Document of The World Bank
Report No: 20143-GH Public Disclosure Authorized
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 8.1 MILLION
Public Disclosure Authorized (US$ 10.83 MILLION EQUIVALENT)
TO THE
REPUBLIC OF GHANA
FOR AN
URBAN 5 PROJECT
IN SUPPORT OF THE FIRST PHASE OF THE
URBAN DEVELOPMENT PROGRAM Public Disclosure Authorized March 9, 2000
Water and Urban 2 Public Disclosure Authorized Country Department 10 Africa Regional Office CURRENCY EQUIVALENTS
(Exchange Rate Effective January 31, 2000)
Currency Unit = Cedi (GHC) GHC I= US$ 0 0002849 US$ I = GHC 3,510 00
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS AFD French Aid Agency APL Adaptable Program Loan CAS Country Assistance Strategy CBA Cost Benefit Analysis CBO Community Based Organization CDF Comprehensive Development Framework CEA Cost Effectiveness Analysis CIDA Canadian International Development Agency CWSP-2 Second Community Water and Sanitation Project DA District Assembly DACF District Assembly Common Fund DANIDA Danish International Development Agency DCA Development Credit Agreement DCD District Coordinating Director DFO District Finance Officer ERR Economic Rate of Return EU European Union GOG Government of Ghana GTZ/KFW German Agency for Technical Cooperation/Kreditanstalt fur Wiederaufbau ICB International Competitive Bidding ILGS Institute of Local Government Studies LACI Loan Administration Change Initiative LGPSU Local Government Project Support Unit LVB Land Valuation Board MLGRD Ministry of Local Government and Rural Development NCB National Competitive Bidding NDF Nordic Development Fund NDPC National Development Planning Commission NGO Non Governmental Organization PC Project Coordinator PCC Project Coordinating Committee PIM Project Implementation Manual PMR Project Management Report RIAP Revenue Improvement Action Plan SFR Statement of Funds Requirement TSC Technical Services Centre UESP Urban Environment SanutationProject UVPBA Urban V Project Bank Account
Vice President Jean-Louis Sarbib, AFRVP Country Manager/Director Peter C Harrold, AFC10 Sector Manager/Director Letitia A Obeng, AFTU2 Task Team Leader/Task Manager Jagdish K Bahal, AFTU2 GHANA URBAN 5
CONTENTS
A. Program Purpose and Project Development Objective Page
1. Program purpose and program phasing 3 2. Project development objective 4 3. Key performance indicators 5
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 6 2. Main sector issues and Government strategy 6 3. Sector issues to be addressed by the project and strategic choices 7 4. Program description and performance triggers for subsequent loans 7
C. Program and Project Description Summary
1. Project components 8 2. Key policy and institutional reforms supported by the project 10 3. Benefits and target population 11 4. Institutional and implementation arrangements 11
D. Project Rationale
1. Project alternatives considered and reasons for rejection 15 2. Major related projects financed by the Bank and other development agencies 16 3. Lessons learned and reflected in proposed project design 17 4. Indications of borrower commitment and ownership 18 5. Value added of Bank support in this project 18
E. Summary Project Analysis
1. Economic 18 2. Financial 19 3. Technical 20 4. Institutional 20 5. Social 20 6. Environmental assessment 21 7. Participatory approach 21
F. Sustainability and Risks
1. Sustainability 22 2. Critical risks 22 3. Possible controversial aspects 23
G. Main Credit Conditions
1. Effectiveness Condition 23 2. Other 23
H. Readiness for Implementation 23
I. Compliance with Bank Policies 23
Annexes
Annex 1: Project Design Summary 24 Annex 2: Project Description 27 Annex 3: Estimated Project Costs 38 Annex 4: Cost-EffectivenessAnalysis Summary 40 Annex 5: Financial Summary 47 Annex 6: Procurement and Disbursement Arrangements 51 Annex 7: Project Processing Schedule 56 Annex 8: Documents in the Project File 57 Annex 9: Statement of Loans and Credits 58 Annex 10: Country at a Glance 60 Annex 11: Profile of Project Towns 62 Annex 12: Programme Letter 69
MAP(S) IBRD 26553 GHANA
URBAN 5
Project Appraisal Document
Afnca Regional Office AFTU2 Date March 9, 2000 Team Leader: Jagdish K Bahal Country Manager/Director: Peter C Harrold Sector Manager/Director. Letitia A Obeng Project ID: P050624 Sector(s) UU - Urban Development Adjustment Lending Instrument- Adaptable Program Loan (APL) Theme(s): Urban Poverty Targeted Intervention: Y
IDA Others Total Commitment Closing USS m % USS m USS m Date Date APLI 10 83 486 1147 22 30 06/30/2003 Governmentof Ghana Loan/
Credit ______APL 2 25 34 73 8 9 00 34 34 06/30/2007 Government of Ghana Loan/
Credit _ _ _ _ _ APL 3 37 00 74 0 13 00 50 00 06/30/2011 Government of Ghana Loan/
C red it ______
Total 73 17 ____ 33 47 1 106 64 ______ProjectFinancing Data [ I Loan [XI Credit [] Grant [ Guarantee []Other (Specify)
For Loans/Credits/Others: Amount(US$m) 10.83
ProposedTerms: SmgleCurrency Graceperiod (years) 10 Yearsto matunty40 Commitmentfee 0 5 Servicecharge 0 75% F16*1ing =a&j V § I Jm Govermment 0 34 0 00 0 34 IBRD IDA 8 01 2 82 10 83 AFD 433 1 67 600 NORDIC DEVELOPMENT FUND 0 62 2 98 3 60 DISTRICT ASSEMBLIES 1 53 0 00 1 53
Total 14 83 7 47 22 30 Borrower GOVERNMENT OF GHANA
Responsibleagency MINISTRY OF LOCAL GOVERNMENT AND RURAL DEVELOPMENT MLGRD Address P 0 Box M50, Accra, Ghana Contact Person Mr S Y M Zanu Tel (233-21) 663 668 Fax (233-21) 664870 Email Other Agency(ies) Local Government Project Support Unit (LGPSU) of MLGRD Address P 0 Box M50, Accra Ghana Contact Person Mr Godfrey Ewool Tel (233-21) 670 364 Fax (233-21) 670 363 Email gewool@ighmail com Estimateddisbursements ( Bank FYIUS$M). FYf .2001 2002 2003 Annual 2 0 6 0 2 8 Cumulative 2 0 8 0 10 8 Projectimplementation period Program 11 years FY2000-20 11, APL 1 FY2000-FY2003 Expectedeffectiveness date 06/30/2000 Expectedclosing date 06/30/2003
OCSA~LPflOF~P. D- 9 -M
-2- A. Program Purpose and Project Development Objective
1 Programpurpose and programphasing I I The purpose of this AdaptableProgram Loan is to ensure the sustainabledelivery of adequate urban infrastructureand services, particularlyin under-servedsecondary towns This will be achieved throughlocal level capacitybuilding and improvementof urban infrastructureand services in support of the Govemmentof Ghana's decentralizationprogram
1 2 Programscope The World Bankhas been involvedin the provisionof infrastructureservices in Ghanathrough three recent projects--UrbanII and the Urban EnvironmentalSanitation Project (UESP), whichcover basic urbanservices in the five main cities, and the Local GovernmentDevelopment Project (LGDP),which covers basic social and economicinfrastructure in 12 secondarytowns The proposed AdaptableProgram Loan (APL) seeks to improve basic infrastructureand services in the remaining25 urban towns, in 23 District Assemblies(DAs) in Ghana,thereby reachingthe urban populationthat has receivedleast attentionin the past by governmentor donors,and focusingon areas whichwould benefita large percentageof the low incomeurban population Since the majorityof these constitutethe weaker DAs, the APL is designedto launch a phased programof capacity buildingfor the DAs, combinedwith physicalinvestments in criticalbasic infrastructureand services
1 3 Programphasing The programhas three phases The first phasewill cover 3 years, and the two subsequentphases will each cover 4 years The underlyingprinciple of the program is to ensure ultimatelythat infrastructureneeds are demand-drivenfrom the DAs and reflectcommunities' needs and priorities,and that DAs competefor scarce resources In order to reach this ambitiousgoal, a programof capacitybuilding is criticalto strengthenDAs' financial,management and technicalcapacities Because the DAs are starting from such weakpositions, the program is phased in such a way that the institutional strengtheningactivities, which would be initiated in the first phase and continue and deepen in the subsequentphases, would be accompaniedby a programof physical investments
• Phase I The objective of the first phase is to strengthenthe technical,financial and management capacitiesof the 23 participatingDAs and financethe provisionand/or rehabilitationof some basic infrastructure It will focus on institutionalstrengthening and capacity building activities through trainingof DA staff and technicalassistance in activitiessuch as improvingfinancial management and revenuegeneration through mapping, land revaluationand improvedfinancial and accounting systems This phasewill also financeat least one infrastructuresub-project in each of the 25 townsto enableDAs to go throughthe processof procuringand managingconsultants and contractorsfor sub- project preparationand implementationusing Bank guidelines(a learnig-by-doing approach) A profileof the 25 projecttowns is attachedas Annex 11 * Phase 2 The objectiveof the secondphase will be to strengthenand deepen the capacity building initiativesfrom Phase I and provide basic infrastructurefor the participatingDAs on a demand- driven and competitivebasis During this phase, the program will be expanded to include 11 additionalsecondary towns (which are currentlya part of the LGDP project) This phase will (i) continueto providetraining and technicalassistance, with additionalspecific training needs provided to DAs on a demand-drivenbasis to ensure relevance, and (ii) provide funds for physical infrastructureinvestments which DAs will access on a competitive,demand-driven basis, with clear selectioncriteria that each DA will have to meet before they becomeeligible for the funds During this and the subsequentphase, there will be close monitoringof DA performanceimprovements (particularlyregarding financial management and own source revenuegeneration) in order to assess and strengthenthe sustainabilityof investments * Phase 3 The objectiveof the final phaseof the programwill be to financeinfrastructure needs in all urbancities and towns in Ghana The scopeof the programwill thereforebe expandedto includethe five metropolitanand municipalassemblies (Accra, Kumasi, Sekondi-Takoradi, Tema and Tamale),
-3- as well as the LGDP towns which were brought in during Phase 2. Funds will be provided on a demand-driven competitive basis, and each proposal will have to meet the selection criteria. Training will continue to be provided on a demand-driven basis.
1.4 Since the program will be implemented in three phases, each phase will constitute a "project" with a separate credit agreement. Any references to "the project" in the remainder of this document will thus refer to the first phase of the program.
2. Project development objective: (see Annex 1) 2.1 The objective of Phase 1 of the program (i.e. the project) is to strengthen the technical, financial and management capacities of the 23 participating DAs and to finance the provision and/or rehabilitation of some basic infrastructure.
-4- 3. Key performance indicators: (see Annex 1)
PHASE 1 END-OF-PROGRAM PERFORMANCEINDICATORS PERFORMANCE INDICATORS (to be achieved by FY2003) (to be achieved by FY2011) Institutional indicators Institutional indicators 1. Local Government Service Act enacted* I. Operational Local Government Service Act 2. A phased implementationplan prepared to implement 2. By program end, full authority to DAs for staff key recommendationsof study on fiscal recruitment and personnel management decentralization where they relate to local 3. Competent technical and financial staff in key posts in governments* all participating DAs, supported by effective human 3. Technical and financial staff in key posts (district resource development policy and procedures engineer, planner, financial officer) are trained and/or 4. District Development Plans and realistic annual competent staff are in key posts in place for at least 6 budgets in all participating DAs developed with months in at least 60% of DAs* greater stakeholder participation; Structure Plans 4. District Development Plans are updated in all 23 DAs developed for all 25 towns with adequate community participation* 5. Management tools in place (accounting and budgeting systems; quarterly management reports; financial Training management procedures manual; technical procedures I. At least 70% of targeted days of training and coaching manual) in all participating DAs delivered 6. Timely planning and programming of investment and maintenance works Financial management 1. Major tax base updated in all 23 DAs Financial management 2. RIAPs & associated changes in the system of billing & I. Timely budget preparation, implementation and collection are implemented in all DAs on a phased basis monitoring; clear and well-targeted urban budget 3. Improved financial and accounting systems established allocations and disbursements in 8 DAs 2. Improved transparency and accountability of DA funds 4. Mapping completed for all 25 towns; digital maps through effective reporting and public access prepared for participating towns in one region; regional 3. Local revenues improve by 2.5% per year in real terms staff (8) of Survey Dept trained with effect from the beginning of Phase II. 5. Annual tax billing rate increases to total potential of tax 4. Adequate O&M funds established at DA level and base in at least 60% of DAs* applied towards O&M expenditures; extensive use of 6. Annual collection rate of billed taxes is over 50% in all private sector in provision of O&M DAs* 7. Annual routine maintenance budgets for infrastructure Infrastructure sub-projects are prepared and are sufficient to cover needs estimated I. Expansion and rehabilitation of basic infrastructure in annual maintenance programs in at least 60% of (related to the sub-projects approved) with resulting DAs* increase in access to basic services, particularly by the poor (water, sanitation, solid waste, access roads, etc.) Infrastructure sub-projects 2. Adequate routine and periodic maintenance of facilities I. At least one sub-project per town implemented by DAs 3. 90% of civil works and design contracts at the DA 2. O&M funds are established for all approved sub- level are contracted out to the private sector (10% projects, and an initial deposit of at least 3% of sub- minor works carried out in-house) project costs is deposited (50% by the DA and 50% by IDA).*
* Also triggers for moving from Phase I to Phase 2. See section B4.
-5- B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)
Documentnumber: 17002-GH Dateof latestCAS discussion: September 4, 1997 1.1 Two of the goals of the World Bank's CAS for Ghana are to promote higher private investments and alleviate poverty. This program will support these two goals by improving basic infrastructure and services, particularly in secondary towns, and strengthening the management of local governments.
1.2 Since the Government's decentralization policy gives responsibility for management and delivery of urban services to the DAs, this project will work towards ensuring adequate, efficient and sustainable service delivery by the DAs. Combined with improving basic infrastructure such as roads, drainage, sanitation, water supply, transport terminals, and markets (through physical investments), the project also aims to set the basis for greater private sector activity in these urban centers and improve the quality of life of the population. Since small and medium cities serve as agricultural marketing and service centers in support of the rural economy, strengthening the management and infrastructure of these small towns will provide benefits to both the urban and rural economy in these regions. In addition, a significant number of the urban poor in Ghana live in secondary towns. By intervening in the urban areas that have been given the least attention by donors in the past, the project will directly address poverty alleviation.
2. Main sector issues and Government strategy: 2.1 Provision of basic urban infrastructure and services: The most important government policy related to urban development is the Government's decentralization initiative. Under the Local Government Act of 1993, Ghana's metropolitan, Municipal and District Assemblies were given the status of autonomous local governments with legislative and executive powers within their areas, and the power to prepare and approve annual budgets, raise revenues from taxes and fees, borrow funds, acquire land and provide basic services and local infrastructure. To assist DAs in carrying out these functions, the constitution requires that a minimum of 5 percent of central government revenues be distributed as grants to the districts annually for capital investments through the District Assemblies Common Fund (DACF). However, investment needs in DAs are far greater than the transfers from the DACF, and DAs' capacity to deliver on their newly granted responsibilities is weak.
2.2 Staffing of District Assemblies: Currently, DAs do not have full authority over their personnel management issues. DA staff are appointed through the central civil service with government transfers covering most of their salaries. Thus, there is little incentive for DAs to use staff efficiently, and needs are mandated by central government. A Local Government Service Bill is being discussed by Government currently, which would place civil servants working for local governments on a separate roster and enable DAs to participate with the Central Government in decision making regarding recruitment of their staff. However, the Bill has not yet been passed by the Cabinet. Once the Bill is passed and operationalized, granting full autonomy to DAs to directly manage their own staff would be the next necessary step in the process.
2.3 Management capacity at the DA level: In order to enable the DAs to provide basic infrastructure and services and to operate and maintain them effectively, their managerial, administrative and technical capacity and ability to raise revenues will have to be greatly enhanced. A few initiatives financed by GOG and other development partners (such as GTZ, KfW and DANIDA) are already under way; these aim to assist DAs in a few pilot districts to better coordinate local government activities. The European Union (EU) is providing capacity building support to all DAs primarily through training local government
-6- officials and councilors. Previous IDA projects have also provided institutional, technical and training support to participating DAs. These efforts need to be supported and coordinated in order to make a significant impact.
3. Sector issues to be addressed by the project and strategic choices: 3.1 Strengthen capacity of the DAs: The project will strengthen DAs' capacity in the following areas: (i) supervision of infrastructure works; (ii) operations and maintenance; (iii) resource mobilization; and (iv) urban planning and management. The project will primarily use the Institute of Local Government Studies in implementing this component.
3.2 Improve municipal resource mobilization and utilization: The weak capacity at the DA level results in low billing and collection rates of local taxes, i.e., property and business taxes. The unrealistic targets, compared to actual revenues and expenditures, make it difficult for municipalities to have a clear picture of the amount and allocation of their resources. This is a contributing factor to the shortage of basic urban infrastructure and services.
3.3 Provide infrastructure to improve living conditions: The project will finance construction and rehabilitation of basic infrastructure in towns in the participating districts that have had limited investment in the past. A preliminary analysis of the 25 towns has identified the main investment priorities in infrastructure. DAs will utilize this analysis, as well as their own project preparation skills, to prepare sub-project proposals and compete for resources from the project on a demand-driven, performance based basis.
3.4 Improve financial sustainability of project interventions: The project will also attempt to strengthen DAs capacity to mobilize and allocate funds for operations and maintenance (O&M) of the infrastructure created. O&M responsibilities for all rehabilitated infrastructure will be clearly outlined from the outset, with indications as to which aspects are the responsibility of central government, DAs, and communities, and where possible, cost recovery mechanisms will be worked out. To improve efficiency, DAs will be encouraged to contract out O&M to the private sector.
3.5 Review of fiscal relationship between central and local governments: CIDA is financing a fiscal decentralization study which is reviewing the adequacy of central government transfers to DAs in light of the Government's decentralization initiative, and examining institutional issues such as the management and reporting structure of fiscal transfers. Based on the results of this study, the project will finance the implementation of relevant recommendations of the study and/or undertake additional work that may be necessary.
