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1 Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized IMPLEMENTATION COMPLETION REPORT (Core ICR) ON AN Report No: Public Disclosure Authorized IDA CREDIT IN THE AMOUNT OF US$ 35 MILLION TO THE PEOPLE'S DEMOCRATIC REPUBLIC OF ETHIOPIA FOR THE SECOND ADDIS ABABA URBAN DEVELOPMENT PROJECT (Credit 2161-ET) Public Disclosure Authorized Water and Urban Unit Eastern and Southern Africa Africa Region December 29, 1999 This document has a restricted distribution and may be used by recipients only in th perfonnance of their official duties. Its contents may not otherwise be disclosed withou World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective) Currency Unit = Ethiopian Birr As of May 1990 Birr 1.00 = US$ US$ 1.00 = Birr 2.07 As of June 30, 1999 Birr 1.00 =US$ US$ 1.00= FISCAL YEAR July 1 - June 30 KEY ABBREVIATIONS AND ACRONYMS AAAR AACG AACBP AARA AAWSA CBB CBE EDPO ERR GoE HSB IDA MWUD PIO UDSS Addis Ababa Administrative Region Addis Ababa City Government Addis Ababa Capacity Building Project Addis Ababa Roads Authority Addis Ababa Water and Sewerage Authority Construction and Business Bank Commercial Bank of Ethiopia Environmental Development Project Office Economic Rate of Return Government of iethiopia Housing and Savings Bank (subsequently named CBB) International Development Association Ministry of Works and Urban Development Project Implementation Office Urban Development Support Services Vice President: Country Director: Sector Manager: Task Team Leader: Callisto E. Madavo Oey Astra Meesook Jeffrey S. Racki Gautam Sengupta

3 CONTENTS FOR OFFICIAL USE ONLY Page No 1. Project Data Principal Performance Ratings Assessment of Development Objective and Design, and of Quality at Entry Achievement of Objective and Outputs Major Factors Affecting Implementation and Outcome Sustainability Bank and Borrower Performance Lessons Learned Partner Comments Additional Information Annex 1. Key Performance Indicators/Log Frame Matrix Annex 2. Project Costs and Financing Annex 3. Economic Costs and Benefits Annex 4. Bank Inputs Annex 5. Ratings for Achievement of Objectives/Outputs of Components Annex 6. Ratings of Bank and Borrower Performance Annex 7. List of Supporting Documents Annex 8. Related Bank Loans/Credits Annex 9. Key Implementation Indicators Table.IA. Key Implementation Indicators for Sites and Services: Infrastructure Development Table IB. Key Implementation Indicators for Sites and Services: Housing Development Table 2. Key Implementation Indicators for Kebele Upgrading Civil Works and Flood Control Projects Table 3. Key Implementation Indicators for Street Maintenance Civil Works Table 4. Key Implementation Indicators for Solid Waste Management Civil Works Table 5. Key Implementation Indicators for Akaki Water Supply Component Annex 10. Studies and Training included in the Project Annex 11. Status of Legal Covenants Annex 12. ICR Mission Aide Memoire and its Attachments Attachment 1. Project Implementation Status as of June 30, 1999 Attachment 2. Schedule of Retention Money to be released Prior to 31 October, 1999 against Bank Guarantee for Defects Liability Attachment 3. Plan for Future Operations of Project Capital Investments Annex 13. Borrower's Contribution to ICR Maps No This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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5 Project ID: P Project Name: Second Addis Ababa Urban Development Project Team Leader: Gautam Sengupta TL Unit: AFTU I ICR Type: Core ICR Report Date: December 29, Project Data Name: Second Addis Ababa Urban Development I/C Number: Project Country/Department: Ethiopia Region: Africa Regional Office Sector/subsector: UM - Urban Management; WU - Urban Water Supply KEY DATES Original Revised/Actual PCD: 12/28/1989 Effective: 11/12/ /12/1990 Appraisal: 02/15/1990 MTR: NA NA Approval: 06/20/1990 Closing. 06/30/ /30/1999 Borrower/lmplementing Agency: Other Partners: Government/Project Implementation Office of the Addis Ababa City Government/Addis Ababa Water Supply & Sewerage Authority/ Construction and Business Bank None STAFF Current At Appraisal Vice President: Callisto. E. Madavo Edward V.K. Jaycox Country Director: Oey Astra Meesook Callisto E. Madavo Sector Manager: Jeffrey S. Racki Jonathan Brown Team Leader at ICR: Gautam Sengupta Carolyn Gochenour ICR Primary Author: Sudeshna RoyChoudhury 1

6 2. Principal Performance Ratings (S=Satisfactory, HS=Highly Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: U Sustainability: UN Institutional Development Impact: N Bank Performance: U Borrower Performance: U QAG (if available) ICR Quality at Entry: Not Applicable Project at Risk at Any Time: Not Applicable Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3. 1 Original Objective: Project objectives outlined in the Staff Appraisal Report (SAR), Report No ET were: (a) improving basic infrastructure and enviromnental conditions in project areas; (b) supporting a core housing development program primarily for lower-income families; (c) promoting opportunities for poor women living in -the kebeles to enhance their income; (d) providing assistance to urban service delivery agencies to carry out their activities more efficiently; and (e) promoting the adoption of sound cost recovery policies Background. The Project evolved over a period of three years ( ). The project concept was clear and was initiated in response to the request of the then Minister of Housing and Urban Development at a time when urban development was not on the Bank's country assistance priority list. Although the project design was intended to be based on the lessons learned from the First Urban Development Project (Cr ET), in practice it proved to be ambitious and complex vis-a-vis the actual implementation capacity of the institutions involved. Also, given the political development and the complex institutional arrangements for implementation, the project design underestimated the risks associated with achieving the development objectives To give a historic context of the assessment of project objectives, it would be useful to note the thinking in the mid 1980s vis-a-vis sector issues both within the Bank and the Government. Around 1986 urban development was not a priority in the Bank assistance strategy to Ethiopia-the emphasis was more on the productive sectors. The only ongoing urban project in the country portfolio was the First Urban Development Project (Cr ET). The Bank's Country Assistance Memorandum (CAM) did not include any support for a second urban project. The draft CPP, however, had a second project in the reserve program. An Urban Infrastructure Review study that was due to be undertaken around this time was excluded from the CAM program because of resource constraints but was retained in the ESW program proposed in the draft CPP. 2

7 It was against this background that the then Minister of Urban Development and Housing visited Washington D.C. in end July 1986 to discuss the Government's urban policies and lending with the Bank. A request for IDA support towards promoting urban development in towns outside Addis Ababa, and for evolving and implementing an overall urban policy was made at this time. The Minister outlined the Government's thinking on a decentralization strategy. It was envisaged that a project to support the Government's decentralization objectives would include social and community services and market facilities which would be designed to serve a hierarchy of towns and villages. These towns would need to be provided with a certain amount of basic infrastructure to foster productive enterprises outside of Addis Ababa and generally to improve the links between the rural and urban economies. This was also important given the need to slow down the rapid growth of Addis Ababa and to expand employment opportunities in the rural areas. Bank staff at that time concurred with the Minister's approach. Subsequently, a mission was fielded in February 1987 to discuss the objectives of a follow-on project in the urban sector at which time agreement was reached between the Government and IDA that the followon project would: (a) build on the experience of the First Urban Development Project; and (b) expand its focus to support a strategy of regional development that was then being pursued by the Government In keeping with the above understandings, a follow-on project, the Integrated Rural/Urban Development Project, began to be conceptualized. A component of this proposed project for Addis Ababa would have included the following sub-components: sites and services, kebele upgrading, national housing sector study, road maintenance, and solid waste management. The other component of the proposed Integrated Rural/Urban Development Project included nine other towns which involved subcomponents such as housing, town-wide infrastructure improvements, income enhancement and employment generation component, water supply, and a sanitation pilot demonstration project It was envisaged that the total cost of the Integrated Rural/Urban Development Project would be about US$100 million of which IDA would finance US$35 million with co-financing to be provided by other bilaterals for the remainder of the US$65 million. However, all the bilaterals that were approached (ODA, FINNIDA, SIDA, EIB, the Italians) declined. Shortly thereafter it was decided in the Bank that in the interest of effective policy discussions and more efficient project implementation, the program would be presented to Bank management and other possible donors as two separate operations: one would be an Urban Poverty Alleviation Project whose objective would be to begin to tackle the absolute poverty conditions among the poor in Addis Ababa; the second would be the Market Towns Development Project aimed at improving essential services and infrastructure tied to the rural productive areas. This proposal of the Bank was communicated to the Government in June Though the Government concurred with the Bank's proposal, it pointed out that the two projects would need to be looked at as one given that the Government perceives them as one integrated project and also due to the potential over-stretching of the capacity of the implementing ministry, i.e., the Ministry of Urban Development and Housing (MUDH) if it had to provide two separate project management offices to manage the implementation of the two projects. Around mid 1989, it was decided that the IDA allocation for both these projects would be significantly increased from US$35 million to US$75 million ($35 million for the Urban Poverty Alleviation Project in Addis Ababa and US$40 million for the Market Towns Development Project). Breaking the original integrated project into two therefore served two key purposes: (i) it precluded presenting to IDA management one large project for a country that most donors were looking at in askance at that time; and (ii) it managed to provide the full funding (US$75 million) from IDA thus negating the other bilaterals' reluctance to provide co-financing to the country just then The complexity of the issues involved regarding the genesis of the eventual Second Addis Ababa Urban Development Project (SAAP) which came out of the Urban Poverty Alleviation Project in Addis Ababa can be better appreciated given the above background. As discussed above, the genesis of the project itself was characterized by political uncertainty, policy and institutional transition in the country, a repeat of the objectives of the First Urban Development Project in order to complete the unfinished business agenda, ambitious objectives in the context of complex institutional arrangements, weak

8 capacity, lack of implementation experience, and inefficient and inappropriate systems and procedures primarily with regard to procurement and financial managernent. This was the reality of the project in terms of its implementation context. 3.2 Revised Objective.: The project was restructured in June Basically, except dropping objectives which had become unattainable due to the changed policy of increasing the interest rates to commercial rates, the other objectives substantially remained the same. Consequently, the restructuring was authorized at management level The project became effective in November 1990 and implementation progress was generally slow for the first two years of implementation. Subsequently, implementation of the project virtually came to a standstill, largely as a result of the overall transition in the country. Rapid changes in institutional responsibilities and arrangements, frequent changes in key project staff and uncertain and evolving economic policies of a government in transition contributed to a markedly changed environment for project inmplementation. This transition was characterized by major administrative and fiscal decentralization. While the new government accepted and supported the fundamental objectives of this project, it decided to conduct a review of the emphasis and implementation arrangements of the project, in light of the changes in the economic, political and administrative environment. The governnent established two governing principles for restructuring the project: (i) to redirect project activities in a way to maximize the benefits to the poor by improving access to basic services; ancl (ii) to strengthen management, financial and technical capacity of service delivery/implementing agencies to improve efficiency and sustainability of investments. An option that was available at the time of restructuring was to cancel the project and begin afresh with a new initiative which would reflect not only the policies and priorities of the new government but would also be "tailored" to realities of capacity constraints of the implementing agencies. However, preparing a new project would have meant significant loss of time in the face of the urgency the new government attached to directing investments for the benefit of the poor. Furthermore, given the state of play in terms of broader policy dialog and the evolving relationship between the new Government and the Bank, canceling the project was not coinsidered as a practical option. As a result, the restructuring exercise attempted to primarily simplify some of the design and implementation aspects of the project. However, in retrospect the complex institutional and implementation arrangement issues weire not fully resolved; resulting in difficult implementation experience following the restructuring exercise The original project objectives, which were consistent with the objectives and priorities of the new government, remained substantively unchanged during the restructuring of the project. However, the project was conceived and designed under a set of policies and circumstances which were no longer fully applicable. The economic policies of the new government needed to be reflected in the restructured project. Also, considerable depreciation of the Ethiopian Birr (about 67% depreciation during implementation as compared to the original appraisal estimate) had affected the amount of the proceeds remaining under the credit. Therefore, though project objectives were not substantively changed, some priorities within the project components were re-ordered, some project components were eliminated, and some new elements added The primary objectives of the restructuring were: (i) to realign the project in a manner consistent with the new Government's policies and priorities; and (ii) to direct financial and technical resources to those activities which would have the most development impact In this context, the original project objectives (a), (b) and (d) enumerated in section above were maintained throughout the life of the project but changes were made regarding (c) and (e) during projject restructuring in July 1996 to reflect the then current realities. With regard to (c) which involved the provision of loans to poorer women for income generating activities, it was found that numerous administrative problems, and lack of interest by potential beneficiaries who were required to reimburse 4

9 the loans at commercial lending rates, resulted in unsuccessful implementation of the sub-component. It was therefore decided that existing loan agreements at the time of project restructuring would be closed and no new ones would be made. The remaining sub-component funds would be reallocated amongst the other project components, thus this project objective was no longer relevant in the restructured project. With regard to objective (e) which was, promoting the adoption of sound cost recovery policies, given that the Government's new priority was to strengthen management, financial and technical capacity of service delivery/implementing agencies to improve efficiency and sustainability of investments, the focus was changed towards trying to improve financial management and operating practices Therefore, after project restructuring the objectives were: (a) Improving basic infrastructure and environmental conditions in project areas; (b) supporting a core housing development program primarily for lower-income families; (c) providing assistance to urban service delivery agencies to carry out their activities more efficiently; and (d) improving financial management and operating practices The revisions to the project objectives were, therefore, not substantive in that the original project objective (c) was subsumed under the added emphasis given to kebele upgrading as a whole in the restructured project; the same applies for the original objective (e) with regard to putting the focus more on improvement of financial management and operating practices under the restructured project. Based upon agreement with the Bank's Africa Region management, the restructured project was approved by the Regional management and not submitted to the Board. 3.3 Original Components: Original project components included: (i) Sites and services, including development of about 2,000 serviced plots with 1,900 core housing units built by self-help with supporting infrastructure and community facilities at two locations in Addis Ababa municipality and about 350 serviced plots and self-help core housing units with supporting infrastructure in Akaki; (ii) Kebele upgrading, including infrastructure improvements and loans for improvementlupgrading of houses in seven centrally located kebeles in Addis Ababa in the first phase; similar investments for kebeles in Addis Ababa to be identified in a second phase; and a loan fund to finance revenuegenerating and other development projects in kebeles citywide in Addis Ababa; (iii) Street maintenance, including vehicles, equipment, spare parts, plant and civil works in Addis Ababa; (iv) Solid waste management, including vehicles, spare parts, collection containers, landfill equipment and civil works in Addis Ababa; (v) Municipal infrastructure, including improvements to roads and drains, essential vehicles and equipment, and a power line extension to service the new sites and service areas in Akaki; (vi) Water supply improvement including major expansion works in Akaki; and (vii) Institutional support programs, including consultancy services, studies, technical assistance, training, vehicles and equipment to strengthen management and maintenance systems of project agencies, and assistance for project management and implementation The total project cost, including contingencies, was estimated at US$46.7 million equivalent at appraisal. The IDA Credit of US$35 million would finance about 75% of the total project cost, over a seven year period. At completion, final costs were about US$39.2 million of which IDA contributed US$31.4 million (about 80% of total project costs). 5

10 The design of the project reflects that components were reasonably related to project objectives. However, some of the implementing agencies were new and others did not have the capacity and the policy environment was not favorable. Given the multiplicity of objectives and components, the multiple agencies involved in executing the project (three), the untested capacity of the newly created project irmplementing agency, the Project Implementation Office (PIO) in the Addis Ababa Administrative Region (AAAR), and the uncertainties with respect to the administrative and financial management capacities of the other agencies such as the Housing and Savings Bank (HSB) and the Addis Ababa Water and Sewerage Authority (AAWSA), implementation was bound to be complex. In terms of institutional capacity, the PIO (in the role of providing overall coordination of project activities) was an untested, new organization. With regard to the HSB (which would be responsible for the housing component), around September 1989 it was noted that HSB was almost entirely dependant on subsidized funding, which the Government provided by requiring the pension and insurance sectors to main low cost deposits with HSB, and which IDA would supplement. This directed and subsidized funding provided a disiixcentive to HSB to mobilize its own resources and adversely affected development of pension and insurance funds as a major potential source of long-termn money. The taxation policy of the Government also appeared to constrain HSB's ability to build its equity base. Finally, HSB had portfolio and financial problems, and the projections suggested that continued infusions of Government capital will be required to cover its deficits. The Addis Ababa Water and Sewerage Authority (AAWSA) to be responsible for implementing the Akaki water supply component was also not a financially viable entity The design of the project has taken into account the lessons learned in the First Urban Development Project. The sites and services and kebele upgrading components did take into account some of the lessons learned from the previous IDA-financed Urban Development Project implemented from in the country. This pertained to the success of community participation in project planning, design and management with respect to self-help housing cooperatives. However, Government commitment to revise its policy on nationalized housing stock and encourage private ownership did not mnaterialize by the end of the first project and this follow-on project was supposed to make this issue a conidition of disbursement. For various reasons, however, (see paras and for details), the effective implementation of this component was hindered. Also, the successful approach of the first Urban Development Project with regard to scheduling implementation in the sites and services component in such a way so as to delay completion of road construction until most of the house construction was completed in order to negate the adverse effects on the roads due to the movement of heavy construction vehicles and equipment was not followed. This resulted in associated damages to the on-site roads and entailed repairs. 3.4 Revised Components: In restructuring, three factors were considered: (a) poor implementation experience as the result of laclc of institutional capacity, an issue which needed to be urgently addressed; (b) project investments needed to "'spread" in a way to maximize the benefits to the poor; and (c) early closure of the project needed to be pursued while using the remaining life (and funds) under the project to better prepare the service delivery institutions for improved planning and implementation of the next generation of investments. Another factor which helped in realigning specific component budgets under the restructured project relates to gains due to exchange rate changes. The original prcject costs were estimated at a time when the Birr was valued at Birr 2 = US$1. With the changes in the exchange rate regime in the country, at the time of restructuring, the Birr was; valued at about Birr 6 = US$ 1. Given the large local content of the investments, the depreciation of the Bin resulted in significant local cost savings (in terms of the US$ available under the credit). For instance, the amount of IDA credit at project restructuring translated into Birr 230 million as compared to ETB 73 million at appraisal. Under the restructuring exercise, a large portion of these gains due to exchange rate changes were directed at increasing the budgets for specific conmponents (valued in terms of local currency) to achieve the underlying objectives. Thus., under the restructured project, the scope of some components was increased, some project components were eliminated, and some new elements added in line with the 6

