Document of The World Bank FOR OFFICIAL USE ONLY Report No. 8831 PROJECT PERFO1MANCE AUDIT REPORT CAMEROON FIRST URBAN PROJECT (LOAN 2244-CM) JUNE 25, 1990 Operations Evaliation Department This document has a restricted distribution and may be used by recipients only in the performance of their officid duties. Its contents may not otherwise be disclosed without World Bank atherization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. 8831
PROJECT PERFO1MANCE AUDIT REPORT
CAMEROON
FIRST URBAN PROJECT(LOAN 2244-CM)
JUNE 25, 1990
Operations Evaliation Department
This document has a restricted distribution and may be used by recipients only in the performance oftheir officid duties. Its contents may not otherwise be disclosed without World Bank atherization.
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ABOREVIATIONS AND ACRe.JYMS
ARAN Agence de Restructurati4n et d'Aménagement de Nylon
ARYNO Agence pour la Restructuration de Yaoundé Nord-Ouest
BEAC Banque des Etats de l'Afrique CentraleBLAF Burau de Liaison Jes Affaires Foncières
CAPME Centre d'Assistance aux Pet1te* et Moyennes EntreprisesCFC Crédit Foncier du Cameroun
CPN Calse Populaire de Nylon
DDA Coopération Suisse au Développement et à l'AIde Humanitalre
FEICOI Fonds Spécial d'Equipement et d'Intervention Interdormunal
MAETUR Mission d'Aménagement et d'Equip.ment des Terrains Urbains et Ruraux
MINUH Ministère de l'Urbanisme et de l'Habitat
NOO Non-govern»ental Organizatlon
OPC Organisation, Pi lotage, Contr8le de Travaux
PiE Petites et Moyennes Entreprises
RFP Request for ProposaiROW Right of Way
SIC Société Immobilière du CaomarounSNEC Société Nationale des Eaux du CamerounSONEL Société Nationale d'Electricit6
UCPY Union des Caisses Populaires de Yaoundé
FOR OFFICIAL USE ONLYTHE WORLD BANK
Washington. D.C 20433U.S.A.
OM1Ce as DMIrect-CenWraopatwis eviatiti
June 25, 1990
MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT
SUBJECT: Project Performance Audit Report onCameroon - First Urban Development Project(Loan 2244-CM)
Attached, for information, is a copy of a report entitled "ProjectPerformance Audit Report on Cameroon - First Urban Development Project(Loan 2244-CM)" prepared by the Operations Evaluation Department.
Attachment
This document has a restricted distribution and may be umed by recipents only in the performanceof their official duties. Its contents may not otherwise be disclosed withoat World Bank authoriation.
FOR OFFICIAL USE ONLY
PROJECT PERFORMANCE AUDIT REPORT
CAMEROONFIRST URBAN PROJECT
(LOAN 2244-CM)
TABLE OF CONTENTS
Page No.
Preface ......................................................... iBasic Data Sheet ................................................ iiEvaluation Summary .............................................. v
PROJECT PERFORMANCE AUDIT
I. PROJECT BACKGROUND ........................................ 1
A. The Economic, Demographic and Political Context ....... 1B. The Urban Sector ...................................... 1C. Bark Involvement and Strategy ......................... 2
II. THE PROJECT ............................................... 3
A. Origin, Development and Objectives .................... 3B. Project Components and Costs .......................... 4C. Costs, Financing and Administration ................... 4
III. PROJECT IMPLEMENTATION AND ACHIEVEMENTS ................... 6
A. Time Delays ................................ ......... 6B. Cost Overruns ......................................... 7C. Achievements and Continuity ........................... 11
IV. POINTS OF INTEREST ........................................ 17
A. Cost Recovery ......................................... 17B. Community Participation and "Animation" ................ 19C. Credit Foncier - Home Construction Finance ............ 20D. Support for Small Businesses and Artisans ............. 22E. Economic Rate of Return ............................... 23F. The Second Urban Project ............................... 24
V. PROJECT IMPACT ............................................ 24
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
Table of Contents (Cont'd)
VI. ROLE OF THE BANK .......................................... 28
VII. LESSONS LEARNED ........................................... 28
VIII. CONCLUSIONS ............................................... 30
I. BACKGROUND AND PROJECT DESCRIPTION ............ ........... 43
II. PROJECT IMPLEMENTATION AND COST ........................... 46
III. PROJECT RESULTS AND SUSTAINABILITY ........................ 52
IV. BANK, BORROWER AND CONSULTANT PERFORMANCE ................. 56
V. LESSONS LEARNED .................................. ........ 60
i
PROJECT PERFORMANCE AUDIT REPORT
CAMEROONFIRST URBAN PROJECT
(LOAN 2244-CM)
PREFACE
1. This is a Project Performance Audit Report (PPAR) on the First UrbanDevelopment Project, partially financed by Loan 2244-CM in the amount of US$ 20million to the Republic of Cameroon. The loan was approved on March 15, 1983and became effective on May 3, 1984. The project closed on June 30, 1988 asexpected at appraisal and an unutilized loan balance of less than US$ 200,000was cancelled on January 25, 1989.
2. The PPAR consists of the Project Performance Audit prepared by theOperations Evaluation Department (OED) and a Project Completion Report preparedby the Infrastructure Operations Division of the Occidental and Central AfricaDepartment (AFlIN). The PPAR is based on the attached PCR, the Staff AppraisalReport, project legal documents, project correspondence files, a transcript ofthe Executive Directors' discussions at Board presentation, interviews with Bankstaff and other releva.t materials. An OED mission visited Cameroon in February1990 to discuss the project with local and national government officials. 1.sairkind cooperation and valuable assistance in the preparation of this report isgratefully acknowledged.
3. The PCR provides a good account and assessment of the projectexperience and indicates its successes and failures. In order to give a widerperspective, OED has attempted to provide additional information about theproject, its history, its outcome, the issues it raised and the problemsencountered during implementation.
4. Following standard OED procedures, copies of the draft PPAR were sentto the Government. No comments, however, were received.
PROJECT PERFORMANCE AUDIT REPORT
CAMEROONFIRST URBAN PROJECT
(LOAN 2244-CM)
BASIC DATA SHEET
KEY PROJECT DATA
Appraisal Actual orItem Expectation Current Estimate
Government's Application 08/24/76First Mention to Timetable 08/01/77Negotiations 10/1979 06/1981 03/04/82Board Approval 11/1979 10/1981 03/15/83Loan Agreement Date 01/1980 06/15/83 09/15/83Effectiveness Date 12/15/83 05/03/84Closing Date 06/30/88 06/30/88Dorrower Republic of CameroonExecuting Agencies Ministry of Urban Developaint and Housing, MAETUR and CFCFiscal Year of Borrower July 01 -- June 30Follow-on Project Name Second Urban Project
Loan number 2999-CMAmount (US$ million) 146Loan Agreement Date January 25, 1989
La Including US$13.1 N additional financing provided under Second Urban Project (La. 2999-CM)/ US$166,945.90 cancelled on 01/25/89
MISSION DATA
Mission No.of No. of DateItem Composition Mo./Year Weeks Persons StaffWeeks of Report
Supervision 11 c ME/ENG/DE 10/85 2 3 6 11/05/85Supervision 12 A TR 12/85 1 1 1 01/13/86Supervision 13 A ME/UP/ENG 06/86 2 3 6 07/31/86Supervision 14 A UP/ENG/DE 02/87 1 3 3 04/01/87Supervision 15 A UP/INST/ENG/DR/2RE 05/87 1 6 6 07/17/87Supervision 16 A UP/EC/RE 11/87 1 3 3 12/17/87Supervision 17 jd UP/RE/INST 06/88 1 3 3 09/06/88
Completion / UP/EC 10/88 3 1 3 12/27/88
/ UP - Urban Planner ME * Municipal Engineer SS * Soils SpecialistEC * Economist TE - Traffic and Transport Engineer ID - Loan OfficerFA - Financial Analyst INST - Institutional Expert AR = ArchitectEN - Energy CE - Civil Engineer TR * TrainingCA * Cadastre DE * Drainage Engineer RE * Road Engineer
A Sector mission./ Preparation mission, Second Urban ProjectLd Pre-negotiation mission, Second Urban Project
1. The first urban project in Cameroin came at the end of a period ofsustained economic growth, but its implementation coincided with the crisis whichfollowed the collapse of oil prices in the mid 1980's. Project preparation wasdrawn out from 1977 to 1983 as the Bank worked along with other bi-lateralagencies and the Government of Cameroon to develop policy instruments whichwould complement the Government's focus on high and middle-income housing withprograms for low-income families. The Zirst project aimed to introduce areplicable model for urban development. I is marked, however, by the changein the country's economic outlook which produt-wd a shift from the social interestpolicies to a focus on productive investments. As a result, the project's scalewas reduced during the final stages of preparation. Works proposed for thecoun:ry's capital, Yaound6, were postponed and the serviced lot components wereeliminated, leaving as the project's centerpiece the upgrading of a 600 hectaresquatter settlement in Cameroon's largest city, DouAla.
Objectives
2. The project represented a bold attempt to introduce several newconcepts including upgrading of squatter neighborhoods, land regularization,resettlement on unserviced plots, home construction financing, cst recovery andsupport for small businesses. Hefty and troubling cost overruns, resulting fromthe problematic terrain of the project area, Nylon, and inadequate engineeringstudies led to dramatic cutbacks in the proposed infrastructure. Once the civilworks 1 :ogram had been redefined, through a renegotiation in 1987, the operationmoved ahead rapidly, completing disbursement in record time (five years asopposed to the Bank average of 9.5 years for urban projects), although severalcomponents were left to be completed under a second project. Cost overrunscontinue to occur and a true economic evaluation of the project will not bepossible until final works are completed and paid for. At that point, thecost/benefit ratio may look less sanguine than at present.
3. The first project included studies leading to the development of asecond urban project, which appeared to absorb most of the time and interest ofthe Bank and the Government during supervision missions given the shift in thefocus of urban policy. The second project is geared toward the development ofprimary urban infrastructure and municipal revenues on a national scale. Itincludes, nonetheless, certain priority works for Nylon in Douala.
vi
Implementation Experience
4. The project has had a marked positive impact on the urban environmentof Nylon and on the city as a whole and has, in addition, stimulated economicgrowth in Nylon and strengthened community development. Cost recovery appearsto be going well. Delays in resettlement of expropriated families and in issuingland titles, together with the failure to generate a viable home financing systemor a program to support small businesses, represent the main shortcomings in anotherwise successful operation.
5. The project established a special executing agency in Nylon, ARAN(Agence de Restructuration et d'Am6nagement de Nylon). ARAN's position astechnically independent, but actually under the aegis of two other agencies, ledto considerable complications during implementation. In addition to its ownidentity problems (PCR para. 1.12), ARAN suffered from the imposed collaborationwith other agencies for small business promotion and assistance and, moreihportantly, for home loans, plot acquisition financing, and, thus, for costrecovery of on-site civil works. Despite its isolation, ARAN managed the projecteffectively, although it has had periodic difficulties rerulting from itsdistance and consequent lack of support from national government.
6. Cooperation with the Swiss technical assistance agency, DDA, led toa fortunate, if occasionally disjointed: collaboration. DDA financed communityfacilities in Nylon and filled in where technical assistance was lacking. Whilethe Bank focused on hardware components, the Swiss were able to work with theexecuting agency, ARAN, in areas of cost recovery, resettlement, land titlingand home construction finance.
Results
7. The existence of a strong community organization in Nylon,"Animation," made the area an attractive locus for a first project. Indeed, thecollaboration between ARAN and Animation has been key in the success ofcomponents such as cost recovery and resettlement, and has led to additionalprograms focusing on small-business development, infrastructure constructionthrough mutual assistance and the local credit union as a source of financingand savings generation. The experience of ARAN and Animation lends support toarguments for community part' -pation in urban development projects.
8. Among other aborted attempts to involve national agencies, the planto establish CFC, the national home credit institution, as a financialintermediary for home construction loans and for cost recovery failed. CFCproved unprepared and/or unwilling to work with the informal sector and tocollaborate with ARAN in project cost recovery as the Appraisal had specified.In retrospect, it was a mistake to assign cost recovery to a separate agency.Under the circumstances, ARAN has managed to develop a viable cost recoverysystem on its own, and is supporting the local credit union, the Caisse Populairede Nylon (CPN), as an alternative home financing agent.
vii
Sustainability
9. Although a primary objective of the first project was to establisha replicable model for urban upgrading, to date no such replication has takenplace. Nevertheless, the interest generated by the events in Nylon and theadoption of certain policy measures which support the legitimacy of squattersettlements suggest that urban upgrading has gained a small but sure footholdin Ganeroon's urban sector.
Findings and Lessons
10. The project has been important for institutional development withinCameroon's urban sectGr insofar as it brought various agencies together and seta new precedent for coordinating efforts in the sector. In addition, it set inplace a new lir. of communication from the community up to the Ministry.
11. Studies financed under the first project led to the preparation andnegotiation of a second urban project in 1988. In addition to the Ussonslearned about tite design of an effective management structure, the first projectidentified areas of institutional and policy weakness, and led to a reassessmentof institutions in the sector without which the second project could not havemoved forward. For example, both the rejection of the complicated institutionalset-up of the first project, including a local executing agency, and the factthat the municipalities were given an important role in the urban developmentprocess in the follow-on project resulted from lessons learned in the firstoperation.
12. Complex barely begins to describe this project which vas apprairadtwice, renegotiated in mid-stream and continues to be implemented even afterdisbursements have been completed. The PCR, completed ir, 1989, gives a verythorough account of events and clarifies the outcome of the principal components.The Audit has thus been able to focus on additional points of interest and tocomplement the PCR with information which has subsequently become available.
PROJECT PERFORMANCE AUDIT REPORT
CAMEROONFIRST URBAN PROJECT
(LOAN 2244-CM)
I. PROJECT BACKGROUND
A. The Economic. Demographic and Political Context
1.01 During the fifteen years prior to appraisal in 1981, Cameroon wascharacterized by steady economic growth in an atmosphere of social stability andgradual national unification. Real annual GDP growth increased from an averageof 4.2% between 1966 and 1971 to 4.5% during the following five years, and thento between 7% and 8% from 1976 to 1981. From 1966 to 1980 per capita GDP roseby an annual rate of 3.1% Donations from the French Government averaged aroundUS$ 45 million a year during the 1960's. Thereafter, French foreign aidcontinued, increasing to about US$ 90 million per year during the 1970's, butgrants diminished and most assistance came in the form of loans.
1.02 From 1978 to 1982 petroleum gained importance as a major export,moving from a 1% share of total exports to about 63% and replacing cocoa andcoffee as the nation's leading export product and a major component of GDP.Government's concerns, echoed in dialogues with the Bank, centered on findingways to convert the windfall of oil revenues into productive investment.Unfortunately, the economy's sudden boom was followed by a general crisis whenoil prices fell in the mid 1980's. Despite its efforts to consolidateagriculture and industry, the Government could not contain the repercussions ofthe crisis which marked the project during its implementation and afterwards.
1.03 With a population of 8.9 million in 1983 and promising economicpotential in many areas, tte Government of Cameroon had focused on agriculture(livestock and forestry), agro-industry, trade and commerce, port facilities anda transport network also serving neighboring landlocked Chad and the CentralAfrican Republic.
B. The Urban Sector
1.04. At the time of appraisal, Cameroon ranked as the fourth mosturbanized country in West Africa. Rapid urban growth suggested that half of thepopulation would be living in cities by 1990, a prediction which has been borneout. At the same time, problems burgeoned along with the urban population, themajority of which were squatters on poorly drained and poorly serviced periurbanland. Forty five percent of the residents had no access to piped water. Fewerthan 10% held legal title to their land.
2
1.05 Nowhere was the incrasing urban squalor more evident than in Doualaand Yaound6, Cameroon's two largest cities. Although the secondary urban centerswere growing almost twice as fast, Douala and Yaound6, already housed morepersons than all the secondary cities combined, a full 38% of the national urbanpopulation and 12% of the country's population as a whole. As Douala and Yaound6continued to expand, the existing squatter se 'ements of Nylon (PCR para. 1.06)and the Briqueterie lacked infrastructure , -t suffered chronic envi-onmentalproblems: residual flooding, no drainage and insufficient garbage collection,resulting in the accumulation of solid waste and serious health hazards.
1.06 Jes,-ite these conditions, Douala and Yaoundd enjoyed certainadvantage. t- -. >sitive prospects. Urban poverty was less pronounced than inother cou.....- 9c-. Both cities enjoyed high levels of formal employment: three-fourths of the work force in iaoundd and two-thirds in Douala were reported tobe salaried employees. Although 17% of Douala's households and 25% of those inYaound6 were estimated to earn below the respective poverty levels (higher thanin other African countries), these percentages are markedly lower than thosefound in Cameroon's neighbors, or in the country's secondary cities. A high rateof internal mobility characterized both Douala and Yaound6 -- from 1972 to 1982over 70% of their households moved at least once -- indicating that the cities'formation was still, to a certain degree, in flux.
