Document of The World Bank
FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No: 53285-MZ
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 33 MILLION (USD$ 50 MILLION EQUIVALENT)
TO THE
REPUBLIC OF MOZAMBIQUE
FOR A
MAPUTO MUNICIPAL DEVELOPMENT PROGRAM II (MMDP II)
Public Disclosure Authorized September 2, 2010
Water and Urban Unit Country Department AFCS2 Africa Region
Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of July 31, 2010)
Currency Unit = New Meticais (Mtn) 34.00 Mtn = US$1 US$1.51 = SDR 1
FISCAL YEAR January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AAP Africa Action Plan APL Adaptable Program Lending CAS Country Assistance Strategy CC Consultative Councils CMM Maputo Municipal Council (Conselho Municipal de Maputo) DA Procurement Department (Departamento de Aquisições) DEP Department of Studies and Projects (Departamento de Estudos e Projectos) DGA Environmental Management Department (Departamento de Gestão Ambiental) DIA Department for Environmental Inspection (Departamento de Inspecção Ambiental) DMF Municipal Finance Directorate (Direcção Municipal de Finanças) DMI Municipal Directorate of Infrastructure (Direcção Municipal de Infra-estruturas) DMPUA Urban Planning and Environment Directorate (Direcção Municipal de Planeamento Urbano e Ambiente) DNAIA National Directorate of Environmental Impact Assessment (Direcção Nacional de Avaliação de Impacto Ambiental) DPFP Decentralized Planning and Finance Program DUATs Rights of Use and Access to Land (Direito de Uso e Aproveitamento da Terra) EDM Power Supply of Mozambique (Electricidade de Moçambique) EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return ESMF Environmental and Social Management Framework IFR Interim Financial Report GDEI Office of Strategic and Institutional Development (Gabinete de Desenvolvimento Estratégico e Institucional) GDP Gross Domestic Product GIS Geographic Information System GOM Government of Mozambique GTZ German Development Cooperation (Cooperação Alemã para o Desenvolvimento) HDM Highway Design and Maintenance Standards Model IEC Information, Education and Communication IDA International Development Association IGF Inspector General for Finance IT Information Technology i
LAA Land Acquisition Assessment LOLE Law on Local Organs of State (Lei dos Órgãos Locais do Estado) IFAD International Fund for Agricultural Development IFR Interim Financial Reports IPA Head or Pool Tax (Imposto Pessoal Autárquico) IPRA Property Tax (Imposto Predial Autárquico) IRR Internal Rate of Return KPI Key Performance Indicators MAE Ministry of State Administration (Ministério de Administração Estatal) MDG Millennium Development Goals MDP Municipal Development Program MICOA Ministry of Environmental Coordination MMDP Maputo Municipal Development Program MTEF Medium-Term Expenditure Framework MTN Mozambique currency (New Meticais) NGOs Non-Governmental Organizations NPV Net Present Value PARPA Poverty Reduction Action Plan (Plano de Acção de Redução da Pobreza Absoluta) PIU Project Implementation Unit PPIAF Public-Private Infrastructure Advisory Facility PPP Public Private Partnership PROL Program for the Reform of Local Public Administration RAP Resettlement Action Plan RPF Resettlement Policy Framework SIGEF Integrated Financial Management Information System (IFMIS) (Sistema Integrado de Gestão Financeira) SIGRH Human Resource Management System (Sistema Integrado de Gestão de Recursos Humanos) SISTAFE Government Financial System (Sistema de Administração Financeira do Estado) SWM Solid Waste Management SSA Sub-Saharan Africa TAE Fee on Economic Activity (Taxa por Actividade Económica)
Vice President: Obiageli K. Ezekwesili Acting Country Director: Olivier Godron Sector Director: Jamal Saghir Sector Manager: Junaid K. Ahmad Task Team Leader: Uri Raich
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MOZAMBIQUE Maputo Municipal Development Program II (ProMaputo II)
CONTENTS
Page
I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A. Country and sector issues...... 1 B. Rationale for Bank involvement ...... 6 C. Higher level objectives to which the project contributes ...... 8
II. PROJECT DESCRIPTION ...... 9 A. Lending Instrument ...... 9 B. Program Objective and Phases...... 9 C. Project Development Objective and Key Indicators ...... 11 D. Project Components ...... 11 E. Lessons Learned and Reflected in the Project Design ...... 15 F. Alternatives considered and reasons for rejection ...... 16
III. IMPLEMENTATION ...... 17 A. Partnership arrangements ...... 17 B. Institutional and implementation arrangements ...... 18 C. Monitoring and evaluation of outcomes/results ...... 18 D. Sustainability...... 19 E. Critical risks and possible controversial aspects ...... 20 F. Loan/credit conditions and covenants ...... 22
IV. APPRAISAL SUMMARY ...... 24 A. Economic and financial analyses ...... 24 B. Technical ...... 25 C. Fiduciary ...... 25 D. Social...... 27 E. Environment ...... 28 F. Safeguard policies ...... 29 G. Policy Exceptions and Readiness...... 30
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Annex 1: Country and Sector or Program Background ...... 32
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 39
Annex 3: Results Framework and Monitoring ...... 41
Annex 4: Detailed Project Description ...... 46
Annex 5: Project Costs ...... 60
Annex 6: Implementation Arrangements ...... 64
Annex 7: Financial Management and Disbursement Arrangements ...... 67
Annex 8: Procurement Arrangements ...... 85
Annex 9: Economic and Financial Analysis ...... 96
Annex 10: Safeguard Policy Issues ...... 112
Annex 11: Project Preparation and Supervision ...... 128
Annex 12: Documents in the Project File ...... 129
Annex 13: Statement of Loans and Credits ...... 130
Annex 14: Country at a Glance ...... 131
Annex 15: Anti-corruption ...... 134
Annex 16: HIV/AIDS Work Plan ...... 136
Annex 17: Maputo’s Public Finances ...... 138
Annex 18: Letter of Sector Policy ...... 141
Annex 19: MAP ...... 159
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MOZAMBIQUE
MAPUTO MUNICIPAL DEVELOPMENT PROGRAM II (MMDP II)
PROJECT APPRAISAL DOCUMENT
AFRICA
AFTUW
Date: September 2, 2010 Team Leader: Uri Raich Acting Country Director: Olivier Godron Sectors: Sub-national government Sector Director: Jamal Saghir administration (100%) Sector Manager: Junaid K. Ahmad Themes: Decentralization (25%); Municipal governance and institution building (25%); Access to urban services and housing (25%); Municipal finance (25%) Project ID: P115217 Environmental category: B, Partial Assessment Lending Instrument: Adaptable Program Loan Joint IFC: Joint Level:
Project Financing Data [ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others: Total Bank financing (USD$m.): 50.00 Proposed terms: Standard IDA terms with a maturity of 40 years, including a grace period of 10 years Financing Plan (USD$m) Source Local Foreign Total RECIPIENT/BORROWER 10.0 5.0 15.0 IMPLEMENTING AGENCY 25.0 15.0 40.0 INTERNATIONAL DEVELOPMENT 31.0 19.0 50.0 ASSOCIATION Total: 66.0 39.0 105.0
Borrower: Republic of Mozambique
Implementing Agency: Maputo Municipal Council Pacos do Municipio-Praca da Independencia PO BOX 251 Maputo, Mozambique Fax: (258) 2132-15-01
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Estimated disbursements (Bank FY/USD$m) FY 2011 2012 2013 2014 2015 2016 Total Annual 3.1 12.5 15.3 10.7 5.3 3.1 50.0 Cumulative 3.1 15.6 30.9 41.6 46.9 50.0 Project implementation period: Start September 30, 2010 End: December 31, 2015 Expected effectiveness date: December 31, 2010 Expected closing date: December 31, 2015
Does the project depart from the CAS in content or other significant respects? [ ]Yes [ x ] No Ref. PAD I.C. Does the project require any exceptions from Bank policies? Ref. PAD IV.G. [ ]Yes [ x ] No Have these been approved by Bank management? [ ]Yes [ ] No Is approval for any policy exception sought from the Board? [ ]Yes [ x ] No Does the project include any critical risks rated “substantial” or “high”? [ x ]Yes [ ] No Ref. PAD III.E. Does the project meet the Regional criteria for readiness for implementation? [ x ]Yes [ ] No Ref. PAD IV.G.
Project development objective Ref. PAD II.C., Technical Annex 3 MMDP II: Improve the delivery and sustainability of priority municipal services in Maputo Municipality.
Project description Ref. PAD II.D., Technical Annex 4 Component A: Institutional Development seeks to strengthen municipal capacity to deliver services in response to citizen demand. The component will address two sorts of constraints: (a) limited technical and administrative capacity to carry out municipal functions; and (b) governance constraints which limit responsiveness and accountability by the municipality.
Component B: Financial Sustainability seeks to ensure the financial sustainability of the Maputo Municipal Council. It seeks to raise revenues and rationalize expenditures with the support of an integrated financial management system.
Component C: Urban Planning seeks to ensure the equitable and sustainable management of municipal land, mostly through improvements in land administration procedures, the establishment of a Geographic Information System, and modest neighborhood improvements.
Component D: Urban Infrastructure Investment and Maintenance seeks to ensure the construction and maintenance of key municipal transport and drainage infrastructure.
Component E: Metropolitan Development seeks to introduce a metropolitan approach for the improvement of selected municipal services. Key sectors identified include urban transport and solid waste management.
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Which safeguard policies are triggered, if any? Ref. PAD IV.F., Technical Annex 10
Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Significant, non-standard conditions, if any, for: Ref. PAD III.F. A. Loan/credit conditions and covenants
Board Presentation: None
Effectiveness Conditions
x The Subsidiary Agreement has been executed on behalf of the Recipient and the Project Implementing Entity, in form and substance satisfactory to the Association. x The Operational Manual has been issued and adopted by the Project Implementing Entity, and approved by the Association.
Covenants
x Not later than six (6) months after the Effective Date, the Recipient has approved a decree regulating property assessment in the Recipient’s territory, in form and substance satisfactory to the Association. x The Project Implementing Entity shall, not later than six (6) months after the Effective Date, approve an action plan for property tax implementation, in form and substance satisfactory to the Association. x The Project Implementing Entity shall: (a) not later than July 1, 2013 increase the Solid Waste Fee by at least 20% from its June 2010 value; and (b) not later than December 31, 2015 increase the Solid Waste Fee by at least 20% from its 2013 value. x Not later than three (3) months after the Effective Date, the Recipient shall cause the Project Implementing Entity to hire external auditors for the Project, under terms of reference satisfactory to the Association.
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I. STRATEGIC CONTEXT AND RATIONALE
A. Country and sector issues
1. Since the advent of economic reform in 1987, the end of a decade long civil war in 1992, and successful multi-party elections in 1994, Mozambique has demonstrated strong economic performance while working assiduously to meet the daunting challenges of poverty reduction. As in most of Africa, Mozambique’s urban population will soon constitute a majority: increasing from 36 percent in 2009 to a projected 60 percent by 2030, thus growing by nearly 12 million people. Urban services and economic opportunities are unlikely to keep pace with this near doubling of demand.
2. The Government of Mozambique’s first two Action Plans for the Reduction of Absolute Poverty (PARPA I and II, implemented from 2001-2005 and 2006-2010 respectively) barely mentioned urban issues. However, the Government’s current Five Year Plan and associated policies have explicitly recognized the importance of urban areas to national economic development, where service and industrial sectors generate over 70 percent of Gross Domestic Product (GDP), as well as to social development, since the challenges presented by urban poverty require profoundly different strategies than rural poverty reduction. Likewise, during the past twenty years, a relatively small share of foreign assistance to Mozambique has been directed toward improving urban governance and services, in deference to priority investments in normalizing rural life and commerce after the war. Aid allocation has also only recently begun to shift toward urban investments.
3. World Bank efforts are a notable exception to this trend. Urban operations have been a significant feature of the IDA portfolio since the Urban Rehabilitation Project became one of Mozambique’s first investment credits in 1987. Subsequent IDA credits supported the establishment of decentralization policies and the legal framework for municipalities under the Program for the Reform of Local Public Administration (PROL) (1994-1999) and the consolidation of first-generation urban municipalities under the Municipal Development Project (2003-2007). Since 2006, the focus of IDA-financed urban investment has been in Maputo, which is not only the seat of government, but it is also the gateway for investors, tourists and immigrants. Maputo contributes over 30 percent of the national Gross Domestic Product and has an estimated GDP per capita of US$1,457, compared to a National GDP per capita of US$332. However, it is also a city of extreme and growing inequality with approximately 70 percent of Maputo’s residents living in informal settlements and 49 percent living below the poverty line. In recognition of its importance, Phase I of the IDA-funded Maputo Municipal Development Program (MMDP) (P096332-IDA 42570) initiated broad and deep institutional and financial reforms which aim to demonstrate, in the country’s capital city, the potential of Mozambique’s local government framework to provide a foundation for sustainable decentralized governance and service provision in urban areas.
Key Challenges Faced by the Urban/Municipal Sector
4. Municipalities in Mozambique face a series of challenges, which also confront Maputo and the MMDP.
1
Municipal populations are mostly poor and experience high investments needs
5. Over half of Mozambique’s urban population can be considered poor using consumption- based indicators. While urban poverty is slightly less (52%) than in rural areas (55%) the difference is small and poverty has also fallen more rapidly in rural than urban areas due to post- war agricultural gains. According to the Country Economic Memorandum of 2005, by 2015, rural-urban migration will result in approximately 4.1 percent per annum growth in the urban working age population, while formal sector wage employment may increase at 1.5 percent per year, at best. This has been accompanied by a notable lack of investments in local infrastructure and service needs that has been worsening as urbanization increases. In Maputo, approximately 70 percent of the urban population is still living in informal settlements with insufficient services; 54 percent live below the poverty line. The low level of investment in urban areas over many years has reduced the quality and quantity of service delivery, especially in the maintenance of existing infrastructure. In Maputo, the coverage of some services has improved but it remains low with solid waste collection at 67 percent (from a low 25 percent), drainage (20-30 percent), road maintenance at about 15 percent of unpaved and 50 percent of paved roads, and cemeteries with an 80-85 percent exhumation rate. Private investors and citizens continue to express dissatisfaction with the existing levels of infrastructure and service delivery.
Municipal finances are weak and constrained by law
6. Total municipal spending per capita in Mozambique is less than 300Mtn or US$12 (in 2006) which is less than the average in Sub-Saharan Africa (SSA). Maputo’s municipal government expenditures of US$15 per capita is also low in comparison with other primary cities in the region like Addis Ababa, Dakar, Dar es Salaam and Kigali. Municipalities in Mozambique are dependent on the state for operating costs and on donors for capital investment. However, state transfers are very small, representing less than 1 percent of the national budget.1 Transfer are not only limited in size, but they do not yet form part of an integrated intergovernmental system that matches the revenue means and the expenditure needs of the different tiers of government. In addition, fiscal autonomy is limited and own-source revenues are as low as US$3 per capita per year in some municipalities. In Maputo, under MMDP I, own revenues were increased and the key performance indicator (KPI) was exceeded from a planned 120 percent increase over the baseline to 157 percent. However, the baseline was low and more substantive increases are needed. Recent changes to the municipal finance law and regulations create some space for new and/or enhanced revenue efforts which will be a major focus of MMDP II.2
1 In 2006, the total budget for all municipalities (excluding aid) was 1.1 billion Mtn, equivalent to US$46 million. 2 In January 2008 a new Municipal Finance Law (Law 1/08) was passed and the new Municipal Fiscal Code was approved in December 2008 (Decree 63/2008). While this legislation increases the potential of some municipal revenue sources, it also restricts others. There remain significant barriers and ambiguities (especially on property valuations) that are inhibiting their implementation and thus real improvements in municipal own revenue collections.
2 Municipal responsibilities are increasing
7. Local government legislation also provides for gradually increasing the responsibilities of municipalities, establishing a potentially asymmetric pattern of decentralization. Municipalities are responsible for the provision of basic urban services3 but both municipal and sectoral legislation are often unclear about specific roles in the provision of those services. Municipal competencies often overlap with those of deconcentrated state bodies and centrally-chartered agencies including utility companies. Recent regulations (Decree 33/2006) have initiated the transfer of additional responsibilities in basic education and health services and in the licensing and regulation of some small and medium enterprises. However, the details of accompanying fiscal and organizational arrangements are not yet clear. Maputo municipality is the first to receive these new competencies beginning in FY2010, but the extent and implications of the transfers are not yet known.
Municipalities are heterogeneous
8. Municipal boundaries in the larger cities typically circumscribe a mix of densely populated urban areas—both the core “cement-city” and informal (colonial-era “indigenous”) settlements—as well as lower density peri-urban settlements and rural space used primarily for self-built housing and agriculture. Municipalities encompass significant peripheries with agrarian village-like settlements and strong linkages to the rural economy. Maputo Municipality is even more heterogeneous and includes: a historic commercial core; luxurious and high-rise middle- class mixed-use neighborhoods; high density informal settlements; several industrial/commercial corridors; a wide crescent of peri-urban expansion zones; an agricultural greenbelt; agrarian Catembe across the bridgeless bay; and Inhaca Island 25 km from the continent.
Municipal organizational structures and human capacity are weak
9. Most municipalities in Mozambique retain the structure and personnel which they inherited from their predecessor “executive councils” which were subordinate administrative entities and not local governments. A structural mismatch persists between their capabilities and the complex governance and multi-sectoral service delivery demands by citizens at the municipal level. Municipalities are also constrained by a centralized political and administrative culture. Several municipalities, particularly those with development partner support, have started to reform their structures and procedures as well as to renew their staff. In Maputo, MMDP I supported comprehensive restructuring and MMDP II will continue the reform process with performance improvement of administrative processes and service delivery.
Conclusion: Municipalities have significant potential but are not yet capable to meet the challenges of urban development
10. Mozambique’s cities and towns are increasingly being seen as key for both economic growth and poverty reduction, through a combination of improved urban living conditions, a
3 Laws 2/97 and 01/08 delineate core municipal competencies as: urban development, construction, and housing; environment and basic sanitation; public utilities; cemeteries; parks, recreation, and sports; culture; municipal police; and refer generally to local economic and social development.
3 more competitive platform for investment by the private sector, and by increases in productivity gains. But in spite of a broadly enabling legal and political framework (albeit with some remaining ambiguities and constraints), the municipal councils which govern Mozambique’s urban areas do not have the institutional capacities needed for mobilizing and managing resources to sustainably provide adequate services to meet the social, environmental, and economic challenges they face.
11. In addition to the municipal constraints to coping with their massive investment needs for infrastructure and service delivery, there are also broader constraints imposed by Mozambique’s municipal laws and regulations and by the practices of the four tutelary ministries which regulate municipalities.4 These broader factors relate to the viability and sustainability of the municipal regime and are often not amenable to resolution at the project level. While MMDP focuses on the country’s capital city, broader planned interventions in other locations and at the central level will address some of the other problems in the sector. More specifically, the Bank will be engaging directly with Government on a future project to expand the city-level reform work to other municipalities, most likely in either strategic locations and/or cities with climate vulnerabilities. At a broader level, it will also be increasing its policy dialogue on the intergovernmental fiscal framework and sectoral decentralization. To complement the lending and policy dialogue approaches, a Municipal Revenue Study, co-financed by the Bank and the P13 Project, is being conducted, reflecting the Bank’s recognition of the importance of analytically grounded policy dialogue to improve the conditions of the urban sector in the country.
Transformational features of the proposed operation
Broad, medium-term vision of ProMaputo provides the strategic basis for the operation
12. MMDP I resulted from an ongoing dialogue during 2005-6 between the municipality of Maputo and the World Bank. The municipality initiated a broad stakeholder consultation process, supported by IDA, which produced a vision, mission, and 10-year development strategy and program (ProMaputo) for the City of Maputo. The vision of Maputo is for “a prosperous, attractive, clean, secure, and united city.” ProMaputo provided both the basis for the prior municipal administration’s strategic and operational plans and underpinned the conception of MMDP as a two-phase Adaptable Program Loan (APL). It was also assumed by the succeeding municipal administration, elected in late 2008, as the basis for their five year program. As such, the ProMaputo vision and strategy continue to guide MMDP II. This durable strategy has provided a basis for policy and continuity despite changes in political leadership, and has also proved sufficiently flexible to accommodate evolving political priorities.
Institutional and financial reforms as the basis for sustainability
13. Based on the ProMaputo strategy, MMDP I focused on significant initial investments in institutional and financial reform and capacity building. To strengthen incentives for reform, resources for improvements to selected priority municipal services were also provided in order to
4 These are the Ministries of State Administration (MAE), Finance (MINFIN), Planning and Development (MPD), and Environmental Coordination (MICOA)
4 generate benefits visible to both external and internal stakeholders. Solid waste collection and road maintenance were selected as primary targets for reform and service improvement based on the Citizens Report Card. Crosscutting constraints to sustained service improvement were also addressed by the modernization of human resources and financial management, enabling greater efficiency, transparency, and legal compliance of municipal administration. To institutionalize these improvements, qualified personnel were recruited for critical departments and organizational structures were modified to align staffing with priority functions. Expenditure controls were strengthened and procedures for the collection of taxes and fees were simplified and made more transparent in order to strengthen the municipality’s resource base.
Mainstreaming of implementation mechanisms in municipal structures
14. Because MMDP was seen by the Maputo Municipal Council (CMM) as a means for implementing ProMaputo and not merely as a short-term investment project, establishing the project’s implementation mechanisms was conceived as part of the municipality’s institutional development process. Rather than creating a Project Implementation Unit (PIU) to manage IDA- financed inputs, project management functions have been integrated into appropriate line units within the CMM, an approach increasingly common in Bank-financed projects in Mozambique. Project funds and procurement activities were managed by the Finance Directorate. Technical assistance, in the form of external advisors, was provided within municipal departments and was tasked to transfer know-how as well as complete required procedures. An Office of Strategic and Institutional Development (GDEI) was established and staffed to coordinate planning, monitoring, and reporting, not only for MMDP but also for the municipality’s broader program including ProMaputo. These mainstreamed arrangements will be continued during MMDP II and external technical assistance gradually reduced to promote sustainability.
Practice of innovative arrangements for service delivery and focus on operation and maintenance, not only funding for capital investment
15. MMDP I introduced significant changes in how CMM manages municipal services and operations. Improved policy and planning, separated from the management of routine functions, has created opportunities for new arrangements at the operational level. The solid waste sector is the most notable example. Private contractors, ranging from large firms to microenterprises, are integrated with municipal employees and community actors in a single system which mobilizes equipment, manpower, technical and management expertise, and beneficiary participation in support of a single system for refuse collection, removal, and disposal. Solid waste fees have gradually been increased to progressively cover the costs of solid waste collection by private operators initially co-financed by the IDA credit. Other public private partnerships (PPP) have been implemented for the management and maintenance of municipal parks and gardening, parking lots, and public sanitary facilities. For the first time maintenance protocols, plans, and budgets have been established for municipal buildings, vehicles, and information infrastructure in the context of a Medium-Term Expenditure Framework (MTEF).
16. MMDP II will build upon these achievements to further promote innovation in the provision of services and sustainable operation and maintenance of municipal facilities. Options will be identified, assessed, and when viable, developed to increase service coverage and
5 efficiency through greater autonomy and cost-recovery by municipal managers. Options will also be developed to enable greater involvement of private firms as contractors, concessionaires, and equity partners in the development and operation of municipal facilities. The demands of these innovative arrangements will require continued technical assistance for their conception, implementation, and monitoring. Municipal leaders will be supported to more effectively fulfill their core governance responsibilities and more effectively manage complex service delivery arrangements. The five years available for implementation of MMDP II allows sufficient time for consolidation of new service delivery arrangements, along with associated monitoring and management systems, and for their integration into the CMM’s routines.
B. Rationale for Bank involvement
17. The World Bank is uniquely positioned to invest in projects such as MMDP that require a long-term, intensive approach to multi-faceted institutional development in order to lay the foundation for large-scale investments in service delivery and infrastructure. These projects are difficult for bilateral donors to support due to their resource limitations and time constraints on their country program commitments. They are also difficult for governments to finance not only due to their high costs and reliance on contracted experts, but also given their limited territorial focus and strong emphasis on capacity development.
18. Although based in Maputo, MMDP I has had positive externalities in other municipal support projects in Mozambique that have emulated its strategic and comprehensive approach. For example, the P13 Cities Project, funded by the Danish, Swiss, and Austrian Development Agencies in central and northern Mozambique, includes capacity building, urban planning, and revenue reforms inspired by ProMaputo and the MMDP. In addition, the Government and municipalities are presently calling for MMDP-type support to be rolled out to all cities as a national program. It is clear that while challenges persist, municipalities have improved their credibility among both the public and private sectors. However, the World Bank is the main development partner which has provided continuous support to the capital city over the past six years, and as such, its continued role in MMDP II is critical.
19. The most compelling rationale for the continuing World Bank support for the MMDP are the accomplishments of the first Phase of Adaptable Program Lending (APL), which has been successful in improving Maputo’s institutional and financial systems and in demonstrating the ability of the city to improve targeted services (e.g. solid waste collection and road maintenance). The project rating of the MMDP I is currently satisfactory.
Compliance with Triggers to Move to the Next Phase of the Program
20. Implementation of MMDP I has been successful and most triggers have already been met. MMDP I has five triggers, three corresponding to outcome Key Performance Indicators (KPIs), and two of the four corresponding to component KPIs.5 The five triggers are: (a)
5 There are two other results indicators that are not triggers, as only two out of four results indicators were required. These other two KPIs are also progressing well. Capital spending during the program has improved significantly and the expenditure indicator is about to be met. Also, CMM has conducted annual citizen report cards and disseminated
6 percentage nominal increase in own-source revenues; (b) amount of solid waste deposited in the waste dump; (c) an Integrated Financial Management System in use and fully functional as designed; (d) additional km of unpaved roads in good condition per year; and (e) the percentage of Organizational Units with the new staffing table defined and existing personnel redeployed. Three, out of the five triggers have been fully accomplished at this time. Two triggers are not fully met at this point and they remain relevant for the continuation of the program. However, one is substantially accomplished and will be fully met in the next two months after negotiations, and the other is partially accomplished and it is expected to be fully met during the last year of MMDP I. Periodic monitoring meetings and progress reviews have and will continue to take place to ensure the full compliance of these two triggers.
21. The three triggers that have been fully accomplished are: (a) percentage nominal increase in own-source revenues; (b) amount of solid waste deposited in the waste dump; and (c) additional km of unpaved roads in good condition per year. On the financial side, CMM has managed to surpass the expected increase in own-source revenues by almost 30 percent, not only by taxing more properties but also by adjusting the fees for certain services, and most significantly by introducing a new and incremental solid waste fee. On the physical investment side, the two triggers have been met and even surpassed (solid waste, by 25 tons, and road maintenance, by 60 km), illustrating CMM’s capacity to undertake capital investments and to achieve complex service delivery improvements. Institutional reforms are always challenging and the trigger in this area (percentage of Organizational Units with the new staffing table defined and existing personnel redeployed) was very ambitious. However, CMM has already completed 70 percent of the extensive organizational reform of the municipality that sought to “put the right people in the right place.” All twenty-six organizational units of CMM have had work processes redesigned and their staff assessed for redeployment in new organizational structures. Staff redeployment plans for the final eight units are ready for CMM approval; their implementation is expected to be complete within two months. Monthly monitoring reports and meetings provide IDA with current status of the restructuring process.
22. Of all the triggers, only one has seen delays: the development and implementation of an Integrated Financial Management System (IFMIS/SIGEF). This is due to both the complexity of implementing such a system at the municipal level and because of procurement-related delays, including a lack of reliable suppliers from Portuguese-speaking countries. MMDP I was extended for one year largely to provide enough time for more significant progress by this activity. Both the CMM and IDA teams have jointly and very closely monitored the supplier. Progress has been made during the last year and the core budget execution, payments, reconciliations, and reporting modules have been designed. They will be tested between August and September and become functional in November of 2010. The remaining functionalities, including the revenue module, will be designed and implemented during the first semester of 2011. As such, the expectation is that all functionalities of the SIGEF will be implemented during MMDP I. MMDP II, however, will provide additional resources to ensure the full implementation of the system, including extensive training and support of municipal personnel in system use during the first year.
their results to the public which has proved useful both to improve accountability and as a planning tool. The 2009/2010 report card is underway.
7 23. In conclusion, although the SIGEF is not fully implemented at this stage, this does not represent a threat to the successful implementation of MMDP II. The overall progress made under MMDP I is such that MMDP II can be envisaged at this time of implementation. In addition, since MMDP II is the natural continuation of MMDP I, it is key that it starts at this stage in order to follow-up on the activities carried out under MMDP I. For all of the above and in compliance with the provisions of paragraph 16 of the Bank's Guidance Note on Adaptable Program Loans, the proposed project is being presented for Board rather than RVP approval.
C. Higher level objectives to which the project contributes
24. The proposed project will contribute to the achievement of higher level objectives of the World Bank, Government of Mozambique, and Millennium Development Goals (MDG). The Country Partnership Strategy (CPS) of 2007 (FY08-11) focuses on promoting shared growth through empowerment of citizens and institutions and has three strategic pillars aligned with the Poverty Reduction Strategy Paper (PRSP) (“PARPA II”). Those are: (i) Accountability and Public Voice (PARPA Governance Pillar); (ii) Equitable Access to Key Services (PARPA Human Development Pillar); and (iii) Broad-based Economic Growth (PARPA Economic Development Pillar). MMDP I and II contribute directly or indirectly to each of these objectives. The institutional reform component will contribute to the Governance Pillar by increasing municipal transparency and accountability and promoting participatory planning mechanisms which increase municipal responsiveness to citizen voice. The Human Development Pillar will benefit from MMDP contributions to improved basic services, especially sanitation and environmental management. Much of MMDP’s benefits will accrue under the CPS’s Economic Development Pillar, including improved transport and traffic flow, greater access to land tenure, improved licensing of construction and other small-scale economic activity, and the continuing development of public-private partnerships that engage private capital and management to improve urban services. With respect to the Bank’s Africa Action Plan (AAP), the project defines an outcome-based strategic framework built around the following principles: (i) Building capable states and improving governance; (ii) Strengthening the drivers of growth, including a vibrant private sector, infrastructure investment, and access to economic opportunity for the poor, among others; and (iii) Increasing the impact of partnerships among governments, donor countries, and development agencies.
25. The Government’s last Five Year Plan referred to the ongoing decentralization in the country as “one of the pillars of the process of modernization of the state”. The Plan sets as an objective consolidation of the municipalities. It also aims to improve access to land and housing by ensuring the approval of urban land use plans and to promote the effective coordination of institutions involved in urbanization and the provision of infrastructure. Soon after the new government took office in early 2010, the official emphasis was clearly on continuity in terms of the priorities set out in the previous government’s Five Year Plan and the PARPA II, with an additional emphasis by the new government on job creation and urban poverty. This new and increasing focus on reducing urban poverty relates directly to MMDP’s objectives and activities.
26. With respect to the MDGs, the project will contribute to the achievement of MDG Goal 1, reducing poverty by investing in Maputo’s slums and peri-urban areas where most of the poor live, and Goal 7, ensuring environmental sustainability through improving urban planning and
8 environmental management, neighborhood improvement/slum upgrading, and security of tenure. In terms of the climate change agenda, MMDP includes a strong emphasis on impact mitigation by improving drainage to limit damage from floods and reduce erosion. The project will also support various planning initiatives and slum upgrading activities in areas that may be more prone to climate change impacts.
II. PROJECT DESCRIPTION A. Lending Instrument
27. The proposed project is the second phase of an Adaptable Program Loan (APL) comprising a total IDA credit of $80 million ($30 million for MMDP I and $50 million for MMDP II). In addition to the IDA credit, MMDP II will be financed by funds from the central government (US$15 million) and CMM’s own contributions (US$40 million), for a total project cost of $105 million.
B. Program Objective and Phases
28. The long-term objective of the APL is to strengthen the capacity of the Maputo City Council (CMM) to finance, manage, and maintain urban services and infrastructure. MMDP I was comprised of three components: (A) Institutional Development and Municipal Governance; (B) Municipal Finance; and (C) Planning and Service Delivery Improvements. The proposed MMDP II continues to strengthen these activities and adds support to urban planning functions and metropolitan development. Thus, although MMDP II covers most of the same areas as MMDP I, the structure of MMDP II is slightly modified to facilitate implementation and monitoring, based upon lessons learned during MMDP I.
29. The proposed MMDP II is comprised of five components: (A) Institutional Development; (B) Financial Sustainability; (C) Urban Planning; (D) Urban Infrastructure Investments and Maintenance; and (E) Metropolitan Development. The design of MMDP II responds to three main issues: (i) sustainability of the municipality as a viable service provider by ensuring its institutional and financial capacities; (ii) the increasing demand to regularize and update informal settlements in peri-urban areas where most of the poor live; and (iii) the movement towards the formation of the metropolitan area of greater Maputo for certain services and to provide the basic tools to begin planning and subsequently manage these services at the metropolitan level.
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30. The following table presents the components of APL I and the achievements of the project as well as the proposed components of APL II, and the financial allocation of the IDA credit by component.
Table 1: Components of Project Phase I and Phase II
Phase I Phase II 2007-2010 2011-2015 Comp A US$6.2M Comp A US$8.2M Institutional x Restructure CMM Institutional x Organization Development Development Organization Development x Staff training and HR mgmnt x HR system organized x Intranet/Virtual Service Portal x Qualified staff hiring x Transparency of CMM plans x IT strategy/network devt and reports and Report Card x Equipment purchases x Anti-corruption actions x Report Card x District focus for planning and x Anti-corruption Strategy managing selected services x Deconcentration begun x Increased number and quality of x Participatory Budgeting PPPs x PPP program established Comp B US$6.7M Comp B US$3.8M Municipal x Expand the property tax Financial x Increased IPRA collection based Finance cadastre Sustainability on property reassessment x Revision of tax legislation and x Tax communication campaigns regulations x Full implementation of SIGEF x Development of an Integrated x Introduction of a Medium-Term Financial Management System Expenditure Framework x Strengthening of procurement x Consolidation of a single function procurement unit x Perform periodic audits Comp C1 US$3.7M Comp C US$11.9M Urban x Maputo structure plan Urban x Expanded coverage of local Planning x GIS/SIGEM begun Planning urban plans x Local urbanization plans x Land titling in peri-urban areas x Land titling system and x Informal settlements improved database Comp C2 US$9.2M Comp D US$11.7M Urban Infra- x Rehabilitation of Sebastiao Urban Infra- x Rehabilitation of J. Nyerere Ave structure Marcos Mabote Avenue structure x Secondary road and drainage x Secondary road improvements improvements x Unpaved road maintenance in x Increased peri-urban unpaved peri-urban areas road maintenance Comp C3 US$4.2M Comp E US$6.4M Solid Waste x Increase quantity of waste Metropolitan x Improve quality and coverage of collection Development waste collection x Sustainable cost recovery plan x Sustainable cost recovery of
10 Phase I Phase II 2007-2010 2011-2015 underway SWM services x Service extended into peri- x Prepare for closing of disposal urban areas site x Improved operation of waste x Transport and Transit Master disposal site Plan and selected investments Unallocated US$0 Unallocated US$8.0M
C. Project Development Objective and Key Indicators
31. The Project Development Objective (PDO) of MMDP II is to improve the delivery and sustainability of priority municipal services in Maputo Municipality. Improvements in service delivery will be measured by increases in coverage of the population with access to solid waste services, with formalized land tenure, and with benefits from road maintenance. The key PDO indicators are: (i) percent of cumulative annual real increase in revenue from property tax (IPRA) collections; (ii) annual coverage by priority municipal services (solid waste, land tenure, and access to all-seasons roads); (iii) mean user perception of quality of public services; and (iv) number of direct project beneficiaries, percentage of which are female.
D. Project Components
32. Being an APL, the selection of project components and activities for MMDP II continues to support mid- and long-term objectives identified during MMDP I. Specifically, MMDP II continues to support the institutional and financial reforms that required a medium-term approach. On the physical investment side, MMDP II components expand and extend coverage in the focus areas identified and prioritized at the start of the project, such as urban planning, infrastructure (roads and drainage), and service delivery (solid waste). The two new focus areas are: (i) modest investments in neighborhood improvement, including land titling, in peri-urban areas which represents a key policy priority of the new municipal administration; and (ii) the introduction of a metropolitan dimension for the planning and delivery of some services across the metropolitan region of Maputo.
33. Importantly, the selection of the components and activities derives from the fact that this project is not an independent intervention but has been conceived to support the municipality’s own medium- and long-term development program, ProMaputo. This may contribute to the apparent complexity of the project design, but this is mitigated by the fact that the project will finance just a few specific activities in some areas of intervention.
Strong synergy among components
34. Each of MMDP II’s components contributes to the achievement of the others. The institutional and financial components provide the two pillars for strengthening the municipality’s sustainable capacity to undertake its urban planning and service provision responsibilities with adequate quality, efficiency, and accountability. The urban planning component provides the territorial framework within which governance, tax and fee collection, infrastructure provision, environmental management, and service provision are prioritized and
11 implemented. Infrastructure improvement and maintenance underpins improved access to employment, public services, economic opportunities, adequate residential conditions, and socially important cultural activities. Metropolitan planning and coordination facilitate public and private sector linkages across jurisdictional boundaries as well as economies of scale in the provision of urban services. Thus, MMDP is conceived as a single integrated project in which better governance, administrative organization, and financial management support improved infrastructure and public service provision, guided by a coherent urban development strategy.
35. Annex 4 provides a detailed description of the project’s five components, which are summarized below.6
Component A: Institutional Development (cost US$12.4 million of which US$8.2 million IDA)
36. The objective of Component A is to strengthen municipal capacity to deliver services in response to citizen demand. The component will address two types of constraints, one resulting from limited technical and administrative capacity to carry out municipal functions, and the other from limited responsiveness and accountability, by improving planning and management capacity through human resource systems, information technology applications, and integrated monitoring of municipal resource flows, activity implementation, and achievement of results. Many of the component activities will continue and expand the efforts promoted under MMDP I.
A-1 Organizational and Human Resource Development
37. Activities of this subcomponent include: (a) the formulation of municipal policies and plans, the development and implementation of municipal systems, the facilitation of work processes and improved staff performance through the employment of organizational development methods, and monitoring and evaluation of municipal programs and activities; (b) training in, inter alia: communications, planning and municipal management, municipal finance, and other technical matters related to the provision of municipal services; (c) rehabilitation of municipal buildings and purchase of equipment to enhance the office space for municipal staff; (d) design and implementation of a networked computer system for CMM; (e) provision of maintenance services for municipal vehicles and networked computer systems; (f) development of monitoring policies and plans, provision of training, and communication support for municipal staff and their families living with HIV/AIDS; (g) financing of project operating costs; (h) recruitment of qualified administrative and technical staff for priority CMM’s departments; (i) acquisition of passenger vehicles for official use by CMM’s officials and staff; and (j) provision of goods and services to CMM’s staff living with HIV/AIDS, and to their respective families.
A-2 Governance Improvement
38. Activities of this subcomponent include: (a) carrying out municipal surveys, governance related campaigns, and campaigns to increase citizens’ access to municipal information and citizen participation in municipal affairs; (b) provision of technical assistance to CMM to enable
6 The sum of all IDA contributions per component does not add to the total IDA contribution as there is an unallocated amount of US$8 million. This is consistent with the budget tables presented in Annex 5.
12 a gradual deconcentration of selected planning, administration, and small municipal investment implementation functions, as well as basic service delivery to municipal districts; (c) small works to improve public infrastructure and services in municipal neighborhoods; (d) promotion of private sector investment and public-private partnerships for purposes of enhancing the delivery of municipal services; and (e) dissemination of CMM’s policies, plans, budgets, and implementation reports.
Component B: Financial Sustainability (cost US$4.6 million of which US$3.8 million IDA)
39. The objective of Component B is to ensure the financial sustainability of CMM. It seeks to raise revenues and rationalize expenditures with the support of an integrated financial management system. Key component activities build upon MMDP I results and will be implemented in three areas: enhancement of municipal revenues by increasing the collection of taxes and fees with emphasis on property taxation; improved financial management by completing the desgn and implementation of the Integrated Financial Management System (SIGEF) initiated during MMDP I; and comprehensive financial planning on the basis of a Medium-Term Expenditure Framework (MTEF) linked to CMM strategic plans and annual budget cycles.
40. Component activities include: (a) support for the expansion and updating of information in the municipal integrated multi-purpose cadastre; (b) update the value of properties within the municipal jurisdiction; (c) improve CMM’s billing and collection administration, enabling the participation of the private sector; (d) promote public information campaigns to increase municipal revenues; (e) develop strategies to update municipal tax regulations and to resolve tax related disputes; (f) design and implement the SIGEF; (g) strengthen CMM’s internal control mechanisms and facilitate the preparation of annual audits of all municipal accounts; and (h) consolidate CMM’s procurement units into a single department responsible for all municipal public procurement.
Component C: Urban Planning (cost US$15.2 million of which US$11.9 million IDA)
41. The objective of Component C is to ensure the equitable and sustainable management of municipal land. Activities will be clustered around two specific objectives, one dealing with urban land and environmental management and the other with neighborhood improvements.
42. Component activities include: (a) improvements on CMM’s land administration procedures, and formulation and dissemination of urban plans for land use, zoning, urbanization, and environmental management; (b) strengthening CMM’s implementation of its municipal geographic information system (SIGEM); (c) strengthening the regularization of land tenure and land registration in peri-urban areas to cover at least 30,800 newly recorded plots, including the development of pertinent methodologies and oversight mechanisms for plot demarcation and land registration; and (d) design and implementation of integrated methodologies for the improvement of informal settlements in high-density and spatially complex peri-urban neighborhoods, including integrated neighborhood plans, targeted improvements to local infrastructure, and services in support of the regularization of land tenure through a participatory, multi-sectoral approach.
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Component D. Urban Infrastructure Investment and Maintenance (cost US$38.1 million of which US$11.7 million IDA)
43. The objective of Component D is to ensure the construction and maintenance of key municipal transport and drainage infrastructure. Component activities include: (a) reconstruction of 9.4 km of the Avenue Julius Nyerere, destroyed by flooding in the year 2000, and which links the central city to important peri-urban residential and commercial areas; (b) rehabilitation of primary and secondary road networks in the city of Maputo, including new collector roads and extensions of existing roadways, and drainage structures; (c) design of plans and the inspection of the urban infrastructure works; (d) maintenance and repairs of unpaved roads and local drainage structures to enhance access to residential neighborhoods after degradation due to annual rains and road use; (e) conducting environmental and resettlement assessments and corresponding environmental and resettlement action plans in connection with the carrying out of the project; and (f) compensation for displaced persons in connection with the urban planning and infrastructure activities of the project.
