Trans-Sahara Highway Project

AFRICAN DEVELOPMENT FUND

TRANS-SAHARA HIGHWAY (TSH) PROJECT

COUNTRY : MULTINATIONAL (ALGERIA/NIGER/CHAD)

PROJECT APPRAISAL REPORT

OITC DEPARTMENT

November 2013

Translated Document

TABLE OF CONTENTS

1 STRATEGIC THRUST AND RATIONALE ...... 1 1.1 Project Linkages with Country and Regional Strategies and Objectives ...... 1 1.2 Rationale for Bank Involvement ...... 1 1.3 Aid Coordination ...... 2

2 PROJECT DESCRIPTION ...... 3 2.1 Project Objectives and Components ...... 3 2.2 Technical Solutions Adopted and Alternatives Explored ...... 5 2.3 Project Type ...... 6 2.4 Estimated Project Cost and Financing Arrangements ...... 7 2.5 Project Areas and Beneficiaries ...... 8 2.6 Participatory Approach to Project Identification, Design and Implementation ...... 10 2.7 Consideration of Bank Group Experience and Lessons Learnt from Project Design ...... 10 2.8 Key Performance Indicators ...... 11

3 PROJECT FEASIBILITY ...... 11 3.1 Economic and Financial Performance...... 11

4 IMPLEMENTATION ...... 14 4.1 Implementation Arrangements ...... 14 4.2 Monitoring/Evaluation ...... 17 4.3 Governance ...... 18 4.4 Sustainability...... 18 4.5 Risk Management ...... 19 4.6 Knowledge Building ...... 20

5 LEGAL FRAMEWORK ...... 20 5.1 Legal Instrument ...... 20 5.2 Conditions Related to Bank Intervention ...... 20 5.3 Compliance with Bank Policies ...... 21

6 RECOMMENDATION ...... 21

LIST OF TABLES No. TITLE Page Table 2.1 - Project Components ...... 3 Table 2.2 - Alternative Solutions Explored and Reasons for Rejection ...... 6 Table 2.3 - Consolidated Cost Estimates by Component ...... 6 Table 2.4 - Estimated Costs by Components and Country ...... 8 Table 2.5 - Sources of Financing by Country ...... 7 Table 2.6 - Consolidated Costs by Expenditure Categories ...... 8 Table 2.7 - Allocation of ADF Financing ...... 8 Table 3.1 - Summary of Economic Analysis ...... 11 Table 3.2 - Table of the Costs of the Environmental and Social Management Plan Consolidated Cost Estimates by Component ...... …..11

APPENDIX I: COMPARATIVE SOCIO-ECONOMIC INDICATORS

APPENDIX II: TABLES OF BANK PORTFOLIO

APPENDIX III: MAJOR RELATED PROJECTS FINANCED BY THE BANK AND OTHER DEVELOPMENT PARTNERS

APPENDIX IV: MAP OF PROJECT AREA

ANNEXES: MAJOR ARGUMENTS IN SUPPORT OF THE REPORT

Currency Equivalents May 2013

UA 1 = USD 1.50900 UA 1 = EUR 1. 15437 UA 1 = CFAF 757 .21708 UA 1 = DZD 118.448

Fiscal Year 1 January - 31 December

Weights and Measures

1 metric tonne = 2,204 pounds 1 metre (m) = 3.28 feet 1 millimetre (mm) = 0.03937 inch 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres

Acronyms and Abbreviations AADT Annual Average Daily Traffic AfDB African Development Bank t ADF African Development Fund AFD French Development Agency AMU Arab Maghreb Union BADEA Arab Bank for Economic Development in Africa BC Bituminous Concrete BDEAC Development Bank of Central African States BOAD/WADB West African Development Bank BTP Construction and Public Works CAFER Autonomous Road Maintenance Financing Fund CBD Competitive bidding documents CEMAC Economic and Monetary Community of Central Africa CFAF Franc of the Financial Cooperation in Africa CLRT Trans-Saharan Road Liaison Committee CSCP Transport Project Monitoring and Coordination Unit in Chad CSP Country Strategy Paper CTS Blood Transfusion Centre DGGT Directorate General for Public Works DGR Directorate General for Roads DGTP Directorate General for Major Works DTS Trans-Sahara Backbone DZD Algerian Dinar EBID ECOWAS Bank for Investment and Development ECCAS Economic Community of Central Africa States ECOWAS Economic Community of West African States ERR Economic Rate of Return EU European Union FER Road Maintenance Fund FSF Fragile States Facility ICT Information and Communications Technology IDB Islamic Development Bank INS National Institute of Statistics INSEED National Institute for Statistics, Economic and Demographic Studies JCP Juxtaposed Checkpoint JTC Joint Technical Committee KFAED Kuwait Fund for Arab Economic Development LTS Long-Term Strategy of the African Development Bank MEQ Ministry of Equipment MIEP Ministry of Infrastructure and Transport MTP Ministry of Public Works NEPAD New Partnership for Africa’s Economic Development NFSP National Food Security Programme NPV Net Present Value OFID OPEC Fund for International Development PDES Economic and Social Development Plan PIA Project Impact Area PIDA Programme for Infrastructure Development in Africa PND National Development Plan (Chad) PNDT National Transport Development Plan (Algeria) RISP Regional Integration Strategy Paper SFD Saudi Fund for Development SNRS National Road Safety Strategy SNT National Transport Strategy STD Sexually Transmitted Diseases STI Sexually Transmitted Infections TFPC Technical and Financial Partners' Committee TSH Trans-Sahara Highway UA Unit of Account USD United States Dollar Veh/D Vehicles per day VOC Vehicle operating cost WAEMU West African Economic and Monetary Union WB World Bank

PROJECT INFORMATION SHEET Client Information

Donees/Borrowers : Republic of Niger and Republic of Chad

Project : Multinational Trans-Sahara Highway (TSH) Project

Location : Tilaberi and Agadez Regions in Niger; Hadjer Lamis, Lake and Kanem Regions in Chad; and Tamanrasset Wilaya in Algeria

Executing Agencies : (i) Ministry of Infrastructure and Transport (MIT) in Chad, acting through the Directorate General for Roads (DGR)

(ii) Ministry of Equipment (MEQ) in Niger, acting through the Directorate General for Major Works (DGGT)

(iii) Ministry of Public Works (DPW) in Algeria, acting through the Directorate General for Roads (DGR)

(iv) General Secretariat of the Trans-Sahara Highway Liaison Committee (CLRT), for the overall cross-cutting project coordination.

1. Financing Plan

Sources of Financing Amounts in UA Million Instrument Chad Niger Algeria Total ADF-12 Loan (PBA) 8.36 36.48 44.84 Project Loan

Institution Building and ADF-12 Grant (PBA) 8.16 19.71 27.87 Rehabilitation Institution Building and ADF grant from cancellation (PBA) 0.38 0.38 Rehabilitation ADF-12 loan (RO) 12.54 22.5 35.04 Project Loan

Institution Building and ADF-12 grant (RO) 12.24 12.24 Rehabilitation BADEA 6.63 6.63 13.25 Loan

BDEAC 33.02 33.02 Loan

IDB 86.63 9.94 96.57 Loan

KFAED 11.27 9.94 21.21 Loan

OFID 7.95 6.63 14.58 Loan

SFD 16.57 16.57 Loan

Government of Chad 49.24 49.24 Public Investment Budget

Government of Niger 3.83 3.83 Public Investment Budget

Government of Algeria 12.76 12.76 Public Investment Budget

TOTAL 252.60 116.04 12.76 381.40

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2. Key ADF Financing Information

Loan/Grant currency Unit of Account (UA) Interest type N/A Interest rate margin N/A Service charge for ADF loans 0.75% per annum on the disbursed loan amount outstanding Commitment fee for ADF loans 0.5% on the loan amount not disbursed 120 days following the signing of the Loan Agreement. Other costs N/A Maturity of ADF loans 50 years Grace period and repayment of ADF 10 years loans FRR, NPV (baseline scenario) N/A ERR, NPV (baseline scenario) 15.3% and NPV of CFAF 43 billion

3. Duration - Milestones (expected)

Activities (Month, year) Concept Note approval May 2013 Project approval December 2013 Effectiveness May 2014 Last disbursement December 2018 Completion December 2018 Last reimbursement May 2064

PROJECT SUMMARY Project Overview

1. This project concerns the Trans-Sahara Highway (TSH) - an infrastructure at the centre of economic, social, political and security stakes for the continent. The highway is located on the Algiers/Lagos and Dakar/Djibouti trans-African corridors identified by the Programme for Infrastructure Development in Africa (PIDA) as priority projects for achieving NEPAD objectives by 2020.

2. The TSH is 9,022 kilometres long. It serves six countries (Algeria, Mali, Niger, Nigeria, Chad and Tunisia) and consists of a 4,498 km-long main road (Algiers/Zinder/Lagos) and three secondary roads: the Tunisian branch (Ghardaïa/Gabès), the Malian branch (Tit/Kidal-Gao-Bamako) and the Chadian branch (Zinder-Nguigmi/Daboua-Ngouri- Massakory-Ndjamena). To promote and support the construction of the various sections of this corridor, the countries involved established the Trans-Sahara Highway Liaison Committee (CLRT), based in Algiers.

3. The TSH corridor runs through a part of the continent endowed with abundant wealth, including the fishery resources of Lake Chad, mineral resources such as the uranium being mined in Arlit, Niger, and underground resources such as the natural gas and oil deposits in Southern Algeria. The TSH is expected to play a central role in the development of these resources and, ultimately, contribute to the creation of conditions for improving their exploitation.

4. The project is expected to: (i) improve TSH service level and increase traffic and trade between North Africa, West Africa and Central Africa; (ii) reduce the cost of transport and logistics; (iii) improve the living conditions of residents of the project area and their access to basic social services (drinking water, schools, health units, etc.); and (iv) contribute to the overall improvement of security in the Sahara region.

5. The project will last 60 months and cost a total of UA 381.40 million, net of taxes and customs duties. The Bank Group's contribution stands at UA 120.37 million, or 31.56% of the total project cost. Other donors are the IDB, BADEA. BDEAC, KFAED, SFD, OFID and the Governments of Algeria, Niger and Chad.

6. The economic and social benefits of the project directly or indirectly affect all users of the Trans-Sahara Highway, but mainly the residents of the project impact area (PIA), which comprises the 32 regions crossed, 74 built-up areas served, spans an area of 4.4 million km², and has a population of 60 million inhabitants, shared by Algeria, Tunisia, Mali, Niger, Chad and Nigeria.

Needs Assessment

7. The Bank is PIDA's executing agency and at seven years from maturity, the mobilization of resources to meet this programme’s financing needs has only been minimal. That is why Niger, Algeria and Chad forwarded to the Bank two joint requests, endorsed by WAEMU, ECCAS and the Trans-Sahara Highway Liaison Committee (CLRT). In addition, the project is part of Chad’s 2013-2015 National Development Plan (PND) and Niger’s 2012- 2015 Economic and Social Development Plan (PDES). It is consistent with the Bank’s 2013- 2022 Long-Term Strategy (LTS), which prioritizes infrastructure, regional integration and the private sector, and therefore entails proper use of resources. In this regard, there is an urgent need for the Bank to act now, following the appraisal mission that it fielded in May 2013.

8. This project complements the initiatives of development partners and various governments in the region. It mainly complements the great Algerian North/South Gas Pipeline Development Project, the Drinking Water Supply Project in Southern Algeria and the creation of two new university cities in the country’s Sahara region. Consequently, the Bank's involvement in this project meets a genuine need and strongly supports the Government's on- going initiatives.

Bank Value Added

9. Considering that the Bank is a strategic partner of Africa, in general, and Chad, Niger and Algeria, in particular, its involvement is necessary to support the development efforts of these three countries. This is paramount because: (i) given that the Bank has already financed nine sections of the TSH (one in Algeria, four in Niger, two in Chad, one in Mali and one in Nigeria), it has the operational experience and technical expertise required for implementing this project; (ii ) by contributing to the development of the missing links of the TSH, the Bank will be assuming its role as a major financial institution in Africa and thus be a key player in the advent of the very first entirely asphalted trans-African highway; (iii) the corridor will fully play its role as a major channel for inter-regional transit and trade between North Africa, West Africa and Central Africa; (iv) the feasibility studies to be carried out will provide a strong case for fibre-optic interconnectivity in Niger, Chad and Algeria; and (v) the project will provide local residents with access to basic infrastructure and facilitate the marketing of their products, thereby resulting in de facto inclusive growth in the areas concerned.

10. This project complements the Bank’s earlier initiatives in the Sahel, particularly for the most vulnerable sections of the population. The initiatives have resulted in Bank budget support to the Government of Niger in the area of food security. In Chad, the Bank is supporting Government initiatives in Bol region, particularly in the agricultural sector and in the overall preservation of Lake Chad. More generally, through its involvement in this project, the Bank is lending its support to the security measures in the Sahel region, adopted by the international community and by the various RECs.

Knowledge Management

11. Lessons from the project will be recorded and disseminated through: (i) the project impact monitoring/evaluation reports that will be provided by Niger’s National Institute of Statistics (INS) and Chad’s National Institute of Statistics, Economic and Demographic Studies (INSEED); (ii) assessment by beneficiaries of the socioeconomic impact of the project post-implementation; and (iii) the activities of the Trans-Sahara Highway Liaison Committee (CLRT).

Results-Based Logical Framework

Project Name: Trans-Sahara Multinational Highway Project (PMRTS) Project Goal: Improve the level of overall service on the TSH and the living conditions of residents of the project impact area. PERFORMANCE INDICATORS RESULTS CHAIN MEANS OF RISKS/ Indicator Baseline Situation Target VERIFICATION MITIGATION MEASURES (including CSIs) I Contribute to the development of Customs value of goods crossing In 2013: In 2018: Source: National Transport M trade and regional integration the land borders Algeria/Niger: CFAF 5 Algeria/Niger: CFAF 26 billion Directorates, INS, INSEED, P between AMU, ECOWAS and billion (reflecting an increase of 420%) Customs A ECCAS Niger/Chad: CFAF 2 billion Niger/Chad CFAF14 billion C (reflecting an increase of 600%) T Outcome 1: Overall service Total traffic at the land borders In 2013: In 2018: Risks level improved on the TSH between Algeria, Niger and Chad Algeria/Niger:62 Algeria/Niger: 116 vehicles/day vehicles/day (reflecting an increase of 87%) (i) Persistence of insecurity in the PIA, especially Niger/Chad: 76 vehicles/day in Northern Niger; Niger/Chad: 18 vehicles/day (reflecting an increase of 375%) (ii) Lack of resources for the timely removal of sand Travel time of a heavy duty (HD) In 2013: In 2018: dunes. truck on the developed sections Assamakka/Arlit: 2 days Assamakka/Arlit: 3.5 hours (down by 93%) Mitigation Measures O Niger border/Ngouri: 5 days Niger border/Ndjamena: 5.5 hours U (down by 95%) (i) In Algeria and Chad, the security risk is minimal T Average vehicle operating cost In 2013: In 2018: and relatively contained. In Niger, the C (VOC) for heavy duty trucks on Niger: CFAF 945/km Niger: CFAF 494/km Government has already mobilized military and O the developed sections (down by 48%) gendarmerie units in the PIA, and that has M Chad: CFAF 1.708/km Chad: CFAF 1.326/km enhanced security in the area and drastically E (down by 22%) reduced vandalism and crime. It is envisaged S Time for the conveyance of goods In 2013: 40 days In 2018: 18 days that approximately 120 additional troops will be from Southern European ports to (down by 55%) mobilized to secure the PIA during the project the cities of Northern Niger (Arlit construction phase. Thus, UA 1.3 million has Assamakka, Agadez) been raised to meet security costs. The EU is also funding the construction of gendarmerie Length of daily uptime for In 2013: 12 hours, or 50% In 2018: 24 hours, or permanent barracks in the region; facilities for crossing the River availability availability (100%) Niger at Farié (ii) In Niger and Chad, the Directorates General for Outcome 2: Improved mobility Volume of cereal production of In 2013: 350,000 tonnes In 2018: 385.000 tonnes, or an Source: INS, INSEED Road Maintenance (DGER) will set up and living conditions of PIA women’s cooperatives increase of 10% permanent mobile teams tasked with clearing residents sand dunes, as has been done in Algeria with Rural access index In 2013: 5% In 2018: 20% satisfactory outcomes. It is envisaged that the mobile teams will be provided with sand- clearing machinery, depending on budget Jobs created during the In 2013: 0 In 2018: 75,000 man/days (20% availability at the end of the works. construction by women) Chad: 0 Chad: 40,000 man/days Niger: 0 Niger: 25,000 man/days Algeria: 0 Algeria: 10,000 man/days

