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Document o f The World Bank
FOR OFFICIAL USE ONLY
Report No: 47507-BI
PROJECT APPRAISAL DOCUMENT
O N A
PROPOSED GRANT
IN THE AMOUNT OF SDR 30.1 MILL ION
(US$45 MILLION EQUIVALENT)
TO THE
GOVERNMENT OF BURUNDI
FOR A
PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
May 12,2009
Water and Urban I1 Country Department AFCEl Africa Region
This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS (Exchange Rate Effective March 3 1,2009)
1,000 BIF = US$0.83
US$1.495 = SDR 1
January 1 - December31
Currency Unit = BIF (Burundi Francs)
US$l.O = BIF 1,211
FISCAL YEAR
ABELO ABUTIP
AfDB AGCD
AGETIP
APL CAS CDD CFAA DA EIA ERR ESMF ESSF EU FAAT
FIRR FM FMIS FMM FNPV FONIC
FRR GDP GOB GRM GSI HIPC IBRD ICB
ABBREVIATIONS AND ACRONYMS
Association o f Local Representatives Burundi Agency for the Execution o f Public Works (Agence burundaise pour la re'alisation des travaux d'inte'rgt public) African Development Bank Belgian Development Cooperation (Administration Ge'ne'rale de la Coope'ration au De'veloppement) Agency for the Execution o f Public Works (Agence d'exe'cution des travaux d 'inte'rzt public) Adaptable Program Loan Country Assistance Strategy Community Driven Development Country Financial Accountability Assessment Designated Account Environmental Impact Assessment Economic Rate o f Return Environmental and Social Management Framework Environmental and Social Screening Form European Union Funds for Territorial Administration (Fonds d'Appui tr I'Administration Territoriale) Financial Internal Rate o f Return Financial Management Financial Management Information System Financial Management Manual Financial N e t Present Value National Fund for Communal Investments (Fonds National d 'Investissement Communal) Financial Rate o f Return Gross Domestic Product Government o f Burundi Grievance Redress Mechanisms Infrastructure Sector Group (Groupe Sectoriel pour les Infrastructures) Heavily Indebted Poor Country Initiative International Bank for Reconstruction and Development International Competitive Bidding
.. 11
ICR IDA IEC IFR IRR ISDS IT ITC MDG M&E NCB NGO NPV O&M PDO PEMFAR PFM PIC PID PIM PRADECS PRASAB PRMSE PRSP PWECP PWUMP QCBS RAP REGIDESO
RPF SETEMU SIGEFI S I L SIM SME SOE TS UNDP voc
FOR OFFICIAL USE ONLY
Implementation Completion Report International Development Association Information, Education and Communication Interim Financial Report Internal Rate o f Return Integrated Safeguard Data Sheet Information Technology Inter-Ministerial Technical Committee Millennium Development Goal Monitoring and Evaluation National Competitive Bidding Non-governmental Organization N e t Present Value Operations and Maintenance Project Development Objective Public Expenditure and Financial Accountability Review Public Financial Management Public Information Center Project Information Document Project Implementation Manual Community and Social Development Project Agriculture Rehabilitation and Sustainable Land Management Project Multisector Program for Social Reinsertion Poverty Reduction Strategy Paper Public Works and Employment Creation Project Public Works and Urban Management Project Quality- and Cost-Based Selection Resettlement Action Plan State Company for Urban Water and Electricity Services (Rkgie de Production et de Distribution d'eau et d'dectricitt;) Resettlement Policy Framework Municipal Technical Services (Services Techniques Municipaux) Integrated Public Financial Management System Specific Investment Loan Sector Investment and Maintenance Loan Small- and Medium-sized Enterprises Statement o f Expenditures Technical Secretariat United Nations Development Program Vehicle operating costs
Vice President: Obiageli K. Ezekwesili Country Director: John Murray McIntire Country Manager Mercy Miyang Tembon Sector Manager: Eustache Ouayoro
Task Team Leader: Sylvie Debomy
This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties. I t s contents may not be otherwise disclosed without Wor ld Bank authorization. 1
BURUNDI PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
CONTENTS
Page
I . STRATEGIC CONTEXT AND RATIONALE .................................................................. 1 A . B . C .
I1 . A . B . C . D . E .
I11 . A . B . C . D . E . F .
I V . A . B . C . D . E . F . G .
Country and sector issues .................................................................................................... 1
Rationale for Bank involvement .......................................................................................... 4
Higher level objectives to which the project contributes .................................................... 5
PROJECT DESCRIPTION .............................................................................................. 6 Lending Instrument. Financing Arrangements and Other Approaches .............................. -6
Project development objective and key indicators .............................................................. 6
Project components .............................................................................................................. 7
Lessons learned and reflected in the project design ............................................................ 9
Alternatives considered and reasons for rejection ............................................................. 10
IMPLEMENTATION ..................................................................................................... 11 Partnership arrangements .................................................................................................. 11
Institutional and implementation arrangements ................................................................ 11
Monitoring and evaluation o f outcomes/results ............................................................... -13
Sustainability .................................................................................................................... -14
Critical risks and possible controversial aspects ............................................................... 15
Grant conditions and covenants ......................................................................................... 17
APPRAISAL SUMMARY .............................................................................................. 17 Economic and financial analyses ....................................................................................... 17 Technical ........................................................................................................................... 19
Fiduciary ............................................................................................................................ 20
Social ................................................................................................................................ -22
Environment ..................................................................................................................... -24
Safeguard policies .............................................................................................................. 25 Policy Exceptions and Readiness ..................................................................................... -26
. .
i v
Annex 1: Country and Sector Background ............................................................................... 27
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................. 35
Annex 3: Results Framework and Monitoring ......................................................................... 37
Annex 4: Detailed Project Description ...................................................................................... 42
Annex 5: Project Costs ................................................................................................................ 48
Annex 6: Implementation Arrangements .................................................................................. 51
Annex 7: Financial Management and Disbursement Arrangements ..................................... 58
Annex 8: Procurement Arrangements ....................................................................................... 67
Annex 9: Economic and Financial Analysis .............................................................................. 72
Annex 10: Safeguard Policy Issues ............................................................................................. 82
Annex 11: Project Preparation and Supervision ...................................................................... 87
Annex 12: Documents in the Project File .................................................................................. 88
Annex 13: Statement o f Loans and Credits ............................................................................... 89
Annex 14: Country at a Glance .................................................................................................. 90
Annex 15: Map Section (IBRD 36802) ....................................................................................... 92
V
BURUNDI
PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
PROJECT APPRAISAL DOCUMENT
AFRICA AFTU2
Date: May 12,2009 Country Director: John Murray McIntire Sector Managerhlirector: Eustache Ouayoro
Team Leader: Sylvie Debomy Sectors: Health (25%); Water supply (21 %); General education sector (2 1 %); Roads and highways (2 1 %); Sub-national government administration (1 2%) Themes: Municipal governance and institution building (P); Other urban development (P); Access to urban services and housing ( S ) Environmental screening category: Partial Assessment
Project ID: P112998
Lending Instrument: Specific Investment Loan Project Financing Data
[ 3 Loan [ ] Credit [XI Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others: Total Bank financing (uS$m.): 45.00 Pronosed terms: A
Financing Plan (US$m) Source Local Foreign Total
~~
BORROWER/RECIPIENT 1.40 0.00 1.40 IDA Grant 30.00 15.00 45.00 Total: 3 1.40 15.00 46.40
Borrower: Government o f Burundi Republic o f Burundi Responsible Agency: Ministry o f Public Works and Equipment Burundi ~
Estimated disbursements (Bank FY/US%m) TY 2010 2011 2012 2013 2014 k u a l 7.00 11.00 10.00 10.00 7.00 hnu la t i ve 7.00 18.00 28.00 38.00 45.00 Project implementation period: Start June 9,2009 End: December 3 1 , 20 14 Expected effectiveness date: September 30,2009 Expected closing date: December 3 1 , 20 14
vi
[ ]Yes [XINO Does the project depart from the CAS in content or other significant respects? Ref: PAD I.C. Does the project require any exceptions from Bank policies? Ref: PAD IKG. Have these been approved by Bank management? I s approval for any policy exception sought from the Board? Does the project include any critical risks rated “substantial” or “high”? Ref: PAD III. E. Does the project meet the Regional criteria for readiness for implementation? Ref. PAD IKG.
[ ]Yes [XINO
[XIYes [ ] N o
[XIYes [ ] N o
Project development objective Ref: PAD II.B., Technical Annex 3 The project development objective i s to increase access to basic socioeconomic services and short-term employment opportunities in target areas. Project description Ref: PAD ILC., Technical Annex 4 The proposed project i s a logical continuation o f the previous Public Works and Employment Creation Project, especially with regard to the execution o f demand-driven subprojects through labor-intensive approaches for job creation. In addition, the project will focus on selected cities (Bujumbura, Ngozi, and Gitega) to address the need for focused and gradual institutional development in municipal management and to prepare for decentralization.
The project will include three components: Component A: Infrastructure (Base cost: IDA US$33 million). This component will support the rehabilitation and expansion o f demand-driven infrastructure in all urban communes o f the country and trunk infrastructure in Bujumbura, Gitega, and Ngozi in order to improve their effectiveness as economic growth poles. Component B: Municipal and Urban Management (Base cost: IDA US$2.3 million). This component will target principally the three main cities o f Burundi (Bujumbura, Gitega, and Ngozi) to improve governance, municipal management, and fiscal performance through the provision o f technical assistance, training, and equipment. Component C: Institutional Strengthening, Monitoring, and Evaluation (Base cost: IDA US$3 million). This component will finance activities aimed at strengthening: (i) institutional partners to better support and monitor communal development; (ii) the local construction private sector to improve i ts capacity to deliver quality infrastructure; and (iii) monitoring and evaluation o f project results, support to project management, and targeted training for the Technical Secretariat and ABUTIP staff.
Which safeguard policies are triggered, if any? Ref: PAD IKF. , Technical Annex 10 The project has triggered OP 4.01 Environmental Assessment, OP 4.12 Involuntary Resettlement, and OP 7.50 Projects on International Waterways due to the potential adverse environmental and social impacts related to the construction and rehabilitation o f planned infrastructure investments such as roads, water supply, markets, schools, and health centers. The project has been designated Environmental Category B.
Since the actual locations and potential localized adverse environmental and social impacts o f the planned infrastructure investments could not be determined prior to the appraisal o f the proposed project, the Borrower has prepared (i) an Environmental and Social Management
vii
Framework (ESMF) which includes a medical waste management plan for health centers, and (ii) a Resettlement Policy Framework (RPF) which outlines the policies and procedures to mitigate potential adverse social impacts due to land acquisition such as loss o f livelihoods or loss o f access to economic assets. The draft ESMF and RPF were disclosed in Burundi on December 25, 2008, and at the Bank’s Infoshop on January 5, 2009. An updated version o f the ESMF and the RPF was posted on Infoshop on March 30, 2009 and in the country on April 1, 2009.
As regards OP 7.50, as requested by the Government o f Burundi, the Bank issued notification letters to Burundi’s riparian neighbors (Angola, Central African Republic, Congo, Democratic Republic o f the Congo, Egypt, Eritrea, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, Uganda, and Zambia) and the N i l e Basin Initiative Secretariat on March 18, 2009 and March 31, 2009 (for Eritrea). The riparian states and the N i l e Basin Initiative Secretariat were given until April 17 and April 30, 2009 (for Eritrea) to respond with any comments they may have. The only response received came from Egypt, Eritrea, and Kenya who confirmed their non-objection to the project as long as there i s no negative effect on the N i l e River Basin. The Kenyan Permanent Secretary o f the Ministry o f Finance requested that information on design studies and environmental impact assessments for water investments and further developments susceptible to use those waters be made available to the ministry and suggested that special attention should be given to ensure catchment protection and soil conservation. A response addressing these remarks and the Environmental and Social Management Framework o f the proposed project were sent to the Government o f Kenya on May 4,2009.
In view o f the slight delay in completing the notification process before scheduled negotiations, a request for authorization to negotiate was approved by the Regional Vice President on April 2, 2009. Negotiations were conducted on April 7 and 8,2009.
Significant, non-standard conditions, if any, for: Ref: PAD III. F. Board presentation: None.
Grant effectiveness: (a) The Umbrella Delegated Contract Management Agreement, in form and substance satisfactory to the Association, has been executed on behalf o f the Recipient and ABUTIP. (b) The Recipient has appointed an internal financial auditor, with qualifications, experience, and terms o f reference satisfactory to the Association, in accordance with the provisions o f Section I11 o f Schedule 2 to the Financing Agreement, for purposes o f project implementation and monitoring and evaluation.
Dated covenant: The Recipient has appointed, no later than three months after effectiveness, external financial auditors, with qualifications, experience, and terms o f reference satisfactory to the Association.
viii
I. STRATEGIC CONTEXT AND RATIONALE
A. Country and sector issues
1. Burundi, a landlocked country, i s one o f the smallest in Sub-Saharan Africa, with a total land area o f only 27,834 square kilometers and a population o f 8 mill ion people, 10.6 percent o f whom live in urban areas. The urban population growth rate o f 6.8 percent per year i s one o f the highest in the region. The country has the second highest population density in the region with almost 300 persons per square kilometer, creating strong competition for natural resources and land.
2. The country has emerged from a civ i l war that lasted more than 12 years with 300,000 victims while displacing about 16 percent o f the population. Steady progress toward peace and restoring institutions has been made, with the December 2008 signing o f a power-sharing agreement between the government and the last rebel group (FNL- Palipehutu), the liberation o f political and war prisoners, and the commitment to start disarmament, demobilization, and reintegration o f FNL combatants.
3. Burundi i s one o f the poorest countries in the world. The gross national income per capita i s US$1 10, one o f the lowest in Sub-Saharan Africa. Poverty i s mainly rural but pockets o f urban poverty are common. Regional disparities in poverty levels are enormous among provinces (poverty incidence o f 29 percent in the capital city, Bujumbura and 82 percent in Kirundo). Burundi’s unemployment rate i s not officially known but i s estimated to be higher than in the region.
4. Burundi’s economic performance improved noticeably between 2001 and 2008. Nevertheless, the country faces a number o f significant challenges, including the need for a more diversified economic base and higher agricultural productivity, as well as investment in human resources to increase economic growth and reduce poverty. The consolidation o f the peace process has helped start reconstruction and created positive prospects for the country. However, Burundi has not yet experienced the typical post- conflict bounce in GDP growth. Economic growth i s largely determined by the widely fluctuating agricultural sector, comprised mainly o f coffee. The growth rate i s projected to reach 4.5 percent in 2009, provided that drought does not persist in the Kirundo northern province. Overall, the country s t i l l faces tremendous challenges.
5. Fragility of the peace process. The political environment remains fragile and the forthcoming 20 10 elections could trigger political and social instability. The strong competition for resources, especially for land, i s exacerbated by a growing population, ethnic tensions, and the return o f large numbers o f internal and external refugees. The management o f the return o f more than 120,000 refugees over the next three years and providing employment to a large section o f the population, including vulnerable people, i s a huge challenge to sustaining recent economic progress and stabilizing the peace process.
6. A high unemployment rate. Very few data on employment are available but a recent study conducted in four cities o f Burundi indicates a high urban unemployment ’
1
rate coupled with massive under-employment. Overall, 20.2 percent o f the urban population in Burundi i s without employment. The average rate in the region i s 11.4 percent. The capital city Bujumbura has the highest unemployment rate (14 percent) followed by Gitega (9 percent). Ngozi’s unemployment rate i s not available but it is generally believed that it is close to Gitega’s. In smaller towns, this rate is lower because o f the large number o f people st i l l involved in agriculture. A s in most Afr ican countries, unemployment in Burundi affects more women than men and fluctuates according to the level o f education. This unemployment rate goes along with a hidden under- employment. When underemployment is represented by the number o f people earning less than the minimum hourly wage, the current rate o f urban underemployment is estimated to be approximately 53.5 percent for the whole work force.
7. Inadequate inpastructure and level of services. The economic decline caused by the war and the international embargo put a heavy to l l o n the country’s infrastructure, which was either destroyed or seriously deteriorated due to poor maintenance, lack o f investment, and eroded management capacity. Roads, water, and electricity were among the most affected, with impacts, in turn, on schools and health centers. Today, Burundi is unlikely to reach many o f the Mil lennium Development Goals (MDGs) such as reduction o f malnutrition, chi ld mortality, maternal health, and environmental sustainability.
8. Burundi is st i l l under-urbanized and suffers f rom the effects o f unbalanced urbanization. Despite its outlying location, Bujumbura, the capital city, with 400,000 inhabitants, concentrates more than 75 percent o f the country’s urban population. The remaining 25 percent o f the urban population i s spread in the other 68 urban centers (four main cities, Le., Gitega, Ngozi, Kayangza, and Rumonge; 15 secondary cities; and 49 small centers with urban vocation) which are under-serviced and less attractive for investment. The level o f under-equipment varies considerably among urban centers. In Bujumbura, most basic services are available to about 70 percent o f households within a 15 minute-walking distance. In other cities, this ratio falls to 20 percent. In 2005, 21 percent o f the country’s population lacked access to improved water supply systems, 64 percent lacked access to adequate sanitation, 97 percent lacked access to electricity, and 99 percent lacked access to telecommunication services. The absence o f reliable data on urban activities (infrastructure, services, municipal finance, and population) seriously handicaps sound planning and programming at the local level as wel l as at the national level.
9. A nascent decentralization process. The decentralization framework i s st i l l in an early stage o f definition. A Communal L a w was adopted in 2005 but by-laws have never been prepared. In January 2007, the Government o f Burundi (GOB) issued a National Decentralization and Community Development Policy Letter. I ts goal was to complement the 2005 Communal Law to define the framework for decentralization and address challenges associated with community development. The strategic framework o f this policy remains, however, very broad and imprecise. The government then drafted a new communal bill to integrate principles contained in the pol icy letter and to correct multiple insufficiencies o f the 2005 Communal Law, but because o f general lack o f consensus among stakeholders, this bill was never submitted to the parliament. The
2
government decided to re-launch the process with broader consultation and the organization o f General Councils for decentralization throughout the country. Consultations have been completed and an editorial board for the new Communal Law was established. Many challenges are associated with this nascent and slow decentralization process.
10. Many local governments, with average annual revenues o f less than US$30,000, have very limited financial resources to take on their responsibilities. Bujumbura resources account for US$1.9 million or US$5 per capita. Gitega and Ngozi, the two other larger cities, have average annual revenues o f US$196,000 and US$146,000 (2006- 2008), respectively, or less than US$1.6 per capita. This level o f resources can be explained by several factors: (i) the taxable base i s not well known and many do not pay taxes; (ii) the lack o f a detailed land and property inventory; (iii) the management o f tax collection i s hampered by manual, heavy, and outdated procedures and filing system; (iv) the level o f communal tax has not been revised since 1997; and (v) the absence o f intergovernmental transfers. Communes have very low self-financing capacity. More than 80 percent o f the budget i s spent on operating costs which leaves very l i t t l e for investment.
11. The communal resources do not match the responsibilities delegated to communes. Their budgets depend on scarce local resources or external donor funding. The local tax system does not allow communes to mobilize sufficient financial resources to support their development needs. Intergovernmental transfer mechanisms to communes such as the National Funds for Communal Investments (FONIC), which i s supposed to receive 15 percent o f the national budget, are not functioning.
12. The technical and financial management capacity o f communes i s weak. Apart from the human and technical constraints, there i s no municipal procedures manual or formal local chart o f account. Only Bujumbura applies an informal manual that i s based on the national accounting nomenclature. Apart from the Local Development Plan, communes lack adequate programming tools that would help to prioritize their investments and maintenance programs at the city-level and plan corresponding needs in a specific period o f time. However, it i s important as the capacity o f communes improves, to complement Community Driven Development (CDD) mechanisms with more integrated city-level approaches. Bujumbura i s the only city with organized municipal technical services (SETEMU), but this structure currently faces tremendous financial constraints to carry out i t s mandate.
Government strategies
13. Poverty Reduction Strateay Paper. The government adopted i ts Poverty Reduction Strategy Paper (PRSP) in September 2006 and it was approved by the IDA and IMF Boards in March 2007. The PRSP i s built upon four pillars: (i) improving governance and security, (ii) promoting sustainable and equitable economic growth, (iii) developing human capital, and (iv) combating HIV/AIDS. With regard to developing human capital, the government’s objective i s to re-establish quality social services in
3
partnership with beneficiary communities, in particular with actions targeting the health and education sectors, water supply and sanitation, urban planning, and decent housing for all.
14. Urbanization Policy. In April 2008, Burundi adopted a National Housing and Urbanization Policy Letter which aims to pave the road toward more balanced urbanization, support the cities as socio-economic growth poles, and improve levels o f services and infrastructure. Specific actions to support the successful implementation o f this policy have been identified, including: (i) improvement o f the local taxation system, (ii) delegated management o f economic facilities and increased private sector involvement, (iii) labor intensive work programs emphasizing the use o f local materials, (iv) delegated contract management and delivery o f communal services, and (v) increased expenditures for investment and maintenance.
Sector issues addressed by the project
15. Following the orientation and lessons learned from previous operations in the country and region, the proposed project would support the government to sustain i t s reconstruction efforts and build the foundation for increased and more sustainable decentralized delivery o f services. In particular, the project will address the following issues: (i) inadequate provision o f infrastructure by financing demand-driven and trunk infrastructure subprojects; (ii) limited institutional and implementation capacity to deliver municipal infrastructure and services, and to generate fiscal resources, by supporting capacity building programs to improve technical skills, financial management, fiscal resource mobilization, and to develop the knowledge base to prepare the decentralization framework; and (iii) high unemployment rate in the country, in particular among unskilled workers, by providing a large number o f short-term employment opportunities on subproject work sites through maintenance and management contracts to small scale contractors.
B. Rationale for Bank involvement
16. To address the lack o f basic infrastructure and the high unemployment rate, the Bank responded to the government’s request by financing in 2001, the Public Works and Employment Creation Project (PWECP) for an amount o f US$73 million, including additional financing. This project was successfully implemented over a six-year period and contributed to strengthening the peace process by: (i) rebuilding part o f the country’s infrastructure critical to economic development and poverty reduction, (ii) improving l iving conditions and creating jobs through the use o f labor-intensive programs for unskilled workers, and (iii) restoring hope for the communities. The project implementation performance was satisfactory and exceeded most appraisal targets, both in terms o f physical infrastructure and job creation (more than six million job-days). The government requested a follow-up operation in view o f the very strong demand for infrastructure from local governments and the need to provide jobs to a fast growing unemployed and underemployed population. The Technical Secretariat (TS) o f the Ministry o f Public Works and Equipment received approximately 1 , 180 subproject
4
requests from local governments and communities. Of these, 122 were financed by the Bank under the previous Public Works and Employment Creation Project (PWECP) and 48 by an African Development Bank-funded project.