Component E. Metropolitan Development (cost US$26.7 million of which US$6.4 million IDA)
44. The objective of Component E is to introduce a metropolitan approach for the improvement of selected municipal services. Urban transport has been selected as a critical priority for the next five years, with an emphasis on linking transport plans with land use plans and access to other key urban facilities and services. This component also builds upon significant MMDP I investments in solid waste management within the Maputo Municipality, which increasingly require upstream and downstream linkages across the metropolitan region for their sustainability.
E-1 Solid Waste Management
45. Subcomponent activities include: (a) improvements in CMM’s planning, operations, and monitoring of solid waste management; (b) financing of solid waste collection and disposal services for CMM through declining operating subsidies for contracted collection based on the MMDP I sustainability strategy already under implementation; (c) carrying out of education campaigns, events, and associated communication services in support of improved municipal sanitation and solid waste management; and (d) developing studies, plans, and projects to ensure the environmental sustainability of solid waste management in the Maputo metropolitan area.
E-2 Strategic Development of Metropolitan Services
46. Subcomponent activities include: (a) development of a master plan for transit and transport across the Maputo metropolitan area, and implementation of management improvement interventions and targeted investments in the municipality and across the Maputo metropolitan area; (b) establishment and consolidation of a municipal transport and transit directorate to be located in CMM; and (c) strengthening the administrative and technical capacities of CMM’s traffic control room.
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47. The specific activities to be fully or partially financed by IDA are those described on Schedule 1 of the Financing Agreement of this project. The financing of all program activities by source is presented in Annex 5 (Table 4).
E. Lessons Learned and Reflected in the Project Design
48. There have been four urban projects in Mozambique with World Bank financing to date: Urban Rehabilitation Project (PRU, 1988-1996), Program for the Reform of Local Public Administration (PROL, 1994-1999), the Municipal Development Project (MDP, 2003-2007) and the MMDP I (2006-2010). PROL and MDP contributed significantly to the establishment of the legal framework for local government in Mozambique and to the introduction of good municipal management practices such as fair, transparent procurement procedures and regular municipal audits. MMDP I was the first city specific project and provides a host of lessons for MMDP II. There are also numerous lessons from an emerging body of practice from World Bank projects in other primary cities in Africa, such as Kampala, Dar es Salaam and Dakar, among others.
Mainstreaming Project Management
49. In order to build sustainability in strategic, financial, and human resources, emerging good practice is to limit the use of ring-fenced project implementation units (PIUs) to instead rely on and strengthen existing management structures of implementing agencies. Consistent with the Bank’s approach to projects in Mozambique, this was the philosophy underpinning implementation for MMDP I. The Mayor and his executive team have been responsible for project preparation and implementation, supported by advisors financed from the credit. Municipal managers and staff undertake project-related activities as part of their functional responsibilities. The MMDP design ensured full ownership by municipal leaders, leading to a seamless transition from a “project” to becoming the basis for Maputo’s 10-year development program, plan and budget. However, it is recognized that external advisors are required for a considerable period to assist the municipality. This lesson has been fully taken into account in the design of the proposed MMDP II that will be mainstreamed into CMM’s institutional structures and procedures, with a phasing out strategy of TA towards the end of the project.
Organizational Change is a Slow and Difficult Process
50. Organizational change is a slow and difficult process that often meets significant resistance and therefore needs substantial commitment from senior management. A number of World Bank and development partner financed projects have shown that sustainability of project results is often limited because new roles and responsibilities have not been institutionalized but rather seen as additional work due to a project. To ensure a profound and successful change process, there needs to be constant investment in these change processes over a long period of time, including investment in “soft” skills and activities. This lesson has been fully taken into account in the design of both MMDP I and II that focus on mid- to long-term institutional and management reforms.
15 Land Use Management and Planning should be Priorities in Municipal Projects
51. Lessons from around the world demonstrate the importance of establishing proper land management and planning systems, as they are critical to establishing the conditions necessary to improve security of tenure, particularly in informal settlements. In Maputo, some initial important steps were taken (e.g. Master Plan and some partial plans) but considerable efforts will be needed under MMDP II to ensure improved security of tenure and more effective implementation of local planning laws and investments in services. This lesson has been taken into account in the design of the project’s urban planning component which will increase the coverage of spatial development planning and land titling.
Overcapitalization of Systems is a Risk in Low Capacity Contexts
52. There is a risk of overcapitalizing low capacity organizations with costly and complex information technology systems. The design (scale, scope, complexity) and timeframes for procurement and implementation of these systems are often ambitious within short-term projects. The case of MMDP I as well as IFMIS projects in Uganda and Tanzania suggest that simplified phased outputs and/or longer term project timelines may be required to accommodate these tensions. This lesson has been taken into account in the proposed MMDP II by expanding the period of implementation of the IFMIS and by focusing on the training and maintenance associated with the use of information technology systems.
Solid Waste Management
53. Lessons learned from experience, both in Maputo prior to MMDP and from other parts of the world, show that solid waste management requires a long-term sustainability strategy in order to achieve results. In many countries, the use of private or corporatized municipal service contractors has proved to be a viable model (e.g. Burkina Faso), provided that service contracts are well-developed. The MMDP experience shows that the financial model must be based on realistic assumptions of service delivery levels, capacity, willingness to pay, and a clear policy decision on the cost recovery schedule. Another key element of success has been Technical Assistance from other donors. The German Development Cooperation (GTZ) has been of key importance in MMDP, as it has been in other Bank financed projects like in Morocco and Ethiopia. These lessons have been taken into account in the design of the proposed MMDP II that will continue to finance solid waste management contracts on a declining basis until the municipality collects enough fees to cover the operation of the service with own resources.
F. Alternatives considered and reasons for rejection
54. MMDP was designed as a two-phase APL, of which MMDP II is the second phase. Since the project strategy remains relevant and MMDP I is progressing satisfactorily, there is no reason for changing this design. The rationale for an APL was twofold. First, MMDP is largely an institutional and financial reform project with some limited investment in MMDP I. Such reform projects, particularly starting from an extremely low base, are a long-term project and require engagement over a substantial period, preferably decades. Second, MMDP I limited infrastructure investment in the city despite the massive needs in order to put in place some basic
16 institutional foundations for good management and sustainability. A major incentive for the city to implement such reforms was the possibility of obtaining significantly more IDA funding for physical investments under MMDP II. Given the Mayor and Council’s political accountability for service delivery, MMDP I reforms were crucial but only a first step to being able to visibly deliver to their constituents. As such, a longer-term, two-phase APL was seen as the most effective instrument of engagement.
55. A further option was to include more than one large city in the APL Phase II. The project does not include additional cities since it was felt that the challenges and demands of Maputo were so extensive that resources were not available to work across various cities at once. Poverty in the Maputo City has also been pervasive. As a capital city, with enormous potential for growth and poverty reduction, it was decided that special effort is required to reverse this trend and minimize the risk of urbanization without growth. It was also important to reduce the complexity of project design.
III. IMPLEMENTATION A. Partnership arrangements
56. The preparation and implementation of MMDP has been complemented by projects supported by other donors (see Annex 2). It is important to note that aid coordination is directly managed by the mayor's office and regular coordination meetings are held with the CMM’s development partners. MMDP follows the guidelines of the Paris Declaration as its contributions are integrated with the City's annual budget, approved by the Municipal Assembly, and executed by the Municipal Finance Directorate. This transparency facilitates coordination with other sources of external assistance.
57. IDA financing during MMDP I was complemented by technical assistance and capital investments from several institutions including: GTZ for solid waste, the International Fund for Agricultural Development (IFAD) for markets, the Arab and African Development Banks, and the Spanish, Belgian, and Japanese Cooperation Agencies for diverse municipal infrastructure. MMDP I significantly increased the credibility and confidence of other partners in the CMM and helped to leverage the existing and future commitments. During preparation of MMDP II, a donor coordination meeting was called with more than 12 donors attending. At this point, the Government of Mozambique (GOM), through the Ministry of Planning and Development (MPD), has signed a Memorandum of Understanding (MOU) with the Korean Export-Import Bank that could serve as an umbrella for financing the design and construction of a new sanitary landfill for the Maputo Metropolitan Area. The MPD considers this a priority project and is committed to making the financing available. In addition, one of the first new complementary investments for MMDP II is the tripartite Brazil-Italy-Mozambique project, implemented in conjunction with Cities Alliance, for improvement of Maputo’s informal settlements (US$2.9 million). The neighborhood improvement activities supported by the urban planning component of MMDP II will take the lessons learned for the tripartite project.
17 B. Institutional and implementation arrangements
58. As during MMDP I, CMM will act as implementing agency for MMDP II. IDA will enter into: (i) a Financing Agreement with the Republic of Mozambique for which the representative is the Ministry of Planning and Development (MPD); and (ii) a Project Agreement with the CMM, as project implementing agency. There will be a Subsidiary Agreement between MPD and CMM. To facilitate the carrying out of the Project by the Project Implementing Entity, the Recipient shall make the proceeds of the Financing available to the Project Implementing Entity under the Subsidiary Agreement between the Recipient and the Project Implementing Entity, under terms and conditions satisfactory to the Association. CMM’s implementation rating of MMDP I is currently satisfactory.
59. Preparation of MMDP II has been led by the Office of Strategic and Institutional Development (GDEI), guided by the Program Implementation Team, a standing taskforce comprised of key Municipal Councilors, Directors, and advisors, overseen by the Council itself under the authority of the Mayor. Implementation arrangements for MMDP II will be retained from MMDP I: the GDEI will continue to undertake overall program planning, coordination, monitoring and reporting to meet the requirements specified in project agreements and detailed in the Operations Manual, while the Municipal Finance Directorate (DMF) will be responsible for procurement and financial management, as per CMM’s own procedures.
60. Financial management will be undertaken by the municipality's own DMF employing the integrated financial management system (SIGEF) developed during MMDP I. The procurement function will continue to be performed by a Procurement Department within the Finance Directorate staffed by municipal personnel supported by contracted procurement specialists. MMDP II audits will be included within the annual audits of the municipality's budget and accounts by external auditors.
61. MMDP activities are fully incorporated in the CMM’s annual plans and budgets which are approved by the Municipal Assembly and publicly disseminated. Each project-supported activity is the responsibility of a specific municipal directorate; there are no separate structures for project management outside the normal mechanisms employed by the CMM. Implementation reports, including quarterly Interim Financial Reports (IFR), will be prepared by the GDEI based on information provided by the line directorates and by the DMF regarding the status of procurement and disbursement.
C. Monitoring and evaluation of outcomes/results
62. The CMM’s own structures and processes will continue to be employed to monitor the activities, outputs, and outcomes of MMDP II. The GDEI will have direct responsibility to ensure that the project results matrix is being monitored; overall accountability for this function will rest with the Mayor himself. The line managers of each directorate will collect monitoring data relevant for MMDP II activities in their area and report these to the GDEI. Regular evaluations of municipal performance such as the Municipal Report Card will be conducted by independent consultants contracted by the municipality. The results of project monitoring and evaluation will be published along with information regarding procurement processes and CMM
18 contracts, the municipal budget execution and the results of the Municipal Report Card as part of the CMM communication strategy, and will be presented to the Stakeholders' Forums and the Municipality's Consultative Council. A full review of project performance and sustainability will be done in preparation for the Mid-Term Review, planned for year three of project implementation.
63. Baseline indicators are being collected through activities financed by MMDP I. Capacity to collect MMDP II monitoring data will be strengthened within the CMM itself, while independent consultants will be responsible for evaluation instruments. Monitoring and evaluation (M&E) costs will be covered under the credit. As part of the implementation of the SIGEF, the CMM plans to move towards activity-based budgeting, linking resources to specific governance, administrative, and service delivery outputs. This will enable gathering of information that will enhance decision making on project performance and cost-effectiveness across its range of investments and services.
D. Sustainability
64. Sustainability is a core objective of the MMDP. Both MMDP I and MMDP II emphasize the strengthening of institutional capacity for governance and management and the mobilization of municipal revenues sufficient to sustain municipal administration and service delivery. While MMDP I focused on building the blocks for efficient provision of municipal services, MMDP II focuses on ensuring the sustainability of those building blocks. During MMDP I, CMM increased coverage and quality of solid waste collection and disposal, improved standards for urban roads and drainage, introduced strategic planning and operational budgeting, as well as information technology-based systems for financial management, land use planning, and personnel administration. However, most of these functions and systems continue to depend on technical assistance and financial support from the IDA credit and other external sources. MMDP II investments in human, organizational, and financial capacity development will ensure their sustainability.
65. The institutional dimension of sustainability rests on greater human capacity. The CMM’s permanent staff includes almost four times as many qualified engineers, economists, urban planners, and technicians than at the beginning of MMDP I. These staff, by working alongside project-financed consultants and advisors, are increasingly assuming responsibility for the implementation, operation, and maintenance of the improved systems and facilities resulting from MMDP I capital investments.
66. The foundation for financial sustainability was also strengthened during MMDP I in order to significantly improve the CMM’s fiscal balance during MMDP II. Improved solid waste management, including collection by private firms contracted by CMM, is now financed by a dedicated sanitation fee. The Municipal Assembly has approved a financing policy associated with major improvements in solid waste management, and entails fee revenue increases of over 200 percent from the 2006 baseline. General revenue enhancement has also been the focus of MMDP investments: while administrative routines associated with several of the most significant taxes and fees have all been significantly improved, the principal emphasis has been on establishing the basis for large increases in property tax (IPRA) collection. The number of
19 properties in the IPRA cadastre with sufficient information to permit tax collection has been increased from 13,000 in 2006 to over 40,000 in 2010, with a focus on the highest value properties. Policy dialogue with the Ministry of Finance has also been undertaken to address legislative and procedural constraints to the reassessment of property values.
67. CMM’s political leadership has consistently expressed its commitment to institutional and financial sustainability as the key objective of MMDP. This commitment was demonstrated during the formulation of ProMaputo. The central government, particularly the Ministries of Finance, Planning and Development, State Administration, and Environmental Coordination have also expressed their support for MMDP’s sustainability strategy and objectives. Mozambican authorities have recognized that the viability of the entire local government system depends on demonstration of a balanced approach to municipal development which entails both service provision and revenue increases. As a result, sustainability indicators figure importantly in the MMDP II results framework, and capacity strengthening investments continue to constitute core activities in all MMDP II components.
E. Critical risks and possible controversial aspects
68. Thanks to the experience acquired during MMDP I, most potential foreseeable risks during MMDP II are limited, and as a result, the risk rating of the proposed operation is Moderate. The potential risks and mitigation measures are the following:
Table 2: Risks and Mitigation Measures
Risk Risk Rating Rating Risks Risk Mitigation Measures without with Mitigation Mitigation To project development objective Lack of central H x Policy dialogue to resolve specific constraints S government action on which limit municipal revenues policies supportive of x Letter of Sector Policy to be ready by municipal development, negotiations creates a venue for policy especially own-source commitments by central government revenues GOM and CMM not S x Monitoring of CMM and GOM financial M providing counterpart commitments and expenditures will employ funding on time and/or municipal budgeting and budget execution in its entirety mechanisms. The Municipal Assembly will ratify the project agreement and approve the annual municipal plans and budgets, which will include all project activities to be financed by CMM and GOM x Counterpart funding was provided on time during MMDP I. However, to prevent potential delays during MMDP II, the counterpart funding will be closely monitored through the IFRs, SIGEF, and annual audits
20 Risk Risk Rating Rating Risks Risk Mitigation Measures without with Mitigation Mitigation Lack of procurement S x Plan for strengthening procurement M and financial department approved and being implemented management capacity x New staff being appointed to budget and mainstreaming of execution and procurement departments in the project management context of organizational restructuring without a PIU creates x SIGEF should result in increased efficiency implementation delays and accuracy in financial management and disbursement x Advisors will be retained for procurement and finance during the first two years of MMDP II Limited capacity of S x CMM demonstrated ability to manage M CMM to manage social safeguards in an effective participatory and environmental manner during MMDP I safeguards x Environmental and social safeguard specialists will be contracted to do assessments and prepare mitigation plans x Ongoing training of CMM staff in social and environmental impact assessment and mitigation To component Results Weaknesses in S x Municipal Code of Conduct and Anti- M transparency and corruption Strategy approved and specific accountability limit directorate level Anti-corruption Plans to be improvements in implemented in MMDP II governance x Ongoing participatory governance mechanisms strengthen both transparency and accountability x Improved internal financial management and information systems x Commitment to disseminate procurement and contract information on the CMM website and conduct comprehensive audits of all CMM funds, not just those from IDA CMM is not able to H x Commitment by municipal political bodies, S mobilize adequate funds supported by central government authorities to meet its commitment to implement IPRA in Maputo to project budget or to x Program itself strengthens CMM capacity to sustain systems and collect taxes and fees, especially IPRA assets financed by x Communication activities support building MMDP awareness of links between taxes and service delivery x Policy dialogue with central government to ensure the municipality has full control over its tax instruments
21 Risk Risk Rating Rating Risks Risk Mitigation Measures without with Mitigation Mitigation Risk of corruption and H x Combination of disseminating territorial S lack of conflict planning and land regulations, anti-corruption resolution mechanisms measures, and improved system and plans for for land disputes leading DUATs will increase predictability and to slow and uneven transparency issuance of DUATs (land documents) Poor performance of M x Credibility of CMM among reputable N contractors may create contractors and CMM capacity for contract delays in negotiation and management were implementation of civil strengthened during MMDP I works Lack of coordination at S x Strong expression of support by central M the metropolitan level government for effective metropolitan coordination in key sectors x Continue dialogue with Maputo province and Matola Municipality regarding coordinated metropolitan planning and service provision Overall risk rating M Risk rating: High Risk (H); Substantial Risk (S); Moderate Risk (M); Low or Negligible Risk (N)
F. Loan/credit conditions and covenants
69. Board Presentation: None
70. Effectiveness Conditions x The Subsidiary Agreement has been executed on behalf of the Recipient and the Project Implementing Entity, in form and substance satisfactory to the Association. x The Operational Manual has been issued and adopted by the Project Implementing Entity, and approved by the Association.
71. Covenants x Not later than six (6) months after the Effective Date, the Recipient has approved a decree regulating property assessment in the Recipient’s territory, in form and substance satisfactory to the Association. x The Project Implementing Entity shall, not later than six (6) months after the Effective Date, approve an action plan for property tax implementation, in form and substance satisfactory to the Association. x The Project Implementing Entity shall: (a) not later than July 1, 2013 increase the Solid Waste Fee at least 20 percent from its June 2010 value; and (b) not later than December 31, 2015 increase the Solid Waste Fee at least 20 percent from its 2013 value.
22 x Not later than three (3) months after the Effective Date, the Recipient shall cause the Project Implementing Entity to hire external auditors for the Project, under terms of reference satisfactory to the Association.
23 IV. APPRAISAL SUMMARY A. Economic and financial analyses
72. An economic analysis was performed for the roads and maintenance investments of the Urban Infrastructure Component D. A financial analysis was conducted for the Financial Sustainability Component B and for the Solid Waste Management services subcomponent of Metropolitan Development Component E.
73. The Net Present Value (NPV) and Economic Internal Rate of Return (EIRR) were calculated for the reconstruction of a major avenue (J. Neyrere) in two segments: Praça Destacamento Feminino to Praça dos Combatentes, and from Praça dos Combatentes to Praça da Juventude. The total road extension is of 9.4 kilometers, 4.0 kilometers for the first segment and 5.4 kilometers for the second segment. Additionally, the analysis was performed on the rehabilitation of seven critical segments of the road network on the following Avenues: Guerra Popular, Karl Marx, 24 de Julho, Albert Luthuli, Marginal, Marien Nguoabi, and Eduardo Mondlane. As can be seen in the full economic analysis in Annex 9, a cost benefit analysis was conducted for these investments. Sensitivity analysis was carried out by: (i) increasing investment costs by 25 percent; (ii) reducing net benefits by 25 percent; and (iii) by combining both (i) and (ii). For the road investment as a whole, the base case has a NPV of US$24,035.5 million. The worst case scenario (iii) has a NPV of US$14,299.2 million. Both these results show that overall, the interventions have a robust return on investment.
74. A financial analysis was also prepared for the Financial Sustainability Component B. Two scenarios were calculated, one for the financial sustainability component costs and benefits alone and one for the costs of the whole project with the revenue increases of the component as the benefits. Based on the project costs and revenue projections, the analysis calculated an internal rate of return (IRR) of 79 percent, taking into account the costs of the financial sustainability component alone, and 3 percent if considering the full project costs with the revenue improvements as the benefits. These results support the viability of the investments in the financial sustainability component of the project.
75. A financial sustainability analysis of the Solid Waste Management services subcomponent of Component E was also conducted. During MMDP I, IDA contributed, with declining proportions, to the service contract costs to support the sustainability of the service. While fee revenues have been increasing, there is not yet total cost recovery. MMDP II will thus continue to support the goal of improved and sustainable coverage and quality through financial assistance for solid waste management (SWM) service contracts. The financial sustainability analysis of MMDP I expected full cost recovery by 2015. However, the construction of a new sanitary landfill 15 kilometers away from the city will increase the operational costs. As such, even if the landfill will not be financed under the project, it will have an impact on the SWM service costs. CMM is now expecting that the SWM system will be financially sustainable by 2017. Detail cost and revenue projections are presented in Annex 9.
24 B. Technical
Urban Planning
76. MMDP I financed important activities to strengthen the urban planning capacities of CMM. Notoriously, the City’s Structure Plan was elaborated and approved, enabling the subsequent elaboration of various urban plans. Other modern technologies are being developed such as Geographic Information Systems (GIS), aerial photography, single multi-purpose cadastre, and digital maps that are allowing CMM to improve its management of urban land. MMDP II will continue supporting these activities, plus new interventions in highly dense and unplanned areas. Experiences in other countries have shown very positive impacts in interventions in unplanned settlements that have resulted from notable improvements in the social methodologies and techniques used.
Urban Infrastructure and maintenance
77. The reconstruction of the Avenue Julius Nyerere will cover the distance between the Praça do Destacamento Feminino and the Praça dos Combatentes (4 km). The technical design was completed in the past and it is now being reviewed to reflect recent changes in topography. The project’s geometric design is innovative. The projected drainage interventions account for the conditions of the local terrain in order to minimize risks during the rainy season. The rehabilitation of urban roads will be focused on the roads with the most transit and on those with the greatest maintenance needs. Interventions in drainage are expected along the sides of the roads.
Metropolitan Development
78. The 10-year strategic plan for solid waste management (2008-2017), produced with the technical assistance of GTZ, foresees that in the next five years there will be need to build a new sanitary landfill in the adjacent municipality of Matola. Because of this, MMDP II will not only continue financing activities in this area, but will start discussions about the provision of the service in the whole metropolitan area with the municipal governments of Maputoand Matola, and the Province of Maputo. Transport is another sector that must follow a metropolitan logic, as an intense movement of people in the urban continuum spans various territorial jurisdictions. There is not yet a transportation master plan for the metropolitan area of Maputo. This situation prevents any long-term strategic decisions in the sector to be made. Thus the highest priority of MMDP II in this sector will be the elaboration of such plan for the whole metropolitan area of Maputo.
C. Fiduciary
Financial management
79. An assessment of the financial management arrangements of the project, took place at the Municipal Finance Directorate (Direcção Municipal de Finanças, DMF) of the Maputo Municipal Council in accordance with the Financial Management Manual for World Bank-
25 Financed Investment Operations dated March 1, 2010. Its objective was to determine whether the arrangements ensure: (i) that the project funds are used only for the intended purposes and in an efficient and economical way; (ii) the preparation of accurate, reliable, and timely periodic financial reports; and (iii) that the entities’ assets will be adequately safeguarded. The assessment of the project was favorably influenced by the fact that this is a follow-on to MMDP I and will, in the initial stages, make use of similar financial management (FM) arrangements. The findings of the assessment are documented in Annex 7.
80. The proposed financial management arrangements for the project were found to be satisfactory with a substantial residual FM risk rating. Fiduciary management of the project will continue to be the responsibility of the CMM’s DMF. Even though project management implementation experience and knowledge have been improving with time, the overall capacity of CMM is still weak. Such weaknesses will be mitigated through additional training of key FM staff and regular supervision. CMM has appointed a financial management controller that would have to be appropriately trained to get enough experience to manage the complexity of the project. To support the financial management controller, CMM will have a part-time Financial Management Specialist familiar with Bank procedures to help preparing the quarterly and annual financial management reports.
81. The audit report for the year ended December 31, 2009 was received within the stipulated date. It received a qualified opinion, due mostly to possible double posting of transactions resulting from auditors’ inability to perform audit functions on counterpart funds. The assessment took into account the above and proposed some mitigating measures to these and other identified risks as documented in Annex 7. The proposed FM arrangements meet the minimum requirements for financial management under OP/BP 10.02.
Procurement
82. Maputo Municipality created a dedicated procurement unit for the MMDP I, which was responsible for the implementation of the Bank-financed operation and the expenditure of all project funds, including contributions from the CMM and central government to the project. The Procurement Department (Departamento de Aquisições, DA) fell under the Directorate of Finance and was intended to increasingly undertake all procurement responsibilities for the municipality. Procurement for other municipal activities funded by their own budget continued to be undertaken by a mix of the new department and the various sector directorates.
83. While the DA has been resourced with international and local procurement consultants to support a permanent Director and staff funded by municipal own revenues, it has faced challenges with high staff turnover during the initial stages of MMDP I. The planned organizational development was secondary to managing the day to day procurement functions. Following a review, the Bank and CMM agreed on an action plan in 2009 to strengthen the capacity of CMM’s DA and provide it with adequate sustainability in the medium- and long- term. A qualified senior procurement specialist was recruited and has provided continued on- the-job training to CMM’s DA staff, as well as developing a plan to restructure the procurement function in the municipality as a whole, as originally foreseen by MMDP I. Furthermore, CMM
26 has agreed to streamline the procurement function within a single Department, through the merger of the existing units and functions. This process has already begun.
84. The CMM action plan on procurement has provided an opportunity to enhance the DA’s capacity to efficiently manage procurement and leverage the existing capacity. To ensure success and continuity of the unit restructuring and training efforts, the same procurement staffing arrangements of MMDPI will be used for MMDP II. A draft procurement plan was reviewed and finalized at negotiations.
85. The Bank has reviewed CMM DA’s current organization and capacity and the associated risk of carrying out procurement to meet Bank fiduciary requirements. The risk has been rated as Moderate.
D. Social
Participation and Accountability
86. The CMM employs a variety of formal and informal mechanisms for inclusion of municipal citizens in governing the city, including: (i) Statutory Accountability Mechanisms, including quarterly mayor’s reports to the Municipal Assembly and public access to the annual plan and budget; (ii) Consultative Councils (CC) that exist in the seven municipal districts; (iii) Grassroots Structures, that serve as links between both municipal and state authorities and the neighborhoods; (iv) Open Presidency, at least once a year; (v) Citizens Report Card on various areas of governance and service provision; (vi) Municipal Ombudsman (or Provedor) to channel citizen complaints; and (vii) Participatory Budgeting since 2007. Some of these mechanisms were supported during MMDP I and will continue to be supported during MMDP II.
HIV/AIDS Strategy
87. HIV/AIDS continues to pose a significant risk to the CMM’s human resources. Past and present municipal administrations have demonstrated their consistent commitment to address the HIV/AIDS pandemic institutionally through the definition and implementation of an HIV/AIDS Strategy, a Workplace Policy, and an Action Plan including promotion of prevention measures and provision of support services to municipal personnel and members of their families living with HIV/AIDS (See annex 16).
Social Safeguards
88. The Borrower updated and disclosed on May 11, 2010 the Resettlement Policy Framework (RPF) developed for MMDP I to ensure that a fully-budgeted Resettlement Action Plan (RAP) be prepared and appropriately implemented for any project activities that might involve the involuntary taking of land, thus leading to resettlement, loss of assets, or loss of income sources or means of livelihood. Component D (Urban Infrastructure) and Sub- Component C2 (Neighborhood Improvement) will finance some planned activities that will require a RAP to be prepared during project implementation. These may include: (i) reconstruction of a major urban street (Avenue Julius Nyerere); (ii) improvements of road
27 network and drainage structures; and (iii) improvements of informal settlements with modest targeted investments. Specifically, the social studies on the reconstruction of Avenue Julius Nyerere identified that this investment may cause the physical relocation of some people who had settled in the right-of-way (around 30 properties could be relocated). In addition to such physical displacement, loss of productive land parcels and/or livelihood might occur for some people who have encroached into the right-of-way, in some cases requiring appropriate compensation measures. A RAP along with an Environmental Impact Assessment (EIA) of the Avenue Julius Nyerere is scheduled to be completed on September 2010 before effectiveness. The reconstruction of the Avenue cannot start until the recommendations of the RAP are cleared by IDA and are fully implemented.
89. The upgrading of informal settlements under Sub-Component C2 will entail regularization, reorganization, and registration procedures in the neighborhoods. Some overcrowded areas may experience physical displacements, since modest civil works will be carried out, including road improvements, sanitary facilities, security lighting and drainage. The project will take a participatory approach, which may result in the voluntary reorganization of plot boundaries and possible voluntary resettlement for people who freely choose to relocate. Where negotiated solutions with residents are not possible, there will be changes in the location of plot boundaries and associated retaining structures, to avoid or minimize any forced displacement of households. Nonetheless, a specific RAP will be prepared if needed, and cleared by IDA prior to the implementation of any sub-project where the establishment of new boundaries would cause an involuntary loss of access to property or to sources of livelihood. In other respects, none of the potentially adverse social impacts associated with these reconstruction works are expected to be significant in scale, and all will be amenable to appropriate social and environmental mitigation measures.
E. Environment
90. Since environmental impacts are likely to arise from the proposed activities, the Borrower updated the Environmental and Social Management Framework (ESMF) developed for MMDP I in order to protect people and the bio-physical environment from negative impacts and minimize potential environmental damage. The updated ESMF was completed and publicly disclosed both within Mozambique on May 11, 2010 and through the Bank's InfoShop on April 29, 2010. The ESMF outlines the environmental criteria and procedures for sub-project screening, institutional arrangements, and environmental training needs for the implementation and monitoring of mitigation measures. It provides environmental rules for contractors and qualified members of the municipality to ensure that construction and subsequent operation and maintenance of the infrastructure are carried out in an environmentally and socially sustainable manner.
91. The project's more environmentally sensitive activities involve the road works within Component D (Urban Infrastructure). The only sub-project identified to date that will require a specific EIA, in accordance with the Bank's Environmental Assessment OP/BP 4.01 and Mozambican law, is the major rehabilitation, reconstruction, and widening of the Avenue Julius Nyerere, over a stretch of 9.4 kilometers, of which 3 kilometers were washed away (forming a 15 meter deep crater) and need to be rebuilt. The area consists of very unstable sandy soils which
28 will require stabilization and proper drainage works to avoid being washed away again. The EIA of the Avenue Julius Nyerere sub-project is scheduled to be completed on September 2010, before effectiveness, and well in advance of the civil works. This EIA will be reviewed by the Bank and publicly disclosed in Mozambique and via the InfoShop after it is completed. The reconstruction of Avenue Julius Nyerere cannot start until the recommendations of the EIA are fully implemented.
92. Other street and road sub-projects, which do not require a specific EIA, include: (i) maintenance of 100 kilometers of existing, unpaved roads that have not been pre-identified, but will be identified using the municipality’s annual plans; (ii) rehabilitation and maintenance (involving resurfacing, paving, and establishment of catch-pits and drainage works) of six secondary urban streets and roads (Guerra Popular, Karl Marx, 24 Julho, Alberto Lithuli, Marien Mguabi, and Eduardo Mondlane) covering 27 km with a budget of US$13.4 million under the joint IDA–CMM program; and (iii) spot and targeted drainage works for problem areas of both the primary and secondary road networks, as part of the rehabilitation and maintenance of the existing drainage network. For these maintenance and rehabilitation investments, the adverse environmental impacts will generally be short-term and can be readily mitigated.
F. Safeguard policies
93. The project triggers four World Bank safeguards polices: Environment Assessment OP 4.01; Involuntary Resettlement OP 4.12; Natural Habitats OP 4.04; and Physical Cultural Resources OP 4.11. The safeguard screening category is S2 and the environmental screening category is B. These ratings result from the proposed infrastructure activities which include refurbishment of buildings, neighborhood development, and road maintenance and reconstruction. Environmental safeguards-related issues are likely to involve minor loss of vegetation, soil erosion, noise, and air pollution (particularly dust during construction). On the social side, impacts on assets and localized loss of economic activity might occur as a result of land boundary changes. The Involuntary Resettlement policy will apply in those limited cases where loss of land, income sources, or means of livelihood could occur. No adverse impacts on cultural property are expected from any program activity. However, in the event that archeological relics, fossils, or other items of cultural significance might be uncovered during construction works, the cultural property "chance finds procedures” specified in the ESMF would need to be followed. Similarly, the project is not expected to adversely affect natural habitats. However, in the event that the project supports the planning of future investments in the limited remaining areas of natural habitats within the coastal zone (such as mangroves or sand dunes), the ESMF indicates that the Natural Habitats Policy would be used to help guide this type of planning.
Application of Safeguard tools
94. To satisfactorily apply the Bank safeguard policy tools to project activities, the following institutional arrangements have been made:
x The Ministry of Environmental Coordination (MICOA), has seconded an Environmental Officer to CMM to assist in applying the environmental and social safeguards and in
29 building capacity within CMM. To this end, a new Environmental Department has been created within CMM. It is staffed with seven employees, four of which have university degrees.
x The Borrower has a good understanding of the need to ensure that all project investments remain in compliance with Bank safeguard policies as well as national legislation. This was demonstrated in MMDP I.
x CMM has further identified the Head of the Environmental Management Department as the person responsible for environmental and social safeguards during MMDP II.
95. CMM's capacity to apply the Bank safeguard policies to project activities is mostly adequate, but will need to be further strengthened. For this, sufficient training opportunities in Bank safeguard policies and the project’s safeguard tools will be made available for key staff in the municipality. This should ensure that all personnel and contractors who are responsible for the application of the program’s safeguard tools are well-equipped to implement and supervise compliance of the various investments with the applicable safeguard policies. Such training will be developed and financed as part of MMDP II, along the lines specified in the ESMF. In addition, IDA safeguard specialists will prepare and deliver periodic training sessions on Bank safeguard policies and MMDP II's safeguard tools to CMM. These sessions will review the principles, purpose, scope, and application of the project's safeguard tools to both old and the new CMM team members.
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [ X ] [ ] Natural Habitats (OP/BP 4.04) [ X ] [ ] Pest Management (OP 4.09) [ ] [ X ] Physical Cultural Resources (OP/BP 4.11) [ X ] [ ] Involuntary Resettlement (OP/BP 4.12) [ X ] [ ] Indigenous Peoples (OP/BP 4.10) [ ] [ X ] Forests (OP/BP 4.36) [ ] [ X ] Safety of Dams (OP/BP 4.37) [ ] [ X ] Projects in Disputed Areas (OP/BP 7.60)* [ ] [ X ] Projects on International Waterways (OP/BP 7.50) [ ] [ X ]
G. Policy Exceptions and Readiness
96. MMDP II does not require any exceptions from Bank policies. The procurement plan for the first 18-months of project implementation was reviewed at appraisal. The project is ready for implementation, as summarized below: x All institutional arrangements for implementation are all in place and ready for effectiveness.
* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas
30 x Preparatory activities for the first 18 months of the project are underway. Especially, the technical design of the Avenue Julius Nyerere (estimated at US$11.7million) is completed. The EIA is underway and will be completed by September 2010, before effectiveness. The bid documents are being prepared and the contract is expected to be signed within six months of effectiveness. x Terms of Reference (TOR) for MMDP II Technical Advisors are being finalized, allowing technical assistance (TA) to begin upon project effectiveness. x MMDP I solid waste management contracts will be effective during MMDP II, ensuring continuity in service provision. x SIGEF core budget execution, payments, reconciliations, and reporting modules have been fully designed and tested and will be in operation by effectiveness. x A draft IPRA regulation was discussed at appraisal, and is under review by the central government at the time of negotiations. Approval is expected by effectiveness. x A financial controller in charge of preparing the Interim Financial Reports (IFR) is already in place.
31 Annex 1: Country and Sector or Program Background
1. This annex presents: (i) a brief history of Mozambique’s decentralization process; (ii) the current context of the municipal sector; and (iii) Maputo City’s program of municipal development (ProMaputo).
Decentralization: An uneven but evolving policy
An Overview of the Dual Framework for Decentralization: Districts and Municipalities
2. Mozambique has a dual local governance framework comprised of: (i) 43 municipalities that are elected Local Governments (now in their third mandate) established under the municipal (autarquia) framework laws of 1997; and (ii) 128 local Organs of State (OLEs), namely District Administrations, that remain deconcentrated arms of the central state. The districts have recently become a focus of more attention since the Law on Local Organs of State (LOLE) was promulgated in 2003, making districts budget entities for the first time and providing a direct budget allocation to them since 2006. Municipalities nevertheless remain the only devolved and autonomous local governments, although they do operate within significant legal and institutional constraints.
3. One of the key guiding principles of Mozambique’s continuing decentralization policy is gradualism, which has two principle dimensions: territorial and functional. Territorial gradualism refers to the gradual expansion of municipal governance to an increasing number of towns (currently district capitals or towns) throughout the country. Functional gradualism reflects the incremental transfer of competencies from the deconcentrated State to municipalities as specified in Law 2/97 and Decree 33/06.
4. Despite significant steps in the transfer of powers and responsibilities to the sub-national level over the past five years, there is not yet an overall decentralization policy and budget law that requires the major sectors (agriculture, health, education, and roads) to define powers and functions to sub-national levels, and allocate resources accordingly. This would be important in order to establish a sustainable, stable, and predictable inter-governmental fiscal system for districts, municipalities, and provinces, along with clarity on the uses of these funds (some confusion exists) and the execution authority of each level of government. According to the Mozambican Government, the policy for Decentralization is found in the Constitution, and thus a Decentralization Strategy is under development and due for approval in 2010. It remains to be seen whether this Strategy will provide the level of detail sought with respect to criteria for graduation from districts to municipalities, the nature of decentralization within each sector, and more broadly, a clear definition of powers and responsibilities for each tier of government.
The History of Municipal Establishment
5. Until the late 1990s, Mozambique’s urban areas were under the political and administrative authority of the centralized state, both through the end of colonial rule in 1975 and during the period of unitary party-state rule which formally ended with the constitutional revision of 1990. The colonial administrative model provided for appointed political executives
32 in the cities (administradores) who presided over municipal boards (câmaras municipais). After national independence in 1975, the FRELIMO party-state established new institutional arrangements for urban governance and management. Party structures were fused with governing structures: after independence, in each city the FRELIMO-appointed first secretary also served as chief executive/administrador and peoples assemblies (assembleias de povo) were selected through the party’s internal processes as the corresponding representative body at the local level. The process of economic and political liberalization foreseen in the 1990 constitution, further propelled by provisions of the Rome Peace Accord of 1992 related to local governance, resulted in the formulation by the Ministry of State Administration (MAE) of a strategy for the introduction of decentralized local government in Mozambique. The Municipal Framework Law, approved by Government and submitted to the legislature in 1994, foresaw the gradual introduction of statutory elected municipalities throughout the national territory, eventually including all 23 cities and 121 districts.
6. After the newly elected government took office in early 1995, formal and substantive concerns were raised by legal specialists and politicians regarding the legality and the viability of the 1994 Municipal Framework Law. Lack of agreement between the FRELIMO and RENAMO parliamentary delegations over the implications of the revised Government proposal, especially those related to the number and selection of the first municipalities and to the perceived limitation of their functions and powers, led the opposition to withdraw from the legislative debate and vote. During its first 1997 session, the Assembly’s FRELIMO majority alone passed the new Local Government Framework Law followed by associated specific legislation including laws structuring the creation of the first municipalities, municipal elections, municipal finance, municipal supervision, municipal office holders, and further specificities of Maputo Municipality’s office holders. Mozambique’s municipal laws were implemented beginning in 1997, resulting in the first municipal elections late in that year. The first 23 elected municipal governments assumed office in January 1998 and a further 10 shortly thereafter. In 2009 an additional 10 municipalities were created, bringing the total to 43. Municipal elections are contested by the major parties but in the last election FRELIMO consolidated its position by winning most of the key municipal elections, barring the second largest city, Beira, which was won by the incumbent mayor standing for a new party, the Democratic Movement of Mozambique (MDM).
Institutional Framework for Municipalities
7. Municipalities possess their own political structures legitimated by direct elections and endowed with administrative, financial, and patrimonial autonomy. The general framework for State oversight of municipalities is provided in the Tutelage Law (Lei de Tutela). The Ministry of State Administration holds the formal supervision (tutela) of the municipalities and is responsible for promoting municipal development. By law, municipalities are granted responsibility for the following areas: local economic and social development; environment, basic sanitation, and quality of life; health; education; culture, leisure time, and sports; local government police; and spatial development, construction, and housing. However, the exercise of local government responsibility in these areas does not exclude the role of State structures in the same areas, in some cases with the same or very similar objectives.
33 8. Some specific public service provision responsibilities are well-detailed in the Framework Law as principally local government competencies, especially those related to the management of urban space and environment and those related to general social affairs and community well-being, while other responsibilities are only generally specified in the basic municipal legislation (Decree 33/06). However, subsequent executive legislation specifies several further functional responsibilities which may be transferred from State bodies to municipalities on a case-by-case basis; the selection of functions and timing of their transfer are established specifically for each municipality. Functions could include: rural and urban infrastructure and facilities; transport and communication; roads; education; culture and social welfare; health; environment and basic sanitation; industry and commerce. It is important to note, however, that in some of these areas the functions potentially susceptible for transfer are quite constrained, while in others they are quite extensive.
9. Despite the autonomy of municipalities, the central government continues to ensure municipal compliance with the substantive policy priorities and practices favored by the ruling national regime. Key state institutions promoting formal compliance include the Administrative Tribunal, the General Inspector of Finance, and the State Administrative Inspector. In addition to these formal mechanisms of state regulatory control, the central government also influences Mozambique’s municipalities through national policies. The key strategic instrument for national policy coordination and development planning is the Poverty Reduction Action Plan, PARPA II (2006–2009). PARPA II performance indicators include two types relevant to the present analysis: indicators explicitly related to decentralization and municipal reform, and indicators related to urban development and the delivery of urban services. The usefulness of the PARPA indicators, however, would appear somewhat limited: they do not engage current municipal and urban policy priorities such as improvements in access to land tenure, to adequate housing in peri-urban neighborhoods, to urban transport services, and to the coverage and quality of solid waste management.
The current context of the municipal sector
Municipalities are growing in number and in size
10. According to the United Nations, Mozambique has one of the largest urban populations in East Africa at 36 percent, and it is expected to grow to 60 percent by 2030. Urban growth (3.03%) and municipal growth (2.84%) are both faster than national and rural growth according to census data. Furthermore the growth numbers belie substantial variability, with seven municipalities growing at over 10 percent, a further five growing at 5-10 percent. Only three are growing at less than 0.5 percent. Municipalities are also growing in number, from 33 in 1997 to 43 in 2008. In the absence of proper urban planning, the rapid pace of growth in certain municipalities will result in the expansion of informal settlements.
