Document of The World Bank

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank IMPLEMENTATION COMPLETION REPORT (PPFI-P9020 PPFI-P9021 IDA TF-23043) ON A CREDIT IN THE AMOUNT OF SDR 72.3 MILLION (US$105.0 MILLION EQUIVALENT) Water and Urban 1 Tanzania & Uganda Country Department Africa Regional Office TO THE UNITED REPUBLIC OF TANZANIA FOR THE URBAN SECTOR REHABILITATION PROJECT June 7, 2005 Report No: 32225

2 CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2004) Currency Unit = Tanzania Shillings Tsh 1 = US$ US$ 1 = Tsh 1050 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS CAS CIP CIUP DAWASA GoT IDA ICR ISS KfW MC NSGRP O & M PHRD PICU PIU PMU PMO PO-RALG QAG QSA SAR USEP USRP UWSA Country Assistance Strategy Community Infrastructure Program Community Infrastructure Upgrading Program Dar es Salaam Water and Sewerage Authority Government of Tanzania International Development Association Implementation Completion Report Institutional Strengthening Strategy Kredit Anstalt fur Wiederaufbau Municipal Council National Strategy for Growth and Reduction of Poverty Operation and Maintenance Policy and Human Resources Development Project Implementation and Coordination Unit Project Implementation Unit Project Management Unit Prime Minister s Office President s Office Regional Administration and Local Government Quality Assurance Group Quality of Supervision Assessment Staff Appraisal Report Urban Sector Engineering Project Urban Sector Rehabilitation Project Urban Water and Sewerage Authority Vice President: Country Director: Sector Manager: Task Team Leader: Gobind T. Nankani Judy M. O'Connor Jaime M. Biderman Solomon Alemu

3 TANZANIA URBAN SECTOR REHABILITATION PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 7 5. Major Factors Affecting Implementation and Outcome Sustainability Bank and Borrower Performance Lessons Learned Partner Comments Additional Information 24 Annex 1. Key Performance Indicators/Log Frame Matrix 25 Annex 2. Project Costs and Financing 27 Annex 3. Economic Costs and Benefits 32 Annex 4. Bank Inputs 43 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 45 Annex 6. Ratings of Bank and Borrower Performance 46 Annex 7. List of Supporting Documents 47 Annex 8. Borrowers Contribution 48 MAP IBRD No

4 Project ID: P Team Leader: Solomon Alemu Project Name: Urban Sector Rehabilitation Project TL Unit: AFTU1 ICR Type: Core ICR Report Date: June 7, Project Data Name: Urban Sector Rehabilitation Project L/C/TF Number: PPFI-P9020; PPFI-P9021; IDA-28670; TF Country/Department: TANZANIA Region: Africa Regional Office Sector/subsector: General water, sanitation and flood protection sector (48%); Roads and highways (30%); Central government administration (11%); Sub-national government administration (11%) Theme: Access to urban services and housing (P); Municipal finance (P); Municipal governance and institution building (P); Other financial and private sector development (S); Participation and civic engagement (S) KEY DATES Original Revised/Actual PCD: 12/07/1994 Effective: 08/23/ /06/1997 Appraisal: 04/24/1995 MTR: 03/01/ /01/1999 Approval: 05/23/1996 Closing: 06/30/ /31/2004 Borrower/Implementing Agency: Other Partners: GOVT/PRESIDENT'S OFFICE - REGIONAL AND LOCAL GOVERNMENTS STAFF Current At Appraisal Vice President: Gobind T. Nankani Callisto E. Madavo Country Director: Judy M. O'Connor James W. Adams Sector Manager: Jaime M. Biderman Stephen Weissman Team Leader at ICR: Solomon Alemu Gerhard Tschannerl ICR Primary Author: Solomon Alemu; Ephrem Asebe 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: Sustainability: Institutional Development Impact: Bank Performance: Borrower Performance: S L SU S S QAG (if available) Quality at Entry: S Project at Risk at Any Time: No ICR S

