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African Development Bank Kenya AFRICAN DEVELOPMENT BANK KENYA SIRARI CORRIDOR ACCESSIBILITY AND ROAD SAFETY IMPROVEMENT PROJECT: ISEBANIA-KISII-AHERO (A1) ROAD REHABILITATION APPRAISAL REPORT OITC/EARC March 2016 TABLE OF CONTENTS I. STRATEGIC THRUST & RATIONALE ......................................................................... 1 1.1 Project Linkages With Country Strategies And Objectives ...................................... 1 1.2 Rationale For Bank’s Involvement ............................................................................ 1 1.3 Donors Coordination ................................................................................................. 2 II. PROJECT DESCRIPTION ............................................................................................... 2 2.1 Development Objectives And Project Components .................................................. 2 2.2 Technical Solution Retained And Other Alternatives Explored ................................ 3 2.3 Project Type ............................................................................................................... 4 2.4 Project Cost And Financing Arrangements ............................................................... 4 2.5 Project’s Target Area And Beneficiaries ................................................................... 6 2.6 Participatory Process For Project Design And Implementation ................................ 7 2.7 Bank Group Experience And Lessons Reflected In Project Design .......................... 7 2.8 Key Performance Indicators ...................................................................................... 8 III PROJECT FEASIBILITY ................................................................................................. 8 3.1 Economic And Financial Performance ...................................................................... 8 3.2 Environmental And Social Impacts ........................................................................... 9 IV IMPLEMENTATION ...................................................................................................... 13 4.1 Implementation Arrangements ................................................................................ 13 4.2 Monitoring ............................................................................................................... 14 4.3 Governance .............................................................................................................. 14 4.4 Sustainability ........................................................................................................... 15 4.6 Risk Management .................................................................................................... 16 4.7 Knowledge Building ................................................................................................ 17 V LEGAL INSTRUMENTS AND AUTHORITY ............................................................. 17 5.1 Legal Instrument ...................................................................................................... 17 5.2 Conditions Associated With Bank’s Intervention ................................................... 17 5.3 Compliance With Bank Policies .............................................................................. 18 VI RECOMMENDATION ................................................................................................... 18 Appendix I: Country Comparative Socio-Economic Indicator .................................................. I Appendix II: Bank’s Portfolio in The Country ......................................................................... II Appendix III: Ongoing Projects Financed by the Bank and Donors ....................................... III Appendix IV: Map of Project Area ......................................................................................... IV Appendix V: Justification for Government’s Level of Contribution ........................................ V Currency Equivalents As of 31.10.2015 1 UA = 1 SDR 1 UA = USD 1.4037 1 UA = KES 145.8126 1 UA = EUR 1.2530 Fiscal Year Kenya: 1 July – 30 June Weights and Measures 1 metric tonne = 2,204 pounds (lbs) 1 kilogram (kg) = 2.200 lbs 1 meter (m) = 3.28 feet (ft) 1 millimetre (mm) = 0.03937 inch (“) 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres Acronyms and Abbreviations AADT Annual Average Daily Traffic KRB Kenya Roads Board ADB African Development Bank MTP Medium Term Plan (AfDB) ADF African Development Fund NACC National AIDS Control Council - Kenya AFD Agence Française de Développement NC Northern Corridor AIDS Acquired Immune Deficiency Syndrome NEMA National Environment Management Authority EU-AITF EU managed Africa Infrastructure Trust Fund NGEC National