4. Programdescription and performancetriggers for subsequentloans: Please see Section I above for program description. The following indicators will have to be achieved before the project can move to Phase II, and subsequently to Phase III:
-7- TRIGGERS FOR MOVING TRIGGERS FOR MOVING FROM PHASE I TO PHASE 11 FROM PHASE 11 TO PHASE III (to be achieved by FY2003) (to be achieved by FY2007) Institutional Institutional 1. Local Government Service Act enacted 1. Local Government Service Act operational 2. A phased implementationplan prepared to implement key 2. Competent technical and financial staff (district recommendations of study on fiscal decentralization where they engineer, planner, financial officer) are in key posts for relate to local governments at least 6 months in at least 80% of DAs 3. Technical and financial staff in key posts (district engineer, 3. Capacity of Survey Department adequately developed planner, financial officer) are trained and/or competent staff are for the sustainable delivery of maps to DAs in place for at least 6 months in at least 60% of DAs 4. MLGRD attaches one additional staff to LGPSU to 4. District Development Plans are updated in all 23 DAs with make a total of 4. adequate community participation 5. MLGRD attaches at least 3 professional staff to LGPSU Training Training 6. At least 80% of DAs will have trained professionals in 6. At least 70% of targeted days of training and coaching delivered posts and will have adopted participatory measures of planning and programming of investment by end of Financial management Phase 11. 7. Annual tax billing rate increases to total potential of tax base in at least 60% of DAs Financial management 8. Annual collection rate of billed taxes is over 50% in all DAs 7. Local revenues increase by 2.5% per year in real terms 9. Annual routine maintenance budgets for infrastructure are during Phase 11in all DAs prepared and are sufficient to cover needs estimated in annual maintenance programs in at least 60% of DAs Infrastructure and services 8. Evidence of private sector involvement in O&M of Infrastructure sub-projects infrastructure and services in all DAs 10. O&M funds are established for all approved sub-projects, and an initial deposit of at least 3% of sub-project costs is deposited (50% by DA and 50% by IDA).
C. Program and Project Description Summary
1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): 1.1 The Program has three phases. Each of the phases will comprise two types of activities: (i) strengthening municipal management; and (ii) urban infrastructure rehabilitation and construction. The objective of the first activity is to improve the level and quality of local public services provided by the DAs through: (i) studies; (ii) training and capacity building for DAs; and (iii) strengthening of line ministries' capacities to support DAs. The objective of the second activity is to improve access to basic services and infrastructure for urban residents of DAs, particularly those in low-income areas, and to improve the urban environment. Investments in infrastructure and services will be carried out through a relatively small amount of funds during the first phase (since the emphasis in Phase I is on capacity building) and upscaling the fund during the second and third phases to include additional districts.
1.2 Training: Training will be provided DAs' staff in the areas of planning and management, including (a) contract management; (b) maintenance management (development of maintenance programs); (c) overall financial management and revenue mobilization; and (d) updating and monitoring development plans. A particular emphasis of the courses will be to train DA staff in involving
-8- communities in the planning and development process, especially with regard to formulating development plans and prioritizing needs
1 3 Capacity building: Technical assistance will be provided in specific areas to enhance the planning, management and resource mobilization capacities of DAs in the long run These include (a) strengthening financial management capacities of DAs through Revenue Improvement Action Plans and putting in place effective financial management systems, and (b) property revaluation following the completion of the mapping exercise
1 4 Mapping: Financing will be provided by the Nordic Development Fund (NDF) to produce new digital and hard copy base maps for all 25 towns and build capacity in the Survey Department, 8 regional survey offices and the 23 DAs This will improve the availability of information for planners, engineers, providers of utility services, land valuers, revenue collectors and title registrars The Survey Department will benefit from technical assistance to be acquired through a twinning arrangement contract and also from short-term technical and management training and attachments to appropriate organizations
1 5 Infrastructure and municipal services sub-projects The project will finance infrastructure investments that meet the following objective to provide/rehabilitate basic municipal infrastructure and services necessary to improve health and environmental conditions and the economic efficiency of benefiting communities/locations Eligible sectors include (a) water supply, (b) liquid waste management, (c) solid waste management, (d) access roads and footpaths, (e) storm drainage, (f) security lighting, (g) markets, (h) lorry parks/transport terminals, (i) community infrastructure upgrading, and (1) slaughterhouses DAs will, with the participation of community groups, prioritize infrastructure needs of each town from Town Development Plans They will prepare sub-project proposals which include, inter alia, justification for the sub-project, number of beneficiaries, evidence of community participation in its selection, environmental impact statement, O&M requirements and arrangements, as well as relevant financial data, such as costs and cash flow forecast, DA contributions, O&M costs, and so on The proposals will be evaluated according to guidelines agreed with the Bank These will include ensuring consistency with other sector programs, particularly with regard to user fees and charges (depending on the type of sub-project, the appraisal/evaluation team will include staff of the relevant sector ministry or agency) and evaluating the consequence/impact of the sub-project (for example, if water is provided, ensuring that adequate measures are taken to deal with an increased amount of wastewater in the area) Once sub-projects are evaluated and certified that they meet the set criteria, the DAs will take charge of sub-project implementation and subsequent O&M requirements
1 6 Co-financing. The Nordic Development Fund will finance the mapping component for a total estimated cost of US$3 6 million (including contingencies) The Agence Francaise de Developpement (AFD) will finance infrastructure sub-projects (specifically roads sub-projects) for a total cost of US$6 0 million, including US$1 0 for design and supervision consultants
-9- lndicative Bank- % of Component Setor Co$sts % of financing Bank- :___::______(US$M) Total finS$M)financing 1. Training Urban 1.19 5.3 1.19 11.0 Management 2. Strengthening Financial Management Urban 0.97 4.3 0.97 9.0 Management 3. Mapping Other 3.60 16.1 0.00 0.0 Urban 4. Infrastructure & Municipal Services Other Urban 14.52 65.1 7.00 64.6 Sub-projects Development 5. Implementation Support Urban 2.02 9.1 1.67 15.4 Management
Total Project Costs 22.30 100.0 10.83 100.0 Total Financing Required 22.30 { 100.0 10.83 100.0
Costs include price and physical contingencies
2. Key policy and institutional reforms supported by the project: 2.1 Local government staffing review: The responsibility for recruitment and personnel management are important for the efficient functioning of DAs. At present, DAs do not have the authority to hire and fire their own staff. The Government has drafted the Local Government Service Bill which provides for an independent Local Government Service separate from the general civil service. When passed, the Act would place civil servants working in local governments on a separate roster, and enable DAs to participate with the Central Government in decision making regarding recruitment of their staff. By giving DAs a say in the hiring, promotion and transfer of their own staff, efficiency of staff management and responsiveness in terms of staffing needs at the DA level are expected to improve. The passing and operationalization of this act, and any remaining legislature and administrative or fiscal bottlenecks, will be dealt with as part of the policy agenda under the project.
2.2 Fiscal/financial review: The financial capacities and performance of DAs depend to a great extent on the nature of the fiscal relationship between central and local govemments. This relationship determines the level of resources that DAs have to carry out their newly granted responsibilities under the government's decentralization program and their incentives to improve their own source revenues. CIDA is financing a fiscal decentralization study which is reviewing the adequacy of central government transfers to DAs in light of the Government's decentralization act, and examining institutional issues, such as the management and reporting structure of fiscal transfers. Based on the results of this study, the project will finance the implementation of relevant recommendations of the study and/or undertake additional work that may be necessary.
2.3 Monitoring local government performance: MLGRD is responsible for monitoring the performance of DAs, identifying problem areas, providing policy guidance on growth and development issues, etc. To do this effectively, MLGRD needs to collect data from DAs, particularly financial data, and monitor this on at least a quarterly basis. To increase transparency and accountability in central government support of local governments and decentralization, the project will strengthen the local government finance unit in MLGRD and improve coordination with the Controller and Accountant General's office (which also collects local government finance data for the Ministry of Finance).
2.4 Land administration: Many investment decisions in districts would involve decisions on land use (e.g., landfill site, liquid waste disposal site, market, lorry park, etc.). The availability of land for such
-10- sites and land titling has been a problem in past projects. Pilot studies to review and analyze the land delivery and titling system have been carried out through previous projects, and a report on the Urban Land Administration Study published in May 1998 which lays out specific recommendations to improve the system. These include, commercializing activities of land agencies, establishment of a Land Data Bank, establishment of a "one-stop-shop" for land registration, and the establishment of a modernized system of urban planning and guiding development. The project will support the implementation of key reforms recommended by these studies when these are adopted by the Government.
3. Benefits and target population: 3.1 Residents: The project will benefit the general population in participating urban centers (for 25 towns, a total population of about 964,000). These urban centers contain some of the poorest people in the country but have received the least attention from government or donor support in the past. Social and economic benefits will occur through improved access to municipal services. Improved roads will reduce travel time and vehicle operating costs; improved drainage, sanitation, solid waste management, and water supply will contribute to better health; increased street lighting will improve safety and security; and markets and lorry parks will enhance economic activity. The program will also improve the linkage between the urban population and local governments by promoting more participatory planning for infrastructure investments, which should lead to more efficient use of developmental resources as investments would be better aligned with people's expressed needs.
3.2 District Assemblies. The project will benefit the DAs directly through capacity building, especially with regard to the management of basic urban services and municipal finances. Improved capacity for resource mobilization, increased transparency of local finance, more coordination with line ministries, more locally devolved responsibilities, improved understanding of local priorities and closer linkages with urban residents will enable municipal decision-makers to make better informed and targeted decisions on use of resources. Contracting out to the private sector and participation of communities in the prioritization of urban infrastructure and services provision will improve efficiency and enhance ownership of infrastructure. It will also alleviate the burden on municipal government and allow it to focus on planning, programming and managing.
3.3 Ministry of Local Government and Rural Development. MLGRD will benefit from additional technical and professional staff, equipment and other resources that would be required to provide support to the DAs from the central government level. MLGRD's capacity to monitor local government performance will be improved.
3.4 Institute of Local Government Studies and other training institutes. The program will utilize the Institute of Local Government Studies to provide courses and other forms of training for DA staff.
3.5 Local contractors and consulting firms: The program will promote private sector participation in the provision of local government services by encouraging the contracting out of service provision to local small and medium enterprises (a policy already endorsed by the decentralization policy).
4. Institutionaland implementationarrangements: APL Implementation period: FY 2000-2011 (11 years) Proposed project--Phase I of APL FY 2000-2003 (3 years)
4.1 MLGRD: The key sector ministry responsible for this project is the Ministry of Local Government and Rural Development (MLGRD). The Local Government Project Support Unit (LGPSU) in MLGRD will have primary responsibility for project implementation.
-11- 4.2 Project Coordination Committee: A Project Coordination Committee (PCC) will be established to provide overall policy guidance and will be responsible for overarching directives and key decisions to be undertaken in the course of the project. It will also be a forum to discuss implementation progress and share experience. The PCC, which will meet twice a year, will be chaired by the Chief Director of MLGRD and will be comprised of the head of LGPSU, representatives of the Ministries of Finance, Roads and Transport, Works and Housing, Land Valuation Board (LVB), Environmental Protection Agency (EPA), Survey Department (SD), Town and Country Planning (TCP), Ghana Water Company Ltd. (GWCL), and the National Development Planning Commission (NDPC), as well as representatives of the 23 participating DAs (the designated Project Coordinators). LGPSU will act as the secretariat for the PCC.
4.3 LGPSU: LGPSU will have primary responsibility for guiding, promoting, facilitating, monitoring, evaluating and reporting on project activities. LGPSU will manage all project funds, including disbursements, accounting, auditing, and financial reporting (see Financial Management). LGPSU will be responsible for procurement and contract management for the capacity building components (mapping, property revaluations, development of Revenue Improvement Action Plans, financial management strengthening, (see Annex 2), and will implement and manage the training component (see ILGS and Annex 2). One of LGPSU's primary responsibilities will be to provide support to the DAs. This will include: * Assisting DAs in evaluating DA capacities, identifying training needs, and setting targets * Assisting DAs in the preparation of realistic District Development Plans, using greater stakeholder participation (including assisting the Town Councils of the 25 towns covered under the project in the preparation of their specific Town Development Plans) • Assisting DAs in analyzing and implementing improvements to their financial management systems * Providing procedural guidance to DAs in the preparation of sub-project proposals (which should originate from Town Development Plans) - Appraising sub-project proposals according to selection criteria and methodology agreed upon with IDA * Providing technical support to the DAs in procurement, engineering, and contract management
4.4 In order to effectively build capacity at the district level, LGPSU will establish a field office for the Urban 5 project to bring its services closer to its clients. The field office will focus on training, institutional development, and related capacity building issues for the districts in its vicinity, as well as carrying out the sub-project technical appraisal and providing technical support for sub-project implementation. The Accra office will provide the same services for the districts in its vicinity. The Accra office will also be responsible for implementing the capacity building components, managing the training component, and overall project coordination and management, including financial reporting and auditing. The need for field office support, as well as the size and skills mix of the Urban 5 LGPSU team, will be reviewed at the end of the first phase of the APL in light of the increasing capacity built at the DA level.
4.5 DAs: DAs will have primary responsibility for identifying their training needs and taking action to fulfill these needs, and for implementing sub-projects. DAs will, with the help of LGPSU, carry out capacity and training needs assessments, and prepare and implement sub-projects using private contractors. They will thus be directly responsible for monitoring the technical and financial performance of sub-projects, as well as the performance of all technical assistance and training programs provided in that regard. Specifically, DAs will: * Develop District Development Plans with a focus on Town Development Plans for participating towns * Prepare sub-project proposals for funding * Manage and implement sub-projects (participate in bid evaluations; become signatories for contracts, review and approve modifications to sub-projects, etc.)
-12- * Develop and implement RIAPs * Develop realistic annual budgets to implement District and Town Development Plans * Develop and implement an effective financial management system • Establish O&M funds, prepare annual O&M plans and contract out work to the private sector * Identify training needs and request training for staff from LGPSU * Recruit technical staff to strengthen their capacities * Report quarterly to LGPSU on project implementation progress
4.6 No parallel structure for project implementation will be established at the district level for the purposes of this project. To be sustainable, project management has to be mainstreamed within the existing administrative structure of each DA, with training and other technical assistance provided to directly strengthen project management and implementation functions. Each DA will nominate a senior officer from its existing staff as Project Coordinator who will liaise with the LGPSU and represent the district in all areas related to this project. DAs will be free to contract out project management services such as procurement and project monitoring to the private sector if they are unable to recruit required staff. DAs will also make their Finance Officers (seconded from the Office of the Controller & Accountant General) responsible for maintaining project accounts and preparing quarterly financial reports. These reports will be incorporated in the quarterly project status reports prepared by the DA coordinators and sent to LGPSU. Sub-project Accounts will be opened for each participating DA which will be replenished on the basis of replenishment requests submitted by the DA to LGPSU. Payments for the equivalent of US$50,000 and above and all foreign exchange transactions will be sent to LGPSU for direct payment.
4.7 ILGS: A bill was approved by Cabinet in June 1999 establishing the Institute of Local Government Studies (ILGS) as a corporate body whose objective is to "organize the training of District Assembly members ... as well as the staff and other personnel in the local government ... to enhance the managerial, administrative and operational efficiency of the units of decentralized government." The ILGS will therefore be responsible for the preparation and delivery of training activities under contract to LGPSU. Training needs will be identified by DAs with the assistance of LGPSU and/or consultants. LGPSU will then contract ILGS for the provision of the requested training. Specifically, ILGS will: * Identify and hire "experts" in their field of specialization to teach courses under temporary contract; * Identify specific learning outcomes for each course in collaboration with contracted instructor and requesting DA, and provide a modular curriculum and training guides keyed to these learning outcomes; * Identify needed learning aids and ensure that necessary arrangements and logistics are in place; * Monitor delivery of training and prepare and implement quality assurance/quality control mechanisms. LGPSU will provide overall management of the training system under the project, including processing training requests from DAs, preparing budgets, contracting and making payments for instruction, and carrying out training impact assessments (see Annex 2).
4.8 Special Implementation Arrangements for Phase I: This project was originally designed as a traditional, centrally implemented project to provide infrastructure to secondary cities. Preparation activities were initiated by the existing LGPSU, including hiring consultants to work with DAs and communities in prioritizing infrastructure investment needs and carrying out preliminary engineering. These were almost completed when the project was redesigned to one where sub-projects are to be demand-driven by DAs and implemented by DAs. This new concept will normally require DAs to select their own sub-projects as well as contract consultants to carry out the preliminary engineering, and subsequently the detailed engineering and hiring of contractors. However, since the preliminary engineering studies already exist, each DA has been advised to select a sub-project for financing under Phase I of the APL, each sub-project to be within a US$200,000 budget (see Annex 2). For this first set of sub-projects only, LGPSU will centrally appoint consultants to carry out the detailed engineering in
-13- one batch in order to expedite the process and provide a concrete sub-project for each DA to "cut their teeth on." DAs will then take over the hiring and supervision of consultants and contractors for implementation of the sub-projects. For all other sub-projects and in the future, DAs will be in charge of feasibility, preliminary engineering, detailed engineering and every other step in sub-project implementation (LGPSU and/or consultants will provide assistance where needed).
4.9 APL and Project Financing: IDA and co-financiers will provide 90 percent of project financing during Phase I of the APL and DAs and GOG will provide 10 percent combined. During Phases 11and III, IDA and co-financiers are expected to provide about 80 percent and DAs and GOG 20 percent of project costs. IDA and all other co-financing will be contingent upon provision of DA and GOG contributions and execution of the annual maintenance program (according to indicated targets) by each DA.
4.10 Financial Management: LGPSU will be in charge of project financial management. A Special Account will be opened in the name of LGPSU for the IDA credit, and a Project Account opened for deposit of Government counterpart funds. The LGPSU field office will operate on anlmprest Account to meet its administrative expenses which will be reimbursed on a quarterly basis. Two sub-project Accounts will be opened in each DA when a sub-project is certified by LGPSU. The financial management and accounting system of LGPSU was analyzed during project appraisal for application of the Loan Administration Change Initiative (LACI). It was agreed that LGPSU will maintain financial records in compliance with accepted accounting principles, as is presently done for the on-going LGDP and UESP projects. Agreement was reached with Government on an action plan to implement LACI within the first year of project effectiveness. LGPSU will provide interim and annual financial statements to reflect the financial performance and position of the project. The Borrower will cause LGPSU to engage independent, external auditors, acceptable to IDA, to canry out annual audits of the project. Audit reports will be submitted to IDA within 6 months of the end of the fiscal year.