17. The proposed follow-up project i s a high priority operation for the government, the communes, and the population. Local governments and communities already mobilized about 850 million Burundian Francs (US$0.82 mill ion equivalent) in local contributions to support additional subproject requests and are eager to see these requests approved as soon as possible. The government i s therefore anxious to maintain the momentum generated by the previous project’s participatory approach and i ts satisfactory outcome in a difficult political and socioeconomic environment. Not acting on these requests would undermine the current momentum and may promote distrust between the population and the government, an unwelcomed development at a time when the country i s attempting to consolidate social cohesion and stability. At the same time, this operation will help maintain a critical flow o f business, which will consolidate the emerging small- and medium-sized enterprises and ensure the continuation o f more durable employment. This would also allow the consolidation o f progress achieved during the first project in terms o f assets maintenance.
18. The Government o f Burundi has rallied increased donor support for a follow-up operation to the previous public works project. The African Development Bank (AfDB) and the Belgian Development Cooperation (AGCD) are preparing parallel financing for about US$15 mill ion each. The government i s committed to financing an annual employment creation project and will earmark funds in a specific budget line-item to sustain this approach. However, about US$80million would be needed to meet the growing demand for basic infrastructure, which far exceeds the financial capacity o f the government. The proposed IDA-financed follow-up operation would enable the government to consolidate and scale-up the impact o f the previous operation.
19. This operation would contribute to the second strategic objective o f the Burundi Country Assistance Strategy (CAS) (FY09-12) to improve access to social services and consolidating social stability by reducing the infrastructure gap and maximizing reintegration and employment opportunities for unskilled workers, returning ex- combatants, refugees, and the most disadvantaged segments o f the population. The Bank will promote an integrated approach, building synergies among on-going Bank-financed operations addressing demobilization and reintegration, water and power, rural development, and community and social development.
C. Higher level objectives to which the project contributes
20. The project i s a response to a request by the Government o f Burundi and i s in l ine with the Country Assistance Strategy (FY 2009-2012) which aims at supporting Burundi’s transition from a post-conflict to a developing economy. It supports Strategic Objective Two, Le., “Improving Access to Social Services and Consolidating Social Stability” by generating substantial local short-term employment through labor-intensive infrastructure rehabilitation. These goals coincide with those o f the 2007 Poverty
5
Reduction Strategy Paper which aims at: (i) improving governance and security, (ii) promoting sustainable and equitable economic growth, (iii) developing human capital, and (iv) combating HIV/AIDS.
21. The project contributes to the achievement o f the Millennium Development Goals (MDGs), in particular Goal 7 (Ensuring Environmental Sustainability) through the delivery o f infrastructure and improving living conditions o f populations suffering the most from lack o f access to water supply and sanitation services. Also universal primary education (Goal 2) and improved child and maternal health (Goals 4 and 5) wi l l be targeted through the construction o f schools and health centers in deprived areas. Through the generation o f unskilled employment opportunities, the project will contribute to the reduction o f poverty in the country.
22. Finally, the project i s aligned with the some o f the main thrusts o f the Africa Action Plan as they relate to shared growth, closing the infrastructure gap and supporting the drivers o f local economic growth.
11. PROJECT DESCRIPTION
A. Lending Instrument, Financing Arrangements and Other Approaches
23. Bank support would be provided through a Specific Investment Loan (SIL), which i s the most appropriate instrument for this type o f operation as it supports the creation, rehabilitation, and maintenance o f infrastructure while supporting institutional reforms and management practices and policies that affect the sustainability o f the investments. Beneficiaries are expected to contribute a certain percentage o f the infrastructure costs and communes will have to allocate and execute a percentage o f their budget for maintenance. Activities will be coordinated with other partners in particular AfDB, the European Union, and AGCD.
B. Project development objective and key indicators
24. services and short-term employment opportunities in target areas.
The project development objective i s to increase access to basic socio-economic
25. This would be achieved through the combination o f demand-based and trunk infrastructure investment programs covering communes o f all provinces and targeted municipal support programs to strengthen municipal management and fiscal performance at the local level in the three main cities o f Bujumbura, Gitega, and Ngozi.
26. The project results wi l l be measured with the following outcome indicators:
(i) (ii) (iii)
Percentage o f population with access to an all-season road; Percentage o f population with access to improved market facilities; Number o f people with access to improved school and health facilities; and
6
(iv) Number o f person-days o f short-term employment created through public works.
C. Project components
27. The project cost will amount to US$45 million funded by an IDA grant. Beneficiaries are expected to contribute to two to five percent o f the investments costs upfront and communes wi l l commit to allocate and execute a percentage o f their budgets for maintenance. The project will be implemented over a five-year period.
Project design
28. The proposed project i s a logical continuation o f the Public Works and Employment Creation Project, especially with regard to the execution o f demand-driven subprojects through labor-intensive approaches for job creation. In addition, the project will focus on selected cities (Bujumbura, Ngozi, and Gitega) to address the need for focused and gradual institutional development in terms o f municipal management and to prepare for decentralization. Therefore this follow-up operation will address the significant demand for basic and economic infrastructure at the country level as well as support the nascent decentralization process by focusing on strengthening local resource mobilization. The aim i s to increase municipal revenues to support investment expenses and to finance operation and maintenance o f these assets.
29. The project i s closely articulated with the IDA-financed Community and Social Development Project which supports the financing o f community-based projects and capacity building activities at the communal and “collinaire” levels (mostly rural).
30. The project will include three components: (i) an infrastructure component; (ii) a municipal and urban development program; and (iii) an institutional development component.
Component A. Infrastructure (Base cost: IDA US$33 million)
31. This component will support the rehabilitation and expansion o f demand-driven infrastructure in all urban communes o f the country and trunk infrastructure in Bujumbura, Gitega, and Ngozi in order to improve their effectiveness as economic growth poles. This component will typically finance consultants, goods, ,works, and fees o f ABUTIP:
(i) Communal and community demand-driven investment programs such as roads, markets, water supply and sanitation infrastructure, communal building, schools, health and social centers, erosion control and environmental works, quarry rehabilitation pilot projects, etc., using the same successful approaches developed during the previous project (PWECP). These subprojects would have been identified in the participatory Local Development Plan.
7
(ii) City-level trunk infrastructure in Bujumbura, Gitega, and Ngozi. To strengthen local economic development, the three main cities will be allocated additional funding for their trunk infrastructure in order to improve the functioning o f city infrastructure networks and/or municipal service delivery. These subprojects would have been identified through the urban audit methodology conducted by the Technical Secretariat in the f i rs t year o f the project.
Component B. Municipal and Urban Management (Base cost: IDA US$2.3 million)
32. This component would target principally the three main cities o f Burundi (Bujumbura, Gitega, and Ngozi) to improve governance, municipal management, and fiscal performance through the provision o f technical assistance, training, and equipment. This will include activities that:
(i) Support the development o f municipal planning and programming tools and improve the technical capacity o f municipal s ta f f to develop and implement infrastructure and maintenance programs; Increase resource mobilization through better tax payer identification, collection procedures, and better management o f revenue-generating facilities; and
(iii) Improve budgeting procedures and strengthen administrative and financial management and reporting. Training on main municipal functions and support to infrastructure maintenance monitoring will be available to all communes.
(ii)
This component will be implemented by the communes under the supervision o f the Technical Secretariat and the Directorate in charge o f communal finance.
Component C. Institutional Strengthening, Monitoring and Evaluation (Base cost: IDA US$3 million)
33, training, and studies aimed at strengthening:
This component will finance technical assistance, limited logistical support
(i) Institutional partners, such as the Directorate for Communal Finance, to better support and monitor communal development, in particular developing a knowledge base o f local financial and fiscal data and support for local taxation reform; capacity o f the Directorate o f Urban planning to develop improved urban planning tools; and the FONIC to develop operational tools to evaluate local investment financial needs and channel funds to local governments; The local construction private sector, to improve i ts capacity to deliver quality infrastructure. This would include training on project management, quality o f works and quality control, environmental and
(ii)
8
(iii)
social management o f subprojects sites, and HIV/AIDS prevention programs on construction sites; and Monitoring and evaluation o f project results including surveys, technical and financial audits, implementation and fol low up o f the Environmental and Social Management Framework (ESMF) and the Resettlement Policy Framework (RPF), annual project impact and beneficiary assessments, information, education, and communication (IEC) activities, support to project management and targeted training for the Technical Secretariat and ABUTIP staff.
This component will be implemented under the supervision o f the Technical Secretariat.
D. Lessons learned and reflected in the project design
34. The project design reflects the key lessons learned from the PWECP:
(9
(ii)
(iii)
Demand-driven selection through participatory arrangements of community in+astructure needs i s most suited to address social cohesion and sustainability o f services. With a fragmented social fabric resulting f rom years o f conflict and the persistent perception o f government unfairness in allocating public resources, a demand-based approach to the selection and financing o f community infrastructure needs i s appropriate to ensure transparency in resource allocation and strengthened social cohesion, while at the same time improving the prospects for sustainable operation o f financed facilities. In a weak governance environment such as the one prevailing in the country, strong ownership at a l l levels and the demand-based approach can mitigate the fiduciary risks. As recommended in the previous project’s Implementation Completion Report (ICR), for this subsequent operation, a proper mechanism to ensure equitable distribution o f subprojects has been put in place to avoid project concentration in the capital city and a few major urban centers. Appropriate implementation arrangements are key to delivering quick results on the ground. The delegated contract management arrangement i s well-suited to mitigate capacity constraints in a post-conflict environment. Showing peace dividends requires swift implementation o f programs while ensuring that fiduciary requirements are met. Delegated contract management arrangements using streamlined and transparent procurement procedures and faster payment methods o f contractors have proved to be very efficient in delivering quick results on the ground. For th is operation, the delegated contract management arrangement will be upgraded to provide more accountability with performance-based disbursement. Short-term employment creation is critical in post-conflict environments. Public works projects using labor-intensive technologies can address the high employment and revenue-generating needs o f conflict-affected groups such as single women, ex-combatants, and refugees. Post-conflict
9
countries are faced especially with high levels o f unemployment and poverty that can only be structurally addressed in the medium- to long- term. Burundi has abundant local materials and has developed labor- intensive technologies that have been successfully used for paving roads, and for building schools, markets, and health centers. This approach has significantly reduced the need for imported materials and has reinforced the capacity o f the local construction industry while supporting the distribution o f revenues to an unskilled labor force.
35. design include:
Other lessons learned from the regional experience and reflected in the project
Support to decentralization should be carefully approached. The nascent decentralization process and the forthcoming elections in 201 0 will strengthen the role o f local governments. However, these entities lack organizational frameworks, human and financial resources, and municipal management skills to fully play their role. Therefore, the project will focus o n strengthening targeted local authorities’ governing capacity and specific departments supporting communal development rather than supporting a fully fledged decentralization process. Investment programs should be supported by institutional strengthening including capacity building activities to improve sustainability. This project will put more emphasis o n municipal development to improve resource mobilization, programming and planning tools, technical and financial management skills, and accountability. The project will test contractual arrangements that will link investment incentives to improved municipal performance in the three main cities.
E. Alternatives considered and reasons f o r rejection
36. The option to increase support to the decentralization process was considered. However, it was advised not to raise expectations at this stage in terms o f major steps o n decentralization. The decentralization strategy is st i l l being discussed at the cabinet level and major progress i s not expected before the 2010 elections. The content o f the strategy and the implementation schedule are not known. It would be premature to engage into a process o n which there is little knowledge and control. However, the project will finance specific studies that will inform this agenda, in particular to improve knowledge o f the fiscal base and intergovernmental transfers.
Increased focus on decentralization.
37. APL versus SIL. An Adaptable Program Loan would have provided a flexible and medium-term implementation timeline for capacity building. However, given the very early stage o f decentralization and the lack o f clear decentralization strategy, i t would have been difficult to design and engage in a longer-term program.
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38. SIM versus SIL. The project could have been processed as a Sector Investment and Maintenance (SIM) Loan as the project intends to develop infrastructure maintenance practices. However, this instrument focuses more on high-level institutional policy reforms than a Sector Investment Loan (SIL), such as the creation o f National Maintenance Funds. The project focuses on maintenance at the local level and therefore the SIL seems more appropriate than a SIM.
39. Repeaterhimple project. Given the similarity o f the project with the PWECP in development objectives, approach, and main components, it was considered and advised to process the project as a repeater project or a simple project. However, these options were rejected because: (i) the procedure for a repeater project i s no longer applicable in the Afr ica Region, and (ii) a simple project procedure could not be applied considering the project high- risk environment.
111. IMPLEMENTATION
A. Partnership arrangements
40. The project is being prepared in close coordination with the Afr ican Development Bank, which i s implementing a similar project in infrastructure and employment creation (Multisector Program for Social Reinsertion - PRMSE) and preparing a new operation with similar objectives as the Public Works and Urban Management Project (PWUMP) for an amount equivalent to US$15 million. Appraisals o f the new AfDB-proposed project and the PWUMP have been conducted jointly. Both projects will use the same implementation arrangements, manuals, procedures, and rules in terms o f selection criteria and allocation o f investment funds and contribute to project management and audits costs.
41. The project i s also coordinating with the Belgian Development Cooperation, which is preparing a new US$ l5 mi l l ion equivalent intervention on employment creation in selected sites, the UNDP, the Dutch Cooperation, and the European Union are supporting locally targeted interventions with the same objectives regarding the capacity o f local governments. To strengthen operational coordination among national and international partners, the government has recently created an “Infrastructure Sector Group” (GSI) which would meet every month to discuss strategy, implementation issues, and foster synergy among donors and national partners.
B. Institutional and implementation arrangements
42. The project builds on the successful and efficient institutional and implementation arrangements put in place during the PWECP, but with an increased involvement o f targeted cities. They will be responsible for implementing their programs with the support o f the Technical Secretariat for the municipal and urban development component, and with the support o f ABUTIP for the execution o f investment programs.
43. Project oversight. The project i s under the administrative supervision o f the Ministry o f Public Works and Equipment. An Inter-Ministerial Technical Committee
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(ITC) has been set up to provide overall strategic project orientation, and to ensure equitable distribution o f subprojects in the provinces. The I T C i s chaired by the Ministry o f Public Works and Equipment, and composed o f representatives from the ministries in charge o f finance, home affairs, decentralization and communal development; water, environment, urban and regional planning, the Municipality o f Bujumbura, and representatives f rom the private sector. The I T C is responsible for: (i) ensuring project execution and viability according to the agreed work program; and (ii) analyzing quarterly reports prepared by the Technical Secretariat. The I T C will be also in charge o f approving annual subproject portfolios screened against the selection criteria and according to the allocation o f investment funds as detailed in the Project Implementation Manual.
44. Local governments and communities. Beneficiary local governments identify their investment programs with the communities, prepare their Communal Development Plan, and define their commitment. Specific municipal programs for the three main cities will be identified through urban audits and detailed in a contractual document (a city contract signed between the commune and the government) which will describe commitments in terms o f maintenance, financial management, budgetary procedures, and resource mobilization. Communes are responsible for timely payment o f their contribution to investment costs, operation and maintenance o f assets, and will sign a Delegated Contract Management Agreement with ABUTIP for managing the execution o f their respective investment programs. Communities will identify subprojects to be financed, contribute financially with the communes, and participate in the monitoring and evaluation o f the project.
45. The central government. Central departments involved in the project (Public Works, Environment, Communal Development, and Finance) are responsible for supporting local governments to implement Component B o f the project, implement activities o f Component C (sector studies, local finance data base, and evaluating project results), and for ensuring compliance with fiduciary and safeguards procedures.
46. The Technical Secretariat is a governmental structure within the Ministry o f Public Works and Equipment responsible for overall coordination and management o f project activities. In particular, the TS will: (i) ensure that subprojects proposed by beneficiaries respect the subproject selection criteria (that the subproject be demand-driven with a proven financial contribution o f beneficiaries, included in the communal development plan, environmentally sustainable, and expected to be properly operated and maintained by the beneficiaries), appraise the proposals and present them to the ITC for approval; (ii) prepare annual work programs o f approved subprojects for transmission to ABUTIP for execution; (iii) closely monitor implementation o f the identified subprojects’ environmental and social management plans; (iv) supervise implementation o f institutional and capacity building activities at local and central levels (Components B and C); (v) supervise local governmental performance o f infrastructure operations and maintenance; (vi) manage project funds and supervise the implementation o f the Contract Management Agreement with ABUTIP; (vii) oversee the implementation o f the ESMF as wel l as the WF; and (viii) coordinate
The Technical Secretariat (TS).
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the overall project monitoring and evaluation system, consolidate progress and financial reports, and report to the ITC. The TS has demonstrated i t s capacity to manage the previous and similar donor-financed projects.
47. ABUTIP is a public works contract management agency responsible for managing contracts related to implementation o f the project’s infrastructure component through an overall delegated contract management agreement with the Government. For each subproject or package o f subprojects, ABUTIP will sign a specific delegated contract management agreement with the beneficiary commune. This arrangement was deemed appropriate for the past seven years and is used to implement several other donors’ investments programs. To ensure more accountability, the evolution from a status o f “implementing agency “(with i t s own special account) to one o f “contract management agency” with performance-based disbursement is being applied. The agency will continue to use i t s approved procedures manual which fosters rapid and transparent procurement practices. ABUTIP will be responsible for: (i) selecting and recruiting consultants in charge o f technical studies, preparation o f bidding documents, and supervision o f works; (ii) supervising the quality o f studies and bidding documents; (iii) managing the bidding process and awarding contracts for works and goods; (iv) supervising contracts and approving invoices; and (v) acknowledgement o f the completion o f works.
48. investment works and studies and will be involved in maintenance o f the assets.
The local private sector will play a major role in the project as it will execute al l
Contribution of beneficiaries
49. The issue o f counterpart funding from beneficiaries has been widely accepted and tested during the PWECP. It was agreed that the contributions o f beneficiaries will be valued in terms o f a percentage o f investment costs (two to five percent depending on the nature o f the investment), and in terms o f an increased effort made by the communes to allocate funds for annual maintenance programs (about ten percent o f the main cities annual revenues by the end o f the project and about six percent for other centers). This contribution should be verified in the budget execution reports.
59. The financial contribution o f beneficiaries to build infrastructure programs would amount to about US$0.2 mi l l ion a year and is to be deposited into a separate account managed by the Technical Secretariat and audited yearly. The financial contribution o f beneficiaries must be paid in full before the start o f works.
C. Monitoring and evaluation o f outcomes/results
51. Annex 3 provides the results framework with the list o f outcome indicators as wel l as the intermediate results indicators for each o f the project component. The Technical Secretariat i s responsible for project implementation, and the overall monitoring and evaluation system, in coordination with the central government, communes, and ABUTIP. It will provide quarterly progress reports to the government
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and to the Bank. The TS i s responsible for compiling data and executing surveys and regular evaluations necessary to monitor progress on project outcome indicators, with quarterly report updates on these indicators. The reporting format i s indicated in the project implementation manual and will include relevant environmental monitoring indicators. The environmental monitoring results will be included in the quarterly reports. Besides annual technical and financial audits o f project activities and implementing structures, annual reviews, environmental and social impact evaluations, and participatory beneficiary assessments o f the project will be conducted by independent consultants s tq ing in the second year o f project implementation.
52. ABUTIP will be responsible for gathering physical and financial data to monitor the implementation o f Component A and the number o f jobs created under each subproject. Disaggregated data that the project i s expected to generate (on gender and other social data on job creation) are specified in the implementation manual. Data related to Component B wi l l be gathered by TS and the department in charge o f communal development. Each o f the three cities will prepare urban audits that will serve as the foundation for establishment o f an urban and financial data base at the national level. Fiscal data gathered at the municipal leve l will be integrated into the national data system to be developed at the Directorate o f Communal Finance with project support (Component C).
53. to evaluate progress and determine whether the project should refocus activities.
A mid-term review will be conducted within 30 months o f project implementation
D. Sustainability
54. Project sustainability will be sought through: (i) improved management capacity o f communes and o f national institutions, (ii) increased mobilization o f local revenues, (iii) increased allocation o f maintenance funds in municipal budgets, and (iv) improved capacity o f the local private construction sector to deliver quality infrastructure. The project will also provide concrete elements to inform the definition o f a decentralization framework which will be an important factor o f sustainable development.
55. Improved management capacity of communes and national institutions. The introduction o f simple city-wide programming tools to complement the local development plans, o f management and monitoring and evaluation tools, and training will improve municipal management and accountability. These tools are low cost and easily replicable in other local governments. The project i s implemented through existing national and local government structures and national professional agencies with clear operational procedures.
56. Increased mobilization of local revenues. Specific actions targeted at improving municipal revenues and support for budget preparation and management will guarantee a better allocation o f funds to investments and assets maintenance.
57. Increased allocation of maintenance funds in municipal budget and improved capacity of the local construction sector. Increased allocation o f revenues for municipal
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infrastructure operations and maintenance (O&M) will support the development o f a culture o f maintenance at the local level. The expected rise o f local revenues as a result o f better financial management, improved revenue collection, and likely predictable transfers should ensure the allocation o f funds for O&M in city contracts. Compliance with the allocation and use o f funds for maintenance will determine eligibility for further investment programs. Capacity building activities for the private sector will improve quality o f works and lifespan o f investments. Participatory planning and participation o f local operators in O&M contracts should ensure a sense o f local ownership.
Description of risk
Sector Governance, Policies, and Institutional capacity i s still weak at all levels in the sector.
58. The project will contribute to the development o f a database on fiscal information which will help define an implementation framework for decentralized urban development interventions.
Support to decentralization fiamework.
Mitigation measures Rating o f residual risk
Moderate Institutions
National and local governments and the local national construction private sector have gained positive experience from the past project. They wil l benefit from additional targeted training and technical assistance. Communes will be supported to improve their management capacity and take on
E. Critical risks and possible controversial aspects
Because the project i s building on the results of the closed original public works project and its additional financing, the level o f risk associated with i t i s low. Furthermore, the implementation performance demonstrated that the risks resulting from the absorptive capacity of the actors were minimized. Technical and financial audits will be carried out periodically and remedial actions will be enforced. In addition, strong ownership at all levels and the demand-based approach to select activities to be financed have significantly reduced their risk of failure and have mitigated the fiduciary risks faced by the project, given the multiple changes at central and local governmental levels and associated implementing agencies.
and enforced. Allocation of project funds by provinces has been prepared based on demographic and revenue criteria to ensure equitable distribution of projects in the country.
Eligibility criteria for infrastructure will be strictly scrutinized
Past implementation experience shows that ABUTIP acted as a professional contract management agency. Technical audits
59. The risk identification worksheet has been updated.
Low
Low
Low
Operation-specific Risks Technical and financial implementation capacity i s weak.
Distribution of subprojects in the country needs to be based on clear criteria to ensure equitable distribution o f subprojects and avoid project concentration in the capital city and a few major urban centers Subprojects are not implemented in a timely manner, within budget, and o f
progressively more responsibilities. The project would contribute to improve governance at the local level by strengthening financial management and accountability o f local governments toward their constituencies and the State. Participation and feedback from communities will strengthen procurement process and accountability. Fiduciary and safeguards risks would be mitigated by appropriate design and close supervision. The Bank will also support the anti-corruption strategy being developed by the government.
