
terminologies in English\. Many of the students that the Bank mission team met in discussion sessions in
CUST, XJTU, TJU, DLUT, and JLU said they regularly used the Internet to access science and technology
information worldwide -- an indication of their English proficiency -- a foundation for their lifelong
learning\. An impressive number were able to discuss in English their learning experience under their
respective universities' reformed academic programs and to express their evaluation of the efficacy of the
reformed methods of teaching and assessment of student learning\. Discussions with students in NJU, SEU,
FDAN, SJTU, PKU and TSING confirmed the earlier mission findings that the university reforms in
science and engineering curricula, teaching-learning methods, and use of the equipment-updated
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laboratories and workshops for students' practical experiments had significantly improved the learning
environment and increased student learning achievement\.
IV\. Student Loan Pilot Scheme\. This sub-component is rated as marginally satisfactory\.
This sub-component was tangential to the main thrust of the project\. The scheme was designed specifically
for students to repay their loans aftergraduation when they were employed\. One of the assumed, but not
explicitly articulated outcomes was the adoption by Lanzhou University of an official policy to allow
students who borrow money to finance their education to repay their loans aftergraduation\. Evidently,
there was no change to the prevailing policy of requiring students to repay the loan beforegraduation\. The
loan fund (a PHRD grant of US$100,000 equivalent to approximately RMB830,000) provided by the pilot
project was quickly taken up by Lanzhou University students\. The majority of borrowers -- about 77% --
were students from rural areas and presumably much poorer than others, repaid their loans before
graduation\. One specific lesson learned from this pilot is that such institution based pilot is not likely to
succeed in achieving the designed policy objective without adddressing the broader policy framework at the
system level\. The prevailing policy environment during the project that did not embrace the transition
toward an income contingent scheme limited the experimental value of such pilot\.
4\.3 Net Present Value/Economic rate of return:
Not applicable\.
4\.4 Financial rate of return:
Not applicable\.
4\.5 Institutional development impact:
The institutional development impact of the project was substantial\. The construction of new or renovation
of existing lab experiment centers provided the physical infrastructure for the reforms in the teaching and
learning of science and engineering that underpinned the institutional development of the PUs as well as the
PIs\. The institutional development impact was evidenced by the following project outcomes: (a) the
restructured academic programs that integrated basic teaching and research; (b) the administrative
reorganization of the previously fragmented labs into a modern integrated system of experiment labs that
facilitates cross-discipline teaching and learning; (c) the institutionalization of the credit system, providing
students a flexible choice of majors and multiple modes of assessing student learning achievement; (d) the
practice of a student-centered teaching/learning methodology and an open-access policy for lab experiment
centers to encourage students to carry out experiments that could test their creativity and innovative ability;
(e) the establishment by MOE of a quality assessment system; (f) the adoption of a graduate employment
mechanism linking employers' requirements and the university undergraduate programs through a feedback
system that strengthened the relevance of academic programs to market demands; (g) the establishment of a
system of continuous curriculum development, including updating or creating new courses and related
examinations, and renewal and development of textbooks and other teaching/learning materials; and (h) the
institutionalization of the partnership program with multiplier effects on the reforms undertaken by the
PUs\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
The sudden outbreak of SARS in Guangdong Province in March 2003 was a major factor that had a
negative impact, but fortunately no long-term effect on the project (PSR #9, archived June 5, 2003, and
PSR #10, archived December 11, 2003)\. During the initial period of the crisis, the travel ban severely
limited communication among PUs and especially among those in Beijing, and forced the shut-down of
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PUs' regular operations in other SARS-infected provinces\. These events temporarily slowed down certain
implementation activities, mainly information dissemination and exchange visits between institutions\. The
crisis, however, produced unexpected outcomes that demonstrated the creative resilience of the PU leaders
whose response to the challenge included the following activities: (a) the creation of off-site and online
communication to maintain inter-university contact; (b) the quick establishment of a public distance
education platform by CERNET that was rapidly expanded with courseware by PUs open to the public; (c)
video-conference technology was used for institutional administration and academic exchanges; and (d)
PUs exchanged project information and progress reports through the website created by MOE/FILO's MIS\.
As the threat of SARS retreated, mobile tutoring teams were established and more flexible course schedules
were developed to maintain the running of courses and cater to students' learning needs\. SARS also had a
negative impact on the project's counterpart funding due to the fact that the crisis forced many PUs to use
their resources to contain the disease while continuing the teaching/learning process through augmented
distance education technologies that also incurred extra expenses\.
5\.2 Factors generally subject to government control:
One of the overseas study tours, as one of the MOE-FILO centrally-organized activities, was delayed by
visa problems\. Apart from this minor delay, the overseas study tours and dissemination seminars were
effectively implemented by FILO's technical assistance department, and institutional project implementation
was monitored and guided by the CEP\. The centralized equipment procurement procedure, at least under
the first ICB, resulted in many PUs receiving poor quality equipment or instruments that did not match
their requirements\. Some PUs reported unsatisfactory or totally non-existent after-sales service;
unsatisfactory or no replacement of defective equipment; and poor quality of locally-manufactured
equipment purchased on the basis of lower price, but was not cost-effective for lab teaching/learning
purposes\. Xian Jiaotong University, for example, was of the opinion that there were "many flaws" in the
national public bidding for equipment because "a remarkable number of equipment" did not fit the
requirements and specifications of the experiment labs\. The equipment list under this procurement method
was too limited\. With reforms deepening and the need for increasingly more sophisticated equipment,
adjustments were needed for large-scale equipment procurement (XJTU, ICR pp\. 21-22)\. These problems
were addressed in the second and third ICBs\.
In staff development, several PUs fell short of their targets for teachers with Master's degree and
doctorates, because they were unwilling to release staff for higher degree training programs, and because
the prevailing regulation limited staff training for higher degrees to staff who were younger than age 45\.
This restriction limited the number of staff eligible for project-financed higher degree training, resulting in
the reduced output of staff with higher degrees\. However, this appeared to be only a temporary setback
which was being overcome by the PUs' own regular staff development programs whereby younger staff
registered for a higher degree while employed by the university which provided incentives, such as reduced
or waived tuition fees\.
5\.3 Factors generally subject to implementing agency control:
In 2000, several PUs faced difficulties with counterpart funding for the project due to the sudden increase
in student enrollments\. After the installation of lab equipment, some PUs claimed that the plan for
counterpart funding covered only installation, not maintenance costs, raising questions about the
sustainability of the investments in equipment (MOE/FILO, 2004 draft APR, p\. 5)\. The frequent changes
of staff responsible for the university partnership program, and the arbitrary changes of certain partnership
activities had an adverse effect on certain aspects of the program\. The problems were addressed by the
CEP during inspection visits to PUs and at the year-end conference organized by MOE/FILO to review and
resolve implementation issues\.
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5\.4 Costs and financing:
At appraisal, the total estimated project cost was US$104\.4 million, including physical and price
contingencies (US$6\.4 million and US$4\.8 million, respectively), comprising US$46\.5 million in foreign
costs and US$57\.7 million in local equivalent (Annex 3, PAD, dated April 14, 1999, p\. 44)\. The
MOE/FILO-revised estimated project cost was US$106\.27 million\. The project was financed by a loan
amount of US$20\.0 million and a credit amount of SDR36\.80 million equivalent to US$50\.0 million\.
The actual project cost was US$121\.73 million, 116\.60% of the revised appraisal estimate\. The increased
cost was mainly due to the cost of civil works funded by counterpart resources from the institutions\. The
heaviest expenditures, in absolute terms, compared with the revised appraisal estimates, were laboratory
equipment (US$76\.47 million = 132\.07%), and curriculum and textbook development (US$6\.27 million =
285%)\. Annex 2 provides details on costs and financing\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
The rating for sustainability is highly likely\. The Government regarded this project as the second wave of
major reforms to create a strong, modernized and broadened curriculum content and skills base which
would enable the project universities to prepare graduates for an increasingly knowledge- and
technology-driven economy\. The MOE fully understood the fact that implementing the much-needed
reforms in the first and second year undergraduate basic science and engineering programs would help the
country keep abreast of the quickening speed of global knowledge-creation and technological innovation\.
The new generation of graduates would help speed up national efforts in the transformation of a planned
economy to a socialist market economy which, if successful, would provide important and
closely-monitored models of institutional change for China's vast higher education sub-sector\. The reforms
are built on a strong policy platform based on the Guidelines of China's Educational Reform and
Development (GOC, February 1993),which called for, among other things, the provision of specialists for
the nation's modernization\. All the outcomes which had a significant institutional impact (listed in para\.
4\.5, above) are the long-term building blocks of the project's sustainability\. Since 1995, cost recovery
mechanisms had been in place with the implementation of tuition fees\. While students who enrolled prior to
1995 did not pay tuition fees, those who enrolled from 1999 were required to pay them\. With the rapid
enrollment growth, the real income of the PUs would correspondingly rise, thus increasing their ability to
sustain the project reforms in teaching and learning\.
To ensure sustainability in the immediate post-completion period, every project university prepared as part
of their ICRs a plan for sustaining project investments\. Many included appropriate policies and
regulations, with the necessary budget provisions, to create a favorable environment for the continued
support of the lab experiment centers and the teaching/learning reforms\. For example, HIT included plans
for the continued development of teaching in its second stage of Project 985 and the Eleventh Five-Year
Plan, 2006-2010, with the proposed investment of RMB 100 million to build a new laboratory complex, in
addition to the annual allocation of RMB 200,000 to maintain each of the four labs developed under the
project, and an equal amount to operate the graduate tracer system\. Other budgetary provisions were made
for training lab center personnel and investment in the partnership activities, including dissemination of
reforms, with Heilongjiang College of Science and Technology (HIT, ICR pp\. 40-41)\. Wuhan University
plans to invest RMB 4 million in the next five years for domestic and overseas training of academic and
laboratory teaching and administrative staff (WHU ICR, p\. 28)\.
6\.2 Transition arrangement to regular operations:
As all the PUs and PIs are long-established, functioning institutions supported according to their
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governmental or ministerial affiliation by MOE, various Ministries, municipalities and provincial
authorities, the transition from project status to regular operations for the project universities and partner
institutions has been a seamless process\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
The first Bank project in China in 1981 was for higher education development, which signalled the start of
a constructive Bank-Borrower relationship in education projects\. By the mid-1990's, however,
undergraduate curricula had not been updated for over a decade\. The 1997 Bank Sector Report, China:
Higher Education Reform (op\.cit\.) provided the rationale for the ground-breaking higher education reform
project that focused, for the first time, on reforms in undergraduate science and engineering programs\. The
Bank Sector Report was in line with the 1993 Guidelines for Development and the Reform of China's
Education System which called upon the education sector to speed up the process of transforming the
planned economy into a socialist market economy\. The project complemented on-going Government
reforms in higher education at the post-graduate level, particularly in "Project 211" which however,
focused largely on physical infrastructure enhancement, whereas this project provided the impetus for
reforms in curriculum and teaching methodology, and institutional management and finance\. The Bank
brought to the project design valuable international experience with regard to science and engineering
education development, international higher education consortia information, and management information
systems\.
7\.2 Supervision:
Budget constraints and the tight work schedule of the counterpart task team, coupled with the SARS crisis
in early 2003 reduced the number of field supervision missions, which however, was supplemented by desk
reviews of project progress based on the Annual Progress Reports (APR) submitted by MOE/FILO\. A
total of 13 Implementation Status and Results (ISRs) (formerly Project Status Reports, PSRs) were
recorded, the first dated June 29, 1999 and the last June 7, 2005\. Field supervision missions and
communication between Bank resident mission staff and MOE/FILO staff provided timely and consistent
support to MOE/FILO and to those PUs which the missions were able to visit in matters pertaining to
procurement of equipment and services, financial management and disbursement of loan funds, and project
reporting\. From the outset, emphasis was placed on strengthening the monitoring and evaluation (M&E)
scheme to track and report on progress towards project objectives and outcomes\. Budget constraints also
limited the site visits and composition of the supervision team\. In between the formal supervision missions,
the Resident Mission staff provided regular support to MOE/FILO to resolve various implementation,
disbursement and financial management problems\. The supervision teams were flexible in addressing
implementation issues\. The findings and recommendations of supervision missions are well documented in
aide memoires, back-to-office reports, and ISRs\. The Bank's supervision performance is rated satisfactory\.
7\.3 Overall Bank performance:
The Bank's overall performance was satisfactory\. The identification, preparation, and appraisal missions
were appropriately staffed with a judicious mix of well managed, and effective higher education specialists\.
Project negotiations were well planned, managed and executed\. The supervsions were adequate with timely
assistance to the Borrower, despite the budget constraints\.
Borrower
7\.4 Preparation:
To prepare for the project, MOE had commissioned a fairly extensive body of research in locations across
China\. The findings had been reported in the project areas of curriculum, teaching, and management
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reform\. In addition, to facilitate the work of the Bank's identification and preparation missions, MOE's
HED had also commissioned 216 research projects nationwide on subject content, teaching method reform,
and management reform in higher education\. (The Bank had earlier supported these activities through an
IDF Grant\.)
Consensus among universities participating in the project was developed through national workshops
convened during the project identification, preparation and pre-appraisal stages\. This was to ensure that
the universities were fully informed about various aspects of project design, implementation and follow-up\.
Between Bank missions, the MOE task team convened several workshops for continuing this work\. In
addition, a national experts committee worked with and advised the project teams\. Project design involved
university management, administrative and academic staff, and civil service staff at all levels of
government managing higher education institutions\. The graduate tracer and social assessment studies
covered a wide circle of stakeholders, including students, parents, employers and minority group
representatives to elicit their views about the project and its objectives\. Government's performance during
project preparation is rated as satisfactory\.
7\.5 Government implementation performance:
MOE/FILO made a good head-start with the training of project, procurement and financial management
staff soon after project launch\. The centrally-organized activities (domestic and overseas study tours and
dissemination seminars) were well-planned and carried out efficiently\. The policy-based studies were
implemented as planned, with summary reports issued in 2004, but no final official reports were published\.
The Higher Education Advisory Panel (HEAP), also known as the Chinese Expert Panel (CEP) provided
effective advisory support for the project\. Frequent staff changes in FILO adversely affected regularity and
continuity of annual project progress reporting, especially at the final stage of project implementation\. All
the PUs submitted individual ICRs, most with extensive coverage of project activities, particularly of the
lab experiment centers\. The CEP submitted a summary report on its supervisory activities, and
MOE/FILO submitted a consolidated report based on the 27 project university ICRs\. The Borrower was in
full compliance with all loan/credit covenants\. All audit reports had been submitted without negative
comments\.
7\.6 Implementing Agency:
Each of the PUs had its own FILO as the implementation unit\. As implementation gathered momentum,
some institutional FILOs and many lab centers experienced staff turnover problems which caused
communication problems between PUs and their partner institutions, adversely affecting the partnership
cooperative activities and management of the lab centers\. From year 2000, some PUs had local funding
difficulties due to the sudden increase in student enrollments\. Apart from these problems, overall
implementation and progress reporting were well managed\.
7\.7 Overall Borrower performance:
Overall the Borrower's performance is rated as satisfactory\.
8\. Lessons Learned
Key lessons learned are summarized as follows:
Project Design and Management
1\. The project demonstrated clearly the crucial importance of: (i) government commitment to the
large-scale reform of higher education to ensure successful implementation; and (ii) the effective
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coordination and integration of the centralized technical assistance and institutional management of training
and development of key management and teaching staff, which were the primary enabling factors in the
successful implementation of the university reforms (para\. 4\.1 and Component 3, I, p\. 14)\.
Policy-Based Studies
2\. Quality Assurance\. A quality assurance system for undergraduate programs requires continued
efforts to: (i) clarify the capacity-building needs at the national and institutional levels in the context of the
decentralized control and diverse structure of higher education; (ii) transform the evaluation system from
being an externally-driven mechanism into an internally-motivated, self-generating agency; and (iii)
establish guidelines based on nationally-accepted standards for the accreditation of private tertiary
institutions in preparation for their expanding role in the education and training of high-level skilled
manpower for China's fast-expanding economy ("Quality Assessment", p\. 15)\.
3\. Institutional Autonomy\. As improvement in institutional governance is the key to effective higher
educational institutional autonomy, a supportive policy framework and financial arrangements need to be
augmented by strong governance to reinforce institutional autonomy against external administrative
interventions ("Managerial Autonomy", p\. 15)\.
Competitive Funding for Textbook Development
4\. The strategy adopted for textbook development demonstrated the usefulness of competitive bidding
as an effective instrument in improving institutional efficiency and performance, provided objectives are
clearly defined, a peer review mechanism is in place, and a set of transparent criteria is established to guide
the process ("Textbooks and Electronic Materials", p\. 16)\.
Equipment Procurement
5\. Some universities experienced poor or non-existent after-sales service for equipment; others could
not obtain replacement of defective equipment which generally was locally manufactured and nominally
less costly than the imported (foreign-manufactured) equipment\. The experience suggested that the best
cost may turn out to be not cost-effective; and therefore, cost considerations needed to be balanced against
quality and specifications of service standard in the procurement of precision instruments (para\. 5\.2)\.
Counterpart Funding
6\. Many PUs learned after equipment had been delivered that the local funding provided only for the
cost of equipment installation not maintenance\. The experience suggested a need to include funding for
equipment maintenance, as well as installation at least during the project period when preparing counterpart
financing of the project (para\. 5\.3)\.
9\. Partner Comments
(a) Borrower/implementing agency:
Note: Borrower's comments included are unedited\.
9\.1 The Borrower thinks that the Bank's ICR made a clear description of the project and its
implementation in terms of project targets, implementation experience and results\. The statistical data
supporting the report is trustworthy\. The Borrower agrees on the whole to the viewpoints, analysis and
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recommendations in the ICR\.
9\.2 Project Background\. In 1993, in order to speed up the modernization, the Chinese Government in
The Guidelines of China's Educational Reform and Development called for reforms to: (a) provide the
required specialists for China's modernization and for establishment of a socialist market economy; (b)
improve the social status, work and living conditions of teachers; and (c) build up numbers of key
universities and establish key courses of studies and specialized studies\. The main problem in achieving
this strategic target was mainly in three aspects: (a) Shortage of education funding\. The proportion of
funded educational expenditure was even lower than 3% of Gross National Product of our country by the
end of the 1990's\. Following the fast enlargement of the scale of higher education, the problems of the
funds for higher education are more severe\. In the 1990's, the universities of our country had already
formed an education of mainly financial allocation funded with other patterns of raising education funds
through many channels\. In this case, university become the host of funds raising, but because of the gap of
economic development level and financial resources invest among different areas, some universities still
face the serious funds shortage situation, which is not good for university development\. (b) The university
new curriculum reform since the 1980's made the school teachers shoulder the pressure of the knowledge
structure renewal\. Furthermore, traditional teaching materials can not meet the new requirements of the
new period either\. Therefore, a large number of funds for teaching staff training and textbook compiling
are needed badly\. Data shows that universities of our country are confined by factors such as being
insufficient in input of science and technology, which leading to low scientific and technical innovation
level\. This means that the scientific creativity is not in a high level because of the limitation of insufficient
investment in science in universities\.
9\.3 After a careful study and discussion with World Bank and based on the need of country's on-going
modernized development strategy, our government determines to utilize World Bank loan supported Higher
Education Reform Project to open up a new way in order to solve the above-mentioned development
bottleneck problems of higher education through adopting the advanced idea of running a school, focusing
on supporting the undergraduate educational reforms in 28 project universities, and improving the
education conditions of the universities\.
9\.4 Project Objective\. The agreed objective of the project was to: (a) improve the teaching and
learning quality and relative teaching conditions and cultivate more innovative students through reforms in
curriculum system, experiment teaching system and teaching pattern of the science and engineering first
and second year undergraduate; and (b) strengthen the programming and management ability of
government and universities to drive the implementation of the above reforms\. This project will definitely
provide favorable environment for project universities and partnership universities to better adapt for the
development of socialist market economy of China\.
9\.5 Project Implementation and Results\. Since the project launching 5 years ago, the project has
reached all the goals pre-planned and then come to a closure on July 31, 2005\. Thus, the targets are fully
met and all construction tasks are completed\. The project has a performance in promoting the conditions of
project universities, deepening the reform of undergraduate education, and improving the teachers'
professions and abilities of management staff\. This project impelled the management mechanism reform of
labs and combined the originally separated labs into 117 experimental teaching centers and multimedia
teaching centers with a total area of 420,984 m2 and total experiment teaching staff number of 5,539\.
Every year, with the help of these centers, 30,876,600 person times of teaching task can be made\. Besides,
the labs areas of basic experimental teaching centers have been enlarged from 245,498 m2 in 1999 to the
current 420,984 m2; the value of equipment has also increased 91\.47 million dollars\. All the experimental
centers are open to the whole university that realized the resources sharing and intercollegiate resources
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communication\. The technological assistance activities supported by project organized domestic trainings
and also study tours in foreign countries\. Besides, various seminars were held\. In total, the number of
project trained staff reaches 39,634 person times completing 152\.89% of the project plan\. In all, the
collaboration activities have established relations with 30 project universities, and the investment made by
the project reaches 28\.657 million RMB\.
9\.6 The implementation of the project has impelled the reform in undergraduates' education and
teaching methods, especially in the experiment courses of basic courses for the first and second year
students\. These experiment courses now turn out to be tightly integrated with the respective theoretical
courses and as well as independent\. In order to realize the student cultivation goal of "Knowledgeable,
capable, and competent" in experiment courses, the project gives much attention to re-equipped the labs,
renew the teaching staff structure to realize a human resources recombination, and construct a new
management mode and mechanism of experimental centers\. Project also undertakes some goals, which has
been realized step by step during the implementation of project: increase the utilization rate of lab
equipment with the link of experimental courses reforms; strengthen the training part for university
executives, teaching staff and technical teaching staff by training activities both in central level and
university level to enhance teachers' quality; project universities provide assistance to partnership
universities in fields like human resources, material resources and funds and consequently, their deeds are
warmly welcomed by the partnership universities; in total, 9\.07 million RMB has been invested in
researches with 186 sets of newly reformed textbooks, 259 renewed courses and many researches valuable
to teaching reform and development as the fruit; combined with experimental courses reformation, project
universities have bought books and teaching software that relevant to undergraduates' basic courses;
project universities have realized the project radiation to other fields through cooperation with partnership
universities, especially has obtain good results in education reform and construction\.
9\.7 Project universities have completed all the labs renewal work in the experimental centers and thus
have strengthened the equipment condition in laboratories and enhanced the utilization rate of the
equipment\. In addition, these universities put much more efforts to teaching reform, construction and
amendment of experiment courses, construction of the management mechanism of experimental centers,
improvement of utilization of books, speeding up the construction of teaching staff, making good and
detailed conclusion and evaluation of the researches of this project and putting it into practice\.
These efforts of project universities provide a stable base for realizing the goals of this project\. These are
fully analyzed in MOE's ICR and Bank's ICR, so no further description will be given here\.
9\.8 Project Sustainability\. After this project, aiming at maximum of the impact of this project in
personnel training, we will continue to support the university for the development of the project in the
aspects as policy, personnel, and funds, and also support the university to organize and implement the
laboratory construction, teacher training, bachelor degree reform, reform of curriculum and course content,
teaching material construction and university teaching management and so on\. Besides, the development of
the project will be included in the master plan and annual plan for higher education development\. In order
to properly promote the overall development of university education, we will assist the project universities
to make the benefits development and fund input plan of five years and after the project is closed\.
Recently, Ministry of Education begins to set up the demonstration centre of national-level experiment
teaching and organize evaluations on the experimental canters of university and regular review on each
center\. It is predictable that a large part of these centers will be supported by the project\. Also more
relevant policies and plans will come out for continuous promoting the development of every project
university (see details in relevant paragraph in MOE's ICR)\.
- 25 -
9\.9 Borrower's Performance\. All the activities related to supporting Institutional Capacity for Change
are managed by MOE, who has supervised the implementation of project through these activities\. FILO of
MOE has organized overall bidding and procurement of equipment, study tours, national training
workshops and dissemination seminars, and provided project management, summary and evaluation\.
Higher Education Department and Financial Department of MOE also have favorably cooperated with
project universities in operating five researches and studies, curriculum reforms and textbooks compiling
activities (electronic textbooks are included)\. The Advisory Panel of Project supported by MOE has played
a crucially important role in assisting FILO of MOE to supervise and evaluate the overall status of project\.
FILO conspicuously fulfilled its task in project supervision, providing very constructive suggestions and
recommendations to project units, and having good coordination with departments concerned, which
guarantee a right direction of project development and also rich outcomes of project\. The activities
mentioned above help to strengthen the programming, management and coordinating ability of the
university authorities\. On the whole, the Ministry of Education has successfully fulfilled its duties in
project implementation and management\.
9\.10 Comment on World Bank's Performance\. World Bank (WB) officials and consultants sent to
China are all possessed with high professional and management ability\. They had worked harmoniously
with the Chinese Counterparts, especially with FILO of MOE who in charge of this project\. From the
beginning of the project, the task manager of the World Bank and Bank consultants have been paying much
attention to the quality and innovation of the project\. They provided lots of valuable suggestions and
recommendations when visiting and supervising the project and helped solve problems appeared in the
implementation period, which guaranteed the smooth implementation of the project\. In a word, in the
evaluation process, implementation process and implementation completion process, their outstanding work
gained respect and high commends from project implementing institutions\.
(b) Cofinanciers:
Not applicable\.
(c) Other partners (NGOs/private sector):
Not applicable\.
10\. Additional Information
Not Applicable\.
- 26 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome/Impact Indicators
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
Project Development Objective:
Quality and relevance of undergraduate
basic science and engineering programs
improved\.
A\. OUTCOMES
Component 1: Achieving Improvement In this section, actual achievements
in Teaching and Learning\. pertain to status at EOP\.
A1\.1: 75% of project universities (PUs) Over 75% of the PUs 100% of PUs and PIs used the updated
and the Partner Institutions (PIs) use the and PIs used the courses and updated or newly
curricula review/renewal mechanism on a reformed curricula on a developed textbooks (Project
regular basis by end of project (EOP)\. regular basis\. Performance Indicators PPIs Table
2 and Table 6)\.
A1\.2: 75% of institutions have adopted Over 75% of 100% of PUs and PIs adopted and
and implemented relevant reform programs institutions had adopted implemented the reforms developed
by EOP\. and implemented under the project, in teaching/learning
relevant reform in laboratory experiment centers\. The
programs by EOP\. relevant examinations have also been
reformed to conform with the reformed
courses; the credit system has been
adopted for the Year 1 and Year 2
science and engineering programs,
providing greater flexibility for students
to choose or change their majors, and
to combine different disciplines as
desired\.
A1\.3: 75% of previously identified Over 75% of identified
teaching/learning/management good teaching/learning and management
practices used by PUs and by at least 70% good practices are used by PUs and
of PIs by EOP\. PIs\. Details are provided by the
individual PU ICRs and the sub-reports
on their lab experiment centers\.
- 27 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
A1\.4: Twenty-eight (28) sets of By end of project year 1, there were 31
partnerships between PUs and PIs PIs (Lanzhou University had 4
established and operational by end of partners, and Jilin University had 2,
project year 1\. taking over Jilin University of
Technology's partner after the merger
of the two universities in 2000)\. Not
all partnerships were in full operation
by end of project year 1, because many
were still working out the details of
partnership activities\. By Mid-Term,
however, all partnerships had been
established and operational\.
Component 2: Using Partnerships and
Networks to Spread Reforms\.
A2\.1: 75% of Partner Institutions (PIs) use As in A1\.1 above\. As in A1\.1 above\.
the curricula reviewal/review mechanism
on a regular basis by EOP\.
A2\.2: 75% of institutions have adopted As in A1\.2 above\. As in A1\.2 above\.
and implemented relevant reform programs
by EOP\.
A2\.3: 70% of previously identified As in A1\.3 and A1\.4 above\.
teaching/learning/management good
practices used by at least 70% of PIs by
EOP\.
A2\.4 Twenty-eight (28) sets of As in A1\.3 and A1\.4 above\.
partnerships between PIs and PUs
established and Operational by end of
project year 1
- 28 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
Component 3: Supporting Institutional
Capacity for Change\.
A3\.1 A system of quality assessment in A study on quality assessement,
higher education developed and initiated in May 2001, developed a new
operational by EOP\. undergraduate evaluation scheme
focused on teaching and learning\. The
study produced five sub-reports dealing
with various aspects of quality
assurance\. Outcomes included: (i)
positive feedback from higher
education institutions; (ii) development
(on-going) of a pool of evaluation
experts and a task force for future
undertakings; (iii) establishment and
implementation from 2003 a 5-year
evaluation cycle; (iv) establishment of a
system of regular data collection on
undergraduate programs; and (v)
establishment (in process) of an
evaluation agency under MOE\. For
details, see ICR, Component 3, II,
Policy-based research studies, p\. 22\.
A3\.2: A textbook renewal mechanism A study on this issue resulted in a
appropriate for a socialist market economy summary report (2003) with
established and operational by EOP\. recommendations for: (i) re-defining
GOC role, including exercising overall
quality assurance by developing and
applying appropriate indicators and
establishing appropriate social
institutions for textbook monitoring
and evaluation; (ii) strengthening role
of publishers through decentralization
of the responsibility for textbook
development; (iii) increasing choice of
textbooks for various subjects to meet
the need for multiple sets of learning
materials; (iv) introducing competition
and incentives for open bids in textbook
development; and (v) further
diversifying textbook provision by
developing electronic teaching/learning
materials\. Many universities have, in
fact, replaced the textbook
single-choice with a multiple-choice
system\. For details, see ICR,
Component 3, II, Policy-based research
studies, p\. 22\.
- 29 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
B\. OUTPUTS
Component 1: Achieving Improvement As no baseline was provided in the
in Teaching and Learning\. Project Performance Indicators (PPIs)
of the PUs' completion reports and in
the ICR of MOE/FILO, the
comparisons in the increased or
decreased OUTPUTS throughout this
section are necessarily based on the
targets set by the PUs and their actual
achievement\.
In this section, all achievements pertain
to status at EOP\.
B1\.1: (a) Ratio of staff with higher degrees
increased by EOP\. The results for ratio of staff with
higher degrees are mixed\. Seventeen
(63%) of the 27 PUs failed to achieve
their targets for increasing the ratio of
teachers with Master's degree to
full-time teachers\. Regarding teachers
with doctoral degree, six (2\.2%) of the
PUs fell short of their targets\. The
situation reflected complex
socioeconomic conditions affecting
staff training in the universities, most
of which had a high proportion of staff
aged 45 or older, usually holding only
a bachelor's degree or equivalent, who
were ineligible for higher degree
training\. This apparently was one of
the main reasons for many PUs falling
short of their training targets\. The
higher proportion of PUs meeting their
targets for Ph\.D\. teachers suggests that
they are the younger academic staff\.
For details, see PPI, Table 1\.
B1\.2: Ratio of students to [full-time] The average student:full-time teacher
teachers increased by EOP\. ratio at appraisal was 11:1 compared
with the 2005 ratio of 15:1\. Thus the
achievement represented a 36%
improvement, implying a higher
teacher utilization rate that would
eventually result in lower per-student
costs\. Further details in PPI, Table 1\.
- 30 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
B1\.3: Cumulative number of teachers In 2005, there were 14,055 trained
trained for basic courses increased by EOP\. teachers teaching Year 1 and Year 2
basic undergraduate courses,
representing 64\.6% of the total of
21,745 teachers\. As there was no
average target for the PUs, relative
achievements could be gauged by
comparing individual PU achievement
against its target\. Examples of target
(T) versus achievement (A) for selected
PUs (using their codes): SEU
T=100%; A=170%; NKAI T= 15%;,
A=43%; LZU T=50%\. A= 97\.5%\.
The majority (88%) of PUs reached or
surpassed their targets\. The increase
in the proportion of trained teachers
reflected higher quality staff, which
would lead to improved
teaching/learning quality\. For details,
see PPI, Table 8\.
B1\.4: Cumulative number of trained In 2005, the PUs had a total of 16,857
administrator increased by EOP\. administrative staff, of whom 9,296
(55%) were trained\. Twenty-two
(81\.5%) of the 27 PUs reached or
exceeded their targets for trained
administrators\. The five PUs that fell
short of their targets may have
encountered a similar problem to that
of PUs with staff aged 45 and older
who were ineligible for further
training\. Further details in PPI, Table
8\.
- 31 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
B1\.5: Number of updated courses and Updated Courses\. In 2005, the PUs
updated/developed titles of textbooks achieved a total of 4,203 (125% of
increased by EOP\. the target of 3,304), averaging 157
per PU versus the average PU target
of 126 updated courses\. The largest
number was achieved by PKU: 400
(target also 400)\. Ten PUs (37%)
had 200 or more updated courses; 9
PUs (33%) had between 100 and 199;
and 8 PUs (30%) had less than 100\.
Updated/developed textbooks, the PUs
achieved 6,827 titles, averaging 253
per PU, or 158% of the target of 4,331
with the average of 160 titles per PU\.
With one exception (JLU), all the PUs
exceeded their targets, from 102\.5%
(XJTU) to 691% (BUAA)\. Further
details in PPI, Table 2\.
B1\.6: Ratio of courses with reformed The PUs achieved 9,434
examinations increased by EOP\. examination-reformed courses, 224%
of the target of 4,204, averaging 349
per PU, ranging from 20 (100% of
target of PKUHSC) to 1,560 (137% of
the target of LZU)\. With five
exceptions, all the PUs reached or
surpassed their targets, from a modest
102% (BNU) to a remarkable 996%
(HIT)\. In absolute terms, LZU had
the largest number at 1,560\. Further
details in PPI, Table 2\.
- 32 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
B1\.7: Ratio of open-shelf books increased Twenty-three (85%) of the PUs had at
by EOP\. least 50% of their books on open
shelves\. The percent achievements
ranged from 100% for seven PUs
(BUAA, PKUHSC, SEU, LZU, SJTU,
XJTU, MTUC) to 37% (BNU)\. A
commendable case is HIT which set a
modest target of 15%, but actually
achieved 78% open-shelf\. Further
details in PPI, Table 2\. Accessibility to
open-shelf books should be seen
against the greatly expanded and
improved in-library reading/study
rooms and carrels (ICR, Component 1
(a) (iii) (c) Improving Learning
Opportunities and Conditions, pp\.
15-16)\.
B1\.8: Ratio of annual borrowed library Only 12 (44%) of PUs set a target of
books\. 50% or higher for book borrowings,
and nine had targets between 30% and
40%\. In actual achievement, 23 (85%)
of PUs reached or surpassed their
targets for annual number of books
borrowed\. Seventeen (63%) of PUs
achieved 50% and higher of book
borrowings, and six (22%) had
30%-49% borrowings\. Further details
in PPI, Table 2\. The book-borrowing
rate should also be assessed against the
expanded and improved in-library
reading/study rooms and carrels (ICR,
Component 1 (a) (iii) (c) Improving
Learning Opportunities and
Conditions, pp\. 15-16)\.
B1\.9: 90% of labs and experiment centers Practically all the laboratories in every
restructured and equipment upgraded by PU were restructured, as evidenced by
EOP\. the increase in lab space and the PUs'
completion reports testifying to the
reorganization and integration of the
formerly fragmented lab facilities into
dynamic, research-oriented
teaching/learning centers, equipped in
varying degrees with the latest
scientific equipment and instruments\.
Details in PPI, Table 3-a & 3-b\.
- 33 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
B1\.10: 80% of good practices in In the absence of specific indicators for
teaching/learning/management identified "good practices", no hard data are
are disseminated by EOP\. available to show the amount and
proportion of good practices identified
and their dissemination\. However,
practically all PUs' completion reports
declared that they had adopted the
student-centered approach to
teaching/learning, the credit system
allowing students a wider, more
flexible choice and combination of
courses and majors; reduction of
formal lectures and corresponding
increase in time for students'
self-study; a less rigid examination
scheme incorporating lab practical
work, library and website research
assignments, oral presentations and
other evaluation methods, as well as
the conventional written tests to assess
student learning achievement\. All the
project circumstantial evidence point to
a high level of good practices identified
and disseminated to the Partner
Institutions and non-project institutions
as well as to other faculties within the
PU\. Further details in PPI, Table 3a
and 3b, and especially the PUs'
completion reports\.
- 34 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
Staff Updating and training program Data source for this section is PPI,
designed and operational\. Table 8\. The numbers pertain to
status at EOP\.
B1\.11: 90% of university
administrative/management staff trained in A total of 6,215 (221% of the target
relevant reform subjects by EOP\. 2,811) administrative/management
staff had been trained\.
B1\.4: (b) 90% of academic staff trained in
relevant subjects and teaching A grand total of 26,430 (325% of the
methodologies by EOP\. target 8,108) academic staff had been
trained through off-job, in-job, long-
and short-term training programs\.
B1\.4: (c) 90% of lab
managers/technicians and librarians A total of 4,471 (152% of the target
trained in relevant technical areas by EOP\. 2,925) laboratory staff had been
trained; and 2,517 (205% of the target
1,223) library management staff had
been trained\.
Component 2: Using partnerships and Source of data for this section is PPI,
networks to spread reform\. Table 5, and refer to the status at
EOP\.
B2\.1: Number of teachers trained The training output in three programs
long-term and short-term for Partner was: Degree, 499; Non-degree, 604;
Institutions (PIs)\. Short-term, 1,071\.
B2\.2: Number of PI students served for Total students served: 42,317\.
lab experiment/practical work\.
B2\.3: Value of equipment donated\. Total value of donations was RMB
28\.68 million, comprising: (a)
Equipment, 18\.42 m\.; (b) Books, 1\.19
m\.; (c) Software, 2\.92 m\.; (d) Others,
6\.15 m\.
B2\.4: Number of teachers sent to teach in A total of 307 PU teachers served the
PIs\. PIs, averaging 11\.4 teachers per PU, in
teaching, consultations in curriculum
and teaching/learning materials
development, teaching methodology,
lab experiment center
planning/development and experiment
teaching\. The largest contingent, 68
teachers, was from Beijing Normal
University to its partner Northwest
Normal University\.
- 35 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
B2\.5: Number of updated courses and The larger proportion of courses and
updated textbook titles in PIs\. textbook titles was developed by the
PIs themselves\. The largest output of
updated courses came from Tsinghua
University's partner, Yunnan
University of Industry, with 600
courses\. The total partnership program
output was in two categories: (a)
Courses updated by PIs' own efforts,
2,284; cooperatively with PUs, 259;
(b) Textbooks updated by PIs, 1,937;
cooperatively, 186\.
Component 3: Supporting Institutional
Capacity for Change\.
B3\.1: Number of staff trained in project Staff training under MOE's
management, financial management, and national-level technical assistance took
procurement management\. place during November 1999 -
December 2002\. FILO reported in
June 2004 that 476 had been trained,
distributed as follows: (a) 84 in project
management and implementation; (b)
56 in financial management; and (c)
336 in equipment
procurement/management\. However,
FILO's ICR (para\. 3\.3\.1) stated that
550 had been trained, versus 504
planned, with no explanation or
substantiation for the additional 74
staff trained after December 2002\.
B3\.2: Number of study tours completed\. The study tours, implemented during
the last quarter of 2002, had 210
participants versus 217 planned\. They
included university presidents, division
directors, and laboratory chiefs\. The
tour groups, which visited higher
education institutions in Europe, North
America, Australia, Malaysia and
Singapore, focused on management of
teaching, finance, institutions, science
and engineering laboratory experiment
centers, and multimedia and language
laboratories\. For details, see ICR
Component 3, I, National-level
technical assistance activities, p\. 21\.
- 36 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
B3\.3: Number of post-study-tour The dissemination seminars, conducted
dissemination seminars conducted\. over the course of 3 years (August
2003 - July 2005) were planned for
588 participants, but the actual number
was 1,764\. The three-fold increase
was due to three seminars held during
April-July 2005, on science and
engineering laboratory teaching &
management, and teaching reform
achievements, which drew 749
participants\. For details, see ICR,
Component 3, I, National-level
technical assistance activities, p\. 21\.
Curriculum Reform and Textbook
Development\.
B3\.4: Number of policy-based research All the five planned policy-based
studies completed and disseminated for research studies were completed and
curriculum reform\. their findings disseminated for the
pertinent reforms in curricula,
textbooks and other teaching/learning
materials\.
B3\.5: Number of textbooks and electronic A total of 6,827 textbooks were
materials developed\. updated or developed\. The total output
of electronic materials was not
quantified, but the majority of PUs
reported developing CAI materials
which were shared with their partner
institutions\. Details in PPI, Table 2\.
Tracer Study Mechanism
B3\.6: A graduate tracking system, an The model for a graduate tracer study
institutional evaluation system, and a set mechanism was developed by
of financial indicators are tested in a Shanghai Jiaotong University and
number of institutions and results tested in all PUs\. The resultant
disseminated among PUs and PIs\. questionnaire and software were
developed and used in several PUs,
including Shanghai Jiaotong: HUST,
HIT, BIT and DLUT\. For details, see
ICR Component 3, II, Policy-based
research studies, p\. 23\.
- 37 -
Indicator/Matrix Projected in Last ISR Actual/Latest Estimate
Student Loan Pilot Scheme for Lanzhou
University as an alternative to an existing
scheme\.
Launched in November 1999 with a
B3\.7: Number of applicants and US$100,000 PHRD Grant, the funds
beneficiaries disaggregated by gender and were disbursed by December 1999\. By
amount disbursed and repaid annually by July 2005, the cumulative loan
EOP\. recovery was RMB 707,000 (about
US$86,000 equivalent)\. It was unclear
whether the pilot scheme could be a
viable alternative to the existing
scheme\.
There were 1,413 applicants and 614
were beneficiaries, of whom 17% were
women, 6% were minority students\.
For further details, see ICR,
Component 3, IV, Student loan pilot
scheme, p\. 27\.
- 38 -
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)
Appraisal Actual/Latest Percentage of
Estimate Estimate Appraisal
Component US$ million US$ million
1\. Achieving Improvement in Effective Teaching and
Learning
a\. Staff Training (4\.8) 4\.80 3\.42 71\.25
b\. Teaching Reforms (3\.2) 3\.20 3\.41 106\.56
c\. Lab Equipment (57\.9) 57\.90 76\.47 132\.07
d\. Books & Library Materials (4\.4) 4\.40 5\.06 115
e\. Maintenance/Parts/Consumables (13\.3) 13\.30 16\.46 123\.76
2\. Using Partnership & Networks to Spread Reform
a\. Partnership Program (5\.2)
3\. Supporting Institutional Capacity for Change 5\.20 6\.63 127\.5
a\. Staff Training (0\.1) 0\.10 0\.13 130
b\. Study Tours (1\.3) 1\.30 0\.99 76\.15
c\. Curriculum & Textbook Development (2\.2) 2\.20 6\.27 285
d\. Dissemination Workshops (0\.3) 0\.30 0\.50 167
e\. Research & Studies (0\.2) 0\.20 0\.23 115
f\. Operating Cost for Higher Education Advisory Panel: 0\.10 0\.09 90
HEAP (0\.1)
Total Baseline Cost 93\.00 119\.65
Physical Contingencies 6\.40
Price Contingencies 4\.80 1\.88
Total Project Costs 104\.20 121\.53
Front-end fee 0\.20 0\.20 100\.00
Total Financing Required 104\.40 121\.73
Note: Figures may not add up due to rounding\.
- 39 -
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
1
Procurement Method
Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost
Other
1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
2\. Goods 60\.40 0\.00 21\.20 0\.00 81\.60
(54\.30) (0\.00) (7\.50) (0\.00) (61\.80)
3\. Services 0\.00 0\.00 6\.30 0\.00 6\.30
Staff Training (0\.00) (0\.00) (2\.70) (0\.00) (2\.70)
4\. Books & Materials 0\.00 5\.00 0\.00 0\.00 5\.00
(0\.00) (2\.30) (0\.00) (0\.00) (2\.30)
5\. Consultant Services 0\.00 0\.00 6\.00 0\.00 6\.00
(0\.00) (0\.00) (2\.90) (0\.00) (2\.90)
6\. Partnership Program 0\.00 0\.00 0\.00 5\.40 5\.40
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 60\.40 5\.00 33\.50 5\.40 104\.30
(54\.30) (2\.30) (13\.10) (0\.00) (69\.70)
Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)
1
Procurement Method
Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost
Other
1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
2\. Goods 76\.40 0\.00 13\.20 0\.00 89\.60
(59\.60) (0\.00) (3\.50) (0\.00) (63\.10)
3\. Services 0\.00 0\.00 6\.83 6\.71 13\.54
Staff Training (0\.00) (0\.00) (1\.44) (0\.00) (1\.44)
4\. Books & Materials 0\.00 0\.00 5\.06 2\.90 7\.96
(0\.00) (0\.00) (0\.00) (2\.16) (2\.16)
5\. Consultant Services 0\.00 0\.00 6\.00 0\.00 6\.00
(0\.00) (0\.00) (3\.00) (0\.00) (3\.00)
6\. Partnership Program 0\.00 0\.00 0\.00 4\.63 4\.63
(0\.00) (0\.00) (0\.00) (0\.00) (0\.00)
Total 76\.40 0\.00 31\.09 14\.24 121\.73
(59\.60) (0\.00) (7\.94) (2\.16) (69\.70)
- 40 -
1/Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\.
2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff
of the project management office, training, technical assistance services, and incremental operating costs related to (i)
managing the project, and (ii) re-lending project funds to local government units\.
Project Financing by Component (in US$ million equivalent)
Percentage of Appraisal
Component Appraisal Estimate Actual/Latest Estimate
Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\.
1\. Achieving Improvement 59\.61 26\.72 62\.98 41\.04 105\.7 153\.6
in Effective Teaching &
Learning
a\. Staff Training 1\.04 3\.48 1\.21 2\.20 116\.3 63\.2
b\. Teaching Reforms 3\.07 2\.61 85\.0
c\. Lab Equipment 56\.43 17\.97 59\.60 33\.33 105\.6 185\.5
d\. Books & Library 2\.14 2\.20 2\.16 2\.90 100\.9 131\.8
Materials
2\. Partnership & 5\.24 4\.63 88\.4
Networks to Spread
Reform
a\. Partnership Program 5\.24 4\.63 88\.4
3\. Supporting Institutional 1\.26 3\.51 5\.47 278\.6
Capacity for Change
a\. Staff Training 0\.10 0\.03 0\.10 30\.0
b\. Study Tours 1\.30 0\.78 0\.20 60\.0
c\. Curriculum & Textbooks 2\.20 2\.07 4\.00 94\.1
Development
d\. Dissemination 0\.30 0\.29 1\.07 96\.7
Workshops
e\. Research & Studies 0\.20 0\.22 0\.10 110\.0
f\. Operating Cost for 0\.10 0\.10 100\.0
Higher Education
Advisory Panel (HEAP)
- 41 -
Annex 3\. Economic Costs and Benefits
- 42 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
08/25/1997 3 Sr\. General Educator & Mission S S
Leader (1); Operations Analyst
(1); Sr\. Education Economist (1)
06/14/1998 6 Sr\. General Educator & Mission S S
Leader (1); Operations Analyst
(1); Higher Education
Management Specialist (1);
Financial Analyst (1); Science
and Technology Specialist (1);
Education Economist (1)\.
10/14/1998 10 Sr\. General Educator & Mission S S
Leader (1); Operations Analyst
(1); Educational Planning
Consultant (1); Higher Education
Management Specialist (1);
Engineering and Technology
Consultant (1); Financial
Management Specialist (1);
Science and Technology
Specialist (1); Procurement
Specialists (2); Education
Economist (1)
Appraisal/Negotiation
01/11/1999 14 Sr\. General Educator & S S
Mission Leader (1);
Education Planning
Specialist (1); Education
Specialist (2); Financial
Management Specialist (2);
Principal Counsel (1);
Higher Education
Management Specialist (1);
Procurement Specialist (1);
Operations Analyst (1);
Engineering and Technology
Specialist (1); Higher
Education Specialist (1);
Science and Technology
Specialist (1); Human
Resources Economist (1)
Supervision
09/13/2000 6 Principal Education S S
- 43 -
Specialist & Mission Leader
(1); Operations Officer (1);
Curriculum Specialist and
Social Sector Coordinator
(1); Monitoring and
Evaluation Specialist (1);
Procurement Specialist (1);
Disbursement Specialist (1)
10/21/2002 7 Sr\. Operations Officer & S S
Mission Leader (1); HD Sector
Coordinator (1); Lead Education
Specialist (1); Sr\. Monitoring
and Evaluation Specialist (1); Sr\.
Science Education Specialist (1);
Procurement Specialist (1);
Disbursement Specialist (1)
06/5/2004 7 Sr\. Operations Officer & Mission S S
Leader (1); Education Specialist
(1); Monitoring and Evaluation
Specialist (1); Science Education
and Research Specialist (1);
Procurement Specialist (1);
Financial Management Specialist
(1); Sr\. Program Assistant (1)
06/20/2005 7 Sr\. Operations Officer & Mission S S
Leader (1); Education Specialist
(1); Procurement Specialist (1);
Financial Management Specialist
(1); Program Assistant (1);
Monitoring and Evaluation
Specialist (1); Science Education
Specialist (1)
ICR
12/21/2005 3 Sr\. Operations Officer & S S
Mission Leader (1);
Education Specialist (1);
Program Assistant (1);
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation N/A 593,172
Appraisal/Negotiation N/A 162,000
Supervision N/A 300,502
ICR N/A 35,000
Total 1,090,674\.00
- 44 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies H SU M N NA
Sector Policies H SU M N NA
Physical H SU M N NA
Financial H SU M N NA
Institutional Development H SU M N NA
Environmental H SU M N NA
Social
Poverty Reduction H SU M N NA
Gender H SU M N NA
Other (Please specify) H SU M N NA
Private sector development H SU M N NA
Public sector management H SU M N NA
Other (Please specify) H SU M N NA
- 45 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending HS S U HU
Supervision HS S U HU
Overall HS S U HU
6\.2 Borrower performance Rating
Preparation HS S U HU
Government implementation performance HS S U HU
Implementation agency performance HS S U HU
Overall HS S U HU
- 46 -
Annex 7\. List of Supporting Documents
A\. Borrower's Implementation Completion Reports for Credit 3213-CHA and Loan 4474-CHA\.
1\. Peking University, July 2005; 234 pages\.
2\. Beijing Aeronautics University (undated); 92 pages\.
3\. Beijing Science and Technology University (undated); 71 pages\.
4\. Beijing Institute of Technology (undated); 74 pages\.
5\. Beijing Normal University (undated); 14 pages\.
6\. Peking University Health Science Center (formerly Beijing Medical University)
June 2005; 12 pages\.
7\. Dalian University of Technology (undated); 63 pages\.
8\. Southeast University (undated); 14 pages\.
9\. Fudan University (May 2005); 56 pages\.
10\. Harbin Institute of Technology (undated); 222 pages\.
11\. Huazhong Institute of Technology (July 2005); 62 pages\.
12\. Jilin University ( July 2005); 129 pages\.
13\. Jilin Institute of Technology, incorporated into Jilin University\.
14\. Lanzhou University (June 2005); 87 pages\.
15\. Nanjing University (July 2005); 74 pages\.
16\. Nankai University (June 2005); 111 pages\.
17\. China Ocean University (August 2005); 157 pages\.
18\. Tsinghua University (July 2005); 17 pages\.
19\. Shaanxi Normal University (June 2005); 86 pages\.
20\. Shanghai Jiaotong University (undated); 29 pages\.
21\. Sichuan University (June 2005); 118 pages\.
22\. Tianjin University (June 2005); 82 pages\.
23\. Wuhan University (undated); 81 pages\.
24\. Xian Jiaotong University (August 2005); 135 pages\.
25\. Zhejiang University (August 2005); 119 pages\.
26\. China University of Science and Technology (undated); 54 pages\.
27\. China University of Mining and Technology (undated); 52 pages\.
28\. Chongqing University (June 2005); 65 pages\.
(Total 2,310 pages\.)
B\. Other Borrower Reports
1\. MOE/FILO: Implementation Completion Report (draft, dated October 2005; final dated
December 20, 2005, received January 14, 2006)\.
2\. Chinese Expert Panel, "Work Review and Evaluation Report" (draft: dated August 25, 2005; final:
dated December 20, 2005, incorporated in MOE/FILO ICR, as Annex 2\.)
3\. Mid-Term Review Report, dated June 2002\.
4\. Annual Progress Report (draft, 2004)\.
5\. Project Implementation Plan, dated April 20, 1999\.
6\. Centrally-Organized Technical Assistance Activity, dated June 8, 1999\.
- 47 -
Bank Documents
1\. Project Appraisal Document, Report No\. 19146-CHA, dated April 14, 1999\.
2\. Development Credit Agreement, Credit No\. 3213-CHA dated July 29, 1999,
and Loan Agreement, Loan No\. 4474-CHA, dated July 29, 1999\.
3\. China Higher Education Reform, Report No\. 15573-CHA, dated June 27, 1996\.
4\. Back-to-Office Reports and Aide-Memoires, Project Status Reports\.
- 48 -
Additional Annex 8\. Additional Data on Components 1 and 2
Component 1 Tables
Table 1: Science and Engineering Laboratory Experiment Centers\.
Laboratory Center No\. %
Physics 26 22\.2
Chemistry 21 17\.9
Biology/Life/Natural Science 15 12\.8
Sub-Total 62 53\.0
Electronics 5 4\.3
Engineering 11 9\.4
Electronics & Electrotechnics 12 10\.2
Mechanics/Mechanism 14 12\.0
Sub-Total 42 35\.9
Multimedia/Electronics Infotech 8 6\.8
Language 5 4\.3
Total 117 100\.0
Source: MOE/FILO Project Performance Indicators for PUs, Table 3a\.
Table 2: Graduate Employment Rates from 10 Selected Universities,* 1999 and 2005\.
No\. Project University Employment Rate (%)
1999 2005
1501 PKU 88 96
1502 BUAA 89 99
1504 BIT 99 95
1505 BNU 97 95
1506 PKUHSC 97 93
1508 SEU 98 98
1512 JLU 93 93
1514 LZU 79 70
1517 COU 90 93
1518 TSING 94 95
*These were universities which had the relevant information\.
Source: MOE/FILO Project Performance Indicators (PPIs), Table 1\. The above figures have been rounded\.
- 49 -
Table 3: Ratio of Teachers with Master's Degree and PhDs in Selected Universities, 2005\.
Ratio of Teachers with Master's Degree among Ratio of Teachers with PhD among Full-Time
Full-Time (FT) Teachers (FT) Teachers
No\. Project University Total FT Total Ts EOP Actual Total Ts with EOP Actual
Teachers with M Target (%) 2005 (%) Ph\.D\. Target (%) 2005 (%)
Degree
1501 PKU 2189 559 * 26 1299 * 59
1502 BUAA 1343 424 35 32 608 45 45
1503 USTB 1040 407 65 39 413 30 40
1504 BIT 1701 905 50 53 694 40 41
1505 BNU 1285 332 55 26 741 30 58
1506 PKUHSC
2946 1002 29 34 1060 25 36
1507 DLUT 1516 684 66 45 472 24 31
1508 SEU 2001 722 50 36 625 30 31
1509 FDAN 2201 625 45 28 917 45 42
1510 HIT 2860 1203 55 42 829 27 29
1511 HUST 3923 2350 45 60 997 30 35
1512 JLU 4189 1590 63 38 1082 25 26
1514 LZU 1283 609 55 47 264 15 21
1518 TSING 2097 593 20 28 1,462 70 70
* No target was recorded Source: MOE/FILO PPIs, Table 1\.
Table 4: Cumulative Number of Updated Courses, & Ratio of Coures with Reformed
Examinations in Selected Universities, 2005\.
Cumulative No\. of Updated Courses Ratio of Courses with Reformed Examinations
Target Actual 2005 Total No\. Reformed Courses
No\. Project University No\. % of Courses No\. %
1506 PKUHSC 16 18 112 20 20 100
1511 HUST 20 25 125 495 495 100
1512 JLU 170 116 68 300 200 67
1514 LZU 200 321 160 1,140 1,560 137
1515 NJU 75 250 333 80 250 313
1516 NKAI 210 240 114 1,350 1,242 92
1517 COU 50 126 252 70 110 157
1518 TSING 220 220 100 300 300 100
1519 SNNU 75 89 119 60 40 67
1520 SJTU 101 105 104 100 148 148
1527 CUMT 61 204 334 136 136 100
Source: MOE/FILO PPIs, Table 2\.
- 50 -
Table 5: Updated/Developed Textbooks, Library Open-Shelf Books, and Annual Borrowed Volumes
in Selected Universities, 2005\.
No\. of Updated/Developed Library Open-Shelf Annual Library
Textbooks Books Borrowed Volumes
Actual 2005 Target Actual 2005 Target Actual 2005
No\. Project University Target No\. % (%) (%)
1502 BUAA 150 272 181 100 100 70 46
1505 BNU 100 210 210 25 37 17 23
1509 FDAN 500 764 153 95 95 25 25
1510 HIT 150 238 159 15 78 39 50
1511 HUST 30 70 233 88 92 22 90
1512 JLU 185 139 75 49 83 38 40
1519 SNNU 50 124 248 44 49 12 28
1522 TJU 120 292 243 30 55 35 65
1523 WHU 260 260 100 76 94 100 168
1524 XJTU 120 123 102 100 100 75 76
1525 ZJU 100 183 183 85 86 60 64
1527 CUMT 60 82 137 37 100 41 62
Source: MOE/FILO PPIs, Table 2\.
Table 6: Trained Teachers in Year 1 and Year 2 Undergraduate Basic Courses
in Selected Universities\.
Ratio of Trained Teachers for
No\. Project University Year 1 & Year 2 Basic Courses
Total No\. of Trained Target Actual 2005 (%)
Teachers Teachers (%)
1506 PKUHSC 2,946 1,426 45 48
1511 HUST 1,382 670 45 48
1512 JLU 1,701 1,105 60 65
1514 LZU 158 154 50 97
1515 NJU 330 330 90 100
1516 NKAI 857 367 15 42
1517 COU 380 220 56 57
1518 TSING 800 721 90 90
1519 SNNU 239 86 35 36
1520 SJTU 246 58 80 23
1527 CUMT 232 115 30 50
Source: MOE/FILO PPIs, Table 2\.
- 51 -
Table 7: Ratio of Students to Full-Time Teachers in Selected Universities, 2005\.
Ratio of Students to Full-Time (FT) Teachers
No\. Project University Total Total FT EOP Actual
Students Teachers Target (2005)
1506 PKUHSC 13,126 2,946 5:1 5:1
1507 DLUT 31332 1,516 13:1 21:1
1509 FDAN 29,028 2,201 18:1 13:1
1515 NJU 31,615 1,905 20:1 11:1
1516 NKAI 30,782 1,587 11:1 19:1
1517 COU 18,940 950 12:1 20\.:1
1518 TSING 27,095 2,097 11:1 13:1
1519 SNNU 13,265 1,182 11:1 11:1
1520 SJTU 33,948 2,254 12:1 15:1
1521 SCU 65,162 3,622 14:1 18:1
1522 TJU 23,474 1,891 13:1 15:1
1524 XJTU 19,157 2,363 12:1 8:1
1526 CUST 18,586 1,360 11:1 14:1
1527 CUMT 21,077 1,392 12:1 15:1
Source: MOE/FILO PPIs, Table 1\. The ratios are rounded\.
- 52 -
Component 2 Tables
Table 8: Partnership Program: Budget and Value of Materials Donated\.
Value of Materials Donated by Project Universities to Partner
Budget Institutions
No\. Project Partner Institution (RMB '000) (RMB'000)
University Soft
(Code) Planned Actual % Equipment Books ware Others TOTAL
1 PKU Inner-Mongolia University 2,700 3,958 146\.6 3,106 54 -- 798 3,958
2 BUAA Guizhou Industry University 1,800 165\.7 92\.1 1,448 1 -- 31 1,480
3 USTB Baotou Iron & Steel College 1,350 1,350 100\.0 484 -- -- 866 1,350
4 BIT Yan'an Educational College 150 152 101\.3 138 5 -- -- 143
5 BNU Northwest Normal University 1,350 850 63\.0 320 40 11 41 412
6 PKUHSC Inner-Mongolia Medical 1,040 1,050 100\.9 1,000 2 2 46 1,050
College
7 DLUT Dalian Nationalities Institute 1,560 1,586 101\.7 400 196 385 605 1,586
8 SEU Yancheng Engineering College 1,400 1,495 106\.8 -- 125 55 -- 180
9 FDAN Yunnan University 1,500 1,460 97\.3 1,230 -- 30 200 1,460
10 HIT Heilongjiang College of Science 1,500 2,184 245\.6 253 -- -- -- 253
&Technology
11 HUST Hebei Three Gorges Institute ? 1,489 ? 799\.3 21\.6 -- -- 820\.9
12 JLU Jilin Normal College (Beihua 1,431 1,431 100\.0 984 100 -- 347 1,431
University)
13 JUT Yanbian University 1,500 1,508 100\.5 1,316 -- -- 192 1,508
Lanzhou Railway Institute;
14 LZU Qinghai Normal Univ\.; Ningxia 1,824 322 17\.6 97 34 16 43 190
Univ\.; Xinjiang Univ\.
15 NJU Guangxi Normal University 1,650 1,971 119\.4 200 -- -- 275\.8 475\.8
16 NKAI Yunnan Normal University 1,450 1,590 109\.6 250 43 365 -- 658
17 COU Liaocheng Teachers' College 1,350 1,600 118\.5 1\.316 164 -- -- 1,480
18 TSING Yunnan Univ\. of Industry 3,000 3,100 103\.3 500 200 400 2,000 3,100
(Kunming Univ\. of Tech\.)
19 SNNU Baoji Instit\. of Liberal Arts and 125 120 96\.1 43 -- -- --
Engineering
20 SJTU Xinjiang University 2,034 2,050 100\.8 800 -- 930 -- 1,730
21 SCU Xichang Agricultural College 1,460 1,145 78\.4 1,068 -- -- 77 1,145
22 TJU Inner-Mongolia Polytechnic 1,440 1,628 113\.1 360 -- -- 50 410
University
23 WHU Yunyang Teachers' College 1,370 149 10\.9 747 150 -- -- 897
24 XJTU Ningxia Northwest Second 1,500 954 63\.6 300 -- 20 -- 320
Minorities Institute
25 ZJU Qinghai University 191 193 101\.5 568 -- -- -- 568
26 CUST Anhui Normal University 1,500 1,473 98\.2 405 35 270 -- 710
27 CUMT Xuzhou Vocational University 1,320 1,323 100\.2 284 22 439 575 1,320
28 CQU Chongqing Architecture -- -- -- -- -- -- -- --
University
TOTAL 37,474 37,787 100\.8 18,416 1\.193 2,923 6,147 28,679
Average 1\.44 1\.40 97\.2 708\.3 74\.5 243\.6 409\.8
Source: MOE/FILO ICR, PPIs for PUs, Table 5\.
- 53 -
Table 9: Partnership Program: Students Served, Teachers Teaching in PIs, Teachers Trained, and Courses & Books Updated\.
Project No\. of No\. of PU No\. of Teachers No\. of No\. of Updated Courses No\. of Updated
No\. University Students Teachers Trained (long-term) Teachers for PIs Textbooks in PIs
(Code) Partner Institution served at despatched for PIs Trained
PU Lab for teaching (short-
Experiment in PIs\. Non- Degree term) for Done by Co- Done by Co-
Centers Degree PIs PIs Operative PIs Operative
1 PKU Inner Mongolia University 315 5 -- 9 20 -- -- -- --
2 BUAA Guizhou Industry 35 9 -- -- 38 130 16 35 7
University
3 USTB Baotou Iron & Steel -- -- -- 14 22 31 7 49 20
College
4 BIT Yan'an Educational College 23 7 1 1 4 9 4 11 5
5 BNU Northwest Normal -- 68 6 28 3 420 -- 470 --
University
6 PKUHSC Inner-Mongolia Medical 2,76 -- 3 -- 3 4 1 1 1
College
7 DLUT Dalian Nationalities 635 4 -- 11 -- 21 10 14 11
Institute
8 SEU Yancheng Engineering 13 18 10 66 28 54 9 21 6
College
9 FDAN Yunnan University 610 7 6 -- 24 23 5 36 --
10 HIT Heilongjiang College of 205 12 15 81 23 60 37 82 41
Science & Technology
11 HUST Hebei Three Gorges 181 12 6 39 21 30 14 21 7
University
12 JLU Jilin Normal College 220 2 6 34 18 116 5 139 2
(Beihua University)
13 JUT Yanbian University -- 6 15 12 5 -- 6 -- 2
14 LZU Lanzhou Railway Institute;
Qinghai Normal Univ\.; -- 1 18 15 351 42 -- -- --
Ningxia Univ\.; Xinjiang
University
15 NJU Guangxi Normal University -- -- 34 3 44 28 10 22 8
16 NKAI Yunnan Normal University 6 13 33 3 21 -- -- -- --
17 COU Liaocheng Teachers' 344 20 6 10 6 138 -- 254 1
College
18 TSING Yunnan Univ\. of Industry -- 8 57 75 34 600 80 250 1
(Kunming Univ\. of Tech\.)
19 SNNU Baoji Institute Of Liberal 60 20 25 2 125 160 20 22 8
Arts & Engineering
20 SJTU Xinjiang University 610 -- 3 2 8 7 4 64 8
21 SCU Xichang Agricultural 15,000 16 4 11 5 20 -- 32 --
College
22 TJU Inner Mongolia Polytechnic -- 11 2 12 64 50 4 13 2
University
23 WHU Yunyang Teachers' College 100 3 4 4 22 160 20 200 50
24 XJTU Ningxia Northwest Second -- 15 -- 25 25 10 -- 8 --
Minorities Institute
25 ZJU Qinghai Unversity -- 2 20 24 11 -- -- -- --
26 CUST Anhui Normal University 226 25 31 13 6 98 7 91 6
27 CUMT Xuzhou Vocational 21,658 23 302 5 139 73 -- 102 --
University
28 CQU Chongqing Architecture -- -- -- -- -- -- -- -- --
University
TOTAL 42,317 307 604 499 1,071 2,284 259 1,937 186
Average
Source: MOE/FILO ICR PPIs for PUs, Table 5\.
- 54 -
Additional Annex 9\. Partnership Implementation Issues
Part of the implementation issues stemmed from the fact that the PIs were not included in the project launch
workshop\. MOE/FILO, thereby, missed the opportunity to fully apprise them of the purpose and scope of
the partnership program\. Some PIs mistook the program to be "charity activities" by the PUs (2004 draft
APR, loc\. cit\.)\. The slow start of cooperative activities and the PIs' generally limited autonomy did not
help to mitigate this misperception\.
A key step to institutional reform was understanding what autonomy could do to help update/upgrade the
management and administration of academic activities\. Generally, PIs being less developed tended to be
more "rule-following" conforming institutions than "rule-breaking" innovative universities\. Their staff
qualifications and exposure to modern international developments in higher education were very different
from those of their PU counterparts\. While each partnership program had a joint committee to plan,
prioritize and coordinate the development activities following the general partnership guidelines, actual
implementation encountered difficulties arising from fundamental differences between project and partner
institution\. For example, USTB reported (ICR, pp\. 17-18) that differences in general institutional
orientation and staff and student backgrounds made it difficult for the partner, Baotou Iron and Steel
College (BISC) to participate in the research and other activities in USTB's reform programs in teaching,
curriculum content and course systems\. Consequently, USTB adjusted the program to focus on promoting
its reform achievements by sending instructors to BISC to give demonstration lessons, using multimedia
courses and donating courseware to the partner\. This had positive results\.
Similarly, the original plan to open the new lab centers and library facilities to BISC students was
impracticable because of the distance between the two institutions\. Discrepancies in the level of computer
network development between the institutions made it impossible to use the Internet to teach\. Instead,
USTB assisted in building a CAD (computer-assisted design) lab in BISC, seating 85 and equipped with
intranet\. The lesson from this particular experience was that certain partnership programs tended to be
rather idealistic, and, in certain aspects, such as level of institutional development and readiness for
collaborative research, the feasibility of specific activities was not adequately assessed\. The partnership
experience also highlighted the need to be flexible in adapting development programs to particular
institutions\.
The slow start of many partnership activities was due to many PUs being preoccupied in the initial project
stage with their own implementation responsibilities\. The lack of urgency was compounded by poor
communication between the partners, a condition which the Chinese Expert Panel (CEP) described as the
"weak link" in the program\. Other problems included changes in PU personnel responsible for the program
and "arbitrary" changing of partnership plans (CEP, "Work Review and Evaluation Report [WREP]",
dated October 25, 2005, p\. 7)\. The Panel, which closed each year's work with a conference convened by
MOE to review implementation problems, addressed the various issues as they visited individual
institutions\. The accumulated implementation experience from the inspection visits provided the basis for a
conference convened by the Panel in March 2004 in Yunnan University where the issues described above
were resolved in part to smooth the way for the continuation and possible expansion of the partnership
program in the post-completion period\. Perhaps the most challenging issue was the fact that traditional
universities with vertical organization and hierarchical management were suddenly expected to establish
lateral or horizontal communication and interaction\.
- 55 -
Additional Annex 10\. Policy-Based Research Studies
Developing a System for Quality Assessment
The study yielded five sub-reports dealing with various aspects of quality assurance: (i) policy
recommendations; (ii) proposal for an evaluation system; (iii) developing mechanisms for an evaluation
system; (iv) developing an information system through a database on key indicators and evaluation experts;
and (v) a comparative study of evaluation systems in North America, Europe and the Asia-Pacific region\.
Outcomes of the study included: (i) establishment and implementation from 2003 of a five-year evaluation
cycle; (ii) establishment of a system of a regular collection of data on undergraduate programs which would
eventually be published; (iii) establishment of an evaluation agency under MOE; (iv) positive feedback
from higher education institutions on the current evaluation system; and (v) development of a pool of
evaluation experts and a task force for future undertakings\.
Key indicators of quality included seven primary and 18 secondary indicators and 38 "observation points"\.
They are used together to monitor and evaluate three key aspects of higher education: (i) operating
conditions of higher education institutions; (ii) the teaching-learning process; and (iii) institutional
efficiency\. The seven primary indicators deal with teaching staff, the curriculum, relative emphases on
science and arts, campus culture, student achievement/performance (e\.g\., in language proficiency, computer
skills, etc\.), and employment outcome of graduates\.
Some necessary follow-up action included: (i) further improvement of the evaluation system by completing
the relevant studies; (ii) extension of the evaluation system from its original conception as an external
mechanism to an internally-motivated, self-generating agency; and (iii) development of evaluation
specialists to carry out all key aspects of evaluation\. Since the inception of the five-year evaluation
process, higher education institutions were preparing to review and institutionalize it\. There were also
plans, based on comparative analyses, to move towards the establishment of an independent evaluation
agency, but no further information was available at EOP\. Also, there was no reference to private tertiary
institutions\.
Establishment of a Textbook Renewal Mechanism
The rationale for the study was the lack of an effective mechanism for textbook renewal for higher
education and the need to establish a [new] mechanism in line with reforms in other sectors of the economy\.
The three sub-studies were on: (i) the textbook renewal mechanism in the socialist market economy and in
the present situation; (ii) recommendations on textbook development and reforms under the 10th Five-Year
Plan; and (iii) a textbook evaluation system for higher education textbooks, especially in science,
engineering, agriculture, medicine, humanities and the social sciences\. The study entailed an extensive
survey made through seminars, questionnaire surveys for teachers and non-teachers, public opinion
solicitation, and topic workshops\. A general summary report, based on 11 articles prepared by the research
team in 2002, was published in 2003\.
Five recommendations for a textbook renewal mechanism included the following: (i) re-definition of GOC's
role and strengthening the role of publishers and publishing groups through decentralization of the
responsibility for textbook development; (ii) increasing the choice of textbooks for various subjects to meet
the need for multiple sets of learning materials; (iii) introduction of competition and incentives for open
bids in the development of textbooks; (iv) exercising overall quality assurance by developing and applying
appropriate indicators and establishing appropriate (social) institutions for textbook monitoring and
evaluation; and (v) further diversification of textbook provision by developing electronic teaching-learning
materials\.
- 56 -
The recommendations were adopted by MOE, and some of the ideas were being implemented\. Many higher
education institutions had replaced the textbook single-choice with a multiple-choice system\. For example,
in Qinghua University, over 30% of courses use multiple textbooks\. Dissemination of the
recommendations had been carried out through workshops\. A follow-up for extending the textbook
evaluation system was the establishment of a web-based feed-back system\.
Managerial Autonomy of Higher Education Institutions
The study was carried out in three phases\. The first phase, a year-long exercise to design the study,
involved a general survey and analysis of the present higher education management system in China and
selected foreign universities\. The result was the design of a framework for higher education institutional
reforms, with some pilot programs implemented in the universities and educational administrative
organizations\. In the second phase, when reforms were introduced in 2000, it became clear that
institutional autonomy could not be achieved without a major restructuring of the system\. During this
phase, about 100 of the 200 institutions were taken over by the provincial authorities and the remainder
remained under MOE\. The third phase, when the actual study was carried out, was completed in mid-2003
and the draft report was reviewed in mid-2004\.
Issues arising from the study included: (i) the legacy of public ownership of higher education institutions
and its attendant problems; (ii) the need to moderate the current centralized control with increased
decentralization to promote institutional autonomy; (iii) the need to recognize that institutional reforms
must be carried out within the framework of political reform; and (iv) the existing internal administrative
mechanisms might hinder reforms\. Factors that hindered autonomy included the lack of: (a) an efficient
mechanism for resource allocation; (b) institutional responsibility and accountability; and (c) management
authority for hiring and firing staff\. However, the existing system of centralized financial control enabled
the authorities to set national priorities\. There was a need to dispel the misperception outside China that
GOC was still trying to retain central control, whereas the policy was actually to decentralize\. Two key
recommendations were to privatize some of the public higher education institutions, and restructure
resource allocation so as to give greater autonomy to institutions\. Information on the outcome of the
recommendations was not available at EOP\.
Graduate Tracer Study
The model for this study was developed by Shanghai Jiaotong University and tested in all project
institutions\. A general survey was first carried out of various existing tracer systems or studies used by
higher education institutions (e\.g\., through their respective alumni associations)\. The plan was to develop,
on completion of the survey, a questionnaire and a software for a student tracking system\. By early 2004,
the study had accomplished three tasks: (i) a survey of graduate employment, with information from
employers, had been carried out during the previous three years; (ii) the contents of the tracking system had
been reviewed to identify/formalize the key indicators; (iii) and software was being developed for
implementing the survey of graduates and employers\. The study was completed in July 2004\. The results
of the evaluation that followed the study were integrated into the present evaluation system\. While no
formal report was issued, several PUs reported results from their own surveys\. The findings of two PUs
have been cited (para\. 4\.2 (a) (i) above)\. Additional information was provided by HUST, ICR pp\. 26;
HIT, ICR pp\. 23-24\. For further details, see MOE/FILO ICR, Annex 4\.
Assessment of Higher Education Financial Management
The findings of the study, which was completed and the report reviewed in 2003, confirmed that the
existing financial management system was appropriate in the context of current reforms\. The software,
designed for the study had been tested and fulfilled MOE standards, was developed for use by higher
- 57 -
education institutions\. It contained 38 key indicators to monitor and evaluate financial management\.
The key indicators, developed with MOE involvement and participation of university financial management
staff, were divided into three groups\. The first group, comprising eight indicators, measured the
institution's financial strength; the second group, comprising 18 indicators, evaluated institutional
efficiency; and the third group, comprising 12 indicators, assessed the institution's development potential
and risks\. The key indicators dealt with the following: (i) total income of the system to be measured; (ii)
operational efficiency (e\.g\., teacher-student ratios expenditure on equipment per student, expenditure for
faculty research, etc\.); and (iii) risks, such as loans/borrowings by institutions, year-end balances,
expenditure versus income, fixed assets versus liabilities, etc\.
Following a trial run in Hebei Province to test its effectiveness, the software was being used by 76
institutions under MOE\. Several publications affirmed that the assessment system was being applied to
various universities affiliated to the Ministry of National Defense, MOE and the Hubei Provincial
Government\.
- 58 -
Additional Annex 11\. Development of Textbooks and Electronic Materials
The MOE target was for the project to produce 400 textbooks on 200 basic courses (PAD, dated April 14,
1999, p\. 39)\. To achieve this, the universities were invited to bid on a competitive basis for contracts to
develop courses following MOE/HED guidelines and write textbooks based on the revised courses\. The
competitive bidding initiated in July 1999, the first of its kind in China, elicited by early 2000, 963
proposals from over 320 universities, of which 773 were for science and engineering and 190 for medical
sciences\. By end-June 2000, a 120 expert-member review panel approved 333 proposals from 170 higher
education institutions from 31 provinces, regions and municipalities, using criteria based on guidelines in
an open, transparent manner\. A significant development was the phenomenon of joint-university proposals
(e\.g\., Fudan, Tsinghua and Zhejiang universities submitted a successful joint bid), a reflection of the
emergence of independent lateral institutional cooperation\. Equally significant was that 22% of the
successful bids were from universities in the disadvantaged western parts of China\. Thus, the awards
contributed to the central government's Western Development Initiative (Aide Memoire, Supervision
Mission, September 2000, para\. 22)\. Under MOE's leadership, the project universities succeeded in
developing and implementing new curricula, textbooks, teaching-learning methods for undergraduate core
foundation, compulsory and elective courses which are supported by a variety of multimedia software\. The
achievements were complemented by the establishment/renovation of science and engineering laboratory
centers and language and audiovisual learning centers, and the provision of new equipment\.
The reformed undergraduate curriculum typically consisted of required common basic, specialized
compulsory and optional courses, general education optional courses, and common optional courses\.
During the Bank review missions in 2004 and 2005, interviews with students indicated that the reformed
curricula were well received by them\. At the same time, project universities in varying degrees had
facilitated the application of modern educational technology to teaching-learning, introducing multimedia
into courses where conditions were appropriate\. At EOP, 4,203 key courses had been updated and 6,827
textbooks renewed or developed, approximately 126% and 157% respectively, of the targets\. At the same
time, there were 9,434 examination-reformed courses, 120% of the project target\. (For details, see Annex
1, key performance indicators under Component 1, and MOE/FILO PPI, Table 2)\.
The development of modern instructional technology was supported by computer-assisted instruction (CAI)
development teams responsible for directing and coordinating software design and production\. In the more
advanced universities, web-based international distance-learning courses were being developed\. For
example, the PKUHSC had completed the development of 17 pre-clinical and nine clinical courses that
could be accessed through the Internet\. At the same time, the leading universities, such as PKU and
DLUT, had increased the proportion of courses delivered in English or bilingually (English-Chinese) as
part of the strategy to further internationalize higher education in China\.
While the reforms were focused on the teaching-learning in the first two years, attention was also given to
the development of specialty courses at the third and fourth years of the academic program\. Students were
free to select courses within the framework of the academic program which, in varying degrees, involved
laboratory experimental research aimed at cultivating undergraduates' capacity for innovation\. Generally,
the new and renovated science and engineering laboratories, equipped with the latest equipment, provided
the necessary enabling environment for the reforms which involved the renewal or revision of subject
matter, teaching-learning and evaluation methods, in both basic and advanced courses\.
- 59 -
Other learning centers provided important logistical support for the reformed teaching-learning methods\.
Advances in the development and application of new technologies and multimedia facilitated improvements
in foreign language education\. Many young instructors had, on their own initiative, introduced important
reforms in foreign language teaching-learning methods through the application of multimedia\. This led to
an increased interest among students in foreign languages\. The establishment of multimedia and
audio-visual centers in many project universities helped to stimulate reform in using English in bilingual
teaching\. For example, the Peking UniversityAudio-Visual Education Center provides facilities for foreign
language education to over 1,200 undergraduates and graduates, and nearly 10,000 undergraduates and
graduates of 19 faculties of the School of International Studies\. All project universities were involved in
the development of conventional textbooks as well as electronic textbooks and CAI course materials\.
- 60 -
Additional Annex 12\. Lanzhou University Student Loan Pilot Scheme
Funded by a PHRD grant of US$100,000 (RMB 830,000, which MOE/FILO erroneously assumed was
part of World Bank project funding), the Student Loan Pilot Scheme was launched in November 1999, and
the funds were disbursed by the end of December 1999\. The longest term was nine years; the shortest, six
years\. As the table below shows, rural students and ethnic minority students were the major beneficiaries
of the scheme\. The loans contributed to the successful completion of their higher education\. Although the
scheme was designed specifically for students to repay after graduation when they were employed, the
majority of borrowers repaid their loans before graduation\.
Undergraduate population: 7,965 Loan Applications Loan Approvals
No\. % No\. %
Applicants 1,413 18\.4 614 43\.4
Female Students 1,378 17\.9 105 17\.1
Ethnic Minority 419 5\.4 37 6\.0
Students
Rural Students 5,920 76\.9 524 85\.3
Science Students 4,765 61\.9 439 71\.5
Source: Lanzhou University Completion Report, pp\. 16-17\.
Of those who received the loans at 2% per annum interest charge, students of 1999 comprised 94\.3%, those
of 1998, 33\.4%, and those of 1997, 7\.4%\. The average loan amount was RMB 1,000 2,000\. Of all the
approved applicants, 28 (4\.6%) took a loan of less than 7 years; 153 (24\.9%), of 8 years, and 433 (70\.5%),
of 9 years\.
Loan Repayment and Revolving Fund\. All the 28 students of 1997 cohort paid off their loans before
graduation (July 2001); recovery was 100%\. Of the 1998 cohort, 113 of the 153 students paid off before
graduation (July 2002); thus, recovery was 74%\. Of the 1999 cohort, 433 students paid off before
graduation (July 2003)\. Up to July 2005, 518 students had paid off their loans; the recovery was 84%\. By
July 2005, RMB 707,000 (including RMB 23,000 interest) had been recovered\. As the amount recovered
was relatively small, the university, in order to save on administrative costs, merged the recovery loans into
the Lanzhou University Special-Purpose Interest-Free Loans for the revolving loan fund, with the intention
of using the funds independently for the revolving applications when the loans were fully recovered\.
(Lanzhou University Completion Report, p\. 17\.) The report did not explain why students who took the
loans repaid them before their graduation\. One assumption is that loan repayment was a condition for
graduation\. If indeed students had no option but to repay their loans before graduation, the apparent
outcome did not prove or disprove the pilot project's assumption that some students might prefer to take an
interest-bearing loan which could be repaid after graduation when they were employed\. Without a detailed
analysis, there appeared to be no basis for any policy recommendation\. (For additional information, see
MOE/FILO ICR Annex 1\.)
- 61 -
Additional Annex 13\. List of Project Universities and Partner Institutions
Project University Partner Institution
No\. Name Code Location & Name Location & Province
Jurisdiction
1501 Peking University PKU Beijing, MOE Inner Mongolia University Hohhot, Inner Mongolia
1502 Beijing Univ\. of Aeronautics & BUAA Ministry of Natl\. Guizhou Industrial University Guiyang,
Astronautics Sc\. & Industry Guizhou
1503 Beijing Univ\. of S &T (Univ of S & T BUST Beijing, MOE Baotou Iron & Steel College Baotou,
Beijing) (USTB)
1504 Beijing Institute of Technology BIT Ministry of Natl\. Yan'an Educational College Yan'an,
Sc\. & Industry Shaanxi
1505 Beijing Normal University BNU Beijing, MOE Northwest Normal University Xi'an,
Shaanxi
1506 Peking University Health Science Center* PKUHSC Ministry of Public Inner Mongolia Medical College Hohhot, Inner
Health Mongolia
1507 Dalian University of Technology DLUT MOE Dalian Nationalities Institute Dalian,
Liaoning
1508 Southeast University SEU MOE Yancheng Engineering College Yancheng,
Jiangsu
1509 Fudan University FDAN MOE Yunnan University Kunming,
Yunnan
1510 Harbin Institute of Technology HIT Ministry of Natl\. Heilongjiang College of Science & Heilongjiang
Sc\. & Industry Technology
1511 Huazhong Institute of Technology HUST MOE Hubei Three Gorges Institute Hubei
1512 Jilin University JLU MOE Beihua University Changchun,
Jilin
1513 Jilin Univ\.of Tech\. ** JUT MOE Yanbian University Jilin
1514 Lanzhou University LZU MOE Guizhou Normal Univ; Lanzhou Lanzhou,
Rly\. Institute; Xinjiang University; Guizhou
Ningxia University
1515 Nanjing University NJU MOE Guangxi Normal University Guiling,
Guangxi
1516 Nankai University NKAI MOE Yunnan Normal University Kunming,
Yunnan
1517 China Ocean University COU MOE Liaocheng Teachers' College Liaocheng,
Shandong
1518 Tsinghua University TSING MOE Kunming Univ\. of Technology Kunming,
Yunnan
1519 Shaanxi Normal University SNNU MOE Baoji College of Arts & Baoji, Shaanxi
Science***
1520 Shanghai Jiaotong University SJTU MOE Xinjiang University Urumqi,
Xinjiang
1521 Sichaun University SCU MOE Xichang Agric\.ultural College Xichang
1522 Tianjin University TJU MOE Inner Mongolia Polytechnic Hohhot, Inner
University\. Mongolia
1523 Wuhan University WHU MOE Hubei-Yunyang Teachers' College Yunyang,
Hubei
1524 Xi'an Jiaotong University XJTU MOE Ningxia Northwest Second Yinchuan,
Minorities Institute Ningxia
1525 Zhejiang University ZJU MOE Qinghai University Xining,
Qinghai
1526 China University of Science & Technology CUST China Acad\. of Anhui Normal University Wuhu, Anhui
Science
1527 Mining and Technology University China MTUC State Bureau of Xuzhou Engineering Institute Xuzhou City,
(China Univ\. of Mining and Technology) Coal Industry Jiangsu
(CUMT)
1528 Chongqing University CQU MOE Chongqing Architecture University Chongqing;
Chongqing
Municipality
* Formerly Beijing Medical University\. ** Merged with Jilin University, June 2000\.