4.11 Release of funds for each sub-project contract will be made by LGPSU only after the DA has fulfilled the following conditions: (i) opened two bank accounts in a commercial bank, one for IDA funds and the other for DA counterpart funds; (ii) deposited 5 percent of sub-project cost for Phase I in the Sub-Project Account; (iii) provided expenditure justification to LGPSU; and (iv) submitted their Statement of Funds Requirement (SFR) for the first quarter of sub-project implementation. As an alternative to (ii) above, DAs may authorize MLGRD to deduct, at source, their contribution from their share of the Common Fund and deposit into the Sub-Project Account. MLGRD will be expected to deposit the amount deducted into the Sub-Project Account within four weeks of the date of deduction. DAs will provide mandatory monthly returns of Bank statements, Bank reconciliation statement and statement of monthly expenditure to reach LGPSU no at later than 15 days following the end of the reporting month. DAs will also provide quarterly progress reports and requests for replenishment of their Sub-project Accounts. These will be examined by LGPSU for: completeness, internal financial consistency, procurement justification, consistency with sub-project proposal, relevant field supervision reports, etc. Auditors will be hired to undertake audits of financial and procurement compliance and random physical verification of works in the field with a focus on output.
4.12 Monitoring and Evaluation: LGPSU will submit quarterly activity reports covering implementation progress, financial status, status of each convenant, DA management and component performance indicators. Independent evaluators will be appointed by LGPSU to assist in carrying out impact assessments of the project and monitoring performance indicators and triggers at mid-term and end of the project. Progress will be reviewed at mid term (2002) and project end in workshops with full participation of all stakeholders. Based on the mid-term indicators, preparation of the second phase will begin and will be evaluated when trigger targets are reached.
-14- D. Project Rationale
1. Projectalternatives considered and reasonsfor rejection: 1.1 The infrastructure needs in the urban centers of Ghana are great. This program is preceded by three urban projects in Ghana, which dealt with various infrastructure and DA capacity constraints in the primary cities and the "second tier" cities. Under the previous urban projects five DAs have benefited from the Urban 2 project and eleven DAs from the Local Government Development project (LGDP). There are 23 DAs with urban settlements (as defined in the Local Government Act) that have been the lowest priority in the country's urban development agenda and have benefited the least from donor intervention due to their small size and remote locations. In the interest of promoting growth more equitably throughout the country, the Government is keen on supporting investments in all these remaining urban centers.
1.2 Stand alone traditional infrastructure projectfor 25 towns: The possibility of financing all 25 towns in one project was rejected on the basis of lessons learned from past projects which revealed the complexities of supervising a centrally managed project in so many towns simultaneously, and the need to concentrate a critical mass of resources in each town in order to achieve some measurable impact.
1.3 Stand alone infrastructure project for 12 towns: Cutting the scope of the project down to 12 towns only was also discussed with the Government. The Government was reluctant to select only 12, but agreed on condition that preliminary engineering studies would be carried out for all 25, of which IDA would finance investments in 12, and the Government would then seek other donor financing for the remaining 13.
1.4 Program approach: The above stand alone infrastructure project for 12 towns was rejected when the possibility of taking a program approach through the new Adaptable Program Lending instrument was accepted as a more viable option. The APL allows the phasing of the capacity building elements in such a way that investments in subsequent phases can be based upon improved performance of DAs and based on demand, thus providing incentives for taking capacity building seriously and actually improving performnance.
1.5 Basic resource transfer mechanism: The possibility of setting up a separate grant system was considered. However, the District Assemblies Common Fund (DACF) is in place through which the central government transfers 5 percent of the national revenue to the DAs based on a formula which takes into account factors such as equity, population, and local revenue generation, amongst others. There is therefore no need to develop a separate grant system. However, a fiscal decentralization study is being carried out and the project will assist the Government in implementing the findings and recommendations that are relevant to DAs.
-15- 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Setor Issue Prject (PSR) Ratings (Bank-financedprojects only) Implementation Development Bank-financed Progress Objective (IP) (DO) 1. Rehabilitate and improve essential infrastructure Accra District Rehabilitation S S in Accra district Project--completed
S S 2. Rehabilitate and improve essential infrastructure Urban II Project--closed June and strengthen capacity of DAs. Housing Sector 1999 Reform to develop housing finance system. S S 3. Support decentralization; improve infrastructure Local Government & services in II secondary towns, strengthen DAs' Development Project--ongoing financial, technical, & managerial capacities. S S 4. Improve environmental sanitation services in Urban Enviromnental Ghana's five main cities. Sanitation Project--ongoing S S 5. Develop basic village-level infrastructure and Village Infrastructure Project-- build capacity of DAs to better plan and manage ongoing investments and empower rural beneficiary groups and associations.
6. Extend coverage of sustainable water and Second Community Water and sanitation facilities in villages and small towns and Sanitation Project--approved strengthening DA and community capacities to August 1999 manage and deliver services. S S 7. Promote efficient fiscal management through Public Financial Management better monitoring & control of public expenditures Reform Program--ongoing & resource allocation Other development agencies 1. EU: Capacity building for District Assemblies Capacity Building program-- ongoing 2. CIDA: Adopting budgeting and expenditure Local Government Reform managementreforms undertaken at the central level Study--ongoing to the local level 3. DFID: Supports civil service reform for the entire Performance Improvement public sector (ministries, departments and agencies) Program--ongoing 4. CIDA: Fiscal Decentralization Project e Implementation of Fiscal Decentralization -- ongoing 5. KfW: Promotion of district capitals Capacity building 6. GTZ: Program for Rural Action Capacity building, and priority infrastructure 7. Danida: Danish support to DAs Capacity building, economic development and employment generation .. IP/DORatings: HS (HighlySatisfactory), S (Satisfactory),U (Unsatisfactory),HU (Highly Unsatisfactory)
-16- 3. Lessonslearned and reflectedin the projectdesign:
3.1 IDA has been financing urban projects in Ghana for over a decade. Significant progress has been made: urban roads have been improved considerably; waste management systems have been established and are functional in major cities; a number of upgrading schemes have been successful; and inroads have been made in municipal capacity building, although more needs to be done. This project has built on the key lessons learned and will address them in the following manner:
3.2 Establishing effective institutional arrangements: There is need to ensure that the agency or unit given the responsibility for project implementation is also given adequate autonomy to enable it to function efficiently. The program will focus implementation authority in one ministry, MLGRD, and build the capacity of the existing Local Government Project Support Unit to provide the necessary support to DAs. A comprehensive project management system will be put in place to effectively monitor and coordinate implementation.
3.3 Strengthening capacity of DAs and central government agencies: The implementation of the Government's ambitious decentralization program has been slow due to weak capacity both at the sector ministry and the DA levels and in other Ministries. The focus of this program will be on training and institutional development for DAs as well as MLGRD. The specific actions will build on past support by IDA in this sector.
3.4 Increasing own source revenues: The fiscal health of DAs can be significantly improved by maximizing local revenue generation through the preparation and implementation ofRIAPs and using budgets as a management tool. The program will provide support for the preparation, implementation and operationalization of RIAPs.
3.5 Ensuring adequate operations and maintenance: There is a need to ensure that proper institutional and fiscal arrangements are in place to carry out adequate operation and maintenance (O&M) of the infrastructure created/rehabilitated through the program. The program will ensure the establishment of institutional arrangements for maintenance and setting up of O&M funds at the DA level for longer term sustainability of the project.
3.6 Reforming local government staffing policy: The centralized staffing policy which places authority in the civil service to hire staff for DAs needs to be changed in favor of a policy that encourages DA participation in decisions relating to DA staffing. The project will support Government's initiative to build an effective separate Local Government Service.
3.7 Continuing donor coordination: The Resident Mission in Ghana and other donors based in Accra have formed an informal group which meets every quarter to coordinate donor support of the Government's decentralization program. Project activities will be coordinated with the donors through these informal meetings.
3.8 Private Sector Participation: Delegating contract management for and involving the private sector in urban service provision is an effective approach which alleviates the burden on DAs and ensures better utilization. The project will encourage greater private sector participation in O&M of municipal services.
3.9 Balanced Growth: There is a need to balance growth (i.e. spread investments) across the country to avoid overwhelming the primary cities and stimulate regional development. During the third phase of the APL, the program will be opened so that all 39 DAs with urban towns in the country will be eligible to participate.
-17- 4. Indicationsof borrowercommitment and ownership:
4.1 Government is keen on getting this program on board as soon as possible. The Minister of Local Government and Rural Development has announced the Government's commitment to go ahead with the program in Parliament. Using funds from the on-going Local Government Development Project, Government commissioned a study by local consultants to assess the development needs and investment prospectus for the 25 secondary towns which was reviewed and discussed during a project preparation mission in April 1998. The Government commissioned consultants (February 1999) to undertake preliminary engineering studies of priority investments, including environmental and economic analyses, which were reviewed and discussed during the pre-appraisal mission in May 1999. During these missions, meetings were held with senior officials of all 23 DAs to introduce the demand-driven concept of the project and seek their inputs in project design. All participating DAs have since then appointed a Project Coordinator and a workshop has been held to identify training needs and learning outcomes. A second workshop was held before the appraisal mission where DAs selected their first priority sub- project.
5. Valueadded of Banksupport in this project:
5.1 The Bank has a history of involvement in the urban sector, has been the major funder of urban development programs, and has established a strong relationship with the key government agency, MLGRD. It is in a position to draw on past experiences and lessons and to address urban issues on a wide and comprehensive scale. The Bank therefore has a comparative advantage in encouraging institutional development and long term sustainability, and ensuring the appropriateness of investments. The European Union (EU) has initiated a capacity building program for all 110 DAs which became effective two years ago. The proposed program will complement the EU's activities by supporting some of the weaker DAs. The program will liaise closely with the EU program to ensure consistency and compatibility of approaches.
E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (supported by Annex 4): Cost effectiveness NPV=US$ million; ERR= %
This project comprises two different types of activities: (i) infrastructure and municipal services sub- projects; and (ii) training and capacity building to support better planning and management of physical infrastructure investments. Briefly, the project analysis refers to ensuring the sustainable delivery of adequate urban infrastructure and services through local level capacity building in support of the Government of Ghana's decentralization policy.
The demand-driven nature of the projects implies that communities will determine the nature and scope of each sub-project funded. Accordingly, neither benefits nor costs can be completely identifiedex ante. As such, it is not possible to estimate an ex ante overall economic rate of return (ERR) for the project nor individually for the variety of potential sub-projects. Eligible sectors for sub-project financing will primarily include: (a) water supply, (b) liquid waste management, (c) solid waste management, (d) access roads and footpaths, (e) storm drainage, (f) security lighting, (g) markets, (h) lorry parks/transport terminals, (i) community infrastructure upgrading, and (j) slaughterhouses. Sub-projects funded under the APL will, in general, be similar to sub-projects funded under the Bank-financed Local Government Development Project. Detailed methodology for economic analysis and expected ERRs for the most typical sub-projects based on the experience of previous urban development projects in Ghana are included in Annex 4.
-18- In summary, the economic analysis of roads and drainage sub-projects will be measured in terms of savings in vehicle operating costs and travel time (under LGDP the actual ERRs ranged from 57 percent to 110 percent). For markets and lorry parks, ERRs will be calculated by taking into account the incremental higher fees users are willing to pay for improved facilities (under LGDP, the range forERRs is between 10 percent and 15 percent). For solid waste management, ERRs will be based on estimates of willingness-to-pay for services such as the actual (market) user fees charged by private providers (under LGDP, ERRs were between 24 percent and 32 percent). For liquid waste management, a similar method resulted in ERRs of 20 percent to 28 percent. ERRs for storm drainage and security lighting will be based on property damage savings from flood alleviation and willingness to pay for security, respectively.
A significant percentage of the project will finance institutional development and capacity building. Although the impact of these are not quantifiable, it is expected that DAs will benefit significantly from these components. Specifically, DAs will increase their own source revenues, improve their financial management capacities as well as their capacity to operate and maintain infrastructure investments.
2. Financial (see Annex 5): NPV=US$ million; FRR = %
Financial policy for sub-projects: DAs are expected to contribute 10 percent of all sub-project costs which will be paid into the DA Urban V Matching Fund Account as follows: (a) the first five (5) percent at the time of the contract award, and (b) the remaining five (5) percent three months thereafter. DAs will also be expected to make a contribution of 3 percent of the sub-project cost to an O&M fund on an annual basis starting one year after completion of the sub-project. IDA will share 50 percent of the cost of O&M. Appropriate user fees and charges will be reviewed and levied for sub-projects where applicable and will conform to sector practices.
Financial Management System: Financial systems acceptable to the Bank are already in place under ongoing urban projects. Under a revised project implementation arrangement, the project accounting staff, who previously reported to the Ministry of Works and Housing, will now report to MLGRD along with the rest of the project staff. The financial management system will be modified to fit the new LACI requirements, within one year of project effectiveness.
Fiscal Impact: A main objective of Phase I is to strengthen the revenue generating and financial management capacities of DAs. A detailed O&M plan (including sources of financing) will be developed for each sub-project indicating incremental O&M costs and expected revenues. Evidence of DA capacity to finance O&M costs will be required for the evaluation exercise before a sub-project can be approved by LGPSU. Since the project is demand-driven, the types of sub-projects ultimately financed will depend on the needs expressed by DAs during project implementation. Some sub-projects, such as drainage and access roads, are public goods for which cost-recovery will not be possible through direct user charges. These will be covered through property rates. The Revenue Improvement Action Plans (RIAPs) will estimate any required increases in property taxes as a result of increases/improvements in general services. For revenue-generating sub-projects, such as markets and lorry parks, user fees will be charged. For sub- projects in water supply and sanitation, the present government policies followed by on-going water sector projects (e.g., CWSP-2) regarding user fees and subsidy ceilings will be applied.
-19- 3. Technical:
The main issues are: (i) the choice of technical standards and consistency of standards and cost recovery mechanisms with other projects in the sector; and (ii) establishment of adequate mechanisms for operation and maintenance of the facilities built/rehabilitated. The following activities have been included in the project selection criteria to address these issues and LGPSU will assist DAs to achieve them: (i) LGPSU and/or consultants will discuss different design options and costs for different sub- projects with DAs and communities before standards are selected; (ii) the project will liaise with other projects in the sector (e.g., water, sanitation, roads, etc.) to ensure consistency of technical standards and cost recovery mechanisms; and (iii) O&M plans for each investment will be worked out at the design stage, involving to the extent possible, the participation of local communities and the private sector (especially for sub-projects, such as markets, public latrines and road side drains), and DAs will be required to provide at least 3 percent of sub-project costs per annum in an O&M fund for the facility. IDA will share 50 percent of O&M cost.
4. Institutional: a. Executing agencies: The sub-projects will be executed using a decentralized approach with key roles being performed by DAs with community and private sector participation. The current capacities of DAs to implement and manage urban infrastructure is generally weak but varies amongst the 23 DAs (DAs have some experience in implementing capital projects using their share of the Common Fund). The project will provide technical assistance and training for DAs, including a short term training program to be implemented during project preparation, in the areas of planning, contract management, financial management, and O&M. The demonstration of adequate capacity to implement and maintain a sub- project is a pre-requisite for approval of sub-projects by LGPSU. The project will seek to ensure that the Government's initiatives in creating a separate Local Government Service are realized. However, these interventions will partially address the capacity problem as the longer term issues, such as improving salary levels and conditions of service to attract the right calibre of recruits into the Local Government Service, will have to be addressed through the body given the authority to implement the Act. b. Project management: Problems with project management for previous urban projects have been addressed by combining the staff of the two existing implementation units, the Technical Services Center (TSC) of the Ministry of Works and Housing and LGPSU, into one consolidated unit under one ministry, MLGRD. Both units had developed project management capacity through the implementation of two completed and two on- going urban projects. Finance and accounting systems acceptable to IDA are in place. The financial management system will be upgraded during the first year of implementation to meet the LACI requirements.
5. Social: No significant social risks are expected, since communities have been involved and will continue to be involved in prioritizing infrastructure needs and selection of sub-projects in each town. The project is generally expected to have a positive impact as poverty will be reduced through better access to urban services.
-20- 6. Environmental assessment: Environment Category: B
Justification/Rationale for category rating: The project is not expected to have a major adverse environmental impact. There is no significant resettlement expected in the project. Rather, the project will improve environmental conditions in the towns. Each sub-project proposal that comes to the LGPSU for approval and funding will require an environmental impact assessment or statement to ensure that environmental concerns have been taken into account and appropriate mitigation measures taken. For example, the final disposal of solid waste and liquid waste (human waste evacuated from latrines, septic tanks and cesspits) is of particular concern in the towns, as the most common mode of disposal is indiscriminate dumping at "convenient" locations, such as fringe areas of the town, lagoons, streams, or the sea. Any project proposals for disposal sites would be required to be appropriately located and engineered to provide maximum protection to the environment, specifically with regard to groundwater, drainage, air pollution and odor. The project will also ensure the establishment of appropriate operational practices for the sites. The project will take into account the policies and strategies undertaken by the Government and other projects in urban environmental sanitation to ensure the use of appropriate technical options and consistency in approaches.
7. Participatory Approach (key stakeholders, how involved, and what they have influenced or may influence; if participatory approach not used, describe why not applicable): a. Primary beneficiaries and other affected groups: The first prioritization of sub-projects and preliminary engineering was carried out by consultants with the full participation of DAs and community organizations. For future sub-projects, District and Town Development Plans will be prepared using a participatory approach. LGPSU will assist DAs in taking a more consultative approach to the development of District/Town Development Plans, and other consultants and/or local NGOs may also be used to facilitate community and stakeholder meetings and consultations. Future sub-project proposals will be selected only from these plans, ensuring that the proposals financed respond to community needs and priorities. The project follows a demand-driven, participatory approach and communities will play essential roles during project implementation. Technical standards and design options will be discussed with communities (e.g., the width of roads). Communities and the local private sector will be involved in the O&M of some infrastructure (especially markets, lorry parks, keeping drains clean, etc.). DAs will be involved in every aspect of project preparation, implementationand evaluation. b. Other key stakeholders: Other key stakeholders include the LGPSU, ILGS, relevant ministries (Local Government and Rural Development, Roads and Transport, Finance, Works and Housing, National Development Planning Committee, Controller and Accountant General) and the private sector. They will be part of the Monitoring and Evaluation process as well as implementation and coordination.
Stakeholders Preparation Implementation Operation District Assemblies CON COL/IMP IMP Communities/CBOs/NGOs CON CON CON/IMP Business community/private sector IS COL COL Central Government COL COL COL/IMP
CON =consultation COL =collaboration IMP = implementation IS = information sharing
-21- F. Sustainabilityand Risks 1. Sustainability:
Sustainability of investments depends on: (i) ownership of sub-projects by DAs and communities; (ii) availability of resources for operations and maintenance; and (iii) management capacity at the DA level, especially for O&M. The project aims to involve DAs and communities in the preparation, design and implementation to ensure ownership and aims to enhance the management of municipal infrastructure and services, including improving DA own-source revenues. Involvement of communities and DAs from the beginning will sensitize them to the need to pay for services where appropriate, and ensure cost recovery.