Substantial
acceptable quality: Showing peace dividends in a post-conflict environment requires swift implementation of programs while ensuring that fiduciary requirements are met. SMEs will not have the absorptive capacity to execute subprojects.
Sustainability issue: There might be insufficient contributions from relevant sector ministries and communes for operations and periodic maintenance. Infrastructure and facilities built might not be well-maintained due to insufficient programming, technical capacity, and lack of financial resources.
Technical Secretariat does not have an internal audit function.
Projects implementing agencies (TS and ABUTIP) do not master procurement practices which lead to implementation delays.
Capacity of TS and ABUTIP in environmental and social management needs to be strengthened.
The Directorate of Environment responsible for the environmental monitoring of subprojects lacks the requisite capacity to fulfill its mandate.
S M E s frequently do not have the Japacity to manage the potential adverse environmental and social impacts of the investments.
will be periodically carried out and timely remedial actions, such as contract cancellation, will be enforced for the few S M E s that will deliver sub-standard works. The delegated contract management arrangement i s well- suited to mitigating capacity constraints in a post-conflict environment while ensuring proper fiduciary compliance. The absorptive capacity of S M E s has steadily increased, as demonstrated by the number of completed contracts and the rapid pace of disbursement and implementation during the previous project. SMEs will continue to benefit from technical and managerial training which will ultimately boost their deliverv canacitv. The development and reinforcement of the local tax system will contribute to the improvement of municipal revenues, which will allow the continuation and sustainability o f maintenance program and operation of municipal infrastructures. The original project helped to develop a systematic approach to operation and maintenance arrangements and all the 116 communes have earmarked resources in their budgets for operation and maintenance. Municipal human resources (communal administrators, technicians and local maintenance committees) will continue to be reinforced to ensure that maintenance programs are well- programmed, financed, and executed. The participatory approach will be reinforced based on the main orientation of the ongoing decentralization process to underscore the necessity of accountability. The TS will recruit an internal auditor to strengthen its capacity and prepare quality reports. TS personnel have sufficient experience in funds flow management from previous experience in implementing World Bank projects. Previous designated accounts were closed. The TS and ABUTIP are familiar with Bank procurement and consultant guidelines. ABUTIP did a good job implementing the first project. This agency masters all the aspect of the procurement process from procurement plan to completion of contracts. Given the new activities to be implemented, the Bank will continue reinforcing ABUTIP procurement capacity in addition to the regular Bank procurement supervision missions (two per year) and an annual technical audit. The project will: (i) support training for the environmental specialist at the TS on implementing environmental and social audits and appraisals; (ii) provide funding for implementing environmental assessments as required, as well as annual environmental audits of subprojects. ABUTIP will appoint a qualified staff to be responsible for environmental and social management of infrastructure investments. With support from the PRASAB, the government has developed a draft application decree regarding environmental impact assessment procedures which will be submitted to the Bank for comments shortly. Parliamentary approval of this decree will give the ministry in charge of environment a legal basis for insisting on the preparation o f environmental impact assessments for particular types of investments. Building on :arlier environmental training provided under PRASAB, the project will further strengthen the capacity of environmental staff in the ministry to assist in the implementation of the ESMF. The project will support training for S M E s to strengthen their mvironmental and social management capacity. T h e above support i s reflected in the ESMF.
Low
Low
Moderate/ Low
Moderate
Low
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The situation of landlocked country and the increased costs o f transportation might affect the project costs and put a strain on the level of local resources.
F. Grant conditions and covenants
The reliability on local material and labor -intensive works programs should reduce the need for imported materials and therefore the impact of transportation cost increases.
Moderate
60. Conditions o f effectiveness:
Overall Risks (i) The overall country risk i s high. Burundi’s economy i s vulnerable. Dependency on aid exposes the country to financial deficiency with a high potential risk of resurgence of political instability. The institutional capacity to design and implement reform programs i s weak and corruption could undermine stability, service delivery, and economic recovery. The decentralization process i s nascent and imprecise and may lead to confusion of responsibilities between the central and local governments. (ii) The project risk i s moderate given: (i) the implementing agency’s experience; (ii) the commitment of the stakeholders to the project; and (iii) the simplicity o f the design which takes into account lessons learned from the previous successful project and the incremental approach in terms o f municipal development.
(i) The Umbrella Delegated Contract Management Agreement, in form and substance satisfactory to the Association, has been executed on behalf o f the Recipient and ABUTIP.
(ii) The Recipient has appointed an internal financial auditor, with qualifications, experience, and terms o f reference satisfactory to the Association, in accordance with the provisions o f Section I11 o f Schedule 2 to the Financing Agreement, for purposes o f Project implementation and monitoring and evaluation.
Substantial
61. Dated covenant:
(i) The Recipient has appointed, no later than three months after effectiveness, external financial auditors, with qualifications, experience, and terms o f reference satisfactory to the Association.
IV. APPRAISAL SUMMARY
A. Economic and financial analyses
62. The outcome o f the appraisal exercise indicates that the f irst proposed investment portfolio i s economically viable and the fiscal impact, at 1.3 percent o f the national government expenditure, i s small. Furthermore, given that some o f the subprojects are revenue-generating, the project will contribute to cost recovery.
63. The communal and community subprojects are demand-driven investments. It i s difficult to appraise such subprojects a priori. However, the methodology used by the community based on weighted points indices should be shown to lead to economically feasible outcome. The appraisal focused on validating whether the methodology used to prioritize the first set o f proposed investment portfolio leads to the selection o f
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economically viable subprojects. Accordingly, the economic appraisal o f the portfolio focused on whether subprojects meeting the fol lowing criteria would also lead feasible ERR, FRR, NPV or FNPV or to cost-effective outcome (see Annex 9, paragraph 14 and Table 4: Methodology for Community Subproject Self Evaluation).
Subprojects proposed in the project’s f i rs t investment portfolio are included in the Local Development Plans; Subprojects are identified and appraised according to agreed criteria on the basis of weighted points which reflect the project objectives and priorities o f the communities; Communes have not only indicated in their development plans their priorities but also have shown commitment by paying counterpart funds as agreed either in kind or cash; Subprojects use labor-intensive approaches for construction; Subproject cost estimates are realistic, bounded, and meet counterpart fund and the regional equity requirements, specified by the project objectives; Selected modules meet the needs o f the community with least costs; and Subprojects so prioritized have rates o f return o f more than 12 percent or positive Ne t Present Value.
64. The 13 first-year proposed investment subprojects were further subjected to cost- benefit and cost-effectiveness analyses. A discount rate o f 12 percent i s used for net present value (NPV) evaluation. Conversion factors for correction on investment are: 90 percent (taxes); 50 percent o f unskilled labor, average monthly rents per kiosks= BIF 10,000. The results o f such analyses were subject to sensitivity analyses o f +20 percent on investment and -20 percent on revenue. The financial internal rate o f return (FIRR) and FNPV were estimated for market subprojects since they generate revenues. The results o f the economic and financial analyses are described in Annex 9. The sensitivity analyses indicate that the return on investments is o n the whole robust,
65. The benefits o f the cobble roads and drainage subcomponent investments are improved sanitations, savings in vehicle operating costs (VOC), and potential appreciation in property value due to improved sanitation. The major quantifiable benefits f rom the project come f i om the appreciation o f property values and the health impact. Both o f these benefits are not easily quantifiable. However, these subprojects are justified o n cost-effectiveness ground. The estimated unit cost per paved km is BIF342 mi l l ion in 2009 prices. This compares favorably with the national average cost per km o f BIF396 mi l l ion in 2009 prices. Assuming that the subprojects are implemented without major cost over-run, the investments are justified. Paving investments are therefore considered cost-effective, taking into account inflation. Moreover, this subproject would create significant number o f jobs since the design o f the subproject i s labor-intensive, thereby contributing to achievement o f project employment objectives.
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Financial Analysis
66. The project will represent an average o f 1.3 percent o f the government’s annual expenditures in 2009, and will have l i t t le adverse fiscal impact on the government budget. As a labor-intensive project with lower foreign exchange requirements, the project will have positive financial impact on the government budget. Further, the market subprojects in the f irst phase portfolio are revenue generating and have a financial internal rate o f return o f more than 12 percent. With improved access to the community and income-generating activities, the urban communes will be in a better position to improve their revenue bases and contribute to cost recovery.
B. Technical
67. The project design benefited from the lessons learned by the Bank through the PWECP, especially with regard to: (i) the execution o f demand-driven subprojects through labor-intensive approach to job creation; and (ii) the delegated contract management arrangement for mitigating capacity constraints in a post-conflict environment. It also benefited from the experience gained in the design and implementation o f public works by the 12 contract management agencies (AGETIPs) active in Sub-Saharan Africa. These include: (i) separating responsibilities for subproject selection from implementation to ensure transparency and avoid conflict o f interest; (ii) using demand-driven approach, socioeconomic viability, and beneficial environmental impact, including beneficiary contribution, for selecting subprojects and increasing sustainability; and (iii) advocating the use o f local materials in construction and labor- intensive methods to support small- and medium-sized enterprise (SME) development and employment generation which have proved to be very effective on the ground. Therefore, the selection and sizing o f the subproject match very well with the implementation capacity o f the local construction industry and local operation and maintenance capacity o f the beneficiaries.
68. Component A (Infrastructure) will finance demand-driven and trunk infrastructure programs including roads, markets, water supply and sanitation infrastructure, municipal halls, schools, health and social centers, erosion control and environmental works, and quarry rehabilitation pilot projects identified through the participatory Local Development Plan and city-level trunk infrastructure in the cities o f Bujumbura, Gitega, and Ngozi, identified through the urban audit methodology to be prepared during the first year o f the project.
69. To be eligible, all investment projects must: (i) respond to the demand o f the beneficiary communities and to the communal priorities identified through Community Development Plans and urban audits for the three identified cities. Larger investments at the greater city level must have been justified in strategic studies such as the Bujumbura Drainage Master Plan and/or screened through the urban audit process; (ii) require a financial contribution o f two percent for social and five percent for commercial investments costs through governmenthommune budget allocation; (iii) be appropriate for the financial capacity o f the city or commune (the city or commune should be able to
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maintain and manage these investments andor take necessary measures to improve maintenance capacity); (iv) favor the rehabilitation or upgrading o f existing infrastructure over new investments; (v) be socially and economically justified or cost effective; (vi) be designed to reflect the most appropriate and beneficial solution for the poorest households and avoid resettlement as much as possible; and (vii) avoid any negative impact or, at a minimum, adopt corrective measures to limit or compensate this impact.
70. The investment program will be implemented at city and communal levels. City- wide investments include a program o f trunk investments, drainage network or central markets that will be executed by well-established, experienced contractors. At the communal level, most o f the investments will be o f simple design and technology, some using labor-intensive methods accessible to local contractors and SMEs. The previous project has provided small contractors an opportunity to learn and grow, which has increased construction capacity in the country. Annual technical audits will be carried out during project implementation.
71. This project will require contractors familiar with the use o f labor-intensive techniques with appropriate managerial capabilities to undertake the construction and rehabilitation o f roads, markets, drainage, health centers, anti-erosion structures, schools, and water supply. The project also requires civil engineering consulting f i r m s to design and supervise works. The project will provide support through technical and managerial training for contractors and consulting f i rm’s personnel to enhance their capacity.
C. Fiduciary
Procurement
72. A capacity assessment o f the agencies to implement project procurement was carried out by the Procurement Specialist in the Burundi Country office in March 2009. The assessment reviewed the organizational structure o f ABUTIP, which will be responsible for implementing the infrastructure component, and the Technical Secretariat, responsible for carrying out the capacity building component along with project coordination and management.
73. The assessment revealed that both agencies are well-equipped and prepared to handle their procurement responsibilities. This i s witnessed by their performance in handling procurement activities o f the Public Works and Employment Project, which was assessed as satisfactory throughout the l i f e o f the project. Moreover, since 2007, ABUTIP has been implementing procurement activities for public entities through contracting arrangements. Hence, the changes proposed to adjust to the needs o f the new operation are minimal. I t was agreed that ABUTIP will recruit a staff member exclusively in charge o f procurement tasks, rather than have a staff member dedicated only 50 percent time to procurement. Both ABUTIP and TS will make some changes in the Project Implementation Manual to account for the changes in their responsibility and adopt new standard bidding documents for National Competitive Bidding and Shopping. This last change i s made to favor harmonization o f procurement practice in the country.
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ABUTIP and the TS will use the standard bidding document recently adopted by the government.
74. The procurement plan for the first eighteen months o f implementation was agreed upon on March 27, 2009 and further reviewed during negotiations. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits’’ published in M a y 2004 and as revised in October 2006; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” published in M a y 2004 and as revised in October 2006, and the provisions stipulated in the Financing Agreement.
75. due to the country’s environment; otherwise the risk could be assessed as moderate.
The overall project risk for procurement i s considered as a medium risk, mainly
Financial Management and Disbursements
76. Burundi has made significant progress in strengthening its public financial management (PFM) environment in al l areas o f weakness documented in the 2004 Country Financial Accountability Assessment (CFAA). These weaknesses were noted budget formulation and execution, financial reporting, oversight systems, as wel l as weak linkages between agreed policies budgeting planning, and a disconnect between planned and executed budget.
77. Notable improvements include: (i) the introduction and now fully-operational interim Integrated Public Financial Management System (SIGEFI), which generates standard quarterly budget execution reports, poverty-reducing expenditure and/or Heavily Indebted Poor Country Initiative (HIPC) expenditure execution reports; (ii) the adoption and implementation o f a new unified functional and economic budget classification system, a double-entry accounting system which has served to improve budget monitoring, while weak treasury controls are being addressed; and (iii) the successfbl, on- track closing o f the government’s extra-budgetary accounts. The Audit Court (Cow des Comptes) established in 2004 has been an important step toward the strengthening o f jurisdictional control over public financial management.
78. The government i s committed to implementing additional reforms and has prepared an integrated medium-term reform action plan, on the basis o f the recently completed (2008) jo int Government-Bank Public Expenditure and Financial Accountability Review (PEMFAR) report, covering the legal Eramework, budget formulation, budget execution, public procurement, financial management and reporting, internal control and audit, external oversight, and control over the wage bill.
79. The financial management (FM) capacity assessment o f the project implementing agency has been conducted in accordance with the financial management practices manual issued by the Wor ld Bank’s Financial Management Sector Board on November 3, 2005. The appraisal concluded that the proposed financial management arrangements put
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in place by the TS-PWECP meet the Bank’s minimum requirements for project financial management as per OPBP 10.02.
80. The project will be implemented in a substantial risk environment. Financial management risks inherent to the project have been assessed as moderate. Appropriate mitigation measures as outlined in Annex 7 have been incorporated into the design o f the financial management arrangements to contain these risks.
81. Disbursements arrangements and methods. The project will finance 100 percent o f eligible expenditures, exclusive o f taxes. A U S dollar-denominated designated account (DA) with a ceiling o f US$1.5 mi l l ion will be opened by the Recipient in a commercial bank acceptable to IDA. Disbursements f rom the IDA grant account will be made on the basis o f incurred eligible expenditures (transaction-based disbursements). Upon grant effectiveness, an init ial advance up to the ceiling o f the designated account (“Advance” method) will be disbursed from the proceeds o f the IDA grant and will be deposited into a TS-operated Designated Account (DA) to expedite i t s implementation. The TS will submit Withdrawal Applications (at least monthly) supported by Statements o f Expenditures (SOE) or records to report actual eligible expenditures paid from the DAY and at the same time may request a new advance up to the ceiling amount. The TS may also use the Direct Payment and Special Commitment methods for disbursing grant proceeds to third party contractorshppliers for eligible project expenditures. The project can be reimbursed for eligible project expenditures pre-financed by the Recipient f rom its own resources.
82. The mitigation measures aim to address specific risks as indicated. In addition to the standard financial statements audit, which includes aspects to examine the extent o f fraud and corruption in the program, the audit will provide additional assurance that the agreed procedures and controls are operating effectively. The recruitment o f an internal auditor will help to reinforce the internal control system and mitigate the risks.
D. Social
83. The socio-cultural and political context in Burundi presents many challenges, where poverty i s the legacy o f c iv i l unrest and its consequent waves o f violence and displaced populations. The Government o f Burundi (GOB) and the c iv i l society have since made encouraging efforts to rebuild an integrated society. Various programs have been put in place to promote national unity with a special attention to gender issues, youth and vulnerable people, and nation-wide programs for more targeted and sustainable socio-economic, cultural, and political capacity.
84. The PWUMP attempts to respond to the objectives o f the CAS and PRSP concerning integration o f social concerns o f the population, specifically those living in poor areas, and making communities more responsible for improved living conditions through their involvement in local decision-making and in project design. The project i s expected to deliver significant social benefits by improving the living and environmental conditions o f communities, which have a poor and relatively limited basic socioeconomic
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infrastructure to accommodate the needs o f their fast growing populations. Further, by improving l iving and sanitary conditions and services in poor areas, and reducing flooding and soil erosion, the project will also address human health and social development issues. The field assessment work revealed the high expectations (both from the beneficiary communities and the government) that people hold for anticipated project activities. Hence, the potential employment opportunities created by the project are expected to bring tremendous socioeconomic re l ie f to the population, including women and vulnerable people such as the ex-combatants, the refugees, and minority groups.
85. Project ownership and social accountability has been regularly integrated as part o f the project preparation methodology. Active participation o f the population and the local governments was sought for (i) diagnosis o f the current situation at the municipal level, and (ii) selection o f investment programs and the level o f services (access roads, markets, etc.). Project works (drainage and road works, in particular) have been designed in a way that will generate local employment. On employment issues, the project intends to promote the recruitment o f women and vulnerable groups engaged in the physical works. Adequate procurement packages will be set forth to accommodate these job creation activities. In compliance with Bank and international development partners’ policies on child labor, the project will give close attention to this particular social issue. ABUTIP and i ts partners (SMEs) have already been sensitized to that issue during the previous PWECP.
86. Social impact and gender dimensions. Project preparation included extensive consultation with local authorities, civi l society organizations, and beneficiary communities. The consultative and participatory mechanisms inherited from the previous project are s t i l l functioning and will help to ensure that financed activities are phased in and are o f benefit to the entire community. The concerns o f youth, women, and vulnerable/marginalized groups have been fully highlighted by involving them in both the planning process and in key decision-making processes. Social and gender equity issues have also been addressed in the provision o f basic social and economic infrastructure. The project will continue to encourage equal benefits to women, in particular through their participation in public works programs. Issues related to the prevalence o f HIV-AIDS will be addressed by ABUTIP and participating SMEs through selected HIV-AIDS activities targeted at the workplace level (local government employees, construction workers, and local beneficiary communities surrounding construction and/or rehabilitation activities).
87. The project has triggered OP 4.12 because the construction and rehabilitation o f planned infrastructure investments are likely to incur some social and environmental impacts. The exact locations and potential localized adverse social impacts o f the planned operations are s t i l l unknown and could not be physically identified prior to appraisal. Consequently, the Borrower prepared a Resettlement Policy Framework (RPF) during project preparation to address any unforeseen impact. This RPF will be translated to Resettlement Action Plans (RAP) if and when the need arises during project implementation.
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88. The potentially negative social impacts o f activities carried out under the project (such as temporary resettlement o f commercial activities for the markets) are expected to be.limited and site-specific typical o f Category B projects.
89. Extensive public consultation and participation have been conducted with various stakeholders to ensure social ownership and accountability o f project activities. Although the Burundi legislation does not recognize informal occupants, the RPF includes a provision that project impacts on people, revenues, and land will be addressed in accordance with Burundi’s constitution, laws, and regulations, and also with the Bank’s pol icy on involuntary resettlement (OP 4.12). The new ordinance (720/CAB/304/2008) dated March 2008 recently updated the compensation tariffs for involuntary resettlement. However, as clearly stated in the RPF, wherever differences appear between the two regulations, the Bank’s pol icy will be applied. With respect to grievances, Burundi law provides two different levels o f Grievance Redress Mechanisms (GRM): (i) friendly settlement which will be encouraged; and (ii) the court settlement, which is the ultimate means to settling any such conflict. Moreover, and as specified in the RPF, participatory and inclusive monitoring and evaluation approaches will be put forth to ensure that there is full ownership and accountability o f project activities, and that al l mitigation measures are taken to ensure infrastructure sustainability.
E. Environment
90. Environmental and social management under the project will draw o n experience gained under the previous operation. The environmental specialist within the Technical Secretariat will continue to: (i) ensure that future subprojects include environmental and social criteria, in addition to the criteria o f eligibility, identification, appraisal, and implementation which are included in the Implementation Manual; (ii) ensure that the environmental and social screening process outlined in the Environmental and Social Management Framework (ESMF) i s efficiently implemented with the participation o f the beneficiaries; (iii) ensure that the Ministry o f Environment reviews and approves the project’s environmental studies, issues ccEnvironmental Compliance Certijcates ” as necessary, and supports the project with regard to environmental monitoring; and (iv) ensure that ABUTIP and the supervision consultants monitor the implementation o f the environmental clauses included in the contracts, as wel l as the recommendations o f the screening results andor environmental impact assessments.
9 1. Based o n experience, potential adverse localized environmental and social impacts o f future subprojects (markets, schools, health centers, roads, water supply) are l ikely to include loss o f vegetation, sedimentation, generation of medical waste, soil, air, and water pollution, and will be mitigated through the implementation o f the provisions o f the ESMF. At the same time, future subprojects are expected to have positive impacts on the quality o f l i f e for the beneficiaries due to the improved access to health services, education, water supplies, hygiene and nutrition education, employment opportunities and improved roads which will benefit the population at the local and national levels.
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92. The project includes a budget for: (i) environmental training and awareness raising for communal administrators, consulting firms, small and medium enterprises, NGOs, and relevant ministry staf f with a focus on the implementation o f the ESMF, national environmental issues, and medical waste management; (ii) training in the management, monitoring and maintenance o f infrastructure subprojects for communal technicians, communal administrators, and local maintenance committees; (iii) short-term training for the environmental specialist within the Technical Secretariat with a focus on environmental audit and appraisal; (iv) environmental and impact assessments for future subprojects, 'as well as environmental and social audits o f subprojects under implementation for one year; and (v) environmental and social monitoring in the field to ensure that the provisions o f the ESMF have been implemented appropriately. To further enhance the environmental and social sustainability o f future infrastructure investments, Component A will finance the planting o f indigenous trees on subproject sites and areas prone to erosion.
F. Safeguard policies
Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OPBP 4.0 1) [XI [I Natural Habitats (OPBP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OPBP 4.1 1) [I [XI Involuntary Resettlement (OPBP 4.12) [XI [I Indigenous Peoples (OPBP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety o f Dams (OPBP 4.37) [I [XI Projects in Disputed Areas (OPBP 7.60)* 11 [XI Projects on International Waterways (OPBP 7.50) [XI [I
93. The project has triggered Bank safeguards OP 4.01 Environmental Assessment, OP 4.12 Involuntary Resettlement, and OP 7.50 Projects on International Waterways due to the potential adverse environmental and social impacts related to the construction and rehabilitation o f planned infrastructure investments such as roads, water supply, markets, schools and health centers. The project has been designated Environmental Category B.