11 governing principles, stated earlier, while conforming to the original project objectives. In general, for the restructured project, the gain in value of the IDA credit in terms of local currency has been directed towards two main objectives: (a) to increase the scope of certain components to"scale up" the coverage of improved basic infrastructure to benefit the population at large; and (b) to invest in building capacity of the institutions/agencies During project restructuring, the IDA credit amount was kept unchanged at SDR 27.1 million. Schedule I to the Development Credit Agreement (DCA) was revised to reflect the revised application of the IDA credit by component and component specific financing percentages. Financing percentages were realigned to ensure full financing of each component by a combination of Government and IDA funds (including amounts already disbursed). The following table summarizes the project budgets by component at appraisal, restructuring and closure. Table 1: Summary of Component Budgets (in US$ millions) Component Appraisal Restructured Actual/ Latest Estimate Estimate Estimate Land Sites and Services Housing Development Kebele Upgrading Municipal Infrastructure Akaki Water Supply Institutional Support Total: The total project cost essentially remained unchanged. The main quantitative shifts in the project budget were as follows: (a) an increase of about US$3.2 million for additional investments in kebele infrastructure investments (about 7% of total project cost); and (b) an increase of about US$ 4.8 million for institutional capacity building of Addis Ababa City Government (about 10% of the total project cost). These increases were covered through local cost savings under the Addis Ababa Sites and Services component (US$3.3 million); by eliminating the Akaki Sites and Services component (US$2.2) million, which was deemed less priority; and eliminating home improvement loans in the kebeles (US$2.1 million) The main departure from the original project was to focus the civil works activities more towards kebele upgrading, given that almost 85 percent of the population in Addis Ababa lives in kebeles requiring infrastructure and enviromnental sanitation imnprovement, and to put more emphasis on capacity building in the Addis Ababa City Government. Consistent with the govermnent's new approach towards shelter development i.e., getting the Government out of the business of direct construction of housing and letting the private sector take the lead, the home improvement loan component was dropped and the undisbursed funds were redirected towards expanding the scope for improving basic services such as sanitation, drainage, community water supply and road maintenance Under the restructured project, the kebele upgrading component was scaled up. Originally, seven kebeles were to be upgraded in Phase I, with a further ten kebeles under Phase II. The revised proposal included the improvement of 16 additional kebeles, to bring it up to a total of 33. The Project Implementation Office would carry out the necessary engineering studies including design and monitoring of the projects. Civil works construction, which was to have been carried out by private contractors, would be carried out using resources available within AACG, including the Road Construction Department. Additionally, beneficiaries within each kebele would be brought into the project, through the provision of either a financial or a labor contribution by the kebele residents. 7

12 In the absence of existing legislation covering land reform, and in particular the privatization of the housing owned by the kebeles, it was not possible to disburse funds for the home improvement loans component in the kebeles. Consequently, the undisbursed funds were transferred to provide increased infrastructure investments in the kebeles. In addition, the Kebele Development Fund component, which originally included funding for community facilities and other revenue generating projects as well as for the provision of loans to poorer women for income generating projects, was reallocated for more basic infrastructure investments in the kebeles. Numerous administrative problems, lack of interest by potential beneficiaries (who are required to reimburse the loans at commercial lending rates), and duplication of some olfthese activities by NGOs resulted in the lack of success of this project component. Consequently, existing loans agreements were closed out, and it was decided that no new loans would be made The restructuring process took over two years to be completed, to ensure full ownership of both the Central and the Addis Ababa City Government. Given that the restructuring primarily involved reordering of priorities within project components, elimination of some project components, addition of some new elements, and the extension of the credit closing date by two years from June 30, 1997 to June 30, 1999 to allow for adequate time to complete project activities-not major substantive changes in themselves-it was approved by the Regional management in April 1997 without requiring approval by the Board. Rating Component Sector Cost (US$ M) S Sites & services inc]luding supporting UH 8.98 infrastructure (including land compensation) U Kebele upgrading including UM 1.56 infrastructure S Infrastructure improvement UM (drains/street maintenance & improvement, improvements in traffic management & road safety, electricity, solid waste management, vehicles and equipment) S Solid waste managernent UM S Improvement of Akaki water supply WU 4.49 U Institutional strengthening of project UM 3.05 agencies Cost included under the infrastructure improvement component. 3.5 Quality at Entry: (i) Consistency of project objectives with the CAS and Government priorities: (see para for details). (ii) The Bank's safeguard policies, applicable to the project such as those on Environmental Assessment and Involuntary Resettlement were met. With regard to the environment, the project was stated to have a beneficial impact in terms of improved environmental and health conditions by addressing critical sanitation deficiencies in the kebele upgrading component, drainage improvements, and improved and expanded refuse collection. On resettlement, a detailed resettlement plan, for the relocation of 19 affected families, was submitted during project niegotiations. (iii) Quality of the design: (see paras , , and for details). 8

13 (iv) Reasonableness of assumptions about any relevant external factors: The key project output was housing units of which there was a huge and widely acknowledged and recognized shortage. In addition, investments in infrastructure upgrading in the kebeles was also greatly needed given the demonstrably poor living conditions that obtained in the majority of them. Further investments in the road and drainage network as also water supply in Akaki were necessary to alleviate service deficiencies. Project risks, especially with regard to implementation, however, were underestimated given the complex institutional arrangements for implementing the project. An extraneous factor, i.e. the civil unrest and the resulting overall transition in the country, put the project at considerable risk when implementation virtually came to a standstill during early, yet critical, years of the project. Rapid changes in institutional responsibilities and arrangements, frequent changes in key project staff and uncertain and evolving economic policies of a government in transition contributed to poor project implementation. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: Overall the outcome of the project is assessed as unsatisfactory. The project failed to achieve its major objectives and is unlikely to give substantial development results. Expected post-construction economic or financial rates of return are low. Where physical outputs have been significant as in the housing construction of 2,244 houses compared to 2,250 houses at appraisal or (99.73%), rising construction and financing costs have put the houses constructed outside the income bracket of the originally targeted population. Delayed implementation of sites and services such as water supply, hindered rapid occupancy of completed units and usage of community facilities. With respect to another major component, Akaki water supply improvement, management and administrative arrangements between kebeles and AAWSA has held up the use of public fountains This has been both a difficult project to implement by the Government and to supervise by the Bank. In retrospect, it is not self evident that the lessons learned from the First Urban Development Project were fully incorporated and built into the design and pragmatic implementation strategy for the project. While the broad objectives of the project remain critical to achieving sustainable development impact, what proved to be difficult was to operationalize these objectives, particularly considering the limited implementation capacity and experience of the PIO and AACG, the evolving institutional relationship between AACG and the Central Government, and the intended institutional and financial reforms, through the manifold project components. The weak implementation capacity of the project entities and the transitions in the country since the beginning of the project also hampered efficient and effective deci3ion-making at critical junctures. Given this reality of the project in terms of its implementation context, achievement of physical outputs was consciously emphasized by both the Government and the Bank at the time of project restructuring. However, this required intense Bank involvement, so much so that there was a risk of the Bank usurping implementation responsibility of the project from the Government in order for the credit proceeds to be effectively utilized within the time remaining. The more fundamental objectives of institutional and financial reform critical for sustainability were not achieved. Although funding was retained for institutional and financial reforms in the restructured project, in the absence of attention from the Addis Ababa City Government, this objective remains unfulfilled. 4.2 Outputs by components: Sites and Services: Physical accomplishment was substantial. Infrastructure provided under this component includes on-site and off-site gravel roads (17.3 km), asphalt roads (3.9 km), communal facilities such schools, health facilities, etc. (10), storm water drainage (9.6 km), and electricity supply. Offsite infrastructure provided under the project has helped the development of housing and transport facilities adjacent to all the three housing sites. However, absence of timely provision of supporting 9

14 infrastructure, particularly permanent water supply has hindered rapid occupancy of completed units and usage of community facilities. Also, delays and problems encountered with the provision of temporary water supply to enable construction activities in the Jimma Road housing site has been one of the major causes for delays in housing construction and related cost increases Housing Development: A total of 2,244 houses have been built under the project in the three sites of Ambo Road (494), Jimma Road (1,400) and Akaki (350). A key change during project implementation was with regard to the original beneficiary target group which changed due exchange rate devaluation, domestic inflation, and increase in interest rate on mortgages in The housing component under the project was initially designed to provide affordable housing to low income families earning salaries less than Birr 400 per monthlus$193 at the then exchange rate. However, the Government introduced a new interest rate regulation that raised lending interest rate for the housing sector from 4.5% to 12%. This increase adversely affected the initially targeted beneficiaries and made the houses unaffordable for them. Construction costs in 1993 were estimated by the PIO to have increased by more than 100% from the SAR estimates. New interest rates on mortgage loans were pegged at 11.5% for medium-term and 12% for long-term housing mortgage loans. In order to enhance the affordability of the house constructors and also ensure the concept of full cost recovery principle, the HSB in consultation with AACG in mid 1993 proposed a weighted average interest rate of 6.4% to be applied on the amount of proceeds to be lent to the house constructors. This rate was obtained by blending the World Bank's 75% share at 4.5% annual rate with HSB's portion of 25% at 12% annual interest rate. The Bank noted that it had no objection to the underlying objectives which are implied in the proposal to blend down the effective interest rate and thus provide some degree of subsidy to the beneficiaries in order to keep the pricing affordable to the target groups. However, the implementation mechanism of this principle would need to be consistent with the Government's overall macro-economic policies including a program of macro-economic reforms and structural adjustments as articulated in its 1993/ /96 Policy Framework Paper and agreed with the IM F and the World Bank. In this context, the Bank pointed out that it was the Government's policy that there be no differentials in interest rates either between sectors (e.g. industry vs. housing) or between buyers (e.g. public vs. private). Any interest subsidy, decided as a matter of policy by the Government, would be made explicit and should be directed at an identified beneficiary group. The Bank therefore, proposed that in order to be consistent with this approach, the HSB should charge the full market interest rate (i.e. about 12% per year) on its housing construction loan. However, the interest relief (subsidy) c.ould then be provided to the ultimate beneficiaries in the form of a cash rebate, funded with the national Government's budgetary contribution. This process would make the process of subsidy and its cost to the economy transparent. It is possible to construct such an arrangement where the subsidy could be directly and. explicitly borne by the "safety net" contemplated under the PFP. A new affordable marketing plan reflecting increased cost of construction and materials and new interest rates for mortgage loans was submitted to IDA. This plan was based on a thorough analysis of affordability through actual registration of cooperative applicants. The survey revealed that: (i) there was still a strong demand for self-help housing in Addis; (ii) some 70% of the applicants could only afford core plus zero units (income range Birr p.m.); and (iii) the majority of the rest could afford core plus one units. Based on this analysis, a new composition of housing types was proposed by the PIO and the Bank in principle agreed. However, the Bank was informed in September 1994 that the HSB had again increased its lending interest rate for the housing sector for second time from the previously agreed 12%X) to 15% with effect from September 1, It was noted that this would have a negative implication on the housing component and that the Bank should intervene with the Government to keep the interest rate for project purposes at 12%. Based upon the above, the target population changed with a shift to higher income groups who subsequently changed the design of the housing types; there were upward revisions in terms of the 10

15 structure and quality of the houses constructed. Overall, the project did assist in increasing the available housing stock in the city thereby helping to alleviate the most pressing problem of housing shortage Kebele Upgrading: The number of kebeles upgraded exceeded the appraisal target by two. This component suffered from a delayed start as sale of government-owned housing stock was a condition of disbursement of this component. IDA agreed to waive this requirement around 1993 as the sale of housing stock was subsequently made a SAC condition. After being scaled up during the restructuring, agreement was reached in October 1997 on scaling down the scope of the kebele upgrading program because of the demonstrated lack of implementation capacity in the executing agency, the Environmental Development Project Office (EDPO). Eventually, only 9 kebeles (three by private contractors and six by EDPO) were upgraded as part of this project. Upgrading works in the kebeles included construction of asphalt roads (1.67 km), gravel roads (1.12 km), paved stone roads (7.13 kin), paved stone ditches (8.16 km), concrete pipe drainage (5.2 km), hard stands for solid waste containers (I 9), communal latrines (40), and public water standpoints (27). One of the benefits of the project is that community participation and involvement in upgrading activities has increased the awareness within AACG for the need to do community consultation in order to ensure ownership and sustainability of the investments. To facilitate implementation, an Operational Manual was developed and introduced at restructuring, based on experiences with prior approaches towards implementing upgrading programs. This Operational Manual has proven to be a valuable tool in designing and implementing subsequent programs. Another result is that in the future, woredas will be involved in actual execution of the works in Addis Ababa whereas EDPO will do the design and supervision. Resettlement aspects of the component were done effectively and in a manner consistent with the Bank's safeguard policies. The following table summarizes the physical and financial aspects of resettlement under this component: Total No. of Total No. of Total Size of Affected Population Compensation Paid for Total Remarks Wereda Kebele Households Inhabitants Fully Affected Partially Affected Total Fully Affected Partially Affected (Birr) In the Kebele In the Kebele (Birr) (Birr) , , , , , , , , , , , , , , , , , (Agency for the Administration of Rented Houses Zone Five O~~~~~~~~~~~~~~~0ff , , = Total , , , Municipal Infrastructure With respect to street maintenance, eight street maintenance projects were completed under phase one and another six projects under the second phase (total of about 25 km length compared to the appraisal target of 31.7 km), implemented by contractors. BDth equipment and materials provided under the project have been utilized fully by the Addis Ababa Roads Authority (AARA). As a result the main roads in the city are now being better maintained as opposed to three years ago. The inputs through the project essentially helped AARA to implement a critical mass of its work program until about a year ago. However, contractor capacity to do asphalt concrete is a problem and most roads 11

16 htave been done using the penetration method. As a result, these have deteriorated quickly because of the h:igh traffic volume on the roads. In terms of solid waste management., the following was done: one building and fence work, on-site asphalt road (1.69 km), one truck park, procurement of solidl waste containers (1362). The equipment and technical assistance inputs have helped considerably in improving the functioning of the solid waste management division within the Health Bureau of the AACG. In addition, because of the project inputs it has been recognized that the institutional arrangements for solid waste management has to be reorganized, a process which has already started. However, the Repi landfill site is not being managed as a sanitary landfill but as a tipping site. The life of this tipping site is estimated to be another five years. Therefore, consideration needs to be given to diverting the weigh-bridge to the proposed new sanitary landfill site that is being considered. The workshop and the control office for the weigh-bridge are there at the site but not in use. There are plans to use the workshop in the near-future to carry out routine maintenance of equipment. The Health Bureau recognizes the limitations at the tipping site and its inability to carry out landfill operations in an environmentally friendly manner. For instance there are no layers of cover material in between layers of refuse, there is no leachate control and treatment though there is awareness and concern. The Health Bureau has begun studying the site from the point of view of taking some stopgap measures for leachate control till the new landfill site is commissioned. The equipment received and the investments made on the site have brought some dividends in that the operations are much better than before. However, it is important that the City Government focuses its attention on the whole issue of solid waste management and also develops a new sanitary landfill urgently. Also, there are recommendations made by consultants that need to be addressed without delay. In addition, other key essential municipal equipment and vehicles such as fire fighting equipment, road maintenance equipment, etc. have also been procured under the project Akaki Water Supply Improvement TIhe physical targets were substantially achieved. Works completed under this component include pipe laying (48.74 km), building of three reservoirs (3, 100 nd capacity in total), aukiliary buildings, three boreholes, electro-mechanical works, procurement of pipes and accessories (50.03 km length). The project's intervention to augment water supply in Akaki has resulted in the identification of the full potential of the aquifer. The investments under the project triggered actions by AAWSA to better utilize the full supply potential of the Akaki aquifer to benefit a large section of Addis Ababa. AAWSA noted that with respect to upgrading of water supply in Akaki, beneficiary assessments that were conducted indicate that water consumption by the beneficiaries has increased from 20 to 80 liters per family per day due to investments made under the project. Average time spent by beneficiaries in collecting water has substantially reduced due to increased number of water points. The public water fountains provided under the project have helped considerably in providing easier access to safe water. However, all of the fountains have not been given water connections. This is because management and administration arrangements between the kebeles and AAWSA have not yet been sorted out. AAWSA indicated that this issue is being addressed. In addition, leak detection equipment and training contributed towards increasing operating efficiency of AAWSA's operations as a whole Institutional Development Institutional development under the project included various key technical assistance in the form of consultancies to the various project agencies such as AAWSA, PIO, AARA and the AACG Health Bureau to supplement their implementation capacity and provide on-the-job training as well as several studies such as the Water Tariff Study for AAWSA, solid waste management strategies and training activities. However, it had been assumed around 1996, that given the long-term nature of key capacity building tasks and that the credit was due to close in mid 1999, these institutional strengthening activities would be subsumed under the proposed Addis Ababa Capacity Building Project (AACBP). Given that this intervention did not materialize due to lack of interest from both the AACG management and the Central Government, as a result, the activities included under this component primarily concentrated on short-term capacity building tasks. Most critically, the project failed to address the fundamental issues of improving budg,eting, accounting and financial management of AACG. This was largely due to the fact that the project 12

17 was perceived and treated as an enclave initiative and the reform agenda built into the project was not integrated into the mainstream decision making and operations of AACG. 4.3 Net Present Value/Economic rate of return: See Annex 3 for details. 4.4 Financial rate of return: NA 4.5 Institutional development impact: Institutional development impact has been at most modest or negligible. There was some institutional development in terms of capacity enhancements in agencies such as AAWSA, the AACG's Health Bureau and the Addis Ababa Roads Authority (AARA) due to project inputs. With respect to AAWSA, leak detection equipment and training contributed towards increasing operating efficiency of AAWSA's operations as a whole. In addition, the water tariff study financed under the project contributed towards recognition of the importance of sound financial management practices and its implementation is now being facilitated under the ongoing IDA-fnanced Water Supply Development and Rehabilitation Project. The equipment and technical assistance inputs to the AACG Health Bureau in terms of solid waste management have helped considerably in improving the functioning of the solid waste management division within the Health Bureau of the city govermment. Because of the project inputs it has been recognized that the institutional arrangements for solid waste management has to be reorganized, a process which has already started. With respect to AARA, the provision of traffic management equipment helped to enhance road safety standards in the city. Technical assistance to AARA on road construction and maintenance also proved to be useful The project, however, was unable to significantly influence fundamental policy reforms, program formulation, prioritization of investments and related financial management and implementation issues within AACG as an institution. In addition, the nucleus of skilled professionals built at the PIO was lost because of changed priorities in the AACG. This was especially critical given that at one time it was mooted that the PIO should be transformed into the equivalent of an Economic Development Council responsible for program management functions including the formulation and coordination of all urban development policies and initiatives in AACG given the experience it had garnered in implementing and coordinating a multi-sectoral and multi-agency implemented SAAP. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: After effectiveness, political instability caused a dramatic slowdown in implementation. No Bank supervision missions were undertaken between October 1990 to October With restoration of political stability in late 1991 implementation resumed, but changes in senior personnel in the implementing agencies resulted in less rapid development than would have otherwise occurred. 5.2 Factors generally subject to government control: The election of a new administration in Addis Ababa in 1993 created further delays in the implementation of the project as all personnel and procedures were reviewed. Key personnel were replaced. Many of PIO's records were impounded, staff replaced, and verbal instructions were given to cancel the implementation of procurement decisions taken earlier. Delays in implementation and decision-making also resulted because the relationship of some key sector agencies (i.e. AAWSA) with AACG remained unclear till about There were serious delays in tariff increases to achieve cost recovery. 13