2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Rk Risk Ris Mn"imiztion easut bk
From Outputs to Objective Government does not support capacity building at DA level M MLGRD will act on Cabinet's comments and resubmit and LGS Act is not passed. draft Bill to Cabinet for clearance before Parliament approval. Fiscal decentralization study recommendations are not M Study funded by CIDA is being carried out by GoG in a accepted by Government. participatory manner to ensure involvement of all relevant GoG ministries. ILGS facilities do not remain operational. M Training specialists in LGPSU will manage training and ILGS will ensure its relevance. DAs unable to hire adequate number of staff. Trained staff M DAs will have a greater say in hiring and firing staff once do not remain in DAs. the LGS Act is passed. DAs are not open to using participatory consultation process M Ensure GoG's commitment to satisfy criteria for Quality and being more transparent and accountable. at Entry. O&M funds are not used for O&M purposes. M Annual O&M plans will be prepared and submitted to Bank for review. Maps are not made available to DAs N GoG has made a commitment to give one copy of maps to each town free of charge and additional copies will be sold. Inadequate capacity and availability of local contractors. N Under previous urban projects sufficient local contracting capacity has been built. Government does not contribute to DA Common Fund N GoG's contribution to the Common Fund is a and/or local revenues are not available. constitutionalobligation. DAs will be assisted by the project to prepare and implement RIAPs. Inadequate capacity at DA level to manage sub-projects. M Extensive training program already started to strengthen DAs From Components to Outputs Counterpart funds are not available and timely. S Extensive discussions will be held at Country Director level to address this country-wide issue. Implementing agency does not have sufficient autonomy to M Implementation arrangements have been clearly laid out operate efficiently. at project preparation stage and incorporated in PIM. Inadequate capacity of LGPSU. N The project will fund the cost of eight professional staff to be added to the LGPSU. Inadequate capacity of DAs to absorb and benefit from M A training needs workshop held before appraisal helped training and technical assistance. participating DAs identify a list of potential courses. Overall Risk Rating M
Risk Rating- H (HighRisk), S (SubstantialRisk), M (ModestRisk), N(Negligible or Low Risk)
-22- 3. Possible Controversial Aspects: None
G. Main Credit Conditions 1. Effectiveness Condition The Project Implementation Manual has been adopted by Borrower in form and substance satisfactory to the Association A Project Account is opened by Borrower and initial amount deposited The Project Coordinating Committee has been established with membership, functions and responsibilities satisfactory to the Association Auditors have been appointed by Borrower A financial accounting and management system satisfactory to the Association has been established.
2. Other [classify according to covenant types used in the Legal Agreements.] Monitoring: Quarterly report submitted by LGPSU within 45 days of end of each quarter Technical audit of annual works program submitted no later than three months after the end of the Borrower's fiscal year.
Financial: Financial audit of project accounts submitted no later than six months after the end of the Borrower's fiscal year. Regular provision of DA and GoG counterpart funding to LGPSU Sufficient budgetary allocation for routine maintenance programs by DAs.
H. Readinessfor Implementation L.a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. [XI 1. b) Not applicable.
] 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. I 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. I 4. The following items are lacking and are discussed under loan conditions (Section G):
1. Compliance with Bank Policies [X] 1. This project complies with all applicable Bank policies. ] 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies.
Jagdish K. Bahar Letitia A. Obeng Peter C. Harrold Team Leader Sector Manager/Director Country Manager/Director
-23- Annex 1: Project Design Summary
GHANA: URBAN5
KeyPerformhance Hierarchyof Objectives Indicators Molnitoring& Evluation CriticalAssumptions Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goalto BankMission) I. Poverty alleviation Increased access to basic MLGRD monitoring of DA Poverty alleviation remains GoG infrastructure services of the provision of services priority urban poor
2. Promoting higher private Increased pnvate sector MoF monitoringof private sector Government remains committed investment and participation participation investment and participation. to private sector participation
3. Support GoG's decentralization Local Govemment Service Act Parliament passes Local policy. operational. Government Services Act.
Program Purpose: End-of-ProgramIndicators: Programreports: (fromPurpose to Goal) Sustainable delivery of adequate urban 1. Operational LGSA. PMRJsupervision infrastructure and services, particularly 2. Full authority to DAs for in under-served secondary towns recruitment & personnel management. 3. Competent technical & financial staff in key positions at central & local levels. 4. District Dev. Plans & annual budgets prepared w/ adequate community participation. 5. Mgmt tools in place in all participating DAs 6. Timely planning & programming of investment & maintenance works
7. Timely budget management & well-targeted urban budget allocation & disbursements. 8. Improved transparency & accountability of DA funds through public info campaigns & reporting. 9. Local revenues improve by 2.5% in real terms from 2003. 10. O&M funds established at DA level & increased expenditures for O&M.
11. Basic infrastructure improvements (related to approved sub-projects). 12. Adequate maintenance of facilities. 13. 90% of contracts at DA level contracted out.
-24- KeyPerformance Hierarchyof Objectives Indicators Monitoring& Evaluation CriticalAssumptions Project Development Objective: Outcome / Impact Project reports: (from Objective to Purpose) Indicators: PHASE 1: 1. Competent technical and PMR/supervision Government maintains pro-active 1. Strengthen financial, technical and financial staff in key posts decentralization policy management capacities of DAs. (District Engineer, Planner, Financial officer) in at least 60% Professionals will be attracted to 2. Improve basic infrastructure. of DAs. secondary towns 2. RIAPs & associated changes in system of billing & collection Trained staff will remain with in each DA successfully DAs implemented. 3. Tax billing increases to total C&AG staff will remain potential of tax base in 60% of committed to implementation of DAs. improved financial systems for 4. Tax collection rate is over the DAs 50% in all DAs. 5. District Development Plans in each DA prepared with adequate community participation. 6. Basic infrastructure improved according to approved sub- projects. 7. O&M funds established for approved sub-projects. Output from each component: Output Indicators: Project reports: (from Outputs to Objective) Policy issues 1. LGSA enacted. 1. Act passed by FY 2003 PMR/supervision Government passes LGSA. 2. Progress made on review of fiscal 2. Phased implementationplan Studies completed and accepted decentralization prepared to implement key by Government recommendations of fiscal decentralization study Trainin ILGS facilities remain 1. DA staff trained 1. Key staff (at least 6 in each PMR/supervision operational DA) trained in planning, contract mgmt, & financial mgmt; other DAs hire adequate number of staff trained on as needed basis. staff 2. Plans updated with adequate 2. District DevelopmentPlans updated community participation in 23 District Development Plans and Trained staff remain in DAs DAs. Annual Budgets DAs open to using more 3. Planning and programming of 3. Realistic annual budgets consultative process investments& O&M improved prepared; reporting of budgets to the public. DAs open to being more transparent & accountable
-25- Key Performance Hierarchyof Objectives Indicators MnitMoring& Evaluation j CriticalAssumptions
Outputfrom each component: OutputIndicators: Projectreports: (fromOutputs to Objective) Technical Assistance 1I RIAPs implemented 1. Major tax bases updated in all PMR/supervision/District DAs Development Plans/Annual 2. Tax base updated 2. Financial status of DAs Budgets analyzed & RIAPs prepared & implemented in phased manner. 3. Improved financial management 3. Improved financial mgmt & systems established accounting systems established in 3 pilot DAs. 4. Adequate mechanism established 4. Annual maintenance program for O&M of infrastructure & services w/ cost estimates prepared & O&M funds used for O&M funding mechanism for routine purposes maintenance established. 5. Maps completed 5. Hard copy maps prepared for 25 towns; digital map prepared PMRlsupervision/Maps/ Survey for participating towns in one Department reports/ consultants' Maps are made available to DAs region. reports 6. Regional Survey Dept staff trained 6. Survey Dept staff in 8 regions trained.
Infrastructure Sub-projects 1. Sub-projects prepared and 1. At least one sub-project per PMR/Supervision/Annual Adequate capacity and implemented town approved & implemented Budgets availability of local contractors 2. O&M funds established 2. O&M funds established for approved sub-projects with Government continues to deposit of at least 3% of sub- contribute to DACF and/or local project costs (50% each DAs and revenues are available IDA).
Adequate capacity at DA level to manage sub-projects. ProjectComponents I Sub- Inputs: (budgetfor each Projectreports: (fromComponents to components: component) Outputs) Costs (US$ millions): I. Training USS 1.19 PMR/supervision Timely availability of govt counterpart funds. 2. Strengthening financial mgmt US$ 0.97 Implementing agency has 3. Mapping sufficient autonomy to operate US$ 3.6 efficiently. 4. Infrastructure and municipal services sub-projects US$ 14.52 Capacity of LGPSU
5. Implementation support Capacity of DAs to absorb and USS 2.02 benefit from training & TA
TOTAL PHASE I US$ 22.3 million
-26- Annex 2: Project Description
GHANA: URBAN 5
1. The Program has three phases. Each phase will comprise two types of activities: (i) strengthening DA management; and (ii) urban infrastructure rehabilitation and construction. The objective of the first activity is to improve the level and quality of local public services provided by the DAs through: (i) studies; (ii) training and capacity building for DAs; and (iii) strengthening of line ministries' capacities to support DAs. The objective of the second activity is to improve access to basic services and infrastructure for urban residents of DAs, particularly those in low-income areas, and to improve the urban environment. Investments in infrastructure will be carried out through establishing a fund for infrastructure sub-projects that all participating DAs can access by fulfilling certain conditions and submitting Sub-project Proposal Forms which have been agreed upon with the Bank. The fund will be relatively small during Phase I as the focus in Phase I is on training and capacity building, but will be increased substantially during the second and third phases (second phase to include the 11 DAs under LGDP and third phase will include all urban Assemblies).
By Component:
ProjectComponent I - US$1.13million (base cost)
COMPONENT 1: TRAINING FOR DAs
2. A needs-based system has been designed to systematically and efficiently support capacity building for participating DAs through training of DA staff in technical, financial, and management skills. Training will be provided in planning and management including: (a) infrastructure management (procurement and management of consultants and contractors); (b) maintenance management (development of maintenance programs); (c) management of privatized contract maintenance; (d) updating and monitoring development plans; (e) overall financial management; (f) revenue mobilization and management; and (g) property tax expansion and improvement. A particular emphasis of the courses will be to train DA staff in involving the communities in the planning and development process, especially with regard to formulating development plans and prioritizing needs. No set amount of funds will be "reserved" for a particular DA. DAs will be provided training as requested. Funds for training will be provided according to training activities actually delivered from within the US$1.13 million allocated for Phase 1.
Introductory Training Courses
3. In order to implement the first set of infrastructure sub-projects, DAs will require some key skills. The project will therefore require each DA to attend short skills training courses which will be provided prior to project effectiveness (funds to support this activity will be accessed from the ongoing Local Govemment Development Project). These will include (a) budgeting and accounting (Loan Accounting Change Initiative); (b) selection of consultants; (c) goods and works procurement; (d) development planning; and (e) training leadership. A Training Needs Workshop was held in August 1999 to determine the leaming outcomes for each of these courses.
Training Program
4. Training to be delivered by the project will be needs-driven, and early training will focus primarily on supporting the identification, design, and implementation of sub-projects. LGPSU will request ILGS to develop at least five courses, identified as the highest priority, during the Training Needs Workshop. These will include the following two courses that are critical for sub-project implementation:
-27- (i) civil works contract management (knowledge of requirements and duties of the engineer, the Project Manager, and authorized representative as set out in contract document five days for each DA engineer and technical support staff); and (ii) maintenance planning and programming (development and supervision of DA maintenance program and annual plans development and supervising typical bid document for maintenance "term or annual" contract: 10 days for each DA engineer and technical support staff). A list of other potential courses that may be delivered during the rest of Phase I was identified primarily from inputs from the Training Needs Workshop and are available in the Project Implementation Manual. These include training for financial, technical and planning staff, and for District Chief Executives. Curriculum and training materials for the rest of the courses will be developed/adapted as DAs request them.
5. ILGS will generally deliver training through two modes. For professional staff in senior financial, technical, and management roles, training will be offered primarily through short courses provided at ILGS, followed by on-the job coaching to help each participant utilize acquired skills in his/her daily work. For non-professional staff, such as O&M technicians, training will be provided by ILGS primarily within the participants' workplace. The budget for this component will allow for the delivery of approximately 50 training courses at ILGS (for an average of 3 days for each course) over 3 years, about 20 days of training at the DA level for each DA per year, plus about 10 days of on-the-job coaching per DA per year.
Implementation Arrangements
6. Training will be needs-based in that each DA is expected to determine its own training needs and demand that training from LGPSU. There will be two Training Administrators within LGPSU (one in Accra, one in the field office) who will provide overall management of the training system. Each DA will assign the responsibility of coordinating training to an existing DA staff, who will collaborate with a Training Administrator within LGPSU in requesting training courses and identifying specific skills to be strengthened or acquired (learning outcomes). Once needs and outcomes have been identified, LGPSU will contract ILGS to prepare and deliver the training by hiring "best practitioners" (experts in their field of specialization, normally from outside ILGS) under short term contracts. LGPSU will be in charge of carrying out impact assessments of the training provided.
7. Specific roles and responsibilities of each agency are the following. LGPSU: Each Training Administrator in LGPSU will, for their respective towns: (a) provide overall management of the training system, including providing continuing assistance to DAs in identifying training needs; (b) process training requests; (c) prepare budgets and contracts and make payments within guidelines agreed by the World Bank; and (d) carry out training impact assessments. DAs: DAs will identify their own training needs. Once needs have been identified, each DA delegate (or training coordinator) will be requested, through his/her Chief Executive, to consult with appropriate persons within the DA in order to identify specific learning outcomes appropriate to each course. This data will then be discussed and agreed upon at a Training Needs Workshops a,tended by representatives from the DA interested in the course and staff of LGPSU, ILGS and MLGRD. ILGS: ILGS will be responsible for (a) identifying "best practitioners" (experts in their field of specialization, normally from outside ILGS) to deliver training courses under short-term contract; (b) identifying learning outcomes in collaboration with the instructor and requesting DA; (c) developing modular curricula (one module for one day) and training guides to meet learning outcomes (it is envisaged that most curricula and training guides will be adaptations of existing materials which have been developed through previous related projects or initiatives); (d) ensuring that necessary logistical arrangements (either within the Institute or on site) are made; (e) monitoring the delivery of training; and (f) providing quality control. Steps a-c will need to be undertaken only once for each course, as the course will then become part of ILGS's standard course list (though updating may be necessary from time to time). In recognition of the important role to be played by ILGS, specific learning resources for ILGS will be provided by the project within an agreed budget.
-28- 8. Each training activity will require a no-objection from the World Bank. No-objections for the five pre-effectiveness workshops will be sought in two packages. Budgets for each training activity (developed by the LGPSU Training Administrators) will follow the following parameters: (a) fees to instructors (or to any task-specific consultant engaged by ILGS with approval of LGPSU), expected to be between US$100-120 per day; (b) approved resources and consumables; (c) actual approved expenses of instructor; (d) actual approved costs of pre-training meeting with requesting DA; and (e) approved costs of ILGS monitoring of training in the workplace. Where instructors or consultants are hired to adapt training materials (curricula and training guides), payment is expected to be about US$50 per eight-hour day and the number of days for adaptation of each product is not expected to exceed 15 days. A model contract between LGPSU and ILGS for the delivery of training as well as payment schedules have been developed and are included in the Project Implementation Manual. In order to contribute to the development of ILGS as a long-term provider of high quality training, the Institute will receive an administrative fee of 15 percent of the total approved actual cost of each training activity that it delivers, which will cover overhead expenses, such as equipment, facilities and operational support.
Performance Monitoring and Triggers for Subsequent Phases
9. It is expected that at least 70 percent of the targeted days for training and coaching will have been delivered--this indicator will serve as one of the triggers for moving the project to Phase II. Other performance indicators related to training include an improved quality of sub-project proposals (with adequate provisions for operations and maintenance), and satisfactory management and implementation of approved sub-projects according to the implementation plan. The impact of training on institutional development and financial management will be monitored under those respective components. Training will continue in Phase II on a demand-driven basis, and it is expected that 80 percent of DAs will have trained professionals in key posts and will have adopted participatory means of planning and prioritizing investment decisions by the end of Phase II (a trigger for moving to Phase III).
ProjectComponent 2 - US$0.92million (base cost)
COMPONENT 2: STRENGTHENING FINANCIAL MANAGEMENT
10. Technical assistance will be provided in specific areas to enhance the planning, management and resource mobilization capacities of DAs in the long run. These include: (i) strengthening financial management capacities of DAs through Revenue Improvement Action Plans and putting in place efficient financial management systems; and (ii) property revaluation following the completion of the mapping exercise. These activities will be handled centrally by LGPSU who will manage the relevant studies and consultants, and will cover each of the 25 towns.
System development and implementation (US$0.57 million)
11. The DAs' current system of accounting and financial reporting has many weaknesses, including poor basic accounting skills; cumbersome manual systems which result in a lack of timely production of financial reports to both the DAs and the center; limited and subjective chart of accounts which does not identify costs and revenues by activity; and lack of forward financial planning. Comparisons of actual financial performance against budgets indicate that the actual budgets are unrealistic in many cases. In the first phase of the APL, an assessment will be carried out of all 23 DAs of their capacity to accept and support a computerized budgeting and accounting system that will enable DAs to effectively control, plan and report on all financial aspects of their activities. Not all DAs will be able to install these systems during the first phase of the project due to lack of electricity, secure facilities or other problems. For these DAs, support will be provided for improving their manual accounting systems through the two financial specialists who will be hired in LGPSU. Following the assessment, eight DAs, one from each
-29- region, will be chosen as pilots for the implementation of the computerized system. This will entail consultancy support for the installation of a simple computerized budgeting and accounting system in eight DAs, including the development of: (a) an activity-based chart of accounts; (b) computerized budgeting and accounting module (with provision for monthly, quarterly and annual reports, accounts and balance sheets); (c) a single and multi-year budgeting module for recurrent and development expenditure; and (d) a revenue management module. The approach will build on current initiatives developed under previous urban projects and will be in two parts. Part I will deal with system design, procedures, manuals and related training programs (approx. 8 months). Part II will involve pilot testing in eight DAs, related modifications, and preparation of replication plans and budgets for the remaining DAs (approx. 12 months). The systems will be developed using a standard accounting software package that is supported in Ghana.
