Integrated Urban Water and Sanitation ProjectAPPRAISAL REPORT
ed
TABLE OF CONTENTS Currency Equivalents
.........................................................................................................................
i Project Summary
............................................................................................................................
iv Results Based Logical Framework
.................................................................................................
vi I– STRATEGIC THRUST AND RATIONALE
.........................................................................
1
1.1 Project Linkages with Country Strategy and Objectives
...................................................... 1 1.2
Rationale for Bank’s Involvement
.......................................................................................
1 1.3 Donor Coordination
...........................................................................................................
2
II - PROJECT DESCRIPTION
....................................................................................................
3 2.1 Project Objectives and Components
...................................................................................
3 2.2 Technical solution retained and other alternatives explored
............................................... 4 2.3 Project type
........................................................................................................................
5 2.4 Project cost and financing arrangements
............................................................................
5 2.5 Project’s Target Area and Population
................................................................................
7 2.6 Participatory process for project identification, design and
implementation ....................... 7 2.7 Bank Group Experience,
Lessons Reflected in Project Design
............................................ 8 2.8 Key performance
indicators
...............................................................................................
8
III – PROJECT FEASIBILITY
..................................................................................................
9 3.1 Economic Performance
......................................................................................................
9 3.2 Environmental and Social
impacts......................................................................................
9
IV – IMPLEMENTATION
......................................................................................................
11 4.1 Implementation Arrangements
..........................................................................................
11 4.2 Implementation Schedule
..................................................................................................
11 4.3 Procurement Arrangement
...............................................................................................
11 4.4 Financial Management and Disbursement Arrangements
................................................. 12 4.5 Monitoring
.......................................................................................................................
13 4.6 Governance
......................................................................................................................
13 4.7 Sustainability
...................................................................................................................
14 4.8 Risk Management
.............................................................................................................
15 4.9 Knowledge Building
.........................................................................................................
15
V – LEGAL INSTRUMENTS AND AUTHORITY
...................................................................
16 5.1 Legal instruments
.............................................................................................................
16 5.2 Conditions associated with Bank’s intervention
................................................................ 16
5.3 Compliance with Bank Policies
........................................................................................
16
VI – RECOMMENDATION
....................................................................................................
16 Appendix 1: Map of Eswatini showing Manzini Region Appendix 2:
Eswatini’s Comparative Socio-Economic Indicators Appendix 3: Table
of AfDB’s Portfolio in the Country (July 2018)
Appendix 4: Key related projects financed by the Bank and other
development partners in the country Appendix 5: Justification of
Government’s Level of Counterpart Funding Contribution
i
Currency Equivalents August 2018
1 UA = US Dollar (USD) 1.40487 1 UA = Eswatini Lilangeni (SZL)
18.3833
South African Rand (ZAR) 18.3833 1 ZAR = Eswatini Lilangeni (SZL) 1
1 USD = SZL 13.08541
FISCAL YEAR
1st April - 31st March
WEIGHTS AND MEASURES 1metric tonne = 2204 pounds (lbs) 1 kilogramme
(kg) = 2.200 lbs 1 metre (m) = 3.28 feet (ft.) 1 millimetre (mm) =
0.03937 inch (“) 1 kilometre (km) = 0.62 mile 1 hectare (ha) =
2.471 acres
ii
ADF: African Development Fund AfDB: African Development Bank CP:
Cooperating Partner ESAP: Environmental and Social
Assessment Procedures ESEA: Eswatini Environmental
Authority ESIA Environmental and Social
Impact Assessment ESMP Environment and Social
Management Plan EWSC Eswatini Water Services
Corporation GOE Government of the Kingdom
of Eswatini HDI: Human Development Index IMS: Information
Management
System IPR: Implementation Progress and
Results Report IWRM: Integrated Water Resources
Management MDG: Millennium Development
Goal MIC Middle Income Country MNRE: Ministry of Natural
Resources
and Energy MOEPD Ministry of Economic
Planning and Development MOF: Ministry of Finance MOH: Ministry of
Health MOU: Memorandum of
Understanding
NGO: Non-governmental Organization
O&M: Operation and Maintenance PCR: Project Completion Report
PIT: Project Implementation Team PRSP: Poverty Reduction
Strategy
Plan PRSAP: Poverty Reduction Strategy
and Action Program RBCSP: Result Based Country
Strategy Paper RWSS: Rural Water Supply and
Sanitation SACU: Southern Africa Customs
Union SADC: Southern Africa
Development Community SAG: Sector Advisory Group SDG: Sustainable
Development
Goal RMC Regional Member Countries UA: Unit of Account UNICEF:
United Nations Children's
Fund USD: United States of America
Dollar WB: World Bank ZAR: South African Rand
WSS: Water Supply and Sanitation
iv
Project Summary
Project Overview–Manzini region is the most populous region in
Eswatini. The water utility (EWSC) has been faced with a challenge
to provide water supply and sanitation services to unserved areas
in the Manzini Region, in particular the peri-urban areas of
Nhlambeni, Manzini South, Mthongwaneni, and Mafutseni. The purpose
of this Project is to improve the well-being of the inhabitants and
spur economic growth in the Manzini Region through extension of the
provision of adequate safe water supply and improved sanitation
services. The objective of the Project is to meet the potable water
requirements of Manzini and surrounding areas and reduce the risk
of environmental pollution of the groundwater through provision of
appropriate sanitation services. The project is based on
development of more reliable and sustainable water sources in the
area, and promotion of more environmentally friendly solutions for
sanitation. The project is estimated to cost ZAR 807.53 million, to
be financed by the Bank and the Government of the Kingdom of
Eswatini (GOE)/Eswatini Water Services Corporation (EWSC). The
project will be implemented over a period of four years. The
project area has an estimated population of 76,467 (2017), of which
52% are women, projected to grow to a total of 106,172 by 2047. The
project is to expand access to water supply and sanitation services
in the four peri-urban areas of Manzini and promote the development
of the area in line with the national agenda. The project promotes
inclusive growth by providing adequate services to the entire
population, including those living in urban, peri-urban and
adjacent rural areas. It is based on development of more reliable
and sustainable water sources and promotion of more environmentally
friendly solutions for sanitation. While sewerage system will be
developed in the urban area, those in peri-urban and adjacent rural
areas will be equipped with appropriate knowledge to provide for
their own improved sanitation facilities. The project beneficiaries
have participated in the preparation of the project and this
collaboration will continue throughout implementation. Needs
Assessment - The Government of the Kingdom of Eswatini (GoE) is set
to achieve sustainable economic development, social justice and
political stability as enunciated in its Vision 2022 and presented
in the National Development Strategy (NDS 1997-2022) and Poverty
Reduction Strategy Action Programme 2006-2022 (PRSAP). The NDS and
the PRSAP address adverse poverty and envisage universal access to
water supply and sanitation services by the year 2022, ahead of SDG
target dates. The project is part of the national sector portfolio
of activities aimed at improving environmental health and part of
GOE’s priorities to address the required major investments for
rehabilitation and expansion of the water supply and sanitation
services into growing urban and peri-urban areas of major towns. It
is part of the broader effort by Eswatini to achieve the
Sustainable Development Goals (SDGs). Bank’s Added Value - The
Bank’s support will contribute the much needed resources to support
the ongoing Government’s efforts to fulfil its commitments to meet
Vision 2022 and SDGs regarding provision of essential services of
water supply and sanitation. Financing the proposed project will
further consolidate Bank’s position in Eswatini as a partner of
choice for the sector. The proposed project will contribute
significantly to the required sector financing outlined in EWSC’s
Investment Master Plan. The project will build on impacts of a
similar ongoing Bank support and expand services to the peri-urban
areas where most of disadvantaged segment of the population live.
The Bank’s support in the design and preparation of the project
demonstrated its added value in reaching out to its RMCs to attain
universal access to water and sanitation services, and broader
development agenda. The Bank’s continued close involvement, in
particular its Regional Office, RDGS, during implementation will
assist in timely delivery of these much needed water and sanitation
services to the beneficiaries in the deprived area. Bank’s
involvement will further consolidate its continued support for the
sector in the region.
v
Knowledge Management - The knowledge gained in the design and
implementation of several operations, in particular the ongoing
Ezulwini Water Supply and Sanitation Project in Eswatini and other
operations in the region has been taken into account in the design
of this project. In the same pattern, the knowledge that will be
generated by this Project will be instrumental in designing and
managing similar operations in the country and in the region. The
project offers interesting lessons on inclusiveness and extension
of basic water supply and sanitation services to inhabitants in the
peri-urban areas of Manzini. The lessons learnt and experience
gained will be captured during project follow-up at the
implementation stage. These will be documented for dissemination in
workshops, discussions and seminars. These documents will be made
available for analysis and will be shared both within the Bank and
with other development partners as well as RMCs.
vi
Results Based Logical Framework
Country and Project name: Eswatini – Manzini Region Integrated
Water and Sanitation Project. The purpose of the project is to
provide improved water supply and sanitation services to the people
in Manzini Region.