Municipal responsibilities are increasing along with urban inequality
11. Municipal mandates are increasing from providers of local services such as parks, roads, public safety, public lightning, municipal policing, and solid waste, among others, to more complex social services including aspects of education and health, as mandated by Decree
34 33/2006. The increase in demand for services is not, however, being accompanied by an expansion of employment, formal economic activity, and revenue. Close to 70 percent of the GDP in Mozambique is produced by the industry and services sectors, mostly located in urban areas. But urban poverty remains high; from 1996/1997 to 2002/2003 (the period for which most recent data exist) urban poverty did not fall as fast as rural poverty. There is also substantial variation of growth and poverty within municipal boundaries and among the urban, peri-urban and rural areas.
Municipal development has progressed in the last ten years
12. The municipalities created in 1998 inherited an extremely weak organizational structure and infrastructure that had generally not been maintained or upgraded since the colonial era. Similarly, they inherited a very limited municipal tax base with no or outdated property registers and generally no culture of tax payment. Despite this disadvantaged starting point, a number of municipalities have managed to overcome some of their organizational challenges and have achieved positive improvements in service delivery, particularly during the most recent mandate. There is nevertheless a major backlog in all areas of service delivery combined with a rapid increasing demand for services from the growing urban population. “Urban” and “municipal” are not synonymous in Mozambique, and municipal boundaries often include a mix of dense urban areas, peri-urban areas, and rural space. This places additional challenges on municipal management teams as priority services and models of service delivery will vary significantly across these varied spaces. There have, however, been some notable efforts and successes in the first ten years.
Municipal finances are extremely weak and constrained by law but opportunities nevertheless exist
13. Municipal budgets are $12 per capita (compared with $23 in Tanzania, for example). Own-source revenues are underutilized, especially with respect to property taxes (IPRA) in larger municipalities, despite legal limitations on expanding the tax base (e.g. exemptions on new properties for five years). All municipalities can improve their fee-based revenues and a number have made significant steps forward with market and solid waste management fees. The new fiscal law (Law 01/08) give municipalities full control over taxes on property transfers and on vehicles, although the financial and administrative implications are onerous. Inter-governmental transfers are very limited. The overall pool is less than one percent of total revenues of the country (and capped at 1.5 percent) and the creation of new municipalities will reduce this further. Additionally, while development aid is important to municipalities, this is not a stable or sustainable source of funding and municipalities are not usually involved or properly consulted about aid-funded projects when they are not the implementing agency. Also, financial management systems are generally weak and fragmented and hamper municipal efforts in planning, executing, and controlling their municipal budgets in an effective and integrated manner.
35 Mozambique’s municipalities score medium to low on the UN Governance Index
14. A recently completed study (WB et al. Municipal Development in Mozambique: Lessons from the First Decade, 2009) calculated the UN Governance Index for a sample of municipalities in Mozambique. The index combines 25 variables into four dimensions, to measure effectiveness, equity, participation, and accountability. Mozambican municipalities scored well on effectiveness, indicating that they managed to use their extremely limited resources relatively well. The scores across the remaining three dimensions were poor but improving. The lack of women in key municipal positions, limited use of pro-poor policies, low municipal election turnout, limited mechanisms for public participation, and weak links with civil society organizations (CSOs) resulted in low and medium to low scores for equity and participation respectively, although there are some improvements and notable initiatives. Similarly, accountability is low but improving, with publication of tenders, budgets, and irregular public accounts, and limited use of existing anti-corruption mechanisms.
Strategic, territorial, and operational planning are among the most important and yet most difficult areas for municipalities to develop and implement
15. To date, there has been a limited vision of a spatially-balanced strategy for urban development and service delivery in most municipalities, particularly between urban and peri- urban areas. This has been exacerbated by the lack of coordination between municipalities and districts, and between central government, municipalities, and provincial sector departments. Annual planning has been largely based on previous years’ budgets using the electoral platforms as a guide, rather than being informed by a strategic financial and spatial planning process. The new planning law (Law 19/2007) allocates the leading responsibility for spatial planning to municipalities and offers opportunities to accelerate the development of urban space by challenging investments and increasing the security of tenures and Right of Use and Access to Land (DUAT). However, most municipalities are not currently equipped to fully implement the Urban Land Regulation, including the provision of land use rights based on spatial plans.
Municipal organizational structures and staffing have improved but remain poorly matched to current and impending responsibilities
16. The central government constrains the autonomy of municipalities through various institutionalized oversight mechanisms which aim to ensure compliance with procedures and norms of public sector management. Nevertheless, municipal legislation does provide some autonomy for municipalities to define their own organizational structures, including revision of departmental responsibilities, workflows and procedures, staffing tables and job descriptions. A number of municipalities have done this but most have not yet exercised this prerogative. There has also been limited use of different models for service delivery, although some municipalities have utilized municipal enterprises (e.g. Quelimane) and public private partnerships (e.g. Maputo).
36 Maputo and ProMaputo
Maputo City
17. Maputo is the gateway for investors, tourists, and migrants from rural areas and surrounding countries. It contributes over 30 percent of the national Gross Domestic Product and has an estimated GDP per capita of US$1,034 compared to a National GDP per capita of US$ 332. It is a coastal primary city with approximately 1.1 million inhabitants, although this number increases substantially during the day as commuters travel into the city for work from the surrounding areas. The City of Maputo has a typical Portuguese colonial design, with the “cidade de cimento” (cement city) in the centre and along the bay, and the suburbs spreading out behind it, with increasing urban sprawl into the hinterland. The city was the magnet for many migrants during the war period but infrastructure was not extended or upgraded during this time and rapidly deteriorated. Although some people returned to the rural areas after the peace agreement, the city continues to attract economic migrants partly due to its strategic location close to South Africa.
18. Maputo is closely linked with the neighboring city of Matola, designed as a satellite for Maputo City approximately 20 kilometers away. Matola has a population of approximately 700,000 (2007) and is located within an industrial park. There is an important port for mineral exports from South Africa and has a range of industries, the most significant being the aluminum smelter—Mozal—which since 2002 has more than doubled Mozambique’s GDP. Maputo City and Matola together form a metropolitan area despite the lack of any formal metropolitan structures. Transport, solid waste management, produce markets, as well as the housing and labor markets of the two cities are clearly interconnected, as are many other sectors.
19. In addition to facing all of the problems set out in the section above, Maputo is also a city of extreme and growing inequality. Approximately 75 percent percent of Maputo City’s residents live in informal settlements and 54 percent live below the poverty line. At the time of the MMDP I design, the low level of investments in urban areas over many years had reduced the quality and quantity of service delivery, especially in the maintenance of existing infrastructure. Private investors had expressed their dissatisfaction with the seriously deteriorated service delivery and infrastructure in Maputo through the Investment Climate Assessment, the Corruption Survey, the media, and other survey instruments. Although Maputo is the capital, it was largely considered one of the poorer performing municipalities during the first municipal mandate.
ProMaputo and MMDP
20. The CMM, led by Maputo’s second elected mayor (elected in 2004), recognized the crisis facing Maputo City. It became clear that the city had to urgently establish a sound organizational and financial base in order to reverse the decline in service provision and infrastructure. The alternative was a scenario of increased costs of living and doing business in Maputo, leading to increased poverty and social exclusion as well as constraining the growth of smaller and medium sized businesses critical to income generation and poverty reduction in the country as a whole.
37 21. The municipality led a major consultative effort with various stakeholders to develop the vision, mission, and 10-year development program—ProMaputo—for the City of Maputo. As a result of these inputs and consultations, the city developed and widely disseminated its vision for the city as well as the Council’s mission statement. The vision for Maputo is a “prosperous, attractive, clean, secure, and united city.” The current municipal administration has endorsed this vision and has approved its five-year development plan based on the core principles of ProMaputo.
22. ProMaputo forms the basis for the Adaptable Program Loan (APL) known as the Maputo Municipal Development Program (MMDP). MMDP I focused on achieving a basic level of functionality in terms of good governance, financial stability, and institutional capacity in order to provide a platform for sustainable improvements to service delivery. MMDP II will include consolidation of reforms under MMDP I but also increase the emphasis on urban and metropolitan planning, slum upgrading, as well as increased investment in infrastructure.
38 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies
IDA-financed projects in Mozambique Latest Sector Project/Summary Supervision Rating IP/DO Maputo Municipal Development Program MMDP I focused on strengthening the capacity of the Urban S/S Maputo City Council to develop, manage, and maintain quality service delivery to its citizens. National Decentralized Planning and Finance Project (DPFP-N) Urban S/S SWAP to support a national program to improve governance and more responsive service delivery at the district level. Decentralized Planning and Finance Project (DPFP) Urban S/S Improved governance and more responsive service delivery. Municipal Development Project (MDP) Legal and institutional framework for municipalities and Urban training of municipal staff and politicians. Capacity building MS/MS through implementation of infrastructure, equipment and consultancies. Public Sector Reform Project Supporting the Government of Mozambique to restructure PREM MU/MS the public service for decentralized service delivery, professionalize the public service, and improve governance. PRSC series The second PRSC series (3-4-5) is designed to assist the government to implement key policy actions outlined in its Second Action Plan for the Reduction of Absolute Poverty (known as PARPA II, by its Portuguese acronym) and in the Performance Assessment Framework agreed to by the government and the 19 external partners that provide general budget support (GBS) to the government. PARPA II is mainly focused on shared growth and on the need for PREM S/S decentralization. Within this context, the PRSC series is expected to help the government in: (a) the consolidation and deepening of the institutional reforms in the area of macroeconomic management; (b) reforms in governance by supporting decentralization to enhance public investments and service delivery at the provincial and district level, and by supporting public sector reform; and (c) economic development by removing constraints to growth, such as infrastructure, and promoting agricultural growth. Water Services and Institutional Support Project (WASIS) The objective of the project is to increase water service coverage in the cities of Beira, Nampula, Quelimane, and Water S/S Pemba under the delegated management framework and to establish an institutional and regulatory framework for smaller cities and towns.
39 Non IDA-financed Projects in Maputo Institution Project/Activity Budget Date Tripartite cooperation Italy- Slum upgrading of Chamanculo C Brazil- 2,900,000 US$ 2010-2012 neighbourhood Mozambique and Cities Alliance BADEA and Saudi Prevention of coastal erosion 21,000,000 US$ 2010-2011 Fund Spanish Construction of crafts and flowers 800,000 € 2009-2010 Cooperation market Japanese Cooperation – Construction of fish market 6,500,000 € 2010-2012 JAICA Belgium Rehabilitation of Avenue Milagre 3,000,000 € 2009-2010 Cooperation Mabote European HIV-AIDS combat program 300,000 € 2009-2012 Union/UCCLA Technical assistance and GTZ – AGRESU equipment for solid waste 2,900,000 € 2007-2010 collection
40 Annex 3: Results Framework and Monitoring
Results Framework
Use of Project Outcome PDO Project Outcome Indicators Information Improve the delivery and Percent of cumulative annual real To assess progress toward sustainability of priority increase in revenue from IPRA financial sustainability municipal services in Maputo collections Municipality Annual coverage by priority municipal To assess improvements to services: the quality of life of - Number of people with access to municipal citizens regular solid waste collection services - Households with secure land tenure formalized (DUAT) - Core indicator: Number of people in urban areas provided with access to all-season roads within a 500 meter range7
To assess changes in the Mean User Perception of Quality of perception of municipal Public Services citizens regarding CMM performance
Core indicator: Direct Project To assess the overall impact beneficiaries (number), of which of the project female (51.5%)8
Use of Intermediate Intermediate Outcomes Intermediate Outcome Indicators Outcome Monitoring Component A Institutional Development
7 This indicator measures the number of persons benefitting annually from improved maintenance of secondary periurban unpaved roads where access is frequently compromised by damage induced by season rains. 8 This is a Core Indicator. Direct Project beneficiaries are persons benefitting from: (i) solid waste collection; (ii) land titling; (iii) road maintenance and improvements; (iv) persons applying for a construction License, DUAT (Land Title) or a microenterprise license; (v) persons living in settlements where some basic infrastructure has been improved; and (vi) persons living in area with new flood or erosion damage prevention measures. Because solid waste collection and disposal services are by far the most pervasive municipal service, with target coverage at over 90 percent during project implementation, one can reasonably expect that all beneficiaries for other services also benefit from solid waste services. Thus those with access to solid waste services also constitute direct project beneficiaries. With respect to indirect beneficiaries, due to the pervasive impact of the five services listed above on the urban physical environment, as well as governance improvements supported by the MMDP to the urban institutional environment, one can posit that all municipal residents benefit at least indirectly from the program. Thus indirect beneficiaries are posited at 100 percent of Maputo’s population and female beneficiaries at 51 percent of this total, with the calculation based on the gender breakdown of recent census results.
41 Use of Project Outcome PDO Project Outcome Indicators Information Strengthened municipal Average processing time (days) for To monitor progress in capacity for service delivery in construction licenses9 improving administrative response to citizen demand. performance Timely public dissemination of clearly presented municipal performance To monitor implementation of information: measures to ensure - Report Card Results transparency in municipal - Financial Execution Report management Component B Financial Sustainability
Increased financial Percent of own-source revenue vs. To monitor fiscal balance of sustainability of the CMM. recurrent expenditures the CMM’s recurrent budget
Recurrent expenditures spent annually To monitor fiscal on roads operation and maintenance commitment to operation and maintenance Component C Urban Planning
More equitable and sustainable Total number of bairros with land use To monitor the level of management of municipal oriented by local spatial plans coverage of urban plans land. Component D Urban Infrastructure
Improved construction and Roads rehabilitated (km), non-rural10 To monitor the coverage of maintenance of municipal peri-urban road maintenance infrastructure efforts Component E Metropolitan Development
Metropolitan approach for the Sectoral commissions undertake To monitor the effectiveness improvement of selected specific initiatives each year to of metropolitan coordination municipal services introduced. improve metropolitan coordination in in the transport and solid key sectors: waste sectors - Metropolitan Transport Commission - Metropolitan Solid Waste Commission
9 Data to be presented in days by the Implementing Agency and converted to hours as per IDA requirement for these core indicators. 10 This is a Core Indicator. Rehabilitation includes maintenance works on urban roads to improve their overall condition. This indicator includes both major road rehabilitation and targeted improvements to paved primary and secondary urban roads and streets.
42 Arrangements for Results Monitoring Target Values Frequency Data Collection Project Outcome Indicators Baseline YR1 YR2 YR3 YR4 YR5 and Instruments Reports % cumulative annual real 36 million CMM Financial increase in revenue from MTn 66% 125% 190% 255% 288% Annual Report IPRA collections Annual coverage by priority municipal services: - Number of people with 729,264 847,333 910,164 972,548 1,035,626 1,041,545 access to regular solid waste Annual DMSC Report collection services - Households with secure land tenure formalized (with 0 800 3,800 9,800 18,800 30,800 Annual DMPUA Report DUAT) - Number of people in urban areas annually provided with CMM’s Yearly 60,00011 60,000 60,000 60,000 60,000 60,000 Annual improved access to all-season Activity Report roads within a 500 meter range Mean User Perception of Municipal Report 2.8 2.8 2.8 2.8 2.9 3.0 Annual Quality of Public Services Card Project Reports and Core indicator: Direct Project 729,264 847,333 910,164 972,548 1,035,626 1,041,545 Official beneficiaries (number), of Annual Demographic which female (51.5%) 375,571 436,376 468,734 500,862 533,348 536,396 Statistics from INE Intermediate Outcome Indicators Component A Average processing time Quarterly (days) for construction 4512 40 40 35 30 30 Quarterly Monitoring Report licenses Timely public dissemination of clearly presented municipal planning and performance information: Dec Annual - Report Card Results Jun Jun Jun Jun Jun 2009/10 CMM planning and control tools - Financial Execution Report Apr Apr Apr Apr Apr Apr Annual
11 Equivalent to 16 kilometers of roads rehabilitated 12 Source: DMI reports
43 Target Values Frequency Data Collection Project Outcome Indicators Baseline YR1 YR2 YR3 YR4 YR5 and Instruments Reports Component B % of recurrent expenditures covered by own-source 96% 97% 98% 99% 100% 100% Annual SIGEF revenue 13 Recurrent expenditures spent on roads operation and 7,892,640 7,892,640 8,287,272 8,701,636 9,136,717 9,593,553 Annual SIGEF maintenance (in MT)14 Component C Total number of bairros with CMM Annual land use oriented by local 13 Annual 13 13 15 15 17 Activity Report spatial plans Component D Roads rehabilitated (km), non- 0 0 0 10 10 rural 8 Annual Component E Sectoral commissions undertake specific initiatives each year to improve 2 Sectoral 2 Sectoral 2 Sectoral 2 Sectoral 2 Sectoral metropolitan coordination in Commission Commissions Metropolitan Metropolitan Metropolitan CMM Annual key sectors: None Intervention Annual constituted and Strategies Strategies being Strategies being Activity Report - Metropolitan Transport Strategies scope defined approved implemented implemented Commission drafted - Metropolitan Solid Waste Commission
13 This indicator will grow slowly because of the increase of maintenance expenditures, according to Medium-Term Expenditure Framework. 14 Source: Medium-Term Expenditure Framework.
44 Note: In addition to the Result’s Framework indicators, the project will monitor the following component indicators:
x Component A. Institutional Development – Average processing time (days) for priority administrative services (DUAT/Land Title Concession and Microenterprise License); Rate of retention of mid- and upper-level municipal personnel (%/yr); and Timely public dissemination of clearly-presented municipal performance information (Annual Plan and Budget, Implementation Report for Annual Plan, and Annual Audit Report); x Component B. Financial Sustainability – IPRA bill collection ratio (number of IPRA bills collected vs. sent); Recurrent annual expenditures on operation and maintenance of priority municipal systems (Vehicle maintenance and information technology (IT) network system maintenance); Percentage of payments made later than standard (45 days); and Percentage of procurement processes which result in signed contracts within specified number of days after adequate TORs are received; x Component C. Urban Planning – Number of persons living in settlements where spatial organization and some basic infrastructure have been improved; x Component D. Urban Infrastructure – Reduction in average transit time between Praça de Destacamento Feminino and Praça dos Combatentes; and x Component E. Metropolitan Development – Number of Maputo citizens who benefit from solid waste collection services; and Master Plan for Transport and Transit approved by Metropolitan Transport Commission.
45 Annex 4: Detailed Project Description
1. The project comprises the following five components:
Component A: Institutional Development (cost US$13.9 million of which US$8.2 million IDA)
2. The objective of Component A is to strengthen municipal capacity to deliver services in response to citizen demand. The component will address two sorts of constraints: (i) limited technical and administrative capacity to carry out municipal functions; and (ii) governance constraints which limit municipal responsiveness and accountability to the demands and priorities expressed by civil society, the private sector, and municipal citizens. Each component/sub-component below presents: (i) a summary of the main activities from MMDP I; (ii) a list of the main activities of MMDP II; and (iii) a detail description of MMDP II activities.
A-1 Organizational and Human Resource Development
3. These activities will continue the reform and capacity building efforts initiated under MMDP I. They build upon major MMDP I results including: restructuring of the CMM administrative apparatus, establishment of a human resource management system, staff strengthening through the recruitment of qualified personnel for priority functions, establishment of networked information technology infrastructure, simplification of administrative procedures, and ongoing staff training. MMDP II activities will include:
a) Increase individual and departmental productivity through organizational development, recruitment of qualified staff for priority departments, staff training, and provision of adequate working conditions: (i) Organizational development assistance, including consultant facilitation of departmental work processes and municipal staff training to improve performance of mid-level organizational units, their managers, and staff; (ii) Improvement of human resource management through selection and placement of newly-recruited technical personnel, technical assistance, purchase and implementation of computerized systems, and staff training; (iii) Improvement of working conditions in existing municipal offices through small rehabilitation works and equipment purchases.
b) Improve planning and management capacity through the use of information technology and integrated monitoring of municipal resource flows, activity implementation, and results achievement; (i) Improvements to strategic planning and monitoring through the implementation of improved systems and processes and the training of municipal staff and political officials to employ them; (ii) Development, implementation, and operational support for networked computer systems, including technical assistance, training, purchase of hardware and software, including licenses, supporting administrative workflow management, online services for citizens, enhanced communication, and improved information dissemination.
46 c) Prevention and services related to HIV/AIDS for council staff and their families through Information, Education, and Communication (IEC) and support for those living with HIV/AIDS.
Organizational development
4. The focus of MMDP II will move beyond the assignment of qualified staff to ensuring that each organizational unit effectively engages its personnel in the provision of the administrative and/or urban services for which it is responsible. Organizational development methods will be employed to promote effective collaboration among intermediate managers, qualified technical personnel, and administrative support staff in the achievement of each unit’s functional mandates. Organizational development consultants will facilitate performance improvement processes implemented individually by targeted departments and sections, first assisting managers to define quality and productivity benchmarks for their department and then to assist them to organize and supervise his/her team to gradually improve their realization of these benchmarks.
Improvement of human resource management
5. CMM’s human resource management system aims to ensure that organizational units are staffed with people possessing the knowledge, skills, and experience required to achieve each unit’s mission. During MMDP I, CMM personnel records were organized for the first time since the creation of the municipality in 1997, and clear transparent rules and procedures for recruitment and promotion were implemented. Remuneration studies were conducted to identify specific professional specialties for civil service salaries, which continue by law to provide the basis for municipal salaries, and yet are not competitive in the context of Maputo’s labor market. A simple performance incentive scheme was established and linked to a performance assessment for qualified personnel and middle managers. A continuous staff training program was established on the basis of annual priority setting, planning of training courses to meet ongoing needs for improvement of general workplace capacities and attitudes, as well as specialized technical knowledge and skills required for urban management and provision of services. Training areas will include, amongst others: organizational management, communications; planning, and urban management; municipal finance; and other technical matters related to the provision of municipal services.
6. MMDP II human resource management will build upon these foundations to move toward two goals: (i) that all municipal jobs should be well-defined and filled by qualified and motivated staff members; and (ii) that appropriate incentives should be in place to attract and retain well-performing staff and to sanction, and in grave situations dismiss, poor performing staff. The functionality of the human resource database will be expanded to provide information related to staff development and performance monitoring in support of the goals. CMM will continue to recruit qualified mid-level and university-trained staff, financed by the Council’s own budget resources, to fulfill priority functions in key departments. The CMM’s staff training program will be expanded to provide broadly based development in cross-cutting workplace skills as well as targeted technical training for professionals in relation to their specific sectoral functions.
47
Improvement of working conditions
7. Under MMDP II, a modest program of workplace improvement will continue. Specific offices have been identified where degraded physical conditions jeopardize the ability of municipal staff to do their work. Many offices are plagued by chronic water or sewerage leaks, lack of lighting or ventilation, or inadequate security for the protection of documents and equipment. A number of such substandard workplaces have been identified and prioritized. On the basis of plans resulting from this prioritization, an annual cycle of workplace improvement will aim to ensure a minimum standard of environment and security for CMM departments, through the rehabilitation of these municipal buildings and the purchase of equipment. To enhance the working environment the Program, with no IDA financing, may purchase passenger vehicles for official use only of CMM’s staff. Operating costs will be provided for a variety of activities supporting all components.
Improvements to strategic planning and monitoring
8. The focus of effort under MMDP II will be to support ongoing CMM efforts to harmonize and then integrate strategic plans and associated monitoring protocols. Led by the Office of Strategic and Institutional Development (GDEI), the CMM will build upon significant progress integrating strategic plans and will emphasize the alignment of operational plans and budgets with approved CMM policy priorities as reflected in medium-term objectives, resource allocations, and expected results. Using the network IT infrastructure financed under MMDP, an intranet-based monitoring system will facilitate information flow among top management (Mayor, Council, and GDEI), the line units implementing and reporting on sectoral activities and their outputs, and the Finance Directorate which manages procurement and budget execution/disbursement in support of line implementers. More timely and accurate monitoring information, linking resource use to investment and service delivery activities and outcomes, will provide the basis for more responsive CMM management, as well as more transparent and accountable municipal governance, as monitoring information becomes increasingly available to elected representatives and civil society.
Development, implementation and operational support for networked computer systems
9. MMDP II will continue efforts initiated under MMDP I to gradually introduce networked communication, information dissemination, and administrative processing applications guided by a medium-term IT master plan. The design and implementation of a networked computer system will continue. Modest investments in the purchase and maintenance of PCs will enable IT access for the growing cadre of qualified staff and users of CMM’s expanding networked systems. Software will be installed on the CMM intranet to facilitate internal workflow, document management, and routine internal communication. The CMM will also expand beyond the existing web page, used for disseminating information, to implement an interactive Virtual Municipal Service Center (“Balcão de Munícipe”) which will provide a web-based portal for license applications and service requests by citizens and businesses. Contracted technical assistance and service providers will support the operation and maintenance of this IT
48 infrastructure, financed on a declining basis by the IDA credit and gradually assumed by the CMM’s recurrent budget so that O&M costs are fully sustained before year five.
Prevention and services related to HIV/AIDS
10. This activity provides goods and services to complement funds available from other programs and donors related to HIV/AIDS prevention, monitoring, plans, training and communication support for municipal staff and their families living with HIV/AIDS.
A-2 Governance Improvement
11. MMDP II continues and expands the governance improvement efforts promoted under MMDP I, including: the Municipal Report Card; disseminating municipal policies, plans, budgets, and implementation reports to civil society; participatory budgeting; and deconcentration of selected basic urban services to municipal districts. MMDP II activities will include:
a) Increase transparency and accountability of municipal policies, resource use, administrative acts, and service outcomes: i) Increases in the transparency and legality of CMM decisions, activities, and resource use through technical assistance, staff training, and improved communication among municipal staff, political officials, and citizens of the municipality; ii) Improvements in communication between the CMM and civil society by improving planning, design, and implementation of information dissemination activities. b) Gradually deconcentrating selected planning, administration, small investment implementation, and basic service delivery functions, supported by technical assistance, training, equipment, and small infrastructure investments to enhance the responsiveness of municipal district governance and services; c) Promotion of private sector investment and public-private partnerships with CMM for the provision of public infrastructure and services through the provision of technical assistance and staff training.
Increases in the transparency and legality of CMM:
12. MMDP II will focus on the implementation of CMM’s Anti-Corruption Strategy and Code of Conduct. Sector-specific anti-corruption plans in priority CMM departments are identified on the basis of the departments’ importance to citizens, the significance of the resources and services they manage, and their apparent vulnerability to malpractice. These include departments which provide construction licenses and land use permits and that administer markets.
49
Improvements to communication between the CMM and civil society
13. During MMDP I, a structured municipal communication program was established. This focused on the dissemination of CMM policies, plans, and accomplishments through the municipality’s website, publications and brochures, and public meetings, including a continuous cycle of “open presidency” meetings which rotated across the seven municipal districts each year. In addition to the citizen comments collected during these meetings, the CMM communication program also creates channels for the expression of citizen preferences, concerns, and feedback. Notably, this includes the annual Municipal Report Card which has been conducted since 2005 and adopted by the Council as a key means for assessing both citizen satisfaction with municipal performance and citizen priorities. MMDP II will continue these activities with a focus on carrying out municipal surveys; governance related campaigns; and campaigns to increase citizen’s access to municipal information and citizen participation in municipal affairs. The program will also emphasize increasing strategic links between communication efforts and other program efforts, including increasing revenue collection and urban environmental management, and increasing the dissemination of plans, budgets, procurement/contract information, and financial reports in order to increase the transparency of municipal governance.
Deconcentrating selected planning, administration, small investments, and basic service delivery functions
14. A major policy priority of the current administration is to increase the prominence of the seven districts and 63 neighborhood structures in governance and management of the urban environment and basic urban services. During MMDP I, several initial steps were taken including: (i) restructuring district administrations; (ii) transfer of labor intensive sanitation and drainage repair brigades to each district; (iii) introduction of participatory budgeting; and (iv) preparatory studies for increasing the roles of districts in basic licensing and revenue collection along with associated control mechanisms.
15. During MMDP II, this process will be consolidated and continued with an emphasis on building district capacity through staff reinforcement and the implementation of simple planning, management, and monitoring and control systems. Small works to improve public infrastructure and services in municipal neighborhoods will also be supported. Several more basic urban services and administrative functions will be gradually transferred to the districts. Strategic development plans will be formulated at the district level for the first time, integrated into the overall urban planning framework, and linked to participatory budgeting. Specific taxes and fees collected by districts will continue to increase gradually, associated with the implementation of the SIGEF revenue modules which will provide the basis for more timely, accurate, and transparent accounting of district collections. These will all be linked to the recently established District Consultative Councils as the governance institutions for representing and reconciling neighborhood interests and increasing downward accountability of CMM district activities.
50 Promotion of private sector investment and public-private partnerships
16. One of the most significant innovations introduced by CMM is the use of public-private partnerships (PPP) to mobilize private sector capital and management capacity in support of providing public services and infrastructure. With the support of additional technical assistance financed by the Public-Private Infrastructure Advisory Facility (PPIAF), the CMM has implemented over 26 PPP projects (plus six that are in the pipeline), including parks and recreation facilities, retail kiosks and street corner lavatories, parking lots, and the construction of office buildings shared by municipal departments and private tenants. The CMM has created and trained a dedicated PPP team, including a financial analyst and a legal specialist, and plans to continue and expand the use of PPPs to cover such areas as parking management on downtowns streets, operation of municipal markets, and possibly even toll roads or bridges to provide major new transport arteries.
Component B: Financial Sustainability (cost US$4.7 million of which US$3.8 million IDA)
17. The objective of this component is to ensure the financial sustainability of CMM. It seeks to raise revenues and rationalize expenditures with the support of an integrated financial management system. Key component activities build upon MMDP I results and will be implemented in three main areas: revenue enhancement, financial management, and improvements in procurement capacity. MMDP II activities will include:
a) Increasing municipal revenues through technical assistance and training support for valuation of properties; purchase of services for billing and collection of taxes and fees; information systems for billing and payment administration along with provision of associated equipment and training; public information campaigns; and legal assistance for revenue enforcement; b) Improvement of financial management through better budget formulation and execution controls and through continuing the design and implementation of the Integrated Financial Management System (SIGEF), supported by provision of technical assistance, hardware, software including licenses, and staff training; c) Improving municipal procurement practices, internal control mechanisms, and asset management by provision of technical assistance and training as well as required equipment to the Acquisitions and Patrimony Departments; Increasing municipal revenues
18. The experience of MMDP I illustrates that there is significant potential for the municipality to increase its tax collection. MMDP II will continue to focus on increasing tax revenues from the current low levels. Although a number of activities will be cross-cutting and will impact the collection of all revenues (including improvements in databases and publication of tax legislation), the focus will be on specific high-potential revenues sources, including the fee on economic activity (TAE), the newly decentralized tax on vehicles, and especially on property taxes (IPRA). In addition to continuing the expansion of taxable properties in the municipal cadastre, the focus will be on updating and completing the valuation of properties. For this, the consolidation of a single integrated multi-purpose cadastre will continue and systems will be developed and implemented for property valuation. Although poverty in Maputo is pervasive, it
51 is estimated that about 130,000 properties are made of durable materials and thus have a value to be taxed. Importantly, the strategy will be to increase property taxation not of the poorest households that may eventually be taxed at a very small flat rate or exempted, but those in the central urbanized areas that are already benefiting from service provision or will be benefitting in the near future. Also, property taxation is less regressive than other currently used taxes (head taxes) so these activities will enable a more progressive municipal tax system. Finally, Maputo’s Medium-Term Expenditure Framework (MTEF) indicates that tax increases are necessary to provide minimum service quality and coverage in the municipality, and is the reason why MMDP II continues to focus in this area (see Annex 17).
19. Another priority will be to analyze tax collection mechanisms and to assess the possibility of including third parties in different segments of the collection process. Similarly, tax collection and administration systems for the newly transferred taxes on vehicles and property transactions (SISA) will be designed. Intensive and comprehensive tax information campaigns targeting Municipal Assembly members and other government officials as well as municipal citizens, private sector businesses and associations, and civil society, will be supported. Also, the procedures for collecting non-tax revenues, including fees and licenses, will be mainstreamed. Particular attention will be paid to reduce leakages and ensure that collections make their way to the municipal treasury. Municipal tax administrations will be strengthened by training tax officials (with emphasis on legal matters to better equip them to deal with both private parties and central level officials in tax-related issues) and continuously updating tax by- laws and procedures. Finally, public information campaigns to increase municipal revenues will be promoted.
Improvement of financial management
20. During MMDP II, SIGEF will be fully designed and implemented by ensuring the articulation of all financial processes and by supporting comprehensive medium term training for all users. Guidelines, procedures, a manual, and norms will be prepared and disseminated. Also, efforts to implement program-based planning and budgeting initiated during MMDP I will continue. Short-term planning will be integrated with broader mid-term strategic planning and budgeting instruments through a Municipal MTEF. Lastly, budget execution and control (internal and external) will be supported by permanent training in the National Financial Administration System (SISTAFE), through the preparation of financial management manuals, and by strengthening the internal control (auditing) function of the municipality. The financial statements of the full municipal budget will be audited every year and disseminated to the public within six months of the financial year end.
Improving municipal procurement practices, internal control mechanisms, and asset management
21. During MMDP II, the procurement function of the municipality will be strengthened under the auspices of a single procurement department for all municipal contracts, irrespective of the source of their financing. This will require the publication of procurement manuals and procedures, acquisition of equipment, and permanent training of the procurement staff and of all the “users” of procurement in the operational units of the municipality. Also, a medium-term
52 procurement capacity building strategy with greater transparency of procurement-related information will be implemented. In addition, the organization of the asset management system that began during MMDP I will be continued during MMDP II. This will include the application of norms for valuing assets and automatically reassessing them, by producing a manual for asset management, and by training the team in charge of this function. Also, the periodic maintenance of fixed assets, vehicles, and especially informational technology (IT) equipment will be supported by, among other things, ensuring that maintenance expenses form part of the MTEF. Finally, MMDP II will strengthen CMM’s internal control mechanisms and facilitate the preparation of annual audits of all municipal accounts.
Component C: Urban Planning (cost US$14.9 million of which US$11.9 million IDA)
22. The objective of Component C is to ensure the equitable and sustainable management of municipal land. Activities will be clustered around two specific objectives, one dealing with urban land and environmental management, and the other focused on neighborhood improvements. Urban land activities will build upon MMDP I results, including: the preparation and approval of Maputo’s Master Plan and several associated urbanization plans for specific neighborhoods, the expansion and updating of the property cadastre, along with associated improvements in land administration procedures; and the establishment of key elements of a computer-based Geographical Information System. A number of additional neighborhood improvement activities will be added to the project. Overall, MMDP II activities include:
a) Consulting assistance for the formulation of urban plans for land use, zoning, urbanization, and environmental management, and through support for information dissemination activities related to these plans; b) Regularization of land tenure and land titling in peri-urban areas supported by technical assistance, equipment provision, and the purchase of private sector services; c) Continued implementation of the municipal geographic information system (SIGEM) and associated cadastres, supported by provision of technical assistance, training, equipment, and data collection and processing services; d) Development, field testing, and implementation of an integrated methodology for improving informal settlements in several selected neighborhoods, supported by specialized consultants; and e) Peri-urban land titling and associated neighborhood improvements involving technical assistance and training in community organization and participatory planning, targeted improvements to local infrastructure, and services supporting regularization of land tenure;
Formulation of urban plans
23. The formulation by CMM of the Maputo Urban Structure Plan (Spatial Master Plan), and approval in 2008 by the Municipal Assembly, was a major MMDP I accomplishment. The Plan provides a strategic framework for expansion, densification, and rationalization of the urban space and provides the legally required foundation for zoning and land use planning, sector- specific master plans, and local urbanization plans which are themselves legal prerequisites for the issuance of land titles. The preparation of the first of these local (“partial”) urbanization
53 plans began under MMDP I in nine neighborhoods; the coverage of these plans will increase significantly under MMDP II to cover 60 percent of mainland peri-urban neighborhoods. Land- use plans for environmentally sensitive areas will also be prepared during MMDP II, including plans for coastal and high-erosion zones, zoning plans to locate preferred areas for commercial, industrial, and agricultural uses, and multi-sectoral strategic development plans for the seven municipal districts.
24. Education of municipal citizens and businesses in support of implementing land use and development plans will also be supported. The effectiveness of urban planning and implementation depends upon public understanding of the importance of, and methodology for, organizing urban space and managing the urban environment. MMDP will provide for environment and planning information, education and communication (IEC) efforts targeting local officials and civil society leaders, private sector operators and firms including large and medium industries, small shops and service providers, and informal sector workers and traders, as well as community leaders and neighborhood residents.
Regularization of land tenure and land titling in peri-urban areas
25. The 2006 approval of the Regulation for Urban Land Use (GSU) provided the legal framework for urban planning and established the land tenure regime for urban and peri-urban areas. The GSU regulation grants municipalities sole responsibility for the issuance of land titles within their territorial jurisdiction. Few of the residences and their associated plots in the post- independence expansion zones have been granted titles under the land law and GSU regulation. CMM estimates that at least 156,000 residents of such informal settlements may be eligible for the Land Use Rights Documents (DUAT) which formalizes tenure rights. A major focus of MMDP II will be the regularization of these neighborhoods and the large-scale issuance of titles (DUATs) for residential properties in the peri-urban neighborhoods.
Continue implementation of the Municipal Geographic Information System (SIGEM)
26. MMDP I has established the basic infrastructure for a computer based GIS/Municipal Management System (SIGEM), including geo-referenced digital maps and a networked software platform capable of producing a variety of analyses and images. MMDP II will support wider implementation of the SIGEM not only for the priority purposes of land use planning, land titling, and real property tax (IPRA) administration, but gradually to improve the administration of a variety of municipal licensing systems (including construction, parking, public signage, and various business permits) and the management and monitoring of basic infrastructure status and maintenance. Service contracts for SIGEM operation and maintenance will be financed by the IDA credit on a diminishing basis, and gradually assumed by the CMM budget in order to ensure the sustainability of the IT system after the end of external funding. CMM staff from various directorates will be trained in SIGEM use as a tool supporting improved urban planning, enforcement of land use regulations, service delivery management, infrastructure maintenance, and administrative functions, including collection of taxes and fees.
54 Development, field testing, and implementation of an integrated methodology for improvement of informal settlements
27. MMDP II will provide support for the development and implementation of socially and technically appropriate methods for upgrading Maputo’s dense “inner ring” of informal settlements. During MMDP I, with the support of Cities Alliance, CMM undertook an experiment in the dense, socially complex neighborhood of Chamanculo C; using a highly participatory process to pursue the limited goals of improving roads and pathways and providing a basis for regularizing tenure. MMDP II will build upon this experience to implement a more integrated model, using participatory planning processes to plan the rationalization of land boundaries and public spaces, as well as providing funds for modest neighborhood infrastructure improvements for internal access roads and paths, drainage, illumination and sanitation based on community identified priorities. Methods adapted from experience with “slum upgrading” programs in other parts of Africa, Latin America, and Asia will be employed as a basis for CMM’s own participatory neighborhood development program. In addition, IDA-supported efforts will be implemented in collaboration with a tripartite Brazil-Italy-Mozambique Integrated Neighborhood Development Project, also supported by Cities Alliance. The project will build upon earlier efforts in the Chamanculo area to pilot more intensive methods for promoting social development, as well as land use regularization and infrastructure improvement in poor peri- urban neighborhoods. The CMM field teams implementing IDA-supported neighborhood improvements and the team implementing more intensive Tripartite Project work in Chamanculo will share technical assistance resources, specialized staff, and field experiences, thus maximizing synergies between these two closely related efforts.
Peri-urban land titling and associated neighborhood improvements
28. In most of the more remote, less dense, peri-urban neighborhoods, a simpler process for organizing and formalizing the urban space can be employed. Especially in the newer residential expansion areas, even without full formal specification of urbanization plans, a majority of households have settled in quadrangular plots organized in blocks broadly compatible with standard dimensions for spacing of plot boundaries and access roads. In these areas, little reordering of private plots and/or public spaces will be necessary. The more rapid “regularization” methods employed here can provide the basis for land titling and planning of future infrastructure improvements across larger areas of the city at significantly less cost than in the case of the more dense and complex informal settlements in older neighborhoods. In the first cycles of land registration, before cost recovery establishes a basis for sustainability, operating costs and private sector services for plot demarcation and associated administrative support will be financed.
Component D: Urban Infrastructure Investment and Maintenance (cost US$38.6 million of which US$11.7 million IDA)
29. The objective of Component D is to ensure the construction and maintenance of key municipal transport and drainage infrastructure. Based on the Maputo Master Plan formulated and approved during MMDP I, as well as sectoral strategies and plans for roads and drainage, the project will finance strategic road and drainage investments as well as improvements and
55 maintenance of existing roads and drainage structures. The road investments will be subject to an economic analysis with an Economic Rate of Return (ERR) above the minimum required 12 percent for Bank-financed projects.
a) Reconstruction of a major municipal artery (Avenida Julius Nyerere); b) Rehabilitation of critical segments of the primary and secondary road network and drainage structures in selected catchments, including construction of new collector roads, extensions of existing roadways, consulting services for works inspection; c) Maintenance and spot repairs of unpaved peri-urban roads to enhance access to residential neighborhoods after degradation due to annual rains and road use; and d) Carrying out of environmental and resettlement assessments and corresponding environmental and resettlement action plans and support, financed by non-IDA sources, for resettlement and compensation of businesses and households that may be impacted by any construction or rehabilitation.
Reconstruction of a major municipal artery
30. MMDP II‘s largest infrastructure investment will replace a major transport artery which was destroyed by erosion from the floods of the year 2000. Julius Nyerere Avenue links the city center with important peri-urban residential, commercial, and industrial areas, as well as with an exit route to the northeast of the city. The alternative routes which have been employed add as much as 8 kilometers and 30 minutes to the trip for typical travelers, and greatly increase congestion during peak periods. The reconstruction of 10 kilometers of Julius Nyerere Avenue, along with associated erosion resistant stabilizing and drainage structures, will reduce congestion and travel time and revitalize several neighborhoods adversely affected by the lack of direct links to central Maputo. In addition to the construction, the program will finance both the design of plans and the inspection of this urban infrastructure work.
Improvement of critical segments of the primary and secondary road network and drainage structures in selected catchments
31. MMDP II resources will continue to support routine and periodic maintenance for the network of paved roads in the urban core and radiating from major transport arteries. Based on an annual assessment of road conditions and priorities resulting from the Structure Plan and the Road Sector Strategic Plan, annual cycles of paved road improvement works will be planned and executed. Annual cycles of repairs to existing drainage structures, to minimize the adverse effects of standing rainwater and to reduce damage to public (roads) and private (homes and business) infrastructure, will be supported by CMM budget resources during project implementation. In addition to the construction, the program will finance both the design of plans and the inspection of these urban infrastructure works.