12. The project will also support the rationalization of the fiscal relationship between central and local governments. The Canadian International Development Agency (CIDA) is financing a fiscal decentralization study which is reviewing the adequacy of central government transfers to DAs in light of the Govemment's decentralization act, and examining institutional issues, such as the management and reporting structure of fiscal transfers. Based of the results of this study, the project will finance the implementation of relevant recommendations of the study and/or undertake additional work that may be necessary.
Preparation of Revenue Improvement Action Plans (US$0.25 million)
13. Maximizing direct DA revenues is considered essential to the successful participation of the selected DAs in the project. Financial perfornance of DAs has generally been poor over the last 4 years, and major revenue sources, such as property rates have fluctuated significantly from year to year. Specific project interventions will focus on property rates with technical assistance for both mapping and preparation of new valuation rolls, with improved systems for revenue management. In addition, consultant support will be provided to assist the DAs in preparing and implementing Revenue Improvement Action Plans (RIAPs) through the project. Each of the 23 DAs will be required to appoint a RIAP preparation team to work with the consultants. The framework for preparation of RIAPs, prepared under the on-going Local Government Development Project (LGDP), is available with MLGRD and will be used as a guide.
Property Revaluation (US$0.1 million)
14. As part of a comprehensive package of measures designed to improve revenue mobilization and financial management, this sub-component will provide a comprehensive register ofrateable properties in each of the 25 project towns to enhance revenue from this source. The program will provide for the revaluation of all rateable properties in the 25 towns, largely by the private sector, under the supervision and guidance of the Land Valuation Board (LVB). LVB has successfully completed revaluation exercises in some DAs under previous urban projects and has developed some expertise for effective implementation and supervision of revaluation work. Since the LVB will need to develop its capacity to maintain the Valuation Lists produced in the future, this component will undertake to carry out the revaluation exercise as well as strengthen the LVB's capacity in the process. The actual revaluation of properties for rating purposes will be carried out in Phase II of the APL after the mapping component has been completed in Phase I, and hard copy maps have been made available to the DAs. However, during Phase 1, some activities will be initiated to set the stage for valuation of properties as soon as the maps have been completed, including the identification and banding of properties.
15. Activities. It is estimated that a total of 186,000 parcels are to be assessed under the project (subject to confirmation following the initial survey). The revaluation of properties in the 25 towns will be carried out by private valuation firms under the direction and supervision of LVB. The activities will
-30- include (a) street identification and property numbering (in conjunction with DAs), (b) preparation of valuation scales, (c) preparation of plans based on maps (see Mapping section), (d) survey of rateable properties in each DA, (e) valuation of rateable properties in each DA, (f) computer production of Valuation Lists, (g) deposit of new Valuation Lists with DAs, and (h) maintenance of new Valuation Lists Based on past experiences with other urban projects, only "high value" properties will be revalued and the remaining properties "banded" together based on the type of construction, size, and so on, into a number of groups This would mean that a fixed graduated rate of property tax could be applied to each property in a particular "band" while the normal levy of a percentage of the value of the property would be applied to the others It is projected that about 20 percent of the estimated 186,000 properties would need to be revalued This would considerably simplify the billing and collection system for the DAs The design of computer systems to maintain the valuation roll will have to be compatible with the computerized accounting package that will be installed under the financial management component The process of identification and banding of properties will commence in Phase I For this purpose, an estimated amount of US$100,000 has been allocated under this phase
Performance Indicators and Triggers for Subsequent Phases
16 Improvements in financial management and performance of DAs during the first phase will be measured using the following indicators, which will serve as the triggers for moving to Phase II of the project (a) annual tax billing rate of at least 60 percent of participating DAs increases to total potential of tax base, (b) the collection rate for annual local tax bills is over 50 percent, (c) annual routine maintenance budgets for infrastructure of at least 60 percent of DAs are sufficient to cover the needs estimated in annual maintenance programs, and (d) the capacity of DAs to provide counterpart funds for project investment is sufficient to increase from 10 percent to 20 percent of sub-project costs for Phase II Capacity building and technical assistance will continue in Phase II for towns not covered in Phase I, to complete the property revaluation exercise, and to deepen the initiatives started under Phase I To move from Phase II to Phase III, it is expected that the following targets will be achieved (a) annual tax billing rate of at least 80 percent of participating DAs increases to total potential of tax base, (b) the collection rate for annual local tax bills is over 75 percent, (c) own source revenue increases by 2 5 percent per annum in real terms, (d) annual routine maintenance budgets for infrastructure of at least 80 percent of DAs are sufficient to cover the needs estimated in annual maintenance programs, and (e) DAs maintain their capacity to provide 20 percent of sub-project costs as counterpart funding
ProjectComponent 3 - US$3 43 million(base cost)
COMPONENT 3- MAPPING
17 This component is being co-financed by the Nordic Development Fund The objective of the component is to produce new digital and hard copy base maps for all 25 towns and build the capacities in the Survey Department Head Office, 8 regional survey offices and the 23 DAs so as to improve the availability of informnationfor planners, engineers, providers of utility services, land valuers, revenue collectors and title registrars This will be carried out in phases over the 11 year APL program period During the first phase of the APL (this project), hard copy and digital maps will be developed for all 25 towns to be used by the eight professional surveyors located in the capitals of the regions covered by the project (Ashanti, Brong Ahafo, Central, Eastern, Greater Accra, Northern, Volta and Western regions) In addition, computer-based digital mapping equipment will be installed in one pilot region (BrongAhafo) to improve its capability
Activities Under Phase I of the APL
18 The following activities will be undertaken under this component, managed by the Survey Department and supervised by LGPSU (details of specific responsibilities are in PIM)
-31- (a) Premarking and ground control. Prior to commencement of the aerial photography, the Survey Department (SD) will mark the urban areas concerned (approx. 750 sq. km) by painting reference points in order to reduce the survey work to be undertaken after photography. The SD (or subcontracted Licensed Surveyors hired for this task) will establish the required ground control base through: plotting existing control points prior to photography and, as appropriate, by photo-point identification after photography. The pattern of plan and height control points (necessary for aerial triangulation) will be agreed between the SD and the subcontractor. (b) Aerial photography and scanning. Under the general supervision of the LGPSU, consultants will be hired by the SD to plan and fly aerial photography of the towns (1000 sq. km), process films, produce prints and diapositives, scan the photos digitally, and produce index plots and flight reports. (c) Digital mapping. Digital line maps are printed maps similar to conventional line maps, but they can be displayed on computer screens and printed selectively at different scales for urban planning purposes. Under the general control of the SD, the consultant will observe and adjust the aerial triangulation of each town as a single block, using a recognized and proven package for block (or bundle) adjustment. The consultant will notify the SD of any error detected in the ground control results, and the SD will check and confirm the correct coordinates and photo-identifications. The consultant will produce samples and preliminary plots of the digital mapping at a 1/2500 scale (area covered by mapping is approximately 750 sq. km). The SD will carry out quality control and checking of digital maps and data submitted by the consultant. (d) Field completion. The SD (or consultants) shall carry out field completion on the ground to collect names and other information not visible on the aerial photographs.
19. Technical assistance will be provided to the Survey Department through training arrangements made by NDF with a member country of the NDF. Services of a contractor will be obtained through NDF's standard bidding processes to provide 18 person-months of technical assistance in different fields of surveying, mapping and land titling (including photogrammetry, ground control, digital cartography, field completion, printing, lathography and others). Other consultants to be hired for mapping will also be contracted out as NDF-financed contracts, except for pre-marking, ground control and field completion, which will be carried out by the SD itself or subcontracted in coordination with the NDF- financed contractors through national consultants. The SD will also benefit from short term technical and management training and secondments to appropriate organizations. The estimated base costs of this component is US$3.43 million.
20. The SD will be responsible for the distribution of the hard copy maps and digital products, and will be responsible for supporting the mapping needs to all DAs through its eight regional survey offices which will be managed by qualified staff from the SD. In the first phase (APL I), only the regional survey office in Brong Ahafo will be equipped with computer-based digital capabilities as a pilot. In the second phase (APL II), the other nine regional survey offices will also be equipped with computer-based digital capabilities. While the SD will supply the products of this component to MLGRD and the participating DAs free of charge, it is expected to publicize these new products to generate revenue for the department, which should enhance self-sufficiency.
-32- Mapping Activities for the Second and Third Phases of the APL
21. During the second phase of the program (APL II), the capacity of the SD will be improved through equipping it with digital mapping capabilities. A "soft copy" digital production system, which includes an image production instrument and a photo scanner, will be provided and the existing analogue photogrammetric systems at the SD will be modified to become fully analytical. The SD will also be assisted in producing sectional maps for all 25 towns. In addition, based on lessons learned from the Brong Ahafo pilot, the capacities of the other nine regional survey offices will be improved, through the installation of simple computer-based digital systems (computer, digitizer, plotter and printer). The estimated base cost for this phase (APL II) is US$3.0 million.
22. During the last phase (APL III), the mapping activities will move from just mapping to land registration. The Land Commission, the Title Registration, the Town and Country Planning and the SD will work in a coordinated way to develop the process of title registration, again using the two selected towns in Brong Ahafo as a pilot. The sectional maps produced in the second phase will be developed into parcel maps to be used in title registration. During this phase, the regional survey offices will be assisted in updating and maintaining their maps in the computer through undertaking periodic revisions with support from headquarters. The estimated base cost for this phase (APL III) is US$4.4 million.
Performance Indicators
23. Performance indicators for the first phase include (i) hard copy maps prepared for all 25 towns; (ii) digital maps and digital capacity in the regional survey office inBrong Ahafo; and (iii) trained staff at SD and its eight regional survey offices in digital mapping. Indicators for the second phase (APL II) include: (i) functional urban digital mapping facilities at SD and its regional survey offices in 10 regions; (ii) digital maps produced for all 25 towns plus the 12 towns mapped during the LGDP project; and (iii) trained survey staff at SD and all 10 regions. Indicators for the third phase (APL III) include: (i) area registration completed for two towns in Brong Ahafo; (ii) on demand registration capability in all 25 towns; and (iii) update mapping programs in all 25 towns.
ProjectComponent 4 - US$12.90million (base cost)
COMPONENT 4: INFRASTRUCTURE AND MUNICIPAL SERVICES SUB-PROJECTS
Eligible physical investments
24. The project will finance infrastructure investments that will improve basic municipal infrastructure and services necessary to improve health and environmental conditions and the economic efficiency of benefiting communities/locations. Eligible sectors include: (a) water supply; (b) liquid waste management; (c) solid waste management; (d) roads and footpaths; (e) storm drainage; (f) security lighting; (g) markets; (h) lorry parks/transport terminals; (i) community infrastructure upgrading; and (j) slaughterhouses. It is a general requirement that all sub-projects be demand-driven and thus be of highest priority to the communities at large. This would be demonstrated in the project identification and planning process which, where relevant, would involve participation of beneficiary communities. The roads sub-projects under this component would be co-financed by AFD. A sub-project should meet all or most of the following criteria to be eligible for funding: * Support implementation of District/Town Development Plans to facilitate rational and orderly growth of municipal infrastructure networks or systems. • Maximize the efficiency of existing investments in infrastructure and municipal services. • Relieve bottlenecks and/or fill strategic gaps in infrastructure and services. * Serve as large as possible number of town residents. * Target (wherever possible) lower income group beneficiaries.
-33- * Provide maximum employment opportunities (i e, sub-projects which lend themselves to use of labor-intensive construction and mamtenance, within sound economic parameters) * Utilize functional least cost planning, design and construction standards while taking cognizance of the need to minimize future operation and maintenance requirements
Sub-project Cycle
25 Through the capacity building and training components described above, DAs will prepare Town Development Plans, which will include all main physical investment requirements for that town DAs will, with the participation of community groups, CBOs and NGOs, prioritize infrastructure needs of each town from the Town Development Plans They will complete Sub-project Proposals (along a format acceptable to the Bank) which include, inter alia, justification for the sub-project, number of beneficiaries, evidence of community participation in its selection, environmental impact assessment, O&M requirements and arrangements, as well as relevant financial data, such as costs and cash flow forecast, DA contributions, O&M costs, etc DAs can seek procedural guidance from LGPSU as well as hire consultants for the preparation of the proposals The LGPSU will evaluate the proposals according to guidelines agreed with the Bank (an Appraisal Checklist) These will include ensuring consistency with other sector programs, particularly with regard to user fees and charges (depending on the type of sub- project, the appraisal/evaluation team will include relevant sector ministry or agency staff) and evaluating the consequence/impact of the sub-project (for example, if water is provided, ensuring that adequate measures are taken to deal with an increased amount of wastewater in the area) Once a sub-project is evaluated by LGPSU and meets the set criteria, MLGRD will provide the funding and the DA will take charge of sub-project implementation This will include hiring consultants and contractors, and monitoring progress, with technical assistance from LGPSU if needed (the Sub-project Proposal Form and Appraisal Checklist are available in project files and the PIM) The DA will also take responsibility for subsequent O&M requirements
26 Any proposal may be accepted provided it fulfills the eligibility criteria and the DA is able to fill out the Sub-project Proposal form adequately, including (a) demonstrating financial, technical and management capacity to implement the sub-project, (b) meeting the financial obligations of counterpart funding (10 percent of sub-project costs in Phase I, and 20 percent in Phases II and III) and O&M funding, and (c) as long as funds remain (funds will be available on a first-come first-serve basis) To prevent a particular DA from submitting a number of proposals at the same time and thereby blocking funds, a DA would have to demonstrate that construction progress on the first sub-project is 50 percent or more before it would receive formal approval for the second sub-project and is able to access fund for its detailed engineering Sub-projects will be categorized as small (between the Cedi equivalents of US$20,000 and US$100,000, base costs) or large (more than the Cedi equivalent of US$100,000, base cost) Sub-projects costing less than US$20,000 will not be eligible for funding under the project
27 AFD has agreed to finance roads sub-projects at a total cost of US$5 million The procedure will be the same as for selection of IDA-funded sub-projects AFD roads sub-projects will be financed in parallel with IDA with no restrictions on the degree of implementation progress of IDA sub-project for approval of subsequent sub-projects O&M for roads project would be covered under the Road Fund, and therefore no contribution to the O&M fund will be required from the DA However, the DA will be required to finance 10 percent of the sub-project cost as for IDA sub-projects
Financial Obligations of DAs
28 DAs will be required to provide a minimum of 10 percent of total sub-project costs This 10 percent will be paid into the DA Urban V Matching Fund Account as follows (a) the first five (5) percent at the time of the contract award, and (b) the remaining five (5) percent three months thereafter DAs will
-34- also be required to set aside at least 3 percent of the capital investment into an O&M fund one year after sub-project completion and every year thereafter on an annual basis (to be equally shared by IDA).
Special Arrangementsfor the First Set of Sub-projects
29. Because the original design of the project was a traditional infrastructure project designed and implemented centrally, preliminary engineering has already been carried out for priority investment needs of all 25 towns. A fundamental principle of the re-designed project is that infrastructure will be demand driven (by DAs and their constituents) and not be supply driven (by central government). Ultimately, this should apply to the whole sub-project preparation and implementation cycle (i.e., from engagement and funding of consultants for feasibility and engineering, through implementation and operation and maintenance). However, since the preliminary engineering has already been done for a number of sub- projects per town, and in order to kick-start implementation so that DAs will be able to see results on the ground quickly, each DA will, as a first step, select one of these sub-projects worth US$200,000 or less for each project town (for a total of approximately US$5 million). DAs will fill out a Sub-project Proposal Form (with assistance from LGPSU if required) ensuring that all the criteria have been met and submit this to LGPSU for funding. MLGRD hosted a workshop with all participating DAs prior to project appraisal to assist DAs in selecting their first sub-project and filling out the Sub-project Proposal Form. LGPSU will procure and manage the detailed engineering and bid document preparation for this first set of sub-projects in one batch (the cost for detailed engineering will be funded from the on-going LGDP). Once the detailed engineering has been carried out, DAs will take over the procurement and management of contractors and supervision consultants (using Bank guidelines) for the entire implementation cycle. The rationale for having a different approach for the first set of sub-projects is: (i) it will give each DA an opportunity to go through the process of procuring and managing consultants and contractors using Bank guidelines (a learning-by-doing approach) for the actual implementation of a sub- project (rather than preparation) and enable them to see results on the ground quickly--and thereby give them an incentive to take advantage of the training and capacity building being provided in Phase 1; and (ii) it will enable each DA to get a piece of the pie, even if the stronger DAs take a larger share of the funds in future.
30. Although the detailed engineering and bid document preparation will be managed and funded through LGPSU, in keeping with the project objectives, supervision consultants will be procured, and managed by the DAs. To this end, LGPSU will hold a procurement workshop on consultant selection following Bank guidelines. DAs, with the support of LGPSU, will prepare the RFPs for the consultants that they would require for construction supervision of the first set of sub-project contracts. DAs will then invite consultant proposals, evaluate and select consultants to manage the contracts.
Preparation of Second Set of Sub-projects
31. In addition to supervising the first set of sub-projects, DAs will also have to plan and prepare detailed engineering and bid documents for subsequent sub-projects. Although the second sub-projects will be prepared in Phase I, it is expected that their actual implementation will take place in Phase II, due to the limited available time in Phase I. As mentioned above, formal approval of the second sub-project depends on 50 percent implementation progress of the first sub-project. However, in order to ensure continuity between Phase I and Phase II, DAs will be expected to prepare and issue RFPs, receive and evaluate proposals and be ready for award of consultant contract prior to achieving 50 percent implementation progress on their first sub-projects. This will ensure that once the second sub-project has been formally approved, the contract for detailed engineering can commence immediately, since all the preparatory work will have already been done.