5 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The Urban Sector Rehabilitation Project (USRP) consisted of a large program of infrastructure rehabilitation works and institutional reform activities covering eight project towns in Tanzania (Arusha, Iringa, Morogoro, Mbeya, Moshi, Mwanza, Tabora, and Tanga) as well as Dodoma and Dar-es Salaam. The investments in Dodoma and Dar es Salaam were of limited scope and complexity compared to those in the other eight towns. The project became effective on May 6, 1997 and closed on December 31, The project objectives were sustainable economic development and urban poverty alleviation through: (a) (b) rehabilitation of the basic infrastructure and expansion into high priority, under-served areas, and improvement of urban local government management and financing capacity by (i) strengthening the financial, technical and overall operations of the urban local authorities through training and technical assistance, and (ii) encouraging private sector and community involvement in urban services delivery and operation and maintenance. The project concept was based both on Government Policy Framework for Urban Management, Service Delivery and Infrastructure Investment and an Implementation Strategy for that framework prepared on the basis of urban sector policy reform undertaken under a prior project, the Urban Sector Engineering Project (USEP) (Credit 2291-TA). The USEP project closed on December 31, 1996 and its outcome was rated as satisfactory. The strategy was well thought out based on extended consultation, and provided an assessment of the issues anticipated in every phase of the project cycle and a solid foundation for the design of the USRP. The project was complex relative to the country s capacity at the time of its inception. The available manpower and the implementation environment were viewed as major constraints. However, on the brighter side, extensive macroeconomic and civil service reforms were made during and prior to the project launch. The GOT had also developed a strategy for raising additional revenues through improvement in tax system efficiency and administrative capacity, including better expenditure planning and control, standardized budgeting and accounting system. USEP helped implement this policy through updating of property valuation and tax system and establishment of an improved standard accounting system through the Local Authorities Accounting Manual (LAAM) and tested it in two project towns and Dar es Salaam. The USRP design envisaged roll out of the LAAM in the remaining six project towns. The project objectives were consistent with the IDA Country Assistance Strategies (CAS) issued since The CAS discussed by the IDA Executive Directors prior to the launching of the project in March 1994 focused on: (i) poverty alleviation through policy reforms and economic growth; (ii) targeted intervention to improve urban services for the poor; and (iii) upgrading and expansion of basic infrastructure and urban services. The project objectives were in line with the three primary thematic objectives of IDA contained in the CAS of (i) capacity building and improved public sector management, (ii) private sector development, and (iii) environmental sustainable investments. The 1997 CAS also focused on supporting: (i) critical link between economic growth and poverty reduction; (ii) targeting interventions to improve urban services for the poor; (iii) upgrading and expansion of basic infrastructure and urban services; (iv) reinforce the growth oriented macroeconomic reforms introduced by the newly elected government; and (v) the need to respect and foster government ownership of both macroeconomic reforms and investment programs. The project objectives were also supportive of - 2 -

6 FY CAS, the period of major USRP implementation, which also focused on higher growth, poverty reduction, and institutional reforms to improve governance and service delivery, which provided a favorable implementation environment for USRP. In addition, the physical and institutional project objectives are in line with current Government of Tanzania National Strategy for Growth and Reduction of Poverty (NSGRP), also known as MKUKUTA in Swahili, with its three cluster goals of: (i) growth and income poverty reduction; (ii) improvement of quality of life and social well being; and (ii) governance. The benefits of the USRP are likely to reinforce these three desired broad outcomes. 3.2 Revised Objective: The Project development objectives were not revised. The Mid-Term Review undertaken in March 1999 confirmed the relevance of the development objectives. However, they would have been better stated as contributing towards sustainable economic development and urban poverty alleviation through elements (a) and (b) noted in 3.1 above, since a single project could at best only make a modest contribution towards economic growth and poverty alleviation. 3.3 Original Components: The project (US$141.3 million equivalent (US$120.1 million base cost and US$21.2 million contingencies)) consisted of the following four components in eight project towns of Arusha, Iringa, Mbeya, Morogoro, Moshi, Mwanza, Tabora, and Tanga, plus Dodoma, and Dar es Salaam. These were (SAR costs estimates indicated below are base costs): A. Rehabilitation and select expansion of infrastructure services in the eight project towns and Dodoma (US$83.4 million, 68%). This included: (i) Municipal infrastructure and services rehabilitation and expansion of priority infrastructure (US$41.5 million, 34%) roads, storm water drainage (US$32.7 million, 27.%): rehabilitation of key arterial and collector roads to bitumen standard, improving and building new bus stands, and rehabilitation of municipal workshops; sanitation (US$3.7 million, 3%): establishment of an improved pit latrine program, schools latrine construction, and provision of vehicles and equipment for strengthening pit latrine and septic tank emptying capacity; solid waste management (US$5.1 million, 4%): provision of skips and vehicles for communal refuse collection and transportation in the eight project towns; improvement of existing dumpsite and access roads and construction of new ones where needed. (ii) Water Supply and Sewerage (US$41.9 million, 34%) Water Supply (US$28.0 million, 22%): rehabilitation and selected expansion of the water supply systems in the towns of Arusha, Dodoma, Morogoro, Moshi, Tabora, and Tanga Sewerage (US$13.9 million, 12%): rehabilitation of sewerage systems in Arusha, Morogoro, Moshi, Mwanza, Tabora, and Tanga, and new construction of system in Iringa; and construction of sludge treatment ponds in these project towns