Maintenance and spot repairs of unpaved peri-urban roads
32. Before MMDP, no systematic program of maintenance existed for Maputo’s peri-urban unpaved roads. During MMDP I, annual budget allocations and work plans were established and CMM’s capacity was improved for managing routine maintenance contracts and directly
56 executing spot repairs to unpaved roads after each rainy season. These efforts will be strengthened and institutionalized during MMDP II. Namely, CMM’s own budget resources will be used for the maintenance and spot repairs of peri-urban roads during project implementation.
Component E. Metropolitan Development (cost US$24.9 million of which US$6.4 million IDA)
33. Component E aims to introduce a metropolitan approach for the improvement of selected municipal services. CMM has recognized that several key services cannot be planned and managed by the Maputo Municipality without cooperation among neighboring jurisdictions, including Matola Municipality, the deconcentrated Government of Maputo City, and the Government of Maputo Province. The CMM, these neighboring jurisdictions, and the central government have identified urban transport as a critical priority for the next five years with an emphasis on linking transport plans with access to other key urban facilities and services, both public and private. This component also builds upon significant MMDP I investments in solid waste management within Maputo Municipality, which increasingly require upstream and downstream linkages across the metropolitan region for their sustainability.
E-1 Solid Waste Management
a) Continued improvement of solid waste management through technical assistance, training, equipment purchases, and infrastructure improvements, including cost sharing for the purchase of solid waste collection and disposal services; b) Education campaigns, events, and associated communication services to increase awareness of proper management of municipal solid waste; c) Consulting support for studies, plans, and project design to ensure the environmental sustainability of solid waste management in the Maputo metropolitan region.
Continued improvement of solid waste management
34. During MMDP I, solid waste management (SWM) constituted a principle focus of MMDP service delivery improvement. CMM efforts in this sector were supported not only by IDA but also by GTZ-financed technical assistance, which contributed both to the formulation of a SWM strategy and to achieving operational improvements. GTZ’s technical assistance (TA) in this area has been excellent, but unfortunately in May of 2010, the GTZ’s AGRESU program which provided assistance in the area of Solid Waste Management in Maputo came to an end and TA in this area will now be covered by MMDP II. MMDP I invested directly in the planning, management, maintenance, and service provision capacities of the CMM Sanitation Department. MMDP I also supported a multi-faceted strategy to strengthen both short-term performance and long-term sustainability of SWM improvements. To ensure the achievement of output targets, CMM employed private firms on performance (i.e. productivity)-based contracts to collect and properly dispose of waste. To ensure a reliable, gradually increasing, dedicated revenue stream as a basis for financial sustainability, the CMM and Municipal Assembly approved a medium- term financing policy, coupled with fees collection, using the administrative facilities of the national electrical utility (EDM). Finally, CMM innovated by extending SWM services to previously neglected peri-urban areas by contracting neighborhood-based microenterprises to
57 transport waste to fixed collection points, using manual carts through otherwise inaccessible residential lanes.
35. MMDP II will continue, broaden, and consolidate the MMDP I SWM program. New contracts for collection and hauling by private firms will be signed, with more focused incentives and improved monitoring based on lessons learned from administering MMDP I contracts. More efficient fee collection and the implementation of previously approved fee increases will be emphasized, based on a more progressive formula to increase equity between less wealthy households which produce less waste, and more wealthy ones - some of which still underpay for the services they receive. By the end of MMDP II, when IDA co-financing of SWM operational costs ends, CMM’s ability to cover operating costs will increase significantly. Increasing the number and scope of micro-enterprise collection agreements, perhaps linked to further deconcentration of other sanitation functions to municipal districts, will lead to greater peri- urban coverage. Investments will also be made in preparation for the planned closure of Maputo’s existing waste dump by 2015.
Education campaigns, events, and associated communication services
36. IDA will continue to provide technical support to the IEC campaigns which aim to inform citizens about the importance of good household and neighborhood waste handling and of the link between the sanitation fees and SWM services.
Studies, plans and project design:
37. IDA will continue its technical support of innovation in the CMM SWM system. CMM will work with Matola, MICOA, and other neighboring jurisdictions to establish a Metropolitan Solid Waste Management Working Group through which Maputo and Matola Municipalities, Maputo City and Maputo Province Governors, and other relevant government actors can meet to coordinate action to increase the efficiency and sustainability of environmental management across Greater Maputo. New models of waste handling, contracting for services, public-private partnerships, community involvement, cost recovery, recycling of useful waste, etc. will continue to be investigated and, when warranted, field tested through pilot projects. This will enable continued improvements in coverage, quality, efficiency, and/or sustainability—both financial and environmental—of SWM services in Maputo. MMDP will also support activities to share CMM’s experience in SWM with other municipalities and national institutions as a basis for promoting other investments in sustainable sanitation services in Mozambique.
E-2 Strategic Development of Metropolitan Services
a) Consulting support for formulation of a Master Plan for Transit and Transport across the Maputo metropolitan region, for subsequent implementation of management improvement interventions, and targeted investments based on the Master Plan will help to improve urban mobility, mitigate traffic congestion, and enhance access to important public and private sector facilities and services, within the municipality and across the metropolitan region;
58 b) Support for the establishment and consolidation of the Municipal Transport and Transit Directorate will be provided through staff training and equipment purchases; c) Acquisition of equipment for the traffic control room.
Formulation of a Master Plan for Transit and Transport across the Maputo metropolitan region:
38. Public transport in Maputo has been the subject of considerable dissatisfaction and increasing controversy in recent years. Based on priorities expressed by the municipality during the formulation of ProMaputo in 2006, no specific investments were made in the transport sector under MMDP I. In 2009, however, when the new municipal administration assumed office, it expressed concern that this important sector was not considered within the program. As a result, it was agreed that a Transport and Transit Master Plan would be prepared, and that this plan would have to cover the metropolitan region and not merely the Maputo Municipality, since both commuter traffic and commercial traffic flow in both directions between Maputo and Matola (Traffic flows increasingly more widely as Greater Maputo grows to include several districts in Maputo province). A diagnostic study to serve as the empirical basis for the Master Plan was begun under MMDP I. It is expected that a draft Metropolitan Master Plan for Transport and Transit will be available by the second year of MMDP II in order to provide a basis for developing specific proposals aimed at improving public transport services across the metropolitan region.
Establishment and consolidation of the Municipal Transport and Transit Directorate
39. Capacity strengthening is required for this recently created organizational unit in order to enable CMM to develop and implement the Metropolitan Transport and Transit Master Plan.
59 Annex 5: Project Costs
Table 1: Total project costs by component and source (US$million) IDA CMM GOM Total A. Institutional Development 8.2 2.9 1.3 12.4 A.1 Organizational Development 7.2 1.4 0 8.6 A.2 Governance Improvement 1.0 1.5 1.3 3.8
B. Financial Sustainability 3.8 0.8 0 4.6
C. Urban Planning 11.9 3.3 0 15.2
D. Urban Infrastructure 11.7 12.7 13.7 38.1
E. Metropolitan Development 6.4 20.3 0 26.7 E.1 Solid Waste Management 4.7 19.0 0 23.7 E.2 Strategic Metropolitan Services 1.7 1.3 0 3.0
Unallocated 8.0 8.0 Total 50.0 40.0 15.0 105.0 Totals may not add up due to rounding.
Table 2: Estimated Project Costs per Component to be financed by IDA (US$ million per calendar year) Project Cost By 2011 2012 2013 2014 2015 Total % Component A. Institutional Development 2.1 2.2 2.7 1.0 0.2 8.2 16.3 B. Financial Sustainability 0.8 0.9 1.0 0.8 0.3 3.8 7.6 C. Urban Planning 2.4 3.9 3.3 1.9 0.4 11.9 23.7 D. Urban Infrastructure 0.0 3.7 4.7 3.3 0.1 11.7 23.5 E. Metropolitan Development 0.9 1.8 1.6 1.7 0.4 6.4 12.9 Unallocated 2.0 2.0 4.0 8.0 16.0
Total IDA 6.1 12.5 15.3 10.7 5.3 50.0 100.0 % Total 12.3 25 30.6 21.5 10.6 100 Totals may not add up due to rounding
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Table 3: Estimated Project Costs per Source of funding (US$ million per calendar year)
Project Cost By Source 2011 2012 2013 2014 2015 Total
CMM* 3.0 6.8 10.4 11.4 8.4 40.0 GOM 0.7 0.8 3.5 6.3 3.8 15.0 IDA 7.0 13.3 12.5 12.0 5.3 50.0 Total 10.7 20.8 26.4 29.7 17.5 105.0 Totals may not add up due to rounding * Indicative yearly figures
Table 4: Financing of Project Activities by Source Exclusively Part A: Institutional Development IDA Non-IDA 1. Organizational and Human Resource Development (a) Provision of technical assistance to CMM for: (i) the formulation of X municipal policies and plans; (ii) the development and implementation of municipal systems; (iii) the facilitation of work processes and improved staff performance; and (iv) monitoring and evaluation of municipal programs and activities. (b) Strengthening of the technical and administrative capacities of municipal X officials and staff through training in, inter alia: (i) communications; (ii) planning and municipal management; (iii) municipal finance; and (iv) other technical matters related to the provision of municipal services. (c) Rehabilitation of municipal buildings and purchase of equipment to X enhance the office space for municipal staff. (d) Design and implementation of a networked computer system for CMM. X (e) Provision of maintenance services for: (i) municipal vehicles; and (ii) X CMM’s networked computer systems, including the acquisition of licenses and the provision of related technical services. (f) Development of monitoring policies and plans, provision of Training, and X communication support for municipal staff and their families living with HIV/AIDS. (g) Financing of Operating Costs for the Project. X (h) Recruitment of qualified administrative and technical staff for priority X CMM’s departments. (i) Acquisition of passenger vehicles for official use by CMM’s officials and X staff. (j) Provision of goods and services to CMM’s staff living with HIV/AIDS, X and to their respective families.
2. Governance Improvement (a) Carrying out of: (i) municipal surveys; (ii) governance-related campaigns; X
61 and (iii) campaigns to increase citizen’s access to municipal information and participation in municipal affairs. (b) Provision of technical assistance to CMM to enable: (i) a gradual X deconcentration of selected planning, administration, and small municipal investment implementation functions; and (ii) basic service delivery to municipal districts. (c) Small works to improve public infrastructure and services in municipal X neighborhoods. (d) Provision of technical assistance to CMM to promote private sector X investment and public-private partnerships for purposes of enhancing the delivery of municipal services. (e) Dissemination of information pertaining to CMM’s: (i) policies; (ii) plans X and budgets; and (iii) implementation reports among CMM’s staff, municipal stakeholders, and citizens in CMM’s municipal jurisdiction.
Exclusively Part B. Financial Sustainability IDA Non-IDA (a) Provision of technical assistance to CMM to support the expansion and X updating of properties information in the municipal integrated multi- purpose cadastre. (b) Provision of technical assistance to CMM to enhance municipal systems X for purposes of better reassessment of property valuations. (c) Provision of goods, works, and technical assistance to CMM to improve its X municipal billing and collection administration services, enabling the participation of the Recipient’s private sector. (d) Carrying out public information campaigns to increase municipal revenues. X (e) Provision of technical assistance to CMM to: (i) develop strategies to X update municipal tax regulations and procedures; and (ii) resolve tax related disputes. (f) Provision of technical assistance to CMM to design and implement its X integrated financial management system. (g) Provision of technical assistance to CMM to: (i) strengthen its internal X control mechanisms; and (ii) facilitate the preparation of annual audits of all municipal accounts. (h) Provision of technical assistance to CMM to consolidate its procurement X units into a single department responsible for all municipal public procurement.
Part C: Urban Planning (a) Provision of technical assistance to CMM to: (i) improve its land X administration procedures; (ii) formulate urban plans for land use, zoning, urbanization, and environmental management; and (iii) disseminate information related to the plans referred to in Part C (a) (ii) of the Project. (b) Provision of technical assistance to CMM to strengthen the implementation X of its municipal geographic information system. (c) Provision of technical assistance and services to CMM to strengthen the X regularization of land tenure and land registration in peri-urban areas, including the development of pertinent methodologies and oversight
62 mechanisms for plot demarcation and land registration. (d) Provision of technical assistance, works, and services to CMM to design X and implement integrated methodologies for the improvement of informal settlements, including integrated neighborhood plans, targeted improvements to local infrastructure, and services in support of the regularization of land tenure.
Exclusively Part D: Urban Infrastructure Investment and Maintenance IDA Non-IDA (a) Reconstruction of approximately 10 kilometers of Avenue Julius Nyerere X in the city of Maputo. (b) Rehabilitation of: (i) primary and secondary road networks in the city of X Maputo, including new collector roads and extensions of existing roadways, and (ii) drainage structures in the city of Maputo (c) Provision of technical assistance for the design of plans and the inspection X of works in project Component D (a), D (b), and; and D (d). (d) Maintenance and repairs of: (i) unpaved roads; and (ii) local drainage X structures, all in the city of Maputo (e) Carrying out of environmental and resettlement assessments and X corresponding environmental and resettlement action plans in connection with the implementation of Components A.1 (c ); A.2 ( c ); B (c); C; D; E.1 (b); and E.2 (b). (f) Compensation for Displaced Persons in connection with the X implementation of project Components C and D.
Part E: Metropolitan Development 1. Solid Waste Management (a) Provision of technical assistance and goods to CMM to improve its X planning, operations, and monitoring of solid waste management. (b) Financing of solid waste collection and disposal services for CMM. X (c) Conducting education campaigns, events, and associated communication X services in support of improved municipal sanitation and solid waste management. (d) Provision of technical assistance to CMM for purposes of developing X studies, plans, and projects to ensure the environmental sustainability of solid waste management in the Maputo metropolitan area.
2. Strategic Development of Metropolitan Services (a) Provision of technical assistance to CMM to: (i) develop a master plan for X transit and transport across the Maputo metropolitan area; and (ii) implement management improvement interventions and targeted investments in the municipality and across the Maputo metropolitan area. (b) Provision of goods, works, and training for the establishment and X consolidation of a municipal transport and transit directorate to be located in CMM. (c) Strengthening the administrative and technical capacities of CMM’s traffic X control room, through the provision of goods.
63 Annex 6: Implementation Arrangements
1. As during MMDP I, CMM will act as implementing agency for MMDP II, which will be co-financed by the IDA credit, GOM contributions, and the CMM’s own budget. IDA will enter into: (i) a Financing Agreement with the Republic of Mozambique, for which the representative is the Ministry of Planning and Development; and (ii) a Project Agreement with the CMM, as project implementing agency. The Government of Mozambique will oversee implementation through its own monitoring mechanisms and as part of established monitoring processes associated with the IDA portfolio. In addition, the Ministries of Planning and Development, Finance, and State Administration will participate in a joint IDA-CMM mid-term review at which time substantive progress and formal compliance will be assessed.
A. MMDP II in relation to CMM’s policies and strategic development plans
2. MMDP II is considered by the CMM and GOM to be a key input to the implementation of the CMM’s Five Year Program and of ProMaputo, the municipality’s medium-term (10 year) strategy for development of the capital city. While MMDP is fully integrated into ProMaputo policies, strategies, and plans, ProMaputo includes a broader array of initiatives than those financed by MMDP II, some financed by central government interventions in the grater Maputo metropolitan region and others financed by donors and development banks as part of their wider programs of cooperation with the GOM.
3. MMDP II, as was the case for MMDP I, will be fully integrated into the planning, coordination, and monitoring mechanisms for ProMaputo. Similarly, MMDP II implementation arrangements, including resource management and safeguards responsibilities, will be fully mainstreamed in CMM’s permanent organizational structure. Technical assistance associated with strengthening these functions will likewise be integrated into the CMM structure; there will be no project implementation unit for MMDP II. The GDEI and the Municipal Finance Directorate will carry out cross-cutting planning, resource management, monitoring, and reporting functions while CMM line directorates and bureaus will manage and implement the project-financed activities within the purview of their assigned responsibilities.
4. Preparation of MMDP II has been led by the CMM Office of Strategic and Institutional Development (GDEI), a small team of high level municipal staff and consultants who provide analytical expertise, strategic guidance, and monitoring assistance to the Mayor and Council. The GDEI is guided and supported by the Program Implementation Team (“GDEI Alargado”), a standing taskforce comprised of selected Municipal Councilors, Directors, and advisors, overseen by the Council itself under the authority of the Mayor. Project plans and institutional instruments required for their implementation, including norms and procedures for project- supported activities, are routinely discussed and approved by the municipality as specified by municipal bylaws and regulations. When necessary, proposals for revision of municipal policies and bylaws in support of project objectives are presented by the Mayor and Council to the Municipal Assembly, which previously approved the CMM’s Five Year Program, as well as the ProMaputo Strategic Plan with which MMDP II activities are aligned, for ratification.
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B. Project management arrangements for MMDP II
5. Implementation arrangements for MMDP II will maintain those employed during MMDP I. The GDEI will continue to undertake overall project planning, coordination, monitoring, and reporting to meet the requirements specified in project agreements and detailed in the Operations Manual. The Municipal Finance Directorate (DMF) will be responsible for procurement and financial management, as per CMM’s own procedures. The Urban Planning and Environment Directorate (DMPUA) will be responsible for environmental and social safeguard compliance, assisted by routine technical exchanges with the Ministry of Environmental Coordination (MICOA), as has been the case under MMDP I.
6. Financial management will be undertaken by the municipality's own DMF employing the integrated financial management system (SIGEF) developed during MMDP I. The procurement function will continue to be performed by a Procurement Department within the Finance Directorate, staffed by municipal personnel supported by contracted procurement specialists. As such, no dedicated project management structures will be created. Rather, the GDEI and DMF will integrate municipal management and MMDP II management within the same structures and routines. MMDP II audits will be included within the annual audits of the municipality's budget and accounts by external auditors. Specific discussions of procurement and financial management are presented in Section IV.C and further detailed in Annexes 7 and 8.
7. MMDP activities are fully incorporated in the CMM’s annual plans and budgets, which are approved by the Municipal Assembly and publically disseminated. Each project-supported activity is the responsibility of a specific municipal directorate; there are no separate structures for project management outside the normal mechanisms employed by the CMM. Implementation reports, including quarterly Interim Financial Reports (IFR), will be prepared by the GDEI, based on information provided by the line directorates regarding substantive progress, and by the DMF regarding the status of procurement and disbursement.
C. Role of Institutional Reform in MMDP II
8. A major focus of MMDP I was the rationalization of the organizational structure, work processes, and staffing of the CMM. The clarification of the roles and functions of each CMM organizational unit and subordinate departments, and of the procedures and methods used to execute their principle functions, has clarified the lines of responsibility and accountability within the Council. Human resources management; including the definition of individual staff job descriptions, training plans, and recruitment priorities; has also been based on these functional attributions. Over 100 university-level and mid-level technical staff were recruited during MMDP I to significantly strengthen the professional capacity for priority functional areas, with a focus on finance, urban planning, infrastructure, and municipal districts. These permanent structures and personnel will provide the basis for MMDP II implementation.
9. While the major restructuring of CMM has been completed, several aspects will continue during MMDP II. First, the central government is transferring new functional responsibilities to the municipality, for incorporation into the CMM, as part of the national decentralization
65 process. Second, the continuing introduction of IT-based systems for CMM administrative processes, many supported by the project, will require further changes in the Council’s internal organization and operating procedures. Finally, the continuing process of deconcentration within the municipality, which is gradually delegating basic functions and services from central directorates to Maputo’s seven municipal districts, will require adjustments to both central and district organization. This deconcentration process aims to improve urban governance and the provision of basic services by enabling greater involvement of neighborhood structures as well as local businesses and citizens in planning and oversight related both to MMDP II activities and routine CMM functions. The process will require further changes in the organization of the municipal districts as well as adjustments by central directorates.
D. Role of Technical Assistance in MMDP II
10. The CMM continues to depend on a significant cadre of long-term advisors during the transition from MMDP I to MMDP II. Several of the major IT-based systems introduced during MMDP I have taken longer than anticipated for procurement, development, and initial implementation, including: the financial management system (SIGEF), the GIS-based municipal information system (SIGEM), the human resource management system (SIGRH), and the planning and monitoring system (SIPM). It is expected that by the end of the second year of MMDP II, these systems will be fully operational and incorporated into the CMM’s operational routines. As the conception and initial implementation of these systems is completed, the need for fulltime technical assistance will be significantly reduced. Recruitment and training of younger, more qualified permanent CMM personnel will continue during the first year of MMDP II to ensure that advisors work closely with the qualified permanent staff who will assume responsibility for each of these systems. Each advisor will be responsible for implementing a knowledge transfer plan to ensure operational sustainability in their respective area. Progress in this transfer will be closely monitored by the GDEI.
11. By mid-term, the majority of long-term advisors funded by MMDP II should be withdrawn. In some cases, periodic technical assistance may be required to support operational improvements to specific systems, but in order to ensure that the CMM is not dependent on external expertise for its routine operations, as a general rule by the end of year three, few long- term full-time advisors should remain. A significant part of the external assessment for mid-term review should focus on sustainability of systems and the realism of reduced dependence on TA personnel. It should be noted that while operation of these systems should be sustainable by CMM staff, given system complexity, their maintenance will not be sustainable by CMM alone. It is expected that CMM will require long-term service contracts for the hardware and software on which these IT-based systems depend. Here, sustainability will depend not on CMM technical capacity but on the financial capacity to support these service contracts and the commitment by CMM top management to ensure adequate technical support for its information technology and systems.
66 Annex 7: Financial Management and Disbursement Arrangements
Introduction and background
1. The program is a follow-on to the Maputo Municipal Development Program I (MMDP I), where responsibility for implementation was within the CMM. The financial management assessment for MMDP II was carried out in accordance with the Financial Management Manual issued by the Financial Management Sector Board on 1 March 2010. The objective of the assessment was to determine whether the CMM, as the implementing agency, has acceptable financial management arrangements which will ensure: (i) that the project funds are used only for the intended purposes in an efficient and economical way, (ii) the preparation of accurate, reliable, and timely periodic financial reports; and (iii) that the entities’ assets are adequately safeguarded.
Summary of the Assessment
2. MMDP II will also be implemented by the CMM through its various departments and the financial management responsibility will continue to rest with the Municipal Finance Directorate (Direcção Municipal de Finanças, DMF). The arrangements proposed by the DMF were reviewed in accordance with the Financial Management Manual issued by the Financial Management Board on March 1, 2010. The findings of the assessment are as follows:
3. The overall residual risk rating for the project is Substantial. A summary of the financial management (FM) risks and the proposed mitigating measures is provided in the table, Risk Rating Summary, below. These measures include the use of the Integrated Financial Management System (SIGEF) for financial management and reporting, the updating of project specific FM and disbursement procedures in the project’s FM Manual, and the appointing of an FM Controller and a private firm of external auditors to reinforce the audit effort of the General Inspector of Finance (Inspeção Geral das Finanças) and the Administrative Tribunal (Tribunal Administrativo) of the project. In addition, the auditors will be requested to express a special opinion on the required counterpart funding contributions from CMM and GOM to the project.
4. The assessment was favorably influenced by the fact that this is a follow-on project being implemented by the same entity responsible for the predecessor project, and which is already familiar with the Bank FM and disbursement procedures.
Institutional Arrangements
5. The CMM will continue to be directly responsible for implementing the entire project. The overall coordination will rest with the Office of Strategic and Institutional Development (GDEI), while the day-to-day financial management activities will be the responsibility of the DMF. Its responsibilities include the management of financial resources for MMDP II implementation and the use of funds, the supervision of the financial management of the funds, and the preparation of the quarterly financial management reports and annual audit reports to review financial management progress. It will also be responsible for developing the withdrawal applications for submission to IDA.
67 6. While the department has benefited from handling FM related matters of the MMDP I, there are still some capacity constraints within the institution as a whole. The institutional arrangements which were set up for MMDP I will remain in place in order to take full advantage of the experience gathered, and provide the Bank with the required assurance that the project’s funds will be used for the purposes intended.
Overall policy guidance for Financial Management
7. The DMF will have overall responsibility for the accounting and other related financial management aspects of the project, which will also: (i) provide a platform for discussion of FM matters between the various support offices and performance monitoring against the agreed indicators; (ii) ensure proper review and follow up of work plans, financial reports, and audit reports; and (iii) and ensure that management information reports such as Interim Financial Reports and audit reports, are prepared, circulated and approved on a timely basis.
Country issues
8. The country’s public financial management system has been noted as weak in diagnostic studies carried out in this area. The most recent of these is the Report based on the PFM PEFA Strengthened Approach (2006), which itself was a follow-up to the country’s first Public Financial Management Assessment conducted in September 2004. Prior to that, a Country Financial Accountability Assessment had been conducted in 2001. These early reports observed that the public sector financial management systems in Mozambique were weak and that the overall public sector fiduciary risk in Mozambique was high. Although satisfactory improvements had been registered in the management of the economy, the comprehensiveness and transparency of the budget was poor, the medium-term planning and budgeting was weak, and budget execution and accounting and reporting presented serious weaknesses.
9. The Government of Mozambique, with the support of its development partners, instituted a number of reforms in an effort to address the weaknesses. These initiatives included the introduction of a new financial management law that formed the basis for the introduction and implementation of a computerized, integrated government financial management information system, e-SISTAFE, which has since been rolled out to all the line ministries at national and provincial level, as well as to 50 of 128 districts. To further strengthen the new FM law, the Government also: (i) issued regulations for the FM law; (ii) initiated the introduction of a new and more-detailed functional classifier into the budget; (iii) introduced restrictions on bank accounts held by public institutions; (iv) started to incorporate off-budget revenues as well as donor-funded expenditures into the budget; (v) initiated training for budget staff in double-entry accounting; and (vi) established a consolidated electronic treasury account to improve control of treasury operations and cash management.
10. The overall indicators covering accounting, recording, and reporting, however, appear to have deteriorated slightly between 2001 and 2006, although some improvements have been noted in the timeliness and regularity of account reconciliations, and the timeliness and regularity of in-year budget reports. There has not, however, been a Public Expenditure Tracking Survey (PETS) in the last three years.
68 11. The report noted that the quality of the PFM was expected to continue improving as a natural consequence of ongoing reforms such as e-SISTAFE, but indicated that this would take some time. A review of e-SISTAFE and its supporting pillars in 2008 concluded that the Mozambique public FM system is adequate for handling Bank investment projects subject to the successful resolution of some cross-cutting issues identified at the time. The issues included:
x Assurances regarding the timeline between the disbursement of Bank funds and their availability to spending units; x Agreed procedures for amendments to project budgets; x Timeliness and content of intra-year and year-end financial reports; x Assurances on the timeliness and accuracy of CUT (Single Treasury Account) bank reconciliation; and, x Progressively greater involvement of the Administrative Tribunal in the external audit of Bank projects.
Governance and Accountability
12. The Government of Mozambique approved an Anti-Corruption Law in 2004. The law stipulates that all contracts to which state or municipal bodies are party must incorporate an anti- corruption clause and that whistle blowers are protected. Public officials now have to present a list of their assets every year and a final list on leaving office. Critics argue, however, that although the law is extensive in scope, implementation is lacking. The Central Office for Combating Corruption (GCCC) has been established within the Attorney General's Office, replacing the now defunct anti-corruption agency (known as the Anti-Corruption Unit). The GCCC carries out investigations of complaints in relation to corruption-related offenses within the public sector and has delegations in Maputo, Beira, and Nampula. The unit receives an increasing number of reports on corruption, but the number of investigations and prosecutions is still low, due partly to under-staffing and lack of funds.
13. Along with the above, there have been some signs of more serious government commitment against corruption, including taking decisive action against senior government officials accused of fraud and corruption, sentencing some of them to long sentences for white collar crime. On the other hand, there is still no law preventing politicians from owning businesses, resulting in many conflict of interest situations.
14. While no specific issues of governance and accountability came to light during the FM assessment, the following steps will be undertaken to minimize the incidence of corruption during the implementation of the project:
15. Internal Audit: Internal audits will be conducted by the Inspector General of Finance (Inspecão Geral das Finanças, IGF) to ensure compliance with GOM’s regulations complimenting the municipality’s own inspection unit.
16. External Audit: The TORs for the auditors will include specific responsibilities for the detection and reporting of fraud and corruption not only in project activities, but importantly for
69 the municipality as a whole. This audit may be performed by an independent private firm of external auditors, acceptable to the Bank.
Risk Assessment
17. The financial management arrangements should be strong enough to:
(i) Ensure that funds are used only for their intended purposes in an efficient and economical way, while implementing agreed activities; (ii) Enable the preparation of accurate and timely financial reports; (iii) Ensure that funds are properly managed and flow rapidly, adequately, regularly, and predictably; (iv) Enable project management to monitor the efficient implementation of the project; and (v) Safeguard the assets and resources procured using project funds.
18, In order to ensure a strong financial management system, the implementing units should have an adequate number and mix of skilled and experienced staff, and the internal control system should ensure the conduct of an orderly and efficient payment and procurement process, along with the proper recording and safeguarding of assets and resources. The accounting system should support the project’s requests for funding and meet its reporting obligations to both the Government and IDA. Lastly, the project’s financial statements and internal controls should be the subject of an independent audit.
19. The table below shows the results of the risk assessment. This identifies the key risks that management may face in achieving the project’s objectives, together with the appropriate ratings. It also outlines the risk mitigating measures that are incorporated into the project design.
70 Risk Rating Summary
Condition of Rating of Effectiveness, Board Rating Risk factors Description of risk Mitigation measures residual or Negotiation of risk risk (Yes or No) Major weaknesses exist in the FM S The Government is committed to the reform program, and S No environment (staffing, operating system, has introduced a new legal and regulatory framework that is Country Level reporting), resulting primarily from low underpinned by the introduction and roll out of the capacity, including in internal controls, integrated financial management system (e-SISTAFE). internal audit, and oversight bodies. The Bank has financed an IDF grant to assist the Supreme The Government’s reform program, Audit Institution to train and certify its auditors. The grant aimed at strengthening accounting and is in the pipeline phase, and its results are expected to be audit capacity through the recruitment yielded in the long-term. and training of FM specialists and accountants, is still a long way from being achieved. The development partners continue to finance the activities Although the new integrated financial of UTRAFE, the body tasked with the roll out of, and user information management system (e- training on, e-SISTSAFE. SISTAFE) has now been rolled out to all ministries at the central level, as well as
to all provinces, it has not yet reached optimal performance due to uneven user training. Sector Level Past experience with the institution has S Auditors will need to be contracted not later than three S No shown that the institution has not months after effectiveness, as a dated covenant. The submitted all its audit reports on a timely proposed institutional framework supports project oversight basis. and implementation. Budgetary control through SIGEF should enhance cost control, and the computerized information system will facilitate the timely preparation and submission of financial reports. CMM may not have sufficient FM capacity for the FM-related tasks ahead. The Bank will deliver workshops on its FM and disbursement policies and procedures as a training program and update to the FM staff of the DMF.
71 Condition of Rating of Effectiveness, Board Rating Risk factors Description of risk Mitigation measures residual or Negotiation of risk risk (Yes or No) Project Level Nature and size of the project being fully S A full-time financial management controller will be M No implemented by the municipality responsible for handling FM for the project. without separate PIU may result in competition of time/resources.
The major risks will relate to the use of Regular targeted training on the abilities and capabilities of the new SIGEF for the implementation the new SIGEF. Representatives from the vendor company of the project activities. As the system will be in Mozambique to continue to provide any technical will still be new to the municipality, assistance as necessary. optimal use of the system may not be adequate. I. Overall S M Inherent Risk II. Control Risk Budgeting Budgeting, budgetary control, and M Budgeting procedures are already well defined in the Law M No budget revisions may not follow 1/2008 (Lei 1/2008 de 16 de Janeiro) as specified in the appropriate internal procedures. Municipal Legislation (Colecatânia de Legislação Autarquica), which requires that the budget for the municipality, including projects implemented by the municipality, is approved by the Municipal Assembly by December 15 of the prior year. It also defines arrangements
required for other budget activities such as budget revisions. Budgets will not be prepared on a timely basis. Yearly project budgets will need to be prepared in line with the procurement plan and the approved work plan. Accounting There may be lack of qualified personnel S The municipality continues to invest and train its staff. The S No handling FM issues at CMM’s finance financial management controller will be adequately department qualified and will also attend the financial management and disbursement training offered by the Bank within the first The accounting is initially to be recorded six months of implementation to enhance his/her skills and and summarized through spreadsheets abilities for further dissemination. until the SIGEF is ready for use, and data could be lost in the process of Backup arrangements will be performed twice a month to
72 Condition of Rating of Effectiveness, Board Rating Risk factors Description of risk Mitigation measures residual or Negotiation of risk risk (Yes or No) transfer. ensure that there is no loss of information.
Once SIGEF is in use, there is a risk of All users of the system have been obtaining training, and errors due to unfamiliarity with the updating will continue throughout as needed by the SIGEF. supplier.
CMM applies cash basis accounting, but CMM is already familiar with the government’s accounting there is a risk that it could not be procedures and Bank Guidelines, which are documented in applying the correct accounting the financial management procedures manual. Inspections standards. from the municipality, IGF, and the TA will help ensure compliance with appropriate standards and regulations.
The municipality continues to invest and train its staff. The financial management controller will attend the financial management and disbursement training offered by the Bank to enhance his/her skills and abilities for further dissemination. Internal Control Audit reports have generally revealed S DMF is responsible for ensuring preventive and corrective S Yes, an updated some weaknesses in the internal control actions of any issues related to internal controls, as well as Operations Manual framework of MMDP. timely follow-up on auditors/supervision recommendations will be a condition of by having an adequately qualified dedicated FM person for effectiveness the project
The risk that CMM’s internal control CMM has its own operations manual which is a living procedures may not be adhered to. document and includes an FM section. It will be updated as needed to incorporate the new project procedures and those of the SIGEF manual.
The fixed asset module is still based on Fixed asset data is being updated and will be migrated into spreadsheets and Primavera but past the SIGEF system. Until the SIGEF is fully functional, the CMM will continue to make use of their current asset audit reports have revealed that these management modality, through the recording of all receipts have not been updated. of assets, ensuring authorization of any movement or disposal, and indicating location to facilitate regular asset
73 Condition of Rating of Effectiveness, Board Rating Risk factors Description of risk Mitigation measures residual or Negotiation of risk risk (Yes or No) inventories. The auditors will also be required to verify the existence of project assets during their annual audits. Funds Flow There is a risk that project funds may be S Report-based disbursements procedures will help ensure M No applied towards other commitments of that funds are used for only approved contracts and the municipality. appropriately prorated, should that be necessary.
There is a risk that CMM/GOM may not Upon full functionality of the SIGEF, a single treasury contribute funds as agreed to the project account for the municipality may be created, through which on a timely basis. funds will be codified by financial source and similarly spent by source to allow for better accountability of the contributions.
In the agreed audit TORs, the auditors are being asked to express special opinions on the provision and usage of counterpart funds. Financial The risk that CMM financial reporting S Government accounting standards have already been M No Reporting may not be in terms of international reviewed and deemed to refer to international accounting accounting standards. standards.
The current MMDP project has Formats of the Interim Financial Reports have been agreed generally struggled to meet the audit between the Bank and CMM. submission deadlines. Auditors will be contracted within three months of Audits have also been qualified and effectiveness as part of the agreed action plan, and there is a risk that the new project may application of Bank remedies will help ensure their suffer the same fate. submission. The 2009 annual audit was received within the stipulated date. Auditing Audit reports may not be submitted on S Contracting of external auditors within three months of S No the date stipulated in the financing effectiveness will be part of the agreed action plan. This agreement. will further enhance early submission of audit reports to the Bank. The risk that both the audit coverage and Audit procedures are to be conducted for the municipality as a whole with auditors using ISA. Should the TA be
74 Condition of Rating of Effectiveness, Board Rating Risk factors Description of risk Mitigation measures residual or Negotiation of risk risk (Yes or No) technical quality may not be satisfactory. responsible for the audit, it will be encouraged to seek the additional support of private audit firms to conduct satisfactory audits, at least in the early stages of implementation. Otherwise, an acceptable firm of external auditors will be responsible for carrying out the audit.
Overall Control S S Risk OVERALL RISK S S RATING: Key : H – High; S – Substantial; M – Moderate; L – Low
75 Strengths and Weaknesses
20. The main strength is that CMM is already experienced in World Bank FM and disbursement procedures, and there are no substantial changes to the arrangements of MMDP I. The implementation of the new SIGEF will also provide an additional measure of comfort with its enhanced abilities, security, and controls. The errors and experience of the predecessor project referred to above can also be viewed as a plus for the municipality, on the assumption that it has learned from those mistakes.
21. The main weakness relates to the capacity of the municipality as a whole. In addition, during the transition period to the SIGEF, difficulties may arise due to the users not being accustomed to it. While this will tend to be a weakness in the earlier stages of the project, with the progression of time and experience with the SIGEF, it is expected that it will become astrength. Other weaknesses include submission of the audit reports after the stipulated due dates.
Funds Flow Mechanisms and Disbursement of Funds
22. The project will operate a segregated Designated Account (DA) in US$ under terms and conditions satisfactory to the Bank as follows:
i) US$ Designated Account managed by CMM, to receive funds from the Bank and to cover all payments. ii) The Ceiling for the DA will be the amount forecast to be spent in the next two quarters as specified in the quarterly IFR. iii) CMM will open the DA in a commercial Bank satisfactory to the Association
76 23. An illustrative flow chart for the funds flow is shown below:
WORLD BANK CENTRAL MAPUTO MUNICIPAL GOVERNMENT COUNCIL
Commercial Bank DA (US$) CMM Bank Account
SUPPLIERS/SERVICE PROVIDERS
24. All Bank funds will initially flow through the Designated Account, and payments to suppliers of goods and services will either be paid through direct payments or from the Designated Account. CMM’s and GOM’s contributions to the program will be effected through a separate bank account held by CMM. The Project will also be able to use the Reimbursement and Special Commitment disbursement methods. The Minimum Application Size for Direct Payments, Reimbursements, and Special Commitments is 20% of the ceiling of the DA.
25. Ongoing work with the SIGEF supplier is taking place to ensure that CMM will be able to directly collate all expenditure information and independently produce the necessary regular reports without needing to export information into spreadsheets for subsequent reporting to the Bank. The SIGEF will be able to distinguish the sources of the funds, as well as the expenditures by source of fund. Therefore, the funds flow will also differ when the SIGEF is fully operational
77 and will be simple to trace, verify, and monitor contributions to the project other than those of IDA, as follows:
World Bank CMM Central Government
Commercial Bank Transit Designated Account (Classification)
CMM Single Treasury (MTN)
Expenditure by the classified source of
funding
SUPPLIERS/SERVICE PROVIDERS
Disbursement
26. The project will use report-based disbursement documentation, producing quarterly Interim Financial Reports (IFR). Disbursements from the Bank will be on a quarterly basis. Upon effectiveness of the Financing Agreement and at the request of CMM, an initial advance not exceeding six months (two quarters) forecasted can be transferred into the Designated Account to cover eligible expenditures.
78 27. The Bank will issue the “Disbursement Letter” which will specify the additional instructions for withdrawal of the proceeds of the Credit.
Allocation of Credit Proceeds Amount of the Amount of the Percentage to be Credit Allocated Credit Allocated financed Category (Expressed in (Expressed in millions of US$) millions of XDR) (1) Works under Parts A.1 15.19 10.00 100% (c); A.2 (c ); B (c); C (d); D (a); D (b) and E.2(b) of the project (2) Goods 2.53 1.70 100% Except for Part A.1(i) of the project (3) Consulting Services 15.73 10.40 100% (4) Training 1.39 0.92 100% (5) Services (other than consulting services) 80% in FY2011 (a) Part A.1 (e) of the 60% in FY2012 project 0.22 40% in FY2013 0.33 20% in FY2014 0% in FY2015
65% in FY2011
(b) Part E.1 (b) of the 50% in FY2012 40% in FY2013 project 3.10 4.70 65% in FY2014
55% in FY2015
0.93 100% (c) Parts B (c); C (c); and C 1.41 (d) of the project
(6) Operating Costs 0.72 0.48 100% Except for Parts A.1(h); and A.2(e) of the project (7) Compensation for 0.00 0.00 0% Displaced People paid by non-IDA sources (8) Unallocated 8.00 5.25 (9) Total financing 50.00 33.00
79 The IDA financing will be inclusive of taxes.
FINANCIAL MANAGEMENT
Budgeting
28. Budgeting, budgetary control, and budget revisions will follow CMM’s internal procedures. Appropriate costing and financing estimates will be developed and monitored by the DMF and approved by the Municipal Assembly as per the bylaws. Approved activities on the budget will be captured in a procurement plan, which for IDA purposes will be the document driving implementation.
Accounting procedures and internal controls
29. Accounting policies and procedures are already documented in the Operations Manual, which was already reviewed and approved for the ongoing MMDP I project, but its application in practice will need to be adequately monitored. Initially, transaction recording will be conducted through spreadsheets. Subsequently, the accounting and some embedded internal controls will be based on the tested SIGEF, while the general internal controls will be derived from standard GOM procedures, as well as those documented in the Operations Manual. Procedures relating specifically to Bank document processing and reporting (including report formats) are already captured in the available Operations Manual for the project, but will require updating in formats of the reports to be submitted to the Bank.
30. Special attention will need to be paid to accounting for project assets, as auditors raised concerns in previous audits. The Operations Manual has adequate procedures for the safeguarding and accounting for the assets, which still needs to be monitored to ensure that the procedures are adhered to. The municipality will also be responsible for ensuring that the DMF is adequately staffed throughout the life of the project.
31. The Audit Report, issued by the IGF (Relatório do Parecer a Conta de Gerência) has also revealed some internal control issues. While not directly related to funds of MMDP I, the report still leaves some valuable recommendations to be followed by CMM, which could have an impact on MMDP II if not appropriately addressed. Independent audit reports, including the December 2009 report, have also revealed some internal control issues which the project has been addressing, including those related to fixed assets, lack of supporting documentation and some ineligible expenditures. The CMM has provided the Bank with a commercial bank’s confirmation that these ineligible expenditures have been refunded to the Bank.
Accounting system
32. The accounting system is used to track, record, analyze, and summarize the financial transactions relating to the project. The project financial statements will be prepared on a cash basis, using similar standards used by the Government of Mozambique and which refer to International Accounting Standards.
80 33. When fully operational, the project will use the outsourced and customized integrated accounting and financial system, SIGEF for all project activities. Accounting staff will still require additional training on using the system. Ongoing technical support will ensure proper system maintenance and that appropriate controls are instituted to safeguard the confidentiality, integrity, and availability of the data. The existence of SIGEF will help reduce the risk of human errors in record keeping, and enhance efficiency in preparing reports as was initially the case with MMDP I with the use of spreadsheets. The project will need to retain adequate and valid supporting documentation to ensure that all activities are properly supported and made available upon request during supervision and audit missions.
34. On-going work with the supplier of SIGEF is underway to ensure that the system provides reports on a timely basis and in accordance with Bank categories, preventing data modification prior to submission to the Bank.