RESULTS CHAIN PERFORMANCE INDICATORS MEANS OF
VERIFICATION RISKS/MITIGATION MEASURES Indicator Baseline
Target
Enhanced quality of life through universal access to improved water
and sanitation sources
Access to improved water supply sources (% pop) 74% (2015) 100%
(2030)
WSS sector M&E report; Water Point Mapping report, JMP Reports,
JMR National Statistics
Access to improved sanitation facilities (% pop) 57% (2015) 100%
(2030)
Under five mortality per 1000 80 (2013) 60 (2030)
Access to safe water supply in project area
Proportion of people using safe and reliable water supply in the
project area (%)
22% (2017) 90% (2022) >52% women
EWSC statistics and Annual Report
Water Point Mapping report
Risk: There is a risk of the Government failing to timely allocate
adequate resources for the sector, especially taking into account
that some of the older systems also require sustained
rehabilitation and upgrading. To minimize the risk, constant
dialogue between the government and development partners including
the Bank will be maintained together with efforts to mobilize
adequate resources. In addition, GoE will be required to make
budgetary allocation for counterpart contribution.
Improved access to sewer in project area
Proportion of people using sewer facilities in the project area (%)
0 % (2017)
25% (2022)
Improved sanitation in project area (VIPs/sceptic tanks/etc)
Proportion of people using improved sanitation facilities in the
project area (%)
35%
>52% women Improved performance of EWSC EWSC's Staff efficiency
ratio:
# Staff/1000 Customers 11 10 (2022)
Component 1: Water Supply Infrastructure
By 2022)
EWSC report, Project progress reports, supervision mission
reports
• Risk: Willingness of consumers to pay increased tariff for
services. A detailed tariff and affordability study, which will
allow for social tariffs, supported by sensitization campaigns will
mitigate such a risk. Water supply systems constructed
Intake works (unit) 0 1 - transmission system (raw and clean water)
57,000m Water treatment plant (capacity) 0 12,000 m3/d Service
Reservoirs (2No.) 0 23,500m3 distribution system 0 100km Metered
connections (No.) 1051 7000 Water kiosks in peri-urban and rural
areas 0 25 • Risk: The project could run the risk of delayed
uptake
of the service connections especially for the sewerage system. In
order to mitigate this risk, connection works will be built into
and carried out as part of the overall sewer laying contract, and
connection charges recovered from sanitation bills. In addition
well-targeted sensitization campaigns together with health and
hygiene education will be carried out to minimize the risk.
Distribution of roller jerrycans to communities 0 100 Component 2:
Sanitation by 2017
Sanitation system constructed
Sewerage reticulation and outfall sewer system built (meters) 0
15,000 Sewage Treatment Plant constructed 0 2,200 m3 Sewer
Connection (no.) 0 500 Public onsite sanitation facilities for
peri-urban areas constructed (gender sensitive)
0
20
Improved Institutional performance of EWSC
Guidelines for mainstreaming gender in water supply and
sanitation
0 Guidelines operationalized
0 15
%of female management staff at EWSC 30% in 2018 40% Water &
Sanitation Communication Strategy 1 Study on Institutional
Transformation
- 1
No. of beneficiaries sensitized on hygiene promotion, HIV/AIDS,
environment, gender and governance (# women)
-
Component 1 : Water Supply Infrastructure Development Component 1:
599,847 Component 2: Sanitation Component 2: 113,674 Component 3:
Institutional Support and Project Management Component 3: 94,007
Total Total 807,528
K E
Y A
C T
IV IT
IE S
Board Approval Publication of GPN Signing Effectiveness Launch
Mission ◊ Consultancy Services for Water Supply* RfP/bidding &
contract award Design, Tender Doc prep and Tendering Supervison of
water supply works Consultancy Services for Sewerage* RfP/bidding
& contract award Design, Tender Doc prep and Tendering
Supervison of water supply works Water Supply Works Bidding &
contract award Implementation Defect Liability Period Sewerage
Works Bidding & contract award Implementation Defect Liability
Period Promotional Sanitation Implementation ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊
◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ Institutional Support Performance
Agreement II Gender and Social Equity Str. Mainstreaming ◊ ◊ ◊ ◊ ◊
◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ Training and Capacity
Building ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊
Sensitization and Promotion ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊
◊ ◊ ◊ ◊ Mid Term Review ◊ Financial Audit (siubmission) ◊ ◊ ◊ ◊ ◊
Project Completion * - Tendering process started with Advance
Contracting procedure.
8 10 10 122 4 6 8 10 12 2022
8 10 12 Activity
6
ESWATINI: MANZINI REGION WATER SUPPLY AND SANITATION PROJECT
IMPLEMENTATION SCHEDULE 2023
2 4 6 8 10 122 4 6 8 12 2 4 6
1
REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE AFDB GROUP TO
THE BOARD OF DIRECTORS ON A PROPOSED LOAN TO THE GOVERNMENT OF THE
KINGDOM OF ESWATINI FOR THE MANZINI REGION WATER SUPPLY AND
SANITATION PROJECT Management submits the following Report and
Recommendation on a proposed AfDB loan of ZAR 719.70 million to
finance the Manzini Region Water Supply and Sanitation Project in
Eswatini.
I– STRATEGIC THRUST AND RATIONALE
1.1 Project Linkages with Country Strategy and Objectives 1.1.1 The
Government of the Kingdom of Eswatini (GoE) is set to achieve
sustainable economic development, social justice and political
stability as enunciated in its Vision 2022 and presented in the
National Development Strategy (NDS 1997-2022) and in Poverty
Reduction Strategy Action Programme 2006-2022 (PRSAP). The NDS and
the PRSAP address adverse poverty and envisage universal access to
water supply and sanitation services by the year 2022, ahead of SDG
target dates. The PRSAP endeavours to reduce inequalities and
disparities amongst the citizens and regions of the country. The
GoE puts emphasis on affording equal opportunity to all citizens
regardless of sex or race to access social and economic services in
order to enhance their development. The proposed project is
conceived within the Vision 2022 of the NDS, specifically within
the macro strategic areas of Human Resources Development,
Industrialization and Environmental Management, and promoting
gender equality in decision making. The project is aligned to the
Environmental Health, Growth and Development pillars of the PRSAP.
The proposed project is in line with the Water Act (2003) and the
draft Water and Sanitation Policies which are expected to be
ratified by first quarter of 2019. The project is part of the
national sector portfolio of activities aimed at improving
environmental health and part of GOE’s priorities to address the
required major investments for rehabilitation and expansion of the
water supply and sanitation services in the fast growing urban and
peri-urban areas of the major towns. It is part of the broader
effort by the Government of Eswatini to achieve the Sustainable
Development Goals (SDGs). 1.1.2 The Bank’s Country Strategy Paper
(2014-2018) is anchored on two pillars: (i) Supporting
Infrastructure Development for Sustainable and Inclusive Growth and
(ii) Strengthening Governance and Institutional Capacity. The
proposed project intervention is anchored on Pillar I as the
provision and improvement of key water and sanitation facilities
will contribute directly to supporting infrastructure development
for sustainable and inclusive growth. The project is also
consistent with the Bank’s Ten Years Strategy (2013-2022) focussing
on the High 5s priorities, mainly on improving quality of life of
people. It also conforms to the Bank's Integrated Water Resources
Management (IWRM) Policy, whose aim is to accelerate access to
improved water supply and sanitation in Africa in a sustainable
way. In addition, the project is in line with the Bank’s Urban
Development Strategy (2011), whose aim is to enhance interventions
in the urban sectors of its regional member countries (RMCs) with
the objective to transform the viability and competitiveness of
African cities to ensure that they perform their role as real
engines of economic growth and social development. The proposed
project also considers gender as integral part of its intervention
and recognizes the role played by women in the sector as emphasized
in the Bank’s Gender Strategy (2014-18) and reiterated in the
Bank’s IWRM policy.
1.2 Rationale for Bank’s Involvement 1.2.1 The Manzini region is
the most populous region in Eswatini and the specific Project
beneficiary areas of Nhlambeni, Manzini South, Mthongwaneni, and
Mafutseni have got a
2
population of 76,467 (2017) and the area is predominantly
peri-urban and rural features with enormous potential for further
development. The water utility (EWSC) has been faced with a
challenge to provide water supply and sanitation services to these
unserved areas in the Manzini Region. Inadequate water and
sanitation services have therefore become a major constraint for
the growth of the area. Water supply in the area is inadequate and
unreliable and most of the residents in the area rely on private
boreholes and in most cases unsafe. In these four areas, only 22%
receive reliable water services from EWSC and the remaining rely on
poorly managed or unsafe borehole and rural systems or use unsafe
surface water. Access to improved sanitation is estimated at 35%
below the national average of 57%. The proposed project is
therefore conceived to expand access to water supply and sanitation
services in the greater Manzini areas in the Manzini region and
promote the development of the area in line with the national
agenda for achieving the Sustainable Development Goals (SDGs). The
project therefore complements other multi-sectoral development
efforts of the GOE and strategic expansion of EWSC services for
universal access. In order to strengthen the policy framework and
synchronise efforts, the GOE prepared new Water, Sanitation and
Hygiene Policies and these are expected to be approved in
2019.
