Language: English Original: English PROJECT: MULTINATIONAL-NACALA ROAD CORRIDOR-PHASE I COUNTRY: MOZAMBIQUE/MALAWI/ZAMBIA PROJECT APPRAISAL REPORT Date: May 2009 Appraisal Team Team Leader: L Kiggundu, Senior Transport Engineer, OINF.2 Team Members: D Gebremedhin, Principal Transport Economist, OINF.2 N Kulemeka, Principal Socio-Economist, OINF.2 R Aron, Socio-Economist, OINF.2 B Nkhoma, Infrastructure Specialist, MWFO J Mabombo, Infrastructure Specialist, MZFO A Willetts, Environmentalist, Consultant Sector Manager: J Rwamabuga Sector Director: G Mbesherubusa Regional Director: F Black Peer Reviewers O Oladapo, OSAN, M Ajijo, ONRI, T Mugoya, OWAS
Transcript
Language: English Original: English
PROJECT: MULTINATIONAL-NACALA ROAD CORRIDOR-PHASE I COUNTRY: MOZAMBIQUE/MALAWI/ZAMBIA
PROJECT APPRAISAL REPORT
Date: May 2009
Appraisal Team
Team Leader: L Kiggundu, Senior Transport Engineer, OINF.2 Team Members: D Gebremedhin, Principal Transport Economist, OINF.2
N Kulemeka, Principal Socio-Economist, OINF.2 R Aron, Socio-Economist, OINF.2 B Nkhoma, Infrastructure Specialist, MWFO J Mabombo, Infrastructure Specialist, MZFO A Willetts, Environmentalist, Consultant
Sector Manager: J Rwamabuga Sector Director: G Mbesherubusa Regional Director: F Black
Peer Reviewers
O Oladapo, OSAN, M Ajijo, ONRI, T Mugoya, OWAS
TABLE OF CONTENTS Currency Equivalents i Fiscal Year i Weights & Measurements i Acronyms & Abbreviations i Loan Information iii Project Summary iv Result-Based Logical Framework vi Project Timeframe ix PART I: STRATEGIC THRUST AND RATIONALE 1 1.1 Project Linkages with Regional Strategy and Objectives 1 1.2 Rationale for Bank’s Involvement 1 1.3 Donors Coordination 2 PART II: PROJECT DESRIPTION 3 2.1 Project Components 3 2.2 Technical Solution Retained and Other Alternatives Explored 4 2.3 Project Type 4 2.4 Project Cost and Financing Arrangements 4 2.5 Project Target Population and Key Performance Indicators 6 2.6 Participatory Processes of Design and Implementation 6 2.7 Bank Group Experience and Lessons Reflected in Project Design 7 2.8 Key Performance Indicators 7 PART III: PROJECT FEASIBILITY 7 3.1 Economic and Financial Performance 7 3.2 Environmental and Social Impact 8 PART IV: IMPLEMENTATION 9 4.1 Implementation Arrangements 9 4.2 Monitoring 11 4.3 Governance 11 4.4 Sustainability 12 4.5 Risk Management 13 4.6 Knowledge Building 13 PART V: LEGAL INSTRUMENTS AND AUTHORITY 13 5.1 Legal Instrument 13 5.2 Conditions Associated with Bank’s Intervention 13 5.3 Compliance with Bank Policies 14 PART VI: RECOMMENDATION 14 Appendices I. Countrys’ Comparative Socio-Economic Indicators 15 II. Table of ADB’s Portfolio in Mozambique 17 II Table of ADB’s Portfolio in Malawi 18 III. Similar Projects Financed by the Bank and Other Development Partners 19 IV. Project Map 20
1 metric tonne (t) = 2,205 lbs. 1 kilogram (kg) = 2.205 lbs. 1 meter (m) = 3.281 ft 1 foot (ft) = 0.305 m 1 hectare (ha) = 0.01 km2 = 2.471 acres
Acronyms and Abbreviations ACFA = Accelerated Co-financing for Africa ADB = African Development Bank ADF = African Development Fund AIDS = Acquired Immune Deficiency Syndrome ARAP = Abbreviated Resettlement Action Plan ARV = Antiretroviral BADEA = Arab Bank for Economic Development of Africa BoQ = Bill of Quantities CBO = Community Based Organisation cif = cost, insurance and freight DFID = Department for International Development EIRR = Economic Internal Rate of Return EMU = Environmental Management Unit ESIA = Environmental and Social Impact Assessment ESMP = Environmental and Social Management Plan EU = European Union EXCIM = Export-Import Bank fob = free on board GAT = Gabinete de Assuntos Transversais GHG = Green House Gases GOMw = Government of Malawi GOMz = Government of Mozambique IFC = International Finance Corporation IPPF = Infrastructure Project Preparation Facility JICA = Japan International Cooperation Agency MWFO = Malawi Field Office MZFO = Mozambique Field Office NEPAD = New Partnership for Africa’s Development NGO = Non Government Organization NPV = Net Present Value OPEC = Oil and Petroleum Exporting Countries PRISE = Programa Integrado do Sector de Estradas (Integrated Road Sector Programme)
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RA = Roads Authority RAP = Resettlement Action Plan RFA = Roads Fund Administration RFP = Request for Proposals RTRN = Regional Trunk Road Network REC = Regional Economic Community RFP = Request for Proposals SADC = Southern African Development Community SC = Steering Committee SCOMs = Sub-sector Committee Meetings STI = Sexually Transmitted Infections SWAp = Sector Wide Approach UA = Units of Account VOC = Vehicle Operating Costs
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Loan Information
Client’s information BORROWER: GOVERNMENT OF MOZAMBIQUE GOVERNMENT OF MALAWI EXECUTING AGENCY: MOZAMBIQUE: NATIONAL ROADS ADMINSTRATION MALAWI: ROADS AUTHORITY Financing plan Mozambique
Source Amount (UA) Instrument ADF
102.72 million
Loan
JICA 40.89 million Loan Korea EXIM 13.63 million Loan GOMz 22.79 million counterpart funds TOTAL COST 180.03 million
Malawi ADF
14.32 million
Loan
GOMw 1.59 million counterpart funds TOTAL COST 15.91 million
Project approval June 2009 Effectiveness November 2009 Last Disbursement (Malawi) June 2013 Last Disbursement (Mozambique) September 2014 Completion (Malawi) December 2013 Completion (Mozambique) June 2015
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Project Summary Project Overview: The Nacala Road Corridor comprises a total of 1033km of road works and two one-stop border posts one between Mozambique and Malawi and the other between Malawi and Zambia. Due to the size of the project it is to be implemented in three Phases: Phase I the subject of this appraisal report comprises 361km or 35% of road works in Mozambique and Malawi. Phase II comprises 360km or 34.9% of road works in Zambia and Phase III of 312km or 30.1% of road works in Mozambique and Malawi and two one-stop border posts between Mozambique and Malawi and Malawi and Zambia. All phases include design review, pre-contract services and supervision of the civil works, road safety, HIV/AIDS prevention and awareness, compensation and resettlement and audit. The financing requirements for Phase I amounts to UA195.94 million comprising UA180.03 million to finance the components in Mozambique and UA15.91 million to finance the components in Malawi. The project components are to be financed through ADF loans of UA102.72 million for Mozambique and UA14.32 million for Malawi. Country allocations from the ADF XI cycle amounting to UA34.24 million from Mozambique and UA4.77 million from Malawi have leveraged UA68.48 million and UA9.46 million from the multinational window for Mozambique and Malawi, respectively. JICA and EXIM Bank of Korea are to jointly finance the component in Mozambique with UA40.89 million and UA13.63 million respectively. Beneficiary Participation: The main beneficiaries of the project include transport industry, export/import operators, freight operators, business community, and communities along the corridor. The impacts on the beneficiaries will include reduced travel time, transport cost savings, shorter turnaround time for international cargo freighters, protection of pavement from premature damage, and improved accessibility of communities to social services and markets. During construction, beneficiaries will participate through provision of labour, goods and services for road and related works. During operation, the beneficiaries will be charged with responsibility for care of road assets and abiding by axle-load controls. Project Rationale and Need: The project will improve the competitiveness of participating countries in international trade by reducing the cost of doing business besides contributing to poverty reduction for communities in the zone of influence. The corridor is of strategic importance and is one of the priority projects of the SADC region and is consistent with the NEPAD and Bank strategy on multinational projects and in line with Pillar 3 of the CSP (2006-2009) of Mozambique that focuses on the improvement of the road network to foster integration of the national economy and improve connection to ports and SADC market and is included in the Integrated Road Sector Programme (PRISE 2007-2011) an outcome of the Road Sector Strategy (2006); and the RBCSP Mid-Term Review dialogue (February 2008) with the Government of Malawi that emphasizes on regional road networks to enhance competitiveness and regional integration and identifies the Nacala Corridor for investment. Bank’s Value Added: The Bank has extensive experience in the implementation of multinational projects and project design has benefited from the lessons learnt from previous Bank projects and the experience of other development partners shared through Road Sub-sector Group meetings which the Bank is an active member in both Mozambique and Malawi.
