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World Bank Document Document of THE WORLD BANK Public Disclosure Authorized Report No. 16460-NIR STAFF APPRAISAL REPORT Public Disclosure Authorized REPUBLIC OF NIGER URBAN INFRASTRUCTURE REHABILITATION PROJECT May 6, 1997 Public Disclosure Authorized Public Disclosure Authorized Transport Group 2 Infrastructure Department Africa Regional Office CURRENCY EQIJIVALENTS (as of January 24. 1997) Currency UJnit CFA Franc (CFAF) US$1.00 CFAF555 CFAF I million US$1,802 FISCAL YEAR January 01 -- December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS CAS = Country Assistance Strategv CFD - Caisse Francaise de D6veloppenient (French Development Agency) CIDA - Canadian Development Agency CNEDD - Conseil national de l'Environnement pour un Developpement Durable (National Council of Environment for Sustainable Development) DE = Direction de l'Environnement (Department of Environment) DUH - Direction de l'Urbanisme et de l'Habitat (Department of Urban Development and Housing) ERR = Economic Rate of Return EU - European I Jnion FAC = Fonds d'Aide et de Cooperation (French Cooperation Fund) GDP = Gross Domestic Product ICB - International Competitive Bidding ICR - Implementation Completion Report IDA - International Development Association KFW - Kreditanstalt fur Wiederaufbau (German Development Agency) MEI - Ministere de l'Equipement et des Infrastructures (Ministry of Equipnmentand Infrastructure) MHE - Ministere de l'Hydraulique et de l'Environnement (Ministry of Hydraulics and Environment) NBC - National Bureau of Coordiniation NCB = National Competitive Bidding NGO Non-Governmental Organization NIGETIP = Agence Nigerienne de Travaux d'Interet Public pour l'Emploi OPEC = Organization of Petroleum Exporting Countries PIE Public Investment Program PPF = Project Preparation Fund UNDP United Nations Development Program TVA = Value Added 'T'ax Vice President: Jean-Louis Sarbib, AFR Country Director: Theodore Ahlers. AFC13 Technical Manager: Maryvonne Plessis-Fraissard, AFTT2 Task Team Leader: Jean Noel Guillossou, AFTT2 REPUBLIC OF NIGER URBAN INFRASTRUCTURE REHABILITATION PROJECT TABLE OF CONTENTS Credit and Project Summary............................................ i I. BACKGROUND........................................... 1 A. Country Background ...................................... 1 B. Urban Sector Background ..................................... 2 C. Previous Bank Experience and Lessons Learned ..................................... 5 D. Project Rationale ..................................... 6 IL. THE PROJECT ............................................ 7 A. Project Objectives ..................................... 7 B. Project Description ..................................... 7 C. Project Cost and Financing...................................... 9 D. Project Implementation.................................... 10 E. Procurement .................................... 12 F. Disbursement .................................... 14 G. Accounting and Auditing .................................... 16 H. Reporting and Monitoring.................................... 17 1. Environmental Aspects .................................... 18 J. Benefits ..................................... 19 K. Risks ..................................... 21 III. AGREEMENTS TO BE REACHED, CONDITIONS AND RECOMMENDATION ...22 ANNEXES 1 Project Design Summary....................................... 23 2 Decentralization Plan....................................... 29 3 Revenues and expenditures of municipalities....................................... 34 4 Letter of Sector Policy....................................... 36 5 Summary of NIGETIP activities....................................... 40 6 Detailed Project Costs ....................................... 45 7 Project Implementation Schedule....................................... 47 8 Performance Indicators....................................... 50 9 Supervision Plan....................................... 53 10 Action plan to develop protection of urban environment....................................... 54 11 Urban environmental issues....................................... 55 12 Economic Analysis ....................................... 56 13 Documents available in the project's files ....................................... 