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Outcome 1: TSH sections TSH asphalting rate in the three In 2013: 84.5% In 2018: 100% Source: DGR in Algeria and Risks developed and asphalted in the countries (consolidated) in Chad and DGGT in Niger three countries Algeria: 2,360 km Algeria: 99.6% (2,350 km) Niger: 1,638 km Niger: 82.8% (1,357 km) Chad: 566 km (i) Significant escalation of construction costs; Chad: 26.7% (151 km)

(ii) Failure to provide in a timely manner the national counterpart funds needed for the works; Outcome 2: Cross-border Number of juxtaposed In 2013: 0 In 2018: 2 stations Source: Customs transport and transit facilitation checkpoints (JCP) built, equipped (iii) Lack of resources for financing the structures commissioned and commissioned at the Algeria/Niger border: 1 JCP Algeria/Niger and Niger/Chad Niger/Chad border: 1 JCP maintenance of the structures built. borders Mitigation Measures

Source: DGR in Chad and (i) Estimates based on current unit market prices Output 3: Related structures Major related works: In 2013: In 2018: DGGT in Niger and detailed engineering studies, with relevant

constructed and commissioned technical solutions; 1. Number of school infrastructure 1. Number = 0 1. 3 schools in Chad and 2 in

rehabilitated Niger (ii) Reduction of Niger's counterpart funding to a

token level (4.6% of the cost of components 2. Number of water points 2. Number = 0 2. 20 water points in Chad and 4 in

OUTPUTS OUTPUTS in the country). In Chad, the Government has constructed for market gardening Niger always honoured its commitments and purposes remains the major donor for on-going road 3. Number = 0 3. 3 health outposts in Chad and 1 projects; 3. Number of health infrastructure in Niger

rehabilitated (iii) Recent increases in road maintenance resource 4. Length = 0 km 4. 100 km in Chad allocations: (i) from CFAF 8 billion in 2011 to 4. Length of rural roads CFAF 18 billion in 2013 in Chad. The cost of rehabilitated for women’s maintaining the structures built amount to cooperatives CFAF 370 million/year, or 2% of the current 5. Number = 0 5. 1 market at Farié FER budget; and (ii) from CFAF 8.3 billion in 5. Markets built 2012 to CFAF 10 billion in 2013 in Niger. 6. Number = 0 6. 15 in Chad and 2 in Niger The cost of maintaining the structures built 6. Cattle loading and unloading amount to CFAF 268 million/year, or 2.7% of platforms built and commissioned CAFER's budget.

Output 4: Crossing structure Bridge built on the River Niger at In 2013: 0 In 2018: One 543 metre-long Source: DGGT in Niger commissioned on the River Farié bridge with 3 km of access roads Niger at Farié

COMPONENTS RESOURCES (UA MILLION)

1. Road works and environmental measures 1. Road works: 302.88 2. Related developments and support for securing the area 2. Related works: 7.72 3. Actions and measures to facilitate transport and transit 3.Transport facilitation actions and measures: 13.87 4. Institution building to the transport sector 4. Institution building and studies: 3.61 5. Project management 5. Project management: 2.29 6. Release of the right-of-way 6. Release of right-of-way: 0.53 Contingencies: 50.50

TOTAL RESOURCES: 381.40 viii

Implementation Schedule

2013 2014 2015 2016 2017 2018 2019 No. Task Name Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 1 GENERAL ACTIVITIES 2 Project appraisal by AfDB and BDEAC 3 Financing approval by the AfDB 4 Signing of financing agreements 5 Effectiveness of loan agreements 6 NIGER COMPONENTS Road Works and Related Developments ( 225 7 km) Award of contracts for the monitoring of road 8 works and related developments 9 Road works and related developments 10 Farié Bridge (543 m) and Access Roads (3 km) Award of contracts for the monitoring of bridge construction works and related developments at 11 Farié Works on the Farié Bridge and related 12 developments 13 Institutional Support and Miscellaneous Studies Technical Assistance for the establishment of a 14 management policy for the corridors Support for the modernisation of the Transport 15 Data Bank

16 Formulation of the National Road Safety Strategy Analysis of the logistics chain linking Algiers, 17 Niamey and Ndjamena 18 Accounts Audit (2014-2018 Fiscal Years) Procurement of Goods (vehicles, office 19 furnishings and IT equipment) 20 CHAD COMPONENTS Road Works, PCJ Chad/Niger and Related Works 21 (330 Km) 22 Chad/Niger bilateral discussions on the PCJ Award of contracts for monitoring, road works 23 and related developments 24 Works implemenation 25 Accounts Audit (2014-2018 Fiscal Years) 26 Institutional Support (Miscellaneous Studies) 27 Feasibility study on lake transport 28 Strengthening of the BNF capacity Procurement of Goods (vehicles, office 29 furnishings and IT equipment) 30 ALGERIA COMPONENTS 31 Road Works (10 Km) 32 Implementation studies 33 Award of monitoring and works contracts 34 Implementation of road works 35 Algeria/Niger Juxtaposed Checkpoint 36 Algeria/Niger bilateral discussions 37 Implementation studies 38 Award of monitoring and works contracts 39 Works implementation 40 CLOSE OF PROJECT

Task External milestones Manual task End only Splitting External milestones Duration only Maturity Milestone Inactive task Manual summary report Progress Summary Inactive milestone Summary of manual tasks Project summary Summary of inactive task and milestones Duration only

REPORT AND RECOMMENDATIONS OF MANAGEMENT CONCERNING LOANS AND GRANTS TO NIGER AND CHAD FOR FINANCING THE ALGERIA/NIGER/CHAD MULTINATIONAL TRANS-SAHARA HIGHWAY (TSH) PROJECT

Management hereby submits this report and recommendation on the proposed: (i) ADF loans amounting to UA 20.90 million for Chad and UA 58.98 million for Niger, (ii) ADF grants amounting to UA 20.40 million for Chad and UA 20.09 million for Niger for financing the Algeria/Niger/Chad Multinational Trans-Sahara Highway Project.

1 STRATEGIC THRUST AND RATIONALE

1.1 Project Linkages with Country and Regional Strategies and Objectives

The TSH is part of PIDA's priority projects. Endorsed at the January 2012 meeting of African Union Heads of State and Government, PIDA’s Priority Action Plan (PIDA-PAP) aims to work towards an integrated continent where the infrastructure and transport services allow the free movement of goods and people, firstly by improving the connectedness of African capitals and major centres with modern paved roads and modern rail systems and, secondly, by meeting the demand for African regional transport infrastructure at the lowest economic cost, with priority given to landlocked countries. The TSH is also part of the transport sector policies and vision of ECOWAS, ECCAS, WAEMU and CEMAC.

The Trans-Sahara Highway (TSH) is consistent with Chad’s 2013-2015 National Development Plan (NDP), which lists transport sector investment, including links with neighbouring countries, among its main priorities. It is also in line with the 2011-2020 National Transport Strategy (SNT), whose primary strategic objective is to accelerate economic growth and improve competitiveness by expanding the network of roads linking the country to the outside world. In Niger, the project is consistent with the 2012-2015 Economic and Social Development Plan (PDES), the fourth of whose strategic thrusts is to promote a competitive and diversified economy conducive to accelerated and inclusive growth, including the development of transport and communication infrastructure. In Algeria, the TSH is an integrated project encompassing road infrastructure, the laying of optical fibre cables, the South/North Gas Pipeline and the creation of two new cities in the south of the country. Thus, TSH is included in the 2010-2025 National Transport Development Plan (PNDT). To this end, the Second Five-Year Plan (2010-2015) envisages to widen the northern section of the TSH over a distance of 1,013 km.

1.2 Rationale for Bank Involvement

Bank involvement is justified by the fact that: (i) the project is consistent with the Bank’s Long- Term Strategy (LTS) for the 2013-2022 period, Pillar 2 of which aims, among others, to provide affordable access to reliable electricity and transport infrastructure, as part of inclusive growth; (ii) the TSH is one of the major trans-African corridors promoted by the African Union Commission as the backbone of the continent's development; and (iii) it plays a leading role in the implementation of NEPAD activities and has many years of experience in regional project implementation. The project is also consistent with the Bank’s Strategy Paper for Chad (CSP 2010-2014), whose Thrust 2 (Pillar 2) is “strengthening the road network in order to open up farming areas and provide a link between Chad and other countries in the sub-region, and thereby enhance regional integration.” The project is also consistent with Pillar 1 of the 2013- 2017 Country Strategy Paper for Niger, whose goal is to develop basic infrastructure required for resilience to food insecurity. Finally, the project is consistent with the 2013-2015 Dialogue Note for Algeria, which aims, under its Pillar 2, to support the diversification of the economy.

The project is also justified by the fact that it is in line with the Bank’s Regional Integration Strategy Paper for West Africa (RISP 2011-2015), whose first pillar is “connection of regional markets,” given that the integration of transport, energy and telecommunications infrastructure services is an important complement to policies aimed at integrating markets, goods and factors of production. Lastly, this project is justified because it fits in with RISP 2011-2015 for Central Africa, whose first pillar is “development of regional infrastructure.” The project is backed by a letter of support from WAEMU and joint requests by the governments of Chad and Niger, on the one hand, and the governments of Algeria and Niger, on the other.

1.3 Aid Coordination

In Chad, donor intervention will be coordinated by the Technical and Financial Partners Committee (TFPC), currently chaired by the Bank. This Committee brings together all partners involved in Chad – be it in the area of technical assistance or in investment financing - and works closely with the Directorate General for International Cooperation in the Ministry of Planning, Economy and International Cooperation. The Committee includes the Bank, the European Union (EU), the World Bank (WB), BDEAC, agencies of the United Nations system, Chinese Cooperation and Arab Funds (IDB, BADEA, SFD, KFAED and OFID). In the transport sector, a thematic group was set up; it meets quarterly, under EU chair. For this operation, key donors in the sector are: the Bank, Arab Funds, the EU, the WB and BDEAC. The various partners maintain excellent relations and joint actions are often initiated. Despite the involvement of these technical and financial partners (TFPs) in the transport sector, the primary donor, however, continues to be the State which finances more than half of the projects out of own resources.

In Niger, development assistance is mainly coordinated by the Ministry of Planning, Territorial Planning and Community Development (MPATDC), acting through the Directorate General for Planning, where sector projects and programmes are concerned. However, the Directorate’s efforts are hampered by the lack of qualified human resources and the unavailability of material resources, including programming and monitoring/evaluation tools. Donors have come together and formed a TFPC, principally comprising the World Bank, the EU and AFD – all with resident missions in the country. In the transport sector, a thematic group is not yet available due to the insignificant number of donor representations in the country. However, many international and regional partners are involved in the sector. Prominent among these are Chinese Cooperation, the ECOWAS Bank for Investment and Development (EBID), the West African Development Bank (BOAD/WADB), AfDB, the EU, Arab Funds (BADEA, IDB, KFAED and OFID), the World Bank and Algerian Cooperation. AREVA, a mining sector private operator, is also involved in transport infrastructure financing.

From 2005, Algeria decided to no longer resort to foreign debt for its investment financing. This situation notwithstanding, a number of donors have continued their cooperation with the country, notably AfDB, AFD, the EU and the World Bank. The cooperation mainly involves dialogue with the country on capacity building and technical assistance. Currently, there is no formal framework for cooperation between donors, and the Government entirely finances all transport sector projects. However, discussions are underway to explore the possibilities of cooperation with some donors in transport infrastructure financing. Therefore, the TSH operation could offer some opportunities for future cooperation with the country.

2 PROJECT DESCRIPTION

2.1 Project Objectives and Components

Objectives and Rationale for Key Components

The project essentially concerns the construction and asphalting of the road sections forming the missing links of the main axis and the Chadian branch of the TSH, over a total distance of 565 km, the construction of a 543 meter-long bridge on the River Niger at Farié, with 3 km of access roads, and the construction of infrastructure to ease transport and transit at the Algeria/Niger and Niger/Chad borders.

Particularly with regard to the Farié Bridge, Farié is a Niger village situated on WAEMU Community Corridor CU14 linking Ouagadougou and Dori (Burkina Faso) to Tera, Farié and Niamey (Niger). The Ouagadougou-Dori-Téra-Farié-Niamey corridor has been constructed and asphalted, and facilitation measures introduced for its Dori-Tera section, with Bank financing. This project was completed in June 2012 and the roads are in use. However, in the absence of a bridge on the River Niger at Farié, the river is crossed by means of a ferry boat which operates 12 hours a day (from 6 a.m. to 8 p.m., with a 2-hour break at noon). Acquired in 1994 and managed by Niger’s Transport Users Council (CNUT), this ferry has a limited capacity as it cannot carry several heavy-duty trucks at a time. This results in extremely long waiting time for heavy-duty trucks. Many of such trucks are thus compelled to use a 130 km-long bypass, which adversely impacts travel and transport overheads. Therefore, Farié Bridge is a strategic structure, easily connecting the TSH to the ECOWAS road network. Its construction will boost the socio- economic impacts of the Dori-Tera project and enable Burkina Faso to access Mediterranean ports from the TSH. Lastly, public consultations found that construction of the Farié Bridge ranks top among the priorities of local residents. In fact, 87.5% of the region’s inhabitants consider this structure their highest priority, compared with other development needs. This reflects the urgent need to substitute the current ferry service with a bridge enabling the free-flow of traffic and offering a permanent and safe means of crossing the river at Farié.

The project’s sector goal is to contribute to the development of trade by road and regional integration between the AMU, ECOWAS and ECCAS, in general, and Algeria, Niger and Chad, in particular. The project's specific objective is to improve the TSH's overall level of service and the living conditions of the inhabitants of the project impact area. To achieve this objective, the activities to be carried out have been grouped into the six components summarized in the table below.

Table 2.1 Project Components No. Name of Components Cost Description of Component (in UA million) A.1 - Algeria: (i) Construction and asphalting of 10 km of road A ROAD WORKS 302.88 from the Guezamm customs post to the border with Niger; (ii) Works monitoring and supervision. A.2. - Niger: (i) Construction and asphalting of 225 km of road between Arlit and Assamakka on the Algerian border, including the 2 km slip road leading to Arlit, rest and refreshment areas for users, allowances for the laying of optical fibre cables, environmental measures (stabilization of dunes, tree planting, etc.); (ii) support for security in the region; (iii) construction of a 543 metre-long bridge across the River Niger at Farié with 3 km access roads; (iv) monitoring and supervision of road works; (v) monitoring and supervision of bridge construction works; (vi) raising of public awareness of HIV/AIDS and other pandemics, environmental protection as well as road safety.