7 B. Dar es Salaam Community-based infrastructure upgrading program and water supply (US$10.8 million, 9%); (i) Community-based Infrastructure Upgrading Program (US$ 5.2 million, 4%): demand-driven community infrastructure program in selected infrastructure deficient settlements consisting primarily of local distributor roads, access roads, storm water drains, sewer laterals and connections and tertiary distribution of water supply. (ii) Dar es Salaam Water supply (US$ 5.6 million, 5%): to assist maintenance of services, provide urgently needed equipment, spare parts, fittings, installation of meters, leak detection and repair and replacement of water mains; Technical Assistance (TA) to management, and studies to develop future source water supply. C. Institutional Strengthening (US$23.1 million, 19%) - consisting of: (i) (ii) (iii) Technical Assistance to Municipal Councils (MCs) and Urban Water and Sewerage Authorities (UWSAs): TA for property valuation in the 8 project towns and the three municipalities of Dar es Salaam (Kinondoni, Ilala and Temeke). Training: Management training for senior MC and UWSA staff; technical training for technical staff; training for economists, valuers and IT training for senior and middle management, technical and secretarial staff. Provision of maintenance-related goods and equipment for: MCs for road maintenance, and UWSAs for maintenance of water supply and sewerage systems. D. Future project preparation (US$2.8 million, 2%): (i) (ii) Feasibility studies and detailed design for water supply and sewerage expansion studies for the towns of Dodoma, Morogogo, and Tabora; and Support to the preparation of a future urban community based project. Assessment of Components The project components, prepared over an extended period of consultation, were aligned with the achievement of the project objectives. Initially financed under the Urban Sector Engineering Project (Cr TA), substantial institutional, financial and technical preparatory work was carried out to define the policies and guidelines for project design and implementation. The preparatory work was also supported through additional funds from PHRD grant (Japanese Government) and a Project Preparatory Facility advance (PPF No. 902-TA). Overall the design of the components was closely related to achieving the project objectives with the first two components and an allocation of about 80% of the project funds directly targeted to the first Project Development Objective (PDO). Component A was generally well designed and subsequently well-managed in spite of the wide geographic spread of the project towns and the varied types of infrastructure. The implementation arrangement whereby the Project Support Units (PSUs) were established to supervise the major works contracts and supported by the Project Management Unit (PMU) at the center staffed by qualified professionals, was a major factor in effective implementation with high quality of works. The - 4 -

8 contracts for minor works (works related to sanitation, solid waste and depot rehabilitation) were fully prepared and managed by the works departments of the respective municipalities on the basis of skills acquired by the staff as counterparts to the supervisors of the major works. Component B was well designed based on the demand driven Community Infrastructure Program (CIP) and implemented by the Dar es Salaam City Council through in-house capacity with backstopping from the PMU; the Dar es Salaam water supply subcomponent was implemented by the Dar es Salaam Water and Sewerage Authority (DAWASA) through its Project Implementation Unit (PIU). Component C was also well designed to address the needs of improving the managerial and financial capacity of the Municipal Councils and Urban Water and Sewerage Authorities. However, at Mid Term Review, it was decided to develop an Institutional Strengthening Strategy to better align and focus the efforts to the needs of the local authorities. The Institutional Strengthening Strategy grouped the activities under this component around three areas technical assistance, training, and provision of essential goods and equipment for maintenance of the investments. Regional and local public and private institutions were used for training. Component D was also an appropriate provision given the need to move speedily with preparatory activities for follow on expansion in key infrastructure (given that USRP s intervention is mostly limited to rehabilitation) and for preparation of a follow on project in the local government sector. At the time the project was prepared the log-frame was not available as a tool for presenting the project design summary with clear outcome and output indicators. The performance indicators in the SAR tended to focus on output rather than outcome. These shortcomings were recognized and corrected during implementation. 3.4 Revised Components: The project components remained substantially the same through out the project life except for a few adjustments in sub components in light of evolving realities on the ground as implementation progressed. These included: (i) under Component A, addition of required solid waste site equipment for spreading and compacting refuse, and (ii) under Component B, the studies for future source of water supply under the Dar es Salaam water supply sub component were eliminated and replaced by an emergency borehole drilling program to alleviate the water supply shortage encountered during the 1997 drought, since the planned Dar es Salaam Water Supply and Sanitation Project would address the issue of studies for future water supply source for Dar es Salaam. As originally designed, the Community Infrastructure Upgrading Program in Dar es Salaam was to focus generally on tertiary infrastructure to cover six communities. However, the communities demand for tarmac arterial roads was higher than anticipated and as a result the available funds could cover only two communities. The Credit Agreement has been amended twice (September 2000 and January, 2004). Both times, it was to reallocate funds among disbursement categories to make funds available for the implementation of the adjusted sub components indicated in the paragraph immediately above. The project closing date was also extended by six months from the original closing date of June 30, 2004 to December 31, 2004 primarily to support activities related to the preparation of a follow-on project, Local Government Support Project (LGSP), which required disbursement from the project funds beyond the original closing date