Gender and Equality Commission COMESA Common Market for Eastern and Southern Africa NGO Non-governmental Organization CSP Country Strategy Paper NMT Non-Motorised Transport DFI Development Financial Institution NPV Net Present Value EAC East African Community NTSA National Transport Safety Authority EIRR Economic Internal Rate of Return PAP Project Affected Persons ESIA Environmental and Social Impact Assessment PCR Project Completion Report ESMP Environmental and Social Management Plan RAP Resettlement Action Plan EU European Union RMC Regional Member Country FE Foreign Exchange RSIP Road Sector Investment Program GoK Government of Kenya SDR Standard Drawing Rate HDM Highway Development and Management System STI Sexually Transmitted Infection HIV Human Immunodeficiency Virus TMEA TradeMark East Africa JICA Japan International Cooperation Agency TYS Ten Year Strategy (2013-2022) KeNHA Kenya National Highways Authority UA Unit of Account KES Kenya Shilling USD United States Dollar i Loan Information Client’s information BORROWER: REPUBLIC OF KENYA EXECUTING AGENCY: KENYA NATIONAL HIGHWAYS AUTHORITY Financing plan Source Amount (USD) Instrument million ADB 228.00 Loan Government of Kenya 41.06 Counterpart Africa Infrastructure Trust Fund (EU-AITF) 11.20 Grant TOTAL COST 280.26 ADB’s key financing information Loan currency USD Loan type Enhanced Variable Spread Loan Lending Rate Base Rate + Funding Cost Margin + lending Margin Base Rate Floating Base Rate based on 6 months USD LIBOR with free option to fix the Base Rate Funding Cost Margin Refer to Footnote1 Lending Margin 60 basis points Commitment fee Not Applicable Other fees Not Applicable Tenor Up to 20 years inclusive of Grace Period Grace period Up to 5 years NPV (base case) USD 57.93 million EIRR (base case) 22.2% Timeframe - Main Milestones (expected) Concept Note approval June, 2015 Project approval by Bank April, 2016 Loans & Grant Agreement Signing May, 2016 Effectiveness June, 2016 Last Disbursement December, 2020 Last repayment August 2036 (ADB) 1 The six months adjusted average of the difference between: (i) the refinancing rate of the Bank as to the borrowings linked to 6-month LIBOR and allocated to all its floating interest loans denominated in USD and (ii) 6-month LIBOR ending on 30 June and on 31 December. This spread shall apply to the 6-month LIBOR, which resets on 1 February and on 1 August. The Funding Cost Margin shall be determined twice per year on 1 January for the semester ending on 31 December and on 1 July for the semester ending on 30 June ii PROJECT SUMMARY Project Overview 1. The Isebania-Kisii-Ahero (A1) Road section forms part of the southern link of the Sirari Corridor (Tanzania-Kenya-South Sudan Corridor), which is a transit route running along the Eastern shore of Lake Victoria via Isebania to Lokichogio onwards to Juba. It is the main trade route between Mwanza port (Tanzania) and Kisumu port (Kenya)—the key trading centres within the Lake Victoria basin. The project aims at facilitating inter-regional movement of passengers and freight, widening of access to local markets, and enhancing connectivity with social and economic centres in the region. It entails: improvement of Isebania-Kisii-Ahero road (172km) and upgrading of feeder roads (77km) connected to the main roadway; assessment of domestic construction industry capacity; analysis of transport infrastructure gap in Kenya; and Technical Assistance to update Road design Manuals, establishment of post-crash care and injury recovery centre, road crash database, and empowerment of small-to-medium women and youth contractors through targeted training—to improve capacity for road maintenance. Ancillary works include: community water supply; roadside markets to improve local business environment and road safety. The Project is estimated to cost USD 280.26 million, and is co-financed by the Bank Group (81.4%), Africa Infrastructure Trust Fund (4%), and Government of Kenya (14.6%). Construction period is 3 years (2016–2019). Beneficiaries include 2 million people directly served by the road network, poised to benefit from expanded market size and improved access to social services. Needs Assessment 2. The existing road was constructed in 1969, the level of service has since deteriorated with increasing motorization levels. Estimated current average annual daily traffic (AADT) varies between 6,000 and 12,000 vehicles. This has over the years hindered cross border trade and undermined performance of fishing and agro-industries in the larger Lake Victoria basin. By lowering travel time and transport costs, the project will thus improve competitive position of the region through increased market access and lower costs. Indirectly, improved internal accessibility will foster efficient agricultural
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