18 5.3 Factors generally subject to implementing agency control: Around 1997 with another change in the management leadership in the AACG, key executive decisions and management actions pertinent to the project were not taken. These decisions and actions were essential not only to ensure the timely completion of ongoing activities but to also finish project activities in the most efficient and effective manner. Repeated requests from IDA to AACG on the weak implementation capacity of the EDPO (implementing agency for the kebele upgrading program), consequent non-cornpletion of the high poverty focussed kebele upgrading component, the need to supplement EDPO's implementation capacity or explore alternative mechanisms for delivery of the program went largely unheeded. This did indeed result in a substantial scaling-down of the kebele upgrading program which had been one of the centerpieces of project restructuring. In addition, effective coordination among the various implementing agencies did not happen especially with regard to the housing loans and cooperatives component. The inability of AAWSA to provide timely and adequate temporary water supply to enable quick construction of housing and communal facilities in the three sites and services schemes resulted in hugely delayed housing construction activities driving up costs as also the PIO's inability to effectively coordinate with the housing cooperatives and AAWSA. Also, the AACG was unable to retain key PIO staff thus impeding effective implementation and important monitoring and evaluation activities especially in the last one year of the project Costs andfinancing: The original project costs were estimated at a time when the Birr was valued at Birr 2 =US$1. With the changes in the exchange rate regime in the country, at the time of restructuring, the Birr was valued at about BilT 6 = US$ 1. Given the large local content of the investments, the depreciation of the Birr resulted in significant local cost savings (in terms of the US$ available under the credit). On completion following restructuring, the latest/actual estimates are shown in 3.4.2Table 1. (i) Sites and Services: The lower actual estimate is mainly attributable to local cost savings under the sites and services component in Addis Ababa and elimination of the Akaki sites and services component during restructuring which was deemed less priority. Also, after restructuring there was some overestimation of the works. (ii) Housing Development: Actual estirnate is lower primarily due to the elimination of the home improvement loans component during restructuring. (iii)i Kebele Upgrading: The lower actual estimate is due to scaling -down of the kebele upgrading program due to capacity constraints in EDPO. (iv) Municipal Infrastructure: Increase in the actual estimate primarily due to increased focus on solid waste management activities during restructuring to improve basic sanitation as well as the provision of increased numbers of municipal vehicles and equipment given the need to restock critical essential municipal equipment. (v) Akaki Water Supply: Actual estimate is lower due to decreased costs of civil works stemming from exchange rate savings. (vi) Institutional Support: Marginal difference. 6. 'Sustainability 6.1 Rationale for sustainability rating: The investments under the project are unlikely to be sustainable given that no firmn commitment has been received from the AACG on financing the operations and maintenance of the physical investments financed under the project. This is further reinforced by the fact that in AACG, in general, there has been a lack of credible institutional, financial, and operational reforms undertaken. There may be some institutional benefits for AAWSA, the AACG Health Bureau, and AARA in termns of overall operational efficiency due to project inputs. 14

19 6.2 Transition arrangement to regular operations: Attachment 3 of Annex 12 (the ICR Mission Aide Memoire) contains a plan for future operations of the major components financed under the project. This plan was developed and agreed to between the mission and the PIO and represents what is considered to be essential to ensure sustainability of the investments. However, a firm commitment from the AACG to undertake the activities proposed under the plan has not been received. Given that most of the investments under the major project components are the direct responsibility of various bureaus and departments of the AACG, it would be necessary for them to receive explicit budgetary allocations as indicated in the plan. Consequently, whether or how much funds are actually made available for operations and maintenance would depend upon the overall financial resources of the AACG and their applications. Further, there is a need for cost recovery through moving towards commercial operation of the water supply schemes. 7. Bank and Borrower Performance Bank 7.1 Lending: Refer to paras , , and Supervision: Overall supervision performance is considered to be satisfactory, although the frequency and impact of the Bank's supervision effort varied during different implementation periods of the project. Bank's supervision effort became more intense and proactive including and following the restructuring exercise from During this period the Bank fielded 10 supervision missions and supervised the project with due diligence; the country department recognized this project as being one of the best supervised in a review conducted in Prior to 1996, effective supervision of the project was adversely effected by the political transition in the country, subsequent changes in key personnel in the implementing agencies as well as changes in Bank task team. This lack of continuity of key personnel, both in the implementing agencies and in the Bank, exacerbated an already difficult implementation environment. 7.3 Overall Bank performance: Overall Bank performance was unsatisfactory. Borrower 7.4 Preparation: The Government's preparation performance was adequate given the capacity limitations. 7.5 Government implementation performance: Implementation performance has generally been unsatisfactory. The civil unrest in the country in the early years of the project retarded implementation progress to a point where only about 6% of the credit was disbursed at the end of two years after credit effectiveness. There were lengthy delays in the procurement process, coordination among the key implementing agencies was weak. Project restructuring took two and half years (from January 1994 to July 1996 from the Government's side) due to decision-making constraints, as well as capacity constraints. Frequent high level management changes in AACG also delayed the implementation schedule. Also, performance of contractors and suppliers was unsatisfactory which stemmed in part due to the PIO's limited capacity to effectively supervise their activities. 7.6 Implementing Agency: Despite the efforts put in by the implementing agencies, weak capacity in these agencies contributed to delays in implementation as well as coordination problems between some of the key actors such as AAWSA, PIO, CBB and EDPO. 15

20 7.7 Overall Borrower performance: IJnsatisfactory. 8. Lessons Learned 8.1. The project appears to have substantially achieved its physical targets although it is not likely to achieve the expected benefit (low ERR) and also unlikely to be sustainable (cost recovery, institutional capacity). In terms of institutional development, implementation experience of the project has helped raise the level of awareness amongst those involved in its execution in terms of the complexity of issues involved in planning, design and implementation of basic infrastructure improvement programs. The project has also served to build capacity, albeit in a limited sense, in segments of the professional staff in those bureaus and departments in the AACG which were involved in project activities On Main Streaming: The project, however, has not been able to achieve substantially its institutional development and broader capacity building objectives. In particular, in this context, it should be noted that the project objectives and the development imperatives did not get fully incorporated into the mainstream policies and programs of AACG. In a sense the project worked as an enclave operation wi.thout having many of the benefits accrue to AACG as a whole. Also, the project was unable to significantly influence fundamental policy reforms, program formulation, prioritization of investments and related financial management and implementation issues within AACG as an institution On Delivery Mechanism: Given the experience with the project it is the task team's assessment that with regarcd to generic city management, while the city (in this case the AACG) should remain responsible for the provision of basic public services, it is not necessary that it has to "deliver" these services by itself. Altemative service delivery mechanisms, under different incentive structures, including increased involvement of the private sector, communities, NGOs, etc. should be explored On Competitive Advantage of the Bank: In this context, it should also be noted that it is not self evident that the Bank has a comparative advantage in financing and supervising small individual subprcjects. Given the high transaction costs of such an approach, the Bank should concentrate on assisting the client in building its capacity to ef0ectively and efficiently manage the project implementation process. Experience indicates that the Bank should be less involved in "managing" the implementation process and be more of a "financier" and a "catalyst" to support building up the client's management capacity On Comprehensive Capacity Building: The Bank did endeavor to address the issue of institutional strengthening and capacity building at the Addis Ababa City Govermment given the need for a broadbased set of capacity building initiatives to help it become more responsive and more efficient to the development demands, needs and priorities of all its stakeholders. Around mid 1996, the AACG and the Bank proposed to formulate an Addis Ababa Capacity Building Project (AACBP) which would help to identify key issues that needed to be addressed. The first set of actions would be to: (i) articulate a first set of priority capacity building actions; and (ii) initiate the process of a series of internal meetings and discussions, involving all stakeholders--r14 officials, other sector agencies, representatives from bus;iness and community, and NGOs On PIO: Under SAAP, PIO functioned in a mode which was outside the mainstream operations of AACG. ThuLs, the policies and programs under the project, managed through the PIO, did not get truly integrated in the overall decision making process in AACG. It had been agreed with AACG that the role of the PIO, which under the project had been to implement and coordinate IDA-financed investments in the urban sector in AACG, would be revisited with a view to enabling it to become more of a program management office for the AACG. Thus, the PIO's institutional capacity would need to be strengthened to enable it to become the in-house econornic policy management team. The idea was that it would be 16

21 mainstreamed into the AACG in order to facilitate coordination of all donor-funded activities so as to avoid duplication of efforts and ensure that donor investment interventions are consistent with the country/region's development objectives. The PIO could thus be gradually transformed into the equivalent of an Economic Development Council at the sub-national level which would be responsible for program management functions including the formulation and coordination of all urban development policies and initiatives in the AACG. This entity could function as the technical secretariat to the senior AACG management and be a forum for setting investment priorities within AACG Priority tasks in Addis Ababa Development: During 1997, considerable progress was made with defining a program of targeted interventions from an institutional strengthening context, in a participatory manner involving various stakeholders, through the proposed AACBP (see para 8.5). However, there was a change in the management leadership within AACG which had other priorities and the Central Government did not pursue for IDA assistance in this regard. Consequently, further preparation efforts were halted. The contribution of Addis Ababa to the national economy is significant. Of the total private sector investment requested at national level, about 54% is in Addis Ababa. However, only a smaller fraction of the total amount is realized (less than half) because of: (i) lack of adequate infrastructure (roads, water, electricity, etc.) (ii) lack of efficient provision of land and construction permits; (iii) lack of adequate financial resources to provide basic public services, etc. The consequences of not addressing these city management and service delivery issues in Addis Ababa could result in potentially serious social and economic consequences not only to the residents but also to the nation. It is, therefore, imperative that making available the necessary assistance in the form of strengthening the city's overall program and financial management capacity, including improving revenue mobilization and enhancement, needs to be seriously considered to enable the functioning of the national economy properly and to effectively address poverty and basic service delivery issues in Addis Ababa. 9. Partner Comments (a) Borrower/implementing agency: See Annex 13 for the Borrower's contribution to the ICR. (b) Cofinanciers: Not Applicable (c) Other partners (NGOs/private sector): Not Available 10. Additional Information About US$2.3 million was canceled from the credit around August 1998 after a determination was made that those monies would not be effectively utilized given the time remaining till credit closing. Approximately US$3.7 million of the credit remains undisbursed (after reconciliation between overdrawn and under drawn categories of about US$292,000). Therefore, expected savings, at a maximum, could amount to US$3.7 million which would have to be canceled from the credit. 17

22 10.2. The current status of the undisbursed monies and the reasons why are enumerated below: Component Undisbursed Reasons for Savings as of 12/14/99 (in US$) Sxites and Services (civil works) 447,777 Actuals were less than originally budgeted. Kebele Upgrading (civil works) 91,596 Weak implementation capacity of EDPO. Sireet Maintenance (civil works) 408,684 Cancellation of one road which was planned to be replaced by another but was not done. Solid Waste Management (civil 85,074 On-site road in the landfill site and the truck works) park were not completed by the closing date. Municipal Infrastructure 88,147 Unused amount on the extension of off-site (electricity civil works) electricity. Building Materials for Housing 278,265 This balance should have been reallocated to Development (goods) other components as these materials were procured long before restructuring. Vehicles and Equipment for AACG and AAWSA (goods) 1,412,414 Pumps and other materials for AAWSA could not be procured due to delay in procurement process. Also, represented in this amount is the final payment for equipment stranded at. Assab port. Street Maintenance Materials 262,433 Actuals were less than originally estimated. (goods) Consultant Services and Training 784,252 AAWSA was not able to pay for consultancy for AACG and AAWSA services as the supervision work went beyond (services) the project closing date, also some AACG consultancy savings. Unallocated 159,541 TOTAL 3,926,587 18

23 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 1 Key Performance Indicators/Log Frame Matrix 19

24 Annex 1. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: Indicator/Matrix Projected in last PSRI Actual/Latest Estimate See under Note below. Output Indicators: Indicator/Matrix Projected in last PSR 1 Actual/Latest Estimate 1. Improvement in the quality of life of approximately 6,000 households due to infrastructure improvements in 6 pilot kebeles. (i) No. of stand pipe users. (ii) No. of public toilet users. (iii) Kms. of new/ improved access roads, (iv) Tons of garbage collected! disposed. 2. Provision of adequate shelter for 2,250 households. (i) No. of families with new homes. 3. Improvements in supporting infrastructure. (i) No. of community facilities such as schools, markets, etc. established. (ii) No. of housing units with water supply connection. (iii) Kms. of new! improved roads. (iv) Kms. of new/ rehabilitated drains. (v) No. of housing units with electricity connection. 4. Provision of permanent water supply in Jimma (1400 units), Ambo (500 units) and Akaki (350 units) sites and services comlponent. (i) No of housing units with permanent water supply connection. 5. Adequate maintenance of 20 kms of asphalt roads and attendant drainage improvements as well as maintenance of additional roads in region using materials and equipment purchased under the project. (i) Kms. of asphalt roads maintained and improved. (ii) Kms. of additional roads maintained and improved using materials and equipment purchased under project. (iii) Kms. of drains maintained and improved. 6. Improved solid waste management funcilions. (i) No. of tons of garbage collected/ _ 20

25 Annex 1. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: Indicator/Matnix Projected in last PSR' Actual/Latest Estimate See under Note below. Output Indicators: Indicator/Matrix Projected in last PSR 1 Actual/Latest Estimate disposed. (ii) No. of households served by one skip. (iii) Frequency of maintenance of vehicles and equipment. 7. Improvement of the Akaki water supply system in terms of expansion, distribution, and management capacity resulting in increased (8,300 m 3 /day) and improved water supply to Akaki town. (i) No. of new households with permanent water supply. (ii) No. of public water facility users. (iii) Percent of unaccounted for water. (iv) Frequency of maintenance of equipment. 8. Improvement of delivery of public services in the Addis Ababa region through implementation of the Financial Management System (FMS), the Urban Land Management System (ULMS), and provision of equipmento the different bureaus. (i) Percent of increase in revenue collection. 1 / End of project Note: During the project restructuring exercise, performance and impact indicators were identified and included as part of the final restructured project proposal to enable effective monitoring and evaluation. However, given the age of the project, the total absence of any kind of baseline data to evaluate project impact, and the implementing agency's (PIO) limited capacity, it was agreed both between the Government and IDA that it would not be practical or feasible to evaluate project impact with any degree of detail. Project outputs, however, could be measured against realistic set targets which would give at least some indication of the result of project activities and can be used as proxies for impact of the investments. Subsequently, a couple of M&E reports were submitted by the PIO to IDA in Thereafter, due to staff attrition (given that the project was due to close in June 1999) and attendant severe capacity constraints, no further reports were submitted. Annex 9 of this ICR, however, provides details on physical implementation indicators by key project component in terms of targets envisaged at appraisal and what was completed at project completion 21

26 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 2 Project Cost and Financing 22

27 Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Project Cost By Component US $million US $million Addis Ababa Land Compensation % Sites and Services % Housing Development % Kebele Upgrading % Municipal Infrastructure (Street Maintenance and % Solid Waste Management) Akaki Civil Works % Vehicles and Equipment % Water Supply Improvement % Institutional Support % Total Baseline Cost % Physical Contingencies 3.35 Price Contingencies 6.46 Total Project Costs % Total Financing Required % Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICB NCB Other 2 N.B.F. Total Cost 1. Works (6.8) (4.2) (11.0) 2. Goods (9.9) (9.9) 3. Services (1.8) (1.8) 4. Housing Development (2.2) (7.0) (9.2) 5. Kebele Development (2.3) (0.8) (3.1) 6. Land Compensation (0.0) Total (18.9) (6.5) (9.6) (35.0) 1/ Figures in parenthesis are the amounts financed by the IDA Credit. All costs include contingencies 2/ Includes minor works, goods, consulting services, training, technical assistance services. 23

28 Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICB NCB Other 2 N.B.F. Total Cost 1. Works (1.4) (2.2) (1.2) (4.8) 2. Goods (17.0) (0.6) (0.9) (18.5) 3. Services (3.0) (3.0) 4. Housing Development (3.8) (3.8) 5. Kebele Development (1.0) (0.2) (1.3) 6. Land Compensation (0.0) Total (18.4) (3.8) (9.2) (31.4) I/ Figures in parenthesis are the amiounts financed by the IDA Credit. All costs include contingencies 2/ Includes minor works, goods, consulting services, training, technical assistance services. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank GoDvt. Cofin- Bank Govt. Confin- Bank Govt. Cofinancier ancier ancier Ad1dis Ababa Land Compensation % Sites and Services % 26% Housing Development % 48% Kebele Upgrading % 25% Municipal % 148% Infrastructure (Street Maintenance and Solid Waste Management) Akaki Civil Works % 167% Vehicles and % Equipment Water Supply % 10% Improvement Institutional Support % 0% Total Project Costs % 67% 24

29 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 3 Economic Costs and Benefits 25

30 Annex 3: Economics Costs and Benefits A. Housing and Sites and Services AddisAbaba (Jimma Road and Ambo Road) and Akaki Sites and Services Sub-component Appraisal Restructuring esdmate Addis Ababa Housing and Sites and Services -Jimma 19% 11.2% Road and Ambo Road) Akaki Housing and Sites and Services Scheme 17% 6.9% Souirce: AKT Consultants, Implementation Coimpletion Report of the Second Addis Ababa Urban Development Project June The sites and service component of Addis Ababa and Akaki (on and off-site infrastructure and housing development) comprised of U'S$11.67 million or 32% of the base project cost. At restructuring the component was reduced to US$9.08 million. As both housing construction and construction of onand off-site infrastructure have not been completed, the economic rate of return was not re-calculated. The benefit from the housing and site and services is expected to be far below the SAR due to: * Significant variations in construction cost that occurred; - The additional allocations for emergency water supply, street lighting, maintenance of on-site roads and drainage, additional works on roads and drainage; The monetary and labor contribution of cooperatives; * The allocation of resources from the institutional support component (through allocations from PIO) for organization of cooperatives, supervision of housing and on-site infrastructure construction; - The allocation of additional resources for community facilities; and - Delayed completion (procurement of housing material and construction site road and changes in FY 1991/92 but first batch was completed in FY 1996/97) 2. The results of a beneficiary survey provides the characteristics of the participants and other attributes are summarized below. Benieficiaries Characteristics Type of Houses (%) Total A B C D Place of Work Employee of region bureau/offices Other government office employees Non-Government Organizations Owners of Private Firm Other _ Monthly Salary <

31 Beneficiaries Characteristics Type of Houses (%) Total : _ A 1B C ID Place of Work 2501 and over Age Group _ Gender Male Female I 1: Educational Attainmentl 12 completed or less Diploma l First Degree Second Degree Martial Status r Never married Currently married Divorced Separated Widowed Total Total Source: AKT Consultants, Implementation Completion Report of the Second Addis Ababa Urban Development Project June Note: Average income = 1,548.4 Average household size = 5 B. Kebele Upgrading Component Sub-component Appraisal Re-estimate Kebele Upgrading 14.8%! 13.2% Source: AKT Consultants, implementation Completion Report of the Second Addis Ababa Urban Development Project June At appraisal the Kebele Upgrading component was US 4.5 million or 12% of the base cost of the project (US$36.86 million). On restructuring the re-estimated ERR ranges from as low as 4.2% to 20.1% depending on the imputed rent. Assuming a realistic value for rent, an ERR value of 13.2% is obtained.. 27

32 C. Street Maintenance Componment Sub-component Appraisal Re-estimate Street Maintenance 18% (15.6) (4.7%) to 9.0% 4. This component had represented 22 % of the base cost of the project. At appraisal the economic rate of return was estimated at 18%. Re-estimated under two sets of scenario for traffic growth, reestimated ERR ranged between -4.7%/o and +9.0%. Note, although the ERR at appraisal was 18% it should have been 15.6%. Traffic data was not available to do a re-evaluation of the ERR. D. Akaki Water Supply Scheme Slb-componenf 4Appraisal Restructuring Re-estimate Akaki Water Supply Expansion Scheime 9.6% 2.9% 5. This cost of this component at iappraisal was estimated at US$4.44 million out of total base project cest of US$36.86 million. At restructuring the total estimated cost of the Akaki water supply scheme was estimated to be US$5.4 million. The ERR was estimated at appraisal to be 9.6%. The restructured project ERR estimate after completion is 2.99%o. This is largely due to the fact that the IDA-financed portion comprised of production capacity, related electro-mechanical equipment and primary distribution. The Government decided because of the overall reallocation of the component budget to finance the secondary and tertiary distribution system from its own resources. At project closing, the secondary and tertiary distribution system has not been fully commissioned. As a result, the full production capacity of the IDA financed component is currently under-utilized resulting in, therefore, an expectedly low ERR. 28