9 3.5 Quality at Entry: The quality at entry was not reviewed at appraisal by the Bank s Quality Assurance Group (QAG). However, Quality of Supervision Assessment (QSA6) assessed the quality at entry retrospectively in its October 2004 Report covering the last two years of project implementation. Accordingly, QAG took cognizant of the complexity of the project and the difficult country environment and assessed the implementation arrangements, and the M & E arrangements put in place as appropriate. In addition, it considered the fact that policy reforms and disbursements have been largely on track as confirmation of the Borrower s commitment. These are good indicators of the soundness of the quality at entry. This ICR rates the quality at entry as satisfactory. This assessment is based on: (a) (b) (c) Consistency of project objectives with Government s strategies, the CAS and consistency with IDA support under the previous project. The project objectives were consistent with the 1994 IDA Country Assistance Strategy (CAS) which was in force at the time of the project appraisal, and which focused on (i) poverty alleviation through policy reforms and economic growth, (ii) targeted intervention to improve urban services for the poor, and (iii) upgrading and expansion of basic infrastructure and urban services. The project was also consistent with the 1997 and the 2001 CAS, which were in force during the period of implementation of USRP. Both focused on higher growth, poverty reduction, and institutional reforms to improve governance and service delivery, providing favorable implementation environment for USRP. The project design benefited from the policy change and management improvement under previous IDA assisted projects particularly the Urban Sector Engineering Project (USEP) (Cr TA) under which the USRP was prepared. The USRP design, built on the main achievements of USEP: (i) property valuation rolls had been updated, rates adjusted, and municipalities revenue collection increased substantially; (ii) semi-autonomous Urban Water and Sewerage Departments had been created in three pilot towns (Arusha, Moshi, and Tanga) where water tariffs substantially increased, more revenue collected and delivery of water services markedly improved; (iii) all key posts in the eight municipalities were filled with long-term and qualified staff; and (iv) accounting and auditing in the municipalities markedly improved (with the development and installation of the Local Authorities Accounting Manual (LAAM)). In addition, the project benefited from important reforms introduced under the Integrated Roads Project I (Cr TA) where civil works and O & M services were to be provided by private contractors rather than by force account which was the practice in the past. These provisions for private sector participation also formed part of the project design. The design of the project had also taken advantage of lessons learnt from implementation of previous urban related projects. IDA s urban project experience in Tanzania includes National Sites and Services Project (Cr. 495-TA, FY75), Second National Sites and Services Project (Cr. 732-TA, FY78), Water Supply I Project (Cr TA, FY77), and Dar Sewerage Project (Cr TA, FY83). The problems associated with these projects during implementation were: (i) inadequate provision of counterpart funds, (ii) lack of policy in relation to generation of revenues to sustain services, (iii) inadequate financial management capacity and insufficient provision to address it, (iv) lack of donor coordination leading to fragmentation, and (v) inadequate involvement of the private sector in service provision. The design of the USRP took place under USEP, which was successfully implemented in the early 1990s and addressed the deficiencies listed above, and set out to build on the achievements (see (b) above). Accordingly, the SAR provided for explicit risk mitigating measures

10 (d) (e) (f) (g) The project was preceded by the Government National Civil Service Reform which created a favorable implementation environment. The reform assisted the urban local authorities with retrenchment of thousands of staff through compensation packages, revised upward national civil service salary scales and recruit (where needed) qualified staff. Project preparation had progressed significantly and was ready for implementation at approval. Moreover, the preparation of the USRP program was participatory,involving consultations with civil society and a large number of stakeholders. With respect to the Bank s environmental safeguards, the project was classified as Category B as it would have limited environmental impacts since it was predominantly a rehabilitation project. As required, the GOT had prepared environmental assessments for all planned rehabilitations and expansions to waste water facilities and solid waste sites. In the case of the city of Mwanza, the government prepared and submitted a resettlement action plan to address the needs of persons identified to be affected by the project due to the location of the sludge disposal pond adjacent to the waste stabilization ponds. However, this action plan was not implemented since the MC opted for a new location for the sludge disposal ponds that did not require resettlement, but for which an environmental assessment was carried out as part of the design of the ponds. The government s commitment to sector policy was strong. This was expressed in its Letter of Sector Policy. Moreover, in view of more positive relations with the county s development partners, the policy environment was favorable for the implementation of the project. Design of the project was focused on effective capacity building initiatives. The implementation arrangement adopted was designed to address the existing weak institutional capacities to implement such a complex and large project with emphasis on vigilant and disciplined supervision; and a strong output monitoring and evaluation feedback that have contributed to the successful achievement of the project objectives. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: Overview: In spite of USRP s wide scope and complexity as well as Tanzania s challenging development environment, the project has satisfactorily achieved its objectives and made significant contributions to the overarching goals of sustainable economic development and urban poverty alleviation. It is also likely to continue to contribute to the three goals outlined under the National Strategy for Growth and Poverty Reduction (NSGPR) in the eight project towns, plus Dodoma and the city of Dar es Salaam. The high quality works in roads and drainages, water supply, sanitation, and solid waste management, has reduced vehicle operating costs, improved accessibility, reduced maintenance costs, and improved overall urban amenities and created attractive environment for private sector investments in the project towns. This is clearly documented through the key performance indicators and EIRR calculations which show high rates of return for most of the project components (see section 4.3 and Annex 3). As evidenced during the ICR mission, there is a general consensus among Senior Government Officials both at the central and local levels, members of parliament and residents of the project towns (the real beneficiaries) that the implementation of the project has had significant positive outcome on improved service delivery in the project towns. This consensus on the outcome of the project is best summed up in the words of a respected veteran project manager in the water sector with over 36 years of IDA and other donor supported project implementation experience who noted: USRP is the single most successful project that IDA has financed and completed in Tanzania according to plan with very little problem