Reporting Arrangements
35. The objective of the reporting system is to enable the production of sufficiently detailed and regular information to assist in the management and monitoring of project implementation. The FM controller, through the DMF, will be responsible for ensuring that all activities are entered into the SIGEF for submission to the Bank. The format of the quarterly reports will enable easy compilation of information and allow for monitoring of project performance.
36. Quarterly reports in the agreed format will be prepared and submitted to the Bank within 45 days of the end of the reporting period. The financial reports will be designed to provide quality and timely information to project management, and various stakeholders on project performance. These quarterly reports include: (i) DA Activity Statement; (ii) Statements of DA expenditures subject to prior review; (iii) Statements of DA expenditures not subject to prior review; (iv) Sources and Uses of Funds by disbursement categories; (v) Detailed Use of Funds by Project Component/Activity with comparison of budgets and actual expenditures, with explanation of any variances, and short-term forecasts of expenditure; and (vi) a narrative summary of implementation highlights for the quarter to help the readers understand the financial statements better.
37. To compliment the work of the FM controller, the project will recruit a part-time Financial Management Specialist (FMS) who is already familiar with Bank reporting requirements to assist the FM controller. The FMS will provide this assistance around the period before the quarterly reports and yearly reports are due to be submitted to the Bank until the FM controller has sufficient capability to handle this responsibility, allowing the transfer of knowledge and know-how to remain at the municipality.
38. Annually, audited financial statements will be submitted to the Bank within six months of the end of the financial year audited. These audits will be conducted in accordance with international standards on auditing. The Annual Financial Statements for the project will incorporate all activities, and include: (i) a Statement of Sources and Uses of Funds showing funds from IDA and how they were applied; (ii) a Summary of Expenditures analyzed by both Component and Category, and the supporting Notes with respect to significant accounting
81 policies and accounting standards adopted by management; (iii) Designated Account Activity for the Year showing deposits and replenishments received, payments substantiated by withdrawal applications, interest that may be earned on the account, and the balance at the end of the fiscal year; (iv) an Implementation Report, which would be a narrative summary of the implementation progress for the project; and (v) a Summary of Withdrawals, listing individual withdrawal applications by reference number, date, and amount.
Oversight Arrangements: Audits
Internal Auditing
39. The Inspector General of Finance (IGF) is constitutionally mandated to conduct the internal audit/inspection function of government funds. For operational purposes, it is split into three geographical teams based in Maputo, Nampula, and Beira, with each team covering provinces in the southern, northern, and central regions respectively. Selection of entities for audit during each year is based on the government’s business needs, as well as history of performance by the subject units. CMM has an internal inspection/audit department which still requires additional staff or qualified personnel to answer the demands of the growing activities of the municipal Council. This department is currently only inspecting the core activities of the institution, but needs to cover those of the project as well. To mitigate this shortfall, the Bank will scale up the level of FM supervision as needed. In addition, the municipality is still subject to IGF audits. Any internal audit reports produced by the IGF covering project matters will be used to compliment Bank supervision efforts, as well as give guidance on audit emphasis for the external audit (below). Likewise, any internal audit reports produced by CMM’s internal audit department will be reviewed by the Bank FM team and used to augment the supervision effort.
External Auditing
40. The Administrative Tribunal (Tribunal Administrativo) (TA) is constitutionally mandated to audit all government projects. The audit will initially be conducted by a firm of private auditors acceptable to the Bank, but participation by TA staff in the actual audit may also be a possibility. Under terms of reference acceptable to the Bank, CMM shall have its non project specific accounts audited. The audit will also cover all the activities of MMDP II, including IDA resources and CMM and GOM contributions. Some emphasis will be placed on verifying project assets and assessing the adequacy of the accounting arrangements for assets, as this was a reason for qualification of the 2008 audit report.
41. The audited financial statements, together with the auditor’s report and management letters (incorporating management’s comments) covering identified internal control and accounting system weaknesses, will be submitted to IDA within six months of the end of each financial year (i.e. by June 30 each year). Any firm of auditors subcontracted to carry out the audit will need to meet IDA’s requirements in terms of independence, qualifications, and experience.
42. In addition, as the audit is to be conducted of the municipality as a whole, including all municipal accounts, one audit report will be issued, with two separate opinions; one of the
82 financial statements of the municpaility, and the other on those of the Project. The audit report, with its respective management letter and CMM’s responses to any issues raised therein, will be submitted to the Bank on a yearly basis.
FM Action Plan Action Indicative Date By whom
Update Operations Manual Condition of Effectiveness CMM
Hiring of auditors 3 Months after Effectiveness CMM
Conditionality
Effectiveness
x Update of Operations Manual.
Dated Covenant
x Not later than three (3) months after the Effective Date, the Recipient shall cause the Project Implementing Entity to hire external auditors for the Project, under terms of reference satisfactory to the Association.
Financial Covenants
x Maintain the financial management system, including records, and accounts in accordance with the terms of Financing Agreement;
x Prepare and furnish to the Bank interim unaudited financial reports for the project covering the quarter, in form and substance satisfactory to the Bank, no later than 45 days after the end of each calendar quarter;
x The project’s Financial Statements will be audited in accordance with the provisions of Section 4.09 (b) of the General Conditions, and together with the Project Implementing Entity annual audited Financial Statements (non Project specific accounts) will be submitted to the Bank no later than six months after the end of GOM’s fiscal year (i.e. by June 30), following the year reported on.
Supervision Plan
43. Supervision will be risk based, and will include: (i) review of quarterly IFRs; (ii) review of annual audited financial statements and the auditor’s management letter; and (iii) management response in turn, as well as timely follow-up on raised issues of concern. As a substantial risk project, a minimum of two FM supervision missions will be fielded per year and adjusted based on the risk rating of the project.
83
44. The Bank Financial Management Specialist in charge of the project will play a key role in monitoring the timely implementation of the financial management arrangements.
Conclusions
45. The overall conclusion of the assessment is that the overall residual risk is “Substantial” and that the FM arrangements meet the Bank’s OP/BP10.02 minimum requirements under financial management.
84 Annex 8: Procurement Arrangements
A. General
1. Procurement for the proposed project would be carried out in accordance with the World Bank’s "Guidelines: Procurement under IBRD Loans and IDA Credits", dated May 2004 and revised in October 2006 and May 2010; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers", dated May 2004 and revised in October 2006 and May 2010, and the provisions stipulated in the Financing Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
2. The Bank has been engaging the Government in pursuing sound procurement reforms and the Government issued the Decree 54/2005 of December 13, 2005 enacting the new Procurement Regulation (now updated into the Decree 15/2010 of May 24, 2010). With the support of the World Bank, the KfW, and the African Development Bank, the Government carried out in 2008 an update of the Country Procurement Assessment Report (CPAR). The 2008 CPAR highlights that the Country has adopted a new Procurement Regulation which makes progress towards meeting the requirements of the OECD DAC indicators as the Regulations are considered as generally meeting international standards for efficiency and accountability. Nevertheless, the CPAR recommended areas for improvement of the Regulation and the Bank and Partners will continue to engage with Government and support the implementation of the CPAR Action Plan.
3. Complementing the Decrees 54/2005 and 15/2010, the Government issued Standard Bidding Documents (SBDs) for works, goods and non-consulting services, drugs and medical supplies, and a Request for Proposal (RFP) for consulting services. These SBDs are generally consistent with Bank guidelines and may be used under National Competitive Bidding, with exceptions indicated under Section F of this Annex below, to better align them with international best practice and the recommendations of the CPAR. Furthermore, the Government has also issued a Standard Request for Proposals that has been reviewed and found to be fully consistent with Bank procedures, and may be used under competition with short-lists comprised of National Consultants, without additional measures.
4. Procurement of Works: Works under the project, estimated to amount to $15.19 million, will mainly consist of construction and/or rehabilitation of municipal roads, spot repair of drainage structures, and modest targeted infrastructure improvements The procurement will be done using the Bank’s Standard Bidding Documents for all International Competitive Bidding (ICB) contracts. National Competitive Bidding (NCB) documents in the Portuguese language, in accordance with the Mozambican Procurement Regulations, as per Decree Number 15/2010, and with the exceptions indicated in Section F of this Annex below, will be used as agreed upon by the Bank. For contracts estimated to cost less than US$5,000,000 equivalent per contract, NCB
85 procedures will apply. Minor works expected to be procured under this project would mainly consist of rehabilitation and maintenance of offices under contracts estimated to cost less than US$100,000 equivalent per contract. These works will be procured with the use of Shopping procedures, comparing at least three written quotations from qualified contractors.
5. Procurement of Goods: Goods procured under this project, worth some $2.53 million, would include vehicles and associated equipment, spare parts for vehicles, IT equipment, office equipment, communication equipment, multimedia equipment, network infrastructure, and office furniture, among others. The procurement will be done using the Bank’s Standard Bidding Documents for all International Competitive Bidding contracts. National Competitive Bidding documents in Portuguese language, in accordance with the Mozambican Procurement Regulations, as per Decree 15/2010, and with the exceptions indicated under Section F of this Annex below, may be used for contracts estimated to cost less than US$500,000 equivalent per contract. Small value goods estimated to cost less than US$75,000 per contract may be procured under the Shopping procedures, through the comparison of at least three written quotations from qualified and reputable suppliers.
6. Procurement of non-consulting services: Non-consulting services procured under this project, valued at $6.44 million, would include the provision of services associated with GIS, financial management systems, solid waste collection, communication services, and IT systems, and these should be procured under ICB procedures. Small contracts estimated to cost less than US$75,000 per contract for the provision of printing materials and workshop organization, among others, may be procured under shopping procedures. Some of these services would be augmented by CMM own funds.
7. Selection of Consultants: Consulting services worth around US$15.73 million under this project will include environmental and social studies, works supervision, financial analysis, revenue collection analysis, human resources studies, change management, solid waste supervision, and monitoring and evaluation systems, among others. All consulting service contracts estimated to cost more than US$200,000 equivalent per contract for firms will be awarded through Quality and Cost Based Selection (QCBS) method. Contracts for assignments estimated to cost less than US$200,000 equivalent may be contracted through Consultants’ Qualification (CQS).
8. Least-Cost Selection (LCS) will be used for selecting consultants for assignments of a standard or routine nature, such as audit services, where well-established practices and standards exist, and estimated to cost less than US$200,000.00.
9. Single Source Selection (SSS) may be employed with prior approval of the Bank, and in accordance with the provisions of paragraphs 3.9 to 3.12 of the Consultant Guidelines.
10. All services of individual consultants (IC) will be procured under individual contracts in accordance with the provisions of paragraphs 5.1 to 5.4 of the Guidelines.
86 11. For the selection of Consulting Services estimated to cost less than the equivalent of US$200,000 per contract, and with a short list comprised only of national consultants, the provisions of the Decree 15/2010 may apply.
12. All terms of reference (TOR) for the selection of firms and individual consultants, regardless of the estimated value of the assignment, will be subject to Bank review and no- objection.
13. Training: This category would cover all costs related to conducting training and workshops, including hiring of venues and related expenses, stationery, facilitators, resources required to deliver the workshops, and per diem and travel costs of participants. Training programs would be part of the project’s Annual Work Plan and Budget, and will be included in the Procurement Plan. Prior review of all training will be required on an annual basis, including proposed budget, agenda, participants, location of training, and other relevant details.
14. Operating Costs: Operating costs shall consist of office supplies, operation and maintenance costs for vehicles and equipment, travel expenses and subsistence expenditures, remuneration of project staff but excluding Recipient’s civil servants, among others. The operating costs will be procured using the administrative procedures of the Maputo Municipality which were reviewed by the Bank and found to be satisfactory for use under the project.
15. Conflict of Interest: Government officials and civil servants cannot be hired under any circumstances by the agency for which they previously worked, or when their employment would create a conflict of interest. Government officials and civil servants may only be hired under consulting contracts, either as individuals or as members of a team of a consulting firm, if they: (i) are on leave of absence without pay; (ii) are not being hired by the agency they were working for immediately before going on leave; and (iii) their employment would not create a conflict of interest. When members of a team of a consulting firm, they would have to be on leave without pay at the time the consulting firm submits its proposal.
16. The procurement procedures and Standard Bidding Documents to be used for each procurement method, as well as model contracts for works and goods procured, are detailed in the Project Implementation Manual prepared by the Borrower and acceptable to the Bank. The Procurement section of the Project Implementation Manual is an update of the MMDP I Manual and was prepared and submitted for Bank review and discussion during appraisal. The Manual was found to be satisfactory and it incorporates the salient fixtures of MMDP II.
B. Assessment of the agency’s capacity to implement procurement
17. The implementation of MMDP II will be steered by the Maputo City Council (CMM), under the purview of the Mayor. Within CMM, the Directorate of Finance has been entrusted with the oversight of the CMM procurement unit and will be responsible for the daily management of the project with the support of GDEI.
18. The Procurement Department (Departamento de Aquisições, DA) will be the sole unit responsible for carrying out procurement under the project on behalf of all the other beneficiary
87 departments within CMM. As agreed during project preparation, the DA is enhancing its capacity through organizational restructuring and on-the job training under an internationally recruited consultant, in order to be able to provide the necessary capacity and oversight on all the procurement phases.
19. To accomplish the task, CMM DA is comprised of eight staff, including one technical staff (architect), and an international Procurement Specialist (PS). The international PS is in charge of the capacity building efforts aiming at strengthening the DA, and provides on-the-job training to the recently recruited staff in addition to developing norms, templates, and guides for use within DA and CMM.
20. A Capacity Assessment of CMM’s DA was carried out on April 12, 2010 by António Chamuço, Procurement Specialist. The assessment reviewed the organization of CMM and of the DA’s capacity to meet Bank fiduciary requirements and implement the proposed MMDP II satisfactorily.
21. The key issues and risks concerning DA procurement capacity for project implementation have been identified as the need to recruit and retain qualified staff within the DA and ensure that qualified technical assistance is retained to provide effective on-the-job training. Furthermore, the various beneficiary units within CMM should actively take ownership of their respective activities and, in a timely fashion, prepare the required TOR/specifications and evaluation reports, and participate in contract negotiations, where applicable. In addition, each unit will undertake its own contract monitoring. To enhance oversight and accountability, CMM should work with all stakeholders to design adequate business standards to be monitored by Senior Management. The corrective measures which have been agreed are listed on the Action Plan below.
Table 1: Procurement Management Action Plan to Mitigate Procurement Risk Risk Action Due Date 1. Capacity to manage Action plan to strengthen the Procurement Continuous procurement inadequate Department should be implemented
Maintain current procurement staffing Continuous arrangements
2. Adequate procedures Update the Procurement Manual under MMDP I to During Appraisal for procurement not laid incorporate applicable procedures under MMDP out properly II, as part of its project implementation manual.
Ensure that adequate business standards are designed for the DA and stakeholders
22. Given that the country context risk for procurement is rated Moderate, the current capacity of the CMM’s procurement unit, the nature and low complexity of the key project activities, and the CMM’s relevant experience in Bank fiduciary requirements, the overall project risk for procurement is Moderate.
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C. Frequency of Procurement Supervision
23. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the CMM results in recommended semi-annual supervision missions to visit the field and review the progress of project implementation. The Bank will carry out a post- review of procurement at least once per year. The Supervision missions will also include on-site visits, at least once every year.
24. The thresholds for the use of the various procurement and selections methods are summarized in Table 2 below:
Table 2: Thresholds for Procurement Methods and Prior Review Contract Value Contracts Subject to Expenditure Category Threshold Procurement Method Prior Review15 (US$) 1. Works ≥ 5,000,000 ICB All 100,000 - 5,000,000 NCB None <100,000 Shopping None Direct Contracting All 2. Goods and Services >500,000 ICB All (other than Consultants’ 75,000 - 500,000 NCB None Services) <75,000 Shopping None Direct Contracting All
3.Consultants’Services >200,000 QCBS, All Firms <200,000 LCS and CQS None Single Source All
4. Individuals >100,000 IC All <100,000 IC None Single Source All
ICB – International Competitive Bidding NCB – National Competitive Bidding QCBS – Quality and Cost-Based Selection LCS – Least-Cost Selection CQS – Consulant’s Qualification Selection IC – Independent Consultant
D. Procurement Plan
25. The Borrower, at appraisal, developed the procurement plan for project implementation, which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the CMM Team on August 26, 2010 for the first 18 months and is available from the Maputo Municipal Council Procurement Department’s Implementation Team. It will also be
15 The Bank may, at its own discretion, require that a sample of contracts below the threshold be subject to prior review, at any time or when the Procurement Plan is updated.
89 available in the project’s database and in the Bank’s external website. The Procurement Plan will be updated in agreement with the Project Team annually, or as required, to reflect the actual project implementation needs and improvements in institutional capacity.
E. Details of the Procurement Arrangements Involving International Competition
1. Goods, Works, and Non-Consulting Services
Review Pre- Expected Estimated Procure Domestic by Contract qualifi- Bid- Ref. No. Cost -ment Preference Bank (Description) cation Opening (US$) Method (yes/no) (Prior / (yes/no) Date Post) Technical assistance to maintain hardware and A-1451/S/01 software $500,000 NCB No No Prior Jan/11 (Corporate network, SIGEM, SIGEF) for 5 years Rehabilitation of facilities of A-2121/W/01 $1,001,000 NCB No No N.A. Jan/12 Municipal Districts Services for rectification of C-1121/S/01 $737,500 ICB No No Prior Aug/11 aerial photography Works in the “trial $850,000 C-1212/W/01 neighborhoods” NCB No No Prior Dec/11
(bairros de ensaio) Services for C-1222/S/01 DUAT printing $1,250,000 NCB No No N.A. Dec/10 and delivery
Cemetery D-1111/W/01 $4,340,000 NCB No No N.A. April/11 building
Rehabilitation of $10,850,000 D-1211/W/01 the Julius ICB Yes Yes Prior Jun/11
Nyerere Road D-1232/W/01 Rehabilitation of $11,000,000 NCB No No May/12 N.A. paved roads
90 Review Pre- Expected Estimated Procure Domestic by Contract qualifi- Bid- Ref. No. Cost -ment Preference Bank (Description) cation Opening (US$) Method (yes/no) (Prior / (yes/no) Date Post) Rehabilitation of non-paved roads D-1241/W/01 in municipal $2,000,000 NCB No No N.A. May/12 districts (rehabilitation) City Collection Center GRSU E-1111/S/01 (from July $5,350,000 ICB No No Prior Jan/11 2011) (CMM/IDA) Secondary collection GRSU (from E-1111.b/S/01 May 2011, $9,058,000 ICB No No Prior Sept/10 signing in January 2011) (CMM/IDA)
(a) Contracts estimated to cost above US$500,000 equivalent for goods and services per contract and all direct contracting will be subject to prior review by the Bank.
2. Consulting Services
Review Expected Estimated Description of by Bank Proposals Ref. No. Selection Assignment Cost (Prior / Submission Method Post) Date (US$) Implementation of the A-1111./CS/01 Report Card $241,500 QCBS Prior Nov/10 2010/2014 Advisor for Planning and A-1151./CS/01 $360,000 IC Prior Dec/10 Monitoring Assistant for Planning and A-1151./CS/02 $112,500 IC Prior Dec/10 Monitoring Consulting Services for A-1231./CS/01 Organizational $1,200,000 QCBS Prior May/11 Development Senior Advisor for A-1232./CS/01 Organizational $300,000 IC Prior Dec/10 Development Advisor for Organizational A-1232./CS/02 $112,500 IC Prior Dec/10 Development
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Review Expected Estimated Description of by Bank Proposals Ref. No. Selection Assignment Cost (Prior / Submission Method Post) Date (US$) Definition of the CMM qualifier and strengthening A-1311./CS/01 of the Restructuring and $648,000 QCBS Prior Jan/11 Integrated HR Management System Consulting services for the automation of processes of A-1412./CS/01 $199,200 CQS Post Jan/12 the Online Bureau (MMDP II) Senior advisor for the A-1461./CS/01 $120,000 IC Prior Dec/10 DMSI Definition of the A-2111./CS/01 $101,000 IC Prior Apr/11 Decentralization Model Technical Assistance for the feasibility assessment, A-2421./CS/01 design, facilitation, and $349,200 QCBS Prior Jan/11 control of the implementation of PPPs B-1152./CS/01 Legal Advisor (counseling) $210,000 QCBS N.A. Feb/11 Senior advisor for the B1 B-1311./CS/01 $240,000 IC Prior Dec/10 sub-component External auditing for years B-23.22./CS/01 $149,800 QCBS Prior Dec/10 1 and 2 Consultant of the B2 B-2411./CS/01 $120,000 IC Prior Dec/10 subcomponent Senior consultant for B-2411./CS/02 $120,000 IC Prior Dec/10 SIGEF Consultant for training at B-2411./CS/03 $150,000 IC Prior Nov/11 the SIGEF Senior Procurement B-3311./CS/01 $300,000 IC Prior Dec/10 Specialist B-3311./CS/02 Procurement Specialist $180,000 IC Prior Dec/10 Preparation of the C-1111./CS/01 $200,100 QCBS Prior Jan/11 Ecological Zoning Plan Consulting Services to C-1122./CS/01 $363,900 QCBS Prior Sept/11 Expand SIGEM Preparation of the Urban C-1131./CS/01 $800,000 QCBS Prior Mar/11 Plan – Marginal Consulting services for the C-1131./CS/02 Preparation of the Urban $770,000 QCBS Prior Nov/11 Plan – Baixa Preparation of PPUs (2 to 3 C-1133./CS/02 $303,000 QCBS Prior Nov/11 contracts)
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Review Expected Estimated Description of by Bank Proposals Ref. No. Selection Assignment Cost (Prior / Submission Method Post) Date (US$) Technical assistance to support the Implementation C-1211./CS/01 of the Global Strategy for $733,200 QCBS Prior Dec/10 Integrated Intervention in informal settlements Coordinator for Integrated C-1213./CS/01 $300,000 IC Prior Dec/10 Actions Urban Planning Strategic C-1213./CS/02 $484,500 IC Prior Dec/10 Advisor Consulting services to define the methodology C-1221./CS/01 and support the Program $1,029,000 QCBS Prior Jun/11 for Massive Regularization of DUAT’s Cemetery’s Construction D-1111./CS/01 $240,000 QCBS NA Mar/11 Supervision Supervision services for D-1211./CS/01 Julius Nyerere’s $660,000 QCBS Prior May/11 reconstruction Consulting services for the N.A. D-1221./CS/01 2nd stage of Julius Nyerere $355,000 QCBS Oct/11 - Supervision Consulting services for the N.A. D-1232./CS/01 project design and $624,000 QCBS Sept/11 supervision – Paved Roads Technical Assistance for D-1311/CS/01 $230,400 IC Prior Jul/11 the Area of Infrastructures GRSU Monitoring (from E-1111.c/CS/01 $200,000 QCBS Prior Mar/11 October/11) Technical assistance for GRSU Monitoring $275,000 QCBS N.A. Nov/10 E-1112/CS/02 Assistance Advisor for the E2 sub- E-2131./CS/01 $120,000 IC Prior Dec/10 component
(a) Consultancy services estimated to cost above US$200,000 equivalent per contract for firms and US$100,000 equivalent per contract for Individual Consultant and Single Source Selection of consultants will be subject to prior review by the Bank.
(b) Short lists comprised entirely of national consultants: Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be comprised entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.
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F. Additional Provisions Governing National Competitive Building
26. National Competitive Bidding (NCB) for Goods and Works, in accordance with the Mozambican Procurement Regulations, as per Decree Number 54/2005 (now updated into the Decree 15/2010 of May 24, 2010) may apply subject to the following additional provisions:
(i) Eligibility. No bidder, foreign or domestic, shall be precluded from participating in the bidding process for reasons unrelated to their eligibility or capability to perform the contract. Examples of reasons that may not be used to preclude a bidder from so participating include the following: proof that the bidder is not under bankruptcy proceedings in the territory of the Recipient; appointment by the bidder of a local representative in the territory of the Recipient; prior registration by the bidder in the territory of the Recipient; or license or agreement allowing the bidder to operate in the territory of Recipient.
(ii) Qualification. Bidders shall be post-qualified unless the Procurement Plan explicitly provides otherwise. Irrespective of whether post-qualification or pre- qualification is used, both national and foreign bidders who meet the qualification requirements, as stated in the bidding documents, shall be allowed to participate in the bidding process.
(iii) Bidding Documents. Bidders shall use Standard Bidding Documents for the procurement of goods, works, and services, consistent with the provisions of the Procurement Guidelines.
(iv) Preferences. No preference for domestically manufactured goods or for domestic contractors shall be allowed.
(v) Bid evaluation. The qualification criteria shall be clearly specified in the bidding documents, and all criteria so specified, and only such criteria so specified shall be used to determine whether a bidder is qualified. The evaluation of the bidder’s qualifications should be conducted separately from the technical and commercial evaluation of the bid. Evaluation of bids shall be made in strict adherence to the criteria set forth in the bidding documents; criteria other than price should be quantified in monetary terms. A contract shall be awarded to the qualified bidder offering the lowest technically responsive evaluated bid. Bidders shall not be eliminated from detailed evaluation on the basis of minor, non-substantial deviations.
(vi) Rejection of All Bids and Re-bidding. In cases where the Recipient rejects all bids and solicits new bids for a contract, it shall, as soon as possible, notify the Association of such decision.
(vii) Complaints by Bidders. Complaints by bidders shall be handled by the Recipient, who shall inform the Association of any such complaint.
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(viii) Right to Inspect/Audit. Each bidding document and contract financed out of the proceeds of the Financing shall provide that the bidder, supplier, contractor, and any subcontractor shall permit the Association, at its request, to inspect their accounts and records relating to the bid submission and performance of the contract, and to have these accounts and records audited by auditors appointed by the Association. An act by the bidder, supplier, contractor or subcontractor intended to materially impede the Association’s exercise of its inspection and audit right constitutes an Obstructive Practice.
95 Annex 9: Economic and Financial Analysis
1. The economic analysis covers the investments of the urban infrastructure component. A financial analysis of Component B on Financial Sustainability and the Solid Waste Management system of Component E is also presented.
Urban infrastructure and Maintenance
2. The rate of road expansion in the city of Maputo is insufficient to cope with the continuous expansion in road traffic demand. Moreover, existing road facilities continue to suffer progressive deterioration due to inadequate and delayed maintenance. To address this situation, a Master Plan and Feasibility Study for the Road Sector in the City of Maputo (target year 2020) was completed in October 2001, and some priority investments in the sector were been completed under MMDP I.
3. MMDP I included investments in 16.4 kilometers of street roads and rehabilitation of 11.6 kilometers of arterial roads. MMDP II investments include investments in 10 kilometers of new roads and 24.1 kilometers of road improvements. The roads were selected on the basis of improvements in traffic management and the opening of access to new settlements. These investments are expected to provide Maputo City with improved access and integrated road networks for more efficient traffic flow management.
4. The 9.4 kilometers of new roads will take place in two segments of Avenue Julius Nyerere; the first between the Praça de Destacamento Feminino and the Praça dos Combatentes (4 km) and the second from the Praça dos Combatentes to the Praça da Juventude (5.4 km). Regarding the 24.1 kilometers of road improvements, these will take place on the following seven critical avenues: Guerra Popular, Karl Marx, 24 de Julho, Albert Luthuli, Marginal, Marien Nguoabi, and Eduardo Mondlane.
5. Methodology: The methodology used is cost-benefit analysis assessing the present value of all costs and benefits using the same discount rate of 12 percent. The analysis calculated all the economic costs and benefits of each project using both present value (NPV) and Economic Internal Rate of Return (EIRR) approaches.
6. The analysis was made with a Highway Design and Maintenance Standards Model (HDM) which is used to assess road interventions. The HDM model looks into the relationship between the costs for construction and maintenance of roads, and the operational costs of vehicles. The criteria for evaluating the benefits is based on the reduction of travel time applied to the value of a single journey plus the reduction in operational costs. The HDM model consists of three phases: (i) data entry; (ii) simulation of traffic flows, and (iii) economic analysis.
7. Investment costs. The investment costs for the construction of one portion of the J. Nyerere Ave. are US$11.8 million for the segment between Praça de Destacamento Feminino and Praça dos Combatentes, distributed between the first and second years of the project, and US$8.1 million for the segment between Praça dos Combatentes and Praça da Juventude, distributed between the third and fourth years of the project. The investment for the road
96 maintenance program is US$13.6 million. The parameters considered are presented on the tables below. Table 1: Rehabilitation of Ave. Julius Nyerere No. of Total lanes Length of lanes Width of sidewalks extension Travel time Praça Destacamento Feminino – Praça Combatentes Alternative 1 Avenue Kenneth Kaunda 4 10 x 2 = 20 Mt 8 x 2 = 16 Mt Avenue Vladimir Lenine 2 4 x 2 = 8 Mt 8 x 2 = 16 Mt 4.600 Mt 45 minutes Alternative 2 Avenue Keneth Kaunda 4 10 x 2 = 20 Mt 8 x 2 = 16 Mt Avenue Joaquim Chissano 4 7 x 2 = 14 Mt 1,5 x 2 = 3 Mt Avenue Acordos de Lusaka 4 10 x 2 = 20 Mt 4 x 2 = 8 Mt Avenue FPLM 4 10 x 2 = 20 Mt 2 x 2 = 4 Mt 7.400 Mt 25 minutes Alternative 3 Avenue da Marginal 2 14 x 1 = 14 Mt NA Avenue Dona Alice 2 7,4 x 1 = 7,4 Mt 1 x 2 = 2 Mt Avenue Julius Nyerere 4 7 x 2 = 14 Mt 2 x 2 = 4 Mt 18.800 Mt 45 minutes Proposed solution 4 7 x 2 = 14 Mt 2 x 2 = 4 Mt 4.000 Mt 7 minutes Av. Julius Nyerere - Trecho Praça dos Combatentes e Praça da Juventude 2 7,4 x 1 = 7,4 Mt NA 5.000 Mt 30 minutes Proposed solution 4 7 x 2 = 14 Mt 2 x 2 = 4 Mt 5.400 Mt 6 minutes
Table 2: Improvement of critical segments road work
Length of Investments No. of Length of Length of Total Travel Length of ROAD central (US$ lane separator lanes lanes sidewalks extension time lane millions)
B.1 - Guerra Popular Ave - Between Marien Nguoabi Ave - Eduardo Mondlane Ave; 2 7 x 1 = 7 2 x 2 = 4 Mt 700 Mt 10 minutes Proposed solution 2 7 x 2 = 14 Mt 2 x 2 = 4 Mt 700 Mt 3 minutes 0,45 - Between Eduardo Mondlane Ave - 25 de Setembro Ave. 4 10 x 2 = 20 Mt 6 x 2 = 12 Mt 1.700 Mt 10 minutes 8 Mt Proposed solution 4 10 x 2 = 20 Mt 6 x 2 = 12 Mt 1.700 Mt 5 minutes 8 Mt 1,28 B.2 - Karl Marx Ave 4 10 x 2 = 20 Mt 6 x 2 = 12 Mt 2.080 Mt 13 minutes 8 Mt Proposed solution 4 10 x 2 = 20 Mt 6 x 2 = 12 Mt 2.080 Mt 5 minutes 8 Mt 1,06 B.3 - 24 de Julho Ave 4 10 x 2 = 20 Mt 6 x 2 = 12 Mt 3,800 Mt 23 minutes 8 Mt Proposed solution 4 10 x 2 = 20 Mt 6 x 2 = 12 Mt 3,800 Mt 10 minutes 8 Mt 3.54 B.4 - Albert Luthuli Ave 4 10 x 2 = 20 Mt 6 x 2 = 12 Mt 1,600 Mt 10 minutes 8 Mt Proposed solution 4 10 x 2 = 20 Mt 6 x 2 = 12 Mt 1,600 Mt 3 minutes 8 Mt 1,25 B.5 - Marginal Ave 2 14 x 1 = 14 Mt NA 10,400 Mt 25 minutes Proposed solution 2 14 x 1 = 14 Mt 2 x 2 = 4 Mt 10,400 Mt 15 minutes 5.01 B.6 - Marien Nguoabi Ave 2 3,5 x 2 = 7 Mt 2 x 2 = 4 Mt 1,900 Mt 11 minutes Proposed solution 2 6 x 2 = 12 Mt 1,75 x 2 = 3,5 Mt 1,900 Mt 5 minutes 1,06 B.7 - Eduardo Mondlane Ave 4 7 x 2 = 14 Mt 2,5 x 2 = 5 Mt 1,900 Mt 11 minutes 1,5 x 3 = 3 Mt 24 Mt Proposed solution 4 7 x 2 = 14 Mt 2,5 x 2 = 5 Mt 3,600 Mt 7 minutes 1,5 x 3 = 3 Mt 24 Mt 3,67
97 8. Maintenance costs: The annual maintenance costs per kilometer considered are: Periodic maintenance US$2,250/km; spot repairs US$3,000; maintenance US$720,000, and maintenance of signals US$1,500.
9. Benefits. Net benefits estimates were calculated with the Highway Design and Maintenance Standards Model (HDM), which simulates highway life cycles, vehicle operation conditions, and costs for multiple road designs and maintenance alternatives. The criterion for evaluating the benefits is the reduction of travel time applied to the unit value of a journey plus the reduction in operational cost and accidents. HDM simulates the life cycle of roads, according to the condition of the vehicles, with its respective costs and maintenance alternatives. Vehicle Operating Costs were calculated for four categories of vehicles: light vehicles, buses, semi- collective vehicles, and medium-sized trucks.
Table 3: Characteristics of vehicles Semi- Light Type of vehicle Buses Trucks collective vehicles Item Price/Cost Price of new vehicle (US$) 50,000 130,000 50,000 75,000 Price of wheels (US$) 100 550 250 600 Hour of driver ( US$ ) 10.00 25.00 25.00 25.00 Hour of maintenance work ( US$ ) 15.00 25.00 30.00 30.00 Hour of traveler ( US$ ) 20.00 20.00 20.00 20.00 Benefit rate ( % ) 12 12 12 12 Diesel ( US$/l ) 1.00 1.00 1.00 1.00 Oil ( US$/l ) 4.00 4.00 4.00 4.00 Characteristics of vehicles Gross weight 1,030 12,300 5,600 14,800 Axle equivalence factor - 0.60 0.05 1.50 Axles per vehicle 2 2 2 2 Wheels / vehicle 4 6 6 6 Passengers / vehicle 1.80 35.00 0.80 0.80 Use of vehicles Useful life by distance (1,000 km ) 234 960 500 715 Life of service (years) 7 10 10 10 Km (annual) 33,429 96,000 55,556 79,444 Hours of usage (annual) 760 2,400 1,462 2,563
10. Traffic Count. Traffic counts of the roads where interventions will take place were made in March of 2010. Table 4 presents the traffic counts for all interventions and all type of vehicles considered. No data on accidents was available.
98 Table 4: Traffic count Semi- Light ROAD Buses collective vehicles Trucks Total Praça Destacamento Feminino – Praça Combatentes Alternative 1 7,738 10,676 2,749 1,858 23,021 Alternative 2 14,667 10,621 3,762 2,545 31,595 Alternative 3 7,324 5,304 1,879 1,272 15,779 Praça Combatentes -Praça Juventude 7,038 5,097 1,806 1,222 15,163 Improvement of critical segments road network B.1 - Guerra Popular Ave Between Marien Nguoabi Ave - Eduardo Mondlane Ave; 20,774 13,327 3,136 1,960 39,197 Between Eduardo Mondlane Ave - 25 de Setembro Ave. 24,380 15,640 3,680 2,300 46,000 B.2 - Karl Marx Ave 12,573 9,293 3,280 2,187 27,333 B.3 - 24 de Julho Ave 21,855 14,020 3,299 2,062 41,236 B.4 - Albert Luthuli Ave 11,007 8,136 2,872 1,915 23,930 B.5 - Marginal Ave 10,947 7,022 1,652 1,033 20,654 B.6 - Marien Nguoabi Ave 8,113 2,075 1,525 359 12,072 B.7 Eduardo Mondlane Ave 30,323 17,776 4,182 1,200 53,481
Results of the Cost-benefit analysis. The following table presents the results for the base case. Sensitivity analysis was carried out by: (i) increasing the investment cost by 25 percent; (ii) reducing the net benefit by 25 percent; and (iii) by combining both (i) and (ii). For the road investment as a whole the base case has a NPV of US$24.0 million. The worst case scenario (iii) has a NPV of US$ 14.3 million. All these results show that overall the program has a robust return on investment.
99 Table 5: Results of Economic Analyses
Base Investment Benefit - Both Investment +25% Road Sections EIRR / NPV Case + 25% 25% and Benefit -25% A1) Reconstruction of Julius Nyerere Ave. - between Praça Destacamento Feminino – and Praça Combatentes EIRR 597.9% 472.8% 416.7% 363.2% - Alternative 1 NPV (US$ million) 1,568.4 1,247.0 1,086.3 925.6 EIRR 1,032.5% 826.6% 733.9% 645.3% - Alternative 2 NPV (US$ million) 4,714.1 3,763.0 3,287.5 2,811.9 EIRR 1,468.9% 1,183.2% 1,054.6% 931.5% - Alternative 3 NPV (US$ million) 10,390.6 8305.1 7262.3 6,219.5 A2) Construction of the second lane Julius Nyerere Ave. - between Praça Combatentes and Praça Juventude - Av. Julius EIRR 265.5% 205.4% 178.6% 153.1% Nyerere NPV (US$ million) 639.7 502.4 433.7 365.1 B) Improvement of critical segments road network B.1 - Guerra Popular EIRR 3,934% 2,626.1% 2,123.4% 1,691.7% Ave NPV (US$ million) 493.6 392.1 341.4 290.7 EIRR 7,757.1% 5,201.8% 4,201.4% 3,348.7% B.2 - Karl Marx Ave NPV (US$ million) 590.6 469.9 409.6 349.2 B.3 - 24 de Julho EIRR 3,972.9% 2,653% 2,146% 1,710.1% Ave NPV (US$ million) 1,447.2 1,151.1 1,003.0 855.0 B.4 - Albert Luthuli EIRR 3,100.1% 2,071.2% 1,674.2% 1,336.1% Ave NPV (US$ million) 372.6 296.0 257.8 219.5 EIRR 3,496.3% 2,335.8% 1,888.5% 1,505.2% B.5 - Marginal Ave NPV (US$ million) 2,176.0 1,732.1 1,510.2 1288.2 B.6 - Marien EIRR 1,354.2% 905.8% 733.7% 585.6% Nguoabi Ave NPV (US$ million) 155.9 123.8 107.7 91.6 B.7 - Eduardo EIRR 6,806.2% 4,541.8% 3,674.3% 2,926.8% Mondlane Ave NPV (US$ million) 1,486.3 1,184.3 1,033.3 882.3 TOTAL NPV (US$ million) 24,035.5 19,167.3 16,733.2 14,299.1
Financial Sustainability Analysis of Component B
Summary
11. A financial analysis was prepared for project Component B, Financial Sustainability. Two scenarios were calculated, one for the financial sustainability component alone and one for the whole project. The results from the analysis support the viability of the investments in Component B. Based on the project costs and revenue projections, the analysis calculated an IRR of 79 percent taking into account the costs of the financial sustainability component alone, and 3
100 percent if considering the full project costs. Only the revenue enhancement was calculated as the benefits under both scenarios.
Revenue projections
12. The revenue projections of the project were calculated as the difference in projected revenues “with” and “without” the project intervention. Both the “with-intervention” and “without-intervention” projections were based on a number of assumptions described below. The year 2009 was used as the baseline. The “with” and “without” projections were prepared on the basis of CMM’s draft Medium-Term Expenditure Framework and the draft regulations for property taxes and for the fee on economic activity (TAE). Since the assumptions for the analysis came from “draft” rather than “approved” regulations, actual projections can substantially change, once these regulations are approved.
Own-source revenues
13. Among all the own-source revenue instruments of the municipality, the analysis only focused on three instruments that the project will be supporting, and that have the greatest revenue potential, namely: (1) Property tax (Imposto Predial Autárquico, IPRA) (2) Fee on economic activity (Taxa por Actividade Economica, TAE) (3) Tax on vehicles
Revenue projections “without” project intervention
14. The revenue projections without the project intervention did not consider any real increases in the rates and bases of the tax instruments but rather assumed a 10 percent annual increase, which amounts to roughly the average inflation rate between 2003 and 2009. Revenues were projected out for five years, until 2015. Since the tax on vehicles has only been recently transferred to the municipality, the baseline used was the 2006-2009 average corresponding to the 75 percent share from this tax when administered by the central government.
Revenue projections “with” project intervention
IPRA (Property tax)
15. IPRA is the municipal tax with the highest revenue potential. However, as explained in Annex 17, ambiguity in the interpretation of the legal framework could be a limiting factor in terms of its potential. The projections made for this tax are based on two scenarios, the first where values are held constant and the second where they are somewhat higher.
16. In 2009 (baseline year) the municipal cadastre of IPRA had 20,000 complete and active registries that yielded a total collection of US$1.3 million. According to the National Institute of Statistics (INE) Maputo has an estimated total of 218,000 properties. INE estimates that of these, about 55 percent (or 120,000 properties) has access to piped water. This analysis uses “access to piped water” as a proxy for taxable value, assuming that the remaining 45 percent of properties
101 are not valuable enough to be worth taxing at the moment, from a cost effective perspective. In addition, INE estimates that Maputo has 8,000 commercial properties and at the moment only 2,000 are being taxed. Thus, at this stage, the potential IPRA universe is approximately 128,000 properties. The projection is that all these properties will be in the cadastre by 2015.
17. Due to the legal restrictions in place that limit the CMM’s ability to reassess properties at close to market values and/or to adjust the tax rates, two scenarios were calculated according to the following steps:
(i) Minimum sizes for construction and land were calculated together with corresponding values by square meter. The size patterns were defined according to information from the Mozambican urban planning regulations. The value per m2 of construction was set as 5,600Mtn which corresponds with the value established in 2005 (4,000Mtn) and remains in use until now, corrected by a 40 percent inflation factor (the average inflation rate between 2005 and 2009). For land, the estimated values are: 11,500Mtn (DM1), 9,000Mtn (DM2) and 1,000Mtn (for the remaining municipal districts). These values were estimated by a rapid market price assessment (see first four columns of Table 1).
(ii) Based on that information, a standard value of construction and land was estimated by district. For example, a standard house in District 1 with 72 m2 of construction and a plot size of 100 m2 will have a value (valor patrimonial) of 1,553,200Mtn or US$57,527 (using an exchange rate of 27 Mtn/US$) (see column 5 in Table 1).