A.3 - Chad: (i) Construction and asphalting of 330 km of road between Ngouri and Daboua on the Niger border, including the slip roads serving surrounding cities (Bol, Baga-Sola and Liwa), rest and refreshment areas for road users and allowances for the laying of optical fibre cables; (ii) monitoring and supervision of road works; (iii) raising of public awareness about road safety, HIV/AIDS and the environment. B RELATED 7.72 B.1 - Niger: (i) Construction of docks for the loading and DEVELOPMENTS unloading of livestock; (ii) drilling of four boreholes along the main axis; (iii) construction of one market, one health centre, two wells and rehabilitation of two schools at Farié; and (iv) monitoring and supervision of related works. B.2 - Chad: (i) Dune stabilization and drilling of boreholes; (ii) rehabilitation of 100 km of rural roads; (iii) rehabilitation of three schools; (iv) construction of docks for the loading and unloading of livestock; (v) support towards the security of the area; and (vi) monitoring and supervision of related works. C ACTIONS AND 13.87 C.1 - Algeria/Niger: (i) Construction and equipment of the MEASURES TO juxtaposed checkpoint (JCP), including a weighing station; (ii) FACILITATE monitoring and supervision of the JCP construction works. TRANSPORT AND C.2 - Niger/Chad: (i) Construction and equipment of the TRANSIT juxtaposed checkpoint (JCP), including a weighing station; (ii) monitoring and supervision of the JCP construction works. D INSTITUTION 3.61 D.1 - Niger: (i) Technical assistance for the establishment of a BUILDING AND management policy for access corridors and the review of STUDIES bilateral road transport agreements; (ii) support for the modernization of the Transport Data Bank (BDT); (iii) development of the National Road Safety Strategy (SNSR); (iv) analysis of the performance of the logistics chain linking the Algiers port, Niamey and N'Djamena, and development of an action plan; (v) feasibility study on the Trans-Sahara Backbone Project (optical fibre). D.2. - Chad: (i) Capacity building for the National Freight Authority (BNF) in cargo data collection and processing; (ii) feasibility study on lake transport and creation of a direct land link with Nigeria. E PROJECT 2.29 E.1. - Niger/Chad: (i) Monitoring/evaluation of the project’s MANAGEMENT socio-economic impact; (ii) support for project management units and the Joint Technical Committee (JTC) in Niger and Chad; (iii) financial and accounts audit; (iv) project technical audit; and (v) road safety audit. F CLEARING OF 0.53 F.1. - Niger: Niger: Compensation of project-affected persons in THE RIGHT-OF- the Farié Bridge area. WAY

ITC Component of the Trans-Sahara Highway (fibre optics)

The TSH is an integrated project encompassing road development and the laying of optical fibre cables along the project route. For reasons of availability of technical studies, the two components were split into two separate but complementary projects. In this phase, feasibility studies were envisaged on the laying of optical fibre cables over approximately 2,400 km, 600 km of which will be in Chad and 1,800 in Niger, for an estimated cost of UA 0.61 million. Plans have also been made to provide facilities under the roadway for the passage of future networks. Once the technical studies are completed, the works will be implemented as part of the Trans-Sahara Backbone (DTS) project appraised by OITC.3. In this regard, the Algerian Government is committed to speeding up the finalization of the feasibility studies on the implementation of the Tamanrasset-Assamakka link, given that resources for financing the works on Algerian territory have been available for four years now. The Trans-Sahara Backbone also provides an interconnection between Niger and Nigeria through the Zinder-Kano link, since like Algeria, Nigeria is financing the Kano-Niger border section out of own resources.

Transport and Transit Facilitation on the Corridor

The major specificity of this project is that it involves three different economic areas, with disparate customs practices. In fact, Chad and Niger are members of CEMAC and WAEMU, respectively. Therefore, harmonizing the customs procedures of both countries with those of a country outside their respective economic zones will require the prior consent of their Regional Economic Communities (RECs) and member countries. Discussions to that end are long drawn and very often lead to political decisions at the level of Heads of State and Government. Since these delays are incompatible with a project implementation schedule, it seems impossible to harmonize the customs transit systems of the three countries within the framework of this road project. Therefore, transport and transit facilitation on the TSH will be implemented in several stages. Only physical infrastructure is planned for this phase, with consideration of systems harmonization being deferred until the completion of the study to be conducted by the CLRT with BADEA funding. In the meantime, the operation of the planned juxtaposed checkpoint (JCP) will be discussed bilaterally between countries, within their respective joint committees, with possible CLRT and REC facilitation. In this context, a CLRT/Niger/Algeria joint mission visited the border area from 10 to 14 September 2013, to inquire about the current situation and identify potential JCP sites.

With regard to anomalous practices, the interdepartmental order of 27 February 2013 defines, in Niger, the types of traffic control, checkpoints and redress mechanisms for minimizing abuses on corridors. In Chad, the only checkpoint on the TSH is located on the border with Niger. Lastly, the project provides for analysis of the performance of the logistic chain linking Algiers Port, Niamey and N'Djamena. The outcomes will be used as a basis for proposing decisions to be taken at the political level to facilitate transport and transit at the borders.

2.2 Technical Solutions Adopted and Alternatives Explored

In Algeria, the technical solution adopted provides for a 10 metre-wide platform and a two-lane carriageway, each lane 3.5 metres wide, and a 1.5 metre-shoulder on either side. The carriageway comprises a 5 cm-thick bituminous concrete (BC) surface course, a base course and a sub-base course of granitic sand, each with a thickness of 20 cm.

In Chad, technical studies financed by the Government were completed in February 2013. The proposed cross-section consists of: (i) a 10 metre-wide platform and a two-lane carriageway, each lane 3.5 metres wide in unpopulated areas; and (ii) a 19 to 21 metre-wide platform with a two-lane carriageway, each lane 3.5 metres wide - separated by a median - with two 1.5 metre-wide shoulders and two side drainage ways, in built-up areas. The carriageway structure consists of a 5 cm-thick bituminous concrete (BC) surface course, anti-crack geotextile, a 20 cm-thick concrete base course and a 20 cm-thick sub-base course of cement-treated loamy soil. 5

In Niger, technical studies were updated in May 2013 with government funding. The selected cross-section provides for a: (i) a 10 metre-wide platform and a two-lane carriageway, each lane 3.5 metres wide, in unpopulated areas; and (ii) a 19 to 21 metre-wide platform, comprising a two-lane carriageway, each lane 3.5 metres wide - separated by a median - with two 1.5 metre-wide shoulders and two side drainage ways, in built-up areas. The carriageway structure comprises a 30 cm-thick forming layer, a base course and a sub-base course of gravel or sand aggregate, each 20 cm thick, and a double-coated wearing course.

Concerning the Farié Bridge, the technical studies were conducted in January 2013 with WAEMU funding. The projected cross-section is a 543 metre-long and 11 metre-wide deck with two lanes, each 3.5 m wide, a 0.25 metre gutter-shaped strip and a 2 metre-wide sidewalk on each side. The infrastructure is a deep foundation composed of eight piles, each 35 metres long, on average. The superstructure consists of a viaduct-type deck with fourteen 43.8 metre-long free span and pre- stressed beams (VIPP). The support option is the conventional type with circular drums and the vertical clearance is sufficient to allow navigation below the future structure. Technical solutions considered and reasons for rejection are summarized in the table below.

Table 2.2 Alternative Solutions Explored and Reasons for Rejection Alternative Solution Brief Description Reason for Rejection Chad - Option 1: A 10 metre-wide platform, comprising a two- Sub-base and base lane carriageway - each lane 3.5 metres wide - State budget annual programming courses of cement- and a 1.5 metre-wide shoulder on each side, problems. enhanced gravel, two- with a two-layer surfacing on which layer surfacing, and bituminous concrete (BC) will be laid five bituminous concrete years later, when the base course will have (BC) five years later stabilized Chad - Option 2: Sub- The Sub-base and base courses are enhanced High cost due to the scarcity of granite base course and base with crushed granite and bituminous concrete materials, given that granite deposits course of crushed granite surfacing are located 500 km from the works and bituminous concrete site. surfacing. Niger – Road Option: Carriageway of unsorted sand or gravel High cost compared to the resources Bituminous concrete aggregate with bituminous concrete surfacing provided by the Government. (BC) surfacing (i) Bridge with “PSI-OM” type double Higher costs and movement of a concrete steel composite beams under greater number of people. the deck; (ii) Pre-stressed concrete box

Niger – Bridge bridge, cantilevered out in successive Options: sections of constant height; (iii) Pre- stressed concrete box bridge, cantilevered out in successive sections of variable heights.

2.3 Project Type

This project is an investment operation. Donor interventions in transport infrastructure in Chad are channelled through this type of operation.

2.4 Estimated Project Cost and Financing Arrangements

Project Costs by Component

The total project cost, net of taxes and customs duties, stands at UA 381.40 million, equivalent to CFAF 288.80 billion at May 2013 exchange rate (UA 1 = CFAF 757.21708). It includes a provision for physical contingencies and price escalation estimated respectively at 10% and 5% of the base cost.

Table 2.3 Cost Estimates by Components UA Million CFAF Billion % PROJECT COMPONENTS F.E. L.C. Total F.E. L.C Total F.E. A. ROAD WORKS 238.01 64.87 302.88 180.23 49.12 229.35 79% B. RELATED DEVELOPMENTS 2.89 4.84 7.72 2.18 3.66 5.85 37% C. TRANSPORT FACILITATION 5.55 8.32 13.87 4.20 6.30 10.50 40% D. INSTITUTION BUILDING 2.61 1.01 3.61 1.97 0.76 2.73 72% E. PROJECT MANAGEMENT AND 2.29 2.29 1.73 1.73 MONITORING F. CLEARING OF THE RIGHT-OF-WAY 0.53 0.53 0.40 0.40 BASE COST 249.05 81.85 330.90 188.59 61.97 250.56 75% Physical Contingencies 24.64 7.74 32.39 18.66 5.86 24.53 76% Financial Contingencies 13.68 4.42 18.11 10.36 3.35 13.71 76% TOTAL COST 287.38 94.01 381.40 217.61 71.19 288.80 75%

Financing Arrangements

In Chad, besides the Bank, other donors are: BDEAC OFID, IDB, BADEA, SFD and KFAED. BDEAC approved its funding in July 2013, while OFID, BADEA and KFAED have already signed their loan agreements. SFD and IDB funding decisions are expected in 2014. The national counterpart funds amount to UA 49.24 million, or 19.49% of the total cost of the project components in the country. The Bank’s recent transport project financing experience in Chad shows that raising the national counterpart funds poses no particular problem.

In Niger, all donors (IDB, BADEA and OFID and KFAED) have already signed their loan agreements, all of which have been ratified. Available resources total USD 50 million, or UA 33.13 million. Given that Niger is eligible for 100% Bank financing for the project (see rationale in Appendix A-6), the national counterpart funding was limited to UA 3.83 million, or 3.3% of the total cost of the components in the country.

In Algeria, the project will be financed entirely by the Government, through the public investment budget, for an estimated total amount of UA 12.76 million, to be raised in 2014.

Table 2.4 Project Costs by Components and Country PROJECT COMPONENTS ALGERIA NIGER CHAD In UA In DZD In UA In CFAF In UA In CFAF

million million million million million million A. ROAD WORKS 4.16 496.43 94.90 71,862.22 203.82 154,335.77 B. RELATED DEVELOPMENTS 1.98 1,496.25 5.75 4,352.25 C. TRANSPORT FACILITATION 6.93 827.39 6.93 5,250.00 D. INSTITUTION BUILDING 2.11 1,598.17 1.50 1,136.20 E. PROJECT MANAGEMENT AND 1.34 1,017.30 0.94 713.54 MONITORING F. CLEARING OF THE-RIGHT-OF-WAY 0.53 399.00 BASE COST 11.09 1,323.82 100.86 76,372.94 218.94 165,787.76 Physical Contingencies 1.11 132.38 9.65 7,309.60 21.63 16,376.30 Financial Contingencies 0.55 66.19 5.53 4,184.13 12.03 9,108.20 TOTAL COST 12.76 1,522.40 116.04 87,866.66 252.60 191,272.26 7

Table 2.5 Sources of Project Financing by Country (UA million) SOURCES OF FINANCING ALGERIA NIGER CHAD TOTAL ADF 79.07 41.30 120.37

IDB 9.94 86.63 96.57

BDEAC 33.02 33.02

BADEA 6.63 6.63 13.25

OFID 6.63 7.95 14.58

KFAED 9.94 11.27 21.21

SFD 16.57 16.57

Government of Algeria 12.76 12.76

Government of Chad 49.24 49.24

Government of Niger 3.83 3.83

TOTAL 12.76 116.04 252.60 381.40

Table 2.6 Consolidated Cost by Expenditure Category (UA million) EXPENDITURE CATEGORIES F.E. L.C. TOTAL A. GOODS 0.40 0.40 A. WORKS 234.63 73.33 307.95 B. SERVICES 14.42 6.76 21.18 C. MISCELLANEOUS 1.35 1.35 BASE COST 249.05 81.85 330.90 Physical Contingencies 24.64 7.74 32.39 Financial Contingencies 13.68 4.42 18.11 TOTAL COST 287.38 94.01 381.40

In Niger, the Bank will be in a parallel co-financing arrangement with all the other donors. In Chad, it will be in a joint co-financing arrangement with BDEAC and in parallel co-financing with other donors. The Bank will finance the project to the tune of UA 120.37 million, or 31.56% of the total project cost, by providing a loan of UA 98 million and a grant of UA 20.09 million to Niger (UA 79,07 million), as well as a loan of UA 20.90 million and a grant of UA 20.40 million to Chad (UA 41.30 million). For the Farié Bridge in Niger, the ADF resources will come exclusively from Niger’s country allocation (grant and loan), given that the resources of the regional envelop is devoted entirely to the Arlit-Assamakka road section. The table below shows the allocation of ADF resources used in BDEAC.

Table 2.7 Allocation of ADF Financing CHAD NIGER TOTAL INSTRUMENTS USED In UA In CFAF In UA In CFAF In UA In CFAF ADF-12 Loan (PBA) 8.36 6,330.33 36.48 27,623.28 44.84 33,953.61 ADF-12 Grant (PBA) 8.16 6,178.89 19.71 14,924.75 27.87 21,103.64 ADF-12 Grant (PBA from cancellation) 0.38 287.74 0.38 287.74

ADF-12 Loan (Regional envelop) 12.54 9,495.50 22.50 17,037.38 35.04 26,532.89 ADF-12 Grant (Regional envelop) 12.24 9,268.34 12.24 9,268.34

TOTAL 41.30 31,273.07 79.07 59,873.15 120.37 91,146.22

2.5 Project Areas and Beneficiaries

This project involves the development of three road sections and a connecting road, through Niger, between the main road and the Malian branch of the TSH. In each case, the area covers sparsely populated and predominantly pastoral regions, characterized by sand dunes.

In Niger, the extended project area covers the Agadez Region, the second least populated region after Diffa, with 536,000 inhabitants, or 3.3% of the population of Niger. Arlit is the immediate project impact area, with 164,000 inhabitants, or 30.5% of the population of Agadez. Given that nearly ¾ of the population of Arlit lives in the commune, the inhabitants of the project impact area are concentrated in this commune. The area is dominated by uranium mining and transhumant pastoralism. Access to water is a major challenge, with boreholes reaching depths of over 700 metres. The project will also finance the construction of a bridge on the River Niger at Farié, and the development of two access roads stretching from each bank of the river. The PIA of this bridge is within the Tillabéri Region, which shares borders with Mali to the North, Burkina Faso to the West and South-West, and Benin to the South. This region has huge natural and economic potential, with agricultural and livestock production ranking among the most significant in the country. Its population is estimated at 438,000 inhabitants and 55,000 households.

The national HIV/AIDS prevalence rate (0.7% in 2011) is among the lowest in the sub-region. However, there are significant disparities between regions and especially between social groups. In the Agadez Region, which is located in the project impact area, the prevalence rate stands at 21% for sex workers, while other categories concerned are the police and migrants (Agadez is a transit zone for migrants bound for Europe and an outpost where military units have been stationed because of the unrest in the region). Therefore, HIV/AIDS awareness campaigns should be targeted at these vulnerable groups (sex workers, migrants and defence forces). It is envisaged that these campaigns will be carried out in tandem with voluntary testing and road safety awareness activities.