11 Further evidence of the impact of the project was reflected in the results of the annual Environmental Health Competition of 2003 and among towns and municipalities and city councils conducted by the Environmental Health Department of the Ministry of Health. The results of the competition show that all eight project towns are ranked at the top of the list, with four classified as very good and the remaining four as good. The environmental health matrix used for the comparison and analysis contains some 21 criteria covering aspects of solid waste, hazardous waste, waste water, hygiene and sanitation, clean and safe water, control of storm water, public toilet, etc, activities financed by the project. The successful implementation of both major and minor works has stimulated socio-economic development and resulted in opening up of significant number of new enterprises and the expansion of the existing ones leading to increase in employment opportunities. The large number of staff trained and institutional capacity built as well as fiscal reform which has enhanced willingness to pay for services augur well for sustainability of the benefits of the project investments over the project economic life. Overall, the quality and impact of the project as well as its timely implementation is highly appreciated by the various beneficiaries. A. Rehabilitation of the basic infrastructure and expansion into high priority, under-served areas Achievement of the physical targets and the impact on poverty alleviation was highly satisfactory. Access to water, transport, sanitation, and protection from storm water have improved urban amenities to a significant portion of the population in the project towns. The quality of works and successful meeting or exceeding of the physical targets in roads and drainage, water and sewerage, and minor works have improved the social infrastructure and improved access to essential public services by the poor; and also facilitated private sector development. Private sector and infrastructure development: All project sub components were implemented by the private sector. It is now accepted practice and supported by the procurement laws of the country to utilize the private sector in major construction, O & M activities, and services. The project has thus contributed to the government objective of fostering the private sector as an engine of economic growth, one of the themes of the CAS. The improvement of the water supply facilities and services had positive outcome on women and children who often bear the burden of fetching water average of 2.5 hours before the project was reduced to less than half an hour. Achievement related to Road and drainage works The project has rehabilitated roads and drainage works and expanded the service into high priority under-served areas in the project towns - the percentage of tarmac road network rehabilitated is 33% at the end of the project far exceeding the planned 21.6%, contributing to: o o o Travel cost - vehicle operating costs have been reduced resulting in high economic rates of return (see section 4.3 of the ICR); Ease of access - trip attraction and generation have increased significantly as evidenced by the high volume of traffic utilizing the roads; Comfort - diversion of traffic has been realized towards rehabilitated roads; - 8 -

12 o o o o Safety - traffic accidents have been reduced. Cases of injuries and damages of property have been reduced; Travel time has been reduced and lower delays or traffic congestion; Economic activities stimulated - more hotels and other service facilities have been constructed, tourism has risen; more variety of products are readily available in the market; and Willingness of people to pay property tax has significantly increased due to improved transport facilities and general improvement in amenities. Achievement related to water supply More people living in the project towns have reliable supply of piped water with enough pressure due to availability of more water. The percentage of people served with piped water has increased from 56% in 1996 to 86% at project closing in 2004; Availability of water has made it possible to increase the construction of residents and commercial premises even in peri-urban areas where the land was unoccupied due to unavailability of water supply; economic activities have been enhanced contributing to employment generation; The quality of water available to the people in the project towns has been improved; water supply is now available for 24 hrs in most of the towns, and service level has improved with the number of pipe connections increasing by nearly 100% from about 50,000 in 1996 to about 101,000 in 2004; unaccounted for water has been improved from above 40% to around 35%; The increased number of customers has resulted in improved revenue in the eight project towns from about Tshs 2.00 billion in the base year of 1996 to about Tshs11 billion at end of 2004, thus improving sustainability of the operations; Improvement in sewerage service has mitigated environmental hazards; improved sanitation at the city center; reduced mosquito breeding location in the residential areas; generated revenue; provided value for money service where the service has been provided; In Dar es Salaam, the project has assisted in sustaining and stabilization of the water supply to the city through maintenance of the electro-mechanical equipment. The leakage control works carried out along the two transmission mains supplying Dar es Salaam resulted in a reduction of losses due to leakage by more than 10,000 m3/day. The emergency borehole drilling program that has provided 34 boreholes fitted with electrical high lift pumps managed by communities has enabled the supply of safe water to about 100,000 inhabitants in the poor peri-urban areas. While these interventions were not intended to provide a comprehensive response to Dar s needs (this is being currently addressed through the Dar es Salaam Water and Sanitation Project), they provided essential short-term solutions to real (sometimes urgent) problems. Achievement of Community Infrastructure Program (CIP) in Tabata and Kijitoyama and minor works in the project towns The successful completion of the modified CIP subcomponents has given the community members, who have contributed the initial 5% of the capital cost, a sense of ownership and pride in their accomplishment, which is an important factor for sustainability; Construction of both spine and neighborhood roads increased the value of land almost by 100%. Property rent has almost doubled in both planned and unplanned settlement in the vicinity; - 9 -