1.07 In institutional terms, the urban sector in Cameroon was largelydominated by centcalized agencies, following the French model. Urban andregional policy, planning and housing functions, as well as land registry andland management, rested with the Ministry of Urban Development and Housing(MINUH), more specifically with its Division of Urbanism and Housing (DUH),formed in 1976. Three parastatal agencies were developed to assist MINUH: (i)SIC (Socift6 Immobili&re du Cameroun), the national housing agency, traditionallydedicated to housing for middle-income families and civil servants; (ii) MAETUR(Mission d'Amdnagement et d'Equipement des Terrains Urbains et Ruraux), createdin 1977 and charged with developing residential land, but similarly geared toupper-income families, and; (iii) CFC (Cr6dit Foncier du Cameroun), establishedin the 1960's, but reborn in 1976 when a funding mechanism through a payroll taxwas developed. The latter was responsible for financing MAETUR and SIC operationsand generating affordable home financing. The municipal councils, presided overby a delegate from the national government, in turn, had limited budgets andfunctions. Infrastructure was and is the business of national parastatalcompanies, while state land was held and managed by the national government.
C. Bank Involvement and Strategy
1.08 By 1982, the Bank had financed 41 projects in Cameroon. Transportand agriculture each accounted for about 40 percent of Bank commitments, althoughthe period from 1975 to 1982 witnessed a growing tendency for the lending programto be broadened into areas such as industrial development, technical assistance,education and water supply. The recommendation to the President in 1983 notesthat Cameroon's disbursement rate had been highly efficient in the past, but thatrecent problems in the central procurement agency had caused setbacks in thecountry's performance vis-&-vis Bank operations.
3
1.09 Bank efforts in Cameroon supported three main areas of development:(i) international trade and transportation -- strengthening and extending thetrunk road and rail systems and improving the port of Douala; (ii) raisingagricultural output and exports; and (iii) improving education. The Bankstrategy in the early 1980's was to continue along the same basic lines, but tostrengthen other infrastructure, in particular telecommunications, energy,health, water supply/sewage and urban. The sectoral diversification of Banklending was seen as a reflection of the growing complexity of the country'sdevelopment.
1.10 Although an urban sector mission visited Cameroon in 1975, projectidentification came some time later. In the interim, the Bank offered technicalassistance and opened an important dialogue involving the sector, focusing ondevelopment of a national housing and urban growth policy.
II. THE PROJECT
A. Origin, Development and Objectives
2.01 Given their predominance in the sector (paras. 1.05 and 1.06) Yaound6and Douala emerged as the primary targets for an urban project in the contextof planned growth and squatter upgrading. A first project memorandum appearedin February 1977, mentioning the two cities and Nylon, Douala's most prominentsquatter settlement -- well-known because of its community organization -- asareas of action and proposing an appraisal date for 1979.
2.02 By 1979, the Cameroon Government had only recently established theMINUH-DUH and a first feasibility study was contracted in July 1979. The Bankresident mission provided an advisor to the Director of Urbanism and Habitat inMINUH from 1979-1981 to help develop a national housing policy. Other bi-lateral agencies were also starting up activities in the shelter subsector inCameroon, emphasizing low-cost solutions for low-income families. TheGovernment, accordingly, redirected its planning efforts towards urban upgradingand serviced lots.
2.03 Given the focus of policy development, the project began to take formwith a double objective: that of raising infrastructure standards for low-incomefamilies (PCR 1.08) and that of setting in place a sustainable and replicableprogram for dealing with sub-standard settlements in both existing and newdevelopments. The project underscored two other key policy issues: grantingtenure to squatters and cost recovery. The Government enunciated its goals asfollows: "to develop the means of improvement which will permit a progressiveevolution of (such) zones leading, ultimately, to publicly-acceptable livingconditions. Moreover, the proposals seek to change the marginality andinaccessibility which characterize the zone(s) and touch every aspect of thepopulation's life." 1
1 P.D.U. evaluation, p.6.
4
2.04 The proposed project included serviced and unserviced lots andsquatter upgrading for both Douala and Yaound6. From 1979 to 1981 othercomponents found their way into the project in accordance with the prevalentfashion for multi-faceted operations: home improvement loans, communityfacilities, market construction, small business support, urban transport, energyand municipal services.
2.05 With appraisal set for late 1980, the Bank concentrated on reducingprojected costs, which ranged between US$ 100 and 120 million, to an acceptableUS$ 74 million, and postponed negotiations until completion of the consultants'feasibility studies. When the Mayor of Yaoundd did not appear at pre-appraisalmission meetings in July, 1980, the upgrading and municipal support componentsfor that city were dropped. With a total project cost of US$ 94 million, theBank invited the Government of Cameroon to negotiate.
2.06 The concurrent reclassification of Cameroon from an IDA to an IBRDcountry turned the tables by giving the Government of Cameroon motives forfurther reducing project costs. As the rCR recounts (para. 1.08), negotiationsresulted in elimination of serviced lot components for both cities, leaving onlya skeletal program of community services for Yaound6 and making the upgradingof Nylon in Douala the project's centerpiece.
B. Project Components and Costs
2.07 As the Table below shows, 74% of project investment coveredinfrastructure works in Douala. While certain measures benefitted the entirecity, the bulk was destined to upgrading, primary roads, drainage, water supplyand electricity for Nylon, which, at the time, covered some 600 hectares and hada population estimated at 90,000. Another 3.7% of the total investment wasallocated to finance secondary and tertiary infrastructure -- including houseconnections as warranted -- additional standpipes and home improvement loans toa pilot upgrading zone of 50 hectares with a population of 20,000, within Nylon.In addition, the Swiss technical assistance agency, DDA, was to finance communityfacilities in Nylon, specifically a major market and secondary markets, communitycenters and health posts. Bank financing also covered the development ofserviced lots for resettlement of families uprooted by upgrading activities,support for small businesses and technical assistance and studies focused mainlyon the development of a second project.
C. Costs. Financing and Administration
2.08 Total project costs came to US$ 54.7 million, of which the Bank loancovered US$ 20 million, or 36%. The DDA loan accounted for US$ 5.5 million, or10%, excluding grants for Swiss technical assistance. The Government of Cameroonwas to finance US$ 29 million, or 54% of the total investment.
2.09 Chart 2-1, taken from the SAR (para. 3.05) shows the flow of fundsand the various agencies designated to implement the project. A special landdevelopment agency for Nylon, ARAN (Agence de Restructuration et d'Amdnagementde Nylon) was established as an extension of MAETUR. ARAN\MAETUR, technicallyindependent, but actually under the aegis of MINUH-DUH, was responsible for the
bulk of the project. In addition to its own identity problems (PCR para. 1. 12),ARAN suffered as a result of the imposed collaboration of other agencies, notablyCAPME (Centre d'Assistance aux Petites et Moyermes Entreprises), for smallbusiness promotion and assistance and, more importantly, CFC, for home loans,plot acquisition financing, and, thus, cost recovery of on-site civil works.(SAR para 3.05)
2.10 Community facilities, with the exception of the major (Madagascar)market, technical assistance and primary infrastructure, were to be financed bythe Government of Cameroon as an outright grant. The secondary infrastructurein the pilot upgrading zone and the home improvement loans, estimated at a totalof US$ 2.02 million, were to be recovered by CFC from direct projectbeneficiaries. The construction costs of the Madagascar market were to berecovered from vendors through rents for market stalls.
III. PROJECT IMPLEMENTATION AND ACHIEVEMENTS
A. Time DelM
3.01 Although the project had advanced considerably during preparation,with the dredging of the Mgoua River (PCR para. 2.02) and identification of thefirst resettlement area, Dibom II, once negotiations were completed, a certainsluggishness set in, amply described in the PCR (paras. 2.02 - 2.06). Compliancewith loan conditions proved elusive, in particular the definition of CFC's rolein managing the home improvement loans program in terms acceptable to the Bank.CFC's subsequent performance turned out to be disappointing (paras. 4.13-4.18)and the general eagerness to have the relevant covenants agreed may have led toacceptance of an ultimately unworkable format.
3.02 The repercussions of the delays in loan effectiveness were passedon to project implementation. The engineering studies for the general upgradingof Nylon actually began in 1984, more than a year after negotiations. Thestudies for the pilot zone were contracted out a full two years after theirscheduled completion. Because the SDAU (Schema Directeur d'Amdnagement etd'Urbanisme) presented a radically new urban road plan (PCR para. 2.07) in late1984, new terms of reference were developed. Furthermore, ARAN\KAETUR and MINUHwere unfamiliar with Bank procurement requirements QCR paras. 2.04, 4.02 and4.12), but the lengthy internal procedures imposed by the complicated relationsbetween implementing agencies also played a role (PCR paras. 4.08-4.10) in theobserved delays. After road construction had begLu, in the fall of 1987,additional stumbling blocks became apparent (PCR paras. 2.13-2.15), while costoverruns (paras. 3.06-3.14) eventually led to an amendment of the project inearly 1988.
3.03 Although the key project data chart shows a time overrun of 40%, theproject remained stubbornly on course; in a surprising about face, ARAN managedto invest 56% of the total project in a single year. By the scheduled date ofproject completion almost 90% of the amount projected at appraisal had beendisbursed, belying the pessimistic supervision mission reports which predictedthat the project would have to be extended until 1992 and making a very positive
7
showing over the worldwide average of nine and a half years for Bank urbanprojects.
3.04 In retrospect, the project officer at the time (of the great leapforward) attributes the slowdowns to blockages in funding from the CentralGovernment as a result of the fall in oil prices in the mid 1980's. He alsonotes that the Douala project was small in comparison to MINUH's otheroperations, suggesting that it was the prospect of a larger second project, ona nationwide scale (paras. 4.28-4.29) and which would give more prominence toMINUH, that actually spurred on implementation.
3.05 Amendment of the project (para. 3.02) meant that it was consideredclosed when funds ran out even though the financing for certain activitiesforeseen under the first operation was relegated to the second project. Thus,in a sense, the first project remains incomplete (paras. 3.15-3.18) and thesupervision reports' predictions of the need for an extension until 1992 may,in practice, prove correct.
B. Cost Overruns
3.06 From any angle, the project proved far moze costly than originallyforeseen. The PCR calculates a 35% cost overrun based on the addition of US$13.1 million financed through the second urban project and an increase of US$2.7 million of DDA funds. The DDA evaluation shows an even higher figure --closer to 50% -- taking into accr.tnt the final costs of community facilities (theMadagascar Market came in at 200% over the original estimate) and the extension
2of technical assistance to ARAN (some 160% of the appraisal estimate). TheAudit calculated a 56% overrun in the costs for Nylon upgrading to date (Table3-1), although this figure lacks some important inputs, notably land costs forNdogpassi and ARAN's operational costs throughout.
3.07 As the Table below indicates, the main cost overrun stems frominfrastructure, associated studies and extended technical assistance. Theoriginal estimates for road and drainage costs were already considered high atthe time of appraisal "because of the unique situation in Nylon... It is low-lying, it drains a large part of the surrounding area and is often subject toflooding." (SAR para. 2.04). With base costs of US$ 220,296 per kilometer (fora 12 meter wide road) for major roads and US$ 359,411/km for drains, Bankengineers had li-tle reason to assume that cost estimates were low, particularlywhen the first engineering study came in 1984 at half the Appraisal estimate.
3.08 According to final construction costs, as amended in late 1989, baseroad costs, however, have risen to US$ 1,961,009/km, for a 12 meter wide road.How could the Bank and project management be caught so unaware ? According tothe project officer at the time, the road designs as developed in the feasibilityand subsequent engineering studies were simply inadequate for the hydraulicconditions at Nylon and for the performance required of a major road (PCR para.2.13). The PCR suggests that the after-effects of the dredging of the MgouaRiver and the subsequent rise in the water table changed hydraulic conditions
2 Dossiers Sectoriels #5 para 1.1.1
8
at Nylon, (PCR para 2.13), an explanation supported by the supervising engineersat ARAN.
Project !Costs at Apraisal and Comletion(US Dollars '000)
Community Facilities 1.82 3.3%Market 1.58 2.9%Small Business Project 0.86 1.6%
TOTAL YAOUNDE 4.26 7.8%
3 The US$ 49,000 for land acquisition refers to the cost of Dibom II. Thecost of additional lots, Ndogpassi 1 and 2 are not available. Completion water,roads, drainage and electricity costs are from the contractor's records.Resettlement costs on completion include US$ 10.34 million for expropriation andUS$ 3 million for land development for Ndogpassi 2 under the second project (SARAnnex 2-4), US$ 2.2 million in development costs for Ndogpassi 1 and studies foran alternative site (1'Aeroport). Completion market, small business project andcommunity facilities costs are drawn from DDA's final report. Housing loansinclude the FFCA 20 million disbursed by CFC outside the project, but does notinclude CPN loans or loans made by private banks. Engineering study costs arefrom PDU 2.
3.09 Furthermore, under the French construction system, it is common forthe contractor to produce the final design of works. In this case, thecontractor who won the contract on the basis of the engineering design (albeitat a cost about 40% over the SAR estimate) proposed important changes inspecifications which resulted in a revised cost of approximately US$ 600,000 perkilometer (again based on a 12 meter road). Two independent consultants reviewedand confirmed the validity of the contractor's proposed specifications and costs.The increased cost, however, implied a dramatic reduction in works. A proposalto cut back on the roads (para. 3.15) and eliminate water, electricity and amajor portion of the d-ainage (paras. 3.15-3.18) was accepted in principle duringproject revision in 1987 (PCR para. 2.14), although ARAN insisted on substitutingprimary water and electricity infrastructure (para. 3.17) for additional roadworks, including a round-about linking the East-West Boulevard to the Boulevardd'Aviati6n (See Diagrams in Annex 1).
3.10 The final road costs are taken from the revised construction contractwhich indicates an addition of some US$ 7.8 million, ' bringing road costs closeto ten times the figure used at appraisal. The amendment to the contract cameafter construction costs in Cameroon increased due to the Government's statedpolicy of paying only 25% of a contract on completion, with the remaining 75%payable over nine years with interest. This may account for the notableincrease, although its impact should have been limited since the contractor ispaid directly by the Bank on completion of works. The supervising engineersaccept these cost increases, explaining that they resulted from the need toincrease the foundations or base materials underlying the roads.
3.11 It is notable that the cost of water piping, electricity and drainsshould have augmented in approximately the same proportion as that of the roads.The supervising engineers considered that the installation of services requiredthe previous construction of the road; the completed roads must be opened andlater rebuilt to lay water piping, for example. Had the full costs of civil
4 Costs from MINUH-Cellule PDU2 including technical assistance insanitation (48 months), in cadastres (42 months), in civil engineering (36months), in institutional development (4 months), in economics (30 months),special assistance to ARAN (36 months), supervising engineers, audit andequipment for ARAN and for MINUH.
s The amended contract became available only one month prior to the Auditand, according to the supervizing engineers, has yet to be reviewed by the Bank.
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works been known earlier, alternative solutions, such as leaving the secondaryand tertiary roads unpaved and laying infrastructure under sidewalks, might havebeen considered. The situation is complex and belies a certain lack of controlwhich resulted from a combination of circumstances: the project officer mostclosely involved was taken sick shortly after the project was amended; currentconstruction technically falls outside of both the first and the second projects;and, the supervising engineers, who are not particularly sympathetic to projectobjectives (para. 5.04), are presented as the on-site representatives of theBank, ' thus precluding the need for further consultation between ARAN and theBank on construction issues.
3.12 The Bank has financed several upgrading projects in low-lying urbanareas. Given the dramatic cost increases in the present project, a comparisonof costs and solutions applied could be helpful for planning and supervising suchoperations in the future. Specifically, the first urban project in Ecuadorfinanced housing in the Guasmo area in Guayaquil, and the second urban projectin Colombia financed upgrading in the Southeast Zone of Cartagena. Accordingto the PCR for the latter, actual costs ran up to 240% of SAR estimates. Roadcosts, however, were not exaggerated, first because an overall infill solutionwas applied, rather than the drainage system proposed for Nylon, and secondbecause secondary roads were left unpaved with sidewalks and curb drains builtin concrete to protect infrastructure.
3.13 Designs for community facilities developed by DDA architects, inturn, also ran over original cost estimates to a point where MINUH felt they wereunjustifiable. The DDA and ARAN countered with the argument that the state hadyet to do anything for Nylon. It was further argued that since the Governmentwas undertaking somethinf important, it was necessary that the people see thatit was of good quality.
3.14 Cost overruns led to important changes in project financing,affecting, in particular, the residents of Nylon who have been carrying theproject's administrative costs for the past four years. The increases in costshold even greater implications for the families of Nylon in the future. As costsrose, so did the amounts and percentages of cost recovery (para. 4.02) which wasdesigned to finance future upgrading. The resulting development levy jumped fromUS$ 233 per family to US$ 650 per family, on average. If costs of the homeswhich the relocated families were required to build -- estimated at between US$3,520 and US$ 30,000 (PCR para. 2.19) -- are included as a logical part of totalcosts, then the beneficiary's direct contribution to total project costs becomesconsiderable.
6 The supervising engineers stated to the Audit mission that they workdirectly for the Bank. At the same time, they complain that their payments areseveral months overdue.
7 Dossiers Sectoriels para 3.2.4
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C. Achievements and Continuity
1. Civil Works
3.15 Roads and Drains. The SAR called for some 17 kilometers of secondaryroads (12 meters wide), three kilometers of primary roads (30 meters wide - the"North-South Boulevard") and a total of 16 kilometers of tertiary roads in thepilot zone. Diagrams 1 and 2 in annex show the original road plan projected inthe SAR for Nylon and for the pilot upgrading zone. The roads which have beencompleted as of the Audit are blackened in and roads to be constructed under thesecond project are hatched. The diagrams make the differences between theoriginal plan and what has been implemented to date quite clear. Although theroads are solidly constructed and, as the PCR points out (paras. 2.09 and 2.10),were crucial to Nylon's development as a working part of Douala, they areconcentrated in one sector and presently lack the vital connections to thedowntown and the circur-erential highway (1'Axe Lourd).