In Chad, the extended area spans four regions: Hadjer Lamis, Barth El Ghazal, Lac and Kanem. The population of these four regions account for 14% of the total population of Chad. However, it should be noted that the project road runs through the following cities/urban centres: Massakory, Ngouri, Bol, Baga-Sola, Liwa, Rig-Rig and Daboua. More than 40 communities are crossed by this section of the TSH totalling 1,334,000 inhabitants, or 12.1% of the population of Chad. The project will build on existing initiatives in the PIA funded by various partners, including the Bank. However, targeted activities will be carried out to raise awareness of HIV/AIDS and other STDs. There are also plans for road safety awareness campaigns. With regard to environmental protection, the population, with the help of NGOs, will be involved in dune-stabilization operations along the main axis.

In Algeria, the project impact area covers Guezzam (7,000 inhabitants), a commune of the Tamanrasset Wilaya (192,000 inhabitants), in the far-south of the Algerian Sahara, endowed with abundant natural gas reserves and mining potential (gold, tin, tungsten, etc.).

The project will have a significant positive impact on the activities of PIA residents, in general, and on those of women and young people, in particular, as it will improve their employability, increase job opportunities in the public works and civil engineering sector, strengthen commercial activities, enhance access to socio-economic infrastructure, and reduce travel time and general transportation costs, as well as improve drinking water access. The most significant expected positive outcomes are : (i) improvement of transport conditions and access to basic social services, markets and production zones for the conveyance of products and goods through roads, road networks, rural roads and structures rehabilitated by the project; (ii) better knowledge of best practices relating to road safety, reproductive health, micro-business management techniques, environmental safety and risk of the spread of STI through the awareness campaigns planned; (iii) increase in the income of young people and women as a result of training and creation of employment opportunities; and (iv) alleviation of the water-fetching chore.

2.6 Participatory Approach to Project Identification, Design and Implementation

During the feasibility studies as well as the preparation and appraisal missions, involvement of all stakeholders was a concern. While security conditions made it impossible to organize visits to the entire project impact area, meetings were held with most of the services and structures involved in the project implementation in Algeria, Niger and Chad. Field trips were organized in Chad and Niger (Farié Bridge). The various meetings organized helped to validate the objectives, components and key related activities to be carried out as part of this project. During the appraisal mission, a meeting of donors was held in Niamey, which helped to finalize the allotment of works contracts and agree on a final financing plan for Niger. During the project execution phase, the participatory approach will be used notably during coordination meetings. This approach will also be preferred when conducting studies envisaged for monitoring/evaluation of the socio-economic impact. At Farié, surveys have shown that after the bridge, the development of health centres and hospices, construction of educational and training institutions and drinking water supply are among the priority needs of the population. The ancillary facilities address these needs.

2.7 Consideration of Bank Group Experience and Lessons Learnt from Project Design

The Bank's active portfolio in Chad has fifteen (15) operations, including three (3) multinational projects. According to the last portfolio review conducted in July 2013, the percentage of at-risk projects dropped from 33% at end-2012 to 15.4% at 30 June 2013. The transport sector has only one project representing 23% of the volume of operations in the country, with a disbursement rate of 86%. A multinational project was recently closed on schedule and supervision missions have confirmed the performance of the project underway. The main difficulties are long procurement delays. The active portfolio in Niger consists of 19 projects representing 11 operations. The main lessons from the last portfolio review in May 2013 concern the quality at entry of projects, particularly technical studies, and the importance of timely recruitment of executing agency staff, preferably prior to financing approval. The transport sector with one project takes up 9.6% of financing. The difficulties encountered in its implementation mainly concern delays in providing counterpart funds and in procurement. In Algeria, the Bank currently has four technical assistance projects in its active portfolio.

The Bank has already financed 66 transport operations in the six TSH countries, including nine regional operations and 57 national projects, for a total UA 2 billion. In the road sub-sector, these funds have contributed to the execution of 52 projects for the construction of 10 888 kilometres of roads. Nine (9) projects directly concerned the TSH for UA 157 million, contributing to the rehabilitation of 1 668 km of roads.

The project drew on the Bank’s experience in implementing national and multinational infrastructure projects whose main challenges emanate from: (i) the multiplicity of actors who usually have low technical and operational capabilities; (ii) weaknesses in procurement, mobilization of counterpart funds (Niger) and performance monitoring; and (iii) poor performance of RECs in implementing components related to the JCP works.

To overcome these weaknesses, this project plans to: (i) set up a Joint Technical Committee (JTC) to coordinate the project at regional level under the CLRT that has already proven its worth in coordinating operations on the TSH; (ii) provide targeted support to existing project management units in each country and JTC; (iii) use Advance Contracting; (iv) scale down Niger’s counterpart contribution; (v) set a works completion deadline that is consistent with the complexity of the structures; and (vi) construct the JCP exclusively under the aegis of countries (Algeria and Chad) instead of the RECs.

2.8 Key Performance Indicators

The main project achievements include: (i) the length of paved roads between Arlit-Assamakka (in Niger) and Ngouri-Daboua-Niger border (in Chad); (ii) the length of access roads developed at the Farié Bridge; (iii) the length of rehabilitated rural roads; (iv) the number of persons made aware of HIV/AIDS, environmental protection and road safety; (v) the area of stabilized sand dunes; (vi) the number of rehabilitated socio-economic infrastructure; (vi) the number of boreholes; (vii) Farié Bridge built; and (viii) the number of juxtaposed checkpoints built and operational.

In terms of expected outcomes, the following key indicators will be measured: (i) total traffic at the Algeria/Niger and Niger/Chad borders; (ii) vehicle operating costs on the Niger and Chad sections; (iii ) time spent by a truck on the Niger and Chad sections and at border crossings; (iv) goods delivery times in the cities of Northern Niger; (v) agricultural output in Bol region in Chad; (vi) daily uptime for means of crossing the Niger River at Farié; (vii) the TSH asphalting; and (viii) jobs created (75,000 man/days). Other indicators to be measured include: (a) rural access index; (b) average household and gender income; (c) job creation rate; (d) price level of agricultural and staple products; and (e) change of behaviour related to HIV/AIDS, environmental protection and road safety. Besides these performance and outcome indicators contained in the logical framework, project implementation performance indicators will also be monitored. Such indicators were selected in relation to Bank institutional performance indicators and mainly concern: (i) timeframes for effectiveness and fulfilment of conditions precedent to first disbursement of funds; (ii) procurement timeframes; (iii) average implementation progress (IP) indicator; and (iv) disbursement rate. These indicators will be monitored during supervision missions and day-to-day management of the project and the outcomes disclosed through the implementation status and results (ISR) reports.

3 PROJECT FEASIBILITY

3.1 Economic and Financial Performance

The economic assessment was performed on the HDM IV model, based on cost/benefit analysis between the “with and without” project situations, over a period of 20 years and a 12% discount rate. This assessment yielded economic rates of return (ERR) for sections ranging from 12.1% to 19.8% (with a 15.3% consolidated ERR) and a Net Present Value (NPV) varying from CFAF 0.2 billion to 25.9 billion according to sections (with a consolidated CFAF 43 billion NPV). The details per section are provided in the table below. By conducting a sensitivity test (increase the project cost by 10% and reduce benefits by 10%), the average ERR stood at 12.7%. The project is therefore economically viable for the community.

Table 3.1 Summary of Economic Analysis Arlit- Economic Elements Ngouri-Bol Bol/Baga- Baga-Sola/Rig- Rig-Rig/Daboua Overall Assamakka Analysed (Chad) Sola (Chad) Rig (Chad) (Chad) Project (Niger) ERR 14.9% 19.8% 17.0% 12.2% 12.1% 15.3% NPV in CFAF million 7,357 25,895 9 033 571 216 43 072 ERR economic sensitivity 12.0% 16.9% 14.3% 10.0% 9.8% 12.7% test

3.2 Environmental and Social Impacts

Environment

Taking into account the nature and volume of work to be undertaken, the Bank has classified the project under Category 1. Detailed environmental and social impact assessments (ESIA), accompanied with Environmental and Social Management Plans (ESMP) were developed and validated by the Chad and Niger ministries responsible for the environment. The summary of the environmental impact assessment approved by the Bank’s Environmental and Social Safeguards was posted on 13/08/2013. The construction of the TSH will foster socio-economic development through the opportunities it offers for the sale of agro-pastoral products, ease of transporting freight, passenger comfort and medical evacuations.

The implementation of this project will engender negative environmental impacts: (i) potential health impacts, mainly the risk of spread of HIV/AIDS in urban areas crossed by the project; (ii) safety impacts related to site management, the organization of the movement of vehicles, road traffic users and handling of explosives at quarry sites, etc.; (iii) alteration of the landscape and the living environment by waste and scrap produced at the base camp, soil erosion due to operation of equipment at quarry sites and borrow areas; (iv) loss of vegetation, cropland and woody vegetation; and (v) soil pollution by solid and liquid waste from construction sites and quarries and borrow areas. Since tree density is very low, except in flood zones and built-up areas in these localities, trees will be avoided as much as possible to minimize the quantities of trees felled (in the first portion of Chadian section, in the flood and built-up areas). The destruction of these plants will be limited largely to herbaceous plants and a few spontaneous shrubs without high ecological value. All these negative impacts are, however, moderate and mitigation measures are provided to limit their scope. Trees on the right-of-way will be pre-marked with paint before earthworks. Wood cleared from the road will be used as firewood. However, it is recommended that this activity be strictly monitored by the local forestry service to prevent abuse. The service will educate people beforehand on the fact that the activity is short term and unique, and will end with the works. Moreover, given the limited firewood resources, the afore-mentioned service will educate people on the use of economic cooking techniques (e.g. improved stoves). However, because wildlife is rare in the project operation area, it will only be slightly affected.

To mitigate and/or improve the various negative and/or positive impacts of the project, a number of measures aimed at reducing or eliminating impacts on the various components of the biophysical (soil, air, water resources, flora and fauna) and human environment (human health and safety, land and agriculture, income-generating activities, infrastructure, etc.) have been recommended, including: (i) the interruption of road traffic during the construction period; (ii) recruitment of casual labour, particularly workers, for worksite purposes; (iii) water abstraction for site purposes should never jeopardize the water supply of the local population. If necessary, new water supply sites will be built and placed at the disposal of the residents after the site winds up; (iv) marking of sites with signs to be visible both day and night, especially in residential sections; (v) spraying of water on the soil at the crossing of built-up and borrow areas to avoid excessive dust emissions; (vi) provision of appropriate security measures on the site to protect workers; (vii) development of a rapid response plan to be implemented in the event of accidents on site, including hazardous waste spill; (viii) disposal of all solid and liquid waste generated by the site, including packaging and food waste, at an appropriate landfill. In particular, waste oil will be carefully collected in sealed containers to be deposited in places where they do not threaten the environment and will in no event be discharged into side ditches; (ix) use of existing tracts by construction machinery and vehicles to access the site, and avoidance of close proximity to homes; (x) raising the awareness of workers and site personnel to the risk of spread of STDs/HIV/AIDS, beginning from the stage of recruitment of site workers and lasting throughout the construction period; (xi) verification of hazardous materials stored in appropriate places and rapid response measures in case of accident,

contained in the terms of reference of the successful company contracted for the works; (xii) involvement of the security and national defence forces in enforcing road construction safety arrangements; (xiii) provision of site workers with protective gear that must be worn; (xiv) establishment of temporary tags and marking signs at road sections with on-going works; and (xv) establishment by the successful contractor of an occupational health and safety service.

An environmental monitoring programme was prepared per project component; it also aims to ensure that all commitments and obligations, including environmental mitigation measures, are applied during construction. The following table shows the cost of the Environmental and Social Management Plan (ESMP) by work area.

Table 3.2 Table of ESMP Costs (in CFAF) Work Areas Total Ngouri-Bol-Daboua-Niger border (Chad) 8,775,250,000 Arlit-Assamaka (Niger) 1,771,750,000 Farié Bridge on the River Niger (Niger) 728,000,000 Grand Total 11,275,000,000

In Niger, the road follows the course of a track extending the RN25 from Arlit to Assamakka and In Guezzam in Algeria. This section is entirely beyond the northern limit of cropland. Since there are no built-up areas along the road corridor except at its ends (Arlit and Assamakka), the project will not affect residents in the area. Regarding the Farié Bridge, the planned works will cause the displacement of 79 people and two community facilities. In Chad, the project road is a west branch of the Ndjamena/Faya-Largeau highway from Massakory towards Bol and the Niger border. It is an already existing stabilized earth road, with a well-defined 50 metre-wide regulatory right-of-way, whose construction will not result in any population displacement.

Climate Change

The impact of climate change may be gauged in terms availability of water resources in boreholes, drought and wind erosion, resulting in increased dune mobility and road silting, as well as the survival of trees that will be planted to stabilize the dunes. The project packaging took these aspects into account. Hence, dune stabilization and water point construction activities have been factored into the project. Besides, considering that the road runs through isolated and open desert areas, it should not contribute significantly to the production of greenhouse gas emissions and climate change.

Gender

Despite efforts by the various Governments concerned, gender disparities persist. Moreover, the desert conditions prevailing in the project impact area (PIA) further complicate the living conditions of women, who face serious problems of access to basic social services, especially water and health care. Sandy tracks and the lack of appropriate means of transport greatly limit their mobility. In the Arlit area, for example, girls devote almost a whole day to water-fetching. In this part of Niger, boreholes may be as deep 700 metres and are, in many cases, equipped with human- powered mechanisms. Therefore, women in this region are understandably overburdened. Both in Niger and Chad, the main income-generating activities for PIA women and their groups revolve around market gardening, spirulina and livestock production. In response to the expressed needs, the project provides for specific actions under related developments designed to impact the lives of women. These are: (i) drilling of 24 boreholes to meet the drinking water and market gardening needs; (ii) rehabilitation of socio-economic infrastructure; and (iii) rehabilitation of 100 km of rural roads. These developments, estimated at UA 5.81 million (or 1.52% of total project cost), will ease the chore of water fetching and diversify income-generating activities for women.

Social Impact and Impact on Youth Employment

The success of the project will eventually have a very strong social impact not only on the local population, but also on all road users in terms of time savings, better access to basic social services for poor households, better evacuation of agricultural produce and especially easy access to drinking water, which is a scarce commodity in the PIA. The project will also have a direct impact in reducing essential commodity prices in the PIA since the improved road conditions will lead to greater use of the competitive corridor. It will further have an economic impact on neighbouring villages in terms of enhancement of economic potential, which will help to create jobs and increase income. Ultimately, the project will have some positive impacts relating to: (i) job creation in the construction (75,000 man/days with 20% for women) and operation phases as well as subsequent road maintenance phases; (ii) reduction in travel time; (iii) reduction in accident rates; (iv) improvement in agricultural production and income; and (v) reduction in commodity prices in the PIA.

Forced resettlement

The project will result in the displacement of 79 people and two community facilities in Farié. All persons affected by the works have been identified and compensation measures are provided in the Summary Resettlement Plan. The payment of compensation by the Government and the transmission to the Bank of evidence relating thereto shall be a condition precedent to commencement of construction of the Farié Bridge.

4 IMPLEMENTATION

4.1 Implementation Arrangements

Executing Agencies

At the national level, each country will implement its own components independently. The ministries responsible for equipment, public works and/or infrastructure, acting through the Directorate General for Major Works (DGGT in Niger) or Roads (DGR in Chad and Algeria), will be the executing agencies and project owners.

Within the Chadian Ministry of Infrastructure and Transport (MIT), project monitoring will be provided by the AfDB/World Bank/EU Joint Unit (CSCP), which has the necessary staff and is already satisfactorily implementing the on-going Koumra-Sarh Project. The key CSCP staff assigned to the project comprise a coordinator, three field engineers, an accountant, an environmental engineer with experience in climate change and a procurement officer. CSCP operating expenses were included in project costs and will be funded entirely by BDEAC through a special account to be opened by the Government.