94. Since the actual locations and potential localized adverse environmental and social impacts o f the planned infrastructure investments could not be determined prior to the appraisal o f the proposed project, the Borrower has prepared (i) an Environmental and Social Management Framework (ESMF), which includes a medical waste management plan for health centers, and (ii) a Resettlement Policy Framework (RPF) which outlines the policies and procedures to mitigate potential adverse social impacts due to land acquisition such as loss o f livelihoods or loss o f access to economic assets. The draft ESMF and RPF were disclosed in Burundi on December 25, 2008, and at the Bank's
' By supporting the proposedproject, the Bank does not intend to prejudice thefinal determination of the parties' claims on the disputed areas
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Infoshop on January 5,2009. An updated version o f the ESMF and the RPF was posted on Infoshop on March 30,2009 and in the country on April 1 , 2009.
95. As regards OP 7.50, as requested by the Government o f Burundi, the Bank issued notification letters to Burundi’s riparian neighbors (Angola, Central African Republic, Congo, Democratic Republic o f the Congo, Egypt, Eritrea, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, Uganda, and Zambia) and the N i l e Basin Initiative Secretariat on March 18, 2009 and March 3 1 , 2009 (for Eritrea). The riparian states and the N i l e Basin Initiative Secretariat were given until April 17 and April 30, 2009 (for Eritrea) to respond with any comments they may have. The only response received came from Egypt, Eritrea, and Kenya who confirmed their non-objection to the project as long as there i s no negative effect on the N i l e River Basin. The Kenyan Permanent Secretary o f the Ministry o f Finance requested that information on design studies and environmental impact assessments for water investments and further developments susceptible to use those waters be made available to the ministry and suggested that special attention should be given to ensure catchment protection and soil conservation. A response addressing these remarks and the Environmental and Social Management Framework o f the proposed project were sent to the Government o f Kenya on May 4,2009.
96. In view o f the slight delay in completing the notification process before scheduled negotiations, a request for authorization to negotiate was approved by the Regional Vice President on April 2,2009. Negotiations were conducted on April 7 and 8,2009.
G. Policy Exceptions and Readiness
97. carried out and will support swift implementation o f the program:
The project does not request policy exceptions. The following actions have been
(i) Screening for the first year subproject portfolio has been conducted according to the eligibility and appraisal criteria. Technical, environmental impact assessment and social studies are ongoing and requests for proposal are being prepared and will be ready before effectiveness. The f i rs t phase o f capacity building activities has been identified. Terms o f reference and bidding documents are being prepared and will be available before project effectiveness. The implementing institutions, Technical Secretariat and ABUTIP, are experienced in this type o f project and are fully staffed and functioning. Implementation manuals have been updated.
(ii)
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Annex 1: Country and Sector Background BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
1. Burundi, a landlocked country, i s one o f the smallest in Sub-Saharan Africa, with a total land area o f only 27,834 square kilometers and a population o f 8.0 mill ion people, 10.6 percent o f whom live in urban areas. The urban population growth rate o f 6.8 percent per year i s one o f the highest in the region. The country has the second highest population density in the region at almost 300 persons per square kilometer, creating strong competition for natural resources and land.
2. The country has emerged from a civil war that lasted more than 12 years with 300,000 victims while displacing about 16 percent o f the population. Steady progress toward peace and restoring institutions has been made. In early December 2008, the government and the last rebel group, the FNL-Palipehutu, signed a power sharing agreement, ending a tense year o f clashes, civilian casualties, and difficult negotiations. In January 2009, significant progress was achieved in the peace process. The rebel group revised i t s name to FNL, removing the ethnic connotation and therefore making the group constitutionally eligible to register as a political party. The government freed political prisoners and prisoners o f war. Preparation for the demobilization o f FNL combatants i s underway. However, the situation remains very fragile, especially given the upcoming elections.
3. Burundi i s one o f the poorest countries in the world. The percentage o f people living on less than one dollar a day has nearly doubled, from 35 percent overall to 68 percent in 2005. Gross national income per capita i s only US$1 10, one o f the lowest in Sub-Saharan Afiica. Poverty i s mainly rural but pockets o f urban poverty are common. Regional disparities in poverty levels are huge among provinces (poverty incidence o f 29 percent in the capital city o f Bujumbura and 82 percent in Kirundo).
4. Burundi’s economic performance improved noticeably between 2001 and 2008. Nevertheless, Burundi faces a number o f significant challenges, including the need for a more diversified economic base and higher agricultural productivity, as well as investment in human resources in order to increase economic growth and reduce poverty. The consolidation o f the peace process has helped start reconstruction and created positive prospects for the country, but Burundi has not experienced the typical post- conflict bounce in GDP growth. Since 2000, the country has progressively recovered from the negative growth (average -1.8 percent) o f the decade o f political and economic turbulence to a positive growth rate o f 5.1 percent in 2006. However, economic growth i s largely determined by the widely fluctuating agricultural sector, comprised mainly o f coffee. The growth rate i s projected to reach 4.5 percent in 2009 provided that drought does not persist in the Kirundo northern province.
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Main Country and Sector issues
Overall, the country st i l l faces tremendous challenges.
Fragility of the peace process
5. The political environment remains fragile and the forthcoming 20 10 elections could trigger new tensions. Burundi is a small country with a high population density. While the country i s agriculturally rich, there is strong competition for resources, especially for land in rural areas where 90 percent o f the population lives. This i s exacerbated by a growing population and ethnic differences. Furthermore, the peace era is seeing the return o f large numbers o f internal and external refugees to land that has been cultivated by others in their absence. This is leading to tensions over resource ownership and use and affects earning potential o f past and present users. Successfully managing the return o f more than 120,000 refugees over the next three years and providing employment to a large section o f the population including vulnerable people i s a huge challenge for the government to address if the hard fought progress achieved lately in the economic front and on the peace process i s to last. Overall, the general progress toward the consolidation o f peace notwithstanding, the underlying economic forces leading to recurrent conflicts will need to be addressed through economic and legal reforms, as wel l as economic diversification and growth to achieve lasting peace and stability.
High unemployment
6. Very few data o n employment are available, but a recent study conducted in four cities o f Burundi indicates a high urban unemployment rate coupled with massive underemployment. Overall, 20.2 percent o f the urban population in Burundi is without employment, as compared to an average regional unemployment rate o f 11.4 percent. The capital city, Bujumbura, has the highest unemployment rate (14 percent) followed by Gitega (9 percent). Ngozi’s unemployment rate i s not available but it is generally believed to be close to Gitega’s. In smaller towns, the unemployment rate i s lower because a larger number o f people are st i l l involved in agricultural tasks. As in most Afr ican countries, unemployment in Burundi affects more women than men and fluctuates according to the level o f education. This unemployment rate goes along with a hidden incidence o f underemployment. Considering the percentage o f people earning a salary less than the minimum hourly wage as an indicator o f underemployment, the current rate o f urban underemployment can be estimated at approximately 53.5 percent for the whole work force.
Inadequate infrastructure and level of services
7. The economic decline caused by the war and the embargo put a heavy tol l on the country’s infrastructure, which was either destroyed or seriously deteriorated due to poor maintenance, lack o f investment, and eroded management capacity. Roads, water, and electricity were among the most affected, along with schools and health centers. In the near future, Burundi is not l ikely to reach many o f the Mi l lennium Development Goals
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such as reductions in malnutrition and child mortality, and improvements in maternal health and environmental sustainability.
8. Burundi is s t i l l under-urbanized and suffers from the effects o f an unbalanced urbanization. Despite i t s outlying location, Bujumbura, the capital city with 400,000 inhabitants, concentrates more than 75 percent o f the country’s urban population. The remaining 25 percent o f the urban population i s spread among the other 68 urban centers (four main cities, i.e., Gitega, Ngozi, Kayangza and Rumonge; 15 secondary cities; and 49 small centers with urban vocation), which are under-serviced and less attractive to investment. The population o f Gitega and Ngozi are about 123,500 and 106,500
, inhabitants, respectively. The level o f under-equipment varies considerably among urban centers. In Bujumbura, most basic services are available to about 70 percent o f households within a 15 minute-walking distance. In other cities, this ratio falls to 20 percent. In 2005, 21 percent o f the population lacked access to improved water supply systems, 64 percent lacked access to adequate sanitation, 97 percent lacked access to electricity, and 99 percent lacked access to telecommunication services. In terms o f housing, 855 hectares o f serviced sites and 26,000 housing units (15,000 o f which are needed in urban areas) should be constructed to accommodate the growing population, whereas only 38 percent o f the demand i s being met by the formal sector.’ The lack o f reliable data on urban activities (infrastructure, services, municipal finance, and population) seriously handicaps sound planning and programming at the local level as well as at the national level.
I Snapshot on level of services I Roads and drainage. Only 20 percent of the 700 km of roads in Bujumbura are asphalted or paved and the majority of the road network i s pothole-ridden. The situation in the road sector i s even worse in secondary cities. Financial resources devoted to road maintenance by the city of Bujumbura are only five percent of the required resources. The road drainage system has not been maintained for the last ten years, leading to localized flooding and premature degradation of the already strained road network. An EU-funded project i s asphalting 32 km of roads, while ADB and Belgium are paving with cobblestone some 1 1 km and 18 km of roads, respectively. In the absence of a proper planning strategy, the very limited resources allocated to the road sector are being spread .over dispersed and uncoordinated interventions. The enhancement o f the road network, including secondary roads, would greatly improve food security and access to health services.
Water and electricity. During the civil conflict, access to electricity in connected areas fe l l by half as the urban population doubled, while the number of REGIDESO’s customers remained barely unchanged. Less than two percent of the country’s households currently have electricity service in their homes. The average consumption of electricity in Burundi i s among the lowest in Africa at 23 kWh/cap/year. The water sector infrastructure suffered much destruction during the years o f civil conflict. Water supply, distribution facilities and networks were targeted by acts o f sabotage, particularly in Bujumbura and other urban centers such as Rumonge, Nyanza-Lac, Cibitoke, Bubanza, Kayanza, Mutaho, as well as in the area of Imbo. Several kilometers of pipes, private connections, and 80 percent of installed meters were destroyed. T h e combination of this destruction with the lack of investment during the same period and the migration of refugees to the periphery o f urban areas and particularly to Bujumbura, has resulted in a serious drop in the rate of urban water supply coverage, from over 70 percent with access to potable water supply in 1993 to an estimated 60 percent at present. In Bujumbura’s peri-urban areas, the coverage i s much lower at an estimated 24 percent. REGIDESO serves Bujumbura through 29,700 water connections and 49 standposts, many of which are out of service. The demand for new connections i s high, but REGIDESO lacks the means to satisfy it, installing only about 1.500 new connections Der vear.
Data provided fiom the (( Lettre de Politique Nationale de d’urbanisation D, April 2008.
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Sanitation. Access to sanitation services remains limited in Bujumbura and i s even more limited in secondary towns. The Municipal Technical Services (Services Techniques Municipaux - SETEMU) i s responsible for sewerage and wastewater treatment services but only covers 38 percent o f Bujumbura’s needs. Therefore, much of the city’s wastewater ends up in storm drains and creeks, and from there flows untreated into Lake Tanganyika. Twenty percent of the existing sewer network in Bujumbura i s 50 years old. Other cities and towns do not have a sewerage system or wastewater treatment facilities. Overall, only 23 percent of the population uses functional facilities, 90 percent of which are traditional pit latrines. Population health surveys show that 84 percent of mortality and morbidity in children under five years old results from poor conditions o f water supply, hygiene, and sanitation, leading to water-borne diseases such as bacillary dysentery, amoebiasis, diarrhea, and cholera. Solid waste collection i s disfunctional, with more than 50 percent of waste produced daily in Bujumbura uncollected. Open dumps are common and uncollected refuse drains into the Tanganyika Lake, the only source of water supply for the capital city.
Education and health facifities. The decision in September 2005 to eliminate “school fees” has resulted in a huge increase in first grade enrollment close to 100 percent in 2005-06, putting pressure on insufficient and depleted school buildings. One-half of the schools in Burundi are built of hard or in semi-hard materials with adequate roofs. Electricity and safe water are almost nonexistent, and many lack proper sanitation. Many years o f conflict have destroyed a large portion of Burundi’s health care system. Health indicators are poor, with high mortality and morbidity rates. As peace and stability increase, the new health authorities are confronted with the challenge of responding to emergency needs, including those of returning refugees and the internally displaced, while ensuring the sustainable development of the system.
A nascent decentralization process
9. The decentralization framework in Burundi i s s t i l l at an early stage o f definition. A Communal Law was adopted in 2005, but by-laws are s t i l l to be prepared. Despite the lack o f clarity in the allocation o f responsibilities among the different tiers o f Government and the developing fiscal framework, the government organized communal elections in June 2005. Experience and studies highlighted several flaws o f the current Communal Law, however, and many challenges are associated with the nascent and slow decentralization process.
10. Financial situation of local governments. Many local governments, with average annual revenues o f less than 30,000 dollars, have very limited financial resources to take on their responsibilities. Bujumbura resources account for US$1.9 mill ion or US$S/per capita. In comparison, resources o f the neighboring capital o f Kigali are six times higher (US$12 million or about US$15/per capita). The cities o f Gitega and Ngozi have average annual revenues o f US$196,000 and US$146,000, respectively (2006-2008), less than US$1.6/per capita. This level o f resources can be explained by several factors: (i) the taxable base i s not well known and many do not pay taxes; (ii) lack o f a detailed land and property inventory; (iii) the management o f tax collection i s hampered by manual, heavy, and outdated filing system; (iv) the level o f communal tax has not been revised since 1997; and (v) the absence o f intergovernmental transfers.
11. Analysis o f the last financial reports provided by the communes reveals very low capacity for self-financing. Municipal expenditures have increased more than available resources. More than 80 percent o f the budget i s spent on operating costs which leaves very‘ l i t t le for investment. Overstaffing and unidentified expenditures (“other services consumed”) contribute to this continuous and uncontrolled growth.
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Financial situation of Bujumbura, Gitega, and Ngozi
Population Bujumbura Gitega Ngozi 393,000 123,811 107,416
Revenue (Average 2006-2008) US$1,962,098 US$196,202 US$145,942
I I I
Current expenseslRevenue (%) I 62 I 81 I 78
Current expenses (Average 2006-2008) US$1,222,997 US$159,620 US$ll3,664
Capital expenses US$I 16,558 US$69,134 US$24,779
Capital expensesRevenue (%)
12. Inadequacy between communal resources and responsibilities. Communal budgets depend on scarce local resources or external donor funding for financial revenues. The municipal and communal tax system has not been reformed since 1997. Many new taxable products developed over the past decade. are not yet incorporated into a new tax code that would better enable communes to collect associated tax revenues. As a result, communes are not mobilizing the level o f financial resources needed to support their development needs. Currently, no practical provisions exist to facilitate the collection o f tax revenues. On the other hand, transfer mechanisms set up to financially accompany communes encountered many problems, which disrupted their functioning. Those are mainly the Funds for Territorial Administration (FAAT), the Communal Development Funds (FDC), and more recently the National Funds for Communal Investments (FONIC). These funds are supposed to receive 15 percent o f the national budget but lack adequate management capacity to function effectively. Since transfers from the government are non-existent, and FONIC management i s weak, donors have not sought to transfer funds through this structure, which i s inoperative as a result. At the
6 35 17
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Number of staff
Salaries
819 198 141
US$572,094 US$51,015 US$33,850
Salaries/Current expenses 47 32 30
same time, national entities neither have the tools to support the development o f local governments nor to monitor their performance.
13. Apart from human and technical capacity, the communes suffer from a lack o f basic equipment and tools to plan and manage their assets and development. Communes are not equipped to generate financial statements on a regular basis. Statements prepared manually and provided by the municipality o f Bujumbura, Ngozi, and Gitega illustrate the weak financial management system. There i s no official communal chart o f accounts. Only Bujumbura applies an informal one based on the national accounting nomenclature. Apart from Local Development Plans, communes lack adequate programming tools that would help to prioritize their investments and maintenance programs at the city-level, and to plan corresponding needs in a specific period o f time. The project i s proposing to develop urban audits at the outset o f the project to gather essential data needed for sound planning and programming.
Communes ’ weak technical and Jinancial management system.
14. At the same time, communes do not have or use a municipal procedures manual. Bujumbura i s the only city with an organized Municipal Technical Services (SETEMU) which operates within a defined legal framework and also has the mandate to intervene in other cities. This structure currently faces tremendous financial constraints to carry out i t s mandate. There i s a need to clarify the institutional framework and oversight responsibility as conflicts o f competences paralyze the system.
15. The lack of articulation between decentralized entities and deconcentrated sectoral services. To date, there are no operational arrangements defining roles, responsibilities, and mechanisms for deconcentrated state technical services in charge o f supporting local level development. Sector policies adopted by the government do not sufficiently integrate decentralization principles and operational mechanisms between communes and deconcentrated state services, particularly at the sub-provincial level.
16. The lack of coordination between interventions at the local level. With regard to local and community development, the absence o f coordination among donors and o f more systematic governmental monitoring led to a dispersion o f interventions, multiplication o f costly operational arrangements, difficulty sustaining those actions, and a concentration on certain communes (which creates equity issues o f resource distribution). More strategic cohesion and oversight i s needed. As municipal capacities improve, it i s important to complement those CDD mechanisms with more integrated city-level approaches.
Government strategies
17. Poverty Reduction Strategy. The government adopted i ts Poverty Reduction Strategy Paper (PRSP) in September 2006 and it was approved by the IDA and IMF Boards in March 2007. The PRSP was built upon four pillars (i) improving governance and security, (ii) promoting sustainable and equitable economic growth, (iii) developing human capital, and (iv) combating HIV/AIDS. With regard to developing human capital,
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the government’s objective i s to re-establish quality social services in partnership with beneficiary communities. To th is end, and as the absence o f the most basic services such as water, electricity and housing, i s a major threat to peace, actions targeting the health and education sectors, water supply and sanitation, urban planning and decent housing for all have been identified as high priority.
18. Decentralization fiamework. In January 2007, the government issued a National Decentralization and Community Development Policy Letter. The goal was not only to accompany the April 2005 Communal Law, but also to define the context, the framework o f decentralization, and challenges associated with community development. The strategic axes o f th is policy remain, however, very broad and imprecise. The government thereafter drafted a new communal bill to integrate principles contained in the Letter and to correct multiple insufficiencies o f the 2005 Communal Law. This new text was adopted at the Council o f Ministers (Cabinet) in July 2007, but because o f general lack o f consensus among stakeholders, was never submitted to the Parliament. The Government decided to relaunch the process with broader consultation; General Councils for Decentralization (Etats ge‘ne‘raux) were organized throughout the country with the support o f the “Gutwara Neza” Program o f the European Union, the United Nations Integrated Office in Burundi, and UNDP, with the participation o f representatives o f the civil society, communes, and NGOs. The aim was to reach a consensus on issues to address in the new decentralization policy and in preparation o f the new Communal Law. Consultations have been completed and an editorial board for the new Communal Law was established.
19. Urbanization policy. In April 2008, Burundi adopted a National Housing and Urbanization Policy Letter which aims to pave the road for a more balanced urban fabric, support the cities as socio-economic growth poles, and improve levels o f services and infrastructure. The strategic axes o f this policy are summarized as the following: (i) strengthening the institutional framework to support urban development and gradually improve housing conditions; (ii) developing a sustainable urban “tradition” in the country, particularly regarding land use; (iii) ensuring decent housing for the population; (iv) fighting the degradation o f living conditions in urban centers; and (v) improving governance to increase .urban productivity. Specific actions to support the successful implementation o f this policy have been identified such as: (i) improvement o f the local taxation system, (ii) delegated management o f economic facilities and increased involvement o f the private sector, (iii) labor intensive work programs emphasizing the use o f local materials, (iv) delegated contract management and delivery o f communal services, and (v) increased expenditures for investments and maintenance. The project wi l l contribute to support this strategy.
Sector issues addressed by the project
20. Following the orientation and lessons learned from previous operations in the country and in the region, the proposed project would support the government to sustain reconstruction efforts and build the foundation for increased and more sustainable decentralized service delivery. In particular, the project will address the following issues:
33
(i) inadequate provision o f infrastructure by financing demand-driven and trunk infrastructure subprojects; (ii) limited institutional and implementation capacity to deliver municipal infrastructure and services and generate fiscal resources by supporting capacity building programs to improve technical skills, financial management, fiscal resource mobilization, and develop a knowledge base necessary to prepare the decentralization framework; and (iii) high unemployment rate in the country, in particular among unskilled workers by providing a large number o f short-tem employment opportunities on subproject work sites, through maintenance contracts to small-scale contractors.
21. The project will closely interact with the IDA-supported Community and Social Development Project which has similar and complementary objectives but which targets more rural areas and communes. The project will closely coordinate with an AfDB- supported infrastructure project under preparation and will link with other donors’ initiatives on institutional capacity for local governments and UN-Habitat which plans to support the preparation o f city development strategies in Bujumbura and other main cities o f the country.
34
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
I
Supervision (PSR) Ratings
(Bank-financed n m i e r t e nnlvl
Summary of sector-related projects
Development
Water Supply
Education
+ Health
I Health
Public Works and Employment Creation (including supplemental financing) (P064961, P09.5024) (closed December 3 1 , 2007)
Multisectoral Water and Electricity Infrastructure Project (P097974)
Education Sector Reconstruction Project (PO645 5 7)
Multisectoral HIV/AIDS Control and Orphans Project (PO7 137 1) (closed November 30,2008) Second Multisectoral HIV/AIDS Project (P 109964)
IP S
MS
S
S
MS
DO S
MS
S
To generate productive employment to help reconstruction on the Borrower's territory through labor-intensive public works; promote the execution o f cost- effective and economically and socially useful public works projects through small and medium enterprises; and build institutional capacity at the municipal level to identify, prioritize, operate, and maintain subprojects To increase access to water supply services in peri-urban areas o f Bujumbura; increase reliability and quality o f electricity services; increase water supply quality and reliability in Bujumbura; and strengthen the state company responsible for Urban Water and Electricity Services (REGIDESO's) financial sustainability To improve the capacity o f schools to educate a rapidly increasing number o f primary-level students; and o f the Government o f Burundi to carry out policy analysis, strategic planning and program implementation To support the implementation o f Burundi's Multisectoral HIV/AIDS Program, by slowing down the spread o f HIV/AIDS in the general population; and mitigating the damage o f HIV/AIDS on individuals and families The project's objective i s to increase the utilization o f a selected set o f preventive services, among groups highly vulnerable to. or affected bv HIV/AIDS
35
Transport Road Sector Development Project (P064876)
Community and Social Development Project (PO9521 1)
Social Development
MS
S S
Other develoDment agencies
revival by restoring part ofthe priority road network, generating employment for the rural poor and improving institutional capacity in the road sector To promote better and more equitable local service delivery
MS I To contribute to Burundi's post-war
Rehabilitation and extension o f rural water infrastructure Emergency Program
Water
Transport
1
Water Sector Project Water infrastructure, sanitation, and rural roads
Agency African Development Bank (AfDB)
Water
Infrastructure
African Development Bank (AfDB)
African Development Bank (AfDB) Belgian Development Cooperation (AGCD)
Dutch Cooperation FDA & OPEP and Belgium Fund
reinsertion
Job Creation Project
Social Infrastructure
Project Description Job creation for the realization o f priority infrastructure, capacity strengthening, support to communal initiatives targeting six provinces Job creation using high-intensity labor methods, capacity strengthening o f microfinance institutions and support to communal organizations Rehabilitation and extension o f water infrastructure in Bururi, Gitega, Muramvya, and Kayanza (i) Roads paving in Bwiza and Nyakabiga; dredging o f Port o f Bujumbura, water infrastructure ,and school equipment; (ii) Economic and social development (Bujumbura, Kirundo, and Ngozi) Capacity strengthening in management o f water infrastructure Targeting local governance, rural infrastructure, agriculture, and health
S: Satisfactory; HS: Highly Satisfactory; n/a: not available
36
Annex 3: Results Framework and Monitoring
BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
Results Framework
Project Development Project Outcome Use of Project Outcome Objective @DO) and Indicators Information
PDO outcomes
Project Development Objective (PDO): To increase access to basic socioeconomic services and short-term employment opportunities in target areas.