3.16 Approximately US$ 15 million has been set aside in the s3cond projectfor complementary construction. Once completed, however, the road network couldbe in jeopardy because of lack of maintenance. The contractor's guaranteeexpires in July 1990 and the city of Douala has not: yet accepted responsibilityfor maintenance. The rest of Nylon's road network will be financed throughcollections from residents. Given the evident high cost of primary roads, thefuture of Boulevard Este remains in doubt and, in any event, will be difficultto finance without outside help.
3.17 Tertiary road construction in the pilot zone is about half completed,but should be taken care of under the second project. According to its long-term plan, ARAN hopes to complete Nylon upgrading, including construction ofsecondary and tertiary roads, by 1996. The program has begun well, but is facingserious financial problems (para. 4.07).
3.18 The primary drainage (14 kilometers in earth and 3 kiliveters inreinforced concrete) has been contracted out to the same company in charge ofroads. Engineering studies have been completed and works should be financedunder the second project. The number and length of drains has been greatlyreduced, but secondary drains were installed along major roads and communityefforts in collaboration with ARAN promise to assist 4n completion of drainsalong secondary and tertiary roads.
3.19 Water and Electricity. The SAR calls for 9.4 kilometers of primaryelectrical lines to permit public street lighting and, eventually, privatedomestic hook-ups. It also included 10 kilometers of primary water mains andthe installation of 40 public standpipes throughout Nylon. Finally, some 39garbage dumpsters were to be purchased for the area. By the time of theproject's official completion, however, nothing had been done in these areasand the contractor, together with the supervising engineers, recommendedconcentrating all efforts in road construction.
3.20 ARAN, nevertheless, has concluded contracts to install electricaltransformers and mains along the North-South Boulevard and Road R8, as shown inDiagram 1. The same contract includes a general water main, ten fire hydrants
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and the necessary piping to allow eventual individual hook-ups in the pilotupgrading zone. The public standpipes were eliminated after a virtual veto fromthe water company which is already suffering serious financial problems andmaintains that it cannot afford to offer free water from standpipes.Institutional problems still threaten the continuity of Nylon's infrastructureand the electric company has not agreed to a cost recovery scheme which wouldfinance future investment in Nylon.
3.21 Garbage Collection. With the reduction in road construction, thegarbage dumpsters had little purpose and were eliminated, but the city has placedcontainers at strategic locations along the new roads and the community hasorganized a collection system which serves unpaved roads and unimprovedneighborhoods (para. 4.11). Final garbage disposal and maintenance of the newroads and drains will depend, however, on relations with the municipality ofDouala, which are presently elusive. Although personal relations between ARANofficials and the city's leadership were essentially cordial throughoutimplementation, the municipality was never given a clear role in the project.A recent impasse reveals the fragility of this arrangement as garbage dumpstershave not been cleaned in over a month (photo 1).
3.22 Resettlement Sites. An initial resettlement area of 30 ha wasdeveloped in DIBOM II, South-East of Nylon. Dibom II, with 923 fully servicedplots (individual electric and water hook-ups and dischargeable septic-tanks,street drainage, unpaved -- but banked and curbed -- streets with sidewalks),was completed in 1984. Although slightly less than half of the plots appear tobe currently occupied, virtually all of the remainder have houses underconstruction and the neighborhood already exudes a vibrant air (photo 2). Thehigh quality of the early construction w would lead one to believe that Nylon'sevicted residents either fooled the census-takers about their low incomes or thatthey subsequently sold out to wealthier families (photo 3).
3.23 A second resettlement area was opened in 1987 in the Ndogpassi IIIarea, where a 279-ha site able to accommodate over 3,000 plots was incorporatedinto State lands by Presidential Decree. In 1987, ARAN developed a first of34 ha at Ndogpassi III/1 with 1,032 plots. The development of a second siteat Ndogpassi 111/2 with 1,350 plots was scheduled to start in 1988 but the workswere postponed due to the Government financial difficulties. The high standardsintroduced in Dibom II were discontinued at Ndogpassi, to the frustration of manyresettled families who were charged the same rate per square meter as at DibomII (Photo 4). With a simply paved road and staked out lots, Ndogpassi, in fact,followed the model of unserviced plots proposed in the first project proposals.The process of eviction and relocation is described in greater detail in paras.3.25-3.32 below.
3.24 Community Facilities. Agreements between the Swiss TechnicalAssistance Agencies (DDA) and the Government of Cameroon called for theconstruction of twenty community facilities, listed in Annex 2 (and in PCR paras.2.20 and 2.21) in addition to the Madagascar Market. High costs and prolonged
* This was the consequence of an obligation imposed by the first modelhouse plans as explained in the PCR paras. 2.19 and 3.10.
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implementation led to alterations in the overall p-.gramming of these facilities,including the elimination of a cemetery and a park, two secondary markets, asecondary health post, a community center for Ndogpassi and the second phase ofNdogpassi elementary school. The Madagascar Market, completed in the firstsemester of 1989, currently houses ARAN offices and the CPN, but its formalinauguration has been postponed indefinitely since negotiations with themunicipality have stumbled (para. 3.21). Given its size and facilities (seephotos 5, 6 & 7), the Madagascar Market, once open, could easily replace thecity's central market as Douala's principal commercial center
2. Relocation
3.?5 Forced evictions and resettlement were not new to the residents ofNylon, which itself was first occupied by families %'to had been uprooted whenthe neighboring settlement of New Bell was developed in the early 1950's. Thismay account for the high degree of compliance on the part of the evacuatedpopulation. Starting in early 1983, ARAN began to conduct socio-economic surveysof the households to be displaced using maps produced through photogram.etrictechniques.
3.26 MINUR established a scheme for varying compensation and indemnizationaccording to the legal status of the families involved. For the majority who hadno legal title and no building permit, MINUH gave no compensation, but a letterof attribution, or right to settle on a newly developed plot in a resettlementsite. These families, however, had to pay the cost of infrastructure (roads,electrical and water hook-ups and dischargeable septic tanks in the case of DibomII) and associated financing charges. ARAN argued, logically enough, thatfamilies who remained at Nylon would have to pay for infrastructure, so theresettled families should assume the same costs for an improved living situation.Families who remained at Nylon, however, did not lose their homes in the bargain.The second project's provision of indemnization for all families, to a total ofUS$ 10 million, may be a mixed blessing insofar as it gives due compensation toexpropriated families, but accentuates the plight of the first group who wereremoved from their homes without such support.
3.27 In theory, the resettlement areas were to offer services better orequal to those of Nylon. However, the DDA evaluation notes that many familiesnever made it to the resettlement areas. Between one a. I three years elapsedbetween the moment of eviction and the time when lots became available forresettlement and the initial conditions were tough; once assigned plots, familieshad four months to pay for them in full, the standard MAETUR requirement whichpresumed the availability of credit. Fewer than 5% of the displaced familiesactually received loans (para. 3.36). Futthermore, families were allowed to moveon to their assigned lots only after they had built according to pre-approvedplans with construction costs ranging from US$ 18,000 to US$ 30,000 (photo 3).For families paying rent in temporary lodging, it was extremely difficult to
9 With DDA assistance, ARAN and Animation used local small enterprises assub-contractors in market construction.
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manage the various payments, which may explain why the Audit could only confirmthat some 10% of the evicted families actually live in resettlement areas outsideof Dibom II.
3.28 Since project initiation, ARAN has taken steps to ease the costs ofrelocation. Most importantly, ARAN cbtained an exemption from MAETUR allowingup to one year for plot payment and it is currently seeking a further extensionof up to five years. Insofar as ARAN has respected families' rights toresettlement plots even when they do not pay within the time limits, a de factoextension already exists. Moreover, ARAN now offers families the option ofmoving on to half of the plot when half of the cost is paid. New, lower costhousing models emphasizing progressive development were approved in 1989 (PCRpara. 2.19) (photos 8, 9 & 10) and CPN has made close to 30 home constructionloans (para. 4.17). Finally, agreements were reached whereby commercialproperty-owners were not evicted from their roadfront lots, 10 but insteadbecame co-owners of the plots in back of their former properties. Thus,continuity of the commercial street front was guaranteed and a significant numberof evictions were avoided. Temporary housing is now available in Nylon for about200 families (photos 11 & 12). A flexible attitude and working relations withthe community (paras. 4.07-4.10) have helped ARAN to resolve problems as theyhave emerged.
3.29 To an unfortunate extent, the Bank skirted the entire relocationissue by not financing any resettlement areas. According to the SAR (para. 4.19),"MAETUR/ARAN will... be responsible for... the compensation and resettlement ofthose current residents displaced by the reblocking and the installation ofinfrastructure and community facilities. The Government has also acquired anddeveloped 30 hectares for resettlement requirements in Nylon and additional landis available as needed. This has been confirmed at negotiations." 1 Early Banksupervision reports considered the resettlement component as 100% complete oncethe lots in Dibom II were allocated. However, they did not appear to beconcerned that Dibom II remained initially largely unoccupied or that it couldnot accommodate even half the number of displaced families, estimated at 2,000it, the feasibility study (and an item in the 1980 issues paper), and at 3,000by 1984.
3.30 The 1,032 plots of Ndogpassi III/1 only became available in 1987 andthe occupation of this site proved slower than expected. Ndogpassi will remaina thorn in ARAN's side for some time to come. Still in a very rural state, itsaccess roads are as much potholes as paving (photo 4), while residents wait forthe extension of the water and electricity distribution networks. Ndogpassi isadjacent to Nylon but some ten kilometers from the center of Douala, and therecent construction of a handsome primary school at the site eases travel forchildren (photo 13). The development of Ndogpassi 111/2 was delayed as a result
1o Plot owners along the East-West Boulevard were evicted and theirproperties resold at commercial rates.
11 This was apparently not the case, however, as a mid-1984 supervisionmission reported that Dibom II was still awaiting installation of septic tanksand plot allocation.
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of Government financial difficulties. The proposed settlement area for theremaining families has yet to be cleared and provided with access ways, eventhough 1,600 families have already been notified of their eviction. At themoment, Ndogpassi 111/2 is a forest (photo 14), although its development isassured through financing under the second urban project.
3.31 As a result of the delays in providing resettlement sites, dislodgedfamilies looked for abandoned lands on which to settle. This situation wasworsened by the absence of formal land development operations in Douala, anduncontrolled settlements have grown up around the airport recalling thebeginnings of Nylon itself. A DDA-financed study undertaken in one squattersettlement on the "axe lourd Yaound6-Douala" in 1987 revealed that 700 familiesdisplaced from Nylon had temporarily moved into the area.
3.32 The second urban project initially included the development of 1,000lots in Ndogpassi (SAR Annex 2-1, para. 14 (d)), as, at the time of appraisal(November 1987), it was still expected that the Government would finance thedevelopment of an additional 1,350 new plots at Ndogpassi 111/2. It could beargued that the growing number of displaced families resulted in large part fromthe increased standards applied to the road construction (PCR naras. 2.10-2.11)and that the Bank should have considered the additional relocations as part ofits increased financing of road costs. When it became obvious that theGovernment would not finance Ndogpassi 111/2, the Bank did so and agreed to makefinancing available for the development of sufficient resettlement plots. Itlikewise requested ARAN to update the list of families' rights to resettlementplots and to ease relocation conditions (para. 3.28). In any case, the pointmay be marginal since present estimates of the final number of displacedfamilies, after complete reblocking of Nylon's 13 neighborhoods, run toapproximately 6,500, a full 30% of the original population. Furthermore, ARANhas reportedly modified its upgrading strategy to ensure that all future evictedfamilies will have access to a resettlement plot and receive payment of duecompensation.
3. Land Titling
3.33 Although the SAR indicates that, compared with the rest of theproject, land regularization is "a much slower process" (SAR para. 2.63), itcould not foresee the problems which would ultimately arise when ARAN, focusingon the pilot area and the resettlement zones, found itself utterly withoutestablished procedures or legal precedents and was left to develop originalsurvey techniques and to coax the collaboration of various ministries (PCR para.2.17). The Bank included financing for an expert in cadastres, but to be locatedat MINUH. DDA assistance filled the gap by helping out at BLAF (Bureau deLiaison des Affaires Fonci6res).
"Report of Jean-Claude Bolay to DDA, 1989, pg. 8.
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3.34 As of the visit of the Audit mission, BLAF had obtained legal landtitles for only fourteen families in the pilot upgrading zone, out of a totalof some 2,000. The titles have yet to be turned over to the residents. BLAFis waiting for an appropriate moment, such as the inauguration of the MadagascarMarket, to present the first titles with due ceremony. To qualify for a titledeed, residents must first cancel the upgrading development levy and payadditional costs running about 120,000 FCFA (US$ 428), to cover, among otherthings, survey and mapping and various officia' papers and stamps. This comesto an average of about 5,000 FCFA (US$ 18.87) per square meter.
3.35 Issued titles, moreover, are conditional upon the residents' buildingand occupying a dwelling meeting municipal building standards within two years.The PCR (para. 3.10) points out the implicit contradictions which had to beovercome to get this far; legal title depends on an architect-designed, legallysanctioned construction, with a building permit which can only be granted forlegally-registered and titled plots. In order to avoid future disappointments,BIAF has obtained certificates from the municipality which confirm that houseson titled lots already, in fact, conform to municipal standards. Even after homeconstruction is approved, title holders must wait another three years beforethey can sell. Such complications suggest some of the problems which ARAN andBLAF had to deal with in establishing a titling procedure at all, and, morefundamentally, in convincing other authorities that it made sense to legitimizetenure of Nylon residents, or of those in any squatter neighborhood.
4. Home Improvement Loans
3.36 The home construction loans foreseen at the time of Appraisal andin the Loan Agreement were not implemented as such for a variety of reasons.CFC was supposed to provide some 450,000,000 FCFA from its own funds for loansto the residents of the pilot upgrading zone for service hook-up, homeconstruction and improvement and plot purchase (SAR para 2.07; Loan AgreementSchedule 2, Part A (ii) and Part D, CFC Project Agreement, Section 2.01). Atthe same time, Central Government was to loan CFC some 600,000,000 FCFA. As thePresident of CFC recalls, works in the upgrading zone were still stalled by thetime of project completion and CFC had not been able to make loans to theresidents partly because the stipulated upgrading had not taken place and partlybecause the financial crisis kept Central Government from providing CFC with itsadvance. Indeed, CFC has not received its standard budget appropriation, basedon a national payroll tax, since 1986.
3.37 Even though the home loans for the upgrading zone never materialized,ARAN sought ways to develop a credit line to help evicted families to build inresettlement areas which eventually resulted in 120 loans through CFC and 30 fromCPN. The complications which arose suggest that CFC had little interest inrisking a credit program in Nylon (PCR para. 3.06). Regrettably, CFC did notkeep separate accounts for its loans to Nylon residents and there is, thus, noway to analyze cost recovery or loan performance. Both programs are explainedmore fully in Section IV C. below and in the PCR (paras. 3.00-3.10).
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5. Small Business Support
3.38 Agreements with CAPHE to open a small business support center inNylon were never confirmed, although the assistance to the CPN -- financing ofa bookkeeper and a general manager -- was in place from 1983-1984. Theseactivities were to be complemented by a line of credit for small business undera separate Bank loan (SAR para 2.10). This loan, however, was, in fact, gearedto businesses larger than those found in Nylon (para. 4.20). During the courseof implementation, moreover, the intermediary agency, BCD, closed, so resultsof Bank efforts in this area were minimal. Nonetheless, ARAN and Animation havebeen active in identifying, organizing and assisting small businesses in Nylon.The DDA has sent several consultants and hopes to set-up a fully-fledged artisanand business support program with the completion of the Artisan Center scheduledfor 1992 (paras. 4.21-4.24).
6. Studies and Technical Assistancp
3.39 Studies to develop a second project were completed satisfactorily(PCR para. 4.17) and led to the negotiations of a second project in 1988.Technical assistance, concentrated on MINUN, was increased by about 50% beyondappraisal estimates (see Table, page 8). In particular, the economic advisorremained in place for an extra six months, while the cadastre expert's contractwas extended from 24 to 42 months. In addition, specialists in the followingareas worked with MINUH: sanitation and drainage - 48 months; civil engineering -
36 months; and institutional analysis - 4 months. While the assistance to ARANappears to have been minimal, but useful, adding manpower support to the projectteam, MINUH's staff report that the consultants tended to work in isolation,leaving little useable knowledge or techniques behind.
IV. POINTS OF INTEREST
A. Cost Recovery
4.01 The SAR (para. 5.02) specified that the costs of the secondary andtertiary infrastructure installed as part of pilot neighborhood upgrading wouldbe recovered from the residents. In addition, the investment in the market wasto be recovered through rents charged to vendors. The SAR, however, left thequestion of cost recovery in resettlement areas open and gave only vague andeven contradictory indications as to how overall cost recovery should be managed.Table 5 of the SAR indicates that final beneficiaries would repay improvementsat terms of 4 years with 2 yearr grace at 5% interest.