In Niger, the project’s executing agency was established by Order No. 080/ME/SG/SGA/DRH/DAP of 13/09/2013 of the Ministry of Equipment. It comes under the responsibility of the Directorate General for Major Works (DGGT) and comprises: a coordinator (civil engineer general), a public works chief engineer, head of the Arlit/Assamakka Road Unit, a senior structural engineer, head of the Farié Bridge Unit and three technicians (one for each works package). This body will be supplemented by an administrative and finance officer with thorough mastery of private accounting, who will be recruited through ADF financing under technical assistance, an accountant, an environmental engineer with sound experience in climate change, a procurement officer and support staff. The resources necessary for the proper functioning of the executing agency will be provided by the ADF (logistics and other equipment), the IDB and the Government (operating costs). Operating costs will be managed through a special account to be opened to the satisfaction of the IDB.

In Algeria, the DGR is the project’s executing agency. The Algerian Government has provided it with the necessary resources for the project.

At the multinational level, the CLRT General Secretariat will provide overall project coordination, in accordance with its statutory duties. This coordination will be ensured through the JTC consisting of the directors in charge of roads and transport, representatives of the Ministries of Planning and Economy (Cooperation-Planning) and Finance (Customs), representatives of the Ministries in charge of Foreign Affairs, Trade, Immigration, project coordinators, directors in charge of transport and infrastructure from ECOWAS/WAEMU, ECCAS/CEMAC, AMU, as well as representatives of haulers. The JTC will be established by a decision taken by the CLRT General Secretariat and sent to donors. Given Algeria’s specificity in the project (neither borrower nor recipient), it was agreed that the JTC may be established as soon as Chad and Niger officially release the names of their CLRT members.

The Chair of the JTC will be held by the CLRT, which will convene its meetings. The Committee will meet at least twice a year, alternately in one of the three countries. For budget management and agenda issues, one of the annual meetings of the JTC may take place in conjunction with the CLRT statutory meeting held every April in Algiers, in which the directors general responsible for roads already participate. The CLRT will play an interface and coordination role between the executing agencies at the national level and the various RECs. It will ensure the collection and dissemination of data on TSH performance indicators, dialogue with the three countries for the effective implementation of transport facilitation measures, and awareness of corridor users and professionals. The CLRT’s operation will be covered by its allocated budget, while expenses related to the participation of JTC members in Committee activities have been included in the operating budget of the executing agencies at the national level in Chad and Niger. In Algeria, the operation of the executing agency will be covered by the DGR budget while JTC members’ expenses will be borne by their respective government services.

Road Safety and Securing of the Project Area

Road safety is a major issue that could jeopardize the achievement of set objectives. Remedial measures to be taken include: (i) compliance with norms and standards in the design and construction phases; (ii) the need for traffic control at all times; and (iii) user awareness.

In Algeria, the lanes are well developed, user awareness is continuing, and vehicle inspection is mandatory and carried out with state-of-the-art equipment. Resources have also been put in place, through mobile motorized brigades (regional pools), to restore traffic in the shortest possible time and evacuate the injured, if need be.

In Chad and Niger, road safety is a real problem, considering the number of accidents on national roads, the scarcity of awareness and difficulties in evacuating the injured. To enhance road safety on the sections to be constructed, the project design made provision for: (i) compliance with technical regulations and standards for road signs and signals, slopes and slope deviations; (ii) construction of clearance areas for temporary parking of vehicles and drivers' rest (one rest area in Niger and three in Chad); (iii) public awareness campaigns on road safety involving users and local populations; and (iv) road safety audit at project start-up and completion. Lastly, the project includes the development of a national road safety strategy (SNSR) in Niger, with the aim of making a diagnosis of road safety in the country, proposing measures to address the challenges encountered and supporting the Niger Road Safety Agency (ANISER) being established.

Although the security risk is real in Algeria and Chad, it is more or less contained by the Governments. In Niger where the security risk is higher, the army and the gendarmerie are already deployed across the North where they have sufficient staff. These measures have helped to drastically reduce the vandalism that once prevailed on the TSH. During construction, additional 15

staff (about 120 men) will be deployed and made available to companies for the security of workers and equipment. In accordance with the legal provisions in the country, the companies will take over the running of mobilized units (fuel, canteen, allowances for working in remote locations, etc.) through the allocation of UA 1.32 million incorporated in the cost of works. This allocation covers transport and communication logistics (pick-up trucks, walkie-talkie, etc.), accommodation facilities (tents, beds, etc.) and other costs mentioned above. A contract will be concluded between the company and the Ministry of Defence for this support. During the operating phase, mobile teams will be available to ensure the safety of users at all times. These units will be backed up by the facilities that the European Union will build in the area for the National Gendarmerie.

Arrangements Concerning the Procurement of Goods, Works and Services

Any procurement of goods, works and services financed by the ADF will be done in accordance with the Bank Rules and Procedures for the Procurement of Goods and Works or Bank Rules and Procedures for the Use of Consultants, as the case may be, using appropriate Bank bidding documents.

In Chad, works was divided into four lots: Ngouri/Bowl (lot 1: 99 km), Bol/Baga-Sola (Lot 2: 58 km), Baga-Sola/Rig-Rig (Lot 3: 80 km) and Rig-Rig/Daboua/ Niger border (Lot 4: 93 km). Lot 1 will be financed by the KFAED, SFD, OFID, BADEA and the State, while Lots 2 and 3 will be financed by the IDB and the State. Lot 4 will be financed by the Bank together with BDEAC and the State; this lot also includes related developments and the Chad/Niger JCP.

In Niger, the work was divided into three lots: Arlit-PK118 (Lot 1: 120 km), PK118-Assamakka (Lot 2: 105 km), Farié Bridge (Lot 3). Lot 1, which also includes the 2 km ramp to Arlit, will be jointly financed by the IDB, BADEA, OFID, KFDEA and the State. The Bank and the Government will co-finance Lot 2 which also includes related developments, while Lot 3 and related developments at Farié will be fully financed by the Bank.

As part of the joint financing of Lot 4 works in Chad, BDEAC agreed to follow the Bank's procurement procedures. Other procurements entirely financed by national counterpart funds and/or other donors will comply, as appropriate, with the procedures of each country or donor.

The Bank has granted its approval for Chad and Niger to use the Advance Contracting (AC) procedure method for works, monitoring and supervision. The process is underway for the recruitment of contractors and monitoring missions.

Disbursement and Audit

The direct payment method will be used for disbursements in respect of Bank-funded consultancy services, works and goods. This method will be used to pay suppliers and consultants based on contracts signed between them and the Governments. Disbursements will be done in accordance with the project expenditure schedule as well as the list of goods and services, and Bank rules and procedures. A disbursement letter defining all disbursement guidelines will be reviewed and accepted by both parties during the negotiation of loans and grants.

Project accounts in Chad and Niger will be audited independently. The annual financial statements and financial monitoring reports prepared by the executing agencies and their respective internal oversight systems will be audited annually by reliable, competent and independent auditors, based on criteria satisfactory to the Bank. The terms of reference for auditors will be adopted at the negotiating meeting with each Government. The external audit will be tailored to the specific project risks. Each financial audit will cover a fiscal year ending December 31, in accordance with the rules in force in Niger and Chad. However, the first audit may cover the first 18 months of the project where the first disbursement was made in the second half of the year of the first 16

disbursement. This same principle will be applicable to the last audit of the project, if the closing date falls in the first six months of the fiscal year concerned. The audited financial statements for each financial year will be submitted to the Bank no later than six months after the end of the year to which they relate. The report will include an opinion report and an internal oversight letter.

Financial Management

In view of the institutional arrangement, the funding method and the implementation procedure adopted for the TSH, this project is a set of three separate entities from the legal, administrative and financial standpoint. Indeed, project activities will be carried out by independent executing agencies specific to each country. Financial management in Niger and Chad will thus be performed by the Directorate General for Major Works of the Ministry of Equipment (DGGT) and the Project Coordination and Monitoring Unit (CSCP) of the Ministry of Infrastructure and Transport, respectively. Under these conditions, the project cannot have a single account. Each entity will separately oversee the administrative, accounting and financial activities within its area of responsibility, so it is not necessary to consolidate their accounts. The Bank carried out an appraisal of the existing financial management systems in Chad and Niger in May 2013 and June 2013, respectively, using the Bank methodology laid out by ORPF.0, in June 2010, in its kit on the “Financial Management of Projects Funded by the African Development Bank” The appraisal was further enriched by the lessons learned from CSCP and DGGT experiences in the implementation of Bank-funded projects. The objective is to ensure that project resources are effectively and efficiently used, and solely for their intended purposes.

It is clear from this appraisal that the residual overall fiduciary risk is deemed “substantial” for Niger and “moderate” for Chad. The proposed mitigation measures should ensure that the financial management arrangements laid down for the project will be sufficient to provide timely accurate and reliable information, allow the preservation of project assets and enable the conduct of the accounts audit within the agreed timeframe. These conditions require the recruitment of qualified and dedicated financial management staff, adaptation of administrative, accounting and financial procedures, procurement of appropriate accounting software and effective conduct of internal and external audit by private firms. Executive summaries of financial management appraisals in both countries are appended. It is worth noting that the financial management system in Algeria was not appraised because the Algerian part of the project is self-financed.

4.2 Monitoring/Evaluation

The implementation of all project components will be monitored by the various executing agencies, depending on the activities under their control. They will produce quarterly and annual monitoring reports. Supervision missions of line ministries and the Bank will also contribute to the appraisal of main project achievements and the problems faced by various teams. Annual technical and financial audit missions will supplement the mechanism to be established to monitor project progress.

It is worth noting that in addition to implementation monitoring, a specific mechanism will be established to ensure monitoring/evaluation of the socio-economic impact (SEIS) of this project. Discussions were held with officials of the National Institute of Statistics (INS) of Niger and the National Institute of Statistics, Economic and Demographic Studies (INSEED) of Chad in view of strengthening national capacity in this field. In each of these countries, the institutes are the only authorities responsible for producing national statistics. They conducted the last census in each country as well as poverty monitoring studies. In July 2010, the INS (Niger) conducted a study on the "Impact of Transport Infrastructure on Poverty Reduction and Attainment of the MDGs in Niger" while INSEED is already in charge of monitoring and evaluating the socio-economic impact of the Koumra/Sarh Road Project financed by the Bank, a mandate it has completed to the satisfaction of the Chadian Government and the Bank. Therefore, the two institutes have the 17

expertise and human resources to monitor/evaluate the socio-economic impact of the TSH, based on agreements to be signed with each government, as follows: (i) INS for the Arlit/Assamakka section and the Farié Bridge in Niger; and (ii) INSEED for the Ngouri/Bol/Niger border section. In each case, three studies will be conducted: the establishment of the baseline before the start of works, the assessment of the socio-economic impact at the end of the project, using substantially the same methodology, and assessment of the socio-economic impact by the beneficiaries. The terms of reference, detailed budgets and key impact indicators to be monitored were specified during project preparation.

4.3 Governance

In Chad, appraisal of the business climate shows that the country had declined on all indicators. The country ranks last (183rd out of 183) among the economies rated in the Doing Business overall rankings for 2012, as against 182nd out of 183 in 2011. To remedy this situation, the Government in 2010 adopted a charter to improve the business environment, but it is yet to be implemented. In 2011, corruption in the administration was considered the second factor hindering the conduct of business in Chad. According to The Global Competitiveness Report 2011-2012 report, the country ranks last globally (142nd) for irregular payments and bribes. To help the country improve its governance, the Bank is currently considering funding the Business Climate Improvement and Economic Diversification Project (PACADET), for UA 4.8 million.

Niger’s economic and financial governance and transparency indicators are still unsatisfactory, although the trend is improving. Over the period 2010-2011, the appraisal of policies and institutions, based on the Bank’s CPIA indicators, showed a substantial improvement in economic management and governance indicators, which exceeded the West African average. This resulted in an increase in Niger’s ADF-12 country allocation by 14.43% and 4.52% in 2012 and 2013, respectively. However, structural, social inclusion and equity policy indicators have not progressed. With respect to transparency and corruption control, the country has evolved positively from an initial deteriorated situation. According to the Transparency International 2012 report, the corruption perception index has improved. Niger ranked 113 out of 176 countries in 2012, against 134 in 2011, showing an increase of 21 places. The Mo Ibrahim Foundation African governance indicators for Niger for 2011 underscore the urgent need to carry out reforms.

4.4 Sustainability

The sustainability of the roads and the bridge will depend on the following factors: (i) the quality of technical studies; (ii) the quality of work performed; (iii) the operation of the infrastructure; and (iv) maintenance level and quality.

With regard to technical studies, extensive studies were carried out on the project in 2013 in Chad and Niger. The technical solutions proposed to this end were deemed satisfactory. General contractors will be selected by international competitive bidding on the basis of Bank-approved competitive bidding documents (CBD). The special technical clauses will specify all the technical specifications of the materials to be used and the criteria for the acceptance of structures. The companies selected will then establish the works execution dossiers to be submitted for approval to the monitoring mission. To ensure compliance with quality standards, works monitoring and supervision will be conducted by consulting engineering firms familiar with similar projects, selected from among the most qualified, in accordance with Bank rules and procedures. Lastly the fact that the project will be supervised by the Bank and technical audits performed by independent consultants will make for better technical monitoring of works and mitigate workmanship risks.

Concerning the operation of infrastructure, especially the roadway, the bridge and their dependencies, the three countries have asset protection laws and regulations. Since Niger is almost no longer affected by this phenomenon, in light of the latest control results (less than 5% of trucks are in violation), only Chad will need to make significant efforts to preserve its road assets. 18

The measures taken by the Government of Chad in connection with road maintenance have helped to increase the road maintenance fund (FER) budget from CFAF 8 billion in 2011 to CFAF 18 billion in 2013, following the increase in the amount of oil royalties. This resource level should lead to an acceptable routine maintenance of the classified road network. The estimated additional costs for the maintenance of the TSH sections amounted to an average CFAF 370 million annually, or 2% of the current FER budget. In Niger, the instruments in force until February 2013 provided for indexing the road user fee (RUR) to imported petroleum products. In fact, products from the national refinery (SORAZ) were not included in the CAFER funding mechanism. At the request of donors, the Government recently enacted new instruments, including petroleum products from the refinery, in the indexing base of oil royalties. Accordingly, the CAFER annual budget should increase from CFAF 8.3 billion in 2012 to CFAF 10 billion in 2013, making it possible to cover classified road network routine maintenance needs. The estimated additional costs for routine maintenance of the Arlit-Assamakka section amounted to an average CFAF 268 million per year, or 2.7% of the CAFER budget. In Algeria, maintenance of the structuring road network, which includes the TSH, is incorporated into the annual investment budget of the DGR, which covers all needs.

4.5 Risk Management

The security situation in the region, particularly in Northern Mali and beyond, is the main risk faced by the project. This could delay the execution of works on the Arlit Assamakka section and later hamper trade development on that road. However, the risk is mitigated by the military action taken by the Government of Niger to secure the northern part of the country, with permanent pre- positioning of military units in the region. This has helped to drastically reduce acts of vandalism that once prevailed along the TSH. During construction, approximately 120 additional troops will be deployed and made available to companies for the security of workers and equipment. Companies will be responsible for the running of the units mobilized through the allocation (UA 1.32 million) that was incorporated in the cost of works. This allocation covers transport and communication logistics, housing and operating costs. During the works operation phase, mobile teams will be set up to ensure the safety of users at all times through regular patrols. These units will avail themselves of the facilities to be built by the EU in the area for the national gendarmerie. Lastly, a range of diplomatic initiatives undertaken by the United Nations, the African Union and ECOWAS are on-going. This should eventually lead to the mitigation of security risk in the Sahel- Saharan region.

Other relatively minor risks that could jeopardize the outcomes or sound implementation of the project include:

 Increased cost of works compared to the estimated budget: this risk is mitigated by the availability of detailed implementation studies recently updated in Chad and Niger, the review of the technical solutions adopted, a realistic cost estimate based on similar works contracts in progress or completed over the past two years and the provision for physical and financial contingencies;

 Failure of the countries to provide counterpart funds in time: this risk is mitigated by the fact that the Government of Chad has always honoured its commitments, while for Niger, the national counterpart funding is only a token amount;

 Lack of road maintenance resources: this risk is mitigated by the commitment of the countries to provide the necessary funding for routine maintenance of the classified network, amounting to CFAF 18 billion and CFAF 10 billion for Chad and Niger, respectively;

 Poor understanding of sand dune movements: this risk is mitigated by the fact that measures will be taken by the Directorates General for Road Maintenance of Niger and Chad to dispatch permanent mobile teams responsible for dealing with silting phenomena.