58 MAP IBRD No 28606 REPUBLIC OF NIGER URBAN INFRASTRUCTURE REHABILITATION PROJECT STAFF APPRAISAL REPORT I. BACKGROUND A. COUNTRYBACKGROUND 1. Niger is a large landlocked country covering an area of 1.27 million km2, and is 600 km away from the closest seashore. The population estimated at 8.7 million in 1994 -- about half of which is less than 15 years old -- is growing at about 3.3 percent a year which is above the average for sub-Saharan Africa. Social indicators are among the lowest in the Sahelian countries. The human resource base is weak, with an adult literacy rate of only 14 percent (9 percent among women) and a primary school enrollment ratio of less than 30 percent. Life expectancy at birth is 47 years, one of the lowest on the continent and infant, and child mortality rates are high. The natural resource base is fragile due to low and irregular rainfall and low and declining soil fertility. As a result, Niger's fast growing population is becoming one of the poorest in the world. Per capita gross domestic product (GDP) has declined by more than 52 percent since 1980, reaching US$176 in 1994. Niger has an open economy, with imports and exports exceeding 30 percent of GDP. Strong trade links exist with Nigeria, which exerts considerable economic influence through long-standing trading and cultural bonds. 2. Besides the weak natural resource base, Niger faces additional constraints in the form of high factor costs, overdependence on uranium, a relatively inefficient public sector and a small modem private sector. The fall of uranium prices in 1981 has resulted in severe financial imbalances and triggered a long-term economic decline. The devaluation of the CFA franc in January 1994 has given Niger an opportunity to resume its economic growth. Political instability, however, has prevented the country from taking full advantage of the devaluation. Eventually, the Government reached agreement with the International Monetary Fund on an Enhanced Structural Adjustment Facility program in June 1996. IDA approved a one-tranche adjustment credit on March 20, 1997. 3. Poverty remains critical in Niger. 63 percent of Nigeriens (5.3 million people) earn incomes below the poverty threshold defined by the Government. About 34 percent (2.8 million people) are classified as extremely poor. Urban/rural differentials are stark, with average rural incomes being half those in urban areas. The participatory poverty assessment carried out in 1996 (Report no. 15344-NIR, June 28, 1996) pictures vividly poverty in Niger: 2 Niger - Urban Infrastructure Rehabilitation Project (a) Urban areas: Poverty is hunger. Ownership of goods is a form of safety net rather that money. Being employed is what matters. Women earn revenues through petty trade, mostly the sale of cooked food. They take care of the family when men lose their jobs. Squatting neglected areas saves the cost of renting houses. Recently, the number of beggars has increased in Niamey, and "traditional" beggars have been joined by large numbers of younger people. (b) Rural areas: Access to land is a major constraint because of the dearth of fertile land and competition exists among groups to exploit natural resources. Households exchange young children: families with many children send older children to help families who do not have enough labor force and receive younger children. Diversification of income sources is a necessary strategy because of the climatic risks, but the poor have little possibilities available. Migration is a survival strategy, the poor migrate to look for food and work within Niger or to neighboring countries. Remittances contribute to the income of those in the household who have stayed in their villages. During the dry season, Niamey's population is estimated to increase by 100,000 dwellers. 4. Putting the country back onto a development path requires the pursuit of the reform agenda, including private sector development and restructuring of the public expenditures to improve basic education and health services coverage. Government's commitment and action on key reforms, the return to political stability and the resumption of donor assistance are critical for the reform program. Sustained success depends on continued fiscal discipline and the increase of investments to rekindle growth, especially in satisfying in the large needs in social infrastructure. To pursue its reform agenda, Niger critically needs to regain donors' confidence through an effective transition to democracy. In reaction to a military takeover in late January 1996, several important donors have suspended budgetary aid, causing uncertainty for the budget situation and medium-term policy outlook. A Presidential election was held in July 1996 and legislative elections in November 24, 1996. B. URBAN SECTORBACKGROUND 5. In February 1996, the Government adopted a policy to decentralize responsibilities to local governments. Because of severe budgetary constraints, however, its implementation will require a long period of time. As a first step, the Government has decided to strengthen the capacity of the 15 most important urban communities, including Niamey. The Government has prepared an action plan to promote the decentralization process and facilitate its implementation. The
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