1.2.2 The Bank’s involvement in the water and sanitation sector in
Eswatini is built on its extensive experience in the sector and in
the Region and its comparative advantage in its cumulative wealth
of experience and positive achievements in the implementation of
water projects in the Region. The Bank has got ongoing operations
in Eswatini in the water and sanitation sector: Ezulwini Water
Supply and Sanitation Project and Mbabane-Manzini corridor (Nondvo
dam) study. The Bank’s support will contribute the much needed
resources to support the ongoing Government’s efforts to fulfil its
commitments to meet Vision 2022 and SDGs regarding provision of
essential services of water supply and sanitation. The proposed
project will further consolidate the Bank’s position in Eswatini as
a partner of choice for the sector. It will contribute
significantly to the required sector financing outlined in EWSC’s
Investment Master Plan, and will build on impacts of the ongoing
Bank interventions and further expand services to the Peri-urban
areas where most of disadvantaged segment of the population
live.
1.3 Donor Coordination 1.3.1 Eswatini receives external development
funding from different development partners. There are two levels
of donor coordination, namely national and sector level donor
coordination. National level coordination is led by the Ministry of
Economic Planning and Development and Ministry of Finance. Major
donors are the US Government (in health), the EU (in agriculture,
water and capacity building), Kuwait Fund, and Arab Fund for
Development. The AfDB played a key role in galvanizing donor
support for reforms in Eswatini. With the Bank support, the
capacity of the Aid Coordination and Monitoring Section (ACMS) in
the Ministry of Economic Planning and Development was strengthened
to enhance its capacity to coordinate development assistance and
ensure country ownership. At sector level, Eswatini receives funds
from several development partners including non-governmental
organisations in the water and sanitation sector. The sector
working group has developed a WASH Forum through which sector
dialogue is held, as a forum for collaboration and to co-ordinate
activities in the sector among the key stakeholders. Such forums
and annual joint sector reviews have been held regularly since
2016. During the fiscal year 2017/18, the total volume of Overseas
Development Assistance (ODA) flows into Eswatini was about USD180
million, of which less than 10% was for water and sanitation
sector. The development partners active in the sector include
European Union, Taiwan Government, United States Government, UNICEF
and several NGOs. It is to be noted that the Bank is one of the
main supporters of the water sector in Eswatini. Currently it is
supporting the GoE/EWSC in the implementation of Ezulwini Water
Supply and Sanitation Project (US$ 23 million) and Mbabane Manzini
Corridor (Nondvo dam) Study using MIC TAFGrant and AWF Grant. These
projects are
3
expected to be completed by end of December 2019. The Bank
continues to maintain close working relationships with the
cooperating partners through dialogue and consultations during
missions and other platforms. In addition, the Bank and the EIB/EU
will continue collaboration and synergy in the sector in the
preparation and implementation of the Nondvo dam study.
Table 1: Development Partners’ Support
Sector or subsector Size GDP Exports Labor Force
Water and Sanitation 1%*
Government Donors
China (Taiwan) 1.0% EU 24.7%
UNDP &UNCEF 0.5%
Level of Donor Coordination Existence of Thematic Working Groups
Yes
Existence of SWAPs or Integrated Sector Approaches Yes, in Progress
for Rural
AfDB's Involvement in donor coordination*** Yes, M
II - PROJECT DESCRIPTION
2.1 Project Objectives and Components
2.1.1 The water and sanitation sector goal is to provide adequate
water and sanitation services to all citizens and to contribute to
economic development and poverty alleviation. In this regard, the
GoE aims at achieving universal (100%) access to water supply and
improved sanitation services by the year 2030 (SDG target). 2.1.2
The Manzini region is the most populous region in Eswatini. The
water utility (EWSC) has been faced with a challenge to provide
water supply and sanitation services to unserved areas in the
Manzini Region covering portions of Nhlambeni, Manzini South,
Mthongwaneni, and Mafutseni. The purpose of the proposed project is
to provide sustainable water supply and sanitation services to
support the national agenda and is in line with the strategic
direction of EWSC. The purpose of this Project is to improve the
well-being of the inhabitants and spur economic growth in the
Manzini Region through the provision of adequate safe water supply
and improved sanitation services.
2.1.3 The specific Project objective is to meet the potable water
requirements of Manzini and surrounding areas and reducing the risk
of environmental pollution of the groundwater through provision of
appropriate sanitation services. The project will increase access
and use of improved water supply and sanitation services to the
residents of Manzini Region. In addition, the project will support
EWSC to strengthen its institutional performance through pertinent
capacity building interventions. The project will also support EWSC
to strengthen its policy and implementation of crosscutting issues
including gender mainstreaming as part of the utility’s Corporate
Social Responsibility. The project will comprise the following
three components: (i) Water Infrastructure Development; (ii)
Sanitation and Hygiene Improvement; and (iii) Institutional
Capacity Building and Project Management. Table 2.1 below provides
a summary of components and outputs, with more details provided in
Annex B2.
4
name Est. Cost
(’000 ZAR) Details
1 Water Supply Infrastructure
599,847 x Construction of an intake structure on Lusushwana river
to abstract raw water using a low flow gauging weir;
x Installation of 400 mm diameter raw water gravity main to a
treatment plant;
x Construction of conventional water treatment plant with a
capacity of 12ML/day near Matsapha;
x Installation of low lift pumps to transfer raw water to WTP x
Installation of high lift pumping station on clear water well
at
WTP x Installation of 8.1km of 500 mm pumping mains from the
high
lift pumping station at the WTP to the service reservoirs at
Mhlaleni;
x Construct 2 treated water service reservoirs of size 8.5ML at
Mhlaleni and the other sized 15ML at Hhelehhele
x Installation of 13km of 500mm gravity main from Mhlaleni
reservoir to Hhelehhele reservoir;
x Installation of 36km of gravity mains of 400mm from the two
reservoirs to the distribution areas in Sidvokodvo and Ngculwini
areas;
x 100km of reticulation x 6000 connections and 25 communal
Kiosks
2 Sanitation 113,674 x Construction of a waste water treatment
plants in Sidvokodvo area with capacity of 2.2ML/d
x Construction of 15km of sewer collector system with diameters
ranging from 160mm to 355mm.
x A total of 370 sewer property connections. x Provision of
demonstration latrines where the poor live i.e. in
the rural and peri-urban areas, x No. 15 Public improved sanitation
facilities and
facilitate/support to construct 6144 household sanitation
facilities
x Conduct public awareness campaigns and carryout health and
hygiene education for the communities and schools in the project
area.
3 Institutional Support and Project Management
94,007 In-house training to address crosscutting issues (gender and
governance, environment and well as HIV/AIDS), procurement, project
management and financial management;
sensitization and public awareness campaign (on water and
sanitation, gender, environmental and social issues),
Institutional support (covering strategic planning and performance
management, and E&S).
Environmental and Social Management Plan (ESMP), and the
Abbreviated Resettlement Action Plan (ARAP) implementation;
Training and capacity building; On the job training of the EWSC
staff, and internship program (especially to encourage female
interns);
Project management comprising engineering services for design and
supervision, and support to Project Implementation Team.
Total 807,528
2.2 Technical solution retained and other alternatives
explored
2.2.1 The water system in Manzini gets its treated water from a
treatment plant at Matsapha with a capacity of 34ML per day. This
water is supplied to Manzini and Matsapha towns as well as
surrounding areas. Only 22% of the people living in the four
project beneficiary areas (Nhlambeni,
5
Manzini South, Mthongwaneni, and Mafutseni) receive services from
the system. Further expansion of the system was not possible due to
the limited water production and demand exceeding supply by almost
50%. It was therefore imperative that the expansion is accompanied
with abstraction and treatment facilities. The rationale for the
chosen alternative to construct a new water treatment facility and
expand the network was based on: (i) availability of surface water
from the Lusushwana river throughout the year due to the presence
of a hydroelectric dam up-stream which releases regulated water;
(ii) expanding existing treatment plant at Matsapha is not possible
due to limitation of land; and (iii) no good quality of ground
water exists in the area – salinity and metals presence. The
foregoing factors have informed the development of the proposed
scheme with a treatment capacity of 12ML per day, transmission,
storage and distribution infrastructure. The project will have
provisions for both individual connections as well as communal
water kiosks to cater the needs of all segments of the
population.
2.2.2 With regards to sanitation, the project will focus on hygiene
and sanitation promotion and marketing. This is expected to create
demand as opposed to the supply driven approach. The focus will be
on onsite sanitation as appropriate in the context of development
of the areas. The water borne sewerage system is chosen for only
limited areas in light of the development of the settlement. EWSC
will provide technical as well as critical material assistance for
the construction of household latrines following the sensitization
and awareness campaigns to the disadvantaged and vulnerable groups.
Furthermore, public facilities will be built in communal areas and
schools in the project beneficiary areas. Table 2.2 below presents
technical options, which were analysed as part of finding the
optimal solution to address the challenge being faced by Manzini
Region.