13 Public transport is now available to the community and the transport time for various activities has been reduced considerably; Provision of services such as schools, health centers, shopping centers have increased as a result of private sector initiative; Environmental and sanitation services have improved due to improved drainage system along side the road network; Security has been enhanced due to the improved accessibility of the neighborhoods; There has been a significant increase in startup of new income generation activities; and; Incidence of communicable diseases especially water-borne ones and skin diseases has significantly dropped. B. Improvement of urban local government management and financing capacity in support of the sustainable economic development and urban poverty alleviation Achievement of this objective is assessed as satisfactory. Urban local governments management and financing capacity have significantly improved as a result of the project as evidenced below: Urban Local Government Management and Water and Sewerage Authority Management Capacity Improved Quality of staff: The quality of the Municipal and Urban Water and Sanitation Authorities' staff has significantly improved due to the provision of appropriate training. This improvement is manifested in timely decisions, quality reports, timely reports, understanding of the planning process, use of modern IT, and quality of communication demonstrated in the course of the project implementation; Ability to identify priority needs: The training program has heightened the level of consciousness of the participants in identifying needs; Improved management style: This is manifested in improved team work, relation with beneficiaries, relation between counselors and management; and improved labor relations in project management; Improved financial management: Timely reporting of financial records; This has resulted in unqualified/clean audited accounts, improved billing and collections; Improved O&M planning and execution: MCs and UWSAs staffs are now aware of the importance of O&M priority and sustainability of the investments undertaken under the project, as well as other investments. Municipal and UWSAs Financing Capacity Through implementation of the property valuation, municipal revenues have more than doubled during the project implementation period. In 1996, the eight project towns had total revenue of Tshs.2100 million. At end of FY 2003/2004 (for which there is audited data), total revenue was Tshs.7500 million, nearly 3.6 fold increase, much higher than that projected at appraisal. During the project implementation period, the financial situation of UWSAs had improved substantially. In 1996, the project towns had a total water and sewerage revenue of Tshs 1,800 million. At end of FY

14 2003/2004, the total revenue was Tshs 10,000 million, a 5.6 fold increase. As indicated in Section 4.5 below, the UWSAs in all the eight project towns and Dodoma are in Category A, implying that, as a minimum, they meet all their operating and maintenance cost. In most cases they generate surplus revenue for limited expansion works and for contribution to counterpart funds. Impact of technical assistance Performance Review and Feedback System for Municipal Authorities has assisted councils in monitoring and improving their performance as well as central agencies in developing local government policies and support mechanisms; Road Maintenance Management Systems (RMMS) has contributed to improving the sustainability of road infrastructure and related assets through institution of preventive and periodic maintenance planning and budgeting; Water Supply and Sewerage Maintenance Management System (WSSMMS) has contributed to the improvement in the sustainability of water and sewerage facilities and related assets through institution of preventive and periodic maintenance planning and budgeting; Valuation for Properties has contributed to increased overall revenue base for councils, increasing the potential financial capacity of project towns. Performance review of UWSA - contributed to the formulation of the National Water Supply Policy for Tanzania. Based on the foregoing achievements, the project outcome is thus assessed as satisfactory. 4.2 Outputs by components: Overall achievement of the outputs of the project is highly satisfactory. The output targets have been met or exceeded as evidenced in Annex 1 (b) and the quality of the outputs is satisfactory. A. Rehabilitation and selective expansion of infrastructure services in the eight project towns and Dodoma (SAR US$83.4 million; ICR: US$ 93.1 million) The outputs of this component were highly satisfactory. The physical targets have been met or exceeded generally within budget and on schedule. (a) Municipal infrastructure Services (SAR: US$41.5 million; ICR US$42.4 million) (i) Road and Storm Water Drainage (SAR: US$32.7 million; ICR: US$37.5 million) The achievement of this subcomponent was highly satisfactory. In the eight project towns a total of 102 km of roads, with side lined drains were rehabilitated to tarmac standard, against Project Implementation Plan (PIP) target of km, has been achieved. As a result, the share of the tarmac network reached 33% above the target of 21.6%, an increase of 55% over the target. The number of bus stands increased by 100%; 13 bus stands against the planned target of 6 bus stands. The use of competitive bidding, appropriate packaging and proactive supervision by project staff reduced the risks of cost overrun and the project ended up with substantial cost savings considering the increased physical targets achieved