(a) Increased access to basic socio-economic services in target areas
(b) Improved access to short- te rm employment generated through labor-intensive public works
Intermediate Outcomes
Component A. Infrastructure
Improved access to infrastructure
(1) Population with access to an all season road (%) [IDA 1 5-RMS] (2) Population with access to improved market facilities (%) (3) Population with access to improved school and health facilities (number)
(4) Person-days provided in public work (number)
Intermediate Outcome Indicators
A.l Classrooms built or rehabilitated (number)
A.2 Roads constructed or rehabilitated (kms)
A.3 Markets constructed rehabilitated (number)
A.4 Subprojects effectively in use within six months o f completion (%)
A.5 Fees o f the Contract Management Agency (CMA) (ABUTIP) < 7%
To assess the impact o f infrastructure upgrading on the living conditions o f the population
To assess effectiveness o f labor-intensive program on employment
Use of Intermediate Outcome Monitoring
To monitor effectiveness o f investments execution arrangements
To assess increased access to public infrastructure
To assess the project impact on access and on economic activities
37
Component B. Municipal Management
Strengthened capacity o f the cities o f Bujumbura, Gitega, and Ngozi in resource mobilization and urban management
Component C. Capacity Building, Monitoring and Evaluation
Improved capacity o f the GOB in monitoring local development
B. 1 Share o f annual budget execution on routine maintenance in annual budgets (%)
B.2 Infrastructure constructed that i s maintained and operational two years after completion (%)
B.3 Increase in municipal revenues (%)
B.4 Administrative and management accounts produced on yearly basis (%I
C. 1 Communes with annual financial data transmitted to the National Directorate for Communal Development (number, %)
C.2 Annual monitoring reports disseminated (%)
C.3 Urban audits completed (number)
C.4 Annual participatory assessments conducted
To monitor commitment o f communes to infrastructure maintenance
To monitor effectiveness o f resource mobilization program
To assess effectiveness o f municipal management support program
To assess effectiveness o f data collection system
38
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s I- -
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00
2
2
2
0
m 3
0 d
3
s II d 0
s II d 3 0
0 3 0
a N. P
0
Q I3
N
3
3
3
Annex 4: Detailed Project Description BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
Project Concept
1. The proposed project i s a logical continuation o f the Public Works and Employment Creation Project (PWECP) especially with regard to the execution o f demand-driven subprojects through labor-intensive approaches for j o b creation. The project will focus on selected cities (Bujumbura, Ngozi, and Gitega) to address the need for focused and gradual institutional development o f municipal management capacity and to prepare for decentralization. Therefore this follow-up operation will address the enormous demand for basic and economic infrastructure at the country level, high unemployment, as wel l as support the nascent decentralization process, by focusing on strengthening local resource mobilization. The a im is to raise the level of municipal revenues to increase investment expenditures and also to finance operation and maintenance o f these assets. The project will also provide short-tem employment opportunities and therefore improve household revenues.
2. US$45 million.
The proposed implementation period is five years. The amount o f the IDA grant will be
3. Project coverage. The PWUMP covers the communes o f the 17 provinces including Bujumbura. Communes, which did not benefit from investment funding under the f i rs t project due to security reasons. In this project, they would be granted priority, subject to subproject eligibility criteria and the allocation grid for equity purposes. All urban communes will receive some attention regarding municipal management o f assets maintenance, but the main emphasis will be on the three main cities o f the country: Bujumbura, Ngozi, and Gitega. The government requested increased support to these three cities because they are the most populous centers and hold specific economic potential for the country.
4. Articulation with the Community and Social Development Project. The project is closely aligned with the IDA-financed Community and Social Development Project (PRADECS) which supports the financing o f community-based projects and capacity building activities at the communal and “collinaire” levels (mostly rural). To ensure this articulation, and that each project achieves i t s development objectives, a number o f guiding principles have been agreed upon:
(0
(ii)
(iii)
Community infrastructure projects o f less than US$lOO,OOO equivalent will be financed through PRADECS procedures. Larger and trunk investments will be executed along the PWUMP procedures. A given commune should not benefit f rom PRADECS and P W U M P financing in the same year in order to respect complementary criteria and ensure that the commune is able to pay i ts financial contribution and absorb the proposed investments. PRADECS would primarily finance small community and communal investments, and capacity building activities for communities, chef o f “collines”, and communes which recruit and pay small contractors and consultants. The
42
PWUMP will finance communal investments and capacity building activities for communes. Contractors and consultants will be contracted by ABUTIP.
Component A. Infrastructure (IDA Base cost: US$33 million)
5. This component will support the rehabilitation and expansion o f demand-driven infrastructure in all urban communes o f the country and trunk infrastructure in Bujumbura, Gitega, and Ngozi in order to improve their effectiveness as economic growth poles. This component will typically finance consultants, goods, works, and fees o f ABUTIP:
(9
(ii)
Communal and community demand-driven investment programs such as roads, markets, water supply and sanitation infrastructure, communal building, schools, health and social centers, erosion control and environmental works, quarry rehabilitation pilot projects etc. using the same successful approaches developed during the previous project (PWECP). These subprojects would have been identified in the participatory Local Development Plan.
City-level trunk infrastructure in Bujumbura, Gitega, and Ngozi. To strengthen local economic development, the three main cities will be allocated additional funding for their trunk infrastructure in order to improve the functioning o f city infi-astructure networks and/or municipal service delivery. These subprojects would have been identified through the urban audit methodology conducted by the Technical Secretariat in the f i rs t year o f the project.
6. Lessons learned during the first project have been taken into account. These include: (i) the use o f participatory arrangements in demand-driven selection o f community infrastructure, in order to address social cohesion and sustainability o f services; (ii) the use o f labor-intensive methods during subproject execution to address high unemployment levels o f unskilled workers, while addressing revenue generating needs; and (iii) reliance on a delegated contract management arrangement to mitigate capacity constraints in a post-conflict environment.
7. The participatory approach initiated during the project will be continued to reinforce accountability and responsibility, in particular to strengthen community infrastructure maintenance and ensure their sustainability. Improvement o f municipal financial resources through concrete actions to better identify and collect those resources will reinforce the focus on operation and maintenance initiated during the f i rs t project. The private sector will also be involved in markets, slaughter-houses, and water supply and sanitation management with the secondary objective to make these facilities profitable and to ensure their regular maintenance.
8. In addition, the delegated contract management arrangement for the infi-astructure component will put more emphasis on accountability toward recipients. ABUTIP will sign a delegated contract management agreement with performance-based disbursement.
9. To date, the Technical Secretariat has received about 1,200 subproject requests for community and communal investments, a large number o f which could not be financed under the previous project. O f the 1,200 subprojects, 122 were financed by the Bank under the previous
43
project (PWECP I) and 48 by the Africa Development Bank. The proposed subproject portfolio for the f i rs t year has been screened according to the selection criteria table which includes the level o f beneficiaries’ contribution, economic, social, and environmental criteria. To ensure equitable distribution o f works and avoid concentration o f subprojects in the capital city and a few major urban centers, allocations by communes and provinces based on population and revenues criteria have been defined by the government. To support the growth potential o f the three cities, a specific allocation for trunk infrastructure has been proposed in addition to the basic allocation. This specific allocation also takes into account the need to improve the sustainability o f investments carried out under the PWECP. The mechanisms defined to implement this component are described in Annex 6.
Component B. Municipal and Urban Management (IDA Base Cost: US$2.3 million)
10. This component would target principally the three main cities o f Burundi (Bujumbura, Gitega, and Ngozi) to improve governance, municipal management, and fiscal performance. A more limited program will be offered to other centers on maintenance, and main communal functions
(i) Capacity building in programming, development and maintenance of infrastructure, and services. This subcomponent includes technical assistance, training, and logistic support aiming at increasing the technical capacity o f communal staff to program, implement infrastructure programs, and ensure their proper maintenance. This
Support to the development and preparation o f programming tools to complement local development plans, with the preparation o f city-level urban and financial audits in the three cities and introduction to performance-based contractual arrangement; Acquisition o f digitalized maps and the appropriate software to process them; Strategic sanitation plan o f Bujumbura and identification o f a priority investment program; Support to the preparation and monitoring o f maintenance programs; Training in procurement, project management, environmental, and disaster management; Support to infrastructure and facilities management; and Information technology (IT) and office equipment support for the three cities.
As cities grow, the introduction o f city-wide planning tool i s necessary as a complement to local development plans which focus more on CDD-type investments. These municipal audits would help build reliable baseline information on the organization, financial structure, and investment needs o f the communes and provide the basis for a coherent municipal management and investment program in the future.
(ii) Support to resource mobilization. This subcomponent includes technical assistance, training, and IT and office equipment support to increase communal revenues
44
through better tax payer identification and better management o f revenue-generating facilities.
(a) Updating the local fiscal base: diagnostic, evaluation, updating o f fiscal registers and enrollment, and support to tax collection procedures, to restore fiscal potential in the three cities, and diagnostic, preparation, and publication o f a local taxation manual; and Study and technical assistance to develop management models for revenue generating facilities such as markets, bus stations, etc. that will be built during the project life.
(b)
(iii) Support to administrative and financial management. This subcomponent includes technical assistance, training, and IT and office equipment support to improve municipal services:
(a) Support to improve budget and accounting procedures and financial management: local budget and chart o f accounts; preparation, publication, and distribution o f the budget and accounting procedures manual to all communes; training; support to regular production o f administrative and management accounts, financial statements, and financial ratios; training on budget preparation, execution, monitoring, and control procedures; short-term technical assistance; and evaluation o f the local accounting and financial software;
(b) Support to improve administrative procedures: publication o f an administrative procedures manual, training, and computerization o f registries; IT and office equipment support to financial and administrative services; and
(c)
(d) Other training and workshops.
Component C. Institutional Strengthening, Monitoring and Evaluation (IDA Base Cost: US$3 million)
11. This component will finance activities aimed at strengthening (i) institutional partners to better support and monitor communal development; (ii) the local construction private sector to improve i ts capacity to deliver quality infrastructure; and (iii) monitoring and evaluation o f project results, project management, and targeted training for the Technical Secretariat and ABUTIP staff. This component i s implemented under the supervision o f the Technical Secretariat.
(i) Support to institutional partners in charge o f supporting communal development, including services in charge o f urban planning and decentralization, such as the Directorate o f Communal Finance, the FONIC, the Directorate o f Urban Planning and Association o f Local Representatives (ABELO).
(a) Support to the Directorate o f Communal Finance will include funds for the development o f a knowledge base on local financial and fiscal data
45
including specific IT and logistical support. The project will also support the preparation study for local taxation reform. The Ministry in charge o f communal development has initiated a revision and actualization o f the Ministerial Order No 530/540/312 August 4, 1997, on communal and municipal tax. The objective would be to adapt and update the order to the new socioeconomic context and to allow communes to collect new taxes that have been developed since 1997. Support to the operationalization o f the Communal Investment National Funds (FONIC) created in 2007. FONIC aims at mobilizing, channeling, and managing internal and external funds targeting local development. The project would support FONIC to develop programming tools complementary to local development plans, such as audits and contractual arrangements, to better channel funds to local governments, monitor progress, and adapt to sector-wide programming approach. Support to the new Association o f Local Representatives to promote exchanges with similar structures; and Support to the Directorate o f Urban Planning to develop improved urban planning tools and training.
(b)
(c)
(d)
(ii) Support to the local construction private sector. The project will contribute to improving the level o f professionalism o f the sector, consultants, control missions, and contractors to deliver quality infrastructure. This would include training on project management, quality o f works and quality control, improvement o f the quality o f pavements, environmental and social management o f subprojects sites, and HIV/AIDS prevention programs on construction sites; and
(iii) Support to project management, monitoring, and evaluation. This component will finance costs related to management and monitoring and evaluation (M&E) activities to be carried out by the TS and includes:
(a) Environmental and social follow-up to the project. Follow-up o f the Environmental and Social Management Framework (ESMF) and the Resettlement Policy Framework (RPF), environmental and social impacts assessments o f subprojects, preparation and follow-up of eventual resettlement action plans, annual project impact, and beneficiary assessments; Annual project financial and technical audits conducted by independent auditors; Support to M&E, including updating the integrated monitoring system within the TS, and preparation o f a detailed M&E manual, surveys, data collection, participatory beneficiary assessments; Information, education, and communication (IEC) activities including project launch workshop, mid-term review, and end o f project workshop, and other IEC activities;
(b)
(c)
(d)
46
(e) Participation to operating costs o f the TS (cost-sharing with AfDB) including staff, logistics, and IT support, and a punctual technical assistance mission and annual evaluation o f staff; and
( f ) Targeted training o f TS and ABUTIP staff to improve staff and management performance and quality. The program will be defined annually based on an audit o f staff performance and submitted to IDA for approval.
12. amount o f US$560,000 will be used to refinance the Project Preparation Facility.
A provision o f US$6.1 million i s made to cover physical and price contingencies and an
47
Annex 5: Project Costs BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
IDA Total Counterpart IDA IDA
us $million
funds Local Foreign Total us us us us
$million $million $million $million
Project Cost By Component
Infrastructure Program 0.8 24.0 9.0 33.0 33.8 Urban Management Program 0.0 1.2 1.1 2.3 2.3
M&E Institutional Development and 0.4 1.5 1.5 3 .O 3.4
Total Baseline Cost 1.2 26.7 11.6 38.3 39.5
Physical Contingencies 0.1 1.4 1.2 2.6 2.7 Price Contingencies 0.1 1.9 1.6 3.5 3.6
PPF refinancing 0.6 0.6 0.6 Total Project Costs’ 1.4 30.0 15.0 45.0 46.4
Total Financing Required 1.4 30.0 15.0 45.0 46.4 Exclusive o f taxes 1
New Donor-supported Public Works and Employment Operations
IDA Total US$ us
AFDB Belgium US$ US$
mill ion Mil l ion Equ. Equ. $million mill ion
Project Cost By Intervention
Infrastructure Program 8.4 10.4 38.0 Local Governance 0.0 2.1 3.0 Institutional Development and 6.3 1.5 4.0 M&E
56.8 4.1 7.8
Total Financing 14.7 14.0 45.0 68.7
48
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B 2
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B 2
B 2
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Annex 6: Implementation Arrangements
BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
1. The project builds on the successful and efficient institutional and implementation arrangements put in place during the PWECP, but with increased involvement o f targeted communes who will be responsible for their project implementation. Support will be provided by the Technical Secretariat (TS) for the municipal development component, and by ABUTIP for the management o f investments programs. The TS and ABUTIP have both demonstrated their strong operational and sound financial management capacity to implement projects o f the same nature and scope.
Institutional Arrangements
2. Project oversight. The project i s under the administrative supervision o f the Ministry o f Public Works and Equipment. An Inter-Ministerial Technical Committee (ITC) has been set-up to provide overall strategic orientation to the project, and to ensure the fair distribution o f subprojects in the provinces. The ITC i s chaired by the Ministry o f Public Works and Equipment, and composed o f representatives from the Ministries in charge o f Finance, Home Affairs, Decentralization and Communal Development, Water, Environment, Urban and Regional Planning, the Municipality o f Bujumbura, and from the private sector. The ITC i s responsible for (i) ensuring project operation and viability according to the agreed work program and (ii) analyzing quarterly reports prepared by the TS and independent financial and technical audits. The ITC will be also in charge o f approving the annual portfolio o f subprojects, screened against the selection criteria and according to the allocation o f investment funds, as detailed in the Project Implementation Manual.
Implementation Arrangements
3. Local governments and communities. Beneficiary local governments identify their investment programs with the communities, prepare 'their Communal Development Plans, and define their maintenance commitments. Specific infrastructure investments for the three main cities will be identified through urban audits and detailed in a contractual document (city contract signed between the commune and the government). This city contract will describe the nature o f support brought by governmental investment and institutional support as well as respective local commitments in terms o f maintenance, financial management, budgetary procedures, and resource mobilization. Communes are responsible for timely upfront payment o f their contribution to investments costs, and operation and maintenance o f assets, and will sign a Delegated Contract Management Agreement with ABUTIP for their respective investment programs. Communities will identify subprojects to be financed, contribute financially with the communes, and participate in project monitoring and evaluation.
4. The Central Government. Central departments involved in the project (public works, environment, communal development, urban planning, and finance) are responsible for conducting sector studies, supporting local governments to implement Component B (municipal and urban management), implementing Component C activities (fiscal and financial base, study
51
in local fiscal reform, urban planning tools, etc.,) for evaluating project results, and for ensuring compliance with fiduciary and safeguards procedures. The central government will also contribute to the operating costs o f the TS and define an annual budget l ine to support job creation projects.
5. The Technical Secretariat (TS). The Technical Secretariat i s a governmental structure within the Ministry o f Public Works and Equipment responsible for overall coordination and management o f project activities. In particular the TS will:
Ensure that subprojects proposed by beneficiaries: (i) respect the subproject selection criteria (demand-driven with a proven financial contribution o f beneficiaries, (ii) i s included in the local development plan, (iii) i s environmentally sustainable, (iv) i s properly operated and maintained by the beneficiaries), (v) appraise the proposal, and (vi) finalize detailed subproject description sheet and present them to the ITC for approval; Prepare annual work programs o f approved subprojects for transmission to ABUTIP for execution; Have consultants conduct environmental and social impacts studies and economic evaluation o f subprojects portfolio; Closely monitor implementation o f the identified subprojects environmental and social management plans (ESMF, RPF, and RAP); Supervise implementation o f institutional and capacity building activities at local and central levels (Components B and C), and supervise local governmental performance o f infrastructure operations and maintenance; Manage project funds and supervise implementation o f the Contract Management Agreement with ABUTIP; and Coordinate the overall M&E system o f the project, consolidate quarterly progress and financial reports, and report to the ITC.
The TS has demonstrated i t s capacity to manage similar projects. To face the new challenges o f the proposed project, the TS i s hiring (i) a municipal development specialist who will follow up on implementation o f Component B and on Component C activities to be carried out by the government; and (ii) an internal auditor.
6. ABUTIP i s a public works contract management agency responsible for managing contracts related to the implementation o f the project infrastructure component through an overall delegated contract management agreement with the government. For each subproject or package o f subprojects, ABUTIP will sign a specific delegated contract management agreement with the beneficiary commune. This arrangement was deemed appropriate for the last seven years and i s used to implement several other donors investments programs. To ensure more accountability, the evolution from a status o f “implementing agency” (with i ts own special account) to one o f “contract management agency” with performance-based disbursement has been agreed upon. The agency will continue to use i ts own procedures manual approved by IDA which fosters rapid and transparent procurement practices. ABUTIP will be responsible for: (i) selecting and recruiting consultants in charge o f technical studies and supervision o f works, (ii) supervising quality o f studies and bidding documents, (ii) managing bidding processes and
52
awarding contracts for works and goods, (iv) supervising contracts and approving invoices, and (v) reception o f works. ABUTIP has demonstrated i ts capacity to manage similar projects.
7. investment works and studies and will be involved in assets maintenance.
Project Main Beneficiaries
The local private sector will play a major role in the project as it will execute all
8. Local populations. The rehabilitation and construction o f economic and social infrastructure i s intended to improve the living conditions o f the populations residing in the beneficiary communes. Unskilled workers, including youth, women, returning refugees, displaced and landless people, and ex-combatants are to benefit from short-term employment through the use o f labor-intensive construction methods. Creating employment and thereby boosting local purchasing power will provide a broad segment o f the population with an economic stake in the reconciliation process and reduce the likelihood o f triggering further conflicts.
9. Communes. The project will help improve the capacity o f communes to mobilize local resources, identify, prioritize, and undertake sustainable investments relevant to the needs o f their populations, and to maintain these assets through the development o f a systematic approach to financing, operating, and maintenance arrangements. This will further strengthen their capacity to address the challenges o f the nascent decentralization process.
10. Small and medium-sized enterprises. The project will help strengthen the capacity o f local consultants and contractors in the public works and construction sectors to deliver quality infrastructure by providing training and using labor-intensive construction methods to execute subprojects.
1 1. The sector ministries involved (Public Works and Equipment, Environment, Communal Development, and Urban Planning) will benefit from capacity building programs to strengthen local development mentoring, monitor progress, and improve technical skills, as well as develop capacity to monitor social and environmental impact assessment, monitoring and evaluation, mitigation action plans, and resettlement plans. FONIC and ABELO will benefit from specific actions to exchange knowledge with similar structures and operationalize their procedures.
Sector ministries.
Implementation of Component A - Infrastructure
12. The overall planning and monitoring responsibility for implementing Component A (Infrastructure) remains with the TS. ABUTIP will be responsible for procurement and managing contracts related to implementation o f the infrastructure component through an overall delegated contract management agreement with the government, and under delegated contract management agreements signed between the beneficiary communes and ABUTIP for each work program. The operational and financial relationship between the TS and ABUTIP are described in an annual implementation agreement which each portfolio submission.
53
13. Identification of communal and community demand-driven subprojects. Communes prepare their local development plan with communities, identify priority infrastructure, and prepare a project description sheet for each subproject with justification according to eligibility criteria. Each subproject sheet should include basic quantitative reference data. The request i s transmitted to the TS for review o f compliance, screening, and appraisal. Based on this evaluation and site visit, the TS will complete the subproject sheet and confirm the estimated amount. Subprojects that comply with the appraisal criteria and that fit into the financial envelop allocated to each province are transmitted to the ITC for approval.
14. Identzjkation of trunk in+astructure subproject. The three main cities will be eligible for additional financing to support their role as a growth pole. The city-level investments will be identified through city-wide urban audits that wi l l be carried out at the outset o f the project. The screening process according to eligibility criteria i s the same as for smaller projects but these subprojects will be financed under a second allocation.