Table 2.2: Project alternatives considered and reasons for
rejection
Alternative name Brief Description Reasons for Rejection
Abstracting Ground Water
Instead of expanding the Manzini water system, the alternative is
to improve the existing boreholes and drill more communal
boreholes
Water from the boreholes in these areas is known to be saline and
presence of heavy metals. An overwhelming expression of interest by
the people for the expansion of piped water system by EWSC as
integrating the area in the urban system is seen removing
inequality in services.
Expansion of the Existing system
This alternative is to expand the existing 34ML plant at Matsapha
and expand the system
Water production from the current treatment plant is not sufficient
for expanding the system and expanding the treatment plant itself
is not possible due to due limitation of space and settlements
around the facility
Sewerage System Provision of water borne sewerage system with a
treatment facility for the sewage
This option is not feasible in the four areas generally, as it will
be expensive to service the area due to the nature of the
settlement. This option is only adopted partially for a specific
location at Sidvokodvo (railway station).
2.3 Project type
2.3.1 The project is part of the Government’s priority investment
operation and will be implemented as a stand-alone investment
project by the water utility – EWSC.
2.4 Project cost and financing arrangements
2.4.1 The estimated total cost of the project is ZAR 807.528
million (UA 43,93 million), net of taxes and duties, of which ZAR
523.95 million (65%) is in foreign currency and ZAR 283.58 million
(35%) in local costs. Table 2.3 below provides a summary of the
project costs by
6
component. These costs are derived from available studies on the
project with details of unit rates derived from experience with
similar ongoing projects in the country and region. The estimates
include physical contingency of 10% and price contingency of 3% per
annum.
Table 2.3: Project cost estimates by component [‘000 ZAR]
2.4.2 The Project will be financed by AfDB and GoE as shown in the
financing plan presented in Table 2.4 below. The total Bank Group
financing is ZAR 719.698 million. The AFDB funds will be used to
finance part of all three components of the project. GOE/EWSC will
finance the balance ZAR 87.83 million covering local costs of the
total project of component 2 and 3 of the project. Details of AfDB
financing are provided in Annex B2. The Bank appraisal mission
discussed and agreed with the relevant Ministries on the above
financing and the proposed conditions stated in Section V of this
document. GoE/EWSC contribution shall also include contributions in
kind.
Table 2.4: Sources of financing [‘000 ZAR] Source Total %
AfDB 719,698 89.1% GoE/EWSC 87,830 10.9%
Total 807,528 100.0%
Table 2.5: Project cost by category of expenditure [‘000 ZAR]
Table 2.6: Expenditure schedule by component [‘000 ZAR]
Components Foreign Local Total % Foreign Exchange
Water Supply Infrastructure 368,595 139,050 507,644 72.6 Sanitation
43,990 52,210 96,200 45.7 Institutional Support and Project
Management 30,973 48,588 79,561 38.9
Total Base Costs 443,557 239,848 683,405 64.9 Physical Contingency
(10%) 44,356 23,985 68,341 64.9 Price contingency (3% per
annum)36,033 19,749 55,782 64.6
Grand Total 523,946 283,582 807,528 64.9
Category Total % Works 553,844 81.0 Services 41,761 6.1
Miscellaneus 87,800 12.8 Total Base Costs 683,405 100.0 Physical
Contingency 68,341 Price contingency 55,782 Total 807,528
Components 2019 2020 2021 2022 Total Water Supply 101,529 203,058
101,529 101,529 507,644 Sanitation 20,420 30,980 22,400 22,400
96,200 Institutional Support and Project Management 26,154 17,802
17,802 17,802 79,561 Sub-Total 148,103 251,840 141,731 141,731
683,405 Physical Contingency 14,810 25,184 14,173 14,173 68,341
Price Contingency 4,887 16,871 14,457 19,567 55,782 Total 167,801
293,895 170,361 175,471 807,528
7
2.5 Project’s Target Area and Population
2.5.1 The project will focus on the expansion of water supply
system and improvement of sanitation infrastructure and hygiene
practices in the Manzini Region, which is the most populous region
in Eswatini. The project will support in expanding water and
sanitation services to the unserved areas in the peri-urban areas
of Manizini, in particular four Tinkhundlas (Administrative
Districts) which include the following communities: Mtfongwaneni,
Mafutseni, Manzini South, Nhlambeni. The project area has an
estimated population of 76,467 (2017), which will benefit upon
completion of the project.The proposed project is conceived to
expand access to water supply and sanitation services in Manzini
region and promote the development of the area in line with the
national agenda and strategic expansion of EWSC services. 2.5.2 It
is expected that about 52% of the beneficiaries will be female and
they will be the most to benefit from it. The provision of potable
water supply and decent sanitation will spur socio economic
development and help people live dignified lives and be healthy. On
top of the productivity gains through reduction in time spent for
collection of water, reduced sickness time and reduced burden on
health care, and ripple effects of sustainable service provision,
the project will create more than 300 temporary jobs during the
construction phase and this will indirectly benefit businesses and
other service providers in the area and 15 permanent jobs during
the operation of the scheme. Furthermore, all of the Kiosk
operators will be women (two for each of 25 kiosks) and will
receive basic training in managing kiosks including basic
numeracy/accounting. EWSC, the utility will also benefit from the
project through the institutional support in the form of staff
training provided under the project.
2.6 Participatory process for project identification, design and
implementation
2.6.1 The preparation of the project involved extensive
consultations with various stakeholders, including project
beneficiaries, line ministries, District Council, DPs and private
businesses, which started from early June 2016 at the early stage
of the project conception to ensure that the main beneficiaries
including water consumers and the general public were kept informed
of the proposed development. Further consultations and data
collection were conducted to discuss the challenges and inform the
proposed solutions and various alternatives considered. The
objectives of the consultations were to raise awareness on the
project and to highlight other issues such as the grievance redress
mechanism, confirmation of the implementation arrangements and
institutional framework for environmental and social issues
management. The consultations continued during feasibility
preparation (2016/7), Environmental and Social Reconnaissance
Survey (2017) and the Bank’s project preparation and appraisal
missions (2018). 2.6.2 A cross section of stakeholders and affected
communities: women, men, youth, and people with special needs were
also consulted and their views integrated into the project design.
Some of the views expressed during consultations included (i) deep
appreciation for a reliable water supply for all people in the area
(ii) need for beneficiaries to be involved in the project
preparation and implementation (iii) affordability of services (iv)
need for consultations especially women when determining the
location and running of water kiosks. Some of the major outcomes of
these consultations helped to promote more inclusiveness, including
the need for careful planning of extension of services with full
involvement of the beneficiaries in the process. Water kiosks will
also be constructed for those without house connections and
promotional sanitation facilities provided in areas that are not
covered by the sewerage system. Another major outcome of the
consultations is the overriding need to ensure that vulnerable
households, including neighbourhood care points would be supported.
Through consultations and presentations, the relevant Government
bodies and ministries (Ministry of Health, Department of Gender
Affairs, Eswatini Environment Authority, Department of Water
Affairs, Ministry of Natural Resources and Energy) were kept
closely informed of the findings and progress of the studies. The
ESMP and ESIA processes also
8
have a legislative requirement to consult all stakeholders which
include public and private institutions, CSOs, NGOs, the community
and any other interested and affected parties. Close beneficiary
participation will continue during implementation.
2.7 Bank Group Experience, Lessons Reflected in Project
Design
2.7.1 The Bank’s current (July 2018) active portfolio in Eswatini
comprises of ten operations in five sectors with a total commitment
of UA 115.7 million with an overall disbursement rate of 25 %. The
overall performance of the country’s portfolio in July 2018 was
rated as satisfactory with implementation objectives and
development outcomes scores of 3.3 and 3.4 respectively. In the
water sector, the Bank is currently financing implementation of
Ezulwini Water Supply and Sanitation Project (US$ 23 million) and
Mbabane Manzini Corridor (Nondvo dam) Study with satisfactory
implementation progress, and expected to be completed by end of
2019. Key lessons learnt from the on-going projects under
implementation in Eswatini as well as lessons reflected in PCRs
elsewhere have been taken into account in formulating the project.
Some of the key lessons included: (i) Removing inequality in
service provision between the urban and peri-urban is critical
for
inclusive development and opening up new opportunities. In this
regard the project main focus is service provision in the
peri-urban areas with flexible designs for individual connections
as well as communal kiosks;
(ii) The use of country structures ensures seamless coordination
and builds sustainable capacity in the institutions. The project
will be implemented through existing structures within EWSC thereby
creating the capacity for implementing more projects;
(iii) While sustained hygiene promotion and sanitation marketing
will bring desirable behavioural
changes and construction of improved sanitation facilities, there
will still be disadvantaged and vulnerable groups of the society
who require targeted support. In this regard EWSC will provide
technical assistance and critical materials for construction of
household sanitation facilities and will fully finance public
facilities in schools and at communal locations.