15 (ii) (iii) Sanitation (SAR: US$3.7 million; ICR: US$1.8 million) The achievement of this subcomponent is also assessed as highly satisfactory having met its physical targets at a substantially lower cost. The planned 311 VIP latrines in 188 schools have all been constructed. In addition a total of 16 vacuum tankers for emptying latrines and septic tanks (2 for each town) were provided. At closing all were in good operational conditions. Solid waste management (SAR: US$5.1 million; ICR: US$3.1 million); This subcomponent met or exceeded its physical target at lower than anticipated costs. Achievement is rated as highly satisfactory. The project provided a total of 490 skip pads, 60 per project town for the 7 towns and 70 for Mwanza city; provided 240 skips (30 skips per town), 16 skip loading vehicles (2 per town), improved the existing 8 dumpsites (access roads, washing bays and guard houses), and provided a total of 8 high performance wheel loaders (1 per town) including steel wheels for management of solid waste site (for spreading covering and compaction of waste). (b) Water supply and sewerage (SAR: US$41.9 million; ICR: US$50.7 million) Water supply (SAR: US$28.0 million; ICR: US$37.3 million) Overall achievement of this subcomponent was satisfactory. This subcomponent was financed by IDA and KfW. Almost all the above cost variation between appraisal and actual was incurred by KfW financed subcomponent mainly due to additional works performed. Under the IDA Credit, major water supply system rehabilitation and expansion were carried out in the towns of Dodoma, Morogoro and Tabora as follows: a. Morogoro: replacement and reinforcement of km of pipes of diameter 100mm-700mm; Mindu dam spillway channel repairs, rehabilitation of Mafiga treatment plant; installation and rehabilitation of pumps (7 pumps in total); construction of 2 service reservoirs (1100m³ and 450 m³). b. Tabora : Rehabilitation of treatment works at Igombe; high lift pumping station; trunk transmission (12.1 km of diameter 600mm); Water storage tank at Kazeh Hill (2250 m³); 20.3 km of distribution system (diameter mm), replacement of 3 low lift raw water pumps. c. Dodoma: installation of two new pumps at Mzakwe and Maili Mbili booster stations; laying of rising main from Maili Mbili to Nkhungu area and construction of 350m³ storage tank. Under KfW financing major water supply system rehabilitation and expansion were carried out in the towns of Arusha, Moshi Tanga as follows: a. Arusha: Construction of chlorination building at Olgilai spring, construction of trunk main pipeline (3.7km); modification of existing chlorination plant at Sekei Central Station; construction of primary/secondary/tertiary pipelines in the distribution system (57km); rehabilitation of 18 break pressure tanks (BPT) and construction of 1 BPT; modification of inlet pipe system for Themi Hill reservoir; and supply of pipes, fittings and equipment for Nduruma borehole

16 b. Moshi: Rehabilitation and expansion of Nsere and Shiri Springs; construction of trunk main pipeline from Shiri and Nsere Springs (16km); construction of new 2,000m³ storage reservoir and rehabilitation of 3 existing ones; construction of distribution pipelines in town (39km); extension of reticulation systems by constructing 63km of pipeline at Kiboriloni, Msaranga, Kaloleni, Pasua and Rau. c. Tanga: Upgrading of raw water/treatment plant capacities from 26,000 to 40,000m³/day; rehabilitation of 20km of raw water/gravity trunk mains; Refurbishment of Kange (1) and Nguvumali (1) reservoirs; replacement of pumps at Mwakidila and Maweni pumping stations; improvement of distribution system: installation of 665 valves, 3.6km of consumer connections and 23 zone bulk meters, and laying of 11km trunk pipeline to Pongwe and Amboni; extension of distribution system: laying of 118km pipeline extensions and to replace old ones; supply of 5,000 water meters. At closing, all the planned works were completed and being operated satisfactorily. Sewerage (SAR: US$13.9 million; ICR: US$13.4 million) Achievement of the output of this subcomponent was satisfactory. The physical targets were satisfactorily met or exceeded within budget. Under this subcomponent, rehabilitation and new construction of sewerage systems and waste stabilization ponds was achieved in seven project towns - Arusha, Moshi, Tanga, Morogoro, Iringa, Mwanza and Tabora - summarized as follows: a. Arusha: rehabilitation (sludge removal and deepening) and construction of inlet/outlet structures of 5 treatment ponds (8 ha); construction of two new sludge ponds, and 8.75 km sewers and associated manholes; b. Moshi: CCTV survey sewers, laying of 8 km sewers and associated manholes, construction of 9 treatment ponds and 2 sludge ponds (20ha); c. Tanga: construction of 9 km of sewers and associated manholes and 4 (6ha) treatment ponds; d. Morogoro: construction of 9 km of sewers and associated manholes and 4 (6ha) treatment ponds; e. Iriga: construction of 4 (20ha) treatment ponds, two sludge ponds, laying of 19 km of sewers and associated man holes; f. Mwanza: CCTV survey of 10 km sewers; construction of 2.6 km sewers and associated manholes; g. Tabora: CCTV survey of 7.5 km sewers; construction of 1.7 km sewers and 2 km laterals and associated manholes, rehabilitation of oxidization ponds, construction of 4 sludge ponds, and replacement of a sewage pump. At closing all of the above works have been completed and were operating satisfactorily. B. Dar es Salaam Community-based Infrastructure Upgrading and Water Supply (SAR: US$10.8 million; ICR: US$11.1 million)