15. Type of subprojects eligible. Eligible subprojects include: (i) communal facilities (city hall, municipal tax office, and technical services); (ii) road and access (paved roads, bridges, urban roads); (iii) environment investments (anti-erosion works, drainage, sanitation); (iv) income generating facilities (markets, stations, slaughter houses, cattle markets); (v) social facilities (health centers, schools, community and sports centers, orphanages); and (vi) water supply and public lightning. Private, military, and religious facilities are not eligible; nor i s the acquisition o f vehicles and other engines.
16. Eligibility criteria. In order for subprojects to be reviewed by the TS, they must comply with the following eligibility criteria: (i) be part o f the local development plan; (ii) the cost must be above US$lOO,OOO, except for small environmental works such as planting (below this threshold, subproject would be financed through the PRADECS procedures; (iii) beneficiaries must contribute at least two percent o f the cost for works for social investments and five percent for income-generating facilities; (iv) school and health facilities must have been included in the national sanitation or school program and conform to sector strategies; and (v) beneficiaries must have put the facilities and infrastructures financed under the f i rs t project into operation. The TS i s responsible for reviewing, appraising, and validating the requests.
17. Counterpart funding by benejlciaries. The beneficiary communes wi l l mobilize the contribution corresponding to the type o f investment (two to five percent o f program costs). The percentage'of contribution reflects the current local capacity to mobilize funds and reflects the experience gathered during the PWECP and the PRADECS. The commune i s expected to bring part o f this contribution with the initial request but the total contribution should be made available upfront before the signing o f the delegated contract management agreement with ABUTIP.
18. been updated and harmonized with the criteria developed for the PRADECS:
Appraisal criteria. The investment appraisal criteria applied during the PWECP have
(i) Financial criteria: (a) amount o f the subproject, (b) economic return, and (c) financial capacity for maintenance.
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(ii) Socio-economic criteria: (a) percentage o f labor to total costs, (b) length o f employment, (c) social impact, and (d) capacity required by contractors.
(iii) Technical criteria: (a) proportion o f local materials, (b) level o f technology/equipment, and (c) technical capacity for maintenance.
(iv) Environmental criteria in the screening process proposed in the ESMF that will determine if the project i s eligible and what type o f safeguards document(s) need to be prepared. Spatial criteria: (i) equity in the geographic distribution o f the subprojects and (ii) complementarity with other subprojects.
(v)
19. Execution of subprojects. Once established, the annual l is t o f appraised subprojects i s transmitted to the ITC for approval. The TS informs the beneficiaries, engages environmental and social impact assessments and economic evaluation o f the portfolio, prepares and delivers detailed subproject data sheet to ABUTIP, and signs the corresponding implementation agreement with ABUTIP. ABUTIP prepares the draft delegated contract management agreement (DCMA) for each beneficiary for signing. The signing o f the DCMA i s a condition to start execution o f investment programs. ABUTIP recruits consultants to prepare technical design and bidding documents that must be approved by the beneficiaries. ABUTIP launches the selection process to recruit the contractors and the supervisors, supervise execution o f the contracts, approve documents certified by the supervisor, and transmit approved request for payment to TS for processing according to the contractual procedures. ABUTIP takes delivery o f the works and hand them over to the beneficiaries.
20. To ensure the fair distribution o f subprojects in the country, the government proposed an allocation grid by cities and aggregated by province based on population and local revenues (see table below). Two financial allocation frameworks have been defined: (i) a first allocation for all communes and representing 80 percent o f the investment funds and (ii) a second supplemental allocation specifically for the three main cities trunk investments representing 20 percent o f the total investments funds.
Allocation of investments funds by beneficiary.
2 1. The f i rs t allocation would be composed o f the following elements: (i) (ii) (iii)
25 percent in a lump s u m allocation; 50 percent to be allocated based on the population; and 25 percent to be allocated based on the level o f communal revenues.
The second allocation would be distributed based on the population o f each o f the three cities.
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Implementation of Component B - Municipal and Urban Management
22. Component B will be mainly implemented by the three cities with the support o f the Technical Secretariat and the Directorate for Communal Finance. The TS will prepare an annual work program with each beneficiary that will be presented to ITC and the Bank for approval and will be responsible for procurement and management o f funds. TS will prepare terms o f reference with the cities and prepare the bidding documents. TS will recruit and supervise consultants who will work with the communes to develop and implement their program.
23. The three cities will prepare their urban and municipal audits during the f i rst year o f project implementation. The results o f these audits, in terms o f trunk investment proposals, municipal improvement needs, and maintenance programs, will lead to preparation o f pilot city contracts. These performance-based contractual arrangements will be signed between the national and city governments and will define the contribution and commitments o f each party in terms o f resources and expected results.
24. The monitoring o f maintenance programs and training on main communal technical and financial functions will be proposed to all beneficiary communes. During the PWECP and throughout the country, 3,164 local maintenance committees were established and trained to ensure proper maintenance o f local infrastructure (schools, water schemes, access roads, etc.. .). Most neighborhood markets constructed during the PWECP are operated and maintained by private operators. The project will continue to monitor these arrangements and the allocation and execution o f annual communal maintenance budgets.
Implementation of Component C - Capacity Building, Monitoring and Evaluation
25. The TS will coordinate implementation o f Component C activities in close collaboration with the national departments, in particular the Directorates responsible for Communal Finance, Environment, and Urban Planning. The Technical Secretariat will be responsible for establishing and maintaining the M&E systems and channeling the information and data to the concerned stakeholders. The TS will also be responsible for procurement, payment, and management o f funds. The TS will prepare annual work plans in close collaboration with beneficiaries which will be presented to ITC and the Bank for approval.
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Annex 7: Financial Management and Disbursement Arrangements
BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
Executive summary
1. This report is a record o f the results o f the assessment o f the existing financial management arrangements at the Technical Secretariat (TS). The objective o f the assessment is to determine whether: (a) the TS has adequate financial management arrangements to ensure funds will be used for the purposes intended in an efficient and economical way; (b) the TS will prepare financial reports in an accurate, reliable, and timely manner; (c) arrangements exist for an independent audit o f the sources and uses o f funds; and (d) the entities’ assets will be safeguarded.
2. The financial management (FM) assessment was carried out in accordance with the Financial Management Practices Manual issued by the Bank’s Financial’ Management Sector Board on October 2008.
Country issues
3. A Country Financial Accountability Assessment (CFAA) concluded in 2004 documented the evaluation o f the Public Financial Management (PFM) environment in Burundi. I t revealed several weaknesses in the PFM system attributed to years o f c iv i l war. Notable areas o f weakness included budget formulation and execution, financial reporting, oversight systems, as wel l as weak linkages between agreed policies, budgeting, planning, and execution. Since then, however, significant progress has been made in al l areas, notably:
(i) The introduction of, and now fully operational, interim Financial Management Information System (FMIS) which generates standard quarterly budget execution reports and reports on poverty-reducing expenditure and/or HIPC expenditure execution; The adoption and implementation o f a new unified functional and economic budget classification system and a double-entry accounting system has served to improve budget monitoring processes while also addressing the weak treasury controls, and thus the closing o f the government’s extra-budgetary accounts is successfblly on track; and The Audit Court (Cow des Comptes) established in 2004 has been an important step toward strengthening jurisdictional control over public finance management.
(ii)
(iii)
4. The government is committed to implementing additional reforms and i s preparing an integrated medium-term reform action plan, on the basis o f the recently completed (2008) jo int government - Bank PEMFAR report, covering the legal framework, budget formulation, budget execution, public procurement, financial management and reporting, internal control and audit, external oversight, and control over the wage bill.
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Risk assessment and mitigation
5. The following are necessary features o f a strong financial management system:
(i)
(ii)
The TS should have an adequate number and mix o f skilled and experienced FM staff; The internal control system should ensure the conduct o f an orderly and efficient payment and procurement process, and proper recording and safeguarding o f assets and resources; The integrated information system should support the TS’s requests for funding and meet i ts reporting obligations to fund providers; The system should be capable o f providing financial data to measure performance when linked to the output o f the project; and An independent, qualified auditor should regularly review the project’s financial statements and internal controls.
(iii)
(iv)
(v)
6. The Risk Assessment and Mitigation table below shows the results o f the risk assessment f iom the Risk Rating Summary. This identifies the key risks the TS management may face in achieving project objectives and provides a basis for determining how management should address these risks.
Risk Preliminary/ Brief description of the risk Risk-mitigating measures Condition oj residual risk incorporated into the Negotiations,
rating design of the Board or implementation Effectiveness arrangements (r/N?)
Inherent Risk
country Level
Entity Level
VM
/M
CFAA conducted in 2004 revealed weaknesses in P F M systems attributed to years o f civi l war. CPIA assessment o f Q 13 and Q I 6 show a high FM risk.
The oversight capacity in government institutions remains weak, and i s exacerbated by unclear institutional roles and responsibilities for each and the possibility o f duplicated functions as a result: Burundi has a generally weak audit environment without a proper
The government has embarked on a revision o f i t s legal and regulatory framework for budgetary and financial management in order to update it and strengthen compliance with the principles o f efficiency and effectiveness o f public finances management. The creation o f an Audit Court (Cow des Comptes) in 2004 was an important step toward strengthening the jurisdictional control over public financial management.
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Project Level
Funds Flow
Control Risk
bwL
NL
A segregated Designated Account denominated in U S dollars and a project account denominated in local currency will be opened under terms and conditions acceptable to IDA.
II; ludgeting
Y (Effectiveness)
,ccounting -r Internal Control
regulatory mechanism.
Involvement of few sectors, few spending units, and previous experience in Bank-financed projects keeps the risk to manageable levels.
TS budgeting arrangements are documented in the FM manual of the previous phase of the project
The procedures manual used under the previous phase will need to be updated for the implementation purposes of the TS Authorization and approval procedures may need to be updated in the old manual.
TS does not have an internal audit function
TS personnel have sufficient experience in funds flow management fiom previous experience implementing World Bank projects. Previous designated accounts were closed.
Project has adequate experience in preparation of IFRs complying with IDA requirements.
TS’s core accounting, financial reporting, and auditing were satisfactory in the PWECP.
Evolution of institutional status fiom implementing agency to one of delegated contract management agency will enhance transactional accountability.
The budgeting arrangements will be well-documented in the updatednew procedures manual being developed under the PPF.
hancial Management Aanual reviewed, updated, nd approved by IDA.
Y (Appraisal)
(Appraisal) r Effectiveness)
Financial Management Manual reviewed, updated, and approved by IDA. The TS will recruit an internal auditor to strengthen i ts capacity to produce efficient quality reports.
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Overall Risk
Action Date due by 1 Financial Management Manual reviewed, updated, and approved Appraisal
2 Appraisal by IDA. Audit Terms of Reference and audit planning wi l l be agreed with
Burundi has a weak audit environment with low audit sectoral capacity to follow acceptable auditing standards Acceptable terms of reference do not exist
Responsible TS
TS
Audit Terms of (appraisal) Reference and audit
with the TS. The TS will recruit independent external auditors acceptable to IDA
, planning will be agreed
3
4.
H: High; S: Substantial; M: Moderate; L: Low
..
the TS. A segregated Designated Account denominated in U S dollars Effectiveness TS and a project account denominated in local currency will be opened under terms and conditions acceptable to IDA. The TS will recruit an internal auditor to strengthen its capacity Effectiveness TS
Strengths and weaknesses o f the Financial Management System
5. I The TS will recruit independent external auditors acceptable to I 3 months after
7. features:
The TS’s financial management capacity is strengthened by the fol lowing salient
TS
(i) - The TS has strong previous experience in managing Bank-financed projects together with an experienced work force; and
(ii) Performance-based disbursement for works programs will ensure more accountability to the recipients.
8. The project financial management may be weakened by the following:
(i)
(ii)
An old financial management manual may be inadequate for implementation purposes; and Lack o f an internal audit department reduces assurances o f internal control effectiveness.
Financial Management Action Plan
9. financial management capacity and the dates that they are due for completion.
The action plan below indicates the actions to be taken by the TS to strengthen its
I IDA. I effectiveness
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Institutional and implementing arrangements
10. for overall project implementation. I t will coordinate project implementation by:
The TS under the oversight Ministry o f Public Works and Equipment will be responsible
(i) (ii) (iii) (iv) Handling project procurement matters.
Project monitoring, reporting, and evaluation; Contractual relationships with IDA and other co-financiers; Financial management and record keeping, accounts, and disbursements; and
Budgeting arrangements
1 1. The budgeting arrangements will be well-documented in the updated procedures manual. The Chief Accountant has sufficient experience drawn from previous engagement with a Bank- financed project and will take the lead role in budgetary preparation. Budget analysis will be conducted to ensure budget variances are addressed in an adequate and timely manner.
Accounting arrangements
Books of Accounts
12. Adequate books o f accounts shall include ledgers, journals, and the various registers, and will be maintained by the TS. The accounting system to be described in the updated Financial Management Manual will be used to track, record, analyze, and summarize the TS’s financial transactions. The TS accounts will be prepared on a cash basis in accordance with International Public Sector Accounting Standards (IPSAS), the grant agreement, and the laws and regulations in Burundi. The accounting system will allow for the proper recording o f the project’s financial transactions, including the allocation o f expenditures in accordance with i ts components, disbursement categories, and sources o f funds. Appropriate controls over the preparation and approval o f transactions should be put in place to ensure that all transactions are correctly made, recorded, and reported upon. In this regard, the TS will ensure proper books o f account have been maintained, and a revised and updated chart o f accounts has been adopted.
Staffing arrangements
13. The overall responsibility for the TS’s financial matters will remain with Chief Accountant, assisted by the Deputy Chief Accountant, who will be responsible for the preparation o f payments to be reviewed and approved by the Chief Accountant. The Chief Accountant will oversee the preparation and submission o f Interim Financial Reporting and audited financial statements to IDA.
Information systems
14. The Technical Secretariat i s currently using an integrated information management system, TOMATE, to maintain i ts books o f accounts. The project will continue to use the same s o h a r e to maintain i t s books o f accounts under the proposed project.
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Financial monitoring and reporting
15. Interim Financial Reports. The TS under the previous Bank-financed project prepared Unaudited Interim Financial Reports in the format complying with World Bank guidelines on the preparation o f Interim Financial Reports (IFR) for Borrowers and submitted on a quarterly basis to the World Bank for review. This will be adopted for the new project to ensure that they provide quality and timely information to the TS, and various stakeholders monitoring the project performance. The IFR will be submitted to the World Bank within 45 days after the end o f the quarter being reported and will be comprised of:
a
e e e
A Designated Account Activity statement; A Sources and Uses o f Funds statement; A Statement o f Uses o f Funds by project activity/component; and The accounting policies and procedures adopted and notes to the financial statements will be disclosed in the report.
Audit arrangements
16. The TS under the previous Bank-financed project provided audits satisfactory to IDA and in compliance with the provisions o f the Financing Agreement. The project annual financial statements will be audited by independent external auditors recruited under terms acceptable to IDA. Annual audit reports, including a management report, will be submitted to IDA within six months following the end o f each fiscal year. The auditors will provide a single opinion on the project financial statements, the special accounts, and statements o f expenditures. They will be required to carry out a comprehensive review o f the internal control procedures and provide a management report outlining any recommendations for their improvement. Terms o f Reference, approved by IDA before negotiations, contdn the audit scope to ensure the efficient use o f funds for their intended purpose and will state whether the audit has been conducted in accordance with international standards in auditing.
.
Internal control and internal audit
Internal Controls
17. The project internal controls will be documented in an updated Project Implementation Manual (PIM) and complemented by a Financial Management Manual (FMM). The accounting systems, policies, and procedures employed by the TS in accounting for and managing project funds will be documented in the updated PIM and FMM. The accounting policies will specify the accounting treatment for the TS’s financial transactions and will constitute basic principles designed to ensure that the accounting records are complete, relevant, and reliable and that accounting practices are followed consistently. The revised P I M and FMM will be used by: (i) IDA to assess the acceptability o f the TS’s accounting, reporting, and internal control systems; (ii) staff as a reference manual; and (iii) auditors to assess i t s accounting systems and controls and in designing specific project audit procedures.
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18. Specific procedures will be documented for budgeting, accounting systems, internal controls, funds flow, reporting and auditing, depicting document and transaction flows, appropriate filing o f project documents, management approvals, and organizational duties and responsibilities. The accounting system will consist o f the methods and records established to identify, assemble, analyze, classify, record and report the transactions o f a project, and to maintain accountability for the related assets and liabilities. The aspects to be covered in the updated manuals will include: (i) flow o f funds; (ii) financial and accounting policies; (iii) accounting system (including centers for maintenance o f accounting records, chart o f accounts, formats o f books and records, accounting and financial procedures); (iv) procedures for authorization o f transactions, budgeting, and financial forecasting; (v) financial reporting (including formats o f reports, linkages with chart o f accounts, and procedures for reviewing financial information); (vi) auditing arrangements; and (vii) aspects o f human resources.
Internal auditor
19. The TS does not have an internal auditor to exercise an oversight function, review the financial monitoring reports, and carry out regular internal audit reviews. The Technical Secretariat will recruit by effectiveness an internal auditor to conduct reviews which will include ex post verification o f expenditure eligibility, as wel l as physical inspection o f works and goods acquired during implementation. The findings and recommendations o f the Internal Auditor will be used by the TS to improve i t s implementation in areas related to financial management and procurement.
Flow of funds
20. Disbursement arrangements and methods. Disbursement f rom the IDA grant account will be made on the basis o f incurred eligible expenditures (transaction-based disbursements). Upon grant effectiveness, an init ial advance up to the ceiling o f the designated account (“Advance” method) will be disbursed from the proceeds o f the IDA grant and will be deposited into a Technical Secretariat-operated Designated Account (DA) to expedite i t s implementation. The TS will submit Withdrawal Applications (at least monthly) supported by Statements o f Expenditures (SOE) or records, as the case may be, to report actual eligible expenditures paid f rom the DAY and at the same time may request a new advance up to the ceiling amount. The TS may also submit requests for reimbursement o f eligible project expenditures which the Recipient has pre-financed from its own resources. The TS will also use the Direct Payment method, whereby payments may be made directly to third parties (e.g., a supplier, contractor, or consultant) at the Recipient’s request. Another acceptable method o f withdrawing from the proceeds o f the IDA grant is the Special Commitment method. Under this method, payments may be made to third parties for eligible expenditures under special commitment entered into, in writing, at the Recipient’s request and o n terms and conditions agreed between IDA and the Recipient.
21. The Designated Account ceiling is set at US$1.5 million, calculated to represent approximately four (4) months o f eligible project expenditures. Monthly bank reconciliations will be prepared by the Deputy Chief Accountant, reviewed by the Chief Accountant. Technical Secretariat payments of.project transactions regardless o f the currency will be done through the
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bank and converted at the day’s mean exchange rate. The TS will also receive contributions from beneficiaries o n a separate account.
22. Supporting documentation and Use of Statements of Expenditures (SOEs). Applications to request reimbursements or to report eligible expenditures paid f rom the DA should be submitted with records evidencing eligible expenditures (e.g., copies o f receipts, supplier invoices) for payments against contracts of: (i) goods valued at US$lOO,OOO or more, (ii) services o f consulting f i r m s valued at US$lOO,OOO or more, and (iii) services o f individual consultants valued at US$50,000 or more. Statements o f Expenditures are required for al l other expenditures or contracts.
23. consistent with the Country Financing Parameters (CFPs) for Burundi.
The project will finance 100 percent o f eligible expenditures, exclusive o f taxes,
24. The TS account signatories will be updated as necessary in the Accounting and Financial Management Procedures Manual. Authorized signatories will be designated in accordance with their position. The current signatories include the Technical Secretariat Director, the Chief Accountant, and the Project Engineer.
Funds flow chart
I IDA
Government
in an acceptable commercial bank
Designated Account in Project Account in an
commercial bank denominated in FBU an acceptable acceptable commercial bank
denominated in U S D denominated in FBU
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Conclusion of the assessment
25. The Financial Management arrangement above indicates that they satisfy the Bank’s minimum requirements under OPBP 10.02. To strengthen i t s financial arrangements and ensure that project funds will be used as intended, the TS has updated the Financial Management Manual and established audit Terms o f Reference approved by IDA before negotiations, and will open a designated and project account and recruit an internal auditor by effectiveness.
Supervision plan
26. Moderate risk rating associated with existing FM arrangements. One on-site supervision visit will be conducted each year to commensurate with the risk levels. The objective o f the supervision missions will be to ensure that strong financial management systems are maintained for the grant throughout the l i f e o f the project. Reviews will be carried out regularly to ensure that expenditures incurred by the TS remain eligible for IDA funding. The Implementation Status Report (ISR) will include a Financial Management rating and will be provided by the Financial Management Specialist after an appropriate review has been carried out.
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Annex 8: Procurement Arrangements BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
A. GENERAL
1. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” published in May 2004 and as revised in October 2006; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” published in May 2004 and as revised in October 2006, and the provisions stipulated in the Financing Agreement. The general description o f various items under different expenditure categories are described below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank project team in the procurement plan. The procurement plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
2. The works contract envisaged will consist o f municipal investment in works such as markets, bus stations, municipal roads, water supply and sanitation infrastructure, schools, health, and social centers. Contracts estimated to cost US$3,000,000 equivalent and above will be awarded through International Competitive Bidding (ICB). Contracts estimated to cost more than US$50,000 equivalent but less than US$3,000,000 equivalent will be awarded through National Competitive Bidding (NCB) in accordance with the provisions o f paragraphs 3.3 and 3.4 o f the above-mentioned Guidelines for Procurement under IBRD Loans and IDA Credits. Small works estimated to cost less than US$50,000 equivalent will be procured on the basis o f quotations obtained f iom at least three qualified contractors in response to a written invitation. The written invitation would include a description o f the works, basic technical specifications, completion date, and if necessary the plan o f the works. The Project Implementation Manual (PIM) will furnish the standard bidding document to be used for NCB and shopping.
Procurement of Works:
3. Procurement of Goods. Goods to be procured by the grant would include equipment to complement the built infrastructure, vehicles, office supplies, and computer equipment. The above-mentioned goods would be procured through a combination o f the following procedures: (a) ICB for contracts estimated to cost more than US$500,000 equivalent, (b) NCB for contracts valued at more than US$50,000 equivalent but less than US$500,000 equivalent, and (c) shopping for contracts estimated to cost less than US$50,000 equivalent. In situations and circumstances that are in compliance with the provisions o f paragraph 3.6 o f the Guidelines for procurement, direct contracting may be used with Bank prior review.
4. Procurement of non-consulting services. Non-consulting services to be financed under the grant would include office and equipment maintenance, rental expenses, communication costs, transport, and insurance. Regarding the size and nature o f these types o f contracts, the procurement process will be conducted under procedures acceptable to IDA and which would be described in the Project Implementation Manual and in the project financial and administrative manual. Both manuals have been reviewed and found acceptable to IDA.
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5. Selection of consultants, training, and workshop. Consultant services to be procured under this grant would include technical studies, technical assistance, and monitoring and evaluation activities performed by f i rms and individual consultants.