33 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 4 Bank Inputs 29

34 Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle Nio. of Persons and Specialty Performance Rating MonthNYear Count Specialty Implementation Development Progress Objective Appraisal: February Financial Analysts, 2 NA NA Municipal Engineers Negotiations: April 16-20, 5 2 Financial Analysts, Sr. NA NA 1990 Municipal Engineer, Sr. Counsel, Disbursement Officer Board: June 20, Financial Analyst, Sr. NA NA Municipal Engineer, Country Economist, Sr. Counsel Effectiveness: November NA NA 12, 1990,,,, October 15-26, Financial Analyst, 2 VMunicipal Engineers January 9-11, Municipal Engineer _ November 25-December 6, 4 Sr. Urban Planner, Sr Municipal Engineer,.Municipal Engineer, ]Financial Analyst June 15-July 18, Sr. Urban Planner, Sr. 1 Municipal Engineer, Financial Analyst May 12-31, Sr. Urban Planner, Municipal 2 2 E]ngineer, Financial Analyst, Chartered Surveyor October 28-November 12, 3 Sr. Operations Officer, Sr M4unicipal Engineer, NA NA Analyst L Financial April 6-22, 1994 (Project 4 Sr. Operations Officer, Sr. Restructuring Mission) Municipal Engineer, NA NA Flinancial Analyst, Urban PElanner June 12-22, 1994 (Follow- I tjrban Planner up Project Restructuring NA NA Mission) October 10-21, 1994, 5 Financial Analyst, Sr. U S Sanitary Engineer, Young rftofessional, Consultant, Operations Analyst November 28-December 2, 2 Sr. Operations Officer, 'NA NA 1994 Urban Planner March 16-30, Sr. Municipal Engineer S S Mid PT. Operations Officer, Sr. S U L Municipal Engineer 30

35 Stage of Project Cycle No. of Persons and Specialty Performance Rating Month/Year Count Specialty Implementation Development Progress Objective January 17-18, Pr. Operations Officer NA NA February 1-13, Sr. Sanitary Engineer NA NA April 24 - May 10, Pr. Operations Officer, S S Municipal Engineer, Operations Analyst, Disbursement Officer (Resident Mission) October 14-November 7, 7 Pr. Operations Officer, Sr. S S 1996 Municipal Engineer, Civil Engineer, Operations Officer (Resident Mission), Urban Transport Specialist, 2 Consultants February 3-15, Pr. Operations Officer, Civil S U Engineer, Operations Officer (RM), Consultant May 30-June 12, Pr. Operations Officer, Civil S U Engineer, Operations Officer (RM), Consultant August 21-26, Pr. Operations Officer, 2 U U Operations Officers (RM), Consultant October 20-November 5, 5 Pr. Operations Officer, Civil U U 1997 Engineer, 2 Operations Officers (RM), Consultant May 3-13, Pr. Operations Officer, Civil U U Engineer, 2 Operations Officers (RM), Consultant August 4-7, Pr. Operations Officer, 2 U U Operations Officers (RM), Consultant November 9-13, Pr. Operations Officer, U U Operations Officer (RM), Consultant May 3-7, Pr. Operations Officer, U U Municipal Engineer, Operations Officer (RM), Consultant August 2-13, 1999 (ICR 5 Pr. Operations Officer, NA NA Mission) Municipal Engineer, Operations Officer (RM), Financial Management Specialist, Consultant 31

36 (1) Staffg Stage of Project Cycle Actual/Latest Estimate = No. Staff weeks US$ (,000) Identification/Preparation Appraisal/Negotiation Supervision ICR Li 40.0 Total "Preparation of this project and the MAarket Towns Development Project (Cr ET) was done together as originally both projects were one (i.e. the Integrated Urban Development Project). However, a decision was made to split the project around June 1989 into two such that activities in Addis Ababa comprised the Second Addis Ababa Urban Development Project and those in the other urban areas were subsumed under the Market Towns Development Project. Project preparation costs, therefore, are not reflected under SAAP but are captured under the Market Towns Development Project. The total cost of preparing both projects is about US$ 256,400 and total staff weeks equal / The WPA system has been discontinued therefore number of staff weeks not applicable anymore. 32

37 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 5 Ratings for Achievement of Objectives/Outputs of Components 33

38 Annex 5. Ratings for Achievement of Objectives/Outputs of Components (]I=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating IX] Macro policies []H[]SU[]M[]N 1X] NA IXJ Sector Policies [ ] H [ I SU [] M fx N [] NA IX] Physical [JH []SU IXIM [ IN []NA )XI Financial []H []SU []M [N7N []NA /X] Institutional Development [ ] [ ]SU [ M IX] N [ ]NA JXI Environmental [ H [ ] SU LXI M [IN r ]NA Social [X] Poverty Reduction [ ]H [ ]SU XM [] N [I]NA [X] Gender []H []SU []M IXIN []NA IX] Other (Please specify) []H []SU [IM [IN /X]NA [XI Private sector development [ ] H [ ] SU [ I M [ ] N [XI NA :X] Public sector management [ ] H [ ] SU [ ] M [X] N [ INA / Other (Please specify) [ ]H [ ]SU [ ]M [ IN [XNNA 34

39 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 6 Ratings of Bank and Borrower Performance 35

40 Annex 6. Ratings of Bank and Borrower Performance (]HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performance [I] Lending IC] Supervision fx] Overall 6.2 Borrowerperformance [X] Preparation /i] Government implementation performance fir] Implementation agency performance IX] Overall Rating U S U Rating S U U U 36

41 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 7 List of Supporting Documents 37

42 Annex 7. List of Supporting Documents 1. Staff Appraisal Report (No. 8632'-ET) 2. Memorandum and Recommendation of the President (No. P-5334-ET) 3. Development Credit Agreement, August 13, AAAR Project Agreement, August 13, AWSA Project Agreement, August 13, HSB Project Agreement, August 13, Project Restructuring Proposal, May Amendment of the DCA, April 30, Amendment of the AAAR Project Agreement, April 30, Amendment of the AWSA Project Agreement, April 30, Amendment of the HSB Project Agreement, April 30, Cancellation and Reallocation of Credit Proceeds, August 3, AAWSA Project Evaluation Report, June CBB Implementation Completion Report, June Implementation Completion Report, Main Report, June 1999, AKT Consultants 16. Back-to-office Reports with relevant attachments (July 1992 to August 1999) 38

43 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 8 Related Bank Loans/Credits 39

44 Annex 8. Related Bank Loans/Credits Credit Title Purpose Year of Approval Status First Urban Development * Lower-cost, replicable 1983 Completed in June Project (Cr ET) approaches to housing 1991 including the development of serviced sites for self-help house construction in Addis Ababa for families above the poverty threshold. * Upgrading of environmental conditions and infrastructure in Addis Ababa for those farnilies below the poverty threshold. * Technical assistance to HSB to identify and begin to address key issues associated with the maintenance of urban rental housing schemes and road systems in Addis Ababa. 40

45 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 9 Key Implementation Indictors 41

46 Annex 9. Key Implementation Indicators Tabie 1A: Key Implementation Indicators for Sites and Services: Infrastructure Development Description Unit Quantity Construction Maintenance PHO FHO days Appraisal Restructuring Actual Contract Actual Ambo Road Housing Site Gravel road (on site) Km NAV /07/94 21/06/96 Asphalt road (Access) Km Communal facilities in No /11/98 housing sites Storm water drainage Km NAP /06/95 Electricity Supply NAV NAV Jimma Road Housing Site Gravel road (on site) Km NAV /08/95 22/06/98 Asphalt road (Access) Km Communal facilities No /05/99 Storm water drainage Km NAV Electricity Supply NAP NAP Akaki Housing Site Gravel road (on and off site) Km NAV 2.36 NAV NAV Communal facilities No /03/94 517/95 Electricity Supply NAP NAP NAV - Not Available NAP - Not Applicable PHO - Provisional Hand Over FHO - Final Hand Over 42

47 Table IB: Key Implementation Indicators for Sites and Services: Housing Development Number of housing units Construction period Completion time Description Appraisal Restructuring Actual Contract Actual Maintenance PHO FHO Ambo site Core + 0 (A) NAP NAP NAP NAP NAP Core + 1 (B) NAP NAP NAP NAP NAP Core + 2 (C) NAP NAP NAP NAP NAP Core + 3 (D) NAP NAP NAP NAP NAP Others (ground +1) NAP NAP NAP NAP NAP Sub-Total Jimma road site Core + 0 (A) NAP NAP NAP NAP NAP Core + I (B) NAP NAP NAP NAP NAP Core +2 (C) NAP NAP NAP NAP NAP Core + 3 (D) NAP NAP NAP NAP NAP Others (ground +1) NAP NAP NAP NAP NAP Sub-Total Akaki site Core + 0 (A) NAP NAP NAP NAP NAP Core + I (B) NAP NAP NAP NAP NAP Core+2(C) NAP NAP NAP NAP NAP Core +3 (D) NAP NAP NAP NAP NAP Others (ground +1) NAP NAP NAP NAP NAP Sub-Total Total (1+2+3) 2,250 2,250 2,244 43

48 Table 2: Key Implementation Indicators for Kebele Upgrading Civil Works and Flood Control Projects Quantity Construction Maintenance PHO FHO Days Description Unit Appraisal Restructuring Actual Contrac Actual t Implemented by Private Contractors Woreda 8 Kebele 23 NAP NAP NAP NAP /07/96 12/10/97 Woreda 8 Kebele 24 first*** NAP NAP NAP NAP /07/96 20/11/97 Woreda 8 Kebele 24 second NAP NAP NAP NAP /10/98 Woreda 8 Kebele 25 NAP NAP NAP NAP /06/97 22/07/98 Woreda 2 Kebele 17 NAP NAP NAP NAP /03/99 Woreda 14 Kebele 21 NAP NAP NAP NAP /05/99 Sub-total Implemented by EDPO Woreda 7 Kebele 30 NAP NAP NAP NAP Woreda 7 Kebele 31 NAP NAP NAP NAP Woreda 7 Kebele 32 NAP NAP NAP NAP Woreda 7 Kebele 33 NAP NAP NAP NAP Woreda 6 Kebele 08 NAP NAP NAP NAP NAV Woreda 5 Kebele 22 NAP NAP NAP NAP 180 Sub-total Total Total Kebeles Covered No Physical Status of Upgrading Civil Works Asphalt Road km NAP NAP NAP NAP NAP Gravel Road km NAP NAP NAP NAP NAP Paved stone Road km NAP NAP NAP NAP NAP Paved stone Drainage km NAP NAP NAP NAP NAP Concrete Pipe Drainage km NAP NAP NAP NAP NAP 44

49 Description Quantity Construction Maintenance PHO FHO Days Unit Appraisal Restructuring Actual Contrac Actual t Slab Bridge No. 26 NAP NAP NAP NAP NAP Foot Bridge No. 26 NAP NAP NAP NAP NAP Communal latrine No NAP NAP NAP NAP NAP Public pipe points No NAP NAP NAP NAP NAP Hard stands No NAP NAP NAP NAP NAP Street lighting No NAP NAP NAP NAP NAP 45

50 Table 3: Key Implementation Indicators for Street Maintenance Civil Worke Street Name Street Length (km) Construction Days Appraisal Restructuring Actual Contract Actual Maintenance PHO FHO 1. Sahie Selassie Bridge to Semen NAP NAP /10/96 31/10/97 Hotel & from Northern Municipality by the Lazarist Mission to Addisu Gebeya 2. French Embassy to Jesus Church NAP NAP /08/96 31/10/97 3. Enkulal Fabrica to Rufael NAP NAP /08/96 31/10/97 4. Dil Paint Factory by the Eth. Coffe NAP NAP /02/97 Board to Diabaco 5. Old Bulgaria Embassy to Debre NAP NAP /09/96 05/11/97 Zeit Road 6. Belair Hotel by Aware to 6* Police NAP NAP /03/97 Station 7. The Three Ketechen Roads NAP NAP /05/97 8. Medhanealem School to Kolfe NAP NAP /04/97 Children Center 9. Janmeda to Minilik Hospital NAP NAP /06/ Coffee Board Junction to Seminary NAP NAP /05/98 College 11. French Embassy to Bella NAP NAP /06/ Ground Force Garage to Jesus NAP NAP Church 13. British Embassy to Traffic Office NAP NAP /06/ Diabaco through Bisrate Gebriel NAP NAP /01/99 Church to Jimma Road and from Diabaco to Vatican Embassy Total

51 Table 4: Key Implementation Indicators for Solid Waste Management Civil Works Quantity Construction Days PHO FHO Description Unit Appraisal Restructuring Actual Contract Actual Building and Fence Work Site I I 1 2/23/98 5/27/99 On-site asphalt road construction and Km NAV NAV June 99 off-site maintenance Truck Park No June 99 Solid Waste Containers No

52 Table 5: Key Implementation Indicators for Akaki Water Sunpplv Component Description Unit Quantity Construction Days Completion date Appraisal Restructuring Actual Contract Actual Pl-O FHO Phase -I Akaki Water Supply Civil Work /11/98 a. Pipe laying km NAV b. Reservoirs (1500 and 800 m3) No. NAV c. Auxiliary Building Ls NAV Sub-total (civil work) NAV Construction of Boreholes No. NAV NAV 780 Apr. 97 Mechanical and Electrical Works Ls NAV NAV 90 Oct. 95 Supply of Pipes and Accessories km NAV NAV Phase -2 Akaki and Hlousing Site Civil Work a. Pipe laying km NAV b. Reservoirs (800 m3) No. 1NAV c. Auxiliaiy Buildings Ls NAV Sub-total (civil work) Mechanical and Electrical Works Ls NAV Supply of Pipes and Accessories km NAV Note. Civil Works under phase-2 are not part of the SAAUDP cost but they are part of the Akaki Water Supply and the Sites and Services Project 48

53 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 10 Studies and Training included in the Project 49

54 Annex 10. Studies and Training included in the Project Component (agency)' Study Purpose Status Impact of Study STUDIES KUG-CW Detailed engineering design in Prepare detailed civil works design Completed Upgrading civil works. (PlOzlocal consultant) target kebeles Minimize dislocations due to project SM-CW Drainage implications of road Study the type and volume of drainage works Completed (PIO=>AARAz:'Local maintenance needed to ensure sustained impact of maintenance Consultant) works. SWM-CW & VME 2 Report of First Tranche Technical Evaluate performance of project procurements Completed Impact not felt due to (Foreign Consultant) Assistance Intervention Identify the VME needs of the SWM system and prevailing political & adm. prepare technical specifications environment. Identify new disposal site out of five sites in the City Master Plan SWM-CW & VME 3 Reports of Second & Third Evaluate performance of project procurements. Completed New vehicle & equip. (Foreign Consultant) Tranche Technical Assistance Identify weaknesses in SWM cycle & recommend needs identified, technical Intervention (including training) improvements in each stage. specification. prepared & Identify the VME needs of the SWM system and prepare technical specifications. Identify new disposal site out of five sites in the City Master Plan. Train SWM Unit staff on SW data collection, analysis, design & implementation of better VME utilization methods. SWM-CW & VME 4 Report of Fourth Intervention of Evaluate performance of project procurements. Partly (Foreign Consultant) Technical Assistant Evaluate alternative disposal mechanisms and Completed feasibility of re-cycling waste and improvements in disposal site management practices. procured. Trained Head of SWM Unit. Improvements in VME mgt. & organizational structure suggested. 'Component refers to the one affected directly by the study, training, workshop; not necessarily the component from which the study was financed. Agency refers to the agency responsible for overall organization or execution (or both) of the activity (study, training, workshop). 2 VME is procurement of vehicles, machinery and equipment. 3 VME is procurement of vehicles, machinery and equipment. 4VME is procurement of vehicles, machinery and equipment. 50

55 Component (agency)' Study Purpose Status Impact of Study STUDIES WSI Study on Water Tariff Structure Evaluate the tariff structure and suggest a new Completed New tariff schedule (Foreign Consultant) schedule to ensure better cost recovery. adopted in 1995; a "survival rate" & rates that rise with utilization applied. IS-TA Study to Modernize Payroll Improve financial management practices to ensure Completed (Local consultant) Preparation and Payment in AACG availability of sufficient resources & cost recovery mechanisms. ** A major Financial Mgt. study plannedfor in SAR has been canceled by govt as part of AA- CBP. IS Study on Urban Development & (PIO, WUDB) Information Needs WSI Organization and Management Streamline organizational structure of AAWSA, Completed (AWSA, local Study and improve MIS system consultant) SWM "Designing a strategy for project Completed (PIO, local consultant) for community-based environmental sanitation" (1998/99) SM Study on Road Transport System (PIO, AA Roads Auth.) in Addis Ababa SWM Study on Management Design an MIS for Sanitation and assess financial Completed Fund for implementing the (PIO) Information System for Sanitation requirements project has been requested Activities in Addis Ababa (with from EU UNDP Regional Water & Sanitation Group for East & Southern Africa) (1998/99) SM Street maintenance: study on Identify the institutions involved in street Completed (PIO, IDA) institutional set-up and system requirements for SM and traffic maintenance; identify main deficiencies in maintenance/traffic management management WORKSHOPS, PANEL, DISCUSSIONS, ETC 51

56 Component (agency)' Study Purpose Status Impact of Study STUDIES SAAUDP Panel Discussion on Create awareness/sensitize agencies and their staff Completed (PIO) "Development Problems ofaddis regarding the role of PIO (SAAUDP) and Role of SAA UDP" (for half-aday) RM Urban Transport Workshop (half- (PIO) a-day) Completed SWM Workshop on SWM study Discuss findings of the study undertaken by Completed PIO-led committee to (PIO) "Environmental Sanitation Case foreign consultants Study" (sponsored undertaken by UNICEF) by foreign and design mechanisms ensure and for follow-up implementation of its implementation consultants (two has been days) recommendations. set up. SAAUDP Workshop on the iitiative for Assess institutional, material, and human resource (P1O) Completed Follow-up Addis action Ababa not Capacity taken Building needs for better provision of public services and Project (3 days) because initiative was design not an investment program to be financed by approved by government. SAAUDP SWM A workshop on "Institutional set- Create sustainable conditions for environmental Completed (PIO) up for environmental sanitation" sanitation in Addis Ababa and a workshop on "Financing enviromnental sanitation" (1998/99). TRAINING SM A two-week visit for Road Enhance the awareness/experience of road mgt. Completed (PIO) Authority Board Members and staff regarding road (road maintenance) Executives systems IS Computer training for AACG: (PIO) 1995/96 Improve data processing capacity of AACG Completed IS Computer training for EDPO, (PIO) PIO, Health Bureau (1997/98) Improve data processing capacity of AACG Completed IS Training on Financial Accounting Completed (PIO & Debre Zeyt Mgt for six staff of PIO and 2 from Irstitute) other AACG agencies (1998/99) 52

57 Component (agency)' Study Purpose Status Impact of Study STUDIES IS Training on Project Planning, Completed (PlO& Debre Zeyt Mgt Implementation Monitoring and Institute) Evaluation from 11 staff from other AACG agencies (1998/99) IS Training on Ethics in Public Completed (PIO& Debre Zeyt Mgt Management from II PIO staff Institute) and 14 from other AACG agencies (1998/99) IS Training on Budgetary Planning Completed (PIO& Debre Zeyt Mgt and Control hics in Public Institute) Management for 2 PIO staff and 10 from other AACG agencies (1998/99) is Trainings for 22 staff (1998/99) Completed (PIO & Debre Zeyt Mgt on: Institute) * Record Management * Office Operation & Management (levels I & II) IS Training on operation of newfire- Completed (PIO) fighting equipment for 4 staff of Fire Brigade in South Africa (1998/99) IS-project management Training on Contract Improve implementation performance by Completed Limited impact due to (PIO) Management for PIO staff (3 persons-i in Accra and 2 in speeding-up and better manage procurement contracts. early resignation of the trained staff. Nairobi) 53

58 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 11 Sbtatus of Legal Covenants 54