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Knowledge Management: The project will generate new knowledge for the Executing Agencies and the SADC Secretariat from implementation of SATCC Standards which have been adopted in the region; modalities of corridor management and safety standards; one-stop border controls; etc. Exchange of experiences of the two countries with the SADC Secretariat during the SC meetings will enhance the use of regional best practices.
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MULTINATIONAL-NACALA ROAD CORRIDOR-PHASE I RESULTS BASED-MATRIX
Hierarchy of Objectives Expected Results
Reach Performance Indicators
Source Method
Indicative Targets
Timeframe
Assumptions/ Risks
1.Sector Goal 1.1. To support economic growth and foster regional integration through reliable, efficient and seamless transport infrastructure that increases competitiveness of the region.
Long Term Outcomes
1.1Improved links between ports and harbors and major centers of economic activity in the hinterland; 1.2 Increased participation in regional and international trade. 1.3. Reduced transport costs;
Beneficiaries SADC member states, Populations of Mozambique, Malawi and Zambia
Indicators 1.1 % increase participation in
regional and international trade
1.2 %share of transport and transit costs in CIF prices of imports and FOB prices of exports for corridor countries
Sources : SADC Secretariat Information System, Methods: Statistics from member states
Targets 1.1 Import/export cargo handled at Nacala port increased from 0.9 million tons per year in 2009 to 1.6 million tons per year by 2015. 1.2 Global competitiveness index improved from 3.1 in 2009 to 4.1 in 2015 for Mozambique; 1.3 Percentage share of transport and transit cost in CIF and FOB prices of import and export reduced by 25% by 2015
Risks 1.1 Commitment to integration by SADC member countries. Mitigation measures 1.1 The SADC region is committed to integration therefore there is no risk
2. Objectives 2.1 To provide Malawi, Zambia and the interior of Mozambique with an improved road transport linkage to the port of Nacala and improve transport services on the corridor, improve accessibility of the communities in the zone of influence to markets and social services and contribute to the reduction of poverty. .
Medium Term Outcomes
2.1 Improved transport services on the corridor; 2.2 Reduce travel time 2.3 Transport cost saving; 2.4 Shorter turnaround time for
international cargo and protection of pavement from overloads;
2.5Improved accessibility of communities to social services and markets
2.6 Improved road safety
Beneficiaries Transport industry, export/import operators, freight operators, business community, and communities along the corridor.
Indicators
2.1Time and cost saving on import/export cargo transport;
2.2 (i) Improvement in the delays
at the border crossing (ii) good service levels of road over design life;
2.3 Increase in women engaged in cross-border trading
2.4 Reduced road fatality rates Sources: SADC Secretariat, Customs in the three countries, Methods: Statistics from member countries, surveys on the corridor, household expenditure surveys
Targets 2.1 Average travel time reduced by 41% from 9hrs in 2008 to 5.3hrs in 2014 (Mozambique) and by 60% from 50 minutes in 2008 to 20 minutes in 2013 (Malawi). 2.2 Delays at the Mozambique/Malawi and Malawi/Zambia borders reduced 36 hours to 6 hours by 2015. 2.3 Composite vehicle operating costs per vehicle km reduced by 36% from US$0.958/km in 2008 to US$0.613/km in 2014 (Mozambique) and 20% from US$0.584/km in 2008 to US$0.470/km in 2013 (Malawi).
Risks 2.1 Commitment of the three
Governments. Mitigation measures 2.1 The three countries have allocated from their ADF XI resources and therefore are committed to the project and therefore there is no risk
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2.4 At least 40% women participation in cross-border trade from 2015 2.5 Fatality rates reduced by 2 percentage points per year from an average of 22.5/10,000 in 2007 in Malawi; and from an average of 61/10,000 in Mozambique, 399/10,000 in Nampula and 145/10,000 in Niassa in 2007.
Sources: SADC Secretariat, Customs in the three countries., Police and Min. of Transport on accidents data Methods: Statistics from member countries, surveys on the corridor Baseline data 2.4 and 2.5 above, to be collected during project implementation
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3. Activities Civil works for;
(i) Upgrading of Nampula-Cuamba Road (348 km) in Mozambique including a weighbridge at Nampula; (ii)Construction of Lilongwe By-pass (13 km) in Malawi; (b) Consultancy services for; (i) supervision of civil works above; (c) Road Safety and HIV/AIDS; (d) Compensation and resettlement; (e) Audit services; Inputs (UA millions) ADF Loan-UA102.72 million to Mozambique ADF Loan-UA14.32 million to Malawi Co-Financing: JICA Loan: UA40.89 million to Mozambique; Korea EXIM Bank Loan: UA13.63 million Counterpart Financing: GOMz: UA22.79 million GOMw: UA1.59 million
Short Term Outputs 3.1 Bitumen standard road between Nampula and Cuamba in Mozambique to 7.0 m carriageway and 2x1.5 m shoulders (2x1.0m single sealed and 2x0.5m gravel) and Lilongwe Bypass Road in Malawi to 7.0m carriageway and 2x2.0m sealed shoulders. 3.2 Road Safety and HIV/AIDS awareness along the Nacala Corridor.
Beneficiaries 3.1. Contractors, consultants, Export/Import operators, freight operators, business in the three countries. 3.2. Communities along the corridor
Indicators 3.1 Length of road upgraded . 3.2 % of population in the zone of influence, in particular vulnerable/ marginalized groups, with enhanced road safety and HIV/AIDS awareness. 3.3 Number of HIV/AIDS awareness campaigns implemented in partnership with local CBOs and NGOs. 3.4 Overload Control 3.5 Number of local employees (disaggregated by gender). 3.6 Full resettlement/restoration and compensation by 2012
Sources/Methods: Quarterly Reports, Bank Supervision Reports, Audit Reports, Mid Term Review Reports
Targets 3.1 348 km upgraded to bitumen standard between Nampula and Cuamba in Mozambique and 13 km of bypass of Lilongwe in Malawi. 3.2 Installation of 1 axle load control facility.
3.3 100% of schools and colleges (27) along the corridor and at least 26 identified settlements in the project zone of influence received road safety and HIV/AIDS awareness, which specifically targets vulnerable/ marginalized groups (women, youth, the disabled, etc.). 3.4 100% of the campaigns carried out in at least 26 settlements in project zone of influence are implemented by a minimum of 3 local CBOs and NGOs. 3.5 At least 25% of unskilled and 5% of skilled construction and related workers should be women in Mozambique and 10% workers should be women in Malawi. 3.6 100% of PAPs having been resettled and restored to livelihoods, and compensated fully. Sources/Methods: Quarterly Reports, Bank Supervision Reports, Audit Reports, Mid Term Review Reports
Risks 3.1. Timely payment of counterpart funds by Governments; 3.2 Timely fulfilment of loan conditions and implementation according to appraisal schedule; 3.3 Project costs within appraisal estimates; 3.4 Executing Agencies retain qualified and experienced staff for effective project supervision; 3.5 Timely payment of resettlement and compensation costs. Mitigation measures 3.1 Payment of Governments have improved in counterpart financing; 3.2 Follow-up will ensure early fulfilling of conditions and mitigate the risk; 3.3 Contingencies are to be built in the project costs to mitigate the risk; 3.4 The Executing Agencies are autonomous agencies and therefore can retain qualified staff; 3.5 Past experience has been positive regarding payment of compensation and resettlement costs. ANE to ensure adequate budgetary provision is provided.
*** Targets will be established for some indicators with the undertaking of the baseline survey during project implementation.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 I. Civil Works 1. Compensation and Resettlement 2. PQ of Contractors 3. Bidding/Contract Award 3. Mobilization 4. Civil Works Execution 5. Defects Liability II. Contract Supervision 1. EOI, Request for Proposals/Award 2. Pre-contract Services 3. Civil Works Supervision 4. Defects Liability Period
Malawi: Lilongwe Bypass Project Programme
Activity 2009 2010 2011 2012 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 I. Civil Works 1. Compensation and Resettlement 2. PQ of Contractors 3. Bidding/Contract Award 4. Mobilization 5. Works Execution-Malawi 6 Defects Liability-Malawi II. Contract Supervision 1. EOI, Request for Proposals/Award 2. Pre-contract Services 3. Works Supervision 4. Defects Liability Period
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MULTINATIONAL: NACALA ROAD CORRIDOR PROJECT-PHASE I
REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE ADB GROUP TO THE BOARD OF DIRECTORS ON PROPOSED LOANS TO MOZAMBIQUE AND MALAWI Management submits the following report and recommendation on a proposed loan of UA102.72 million to jointly finance with JICA and the EXIM Bank of Korea the Nampula-Cuamba Road in Mozambique and UA14.32 million to finance the Lilongwe Bypass in Malawi both as part of Phase I of the Nacala Road Corridor.