4.02 CFC was expected to offer 90% financing to final beneficiaries over15 years with one year of grace "at an average rate of 4.5%." The SAR (para.3.05) stipulates that CFC would be the financial intermediary .nd would assumeall foreign exchange risk which was reaffirmed in the Loan Agreement. SinceCFC's lending component was calculated to cover only half the residents of thepilot upgrading zone, the SAR left open the question of how the remainder of thebeneficiaries were to be financed. And neither the SAR, nor the Loan Agreementmention any condition or form of cost recovery from the resettled families.
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4.03 Despite its irresolute mandate, ARAN took cost recovery veryseriously. Judging from both the terms of reference and subsequent supervisionmission reports during the first four years of implementation, ARAN got littleguidance from the Bank in this area, and covenants with CFC did not mention itsrole in debt collection. Left to itself, ARAN, nonetheless, developed aneffective system which aims to carry the full cost of upgrading all of Nylon tocompletion through 1996 (PCR para. 3.16). This implied the recalculation ofcharges to residents in terms of future costs, including studies, legal andadministrative expenses, rather than just completed investments in civil worksas implied in the SAR. The project evaluation financed by DDA sets the amountto be recovered from project beneficiaries at 16% of the total cost, isconsiderably higher than the 5% stipulated by the SAR.
4.04 In principle, ARAN based debt service charges (the "developmentlevy") on MAETUR's financing terms which called for 100% repayment in four months(para. 3.27). Even after MAETUR granted an exemption, the new terms for Nylonremained tight: 20% in four months and 80% within a year at 5% interest. Forresidents of the pilot upgrading zone, whose monthly household income averages90,000 FCFA (US$ 340), 1 the monthly payments on a 100 s Iuare meter plot wouldcome to 41,600 FCFA, or close to half of family income. ARAN has, however,taken its cue from MAETUR in allowing families to pay as they can (para. 3.28).Residents of resettled areas , who are not permitted to move on to their plotsbefore completing payments, have a clear incentive to meet ARAN's requirementsand have made an impressive contribution thusfar.
4.05 After five years, the costs of Dibom II are 89% reimbursed. Recoveryof Ndogpassi has reached 48% after three years. ARAN enjoys less leverage inthe upgrading areas where families already reside and where improvements, by andlarge, are yet to be seen. After two years, ARAN has recovered only 23% of theprojected costs from the first pilot upgrading zone and only 1.6% for the secondupgrading zone, Bilongue, after one year. ARAN does not calculate financialcosts beyond the first year, so the real cost recovery rate is actually less thanthese amounts ARAN has currently proposed new financial terms to MINUH and toMAETUR which would allow families to pay over five years at 5% interest, possiblywith a threat of eviction for non-payment. Based on its work with the community,ARAN feels assured that the application of an easier, but regulated, paymentsystem would be acceptable to residents and would speed up cost recovery.
4.06 Given the current economic crisis and ARAN's tough payment schedules,it is noteworthy how much families have paid in development levies, particularly
1 But it is not clear whether or not the additional US$ 13 million fromthe second project is included in the total.
Average reported by BLAF. Other estimates from Bank sources set medianhousehold income for all of Nylon somewhere between 30,000 and 40,000 FCFA permonth.
i The development levy is calculated according to the size of thebeneficiary's plot. Cost per square meter also varies with plot location,increasing as plots get closer to the main roads.
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since ARAN uses no regular collection system aside from community meetings andpromotion through Animation. At ARAN, only three people work part time in thecollection and cost recovery department.
4.07 Insofar as residents pay on the basis of plans, and not for completedworks, cost recovery and, indeed, the project's continuity depend on ARAN'scredibility which is currently in jeopardy. Since 1986, the Government ofCameroon has withheld appropriations for ARAN's operating budget and ARAN hasused its income from cost recovery payments to finance project administration.Consequently, it has not accumulated enough funds to complete services inNdogpassi (para. 3.29), nor to begin works in the second upgrading zone,Bilongue. Upgrading in the pilot zone is also lagging and, in all likelihood,these factors combine to discourage residents from meeting cost recoveryrequirements. The sale of plots at Ndogpassi 11/2 should produce a new sourceof income for ARAN and the agency's director is also working on a plan to reducestaffing and, consequently, its operating costs. Nonetheless, the continuedsuccess of cost recovery operations at Nylon will depend on continued visibleprogress.
4.08 In addition to neighborhood upgrading, revenues from the MadagascarMarket were expected to add to cost recovery funds for reinvestmenc in Nylon.This scheme, however, has run into two snags. First, the municipality claimsthat it, and not ARAN, should dispose of the income from the market for city-wide needs. Second, the operating and investment costs were considerably higherthan originally foreseen, making it difficult to attract vendors, particularlyfrom Nylon. ARAN was forewarned. A rather outspoken consultant's report in 1981stated that "it would be a fantasy to imagine that any municipal market couldbe a profitable venture, let alone amortize the investment in its ownconstruction. It has become clear that the World Bank's assumptions arecompletely unrealistic and partially wrong... It is not clear where the WorldBank got its rate schedule, but it is wrong.. .The operating costs were not takeninto account by the Bank." " At this point, ARAN is not counting on income fromthe Madagascar Market.
B. Community Participation and "Animation"
4.09 Besides its physical achievements, the project generated a seriesof community development projects at the neighborhood level, owing to the mutualcooperation between ARAN, the newly formed project administration unit, andAnimation, the existing community organization, which made Nylon such anattractive place to work in the first place. Animation grew out of the jointefforts of Sister Marie Roumy, a French nun who went to live in Nylon in 1973,and the community leaders who were Nylon's founding fathers. Originally formedas a civil defense network in an area with no police protection or publiclighting and which was cut off from the rest of the city, Animation evolved intoa mutual assistance association that undertook major infill works when Nylonwas little more than a swamp.
1 Dolf, Benedickt, Mission Report of June 1981.
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4.10 Relations between ARAN and Animation passed through a rocky periodat first as ARAN moved into direct works and relegated the community to anobserver status. In 1986, a DDA consultant's survey showed that few residentsunderstood what ARAN was and that those who did thought badly of it. A heftypercentage thought that a "Mr. Laran" was going to evict all of Nylon and keepthe land for himself. Relations between the community and ARAN became smootheronce the issue of expropriation was settled (paras. 3.25-3.30). ARAN'sflexibility respect. Five meetinghouses for Animation were refurbished underSwiss-financed project components.
4.11 The peaceable acceptance of the expropriations and the progress ofcost recovery are due, in large measure, to ARAN's present good relations withthe community of Nylon, which in turn stem from ARAN's collaboration withAnimation. Community members help un censuses and measure plots for thecalculation of cost recovery charges (para. 4.04). In 1987, under ARAN'sauspices, the leaders of Animation, presided by Soeur Marie, became directorsof the CPN. In addition, Animation established a youth organization, Coopje,which has close to 1,000 members and collaborates in neighborhood upgradingprojects such as trash recycling, garbage collection and infills. A women'sassociation containing about 500 housewives is also involved in communityimprovement, handicrafts and small businesses. Residents of upgraded areas arecurrently building storm water drains along new roads. ARAN donates the cementand the technical advice, while Animation furnishes cement blocks and labor.
4.12 Tf, as Animation leaders mention, the project has laid a certaingroundwork for community-managed upgrading, the project has likewise enjoyed amultiplier effect thanks to Animation. The individual investments in homeimprovement, as well as the neighborhood efforts, bespeak a confidence in theproject and in ARAN which stems, at least in part, from its association withAnimation. Community development, as opposed to physical upgrading, could bemeasured in terms of the number of families who have chosen to remain in Nylonversus those who opted to cash in on their appreciated property values by sellingand moving elsewhere. It is, therefore, telling that Nylon's population hasalmost doubled since the project was first initiated, suggesting that newfamilies are moving in, while the older residents are profiting from upgrading,but staying put. ARAN and Animation appear to have hit upon an inspiring formof collaboration whereby ARAN installs the infrastructure and Animation insuresthe community's continuity.
C. Crddit Foncier - Home Construction Finance
4.13 The issue of home improvement loans and the SAR's undefined role forCFC has already been mentioned (para. 4.02). With its steady income from apayroll tax, CFC subsidized interest rates and had little desire to branch intounknown areas. The Bank, however, openly hoping to convert CFC into anindependent home finance operation, funded a study aimed at identifying waysfor CFC to expand its activities, specifically in the area of low-income housing.(PCR para. 3.09)
4.14 The study, presented in 1982, focused on the evident high capacityto save among low-income Cameroonians, the viability of a savings and loan systemand the need to eliminate CFC's practice of differential interest rates. This
21
study pointed out the inherent weaknesses involved in the multiplier/creditsystem based on the French contract-savings plan ("dpargne-logement") andproposed a simpler savings and loan approach modelled on the British "buildingsocieties". One month after receiving the Bank consultant's report (April 1982),CFC proceeded to establish a home-savings program which ran precisely counterto his recommendations, requiring regular fixed deposits and offering automaticloans for three times the amount saved. As the consultant predicted, CFC'ssaving for housing program failed within two years and the Bank abandoned furtherefforts to work out a home-financing program through CFC.
4.15 Two years later, the same consultant reappeared in Douala, this timeat the invitation of the Swiss technical assistance agency to work with ARAN andat the grass roots level. He analyzed the savings capacity of the localpopulation through the "tontines" (an important traditional form of groupsavings), the local credit union, CPN (Caisse Populaire de Nylon), and the CFCto develop a three tier system to generate savings at the lower levels (tontinesand CPN) and to guarantee loans from CFC. The consultant pointed out that theCFC approach, typical of housing finance institutions in many developingcountries, effectively inherited the biases and outlook of the "Socidt6sImmobili6res" -- parastatal construction companies -- focusing on constructionprojects to resolve the housing problem of low-income families. This problem,however, in reality, had very little to do with a lack of construction capacity,but, rather, involved the limited access of low-income people to legalized urbanland and credit. CFC confirmed the consultant's suspicions by not appearing atmeetings organized with ARAN and failing to provide standard information aboutits operations. The consultant's report conta..ns a dignified chapter of blankpages in the place of CFC's contribution.
4.16 Undaunted, the DDA funded two more studies focused on the CPN. Thefirst, a rather discouraging evaluation of the CPN by the Union of CaissesPopulaires de Yaoundd cited the agency's disorganization and lack of credibility.The second, carried out in 1986, analyzed CPN in terms of the recommendationsof the original housing finance study. The three-tiered savings and loan systemremained unworkable because the upper two tiers lacked interest, in the case ofCFC, and ability, in the case of CPN. The study did note that CPN had increasedits membership to 428, but despite technical assistance financed by the Bank(para. 3.38), its record-keeping had not improved, it was not legallyincorporated, its portfolio was extremely limited and it was not well-known inNylon.
4.17 Since it merged interests with Animation in 1987 (para. 4.11),however, CPN has taken a new lease on life. Membership has doubled annually andthe savings portfolio has grown accordingly. The CPN has already made aboutthirty home construction loans for around 3,000,000 FCFA each and is making smallbusiness loans as well. DDA has agreed to provide an equivalent of one millionSwiss Francs to the CPN. The new national director of CFC has expressed interestin working with CPN through a two or three tiered guarantee system, althoughthe local director of CFC professes to know nothing about projects in Nylon.So the Bank's original hope for a savings and loan program catering to low-income families may yet materialize.
22
4.18 In retrospect, the point stressed in the original housing financestudy has been borne out. The issues which clouded formal sector financingagencies do not appear to be tied directly to the question of land titles or thesalaries of the borrowers; rather they involve a viable guarantee. Both CFC andcommercial banks have made substantial loans to residents in Dibom II andNdogpassi, where legal tenure has yet to established. However, they chose theirclientele carefully and assumed that the houses to be financed would have a highresale value (PCR paras. 3.06 and 3.08). It remains to be seen whether or notCPN will be able to proviA- satisfactory guarantees to CFC.
D. Support for Small Businesses and Artisans
4.19 The project components designed to assist small businesses andartisans were rather unfocused and did not have much effect on Nylon (and, inthe case of the Swiss financed components, have yet to take place.) Nonetheless,the project has resulted in several advances in small business development.
4.20 The Bank had proposed a three-pronged action, one of these being tohelp organize CPN in the eventuality that it could offer small business loans(paras. 3.38 and 4.16). CPN may yet become an effective source of finance forNylon's entrepreneurs, but it will not be due to the Bank's support. Bankfinancing also covered eight man-months of technical assistance to CAPME, todevelop training programs in coordination with the BCD (Banque Cameroonaise deDeveloppement) business loans project. CAPME, however, never signed the agreementofficializing its participation in the project, although it did develop trainingprograms in Nylon, particularly in conjunction with contractors who worked onconstruction of the Madagascar Market. The BCD program was really oriented toenterprises of a larger scale than those that generally exist at Nylon, offeringloans from 1.5 million FCFA (US$ 5,555) to 10 million FCFA (US$37,000). Duringthe three years prior to BCD's demise, it extended 118 such loans, but none isrecorded as having benefitted Nylon residents.
4.21 DDA, working on the Madagascar Market and a proposed artisan center,was inevitably drawn into the realm of business support. By obligating thecontractor of the Madagascar Market to sub-contract out to small local firms,DDA and ARAN helped promote the local small construction industry and evidentlyimproved construction time and costs. The market itself is supposed to benefitNylon's merchants and entrepreneurs, but negotiations with the city are currentlystumbling over, among others, the issue of what percentage of vendors should comefrom Nylon. ARAN is pushing for a 60-40 balance, while the city is arguing fora 50-50 split. In any event, the deciding factor will be the rents charged tovendors (para. 4.08). An attempt to form an all-Nylon "self-managingh marketfailed, apparently to the relief of the vendors who prefer that the city ofDouala run the market.
4.22 Even so, the mere presence of the market and the construction of itsaccess roads appear to have stimulated local commerce. A consultant's reportin 1981 counted some 500 vending stands in all of Nylon. The number of merchantsin the old market place plus those along the roadways would now easily reach fivetimes the earlier total.
23
4.23 The DDA consultant who visited Nylon in the early 1980's recommendedagainst building an artisan center, noting that previous attempts to organizeartisans into cooperatives had failed and that the groups involved -- artisansand their supporters -- could not agree on what exactly the center should consistof, despite a general feeling that such a facility would be a good thing. Theartisan center appears to be no better defined today, but its construction willgo ahead shortly, based on a flexible floor plan whereby partitions can beshifted to accommodate different uses over time.
4.24 Local efforts to promote artisans and entrepreneurs began in the late1970's through the combined efforts of Animation and PDI (PanAfrican DevelopmentInstitute). Several small businesses were founded along import substitutionlines, notably: Confijunyl, which produces candies and juices; Siropcam,manufacturing fruit juices; Chipscam, a maker of plantain chips and a needlecraftgroup. COOPAN, an umbrella organization serving the artisans of Nylon, had asales outlet for members, but appears to be in decline at the moment. PDI andAnimation ran small, but fairly successful, youth training programs in metalwork,carpentry and handicrafts, but floundered when it came to organizing theirgraduates into cooperative business ventures. Given the general rejection ofcooperative businesses, Animation appears to be focusing on individuals.Concurrent with the project, the youth cooperative, Coopje, has helped get youngpeople started on, among other enterprises, home poultry, cigarette sales,carting and popsicle vending. New hopes are pinned on CPN as a promoter of localbusinesses.
4.25 The particular efforts of Animation and ARAN notwithstanding, Nylon'sphysical development has been, perhaps, the project's greatest support to localbusiness. The new connection to Douala has stimulated Nylon's artisans and hasgenerated considerable commercial development along the main roads. Individualelectric and water connections - - not to mention public street lighting - - shoulddo even more to increase the productive and commercial capacities of Nylon'sentrepreneurs.
E. Economic Rate of Return
4.26 The SAR presents an economic justification of the project based ona projected increase in Nylon's rental values and on appreciation of land costsas a result of infrastructure investments in Nylon, leading to an overall ERRof 18%. The PCR (para. 3.18) reports a tentative completion ERR of 24%. Indeed,the project evaluation by DDA notes that the average land price in Nylon hasjumped from 500 FCFA/m2 in 1983 to 1000 FCFA/m2 in 1988 (the exchange rate hasgone down by 2% over the same period). Commercial land runs from 5,000 FCFA/m2to 30,000 FCFA/m2 and land in the pilot action zone now sells for 2,500-9,000FCFA/m2. Rents have increased by 50% since 1983. The fact that Nylon'spopulation is now estimated at 220,000 indicates that the area's carryingcapacity has increased by about 245%.
4.27 On the other hand, final project costs within Nylon will probablyexceed the original investment estimates by about the same proportion. If landvalues increased so dramatically with the constructton of roads andinfrastructure in a limited part of Nylon, it is difficult to believe that theywill continue to increase at the same rate when Nylon as a whole is upgraded.
24
According to the present tally, some 73% of the project funds are invested inprimary roads, engineering studies and technical assistance. Were the ERRrevised to measure total investment in terms of overall benefits to Nylon (orto Douala in terms of land appreciation), the results might have been lesssanguine. The Swiss evaluation adds a further note of caution, "it must beemphasized that the distribution of (project) benefits has not been particularlyeven and that the total o Peration will present a serious negative outcome forthe dislodged families." To this, the Audit adds that a true ERR will dependon final project costs.