4.6 Knowledge Building

In order to draw lessons from this project, a monitoring/evaluation mechanism will be set up to record project outcomes and impacts. This will allow for drawing lessons in terms of both project implementation performance and level of achievement of expected project outcomes and impacts. The assessment of the project impact by the beneficiaries will provide details on the population’s evaluation of the outcomes and the degree to which their expectations from the project have been met. This knowledge and the lessons will be posted on the OITC Department website, and disseminated through reports and publications as well as workshops and seminars.

5 LEGAL FRAMEWORK

5.1 Legal Instrument

A loan agreement and a grant protocol agreement will be signed between the Bank and the Republic of Chad, as well as with the Republic of Niger.

5.2 Conditions Related to Bank Intervention

A. Conditions precedent to the effectiveness of the ADF grants and loans to Niger and Chad

The effectiveness of the ADF grants is subject to the signing of the related Protocol Agreements between the Bank and the Governments of Niger and Chad.

The effectiveness of the ADF loans is subject to the fulfilment by the Borrowers of the conditions specified in Section 12.01 of the General Conditions.

B. Conditions precedent to the first disbursement of the ADF grants and loans

For the Republic of Chad: None.

For the Republic of Niger: Niger shall provide, to the satisfaction of the Fund, evidence of payment of a total amount of CFAF 143 million into a secure account belonging to the national counterpart, as its contribution to the operating budget of the Project Executing Agency.

C. Other ADF grant and loan conditions

For the Republic of Chad:

(i) Chad shall provide, to the satisfaction of the Fund, no later than 31 December of each year, the FER annual budget, which should amount to a minimum of CFAF 18 billion;

For the Republic of Niger: Niger shall provide to the satisfaction of the Fund:

(i) No later than December 31 of each year, the CAFER annual budget, which should amount to a minimum of CFAF 10 billion;

(ii) No later than the beginning of the construction of the Farié Bridge, evidence of compensation of persons affected by the bridge construction, in accordance with the Fund's policies and guidelines in this regard, the Environmental and Social Plan Management Plan (ESMP) and Compensation and Resettlement Plan (CRP).

D. Undertakings

For the Republic of Chad: Chad undertakes, to the satisfaction of the Fund: (i) to implement the Project and the Environmental and Social Management Plan (ESMP), and ensure the implementation of same by its contractors in accordance with national legislation, the recommendations, requirements and procedures laid out in the ESMP, as well as the Fund’s relevant rules and procedures; and (ii) to provide the Fund with quarterly reports on the ESMP implementation, including, where appropriate, the weaknesses and the corrective measures taken or to be taken.

For the Republic of Niger: Niger undertakes, to the satisfaction of the Fund: (i) not to start the construction of the Farié Bridge without ensuring that the affected persons of the area have been fully compensated; (ii) to implement the Project, the Environmental and Social Management Plan (ESMP) and the Compensation and Resettlement Plan (CRP), and ensure the implementation of same by its contractors in accordance with national legislation, recommendations, requirements and procedures laid out in the ESMP, the CRP as well as the Fund’s relevant rules and procedures; and (iii) to submit to the Fund quarterly reports on the ESMP implementation, including, where appropriate, the weaknesses and the corrective measures taken or to be taken.

5.3 Compliance with Bank Policies

This project complies with all applicable Bank policies.

6 RECOMMENDATION

Management recommends that the Board approve the proposed award of: (i) ADF loans of UA 20.90 million to the Republic of Chad and UA 58.98 million to the Republic of Niger; (ii) ADF grants of UA 20.40 million to the Republic of Chad and UA 20.09 million to the Republic of Niger for this project and on the terms and conditions set forth in this report.

APPENDIX I Comparative Socio-Economic Indicators

Developing Developed Indicators Year Niger Chad Algeria Africa Countries Countries

Basic Indicators Area ('000 Km²) 2011 1 267 1 284 2 382 30 323 98 458 35 811 Total Population (millions) 2012 16.6 11.8 37.3 1 070.1 5 807.6 1 244.6 Urban Population (% of Total) 2012 17.4 28.7 73 40.8 46.0 75.7 Population Density (per Km²) 2012 12.7 9.0 15.7 34.5 70.0 23.4 GNI per Capita (US $) 2011 360 690 4 450 1 609 3 304 38 657 Labour Force Participation - Total (%) 2012 32.0 37.7 32.1* 37.8 68.7 71.7 Labour Force Participation - Female (%) 2012 31.2 45.2 15 42.5 39.1 43.9 Gender -Related Development Index Value 2007-2011 0.308 0.380 …. 0.502 0.694 0.911 Human Development Index (Rank among 186 countries) 2012 186 184 93 ...... Population Living Below $ 1.25 a Day (% of Population) 2008-2011 43.6 61.9 N.A 40.0 22.4 ... Demographic Indicators Population Growth Rate - Total (%) 2012 3.5 2.6 1. 4 2.3 1.3 0.3 Population Growth Rate - Urban (%) 2012 4.4 4.6 3.1 3,4 2.3 0.7 Population < 15 years (%) 2012 48.9 45.2 27 40.0 28.5 16.6 Population >= 65 years (%) 2012 2.3 2.8 5 3.6 6.0 16.5 Dependency Ratio (%) 2012 104.8 92.6 77.3 52.5 49.3 Sex Ratio (per 100 female) 2012 101.3 99.0 102.4 100.0 103.4 94.7 Female Population 15-49 years (% of total population) 2012 21.6 22.7 28.2* 49.8 53.2 45.5 Life Expectancy at Birth - Total (years) 2012 55.1 49.9 76.4 58.1 67.3 77.9 Life Expectancy at Birth - Female (years) 2012 55.6 51.4 75.7 59.1 69.2 81.2 Crude Birth Rate (per 1,000) 2012 47.9 43.7 24.78 33.3 20.9 11.4 Crude Death Rate (per 1,000) 2012 12.3 15.7 4.41 10.9 7.8 10.1 Infant Mortality Rate (per 1,000) 2012 86.5 124.9 23.1 71.4 46.4 6.0 Child Mortality Rate (per 1,000) 2012 145.1 197.3 26.8 111.3 66.7 7.8 Fertility Rate (per woman) 2012 7.0 5.8 2.87 4.2 2.6 1.7 Maternal Mortality Rate (per 100,000) 2010 590.0 1100.0 97 417.8 230.0 13.7 Women Using Contraception (%) 2012 13.7 6.4 31.6 62.4 71.4 Health & Nutrition Indicators Physicians (per 100,000 people) 2004-2010 1.9 4.0 120.7 49.2 112.2 276.2 Nurses (per 100,000 people) 2004-2009 13.7 28.0 134.7 187.6 730.7 Births attended by Trained Health Personnel (%) 2006-2010 17.7 22.7 95.2 53.7 65.4 ... Access to Safe Water (% of Population) 2010 49.0 51.0 83 67.3 86.4 99.5 Access to Health Services (% of Population) 2000 30.0 30.0 95 65.2 80.0 100.0 Access to Sanitation (% of Population) 2010 9.0 13.0 98* 39.8 56.2 99.9 Per cent. of Adults (aged 15-49) Living with HIV/AIDS 2011 0.8 3.0 0.1 4.6 0.9 0.4 Incidence of Tuberculosis (per 100,000) 2011 108.0 400.0 90 234.6 146.0 14.0 Child Immunization Against Tuberculosis (%) 2011 61.0 53.0 N.A 81.6 83.9 95.4 Child Immunization Against Measles (%) 2011 76.0 28.0 95 76.5 83.7 93.0 Underweight Children (% of children under 5 years) 2006-2011 39.9 33.9 N.A 19.8 17.4 1.7 Daily Calorie Supply per Capita 2009 2 489 2 074 3500* 2 481 2 675 3 285 Public Expenditure on Health (as % of GDP) 2010 5.2 1.1 3.9* 5.9 2.9 8.2 Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2010-2012 70.8 101.0 109* 101.9 103.1 106.6 Primary School - Female 2010-2012 64.3 86.1 107* 98.4 105.1 102.8 Secondary School - Total 2010-2012 14.4 25.4 102* 42.3 66.3 101.5 Secondary School - Female 2010-2012 11.3 15.4 38.5 65.0 101.4 Primary School Female Teaching Staff (% of Total) 2011 45.2 15.3 43.2 58.6 80.0 Adult literacy Rate - Total (%) 2005-2010 28.7 34.5 72.6 67.0 80.8 98.3 Adult literacy Rate - Male (%) 2005-2010 42.9 45.0 N.A. 75.8 86.4 98.7 Adult literacy Rate - Female (%) 2005-2010 15.1 24.2 N.A. 58.4 75.5 97.9 Percentage of GDP Spent on Education 2008-2011 4.5 2.9 4.8** 5.3 3.9 5.2 Environmental Indicators Land Use (Arable Land as % of Total Land Area) 2011 11.8 3.4 3.2 7.6 10.7 10.8 Annual Rate of Deforestation (%) 2000-2009 3.7 0.6 N.A 0.6 0.4 -0.2 Annual Rate of Reforestation (%) 2011 0.9 9.2 0.6 23.0 28.7 40.4 Per Capita CO2 Emissions (metric tons) 2009 0.1 0.0 3.2 1.2 3.1 11.4 *=2011; **=2008; N.A. = Not Applicable Source: ADB Statistics Department, from national and international sources.

* Most recent year. Last update: May 2013

APPENDIX II

On-going Bank Portfolio in Chad as at 30/06/2013

ADF Effectiveness Amount % Closing No. Project Name Commitment Date Disbursed (UA) Disbursed Date (UA) Agricultural Sector

Natural Resource Management and Development Project (PGRN) LOAN 16/02/2006 4 270 000 3 086 023.30 72.27 31/03/2014 1 Natural Resource Management and Development Project (PGRN) GRANT 19/05/2005 2 000 000 1 463 519.91 73.18 31/03/2014 Natural Resource Management and Development Project (PGRN) additional 31/01/2011 9 570 000 0.00 0.00 LOAN 30/10/2014 Lake Chad Basin Sustainable Development Programme / MULTINATIONAL 2 19/12/2008 30 000 000 5 757 936.25 19.19 31/12/2015 GRANT 3 Cotton Sector Support Project /MULTINATIONAL GRANT 08/02/2007 5 000 000 1 820 848.92 36.42 31/12/2013 4 Rural Infrastructure Support Project LOAN 07/06/2011 5 200 000 180 959.67 3.48 31/12/2016 Rural Infrastructure Support Project GRANT 07/06/2011 5 200 000 639 662.16 12.30 31/12/2016 5 Fisheries Development Project (PRODEPECHE) GRANT 23/11/2005 10 000 000 9 081 021.78 90.81 30/12/2013 Total Agricultural Sector 71 240 000 22 029 972 30.92

Water and Sanitation Sector 6 DWSS Programme 15 secondary centres GRANT 17/07/2012 6 900 000 50 307.73 0.73 31/10/2017 DWSS Programme 15 secondary centres GRANT RWSSI 04/10/2012 2 603 331 101 864.59 3.91 31/10/2017 DWSS Programme 15 secondary centres LOAN 17/07/2012 10 710 000 0.00 0.00 31/10/2017 Total Water and Sanitation Sector 20 213 331 152 172 0.75

Transport Sector 7 Koumra- Sahr Road Asphalting Project GRANT 02/06/2009 31 610 000 27 785 672.82 87.90 31/12/2013 Total Transport Sector 31 610 000 27 785 673 87.90

Social Sector (Education and Health)

Lake Chad Basin Initiative Support Project (PAIBLT) MULTINATIONAL 8 10/11/2006 10 000 000 7 387 483.43 73.87 31/12/2013 GRANT Total Social Sector 10 000 000 7 387 483 73.87

1 NFSP Round Table 29/11/2011 139 326 133 092.02 95.53 30/06/2013 2 STATISTICS 22/11/2011 1 000 000 506 776.48 50.68 31/12/2013 3 Public Finance Capacity Building 14/01/2013 1 450 000 0.00 0.00 31/10/2014 4 General Livestock Census 02/12/2010 587 245 236 827.00 40.33 31/12/2013 5 Capacity Building in Extractive and Oil Industries 14/01/2013 1 350 000 0.00 0.00 31/10/2014 6 Cholera Emergency Aid 19/04/2012 630 517 630 517 100.00 30/06/2013 Sub-Total Institution and Capacity Building 5 157 088 1 507 213 29.23

Overall Total 138 220 419 58 862 513 42.59

On-going Bank Portfolio in Niger as at 30/06/2013

Approval Loan/Grant Disbursement Project Closing Date Date Amount Rate Tibiri-Dakoro and Madaoua Bouza Roads Project 19/12/2005 30/09/2013 22 000 000.00 66.08 Sub-Total Infrastructure - OITC 22 000 000.00 66.08

Niger- PPCR pilot Programme 24/09/2012 01/06/2014 6 170 353.72 0 Niger- PPCR pilot Programme 24/09/2012 01/06/2014 2 272 288.21 0 PPCR-Niger PROMOVARE Project 25/09/2012 01/10/2016 8 118 886.48 0 PPCR-Niger PROMOVARE Project 25/09/2012 01/10/2016 6 170 353.72 0 Maradi, Tahoua and Zinder Mobilization Project 20/09/2011 31/12/2016 9 340 000.00 3.5 Maradi, Tahoua and Zinder Mobilization Project 20/09/2011 31/12/2016 21 433 860.30 0 Tillabéry, Diffa Region Water Mobilization Project 05/10/2006 31/12/2012 13 000 000.00

KANDADJI Programme Phase I 29/10/2008 31/12/2015 20 000 000.00 12.58 KANDADJI Programme Phase I 29/10/2008 31/12/2015 20 000 000.00 15.71 Sub-Total Agriculture - OSAN 106 506 742.43 12.97

DWSS Project in 3 regions 21/02/2007 30/11/2012 10 351 947.98

DWSS Project in 3 regions 21/02/2007 30/11/2012 3 000 000.00

RDWSS Project Phase II 20/09/2011 31/12/2015 16 000 000.00

RDWSS Project Phase II 20/09/2011 31/12/2015 3 300 956.45

Sub-Total Water and Sanitation –OWAS 33 320 617.69 37.92

Education and Vocational Training Development Support 15/12/2012 31/12/2016 17 630 000.00

Education and Vocational Training Development Support 15/12/2012 31/12/2016 7 870 000.00

Sub-Total Social – OSHD 25 500 000.00 0.95

Domestic Resource Mobilization Support Project 26/01/2012 31/12/2016 10 000 000

Inclusive Growth and Food Security Enhancement Support Project 14/11/2012 31/12/2014 21 560 000.00

Total 230 038 240.12 18.8

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APPENDIX III

Key Related Projects Financed by the Bank and other Partners in Chad

Cost (in CFAF No. Project Description Source of Financing million Net of Taxes) 1 Sarh/Kyabe Road Asphalting Project EDF 55,229

2 Koumra/Sarh Road Asphalting Project ADF 56,170

3 Massakory/Ngouri Road Asphalting Project IDB 55,393

Key Related Projects Financed by other Partners in Niger

Cost (in CFAF No. Project Description Source of Financing million Net of Taxes) 1 Development of access roads to the 2nd Bridge in Niamey China 6,000

2 Rehabilitation of the Dosso-Bella II Road EDF 27,350

3 Bella-Gaya Road BIDC/WADB/OFID 26,965 4 Tibiri-Dakoro and Madaoua-Bouza-Tahoua Road ADF/WADB 32,658 5 Niamey-Namaro-Farié Road WADB 18,519 6 Gouré-Djajiri Road BADEA 2,500 7 Tahoua-Filingue Road WADB /BIDC 37,257 8 Tahoua-Arlit Road AREVA 173,000