2.8 Key performance indicators
2.8.1 The project will be monitored using Key Performance
Indicators (KPIs) reflected in the Project’s Results Based Matrix
which are in-line with the Bank’s Core Sector Indicators (CSIs) and
the national sector M&E framework. The project’s Result Based
Matrix reflects the KPI of the project at input, output, outcome
and impact levels. At impact level these include advancement
towards universal water and sanitation coverage at national level.
The outcome objectives will be measured through monitoring access
to potable water and number of service connections within the
project area. For sanitation, this will be measured through
proportion of people using improved sanitation facilities and
number of connections made to the sewerage network. The output of
the project will mainly be measured through production capacity for
treated water and volume of wastewater removed and treated, key
facilities constructed, and trainings and capacity built
(disaggregated by gender). EWSC through the Project Implementation
Team (PIT) will monitor and report the project’s achievements
against the identified performance indicators. The PIT/EWSC will
undertake a validation exercise at commencement of the project and
project closure to collect end-line data. The project
implementation schedule and procurement plan will also be
monitoring tools for activities leading towards outputs.
9
3.1 Economic Performance Table 3.1: Key Economic Figures
EIRR 16.7% and NPV Lilangeni (SZL) 234.53 million (at 12% base
case) NB: detailed calculations are available in Annex B7 3.1.1 The
economic analysis of the project has been undertaken by comparing
“with project” and “without project” of the various costs and
benefits that will accrue to the beneficiaries of the improved
water supply and sanitation services in Manzini and surrounding
areas. The proposed project will promote environmental health,
which will enhance the quality of livelihood and well- being of the
beneficiary population. The economic returns are measured in terms
of the benefits which accrue to beneficiaries in the form of
regular and adequate drinking water supply, improved sanitation
services, and a general improvement in living conditions. The costs
side includes capital investments, periodic replacement costs, and
incremental operating and maintenance costs. All costs and benefits
are considered net of duties and taxes. In addition, the economic
life of the investment is estimated at 25 years. The project’s
economic rate of return is estimated at 16.7%. The value is higher
than the opportunity cost of capital of 12% and thus the project is
considered economically viable. Sensitivity analysis to test the
robustness of the EIRR was carried out to determine the impact of
adverse variations. The EIRR changes to 14.0% assuming that
investment cost increases by 20%, and changes to 13.1% assuming
that the benefits of the project are decreased by 20%. The analysis
shows that the project is economically viable and socially
beneficial for Eswatini. Annex B7 shows the assumptions and the
calculations of the EIRR. 3.2 Environmental and Social impacts
3.2.1 The Project was validated as a Category 2 on 06 July 2018 in
line with the AfDB’s Integrated Safeguards System (ISS) and
Environmental and Social Assessment Procedures (ESAP) due to
localized and temporal nature of the environmental impacts
associated with it, which can be mitigated through the
implementation of an environmental and social management plan. The
provision of improved water supply and sanitation services will
create an enabling environment for improved economic and social
development, such as the reduction of water borne diseases and
creation of employment opportunities. Negative impacts pertain
mainly to the construction phase, including clearance resulting in
disturbances and loss of fauna and flora, as well as impacts during
the operation phase including sludge production, leaks and spills
of wastewater leading to possible groundwater pollution, damage to
natural habitats as well as public health hazards. All impacts will
be mitigated as per the Environmental and Social Management Plan
(ESMP) developed in accordance with national and AfDB requirements.
Costs associated with ESMP implementation have been reflected in
the overall Project costs.
3.2.2 The majority of water and wastewater pipelines and
infrastructure will primarily run along existing servitudes and/or
be located on public Swazi Nation Land (SNL) with no need to
relocate people during or after project implementation. However,
access to private properties and displacement of economic
activities will be required. It is expected that an estimated 31
farms will require compensation for land slated to be the location
of the new wastewater treatment plant, thus requiring an
Abbreviated Resettlement Action Plan (ARAP) developed in accordance
with national and AfDB requirements. Any additional economic and/or
physical displacements identified as a result of final project
design or change in scope are to be reflected in a revised ARAP.
Costs associated with ARAP implementation are to be borne by the
project proponent and proof of compensation to affected parties to
be submitted to the Bank prior to commencement of any civil
works.
10
3.2.3 The ESMP and ARAP summaries have been disclosed on the Bank’s
website and Public Information Centre on 23 and 24 October 2018,
respectively.
Climate Change 3.2.4 The Project has been classified as Category 2
in terms of Climate Risk in accordance with the Bank’s Climate
Safeguards System. On climate change, the Project will deliver
adaptation benefits in relation to water resources management that
is sustainable in the face of climate change impacts, particularly
given the threat of significant water stress facing the country as
a result of high inter-annual rainfall variability in both dry and
wet years and expected decrease in annual run-off volumes on the
one hand, and increasing demand projects on the other. Provision of
safe and reliable water is therefore intended to alleviate the
impacts of climate change on the receiving population.
Gender 3.2.5 According to UNICEF data estimates, 40 % of rural
population does not have access to basic water services and rely on
unimproved, unreliable and surface water sources. Women in Eswatini
like in other countries face particular challenges regarding access
to water being the ones responsible for household water provision.
Women consulted during appraisal indicated that collection of water
takes up to 2 hours per trip. This time increased during dry
seasons when they have to dig out riverbeds for water. The lack of
safe, separate and private sanitation and washing facilities in
schools is one of the main factors preventing girls from attending
school, particularly when menstruating. UNICEF estimates that only
58 % of the population in both rural and urban areas have access to
safe sanitation facilities. At one school visited during appraisal,
teachers reported of recurrent school closures due to irregular
water supply 3.2.6 The project has been classified as a category
two according to the Bank’s Gender Marker System. The project will
increase access to household water supply in project areas. The
project will also reduce distances and time spent to water sources
by women thus releasing their time to undertake productive
activities and schooling for girls. Water supply in schools in the
target area will contribute to quality of education reducing school
closures, and improved hygiene and sanitation. In addition to the
benefit of water supply to homes, the following interventions will
be implemented to strengthen gender mainstreaming: (i)
Sensitization in schools and communities on hygiene and sanitation,
(ii) to address affordability of water for poor households,
twenty-five water kiosks will be constructed in densely populated
areas without private connections. The distribution of the kiosks
will be determined through consultations with communities. The
kiosks will be operated by women, therefore providing an enterprise
opportunity. The design of the kiosks will be appropriate for use
by women and children, and will include washing troughs for
laundry. EWSC will provide water to kiosk operators at an
affordable set price, (charged on the public connection rate),
regardless of consumption. (iii) Distribution of roller jerrycans
to communities surrounding the water kiosks to ease the
transportation of water. (iv) A target of 50% jobs for women of the
approximately 300 jobs to be created during construction period and
(v) Community sensitization on gender, hygiene and sanitation will
be undertaken.
3.2.7 Under the on-going Bank financed Ezulwini water and
sanitation project, EWSC developed a gender and social equity
strategy. The strategy seeks to mainstream gender internally at
EWSC with a focus on employment and workplace equity. EWSC
currently employs 90 women, who represent 17% of the workforce.
Women currently occupy 30% of EWSC’s managerial positions. While
some notable results have been achieved the number of female staff
working at EWSC still remains below national targets. Under this
project, EWSC will continue to implement the gender strategy as
follows; (i) Development of guidelines for gender mainstreaming in
water supply and
11
Involuntary resettlement 3.2.8 No Involuntary resettlement will
arise as a result of this project.
IV – IMPLEMENTATION
4.1 Implementation Arrangements 4.1.1 The implementation of the
Project will use existing institutional arrangements. The Ministry
of Finance (MoF) of the GOE shall be the borrower of the AfDB loan,
while the EWSC will be the Executing Agency (EA) of the Project.
The MoF will pass the resources to the EWSC through a subsidiary
financing agreement on terms and conditions acceptable to the Bank.
The overall coordination of the project and reporting obligations
to GOE and the Bank will be the responsibility of EWSC. EWSC has
implemented projects of similar size and has the experience and
capacity to implement the Project. The Executing Agency will be
responsible for the procurement, financial management, monitoring
and reporting and overall project management functions. An
internally constituted Project Implementation Team (PIT),
comprising a Project Coordinator who is a Water Supply and
Sanitation Engineer, Water Supply Engineer, Procurement/Contracts
Management specialist, Environmental and Social Specialist (with
knowledge of current gender issues), and an Accountant will be
responsible for the implementation of the Project. EWSC has an
internal mechanism in place for ensuring implementation,
supervision and reporting of the ESMP. In addition, both the
consultants and the contractors will have environmentalist experts
on board who will be supervised by the EWSC’s environmentalist, and
by the social expert and community liaison officer. The PIT shall
also oversee the implementation of the gender strategy,
implementation of the crosscutting issues and awareness raising,
promotional sanitation, and Hygiene Education sub- components in
the peri-urban areas using the existing institutional
structures.
4.2 Implementation Schedule 4.2.1 The project will be implemented
over a period of 48 months from January 2019 after the signing of
the loan agreements. Implementation of the major works will
commence during the third quarter of 2019 and Mid Term Review (MTR)
will be conducted in the fourth quarter of 2020. The expected
physical completion of the project is by 31st December 2022.