*** Formerly Institute of Liberal Arts & Engineering\.
- 62 -
- 63 - | REVIEW |
P101279 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
CO Solid Waste Management Program Projec (P101279)
Report Number : ICRR0020345
1\. Project Data
Project ID Project Name
P101279 CO Solid Waste Management Program Projec
Country Practice Area(Lead)
Colombia Social, Urban, Rural and Resilience Global Practice
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IBRD-77420 31-Dec-2013 27,130,316\.00
Bank Approval Date Closing Date (Actual)
04-Aug-2009 31-Dec-2015
IBRD/IDA (USD) Grants (USD)
Original Commitment 20,000,000\.00 0\.00
Revised Commitment 7,400,000\.00 0\.00
Actual 5,221,073\.17 0\.00
Prepared by Reviewed by ICR Review Coordinator Group
Chaitri N\. Hapugalle John R\. Eriksson Christopher David Nelson IEGSD (Unit 4)
2\. Project Objectives and Components
a\. Objectives
The Project Development Objective (PDO) formulation in the Loan Agreement (LA, Schedule 1, page 5) was
to support the implementation of the regional solid waste management component of the Borrowerâs
Program, which aims at improving the quality and coverage of integrated (1) solid waste management
services in the territory of the Borrower\.
The PDO statement in the PAD is virtually identical but does not include the word âregionalâ in its reference
to the solid waste management component (PAD p\. 6)\.
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IEG adopts the formulation of the PDO in the LA\.
Note*(1) "Integrated" refers to considerations of financial, environmental, and social sustainability\. (ICR
footnote 26, p\. 5)\.
b\. Were the project objectives/key associated outcome targets revised during implementation?
No
PHEVALUNDERTAKENLBL
c\. Will a split evaluation be undertaken?
No
d\. Components
Actual costs for Component one and revised Component were based on updated numbers provided by the
Region\.
Component 1: Development of and Investment in Solid Waste Disposal Systems\. (US$20 million at
appraisal; Actual US$ 4,389,564\.36)
(1\.1) The construction of solid waste management infrastructure consisting of civil works, equipment and
services in support of the rehabilitation, construction, and/or expansion of landfills and transfer stations\.
(1\.2) Finance the rehabilitation and expansion of landfill sites that may currently be operating at sub
sanitary levels\.
(1\.3) Technical advisory services for the development of SWM Investments\.
Component 2: Institutional Strengthening in Solid Waste Management\. (US$ 0 million at appraisal;
Actual US$ 41,302\.15)
(2\.1) Strengthening sector regulatory framework and capacity building\.
(2\.2) Strengthening of SWM planning systems (though development of SWM plans and strategies)\.
(2\.3) National assessment of recycling markets and strategy framework\.
Component 3: Project Management (US$ 0 million at appraisal; Actual US$ 4,272,251)
(3\.1) The component would finance costs associated with project management including goods, works,
services, and operating expenses associated with financial audits and midterm and end-project
evaluations\.
(3\.2) Reinforce technical, environmental, community outreach, communications, administrative, and
fiduciary capacity within the\. Ministry of Environment, Housing, and Regional Development (MAVDT)\.
Revised Components
Component 1: Development of and Investment in Solid Waste Disposal Systems\. (US$16,510,000;
Actual amount US$ 4,389,564\.36)
(1\.1) Carrying out and supervising investments in SWM infrastructure consisting of civil works, equipment,
and services in support of the rehabilitation, construction, and/or expansion of landfills, waste treatment
systems in selected sites, and the closing of unsanitary open-air landfills\.
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CO Solid Waste Management Program Projec (P101279)
(1\.2) Provision and supervision of technical advisory services for the development of SWM investments
including with respect to their regionalization, engineering designs, environmental impact assessments,
social assessments, and other related studies\.
(1\.3) Development and implementation of social inclusion, skills building, and entrepreneurial programs for
waste pickers\.
Component 2: Institutional Strengthening in Solid Waste Management (US$1,430,000; Actual
amount US$41,302\.15)
(2\.1) Provision of advisory services to strengthen the technical, operational, and commercial capacity of
SWM operators\.
(2\.2) Carrying out studies to strengthen SWM at the national level\.
Component 3: Project Management (US$2,060,000); Actual amount US$ 4,272,251\.130)
(3\.1)\. Support the Ministry of Housing, City and Territory (Ministerio de Vivienda Ciudad y Territorio MVCT)
technical, environmental, communication, administrative, and fiduciary capacity in managing the
administrative and financial aspects of the Project, through the financing of goods, consultantsâ services,
training, and operating costs, including the financing of project audits, evaluations, and other related
project management activities\.
e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Costs - The project cost and component table (ICR annex 1 pp 29-30) took into consideration
only project costs based on the World Bank contribution\. The Region confirmed the following
disbursement rates but the final disbursement rate at project closure was not provided\. The disbursement
rates (2) at the time of restructuring undertaken in 2013 were US$ 4\.56; US$ 5mn was disbursed during
the second restructuring on 08/25/2014; and US$5 Mn disbursed during the third restructuring on
06/25/2015\.
Financing and Borrower Contribution - The Borrowerâs contribution at appraisal was to be US$ 5\.0
million but the actual contribution was US$0\.90 million at project closure\. The ICR did not provide
disbursement rates, which were missing for the 2013, 2014 and 2015 restructurings\. The Region was not
able to provide disaggregated data (ICR annex pp 29-30, team meeting and final audited numbers
provided by the Region)\.
Dates- The first restructuring was approved on 09/09/2013\. The closing date of the project was extended
by 18 months to 06/30/2015\. Due to slow implementation progress, the Bank requested a reimbursement
of US$1\.07m\. A second restructuring was approved by the Bank on 08/25/2014\. The key changes
included a) changes to rectify design deficiencies in the project implementation arrangements, b) adjust
scope of activities to more accurately respond to country demand, and c) reallocate funding so that
components two and three would be financed by the Bank instead of the borrower\. Moreover, a
retroactive waiver to the withdrawal conditions was provided to resolve inapplicable conditions, modify
project indicators and target values to simplify the results framework, clarify ambiguities and accurately
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CO Solid Waste Management Program Projec (P101279)
reflect activities financed under the project and their outcomes\. (ICR pp\.8-9)\. A third restructuring
formalized a second extension, which was approved after the Borrowerâs request to (i) extend the closing
date of the Loan by six months, from 06/25/2015 to 12/31/2015\. The total cumulative extension was 24
months and included a partial cancelation of US$ 12\.6mn (ICR pp\.8-9)\.
Information provided by the team show that US$12\.6 million was cancelled as of 05/13/2015\. US$3,01
million was cancelled as of 08/23/2016\.
Note * (2) Disbursement of funds from the Bank to the special account
3\. Relevance of Objectives & Design
a\. Relevance of Objectives
Historically, the disposal of solid waste in Colombia has always been a municipal responsibility\. Colombia's
1,122 municipalities produced approximately 28,800 tons of solid waste per day and was inadequately
disposed in open-air dumps\. Limited waste minimization, source separation, and recycling were concerns\.
Related to the not-in-my-backyard (NIMBY) factor, regionalization of municipalities with existing landfills was
obstructed by local government and citizen groups\. Vulnerable waste pickers who depended on open-air
dumps for their livelihoods also lacked access to basic services (PAD pp\. 1-3)\.
The regionalization of solid waste management was a key priority for the Government of Colombia (GoC)\.
Government initiatives had identified 130 potential regional landfill projects which were financed through
public resources\. The National Strategy for Infrastructure Development, Solid Waste Sector issued by the
Department of National Planning (DNP) in 2014 prioritized improvement of regional landfills, expansion of the
lifespan of sanitary landfills, and closure of open dumpsites\. The Bankâs implementation assistance remained
relevant to achieving the country's development goals\. The Project was strategically aligned to support the
World Bank Groupâs Country Partnership Strategy (CPS) 2012-2016\. The PDO reinforced a core strategic
pillar; the Sustainable Growth with Enhanced Climate Change Resilience pillar\. Solid waste final disposal
was one of the means identified to improve sustainable urban development\. (ICR p\.19)\.
Rating
High
b\. Relevance of Design
Both pre and post restructuring, the project included a clear statement of the PDO and was relevant for the
challenges facing the sector\. (ICR p\.18)\. The PDO and its three sub-objectives (see Section 4 below) were to
be achieved with; a) development of investments in solid waste disposal systems, b) institutional development
and c) improved project management\. (ICR pp\.6-8)\. The expected intermediate results were the construction
and operation of sanitary landfills, environmentally sustainable closure of open-air dumps cost recovery for
final disposal in Bank financed landfills, formation of specialized utility companies and the transition to the
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CO Solid Waste Management Program Projec (P101279)
specialized operator model for solid waste disposal\. (ICR p\.5)\. However, the causal chain was of negligible to
modest relevance\. (ICR p\.19)\. The original design and implementation were not relevant because the existing
planning structure and subproject preparation capacity were not relevant to the unique challenges of solid
waste management\. The PDO indicator was weak and subsequently modified (see section 10)\. While two
components supported institutional and capacity building elements related to program outcomes, the PDO did
not reflect this linkage\. (Team Interview)\.
The 2014 restructuring addressed design deficiencies related to the inconsistency between Government and
Bank and processes and to accommodate changes in demand in the sector due to increased private sector
focus on medium size landfills\. (See Section 8a on Bank Quality at Entry)\. However, the PDO remained
âunchanged and achievable, due to the broader scope and regional approach of the sub-projects to be
implemented\.â (Report No: RES11773 p4)\. Under Component 1, eligible investments were expanded to
include complementary investments in collection and treatment technologies and to cover investments in
smaller landfills\. Components 2 and 3 were no longer to be funded solely by the borrower\. Component 2
included activities related to skill development for human resources, technical, and entrepreneurial
strengthening for landfill operators and undertaking of studies on a national level, and Component 3 was
focused on project management\. (ICR p 19)\.
The project changed the approach to regionalization of disposal services to incorporate more municipalities
into regional systems\. The project design re-focused on the unmet demand by building new regional landfills
for medium and smaller landfills (Team Interview)\. Other changes included the expansion of the type of
investments and reallocation of funds\. (ICR pp\. 7-9)\. âThe restructured design was substantially relevant due
to the following changes: the adoption of a planning and subproject execution process more adapted to the
solid waste sectorâ (ICR p\.19)\. The subprojects financed under the loan were not limited by a geographic
departmentâs âPDAâ (Departmental Plans for Water and Sanitation) budget quota and thus not competing with
water and sanitation projects\. The solid waste unit was more proactive in developing subprojects (ICR p\.13),
which âenabled the financing of investments in existing regional facilities with a variety of administrative
models and sizes; improved management; and final disposal solutions for isolated municipalities when
regional landfills were not the appropriate solutionâ\. (ICR p\.19)\. Overall, the relevance of the design was less
than optimal to fully demonstrate the achievement of the PDO\. While the modified PDO indicator (See M/E
discussion) was overachieved, Bank funds had to be drawn to finance a consultancy to develop the plans in
Ipiales and Grenada for social inclusion pilots\. While MVCT assigned budget to works under way, no budget
was available for institutional strengthening, capacity building for operators, nor for sector and regionalization
studies, which were not executed (ICR p 19)\. The ability to draw on carbon financing in the event funding
shortfalls was noted during the appraisal stage, but limited progress in tariff reform related to composting
prevented the ability draw on carbon financing to cushion the shortfalls\. (Team interview)\.
Rating
Modest
4\. Achievement of Objectives (Efficacy)
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CO Solid Waste Management Program Projec (P101279)
PHEFFICACYTBL
Objective 1
Objective
The overall objective of the Project was to support the implementation of the regional solid waste
management component of the Borrowerâs Program which aimed at improving the quality and coverage of
integrated solid waste management services in the territory of the Borrower\. (LA, p\.5) The overall objective
is divided into three sub-objectives as shown below\. To better assess the achievement of objectives, the
PDO indicator was supplemented by outcome indicators developed ex-post specifically for the purposes of
the ICR (ICR, p\. 20)\.
Sub-objective 1 focused on improving the quality of solid waste management services in the territory of the
Borrower\. Discussion in this section draws in part from the ICR (pp 20-22)
Rationale
For the PDO Indicator the target was for the solid waste of at least 400,000 beneficiaries to be adequately
disposed of in sanitary landfills\. Achievement: this target was overachieved with 683,547 people benefitting\.
This included investments completed in all the landfills reconstructed and upgraded and the populations of
the 60 municipalities served by these landfills (ICR, p\. 20)\. However, the indicator had shortcomings as
discussed in the M&E section\.
Service quality was improved (in 6 of the 7 regional systems), benefitting 675,352 people through the
construction of upgraded cells, treatment systems, and auxiliary infrastructure, ICR, p\.22, note 58)\.
Additional information on the improvement in the technical and environmental quality of final disposal is
provided in the ICR (p\.21)\. Capacity building for 6 operators (ICR p\.22) allowed previously open dumps or
landfills with operational deficiencies to operate at higher standards\. Subprojects consisted of upgrading or
reconstructing existing landfills rather than constructing greenfield sites\. As of 2016 more municipalities
ended up using landfills than anticipated, which explains why this sub-objective was achieved in spite of the
low percentage of disbursement (26%)\. (ICR p\.22, note 58)\.
Rating
Substantial
PHREVDELTBL
PHEFFICACYTBL
Objective 2
Objective
Sub-objective 2 focused on improving the coverage of solid waste management services in the territory of
the Borrower\.
Rationale
The project completed seven sanitary landfill subprojects that served 60 municipalities incorporating 33
municipalities into regional landfill systems, providing a population of 683,547 with adequate solid waste
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services (ICR p\.22 para 83)\.
One target was that five landfills were to be expanded, optimized or upgraded\. This was achieved (5) and 33
municipalities were incorporated into regional disposal systems\. The latter represented an overachievement
from a revised target of 15 municipalities and a baseline of zero\. Increased service coverage was provided
for 42 municipalities with a population of 465,795 through expanded capacity in six of seven systems (ICR,
p\. 20, note 54 and Annex 2)\. Sixteen municipalities benefited from an upgraded system that provided
adequate disposal service not previously available\.
The upgraded sites also provided the opportunity for 26 municipalities that had previously used open dumps
to join the regional systems\. The number of inhabitants in 2016 that benefited from landfills with an
increased useful life was 566,534\. This resulted from construction of additional disposal capacity, namely,
1,089,000 additional tons in six landfills: Ipiales- 5 years, Guaviare 10 years, la Dorada 12 years, Aguadas
21 years, Granada 3 years and Quichia 18 year (ICR, p\.20, note 55)\.
Regarding waste collection, the results are not strictly comparable, but suggestive\.(3) The target was an
âincrease in the coverage of proper final waste disposal (number of inhabitants and percent of waste
collected)\.â The achievement was that 465,795 inhabitants produced one percent of waste collected in the
country (see Section 10a below for further discussion)\. Before the investment was undertaken, four percent
of the waste collected in the country was not disposed of in sanitary landfills (ICR, p\.20)\.
Note* (3) The region provided the following clarification\. The indicator of reference relates to disposal rather
than collection services\. Colombia uses â % of waste that is collected that is disposed in sanitary landfillsâ as
their indicator for landfill service coverage\. To allow for comparison, the average waste production per
person in Colombia was multiplied by the population provided this service under the project to get the waste
that is now due to the project investments, disposed in a sanitary manner\. It was considered a more precise
estimate than using the tons per day disposed in each of the new landfills as in some cases the population
being served had already disposed in another sanitary landfill\.
Rating
Substantial
PHREVDELTBL
PHEFFICACYTBL
Objective 3
Objective
Sub-objective 3 focused on improving the coverage of an integrated system of solid waste management
services in the territory of the Borrower, where âintegratedâ referred to financial, environmental, and social
aspects (ICR, p\. 22)\.
Rationale
The Project partially achieved the integrated systems of solid waste management (financial, environmental
and social)\.
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Financial-With the exception of Milaflores, the project succeeded in assuring financial sustainability through
the application of the tariff system of 2015 in all the systems and the associated capacity building\. However
due to its size and lack of ability of the tariffs to cover costs, Milaflores had to rely partly on general
municipality income to cover operational costs\.
According to a supplemental PDO outcome indicator reported by the ICR, the population (680,078) of six of
the seven landfill sites was by 2016 served by disposal systems with adequate cost recovery (ICR, p\.21)\. No
target or baseline information was provided\.
Environment-The Projectâs environmental outcomes included compliance with environmental assessment
policies and improved operation but the operational improvements were limited only to the Project
investments\.
Social- Five studies were completed for open-dump closure but had limited impact on the ground\. One study
led to a closure and one other closure was completed in parallel with the investments in Ipiales\. Social
inclusion plans were to incorporate informal recyclers in two landf
ills (Ipiales and Granada), but due to lack of budget allocation and unclear legal mandates, the MVCT did not
develop or implement these plans\. To overcome the situation, the Bank provided technical assistance to
develop plans for the two sites\. Granada incorporated the plan in its municipal SWM plan (ICR, p\.17, para
66)\. Two regionalization studies were conducted\. (ICR p\.22, p\.83)
Rating
Modest
PHREVDELTBL
PHREVISEDTBL
5\. Efficiency
The project focus shifted to restructuring smaller landfills with capacities of 4 tons, 13 tons and 16 tons, as
well as three small-medium landfills with respective capacities of 56, 57 and 96 tons\. (Team Interview)\.
Methodology-According to the PAD, the economic analysis assumed the tariff as a proxy for willingness to
pay in the municipalities where appropriate final disposal service is provided and economic prices were
assumed as financial prices without taxes\. (ICR annex 3 p 36-39)\.
For the ICR, a financial rate of return was estimated by measuring its costs and benefits at market prices\. The
ex post economic rate of return was estimated by converting financial costs into economic costs through the
elimination of taxes and subsidies to remove some market distortions\. Economic benefits consisted of the
population's surplus resulting when the open-air dumps were closed and regional landfills were constructed
and operated\. Additional benefits, e\.g\. those related to public health and the environment, were not
quantified\.
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Cost-benefit Analysis - A financial and economic analysis was undertaken for each component\. Cost-benefit
accounted for investment and operational costs as well as the benefits in terms of revenue (gate fee per ton
times disposed tons)\. The same methodology was used to assess the ex-ante scenario (PAD) were used
also to assess the ex post scenario\. (ICR annex 3 p 36-39)
Key Findings - Overall, the ICR findings in the tables below show that the combination of revenues from the
tariffs and the relatively low cost but high impact investments in upgrading of existing regional sites under the
restructured project contributed to the financial and economic viability of all the investments except for the
smallest landfill, Miraflores (1 ton per day) located in a remote area of Colombia (ICR, p 23)\. Findings show
that the construction of regional landfills is financially and economically feasible for landfills with a capacity
higher than 40 tonsâ day (see Annex 9)\. Moreover, economic results, as shown in Tables 1-2 below, are
generally greater than financial results\. Results were also tested against real-world uncertainties by
conducting a sensitivity and risk analysis, which continued to show robust returns\.
Conclusions - The updated project cost table provided by the team included project costs broken down by
the Bank and counterpart funding, but the team had difficulty identifying the actual costs and disbursement
rates (ICR, p 17 and lessons learned under âLegal Frameworkâ)\. During missions the Bank detected
differences in total amounts of money assigned to some contracts when comparing the records of MVCD and
those of the Gestores (ICR p 17 footnote 46)\.
The Region clarified the source and costs used for economic and financial analysis\. The costs used in the
economic analysis were based on the costs found in official documents directly related to the contracts (final
acts, agreements and contracts)\. These numbers were the same as those reported by the government after
completion of the audit of the project in January 2017\. The differences in total amounts of money assigned to
some contracts when comparing the records of MVCT and those of the Gestores detected during a
supervision mission (ICR p 17, footnote 46) were subsequently resolved during implementation and
confirmed through audits\.
Table1\. Financial Results-Net Present Value and Internal Rate of Return, incl\. Investment and Operating
Costs
NPV IRR
(US$)* (%)
Regional landfill\. Municipality of Ipiales (Nariño)\.
417,073 49
Municipal landfill\. Municipality of Miraflores (Guaviare) -
322,277 10
La Doradita landfill\. Municipality of La Dorada (Caldas)
866,007 48
Los Eucaliptos landfill\. Municipality of Aguadas (Caldas)
568,557 45
Quinchia landfill expansion Municipality of Qunichia (Risaralda)
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10,453 15
La Guaratara landfill expansion\. Municipality of Granada
(Meta) 179,077 44
NPV = Net Present Value; IRR = Internal Rate of Return; Exchange rate:1 US$=COP$3\.149 December
31th, 2015)\.
Table 2: Economic Results - NPValue & Economic Rate of Return, incl\. Investment & Operating Costs,
excl\. Taxes\.
Solid Waste Systems NPV IRR
(%)
(US$)*
Regional landfill- Municipality of Ipiales (Nariño)
792,784 72
Municipal Landfill\. Municipality of Miraflores (Guaviare) - 5,073
8
La Doradita landfill\. Municipality of La Dorada (Caldas)
1,543,098 67
Los Eucaliptos landfill\. Municipality of Aguadas (Caldas)
936,566 56
Quinchia landfill expansion Municipality of Qunichia (Risaraldra)
82,409 21
La Guaratara landfill expansion\. Municipality of Granada
(Meta) 397,952 73
Note: ERR = Economic Rate of Return
1] In some cases the intervention will be limited to the construction of transfer stations that will direct waste
to existing landfills\. In the case the financial viability of the transfer stations is ensured\.
Efficiency Rating
Substantial
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
0
Appraisal ï¼ 0
ï¨Not Applicable
0
ICR Estimate ï¼ 0
ï¨Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
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6\. Outcome
This rating is moderately satisfactory for the following reasons: relevance of objectives is high; relevance of
design is modest; efficacy of objectives is substantial, substantial and modest, respectively; and efficiency is
substantial\. Therefore, Outcome is rated moderately satisfactory\.
a\. Outcome Rating
Moderately Satisfactory
7\. Rationale for Risk to Development Outcome Rating
Institutional risk - At the time of project closure, with help from national budget allocated to the MVCT, the
solid waste unit was managing a small but important set of investments and activities\. However, limited budget
allocation to the unit and the sector, lack of World Bank (and other international institutionsâ) involvement may
present a barrier to expanding their program to meet the countryâs demand and to a lesser extent present a risk
to the capacity built under the project\. (ICR p24)
Financial and operational risks - Both technical and financial risks are higher in Guaviare due to their lower
access to resources, difficulty in supervision, and lower financial sustainability\. (ICR p 25)
a\. Risk to Development Outcome Rating
Modest
8\. Assessment of Bank Performance
a\. Quality-at-Entry
The original project design adopted similar design and institutional arrangements used in the water sector
(ICR, p\.1)\. The project appraisal conducted sector, poverty and economic analyses, identified safeguards
issues, conducted financial analysis including fiduciary arrangements, and designed a results monitoring
framework (ICR, p\. 25)\. The Project aligned its preparation and objectives with the sector reform that was
under way in the country at the time of appraisal and was included in the country strategy and policy
documents\. The design of the project took into consideration international best practices to promote the
optimization of regional SWM systems\. But it failed to facilitate compatibility between the following Bank and
Government processes: a) the approach to project evaluation, (b) the disbursement structure through the
subnational accounts and (c) the requirement to implement social inclusion plans\. These were significant
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deterrents at the outset of project implementation (ICR, p\. 25)\. But making the implied adjustments was
considered impractical considering that: (a) the water sector institutional, financial and operational framework
did not adapt to investments in the solid waste management subsector; b) the project did not anticipate
technical advancements in the sector nor allow flexibility to adopt them; c) a pipeline of subprojects was not
ready at the time of Board approval of the project; and d) the need for capacity building was underestimated
by the different government levels involved in project implementation (paraphrased from ICR, pp\.10-11)\.
The challenges of using the Ventanilla Unica (single window approach for subproject selection) (4) and the
PDAs were underestimated along with the need for institutional capacity building of the MVCT and Gestores
(geographic-level Department project management entities)\. (5) Risks were taken into account but
underestimated as some risks such as the lack of pipeline of subprojects, implementation complexity through
the PDA and entities not familiar with financial, management and procurement processes did materialize
(ICR, p\. 11)\.
The project shifted the approach to regionalization of disposal services in order to incorporate more
municipalities into regional systems\. The project focus also changed to include the improvement of already
existing regional facilities to reconstruct or upgrade them to allow for adequate disposal and to increase
capacity to accommodate more municipalities\. The program broadened its scope allowing for operation
through a variety of arrangements (not just specialized operators), and investments in smaller facilities
including isolated municipalities when regional facilities were not feasible\.
Notes * (4) The evaluation process, Ventanilla única, is an application-based process where the geographic
Department-level Gestores would present projects to the MVCT who would ask for adjustments and, once
approved would be presented to the Bank for No Objection (ICR, note 33, p\. 9)\.
Notes* (5)The Department-level planning and budget structures (Planes Departamentales para el Manejo
Empresarial de los Servicios de Agua y Saneamiento, PDA) were established under the MAVDT to be the
primary means of channeling resources from the National Government to the subnational geographic
Departments for investments in water, sanitation, and solid waste\. The PDA framework allowed for
prioritization, investment screening, and execution of investments within a budget quota assigned to each
Department (ICR, pp\. 2-3)\.
Quality-at-Entry Rating
Moderately Unsatisfactory
b\. Quality of supervision
The project was implemented over the period 2009-2015\. Bank missions coordinated closely with
representatives from the Minister of Housing, Cities and Territory (MVCT)\. âNo midterm review was held;
instead each mission had the elements of a midterm review and involved senior staff, management, and
expertsâ (ICR, p\. 26)\. The approval process for the restructuring and extensions was however delayed due to
both the Bank and Government decision making and approval processes which did not affect the Gestores
approval process directly\. In 2011, the Bank requested reimbursement of US$1\.07 million due to lack of
execution, and discussed the options with the Borrower, including closure of the project and partial cancelation
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of implementation, but agreed to restructure the project\. However, agreement was delayed due to
complications resulting from changes, design issues, and perceived risks, which led to an increased number of
Bank requirements that were not easy to negotiate in the context of national legal requirements (ICR, pp\.13,
26)\. The delays reduced time for implementation of the planned activities and disbursement of the loan
amount and âaccompaniment in technical, fiduciary and safe guardâs aspects was impactful for the project and
sectorâ (ICR, p\.26)\.
On the positive side, key decisions regarding the design, lack of project and institutional readiness were
overcome\. The Bank worked with the MVCT to strengthen institutional capacity and funding\. During 2012,
based on the progress made, the special account was increased, including for use of Bank funds to finance
social inclusion plans\. (See lessons learned in section 13 for other key interventions\.) The Bank supported
South-South exchange visits, clients in the field by conducting field visits with help from specialists and
regional experts, and conducted a solid waste sector study to improve the capacity of the Government (drawn
from ICR, p\.25)\.
Owing to moderate shortcomings including delays related to complications resulting from changes, design
issues, and perceive, an increased number of Bank requirements were not easy to negotiate in the context of
national legal requirement the quality of supervision is Moderately Satisfactory\.
Pursuant to the Harmonized Criteria agreed by IEG and OPCS, with Outcome rated Moderately
Satisfactory, Quality at Entry rated Moderately Unsatisfactory and Supervision rated Moderately
Satisfactory, Overall Bank Performance is rated Moderately Satisfactory\.
Quality of Supervision Rating
Moderately Satisfactory
Overall Bank Performance Rating
Moderately Satisfactory
9\. Assessment of Borrower Performance
a\. Government Performance
Strong borrower ownership was evident at the Appraisal stage\.The Government response to critical
challenges facing the SWM subsector was comprehensive as demonstrated by its commitment to
undertake legal reforms, policies, strategies and plans\. MVCT was given the mandate for the development,
promotion, and optimization of regulatory, technical, financial, and capacity-building instruments, including
promoting regional planning and provision of services\. National and sector planning was undertaken by the
National Department for Planning (DNP)\. (ICR p 1-4)\. Commitment during the implementation phase was
hindered by a weak legal framework, funding and capacity and working knowledge of Bank policies\. The
slow pace of execution of some contracts by Departments delayed the pace of disbursement and
highlighted the need for further capacity building within the MVCT and at subnational levels where high
rotation of personnel was a key issue\. (ICR p12)\.
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Government Performance Rating
Moderately Unsatisfactory
b\. Implementing Agency Performance
The implementing agency was the Ministry of Housing, City and Territory ((MVCT); at the time of appraisal,
the Ministry of Environment, Housing and Territorial Development (MAVDT)\. The MAVDT did not have the
requisite stature and capacities, as well as relationships with the Departments to fulfill its role\. Moreover,
the solid waste unit was limited by its relatively low political profile\. The activities of building this capacity
were not considered as explicit activities and although Components 2 and 3 included capacity building\.
These activities were not focused on these capacity constraints and these activities were overlooked in
implementation in part because they were not in the LA nor financed by loan resources\. The MVCT staff
used their own budget to enhance the regulation of operation by involving the Superintendencia and
regional environment authorities; undertake low cost capacity building through exchanges with good
operators; conduct supervisory technical visits by World Bank and MVCT experts; and develop capacity
building consultancies through national funding (outside of the loan)\. The limited PDA Departmental budget
quotas at the beginning of the Project and the overall limited budget allocated by the MVCT to the sector,
led to subprojects that were designed or selected to be at a lower cost\.
A bottleneck for the Gestores was the MVCT approval process and was not affected significantly by the
Bank approval process for these investments\. (Comments made by the Region)
Solid Waste Unit- The solid waste unit was established in the MAVDT with experienced staff but lacked
the minimum staff stipulated by the LA, which was only reached by the end of 2011\. The unit did not have
technical professionals working exclusively for the project, but rather relied on part-time consultants with
other commitments\. The unit was at first limited by the lack of outreach to Departments\. But over time, it
was strengthened and professionalized\. The unit disseminated good practices between municipalities,
coordinated exchanges between service operators, and shared the Colombia experience globally\. The solid
waste unit steadily improved its contract supervision and monitoring of the sub-projects through field visits
and periodic contact with the technical staff of Gestores Departamentales\.
Pursuant to the Harmonized Criteria agreed by IEG and OPCS, with Outcome rated Moderately
Satisfactory, Government Performance rated Moderately Unsatisfactory and Implementing Agency
Performance rated Moderately Satisfactory, Overall Borrower Performance is rated Moderately
Satisfactory\.
Implementing Agency Performance Rating
Moderately Satisfactory
Overall Borrower Performance Rating
Moderately Satisfactory
10\. M&E Design, Implementation, & Utilization
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a\. M&E Design
A monitoring and evaluation (M&E) framework was developed to track progress and subsequently adjusted
post restructuring\. (see details in PAD, pp\.17-18)\. According to the ICCR, a key weakness of the PDO indicator
[the beneficiary population] was that measures of key intermediate indicators were lacking, including the
pipeline of subprojects at appraisal and of its evolution during implementation, as well as the changing
populations served year-to-year by regional landfills\. The absence of measurement of both factors resulted in
âimprecise estimates of the project beneficiary population (the PDO indicator) which, combined with the lack of
a good causal link to the intermediate indicators, provided an imprecise measure of PDO achievement\." (see
ICR, p\. 15-16)\.
âThere was a weak causal chain between the intermediate indicators and the PDO indicator\. The PDO
indicator, which focused on the number of beneficiaries, did not properly reflect the intended impact of the loan
or the PDO description entirely\. Although the activities related to social inclusion, the financial sustainability and
environmental benefits such as dumpsite closure were addressed by some intermediate indicators, they were
not properly reflected in the PDO indicator\." (ICR, p\.15)
The indicators did not, according to the ICR, properly consider several intermediate outcomes and outputs\.
Activities related with capacity building were not adequately reflected in the indicators, even though a significant
amount of time and effort was invested in capacity building, which proved to be essential to attain the Project
outcomes\. Subprojects relied on studies that needed to be contracted and executed beforehand and were not
reflected in the original M&E framework\."
b\. M&E Implementation
The original framework included several indicators that were not useful or no longer considered relevant post
2015 restructuring\. Of the 14 original intermediate results indicators, ten were eliminated, three were adjusted
(leading to more flexible ones in terms of targets or scopes) and only one intermediate results indicator was
maintained\. Seven new indicators were also included (three of them core indicators)\. The usefulness of the
new set of indicators was limited by the delays in officially approving the restructuring, but increased during
the last year and a half of the project when results were being achieved at a faster rate\. (ICR p15)\.
c\. M&E Utilization
While it was not mentioned under the M&E section, during the ICR stage, to better assess the achievement
of objectives, the PDO indicator was supplemented by outcome indicators developed ex-post specifically for
the purposes of the ICR\. (See ICR p20-22 for specific details)\. Activities related with capacity building were
not adequately reflected in the indicators, even though a significant amount of time and effort was invested in
capacity building and it proved to be crucial to attain the project outcomes\. Findings of the indicator
performance were used as an input to draft country strategies and plans\. (Team interview)\.
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M&E Quality Rating
Modest
11\. Other Issues
a\. Safeguards
Two safeguards were reported at ICR stage\. OP 4\.01 â Environmental Assessment and OP 4\.12 â
Involuntary Settlement\. During the PAD and ICR stages, the environmental safeguard was assigned an âAâ
category\. The compliance rating for OP 4\.01 varied during implementation cycle\. While no safeguard was
triggered under OP 4\.12, a resettlement plan was developed despite any displacement and social inclusion
plans were developed with technical assistance provided by World Bank funds\.(ICR pp16-17)
b\. Fiduciary Compliance
The following was noted in different parts of the ICR, but the Region confirmed the disbursement rates partially\.
Financial Management- ICR findings show that financial management compliance ranged from Moderately
Satisfactory to Unsatisfactory during the project implementation cycle\. The main issues were a) the inability to
justify disbursements at the beginning of the project that led to the World Bank asking for reimbursement of
US$1\.07 million due to lack of execution\. Legal barriers prevented MVCT from undertaking the process of
retrieving or substituting expenses for the small amount of funds not expended in subnational accounts, the
special account was able to be closed satisfactorily\. Limitations in the supervision at subnational level\. (ICR
p17)\.
The second of three restructurings (August 2014) was substantial and renegotiation necessitated the
incorporation of updated Bank requirements and legal measures designed to reduce risks related to the
disbursements to subnational accounts\. Three amendments to the disbursement letter took place (approved
03/31/2010, 12/13/2012 and 07/07/2015\. with delays in the last modification which limited its utility\. (ICR p15)\.
Project reports were reviewed and found acceptable to the World Bank with some delays in contracting and
presenting them (ICR p 17)\. Audit reports were not mentioned by the ICR\.
Disbursements-The ICR noted the following but the Team was not able to verify disbursement figures\. The
following information was pulled together from different parts of the ICR\. During the first three years of the
Project, there was little to no disbursement of the loan\. The Bank disbursed US$2 million in December 2009 to
the special account, which was then channeled into subnational accounts\. Two years later, less than 4 percent
of that amount had been paid against contracts\. ICR findings show that disbursement arrangements
necessitated adjustments during implementation, which led to significant delays\. For FY12, the disbursement
ratio was only 6\.7 percent, while it climbed to 17 percent in FY13\. The Project did not disburse the full amount
of the remaining loan amount, due to the cancellation of subprojects\. The limited PDA Departmental budget
quotas at the beginning of the project and the overall limited budget allocated by the MVCT to the sector, led to
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subprojects that were designed or selected to be at a lower cost\. The fact that the subprojects did not have the
expected size reduced the magnitude and rate of disbursement\.(ICR p12, 15 and 17)
Procurement-The procurement compliance rating at project closure was moderately satisfactory\. At the outset,
procurement challenges were cited as one of reasons for delays during project implementation\. Bidding
processes for US$ 3\.6 million (San Gil, Choco, and Pamplona were cancelled and the time was limited for
rebidding\. (ICR p14)\. Delays were prevalent because the Bankâs procurement rules were not consistent with
local procedures and practices and expectations\. One of the main issues was the weak capacity of Gestores,
which had no experience with Bank procurement policies and as a result, three procurement processes failed\.
(ICR p 17)\.
c\. Unintended impacts (Positive or Negative)
Institutional change/strengthening\. The Project also increased the interest and capacity of Departmental
Gestores in the development of solid waste projects\.
Strategy and policy- As a complementary activity, a sector study was launched in December 2015\. It
incorporated the lessons learned from the implementation of the loan and highlighted the approach to
recycling and resource recovery and informal recyclers\. The findings were used by the DNP in designing the
Programmatic Development Policy Loan for Sustainable Development\.
d\. Other
Other unintended outcomes and impacts (positive or negative)\. The Project helped increase technical
standards within the sector by providing examples of good practice including examples of concession
agreements, operational contracts, public management of small landfills (Quinchia) and the Colombian tariff
system (see references in annex 7) that were re-disseminated in Colombia and internationally\.
12\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Given that Relevance of
Objectives is rated High,
Relevance of Design is rated
Moderately Moderately
Outcome Modest, Efficacy of the first
Unsatisfactory Satisfactory
two sub-objectives are each
rated Substantial while
Efficacy of the third sub-
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objective is rated Modest, and
Efficiency is rated Substantial,
Outcome is rated Moderately
Satisfactory\.
Risk to Development
Modest Modest ---
Outcome
Pursuant to the Harmonized
Criteria agreed by IEG and
OPCS, with Outcome rated
Moderately Satisfactory,
Moderately Moderately Quality at Entry rated
Bank Performance
Unsatisfactory Satisfactory Moderately Unsatisfactory and
Supervision rated Moderately
Satisfactory, Overall Bank
Performance is rated
Moderately Satisfactory\.
Pursuant to the Harmonized
Criteria agreed by IEG and
OPCS, with Outcome rated
Moderately Satisfactory,
Government Performance
Moderately Moderately rated Moderately
Borrower Performance
Unsatisfactory Satisfactory Unsatisfactory and
Implementing Agency
Performance rated Moderately
Satisfactory, Overall Borrower
Performance is rated
Moderately Satisfactory\.
Quality of ICR Modest ---
Note
When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the
relevant ratings as warranted beginning July 1, 2006\.
The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as
appropriate\.
13\. Lessons
The ICR included seven lessons, several of which this Review adapted\. Some lessons were added that appear
relevant given the significant design, implementation and funding issues encountered by the project\.
1\. Global, and regional lessons learned from the other operations in the sector are not always suitable
for replication due to specific country, sector conditions and priorities\. The original design of this project
adopted global and regional lessons learned (ICR pp9-11) and adopted similar institutional arrangements used
in water and sanitation sector projects\. However, as pointed out in the ICR (p\. 27), the latter projects, owing to
their long record, higher visibility and established procedures, tended to relegate solid waste investments to
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lower budget priority in the PDA budget structure\. Restructuring highlighted the need to consider the solid
waste sector separately and adapt investment financing frameworks accordingly\.
2\. A conducive legal framework should be in place prior to project implementation\. Prior to effectiveness,
the Bank should understand the legal framework and be prepared to offer workable alternatives in the event
that legal issues should arise during implementation\. Colombia has a highly regulated public sector with public
audit and control functions established in the constitution and national regulations governing government
activities at all levels including basic services\. (ICR p 1)\.
A) Laws related to subnational accounts\. In 2011, the Bank requested reimbursement of US$1\.07 million of
the loan from the Special Account due to lack of execution, and discussed the options of closure of the project
and partial cancelation\. But it was determined by Colombian authorities that this would have raised legal
barriers due to the Constitutional provision that requires money to be used for designated purposes in
designated Departments)\. In this project an alternative solution was developed entailing an increase to the
Special Account and an agreement to work toward project restructuring rather than closure (ICR, p\.13)\.
B) Legal barriers related to social inclusion\. The Government did not prioritize the social waste pickers as
their activities were not supported by the prevailing law and there was strong opposition to changing the law\. A
subsequent Supreme Court ruling resulted in waste pickers being designated as within the public service\. Near
project closure, the Bank used its own funds to provide technical assistance leading to incorporation on a pilot
basis of informal recyclers in two sites of the system\. (Team Interview)\.
3\. The importance of committing funds in advance of project implementation to help obtain stakeholder
consensus\. The regional landfill operations involved multiple municipalities and required extensive negotiation
and consensus building across municipal parties which spanned a period of municipal elections and transition
of administrations\. Political consensus could not be obtained until funding was assured\. (Team interview)\.
4\. The role and importance of performance targets to improve accountability and improve project
implementation\. Project execution did not advance throughout 2010 and for a significant portion of 2011\.The
GoC and Bank agreed on a set of performance targets, which played a catalyst role in incentivizing the MVCDT
to take action to speed up the process\. (ICR p13)\.
5\. Importance of closer coordination and continuous oversight by the Bank and Borrower to identify
and mitigate risks in a timely manner\. The project faced multiple risks at different levels, some of which were
identified and mitigated better than others\. Some risks pertaining to budget and staff allocations at higher levels
were perceived but also seen as being of limited scope for influence by the Bank or implementing agency\.
There were two key risks that were not identified at appraisal\. The high staff turnover at Departmental-level
management entities for the PDA (Gestores Departmentales) was not considered in the risk analysis and in
consequence, the mitigation measures regarding capacity building were not effective\. The risk of using the
subnational account structure and a ring-fenced project sub-account within a single national level (Patrimonio
Autonomo) structure was not adequately identified and addressed\. (ICR p 11)
6\. Best practices related to technical standards merit dissemination\. The Project helped increase technical
standards within the sector by providing examples of good practice including examples of concession
agreements, operational contracts, public management of small landfills (Quinchia) and the Colombian tariff
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system (as noted in Section 10d above; also see references in ICR, annex 7)\. These examples were re-
disseminated in Colombia and globally\. (ICR p 24, footnote 59)
14\. Assessment Recommended?
No
15\. Comments on Quality of ICR
The report was concise; but was more an implementation narrative than an outcome based report\. Contrary to
OPCS guidelines, a key shortcoming of the report was the substantial evidence found in different parts of the
report which should have been organized under specific topics â relevance of design, quality of entry\. borrower
performance, government performance\. Disbursement rates were partially confirmed\. However, there was a
lack of discussion related to operational and administrative efficiency\. The indicators in the PAD were
inadequate to demonstrate achievement of the PDO, but the ICR relied on new indicators identified ex post by
the ICR team\. An interview with the project team was useful to clarify nuances related to design,
implementation, funding issues, efficacy, efficiency and M/E discussions, and project costs, as well as
inconsistencies between Bank and Government processes\. The comments sent by the region helped to rectify
most of the discrepancies and clarify the nuances\. Another round of editing would have improved clarity and
readability\.
a\. Quality of ICR Rating
Modest
Page 20 of 20 | REVIEW |
P125425 |  ICRR 14170
Report Number : ICRR14170
IEG ICR Review
Independent Evaluation Group
1\. Project Data : Date Posted : 04/03/2014
Country : Kyrgyz Republic
Is this Review for a Programmatic Series? Yes No
Series ID :
First Project ID : P125425 Appraisal Actual
Project Name : Economic Recovery US$M ):
Project Costs (US$M): 30 30
Support Operation
(ERSO)
L/C Number : Loan /Credit (US$M):
Loan/ US$M ): 30 30
Sector Board : Economic Policy US$M ):
Cofinancing (US$M):
Cofinanciers : Board Approval Date : 08/02/2011
Closing Date : 06/30/2013 06/30/2012
Sector (s): Other social services (25%); General public administration sector (25%); General energy
sector (20%); Public administration- Information and communications (15%); General
finance sector (15%)
Theme (s): Social safety nets (25%); Other public sector governance (25%); Other
accountability/anti-corruption (25%); Macroeconomic management (15%); Infrastructure
services for private sector development (10%)
Evaluator : Panel Reviewer : ICR Review Group :
Coordinator :
Nils Fostvedt Clay Wescott Lourdes N\. Pagaran IEGPS2
2\. Project Objectives and Components:
a\. Objectives:
The ERSO - as per the Program Document (PD), paragraph 5 - supported policy actions implemented between
April 2010 and June 2011 aimed at (i) stabilizing the economy, (ii) strengthening governance and (iii)
safeguarding social protection \. There were thus three overall objectives \. The PD elaborates on these under
two themes: Strengthened governance in management of public assets and revenues, and Safeguarding Social
Protection and Supporting Conflict -Affected population (pp\.28-38, 58-9)\.
b\. If this is a single DPL operation (not part of a series), were the project objectives/ key
associated outcome targets revised during implementation?
No
c\. Policy Areas:
The policy areas under each theme were as follows :
Theme 1: Strengthened governance in management of public assets and revenues \.
Assert budget control and transparency over management of public assets and revenues;
Establish proper transparency and accounting practices of energy sector operations; and
Maintaining financial sector stability \.
Theme II : Safeguarding social protection and supporting conflict affected population
Safeguarding essential social protection spending; and
Re-establish livelihoods and provide social compensation in the south \.
There were eight prior actions under Theme I, and four under Theme II \. All were met as agreed\. There was no
theme for economic stabilization, but two of the three policy areas under Theme 1 and several of the related
policy actions supported the objective of stabilization, including those related to maintaining financial sector
stability; and asserting budget control and transparency over the management of public assets and revenues \.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
This was a one-tranche operation (IDA credit plus IDA grant) based on the fulfillment of prior conditions \. The
ERSO became effective in November 2011 and closed as scheduled June 30, 2012\. There were no
concomitant adjustment/development policy operations, but a program for Programmatic Development Policy
(PDP) operations (planned for three operations ) was initiated with the approval of PDP 1 in mid 2013\. That
operation became effective in late 2013 and PDP2 is now under preparation\.
3\. Relevance of Objectives & Design:
a\. Relevance of Objectives:
The ERSO provided budget support (together with ADB, IMF and the EU) at a time when the country was
coming out of political turmoil and ethnic conflict (that had erupted in 2010) that inflicted a serious burden on the
economy and on the budget \. The operation addressed important short -term reform issues in the important
areas of economic stabilization, governance and social safety nets \. In addition, some areas of support
addressed longer-term perspectives as well\. For example, the ERSO-supported reforms in the electricity sector
could serve as a subsequent basis for a longer -term reform and development strategy \. The focus on the
objectives of economic stabilization, governance and social protection supported the implementation underway
of Government reforms, linked to the planned Medium Term Development Program for 2012-2014 (Poverty
Reduction Strategy Paper), and was closely aligned with the Bank's FY 12-13 Interim Strategy Note (ISN)\. The
relevance of objectives was High \.
b\. Relevance of Design:
The ERSO provided a clear statement of high priority objectives \. There was a plausible causal chain between
12 specific prior conditions, all of which were implemented prior to Board presentation, and the objectives and
targeted outcomes\. The design did not include any actions explicitly supporting the economic stabilization
objective, but many of the actions indirectly contributed \. There were no significant, unforseen exogenous
factors affecting or unintended effects from this operation \. Overall, the relevance of design was Substantial \.
4\. Achievement of Objectives (Efficacy):
Objective: Help stabilize the economy (no indicators): Substantial \.
The ICR reports that the ERSO funding, together with that of other development partners, provided resources to
ensure that essential spending was protected \. The economy rebounded quickly in 2011 (to 5\.7 percent), with
physical security and political stability largely restored \. But it then contracted in 2012 (by 0\.9 percent) due to a
drop in gold output due to geological issues (a shift of ice and waste into the central pit of the Kumtur mine ) and
a protracted conflict with the main producer \. There was also lower than expected growth in agriculture, although
other sectors seem to have performed quite well \. Growth for 2013 has recovered to about nine percent as per
early estimates, while medium-term growth is projected at around five percent per annum \. Fiscal consolidation
is still "urgently" needed\. Thus significant economic stabilization has been achieved, but the picture is still
fragile\. IMF (staff report May 21, 2013) notes that the authorities have implemented critical fiscal reforms, that
financial sector reforms turned out to be more challenging than expected, and that â notwithstanding the
deterioration of macroeconomic conditions in 2012 - policies have generally remained prudent \.
Note that in a few cases, the indicators or their targets (discussed below) as presented in the ICR have been
formulated slightly differently from the text in the Program Document matrix \. Such differences should be
avoided, but in this case they do not seem to have any significant importance \.
Objective: Strengthen governance\. Substantial \.
Assert budget control and transparency over management of public assets and revenues \. Three targets mainly
achieved: (i) The government has restored accountability and responsibility for public investments to the
Ministry of Finance\. (ii) The responsibilities for privatization have been clarified and the 2012-14 program has
been approved, but it is not clear whether this improvement fully meets the original target : âprivatizations
implemented in line with best practiceâ? (iii) The Kyrgyz Republic has been declared (since 2011) fully compliant
with the Extractive Industries Transparency Initiative (EITI) and the target for company coverage has been
exceeded (57 compared to a target of 46), but the ICR raises some doubt as to the sustainability of the EITI in
the country for funding reasons \.
Establish proper transparency and accounting practices in energy sector operations \. Six targets achieved: (i)
Supervisory council set up in the Ministry of Energy and strategic decisions are being made with its input \. (ii)
Power export proceeds are accounted for and used transparently \. (iii) Performance agreements between the
regulator and the six energy companies are in place (but it is not explicitly clear in the ICR whether they are
being followed)\. (iv) Loss reduction in the electricity sector is better than targeted \. (v) Electricity collection rate
target reached in 2011\. (vi) Ministry of Energy has adopted revenue sharing rules (among generation,
transmission and distribution sub -sectors) with transparent criteria\. However, the steps forward regarding
improved data availability, greater public participation in decision making, and improved public accountability are
still described as modest, and the principal challenges for the energy sector (financial viability, export potential,
and the regulatory framework) still remain to be addressed\.
Maintain financial sector stability \. Three targets achieved: (i) A major bank (AUB) was nationalized, split into a
âgoodâ? and a âbadâ? bank, and the âgoodâ? bank (Zalkar) was privatized in 2013 - this was later than expected \.
Some other banks remain under conservatorship \. Meanwhile, banking system indicators have begun to
improve\. (ii) The central bankâs ability to supervise the banking sector has improved â but that is not quite the
same as whether it is now equipped to supervise the sector, address vulnerabilities in a timely manner, and
resolve troubled banks efficiently, as per the original target \. (iii) The Deposit Protection Agency has been
reconstituted as an independent legal entity \. Overall, there are still deficiencies in the bank resolution legal
framework, and weaknesses in the supervisory framework \. Some of these issues were to be addressed in an
IDA financial sector development project (2012) that was not approved by Parliament (it was since restructured
into a smaller operation)\.
Objective: Safeguard social protection\. Substantial \.
Safeguard essential social protection spending\. Two targets achieved: (i) The monthly benefits for poor families
with children were increased\. (ii) Number of rights-based categories decreased to 25\. Overall, the social sector
still requires consolidation and a more decisive shift towards poverty -targeted programs\.
Re-establish livelihoods and provide social compensation in the south\. This was the area most affected by the
ethnic unrest\. One target achieved: In the intermediate post-conflict period, the government provided significant
support to affected people in the form of cash compensation and support to re -establish livelihoods\.
The ICR rightly notes - with particular reference to the governance-related measures - that these were well
advanced early in the preparation process, making difficult causal attribution-linkages\. But importantly it is also
noted that the reforms were prepared largely by the government itself, are still in place and in some areas are
being further advanced\.
5\. Efficiency (not applicable to DPLs):
6\. Outcome:
This project supported 12 prior actions that all were met prior to Board presentation and there has been no
back-sliding\. It addressed priority objectives and provided budgetary support at a time when the country was
recovering from political and ethnic unrest and starting to reform under a new regime \. Progress is discernible in
all areas addressed, although further improvements are needed \. The relevance of objectives was High, the
relevance of design Substantial, and the achievement of the three objectives all Substantial \.
a\. Outcome Rating : Satisfactory
7\. Rationale for Risk to Development Outcome Rating:
The government has made a good start with its stabilization and reform program, but the Kyrgyz Republic is a
small, landlocked country, highly dependent economically on gold mining and remittances, with a recent history
of political and ethnic unrest \. The transition to a more open, rules -based representative government has so far
gone quite well but remains a work in progress \. Human and institutional capacity remains a concern \.
a\. Risk to Development Outcome Rating : Significant
8\. Assessment of Bank Performance:
a\. Quality at entry:
This project was a timely response to the need for assistance following the crisis, and was prepared in a
short time and addressed priority issues \. A three-year series of programmatic development policy
operations had been added to the country program in late 2009, and the first such operation had been
appraised prior to the outbreak of unrest in April 2010; the funds in the lending program were then
reallocated to crisis response \. A multi-loan program has now been initiated with PDP 1\. The decision to go
for a free-standing ERSO in 2011 was reasonable in light of the still unsettled conditions at the time and the
absence of medium term development program, as explained in the ISN, with the prospects for a subsequent
DPO program\. The program matrix should have explicitly addressed the objective of stabilizing the
economy\.
at -Entry Rating :
Quality -at- Satisfactory
b\. Quality of supervision:
The prior actions were met prior to Board presentation, and the project closed as planned \. There was
supervision as part of continued dialogue on economic policy and governance \. This included a formal
supervision undertaken at the time of credit and grant effectiveness, and parallel supervision of related
technical assistance operations \.
Quality of Supervision Rating : Satisfactory
Overall Bank Performance Rating : Satisfactory
9\. Assessment of Borrower Performance:
a\. Government Performance:
The program supported by ERSO was prepared in a short time period and with 12 prior conditions all
implemented prior to Board approval\. The subsequent implementation of the program has gone well \.
Government Performance Rating : Satisfactory
b\. Implementing Agency Performance:
The Ministry of Finance was responsible for coordinating donors' activities and was the Bank's counterpart
for the ERSO implementation, as well as for the management and coordination of implementation of policy
measures among other ministries and agencies, but the real counterpart was the government as a whole \.
The ICR also does not discuss the performance of the ministry, so there are thus two reasons for not rating it
separately here\.
Implementing Agency Performance Rating : Not Applicable
Overall Borrower Performance Rating : Satisfactory
10\. M&E Design, Implementation, & Utilization:
a\. M&E Design:
The policy matrix (PD Annex 2) was well designed, except that it did not include any explicit targets regarding
the objective to help stabilize the economy \.
b\. M&E Implementation:
The ICR includes updates on all the identified indicators - given the nature of the program most of the indicators
were qualitative and thus presumably easier to track than more numerical indicators \. As mentioned in Section 4,
a few indicators or their targets were formulated slightly differently in the ICR than in the PD \. Examples include;
(i) The indicator on electric power in the PAD talked of collection rate of energy delivered to the internal market
and in the ICR of per kWh billed; (ii) Target for AUB resolution in the PD matrix talked of âMajor bank
nationalized and restructured through a âgood bank, bad bankâ? split\. Other banks put under conservatorship,
temporary administration, or direct supervision \. Stability and confidence in the banking sector partly restored \.â?
The first sentence was reformulated in the ICR without significant change in meaning, while second sentence
was missing altogether\.
c\. M&E Utilization:
The indicators were used in the brief period of implementation \.
M&E Quality Rating : Substantial
11\. Other Issues
a\. Safeguards:
Not applicable\.
b\. Fiduciary Compliance:
Not applicable\.
c\. Unintended Impacts (positive or negative):
There were no such impacts\.
d\. Other:
The operation helped paving the way for the subsequent Programmatic Development Policy program, for which
the first operation has just become effective \.
12\.
12\. Ratings : ICR IEG Review Reason for
Disagreement /Comments
Outcome : Satisfactory Satisfactory
Risk to Development Significant Significant
Outcome :
Bank Performance : Satisfactory Satisfactory
Borrower Performance : Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank
for IEG to arrive at a clear rating, IEG will downgrade
the relevant ratings as warranted beginning July 1,
2006\.
- The "Reason for Disagreement/Comments" column
could cross-reference other sections of the ICR
Review, as appropriate\.
13\. Lessons:
A single-tranche operation can be an adequate response to a post -emergency situation, but it is
preferable - as in this case - for such an operation to be prepared with the prospect of a subsequent
development program\.
An operation with high government ownership as in this case, where most of the specific prior actions
were prepared largely by the government, may have better prospects for sustainability and for avoiding
backsliding\.
14\. Assessment Recommended? Yes No
15\. Comments on Quality of ICR:
The ICR discusses all relevant aspects of the project \. It could have avoided and /or noted the modest
differences in the formulation of the indicators between the PD results matrix and subsequent formulations \.
a\.Quality of ICR Rating : Satisfactory | REVIEW |
P112312 |  Document of
The World Bank
Report No: ICR00001909
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IBRD-75900)
ON
LOANS
IN THE AMOUNTS OF
1\. US$200 MILLION (September 17, 2008)
2\. US$350 MILLION (June 24, 2009)
TO THE
REPUBLIC OF GUATEMALA
FOR THE
FIRST AND SECOND PROGRAMMATIC FISCAL AND INSTITUTIONAL
DEVELOPMENT POLICY LOANS
June 30, 2010
Central America Country Management Unit
Poverty Reduction and Economic Management
Latin America and Caribbean Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 31, 2010)
US$1\.00 = QZ 8\.016 (Quetzales)
FISCAL YEAR
January 1st â December 31st
ABBREVIATIONS AND ACRONYMS
CCT Conditional Cash Transfer
CPS Country Partnership Strategy
DPL Development Policy Loan
Guatecompras Government procurement system
IEATAAP Temporary tax on business income (Impuesto Extraordinario de
Apoyo a los Acuerdos de Paz)
ISO Transitional âSolidarity taxâ? on business income (Impuesto de
Solidaridad)
MoF Ministry of Finance
SAQBâE Customs Management System
SIAF Integrated Financial Management System
SIB Banking Superintendency
SME Small and Medium Enterprises
Vice President: Pamela Cox
Country Director: C\. Felipe Jaramillo
Sector Manager: Rodrigo A\. Chaves
Task Team Leader: David M\. Gould
ICR Team Leader: Elizabeth Ruppert Bulmer
GUATEMALA
FIRST AND SECOND PROGRAMMATIC FISCAL AND INSTITUTIONAL
DEVELOPMENT POLICY LOANS
IMPLEMENTATION AND COMPLETION RESULTS REPORT
CONTENTS
Data Sheet
A\. Basic Information
B\. Key Dates
C\. Ratings Summary
D\. Sector and Theme Codes
E\. Bank Staff
F\. Results Framework Analysis
G\. Ratings of Program Performance in ISRs
H\. Restructuring
1\. Program Context, Development Objectives and Design \. 1
2\. Key Factors Affecting Implementation and Outcomes \. 5
3\. Assessment of Outcomes \. 12
4\. Assessment of Risk to Development Outcome \. 17
5\. Assessment of Bank and Borrower Performance \. 18
6\. Lessons Learned\. 21
Annex 1 Bank Lending and Implementation Support/Supervision Processes\. 23
Annex 2\. Beneficiary Survey Results \. 25
Annex 3\. Stakeholder Workshop Report and Results \. 26
Annex 4\. Summary of Borrower's Comments on Draft ICR \. 27
Annex 5\. Comments of Cofinanciers and Other Partners/Stakeholders \. 29
Annex 6\. List of Supporting Documents \. 30
MAP
Â
A\. Basic Information
Program 1
GT Fiscal and
Country Guatemala Program Name
Institutional DPL
Program ID P112312 L/C/TF Number(s) IBRD-75900
ICR Date 06/30/2011 ICR Type Core ICR
REPUBLIC OF
Lending Instrument DPL Borrower
GUATEMALA
Original Total
USD 200\.00M Disbursed Amount USD 200\.00M
Commitment
Implementing Agencies
Ministry of Public Finance
Cofinanciers and Other External Partners
Program 2
Second Fiscal and
Country Guatemala Program Name Institutional
Development Policy
Program ID P114373 L/C/TF Number(s) IBRD-77360
ICR Date 06/30/2011 ICR Type Core ICR
REPUBLIC OF
Lending Instrument DPL Borrower
GUATEMALA
Original Total
USD 350\.00M Disbursed Amount USD 350\.00M
Commitment
Implementing Agencies
Ministry of Public Finance
Cofinanciers and Other External Partners
B\. Key Dates
GT Fiscal and Institutional DPL - P112312
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 07/30/2008 Effectiveness: 03/17/2009 03/17/2009
Appraisal: 09/12/2008 Restructuring(s):
Approval: 10/21/2008 Mid-term Review:
Closing: 12/31/2009 12/31/2009
i
Second Fiscal and Institutional Development Policy - P114373
Revised / Actual
Process Date Process Original Date
Date(s)
Concept Review: 05/11/2009 Effectiveness: 03/07/2010 12/17/2009
Appraisal: 06/10/2009 Restructuring(s):
Approval: 07/28/2009 Mid-term Review:
Closing: 12/31/2010 12/31/2010
C\. Ratings Summary
C\.1 Performance Rating by ICR
Overall Program Rating
Outcomes Moderately Satisfactory
Risk to Development Outcome Substantial
Bank Performance Satisfactory
Borrower Performance Moderately Satisfactory
C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Overall Program Rating
Bank Ratings Borrower Ratings
Quality at Entry Satisfactory Government: Not Applicable
Implementing
Quality of Supervision: Satisfactory Not Applicable
Agency/Agencies:
Overall Bank Overall Borrower
Satisfactory Moderately Satisfactory
Performance Performance
C\.3 Quality at Entry and Implementation Performance Indicators
GT Fiscal and Institutional DPL - P112312
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem
Quality at Entry
Program at any time No None
(QEA)
(Yes/No):
Problem Program at any Quality of
No None
time (Yes/No): Supervision (QSA)
DO rating before Moderately
Closing/Inactive status Satisfactory
ii
Second Fiscal and Institutional Development Policy - P114373
Implementation QAG Assessments
Indicators Rating:
Performance (if any)
Potential Problem
Quality at Entry
Program at any time No None
(QEA)
(Yes/No):
Problem Program at any Quality of
No None
time (Yes/No): Supervision (QSA)
DO rating before
Satisfactory
Closing/Inactive status
D\. Sector and Theme Codes
GT Fiscal and Institutional DPL - P112312
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 60 60
General finance sector 20 20
Other social services 20 20
Theme Code (as % of total Bank financing)
Other accountability/anti-corruption 14 14
Public expenditure, financial management and
14 14
procurement
Regulation and competition policy 29 29
Social safety nets 14 14
Tax policy and administration 29 29
Second Fiscal and Institutional Development Policy - P114373
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 35 35
General finance sector 20 20
General public administration sector 20 20
Other social services 25 25
Theme Code (as % of total Bank financing)
Macroeconomic management 20 20
Other financial and private sector development 20 20
Other human development 20 20
iii
Public expenditure, financial management and
20 20
procurement
Tax policy and administration 20 20
E\. Bank Staff
GT Fiscal and Institutional DPL - P112312
Positions At ICR At Approval
Vice President: Pamela Cox Pamela Cox
Country Director: Carlos Felipe Jaramillo Laura Frigenti
Sector Manager: Rodrigo A\. Chaves Rodrigo A\. Chaves
David Michael Gould
Task Team Leader: David Michael Gould
Waleska Garcia-Corzo
ICR Team Leader: Elizabeth N\. Ruppert Bulmer
ICR Primary Author: Elizabeth N\. Ruppert Bulmer
Second Fiscal and Institutional Development Policy - P114373
Positions At ICR At Approval
Vice President: Pamela Cox Pamela Cox
Country Director: Carlos Felipe Jaramillo Laura Frigenti
Sector Manager: Oscar Calvo-Gonzalez Rodrigo A\. Chaves
David Michael Gould
Task Team Leader: David Michael Gould
Rashmi Shankar
ICR Team Leader: Elizabeth N\. Ruppert Bulmer
ICR Primary Author: Elizabeth N\. Ruppert Bulmer
F\. Results Framework Analysis
Program Development Objectives (from Program Document)
Program Development Objectives:
I\. Promote macroeconomic stability and financial sector deepening and maintain
fiscal space for priority spending\.
II\. Improve governance and transparency of public financial management and
expenditures\.
III\. Strengthen the effectiveness of the Mi Familia Progresa Conditional Cash
Transfer Program through improved execution and targeting\.
IV\. Promote sustainable growth and productivity\.
Revised Program Development Objectives (as approved by original approving authority)
N/A
iv
(a) PDO Indicator(s)
GT Fiscal and Institutional DPL - P112312
Original Target Formally Actual Value
Baseline Values (from Revised Achieved at
Indicator
Value approval Target Completion or
documents) Values Target Years
Central Government fiscal deficit does not rise above 2\.2 percent of GDP on
Indicator 1 :
average for 2009-2011, as priority social spending increases\.
Value 2\.2 percent of
2\.1 percent of GDP in 2\.8 percent of 3\.3 percent of GDP
(quantitative or GDP average for
2007 GDP in 2010 in 2010
Qualitative) 2009-2011
Date achieved 12/31/2007 12/31/2010 12/31/2010 12/31/2010
Comments
Fiscal reforms and tax modernization measures insufficient to offset higher
(incl\. %
spending and lower revenues during economic downturn\.
achievement)
Fiscal reform implementation contributes to additional revenues so that tax
Indicator 2 :
collection as a share of GDP rises to 12\.7 percent of GDP in 2011\.
minimum
Value
12\.7 percent in threshold of 10\.5 percent of
(quantitative or 12\.3 percent in 2007
2011 10\.4 percent in GDP
Qualitative)
2010
Date achieved 12/31/2007 12/31/2010 12/31/2010 12/31/2010
Comments
(incl\. % Target achieved\.
achievement)
Consolidated supervision has been completed in at least half of the financial
Indicator 3 : groups by assets and regular supervision completed for the majority of risk
profiles under the new risk manual\.
Consolidated
Consolidated
Value supervision in at
supervision in 9 out
(quantitative or 0 in 2007 least half of
of 11 financial
Qualitative) financial groups
groups
by assets\.
Date achieved 12/31/2007 12/31/2010 12/31/2010
Comments
(incl\. % Target exceeded\.
achievement)
v
Second Fiscal and Institutional Development Policy - P114373
Original Target Formally Actual Value
Baseline Values (from Revised Achieved at
Indicator
Value approval Target Completion or
documents) Values Target Years
Central Government fiscal deficit does not rise above 2\.8 percent of GDP in
Indicator 1 : 2010, as priority social spending increases, in the context of the global crisis
and growth slow-down\.
Value
1\.7 percent of GDP in 2\.8 percent of 3\.3 percent of GDP
(quantitative or
2008 GDP in 2010 in 2010
Qualitative)
Date achieved 12/31/2008 12/31/2010 12/31/2010
Comments
Fiscal reforms and tax modernization measures insufficient to offset higher
(incl\. %
spending and lower revenues during economic downturn\.
achievement)
Fiscal reform measures mitigate the impact of the crisis so that Central
Indicator 2 :
Government tax collections do not fall below 10\.4 percent of GDP in 2010\.
Central
Value government tax
10\.5 percent of
(quantitative or 11\.3 percent in 2008 collections do not
GDP
Qualitative) fall below 10\.4
percent of GDP
Date achieved 12/31/2008 12/31/2010 12/31/2010
Comments
(incl\. % Target achieved\.
achievement)
Consolidated supervision has been completed in at least half of the financial
Indicator 3 : groups by assets and regular supervision completed for all four risk profiles
under the new risk manual\.
Consolidated
Consolidated
Value supervision in at
supervision in 9 out
(quantitative or 0 percent in 2007 least half of
of 11 financial
Qualitative) financial groups
groups
by assets\.
Date achieved 12/31/2008 12/31/2010 12/31/2010
Comments
(incl\. % Target exceeded\.
achievement)
Indicator 4 : Regular debt issuance by MoF starting the second half of 2008\.
Value Only irregular and Ongoing regular Ongoing twice a
(quantitative or sporadic issuance by issuance of debt by week issuance of
Qualitative) MoF in 2007\. the MoF\. debt by the MoF\.
Date achieved 12/31/2007 12/31/2010 12/31/2010
Comments
(incl\. % Target achieved\.
achievement)
vi
Three percent financing volume increase generated with the use of garantÃas
Indicator 5 :
mobiliarias\.
Three percent
The use of movable
financing volume
Value asset guarantees led
increase generated
(quantitative or 0 percent in 2008 to a 4 percent
with the use of
Qualitative) increase in total
garantÃas
credit
mobiliarias\.
Date achieved 12/31/2008 12/31/2010 12/31/2010
Comments
(incl\. % Target achieved\.
achievement)
Ministry of Finance and General Auditor's Office using annual audits and
Indicator 6 : monthly financial and execution reports from at least ninety percent of the
public trust funds to improve oversight and management\.
At least ninety 2009 audits
Value
percent of the completed for 31
(quantitative or 0 in 2008
public trust funds out of 56 trust
Qualitative)
audited\. funds
Date achieved 12/31/2008 12/31/2010 12/31/2010
Comments
Target partially achieved, although the audits represent the largest trust funds
(incl\. %
and thus capture the majority of spending\. 2010 audits not yet available\.
achievement)
Specialized offices to facilitate access to public information have been
Indicator 7 :
established in at least 30 percent of Central Government agencies\.
At least 30 percent Public information
of Central offices have been
Value
Government established in 85
(quantitative or 0 in 2008
agencies have percent of Central
Qualitative)
public information Government
offices\. entities\.
Date achieved 12/31/2008 12/31/2010 12/31/2010
Comments
(incl\. % Target exceeded\.
achievement)
Results indicators have been developed for fifty percent of Central
Indicator 8 : Government's expenditures in order to introduce the results informed budget
framework\.
Results indicators
Results indicators
have been
Value developed for 97
developed for fifty
(quantitative or 22 percent in 2008 percent of Central
percent of Central
Qualitative) Government
Government's
expenditures
expenditures\.
Date achieved 12/31/2008 12/31/2010 12/31/2010
Comments
(incl\. % Target exceeded\.
achievement)
vii
Co-responsibilities verified for 50 percent of the CCT beneficiaries, half of
Indicator 9 :
which are extreme poor, based on a framework for monitoring and evaluation\.
Co-responsibilities
Co-responsibilities
verified for 100
verified for 50
Value percent of the CCT
percent of the CCT
(quantitative or 0 in August 2008 beneficiaries;
beneficiaries, half
Qualitative) cannot calculate
of which are
share of extreme
extreme poor\.
poor\.
Date achieved 12/31/2008 12/31/2008 12/31/2010
Comments
Target achieved\. In terms of extreme poor, share of beneficiaries in this group
(incl\. %
is likely to be high due to geographical targeting and proxy means test\.
achievement)
Tax declarations submitted through the internet have increased by 3 percentage
Indicator 10 :
points\.
37 percent of tax 42 percent of tax
Value
declarations declarations
(quantitative or 34 percent in 2007
submitted through submitted through
Qualitative)
the internet\. internet\.
Date achieved 12/31/2008 12/31/2010 12/31/2010
Comments
(incl\. % Target exceeded\.
achievement)
Customs times for clearance and release of exported/imported goods has
Indicator 11 :
declined by 5 percent\.
Time to export 19 days,
Value Time to export 18 Time to export 17
time to import 18 days
(quantitative or days, time to days, time to import
in 2007; Doing
Qualitative) import 17 days\. 17 days\.
Business Report, 2008\.
Date achieved 12/31/2007 12/31/2010 12/31/2010
Comments
(incl\. % Target achieved\.
achievement)
(b) Intermediate Outcome Indicator(s)
viii
GT Fiscal and Institutional DPL - P112312
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Completion of enhanced or regular supervision of 3 out of 4 risk
Indicator 1 : profiles under the risk-based consolidated supervision manual in
all financial groups in the system
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. % achievement)
Second Fiscal and Institutional Development Policy - P114373
Original Target Actual Value
Formally
Values (from Achieved at
Indicator Baseline Value Revised
approval Completion or
Target Values
documents) Target Years
Completion of enhanced or regular supervision of 3 out of 4 risk
Indicator 1 : profiles under the risk-based consolidated supervision manual in
all financial groups in the system
Value
(quantitative or
Qualitative)
Date achieved
Comments
(incl\. % achievement)
G\. Ratings of Program Performance in ISRs
GT Fiscal and Institutional DPL - P112312
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 12/30/2008 Moderately Satisfactory Moderately Satisfactory 0\.00
Second Fiscal and Institutional Development Policy - P114373
Actual
Date ISR
No\. DO IP Disbursements
Archived
(USD millions)
1 09/25/2009 Satisfactory Satisfactory 0\.00
2 02/27/2011 Moderately Satisfactory Satisfactory 349\.13
ix
Â
1\. Program Context, Development Objectives and Design
Guatemala has the largest economy in Central America but is plagued by very high rates
of poverty and inequality\. Compared to other middle-income countries, social indicators
in Guatemala are low, particularly among the geographically and economically
marginalized rural indigenous population\. The institutional environment was hampered
by decades of civil war, which contributed to weak governance and transparency and
constrained the economic participation of large segments of the population\. Crafting and
implementing sound public policies proved difficult in this restive environment, in turn
inhibiting broad-based and sustained economic and social development\.
1\.1 Context at Appraisal
Since the signing of the 1996 Peace Accords, the country has begun to make headway,
focusing on social needs and building democratic institutions\. The peaceful transition to
a new government in January 2008 is a clear illustration of progress to-date\.
Nevertheless, serious challenges remain\. The series of Programmatic Fiscal and
Institutional Development Policy Loans was initiated in 2008 during this period of
political transition, but also at a time of great economic uncertainty with the emergence
of the global financial crisis and subsequent growth slow-down\. At appraisal,
Guatemalaâs economy was growing at a robust 6\.3 percent (2007), following several
years of steady growth rates of 3-5 percent\. This sustained economic performance â
despite consecutive negative shocks in terms of natural disasters, commodity price
fluctuations and a domestic banking crisis and bail-out â reflects a prudent macro policy
stance\. Guatemalaâs modest fiscal deficits (2-3 percent of GDP), relatively stable current
account deficit (historically around 5 percent of GDP) and low levels of external debt
(less than 25 percent of GDP) helped the economy to weather these shocks (see Table 1
below)\.
In the period leading up to appraisal, Guatemala focused its trade policy on increased
regional and global integration, with the signing of DR-CAFTA (which came into effect
in 2006)\. These efforts were complemented by some improvement in the investment
climate, although corruption and crime remain significant obstacles\. Nevertheless,
Guatemalan competitiveness seems to have improved, reflected by a large inflow of FDI
during this period\. Government accountability and transparency have also improved due
to ongoing efforts to consolidate public financial management reforms through the
integrated financial management system (SIAF) and a new public procurement system
(GUATECOMPRAS)\. But perceptions of corruption and weak rule of law continue to
plague day-to-day decision making and transactions\.
Prior to appraisal, financial sector soundness saw concrete improvement, but supervision
continued to fall short in some areas\. Legal and regulatory reforms in 2002 contributed
to improve banking sector solvency and resilience to market volatility\. These reforms
also contributed to designing an effective bank resolution framework, which led to the
successful resolution of two significant banks (Bancafé and Banco del Comercio) in
2006-2007\. However, as noted in the 2006 FSAP update, further strengthening of
1
financial supervision was needed, in particular on the supervision of financial
conglomerates which accounted for over 80 percent of total regulated financial system
assets\. With regard to access to finance, although domestic credit to private sector firms
increased from around 20 percent of GDP in 2000 to 30 percent in 2007, this figure was
low compared to the Central American average of 47 percent\. Access to finance was
particularly troublesome for small firms which had lower or no collateral and were
serviced by non bank and mostly non regulated entities\.
Table 1: Selected Economic Indicators
2004 2005 2006 2007 2008 2009 2010
Income and Prices
GDP growth (% change) 3\.2 3\.3 5\.4 6\.3 3\.3 0\.5 2\.6
GDP per capita (% change) 0\.6 0\.7 2\.8 3\.7 0\.8 -1\.9 -0\.1
Inflation (CPI end of period % change) 9\.2 8\.6 5\.8 8\.7 9\.4 -0\.3 5\.4
Nominal exchange rate (average
Quetzales/US$) 7\.9 7\.6 7\.6 7\.7 7\.6 8\.2 8\.1
Central Government Finance (% of GDP)
Total revenues and grants 12\.3 12\.0 12\.7 12\.8 12\.0 11\.1 11\.3
Total tax revenues 11\.5 11\.2 11\.9 12\.1 11\.3 10\.3 10\.5
Total expenditure 13\.4 13\.7 14\.7 14\.3 13\.6 14\.2 14\.6
Central Government primary balance 0\.3 -0\.3 -0\.6 0\.0 -0\.3 -1\.7 -1\.8
Central Government overall balance -1\.1 -1\.7 -1\.9 -1\.4 -1\.6 -3\.1 -3\.3
Non Financial Public Sector total debt 22\.2 21\.1 21\.9 21\.6 20\.1 23\.0 24\.6
o/w External 15\.5 13\.2 13\.1 12\.4 11\.2 13\.1 13\.5
Balance of Payments (% of GDP)
Current account balance -4\.9 -4\.6 -5\.0 -5\.2 -4\.3 0\.0 -2\.1
Trade balance -15\.2 -15\.4 -16\.1 -16\.1 -14\.2 -8\.9 -10\.4
Exports (f\.o\.b) 21\.3 20\.1 20\.1 20\.5 20\.0 19\.4 20\.8
Imports (f\.o\.b) -36\.5 -35\.5 -36\.2 -36\.6 -34\.3 -28\.2 -31\.3
Foreign direct investment 1\.2 1\.9 2\.0 2\.2 1\.9 1\.6 1\.7
Remittances 10\.8 11\.1 12\.1 12\.3 11\.3 10\.5 10\.1
Domestic Credit 21\.4 24\.3 28\.4 31\.1 29\.1 29\.1 30\.0
o/w Credit to Private Sector 20\.9 23\.2 27\.1 30\.0 29\.5 28\.7 28\.1
Memorandum item:
Nominal GDP (billions of US$) 24\.0 27\.2 30\.2 34\.1 39\.1 37\.7 41\.2
Source: Ministry of Finance, Central Bank, IMF, and World Bank staff estimates\.
Despite considerable progress across the policy spectrum and positive real per capita
growth rates, institutional and development outcomes in Guatemala continue to signal the
need for further reform\. The Colom administration, which came to power in January
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2008, committed to a program addressing poverty and inequality through increasing
growth, creating fiscal space through fiscal reform and better monitoring and evaluation
to target needy sectors while maintaining macroeconomic stability, and improving
governance and transparency at the central and local levels to raise accountability and
improve service delivery\. The Bank has much to offer in these technical areas, and the
Government requested both financial and technical support from the Bank through the
Programmatic DPL series in order to help them address this development agenda\. The
Bank team preparing the DPL series judged the macroeconomic policy framework to be
prudent and the outlook for sustainable growth positive\. The resulting DPLs were
designed to complement the broad objectives identified in the Country Partnership
Strategy\.
1\.2 Original Program Development Objectives (PDO) and Key Indicators (as approved)
The overall Program Development Objectives for both loans and the associated key
performance indicators (outcomes expected for end-2010) are as follows:
I\. Promote macroeconomic stability and financial sector deepening and maintain fiscal
space for priority spending
i\. Central Government fiscal deficit does not exceed 2\.8 percent of GDP in
2010 as priority social spending increases
ii\. fiscal reforms mitigate the crisis impact so that Central Government tax
collections do not fall below 10\.4 percent of GDP in 2010
iii\. consolidated supervision completed in at least half of financial groups by
assets and regular supervision completed for all 4 risk profiles under the
new risk manual
iv\. regular debt issuance by MoF starting in the second half of 2008
v\. three percent increase in financing volume generated by use of garantÃas
mobiliarias
II\. Improve governance and transparency of public financial management and
expenditures
vi\. MoF and Auditor Generalâs Office use the annual audits and monthly
financial reports of at least 90 percent of public trust funds to improve their
oversight, management and efficiency
vii\. specialized offices to facilitate access to public information established in at
least 30 percent of Central Government agencies
viii\. results indicators developed for at least 50 percent of Central Government
expenditures to introduce a results-informed budget framework
III\. Strengthen the effectiveness of the Mi Familia Progresa Conditional Cash Transfer
Program through improved execution and targeting
ix\. co-responsibilities verified for at least 50 percent of CCT beneficiaries, half
of which are extreme poor, based on a monitoring and evaluation
framework
IV\. Promote sustainable growth and productivity
x\. tax declarations submitted via the internet have increased by 3 percent
relative to 2007 baseline
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xi\. customs clearance times for exports and imports have declined by 5 percent
compared to 2007
V\. The first DPL had an intermediate objective to meet the fiscal and financial needs
during a period of economic slowdown (namely 2008-9)\.
1\.3 Revised PDO and Key Indicators
The series of programmatic DPLs was originally designed to comprise 3 operations to
span fiscal years 2009-2011, but the onset of a severe economic crisis during appraisal of
the second operation led the Bank management to revise the series to two operations,
shorten the timeline by 12 months, and enlarge the total DPL lending package to US$550
million to address evolving economic situation (an increase from the originally allocated
US$500 million over three operations)\. The rationale for this change stemmed from the
dire impact of the global crisis on tax revenues\. The Government adjusted its reform
program to reflect accelerated actions in some areas, namely to increase private sector
access to finance and address financial sector stability, and ensure that social
expenditures were protected and that recent reductions in poverty rates were not reversed\.
Other actions relating to tax reform were deferred to the post-crisis period and thus fell
outside the scope of the DPLs\. No changes in the development objectives resulted,
however, and the key indicator values in the 2nd DPL were defined to reflect weaker
fiscal performance during 2009 (i\.e\., a less ambitious target for the fiscal deficit) and the
shortened time-frame for expected outcomes which advanced from end-2011 to end-2010\.
1\.4 Original Policy Areas Supported by the Program (as approved)
The original policy areas supported by the first and second DPLs were:
I\. Promote macroeconomic stability and financial sector deepening and maintain fiscal
space for priority spending
Specific measures designed to promote macroeconomic stability are centered on fiscal
reforms and modernizing tax administration methods in order to increase tax revenues
above their very low base level\. This in turn helps to create the fiscal space necessary for
priority spending in social sectors\. Measures to deepen the financial sector include
extending banking supervision by risk category to capture financial conglomerates,
extending prudential regulations to off-shore banks, and creating a moveable assets
registry to facilitate credit access for firms lacking fixed capital\. Additional measures
relate to standardizing the Central Bankâs short-term debt issuance\.
II\. Improve governance and transparency of public financial management and
expenditures
Policy measures to increase transparency include the strengthening and/or creation of
institutional structures to promote public accountability and reduce corruption, and the
passage and implementation of an Access to Public Information law\. New measures aim
at increasing scrutiny and control over public trust funds, as well as strengthening the
4
public financial management and procurement systems for central and local government
entities\.
III\. Strengthen the effectiveness of the Mi Familia Progresa Conditional Cash Transfer
Program through improved execution and targeting
The Governmentâs main program for expanding opportunities for vulnerable groups is Mi
Familia Progresa, and measures to improve its effectiveness focus on better targeting and
execution as the program is rolled out across the country\.
IV\. Promote sustainable growth and productivity
Measures for promoting growth and productivity have some overlap with the preceding
thematic areas, given the correlation between economic growth and macroeconomic
stability and labor productivity, inter alia\. Additional complementary measures focus on
the business environment by accelerating customs clearance and reducing tax reporting
requirements through more efficient electronic processes\.
The broad range of policies supported by the DPLs stems from the goal to support the
Country Partnership Strategy pillars\. The DPLs were in effect the primary Bank
instrument for dialogue with the Government\.