F. The Second Urban Project
4.28 The Government requested the Bank to consider a second urban projectfocusing essentially on the upgrading of urban transport and drainageinfrastructure in Douala. Engineering studies, financed under the first urbanproject, began in early 1985 and appraisal of an infrastructure project forDouala took place in February 1986. Negotiations were scheduled first in July1986, then in October 1986, but never took place. The dialogue continued betweenthe Government and the Bank, however, on a low-key basis, due partly to theillness of the project officer and partly to the Bank reorganization. InSeptember 1987, the Government requested that the project be broadened in scopeto complete elements of the first urban project, to undertake policy actions inline with its strategy for the urban sector including resource mobilization.Aside from its focus -- away from urban upgrading and low-income settlements -- the second project, which was appraised in November 1987 for a total cost ofUS$222.4 million, differs substantially from the first in its implementationscheme. A project development unit (PDU-2) based in MINUH is responsible foroverall administration and the municipalities manage implementation ofsubprojects, with financing from CFC.
4.29 The first project led to the realization that municipalities mustbecome involved in urban development projects and that MINUH should be the singleproject overseer. The second urban project also includes about US$20 millionto complete works initiated in Nylon under the first project. Negotiationsproceeded smoothly, once the Douala infrastructure project was redesigned tocover a range of municipalities. Despite the project's initial concept, theGovernment of Cameroon was not interested in concentrating investments in asingle area.
V. PROJECT IMPACT
A. Physical Impacg
5.01 The project has had a major positive impact not only on Nylon, butalso on the structure of the city of Douala. The new road networks link theproject area to the city center, increasing considerably the area of influenceof downtown Douala. Furthermore, they offer the promise of public services(water, electricity, drainage and garbage collection) to the 220,000 residents
' Dossiers Sectoriels
25
of Nylon. At the other extreme, Ndogpassi, located 15 kilometers from Douala,should, over time, become a new growth pole. The project's dynamic impact (PCRpara. 3.01), however, should be qualified. The expropriations have also led tothe formation of new squatter settlements and sites which will require futureupgrading (paras. 3.30 and 5.13).
B. Environmental Impact
5.02 The dredg.ng of the Mgoua River in 1982 evidently improved Nylon'senvironmental conditions, reducing the residual impact of annual floods. Sincethat time, however, the silting up of the Mgoua and the construction of secondaryroads under the project, coupled with the completion of a major highway (1'AxeLourd) which converted Nylon into a virtual basin, have complicated the area'sdrainage (PCR para. 3.04). In 1988, ARAN was obliged to undertake a study tofind a solution for the .new puddling which occurred and has subsequentlyorganized community works to help drain house lots. Nonetheless, according toan independent evaluation done by DDA, "at least one third of the lots in thepilot zone run the risk of having poorer drainage after the completion of worksthan before." is
5.03 While engineering supervision consultants note acidly that there isno solution to Nylon's drainage and add that "the project would have done betterto raze the area completely," residents can be seen undertaking individual inf illprojects to raise the level of their house plots by up to 1.5 meters. Thecommunity itself is building and maintaining secondary street drains (para.4.11). Nylon's residents are, evidently, not ready to give up and the projectappears to have sparked both communal and individual efforts to deal directlywith environmental problems.
5.04 As the PCR (para. 3.03) notes, the lack of piped water continues tothreaten Nylon's environment. With only six public standpipes, Nylon's residentsdraw water from individual and communal wells on the same plots where latrinesdischarge black and gray waters, thereby presenting a major health and sanitationhazard. However, DDA evaluators note that 10% of Nylon's residents now havepiped water connections, as opposed to a mere 1% in 1980. 19 Again, it is to behoped that residents will themselves eventually install the solutions which theproject itself could not implement.
C. Institutional Impact
5.05 When analyzing institutional development, it is difficult todistinguish the input of the first project from that of the second or from theforce of circumstance. In any case, the advent of the former appears to haveserved both as a first step and as a filter. Aside from those noted below,certain institutions, such as CAPME and BCD, dropped out of the urban developmentsector altogether. Others, which were not taken into account in project design,such as the municipality of Douala and the State Land Bureau, proved too
18 Dossiers Sectoriels
19 Dossiers Sectoriels #9 p.3.
26
important to be overlooked and have been brought into more active roles in urbandevelopment. Indeed, the most important changes to be noted concern theevolution of inter-institutional coordination among the agencies involved in thefirst project and the growing awareness of an urban sector interest beyond thatof individual institutions.
5.06 MINH was charged with overseeing the first project and preparinga second one. As noted in the PCR (para. 1.12), however, MINUH tended to eschewits role as coordinator. Its involvement with ARAN was somewhat erratic and theproject coordinator operated quite apart from the rest of MINUH staff, as wellas from other agencies. In retrospect, the technical assistance offered throughthe project was not seen as particularly helpful to MINUH over the long term(para. 3.39). MINUH did, nonetheless, carry out studies for the second project,appraised in 1987, and its urban development unit subsequently appears to havetaken on new life.2 Implementation of a large and complex program appears tobe going smoothly. In the sense that the first project prepared MINUH for afollow-on operation, including the flushing out of inefficient managementsystems, its impact must be considered positive.
5.07 The project gave MAEglt its first real taste of land development forlow-income families and pointed out the limits of the agency's procedures andstandards for the target population. Under the second project, MAETUR appearsbetter equipped both to meet the ieeds of the low-income population and to takeon a broader role in urban land development. It is not clear, however, whetherMAETUR should be involved in upgrading projects or whether these should be leftto the cities themselves. As the PCR points out (para. 1.12), moreover,relations between ARAN and MAETUR were often sticky and the positive impact onARAN was not also transferred to MAETUR.
5.08 While the project appears to have failed in its attempts to developGC (paras. 4.13-1.17) as a major credit institution for low-income families,the present director of CFC, notably influenced by the agency's involvement inthe second project, has expressed clear interest in augmenting its savingsportfolio and in working out a loans program to serve the informal sector.Interestingly, the director has requested copies of the Bank consultants' reportswritten under the auspices of the first project. Although CFC's interest maybe largely a temporary result of its present economic crunch, the first projectmay still prove to have had an important impact on CFC.
5.09 At the local level, the project doubtless strengthened Animation andset CPN on stronger ground. The most marked institutional development, however,occurred at AAN, which seems quite capable of completing the upgrading of Nylonon its own, barring unforseen economic problems. The question remains, however,as it often does in urban projects of this sort, what will become of ARAN after1.996?
2o The change may also be attributed to a difference in personalities.Furthermore, while the former director of the PDU lacked support from auxiliarystaff, his successor has relied on a more open management style.
27
D. Poliev Impact
5.10 Urban policies in Cameroon appear to have gone a full circle. Inpreparing the first project, the Bank attempted to concentrate MINUH's effortson informal settlements and urban growth. But as the Bank itself changed itsvision of urban development, it seems also to have led MINUH to shift focus.In the words of the director of PDU2, "we are interested in productiveinvestments now rather than social investments." MINUH may be reaffirming thecountry's original outlook.
5.11 At the same time, as the PCR (para. 2.05) observes, the first projectbroke ground in several key areas such as cost recovery, legalization of tenureand the installation of services and infrastructure in squatter settlements.It also pointed out the need for policy changes to facilitate future urbandevelopment, the most important of which include:
a) The -ole of municipalities. The dissocittion of Douala from thefirst project led to implementation problems and jeopardizes theproject's future. By contrast, municipalities play a key role asdevelopers in the second project;
b) Land titling. The problems with transferring land from the nationalgovernment complicated and prolonged the land regularization processconsiderably. The State Lana Bureau is currently studying a newprocedure which will give development agencies the power to controland sell government land; and,
c) Resettlement. It has become clear that urban development projects,like neighborhood upgrading, must be accompanied by resettlement andsite planning programs. The second project includes components todevelop settlement plots in tandem with upgrading and adds financingfor adequat%.- indemnization of families evicted for urban improvementprojects. This constitutes a de facto recognition of squatters'rights to land.
5.12 The first project's involvement with one quite particular communityhas opened a new line of communication which can influence MINUH policiesdirectly. Changes in financing terms, in expropriation procedures, in buildingstandards and in land regularization practices offer some examples of policyreform which grew out of the experience at Nylon and developed directly from thedialogue with Nylon residents. This reversal of the previously establishedpattern represents an important policy shift in and of itself.
5.13 While upgrading projects were not included in the second project,events of the last two years suggest that they may well prove as productive asother municipal development activities. If its cost recovery continues onschedule, ARAN will be able to present a strong case to MINUH for includingupgrading projects in future municipal development programs. Even if MINUHchooses not to support upgrading projects, the experience at Nylon has,nevertheless, sparked local interest. The Mayor of the adjacent township of NewBell, moreover, has invited ARAN and Animation to advise on the feasibility ofan upgrading program for this community as well.
28
5.14 Douala's agreement to reduce building standards (PCR para. 5.08) andits approval of construction on unregistered plots represents an importantprecedent, in line with the recognition of squatters' rights (para. 5.11c) Thefact that such constructions have already been financed by formal sectorinstitutions is a hopeful advance in credit policy.
E. Poverty Impact
5.15 The residents of Nylon were identified as the poorest and most needyin Douala in terms of income levels and standards of living, respectively. Theproject had a noted positive impact on both. This success remains qualified,however, by the less positive situation of certain of the expropriated families,as well as of those adversely affected by continuing drainage problems at Nylon.
VI. ROLE OF THE BANK
6.01 The Bank clearly played a key role in developing government policyand support for urban upgrading prior to project appraisal. Judging frominternal reports, however, once negotiations were completed, the Bankconcentrated on preparing the second project and, unfortunately, tended to leavethe first operation largely on its own. Bank missions also became involved inthe problems of highway costs, sending in two different consulting groups, andengaged in a long dialogue over alternative construction schemes for drainagecanals, the Bank pressuring for a lower-cost, labor- intensive construction systemwhich was eventually selected. But the "software" components of the projectwere virtually ignored (para. 3.31, PCR para. 4.12).
6.02 The Bank did use its influence to have resettlement sites transferredto MAETUR, but it could have offered considerable assistance with cost recovery,the housing loans program and budget transfers to ARAN and to CFC. The Bank'sdirect lines of payment to the supervising engineers and its evident concern fortechnical components may have led project directors to feel that civil workswere beyond their control, while the remaining components held little interestfor the Bank. The coordination with Swiss missions after April 1988 (PCR para.4.14), albeit late in coming, was welcomed as evidence of renewed Bank concernfor all project components.
VII. LESSONS LEARNED
7.01 The Audit concurs with the findings of the PCR (paras. 5.01-5.06),adding the observations in the following paragraphs.
7.02 The first project is typical of the "Christmas tree" approach,prevalent among Bank-supported urban operations in the late 1970's and early1980's, which focused on a particular site with a multitude of loosely-relatedcomponents. Experience in Cameroon tends to confirm that such projects can bevery difficult to administer locally and defy the supervision capabilities ofthe Bank. Specific projects, moreover, run the risk of incurring resentment ata national level. Most successful pilot projects take place in the country's
29
capital city and part of Nylon's administrative problems can be attributed toits location elsewhere.
7.03 As to the multiple components, here as elsewhere, the smallerelements tend to be eclipsed and key issues related to them tend to be overlookedby Bank supervision missions unless they have a significant impact ondisbursements. Indeed, the project's success in resettlement, landregularization, cost recovery and small business support are due in large partto ARAN's dynamic director, who stayed with the project eight years and toalliances forged with the community, through Animation and the Swiss technicalassistance program.
7.04 In retrospect, it was a mistake to give ARAN responsibility forproject implementation, while farming out cost recovery to another agency (CFC).The second project has opted for a more streamlined model of administrationwhereby the municipalities are charged with both execution and cost recovery.
7.05 The project demonstrates, however, that urban upgrading can resultin efficient cost recovery and, thus, be replicable. If ARAN fails to carry outits upgrading program for all of Nylon, it will be because of insufficientgovernment backing, rather than lack of local revenues. The experience at Nylonalso points to the need to include adequate programs for resettlement and newsettlement in conjunction with upgrading and municipal development projects ingeneral.
7.06 The project likewise illustrates the difficulties faced by anexecuting agency working in isolation. ARAN had to manage with only limitedsupport from MAETUR, MINUH and the Bank. Had the municipality been enlisted inproject implementation, the project might have run more smoothly and its futuremight have been better assured (PCR para. 5.04). Again, the second project hasattempted to avoid this problem by establishing a stronger relationship withthe municipalities.
7.07 The importance of defining clear and workable systems of financingand cost recovery should be stressed. This includes prior agreement with aviable financial intermediary. It also means developing affordable projects andpayment schemes, a lesson which ARAN learned and applied in the course ofimplementation. Problems with financing and cost recovery have plagued Bankurban projects in the past and will probably continue to do so in the future.Successful experiences, therefore, should be well documented and effectivetechnical assistance 1,p:r)moted in these areas.
7.08 Inasmuch ar* the project could have benefitted from closer assistancewith regard to certain problem areas occurring during implementation -- notablycost recovery, land titling and resettlement -- it might be advisable to leaveunallocated funds for unforeseen technical assistance needs, particularly inpilot projects. The fact that technical assistance centered on MINUH, ratherthan ARAN, did little to help the situation. Under the circumstances, DDA'sassistance and flexibility were invaluable.
7.09 The impa-,t of a first project may not be felt immediately. Severallessons of this experience are just beginning to be reviewed at the national
30
level and their results will probably not be fully observable until a th:rdproject is implemented or until local initiatives, such as that at New Bell,take place.
7.10 The project points out the advantages of collaboration with communityorganizations and co-financiers working on site. In many instances, DDA madeup for the Bank's weaknesses in supervision. The efforts of ARAN and Animationin the areas of small business support and community development, however,suggest that such activities may be better suited for management by donors otherthan the Bank.
7.11 The troublesome cost overruns experienced in this project suggestthat additional emphasis is needed on the review of cost calculations,consideration of alternative solutions and better control of constructionactivities and costs.
VIII. CONCLUSIONS
8.01 The project represented a bold attempt to introduce several newconcepts including the upgrading of squatter neighborhoods, land regularization,resettlement on unserviced plots, home construction financing, cost recovery andsupport for small businesses. The problematic terrain at the project site,Nylon, led to hefty and troubling cost overruns and a dramatic reduction in thecivil works program. Compared with Bank urban experience world-wide, however,the project completed disbursement in record time (five years as opposed to 9.5years), although several components were left to be completed under a follow-on operation.
8.02 The project has had a marked positive impact on the urban environmentof Nylon and on the city of Douala as a whole. In addition, it has st-Imulatedeconomic growth in Nylon and strengthened community development. Unlike manyother Bank-financed urban projects, cost recovery appears to be going well.Delays in the resettlement of expropriated families and in issuing land titles,together with the failure to generate a viable home financing system and aprogram to support small businesses, represent the main shortcomings in anotherwise successful project.
8.03 Although a primary objective of the first project was to establisha replicable model for urban upgrading and, to date, no such replication hastaken place, the policy changes and interest generated by the experience at Nylonsuggest that urban upgrading has gained a small, but secure, foothold amongofficial urban development activities in Cameroon.
8.04 Studies financed under the first project led to the preparation andnegotiation of a second urban operation in 1988. The first project identifiedand took the initial steps to address areas of institutional and policy weakness,without which the second project could not have moved forward.
SOLDE A REPORTER ..... 554 -531 M_ 1111 1-1 -- 171 2071 1081 1531 -311-141 so ul 23r 231 0
ANNEX 3PHOTOGRAPHS Page 1 of 7
Photo I Problems with public servicemaintenance--like garbage collec-tion--stem from the runicipalityT sdistance from the project
Photo 2. Dibom II under construction
35 ANNEX 3Page 2 of 7
Photo 3. The first house models were beyondthe means of most Ny1on req*-ents
Photo 4. Ndogpassi is more of wilderness
than a settlement
36 .NNEX 3Page 3 of 7
Phote
Photo 6.
37 ANNEX 3?age of 7
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Photos 5, 6 7. The Madagascar Market
Photo 8. Differunt house models at Dibon II
38 ANNEX 3Page 5 of 7
Photo 9 Progressive houses financedby CPN
Photo 10. Another CPN housing loan
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41
PROJECT COMPLETION REPORT
CAMEROON
FIRST URBAN PROJECT(IDAN 2244-CM)
October 5, 1989
Occidental and Central Africa DepartmentInfrastructure Operations Division
42
43
REPUBLIC OF CAMEROON
URBAN DEVELOPMENT PROJECT, LOAN 2244-CM
PROJECT COMPLETION REPORT
I. BACKGROUND AND PROJECT DESCRIPTION
Sector Background and Project Identification
1.01 In 1980 when the project was appraised, about a third, or 2.6 millionpeople, of Cameroon's 8.4 million population lived in urban areas. In 1987 whena follow-up Second Urban Project was appraised, 40Z of the 10.5 millionpopulation were urban residents. The steady rate of urbanization is a majorfactor contributing to strong growth of GDP in non-oil sectors during thisperiod. Urban-based activities generated over two-thirds of new employmentopportunities and real growth in non-oil GDP. Cameroon's unusuallywell-developed and dense network of urban settlements has allowed, through thedevelopment of the internal food market, for increased agricultural productionand the related shift from subsistence into market-oriented agriculture. Besidesits polycentric structure, the urban network is notable for the market importanceof the secondary centers, which play as large a role in absorbing urban migrantsas the two main cities put together.