17 a. Community based Infrastructure Upgrading Program (SAR:US$5.2 million; ICR: US$5.0 million). The achievement of this subcomponent is satisfactory. The subcomponent was implemented by the Dar es Salaam City Council with the participation of and contribution to capital cost by the community. The following were achieved: 6 km of spine roads in Kijitoyama and Tabata (tarmac) against planned target of 6km; sewerage works in Kijitonyama and Tabata: 12.9 km of sewers were constructed against the planned target of 11.1 km; Neighborhood roads in Kijitoyama and Tabata (gravel): 14.5 km was constructed against planned target of 16km. In addition 3 km of flood alleviation drains which were not initially planned were constructed. All the above works were completed and are now operational. b. Dar es Salaam Water Supply (SAR: US$5.6 million; ICR: US$5.9 million) This component has met or exceeded its targets. The subcomponent covered civil works, consulting services, and supply of goods and equipment for sustaining the water supply service in Dar es Salaam, and supporting institutional reform of DAWASA in its transformation to Asset Holding Authority and engaging an international operator through a 10 year lease contract for the operations of the system (which is now being supported by a separate IDA credit). Summary of outputs achieved is as follows: (i) (ii) (iii) Civil works: Under the emergency borehole program a total of 34 boreholes with panel houses and system installation were completed. Rehabilitation of service mains off the Upper and Lower Ruvu transmission mains were undertaken to reduce leakage. In addition, rehabilitation of DAWASA offices at Mwananyamala; repair of Ruvu River breach at Kidogozero and rehabilitation of Boko yard was completed. Goods and Equipment: supply and installation of pumps, water works electro-mechanical spares, ultrasonic water meters and gate valves; supply and installation of 40 submersible borehole pump; supply of office and laboratory equipment; and information technology hardware and software. Consulting Services: TA for financial, engineering and procurement advisory services, design and supervision of the leakage control works, auditing and communication services were provided. C. Institutional Strengthening (SAR: US$23.1 million; ICR: US$29.3) The output of this component is rated as highly satisfactory. The increase in component cost from the appraisal was mainly due to additional training and provision of equipment for solid waste management, and additional domestic consumer water meters. The component consisted of a number of subcomponents aimed at supporting the implementation of the Project, provision of Technical Assistance to MCs and UWSAs, training of MCs and UWSAs staff, and provision of maintenance equipment for roads, water supply and sewerage systems (the cost of equipment constituted 33% of total component costs). Achievements of this component are summarized as follows: a. Support to the implementation of the project: The project established project management and coordination units staffed with skilled officers who provided assistance to the successful implementation of the project. Substantial skills transfer to counterpart staff through established project support Units (PSUs) and Construction Supervision Consultancies (CSCs) has taken place

18 b. Technical Assistance to MCs and UWSAs in all eight project town and the three Dar Municipalities: Over 44,000 properties were valued under this TA. In addition, Road Maintenance Management System (RMMS) (hardware, software and training) was installed in all the eight project towns; Development of a Performance Review and feedback system for MCs; Performance Review of 18 UWSAs; establishment of Computerized Maintenance Management System (CMMS) including hardware, software and training for all the eight UWSAs were financed. The outputs of the TA and support system provided is being used effectively at project closing. c. Training: A total of about 1,508 persons have benefited from the training program under this component, of which 15 were top management, 440 were middle management, 613 technical staff, 32 support staff, 48 union members, 64 councilors, 40 UWSAs Board members, 144 Ward Executives and 112 training of trainers. The training was provided through public and private institutions in the country and the region and has empowered the staff to be effective and respected in their communities for their improved service delivery. d. Provision of maintenance goods and equipment: The municipal councils have been provided with computers, office equipment, vehicles to support O&M and property tax collection, and a package of basic road maintenance equipment. The UWSAs were also provided with computers (including relevant software) and various office equipment, vehicles and packages of essential water supply and sewer maintenance equipment, and a large number of domestic water meters and bulk meters. The equipment was being utilized effectively and had improved the performance of the MCs and UWSAs substantially. D. Future project preparation (SAR: US$2.8 million; ICR: US$1.8 million) The quality of the outputs of studies and preparatory activities was satisfactory. The project has financed three consulting services for preparation of Feasibility Study, Environmental Impact Assessment, and Detailed Design and Preparation of Tender Documents for Water Supply and Sewerage Improvements in the towns of Dodoma, Morogoro, and Tabora. All the three studies have been completed satisfactorily and will be inputs to the planned urban water sector expansion program. The component has also financed the preparation of the IDA funded Tanzania: Local Government Support Program (LGSP), which was appraised and negotiated in September 2004, and approved by the Board on November 30, 2004, and became effective on April 13, Net Present Value/Economic rate of return: An economic evaluation was undertaken for two sub components: (a) urban roads and storm water drainage; and (b) water supply and sewerage works, implemented over 1998 to The economic evaluation covers both the above two sub components individually, as well as together for the entire project. The detailed analysis is in Annex 3 and the findings are summarized as follows. Urban Roads and Storm Water Drainage The Economic Internal Rate of Return (EIRR) of the component is estimated to be 33.0% versus the SAR estimate of 23.9%. The SAR Net Present Value (NPV) of US$12.9 million at a discount rate of 12% is now estimated to be US$55.7 million. The recalculated EIRR and NPV are higher than anticipated at appraisal mainly because of savings in project costs and higher growth in traffic than the SAR projections. The table below summarizes the results and the detailed analysis is in Part I of Annex