-35- Funding arrangements
32 In addition to the US$5 million that will be made available on an equitable basis to all 25 towns, an additional allocation of US$2 02 million will also be available to DAs for supervision of the first set of projects and preparation of the second sub-projects Approximately US$5 million will be available from AFD for roads sub-projects and an additional US$1 million for design and supervision About US$35 million will be allocated by IDA for sub-project investments in Phase II of the APL, and approximately US$50 million in Phase III with the possibility of additional investment from AFD as well The need for any caps on the size of sub-projects for Phases II and III will be reviewed at a later stage It will be the responsibility of DAs to carry out all the preparatory work for sub-projects including engineering designs (other than for the first batch of sub-projects) However, the estimated cost of detailed sub-project preparation may also be included for consideration for funding along with the capital cost of the investment
Operations and Maintenance
33 To ensure that project investments are sustained, DAs will be required to establish a funding mechanism and operational procedures and practices at the district level for operation and maintenance of the infrastructure, service vehicles and equipment to be provided through the project DAs will be required to submit a maintenance program and set up a Maintenance Fund as part of each sub-project proposal The maintenance program will set out, inter alia, the following (a) how the DA proposes to maintain and operate the facilities provided, (b) the estimated annual O&M costs, and (c) the expected date that operation and/or maintenance activities for the sub-project are to commence Approval of a sub- project will be contingent on submission of an acceptable maintenance program (or detailed proposals of how and when it is to be prepared) and DA agreement to set up the Maintenance Fund (I e, to open an account and to contribute agreed contributions to the account at the appropriate times) It is expected that maintenance of infrastructure will be carried out by the private sector under contract to the DA For civil works, the adoption of term (annual) unit rate contracts for maintenance of various facilities will be introduced For vehicles and equipment procured for waste collection and disposal, DAs will, when feasible, lease the vehicles and equipment to private contractors who will provide the services The contracts will include the necessary safeguards regarding service levels, cost recovery, and equipment and maintenance standards
34 Actual annual sums required for maintenance, which will determine the level of funding to be deposited by the DA into the Fund, will be determined in the detailed maintenance program However the minimum annual sum for sub-project maintenance, which may include building up a sum for replacement of vehicles and equipment provided under the project, will not be less than 3 percent of the capital cost of the sub-project per annum IDA will share the cost equally to the Fund each year once the DA has deposited its own contribution As maintenance of a sub-project would not normally be required until I year after completion of the sub-project (other than simple routine maintenance such as street sweeping and drain cleaning), DAs (and IDA) will start making their contributions commencing one year after the completion of the sub-project The fund will be expected to continue beyond the life of the project, and DAs are expected to maintain their contributions to the fund to ensure sustainability
-36--, Performance monitoring and triggers
35. Approval of subsequent sub-project proposals in Phase II will depend on the performance of the DA in managing consultants and contractors in the implementation of the sub-project according to the implementation plan, and on whether adequate O&M funds have been provided by the DA for completed sub-projects. These will be monitored through quarterly Project Monitoring Reports, annual audits and supervision on the ground by LGPSU as well as Bank missions. By developing the DAs' capacity in contract management, it is expected that DAs will improve the efficiency of service delivery and infrastructure management by increasingly contracting out to the private sector. As a trigger for moving from Phase I to Phase II of the project, 70 percent of civil works and design contracts in participating DAs are expected to be contracted out (the expected amount will increase to 90 percent of civil works and design contracts as a condition of moving to Phase III).
ProjectComponent 5 - US$2.02million (base cost)
PROJECT IMPLEMENTATIONSUPPORT
36. The key focus of the proposed project management and implementation arrangements is to enable DAs to effectively perform their responsibilities with regard to the development of local infrastructure. The overall responsibility for the implementation of the project will be with MLGRD. The Local Government Project Support Unit (LGPSU) in MLGRD will provide project management and implementation support to the DAs. LGPSU will operate with a core team of 8 specialists, 4 in Accra and 4 in the field office, including 2 engineers, 2 finance specialists, 2 training administrators, and 2 planners who will provide technical, institutional development and capacity building support to DAs. The project will finance these 8 specialists for a three year period, as well as operational support to LGPSU for vehicles, equipment, and other operating costs. The position of Project Director (PD) is currently being funded under the on-going Local Government Development Project. A provision has also been made for the hiring of a limited number of short-term consultants for specialized support not available within the core staff of LGPSU and for other aspects of the program, such as the implementation of the Local Government Services Act, when passed, and implementation of the recommendations of the fiscal decentralization study. The project will strengthen the capacity of MLGRD to monitor the financial performance of DAs by facilitating the processing of monthly financial returns and improving coordination between MLGRD and the Controller and Accountant General in this regard. Any consultancies that may be required for this purpose will also be financed from the provision for short term consultants.
37. In addition, the project will provide a limited amount of operational support to each of the 23 DAs to facilitate the implementation of their sub-projects. This will be in the form of one vehicle, one motorcycle, and US$3,600 for operating costs for each DA for the duration of the project. This token support is being provided to give DAs as an incentive to commit their funds for project related activities. It is expected that once DAs prepare and implement their first sub-project, they will recognize the need and value in providing the requisite funds for operational support that would enable them to access funds for additional sub-projects as well as to access the training and capacity building support being provided by the project on a demand-driven basis.
38. Currently, all but three LGPSU professional staff are on contract supported by various Bank- financed projects. In order to ensure that capacity building is sustainable and that in the future MLGRD will continue to be able to provide support to DAs, the project will require the Ministry to attach at least 3 professional counterpart staff to LGPSU. This will serve as a trigger for moving to Phase II of the APL. The trigger to move to the Phase III will be that MLGRD attaches at least one additional professional counterpart staff to LGPSU.
-37- Annex 3: Estimated Project Costs
GHANA: URBAN 5
Local Foreign Total Project Cpst By Coomponent US $rmrllion US $million US$million 1 Training 1 13 0 00 1 13 2 Strengthening Financial Management 0 73 0 19 0 92 3 Mapping 0 60 2 83 3 43 4 Infrastructure& Municipal Services Sub-Projects 9 00 3 90 12 90 5 Implementation Support 1 05 0 87 1 92
Total BaselineCost 12 51 7 79 20 30 Physical Contingencies 0 69 0 29 0 98 PnceContingencies 0 67 0 35 1 02 TotalProject Costs 13 87 8 43 22 30 Total FinancingRequired 13 87 8 43 22 30
Local Foreign Total Project CostBy ate o PS $yi9llon US$mdhon US$mllion Subprojects 11 13 3 39 14 52 Goods 0 00 0 89 0 89 ConsultantServices and Technical Assistance 0 76 0 21 0 97 Training 119 0 00 119 Mapping 0 62 2 98 3 60 OperatingCosts 1 13 0 00 1 13
Total ProjectCosts 14 83 7 47 22 30 Total FinancingRequired 14 83 7 47 22 30
-38- Ghana - Urban V Project Detailed Cost Table (in US$)
Components Cost/unit No. of Subtotal Total Base Physical Price Total Cost Local/ Disb. Procure- Flnmnc- units Cost Cont Cont 5% foreign Category ment Ing 10% financing method agency
A Training Courses 806,280 40,314 846,594 local Training Other IDA (i) Courses at LGS& course material preparation 232,200 11,610 243,810 local Training Other IDA (ii) Coursesin the DAs 353,280 17,664 370,944 local Training Other IDA (iii) Follow-on coaching in the Das 220,800 11,040 231,840 local Training Other IDA B. Production of Training Materials 28,000 28,000 1400 29,400 local Training Other IDA C. Meals and Accommodationfor partiapants 117,450 117,450 5,873 123,323 local Training Other IDA D. Equipment for ILGS to SupportTraining 7,000 7,000 350 7,350 local Training Other IDA E. Management/OverheadFee to ILGS 170,000 170,000 8,500 178,500 local Training Other IDA
A. System development and Implementation in 8 DAs 570,500 28,525 S99,025 (i) Consuiting Services Team leader 4,000 24 96,000 4,800 100,800 local CS & TA Other IDA Financial Specialist 4,000 18 72,000 3,600 75,600 local CS & TA Other IDA Computer Software specialist 3,500 12 42,000 2,100 44,100 local CS & TA Other IDA Training Specialist 3,500 39 136,500 6,825 143,325 local CS & TA Other IDA (ii) Equipment and Materials Computers (desktop), printers, UPS 2,500 8 20,000 1,000 21,000 foreign CS &TA Other IDA Computers (laptops) 4,000 2 8,000 400 8,400 foreign CS & TA Other IDA Licensed Software 2,000 1 2,000 100 2,100 foreign CS &TA Other IDA Manuals etc. 2,400 10 24,000 1,200 25,200 foreign CS & TA Other IDA Vehide 25,000 2 50,000 2,500 52,500 foreign CS & TA Other IDA (iii) Office and Support costs 5,000 24 120,000 6,000 126,000 local CS & TA Other IDA B. Preparation of RIAPs 250,000 12,500 262,500 (i) Consulting Services (5 @4000) 20,000 8 160,000 8,000 168,000 local CS & TA Other IDA (ii) Equipment, Vehicles and Supplies 90.000 1 90,000 4,500 94,500 foreign CS & TA Other IDA C. Property Revaluation 100,000 5,000 105,000 PreparatoryWork 100,000 1 100,000 5,000 105,000 local CS&TA Other IDA
(i) Aerial Mapping and Scanning 1 200,000 200,000 10,000 210,000 foreign Mapping NBF NDF 200,000 (ii) Ground Mapping and Verification 496,000 24,800 520,800 a. Pre-marking 1 84,000 4,200 88,200 local Mapping NBF NDF 84,000 b. Ground Control 1 250,000 12,500 262,500 local Mapping NBF NDF 250,000 c. Field Completion 1 112,000 5.600 117,600 local Mapping NBF NDF 112,000 d. Editing 1 50,000 2,500 52,500 local Mapping NBF NDF 50,000 (iii) Digital Mapping 1 2,180,000 2,180,000 109,000 2,289,000 foreign Mapping NBF NDF 2,180,000 (iv) Capacity Bldg for Survey Dept. 405,000 20,250 425,250 a. Training 1 100,000 5,000 105,000 local Mapping NBF NDF 100,000 b. Technical Assistance (twinning) 1 225,000 11,250 236,250 foreign Mapping NBF NDF 225,000 C. Equipment 1 80,000 4,000 84,000 foreign Mapping NBF NDF 80,000 (v) Vehicles 2 50,000 50,000 2,500 52,500 foreign Mapping NBF NDF 25,000 (vi) Supplies 1 100,000 100,000 5,000 105,000 foreign Mapping NBF NDF 100,000
A. 1st set of Suc-projects (i) IDA-financed sub-projects 4,835,000 1 4,835,000 483,500 241,750 5,560,250 lo/fo 70130 Subproq. NCB IDA/DA (ii) AFD-financed roads sub-projects 4,635,000 1 4,835,000 483,500 241,750 5,560,250 b/fo 70130 Subproj. NBF AFD/DA B. Spn & prep of IDAsub-projects (1st & 2nd set) 2,020,105 1 2,020,105 101,005 2,121,110 local Subproj. Other IDA/DA C. Design & supervisionof AFD roads sub-projects 1,057,000 1 1,057,000 52,850 1,109,850 lo/fo 70/30 Subproj. NBF AFDIDA D. O&M 150,000 1 150,000 15,000 7,500 172,500 lo/fo 70/30 Subproj. NCB IDAiDA
A. Technical Assistance 818,000 40,800 856,800 (i) Staffing of LGPSU (8@ $2500/month) 20,000 36 720,000 36,000 756,000 local Op. Costs Other IDAVGO G (ii) Additional staff of LGPSU Yr 3 (2 Q 52500/month) 5,000 12 60,000 3,000 63,000 local Op. Costs Other IDAVGO G (iii) Other short term staff 2,000 18 36,000 1,800 37,800 local Op. Costs Other IDAVGO G B. Equipment and Vehicles 232,000 11,600 243,600 Computers, Printers 4,000 8 32,000 1,600 33,600 foreign Goods ICB IDA Vehicles 25,000 8 200,000 10,000 210,000 foreign Goods ICB IDA C. Operating Costs 174,000 1 174,000 174,000 8,700 182,700 local Op. Costs Other IDAIGO G D. Support to DAs 703,800 35,190 738,990 (i) Vehicles 25,000 23 575,000 28,750 603,750 foreign Goods lCB IDA (ii) Motorcycles 2,000 23 46,000 2,300 48,300 foreign Goods ICB IDA (iii) Operating Costs ($100/month) 3,600 23 82,800 4,140 86,940 local Op. Costs Other IDA
-39- Annex 4: Cost Effectiveness Analysis Summary
GHANA: URBAN 5
Basic Conceptual Framework: Cost benefit analysis (CBA), and cost effectiveness analysis (CEA) are two methods of determining the project's economic efficiency. CBA is commonly used to calculate the net present value (NPV) of a project, which is an indicator of its economic desirability; it essentially involves estimating the stream of economic benefits of a project from which the project's stream of costs (during the life time of the project) are subtracted. And to the difference a discounted rate is applied. Where benefits cannot be estimated, the CEA procedures may be used as an alternative. Cost effectiveness or cost minimization approach would be more appropriate and will be used when undertaking an economic evaluation of institutional development and capacity building components. On the other hand, cost benefit analysis will be used for physical infrastructure investment sub-projects.
Project's Objective: The proposed Adaptable Program Loan seeks to improve basic infrastructure and services in 25 urban towns, reaching the urban population that has received least attention in the past by government or donors, and focusing on areas which would benefit a large percentage of the low income urban population. The purpose of this APL is to support the Government of Ghana's decentralization policy by providing the framework for institutional development and capacity building for local governments to ensure adequate urban service delivery and improve basic infrastructure.
Summary of benefits and costs:
Project's Expected Impact:
The program has three phases. The first phase (APLI) will cover 3 years, and the two subsequent phases (APL2 and APL3) will each cover 4 years. The first phase will strengthen the capacity of local governments (District Assemblies--DAs) to prepare subproject proposals, mobilize resources, improve service delivery and improve DAs management. The expected impact will be measured in terms of the minimum number of staff in each DA capable of carrying out planning, financial analysis and contract management. Adequate management is expected to include: (i) community participation in development plans; (ii) adequate provision of O&M for each sub-project proposed and an O&M fund established; and (iii) implemented changes in the billing and collection systems.
Project's Design Alternatives: The possibility of financing all 25 centers in one project was rejected on the basis of lessons learned from past projects, which revealed the complexities of supervising projects in so many towns simultaneously, and the need to concentrate a critical mass of resources in each tow in order to achieve some measurable impact. Cutting the scope of the project down to 12 towns only was also discussed. The Government was reluctant to select only 12, but agreed on the condition that preliminary engineering studies would be carried out for all 25. IDA, it was proposed, would finance investments in 12, and the Government would seek donor financing for the remaining 13. The above option was also rejected when the possibility of taking a program approach through the new Adaptable Program Lending instrument became a viable alternative. The APL allows phasing of the capacity building elements so that investments in subsequent phases can be based upon improved performance and demand, thus providing incentives for effective capacity building.
Linkages of Project's Components: In order to achieve the project's objectives, two areas have been identified as fundamental components of the project. The first component comprises capacity building and training for planning, local revenue mobilization (the property tax), and involving communities in the planning and development process. Specific Revenue Improvements Action Plans will be put in place, and will be linked to property revaluation following the completion of mapping of the core
-40- developed areas. Training and capacity building will support better planning on investments on physical infrastructure. The second component comprises investments in priority infrastructure. DAs, with the participation of community groups, will prioritize infrastructure needs of each town from Town Development Plans. They will be linked through the preparation of sub-projects proposals which include, inter alia, justification for the sub-project, number of beneficiaries, evidence of community participation in its selection, environmental impact assessments, as well as relevant financial data, such as costs, cash flow forecast, DA contributions, and O&M costs. The Local Government Project Support Unit will evaluate the proposals according to guidelines agreed with the Bank.
NPV Vs Cost-Effectiveness:
Even if a benefit estimate can be based on institutional strengthening programs, experience suggests that calculation of a single NPV is not necessarily helpful. The benefits associated with effective management of urban service provision typically far outweigh the cost of institutional capacity building. However, it is clear that there are different ways of generating the benefits associated with building local institutional capacity. If an institutional capacity building project costing US$20 million can have a similar effect as an institutional project costing two or three times that amount, then there is no economic rationale for investing on the basis of the most costly alternative. The major consideration in institutional valuations, therefore, is the project cost. This holds true, provided that the different alternatives have similar expected benefits (i.e., that they have the same chance of success and that, if successful, they will lead to similar improvements in local management of service provision). An appropriate methodology, and the approach taken here, is therefore to provide an institutional structure that would be capable of achieving the potential future benefits but at a minimum cost. This is why the emphasis will be on setting up a well- trained core team of staff in each district assembly.
Winners and Losers:
In principle, national taxpayers (current and future) will have to bear most of the cost of the project through national taxes. However, one of the project's targets is to strengthen local government finances, so that they may be able to contribute to project financing with initially 10 percent and subsequently 20 percent of sub-projects cost. As only a part of the taxes (national and local) will be shifted to the consumer, the public as a whole would be sharing in the cost of the project. Equally, the nation in general and the residents (local taxpayers) in the 25 towns in particular would be the beneficiaries of the project as a whole. Therefore, the cost is being distributed among those who benefit directly and indirectly from the project and the cost, in principle, is distributed in relation to their fiscal capacities. In this sense the fiscal burden is directly related to national and local fiscal capacities. Hence, the burden of the cost seems to be distributed in an equitable manner.
Beneficiaries and Cost Recovery: Whenever the direct beneficiaries of the sub-projects are identifiable on an individual basis (i.e., the corresponding households), cost recovery policies must in principle be adopted in order to be eligible for financing. This would be the case primarily of those sub-projects that are revenue generating, such as water provision, and solid waste collection and disposal. Cost recovery is expected to make more rational use of these services and contribute to make their provision more cost- efficient.