59 Annex 11. Status of Legal Covenants (as per the restructured project) Section Present Original Revised Description of Covenant Reference/ Status Fu1filment Fulfilment Covenant Class Date Date Comments Development Credit Agreement 2.02 (b)/ I/ C Opening of Special Accounts for Complied with l l CBB, AAWSA and AAAR AAAR Project Agreement 3.04 / 7 C In carrying out Part B (upgrading Complied with of kebeles), AAAR to implement in a manner satisfactory to IDA a resettlement plan for the people whose homes may be affected. 4.01(a) I C AAAR to maintain records and Complied with accounts for Parts A. I (development of housing sites and services), B (upgrading of kebeles), C (infrastructure improvement in Addis Ababa), D (solid waste management in Addis Ababa), and F. I (institutional development for AAAR) of the _ Project. 4.01(b) /I C AAAR to have accounts audited Complied with within nine months of end of fiscal year and submit to IDA 4.0 1/2 NC AAAR to take all appropriate Not complied measures to recover on-site with infrastructure costs associated with carrying out Part A. 1 (development of housing sites and services) of the project from the beneficiaries. AAWSA Project Agreement 3.04 /2 C 09/30/91 AAWSA to carry out a Water Complied with Tariff Study and consult with IDA prior to implementation of the recommendations. 4.01(a) I C AAWSA to maintain records and Complied with accounts for Parts E (water supply in Akaki) and F.2 (institutional development for AAWSA)of the Project. 4.01(b) I C AAWSA to have accounts audited Complied with within 12 months of end of fiscal year for first two years and within nine months of end of fiscal year for subsequent years and submit to IDA. 4.01(c) /I C AAWSA to have SOEs included in Complied with audit report with separate opinion. 4.02(a) /2 CP AAWSA to produce for each fiscal Complied with 55

60 Section Present Original Revised Description of Covenant Comments Reference/ Status Fulfilment Fulfilment Covenant Class Date Date year total revenues equivalent to partially not less than the sum of (i) total operating expenses and (ii) the amount by which debt service exceeds the provision for depreciation. 4.02(b) /2 CP AAWSA shall prepare forecasts to Complied with determine whether it will meet partially 4.02(a). 4.02(c) /2 CP AAWSA to take all necessary Complied with measures to meet 4.02 (a). partially CBB Project Agreement 2.06(a) / 3 C CBB to extend loans to Complied with individuals, coops and self-help groups for house construction under terms, conditions and eligibility criteria acceptable to IDA. 2.06(b) / 3 C 12/31/90 CBB to enter into an agreement Complied with with AAAR for bulk purchase of building materials /3 C CBB to extend sub-loans to Complied with selected cooperatives for the construction of residential houses under terms and conditionis approved by IDA including interest at the prevailing market rate, and a repayment period of 25 years, including a grace period of one year. 4.01(a)/ 1 C CBB to maintain records and Complied with accounts for Part A.2 (sub-loans for housing units and related services in Addis Ababa and Akaki) of the Project. 4.01(b) / I C CBB to have accounts audited Complied with within nine months of end of fiscal year and submit to IDA. Action Taken Covenant Class C - Complied With I - Accounts/Audit CD - Compliance after Delay 2 - Financial performance/generate revenue from beneficiaries CP - Complied with Partially NC - Not Complied With 3 - Flow and utilization of Project funds 4 - Counterpart funding 5 - Management aspects of the Project or of its executing agency 6 - Environmental covenants 7 - Involuntary resettlement 8 - Indigenous peoples 9 - Monitoring, review and reporting 10 - Implementation 11 - Sectoral or cross-sectoral budgetary or other resource allocation 12 - Sectoral or cross-sectoral regulatory/institutional action 13 - Other 56

61 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 12 Mission Aide Memoire and its Attachments 57

62 Annex 12. ICR Mission Aide Memoire and its Attachments FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Second Addis Ababa Urban Development Project (Credit 2161-ET) Implementation Completion Review Mission, August 2-13, 1999 AIDE MEMOIRE l. Introduction 1. An IDA team consisting of Mr. Gautam Sengupta (Team Leader), Mr. Yitbarek Tessema (Operations Officer), Mr. Eshetu Yimer (Financial Management Specialist), Mr. Hamim Magdon-Ismail (Engineer) and Ms. Sudeshna RoyChoudhury (Consultant) conducted an Implementation Completion Review (ICR) mission in Ethiopia from August 2-13, 1999 of the Second Addis Ababa Urban Development Project (SAAP). The mission met with officials from the Ministry of Economic Development and Cooperation (MEDAC); the Ministry of Works and Urban Development (MWUD); the Project Implementation Office (PIO), the Addis Ababa Water and Sewerage Authority (AAWSA), the Addis Ababa Roads Authority (AARA), the Health Bureau, and the Environmental Development Project Office (EDPO) of the Addis Ababa City GDvernment; the Construction ancl Business Bank (CBB); and the Urban Development Support Services l(udss) of the Ministry of Works and Urban Development (MWUD). This aide memoire summarizes the mission's main findings and recommendations. The mission would like to gratefully acknowledge the co-operation and assistance extended by all the officials during its visit. 2. Mission Objectives: The main objectives of the mission were to: (i) explain about the Bank's requirement for the Government's contribution to the ICR; (ii) agree on the plan for the future operations of the project to ensure sustainability of investments financed under the credit; and (iii) elicit views of various stakeholders on the project. II Background 3. The project which became effective in November 1990 was restructured in July 1996 for reasons enumerated in para. 6 below. The original project objectives were not changed during the restructuring but some priorities within project components were re-ordered, some project components were eliminated, some new elements added and the credit closing date was extended by two years. In August 1998, a reallocation of credit proceeds was undertaken (see para. 8). Again, the reallocation did not change the project objectives, no new component was added or deleted and there was no further extension of the closing date. The reallocation exercise resulted in a shift of funds towards those components that had a good implementation track record. In addition, SDR 1.75 million from the credit was canceled from those activities that were unlikely to be completed by the credit closing date of June 30,

63 A. The Original Project 4. In response to the severe shortage of housing, deteriorating physical infrastructure, unhealthy environmental conditions, and inadequate financial and management capacity to effectively meet the needs of a growing national capital, Addis Ababa, the previous Government of Ethiopia sought IDA assistance in the sector. The Second Addis Ababa Urban Development Project as a follow-on to the First Urban Development Project was approved by IDA on June 20, The project's total cost was estimated at US$46.7 million, to be financed by an IDA credit of SDR 27.1 million (US$35 million equivalent 5 ) and contributions from the Government of Ethiopia (US$1 million) and the project agencies (US$10.7 million). 5. The main objective of the project was to help improve basic infrastructure and environmental conditions in the project areas of Addis Ababa and Akaki. The original project components were: * sites and services and core housing development in two locations in Addis Ababa and one in Akaki; * upgrading of infrastructure and housing in some kebele (slum) areas in Addis Ababa and a loan fund to finance revenue-generating projects for poor women and other development projects in kebeles citywide; * street maintenance and improvements to solid waste management in Addis; * improvements to municipal infrastructure in Akaki, and expansion of its water supply system; and * institutional support programs to strengthen management and maintenance systems in the project agencies. 6. The project became effective in November 1990 and implementation progress was generally satisfactory for the first two years of implementation. However, implementation of the project virtually came to a standstill during 1993, 1994, and the early part of 1995, largely as a result of the overall transition in the country. Rapid changes in institutional responsibilities and arrangements, frequent changes in key project staff and uncertain and evolving economic policies of a government in transition contributed to poor project implementation. While the new government accepted and supported the fundamental objectives of these two projects, it decided to conduct a review of the emphasis and implementation arrangements of the project, in light of the changes in the economic, political and administrative environment. The government established two governing principles for restructuring the project: (a) to redirect project activities in a way to maximize the benefits to the poor by improving access to basic services; and (b) to strengthen management, financial and technical capacity of service delivery/implementing agencies to improve efficiency and sustainability of investments. B. Project Restructuring 7. In December 1995, the project implementing agencies and IDA agreed, at a working level, on a general framework for restructuring, as well as a revised implementation schedule. Following this general agreement, however, there was a lengthy delay while the Government and IDA reached 5 Currently about US$38 million equivalent. 59

64 agreement on difficult policy and implementation arrangement issues. These were finally resolved in April 1996, and the formal restructuring proposal (Project Restructuring Proposal, May 1996) was submitted by the Government and agreed with IDA in July Eventual formalization of the restructuring and the amended legal agreements was concluded in April The original project objectives, which were consistent with the objectives and priorities of the new government, remained unchanged during restructuring of the project. However, the project was conceived and designed under a set of policies and circumstances which were no longer fully applicable. The economic policies of the new government needed to be reflected in the restructured project. Also, changes had taken place in world currency markets that affected the amount of the credit remaining under the credit agreement. Therefore, though project objectives were not changed, some priorities within the project components were re-ordered, some project components vwereliminated, and some new elements added. 9. The primary objectives of the restructuring were: (i) to realign the project in a manner consistent with the new Governmient's policies and priorities; and (ii) to direct financial and technical resources to those activities which would have the most development impact. The main departure from the original project was to focus the civil works activities more towards kebele upgrading, given that almost 85 percent of the population in Addis Ababa lives in the kebeles requiring infrastructure and environmental sanitation improvement, and to put more emphasis on capacity building in the Addis Ababa City Government. The restructuring process took over two years to be completed, to ensure full ownership of both the Central and the Addis Ababa City Government. The original credit closing date of June 30, 1997 was extended by two years to June 30, 1999 during the restructuring, to allow adequate time to complete all project activities. C. Reallocation of Credit Proceeds 10. Based upon actual implementation experience since project restructuring, the timely implementation of the kebele upgrading program proved to be difficult given the weak institutional capacity and lack of experience of the implementing agency, the EDPO. It became evident that the scope of the kebele upgrading program would need to be reduced. Also, the capacity building component expanded during project restructuring, proved to be too ambitious in the context of evolving fundamental policy and systemic reforms in city administration. G:iven the long term nature of capacity building initiatives, specially in the evolving context of decentralization (Regionalization), both IDA and the Government considered it to be more prudent to start afresh later in this regard. In August 1998, therefore, agreement was reached with the Government on reallocation of credit proceeds among various project components taking into account the developmtent priorities of Addis Ababa and the need for completing activities by the credit closing date of June 30, The reallocation did not change the project objectives, no new component was added or deleted, and there was no further extension of the credit closing date. Substantively, the reallocation aimed to shift funds towards those components which had a good irmplementation track record. The major budget shift among components concerned an increase for the purchase of additional municipal equipment for essential city services by primarily reducing allocations from the kebele upgrading component and other types of goods and equipment. Agreement was also reached to cancel SDR 1.75 million of the IDA credit from the component pertaining to long-term capacity building tasks which were unlikely to be completed by the credit closing date. 60

65 III. Project Implementation Status 11. Attachment 1 summarizes the status of implementation of the various project components at the credit closing date of June 30, Site Visits: The IDA mission conducted site visits for some of the major components financed under the credit. The main findings from these site visits are as follows: (i) Akaki Water Supply: The mission visited the bore-hole pump remote control room, the chlorine injection tank and the bore-holes from which water is pumped. Treated water is pumped twice a day into the storage reservoir from which water is gravity fed into the reticulation system supplying Akaki. All four bore-holes, three new and one upgraded have been commissioned. The three new bore-holes are used for water supply with the upgraded bore-hole acting as a standby. At the time of the visit there was no water production taking place. The Branch Manager informed the mission that the system was operational and functioning satisfactorily. The exterior approaches to the buildings at the site were messy as a result of the rains and also construction debris from the adjacent water supply construction works. AAWSA indicated that it will be carrying out the paving and tidying of the exterior premises at an appropriate time when all works in the vicinity are completed. In addition, one of the public fountains was also visited and appeared to be functioning and providing water in sufficient quantity. However, all of the fountains have not been given water connections. This is because management and administration arrangements between the kebeles and AAWSA have not yet been sorted out. AAWSA indicated that this issue is being addressed. The mission learnt that the project's intervention to augment water supply in Akaki has resulted in the identification of the full potential of the aquifer which is substantial and further development and utilization by AAWSA. (ii) Sites and Services at Jimma, Ambo andakaki Roads: The mission visited the following sites: (a) The Jimma Road housing scheme (1,400 houses): It should be mentioned here that the credit financed housing loans through the CBB to housing cooperatives. These housing loans have been fully disbursed but the actual construction of the houses are at various advanced stages, due mainly to modifications of the plans in some housing cooperatives. The mission also noted that there were very few residents at the Jimma Road housing scheme because of a lack of sufficient water supply. The temporary water supply arrangement was not adequate. The community facilities which were complete were not operational as very few people had moved into their premises. AAWSA informed the mission that permanent water supply (financed from AAWSA's own resources) would be made available to residents in two months time. The mission was informed that work on the permanent supply system has resumed with the appointment of a new contractor. The mission noted that there is need to monitor this activity closely so that people can move into the housing scheme as soon as possible. In addition, actions should be taken to have the community facilities functioning as soon as the residents move in. It was noted that the internal access roads to the houses from the main road were in poor condition primarily due to the movement of heavy equipment due to the construction activity that is still ongoing. The mission pointed out that the AACG should construct the access roads as soon as the construction works on the houses is fully completed. The mission was informed that the PIO has recently organized community committees to take over the operations and maintenance of the on-site infrastructure. The mission was also given to understand that the development of this 61

66 housing scheme has had a synergistic effect in terms of further housing development and increased public transport access in the immediate area mainly because of the ancillary infrastructure such as roads, etc. that have been built. (b) The Ambo Road housing scheme (500 houses): The residents of this housing scheme have taken occupation recently. There is temporary water supply available to the residents. Permanent water supply will be provided by AAWSA from its own resources. AAWSA has included the provision of permanent water supply in this site in the same contract for the permanent water supply scheme for the Jimma Road housing site. However the community facilities are not yet functional although the buildings and services are in place. The mission was informed that the school is targetied to start classes at the beginning of the next academic year while the health clinic has to be provided with the required staff, furniture and equipment. Actions have been taken to have these become fully functional shortly. It was noted that the imrportance of advance planning and timely provision of necessary budgets needs to be etnphasized in future projects. (iii) Kebele Upgrading: Woreda 7, Kebele 32 was visited. The upgrading work is complete. The water supply fountain inspected was functioning under the management of the kebele administration. The charge for 20 liters of water is 5 cents which is much cheaper than what the community was paying prior to the supply of water in this manner. The hard stands for the refuse containers are not in use. Tne mission was informed that as soon as the skips arrive they will be deployed at the kebeles. Modalities are to be worked out for the safekeeping of the skips when deployed. The mission nloted that it is necessary that operational and maintenance mechanisms are put in place in consultation with the community. The investments made must be protected and built on. Commumity education and public awareness are essential for the sustainability of the investments. In addition, a storm water canal retaining wall in Wereda 2, Kebele 17 and Wereda 14, Kebele 21 (300 meters on either side of the stream) has been completed satisfactorily and has stood the test of the recent heavy rainfall. The danger posed to the houses and residents of the area by collapsing earth is not there and erosion has also been minimized. Incomplete design work and inaccurate cost estimates are some of the problems that were faced during implementation. (iv) Repi Landfill (Tipping) Site: A substantial length of the permanent fence has been brought down to give way to the Addis Ring Road. A temporary wooden pole fence has been erected in its place. The off-site approach road to the landfill is complete but the on-site internal access road under the same contract has riot been finished. The on-site access road is in poor condition due to, possibly, design and constiuction inadequacies compounded by the sole owner contractor passing away. Tipping is taking place outside the fenced area of the site because inclement weather has made the area inside the fence inaccessible. Thus, the reduction in scavenging anticipated by the fencing is not of relevance. The life of this tipping site is estimated to be another five years. Therefore, consideration should be given to diverting the weigh-bridge to the proposed new sanitary landfill site that is being considered. The workshop and the control office for the weigh-bridge are there at t;he site but not in use. There are plans to use the workshop in the near future to carry out routine maintenance of equipment. The sheep-foot compactor at the site is out of order but will not be repaired as this equipment is unable to operate productively in this site which is essentially a tipping site. It may be of use in the sanitary landfill to be developed. The Health Bureau recognizes the limitations at the tipping site and its inability to carry out landfill operations in an. environmentally friendly manner. For instance there are no 62

67 layers of cover material in between layers of refuse, there is no leachate control and treatment though there is awareness and concern. The Health Bureau has begun studying the site from the point of view of taking some stopgap measures for leachate control till the new landfill site is commissioned. The equipment received and the investments made on the site have brought some dividends in that the operations are much better than before. However, it is important that the City Government focuses its attention on the whole issue of solid waste management and also develops a new sanitary landfill urgently. Also, there are recommendations made by consultants that need to be addressed without delay. (v) Street Maintenance: The mission drove through some of the roads that have recently been restored. The important point is the upkeep of these roads and the sustainability of the investments. The mission was informed that there is no real holistic pavement management system in place and this has led to ad hoc interventions. Traffic management systems are nonexistent and there is an urgent need for pervasive design standards. During the site visits the mission focused on the need for constant awareness of the importance of sustainability of all investments, forward planning for their upkeep, maintenance and operational management systems and timely budget allocation. 13. Payments after Credit Closing Date: The mission informed the Government that reimbursements from IDA would be made only for those goods, works and services received and/or completed before the credit closing date of June 30, 1999 and such expenditures would be paid from the credit proceeds for a period up to four months after the credit closing date, i.e., through October 31, Payments for Retention Monies: IDA has agreed with the Government that it would be eligible for reimbursements against retention monies to be paid to relevant civil works contractors and suppliers of goods during the maintenance/defects liability period against an acceptable bank guarantee received from such contractors/suppliers. Att4chment 2 summarizes the agreed list of contractors/suppliers, amount of retention money to be paid against acceptable bank guarantee, and the duration of the maintenance/defects liability period. The mission advises the Government that reimbursements from IDA would be made against the agreed amounts of retention money only through October 31, The Government should, therefore, conclude these transactions and submit the necessary reimbursement requests as soon as possible. IV. Views of Stakeholders 15. The mission solicited the views of the implementing agencies within the Addis Ababa City Government and direct beneficiaries on project implementation experience with respect to some of the major components. The following highlights some of the key observations of the stakeholders. 63

68 (i)+ Akaki Water Supply * AAWSA noted that with respect to upgrading of water supply in Akaki, beneficiary assessments that were conducted indicate that water consumption by the beneficiaries has increased from 20 to 80 liters per family per day due to investments made under the project. * The public water fountains provided under the project have helped considerably in providing easier access to safe water. * Average time spent by beneficiaries in collecting water has substantially reduced due to increased number of water points. * The investments under the project triggered actions by AAWSA to better utilize the frill supply potential of the Akaki aquifer to benefit a large section of Addis Ababa. * Leak detection equipment and training contributed towards increasing operating efficiency of AAWSA's operations as a whole. * The tariff study financed under the project contributed towards recognizing the importance of sound financial management practices and its implementation is now being facilitated under the ongoing IDA-financed Water Supply Development and Rehabilitation Project. (ii') Sites and Services at Jimma, Ambo and Akaki Roads * Supply of housing stock in the city has increased. * Absence of timely provision of supporting infrastructure, particularly permanent water supply has hindered rapid occupancy of completed units and no usage of community facilities. * Offsite infrastructure has helped development of adjacent housing and transport facilities. (iii) Kebele Upgrading * The component which espoused community participation and involvement in upgrading activities has increased the awareness within AACG for the need to do community consultation in order to ensure ownership and sustainability of the investments. * The capacity of the EDPO, the implementing agency, needs to be strengthened and its institutional structure needs to be reorganized to be more efficient in delivering these programs. * Funds flow mechanisms and procurement processes need to be streamlined and shortened. * The Operational Manual produced under the project has proved to be a valuable tool in designing and implementing future programs. * Woredas to be involved in actual execution of the program whereas EDPO will do the design and supervision. (iv) Solid Waste Management * The equipment and technical assistance inputs have helped considerably in improving the functioning of the solid waste management division within the Health Bureau of the city government. * Because of the project inputs it has been recognized that the institutional arrangements for solid waste management has to be reorganized, a process which has already started. (v) Street Maintenance * Both equipment and materials provided under the project have been utilized fully by the AARA. As a result the main roads in the city are now being better maintained as opposed to three years ago. The inputs through the project essentially helped AARA to implement a critical mass of its work prograrm until about a year ago. 64