I - STRATEGIC THRUST AND RATIONALE
1.1. Project Linkages with Regional Strategy and Objectives 1.1.1 The sector goal is to support economic growth in the SADC region and foster regional integration through reliable, efficient and seamless transport infrastructure that increases competitiveness of the region. The objective of the project is to provide Malawi, Zambia and the interior of Mozambique with an improved road transport linkage to the port of Nacala and improve transport services, accessibility of the communities in the zone of influence to markets and social services and contribute to the reduction of poverty.
1.1.2 The Southern African Development Community (SADC) Protocol on Transport, Communications and Meteorology commits member states in the long term to establish transport systems that provide efficient, cost-effective and fully integrated infrastructure and operations which best meet the needs of customers and promote social development while being environmentally and economically sustainable. Mozambique, Malawi and Zambia, supported by South Africa and the SADC Secretariat have signed a tri-lateral agreement establishing a Spatial Development Initiative (SDI). The SDI identifies Development Corridors through which social and economic activity can be enhanced to improve the livelihood of the communities in the zones of influence. The purpose is to foster economic growth by promoting cross-border and international trade, regional co-operation and integration and make the region a competitive investment area through reducing the cost of doing business. The development corridors have been identified around transport corridors to stimulate private sector investment by providing easy access among which is the Nacala Corridor.
1.1.3 The Nacala Road Corridor is part of the SADC RTRN designated as Route 20 running from the Nacala port to Lusaka through Malawi covering a distance of 1,700km. The road section in Mozambique in this phase is part of the 510km missing link to the border with Malawi which at present is not transitable for part of the year. In Malawi, the Lilongwe Bypass will divert from the centre of the city long-distance traffic especially heavy vehicles whose behaviour differs from urban traffic. The bypass will relieve the traffic congestion currently experienced and reduce traffic accidents.
1.2 Rationale for Bank’s Involvement
1.2.1 The Nacala Corridor is one of the priority projects of the SADC Region and is consistent with the NEPAD and Bank strategy for Regional Economic Communities (RECs) on multinational infrastructure projects that remove barriers and obstacles to the movement of persons, goods and support regional co-operation and integration. The SADC member states are committed to minimizing transport costs to enhance economic and social integration of the region through the provision of integrated transport infrastructure that facilitates trade. The Nacala Corridor is among the transport corridors identified as necessary to improve the competitiveness of partner countries in international trade. The project is in line with Pillar 3 of the CSP (2006-2009) of Mozambique on Economic Development that focuses on the improvement of the road network to foster integration of the national economy and improve connection to ports and SADC market and is included in the Integrated Road Sector
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Programme (PRISE 2007-2011) an outcome of the Road Sector Strategy prepared in 2006 through a wide consultative process with stakeholders including donors; and the RBCSP Mid-Term Review dialogue (February 2008) with the Government of Malawi under Pillar 1 on infrastructure that emphasizes focus on regional road networks to enhance competitiveness and regional integration and identifies the Nacala Corridor for investment. The project also supports the poverty reduction objectives of Malawi Growth and Development Strategy (MGDS) and the Plan of Action for the Reduction of Absolute Poverty (PARPA) of Mozambique. The Governments of Mozambique, Malawi and Zambia and the SADC Secretariat support the project. 1.2.2 The Bank is implementing a number of multinational road projects of a similar nature on the continent and therefore project execution will benefit from the experience gained from these interventions. 1.3 Donors Coordination Mozambique
Size
Sector or sub-sector*
GDP Exports Labor Force
Transport [%] [na] [%]
Players - Public Annual Expenditure (2008)
Government Donors
EU
21%
UA m 86.0 48.7 World Bank 18%
% 63.8 36.2 Italy 12%
DFID 11%
Level of Donor Coordination Existence of Thematic Working Groups [Y] Existence of SWAps or Integrated Sector Approaches [Y] ADB's Involvement in donors coordination [Leader] Malawi
Size
Sector or sub-sector*
GDP Exports Labor Force
Transport [5.9%] [na] [%]
Players - Public Annual Expenditure (2007/08)
Government Donors
EU 34% UA
m 13.976 13,212 World Bank 8%
% 51 49 JICA 7%
DfID 1%
Level of Donor Coordination Existence of Thematic Working Groups [Y] Existence of SWAps or Integrated Sector Approaches [Y] ADB's Involvement in donors coordination [Member] Comments on Donor coordination:
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1.3.1 In Mozambique, there is effective coordination among the road sub-sector donors through a specific working group set up to deal with issues in the sub-sector with the ADB leading the group since 2007. The Road Sector Working Group meets monthly to discuss issues concerning coordination among the donors and alignment with Government systems. In addition donors meet with the Government twice a year to review the performance of the sub-sector vis a vis expenditure projections of the three year rolling plan of the Road Sector Integrated Programme (PRISE) which includes basket financing (SWAp). 1.3.2 In Malawi a Transport Donor Coordination Group (TDCG) co-ordinates the activities of donors in the country in the transport sector and provides a platform on which the development partners discuss financing and implementation issues in the sector. The group is currently led by the EU and the Bank is an active member. Government has set up a Consultative Transport Forum chaired by the Ministry of Transport and Public Works. 1.3.3 Through effective donor coordination, JICA has financed the studies for the Nampula-Cuamba road in Mozambique and accepted to jointly finance the component in Mozambique based on the ACFA agreement. JICA also participated in the mission to Mozambique and is processing its conditional approval for joint financing. EXIM Bank of Korea is also processing its financing for joint financing. Meetings were held with the main transport sector donors including the EU, World Bank, DFID, IFC and MCC in which the role of regional corridors in promoting integration was recognized. Consultation with other donors revealed that there are initiatives by other donors involving studies for the improvement of the rail portion of the Nacala Corridor, the port and re-evaluation of the existing rail concession agreements.
II – PROJECT DESCRIPTION 2.1. Project Components The Nacala Road Corridor is to be implemented in three phases, comprising components in Mozambique and Malawi as Phase I, the component in Zambia as Phase II and components in Mozambique and Malawi and two one-stop border posts (OSBP) as Phase III. For the OSBP, detail designs are due to commence early 2010 with financing from the NEPAD-IPPF. Details of the phasing are in Annex B3.
Table 2.1: Project Components of Phase I
Nr.
Component name Est. cost (UA million) Component description
1 Civil works for (i) upgrading of the Nampula-Cuamba Road (348km); (ii) construction of the Lilongwe Bypass (13km);
184.42
The works comprise Double Bitumen Surface Treatment (DBST) on crushed stone base, on cement stabilized sub-base on natural gravel selected layers with carriageways of 7.0m with 1.5m shoulders on either side for the Nampula-Cuamba and 7.0m with 2.0m shoulders on either side for the Lilongwe Bypass;
Mobilization of contractor Camp site construction Road construction HIV/AIDS mitigation Defects Liability Period
2 Design review, pre-contract and supervision services for the civil works
9.26 Design review Preparation of bidding documents, pre-bid
meeting and site inspection, bid evaluation, to award of contract;
Quality Assurance 3 Road Safety 0.20 Public Awareness campaigns
Media broadcasting 4 ESMP, Resettlement 1.87 Compensation of PAP
Environmental Mitigation Social mitigation
5 Audit 0.19
Financial audit Technical audit
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2.2. Technical Solution Retained and Other Alternatives Explored
Alternatives were considered for each of the components in Mozambique and Malawi to select the most cost-effective solutions based on best investment option, design life, traffic levels, costs and benefits to the road users and the public at large. The alternative retained for Mozambique is a Double Bitumen Surface Treatment (DBST) on 150mm crushed stone base, on 200mm cement stabilized sub-base, on two natural gravel selected layers of 200mm and 250 mm each. For Malawi the pavement adopted is a DBST surfacing on 150mm crushed stone base, on 150mm natural gravel sub-base on 150mm selected layer. Table 2.2: Project Alternatives Considered and Reasons for Rejection Mozambique
Alternative name
Brief description
Reasons for rejection
Asphalt Concrete (AC)
40 mm asphalt concrete surfacing on 150mm crushed stone base on 200mm cement stabilized sub-base on 200mm and 250 mm natural gravel selected layers.
Not economically viable
Engineered Gravel Road
300 mm wearing course on 200mm and 250 mm natural gravel selected layers.
Not economically viable
Malawi Alternative name Brief description
Reasons for rejection
Dual Carriageway Provision of a dual carriageway instead of a single carriageway to cater for future traffic
Not economically viable
Asphalt Concrete (AC)
40 mm asphalt concrete surfacing on 200mm crushed stone base on 250mm natural gravel sub-base on 200mm selected layer.
Not economically viable
2.3. Project Type The intervention is a stand-alone operation comprising civil works, supervision, HIV/AIDS prevention and awareness, road safety, audit, compensation, resettlement and ESMP implementation. The modality of operation suits the type of works typical of civil works contracts for road projects.