Project's Financial Sustainability: The financial sustainability of the project is particularly relevant for the component comprised by investments in physical infrastructure. Among those investments, the most critical, regarding their sustainability, are those that are not revenue generating, such as access roads and footpaths, storm drainage, public lighting (security), and other community infrastructure. As a response to this need, the project's design includes as a requirement to be eligible to the project's benefits, the creation of Operation and Maintenance Funds. Also, part of the target is to ensure that O&M Funds
-41- would contract out most of the services needed (See section F of this document on Sustainability and Risks for more details)
Project's Risks: The project's success, however will depend, among other factors, on (i) the ability of DAs to retain their staff after training and technical assistance is provided, (ii) the involvement of the communities on the ownership of the sub-projects, and (ii) the effectiveness of local governments to mobilize local revenues and establish the O&M funds to insure the sustainability of services provided (See Section F of this document on Sustainability and Risks for more details)
Main Assumptions It is being assumed that current needs of urban physical infrastructure will be transformed into effective demand for eligible sub-projects Also, it is assumed that the training and institutional strengthening of the first phase of the project will be able to mobilize resources and community participation to identify, prioritize and support required counterpart financing Furthermore, it is assumed that the expected net economic benefits of the eligible sub-projects will offer ERRs similar to those generated by such sub- projects in other urban centers (See illustrative tables including cost/benefit and sensitivity analysis attached to this annex )
Cost-effectiveness indicators: 2 Two main indicators would be the size and per capita cost of the local administration Other quantitative measures would be focused on the cost effectiveness (i e, the unit cost) of service provision of each locally provided service For those physical investments taking place during the first phase of the APL, cost benefit analysis would be applied
Economic Rates of Return The economic analysis of four specific subprojects are included in the following pages (tables 1 to 4). In summary the ERR for these four subprojects are as follows
Subproject Economk Rate of Return (ERR) Sunyani - Road Rehabilitation Littlewood-Chiraa Rd 3 Km 67 57% Sunyani- Central Market Rehabilitation Approach 12 36% Bolgatanga - Solid Waste Management Revenue Approach 28 16% Koforidua - Liquid Waste Management Revenue Approach 24 16%
-42- Tabte ERR for SUNYANI Road Rehabilitation:Littlewood-Chiraa Rd. 3.0 Km (Unit; usS'000 at 1993 prices)
...... ,...... I ...... Economic Annual ProjectCost w/ Economic Net SensitivityAnalysis No. Year V/C Ratio SurfaceCond. Traffic Speed User AADT Economic Contingencies Naint'ceEconomic Net Econmic Benefit: ------...... Savings Rd. User ------Cost Benefit w/o W/ W/ w/o W/ w/o W/ w/o w/ per Cost Finan. Econom. Saved Passenger Zero Traffic 20X Proj. Proj. Proj. ProJ. Proj. Proj. Veh-Km Savings Time Growth & No Cost (kph) (kph) Savings Surf. Decay Increase
(Cedis) ($'000) (S'000) (S'000) (S'000) (S'000) (S'000) ($ 000) (S'OOO)
1992 0.48 7500 36 2100 -4.00 -4.00 -4.00 -4.00 -4.00 1. 1993 0.51 8625 35 2226 -4.00 -4.00 -4.00 -4.00 -4.00 2. 1994 0.54 9919 34 2360 345 320.85 -320.85 -320.85 -320.85 -385.02 3. 1995 0.57 11407 32 2502 345 320.85 -320.85 -320.85 -320.85 -385.02 4. 1996 0.60 0.41 12000 3000 30 50.00 98 2652 550.30 4.00 554.30 478.31 478.31 554.30 5. 1997 0.64 0.43 12000 3450 30 47.50 100 2785 592.53 3.00 595.53 511.26 477.31 595.53 6. 1998 0.68 0.46 12000 3968 30 45.00 98 2924 610.53 2.00 612.53 524.96 476.31 612.53 7. 1999 0.72 0.48 12000 4563 30 42.50 106 3070 683.32 1.20 684.52 595.09 475.51 684.52 8. 2000 0.76 0.49 12000 5247 30 40.00 93 3224 643.28 1.20 644.48 548.39 475.51 644.48 9. 2001 0.81 0.52 12000 3000 30 50.00 98 3353 695.75 4.00 699.75 603.68 478.31 699.75 10. 2002 0.85 0.55 12000 3450 30 47.50 100 3521 749.12 3.00 752.12 645.58 477.31 752.12 11. 2003 0.91 0.58 12000 3968 30 45.00 98 3662 764.62 2.00 766.62 656.95 476.31 766.62 12. 2004 0.96 0.61 12000 4563 30 42.50 106 3808 847.57 1.20 848.77 737.86 475.51 848.77 13. 2005 1.02 0.64 12000 5247 30 40.00 93 3961 790.33 1.20 791.53 673.48 475.51 791.53 14. 2006 1.08 0.67 12000 3000 30 50.00 98 4119 854.70 4.00 858.70 740.68 478.31 858.70 _ __-- ...... 690 ._._. _..... _ , ...... -...... _ __...... ERR= 67.57X 60.29X 55.97X 59.04X Table: ERR for SUWYANICentral Market Rehabilitation Approach (Unit: USS '000 In 1993 prices at 600 Cedis/USS) ...... No. Year Capital Cost wl Incremental Incrementat Economic Net Sensitivity1: Sensitivity2: sensitivity3: Phy. Cont. (IOX) Economic Benefits Salvage Economic 10X Net 25X Net loX Net ------Operation& ------Value Benefit Increase Economic Increase Economic Increase Economic Finan. Econom. Maintenance Finan. Econom. (1OX) in Cost Benefit in Benefits Benefit in Benefits Benefit Cost 1/ 2/ tS'000) (S'000) (S'O00) (S'OOO) (S'000) (S6000) (S'OOO) (S'000) (S'000) (S000) ($'000) (S'OOO) (S'OOO) ...... ------...... 1 1994 0.0 0.0 2 1995 171.2 159.3 0.0 0.0 0.0 -159.3 175.2 -175.2 0.0 -159.3 0.0 -159.3 3 1996 178.7 166.2 4.8 33.8 31.4 -139.5 188.1 -156.6 39.3 -131.7 34.6 -136.4 4 1997 201.0 187.0 9.8 68.4 63.6 -133.2 216.4 -152.8 79.5 -117.3 69.9 -126.8 5 1998 193.6 180.0 15.4 107.1 99.6 -95.8 214.9 -115.3 124.5 -70.9 i09.6 -85.8 6 1999 20.8 145.9 135.7 114.9 22.9 112.8 169.6 148.8 149.3 128.5 7 2000 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 8 2001 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 9 2002 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 10 2003 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 11 2004 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 99.9 12 2005 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 13 2006 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 14 2007 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 99.9 15 2008 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 16 2009 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 17 2010 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 18 2011 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 19 2012 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 20 2013 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 21 2014 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 22 2015 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 23 2016 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 99.9 99.9 24 2017 49.4 145.9 135.7 86.3 54.3 81.4 169.6 120.2 149.3 ------~~...... ---- ...... Total 744.6 692.4 ERR- 12.36X ERR- 10.06X ERR- 18.22X ERR= 14.77X
1/ The incrementaloperation and maintenancecost is estimatedat 3X of the capital cost. 2/ The standard conversionfactor (SCF) for Ghana of 0.93. Table: ERR for BOLGATANGASoLid Waste Nanaganent Revenue Approach (Unit: USS '000 in 1993 prices at 600 Cedis/USS)
------I...... No. Year Capital Cost wl IncrementaL Incremental Economic Net Sensitivity 1: Sensitivity 2: Sensitivity 3: Phy. Cont. (10X) Economic Benefits Salvage Economic 10X Net 25X Net lOX Net ...... Operation& ------Value Benefit Increase Economic Increase Economic Increase Economic Finan. Econom. Maintenence Finan. Econom. (10X) in Cost Benefit In Benefits Benefit in Benefits Benefit ------...... Cost 1/ 3/ 2/ Value (S'OOO) (S'OOO) ($000) (C000) (S'OOO) (S'OOO) (S'OOO) (S'000) ($S000) (S'OOO) ($S000) (S'000) (S'000) ...... ----- 1 1994 90.0 83.7 0.0 78.5 N.A. -83.7 92.1 -92.1 0.0 -83.7 0.0 -83.7 2 1995 280.0 260.4 15.1 107.5 100.0 -175.5 303.0 -203.0 125.0 -150.5 110.0 -165.5 3 1996 310.0 288.3 61.9 144.4 134.3 -215.9 385.3 -251.0 167.9 -182.4 147.7 -202.5 4 1997 0.0 0.0 113.8 192.7 179.2 65.4 125.2 54.0 224.0 110.1 197.1 83.3 5 1998 110.0 102.3 113.8 273.9 254.7 38.6 237.7 17.0 318.4 102.3 280.2 64.1 6 1999 132.2 344.0 320.0 187.7 145.5 174.5 399.9 267.7 352.0 219.7 7 2000 132.2 357.3 332.3 200.1 145.4 186.9 415.4 283.2 365.5 233.3 8 2001 132.2 371.1 345.2 213.0 145.4 199.7 431.5 299.3 379.7 247.5 9 2002 132.2 385.5 358.5 226.3 145.4 213.1 448.1 315.9 394.4 262.2 cn 10 2003 132.2 400.4 372.4 240.2 145.4 227.0 465.5 333.3 409.6 277.4 11 2004 132.2 415.9 386.8 254.6 145.4 241.4 483.5 351.3 425.5 293.3 12 2005 132.2 432.0 401.8 269.6 145.4 256.4 502.2 370.0 442.0 309.8 13 2006 132.2 448.7 417.3 285.1 145.4 271.9 521.7 389.5 459.1 326.9 14 2007 132.2 466.1 433.5 301.3 145.4 288.1 541.8 409.6 476.8 344.6 15 2008 132.2 484.1 450.2 318.0 145.4 304.8 562.8 430.6 495.3 363.1 16 2009 132.2 502.9 467.7 335.5 145.4 322.3 584.6 452.4 514.4 382.2 17 2010 132.2 522.3 485.8 353.6 145.4 340.4 607.2 475.0 534.3 402.1 18 2011 132.2 542.6 504.6 372.4 145.4 359.2 630.7 498.5 555.0 422.8 19 2012 132.2 563.5 524.1 391.9 145.4 378.7 655.1 522.9 576.5 444.3 20 2013 132.2 585.4 544.4 412.2 145.4 399.0 680.5 548.3 598.8 466.6 21 2014 132.2 608.0 565.4 433.2 145.4 420.0 706.8 574.6 622.0 489.8 22 2015 132.2 631.5 587.3 455.1 145.4 441.9 734.2 602.0 646.1 513.9 23 2016 132.2 656.0 610.1 477.9 145.4 464.6 762.6 630.4 671.1 538.9 24 2017 132.2 681.4 633.7 501.5 145.4 488.3 792.1 659.9 697.0 564.8 .... ------...... ------...... ------...- - -- - ...... Total 790.0 734.7 ERR= 28.16X ERR' 24.48X ERR' 38.60X ERR= 32.26X N.A. - Not applicable. 1/ The incrementaloperation and maintenancecost is estimatedat 18X of the capital cost. 2/ The standard conversionfactor (SCF) for Ghana of 0.93. 3/ Includesbenefits due to population growth (3.87X) in the numberof anmual beneficiaries. Table: ERR for KOFORIDUALiquid Waste Management Revenue Approach (Unit: USS 4000 In 1993 prices at 600 Cedis/USS) ...... No Year Capital Cost wl Incrementat incrementaL Economic Net Sensitivity 1: Sensitivity2. Sensitivity3: Phy. Cont. (10K) Economic Benefits Salvage Economic 10X Net 25X Net 10X Net *------Operation & ------Value Benefit Increase Economic Increase Economic Increase Economic Finan. Econom. Maintenance Finan. Econom. (10x) in Cost Benefit in Benefits Benefit in Benefits Benefit ------Cost 1/ 3/ 2/ (S'OOO) (S'OOO) (SOOO) (SWON) (S'000) (S'000)(S'000) (S000) (SOOO) (S'OO0) (S'000) (S'OOO) (SOOD) 1 1994 180.0 167.4 0.0 69.2 N.A. -167.4 184.1 -184.1 0.0 -167.4 0.0 -167.4 2 1995 110.0 102.3 16.7 114.0 106.0 -13.0 130.9 -24.9 132.5 13.5 116 6 -2.4 3 1996 160.0 148.8 27.0 115.4 107.3 -68.4 193.3 -86.0 134.2 -41.6 118.1 -57.7 4 1997 250.0 232.5 41.9 185.2 172.2 -102.1 301.8 -129.5 215.3 -59.1 189.5 -84.9 5 1998 180.0 167.4 65.1 214.6 199.6 -32.9 255.8 -56.2 249.5 17.0 219.5 -13.0 6 1999 81.8 245.2 228.0 146.2 90.0 138.0 285.0 203.2 250.8 169.0 7 2000 81.8 251.1 233.5 151.7 90.0 143.5 291.9 210.1 256.9 175.1 8 2001 81.8 257.1 239.1 157.3 90.0 149.1 298.9 217.1 263.0 181.2 9 2002 81.8 263 3 244.9 163.1 90.0 154.9 306.1 224.3 269.3 187.5 10 2003 81.8 269.6 250.7 168.9 90.0 160.7 313.4 231.6 275.8 194.0 11 2004 81.8 276.1 256.7 174.9 90.0 166.8 320.9 239.1 282.4 200.6 12 2005 81.8 282.7 262.9 181.1 90.0 172.9 328.6 246.8 289.2 207.4 13 2006 81.8 289.5 269.2 187.4 90.0 179.2 336.5 254.7 296.1 214.3 14 2007 81.8 296.4 275.7 193.9 90.0 185.7 344.6 262.8 303.2 221.4 15 2008 81.8 303.5 282.3 200.5 90.0 192.3 352.9 271.1 310.5 228.7 16 2009 81.8 310.8 289.1 207.3 90.0 199.1 361.3 279.5 318.0 236.2 17 2010 81.8 318.3 296.0 214.2 90.0 206.0 370.0 288.2 325.6 243.8 18 2011 81.8 325.9 303.1 221.3 90.0 213.1 378.9 297.1 333.4 251.6 19 2012 81.8 333.7 310.4 228.6 90.0 220.4 388.0 306.2 341.4 259.6 20 2013 81.8 341.8 317.8 236.0 90.0 227.9 397.3 315.5 349.6 267.8 21 2014 81.8 350.0 325.5 243.7 90.0 235.5 406.8 325.0 358.0 276.2 22 2015 81.8 358.4 333.3 251.5 90.0 243.3 416.6 334.8 366.6 284.8 23 2016 81.8 367 0 341.3 259.5 90.0 251.3 426.6 344.8 375.4 293.6 24 2017 81.8 375.8 349.5 267.7 90.0 259.5 436.8 355.0 384.4 302 6 Total 880.0 818.4 ERR= 24.16X ERRz 20.63X ERR: 34.34K ERR- 28.13X W.A. z Not Applicable 1/ The incrementaloperation and maintenancecost is estimatedat 10X of the capital cost. 2/ The standardconversion factor (SCF) for Ghana of 0.93. 3/ includesbenefits due to populationgrowth (2.4K) in the annuaL number of beneficiaries. Annex 5: FinancialSummary
GHANA:URBAN 5
Local GovernmentProject Support Unit (LGPSU) of the Ministry of Local Government and Rural Development (MLGRD)
Overview of LGPSU
Under previous Bank-financed urban projects, two implementing agencies were created which have developed considerable experience and expertise in project management and World Bank procedures and guidelines. These are the existing LGPSU in MLGRD and the Technical Services Center (TSC) of the Ministry of Works and Housing, both of which currently share project management responsibilities for on-going urban projects. There is adequate capacity in the existing two units to deal with the accounting, reporting, engineering and technical matters relating to project implementation including the concept of decentralized project implementation. Under LGDP, in addition to TSC, there were four zonal offices with planning, engineering and financial officers who provided support to the eleven DAs. Under UESP, each of the five DAs are responsible for implementation of their components and maintain sub-project implementation units in their respective DAs in addition to LGPSU at the center. All DAs are responsible for maintaining their sub-project accounts and preparing and submitting quarterly reports to LGPSU or TSC which are consolidated into the quarterly project reports.
The present LGPSU has technical staff, such as engineers, planning officers and support staff. The accounting and financial functions for both on-going projects (i.e., UESP and LGDP) are carried out by the accounts unit at TSC. To effectively implement Urban V and to prevent overlap of functions, relevant staff from TSC and LGPSU have been merged to constitute a new LGPSU under MLGRD which is responsible for all Bank supported urban projects.
Current Accounting Unit
The unit is headed by a professionally qualified accountant and assisted by four additional staff, two project accountants (partly qualified _ part II of ICA) and two accounts assistants (C&AG staff). They have been responsible for the implementation of several Bank and other donor-funded projects and are very familiar with Bank disbursement and other requirements.
The financial procedures designed to implement the previous and on-going projects have been functioning well and meet the Bank's requirements of adequate systems for transactions recording and accounting processing. These procedures, as contained in their manual, will be modified to incorporate the decentralized implementation arrangements for Urban V and its reporting needs.
Revised Financial Arrangements
The Urban V implementation will be decentralized to the DA level; and therefore, the mode of disbursements and reporting from the DAs will be modified, as deemed necessary, to meet this situation. A funds flow arrangement and disbursement mechanism was agreed with GOG at Appraisal. These procedures will be documented in the financial procedures and project implementation manuals.
The procedures to be covered under the financial management section of the financial procedures manual/project implementation manual will address the financial policies and procedures governing the project, the preparation of project budgets, the necessary supporting documentation for release of funds,
-47- the necessary forms and formats and other steps required in the financial administration of the project. In addition, the financial procedures manual will include changes to the chart of accounts, authorization procedures on the decentralized basis, and additional reporting for all identified levels. The computerized accounting system will also be modified to ensure that it can address the Bank's new Project Management Reporting (PMR) requirements (see PMRs below).
The weaknesses at the DA level in the areas of inadequate skills, insufficient and untimely financial reporting, lack of forward planning and inadequate supervisory and control oversight over financial resources will be addressed through the financial management strengthening component of the project during Phase I of the APL.
Funds Flow Mechanism
Funds under the project will be managed centrally by the finance unit at LGPSU. However, the sub- project investment component will be fully implemented by the DAs with help from the LGPSU. To ensure that the DAs are accountable for the implementation, funds will be transferred to them under this component. Funds for the other components will be managed by LGPSU finance unit.
DAs will follow the guidelines outlined in the Project Implementation Manual to get their sub-projects evaluated and approved. Funds flow or disbursement mechanism from the HQ to the DAs are as follows:
Steps
I1. For each DA to be eligible to receive funds it must open a Ghana Cedi bank account, to be known as the DA Urban V Matching Fund Account and a second account in US dollars called the DA Urban V Account solely for Urban V project funds. IDA funds meant for the sub-projects will be lodged in this Urban V Account while the DA's counterpart funds will be lodged in the Matching Fund Account.
2. Authorized signatories and specimen signatures must be communicated to LGPSU. It is expected that there will be two groups of signatories; one group consisting of the District Coordination Director (DCD), or in his absence, the Project Coordinator (PC) and the other group, the District Finance Officer (DFO), or in his absence, the Budget Officer (BO) for this project. Two signatures, one from each group, will be considered sufficient mandate for the release of funds into, and disbursement of funds from the PBA.
3. After a sub-project has been approved and when the DA is ready to award contract (which will be in accordance with agreed guidelines as outlined in the PIM), the DA will prepare their Statement of Funds Requirements (SFR) for the first quarter of sub-project implementation.
4. The SFR will be based on contracts signed (or ready to be signed) and termnsof payment contained therein. DAs will submit their funds requirement to the LGPSU for verification and subsequent disbursement directly into the DA account. Works for which contracts are not ready will not form part of the SFR.
5. The SFR will show details of contract percentage amounts being claimed in the first instance, and for subsequent amounts already claimed and percentage completion to date. A sample form is attached in Annex A.
6. The LGPSU finance unit will disburse the funds directly to the DA's accounts, with information to the officer who submitted the request.