(iii) Taking into account the different tax rates (0.04 percent residential and 0.07 percent commercial) IPRA values were calculated for standard residential and commercial properties as follows:
Table 1: IPRA estimation by type of use and location Districts Built Land Value of Value of Patrimonial IPRA for IPRA for area (m2) area building land (US$) value (US$) (5) residential use commercial use (1) (m2) (2) (US$) (3) (4) (US$) (6) (US$) (7) DM1 72 100 14,933 42,592 57,525 230 402 DM2 72 100 14,933 33,333 48,266 193 337 DM3 91 312 18,874 11,574 30,448 121 213 DM4 91 312 18,874 11,574 30,448 121 213 DM5 91 312 18,874 11,574 30,448 121 213 Catembe 91 312 18,874 11,574 30,448 121 213 Inhaca 91 312 18,874 11,574 30,448 121 213
18. Based on Table 1, three scenarios were calculated. Scenario I was calculated by simply multiplying the total number of registries by a fixed value of US$45 which is the estimated average value that CMM will collect in 2010. Scenario II goes a step further in the following way: The 20,000 existing registries were charged at US$45 per property, but the additional properties added from 2010 onwards are taxed at the new estimated value. As can be seen from Table 3, the difference in IPRA total revenue collected goes from US$5.7million under Scenario 1 to US$18.2 million under Scenario II. Based on Scenario II, a third scenario was simulated for constant yearly increases to smooth some of the peak increases of Scenario II, mostly during the first year of the project, when it may not be feasible to reach very pronounced increases. IPRA Scenarios 1 and 3 are the ones used for the financial analysis conducted later on.
102
Table 2: IPRA projections (US$) Scenario I Scenario II Scenario III Year Total No. Avg. Total Value of No. of Avg. Value of Total Total of taxable IPRA estimated existing additional IPRA additional estimated estimated properties bill collection Properties properties Bill properties collection collection 2009 20,000 1,300,000 1,300,000 1,300,000 1,300,000 2010 46,000 45 2,070,000 900,000 26,000 244 6,344,000 7,244,000 4,131,333 2011 68,000 45 3,060,000 900,000 48,000 202 9,696,000 10,596,000 6,962,666 2012 88,000 45 3,960,000 900,000 68,000 182 12,376,000 13,276,000 9,794,000 2013 128,000 45 5,760,000 900,000 108,000 161 17,388,000 18,288,000 12,625,333 2014 128,000 45 5,760,000 900,000 108,000 161 17,388,000 18,288,000 15,456,667 2015 128,000 45 5,760,000 900,000 108,000 161 17,388,000 18,288,000 18,288,000
Tax on Vehicles and TAE
19. In the past, the vehicles tax was administered by the central government, which then passed down 75 percent of the receipts to the municipalities. Since the 2008 municipal tax reform, this has been slated to become a municipal tax. Projections for this tax were done linearly using the only existing data for light and heavy vehicles from 2004 to 2006, produced by INE. The projections of TAE were done very conservatively by expanding the total number of registries to 8,000 which is the total estimated universe at the moment, and assuming a yearly rate increase of 10 percent, in line with the average inflation rate of the last few years.
Administrative costs of taxation
20. The revenue projections also took into account the administrative and collection costs associated with these revenue sources. In the absence of detailed data to assess the precise administrative and collection costs of these revenue instruments, a factor of 20 percent was used to discount the total revenue projections. This number is of the same order of magnitude of the one estimated by a more detailed methodology for MMDP I.
Financial analysis
Net revenues
21. Using an estimated 20 percent of administrative and collection costs, net revenues (benefits) were calculated as the absolute difference between the “with-intervention” and “without-intervention” projections. This was done taking two IPRA scenarios into account. Then, the total project costs were subtracted from the benefits of the project. For this, two calculations were done, one taking into account the project costs of the financial sustainability component alone, and the other considering the total costs of the project.
22. Based on these projections of costs and benefits, two scenarios were calculated. The first one (Scenario I) compares the most conservative projections of IPRA, with the project costs assigned to the component on financial sustainability. The costs of this component come from an internal exercise in which the CMM estimated the credit allocation by component, subcomponent, and project activity. The second scenario (Scenario II) compares a less conservative projection of IPRA with the total project costs. The objective of Scenario I is to do
103 a comparison of the costs and benefits of Component B alone, to show that it pays off to invest in Component B activities. However since investments in Component B activities will derive positive impacts not only for this component but for the project as a whole, a second scenario (II) was calculated only to illustrate the positive impact of the investments in Component B on the whole project. Note, however, that the revenue projections of this second scenario are less conservative than the ones used in the first scenario, and that this exercise does not take into account the full benefits of other revenue activities in the project generated outside the Component B, such as the solid waste fees and the licenses for the issuing on land use rights. If these were to be used, however, the benefits would be even higher.
Table 3: Net revenue scenarios (US$) Benefits* 2010 2011 2012 2013 2014 2015 Total
227,167 876,284 1,439,112 2,706,223 2,516,046 2,306,850 10,071,683 IPRA 1- (“with” - “without”) 1,876,234 3,998,417 6,106,312 8,198,490 10,273,379 12,329,250 42,782,083 IPRA 3- (“with” - “without”) Vehicle’s tax- (“with” - 2,170,647 2,380,123 2,583,615 2,780,525 2,970,196 3,151,903 16,037,009 “without”) 42,636 160,974 177,072 194,779 214,257 235,682 1,025,400 TAE- (“with” - “without”) Total Benefits. Projection 1 2,440,451 3,417,381 4,199,799 5,681,528 5,700,499 5,694,436 27,134,094 (A) Total Benefits. Projection 2 4,089,517 6,539,514 8,866,999 11,173,794 13,457,832 15,716,836 59,844,492 (B)
Costs Financial sustainability 1,360,000 1,880,000 800,000 650,000 350,000 5,050,000 component costs (C) 2,340,000 14,680,000 17,380,000 8,480,000 4,750,000 50,000,000 Total project costs (D)
Scenarios Scenario I (lower benefits lower costs) 2,057,381 2,319,799 4,881,528 5,050,499 5,344,436 22,084,094 (A-C) Scenario II (higher benefits 4,199,514 (5,813,001) (6,206,206) 4,977,832 10,966,836 9,844,492 higher costs) (B-D) * Calculations already assume a 20% charge for administrative and collection costs
23. As can be seen from Table 3, both Scenarios I and II show that the net revenues (benefits) at the end of the project are positive. Scenario I shows that investing US$5million in revenue strengthening activities is expected to generate (under conservative projections) about US$22 million of additional revenue, rendering a positive return on the investment. Scenario II, on the other hand, shows that the total investment of the project (US$50million), is expected to pay off the total investment and generate (under less constraining projections) about US$10 million of additional revenue, also rendering a positive return on the investment.
Internal Rate of Return
24. Based on the project costs and revenue projections, an IRR was calculated for Scenarios I and II. The IRR for Scenario I, which only looked at the costs and benefits of the financial
104 sustainability component, is 79 percent. A sensitivity analysis considering an increase in 25 percent of costs and 25 percent reduction in benefits produced an IRR of 45 percent. These high and positive values were expected given that the total projected revenue increases (benefits) that will derive from interventions in the fiscal sustainability component are only compared to the costs of that component. Scenario II broadens the analysis by relating the benefits of the project to the total project costs. In this case the IRR is 3 percent. A sensitivity analysis considering a 25 percent reduction in benefits was calculated resulting in a negative IRR of -5 percent. Over a period of more than five-years, the IRRs are even higher. These calculations support the financial viability of the investment in the financial sustainability component.
Solid Waste Management
25. The municipality of Maputo intends to achieve full financial sustainability of its Solid Waste Management (SWM) services by 2017. MMDP I focused on increasing coverage levels from a very low base, continuing to use the existing dump site and bringing in service contractors. MMDP I achieved its objectives through a rigorous new strategy where IDA contributed declining proportions of the service contract costs while fee revenues were raised as a function of improved service delivery and regulatory increases. MMDP II will continue to support the goal of improved and sustainable coverage and quality through financial assistance for SWM service contracts.
26. The key assumptions during MMDP II are:
x Service coverage will increase from 66% in 2010 to 95% in 2015 x Service costs will increase from about US$4 million in 2010 to $8.7 million in 2015 x Cost calculations include all costs except the investment costs for the new sanitary landfill (that will not be covered by IDA) x The IDA credit will contribute annually on a sliding scale until 2015 as follows: 2011 - 65%; 2012 - 50%; 2013 - 40%; 2014 - 30%; and 2015 - 20%.
27. The IDA contribution will focus on the collection contracts only. This would liberate CMM’s resources to cover the other aspects of SWM collection, like the operation and closure of the current disposal site. Although service delivery should increase continuously, the construction of a new sanitary landfill that will start operating in 2014 will have non-linear consequences for the cost structure and strategy of the SWM system. Operational costs of a sanitary landfill are significantly higher than the current uncontrolled disposal site due to different operational requirements (equipment, gas, collection, compaction of waste etc). Current costs are estimated at US$15/per ton disposed while the new landfill will result in approximately US$20/per ton. As the landfill site is 15 kilometers further than the current disposal site, it will result in much higher costs per ton for the collection and transport of waste (collection contracts will increase by at least 50 percent). Strategically, this cost increase cannot be translated immediately in a service fee increase, as the benefits of the landfill are not directly visible. Fee increases must be done in a more cautious and incremental way and based on perceived improvements in service levels. Although the distance of the sanitary landfill will raise costs in
105 the short term, the technical studies demonstrated that, in the future, this is the best option for a city-region that is expected to continue growing.
28. The quantitative analysis done by CMM’s SWM department, based on the current costs of the service contracts or services implemented directly by CMM, show the significant impact of the operational, collection, and transport costs of the landfill in 2014. From 2010 to 2015, costs will increase from US$3.9million to US$8.7 million—with a significant increase in 2014. On the revenue side, revenues are expected to come from domestic and non-domestic SWM fees (collected through the energy provider, EDM), from a cost recovery special rate, and from disposal contributions from private service providers. The calculations are based on an exchange rate 26.5 Mtn/US$ and include the following assumptions (See Table 4).
x Annual increase of EDM revenues of 6% (new clients and more consumption) x Cost recovery rate for special collection services 30% until 2015; 75% afterwards x Tariff for landfill (new landfill) US$5/ton until 2015; US$7/ton afterwards.
106 Table 4: SWM costs and revenues in Maputo (US$)
Collection area and system 2009 2010 2011 2012 2013 2014 2015 2016 2017
Inner City high density, small 532,789 602,385 670,981 674,336 713,377 1,024,205 1,029,326 1,034,473 1,039,645 public container collection Inner City residential areas, 286,089 325,855 364,085 386,234 408,595 586,625 589,558 592,506 595,469 door to door collection Suburban area, primary waste 350,431 488,491 657,938 693,541 873,816 917,465 924,769 969,421 977,149 collection
Suburban area, secondary 760,625 896,381 1,086,585 1,166,262 1,382,978 1,991,398 2,007,250 2,023,240 2,039,369 waste collection
Waste collection Catembe + 23,975 36,264 39,005 39,332 42,141 42,495 45,372 50,837 51,265 Inhaca
Markets waste collection 189,500 218,440 260,266 277,112 293,770 422,658 425,668 428,702 431,760
Special collection services 140,192 168,718 296,121 445,494 535,892 852.,701 854,796 856,908 859,038
Collection of street sweepings 54,689 62,140 87,866 103,536 126,979 193,990 217,700 219,877 222,075
Commercial and industrial 300,921 309,948 402,251 414,319 355,623 418,620 431,178 444,114 457,437 waste
Support to street sweeping 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000
Landfilling 228,185 263,856 308,209 337,701 394,087 1,429,748 1,492,449 1,512,150 1,532,284
Other operations DMSC 301,739 352,248 432,331 468,787 527,726 401,495 408,403 414,111 417,775
TOTAL 3,319,133 3,874,727 4,755,640 5,156,652 5,804,984 8,431,400 8,576,470 8,696,339 8,773,266
Specific cost per ton 14.5 14.6 15.4 15.2 14.7 20.6 20.0 20.0 19.9
107 Revenue Source (US$) 2009 2010 2011 2012 2013 2014 2015 2016 2017 Fee increase 20% 40% 20%
Waste fee domestic (EDM) 1,989,504 2,530,649 2,682,488 3,980,812 4,219,661 4,472,840 5,689,453 6,030,820 6,392,669
Waste fee non-domestic (EDM) 361,381 459,676 487,257 723,089 766,475 812.,463 1,033,453 1.095,460 1,161,188
Special collection services 0 16,872 59,224 133,648 160,768 255,810 256,439 642,681 644,278
Disposal costs for private 37,398 46,224 55,545 65,385 101,019 404,639 476,318 686,850 707,455 operators TOTAL 2,502,165 3,053,421 3,284,514 4,902,934 5,247,922 5,945,752 7,455,662 8,455,811 8,905,590
Cost recovery (including 75% 79% 69% 95% 90% 71% 87% 97% 102% investment costs)
108
29. The graph below shows the increase in revenues that follows the improved service delivery. It also shows the increase in costs with a spike at the introduction of the landfill in 2014. As a result of the landfill, the fee will only achieve full cost recovery in 2017.
$10,000,000
$9,000,000
$8,000,000 Sanitary Landfill Cost increase $7,000,000
$6,000,000
$5,000,000
Annual costs & revenues in USD in revenues costs & Annual $4,000,000
$3,000,000 2010 2011 2012 2013 2014 2015 2016 2017 Total Costs of SWM system Revenues of SWM sector
30. As summarized in Table 5 below, to achieve full cost recovery by 2017, CMM intends to increase fees by 20 percent in 2010, 40 percent in 2012, and 20 percent in 2015. The annual financial balance including CMM projections and IDA contributions and shows the difference between costs, on the one hand, and IDA support and fee revenues, on the other. There is a significant surplus in 2012 and 2013 with deficits from 2014 to 2016, reflecting the increases in costs from the new landfill in 2014. The total balance from 2011 to 2017 amounts to a deficit of around US$300,000 for the whole period.
109
Table 5: Financial Sustainability of Solid Waste Management Maputo SWM MAPUTO 2010 1S 2011 2S 2011 2011 2012 2013 2014 2015 2016 2017 Solid Waste collected (ton/day) 650 650 700 700 800 850 850 850 850 850 (indicator)
Service coverage 66% 66% 76% 76% 82% 95% 95% 95% 95% 95%
Total cost of SWM $3,874,727 $2,377,820 $2,377,820 $4,755,640 $5,156,652 $5,804,984 $8,431,400 $8,576,470 $8,696,339 $8,773,266 Collection cost of $807,823 $446,476 $446,476 $892,951 $903,764 $903,894 $1,301,672 $1,315,117 $1,328,837 $1,342,841 Inner City area Collection cost of suburban areas and $1,219,332 $705,945 $705,945 $1,411,890 $1,507,692 $1,711,105 $2,555,209 $2,578,305 $2,601,691 $2,625,371 markets Comparticipation 65% 65% 65% 65% 50% 40% 30% 20% 0% 0% IDA
Amount IDA $1,317,651 $749,073 $749,073 $1,498,147 $1,205,728 $1,045,999 $1,157,064 $778,684 $0 $0 Amount CMM $2,557,076 $1,628,746 $1,628,746 $3,257,493 $3,950,924 $4,758,985 $7,274,336 $7,797,786 $8,696,339 $8,773,266 SWM Planned waste fee 20% 0 40% 0 0% 20% 0% increases
Expected revenues $3,053,421 $1,642,257 $1,642,257 $3,284.,514 $4,902,934 $5,247,922 $5,945,752 $7,455,662 $8,455,811 $8,905,590 Ratio Revenue CMM/ total costs 79% 69% 95% 90% 71% 87% 97% 102% SWM Annual balance $496,344 $13,511 $13,511 $27,021 $952,010 $488,937 -$1,328,583 -$342,124 -$240,528 $132,324 SWM
110
31. As of the IDA financing, this will focus on the collection contracts only. The total IDA contribution during MMDP II will be of US$4.76 million for the collection contracts. To cover the expected cost increases of the new landfill, and for unexpected increases, such as fuel prices or currency adjustments, IDA would maintain an additional fund of US$2.80 million which would add up to a maximum of an additional 35 percent contribution for years 2014 and 2015. For 2014 the expected IDA contribution will increase from US$1,157,000 to US$2,507,000 (+US$1,350,000) and in 2015 from US$779,000 to US$2,141,000 (+US$1,362,000). Those increases would result in an IDA financing of the collection contracts of 65 percent in 2014 and 55 percent in 2015. CMM will finance a total of US$25,580,000 with own-revenues during MMDP II.
111 Annex 10: Safeguard Policy Issues
Executive Summary Environmental and Social Management Framework (ESMF)
Introduction
1. Since 2007, the Municipal Council of Maputo has been implementing the Maputo Municipal Development Program, MMDP, with an IDA/World Bank loan. Before launching MMDP, an Environmental and Social Management Framework (ESMF) was created to ensure that environmental safeguards would be incorporated into all infrastructure activities included in the program, complying with the Bank’s Operational Policy for Environmental Assessment (OP 4.01).
Objective and Methodology
2. The ESMF objective is the establishment of a process for the environmental and social management of projects that will be implemented by MMDP II. It is a strategic guide to be used as a tool during implementation of the various MMDP II projects. ESMF preparation included documentation review, field visits, and consultation with stakeholders. During the preparation of the ESMF for the MMDP I, consultation was undertaken with stakeholders, including representatives of the Maputo Municipality, responsible entities for the environmental impact assessment nationwide, district authorities, and NGOs operating in Maputo. For the updated ESMF for MMDP II, the public consultation was extended to a larger number of citizens’ representatives as well as members of District Consultative Councils of the municipality. These councils comprise representatives of the local administration of each district and representatives of civil society.
Legal and Institutional Framework on Environment in Mozambique
3. The Ministry for the Coordination of Environmental Action (MICOA) is the ministry governing environmental licensing and the environmental assessment process, through the National Directorate of Environmental Impact Assessment (DNAIA). In the municipality, this area is under the responsibility of the Municipal Directorate for Urban Planning and Environment (DMPUA), through the Department for Environmental Management (DGA) and the Department for Environmental Inspection (DIA). Following the recommendation of MMDP I EMSF, CMM established a Memorandum of Understanding with MICOA, having been offered a DNAIA staff to lead the DGA. Currently the DIA and DGA have three and four technicians, respectively. However, beyond the DNAIA staff, only one additional staff person (in charge of UN Habitat) has experience in environmental assessment. The training proposed in the ESMF for MMDP I was not actually carried out, so that there is currently an insufficient number of trained staff. In the face of this, the two departments act as a single team.
112 World Bank’s Safeguard Policies
4. The MMDP II triggers four of the Bank’s Safeguard Policies: Environmental Assessment OP 4.01, Natural Habitats OP 4.04, Physical Cultural Resources OP 4.11, and Involuntary Resettlement OP 4.12.
5. Environmental Assessment OP 4.01. The objective of this policy is to ensure that projects financed by the Bank are environmentally sound and sustainable, and that decision making is improved through adequate analysis of actions with potential adverse environmental impacts, including risks to the natural environment, human health and safety, physical cultural resources, and global and trans-boundary environmental aspects. This policy is applicable when a project has the potential to cause negative environmental impacts in its area of influence. Some of the MMDP II activities could cause negative environmental and social impacts during and after construction, including localized loss of vegetation, soil erosion, noise, air pollution, and water pollution (surface and groundwater). Adverse social impacts could include potential public health risks, impacts on urban traffic, and involuntary resettlement. Based on the Operational Policy on Environmental Assessment (OP 4.01), the MMDP II was classified as Category B. Since most of the civil works to be supported by MMDP II will be specifically identified and designed only during project implementation, an Environmental and Social Management Framework (ESMF) was prepared to help ensure the proper environmental and social mitigation of potential negative impacts.
6. Natural Habitats OP 4.04. This policy recognizes that the protection and management of natural habitats is essential to maintain biodiversity, environmental services, many products used by human society, and for long-term sustainable development. The Bank expects proponents to apply the precautionary principle in the management of natural resources to ensure opportunities for sustainable environmental development. This policy applies to any project or sub-project which could lead to significant loss or degradation of natural habitats, whether directly (e.g., through construction) or indirectly (e.g., through new human activities facilitated by the project). Natural habitat areas in the municipality of Maputo are very scarce and are limited to some mangroves and sand dunes in the coastal zones in the north of the municipality, along with Inhaca Island. This policy thus only applies to sub-projects located within or adjacent to these areas. During MMDP II, the only activities expected within these areas are planning studies, but no civil works.
7. Physical Cultural Resources OP 4.11. The objective of this policy is to help countries prevent and mitigate negative impacts generated by development projects on physical cultural resources, also known as cultural property. Physical cultural resources include objects and sites of archeological, paleontological, historical, religious, scenic, or other cultural significance. This policy applies to any Bank-supported project involving civil works, since physical cultural resources may be affected, including underground objects of cultural significance (archaeological relics, fossils, human remains, etc.) that might only be discovered during the construction process. The MMDP II project triggers this policy because objects of cultural interest might be uncovered during construction activities. However, none of the sub-projects currently planned are expected to affect known, above-ground sites of cultural significance.
113 8. Involuntary Resettlement OP 4.12. The objective of this policy is to: (i) avoid or minimize negative impacts where feasible and explore all viable alternative project designs; (ii) assist affected people in improving their former living standards, income earning capacity, and production levels, or at a minimum, in restoring them; (iii) encourage community participation in planning and implementing resettlement; and (iv) provide assistance to affected people, even in cases of irregular land tenure. This policy covers any involuntary taking of land, or other assets, for project purposes that results in: (i) relocation or loss of shelter; (ii) loss of assets or access to assets; or (iii) loss of income sources or means of livelihood, whether or not the affected people must move to another location. In these cases, the Bank requires the use of a Resettlement Action Plan (RAP), often based on a Resettlement Policy Framework (RPF). For some MMDP II activities, it may be necessary to remove houses or otherwise affect the land or assets used by local people without their free and informed consent. In such cases, the project would follow the criteria and procedures outlined in the RPF that has been prepared and updated for MMDP II.
9. Lessons Learned from MMDP I: During MMDP I, teams from DGA and DIA were responsible for the implementation of the ESMF, using environmental screening forms, preparing terms of reference for environmental impact studies, evaluating proposals, monitoring consultants, reviewing completed studies, and participating in the process of resettlement. In particular, this included carrying out the Resettlement Plan for Avenida Sebastião Marcos Mabote, reviewing the Environmental Impact Assessment (EIA) of the Michafutene and Marracuene Cemetery, and preparing the terms of reference for the EIA of the Rehabilitation of Avenida Julius Nyerere. The shortage of trained staff generated some difficulties in implementing these steps; this problem is progressively being addressed with the support of GDEI and MICOA.
10. During MMDP I, the involvement of the DGA and DIA tended to be mostly reactive in nature, mainly to meet Mozambican legal requirements or needs of the Bank itself, or to resolve specific problems occurring with the works. There were difficulties in coordination between the DGA and other departments during the planning stage of sub-projects, and even in the preparation of specifications for contractors, partly due to lack of expertise in conducting the ESMF. Nonetheless, there was already some sensitivity to environmental issues on the part of the infrastructure-related departments involving topics such as drainage, erosion, and impacts on people, which had already been given general consideration in sub-project planning. It has been helpful to have a municipal official, working on an ongoing basis with people affected by project works.
11. Implementation of the ESMF was also somewhat affected by the time-consuming process of procurement of consultants and training, which resulted in delayed provision of consultant services and an absence of training. With regard to capacity building, the ESMF proposed a set of training actions that have not been implemented or integrated into the municipality’s training plan. The lack of vehicles available to the DGA/DIA has also been a constraint, limiting environmental inspection actions.
114 12. Potential Environmental and Social Impacts: Potential impacts from all types of physical activities from MMDP II include: Potential General Impacts - Disagreement over the location of structures can lead to conflict; - Destruction or damage to buildings and structures located near the construction site; - Occupation and/or destruction of farming areas or fruit trees; - Localized changes in environmental quality due to noise, air pollution (including dust), wastewater, and solid waste; - Erosion and siltation of waterways due to sediments; - Disturbance of road traffic and pedestrian access during construction, with increased risk of road accidents; - Cutting of services and buried infrastructure (telecommunications, electricity, sanitation); - Creation of erosion points due to inadequate closure of the works. Potential Impacts of Municipal Buildings - Changes in the surface drainage patterns, runoff blockage, or upstream flooding. Potential Impacts of Urban Roads - Risk of increased erosion on slopes and road drainage discharge points; - Increased risk of vehicle and pedestrian accidents due to higher traffic velocity. Potential Impacts of Sanitation and Drainage - Contamination of water supply sources due to latrines overflow; - Increased risk of vectors that transmit diseases (mosquitoes, flies, rodents); - Lack of maintenance and unhygienic conditions can lead people to avoid the use of latrines; - Changes in land use (i.e., potential flood areas could begin to be targeted for residential occupation); - Solid waste disposal in drainage channels, causing blockage and water contamination; - Indiscriminate wastewater discharge in drainage canals, causing water contamination; - Increased public health risk due to the use of discharged water for human consumption by the surrounding population; - Increased flooding and erosion in the canal discharge areas, affecting existing land use, structures, and facilities; - Water pollution downstream, with impacts on public health and on ecologically sensitive areas (e.g. mangroves, wetlands). Potential Impacts of Water Supply - Risk of aquifer over-exploitation; - Risk of erosion around flowing water sources; - Increased risk of developing disease-transmitting vectors (mosquitoes) in the puddles created around springs and wells; - Risk of water-borne diseases due to poor maintenance of the spring and the surrounding area. Potential Impacts of Solid Waste Management - Fallen rubbish from collection and transport vehicles, causing deterioration in environmental quality along the route;
115 - Accumulation of contaminated water in waste containers, with subsequent discharge and contamination of the environment; - Spillage from waste containers, causing soil and water contamination; - Waste accumulation outside the containers, creating health risks and negative aesthetic impacts; - Conflicts over displacement or income loss with scavengers who frequent or reside at Hulene Landfill; - Risk of improper settlement of landfill area following closure; - Leachates may continue to contaminate surface and ground water after closure; - Contaminated wells surrounding the closed landfill area might be used by the local population; - Emergence of new, informal waste disposal sites; - Indiscriminate waste disposal even after closure of the landfill.
13. Procedures for ESMF Implementation: A comparison of the environmental impact assessment process legally established in Mozambique (Decree No. 45/04) with the Bank’s Environmental Assessment OP 4.01 indicates a high degree of overlap between the two. The stages of the environmental and social assessment process that would be used for any MMDP II sub-project requiring a specific EIA are presented below. The steps and players in the process of addressing any involuntary resettlement are listed in the Resettlement Policy Framework of MMDP II, prepared in parallel with the present ESMF. Screening, to classify the activities within Categories A, B or C, based on the sub-project characteristics and on the environmental and social sensitivity of sub-project area. To support this step, the ESMF provides a checklist and an Environmental Pre-Assessment Sheet; the latter is submitted to DNAIA for review. This is a Category B project, so no project activity will be funded which is classified as Category A. Preparation of Terms of Reference (TOR), to define the scope of the study (in case of Category A or B sub-projects). The TOR needs to be sent to the Bank for no-objection and then to DNAIA-MICOA for approval. Preparation of the EIA, by the environmental consultant registered at DNAIA and hired by the Borrower, following the approved TOR. This includes a public participation process. Review of the EIA, followed by approval (if warranted) is carried out by DNAIA, following an internal review within CMM. Compilation of Environmental and Social Requirements for Tender Documents. The specific mitigation measures required for a particular sub-project need to be included in the tender documents for the sub-project designer or contractor. The ESMF contains a standard list of environmental mitigation measures for sub-projects; additional mitigation measures may be required according to the particular characteristics of a sub-project, including the findings and recommendations from a specific EIA.
14. Both during the execution of works and following construction, the CMM should monitor the implementation of the Environmental Management Plan and/or mitigation measures included in this ESMF. The CMM should also monitor any relevant environmental outcome indicators.
116 15. Recommendations: The ESMF makes recommendations to improve the performance of the municipality in implementing environmental and social safeguards, particularly with respect to the institutional, technical, and administrative aspects. In institutional terms, the Municipal Directorate for Urban Planning and Environment is responsible for implementing the ESMF of MMDP II. However, it is crucial to also involve the other municipal directorates responsible for implementing MMDP II activities, from the early stages of sub-project planning, through construction and operation. The table below describes the responsibilities for each of the municipal entities and other participants in the environmental management process.
Process / Procedure Body responsible Assignments Environmental Impact Assessment Process: Sub-project screening DGA Based on technical information about the proposed activity Technical Dept. proponent and site visits, DGA will indicate the respective category (transport, water and and fill in the Preliminary Environmental Information sanitation, solid waste, etc.) Sheet and forward it to the DNAIA. DNAIA Preparation of TOR DGA If the activity is classified as Category A or B, then DGA for the EIA GDEI prepares the TOR for the EIA, with the support from GDEI and later sends it to the Bank for no-objection. Preparation of the EIA Consultant The Consultant is responsible for preparing the and directing the DGA environmental and social assessment study and conducting public participation Technical Dept. proponent the public participation process. process. of the activity (buildings, DGA is the focal point of communication between the roads, water and sanitation, consultant and the other departments of the municipality, solid waste, etc.) including District Administrations. District Administrations provide support through contacts District Administrations with the community and facilitate the participation process, namely through the establishment of local committees. Review and Approval DGA DGA initially reviews the EIA study and then submits it to MICOA / DNAIA DNAIA. Through DNAIA, MICOA performs the review and approval of the study and issues the environmental permit. Compilation of DGA Responsible for compiling the impact mitigation measures environmental and that must be implemented by the designers and contractors. social requirements Preparation of Tender Technical Dept. as the Integrates the compiled mitigation measures to be Documents proponent of the activity incorporated in the Tender Documents for Project Design (buildings, roads, water and or Works. sanitation, solid waste, etc.) Supervision and Monitoring: Supervision of the DIA The Technical Department is responsible for supervising works Technical Dept. as the the work, as well as implementation of mitigation measures proponent of the activity mentioned in the Tender Documents. (buildings, roads, water and DIA provides technical support to supervision and makes sanitation, solid waste, etc.) occasional visits to the work site.
117 Monitoring of DGA Performs the monitoring of environmental outcome Environmental indicators. Indicators
16. To ensure the effective operation of the procedures and actions contained in this ESMF, there is the need to implement a training plan for all participants, including DMPUA technicians, technicians from local entities responsible for implementing the activities, District Directorates and District Consultative Councils.
17. The training plan to be developed in several modules should be developed and implemented by a consultancy with training expertise and experienced instructors in the areas of environmental and social assessment of infrastructure, to be hired through an open competition. The training modules should have, whenever possible, a practical component that facilitates their application, including:
Basic Practices: Environmental classification of the activity, environmental and social impact assessment process; public participation;
Environmental Impacts: Selection of the sub-project area in ways that reduce environmental and social impacts; incorporating mitigation measures within tender documents; impact management during construction;
Monitoring and Redress of Complaints: Transparency and public administration at the planning stage; responsibility for recording and monitoring during the implementation phase; procedures for registering and responding to complaints.
18. The whole process implemented in the light of this ESMF should be properly documented and filed for future reference in the audit stage. DGA shall produce an annual report of activities carried out under the ESMF. The costs of implementing the ESMF include developing municipal institutional capacity and personnel, and the need for environmental consultants to prepare EIAs for certain sub-projects.
Resettlement Policy Framework Update
19. This Resettlement Policy Framework update covers activities under MMDP II. MMDP II will focus on broader improvements of living conditions and the use of urban space and services. Under the project, improvements to roads and some neighbourhoods might cause physical displacement of people, property damage, loss of access to property or resources, and/or loss of livelihood sources. Land use rights may have to be acquired for the sub-projects themselves and for resettling displaced people. Presently, the location, nature, and scope of project impacts are not yet known.
20. When the details of involuntary resettlement and acquisition of land use rights are not fully known, a Resettlement Policy Framework (RPF) is developed for public information and discussion. The RPF establishes the policy principles for the development of specific Resettlement Action Plans (RAPs). As the sub-projects to be carried out in MMDP II become
118 known in sufficient detail, a RAP will be developed as needed for each sub-project, based on the principles agreed upon in the RPF.
21. The Bank’s Involuntary Resettlement Policy (OP/BP 4.12) addresses physical displacement, impact on assets, and economic impacts. Thus, the need for resettlement and compensation refers to the impact of the development causing the loss of, or loss of access to, any assets growing on or permanently affixed to the land, such as shelters, businesses, buildings, and crops and also to the impact causing loss of, or loss of access to, an economic resource base or local communities’ means of livelihood. Losses may be total or partial. According to the Bank policy, the absence of legal title to use and benefit from the land does not limit rights to compensation. The policy also emphasises that land-based resettlement strategies should be used for project-affected people whose livelihoods are land-based. In the case of MMDP II, this is interpreted as access to land for livelihoods; thus, if sufficient alternative land is not available, other options built around opportunities for employment or self-employment should be provided, in addition to cash compensation for assets lost.
22. Encroachment on project sites during prolonged planning processes is common in Maputo. Unauthorized houses, businesses, and other structures -- some temporary, others permanent -- as well as cultivation in open areas, are common. People affected by MMDP II developments should be assisted to improve or restore their livelihoods in a manner that maintains the sustainability of their interaction with the economic resources available to them.
Mitigation Actions
23. The costs of resettlement can add significant amounts to project budgets and wherever possible resettlement and compensation should be avoided. Where it is not possible to choose another location or alignment of boundaries for a project, activities should be defined so that the fewest people are affected without compromising the viability of the project.
24. To this end, the MMDP II includes inputs to the design of zoning, detailed land-use plans, and, in particular, new experiences with upgrading neighborhoods with informal settlements and minimal urban services and infrastructure, the implementation of which will define community use and access to economic resources in different areas. Urban land use changes will sometimes cause loss of property, loss of livelihoods, or loss of access to economic assets, and the need for local residents to relocate to other areas. It may marginalize some of the weaker members of households affected by these changes, who may be unable to easily take up the alternatives being offered. Planning together with local people should identify vulnerable people and address their needs as early as possible in the project preparation process. When improvement of low-income areas of the city incorporates planned resettlement into the direct benefits of the program, resettlement solutions will include the option of voluntary relocation as part of a location’s social improvement program.
25. When an activity with impacts on local people is identified, alternative designs must be prepared to minimize the impact wherever possible. If activities carried out by a project unavoidably cause economic or physical displacement, or require the acquisition of land use rights, the RPF requires that the CMM conduct a concise Land Acquisition Assessment (LAA)
119 as a screening mechanism to identify if resettlement planning will be required. Since land cannot be purchased in Mozambique, the screening process will refer to acquisition of land use rights. Screening is a useful mechanism for a project where the enforcement of municipal land use rights is likely to impact local people and/or their livelihoods; it is an obligatory part of the RPF. Thus, where planned development initiatives and encroachment over the past few years mean that physical and/or economic impacts will occur, a simple LAA incorporated into the broader screening process will be used for relevant sub-projects. If this screening device detects the likelihood of impacts, then the Bank will be consulted for identification of what type of resettlement or compensation planning will be needed. This RPF will be used to guide the development of a RAP, where needed.
26. Under Mozambican law, all projects must also be screened using a standard checklist to identify whether an Environmental Assessment (EA) is necessary. Should screening identify the physical displacement of any people, this fact will necessitate an EA. A simple EA or more complex Environmental Impact Assessment (EIA) may be undertaken depending on the nature and size of the potential environmental and social impacts. In all cases, a scoping phase to define the terms of reference for the EIA will identify the scale and general potential impacts likely to be caused by a project. The EIA will present details of likely socio-economic impacts on people as a result of project development and any associated facilities required for construction or operational phases. It will also identify probable induced impacts, including likelihood of in- migration to the project area.
27. The EIA itself will include a Social Impact Assessment (SIA) that will identify and quantify impacts and the numbers of people affected or displaced by the project. A socio- economic baseline survey should include a census of all affected people and provide the basis for estimation of impacts on the population. EIAs require extensive and reported public consultation during preparation. Mitigation plans are also required to be prepared as part of the EIA.
28. EIA/SIA mitigation plans should outline the procedures used to minimize the negative impacts on the community as a whole, or on part of it, or on single households. Where these require resettlement or compensation, according to Bank requirements, these procedures will be defined in detail in a Resettlement Action Plan (RAP). If in MMDP II, concessions involving land use rights acquisition are awarded, once demarcated, the concession should be subject to screening for resettlement-related impacts.
29. An abbreviated RAP is used if the scale of resettlement is low. It describes the project activity and actions to minimise resettlement. It provides an officially-certified survey of project- affected persons, an asset inventory and valuation and, if appropriate, a socio-economic survey. It describes in detail the compensation and other resettlement assistance, including entitlement to participate in alternative livelihoods development activities to be provided. It also describes the results of consultations with affected people about acceptable alternatives. It must identify institutional responsibilities for implementation and monitoring, as well as procedures for redressing grievances. An implementation schedule and detailed budget are required.
30. In cases where an activity or sub-project would cause involuntary resettlement or adversely affect livelihoods or assets, where more than 200 people would be affected by a loss of
120 greater than 20 percent of assets, the CMM will prepare a full RAP for that particular activity. The scope and level of detail of a RAP would vary with the magnitude and complexity of the resettlement involved. The organization and minimum of information required for a RAP would conform to requirements of the Involuntary Resettlement OP/BP 4.12 and the RPF.
Institutional Responsibilities
31. Screening: Screening of a project that may require resettlement planning is initiated by the municipal department or other agency responsible for proposing the project. In MMDP II, this may involve the Urban Planning Department of the Municipal Council (CMM), the Transport Department, the Projects and Studies Department, and the Water and Sanitation Department of the municipality, among others. A simple environmental and social screening checklist must be completed for the Ministry for Coordination of Environmental Action. Since Mozambique has no resettlement planning regulations, the contents of a Land Acquisition Assessment will be included in this screening form and be shared with the World Bank if impacts requiring compensation and/or resettlement are detected. Once the screening form is completed, the Environmental Management Department (DGA) of the CMM will ensure that if any physical displacement, loss of assets, or economic impacts are registered, the form will be submitted to MICOA.
32. RAP Preparation: Responsibility for ensuring the production of a RAP lies with the Environmental Management Department, delegated by the Program Authority, the Office of Strategic and Institutional Development (GDEI). A consultant may be contracted to carry out socio-economic studies, a social impact assessment, and the RAP. The consultant would be responsible for stakeholder consultation, facilitating and supervising compensation negotiations and agreements, and producing the draft RAP report. When the Municipal Council is responsible for RAP preparation, the task will be designated by the Project Resettlement Commission to the Technical Working Group of officers from the Municipal Directorate of Urban Planning and the Environment (DMPUA) and the Municipal Directorate of Infrastructure’s (DMI) Department of Studies and Projects (DEP). In MMDP II technical assistance will develop the capacity of municipal personnel responsible for planning resettlement in DMPUA. The RAP would then seek final clearance from the Bank prior to implementing activities.
33. Resettlement Implementation: Responsibility for resettlement implementation lies with GDEI, as the Program Authority, which will task the DGA to organize social and other technical support from DMPUA and the various municipal departments. This will build capacity for: (i) consultation, compensation negotiation, and resettlement processes with the project-affected people (DMPUA and DMI/DEP); (ii) property evaluation (DMI/DEP); and (iii) site demarcation and acquisition of land use rights for resettlement (DMPUA). The DGA may, on behalf of the Program Authority, contract additional assistance to facilitate resettlement, such as: (i) contractors for house design and/or construction; (ii) consultants to oversee the process; and (iii) facilitators of the consultation, compensation negotiation, and resettlement processes with project-affected people.
34. It will be important to maintain access to an advisory resettlement specialist in the first two years who can be called upon to assist the Program Authority and the municipal technical
121 departments in social process and impact monitoring, capacity development, and preventing negative outcomes during resettlement implementation. The DGA was created during MMDP I with five technical personnel. It has no social or resettlement specialist as yet. This shortage has meant that the Department has not been able to assume its responsibilities in relation to resettlement in MMDP I.
35. It is therefore recommended that a qualified and experienced technician be employed with responsibility for resettlement issues and develop capacity in the DMPUA to supervise and manage the social inputs to the various resettlement processes planned during MMDP II. Until such management and coordination capacity is developed in the DMPUA, the advisory resettlement specialist should be used to help provide inputs and special guidance in these aspects to the DGA, in particular, and DMPUA in general. The DGA, designated by the Program Authority to lead the resettlement process, will participate in the development of capacity to manage whatever resettlement may be needed in MMDP II for DMPUA. Capacity development will require technical assistance to train personnel of DMPUA and DMI/DEP and help prepare for progressive allocation of responsibilities to DMPUA. For these teams to carry out their duties effectively, they must be supported with the means to organize and directly supervise resettlement implementation at sub-project sites, and be provided with field facilitators. Male and female social facilitators should be drawn from DMPUA or, if necessary, contracted to carry out the social and organizational aspects of resettlement. It is very advantageous to use the same facilitators, in both the consultation process required to prepare the RAP and in its implementation, for creating and maintaining community trust.
36. At the community level, if resettlement is required for more than 50 families, a gender- representative resettlement committee will be established, composed of representatives of affected families as well as others who are not affected. The local Resettlement Committee (RC) will be selected by the local Neighborhood Collective. The RC will include a sub-group of Neighborhood Collective members, as well as other trusted local leaders and representatives of the men and women affected by the project. It will be a key forum for linking community issues, including resettlement and grievances with the social facilitator, the Municipal District, the DMPUA, and ultimately the Municipal Assembly or Law Courts.
37. For the implementation of an RAP, the present process is to create a Project Resettlement Commission (PRC), led by the councilor of the main Municipal District affected, to ensure adequate dialogue with the relevant organization of displaced and affected people, and that the affected people are properly consulted and adequately compensated for losses. This approach will be continued during MMDP II, as will the Technical Working Group, comprised of Project Resettlement Commission members, to carry out resettlement implementation tasks. This will enable the Municipal District councilor leading the Project Resettlement Commission to ensure coordination of District Consultative Council (CC) representatives in an informal working group liaising with the local RC, or where no RC is created, directly with the affected people. This organizational structure has been used in MMDP I, and should continue to be followed as it appears to be effective. Resettlement Committee members and the informal District Working Group members at the community level should be trained in social and management issues and be supported by social facilitators. At the Municipal District (DM) level, the DM Councilor is responsible for the operation of the informal Working Group.
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38. The Project Resettlement Commission will coordinate and supervise community consultation and participation in RAP implementation at the district level, realized through its Technical Working Group or, when needed, contracted consultants. Project Resettlement Monitoring Commissions have also been created to ensure implementation of resettlement in projects carried out by the CMM over the past two years. These have been successfully used to assess the effectiveness of RAP implementation and provide the report for official approval to clear the previously occupied areas and permit the main construction project activities to go ahead. Resettlement Monitoring Commissions will continue to be used in MMDP II and will comprise a mix of independent, uninvolved reviewers, as well as representatives of affected families.
39. Informal District Working Groups must coordinate their activities with the executive Project Resettlement Commission and, in particular, with the Commission leader (Councilor), who is responsible for ensuring technical coordination through the Environmental Management Department. The Commission leader must ensure the Department secures and archives a copy of all technical information collected locally. The Department should pass copies of relevant information to the Municipal Communication Office. Intra- and inter-departmental coordination for resettlement is overseen by the GDEI. The GDEI will also be responsible for ensuring compliance concerning public consultation and disclosure.