2.4 Project Cost and Financing Arrangements Nampula_Cuamba Road
The project cost estimate for the Nampula-Cuamba road section is UA180.03 million net of taxes, which is, made up of UA136.47 million (75.8%) in foreign exchange cost and UA43.55 million (24.2%) in local cost. Table 2.3: Summary of Project Cost Estimates by Component (UA million-net of taxes)
USD million UA million COMPONENT FE LC Total FE LC Total
Civil works Lot A: Nampula-Ribaue Lot B: Ribaue-Malema Lot C: Malema-Cuamba Sub-Total
54.18 52.31 54.83
161.32
15.29 14.75 15.47 45.51
69.47 67.06 70.30 206.83
36.92 35.65 37.37 109.94
10.42 10.05 10.54 31.01
47.34 45.70 47.91 140.95
Pre-contract and Supervision services Lot A: Nampula-Ribaue Lot B: Ribaue-Malema Lot C: Malema-Cuamba Sub-Total
Physical Contingency (10%) 16.97 5.00 21.97 11.57 3.41 14.98 Price Contingency (3% FE and 7% LC)
13.56 8.91 22.47 9.24 6.07 15.31
Total (Net of Taxes) 200.25 63.92 264.17 136.47 43.56 180.03 * HIV/AIDS mitigation included in the BoQ for the civil works
The proposed financing from ADF,JICA and EXIM Bank of Korea will jointly cover the entire foreign exchange cost amounting to UA136.47 million. ADF will in addition cover 41.5% of the local cost (UA18.08 million). JICA will cover UA40.89 million (22.7% of project cost) and the EXIM Bank of Korea will cover UA13.63 million or 7.6% . The GOMz will finance 12.6% of the cost of the project or 52.3% of the local cost (UA22.79 million). The proposed financing plan by source is presented in the Table below:
Table 2.4: Sources of Finance (UA million-net of taxes) SOURCE FE LC Total % ADF 84.64 18.08 102.72 57.1 JICA 40.89 - 40.89 22.7 Korea EXIM 10.94 2.69 13.63 7.6 GOMz - 22.79 22.79 12.6 Total 136.47 43.56 180.03 100 Percentage 75.8 24.2 100
Table2.5: Sources of Finance (UA million - net of taxes) by Category CATEGORY ADF JICA EXIM GOMz TOTAL Civil Works 93.91 40.89 13.63 21.14 169.57 Design review/supervision 8.52 - - - 8.52 Road Safety 0.15 - - - 0.15 Other (ESMP, Compensation) - - - 1.65 1.65 Project Audit 0.14 - - - 0.14 TOTAL 102.72 40.89 13.63 22.79 180.03
Table 2.6: Expenditure Schedule by Categories (UA million – net of taxes) CATEGORY 2009 2010 2011 2012 2013 2014 TOTAL Civil Works - 26.37 54.86 53.09 30.44 4.81 169.57 Pre-contract services/Supervision - 0.73 2.99 2.89
The project cost estimate for the Lilongwe Bypass is UA15.91 million net of taxes, which is, made up of UA12.07 million (80%) in foreign exchange cost and UA3.84 million (20%) in local cost.
Table 2.7: Summary of Project Cost Estimates (UA million - net of taxes) by Component MWK million UA million COMPONENT
FE LC Total FE LC Total Civil Works 2,063.26 581.74 2,645.00 9.86 2.78 12.64 Design Review, Pre-contract and Supervision
Total 2,526.15 804.18 3,330.33 12.07 3.84 15.91 * HIV/AIDS mitigation included in BoQ for civil works
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Table 2.8: Sources of Finance (UA million - net of taxes) SOURCE Foreign Local Total % Currency Currency ADF 12.07 2.25 14.32 90 GOMw - 1.59 1.59 10 Total 12.07 3.84 15.91 100 Percentage 75.9 24.1 100
The proposed financing from the ADF will cover the entire foreign exchange cost amounting to UA12.07 million and 56.3% of the local cost (UA2.25 million). The GOMw will finance 10% of the cost of the project or 41.4% of the local costs (UA1.59 million).
Table 2.9: Sources of Finance (UA million - net of taxes) by Category CATEGORY ADF GOMw TOTAL Civil Works 13.48 1.37 14.85 Pre-contract/supervision services 0.74 - 0.74 Road Safety 0.05 - 0.05 Other (ESMP, Compensation) - 0.22 0.22 Project Audit 0.05 - 0.05 TOTAL 14.32 1.59 15.91
Table 2.10: Expenditure Schedule by Categories (UA million - net of taxes) CATEGORY 2009 2010 2011 2012 2013 TOTAL Civil Works - 3.62 8.90 2.27 0.06 14.85 Pre-contract/supervision services 0.03 0.30 0.31 0.10 - 0.74 Road Safety - - 0.02 0.02 0.01 0.05 Other (ESMP, Compensation) 0.11 0.11 - - - 0.22 Audit Services - 0.01 0.01 0.02 0.01 0.05 Total 0.14 4.04 9.24 2.41 0.08 15.91
2.5. Project’s Target Area and Population
2.5.1 The project road traverses five districts of Nampula, Mecuburi, Ribaué, Malema and Cuamba in Mozambique; and Lilongwe urban and peri-urban in Malawi. The beneficiaries will be road users (domestic and international) and communities in the zones of influence. When the entire corridor is completed, the target population will comprise beneficiaries from the three countries that will use the corridor. However this particular project has, in Mozambique, a combined population of 787,170 people; and in Malawi (Lilongwe Bypass) an estimated population of 669,021 that will benefit from the project in the short to medium term through year round access. Outcomes will be improved transport services, reduced travel time and transport costs, shorter turnaround time for international cargo, protection of pavement from premature damage and improved access to markets and services.
2.6. Participatory Process for Project Identification, Design and Implementation
2.6.1 The project was identified as a priority for SADC and national governments through the regional sub-sector committee meetings. Design and implementation benefited from public consultations conducted through the ESIA and RAP studies for the Nampula-Cuamba road which had meetings in Nampula city and Cuamba. Meetings and interviews were held with donors (EU, WB, DFID, MCC and IFC), key institutions, donors, private sector, stakeholders and local authorities; and a sample of households residing along the project road was also undertaken. Stakeholders consulted and key findings are presented in Annex B8 and B9.
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2.7. Bank Group Experience, Lessons Reflected in Project Design
2.7.1 The Bank Group’s experience with similar projects is improvement of transport services with reduction in transport costs and travel time for the communities in the zones of influence. There are two on-going projects in Mozambique funded by the Bank, namely Vanduzi-Changara Road Rehabilitation due for completion in the first quarter of 2010 and the Montepuez-Lichinga Road Project that is at tendering stage, both expected to achieve their objectives. There are no on-going operations financed by the Bank in the transport sector in Malawi currently. The lessons reflected in project design from completed projects as summarised in Annex B1 and experience from portfolio management are ; (i) critical review of the detailed design reports reduces chances of modification of the scope of works; This has been mitigated by critically reviewing the design reports during project processing and bringing the identified gaps to the attention of the Executing Agencies for closing prior to appraisal; (ii) late payment of counterpart financing can lead to contractor claims and possible termination of contracts; Counterpart financing by Governments has improved due to better budget control; (iii) high turn-over of staff by the Executing Agencies results in loss of personnel with knowledge of Bank procedures in procurement and disbursement causing delays in procurement and disbursements; The Roads Agencies in both countries are autonomous entities that have improved remuneration and benefits for staff and therefore can retain qualified and experienced technical staff for management of road projects; (iv) Premature failure of the pavements will be mitigated by control of axle loads; The Field Offices will be channels of communication with the Bank’s Head Office to ensure that the Executing Agencies adhere to the implementation schedules agreed to.
2.8 Key Performance Indicators
2.8.1 Progress towards achieving the main outcomes shall be measured by reduction in vehicle operating costs and travel time translated into reduced cif and fob for imports and exports, improved road safety and increase in women engaged in cross-border trading, Use of trade statistics from SADC secretariat, customs and immigration records will be the source of information. The output indicators will be monitored using progress and supervision reports as the road is opened to traffic during project execution and at project completion. The supervision consultant will be responsible for the collection of baseline data, including disaggregating it by gender, at various intervals throughout the project as means of ensuring that the intended targets are achieved.
III – PROJECT FEASIBILITY
3.1 Economic and Financial Performance 3.1.1 The methodology for the economic analysis is based on cost benefit analysis by comparing the “with” and “without “ project scenarios over a period of 20 years, using the Highway Development and Management Model (HDM-4). A discount rate of 12% and a residual value of 20% are adopted. Construction period of 3 years starting January 2010 for Nampula – Cuamba and 2 years for Lilongwe Bypass are assumed. The economic costs consist of (i) the capital investment costs and (ii) the routine and periodic maintenance expenses. The benefits consist of savings in (i) vehicle operating costs and (ii) motorized traffic travel time for passenger and cargo. The traffic and economic analysis results are presented in Annex (B7). The summary of the economic analysis is presented in Table 3.1.