9 Implementation of the Programme to build 273 km of Feeder Roads EDF 9,352

10 Paved Roads Programme – EDF-10 EDF 54,583

11 Transport Sector Programme Support Project IDA 13,500

12 Renewal of CPTP Equipment Algeria 2,115

13 Rehabilitation of Roads EDF-11 EDF 87,489

14 Establishment of 22 new Toll Gates EDF 6,700

15 Say-Tapoa Road IDB 14,528

16 Baléyara-Filingue Road Rehabilitation EDF 11,500

17 Kelle-Goure and Kollo-Kirtachi Road IDA 33,257

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APPENDIX IV Map of the Project Area

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ANNEXES KEY ARGUMENTS IN SUPPORT OF THE REPORT A.1. DETAILED PROJECT COST ESTIMATE

Amount PROJECT COMPONENTS Amount (UA) (CFAF) A. ROAD WORKS 229 347.99 302.88

1. Chad: Development and asphalting of the 330 km-long Ngouri/Bol/Baga-Sola/Rig-Rig/Daboua/ Niger Border road, 146 819.78 193.89 including refreshment areas and environmental safeguards 2. Niger: Development and asphalting of the 225 km-long Arlit/Assamakka/ Algeria Border road, including refreshment 43 796.09 57.84 areas, environmental safeguards and 2 km-long secondary roads 3. Niger: Construction of the 543 km Farié bridge, including 3 km-long access roads 24 002.79 31.70 4. Algeria: Development and asphalting of the 10 km-long Customs Post/ Niger Border road 3 000.00 3.96 5. Chad: Monitoring and supervision of road works 7 340.99 9.69 6. Niger: Monitoring and supervision of road works 2 600.70 3.43 7. Niger: Monitoring and supervision of construction works on the Farié Bridge 1 200.14 1.58 8. Algeria: Monitoring and supervision of road works 150.00 0.20 9. Chad: Road safety, HIV/AIDS and environmental protection awareness 175.00 0.23 10. Niger: Road safety, HIV/AIDS and environmental protection awareness 262.50 0.35 B. RELATED WORKS 5 848.50 7.72

1. Chad: Rehabilitation of 100 km of feeder roads to open up agricultural production areas 2 000.00 2.64 2. Chad: Rehabilitation of social infrastructure in Liwa and Daboua (schools, health centres, water points, loading docks 2 145.00 2.83 for livestock) 3. Chad: Monitoring and supervision of related works 207.25 0.27 4. Niger: Related works on roads (water points, loading docks for livestock, etc.) 1 195.00 1.58 5. Niger: Related works on the Farié Bridge 230.00 0.30 6. Niger: Monitoring and supervision of related works in Farié 11.50 0.02 7. Niger: Monitoring and supervision of related works on the road 59.75 0.08 C. TRANSPORT AND TRANSIT FACILITATION 10 500.00 13.87

1. Construction of an equipped juxtaposed checkpoint at the Algeria/Niger border, including a weighing station 5 000.00 6.60 2. Monitoring and supervision of construction works on the Juxtaposed Checkpoint (JCP) at the Algeria/Niger border 250.00 0.33 3. Construction of an equipped juxtaposed checkpoint at the Niger/Chad border, including a weighing station 5 000.00 6.60 4. Monitoring and supervision of construction works on the Juxtaposed Checkpoint (JCP) at the Niger/Chad border 250.00 0.33 D. INSTITUTION BUILDING AND STUDIES 2 734.37 3.61

1. Chad: Institution building of the National Freight Office (BNF) in the collection and processing of freight data 136.20 0.18

2. Chad: Feasibility study on lake transport and the establishment of a direct land connection to Nigeria 1 000.00 1.32 3. Niger: Technical assistance for the establishment of a management policy on access corridors and review of bilateral 223.00 0.29 road transport agreements 4. Niger: Support for the modernization of the Transportation Data Bank (BDT) 500.00 0.66 5. Niger: Formulation of the National Road Safety Strategy (SNSR) 200.00 0.26 6. Niger: Analysis of the performance of the logistics chain between the Port of Algiers, Niamey and N'Djamena, 216.00 0.29 together with the development of an action plan 7. Niger: Feasibility study on the Trans-Saharan Backbone (DTS) for the Algeria/Niger/Chad/Nigeria fibre optics 459.17 0.61 E. PROJECT MANAGEMENT & MONITORING 1 700.04 2.25

1. Financial and accounting audit of the project in Niger and Chad 175.00 0.23 2. Technical and road safety audit in Niger and Chad 120.00 0.16 3. Monitoring-evaluation of the socio-economic impacts of the project in Niger and Chad 324.44 0.43 4. Niger: Technical assistance to the Executing Agency for keeping the project’s accounts 180.00 0.24 5. Niger: Functioning of the Project's Executing Agency and Joint Technical Committee (JTC) 507.80 0.67 6. Chad: Functioning of the Project's Executing Agency and Joint Technical Committee (JTC) 392.80 0.52 F. CLEARANCE OF RIGHT-OF-WAY 399.00 0.53

BASE COST 250 560.70 330.90 Provision for Physical Contingencies 24 525.90 32.39 Provision for Price Escalation 13 712.33 18.11 TOTAL COST 288 798.93 381,40

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A.2. ARRANGEMENTS RELATING TO THE PROCUREMENT OF GOODS AND SERVICES FINANCED BY THE ADF IN CHAD

Total ADF-12 Procurement Type of Procurement Amount ADF-12 Loan Remarks Grant Method (UA Million) 1. GOODS

2. WORKS

Includes road works, recreational areas, related Development and asphalting of road including related works and the works, environmental protection measures and the 2.1 205.97 [18.10] [12.77] ICB juxtaposed checkpoint at Chad/Niger border juxtaposed checkpoint at the Chad / Niger border. Works are broken down into 4 lots. 3. SERVICES 3.1 Monitoring and supervision of road works and related works 8.24 [2.95] Short List (SL) SBQC 3.2 Road safety awareness activities 0.23 [0.23] SL NGO only Institution building of the National Freight Office (BNF) in the collection 3.3 0.18 [0.18] SL SBQC and processing of freight data Feasibility study on lake transport and the establishment of a direct land 3.4 1.32 [1.32] SL SBQC connection to Nigeria 3.5 Financial and accounting audit of the project 0.10 [0.10] SL SMC 3.6 Technical audit of the project 0.05 [0.05] SL Individual Consultant 3.7 Road safety audit 0.03 [0.03] SL Individual Consultant Direct 3.8 Monitoring-evaluation of the socio-economic impacts of the project 0.25 [0.25] INSEED Negotiation Legend: The amounts in brackets [ ] are financed with ADF resources.

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A.3. ARRANGEMENTS RELATING TO THE PROCUREMENT OF GOODS AND SERVICES FINANCED BY THE ADF IN NIGER

Total ADF-12 ADF Grant Procurement Type of Procurement Amount ADF-12 Remarks Loan Cancellation Method (UA Million) 1. GOODS 1.1 Procurement of six vehicles for the Project's Executing Agency 0.198 [0.198] NCB Shopping for 1.2 Procurement of office furniture 0.007 [0.007] Contractors (SC) 1.3 Procurement of IT equipment 0.01 [0.01] SC 1.4 Procurement of accounting software 0.03 [0.03] SC 2. WORKS

Includes road works, recreational areas, related works, and environmental protection measures. 2.1 Development and asphalting of road including related works on the road 59.30 [30.38] ICB Works are broken down into 2 lots, given that lot 2 is financed by the ADF Includes the construction of the bridge, access roads, 2.2 Construction of the Farié Bridge and related works 32.00 [16.21] [15.46] [0.33] ICB related works and environmental protection measures 3. SERVICES

Monitoring and supervision of construction works on the road and related 3.1 3.51 [1.52] Short List (SL) SBQC road works Monitoring and supervision of construction works on the bridge and 3.2 1.60 [1.60] SL SBQC related works in Farié Technical assistance for the establishment of a management policy on 3.3 0.29 [0.29] SL SBQC access corridors and review of bilateral road transport agreements 3.4 Support for the modernization of the Transportation Data Bank (BDT) 0.66 [0.66] SL SBQC 3.5 Formulation of the National Road Safety Strategy (SNSR) 0.26 [0.26] SL SBQC Analysis of the performance of the logistics chain between the Port of 3.6 Algiers, Niamey and N'Djamena, together with the development of an 0.29 [0.29] SL SBQC action plan 3.7 Financial and accounting audit of the project 0.13 [0.05] SL SMC Technical assistance to the Executing Agency for keeping the project’s 0.24 [0.24] 3.8 SL Individual Consultant accounts 3.9 Technical audit of the project 0.05 [0.05] SL Individual Consultant 3.10 Road safety audit 0.03 [0.03] SL Individual Consultant Direct 3.11 Monitoring-evaluation of the socio-economic impacts of the project 0.18 [0.18] INS Negotiation Road safety, HIV/AIDS and environmental protection awareness activities 3.12 0.35 [0.35] SL NGO only on the road and in Farié Feasibility study on the Trans-Saharan Backbone (DTS) for the 3.13 0.61 [0.61] SL SBQC Algeria/Niger/Chad/Nigeria fibre optics Legend: The amounts in brackets [ ] are financed with ADF resource

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A.4. PROJECT FINANCIAL MANAGEMENT

Niger:

The current financial management system at the Directorate General for Major Projects (DGGT) of the Ministry of Equipment (MEQ) was appraised in June 2013 in accordance with the Bank's methodology. The objective is to determine whether: (i) the project's Executing Agency has the acceptable and appropriate financial management capacity to ensure the judicious, efficient and economical use of project funds; (ii) project financial reports will be prepared in an accurate, reliable and timely manner; and (iii) project assets will be saved and accounts audited within the agreed timeframe.

It is clear from such review that the financial management system in place is not appropriate for the financial management of the project due to the lack of human and material resources necessary for proper accounting and financial management, particularly the lack of an accountant with adequate qualifications and experience, suitable accounting software, and a procedures manual. Under these circumstances, the overall fiduciary risk is considered “high”. However, the risk can be reduced to “substantial” through the timely implementation of the measures contained in the table below:

Financial Management Action Plan Actions Responsibility Maturity Prepare an administrative, accounting and

financial procedures manual acceptable to the Prior to first disbursement. DRA/MEQ Bank in all significant aspects. Recruit, at the local level, a Project Administrative Not later than three (3) months after and Financial Officer (AFO) with qualifications DRA/MEQ the first disbursement. and experience satisfactory to the Bank. Appoint a project accountant from among the civil servants (DGGT, if possible) with minimum requisite qualifications in accounting to support the AFO, who will build his/her capacity with a DRA/MEQ Prior to first disbursement. view to ensuring the sustainability of achievements for the management of future projects. Establish a computerized accounting and financial management system comprising the procurement Not later than six (6) months after the of computers and accounting software, software DRA/MEQ first disbursement. configuration and the training of staff on the said software. Agree on the formats and frequency of the DRA/BAD At negotiation financial monitoring report. Agree on the TOR of the External Auditor. MEQ/AfDB/IDB At negotiation Recruit the external auditor to ensure that annual Not later than six (6) months after audit reports are prepared and submitted to the DRA Project effectiveness Bank in a timely manner. Include, in the Work Programme for 2014 of the Field the first mission six months CC or IGF or IG of ME, the review of project MEQ/MF/CC after the first disbursement. activities and field at least one mission / half year. The actions and deadlines indicated above are commitments and obligations for the Borrower.

The DGGT/MEQ is the project management and coordination organ, and is responsible for its financial, accounting and administrative management. This is the same directorate which, through a Management Unit, is currently in charge of managing the Tibri-Dakoro, Madaoua-Bouza-Tahoa Road Construction Project financed by the Bank. Under the TSH project, DGGT will be supported by: (i) the Arlit/Assamakka Project Management Unit (PMU) comprising a civil engineer, Head of Unit, a senior technician and support staff; (ii) the Farié Bridge Management Unit, which will also comprise an engineer and a technician; and (iii) administrative and financial management staff, a monitoring/evaluation expert and an environmentalist. Such staff should be appointed from among the civil servants of the MEQ. Given the lack of qualified accounting professionals within the MEQ, the Administrative, Accounting and Financial Officer (AFO) will be recruited through a competitive process at the local level. He/she will be assisted by an accountant appointed from among the civil - 8 -

servants of the supervisory ministry. The DGGT will prepare a procedures manual acceptable to the Bank in all significant respects and have it adopted prior to project implementation. A multi-project accounting software will be procured at project start-up on ADF resources to enable the establishment of an appropriate computerized accounting and financial management system - not later than six (6) months after the first disbursement. The IDB will finance part of the operating budget of the project, given that the balance will be paid by the national counterpart contribution.

The DGGT manages several projects funded by bilateral financial partners. It currently manages the Tibri-Dakoro, Madaoua-Bouza-Tahoa road construction project. It will use this experience to better implement the TSH Project activities. The weaknesses ensuing from this experience concern mainly the quality of financial information and its production deadlines, owing to the lack of suitably qualified financial management personnel. Project account audits are produced with many delays with respect to requisite timeframes. For instance, the audit for fiscal year ending 31 December 2012 has not yet been undertaken. The conduct of such audit shall be a condition precedent to the first disbursement of the project under review.

The accounting software currently used at DGGT does not allow for the simultaneous management of multiple projects, and the procedures manual is specific to the Tibri-Dakoro Project. Under the management of the TSH Project, the DGGT will procure, with ADF resources, appropriate software for the concurrent management of several projects with multiple funding sources and recruit, at the local level, an Administrative and Financial Officer (AFO) with a view to offsetting the inadequacy of relevant skilled human resources at the MEQ. The procedures manual should be updated to incorporate new aspects of management induced by the advent of the TSH Project.

For the moment, the performance of the State's internal audit system is unsatisfactory. During the five years of implementation of the Tibri-Dakoro, Madaoua-Bouza-Tahoa Project financed by the Bank, no internal control mission of State supervisory bodies was conducted. Under the TSH Project, the mission recommends the establishment of a programme for internal audit missions (at least one per half year) of one of the State services empowered to conduct audits, in particular the General Inspectorate of MEQ, the Court of Auditors or the General Inspectorate of Finance. The reports of these missions will be sent to the Bank and kept in the project’s archives for purposes of information needed by external auditors.

The external audit of the TSH Project accounts in Niger will be conducted by an external auditor acceptable to the Bank. An external audit report, together with a letter to management, will be submitted to the Bank within six months after the end of each fiscal year. However, the first audit will cover the first 18 months of the project where the first disbursement was made in the second half of the first disbursement. This same principle applies to the last audit of the project, if the closing date is within the first six (6) months of the said fiscal year. The cost of the audit will be borne by the project.

Only the direct payment method is retained for ADF disbursements. Financing by the IDB and possibly the Government will cover the financing needs of the project management component. To achieve this, the DGGT will open a special account in local currency (CFA Franc) with a bank to receive funds exclusively from the IDB. Under this project, counterpart funds from the State will be disbursed only through the direct payment method.

There is still substantial inherent risk. Hence, the project will be subject to two on-site supervision missions per year. This frequency and the risk related to the overall financial management of the project, including the risk of non-control, will be reviewed immediately after effectiveness. Supervision missions will endeavour that the entire system remains operational throughout the project duration. They will include visits to sites, offsite reviews and building the capacity of the project’s accounting and financial staff.

Chad:

The financial management system in place at the Project Monitoring and Coordination Unit (PMCU) of the Ministry of Infrastructure and Transport (MIT) was assessed in May 2013 in N’Djamena, in accordance with the Bank’s methodology adopted by ORPF.0 in June 2010 in its kit on “Financial Management of Projects funded by the African Development Bank.” Furthermore, the appraisal was

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enriched by the lessons learned from the implementation, by the CPSC, of two road projects financed by the Bank. The objective is to ensure that project resources are used effectively and efficiently, and solely for their intended purposes.