2\. Key Factors Affecting Implementation and Outcomes
In light of the country context and developments since the design of the 1st and 2nd DPLs,
the project has proved to be a flexible instrument that helped the Government implement
its reform program and achieve or make substantial progress toward other policy
objectives, albeit with varying degrees of success\. The policy actions were designed to
align with the Governmentâs program within a timeframe that was judged to maximize
the potential for success\. This timeframe could not anticipate important exogenous
shocks to the political and economic environments, however\.
The World Bank Board approved the two DPL operations on time (October 2008 and
July 2009)\. Effectiveness delays of 5 months resulted from delays in Congressional
approval, but with no negative impact on implementation\. Both operations were single-
tranche, such that prior actions triggered disbursement\. Appropriate sequencing of prior
actions allowed for measurable progress in implementation\. All prior actions were met\.
Two main adjustments were made to the original structure of the DPL series during
implementation\. As mentioned above, the series was originally designed to comprise
three operations, but this was truncated to two operations in the context of the economic
crisis, and outcome indicators were adjusted accordingly to accommodate the shorter
time-frame (i\.e\., the third operation would have closed later in the CPS cycle rather than
the December 2010 closing date of the 2nd and final DPL)\. Secondly, the economic
slowdown in the second half of 2008 and beginning of 2009 and the associated credit
5
crunch signaled the need to stimulate credit availability; as a result, measures were added
to the policy matrix to ease credit access for micro- and SMEs\.
The following section provides a summary of prior actions and a brief description of the
policy measures supported by the two DPLs\.
2\.1 Program Performance
First Development Policy Loan
Prior Actions Status
1\. Government drafted and submitted for Congressional approval 1st phase of fiscal reform Met
including modernization of indirect tax and customs systems and direct tax on business
income to offset the expired IETAAP
2\. Banking Superintendency completed enhanced supervision of 2 risk profiles using new Met
risk-based consolidated supervision manual in 3 large financial groups, and extended
prudential rules to off-shore banks
3\. Government created the Vice Ministry for Fiscal Transparency and Evaluation at the Met
MoF, and incorporated regular monthly financial reporting on public trust funds in the
2009 budget
4\. MoF expanded e-procurement to make detailed information on large Government Met
contracts (including unit prices on regular purchases) publicly available and open to
electronic competitive bidding
5\. Government designed and began pilot implementation of a transparent monitoring and Met
evaluation mechanism for CCT program Mi Familia Progresa including proxy means test
6\. The Tax Administration Office developed and distributed software for electronic Met
accounting and submission of income tax withholding for firms
Second Development Policy Loan
Prior Actions Status
1\. Government implemented a direct tax on business income, mandated electronic Met
submission of income tax withholding declarations, and performs cross-checks between
VAT declarations and income tax submissions
2\. Banking Superintendency completed supervision of at least 3 risk profiles in financial Met
groups holding at least half of total bank assets of the domestic financial system
3\. Central Bank standardized its debt instruments and established regular debt issuance Met
through weekly auctions coordinated with the MoF and the electronic issuance of 7-day
securities
4\. Congress approved the Movable Assets Law (Decree 51-2007) and related reforms Met
(Decree 46-2008) to provide micro- and SMEs with the possibility of using movable assets
as collateral
5\. Government implemented monthly financial reporting of the main public trust funds to Met
MoF and Auditor General and annual external auditing of public trust funds
6\. Congress approved an Access to Public Information Law and the MoF implemented it Met
7\. MoF issued and is implementing Executive Decree 394-2008 for MoF internal Met
reorganization to absorb, operate and upgrade SIAF and Guatecompras, and included
provisions and technical indicators in 2010 budget guidelines to start implementing
results-informed budgeting in the Central Government
8\. Government is implementing a transparent M&E system for verifying eligibility of CCT Met
beneficiaries, and received external evaluations of risks related to design, instruments,
conditionality, information flows, beneficiary feedback and coordination with other
institutions
9\. The Tax Administration Office implemented in at least 3 major ports a customs Met
management system (SAQBâE) on imports and exports, accounting for at least 30 percent
of Guatemalaâs total customs traffic
6
Policy Measures Supported by the 1st and 2nd DPLs:
Fiscal reform and tax administration comprise the first main policy areas supported by
the DPLs\. Guatemala has long suffered from low revenue collection rates as a share of
GDP, greatly restraining the Governmentâs capacity to deliver effective services\. A two-
pronged strategy was adopted to remedy this weakness\. The first focused on
modernizing tax administration by streamlining and digitizing tax declarations and
fostering their use through user-friendly software and training\. Government began to
require electronic submissions of income tax withholding for firms, and upgraded its
administrative systems to perform electronic cross-checks between VAT declarations and
income tax submissions to reduce tax evasion\. Reforms were also undertaken in the area
of customs administration with the introduction of a new Customs Management System
(SAQBâE) to modernize and digitize customs clearance processes in line with
international practices\. The second part of the strategy targeted tax reform, namely by
introducing a new gross revenue tax (ISO) on businesses to replace the expired IETAAP,
a temporary tax\. The new ISO would be transitional by covering the revenue gap until
passage of a new tax law revising both business profit tax rates and taxes on distribution
of profits as well as measures to broaden the tax base and simplify the personal income
tax regime (phase two of the proposed fiscal reform)\.
In terms of financial market stabilization and deepening, the DPLs supported
Government efforts to extend prudential rules to offshore banks, and helped strengthen
supervision of financial conglomerates by moving to risk-based and consolidated
supervision, a multi-year strategy that the Bank has supported through the Financial
Sector Adjustment Loan (closed in March 2007) and the subsequent Financial Sector
Technical Assistance Loan (closed in June 2009)\. The 2nd DPL also supported the
elaboration and adoption of the Movable Assets Law (garantÃas mobiliarias) and
establishment of the registry as an instrument to increase access to finance by micro,
small and medium size companies which often lack real estate collateral to obtain
financing\. In addition, the DPLs supported Central Bank standardization of debt
instruments and regular issuance through weekly auctions coordinated with the Ministry
of Finance in order to foster the development of an interest rate yield curve as a step
towards secondary debt market development\.
The Governmentâs program places strong emphasis on improving governance and
increasing transparency, the third main policy area supported by the DPLs\. The policy
actions to achieve these goals include monthly financial reporting and annual external
audits of public trust funds for use by the MoF and the Auditor General, and the passage
and implementation of an Access to Public Information law\. Measures to strengthen
public financial management have been ongoing for several years; the 1st and 2nd DPLs
specifically supported a system to make all Government procurement information
publicly available, and establish an e-procurement system for electronic competitive
bidding on large Government contracts\. The MoF committed to finance, operate and
upgrade the financial management (SIAF) and procurement (Guatecompras) systems\.
The DPLs also supported the implementation of results-informed budgeting in Central
Government entities\.
7
In 2008, the Government launched, on a pilot basis, a conditional cash transfer program
called Mi Familia Progresa\. Bank support â both through the 1st and 2nd DPLs and the
Expanding Opportunities: CCT Institutional Establishment investment loan currently
awaiting implementation â has assisted implementation of a transparent monitoring and
evaluation system of the CCT program to allow verification of eligibility, i\.e\., verifying
that beneficiaries have met the necessary health and education attendance conditions\.
External evaluations of the programâs design, risks, management, and effectiveness are
part of the assistance provided to the Government to ensure that benefits reach the
targeted population through efficient and financially sustainable execution as the program
is extended throughout the country\.
2\.2 Major Factors Affecting Implementation
Implementation of the 1st and 2nd DPLs was very much affected by the economic and
political environment, with both positive and negative implications\. The 2008
inauguration of President Colom represented a shift from prior administrations in that it
was Guatemalaâs first centre-left government in over fifty years, elected with the broad
support of rural and indigenous populations\. The new Governmentâs program focused on
(i) reducing poverty and inequality, (ii) better fiscal management to meet priority social
spending and investment, (iii) improved governance and transparency, and (iv) promoting
sustainable growth and productivity\. By aligning its policy support with the new
Governmentâs pro-reform agenda, the Bank was able to help articulate and contribute
positively to pro-poor, pro-development policies\. And because the 1st DPL coincided
with the beginning of President Colomâs term, the Bank â along with many pro-reform
constituencies in Guatemala â linked its policy agenda to the campaignâs reformist
platform that could be implemented with the election mandate\. It was widely believed
that by expending the necessary political capital early in his term, President Colom and
his team could initiate significant and lasting reforms\. The CCT program was
successfully launched, but the ambitious fiscal reform package â which had been
developed with broad consultation including private sector input and support â lost
momentum\.
Numerous factors are to blame\. There was a major shift in political party allegiances in
Congress within months of the election which undermined the Presidentâs legislative
support\. The global economic slowdown began to bite in Guatemala as growth rates fell
sharply; the idea of paying higher taxes became increasingly unpopular among business
owners\. And in 2009 a political crisis erupted that attracted international attention to
Guatemalaâs weak institutions and fueled the perception that the Government was simply
conducting business as usual rather than promoting real improvements in transparency\.
As support for the Government waned, the private sector withdrew its support for fiscal
reform and the Government focused its energies on the rapid implementation of the CCT
program\. Although this was successful on many fronts, benefiting hundreds of thousands
of families, it attracted criticism from some political opponents that the CCT program
was increasingly being used as a vehicle to buy the rural vote\. Whereas political factors
undermined progress in certain policy areas, it facilitated the passage of a tide-changing
Access to Public Information Law in part because of the new demand for increased
transparency and public accountability\.
8
The political challenges reflect a combination of exogenous and endogenous factors\. On
the one hand, the Government demonstrated a strong commitment to the agreed policy
agenda and prior actions, in some areas reflecting a consensus approach with broad
support from international financial institutions and civil society organizations\. But as its
domestic support base slipped, the Government retreated from more aggressive fiscal
reform â in part because it would counteract the needed fiscal stimulus at the height of
the economic crisis\.
Three types of risk were identified during preparation of the 1st and 2nd DPLs, all of
which proved to be relevant during the 30-month life of the operations\. Mitigation
measures were only partly successful in addressing political risk, but were largely
effective in addressing other risks\.
ï Political risk is always significant in Guatemala, but particularly for President
Colomâs ruling UNE party, which never secured a majority in Congress and in
fact has lost congressional support\.1 To mitigate the risks to its reform agenda,
the Government pursued wide consultation with stakeholders on fiscal reforms\.
Whereas this strategy paid off for Phase 1 of the fiscal reform package, it was
insufficient to overcome the growing opposition that was gaining momentum\.
ï The impact of the global economic downturn was another risk to the
Governmentâs program as Guatemala tried to climb out of economic crisis\.
Although growth started to recover in 2010, the external environment remained
unstable as commodity price shocks and lower remittances threatened the fragile
recovery\. Fiscal revenues continued to suffer, but the international financial
institutions helped to fill the financing gap, in addition to the regular issuance of
and sustained demand for domestic debt\. The Government did not need to access
liquidity available under a precautionary Stand-By Arrangement with the IMF\.
The CCT program helped to mitigate the impact on the poor\.
ï Guatemala is susceptible to natural disasters, and 2010 saw its share of external
shocks: landslides, a volcanic eruption, Tropical Storm Agatha, and a large sink
hole in the capital, resulting in loss of life and property\. In April 2009, the Bank
approved a Catastrophic Risk Deferred Draw-Down operation to provide
contingent financing following a natural disaster, which it drew on after a series
of natural disasters due to hurricanes and flooding\.
2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
Nine out of the eleven outcome indicators defined in the policy matrix are easily
measured indications of progress toward the Program Development Objectives\. For
some of these outcome indicators, however, factors other than the policy measures of the
DPLs may have contributed, such that outcomes are not uniquely attributable to the two
DPLs\. For instance, tax reforms and tax administration improvements will affect the
1
UNE won 51 out of a total 158 congressional seats in the 2007 elections, but currently holds 40
seats\.
9
fiscal deficit, which is easily measured and monitored due to readily available data\. But
other factors may also explain higher spending or lower revenues such as exogenous
shocks that slowed economic activity, thus reducing VAT collections and import duties,
inter alia\. Despite these measurement difficulties, the fiscal deficit is nevertheless
indicative of the impact of fiscal reforms\.
The DPL is confined to short-term measures due to its short time-horizon, but M&E
arrangements are meant to assess achievement of long-term objectives\. This timing
inconsistency raises issues for selecting appropriate outcome indicators as measures of
progress toward long-term development objectives\. For instance, increasing transparency
through a new Access to Public Information Law is an important step, but the real impact
on transparency may take time to emerge\. In the DPL time-frame, however, progress is
monitored by measuring the number of Government agencies that have opened public
information offices within 18 months\.
In another example, the customs administration reform was essential for updating
Guatemalaâs systems to international standards, and met its goals of facilitating and
accelerating customs clearance procedures within 18 months\. But the reform was also
expected to reduce corruption\. Focusing on digitizing systems does not address one of
the fundamental drivers behind much corruption, namely the presence of customs
officials and their personal interaction with traders\. Without addressing the roles of
customs personnel within the new context of electronic processing, the positive impact of
reform â which includes reduced opportunities for corruption â will be limited until these
underlying impediments are addressed\.
M&E utilization has been more positive in other components of the DPLs\. With respect
to results indicators in the budgeting process, although they are in the early stages, it
appears that these monitoring indicators are indeed being used to develop the new results-
informed budget framework\. And in terms of the tax administration improvements, the
Tax Administration Superintendency has calculated the additional revenue gained
through modernization, controls and cross-checking measures and its contribution to
overall revenue collections\.
One indicator that poses measurement difficulties relates to the oversight of public trust
funds\. The policy action requires monthly financial reports and annual external audits as
tools to improve transparency, but the outcome indicator requires a measure of their use
by the MoF and the Auditor General to improve trust fund management and efficiency,
requiring a subjective assessment\. The preparation of financial reports and audits are
crucial and certainly helped shed light on the operations of these public trust funds, but it
is unreasonable to assume that the availability of these reports will automatically result in
limits on the discretionary use of trust funds\.
The other indicator that poses measurement problems relates to the targeting of the CCT
program\. Verifying co-responsibilities is inherent to the benefit disbursement procedures,
and confirming this will become easier with electronic monitoring that is currently being
implemented\. But the data necessary to calculate the share of beneficiaries that are
10
extreme poor do not currently exist\. This evaluation will be feasible only after the new
living standards survey is completed (a new survey expected to be launched in the
coming months)\.
The data requirements for the defined outcome indicators were manageable (with the
exceptions cited above) and M&E has been for the most part carried out, not only by the
Bank in its supervision functions, but also by various partners\. For example, the media
has played a significant role in monitoring transparency by mining the publicly available
data in Guatecompras; by calling attention to outliers such as large expenditures or
examples of nepotism, the media draws attention to and thus fosters debate around
government transparency and accountability issues\. Civil society groups play a central
role in monitoring the implementation of the Access to Public Information Law; in
particular, Acción Ciudadana tracks the ways in which Central Government entities
respond to requests for information, and publish an index ranking agenciesâ performance
with respect to transparency measures\. In this way, the DPLs leveraged additional
oversight by other entities\.
The real challenge â for the DPLs as for all Bank operations â lies in stimulating the
effective use of monitoring data to inform decision-making and resource allocation\. The
example of Access to Public Information offices illustrates this difficulty\. The
development objective behind this policy action was to increase transparency as well as
to create the demand for greater accountability and efficiency in public spending by
service users\. There is a high demand for transparency and accountability among the
Guatemalan public, but weak political parties, tentative civil society networks and
factions across various indigenous groups lead to a coordination failure\. The remaining
challenge is how to catalyze this broad-based demand for transparency in order to create
change\.
2\.4 Expected Next Phase/Follow-up Operation
There are no new DPLs planned within the current CPS\. The Bank can continue to
support the Governmentâs reform program through technical or analytical assistance,
however, and the forthcoming Public Expenditure Review will be a useful tool to help the
Government further deepen and institutionalize public financial management reform, tax
reform, and the effectiveness of social spending, particularly through the CCT program\.
With respect to the latter, disseminating Bank and other donor-prepared evaluations of
Mi Familia Progresa in terms of its costs and benefits could provide the impetus for
further strengthening the program (e\.g\., through better targeting), generating broad
political support and securing adequate dedicated public resources to finance it in future\.
The timing of the Bankâs analytical input would be most effective if it could contribute to
the political debate surrounding the Presidential election cycle (first-round elections will
take place in September 2011)\.
Another aspect of the operation that could benefit from follow-up relates to customs
reform and redefining the role of customs officials in order to further reduce corruption
and accelerate customs clearance times\. Ongoing monitoring through the Bankâs Doing
11
Business Indicators based on investment climate surveys will help to track developments
in this area\.
In terms of consolidated banking supervision, although all the key profiles for risk-based
supervision have been completed and applied to all financial groups, the unfinished
agenda relates to supervision of economic conglomerates, which may de facto control
financial institutions\.
3\. Assessment of Outcomes
3\.1 Relevance of Objectives, Design and Implementation
The development objectives of the programmatic DPL series remain highly relevant
today in the context of the ongoing challenges facing Guatemala\. These objectives were
fully aligned with the Governmentâs development priorities as articulated in the August
2008 Country Partnership Strategy Report, namely to (i) enhance economic fundamentals,
(ii) sustain growth and productivity, and (iii) expand opportunities for vulnerable groups\.
Each of the policy areas supported by the 1st and 2nd DPLs falls under these three over-
arching objectives\.
The operationsâ design was consistent with the stated program development objectives,
and the DPLsâ implementation proved to make an important contribution toward
implementing the Governmentâs program\. Numerous counterparts in Guatemala noted
the vital role that the Bankâs development policy lending plays, not so much in setting the
Governmentâs priorities, but rather in helping the Government achieve its priorities\. The
policies reflected in the 1st and 2nd DPL prior actions were measures already identified by
the Government as essential to their strategy; incorporating them into the framework of a
DPL was effective in accelerating their implementation and helped the Government
remain focused on its medium-term objectives and the near-term measures needed to
reach them\.
Although the number of components in the DPL matrix is large, they represent a sound
and consistent framework with a strategically appropriate and achievable scope\. Because
the DPLs were the Bankâs main instrument for country dialogue, it was important to
cover the range of relevant policy areas rather than focusing more narrowly\. As
mentioned above, a DPL is confined to short-term measures due to its short time-horizon\.
But some reforms require more long-term input\. When assessing the DPLsâ outcomes,
therefore, it is important to acknowledge when expected results are unrealistic within the
given time-frame\.
The Bank demonstrated its responsiveness to the changing economic environment by
revising policy actions to address specific challenges stemming from the economic crisis\.
The Bank also restructured its support to accommodate the Governmentâs greater
financing needs, increasing the loan size of the 2nd DPL and eliminating the planned 3rd
DPL in order to consolidate support at a critical time\. The Bankâs response was mirrored
by greater financial support from the IMF and IDB as well\. By enlarging the overall
12
programmatic DPL lending package to US$550 million and accelerating the
disbursement schedule, Bank support helped the Government to meet the demands of the
economic crisis and ensure that social expenditures were protected despite a sharp decline
in tax revenues\. The DPL series also responded to the need to help mobilize credit to
micro- and SMEs because of the negative effect of the global economic downturn and
credit crunch on the Guatemalan economy and, in particular, firmsâ access to credit\. The
scope of the 2nd DPL was expanded to support the creation of a Movable Assets Registry
under which firms can use movable assets as collateral when borrowing\.
3\.2 Achievement of Program Development Objectives
I\. Promote macroeconomic stability and financial sector deepening and maintain fiscal
space for priority spending
The series of programmatic DPLs helped to promote macroeconomic stability through
the direct provision of budget financing to maintain fiscal space for priority spending
areas, but also by assisting fiscal modernization to increase revenue collections and
reduce tax evasion\. The improved tax administration system now requires electronic
submission of business withholding taxes\. The shift to the digital format vastly improved
accuracy and efficiency, and allows cross-checking among the profit tax, VAT and the
ISO tax regimes and the associated exemptions, as well as performing other controls\.
The combined impact of these administrative control measures added 0\.3 percent of GDP
to fiscal revenues in 2010\. The implementation of the transitional Solidarity tax to
replace the IETAAP also maintained revenues (equivalent to over 1 percent of GDP),
which helped the Government to meet the revised targeted tax revenue outcome indicator
for 2010 (total tax revenues were 10\.5 percent of GDP)\.
Even though the fiscal target was eased under the 2nd DPL to account for the crisis-
induced fall in revenues, and despite the shift in policy measures away from the
envisaged tax increases (inappropriate during a downturn because it would counteract
expansionary policies) to more immediate tax administration measures, the Government
still missed the 2010 target deficit of 2\.8 percent of GDP\. The DPLsâ accommodative
stance and the revenue gains from anti-evasion efforts proved insufficient to offset the
effects of the crisis, as the fiscal deficit reached 3\.3 percent of GDP\.
With respect to promoting financial sector stability and deepening, consolidated
supervision has been implemented in 9 of the 11 financial groups licensed by the Banking
Superintendency as of April 2011, and all four key profiles for risk-based supervision
(institutional, financial, risk, and control environment) have been completed and applied
to all financial groups, surpassing the outcome indicator\. The Banking Superintendency
is in the process of finalizing a single matrix for consolidated risk-based supervision and
determining one overall risk rating for each financial group (initially the work on risk-
based and consolidated supervision started in parallel with two different manuals that are
being merged)\.
Central Bank efforts to standardize issuance of short-term debt reflects some progress
toward financial market deepening, consistent with the targeted outcome indicators\.
13
However, weaknesses remain which limit the deepening of bond markets in line with
longer-term objectives\. For example, banks are exempt from a tax on government bond
transactions, which has concentrated 90 percent of domestic public debt holdings in four
banks, thus limiting broader private sector participation\.
The registry of movable assets had a directly positive effect on financial market
development by increasing the amount of credit in the economy\.2 Although total credit
stagnated in 2009-2010 under the global credit crisis, the registry increased the amount of
movable guarantees so that the share of credit guaranteed by movable collateral reached
4\.1 percent of total credit as of December 2010, from a base of zero in 2008, exceeding
the outcome target\.
II\. Improve governance and transparency of public financial management and
expenditures
The step of institutionalizing the Governmentâs commitment to greater transparency by
creating the Vice Ministry for Fiscal Transparency and Evaluation provided an important
signal\. But this commitment was made more credible by the adoption of the Access to
Public Information Law, which empowers citizens to hold Government accountable for
its use of public resources\. Specialized offices have been created in 85 percent of Central
Government agencies to facilitate access to public information, exceeding the outcome
indicator\.
This success contrasts with the continued challenge of making more transparent the
operations of public trust funds to facilitate greater efficiency and accountability\. The
policy measures supported by the DPLs introduced monthly financial reporting and
annual external audits of trust funds\. Whereas this represents a significant improvement
relative to 2008 when no financial oversight was performed, external audits are not
available for all trust funds, and it is not possible to judge whether the reports are being
used to improve their management\. Government commitment to transparency would
have been more credible if, for example, the operations of publicly funded trust funds had
not expanded so much during the lifetime of the operations without concomitant legal
reforms to regulate their use\. Whereas trust fund oversight was strengthened with the
support of the DPLs, their continued use has not been curbed, implying that progress vis-
à -vis the development objective has been limited\.
In terms of strengthening the public financial management and procurement systems, the
MoF launched an internal reorganization to absorb, operate and upgrade SIAF and
Guatecompras, but they have yet to fund the absorption of current staffing levels financed
until now by external sources\. Whereas Guatecompras has to a degree increased
2
To isolate the impact of the registry, we measure the market share of credit supported by the
registry in total credit\. We proxy the amount of credit supported by the registry by the amount of collateral
registered\. Since the registry does not measure collateral by type of borrower (i\.e\., small vs\. large) we
measure the effect on total credit\.
14
transparency through recording Government purchases on a public website, assessments
of the effectiveness of Guatecompras show that only a small percentage of direct
contracting occurs through Guatecompras Express, implying minimal success in
expanding the use of competitive bidding\. Moreover, a large share of public contracting
still occurs through pre-existing contracts, public trust funds and NGO purchases, iner
alia, which are exempt from the procurement rules\.
Real progress is being made, however, on the results-informed budgeting system\.
Results indicators have been developed for three-quarters of all Ministries, representing
97 percent of Central Government expenditure, nearly double the outcome target\.
The reality is that transparency in Guatemala has been very low but in recent years the
Government has taken steps to improve it\. On balance, the DPL measures helped to
improve transparency, albeit only moderately\.
III\. Strengthen the effectiveness of the Mi Familia Progresa Conditional Cash Transfer
Program through improved execution and targeting
The policy actions supported by the 1st and 2nd DPLs had a very positive impact on the
CCT programâs targeting and transparency, primarily through the introduction of proxy
means testing to identify eligible beneficiaries\. The procedures for verifying co-
responsibilities of beneficiaries (i\.e\., confirming school and health check attendance) are
well established, and will soon be greatly improved through the use of scanning
technology to digitize verification\. The Mi Familia Progresa program was extended into
more than 270 municipalities to reach over 900,000 families in a very short period of
time\. This rapid expansion raises questions about execution effectiveness, but the
programâs simple design (e\.g\., flat benefit levels distributed to family units) and likely
modest leakages (due to very high poverty rates in rural areas) mitigates these concerns\.
The Government confirmed that co-responsibilities are being verified for all recipients
through a network of local representatives, double the outcome indicator target of 50
percent\. It is not feasible to verify the exact proportion of extreme poor, however, due to
lack of updated survey data on household living standards (a new survey will be launched
in the coming months)\.
IV\. Promote sustainable growth and productivity
The tax modernization measures supported by the DPLs â in particular the development
and distribution of software for web-based business tax withholding â has directly
contributed to higher productivity by reducing the amount of time required to make tax
declarations, and at the same time improving accuracy and reducing evasion through
cross-checks\. The share of firms submitting tax declarations electronically has risen from
34 percent in 2007 to 42 percent in 2010, surpassing the targeted 37 percent\.
Exporting and importing firmsâ productivity has also been stimulated by the new
Customs Management System, SAQBâE, which has been implemented in 15 ports (out of
18 in total)\. By digitizing the customs clearance documentation requirements, clearance
15
times for imports fell from 19 to 17 days (a 10 percent drop) and export clearance times
fell from 18 to 17 days (a 5 percent decline), meeting the outcome target\. There remains
room for further improvement, however, as opportunities for corruption continue to be
present\.
3\.3 Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
The overall outcome rating reflects two criteria for measuring success: the extent to
which target outcome indicators were met, and the extent to which program development
objectives were achieved\. As stated previously, most outcome indicators were met, with
only minor shortcomings (and with respect to the fiscal deficit, these were largely
exogenous)\. Progress toward certain development outcomes was more problematic,
however, reflected by moderate shortcomings in implementation\. In particular,
qualitative progress towards better governance and transparency in public financial
management and expenditures was below expectations relating to public procurement and
trust fund oversight\. The overall outcome rating is therefore moderately satisfactory\.
3\.4 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
This operation addresses poverty and welfare both indirectly â through more efficient use
of public resources â and directly â through measures to improve social safety net
targeting\. There have been no new measures of poverty since the inception of the 1st
DPL, but the CCT program has rapidly increased its scope, currently providing income
support to approximately one-third of the population\. Whereas the net impact on primary
enrollment may be very small, there is some evidence to suggest that the program is
helping to keep students enrolled in school longer, and there are almost certainly gains in
physical health for beneficiary families\. Anecdotal evidence also suggests that rural
women are benefiting through increased empowerment\. Otherwise, gender issues are
mainstreamed rather than being targeted specifically\.
(b) Institutional Change/Strengthening
The programmatic DPL series has a strong focus on institutional development, with a
majority of its measures aimed at strengthening Governmentâs institutional capacity\. For
example, modernizing tax administration and streamlining its processes not only
increases revenues and spreads the tax burden more equitably, but also helps to increase
confidence in the Government and legitimize its tax and spending functions\. The
Banking Superintendency has been highly successful in upgrading its supervision
capacity by establishing more thorough criteria for overseeing the banking sector\.
Further capacity building needs to focus on extending supervision to the
conglomerates/economic groups which may control the financial groups and include non-
financial companies that may create risks to financial entities\. Guatecompras, in contrast,
has not achieved the goal of transparency and competition in Government contracting,
implying the need for deeper institutional reform\. Nevertheless, the system provides the
16
framework for increased transparency and competitiveness in the future through on-line
bidding capability and publication of data\.
Regarding the registry for movable assets, the first two years have been successful in
terms of development, but additional measures to increase its efficiency and effective
targeting of SMEs will be essential to strengthen institutional capacity further\. Planned
measures include a recently launched communications campaign to market itself to small
businesses and financial institutions that usually service small businesses, such as
cooperatives, and making the registration process available on-line\. With respect to the
CCT program, the targeting and program execution procedures have been strengthened,
and should improve further with the planned electronic verification platform and the
forthcoming household survey to provide a new proxy means test for identifying eligible
households and in particular the extreme poor\.
The operationsâ long-term development goals aim at strengthening more far-reaching
institutions such as the rule of law and transparency\. The Access to Public Information
Law provides a real impetus to civil society groups to mobilize pressure to hold
Government accountable and make more efficient use of public resources\. And although
the public trust fund operations remain somewhat obscure, they are at least on the radar
screen and a majority is being monitored on an ex-post basis, the first step in recognizing
the scope of the problem and the incentive challenges in trying to address it\.
4\. Assessment of Risk to Development Outcome
Rating: Substantial
The risk that development outcomes will not be maintained is substantial and stems from
many sources\.
The program objective to promote macroeconomic stability and enhance fiscal space for
priority spending depends on both external and internal factors\. The Guatemalan
economy is vulnerable to negative exogenous shocks in the global economic environment,
affecting trade and domestic demand, which in turn affects available public financing\.
Whereas the Governmentâs prudent macroeconomic policies will help to mitigate these
effects, the impact of the recent economic crisis demonstrates that macro balances remain
vulnerable\. Natural disasters represent another source of risk that threatens the
macroeconomic environment\. Internal factors that present the largest risks derive from
the political environment and Government ownership\. Fiscal reform efforts have stalled
in the past, and the currently rancorous political climate and the upcoming Presidential
elections have complicated meaningful policy debate and any potential consensus-
building\.
Although important gains have been made in improving the governance and transparency
of public financial management and expenditures, with key systems in place to facilitate
open and efficient management, the political will at the leadership level to embrace these
processes and embed the concept of transparency into the institutional fabric depends
upon the management teams in key ministries to implement transparency initiatives\. But
17
the degree to which these teams can achieve a lasting impact is hindered by the frequent
personnel changes that characterize Guatemalan politics\. The Access to Public
Information Law and the creation of information offices in most ministries can help to
mitigate backtracking in this arena, but the demand for public information is relatively
low and civil society networks are weak\. Long-term outcomes will depend on
stakeholder ownership in terms of political will on the inside and citizen demand on the
outside, both difficult factors to manage\.
The Mi Familia Progresa Conditional Cash Transfer Program is well established
throughout much of the country and execution and targeting continues to improve\. It has
been financed through ad-hoc budget sources until now, pulling budget from other line
items to fund the Mi Familia Progresa Trust Fund\. The program has broad support across
the political spectrum, but its precarious financing situation and high cost (accounting for
2 percent of the budget) present a negative risk to its future operation\. The probability of
the program being cut is low, but there is a small probability that targeting will suffer due
to weak governance\. On the other hand, given that the program is geographically
concentrated in areas of very high poverty, total leakage is likely to be small\.
Improvements in the business environment have contributed to Guatemalan firmsâ
productivity and their ability to compete in global markets\. The customs clearance
process is a fundamental component of the trading environment, and the new electronic
system has successfully reduced the administrative burden on importing and exporting
firms\. Nevertheless, corruption remains an issue\. Technical solutions can help to further
automate the clearance process, but a lasting positive outcome will only emerge when
person-to-person interface with customs officials is minimized\.
5\. Assessment of Bank and Borrower Performance
5\.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Satisfactory
The programmatic DPL series was prepared in close consultation with the Government
and stakeholders such as civil society groups and international donors\. The policy
measures were identified on the basis of extensive analytical work and in coordination
with reforms being supported by other donors in order to maximize the development
impact and at the same time provide complementary and therefore reinforcing
mechanisms of support, constituting a strategic approach\. The operation was conceived
to help the new Colom administration achieve an ambitious program of public sector
reforms and strengthen public institutions in a way that also increased transparency\. The
other key structural elements of the Guatemalan economy that needed to be addressed by
the DPLs were poverty and social inclusion, and growth and productivity\. The Bank
team designed the operations specifically to address the institutional environment with a
view to strengthening institutional capacity in a sustainable way\.
The Bank demonstrated a high degree of flexibility in adapting the DPL parameters â
both policies and financing structure â to a changing country context\. Whereas overall
18
development objectives did not change, the policy actions to achieve them in a climate of
macroeconomic and fiscal crisis needed to be revised\. Furthermore, additional budget
support was needed to fill the financing gap, and the Bank, in conjunction with the IMF
and the IDB, were able to meet these new demands\.
The operations were prepared with a full appreciation and articulation of the risks to
program outcomes, and included mitigation measures to address these risks (some more
successfully than others)\. The overall implementation and M&E arrangements were
broadly effective, although a few of the monitoring and evaluation criteria proved
problematic in terms of measurement\. Recall, for example, that it is not feasible to verify
the exact proportion of extreme poor in the CCT program due to the lack of updated
survey data on household living standards\. Another indicator that is difficult to measure
because it requires a subjective assessment relates to the oversight of public trust funds\.
The indicator seeks to measure the use of monthly financial reports and annual external
audits by the MoF and the Auditor General to improve trust fund management and
efficiency\. The discussion above also acknowledges a degree of disconnect between the
short-term outcome indicators and the long-term development objectives\.
Some components of the policy matrix sought to embed the reforms by implementing
them across agencies, thereby fostering inter-agency cooperation\. But effective
cooperation is difficult in the best of times, even with the best intentions\. The DPLs have
indeed resulted in increased cooperation, such as between the MoF and the Central Bank
in issuing public debt, but if the objective is better coordination, then an explicit incentive
mechanism may be more effective in encouraging it\.
(b) Quality of Supervision
Rating: Satisfactory
As mentioned above, the operationsâ design emphasized monitoring and evaluation of the
reforms, both implicitly and explicitly\. Because the operations formed a programmatic
series, sequencing the two operations enforced close supervision in that preparation of the
2nd DPL was contingent on the results of the 1st DPL\. Explicit attention to supervision is
reflected not only in the target indicators but also was demonstrated by the Bankâs
responsiveness to changing country circumstances and the Governmentâs request to alter
the structure and magnitude of the loan\.
The ISR prepared following the closing of the 2nd DPL was very candid and thorough in
its performance assessments\.
19
(c) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
Both quality at entry and quality of supervision were satisfactory, making the overall
Bank performance rating satisfactory\.
5\.2 Borrower Performance3
(a) Government Performance
Rating: Moderately Satisfactory
The operation was designed to align fully with the Country Partnership Strategy and the
incoming Governmentâs objectives\. The Governmentâs program resulted from a
consultative process, including particular consultation with the private sector on fiscal
reform\. Government ownership and commitment was strong from the outset\. The
difficult political environment and resulting failure of the originally proposed fiscal
reform package led the Government to scale back its reform proposal\. Nevertheless,
significant progress was achieved, primarily through tax administration improvements
which not only raised tax revenue and reduced evasion, but also built institutional
capacity\.
The macroeconomic environment in which the 1st DPL was prepared was characterized
by strong growth and sound macro balances\. The global financial crisis and economic
slowdown began to drag down Guatemalan growth in 2008 and 2009, with significant
implications for Government service provision (tax revenues fell sharply) and poverty
(remittances suffered a significant decline), which in turn helped to shape the 2nd DPL\.
The Government maintained its prudent macroeconomic policy stance\.
There have been moderate obstacles on the transparency front, in particular relating to
Guatecompras and public trust funds\. The Guatecompras system has indeed increased
transparency through recording Government purchases on a public website, but efforts to
expand the use of competitive bidding have stalled; only a small share of purchases
eligible for direct contracting occurs through Guatecompras Express\. Moreover, pre-
existing contracts that can be renewed automatically do not need to be processed through
Guatecompras\. Public trust funds also fall outside Government procurement rules\. This
was the rationale behind increasing transparency through the introduction of monthly
monitoring and annual external audits of trust funds\. Some audits remain to be
completed, and it is unclear whether the monitoring reports are being used to improve
trust fund management and efficiency\. The Government has met its commitment to
establish information offices in a majority of Central Government agencies\.
3
For a Development Policy Loan providing budget support, the borrower consists of the
government, which also acts as the implementing agency\.
20
Borrower performance has also been satisfactory vis-Ã -vis financial sector outcomes\.
The registry for movable assets has made a strong impact in its two years of existence,
and the Banking Superintendency has consistently expanded risk-based supervision and
consolidated supervision\. Mi Familia Progresa remains the Governmentâs flagship
program, reflected by its rapid expansion and consistently high profile\. The Government
has been receptive to external advice on implementation and has sought timely resolution
of implementation obstacles\.
The Government has met most of the targeted outcomes, demonstrating drive for results
except in the areas of governance and transparency in public financial management and
expenditures, where results were below expectations\. Overall, Government performance
merits a moderately satisfactory rating\.
6\. Lessons Learned
The implementation challenges relating to the fiscal reform component of the 1st and 2nd
DPLs illustrate the difficulties of achieving program objectives that depend on legislative
approval, particularly in the area of tax reform\. Repeated attempts to increase revenue
collections through raising tax rates and expanding the tax base have failed in the past,
and continue to face stiff opposition\. Moreover, it is important to acknowledge the
intrinsic difficulty of implementing redistributive tax reform in a highly unequal society
and within a short time horizon\. The experience of the 1st and 2nd DPLs implies that the
Bank could be more modest in its expectations, and could foster support for reform by
identifying and helping build constituencies with shared interests or who stand to gain
from reform\. Another related lesson that can be drawn from the DPLs is that although
the planned fiscal reforms would have generated significant revenues, measures to
improve tax administration can also generate large revenue gains, and are politically
more palatable\. In Guatemala, introducing tax controls and modernizing tax systems not
only increased efficiency but had a big pay-off through reducing evasion\.
Another lesson that can be derived from the operation relates to the policy measures on
increasing the transparency of public trust funds\. The stated objective was to increase
transparency in the hope that eventually this would create pressure to increase oversight
and efficiency\. But this result has yet to come to fruition\. The real objective was to
ensure that all public resources are spent in a transparent way consistent with
Government priorities in order to minimize leakages\. Although audits can potentially
help in this regard, they do not address the underlying reasons for continued and
expanding use of public trust funds (such as prohibitive procurement rules, for example)\.
Designing policies that take into account these deeper impediments will have a greater
impact\.
Despite uneven progress in increasing transparency and accountability, even modest
advances can have a significant impact, especially when starting from a very low level\.
For example, the passage of the Access to Public Information Law overcame initial
opposition precisely because of corruption scandals, which drew the ire of the public and
thus provided the impetus for the law to pass\. In a similar vein, even though the
21
application of Guatecompras has been imperfect, it has provided access to information on
unfair contracting practices that, once made public, generated support for greater
transparency\.
Success in strengthening the supervision of the financial sector was not achieved simply
through the policies supported by the 1st and 2nd DPLs, but rather as a result of a larger
program of Bank support that has been sustained over time\. The implementation of
consolidated supervision is a long-term process reflecting the importance of financial
groups in the financial system\. As highlighted in the CPS, complex institutional issues
may require support across various instruments and over an extended period of time\.
This complementarity of short-term and long-term support underscores the inherent
limitations of DPLs to achieve long-term development goals because of the timing
inconsistency between program development objectives and the short-term policy
interventions designed to achieve them and, because of the short timeframe of DPLs, the
short-term outcome indicators used to assess progress\. For example, real progress in
transparency of Government purchases takes years of reform effort at the institutional
level; it is unreasonable to expect results as a consequence of short-term policy
interventions\. This timing paradox complicates program design and makes the selection
of appropriate outcome indicators particularly challenging\.
The final lesson drawn from the implementation experience of the DPLs stems from the
request to increase financing in the 2nd DPL in order to address the demands of the
economic crisis\. The DPL provided a lot of flexibility in a moment of need\. Specifically,
the Bankâs flexible response helped to support pro-cyclical fiscal policy by enabling the
Government to continue to function and at the same time protect priority spending\.
Whereas this is not a fundamental objective of development policy lending â which by
definition focuses on long-term structural issues â it nevertheless was effective in this
case by sustaining progress in the long-term reform agenda in the face of negative shocks\.
22
Annex 1 Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
P112312 â First Fiscal and Institutional Development Policy Loan
Responsibility/
Name Title Unit
Specialty
Lending
Keisgner Alfaro Sr Procurement Specialist LCSPT
Juan Belausteguigoitia Lead Environmental Economist LCSEN
Enrique Fanta Ivanovic Sr Public Sector Specialist LCSPS
Antonio Blasco Sr Financial Management Specialist LCSFM
Sr Disaster Risk Management
Armando Guzmann LCSUW
Specialist
Mariluz Cortes Consultant IEGCC
Stephen Brushett Lead Transport Specialist LCSTR
Cecilia Corvalan Sr Transport Economist LCSTR
Martha Garcia Staff Assistant LCSPE
Michael Geller Sr Program Assistant LCSPE
Sr Private Sector Development
Michael Goldberg LCSPF
Specialist
Yira Mascaro Lead Financial Sector Specialist AFTFE
John Newman Lead Poverty Specialist SASEP
Enrique Pantoja Sr Land Administration Specialist LCSAR
Tova Solo
Jose Eduardo Gutierrez Ossio Consultant LCSPE
Alberto Leyton Representative LCCSV
Manuel Salazar Sr Social Protection Specialist AFTSP
Pierre Werbrouck Consultant LCSAR
David Gould Lead Economist LCSPE Task Team Leader
Carlos E\. Sobrado Senior Poverty Specialist EASPR
David Varela Sr Public Sector Specialist LCSPS
Waleska Garcia-Corzo Co-Task Team Leader
P114373 - Second Fiscal and Institutional Development Policy Loan
Responsibility/
Name Title Unit
Specialty
Lending
Elizabeth Currie Lead Financial Officer BDM
Enrique Fanta Ivanovic Senior Public Sector Specialist LCSPS
Anna Fruttero Economist LCSHS
Jose Eduardo Gutierrez Ossio Consultant LCSPE
Alberto Leyton Representative LCCSV
Manuel Salazar Sr Social Protection Specialist AFTSP
Rashmi Shankar Senior Economist LCSPE Co-Task Team Leader
23
Ilias Skamnelos Special Assistant FPDVP
Carlos E\. Sobrado Senior Poverty Specialist EASPR
Supervision
David Gould Lead Economist LCSPE Task Team Leader
Lead Financial Officer/Sovereign
Elizabeth Currie BDM
Debt
Barbara Cunha Economist LCSPE
Enrique Fanta Ivanovic Senior Public Sector Specialist LCSPS
Alejandro Alcala Gerez Sr Counsel LEGLA
Anna Fruttero Economist LCSHS
Maria Lucia Guerra Bradford E T Consultant LCSPE
Jose Eduardo Gutierrez Ossio Consultant LCSPE
Alberto Leyton Representative LCCSV
Reynaldo F\. Pastor Chief Counsel LEGLA
Manuel Salazar Sr Social Protection Specialist AFTSP
Rashmi Shankar Senior Economist LCSPE
Ilias Skamnelos Special Assistant FPDVP
Carlos E\. Sobrado Senior Poverty Specialist EASPR
Marie Georgiana J\. Valent Vidal E T Consultant LCSPE
Ricardo Antonio Tejada Financial Officer BDM
Elizabeth Ruppert Bulmer Sr\. Country Economist LCSPE ICR Team Leader
Caroline Cerruti Financial Sector Specialist LCSPF Financial sector, ICR
Christian Schuster ET Consultant LCCGT Transparency, ICR
(b) Staff Time and Cost
P112312 â First Fiscal and Institutional Development Policy Loan
Staff Time and Cost (Bank Budget Only)
Stage US$ Thousands (includes travel and
No\. of Staff Weeks
consultant costs)
Lending
FY09 22 90\.3
FY10 0 0\.0
Total: 22 90\.3
P114373 - Second Fiscal and Institutional Development Policy
Lending
FY09 23 113\.7
FY10 9 50\.7
Total: 31 164\.4
Supervision
FY10 16 98\.3
FY11 8 76\.6
Total: 24 174\.9
24
Annex 2\. Beneficiary Survey Results
(N/A)
25
Annex 3\. Stakeholder Workshop Report and Results
N/A
26
Annex 4\. Summary of Borrower's Comments on Draft ICR
[The following comments were translated from Spanish\.]
Initially, the series of DPLs proposed in the Country Partnership Strategy with the World
Bank comprised 3 operations for a total amount of US$500\.0 million\. However, only 2
operations were signed and disbursed\. The DPL series satisfactorily achieved the
objective of contributing to the main policy objectives of the Government through: 1)
support for strengthening governance, transparency and monitoring and evaluation of
major public expenditure and investment; and 2) supporting macroeconomic stability and
greater fiscal space for priority expenditures\.
ï The series of Fiscal DPLs was partially successful\. While in some areas
supported by the DPL series the results were successful (strengthening tax
administration, strengthening the administration and supervision of the financial
sector, governance and transparency, improving the investment climate), the
results were not very encouraging in the area of fiscal reform (increased public
spending and modernizing public financing), due to the fact that a series of
reforms pushed by the Government at the end of 2008 was not approved\.
ï This series of DPL operations helped to maintain a continuous dialogue
between the country and the Bank\. The DPL series served as a two-way
communication channel between the Governmentâs administration, the Bank and
the international community on progress in the countryâs development strategy
and in the reform policies being encouraged\.
ï The resources of the 1st and 2nd DPLs were used to tend to budgetary
requirements\. In this sense, they financed various actions in the sectors listed in
the following table\.
ï Non-approval of the Fiscal Reform Initiative presented to Congress made it
difficult to manage and negotiate a third Fiscal DPL\. At the end of August
2010, the World Bank informed the Government that the actions and reforms
proposed for a 3rd DPL were insufficiently substantive to cover such an operation\.
Moreover, it indicated that the total level of budget support granted to Guatemala
had reached US$550\.0 million in the last two years\. In this regard, the World
Bank â conscious of the additional costs the Government must incur to cover
reconstruction needs â proposed financing under an emergency loan in the
amount of US$100\.0 million for Education and Health (currently in Congress
pending approval)\.
27
Préstamos de Apoyo Presupuestario Â
Sectores beneficiadosÂ
2009 2010
Desarrollo Rural Desarrollo Rural
Agua  y saneamiento Agua  y saneamiento
Mantenimiento y reconstrucción de red vial Mantenimiento y reconstrucción de red vial
DPLÂ 1
Sector agricola Sector agricola
Catastro Catastro
Servicio de Deuda Pública Medio ambiente, manejo de cuencas
Construcción de escuelas
Desarrollo Rural Desarrollo Rural
Servicios de seguridad ciudadana Servicios de seguridad ciudadana
Educación Educación
Servicios de salud Servicios de salud
DPL 2 Producción agricola Producción agricola
Recursos naturales Recursos naturales
Catastro Catastro
Mantenimiento y reconstrucción de red vial Mantenimiento y reconstrucción de red vial
Sistemas de comunicaciones Sistemas de comunicaciones
28
Annex 5\. Comments of Cofinanciers and Other Partners/Stakeholders
N/A
29
Annex 6\. List of Supporting Documents
Acción Ciudadana, 2010\. �ndice de Acceso a la Información Pública del Organismo
Ejecutivo del 2010, Guatemala City, 2010\.
âRendición de Cuentas 2010â?, presentation by Mi Familia Progresa, SecretarÃa de Obras
Sociales de la Esposa del Presidente (SOSEP), March 2011\.
âAnálisis del programa âMi Familia Progresaâ con énfasis en al ámbito educativoâ?,
Empresarios por la Educación, Guatemala City, March 2011\.
30
IBRD 33413R1
91°W 90°W 89°W 88°W
G UATEMA LA
SELECTED CITIES AND TOWNS
DEPARTMENT CAPITALS
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RIVERS GUATEMALA
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Sipacate San José
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0 20 40 60 Kilometers
To
La Unión
0 10 20 30 40 50 Miles To
La Unión
This map was produced by the Map Design Unit of The World Bank\.
The boundaries, colors, denominations and any other information PA CIFIC O CEA N
shown on this map do not imply, on the part of The World Bank
Group, any judgment on the legal status of any territory, or any
endorsement or acceptance of such boundaries\.
13°N 13°N
92°W 91°W 90°W 89°W 88°W
NOVEMBER 2006 | REVIEW |
P008974 |  ICRR 10393
Report Number : ICRR10393
ICR Review
Operations Evaluation Department
1\. Project Data :
OEDID :
OEDID: L3177
Project ID : P008974
Project Name : Second Agricultural Extension and Applied Research Project
Country : Turkey
Sector : Agricultural Extension
L/C Number : 3177-TU
Partners involved :
Prepared by : Madhur Gautam
Reviewed by : Helen Abadzi
Group Manager : Gregory K\. Ingram
Date Posted : 06/30/1999
2\. Project Objectives, Financing, Costs and Components :
Objectives : (i) to foster increased productivity and agricultural incomes through improved flows of information
concerning their needs and problems from farmers to the Ministry of Agriculture, Forestry and Rural Affair's (MAFRA)
extension/research services, and the transmission of improved technology from extension /research to the farmers\.
(ii) contribute to the institution building and strengthening of the extension /research services of MAFRA, including a
pilot program for women farmers\. (iii) pilot a program to improve the animal health services \. Components : (i)
upgrade provincial agricultural extension services; (ii) strengthen extension-research linkages and support 14
research institutes to backstop the extension service; (iii) training and technical assistance to MAFRA for project
implementation; and (iv) improving monitoring and evaluation of the provincial agricultural extension services \.
Financing and costs : At appraisal, total costs were anticipated at US$ 145\.4 million, of which IBRD was to finance
US$ 63\.0 million\. The loan was approved in March, 1990\. Final projects costs were US$ 69\.4 million, with IBRD
financing US$ 47\.4 million\. The remainder of the IBRD loan was canceled at closing despite an extension of one
year till June 30, 1998\.
3\. Achievement of Relevant Objectives :
The project partially achieved its objectives \. Several features of the original project design were modified during
implementation\. Based on a number of surveys, conducted for the completion report, the ICR notes increased
production, and to a lesser extent in livestock production, during the project period and attributes these changes to
improved extension services \. However, the changes made to the project design are not clear from the ICR, nor is it
clear how the project contributed to the observed changes \. The majority of the gains accrued to medium and large
farmers, who were better placed to provide feedback to research and extension \. The pilot program for women's
extension services was not effective \. On the institutional development side, research -extension links were largely
non-functional for lack of ownership by the research establishment; the extension service faced increasing fiscal
difficulties over time; and implementation varied by provinces due to uneven managerial capabilities \. The
sustainability of the extension system, both fiscally and politically, is uncertain \. Nevertheless, the extension service
has shown flexibility in modifying the extension approach during implementation, and has actively sought a
partnership with the private sector in the face of fiscal difficulties \. These are positive developments and likely had a
positive impact towards the latter part of the project \. The project also provided significant training to extension staff,
which is likely to have had some positive impact \.
4\. Significant Achievements :
Institutionalization of monitoring and evaluation and MIS, including diagnostic and evaluation surveys \. Modification
of the original project design once it was apparent that the original approach was neither effective nor fiscally
sustainable\. Increasing realization by the public extension service of the benefits of collaboration with the private
sector to deliver the services and the need to introduce cost -sharing\.
5\. Significant Shortcomings :
Inability to institutionalize research -extension linkages; ineffective communication channels for the flow of
information from small farmers to research /extension; lack of broadening the focus of women's extension services
beyond the traditional home-economics orientation; the failure of the government to follow up on its agreements after
the mid-term review to introduce pluralism in the delivery of extension services and to introduce cost -sharing
mechanisms\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Marginally Satisfactory The ICR rates the project as marginally
satisfactory in the text but as satisfactory
in the ICR summary ratings table\.
Institutional Dev \.: Partial Modest Same
Sustainability : Uncertain Uncertain
Bank Performance : Deficient Unsatisfactory
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
7\. Lessons of Broad Applicability :
1\. The fiscal implications of a project for public services need to be analyzed to ensure sustainability of the projects
outcomes\.
2\. Blanket prescriptions for extension projects are not likely to be effective; project design must take into
consideration the diversity in circumstances across beneficiaries and regions \.
3\. Farmer empowerment through farmer organizations or other institutional arrangements is critical to ensure that the
extension service is demand -driven and responsive\.
4\. The follow-on phase of a project must be undertaken only after a thorough analysis of the implementation
problems and effectiveness of the initial phase to properly incorporate emerging lessons \.
8\. Audit Recommended? Yes No
Why? The contribution of the project towards the observed performance of agriculture is tenuous based
on the information provided in the ICR \. At the same time, some positive developments during implementation offer
potentially important lessons for future agricultural extension projects, e \.g\., a mid-stream change in the approach to
extension to a seemingly more cost -effective one, and the progress towards a partnership with the private sector to
deliver extension and research services \.
9\. Comments on Quality of ICR :
The ICR is based on a concerted effort at establishing results on the ground through a series of stakeholder surveys \.
It is candid in its discussion of the original design problems and other implementation issues \. However, the ICR is
difficult to read in places and could have made better use of the available evidence and presented a more detailed
analysis of the project's contributions to outcomes \. | REVIEW |
P119077 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
VN-Urban Water Supply and Wastewater (P119077)
Report Number: ICRR0022197
1\. Project Data
Project ID Project Name
P119077 VN-Urban Water Supply and Wastewater
Country Practice Area(Lead)
Vietnam Water
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IBRD-86210,IDA-49480,IDA-58170,TF- 30-Dec-2016 266,451,940\.87
56904
Bank Approval Date Closing Date (Actual)
24-May-2011 31-Dec-2019
IBRD/IDA (USD) Grants (USD)
Original Commitment 200,000,000\.00 0\.00
Revised Commitment 295,371,577\.00 0\.00
Actual 266,452,159\.93 0\.00
Prepared by Reviewed by ICR Review Coordinator Group
Cynthia Nunez-Ollero Fernando Manibog Ramachandra Jammi IEGSD (Unit 4)
2\. Project Objectives and Components
DEVOBJ_TBL
a\. Objectives
According to the Financing Agreement (FA, p\.5) and the Project Appraisal Document (PAD, paragraph 12),
the Project Development Objective (PDO) was to increase access to sustainable water services and
environmental sanitation in selected urban areas in the Project Provinces\.
This review assesses the achievement of the following objectives:
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ï to increase access to sustainable water services in selected urban areas in the project provinces\.
ï to increase access to sustainable environmental sanitation in selected urban areas in the project
provinces\.
Although the PDO outcome indicators were revised during restructuring, the level of ambition increased at
significant levels that were commensurate with the approved Additional Financing (AF, see below)\. As a
result, a split rating was not applied to the outcome\.
b\. Were the project objectives/key associated outcome targets revised during implementation?
Yes
Did the Board approve the revised objectives/key associated outcome targets?
No
c\. Will a split evaluation be undertaken?
No
d\. Components
Component 1\. Investments and Project Implementation (At appraisal: Cost: US$232\.4 million, of which
IDA - US$ 197\.0 million and counterpart financing - US$35\.4 million; At Completion: Cost: US$345\.68
million, of which IDA - US$ 310\.28 million and counterpart financing - US$35\.4 million)
Subcomponent 1A: Water Supply (US$109\.5 million at appraisal, revised to US$106\.6 million during the
restructuring, and US$108\.13 million actual)\. This component would finance an expansion of the water
networks, increase house connections for water, and increase in the water treatment and storage
capacity in seven cities and towns across seven provinces\. These were Uong Bi town in Quang Ninh
province, Ninh Binh city in Ninh Binh province, Tam Ky city in Quang Nam province, Da Lat city in Lam
Dong province, My Phuoc in Binh Duong province, Duong Xoai town in Binh Phuoc province and Phu Quoc
in Kien Giang province\. In addition, this component would finance technical assistance to design and
prepare bidding documents, supervise construction, ensure compliance with environmental and social
safeguards, and perform fiduciary functions of financial management and procurement\. This component
would also finance consulting services to generate an Operational Improvement Plan for each water sub-
project designed to strengthen each utility's management capacity and improve operations\. This component
would also finance two surveysâone at the start of the project and another at project closing--to rate
gender disaggregated consumer satisfaction on services delivered\.
Subcomponent 1B: Environmental Sanitation (US$122\.9 million at appraisal, revised to US$233\.5
million during the restructuring, and US$237\.55 million at completion)\. This component included activities to
increase wastewater collection and treatment capacity, expand drainage in flood prone areas, and increase
the number of house connections to the sewer networks as contained in Strategic Sanitation Plans (SSPs)
to be prepared for each participating city or town\. The cities and towns included were Ninh Binh city in Ninh
Binh province, Tam Ky city in Quang Nam province, Da Lat city in Lam Dong province, Duong Xoai town in
Binh Phuoc province, Bim Son town in Thanh Hoa province, Dong Ha city in Quang Tri province, and Thai
Hoa town in Nghe An province\. The city of Di An town in Binh Duong province was added at the Additional
Financing (AF) in May 2016\. In addition, this component would finance consulting services to prepare the
SSPs and detailed design and bidding documents, supervise investments activities, ensure compliance with
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VN-Urban Water Supply and Wastewater (P119077)
environmental and social safeguards, and perform fiduciary functions such as financial management and
procurement\. Similar to the water sub-projects supported under the first component, this component would
also finance the preparation of an Operational Improvement Plan for each sub-project to strengthen
management capacity, improve operations and conduct two customer satisfaction surveysâat the start and
closing of the project\.
Component 2: Technical Assistance (cost at appraisal: US$3\.8 million, of which IDA - US$3\.0 million and
counterpart financing - US$0\.8 million; at completion: US$11\.10 million, of which IDA - US$10\.0 million and
counterpart financing - US$1\.1 million)\.
Subcomponent 2A\. Institutional Strengthening and Project Monitoring (US$2\.30 million at appraisal
and at completion)\.This component would finance the Ministry of Construction's (MOC's) efforts to
develop a sector database with associated regulations that would monitor the performance of
companies; guide provinces in developing their respective SSPs; and help these provinces identify least-
cost options in collecting and treating wastewater and establishing investment priorities for water and
sanitation sector accompanied by financing plans\. This component would also finance a study tour to learn
about best practices in water and sanitation service delivery and project monitoring to be conducted by the
MOC\.
Subcomponent 2B\. Improving the Efficiency of Investments and Operations (US$1\.5 million at
appraisal and at completion)\. This component would finance consulting services delivered to the Ministry of
Planning and Investment (MPI) to develop two circulars\. The first circular on wastewater tariff would help
increase the financial viability of sanitation companies by applying cost recovery principles to their
operations\. A second circular on Operational Improvement and Investments Needs would outline the role of
the private sector to improve operational efficiency in the sector\. In addition, consulting services would
facilitate the issuance of an MPI ministerial decision for private sector participation in project areas\. This
ministerial decision would review options, identify a pilot province where a private sector transaction would
be implemented, and prepare a âPrivate Sector Participation Tool Kit\.â
Subcomponent 2C\. Water Sector Priority Investment Plan (US$7\.30 million added at restructuring;
US$7\.30 million at completion)\. This component was added to the project scope at the Additional Financing
in May 2016 for the preparation of investment studies related to water supply sources in six Mekong Delta
provinces of An Giang, Soc Trang, Bac Lieu, Ca Mau, and Kien Giang, as well as the city of Can Tho\.
These studies would identify options to improve water supply schemes that were vulnerable to climate
change variability, sea level rise, and salinity intrusion to those that would address subsidence risk in the
Mekong Delta\.
e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Cost and Financing: The project cost at appraisal was US$236\.2 million with IDA credit of
US$197\.0 million and US$35\.4 million as borrower contribution\. Additional financing in May 2016 added
US$119 million comprising IDA credit of US$50 million and an IBRD loan of US$69 million\. At completion
the cost was US$356\.68 million, comprising US$310\.2 million from IDA, US$10 million from IBRD, and
US$36\.5 million from counterpart funding\.
Dates and restructurings: The project was approved on May 24, 2011 and became effective on October 7,
2011\. A Mid-Term Review (MTR) was conducted on January 12, 2015\. The original IDA loan was closed
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VN-Urban Water Supply and Wastewater (P119077)
on December 31, 2017; one year after the original closing date of December 31,2016\. The IDA credit and
International Bank for Reconstruction and Development (IBRD) loan approved at the Additional Financing
(AF) in May 2016 closed on December 31, 2019\. In addition to the AF, there were two more Level 2
restructurings (ICR, paragraphs 20 and 34):
ï Additional Financing and First Restructuring (Level 1 - May 26, 2016): The first restructuring
provided an e(US$50 million of IDA credit and US$69 million from IBRD loan) to finance (i) the cost
overruns of US$20 million due to the appreciation of the US$ against the SDR; (ii) a new wastewater
drainage project (US$92 million) in the town of Di An in Binh Duong Province; and (iii) the
preparation of the Mekong Delta Water Supply Investment Plan (US$7 million)\. The project closing
date for the AF was December 31, 2019\. Because of the increase in the project scope, the Results
Framework was amended as follows:
o Target values of three outcome-level indicators were revised: (i) number of new piped
household connections from 42,628 to 65,872; (ii) number of people who have improved
sanitation from 263,051 to 312,051; and (iii) the increase in the satisfaction rate of
beneficiaries from a baseline of 72 percent to 80 percent, both of which were specified at the
AF\.
o Three new outcome-level indicators were added: (i) number of direct beneficiaries with a
target value of 450,382; (ii) number of female beneficiaries with a target value of 51 percent
of the total direct beneficiaries; and (iii) increase in the satisfaction rate of beneficiaries of
wastewater and drainage services in Di An town from 25\.21 percent of baseline to 80
percent\. (This was an indicator specific to Di An town added to the project scope at the AF\.)
o Two intermediate outcome indicators were revised: (i) the baseline of volume of water sold
annually was defined as âzeroâ without a change in the target value of 21\.7 million cubic
meter; and (ii) the target value of areas benefiting from increased drainage coverage and
flood protection measures was increased from 12,564 hectare (ha) to 12,618 ha\.
o Two new intermediate outcome indicators were added: (i) preparation of the Mekong Delta
water supply investment plan; and (ii) volume of Biologic Oxygen Demand (BOD) massâ
BOD is a water quality parameter measuring the amount of organic matter, or âfood,â
available in wastewater for oxygen-consuming bacteria; a lower BOD ratio means
wastewater is less harmful to the environmentâremoved by the wastewater treatment plant
in Di An town\.
ï Second Restructuring (Level 2 - December 26, 2016): The closing date of the original IDA credit
loan was extended from December 31, 2016 to December 31, 2017\. The closing date of the AF
remained at December 31, 2019\. According to the Task Team (email to IEG dated August 13, 2020),
the legal agreement for the AF above indicated that the entire project would close on December
2019\. However, the Prime Minister's Office instructed that activities prior to the AF should maintain
their original closing date of December 31, 2016\. Finally, due to delays in approving the AF financing
agreement, and delays in accessing AF resources to complete the original activities, the original
closing date was extended as requested\.
ï Third Restructuring (Level 2 - November 29, 2019): An unused credit of US$24\.42 million was
cancelled, and some proceeds were reallocated among disbursement categories\. Funds were
underutilized âbecause of delays in allocating Official Development Assistance (ODA) to provinces
caused by the fiscal situation at the time as well as lengthy processing time for approval of additional
project activitiesâ (ICR, p\.15)\.
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3\. Relevance of Objectives
Rationale
The project development objectives (PDOs) were relevant to the country's development priorities as stated
in âVietnam 2035 Visionâ and the country's Social Economic Development Plan (SEDP) for 2016-2020\. The
PDO would contribute to the SEDP goals for 2020, where 95% of the urban population and 90% of rural
population would have access to clean, sanitary water (Section III, Goals, Targets, and Breakthroughs)\.
The PDO was also relevant to the Government's plan to construct improved infrastructure systems in urban
areas (Section V, Tasks and Major Solutions, p\. 93) and respond to risks from climate change and natural
disasters through enhanced natural resource management and environmental protection (p\.105)\.
The PDOs were relevant to the countryâs goal of achieving water security by contributing to sustainable
management of its water resources\. A 2019 World Bank study, âTowards a Safe, Clean, and Resilient
Water Systemâ pointed out that by 2030, urban development, an increase in competing demand for water,
and discharge of untreated wastewater would pose stresses to 11 of the 16 river basins in Vietnam\. For
example, the countryâs Ministry of Construction confirmed that only 46 percent of urban households were
connected to the drainage system and only 12\.5 percent of domestic wastewater was treated\. If unchecked,
these challenges to water quality and productivity, including the impact from climate change on water-
related disaster risks such as subsidence and flooding could cost the country up to 3\.5 percent per year of
its Gross Domestic Product by 2035\. The study suggested policy actions and roles for the public and
private sectors in effective and sustainable water management\. The PDOs were relevant in addressing the
development problem of achieving water security\. In addition, this project included a private sector
participation (PSP) toolkit and a pilot PSP for the Binh Duong Water Supply, Sewerage, and Environmental
Company (BIWASE) (see Section 4, Efficacy below)\.
The PDO also remained relevant to the World Bank Group's (WBG) Country Partnership Framework (CPF)
for FY18-FY22\. The CPF focused on the gains offered by urbanization, and aimed to increase productivity
growth, competitiveness, and inclusiveness\. The WBG supported the Governmentâs efforts to strengthen
urban planning, management, and governance\. The CPF looked to boost capacity to deliver high-priority
infrastructure and strengthen the system of cities\. In particular, the engagement would strengthen
institutional governance in the water sector, clarify roles and responsibilities, and promote integrated
management of water resources\. In addition, the WBG support would strengthen private sector participation
in the sectorâboth as a provider of water services and as an investor\. The PDO would contribute to
achieving objectives under Focus Area 1 (enable inclusive growth and private sector participation), such as
objective 1 (strengthened economic governance); objective 2 (promote private sector development); and
objective 4 (improve planning, management, and delivery of infrastructure and land in cities)\. The PDO
would also contribute to achieving goals under Focus Area 3 - Ensure Environmental Sustainability and
Resilience through objective 9 (to promote low carbon energy generation, and reduce greenhouse gas
(GHG) emissions (by way of the pollution management aspect of the PDO) and objective 11 (to strengthen
natural resource management and improve water security (CPF, paragraph 83)\.
At appraisal, the World Bank was already engaged in the water supply and sanitation sector in the country
through the Vietnam Water Supply Development Project (P073763), which was a similar project with the
objective to improve water and household sanitation services in selected district towns and large urban
centers\. This current project benefited from the experience gained in the first project and targeted medium-
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size towns with potential to grow in terms of population because of rapid urbanization\. Therefore, given the
World Bankâs experience in the sector and the country, the project objectives were adequately challenging\.
Rating Relevance TBL
Rating
High
4\. Achievement of Objectives (Efficacy)
EFFICACY_TBL
OBJECTIVE 1
Objective
To increase access to sustainable water services in selected urban areas in the project provinces\.
Rationale
The Project Appraisal Document (PAD) did not present a theory of change (ICR, paragraph 6)\. However, the
main causality chains leading to achievement of the PDO were provided in the Results Framework (PAD,
Annex 1) and the description of the project components (PAD, paragraphs 22-33) as follows: First, the new
piped water connections, the improved service availability, and the increase in treatment plants and storage
capacity together were expected to lead to an increase in the volume of water sold to a number of urban
households in the targeted project area\. This first causal chain represented the technical sustainability of
delivering sustainable water services\. The second causal chain indicated that the piloting of a toolkit for
private sector participation, and the functional roll-out of a sector database would be expected to result in the
implementation of a Private Sector Participation sub-project and thereby also add new connections\. This
second causal chain represented the institutional sustainability of delivering sustainable water services\. The
third causal chain related to setting adequate tariffs that would cover operation & maintenance (O&M) and
depreciation costs for water utilities, effect improvements in revenue collection, or reductions in non-revenue
losses that would lead to financial sustainability of water utilities and water service delivery\. These activities,
outputs, and intermediate outcomes would lead to two main final outcomes that signal the achievement of the
PDO: (i) an increase in the number of direct beneficiaries with access to safe water and improved health and
well-being; and (ii) lower costs of water access and sustainable water services\. The projectâs Theory of
Change (TOC) was premised on assumptions tested during implementation: (i) the government would expand
the capacity of the water treatment plant and expand its distribution network; and (ii) at the central level, a
ministerial level decision would be made for private sector participation\. The TOC was valid, with logical
causality chains that included activities that were based on reasonable assumptions, and were
comprehensive, adequately scaled and properly sequenced\.
OUTPUTS:
The following output targets were met or exceeded:
New piped household water connections and direct beneficiaries: As a result of the completion of the water
supply sub-projects in seven towns, i\.e\., water treatment facilities and distribution networks, 80,173
households (covering 358,324 direct beneficiaries) were provided with new piped household water
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VN-Urban Water Supply and Wastewater (P119077)
connections (baseline 4,366 households, original target 42,628 households, revised target 65,872
households/263,488 direct beneficiaries)\. The revised target was significantly exceeded despite the
depreciation of the SDR against the US$, which was compensated by the AF and by utilities combining their
funds from other sources (ICR, footnote 13)\. Early completion (by February 2016) of infrastructure
construction and higher than expected availability of water enabled the utilities to shift focus to increasing
household water connections that resulted in a higher number of connections (ICR, paragraph 45)\.
Additionally, female beneficiaries constituted 40 to 52 percent of direct beneficiaries (target 51 percent, target
achieved by one province (Tam Ky) and almost achieved in four provinces (Ninh Binh, Phu Quo, Da Lat, and
Dong Xoal) while not achieved in two (Uong Binh and My Phuoc)\. According to the ICR (paragraph 93), the
percentage of females living in the project service area was overestimated\. Females constituted 48 percent of
beneficiaries according to the July 2017 survey and 44 percent in the March 2000 survey\.
Private sector participation
ï The Ministry of Investment and Planning (MIP) adopted criteria for selecting Private Sector
Participation (PSP) projects\.
ï A PSP toolkit was developed as targeted but a circular on the use of PSP in operating and managing
water supply services was not yet issued at closing (ICR, paragraph 68)\.
Planning and investment studies
ï The Ministry of Construction (MOC) developed a functional sector database\.
ï The Mekong Delta Water Supply Investment studies, which were added under additional financing
covering the six Mekong Delta provinces of An Giang, Soc Trang, Bac Lieu, Ca Mau, Kien Giang, and
the city of Can Tho, were not completed, but design options are available\.
ï Water security priority investments studies were prepared but not finalized at closing\. They are likely
to be completed after closing\.
OUTCOMES:
Infrastructure service delivery targets were achieved or exceeded:
ï The water treatment capacity increased from 2,089,000 cubic meters per year (cu m/year) in 2011 to
27,605,000 cu m/year in 2017 (ICR, paragraph 45)\. There was no target set related to increase in
water treatment capacity\.
ï Volume of water sold by the utilities: This increased to 27,605,000 cu m/year against a target of
21,731,000 cu m/year at AF, and a baseline of 2,089,000 cu m/year\.
ï 97\.80 percent of water supply service beneficiaries expressed satisfaction with the water supply
services received (baseline 86\.3 percent, target 90 percent, target exceeded)\. Satisfaction with
service delivery was expressed in terms of improved water pressure, continuity of service, water
quality (no chlorine smell and no turbidity) and customer service (ICR, paragraph 46)\.
Sustainability and efficiency indicator targets were achieved:
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ï All utilities achieved the target of less than 0\.9 financial working ratio (operating costs (excluding
depreciation and amortization) divided by revenue collected), except Uong Bi, which was marginally
higher at 0\.92\.
Private sector participation
ï Based on the PSP criteria, the Ministry of Planning and Investments (MPI) selected the Binh Duong
water supply sub-project to increase its water treatment capacity using a pilot private sector
participation (PSP) arrangement with the Binh Duong Water Supply, Sewerage, and Environmental
Company (BIWASE), a public company and a private firm from Binh Duong\. However, BIWASE was
converted from a state-owned enterprise into a public corporation (or âequitizedâ in Vietnam's terms)\.
Because the AF had limited resources for water sub-projects, BIWASE secured commercial funds for
increasing water treatment capacity\. Tariffs collected from water sales were used to repay the private
loan\. The Bin Duong water utility was the only water utility listed on the Vietnamese Stock Exchange
(ICR, paragraph 68)\.
Mekong Delta water supply investment:
ï At closing, following the completion of the water security priority investment studies for the six Mekong
Delta provinces and the city of Can Tho, the Ministry of Construction (MOC) was still considering
which option to implement â a regional or a provincial infrastructure\. The investment options have
been submitted to the Prime Minister's Office for approval (project task teamâs email to IEG dated
August 13, 2020\.) The technical assistance would identify options to improve the present water
supply schemes in the provinces of the region that relied primarily on systems vulnerable to climate
change variability, sea level rise, salinity intrusion, and declining ground water levels\. These factors
accelerated the subsidence risk of the Mekong Delta\.
The efficacy of the achievement of Objective 1 was rated high; the project fully achieved or exceeded its
intended outcome of increasing access to water services, while achieving financial sustainability parameters,
and the PSP pilot resulted in Bin Duong water utility being listed in the stock exchange\.
Rating
High
OBJECTIVE 2
Objective
To increase access to sustainable environmental sanitation in selected urban areas in the project provinces\.
Rationale
Theory of Change: Capacity of wastewater treatment plants would be increased, sewer networks and
drainage systems would be built, extended, and households connected to the sewer network\. The drainage
system would be expanded, and urban residents in the target area were to be connected to improved
sanitation\. A target area (expressed in hectares) would be provided with drainage and flood protection
measures\. The AF financed the construction of the Di An Town Wastewater Treatment Plant, and a target
volume of biological oxygen demand (BOD) would be removed from wastewater\. For sanitation sub-projects,
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tariffs would be collected to recover at least O&M costs (ICR, paragraph 9)\. The project would develop two
policy support circulars regarding cost recovery tariffs and financial management\. These factors would
address the financial sustainability of delivering sanitation services in the target urban areas\. These activities
would lead to the following outputs: increase in the capacity of wastewater treatment, increase in the capacity
of the sewer network and drainage in flood prone areas, and increase in the number of households connected
to the system\. These outputs would lead to intermediate outcomes such as increase in the volume of
wastewater collected, increase in the volume of BOD removed from collected wastewater, increase in the
number of residents benefiting from wastewater services, increase in the area covered by drainage and flood
protection, and in Di An town only, an increase in the rate that beneficiaries were satisfied with the services\.
The following assumptions were made in the wastewater sector: wastewater treatment plants and sewerage
networks and drainage systems would be completed, and at the central level, circulars on wastewater tariffs,
operation improvements, and investments needs would be developed\. Sustainability of the wastewater sub-
projects was not part of the results framework nor were these added at restructuring but were discussed in
the ICR (paragraphs 58-68; see also below under Outcomes)\.
However, the theory of change did not include an intervention to facilitate household connections to the
sewage system by supporting households to âchange internal plumbing, move or build manholes, and repair
interior floorsâ (ICR, paragraph 56)\. Additionally, the project did not include an information and education
campaign to raise awareness about the benefits of household connections to sewage system\.
OUTPUTS:
The following targets for infrastructure provision were exceeded:
ï In Di An town, 6,268 new household connections were achieved (baseline, 0, target, 6,000)
ï The volume of Biological Oxygen Demand (BOD) mass removed at the WWTP reached at 1,600
kg/day (baseline 0, target 1,020 kg/day)\.
The following targets for infrastructure provision were fully or partially achieved:
ï 152,928 urban residents benefited from improved sanitation (baseline 0, original target 263,051
residents, revised to 312,051 residents)\. The lower number of household connections were due to the
following: (i) In some areas, constructing the treatment plants and sewer network was prioritized over
establishing household connections â for instance, in Da Lat, the construction of the WWTP and
sewer network was prioritized over establishing household connections, and the volume of wastewater
collected and treated remains at about 45 percent of the total installed capacity; (ii) In others,
wastewater would need to be pumped because houses were located below the sewer
lines\. Therefore, households opted to continue to use their septic tanks instead; (iii) Although
connecting to the sewer lines was free-of-charge, households would have to bear the cost of a change
in internal plumbing, move or build new manholes, or repair floors; and (iv) In households with
combined systems (drainage and sewer) that discharged wastewater to the public drains, they were
reluctant to connect anew (ICR, paragraph 56)\.
ï In Di An Town, 25,072 residents directly benefited from the sub-project (baseline,0, target, 49,000)
ï Flood protection measures (with no targets provided) included raising river embankments, building
drainage canals, pumping stations, and hardened embankments around storm water detention water
bodies\. In Dong Ha, three large storm water detention ponds were created to capture a combined
140,000 cubic meter of storage\. This capacity addressed flooding across 369 hectares of urban land\.
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Flooding occurred during the rainy season (September to December)\. Floods could be as high as 1\.5
meters\. This flooding level was reduced but no figure was reported\.
Planned investment plans and studies were completed:
ï Strategic Sanitation Plans (SSPs) were completed for each sanitation sub-project to inform sub-
project feasibility studies for proposed new connections\.
ï Sustainability of wastewater and drainage sub-projects (technical, financial, and institutional) were not
included in the Results Framework\. However, the Monitoring and Evaluation (M&E) system
established by the project helped central and local agencies monitor sector development to inform the
sustainability aspects of the sanitation sub-project investments\.
ï The Ministry of Planning and Investments (MPI) prepared a circular on methods for estimating and
implementing wastewater tariff\. The Ministry of Construction (MOC) issued this circular at the national
level\. Seven of the eight Provincial People's Committees (PPCs) have agreed to charge all customers
wastewater tariff\.
OUTCOMES:
Environmental services delivered exceeded targets:
ï 72 percent of customers expressed satisfaction with services received (baseline 60\.4 percent, target
70 percent)\.
ï 70 percent of Di An wastewater treatment plant customers expressed satisfaction with the drainage
and wastewater services received (baseline 25\.21 percent, target 50 percent)
Targets for environmental services were fully or partly achieved:
ï 8,582 hectares (or 68 percent of the revised target area) benefited from drainage coverage and flood
protection measures (baseline 0, original target 12,564 hectares, revised target 12,618 hectares)\.
According to the ICR (paragraph 57), the target was not achieved because even after being informed
by the SSPs and discovering that the target area for drainage sub-projects was lower than determined
at appraisal, the AF did not reduce the target\. However, the evidence supported the argument that the
groundwork has been laid and therefore there is a likelihood that the target would be achieved after
the project closed (ICR, Box 2),
ï The flood protection measures mentioned above were anecdotally reported to have reduced the risk
of flood related damage, improved the drainage of storm water, and assumed an increase in property
values in the project area\. In Dong Ha, the improved capacity from the storm water detention ponds
addressed flooding during the rainy season (September to December) across 369 hectares of urban
land\. The ICR did not provide the figure for the reduced flooding level\. In Dong Ha, polluted and
visually unappealing marshlands were transformed by deepening the lake to improve the water
storage function of the area and shoring up the sides\. The lake perimeter was developed with walking
paths, roads, and parks resulting in 20 hectares of new public space, with handrails, landscaping and
lighting around the lake\. Many of the amenities were financed by the city\. Land value surrounding the
area were anecdotally reported to have increased by about 500 percent for plots around the lake and
10 percent for adjacent ones\. The public spaces were used for recreational activities (ICR, Box 2)\.
ï (i) Operations and maintenance (O&M) activities of the treatment plants: Two technological systems
were implemented\. One was the simpler biological pond treatment technology, which removed BOD
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load from domestic wastewater to comply with discharge standards\. Another was the more complex
one, which required an anaerobic filtration system and activated sludge in sequencing batch reactors
(SBRs)\. In this technology, wastewater was added to a single batch reactor, treated to remove
undesirable components, then discharged\. Periodic activities were conducted, such as monitoring the
components, measuring water quality at discharge points, and comparing volumes of inflows/outflows\.
(ii) The quality of effluents from the wastewater treatment plants: All wastewater sub-projects met
Category B discharge water quality standards defined by the Ministry of Natural Resources and
Environment (MONRE)\. All were given permits to discharge effluents into the environment\.
Results for financial and institutional sustainability were inconclusive:
ï Financial sustainability of wastewater and drainage sub-projects were to be supported
by wastewater tariffs and available government subsidies\. The Da Lat sub-project had been charging
wastewater tariffs since 2013 under a donor-funded project\. The remaining six wastewater
utilities approved wastewater tariffs but have not collected these because wastewater treatment
facilities commissioned these facilities only in 2018\. The Provincial People's Committee (PPC) first
needed to revoke the 10 percent environmental surcharge to water supply customers\. This 10 percent
surcharge represented cost recovery payment for wastewater treatment and drainage\. These fees
were not collected by the wastewater provider; instead they were collected by the government and
transferred to the provincial treasurer, which did not necessarily mandate its use for O&M needs\. The
PPCs and City People's Committees (CPCs) committed to financing O&M of wastewater treatment
plants and drainage systems\. Provinces allocated funds as part of their annual budget planning (ICR,
paragraph 63)\. Financial sustainability could not be claimed at project closing\.
ï Institutional sustainability of wastewater and drainage sub-projects was supposed to have been
provided through efforts to strengthen existing Urban Environmental Companies (URENCOs)\. These
entities were originally assigned asset ownership and O&M of wastewater and drainage system\. With
institutional changes introduced in 2016, PPCs and CPCs assigned asset ownership to a separate
internal entity who then signed O&M service contracts with URENCOs\. In Di An and Thai Hoa,
however, the water supply and sewerage utility, retained O&M functions for wastewater and drainage\.
Most wastewater companies reported to or operated under a contract with a PPC and were
responsible for O&M of the drainage system\. Institutional sustainability could not be claimed at project
closing\.
The outcome for this objective was rated modest because, although the targets for increasing access to
environmental servicesâflood protection, drainage, and wastewater treatmentâwere partially achieved by
project closing, results for financial and institutional sustainability were inconclusive\. The sustainability of
wastewater and drainage services, although not defined at appraisal or AF (ICR, paragraph 58) were
assessed using available information, including from the sector database that was last updated in 2015 (ICR,
paragraph 53)\.
Rating
Modest
OVERALL EFF TBL
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OBJ_TBL
OVERALL EFFICACY
Rationale
The project's efficacy in achieving the first objective was high, having met or exceeded the targets for the
outcome indicators\. The project's efficacy in achieving the second objective was modest, based on important
shortcomings in meetings targets as well as other weaknesses in performance\. The overall efficacy was rated
substantial taking into account government commitments to address the shortcomings in relevant targets
(e\.g\., the decision regarding the Mekong Delta water supply investment was in the Office of the Prime
Minister, an agreement had been reached with the Provincial People's Committees regarding the
implementation of the wastewater tariff, the provincial and city level People's Committees have allocated
funds to finance O&M of wastewater treatment plants and drainage systems)\. Also, the capacity was
established to support future water and sanitation connections, and foundations were put in place for the
institutional, technical, and financial sustainability of the services\. These factors point to the shortfalls being
addressed in the near term to justify the substantial overall efficacy\.
Overall Efficacy Rating
Substantial
5\. Efficiency
Economic and Financial Efficiency: At appraisal, cost effectiveness, economic, and financial analyses were
conducted to the water sub-projects while economic analyses were undertaken for the wastewater sub-projects\.
Cost effectiveness was based on costs per beneficiary\. This measure was commonly used for assessing the
economic and financial efficiencies of wastewater and drainage projects\.
At appraisal, the project committed to a maximum of US$200 per capita\. For water sub-projects, the per capita
cost effectiveness ranged from a low of US$72 (Da Lat) to US$196 (My Phuoc) while for wastewater sub-
projects, the per capita cost effectiveness ranged from US$88 (Da Lat) to US$201 (Bim Son)\.
At appraisal, benefits from the water sub-projects were reflected in the value of the incremental volume of water
sold against the corresponding costs\. Tariffs paid were used as proxy for the value of water (PAD, paragraph
46)\. The economic rate of return (ERR) for water sub-projects ranged from 6\.3 percent (Dong Xoai) and 9\.4
percent (Phu Quoc) to 15\.3 percent (My Phuoc)\. Two of the 5 sub-projects had lower than 10 percent in ERRs
because the cost of investments included a change in the water source and the building of a new transmission
system (Dong Xoai) and upgrading the transmission system Phu Quoc (PAD, paragraph 47)\.
At appraisal, benefits came from improved sanitation valued at a rate based on a 2008 World Bank/World
Sanitation Program study called Environmental Impacts of Sanitation in Vietnam and was assumed to increase
at 2 percent a year as the level of income increased\. The ERR for wastewater sub-projects ranged from 9\.5
percent (Dong Ha, Tam Ky) to 13\.7 percent (Ninh Binh)\. The ERR for wastewater sub-projects assumed: (i)
US$0\.10 per cubic meter of wastewater treated to indicate the costs of investing and operating wastewater
treatment plants, and (ii) US$28 as the annual per capita benefits of improved sanitation based on the earlier
mentioned 2008 study\.