69 * Contractor capacity to do asphalt concrete is a problem and most roads have been done using the penetration method. However, these have deteriorated quickly because of the high traffic volume on the roads. V. Key Observations of the Mission 16. Overall, the project appears to have achieved its objective of accomplishing the intended physical targets. Implementation experience of the project has helped raise the level of awareness amongst those involved in its execution in terms of the complexity of issues involved in planning, design and implementation of basic infrastructure improvement programs. The project has also served to build capacity, albeit in a limited sense, in segments of the professional staff in those bureaus and departments in the AACG which were involved in project activities. 17. However, the project has not been able to achieve one of the key objectives of institutional development and broader capacity building. In particular, the mission notes the following: (i) The project objectives and the development imperatives did not get fully incorporated into the mainstream policies and programs of AACG. In a sense the project worked as an enclave operation without having many of the benefits accrue to AACG as a whole. (ii) The project was unable to significantly influence fundamental policy reforms, program formulation, prioritization of investments and related financial management and implementation issues within AACG as an institution. (iii) While the AACG should remain responsible for the provision of basic public services, it is not necessary that it has to "deliver" these services by itself. Alternative service delivery mechanisms including increased involvement of the private sector, communities, NGOs, etc. should be explored. (iv) It is not self evident that the Bank has a comparative advantage in financing and supervising small individual sub-projects. Given the high transaction costs of such an approach, the Bank should concentrate on assisting the client in building its capacity to effectively and efficiently manage the project implementation process. Experience indicates that the Bank should be less involved in "managing" the implementation process and be more of a "financier" and a "catalyst" to support building up the client's management capacity. VI. Plan for Future Operations of the Project 18. Attachment 3 is a plan for future operations of the major components financed under the project. This plan was developed and agreed to between the mission and the PIO and represents what is considered to be essential to ensure sustainability of the investments. However, a firm commitment from the AACG to undertake the activities proposed under the plan is still to be received. 65

70 19. Given that most of the investments under the major project components are the direct responsibility of various bureaus and departments of the AACG, it would be necessary for them to receive explicit budgetary allocations as indicated in the plan. Consequently, whether or how much funds are actually made available for operations and maintenance would depend upon the overall financial resources of the AACG and their applications. VII. Schedule of Preparation of ICR 18. The mission held discussions with the PIO and its consultants on the ongoing analytical work required to prepare the Government's contribution to the ICR. It was agreed that the PIO will finalize and submit its contribution to the ICR by September 30, IDA will make available the draft of the full ICR for the Government's comment within three weeks of receiving the Government's contribution to the ICR, i.e., October 22, It has been agreed that the Government will provide its comments on the draft within two weeks, i.e., by November 5, IDA will make available the final draft ICR for the Government's comments within two weeks after receiving the Government's comments on the initial draft, i.e., by November 19, Gautam Sengupta Team Leader, SAAP/MTDP/DSP The World Bank 66

71 Key Persons Met: H.E. Ato Girma Birru, Minister, MEDAC H.E. Ato Haile Assegidie, Minister, MWUD Ato Aschalew Aberra, General Manager, PIO Ato Dereje Ayalew, Project Engineer, AAWSA W/o Tseganesh Melese, IDA Unit Head, CBB Ato Gutema Bulcha, General Manager, UDSS/MWUD Ato Ismael Ibrahim, General Manager, AARA Ato Mehari Bekele, Enviromnental Health Department Head, AACG Health Bureau Ato Kinde Bizuneh, General Manager, EDPO Copies to: H.E. Ato Girma Birru, Minister, MEDAC HWE. Ato Haile Assegidie, Minister, MWUD H.E. Ato Berhanu Tamirat, Vice Minister, MWUD Ato Tadesse Kebede, General Manager, AAWSA Ato Aschalew Aberra, General Manager, PIO W/o Tseganesh Melese, IDA Unit Head, CBB Ato Gutema Bulcha, General Manager, UDSS/MWUD Mr. Nigel Roberts, Resident Representative, The World Bank Resident Mission, Ethiopia Mr. Surit Singh, Principal Operations Officer, The World Bank Resident Mission, Ethiopia 67

72 SECOND ADDIS ABABA URBAN DEVELOPMENT PROJECT (CR ET) Project Implementation Status as of June 30, 1999 Attachment 1 No Major Project Component/Activities Unit Physical Targets andaccomplishment Cost (in '000 Eth. Birr) SAR Restructuring Reallocation Actual SAR Restructuring Reallocation Actual I Sites and Services 1.1 Community facility no Site servicing I Off.9-sit- and on-site roads wit drains Electricity supply sites I.2.3 Up-grading (Asphalting) of off-site km _ roads 2 Housing Loan Units StreetMaintenance _ 3.1 Asphalt roads and drains maintenance km Bitumen Ton Kebele Up-grading - _ 4.1 Number of kebeles No Solid Waste Management Land fill site improvement Cont. I I I l Access roads with drains km Truck park with work shop facility Cont. 0 _ Solid waste containers pcs Institutional Development 6.1 Municipal equipment No III Consultancy _ 68

73 No Major Project Component/Activities Unit Physical Targets and Accomplishment Cost (in '000 Eth. Birr) SAR Restructuring Reallocation Actual SAR Restructuring Reallocation Actual Design and supervision Advisory services and system study No 1_ System study 6.3 Training 7 Akaki Water Supply 7.1 Civil work' #ofcont Vehicle and equipment # Of Packg Goods 4 # Of Packg Consultancy and training ' #Of Packg Total Civil works include design and supervision contract. 2- The package includes: Test benches, Office equipments, and vehicles 3- The package micludes: Org& Mgmt. St-dy, tariff stidy, MIS system study, Technicians training, and management training. Th6e package includesuply of pipes and Supply and installation of electromechanical 69

74 ttachment 2 Schedule of Retention Money to be Released Prior to 31, October, 1999 Against Bank Guarantee for Defects Liability Project Contract Contractor Contract Out Standing Retention Provisional Date Date of No Amount of end of defects actual liability period payment of retention L Sites and Services I % Amount IDA Share. 1.1 Jimma Road Housing Site.. l a) Asphalt Road Construction at 14/98 2,959, , , June 23, 2000 Jimma Road Housing Site b) Communal facility construction at 04/97 5,007, , , May 18, 2000 Jimma Road Housing Site c) Drainage structure construction at Jimma Road Housing Site 08/98 1,411, , , June 24, Akaki Housing Site - Communal facility construction at 13/98 1,404, , , March 4, 2000 Akaki Housing Site 1.3 Ambo Road Housing Site a) Asphalt Road Construction at 20/98 988, , , June 2, 2000 Ambo Road Housing Site b) Drainage structure construction at 09/98 231, , , Feb 16, 2000 Ambo Road Housing Construction c) Communal facility construction 12/98 1,253, , , Nov. 19, 1999 at Ambo Road Housing Site II. Repi Sanitary Land Fill Site - On site Asphalt road construction and off 18/98 site Asphalt road maintenance work 2,154, , , June 23, 1999 Building and pavement work at Woreda 07/98 2,773, , , June 23, Kebele 13 (Truck park) IIL. Street Maintenance, Second Phase - Road from Ground Force Garage to Jesus 06/97 Church 2,415, , , June 30, Road from Diabacco through Bisrate 08/97 Gebriel church to Jimma road & road 2,751, , , Jan. 26, 2000 from Diabacco to Vatican Embassy IV. Retaining Wall Construction - Retaining wall construction at Woreda 10/98 2 Kebele 17 1,384,343, , , March 17, Retaining wall construction at Woreda 11/98 1,453, , , May 14, Kebele 21 Total Amount 26,187, ,322, ,057,

75 Attachment 3 PLAN FOR FUTURE OPERATIONS OF PROJECT CAPITAL INVESTMENTS 1. Housing Sites and Services Housing: The owners shall assume maintenance costs. The Construction and Business Bank (CBB) will keep on collecting loan repayment at current interest rate. The total project cost for all housing units in the three housing sites is Birr 45 million. Maintenance requirement per year is about Birr 500,000. In addition, major maintenance is required every 10 years amounting 25% of the project cost. Utilities: Similar to the current experience elsewhere in the city, Addis Ababa Water and Sewerage Authority (AAWSA) and Ethiopian Electric Power Corporation (EEPCO) will be the responsible agencies (as the prime utility companies) in management and operation of water and electric power supply woks respectively. These institutions shall complete individual connections to each house. Off-site and on-site-roads and drains: All the housing sites are found in the peripheries where there is also other construction being carried out. Trucks passing through these roads would damage the already constructed roads. Promotion of development committees to generate resources is required for further maintenance and upgrading of on-site roads and drains. Off-site roads shall be maintained by the Addis Ababa Roads Authority (AARA) together with the community in each of the respective sites. The total amount required for routine maintenance annually is about Birr 67,000. Major maintenance is required every 5 years and the amount estimated for this investment is 25% of the project cost which is Birr 2 million. Communal Facilities. There are two options for these facilities. The market center either would be under the management of the community development committee or rented by the Addis Ababa City Government (AACG) Finance Bureau. Schools, kindergartens and health centers either would be under relevant bureaus of the AACG (Education and Health) or contracted to the private sector. All communal facilities can in principle generate resources to cover at least maintenance costs. The amount required for maintenance of these facilities in the three housing sites is Birr 52 thousand. In addition, 25% of the project cost which is currently Birr 1.3 million is required every ten years. 2. Kebele Upgrading Program The different types of infrastructure provided under this component require different arrangements. Roads and drains are beside large local or access roads. These require regular maintenance. Infrastructure completed earlier is now deteriorating. In the long term, the shift to community management can be an option if it is preceded by adequate sensitization and promotion. In the short term, however, intervention by NGOs and the Government in cooperation with the community seems to be a more sensible approach. Involvement of government agencies might have to be limited to financing and contract administration. Experience has shown that physical force account involvement is inefficient. Communal Latrines: The beneficiaries in the project areas are managing communal latrines. Cleaning and cash contribution to get regular emptying services is handled by the beneficiary households. There are too many households per latrine, however. This is discouraging proper management of these latrines in particular cleaning. This overloading is due to lack of space in the area to construct additional latrines. Further interventions to reduce congestion would be an issue that needs to be considered in these areas. 71

76 S'olid Waste Hardstandings: Solid vwaste containers are not placed on hardstandings provided under this component. Some people in the area dump solid waste on the hardstands themselves. Containers need to be placed in these sites by the Solid 'Waste Management Unit of the Health Bureau. 'ublic Standpipes: Some public sitandpipes are not in operation due to delays in providing water connections by AAWSA. Kebele Development Committees are managing those standpipes that are operational. An alternative arrangement would be to consider poor women in the project areas. Mlaintenance of standpipes would be financed by user fees. The overall amount required for the maintenance of upgrading projects annually, in the 9 Kebeles (5/22, 6,108, 7/30, 7/31, 7/32, 7/338/23, 8/24, and 8/25) and the two flood control projects, is Birr 71,000. In addition 25% of the project cost for major maintenance every 10 years is required. This amount currently is estimated at Birr 1.5 million. 3. Street Maintenance Component Civil works under this component included maintenance of streets in different areas in the city. The Addis Ababa Roads Authority (AARA) has; been involved in selection, design and supervision as major streets which require further maintenance and upgrading is its responsibility. Birr 167,000 and Birr 4.1 million are required for routine maintenance every year and major maintenance every ten years respectively. Three beneficiary agencies are involved for street maintenance related procurement of goods. These are the AARA, Equipment Service Department of the Addis Ababa City Government (AACG) and Construction Materials Production Enterprise (CMPE). The operation and maintenance responsibility is under each organization. According to the information obtained from the Equipment Service Department and findings of technical assistance interventions some of the tools and machinery purchased are poorly managed by the Ecluipment Service. The Equipment Service Department has a chronic problem of skilled manpower. It is unlikely that the Equipment Service will provide efficient maintenance services for the AACG agencies. The AARA and other agencies in the AACG that have huge machinery overhaul would have to seek other alternatives. These could be contracting out the service and own maintenance unit. CMIPE is a profit making agency 'which supplies construction materials for road construction and maintenance. Most of the machinery purchased are in operation. Maintenance and operating costs financing are guaranteed by the financial position of the enterprise. However, similar to other public enterprises in the country other options such as privatizing should be studied for this enterprise. The total amount required for operation and maintenance of major equipment and vehicles is Birr 4.5 million, excluding loan repayment and overhead costs of administration. This amount is only considering major machinery and equipment that have been procured under the project. The amount estimated includes loan repayment, operating and maintenance costs. From operating and maintenance costs, items included are costs such as fuel and tires (where applicable) consumption, labor requirement and maintenance. Two financial sources are identified. These are general revenue for machinery and equipment provided to the AARA and the enterprises revenue for items provided to the CMPE. User fees shall cover the finamcial requirement of those items owned by the Equipment Services Department. 4. Solid Waste Management Component The Solid Waste Component expanded into a more general "Sanitation Component" by including provision of equipment for cesspool rnanagement to the Health Bureau (for public toilets management) and AAWSA (for private houses' needs). The Health Bureau, which is responsible for solid waste management, has been the beneficiary of most of the equipment and civil works under the component. 72

77 The Solid Waste Management Unit in the Health Bureau has a large fleet of vehicles, substantial other resources (such as, a truck park constructed under the project, the landfill site), and a large staff. The volume of operation it is expected to undertake, and the dilemma between operations-regulatory roles of the Health Bureau call for a change in the institutional arrangement for the Solid Waste Management Unit, probably forming an independent entity under the AACG. AACG is recently looking at the options and a decision is expected soon. The total amount required for civil works annual routine maintenance and major maintenance every ten years is Birr 60,000 and 1.5 million respectively. Solid waste carriers, containers and landfill plant require operating costs including fuel and tires, labor and maintenance. The amount required for this purpose, per year, is Birr 4.5 million, excluding loan repayment and overhead costs. Financing for future resource requirements of the solid-waste component and public latrine servicing would come largely from City general revenues, and a small part from fees on institutional entities. The actions that were expected to be taken to increase cost-recovery has not been taken. Even if the most feasible financing option is regional budgets, actions to recover as much as possible should be taken soon. The cesspool emptier service provided by AAWSA is financed by user charges. 5. Akaki Water Supply Component AAWSA, as a borrower by a subsidiary loan agreement entered with IDA, has been involved actively since the very beginning. The component has been implemented (and is being implemented) by the overall coordination of this organization. The operating management is also handled by AAWSA. According to AAWSA's June 1999 completion report, total operating costs owing to supply of chemicals and electricity as well as salaries for one year is Birr 1.2 million. User fees charged by AAWSA shall be the source for all the required resources under this component. 6. Institutional support Several capacity building activities have been undertaken under the project. These include, technical assistance, studies and training and procurement of municipal equipment. Procurement of specialized fire fighting vehicles for the Addis Ababa Fire Brigade is the most considerable one. The operation and maintenance management of these items shall be under the responsibility of this organization. The amount estimated for annual operation for specialized vehicles purchased under the project is Birr 0.9 million assuming the equipment would be active for half-an hour every day. More than 40 automobiles and pick-up trucks worth about Birr 6.7 million were provided under the Institutional Support component. These would require about Birr 0.7 million for operation and maintenance. This would be paid for from the budgets of beneficiary agencies. 6 This may not be fire-fighting activity, daily check-up of truck engines, etc. would be included. 73

78 Table 1. Vehicles and equipment provided for sanitation-related agencies under Second Addis for which operational resource requirements are calculated Attachment 3 Equipment Unit initial Accessories Unit total No. Total capital Status price (spares, etc.) capital cost of equip. cost as of Solid waste trucks Volvo lift-trucks for 8m3 (less price of containers) 349, , , ,451, Delivered to Health Bureau in 1994 RENAULT solid waste truck (I5m3) 592, , , ,897, Solid waste trucks-4m3 (plus 28% for local cost) 380, , ,900, Being shipped to port Djibouti Cesspool emptier trucks Cesspool emptier truck (Akaki component) 433, , , , Delivered to Health Bureau (Akaki) in 1994 Cesspool emptier(l15m3) 623, , , ,493, Delivered to Health Bureau 1998/99 IVECO cesspool emptier (plus 10% unpaid) 565, , , ,381, Delivered to AAWSA 1998/99 IVECO cesspool emptier (plus 28% local cost & 25% 504, , , ,752, Stranded in Port Assab due to war spares) Containers 8m3 solid waste containers 16, , ,125, Delivered to Health Bureau in 1994 I.lm3 solid waste containers 3, , ,200 4,323, Delivered to Health Bureau 1998/99 Disposal site plant Compactor 1,221, , ,573, ,573, Delivered to Health Bureau in 1994 Crawler Dozer 1,001, , ,279, ,279, Delivered to Health Bureau in 1994 Weigh bridge 288, , , Awaiting shipment in port Djibouti Other Radio communication equipment 130, , , Delivered to Health Bureau 1998/99 Double-cabin Mitsubishi pick-up trucks 188, , , Delivered to Health Bureau 1993 (?1994) 74

79 Attachment 3 Table 2. Annual resource requirements for solid waste collection trucks provided under Second Addis Cost Item 8m3 lift-truck Renault waste truck 4m3 waste trucks Unit cost Total cost Unit cost Total cost Unit cost Total cost Capital cost 350, ,805, , ,923, , ,800, Other capital items (e.g. spares, field kits) 58, ,646, , ,974, Total capital cost 408, ,451, , ,897, , ,900, Loan repayment (4.5%, 20 years) 31, , , , , , Annual maintenance cost (@ 5% of capital cost) 20, , , , , , Fuel cost 14, , , , , , Lubricant costs (at 5% of fuel cost) , , , Tire costs (at 20% of fuel cost) 2, , , , , , Labor costs 9, , , , , , Total direct costs per annum 70, ,960, , ,183, , , Overhead costs (@10% of direct costs) 7, , , , , , Total cost per year 77, ,156, , ,301, , , ASSUMPTIONS Per week Per year Per week Per year Per week Per year Fuel consumption (km/it. or hr/it. for plant) Number of working days Available days (at 87% available time) Number of trips to disposal site (@ 5, 3 per day) , , , Distance: disposal to work area (@ 12.5 per trip) , , , Cost of labor , , , Cost of labor Driver Loaders Driver Loaders Driver Loaders Monthly salary Monthly allowance (@25% of salary) Vehicle maintenance cost as % of capital cost 5.00% 5.00% 5.00% 75