This appraisal revealed that the financial management system in place at the PMCU is not sufficiently appropriate, owing mainly to the lack of an administrative, accounting and financial procedures manual and accounting software for project financial management. The overall fiduciary risk is deemed substantial. The mitigation measures proposed below should ensure that financial management arrangements in place for the project will be sufficient to provide timely, accurate and reliable information, and allow the preservation of project assets and the conduct of accounts audit within the agreed timeframe.

Financial Management Action Plan Actions Responsibility Maturity Update the procedures manual to make it more comprehensive, PMCU Prior to first disbursement incorporating the management (Resources are provided for in the context, by PMCU, of several projects 2013 budget of the PMCU). financed by various partners and acceptable to the Bank. Procure and configure the multi- Not later than three (3) months project accounting software, and train PMCU after the first disbursement. staff on the said software. Implement a comprehensive, Not later than six (6) months after computerized financial management PMCU the first disbursement. system for project activities. Open a special account (FR/BDEAC) PMCU Prior to first disbursement Agree on the formats and frequency of MIT/ PMCU /Bank At negotiation the financial monitoring report. Agree on the TOR of the External MIT/ PMCU /Bank/BDEAC At negotiation Auditor. Recruit the external auditor to ensure PMCU that annual audit reports are prepared Not later than six (6) months after and submitted to the Bank in a timely Project effectiveness. manner. Provide funding for the PMCU after Prior to the date of the last the end of 2015, the date of the last MIT/Bank disbursement of IDA funding. disbursement of IDA funding. Chang the TOR of the internal auditor Not later than six (6) months after and the internal audit charter to PMCU the first disbursement. incorporate aspects of Bank financing. The actions and deadlines indicated above are commitments and obligations for the Borrower.

The PMCU/MIT is the project Executing Agency and is in charge of financial management. It scored satisfactory results in implementing transport facilitation projects along the Douala-N'Djamena corridor and the Koumra-Sarh Road Construction Project financed by the Bank. Institutional anchoring is also suitable for the project, given that it is within the ministry in charge of the project and interacts with specialized services of the said Ministry to implement its activities. It has a fiduciary team comprising a chief accountant, an accountant, an internal auditor and a procurement officer. The latter position was vacant at the time of the mission. The procurement officer will be recruited in the course of 2013 through a competitive process on the local market, similar to that of aforementioned colleagues who have been in place for several years and are familiar with the Bank's financial management procedures. Fees and staff bonuses are provided for under IDA financing and the operating budget of the PMCU. The project will provide additional funding.

However, weaknesses were identified in the course of managing the above-mentioned road projects. These include significant delays in the audit firm’s recruitment process, which did not allow the timely submission of annual audit reports. These delays were eliminated and the project was able to submit the final report due in fiscal 2012 on time. It was also noted that owing to the lack of appropriate accounting software, the accounts of Bank-financed projects were maintained on Excel. The PMCU

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procedures manual was not adapted to the context of managing multiple projects with several different partners. To meet the requirements of financial management that complies with the requisite minimum standards, the PMCU will need to update its administrative, accounting and financial procedures manual and procure software that will take into account the context of the Unit’s management of several projects funded by several financial partners.

The scope of monitoring activities of the internal auditor of PMCU will be expanded to include financing aspects of the Bank and other donors involved in funding the Chad component of the TSH Project. In addition to its daily activities, the Internal Auditor will conduct at least one appraisal per quarter of the current control system, culminating in an internal audit report to be approved by the Project Coordinator and submitted to the Bank. The implementation of these appraisal recommendations should be monitored through an action plan matrix with timelines and specific activities as well as parties responsible for undertaking such tasks. The implementation status of recommendations of internal and external audits will be included in the internal auditor's report.

The external audit of the Chad component of the Algeria Niger-Chad TSH Project will be conducted by an external auditor acceptable to the Bank. An external audit report with a letter to Management will be submitted to the Bank within six months following the end of each fiscal year. However, the first audit report will cover the first 18 months of the project where the first disbursement was made in the second half of the year of the first disbursement. This same principle applies to the last audit of the project, if the closing date is within the first six (6) months of the said fiscal year. The cost of the audit will be borne by the project.

Only the direct payment method is retained for ADF disbursements. Funding from BDAEC and possibly the Government covers the financing needs of the project management component, which requires the special account method. To achieve this, the PMCU will open a special account in local currency (CFA Franc) with a bank to receive funds exclusively from BDEAC. Under this project, the counterpart funds from the State will be disbursed exclusively through the direct payment method.

A.5. DETAILED PROJECT ECONOMIC ANALYSIS.

The works concern three road sections of a total length of 565 km, including 10 km in Algeria, 225 km in Niger (including the ramp leading to Arlit) and 330 km in Chad. Given the low volume of work to be performed on Algerian territory, the economic appraisal of the project was conducted only on the Niger and Chad sections. To ascertain the economic performance of the project, the entire section was divided into five homogeneous traffic sections as follows: Arlit/Assamakka in Niger; Ngouri/Bol, Bol/Baga- Sola, Baga-Sola/Rig-Rig and Rig-Rig/Daboua/Niger Border in Chad.

Weighing checks carried out in Chad show that 26% of trucks have at least one axle exceeding the maximum load of 13 tonnes, which severely contributes to rapid road deterioration. In Niger, only 4.31% of the trucks were controlled for overloading. Counting campaigns were organized in Chad in 2010 and Niger in 2006. Given the impossibility of carrying out fresh counting campaigns in 2012, due to security risk in northern Niger, the data collected in 2006 were extrapolated for 2013, based on normal circumstances. The estimated data lead to an AADT (annual average daily traffic) per section summarized in the table below:

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Overal Length Pickup 2-Axle 3-Axle Sections Studied PV Bus l Total % HV in km Truck Truck Truck Articul Arlit/Assamakka (Niger) 223 9 16 3 7 20 7 62 54.9 Ngouri/Bol (Chad) 99 48 95 0 7 6 4 160 10.4 Bol/Baga-Sola (Chad) 58 32 51 0 7 6 6 102 18.6 Baga-Sola/Rig-Rig (Chad) 80 24 18 0 4 4 2 51 18.6 Rig-Rig/Niger Border 93 7 6 0 2 1 1 18 26.7 (Chad)

The extrapolated AADT on the Arlit/Assamakka section is consistent with the counts made in 2013 by DGR in Algeria, in Tamanrasset (5000 veh/day, 60% of which are HVs (Heavy Vehicles)) and at In Guezamm (200 veh/day, 55% of which are HVs). It is obvious that a substantial portion of this traffic, especially at In Guezamm, is heading for the Arlit region in Niger.

The road is expected to be commissioned starting 2017, given that works would be executed over the period 2014-2016.

At commissioning, account was taken of traffic induced in Niger that will account for 15% of normal traffic for LV (Light Vehicle) and HVs. Furthermore, account was taken of a diverted traffic that corresponds to the transportation of 135,300 tons of freight and an additional mining traffic of 13 vehicles per day, mostly trucks, in light of on-going mining projects in the region and relevant information provided by AREVA. The annual growth rates used for normal traffic are 5% and 6% for LVs and HVs. With respect to induced traffic and additional mining traffic, the annual growth rate stands at 3% for all categories of vehicles.

In Chad, the induced traffic was estimated at 35% of normal traffic for light vehicles and 25% for HVs. Furthermore, account was taken of a diverted traffic of LV on the Ngouri /Bol section, given that other sections are open. In addition, international traffic was considered in relation to the prospect of opening the country to ports on the West African coast and the Mediterranean fringe. The annual growth rates used for normal traffic stand at 5.5% for LVs and 5% for HVs. With respect to induced traffic and international traffic, the annual growth rate stands at 3% for all categories of vehicles. Traffic estimated at the road commissioning in 2017 will be as follows:

Overal Length Pickup 2-Axle 3-Axle Sections Studied PV Bus l Total % HV in km Truck Truck Truck Articul Arlit/Assamakka (Niger) 223 12 22 4 9 28 41 116 67.1 Ngouri/Bol (Chad) C 88 168 38 11 18 33 357 17.5 Bol/Baga-Sola (Chad) 58 55 87 26 11 18 36 234 28.2 Baga-Sola/Rig-Rig (Chad) 80 41 30 18 6 15 31 140 36.4 Rig-Rig/Niger Border 93 12 10 10 4 11 29 76 57.4 (Chad)

The first economic benefit of the project is the reduction of vehicle operating costs (VOC). According to the HDM IV model, the VOC was calculated for six categories of new vehicles in the “with and without” project situation over a period of 20 years from the year of commissioning. VOC gains are economic benefits. The project will also result in travel time gains for users and better access to production areas and /or flow of goods. Thus, in the Chadian section, agricultural and agro-pastoral surplus was taken into account, in light of benefits from the opening of the project area at the completion of works and the high probability of increase in agricultural production or in the selling price of livestock.

The economic cost of investment is the cost at constant prices, net of taxes. They are spread over the period 2014-2016. The residual value of investment after twenty (20) years is limited to 20% due to heavy vehicle traffic forecast and subsequent structural damage, in the absence of regular maintenance.

The road maintenance policy implemented in Niger under the current situation (“without project”) recommends annual routine maintenance, the cost of which stands at CFAF 0.4 million/km (for earth roads) and regular maintenance performed every 5 years, at the cost of CFAF 60 million/km. In the “situation with project”, the road maintenance policy provides for routine annual maintenance in the - 12 -

amount of CFAF 1.2 million/km, given the age and quality of the pavement structure. Routine maintenance will be performed every 7 years, at the cost of CFAF 90 million/km. Such routine maintenance will involve resuming the two-layer surface coating over the entire width of the road, including shoulders and restoring sanitation facilities. The table below shows the VOC with and without the project:

Parameters Vehicle Operating Cost in 2017 Before and After the Project in CFAF per Veh/km Private 2-Axle 3-Axle Overall LV HV Minibus Bus Total Avr. Vehicle Truck Truck Arti. Avr. Avr. VOC Without the Project (in 302 404 507 541 1 039 1 265 4 059 677 404 945 2017) VOC With the Project (in 182 203 263 290 539 654 2 132 355 216 494 2017)

The road maintenance policy implemented in Chad under the current situation (“without project”) recommends annual routine maintenance, the cost of which stands at CFAF 3 million/km (for earth roads) and regular maintenance performed every 5 years, at the cost of CFAF 20 million/km. In the “situation with project”, the road maintenance policy provides for routine annual maintenance in the amount of CFAF 3.7 million/km, given the age and quality of the pavement structure. Routine maintenance will be performed every 15 years, at the cost of CFAF 80 million/km. Such routine maintenance will involve resuming the two-layer surface coating over the entire width of the road, including shoulders and restoring sanitation facilities. The table below shows the VOC “with and without project”.

Parameters Operating Cost in 2017 Before and Vehicle After Project in CFAF per Veh/km Private 2-Axle 3-Axle Overall LV HV Minibus Bus Total Avr. Vehicle Truck Truck Arti. Avr. Avr. VOC Without the Project (in 544 727 913 974 1 871 2 278 7 307 1 218 728 1708 2017) VOC With the Project (in 366 402 423 1 196 1 259 1 326 4 972 829 397 1261 2017)

The economic benefits derived from project implementation during the period of analysis (2017-2036) entail the following ERR and NPV by road section.

Economic Arlit/Assamakka Ngouri/Bol Bol/Baga-Sola Baga-Sola/Rig-Rig Rig-Rig/Daboua Parameters Entire Project (Niger) (Chad) (Chad) (Chad) (Chad) Analysed ERR 14.9% 19.8% 17.0% 12.2% 12.1% 15.3% NPV in 7 357 25 895 9 033 571 216 43 072 CFAF million ERR Sensitivity Test (10% 12.0% 16.9% 14.3% 10.0% 9.8% 12.7% variation in costs and benefits)

A.6. RATIONALE FOR REDUCING NIGER’S COUNTERPART CONTRIBUTION

Niger's eligibility for 100% financing on ADF resources is justified since it is compliant with the Bank's policy on eligible expenditure with respect to the three essential criteria mentioned below (Arrangement 4.2.2 of the Bank Group's Policy on Eligible Expenditure: ADB/BD/2007/106/Rev.1, revised version of 19 March 2008).

1. The country's commitment to implement its development programme

It is worth noting that the Government's development programme is based on the Economic and Social Development Plan (PDES) for 2012-2015, which remains the sole baseline framework for investment planning. The PDES vision is based on building an emerging country, undergirded by a dynamic, diversified and sustainable economy harmoniously distributed on the national territory. Its objective is to promote the economic, social and cultural welfare of the Nigerien population. - 13 -

Five strategic pillars have been identified to meet the challenges and issues of economic and social development, as follows: (i) consolidation of the credibility and effectiveness of public institutions; (ii) sustainability conditions for balanced and inclusive development; (iii) food security and sustainable agricultural development; (iv) a competitive and diversified economy for accelerated and inclusive growth; and (v) promotion of social development. These strategic pillars are complementary and interdependent. They form a coherent whole whose implementation will allow Niger to achieve the expected objectives and outcomes.

The Bank's country strategy in preparation will be aligned with PDES that the Government has undertaken to implement. Such commitment was reasserted to development partners at the International Roundtable on Financing PDES that the Government organized in May 2012 in Paris. During the roundtable, the Government committed to fund approximately 72.1% of the cost of implementing the PDES on internal resources and the Bank, like other FTPs, reaffirmed its commitment to support Government efforts in this direction.

2. Funds allocated by the country to sectors targeted by Bank assistance

The Nigerien Government's transport sector policy has undergone massive changes through the adoption, in June 2012, of the National Transport Strategy (NTS) for 2011-2025. Indeed, it came to replace the NTS 2005-2010, which concerned only the road sub-sector. The new strategy therefore affirms the multimodal and multi-sector perspective of government policy on transport. However, the road sub-sector remains dominant, given that road transport accounts for 95% of the country's overall transport demand, and investments in this sub-sector monopolize 74% of the total cost of the NTS. In addition, the road sub-sector also receives almost all the funding mobilized by donors, thereby highlighting the phenomenal interest taken therein.

3. The country’s budgetary position and debt level

At the end of 2010, Niger's public debt level was low: the total public debt (domestic and external) accounted for about 19.8% of GDP. This resulted from debt relief under the HIPC Initiative and the MDRI Initiative enjoyed by Niger in 2004 and 2006. In addition, since then, Niger had also implemented a prudent management of its debt under the aegis of various economic and financial programmes, especially those agreed with the IMF. In addition, a comprehensive inventory of domestic debt drawn up by the authorities and the signing, in July 2010, of an agreement with the BCEAO on the repayment of bank loans had improved the State’s financial situation. However, since 2011, public debt has increased. The debt sustainability analysis revealed a deterioration of ratios, with the risk of over- indebtedness moved from “low” to “moderate.” The stock of external debt rose from 17.4% of GDP in 2010 to 25.8% of GDP in 2011 and 27.1% in 2012. This is due to the State-provided guarantee to loans granted to the oil refinery (SORAZ) and the contraction of a loan to finance the State’s participation in the Imouraren uranium mine. As a result, Niger upgraded from the status of essentially a loan country over the period 2011-2012 of ADF-12 to a loan and grant country over year 2013. It is recommended that Niger resort to concessional financing and implement a prudent debt policy. Despite the favourable medium-term economic outlook with a growth trend of 6% or even 7%, the budgetary constraint will remain strong due to the impact of the Malian crisis on public finances. Indeed, as a result of the Malian crisis and threats from extremist groups along the other borders (Nigeria, Libya), the security and defence budget almost doubled in 2012. This trend is expected to continue in 2013 and the next few years at the expense of certain types of expenditure.

In this context, it is recommended that the counterpart funds expected from the Government of Niger for the projects be minimized, particularly in the case of this road project. The use of national resources only translates the desire of ownership by the authorities.

Sub-section 5.1.1 of the Policy further states that the Bank will use the Country Financing Parameters (CFPs) already developed for 38 countries by the World Bank.

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