6. Contracts estimated to cost US$lOO,OOO equivalent or more, would be procured through Quality-and Cost-Based Selection (QCBS). The contracts for services estimated to cost less than the equivalent o f US$lOO,OOO per contract may be procured under contracts based on Consultants' Qualifications in accordance with the provisions o f paragraphs 3.1 and 3.7 o f the Consultant Guidelines.
7. Financial and technical audits estimated to cost less than US$l 00,000 equivalent may be procured under Least Cost Selection (LCS) methods, in accordance with the provisions o f 3.1 and 3.6 o f the Consultant Guidelines. Consultants for services meeting the requirements o f Section V o f the Consultant Guidelines may be selected under the provisions for the Selection o f Individual Consultants, i.e. through the comparison o f the curriculum vitae o f at least three qualified individuals. N o civil servant can be hired as consultant,
8. Single source selection may be used exceptionally in accordance with paragraph 3.9 to 3.12 o f the Consultant Guidelines for: (i) training, (ii) consulting assignment provided by NGOs or local other organizations, and (iii) for consultant assignment estimated to cost less than US$lO,OOO equivalent per contract.
9. To ensure that priority i s given to the identification o f suitable and qualified national consultants, short-lists for contracts o f value estimated to be less than US$lOO,OOO equivalent may be comprised entirely o f national consultants (in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines), provided that a sufficient number o f qualified individuals or f i r m s (at least three) are available at competitive costs. Training, workshops, conference attendance, and study tours would be carried out on the basis o f approved annual work programs that identify the general framework o f training or similar activities for the year, including the nature o f traininglstudy tours/workshops, number o f participants, and estimated cost.
10. Operating costs to be financed under the grant include the non- consulting services mentioned above, plus per diem, supervision costs, and salaries o f locally- recruited staff. These costs shall exclude salaries, bonuses, and fees for government civil servants. These expenses will be financed using procedures acceptable to IDA and that will be described in the P I M and in the project financial and administrative manual.
Operating costs.
B. PROCUREMENT
ASSESSMENT OF THE AGENCIES' CAPACITY TO IMPLEMENT
11. Procurement activities under the project would be carried out by ABUTIP, which will implement the infiastructure component, and the TS, which will be responsible for the municipal and urban management component, and the capacity building component. Both agencies were
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involved in the previous operations with responsibilities similar to those they will hold in the new operation.
12. ABUTIP i s an autonomous non-profit association that includes on i t s board representatives from civil society, the private sector, and governmental structures at national and l w a l levels. ABUTIP will be responsible for: (i) selecting and recruiting consultants in charge o f technical studies and supervision o f works, (ii) supervising quality o f studies and bidding documents, (iii) managing bidding process and awarding contracts for works and goods, (iv) supervising contracts and approving invoices, and (v) acknowledgement o f the completion of works.
13. The performance o f ABUTIP in handling procurement activities was satisfactory in the first operation. After the closing o f this operation, ABUTIP continued to operate as an implementing agency and/or as a contract management agency for operations funded by the African Development Bank and/or IDA. The main change since the closing o f the previous operation i s a reduced level o f activity. As a consequence, ABUTIP had to reduce the number o f staff. A few qualified staff chose to seek jobs in other organizations, but this adjustment to circumstance did not reduce the capacity o f the agency to implement procurement activities. The proposed operation will increase the volume o f ABUTIP activity. During project preparation, i t was agreed that ABUTIP should recruit a Procurement Specialist instead o f having one o f their operations officers dealing with procurement tasks and operations.
14. At pre-appraisal, i t was also agreed that ABUTIP would review and adopt the standard bidding documents for National Competitive Bidding and Shopping that are now used by the Government so that the project favors harmonization o f procurement practice in the country. These standard bidding documents were developed with the support o f an IDA-financed operation and are intended for use by all governmental structures and project implementation units beginning in January 2009. It was also agreed to adjust the project implementation manual in accordance with the new function o f ABUTIP. The manual was finalized during the negotiations.
15. The TS i s a governmental structure within the Ministry o f Public Works and Equipment. I t will be responsible for: (i) preparing annual work programs o f approved subprojects for transmission to ABUTIP for execution, (ii) monitoring implementation o f the identified subprojects’ environmental and social management plans, (iii) supervising implementation o f institutional and capacity building activities at local and central levels and overall monitoring and evaluation o f the project, (iv) supervising local governmental performance o f infrastructure operations and maintenance, and (v) managing project funds and supervising the implementation o f the Contract Management Agreement with ABUTIP.
16. The TS’s performance in handling procurement activities was also satisfactory during the first operation. No change occurred in TS staffing since the closing o f the previous operation, but an increased workload will require TS to handle more activity than under the f i rs t operation. This change does not require recruiting an additional staff. The P I M needs to be adjusted to account for the changes in the TS’ assignment and responsibility. The standard bidding
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documents will be the same for both implementing agencies; the changes deemed necessary are handled by ABUTIP, as above mentioned.
17. The Technical Secretariat was not really exposed to the changes that occurred in the selection guidelines, Guidelines: Selection and Employment of Consultants by World Bank Borrowers” published in May 2004 as revised in October 2006. Hence, The TS team will need refreshment training on consultant selections that will be conducted by the Procurement Specialist o f the Country Office before September 2009 for all the project implementation un i t s that are in the same situation as the TS. Close monitoring o f implementation o f the TS’ procurement plan will be necessary during the six f irst months o f project implementation to make sure that the selection o f consultant f i r m s and the publication o f contract awards are done in compliance with the Banks’ selection guidelines published in May 2004 and as revised in October 2006.
C. PROCUREMENT PLAN
18. At appraisal, the Recipient o f the grant submitted a procurement plan for project implementation which provides the basis for the procurement methods. This plan was agreed between the Recipient and the project team on March 27, 2009. The procurement plan was reviewed during negotiations and will be available at the offices o f the implementing agency. I t will also be available in the project’s database and on the Bank’s external website. The procurement plan will be updated in agreement with the project team annually or as required to reflect actual project implementation needs and improvements in institutional capacity.
D. FREQUENCY OF PROCUREMENT SUPERVISION
19. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the implementing agency has recommended at least two supervision missions to carry out post-review o f procurement actions and yearly technical audits.
E. INTERNATIONAL COMPETION
DETAILS OF THE PROCUREMENT ARRANGEMENT INVOLVING
1. Goods and works and non consulting services.
a. contracting.
L i s t o f contract Packages which will be procured following ICB and direct
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1
Ref. No.
1
2
2
Contract (Descript ion)
Paved road in Kinanira and rainwater
3 4
Estimated Procurement Cost (US$) Method
2,100,000 ICB
collection I Paved I 1,900,000 I ICB
7
road in Kibenga
8 9 5 1 6
Review Expected by Bank Bid- (Prior / Opening Post) Date
Prior Mid - 2009 September
To ensure adequate competition, ICB will be used for paved road estimated to cost more than US$ 1,500,000 equivalent
Post
Comments
March 2010
P-Q
P-0 = Preaualification
2. Consulting services.
Domestic Preference (yedno)
(a) L is t o f Consulting Assignments with short-list o f international f i rms.
2
Description o f Assignment
Study of the strategic
Bujumbura including bidding documents for the emergency program
sanitation plan of
1 3 4 5 6 7
Estimated Selection Review Expected Comments Method by Bank Proposals
(PriorPost) Submission cost (US$) Date
2010 350,000 QCBS Prior Mid-July
Ref. No.
1
(b) Consultancy services estimated to cost above US$200,000 equivalent per contract and Single Source Selection o f consultants ( f i rms) for assignments estimated to cost above US$50,000 equivalent will be subject to prior review by the Bank.
(c) Short lists composed entirely of national consultants: Short l is ts o f consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.
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Annex 9: Economic and Financial Analysis BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
I. Socio-economic Context
1. The First Public Works and Employment Creation Project implemented between 2001 and 2007 provided improved access to basic services by funding, among others, the construction of markets of various modules and roads to some o f the communes in selected provinces. The subprojects have thus enhanced equity and economic development by stimulating urban-rural exchanges. This second project plans to expand these urban services in communes in all provinces, including those not covered in the f irst program. The focus o f the second project i s also on employment creation as well as increased access to basic socio-economic services in targeted areas. Through demand-based and other infrastructure investment programs for urban centers, covering all provinces and targeted municipalities, the program also plans to strengthen municipal management and local fiscal performance in the three main cities, Bujumbura, Gitega and Ngozi. The following socio-economic background provides the context for the assumptions underlying the economic and financial analyses.
2. The 2008 population o f Burundi i s 8,038,61 8.2 The country i s administratively divided into 17 provinces, 129 communes (both urban and rural), 375 zones, and 2,908 collines3. The 2008 provincial population varies from 22 1,39 1 people (Cankuzo Province) to 66 1,3 10 people (Ngozi Province); at commune level, the population ranges from 15,865 people (Reher Communes, Maire de Bujumbura Province); to 156,096 people (Gitega commune, Gitega Provinces). The number o f communes per province ranges from 5 to 13.
Population characteristics of urban communes.
Table 1: Demographic Characteristics of Selected Urban communes
3. Urbanization. Urbanization in Burundi i s at a very low level. About 10.6 percent the total population i s known to live in urban settings. The country i s said to have 68 ‘urban centers’ o f which four are classified as ‘main cities’ (Gitenga, Ngozi, Kayangaza, and Rumonge), ‘15
* Third Burundi Census, 2008
correspond to district, sub-county, parishes and villages respectively. Development planning i s done at commune level in Burundi, while in Uganda development planning territorial unit i s the sub-county.
For those familiar with Uganda administrative structure, Burundi’s province, commune, zone and collines,
72
secondary cities’, and the remaining are mainly semi-urban centers. Despite relatively l o w urbanization rates, Burundi suffers from many o f the same i l ls as many urbanized Sub-Sahara Afr ican countries. Accessibility in urban areas to basic services is relatively low. There i s a high rate o f urban unemployment, high incidence o f poverty, poor urban housing, and long distances to access potable water and health service centers. Only 4.2 percent o f the population has access to electricity, with serious implications for economic modernization mobile phones are being introduced but coverage is currently low. Yet, accessibility o f these basic services i s even worse in the rural areas than in urban areas.
4. Urban Unemployment. Table 2 summarizes unemployment rates by gender and age in selected urban sector for which data was readily available. Overall, the urban unemployment rate was 13.5 percent for 2007 (20.2 percent for the country). The highest overall urban unemployment rate (17.5 percent) was experienced by 15 to 29 year-olds; while the lowest (8.4 percent) was for people more than 50 years old. Unemployment is highest in Bujumbura (14 percent), and lowest in Makamba (4.6 percent), reflecting that in Burundi there are significant variations in urban unemployment among urban centers. Unemployment is often accompanied by hidden under-employment. Considering the percentage o f people earning a salary less than the minimum hourly wage as an indicator o f under-employment, the current rate o f urban under- employment can be estimated at approximately 53.5 percent for the whole work force.
Table 2: Unemployment Rate by Gender and Age in Selected Urban Centers (2007)
Source: Statistical Institute and Study (STEEBU, Bujumbura), Phase 1 survey
5. About 97 percent o f the poor l ive in rural areas, however. This project intends to promote urban-rural exchange by creating urban jobs. In a landlocked country such as Burundi, which faces high transport costs, the competiveness o f its main exports o f coffee and tea i s at a comparative disadvantage in the world market. The labor-intensive investments in urban communes under the project create a domestic urban market for the products o f the rural poor from such provinces as Kirundo which. was considered the leading supplier o f food staples prior to the c iv i l war, but today has the largest incidence o f poverty (82 percent) in Burundi.
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6. The results o f the Employment Survey in Urban Areas (Table 3), covering Bujumbura, Gitega, Makamba, and Kirundo4 provide some insight into the condition of urban income in selected towns. O f the people now living in the four cities, 31 percent were not born there and have settled in the urban centers over the past many years. These migrant residents (not born in the city) are among those that are in the higher income bracket.
Urban income.
Table 3: Dynamic of Migration
Source: Statistical Institute and Study (STEEBU, Bujumbura), Phase 1 survey
7. Equity in urban centers. In Burundi, with an estimated Gini coefficient o f 0.38, the difference in daily consumption per capita i s not affected by severe inequalities. However, overall incidence o f urban poverty i s 34 percent. The lowest poverty rate i s found in the municipality o f Bujumbura, at 29 percent, while the incidence o f rural poverty stands at 69 percent. The share o f food expenditures in total household expenditures comprises between 60 and 67 percent o f monthly income. Yet, about 80 percent o f the population consumes only 56 percent o f the national daily consumption, and over the past years a sort o f static equilibrium appears to have been reached. About 95 percent o f households acknowledge being severely hit by the soaring international food and fuel prices. This project, by promoting increased incomes through labor intensive employment and access to basic services in urban communes, could enhance urban demand for rural products and also enhance access to services in urban centers.
8. Urban poverty. In urban areas, poverty affects about 160,000 people. If a cash transfer i s to be made so that the poor can meet their food and non-food needs, the cash required will be approximately 125 BIF per daykapita or (US$O. 12/day/capita). With 5.4 mill ion poor, the government budget would need to be US$236.5 million. The labor-intensive policy that guides the design and implementation o f the project would provide opportunities for the unemployed and contribute to poverty alleviation.
.
9. Human capital formation. A recent Burundi poverty study’ has shown that poor (low income) households in Burundi have household heads that are generally less educated, rely heavily on agricultural activities, and are female-headed households. Conversely, rich (high income) heads o f households have higher education, rely more on non-agricultural activities, and are male-headed households.
10. Households in Burundi with higher levels o f daily consumption per capita tend to have a higher proportion o f heads o f household with some formal educational background (e.g., primary, secondary, and college). The wealthiest 20 percent o f households have proportionally more household heads with primary, secondary and college education (respectively 4 1 percent,
Phase1 : Enqudte Emploi en Milieu Urbain ’ Aurelien S.Beko, (Poverty Economist -PREM 3), Povertv Uudate, unpublished note.
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15 percent, and 4 percent), than the poorest 20 percent do (respectively 26 percent, 1 percent, and 0.1 percent). In 2006, about 69 percent o f household heads generated their income from agriculture (domestic and exports). Yet, the proportion o f household heads relying mainly o n agricultural activities was greater in poor households (75 percent) than in r ich households (53 percent). A larger proportion o f incomes generated by r ich heads o f household originated from urban activities such as industry, public services, and the informal sector, than in poorer households. Moreover, gender specificities indicated that people leaving in female-headed households tended to be poorer than people living in male-headed households.
11. The proposed project investments in markets and health centers will contribute to improved sanitation and fight disease. The prevalence o f disease causes as many as 11 sick days per year, per capita. Most people do not get to see doctors for lack income to pay the medical fees. This lack o f access to medical services has informed the evaluation o f expected benefits f rom project investments in health centers and schools6.
11. Economic analysis of the project
12. The Public Works and Urban Management Project has three components: Component A: Infrastructure (total base cost: US$33.8 mi l l ion Component B: Municipal Urban Management (total cost: US$2.3 million) and Component C: Institutional Strengthening, monitoring and evaluation (total cost: US$3.4 million; see detail Annex 5: Project Costs). Components B and C are necessary conditions for realization and sustainability o f the benefits achieved under Component A. Component A will finance: (i) communal and community demand-driven investment programs in phases; and (ii) city-level infrastructure in Bujumbura, Gitega, and Ngozi. The costs o f component A include consultants for technical study and supervision, goods, works, and costs related to contract management.
Methodology for subproject evaluation
13, Communal and community subprojects are demand-driven. Prior economic appraisal o f such subprojects is difficult. However, it is important to validate the methodology used, as subproject evaluation will lead to decision-making about investment in economically viable subprojects. Subprojects selected for investment, using the subproject cost-benefit evaluation methodology under hard-budget constraints, were shown to be economically viable for the first- year investment portfolio. Such subprojects identified and selected under the outlined procedure have either high economic rate o f return (ERR) or are found to be cost-effective.
14. Procedures for identification and selection o f demand-driven subprojects require that:
(i) (ii) (iii)
(iv)
Subprojects are identified by the communities to meet their needs; Subprojects are included in the Commune Development Plans; Subprojects identified meet regional equity requirements, as stated in the project objectives; Subprojects use labor-intensive approaches o f construction;
Aurelien S.Beko, Poverty Update. 6
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(v)
(vi)
(vii)
Subprojects meet agreed criteria on the basis o f weighted points which reflect the objectives o f the project and those priorities o f the communities; The communes have shown commitment to the subprojects by paying counterpart funds, either in kind or cash; and Subproject cost estimates are realistic, bounded, and meet counterpart fund o f two to five percent o f the project cost, which serves as hard budget constraints.
15. The first investment portfolio proposed for financing has been analyzed and meets the above procedure. The fol lowing subprojects were reviewed and proposed for implementation in the first year.
0 f ive (5) markets, 0 seven (7) schools and higher institutions,
two (2) health centers, and 0 three (3) paving subprojects.
16. for subproject evaluation.
The indices used to rank the subprojects are based o n weighted points in the methodology
Table 4: Methodology for Community Subproject Self Evaluation Points for Evaluation Criteria
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Source: Gov. o f Burundi
Average cost per km of paved roads with
drainages by coble stone in for the project ( B F U b million in
2009 prics)
National average cost per km o f paved roads with drainage by coble stone in ( B F U h
million in 2009 prices) Quartier -Kibanga 342 3 96 Quartier -Kinanira I11 342 396 Quartier -Gihosha 342 396
17. These first-year investment subprojects were further subjected to cost-benefit and cost- effectiveness analyses. A discount rate o f 12 percent i s used for net present value (NPV) evaluation. Conversion factors for correction on investment 90 percent (taxes); 50 percent o f unskil led labor; average monthly rents per kiosks=lO,OOOFBu. The results o f such analyses were subject t o sensitivity analyses o f +20 percent on investment and -20 percent o n revenue. The financial internal rate o f return (FIRR) and FNPV were estimated for market subprojects since they generate revenues. Table 5 (Summary o f Cost-effectiveness) shows the cost effectiveness indices for the coble stone roads and drainage sub-projects, and Table 6 (Summary o f Economic and Financial Analysis) provides the estimates for ERR, FRR, NPVs, and FNPVs. The sensitivity analyses indicate that the return o n investments i s on the whole robust.
Cost-effectiveness 0.864 0.864 0.864
Table 5: Summary o f cost-effectiveness
77
T
3
.rl cd
3 .S LL
u 'g P .s 0 0 v)
0 00
18. The benefits of the coble roads and drainage subcomponent investments are improved sanitations, savings in vehicle operating costs (VOC), and potential appreciation in property value due to improved sanitation. The major quantifiable benefits from the project come from the appreciation o f property values and the health impact. However, both o f these benefits are not easily quantifiable. However, these subprojects are justified on cost-effectiveness ground. The estimated unit cost per paved km is BIF342 mi l l ion in 2009 prices. This compares favorably with the national average cost per km o f BIF396 mi l l ion in 2009 prices. Assuming that the subprojects are implemented without major cost over-run, the investments are justified. Paving investments are therefore considered cost-effective, taking into account inflation. Moreover, these subprojects would create significant number o f jobs (approximately 3 mi l l ion person-days since the design o f the subproject i s labor-intensive, thereby contributing to achievement o f project employment objectives.
Financial Analysis
19. The project will represent an average o f 1.3 percent o f the 2009 Burundi government’s annual expenditures, and will have l i t t le adverse fiscal impact on the government budget. As a labor-intensive project with lower foreign exchange requirements, however, the project will have positive financial impact o n the government budget. Further, the market subprojects in the f i rs t phase portfolio are revenue generating and have a financial internal rate o f return o f more than 12 percent. With improved access to the community and income-generating activities, the urban communes will be in a better position to improve their revenue bases and contribute to cost recovery.
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Annex 10: Safeguard Policy Issues Burundi: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
1. The proposed project i s designed to have beneficial impacts on basic infrastructure, service delivery, and improved living conditions. The project has triggered safeguards OP 4.01 Environmental Assessment, OP 4.12 Involuntary Resettlement, and OP7.50 Projects on International Waterways due to the planned infrastructure construction and rehabilitation activities. Given the programmatic and demand-based nature o f the project, an Environmental and Social Management Framework (ESMF) and a Resettlement Policy Framework (RPF) have been prepared by the government’s Technical Secretariat (TS) and disclosed in-country on December 25,2009 and at the Infoshop on the Bank’s intranet on January 5, 2009. An updated version o f the ESMF and the RPF was posted on Infoshop on March 30,2009 and in the country on April 1 , 2009. Specific Environmental Impact Assessments (EIA) and Resettlement Action Plans (RAP) are being prepared as needed for each subproject when location i s determined and according to the screening process carried out at subprojects’ appraisal. For the first proposed portfolio, the environmental screening has been made and EIA are being prepared along with the technical design studies.
2. anticipated from the project activities and eligible investments. activities that would fall under Category A.
This project falls into Environmental Category B as no adverse long-term impacts are This project will not fund
3. Environmental and social concerns have been integrated into the project design and anticipated impacts on the environment and social setting are included as screening and selection criteria o f investments subprojects at an early stage o f the process.
4. The ESMF and the RPF were prepared in consultation with a number o f key stakeholders including: relevant representatives o f the Ministry in charge o f environment, governors, communal administrators and councils, technical municipal services, local maintenance committees, potential beneficiary Community Development Committees, and direct potential beneficiaries (markets vendors, people along roads susceptible to be paved, schools directors). The consultations confirmed the high expectation raised by the project among beneficiaries and satisfaction with the use o f a participatory process to identify priority development subprojects and ultimately prepare local development plans.
Project Location and Salient Physical Characteristics Relevant to the Safeguard Analysis
5. While the investment component project targets the communes o f all provinces, the implementation o f the municipal support activities will primarily target the three main cities o f Bujumbura, Ngozi, and Gitega.
Measures Taken by the Borrower to Address Safeguard Issues
6. As a complement to the Social and Community Development project (PRADECS), which mainly focuses on rural areas and small communes, the proposed Public Works and Urban Management Project (PWUMP) focuses more on urban communes. For each subproject
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proposed by the commune, a comprehensive screening process for environmental and social impacts i s been put in place prior to subproject approval, to ensure compliance with the category o f the project, safeguard directives and policies, and to define the type o f safeguards documentation to be prepared. The project took into account the recommendations o f the ESMF and safeguards preparation missions in terms o f (i) strengthening the capacity o f different stakeholders on safeguards related to project activities; and (ii) inclusion of safeguards measures into subproject design and costs, bidding documents, and supervision; and (iii) follow-up and assessment o f the ESMF and RPF implementation and annual project impact assessment.
OP 4.01 Environmental Assessment
7. The project has triggered OP 4.01 because the construction and rehabilitation o f the planned infrastructure investments (markets, health centers, schools, roads, municipal halls, erosion control and environmental works, quarry rehabilitation) are likely to incur some adverse environmental and social impacts (loss o f livelihoods, air, water and soil pollution, soil erosion, loss o f vegetation, traffic accidents, and medical waste).