Table 3.1Summary of the Economic Analysis Nampula – Cuamba (348.1km) Lilongwe Bypass (13km) FIRR, NPV (base case) (Not Applicable) (Not Applicable) Economic Internal Rate of Return(EIRR) 17.9% 18.2% Net Present Value (NPV) in US$ 77.05million 14.46million Sensitivity of EIRR of concurrently 20% increase in cost and 20% decrease in traffic
12.9%
12.1%
8
3.2. Environmental and Social impacts Environment
3.2.1 Consistent with AfDB Policy, the project falls under Category I as there are a number of potentially significant and sensitive environmental and social impacts (which can be managed) but require substantial commitment, resources, and monitoring. ESIA Summaries, together with annexes containing summaries for a full RAP for the Nampula-Cuamba Road and an abbreviated RAP for the Lilongwe Bypass were posted on 29th January 2008 on the Bank’s website.
3.2.2 The major adverse social impacts along both roads will be due to the relocation of project affected people and to address this resettlement action plans have been prepared. Along the Nampula-Cuamba Road, environmental impacts of concern relate to vegetation clearance and the subsequent destruction of virgin forest and miombo woodland and therefore wildlife habitats due to access for increased exploitation of natural resources and clearing for large scale monoculture plantations. On the Malawian side, major environmental issues shall include landscape alteration and vegetation clearance, grabbing of farm land, potential water pollution especially of the Lilongwe River (the main water source for Lilongwe City), human settlements and soil erosion. In order to address all the negative impacts, full ESIA reports and costed ESMPs have been developed in accordance with Bank’s ESAP. Environmental and social mitigation costs for the Nampula-Cuamba Road are estimated at UA1.65 million and those for the Lilongwe Bypass amount to UA 0.22 million (equivalent in respective local currencies).
Climate Change
3.2.3 The project area in both countries has relatively high rainfall (800 – 1000 mm per year). The coastal districts of Mozambique, including Nacala and Nampula are prone to cyclones which may get worse with climate change. The road project may, therefore, be affected by heavy water splashes and flash floods. The design has taken into consideration these effects by incorporating measures to control stormwater and the erosive effects. The road infrastructure shall be protected by installing drainage works to prevent surface water from being concentrated in streams and from scouring slopes, banks or other areas. Special measures include: use of mechanical cover or packing structures such as geofabric to stabilize steep slopes or hessian, gabions and mattress and retaining walls; straw stabilizing, brush-cut packing, mulch or chip cover, hydroseeding, sprigging or sodding, and anti-erosion berms. These measures shall ensure that no damage is caused to downstream property caused by the diversion of overland stormwater flows. Alleviation of congestion within Lilongwe city will result in fewer vehicle emissions in the town centre since idling in traffic jams will be diminished, but traffic volumes along the bypass will increase. Overall, a minimal increase in GHG emissions is expected. Mitigation measures include control over plant and equipment that could potentially emit exhaust fumes, and the age of equipment and building restrictions to ensure minimum distance from the road. Afforestation in both cases will be part of funded activities in ESMP.
Gender
3.2.4 While men and women will both be affected by the project, women will bear a disproportionate burden. The expected negative impacts of the Nacala Corridor road project on women include dislocation, loss of property and land, disruption in income source, loss of client/ marketing base for products, heightening of social tensions/ conflicts, and increased vulnerability to HIV/AIDS and STIs for women and girls. Mitigation measures have been developed and budgeted for in the ESMP. The expected positive impacts on women include additional employment opportunities in the project works of at least 25% of unskilled jobs and 5% of skilled jobs in Mozambique (approximately 375), and at least 10% of jobs in Malawian (approximately 15); increased sources for income generation; greater access to national and regional markets; enhanced contribution of women to strengthening the viability
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of national and regional economies; and improved access to and use of socioeconomic infrastructure by women and girls.
Social
3.2.5 During construction, employment opportunities for members of the local communities will supplement family incomes. It is expected that at least 1,000-1,500 and 100-130 people will be employed in Mozambique and Lilongwe, respectively. This translates into at least US$2.9 million and US$52,222 in form of wages over the 36 months and 19 months periods in Mozambique and Malawi, respectively. Businesses will benefit from providing services such as the provision of construction materials, transport services, food and drink for the workforce. When complete, the project roads will boost agriculture productivity through ease of access to markets, thereby increasing farming revenues. Other commercial activities will also be stimulated, leading to more agro-industries being set up, and consequently more social infrastructure will be established. Benefits shall be enhanced through synergies derived from other projects such as the Niassa Provincial Towns Water Supply funded by ADB in Mozambique and the Lilongwe Water Development Project funded by World Bank which is protecting the up-stream water intake for the Lilongwe Water Board.
3.2.6 After construction, the transport system in the region will be greatly enhanced, as will regional connectivity. Transportation of people and goods will become more efficient, travel times will decrease, travel will be more comfortable, and vehicle operating costs will decrease. Social services will be more easily accessible. However, traffic accidents are likely to increase, and there is risk of STIs/HIV/AIDS spreading due to the interaction of the local communities with construction workers, truck drivers and/or newcomers who will migrate to the project areas in search of livelihood and employment opportunities. Given the seriousness of the epidemic on road corridors, the project will prescribe a standard TORs for service providers to be included in the bidding documents. Full details are presented in Annex C3.
Involuntary Resettlement
3.2.7 Along the Nampula-Cuamba Road, potentially 469 houses and structures belonging to 400 households will be affected, as well as approximately 500 acres of agricultural land, crops and trees. A Resettlement Plan has been prepared, and the total cost of relocation is estimated at between US$ 3,090,950 and US$5,247,786. Immense effort was applied to ensure that no social infrastructures are affected on the Nampula - Cuamba road. An Abbreviated Resettlement Plan has been prepared for the Lilongwe Bypass, where 27 houses, about 78 hectares (193 acres) of cultivated land, 7 hectares of private land, 7 hectares of natural trees, a church, a borehole, 12 electric poles and a water pipe will be affected. The basic compensation cost for the affected structures and land is estimated at US$ 295,000, exclusive of implementation, administration and monitoring costs.
IV – IMPLEMENTATION
4.1 Implementation Arrangements Institutional
4.1.1 Overall a Steering Committee (SC) will oversee project implementation through bi-annual meetings coinciding with the regional road sub-sector meetings (SCOMs). The SC under the Chairmanship of the Director of Infrastructure and Services at the SADC Secretariat will comprise the Director General of the National Roads Administration (ANE) in Mozambique, the Chief Executive of the Roads Authority (RA) in Malawi or their designates and a representative from the ministry responsible for transport from each country. Under Bank financing the SADC Secretariat has strengthened its management capacity by appointing a Corridor Coordinator. The Corridor Coordinator has requisite experience in transport planning and project/corridor management. He/She will be the link between the two executing agencies and coordinate the bi-annual meetings with the Bank, Governments and
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Executing Agencies. The Committee at its meetings will review progress and ensure that implementation is streamlined for successful completion of the components in each country. This arrangement was agreed to during the processing of this project.
4.1.2 At national level, ANE in Mozambique and RA in Malawi, the two entities responsible for management of the national road networks, will be responsible for the execution of the project components in the respective countries. ANE and the RA have successfully supervised similar road projects funded by donors including the Bank and have sufficient experience and capacity for the execution of the proposed project. The organizational structures of ANE and the RA are presented in Annex B4.
4.1.3 Both entities will assign civil engineers to be Project Coordinators. The designated engineers shall have a minimum of five years of experience and qualifications that are acceptable to the Bank. This is a condition for both loans. The Project Coordinators will be responsible for overall monitoring of the activities of the project components in each country, and serve as contact persons for all the parties involved in the project. They shall liaise with the supervision consultants, prepare and forward the quarterly progress reports to the SADC Secretariat and the Bank. With regard to environmental and social mitigation measures, GAT (Office of Cross Cutting Issues) in Mozambique is responsible for ensuring legal, environmental, social (including gender, resettlement, road safety and poverty reduction) and security aspects during and after project, are implemented. In Malawi, the responsibility will rest with the Environmental Management Unit (EMU) of the Roads Authority in collaboration with the District and City Assemblies.
Procurement
4.1.5 All procurement of goods, works, and related services, and acquisition of consulting services financed by the ADF will be in accordance with the Bank’s Rules and Procedures for the Procurement of Goods and Works and Rules and Procedures for the Use of Consultants, using the relevant Bank Standard Bidding Documents. Both the ANE in Mozambique and the RA in Malawi have Procurement Sections reporting directly to the Director General in the case of Mozambique and to the Chief Executive Officer in Malawi. The sections are responsible for procurement and both have experience of procurement for donor funded projects. The sections are adequately staffed and have the capacity for procurement for this project.