Public Consultation and Grievances
40. A local communication strategy, outlining awareness-raising activities about the sub- project(s) and resettlement procedures and entitlements, should be implemented throughout preparation and implementation of resettlement, in order to promote dialogue and to reduce misunderstandings and grievances. This strategy will be developed as part of the RAP. Communities will be involved in awareness-raising and training concerning their rights and obligations, how to obtain legal advice and representation, and how to seek redress against what they regard as unfair practices.
41. The Resettlement Policy Framework and RAP preparation processes are participatory. Resettlement preparation via consultation during the socio-economic studies and impact assessments should identify potential conflicts and communication channels for grievances. The consultation process for RAP preparation must involve all potentially affected people. During and after project impact, individual and group consultation should be continued by social facilitators to verify progress in people taking up new livelihoods activities and in restoring their lives to pre-project levels. Grievances by project-affected people and host communities, concerning proposed or actual resettlement arrangements, can initially be presented for local redress to the Quarter Chief, a local influence leader, or the local Resettlement Committee (where one exists). Failing resolution at community level, issues may be presented to the District-level Resettlement Working Group for resolution, or transmission to the Project Resettlement Committee. If the complaint merits higher-level treatment, this should be transmitted to the Program Authority via the Environmental Management Department, or it may be formally taken to the Municipal Assembly to investigate and coordinate appropriate solutions.
123 42. Grievances may also be taken to the social facilitator working with the affected community. This channel may assist in local resolution or provide a rapid channel for timely resolution involving the Project Resettlement Commission. Unresolved issues, dissatisfaction with solutions, or conflicts between a community and a private-sector contractor may require formal recourse to the Municipal Assembly via the customary presentation and hearing of a municipal citizen’s petition. Failing resolution there, it would be taken to the Ministry or agency with titular responsibility for the investment. Provisions to appeal sectoral grievances to higher levels of government, such as National Directors and Ministers exist in Mozambican legislation. Should any party be dissatisfied, the grieved party may take the complaint to court, where it will be dealt with under Mozambican law.
43. The MMDP II is further developing its good governance management model that uses participatory monitoring and evaluation tools to ensure the continued relevance of program direction and activities. Community consultation and participation in the RAP planning process will identify progress and impact indicators. These will be used to formulate the RAP, and subsequently for monitoring and external audits during the implementation of the RAP. Communities will also participate in external evaluation of resettlement outcomes.
44. The activities identified in any written agreements between the Program Authority and community representatives will be jointly monitored and, where possible, community organizations will be responsible for ensuring the compliance of community members. The Program Authority (GDEI) will be responsible for ensuring the adequate design, development, and oversight of general resettlement monitoring and evaluation systems.
Safeguards Issues in Urban Planning Activities in MMDP II (Component C)
General Considerations
45. This section will clarify issues concerning both environmental and social safeguards with respect to land use planning activities under Component C. It was prepared with reference to the following Bank documents:
1) OP 4.01 on Environmental Assessment 2) OP 4.12 on Involuntary Resettlement 3) “Interim Guidance Note on Land Use Planning” (2009) 4) “Review of Environmental and Social Considerations in Land Use Planning: Key Findings and Good Practice” (2009)
46. Before examining the implications of these guidelines for MMDP II Component C, it is important to clarify the general question of their applicability to IDA-supported planning activities. According to the Interim Guidance Note, land use planning is a process to define and regulate specific uses in a given spatial area, subject to zoning laws, regulations, and protections governing such use. At its most basic, land use planning can involve spatial mapping, resource assessments, technical proposals for land/natural resource uses, and participatory processes and consultation with a range of stakeholders or political actors.
124 47. The Interim Guidance Note indicates that safeguard concerns regarding land use planning have potential relevance for urban, housing, and municipal development projects that are building houses/settlements and shifting people from locations, including slum upgrades and urban planning programs and creating new land regulations. With respect to Involuntary Resettlement (OP 4.12), the safeguard would not be triggered where the Bank’s investment does not cause ‘direct economic and social impacts that result in the involuntary taking of land or the involuntary restriction of access.’ In land use planning projects, OP 4.12 would be triggered by investments (e.g., infrastructure investments) that directly result in the involuntary taking of land or the involuntary restriction of access to parks or protected areas, regardless of the source of financing, but within the project scope.”
48. Bank safeguard assessments are thus triggered by the potential social or environmental impact of investment activities supported by Bank or IDA-financed plans, independent of the source of investment financing. Conversely, operations which finance plans for which investment financing is not available do not in themselves trigger safeguards.
49. The Interim Guideline goes on to discuss potential indirect reputational risk resulting from plans financed but not implemented with funding from an IDA financed operation. It notes that “good practice would be to undertake social assessment and implement measures to minimize and mitigate adverse economic and social impacts, particularly upon poor and vulnerable groups. These practices are encouraged both to enhance the project’s potential sustainability outcomes as well as to minimize the Bank’s reputational risk.”
50. Here the difference in the language employed by the Interim Guidance should be noted. In cases where plan implementation would likely produce some adverse social impacts but there are no takings, involuntary resettlement, or specific adverse environmental impacts from investments supported by the IDA-financed operation (including investments funded by non- IDA sources), social assessments are considered “good practice” and “are encouraged.” The formal safeguard assessments, reviews and mitigation measures are not “triggered” as they are the case of financed investments which may result from project supported plans. As such, for plans in operations without funds for implementing the investments which the plans identify, the consideration of potential impacts of plans on the poor or on marginalized groups is not a safeguard question; it is a question of the methodological and substantive adequacy of the planning processes and methods themselves. (For example, do the poor participate adequately in plan formulation? Are their concerns given adequate consideration?) In such cases of indirect reputational risk, these plans would be subject to “normal” quality assurance mechanisms as part of task supervision, and not subject to the “exceptional” institutional controls and review processes which result from triggered safeguards.
Specific Consideration of MMDP II Planning Activities
Area of Activity C-1: Urban Land Use Planning
51. Nature of Activities: The project will finance the development of the urban planning system as well as the preparation of several kinds of sub-municipal spatial plans. This includes continuing support begun under MMDP I for the implementation of a GIS-based Municipal
125 Management Information System (SIGEM) and associated imagery and data bases. Development plans for the downtown and waterfront areas of the city will be prepared. In addition, two levels of required “urbanization plans” specified in the urban land law -- (i) partial and, where necessary, (ii) detailed urbanization plans -- will be developed for as many neighborhoods of the city as possible. These plans and their implications will be disseminated among municipal stakeholders in the public and private sectors and civil society, and the Municipal Structure Plan will be updated mid-way through its ten-year term, as specified by law. Finally, a broadly-based land titling campaign will be undertaken to formalize land tenure in residential neighborhoods, with a focus on low income peri-urban areas of the city.
52. Possible Social Safeguard Issues and Proposed Mitigation Measures: As in the cases discussed above, the partial and detailed urbanization plans and the local development plans to be prepared with project financing will not entail any resettlement and will not trigger social safeguards. The infrastructure investments which may be suggested in these plans are not funded. Should they be undertaken later, the individual investment projects will be subject to social safeguard screening. The land titling activities to be financed are standard “land administration” activities as discussed in the Interim Guidance Note and do not trigger social safeguards.
53. Possible Environmental Safeguard Issues and Proposed Mitigation Measures: As with social safeguards, environmental safeguards will not be triggered by the preparation of urban spatial plans financed by this activity. Participatory methods will be employed for plan preparation and review, per good practice, and thus the measures to be undertaken will mitigate potential reputational risk, as recommended in the Interim Guidance Note.
Area of Activity C-2: Neighborhood Improvement
54. Nature of Activities: The program will finance integrated neighborhood development initiatives in several of Maputo’s informal settlements. These initiatives will include, where necessary, spatial reordering of public and private land as well as land titling and modest infrastructure investments in response to community priorities to improve some or more of the following services: access, drainage, sanitation, and/or public illumination. After spatial reordering, land tenure will be regularized through the issuing of DUATs to neighborhood residents.
55. Possible Social Safeguard Issues and Proposed Mitigation Measures: The improvement of informal settlements to be financed under this activity may trigger social safeguards. The spatial reordering required to create adequate space for infrastructure improvements may produce one of two types of social impact: (i) changed plot boundaries; and (ii) resettlement of selected households.
56. Improvement of informal settlements (i.e. “slum redevelopment”) frequently requires the adjustment of boundaries of individual plots to permit infrastructure improvements. Preferred practice is voluntary adjustment of plot boundaries through participatory deliberation with neighbors in order to establish new delimitation between public and private space and among private land occupants. As tested in previous pilot initiatives in Maputo’s Chamanculo
126 neighborhood, residents typically accept minor adjustments in plot boundaries voluntarily, often facilitated by municipal assistance in the reconstruction of fences and other structures along the boundaries to be moved. Once boundaries are adjusted to permit improved access and infrastructure investments, the modified plot boundaries provide the basis for land registration and titling. Although there are no households to be relocated by such boundary adjustment, it may result in material losses to affected households; thus adequate protections and potential compensation should be foreseen. The Resettlement Policy Framework (RPF) specifies the form of voluntary agreements for boundary adjustment as well as assessment, screening, and available appeal/recourse mechanisms to ensure that affected households truly accept the terms specified by these agreements. During the titling process, efforts will be made to ensure both husband and wife are registered on the title.
57. In the case of relocated households, CMM has stated that it will make available attractive alternative residential plots outside of the informal settlements within which spatial reordering may be required. These plots, along with relocation assistance, as per the RPF, will be provided as compensation for those households who voluntarily choose to leave the informal settlement, thus relieving the neighborhood plots of households whose present locations impede essential spatial reordering and infrastructure improvements. The RPF specifies the assessment, screening, appeal, and compensation procedures required for cases of voluntary resettlement in the context of neighborhood improvement activities.
58. Possible Environmental Safeguard Issues and Proposed Mitigation Measures: No significant adverse environmental impacts are expected in the case of neighborhood improvement investments. Infrastructure improvements will be small, local, and reversible, and will take place in already built-up areas. Nevertheless, to ensure compliance with both the Government of Mozambique and Bank environmental guidelines, a simple screening methodology is included in the CMM’s Environmental and Social Management Framework (ESMF) to ensure that neighborhood infrastructure improvements do not require special mitigation measures. In the event that this screening should reveal significant potential environmental impacts, the EIA protocol specified in the ESMF would then be applied in relation to those proposed neighborhood infrastructure improvements which entail such risks, and adequate mitigation measures would taken and verified as per the criteria and procedures specified in the ESMF.
127 Annex 11: Project Preparation and Supervision
Project Preparation Timetable Planned Actual PCN review December 15, 2008 December 15, 2008 Initial PID to PIC December 15, 2008 January 13, 2009 Initial ISDS to PIC December 15, 2008 January 9, 2009 Appraisal October 2009 May 14, 2010 Negotiations November 2009 August 26, 2010 Board/RVP approval December 2009 Planned date of effectiveness April 2010 Planned date of mid-term review Jan 2013 Planned closing date April 2015
Key institutions responsible for preparation of the project: Office for Strategic and Institutional Development (GDEI) of Maputo Municipal Council.
Bank staff and consultants who worked on the project included: Name Title Unit Uri Raich Sr Urban Specialist AFTUW Kate Kuper Sr Urban Specialist AFTUW Natalino Nascimento Engineer/Technical Consultant AFTUW Louis Helling Institutional Development Consultant AFTUW Ali Alwahti Urban Specialist AFTUW Furqan A. Saleem Sr. Financial Management Specialist AFTFM Elvis Langa Financial Management Specialist AFTFM Miguel S. Oliveira Finance Offcier CTRFC Eduardo Brito Sr. Counsel LEGAF Theresa Gamulo Procurement Analyst AFTUW Amos Malate Procurement Analyst AFTPC Antonio Chamuco Procurement Specialist AFTPC Suzanne Morris Sr. Finance Officer CTRFC Miguel-Santiago Oliveira Finance Officer CTRFC Nilsa Come Team Assistant AFCS2 Rildo Santos Program Assistant AFTUW George Ledec Lead Ecologist AFTEN Jutta Kern M&E Specialist AFTRL Kristine Schwebach Safeguard Specialist AFTCS
Quality Assurance Team: Mats Andersson, Consultant, EASCS Ming Zhang, Lead Urban Economist, LCSUW Alexandra Ortiz, Sr. Urban Economist, MNSUR Maria Emilia Freire, Consultant, SASDU
Bank funds expended to date on project preparation: Bank resources: $300,000
Estimated Approval and Supervision costs: Remaining costs to approval: $10,000 Estimated annual supervision cost: $70,000 128 Annex 12: Documents in the Project File
A. Project Documents
Project Concept Note Aide Memoires, Annexes and Management Letters Project Appraisal Document Decision Meeting Minutes Integrated Safeguards Data Sheet (ISDS) Project Information Document (PID) Minutes of Negotiations
B. Quality Assurance
Quality Enhancement Review Minutes,
C. Other Documents (Background Studies – MMDP II)
- KPMG, CMM’s Staff Census, 2010 - Dray, Madalena, Revision of Environment and Social Management Framework for ProMaputo II, 2010 - Thompson, Gaye, Revision of Resettlement Policy Framework for ProMaputo II, 2010 - Austral and Cowi, Citizen Report Card 2009, 2010. - Serrano, Elena, Communication Strategy for Maputo Municipal Council, 2009 - CMM Transparency Index, 2010 (TBD) - Baselines Studies, 2010 (TBD) - External Assessment PPP’s Model, 2010 (TBD) - TORs for Transportation Director Plan, 2010 (TBD) - CMM, Mid-Term Expenditure Framework Study, 2010
129
Annex 13: Statement of Loans and Credits
Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d P111592 2010 MZ Higher Educ Science & Techn. (FY10) 0.00 40.00 0.00 0.00 0.00 37.15 0.00 0.00 P108444 2010 MZ-Energy Dev. & Access Project (APL-2) 0.00 80.00 0.00 0.00 0.00 74.92 0.67 0.00 P107311 2010 MZ-Nat'l Dec Planning & Fin SIL (FY10) 0.00 30.40 0.00 0.00 0.00 29.00 2.76 0.00 P106355 2009 MZ-Competitiveness & PS Dev 0.00 25.00 0.00 0.00 0.00 23.44 -2.03 0.00 P099930 2009 MZ-Health Service Delivery SIL (FY09) 0.00 44.60 0.00 0.00 0.00 45.47 -0.36 0.00 P104566 2008 MZ-Water Services & Inst. Support 0.00 15.00 0.00 0.00 0.00 10.88 5.06 0.00 P083325 2007 MZ-APL2 Roads & Bridges 0.00 100.00 0.00 0.00 0.00 51.02 45.75 0.00 P096332 2007 MZ-Maputo Municipal Development 0.00 30.00 0.00 0.00 0.00 7.17 6.29 0.00 Program P093165 2006 MZ-Market Led Smallholder Dev (FY06) 0.00 20.00 0.00 0.00 0.00 14.20 6.64 0.00 P087347 2006 MZ Tech & Voc Edu & Training (FY06) 0.00 30.00 0.00 0.00 0.00 15.21 10.55 0.00 P086169 2006 MZ-Financial Sector TA Project 0.00 10.50 0.00 0.00 0.00 4.27 0.90 0.00 P071465 2006 MZ-TFCA & Tourism Dev (FY06) 0.00 20.00 0.00 0.00 0.00 10.19 2.78 0.00 P082618 2005 MZ-Beira Railway SIL (FY05) 0.00 110.00 0.00 0.00 0.00 1.75 -3.29 -3.95 P069183 2004 MZ - Energy Reform and Access APL-1 0.00 40.26 0.00 0.00 0.00 5.85 0.35 0.35 P078053 2003 MZ-HIV/AIDS Response SIL (FY03) 0.00 55.00 0.00 0.00 0.00 2.80 -5.39 -12.79 Total: 0.00 650.76 0.00 0.00 0.00 333.32 70.68 - 16.39
MOZAMBIQUE STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions of US Dollars
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2004 ENH 0.00 18.50 0.00 0.00 0.00 13.37 0.00 0.00 GTFP BDC 0.11 0.00 0.00 0.00 0.11 0.00 0.00 0.00 1997 MOZAL 29.70 0.00 58.50 0.00 29.70 0.00 58.50 0.00 2001 MOZAL 10.12 0.00 0.00 0.00 10.12 0.00 0.00 0.00 2000 SEF Ausmoz 0.72 0.00 0.00 0.00 0.72 0.00 0.00 0.00 1997 SEF CPZ 1.00 0.00 0.00 0.00 1.00 0.00 0.00 0.00 2000 SEF Cabo Caju 0.58 0.00 0.00 0.00 0.51 0.00 0.00 0.00 2001 SEF Grand Prix 0.33 0.00 0.00 0.00 0.33 0.00 0.00 0.00 2004 SEF Merec 1.02 0.00 0.00 0.00 1.02 0.00 0.00 0.00 Total portfolio: 43.58 18.50 58.50 0.00 43.51 13.37 58.50 0.00
Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic.
Total pending commitment: 0.00 0.00 0.00 0.00
130
Annex 14: Country at a Glance
Mozambique at a glance 2/25/10
Sub- Key Development Indicators Saharan Low M ozambique Africa income Age distribution, 2008 (2008) Male Female
Population, mid-year (millions) 21.8 818 973 75-79 Surface area (thousand sq. km) 799 24,242 19,310 60-64 Population growth (%) 1.9 2.5 2.1 Urban population (% of total population) 37 36 29 45-49 30-34 GNI (Atlas method, US$ billions) 8.4 885 510 15-19 GNI per capita (Atlas method, US$) 390 1,082 524 GNI per capita (PPP, international $) 770 1,991 1,407 0-4
10 5 0 5 10 GDP gro wth (%) 6.8 5.0 6.4 percent of total population GDP per capita growth (%) 4.8 2.5 4.2
(most recent estimate, 2003–2008)
Poverty headcount ratio at $1.25 a day (PPP, %) 75 51 .. Under-5 mortality rate (per 1,000) Poverty headcount ratio at $2.00 a day (PPP, %) 90 73 .. Life expectancy at birth (years) 42 52 59 Infant mortality (per 1,000 live births) 115 89 78 250 Child malnutrition (% of children under 5) 21 27 28 200
Adult literacy, male (% of ages 15 and older) 57 71 72 150 Adult literacy, female (% of ages 15 and older) 33 54 55 100 Gross primary enrollment, male (% of age group) 119 103 102 Gross primary enrollment, female (% of age group) 103 93 95 50
Access to an improved water source (% of population) 42 58 67 0 Access to improved sanitation facilities (% of population) 31 31 38 1990 1995 2000 2007
Mozambique Sub-Saharan Africa
Net Aid Flows 1980 1990 2000 2008 a
(US$ millions) Net ODA and official aid 167 998 906 1,777 Growth of GDP and GDP per capita (%) Top 3 donors (in 2007): European Commission 7 81 79 240 15 United States 9 62 116 153 10 United Kingdom 11 43 83 116 5 Aid (% of GNI) 4.7 43.0 22.5 24.2 0 Aid per capita (US$) 14 74 50 83 -5
Long-Term Economic Trends -10 95 05 Consumer prices (annual % change) 4.2 43.7 12.7 10.3 GDP implicit deflator (annual % change) 4.1 34.1 12.0 7.7 GDP GDP per capita
Exchange rate (annual average, local per US$) 0.0 0.9 15.4 24.3 Terms of trade index (2000 = 100) 87 112 100 119 1980–90 1990–2000 2000–08 (average annual growth %) Population, mid-year (millions) 12.1 13.5 18.2 21.8 1.1 3.0 2.2 GDP (US$ millions) 3,526 2,463 4,249 9,846 -0.1 6.1 8.0 (% o f GDP ) Agriculture 37.1 37.1 24.0 28.6 6.6 5.2 7.8 Industry 34.4 18.4 24.5 24.3 -4.5 12 . 3 10 . 1 M anufacturing .. 10.2 12.2 13.9 .. 10 . 2 9.4 Services 28.5 44.5 51.5 47.1 6.5 5.0 7.2
Household final consumption expenditure 96.7 92.3 79.5 81.7 -1.1 5.8 7.6 General gov't final consumption expenditure 12.2 13.5 9.0 12.1 -6.7 3.2 -7.0 Gross capital formation 7.6 22.1 31.0 18.5 4.1 8.6 3.3
Exports of goods and services 10.9 8.2 17.5 33.3 -6.8 13.1 16.5 Imports of goods and services 27.4 36.1 37.0 45.7 -3.8 7.6 6.7 Gross savings ......
Note: Figures in italics are for years other than those specified. 2008 data are preliminary. .. indicates data are not available. a. Aid data are for 2007.
Development Economics, Development Data Group (DECDG).
131 Mozambique
Balance of Payments and Trade 2000 2008 Governance indicators, 2000 and 2008 (US$ millions) Total merchandise exports (fob) 364 2,653 Total merchandise imports (cif) 1,163 3,804 Voice and accountability Net trade in goods and services -815 -1,223 Political stability Current account balance -1,042 -2,021 Regulatory quality as a % o f GDP -24.5 -20.5
Rule of law Workers' remittances and compensation of employees (receipts) 3 7 116 Control of corruption
Reserves, including gold 745 1,605 0255075100
2008 Country's percentile rank (0-100) Central Government Finance higher values imply better ratings 2000 (% of GDP) Current revenue (including grants) 15.2 19.7 Source: Kaufmann-Kraay-Mastruzzi, World Bank Tax revenue 10.5 14.2 Current expenditure 11.7 15.7 Technology and Infrastructure 2000 2008 Overall surplus/deficit -8.4 -7.9 Paved roads (% of total) 18.7 .. Highest marginal tax rate (%) Fixed line and mobile phone Individual 20 32 subscribers (per 100 people) 1 21 Co rpo rate 35 32 High technology exports (% of manufactured exports) 9.3 2.3 External Debt and Resource Flows Environment (US$ millions) Total debt outstanding and disbursed 7,247 3,432 Agricultural land (% of land area) 61 62 Total debt service 96 43 Forest area (% of land area) 24.8 24.5 Debt relief (HIPC, M DRI) 2,992 1,057 Nationally protected areas (% of land area) .. 5.8
Total debt (% of GDP) 170.6 34.9 Freshwater resources per capita (cu. meters) 5,242 4,693 Total debt service (% of exports) 12.5 1.3 Freshwater withdrawal (billion cubic meters) 0.6 ..
Foreign direct investment (net inflows) 139 587 CO2 emissions per capita (mt) 0.07 0.09 Portfolio equity (net inflows) 0 0 GDP per unit of energy use (2005 PPP $ per kg of oil equivalent) 1.3 1. 7 Composition of total external debt, 2008 Energy use per capita (kg of oil equivalent) 397 420 IBRD, 0 Short-term, 629 IDA, 1,149 World Bank Group portfolio 2000 2008 Private, 7 (US$ millions)
IMF, 15 IB RD Total debt outstanding and disbursed 0 0 Bilateral, 1,120 Disbursements 0 0 Principal repayments 0 0 Other multi - lateral, 512 Interest payments 0 0
US$ millions IDA Total debt outstanding and disbursed 760 1,149 Disbursements 97 255 Private Sector Development 2000 2008 Total debt service 6 8
Time required to start a business (days) – 26 IFC (fiscal year) Cost to start a business (% of GNI per capita) – 22.9 Total disbursed and outstanding portfolio 99 84 Time required to register property (days) – 42 o f which IFC o wn acco unt 99 84 Disbursements for IFC own account 49 -2 Ranked as a major constraint to business 2000 2008 Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 3 18 n.a. .. .. n.a. .. .. M IGA Gross exposure 114 228 Stock market capitalization (% of GDP) .. .. New guarantees 74 50 Bank capital to asset ratio (%) 8.2 6.4
Note: Figures in italics are for years other than those specified. 2008 data are preliminary. 2/25/10 .. indicates data are not available. – indicates observation is not applicable.
Development Economics, Development Data Group (DECDG).
132 Millennium Development Goals Mozambique
With selected targets to achieve between 1990 and 2015 (estimate closest to date shown, +/- 2 years) Mozambique
Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2008 Poverty headcount ratio at $1.25 a day (PPP, % of population) .. 81.3 .. 74.7 Poverty headcount ratio at national poverty line (% of population) .. 69.4 .. 54.1 Share of income or consumption to the poorest qunitile (%) .. 5.6 .. 5.4 Prevalence of malnutrition (% of children under 5) .. 28.1 .. 21.2
Goal 2: ensure that children are able to complete primary schooling Primary school enrollment (net, %) 42 .. 56 76 Primary completion rate (% of relevant age group) 26 26 16 46 Secondary school enrollment (gross, %) 7 7 6 18 Youth literacy rate (% of people ages 15-24) .. 47 .. 53
Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (%) 71 .. 75 85 Women employed in the nonagricultural sector (% of nonagricultural employment) 11 ...... Proportion of seats held by women in national parliament (%) 16 25 30 35
Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1,000) 201 190 184 16 8 Infant mortality rate (per 1,000 live births) 135 128 125 115 M easles immunization (proportion of one-year olds immunized, %) 59 71 71 77
Goal 5: reduce maternal mortality by three-fourths M aternal mortality ratio (modeled estimate, per 100,000 live births) ...... 520 Births attended by skilled health staff (% of total) .. 44 .. 48 Contraceptive prevalence (% of women ages 15-49) .. 6 .. 17
Goal 6: halt and begin to reverse the spread of HIV/AIDS and other major diseases Prevalence of HIV (% of population ages 15-49) 1.4 4.5 9.5 12 . 5 Incidence of tuberculosis (per 100,000 people) 181 262 378 431 Tuberculosis cases detected under DOTS (%) .. 59 47 49
Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (% of population) 36 39 41 42 Access to improved sanitation facilities (% of population) 20 22 27 31 Forest area (% of total land area) 25.4 25.1 24.8 24.5 Nationally protected areas (% of total land area) ...... 5.8 CO2 emissions (metric tons per capita) 0.1 0.1 0.1 0.1 GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) 0.9 1.0 1.3 1. 7
Goal 8: develop a global partnership for development Telephone mainlines (per 100 people) 0.4 0.4 0.5 0.4 M obile phone subscribers (per 100 people) 0.0 0.0 0.3 20.2 Internet users (per 100 people) 0.0 0.0 0.1 1.6 Personal computers (per 100 people) .. 0.1 0.3 1. 4
Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds)
100 100 30
75 75 20 50 50 25 10 25 0
2000 2002 2004 2006 2008 0 0
1990 1995 2000 2007 2000 2002 2004 2006 2008 Primary net enrollment ratio Fixed + mobile subscribers Ratio of girls to boys in primary & secondary Mozambique Sub-Saharan Africa education Internet users
Note: Figures in italics are for years other than those specified. .. indicates data are not available. 2/25/10
Development Economics, Development Data Group (DECDG).
133 Annex 15: Anti-corruption
1. Anti-corruption efforts constitute an explicit element in the political program of the current municipal administration, as they did for the prior executive during the formulation and implementation of MMDP I. Under the Institutional Development Component of MMDP II, specific policy, capacity building, and monitoring activities are foreseen which would engage both municipal officials and citizens in the reduction of opportunities for corrupt practices and the elimination of corrupt behavior.
2. CMM’s first Anti-corruption Strategy was drafted by the executive and approved by the Municipal Assembly in 2006; an updated strategy was approved in 2009 by the newly elected leadership. Both of these anti-corruption strategies and associated implementation plans are consistent with national policies and legislation. They are tailored to the specific issues and opportunities which confront the municipality in the exercise of its legal competencies as a local taxing, regulatory, and service delivery authority. In 2007, the CMM approved a Code of Conduct which provides clear standards for municipal officials and provides for both preventive measures and enforceable sanctions which can be undertaken by the municipality to ensure proper behavior by its staff.
3. Both the earlier and present strategies focus on prevention of corruption, and are organized around four pillars: leadership, organization, capacity building, and communication and education. From 2007 to 2009, CMM clarified municipal powers and procedures, clearly allocating responsibility for their exercise as part of its organizational reform. Improved systems, most notably the computer-based Integrated Financial Management System (SIGEF) and human resource management system, were developed to increase internal controls and the transparency of resource use. In addition, information campaigns were directed at municipal officials, citizens, and civil society organizations to establish expectations regarding acceptable conduct and performance. Citizen feedback mechanisms were also established and strengthened, including: periodic public consultations by the Mayor and his councilors with residents of municipal districts, suggestion boxes at service delivery points, a confidential telephone complaint line, and the autonomous municipal ombudsman who receives and addresses citizen complaints and reports directly to the Mayor. While these measures have contributed to modest increases in the transparency of municipal administration, no data is available to demonstrate their impact on the reduction of corrupt activity.
4. MMDP II anti-corruption plans include continuing MMDP I efforts to clarify, simplify, and publicize procedures and decision criteria in order to reduce vulnerability to corruption. Full SIGEF implementation, including automation of many revenue administration and disbursement functions, will significantly reduce opportunities for corrupt practices by staff. Specific functional areas vulnerable to corruption which have been identified as priority sectors under MMDP II include: land registration, construction licensing, small business licensing, collection of taxes and fees, municipal police (who enforce municipal bylaws and regulations at district and neighborhood levels), and municipal procurement and contracting. Detailed anti-corruption action plans have been drafted and will guide implementation in each of these sectors. In addition to preventive cross-cutting administrative reforms and staff training, CMM plans to establish specific oversight and control mechanisms in these areas to identify staff who may be engaging in corrupt practices and to remove them from vulnerable positions and, when possible, initiate disciplinary action. Furthermore, the CMM has committed itself to more proactive,
134 pervasive, and effective information and communication efforts in order to increase the transparency of municipal decisions and actions. The aim is to enable public and civil society oversight to reinforce internal efforts to reduce administrative irregularities and corrupt practices. The CMM also plans to reinforce the strengthening of its Municipal Inspector, which has authority both to undertake independent investigations of specific cases and to review departmental practices and performance.
5. Technical assistance and training resources financed by the IDA credit and operational costs from CMM’s revenues have been allocated in the MMDP II budget to support these efforts. Progress of planned activities, production of planned outputs, and achievement of planned results, as specified in anti-corruption action plans, will be jointly monitored by CMM and the Bank Task Team on a quarterly and annual basis during MMDP II implementation.
135 Annex 16: HIV/AIDS Work Plan
1. The Maputo City Council (CMM), like most government institutions in Mozambique, faces many challenges in the fight against the HIV/AIDS pandemic whose consequences have an impact on the ability of CMM to deliver adequate services to its residents. The prevalence of HIV/AIDS in Mozambique is estimated at 15 percent (2009) with a varied territorial distribution. In the North (Niassa, Nampula, and Cabo Delgado) prevalence is 9 percent, while in the Center (Sofala, Manica, Tete, and Zambézia) it is estimated at 18 percent. As for the South (Maputo City, Maputo Province, Gaza, and Inhambane) prevalence is 21 percent. Maputo City has a prevalence of 23 percent (2007), representing an increase of 2.3 percent from 2004 estimations. Propagation of the pandemic is increasing with its negative effects at the social and economic levels directly affecting the City’s limited human resources. This rapid increase in prevalence is also challenging the current infrastructure which is unable to cope with the effects of the pandemic, namely with limited capacity to ensure adequate burial arrangements.
2. CMM is currently reorganizing and developing its institutions with a view to transforming the municipal administration to be able to improve service delivery and improve living conditions in Maputo. As a measure to mitigate the risks from the City’s limited human resources and the increased burden of the pandemic, CMM has developed an HIV/AIDS strategy that MMDP I has supported with funding from the National AIDS Council (CNCS). Implementation of the strategy has successfully involved all departments of CMM, and followed the National HIV/AIDS policy of the Government of Mozambique. A key element of the strategy is the CMM-designed own internal CMM policy for HIV/AIDS in the workplace. Implementation of the Workplace policy was initiated successfully and its implementation will be consolidated during MMDP II.
3. During MMDP I, the World Bank HIV/AIDS specialist and consultants were able to supervise and monitor implementation of the strategy as well as ensure that CMM had secured external financing to support the implementation of this essential instrument of MMDP. Indeed, in addition to receiving funds from CNCS, CMM also signed an agreement with the European Union through the Union of Lusophone Capital Cities (UCCLA/EU) for training, technical assistance and other contributions to its ongoing HIV/AIDS program. In addition, CMM continues to receive support from other development partners such as UNICEF for financing collateral activities related to HIV-AIDS. Under MMDP II, this support will continue and CMM will consolidate the HIV-AIDS program within the same framework of the MMDP I strategy. The strategy highlights three major areas of intervention: prevention; mitigation and information gathering; and the targeting of CMM’s staff and their families.
4. During MMDP I, the CMM benefitted from funding for these efforts from CNCS; by the end of the MMDP I, however, these funds were no longer available. In MMDP II, the CMM HIV-AIDS strategy includes a five-year work plan and a budget with priority activities to be implemented in year one of the program. On the basis of this strategy CMM will seek funding from the central government and other sources to support its HIV-AIDS activities.
5. To support CMM in the implementation of its HIV-AIDS strategy and in line with the institutional restructuring, CMM, during MMDP I, appointed a full time HIV/AIDS Coordinator whose major role is to strengthen CMM’s Human Resources department in mainstreaming
136 HIV/AIDS at the workplace. The strategy also highlights a strengthened role of the HIV/AIDS Focal Points at CMM. Likewise, the CMM HIV/AIDS team has benefitted from the support and expertise of a HIV/AIDS specialist in the department of Human Resources, enabled by funding from CNCS for the past three years. Due to the end of funding from CNCS mentioned above, IDA’s funds in MMDP II will finance the recruiting of this HIV-AIDS Specialist, and other activities described in next paragraph.
6. Given that the activities financed by the EU do not cover several essential services which have previously been provided by CMM to its general workforce and to staff members and their families living with HIV/AIDS, CMM and IDA reviewed and finalized the proposed HIV-AIDS budget and the five-year workplan for MMDP II. The budget for HIV/AIDS activities is US$640,200 of which US$404,660 is from the IDA credit. Planned activities include: workplace policies and staff training, IEC activity design, voluntary counseling, program monitoring, and a technical advisor to be funded by IDA. IEC campaigns, condom distribution, voluntary testing and counseling, and support for staff members or their immediate families under TARV will be funded by CMM. As mentioned earlier, CMM will work closely with the central government, through the Ministries of Health and Public Service in the months following the appraisal of MMDP II to further clarify the availability of support for its HIV/AIDS program when the Government’s strategy for HIV/AIDS interventions towards Civil Servants under the umbrella of the CNCS is clarified and completed.
7. The Operations Manual for MMDP will be reviewed to ensure that the institutional responsibilities of the various staff within the two departments that are in charge of the HIV/AIDS activities, namely the Department of Human Resources (Direcção Municipal de Recursos Humanos) and the Department of Health and Sanitation (Direcção Municipal de Saùde e Salubridade), are effectively harmonized and their roles clearly defined to ensure a smooth transition to MMDP II.
137 Annex 17: Maputo’s Public Finances
1. The 2009 executed budget of Maputo was US$16.3 million, representing a total spending per person of close to US$15. The composition of revenue sources was 25 percent transfers and 75 percent own-source revenues. Inter-governmental transfers in Mozambique consist of a general purpose municipal compensation fund (Fundo de compensação autárquica, FCA) and an earmarked fund for local investments (Fundo de investimento local, FIIL). In addition, municipalities may also receive other transfers for specific investments, namely for road construction in the form of a Roads Fund (Fundo de Estradas, FE).
2. As a proportion of the total revenues of the country, municipal transfers represent a very small allocation. On average, from 2005 to 2007, the total amount of resources that the municipalities received through the FCA and the FIIL did not even reach one percent (0.74%) of the total national revenues. Changes in the system of inter-governmental transfers in order to increase the revenue pool, improve the allocation criteria and enhance transparency, predictability and tax effort, could have a very positive impact on the overall financial condition of municipalities. However, since this requires the involvement of national government actors, MMDP has not been dealing with these issues directly but rather has focused on the support to enhancing own-revenue sources that are under the control of municipalities and include both fiscal (taxes) and non-fiscal (fees, licenses, fines) instruments.
3. Maputo’s US$15 spending per capita is low, not only in comparison with other capital cities in the region (like Addis Ababa, Dakar, Dar-es-Salaam, and Kigali) but more importantly, relative to the extensive functions and services that Maputo has to deliver, ranging from roads, solid waste, water, public lightning, and security, and more recently, to basic health and education, according to Decree 33/2006.
4. In light of the perceived imbalance between Maputo’s revenues and expenditures, CMM is attempting to develop a Mid-Term Expenditure Framework (MTEF). The final results are not ready yet, but in general the framework shows that in the next few years CMM will have to increase its revenues substantially (up to five times) in order to reach and maintain an acceptable coverage and quality of service provision. To do so, MMDP has been supported and will continue to support a number of revenue enhancing activities.
5. According to the municipal finance law (Law 1/08), municipalities are primarily in charge of the following revenue instruments: property tax (IPRA), head tax (IPA), tax on property transaction (SISA), tax on vehicles and a series of fees, namely on economic activity (TAE), markets, solid waste, publicity, and public spaces. All these revenue instruments can be improved in terms of efficiency and equity. Of all the potential sources, the property tax, the recently transferred tax on vehicles, and the fee on economic activity seem to have the greatest potential. However, to reach that potential a number of actions (that will be supported by MMDP II) must take place.
6. In the past, the vehicles tax was administered by the national government and 75 percent of the proceeds were passed down to the municipalities. This tax has been now fully transferred to the municipalities. Although now CMM will be able to keep all the proceeds of this tax, it will also have to cover all its collection and administration costs. Although no specific estimation of
138 these costs is available, net revenues over the previous situation (when the tax was administered by the central government) will only be realized once the additional 25 percent received as a consequence of this reform is higher than the total administrative and collection costs. As of the fee on economic activity (TAE), it is structured as a license for commercial operations, without any link to the economic activity generated. With an appropriate adjustment, this fee could be turned into business friendly tax on the sales or turnover of commercial activity. However, this will require great effort from municipalities, as central authorities may view this as double taxing existing income and consumption national taxes.
7. Different analyses of municipal revenues in Mozambique agree that IPRA is the tax with the greatest potential. Municipal revenues in Mozambique are constrained by the under- utilization of property taxes, which throughout the world are considered one of the most appropriate and significant instruments of local revenue generation. During the preparation of MMDP I, it was identified that a very small number of properties (300 out of 14,000 properties in 2007) paid taxes at close to market values. The situation continues to be very restrictive, with IPRA amounting to only 10 percent of own-source revenues (excluding transfers) while more regressive and inefficient taxes and fees predominate. Recognizing the potential that exists (more than 120,000 taxable properties in the city) and that urbanization has dramatically increased the demand for locally-financed and managed services, MMDP I made efforts to address this situation. The municipal cadastre has been expanded to include over 30,000 records, with a focus on the most valuable properties. However, as a result of delays in parliamentary approval of a revised municipal tax law (Law 1/08), and cabinet approval of the municipal revenue code (in December 2008), the CMM only prepared a draft regulation defining its powers to collect IPRA in 2009. In addition, legal ambiguities continue to obstruct its full implementation and thus the realization of potential municipal revenues which are needed to finance mandated urban services.
8. Against good practice, municipalities in Mozambique do not have the power to set property tax rates. The 2008 municipal tax law imposed a reduction in rates of 75 percent for residential properties and of 42 percent for commercial properties from those established in the prior (1997) Law, fixing the rates at 0.4 percent for residential use and 0.7 percent for commercial use. To achieve required revenues in this constrained context, municipalities must expand the tax base by increasing the number of taxable properties and reassessing property values. CMM has significantly increased the number of taxable properties in its cadastre, but most recorded property values are severely outdated (book values from the colonial period) and do not show any link with Mozambique’s current economic and urban reality. Legal and administrative instruments under the control of central government prevent the updating of these valuations.
9. The main problem is that the values of the vast majority of urban properties are pegged to the values registered in the decades old and outdated “Matriz Predial”. The “Matriz” is under the control of the central government (Ministry of Finance) and cannot be updated by the municipality without an explicit mandate to do so. Under these conditions, even the expanded municipal property cadastre and associated improvements in municipal tax administration already underway will not generate significant revenue increases. The current situation brings serious efficiency and equity considerations. On the efficiency side, properties with book values of up to 25,000 Mtn (US$1,000) pay a flat fee of 100 Mtn (US$4). On equity ground the situation is also critical because, in specific cases, the law allows for the assessment of properties that are not in the “Matriz” at market values, which means that two identical properties (one in
139 the “Matriz” and the other outside) pay very different taxes. In addition, the current status of outdated property values is regressive, as the undervalued but high-value properties consume more public services than low-income residences where the tax-service link is not so evident. In addition to valuations, another important constraint is that the current IPRA formula requires an excessive number of parameters and gathering data on each of them is not always feasible (e.g. age of the properties). Thus a simplified formula should be approved to give municipalities more flexibility to collect the taxes.
10. Without an improved CMM revenue base, the sustainability of existing and planned MMDP investments is compromised. Policy dialogue with the central government (Ministry of Finance and Tax Authority) is required to ensure that municipalities are authorized to determine a suitable valuation technique as a basis for efficient and equitable taxation of municipal properties. As is done in many countries in the world, municipalities must be able to exercise their statutory autonomy to manage their own tax instruments and procedures, within the limits established by law. Specifically, they should be allowed to use their own cadastres and procedures to assess the property values rather than be tied to the outdated values of the “Matriz Predial” and to valuations controlled by central government agencies.
11. The legal interpretation of the central government is that municipalities do not have autonomy to regulate the reassessment of the property values in their jurisdictions. Such regulation is under the responsibility of the central government (Ministry of Finance). This regulation that has been pending for many years is now currently being developed. It remains to be seen when it will be approved and implemented (expected in October 2010) and more importantly what its content would be. The regulation should give municipalities enough flexibility to assess properties on the basis of market values and through the application of simple formulas. If this is not the case, Maputo would have a difficult time increasing its property taxes. Under such a scenario of restrictive municipal own-source revenue generation, the central government may choose to increase its inter-governmental transfers to prevent a decline in the coverage and quality of municipal services.
12. Should the legal interpretation of the central government not support municipal responsibility for updating valuations, then the government should commit to clarify by whom and by when the new regulation for valuations (which has been pending for many years) will be approved and implemented, and that such valuations will be based on the market or close to market value for properties.