1.02 Douala, the site of this project, is the country's main port andindustrial center and also the regional economic center for the provinces ofthe western region, Cameroon's agricultural and commercial heart and its mostdensely settled region. Douala is also the largest city, with about 600,000 in1980 and about 842,000 in 1986. Located at the mouth of the Wouri River on'theGulf of Guinea, it has been a major trade center since the arrival of thePortuguese in the sixteenth century. Its port now handles virtually all import-export traffic for Cameroon as well as goods en route to or from landlocked Chadand the Central African Republic. The second-largest city, Yaoundd, the capital,is located centrally and has served as the administrative center of Cameroonsince 1915. These two cities contain about a third of the country's urbanresidents. Douala will pass the one million mark within the next few years andYaound4 will pass it by 1995.
1.03 The identification of the First Urban Project grew out of an extendedand fruitful consultation concerning urban and housing policy between the Bankand Government, initiated in 1975 by Government's request for a sector mission.Important aspects of the secter mission's findings were reflected in the urbanand housing sections of the Fourth Plan (1976-80) and the dialogue continuedthrough project preparation missions assisted by the Resident Mission, and byan advisor to the Ministbre de l'Urbanisme et de 1'Habitat (MINUB), provided from1979-81 througi the First Technical Assistance Project (Credit 673-CM).
1.04 The project was initially conceived in 1978 as a three-pronged effortto: initiate urban upgrading,operations, institute a sites and services program,and strengthen the institutions on which the future of urban development depends.Both upgrading and sites and services involve provision of basic road, drainage,water, education and health facilities in urban areas, along with land tenureand housing credit arrangements which encourage private investment in permanenthousing stock. Upgrading involved the introduction of these measures in existinguncontrolled and usually illegal settlement areas, while sites and servicesprograms opened new areas. Both types of infrastructure programs were receiving
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Bank Group support from the early 1970s in a number of countries as the mostpractical means of addressing the need to extend basic infrastructure networksin the face of rapid urbanization, and to provide for the basic needs of theurban poverty group.
1.05 The sites and services approach formed the basis for Governmentcreation in 1978 of a new Agency for Urban and Rural Land Development (Missiond'AmOnagement et d'Equipement des Terrains Urbains et Ruraux or MAETUR), underthe aegis of MINUH. The Government was prepared to envisage a long-range, multi-city program for sites and services but wanted to proceed more cautiouslyregarding upgrading efforts. The Bank considered that priority should be givento upgrading operations as the main mechanism for clearing the urban infrastruc-ture backlog as well as to sites and services programs, providing thatappropriate action be taken to eliminate two major constraints: lack ofprovision of sites for households below the 25th income percentile, and thediscontinuation of heavily subsidized housing loans (interest rates below savingsdeposit rates).
1.06 The Nylon area of Douala was clearly identified by both partners asthe highest priority area to upgrade from all points of view: technical, social,and political. Nylon was the largest slum and the worst squatter area in thecountry. Housing 90,000 residents in 1980, a sixth of the city's population anda quarter of its poor, Nylon was located on marshy ground along the airport roadand directly adjacent to already developed areas, whose runoff it received.Unlike its namesake, Nylon never dried out. First established in the 1950s asan extension area for residents of next-door New Bell, it was for many yearsdesignated as a "green area' by the urban master plan. Bypassed byinfrastructure extensions, the residents of Nylon, noted for their cohesivesocial structure, formed an effective and well-organized system of thirteenneighborhood action committees. Beginning in 1970, these committees mobilizedwork groups equipped with hand tools who filled the swampy land and constructedand maintained makeshift bridges, drainage canals, and dirt roads.
1.07 While the solidarity of the community has been and continues to be agreat strength, there was a limit to what it could achieve. In 1980 the areawas served by a single water standpipe, a single low-tension electric line, andlacked street lighting. It was inaccessible to buses, garbage vehicles or trucksand deficient in health and education facilities. Vendors were plentiful butthere was no market since these are built and run by the city government, andin any case trucks could not have gotten through.
Project Obiectives and Description
1.08 The project's main objectives were to raise urban infrastructurestandards to an envir 'tally acceptable minimum, and to strengthen theinstitutional base and % - -op appropriate mechanisms for a continuing upgradingprogram in Cameroon. The project was designed to attain these objectives bysupporting the folloving activities:
(a) construction of primary infrastructure for the whole 600-ha Nylon area,and to raise the environmental sanitation conditions and road accessto an acceptable minimum. This included the provision of major roads,drainage, dredging of the Mgoua River, water supply, electricity andstreet lighting, as well as the development and servicing of
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resettlement areas to accommodate the households displaced byinfrastructure construction (56Z of total base cost);
(b) complete upgrading of a first neighborhood of 50 ha, including theprovision of secondary and tertiary infrastructure, reblocking ofplots, land tenure regularization, housing credit, and cost recoverymechanisms (3% of total base cost);
(c) community facilities for Nylon and the resettlement areas, includinga major market, community centers, public health facilities and primaryschools financed by Swiss bilateral assistance (15? of base cost);
(d) community facilities in Yaound4 Northwest, an under-serviced denselysettled low-income area of the capital city (8% of total base cost);and
(e) institution building consisting of support for the urban developmentinstitutions responsible for carrying out the project, support tostrengthen MINUH, in particular its land administration sections, andfinancing for preparation cf a Second Urban Project and other urbanstudies (192 of total base cost).
1.09 In addition to the community facilities program, Swiss bilateral aid(Coopdration Suisse au Ddveloppement et & l'Aide Humanitaire -- DDA) alsoprovided a wide range of support activities for the existing communityassociations, including three full-time project unit staff members, tools andsupplies for ongoing neighborhood self-help infrastructure maintenance, and ahealth and nutrition education program. The community facilities program wasextended twice to include another group of community facilities and furthersupport. This support included training for project unit staff and for small-scale contractors involved in the construction sector, design and establishmentof an artisan center in the market, proposals for market management, andmanagement assistance to the Nylon residents' housing credit association.
Project Design and Oraanization
1.10 The above project components were designed over a two-year periodculminating in a November 1980 appraisal of a much larger project to be financedby a US$40 M IDA credit, twice the amount of the loan eventually approved. Theproject size was reduced during negotiations in February 1982 at the Government'srequest by the withdrawal of a large component originally intended to supportthe launching of a sites and services program and the technical assistanceassociated with this component. This cut was requested because of the increasein the cost of local financing associated with the shift of the project from thelast IDA credit to Cameroon to the first IBRD loan.
1.11 The institutional setup originally agreed at appraisal, to create aproject-specific independent agency to carry out the upgrading of Nylon, waseventually retained, despite strong pressure from the Bank to establish aprogram-oriented one. Once the decrees to create the agency reached thePresidency, the President ruled in summer 1981 that the agency should be createdwithin MAETUR, itself newly created, in order to discourage proliferation ofparastatal institutions. This option had earlier been considered and rejecteddue to the risk of overburdening MAETUR, which was engaged in launchinggovernment's first land development efforts. A compromise was sought which would
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separate the Nylon agency's management and budget from those of the MAETUR landdevelopment arm. The setup finally approved left administrative and accountingfunctions with the central MAETUR office in Yaound4 and operational respon-sibility with the director and staff of the Nylon agency in Douala, named ARAN(Agence de Restructuration et d'Am6nagement de Nylon).
1.12 The subsequent experience with this institutional arrangement was notsatisfactory. Poor working relations between the Douala ARAN office and theYaoundd MAETUR office, which had to approve every administrative and technicalaction, remained a constant source of friction and delay throughout the project'slife. Lack of delegation of authority from Yaoundd along with rigidity anddetail-ridden procedures rooted in the legal tradition were to blame for muchof this friction. A Steering Committee made up of Ministry, municipal andcommunity representatives was to have played an important role in setting workprograms and budgets; this arrangement also did not work: the Committee met onlyonce. The project's financial arrangements, designed at appraisal to strengthentwo inexperienced financial intermediaries, were complex, and made the draftingof the legal documentation required for effectiveness quite time consuming.
II. PROJECT IMPLEMENTATION AND COST
Overview
2.01 The most critical variances between planned and actual projectimplementation were a four-year delay in start-up of civil works, and aconsequent extension from four to seven years of project technical assistance.These delays were due in part to factors known at appraisal but which could notbe accurately estimated, in particular the slowness of procurement and landadministration procedures in Cameroon. Also, some factors were not foreseen:in particular the need to redesign basic infrastructure in response to the 1985master plan revision, and the 1986187 economic crisis plus the fall of thedollar. However, new land administration procedures and institutionalarrangements worked out during the first project made it possible to plan morerealistically for implementation of the Second Urban Project.
Start-up Activities
2.02 Government's commitment to the project was clearly demonstrated bythe fact that even before negotiations, it undertook about US$4 H in preparatorycivil works adjacent to Nylon. A Bank urban sector mission which visitedCameroon in spring 1982 found that works to prepare a first resettlement siteto accommodate roughly half of the households to be displaced and to dredge theMgoua River which drained Nylon, had already been completed under Cameroonianfinancing. Retroactive financing for these works was originally intended to beincluded in the project, but dropped at Government's request in order to reducethe size of the proposed loan.
2.03 During the two-year period between negotiations and effectiveness(February 1982--May 1984), activity was stalled on three fronts: institutional,technical andland availability. Institutionally, the responsibilities of MINUBand of the kJnistry,\5 Plan for the overall supervision of the First UrbanProject were not clearly defined. Then during the 4rafting in Cameroon of legaldocumentation required for effectiveness, it became necessary to incorporate the
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concerns of agencies who had not participated in negotiations. At issue was notthe project concept, but rather the project's complex financial arrangements andthe procedures for repayment and disbursement of sub-loans.
2.04 Other delays resulted from the requirement that the selection ofconsultants for design and engineering contracts comply with the Bank guidelines.This requirement acccunted for about four of the six months delay between initialconsultant selection and start of design work (December 1983--June 1984).
2.05 On the land availability front, a search was going on for a secondresettlement site. The first resettlement site (30 ha) called Dibom II whichwas part of State lands at the time of negotiations could accommodate only abouta third of the households to be resettled. At negotiations, Government hadassured the Bank that additional land was available for extension of theresettlement area as needed. In fact the situation turned out to be much morecomplex. A second site called Ndogpassi I which was set aside for public usein spring 1985 turned out to be unusable because 80 of the 180 ha was titled andwould have required compensation, and 35 ha were occupied by squatters. Anothersite called Ndogpassi III, 3 km east of Nylon, was designated and integrated intoState lands in fall 1985. This 279-ha site was large enough (over 3,000 plots)to accommodate the remaining households to be relocated from the project and alsothose anticipated to require resettlement as part of the Second Urban Projectwhich was then under preparation (see map).
2.06 The two years between negotiations and effectiveness were also a timeof intense activity for sector work and identification of follow-on projects.Three interdisciplinary sector missions visited Cameroon during this period, andan Urban Sector Review Report (4540-CM) was issued July 5, 1984. The supervisionmission which coincided with the last of these (February 1984) also formallyidentified a US$200 M Douala Infrastructure Project focussing on major road anddrainage improvements in Douala, as well as a Cadastre (land administration)Project and a Secondary Cities (municipal development) Project, in line with therecommendations of the sector work. The First Urban Project included financingfor the preparation of a Second Urban Project, and supervision of the feasibilitystudy for this project took up a large share of project supervision staff time.At the same time, the prospect of this follow-on project acted as an incentiveto resolve satisfactorily certain complex issues, particularly land tenurearrangements, which arose during implementation of the First Project. Otherstart-up activities during this period were the recruitment of technicalassistance staff and training of Cameroonian counterpart staff.
Road and Drainage Infrastructure Design
2.07 Project civil works components accounting for about 60Z of projectcosts were grouped in two large contracts, one covering the basic primary roadand drainage network in the whole of Nylon and the other covering secondaryinfrastructure in the 50-ha pilot upgrading zone. In early 1985, at the sametime that adequate drainage design to cope with severe geotechnic problems wasbecoming a major concern, Government decided to change the basic structure ofthe road and drainage network in Nylon to reflect the new Urban Master Plan forgreater Douala.
2.08 The above change in the basic structure of the road and drainagenetwork was a fundamental one, involving a shift in perspective from viewingNylon as a quartier, albeit a large and important one, to viewing it as a major
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commercial center. For one thing, in the five years separating engineeringdesign from appraisal, Nylon had outgrown its earlier boundaries. Described inthe appraisal report as a 600-ha area with 90,000 population, Nylon had grownto 700 ha with 120,000 by the spring of 1984.
2.09 In addition, the time had come in the growth of Douala that the four-lane road east-vest approach to the city had to be extended, and Nylon happenedto be the logical location for a crucial link. Such a revision would have beenimpossible to avoid at this point in time. The same Bank and MINUH teams whowere supervising the First Urban Project were simultaneously involved inpreparing the Douala Infrastructure Project which was intended to identify thoseroad and drainage investments critical to the efficient functioning of the cityas a whole.
2.10 The design consultants for the project were instructed to quicklydevelop preliminary design solutions taking into account the transformation ofthe north-south access road into a four-lane highway and the east-vest highwayinto a six-lane highway. Thirty meter rights-of-way for there segments had beenincluded in the design in anticipation of future needs but initial project costhad not provided for construction of such wide roads. The cost increase impliedby this type of design upgrade could now easily be accomLodated, it was thought,since the Bank loan was denominated in US dollars and the dollar had risen from270 CFAF at the time of negotiations to 400 CFAF. The expected date of biddingdocuments was postponed from December 1984 to March 1985 to allow for theredesign.
2.11 Final design and final bidding documents were in fact not completeduntil late 1985, following a detailed review and comments on preliminary versionsby a spring Bank mission. No sooner were the bidding documents satisfactorilyrevised than the terms of reference for on-site supervision (Organization,Pilotage, Contr6le des Travaux (OPC)) had to be rejected. Revised versions ofthe terms of reference for OPC bounced back and forth between the Bank, ARAN,MAETUR and the Ministry of Public Contracts, the Government procurement ministry,from mid-1985 to mid-1986; the Marchds Publics then proceeded to call for localbidding against Bank procurement guidelines. A short list agreeable to allparties was finalized in August and the Bank was informed of OPC bid evaluationsin November. The selection process for the consultants in charge of on-sitesupervision created additional delays. The preparation of a request forproposals in compliance with Bank guidelines took over one year and Bank approvalof the OPC contract was not given until receipt of the bid evaluation report(February 1987), final TOR (March 1987) and the detailed contract (April 1987).
2.12 Bids for civil works in Nylon were opened in April 1986 and the bidevaluation was reviewed with the Bank mission in June 1986. The Bank wasinformed in September of the July decision of the Procurement Commissionconcerning the selection of a civil works contractor. Following several monthsof Bank-ARAN-MAETUR disagreement concerning important details of the winning bidproposal, a Bank mission visited Cameroon in February 1987 and resolved thesedifficulties. A preliminary engineering report was approved by the Bank in lateApril, rights-of-way were cleared beginning in early 1987 and road constructionbegan in fall 1987.
2.13 The construction contractors soon ran into two unanticipated problems:geotechnical difficulties requiring the construction of special road basesimpervious to water which led to substantial increases in costs, and errors in
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the quantity survey. At the same time, Cameroon had to face a deterioratingeconomic and financial environment. Oil production had begun to drop in FY86,but Government spending had continued to increase, drawing on accumulated oilproceeds. By late 1986, the economic crisis due to the fall in oil prices,combined with the weakening of the US dollar, was belatedly making itself feltat the project level.
2.14 Due to these technical and financing constraints, it was agreedfollowing a mission in late 1987 that the Bank would increase its share of theproject financing. It was also agreed that the scope of the First Urban Projectwould be limited to components already committed, by reallocating to thesecomponents uncommitted funds which had been reserved for the training program,the Yaound4-Northwest community facilities, non-essential technical assistance,and small components for health education and artisan assistance. From thispoint on, efforts focussed on the completion of primary roads and drainage, andof secondary infrastructure in the pilot upgrading zone on which constructionhad begun in fall 1987, and on improvement of the land tenure situation.
2.15 The most important design changes at this stage were to accept areduced configuration for the east-west highway which provides the main accessroad to the area, rather than the six-lane highway which under earlier economicconditions would have been affordable, and to realign the north-south road tobecome a link in a new ring road, while retaining its four-lane configuration.At the time of negotiations for the Second Urban Project in July 1988, which nowconsisted of a scaled-down Douala Infrastructure Project combined with priorityworks in Yaound4 and secondary cities, an additional US$13 M was added to theSecond Urban Project to complete the upgrading of the Nylon area. All works inNylon initiated under the First Urban Project are expected to be completed byJune 1990.
Improvement of the Land Tenure Situation
2.16 The vast majority of Nylon residents had developed their plots outsideof all legal procedures for land acquisition, subdivision, development andregistration. As a result, they were considered illegal squatters by the urbanauthorities, and were refused the right to any secure land tenure which in turnlimited their willingness to invest in the improvement of their housing. Oneof the project's major objectives was to develop appropriate procedures andmechanisms to regularize land tenure in uncontrolled settlements. The deliveryof secure land tenure would be conditionai to the payment of an infrastructureservicing fee in order to allow for the financial replicability of the operation.Mechanisms to improve the land tenure situation were developed for two types ofsituationst (a) the upgrading of uncontrolled settlements; and (b) thedevelopment of resettlement areas to accommodate households displaced as a resultof the clearing of the rights-of-way required for the provision of priorityinfrastructure in h1lon.