4.3 Procurement Arrangement 4.3.1 The Country’s procurement regime
is governed by the Public Procurement Act, 2011 (PPA 2011). The PPA
2011 is broadly consistent with international standards and best
practices in procurement. However, the Regulations and National
Standard Bidding Documents (SBDs) to accompany the Act are not
approved yet. Consequently, procurement of Works and Consulting
Services, under the Project, will be carried out in accordance with
the Bank’s Procurement Framework for Bank Group-Funded Operations,
dated October 2015, using Bank’s Procurement Methods and Procedures
(PMP). 4.3.2 A Procurement Risk and Capacity Assessment (PRCA) was
undertaken to (i) evaluate the risks associated with the borrower
procurement system, the sector capacity which includes the capacity
of the local industry, the project complexity and design, and the
procurement capacity of the Executing Agency; (ii) set up risk
mitigation to be exercised by the Bank and the Borrower; and (iii)
form a judgment on the adequacy of procurement methods and
procedures, as well as controls
12
being used by the Borrower in the use of funds and contract
management. The detailed PRCA is outlined in the Technical Annexes.
4.3.3 In order to accelerate implementation of the project, the
Bank has approved GoE’s application for advance contracting and
retroactive financing for the procurement of (i) engineering
services for design, tendering and supervision for water supply
works and (ii) engineering services for design, tendering and
supervision for wastewater works in line with the Procurement
Framework The procurement procedures shall be in accordance with
the Procurement Framework in order for the eventual contract(s) to
be eligible for Bank Financing, and the Bank shall review and
provide guidance the process used by the Borrower. The Borrower
undertakes such advance contracting and retroactive Financing at
its own risk, and any concurrence by the Bank with the procedures,
documentation, or proposal for award(s) does not commit the Bank to
provide Financing of the project. If the contract(s) is/are signed,
reimbursement by the Bank of any payments made by the Borrower
under such a contract signed prior to signature of the Financing
Agreement is only permitted within the limits specified in the
Financing Agreement. 4.4 Financial Management and Disbursement
Arrangements Financial Management 4.4.1 The overall conclusion of
the FM assessment is that EWSC’s capacity to handle the FM aspects
of the project satisfies the Bank’s minimum requirements as per the
Bank FM guidelines. The Agency has handled Bank-funded (Ezulwini
Sustainable Water and Sanitation Service Delivery) and the
performance has been found generally satisfactory. The agency is
generally adequately staffed. The agency utilizes a functional
computerized accounting system (Accpac) to record and process
transactions and prepare reports. The reports have been prepared on
a timely manner and audit reports submitted to the Bank within the
stipulated requirements. No material instances of internal control
failures were noted during the previous audit an indication of a
strong internal control environment. The control environment from
budget preparation, execution, monitoring and reporting were found
to be adequate. In that regard, the Bank will make uscoe of the
existing systems within EWSC (while closely monitoring and
providing assistance as required) under the overall responsibility
of the Director, finance department, to handle the project’s FM
including accounting for the project resources and submitting the
required financial reports to the Bank. The project accountant
assigned from the agency will handle day to day financial
management of the project and will be part of the Project
Implementation Team (PIT). In accordance with the Bank’s financial
reporting and auditing requirements, the project will be required
to prepare and submit to the Bank, Interim Financial Reports (IFRs)
as part of the Interim Quarterly Progress Report (IQPR) no later
than 45 days after the end of each quarter. In addition, the
project will be required to prepare separate project annual
financial statements which will form the entry point for external
audit due diligence. The overall FM risk for the project is
assessed as Moderate (Details in Annex to the PAR B4) 4.4.2
Disbursement arrangements: Disbursement from the AfDB resources for
the development of water supply infrastructure and sewerage system
as well as associated engineering consulting services shall be
through Direct Payment method. Other disbursement procedures
(especially reimbursement method of disbursement) could also be
used if necessary. The entire disbursement process will be in
accordance with Bank Disbursement rules as contained in the
Disbursement Handbook (2012). The Bank will issue a Disbursement
Letter and its contents will be discussed and agreed with the
borrower during negotiations. Detailed FM and disbursement
arrangements are also included in the Technical Annex B.4.
13
4.4.3 Auditing Arrangements: The executing agency (EWSC) has been
audited by a private auditor. No major issues were noted in the
previous audit. The ongoing Bank-funded project’s audit has been
done by the EWSC corporate external auditors. The audit reports for
the ongoing project have been submitted to the Bank annually on a
timely manner. In line with the current practice, the proposed
project will be audited by the EWSC corporate auditors. Therefore
the audit cost will be borne by EWSC as part of counterpart
contribution. The annual audited financial statements including the
auditor’s opinion and management letter will be submitted to the
Bank not later than six months after the end of each fiscal year.
The detailed auditing arrangements are included in the Technical
Annex B.6.
4.5 Monitoring 4.5.1 The Executing Agency (EWSC) will be
responsible for the overall monitoring and supervision of the
Project activities including ESMP implementation. It will produce
monthly, quarterly and annual progress reports on the status of the
various project activities, financial and procurement status, asset
management, stakeholder participation, safeguard, risks and
mitigation measures and the progress towards meeting the project’s
targets as reflected in the project result- based logical
framework. Besides submission of the reports to the Bank, the
reports will also be shared with the relevant government’s bodies,
especially the Ministry of Natural Resources and Energy and the
Ministry of Economic Planning and Development, so that the results
can feed into the country’s National Data System. The project
mid-term review will enable EWSC, the Government and the Bank to
re-examine the implementation arrangements and further strengthen
the system if necessary. Once the project approaches substantial
completion, a completion report will be prepared by EWSC that
includes details of project implementation, financial management,
procurement, asset, safeguard and measures of the achievements of
the project against the indicators in the log frame. The project
completion report will also provide lessons learnt for future
operations. All reports will be prepared and submitted according to
the Bank’s requirements. The data will be entered into the
Implementation Progress and Results Report (IPR) in timely manner.
4.5.2 The Bank shall also conduct regular project monitoring
through supervision missions. The project implementation schedule
is presented in Annex A1. A summary of the main milestones is
presented below:
Table 4.1 : Key Project Milestones
Timeframe Milestone Monitoring Process/feedback loop October 2018
Request for Proposals
(Advance Procurement) RfPs approved and issued to firms
October 2018 Loan Negotiations Loan Negotiations with GoE/EWSC
November 2018 Board Approval Financing Approval March 2019 Signing
of Agreements Financing agreements signed April 2019 Effectiveness
for first
disbursement Declared effective by the Bank
April 2019 Launching Launching workshop organised July 2019 Works
commencement First works contract signed December 2020 Mid Term
Review Mid Term Review conducted December 2022 Completion of
Project Commissioning and project completion report
4.6 Governance 4.6.1 The executing agency, EWSC, was established in
1992 with the sole right and obligation to provide water services
in urban and peri-urban areas in Eswatini. The Corporation is a
public enterprise mandated by the Water Services Corporation Act
No.12 of 1992 to provide water and sanitation services in its
mandated areas. EWSC is regulated by the Government of Eswatini
(GOE) through the Ministry of Natural Resources and Energy (MNRE)
and the Public Enterprises Unit
14
(PEU) under the Ministry of Finance. The Corporation is committed
to complying with best practices of corporate governance as
prescribed by King IV and other international codes of conduct.
EWSC complies with the requirements of the Public Enterprises
(Control and Monitoring) Act No. 8 of 1989 and the Water Services
Act No. 12 of 1992. In order to enhance the corporate performance
and governance aspects of all parastatals in the Country, GOE uses
performance agreements with the utilities. In this regard,
preparation of the fourth five year PA covering the period 2019 to
2023 is in progress. The borrower will submit evidence of signed
fourth performance agreement with EWSC and this will be one of the
conditions of the AfDB financing agreement. In October 2017 the
Government promulgated a new PFM Act to enhance efforts to align
and comply with the international standards, ensure fiscal
discipline, increase efficiency and ensure accountability in all
Public Enterprises. 4.6.2 The Project implementation shall fall
within the ambit of EWSC’s existing Governance structures. A tender
committee exist to among others oversee implementation of capital
projects, and the project shall fall in this category. Procurement
for Bank financed components shall follow the Bank’s procedures and
rules, which in part, will ensure fairness and transparency in the
procurement process. The PIT will also include an expert with
adequate experience in procurement and contract management.
Furthermore, two internationally recognized engineering firms will
be recruited, as part of the project, to assist with procurement
and then supervise the construction works. These shall reinforce
transparency and accountability during tendering and award of
contracts. The Bank through RDGS shall also closely monitor the
procurement activities under the project and shall provide
assistance whenever necessary.
4.7 Sustainability 4.7.1 The Government’s commitment to the
development of the water and sanitation sector in the country is
demonstrated by its inclusion as one of the key sectors targeted
for increased support under the country’s NDS/PRSAP. GOE also
encourages full ownership and participation by the beneficiaries in
the provision of the services, taking into account gender
sensitivity and environmental & social safeguard in the
process, in order to ensure their effectiveness and sustainability.