Disbursement
4.1.6 The loan will be disbursed through two categories of expenditure namely, civil works and consulting services for design review/supervision, road safety and Audit Services. The Direct Payment Disbursement Method will be used for all payments against standard documentation as specified in the Bank’s ‘Disbursement Handbook’. Project audit will be in accordance with Bank Rules.
Financial Management 4.1.7 In Mozambique, the Head of the Financial Management Department of the Road Fund (FE) will be responsible for financial management and reporting for the project. In Malawi, the Head of Finance in the Road Fund Administration (RFA) through the Senior Accountant will be responsible for the function. Both Departments have experience in financial management of donor funded projects are fully staffed and therefore have the capacity to manage the finances of the project. In Mozambique, the capacity of the Financial Management Department has been strengthened by a Technical Assistant. Both entities are using the SUN system which has enhanced accountability, managerial autonomy and financial control. The Financial Management Department (FE) in Mozambique and the Finance Department (RFA) in Malawi will maintain all the financial records of the project components.
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4.2 Monitoring
4.2.1 The Executing Agencies have successfully undertaken monitoring and evaluation of similar projects financed by the Bank and other development partners. The Agencies therefore have the necessary capacity for monitoring and evaluation of this project. Since there are no harmonized reporting mechanisms nor has the use of country systems been adopted for this project, the Executing Agencies will submit monthly reports prepared by the supervision consultants and quarterly reports prepared in the Bank's format. These reports will include physical, financial, social and environmental indicators the project has achieved. The reports will also provide updated information on project implementation, highlighting key issues and problem areas and recommending action plans for resolving identified bottlenecks. Copies of these reports will be reviewed by the Infrastructure Specialists in the Field Offices in Maputo and Lilongwe to advise the Executing Agencies prior to forwarding to Tunis and the SADC Secretariat. The Bank will field supervision missions twice a year to coincide with the bi-annual meetings of the SC and will mount a mid-term review in the second year of implementation to identify any major issues facing the project and provide the required corrective measures.
4.2.2 For both road projects the resettlement process must be completed for the first sections before road construction works begin. Monitoring will be done by GAT for the Nampula-Cuamba Road and the EMU for the Lilongwe Bypass. Local CBOs and NGOs alongside local communities will also take part in monitoring.
4.2.3 At 85% completion of the project components in each country, the Bank and the Executing Agencies will start preparing a Project Completion Report for submission to the Bank as specified in the General Conditions. This report, the consultants’ final project report and the Executing Agencies’ performance statistics and financial performance will form the basis of post-evaluation of the project. The impact of the project will also be assessed through the Performance Assessment Frameworks (PAF) developed for the roads sub-sector in the two countries to monitor implementation of programmes.
4.3 Governance 4.3.1 The CSP (2005-2009) under Pillar 1 on Governance is intended to turn the state apparatus to stimulate the economy and develop human capital. GOMz has continued to create an enabling environment for private sector investment and priority infrastructure development by ensuring transparency, accountability and implementation of legislation against crime and corruption. In response, the Government is putting in place an anti-corruption strategy and has appointed a new Attorney General.
4.3.2 The Government of Malawi has shown commitment to fight corruption and related crimes leading to improved transparency and accountability. In order to sustain the fight against corruption, the Government of Malawi launched a National Anti-Corruption Strategy in February 2009 which aims at bringing all stakeholders together in fighting graft. Further, Malawi is implementing a Citizens Charter programme with a view to improve public service delivery, transparency and accountability. Government has put anti-corruption high on its agenda. The general elections held in May 2009 were peaceful and will provide an environment conducive for the implementation of the project. 4.3.3 In the roads sub-sector the donor groupings in the two countries monitor governance issues on a continuous basis. During donor consultations no malpractices were reported. For this project mechanisms for procurement and financial management will be in accordance with Bank rules and therefore the risk of fraud and corruption is minimal. Adequate provisions have also been made for auditing of the project on annual basis.
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4.4 Sustainability 4.4.1 Regional led road sector reforms as provided by the SADC Protocol on Transport, Communications and Meteorology have resulted in the establishment of autonomous roads agencies and road funds in member states which have been delegated the planning, construction, maintenance, management and financing of the country’s core road networks outside the public service. The road funds with revenues from road user charges have ring-fenced financing for road maintenance, a shift from the force account systems that could not deliver value for money maintenance. Mozambique and Malawi established Roads Agencies and Road Funds in 1999 and 1998 respectively and are fully staffed with qualified personnel and have developed the experience and capacity to manage the national road networks and over the period have transformed into results-oriented entities. Annex B3 details the reforms undertaken. In addition the two entities are contracting out routine and periodic maintenance to the private sector and have enhanced the development of the domestic contracting industries to sustain service delivery for road works. For Mozambique the project has built-in axle load control facilities at Nampula to protect the road from overloading and the existing network of axle-load control facilities in Malawi is well placed to protect the investment. The one-stop border posts are to incorporate axle-load control facilities for cross-border traffic. 4.4.2 During construction and the defects liability period the contractors will be responsible for maintenance of the sections open to traffic. At completion ANE and the RA will be responsible for maintenance through financing from the road funds. The maintenance activities during the life of the roads will include routine maintenance comprising crack sealing, road reserve maintenance, pothole patching, clearing of drainage structures and rejuvenation sprays. Periodic maintenance will be through reseals after 5-7 years and overlays after 10-15 years.
4.4.3 In Mozambique the road fund revenues cover the entire routine maintenance needs and about 21% of the periodic maintenance requirement. The balance is covered by donors through sector budget support or pooled financing. Initiatives to reduce pressure on the road fund revenues complimented by sector budget support financing are being considered by Government. The measures include tolling of road sections with relatively high traffic levels through concessions using the experience gained from the Maputo-Witbank toll road on the Maputo Corridor. Procurement is underway for concessioning of three road sections and the feasibility of tolling another two sections is being investigated. The medium to long term plan is to introduce private sector performance based maintenance contracts on some road sections, further increase the fuel levy and widen the road user charging system to incorporate part of the license fees.
4.4.4 In Malawi the road fund covers the entire routine maintenance requirement and about 24% (2008/09) of the periodic maintenance requirement and donors cover the balance through direct financing. Discussions between Government and development partners are underway to channel financing through budget support and the EU has earmarked €50 million for routine and periodic maintenance and €10 million for capacity building for the 2011-2013 period. The recent increase of fuel levy by 102% has doubled the Road Fund Revenues and is sure commitment by Government to the sustainability of the roads sub-sector. Dialogue with Government is looking at widening the source of revenues for the Road Fund by incorporating the existing road tax and a portion of the car licence fees.
4.4.5 Annex C2 gives details of road network financing needs and revenues.
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4.5. Risk Management 4.5.1 Counterpart Financing: Failure to pay counterpart financing results in claims from the contractors or termination of contracts. This will be mitigated in Mozambique by GOMz making adequate provisions in PRISE (2007-2011) budget allocations for counterpart financing. In Malawi there has been significant improvement in the payment of counterpart financing due to Government’s increased budget effectiveness and efficiency. 4.5.2 Bank Rules and Procedures: High Turn-over of Staff results in loss by Executing Agencies of staff with knowledge of Bank procurement and disbursement procedures and resulting in delays in project implementation. The Field Offices will mitigate the risk by making available expertise that can advise and follow-up with the Executing Agencies; 4.5.3 Cost Overrun: The increase in project costs due to the volatility of oil prices and prices of road building materials has been mitigated by using rates based on recently awarded contracts and making adequate provisions in the estimates for price escalation.
4.6. Knowledge Building
4.6.1 The project will generate new knowledge from implementation of SATCC Standards which have been adopted in the two countries; modalities of corridor management and safety standards; one-stop border controls; etc. Exchange of experiences of the two countries with the SADC Secretariat during the SC meetings will enhance the use of regional best practices.
V – LEGAL INSTRUMENTS AND AUTHORITY
5.1 Legal Instrument 5.1.1 ADF loans will be used to finance the upgrading of the Nampula-Cuamba Road in Mozambique and the construction of the Lilongwe By-pass in Malawi.
5.2. Conditions associated with Bank’s Intervention The ADF loans shall be subject to the following specific and particular conditions:
(A) Conditions Precedent to Entry Into Force:
The entry into force of the loan Agreements shall be subject to the fulfilment by the Borrowers of the conditions set forth in Section 12.01 of the Revised General Conditions Applicable to the African Development Fund Loan Agreements and Guarantee Agreements.