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At closing, the average ERR for water sub-projects was at 17\.8 percent, ranging from 6\.2 percent (Tam Ky) to
26\.3 percent (My Phuoc)\. The average ERR for wastewater sub-projects stood at 22\.8 percent, ranging from
18\.2 (Tam Ky) to 31 percent (Dong Xoai)\. The ERR for wastewater assumed that by 2018 the per capita value
of the benefits from improved health and water resource degradation would reach US$44 per capita\.
At closing, cost effectiveness improved because of population growth and gains from project management\. For
water sub-projects, cost effectiveness ranged from a low of US$52 per capita (Da Lat) to a high of US$112 (Tam
Ky)\. For wastewater sub-projects, the per capita cost effectiveness ranged from US$39 (Da Lat) to US$196 (Di
An)\. These figures were well within the US$200 cost effectiveness maximum that was committed at appraisal\.
Operational and Administrative Efficiency: Delays during the early stages of implementation resulted in low
disbursements\. This was due to a change in project design\. Target urban areas were changed from two large
cities (Ho Chi Minh and Hanoi) to ten mid-size cities\. Implementing agencies lacked experience in managing
wastewater treatment investments\. Each city was required to prepare a Strategic Sanitary Plan (SSPs) before
implementing its wastewater and drainage sub-projects\. Additional steps such as establishing or updating
master plans and conducting feasibility studies prior to undertaking detailed designs and bidding documents
for sanitation sub-projects contributed to this delay and resulted in the modest outcome in
household wastewater connections\. In 2016, the government restricted the use of Official Development
Assistance (ODA) to reduce its public debt because the country has reached its borrowing ceiling from multiple
multinational development institutions\. Sub-projects with limited funds could not pay their contractors on time,
leading to a delay in project completion\. At closing, US$24\.42 million was cancelled due to delays introduced by
internal government procedures requiring the inclusion of project funds in the Midterm Investment Plan\.
Even with the operational and administrative shortcomings, overall efficiency was rated substantial because of
the high ERRs for both the water and wastewater sub-projects, representing 96\.9 percent of total project cost at
closing\. The figure used below refer to the average ERR of the wastewater sub-projects (reaching 22\.8 percent),
covering US$237\.55 million of the total project cost of US$356\.78 million at closing\. There was no comparable
average ERR for wastewater sub-projects at appraisal\.
Efficiency Rating
Substantial
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal
and the re-estimated value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
0
Appraisal 0
ï¨ Not Applicable
66\.60
ICR Estimate ï¼ 22\.80
ï¨ Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
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6\. Outcome
The relevance of objectives was rated high\. The efficacy of the project in achieving first objective was rated
high\. The project's efficacy for the second objective was rated modest\. The overall efficacy was rated
substantial\. Efficiency was rated substantial\. The outcome is rated satisfactory\.
a\. Outcome Rating
Satisfactory
7\. Risk to Development Outcome
The following pose risks to the development outcome:
ï Financial risk with regard to adequacy of financial flows and financial viability of wastewater
utilities\. Only one of the eight wastewater utility was experienced in collecting established
tariffs\. Tariffs for the remaining wastewater utilities, some of which were state-owned at the city level
and some a subsidiary of a water utility, were approved by their respective PPCs before project
closing\. These fees were earmarked for O&M needs of the wastewater utility assets\. Actual
implementation may be delayed because current water user fees include environmental
surcharges\. These need to be revoked first and then a separate wastewater tariff introduced\. The
government anticipated continuing its subsidies to all wastewater companies\.
ï Stakeholder risk in connecting to wastewater services\. The slow progress in wastewater
connections during implementation may continue\. Households that use septic tanks or public drains
and appeared to be unaffected by wastewater discharge are not connected to the wastewater
collection network\. In most sub-projects, project funds were used to connect households\. After
closing, cities may not have funds to assist those households that are connected to the system\. To
mitigate this risk, provincial and central governments would need to subsidize wastewater companies
to expand wastewater connections, in addition to providing subsidies for O&M needs\.
ï Institutional support risk from a lack of instruments and regulatory oversight to accompany
recently equitized water supply utilities\. Urban water utilities were equitized during project
implementation\. The water utilities became public corporations that owned assets and could
decide on investments, such as expanding its service\. However, there were no institutional
arrangements or instruments established to accompany how these public corporations would meet
the water utilities' obligations to deliver water services\. To mitigate this risk, the government may
need to assign a government entity to supervise these water utilities, provide guidance regarding
expansion plans for optimal and equitable water service delivery, and require them to report on their
performance (see below)\.
ï Technical risk in the use of the M&E database\. According to the ICR, the database developed
under the project was not regularly updated (ICR, paragraph 127)\. The last known update was made
in 2015 (ICR, paragraph 53)\. When the water utilities were equitized, they were not provided
incentives nor were they mandated to report on their performance\. This database was designed to
link these capital projects to sector wide long-term planning\. With the information from this database,
the government could determine appropriate investments and design actionable policies that promote
accountability and transparency in the sector (ICR, paragraph 8)\. To keep the database useful, the
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government could consider using its continuing subsidies as incentive for the water and wastewater
utilities to regularly report on their performance or include the obligation in new policy directives\.
8\. Assessment of Bank Performance
a\. Quality-at-Entry
The Bank's project design responded to the government's request and was relevant to achieving the
country's objectives for the urban water and wastewater sectors\. Project design included relevant lessons
from six similar projects implemented in Vietnam\. Among the lessons that influenced the design were: (i)
a lack of prepared sub-projects could lead to implementation delays; (ii) signing subsidiary legal
agreements for sub-projects could face time lags; (iii) connecting households to services could take time;
and (iv) decentralized implementation works well for providing water and wastewater services\. To avoid
implementation delays, design included the following: (i) Provincial People's Committees (PPCs)
approved sub-project feasibility studies prior to appraisal; (ii) subsidiary agreements for sub-projects were
to be signed within 90 days after the signing of the Financing Agreement for inclusion in the project;
(iii) the project would finance household connections for water and wastewater services; and (iv)
implementation would be decentralized\. (PAD, paragraph 36)\. However, the project area was changed
from two major cities (Ho Chi Minh and Hanoi) at concept to ten smaller cities (with populations between
58,000 and 212,000 residents) at approval\. All the new ten cities required Strategic Sanitation Plans
(SSPs) for wastewater and drainage before approving these sub-projects\. Design did not include
information and education campaign activities that could have been useful for persuading more
households to connect to wastewater services\. Project components were reasonable to achieve the
objectives stated\. Counterpart funds were committed\. At appraisal, a high risk was noted because
provinces were unfamiliar with World Bank processes, the wide geographical spread of sub-
projects, expected delays from land acquisition, and uncertainty in implementing tariffs for the services\.
The risk that households would not connect to the wastewater services, the possibility that technical
design may pose problems, or that the country would reach its borrowing ceiling and that the government
would impose limitations in the use of Official Development Assistance (ODA) funds from all sources,
were unforeseen risks that nevertheless became evident during implementation\.
Quality-at-Entry Rating
Moderately Satisfactory
b\. Quality of supervision
The Bank project team conducted 17 semi-annual supervision missions over the eight-year implementation
period, Supervision inputs were adequate\. For example, in the case of environmental safeguards, the Bank
team worked closely with the implementing entities to ensure that the clearance of Unidentified Ordinances
(UXO) or explosive weapons that did not explode and posed risks of detonation, were completed before
the sites were handed over to contractors (ICR, paragraph 109)\. The project components specified
technical assistance directed at building the capacity of the implementing entities that were not familiar with
Bank processes (see component 3 in Section 2 Project Objective and Components above)\. The Mid Term
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Review (MTR) was carried out in January 2015, following delayed disbursements\. The MTR identified
a US$20 million deficit due to exchange rate losses (from SDR to US$)\. A restructuring and additional
financing (AF) covered the deficit and added a new wastewater treatment plant sub-project in Di An
town\. Candor in reporting the quality of performance reporting was evident in the project team's efforts to
avoid leaving funds unused because the provincial implementing entities could not meet the complex
process, introduced by the government, of including approved funds for ongoing sub-projects in the Mid
Term Investment Plan\. Nevertheless, at closing, the government requested the cancellation of US$24\.42
million (see Section 5, Efficiency above)\.
Overall, while taking note of the minor shortcomings that were within the Bank team's control to resolve, the
quality of supervision was rated satisfactory\.
Quality of Supervision Rating
Satisfactory
Overall Bank Performance Rating
Moderately Satisfactory
9\. M&E Design, Implementation, & Utilization
a\. M&E Design
The objectives were clearly specified\. The Results Framework showed valid links along a causal chain
between inputs and outputs, leading to intermediate and final outcomes that can be attributed to the
project's interventions\. The indicators were adequate to capture the achievement of the project outcomes\.
However, there was a lack of indicators to address the sustainable delivery of services, particularly for
sanitation services\. There were no specific indicators measuring the quality and the reliability of the water
supply, but this was covered by the outcome indicator of âincrease in the satisfaction rate of beneficiariesâ;
the customer satisfaction survey included questions related to water pressure, service continuity, and water
quality, such as level of chlorine smell and turbidity (ICR, paragraph 46)\. There were no indicators, either,
capturing the completion of project outputs of water supply systems and wastewater collection network and
treatment plants in terms of kilometer or capacity, respectively\. Baselines for the outcome indicators were
established as defined in the Results Framework; these indicators were specific, measurable, time-bound,
achievable, and relevant\. The data collection arrangements were adequate; each project implementation
unit would be responsible for data collection from each subproject, and the MOC would consolidate and
report the data (ICR, paragraph 99)\. An M&E consultant was to be hired to support data verification and
consolidation\.
b\. M&E Implementation
The Administration of Technical Infrastructure (ATI), an agency of the MOC, implemented the M&E
system\. Each PMU contributed to the implementation of the M&E system\. Planned
baselines were carried out\. Indicators provided in the Results Framework were measured and reported\.
For the water sub-projects, the number of connections installed was monitored and verified through
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indicators such as volumes of water sold, revenues, and costs\. For wastewater, new connections
were the indicator of choice\. Outcomes in drainage improvement were monitored based on areas that
benefited from improved drainage and reduced flood risk\. An M&E consultant regularly updated the
Results Framework, but the water utilities and wastewater companies were not directly involved in the
process, resulting in a missed opportunity for building capacity and institutionalizing the function (ICR,
paragraph 104)\. Therefore, at project closing, utilities could not provide the task team consistent
information on results achieved\. The AF resulted in new sub-projects and new indicators were introduced
(e\.g\., volume of BOD removed from the wastewater plant in Di An, the number of direct beneficiaries, and
level of customer satisfaction, disaggregated by gender) while some were revised upwards based on
additional resources (e\.g\., increase in the number of new piped household water connections)\.
The method used to calculate direct beneficiariesâthe indicator added at the AFâwas not clearly
defined (ICR, paragraph 87)\. Reports did not show whether beneficiaries were involved in defining target
indicators and assessing achievement of indicators\. The weakness in the M&E design measuring the
progress in investment activities was not corrected\.
c\. M&E Utilization
The project used the M&E results to inform the implementing entities and the Bank's task team on the
project's progress and informed the requirements of the Additional Financing (AF)\. M&E data was used
to provide evidence of achievement of outcomes, and instances of sustainability of operations\. However,
since the M&E function was carried out by a consultant rather than by the implementing entities, the
M&E system introduced by the project may not be sustained\.
The M&E system as designed and implemented was sufficient to assess the achievement of the project
objectives and test the links in the result chain\. However, M&E quality was rated modest because of the
missed opportunity in institutionalizing the M&E function at the level of the water and wastewater
utilities, inconsistent information on results achieved provided at project closing (ICR, paragraph 104),
linkages among some indicators were not strengthened at the AF stage (ICR, paragraph 93), and the
lack of incentives for water supply utilities to regularly update the ATI so it could monitor sector
performance\.
M&E Quality Rating
Modest
10\. Other Issues
a\. Safeguards
Environmental and Social Safeguards: The project was determined to require a partial assessment
(environmental category B)\. The project triggered OP/BP 4\.01 Environmental Assessment, OP/BP 4\.12
Involuntary Resettlement, and OP/BP 4\.37 Safety of Dams\. At AF, two additional safeguards were triggered
- OP/BP 4\.11 Physical Cultural Resources and OP/BP 7\.50 Projects on International Waterways\. The latter
was triggered because treated water from the Di An WWTP was to be discharged to a local canal that
flowed into the Dong Nai River of which Cambodia was a riparian state\.
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An Environmental Management Plan was prepared for each sub-project identified at appraisal and
disclosed on December 6, 2010\. Overall, there were no major environmental, health or safety issues\. The
World Bank team and the Project Management Unit (PMU) closely monitored the implementation of UXO
clearance prior to turning cleared sites over to contractors\. An independent consultant supervised the
implementation of environmental safeguards on behalf of the MOC and its performance has been reported
as acceptable (ICR, paragraph 109)\. The project did not finance construction of dams but triggered this
safeguard because raw water would be supplied by reservoirs that have formed an existing dam\. At the
2015 MTR, an independent consultant carried out dam safety review and concluded that all dams were
operational and safe with remedial actions for (i) Duong Dong Dam for seepage treatment; (ii) Phu Ninh
dam for gate repair; and (iii) Dong Xoai dam for installation of monitoring instruments\. According to the ICR
(paragraph 110), all remedial actions were completed\. World Bank management granted an exception to
the riparian notification allowed under paragraph 7(c) of OP/BP 7\.50 since Vietnam was the lowest
downstream riparian of the Dong Nai River, hence this river ran only in Vietnam and did not cause harm to
other riparian states\.
OP/BP 4\.11 Physical Cultural Resources was triggered because the project activities financed under AF
would result in considerable amounts of earthworks\. Public consultations were carried out\. A Resettlement
Policy Framework and 15 Resettlement Action Plans were prepared and disclosed\. Documentation of land
acquisition was not adequately prepared by some sub-projects\. The World Bank team provided intensified
guidance and shared templates to record land acquisition\. Land acquisition encountered some delays due
to lengthy processes, weak project management capacity, timing constraints resulting from required
approvals of lands appraised, and differences between resettlement policies of the government and the
World Bank\. Compensation levels and assistance to project affected households were completed and
issues resolved by project closing except in Thai Hoa and Ninh Binh sub-projects\. There were no
outstanding unresolved grievances reported at project closing\.
b\. Fiduciary Compliance
Financial Management: The Ministry of Construction (MOC) and the implementing agencies complied with
World Bank financial management policies and procedures\. All unaudited interim financial reports were
submitted on time and met World Bank requirements\. The MOC submitted Independently audited financial
reports on time, with the final one expected on June 30, 2020\. Privately operated water supply utilities
submitted annual audited financial statements according to Vietnamese Accounting Standards\. The audits
were unqualified (ICR, paragraph 116)\.
Procurement: All project procurement activities complied with the World Bank's guidelines\. Contract
management in some sub-projects were observed to be weak, leading to implementation delays and
quality concerns\. These were addressed to the satisfaction of the World Bank\. There was one complaint
related to a local company\. That bidder was sanctioned in accordance with national procurement laws and
regulations, satisfactory to the World Bank requirements\.
c\. Unintended impacts (Positive or Negative)
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None
d\. Other
None
11\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Outcome Satisfactory Satisfactory
There were moderate
shortcomings in Quality at Entry
such as absence information
and education campaign
Bank Performance Satisfactory Moderately Satisfactory activities to raise awareness
about the benefits of connection
to the wastewater collection
system, and insufficient risk
analysis\.
Quality of M&E Modest Modest
Quality of ICR --- Substantial
12\. Lessons
ï Inexperienced implementing entities may require periodic, customized, technical
assistance to build their capacity to achieve project objectives\. In this project,
constructing wastewater systems was delayed because of the introduction of new processes
for which the implementation entities were not prepared, such as the preparation of
sanitation strategy plans before implementing the environment sanitation sub-projects\. In
addition to the capacity building components of the project itself, additional technical
assistance efforts were included in consulting packages to address capacity gaps of
implementing agencies, particularly those unfamiliar with World Bank processes\.
ï Information and educational campaigns may influence behavioral change in
households to address their reluctance to connect to wastewater systems\. In this
project, the outcome indicator called for increasing the number of households connected to
the wastewater system\. Households who used septic tanks or public drains and who did not
appear to be negatively affected by wastewater discharge were disinclined to connect to the
system without the incentives that other households received\. The project financed
household connections to the wastewater systems and technical engineering solutions but
did not devise educational campaigns or behavior change strategies to increase the level of
household connections\.
Page 19 of 21
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
VN-Urban Water Supply and Wastewater (P119077)
ï Engaging beneficiaries may improve the data productivity and utilization of a project's
M&E system\. In this project, the quality of beneficiary information under the M&E system
was inadequate\. The implementing agencies could not monitor performance of the utilities
and outcome of the project interventions using beneficiary information\. Data disaggregated
by relevant factors\. could not be collected\. Engaging beneficiaries through periodic customer
surveys could strengthen the usefulness of an M&E system, refine beneficiary selection for
outcome attribution, facilitate decision making, and bring transparency in sector service
delivery\.
13\. Assessment Recommended?
No
14\. Comments on Quality of ICR
The ICR provided a comprehensive overview of the project\. The narrative was internally consistent and highly
evaluative\. The ICR was adequately focused on the results of the project; it provided sufficient evidence to
support the outcome of the projectâs intervention, including the factors behind not meeting wastewater
household connections\. The interrogation of evidence was adequate, and the analysis clearly linked evidence
to findings\. The lessons were informed by the operation, particularly with regard to the benefit of adopting
information and educational campaigns to boost household connections for wastewater services\. The annexes
provided additional information to expound on the cost effectiveness of the project (see Annex 4 Efficiency
Analysis)\. Boxes in the main text and footnotes were helpful in understanding technical concepts\. The ICR was
also consistent with the Bank guidance\.
In the section on Quality at Entry, paragraph 119 of the ICR stated that the number of household sanitation
connections could have been used as an intermediate indicator\. Lastly, the ICR was substantially longer (39
pages) than recommended in the Bank guidance (15 or 20 pages)\.
a\. Quality of ICR Rating
Substantial
Page 20 of 21
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
VN-Urban Water Supply and Wastewater (P119077)
Page 21 of 21 | REVIEW |
P050601 |  ICRR 12326
Report Number : ICRR12326
IEG ICR Review
Independent Evaluation Group
1\. Project Data: Date Posted : 03/14/2006
PROJ ID :P050601 Appraisal Actual
Project Name :Social Fund II (SFII) Project Costs 27\.7 36\.3
US$M )
(US$M)
Country :Cambodia Loan/ US$M )
Loan /Credit (US$M) 25\.0 33\.8
Sector (s):Irrigation
): and drainage; US$M )
Cofinancing (US$M) TBD 2\.2
Primary education; Other
social services; Roads and
highways; Water supply
L/C Number :C3179
FY )
Board Approval (FY) 99
Partners involved : American Assistance for Closing Date 12/31/2002 03/31/2005
Cambodia (AAfC), OPEC
Evaluator : Panel Reviewer : Division Manager : Division :
Anju Vajja Christopher D\. Gerrard Alain A\. Barbu IEGSG
2\. Project Objectives and Components
a\. Objectives
The project objectives were:
(1) Provision of small scale, community-based sub-projects in the areas of social and economic infrastructure with an
emphasis on the poor;
(2) Creation of short-term employment opportunities to absorb the increase in unemployment associated with
post-crisis reverse migration of workers from Thailand, and with the demobilization of Cambodian army units;
(3) Strengthening of communities' capacity to implement development projects and sustain them;
(4) Improvement of donor coordination and co -financing;
(5) Improvement of poverty and district targeting \.
In May 2001, a year before the expected closing of the SFII project, the Bank approved a Flood Rehabilitation
Supplemental Credit (for US$10 million equivalent) which provided additional resources to the Social Fund of the
Kingdom of Cambodia (SFKC) to address emergency needs in rebuilding small -scale infrastructure damaged in
heavy flooding during 1999-2000\. There was no change to the SFII credit agreement, given the similar objectives of
both credits, nor any changes in the original components since those of the supplemental credit mirrored those of the
original project\.
b\. Components (or Key Conditions in the case of Adjustment Loans ):
The project had three components :
Sub -project grants ($24\.4 million at appraisal, $31\.7 million actual) -- financed sub-grants for small-scale
(a) Sub-
infrastructure and services projects proposed by communities, local groups, NGOs, and other groups \. Eligible
sub-project types included irrigation systems, bridges and culverts, water supply and sanitation systems, schools,
vocational training centers and training, and health centers \.
(b) Institutional support ($3\.0 million at appraisal, $4\.6 million actual) -- supported the costs of staffing, equipping,
operating, training, and assessing the Social Fund \.
(c) Unallocated : ($0\.31 million at appraisal; $0\.0 million actual) -- approximately 1 percent of the credit was left
unallocated at appraisal to provide flexibility during implementation \.
c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
SFII was an immediate follow-on from the Social Fund I (SFI) project, and channelled funds through the same
agency, the SFKC, as the first project \.
IDA financed 91 percent of project costs and the Borrower less than 1 percent\. AAfC provided $2\.2 million of direct
co-financing for schools and OPEC provided an additional $ 7\.8 million in a separate OPEC project which started in
March 2001 and closed in December 2005\. Ten NGOs contributed an additional $ 4 million at the sub-project level\.
The closing date of the project was extended by 15 months due to implementation delays at the beginning of the
project, and by an additional year due to the approval of the supplemental flood rehabilitation credit \. Initial
implementation was delayed due to political uncertainties and due to the introduction of new procedures, so that it
was not until May 2000 -- ten months after project effectiveness -- that operations again reached the level achieved
during SFI\.
3\. Relevance of Objectives & Design :
Overall relevance is rated substantial \. The project is consistent with both the government and CAS objective of rural
development\. Allocating at least two-thirds of total sub-project financing rural economic infrastructure -- irrigation,
rural roads, water supply (PAD, p\. 3) -- is justifiable given other donor programs' focus on education and health \.
Given the sustainability concerns regarding water supply sub -projects in SFI, SFII established a Sustainability
Program Unit (SPU) and hired a sustainability advisor \.
The current government and Bank Country Assistance Strategy emphasizes the importance of strengthening the
capacity of government institutions, yet the project did not address this objective \. The project operated solely through
an autonomous agency, SFKC\.
4\. Achievement of Objectives (Efficacy) :
Overall efficacy is rated modest \.
Objective (1) is rated substantial \. The project financed 1,416 small- to medium-sized economic and social
infrastructure sub-projects throughout the country, which benefited over 5 million people according to SFKC
estimates\. According to the Independent Technical and Beneficiary Assessment (ITBA) completed in late 2004,
benefits included increased school enrollment, particularly among girls; safer school environments; improved access
to schools and markets; decreased impacts from flooding; enhanced trade in agriculture and other local products;
and added income from employment opportunities \. However, school construction was to be limited to less than
one-third of total sub-project approvals in value terms, since other donors' programs focused on education and
health, and at least two-thirds was to be allocated towards rural economic infrastructure (PAD, p\. 3)\. Instead, over
50% was allocated to schools and only 45% to rural economic infrastructure \.
Objective (2) is rated modest \. The project did not include special incentives or provisions for hiring returning workers
or former military personnel, and the backgrounds of employees hired were not tracked \. (ICR, p\. 4)\.
Objective (3) is rated modest \. The ICR concludes that "the project appears to have had a positive impact " on
community capacity to implement and sustain sub -projects, as evidenced by (a) high levels of ownership/community
contribution (time, in kind, labor and money); (b) participation by 60% in other community development activities; and
(c) use of skills gained through SFKC experience in other development activities by 80 percent (p\. 4)\. This conclusion
is based primarily on the results of the ITBA, which interviewed over 1000 individuals, including in-depth interviews
with Project Support Committee (PSC) members, local and national authorities, and over 500 randomly selected
beneficiaries\. However, it not clear to what extent capacity enhancement can be attributed to the project without
baseline surveys or with and without project comparisons \. For instance, that 60 percent of the members indicated
that they went on to participate in other development projects does not demonstrate capacity enhancement unless
one can specify how many of these had never before participated in development projects prior to SFKC \.
Objective (4) is rated modest \. The project was able to improve the level of co -financing, but there is no indication in
the ICR on improvements in donor coordination insofar as strategic consensus, procedures, and policy are
concerned\.
Objective (5) is rated modest \. The project proposed to improve poverty targeting, based on new poverty data (PAD,
p\. 4)\. However, the poverty targeting objective was not met fully, according to the ICR, because of insufficient
socioeconomic data for certain areas of the country and the lack of a coherent targeting mechanism \. The SFKC used
a set of different and competing prioritization tools (ICR, p\. 5)\.
5\. Efficiency :
There is insufficient information to rate efficiency\.
No economic rate of return (ERR) was calculated at appraisal or at closure because "standard rate of return analysis
is not readily applicable to a large number of small, demand -driven, and disparate sub-projects\." (ICR, p\. 6)
However, while the ERR could not be calculated ex -ante because the sub-project investments are not known at
appraisal, a sample of ERRs could should have been attempted for typical sub -projects supported by the project \. The
PAD had also indicated (p\. 9) that relatively simple ERR calculations would be calculated for larger economic
infrastructure sub-projects\.
The ICR indicates that operational costs were contained to the agreed 8% of total project costs, lower than other
public agencies and below the average of social funds included in a recent Bank comparative study (10-13%)\. The
Bank's 2003 comparative study indicated that social funds â overhead expenses were similar among countries, falling
within a range of 7â13 percent of total program costs (Source: Evaluating Social Funds: A Cross-Country Analysis of
Community Investments )\. Thus the SFII was in the lower part of this range \.
6\. M&E Design, Implementation, & Utilization:
M&E design was weak\. There was little emphasis on systematically measuring outcomes and impacts as evidenced
by the lack of outcome and impact indicators, targets for key indicators, baseline surveys, and follow ups \. The ICR
notes that "it should be acknowledged that at the time the SFII was prepared, the Bank in general was placing much
less emphasis on indicators and mechanisms for monitoring and evaluation, compared to the strong focus the Bank
now has on measuring outcomes and impact (p\. 9)\." However, even the few indicators that were mentioned in the
PAD were monitored and tracked only sporadically (p\. 9)\.
SFKC did not widely disseminate the lessons learned from its experience in local development, community
capacity-building, governance, and partnerships until the end of the project (ICR, p\. 7)\.
7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):
According to the PAD, SFKC only rebuilds or rehabilitates existing structures and each includes an environmental
assessment\. Further, if an assessment revealed substantial environmental impact, appraisal was to be halted and
further impact studies were to be conducted \. However, no study was carried out on the cumulative impact of
sub-projects, such as the cumulative impact on the water table of rehabilitating /rebuilding over 5000 water supply
systems\.
SFII created an Internal Audit Unit, and adopted local shopping procedures for sub -projects valued below
US$250,000, etc\. in response to circumstantial evidence of procurement irregularities in mid -2000 (p\. 7)\. The ICR
does not report on community capacity to undertake fiduciary management responsibility \.
8\. Ratings : ICR ICR Review Reason for Disagreement /Comments
Outcome : Satisfactory Moderately Satisfactory [The ICR's current 4-point scale does not
allow for a "moderately sat\." rating]\.
Project achieved most of its major
relevant objectives but with significant
shortcomings\.
Institutional Dev \.: Modest Modest
Sustainability : Likely Non-evaluable The evidence provided in the ICR for
sustainability of sub-projects is mixed and
insufficient for a "likely" rating\.
Bank Performance : Satisfactory Satisfactory Albeit marginally so, due to:
(a) Lack of exit strategy for SFKC given
the focus of the government strategy and
CAS on building government capacity \.
(b) Weak poverty targeting strategy,
monitoring and evaluation design and
dissemination of lessons learned \.
Borrower Perf \.: Satisfactory Satisfactory But the implementing agency did not track
all the M&E indicators specified during
implementation\.
Quality of ICR : Satisfactory
NOTES:
NOTES
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating,
IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \.
9\. Lessons:
The ICR has extracted a number of relevant lessons from the experience with this project \.
1\. Monitor outcomes and evaluate impact to assess development effectiveness \. To assess development
effectiveness input and output indicators (amount disbursed, sub-projects completed) should be supplemented
by outcome and impact (sustainability, benefits) indicators\. For projects benefiting a large proportion of the
population, use of household surveys to monitor impact (for example capacity enhancement ) should also be
explored\.
2\. Find mechanisms to ensure appropriate targeting \. Projects aimed at supporting poor communities and specific
beneficiary groups should have a coherent targeting mechanism in place \. In addition, indicators that measure
whether project benefits are reaching the target groups should be developed and monitored to facilitate
adjustments during implementation\.
3\. Tackle transparency issues systematically especially for an effective procurement process \. Well-defined
procedures, adequate training, rigorous internal monitoring, regular independent external evaluations, and
appropriate and enforceable penalties and a commitment to invoke them is required as well as continuity of
Bank staff, frequent site visits, and through country knowledge \.
4\. Communicate through regular and consistent dialogue with all stakeholders to achieve sustained impact \. For
example, SFKC could have a substantial institutional impact on the capacity of government agencies had it
communicated and collaborated more extensively with them through dialogue, data sharing, technical
assistance and training sessions \.
5\. Plan for hand-over or exit strategy to ensure lasting institutional development impact \. For all Social Funds and
especially for this one where the implementing agency enjoys a high degree of autonomy, it is important to
include mechanisms to ensure that the valuable processes, skills, and systems which are developed can be
adopted by and/or passed on to national and local institutions \.
10\. Assessment Recommended? Yes No
Why? Post-conflict countries often face the urgent need of restoring basic services and infrastructure \.
Given low government capacity, social fund projects address these needs through autonomous agencies, rather than
build longer-term institutional capacity by working with the weak public entities /bodies\. However, in many cases this
has resulted in unsustainable infrastructure \. It would be important to assess if by -passing the government provides a
more effective and sustainable means of providing basic infrastructure and services than directly building up the
government's institutional capacity, especially in those post -conflict countries where the Bank is increasing its aid \.
11\. Comments on Quality of ICR:
The ICR is rated satisfactory overall, but it lacks :
(a) Clear and systematic presentation of tables (for example, the number of different types of sub -projects, and the
average unit cost of each type of sub-project on page 16)\.
(b) ERRs for larger economic infrastructure sub -projects (as indicated in the PAD)\.
(c) Beneficiary assessment questionnaire /analysis, which is typically an annex in ICRs for projects in which
beneficiary assessments have been conducted \. | REVIEW |
P076702 | Document of
The World Bank
Report No\. 88547
PROJECT PERFORMANCE ASSESSMENT REPORT
Democratic Socialist Republic of Sri Lanka
RENEWABLE ENERGY FOR RURAL ECONOMIC DEVELOPMENT PROJECT
(IDA-36731 IDA-36730 TF-51248)
June 25, 2014
IEG Public Sector Evaluation
Independent Evaluation Group
iii
Currency Equivalents (annual averages, select years)
Currency Unit = Sri Lankan Rupee (LKR)
2002 US$1\.00 LKR96\.7
2005 US$1\.00 LKR102\.0
2010 US$1\.00 LKR111\.1
2011 US$1\.00 LKR113\.9
2012 US$1\.00 LKR128\.2
2013 US$1\.00 LKR126\.9
Abbreviations and Acronyms
AU Administrative Unit
DFCC Development Finance Corporation of Ceylon
GEF Global Environmental Facility
IDA International Development Association
IEG Independent Evaluation Group
IFC International Finance Corporation
kW Kilowatt
MW Megawatt
MWh Megawatt-Hour
NCRE Non-Conventional Renewable Energy
PCI Participating Credit Institution
PUCSL Public Utilities Commission of Sri Lanka
PV Photovoltaic
RERED Renewable Energy for Rural Economic Development (Project)
SEA Sustainable Energy Authority
SHS Solar Home System
SPPA Standardized Power Purchase Agreement
VHP Village Hydro Project
Fiscal Year
Government: July 1 â June 30
Director-General, Independent Evaluation : Ms\. Caroline Heider
Director, IEG Public Sector Evaluation : Mr\. Emmanuel Jimenez
Manager, IEG Public Sector Evaluation : Ms\. Marie Gaarder
Task Manager : Mr\. Varadarajan Atur
iv
Contents
Principal Ratings \. v
Key Staff Responsible\. v
Preface\. vii
Summary \. ix
1\.Background and Context\. 1
2\. Renewable Energy for Rural Economic Development (RERED) project \. 7
Objectives, Design, and their Relevance \. 7
Implementation \. 11
Achievement of the Objectives \. 15
Efficiency \. 20
Ratings \. 21
3\. Lessons \. 29
Annex A\. Basic Data Sheet \. 31
Annex B\. List of WB Energy Projects in Sri Lanka \. 34
Annex C: Additional Data Tables and Figures \. 35
Annex D\. List of Persons Met\. 39
Figures
Figure 1: Rate of electrification in Sri Lanka (1976-2012) \. 2
Figure 2: Structure of the Electricity Industry in Sri Lanka \. â¦3
Figure 3: Cost of Power Generation (LKR/kWh) from Various Power Plants \. 5
Tables
Table 1: Evolution of Installed Capacity and Peak Demand (2000-12) \. 4
This report was prepared by Varadarajan Atur, who assessed the project in March 2014\. The report was
peer reviewed by Raihan Elahi and panel reviewed by Robert Lacey\. Romayne Pereira provided
administrative support\.
v
Principal Ratings
ICR* ICR Review* PPAR
Outcome Satisfactory Satisfactory
Risk to Negligible to Low Negligible to Low
Development
Outcome
Bank Performance Satisfactory Moderately Satisfactory
Borrower Satisfactory Satisfactory
Performance
* The Implementation Completion and Results (ICR) report is a self-evaluation by the responsible Bank department\.
The ICR Review is an intermediate IEG product that seeks to independently verify the findings of the ICR\.
Key Staff Responsible
Project Task Manager/ Division Chief/ Country Director
Sector Director
Appraisal Subramaniam V\. Iyer Penelope J\. Brook Mariana Todorova
Completion Abdulaziz Faghi Jyoti Shukla Gaye Diarietou
vi
IEG Mission: Improving World Bank Group development results through excellence in
independent evaluation\.
About this Report
The Independent Evaluation Group assesses the programs and activities of the World Bank for two purposes: first, to ensure
the integrity of the Bankâs self-evaluation process and to verify that the Bankâs work is producing the expected results, and
second, to help develop improved directions, policies, and procedures through the dissemination of lessons drawn from
experience\. As part of this work, IEG annually assesses 20-25 percent of the Bankâs lending operations through field work\. In
selecting operations for assessment, preference is given to those that are innovative, large, or complex; those that are relevant to
upcoming studies or country evaluations; those for which Executive Directors or Bank management have requested assessments;
and those that are likely to generate important lessons\.
To prepare a Project Performance Assessment Report (PPAR), IEG staff examine project files and other documents, visit
the borrowing country to discuss the operation with the government, and other in-country stakeholders, and interview Bank
staff and other donor agency staff both at headquarters and in local offices as appropriate\.
Each PPAR is subject to internal IEG peer review, Panel review, and management approval\. Once cleared internally, the
PPAR is commented on by the responsible Bank department\. The PPAR is also sent to the borrower for review\. IEG
incorporates both Bank and borrower comments as appropriate, and the borrowers' comments are attached to the document
that is sent to the Bank's Board of Executive Directors\. After an assessment report has been sent to the Board, it is disclosed to
the public\.
About the IEG Rating System for Public Sector Evaluations
IEGâs use of multiple evaluation methods offers both rigor and a necessary level of flexibility to adapt to lending
instrument, project design, or sectoral approach\. IEG evaluators all apply the same basic method to arrive at their project
ratings\. Following is the definition and rating scale used for each evaluation criterion (additional information is available on
the IEG website: http://ieg\.worldbankgroup\.org)\.
Outcome: The extent to which the operationâs major relevant objectives were achieved, or are expected to be achieved,
efficiently\. The rating has three dimensions: relevance, efficacy, and efficiency\. Relevance includes relevance of objectives
and relevance of design\. Relevance of objectives is the extent to which the projectâs objectives are consistent with the
countryâs current development priorities and with current Bank country and sectoral assistance strategies and corporate goals
(expressed in Poverty Reduction Strategy Papers, Country Assistance Strategies, Sector Strategy Papers, Operational Policies)\.
Relevance of design is the extent to which the projectâs design is consistent with the stated objectives\. Efficacy is the extent to
which the projectâs objectives were achieved, or are expected to be achieved, taking into account their relative importance\.
Efficiency is the extent to which the project achieved, or is expected to achieve, a return higher than the opportunity cost of
capital and benefits at least cost compared to alternatives\. The efficiency dimension generally is not applied to adjustment
operations\. Possible ratings for Outcome: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately
Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\.
Risk to Development Outcome: The risk, at the time of evaluation, that development outcomes (or expected outcomes)
will not be maintained (or realized)\. Possible ratings for Risk to Development Outcome: High, Significant, Moderate,
Negligible to Low, Not Evaluable\.
Bank Performance: The extent to which services provided by the Bank ensured quality at entry of the operation and
supported effective implementation through appropriate supervision (including ensuring adequate transition arrangements for
regular operation of supported activities after loan/credit closing, toward the achievement of development outcomes\. The
rating has two dimensions: quality at entry and quality of supervision\. Possible ratings for Bank Performance: Highly
Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\.
Borrower Performance: The extent to which the borrower (including the government and implementing agency or
agencies) ensured quality of preparation and implementation, and complied with covenants and agreements, toward the
achievement of development outcomes\. The rating has two dimensions: government performance and implementing
agency(ies) performance\. Possible ratings for Borrower Performance: Highly Satisfactory, Satisfactory, Moderately
Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\.
vii
Preface
This Project Performance Assessment Report, prepared by the Independent Evaluation
Group (IEG), evaluates Sri Lankaâs Renewable Energy for Rural Economic Development
Project (2002-2011)\.
The project was approved on January 22, 2002 with an IDA Credit (IDA-36731) and
GEF Grant (TF-51248) of US$ 75 million and $8 million respectively\. Additional IDA
financing of US$ 40 million (IDA-36730) was approved in 2007 to meet the greater than
expected demand for financing sub-projects\. The final IDA contribution was US$121
million, about 5 percent higher than planned, while the GEF grant was close to the
planned amount of US$8 million\. The total project cost was US$254 million, about 10
percent higher than the original estimate of US$232 million\. The project was
restructured twice â first, on October 18, 2010 to reduce the target for the âoff-grid
renewablesâ component from 161,000 units to 113,500; and next on June 16, 2011 to
extend the closing date by six months to enable ongoing investments to be completed\.
The project was closed on December 31, 2011, three and a half years after the originally
planned completion date of June 30, 2008\.
The project supported the countryâs priorities for providing sustainable electricity access
to its unserved population, especially for improving the quality of life in rural areas, by
utilizing off-grid renewable energy technologies and promoting private sector
involvement in renewable energy resources for the main grid\. The project also sought to
reduce atmospheric carbon emission by removing barriers and reducing implementation
costs for renewable energy and removing barriers to energy efficiency\.
IEG considered several factors in choosing this project for an assessment\. Sri Lanka is
widely regarded as having made significant progress in improving generation capacity
and electricity access over the last decade and as having effectively employed both off-
grid and grid-connected renewable energy in the process\. In this effort, the role of
microfinance institutions and the private sector is particularly noted\. Collectively, these
efforts are seen to have placed Sri Lanka on the road to universal access to electricity, in
sharp contrast to the other large countries in South Asia that lag behind in electrification\.
The World Bank has played a significant role in supporting the electricity sector in Sri
Lanka over the past fifteen years, providing nearly US$300 million for investment, policy
reform and technical assistance\. Examining the performance of this project can add to our
understanding of the Bankâs role and effectiveness in supporting Sri Lankaâs electricity
sector, and can provide valuable feedback for future engagements of a similar nature in
this country as well as in other country situations\. The findings and lessons from this
assessment will also be an important input to the forthcoming IEG evaluation of the
World Bank Groupâs Support for Electricity Access\.
IEG prepared this report based on an examination of the relevant Project Appraisal
Documents, Implementation Completion and Results Report, legal agreements, project
files and archives, as well as other relevant reports, documents, memoranda and working
papers\. An IEG field mission visited Sri Lanka during March 2014\. Discussions were
held with Bank staff in Washington, DC and in Colombo, and government and other
viii
officials in Colombo and other locations in the country\. The mission discussed the
projectâs experience and the effectiveness of Bank assistance with other stakeholders
including the project developers, commercial banks, think tanks, independent consultants,
citizens, and the Asian Development Bank\. Site visits were undertaken in locations with
mini-hydro, community-based micro hydro systems, Solar Home Systems (SHS) in the
Ratnapura region\.
The mission expresses its appreciation of the generous time and attention given by the
Borrower and all concerned parties\. A list of persons met by the mission is in Annex D\.
Following IEG practice, copies of the draft report were sent to government officials and
implementing agencies, and no comments were received\.
ix
Summary
This Project Performance Assessment Report assesses the development effectiveness of
Sri Lankaâs Renewable Energy for Rural Economic Development (RERED) project\. The
project sought to (i) improve the quality of rural life by utilizing off-grid renewable
energy technologies to provide energy services to remote communities; and (ii) promote
private sector power generation from renewable energy resources for the main grid\. The
project also sought to reduce atmospheric carbon emission by removing barriers and
reducing implementation costs for renewable energy and improving energy efficiency\.
Project performance and ratings
The RERED project helped catalyze and scale up grid-connected and off-grid renewable
energy with private sector participation\. The project built upon the foundation laid by the
Bankâs previous Energy Services Delivery project (1997-2003) for Sri Lanka\. The
project also benefited from the Bankâs experience with large renewable energy and
energy efficiency projects in Africa and Asia\.
The Overall Development Outcome of the project is rated satisfactory due to the
improvements in social and economic welfare in rural areas through increased electricity
access, and from increased private sector activity in renewable energy; as well as the
substantial efficiency with which the project was implemented\. Risk to development
outcome is rated low as there is significant on-going private sector activity in renewable
energy; and continued use of the majority of solar home systems installed under the
project, even alongside newly acquired grid-based electricity\. Bank performance is rated
satisfactory based on generally good quality at entry and quick adaptation to changing
project, market, and country circumstances\. Borrower performance is rated satisfactory
due to steady commitment to the project objectives, and sound project implementation\.
Lessons
Local participation and involvement, suitably incentivized, is crucial to promoting
distributed power generation activities\. Active local participation drove the momentum
and successful implementation of the 68 mini hydro projects and the 173 community-
based micro hydro projects supported by the project\. The participation came in the form
of local political support and the newly-formed village level electricity consumer
societies, which were incentivized by opportunities for selling a part of the generation to
the grid through ânet meteringâ\.
Involving the private sector effectively in a decentralized developmental effort
requires flexibility in implementation arrangements and space for adapting to
market conditions\. In spite of past lessons informing the design of the project, almost all
major aspects â financing and disbursement parameters, procurement policies and
approach, SHS business model â had to undergo modifications to keep up the pace of
implementation\. Without such adjustments, the project would likely have stalled /failed\.
An appropriate feed-in-tariffs policy and its consistent and transparent application
are crucial to spur growth of small scale and non-conventional renewable energy
x
generation\. The low transaction costs enabled by attractive feed-in-tariffs crowded in
project developers and investors, as well as commercial/investment banks to develop and
invest in a variety of distributed generation projects\. Market confidence was enhanced by
consistent and transparent application of the policy by the regulator / government\.
Investments in off-grid electrification could be underutilized or even abandoned in
the event of a faster than expected arrival of the electricity grid\. To mitigate this,
the expansion of the grid should be coordinated with off-grid investments, and,
where warranted, the off-grid facilities should be made grid-compatible to ensure
their continued utility\. In Sri Lanka, as the electricity grid expanded faster than
expected, the decreasing necessity and relevance of off-grid electrification was not
foreseen early enough, resulting in some off-grid facilities falling into disuse or neglect\.
This experience points to the need for planning ahead for a coordinated access rollout,
and making policy and technical provision for making the off-grid facilities grid-
compatible and economically viable\.
Caroline Heider
Director-General
Evaluation
1
1\. Background and Context
1\.1 Sri Lanka has become a lower middle-income country, with GDP per capita
reaching US$3,194 in 2013, putting the country ahead of others in the South Asia region
in this respect\. The country is shifting from a predominantly rural-based economy to an
urban economy oriented around manufacturing and services\. Currently, services account
for 59 percent of the economy, followed by manufacturing at 30 percent and agriculture
at 11 percent\. Growth in Sri Lanka has been inclusive, with poverty rates declining
dramatically to 9 percent in 2010 from 22 percent in 2002\. Moreover, inequality in per
capita consumption expenditure has declined as reflected by a drop in the Gini
coefficient 1 from 0\.40 to 0\.36 between 2002 and 2010\. Sri Lanka notably outperforms the
South Asia average on progress towards meeting the Millennium Development Goals\.
While South Asia as a whole is on track or is an early achiever for only nine indicators,
Sri Lanka manages this for 15 of the 22 Millennium Development Goal indicators\. (WDI
2013)
1\.2 The end of the civil war in 2009 and a well-educated workforce are expected to
facilitate Sri Lankaâs economic growth in the coming years\. The Governmentâs vision for
future development, as presented in its 2010 âMahinda Chintanayaâ â Vision for the
Future, has targeted GDP per capita of above US$4,000 by 2016 through sustained real
growth of over 8 percent per annum\. While economic activity has been mostly private
sector driven through strong private consumption and investment, public investment has
contributed through large infrastructure projects, including post war reconstruction efforts
in the Northern and Eastern provinces\. The economyâs growth is expected to drive up
demand for energy, especially electricity\. Energy demand in the industry sector is
expected to grow at 3\.0 percent through 2035 and electricity demand in particular may
see an even higher rate of increase at 5\.5 percent per year (ADB 2013), driven also by
increasing consumption by households\.
POWER SECTOR
1\.3 In 2002, nearly 60 percent of the then 19 million population of Sri Lanka had
access to electricity and the levels of access varied significantly among regions of the
country\. The Western Province had about 80 percent access to electricity while other
Provinces (e\.g\. Uva) had less than 30 percent\. 2
1\.4 Recognizing the importance of electrification to the expansion of the economy
and for the countryâs overall development agenda, the Government set a target of 75
percent electrification island-wide by the year 2007, which was achieved with a yearâs
delay in 2008\. By end-2012, the access rate had reached 94 percent of households in the
country through aggressive grid expansion\. The Government plans to provide access to
the remaining unconnected population within the next couple of years to reach universal
1
Gini coefficient measures the degree of inequality in the distribution income in a country\. The more nearly equal a
country's income distribution, the lower its Gini index
2
Ministry of Finance; Ministry of Power and Energy\.
2
access status\. About 40,000 households in remote areas are identified for off-grid options,
including solar, mini-/micro-hydropower\.
Figure 2 Rate of electrification in Sri Lanka (1976-2012)
100
90
Households electrified (%) 80
70
60
50
40
30
20
10
0
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Year
Source: Ceylon Electricity Board
Institutional Structure
1\.5 The Power sector is overseen by the Ministry of Power and Energy (MPE), which
is also responsible for policy making\. The Ministry of Power and Energy sets policy
goals, targets and broad strategies periodically, including the institutional responsibilities
for achieving the same\. The Sustainable Energy Authority (SEA) was established in 2007
under the Ministry of Power and Energy to plan, promote, facilitate and coordinate the
development of non-conventional renewable energy (NCRE, e\.g\. solar, wind, biomass,
mini- and micro-hydro)\. In 2013, the policy and oversight responsibilities for renewable
energy were transferred to the Ministry of Environment and Renewable Energy (MERE);
the Sustainable Energy Authority also moved under the MERE\.
1\.6 The power sector is regulated by the Public Utilities Commission of Sri Lanka
(PUCSL)\. The PUCSL was set up in 2002 under an Act to regulate infrastructure sectors;
currently electricity, water and petroleum industries are under the purview and
responsibilities of PUCSL\. In the power sector, PUCSL has since gradually developed
capacity to carry out its responsibilities covering several aspects, namely, consumer
protection, tariff setting, dispute resolution, licensing, performance standards, grid code,
etc\. The PUCSL also set feed-in-tariffs for non-conventional renewable energy, approved
standard power purchase agreements and net-metering regulations\. These functions are
typical and represent the core of regulations for a sector\.
1\.7 The electricity supply is dominated by the Ceylon Electricity Board, which is a
vertically integrated utility responsible for generation, transmission and distribution\. The
Ceylon Electricity Board is functionally organized into separate generation, transmission
and several distribution entities within its corporate structure, which adopt power sales
agreements for entity level activity and performance tracking\. Among the distribution
entities, Ceylon Electricity Board also owns majority shares in the Lanka Electricity
3
Company (LECO), which is a private limited company established in 1983 to carryout
retail sales to certain industry customers and large domestic customers\. Lanka Electricity
Company distributes about 10% of Ceylon Electricity Boardâs total sales\. In the
generation, there are a number of independent power producers (IPPs) who supply to the
Ceylon Electricity Board\. The Energy Policy of 2008 contemplated unbundling of the
Ceylon Electricity Board into separate generation, transmission and several distribution
companies and stops short of introducing competition in the electricity market\. The
schematic of the current industry structure is shown in Figure 2 below\.
Figure 2\. Structure of the Electricity Industry in Sri Lanka
Source: PUCSL Annual Report, 2012
Demand-Supply Balance
1\.8 Sri Lanka is the only country in the region to have installed adequate generation
capacity to meet demand\. The evolution of demand and supply capacity over the 2000-
2012 is summarized in Table 1 below for select years\.
4
Table 1: Evolution of Installed Capacity and Peak Demand (2000-12)
2000 2005 2010 2011 2012
Installed Capacity (MW)
Major Hydro 1,137 1,207 1,207 1,207 1,357
Thermal 685 1,115 1,389 1,689 1,695
NCRE 16 89 221 244 315
Total (MW) 1,838 2,411 2,818 3,141 3,368
Maximum Demand (MW) 1,748 1,955 2,163 2,146
Gross Generation (GWh):
Major Hydro 2,813 3,222 4,988 4,018 2,727
Thermal 3,512 5,339 5,063 6,896 8,416
NCRE 47 282 731 725 735
Total (GWh) 6,372 8,844 10,738 11,628 11,879
Sales (GWh) 5,443 7,253 9,209 9,990 10,407
System losses (%) 14\.6% 17\.2% 14\.2 14\.1% 12\.4%
Ave\. Revenue (LKR/kWh) 4\.85 7\.99 13\.10 13\.42 15\.73
Ave\. Revenue (US cents/kWh) na 7\.83 11\.79 11\.78 12\.27
Source: SEA Statistics (2012)
1\.9 Sri Lankaâs power supply is heavily reliant on thermal power plants, mostly oil-
based\. The share of oil-fired power gradually increased from 1995 and quickly reached
54\.2 percent in 2000, and has since stayed around 50 percent\. 3 Most of the countryâs
hydropower resources have already been developed\. The country has no domestic
production of coal, crude oil, or natural gas, and as a result all the fossil fuel demand is
met through imports\. The high reliance on oil-fired power, together with growing
international oil prices, has pushed up the cost of electricity generation, whereas the tariff
adjustments, though aggressive, lagged the levels required for full-cost recovery\. For
example, in 2011 and 2012, the average revenue / tariff levels were approximately LKR
2\.20/kWh below the level that were necessary for the Ceylon Electricity Board to avoid
operating losses 4\. The April-2013 tariff adjustment expected to result in average tariff of
LKR 17\.73 to 18\.60/kWh 5, and hence the 2013 financial outcome for the Ceylon
Electricity Board and the sector is expected to be positive\.
1\.10 In parallel with tariff adjustments, and in response to rising power generation
costs, the Government supported the construction and operation of two coal-fired power
stations with a total capacity of 1,400 MW, of which 300 MW in the first phase of the
Norochcholai coal-fired power plant was already commissioned in 2011; an additional
600 MW of capacity is under construction\. Since a large part of the cost is attributed to
oil-based generation to meet peak power demand, base load coal power plants are
unlikely to lower the overall supply costs significantly, whereas non-conventional
renewable energy plants should be able to replace the oil-based peak load power plants,
thereby helping lower the costs of supply (see Figure 3 below)\. On the tariffs side, the
average level for 2013 is estimated to exceed US cents 14\.0/kWh, the highest in South
3
International Energy Agency Statistics; IEA\.org
4
Authorâs estimate using CEB operating statements
5
Based on CEB and PUSLK documents
5
Asia\. Increasing further to cover higher fuel costs would likely be difficult for socio-
political reasons and Sri Lanka has opportunities to explore and realize cost reduction in
electricity supply\. Therefore, the growth and diversification of sources of electric power
generation that also lower average cost of supply is an urgent issue for Sri Lankaâs power
sector\.
Figure 3: Cost of Power Generation (LKR/kWh) from Various Power Plants
Source: PUCSL
Reliability and Quality of Supply
1\.11 Sri Lankaâs power system losses (see Table 1 above) indicate an improving trend
and the level of losses at about 12\.4% in 2012 is not unusually high for a rapidly growing
network in developing countries, but could be further improved\. According to Enterprise
Survey (2011), the number of electrical outages in a typical month stood at 4\.1 (compared
to 18 for South Asia) and the duration of a typical electrical outage was 1\.1 hours
(compared to 1\.2 in South Asia)\. This is also corroborated by a survey by World
6
Economic Forum 6 which showed consistent improvement in quality of electricity supply
from 2006 through 2013\. The index 7 was at 3\.8 in 2006 and improved to 5\.0 by 2012\.
World Bank Group support for Sri Lankaâs electricity sector
1\.12 The World Bank has played a significant role in supporting the electricity sector
in Sri Lanka over the past two decades providing nearly US$300 million for investment,
policy reform and technical assistance\. The Energy Services Delivery project (1997-
2003) financed by the World Bank and Global Environment Facility (GEF) demonstrated
that off-grid systems â such as solar home systems (SHS) and community-level
independent grids â were a viable option to serve the population living in remote rural
communities where the grid had not reached\. It also demonstrated that mini-hydro and
other renewable energy technologies such as wind and biomass had potential to
contribute to the energy mix in the grid and could add diversity to electricity generation\.
As renewable energy technologies use indigenous resources, this would lead to a
reduction in the import of fossil fuels for power generation\. The Energy Services
Delivery project had also proven to be a catalyst for engaging the private sector to invest
in renewable energy development\.
1\.13 IFC has contributed through a program called PADGO or Portfolio Approach to
Distributed Generation Opportunity\. The IFC supported an innovative risk sharing
facility with two commercial banks, in combination with advisory services, in supporting
small hydro and wind power projects with total installed generation capacity of 65\.4MW
thus far, enabling 72,000 MT GHG emissions reduction yearly\. IFC has also provided
direct financing for wind power generation\.
1\.14 Building upon the earlier Energy Services Delivery project, the RERED project
helped scale-up renewable energy with participation of private sector investors and
financing in a significant way\. Across the stakeholders group, the RERED project
remains the pioneer in establishing the framework for private sector led renewable energy
development in Sri Lanka, institution and capacity building, and as a catalyst for critical
policy development in the sector\. Deepening the liquidity in the financial sector for much
longer-term financing that is more suitable for financing utility scale renewable energy
projects is a pressing need in Sri Lanka\. Such financing would not only lower the
annuitized tariffs, but also help Sri Lankan project developers to compete with
international bidders for such types of power plants, e\.g\. large solar and wind farms being
prepared\.
1\.15 In the following sections, the RERED project is assessed, followed by lessons
drawn from the overall project experience\.
6
World Economic Forum (WEF): The Global Competitiveness Index data platform\. Available at
http://www\.weforum\.org/issues/competitiveness-0/gci2012-data-platform/
7
The index measured the response to: âHow would you assess the quality of electricity supply in your country (lack
interruptions and lack of voltage fluctuations)?â[1=insufficient and suffers frequent interruptions; 7=sufficient and
reliable]\.
7
2\. Renewable Energy for Rural Economic Development
(RERED) project
Objectives, Design, and their Relevance
OBJECTIVES
2\.1 According to the Project Credit Agreement (June 12, 2002), the project
development objectives were to (i) improve the quality of rural life by utilizing off-grid
renewable energy technologies to provide energy services to remote communities; and
(ii) promote private sector power generation from renewable energy resources for the
main grid\.
2\.2 The global environment objective as stated in the Project Appraisal Document
was to reduce atmospheric carbon emission by removing barriers and reducing
implementation costs for renewable energy and removing barriers to energy efficiency\.
There is no statement of the global environment objective either in the Project Credit
Agreement or the GEF Project Agreement 8 documents\.
RELEVANCE OF OBJECTIVES
2\.3 Relevance of the project development objectives is rated High\. The objectives of
the project were highly relevant to Sri Lankaâs priorities, the Bankâs partnership strategy,
and global energy and climate concerns, both at the time of project appraisal and project
completion\.
2\.4 The grid-connected renewable energy development under the project is in line
with the Governmentâs October 2006â National Energy Policy and Strategies of Sri
Lankaâ 9 which sought to: (i) provide basic energy needs; (ii) improve energy security;
and (iii) use indigenous resources for these purposes\. It is also consistent with the
Governmentâs âMahinda Chinthanaya â Vision for the Futureâ which commits to
increasing generation from renewable energy (excluding large hydro) to 20 percent of
total generation by 2020 corresponding to about 4,000 GWh/year (or approximately 1300
MW in installed capacity)\. The off-grid effort under the project remains highly relevant
to the Governmentâs priorities: to achieve a 100 percent electrification goal, the
Government has been investing significantly in network expansion, including off-grid
means to electrify roughly 40,000 customers who are âbeyond the last mile,â and adding
new generation capacity\.
2\.5 While the foundations had been laid for sustainable growth of the renewable
energy industry in Sri Lanka â to which the Bankâs earlier Energy Services Delivery
project had contributed significantly â critical barriers still needed to be addressed to
maintain the momentum: the relatively small size of the market; lack of a level-playing
8
The GEF Project Agreement refers to the âthe objectives of the Project as set forth in Schedule 2 to the Development
Credit Agreementâ, but there is no statement to be found there\.
9
Government of Sri Lanka: Gazette Notification No\. 1553/10 â June 10, 2008
8
field for private sector participants; limited access to long term financing with domestic
fund mobilization being mainly short term; integrating renewable energy in the countryâs
overall electrification strategy; and establishing a sustainable and transparent basis for
subsidies for rural electrification\.
2\.6 The project continues to be relevant to the latest Country Partnership Strategy
(FY2013-16) that supports sustained private and public investment; and improving living
and standards and social inclusion\. The project was also consistent with the World
Bankâs Country Assistance Strategy (FY97-99) which included promotion of sustainable
private-sector led growth; increasing efficiency in delivery of infrastructure, especially in
rural areas; preserving the environment; and working closely with communities and non-
Governmental Organizations (NGOs) to generate development solutions\. The project
objectives were also aligned with the GEF Operational Program 6 which covers
promoting renewable energy by removing barriers and reducing implementation costs\.
The development of grid-connected renewables responds to the 2009 Country Assistance
Strategy goals of improving infrastructure provision, improving the business environment
for stronger entrepreneurship and knowledge-based economy, and improving economic
opportunities in North and East of the country\.
DESIGN
2\.7 The project financed investments in renewable energy, energy efficiency and
demand side management as well as technical assistance to support capacity building and
implementation, and M&E surveys\.
Component 1\. Grid-Connected Renewable Energy Power Generation (At appraisal:
US$150\.3 million; At completion: US$204\.9 million): Continuation of refinancing
support for mini-hydro projects provided under the preceding Energy Services Delivery
Project, and support for two other commercially available renewable energy sources -
wind and biomass, to result in an increase of nearly 85 MW of grid-connected small-scale
renewable energy capacity\.
⢠Mini Hydro Projects: In addition to a pipeline of eight projects, totaling 39
MW, in an advanced stage of development, an additional 20-25 MW\.
⢠Wind Projects: Commercialization and up-scaling of wind development,
including exploring the possibility of off-shore development\. Technical
assistance would be provided for business development, feasibility studies,
and off-shore resource assessment\.
⢠Biomass: Support the marketing of viable grid-connected biomass projects\.
Focus initially on small-scale co-generation/gasification projects in the
coconut and tea-industry and on larger scale projects with potential biomass
plantations\. Technical assistance for business development, feasibility studies,
and regional trade shows, as well as longer term financing for developers
through the Participating Credit Institutions (PCIs)\. Additional support for
pilot biomass gasification investments was to be determined and implemented
during the life of the project\. Subprojects anticipated were one 8 MW project
(coconut-based) and about 4-5 smaller biomass generators in the range of 1-2
MW based on wood waste (from saw mills) and/or new plantations\.
9
Component 2\. Solar PV Investments (At appraisal: US$63\.7 million; At completion:
US$43\.7 million): Credit and grant support for solar PV investments for household,
commercial, and institutional use to enable the market to become fully commercial\. In
particular, the Project's proposed refinance, grant, and technical assistance support would
seek to solidify the existing middle-range solar home system market and expand service
to other applications such as: (i) smaller systems accessible to poor households; and (ii)
community applications for health clinics, schools, street lighting, etc\. Further capacity
building would be provided in respect of micro-finance institutions and other household
financing organizations serving limited communities to expand credit access\. These
measures would enable Sri Lanka to achieve the indicated target of 85,000 solar systems\.
Component 3\. Independent Grid Systems (At appraisal: US$5\.3 million; At
completion: US$2\.6 million): Support further commercialization of village hydro and
other community-based independent grid systems through refinancing and grant support
for investments and project preparation support\. Additionally, technical assistance would
address such issues as daytime electricity use for income generation activities and
mechanisms for disposal of assets once an area served by an independent grid is
connected to the national system (stranded assets)\. The status of independent grids within
the sector reform agenda would also be emphasized in the broader sector technical
assistance\. The indicative target was access for 15,000 new households and enterprises
through independent grids - village hydro projects, as well as projects based on biomass
and other technologies, where feasible\.
Component 4\. Energy Efficiency and Demand Side Management (DSM) (At
appraisal: US$2\.0 million; At completion: US$0\.3 million): Provide TA and limited
credit support for further private sector development for provision of energy efficiency
services, including a framework for integrating sustainable implementation of such
programs into sector reforms\. It was envisioned that responsibility for energy
efficiency/demand-side management (DSM)-related policy and regulatory issues, as well
as implementation of public-policy type DSM programs would rest with the Government,
regulator, or utility, while private sector enterprises such as Energy Service Companies
(ESCOs) would implement commercially viable energy efficiency projects\.
Component 5\. Cross-sectoral Energy Applications (At appraisal: US$4\.9 million; At
completion: US$0\.04 million): Provide rural enterprises credit support for larger systems\.
Provide TA to service institutions for the development of energy, and standardized
energy packages to create awareness and to integrate energy provision into improved
service delivery\. In addition, co-financing support would be provided for investments in
selected areas\. Commercial/institutional support would include TA aimed at
mainstreaming productive applications in off-grid systems\. The project sought to connect
at least 1,000 institutional and commercial systems, spurring interventions that are
critically important in restoring economic development in the country's northern and
eastern areas\.
Component 6\. Technical Assistance (At appraisal: US$5\.7 million; At completion:
US$2\.3 million): In addition to the component-specific assistance described above,
technical assistance under the Project was projected for the following activities: project
administration/ promotion; subproject promotion/development support; technology/
10
market introduction/ promotion/capacity building related to renewable energy and energy
efficiency; cross-sectoral energy applications; sustainability; and monitoring and
evaluation\.
2\.8 Additional financing: Following a mid-term review in 2005, which noted an
increase in demand for independent power projects, an additional financing of US$40
million was approved by IDA in 2007\.
2\.9 Project Restructuring: The first restructuring (level 2, implying that project
objectives were not changed), which was carried out on October 18, 2010, revised the
end-of-project target for component 2 (âoff-grid renewables) from 161,000 households,
small and medium enterprises and public institutions to 113,500 as recommended by the
Ministry of Power and Energy\. The Bank considered the reduced target was appropriate
given the faster than anticipated pace of grid expansion, which reduced the demand for
off-grid renewable solutions\. A second restructuring (level 2; June 16, 2011) extended
the closing date by 6 months\. This was necessary to enable ongoing investments to be
completed and to make up for the delay in effectiveness of the Additional Financing
credit\.
Relevance of Design
2\.10 Relevance of project design is rated Substantial\. The Project had two distinct
objectives, the first to improve the quality of life in rural areas through provision of off-
grid electricity, and the other to augment generation capacity for the grid through
promoting private sector involvement in renewable energy resources for the main grid\.
Both the objectives were united by the focus on renewable energy, and on augmenting
the available generation capacity in the country\. The global development objective of
decreasing Greenhouse Gas (GHG) emissions derived from the use of renewable energy
to displace fossil fuels\.
2\.11 In tracing the results chain, provision of off-grid rural electrification was an
appropriate choice based on the assessment â at appraisal â of the speed at which the grid
was expanding to rural areas\. The provision of off-grid electricity would give a jump-
start to the rural areas distant from the grid, to experience the expected social and
economic benefits from rural electrification\. In retrospect, the pace of grid expansion
turned out to be much faster than anticipated due to greatly increased emphasis on grid
expansion by the Ceylon Electricity Board with the support of Government 10 during the
project implementation period\.
2\.12 Given the limited options for expanding generation capacity (Sri Lanka has low
indigenous fossil fuel resources and has exploited most of its large hydro potential) the
choice or pursuing new renewable sources (Mini-hydro, Solar, Wind, Biomass) to feed
the grid was appropriate, as these would help replace higher cost liquid fuel based power
plants\. Also, because of the distributed nature of such resources, the potential for local
development and savings in GHG emissions was significant\.
10
The AU pointed out that national integration was an important goal pursued by the Government, which also helped
faster grid expansion\. e\.g\. during 2008-12, the access increased by nearly 20% (from 75% to 94% of households)
11
2\.13 The inclusion of energy efficiency as a small component was expected to help
consumers through reduced consumption and bills, and the utility by rationalizing load
management and supply\. In retrospect, this component did not fit into the overall design
and objective, although a more broad-based intervention would still be necessary to
effectively address the issues, institutions and processes for orienting consumer behavior
towards energy efficiency, which is also borne out from experience with other Bank
projects\.
Implementation
Planned vs\. Actual Costs
2\.14 The project cost at completion was US$254 million, about 10 percent higher than
the planned US$232 million\. The increase resulted from revised output targets during
implementation, and also due to exchange rate variations\. Almost all of the additional
financing of US$40 million was provided to the grid-connected renewable generation and
solar PV components\. The two components accounted for about 97\.5% of total
expenditures\. The grid connected hydro and wind power investments incurred about 36%
more total costs and corresponding allocation than was envisaged at appraisal\.
2\.15 The independent grid systems component was relatively small in terms of
expenditures (approximately 1 percent)\. The expenditures under the remaining
components were far lower than estimates\. The component on cross-sectoral energy
applications was not implemented as the greater than expected grid expansion during the
project implementation period made these activities either less useful or unnecessary\.
Implementation Experience
2\.16 The project was approved on June 20, 2002 and became effective as scheduled on
October 7, 2002\. The project was implemented through an Administrative Unit (AU)
located in the DFCC Bank, a commercial entity, which continued the role that it had
played under the prior Bankâs Energy Services Delivery project\. The project was
ultimately extended by three and a half years â for reasons explained in the following
paras â and closed on December 31, 2011\.
2\.17 A mid-term review was carried out in September 2005, which noted that the grid-
connected renewable energy effort (component 1) was behind schedule, and that the
independent grid systems (component 3) were facing constraints\. The delays related to
dealing with sub-stations that had reached their maximum capacities, obtaining required
approvals from the Central Environmental Authority and other agencies, and acquiring
land\. The mid-term review made recommendations to overcome these constraints, which
required the cooperation of the Ceylon Electricity Board and Central Environmental
Authority\.
Financing terms and procurement issues
2\.18 Following remedial actions through the mid-term review, the Participating Credit
Institutions encountered problems with refinancing subprojects\. As per the participation
agreements, a Participating Credit Institution to which refinance had been committed by
12
the Administrative Unit or AU located in the DFCC Bank, (which was the implementing
agency for the project) would face cancelation of the refinance if there was no offtake for
12 months\. This long interval increased the prospect of other needy Participating Credit
Institutions being blocked from refinance, and leaving them little time to apply after
unused funds was released\. To address this issue, the Bank and the AU agreed in 2008 to
allow refinancing requests on a first-come first-serve basis until the available funds were
exhausted\. This modified approach resulted in an increase in disbursements and ensured
that the IDA Credit would be fully disbursed by the closing date of the project or during
the grace period\.
2\.19 Subsequently, the Participating Credit Institutions found that the interest rate
stipulated by the project was not in line with prevailing market interest rates\. The original
IDA Credit and GEF grant agreement stipulated an interest rate to Participating Credit
Institutions that was based on a six-month average of the Average Weighted Deposit Rate
(AWDR)\. After additional financing was approved, this was changed to a blend of
AWDR and the Average Weighted Fixed Deposit Rate (AWFDR), with the intention of
bringing the interest rates closer to market rates\. However, market interest rates began to
rise soon after, putting upward pressure on the financing terms for renewable energy
project loans, which resulted in a considerable decline in loan applications 11\. Even after
market rates began to decline rapidly in the second half of 2009, the refinance was slow
to adjust because it was adjusted only every six months\. To address this matter, the Bank
agreed to speed up this adjustment to three month intervals\. This helped to improve the
flow of loan applications and financing of sub-projects increased\.
2\.20 Many project sponsors and Participating Credit Institutions determined that the
requirement to use International Competitive Bidding (ICB) procedures for small value
projects resulted in delays and sometimes in cost overruns\. The thresholds set in 1997
under the previous Energy Services Delivery project were carried over to this project
without taking into account the sustainable price increases since then\. Hence, the
thresholds for the procurement of goods, works, and turnkey contracts was increased in
mid-2009 from US$ 2 million, 3 million and 5 million respectively to US$ 6 million, 9
million and 15 million, above which ICB would apply\. Both Participating Credit
Institutions and project sponsors met by the mission underscored this point and also
expressed their appreciation of the Bankâs responsiveness in this regard\.
Impact of grid expansion on solar PV component
2\.21 Under component 2, sales of SHS fell from 2,000 per month in 2005 to 800 per
month in 2008\. The shrinking of the market was caused by a rapid expansion of the grid
during project implementation and by a reduction or cessation of SHS loans from
financial institutions as the rate of defaults on loans began to rise sharply\. Customers
who had purchased SHSs stopped payments when they were connected to the grid, which
offered functionally superior energy for their applications and needs\. The Participating
Credit Institutions could not resell or salvage the repossessed SHSs effectively\.
Responses to resuscitate this segment such as importing of more cost-effective systems,
11
Commercial Banks met by the mission indicated that project cash flows were sensitive to interest rates in many
cases\.
13
and more radical changes to business model by shifting to cash sales and modification of
the sales services networks were unsuccessful\. By 2009, the AU and the Bank realized
that the targets for solar PV component sales would not materialize, and finally in late
2010 the target for the off-grid renewables component was reduced from 161,000
households, enterprises and institutions to 113,500\. Ultimately the number of solar PV
vendors fell from 14 to 2 12 due to market forces\. The current vendors are supplying SHS
systems on a cash basis or providing credit on their own to consumers\.
Capacity issues with certain project developers
2\.22 Under the component for Independent Grid Systems (component 3) there were
issues related to the quality and technical capacity of some of the village hydro
developers and equipment suppliers\. Project preparation grants were made available for
village hydro projects, to be released in instalments on reaching agreed milestones\. The
Participating Credit Institutions found that many such grants made initially were not
resulting in timely project preparation activities and/or viable projects\. This matter was
addressed through the introduction of a pre-qualification process for all village hydro
developers and suppliers, mandatory testing of equipment prior to installation, and
stricter oversight\. This led to better utilization of grant funds, fewer number of
incomplete projects and overall, a more efficient implementation of the village hydro
component, as noted by the AU\.
Poor uptake of energy efficiency and cross-sectoral energy applications
2\.23 There was little demand for Energy Efficiency and DSM (component 4) which
sought to support energy efficiency sub-projects and awareness campaigns\. The main
reason for this was that the Environmental Friendly Solutions Fund (E-Friends) supported
by Japan International Cooperation Agency, offered similar support at better terms than
the Bank\. The AU decided to focus its attention on the more significant components with
potentially larger impacts on the achievement of the project development objectives and
the global environmental objectives\. However, the allocation to this component was
increased by US$0\.5 million at the time of additional financing\.
2\.24 The cross-sectoral energy applications (Component 5) also had limited demand\.
The grid was expanding rapidly and most rural public institutions such as schools and
hospitals were gaining access to grid electricity and, as such, a long term renewable
energy-based solution was not a priority\. AU also did not push this component and
devoted its attention to the main (larger) components, namely 1 and 2\. The allocation to
this component was unchanged at the time of additional financing\.
Counterpart funding by Government
2\.25 During project implementation, the Government requested that the percentage of
expenditures financed for the technical assistance categories of the IDA Credit and GEF
Grant be increased to 100 percent\. This was due to the difficult fiscal situation at that
12
One microfinance and guarantee company (Sarvodaya) and a solar company (Wisdom Solar) have been resilient and
indicated their resolve to capture the remaining off-grid market, especially in the northern region of the country\. They
also indicated the prospects for expanding solar street lighting with municipalities\.
14
time which was further aggravated by the global economic crisis\. At the height of the
military conflict, solar subsidy payments were delayed by the Government, resulting in
severe cash flow problems to SHS vendors\. This often resulted in payment delays to
suppliers and reputational risks for the Bank\. The increased financing facilitated the
implementation of a critical technical assessment of the power grid absorption capacity as
well as capacity building activities and other technical assistance geared towards scaling-
up investments in new renewable energy technologies such as wind and biomass\. The
increase in expenditures was covered by a reallocation of non-utilized funds from other
categories\.
Restructuring and additional financing
2\.26 The Bank was generally responsive to the emerging implementation issues and
helped resolve them as noted above\. The Bank also responded with additional financing
of US$40 million to scale up the components in demand\. With an average gestation
period of about two years from inception to commissioning, the Bank also approved a
three-year extension to the closing date (up to June 30, 2011) to allow sufficient time for
the additional financing credit to be committed and disbursed\.
2\.27 A second project restructuring was carried out in June 2011 to extend the closing
date further by 6-months to December 31, 2011\. This was partly to make up for the delay
in effectiveness of the Additional Financing credit, and generally to allow activities that
were under implementation to be completed and to ensure satisfactory closure of the
project\.
2\.28 Safeguards\. The project was placed in Category B under the Bankâs
environmental and social safeguard policies\. The proposed project was expected to yield
net positive environmental effects\. The off-grid electrification sub-projects would reduce
use of kerosene and lead-acid automotive batteries\. No significant negative impacts were
expected from the run-of-river village-hydro projects, as demonstrated by the 20 existing
village hydro projects\. Because of their small size, the grid-connected mini-hydro sub-
projects were also unlikely to cause significant environmental damage\. No resettlement
was envisioned because the project did not involve land acquisition with settlements\.
2\.29 IDA had required prior review of: (i) all biomass projects; (ii) mini-hydro
projects with a capacity of more than 5 MW; (iii) wind projects with a capacity of more
than 10 MW; (iv) all projects involving land acquisition and/or resettlement; and (v) the
first two environmental assessments of each Participating Credit Institution for mini
hydro, biomass and wind power projects\. Mini-hydro subprojects would be reviewed by
the Central Environment Authority for compliance with environmental policies\.
Participating credit institutions would ensure that project sponsors obtain GOSL and
IDA-mandated environmental clearances, where necessary\.
2\.30 Discussions with the projectâs task team during the PPAR mission confirm that
the AU followed these procedures diligently\. In addition, the AU contracted consultants
to conduct environmental and social assessments of every grid connected sub-project
before approval, and on a sample basis after commissioning, which also included site
visits\. Based on these assessments, two projects were denied refinancing because of non-
15
compliance with environmental safeguards\. An environmental review for a Pilot Wind
Farm confirmed that it would have minimal environmental impacts, entailed no
relocation of local population and would be located more than one mile outside the
Bundala and Yala wildlife reserves\. Overall, the task team reports that the project was in
compliance with the Bankâs environmental and social safeguards requirements\.
2\.31 The discussions with the Participating Credit Institutions indicated that the project
had enabled their institutions to develop knowledge, skills and approach to handling
safeguards issues in energy projects\. One wind project sponsor felt that the paper work
involved due to specific requirements of World Bank over and above the government
regulations and requirements was excessive\.
2\.32 Financial Management\. The AU had well-established procedures for approval
of disbursements of loan and grant resources and adequate financial management (FM)
staff with sufficient capacity to undertake those responsibilities\. Participating credit
institutions were required to submit refinancing application packages comprising a
complete set of documents\. The Refinance disbursements were made only after providing
proof that Participating Credit Institutions had already disbursed their loans to developers
and such funds were utilized for the stated purpose\. Co-financing grants were disbursed
on submission of proof of installation\. Other grant payments were generally based on
reaching specified verifiable milestones\. Verification of installation of SHS was carried
out on a sample basis\. The Task team reports that these verifications did not find any
indication of unjustified payment requests\. The AU kept detailed records on all payments
made\. To ensure adequate fiduciary controls, IDA reviewed: (i) the first two refinancing
requests, irrespective of size, submitted by each Participating Credit Institution; (ii)
refinancing applications above US$ 3\.5 million; (iii) each Participating Credit
Institutionâs first solar home system refinancing request; (iv) each Participating Credit
Institutionâs first grid-connected hydro, wind and biomass refinancing request; and (v)
each Participating Credit Institutionâs first village based hydro, wind and biomass
refinancing request\. The task team confirmed that there were no qualified audits\.
Achievement of the Objectives
OBJECTIVE 1: IMPROVE THE QUALITY OF RURAL LIFE BY UTILIZING OFF-GRID
RENEWABLE ENERGY TECHNOLOGIES TO PROVIDE ENERGY SERVICES TO REMOTE
COMMUNITIES\. Rated Substantial\.
Outputs
2\.33 The original target formulated at appraisal was to provide 161,000 households,
rural small and medium enterprises and public institutions access to electricity services
through off-grid renewable energy schemes\. In the following years, a greatly increased
emphasis on grid expansion by the Government resulted in an increase of grid connected
domestic customers from 2\.82 million in 2004 to 3\.96 million by 2010 â an increase of
1\.14 million\. Presently, grid electrification now serves 94 percent of households making
off-grid less relevant than originally anticipated at Project Appraisal\. In response to these
developments, the target was reduced to 113,500 based on the forecast demand for off-
grid electrification\. The final accounting for off-grid electrification showed that the
16
project had provided access to electricity to 110,575 households through the sales of SHS
while 6,220 households were electrified through independent grid systems, mainly village
hydro\. In total the project provided 116,795 households access to electricity, which
exceeded the revised target by a small margin\.
2\.34 Of the 110,575 SHS sold to rural households an estimated 20,000 had to be
repossessed because households defaulted on their loans\. In general, the Participating
Credit Institutions only repossessed the modules which were deemed as their only
collateral\. The value of the repossessed modules was insufficient to recover the
outstanding balance\. Further, a small number of SHS and village hydro systems are no
longer used because the households have since been connected to the electricity grid\. On
the other hand, while several village systems have now been connected to the grid, under
a net-metering scheme similar to a Standardized Power Purchase Agreement but for
smaller systems, the off-grid village systems connected to the grid can now sell power to
the utility at an agreed tariff\. This is a win-win situation for the village-communities who
have invested money and sweat equity into their off-grid systems as they can now benefit
from the reliability of the national grid, while continuing to earn revenues from the sale
of electricity generated by their village hydro schemes back to the utility at an agreed
tariff\. Following the pilot scheme adopted by a village hydro (21 kW at Athuraliya
village in Ratnapura), net metering spurred the growth of distributed renewable energy
projects\.
Outcomes
2\.35 Feedback to the IEG mission from beneficiaries in the field confirms that access
to electricity for the first time â both from SHS and the grid â has had a transforming
effect on their lives\. The more significant impacts on the quality of life appear to have
come from better lighting and use of television, even though newly electrified households
and small businesses activities have indicated little improvements in income\.
2\.36 The Bank team attempted to capture outcome data for the project during
implementation through surveying 1,500 households, small/medium enterprises and
public institutions targeted for electrification from the original IDA Credit (1,000) and
the Additional Financing (500)\. The results of the surveys are summarized in the
"Completion Report" which reports on achievements in the period September 2004 to
September 2008\. 13
2\.37 The surveys had found that even in small quantities, electricity consumption
brings about significant lifestyle changes in families, mainly by making home life more
convenient and housework easier\. One finding from the surveys, which was confirmed by
this missionâs conversations with beneficiaries, is that while access to electricity does not
reduce the overall work load of women, it makes their work easier\. Off-grid electricity is
also extensively used for watching television, leading to more awareness of the outside
world, in addition to providing entertainment\. This is considered the next highest benefit
of electricity as it serves to bring remote rural communities closer to the outside world\.
13
Resources Development Consultants (Pvt) Ltd\.: Monitoring and Evaluation of the Renewable Energy for Rural
Development Project\. September 2004 - September 2008\. Completion Report submitted to RERED AU\.
17
Further, the level of social interaction within households and communities increase with
electricity, which contributes in numerous ways to social capital development\. Men spent
more time with the family (80 percent of the respondents in surveys) and reduced time
spent outside of the house including alcohol consumption in the evening (20 percent of
respondents)\.
2\.38 One home owner conveyed that the lighting has given a feeling of safety for her
and her children\. This point was also found in the survey when villagers reported that
they feel safer (60 â 87 percent of the respondents of different surveys) and an increase in
socio-cultural activities resulting from the presence of electricity at religious places in the
villages (80 percent of the respondents)\. The use of computers was also observed in a few
houses electrified by village hydro schemes\.
2\.39 Contrary to expectation, the availability of electricity did not stimulate the
development of new enterprises\. However, it improved operation of existing enterprises\.
According to reports from Participating Credit Institutions and consultants, access to
electricity improved economic activities of 742 (household) enterprises or 0\.6% of total
number of electrified households\. Economic activities that benefited from access to
electricity include grocery shops, bakeries, battery-charging stations, communication
centers, computer training centers, grinding/rice milling and cinnamon processing\.
2\.40 Not all rural households using off-grid schemes have benefitted from the
expansion of the national grid as approximately 40,000 households are expected to still
remain without access to the national grid (including some who are on small islands\.)
This is in addition to thousands who are still using off-grid schemes or other means such
as kerosene for lighting today\. However, for those who have benefitted from faster than
anticipated grid expansion this was a positive development as it provides a higher level of
services and is more affordable for households\. Off-grid electricity supply provided
access to electricity several years before the arrival of the grid to their communities, and
for those households who have yet to receive grid power; the off-grid schemes are still
very much valued\. On the whole, off-grid installations under the project have
demonstrated that SHS and/or independent mini grids are a viable option for rural areas
where the cost of grid extension would be prohibitive for the utility\.
OBJECTIVE 2: PROMOTE PRIVATE SECTOR POWER GENERATION FROM RENEWABLE ENERGY
RESOURCES FOR THE MAIN GRID\. RATED HIGH\.
Outputs
2\.41 The target for this objective was the installation of 135 MW of small-scale
renewable grid-connected power generation capacity (85 MW at appraisal and 50 MW
added under the Additional Financing)\. At completion, the project had supported the
installation of about 185\.3 MW grid-connected renewable energy sub-projects\. This
included 2 wind projects (19\.8 MW total capacity), 1 biomass project (1 MW capacity)
and 68 mini hydro projects (164\.5 MW of total capacity)\. All of these projects are
reported to be functioning with the exception of the lone biomass project which stopped
operations due to difficulties with fuel supply\. All these projects were promoted by
18
private sector developers, using loans provided by commercial banks participating in
RERED\. The Participating Credit Institutions extended loans totaling US$ 122 million
(LKR 12\.84 billion), which is on average 59\.5% of total project cost\. The total
investment was about US$ 205 million (LKR 21\.55 billion)\.
2\.42 As of end-2013, there were 146 non-conventional renewable energy projects
commissioned\. The total installed capacity from those was 367\.3 MW of which about
271 MW (~74%) were mini hydropower based\. In addition, there is a pipeline of about
73 projects for which a Standardized Power Purchase Agreement has been signed
between private developers and the Ceylon Electricity Board, and are expected to add
about 246 MW when completed\. The total energy generated during 2013 from non-
conventional renewable energy capacity was 1169 GWh, which is about 9\.6% of total
generation\. Please see Annex C for details\.