2.17 ARAN, through its land management bureau, Bureau de Liaison desAffaires Foncibres (BLAF), and with the support of DDA, developed detailedprocedures for the restructuring and land regularization of a pilot area of 50ha. All plot occupants were identified by a Land Commission assisted by theneighborhood associations. Aerial photographs were used to restructure theplots layout in order to allow for minimal infrastructure servicing. After theincorporation of the corresponding area into State lands, the subdivision planwas officially approved and individual plots were demarcated. Files were
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prepared by BLAF for the beneficiaries of the 1703 plots as well as for the 407households which had to be displaced as a result of the upgrading operation.The first land titles were delivered in mid 1989 after payment of an infrastruc-ture servicing fee averaging CFAF 4500 per square meter.
2.18 The clearing of the rights-of-uay of the primary infrastructure andcommunity facilities planned as part of Nylon upgrading led to the displacementof a total of roughly 3,000 households among the 20,000 households whichoriginally occupied the site. BLAF, together with neighborhood associations,conducted surveys of the households to be displaced allowing for the expropria-tion commission to determine corresponding compensation rights. The vastmajority of the households concerned were illegal squatters and did not have anyofficial right to compensation. However, MINUH agreed to grant each displacedhousehold the right to a resettlement plot against pay-Aent of its infrastructureservicing costs.
2.19 An initial 30-ha site, called Dibom II (para. 2.05), was prepared in1984. All of its 923 plots were allocated, and 865 of them were paid in fullwith house construction completed or actively underway. A second resettlementarea was opened in 1987 in the Ndogpassi III area, where a 279-ha site able toaccommodate over 3,000 plots was incorporated into State lands. Plots occupancyand house construction in Ndogpassi III is slower than expected. Among the first1,032 plots, only 933 had been allocated and 345 paid in full by mid 1988. ARANcommissioned a non-governmental organization (NGO) to analyze problemsencountered by resettled households. The major conclusions and recommendationsof this study are that the delay for plot payment should be extended from fourmonths to two years and that the standard housing designs prepared by ARAN toaccelerate the delivery of building permits led to construction costs of overCFAF 5 million each which was out of reach of the majority of the households.Consequently, the NGO was commissioned, under DDA financing, to design andsupervise the construction of core housing units for a cost of CFAF 2 million.These recommendations, which were already included in the Resettlement ActionPlan of the Second Urban Project, will be integrated into ARAN's futureoperations.
2.20 Community facilities in Nylon were covered by the Government'sagreement with DDA. This agreement provided for the construction of theMadagascar Market as well as 13 other community facilities in Nylon as originallyappraised by the Bank. While construction on the market had begun in 1984 andwas completed in early 1989, only one of the other community facilities had beenstarted, a primary school for the Ndogpassi III resettlement area miles away fromthe nearest existing school. The delay in building community facilities was aconsequence of ARAN's decision to carry out all the design, contracting andsupervision functions for community facilities in-house and to develop newdesigns rather than adapt existing ministerial building prototypes. The newdesigns appear more innovative and functional but took longer to design andconstruct, and also proved to be more expensive.
2.21 Despite these problems, DDA and Cameroon Governments agreed toadditional financing in 1987 to complete the remaining primary school, two healthfacilities, and eight sociallsports facilities, and to further extend the programto include a community center, three kindergartens, and an artisan center inthe Madagascar market; in Ndogpassi III, an additional school, market anddispensary; and in Dibom II, a market and cemetery. ARAN has recently agreedto delegate the design function to local architects. Most community facilities
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are in the design stage and discussions center around cost reduction measures.A five-year schedule agreed with the DDA in spring 1989 shows constructionstarting on the Soboum community center in fall 1989 as the Bilongue school isbeing completed, with nine more facilities starting up during winter 1989/90 andthe remaining nine facilities coming on stream over the 1991-94 period.
2.22 Following the creation in spring 1986 of the Agence pour laRestructuration de Yaound4 Nord-Ouest (ARYNO), a HAETUR agency responsible forupgrading operations in Yaound4, preliminary proposals for community facilitiesin Northwest Yaoundd were first presented in 1987. The area had substantiallychanged since appraisal as a result of major road works by both central andmunicipal governments and subsequent private building construction. The sitespreviously considered for these facilities were no longer available and theproposed location would have required considerable demolition. The costs of theproposed facilities were also much higher than available financing. As notedin para. 2.14, this component was postponed and the uncommitted project fundsallocated to the completion of priority works in Nylon. Central and municipalgovernments are in the meantime proceeding to construct the needed facilitiesas financing permits.
Institution Building
2.23 Five technical assistants and experts were in place from 1984 until1988, with contract extensions being covered either by the reallocation ofproject funds agreed in November 1987 or by Government funds. The mainachievements of the project's institutional development component, along withan urban sector training component financed under the Second Technical AssistanceProject (Credit 1168-CH), are the support provided to ARAN, creation of newunits within the MINUH to deal with urban infrastructure maintenance and withtraining, supervision of the engineering studies for the priority infrastructureproject in Douala and preparation of an action program to improve Cameroon's landcadastre.
Proiect Cost (Table 1)
2.24 The project costs amount indicated at appraisal was US$54.3 M, or14.8 billion CFAF at the 1983 exchange rate (US$1 - 270 CFA), of which 51% wasthe foreign exchange component. The Loan amount of US$20.0 M was to be appliedto finance civil works (50%), materials and equipment (60%) and consultants andstudies (70?). The Loan was to finance 36Z of total project costs, theGovernment of Cameroon, 542, and the DDA, 10%. A February 18, 1988 amendmentto the Loan Agreement modified the Bank financing share to 85? for works and 100%for consultants. Total project cost at closing (30 June 1988) was estimated atCFA 22.2 billion, or US$74.0 M at the then current rate of exchange(US$1 - 300 CFA). This corresponds to a 35% cost overrun for all project works,including those to be completed with funding from the Second Urban Project.
2.25 Of the US$19.8 M disbursed under the First Urban Project, US$13.5 Mwent for civil works in Nylon, compared to the US$11.9 M planned, and US$6.0 Mwas disbursed for institution building, compared to US$5.6 M planned (Table 2).The final allocation of funds to the two main components thus generally reflectsthe original intent of the project. The main change has been in the share offunding assumed by the Bank, which was to have been 36? but became 72? followingthe adjustment in financing arrangements made in November 1987 in response to
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the economic crisis and the provision of additional funds under the Second UrbanProject.
III. PROJECT RESULTS AND SUSTAINABILITY
Impact on the Urban Environment
3.01 Physically, the project has resulted in the construction of a primaryroad and drainage network over a 600-ha site in Nylon which for the first timefully incorporates this area into the urban fabric of Douala. Thisinfrastructure, along with the completion early in 1989 of a huge modern market,has transformed Nylon from a swamp into one of the city's most dynamic commercialzones. The Nylon market, Marcho Madagascar, is actually more easily accessibleto many city residents than is the main Lagos market in downtown Douala.
3.02 Equally important, two new housing sites, Dibom II and Ndogpassi III,have been developed, subdivided, allocated, and occupied. Over two thousandplots have been completed to resettle households. Individual land titles forthose Dibom residents whose permanent structures are in place have been approvedby the provincial cadastral office, and their actual delivery began in July 1989.
3.03 The most disappointing shortfalls from a physical standpoint are thedifficulties in securing the systematic provision of basic urban services andfacilitis. Provision of water and electricity networks was delayed because offinancial difficulties with the utilities parastatals responsible for theseworks, limiting their capacity to service their clientele. This in turn hasdelayed installation of standpipes and street lighting by the municipality. Asa result, a temporary water line, financed under the project, had to be installedin 1988 to serve Nylon proper, including Dibom II. Other difficulties resultfrom delays in adjusting the contract with the private contractor in charge ofgarbage collection to include Nylon in its routes. These matters should beresolved in the near future.
3.04 Following the initial dredging of the Mgoua River in 1982, the watertable in Nylon had fallen from a centimeter or two beneath the surface to asmuch as a meter. Since then, it has been slowly rising as the Mgoua graduallysilted again. Dredging is again required; however, appropriate financingmechanisms between central and municipal government have not yet been approved.Until the Mgoua is dredged and the water table lowered, runoff from the newhighways in Nylon will adversely affect those living alongside. The lack ofadequate dredging would be likely to create adverse conditions for some of theplots in the pilot upgrading zone which would be less well drained than they werebefore the new highway construction (para. 2.09).
Policy Impact
3.05 New mechanisis and procedures have been worked out for resettlinghouseholds displaced by public works, for carrying out public works improvements,for recovering infrastructure servicing costs, and for regularizing land tenurein existing illegal or irregular settlements (urban upgrading). The developmentof these mechanisms and procedures extended over much of the project's lifebecause the situations produced by the project had never been addressed before,administratively, legally, or financially. Procedures were developed to
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streamline land rights assessment and registration within irregular settlements,and to resettle and compensate households in such settlements displaced frominfrastructure rights-of-way. Cost recovery procedures were developed and appearto be working well which should permit replicability of upgrading operations.The experience gained by the project executing agency, ARAN, is a valuable assetcreated through the project and probably the project's most importantachievement.
3.06 Less satisfactory were arrangements made for housing credit.Cameroon's housing credit bank, CFC (Credit Foncier du Cameroon) had agreed toloan about CFAF 220 million to 600 households for plot purchase and homeimprovement in the pilot neighborhood. This provision left out of account theneeds of the over 2,000 resettled families who needed financial support toaccelerate the house construction process. By fall 1985 only 60 loans had beenapproved; by spring 1987, this had risen to 121 loans, but the average amountswere much larger than had been envisaged. Although the overall amount loanedby CFC exceeded that agreed at appraisal, the end result is far from thatintended.
3.07 A major barrier which was anticipated and provided for at appraisalwas the CFC's policy of lending only to salaried workers, which constitute theupper income segments of Nylon. CFC was to work out an arrangement with theNylon neighborhood savings association (Caisse Populaire de Nylon) to encouragenon-salaried workers to start CFC savings accounts in order to qualify for loans.This arrangement proved difficult to conclude because of residents' reluctanceand unfamiliarity with formal sector financial institutions. CFC then workedout an agreement to lend to non-salaried household heads provided the CaissePopulaire de Nylon constituted a guarantee fund.
3.08 Another important housing finance issue resolved during the projectconcerns CFC's insistence over most of the project lifetime that housingconstruction laans would be conditional on receipt of individual title. CFC infact suspendad all 121 loans made to salaried wage earners in late 1986 becauseborrowers had no title. Since receipt of title is conditional on erecting apermanent structure under the law, the CFC condition developed into an impassefor resettlement plot allottees. The project provided the need and incentivefor CFC to agree, in the resettlement case, that a plot allocation awardcertificate and receipt for payment in full of plot costs would constitutesufficient documentation for a housing loan application.
3.09 However, the issue of avalable funds remains. By the time the CaissePopulaire guarantee fund and loan conditionality arrangements had been agreedon, and CFC had agreed to extend its formal agreement with MAETUR and reserveCPAF 150 million a year for three years to resettlement plot allottees, CFC hadno more funds to lend. The CFC financial crisis was due both to worseningeconomic conditions, slowness in identifying other sources of funding than thepayroll tax, a generally inappropriate interest rate structure, and otherproblems of the country's and region's banking and financial system. Theinterest rate problem and structural problems with the Cameroonian finance systemhad been a major concern prior to negotiations; they had been resolved at thatpoint by agreeing to undertake a study and reassessment of the financial sector.This was done, but rigidities of regulations established by the Central Bank forStates of Central Africa (BEAC) have continued to be a stumbling block.
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3.10 Another policy problem not adequately anticipated was the municipal-ity's insistence on applying building code standards to new structures going upon the resettlement plots which far exceeded the means of most Nylon residents.The building code issue was resolved in 1989 for both the First and Second UrbanProjectss allottees who have paid half the plot charge may build a temporarystructure; once they are fully paid up, a permanent structure, required toreceive permanent land title, may be erected.
Urban Strategy issues and Institution Building
3.11 The First Urban Project proved instrumental in assisting Governmentin clarifying its strategy for the urban sector, to be implemented as part ofthe Sixth Development Plan (1986-91). The priority objectives of this revisedurban strategy include: (a) the rationalization of public investment in theurban sector; (b) the strengthening of municipalities; (c) the improvement ofurban land management; and (d) the strengthening of the role of the privatesector in housing and land development.
3.12 The Second Urban Project, initially appraised in February 1986, wasrevised at Government's request in November 1987 to broaden its geographic scopeand include priority works in Yaound6 and other cities and to support the revisedurban strategy. In addition to urban infrastructure improvements, this projectincludes a program to improve urban resources mobilization and the implementationof a policy action plan to consolidate the Government's urban strategy. As afirst step in the policy action plan, the Government has created aninter-ministerial Urban Development Steering Committee to coordinate urbandevelopment policies and implement the urban strategy. Other actions includethe strengthening of urban institutions (MINUH and municipalities) and therehabilitation of parapublic enterprises in the urban sector. In addition, aProject Special Unit was created by Presidential Decree to be directlyresponsible for project administration coordination and inform the SteeringCommittee on the status and progress of the project's components and policyactions.
3.13 Implementation experience under this project has also put projectexecuting agencies and the Bank in a good position to design and undertakeefiective rehabilitation of the parastatals in this sector within the largereffort of the Structural Adjustment Loan approved in June 1989.
Cost Reco%very and Sustainability
3.14 The cost recovery principles defined at negotiations were carried outas agreed. Primary infractructure and community facilities costs amounting toabout 80% of project costs, not normally charged directly to beneficiaries, wereborne by Government. The cost of the market is to be charged to users, andstandpipes, street lighting, and garbage depots are to be provided at the expenseof the city government. The cost of secondary and tertiary infrastructure inthe pilot zone and the two resettlement sites is recovered from the residentsof the zone in the first case and from plot allottees in the second case; in bothcases the cost varis according to location. Commercially zoned property alongprimary roads is priced at two to four times the actual servicing costs, whileproperty along internal footpaths is priced to sell at less than cost to thosewith lower incomes. For Dibom II, no distinction was made between plotsaccording to location and the cost of secondary and tertiary infrastructure and
55
of latrine installation is being recovered through plot charges which are equalfor all allottees (average cost)
3.15 Cost recovery for Dibom II has gone well since plot allocation in 1984,with allottees 52Z paid up after a year, 68% after two years and 85% after threeyears. It has gone more slowly for Ndogpassi III where only 27? of the amountsdue had been received after a year. This is due to the fact that plot allocationin early 1987 coincided with the economic crisis. Cost recovery is going evenmore slowly in the pilot upgrading zone, where only about 6Z of the total amountsdue were collected in the first year. This is due to the fact that householdsremaining in the upgrading zone already occupy their plot and are payingprimarily in order to receive a title at some time in the future. They hadlittle incentive to pay as long as they could see that those who have alreadyconstructed permanent houses in the resettlement areas suffered abnormal delaysin receiving their title documents. With the streamlining of land titlesdelivery currently underway, this situation should improve significantly.
3.16 ARAN has prepared a 10-year program to achieve the complete upgradingof all twelve neighborhoods constituting the whole Nylon area. Based upon theexperience of the First Urban Project, new mechanisms were developed to betteradjust infrastructure levels of service with actual cost recovery in order toallow for the replicability and sustainability of the program. ARAN has alreadyextended the program of upgrading operations to additional zones not includedin the initial project: construction of secondary infrastructure in these zonesis to commence following surveying, recovery of costs from households and saleof commercial plots bordering the new roads and is to be self-financing.Preparations in these zones, covering 50 ha each, had reached the followingstages in early 1989: design and engineering studies had begun for the secondzone, the subdivision plan was being reviewed for the third zone, and sitesurveying was completed for the fourth zone. ARAN's intention is to completethe secondary infrastructure for the remaining 11 neighborhoods in Nylon by thelate 1990s.
3.17 From a financial point of view as well, ARAN appears to have achievedconsiderable success in its development; construction volume in FY88 exceededthat of all previous years combined and was higher than that of MAETUR's own landdevelopment programs, which have declined during the economic crisis. Costrecovery funds from upgrading and resettlement plot charges are estimated in anearly 1989 budgeting exercise to cover ARAN's administrative budget and all worksin the upgrading zones. All conditions appear to be met to fulfill the objectiveof the replicability of the upgrading operations.
Economic and Poverty Impact
3.18 The ex-post economic rate of return for the upgrading of Nylon has beenrecalculated based on land values in 1988. It reaches 24Z as compared to anexpected 182 in the staff appraisal report. All direct and tangible benefitsenumerated in the project economic analysis will have been realized by thecompletion of project works in mid 1990. Economic rates of return will berecalculated after project works are completed. It is expected that they willfar exceed those appearing in the staff appraisal report, since actual increasesin the rental value of property in Nylon have outstripped expectations. Asincome for many households fell during this same period, the current economiccrisis has increased the pressure to transfer plots. For this reason, DDA is
56
redirecting the focus of its follow-on efforts to a more coordinated and longer-term effort to organize new income generating activities for Nylon residents.