80 Attachment 3 Table 3. Annual resource requirements for cesspool servicing trucks provided under Second Addis Cost Item I 5m2 emptier 15m2 emptier-a 15m2 emptier-b 8m2 cesspool emptier -C cesspool cesspool cesspool Unit cost Total cost Unit cost Total cost Unit cost Total cost Unit cost Total cost Capital cost 623, ,870, , , , ,828, , ,056, Other capital items (e.g. spares, field kits) 207, , , , , , , ,695, Total capital cost 831, ,493, , , , ,381, , ,752, Loan repayment (4.5%, 20 years) 63, , , , , , , , Maintenance cost (@ 5% of capital cost) 41, , , , , , , , Fuel cost 14, , , , , , , , Lubricant costs (at 5% of fuel cost) , , , , , , , Tire costs (at20% of fuel cost) 2, , , , , , , , Labor costs 11, , , , , , , i42, Total direct costs per annum 123, , , , , , , ,348, Overhead costs (@10% of direct costs) 12, , , , , , , , Total cost per year 136, , , , , , , ,483, ASSUMPTIONS Per week Per year Per week Per year Per week Per year Per week Per year Fuel consumption (km/it. or hr/it. for plant) Number of working days Available days (at 87% available time) Number of trips to disposal site (@5, 3 per day) , , , Distance: disposal to work area (@12.5 per trip) , , , , Cost of labor , , , , Cost of labor Driver Loaders (2) Driver Loaders Driver Loaders Driver Loaders Monthly salary Monthly allowance (@25% of salary) Vehicle maintenance cost as % of capital cost 5.00% 5.00% 5.00% 5.00% 76

81 Attachment 3 Table 4. Annual resource requirements for landfill plant & equipment provided under Second Addis Cost item Crawler Dozer Landfill Compactor Unit cost Total cost Unit cost Total cost Capital cost 1,001, ,001, ,221, ,221, Other capital items (e.g. spares, field kits) 277, , , , Total capital cost 1,279, ,279, ,573, ,573, Loan repayment (4.5%, 20 years) 98, , , , Annual maintenance cost (@ 5% of capital cost) 31, , , , Fuel cost 99, , , , Lubricant costs (at 5% of fuel cost) 9, , , , Tire costs (at 20% of fuel cost) , , Labor costs 17, , , , Total direct costs per annum 239, , , , Overhead costs (@10% of direct costs) 23, , , , Total cost per year 263, , , , ASSUMPTIONS Per week Per year Per week Per year Fuel consumption (km/lt. or hr/it. for plant) Number of working days Available days (at 87% available time) Number of trips to disposal site (@ 5, 3 per day) , , Distance: disposal to work area (@ 12.5 per trip) , , Cost of labor , , Cost of labor Driver Assistants (4) Driver Assistants (4) Monthly salary Monthly allowance (@25% of salary) Equip & plant maint cost as % of capital cost 2.50% 2.50% 77

82 Attach...eUt 3 Table 5. Annual resource requirements for solid waste containers provided under Second Addis Cost Item 8m3 waste containers I. 1 m3 waste containers Unit cost Total cost Unit cost Total cost Capital cost 16, ,125, , ,323, Other capital items (e.g. spares, field kits) Total capital cost 16, ,125, , ,323, Loan repayment (4.5%, 20 years) 1, , , Annual maintenance cost (@ 2.5% of capital , , cost) Fuel cost Lubricant costs (at 5% of fuel cost) Tire costs (at 20% of fuel cost) Labor costs Total direct costs per annum 1, , , Overhead costs (@10% of direct costs) , , Total cost per year 1, , ,

83 Attachment 3 Table 6. Vehicles and equipment provided to AARA under Second Addis for which operational resource requirements are calculated Equipment Unit initial Accessories Unit total No. Total capital Status price (spares, etc.) capital cost of equip. cost as of Dump trucks 433, , , ,332, Delivered to UDWB in 1994 Water-tank trucks 433, , , , Delivered to UDWB in 1994 Air compressor 215, , , ,195, Delivered to UDWB Asphalt paver 485, , , ,772, Delivered to UDWB Tire roller 485, , , , Delivered to UDWB Front-end/backhoe loader 508, , , ,658, Delivered to UDWB Excavator 508, , , , Delivered to UDWB Motor graders 1,001, , ,279, ,559, Delivered to UDWB Vibrator roller compactor 374, , , , Delivered to UDWB 79

84 Attachment 3 Table 7. Vehicles and equipment provided for road maintenance-related agencies under Second Addis for which operational resource requirements are calculated Cost item Tire Roller Loader Excavator Motor Grader Vibrator roller Unit cost Total cost Unit cost Total cost Unit cost Total cost Unit cost Total cost Unit cost Total cost Capital cost 485, , , ,001, , Other capital items (e.g. spares, field 105, , , , , kits) Total capital cost 590, , , ,658, , , ,279, ,559, , , Loan repayment (4.5%, 20 years) 45, , , , , , , , , , Maintenance cost (Q 5% of capital cost) 88, , ,6$ , , , , , , , Fuel cost 44, , , , , , , , , , Lubricant costs (at 5% of fuel cost) 4, , , , , , , , , , Tire costs (at 20% of fuel cost) , , , , Labor costs 9, , , , , , , , , , Total direct costs per annum 192, , , , , , , , , , Overhead costs (@10% of direct costs) 19, , , , , , , , , , Total cost per year 211, , , , , , , , , , ASSUMPTIONS Per week Per year Per week Per year Per week Per year Per week Per year Per week Per year Fuel consumption (Birr/hr) Number of working days Available days (at 87% available time) Number of hours worked (@6 hrs/day) , , , , , Cost of labor , , , , , Cost of labor Operator Assistants Operator Assistants Operator Assistants Operator Assistants Operator Assistants Monthly salary Monthly allowance (@25% of salary) Maintenance cost as % of capital cost 15.00% 5.00% 5.00% 10.00% 15.00% 80

85 Attachment 3 Table 8. Vehicles and equipment provided for road maintenance-related agencies under Second Addis for which operational resource requirements are calculated Cost item Dump trucks Water-tank trucks Air compressor Asphalt paver Unit cost Total cost Unit cost Total cost Unit cost Total cost Unit cost Total cost Capital cost 433, , , , Other capital items (e.g. spares, field kits) 108, , , , Total capital cost 541, ,332, , , , ,195, , ,772, Loan repayment (4.5%, 20 years) 41, , , , , , , , Maintenance cost (@5% of capital cost) 27, , , , , , , , Fuel cost 99, , , , , , , , Lubricant costs (at 5% of fuel cost) 4, , , , , , , , Tire costs (at 20% of fuel cost) 19, , , , , Labor costs 9, , , , , , , , Total direct costs per annum 201, ,615, , , , , , , Overhead costs (@10% of direct costs) 20, , , , , , , , Total cost per year 222, ,776, , , , , , , ASSUMPTIONS Per week Per year Per week Per year Per week Per year Per week Per year Fuel consumption (Birr/hr) Number of working days Available days (at 87% available time) Number of hours worked (@6 hrs/day) , , , , Cost of labor , , , , Cost of labor Driver Assistant Driver Assistant Operator Assistants Operator Assistants Monthly salary Monthly allowance (@25% of salary) Maintenance cost as % of capital cost 5.00% 5.00% 5.00% 15.00% 81

86 Attachment 3 Table 9. Vehicles and equipment provided to Fire Brigade under Second Addis for which operational resource requirements are calculated Equipment Unit initial Accessories Unit total No. Total capital Status price (spares, etc.) capital cost of equip. cost Bronto F72 fire-fighting truck 7,739, ,739, ,739, Delivered to Fire Brigade in 1997 Fire-fighting trucks 1,103, ,103, ,515, Delivered to Fire Brigade in 1997 Ambulance 600, , , Delivered to Fire Brigade in

87 Attachment 3 Table 10. Vehicles and equipment provided for road maintenance-related agencies under Second Addis for which operational resource requirements are calculated Cost Item Bronto F72 fire-fighting truck Rapid fire- trucks Ambulance fighting Unit cost Total cost Unit cost Total cost Unit cost Total cost Capital cost 7,739, ,103, , Other capital items (e.g. spares, field kits) Total capital cost 7,739, ,739, ,103, ,515, , , Loan repayment (4.5%, 20 years) 594, , , , , , Maintenance cost (@ 5% of capital cost) 386, , , , , , Fuel cost 8, , , , , , Lubricant costs (at 5% of fuel cost) , , , Tire costs (at 20% of fiuel cost) 1, , , , , , Labor costs 17, , , , , , Total direct costs per annum 1,009, ,009, , , , , Overhead costs (@10% of direct costs) 100, , ,943,18 79, , , Total cost per year 1,110, ,110, , , , , ASSUMPTIONS Per week Per year Per week Per year Per week Per year Fuel consumption (Birr/hr) Number of working days Available days (at 87% available time) Number of hours worked (@0.5 hrs!day) , Cost of labor , , , Cost of labor Driver Assistants (4) Driver Assistant Operator Assistants Monthly salary Monthly allowance (@25% of salary) Maintenance cost as % of capital cost 5.00% 5.00% 5.00% 83

88 Second Addis Ababa Urban Development Project Credit 2161-ET Annex 13 Borrower's Contribution to ICR 84

89 Annex 13. Borrower's Contribution to ICR Federal Democratic Republic of Ethiopia Second Addis Ababa Urban Development Project Credit No ET Borrower Perspective of the Project Evaluation Report 1. INTRODUCTION The Government of Ethiopia and the World Bank (IDA) signed an agreement (No Er on 13 August 1990 to under take the Second Addis Ababa Urban Development Project (SAAVDP) in Addis Ababa. The Project originally was designed to cover ten areas. These were Sites & Servis, Husing Cuctik Lo^, Kekie Upgading Homing nprzo Loan, KebeleDedopne Fw7ad, Street Maiane, Solid Waste Manaxnt, Water Suppi, Municpal Insfrast and Instizioal Support Implementing agencies were the Addis Ababa City Government (AACG)(the then Addis Ababa Admninistrative Region (AAAR)), the Construction and Business Bank (CBB)(the then the Housing and Savings Bank) and the Addis Ababa Water and Sewerage Authority (AAWSA). In 1996 the project was restructured to allow provisions for macroeconomic and sectoral policy changes undertaken following the change in the government in Ethiopia. 2. STATEMENT/EVALUATION OF OBJECTIVES 2.1. PROJECT OBJECTIVES Both the SAR and the restructured document maintained five major objectives. These are: * Improving basic infrastructure and environmental conditions in project areas; * Supporting a core housing development program primarily for lower-income families; * Promoting opportunities for poor women living in the Kebeles to enhance their incomes; * Providing assistance to urban service delivety agencies to carry out their activities more efficiently; and * Promoting the adoption of sound cost recovery policies and practices. 85

90 2.1. EVALUATION OF OBJECTIVES Realism and Importance of Objectives In the housing sector low cost replicable approach on serviced plots has been adopted. However, adopting sites and services approach on a larger scale as to make significant contributions towards solving housing problems is almost unthinkable. Urban services generally lag behind urban growth: it is estimated that up to 90 percent of the areas in Addis Ababa are not sufficiently serviced. In the water and sanitation sector, the strategy to achieve the poverty reduction objective is to support government investment plans in water and sanitation infrastructure including institutional capacity building. The other strategy adopted, to improve the deteriorating sanitation system in slum areas, was to change the tenure structure (e.g. sale of government owned houses). Provision of comprehensive package to upgrade slum areas, improving the capacity of the public agencies involved in the delivery of sanitation and water services directly contributed to these objectives Complexity of the Project The project had been rendered complex primarily by the fluid political, economic and institutional enivironment that occurred during its implementation. This required re-definition of its priorities, delivery mechanisms and groups involved in the project in various capacities. The project was complex in terms of the large number of institutions and other interest groups involved as irnplementing, collaborating and beneficiary agencies. This constrained efficient coordination in each stage in the project life cycle from identification of activities to undertake to planning for efficient future operations. The project required procurernent, engineering design/specification, coordination, and monitoring/evaluation skills than the beneficiaries/implementing agencies could muster. Similarly, the absorptive capacity of the economy in terms of availability of well-qualified contractors and design consultants made the project too complex to implement Extent of risk in the ProDject The SAR identified three risk areas items: risk regarding sale of kebele-owned houses in project areas, increase in water tariffs, and costs of the Akaki Water Supply Component. The first risk, though not of significant implication to the achievement of project objectives, materialized. The rise in water tariffs has been implemented though the magnitude was not large enough to result in the anticipated rise in rates of return. Finally, the rise in the cost of Akaki Water Supply improvement seems to have been larger than anticipated and truly risked the achievement of expected rates of cost-recovery. Art important source of risk that was ignored is the intensification of the civil war. The war led to change of government and significant changes in the implementation environment, delays in production of project outputs, and in the level and composition of costs. 86

91 3. ACHIEVEMENT OF OBJECTIVES 3.1. PHYSICAL OBJECTIVES Housing Sites and Services Hosig In the housing component, the physical objectives set out in the SAR/Restructuring have been achieved, even exceeded when type/quality of housing units is considered. Significant changes, dominantly improvements in design of structures, occurred due to demands from beneficiaries. The poverty focus of the housing loans have been lost, pardy due to the rise in construction cost and interest rates. (mwuafaities: There is high physical achievement in communal facilities construction due to further allocation of budget to this activity to construct additional infrastructure in Ambo Road and Akaki housing sites. The reallocation also included the procurement of furniture to some of these structures (schools and health centers and posts). Design problems and problems related to capacity of contractors led to cost-overruns and implementation delays. Utdiies. Electric power and water supply works in the housing sites have been completed in two sites (Ambo Road and Akaki sites) and were in progress in Jimma Road housing site. Since Jimma Road site accounts for the largest proportion of housing developments, the failure to provide utilities in this site in a timely manner has made the weighted average implementation rating to be very low. Roads anddraim There is high physical achievement in these works due to change in design of offsite roads (from gravel to asphalt) and additional works on on-site drainage. Roads and drains in Jimma site in particular deteriorated fast due to omissions in the design stage that overlooked drainage implications of the roads. Decisions to asphalt off-site roads imply rise in proportion of costs that are not directly recoverable from beneficiaries Kebele Upgrading Civil Works Upgraded Kebeles are far below both the SAR and Restructuring estimates. The overall estimate ranged between 22 to 36 Kebeles. The project upgraded only 9 Kebeles (40 to 23 percent of the estimates) and two flood control civil works in two Kebeles Kebele Development Fund The Project implemented 10 income generating projects for Kebeles and one income generating project for poor women. The implemented projects performance is unsatisfactory. Two of them are closed and others failed to service the loan as scheduled Street Maintenance Civi Works. The SAR planned to undertake a minimum of kilometers of streets. Actual maintenance was about km of streets in 14 places. Thtazmei of Good.v Procured items such as machinery (for road construction, quarry, and workshop), workshop tools, asphalt plant, vehicles (trucks), spare parts and materials (asphalt for road construction) have been handed over to the Addis Ababa Roads Authority (AARA), Construction Materials Production Enterprise (CMPE), and Equipment Services Department. 87

92 Solid Waste Management CGo Works: The projects included in this sector are building and fence work at the landfill site, asphalt road construction and building and pavement work at truck-park. The building and fence work is the only project completed. Others are still in progress. AP7nert of Gocd solid waste conltainers, specialized vehicles and machinery and equipment have been procured. The procurement exceeded the SAR estimate substantially due to additional procurement made owing to additional budget allocation while restructuring and reallocations made aft;er Municipal Infrastructure-Akaki Tlle implementation of this component aborted due to the incorporation of the Akaki town to Addis Ababa. All municipal services are know provided by relevant Bureaus of the AACG Water Supply Improvement Physical achievement in this component is biased towards supply than construction. 3 bore-holes have been drilled and one bore-hole has been rehabilitated; 2 reservoirs were built and about 16 km of pipe laying was undertaken Institutional Support AAAR. Technical assistance to different agencies has been provided as indicated in the SAR The assistances were in relation to Road Construction and maintenance, solid waste management and.project implementation. Procurement of vehicles and office equipment exceeded the SAR target due to further additions during restructuring and reallocations. The most significant is the procurement of specialized fire fighting vehicles that includes 72 met;er rescue truck that can be used for high rise buildings. Most studies have not been undertaken. The implementation of the studies part of the component has been affected by the envisaged Addis Ababa Capacity Building Project. This project has not been implemented. AA WSA. All activities under this component have been implemented as envisaged in the SAR. The major consultancy part of this sub-component was made to facilitate the implementation of the Akaki Water Supply Component. In addition, water tariff study, water leakage study, organizational management study and short-termn training were undertaken FINANCIAL OBJECTIVES The total Project cost was 46.1 million USD and out of which IDA loan was USD 35 million (SDR 27.1 million). The loan amount has been downsized to SDR million in The total cost of the project included counterpart funding by the government (Borrower) and the beneficiaries. The Borrower assumed full financing roles in taxes and duties, compensation payments, and employee's benefits in project management. The Borrower also fnanced part of the local costs. In this regard, both the Borrower and beneficiaries covered 20 percent of local costs excluding some technical assistance, training and studies whose cost was covered fully by IDA loan. As of end of June 1999 the disbursement status was about 37 million USD. Out of which 30 million was from IDA and the remaining 7 million was covered by government and project agencies. Due to slow implementation in procurement of civil works, goods and services, the performance of disbursement has been unsatisfactory. Procurement of civil works and services including studies 88

93 demand more from domestic conditions than procurement of goods. Thus, the domestic absorption capacity, might be one explanation for low disbursement ECONOMIC RATE OF RETURN The SAR estimate and the recalculated ERR for four applicable components of the project are presented as follows. Rates of return in the activities have declined except in the Kebele Infrastructure Upgrading Component which, regretfully, was implemented in a very small scale. The fall in rates of return is partly explained by optimistic benefit estimates in the SAR, rise in (mostly foreign) costs, cost overruns due to design faults, and inclusion of additional activities without due economic justification. Component SAR ICR/ recalculated Sites and Services Addis Ababa Jimma and Ambo Road) 19.0 percent 11.2 percent Akaki 17.0 percent 6.9 percent Kebele Upgrading 14.0 percent 13.2 percent Street Maintenance 18.0 percent 9.0 percent Akaki Water Supply 9.6 percent 2.9 percent (orless) 3.4. POVERTY REDUCTION The primaxy objective of the SAAUDP was poverty reduction. Yet, most components of the project were not directly related to this objective. The project reached the poor directly only through the Kebele Upgrading Component. However, low physical achievement limited the adequacy of the project's contribution in poverty reduction. Indirect contributions with respect to poverty alleviation was made through the implementation of the Akaki Water Supply Component that increased access to water. The claim that housing loans in the Sites and Services Component were meant to target low-income people was unrealistic; it proved to miss the target widely. Housing improvement loans and loans for income generating activities for poor women which would have contributed more to this goal were cancelled/terminated ENVIRONMENTAL OBJECTIVES Three components of the Project had direct implication to the environment. These are: the Kebele Upgrading Component, the Solid Waste Management Component and the Akaki Water Supply Improvement Component. Substantial contribution is made in upgraded areas although its scale is too small to have widespread impact. Significant contributions have been made to the pbysiad capacity to improve supply of environmental sanitation services. This has been made through the supply of solid waste and cesspool collection vehicles and containers. Increased and improved access to potable water supply that resulted from 89