8. Since the exact locations o f the subprojets and potential localized adverse environmental and social impacts o f the planned infrastructure investments could not be identified prior to appraisal, and to ensure that future investments are implemented in an environmentally and socially sustainable manner, the Borrower has prepared an Environmental and Social Management Framework (ESMF). The ESMF outlines an environmental and social screening process for fbture subprojects. The key element o f this screening process i s the Environmental and Social Screening Form (ESSF) which will enable subproject implementers to identify potential adverse environmental and social impacts and recommend appropriate mitigation measures, taking into account Burundi’s environmental legislation as well as the Bank’s safeguard policies. The ESSF also includes a requirement for public consultations during the screening process as well as questions designed to determine the potential loss o f livelihoods. The completed screening forms will be attached to the subprojects proposed for financing.
9. The ESMF includes the following annexes: (i) Environmental and Social Management Plan (ESMP) for the proposed project (Annex l), (ii) Environmental and Social Screening Form (ESSF) for subprojects (Annex 2), (iii) Environmental and Social Checklist for subprojects requiring the implementation o f simple mitigation measures (Annex 3), (iv) generic Environmental Assessment (EA) Terms o f Reference for subprojects requiring separate EAs (Annex 4), (v) Monitoring Indicators for subprojects (Annex 9, (vi) Summary o f the Bank’s safeguard policies to ensure that future subprojects are environmentally and socially sustainable and implemented in compliance with the Bank’s policies (Annex 6), (vii) Environmental Clauses for Contractors to be attached to the bidding documents to ensure the use o f environmentally and socially sustainable construction techniques (Annex 7), (viii) Medical Waste Management Plan for Health Centers (Annex S), and (ix) l i s t o f persons met during the preparation o f the ESMF.
10. Environmental and social management under the project will draw on experience gained under the previous operation. The Environmental Specialist located in the Technical Secretariat will continue to: (i) ensure that future subprojects include environmental and social criteria in
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addition to the criteria o f eligibility, identification, appraisal, and implementation which will be included in the Project Implementation Manual; (ii) the environmental and social screening process outlined in the Environmental and Social Management Framework (ESMF) i s efficiently implemented with the participation o f the beneficiaries; (iii) ensure that the Ministry o f Environment reviews and approves the project’s environmental studies, issues “Environmental Compliance Certificates” as appropriate, and supports the project with regard to environmental monitoring; and (iv) ensure that ABUTIP and the supervision consultants monitor the implementation o f the environmental clauses included in the contracts as well as the recommendations o f the screening results andor Environmental Impact Assessments.
1 1. Based on experience, potential adverse localized environmental and social impacts o f future subprojects (markets, schools, health centers, roads, water supply) are likely to include loss o f vegetation, sedimentation, generation o f medical waste, soil, air, and water pollution, and will be mitigated through the implementation o f the provisions o f the ESMF. At the same time, future subprojects are expected to have positive impacts on the quality o f l i fe o f the beneficiaries due to the improved access to health services, education, water supplies, hygiene and nutrition education, employment opportunities, and improved roads which will benefit the population at the local and national levels.
12. The project includes a budget for: (i) environmental training and awareness-raising for communal administrators, firms, small and medium enterprises, NGOs, and relevant ministry staff with a focus on implementation o f the ESMF, national environmental issues, and medical waste management; (ii) training in the management, monitoring and maintenance o f infrastructure subprojects for communal technicians, communal administrators, local maintenance committees; (iii) short-term training for the Environmental Specialist located at the Technical Secretariat with a focus on environmental audit and appraisal; (iv) environmental and impact assessments for future subprojects as well as environmental and social audits o f subprojects under implementation for one year; and (v) environmental and social monitoring in the field to ensure that the provisions o f the ESMF have been implemented appropriately.
13. To further enhance the environmental and social sustainability o f future infrastructure investments, Component A will finance the planting o f indigenous trees on project sites. The trees will be planted along paved roads, around schools and health centers, at markets, bus stations, and sports facilities. The planting o f trees will increase employment opportunities while reducing soil erosion and sedimentation in nearby rivers and streams, improving soil quality, slope stability, and the state o f vegetation. The trees will also contribute to an improvement in the public’s quality o f l i fe. The selected contractors will work closely with the National Anti- Erosion Plan (PNLAE) to ensure that appropriate, disease-resistant, local varieties, such as Gravillba, Cedrella or Therminania Suferba are planted.
14. In the remaining project areas, subprojects will have access to tree plants by contacting the provincial offices o f the PNLAE and the Agriculture Rehabilitation and Sustainable Land Management Project (PRASAB); the Rural Technical Services (“Le Genie Rural”) in the towns o f Ngozi and Gitega, or the provincial offices o f the Employment Creation Project supported by the African Development Bank in the provinces o f Ngozi, Kayanza, Muyinga, and Gitega.
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OP 7.50 Projects on International Waterways
15. A s regards OP 7.50, as requested by the Government o f Burundi, the Bank issued notification letters to Burundi’s riparian neighbors (Angola, Central African Republic, Congo, Democratic Republic o f the Congo, Egypt, Eritrea, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, Uganda, and Zambia) and the N i l e Basin Initiative Secretariat o n March 18,2009 and March 3 1 , 2009 (for Eritrea). The riparian states and the N i l e Basin Initiative Secretariat were given until April 17 and April 30, 2009 (for Eritrea) to respond with any comments they may have. The only response received came from Egypt, Eritrea, and Kenya who confirmed their non-objection to the project as long as there i s no negative effect on the N i l e River Basin. The Kenyan Permanent Secretary o f the Ministry o f Finance requested that information on design studies and environmental impact assessments for water investments and further developments susceptible to use those waters be made available to the ministry and suggested that special attention should be given to ensure catchment protection and soil conservation. A response addressing these remarks and the Environmental and Social Management Framework o f the proposed project were sent to the Government o f Kenya on M a y 4,2009.
OP 4.12 Involuntary Resettlement
16. The project has triggered OP 4.12 because the construction and rehabilitation o f the planned infrastructure investments (markets, health centers, schools, roads, municipal halls, erosion control and environmental works, quarry rehabilitation) could require temporary displacement and relocation o f households who are currently residing o n or close to the proposed roads, or next to infrastructure that will be improved, and temporary relocation o f vendors during the upgrading works o f markets. The potentially negative social impacts o f activities carried out under the project (such as temporary resettlement o f commercial market activities) are expected to be l imited and site-specific typical o f Category B projects. Nonetheless, since the exact locations and potential localized adverse social impacts o f the planned demand-driven subprojects are st i l l unknown and will be determined during the l i fe o f the project, the Borrower prepared a Resettlement Policy Framework (RPF) during project preparation to further help address any unforeseen impact. This RPF will be translated to Resettlement Action Plans (RAP) as and when the need arises during project implementation.
17. As set forth by the policy, the main objectives o f the RPF are to: (i) avoid or minimize resettlement to the extent possible; (ii) execute unavoidable resettlement activities as sustainable development programs, providing resources to enable displaced persons to share in project benefits; and (iii) assist displaced people, including vulnerable inhabitants, in their efforts to improve livelihoods and standards o f living or at least to restore them. The eligibility criterion for resettlement and compensation packages i s based o n the fol lowing census: “Any household that has been identified as owning a structure/land that will be affected by the project will be eligible for a resettlement and compensation package.” Consequently, three types o f resettlement action plans (RAP) will be prepared according to the number o f project affected people: less than 50, between 50 and 200, and over 200 people. The specific resettlement and compensation packages will offer to al l displaced land andor asset owners a standard compensation that will be calculated according to specific and precise criteria (Le., based o n the current market value).
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18. Extensive public consultation and participation have been done with various stakeholders to ensure social ownership and accountability o f project activities. Although the Burundi legislation does not recognize informal occupants, the RPF has made provision that project impacts on people’s revenues and land will be dealt with in accordance with Burundi’s constitution, laws, and regulations, and also with the World Bank’s policy on Involuntary resettlement (OP 4.12). The new ordinance (720/CAB/304/2008) dated March 2008 recently updated the compensation tariffs for involuntary resettlement. However, as clearly stated in the RPF, wherever differences appear between the two regulations, the World Bank’s pol icy will be applied.
19. With respect to grievances, Burundi law provides two different levels o f Grievance Redress Mechanisms (GRM): (i) friendly settlement which will be encouraged; and (ii) court settlement, which i s the ultimate means to settle down any such conflict.
20. Participatory and inclusive monitoring and evaluation are key elements o f the RPF. The two main objectives are: (i) follow-up o n the specific situations and difficulties encountered during implementation o f resettlement operations; and (ii) participatory monitoring and evaluation o f the mid-term and long-term impacts o f resettlement operations o n project-affected people, their living conditions, the environment, the local capacity building, and so forth. The evaluation will also (i) make sure that the main objectives o f the RPF have been fulf i l led accordingly, (ii) ensure that the policy directives on resettlement operations have been respected, and finally (iii) carry out a new strategy for a long-term perspective. The annual evaluation process will be the responsibility o f the TS, which will prepare and disseminate a yearly status report, Independent auditors will be encouraged to evaluate the transparent implementation and the tangible results o f the RPF after the end o f the resettlement operations, and after a sufficient period o f time (two years). Based o n experience and if necessary, improvement will be brought to the RPF during the l i fe o f the project.
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Annex 11: Project Preparation and Supervision BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
PCN review Initial PID to PIC Initial ISDS to PIC Appraisal Negotiations Board approval Planned date o f effectiveness Planned date o f mid-term review Planned closinp: date
Planned Actual 09/29/2008 09/23/2008 10/14/2008 1 0/0 1/2008 1 O/ 1 4/200 8 1 O/ 1 2/200 8 03/16/2009 03/13/2009 04/06/2009 04/07/2009 0 6/0 9/2 00 9 09/30/2009 06/0 V.20 12 12/31/2014
Key institutions responsible for preparation o f the project: Ministry o f Public Works and Equipment
Bank staff and consultants who worked on the project included:
Name Title Unit Sylvie Debomy TTL, Senior Urban Planner AFTU2 Deo-Marcel Niyungeko Emmanuel Sinzohagera Prosper Nindorera Sameena Dost Aissatou Diallo Cheikh Sagna Edeltraut Gilgan-Hunt Connie Kok Shun Clarette Rwagatore Sylvestre Bea Ephrem Asebe
Senior Municipal Engineer Financial Management Specialist Senior Procurement Specialist Senior Counsel Finance Officer Social Specialist Environmental Specialist Senior Program Assistant Team assistant Fin ancial Specialist Economist
AFTU2 AFTFM AFTPC LEGAF LOAFC AFTCS AFTEN AFTU2 AFMBI AFTU2 AFTTR
Tova Solo Peer reviewer LCSUW Alison Cave Peer reviewer QER ECSSD Ivo Imparato Peer reviewer QER LCSUW Mukami Kariuki Peer reviewer EASPS Barj or Mehta Peer reviewer AFTUl
Bank funds expended to date on project preparation (actuals and committed): 1. Bank resources: US$160,000 2. Total: US$160,000
Estimated approval and supervision costs: 1. Remaining costs to approval: US$115,000 2. Estimated annual supervision cost: US$lOO,OOO
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1
2.
3.
4.
5.
10.
11.
12.
13.
14.
15.
Annex 12: Documents in the Project File BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
Etude diagnostique sous-sectorielle - De'centralisation, gouvernance etjnances locales - Mission d'appui h I 'daboration d'une politique nationale de I 'habitat et de 1 'urbanisation au Burundi -
De'centralisation de la ville de Bujumbura (octobre 2007) - Apique Conseil
Lettre de politique nationale d'habitat et d'urbanisation (avril2008)
Mission d'appui 6 la formulation d'une politique d'habitat et d'urbanisation au Burundi - Cadrage macro-e'conomique du secteur de I 'habitat et de I 'urbanisation fe'vrier 2007) - Anicet Havyarimana
Mission d 'appui h la formulation d'une politique d'habitat et d'urbanisation au Burundi - Etude diagnostique globule (octobre 2007)
Budget communal d'entretien 2004-2007
SynthBse de 1 'e'volution des budgets d'entretien par province (2004-2007)
Recueil des textes de la de'centralisation au Burundi (aoiit 2008)
Carte du Burundi avec re'partition indicative des partenaires en matiire de projet de de'veloppement communautaire et social
Manuel de Proce'dures Techniques du Projet- Avril2009
Manuel de Proce'dures administratives, JnanciBres et comptables du projet- Avril2009
Manuel d'exe'cution du Projet - Avril2009
Programme de De'veloppement Municipal. Cheikhou Diop. Avril2009
Cadre de politique de Recasement, Mars 2009
Cadre de Gestion Environnemental et Social, Mars 2009
88
Annex 13: Statement of Loans and Credits
BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
Difference between expected and actual
disbursements Original Amount in US$ Millions
Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d
P102508 2009 BI- ERSG I1 DPL (FY09) 0.00 30.00 0.00 0.00 0.00 29.06 0.00 0.00 P109964 2008 BI-Second HIV/AIDS MAP (FY08) 0.00 15.00 0.00 0.00 0.00 15.27 0.00 0.00 PO97974 2008 BI-Multisectoral Water & Electricity Inf 0.00 50.00 0.00 0.00 0.00 49.43 0.00 0.00 PO64557 2007 BI-Educ. Sector Reconstr. (FY07) 0.00 20.00 0.00 0.00 0.00 17.82 1.11 0.00 PO9521 1 2007 BI-Community and Social Dvpt S L 0.00 40.00 0.00 0.00 0.00 38.47 2.62 0.00
PO64558 2005 BI-Agr Rehab & Sustain Land Mgmt 0.00 35.00 0.00 0.00 0.00 21.87 0.48 0.00
PO64876 2004 BI-Road Sec Dev SJh4 (FY04) 0.00 51.40 0.00 0.00 0.00 24.99 20.46 0.00 PO78627 2004 BI-Econ Mgmt Supt S I L (FY04) 0.00 26.00 0.00 0.00 0.00 16.29 11.96 0.00
PO71371 2002 BI-MultiSec HIV/AIDS & Orph APL 0.00 36.00 0.00 0.00 0.00 0.15 -6.88 0.00
PO65789 2001 Regional Trade Fac. Project - Burundi 0.00 7.50 0.00 0.00 0.00 5.57 -2.28 2.02
(FY06)
(FY05)
PO81964 2004 BI-Demobilization & Reint Prj (FY04) 0.00 33.00 0.00 0.00 0.00 7.63 6.11 6.91
(FY02)
Total: 0.00 343.90 0.00 0.00 0.00 226.55 33.58 8.93
BURUNDI STATEMENT OF IFC’s
Held and Disbursed Portfolio In Millions o f U S Dollars
Committed Disbursed
IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.
Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic.
Total pending commitment: 0.00 0.00 0.00 0.00
89
Annex 14: Country at a Glance BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
2007 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions)
Average annual growth, 2001-07
Population 1%) Labor force 1%) Most recent estimate (latest year available, 2001-07) Poverty I% of population below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% of children under 5) Access to an improved water source (% ofpopulation) Literacy (% of population age 15+) Gross primary enrollment (% of school-age population)
Male Female
KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1987
GDP (US$ billions) 1.1 Gross capital fomation/GDP 22 6 Exports of goods and ServicedGDP 9.7 Gross domestic savingslGDP 6.6 Gross national savingdGDP
Interest paymentslGDP I .4 Total debtlGDP 68.0 Total debt service/exports 41.3 Present value of debtlGDP Present value of debtlexports
1987-97 1997-07 (average annual growth) GDP -1.6 2.0 GDP per capita -3.5 -1.0 Exports of goods and services
Current account balance/GDP -11.4
2.7
Sub- POVERTY and SOCIAL Saharan
Burundi Africa
8.5 800 110 952
0.92 762
3.6 2.5 4.7 2.6
10 36 49 51
I09 94 27
71 58 59
103 94 108 99 98 aa
1997 2006
0.97 0.90 6.1 16.7 9.8 10.9 1.5 -20.2 5.1
-1 .o -6.3 0.9 I .o
109.9 156.2 29.4 49.1
88.9 .. 996.6
2006 2007
5.1 3.6 1.1 -0.3
Low- income
578 1,296
749
2.2 2.7
32 57 85 29 68 61 94
I00 a9
2007
0.97
-9.9
2007-1 1
Development diamond*
Life expectancy
T GNI Gross per primary capita enrollment
Access to improved water source
-- BuNndi - Low-income group
Economic ratios'
Trade
Domestic Capital savings
Indebtedness
Bumndi - Low-income group I - -
STRUCTURE of the ECONOMY
(% of GDP) Agriculture Industry
Services
Household final consumption expenditure General gov't final consumption expenditure Imports of goods and services
Manufacturing
(average annual growth) Agriculture Industry
Services
Household final consumption expenditure General gov't final consumption expenditure Gross capital formation Imports of goods and services
Manufacturing
1987 1997
55.1 49.2 17.1 15.8
27.8 35.0 11.5 7.8
83.7 81.7 9.7 16.8
25.7 14.4
1987-97 1997-07
-1.2 -1.7 -2.8 -4.7 -5.1 -0.8 9.1
-1.8 0.8 0.6 0.8
2006
90.9 29.3 47.8
2006
2007
2007
I Growth of capital and GDP (%) I
GCF d G D P I -~- I
Note: 2007 data are preliminary estimates. 9/24/oa This table was produced from the Development Economics LDB database. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will
be incomplete.
90
PRICES and GOVERNMENT FINANCE
Domestic prices (% change) Consumer prices Implicit GDP deflator
Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall surplusldeficit
TRADE
(US$ millions) Total exports (fob)
Coffee Tea Manufactures
Total imports (cif) Food Fuel and energy Capital goods
Export price index (2000=700) Import price index (2000=100) Terms of trade (2000=700)
BALANCE of PAYMENTS
(US$ millions) Exports of goods and services Imports of goods and services Resource balance
Net income Net current transfers
Current account balance
Financing items (net) Changes in net reserves
Memo: Reserves including gold (US$ millions) Conversion rate (DEC, /ocaWS$)
EXTERNAL DEBT and RESOURCE FLOWS
(US$ millions) Total debt outstanding and disbursed
IBRD IDA
Total debt service IBRD IDA
Official grants Official creditors Private creditors Foreign direct investment (net inflows) PoMolio equity (net inflows)
World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers
Composition of net resource flows
1987
7.1 -3.4
14.6 1.1
-14.4
1987
98 70
5 13
198 12 29 73
150 72
207
1987
110 291
-181
-28
-1 28
207 -79
69 123.6
1987
770 0
252
47 0 4
32 125
-8 1 0
13 43
2 41
2 39
1997
31.1 32.4
15.3 -2.6 -5.2
1997
87 77 11 1
118 11 14 32
149 95
156
1997
96 140 -45
-13 48
-10
-54 64
118 352.4
1997
1,069 0
566
29 0 9
46 7 0 0 0
0 12 4 7 5 3
2006
5.4 2.6
2006
2006
-33
-57
131 1,028.4
2006
1,411 0
797
40 0
22
328 23 -2 0 0
0 29 16 12 6 6
2007
6.0 9.5
2007
2007
-34
-96
177 1,081.9
2007
0 830
0 23
0 19 18 2 6
-4
lnflatlon (%) 1
-- GOPdeflator 4 C P I I I
I Export and import levels (US) mill.)
250
204
150
100
50
0
01 02 03 M 05 08 07
mExports .Imports
Current account balance to GDP (%)
-12 1
Composition of 2006 debt (US$ mill.)
F , , G: 38
A - IBRD B - IDA D - Other multilateral F - Private C - IMF
E - Bilateral
G - Short-term
Note: This table was produced from the Development Economics LDB database. 9/24/08
91
Annex 15: Map Section (IBRD 36802) BURUNDI: PUBLIC WORKS AND URBAN MANAGEMENT PROJECT
92
MAP SECTION
Mt. HehaMt. Heha(2,670 m)(2,670 m)
Most distantMost distantheadwater ofheadwater ofthe Nile Riverthe Nile River
C I B I T O K EC I B I T O K EN G O Z IN G O Z I
K AYA N Z AK AYA N Z A
B U B A N Z AB U B A N Z A K A R U Z IK A R U Z I
K I R U N D OK I R U N D O
M U Y I N G AM U Y I N G A
C A N K U Z OC A N K U Z O
R U Y I G IR U Y I G IG I T E G AG I T E G A
M WA R OM WA R O
R U TA N AR U TA N AB U R U R IB U R U R I
M A K A M B AM A K A M B A
MM UU RR AA MM VV YYAA
BB UUJJ UU
MMBB UU
RR AA
Nyanza-LacNyanza-Lac
RumongeRumonge
MabandaMabanda
MatanaMatana
BukirasaziBukirasazi
MutangaroMutangaro
RusibaRusiba
MusadaMusadaBuhigaBuhiga
BururiBururi
MwaroMwaro
GitegaGitega
MuramvyaMuramvya
BubanzaBubanza
KayanzaKayanzaNgoziNgozi
CibitokeCibitoke
RuyigaRuyiga
CankuzoCankuzo
KaruziKaruzi
MuyingaMuyinga
KirundoKirundo
RutanaRutana
MakambaMakamba
BUJUMBURABUJUMBURA
C I B I T O K EN G O Z I
K AYA N Z A
B U B A N Z A K A R U Z I
K I R U N D O
M U Y I N G A
C A N K U Z O
R U Y I G IG I T E G A
M WA R O
R U TA N AB U R U R I
M A K A M B A
M U R A M V YA
B UJ U
MB U
R A
Nyanza-Lac
Rumonge
Mabanda
Matana
Bukirasazi
Mutangaro
Rusiba
MusadaBuhiga
Bururi
Mwaro
Gitega
Muramvya
Bubanza
KayanzaNgozi
Cibitoke
Ruyiga
Cankuzo
Karuzi
Muyinga
Kirundo
Rutana
Makamba
BUJUMBURA
DEM. REP.OF CONGO
RWANDA
TANZANIA
Kanya
ru
Rusiz
i
Rum
pung
u
Kagera
Ru
vuvu
Ruvuvu
Ruvu
vu
Luvi
ronz
a
Mwerusi
Muragarazi
LakeTanganyika
LakeKivu
LakeCohoha
LakeRweru
To Kasulu
To Uvira
To Kibondo
To Kakonko
To Nyakanura
To Rulenge
To Kigali
To Gitarama
To Butare
To Cyangugu
Mt. Heha(2,670 m)
Most distantheadwater ofthe Nile River
29°E
29°E
30°E
30°E
31°E
31°E
4°S 4°S
3°S 3°S
BURUNDI
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.
0 10 20 30
0 10 20 30 Miles
40 Kilometers
IBRD 36802
MARCH 2009
BURUNDI
PUBLIC WORKS AND URBAN MANAGEMENT PROJECTSELECTED CITIES AND TOWNS
PROVINCE CAPITALS
NATIONAL CAPITAL
RIVERS
MAIN ROADS
PROVINCE BOUNDARIES
INTERNATIONAL BOUNDARIES
MAIN PROJECT CITIES
*All Provinces are coveredunder the Project.