(B) Conditions Precedent to First Disbursement: Mozambique
The obligations of the ADF to make the first disbursement of the loan shall be conditional upon entry into force of this Loan Agreement as provided above and the Borrower shall have provided evidence, to the satisfaction of the Fund, of:
(i) ANE’s approval of the project’s sections and project’s works schedule (“Works
Schedule”);
(ii) All relevant project-affected persons and properties for the first section of Lot A, Lot B and Lot C under the Works Schedule have been fully and adequately compensated in accordance with RAP prior to commencement of construction works;
(iii) Will provide written confirmation that joint financing required for the project has been secured;
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(iv) having designated a Project Coordinator for project co-ordination functions who shall be a civil engineer from ANE with relevant qualifications and experience acceptable to the Fund;
Malawi The obligation of the Fund to make the first disbursement of the loan shall be conditional upon entry into force of this Loan Agreement as provided above and the Borrower shall provide evidence, in a form and substance acceptable to the Fund of:
(i) All relevant project-affected persons and properties for the entire bypass in
Malawi have been fully and adequately compensated in accordance with ARAP prior to commencement of construction works;
(ii) having designated a Project Coordinator who shall be a civil engineer from the RA, with relevant qualifications and experience acceptable to the Fund for project co-ordination functions;
(C) Conditions Precedent to Further Disbursements
The obligation of the Fund to make further disbursements of the Loan under this Agreement shall be conditional upon the Borrower providing evidence, in a form and substance acceptable to the Fund of:
(i) having compensated and relocated/resettled in accordance with the relocation, resettlement and compensation plan, PAPs in subsequent sections prior to the commencement of construction works (Mozambique);
(ii) the Budgetary appropriation for compensation of PAPs during the relevant budgetary year (Mozambique);
(D) Undertaking (Mozambique and Malawi)
The Borrower undertakes; (i) to carry out traffic counts on the project road and on the national road network on a bi-annual basis during project execution as of the commencement of the civil works; and (ii) to implement the Environmental and Social Management Plan (ESMP).
5.3. Compliance with Bank Policies This project complies with all applicable Bank policies.
VI – RECOMMENDATION Management recommends that the Board of Directors approve the proposed loans of UA102.72 million to the Government of Mozambique for jointly financing with JICA and the EXIM Bank of Korea the Nampula-Cuamba Road and UA14.32 million to the Government of Malawi for the Lilongwe Bypass both as part of Phase I of the Nacala Road Corridor for the purposes and subject to the conditions stipulated in this report.
15
Year Mozam- bique Africa
Develo- ping
Countries
Develo- ped
CountriesBasic Indicators Area ( '000 Km²) 802 30 323 80 976 54 658Total Population (millions) 2008 21,8 985,7 5 523,4 1 226,3Urban Population (% of Total) 2008 36,9 39,2 44,0 74,4Population Density (per Km²) 2008 27,2 32,5 23,0 49,6GNI per Capita (US $) 2007 320 1 226 2 405 38 579Labor Force Participation - Total (%) 2005 51,6 42,3 45,6 54,6Labor Force Participation - Female (%) 2005 50,6 41,1 39,7 44,9Gender -Related Development Index Value 2006 0,358 0,482 0.694 0,911Human Develop. Index (Rank among 174 countries) 2006 175 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 2003 54,1 34,3 25,0 …Demographic IndicatorsPopulation Growth Rate - Total (%) 2008 1,9 2,3 0,3 1,2Population Growth Rate - Urban (%) 2008 4,1 3,3 2,5 0,5Population < 15 years (%) 2008 44,4 40,9 16,6 27,4Population >= 65 years (%) 2008 3,2 3,4 16,7 8,0Dependency Ratio (%) 2008 90,5 79,5 47,7 53,9Sex Ratio (per 100 female) 2008 94,6 99,3 94,3 101,5Female Population 15-49 years (% of total population) 2008 23,7 24,2 24,3 25,8Life Expectancy at Birth - Total (years) 2008 42,4 54,5 76,7 67,5Life Expectancy at Birth - Female (years) 2008 42,7 55,6 67,5 80,3Crude Birth Rate (per 1,000) 2008 38,7 35,7 11,0 20,1Crude Death Rate (per 1,000) 2008 19,5 13,0 10,4 8,6Infant Mortality Rate (per 1,000) 2008 93,5 83,9 7,1 48,5Child Mortality Rate (per 1,000) 2008 159,2 137,4 8,8 72,3Total Fertility Rate (per woman) 2008 5,0 4,6 1,6 2,5Maternal Mortality Rate (per 100,000) 2005 520,0 683,0 450 9Women Using Contraception (%) 2003 16,5 29,7 61,0 75,0Health & Nutrition IndicatorsPhysicians (per 100,000 people) 2004 2,6 39,6 78,0 287,0Nurses (per 100,000 people) 2004 19,7 120,4 98,0 782,0Births attended by Trained Health Personnel (%) 2003 47,7 51,2 59,0 99,0Access to Safe Water (% of Population) 2006 42,0 64,3 84,0 100,0Access to Health Services (% of Population)* 2004 39,0 61,7 80,0 100,0Access to Sanitation (% of Population) 2006 31,0 37,6 53,0 100,0Percent. of Adults (aged 15-49) Living with HIV/AIDS 2007 12,5 4,5 1,3 0,3Incidence of Tuberculosis (per 100,000) 2006 0,0 0,0 275,0 19,0Child Immunization Against Tuberculosis (%) 2007 90,0 83,0 89,0 99,0Child Immunization Against Measles (%) 2007 75,0 83,1 81,0 93,0Underweight Children (% of children under 5 years) 2003 23,7 25,2 27,0 0,1Daily Calorie Supply per Capita 2004 2 057 2 436 2 675 3 285Public Expenditure on Health (as % of GDP) 2004 2,7 2,4 1,8 6,3Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2006 104,8 99,6 106,0 101,0 Primary School - Female 2006 96,9 92,1 103,0 101,0 Secondary School - Total 2006 15,5 43,5 60,0 101,5 Secondary School - Female 2006 12,9 40,8 58,0 101,0Primary School Female Teaching Staff (% of Total) 2006 26,4 47,5 51,0 82,0Adult Illiteracy Rate - Total (%) 2007 55,6 38,0 21,0 1,0Adult Illiteracy Rate - Male (%) 2007 42,8 29,0 15,0 1,0Adult Illiteracy Rate - Female (%) 2007 67,0 47,0 27,0 1,0Percentage of GDP Spent on Education 2006 5,0 4,5 3,9 5,9Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 2005-08 4,0 6,0 9,9 11,6Annual Rate of Deforestation (%) 2000-08 0,2 0,7 0,4 -0,2Annual Rate of Reforestation (%) 2000-08 4,0 10,9 … …Per Capita CO2 Emissions (metric tons) 2005-08 0,1 1,0 1,9 12,3
Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update :UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports
Note : n.a. : Not Applicable ; … : Data Not Available;
COMPARATIVE SOCIO-ECONOMIC INDICATORSMozambique
mars 2009
Infant Mortality Rate ( Per 1000 )
0
20
40
60
80
100
120
2003
2004
2005
2006
2007
2008
Mozambique Africa
GNI per capita US $
0200400600800
100012001400
2002
2003
2004
2005
2006
2007
Mozambique Africa
Population Growth Rate (%)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2003
2004
2005
2006
2007
2008
Mozambique Africa
Life Expectancy at Birth (years)
111213141516171
1
Mozambique Africa
16
Year Malawi AfricaDevelo-
ping Countries
Develo- ped