94 SAAUDP's contribution to Akaki 'Water Supply Improvement scheme would also affect sanitation positively GENDER AND OTHER SOCIAL OBJECTIVES Tlle SAR indicated that some fund from the Kebele Upgrading Component would be allocated for income generating projects for poor women. There was no, however, considerable implementation record in this aspect. The other area of the project where gender issue was relevant is the slum upgrading activities of the Kebele Upgrading Component. In this area of the Project's activity, basic sanitation infrastructure have been provided in poor areas where about half of the households are also women headed. The positive impact is also expected to come out through induced home based job opportunities that are primarily women's domain. Increased access to safe water owing to the implementation of the Akaki Water Supply Component as well as improved sanitation situation owing to the increased capacity of solid waste collection and upgraded slum areas would imply considerable contribution to health and other welfare benefits. Contribution to alleviate housing shortages was made. However, this cannot be regarded conisiderable. The project provided 2244 houses and the annual need and backlog in the city is estimated at 15, 000 and 30,000 housing units respectively READJUSTMENT, RESETTLEMENT AND DISLOCATION The Project aimed to minimize the r eadjustment, resettlement or dislocation costs that would have been incurred while implementatioin. Two components were relevant in this regard. One is the Housing Sites and Services Component and the other is the Kebele Upgrading Infrastructure Development Component. Compensation was paid to all affected families INSTITUTIONAL DEVELOPMENT The Addis Ababa Roads Authority (AARA), at the moment, has an annual maintenance capacity of Birr 30 to 50 million. In fact, not all this is attributed to the assistance made by SAAUDP. The solid waste collection capacity has also been increased from 50 to 65 percent. However, most of the institutional development efforts were intervened by procurement of goods. Complementary activities (technical assistance, studies and training) were limited PUBLIC SECTOR MANAGEMENT The Project included technical assistance and studies to improve the management capacity of the public agencies involved in urban service delivery in Addis Ababa. Examples are, technical assistance provided to Road Construction and Maintenance Department which were later transferred to the Addis Ababa Roads Authority, and to Addis Ababa Health Bureau in conjunction with solid waste management. In addition, water tariff and water leakage studies have been undertaken by other agencies to improve the management and financial capacity of AAWSA. The water tariff study have become the base for another similar study in another AAWSA's project. 90

95 3.10. PRIVATE SECTOR DEVELOPMENT The restructuring included private sector development as one major objective. The project created opportunities for private sector development in the country. All the contracts except part of the civil works component have been implemented together with the private contractors. The SAAUDP also involved considerable procurement of goods. All goods in all the components were supplied by private suppliers under several contracts. It should be noted that the SAAUDP's private sector development in this regard is limited due to the fact that most of them were supplied from abroad. 4. MAJOR FACTORS AFFECTING THE PROJECT 4.1. FACTORS OUTSIDE GOVERNMENT CONTROL In general, pefomxe of contracaos and wppliers was unsatisfactory and resulted in implementation delays. Most of the contractors delivered goods and services behind the agreed schedule. 12 cesspool emptier trucks procured by an ICB contract are stranded in Port Assab due to the current EFtio-Eritrn cnac. The process of shifting delivery orders from Port Assab to Port Djibouti also contributed to delays in procurement FACTORS WITHIN THE CONTROL OF THE GOVERNMENT The major macroeconomic events that affected SAAUDP are devaluation, liberalization of domestic and foreign trade, the attempt to reduce the role of the government in ecoilomic activity and the drive towards privatization. SAAUDP was affected by these in many ways. First, it led to a rise im the Birr-equivalent of the loan and IDA funds available for local expenditures on goods and services. Second, it increased the tariffs on imports of vehicles, equipment and materials and the matching fund required from the Borrower to finance these. Thirdly, it changed the asset position of the Borrower by raising the Birr-equivalent of its debt. This affects the affordability of the project and Borrower's ability to service its loans. The whole process led to the restructuring process which in turn caused delay in implementation FACTORS WITHIN THE CONTROL OF IMPLEMENTING AGENCIES Staffing The major implementing agency in the SAAUJDP is the AACG. The AACG's Project Implementation Office (PIO) had manpower problems. Rapid turnover of (professional) staff meant that the stock of experienced staff at any one time had been very low. In 1998/99, there was no senior (professional) staff who worked since the Restructuring of 1996, let alone since project startup. The AACG also, in later years, added the Environmental Development Project Office (EDPO) to execute upgrading civil works replacing commercial contractors. Implementation speed of Kebele Upgrading undertaken using EDPO was unsatisfactory. This was by large reflected by the EDPO's capacity. This led to downsizing of the budget allocated for the Kebele Upgrading component Adequacy of Monitoring and Evaluation All the implementing agencies focused on the monitoring aspect and evaluations are rarely undertaken. Moreover, reports submitted to different authorities never attracted responses. One 91

96 reason for this was failure to keep the technical and advisory committees regular meeting. The other is frequent changes of authorities in the AACG to whom PIO used to report regularly Fungibility of Resources Resources such as vehicles acquired to facilitate project implementation were used for other purposes by the AACG Beneficiary participation. Beneficiary organizations, such as bureaus and project offices of the AACG, were slow to prepare technical specifications for procurement or in evaluation technical specifications forwarded to them. The performance of members of housing cooperatives was also poor. 5. PROJECT SUSTAINABILITY Housing sites and services produced a lower economic rate of return compared to the SAR. Roads and drains in peripheralocations, -vhere sites and services projects are located, are vulnerable due further housing developments in the area. Heavy trucks and construction machinery, for instance, would darmage the already provided off-site and on-site roads. The establishment of AARA, introduction of road fund and the conducive policy environment for private civil work contractors would imply that positive developments are in place for road construction and maintenance in the city. Solid waste and upgrading infrastructures provided by the project are comprehensive in the sense of integration of activities implying sustainability. Lack of complimentary inputs such as well motivated and capable labor force, efficient & speedy maintenance capacity, and appropriate institutional framework would substantially affect negatively the sustainable operations of vehicle and equipment provided by the project. AAWSA is the leading institution in water supply in Addis Ababa and its surroundings. Experience gained in implementing similar completed and on-going projects would add to the technical capabilities of the Authority. Tariff revisions in favor of cost recovery pricing would develop the resource position of the Authority. 6. BANK PERFORMANCE Since 1987 the mission visited the imnplementing agency and the Borrower 17 times. Out of these two were for identification in 1987; two for appraisal in 1989 and 1990, one specialized program in 1996; eleven were for implementation review during and one for implementation completion report in The performance was intensive in 1997 and The Bank's supervision missions were effective in assessing project implementation status as well as identifying required actions. However, Borrower's slow response constrained the effectiveness. The Banks performance were poor in areas of project appraisal as explained by large deviations from SAR despite the Banks contribution to use earlier studies undertaken during the implementation of the First Urban Development Project (Credit# 1366-ET). The Bank also took much time to approve and finalize the restructuring process. 92

97 7. BORROWER PERFORMANCE The Borrower was able to provide the required matching resources throughout the implementation period. However, poor performance in other aspects affected the overall implementation process. One of the most serious was the failure of the government to comply with the recommendations of the studies undertaken. 8. ASSESSMENT OF OUTCOME Physical achievement in civil works have been constrained by design problems (some street maintenance works and roads and drains in the sites and services scheme) and affected the infrastructure provided. Circulation in the housing sites is difficult due to the narrowness of the roads. This also affected utility line (both water and electricity) operation. Upgrading of slum areas improved environmental sanitation in the area. However, this cannot be regarded as adequate when compared to the upgrading requirement in the city. Kebele Development Fund projects and the poor women income generating project failed to achieve the envisaged outcome. This justifies the appropriateness of the discontinuation of this component during restructuring. Streets maintained in different parts of the city are being intensively used. However, these streets are less likely to serve for many years due to the increased pressure from high traffic. Solid waste carriers use the landfill site access roads intensively. Fence and building works are poorly undertaken. The site is still accessed by human and animal scavengers. Goods procured by the project increased solid waste collection capacity. Similarly, the road construction and maintenance capacity of the AARA has been increased. The physical components of the Akaki Water Supply Component, have been cornpleted and the related system has been put in operation. This has improved the water supply situation in Akaki town. Full utilization of the investment made still calls for the successful completion of fiurther civil works included in Phase-II. 9. FUTURE OPERATION 9.1. HOUSING SITES AND SERVICES COMPONENT H asing owners shall assume maintenance costs. Maintenance requirement for all houses per year is about half million Birr. In addition, major maintenance is required every 10 years amounting 25% of the project cost. Utiliies: Similar to the current experience elsewhere in the city, Addis Ababa Water and Sewerage Authority (AAWSA) and Ethiopian Electric Power Corporation (EEPCO) will be responsible agencies (as the prime utility companies) in management and operation of water and electric power supply works respectively. These institutions shall complete individual connections to each house. Cfsite and on-site-oads and draiw All the housing sites are found in the peripheries where there are also other constructions carried out. Trucks passing through these roads would damage the already constructed roads. Promotion of development committees to generate resources is required to further maintenance and upgrading of on-site roads and drains. Off-site roads shall be maintained by AARA together with the community in each respective site. The total amount of Birr required to 93

98 routine maintenance annually is about 67 thousand. Major maintenance is required every 5 years and the amount estimated for this investment is 25% of the project cost or Birr 2 million. Ccn Facilities. There are two options for these facilities. The market center either would be under the management of the community development committee or rented by AACG Finance Bureau. Schools, kindergartens and health centers either would be under relevant bureaus of the AACG (Education and Health) or contracted to the private sector. All communal facilities can in principle generate resources to cover at least maintenance costs. The amount required for maintenance of these facilities in the three housing sites is Birr 52 thousand. In addition, 25% of the project cost is required every ten years. This arnount is currently Birr 1.3 million KEBELE UPGRADING COMPONENT Different infrastructure provided under this component require different arrangement. Roads and drains are by large local or access roads. These require regular maintenance. Activities completed earlier are now deteriorating. In the long term, the shift to community management can be an option if it is preceded by adequate sensitization and promotion. In the short term, however, intervention by NGOs and Government in cooperation with the community seems to be a more sensible approach. Involvement of governmlent agencies might have to be limited to financing and contract administration. Experience has shovvn that physical force account involvement is inefficient. The beneficiaries in the project areas are managing communal latrines. Cleaning and money contribution to get regular emptying service is handled by the beneficiary households. There are too m;my households per latrine, however. This is discouraging proper management of these latrines particularly cleaning. This overloading is due to lack of space in the area to construct additional latrine. Further intervention to reduce congestion would be an issue that needs to be considered in these areas. Solid waste containers need to be placed in hardstanding sites by Solid Waste Management Unit of the Health Bureau. Some public standpipes are not in operation due to water connection delay the responsibility of which belongs to AAWSA. In those who already started operation, the management is given to the Kebele Development Committee. Alternative arrangement would consider poor women in the project areas. Maintenance of standpipes would be financed by user fees. The overall amount required for amnual maintenance of upgrading projects is Birr 71 thousand. In addition, 25% of the project cost for major maintenanc every 10 years is required. This amount currently is estimated at Birr 1.5 million STREET MAINTENANCE COMPONENT CiNil works under this component are maintained streets in different places of the city. The AARA has been involved in selection, design and supervision. As major streets further maintenance and upgrading is the responsibility of the Authority. Birr 167 thousand and Birr 4.1 million are required for routine maintenancevery year and for major maintenancevery ten years respectively. Three beneficiary agencies are involved for street maintenance related procurement of goods. These are the AARA, Equipment Service Department of the AACG and CMPE. The operation and maintenance responsibility is under each organization. 94

99 Some of the tools and machinery purchased are poorly managed by the Equipment Service. The Department has a chronic problem of skilled manpower. It is unlikely that the Equipment Service will provide efficient maintenance services for the AACG agencies. The AARA and other agencies in the AACG that have huge machinery overhaul shall seek for other alternatives. These could be contracting out the service and own maintenance unit. CMPE is by large profit making agency besides to supplying construction materials for road construction and maintenance. Most of the machinery purchased are in operation. Maintenance and operating costs financing are guaranteed by the financial position of the enterprise. However, similar to other public enterprises in the country other options such as privatizing should be studied for this enterprise. The total amount of money required for operation and maintenance of major equipment and vehicles is Birr 4.5 million, excluding loan repayment and overhead costs of administration. This amount is only considering major machinery and equipment that have been procured by the SAAUDP. Two financial sources are identified. These are general revenue for machinery and equipment provided to the AARA and the enterprise's revenue for items provided to the CMPE. User fee shall cover the financial requirement of those items owned by the Equipment Services Department SOLID WASTE MANAGEMENT COMPONENT The Solid Waste Component expanded into a more general "Sanitation Component" by including provision of equipment for cesspool management to Health Bureau (for public toilets management) and AAWSA (for private houses' needs). The Health Bureau, responsible for solid waste management, has received the largest part of equipment and civil works under the component. The Solid Waste Management Unit has a large fleet of vehicles, substantial other resources (such as, a truck park constructed under SAAUDP, the landfill site), and a large staff. The volume of operation it is expected to undertake, and the dilemma between operations-regulatory roles of the Health Bureau call for a change in the institutional arrangement for Solid Waste Management Unit, probably forming an independent entity under the AACG. AACG is recently looking at the options and a decision is expected soon. The total amount required for civil works annual routine maintenance and major maintenancevery ten years is Birr 60 thousand and 1.5 million respectively. Solid waste carriers, containers and landfill plant require operating costs including fuel and tire, labor and maintenance. The amount required for this purpose, per year, is Birr 4.5 million, excluding loan repayment and overhead costs. Financing for future resource requirements of the solid-waste part and public latrine servicing would come largely from City general revenues, and a small part from fees on institutional entities. The cesspool emptier service provided by AAWSA shall be financed by user charges AKAKI WATER SUPPLY COMPONENT The operating management is handled by AAWSA. Total operating costs owing to supply of chemicals and electricity as well as salaries for one year is Birr 1.2 million. User fees charged by AAWSA shall be the source for all the required resources under this component. 95

100 9.6. INSTITUTIONAL SUPPORT COMPONENT Several capacity building activities have been undertaken by the SAAUIDP. Procurement of specialized fire fighting vehicles to Addis Ababa Fire Brigade is the most considerable one. The operation and maintenance management of these items shall be under the responsibility of this organization. The amount estimatecd for annual operation including daily check up of truck engines of specialized vehicles purchased under the SAAUJDP is Birr 0.9 million. In addition, more than 40 automobiles and pick-up trucks worth in the order of 6.7 million Birr were provided to various agencies under the Institutional Support component. These would require about Birr 0.7 million for operation and maintenance. This would be paid for from the budgets of beneficiary agencies. 10. KEY LESSONS LEARNED Organization of an implementing agency: appropriate organizational structure is a key issue with huge influence on the success of any project, specially integrated, inter-sectoral projects that involve a large number of agencies and activities. From the specific circumstances under which SAAUDP was implemented, many organizational issues have been raised. The most important ones that relate to authority, division of responsibility, and accountability that need to be addressed are: Authority: the agency that coorcinates and implements the project (for instance as PIO in SAAUDP) need to be given required authority to enforce the requirementset out in the project, ancl mechanisms through which other agencies can be made accountable to it in the perforrmance of activities related to the project. This could be done by making it, for instance, a direct extension of the AACG Executive Council or Economy Sector of the Executive Council. The minimum requirement is to clearly make the project implementing and coordinating agency above the Bureaus that perform everyday policy,-making/service-giving functions. Accountability: there is a need to make other agencies responsible for delays and cost over-runs in activities under their purview. Since there is a tendency to give project activities lower priorities (compared to their 'main' functions), there should be a mechanism to force agencies to incorporate these activities as one of their priority areas. Collaborating agencies: there is a need to make assistance to relevant agenciestrongly conditional on execution of their responsibilities under the project. Conitract Administration: Separate contracts for civil engineering works and supply of goods (eqlipment and pipes) affected coordinatio negatively. Moreover, disintegrating contracts decreases the total value in each contract which is less likely to attract large contractors. Cornponent/Activity Phasing: A project component with a number of activitieshall be piloted or phased. Factors that were not identified well at the time of project formulation would come out important while implementation. This helps to improve implementation (e.g. speed) and delivery (supervision, cost-effectiveness and quality). Operations: Operational plan needs to be prepared and agreed with concerned agencies before procurement. Component Specific Issues Interest rate subsidies alone are unlikely to acconmodate the poor in sites and service scheme. The market rate shift in SAAUDP seems appropriate. This also encourages loan repayment rate. Cormpensation system in upgrading slum areas is effective to secure right-of-way. However, it can be time consuming to obtain ownership certificate that is often absent in these areas and also encourages irregular ownership claims. 96

101 Second Addis Ababa Urban Development Project Credit 2161-ET Map 97

102

103 IBED T~~~~~~~~~~~~~~~ ~~~~~~~ETH IOPIA ~~~~ ~~~~~ ~~SECOND ADDIS ABABA URBAN DEVELOPMENT PROJECT ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ MAINTENANC 2 A: T. D-i. SAHLE SELASSIE BRIDGE S MEDHANEALEM SCHOOL TO TO SEMEN HOTEL KlIFE ChILDREN CENTRE ~ ~~~~~~~~~~~NO'RTH MUNICIPAUITY By JANMEDA TO, MINLIK LAZARIST MISS1ION HOSPITAL FBENCH EMBASSY TO 10 ETH~ COPFFE BOABD JUNCTION JESUS CHURCH TO SEMINARY COLLEGE t. 3~~~~~~~~~~~~~~~~~~ ENKULAL FABRICA TO ~ 11FRENCH ~~~~~~~~~~~~~~~~~~~~~ EMBASSY TO BELLA RUFAEL CHURCH DIL PAINS FACTORY BY THE 12 GROUND FORCE GARAGE ETA. COFFEE BOARD TO DIABACO TO JESUS CHURCH 5, S ~~~~~~~~~~~~~~~ ULGRIAEBAS ~~~OLD 12 BRITISH EMBASSY TO C, - U ~~~~~~~~~~~~~~~~~~~~~~~~~~BELAIRHO 14 DIBACO THROUGH BISRATE GERRIEL 6TH PO LICE BTATION CHURCH TO JIMMA ROAD 28 / ~~~~~~~~~~~~~~~~~THE THREE KECH-ENE 14AA DIBACO TO VATICAN EMBASSY S-B demil wf Ih 71' TO DEBRE SEIT ROAD TRAFF C OFFICE ) IX - - ~ ~~~-- '~~~ -- ~~~-----~~~ 'N *,~~~~ _ ~~~~~~-2 J % ~KEBELE UPGRADING SB WEREDA 6, KEHELY, SB ST WEREDA 7, K EBl I0 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~22WUREDA 5,KEBEE I1 WEREDA 7, KBE'LE WEREDA B, LEBELE WREDA 7, EBLE 2 21~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~T W'EREDA B KEBEE EF26 2WEDA 7, RUBE ST 242 / ~~~~~~~25 WEREDA H, IKEBELE FLOOD PROTECTION R. d ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ DEVELOPMENT FUND IL WEREDA WREA 5,,KEEL KEBELE IA WERESA WRDA1 15,, REBELE EB~E226~~~~~~~~~~~~~~~~~~~~~~~~~~~%T 23 ~ ~ ~ ~ ~~ 5,, ~158 WEREDAI17, KEBELE1R 22 WEREDA18,KEBE E r ~~~~~~~~~~~~~~~~~~~~~~~~~*21 WEREDA 17, KEBELE - V U ~~~~~~~~~~~~~HOUSING DEVELOPMENT 17 WATER SUPPLY PROJECT SOLID WASTE MANAGEMENT T. ji... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~UPROJECT AREA LANDFILL / - ~~~~~~~WATER PIPELINE TRACE PARK 0 RESERVOIRS GWA3 R--ENiE - AUDI ARABIA SUSAN N ~~~~~~~MA MAIN ROADS * OTHER ROADS 'I 26' BET A,d~\ WERRGA BOUNDARIES WEREEDA NUMBERS,--GA2Rero CNS,,, EHFA ADSDIS ABARAADMINISTRATIVE ICIENAT.' REGION BOUNDARY BAFRE./ ~~~, Akoki \ N / KENYA I~~~~~~~~~~~~~~~~~~~~_ SOM ALIA S~ AL DE.BR',IDCEA Thil BORp pd-dby IHOMOp DOBiR~BUiIOTh. OIYO4RN 8- T.5-66oflE.R,.oI-,doo,,,ooB d -oy.lh-f-f-,f6fa- GWA,NR. -J O _opm_, ~bohar. L TANZANIA