4.7.2 The executing agency, EWSC is a well-managed and functioning
utility with a good performance record. The Utility employs modern
systems in the management of its operations and has been
instrumental to the country’s high rates of access of water supply
and sanitation services in urban areas. It is able to achieve over
90% revenue collection, and is striving to further reduce the level
of Non Revenue Water (NRW) , currently estimated at 27% of
production to attain the target of 20% by 2022. This indicator is
well below the industry’s average (NRW of about 30%). The
Corporation has policies, systems and procedures in place to ensure
effective sustainability of the facilities constructed under the
project. Furthermore, the design of the project is based on the
same technology used in the existing systems. 4.7.3 EWSC collects
adequate revenue to manage the water supply and sanitation services
in its mandated area. The tariff structure used by EWSC has been
adopted since the establishment of the Corporation in 1992, from
the then Eswatini Water Services Board (SWB). In 2016, EWSC updated
its tariff structure following a recommendation of a detailed
Tariff and Affordability study conducted to assess its tariff
structure and to ensure tariffs reflect efficient cost of service
provision, taking into account the social nature of these services
and affordability. The current water supply and sanitation tariff
enables the utility to generate adequate funds to operate and
maintain the water supply and sewerage system. The provision and
enhancement of the water supply and sanitation infrastructure in
Manzini and surrounding areas will increase the water and
sanitation revenue of EWSC. The current tariff level, average of
SZL 12.0/m3 for water and SZL 11..0/m3 for sewer services is higher
than the operations and maintenance cost recovery, estimated at SZL
7.5/m3 and
15
SZL 4.5/m3 for water and sewer services, respectively. At
completion of the project, the incremental revenue (SZL 34 million)
generated from the project will more than offset the incremental
recurrent costs (SZL 12 million). Consequently, there will not be
any need for budgetary support or subsidies from GOE for operations
and maintenance of the project.
4.8 Risk Management 4.8.1 One of the challenges the project may
face is lack of willingness by the beneficiaries to pay for the new
services. This is particularly so for the majority who hitherto
have not been benefiting from any public water supply and
sanitation services. This risk will be mitigated by introduction of
tariffs that take into account affordability by different
categories of beneficiaries, and cross subsidization. In addition,
the project will include public awareness and extensive
sensitization campaigns to get beneficiaries on board. 4.8.2 The
project could also run the risk of delayed connections to the
sewerage system. This is common with new sewerage projects which
can take a long time before attaining a critical mass of
household/premises sewer connections. To ensure that delays in
house connections do not occur, customers will be connected as the
sewers are laid under the project. Connection works will be built
into and carried out as part of the overall sewer laying contract,
and connection charges gradually recovered from sanitation bills.
In addition well-targeted sensitization campaigns together with
health and hygiene education will be carried out to further
minimize the risk. 4.8.3 The GOE has so far done well in providing
the bulk of its people with the essential services of water supply
and sanitation. Further it has set itself tight targets of covering
the entire population. This calls for timely allocation of adequate
resources for the sector. There is therefore a risk of the
Government failing to make this timely allocation of enough
resources especially taking into account the fact that some of the
older systems also require rehabilitation and upgrading. To
minimize the risk, constant dialogue between the Government and
development partners including the Bank will be maintained together
with efforts to mobilize adequate resources. The other related risk
is the availability of counterpart budget. This risk is mitigated
by having (EWSC) the executing agency (financially autonomous
entity) as the contributor including contributions in kind.
4.9 Knowledge Building 4.9.1 The project is expected to generate
considerable knowledge and experiences that will add value and
build up lessons for the design and management of similar projects,
to be replicated throughout the country as well as to other RMCs in
Africa. The lessons learnt will be documented including
documentation on project design, procurement, environment and
social aspects as well as gender mainstreaming of the EWSC. Bank
supervision missions, quarterly and annual progress reports,
mid-term review, audit and completion reports will also provide an
opportunity to capture knowledge on relevant aspects of the
project. These documents will be made available for analysis and
will be shared both within the Bank and with other development
partners as well as RMCs. 4.9.2 The executing agency will enhance
its knowledge of the Bank’s procedures and safeguards to ensure
adequate preparation and successful implementation of development
projects, and be able to replicate the same in its future
development programs. EWSC, as a Utility that provides professional
assistance and support to similar utilities in the region, will act
as an agency of dissemination of lessons learnt in partnering with
the Bank to implement this important project. Similarly, the Bank
will share with other RMCs as well as internally, the lessons
learnt from the experience of implementing its first water supply
and sanitation project in Eswatini.
16
5.1 Legal instruments
The legal instrument for the Project will be a loan agreements
between the African Development Bank and the Kingdom of
Eswatini.
5.2 Conditions associated with Bank’s intervention
A. Conditions Precedent to Entry into Force of the Loan
Agreement
(i) The Loan Agreement shall enter into force subject to the
fulfilment by the Borrower of
the provisions of section 12.01 of the General Conditions
Applicable to Loan Agreements and Guarantee Agreement of the
African Development Bank.
B. Conditions Precedent to First Disbursement of the Loan:
(i) Provide evidence of a signed subsidiary financing agreement
between the Borrower and the Executing Agency relating to the
proceeds of the Loan, on terms and conditions acceptable to the
Bank;
C. Other Conditions:
(i) The Borrower shall, on annual basis, provide to the Bank,
evidence of budgetary commitment to cover its counterpart
contribution;
(ii) The Borrower shall, cause the Executing Agency to submit to
the Bank the full Environmental and Social Impact Assessment (ESIA)
and Comprehensive Management Plan (CMP) in form and substance
satisfactory to the Bank and, shall confirm to the Bank approval of
the ESIA/CMP by the Eswatini Environmental Authority, prior to the
commencement of the civil works for water supply and waste
water;
(iii) The Borrower shall, prior to the commencement of any civil
works for the water supply
and sewerage works under the Project, submit evidence, acceptable
to the Bank, of having acquired all land and/or rights with respect
thereto required for carrying out the civil works for the water
supply and sewerage works and has compensated the owners of all
such land in accordance with national legislation, the
Environmental and Social Management Plan (ESMP), and the
Abbreviated Resettlement Action Plan (ARAP); and
(iv) The Borrower shall provide, by no later than 30 June 2019,
copies of valid and duly
executed performance contract between the Borrower and the
Executing Agency’s Board of Directors covering the period between
2019 and 2024.
5.3 Compliance with Bank Policies This project complies with all
applicable Bank policies. VI – RECOMMENDATION
Management recommends that the Board of Directors of the Bank
approve the proposal for an AfDB loan of ZAR 719.70 million to the
Government of the Kingdom of Eswatini for the purposes and subject
to the conditions stipulated in this report.
I
II
This map was provided by the African Development Bank exclusively
for the use of the readers of this Aide Memoire. The names used and
the borders shown do not imply on the part of the Bank and its
members any judgment concerning the legal status of a territory nor
any approval or acceptance of these borders.
III
IV
Appendix 3: Table of AfDB’s Portfolio in the Country (July
2018)
Sector Name Long name Status of Project
Finance project Window Approval date
Commit ment date
Entry into force
Effective 1st disb
OnGo P-SZ-AAC-005 [ ADB ] 04/05/2016 10/26/201 6
2/23/2017 4/6/2017 31/12/2021 44,147,186.4
-
Finance Total 18,327,310.3 - 0.0 1.2 Multi-Sector STATISTICAL
CAPACITY BUILDING
PROGRAMME - PHASE II (SCB II) OnGo P-SZ-K00-003 [ ADB ] 01/02/2012
4/24/2012 4/24/2012 9/9/2013 31/12/2018
490,600.0
Multi-Sector Total 490,600.0 301,887.6 61.5 6.5 Power ENERGY SECTOR
TECHNICAL
ASSISTANCE PROGRAM OnGo P-SZ-FF0-001 [ ADB ] 08/12/2014 6/8/2015
6/8/2015 12/14/2015 01/10/2018
717,652.0
PROJECT OnGo P-SZ-DB0-012 [ ADB ] 28/05/2014 11/25/201
4 6/2/2015 7/7/2015 31/12/2019
OnGo P-SZ-E00-005 [ ADB ] 18/06/2014 11/25/201 4
4/22/2015 5/22/2015 31/12/2020 16,361,077.0
OnGo P-SZ-EAZ-002 [ ADB ] 21/12/2015 3/22/2016 3/22/2016 3/22/2016
31/05/2020 797,416.0
144,745.1
OnGo P-SZ-EAZ-001 [OTHERS ]
Water Sup/Sanit Total 18,219,386.6 6,258,111.6 24.1 3.1 Grand Total
115,734,709.5 30,235,452.8 25.0 3.2
V
Appendix IV: Key related projects financed by the Bank and other
development partners in the country
Project Date and Amount
Komati Downstream Development Project
Agriculture development – 4200ha of irrigated land
*** x Important to have a strong and well composed Implementation
Unit;
x Need for frequent monitoring missions comprising the right mix of
staffing;
x Important to have the beneficiaries on board as early as possible
at the commencement of the project and their role during the
implementation process clarified.
x Need to have occasional workshops to familiarize the implementing
agency with Bank rules and procedures
Infrastructure Development – Roads, pump stations and
portable water supply
2003 – 2007 UA 10.20m
construction of civil works including 3 dams, and
distribution system
**** x Need to have a strong project implementing unit; x Where
communities are involved it is vital to have them on
board and their participatory role clarified upfront; x Competent
consulting services are vital for smooth
implementation of the project. Development of relevant
Policy and Legal framework; ***
Environmental Mitigation **** Project Management
existing dual carriageway and construction of a new 6km of
dual carriageway;
**** x Compensation and resettlement if any should be finalised
well before the affected contracts are awarded.
x Procurement process and strategy should be understood and agreed
upon by all concerned parties;
x Ensure early appointment of the annual Audit consultant.