Outcomes
2\.43 Since the close of the project, investments in new projects have continued as
evidenced by the pipeline of projects mentioned in para 2\.42\. Developers have shown a
continued desire to undertake private investment in renewable energy generation even
after support from the project has ceased, since commercial banks continue to finance
these investments\. Sources of funds include private equity, funds raised through stock
markets, foreign equity investors and support from a small IFC loan guarantee facility\.
The Participating Credit Institutions and IFC indicated to the mission that the project had
helped create the momentum for non-conventional renewable energy projects in the
country and that there is now competition among banks and investors to invest in these
projects\.
2\.44 Feedback to the mission from government officials, Participating Credit
Institutions and developers suggests that the project was instrumental in developing a
vibrant renewable energy industry in Sri Lanka\. Greater demand for support services is
noted, including project development, technical design, construction, equipment
manufacturing, and financing, though no specific data was available in this regard\. The
project has contributed to the formation of several developer associations, including for
solar, wind, village hydro and small hydropower\. The IEG mission met with select
developer associations that continue to be active today and play an important role in
representing their industry in government, regulatory and other consultations\. The
collective feedback from government officials, Participating Credit Institutions and
developers supports the claim that Sri Lanka now has a viable renewable energy industry\.
A significant number of developers, manufacturers, and financiers are venturing abroad
to undertake investments in renewable energy projects in other countries in Asia and
Africa\. A few examples include: five Sri Lankan mini hydro developers are now active in
East Asia; Lanka Ventures, an equity financier, is investing in mini hydro projects in East
Africa; VS Hydro undertakes its own contracting and manufacturing of turbines in Sri
Lanka and has investments in Uganda, Tanzania and Kenya\. An 18 MW plant in Uganda
uses three 6 MW turbines manufactured in Sri Lanka\.
2\.45 The AU and the Sustainable Energy Authority noted the value added from several
technical assistance initiatives under the project\. The regulatory agency (Public Utilities
19
Commission of Sri Lanka) noted that the project had enabled a better understanding of
structuring Power Purchase Agreements\. Across the stakeholder groups, the project is
credited to have enabled knowledge sharing through periodic consultative meetings,
which were reported to have helped many project sponsors and Participating Credit
Institutions to fine tune their activities and interventions\. One independent consultant and
energy expert noted that this was effective because of the relatively higher level of skills
and absorption capacity among institutions in Sri Lanka\.
2\.46 As a result of increased renewable energy activity, rural communities have
benefitted from both temporary and long-term employment opportunities from
construction and operations of the sub-projects and overall improved infrastructure as
Government has undertaken construction of new roads and/or repair of existing ones to
facilitate the construction activities for some of these sub-projects\. A number of villages
benefitted from piped water supply, construction of houses, school facilities, community
centers and improved facilities at places of worship\. Developers carried out these
improvements mainly to create goodwill among the villagers, while some were done as
compensation payments to the villagers\.
GLOBAL ENVIRONMENTAL OBJECTIVE
GLOBAL ENVIRONMENTAL OBJECTIVE: TO REDUCE ATMOSPHERIC CARBON EMISSION BY
REMOVING BARRIERS AND REDUCING IMPLEMENTATION COSTS FOR RENEWABLE ENERGY
AND REMOVING BARRIERS TO ENERGY EFFICIENCY\.
2\.47 The indicators for achieving the global environmental objective were: (i) avoiding
emissions of 1\.25 million tons of CO2; and (ii) promotion of the adoption of renewable
energy by removing market barriers and reducing implementation cost\.
2\.48 The teamâs estimates of CO2 avoidance are straightforward and credible\.
Assuming an average carbon emission coefficient for Sri Lanka of 0\.8 kgCO2/kWh 14, the
resulting avoided emissions of sub-projects commissioned to date is 1\.84 million tons
CO2; surpassing the target of 1\.25 million tons of CO2 by 47 percent (the quantifiable
indicator was not increased with the additional financing)\. By estimating the total
expected generation from all plants commissioned in 2012 or those expected to be
commissioned by yearâs end, the volume of avoided CO2 emissions would be 2\.15
million\. The avoided emissions are calculated from the actual renewable electricity
production and conservative estimates for the total annual electricity generation over the
lifetime of the sub-projects\. The resulting reduction in carbon emissions can also be
attributed to the off-grid schemes as well, though these are far smaller in volume than
emissions avoided from the grid-connected sub- projects\. The coefficients used for
estimates of CO2 evidence at appraisal continue to be valid at present\. Ongoing activity
in grid-connected renewables and off-grid renewables following project completion
continues to add proportionately to CO2 avoidance\.
14
This value is for marginal power plants which are diesel and fuel oil based, and can be displaced by the new
renewables financed under the project\.
20
2\.49 The design of the project also included an engagement on energy efficiency
through a small component; however, the limited resources allocated for energy
efficiency and demand-side management (DSM) (US$ 2 million equivalent or 0\.9% of
the total financing) made a significant impact unlikely\. Moreover, a low interest credit
line for energy efficiency extended by the Japan International Cooperation Agency
(JICA) made RERED funds far less attractive\. The project therefore did not result in any
direct CO2 reductions from the energy efficiency and DSM component\.
2\.50 The removal of market barriers is evident from the additional installed capacity of
grid-connected renewable energy, improved all-round sector capacity, and viable private
sector activity in this area as describe in the discussion under objective 2 above\. In
contrast to the situation prior to the project there is now far greater familiarity and
willingness to lend by commercial banks for grid-connected renewable energy projects
and the Ceylon Electricity Board is far more oriented to purchasing electricity from grid-
connected renewable energy plants\.
Efficiency
2\.51 The efficiency of the project in meeting its objectives is rated Substantial\. The
economic and financial analysis was based on representative stylized sub-projects from
the feasibility study at appraisal, compared with actual projectsâ data at close\. Under the
financial intermediary mode followed by this project, the verification of the financial
viability of the sub-projects within the feed-in tariff regime was the responsibility of the
lending commercial banks which also bore the full credit risk of the sub-projects\.
2\.52 Mini-hydropower plants\. Grid-connected mini- and micro-hydropower plants
were the dominant investment in the âgrid-tiedâ component\. A mini hydro sub-project
was used as a representative project for the economic and financial analyses\. Post
completion, the Economic Internal Rate of Return (EIRR) was 46 percent for a
representative 2\.5 MW mini hydro plant with an investment cost of US$1,445/kW, a
plant factor 15 of 38 percent and an avoided cost of US$0\.252/kWh based on Short-Run
Marginal Cost (SRMC) of highest cost thermal plants offset by the mini hydro
generation\. The economic analysis at Appraisal for a 1\.5 MW mini hydro plant showed
an EIRR of 24 percent\. The higher EIRR is attributed to the higher avoided cost even
though plant factor was lower and investment cost higher than at appraisal\.
2\.53 Solar Home Systems\. Households using a SHS save on kerosene for lighting and
batteries and receive far superior and safer lighting services from electric lighting
compared to kerosene lighting\. Based on a 40 Wp SHS for a representative analysis, the
ICR estimated the EIRR at 88 percent when consumer surplus (attributed to the far
superior electric lighting) is considered and 13 percent if consumer surplus is
disregarded\. There was no EIRR calculated at appraisal for this component\. However,
since about 20,000 SHSs were not used by beneficiaries (which is about 18% of all
SHSs), spreading the cost of these over the remainder of the SHSs should reduce the
EIRR\.
15
The ratio of the average power load of a plant to its rated capacity
21
2\.54 Village hydro plants\. A village hydro plant saves kerosene for lighting and
batteries as well as providing far superior and safer electric lighting services compared to
kerosene lighting\. Beyond meeting householdsâ basic electricity needs, they have the
potential to meet other electricity needs in the community such as ironing, water
pumping, and power for small enterprises\. The EIRR of a representative sub-project was
calculated taking into account only savings due to avoided kerosene and battery use as
well as consumer surplus gained from using superior electric lighting\. The EIRR for a
representative sub-project with a capacity of 8 kW and serving 30 households is 54
percent when consumer surplus is considered and 9 percent if consumer surplus was not
considered\. In comparison, the EIRR of a typical village hydro sub-project was reported
as 12 percent at Appraisal\.
2\.55 The project cost increase of 10 percent (US$254 million vs\. the original estimate
of US$232 million) is in line with the significant upward revision and achievement of
targets for grid-connected renewable energy, while noting the decrease in targets and
achievements for SHS\. The time overrun of three and a half years on top of the originally
planned six and a half years implementation period was due to the increased targets and
achievements, and the adjustments that were appropriately made in response to
intervening political, financial and market conditions\. As noted in the mid-term review,
there were also delays in activities relating to overloaded substations on the part of the
Ceylon Electricity Board and granting required approvals by the Sustainable Energy
Authority that also contributed to the delay\. Taking all these factors into consideration,
efficiency is rated substantial\.
Ratings
OUTCOMES
2\.56 Overall project development outcome is rated Satisfactory\. Relevance of the
project development objective is rated high because of Sri Lankaâ priority and the Bankâs
supportive strategy to contribute to rural well-being through improved provision of
electricity access and to reduce dependence on imported fossil fuels as a source of
electricity\. Relevance of the projectâs design is rated high because of its logical approach
of leveraging renewable energy sources for both off-grid and grid-connected provision of
electricity to improve access and therefore positively impact beneficiaries, especially in
rural areas, while displacing the use of fossil fuels\. The Efficacy of the first objective of
improving the quality of rural life through off-grid renewable technologies is rated
substantial due to significant outcomes from the spread of SHS in unserved rural areas,
though this process was overtaken to some extent by the parallel advance of the
electricity grid\. The second objective of promoting private sector power generation from
renewable energy resources is rated high from the higher greater than expected
achievements from various renewable energy sources\. Efficiency of the project is rated
substantial (rather than high) mainly due to the avoidable causes that contributed to the
significant time overrun, even though the economic rate of returns are very favorable\.
Overall Development Outcome of the project is rated satisfactory based on the ratings
for relevance, efficacy and efficiency\.
22
2\.57 Global environment outcome\. CO2 emission reductions were greater than
expected due the significant lowering of market barriers to renewable energy
development and the overall achievement of renewable energy under the project being
greater than originally planned\.
RISK TO DEVELOPMENT OUTCOME
2\.58 The risk to the improved quality of life from utilizing off-grid renewable energy
technologies to bring electricity to remote communities is considered low\. Also, the risk
of communities no longer using the off-grid renewable energy technologies for reasons
other than the arrival of the grid is low\. Once the users have experienced the benefits of
off-grid electrification they are seen to make considerable efforts to maintain this service\.
In many cases, the off-grid options may be maintained as a back-up or to reduce the grid
electricity bill\.
2\.59 At Appraisal, the Governmentsâ rural electrification policy envisaged that 20
percent of the population would remain reliant on off-grid electricity supply\. At present,
the Government expects to achieve full electrification by 2016, of which a relatively low
number of 40,000 households would have to be served by off-grid means\. The
Government also targets a share in generation capacity for non-conventional renewable
of 15 percent by 2015 and 20 percent by 2020\. By 2013, the generation from non-
conventional renewable energy sources had reached about 9\.6 percent\. Apart from the
numerical targets, further addition of non-conventional renewable energy is critical for
managing the peak load demand as well as replacing expensive oil-based power plants,
thereby lowering the average costs of generation\. Hence the sustainability of the projectâs
outputs and outcomes are very important to the sectorâs developmental priorities\.
Role and support of Ceylon Electricity Board
2\.60 Stakeholders expressed mixed views to the mission about the Ceylon Electricity
Boardâs active support for grid-connected renewable energy, mainly attributing this to a
lack of consensus among its key constituents and management\. However, there are signs
that the Ceylon Electricity Board has emerged from its earlier reluctance towards grid-
connected renewable energy\. For instance, the Ceylon Electricity Board has
acknowledged that power purchased from small renewable energy plants had saved the
utility LKR 2 billion in electricity generation costs in 2010 through reduced expenditure
on imported heavy fuel oil and other fossil fuels\. Following the April 2013 tariff
adjustments, the Ceylon Electricity Board estimates show that its average selling price
could exceed the average purchase cost of energy from non-conventional renewable
energy\. Ceylon Electricity Boardâs projections indicate that non-conventional renewable
energy would be a viable option to pursue in supply cost reduction\. Please see Annex C
for details\. Project developers and the Ceylon Electricity Board both have a mutual
interest in maximizing renewable energy production, particularly to minimize use of
imported fossil fuel as the alternative for electricity generation\.
23
Continuing financing for NCRE projects
2\.61 One major criterion for measuring the impact of this project is the continued
lending for renewable energy projects by commercial banks and the initial findings post
project completion are very encouraging\. As noted (in para 2\.42) 73 new projects are in
the pipeline and would add another 246 MW to non-conventional renewable energy
capacity in the country\.
2\.62 Small hydro development is now considered a commercially viable activity by
Participating Credit Institutions and developers\. Sufficient technical expertise for this
purpose exists within the country\. All this is borne out by the large number of mini hydro
projects in the pipeline\. However, development of village hydro without the type of
support provided by this project is unlikely while the need is also declining due to rapid
grid expansion\. Developers active in village hydro have moved to other areas and some
are now providing consultancy services in India and Africa\.
2\.63 Biomass generation, and to a lesser extent wind and solar power generation, are
still facing a number of barriers and support to overcome these barriers would be useful\.
These barriers include technical (integration with grid issues), regulatory (feed-in-tariffs)
and financing (suitable terms) barriers\. The Asian Development Bank is providing
technical assistance support in this regard, and indicated its readiness to follow with
financial support for investments\.
2\.64 The demand for SHS systems can be positively impacted by the net metering
regulations introduced by the regulator (Public Utilities Commission of Sri Lanka) that
allow individual SHS customers to offset their payments to the utility with electricity
generated from their SHS systems at the retail tariffs\. A few of these schemes (limited to
42 kWp per facility) are now in operation as residential tariffs have recently been
increased to as much as LKR 50\.4/kWh (including fuel adjustment surcharge for higher
consumption category; currently about US$0\.38/kWh)\. As the Ceylon Electricity Board
and the Public Utilities Commission of Sri Lanka continue to fine tune the net-metering
regulations, they need to ensure that the boost these have provided to the SHS industry is
sustained\.
2\.65 In respect of SHS, only two vendors are currently active out of the fourteen at the
peak of sales\. Some of the technicians trained under the Energy Services Delivery and
the RERED projects are providing independent after sales services in their areas and the
remaining SHS vendors depend on their services to fulfill their obligations\. One vendor
(Wisdom Solar) has shown resilience by marketing solar street lamps to municipalities,
and capturing business in some remote areas in the northern part of the country, and
indicated that their firm is well placed to implement the SHSs and off-grid solutions to
the 40,000 homes identified by the Ceylon Electricity Board\.
Power plant operating risks
2\.66 There is a risk that some of the grid-connected renewable energy sub-projects
might stop operating (mainly for projects where power purchase agreements will be
expiring and the tariff offered might be too low to sustain operations)\. For instance, a 1\.8
24
MW mini hydropower plant 16 commissioned in 1989 was reported to have shut down
from being unable to meet operating costs due to low tariffs\. The Public Utilities
Commission of Sri Lanka showed understanding in this situation and resolved this issue,
after considering the impact it could have on the whole non-conventional renewable
energy segment\. The risk that the private sector ceases to seek and develop new projects
is considered low unless tariffs decline substantially to the point where the economics
become unviable\. The Government has indicated its commitment to the participation of
the private sector in electricity generation, especially from renewable resources\. These
projects are financially viable and commercial banks are continuing to lend, even without
refinancing\.
Role and support of the Government
2\.67 Sub-projects refinanced by the project would continue to comply with the
Governmentâs environmental requirements, including the required monitoring\. Some
stakeholders from private sector and industry association however expressed reservations,
but also the desire that the Sustainable Energy Authority needs to step up its efforts to
meet the challenges, streamline bureaucratic requirements, and actually assist project
developers to realize their projects and also contribute to national priorities of promoting
non-conventional renewable energy\. The Governmentâs further endorsement of non-
conventional renewable energy and support for its development should be sufficient
incentives for the Sustainable Energy Authority, though its ability to attract skills remains
an issue as market pay scales are far higher\.
2\.68 The activities supported by the project have transitioned from the AU to the
Sustainable Energy Authority which will provide continuity for facilitating investments
in the sector\. Sustainable Energy Authority officials indicated to the mission that they
are now maintaining documentation from the project, which includes a wealth of
analysis, data and information on the subject of renewable energy and related initiatives
in the developing country context\.
2\.69 Based on the overall assessment of the key issues, the risk to sustainability of
overall project development outcome is rated Low\.
BANK PERFORMANCE
2\.70 The quality at entry for the project is rated Satisfactory\. The design of this project
benefited from the Bankâs experience with the earlier Energy Services Delivery project â
which received a satisfactory outcome rating â as well as rural and renewable energy
projects in South and East Asia and Sub-Saharan Africa\. The guiding principles that
emerged from the Energy Services Delivery project and other Bank projects were: (i)
necessity of providing consumer choice; (ii) ensuring pricing which is cost-reflective;
(iii) overcoming high start-up costs; (iv) encouraging local participation, tapping into
private sector and civil society capabilities and potential; and (v) implementing sound
sector policies\.
16
Daily Mirror, Sri Lanka, March 13, 2014, page A16 âPrivate Hydropower Plant Closed Without Noticeâ
25
2\.71 Design features of the project that derived from the above lessons contributed to
effective project implementation, including: third-party administration of the credit and
grant facility and overall project management; involvement of industry associations and
advocacy groups in guiding industry growth and directions; the adoption of a
standardized power purchasing agreement and ensuring tariff certainty; a bankable legal
framework that assured availability of long term financing; and the importance of
participation and commitment of the entire community on off-grid village electrification
schemes for ensuring long term sustainability of these schemes, as well as adequate after
sales service\.
2\.72 In retrospect, the project design underestimated the pace at which the electricity
grid would expand in the country\. At the project preparation stage, the Bank in
consultation with the Ceylon Electricity Board, estimated that existing technical and
financial constraints would limit the coverage of the grid to 80 percent of the population
leaving about 20 percent (or about 1 million households) reliant on off grid systems\.
Subsequently, the Government moved aggressively to increase generation (2,483 MW to
3,312 MW during 2003-12) and expand the grid, with the result that only 40,000
households remained to be covered through off-grid options by 2013\. As the
development of major hydro has remained stagnant at 1,207 MW since 2003, the growth
in generation came mainly from an increase in thermal power (51%) as well as renewable
energy (48%), the latter comprising small hydro, wind and biomass\. The faster than
anticipated growth of the grid, while a welcome development, necessitated changes in
strategy and targets for off-grid electrification\.
2\.73 The overall risk rating for the project at appraisal was substantial\. This is
reasonable for the type and scale of interventions proposed under the project\. The
demand for refinancing of loans for grid-connected renewable energy projects depends
on a number of macroeconomic factors that are beyond the control of the project\. For
example, when interest rates were substantially higher at certain periods during the
implementation period â most notably at the height of the military conflict â the demand
for refinancing loans reduced significantly\. Demand grew once more when interest rates
dropped again\. On the other hand, the risk of an insufficient market for SHS was
identified and considered moderate\. The impact of a saturated market for SHS or
accelerated grid expansion was not analyzed in sufficient detail, which could have
anticipated some of the challenges faced during implementation\. This is an important
lesson for other countries that are undertaking or planning aggressive off-grid
electrification schemes\.
2\.74 Again in retrospect, the inclusion of two relatively small components for energy
efficiency/demand-side management and cross-sectoral energy applications did not fit
well into the major thrust of the project\. These components did not yield expected
results, and may even have diverted some focus and effort from the larger project
components\.
2\.75 The Bankâs quality of supervision during the project is rated Moderately
Satisfactory\. The Bankâs supervision was characterized by a strategic management role
rather than day to day handholding of the implementing agencyâs activities\. This was
possible because of AUâs capacity and competence, and contributed greatly to its sense of
26
ownership of the project for both AU and the Government\. Feedback from the AU and
the Government suggests that the Bank responded adequately and in a timely manner to
requests for clearances and participated regularly in meetings with all project
stakeholders\. Both AU 17 and other stakeholders credited the participatory approach and
its approach to the Bank and the project\.
2\.76 The role of the Bank was highly valued as indicated by the feedback survey
conducted at the end of the project\. This was confirmed by the mission from the
feedback it received from the Government, AU, Participating Credit Institutions and
other stakeholders\. Most respondents recognize the Bank as a key catalyst for grid-
connected and off-grid renewable energy and energy efficiency interventions\. The Bankâs
involvement increased the confidence of the Participating Credit Institutions to continue
to provide long-term loans to private developers of renewable energy projects\. This was
of particular importance because increasing the access to energy services from renewable
energy was at the heart of the RERED design\.
2\.77 However, the Bank was less responsive in dealing with the implementation issues
with solar PV, cross-sectoral energy applications and energy efficiency & demand side
management components\. Despite the early onset of problems from 2006 onwards, it was
not until late-2010 when Bank revised output targets for solar PV component, and also it
is unclear if the Bank proactively examined the implications of potential risks of non-
payment by SHS customers on the vendors, creditors and the refinancing by the project\.
It is also unclear if the Bank enabled dialogue with Ceylon Electricity Board and the
Government on these issues and possible coordination of grid expansion with off-grid
options during this period\. Similar lack of proactivity is apparent concerning the other
two components, as also noted by the absence of such discussion in the additional
financing documents\.
2\.78 The Bank could have done more to encourage and assist the AU in making active
use of the technical assistance component rather than relying on requests from the
industry, beneficiaries, or other stakeholders\. The Bank could also have insisted on better
transition arrangements from the AU to Sustainable Energy Authority including the
digitizing and transfer of documentation\.
2\.79 Some stakeholders also pointed to the sometimes passive role of the Bank in
critical issues (e\.g\. The Ceylon Electricity Boardâs least cost development plan and
implications for non-conventional renewable energy); while most expressed that the Bank
seemed to have exited the sector too soon since many policies formulated and adopted
during the project period were showing signs of stress and the absence of the Bankâs lead
and convening forte was conspicuous\. Interestingly, the Public Utilities Commission of
Sri Lanka shared the view that local economic gains from non-conventional renewable
energy projects could now be integrated into a broader theme of rural economic
development, and that the Bankâs presence could have facilitated this effectively\.
2\.80 Overall Bank Performance is rated Moderately Satisfactory\.
17
The AU noted that despite the value-added of such an approach, other financiers like the European Investment Bank
had not included technical assistance in their ongoing projects and financing\.
27
BORROWER PERFORMANCE
2\.81 The governmentâs performance is rated Satisfactory\. The Government showed
consistent support to the project objectives throughout appraisal and implementation\.
During the project implementation period, in October 2007, the Government established
the Sri Lanka Sustainable Energy Authority as an apex institution responsible promoting
sustainability in energy generation and use through increasing the use of indigenous
renewable energy resources and improving energy efficiency\. This underlined the
commitment of the Government to renewable energy and complemented the activities of
the project\.
2\.82 The Government ensured continuity in the implementation arrangements from the
earlier Energy Services Delivery project by working through the same AU located in the
DFCC Bank\. The Government also appropriately took a hands-off approach to the day-
to-day implementation of the project and generally limited its own role to creating an
enabling environment and providing counterpart funding\. It facilitated the
implementation of the project by providing the required policy and regulatory support,
and approving investments by the utility for upgrading substations\. The Government also
provided considerable grant support for renewable energy through the Ceylon Electricity
Board, directly to beneficiaries for SHS, and through provincial councils for village
hydro schemes\. It established attractive tariffs for selling renewable electricity to the
national grid and ensured that the Standardized Power Purchase Agreement terms and
conditions were adhered to by all parties\. The Government was very responsive to the
routine refinance-linked disbursement requests from the AU and was supportive in
addressing problems that arose during the process\. The mid-term review noted that there
were delays in some cases in granting necessary approvals on the part of the Central
Environmental Authority (CEA), and in dealing with overloaded substations on the part
of the Ceylon Electricity Board\. On balance, the Governmentâs performance is rated
Satisfactory\.
2\.83 Implementing agency performance during the project is rated Highly Satisfactory\.
The AU situated in the DFCC Bank was the implementing agency for the project\. The
AU was well placed to work with the Participating Credit Institutions and private
developers and administer the refinancing mechanism due to its experience in
commercial banking transactions\.
2\.84 The AU displayed strong commitment and professionalism to the objectives of
the project, and coordinated well with all major stakeholder groups including
Participating Credit Institutions, MFIs, developers, SHS vendors, village hydro
developers, industry associations, village electricity consumer societies, the Ceylon
Electricity Board and other Government organizations\. In coordinating with stakeholders,
the AU consolidated the consultative process that had been developed under the Energy
Services Delivery project\. Feedback to the mission from stakeholders suggests that they
generally hold favorable views about the AU and its helpful role during their interactions\.
Some developers were very complimentary of the neutral role played by the AU;
especially as it is also one among peer Banks and Participating Credit Institutions\. Other
Participating Credit Institutions indicated that the AU was professionally staffed and
managed\.
28
2\.85 The AU was administratively separated from the lending arm of DFCC Bank to
minimize conflict of interest in the eyes of the other Participating Credit Institutions that
were competing with DFCC Bank for refinancing of their loans\. Procedures were
documented well in the AU, and detailed records of sub-projects were maintained well\.
In retrospect, the AU could have done better in identifying more opportunities for
technical assistance activities to support the various components, and in planning for a
smoother transition after project completion, especially in the development of Sustainable
Energy Authorityâs readiness\.
2\.86 Overall, Borrower performance is rated Satisfactory\.
MONITORING AND EVALUATION
2\.87 Monitoring & Evaluation Design\. The M&E framework employed appropriate
outcome and output indicators that were well-defined and largely measurable\. The
responsibility for collecting the M&E indicators lay mainly with the AU\. The objective
of improving the quality of rural life by utilizing off-grid renewable energy technologies
was to be measured through: (i) increase in income generating activities in communities
that gain access to electricity; and (ii) increased electricity connections to households,
rural small/medium enterprises and public institutions\. The number of households, small
and medium enterprises and public institutions electrified was to be obtained from regular
reporting under the project\. The increase in income generating activities would be
assessed through surveys, though it was noted that attribution to the use of renewable
energy technologies might be difficult\.
2\.88 The objective of promoting private sector power generation from renewable
energy resources for the main grid would be measured by additional MW of small-scale
renewable grid-connected power generation capacity\. The global environmental
objective would be tracked through reduction of greenhouse gas emissions and the
adoption of renewable energy and the trend in implementation cost as proxies for
reducing market barriers\. The indicators were adequate to assess achievement of this
objective\.
2\.89 M&E Implementation\. The AU contracted a consultant to monitor progress
towards achieving objectives and meeting indicators\. M&E reports were submitted
initially every quarter and bi-annually from 2006 onwards\. The AU collected the
required information as part of its routine administration work and progress was
monitored throughout the sub-project lifecycle\. The task team reports that the information
provided was current and reliable\. The Bank also hired an expert consultant to help
review the progress and issues with solar PV component, which was helpful in examining
options to resuscitate this component\.
2\.90 M&E Utilization\. The M&E process helped in proposing and pursuing the
various corrective actions that emerged as described in the section on âImplementation
Experienceâ\. The AU also conveyed that it had replicated the M&E processes for this
project in other ongoing donor supported projects\.
2\.91 Overall, M&E is rated High\.
29
3\. Lessons
⢠Local participation and involvement, suitably incentivized, is crucial to
promoting distributed power generation activities\. Active local participation
drove the momentum and successful implementation of the 68 mini hydro
projects and the 173 community-based micro hydro projects supported by the
project\. The participation came in the form of local political support and the
newly-formed village level electricity consumer societies, which were
incentivized by opportunities for selling a part of the generation to the grid
through ânet meteringâ\.
⢠Involving the private sector effectively in a decentralized developmental
effort requires flexibility in implementation arrangements and space for
adapting to market conditions\. In spite of past lessons informing the design of
the project, almost all major aspects â financing and disbursement parameters,
procurement policies and approach, SHS business model â had to undergo
modifications to keep up the pace of implementation\. Without such adjustments,
the project would likely have stalled /failed\.
⢠An appropriate feed-in-tariffs policy and its consistent and transparent
application are crucial to spur growth of small scale and non-conventional
renewable energy generation\. The low transaction costs enabled by attractive
feed-in-tariffs crowded in project developers and investors, as well as
commercial/investment banks to develop and invest in a variety of distributed
generation projects\. Market confidence was enhanced by consistent and
transparent application of the policy by the regulator / government\.
⢠Investments in off-grid electrification could be underutilized or even
abandoned in the event of a faster than expected arrival of the electricity
grid\. To mitigate this, the expansion of the grid should be coordinated with
off-grid investments, and, where warranted, the off-grid facilities should be
made grid-compatible to ensure their continued utility\. In Sri Lanka, as the
electricity grid expanded faster than expected, the decreasing necessity and
relevance of off-grid electrification was not foreseen early enough, resulting in
some off-grid facilities falling into disuse or neglect\. This experience points to
the need for planning ahead for a coordinated access rollout, and making policy
and technical provision for making the off-grid facilities grid-compatible and
economically viable\.
30
References
1\. IEG 2008\.The Welfare Impact of Rural Electrification: A Reassessment of the Cost
and Benefits\. An IEG Impact Evaluation\. World Bank, Washington D\.C\.
2\. UNDP 2012\. Renewable Energy Sector Development: A Decade of Promoting
Renewable Energy Technologies in Sri Lanka\. Case Study 11\. Environment and
Energy\. January 2012\.Asian Development Bank 2013\. Energy Outlook for Asia and
the Pacific
3\. Government of Sri Lanka 2012\. Energy Statistics 2012\. Sustainable Energy Agency,
Colombo, Sri Lanka
4\. National Energy Policy and Strategies for Sri Lanka, GOSL Gazette Notification,
dated June 10, 2008
5\. Ceylon Electricity Board\. Sector Statistics and CEB Annual Report 2011\.
www\.ceb\.lk
6\. NCRE Feed-in Tariffs Announcement, August 2012; Annual Report 2012; and
various other documents pertaining to sector regulation and performance\. Public
Utilities Commission of Sri Lanka\. www\.pucsl\.lk
7\. Performance Report of Distribution Licensees, 2013, PUCSL
8\. Electricity Sector Cost Report, Jan-June 2013, PUCSL
9\. Off-grid electrification using micro-hydro power schemes â Sri Lankan Experience â
A survey, 2012, PUCSL
10\. Stakeholder workshop meeting notes, Nov 24 and Dec 12, 2011: Small Hydropower
Industry Association of Sri Lanka
11\. DFCC\. 2012\. RERED Financial Statements and Independent Audit Report (Ernst &
Young)
12\. World Bank 2013\. Sri Lanka Development Update\. October 2013
13\. Resources Development Consultants (Pvt) Ltd\.: Monitoring and Evaluation of the
Renewable Energy for Rural Development Project\. September 2004 - September
2008\. Completion Report submitted to RERED AU\.
14\. Quality of Electricity Supply â Survey Findings: World Economic Forum (WEF):
The Global Competitiveness Index data platform\. Available at
http://www\.weforum\.org/issues/competitiveness-0/gci2012-data-platform/
31
Annex A\. Basic Data Sheet
RENEWABLE ENERGY FOR RURAL ECONOMIC DEVELOPMENT PROJECT
(IDA-36731 IDA-36730 TF-51248)
Key Project Data (amounts in US$ million)
Appraisal Actual or Actual as % of
estimate current estimate appraisal estimate
Total project costs 231\.9 253\.9 110%
Loan amount 115\.0 127\.4 118%
Co-financing 7\.1 7\.0 99%
Cancellation - - -
Cumulative Estimated and Actual Disbursements (P076702)
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
Appraisal estimate (US$M) 15\.0 23\.5 40\.6 63\.7 81\.8 89\.6 97\.5 110\.0 115\.0 115\.0
Actual (US$M) 15\.0 23\.5 40\.6 63\.7 81\.8 82\.4 95\.5 103\.4 122\.3 127\.4
Actual as % of appraisal 100 100 100 100 100 92 98 94 106 111
Date of last disbursement: December 31, 2011
Cumulative Estimated and Actual Disbursements (P077761)
FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
Appraisal estimate (US$M) 1\.6 3\.5 5\.2 5\.3 6\.1 6\.4 6\.6 6\.9 7\.1 7\.1
Actual (US$M) 1\.6 3\.5 5\.2 5\.3 6\.1 6\.4 6\.6 6\.8 7\.1 7\.0
Actual as % of appraisal 100 100 100 100 100 100 99 98 100 99
Date of last disbursement: December 31, 2011
Project Dates (P076702; P077761)
Original Actual
Appraisal 01/22/2002 01/22/2002
Board approval 06/20/2002 06/20/2002
Effectiveness 10/07/2002 10/07/2002
Closing date 06/20/2008 12/31/2011
ANNEX A 32
Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle USD Thousands (including
No\. of staff weeks
travel and consultant costs)
Lending
FY02 22\.63 70,966
FY03 0\.00 0
Total: 22\.63 70,966
Supervision/ICR
FY03 25\.37 80,118
FY04 22\.77 64,358
FY05 18\.98 47,457
FY06 19\.63 67,250
FY07 16\.03 43,334
FY08 26\.47 85,307
FY09 27\.65 113,345
FY10 19\.16 85,112
FY11 20\.28 88,388
FY12 16\.01 100,271
Total: 212\.35 845,906
ANNEX A 33
Task Team Members
Names Title Unit Responsibility
Lending
Subramanian V\. Iyer Team Leader Team Lead
Supervision/ICR
Abdulaziz Faghi Energy Specialist SASDE Team Lead
Amali Rajapaksa Senior Infrastructure Specialist SASDT Procurement
Boonsri Prasertwaree Kim Program Assistant SASDO Energy Economist
Darshani De Silva Environmental Specialist SASDI Financial Management
Deepal Fernando Senior Procurement Specialist ECSO2 Disbursement
Donna Thompson Sr Financial Specialist OPCFM Resource Management
Gevorg Sargsyan Program Coordinator SEGEN Financial Management
Hiran Heart Consultant SASDI Procurement
Jiwanka B\. Wickramasinghe Sr Fin\. Management Specialist SARFM Financial Management
Lashantha H\. ayawardhana Consultant SASDI Env\. Safeguards
Luis Alejandro Lopez Program Assistant SASDO
Md\. Iqbal Senior Energy Specialist SASDE
Mikul Bhatia Senior Energy Specialist SEGEN ESCO Specialist
Miriam Witana Procurement Specialist EAPPR Energy Specialist
Peter Johansen Senior Energy Specialist ECSS2 Energy Specialist
Raihan Elahi Senior Energy Specialist AFTEG Energy Specialist
Ravindra Anil Cabraal Consultant AFTEG
Peter Johansen Senior Energy Specialist ECSS2 Energy Specialist
Seenithamby Manoharan Sr\. Rural Dev\. Specialist SASDA Rural Development
Shane Andrew Ferdinandus Program Assistant SASDO
Shaukat Javed Program Assistant SASDO
Sriyani De Alwis Team Assistant SACSL
Sriyani M\. Hulugalle Senior Economist SASFP
Environmental
Sumith Pilapitiya Lead Environmental Specialist SASDI
Specialist
Supul Chamikara Wijesinghe Financial Specialist SARFM Financial Management
34
Annex B\. List of WB Energy Projects in Sri Lanka
Table 1\. World Bank Lending for the Energy Sector in Sri Lanka (1992-Present)
No\. Project Name Approval Closing Instrument Project WB
ID FY FY Cost Commitment
(US$M) (US$M)
1 P010386 Power Distribution 1992 1998 Specific Investment Loan 79 50
Private Sector
2 P010517 Infrastructure 1996 2007 Financial Intermediary Loan 232 77
Development
3 P039965 Energy Services Delivery 1997 2003 Specific Investment Loan 30 6
4 P010498 Energy Services Delivery 1997 2003 Specific Investment Loan 55 24
Renewable Energy For
5 P076702 2002 2012 Specific Investment Loan 166 115
Rural Economic
Economic Reform
6 P077586 2003 2008 Technical Assistance Loan 19 15
Technical Assistance
35
Annex C: Additional Data Tables and Figures
Non-Conventional Renewable Energy (NCRE) Development in Sri Lanka
Figure 1
Figure 2
36
Table 1
Source: Figures 1, 2, and Table 1: Ceylon Electricity Board
Table 2\. Average Revenue, Total Generation and NCRE Contribution (2000-2013)
2000 2005 2010 2011 2012 2013
Total Generation (GWh) 6629 8898 10801 11646 11896 12151 a/
of which: from NCRE (GWh) Na 280 727 722 730 1169
as % of total na 3\.2 6\.73 6\.20 6\.14 9\.62
Ave\. Rev\. (LKR/kWh) 4\.85 7\.99 13\.10 13\.42 15\.73 17\.73-18\.60
Ave\.Rev\. (US cents/kWh) na 7\.83 11\.79 11\.78 12\.27 13\.97-14\.66
a/ extrapolated estimate
Source: Ceylon Electricity Board; and Sustainable Energy Agency Statistics, 2012
37
Figure 3
Source: Ceylon Electricity Board
Annex D\. List of Persons Met
Government of Sri Lanka
Mr\. Upali Daranagama , Additional Secretary, Ministry of Power and Energy,
Mr\. B\.M\.U\.D\. Basnayake, Secretary, Ministry of Environment and Renewable Energy
Mr\. Noel Priyantha, Chief Engineer (Renewable Energy), Ceylon Electricity Board
Mr\. Thusitha Sugathapala, Director General, Sustainable Energy Authority
Mr\. M\.M\.R\. Pathmasiri, Deputy Director General, Sustainable Energy Authority
Mr\. Damitha Kumarasinghe, Director General, Public Utilities Commission of Sri Lanka
Dr\.B\.M\.S\. Batagoda, Deputy Secretary to the Treasury, Ministry of Finance
DFCC Bank
Mr\. Nalin Karunatileka Assistant Vice President, Project Management (AU)
Mr\. Rohantha Seneviratne, Operations Manager
Commercial Banks / Participating Credit Institutions
Ms\. Sushara Vidyasagara, Senior Manager, Corporate Finance, Commercial Bank of Ceylon
Mr\. Kapila Subasinghe, Vice President, Corporate Banking
Mr\. Champal de Costa,Vice President / Manager, Ratnapura Branch
Ms\. Dulani Rodrigo, Relationship Manager, Corporate Banking, NDB Bank
Developers Associations / Advocacy Group / Think Tanks
Ms\. Rekha S\. Karunaratne, Small Hydropower Developers Association;
Mr\. Shakila Wijewardena, Sarvodaya, Vice President, Microfinance and Guarantee Company
Mr\. T\.K\. Weerawardhana, Sarvodaya, Microfinance and Guarantee Company
Mr\. Asoka Abeygunawardhana, Executive Director, Energy Forum
Mr\. Bandula Chandrasekara, Programs Coordinator, Energy Forum
Project Developers
Mr\. Herath Dissanayake, Managing Director, Wisdom Solar Pvt\. Ltd\.
Ms\. Rozanne Croos Moraes, Project Manager, Senok Wind Power (Pvt) Ltd
Ms\. Praveena Sivamohan, Finance Manager, Senok Wind Power (Pvt) Ltd
Mr\. Vishnu Vasanth, Managing Director, RenewGen Ventures
Ms\. Rekha S\. Karunaratne, Director, Integra International Pvt\. Ltd\.
World Bank / IFC / ADB
Ms\. Francoise Clottes, Country Director, World Bank
Mr\. Camilo Gomez Osorio, Country Economist, World Bank
Ms\. Niluka Nirmalie Karunaratne, Team Assistant, World Bank
Mr\. Abdulaziz Faghi, Senior Energy Specialist and Task Team Leader, World Bank
Mr\. Kamal Dorabawila, Principal Investment Officer, IFC
Mr\. Nishantha Jayasooriya, Associate Operations Officer, IFC
Mr\. Milinda Wasalathantri, Investment Analyst, IFC
Mr\. Ranishka Wimalasena, Project Officer (Energy), ADB
Note: During project site visits, several persons â traders / merchants, operators of power plants, SHS
owners at homes and shops, energy consultants and specialists â were met\. Conversations were
facilitated through translators\. | REVIEW |
P073904 | Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 31390-STP
IMPLEMENTATION COMPLETION REPORT
(IDA-34290)
ON A
CREDIT
IN THE AMOUNT OF US$5 MILLION
TO THE DEMOCRATIC REPUBLIC OF
SAO TOME AND PRINCIPE
FOR A
PUBLIC RESOURCE MANAGEMENT TECHNICAL ASSISTANCE CREDIT
June 29, 2005
Poverty Reduction and Economic Management 4
AFC15
Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their
official duties\. Its contents may not otherwise be disclosed without World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective May 2005)
Currency Unit = Dobra
Db 1 = US$ 0\.000103
US$ 1 = Db 9699\.4
FISCAL YEAR
January 1 - December 31
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank
ASYCUDA Automated System for Customs Data
CEMAC Central African Economic and Monetary Community
CET Common External Tariff
EITI Extractive Industry Transparency Initiative
EMAE Empresa de Agua e Electricidade (Utility Company)
EMOLVE Palm-Oil Development Company
ENAMED Empresa Nacional de Medicamentos (Public Drug Company)
ENCAR Empresa Nacional de Carne (Public Meat Processing Company)
ENCO Empresa Nacional de Combustivel e Oleos (Petroleum Distribution Company)
EU European Union
FIAS Foreign Investment Advisory Service
FM Financial Management
GCB-TA Governance Capacity Building Technical Assistance Credit
GDP Gross Domestic Product
HIPC Heavily Indebted Poor Countries
IDA International Development Agency
IDF Institutional Development Fund
IMF International Monetary Fund
INE National Institute of Statistics
M&E Monitoring and Evaluation
MoPF Ministry of Planning and Finance
NGO Non-Governmental Organization
PE Public Enterprise
PER Public Expenditure Review
PIP Public Investment Program
PPIAF Public-Private Infrastructure Advisory Facility
PRGF Poverty Reduction and Growth Facility
PRSP Poverty Reduction Strategy Paper
SAC Structural Adjustment Credit
SDR Special Drawing Rights
SPA Special Program of Assistance
TTL Task Team Leader
UNDP United Nations Development Program
USD United States Dollar
VAT Value Added Tax
WAEMU Western African Economic and Monetary Union
WCO World Customs Organization
WTO World Trade Organization
Vice President: Gobind T\. Nankani
Country Director A\. David Craig
Sector Manager Robert R\. Blake
Task Team Leader/Task Manager: Dorsati Madani
DEMOCRATIC REEPUBLIC OF SAO TOME AND PRINCIPE
PUBLIC RESOURCE MANAGEMENT TA CREDIT (PRM-TA)
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 4
5\. Major Factors Affecting Implementation and Outcome 9
6\. Sustainability 10
7\. Bank and Borrower Performance 11
8\. Lessons Learned 13
9\. Partner Comments 14
10\. Additional Information 14
Annex 1\. Key Performance Indicators/Log Frame Matrix 15
Annex 2\. Project Costs and Financing 16
Annex 3\. Economic Costs and Benefits 17
Annex 4\. Bank Inputs 18
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 19
Annex 6\. Ratings of Bank and Borrower Performance 20
Annex 7\. List of Supporting Documents 21
Annex 8\. Outputs by Component 22
Annex 9\. Borrower's Evaluation Report 28
Project ID: P073904 Project Name: Public Resource Management - TA
Team Leader: Dorsati Madani TL Unit: AFTP4
ICR Type: Core ICR Report Date: June 29, 2005
1\. Project Data
Name: Public Resource Management - TA L/C/TF Number: IDA-34290
Country/Department: SAO TOME AND PRINCIPE Region: Africa Regional Office
Sector/subsector: Central government administration (100%)
Theme: Public expenditure, financial management and procurement (P); Tax
policy and administration (P); Regional integration (P);
Macroeconomic management (P); State enterprise/bank restructuring
and privatization (P)
KEY DATES Original Revised/Actual
PCD: 05/04/2000 Effective: 02/21/2001 02/21/2001
Appraisal: 08/01/2000 MTR:
Approval: 11/02/2000 Closing: 03/31/2003 12/31/2004
Borrower/Implementing Agency: GOVERNMENT OF SAO TOME AND PRINCIPE/MINISTRY OF PLANNING
AND FINANCE
Other Partners: Not applicable\.
STAFF Current At Appraisal
Vice President: Gobind T\. Nankani Callisto E\. Madavo
Country Director: A\. David Craig Hasan A\. Tuluy
Sector Manager: Robert R\. Blake Emmanuel Akpa
Team Leader at ICR: Dorsati Madani Dorsati Madani
ICR Primary Author: Dorsati Madani; Sati Achath;
Madhu Nair
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,
HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: SU
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: U
Project at Risk at Any Time: No
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The Public Resource Management Technical Assistance Project (PRM-TA) (US$2\.5 million Credit) was to
provide necessary technical support, training, goods and equipment to meet three distinct objectives: (i)
implement the policy measures that were to be carried out under the government's reform program
supported by the Public Resource Management Credit (PRMC); (ii) carry out sectoral, sub-sectoral and
specific studies needed towards the preparation of its Poverty Reduction Strategy Paper (PRSP); and (iii)
develop the agenda for macro-economic and sectoral policy reforms\. While the name of the credit
(PRM-TA) suggests that all three objectives of the credit are fully associated with the reforms included in
the PRMC, only the first objective of the PRM-TA directly supported the PRMC reforms\. Support for the
development of the PRSP and the agenda for macro-economic and sectoral policy reforms were provided in
conjunction with TA for the PRMC reforms to strengthen the overall policy environment of the country\.
The objectives were important to the achievement of the country's economic and social development\. They
were also clear, realistic, and timely for addressing the needs of the Borrower\. Sao Tome and Principe's
economic and social indicators were negatively affected by some of the basic challenges that afflict many
low income small island states\. These challenges include: remoteness and insularity, susceptibility to
natural disasters, limited institutional capacity, a narrow resource base, vulnerability to external shocks,
limited access to external capital, and entrenched poverty\. Given that Sao Tome and Principe's resource
base and revenue potential were very limited and essentially tied to subsistence or informal sector activities
and an export sector based on one major activity, cocoa, the government needed to develop and implement
a medium-term program aimed at improving resource mobilization as well as the efficiency and equity of
public resource allocation, within a solid macroeconomic framework and well-defined sector development
priorities, with clear poverty reduction objectives\.
On the other hand, the Memorandum of the President (MOP) for the joint credits PRMC/PRM-TA only
dedicates one brief paragraph to the TA project, noting that it will finance a Study Fund to carry out policy
reform studies; prepare sectoral strategies; and develop simulation models\. As a result, the objectives were
not clearly translated in application in the sense that during preparation they were not programmed in a
logical framework, with clear milestones, and sequencing of activities, that would match with the reform
schedule supported by PRMC or the development of the PRS document\.
The TA project was consistent with the Bank's Country Assistance Strategy (CAS) and the country's
Interim Poverty Reduction Strategy Paper (I-PRSP)\. One of the components of the project aimed to support
PRMC, which was complementing ongoing reforms financed under the Institutional Development Fund
(IDF) and the International Monetary Fund (IMF) Poverty Reduction and Growth Facility (PRGF), and
assist the São Tomean authorities to implement a set of first-generation policy reforms\. These reforms were
needed to consolidate and accelerate the government's efforts and move Sao Tome and Principe towards a
new phase of economic and social development\. The government recognized the Bank as a privileged
partner, well positioned to provide sound advice and extend the dialogue to other development partners\.
While no specific risk factors were identified for PRM-TA, the following risk factors were identified in the
MOP that covered the joint credits PRMC/PRM-TA: (i) low institutional capacity; (ii) limited donor
commitment and lack of coordination; and (iii) a narrow private sector\. To manage the above risks, the
government planned to: (a) strengthen donor coordination including, holding a Donor Round Table meeting
in October 2000; and (b) develop local institutional capacity\.
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While the borrower could identify the needs and program for them, the project was demanding for the
Borrower in the area of procurement and financial management\. The Credit was responsive to the Borrower
circumstances and development priorities\. For example, the Bank adjusted the programming of the project
based on the assessment of the needs, and allocated US$500,000 of the credit to petroleum TA needs that
arose half way through the implementation of the credit\.
3\.2 Revised Objective:
The objectives were not revised\.
3\.3 Original Components:
The project consisted of the following components:
l Strengthening the Borrower's capacity, through the provision of technical advisory services and
training and acquisition of equipment to implement expenditure management reforms, expenditure
monitoring and control measures, civil service reforms and private sector development policies\.
l Carrying out policy reform studies on the impact of structural reforms on the Borrower's economy,
especially on trade liberalization, tax system, exchange rate policy, diversification of agriculture
production, tourism, fisheries, public utilities, private sector development, fiscal reform, banking
reform and financial sectors, social sector and poverty reduction measures
l Carrying out research on further constraints to the growth of the Borrower's economy\.
3\.4 Revised Components:
The components were not revised\.
3\.5 Quality at Entry:
There was no official assessment of the quality at entry by the Quality Assurance Group (QAG)\. The ICR
deems the quality at entry to be marginally unsatisfactory\.
The project objectives were consistent with the CAS and the government priorities and met the critical
needs of the macroeconomic sector\. During preparation, the Bank took into account the country's low
capacity and incorporated flexibility in the project design in order to ensure that the country would be able
to implement policy reform work, and undertake sectoral, sub-sectoral, and specific studies which would
provide input to the PRSP, and also develop the agenda for macro economic and sectoral policy reforms\.
The team developed a flexible design for the credit by assigning some US$500,000 as unallocated funds\.
This feature became highly useful in assisting the country advance during implementation\. The ICR views
these aspects as satisfactory\.
On the other hand, the project was burdened by several weaknesses:
l The preparation process did not include a logframe for the credit so that internal monitoring and
evaluation were not well programmed in terms of project outputs and outcomes\.
l While the project was aimed at assisting the government in implementing its reform program, the
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activities of the component supporting PRMC reforms were not fully aligned with the PRMC reform
content and timing\. Some of the studies and other provision of TA (international and national) should
have been conducted at the identification and preparation stages of PRMC in order to provide the
necessary information and assistance needed to ensure timely, and well sequenced implementation of
PRMC reforms and successful outcomes\.
l The credit underestimated the extent of the capacity building needs of the administration and its reform
program, which went beyond the capacities of the US$2\.5 million Study Fund\.
l The Project Implementation Unit (PIU) was functional but weak in the early stages of implementation
as its staff was not given adequate training on bank financial and procurement procedures at the launch
of the project\.
l The political risk and weakness in the civil service in undertaking the reforms were underestimated\.
The flexibility of the credit compensated for some of the weaknesses listed above\. In light of these factors,
the overall quality at entry is rated marginally unsatisfactory\. However, in the absence of `marginal' ratings
for the ICR, the ICR team is constrained to give an Unsatisfactory rating in Section 2 (Principal
Performance Ratings)\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
Satisfactory\. The project supported the government to meet the three distinct development objectives of the
credit by providing technical support, training, goods and equipment\. Only the first objective of the
PRM-TA directly supported the PRMC reforms\. The PRM-TA also provided support for the two other
objectives (development of the PRSP and the development of an agenda for macro-economic and sectoral
policy reforms) to improve the overall policy environment of the country\.
With its flexible design, it also supported the government during the highly sensitive early period of the
nascent petroleum sector by providing timely and responsive support to lay the early foundation for
institutional capacity building in the sector\. The positive developments in the petroleum sector would not
have materialized in the absence of the PRM-TA credit\.
Overall, the credit became an important vehicle for policy dialogue and institutional capacity building in the
framework of a small state\. These policy dialogues engaged the Ministry of Planning and Finance on
public resource management, the poverty reduction strategy, and privatization of SOEs; the Ministry of
Natural Resources on petroleum sector revenue management and transparency issues, telecommunications
regulations and utilities reform and privatization; the Ministry of Justice on reform of the institutional and
legal environments; the Ministry of Commerce on private sector development and business environment;
and the national PRSP team on the overall poverty reduction approach, its goals, its associated costs and
the methodology to monitor and evaluate its output and outcomes\.
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The major outcomes of the project are the following:
Objective I: Helping the government implement policy measures under its reform program
which was supported by the PRMC
Marginally unsatisfactory
The first objective of the PRM-TA was to support the PRMC reforms\. However, the implementation of
the reforms included in the PRMC program was uneven due to political instability and lack of political will\.
Consequently, PRM-TA could not be used to support the full spectrum of the PRMC program\. Where
Government launched reform measures - such as in the fiscal reform and management and resource
mobilization the TA credit supported the reform process\. In other areas where reform efforts were never
launched such as the rural sector, and many of the private sector reforms the TA was not used\.
Fiscal reform and management, resource mobilization:
The credit contributed to the development and implementation of reforms leading to improved economic
management and revenue collection:
l Overall, tax collection increased from 17% of GDP in 1999 to 20\.4% in 2004, through: (i) improved
coordination in tax payer identification (ID numbers) and registration; (ii) implementation of reforms
suggested by a study of the directorate of taxation to improve productivity and tax collection; and (iii)
improved customs management and revenue collections due to ASYCUDA and better valuation
methodology (import tax revenue collection increased from 7\.7% of total government revenues in 2001
to 11% in 2003) (see Annex 8)\.
l The institutional and legal business environment of the country is expected to improve once the new
tax and investment laws, currently at the National Assembly, become law\. As outlined in Annex 8, the
credit supported fully or partially the update of these laws through Foreign Investment Advisory
Service (FIAS) and national TA\. These laws will modernize the fiscal and investment framework of
the country\. The delay in the adoption and implementation of these laws was political as multiple
changes in governments did not facilitate the process of policy making, especially on such a sensitive
issue\. It is now expected that the laws will be adopted and implemented as they are also part of a new
IMF PRGF program\.
l The public sector engagement in the economy was reduced by privatizing some public enterprises\.
This allowed for better control of budget expenditures\. Several public sector enterprises were sold,
liquidated or were in the process of being fully or partially privatized\. The TA funded assistance to the
privatization working group to prepare and follow up on the `dossiers' for the privatization process\. It
also funded a review of the electricity and water company to assess its viability and potential for
privatization in the short to medium run\.
l Economic management improved through better public expenditure planning (procurement and public
investment program (PIP)), budget implementation, and fiscal management oversight\. The creation of
a dedicated unit to debt management contributed to this progress\. The PRM-TA financed consultants to
assist this review and reform process, including training for different services within the MoPF and
Central Bank\.
l The government continues to realign public expenditures to primary sectors (health and education) as
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part of the overall reform process of aligning government budget with PRSP goals\. To facilitate this
process the credit financed public expenditure reviews in education and health to study the existing
sectoral budget processes and expenditures and provide recommendations for better use of funds (see
Annex 8)\.
Objective II: Carrying out sectoral and specific studies needed for the preparation of the PRSP
Satisfactory
The credit supported the development of the first full PRSP document\. This support included financing the
PRPS coordinating unit and consultants to prepare the five thematic studies and lead the thematic groups
that are at the base of the five action pillars of the PRSP\. These five thematic studies, together with a
poverty analysis which was also partially financed by the PRM-TA credit- formed the analytical base for
the assessment of the socio-economic and political situation in the country and provided policy suggestions
that led to the formulation of the full PRSP\. The five thematic groups and the coordinating unit developed
the complete document, the monitoring and evaluation indicators and methodology and provided an
estimate of the cost of the strategy\. They led extensive consultations with all social groups in different
regions of Sao Tome island and on Principe island (see Annex 8, Component 2 for a list of the studies)\.
The first full PRSP was officially adopted by the government in a national forum in December 2002 and
promulgated by the President in January 2003\. A new unit was created in 2004 in the Ministry of Planning
and Finance (MoPF) to foster PRSP implementation and monitoring of its results\. To support its
monitoring efforts, the PRM-TA has also funded expertise and training to INE to improve the data bases
necessary for the PRSP M&E (see Annex 8)\.
The document's strategic vision is viewed as the development strategy for the country\. Its policy priorities
are being reflected in the regular budgetary and public investment decisions of the country since the budget
year 2003\. The PRSP was presented to the Board of the World Bank on April 21, 2005, and garnered very
positive support of the Directors who backed its approach and its goals and encouraged the government to
implement it fully\. The Joint Staff Advisory Note (JSAN) considers that the PRSP provides a reliable
framework for reducing poverty in Sao Tome and Principe\. They considered the document as a credible
but highly ambitious strategy\.
Objective III: Developing the agenda for macro-economic and sectoral policy reforms
Satisfactory
The project's flexibility and focus in accommodating the country analytical and capacity building needs in
the petroleum and justice (legal and regulatory) sectors led to highly positive outcomes for the country\.
In the nascent petroleum sector:
In the absence of the PRM-TA the outcomes described below would most likely not have materialized\. The
credit funded a number of international and national consultancies and provided material support to assist
the government to address urgent policy, negotiations and capacity building needs permitting (see Annex 8):
Better financial terms for STP in four existing petroleum contracts\. The credit funded consultants to
help the government understand the economic ramifications of existing contracts and renegotiate four
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old contracts to reach better financial terms for the country\.
More transparent and informed decisions related to the petroleum bid analysis for the nine blocs
managed by the Joint Development Zone (November 2003-April 2004) to ensure best negotiation
outcomes for the country\. The credit funded national and international consultants to assist the
government in analyzing the geological information, develop economic and financial potentials of the
sector, review bids and the qualifications of the bidding companies, thus making a more informed
decision about which companies and bid offers to choose\.
Adoption of a best practice law on Petroleum Revenue Management that will affect the future
economic development of the country\. PRM-TA partially funded international consultants to develop,
present and discuss a draft law with the National assembly, the Government and the National
Petroleum Agency\. The law was approved by the National Assembly in November 2004, and was
promulgated by the President of the Republic end 2004\. It is currently being implemented with the
support of the new World Bank GCB-TA credit\.
Establishment of the legal and institutional framework to manage the sector related activities\.
PRM-TA financially supported the creation and activities of the original core team of national experts
to deal with the sectoral issues in 2002\. This involved provision of international expertise, training for
the national team, and materials\. This team was instrumental in analyzing and overseeing sectoral
activities\. This ad hoc group was formalized by the decree law creating the National Petroleum
Agency (promulgated in June 2004) to supervise and regulate sectoral institutions as well as create
more cadres\. National officials are now better equipped to address legal and industrial issues related to
petroleum\.
Enhanced transparency and governance by building national capacity and supporting policy dialogue
on the petroleum issue\. The PRM-TA co-sponsored (with UNDP) two 2-day petroleum
training/capacity building seminars that informed and educated national and local policy makers as
well as national and international Non-Governmental Organizations (NGOs)\. This involved funding
international experts to provide studies and presentations at the conferences\. The first conference (held
in December 2003) familiarized Sao Tomeans with the basic information about the petroleum industry,
expectations regarding timing and cost of exploration, points and aspects to be covered in a petroleum
contract, projections of time and amount of monies Sao Tome could hope to receive\. The second
seminar (held in March 2004), informed Sao Tomeans on issues related to petroleum revenue
management\.
In the public sector (justice / regulations / governance):
The credit supported the development of a strategy for the reforms of the state\. This new strategy will
help the state change its overall administrative structure to become more efficient in advance of the new
petroleum era\. It also financed the drafting of a new Code of Administrative Procedure\.
Modernization of the overall institutional, legal and business framework of the country in view of the
upcoming petroleum era\. The credit fully financed or co-financed updating a large number of outdated
(often colonial) legal codes in the legal (criminal and civil), economic (and commercial) and
institutional (local and electoral) areas\. The credit also facilitated training for some of the judges and
court staffs, accounting tribunal, and office of the Attorney General (see Annex 8 Component 3)\.
This effort is continuing with the support of the new justice sector IDF\.
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l The newly adopted telecommunication laws and regulatory authority is the base for the supervision of
the opening of the market to competition by end 2005\. PRM-TA funded technical assistance to help
the government develop and implement the telecommunications regulatory authority\. Authority was
created and its capacity was enhanced through training\.
4\.2 Outputs by components:
See table in Annex 8 for the list of outputs and their impacts\.
4\.3 Net Present Value/Economic rate of return:
Not applicable\.
4\.4 Financial rate of return:
Not applicable\.
4\.5 Institutional development impact:
Substantial\. The project resulted in substantial institutional development impact\. Perennial capacity has
been strengthened in public resource management, justice, and basic capacity has been established in the
nascent petroleum sector\.
Public resource management and expenditure continue to be strengthened and made more transparent,
especially with the government adopting the Petroleum Revenue Management Law and the principles
of the Extractive Industry Transparency Initiative (EITI) petroleum revenue initiative in 2004\. The
petroleum law is considered a best practice law\. The government has centralized the revenue and
external financial proceeds (except for some grants), and has improved control over its expenditures\.
The Government launched the Office of the Auditor General in mid-2003 to audit government
budgetary performance (the credit provided some material support to facilitate the launch of this
office)\. Review of the process of execution of the public investments (supported by the credit) has led
to improvements in public procurement procedures of the Public Investment Program (PIP)\. This
review has also led to the adoption of better mechanisms of control and follow up for the PIP\. The
government has also improved tax and tariff collections by increasing tax collection (PRM-TA
supported reviews of system and provided materials and training), by upgrading customs valuations
(including ASYCUDA training) and by introducing new taxes, and improving methodology to identify
tax-payers\.
Reforms at the Finance Directorate have been taking shape\. Three new directorates: Tax, Budget and
Treasury, were created and are functional\. All three directorates have received technical assistance
from the Bank and other donors to assist them in capacity building (for instance advisory services,
training and provision of materials) and the reform of their budget related procedures\. The budget is
prepared following consultation with spending departments, but is still done on a yearly basis instead of
within a medium-term expenditure framework\. The 2003 and 2004 budgets were linked to the policy
priorities of the PRSP and the macro-economic targets were agreed to with international partners\.
In the justice sector, the country has adopted of a number of revised laws affecting the institutional and
legal framework\. This modernization was accompanied by training for the judicial clerks and some of
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the judges to improve their professional skills\.
l Petroleum Sector development\. Section 4\.1, Objective II includes description of the institutional
capacity building started with the assistance of PRM-TA\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
The rapid developments in the nascent petroleum sector starting in 2002 crystallized the complete lack of
national capacity and the urgent need to address critical policy, negotiations and analytical issues related to
the sector\. The government requested assistance from the Bank\. The Bank responded rapidly and
flexibly, allocating the PRM-TA's unallocated balance to the provision of international and national
technical assistance and the building of sustainable domestic institutional capacity\. This assistance was
further anchored in direct WB advisory support and continuous and open sectoral policy discussions\.
5\.2 Factors generally subject to government control:
Limited capacity\. The implementation of the project experienced delays due to lack of institutional,
technical and administrative capacity of the civil service\. Even though the project was meant to loosen
this capacity constraint, it was not programmed closely enough from the onset to fully achieve this
goal\.
Unstable political environment\. A major constraint to achieving the Development Objectives (DOs) in
a timely manner was the unstable political environment with six changes of governments or
government reshuffles since 2001 causing weeks or months of uncertainty and stalemate in the
administration\. These ministerial changes and stalemate in turn made it more difficult to deliver TA
and build capacity to achieve the three objectives of the credits, especially in relation to supporting the
implementation of the PRMC reforms (first objective of the credit)\.
Uneven government commitment to the reform program of the PRMC affected the performance of the
TA component designed to support the reforms\. The government commitment was not consistent in all
sectors\. The tendency on the part of the government was to focus on specific conditions for meeting
PRMC tranches\. For example, while the commitment was strong in macroeconomics, on other areas
such as land reform, rural development, and private sector development the commitment was lacking\.
This in turn affected what would get done in the TA credit\.
5\.3 Factors generally subject to implementing agency control:
Management Effectiveness\. While the coordinator of the project was capable, highly motivated and
performed well, she was burdened by the fact that there was no sufficient staffing in the PIU\. In the early
stages of the project, there was no procurement specialist in the PIU and the project coordinator had to be
advised mid-stream during the credit about the updates needed in procurement/financial management
procedures by the Banks' procurement/financial management specialists\. In the third year, the project
coordinator and other relevant staff were trained in financial management and procurement in conjunction
with the preparation of the Governance Capacity Building (GCB-TA) credit which became effective on
February 3, 2005\. There were also some implementation problems due to delays in the delivery of reports
by consultants\.
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5\.4 Costs and financing:
As of February 28, 2005, the actual disbursement under the credit was US$2\.64 million (1\.95 million
SDR) compared to the appraisal estimate of US$2\.5 million (1\.95 million SDR)\. The superior dollar value
is due to the recent devaluation of the dollar against SDR, which is the legal currency of the credit
agreement\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
Likely\. A number of components and subcomponents supported by the project are likely to be sustainable\.
The newly launched Justice sector IDF and GCB-TA credit will provide further support to several of these
ongoing activities, thus enhancing their sustainability:
The revenue mobilization and management reforms have been absorbed into the institutional and
procedural structure of the government\. For instance, the reforms at the Customs administration and
tax directorates appear to have become embedded\. To a lesser degree, so have the basic tenets of
expenditure management\. One major component of the new GCB-TA Credit is dedicated to continue
to support the public finance management reforms and capacity building with a view to the upcoming
petroleum era\. The envisaged reforms include new budgetary nomenclature, accounting plan and
establishment of a new integrated computerized budgetary system\.
The PRSP unit, whose creation was supported by the credit has been elevated to the PRSP observatory
within the directorate of planning in the MoPF to strengthen the implementation of the PRSP\. The
continued implementation of the PRSP goals and actions, its monitoring and future update of the PRSP
(including an analysis of the impacts of "the petroleum economy") will be further supported by the
GCB-TA Credit in coordination with UNDP\.
Support for National Institute of Statistics (INE) comprised helping to complete surveys, providing
material support and training staff in methodology\. This support is expected to impact the overall
capacity of the directorate\. This activity is further supported in the GCB-TA Credit in tandem with
support for PRPS implementation and evaluation\.
The petroleum unit supported by the credit has evolved into the National Petroleum Agency (by decree
law)\. The institutional capacity building in the sector continues to receive technical, advisory and
material support through GCB-TA credit\.
The petroleum capacity building and petroleum laws adopted in late 2004- are also sustainable
policy/economic components for the country\. During the drafting of the law, lengthy policy discussions
took place with regards to the content and policy implications of the law between the government, the
central bank and the National Assembly to ensure understanding by and agreement of policy makers\.
The implementation of the petroleum laws and sector related capacity building will continue to be
supported by the GCB-TA credit through technical and advisory assistance as well as training for
policy makers\.
The update of laws, which once finalized through promulgation of the new laws and implemented, will
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play a key role in creating a modern legal and institutional framework for the economy and private
(domestic and foreign) investment\. The Ministry of Justice is now pursuing its reform program with the
assistance of an IDF grant approved in October 2004\. The IDF will include: (i) capacity building for
the magistrates and personnel working directly in the courts; (ii) updating further laws such as the
civil/commercial laws; and (iii) improving conflict resolution methods\.
6\.2 Transition arrangement to regular operations:
See Section 6\.1
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Marginally unsatisfactory\. The identification process correctly focused on critical gaps and opportunities
for interventions in Sao Tome and Principe\. The project was consistent with the CAS and government's
development priorities\. The Bank had a consistently good working relationship with the Borrower during
preparation and appraisal\. On these counts, the Bank's performance in the identification, preparation, and
appraisal of the project was satisfactory\.
However, the Bank's overall performance in lending is rated marginally unsatisfactory, based on the
following factors: (i) the credit was designed as a study fund with no direct connection between component
(activities) and funds; (ii) a complete logical framework was not developed during the preparation process
of the Credit for Monitoring and Evaluation (M&E) and to capture progress; (iii) the activities of the
PRM-TA component supporting the PRMC were not programmed in close coordination with the policy
measures included in the PRMC; (iv) on procurement and financial management (FM), the Bank should
have done a better job of identifying the weaknesses and training the counterpart staff; and (v) the political
risk and weakness in the civil service were underestimated\.
7\.2 Supervision:
Satisfactory\. In spite of limited supervisory resources, the Bank's performance during the implementation
of the project was broadly satisfactory\. Over the four years of project implementation, there were seven
supervision missions, with an average of about two missions per year\. The Bank's client relationship was
very cordial and productive\.
Aide-memoires were regularly prepared and transmitted, flagging outstanding issues and underscoring
benchmarks for actions\. These alerted the government to problems with project execution and
facilitated remedies in a timely manner, in conformity with Bank procedures\. The Project Status
Reports (PSRs) rated the performance of the project both in terms of achievement of development
objectives and project implementation based on mission findings, updating ratings when deemed
necessary\.
In late 2002, the development in the nascent petroleum sector led to urgent advisory, technical
assistance and capacity building needs in the country\. The supervision team responded quickly, and
with flexibly to address the country's immediate needs through the end of the project\.
Weak preparation of the PIU led to annual external audits identifying some problems in procurement
and financial management\. The Task Team Leader (TTL) addressed these issues in coordination with
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the PIU and the WB audit team to ensure implementation satisfactory to WB\.
As noted above, the preparation process did not include a logframe for the credit so that internal
monitoring and evaluation were not well programmed in terms of project outcome and output\. Early
monitoring and evaluation were based on inputs, outputs and financial reports provided by the
coordinator and reviewed by the TTL\. Noting the weakness of this approach, in 2003 the TTL
responded proactively by retrofitting some indicators to complement the early M&E approach\. In view
of this M&E weakness, the TTL rated the M&E as unsatisfactory in the last two PSRs\. The TTL
also developed guidelines for financing training, especially training abroad\.
l Whenever delays in implementation occurred, the Bank's task team was able to define concrete steps
and timetable to try and put the project back on track and pace\. The Bank paid sufficient attention to
the project's likely development impact\.
7\.3 Overall Bank performance:
Marginally Satisfactory\. Overall, the Bank performance was marginally satisfactory\. However, in the
absence of `marginal' ratings for the ICR, the ICR team is constrained to give a Satisfactory rating in
Section 2 (Principal Performance Ratings) and Annex 6\.
Borrower
7\.4 Preparation:
Satisfactory\. The performance of the Borrower was satisfactory during preparation of the project\. It was
committed to the objectives of the project\. The government officials worked closely with the Bank's project
team on a continual basis, with full cooperation\.
7\.5 Government implementation performance:
Marginally Satisfactory
On the positive side, when the government was clearly in need of TA in petroleum sector, it was very
proactive in seeking help from the Bank to hire international consultants and provide training for nationals\.
Further, in public finance, directors of budget, taxation, and customs were proactive in improving their
services by applying for TA funds for purchasing equipment, providing training to their staff, and hiring
international consultants\.
On the other hand, the government was not consistent in its commitment to all sectors\. As mentioned in
Section 5, the tendency on the part of the government was to focus on specific conditions for meeting
PRMC tranches or in specific sectors\. This narrowly focused commitment, in turn, affected the use and
outcome of the TA Credit\. Further, the delay in providing counterpart funds slowed down implementation\.
7\.6 Implementing Agency:
Satisfactory
The performance of PIU which coordinated the project was overall satisfactory in supervising the
implementation of the project, programming activities and reporting results\. It operated in close
coordination with the senior management of MoPF, and was receptive to the Bank's advice, and highly
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collaborative with respect to meeting demanding benchmarks and deadlines\. In the absence of a logframe
and early FM/procurement training, the coordinator provided regular reports on inputs and outputs and
financial status of the credit\.
The process of launching audits experienced some delays for two of the audit years, but was eventually
performed to the Bank's satisfaction\. The 2002 audit was launched late (in August 2003) due to political
instability, especially the January constitutional dispute between the National Assembly and the Presidency,
the April demonstrations and the July coup\. The process for the audit of the year 2003 was launched in
December 2003\. However, due to lack of response by audit companies (only one response), the Bank
recommended that a second bid be launched in March 2004\. This was promptly done by the project
coordinator in April 2004, under the direct supervision of the Procurement team at the Bank\. The 2003
Audit was received in September 2004\. The Bank's specialists reviewed it and deemed it satisfactory\. The
Audit for 2004 was received in June 2005 (within the appropriate six-month deadline) and is being
reviewed by the WB audit team\.
These audits flagged the weaknesses in FM and procurement already discussed above\.
7\.7 Overall Borrower performance:
Marginally Satisfactory\. The overall performance of the Borrower was marginally satisfactory\. However,
in the absence of `marginal' ratings for the ICR, the ICR team is constrained to give a Satisfactory rating in
Section 2 (Principal Performance Ratings) and Annex 6\.
8\. Lessons Learned
Program-related lessons
This credit (unlike many typical TAs) gave the Bank the opportunity to engage the government on a
large number of sectoral policy dialogues as well as to build institutional capacity, especially on
petroleum sector issues, legal reforms, and public finance management issues\. This was due to the
nature of the small economy and the large scope of the credit\. Taking the following two lessons into
account will help ensure that future TA projects will have the same positive effect on sectors covered
by the credit\.
There should be flexibility in the provision of TA in order to adapt it to the changing needs of the
government (in this case in the petroleum sector)\. As part of this flexibility, it is important to keep a
certain percentage of credit as unallocated\. Flexibility of design is equally important when the project
involves capacity-building activities, especially in terms of prioritizing capacity issues\.
TA credit should be given within the framework of the government's reform and institutional capacity
building programs, with well-defined overall vision, and not as one-time perfunctory, incremental
assistance\. As capacity building usually takes many years, such TA credits should be viewed in terms
of sequential credit arrangements that build upon the accomplishments of previous credits\.
Implementation-related lessons
Better preparation/training of the PIU from the beginning of the project would ensure an easier
implementation process, especially on procurement and financial management\. As part of this, it is
essential to put together a strong team in the beginning so that the burden does not fall on a single
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person\. Learning from this experience, the presence of this team was made a condition of negotiations
for the new GCB-TA Credit\.
M&E should be developed in the early stages of project development\. PIU should be made fully aware
of expectations of them in terms of M&E of the project's outcomes and outputs\. This is addressed in
the new GCB-TA Credit\.
To ensure more complete supervision and ease the work load at the PIU, increased supervision funding
would have been useful so that at least financial management and procurement specialists were taken
on mission once a year\. This is addressed in the new GCB-TA Credit\.
l During project preparation, special attention should be given to the project's content and how it fits
within the context of prevailing weak institutional capacity and the level of political volatility\. More
specifically, neither should be underestimated\.
9\. Partner Comments
(a) Borrower/implementing agency:
See Annex 9
(b) Cofinanciers:
N/A
(c) Other partners (NGOs/private sector):
N/A
10\. Additional Information
A\. The Bank's ICR Team consisted of the following members:
(i) Dorsati Madani Task Team Leader
(ii) Sati Achath Consultant
(iii) Madhu Nair Consultant
B\. List of Task Team Leaders of the project in chronological order:
(i) Miguel Saponara
(ii) Dorsati Madani
C\. Persons interviewed for the preparation of the ICR:
(i) A\. David Craig Country Director
(ii) Robert R\. Blake Sector Manager
(iii) Eleodoro Mayorga Lead Economist
(iv) Simplice Zouhon-bi Consultant
(v) Miguel Saponara Consultant
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Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome/Impact Indicators:
Indicator Projected in SAR/PAD Actual/Latest Estimate
End of Project
First Objective:
Improved economic Continued broadly satisfactory Continued broadly satisfactory macroeconomic performance
management and macroeconomic performance in first half of 2004, however, performance slipped during
revenue collection Tax collections as share of GDP second half of 2004, leaving the budget in larger deficit than
estimated at 20\.4 percent by anticipated\. The Government and the IMF came to an
2004\. agreement on a PRGF program in early 2005 that includes
corrective budgetary measures and structural reforms\.
Tax collections as share of GDP estimated at 20\.4 percent by
2004\.
Customs administration has improved management due to
ASYCUDA and better valuation methodology\.
Second Objective:
PRSP is adopted by Adoption of the PRSP\. PRSP adopted in January 2003, its principals
the government and - PRSP guides budgeting process\. (emphasis on health, education, infrastructure)
used in budgeting reflected in the 2003, 2004 budgets\.
New unit to supervise implementation and follow up
on PRSP created\. Five updated annexes in
development to complement the 12/02 PRSP
document presented to the WB boards in April 2005\.
Third Objective:
Government is Petroleum sector: Petroleum revenue management law was promulgated
developing and - Capacity building: Petroleum by the President of the Republic in December 2004
implementing agenda revenue law promulgated\. and is in the implementation phase\.
for macro-economic
and sectoral reforms - Justice Sector: partially Several new laws drafted, in process of review,
modernizing the legal and presented to National Assembly or approved\. (See
institutional infrastructure of the Annex 8 for further details)\.
country\.
- Strategy on reform of the state: Strategy adopted, needs to be fully implemented\.
adopted\.
* Note: This table and its content were not available in the PAD\. More specifically, no outcome indicators were
included\. Outcome indicators were added in Oct\. 2003 and for the ICR document\.
Output/Outcome/Impact Indicators: See Annex 8\.
- 15 -
Annex 2\. Project Costs and Financing
Project Cost by Component (in US$ equivalent)
Component Appraisal Actual/Latest Percentage of
Estimate Estimate Appraisal
Bank Government Bank Government Bank Government
Goods/Equipment 512,820\.51 51,282\.05 604,350\.00 66,448\.45 24\.17 2\.66
Consultant services 1,474,358\.98 1,497,937,82 59\.92
training, studies, and
audits
Unallocated 512,820\.51 537,580\.73 2,185\.40 21\.50 0\.09
(Petroleum Sector)
Total 2,500,000 51,282 2,639,868\.55 68,633\.85 105\.59 2\.75
Project Cost (in US$ equivalent)
Project Component Appraisal Estimate Actual/Latest Estimate
US$ US$
Goods/Equipment 512,820\.51 670,798\.45
Consultant services 1,474,358\.98 1,497,937,82
training, studies, and
audits
Unallocated 512,820\.51 539,766\.13
(Petroleum Sector)
Total 2,500,000\.00 2,708,502\.40
- 16 -
Annex 3\. Economic Costs and Benefits
N/A
- 17 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
12/1999 4 Team Leader (1), Director (1),
IMF Mission Chief (1),
Economist (1)
Appraisal/Negotiation
07/26/2000 6 Economist (2), Director (1)
Lawyer (1), Disbursement
Officer (1), Consultant (1)
Supervision
06/01/2001 4 Team Leader (1); Economist
(2); Consultant (1)
11/15/2002 5 Team Leader (1); Economist (2); S S
Consultant (1); Program
Assistant (1)
05/26/2002 1 Task Team Leader (1) S S
04/28/2003 3 Economist (2); Lead Operations S S
Officer (1)
10/19/2005 1 Task Team Leader (1) S S
05/08/2004 1 Task Team Leader (1) S S
09/21/2004 1 Task Team Leader (1) S S
ICR
01/05/2005 3 Team Leader (1);
05/30/2005 Consultants (2)
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation 18 45\.0
Appraisal/Negotiation 10 40\.0
Supervision 22 90\.5
ICR 8 30\.0
Total 58 205\.5
- 18 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies H SU M N NA
Sector Policies H SU M N NA
Physical H SU M N NA
Financial H SU M N NA
Institutional Development H SU M N NA
Environmental H SU M N NA
Social
Poverty Reduction H SU M N NA
Gender H SU M N NA
Other (Please specify) H SU M N NA
Private sector development H SU M N NA
Public sector management H SU M N NA
Other (Please specify) H SU M N NA
- 19 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending HS S U HU
Supervision HS S U HU
Overall HS S U HU
6\.2 Borrower performance Rating
Preparation HS S U HU
Government implementation performance HS S U HU
Implementation agency performance HS S U HU
Overall HS S U HU
- 20 -
Annex 7\. List of Supporting Documents
1\. Aide-memoire, Back-to-Office Reports, and Project Status Reports\.
2\. Project Progress Reports\.
3\. Consultant Study Reports financed under the Project\.
4\. Borrower's Evaluation Report dated February 28, 2005\.
5\. Report and Recommendation of the President of the International Development Association for the
Democratic Republic of Sao Tome and Principe: Public Resource Management Credit, dated
October 6, 2000 (Report No\. P07398)\.
- 21 -
Additional Annex 8\. Outputs/Outcomes by Component
Components Sector/ Domain Activities Impacts
COMPONENT 1: Tax Reform The project financed a consultant to Recommendations made by the consultant
Fiscal Reform and conduct a diagnostic study on were for the most part included in the draft
Management, administrative, institutional, and of the new tax and investment code
resource legislative dysfunctions in the tax currently at the National Assembly\.
mobilization system\. It evaluated tax and tax
incentives systems to help Government
in making the necessary reforms to
promote private investment\.
Financed preparing draft proposals for: These laws are being reviewed by the
laws on taxation of personal and government and are to be submitted to the
company income - an income tax code National Assembly by mid-2005 as part of
and a wage tax code\. Property taxation - the PRGF agreement with the IMF\. These
regulations for the urban property tax laws will modernize and simplify the tax
[Contribuição Predial Urbana]; structure of the economy, reduce ambiguity
regulations for the registration tax and potential for arbitrary taxation, and
[Contribuição de Registro] , transfer help bolster private sector growth\.
(SISA), inheritance, and gifts); Rules for
tax enforcement procedures: Tax
Litigation Code and General Tax code\.
The project financed a consultant to Reforms were undertaken within the
analyze the structure of the directorate of directorate\. Tax collection has increased
taxation, providing suggestions for from 17% of GDP in 1999 to 20\.4% of
in-depth reform to improve productivity GDP in 2004\.
and tax collection\.
Directorate of The project financed training and Improved revenue performance through
Customs Technical Assistance in ASYCUDA to better valuation and higher collection\.
improve skills of employees working
with the system, leading to better Import tax collections rose from 7\.8% of
assessment of import categorization and total government revenues in 2001 to 11%
values, tariff calculations and increased of total government revenues in 2003\.
collection\.
Financial Inspection Technical assistance was provided to Accounting systems were normalized, and
Service train the inspectors to overcome fiscal management system improved
deficiencies in the application of the (through better reporting)\.
OCAM accounting plan in effect\. Basic
notions of organization and
record-keeping of the OCAM system
were taught\. Workbooks of practical
exercises in the OCAM system were
prepared\.
Public Enterprise A study was financed to focus on an Recommendations made for the
reform: EMAE [São assessment of the company's present restructuring, price structure and
Tomé Water and situation, the application of the proposed privatization of the firm, within the
Power Company] tariffs, re-establishment of the purview of the PRMC privatization
company's financial equilibrium, program\.
investments, and prospects for
privatization\. Some of the recommendations of the study
were implemented: the company
succeeded in improving its collection rate;
management revised some of its pricing
policy; management aggressively pursued
- 22 -
new investment potentials and the
privatization process was postponed until
the firm was deemed more financially
sound\.
Public Enterprise Technical assistance was provided to the Dossiers for Public Enterprises (PE) were
reform: Directorate of directorate to prepare the dossiers of the prepared, privatization process was
Treasury and public enterprises to be privatized under launched and bids evaluated for several
Patrimony the PRMC project\. companies\.
Out of seven firms earmarked in the PRMC
for privatization two were liquidated\. A
hotel was sold while another firm was in
the last stages of privatization (through
government negotiations with private
shareholders)\. A palm oil producing
company was brought to the point of sale
twice with no takers\. In the case of Air Sao
Tome airline negotiations has deadlocked
between the government (minority
shareholder) and the majority shareholder
(TAP Air Portugal)\. One firm (EMAE)
was removed from the privatization list
(see above)\.
Public Expenditure A consultant was hired to do a detailed
Planning study of procedures for executing public
investment expenses\.
Recommendations were provided to
improve methodology and capacity in
competitive bidding procurement,
planning and follow-up mechanisms\.
Central Bank Credit financed introductory courses in Improved Central Bank oversight\.
finance for employees of the Central
Bank were given during a two-week
period, focusing primarily on two
aspects: Financial Instruments and Bank
Supervision\.
Central Bank / MoPF Technical assistance was provided to Led to consolidation of the debt dossiers
improve the debt data management\. under the supervision of a new specialized
This included internal and international Debt Management directorate: unified data
debt dossiers, improvement in the base and hard copy repository for debt
production of TOFE and the payment documents and basic analysis\.
system to be implemented by the Central
Bank\. Better management of the debt dossier,
affecting budget programming and
accounting process\.
Review of Public A consultant hired by the project Enabled the Ministry of Education and
Expenditures / conducted a study on educational Culture to introduce and implement
Education micro-planning aimed at introducing a planning with a view to reinforcing
discussion of problems with the school institutional capacity (proposal for
map [carta escolar] in the Sao Tomean implementation of school map, scenarios
educational system\. for different school mapping development)\.
Review of Public Financed a consultant to review the Recommendations were made for better
Expenditures/ structure of public spending on education use of budgetary funds in view of the
Education in the past five years and suggest better Government's decision to support
use of funds from a macroeconomic education as a primary sector\.
perspective\.