3.19 At the time of appraisal, about 552 of Nylon area residents wereestimated to have incomes below the poverty threshold for Douala, leading to anestimate of about 502 of total costs with direct benefits to the urban povertygroup. Because effective economic monitoring of the beneficiary population iscurrently being mounted with DDA assistance, no information is yet availableconcerning changes in the resident population due to legal or illegal transferof land rights. Earlier DDA-supp-rted efforts to set up a monitoring andevaluation system failed because it was too complex.
3.20 Upgrading can leave the intended beneficiaries no better off in termsof housing, and lead to the proliferation rather than the reduction of illegalsettlements, if the windfall realized by any resale of land or rights to higherincome groups cannot readily be reinvested by these beneficiaries in servicedresidential land. The Bank's willingness to support upgrading in this projectwas based on an assumption that MAETUR would be supplying at least all but thelowest 10 of the market for serviced land during the upgrading project'slifetime, this was indeed one reason why the project as originally appraisedincluded both upgrading and serviced sites programs. MAETUR's programs have beenslower starting without external assistance, and they have provided little landaffordable below the 50th income percentile. Therefore it is possible that someoriginal beneficiaries have chosen to depart for new uncontrolled settlements.Mitigating against unfavorable economic and land market circumstances are anunusually strong sense of community solidarity observed in Nylon for the last20 years, and the close and continuing involvement of community representativesin the project implementation process, through liaison effected by two ARAN staffmembers, one Bank- and one DDA-financed. The issue of redirecting MAETUR'soperations towards lower-income groups is being addressed as part of itsrehabilitation action plan to be implemented under the Second Urban Project.
IV. BANK, BORROWER AND CONSULTANT PERFORMANCE
Bank Performance
4.01 The Bank's main strength throughout the project lay in correctlyidentifying major issues and in pressing for their resolution. This applies tothe debate about institutional arrangements for the upgrading agency and abouthousing finance which preceded negotiations; the technical, procurement andresettlement site issues preceding start-up of civil works, and the landadministration issues raised throughout the project. In retrospect, the Bankwanted the project to be executed as conceived; the main case where the Bankposition did not in the end prevail, that is, regarding the institutionalarrangements for the upgrading agency, the resultant compromise handicappedproject execution. The lack of resolution (to this day) of the housing financeissue (para. 3.09), discussed at length before negotiations, remains a handicapto many project beneficiaries unable to qualify for housing credit.
4.02 The Bank's main weaknesses were, at the design stage, failing tosimplify the project financial arrangements, underestimating physicalcontingencies for civil works, and overlooking the need for periodic redredgingof the Kgoua River. Given the low-lying, swampy nature of the site and the fact
57
that Douala's annual rainfall is one of the highest in the world, on the orderof 3-4 m, the contingency estimates in the appraisal report were overlyoptimistic. The lack of accurate topographical ant soils data led to anunderestimation of total project cost. Following the appraisal of the project,the Bank began to require progressively more advanced stages of design andengineering prior to project appraisal in response to similar problems in manyother projects.
4.03 Another approach to coping with technical uncertainty suggested bythe Borrower in its Completion Report (see Preface), which would also mitigatethe vulnerability of project implementation to currency fluctuations, is todivide project works into discrete subproject phases which could be finsacedsequentially on the basis of available financing during the subperiod. Inaddition, the Borrower suggested the introduction of the concept of an acceptableexchange rate band; movement outside this band would automatically require someform of formal adjustment in project design and financi-&. Such a proposal isnot acceptable considering the Bank's existing lending guidelines.
Borrower Performance
4.04 The Government's greatest strength throughout the project's life hasbeen its demonstrated commitment to overall project and sector objectives, andwillingness to assume financial responsibility. Government committed aboutUS$4.0 M prior to Loan effectiveness for initial dredging of the Mgoua andpreparation of the first resettlement site. Until early 1987, when the economywas in rapid decline, counterpart funding was furnished as required. During theeconomic crisis, Government arranged with contractors to keep the project goingafter loan funds were exhausted in 1988, until arrangements could be made forfollow-on financing under the Second U,ban Project. Cost recovery from residentsof the upgrading zones begun under the project is now continuing as the projectexecution agency extends upgrading to the other zones of Nylon. Land transferprocedures and the delivery building permits were modified to provide for orderlyand fair development of resettlement zones and tenure regularization.
4.05 The Douala municipal government participated financially in theconstruction of the Madagascar Market, for which it has agreed to pick up a heftyconstruction cost overrun (around CFAF 3 million). However, the city has notyet provided the garbage collection, street lighting and standpipes for whichit is responsible.
4.06 The main shortcoming of Government performance was the slowness ofits political and administrative processes, a phenomenon which affects allprojects in Cameroon. Two factors can explain this situation:
(a) top decision-makera remain uninvolved at preparatory stages and arenot prepared to take a timely decision; they must first seek advicefrom those who have been involved and arrive at a consensus; and
(b) responsibility for technical, legal and administrative matters arenot sufficiently separated and participants often get involved inareas beyond their expertise.
Management deficiencies stemming from these factors also reduced theeffectiveness of technical assistance, which was frequently diverted to solveproblems not directly related to project matters.
58
4.07 Two areas in particular suffered from the general delay phenomenon:selection of a resettlement site and housing credit. While the particularpolitical sensitivity of land matters may have enhanced the delay factors, itis difficult to believj that the proposal of Ndogpassi I as the secondresettlement site could have been made in ignorance of the many encumbrancqs ofthis site. A suitable site was then proposed (Ndogpassi III), but six monthshad already been lost. It is also regrettable that new arrangements for housingcredit to non-salaried household heads and resolving the CFC requirement fortitle prior to loan approval were not given higher priority by Cameroonianauthorities.
4.08 Apart from general delay factors, Government's position on theinstitutional arrangements at the outset of the project had a negative impacton project implementation. Government's insistence that the upgrading projectexecution agency be established within MAETUR rather than as an independentagency may have been reasonable in principle, but the specifics of the relationsbetween ARAN and the MAETUR Yacund4 office had the result of handicapping ARAN'sfunctioning.
4.09 The problem of poor relations between ARAN's Douala office and theHAETUR central administration in Yaoundd was a recurrent theme in supervisionreports. A management consultant was asked to study the situation and recommendways of alleviating it in early 1985. His conclusions were that while someprocedures could be simplified, the time-consuming nature of the administrativeprocedures was irremediably imbedded in the project institutional setup and therequirements of the legal system. It was agreed that additional staff in ARAN'sDouala office could help, and they were recruited in late 1985: an additionalengineer, three technicians, three topographers, and a secretary. Arrangementswere also made to computerize ARAN's accounting system.
4.10 Besides absorbing energy and time, the friction between ARAN and MAETURimpacted negatively on project monitoring and audit. ARAN would forward itsquarterly reports to MINUH which would hold them. It may be that MINUH'sintention was to consolidate them with its own reports on technical assistanceand training and forwarding them to the Bank; however, this was never done. Thesolution eventually adopted was for each agency to forward its reports directlyto the Bank. In a similar vein, the First Project audit was rejected by the Bankbecause it covered only ARAN's accounts and contained no consolidated projectaccounts. The accounts for 1985/86 were successfully audited in June 1987.
4.11 Taking a longer view, it is also regrettable that at negotiations,the Government chose to drop the sites and services component and that noalternative financing was found. As a result, MAETUR programs were slow to getunderway and did not follow the policy of responding to all segments of demand,including households below the 50th income percentile. The economic crisis hasbrought MAETUR programs virtually to a standstill. As a result, most of thepopulation, including Nylon residents, with or without resettlement plots whodesire or need to set up housekeeping elsewhere, have little choice but to squatillegally as long as there are no low-cost plots coming on the marke.: for sale,in a variety of urban locations.
59
Proiect Relationship
4.12 The necessity to follow Bank procurement guidelines was more than justa recurrent theme in Bank supervision reports and a constant source of frictionbetween the Bank and Borrower teams. Both teams poured so much energy intoresolving this problem that little was left for other important aspects ofproject management and implementation. As a result, non-civil works aspects ofthe project were neglected, the housing credit issue dragged on, coordinationwith DDA languished. On the surface, the friction over procurement could beinterpreted as due to poor understanding of procurement procedures. The Bankrepeatedly had to remind the project agency to send TOR and full contractdocumentation for its review and to specify selection criteria in TOR. Somekind of local assistance in procurement could be helpful in this case, as willthe drafting of standard contract clauses being carried out under the SecondUrban Project.
Relationship with Swiss Aid
4.13 Following the preparation stages of the project, the Bank and DDAefforts in the Nylon area were implemented virtually independently. The SwissGovernment wrote the Bank in summer 1986 regretting the infrequence of contactand proposed regular meetings; they also requested that the Bank inform them ona routine basis of the timing of Bank missions. In its own Project CompletionReport (para. 4.03), the Government expresses its regret and surprise at theBank's apparent lack of interest in the housing credit, employment generationand community development aspects of the project. Both this report and the DDA-financed report on project replicability stressed the necessity of communityparticipation in upgrading operations, at least one of whose objectives is toimprove living conditions for the resident population. In particular, theGovernment praised the financial and technical flexibility of DDA in comparisonto the Bank, which allowed it to adapt more readily to changing needs.
4.14 In April 1988, the Bank took up the suggestion made earlier by DDA.It announced its upcoming mission to finalize investments required to completethe First Urban Project and invited DDA to join the mission in Cameroon. DDAreplied immediately, agreeing to synchronize missions and outlining their primaryconcernst secondary and tertiary roads and drainage, housing finance and incomegeneration; housing improvement, house construction assistance, support toartisans and small enterprises, and waste collection. From this point on, closecoordination has been maintained.
Consultants' Performance
4.15 Consultants' performance was generally good with the exception of theNylon civil works design and engineering. Of particularly good quality was thetechnical documentation for Douala roads and drainage improvements, financedunder the First Urban Project, in preparation of the Second Urban Project. Thisinformation will prove essential for the implementation of infrastructureimprovements over the entire city.
4.16 Concerning the civil works design and engineering for the Nylon civilworks, Bank supervision teams devoted considerable effort to require that drainlining technologies appropriate to the environment be considered, among othershortcomings in the drainage design. It was not until the civil works contractorbegan work that errors in the quantity survey for roads design were discovered.
60
In the Borrower's view, the underestimate of project costs at appraisalencouraged the design engineering consultant to underestimate quantities at thequantity survey stage. It is also true that technical standards were beingsubstantially revised upwards during the design stage, due to the need to makethe project road and drainage network compatible with the newly issued MasterPlan, and this created a difficult situation for all parties.
V. LESSONS LEARNED
3.01 This was an innovative project, and one which was ambitious in seekingto remedy the deep-rooted and longstanding problems presented by the Nylon area.It is not surprising that there were unusual resistances and obstacles to beovercome, even without vnfavorable economic circumstances. It is also notsurprising that the project was so rapidly overtaken by events during thenumerous delays it suffered, given the inherently dynamic nature of urban milieuxgenerally and that of Douala, one of West Africa's major port cities, inparticular. What is surprising is that the project succeeded as well as it did,and paved the way for the Second Urban Project, which is tackling directlystructural areas that had resisted earlier attempts to address: land managementand urban institutional environment.
Benefits of Cofinancing
5.02 The project demonstrates one effective means of integrating "hard*and 'soft' elements with the same project, that is, for the Bank to focus itsefforts primarily on the first, while cofinanciers better adapted to workingcloser to the ground handle the second. In this project, staff within a singleproject unit managed both Bank supported infrastructure investments and grantcofinanced activities oriented to human and community development.
5.03 This arrangement proved particularly useful as a way of providing anumbrella for community and NGO participation. House construction in theresettlement sites benefitted from low-cost designs and construction methodsworked out with the help of the French NGO Architectes Sans Frontibres. Houserenovation in the pilot upgrading zone has been receiving assistance from agroup organized by the University of Geneva's School of Architecture. Artisantraining involved two local NGOs. Pit latrine construction was carried out bysmall local contractors, who also carried out about half of the works toconstruct the Nylon market. As mentioned above, DDA found that creating workfor small contractors and artisans does not form a sound foundation for a longerterm effort to improve economic opportunities in such a community. They arecurrently developing a strategy which takes a broader view of the zone's economicdevelopment within a citywide context.
Payoff from Project/Sector/Country Work Coordination
5.04 The project history demonstrates the kind of payoff which can come fromclose association of sector and project work, though this means some harddecisions by Bank missions on the inevitable tradeoffs between supervision,preparation and sector work. The aide-memoire of the July 1988 urban missionis a good example, covering a wide range of issues concernir, the First andSecond Projects, infrastructure in Yaound4 and secondary ci.ies, municipalassistance, and urban sector action plan and strategy. In the sector strategy
61
itself, the redefinition of responsibilities for infrastructure as betweencentral and local government grew directly out of the experience with the FirstUrban Project. Central government financing should be limited to primaryinfrastructure, while city governments and private developers should be givenmore scope for action and their responsibilities broadened to include financingand execution of secondary and tertiary infrastructure.
5.05 The sector strategy also reflects project experience in defining otherstrategic objectives -- opening up of the land and housing finance markets --and emphasizes the need for strong cointry economic support in order to resolvestubborn structural problems such as those blocking housing credit. It will bevery important to future operations in this sector that the housing credit agency(CFC) along with the land development agency (MAETUR) and other institutionsinvolved in housing and industrial development have partiLipated in the currentparapublic rehabilitation program being carried out with Bank support.
5.06 The experience gained by ARAN through project implementation will allowfor the continuation of a program of replicable urban upgrading operatior.s. Inaddition, this project proved instrumental in assisting Government in theclarification of its strategy for the urban sector which will be consolidatedwith the support provided by the Second Urban Project.
Issues to be Resolved under Future Projects
5.07 As obvious as it seems, it is important to restate a verity amplydemonstrated by this projects a first project in a new sector is not likely tobe smooth-sailing. On the other hand, the payoff can be greater than expected:the years-long working out of new detailed procedures for compensation andtransfer of title, applicable to resettlement of residents of rights of way orof illegally settled urban areas, will mean that the Bank's Second Urban Project,among other projects, should be spared such delays.
5.08 The Second Urban Project will also profit from lessons learned in theFirst Project about infrastructure cost recovery and housing construct'on onresettlement plots. While most households had little difficulty coming up withthe roughly US$1,000 equivalent to pay for basic infrastructure costs ofresettlement plots, unrealistically high building standards imposed by the citygovernment and a drying up of housing credit meant that, until recently, thoseallocated resettlemeat plots were hindered in their efforts to set up newpermanent homes. This situation was resolved by agreeing with the citygovernment that an exception to formal city building standards should be madefor resettled families.
5.09 Conflicts regarding the application of Bank procurement guidelinesconsumed many valuable weeks of Bank staff time that could have more usefullybeen devoted to other aspects of project implementation. To remedy theshortcomings of tendering practices, Government has created a new body whichshould be fully in operation in early 1990. As part of the Second Urban Project,efforts are now underway to draft standard administrative clauses for works andequipment contracts which can accelerate approval by Cameroon and the Bank.Improved dialogue on procurement will be essential if Bank missions are toproperly supervise important institution-building aspects of the Second UrbanProject.
62
5.10 Better coordination is required with water and electricity parastatalsto persuade them to install their services in parallel with road and drainageworks. Provision should be made for financing periodic redredging of the MgouaRiver, as well as for garbage collection by the city of Douala. The UrbanDevelopment Interministerial Committee created in the framework of the SecondUrban Project will ensure improved coordination between the various urbanagencies.
5.11 More appropriate design standards should be selected in designingfuture community facilities. This would have made it easier for localcontractors to build, speed up construction and lower costs.
5.12 A lesson learned, but still unimplemented, involves identifying betterarrangements for housing credit (paras. 3.06 and 4.07) to unsalaried householdheads not eligible for loans from the government parastatal. The arrangementwould involve setting up a guarantee fund by the Nylon neighborhood savingsorganization, for which the Swiss are prepared to provide backing.Unfortunately, the parastatal's current lack of funds has rendered this agreementmoot.
63Table 1
REPUBLIC OF CAMEROONURBAN DEVELOPMENT PROJECT, LOAN 2244-CM
PROJECT COMPLETION REPORT
Prolect Cost and Financing (US$ M)
* ----- Appraisal L! --------- --------------- Actual Lb *------
Project Component Total Cameroon IBRD Swies-DDA Total Cameroon IBRD SwIes-ODA Other
INSTITUTIONAL DEVELOPMENT- Support to ARAN 4.3 2.2 2.1 -- 6.2 4.5 1.3 2.4 --
- Support to MINU 6.8 8.5 3.3 - 16.9 6.4 4.5 -- -
-- Other 1.5 0.8 0.7 - 1.6 1.8 0.2 * --
FRONT END FEE 9.8 - 6.8 0.8 - 6.3
Total 643 28.8 0. . 74.0 2.9 19..1.
/a USS a 270 CFAF (Appraisal Estimate)
b US$ 817 CFAF (Project Average)
Is To be financed under the Second Urban Project
AFlINOctober 8, 1989
A:T1.pcr (S)
64Table 2
REPUBLIC OF CAMEROON
URBAN DEVELOPMENT PROJECT, LOAN 2244-CM
PROJECT COMPLETION REPORT
Loan Disbursement by Expenditure Category (USS1,0M)
--Original Financing Plan-- ---Revised Financing Plan--- ------ Total--------from 65/03f4 to 92/18(88 from 62/118/88 to 91/25/89 from 0S/98/84 to 01/26/89