Engineering Services for
design and works supervision ***
2007 - 2012
UA 0.46m
Feasibility Study for Water Supply and Sanitation for the
Lavumisa-Nsalitje corridor
Lessons Emerged: x Need to have an early launching mission to
clarify the
implementation process including procurement of the services;
VI
2007 - 2012
UA 0.46m
promotional sanitation
Lessons Emerged: x Need to ensure to include financing of
engineering consultant to undertake detailed design and supervision
of works, if necessary through advance contracting.
Mbabane-Manzini (Nondvo dam) Study
corridor.
Lessons Emerged: Need to have dedicated study/program manager who
will champion the timely start up of the study
VII
Appendix V: Justification of Government’s Level of Counterpart
Funding Contribution Introduction The Kingdom of Eswatini’s
contribution to the Manzini Region Water Supply and Sanitation
Project of USD 6.71 million represents 11% of the total project
cost, which is less than the recommended 50% minimum counterpart
funding, in accordance with Bank’s 2008 Policy on Eligible
Expenditures for Bank Group Financing. The policy stipulates that
“AfDB may finance more than 50% of the total project costs on a
case-by-case basis and up to a limit that does not exceed 100%.”
The recommendation is for the Bank to finance up to 89% of the
project cost. The basis for this recommendation is that the country
is currently facing a challenging macroeconomic environment
characterised by low growth and mounting fiscal imbalances.
Economic growth has remained subdued since 2011, with real GDP
growing by an average 1.3% per year in 2011-2016. The economy’s
recent growth trajectory has been weak, with growth declining to
1.9 % in 2017 from 3.2 % registered in 2016 and is projected to
further soften to 1.3 percent in 2018. The subdued growth is mainly
due to adverse effects of drought conditions and a sharp reduction
in the Southern Africa Customs Union (SACU) revenues that continue
to linger, emanating from an economic slowdown in South Africa. It
is also, in part, because of lack of competitiveness, low
investment, high cost of doing business, and fiscal challenges. The
fiscal deterioration has largely been because of the Government
maintaining higher spending against a prolonged decline of the
revenue base, particularly SACU that has resulted in liquidity
challenges and accumulation of domestic arrears. Against this
background, reducing Eswatini’s financing contribution to this
project will provide the needed fiscal space for the Government to
implement its development programmes to support inclusive growth as
the country embarks on consolidating the budget and returns to
fiscal stability. The justification for the reduced Government
contribution is further strengthened on the considerations
highlighted below. The Government’s commitment to implement a
national development programme The 1997 National Development
Strategy (NDS) sets out Eswatini’s development objectives until
2022. To operationalize the NDS, the Government has formulated the
2013-2018 Program of Action as its medium-term framework. The POA
commits to addressing Eswatini’s development challenges that
include low economic growth, unemployment, widespread poverty, high
incidence of HIV/AIDS and weak institutional capacity. The POA
articulates eight focal areas: (i) Economic prosperity; (ii)
Agricultural and environmental sustainability; (iii) Education;
(iv) Health; (v) Service delivery; (vi) Infrastructure; (vii)
Governance; and (viii) Corruption. Since POA will expire at the end
of 2018, the Government is developing its consolidated National
Development Plan, covering the period 2018-2022, expected to be
ready by the end of 2018. The Government recognizes that
infrastructure makes a vital contribution to effective productive
and trade processes in the economy. Despite its middle-income
country (MIC) status, Eswatini still faces many infrastructure
bottlenecks in transport, electricity, water, and
telecommunications, all of which increase the cost of doing
business. To increase the country’s productive capacity and support
growth in the long term, the country needs to address its
infrastructure shortcomings. In this regard, Eswatini has equipped
itself with the strategy and policy instruments it needs to do so;
but an enormous investment in infrastructure is still
required.
VIII
Eswatini has a National Water Policy, which envisages water playing
a catalytic role in poverty reduction in the country through
various interventions, and is an engine for development, which
ensures sustainable economic prosperity. To achieve this goal,
water has to play its role in the attainment of the country’s
objectives of social equity, food security, peace and stability,
energy security, safety from water related disasters, environmental
sustainability, improved tourism and recreational activities and
industrial development. The Country’s financing of infrastructure
Notwithstanding the obtaining fiscal challenges, the Government of
Eswatini gives priority to infrastructure as evidenced by its
budget allocations for capital spending. In FY 2018/19, Government
allocated SZL 5.6 billion (about USD 0.5 billion), or 26% of the
total budget to capital spending. In addition to the Government
budget appropriations, Eswatini relies on other traditional funding
sources, such as loans from multilateral development banks (MBDs),
to finance its infrastructure projects. Private investment has been
insignificant. Eswatini’s long term Vision envisages a 100% good
quality water coverage by the year 2022, and in order to achieve
this, enormous investment in water and sanitation infrastructure is
required. However, due to fiscal constraints, Government is finding
it increasingly difficult to finance infrastructure projects, which
presents a challenge in meeting some of the Vision 2022 targets and
2030 Sustainable Development Goals (SDGs).Eswatini’s capital budget
allocations have been softly growing in recent years in relation to
the increasing share of the capital budget. However, the share of
water and sanitation infrastructure allocation in the capital
budget has not been consistent in the last five fiscal budgets, as
it fluctuated between 9% and 21% percent (Table 1). Table 1:
Infrastructure financing in Eswatini (SZL million) – water and
sanitation Fiscal Year
2014/15 2015/16 2016/17 2017/18 2018/19 Total capital budget (SZL
million) 3,610.42 3,725.28 3,897.34 5,579.44 5,603.74 Capital
budget allocation to water & sanitation infrastructure (SZL
million) 328.24 392.55 799.19 509.01 1,097.72 Share of water &
sanitation infrastructure in the capital budget (%) 9% 11% 21% 9%
20%
Source: Ministry of Finance The budget situation and debt levels
Eswatini’s fiscal policy has been under considerable pressure in
recent years. Lack of an independent monetary policy tool has led
the Government to use fiscal policy as a countercyclical tool in
recent years to boost economic activity and employment. The
Government pursued an expansionary fiscal policy after the 2010/11
fiscal crisis, mainly supported by the rebound of revenues from
SACU. Expenditures expanded even further owing to increased
recurrent spending, particularly in public sector wages, and a
revival of capital expenditures. A fiscal crunch occurred in
2016/17 due to a marked 22% decline in SACU revenues leading to a
significantly wider deficit of 12.3% of GDP. To finance the fiscal
deficit, Government has borrowed from the domestic markets and
resorted to central bank financing, as well as accumulating
domestic arrears that threaten the banking sector’s stability and
potentially crowd out the private sector. The fiscal outturn in
2017/18 was a slightly lower fiscal deficit of 8.2% of GDP mainly
due to a surge in SACU revenues. Revenue collections and grants are
projected to slow down by 2.6% to reach SZL 16.4 billion (Table 2),
while total expenditures are planned at SZL 21.6 billion, almost
equal to the level of 2017/18, deepening the deficit.
IX
Fiscal Year 2014/15 2015/16 2016/17 2017/18 2018/19 (p)
Tax revenue and grants 14,743.57 14,462.42 14,288.47 16,845.78
16,403.96 Total expenditure & net lending 15,304.43 17,198.33
19,778.78 21,779.35 21,596.14 Overall balance -560.86 -2,735.91
-5,490.31 -4,933.58 -5,192.18
Source: Ministry of Finance The Government is committed to improve
the country’s fiscal position through implementing a raft of
reforms aimed at consolidating the fiscus. The budget for 2018/19
fiscal year, announced by the Minister of Finance on 1 March 2018,
is aimed at achieving fiscal consolidation and fiscal
sustainability in order to create fiscal space to support
investment and socioeconomic spending. In this regard, the
Government is pursuing a number of strategies to enhance revenue
and reduce expenditure, as well as implementing public financial
management reforms that should reduce the fiscal deficit. Narrowing
the fiscal deficit is, therefore, contingent on fully implementing
the measures proposed for boosting revenues. These include
collection of licence fees from mobile companies; raising the
value-added tax (VAT) rate from 14% to 15% to align with the new
rate announced by South Africa; introducing a levy on bank revenue;
reviewing user fees and fuel tax; and introducing an import levy on