Review of Public Financed a consultant to analyze
Expenditures / available data (public and private
- 23 -
Health expenditures associated with health
projects and strategies already
implemented, and their actual effect) and
the relationship to poverty in Sao Tome e
Principe\.
Reviewed the structure of public
spending on health in the past five years
to suggest better use of funds from a
macroeconomic perspectives\.
COMPONENT 2: PRSP (National Supported the development of the PRSP PRSP adopted in early 2003\.
Carry out sectoral Poverty Reduction document: Production of PRSP document through a
and specific Strategy) highly consultative process\.
studies needed to Financed consultants to develop the 5 WB board presentation in April 2005 was
prepare the PRSP sub-themes studies and to coordinate 5 met with strong support by all Executive
sub-theme working groups\. Also Directors\.
financed the finalization of the poverty The Joint Staff Advisory Note (JSAN)
analysis used in the PRSP and the considers the PRSP to provide a reliable
writing of the PRSP\. framework for reducing poverty in São
Tomé and Príncípe\.
Studies (5 themes of the PRSP):
1\. Education , alphabetization, and
professional education
2\. Health, nutrition and population
3\. Governance, descentralization,
participation, communication and
information\.
4\. Opportunities for income creation for
the poor
5\. Potentials for STP economic growth,
macro-economic framework\.
Financed consultants to hold consultative
provincial meetings to discuss the PRSP
content during development and propose
solutions for the issues concerning the
need to implement the PRSP and the
matrix of measurements, including the
preparation of progress indicators to
serve as quantitative and qualitative
benchmarks for evaluation of the extent
to which the PRSP has been fulfilled\.
Financed consultants to establish a
framework for financing the priority
activities of the PRSP (2002-2005) and
the costing of the PRSP\.
National Forum Consultant produced a base document to Document facilitated national discussion
provide thematic content for discussion about future of the country and
during the Summer 2004 National development outlook\.
Forum\. Provided summary of Forum
recommendations\.
INE [National Financed technical assistance for surveys New data will feed into the M&E process
Statistics Institute] of the active population, employment of the PRSP implementation to improve
and unemployment \. This data is basic economic and social sector
considered fundamental for the areas of information\.
labor, employment, wages, vocational
training, and others\.
- 24 -
Technical assistance also updated data
bases providing more current and
accurate information\. Staff were also
trained through this support of data
gathering and processing\.
Provided technical assistance and
training to complete the General Census
of the Population and Housing\.
INE [National Financed collecting basic statistical data Updated data bases providing more current
Statistics Institute] to feed INE databases with updated and accurate information\.
information (1998, 1999, and 2000) in
order to prepare the national accounts\. New data will feed into the M&E process
Partially supported annual harmonized of the PRSP implementation by providing
survey of companies for 1999 and 2000, more accurate information on the status of
enhancing the sectoral and geographic the economy, private sector activities and
desegregation of the respective results\. national accounts\.
Staff were also trained through this
support of data gathering and processing\.
COMPONENT 3:
Developing the
Agenda for
macro-economic
and sectoral policy
reforms
Petroleum Financed international expertise to Renegotiated contract tems for securing
review all the problems contained in more financial gains for the country\.
contracts signed with the oil companies
and the problems arising from those
contracts; to develop a strategy for
handling the situation and to assist the
government in negotiations with the oil
companies\. Advised the government of
the DRSTP in matters of petroleum
negotiation\.
Credit financed review of the evaluation Technical knowledge and advice
of geophysical and geological data, helped government to have a more
especially with respect to the recent transparent and economically
acquisitions of seismic and other data for rational decision making\.
use in promoting the blocks of the
economic zones (Joint Development Zone Improved government's knowledge
JDZ) and the exclusive economic zone of economic potential of the sector
(EEZ)\. This evaluation provided important and allowed them to negotiate
input to economics consultant by better contracts\.
furnishing data that will make it possible
to correctly model the financial potential
of the petroleum sector\.
Co-financed (with UNDP) consultants that Promulgated in December 2004
drafted the petroleum resources and is now in the implementation
management law\. phase\. The law is considered to
be a best practice in the sector\.
Financed consultants to do economic
assessment (analyses) of the JDZ and the Technical knowledge and advice
EEZ, and model the the petroleum sector helped government to take a more
potential\. transparent and economically
rational decision making\.
- 25 -
Financed a workshop on : "Options for Education and raising of awareness among
Better Resources Management\." Generic decision makers and civil society regarding
subtopics were addressed, such as the petroleum helped a more informed national
global trend toward transparency, the discussion and decision making regarding
ability of OPEC to stabilize prices, and the petroleum sector and revenues\.
earnings by petroleum exporter
countries\. A "coach" advised and
proposed different kinds of solutions to
the national petroleum commission in
the framework of the implementation of
the national petroleum agency\.
Telecommunications Technical assistance to help the Authority was created, its capacity was
government develop and implement the enhanced through training\.
telecommunications regulatory authority\.
The telecoms laws were adopted and will
be the base to supervise the opening of the
market to competition by end 2005\.
Administrative Reform Developed a comprehensive strategy for Draft of Code of Administrative
reform of the State to improve Procedure\.
effectiveness of the government\.
Judicial System Financed consultants to revise certain laws The following laws have been been
(in coordination with Portuguese approved by the National Assembly:
assistance), namely: Law of Penalties Execution
the Penal Code, Code of Criminal Basic Law of Judiciary
Procedure, Law of Penalties Execution, Statute of the Judicial Magistrates Service
Basic Law of the Judiciary System, and Statute of the Public Prosecutor
other complementary legislation\. Amended Statute of the Judicial Secretariats
the Statute of the Judicial Magistrates
Service and the Office of the Public The following laws are still in draft (being
Prosecutor and the Judicial Secretariats\. discussed by the government or at the
Draft a Law on Professional Associations\. National Assembly):
Also revised the following laws: the Local the Local Finances Law;
Finances Law; the Political and the Political and Administrative Statute of
Administrative Statute of Principe, the Príncipe\.
Political and Administrative Statuts of
Príncipe\.
The objective was to modernize the overall
institutional and legal framework of the
country\.
Judicial System / Credit financed a consultant to undertake New laws were submitted to the National
National Assembly a comparative study on the effect of Assembly\. The Electoral Census Law and
democracy on development in African Local Government Election Law were
countries in general and in STP in approved\.
particular, including evaluation of the
percentage of the General State Budget Their implementation is aimed at
allocated to financing legislative activity, improving transparency\.
as well as a comparative study of the
legislator-per-capita-of-population
coefficient\. Revised draft electoral laws
on activities and financing of political
parties; financing of electoral campaigns\.
Judicial System Financed training for personnel in the Improved quality of judicial system
courts and in the office of the performance
Government Prosecutor concerning the
legal system, handling of cases, and the
operations of the judicial secretariats\.
This included training for the
- 26 -
Accounting Court (Tribunal das Contas)\.
Judicial System / Financed (partially) consultants to revise
Private Sector the following bills of law: General
Development/ Regime for the Pursuit of Commerce;
Ministry of Model Statutes for Associations of
Commerce Different Occupational Groups;
Registration of Importers by Class;
General Table of Commerce, Industry
and Tourism; Law on Tourist Uses; Law
creating a National Council on Tourism;
Tourism Framework Law; Law on
Operation of the Drive-Yourself Rental
Car Industry; Draft a bill that would set
up an autonomous fund to finance
government actions in the realm of
tourism; Draft a new consolidated and
updated law on industrial licensing\.
The objective was to facilitate and
modernize the business environment
associated with private sector activities
(tourism, commerce, industry)\.
Judicial System / Funded consultant to propose legislation Law was proposed and adopted\.
Private Sector that responds to the need to protect São
Development/Ministry Tomean entrepreneurs by reserving areas
of Commerce of economic activity exclusively for them,
or for others in partnerships with São
Tomean citizens\.
A legal instrument was created to formally
Funded consultant to develop regulation establish the Single Service window\.
for the new Investments Code to be
enacted by the National Assembly and
create the bases for functioning of a Single
Service Window [Balcão Único]\.
Private Sector Funded a consultant to analyze the
Development/Ministry possibilities for implementing an
of Commerce/ integrated program (PIAFE)\.
Employment Strategy
This analysis helped to identify economic
opportunities to form and support business
initiatives\.
Private Sector Funded development of technical
Development / procedures for organizing an office to
Employment Strategy serve young micro-enterprises, conduct
studies to set up incubators for services
companies\.
This was to help unemployed youth to
start up micro-businesses through the
center for information and
communications technologies, incubators
Developed a National Training,
Employment and Housing Strategy for
Young People, to present to the National
Youth Forum\.
- 27 -
Additional Annex 9\. Borrower's Evaluation Report
Democratic Republic of Sao Tome e Principe
Ministry of Planning and Finance
PATGRP Evaluation Report
(February 2001 / December 2004)
I\. Objectives
As a result of successes achieved in the implementation of macroeconomic policy beginning in
1998, the Government of the Democratic Republic of Sao Tome and Principe, in April 2000,
reached agreement with the IMF on a program known as the Poverty Reduction and Growth
Facility (PRGF) designed to lead the country to a reduction in its external debt as one of the HIPC
(Heavily Indebted Poor Countries)\. Determined to execute this program, the Government, in a
letter dated August 14, 2000 that described the plan of action, objectives, and policy measures
intended to strengthen the management of public funds and improve the country's macroeconomic
stability, asked the World Bank for assistance to support the PRGF during its execution\.
Based on a loan agreement signed in November 2000 for the equivalent of SDR 1,950,000 (one
million nine hundred fifty thousand SDRs), which at the time represented US$2,500,000, the
Technical Assistance Project for Public Funds Management (PATRGP) enabled the Government
of the Democratic Republic of Sao Tome and Principe to receive assistance in carrying out the
policy measures contemplated in the PRGF Program by conducting the sectoral, sub-sectoral and
specific studies necessary for preparation of its PRSP (Poverty Reduction Strategy Paper) and in
the drafting of an agenda for macroeconomic reforms and changes in sectoral policy\.
Throughout its existence, the PATGRP has helped reinforce the Government's institutional
capacity\. It has ensured that technical assistance services were provided for managing the
objectives of the Government's economic and financial policy\. It purchased various types of
equipment for use in mobilizing public funds and managing them more effectively\. It financed
training in the various arenas of Government activity and an analysis of public spending on health
and education\. It supported initiatives to better define the policy objectives for private sector
development and to strengthen the nation's performance in the area of statistics\. It also assisted in
the reform of certain codes that comprise the legal framework of the country's judiciary\.
II\. Evaluation of PATGRP Implementation
Execution of activities planned by the PATGRP was heavily impacted by the political events that
occurred in this country during the project period and provoked instability in the leadership of the
ministries and continual changes in the work plans\. This troubled internal environment, coupled
with a rather unfavorable economic and financial context, and the limited ability of the various
project beneficiary sectors to respond, explain the delay experienced in carrying out the
programmed activities\.
- 28 -
Despite these difficulties, the Government believes that overall its objectives were met\.
We have prepared the following table to give a better picture of project objectives for the principal
beneficiary sectors, along with the impact and results of the key studies and/or technical assistance
provided by the PATGRP\.
Sectors/domains Objectives of the studies/technical assistance Impact
The National Assembly Comparative study on the effect of democracy on Two draft bills were submitted: one on the
development in African countries in general and in STP revision of the political parties law and
in particular, including evaluation of the percentage of another on the political party financing
the General State Budget allocated to financing law\. Their implementation will, among
legislative activity, as well as a comparative study of other things, help combat corruption\.
the legislator-per-capita-of-population coefficient\.
Tax Reform The proposed study sought to evaluate fundamental A series of recommendations was made to
aspects of the tax and tax incentives systems in order to improve the taxation system, the
guide the Government in making the reforms necessary organizational structure of the Bureau of
to promote private investment\. It also was intended to Taxes, and the tax incentives regime\. A
diagnose administrative, institutional, and legislative logical sequence to be followed in tax
dysfunctions in the tax system\. reform was also laid out\.
Draft proposals for: laws on taxation of personal and Their enactment and subsequent
company income - an income tax code and a wage tax implementation will increase tax fairness
code\. Property taxation - regulations for the urban and help bolster the private sector\.
property tax [Contribuição Predial Urbana];
regulations for the registration tax [Contribuição de
Registro] (transfer (SISA), inheritance, and gifts);
Rules for tax enforcement procedures: Tax Litigation
Code and General Tax code\.
Financial Inspection Technical assistance made it possible to train the The skills of the Inspection Service have
Service inspectors so as to overcome deficiencies in the been bolstered; accounting systems
application of the OCAM accounting plan now in effect standardized; presentation of the results
in this country, even as applied by the State Auditing for the year is improved; application of the
Agents [Agentes Fiscalizadores do Estado]\. Basic fiscal system was improved\.
notions of organization and record-keeping of the
OCAM system were taught\. Workbooks of practical
exercises in the OCAM system were prepared\.
Public Expenditure Detailed study of procedures for executing public When the proposed recommendations are
Planning investment expenses in order to improve public implemented, the methodology of the
competitive bidding procedures and adopt investment logical framework of project preparation
control and follow-up mechanisms\. will have been integrated: evaluation from
the project standpoint to the standpoint of
PIP (Public Investment Program)
preparation\.
Review of Public A study in educational micro-planning aimed at Indicators of access and participation
Expenditures introducing a discussion of problems with the school throughout the different levels of the
map [carta escolar] in the São Tomean educational educational system were identified and
system\. This will enable the Ministry of Education and calculated\. Organization of the school
Culture to introduce and implement planning with a system and enumeration of the social and
view to reinforcing institutional capacity\. economic factors that explain the present
dynamic\. Proposals for implementation of
the school map, identifying the phases, the
human resources, the timetable, etc\.
Proposals for different scenarios of school
system development were presented\.
Review the structure of public spending on education Review public spending in order to
- 29 -
in the past five years and suggest better use of funds achieve better allocation of public funds\.
from a macroeconomic perspective\.
Review of Public Inventory and analyze available data (public and Develop a list of pertinent indicators with
Expenditures private expenditures associated with health, projects, a view to following up on the objectives of
and strategies already implemented, and their actual health policy\. Review public spending in
effect) and the relationship to poverty in Sao Tome and order to achieve better allocation of public
Principe\. funds\.
Review the structure of public spending on health in
the past five years and suggest better use of funds from
a macroeconomic perspective\.
Financial Management Provide the managerial staff of the districts in Sao The skills of the managerial personnel in
Tome and Principe with a knowledge of financial and the districts of São Tomé and Príncipe
personnel management practices, as well as were enhanced\.
information technology\.
Survey all the problems contained in contracts signed A legal and institutional framework was
with the oil companies and the problems arising from designed for managing petroleum-related
Petroleum those contracts\. activities in Sao Tome and Principe\.
Develop a strategy for handling the situation and assist
the Government in negotiations with the oil companies\.
Advise the Government of the DRSTP in matters of
petroleum negotiation\.
Review the evaluation of geophysical and geological Improvements were made in managing the
data, especially with respect to the recent acquisitions contracts to gather seismic and other data
of seismic and other data for use in promoting the for use in promoting the blocks of the
blocks of the economic zones (Joint Development Zone economic zones\.
JDZ) and the exclusive economic zone (EEZ)\. This
review should include the regional geological scenario\.
Advise the consultant for economics by furnishing data
that will make it possible to correctly model the
petroliferous potential of those areas\.
Draft a petroleum resources management law\. Examine São Tomean officials are now better
and propose alternatives to the fiscal arrangements equipped in legal terms to satisfactorily
under the existing contracts and the proposals for manage the petroleum resources\.
revising them\. Economic assessment (analyses) of the National capability to evaluate contracts in
JDZ and the EEZ, and correct modeling of their the area of petroleum has improved\.
petroliferous potential\.
Presentation of the topic: "Options for Better Resources Skills reinforced on "Options for Better
Management\." Generic subtopics were addressed, such Resources Management\."'
as the global trend toward transparency, the ability of
OPEC to stabilize prices, and earnings by petroleum
exporter countries\. A coach will advise and propose
different kinds of solutions to the national petroleum
commission in the framework of the implementation of
the national petroleum agency\.
EMAE [São Tomé The study focused on an assessment of the company's If the recommendation made in the study
Water and Power present situation, the application of the proposed is adopted, the financial situation of
Company] tariffs, re-establishment of the company's financial EMAE will improve\.
equilibrium, investments, and prospects for
privatization\.
Telecommunications Take steps to create a telecommunications regulatory Telecommunications Regulatory Authority
authority\. created\.
Judicial System Revise certain bodies of law, namely: the Penal Code, After passage of those laws, the judicial
Code of Criminal Procedure, Law of Penalties system will be more expeditious\.
Execution, Basic Law of the Judiciary System, and
other complementary legislation\. Amend the Statues of
the Judicial Magistrates Service and the Office of the
Public Prosecutor and the Judicial Secretariats\.
Draft a Law on Professional Associations\.
- 30 -
Administrative Reform Reformulate the following laws: Electoral Census Law; Enhancement of local power\.
the Local Government Elections Law; the Local
Finances Law; the Political and Administrative Statute
of Príncipe\.
Draft a Code of Administrative Procedure, keeping in Regulate the organization and functioning
mind the realities and specific characteristics of the of the public administration\. Avoid
Republic of Sao Tome and Principe\. bureaucratization and bring services closer
to the people\.
Develop a comprehensive strategy for reform of the A document that serves as a guide for
State\. actions to be taken to solidify plans to
adapt and continually adjust the apparatus
of the State to changes in the global
context and the basic policies of the
Government\.
Judicial System Training for personnel in the courts and in the office of Skills of government employees improved\.
the Government Prosecutor concerning the legal
system, handling of cases, and the operations of the
judicial secretariats\.
Employment Strategy Develop technical procedures for organizing an office This should help consolidate the
to serve young micro-enterprises, conduct studies to set initiatives for young people, particularly
up incubators for services companies\. by creating young micro-enterprises, a
center for new information and
communications technologies, and
incubators\.
Develop a National Training, Employment and A National Youth Forum was held,
Housing Strategy for Young People, to be presented to involving the sectors associated with the
the National Youth Forum\. problems of job creation\.
ENRP [National Develop an ENRP and propose solutions for the issues A document was drafted that constitutes a
Poverty Reduction concerning the need to implement the ENRP and the reference tool for use in harmonizing the
Strategy] matrix of measurements, including the preparation of sectoral and macroeconomic policies and
progress indicators to serve as quantitative and in implementing the ENRP, in other
qualitative benchmarks for evaluation of the extent to words "Who will do what, when, and
which the ENRP has been fulfilled\. Establish a with what resources?"
framework for financing the priority activities of the
ENRP (2002-2005) and the complete ENRP\.
Analyze the possibilities for implementing an Sectors of activity in the national economy
integrated program to support and form business were identified, as well as a commercial
initiatives (PIAFE) in Sao Tome and Principe\. and industrial zone suited for
implementation of a PIAFE\.
Propose legislation that responds to the need to protect After approval, the country will be better
São Tomean entrepreneurs by reserving areas of prepared to protect the São Tomean
economic activity exclusively for them, or for others in entrepreneur\.
partnerships with São Tomean citizens\.
Reformulate the following bills of law: General Regime A legal foundation for organized
for the Pursuit of Commerce; Model Statutes for commercial activity was created\.
Associations of Different Occupational Groups;
Registration of Importers by Class; General Table of
Commerce, Industry and Tourism; Law on Tourist
Uses; Law creating a National Council on Tourism;
Tourism Framework Law; Law on Operation of the
Drive-Yourself Rental Car Industry\. Draft a bill that
would set up an autonomous fund to finance
Government actions in the realm of tourism\. Draft a
new consolidated and updated law on industrial
licensing\.
Regulate the new Investments Code to be enacted by A legal instrument was created for use in
the National Assembly and create the bases for institutionalizing a Single Office for
functioning of a Single Service Window [Balcão investment promotion\.
- 31 -
Único]\.
Central Bank Introductory courses in finance for employees of the Improvement of skills of Central Bank
Central Bank were given during a two-week period, personnel\.
focusing primarily on two aspects: Financial
Instruments and Bank Supervision\.
INE [National Conduct surveys of the active population, employment A diagnosis was made of the current
Statistics Institute] and unemployment by interviewing families in order to status of statistics on labor, employment,
gather and make available statistics that are considered wages, and vocational training\.
fundamental for the areas of labor, employment, wages, Dissemination and subsequent publication
vocational training, and others\. of data from the 2001 Census was
Complete the General Census of the Population and completed\.
Housing\.
Gather basic statistical data to feed and update the INE Create posts in remote locations where
databases with updated information (1998, 1999, and statistical data can be gathered\.
2000) in order to prepare the national accounts\. Annual
harmonized survey of companies for 1999 and 2000,
enhancing the sectoral and geographic desegregation of
the respective results\.
- 32 -
- 33 - | REVIEW |
P039161 | Document of
The World Bank
Report No: 33204
IMPLEMENTATION COMPLETION REPORT
(SCL-44330 TF-29316)
ON A
LOAN
IN THE AMOUNT OF US$101\.0 MILLION EQUIVALENT
TO THE
REPUBLIC OF CROATIA
FOR A
RAILWAY MODERNIZATION & RESTRUCTURING PROJECT
December 28, 2005
Infrastructure and Energy Department
Europe and Central Asia Region
CURRENCY EQUIVALENTS
(Exchange Rate Effective June 2005)
Currency Unit = HRK
HRK1 = US$ 0\.174
US$ 1 = HRK5\.747
FISCAL YEAR
January 1 - December 31
ABBREVIATIONS AND ACRONYMS
CAS Country Assistance Strategy
DMU Diesel Multiple Unit
EBRD European Bank for Reconstruction and Development
ECA Europe and Central Asia
ECU European Currency Unit
EFSAL Enterprise and Financial Sector Adjustment Loan
EMU Electric Multiple Unit
ERR Economic Rate of Return
EU European Union
FRR Financial Rate of Return
GDP Gross Domestic Product
GPN General Procurement Notice
HZ Hrvatske Zeljeznice (Croatian Railways)
IBRD International Bank for Reconstruction and Development
ICR Implementation Completion Report
ILO International Labour Organization
IMF International Monetary Fund
ISA International Standards of Auditing
MMATC Ministry of Maritime Affairs, Transport and Communications
MOF Ministry of Finance
MSTTD Ministry of Sea, Transport, Tourism, and Development
NPV Net Present Value
PAD Project Appraisal Document
PAL Programmatic Adjustment Loan
PPIAF Public-Private Infrastructure Advisory Facility
PSO Public Service Obligation
PSR Project Status Report
PTL Project Team Leader
QAG Quality Assurance Group
SOE Statements of Expenditure
Vice President: Shigeo Katsu, ECAVP
Country Director Anand K\. Seth, ECCU5
Sector Manager Motoo Konishi, ECSIE
Task Team Leader/Task Manager: Sunja Kim, ECSIE
CROATIA
Railway Modernization & Restructuring Project
CONTENTS
Page No\.
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 7
5\. Major Factors Affecting Implementation and Outcome 12
6\. Sustainability 14
7\. Bank and Borrower Performance 14
8\. Lessons Learned 17
9\. Partner Comments 18
10\. Additional Information 22
Annex 1\. Key Performance Indicators/Log Frame Matrix 23
Annex 2\. Project Costs and Financing 24
Annex 3\. Economic Costs and Benefits 28
Annex 4\. Bank Inputs 30
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 33
Annex 6\. Ratings of Bank and Borrower Performance 34
Annex 7\. List of Supporting Documents 35
Map: IBRD No\. 29793
Project ID: P039161 Project Name: Railway Modernization & Restructuring
Project
Team Leader: Sunja Kim TL Unit: ECSIE
ICR Type: Core ICR Report Date: December 30, 2005
1\. Project Data
Name: Railway Modernization & Restructuring Project L/C/TF Number: SCL-44330; TF-29316
Country/Department: CROATIA Region: Europe and Central Asia
Region
Sector/subsector: Railways (65%); Other social services (35%)
Theme: Infrastructure services for private sector development (P); State enterprise/bank restructuring
and privatization (P); Access to urban services and housing (S); Rural services and
infrastructure (S)
KEY DATES Original Revised/Actual
PCD: 06/11/1997 Effective: 06/09/1999 06/09/1999
Appraisal: 06/01/1998 MTR:
Approval: 01/12/1999 Closing: 06/30/2003 06/30/2005
Borrower/Implementing Agency: GOVT\. OF CROATIA/CROATIAN RAILWAYS
Other Partners:
STAFF Current At Appraisal
Vice President: Shigeo Katsu Johannes Linn
Country Director: Anand K\. Seth Arntraud Hartmann
Sector Manager: Motoo Konishi Eva Molnar
Team Leader at ICR: Sunja Kim Enn Vasur
ICR Primary Author: Agnieszka Grudzinska; Sati
Achath; Madhu Nair; Yash Pal
Kedia
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely,
HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: M
Bank Performance: S
Borrower Performance: S
QAG (if available) ICR
Quality at Entry: S S
Project at Risk at Any Time: Yes
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
The objective of the US$183 million project (Loan US$101 million) was to modernize and restructure
Hrvatske Zeljeznice (HZ) in order to diminish its deficit and thus also its financial burden on the
government budget while creating a company adapted to a competitive transport market\.
The project objective was consistent with the Bank's Country Assistance Strategy (CAS) for Croatia
(Document No\.14088-HR, April 04, 1995), as discussed by the Board on May 6, 1998\. This strategy
emphasized: (i) strengthening public sector management by increasing efficiency and reducing fiscal
expenditures; and (ii) promoting infrastructure and energy development as a basis for growth\.
The project incorporated the following lessons learned from previous Bank-assisted projects in the
transport sector in Croatia: (i) clear goals must be agreed regarding reduction of non-commercial functions
of the railways and the staff employed by the railways\. Most transport projects had achieved their physical
objectives, but had difficulties in achieving the financial objectives, especially in the railway sector, in the
pre-independence projects\. Although usually successfully completed, economically justified and having
resulted in operational improvements, the railway projects were only partly successful in improving
railway's financial performance\. This was partly because of an underlying difference of view between the
Government of the former Yugoslavia and the Bank about the function of the railways (the Government
viewed the railways as serving important non-commercial functions which required continued
subsidization) and partly because of the continuing bureaucratic culture which limited operational
improvement, reluctance to reduce staff, and almost no incentives for increasing revenues or reducing
expenditure; (ii) the implementing agency should be directly responsible for all implementation aspects of
the project components, including procurement and disbursements; and (iii) the implementation unit should
be fully staffed before loan effectiveness\.
The project envisioned the following benefits from the project: (i) an improved financial situation for HZ
through productivity increases and focus on core businesses, which will translate into a decreased burden
on the Government's budget; (ii) beginning of the transformation of HZ into a commercially viable
company in a market economy; (iii) reduced maintenance costs and derailment risks through the
modernization of HZ's physical assets; (iv) higher productivity for HZ and lower labor costs resulting from
staff retrenchment; (v) preparedness of HZ to meet the traffic demand foreseen in the medium-term, by
increasing HZ services reliability, productivity and quality, and enabling HZ to provide services more
adapted to the actual market requirement; and (vi) contribution to better environmental conditions in
Croatia, resulting from modernized facilities and rolling stock, the same being less polluting than the
present ones\.
The objective was important to the country's economic and social development, especially in terms of
reducing the government budget for railways\. The objective was also important for HZ as the
Government's financial support to the HZ was diminishing and becoming irregular and thus the physical
condition of the railway assets was progressively deteriorating\. However, the project objective, as stated,
was subject to varied interpretation by the Borrower and HZ on one side and the Bank and EBRD on the
other\. In particular, the Government and HZ chose to interpret the stated objective "to modernize" and to
adapt "to a competitive transport market" to mean the creation of a modern high-speed, high-technology
railway, despite the contradiction between such interpretation and the objective of reducing the deficit\. In
retrospect, the project objective should have more clearly emphasized the priority of reducing the fiscal
burden\.
- 2 -
3\.2 Revised Objective:
The objective was not revised\.
3\.3 Original Components:
The project consisted of seven components, all related to achieving the project's objective\. HZ had
reasonable technical, administrative and financial capacity for successful implementation of these
components\. Following is a description of the project's components\.
Component 1: Track Renewal and Maintenance of Core Routes: (US$24\.2 million: 13% of the total
project cost)
The project proposed a minimum level of track renewal of the "core" routes, which if not undertaken,
would have jeopardized HZ's efforts to improve its financial and commercial performance, as a worsening
track condition would have resulted in rerouting of part or all of the existing profitable transit traffic and
would have strongly diminished the prospects of new traffic\. The project included the provision of: (i)
25,000 tons of rails, (ii) base plates and ring pads; (iii) components for the rehabilitation of 200 turnouts,
(iv) 3-track maintenance cars; (v) a butt-welding machine; and (vi) miscellaneous track maintenance
equipment and spare parts for rehabilitation of track maintenance equipment\.
Component 2 Rehabilitation of Traction Units and Spare Parts: (US$57\.8 million: 31% of the total
project cost)
The project provided for rehabilitation and modernization of 40 mainline locomotives (30 diesel and 10
electric) and provision of additional spare parts (which would allow heavy repairs on 50 additional main
line diesel locomotives and daily maintenance of the 80 rehabilitated diesel locomotives over a period of
five years), as well as for the modernization of six Electric Multiple Units (EMUs)\. The project aimed at
improving the daily availability of the rehabilitated traction units to reach at least 80 percent\.
Component 3: Conversion of Freight Wagons: (US$3\.0 million: 2% of the total project cost)
The freight wagon fleet was too large for prevailing requirements and there was a lack of suitable wagons\.
The project financed the conversion of 100 standard covered 2-axle wagons to provide full side access and
strengthened floors for pallets\. The conversion of these wagons would allow HZ to increase its presence on
revenue generating segments of the freight transport market\.
Component 4: Rehabilitation of Passenger Coaches: (US$10\.0 million: 5% of the total project cost)
The project included provision for the rehabilitation and modernization of 120 coaches for international and
inter-regional services\. This rehabilitation would preserve the availability of passenger cars for service
through overhaul of these coaches to ensure that they remain serviceable for the years to come, with lower
maintenance costs and improved comfort, which would provide the basis for a passenger tariff increase\.
Component 5: Environment Protection: (US$1\.6 million: 1% of the total project cost)
The project aimed to: (i) mitigate potential negative impacts on the environment resulting directly from
program activities (such as closure of workshops, and fueling stations); and (ii) modernize, up to adopted
environmental standards, those HZ facilities and activities, which were considered as having the worst
effects on the environment\. Modernization included rolling stock rehabilitation (under the investment
component of the program), improved water pre-treatment and collection to reduce used water pollution,
- 3 -
supply of oil foils, construction of recycling yards and depots for fuel supply\.
Component 6: Severance Payment: (US$82\.4 million: 46% of the total project cost)
Two specific components were designed as part of the Staff Retrenchment Program in order to minimize
the social impact of adjustment\. The first one was a severance payment component, which would
compensate each redundant staff in accordance with the Bank's guidelines and Croatian Labor Law on
severance payment; and (ii) the agreement reached by HZ to get, for each of its redundant staff, double of
minimum severance payment per year of employment\. In addition, the second component provided support
to laid-off staff in terms of training based on regional employment opportunities, job searching and
outplacement\.
Component 7: Efficiency Improvement: (US$3\.0 million: 2% of the total project cost)
The implementation of efficiency improvement measures at the company's management and organizational
levels was a key element in ensuring the success of project implementation\. Improvements were required in:
(i) the management area, including the company's organizational structure, the decision-making processes,
allocations of responsibilities and preparation of business plans; (ii) the handling of non-core businesses
and uneconomic services; (iii) the financial management systems; (iv) the development of information
systems; and (v) work processes and productivity\. In this respect, full time consultant services were to be
provided to HZ management and the restructuring unit during the first two years of project implementation\.
In addition, training would be provided to: (i) HZ senior staff, principally in the areas of management,
marketing, performance evaluation, planning and commercial business approaches; and (ii) HZ staff, to
improve working methods and to introduce them to accountability and results driven management\.
3\.4 Revised Components:
The Loan Agreement was amended in August 2001 to provide for information technology systems not
provided for in the original Loan Agreement\. To make the funds available, some items of track
maintenance equipment and locomotive spare parts were dropped\. The Loan Agreement was amended in
July 2003 to add ticket vending machines to Goods Category and increase allocation for track renewal
equipment and passenger coach rehabilitation\. The additional allocation was made possible by reallocating
the unallocated amount and reducing the allocation for several items in Goods Category and Consultant
Services Category\. An international consulting firm, financed under a bilateral grant money, was engaged
to assist HZ with tackling core issues such as non-economic lines, staff reduction, and privatization of
non-core businesses\. This led to some savings in Consultant Services Category\. The Loan Agreement was
again amended in April 2004 to increase allocation for track renewal and maintenance, the funds being
made available from the environment category, the funds for which were provided internally by HZ's own
resources together with the government subsidy\. The design of the drainage rehabilitation and fuel filling
stations were delayed and sufficient time was not left for the implementing the designs, thus the funds were
provided by HZ to make it easier to hire contractors on HZ's terms\.
3\.5 Quality at Entry:
There was an official assessment of the quality at entry by the Quality Assurance Group (QAG)\. The
project's overall quality at entry received a "Marginally Satisfactory" rating from QAG\. Since the current
ICR template does not have the capability of rating "Marginally Satisfactory", we had to assign "S" rating\.
This comprised Marginally Satisfactory ratings for the Project/Operation's Concept; Objectives and
Approach; Technical and Economic Aspects; Poverty and Social Aspects; Financial Management Aspects;
Institutional Capacity Analysis; Risk Assessment and Sustainability; and Bank Inputs and Processes\.
Satisfactory ratings were given to Environmental Aspects and Readiness for Implementation\.
- 4 -
QAG remarked that:
"The major weakness in the project is the absence of a clearly articulated vision of the future of Hrvatske
Zeljeznice (HZ), the related scope of restructuring and reinvestments necessary to get there, and the role of
the restructuring under this project during the transition\.
The project did not culminate with an explicit and shared vision between the Bank and the Borrower of the
end goal of reform and a common understanding of the depth and cost of restructuring that would be
necessary to achieve such an ultimate goal\. The final choice of a restructuring strategy to support under the
project appears to have been driven more by political expediency than fundamental analysis of the needs of
the railway\. In and of itself, this would have been acceptable provided that this project laid the groundwork
for the much more ambitious restructuring dictated by the competitive and financial situation of HZ\. In the
Panel's opinion the processes put in place under the project are inadequate to build a strong political
constituency and technical capacity for effective implementation of the limited restructuring measures in the
project let alone to lay the foundations for a much more ambitious program\. The project documents fail to
adequately recognize the major political and economic and, ultimately, implementation risks confronted by
the project\.
Strengths: There is an undoubted need for the restructuring of a railway that is chronically and heavily
dependent on the national treasury for its operating viability and that faces huge competitive challenges to
its existence as a viable player in the regional transport sector\. The project team did an excellent job of
laying some of the institutional foundations for a serious attempt at restructuring the railways\. Although
not ultimately a centerpiece of the dialogue with the Borrower and the discussion of strategic choices within
the Bank, the preparation of the project included a detailed development of restructuring options based on a
thorough analysis of the system's capabilities relative to evolving market demand\. The fact that this work
featured little in project design is, in the Panel's view, primarily due to failure in oversight and to a lack of
incentives provided to the team to confront hard choices\. Specifically, the traditional review processes were
in a state of flux and there appears to have been considerable pressure not to risk the delivery of operations
to Croatia\.
Weaknesses: There is a clear disconnect between the project objectives, the knowledge developed about the
relative merits of different strategic options for achieving these objectives and the final choice of a strategy
under the project\. The restructuring strategy to be implemented under the project was designed to be
consistent with a ceiling on the level of operating subsidies to the railways under an adjustment operation\.
This subsidy target was developed without the benefit of analysis to define the performance potential of the
railways and the actions required to realize such potential\. It had the benefit of being politically acceptable
to the Croatians\. But it clearly preempted serious discussion of the other restructuring scenarios that were
developed during project preparation and based upon detailed technical and market studies\. These scenarios
presented a clear view of the end goal of reform of the railway and the depth of restructuring necessary to
achieve it\.
Bank Processes\. This operation was prepared during a state of considerable flux in the organization of the
ECA Region\. There was little oversight of the evolving quality of the operation\. While this failure was
partly mitigated by the presence of an experienced Team Leader, the team nonetheless faced tough choices
as to the strategic options to advance and the composition of Bank assistance best aligned with a chosen
option\. The team would have been helped considerably if there were more discussion and managerial
involvement more upstream in the preparation process\. As it is, by the time the internal organizational
issues were adequately resolved, this project was well advanced and it became difficult to make substantive
- 5 -
changes to its design\."
The Regional response to QAG Review was the following:
"The project was designed during a very difficult period of country relationships when major Bank
shareholders did not support lending to Croatia due to the government's reluctance to adhere to the Dayton
Peace Agreement\. During this period it was difficult for sector and country management to fully assess
Croatia's commitment to the railway reform program\. The Project Team Leader (PTL) expressed full
confidence in the commitment to the reform program by the Croatian railway management\. The PTL felt
strongly that the project was well prepared and ready for implementation\.
Both sector and country management was concerned about the status of preparation, and lack of up-front
action\. Sector management sought advice of outside reviewers\. Guidance received was conflicted, with
several reviewers insisting that a tougher and more defined program was needed\. Other advisors endorsed
the gradual and flexible approach adopted by the business plan\. Sector and country management
significantly tightened the program during negotiations and agreed to submit project for Board approval\.
The QAG report wrongly reflects positions of country and sector management\. Country management did
not want to have "an operation that could be delivered quickly to start addressing fiscal reform issues", as
stated in the report\. Country management did not exercise pressure to deliver this project to the Board\. To
the contrary, country management received pressure from shareholders not to submit projects for Croatia to
the Board due to political reasons\. The assertion of the QAG report that "undue pressures by country
management undermined solid preparation of an investment operation" is wrong\.
Country management felt uneasy about the quality of preparation of the project and: i) requested change of
PTL at appraisal stage; and ii) requested active involvement by sector management in quality control\.
Sector management provided careful quality control at and after appraisal stage and made significant
improvements to the project\. Sector management decided to change PTL only after Board approval to
assure continuity in project preparation\. In the ECA matrix structure, quality control of project design and
preparation rests with sector management\."
In retrospect, the ICR agrees with the QAG judgment on overall quality at entry\. As mentioned in Section
3\.1, the project design did not take note of the varied interpretation of project objective and made some
simplistic assumptions, which did not take into account the significant political capital required to
implement the project as designed\. In particular:
(a) the commitment of the Government towards staff reduction and discontinuation of loss-making
passenger services became diluted during the initial stage of project implementation, partly due to a fragile
majority enjoyed by the then-Government and its fear of losing the elections;
(b) the Parliament and the local authorities were not prepared to face the discontinuation of
loss-making passenger services;
(c) the Government, while wishing the losses of HZ to come down, made no effort to dissuade HZ
from making heavy investment in high speed technology; in fact made intensive modernization a
Government policy for the transport sector\.
However, according to the ICR team, the Quality at Entry was still marginally satisfactory based on the
following factors:
(i) The project objective was consistent with the CAS and met the critical needs of Croatia's railway
- 6 -
sector\.
(ii) Extensive discussions were held with the trade unions during project preparation in order to explain
the project rationale and exchange views on the solutions proposed to resolve the difficult issues facing
HZ\.
(iii) Local governments had been informed of the services reduction component of the project, and
negotiations were held with HZ during the preparation of proposals on how to handle service
reductions\. These proposals were eventually submitted to the Government for approval\. Consultants
were engaged to propose a variety of measures to increase productivity, reconfigure passenger services,
and reduce staff\.
(iv) The Ministry of Sea, Transport, Tourism, and Development, (MSTTD), (formerly known as the
Ministry of Maritime Affairs, Transport, and Communications MMATC) as the Ministry in charge of
HZ activities, the Ministry of Finance (MOF) as well as the Office for Restructuring and Economics of
State Owned Enterprises were deeply involved in the preparation of the project through consultations
and reviews\. The Croatian Office for Employment was mainly involved on an information-sharing
basis\.
(v) During project preparation, an alternative project design was considered which included an outright
privatization of the company\. The project preparation team made a correct decision to pursue a more
gradual approach\. In retrospect, it is even more clear that, a rapid and radical privatization was not
acceptable politically and that there was little prospect of private investments in HZ in its prevailing
condition\.
In addition to the above considerations, it is important to note that the direct engagement of the Bank and
other donor partners with the Government throughout the project has led to much better outcomes and
reform progress than would have been the case without the project\. A tough stance in the beginning is
unlikely to have yielded better results\. Railway restructuring is a complex operation and the accompanying
staff reduction is a painful process, where the cost of waiting for every single factor to turn right before
engaging can prove very high\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
Overall, the project objectives were partially achieved\. If we had the capability of the six-scale rating, we
would have rated the actual outcome 'Moderately Satisfactory'\. The project has not achieved its stated
objectives fully due mainly to lack of serious sector policy reform\. However, without the project, the
financial situation of the Croatian railways would have been much worse\. The project contributed to
developing a coherent restructuring program and maintaining the policy dialogue, but was not able to
advance much needed policy reforms on its own\. Toward the end of the project implementation, the PAL
played a significant role in furthering the reform of the railways sector\. Although during most of the six
years of project period, achievement of Development Objective was rated as `Unsatisfactory', the rating
thus improved by the end of the project due to significant progress with the reforms\. The following are
some key outcomes to which the project contributed:
(i) The Railway Law, an important step forward in the reform process, has been enacted and its
implementation, though initially delayed, is expected to start in 2006;
(ii) Basic concepts of restructuring have been accepted by the Government and HZ as demonstrated in the
- 7 -
medium-term restructuring plan, adopted by the Government and currently under implementation by HZ;
(iii) All of HZ's non-core businesses were separated and are now being prepared for privatization;
(iv) Despite the real-term increase in railways wages to compensate for the past stagnation and failure to
reduce passenger services, Government's operating budget support to HZ as a percentage of GDP has not
increased;
(v) Freight traffic (in net ton km) has increased by 48% in the last five years (2000-2004), and is expected
to continue growing at an annual rate of 5% in the next five years\.
The project facilitated the process of modernizing the Croatian Railways, over and beyond the direct
financing provided by IBRD and EBRD\. During the project period, significant investments were made in
track renewal and maintenance, modernization and remanufacture of locomotives, DMUs, EMUs, and
rolling stock, automation of passenger ticketing systems, and upgrading of IT systems\. The overall level of
investments in infrastructure in 2004 was US$175 million and is estimated to reach US$230 million, in
2005\. Major part of those funds was used for rehabilitation of corridor lines, while the rest of the funds
was used for program of development activities for rail infrastructure in Zagreb, local and regional lines\.
The availability and reliability of operating assets and infrastructure improved during the project period as
the direct result of these investments, although the full impact is expected to be realized in future years\.
Significant progress has been achieved in restructuring the railways\. The staff reduction targets as
established under the project have been achieved: between 1998 and June 30, 2005, HZ reduced its staff by
8,429 on a net basis, from 22,908 to 14,479, with the majority of staff reductions (nearly 60%) achieved
through a well executed voluntary and involuntary retrenchment program\. HZ has made major progress in
streamlining its operations through spin-off of non-core businesses\. During the project implementation
period, HZ created 9 new subsidiaries making a total of 16 subsidiaries, which are now earning about one
third of their revenue from outside of HZ\. All subsidiaries are scheduled to be privatized and the process is
expected to commence shortly with three subsidiaries slated for privatization in 2006, followed by at least
another seven in 2007\. There has also been some progress in restructuring the core business\. In accordance
with the EU directives and in preparation for the actual separation, HZ has already started maintaining
separate accounts for the infrastructure, and freight and passenger services\. That separation has led to a
bigger focus on the profitability of each business and has laid the ground for more effective cost control\.
The implementation of the Railways Law in January 2006 will establish separate companies for the
infrastructure, freight and passenger businesses, and for the locomotives and rolling stock holding\. This is
expected to lead to improved accountability for performance, more autonomy and management
effectiveness, reduced cross subsidization, and eventually improved profitability for the whole system\.
Although the operating companies (freight and passenger) would be initially 100% owned by the
Government, a consensus is emerging that the freight business will eventually be privatized\. McKinsey &
Co, financed under the Public-Private Infrastructure Advisory Facility (PPIAF), is currently assisting HZ
and MSTTD with refining the restructuring model, formulating a restructuring implementation strategy,
developing a staff reduction strategy both in the context of restructuring as well as efficiency improvements
and rationalization of operations, and facilitating privatization of non-core business including necessary
regulatory and legislative steps\.
The project has not achieved its stated objective of reducing railways financial burden on the budget:
Government support for HZ is projected to reach HRK 3\.1 billion, or 1\.4% of GDP in 2005\. This level of
financial support would make it difficult for the Government to achieve its target of reducing the fiscal
deficit to less than 3% of the GDP in preparation for the accession to EU\. At the end-December 2005, the
Government is planning to adopt a medium-term railway restructuring plan to improve HZ's productivity
and financial performance and consequently to reduce its heavy dependence on financial support from the
budget\. The implementation of the medium-term plan, to be developed with the assistance of the
- 8 -
PPIAF-funded consultancy mentioned above, is expected to commence in January 2006\. HZ's financial
deficit remained high due to the following: i) a decision to bring railways up to the national average, which
required approximately 40% salary increases in real terms and counteracted most of the gains of staff
reduction; ii) additional spending in order to catch up with the significant backlog of maintenance; (iii)
contrary to the Bank's advice, HZ, with the approval of the Government, embarked on an expensive plan
for introducing high-speed trains on the Zagreb-Split section, thus vastly increasing the level of investment
and cost of operation and maintenance\.
However, the most important reason for not meeting the project objective of reducing the financial losses
was the failure to discontinue loss-making passenger services and branch lines\. It is important to note,
however, that persistent efforts were made under the project to achieve this objective\. HZ's pilot proposal
for the closure of a few lines was never approved by the Parliament\. Instead, the Parliament eventually
approved a five-year process, by which responsibility for regional passenger services would be transferred
to the local authorities\. The local authorities are expected to gradually takeover the financing of the
services while the central Government will remain responsible for the rehabilitation of the infrastructure\.
HZ has already initiated the dialogue with a number of local authorities but with limited success so far\. In
part due to the above process, there has been very little progress with reaching transparent public service
obligation agreements between HZ and the Government\. Even though the Government is providing
substantial financial support to HZ for operating the passenger services, the financial support is not based
on any specific formula or contract\. The Government has been reluctant to sign PSO contracts due to the
following reasons: (a) the MOF considers the current financial support requirements too high and would
like to see improved operating efficiency before committing to a contract; and (b) the Central Government
wants the local authorities to take responsibility for supporting regional passenger services\.
HZ's operating performance in 2005 and onwards will continue to improve based on the following actions
envisioned by HZ Management: (a) conducting intensive studies to identify further staff surplus (b)
defining clear targets for the reduction of the working ratio to 150-170% in 2007; (c) implementing
recommendations of a locomotive and rolling stock productivity study, which suggests ways to increase
productivity of the assets and thus reduce operating and maintenance costs
Progress has been made in increasing the competitiveness of HZ\. After the initial drop in traffic due to
factors described below (see section 5\.1), in the period 2000-2004, the freight traffic increased by
approximately 19% in tons, and 48% in net ton km\. HZ's freight traffic (in net ton km) is expected to
increase by 5% in the next five years\. Passenger traffic increased during 2000-2004 by 20% in number of
passengers but only 7% in passenger km because of growing number of local and suburban passengers for
short distance\. Passenger traffic is also forecast to increase in the next five years, by an annual rate of 3%
in passenger km\. In collaboration with other regional railway companies, since 2004 HZ has engaged in
the preparation of joint products designed to increase the railways share of regional traffic\. During the
course of the projects, HZ implemented a number of efficiency improvement and institutional strengthening
measures (described in under points 4\.2 Output by Component and 4\.5 Institutional Development Impact
below) which laid necessary foundations for continuing improvements in competitiveness\.
4\.2 Outputs by components:
Component 1: Track Renewal and Maintenance of Core Routes
The project financed: (i) the rehabilitation of 37 km of track on the Dugo Selo-Vrbovec-Krizevci section of
the Vb Corridor\. The rehabilitation was successfully carried out and finalised by mid 2003; and (ii) track
maintenance machines, which included: 11 track maintenance cars, a set of track tamping machines, a
wagon for transport of turnouts and a tracklayer machine and components for the butt-welding plant\. All
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the procured mechanisation activities considerably improved capacities and track maintenance\.
Achievement of this component is satisfactory\.
Component 2 Rehabilitation of Traction Units and Spare Parts
The project provided for rehabilitation and modernization of traction units and spare parts, including: (i)
spare parts for the overhaul and current maintenance of diesel locomotives, and 30 locomotives and normal
current maintenance for all diesel locomotives in HZ's locomotive fleet; and (ii) the modernization of 20
diesel locomotives series 2062, the modernization of 15 electric locomotives series 1141, the procurement
of spare parts for the modernization of 3 EMUs series 6111, 8 DMUs series 7121 and 15 shunting
locomotives series 2132\. These activities were very successfully concluded in 2002 and 2003\.
Achievement of this component is satisfactory\.
Component 3: Conversion of Freight Wagons
The project financed the procurement of equipment and material for the conversion of 130 worn-out 2-axle
wagons type Gbs-z and RS-z into standard wagons type Hbis-z and Rils-z, which provide full side access
and strengthened floors for pallets\. The delivery of the goods and the conversion of these wagons were
completed in 2003\. All the wagons are in use with high availability, thereby enabling HZ to increase its
presence on revenue generating segments of the freight transport market\.
Achievement of this component is satisfactory\.
Component 4: Rehabilitation of Passenger Coaches
The project included provision for the rehabilitation and modernization of 38 coaches (12 type Aeelt and 26
type Bee) for international and inter-regional services\. The last coach was delivered in May 2005 and since
then all 38 coaches are in use with high availability\. This rehabilitation preserved the availability of
passenger coaches for service and will ensure that they remain serviceable for the years to come, with lower
maintenance costs and improved comfort\.
Achievement of this component is satisfactory\.
Component 5: Environment Protection:
During 2000-2004, HZ spent about HRK 5\.0 million of its own resources on various environment-related
activities, the main ones being as follows (See Section 3\.4):
§ Elaboration of new Regulations for all kinds of waste from technological processes and waste
water treatment processes for all technological units on HZ territory\. Elaboration of Regulations for
station location; Rijeka, Zagreb shunting station, Zagreb main station
§ Elaboration of Regulations for treatment of waste (Regulation 620)
§ Elaboration of Guidelines for the Management of the Cadastre of Emissions into the Environment
at HZ (Regulation 621)
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§ Operative plans of intervention measures in case of unexpected pollution of water systems for all
technological units on HZ territory (Osijek, Pula, Split, Rijeka, Varazdin, Vinkovci, Karlovac, Knin,
Koprivnica, Zagreb shunting station and Zagreb main station) have been updated
§ Guidelines on the operation and maintenance of drainage facilities and devices for the treatment of
waste water for all technological units on HZ territory have been updated
§ Supervision of obligations of Croatian Railways technological units according to legal provisions
has been carried out\.
§ The drawing up of the Design documentation for the Rehabilitation of the drainage systems and
devices for processing liquid waste\.
§ The rehabilitation and reconstruction of the drainage system and equipment for processing liquid
waste has been carried out for: Zagreb shunting station; Vinkovci; Zabok; Rijeka
§ The drawing up of the Study for the acquisition of water management permits and the necessary
technical documentation for the locations of: Zagreb shunting station, Zagreb main station, Bjelovar,
Varazdin, Koprivnica, Rijeka, Virovitica, Vinkovci, Moravice, Krizevci, Karlovac, Knin, Botovo, Split,
Novska, Pula, Zabok, Osijek\.
§ Works arising from the permission orders of the acquired water management permits and
inspector's supervision have been realized under Rehabilitation construction\.
§ Improvements in regard to treating waste from technological procedures\. Approximately 100
pieces of containers for hazardous and non-hazardous waste have been procured\.
§ The procurement and mounting of flow gauges on 12 testing shafts of connectors of internal
drainage systems into public drainage systems on Croatian Railways territory\.
Achievement of this component is satisfactory\.
Component 6: Severance Payment:
The program for the reduction in the number of employees consisted of severance payments, which were
paid as compensation to employees in accordance with the Bank guidelines, domestic laws and Decisions of
the HZ Management\. Under this approach, from 1998 to June 2005, Croatian Railways reduced their
number of staff by 8,429\. Of this number, 3,995 employees were partially financed from the Bank funds
(43%) and the rest (57%) from the State Budget\. The Bank also financed severance payments for 787
employees from HZ subsidiaries\.
Achievement of this component is satisfactory\.
Component 7: Efficiency Improvement
The implementation of efficiency improvement measures at the company's management and organizational
levels ensured the success of project implementation\. Improvements were made
in: (i) the management area, including the company's organizational structure, decision-making processes,
allocations of responsibilities and preparation of business plans; (ii) the handling of non-core businesses
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and uneconomic services; (iii) the financial management systems; (iv) the development of information
systems; and (v) work processes and productivity\. In this respect, full time consultant services were
provided to HZ management and the restructuring unit during the first two years of project implementation\.
In addition, training was provided to HZ staff at the International Training Centre of the ILO in Torino as
follows: (i) in 2000, an employee in the Restructuring Project Unit in HZ, attended the seminar for the
procurement of IT equipment; (ii) in 2002, some of the relevant staff in HZ attended the seminar for
Equipment Procurement Management according to World Bank procedures; and (iii) in 2004, an employee
in the Restructuring Project Unit in HZ, attended the seminar for Works Procurement Management based
on the Bank procedures\.
Achievement of this component is satisfactory\.
4\.3 Net Present Value/Economic rate of return:
Economic analysis has been undertaken on the basis of comparing the results under the "With project" and
"Without project" scenarios, the latter based on lower investment and no pressure to reduce staff\. The
Economic Rate of Return (ERR) is currently estimated at 45% and NPV at HRK 1,233 million, which is
lower than the 54% ERR and NPV of HRK 2,157 million estimated at appraisal but still satisfactory\. The
detailed assumptions and calculations for ERR and FRR can be found in Annex 3\.
4\.4 Financial rate of return:
The financial rate of return (FRR) is estimated at 28% compared with a FRR of 26% calculated at
appraisal\. The NPV is estimated at HRK 750 million compared to HRK 684 million of appraisal estimates\.
The high FRR is driven by significant increases in staff salaries in real terms without the project-driven
retrenchment, HZ financial losses would have been significantly worse\. Furthermore, staff reductions are
very likely to continue contributing to further improvements in HZ's financial performance\.
4\.5 Institutional development impact:
The Project's institutional development impact is rated Modest based on the following factors:
Rolling Business Plan\. At the operating level, HZ has developed a culture of long-term planning and the
5-year rolling business plans have become a regular part of its planning process\. The planning process has
resulted in the development of skills in various departments in the areas of forecasting, costing, operations
planning, and operations optimization\. Despite this progress, HZ recognizes that there is considerable
room for improvement in this area and further strengthening is highly likely\.
The Staff Retrenchment Process and the Mobility Centers\. In 2001, four mobility centers staffed with
18 counselors were created in Zagreb, Split, Rijeka, and Vinkovci to assist redundant employees of
Croatian Railways and its subsidiaries with the process of finding an alternative employment\. HZ
demonstrated high commitment to this program spending 1 million of its own resources for operation of
the mobility centers, in addition to a modest contribution from the state budget (22,000)\. A program for
an internal employment agency was set in motion with the aim of enabling greater internal mobility of the
work force, including all HZ's subsidiaries\. A complementary program entitled "MC Incubator" was
focused on creating new jobs inside the HZ system to engage the now unproductive staff from the surplus
list awaiting retrenchment\. However, the utility rate of these centers was disappointingly low as the
majority of the retrenched staff opted to get their severance package rather than seeking an alternative
employment\. HZ closed the Mobility Centers in December 2004 as the rate of staff retrenchment had fallen
but absorbed key staff in order to maintain the residual activities and experience gained in the process\. The
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retrenchment process as implemented under the project has built cooperative relations with the unions and
smoothed the way for further staff retrenchments in the future\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
The financial situation of HZ continued to deteriorate in 1999 due, in part, to difficult external conditions
such as the Kosovo crisis which led to a GDP decline by 2% and an increase in inflation\. The freight
traffic fell 3% and average traffic unit revenue decreased by 12-14%\. The Government was not able to
close any loss-making passenger services or branch lines, due to political opposition from the Parliament\.
Since 2000, traffic volume has continued to increase\.
5\.2 Factors generally subject to government control:
Despite the overall satisfactory performance of the Government (see section 7\.4), more decisive actions in
the following areas would have contributed to higher outcomes:
The Implementation of the Railway Legislation\. The Railway Law, passed by the Parliament in July
2003, was expected to come into force on January 1, 2005 and to be preceded the restructuring of HZ
including the separation of infrastructure, freight and passenger services\. However, the budget proposal
for 2004, accepted by the new Government had reduced the amount of subsidies to HZ and at the same
time, eliminated the fuel taxation as a dedicated source for railway infrastructure financing\. These
decisions of the Government cut the financial basis needed for the implementation of the Croatian Railways
Restructuring and Modernization Program\. Consequently, the Government accepted to postpone the
Program as well as the implementation of the Law for one year\.
Privatization of Non-Core Subsidiaries\. It was not clear whether the generic privatization law for the
privatization of public sector entities was also applicable to the subsidiaries of HZ\. MSTTD did not
initially pursue a clarification of the existing Privatization Law, which would have provided a legal basis
for the immediate privatization of the non-core subsidiary companies\. Although the clarification has since
been obtained, the privatization of subsidiaries had to be delayed until 2006\.
Fiscal Discipline and Public Service Obligation (PSO)\. The MOF could also have forced some hard
constraints on capital expenditure and assisted HZ in controlling the expenditure and improving the
working ratio\. The Government's readiness to support a very ambitious modernization program for the
railways and to finance the deficit in general also left little incentive for HZ to accelerate the staff reduction
program and take other measures for reducing deficit\. There has also been no progress with negotiating
and signing PSO agreements as explained in section 4\.1 above\.
5\.3 Factors generally subject to implementing agency control:
HZ was and is still keen to maintain control of some of the non-core subsidiaries and to absorb the
proceeds from the privatization of all subsidiaries\. The reluctance to relinquish control is explained by the
management by the fear that some of the non-core subsidiaries may strive to extract monopoly rents from
HZ after becoming independent\. In some cases such anxiety is justified, as some of the subsidiaries mix
core, and strategically significant for HZ, functions with non-core activities\. However, this issue could be
resolved by separating and re-integrating with HZ some of these core activities during the divestiture
process, rather than slowing down the entire process of separation and privatization of non-core
subsidiaries\. In other cases, when the non-core subsidiary may enjoy a monopolistic position in the short to
medium term, medium (up to three-year) term contracts can be used to protect HZ's commercial interests
until the markets become more competitive\.
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5\.4 Costs and financing:
The total cost of the project was about US$170\.6 million compared with the PAD estimate of US$183\.0
million, due to the change in the exchange rate US$/EUR in the course of the project\.
The Bank financed US$94\.4 million (55\.5%), European Bank for Reconstruction and Development
(EBRD) financed US$35\.0 million (20\.5%), and the HZ contributed US$ 40\.6 million equivalent in local
costs (24%)\.
6\. Sustainability
6\.1 Rationale for sustainability rating:
Likely\. The results of the project are sustainable\. In particular, HZ will continue to benefit from the well
implemented retrenchment program and lessons learned during its implementation\. The Government and
HZ have agreed that the Business Plan for 2006-2010 would have detailed strategies and plans for the
restructuring of HZ pertaining to: privatization of HZ's subsidiaries and core businesses; closure,
discontinuation, or curtailment of the uneconomic lines and services; implementation of the Railway Law;
and staff reduction\. The Bank has mobilized grant funds under PPIAF to finance external consultants to
help develop these detailed plans and strategies\. The PPIAF will allow the Bank to continue with the
dialogue after the closure of the on-going project\. The Bank also financed international consultants to assist
HZ with a study to determine the optimal levels of investment based on cost-benefit analysis\.
Railways reform is also included in the series of three PALs, the preparation of which started in mid 2004\.
Under the PAL program, the Bank is following up with the Government and HZ to keep the reform
momentum, in particular with regard to improving financial performance of HZ and privatization of
non-core subsidiaries\. The Government and HZ have committed themselves to improving the working ratio
to 220% by the end of 2005, 190% by the end of 2006, and 150-170% by the end of 2007 through staff
retrenchment, restructuirng and productivity improvements\. The restructuring strategy developed under the
PPIAF grant mentioned above will assist in reaching these targets\.
On December 15, 2005, the Parliament passed the law necessary to proceed with the separation of
infrastructure from operations as required by EU directives\. The new law will be implemented in 2006\.
6\.2 Transition arrangement to regular operations:
No transition to regular operations is needed, as the railways have continued to operate throughout the
project\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Satisfactory\. The Bank's performance in the identification, preparation, and appraisal of the project was
satisfactory\.
On one hand, the Bank's presence and support contributed to the development of a coherent restructuring
program\. The Bank was able to provide a reasonable framework as well as adequate tools to prepare a
program which would permit the restoration of HZ financial viability with lower Government contributions\.
The presence of the Bank significantly contributed to the fact that market-oriented principles had been
accepted by the Government as the principles to be followed in the preparation of this program\. The Bank
had a strong role in the increasing quality and realism of HZ business plans, and was recognized as the
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independent authority which would assess the quality of future business plans over the life of the project\.
In addition, given the size of the investments required by the implementation of the program, the loan had
already provided and continued to provide a strong incentive for the Borrower to comply with the
requirements of the program\. Finally, through the Bank's involvement in this program, grants from Japan
and Canada in the amount of almost US$1 million for project preparation, and a US$0\.5 million grant from
the Government of the Netherlands for assistance in project implementation were arranged, in addition to
parallel project financing from the EBRD in the amount of US$35 million\.
On the other hand, as mentioned in Section 3\.5 and as opined by the QAG Panel, the Bank could have
made more efforts to ensure that: (i) the Government was fully committed to project objective; (ii) quality
of design took into consideration the amount of political capital required to implement both a far reaching
staff retrenchment program and discontinue loss making passenger services; and (iii) the target working
ratio was developed with in-depth analysis of the performance potential of the railways and the actions
required to realize such potential\.
While there is no doubt that better preparation would have yielded better project results, one has to balance
the marginal improvements in quality and the additional time required for preparation\. The political
situation in Croatia was quite volatile and delaying the project in order to build stronger commitment from
the Government could have easily backfired\.
7\.2 Supervision:
Satisfactory\. The Bank's performance during the implementation of the project was satisfactory\.
Sufficient budget and staff resources were allocated, and the project was adequately supervised and closely
monitored\. During supervision, the task team tried to overcome the drawbacks of project design\. Over the
six years of project implementation, there were 11 supervision missions, with an average of about two
missions per year\. The Bank's client relationship was very cordial and productive\. Review teams included
specialists in railways, financial analysis, project management, financial management, and procurement\.
External consultants were used for specific aspects of project components\.
Aide-Memoires were regularly prepared and project implementation progress was adequately reported;
Implementation problems were identified early and addressed proactively\. Regular discussions were held
with MOF, line ministries, and HZ\. The Project Status Reports (PSRs) realistically rated the performance
of the project both in terms of achievement of development objectives and project implementation\. The
Bank paid sufficient attention to the project's likely development impact\. The quality of advice and the
follow-up on agreed actions were mostly adequate\. Loan covenants and remedies were enforced
effectively\.
The Bank Team effectively balanced the need to urge the Management to take some hard decisions in order
to cut costs and reduce the financial deficit with the objective to maintain a trusting relationship with the
Management\. Without an adequate relationship the progress of implementation would likely have stalled\.
The Bank Team did succeed in building a constructive relationship with both the new and old
managements\.
7\.3 Overall Bank performance:
Satisfactory\. Overall, the Bank performance was satisfactory during project preparation, appraisal and
implementation\.
Borrower
7\.4 Preparation:
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Satisfactory\. The Borrower's performance in the preparation of the project was satisfactory\. During the
whole of the project preparation cycle, and in the numerous exchanges of letters between the Bank and the
Prime Minister and the Minister of Sea, Transport, Tourism and Development, both HZ and the
Government had shown strong commitment to the project\. The project documents produced during project
preparation were reviewed and agreed to in principle by both the Government and Parliament, and had also
been extensively discussed with the trade unions and in the media\. Furthermore, each preparation mission
was conditioned on the Croatian authorities taking specific actions, as identified in the Action Plan, to
demonstrate Croatia's commitment to this project\.
The actions taken on the Croatian side, included: (i) reduction of staff by about 2,000 in 1998; (ii)
reduction of uneconomic services by 700,000 passenger train kms in the 1998-99 timetable; (iii) first
organizational changes in HZ implemented on March 1, 1998; (iv) a resolution of 32 percent of HZ
arrears; (v) a decision to fully implement the Law on Croatian Railways as of January 1, 1999; and (vi) the
creation of a working group at the MMATC level to clarify and interpret the Law on Croatian Railways\.
The Croatian authorities had, in a Letter of Development Policy, confirmed their commitment to HZ
modernization and restructuring, and agreed to the series of annual benchmarks to be reached over the
project implementation period, as proposed by the Bank\.
7\.5 Government implementation performance:
Moderately Satisfactory\. The most important reason for not meeting the project development objective of
reducing the financial losses was the failure to discontinue loss-making passenger services and branch lines\.
Persistent efforts were made under the project to achieve this objective by the Ministry and HZ\. The pilot
proposal for the closure of non-economic lines was not approved by the Parliament\. Instead, the Parliament
eventually approved a five-year process by which responsibility for regional passenger services would be
transferred to the local authorities\. During implementation, a number of differences in opinions emerged
between the Bank and the Borrower\. These differences pertained to the level of investments, track
standards, hiring of new staff, and slower than initially envisioned rate of retrenchment, but genuine effort
was made by the Borrower to address and resolve such differences\. The HZ's Management was keen on
getting and implementing the Bank's advice and to meet the Project targets\. The Ministry of Transport
attended key mission meetings and took the opinions of the Bank seriously\.
The Ministry of Transport could have done better in terms of scrutinizing HZ's Business Plans, setting
guidelines for the track standards, assisting in the analysis of the passenger services and finalization of
PSO contracts, establishing clear norms for the financing of infrastructure, reviewing HZ's efforts to
improve productivity and operating efficiency, putting pressure on and assisting in the privatization of
subsidiaries\. However, the Ministry had seriously limited capacity and depended upon the Supervisory
Board to perform all the above-mentioned functions\. The Bank suggested that the loan funds be used to
engage consultants but there was a marked reluctance to use loan funds for technical assistance\.
The project was declared a problem project soon after effectiveness because of delays on the part of the
Government and HZ in preparing and initiating implementation of programs which included: (a)
involuntary staff separations; (b) service reductions and line closures, or the introduction of Public Service
Obligation (PSO) payments; and (c) privatization of HZ subsidiaries\. Consequently, no procurement action
other than items already identified at that point of time was allowed to be taken for the first two years\. This
eventually resulted in the extension of the closing date\.
The project's closing date was extended three times, and it was finally closed on June 30, 2005, two years
later than originally planned\. The project was first extended for a period of one year, from June 30, 2003
to June 30, 2004, in order to: (i) compensate for the delay at the start of the project and permit the
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completion of all programmed procurements as well as staff retrenchments; (ii) ensure further reduction of
staff, improve the working ratio, strengthen project outcomes, and advance the newly developed objectives
of restructuring the railways and deal with passenger services and preparing the subsidiary companies for
privatization; and (iii) continue the dialogue with HZ management to make the business like, professional
and commercial management culture, a durable feature of the railways\.
The closing date was extended for the second time by six more months to December 31, 2004 in order to
enable HZ to complete the procurement of the urgently needed track maintenance machines and the Bank
team to continue focusing on railway reforms\. The project was extended for the third time by another six
months to June 30, 2005 with a limited purpose of enabling HZ to utilize about EUR1\.8 million of
undisbursed amounts in Category 2 (Labor Restructuring) of the Loan to finance about 200 to 300 further
voluntary layoffs from the HZ\.
7\.6 Implementing Agency:
Satisfactory\. HZ's Management was committed to complete the restructuring of the railways and putting
it on a sound financial footing\. HZ's Management fully embraced the project objectives and considered the
project as their own rather than being primarily Bank-driven\. Representation of the different key ministries
on HZ's Supervisory Board led to harmonization of sectoral and national policies and priorities and a much
better relationship between HZ and the Government but also led to a serious diminishing of the oversight
roles of the Ministries\. HZ's management developed a healthy partnership with the labor unions and all
restructuring decisions were preceded by intense consultations with the unions and thus a solid foundation
had been laid for receiving the unions' cooperation in deepening and implementing the restructuring
process\.
HZ's Management team was dedicated and professional and was alive to the need for increasing traffic,
improving safety, maintaining good relations with labor, developing cooperative ties with the neighboring
countries, and improving HZ's performance\. There was, however, a general adherence to the philosophy of
a modern railway with the accompanying need for high investments\. Additionally, the management felt that
infrastructure was the responsibility of the Government and improving the financial performance was
certainly not its top priority\.
The compliance with the loan covenants was not fully satisfactory\. The targets for the working ratio were
not achieved due to reasons stated above\. While HZ also fell short of the debt service coverage target, over
90% of its debt service obligations was covered by the state budget as they pertained to infrastructure
loans\. HZ was able to generate sufficient cash to service their share of debt service\. The audit reports
were timely and unqualified, and the financial management was satisfactory\.
7\.7 Overall Borrower performance:
Satisfactory\. The overall performance of the Borrower was satisfactory\. All project components were
satisfactorily completed\.
8\. Lessons Learned
The implementation of far reaching restructuring of the railways, particularly when staff retrenchment and
reduction in passenger services is required, is a complex and time consuming process, which requires a
significant amount political capital and can be greatly affected by political instability\. The following are
some specific lessons learned from this project:
As noted in OED's Country Assistance Evaluation, the Bank should lend to assist Croatia's
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infrastructure development only where government support for reforms is adequate and faulty past policies
are replaced by more appropriate policies, and this change is being implemented in the current CAS, with
investment lending for railways and roads included only in the high case, for which implementation of
sector reforms are a trigger\. The Bank and the IMF need to maintain consistent focus and pressure on the
reform in order to assist the Government with weathering political pressures and prevent backsliding\. For
this project, the Programmatic Adjustment Loans, which put the railways reform issues at the center of
policy dialogue, were very effective\.
Consensus with the labor unions helps the retrenchment process\. Discussions with the labor
unions should take place at an early stage with exchange of views on the intended restructuring model\.
Views of the labor unions must be seriously considered and the labor unions should get a genuine feeling of
participation\. It is also essential to go into details of the labor contracts and the assurances that might have
been given in the past\. Despite the particularly difficult political and social environment, the retrenchment
process was successful and strengthened the partnership between the management and the labor unions\.
The requirement to sign and honor PSO agreements for loss making passenger services, ideally
signed with the level of Government most closely linked to the beneficiaries, should precede efforts to
discontinue services; the public opinion needs to be prepared gradually for the curtailment of most
expensive services\.
Although there was a genuine commitment to the project by both the Borrower and the Implementation
Agency there were also differences in opinions with the Bank about how to interpret project development
objectives, which affected the implementation\. The following lessons should be addressed in future
projects:
It is important for the Bank to get a clear agreement from the Government on the kind of railways
the country wants to have and can afford\. The incumbent railways cannot reasonably be expected to drive
the process without strong Government leadership\.
When higher Government functionaries are made members of the Supervisory Board of the
railways, their position should be treated "ex officio"\. Otherwise, the presence of these representatives can
seriously diminish the capacities of the Ministries to provide oversight and to provide critical comment\.
9\. Partner Comments
(a) Borrower/implementing agency:
(a) Borrower/implementing agency:
I\. Loan Overview
The year 1999 saw the start of the modernisation and reconstruction of Croatian Railways\. The Project
was financed from IBRD loan 4433 HR, EBRD loan 733 and the State Budget\. The starting value of the
entire Project expressed in USD amounted to 183 mil\. USD\. The World Bank participated in this amount
with 101 mil\. USD, EBRD with 35 mil\. USD and the Republic of Croatia with 47 mil\. USD\. The World
Bank loan was converted into EUR prior to loan utilisation and this remained the currency in use\.
The objective of the Project was the modernisation of the company, in an effort to make it competitive on
the transportation market, to increase revenues and ultimately to ensure that it was less of a burden on the
State Budget\.
The Croatian Government, aware of the problems Croatian Railways were having, attempted to create a
framework for the restructuring of the railways and defined an action plan consisting of the main tasks
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performed in the course of the Project\.
The Project's tasks were created to solve the following problems:
- modernise the physical assets of HZ;
- increase labour productivity;
- increase traffic volume;
- decrease staff numbers;
- solve the issue of non-economic lines;
- privatise the subsidiaries;
- increase financial performance and thus decrease the burden on the Budget; and
- implement the new Railways Act\.
II\. Components
The financial support for the Project was aimed at seven components which were connected to the
modernisation of assets and the reduction of the labour force\. The components were as follows: (i) track
renewal and maintenance of core routes; (ii) rehabilitation of traction and procurement of spare parts; (iii)
conversion of freight wagons; (iv) rehabilitation of passenger coaches; (v) environment protection; (vi)
severance payments; and (vii) efficiency improvement\.
All technical, administrative and financial capacities were available for Project implementation\.
(i) Track renewal and maintenance of core routes
The complete material for 37 km of track on the Dugo Selo-Vrbovec-Krizevci section of the Vb Corridor
was procured and the rehabilitation was successfully carried out\. Machines for track maintenance and
necessary spare parts were procured\.
(ii) Rehabilitation of traction and procurement of spare parts
The rehabilitation of traction units was for the most part financed from the EBRD loan and this was very
successfully realised\. Availability was significantly increased, as was the reliability of the traction units\.
Much valuable experience was acquired in the course of the Project which we shall be able to apply in
similar projects in the future\.
(iii) Conversion of freight wagons; and (iv) Rehabilitation of passenger coaches
Capacities, quality and traffic safety were increased with the conversion of freight wagons and the
modernisation of passenger wagons and of course greater comfort was provided to passengers\.
(v) Environment protection
Activities in connection to environment protection resulted in the drawing up of various regulations and
guidelines for water protection; the design documentation for the rehabilitation of drainage systems was
drawn up; drainage systems at several stations were reconstructed and rehabilitated; containers for
hazardous and non-hazardous waste were procured; flow gauges for 12 testing shafts were procured, etc\.
All this was financed with HZ's own funds\.
(vi) Severance payments
The reduction in the number of employees proceeded at a very slow pace; however, the system of severance
payments enabled the departure of a large number of employees without the social upheavals and
disturbances which almost always accompany loss of employment\.
- 19 -
(vii) Efficiency improvement
In the area of efficiency improvement, the training of PIU staff was financed from loan funds in order for
them to acquire knowledge and skills connected to the procurement of goods and services according to
World Bank procedures and auditing services\. Also financed under this component was the procurement of
ticket vending machines and the IT system, as well as consulting services linked to the components for the
rehabilitation of tracks and wagons\. In regard to the IT system, the procurement of a Unisys 1100/73
central computer with a Clear path system was carried out\. The contract included the education of users
and equipment maintenance for a period of seven years\. The system serves to monitor and operate the
traffic-transportation technological processes of HZ and according to its technical characteristics it can be
incorporated in the future computer network of HZ with the task of integrating data in the data base in the
field of planning and execution of transportation\. The system enables savings on direct operating costs,
improves information systems, organisation of operations and advances operating processes\.
The allocation of funds per components, with the agreement of the Bank, changed as the Project
progressed, in accordance with the possibilities and needs of HZ, so that in categories, such as environment
protection, where it was evident that funds were more than sufficient, these funds were transferred in order
for ticket vending machines and track reconstruction equipment to be procured\.
The total costs of the project amounted to 170\.6 mil\. USD\. If we rank the expended sums according to
categories then we see that the major part was spent on severance payments (71\.4 mil\. USD), followed by
rehabilitation of traction units (38\.9 mil\. USD), track renewal and maintenance (28 mil USD) and
rehabilitation of passenger coaches (22\.1 mil\. USD)\. The rest went to ticket vending machines, IT
equipment and consulting services\. The difference in funds which occurred in regard to the amount of 183
mil\. USD, as was envisaged in the original document, is the result of constant changes in the currency rate
between EUR/USD\.
The World Bank loan was spent in full, as was the 35 mil\. USD of the EBRD loan\. In the severances
category, State Budget funds participated in the amount of 40\.4 mil\. USD\. Expressed in percentages, this is
57% of the total funds for severances as was envisaged in the original document and contract\.
III\. Conclusion
All Project activities were for the most part realised by the end of 2004 and all that remained in the first
half of 2005 were the payments for severances and auditing of the Project and HZ as a whole\. Thus the
financial part of the Project was concluded\. All the envisaged funds were expended\. As far as social
policies are concerned, the part which was solved through the Project was also concluded but the
programme of severance payments as incentive measures continues from the State Budget\.
The Project was extended three times, that is, the implementation of the Project was delayed by two years,
due to delays in the preparation at the start of the Project\.
a) Main Objectives
In the course of the Project, the main objectives were not revised; however, we were unable to fully achieve
all the objectives such as staff separation, closure of uneconomic lines and the privatisation of HZ
subsidiaries\. These issues are to be solved in the scope of the process of the restructuring of Croatian
Railways which has not stopped with the completion of this Project\. On January 1 2006 the new Railways
Act shall take effect which presumes a different organisation, that is, the physical separation of
infrastructure from operations, which has already been accomplished on the accounting basis\. Such an
approach has enabled each sector to be more focused on its own revenues and costs\.
- 20 -
HZ has also taken on the obligation of adjusting to EU guidelines and the World Bank is present in this
process through the PAL programme which envisages intensive programmes of structural reform, with the
previous completion of agreed activities, that is, the above mentioned unachieved objectives\.
b) Future Activities
In terms of a better approach and execution of all tasks, HZ regularly draws up the yearly and medium
term business plans, analyses and projections and constantly keeps in mind the planned restructuring
objectives\. The measuring unit set by the Bank is the working ratio and this year it is at the requested level\.
HZ is, in agreement with the Bank and according to PAL conditions, committed to a continued reduction of
the working ratio in the upcoming years\.
As for problems concerning uneconomic lines and the cancellation of some passenger services, HZ has
drawn up and sent to the Croatian Government for their approval a draft plan to solve this issue\.
The activities connected to the process of the privatisation of the subsidiaries owned by HZ began in 2005\.
HZ has drawn up a programme and a schedule according to which these subsidiaries are to be privatised by
the spring of 2006 and a further seven subsidiaries by the end of 2007\.
All the improvements which we expected, including the formation of a commercially viable company, the
reduction of maintenance costs, higher productivity and lower labour costs were not achieved at the level
originally conceived at the beginning of the Project\. This is the result of continued high maintenance costs
and labour costs which increased despite a reduction of employment levels\. Namely, employee wages had
to be equalised with the state average which, in effect, caused labour costs to remain at the same level\.
However, now that wages are at a satisfactory level, it is to be expected that all further staff reductions
shall have a direct effect on the reduction of costs and thus the working ratio\. HZ is also committed to
further decrease staff numbers and in this effort is using the valuable experience of the Mobility Centre
which, apart from severance payments as a method of resolving surplus employees, offered alternative
employment opportunities\. The unions, whose opinions and points of view are seriously taken into
consideration, are also included in the process of reducing staff numbers\. Currently at HZ, a new job
classification is underway which should identify surplus staff and thus in due course improve efficiency\.
c) Cooperation between Project Partners and Project Evaluation
The cooperation between all participants was successful\. Taking part in the Project through their financing
were the Croatian Government, IBRD, and EBRD and Croatian Railways as the Borrower\.
Cooperation was carried out on all levels, from the physical implementation of the Project to the
implementation and control of business plans and key indicators\.
The Bank's Project team always endeavoured to understand and accept the problems which arose in the
course of the Project and to support HZ's plans and proposals at the Government level\.
To the satisfaction of all sides, the relationship between partners was from the very beginning open and
transparent\. The Bank's Project team was always ready to cooperate and aid in terms of advice and support
both from HZ and the Government\. In terms of the most efficient way to execute tasks and cooperation
with the Bank, individual PIU members took courses in World Bank procedures\. The actual
implementation of the Project enabled the acquisition of knowledge, skills and experience which will
certainly increase the efficiency of employees and have an effect on the future success of HZ activities\.
To conclude, we evaluate this Project as satisfactory and our cooperation with the World Bank as very
successful\.
- 21 -
(b) Cofinanciers:
(b) Cofinanciers:
Comments from EBRD:
Project Implementation: As part of rolling stock rehabilitation programme, in 1999, Croatian Railways
signed a sovereign guaranteed loan with the EBRD to finance the modernisation of 20 diesel locomotives
series 2062 and 12 electric locomotives series 1141 in the total amount of US$ 35 mil\. (loan no\. 733)\. The
final list of financed project components included:
1\. Modernisation of 20 diesel-electric locomotives series 2062 (Turner, TZV-Gredelj, EMD)
2\. Modernisation of 15 electric locomotives series 1141 (Konar-Elektrine lokomotive)
3\. Procurement of a new type diesel engine CAT 3412 E to replace the old engine for shunting locomotives
series 2132 (Teknoxgroup)
4\. Procurement of assemblies for the modernisation of 8 DMUs series 7121:
- 16 diesel engines with cooling system and elements for increasing power (Voith Turbo)
- 16 sets for hot air heating of passenger area (Liebherr)
- 16 sets of devices for indicating travelling destination (Belise)
5\. Procurement of 12 traction motors and gear boxes for 3 EMUs series 6111 (Konar- Generatori i motori,
Voith Turbo)
6\. Contract with the Canadian company Canarail for the provision of consulting services in the realisation
of the projects financed by the EBRD\.
There were no cost overruns and the project was completed successfully within the agreed timeschedule
reaching its physical objectives\.
Covenant Compliance/Sector Reform: Not fully satisfactory\. There continues to be lack of a
comprehensive reform strategy for the railway sector\. It maintains its reliance on excessive state subsidies\.
Delays in implementation of the new railway law and absence of a clear decision on the funding
mechanisms for rail infrastructure investments and the financing of passenger service losses has had a
detrimental effect on the competitiveness of the sector\. Introduction of the open access, required if Croatia
becomes an EU member state, will thus have extremely negative effect on the railway operations in the
medium term\. EBRD fully concurs with Lessons Learned section above\. Comprehensive plan for the
sector's future is long overdue\.
(c) Other partners (NGOs/private sector):
N/A
10\. Additional Information
A\. The Bank's ICR Team consisted of the following members:
Agnieszka Grudzinska (Senior Infrastructure Finance Specialist)
Yash Pal Kedia (Railway Specialist, Consultant)
Sati Achath (Consultant)
Madhu Nair (Consultant)
Lorraine McCann Kosinski (Program Assistant)
B\. List of Task Team Leaders of the project in chronological order:
- 22 -
(i) Enn Vasur
(ii) Peter Parker
(iii) Sunja Kim
- 23 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome/Impact Indicators:
Indicator Projected in SAR/PAD for Actual/Latest Estimate
end-2002
Working ratio 155% 220 % (estimate for
excluding subsidy 2005)
Debt service 1\.3 1\.1 (estimate for 2005)
coverage ratio
Staff productivity 217 299 (estimate for 2005)
(TU per employee)
Reduction of 6 1/
uneconomic
passenger services
(train kms, million)
Working ratio 77% 98% (estimate for 2005)
Including operating
subsidy
Output Indicators:
Indicator Projected in SAR/PAD Actual/Latest Estimate
16,000 (as of December 14,362 (as of Oct\. 31,
HZ staff reduction 31, 2002) 2005)
Kms of rail lines
either closed or 100 100
under PSO (p\.a)
1/ Under the ongoing PAL operation, HZ will prepare a proposal to reduce services along or close
uneconomic lines in 2006-2009, and submit the proposal to the MSTTD and the Bank by end-January
2006\. Based on such proposal, the MSTTD will prepare a program and, after consultation with local
authorities, submit the program to the Government for approval by end-March 2006\. Implementation of
such program will start no later than May 2006\.