CountriesBasic Indicators Area ( '000 Km²) 118 30 323 80 976 54 658Total Population (millions) 2008 14.3 985.7 5 523.4 1 226.3Urban Population (% of Total) 2008 18.9 39.2 44.0 74.4Population Density (per Km²) 2008 120.6 32.5 23.0 49.6GNI per Capita (US $) 2007 250 1 226 2 405 38 579Labor Force Participation - Total (%) 2005 46.3 42.3 45.6 54.6Labor Force Participation - Female (%) 2005 48.5 41.1 39.7 44.9Gender -Related Development Index Value 2006 0.453 0.482 0.694 0.911Human Develop. Index (Rank among 174 countries) 2006 162 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 2006 45.0 34.3 25.0 …Demographic IndicatorsPopulation Growth Rate - Total (%) 2008 2.6 2.3 0.3 1.2Population Growth Rate - Urban (%) 2008 5.2 3.3 2.5 0.5Population < 15 years (%) 2008 46.8 40.9 16.6 27.4Population >= 65 years (%) 2008 3.0 3.4 16.7 8.0Dependency Ratio (%) 2008 98.4 79.5 47.7 53.9Sex Ratio (per 100 female) 2008 99.1 99.3 94.3 101.5Female Population 15-49 years (% of total population) 2008 22.3 24.2 24.3 25.8Life Expectancy at Birth - Total (years) 2008 48.7 54.5 76.7 67.5Life Expectancy at Birth - Female (years) 2008 48.8 55.6 67.5 80.3Crude Birth Rate (per 1,000) 2008 40.3 35.7 11.0 20.1Crude Death Rate (per 1,000) 2008 14.6 13.0 10.4 8.6Infant Mortality Rate (per 1,000) 2008 87.5 83.9 7.1 48.5Child Mortality Rate (per 1,000) 2008 128.3 137.4 8.8 72.3Total Fertility Rate (per woman) 2008 5.5 4.6 1.6 2.5Maternal Mortality Rate (per 100,000) 2004 984.0 683.0 450 9Women Using Contraception (%) 2006 41.7 29.7 61.0 75.0Health & Nutrition IndicatorsPhysicians (per 100,000 people) 2004 2.1 39.6 78.0 287.0Nurses (per 100,000 people) 2004 56.3 120.4 98.0 782.0Births attended by Trained Health Personnel (%) 2006 53.6 51.2 59.0 99.0Access to Safe Water (% of Population) 2006 76.0 64.3 84.0 100.0Access to Health Services (% of Population)* 2004 35.0 61.7 80.0 100.0Access to Sanitation (% of Population) 2006 60.0 37.6 53.0 100.0Percent. of Adults (aged 15-49) Living with HIV/AIDS 2007 11.9 4.5 1.3 0.3Incidence of Tuberculosis (per 100,000) 2006 377.0 315.8 275.0 19.0Child Immunization Against Tuberculosis (%) 2007 95.0 83.0 89.0 99.0Child Immunization Against Measles (%) 2007 82.0 83.1 81.0 93.0Underweight Children (% of children under 5 years) 2006 19.4 25.2 27.0 0.1Daily Calorie Supply per Capita 2004 2 077 2 436 2 675 3 285Public Expenditure on Health (as % of GDP) 2005 8.7 2.4 1.8 6.3Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2007 116.5 99.6 106.0 101.0 Primary School - Female 2007 118.6 92.1 103.0 101.0 Secondary School - Total 2007 28.3 43.5 60.0 101.5 Secondary School - Female 2007 25.7 40.8 58.0 101.0Primary School Female Teaching Staff (% of Total) 2004 45.7 47.5 51.0 82.0Adult Illiteracy Rate - Total (%) 2007 28.2 38.0 21.0 1.0Adult Illiteracy Rate - Male (%) 2007 20.8 29.0 15.0 1.0Adult Illiteracy Rate - Female (%) 2007 35.4 47.0 27.0 1.0Percentage of GDP Spent on Education 2006 5.3 4.5 3.9 5.9Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 2005-08 19.9 6.0 9.9 11.6Annual Rate of Deforestation (%) 2000-08 2.4 0.7 0.4 -0.2Annual Rate of Reforestation (%) 2000-08 8.0 10.9 … …Per Capita CO2 Emissions (metric tons) 2005-08 0.1 1.0 1.9 12.3
Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update :UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports
Note : n.a. : Not Applicable ; … : Data Not Available;
COMPARATIVE SOCIO-ECONOMIC INDICATORSMalawi
March 2009
Infant Mortality Rate ( Per 1000 )
75
80
85
90
95
100
2003
2004
2005
2006
2007
2008
Malawi Africa
GNI per capita US $
0200400600800
100012001400
2002
2003
2004
2005
2006
2007
Malawi Africa
Population Growth Rate (%)
2.0
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2003
2004
2005
2006
2007
2008
Malawi Africa
Life Expectancy at Birth (years)
111213141516171
1
Malawi Africa
17
APPENDIX II: Table of ADB’s Portfolio in Mozambique
Project
Date Approved
Loan/Grant Amount
(UA million)
Amount Disbursed
(UA million)
%
Disbursed AGRICULTURE Artesanal Fisheries Development Project
14/09/2001 Loan: 14.17 Grant: 1.73 Total: 15.90
4.09
22
Family Sector Income Enhancement Project
31/10/2000 Loan: 12.46 Grant: 1.00 Total: 13.46
7.75
57.6
Massingir Dam and Smallholder Agriculture
02/03/2007 Loan: 17.00 Grant: 0.00 Total: 17.00
0.06 0.39
Massingir Dam and Smallholder Agricultural Rehabilitation
POWER Electricity IV Project 13/11/2003 Loan: 26.30
Grant: 0.00 Total: 26.30
0.25 1.0
Energy Reform and Access Program Rural Electrification Project (Elect III)
03/11/2001 Loan: 11.12 Grant: 0.00 Total: 11.12
2.35 21.2
SOCIAL Education III Project 15/07/1998 Loan: 10.69
Grant: 1.63 Total: 12.32
10.66 86.6
Education IV Project 13/11/2001 Loan: 10.00 Grant: 0.00 Total: 10.00
1.73 17.3
Health II Project 21/12/2000 Loan: 9.00 Grant: 0.60 Total: 9.60
3.14 32.7
18
TRANSPORT Montepuez-Lichinga Road Project 27/10/2006 Loan: 30.10
Grant: 0.00 Total: 30.10
0.0 0.0
Vanduzi-Changara Road Rehabilitation Project
15/12/1999 Loan: 16.79 Grant: 0.80 Total: 17.59
10.12 57.5
WATER AND SANITATION Integrated Water Supply and Sanitation Project
08/12/2000 Loan: 15.77 Grant: 1.00 Total: 16.77
10.15 60.5
Maputo Water Supply Augmentation Project
17/06/1999 Loan: 17.50 Grant: 2.16 Total: 19.66
5.10 25.9
Urban Water Supply & Inst Support 20/12/2002 Loan: 19.06 Grant: 2.31 Total: 21.37
9.22 43.2
TOTAL APPROVALS 415.58 233.97 56.30 Appendix II: Table of ADB’s Portfolio in Malawi
Project
Date
Approved
Loan/Grant Amount (UA
million)
Amount Disbursed (UA million)
%
Disbursed Smallholder Irrigation Project
26/12/1998 Loan: 5.020 Grant:0.000 Total: 5.020
4.99 99.4
Smallholder Outgrowers Sugarcane Production Project
15/12/1999 Loan: 8.930 Grant:0.000 Total: 8.930
8.43 94.4
Support to Secondary Education Phase IV
21/11/2001 Loan: 15.00 Grant: 0.00 Total: 15.00
12.45 83.0
Skills & Income Generation
06/01/2002 Loan: 9.590 Grant:0.000 Total:9.590
8.22 85.7
Lake Malawi Artisanal Fisheries Development
29/01/2003 Loan: 6.930 Grant: 0.840 Total: 7.770
4.47 58.6
Support to Health Sector Program SWAp
24/11/2005 Loan: 0.00 Grant:15.00 Total: 15.00
5.1 33.8
Smallholder Crop Production & Marketing
07/07/2006 Loan: 0.00 Grant:15.00 Total: 15.00
2.42 16.1
Poverty Reduction Support Loan
11/04/2007 Loan:14.890 Grant: 0.000 Total:14.890
14.89 100
National Water Development Program
02/07/2008 Loan: 15.20 Grant: 10.70 Total: 25.90
0 0
Local Economic Development
Loan: 14.00 Grant: 0.00 Total: 14.00
0 0
19
Appendix III: Key Related Projects Financed by the Bank and Other Development
Partners in Mozambique Supervision Ratings Project Financier Amount
Million USD
Implementation Progress
Development Objectives
N1: Jardim-Benfica World Bank 28.0 F F N1: Xai Xai-Chissibuca World Bank 53.0 F F N1: Namacurra-Nampevo EU 20.0 P P N11: Mocuba-Milange EU 88.0 Commencing na N14: Marrupa-Ruaca SIDA 26.0 Commencing na N1: Nicuadala-Chimuara MCA 59.2 Commencing na N1: Rio Ligonha-Nampula MCA 38.2 Commencing na N1: Namialo-Metoro MCA 75.9 Commencing na Zambezi Bridge EU/SIDA/Italy
/JICA 88.1 G G
G-Good; F-Fair; P- Poor
Key Related Projects Financed by the Bank and Other Development Partners in Malawi
Supervision Ratings Project Financier Amount Million
USD Implementation Progress
Development Objectives
Karonga-Chitipa Road Upgrading
China 45.00 S S
Zomba-Jali-Phalombe-Chitakale
OPEC/BADEA/Kuwait Fund
57.09 F S
Thyolo-Bangula Road Rehabilitation
OPEC/BADEA/Kuwait Fund/Saudi Fund
64.15 P P
Liwonde-Naminga OPEC 22.68 S S Masasa-Golomoti EU 6.30 S S Mangochi-Monkey Bay EU 11.50 S S Lilongwe-Nsipe EU 11.40 S S Mzuzu-Urban EU 3.90 S S Kalwe, Liwaladzi, Katsikizi, Lisasadzi Bridges
EU 2.70 S S
Blantyre City Roads JICA 14.98 S S Infrastructure Services World Bank 6.00 S S S – Satisfactory; F – Fair; P - Poor
20
Appendix IV: Map of the Project Area MOZAMBIQUE / MALAWI / ZAMBIA: MULTINATIONAL NACALA ROAD CORRIDOR –