140 Annex 18: Letter of Sector Policy
-- ffi",= de 01to~"t'7"" (jJ'()IV.(J }{Ita. Dear Mr. Olivier Godron Acting Country Director for t\.'to7.ambiquc Tbe World Hank Office MAPUTO • MOZAMBIQUE I. I am writing on behalf of the Government of the Republic of Mozambique (the Government), to request from the International Development Association (lOA), 50 million U.S. dollars to fi nance the Phase II of the Maputo Municipal Development Program (the Program ). The Phase I of the APL is ncar completion. This second phase consists of the following five components: (I) Institutional Development, (II ) Financial Sustainability, (III) Urban Planning, (IV) Urban Infrastructure, and (V) Metropolitan Development. 2. Background 2.1 With the approval of the Law 2 197, the Government of the Republic of Mozambique established the legal framework necessary for the establishment of local governance. This Law approved the creation of 33 municipalities with administrative and financial autonomy. The Government al so set for the City of Maputo (Law 8/97) a special organizational and operational structure and defined the status of the Presidents of Municipal Councils and the elected Members of Municipal Assemblies (Law 9/97) 2.2 After three rounds of municipal elections and 12 years of municipal experience, the Government remains committed to the strengthening of the Local Bodies by developing programs and plans for capacity building, intergovernmental cooperation and investment in equipment an~ local infrastructure. 2.3 Mozambique, like moSI African countries, is being covered by the demographic phenomenon of an accelerated urbanization. The urban population represents about 30% of the country's tOlal and the urbanization average is hovering around 5% per annum. It is estimated that in 2020 about 50% of the Mozambican population will be living in urban areas. For 2015, it is estimated that the urban population of Maputo city wi ll grow from 1.1 million in 2010 to around 1.3 million inhabitants. Recent studies show that over 50% of the population is considered poor according to key indicators commonl y used for this purpose. Urban povcrty is slightly lower (5 1.5%) than rural poverty (55 .3%). The difference be""JA.9oth is small however there is a . v " I U I 'ILL . &r. -U r;,) l; (:rdl C/,.,8O!t ,. :\.1."L).. 1 • www.bancomoc..mz PIiOMQVENDO A VALORIZACAo DO METICAL E Oo:em~ENT~~;~~1.:£~~CIONAL (" PROMOTING THE VALUF, OF THE METICAL AND THE ECONOMIC GROWTH 141 - - 'mi""cc de g,{{~i<;"" 8f:;V(M(-}tad04' studies show that over 50% of the population is consid ered poor according to key indicators commonly used for this purpose. Urban poverty is slightly lower (51.5%) than rural poverty (55.3'Yu). The difference between both is small however there is a clear tendency of rural poverty to decrease while urban poverty is increasin gly pronounced. 2.4 The fight against urban poverty is one of the main chall en ges of the Government in its efforts of promoting the welfare of all citizens and the development of Mozambique. While absolute poverty in rural areas is characterized by a lack of basic needs of citizens in relat ion to food, education, health, housing. labour, in/ormation, security, among others, urban poverty is more severe because the populations inhabiting the cities and towns suffer. in addition to those needs, problems such as lack o//acilities and basic urban in[rastruclllre like roads, drainage syslems. electricity and public lighting, aggravated by /ln employment. 2.5 Given the different levels of poverty and inequality in many urban areas, the Government has made efforts to identify strategic options for action, taking into account the availabilit y and access to resources and mechanisms for combat ing poverty. The Government is currently designing a Strategic Program for Urban Poverty Reduction (PERPU) with focus on promoting employment and social protection. The CMM continues to out interventions of infrastructural nature (roads, sanitation, drainage). In addition is conducting a study on poverty in the city in order to have a clear and profound knowledge that it will allow the design of policies, strategies and mobilize governmental and non-governmental resources and initiatives, in a concerted action among the public sector, the private sect,?r and the civil society ai med at creating conditions for improving their quali ty of life. 2.6 The CMM is committed to continue its strategy of financial and institutional sustainability to improve the provision of services and basic municipal infrastructure, reduce crime rates and the cost of living and promoting an attractive environment for investment and boosting economic development. The assumption of these priorities will not only slow the rate of poverty and crime that inhibit large-scale economic investment but will also facilitate the creation of small and medium-size business projects with an enOnllOUS impact on the generation and distribution of wealth and significant impact in reducing poverty at local and nati onal level. 2.7 The Government's Five Year Program for the period 2010·2014 reaffinns the role of government in its support of actions aimed at building and consolidating a decentralized local government; effective. expeditious and proactive practices of good governance, citizen-centered and dynamic to meet the challenges of poverty reduction. and socio·cconomic and cultural development. Thus, the Government is committed to undertake the fo ll owing actions: (i) continue with dccentrali7..ation and • WONW.bancomoc.mz PliQMOVENDO A. VALORIZA(:'AO DO METICAL B 0 CRESCIMENTO DA. ECONOMlA NA.CIONAL PROMOTING THE VALUE OF THE METICAL AND THE ECONOMIC GROWTH :j~ 142 - - rK3(UlCO (k 04~mb'9 (1f"' /jJovfYY-)w d or- gradual consolidation of municipali ties, (ii ) continue with the training of local authorities to strengtheni ng of leadership and management, (iii) strengthen the systems and mechani sms for public accountability by the Municipal Administration. (iv) strengthen the mechanisms for citizen participation in the governance process and municipal decision-making at local level, (v) continue to devel op and implement the supplementary regulations fo r the full exercise of the powers of the local authorities, (vi) promote the pro vision of facilities and muni cipal infrastructure to increase coverage and improve the quality of service, and (vii) adjust the infrastructural conditions of the municipal bodies for their effecti ve and effi cient operation. 3. Context 3.1 The Vision of the City Council for the city, set with broad parti cipati on of internal and external partners in the fo rmulation of Phase 1 of the Program and assumed by the current Executive is that "Maputo is a prosperous, attractive, cl ean, secure and united city." 3.2 The City Council's Mission is "To lead the process of raising the quality ofli fe of the municipal citizens, creating an attractive environment for investment and employment generation through better delivery of servi ces, mobilization of the citizens and the coordinated action between actors." 3.3 In 2007. the Municipal Council of Maputo, began im plementing the Maputo Municipal Development Program (PRO MAPUTO) which is a ten year Governance Strategic Pl an for implementation of the Vision and Mission of the City of Maputo. It is divided into two implementation stages as follows: • Phase I: Has elapsed between 2007 and 2010 • Phase 2: To be completed between 2010 and 2016 3.4 The overall objective of Phase I was "to increase the coverage and quality of municipal services to citizens by strengthening the institutional and financial capacity of the Municipal Council of Maputo." The operationalization of the results and specific obj ectives were structured into three specifi c components: Component A -Institutional Development and Municipal Governance Component B - Improl-'ement o[ Municipal Finances Component C - Improvement of Service Delivery 3.5 The obje~ti ve of Phase 1I is to "Improve the delivery and sustainability of priority municipal services in Maputo" and is operationally structured into the following components: Component A - Institutional Development will strengthen the municipal·capacity to provide services; www.bancomoc.mz ' PIWMOVENDO A VALORIZACAO DO METICAL E 0 CRESCIMENTO DA ECONOMIA NACIONAL tI PROMOTING THE VALUE OF THE METICA.LAND THE ECONUMIC GROWTIl 4 143 - - - !'!i3anco de ~nd"1" " /jflo-veJelwk Componenl B - Financial Su!)'lainabiJity will ensure the financial sustainability of the Municipal Council or Maputo; Componelll C - Urban Planning will ensure a sustainable and equitable management of urban land; Component D - Urban Infrastructure will ensure the construction and maintenance of municipal infrastructure; Component E - Metropolitan Developmelll will introduce a metropolitan approach to the delivery of selected municipal services. 3.6 The Government has made the following commitments in support of the implementation of Phase J; a. Negotiation and Signing of Credit Agreement with IDA amounting to US 30 million; h. Direct co participation of US 6.5 million U.S. dollars; c. Improve coordination between CMM and deconcentrated state organs operating in the city; d. Strengthen the role of CMM in the definition and monitoring of Public Sector Policy and management in its geographic boundaries; e. Improve the financial autonomy by revising the Municipal Tax Code in order to increase municipal own revenues; f. Support the CMM in its efforts to mobilize resources for major investments in the city; g. Accelerate the adoption and introduction of SIST AFE in the CMM to improve management and accountability while recognizing that they are autonomous entities and that therefore require specific functionalitics, and; h. Develop a national policy and a legal framework that all ows the establishment of public-private partnerships. 4. Challenges for Implemcntation of Phase II of the Maputo Municipal Dcvelopment Program 4.1 The fonnulation of Phase II identified, support by the Government to facilitate the achievement of overall objectives and impact of the Program, the following areas: a. Improved coordination between the Municipal Council of Maputo and the decentralized government agencies at the city level; b. Improved coordination mechanisms between the Government and local authorities to promote good governance amongst the citizens; www.bancomoc.mz A t PltoMOVENDO A VALORIZA(:'AO DO METICAL E 0 CRESCIMENTO DA ECONOMIA NACIONAL PROMOTING THE VALUE OF THE METICAL AND THE ECONOMIC GROWTH 41' 144 - -- f?l3",, c. Improved the framework for '-(uman Resource Management and organization in the municipalities in order to promote greater competitiveness in the labour market and respond to the needs of Ihe municipalities; d. Improved coordination and sharing of in formation regarding the collection of municipal taxes and in particular the autonomy of municipalities in the implementation of the Municipal Property Tax (IPRA); e. Defined, together with CMM, arrangements for the sharing of revenue, including revenue from the tax on lOuri sm; f. Creation of a co participation system of the economic activities that take place in the city and / or other gain s in public businesses, whi ch uses the city infrastructure such as solid waste facilities . ports , airpons, toll roads/gates, water, electricity, and gas distribution, among others; g. Reinforcement of municipal management capacity, focusing on administrative and financial sustainability, to ensure direct delivery of decentralized powers ineluding: primary care educati on and basic health services, licensing of economic activities, construction and maintenance of infrastructure and imp lementation of municipal public.private partnersh ips; h. Definition of an institutional framework for the provision of municipal services in the metropolitan context. S. Sector policies and regu lations of th e Government in Supporting Phase II of tbe Maputo Muoicipal Development Program 5.1 The Government supports this program and believes that its proper implementation will generate a positive impact on improving the quali ty of li fe by increasing the coverage, quality, and sustainability of municipal services. 5.2 To promote and support the implementation of Phase II of the Program the Government commits to implement the following initiatives: Concerning the general legal .lUd in stitutional framework for municipalities: a. Revision of the Decentralization Strategy in order to clarify the roles of municipalities, the municipal institutional relationship with the various organs and public entities and improve the administrative and financial autonomy of municipalities; b. Revision of the National Strategy for Urban and Municipal Development in order to set policies, objectives and implementation mechanisms for social and economic development aiming to reduce poverty and foster the involvement of the private sector in providing municipal services; . W'INW.ban(omoc.mz Pl!OMOVENDO A VALORIZACAO DO METICAL E 0 CRESCIMENTO DA ECONOMIA NACIONAL ' PROMOTING THE VALUE OF THE METICAL AND THE ECONOMIC GROWTH ;:; 145 - - Wane<> de g,f~m6i<; '" /jJtWel'nac/04' C. Promote the implementation of the program for strengthening good governance, transparency. integrity and accountability to the citizens: d. Definition, by 201 2, of a Legal and Technical Framt'work for the Policies and Procedures for Human Resources Management in the Municipalities. Such Framework must ensure the management of careers and professional profiles specific for the municipalities, enabling the mobility of staff between municipalities and ensure their ability to attract, retain, develop and motivate qualified staff required by the governance strategy; e. Revision, by 2012. o f policies, criteria, and regulations that delegate to CMM and other municipalities the responsibility for licensing and inspecting the exercise of mid·size economic activities for which municipalities are the entities best suited for their licensing and monitoring; f. Define and approve the legislation and regulations for the implementation of CMM and other municipalities of investment projects in the modality of Public·Private Partnerships, so that the mechanisms for selecting, hiring and supervising this type of investments involving the private sector are appropriate for projects in different scales and sectors wilhin the authority of the municipalities. Regarding tbe general legal and administrative framework of municipal finances: g. Authorize and facilitate access to the CMM and other municipalities of information and databases of other government organs indispensable for the management and collection of taxes and duties namely: data on Vehicles Taxes; Property Registry Office and other sources related to the transfer of possession of property that is necessary for the Administration of SISA taxes; data relating to registration, licensing, and taxation of commercial and industrial facilities that may be relevant to the administration of Economic Activity Fee (T AE) and other infonnation relevant to the collection tax revenue and non· tax re venue at municipal level; b. Resolve, by 2011 , the current constraint in the management and collection of the IPRA which shall include: the possibility of CMM and other municipalities to use their property registries and procedures for their assessment in order to update the values of the Property matrix and thus improve the financial sustainability of municipal services; WWW.bancomoc.mz I PROMOVENDO A VALORIZACAO DO MBTICAL B 0 CRBSCIMBNTO DA BCONOJlIA NACIONAL¥ / PROMOTING mB VALUE OF THE METICAL AND THE ECONOMIC GROWTH 146 - - ~anc<' de gf{o¥,~mbi'l"" Jj104M1'nadMt i. Review the policics. mechanisms and fannulas for ca lc ulating intergovernmental transfers to municipaliti es to ensure their alignm ent with the increased responsibilities and powers of the CMM and other municipalities, namely: 1. The factors and fonnulas that govern the transler of resources through the FeA, FIL and the Roads Fund to ensure its transparency. consistency with the scale and demands of the responsibilities of each municipality, and their consistency from year to year; 2. The criteria, fo nnulas, and administrative mechanisms for the transfer of values associated with the transfer of powers/competence under Decree-Law 3312006, with emphasis on the responsibility fo r the provision of primary education and health services, to ensure the institutional sustainability in the provision of these services and others to be transferred ; j. Provide strategic guidance and technical support to the CMM and other municipalities regard ing the implementation of information systems for financial management to respond to the legal requirements of the SISTAFE law; Regarding specific aspects of the Maputo Municipality: k. Define, jointly with the CMM, specific policies and mechanisms for planning and funding of investmcnt and maintenance of infrastructure to ensure that the needs of investment in Maputo, due to its role as capital city, arc met; I. Define a policy and legal framework for the coordination and management services in the metropolitan area either on the basis of a sectorial or territorial approach. This should increase the synergies, economies of scale, and when convenient sharing between the municipalities of Maputo, and Matola as well as the Government Maputo City in investments and infrastructure that help increase efficiency and coverage of pU.blic services at the metropolitan level; m. Support the CMM in the definition and implementation of mechanisms for coordination with key regional partners, agencies, government departments and public companies involved in providing services in the metropolitan area of Maputo, including the establishment of a Working Committee for the Great Maputo region for each of the following services: urban transport and management of municipal solid waste; n. Guarantee funds for the construction of a suitable sanitary landfill to serve the metropolitan area of Great Maputo, since the municipal dumping site currently in use wiIl exhaust its useful life in 2013. www.bancomoc.mz P110MOVENDO A VALOR/ZA,AO DO METICAL E 0 CRESCIMENTO DA ECONOMIA NACIO~ PROMOTING THE VAL UE OF THE METICAL AND THE ECONOMIC GROWTH '1'~' 147 - Pl3anco,4, ~mkr"" ~"ak O. Facilitate the transfer of competence to administer the Vehicles Tax under Decrees 63/2008 and 33 /2006, ensuring the decentralization from the organs of state to the CMM of the human and material resources associated with the execution of this new municipal competence. p. Creation of a syste m of comparticipation or sharing between the state and CMM of the revenues from economic activity and from public businesses that take place in the city, which use city infrastructure, such as solid waste, ports, airports, toll gates, water and electricity, and gas distribution, among others. 6. Concluding Remarks 6.1 The Government is committed to continue supporting the strengthening of municipal governance. and in pa rticular of the Municipality of Maputo, as a good example to be followed by other municipa1ities. 6.2 On behalf of the Government of the Republic of Mozambique, I would like to thank , IDA and the donors contributing to the Maputo Municipal Development Program for the assistance rendered in the preparation of the Phase II of this program and hereby request a continued support and assistance for the implementation of this phase in accordance with the Plan of Activities and Budget defined in the preparatory stages. I trust that this request for assistance through the proposed second Phase of the Program, II will receive your favourable support. t Ernesto Gou ia fove Governor of Banco Mo~ambique and Alternate Gover or for Mozambique c.c. S. Excia. 0 Ministro da Planifica~io e Desenvolvimento Dr. Aiuba Cuereneia Av. Ahmed Sekou Tour~ N'21 - 3' Andor Tel. 21 492705 Maputo 8 www.bancomoc.mz PIiOMOVBNDO A VALORlZA.CAo DO MBTICAL B 0 CRESCIMBN7'Q DA BCONOMlA. NACIONAL PROMOTING THE VALUE DF THE MBTICAL AND THE ECONOMIC GROWTH c.c. S. Excia. 0 Ministro das FinaHl;as Dr. Manuel Chang Pra~a da Mariaha C.P. 272 Tel. 21 315040 F •. 21 310493 148 - PlJanco de ~/k;'" /llov-e'Jlnak Carta da Politica Sectorial Programa dc Descnvolvimento do Municipio de Maputo (Fase II) Mr. Olivier Godron Acting Country Director for Mozambique The World Bank Office MAPUTO MOZAMBIQUE 1. Serve a prescote para, em nome do Govemo da Ih:publica de Mo/yambiquc. solicitar it International Development Associaton (IDA), 50 milhoes de d61ares americanos para linanciar a Fase II do Program a de Desenvolvimento do Municipio de Maputo (PROMAPUTO), parte integrantc do APL, cuja Fase I esls em fase de conc\usiio . Esla fase II e constituida por cin co componentes, a saber: (I) Oesenvolvimcnto Institucional; (II) Sustentabil idade Financeira; (III) Planeamento Urbano; (IV) Infra-estruturas Urbanas e (V) Desenvolvimento Metropolitano. 2. Enquadramento 2. 1 Com a ap r ovat;~o da Lei 2/97, 0 Govemo estabelcccu 0 enquadramento legal necessario para a cria~o dos 6rg30s locais de governat;ao. Esta Lei aprovou a criat;ao de 33 Munici pios com autonomia administrativa e financeira. 0 Govemo definiu tambem pa ra 0 Municipio de Maputo (Lei 8/97) uma estrutura organizacional e funcional especial e, definiu 0 Estatuto dos Presidentes dos Conselhos Municipais e Membros das Assembleias Municipais eleitos (Lei 9/97). 2.2 Depois de tJ-es ciclos de eleit;oes municipais e 12 anos de experiencia autarquica, o Govemo continua comprometido com 0 refort;o dos 6rgaos do Poder Local atraves do desenvolvimento de programas e pianos de capacitat;~o institucional, programas de coopcrat;Ao inter-govemamental e invcstimentos nos equipamentos e infra-estruturas locais. www.bancomoc.mz PROMOVENDO A V.UORIZACAO DO METICAL E 0 CRESCIMENTO DA ECONOMIA NACION1$ , PROMOTING THE VAI,UB OF THE METICAL lIND THE ECON OMIC GROWTH 149 -- reanco .Ie ~,t,,; '" ~~,uu!o)t. 2.3 Mo~ambiqu e, como :t maioria dos paises Africanos, l'Sla sendo abrangido pclo fen6meno dem ogralico de uma acclerada urbaniza,ao. A popu lat;ao urbana representa cerca de 10% do total do pais rondando 0 r:le ia de urbani za9ao em cerca de 5% ao ana. Em 2020 preve·se que cerca de 50% da Popu1a9ao MOyambiacana viva em areas urbanas. Para 2015, eSlima-se que a populacao urbana da Cidadc dl' Maputo cresea de 1.1 milhoes de habitantcs no ana 20 I 0 para cerca de 1.3 mi Ihoes de habitantes. Estudos recentes mostram que mais de 50% da popuiacan e considerada pobrc segundo as indicadores-chavc habitual mente usados para esse efeito. A pobreza urbana e urn poueD menor (51.5%) do que a ponreza nas zonas rurais (55.3%). A diferen~a entre ambas e pequena, contudo, hi! uma tendencia clara de dim inu i~ao da pobreza rural enquanto a pobreza urbana e cada vez mai s acentuada. 2.4 0 combate a pobreza urbana const itui urn dos principais desalios do Govemo, na sua ac~ao visando a p r om~ao do bem·estar de lodos os cidadllos e 0 desenvolvimento de Mo~ambique . Enquanto a pobreza absoluta nas zonas rurais caracteriza·se, essem:i almentc, pe la falta de satisfa~ao das necessidades basicas dos cidadaos rclativarnente a alimenta~ao. educa~iio , sO/ide. habitayiio, traba/ho. injormayiio, seguranrfl, entre outras, a pobreza urbana e mais severa porquanto as popula~oes habitando as cidades e vilas sofrcm, alem daquelas carencias, os problemas dajalla de equipamenlos e injravestruturas l/I·banas basicas. tais como rede viaria, sistemas de saneamefllo c drenagem, energia eiectrica e i/uminayiio publica, agravados pdo desemprego. Perante os diferentes niveis de pobreza e desigualdades nas va rias zonas urbanas. 0 Govemo tern envidado esfor~os na idcntifica~ao de opeaes cstrategicas de interven~ao , para cada local, tendo em conta a disponibilidade e acesso relativo aos recursOs C mecanismos de combate Ii. pobreza. Assim, de imedialo. esta em curso 0 desenho de urn Programa Eslrategico para a Redu~iio da Pobreza Urbana (PERPU) com enfoque na promoyiio de emprcgo e protec~ao social. 0 CMM cominua com as intervenyoes de natureza injraeslrutural (eslradas, saneamento, drenagem). Adicionalmente estA a realizar urn eSllIdo sobre a pobreza na urbe de modo a ler um conhecimento claro e profundo qlle vai pennitir 0 desenho de politicas, estrategias e mobiliza~ao de recursos e iniciativas govemamcntais e nao.govemamentais, numa a~ao artieulada entre a sector publico, 0 sector privado e a sociedade eivil visando a · cria~ao de eondi~ocs para a melhoria da sua quaJidade de vida. 2.5 0 Conselho Munici pa l de Maputo esta comprometido a prosseguir a sua estrategia de sustentabilidade instituicional e linaneeira p~ra melhorar a provisao de servi~os e infra-estruturas municipais basieas, diminuir os Indices de crim inalidade e 0 ClIsto de vida bern como prornover urn arnbiente atractivo ao investimento e dinamiza.;:ao do desenvotvimento econ6mico. A assumpc;ao destas www bancomoc.mz 2$ , PPQMOVENDO A VALOHIZACAo DO METICAL E 0 CRESCIMENTO DA ECONOMIA NACION ' PROMOTING THE VAL UP. OF THE METICAL AND THE ECONOMIC GROWTH 150 - . -- Pi3anc(.l. de GI~amb-«;fH' /jfjo'lJe1'-JUUkw 2.6 prioridadcs ini nac 56 diminuir 0 indice de probreza c criminalidade que inibcm 0 investimento econ6mico de Ja rga eseala mas tambcm racil itani, a cria.yao de pcquenos e media s projectos cmprcsariais com urn elavado impacto na gerarrao e di stribui 2.7 0 Programa Quinqucnal do Govcmo para 0 Periodo 2010-20 14 reafirma 0 papel do Governo na prossccw;ao de aCyoes com vistaa edifi cayao e consolidarrao de urna Administrayao Local dcsccntralizada, eticaz e ceierc, dinamizadora de boas praticas de govemayao. centrada no cidadiio e diniimica para enfrentar as desanos da reduyao da pobreza e do dcscnvolvimento s6cio-econ6mico e cultural. Assim, o Governo compromele-se a implemenlar as seguinles ac~oes: 0) prosseguir a auta r ciza~ao gradual c consolidayao dos municipios: (ii) prosscguir com a forma~ao dos argaos das autarquias 10cais no ambito do r e fo r ~o da lideran~a e gestao; (iii) fortaleccr os sistemas e mecanismos de presla~ao publica de contas por parle da Adm inistra~ao Autarquica; (iv) fortalccer os mecanismos de participa~ao dos munici pes no processo de governayao municipal e de tamada de decisoes a nivcl local; (v) continuar a elaborar e a implcmentar a regulamentayao complementar para 0 plena excrcicio das atribuiyocs e competencias das autarquias; (vi) promover a provisao de equipamcntos e infra-estruturas municipais para aumcntar a cobertura e melhorar a qualidade de serviyo prestado ao publico, e (vii) adcquar as condiyoes infra-estruturais dos argaos autarquicos para 0 seu funcionamento eficaz c eficiente. 3 www.bancomoc.mz PIWMOVENDO A VALORIZACAO DO METICAL E 0 CRE$CIMENTO DA ECONOMIA NACION < PROMOTING THE VALUE OF THE METICAL AND THE ECONOMIC GROWTH 1" 151 - -- ffia,nw (Ie Q//{cu;amt,'J"" ~O'f~eJVIUld()1l 3. Contexto 3.1 A Visao do Consc1ho Municipal para a cidade, dc linida com uma larga participar;8.o de parcciros intcrnos e externos aquando da formulacao da Fase I do Programa c assumida pelo actual Exccutivo e: Maputo c uma "Cidade Prospera, Bela, Limpa, Segura e Solidaria." 3.2 A Missao do Conselho Municipal c " Liderar 0 proccsso de elevacao da qualidade de vida dos municipes, criacao de urn ambicntc atraclivo aos investimentos e a geray30 de emprego, atraves da melhor prestaeao de servicos, da mobilizacao dos municipes e da aeCao coordenada entre as diversos intcrvcnicntes." 3.3 Em 2007, 0 Conselho Municipal de Maputo, deu initio it impiementacao do Programa de Desenl'O/v imento Municipal de Maputo (PROMAPUTO) que e urn plano Estrategico de Gove rna~iio de dez anos de C:Oll cre tiza~ao da Visao e da Missao da Cidade de Maputo e esta dividido ern duas fases de irnplementat;ao a saber: - Fase 1 ja decorrida entre 2007 c 20 I 0 - Fase 2 a decorrer entre 2010 e 2016 3.4 0 objectivo global da Fase J foi " Aumentar a cobertura c qualidade dos scrviyos municipais aos cidadaos atraves do refon;:o da capacidade institucional e financeira do Consclho Municipal de Maputo." A operacionaliza9ao dos seus resultados e objectivos especificos foi estruturada em tres componentes especificas: a. Componente A - Desenvolvimento Institllcional e Governariio Municipal; b. Componente B - Me/horia das Finanras Municipais; c. Componente C - Me/haria da Prestarao de Serviros. 3.5 0 objectivo da Fase II e: "incrcmcntar a cobertura e a qualidade dos serviyos municipais atraves da sustentabilidade financcira c in stitucional" e esta estruturada operacionalmcnte nas scguintcs componcntcs: a. Component A - Desenvo/vimento Instituciona/ irei refort;ar a capacidade municipal de preslar servit;os; b. Componente B Sustentabilidade Financeira ira assegurar a sustenlabilidade jillanceira do Conselho Municipal de Maputo; www. bancomOC.mz PIWMOVENDO A VALORlZA9Ao DO METICAL E 0 CRESCIMENTO DA ECONOMIA NACION ... PROMOTING THE VAL UE OF THE METICAL AND THE ECONOMIC GROWTH 4#' 152 - - gsa?/CO de ~mti'l"" /1l~l"'lackl' c. Componente C - Planeomelllo Urbano ira garantir uma gestiio equ;laliva e sustentQvel do solo urbano: d. Componenle D - In!fll-estruturas Urbanas ira u.uegurar a conslrurOO e manulent;OO das iI!fra-estruluras municipais: e. Componenle E - Desenvolvim ento MetropolilollO ira introduzir uma abordagem melrupolitana de prestaqiio de servifo.\' municipais seleccionados. 3.6 0 Governo assum iu os seguinlcs compromissos no suporte a imptement8yao da Fase I: a. Negoc i a~ao e Assinatura do Acordo de Cn:dito com 0 IDA no valor de 30 milhoes de d61arcs norte-americanos; h. Com p arti c i pa~ao directa de 6,5 milhoes de d61ares norte-americanos; c. Melhorar a coordcnatrao entre 0 CMM e as orgaos do Estado desconcentrados que fu ncionam na eidade; d. Fortaleeer 0 parel do CMM na defi nicrao e monitoria das Politi cas do Sector Publico e gestao nos seus lim ites geognificos; e. Melhorar a autonomi a fin anceira at raves da revisao do C6digo Tributario Autarquico de forma a in crementar as receitas proprias do municipio; f. Apoiar 0 CMM no seu esforcro de mobili zacrao de recursos para grandes investimentos na cidade; g. Acelerar a processo de ad o p~ao e i nt rodu~ao do SISTA FE no CMM para melhorar a gestao e prestacrao de conlas em bora reconhecendo que ~o entidades autonomas e que consequentemente nel:essitarao de fu ncionalid ades escpecificas e; h. Desenvolver uma politica nacional e urn quad ro legal que permite 0 estabelecirnento das parcerias publ ico-privadas. 4. Desafios para Imple mentacr~o da Fase II do Progra ma de Desenvolvimento Municipal de Ma puto 4. 1 A fo rmul a~ao da Fase II identi ficou, como necessidades de suporte por parte do Govemo para facili tar a concreti zacrao dos objectivos globais e impacto do Programa, os seguintes dominios: a. Melhoria da coordena.;:ao entre 0 Conselho Municipal de Maputo e os a rgaos do Govemo dcsconcentrados 80 nivel da cidade; b. Melhoria dos mccanismos de coo r den a~ao entre 0 Govemo e as autarqu ias no sentido de prornover a boa govemaryao junto dos cidadaos; wwwbancomoc.mz PIWlIIOVBNDO A VALORIZA(:A o DO lIIBTICAL B 0 CRBSCIMBNTO DA BCONOMIA • PROlllOTING THB ""-UK OF THB lIIETICALAND THE ECONOMIC GROWTH NA CI~r 153 - - :'??3anro de ~ttf«1'" [jJ(N)(>#ncu/o}( C. Me lhoria do cnquadramento da abordagem das politicas de gestao e organiza~ao dos n::c ursos humanos dos municipios de forma a promover uma maior capacidad C' competitiva no mercado de trabalho e resposta as necessidades das au tarquias; d. Melhoria da coorde na~ao e partilha de informa<;:ao relativa it cohran!j:a de impastos municirais e em particular, autonomia das autarquias na impiementayao do Impasto Predial Autarquico (lPR A); e. Defini<;:ao conjunlamente com 0 CMM de fafmas de partilha de recejtas, incluindo a receita proveniente do impasto sabre actividade turistica; f. Criacao de urn sistema de comparticipacao nas acti vidades economicas, que se realizam no Mu nicipio e/ou autros ganhos nos ncg6cios publicos, que usam as infra-estruturas da cidade tais como, facilidades de recolha de residuos s6lidos, portos, (/eroportos, porlagens, cigua, elcctricidade, distribuifYao de gas, entre outros; g. ReforfYo da capacidade de gestao das autarquias, com enfoque na autonomia administrat iva c sustentabilidade financeira, para assegurar a prestafYao directa das competencias descentralizadas nomeadamente: servifYos primarios de educafYa.o e servifYos basicos de saude; licenciamento de actividades economicas; const rufY a.o e manutenyao de infra-estruturas e implementayao de parcerias publico- privadas municipais; h. Definiyao de urn modele institucional para a presta~ao de serviyos municipais de ambito metropolitano. S. Politicas Sectoriais e Regulamcnta~Ao do Governo Para Suportar a Fase II do Programa de Dcsenvolvimento MuniCipal de Maputo 5.1 0 Govemo apoia cstc progra~a e acredita que uma implementaya.o adequada do mesmo, ira gerar impacto positivo na melhoria da qual idade de vida dos cidada.os pelo aumento da cobertura, qualidade e sustentabilidade na prestafYao de servifYos municipais. 5.2 Para promover e apo iar a implementayao da Fase II do Programa, 0 Govemo, compromete-se a implementar as seguintes iniciativas: 6 ' www.bancomoc.mz PROMOVENDOA VALORlZA(:,Ao DO METICAL E 0 CRESCIMENTO DA ECONOMIA NACION. PROMOTING THE VALUE OF THE METICAL AND THE ECONOMIC GROWTH f 154 - ~~ Wa-nro de g,{io!i,,,mb«;,,,, (jJ'ovenuu/o-J' Em rcla~ao 30 quadro juridico c institucional gcral para municipios: a. Revisao da Estrategia de Descentralizac;ao de forma a clarificar as papeis das autarquias. relacionamcnto institucional das autarquias com as divcrsos 6rgaos e entidades publicas e melhorar 0 nive l de f. Definir e aprovar a iegisiayao e regulamentos para a impiementafYao pelo CMM e outros municipios de projectos de investimento na modalidade de Parcerias Publico-Privadas, para que os mecanismos de selecyao, contratayao e fi scalizayao deste tipo de investimentos envolvendo 0 sector privado sejam adequados para projectos nas di versas escalas e sectores relevantes no ambito das competencias das autarquias. Em rela~ao ao quadro juridico e administrativo geral de finanyas autarquicas: g. Autorizar c fa cilitar 0 accsso ao CMM e outras aUlarquias, a injormQ(;iio c bases de dados de outros orgaos do Governo imprcscendiveis para a gestao e colecta de taxas e impostos nomeadamente: os dados de Impasto sobre Veiculos; Conscrvatorio Imobiliario e outras fontes relacionadas com a www.ban(omoc.mz PIWMOVENDO A VALORIZA9AO DO METICAL E 0 CRESCIMENTO DA ECONOMIA NACION.f' /' PROMOTING THE VALUE UF THE METICAL AND THE ECONOMIC GROWTH 155 - - re transferencia da posse de im6veis que scjam necessarias para a ad mini s tr a~ao do Impasto SISA; as dad os rclacionados com regi stos, li ce n~as. e tri bula~i\o de in stancias comcrciais e industriais que possam ser relevantes a admini stray30 da Taxa de Actividadc Economica (TAE), bern como outras in !ormayocs releva ntes it cobranc;a de receitas fiscai s e nao fiscai s do am bilO municipal; h. So lucionar, ale 2011 , 0 actual constrangimcnto na gestao e colecta do IPRA nomeadamente atraves de: possibi lidade de 0 CMM e Qutras autarqu ias usarem seus cadastros im6veis e procedimentos de avaliayao dos mcsmos de forma a aClual izarem as valores da Matri z predial e assim melhorar a sustentabilidadc fin anceira dos servi~o s mun icipais; i. Rever as poJiticas, mecanismos e f6rmu las de d lcul o das transferencias intergovemaJ11l: ntais a municipios de forma a assegurar 0 seu alinhamento com 0 incremento de responsabilidades e compctencias atribuidas ao CMM e a outras autarquias, nomeadamente: I. Os factores e as f6rmu las que regem a translcrencia de recursos atraves do FCA, FIL e Fu ndo de Estradas para asscgurar a sua transparencia, coerencia em re l a~ao a escala e exigencia das rcsponsabilidades de cada municipio, e a sua consistencia de ano a ana; 2. Os criterios. as f6rmulas de ca\culo, e os meca nismos admini strativos de transferencia dos va lores associados com as transferencias de competencias ao abrigo do Decreto-Lei 33/2006, com destaque para a responsabil idade pela presta~ao de serv i~o s primarios de educa~o e saude, para que seja assegurada a sustentabilidade institucional na presta~ao dcstes servi~os e outros a serem tran sferidos; j. Fomecer urn a orienta~Ao estrategica e suporte tccnico ao CMM e outras autarquias relati vamente a impl ementa~ao de sistemas de i nforma~ao de gestao financcira que respondem os requisitos lcgais da Lei do SISTAFE; Em rela~ao aos aspectos cspecificos do Municipio de Maputo: k. Definir em conjunto com 0 CMM, politicas cspecificas e mecani smos de planeament o c fin anciamento de investimento e manuten~ao de infra estruturas de forma a garantir que as necessidades de investimento em Maputo, mcrcc do seu papeJ como cidade capital, sejam cumpridas; , www.bancomoc.mz PROMOVENDO A VALORlZACAo DO METICAL E 0 CREse lMENTO DA ECONOMIA NAClO MI PROMOTING THE VAL UE OF THE METICAL AND THE ECONOMIC GROWTH ;$ 156 - - g(j""ICO tft Q/f'to,anuii9"" /JJ()I1J€1) I. Definir urna polit ica c enq uadramento lega l para a coo rd e na~ao e gestao da pre sta~ao de scrv i.;:os da arca metropolitana quer de canicter sectorial ou territorial, ad l.'quados ao au mento de sin ergias. I.!conomias de csca la, C quando convcniente a comparticipay8o entre 0 Illunicipios de Maputo e Matola bern co mo 0 Govemo da Cidadc de Maputo em invcstimentos e infra·estruturas que contribuam para aumentar :l cficicncia e cobertura de serviyos publ icos a nive l mctropolitano; m. Apoiar 0 CMM na definiyao e implementa\,8o dos mecani smos de coordenayao com os principais parceiros territori ais, 6rgaos sectorias do Governo e cmpresas publicas envolvidas na prcstayao de serviyos na area metropoli tana de Maputo, incluindo a co n s titu i~ao de uma Comissao de Trabalho para a regiao do Grande Maputo para cada urn dos seguintes servi~ s: transportes urbanos e gestao de residuos sol idos urbanos; n. Assegurar, ale 2011 , 0 financiamento para a constrw;:ao de urn aterro sanitario adequado para servir a Regiao Metropolitana de Grande Maputo, uma vez que a lixeira muni cipal actualmente em uso vai esgotar a sua vida util em 20 13. o. Viabilizar a transferencia da competencia de administrac;:ao do Impasto sobre Veiculos no ambito dos Decretos 63/2 008 c 33 /2006, assegurando a descentraliz.... W;io, pelos orgaos do Estado ao CM M, dos recursos humanos e materiais associadas ao exercicio desta nova competencia municipal. p. Cria'rao de um sistema de comparticipa'rao ou partilha entre 0 Estado e 0 CMM das rcceitas provenientes das actividades econ6micas e dos neg6cios publicos que se realizam no Municipio e, que usam as infra-estruturas da cidade tais como, servi'ros de recolha de residuos solidos, portos, aeroportos, portagens, agua e electricidade, distribui'rao de gas, entre outros. 6. Cons id era~oes Finais 6.1 0 Govemo esta comprometido em continuar a apoiar 0 refo r~o da Govema'rao Municipal, e em part icular 0 Municfpio de Maputo, como urn born exemplo a ser seguido pelos OUlros Municipios. 6.2 Em nome do Govcrno da Republica de MO'rambique, gostaria de agradecer a IDA e outros parceiros da Coopera'raa a cantributo ao Programa de Desenvolvimento Municipal de Maputo dado na prepara'rao da Fase II deste Programa e solicitar a continua'rao do apaio e assistencia para a implementa'rao desta fase em conformidade com 0 Plano de Actividade e Or'ramento definidos na elapa de ' www.bancomoc.mz PIWMOVENDO A VALORIZACAo DO METICAL E 0 CRESCIMENTO DA ECONOMlA NACIO :AU PROMOTING THE VALUE OF THE METICAL AND THE ECONOMIC GROWTH l 157 - 'PJ3= de ~d«t'" !lJov(7)G.nado--;: preparac;ao. Desejo que esta solicitac;ao de continuac;ao do apoio e assistencia da Segunda Fase do Programa tenha a vossa deci sao favoravc l. Govcrnador do Ban 0 de Mo~ambiquc e Alternate Governor for Mozambique c.c. S. Excia. 0 Ministro da Planificat;ao e Desenvolvimento Dr. Aiuba Cuereneia Av. Ahmed Sekou Tour'; N' 21 - 3' Andar Tel. 21 492705 Maputo c.c. S. Excia. 0 Ministro das Finanf;3s Dr. Manuel Chang Pra~a da Marinha c.P. 272 Tel. 21315040 Fx. 21310493 Maputo c.c. S.Excia. 0 Presidentc do Conselho Municipal Dr. David Simango Pra~a da Independencia Maputo 10 www.bancomoc.mz PROMOVENDO A VALORIZACAO DO METICAL E 0 CRESe/MENTO DA ECONOMIA NACIONAL PROMOTING THE VALUE OF THE METICAL AND THE ECONOMIC GROWTH 158 MAP SECTION 159 IBRD 33451R1 30° E 35° E 40° E 10° S 10° S ToTo LakeLake TANZANIAT A N Z A N I A MtwaraMtwara MalawiMalawi Mocimboa MOZAMBIQUE MuedaMueda da Praia a end Lug MetangulaMetangula CABOC A B O lo DELGADOD E L G A D O ssa Pemba NIASSAN I A S S A Me LichingaLichinga MarrupaMarrupa MontepuezMontepuez MALAWIMALAWI u e i q CaturCatur b rio ToTo m u Lú ChipataChipata ToTo a a LilongweLilongwe z t e ZAMBIAZ A M B I A o a MualadziMualadzi M l ToTo P Nacala MangocheMangoche ToTo CCuambauamba NAMPULAN A M P U L A PetaukePetauke FurancungoFurancungo RibáuRRibáuèibáuè 15° S ToTo 15° S ToTo ZombaZomba LusakaLusaka FíngoFFíngoèíngoè MontesMontes NNamuleamule NampulaNampula Moçambique Lago de TETET E T E (2,419(2,419 m)m) Za Cahora Bassa mb GuruéGGuruurué ez ZumboZumbo SongoSongo e ToTo AltoAlto MolócueMolócue L i BlantyreBlantyre g o MoatizeMoatize n MilangeMilange h a TeteTete Angoche Li ZAMBÉZIAZAMBZ A M B É ZIAZ I A cu ng o ChangaraChangara MocubaMocuba ToTo MutokoMutoko NamacurraNamacurra Pebane SenaSena Z am CatandicaCatandica b Quelimane ez ZIMBABWEZ I M B A B W E e GorogosaGorogosa InhamingaInhaminga ToTo HarareHarare SOFALAS O F A L A ChimoioChimoio n INDIAN OCEAN ToTo MANICAMANICA i MasvingoMasvingo a l MonteMonte BingaBinga P Beira 20° S (2,438((2,4362,438 m)m) 20° S e uzi ToTo B u MasvingoMasvingo EspungaberaEspungabera q i b Nova Mambone m e a Sav z Inhassôro ToTo RutengaRutenga o M Vilanculos ChicualacualaChicualacuala 0 50 100 150 200 Kilometers MachaílaMachaíla ToTo MessinaMessina INHAMBANEINHAMBANE 0 50 100 150 Miles ChiguboChigubo MapaiMapai GAZAG A Z A L C i m h p a o n p g o a n SOUTHS O U T H e MassingirMassingir Inhambane MOZAMBIQUE AFRICAA F R I C A PandaPanda SELECTED CITIES AND TOWNS GuijaGuija Inharrime ChibitoChibito PROVINCE CAPITALS 25° S MAPUTOMAPUTO NATIONAL CAPITAL 25S ToTo Xai-Xai NelspruitNelspruit This map was produced by RIVERS Manhica the Map Design Unit of The World Bank. The boundaries, MAIN ROADS MoambaMoamba colors, denominations and MatelaMatela any other information shown MAPUTO on this map do not imply, on RAILROADS ToTo the part of The World Bank MbabaneMbabane Group, any judgment on the PROVINCE BOUNDARIES legal status of any territory, SWAZILANDSWAZILAND or any endorsement or INTERNATIONAL BOUNDARIES Zitundo acceptance of such boundaries. 30° E 35° E JANUARY 2007