- 24 -
Annex 2\. Project Costs and Financing
Annex 2a : Project Costs by Components (US$ million equivalent)
Project Component Appraisal Estimate Actual/Latest Estimate Percentage of
Appraisal
A\. Goods
Track Renewal and 20\.7 28\.0 135\.3
Maintenance
Rehabilitation of 49\.3 38\.9 78\.9
Traction Units and
Spare Parts
Conversion of Freight 2\.6 1\.7 65\.4
Wagons
Rehabilitation of 8\.5 22\.1 260\.0
Passenger Coaches
Environment 1\.4
Protection
B\. Severance 70\.3 71\.4 101\.6
Payment
C\. Efficiency 2\.5 1\.14 45\.6
Improvement
Total Baseline Cost 155\.3 169\.16 108\.9
Physical Contingencies 14\.1
Price Contingencies 12\.6
Frontier-end Fee 1\.0 0\.9 90\.0
Total Project Cost 183\.0 170\.6 92\.9
- 25 -
Annex 2b\. Project Costs by Procurement Arrangements (US$ million equivalent)
Appraisal Estimate
Project ICB IS Other NBF Total Cost
Component (including
contingencies)
1\.
Goods 23\.2 1\.0 24\.2
(23\.2) (1\.0) (24\.2)
(a)
Construction
materials
Track Renewal
and
Maintenance
Environment 0\.8 0\.7 0\.1 1\.6
Protection (0\.8) (0\.7) (0\.1) (1\.6)
(b) Equipment
and machinery
Rehabilitation 13\.0 1\.0 8\.8 35\.0 57\.8
of Traction (13\.0) (1\.0) (8\.8) (22\.8)
Units and Spare
Parts
Conversion of
Freight Wagons 3\.0 3\.0
(3\.0) (3\.0)
Rehabilitation
of Passenger 10\.0 10\.0
Coaches (10\.0) (10\.0)
2\. Severance 35\.4 47\.0 82\.4
Payment (35\.4) (35\.4)
Consultancies
Technical
Assistance 3\.0 3\.0
(3\.0) (3\.0)
Total Baseline
Cost
Frontier-end Fee 1\.0 1\.0
(1\.0) (1\.0)
Total Project 50\.0 2\.7 48\.3 82\.0 183\.0
Cost (50\.0) (2\.7) (48\.3) (101\.0)
- 26 -
Actual
Project ICB IS Other NBF Total Cost
Component (including
contingencies)
1\.
Goods
(a) 26\.33 1\.67 28\.0
Construction
materials
Track Renewal
and
Maintenance
Environment
Protection
(b) Equipment
and machinery
Rehabilitation 3\.70 35\.20 38\.90
of Traction
Units and Spare
Parts
Conversion of
Freight Wagons 1\.70 1\.70
Rehabilitation
of Passenger 21\.85 0\.25 22\.10
Coaches
Passenger
Transport 3\.40 3\.40
IT 2\.52 2\.52
2\. Severance
Payment 31\.0 40\.4 71\.4
Consultancies
Technical
Assistance 1\.14 1\.14
Total Baseline
Cost
Frontier-end Fee
0\.90 0\.90
Total Project
Cost 53\.28 38\.66 75\.60 170\.6
- 27 -
Annex 2c\. Project Financing by Component (in US$ million equivalent)
Componen Appraisal Estimate Actual/Latest Estimate Percentage of Appraisal
t
Bank EBRD HZ Bank EBRD HZ Bank EBRD HZ
Goods
Track 24\.2 0\.0 28\.0 116
Renewal
and
Maintenan
ce
Rehabilitat 22\.8 35\.0 0\.0 3\.7 35\.0 0\.2 16 100
ion of
Traction
Units and
Spare Parts
Conversio 3\.0 0\.0 0\.0 1\.7 57
n of
Freight
Wagons
Rehabilitat 10\.0 0\.0 0\.0 22\.1 221
ion of
Passenger
Coaches
Environme 1\.6 0\.0 0\.0
nt
Protection
Passenger 3\.4
Transport
IT 2\.52
Severance 35\.4 00\.0 47\.0 31\.0 40\.4 88 86
Payment
TA 3\.0 0\.0 0\.0 1\.14 38
Frontier-e 1\.0 0\.0 0\.0 0\.9 90
nd Fee
Total 101\.0 35\.0 47\.0 94\.46 35\.0 40\.6 94 100 -6\.4
Project
Cost
- 28 -
Annex 3\. Economic Costs and Benefits
Economic Cost Benefit Analysis
(Amounts in HRK million, base year: 1999)
Present Value of
Flows
Economic Analysis Financial Analysis
Appraisal Latest Estimates Appraisal Latest Estimates
NPV HRK 2,157 m HRK 1,233 m HRK 684 m HRK 750 m
IRR 54% 45% 26% 28%
Until now, the full economic benefits of the project have not been achieved mainly because there has not
been enough time for the Bank-financed investments to fructify\. HZ is now set to continue increasing
traffic and revenue at 2% per annum, reducing staff on the basis of mechanization and use of locomotives,
wagons and maintenance equipment rehabilitated and retrofitted under the Project\. Because of heavy staff
reduction, HZ will need to procure more services and the variable cost/unit will increase gradually from
HRK0\.33/traffic unit to about HRK0\.41/traffic unit\. It is also quite certain that "without project" transport
capacity building would have suffered and traffic would have increased by 2% per year for five years or so
and then stagnated at that level, staff reduction would have not taken place except that due to natural
attrition of 1% per year\. On the other hand, staff wages would have risen as they have, due to union
pressure and the national policy on wages\. Economic analysis has been undertaken on the basis of
comparing the results under the "without project" and "with project" scenarios, the assumptions under the
two scenarios are indicated below\.
Assumptions behind the "without project" scenario include the following:
a) The investment in the railways will be restricted to HRK 400 million per year due to budgetary
constraints;
b) The traffic carrying capacity will slowly decline and as a result the freight traffic will increase only
by 2% per year for five years and then remain at that level;
c) While traffic will increase slowly, the staff will continue except for natural attrition, which rate has
been assumed as 1% per year;
d) Variable cost has been assumed to be HRK 0\.33 per traffic unit, this cost not including staff costs
but only fuel, services, and spare parts;
e) Fixed cost has been assumed to be HRK 360 million per year;
f) Average tariff has been assumed as HRK 0\.38 per traffic unit; and
g) Economic cost of staff has been computed on the assumption that HZ will like to manage the
railways with 15,000 staff;
Assumptions behind the "with project" scenario include the following:
h) The investment in the railways will be made by the Government being HRK 400 million per year
plus the investment made under the Project;
i) The traffic carrying capacity will sharply improve and as a result the freight traffic will increase by
- 29 -
40% in the first five years and thereafter at 5% per year for the next five years, and 2% per year thereafter;
j) The staff will reduce until it reaches the level of 8,000 or so;
k) The average salary has risen at a sharp rate due to national policy but been assumed to remain
constant, i\.e\., will increase only by the rate of inflation;
l) Variable cost has been assumed to increase gradually to HRK 0\.41 per traffic unit due to gradual
increase in services as staff is reduced;
m) Fixed cost has been assumed to remain the same;
n) Average tariff has been assumed to remain the same;
o) About 25% of the retrenchment benefits will be invested by the staff and that will generate an
income of 10% per annum; and
p) About 45% of staff leaving HZ was reemployed, mostly in the subsidiary companies until the year
2004 by which date the process of subsidiary formation had been completed\. After 2004, the rate of
reemployment of fresh retrenchment has been assumed as 10%\.
WithoutProject WithProject
Fin\. Econ\. Variable Fin\. Econ\. Total Total Variable Total Retrenched Interest Freight Total Change Change
staff staff &fixed total total Capital Total fiscal econ\. Staff &fixed Capital Total fiscal staff from user econ\. Croatian Govt
Year cost cost cost cost cost cost revenue surplus surplus cost cost cost rev surplus AltIncomealt\.income savings surplus Econ\. Fiscal
1 1,265 886 1,345 2,610 2,231 400 1,117 (1,893) (1,514) 1,265 1,345 478 1,117 (1,971) 32 2 0 (1,937) (44) (78)
2 1,253 886 1,365 2,617 2,251 400 1,139 (1,878) (1,511) 1,193 1,441 510 1,190 (1,954) 57 3 31 (1,864) (46) (76)
3 1,314 939 1,385 2,699 2,324 400 1,162 (1,937) (1,562) 1,206 1,581 543 1,306 (2,025) 92 2 87 (1,845) (16) (88)
4 1,392 1,005 1,405 2,798 2,410 400 1,185 (2,012) (1,625) 1,217 1,661 582 1,352 (2,108) 161 0 101 (1,845) (8) (95)
5 1,420 1,035 1,426 2,846 2,461 400 1,209 (2,037) (1,652) 1,109 1,807 639 1,464 (2,092) 202 2 154 (1,734) (8) (55)
6 1,504 1,107 1,448 2,952 2,555 400 1,233 (2,118) (1,722) 1,100 1,859 617 1,477 (2,100) 241 1 147 (1,711) 4 18
7 1,489 1,107 1,448 2,937 2,555 400 1,233 (2,103) (1,722) 1,045 1,976 470 1,550 (1,941) 247 2 191 (1,501) 159 163
8 1,474 1,107 1,448 2,922 2,555 400 1,233 (2,088) (1,722) 993 2,100 400 1,628 (1,865) 252 1 238 (1,375) 233 223
9 1,459 1,107 1,448 2,907 2,555 400 1,233 (2,074) (1,722) 943 2,233 400 1,709 (1,867) 256 1 287 (1,322) 235 207
10 1,445 1,107 1,448 2,892 2,555 400 1,233 (2,059) (1,722) 896 2,327 400 1,795 (1,828) 261 1 339 (1,227) 283 231
11 1,430 1,107 1,448 2,878 2,555 400 1,233 (2,045) (1,722) 851 2,425 400 1,885 (1,792) 265 1 393 (1,133) 333 253
12 1,416 1,107 1,448 2,864 2,555 400 1,233 (2,030) (1,722) 809 2,466 400 1,922 (1,753) 269 1 416 (1,067) 356 278
13 1,402 1,107 1,448 2,849 2,555 400 1,233 (2,016) (1,722) 768 2,508 400 1,961 (1,716) 273 1 439 (1,003) 379 300
14 1,388 1,107 1,448 2,835 2,555 400 1,233 (2,002) (1,722) 730 2,551 400 2,000 (1,681) 277 1 463 (941) 403 321
15 1,374 1,107 1,448 2,821 2,555 400 1,233 (1,988) (1,722) 693 2,595 400 2,040 (1,649) 280 1 487 (881) 427 340
16 1,360 1,107 1,448 2,808 2,555 400 1,233 (1,974) (1,722) 659 2,640 400 2,081 (1,618) 283 1 511 (823) 451 357
17 1,347 1,107 1,448 2,794 2,555 400 1,233 (1,961) (1,722) 626 2,685 400 2,122 (1,589) 286 1 536 (765) 475 372
18 1,333 1,107 1,448 2,781 2,555 400 1,233 (1,947) (1,722) 595 2,732 400 2,165 (1,562) 289 1 562 (710) 499 386
19 1,320 1,107 1,448 2,767 2,555 400 1,233 (1,934) (1,722) 565 2,779 400 2,208 (1,536) 289 0 588 (658) 521 398
20 1,307 1,107 1,448 2,754 2,555 400 1,233 (1,921) (1,722) 565 2,828 400 2,252 (1,540) 289 0 615 (636) 543 381
21 1,294 1,107 1,448 2,741 2,555 400 1,233 (1,908) (1,722) 565 2,877 400 2,297 (1,545) 289 0 642 (613) 566 363
22 1,281 1,107 1,448 2,728 2,555 400 1,233 (1,895) (1,722) 565 2,927 400 2,343 (1,549) 289 0 670 (590) 589 346
23 1,268 1,107 1,448 2,715 2,555 400 1,233 (1,882) (1,722) 565 2,979 400 2,390 (1,553) 289 0 698 (566) 613 329
24 1,255 1,107 1,448 2,703 2,555 400 1,233 (1,869) (1,722) 565 3,031 400 2,438 (1,558) 289 0 727 (542) 637 311
25 1,243 1,107 1,448 2,690 2,555 400 1,233 (1,857) (1,722) 565 3,085 400 2,487 (1,563) 289 0 756 (517) 662 294
NPV 1,233 750
IRR 45% 28%
- 30 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Preparation
07/15/1997 5 Transport Economist (1);
Financial Analyst (1);
Transport Engineer (1);
Counsel (1);Procurement
Specialist (1)
01/07/1998 5 Transport Economist (1);
Financial Analyst (1);
Transport Engineer (1);
Counsel (1);Procurement
Specialist (1)
Appraisal/Negotiation
06/26/1998 6 Transport Economist (1);
Financial Analyst (1);
Transport Engineer (1);
Counsel (1);
Disbursement Officer (1);
Procurement Specialist (1)
11/12/1998 6 Transport Economist (1);
Financial Analyst (1);
Transport Engineer (1);
Counsel (1);
Disbursement Officer (1);
Procurement Specialist (1)
Supervision
11/05/1999 3 RAILWAY SPECIALIST (1); S U
FINANCIAL ANALYST (1);
TRANSPORT SPECIALIST (1)
03/26/2000 2 SR\.TRANSPORT ECONOMIST U U
(1); TRANSPORT SPECIALIST
(1)
06/06/2000 5 TEAM LEADER (1); U U
TRANSPORT ENGINEER (1);
FINANCIAL ANALYST (1);
RAILWAY SPECIALIST (1);
PROJECT OFFICER (1)
11/20/2000 5 TEAM LEADER (1); U U
TRANSPORT SPECIALIST (1);
FINANCIAL ANALYST (1);
LEAD RAILWAY ENGINEER
(1); SR\. OPERATIONS OFF\. (1)
06/01/2001 5 TEAM LEADER (1); U U
TRANSPORT SPECIALIST (1);
FINANCIAL ANALYST (1);
- 31 -
LEAD RAILWAY ENGINEER
(1); SR\. OPERATIONS
OFFICER (1)
06/01/2001 5 TEAM LEADER (1); S S
TRANSPORT SPECIALIST (1);
LEAD RAILWAY ENGINEER
(1); FINANCIAL ANALYST
(1); SR\. OPERATIONS
OFFICER (1)
06/01/2001 5 PROGRAM TEAM LEADER S S
(1); TRANSPORT SPECIALIST
(1); LEAD RAILWAY
ENGINEER (1); SR\.
FINANCIAL ANALYST (1);
SR\. OPERATIONS OFFICER
(1)
10/01/2002 4 SR\.OPERATIONS OFF\. (1); S S
SR\.FINANCIAL ANALYST (1);
FINANCIAL ANALYST (1);
CONSULTANT (1)
02/28/2003 4 SR\.FINANCIAL ANALYST (2); S S
LEAD RAILWAY ENGINEER
(1); CONSULTANT (1)
09/15/2003 4 SR\. FINANCIAL ANALYST S S
(1); RAILWAY SPECIALIST
(1); INFRASTRUCTURE
SPECIAL (1); PROJECT
OFFICER (1)
02/27/2004 4 SR\.FINANCIAL ANALYST (1); S U
RAILWAY SPECIALIST (1);
INFRASTRUCT\.SPECIALIST
(1); PROJECT
OFFICER,ZAGREB (1)
09/24/2004 4 TEAM LEADER (1); S U
RAILWAY SPECIALIST (1);
TRANSPORT ADVISER (1);
PROJECT OFFICER,ZAGREB
(1)
ICR
March 2005 5 TEAM LEADER (1);
PROJECT OFFICER ,
ZAGREB (1);
TRANSPORT SPECIALIST
(2); RAILWAY
SPECIALIST (1)
- 32 -
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ ('000)
Identification/Preparation N/A 305\.00
Appraisal/Negotiation N/A 220\.27
Supervision N/A 785\.17
ICR N/A 30\.0
Total N/A 1340\.44
*SAP no longer provides information on staff weeks\.
1/ Also includes Bank-financed and trust fund consultants\.
- 33 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Macro policies H SU M N NA
Sector Policies H SU M N NA
Physical H SU M N NA
Financial H SU M N NA
Institutional Development H SU M N NA
Environmental H SU M N NA
Social
Poverty Reduction H SU M N NA
Gender H SU M N NA
Other (Please specify) H SU M N NA
Private sector development H SU M N NA
Public sector management H SU M N NA
Other (Please specify) H SU M N NA
- 34 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
Lending HS S U HU
Supervision HS S U HU
Overall HS S U HU
6\.2 Borrower performance Rating
Preparation HS S U HU
Government implementation performance HS S U HU
Implementation agency performance HS S U HU
Overall HS S U HU
- 35 -
Annex 7\. List of Supporting Documents
1\. Aide Memoires, Back-to-Office Reports, and Project Status Reports\.
2\. Project Progress Reports\.
3\. Consultant Study Reports financed under the Project\.
4\. Borrower's Evaluation Report dated October 2005; and
5\. Project Appraisal Document for Croatia: Railway Modernization and Restructuring Project, dated
December 8, 1998 (Report No: 18553-HR)
- 36 -
IBRD 29793
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A U S T R I A
To Pragersko Lendava ^
^ ^ Mursko Sredisce
C R O A T I A
Sredisce Cakovec
To Grobelno Kotoriba To Budapest
H U N G A R Y RAILWAY MODERNIZATION AND
Varazdin Murakeresztur
To Budapest
To Stranje Rogatec
Golubovec Gyekenyes RESTRUCTURING PROJECT
ITALY Durmanec Koprivnica
Imeno Kumrovec
^
46° ^ To Pécs 46°
S L O V E N I A To Ljubljana Gornja Krizevci
Savski Zabok Klostar
Stubica
Marof
Dobova ZAGREB RAILROADS:
Bjelovar Magyarboly
^ Beli
To Pivka MAIN LINES
Dugo Selo Odvojnica
^
To Presnica To Ljubljana Manastir
Pcelic ^ BRANCH LINES
V\. Gorica Belisce
To Subotica RAILROAD TRACK RENEWAL AND REHABILITATION:
Ilirska Metlika Kamanje Osijek Erdut 1998 PROGRAM
Bistrica ^ Bizovac
Rakitovec Karlovac Banova Velika Dalj Bogojevo 1999 PROGRAM
Sisak/Caprag Nasice
Jaruga
Buzet Moravice Vukovar 2000 PROGRAM
Lupoglav Vinkovci
Rijeka Sunja Novska 2001 PROGRAM
Nova
Ogulin ^ Glina Kapela/ Slavonski 2002 PROGRAM
Ostarije Batrina Brod ^
Slavon
Odvojnica Volinja Tovarnik Sid
^ Samac
Rasa Dobrljin Zupanje
45° Bosanski Beograd MAJOR TOWNS
Brod ^Bosanski Drenovci
Samac To NATIONAL CAPITAL
To Bosanski Novi
Pula ^ RIVERS
To Sarajevo Brcko
To Bosanski Novi INTERNATIONAL BOUNDARIES
^ To Banovici
Ripac
Loskun Kulen Vakuf
Gospic Martin Brod
^
Licko Dugo Polje
B O S N I A A N D
Strmica H E R Z E G O V I N A
Zadar
44° 44°
Benkovac Knin
A Sibenik
d r Perkovic
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S e To Sarajevo
a
Capljina
PloceMetkovic
^
43° FED\. REP\. 43 °
OF
YUGOSLAVIA
(SERB\./
This map was produced by Dubrovnik MONT\.)
the Map Design Unit of The
World Bank\. The boundaries,
colors, denominations and 0 25 50 75 100 Kilometers
any other information shown
on this map do not imply, on
the part of The World Bank
Group, any judgment on the 0 25 50 75 100 Miles
legal status of any territory,
or any endorsement or
a c c e p t a n c e o f s u c h
boundaries\.
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DECEMBER 1998 | REVIEW |
P088716 | Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Health Network Formation & Quality Im (P088716)
Report Number : ICRR0020349
1\. Project Data
Project ID Project Name
P088716 BR Health Network Formation & Quality Im
Country Practice Area(Lead)
Brazil Health, Nutrition & Population
L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD)
IBRD-76320 30-Jun-2014 676,800,000\.00
Bank Approval Date Closing Date (Actual)
29-Jan-2009 31-Dec-2015
IBRD/IDA (USD) Grants (USD)
Original Commitment 235,000,000\.00 0\.00
Revised Commitment 170,000,000\.00 0\.00
Actual 93,852,870\.04 0\.00
Sector(s)
Health(87%):Public Administration - Health(13%)
Theme(s)
Health system performance(100%)
Prepared by Reviewed by ICR Review Coordinator Group
Judyth L\. Twigg Soniya Carvalho Joy Behrens IEGHC (Unit 2)
2\. Project Objectives and Components
a\. Objectives
According to the Loan Agreement (p\. 5), the project's objectives were: "(i) to improve the quality and efficiency of the Borrower's Sistema
Ãnico de Saúde (unified health system, SUS) regional health care networks (RHCNs) with emphasis on secondary-level health care,
specialty, diagnostic and emergency centers, and logistical systems serving the Borrower's territory and population; and (ii) improve the
effectiveness of the Borrower's SUS RHCN's delivery system to prevent, detect and treat priority health conditions in the Borrower's territory
and population\."
The project was originally intended as the first phase of a two-phase, ten-year Adaptable Program Loan (APL)\. The overall APL program
objectives were to: "(a) improve the quality, efficiency and effectiveness of the SUS-financed delivery system, through the development of
integrated regional health care networks, with emphasis on the integration among basic health care and high and medium-complexity health
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
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care providers, support services (e\.g\., diagnostics), and logistical systems (e\.g\., transport); and (b) contribute to improving the continuity of
care by strengthening the prevention, detection, and treatment of diseases and conditions with the greatest impact on the country's disease
burden, including hypertension, diabetes, and cancer" (Project Appraisal Document, PAD, p\. 7)\. The second phase of the APL is no longer
contemplated\.
b\. Were the project objectives/key associated outcome targets revised during implementation?
No
c\. Components
The project contained three components:
1\. Development of regional health care networks and strengthening of health care facilities (appraisal, US$ 646\.1 million, with IBRD
financing of US$ 205 million; actual US$ 409\.6 million)\. This component was to support two related categories of activities\. The first
involved the development and implementation of regional and organized arrangements for coordinated or integrated health care (the
RHCNs)\. The second consisted of upgrading, quality enhancement, organizational reform, and strengthening of management practices in
facilities within the RHCNs\. Both types of activities were to be incorporated into up to 15 demand-driven RHCN subprojects aimed at
developing and implementing RHCNs in a subset of the country's states to raise the effectiveness of care provision and strengthen the
performance of health and support services\. These subprojects were to finance works, goods, training, and technical assistance, including
upgrading and equipping existing health facilities and procurement of medical and non-medical equipment\. Each participating state was to
select interventions based on a diagnosis of population needs, local conditions, and implementation capacity\. Emphasis was to be placed
on both "fundamental" areas (development of network and facility policies for establishing RHCNs; network configuration; network and
facility governance, management, and financing/payment mechanisms; monitoring and evaluation systems; and support and logistics) and
"functional" areas (development of evidence-based care practices or clinical guidelines; disease and care management; organized
management of referrals, bed assignments, diagnostic exams, specialty consultations, and urgent/emergency care; contracting
arrangements; patient communication and health promotion; continuous quality improvement; efficiency enhancement; continuing
education for professional and auxiliary staff; information and communication systems; and change management)\.
2\. Systems development for performance enhancement (appraisal, US$ 26\.3 million, with IBRD financing of US$ 26\.3 million; actual, US$
32\.7 million)\. This component was to support the creation of an enabling institutional and systems environment to support the
implementation of RHCNs to improve quality and care management, promote alternative payment systems, and strengthen monitoring and
impact evaluation\. It was to have a national focus and be implemented directly by the Ministry of Health (MOH)\. Supporting studies,
consultancy services, goods, training, and travel expenses, the component was to support network formation, the development of clinical
pathways in support of care coordination, quality enhancement activities, studies in support of technological innovation and assessment,
development of mechanisms related to health financing and performance, and monitoring and impact evaluation\.
3\. Project management (appraisal, US$ 3\.8 million, with IBRD financing of US$ 3\.1 million; actual, US$ 8\.0 million)\. This component was
to strengthen MOH capacity to implement and supervise the project\. It intended to finance full-time consultants to support MOH staff in
procurement, financial management, and administrative tasks associated with daily project implementation, as well as facility upgrading
and operating expenses\.
d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project cost: Total estimated project costs were US$ 676\.8 million, including a front-end fee of US$ 0\.6 million and physical and price
contingencies of US$ 143\.8 million\. Actual total costs were US$ 450\.9 million\.
Financing: The project was to be financed by a US$ 235 million IBRD loan\. Actual financing was US$ 93\.9 million\. The project
incorporated a pooled financing approach, with loan proceeds under the first component channeled through the MOH's financial
subsystem in which grants were transferred to sub-national entities to co-finance health programs and service delivery\. The arrangement
was to incorporate a performance-based financing scheme that was to reward states for achieving agreed benchmarks related to results
and implementation at specified intervals, while reducing (or even canceling) financing for non-performers (PAD, p\. 24)\.
Borrower contribution: The government made US$ 357 million of an expected US$ 441\.8 million contribution\.
Dates: The project was approved on January 29, 2009 and became effective on February 29, 2010\. The mid-term review took place as
scheduled in late May 2012\. There were three Level 2 restructurings\. The first, on June 23, 2014, extended the closing date from June
30, 2014 to December 31, 2014, and cancelled US$ 65 million of loan proceeds\. The second, on December 1, 2014, extended the
closing date by an additional twelve months to December 31, 2015\. Both of the 2014 restructurings were done with the expectation that
a Level 1 restructuring, including a revision of the project's objectives, would soon follow\. In view of the proximity of the closing date,
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Health Network Formation & Quality Im (P088716)
however, the Bank decided not to proceed with a Level 1 restructuring\. Instead, a third Level 2 restructuring, on June 19, 2015, revised
the results framework to align with government indicators and data availability, reallocated funds across categories, and revised some
project activities to reflect delays in implementation and changes in government priorities\.
3\. Relevance of Objectives & Design
a\. Relevance of Objectives
The objectives were relevant to country conditions at the time of appraisal\. At that time, Brazil had made significant progress in improving the
health status of its population\. Because health care was a highly political issue and a large component of public spending, increasing
efficiency and effectiveness in the use of health resources were perceived to be the country's most important health challenges\. Non-
communicable diseases and injuries had become the leading causes of mortality, threatening accelerated burdens on health care spending
without aggressive actions to improve coordination of health services promotion and delivery\. In addition, neonatal mortality remained a
challenge, reflecting the need for effective health care referral systems and improvements in the quality of hospital care\.
Initially, the objectives were also relevant to World Bank and government strategy\. A new set of government reforms launched in 2006 set
regionalization as the foundation of the health care delivery system and mandated the creation of RHCNs, along with corresponding inter-
municipal government structures to support network formation (Regional Management Councils)\. The Bank's more recent Country
Partnership Strategy (2012-2015) called for improvement in the provision of public services for low-income households, as well as the
expansion of those services through both public and private channels\. In 2011, however, the MOH assigned high priority to primary health
care, with specific emphasis on maternal/child health and emergency care, out of synch with the project's objectives, although there was
continued focus on regional health networks as the preferred delivery model\. The objectives have therefore not remained relevant to current
government strategy\.
Rating
Modest
b\. Relevance of Design
The project's planned activities were logically and plausibly connected to achievement of its objectives\. Quality and efficiency of the RHCNs
was to be enhanced through demand-driven subprojects, with specific elements linked to local needs and implementation capacity\. The
capacity to prevent, detect, and treat priority health conditions was to be increased through studies, technical assistance, and institution-
building\. The APL instrument was selected due to the long-term nature of the proposed activities, the need for a phased approach given the
complexity of the envisioned interventions, and the long-term commitment of the health ministry to health network formation\. However, the
project was far too complex given available capacity and time, and some key foundational elements were not specified during preparation:
sequencing of capacity-building at the federal level prior to using that built capacity to support regional development, and criteria for selection of
subprojects\.
Rating
Modest
4\. Achievement of Objectives (Efficacy)
PHREVISEDTBL
Objective 1
Objective
Improve the QUALITY of the Borrower's SUS RHCNs with emphasis on secondary-level health care, specialty, diagnostic and emergency
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
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centers, and logistical systems serving the Borrower's territory and population
Rationale
Outputs:
Regional subprojects were approved for 16 states and the Federal District, under the framework of 15 approved RHCN subprojects
prepared by State Secretariats of Health\. These subprojects focused on anywhere from one to all five of five priority areas: primary health
care, thematic networks (maternal and child health or emergency care), diagnostic and therapeutic support systems, logistical support
systems, and regional governance strengthening\. Nine subprojects were for RHCNs in metropolitan areas, three were for interstate
RHCNs, two addressed coordination with the indigenous health system, and one was in a border area\. All of the participating regions
implemented new governance mechanisms to support regional coordination and collaboration, surpassing the target of 80%\.
The project helped establish the legal framework for RHCN formation through a series of directives, guidelines, policy, and
legislation covering organizational structure, action plans, maternal and child health care, emergency/urgent care, home care, HIV and
syphilis testing, and quality assurance\. Five planned national studies aimed at developing strategic guidance for the establishment of
RHCNs were never carried out due to delayed in procuring the studies and issues with following Bank procurement guidelines\. Instead of
these five studies, the MOH issued a special publication through the Unified Health System to provide analysis and guidance to state
Secretariats of Health on the topic of regional network formation\. Nine of Brazil's states and the Federal District contributed to the
publication, encompassing 295 research projects (mostly from universities) in the areas of regionalization, networks, and planning; health
care delivery; human resources; monitoring and evaluation; and financing\.
Of the 15 approved RHCN subprojects, three were never implemented, and none of the remaining 12 was implemented in its entirety\.
Overall, only 34\.5% of resources committed to RHCN subprojects were disbursed\. Of those resources that were disbursed, almost half
(45\.02%) were spent on medical equipment, with other significant expenditures on capacity building/training (13\.9%) and appliances and
vehicles (10\.73%)\.
Training and seminars were conducted in the areas of architectural/engineering design for health facilities, transport systems for elective
care, hospital cost management, management of medical technologies in hospitals, pharmaceutical management, and basic health care
information systems\. 64 architects and engineers were trained in parameters and technical criteria for construction and renovation of
hospital units, exceeding the target of 50\.
Outcomes:
88% of participating regions had at least 70% of their primary care teams certified by external evaluation of the Improvement of Care and
Quality Program, not reaching the target of 100% of participating regions\.
The percentage of participating regions with at least 80% mobile emergency care coverage increased from 50% in 2010 to 67% in 2015,
not reaching the target of 90%\. However, some of this progress was made in regions that did not use project funding\.
36% of participating regions implemented a rapid test for diagnosing syphilis in pregnant women and their sex partners, not reaching the
target of 80%\. Many factors other than activities financed by the project contributed to this outcome\.
Rating
Modest
PHREVISEDTBL
Objective 2
Objective
Improve the EFFICIENCY of the Borrower's SUS RHCNs with emphasis on secondary-level health care, specialty, diagnostic and
emergency centers, and logistical systems serving the Borrower's territory and population
Rationale
Outputs:
In addition to the outputs listed above:
All of the project's participating regions implemented a new pharmaceutical management system, covering 198 municipalities\. In another
84 municipalities, staff have been trained on the system and its introduction is in progress\. 4,680 professionals were trained on the system,
exceeding the target of 2,420\. However, only 45% of participating regions had at least 85% of their municipalities implement the system,
not meeting the target of 100% of participating regions reaching that level of municipal implementation\.
Only 9% of hospitals in the project's participating regions introduced a planned hospital cost management system intended to identify and
manage health care costs according to standard parameters, not meeting the target of 15%\.
Only three RHCNs implemented patient transportation systems\. An additional nine planned to do so, but the systems were never
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Health Network Formation & Quality Im (P088716)
implemented due to delays in execution and difficulties in coming to agreements on cost sharing and management\.
45% of participating regions procured equipment to implement regional referral and counter-referral systems, not meeting the target of
70%, and even those that did establish the technical infrastructure are not yet operational\.
88% of municipalities (430 municipalities) in the participating regions now use a system of electronic medical records in primary health
care\. 17 additional municipalities are in the advanced stages of rolling out this system\. Only 5% of municipalities in the participating
regions have not begun processes to adopt this system\.
Outcomes:
No outcome data are provided on efficiency of the RHCNs, though it is plausible that some of the training and capacity development
provided could have contributed to some modest level of institutional and network efficiency\.
Rating
Modest
PHREVISEDTBL
Objective 3
Objective
Improve the EFFECTIVENESS of the Borrower's SUS RHCN's delivery system to prevent, detect and treat priority health conditions in the
Borrower's territory and population
Rationale
Outputs:
National legislation and policy were developed on regional health care networks, maternal/infant care, and emergency care\. The MOH,
through a special publication issued through the SUS's Research Program, provided analysis and guidance to state Secretariats of Health
on regional network formation and the implementation of relevant legislation and directives\. Nine states and the federal district contributed
to this publication\. 295 other research studies were completed in the areas of regionalization, networks, and planning; health care delivery;
human resources; monitoring and evaluation; and financing\.
Outcomes:
No outcome data are provided specifically for this objective\. No results chain is articulated linking any progress in developing and
implementing RHCNs with the prevention, detection, and treatment of health conditions\.
Rating
Negligible
5\. Efficiency
The PAD (Annex 9) estimated that the project would save over 10,000 lives representing 281,000 years of life over a ten-year horizon,
producing direct economic benefits of reduced hospital admissions alone valued at US$ 44\.2 million (before discounting)\. During the
implementation period (five years), the calculated Net Present Value (NPV) was negative (US$ - 278\.32 million), but under the full ten-year
period of analysis and most likely scenario, the NPV becomes positive at US$ 97\.55 million, with an Internal Rate of Return (IRR) of 6\.5% and
benefit:cost ratio of 1\.18\. The main factors seen as contributing to the economic impact of the project under this scenario were the scale of
the subprojects and the definition of outcome variables directly related to target conditions\. The assumptions underlying these calculations
are explicit and reasonable, and the PAD (p\. 104) presents a reasonable sensitivity analysis\.
The ICR does not conduct a formal economic analysis, stating that insufficient information was collected (p\. 27)\. The ICR points out that
much of the loan was not disbursed, and most of the allocated funds were spent on covering ad hoc equipment needs prioritized by individual
RHCNs, making it impossible to specify benefits in economic terms\. There were major implementation inefficiencies, including start-up
delays, shifts in government policy, and failure to restructure to match project focus with changing government priorities\.
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
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Efficiency Rating
Negligible
a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated
value at evaluation:
Rate Available? Point value (%) *Coverage/Scope (%)
100\.00
Appraisal ï¼ 6\.50
ï¨Not Applicable
0
ICR Estimate 0
ï¨Not Applicable
* Refers to percent of total project cost for which ERR/FRR was calculated\.
6\. Outcome
Relevance of objectives is rated Modest due to a mismatch that developed, and was not corrected, between government strategy and the
project's objectives\. Relevance of design is also rated Modest due to the project's complexity in relation to its time frame and implementation
capacity\. Achievement of objectives is rated Modest for development of effectiveness and efficiency in the RHCNs in the area of secondary
care\. The RHCNs' contribution to diagnosis, prevention, and treatment of major health conditions was Negligible\. Efficiency was also Negligible
given multiple delays and few achieved outcomes\. Overall, although the project assisted with conceptualizing regional health care networks and
putting in place their legal and institutional basis, no meaningful, measurable outcomes were observed\. These ratings are indicative of major
shortcomings in the project's preparation and implementation, resulting in an Outcome rating of Unsatisfactory\.
a\. Outcome Rating
Unsatisfactory
7\. Rationale for Risk to Development Outcome Rating
Minimal outcomes were achieved\. In keeping with IEG/OCPS harmonized guidelines, this section assesses the risk that this little outcome will
be knocked off by a shock (rather than maintained)\. That risk is rated as Substantial\. Support for health care network development in Brazil is
being funded entirely by the government, producing important financial risks due to the current economic downturn and resulting fiscal
constraints\. The project's contribution to MOH guidelines regarding the regionalization process for delivery of health care is likely to be
sustained, but according to the ICR (p\. 28), institutional capacity development under the project was minimal, and therefore
effective implementation of those guidelines is uncertain\.
a\. Risk to Development Outcome Rating
Substantial
8\. Assessment of Bank Performance
a\. Quality-at-Entry
The project drew a number of lessons from prior experience with health reform in Brazil, including the need to limit the number of subprojects
to avoid resource dispersion, the importance of substantial technical assistance to participating states, the need for a pre-investment phase of
capacity building, the prioritization of managerial and organizational change over investment in hardware, the importance of specific links
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
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between investment financing and the achievement of performance targets, and the appropriateness of using independent
groups/commissions to review subproject proposals and assess subproject performance (PAD, pp\. 19-20)\. The project's design drew on four
analytic studies prepared by the Bank in response to the government's request for support in improving the efficiency and quality of public
services, and its focus emerged logically from other Bank-financed work in the health sector\. Risk assessment acknowledged several
significant risks: overly complex network design, political interference in subprojects, weak performance of subprojects, over-emphasis on
hardware investments, lack of experience with Bank-financed projects, and weak technical and fiduciary capacity\. After mitigation measures
were considered, the only risk still considered substantial was that of political interference with the planning and implementation of subprojects
that might produce pressure to finance investments outside the project's scope\.
Although the project was prepared at a two-phase APL, the government approved only the first phase; the ICR (p\. 10) states that it would
have been prudent for the Bank team to have adjusted the project for implementation in one phase only\. Overall, the approach during
preparation was "overly positive" (ICR, p\. 11), underrating several key risks and not taking into account lessons from prior projects about the
need to put in place adequate M&E systems during preparation\. Project design was quite complex, with capacity-building that would enable
the federal MOH team planned to occur simultaneously with the selection and roll-out of regional-level subprojects that would depend on that
capacity having already been built at the federal level\. The planned five years was a short time period to expect this to happen\. Overall, the
project was not ready for implementation upon approval by the Board: the Operational Manual had not been finalized, critical staffing at the
MOH was not in place, M&E arrangements (including baseline data) were not complete, and criteria for selection of subproject proposals had
not been elaborated and adopted\. Finally, the Bank's Task Team Leader changed in the final stages of preparation and was no longer based
at the Country Office\.
Quality-at-Entry Rating
Moderately Unsatisfactory
b\. Quality of supervision
The Bank team worked closely and continuously with the MOH to accelerate implementation and keep the project's activities in line with
government priorities and guidelines\. Nonetheless, the project's legal framework, definition of criteria for selecting participating states,
contracting of consultants to work on subproject preparation, and communication with state-level health secretariats about the project were
completed over two years after approval\. There were extensive delays in submitting and approving a request for a Level 2 restructuring, and
the project's objectives were never brought in line with changing government priorities\. Monitoring and reporting on formal project indicators
did not take place, and Implementation Status Reports did not reflect ongoing challenges\. Implementation support for the first several years of
the project was provided by a Headquarters-based Task Team Leader, resulting in inadequate "hands-on" support (ICR, p\. 35); this situation
was rectified with a handover to a country-based Task Manager for the project's final stages\.
Quality of Supervision Rating
Unsatisfactory
Overall Bank Performance Rating
Unsatisfactory
9\. Assessment of Borrower Performance
a\. Government Performance
The government was not committed to the project throughout most of the preparation and implementation periods\. Project preparation took
a relatively long time (over three years) because of changes in the government's technical team\. Preparation was carried out by the
Executive Secretariat of the MOH supported by three external consultants; this limited buy-in by the various MOH technical departments
that had roles in implementation\. Effectiveness was also delayed (more than one year after approval by the Board) because of a lengthy
process ratification by the Senate (impacting all projects in the country) and because of MOH reconsideration of implementation
arrangements (eventually the original arrangements were adopted)\. Upon a change in federal government administration in January 2011,
priorities shifted in the health sector to primary care, reducing the relevance of the project's focus at the secondary level\. The MOH issued
new guidelines on regionalization in December 2010 that shifted counterpart funding from regular transfers to participating states and
municipalities for higher-complexity services -- the focus of the project's objectives -- instead to transfers to thematic health care networks
focusing on maternal/infant health and emergency care\. As the project progressed, the MOH worked closely with the states to improve the
implementation of subprojects, but eventually it agreed to finalize the subprojects without a Level 1 restructuring to reorient the project\.
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BR Health Network Formation & Quality Im (P088716)
Government Performance Rating
Moderately Unsatisfactory
b\. Implementing Agency Performance
The majority of project activities, under the first components, were implemented by the states, with the second component implemented by
the MOH Executive Secretariat\. The states varied considerably in their capacity to formulate and implement subprojects, and the
Executive Secretariat displayed little commitment to the project\. A formal Project Execution Unit was established only two years after
approval\. Although this Unit attempted to improve project performance during its final stages, it could not overcome initial delays (including
the completion of some important bidding procedures) and the mismatch between project and government priorities\.
Implementing Agency Performance Rating
Moderately Unsatisfactory
Overall Borrower Performance Rating
Moderately Unsatisfactory
10\. M&E Design, Implementation, & Utilization
a\. M&E Design
The PAD (p\. 9) acknowledged the intrinsic difficulty of measuring the impact of health care networks and care coordination practices\. Most of
the key project indicators were therefore process indicators that were proxies for more robust outcome indicators, but were not geared toward
measuring true progress toward achievement of the development objectives\. It was also acknowledged that most existing data collection was
oriented toward programs, facilities, and broad population-based data; regional and patient-level information related to care coordination and
case management across multiple providers did not exist\. The project therefore proposed to put in place processes such as standardized
clinical pathways, risk classification systems, and continuous patient monitoring, as well as information systems and institutional structures to
capture the impact of RHCNs on service quality, effectiveness, and efficiency and, ultimately, health status\. Process indicators were specified
for the overall system of RHCNs, for each specific RHCN, and for capacity development at the federal MOH\. Specifically, the M&E system was
to collect, analyze, and act upon six sets of data: project performance indicators included in federal-state agreements, performance indicators
not included in those agreements, MOH institutional capacity indicators, fiduciary indicators, environmental indicators, and baseline and ex-post
survey data for impact evaluation\.
This was a highly complex results framework\. Participating states were to be financed in relation to implementation and results at specified
intervals\. Support was to be provided to the MOH for technical assistance to the RHCNs to monitor performance, including the collection of
baseline data\.
b\. M&E Implementation
Few of the indicators in the formal results framework were ever monitored or reported in Implementation Status Reports, as the required
monitoring and reporting systems were never put in place at the subnational or federal level\. Baseline data were compiled only in June 2014\.
At the June 2015 restructuring, the results framework was revised to align with government indicators, to acknowledge the project's limitations
in influencing the quality and efficiency of the RHCNs, and to reflect the government's decision to prioritize thematic health care networks
focused on maternal/child health and emergency care\.
c\. M&E Utilization
With little to no data collected and reported, there was no opportunity for the project's M&E to impact implementation or policy development\.
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M&E Quality Rating
Negligible
11\. Other Issues
a\. Safeguards
The project was environmental category "B" and triggered three safeguard policies: Environmental Assessment (OP/BP 4\.01), Physical
Cultural Resources (OP/BP 4\.11), and Indigenous Peoples (OP/BP 4\.10)\. An Environmental Assessment was prepared to identify potential
environmental impacts\. It proposed activities to enhance environmental management, particularly under the RHCN subprojects\. All
RHCNs were required to incorporate the establishing or strengthening of an organized sanitary and transport system for medical waste that
serves all municipalities and units within their regions\. A project Environmental Framework (EF) was also established to guide the
selection, screening, construction, and monitoring of health networks and units\. In order to address the Physical Cultural Resources
safeguard, the EF included "chance find" rules and procedures, as well as screening procedures to identify any known cultural resources
requiring special attention during renovation activities\. An Indigenous Peoples Planning Framework was incorporated, through which states
whose subproject catchment areas included indigenous communities would develop Indigenous Peoples Plans\.
At the time of the mid-term review in May 2012, a review of compliance with safeguard policies was carried out, but given the lack of
subproject implementation at that time, there was only a review of plans\. The project team later confirmed that there was full compliance
with the Bank's safeguard policies\.
b\. Fiduciary Compliance
Financial management presented no major issues during implementation, although internal controls at the state level were weak\. Corrective
actions included the use of state- and federal-level systems and the information technology system developed for another Bank-financed
project\. However, there were extensive procurement delays, as state and municipal capacity to handle procurement varied widely\. The ICR (p\.
19) states that little (if any) training on Bank procurement guidelines was carried out\. Ultimately, because of operational delays during
implementation, several states were unable to complete contracts included in their procurement plans\. The project team later confirmed that
there was full compliance with the Bank's fiduciary policies\.
c\. Unintended impacts (Positive or Negative)
None reported\.
d\. Other
---
12\. Ratings
Reason for
Ratings ICR IEG
Disagreements/Comment
Outcome Unsatisfactory Unsatisfactory ---
Risk to Development Outcome Substantial Substantial ---
The project's objectives were not
Bank Performance Moderately Unsatisfactory Unsatisfactory brought in line with changing
government priorities, monitoring
Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review
BR Health Network Formation & Quality Im (P088716)
and reporting on formal project
indicators did not take place, and
Implementation Status Reports did
not reflect ongoing challenges\.
Borrower Performance Moderately Unsatisfactory Moderately Unsatisfactory ---
Quality of ICR Substantial ---
Note
When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted
beginning July 1, 2006\.
The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\.
13\. Lessons
The following lessons are derived from the ICR (pp\. 33-35):
Government policy shifts can render existing projects less relevant, or even irrelevant\. In this case, a project whose buy-in was tenuous from
the beginning suffered fatal blows when government priorities changed\. Continuous dialogue and attention is necessary so that the need for
restructuring is identified early and accurately\.
Sequencing is important\. When enhanced institutional capacity is essential to project implementation, it must be adequately planned and
provided\. In the case of this project, MOH required capacity development in order to support the subnational levels in design and
implementation of subprojects, but the required phasing of activities was not put in place\.
Candor in Implementation Progress Reports is a prerequisite for mid-course adjustment\. In this case, lack of candor in ratings for progress
toward development objectives and implementation support translated into lack of urgency regarding corrective action and restructuring\.
14\. Assessment Recommended?
No
15\. Comments on Quality of ICR
The ICR is analytical, concise, and candid in its reporting of the challenges with the project's preparation and implementation\. Its provides a
thorough assessment of attribution of observed outcomes to the project's interventions\. Lessons are insightful and well derived from project
experience\. However, the ICR is repetitive at points, and there are numerous mismatches in outcome data between the Data Sheet and main
text\.
a\. Quality of ICR Rating
Substantial | REVIEW |
P008204 | Document of
The World Bank
FOR OFFICIAL USE ONLY
IMPLEMENTATION COMPLETION REPORT
(Core ICR)
ON A Report No: 19838
LOAN
IN THE AMOUNT OF US$100\.0 MILLION
TO THE REPUBLIC OF VENEZUELA
FOR A SOCIAL DEVELOPMENT PROJECT
PROJECT ID: P008204
L/C NUMBER: 32700; 3270A; 3270S
January 13, 2000
Country Management Unit for Colombia, Ecuador and Venezuela
Human Development Sector Management Unit
Latin America and the Caribbean Regional Office
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
CURRENCY EQUIVALENTS
(Exchange Rate Effective November 30, 1999)
Currency Unit = Bolivar (B)
B 637\.00= US$ 1\.00
US$ 0\.0016 = B 1\.00
FISCAL YEAR
January 1 December 31
ABBREVIATIONS AND ACRONYMS
CORDIPLAN Ministry of Coordination and Planning
ICR Implementation Completion Report
IEC Information, Education and Communication
INN National Institute of Nutrition
FONVIS Venezuelan Fund for Social Investment
FUNDAESCOLAR School Fund (Fundaci6n Escolar)
MINFAM Ministry of the Family
MOE Ministry of Education
MOH Ministry of Health
NGO Non-Governmental Organization
OCEI Central Office of Statistics and Information
OTC Technical Coordination Office (Ministry of the Family)
PAHO Pan-American Health Organization
PAMI Expanded Maternal-Child Health Care Program
SAL Structural Adjustment Loan
Vice President: David de Ferranti
Country Manager/Director: Andres Solimano
Sector Manager/Director: Xavier Coll
Country Sector Leader: Constance Corbett
Task Team Leader/Task Manager: Willem Struben
FOR OFFICIAL USE ONLY
VENEZUELA
SOCIAL DEVELOPMENT PROJECT
(Loan 3270-VE
IMPLEMENTATION COMPLETION REPORT
CONTENTS
Page No
1\. Project Data 1
2\. Principal Performance Ratings 1
3\. Assessment of Development Objective and Design, and of Quality at Entry 2
4\. Achievement of Objective and Outputs 3
5\. Major Factors Affecting Implementation and Outcome 6
6\. Sustainability 8
7\. Bank and Borrower Performance 8
8\. Lessons Learned 11
9\. Partner Comments 12
10\. Additional Information 20
Annex 1\. Key Performance Indicators/Log Frame Matrix 21
Annex 2\. Project Costs and Financing 22
Annex 3\. Economic Costs and Benefits 25
Annex 4\. Bank Inputs 26
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 28
Annex 6\. Ratings of Bank and Borrower Performance 29
Annex 7\. List of Supporting Documents 30
Annex 8\. Beneficiary Assessment Results 31
Annex 9\. Supplementary Project Data 45
This ICR was prepared by Mr\. Willem Struben (consultant, LCSHD), with the help of Messrs\./Mmes\.
Federico Joubert, Bethania Blanco, Maria Elena Anderson and Pablo Schneider (consultants), with
production assistant from Mr\. Cesar Granados (LCSHD)\. The Beneficiary Assessment was carried out
by local consultants with the help of Ms\. Ximena Traa (consultant)\. It was reviewed by Ms\. Constance
Corbett (Country Sector Leader, LCC4C) and Mr\. Bruce Carlson (Task Manager, LCCVE)\.
A Bank completion mission took place in November/December 1998\. The report is based on the
findings of this mission, as well as on material in the project file, discussions with representatives of
the Borrower and the Bank, and a beneficiary assessment carried out in 1999\. The Borrowed
contributed to the preparation of the ICR by preparing the comments presented in Section 9, and
supplementary data presented in Annex 9, compiling statistical data, commenting on the draft ICR,
and contributing to the preparation of the Beneficiary surveys (Annex 8)\. Final comments were
delayed because of the change in Government and some senior project managers in February /March
1999 and the need to complete the beneficiary assessment\.
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties\. Its contents may not otherwise be disclosed without
World Bank authorization\.
Project ID: P008204 Project Name: SOCIAL DEVT
Team Leader: Constance A\. Corbett TL Unit: LCC4C
ICR Type: Core ICR Report Date: January 11, 2000
1\. Project Data
Name\. SOCIAL DEVT L/C Number: 32700; 3270A; 3270S
Country/Department\. VENEZUELA Region: Latin America and
Caribbean Region
Sector/subsector: HB - Basic Health
KEY DATES
Original Revised/Actual
PCD: 07/13/89 Effective: 03/01/91 09/30/91
Appraisal: 05/07/90 MTR:
Approval: 11/29/90 Closing: 12/31/96 06/30/99
Borrower/lmplementing Agency: Republic of Venezuela/Ministry of the Family; Ministry of Health; Ministry of
Education; Ministry of Planning and Coordination (CORDIPLAN); Central Office
of Statistics and Information (OCEI); Venezuelan Fund for Social Investment
(FONVIS) (Financial Administration)
Other Partners: United Nations Development Programme (UNDP) (Procurement/Administrative
Assistance to Borrower)
STAFF Current At Appraisal
Vice President: David de Ferranti S\. Shahid Husain
Country Manager: Andres Solimano Ping Loh
Sector Manager: Xavier E\. Coll Robert Drysdale
Team Leader at ICR: Bruce Carlson Cecilia Valdivieso
ICR Primary Author: Willem Struben
2\. Principal Performance Ratings
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly
Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: U
Sustainability: UN
Institutional Development M
Impact:
Bank Performance: U
Borrower Performance: U
QAG (if available) ICR
Quality at Entry: U
Project at Risk at Any Time: Yes
3\. Assessment of Development Objective and Design, and of Quality at Entry
3\.1 Original Objective:
To assist the Borrower in developing a social sector strategy to redirect its social expenditures into
well-targeted and efficient programs within the framework of the Social Sectors Action Program (SSAP)\.
The SSAP had the following objectives: (a) improve the living conditions of the poor and vulnerable
population, specifically pregnant and lactating women and children under six years of age, while mitigating
the potential adverse impact of the adjustment program; (b) replace indirect subsidies with targeted social
programs, while improving their efficiency and rationalizing their distribution; and (c) promote
institutional development by improving the planning and management capacity of the Ministry of Health
and Education, as well as the capacity to target, develop and monitor social programs in the Ministry of the
Family\.
3\.2 Revised Objective:
No change\.
3\.3 Original Components:
Rating Component Sector Cost
U Primary Health Care HY 231,300,000
S Pre-School Development EP 54\.900,000
Infonnation, Education &
U Communications XX 10,100,000
S Institutional Development xx 9,700,000
Total 306,000,000
3\.4 Revised Components:
n/a
3\.5 Quality at Entry:
ICR rating: Unsatisfactory\.
With hindsight, the scope of the project was too broad and its development objectives overly ambitious in
light of the political context at the time and the Borrower's lack of experience with Bank policies and
procedures\. A more narrowly focused objective and simpler design minimizing the need for complex
inter-institutional coordination would seem to have offered a better chance of success\. This might have
been done through a series of separate single-sector projects\. A second alternative might have been a social
fund-type approach, such as that taken in other Latin American countries at that same time\.
With respect to composition of project design and thoroughness of analysis, project preparation lacked
adequate definition of the institutional arrangements for project execution and financial management of this
complicated multi-sector project\. As the project was intended to mitigate the social impact of adjustment,
there was a strong perception on the part of both the Borrower and the Bank that initiation of project
activities, in parallel with the implementation of the SAL, was extremely urgent\. It was thought that
detailed management arrangements could be worked out at the start of the project\. This turned out to be a
mistake, and project implementation was hampered throughout execution by organizational, managerial and
financial problems\. A public administration/management specialist should have been involved in project
design and appraisal, as well as throughout supervision\. Both the Borrower and the Bank were overly
optimistic about the ability of the MOF to coordinate and facilitating a complex project involving two other
major actors, MOE and MOE, each of which had their own agenda that frequently took precedence over
-2 -
those of the project\. An attempt was made to compensate for the lack of readiness of implementation
arrangements by incorporation of a condition of effectiveness\. However, arrangements presented in
compliance with the condition proved inadequate\.
The Loan Agreement specified that progress under the Government's Social Sectors Action Program would
be reviewed annually as the basis for setting spending targets in the following year\. This provision proved
insufficient; Bank financing, as well as Government counterpart spending were included in the overall
budget, and overall spending on the social sectors fell short of projected levels during the project period\.
Provision for a Mid-Term Review was not included\.
While formal economic analysis was not included in the project documentation, quantitative estimates of
expected benefits were provided\. Coverage of the pre-school component was overestimated, leading to
overestimation of overall benefits\.
Risks\. The SAR identified the Borrower's lack of experience with international bidding in general, and
Bank procedures in particular, as the major risk facing the project\. Provision of technical assistance and
seminars in procurement and disbursement procedures were considered adequate to overcome these
weaknesses\. Much was left to intensive supervision as a way of overcoming inherent weaknesses\. In the
event, frequent turnover of ministerial and project management staff nullified the effect of the project
launch assistance provided early on\.
The complexity of project design itself, and the additional burden it would place on the weak institutions
involved in implementation was not mentioned as a risk\. This proved to be the major obstacle to project
implementation\.
4\. Achievement of Objective and Outputs
4\.1 Outcome/achievement of objective:
The project objective of helping the Government refocus and improve its social policies and operational
programs aimed at vulnerable groups, in particular programs in pre-school education and health and
nutrition for pregnant and lactating women and children up to six years of age, was only partially achieved\.
In particular:
* Improved Living Conditions\. Although the project's supplemental food component was
substantial and did have an initial positive impact on the malnutrition coefficient, the other
components did not make a substantial difference, and the country's current social indicators are
generally worse today than at the start of the project\. Despite the minimal physical impact,
however, the pre-school component has established a basis for a realistic and potentially
substantial and sustainable development of pre-school education, particularly with the help of
NGOs and the beneficiary communities themselves\. In addition, a large number of health centers
has been provided with adequate equipment, again helping the poor\.
* Targeted Subsidies\. The Government did increase its targeted social programs at the expense of
in direct subsidies, but the targeting was broad-ranging and far from perfect\. It is true that
supplementary nutrition, health center equipment, and pre-school education efforts were all aimed
at the poor, by definition, but it is also true that the policies did not achieve the targeting of the
Government's limited resources to the relatively most vulnerable groups and regions\. Nutrition
- 3 -
programs were only in more recent years channeled through the health centers, and medical
equipment was only very recently allocated to under-served health centers\. Pre-school classrooms
have been established using targeting mechanisms developed on the basis of a study carried out in
1993\. This should also be of use for future efforts\.
a Institutional Development The project's aim to strengthen the planning and management
capacity of MOH and MOE, as well as MOF's capacity to design, plan, implement, and monitor
social programs, was only partially achieved\. MOH was not affected, mainly because the
substantial PAMI program was outside its control, because the medical equipment component
managed by MOH was relatively minor, and because of a seeming lack of interest on the part of
both MOH and MOF in having the OTC components provide policy and operational efficiency
advice to MOH\. MOE was barely affected\. Again, there was very little project advice on the more
efficient operation of MOE's project activities coming from OTC, seemingly also because of
MOF's own pre-school activities\. In addition, the initial cooperation between
FUNDAPREESCOLAR and MOE's responsible directorate-general was poor, and the component
was relatively small to begin with\. However, this component did eventually have some impact on
MOE's pre-school policies and an agreement that future sub sector activities should aim at the
substantial involvement of communities and NGOs\. MOF itself was strengthened, particularly in
its role as the technical secretariat of the Social Cabinet, including the new directorate-general for
social development and recent government moves to reach out to NGOs and involve the mayors in
social policy setting and operation\.
4\.2 Outputs by components:
Pre-School Component\. This component, managed by the Preschool Fund (FUNDAPREESCOLAR),
aimed to provide about 112,000 children between the ages of 4 and 6 from low-income families with access
to pre-schools through the construction and equipping of 1,600 formal classrooms and 185 non-formal
classrooms, the latter with community and NGO participation\. However, only 804 formal and eight
non-formal classrooms were completed, providing access to only an additional 27,000 children each year,
or two percent of pre-school age children without access to pre-school education\. The marginal increase in
access was partly the result of an over-estimation during appraisal of the number of children per classroom;
the appraisal projected 57 children for formal classrooms and 152 children for non-formal classrooms, the
actual figure turned out to be 34\. In addition to the issues mentioned in the previous paragraph,
construction and equipping were also affected by high inflation during most of the implementation period,
with extraordinary increases in construction costs\. This was compounded by the substantial and
time-consuming land acquisition problems experienced by the component, and the long delay in reaching
agreement on a non-formal classroom approach\. On the positive side, the pre-school policy has now been
properly designed and is officially endorsed by the Ministry of Education (MOE), both formal and
non-formal classrooms, targeted to serve children of low-income households, are operating, and the
non-formal pre-schools managed by the communities and NGOs are a good model for sustainable
development\. In addition, over 52,000 participants benefited from training programs for pre-school
teachers, and the various sector-related studies proposed under the project were completed (Annex 1)\.
Primary Health Component This component, managed by the Ministry of Health (MOH) and the
Expanded Maternal Child Health Care Program (PAMI), aimed to fund medical equipment, vaccines, food
(milk), and nutritional supplements, as well as contraceptives for 955 rural and urban health centers\. In
addition, it was to finance the rehabilitation and construction of warehouses, vehicles for supervision,
computer equipment for the health centers, and training for health center personnel\. During 1992 and
- 4 -
1993, about US$15 million in equipment was acquired for the health centers, but was partly diverted to
small hospitals\. In 1994 and 1997, the project provided vaccines, medicines, and other health center
inputs\. It also helped carry out a campaign in 1994 to eradicate measles, covering all children between the
ages of 9 months and 15 years\. In 1997, the component was redesigned, and it was agreed to target US$22
million in new equipment, medicines, contraceptives, vehicles, and other inputs to 303 health centers in 10
states, to be procured with the help of UNDP\. By late- 1998, this was mostly achieved\. PAMI was
responsible for food distribution, which was fully financed from Government funds\. PAMI reports to have
spent US$409 million (excluding the cost of warehouse rehabilitation and personnel), or more than double
the amount estimated at appraisal\. The program reached a peak in 1992 and 1993, and resulted in
increased health center attendance, but its budget (and consequently, its coverage) was substantially
reduced in 1998\. Contrary to agreements reached at negotiations, food distribution was not targeted to
high-risk groups in a limited number of states, leaving some very poor areas without coverage, despite the
high spending levels\. Training of health center personnel only started in 1997, when the Government
signed an agreement with the Pan-American Health Organization (PAHO)\. There was some progress in
improving recording of health services, but this was done by the Ministry of the Family (MOF), not by
MOH\. Overall, despite increased commitment on the part of MOH in recent years, the project did not
succeed in increasing health care coverage and nutritional interventions\. Health indicators for 1995, the
last year for which statistics are available, show a higher number than projected for pre-natal services and
infants less than two years old, but a very low level of post-natal services and coverage of pre-school-aged
children\. Immunizations did not increase as projected\. Family planning services are up, but cover only 12
percent of the population demanding those services (Annex 1)\.
Information, Education and Communication (IEC) Component This component, managed by the
Technical Coordination Office (OTC) under the Ministry of the Family, experienced substantial delays and
other problems\. The OTC, in its capacity as project coordinator and facilitator, aimed to carry out studies
and provide technical assistance for improving the impact of the implementation of the pre-school and
primary health care components\. However, during the first six years of the project, the component
provided only for basic studies to help design appropriate communication strategies, as well as some
learning materials for preventive health education\. Only during the last two years was an IEC concept
developed\. Nevertheless, the concept (labelled "family values") is quite general and does not provide the
implementing agencies with a concrete and operationally useful communication strategy\. The component
never focussed on the specific needs of the MOE and MOH with regard to pre-school, health, and nutrition
policies and practices aimed at the most vulnerable groups\. On the positive side, the component did
provide pre-school books, and some learning materials on education, nutrition, and family strengthening
(Annex 1)\.
Institutional Development Component This component, also managed by the OTC, in cooperation with
the Central Office of Statistics and Information (OCEI) and the Ministry of Coordination and Planning
(CORDIPLAN), has shown more positive results\. Particular achievements include various studies,
definition of the role of MOF as technical secretariat for the social cabinet, and recent Government efforts
to involve the mayors and NGOs as representatives of their communities, in reviewing the objectives and
results of crucial social sector Government programs\. The studies have provided useful data on the social
sectors in general and poverty in particular and are a basis for future social sector program targeting\. The
project also helped to strengthen the Venezuelan Social Investment Fund (FONVIS), which was contracted
to manage the project accounts, and provided equipment for OCEI, MOL, and MOF\. Therefore, despite
the lack of impact on the implementation capacity of MOE and MOLT the component can be considered to
have been reasonably successful\.
-5 -
4\.3 Net Present Value/Economic rate of return:
n/a
4\.4 Financial rate of return:
n/a
4\.5 Institutional development impact:
Public Sector\. As mentioned above, the project's contribution to institutional development was marginal
at best\. In MOE, the creation of a separate foundation ( FUNDAPREESCOLAR) to implement its
component seemed a good solution at project design to by-pass some of the bureaucratic restrictions of the
Ministry itself However, although this did facilitate funding, it also created problems, stemming partly
from resentment on the part of MOE's Pre-School Directorate, which felt that FUNDAPREESCOLAR
was encroaching on its territory\. Early on, there was little or no technical coordination between these units
on educational materials, studies, and technical assistance\. Moreover, there was little help from OTC,
since it was felt that FUNDAPREESCOLAR was competing with MOF's own non-formal pre-school
program\. Eventually, a better relationship was established, and the component has contributed to a
somewhat better set-up in MOE\. This is not the case in MOH\. At project design, it was decided to set up
a separate foundation, PAMI, to overcome some of the major bureaucratic hindrances anticipated\. This
was resented by the Ministry itself, however, and resulted in the separation of food distribution under
PAMIN from the health service provision activities under MOH itself, with little coordination between the
two\. Although the number of health center beneficiaries increased in response to the increased provision of
food, this was not paralleled by a corresponding increase in health services\. In addition, despite a
somewhat better focus of PAMI's program at the end of the project, there are still major inefficiencies in
the country's food distribution to the poor\. In addition to the small, long-term improvement in MOE, the
project also contributed to the strengthening of MOF, OCEI, and FONVIS, both through equipment and
technical assistance\. In MOF, in the context of the last Government's Agenda Venezuela, there is now an
experienced department dealing with social programs, as well as a recent outreach to mayors and NGOs\.*
These, combined with the collection of relevant social sector data, should assist the Government in
designing an effective long-term follow-up aimed at the poorest\.
Private Sector\. As mentioned above, the pre-school component contributed to gaining at least some
experience with non-formal classrooms managed by NGOs and communities\. Despite the limited number
of classrooms established so far, this approach appears promising and sustainable\.
* The current Government has placed coordination of the social sectors under the new Ministry of Health and
Social Development, eliminating the MOF\.
5\. Major Factors Affecting Implementation and Outcome
5\.1 Factors outside the control of government or implementing agency:
The MOE component experienced significant cost increases in civil works due to high rates of inflation
during most of the project years\. All components were affected by changes of leadership and management
at all levels\. The MOH had five different Ministers during the project period\. The health component was
also seriously affected by several lengthy strikes by health service personnel, which had a serious impact on
- 6 -
the provision of primary health care\.
Project implementation was definitely affected by lack of adequate attention from the Bank\. Departmental
responsibility for Venezuela shifted three times during the project period\. The resulting frequent turnover
in Bank managers responsible for Venezuela resulted in loss of institutional memory and contributed to
inadequate oversight from senior Regional Management within the Bank\.
5\.2 Factors generally subject to government control:
A number of problems and delays could have been prevented by timely decisions and/or action on the part
of the Government\. During the initial years, all staff showed a lack of knowledge of Bank procurement
procedures\. The changes of Minister mentioned above were frequently accompanied by turnover of
managerial and technical staff, resulting in loss of any knowledge developed in this area\. In addition, the
Government's own cumbersome budget and contract procedures greatly contributed to delays and cost
overruns; budgets were cut and contract approvals and payments were extremely time-consuming\.
Moreover, the Government did not allow the implementing agencies direct access to the Special Account,
nor did it permit direct payment by the Bank of local contracts\. (This was greatly alleviated in 1997, when
UNDP was contracted to manage the procurement of goods and services for PAMI and OTC\.) Combined
with the impact of inflation, these delays contributed to an almost six-fold increase in the unit cost of
classrooms, rising from an estimated US$9,500 at appraisal to US$54,000 in late-1998\.
Both the education and health components were negatively affected by the institutional jealousy between
staff in the respective line ministry and the semi-autonomous agency set up to carry out key activities
(FUNDAPREESCOLAR and PAMI, respectively)\. In both cases, attention from the minister and his
senior staff could have helped solve the problem, but no action appears to have been taken by either MOE
or MOH management on this matter\.
5\.3 Factors generally subject to implementing agency control:
n/a
5\.4 Costs andfinancing:
At the Government's request, the project was restructured in April 1997, at which time the closing date was
extended by 24 months and US$15\.0 million was cancelled from the original loan amount of US$100
million\. The closing date was subsequently extended twice, for a cumulative total of 30 months\. The final
closing date was June 30, 1999\. At closing total disbursements reached US$84\.6 million (of which about
US$84\.0 million was fully documented by the date of this report)\. Total project costs amounted to about
US$501 million, compared to about US$321 million projected at appraisal (Annex 2)\. Most of the
increase is accounted for by a more than doubling in the food purchase and distribution program managed
independently by PAMI and Government funded\. Excluding food purchases and distribution, however,
total spending averaged only 71 percent of appraisal estimates\. Bank financing was estimated to account
for about 31 percent of total costs at appraisal (77 percent excluding food)\. At project completion, Bank
financing represented about 17 percent of total costs (91 percent excluding food)\.
- 7 -
6\. Sustainability
6\.1 Rationale for sustainability rating:
As designed and implemented, the project would only be partly sustainable\. The prospects of the MOE
component look most positive: there have been no problems in getting pre-school teachers assigned to the
new classrooms, thus ensuring adequate educational services, and classrooms were designed and built with
materials requiring low maintenance\. The main achievements have been: (a) the design and operation of
workable formal and informal pre-school models, including in the latter NGOs and communities; (b) the
development, with the help of local universities, of a successful teacher-training model, which the MOE has
now adopted for primary teacher training as well; and (c) the design and implementation of a methodology
to target pre-school investments, which can also be used for other social sector planning\. In contrast, the
prospects of sustainability of the MOH/PAMI component are doubtful\. Much will depend upon the current
administration's interest, as well as recent efforts aimed at decentralization\. For the limited progress to be
sustained, however, would require at least an increase in the work hours of medical personnel (currently
only 1\.4 hours daily for doctors and 2\.2 hours for nurses) as well as proper funding of equipment provided
for the health centers\.
6\.2 Transition arrangement to regular operations:
Possible follow-up activities depend upon the new administration's interest in the social sectors in general
and the more successful Government project components in particular\. There is a clear need for the type of
activities funded by the project; the social indicators are as poor as, if not worse than, those of a decade
ago\. As mentioned above, MOE now has a good design and some good experience with pre-school
education for the poorest populations, particularly with non-formal classrooms run by indigenous
communities with the help of NGOs\. In addition, MOF now has a relevant social sector database for the
identification of the needs of the poorest that would make feasible better definition and targeting of needed
social assistance\. Based on the difficult coordination problems and disappointing experience with
multi-sector project implementation, however, any future Bank support should be provided in a much
simpler insitutional framework\. Alternatively, if the Government and the Bank were to choose a
multi-sector approach, a social fund such as FONVIS could provide an efficient, cost-effective vehicle for
channeling such investments\. FONVIS has gained substantial experience in recent years, and, like all
social funds, operates under the guidelines set by the line ministries; at the same time, it is exempt from
many of the bureaucratic constraints unavoidably experienced by government line ministries\.
7\. Bank and Borrower Performance
Bank
7\.1 Lending:
Bank performance in project identification was highly satisfactory\. The need for comprehensive social
sector action was identified during the preparation of the SAL, and this was further analyzed and confirmed
at the identification stage\.
-8 -
Although the sector requirements were reviewed in great detail, project preparation lacked an adequate
assessment of the necessary technical and financial management of this complicated, multi-sector project\.
In view of the urgency of the project activities, in parallel with the implementation of the SAL, it was
decided that detailed management arrangements could be worked out at the start of the project\. This turned
out to be a mistake, and project implementation was hampered throughout the years by organizational,
managerial, and financial problems\. A public administration/management specialist should have been
involved from the preparation stage to assist the Borrower in designing adequate institutional arrangements
for project execution and financial management\.
Appraisal utilized a great deal of detailed sector information, but was deficient with respect to assessment
of institutional arrangements and project management\. In addition, the number of students per pre-school
classroom was overestimated, resulting in a significant overestimate of the benefits of the pre-school
component\.
7\.2 Supervision:
Apart from the project management issue, which was never fully resolved, and which would have benefited
from participation by a public administration specialist throughout project implementation, supervision was
hampered by the frequent turnover in responsibility for both Venezuela and the project in the Bank\. As a
result, the Bank lacked the senior-level institutional knowledge and interest necessary for "hard" project
decisions\. On the other hand, the assignment of supervision responsibility to the Resident Mission in 1997
led to much more Bank involvement and accelerated project implementation and Loan disbursement\.
7\.3 Overall Bank performance:
Despite improvements in both task management and the involvement of senior Regional Management in the
last years of project execution, this was not sufficient to compensate for the lack of attention of earlier
years or the failure to ensure adequate provision for project management and institutional coordination\.
Therefore, overall Bank performance was less than fully satisfactory\.
Borrower
7\.4 Preparation:
During project preparation, the Borrower did not decide upon the critically important management details,
and showed an unrealistic optimism about the possibility of MOF's coordinating and facilitating a
complex project involving two other major actors (MOE and MOH), each with their own agendas that took
precedence over those of the project\.
7\.5 Government implementation performance:
The Borrower's implementation performance was less than satisfactory, although this varied among
components and improved in recent years\. All components suffered from the poor
organizational/managerial set-up of the project and the ongoing, major contract processing and budget
hurdles\.
The Borrower followed agreed Bank procurement procedures, but a lack of knowledge and the internal
-9-
and external clearance process resulted in major delays in contracting and, with the high rate of inflation, in
project costs\. This was somewhat improved in 1997 with the delegation of responsibility for project
supervision by the Bank to its resident mission, and to the use of UNDP for the procurement of goods and
services by OTC and PAMI\. Procurement data are provided in Annex 2\.
Disbursement of loan proceeds was slow, reflecting delays in implementation of the project\.
Disbursements accelerated with the contracting of UNDP and the subsequent deposit of substantial
amounts in its account\. Disbursement data are provided in Annex 2\.
Funding\. The Government's practice of including international loan proceeds in its regular budget made
both loan and counterpart funds subject to the same severe budgetary constraints and increased the
likelihood that the loan substituted for regular funding, rather than providing incremental financing\.
Government priorities led to sharp increases in the PAMI-executed food component, while the core health
and education services components were reduced\. Government restrictions, such as refusal to allow the
implementing agencies direct access to the project's Special Account in the Central Bank and prohibition of
direct payment of local contracts by the Bank, added to the funding problems for these core components\.
Accounting and Auditing\. The institutional complexity of the project led to difficulties with respect to
timely and accurate consolidation and report of financial accounts\. In 1993/94, MOF attempted to address
this problem by assigning overall responsibility for project financial administration and accounting to the
Venezuelan Fund for Social Investment (FONVIS), which was to work in coordination with the OTC and
the other implementing entities\. (FONVIS was also given responsibility for execution of financial
management training activities)\. However, FONVIS' effectiveness as financial administrator was
hampered by the same budgetary and procedural constraints that slowed project implementation overall\.
Its accounting was generally accurate, though slow\. In 1997, an agreement was signed with UNDP for
provision of assistance in procurement and administration of funds for the purchase of goods and
contracting of services\. While effective in providing more direct access to project funds and in handling
procurement procedures, UNDP was also slow in providing reports on financial accounts\. The diffusion of
responsibility for financial management and accounting among entities and slowness in accounting by all
parties combined to make consolidation of the project accounts very difficult\. Financial audits by private
auditors were carried out, but generally behind schedule\. In audit reports since 1995, the auditors
consistently flagged weakness in overall project financial management\. (Although this is a problem flagged
by auditors in nearly all projects in Venezuela, it was a particular problem in this project because of its
complexity)\.
Legal Covenants\. The Borrower substantially complied with the technical covenants of the legal
agreement\.
7\.6 Implementing Agency:
Unfortunately, the weaknesses in the organizational set-up of the project prevented MOF from playing the
coordinating and facilitating role needed for a successful implementation of the project\. In addition,
ministers and senior project staff changed frequently, and with them, commitment to the project's objectives
and knowledge of agreed procedures and practices, were lost\. In general, senior staff received standard or
even below-standard Government remuneration\. Some of the implementing agencies did overcome some of
these hurdles, in particular FUNDAPREESCOLAR, which showed dynamic leadership in later years\.
MOF also became more proactive in the last two years\. To assist the OTC in project management, it
established elaborate procedures to ensure adherence to the Bank's rules and regulations, including an
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agreement with FONVIS to screen the procurement/reimbursement requests from all of the implementing
agencies; this did ensure adequate procedures and documentation, but also caused further delays\. On
balance, implementing agency performance is considered unsatisfactory\.
7\.7 Overall Borrower performance:
Despite improved performance in the last years of implementation, Borrower performance overall was
unsatisfactory\.
8\. Lessons Learned
The relatively limited success of the project can be ascribed to a variety of factors already mentioned
before\. The problems included:
The perceived urgency to complement the SAL quickly with an investment operation intended to
alleviate the social impact of adjustment, which led to haste in project preparation and lack of
specificity in the design of project components and project management (even more serious in a
country where there had been no Bank-assisted sector operations for many years);
A complicated organization, with MOF trying to coordinate the policies and activities of the
major ministries of MOE and MOH through a relatively small OTC;
The lack of experience of, and incentives for, implementing agencies' management and technical
personnel to pursue project objectives\. This was mainly due to the frequent change in ministers
and consequent turnover of project management and to the relatively low remuneration of
project staff;
The limited health and education budgets (with Loan funding included in overall government
budget allocations and, thus, restrictions), restricted access to the Loan's Special Account, and
the prohibition by the Government against use direct payments for local contracts (this was
partly alleviated since 1997 by the use of UNDP as a contracting agency);
The high rate of inflation in the country and consequent escalation of project costs;
Lack of specific targeting of project activities, especially during the initial years of the project;
Frequent labor problems in the health sector, affecting the operations of the health centers;
Initial difficulty with the purchase of land for pre-school classrooms; and
Lack of involvement of public administration specialists from the Bank during project design
and follow-up, and the limited attention by the Bank's senior management until late in project
execution\.
The above problems suggest several features of project design, institutional context and implementation
arrangements that could improve the probability of a successful project outcome:
A simple project design and organization\. In most cases, this implies a single-sector design,
minimizing complex inter-institutional coordination;
Policies, rules and regulations, practices, and definition of institutional roles worked out and
agreed in detail prior to Board approval;
Agreement at the country level, prior to project preparation, on the general terms and
conditions for project implementation, including how counterpart funding would be budgeted
and disbursed, the incremental nature of Bank financing, and the management of Special
- 1 1-
Accounts;
* Agreement with the Government, as part of project design, on overall priorities and funding
levels for priority programs and services in the relevant sectors;
* Appointment (and maintenance over time) of experienced, appropriately project management
and staff, with the proper incentive structure;
* Sufficient and accessible project funding and adequate provision for financial management and
accounting;
* Maximum involvement of the communities and local governments in all stages of the project
cycle; and
* Close monitoring by the Bank, with adequate participation by appropriate subject matter
specialists, as needed;
The generally positive experience with social investment funds around the world suggests that a
semi-autonomous, well-managed social fund may offer an appropriate vehicle for channeling funds to
investments in several social sectors\. In Venezuela, FONVIS may offer such a vehicle\.
9\. Partner Comments
(a) Borrower/implementing agency:
Introduction (written following the change in Government)
During execution of the Social Development Project (SDP), the institutions in charge of social issues
suffered a full-blown crisis\. There was a complete lack of national, intersectoral, or intergovernmental
perspective, and a dearth of legitimate policies, effective plans, clear priorities, and coherent organization\.
While political discourse repeatedly referred to economic and social policy, in practice there was evidence
of more or less coherent economic measures, but, as far as social issues were concerned, a series of erratic,
spot, and even marginal actions\. Government authorities were, it is true, totally convinced that economic
growth alone would suffice to eradicate poverty and mitigate inequality\.
Economic and social indicators reveal the deterioration in Venezuelan society in the past two
decades:
International reserves fell by approximately US$10,000 million between 1975 and 1997\.
Oil exports declined in constant value terms from US$24,000 million in 1975 to US$13,000
million in 1995\.
Real Gross Domestic Product grew, albeit erratically, at an average year-to-year rate of 1\.9%, at
the mercy of shifts in oil prices: in 1988 GDP grew 5\.82%; in 1989 it fell 8\.57%; in 1991 it grew
10\.96%; and in 1998 it dropped 0\.67%\.
Inflation was 81% in 1989; 70\.8% in 1994; 103% in 1996; and 30% in 1998\.
The open unemployment rate is estimated to have fluctuated between 16% and 25%\.
* Roughly half the economically active population works in the informal sector\. {Under these new
circumstances, in which work in the formal sector ceases to be the principal port of entry into
organized society, the poor became not so much exploited as excluded and increasingly displaced
and removed from the nerve centers of society\.}
- 12 -
* The Gini coefficient was 42\.4% in 1992 and 46\.5% in 1995\.
The percentage of the population living below the poverty line increased from 33% in 1975 to
67\.2% in 1997\.
In 1975 the income gap (minimum financing required to eradicate poverty) was equivalent to 1\.9%
of GDP, 6\.2% of oil exports, and 7% of fiscal revenue from oil; in 1997 the gap was equivalent to
13% of GDP, 31 % of oil exports, and 48% of fiscal revenue from oil (Ruitort, 1999)\.
Malnutrition among pregnant women was back at levels registered in the 1950s\. Forty-one percent
of pregnant women treated in outpatient centers in the metropolitan Caracas area were anemic and
47\.3% suffered from iron deficiency\.
The percentage of children under two years of age who were underweight or generally
undernourished rose from 13\.8% in 1995 to 14\.5% in 1998\. The rate for malnutrition in children
aged between 2 and 6 also increased, from 23\.8% to 24\.6% in the same period\.
In 1997, the infant mortality rate was 21\.4 per thousand and the maternal mortality rate 59\.6 per
thousand\.
The year-on-year rate of growth for official enrollment at pre-school level was 8\.3% in the
1996-1997 school year\. A year later the growth rate had dropped to 2\.4%\.
Social expenditure has decreased in real terms in recent years\. {ECLAC considers social
expenditure high when it exceeds 15% of GDP and low when it is equivalent to less than 9% of GDP\.}
Furthermore, no progress has been made either in improving its redistribution potential or in directing it
towards vulnerable sectors\. Real social expenditure reached a historic peak in 1992, at 9\.7% of GDP, but
fell thereafter, to 7\.6% of GDP in 1994\. Since then, with the exception of a slight upturn in 1997, when it
rose to 8\.5% of GDP, it has leveled off at approximately 8% of GDP\. A more detailed look at the shares
of education and health in social expenditure reveals how far outcomes fall below standards set by
UNESCO and the World Health Organization\. Thus, in the decade between 1988 and 1998, expenditure
on education and health averaged 3\.2% and 1\.4% of GDP, respectively, or 14\.36% and 5\.92%,
respectively, of total public sector expenditure\.
The social sectors did not always fare that badly\. Indeed, the constitution of the modern
Venezuelan state was a process accompanied by relatively effective implementation of social protection
mechanisms based on applying universal standards, which helped shape political life, created a sense of
citizenship, and enhanced social equity\. This social protection model, made possible by oil revenue and
sustained economic growth and geared to formal sector employment, began to break down at the beginning
of the 1980s, as the debt crisis and external sector difficulties set in\.
Objective
The project aimed to direct part of the State's social expenditure in such a way as to offset the
effects of macroeconomic stabilization and structural adjustment policies, although the latter were never
applied systematically and continuously\. So priority was attached to focusing on what were considered to
be the most vulnerable groups -- pregnant and nursing mothers and children under six, and to improving the
social sector's managerial and organizational capabilities\. The project's four components (primary health
care; pre-school development; information, education, and communications activities; and institutional
development) were conceived from an intersectoral standpoint, without, moreover, being subsequently
reevaluated and/or reformulated\.
- 13-
Analysis of the technical and political consistency of the project
At this stage, and in light of recent findings in action research, strategic planning, and social
management in general, one can say that the objective was based on a positivist, reductionist, and
technocratic approach\. Positivist: because it was founded upon empirical measurement of the effects of the
social crisis without any reference to etiological aspects (in other words, it was based on data and not on
relations between the players)\. Reductionist: because it attached excessive importance to meeting
established targets without regard to intersectoral, intergovernmental, and local factors that not only
combined and conspired to thwart execution of the project as such, but also undermined its medium and
long-term sustainability\. Technocratic: because it overestimated the intuition and opinions of experts, to
the detriment of the real interests of other key players, and, above all, the beneficiaries\. That may partly
have been due to the paradigm governing World Bank actions at that time and perhaps to the personal
convictions of the national team acting as the Bank's counterpart in negotiations and in the final design of
the project\. If, instead, a more heuristic, holistic, and participatory approach had prevailed, the project's
objectives and components would have been technically and politically more coherent, and that, in turn,
would have led to swifter implementation and much greater mobilization of regional government and
beneficiary interest in expected outcomes\.
Of the heurism, holism, and participation trilogy, the participation factor is the most important,
since it is, in a sense, the instrument which leads, first, to the heuristic dimension by opening up and
ultimately generating knowledge and innovation, and, second, to the holistic dimension, particularly since,
by definition, participation makes it possible to both apprehend the whole and handle the diversity of the
component parts\.
A priori, the advantage of participation is that it generates knowledge, applies it in action, and, in
addition, makes it possible for project execution to become a real learning process\. It broadens insight into
the context surrounding projects and their impact and facilitates possible changes in structure that may
need to be made to improve implementation, not to mention a total redrafting or outright abandonment of
the project\.
The approach underlying the project's design and its approval was clearly shaped by the
Washington Consensus, which preached above all the need to eliminate the fiscal deficit, rein in public
spending, deregulate markets and free up investment, privatize state-owned enterprises, and then look after
the victims of such measures through compensation mechanisms\. In this view, any more or less complete
social protection network is perceived as a cost and/or rigidity factor obstructing the normal workings of
the market and of business\. That led to over-emphasis on adopting centralist and reductionist policy
formulae, under which inordinate power was granted to the traditional sector ministries and the success of
the project gauged in terms of changes in global indicators, with complete disregard for the context in
which the project unfolded at the regional level: states, municipalities, local communities\.
Even acknowledging that the decision to go ahead with the Social Development Project could not
depend exclusively on first disentangling relations between national, state, municipal, and community
bodies, it remains undoubtedly true that if key actors at those levels had been actively involved in designing
and executing the project, it would have generated a very intensive learning and institution-building
process\. It would also have meant that the necessary changes could have been made in time\.
- 14 -
Achievement of the Objective and Project Outcomes
Poverty mitigation
A glance at recent statistics suffices to show that, generally speaking, the circumstances that gave
rise to the project have deteriorated markedly in the last few years\. The project managed to have only a
marginal mitigating impact on the effects of the pervasive (and ongoing) crisis in the social sector\. The
results are, to say the least, unsatisfactory\.
Project outcomes
Primary Health Care (PHCQ: Infant mortality, maternal mortality, and the mortality rate for
children aged I to 4 continue to have a decisive impact on the overall maternal and child health situation\.
In fact, these factors generate so much activity that they accounted for 88% of all preventive health care
interventions in this sector in 1996\. The figure is higher than that for 1990, which goes to show that
progress in this area has been limited\. Separately, it is worth noting that insufficient attention was paid to
the capabilities of the institutional and individual actors involved in execution of this component\.
Pre-School Development (PSD): Low pre-school education coverage continues to be a top priority
concern in the educational sector\. Pre-school attendance in the 1996-1997 school year (41\.6%) was barely
0\.88% higher than in 1992-1993 (40\.28%), an indication of how little progress has been made in this area\.
Information\. Education, and Communication Activities (IEC): An integrated support program for
implementation of the PHC and PSD components was not achieved\. Nevertheless, a set of relevant data
were generated with respect to nutrition, health, and education, which will help to enhance the promotional
and training activities of social sector executing agencies\.
Institutional Development (ID): It was not possible:
§ to establish mechanisms guaranteeing maternal and child health care coverage;
§ to calculate real coverage of the maternal-child health care program;
§ to ensure monitoring of nutrition levels;
§ to introduce PAMI [Maternal-Child Health Care Program Foundation] targeting
mechanisms;
§ to sustain an extension of non-conventional pre-school education programs\.
These problems proved to be key factors in limiting attainment of the coverage ratios contemplated
in the project\.
Principal factors affecting project execution and the achievement of objectives
The one-way and rigid nature of the project
Despite the fact that the project was not producing the results expected of it, both the World Bank
and the Venezuelan Government pressed on with its implementation, sticking dogmatically to the original
design set forth in the Staff Appraisal Report (SAR)\.
For that reason, there was no room for on-the-spot learning\. The project was implemented in linear
fashion, without all the interested parties being involved in making sure its objective and targets were
- 15-
achieved\. Those parties (governors' offices, regional directorates of sector ministries, municipalities, and
civil society) were generally spectators witnessing implementation\. As a result, the project's components
(PHC, PSD, IEC, and ID) were unable to establish real channels of communication with what was
presumably their immediate and mediate environment\. Thus, maternal-child health care, for instance, was
restricted to quantitative targets, with no regard for its potential role as a catalyst in promoting changes,
such as the empowerment of women, enhancement of the quality of life, productive development, etc\. Once
again, involving interested parties in the design and execution of the project would have made it possible to
detect and/or specify the relations between each component and the (educational, epidemiological,
community, administrative, and so on) system in which it was embedded\. It would also have been possible
to identify the necessary (sectoral, intergovernmental, State-civil society) channels to work through, not just
to ensure more pluralistic and synergetic implementation of the project, but also in order to pass on more
know-how and power to the target groups, instead of reserving them for the exclusive benefit of the
executing agencies\.
The institutional context
Three shortcomings in particular affected project execution and the achievement of its objectives,
namely: the lack of intersectoral coordination, the lack of intergovernmental cooperation, and weak
drafting, monitoring, and evaluation of plans and programs (not to mention the nonexistence of any real
focusing mechanisms)\.
It is true that Venezuela never had, and still does not have, a national social policy system in the
sense of a set of definitions, regulations, institutions, and fundraising mechanisms geared to broad, medium
and long-term social objectives\. Not even at the time when the State fostered national integration by
extending citizenship, democratizing education and culture, and funding health, housing, and social security
systems, etc\.
More recently, the bodies in charge of drafting social policies have been singularly low-profile\.
That explains why, at the time the project was drawn up, Venezuela lacked explicit social policies and,
consequently, relevant and coherent social programs, whereby social policy is understood as an
agreed-upon, structured and forward-looking set of government, private, or community measures in the
political, economic, and cultural spheres, whose objective is to enhance the quality of life of the population
from an endogenous development perspective\. {The not only weird but also paradoxical fact of the matter
is that it has been the multilateral organizations that have called upon the government to pay more heed to
social issues, with their influence largely being exerted in the form of selective program designs; never,
however, in the form of a comprehensive social policy\.}
When the SDP was drawn up, the dismantling of the State apparatus had been going on for some
time\. As it became increasingly insolvent, it was forced to abandon its role as the leading force behind
social development, a development which paved the way for the partial privatization of health and
educational services that has been taking place\.
That was the institutional context at the time the SDP was drawn up\. Under such circumstances,
the idea was to channel the few available resources toward solving the severest manifestations of poverty\.
At the same time, power structures "at the top" began to undergo a decentralization process that favored
political power distribution at the expense of the specifically technical design of the project\. As a result, it
proved impossible to define the different spheres of competence of the various government entities\. Nor
were formal mechanisms for intergovernmental coordination and cooperation established\. That was the
objective reason why the SDP was developed and placed under the sector ministries, because lower or
regional levels lacked both the technical capability and the authority needed to figure as front line
stakeholders in its design and execution\.
- 16-
Toward the end of SDP execution, in light of the assessment of results for each component in the
project carried out by project staff and of the evaluation of beneficiaries, it became clear that the crucial
factors that prevented the project from attaining its objective had been institutional and organizational\.
The mediocre performance of the health and education ministries, where the SDP's main executing
entities (PAMI and Fundaescolar) were located, is due to:
§ a cumbersome, inert, corrupt, and incompetent bureaucracy;
§ the interests of professional associations and unions;
§ the discrepancy between the information available to senior management and the
information at the disposal of administrative, professional, and technical staff, on the one
hand, and the recipients of the services rendered, on the other;
§ the lack of sufficient incentives to rouse the enthusiasm of all those involved;
§ the nonexistence of mechanisms for the general public to exercise control over the way
hospitals, outpatient clinics, and educational institutions of any kind are run\.
Sustainability of the Project
As regards the SDP's main components, namely PHC and PSD, a priori sustainability is out of the
question, given that in practice they were not the most desirable ways to attend to maternal and child health
care problems or the pre-school education needs of the most vulnerable sectors, respectively\. Furthermore,
the expenditure that would be required today just to mitigate the worst aspects in these areas could not be
financed with public sector funds\.
Nevertheless, the SDP did yield positive results in the Institutional Development component, which
should be reinforced:
§ The project served to create awareness of the need for clear intersectoral and
intergovernmental policies and strategies in the social sector and for broad national
consensus regarding how social services should be delivered;
§ It laid the preliminary foundations for an integrated, performance-oriented and
decentralized social policy management system covering research, projections, the
development of statistics, planning, monitoring, and evaluation\.
§ It defined criteria and preliminary mechanisms for directing the State's social sector
activities toward the alleviation of extreme poverty\.
To consolidate these achievements, a vast program geared to strengthening the social sector would be
required\. Its principal projects would be:
- 17-
Establishment of a Social Sector Authority\. This body would the guide social policy in the required
direction; which means, first and foremost, redefining the sphere of competence of todays Social
Cabinet Office\. The idea is to create a permanent body, with powers to formulate policy, allocate
resources, and determine how social programs are to be executed, monitored, and evaluated\. The
Social Sector Authority shall determine which areas merit priority attention based on key social
problems that have been properly analyzed and quantified by studying their root causes, not on the
basis of technocratic or bureaucratic intuition\. The Social Sector Authority would also be responsible
for publishing the Social Sector Yearbook and drawing up the consolidated social sector budget\.
Setting up a System for Monitoring and Evaluating Social Sector Problems, Policies, and
Programs\. This system could become the main tool for monitoring key social problems and devising
public sector measures to solve them\. A blueprint for such a system is almost ready and only requires
supplementary studies to consolidate its socio-demographic and epidemiological data base and become
operational\. The monitoring system would constitute a fundamental instrument for the Social Sector
Authority to carry out its government functions\. Such a system makes it possible to pinpoint priority
areas for social development activities and thereby construct a comprehensive agenda of social sector
problems, policies, and programs\. It is a computerized information system which throws light on
overall social trends, facilitates analysis of cost-benefit differentials in Latin American countries, and at
the same time exercises operational control over the different programs\. Essentially the system
measures:
Basic needs
The situation of vulnerable groups
Inequalities
Context
Setting up a National Beneficiaries System (SISNABE)\. Conceived as a system offlexible, modern,
transparent, and decentralized mechanisms for channeling resources to vulnerable/poor families or
households, SISNABE is an indispensable vehicle for improving the selection of foci employed in
poverty reduction programs\. A draft blueprint for SISNABE has been drawn up, outlining
administrative, financial, informational, and legal aspects of the system's general orientation, along
with basic elements needed for its future implementation\. This preliminary design envisages three
types of targeting:
Program-based
Geographical
Case-by-case
Once the design of SISNABE is completed, including data on current beneficiaries of social programs,
the methodology applied to weight different poverty levels, and the software used for gathering,
ordering, updating, and consolidating data at the national, state, and municipal levels, the next step will
be to define institutional and operational aspects, and spheres of competence\.
-18 -
Developing a social sector statistics system\. One of the core social sector activities that the current
government should engage in is gathering and updating coherent sets of statistics on the social sector to
feed into the decision-making process\. A Social Sector Statistics Committee {Comprising
representatives of the following entities: Cordiplan, the Ministry of the Family and Labor, the Ministry
of Health and Social Development, and the Ministry of Education, Culture and Sports} comprising
various subcommittees already exists, run by the Statistics and Information Office (Oficina de
Estadistica e Informatica - OCEI)\. {The subcommittees are on: Social Statistics, Social Programs,
Poverty, the Family Food Basket, Nutrition, Core Statistics, and Employrnent\.}
In 1998, through the SDP, the Ministry of the Family made a decisive contribution to the development
and consolidation of the Social Sector Statistics System by conducting the following surveys jointly
with OCEI and the Venezuelan Central Bank:
* 1998 Social Survey
* 1998 Population and Family Survey
* National Family Budgets Survey
Supplementary Survey on Child Care
Thus, a fairly complete set of instruments is already in place, which, when properly analyzed, provides
the bulk of the information needed to measure poverty in all its dimensions: patterns, incidence,
geographical distribution, consumption patterns, inequality, and a wealth of general data on the living
conditions of the poor\. The next steps will be to formally establish how often those instruments are to
be applied, and the schedule for setting up social sector statistics systems in all the states and
municipalities, not to mention the process of updating the administrative records kept by the Ministry
of Health and Social Assistance\.
Establishment and Consolidation of the Single Social Fund [Fondo Unico Sociall - SSE The SSF
is a source envisaged in the program of funding for large-scale activities designed to benefit the poor\.
Currently the SSF restricts its role to improving the basic health, nutrition, educational facilities, and
productive activities of the poorest segment of the population, although, eventually, it could broaden
the scope of its funding to cover basic social infrastructure\. The SSF program guidelines take into
account the already existing institutional framework (with which it should preferably coexist) and the
gravity of the problems besetting the poor, as well as the effectiveness and cost of possible alternative
solutions\. Those analyses, based, as mentioned earlier, on a study of underlying causes, have made it
possible to define the following programs and projects:
* The Minimum Family Income Program (MFI)
* The Single Nutrition Program
Daily Care Households and Multiple Households
* The National Young People's Job Training Program
* The Extramural School Support Program
- 19 -
The Single Social Fund's Flagship Program: the Minimum Family Income Program (MFI)\.
Improving public education is the only way to ensure the sustainable participation of our country in a
globalized world\. From that perspective, education is being regarded not just as the key to personal
development, but also as a determining factor for economic development, reduction of inequalities, and
the elimination of poverty\. Moreover, it has been shown that there is a close correlation between a
country's level of income per capita and the proportion of the population completing sixth grade in
primary school\. In other words, a high level of enrollment in basic education contributes to economic
growth\.
The inefficiency of the basic education system is the prime cause of declining incomes in the poorest
households, because those who drop out of primary school earn on average 56\.8% less than those who
complete that level\. In addition, the deterioration associated with insufficient means is well known,
with respect to both skills and performance\. In view of that evidence, the program proposes adopting a
flexible and transparent mechanism for making cash payments to women living in extreme poverty as
an incentive for having their children complete their basic education\. The scheme has additional
spin-offs, including positive effects on health, nutrition, and fertility\. The MFI's sole objective is to
increase the number of children of poor families who complete their basic education, by improving
access to the system and reducing drop-out ratios\.
Drawing up a Strategic Plan for the Social Sector
The structure, scope, and essence of social development have not traditionally been considered of
fundamental importance\. That situation must now be reversed, by doing everything possible to re-forge the
links between the economic and social spheres, by treating them as part of a duo, as two sides of the same
coin\.
That implies drawing up a Strategic Plan for the Social Sector, as the linchpin of a system of target
selection, action, and accountability in social issues\. Based on extensive consultation with civil society
regarding sectoral and selective policies, and on a legitimate technical and political process of defining the
State's social objectives, the Plan will establish social priorities in accordance with key problems pinpointed
by the System for Monitoring Social Sector Problems, Policies, Programs, and Plans\. The Plan will also
make it possible to implement social policy through intergovernmental cooperation and coordination with
civil society\.
Being both action- and performance-oriented, the Plan will usher the various institutional players in the
social sector in the same direction\. It will direct activity toward priority aspects agreed upon by the social
sector as a whole, including regional public bodies and NGOs working on social issues\. The key to
strategic planning is precisely to ensure that organizations remain in sync with their changing environment\.
Hence the suggestion that it is necessary to concentrate only on matters of strategic importance,
disregarding, among other things, any courses of action that are not related to key social problems\.
(b) Cofinanciers:
N/A
(c) Other partners (NGOs/private sector):
See Annex 8: Beneficiary Survey Results
10\. Additional Information
N/A
-20 -
Annex 1\. Key Performance Indicators/Log Frame Matrix
Outcome Impact Indicators:
The SAR and other available project documentation did not establish impact indicators\.
Output Indicators:
HEALTH SERVICE COVERAGE EXPECTED AT PROJECT COMPLETION ACTUAL 1995 a/
TARGETS (PER YEAR) IN 1995
Pre-Natal Women 422,000 623,699
Post-Natal Women 359,000 93,035
Infants (up to 24 months old) 641,000 757,114
Preschool Children (2-6 years old) 916,000 490,082
Family Planning 251,300 680,000 bI
Breastfeeding for 6 months n/a
Cervical Cancer Screening 375,000 477,076 (1997)
Immunization Coverage (for children under 90% 79% (1997)
three)
ACTUAL 1998
PRESCHOOL DEVELOPMENT
New Classrcoms (formal system) 1,506 804
Non-formal Centers Opened 184 8
Increased Attendance - Formal 85,300 27,000
Increased Attendance - Non Formal 28,020 240
Note: The population requiring services from the health centers reportedly increased dramatically because of the
country's economic deterioration; therefore, the percentage of the target population served by the health centers
declined\.
a/ Last year for which health statistics were processed at the MOls Statistics Unit
b/ Represents only 12 percent of the population requiring family planning services
Sources: MOH (Health Statistics)
FUNDAESCOLAR (Education Statistics)
End of project
-21 -
Annex 2\. Project Costs and Financing
Pr6ect Cost by Com onent (in US$ million e uivalent)
Primary Health Care (including food)* 185\.50 446\.10 232
Pre-School Development 42\.50 28\.30 59
Information, Education, Communication 12\.60 17\.40 44
Institutional Development 3\.80 2\.60 53
Unallocated (disbursed, but final accounting of UNDP on 6\.60
allocation by project component not yet available)
Total Baseline Cost 244\.40 501\.00
Physical Contingencies 12\.20
Price Contingencies 64\.30
Total Project Costs 320\.90 501\.00
Total Financing Required 320\.90 501\.00
- Appraisal estimate included US$ 143\.1 million equivalent of food (excluding contingencies), to be financed
entirely from Government sources\. Actual figure includes food purchase and distribution of US$409\.0 million,
as reported by PAMI\.
Source: FONVIS (Responsible for Financial Management)
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)
1\. Works 0\.00 16\.80 0\.30 0\.00 17\.10
(0\.00) (14\.90) (0\.20) (0\.00) (15\.10)
2\. Goods 29\.60 9\.50 6\.50 191\.60 237\.20
(26\.60) (8\.60) (5\.50) (0\.00) (40\.70)
3\. Services 0\.00 0\.00 19\.10 0\.00 19\.10
Including Consulting (0\.00) (0\.00) (19\.10) (0\.00) (19\.10)
Services
4\. Training 0\.00 0\.00 10\.30 0\.00 10\.30
(0\.00) (0\.00) (10\.30) (0\.00) (10\.30)
5\. Operating Costs 0\.00 0\.00 37\.20 0\.00 37\.20
(0\.00) (0\.00) (14\.80) (0\.00) (14\.80)
Total 29\.60 26\.30 73\.40 191\.60 320\.90
(26\.60) (23\.50) (49\.90) (0\.00) (100\.00)
- 22 -
Projct ost byProuree tArrangements (Actual/Latest Estimate) (US$ million equivalent)
Procurement Method
Expenditure Category ICB N\.B\.F\. Total Cost
NCB other _____
1\. Works 0\.00 18\.30 0\.00 0\.00 18\.30
(0\.00) (16\.40) (0\.00) (0\.00) (16\.40)
2\. Goods 37\.10 2\.50 0\.40 409\.00 449\.00
(36\.60) (0\.00) (0\.00) (0\.00) (36\.60)
3\. Services 0\.00 0\.00 22\.80 0\.00 22\.80
Including Consulting (0\.00) (0\.00) (22\.80) (0\.00) (22\.80)
Services
4\. Training 0\.00 0\.00 6\.20 0\.00 6\.20
(0\.00) (0\.00) (5\.50) (0\.00) (5\.50)
5\. Operating Costs 0\.00 0\.00 4\.70 0\.00 4\.70
(0\.00) (0\.00) (2\.70) (0\.00) (2\.70)
Total 37\.10 20\.80 34\.10 409\.00 501\.00
(36\.60) (16\.40) (31\.00) (0\.00) (84\.00)
Source: FONVIS\.
Notes:
I\. Goods includes US$409\.0 million of food, as reported by PAMI\.
2\. Total disbursement of Bank loan proceeds amounted to US$84\.6 million, US$0\.6 million more than
shown in table\. US$0\.2 million is due to rounding, and further US$0\.4 million disbursed, but category
breakdown awaiting final data from UNDP and Borrower
Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies
2 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted
staff of the project management office, training, technical assistance services, and incremental operating costs related to
(i) managing the project, and (ii) re-lending project funds to local government units\.
Project Financing by Component (in US$ million equivalent)
The SAR presented the detailed financing plan by category of expenditure, rather than by component\.
Therefore, a comparative table is presented below\.
- 23 -
Project Financing by Category of Expenditure
Actual as % of Appraisal
Appraisal Estimate Actual Estimate
IBRD as IBRD as
% of % of
Govt IBRD Total Total Govt IBRD Total Total Govt IBRD Total
(%) (%) (--- % ---
Civil works 2\.1 15\.0 17\.1 87\.7 1\.9 16\.4 18\.3 89\.6 90 109 107
Equipment
furniture, &
materials 6\.6 42\.0 48\.6 86\.4 3\.4 36\.6 40\.0 91\.5 52 87 82
Food 191\.6 - 191\.6 0\.0 409\.0 - 409\.0 0\.0 213 213
Consulting
services &
studies - 7\.1 7\.1 100\.0 - 22\.8 22\.8 100\.0 - 321 321
Training - 10\.3 10\.3 100\.0 0\.7 5\.5 6\.2 88\.7 - 53 60
Operating costs 20\.6 13\.6 34\.2 39\.8 2\.0 2\.7 4\.7 57\.4 10 20 14
IEC services - 12\.0 12\.0 100\.0 - - - - - - -
Total 220\.9 100\.0 320\.9 31\.2 417\.0 84\.0 501\.0 16\.8 189 84 156
Total, less food 29\.3 100\.0 129\.3 77\.3 8\.0 84\.0 92\.0 91\.3 27 84 71
Sources: Food expenditures as reported by PAMI\. All other: FONVIS, Responsible for Financial
Management\.
Note: Figures are preliminary pending documentation of final expenditures by FONVIS and UNDP
(total disbursements, including advances to UNDP, total US$84\.6 million)\.
- 24 -
Annex 3: Economic Costs and Benefits
Neither the SAR nor available project documentation reflected quantitative analysis of costs and benefits\.
The project did not systematically maintain records sufficient to quantitatively assess costs and benefits at
completion\.
-25 -
Annex 4\. Bank Inputs
(a) Missions:
Stage of Project Cycle No\. of Persons and Specialty Performance Rating
(e\.g\. 2 Economists, I FMS, etc\.) Implementation Development
Month/Year Count Specialty Progress Objective
Identification/Pre
paration 5 Education Specialist, Health
06/89 Specialist
Appraisal/Negotiation
11/89 5 Education
(Pre-Appraisal)
05/90 Health
Public Administrator
Supervision
06/91 6 Procurement Specialist, S S
Auditing Specialist,
Educator, Legal,
Disbursement Specialist,
Civil Works
05/92 5 Educator, Social Survey, U S
Education Specialist,
Procurement Specialist, Health
Specialist
11/92 5 Health Specialist, Educator, U S
Social Survey, Education
Specialist
04/93 5 Educator, Operations Analyst, U S
Public Health & Nutrition,
Education Specialist
08/93 2 Operations Specialist U U
04/94 5 Educator, Operations Specialist, U U
Public Health & Nutrition,
Communications Spec\.
08/94* S S
02/95 6 Operations Specialist, Resident S S
Representative, Public Health &
Nutrition, Communications,
Educator
06/95* S S
02/96* S S
06/96* U S
12/96 2 Public Administrator, Resident U S
Representative
04/97 3 Resident Representative, U S
Institutional Development
Specialist,
- 26 -
03/98 4 Public Health & Nutrition, S S
Institutional Development,
Educator, Public Administrator
ICR
12/98 5 Public Health & Nutrition, U U
Institutional Develepment,
Education Specialist, Public
Administrator
* Updates
(b) Staff:
Stage of Project Cycle Actual/Latest Estimate
No\. Staff weeks US$ (,000)
Identification/Preparation 75\.5 128,004
Appraisal/Negotiation 18\.8 39,363
Supervision 254\.2 538,419
ICR 3\.1 9,922
Total 351\.6 715,708
- 27 -
Annex 5\. Ratings for Achievement of Objectives/Outputs of Components
(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
Rating
Z Macro policies O H OSUOM * N O NA
i Sector Policies O H OSUOM O N O NA
I Physical O H OSU*M O N O NA
Z Financial O H OSUOM O N * NA
X Institutional Development 0 H 0 SU * M 0 N 0 NA
rzEnvironmental O H OSUOM O N * NA
Social
Z Poverty Reduction O H OSU*M O N O NA
Z Gender O H OSUOM O N O NA
Z Other (Please specify) O H OSUOM O N * NA
Z Private sector development 0 H O SU O M * N 0 NA
2 Public sector management 0 H O SU O M * N 0 NA
El Other (Please specify)
- 28 -
Annex 6\. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6\.1 Bank performance Rating
L Lending OHS OS *U OHU
El Supervision OHS OS *U OHU
El Overall OHS OS * U O HU
6\.2 Borrower performance Rating
O Preparation O HS O S * U O HU
EL Government implementation performance 0 HS 0 S * U 0 HU
CL Implementation agency performance 0 HS 0 S 0 U 0 HU
El Overall OHS Os *u O HU
Notes: Both Borrower implementation and Bank supervision improved in the last few years, partly due to
substantial Resident Mission involvement in supervision\.
- 29 -
Annex 7\. List of Supporting Documents
1\. Venezuela-Social Development Project-SAR, IBRD, October 30, 1990
2\. Informe de Avance-Asistencia T&cnica en Planificaci6n y Control, Cynner Consultores, November
1998
3\. FONVIS: Experiencia y Perspectiva, Lourdes Alvarez, April 1, 1998
4\. Cuarto Informe de Seguimiento de los Programas Sociales del Componente de Proteccion Social de la
5\. Agenda Venezuela, Primer Semestre, 1998
6\. Programa Fortaleciendo la Familia, Informe Final, Burston-Marteller, June 1998-January 1999
7\. Evaluacion del Impacto del Componente de Educaci6n, September 1999
8\. Evaluaci6n del Impacto sobre los Beneficiarios de los Componentes de Salud; Informaci6n, Educacion
y Comunicaci6n; y Fortalecimiento Institucional, August 1999
- 30 -
Annex 8\. Beneficiary Assessment Results
Background
Following a completion mission for the Social Development Project (SDP) late 1998, the closing date of the
loan was extended twice to conclude various priority activities including the Beneficiary Assessment (BA)\.
The terms of the BA were discussed with GOV officials and members of the project's Technical
Coordination Unit (OTC) in late 1998 and the assessment was carried out by local NGOs between May
and August, 1999\.
The BA was planned around the objectives of the Social Development Project, which were to: (a) improve
the living conditions of a large and poor segment of the population, especially pregnant and lactating
women, and children under six years of age, while mitigating the potential adverse impact of the adjustment
program, (b) replace indirect subsidies with targeted social programs, while improving their efficiency and
rationalizing their distribution, and (c) promote institutional development by improving the planning and
management capacity of the Ministry of Health (MOH), and Ministry of Education (MOE), as well as the
capacity to target, develop, and monitor social programs of the Ministry of Family (MOF)\.
The need for consultations with beneficiaries became even more important because the project performance
seemed to fall short of targets, initial baseline data were unclear, and there had been an absence of
evaluations through the life of the project\. Also, some subprojects (i\.e\. primary health care program,
PAMI) were started long ago, while others (i\.e\. most Information and Education (IEC) and Institutional
Development (ID) activities) were recent activities thus making impact difficult to measure\. Finally, there
were difficulties with the identification of direct beneficiaries of the ID component, as the country
experienced substantial staff turnover with the installation of the new government\.
This assessment was intended to be a qualitative assessment of beneficiaries' perceptions of the project and
its benefits\.
Beneficiary Assessment (BA)
Given the heterogeneous nature of the four components of the SDP, it was agreed that four different BAs
would be carried out by NGOs\. Cahas, Turmedo and Associates were responsible for the IEC assessment;
LACSO was contracted for the ID and the Primary Health Care Network components; and the Department
of Education of the University of Venezuela assessed the Fundaescolar component\.
The assessments would seek to evaluate the four components: (a) rehabilitation and development of the
primary health care network; including provision of basic health and nutrition services for pregnant and
lactating women and children under six years of age, (b) development and expansion of pre-school
education, focused on lower-income rural and urban areas, (c) information, education, and communications
(IEC) services for health, nutrition, and education promotion, and (d) improvement of the Government's
capacity to design, plan, and implement social programs and to monitor the effect of such programs\.
Objectives of each BA
To promote an open forum for dialogue and discussion among policy-makers, stakeholders and
beneficiaries on the social pertinence of the SDP, and its relevance in poverty reduction in
Venezuela\.
- 31 -
To identify the actual beneficiaries and stakeholders of the sub-projects, 1991-1999\.
To assess beneficiaries' satisfaction with the goods and services received through the project\.
To assess beneficiaries' perceptions of effectiveness of the project to respond to their needs and
demands; to assess the appropriateness of mechanisms used to deliver the project; and to draw
lessons learned\.
To document, if possible, the perceived impact of the project on improving living conditions in
health, education and knowledge management\.
Methodology and Instruments
Participatory urban/rural assessments were used for all the components\. Triangulation was used to
cross-reference information\. Methods included short surveys, structured and semi-structured interviews
with selected beneficiaries and stakeholders, focus groups and observation visits\. The instruments were
formulated by each research firm in consultation with the TCU to conform with the goals of each
assessment\. Probing aimed at providing answers to the questions of: (a) social and economic pertinence of
the subproject; (b) effectiveness; (c) stakeholder/ beneficiary satisfaction; and (d) recommendations\.
PRIMARY HEALTH CARE NETWORK COMPONENT
The objective of the component was to provide health care and nutrition to pregnant and lactating women
and to children under six years of age suffering from poverty, as a means of replacing indirect subsidies by
targeted programs\. This component was managed by the Ministry of Health and the Primary Health Care
Network (PAMI), a foundation established by the Ministry of Health\. It had two subcomponents: PAMI
and National Training Program (PNC)\. PAMI ($409 million) managed two programs since 1991: (a)
distribution of food (milk and lactovisoy) through selected health centers; and (b) provision of medical
equipment ($37 million) in peri-urban health centers since 1992\. The executing agencies were PAMI,
Regional Health Centers and Governor Offices, Mayors Offices, and the Red Cross (in Estado de Lara)\. In
general, the goods and services were delivered by urban and rural ambulatory health units types I, II and
III and by MOH hospitals types I and II\. The project became reasonably well known as it responded
efficiently to a break out of chickenpox between 1994 and 1997 with the purchase of $3 \.4 million in
vaccines, covering 94 percent of children between ages of nine months and 15 years\.
Sampling for the BA
One state per region was selected for sampling of distribution centers\. Sampling of beneficiaries was
proportional to population in each state\. According to PAMI, in 1999 there were 1190 stores which
distributed goods to 2,454 health units in the five regions of the country (Caracas DF, Miranda/Central/De
Los Llanos, Center/West/Zuliana, de Los Andes, and North East/Inland/Guayana)\. The states selected in
agreement with TCU were Monagas, Carabobo, DF, Lara and Tachira\. Thus six municipalities in
Monagas, eight in Carabobo, two in DF, three in Lara, and 17 in Tachira were included\. A stratified
sample of 162 PAMI centers participated in the BA\. The stakeholders and beneficiaries participating in
the survey were 752 mothers, 378 local health care team members, 125 PAMI promoters and distribution
center staff, and 71 participants in the training program (PNC)\.
Triangulation was used for cross-reference\. Focus groups were conducted with milk and lactovisoy
recipients\. Interviews were carried out with high and intermediate officials of health units and distribution
- 32 -
stores\. Survey instruments were applied to all the participants\.
Results
Who are the beneficiaries of PAMI?
1\. The socio-demographic and socio-economic surveys were conducted with the purpose of analyzing
the targeting of the PAMI program\. The socio-demographic survey shows that 85 percent of recipients
were between 21-40 years old and only 18 percent were single mothers\. There was some correlation
between education level and employment\. The less educated were typically unemployed\. More than half of
the recipients had finished elementary school and one fifth had a high school diploma\. The number of
children (from one to seven) per family seemed to be evenly spread irrespective of education attainment\.
Half of the mothers had a child between six months and six years of age\. Two thirds of mothers had one
child benefiting from PAMI and the other third had at least two benefiting from the program\. The PAMI
products collected were usually distributed by mothers to all their children, not only to those qualified by
the program\.
2\. The socioeconomic survey aimed at identifying the financial status of the beneficiary mothers in
order to assess social pertinence\. It shows that 23 percent of women have a family income below 80,000
Bs\., the family income of 34 percent of mothers ranged between 80,000 Bs and a minimum salary; that of
20 percent was equivalent to two minimum salaries, and that of 3 percent was equivalent to more than two
minimum salaries\. In other words, 57 percent of beneficiaries declared a family income lower than the
minimum salary\. This bracket included all illiterate women (6 percent) and most unemployed\. In terms of
the living conditions, 70 percent lived in houses with zinc/metallic roof and 85 percent had cement floors\.
Seventy percent of households had electricity and garbage collection\. Some 89 percent had piped water
and solid waste disposal system in pocetas or cloacas\. In terms of occupancy per household, in 80 percent
of households bedrooms were occupied by one to three persons, which showed there was no overcrowding\.
In short, according to LACSO, in the context of Venezuela, PAMI was appropriate in terms of targeting\.
About the services provided by the Program
Most PAMI recipients had been in the program at least two years\. Some 65 percent of them joined the
program between 1994-98, and 35 percent since 1989\. The overall rating of satisfaction among recipients
of milk and lactovisoy in 1998 indicated that 50 percent of women interviewed were moderately satisfied,
27 percent were neither satisfied not dissatisfied, 15 percent were dissatisfied and only 8 percent were very
satisfied\. Major reasons for dissatisfaction were: (a) infrequency of product availability and distribution;
(b) insufficient knowledge about the services provided by PAMI -mode of distribution, goals of the
program and characteristics of the products; and (c) lack of mechanisms (promotion, targeting) to include
extremely poor women and children\. Although most women did not think the program improved mortality
rates, 56 percent believed it improved their children's daily nutrition\.
Quantity and quality of products and of the program in general were also assessed\. Most recipients were
happy with the amounts of milk and lactovisoy received in 1998\. Some 37 percent received both, 34
percent only milk and 28 percent lactovisoy\. Monthly installments of two kilos were received by 70
percent of milk recipients, and 56 percent of them agreed that the quality of the product was good\. About
30 percent of the mothers received two kilos of lactovisoy and 46 percent of them thought the quality was
good\. When asked if they had received educational information on PAMI from the center, 60 percent
mentioned that they had not, but 32 percent of those receiving the information rated it very good\. In terms
of the quality of the program over time, 30 percent of milk recipients thought the quality of the program
- 33 -
had remained constant since 1995, but 28 percent believe it had deteriorated in the past few years\. On the
other hand, 48 percent of lactovisoy recipients believed product deterioration had increased lately\.
Beneficiaries rated highly those community participation programs promoted by PAMI\. Sixty-two percent
of beneficiaries benefited at least once from educational activities promoted by PAMI (training)\. Most
people were moderately satisfied with the interaction and services provided by PAMI distribution staff in
general\.
Rating of human resources in ambulatory health units
Beneficiaries were asked to identify services and service providers (e\.g\. doctors, nurses, social workers),
and to assess the quality of those services, and of the equipment being used\. It was quite difficult for
patients to identify and list the types of services being offered at ambulatory units\. However, half of
patients interviewed thought services provided by doctors and nurses had improved in the past two years,
40 percent thought they remained the same and 6 percent believed they had deteriorated\. Usefulness and
quality of equipment had also improved according to 40 percent of patients\. As far as the work done by
social workers, 18 percent thought services improved, 20 percent said they remained the same and 30
percent did not know\. In terms of the physical conditions of the units, 52 percent thought they improved,
42 percent thought they were the same and 4 percent thought they had deteriorated\. In general, about 50
percent of beneficiaries believed services had improved over the past few years, and 30 percent thought
services had remained the same overtime\. Slightly 10 percent of beneficiaries thought most services had
deteriorated\.
Assessment of PAMI by distribution center staff
Perceptions by distribution center staff did not differ greatly from beneficiary perceptions\. Local PAMI
distribution centers are stakeholders and indirect beneficiaries\. Some 125 middle-age employees, mostly
women, most of whom have high school or technical education, were interviewed to evaluate the program
as a whole\. Turnover of staff was small\. Only 40 percent of them had been hired since 1997, and the rest
had job security at PAMI since 1990\. Around 30 percent of interviewed distributors made household
visits at least weekly\. Around 95 percent of them had been trained mainly through workshops, courses,
conferences on maternal & child health, health education, nutrition, and mostly community participation\.
Most believed the key problem lay in the logistics of the distribution chain of products\. The lack of
systematized and timely delivery schedules created anxiety among beneficiaries and workers\. The main
problem was the distribution from PAMI centers to distribution centers\. Delivery from distribution to
ambulatory centers was better organized and rated satisfactory\. The istribution mechanisms of milk
seemed to have deteriorated further than those of lactovisoy\. The mode of final distribution to users was
good, and the coordination and cooperation between distribution centers and ambulatory centers was good
and very good respectively\.
Perceptions were gathered around the question 'Has PAMI improved living conditions of Venezuelan
family?' Some 72 percent of distribution center employees felt this goal was only partially met\. However,
90 percent of them agreed that PAMI had contributed to reduce child morbi-mortality rates\.
Again, community outreach and participation was one of the main achievements identified by the entire
group of indirect beneficiaries\. PANG triggered the creation of a health network between distribution
centers and participating CBOs, such as Neighborhood and Parish organizations\. These networks were
- 34 -
being used for other community enrichment programs\.
Assessment of PAMI by local health center staff
Some 378 local health professionals were interviewed in their ambulatory units\. They included medical
doctors (32 percent), nurses (38 percent), nutritionists, social workers and nurse assistants\. As with
distribution centers, almost 90 percent were female\. Turnover of these staff was equally low\. Some 42
percent were hired on or before 1992, and only 12 percent in 1998\. This was the only group which knew
about the professional services supplied by PAMI, such as family planning, cancer screening, control of
acute diarrhea infections (ADI), and acute respiratory infections (ARI), infant growth controls and
immunizations, sexually transmitted decease controls, health promotion and education and community
participation activities\.
Thirty percent of the staff asserted to have had training in one or more of the above fields\.
Only 23 percent of interviewed staff believed PAMI had contributed significantly to the reduction
of morbi-mortality, while 34 percent believe the aim had been met only in part\. 45 percent believed
PAMI had improved living standards of mother-child groups of the population\.
Most of the medical staff interviewed thought the amount of medical equipment and supplies
provided by PAMI was insufficient\.
Although 47 percent of the ambulatory centers were equipped by PAMI, only 16 percent of
medical staff believed the equipment met the needs and requirements of the center\.
Equipment was over-sophisticated\. The physical improvements carried out by PAMI in 1998
seemed to have improved the services, according to 70 percent of interviewed\.
BA of the National Training Plan (PNI) executed by PAMI
A separate survey was applied to 71 trainees (mostly middle-age females) of PNC modules\. Some 43
percent were trained in all modules, while 18 percent only in epidemiology and 17 percent in the
mother-infant module\. Modules typically lasted between 4 and 15 days\. Trainees rated modules very high
in terms of scientific as well as cultural relevance of content and application to their work\. Most staff were
equally satisfied with the trainers and physical settings of training sessions\. Among the participating
organizations were MOR, Health Regional Office, PAHO, Research and Teachers Departments,
Epidemiology, Mother-Infant Care, Social and Health Promotion Department\. The level of satisfaction
with the quality of training was high among regional offices, central GOV offices, and local health
authorities\.
Beneficiaries and stakeholders' observations on the PAMI Program
Most beneficiaries and stakeholders interviewed were moderately satisfied with the quality of the
goods and services provided by PAMI\. However, they mentioned the need to "redefine" the
strategy of the program, the targeting mechanisms to reach those who need the services most, the
quality of the products delivered, and the logistics of delivery\. It is recommended that a "less
cumbersome" bidding system be put in place to allow for a more dynamic program\. Once the
strategy is articulated, an information dissemination campaign should be implemented\.
- 35 -
* Medical staff at the local, regional and central levels suggested medical equipment supplied to
ambulatory units should be "based on a diagnosis" of equipment needed\. It should respond to
demand, not to supply\. In this particular situation, equipment was "too sophisticated" to meet
clients needs\. On the other hand, the ambulances needed for health centers were not supplied\.
* Establish monitoring and evaluation mechanisms to control and improve coordination at the
central, regional and local levels\. Involving the community in the monitoring of indicators of
nutrition, health, and community participation would help improve the image of PAMI\. Improving
supervision services by district staff was also recommended\.
PAMI staff at ambulatory centers recommended inter-institutional coordination to maximize
services to the poor\. They also recommended an increase in the number of services offered at the
health units based on an adequate assessment of community needs\.
With regard to the PNC training modules, both trainers and trainees recommended more emphasis
on health promotion\. They also recommended to extend training time per module, to improve the
quantity and quality of training materials, and to take into account trainees evaluations of each
module\.
All evaluating agencies recommended to maintain and expand this program as the targeted
population is in fact receiving the services intended in the food distribution as well as Primary
Health Care Program\.
* Finally, decision-makers should bear in mind that, according to the BA surveys, most women
benefiting from PAMI goods and services also subscribe to other social programs, e\.g\. 53 percent
to Public Food Stores (PROAL), 52 percent to School Uniforms, 43 percent to Food Grants, 35
percent to Daily Family Care, 22 percent to School Milk Program, 27 percent to School Supplies,
28 percent to School Meals, 13 percent to Transportation subsidy, 21 percent to School Food, 31
percent to Medication Supply, and 3 percent to Training for Employment\.
THE INFORMATION AND EDUCATION COMPONENT
This component was managed by the OTC of the Ministry of the Family (MOF)\. The objective was to
study and publish topics which would improve the implementation of the health and education components
of the project by means of increasing beneficiaries' awareness of primary health, basic education, nutrition
and family strengthening practices\. Except for the Joint Editorial Plan of MOF and Social Management
School which initiated in 1991, all IEC efforts were implemented since 1996\.
The present BA seeks to assess the impact of six sets of publications produced and disseminated by this
component, such as (1) the IEC Kit; (2) Food Guides; (3) Manuals of Child Development for ages 0 to 6
years old; (4) Family Strengthening Program; (5) Breastfeeding Kit; and (6) MOF Joint Editorial Plan\. It
sought to assess behavioral changes triggered by the above publications\. Survey instruments and
semi-structured interviews were used for data collection\. From a universe of 11,212 publication recipients,
371 primary and 384 secondary beneficiaries were selected with weights proportional to number of issues
published per type\. Results were corroborated with an opinion poll of 100 respondents carried out in
Caracas\.
The IEC Kits\. The TCU was in charge of organizing the production and distribution of publications to
SDP executing agencies\. The IEC Kits present the evolutionary cycle of an individual; it includes five
- 36 -
manuals on Mother-Child Health, Mother-Child Nutrition, Adolescence, Sexuality and Teenage Pregnancy,
Psychological Aspects of Infancy, and Community Education\. In 1997, 16,000 copies were published and
70 percent of them distributed among the SDP executing agencies, groups and individuals\.
Food Guides (pamphlets)\. Only 22 percent of the 350,000 copies published in 1995 were distributed by
the National Nutrition Institute\. The rest was in storage\.
Child Development Manuals for children 0-6\. Since 1998 the Preschool Department of the Ministry of
Education distributed only 7 percent of the 65,000 copies edited by the TCU to Integrated Preschools and
the Family Program\. The rest was in storage\.
"Strengthening the Family " Program\. With the purpose of improving the quality of life of the Venezuelan
family, the Social Strengthening Fund of the MOF carried out a national sensitivity campaign in 1998\. It
was aimed at rescuing and restoration of family values\. Some 95 percent of the 50,000 kits produced were
distributed to members of community circles formed by 173 NGOs\. The rest was in storage\.
Breastfeeding Kit\. The National Breastfeeding Commission (CONALAMA) developed this Kit in 1998
aimed at health and nutrition professionals and promoters\.
Joint Editorial Plan\. Since 1991 the MOF and the Social Management School have developed a series of
publications aimed at the institutional strengthening of MOF\. Publications explore MOF achievements,
and discuss ideas and proposals\. All 31 issues with 300 copies of each have been distributed\.
Results
The quality of publications in general was rated high by users\. It should be stressed, however, that
publications would not have had the desired impact without the intervention of health and
education promoters in charge of disseminating, discussing and maintaining the dialog among
health and education network users\.
The implementation of the component went beyond the change of habits of community groups, to
the promotion of an integrated concept of health which included biological-psychological-social
aspects of an individual\.
With regard to the quality of materials, users reported general satisfaction with vocabulary,
content, relevance of information, quality of paper and illustrations\.
The component promoted higher levels of community organization\. Promoters used community
resources, multi-disciplinary teams (priests, mayors, teachers, neighborhood committee members,
etc\.) to disseminate messages\. Community participation in knowledge dissemination was higher in
rural communities\.
According to primary beneficiaries, the biggest deficiency of the component was the failure of
GOV to distribute publications\. In some cases distribution did not even reach promoters\.
Materials remained in storage rooms\. They urged GOV agencies to complete distribution\.
Another beneficiary of this component was CONALAMA\. The 40-hour program designed under
the component was incorporated into the curriculum of the Nutrition and Dietetics School of
- 37 -
Central University of Venezuela\.
Recommendations by beneficiaries
A national IEC plan of this nature should not be an isolated effort, but should be part of the plans
of the line ministries of Health, Education and MOF\. This plan should include a distribution
strategy, training for usage, and monitoring and evaluation\.
* Also, it was recommended that distribution be contracted in the private sector\.
THE INSTITUTIONAL DEVELOPMENT (ID) COMPONENT
This component was managed by the TCU, in cooperation with the Central Office of Statistics and
Information (OCEI) and the Ministry of Coordination and Planning (CORDIPLAN)\. The goal was the
strengthening of the institutions involved in the planning, implementation and evaluation of social
programs\. It included technical assistance and training, elaboration of studies, equipping of facilities of
OCEI, Ministry of Health, Ministry of Family, improvement of information systems, etc\. The BA shows
that some of the goals of the ID component were not reached due to inadequate planning and provision of
needed tools and mechanisms\. Some of the studies planned were satisfactorily finished, others only
partially finished, and most of them took longer than expected\. Recent involvement of the mayors and
NGOs (representatives of the communities) in reviewing the results of crucial government programs added
a new dimension to this component\. The studies provided useful data on the social sectors in general and
poverty in particular\. SDP also funded the strengthening of the Venezuelan Social Fund (FONVIS)\.
Identification of beneficiaries was a challenging task for LACSO (NGO carrying out the BA)\. Direct
beneficiaries of this component (policy makers, GOV agencies, social protection entities) involved in
planning and implementation of social programs could not be easily identified by LACSO; therefore,
agencies which carried out the studies were interviewed instead\. Only 40 percent of beneficiaries of
training, equipment and technical assistance were located and interviewed\. Mayors and attendees to Local
Board Events (public and private sector officials) were identified and interviewed as beneficiaries of the
Local Board subproject\. Methods and instruments of data collection included interviews and focus groups,
questionnaires and opinion polls\.
Strengthening and equipping OCEI was one of the main objectives of this component\. This was done
through the following five special subprojects: (1) Support to Normative Reorganization of the National
Statistical System (SEN) and the creation of a National Statistics Plan (PEN); (2) Institutional
Development of OCEI; (3) Modernization of the Geographic and Statistics Information System (SIGE); (4)
Physical and technical support to Computational Capacity for the 2000 Census, and (5) National Platform
of Automatic Official Information (PLATINO)\. Also, the strengthening of the National Statistics Network
(RENE) was in the original plan\.
- 38 -
Results
* According to GOV officials interviewed, the support of SDP to OCEI was significant not only in
terms of the strengthening of that institution, but in terms of the potential impact on the national
statistics system and its potential contribution to policy making\. The overall assessment indicated
OCEI's strengthening was adequate and pertinent to empower the institution with the tools for
efficient planning, monitoring and evaluation of the statistical processes in the country\. However,
many of the processes and activities within each subproject were developed in the past two years
only and were incomplete\. Further funding would be needed to achieve the initially established
goals\.
The following surveys carried out by OCEI and the MOF: (1) Social Survey (ENSO 98), (2)
Survey of Family Budgets (ENPF), and (3) National Survey of Population and Family
(ENPOFAM) were satisfactorily completed but dissemination was still pending\. The social survey
was intended to identify which social programs were effective and whether or not they were
reaching the targeted population\. The Family Budget and Family and Population surveys sought to
analyze income and expenditures of the Venezuelan family, as well as demographic growth\. The
three surveys were deemed important for the formulation of social policy and the design of social
programs\. Potential beneficiaries were to be found in the public and private sectors\.
The Strategic Program of Human Resource Training and Development (PEDRHU) was a joint
initiative of MOF and the Social Management Foundation (FEGS) seeking to train public servants
in areas of social management\. This inter-institutional effort also ranked high because of its
effectiveness in opening a dialog among institutions\. Trainers and trainees assessed this program
as successful in meeting its goals, and recommended expansion of the program to private
institutions dealing with social programs\.
- SDP financed two subprojects aimed at institutional strengthening of NGOs\. First of all, an
Internet communications network for institutional strengthening of NGOs and CBOs\. Beneficiary
organizations were satisfied with this effort and recommended more training on Internet use and
applications to be delivered through the network\. The network allowed interaction of the civil
society with the public sector\. The second subproject, institutional strengthening of Micro-Finance
NGOs, did not go beyond planning and diagnosis\.
SDP also financed the First and Second Stage of Basic Education Teacher Training Program for
the use of School Food Guides developed by the National Institute of Nutrition (INN), MOE,
CENAMEC and Fundaci6n CAVENDES since 1990\. The implementation of the training
program was contracted out to two other agencies\. The stakeholders who participated in planning,
implementation and evaluation of the subproject were interviewed\. They suggested this nutrition
program be continued for its educational value for teachers as well as students\. No direct
beneficiaries were interviewed\.
One of the roles of MOF was the coordination of Local Social Boards (Gabinetes Sociales)\. The
Social Boards were an operational arm of the Social Protection Component of the Agenda
Venezuela in the areas of education, health, housing, social security and labor policy\. The eleven
events carried out since April 1997 called "Municipality and Social Management" aimed at the
coordination between the central, regional and local GOV agencies to allow for the decentralization
of decision making\. High rank representatives of the public and private sectors attended these
events, including the President of Venezuela, Ministers, and representatives of Foundations,
- 39 -
mayors, and Social Development Agencies of Municipalities and Governor Offices\. Social Boards
were successful in establishing agreements with mayors to allow municipalities to have access to
resources available in the 14 social programs of the Agenda Venezuela\. In most mayors' opinions,
although the studies funded by SDP recommended demand-driven projects be prioritized in the
ministerial agendas, they felt those recommendations had no impact at higher levels of
decision-making in the ministries\.
Recommendation
To consolidate and evaluate the studies and monitoring/ evaluation tools (statistics) created by this
component in the different GOV agencies\. It is equally important to validate conclusions, results
and recommendations and to bring them to the attention of policy-makers of the new government\.
This should prevent unnecessary efforts to repeat the studies, and should allow the GOV and
donors to capitalize on lessons learned\.
DEVELOPMENT AND EXPANSION OF PRESCHOOL EDUCATION COMPONENT
The Preschool Education component was implemented by Fundaescolar (1991 to 1999), a foundation
established by the Ministry of Education to replace FundaPreescolar which operated in Venezuela since
1990\. The objective of this component was to expand coverage of preschool education to 3-to-6 year old
children in urban and rural lower-income regions\. Services were to be supplied through conventional and
non-conventional settings\.
Some 812 classrooms out of the planned 1,600 conventional classrooms were built\. These accommodated
27,000 out of the 96,000 children projected at appraisal\. Eighty-five non-conventional community-based
schools to serve 16,000 children were originally planned; only eight of these were achieved\. The BA
sought to assess perceptions on the effectiveness of the program from 1991 to 1999 by means of a
Participatory Appraisal in four target areas: peri-urban, rural, bordering, and indigenous territories\. The
component was to include construction, provision of equipment, teacher training and research\.
The sample for assessment included 24 preschools located in eight regions of the country (Amazonas,
Anzoategui, Apure, Carabobo, Lara, Merida, Miranda y Zulia) Parents, teachers, school principals and
community members participated in 24 workshops with direct beneficiaries\. Also, eight other workshops
with executing agencies of the program included members of the Preschool MED Department, Regional
MED staff, trainer teams, builders, and suppliers of school equipment and teaching materials, and groups
of the civil society associated with the Preschools\.
Results
In general, beneficiaries and stakeholders showed satisfaction with the quality of the infrastructure, the
equipment, the school supplies, and the training provided by the project\. It was widely recognized that
political and economic instability (inflation and unemployment), added to the heavy institutional
bureaucratic procedures (MED, Fundaescolar, World Bank), slowed down the project\. High turnover of
staff at MED, Fundaescolar, administrators and directors required constant program adjustments\. Lack of
inner- and inter-institutional coordination and planning among the MED Preschool Department,
Fundaescolar, contractors, and service providers made the operation of the subprojects slow and
cumbersome\.
As far as construction of infrastructure was concerned, approximately 50 percent of classrooms were not
- 40 -
built due to increasing costs of building materials, undefined building sites, and unclear goals and
objectives of the program\. Equipment and school supplies were delivered despite problems of untimely
articulation between supply and demand of building materials, delivery of furniture and school materials,
and class schedules\.
Praise was given by beneficiaries to Fundapreescolar, Preescolar Office at MED and the program
management\. But most dissatisfaction was expressed with regard to the lack of recreational grounds,
illumination and ventilation of the buildings and inadequate sanitary facilities\.
One of the goals of the subproject was to graduate those unlicensed teachers and directors already in
service without a Preschool Teaching diploma\. Some of them had a university degree, but lacked Preschool
specialization\. This goal was not met\. However, 52,200 people were trained throughout the life of the
project, in different topics and at different times\. Training did not seem to be carefully planned\. Most
problems with regard to training concerned the inefficient coordination of MED and Fundaescolar for
determining training priorities, formulating training plans and adequately delivering them\. The training
quarters of the Central Preschool Education Office were fully equipped, but those of the regional offices
were only partially equipped\.
Increase of preschool student enrollment (26 percent in 1991) was one of the goals of this component\. This
increase did not take place, although infrastructure and equipment were supplied\. One of the reasons was
that much of the infrastructure included the rehabilitation and replacement of buildings\. Redistribution of
the old enrollment into new buildings took place, but new enrollment was limited\. Although beneficiaries
were happy with very small classes, the facilities were underutilized\. Another factor identified for
stagnation of enrollment was the non-existence of school nutrition programs in those schools\. Finally, new
enrollment of some schools was not registered at the MED as they include unconventional programs; i\.e\.
Fundaci6n del Nifio serves 1,077 children in 41 classrooms\. Other preschools were not registered at MED\.
Some of the main strengths of the subprojects were the community participation component and the
opportunities created for job generation and social capital\. Links were established among community
members, local governments, civil groups, teachers, universities and NGOs for discussion of educational
issues in open fora\. Those events were highly regarded as community strengthening achievements\.
One of the biggest accomplishments cited by beneficiaries was the provision of school services to remote
indigenous areas of the country, such as Amazonas and Anzoategui\. These indigenous communities were
characterized by a strong community organization and high social controls which promoted program
sustainability\. However, their special needs for teacher training, and culturally appropriate teaching
materials required more attention than that dispensed\.
A perceived weakness of MED was the lack of a National Plan for Preschool Education which would
provide a strategy, norms, and operational plans to schools and their communities\. Sound supervision,
monitoring and evaluation systems were also assessed as urgent needs\.
Recommendations
A general recommendation of all stakeholders was that education projects should be demand-driven\. A
diagnostic analysis and needs assessment must be made with MED staff, teachers, NGOs, CBOs and
communities to ensure coordination and commitment of stakeholders and beneficiaries\. The following
recommendations were made for a successful continuation of the project:
- 41 -
* To analyze the real supply and demand of preschool infrastructure and teachers of preschool age
children in rural and urban areas\. Special attention must be given to under-served and isolated
(indigenous) areas with high demand of education but with special needs, i\.e\. bilingual and
culturally-appropriate instruction\. Use of existing facilities should be optimized by the MOE in
response to community demands, i\.e\. double-shifts for classes, use of facilities for meetings of
civil society groups\.
To provide the Preschool Department of the MED with an institutional strengthening program
which would empower MED staff with knowledge and expertise to assist schools\.
To establish a National Preschool Education strategy which supports the decentralization of
administration and decision-making power to schools and communities\. School programs must be
able to run smoothly, irrespective of turnover in MED and GOV authorities\.
To provide Fundaescolar with an institutional strengthening program to improve efficiency, and
plan strategically; e\.g\. land tenure titles should be secured before construction plans are made;
maintenance plans for infrastructure and equipment should be an important part of project\.
To ensure preschool teachers are trained in the use of materials delivered by MED\.
To incorporate training for training mothers (Lara y Merida) and unlicensed indigenous teachers in
indigenous areas\. Indigenous teachers in Anzoategui and Amazonas have requested training in
bilingual education\.
To establish a project monitoring and evaluation system for Fundaescolar and preschools, to be
implemented systematically by Fundaescolar, by the schools themselves, and by the MED\.
To incorporate permanent school feeding programs, especially in areas of extreme poverty such as
the indigenous areas\.
General Conclusions of the BA
1\. The BA went beyond the expected qualitative assessment of project stakeholders and beneficiaries\. It
opened many windows of dialogue and debate among stakeholders, social analysts in line ministries and
the private sector, to evaluate the effectiveness and social relevance of the SDP\.
2\. The assessment was carried out in eight states of Venezuela between May and August, 1999 by three
agencies (LACSO; Canias, Turmedo and Associates; and the Department of Education, Central
University of Venezuela)\. A total of 162 PAMI centers, 1,326 people (mothers, local health care staff,
promoters, PNC trainees) were consulted in focus groups and interviews for the PAMI assessment\.
Over 800 beneficiaries were surveyed for the IEC component\. No direct beneficiaries (i\.e\.
policy-makers in GOV agencies or private sector) were interviewed for the ID component; instead,
OCEI and the agencies which implemented the studies were interviewed\. Parents, teachers, CBOs,
students of 24 preschools and eight civil society groups in eight regions of the country (including
Amazonas and Anzoategui with indigenous population) participated in focus groups and interviews for
the assessment of Fundaescolar\.
3\. Most beneficiaries and stakeholders interviewed were moderately satisfied with the quality of the goods
and services provided by PAMI\. However, they emphasized the need to "redefine" the strategy of the
- 42 -
program, to up-date the targeting according to poverty maps in order to reach those who need the
services most, to assess the quality of the products delivered, and the logistics of delivery\. They
recommended that a "less cumbersome" bidding system be put in place to allow for a more dynamic
program\. Once the strategy is articulated, an information dissemination campaign should be
implemented\.
4\. Beneficiaries acknowledged the improvement of medical services due in part to newly distributed
medical equipment among health centers\. However, medical staff at the local, regional and central
levels suggested medical equipment supplied to health centers should be "based on a diagnosis" of
equipment needed\. In this case, the quipment provided was too sophisticated\. An increase in the
number of ambulances in primary health centers is also a priority not met yet\.
5\. According to GOV officials interviewed, the support of SDP for the institutional strengthening of
OCEI was of significant importance to potentially improve national statistics and policy making
nationwide\. It provided OCEI with tools for efficient planning, monitoring and evaluation of the
statistical processes in the country\. Half of the studies carried out under this component (Social
Survey -ENSO 98-, Survey of Family Budgets -ENPF-, National Survey of Population and Family
-ENPOFAM- were only completed in the past two years and proper dissemination had not been done at
the time of the BA\. It was strongly recommended that "public" dissemination of these documents be
done to the public and private sectors to provide policy makers with the tools for well-informed
decisions\.
6\. The Strategic Program of Human Resource Training and Development (PEDRHU), institutional
strengthening of NGOs through internet, and other training programs, e\.g\., the PNC training program
under PAMI, the Basic Education Teacher Training Programs for the use of School Food Guides were
interagency efforts recommended by beneficiaries to be continued\. Municipal strengthening through
the "Municipality and Social Management" program (Gabinetes Sociales) made Agenda Venezuela
programs accessible to municipalities and their communities\. Consequently, mayors and communities
interviewed suggested this program also be continued for demand-driven projects\.
7\. Fundaescolar did not meet the goals established at project appraisal\. Only 50 percent of the
infrastructure and 26 percent increase of preschool enrollment took place\. However, beneficiaries are
quite satisfied with the quality of infrastructure, equipment and school supplies distributed\. In most
regions of the country, new school construction allowed for redistribution of enrollment in smaller
classes; unfortunately, much space went under-utilized\. It was recommended that under-utilized
schools be made available to double-shift schedules and other civil society activities\. Major
accomplishments of Fundaescolar was felt in other regions such as Amazonas and Anzoategui which
are indigenous communities suffering from high illiteracy rates\. In those areas, Fundaescolar provided
preschool education to children not previously enrolled\. This resulted in frequently high levels of
participation and ownership of the projects\.
8\. A major problem identified by all stakeholders was the unrealistic and over-enthusiastic goals set for
the projects in general without a layout of mechanisms to achieve them\. Equally stressed was the lack
of coordination of GOV agencies to carry out activities to achieve outputs, and lack of monitoring and
evaluation systems to measure progress, performance and impact\.
9\. In general, there was an overall lack of a communications strategy to consult and inform beneficiaries
of the goals, targets and mechanisms of project implementation\. There were few cases of community
networks created through the years, eg\. Primary Health Care and Fundaescolar components which
- 43 -
promoted inclusion and ownership of the projects\. Creation of those health and education networks
were identified by beneficiaries as important benefits of the project\.
10\. A monitoring and evaluation system, as well as periodic evaluations would have improved the
possibilities of success of this project\. Unfortunately, no evaluations were carried out during the life of
the project\.
11\. Timely and systematic technical assistance from the World Bank would have been needed for a
successful implementation of the project\.
- 44 -
Annex 9\. Supplementary Project and Sector Data
BASIC SOCIAL INDICATORS
1\. Population: 23,242,435 inhabitants, of whom 11,699,249 are male and 11,543,186 are female\. (Source:
Population Estimates and Projections, 1998, Central Statistics and Information Office, [OCEI])\.
2\. Total population living in poverty: 11,401,853 inhabitants, of whom 5,067,095 (44\.4 percent) live in
extreme poverty\. (Source: Social Information Office, Ministry of Family Affairs, 1998\. Method used:
unmet basic needs assessment\.)
3\. Life expectancy, 1997: Men, 69\.8 years; women, 75\.5 years\.
4\. Maternal mortality rate, 1997: 59\.62\.
5\. Overall crude death rate, 1997: 4\.66\.
6\. Crude birth rate, 1997: 24\.50\.
7\. Total fertility rate: average of 2\.6 children per woman\. (Source: ENPOFAM, 1998\.)\.
8\. Infant mortality rate, 1997: 18\.74\.
9\. Average annual per capita increase in GDP, 1970-1980: 0\.5 percent; 1980-1990: -1\.9 percent;
1990-1997: 1\.7 percent (in 1990 dollars)\.
10\. Average annual increase in social expenditure for 1988-1998: 1\.3 percent (base year: 1984)\.
11\. Social expenditure as a percentage of GDP: 1988, 7\.3 percent; 1998, 8\.1 percent (base year: 1984)\.
12\. Average annual rate of per capita real social expenditure: 1988-1998: -1\.0 percent\.
13\. Education expenditure, 1988-1998:
* As a percentage of GDP: 3\.2 percent
* Percentage per capita:
* Annual rate of growth: -1\.0 percent
* As a percentage of social expenditure: 39\.6 percent
* As a percentage of the national budget: 14\.36 percent\.
14\. Health expenditure, 1988-1998:
* As a percentage of GDP: 1\.4 percent
* Percentage per capita:
* Annual rate of growth: -1\.6 percent
* As a percentage of social expenditure: 16\.2 percent
* As a percentage of the national budget: 5\.92 percent\.
-45 -
Year/indicators
Year Indicator Year Indicator
Population (millions) 1988 18\.8 1999 23\.2
Per capita GDP (US$) 1988 3,230 1997 2,681
Average annual rate of growth of per capita GDP 1988 -0\.9 1997 2\.8
Income of poorest quintile (20 percent) - percentage 1988 3
Population living in extreme poverty (percent) 1988 22\.3
Population living in critical poverty (percent) 1988 31\.4
Crude birth rate (per thousand) 1987 30\.6 1997 24\.5
Crude death rate (per thousand) 1987 5\.4 1997 4\.66
Crude population growth rate 1988 2\.7 1997 19\.84
Fertility rate 1987 3\.8 1998 2\.6
Maternal mortality rate (per 10,000) 1980-87 65 1997 59\.62
Infant mortality rate (per thousand) 1987 36 1997 21\.4
Life expectancy at birth 1987 70 1998 72\.8
Health expenditure as a proportion of national budget (per\.) 1985 9\.3 1998 5\.9
Health expenditure as a proportion of GDP (percent) 1985 2\.6 1998 1\.4
Daily calorie consumption 1986 2,494 1997 1,942
Children with low birth weight (percent) 1982-87 9 1997 13\.4
Consumption of calorie requirements (percent) 1986 114
- 46 - | REVIEW |
P048522 |  ICRR 11252
Report Number : ICRR11252
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 06/11/2002
PROJ ID : P048522 Appraisal Actual
Project Name : Emergency Flood Project Costs 35\.00 31\.59
Rehabilitation Project US$M )
(US$M)
Country : Yemen Loan/
Loan US$M ) 27\.84
/Credit (US$M) 27\.44
Sector (s): Board: RDV - Irrigation and Cofinancing
drainage (24%), Flood US$M )
(US$M)
protection (24%), Water
supply (24%), Roads and
highways (24%), Central
government administration
(4%)
L/C Number : C2932; CQ016
Board Approval 97
FY )
(FY)
Partners involved : UNDP Closing Date 07/31/2000 12/31/2001
Prepared by : Reviewed by : Group Manager : Group :
Ridley Nelson William B\. Hurlbut Alain A\. Barbu OEDST
2\. Project Objectives and Components
a\. Objectives
The objectives of the project were : (i) to help restore the countries essential economic infrastructure (roads,
agriculture, rural water supply) and domestic food production capability damaged by the heavy rains and flooding and
to facilitate access to production centers, markets and social services; (ii) to strengthen Yemen's institutional capacity
to manage disaster recovery programs and develop programs to mitigate the country's vulnerability to flood damage;
and (iii) to serve as a catalyst for donor financing and coordination of the reconstruction effort \.
b\. Components
Investments were directed towards the most affected areas including Shabwa, Marib, Hadramaut, Al -Jafw, and
Abyan\. Main components were: (a) agricultural infrastructure including rehabilitation of embankments, irrigation
systems, service roads, and installation of secondary canals, wells, bunds, and weirs (base costs: US$13 million); (b)
transport infrastructure, including rehabilitation of main roads and associated structures (US$13 million); (c) water
supply infrastructure, including rehabilitation of urban and rural water supply facilities through the supply of
equipment such as pumps, generators, chlorinators, and pipes (US$1\.1 million); (d) consulting services and studies,
including assistance in the design and implementation of civil works, contract management and construction
supervision, and preparation of studies, including a flood preparedness and mitigation study (US$2\.2 million)\.
c\. Comments on Project Cost, Financing and Dates
The project closed 18 months later than the original schedule with close to 100 percent of funds disbursed \. This
project funding followed closely behind the reallaocation from existing credits of US$ 14\.5 million to finance initial
rehabilitation\. The failure of a parallel financier, UNDP, to implement a US$ 1 million dollar component for a flood
preparedness and mitigation component impacted on the implementation of the overall program and is likely to have
some impact on sustainability\.
3\. Achievement of Relevant Objectives:
With respect to objective (i), related to agricultural infrastructure, this was substantially achieved with particular
success in wadi rehabilitation achieving well beyond the appraisal targets \. The reconstruction of a diversion weir and
wadi course rehabilitation protected the historical city of Shibam \. Ten major Irish crossings/roads and four major
bridges damaged by floods on major road arteries were reconstructed \. With respect to objective (ii), related to
strengthening Yemen's institutional capacity to manage disaster recovery, the impact is reported to have been
significant apart from the failure by a cofinancier to carry out the anticipated flood preparedness and mitigation
component, which affected the achievement of this objective \. First, the project succeeded in building local contractor
capacity in building bridges to high standards of construction \. Second, the project provided an opportunity for a large
number of new small contractors to emerge and to acquire experience with small works \. Third, the project's use of
community participation developed ownership and maintenance capacity for the works as well as creating substantial
employment\. With respect to objective (iii), related to catalyzing donor financing and coordination of the
reconstruction effort, the evidence in the ICR is less clear and success appears to have been mixed \. The failure of
the UNDP-funded component impacted negatively on this objective \. However, the generally effective performance of
the PIUs probably had a postive impact on coordination \.
4\. Significant Outcomes/Impacts:
Apart from the Marib subcomponent, the project substantially achieved the infrastructure outputs \. The targets for the
transport infrastructure component are reported to have been fully achieved, and, in some cases, exceeded \. There
appears to be some evidence that unit costs in the transport infrastructure component were close to or, in some
cases, better than those projected at appraisal \. The building of both large and small contractor capacity is a
significant outcome with likely positive benefits in the longer -term\. The introduction of new flood protection
technologies in some areas will also have positive longer -term benefits\. The early establishment of the
interministerial Steering Committee chaired by the Deputy Prime Minister and Minister of Planning appears to have
provided strong political and implementation support \. The direction of project support not simply to affected areas but
to those affected areas with receptive communities appears to have had a positive impact on outcomes and
efficiency and probably future sustainability \. Whether it had a positive impact on poverty and equity is unclear from
the evidence\.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
An 18 month delay in completion of what was planned as a project of just over three years is a significant delay
especially in an emergency project \. Other significant shortcomings include : the failure to carry out the preparedness
and mitigation component and startup delay in works for the rehabilitation of the Marib Irrigation Scheme \.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory But it is not entirely clear how satisfactory
the achievement of objective (iii) was\.
Institutional Dev \.: Substantial Substantial
Sustainability : Likely Likely But, depending on how frequently such
events are likely to occur, this is a
marginal call given the failure to complete
the preparedness component during the
life of the project\.
Bank Performance : Satisfactory Satisfactory Partly supported by the fact that the
project quality at entry was rated
Satisfactory by QAG\.
Borrower Perf \.: Satisfactory Satisfactory
Quality of ICR : Satisfactory
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
NOTE:
7\. Lessons of Broad Applicability:
1\. Emergency projects, in particular, require strong political commitment and high -level oversight and coordination \. 2\.
Selectivity is important in emergency projects, and although directing support to affected areas is necessary,
community receptivity is also important for rapid implementation and sustainability \.
8\. Assessment Recommended? Yes No
9\. Comments on Quality of ICR:
A satisfactory ICR with no major shortcomings and sound lessons \. The achievements of objective (iii), related to
catalizing donor funding and coordinating reconstruction were not sufficiently addressed in the ICR \. The argument
that, because no ERR is estimated ex ante in an emergency project - due to the time constraint, there is no case for
an ERR analysis ex post - when there is no time constraint, is one that is often used but is not convincing \. An ERR
analysis could still have been attempted, perhaps on a sample basis \. But it would probably have shown high ERRs
given the rehabilitation nature of the investment \. | REVIEW |
P010417 |  ICRR 10729
Report Number : ICRR10729
ICR Review
Operations Evaluation Department
1\. Project Data: Date Posted : 08/03/2000
PROJ ID : P010417 Appraisal Actual
Project Name : Balochistan Primary Project Costs 120\.00 86\.75
Education Program Project US$M )
(US$M)
Country : Pakistan Loan/ US$M ) 106\.00
Loan /Credit (US$M) 78\.80
Sector (s): Primary Education Cofinancing
US$M )
(US$M)
L/C Number : C2482
Board Approval 93
FY )
(FY)
Partners involved : None directly, several in Closing Date 12/31/1999 12/31/1999
parallel interventions\.
Prepared by : Reviewed by : Group Manager : Group :
2\. Project Objectives and Components
a\. Objectives
Under the Government's long-term Balochistan Primary Education Program (BPEP), the project was to implement
special measures to improve girls' education, including :
1\. improving access, equity and efficiency;
2\. improving the quality of the learning environment;
3\. improving the organizational framework, planning and management \.
b\. Components
1\. Access, equity and efficiency would be increased by:
establishing new girls' schools which boys are allowed to attend;
providing classrooms and facilities to mixed shelterless schools;
introducing a scholarship program for girls in urban slum areas to attend privately -run schools; and
introducing a new policy to permit double -shifts where needs arose\.
2\. Quality would be improved by:
establishing appropriate pre-service and in-service teacher training system geared to multi -grade school
conditions;
developing core student-activity books and other instructional materials suitable for multi -grade teaching and
learning;
institutionalizing an instructional support system using learning coordinators \.
3\. The organizational framework, planning and management would be improved by:
establishing a Directorate of Primary Education (DPE) separate from the secondary school administration at
provincial and district levels;
establishing a monitoring and evaluation unit within the DPE;
continuing development of the management information system (MIS)\.
Beneficiary participation would be used to achieve all of the objectives by setting up parent committees and
involving them in school establishment and supervision \.
The project's scope was amended in September 1997, 1997 in part to align it with the ongoing programmatic Social
Action Plan projects covering management and budgetary planning and management countrywide \. Objectives were
not amended but component scope was broadened to include middle schools; inclusion of mentoring and
peer-training for primary school teachers; provision of funds for piloting innovations such as new training approaches
and early childhood education; requirement of the Borrower to expand the supply of female primary school teachers;
and development of a student learning assessment system; inclusion performance indications; five new
conditionalities; revision of the program agreement on procurement, withdrawals, reallocation of credit proceeds and
more frequent audit reporting\.
c\. Comments on Project Cost, Financing and Dates
The credit financed construction, furniture and equipment, educational materials, specialist services, fellowships and
training, and incremental recurrent costs for additional staff and operations and maintenance during the project's
implementation\.
In February 1996, the BPEP Development Credit Agreement and project legal agreement were amended with new
conditionalities and conditions to address generic problems of weak administrative capacity and deficient provincial
governance; excessively centralized management and unclear accountability; delays in budgeting and release of
funds; frequent manager transfers, hiring of unqualified teachers, and staff absenteeism; refusal by the Government
of Balochistan (GOB) to place qualified counterparts for the TA or retain contract staff; and difficulties with
procurement and logistics\. NGO involvement was included\.
In December 1999, a decision was made to cancel the remaining credit, ($8\.5 m\.)\. 100% depreciation of Rupee
against US dollar partially explains non -tulized proceeds from credit, according to ICR (p\.11)\.
3\. Achievement of Relevant Objectives:
BPEP was successful in achieving targets for : access and equity; development of learning inputs (teacher training
and instructional materials); development of the MIS; and establishment of partnerships with NGOs to mobilize
communities in establishing and overseeing the effectiveness of primary schools \.
School Construction, rehabilitation and teacher selection and deployment \. Over 4,000 schools and nearly 1,500
classrooms were constructed, though the ratio of 70/30 of girls' to boys' schools was reversed with a ratio of 40/60 at
completion\. Furniture was procured though chairs and desks were unsuitable in design for teaching -learning
activities\. The numbers of female teachers in rural areas increased, including in 1,500 community schools, though
merit-based criteria for recruitment allowed unqualified and untrained teachers to be hired instead of the available
qualified teachers\. In community schools, teacher absenteeism was far less frequent than elsewhere where the
problem remains rampant\.
Improving the Learning Environment \. Altogether, 8,600 untrained teachers including 1,500 community school
teachers were trained and certified through BPEP effectively clearing a backlog of untrained teachers \. Accelerated
in-service training was implemented for 2,500 teachers and pre-service training was implemented through the
government college and, for community schools, a mobile female teacher training unit\. In-service training for trained
teachers was implemented in multi-grade teaching, hygiene and sanitation and learning coordinator skills \. The
DPE's teacher training and support cell successfully developed and delivered innovative needs -based training for
3,300 girls in remote rural areas\. The college based training, however, continued in a traditional mode \. The
mentoring program benefited 10,000 teachers in monthly workshops, and UNICEF -funded health and early
childhood workshops were conducted through the program \. The Primary Education Improvement Program, a
complementary initiative funded by the Netherlands, provided inputs to improve teaching and community
involvement in school management \.
Improving the organization framework, planning and management \. About 22% of positions were filled by female
managers compared with 2% at project launch\. All officers were trained\. New joint management arrangement for
classes K to 8 that were expected to emanate from the separation of the DPE from secondary and higher education
management was not completed\. The MIS was established by USAID prior to the project and was one of the
brightest achievements of BPEP\. It is in use province-wide for annual school censuses, planning (school sites and
construction, textbooks and teachers )\. However, analysis of data is a huge task still required but with potential use
for targeting and impact evaluation \. When a Assessment Monitoring and Performance Evaluation Cell was
established in 1996, it began to monitor and textbook availability and school management committees and
developed student progress reports for parents \. But the methods it used for assessment of student learning do not
so far yield reliable and valid information and have not proved useful for policy and planning \.
The community schools demonstrate considerable success and potential if problems in the partnership between the
government, NGOs and communities could be resolved, especially the full inclusion of communities in
decision-making\. At credit closing, 1,300 schools enrolled 60,000 students and they have lower rates of
absenteeism, dropout and repetition and encourage greater demand for girls' education overall \. Village Education
Committees did not consider that they could support the schools without government help \. In 1996, the GOB
decreed that all new schools should follow the community model but without the involvement of NGOs \. About 10,000
school management committees were established, over 2,000 were trained and validated by NGOs and 4,700
opened bank accounts and received operating funds \. The more successful committees were those established with
adequate preparation and participation and not under abrupt central directives \. Their potential benefits are at risk
unless the community support experience can be built on and adequate operational funds are made available \.
4\. Significant Outcomes/Impacts:
Fellowships for girls' to attend low-tuition private schools helped increase access for 6,654 girl students in 40 urban
schools by covering fees for tuition, books and educational materials \. Implementation was undertaken by an NGO
and later the Balochistan Education Foundation \. It continues to enjoy parental support even when subsidies have
ended and the enrollment of girls continues to increase \. The rural scheme provided the means for about 1,000 girls
to attend school for 30 schools in remote and sparsely populated rural areas \. By the completion, 21 schools
converted to community schools, one became private and 8 failed, probably due to unrealistic assessment of the
community's capacity to support the schools \.
5\. Significant Shortcomings (including non-compliance with safeguard policies):
Satisfactory institutional capacity was developed in the DPE to manage the program but this has dissipated since
1996 due to deterioration of the political environment, frequent staff turnover and transfer of the teacher training
support and the materials development functions out of the dedicated units to inexperienced agencies, and to
exclude NGOs\. Due to the changes, the risk is considerable that teaching and learning practices and the use of
materials will revert to pre-project behavior\.
6\. Ratings : ICR OED Review Reason for Disagreement /Comments
Outcome : Satisfactory Satisfactory
Institutional Dev \.: Negligible Modest During implementation, institutional
development was achieved from a low
base and with moderate success --in
primary education organization, planning
and management; in teacher training; and
in community/NGO support for schools\.
The impact was less than substantial
because of post-project government
actions in transferring functions and
denial of funding\.
Sustainability : Unlikely Unlikely ICR judges that recurrent and investment
budgets and structural arrangements
inadequate and overall sustainability
unlikely, therefore\. ICR observes that, in
the schools established under BPEP,
community schools and urban fellowships
for girls are likely to be sustained in the
short-term because of demand\.
Bank Performance : Satisfactory Unsatisfactory The ICR points out that task teams made
great efforts with too few resources under
difficult country conditions but also
comments on important deficiencies of
Bank performance overall\. The project as
presented to the Board was not ready for
implementation and is judged
over-complex and unrealistic about
project management skills, financial and
procurement arrangements,
implementation capacity, use of TA and
borrower commitment\. Frequent staff
changes in supervision led to lack of
attention to financial, management,
educational and sustainability issues, and
this led to disruptions of which the
Borrower complains\.
Borrower Perf \.: Unsatisfactory Unsatisfactory Despite the satisfactory performance of
some technical agencies and the
successful completion of most
components, the Government
demonstrated lack of commitment to
maintaining funding and staffing for
project institutions; allowed the project to
suffer from political interference; and
failed to comply with financial and other
covenants\. Furthermore, the management
of TA was grossly inadequate \. These
deficiencies damaged the project's ability
to make a lasting developmental impact,
despite its relevance and innovative
focus\.
Quality of ICR : Exemplary
NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\.
NOTE:
7\. Lessons of Broad Applicability:
Among the many lessons for the Pakistan context, several are of broad applicability and are not frequently
mentioned in ICRs (OED's emphasis in italics)\.
Lessons for Education
Complementing targeting priorities with appropriate targeting mechanisms have been shown to improve equity \.
Toward ensuring sustainability beyond completion, project processes and outcomes and, in particular, the
implementation of agreed exit strategies should receive more attention from supervision missions from
mid-term\.
Taking to scale successful interventions need to consider the time required to build additional capacity to
ensure appropriate follow up and quality in the delivery of interventions \. Too much too soon leads to serious
operational drawbacks\.
Demand-driven interventions involving community participation in managing school -related issues have
proved effective worldwide in reducing teacher absenteeism and in increasing access to schools ---in this case,
for girls, as well as boys\.
Needs-based teacher training activities involving periodic peer interaction and on-site follow up have proven
effective to change teaching practices in the classroom \.
Ensure the involvement of qualified NGOs in the design and implementation of project-related interventions for
which they have shown expertise \.
Among lessons learned for the Bank 's management , the most important are that management should ensure
that supervision missions avoid frequent changes in tactics, priorities and unwarranted design changes, and
that they are backed appropriate budgets, sufficient time for field visits and adequate skills to address relevant
issue\.
Among lessons learned by the Borrower , the most important are: planning should be undertaken at the start
to ensure adequate financial resources for new structures and activities beyond the completion of the project;
permanent staff should act as counterparts to technical experts to ensure that capacity -building remains within
the DPE; the fees for experts should not be changed during implementation, local experts should used except
in dire necessity, only qualified persons should be engaged, and TA costs should be controlled at 5% of total
costs rather than the 10% in this project\.
8\. Assessment Recommended? Yes No
Why? In a country social sector review as a cluster with other basic education projects and the SAPs in
Pakistan when all are near completion in 2--3 years\. Successful innovations in girls' education and teacher training
should be evaluated for their durability and replicability \.
9\. Comments on Quality of ICR:
The ICR is exemplary because the evidence is presented clearly and fully, the evaluation of findings is balanced and
convincing, and the conclusions drawn are well -grounded\. In particular, the discussion of educational issues shows
an exceptional level of appreciation for the technical aspects ---a quality that is often missing from ICRs in education \.
The 18 lessons learned are clearly divided between the preparation -appraisal stage and the implementation stage,
and demonstrate appreciation for factors important for relevance, efficacy and efficiency and fiduciary issues, as
well as sustainability OED's evaluation led to some variance in ratings of Bank and Borrower performance and
somewhat different focus for institutional development | REVIEW |
P054937 | Document of
The World Bank
Report No\.: 78275
PROJECT PERFORMANCE ASSESSMENT REPORT
DOMINICAN REPUBLIC
EARLY CHILDHOOD EDUCATION PROJECT
(P054937)
June 27, 2013
IEG Public Sector Evaluation
Independent Evaluation Group
ÿþC u r r e n c y E q u i v a l e n t s ( a n n u a l a v e r a g e s )
C u r r e n c y U n i t = D o m i n i c a n P e s o
2 0 0 2 U S $ 1 \. 0 0 D O P $ 1 8 \. 6 0
2 0 0 3 U S $ 1 \. 0 0 D O P $ 3 0 \. 8 3
2 0 0 4 U S $ 1 \. 0 0 D O P $ 4 2 \. 1 1
2 0 0 5 U S $ 1 \. 0 0 D O P $ 3 0 \. 5 1
2 0 0 6 U S $ 1 \. 0 0 D O P $ 3 3 \. 2 5
2 0 0 7 U S $ 1 \. 0 0 D O P $ 3 3 \. 3 1
2 0 0 8 U S $ 1 \. 0 0 D O P $ 3 4 \. 8 7
2 0 0 9 U S $ 1 \. 0 0 D O P $ 3 6 \. 1 2
2 0 1 0 U S $ 1 \. 0 0 D O P $ 3 7 \. 3 0
2 0 1 1 U S $ 1 \. 0 0 D O P $ 3 8 \. 2 3
A b b r e v i a t i o n s a n d A c r o n y m s
E C D E a r l y C h i l d h o o d D e v e l o p m e n t
E Y E E a r l y Y e a r s E v a l u a t i o n
I D B I n t e r - A m e r i c a n D e v e l o p m e n t B a n k
I C T I n f o r m a t i o n C o m m u n i c a t i o n T e c h n o l o g y
I E G I n d e p e n d e n t E v a l u a t i o n G r o u p
I R R I n t e r n a l R a t e o f R e t u r n
I S R I m p l e m e n t a t i o n S t a t u s a n d R e s u l t s R e p o r t
M & |