-48- 7. DAs will, on receipt of funds from HQ, immediately effect payment to various contractors/suppliers and submit monthly returns on disbursement/expenditure back to the HQ, either directly to Accra, if they are located in close proximity of Accra, or through the field office.
8. The monthly returns should include the following statements:
i) Bank statement ii) Bank reconciliation statement (Annex B) iii) Statement of monthly expenditure (Annex C)
These are mandatory and should be submitted even if no activity has taken place in the previous month. Sample formats are attached as annexes.
9. These reports are to reach HQ no later than 15 days following the end of the reporting month.
LGPSU Field Office
To ensure that the field office operates effectively and provides the needed support to the relevant DAs, funds will be allocated and will be operated as a revolving fund of Cedis equivalent of US$15,000. Monthly returns of expenditures will be submitted to HQ. Resources will be allocated and accounted for with the supporting documentation in line with the following procedures:
10. The office will open Urban V project bank account for this purpose and provide to the HQ the details, including the signatories and specimen signatures.
11. At the beginning of each quarter, the office will prepare a quarterly budget for its operational activities. This will be in line with their agreed program approved by HQ.
12. Resources will be released to the office based on their approved budget for the quarter. They will submit monthly returns to HQ with all the supporting documents for replenishment of the account. The returns will include: statement of the monthly expenditure; bank reconciliation statement; Bank Statement for the month and supporting documentation.
External Audit.
The audit of Urban V will be carried out by independent and qualified auditors acceptable to the Bank. The selection of auditors shall be on a competitive basis and will be in place by effectiveness of the project. The audit will also cover project activities in the participating DAs.
Project Management Reports (PMRs)
The Bank has introduced a new initiative to change loan administration, the Loan Administration Change Initiative (LACI). This initiative has been formally launched in Ghana and it is expected that all projects should comply fully with this new requirement at start of implementation or put in place an action plan to ensure compliance in 12 to 18 months of commencement of implementation. LACI requires projects to prepare quarterly project management reports in the areas of finance and procurement, including contract details and project progress.
The Quarterly Financial Reports will consist of Project sources and Uses of Funds, statement of Uses of Funds by Project Activity, Project Cash Withdrawals, Special Account Reconciliation statement and a six months Project Cash Forecast;
-49- Quarterly Project Progress Report will consist of Output Monitoring Report on contract Management and on Unit of Output by project activity;
Quarterly Procurement Management Report will consist of procurement process monitoring for goods, works and consultants' services, and contract Expenditure reports for goods, works and consultants' services.
Due to the expected new disbursement arrangements involving the DAs and DA contracting and reporting, Urban V will be unable to fully comply with the LACI-PMR requirements at the start of implementation. Agreements were reached with GOG at appraisal on the initial reports to be produced (same as for on-going projects, UESP and LGDP) and an action plan to achieve full compliance in the first year of implementation.
-50- Annex 6: Procurement and Disbursement Arrangements
GHANA: URBAN 5
Procurement
Guidelines
Procurement will follow the World Bank guidelines for procurement of goods, works and services; Guidelines: Procurement under IBRD Loans and IDA Credits (1995 edition, revised in January 1999), and Guidelines: Selection and Employment of Consultants by World Bank Borrowers (1997 edition, revised in September 1997 and January 1999). Preference for domestically manufactured goods will be allowed in accordance with World Bank Guidelines. National Competitive Bidding (NCB) procedures will include: (a) explicit statement to bidders of the evaluation and award criteria; (b) local advertising with public bid opening; (c) award to lowest evaluated bidder; and (d) foreign bidders would not be precluded from participating in NCB. Shopping procedures will include inviting in writing for written quotations from at least three different suppliers, setting a deadline for submission of quotations and opening them at the same time. For ICB procurement, the project will use Bank's Standard Bidding Documents for procurement of goods and works. For NCB procurement, Bank's Standard Bidding Documents for procurement of goods and works with appropriate modifications. For selection of consultants, the Standard Request for Proposals for selection of Consultants would be used. For small consultant contracts, other simpler versions of documents acceptable to the Bank would be used.
Procurement Notices
A General Procurement Notice (GPN) will be published in the UN Development Business and in a National newspaper of wide circulation as provided for in the Guidelines. The GPN would be updated annually in case ICB procurement would not be completed in the first year of the project. Specific procurement Notices (SPN) would be required for goods and works contracts to be procured on ICB and NCB basis and for expressions of interest for consultant contracts exceeding US$ 100,000. SPNs would (as a minimum) be published in local newspapers of wide circulation.
Procurement Planning
Except for sub-projects, a global procurement plan covering the entire project period and a specific procurement plan for the first year of the project showing contract packages, and for each package its estimated cost, procurement method and processing times until completion (including bidding documents for items to be procured under ICB in the first year of the project) would be prepared and sent to IDA for Bank's review and comments before credit effectiveness. By September 30 of each year, the LGPSU would prepare and submit to IDA, for review and comments, a specific procurement plan for the following year as part of its annual work program. For sub-projects to be implemented by District Assemblies, a tentative procurement plan has been prepared for phase one of the project and is attached to this annex as Appendix 1. No annual procurement plans will be required for sub-projects as the sub-projects will be generated by the District Assemblies from time to time during the project implementation period on a demand driven basis. However, the appraisal document of each approved sub-project will include a procurement plan for completing contract packages under the sub-project.
-51- Procurement methods (Table A)
Scope of Procurement and implementation arrangements
Procurement under the project will involve the following
(i) The sub-projects component, estimated to cost US$ 14.52 million, will consist of water supply, waste disposal, roads and footpaths, stormndrainage, public parking terrinals, security lighting and other community facilities, such as slaughter houses, public toilets and markets The cost of the sub-projects is inclusive of works, goods and consultant services Contracts under the sub-projects would be packaged by DAs and procured following the procurement procedures specified in the DCA DAs would prepare a procurement plan for each contract package under a sub-project as it gets approved The DAs will be responsible for calling for bids, receiving and evaluating bids, awarding and signing contracts, supervising performance and making payments No ICB procurement of goods and works is envisaged under the sub-projects in phase one
As part of this component, Agence Fran9aise de Developpement (AFD) will provide US$5 0 million for road sub-projects (civil works) and US$1 0 million for design and supervision Individual contracts for road sub-projects would be packaged by DAs and procured following the specified procurement procedures, including those agreed with the development partner for this component
(1i) Goods (excluding those under sub-projects), estimated to cost US$ 0.90 million for sector strengthening and for supporting project management by MLGRD, will consist of a limited supply of vehicles, computers, office equipment and miscellaneous items of supplies and furimture Contracts for these goods will be packaged by LGPSU, incorporated into the project's procurement plan and procured following procurement procedures specified in the DCA
(1ii) Consultant Services and Technical Assistance, estimated to cost US$ 0.97 million, would consist of systems development and implementation in eight DAs, preparation of Revenue Improvement Action Plans (RIAPs) and property revaluation Technical Assistance would consist of consultants providing implementation support to LGPSU Resource persons required for training programs would be included in the training packages and not under this component Contracts for Consultant Services and Technical Assistance will be packaged by LGPSU, incorporated into the project's procurement plan and procured following procurement procedures specified in the DCA
(IV) Training component, estimated to cost US$ 1 18 million, will consist of training to be provided to DAs in planning and management LPGSU would prepare training packages (as part of the project's Annual Work Plan) and send them to the Bank for review and comments before they are implemented
(v) Mapping, estimated to cost US$ 3.60 million, will consist of aerial mapping and scanning, ground mapping and verification and digital mapping, including associated capacity building, technical assistance, vehicles and equipment Individual contracts under this component would be packaged by LGPSU and procured following specified procurement procedures, including procedures agreed with the Donor for this component, and acceptable to IDA
-52- Procurement capacity
Procurement capacity in the LGPSU is adequate while that in the District Assemblies is weak as indicated in procurement capacity assessment under other Bank-financed projects, to be implemented by DAs. This fact is recognized in the project design as under the project implementation arrangements, capacity of DAs would be enhanced by the training programs to be implemented by LGPSU, as well as by use of procurement and financial procedures to be specified in the Project Implementation Manual.
Table A: Project Costs by ProcurementArrangements (US$ million equivalent)
Expenditure Category . 2 Total Cost ICB NOB Other N.B.F. 1. Works 0.00 5.73 2.12 6.67 14.52 (0.00) (5.09) (1.91) (0.00) (7.00) 2. Goods 0.90 0.00 0.00 0.00 0.90 (0.90) (0.00) (0.00) (0.00) (0.90) 3. Services 0.00 0.00 0.97 0.00 0.97 Consultant Services & (0.00) (0.00) (0.97) (0.00) (0.97) Technical Assistance 4. Training 0.00 0.00 1.18 0.00 1.18 (0.00) (0.00) (1.18) (0.00) (1.18) 5. Mapping 0.00 0.00 0.00 3.60 3.60 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Operating Costs 0.00 0.00 1.13 0.00 1.13 (0.00) (0.00) (0.78) (0.00) (0.78) Total 0.90 5.73 5.40 10.27 22.30 (0.90) (5.09) (4.84) (0.00) (10.83)
1/ Figuresin parenthesisare the amountsto be financedby the . All costs includecontingencies 2/ Includescivil works and goodsto be procuredthrough national shopping, consulting services, services of contractedstaff of the projectmanagement office, training, technical assistance services, and incremental operatingcosts related to (i) managingthe project,and (ii) re-lendingproject funds to localgovernment units.
Priorreview thresholds (Table B) Procurement methods and thresholds
(i) Contracts for civil works would be awarded on basis of NCB. Goods contracts estimated to cost more than US$100,000 would be by ICB, contracts estimated to cost between US$100,000 and US$30,000 would be by NCB and below US$30,000 by shopping procedures. Direct contracting would be allowed only with prior clearance with the Bank.
(ii) Procurement of consultant services will follow the guidelines. The Bank's Standard Request for Proposals (SRFP) will be used for all contracts estimated to cost more than US$100,000 equivalent.
-53- Bank Review
(i) Goods contracts estimated to cost the equivalent of US$100,000 or more and all civil works contracts under sub-projects will be subject to prior review in accordance with the procedures set forth in paragraphs 2 and 3 of Appendix I of the Procurement Guidelines.
(ii) For Consultant services, all terms of reference, regardless of cost, will be subject to prior review. Contracts estimated to cost US$25,000 for individuals and US$50,000 for firms or more will be subject to prior review in accordance with the procedures set forth in paragraphs 2 and 3 of Appendix I of the Consultants Guidelines. Contracts not subject to prior review will be subject to review by IDA supervision missions and through ex-post procurement audits and will be governed by the procedures set forth in paragraph of Appendix I of the Procurement Guidelines and the last sub-paragraph of paragraph 2(a) and paragraph 4 of Appendix I of the Consultants Guidelines.
Table B: Thresholds for Procurement Methods and Prior Review 1
CottValue CnrcsSbett Threshold Procurement PriPnor Rviwd Expenditure Category (US$) Method (US$) 1. Works NIL NCB All
2. Goods Over US$100,000 ICB All contracts
3. Services(Consultants) Above US$100,000 QCBS (i) All Sole source Below US$100,000 Other methods (ii) All TORs (iii) All stages for contracts below US$25,000 and US$50,000 for Individuals and Firms respectively
Total value of contracts subject to prior review: US$8.0 million out of US$22.30 million
Overall Procurement Risk Assessment
Average
Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits)
1 Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional ProcurementAdviser for guidance.
-54- Disbursement Allocationof proceeds(Table C)
Table C: Allocation of Proceeds
Expenditure Cateory Amount in US$riuion Financing Percentage 1. Works (Sub-projects) 6.08 50% of O&M expenditures 90% of other expenditures 2. Goods 0.85 100 % of foreign expenditures 85% of local expenditures 3. Consultants' Services and Technical 0.92 100% Assistance 4. Training 1.13 100% 6. Operating costs 0.75 70% 7. Unallocated 1.10
Total Project Costs 10.83
Total 10.83
Use of statements of expenditures (SOEs):
Contracts less than US$100,000 equivalent for goods Consultant contracts of less than US$ 50,000 for firms and US$ 25,000 for individuals Training Operating Costs
Special account:
The special account will have an authorized allocation of US$1,200,000 to cover 4 months of eligible expenditure. An initial deposit of US$600,000 will be made to the project account opened in a commercial bank upon effectiveness of the credit.
Sub-project accounts at the DA level
Each DA will open two sub-project accounts, one for IDA funds and one for DA counterpart funds. The IDA account will be replenished on the basis of estimated quarterly requirements for sub-project implementation. All payments for US$50,000 and above will be referred to LGPSU for direct payment from the LGPSU special account. Payments under US$50,000 may be made directly from the DA account.
-55- Annex 7. Project Processing Schedule
GHANA: URBAN 5
Project Schedule Planned Actual
Timetaken to preparethe project (months) 27 42 FirstBank mission (identification) 12/01/97 12/01/97 Appraisalmission departure 10/15/99 09/25/99 Negotiations 01/15/2000 01/24/2000 PlannedDate of Effectiveness 06/30/2000
Prepared by Ministry of Local Government and Rural Development (MLGRD)
Preparationassistance Local Government Project Support Unit (LGPSU) of the MLGRD
Bankstaff who workedon the projectincluded Name Speciality Jagdish Bahal Team Leader Charles Boakye Civil Engineer (Ghana Office) Rumana Huque Urban Specialist Frederick Yankey Financial Management Specialist (Ghana Office) Chris Banes Municipal Engineer Hassan M Hassan Principal Environment Specialist Ian Wetherell Municipal Finance Specialist David Webber Sr Disbursement Officer Said Al Habsy Sr Counsel Mbuba Mbungu Procurement Specialist (Ghana Office) Kofi Awanyo Procurement Specialist (Ghana Office) Hernando Garzon Economist Jack Cresswell Training Specialist Gunter Heidenhof Sr Public Sector Management Specialist Ernestina Attafuah Program Assistant Lizmara Kirchner Team Assistant
Quality Team Gerhard Tschannerl Principal Municipal Engineer Alan Carroll Principal Urban Specialist George Gattoni Principal Urban Planner
-56- Annex 8: Documents in the Project File*
GHANA: URBAN 5
A. ProjectImplementation Plan Project Implementation Manual
B. BankStaff Assessments 1. Financial Analysis and Revenue Projection of 25 Towns 2. Financial Management Assessment
C. Other 1. Study of Investment Needs and Priorities of 25 Towns 2. Study of Preliminary Engineering Design of 25 Towns 3. Training Needs Assessment
*Includingelectronic files
-57- Annex9 Statementof Loansand Credits
GHANA URBAN5
Difference between expected and actual Onginal Amount in US$ Millions disbursementsa Project ID FY Borrower Purpose IBRD IDA Cancel Undisb Orig Frm Revd GH-PE40557 1999 GOVERNMENT ERSO11 000 18000 000 17758 000 000 GH-PE-40659 1999 GOVERNMENT COMMUNFIYDEV 000 500 000 495 000 ooo GH PE 50615 1999 GOV OFGHANA PUSSECTORMNGTPROG 000 1430 000 1405 000 000 GH PE 970 1999 GOVT OF GHANA TRADE GATEWAY &INV 000 5050 000 4738 1 98 000 GH PE 974 1999 GOVT OF GHANA NAT FUNC LIT PROG 000 3200 000 31 72 000 000 GH PE-946 1998 GOVERNMENT NAT RES MANAGEMENT 0 00 9 30 0 00 9 23 4 04 0 00 GH PE-949 1998 GOVT OF GHANA HEALTH SCTR SUPPORT 000 3500 000 2710 390 000 GH PE-41150 1997 GOVERNMENT VILLAGE INFRASTRUCTU 000 3000 000 2308 203 000 GH PE-45588 1997 GOVT OF GHANA PUB FIN MGMT TAP 0 00 20 90 0 o0 16 34 11 88 0 c0 GH PE42516 1996 GOVERNMENT PUBLIC ENTERPRISE/PR 0 00 26 45 0 00 1848 590 0 00 GH-PE 943 1996 MINISTRY OF FINANCE NON BANK FIN INSAST 0 00 23 90 0 00 1719 14 70 0 00 GH PE 957 1996 GOVERNMENT HWY SECTINVPROG 000 10000 000 5672 528 000 GH-PE 973 1996 GOVT OF GHANA URBAN ENV SANITATION 0 00 7100 000 49 26 3592 0 00 GH PE 975 1996 GOVERNMENT BASIC EDUCATION 000 5000 000 4208 2312 000 GH PE 926 1995 GOVTOFGHANA THERMAL(P VII) 000 17560 000 4029 4202 1317 GH PE 948 1995 REP OF GHANA EDUCNOC TRNG 0 00 9 60 0 00 5 68 425 0 04 GH PE-960 1995 GOVERNMENT PRIV SECTORDEV 000 1300 000 851 752 000 GH PE 962 1995 GOVERNMENTOF GHANA FISHERIES 0 00 900 0 o0 4 32 2 31 000 GH PE 966 1995 GOVERNMENT MINING SEC DEV & ENV 0 00 12 30 0 00 5 46 3 76 000 GH PE 924 1994 TBD COMMUNITY WATER & SA 000 21 96 000 824 714 000 GH PE 936 1994 GOVERNMENT LOCAL GOVT DEV 0 00 38 50 0 00 1482 716 0 00 GH-PE 961 1994 GOVT OF GHANA AGRIC SECTOR INVEST 000 2150 000 398 216 231 GH PE 930 1993 GOVERNMENT LIVESTOCK 000 2245 038 258 354 315 GH PE 953 1993 GOVERNMENT NArLELECTRIFICATIO 000 8000 000 1006 1368 784 GH PE 956 1993 GOVT OF GHANA URBAN TRANSPORT 0 00 76 20 000 919 616 2 41 GH PE 931 1992 AGRIC EXTENSION 0 00 3040 0 00 4 85 449 449 GH PE918 1991 AGRIC DIVERS (TREE C 000 1650 1 85 452 559 1 01
Total 000 1 17536 223 65466 21417 22 8
-58- GHANA STATEMENT OF IFC's Held and Disbursed Portfolio 3 1-Jul- 1999 In Millions US Dollars
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1988/89/91/93 Bogosu 6.00 5.35 1.72 12.45 6.00 5.35 1.72 12.45 1989/91/93 Cont Acceptances 0.00 0.00 0.88 0.00 0.00 0.00 0.88 0.00 1989/92 Wahome Steel 0.87 0.00 0.44 0.00 0.87 0.00 0.44 0.00 1990 AEF Alugan 0.05 0.00 0.00 0.00 0.05 0.00 0.00 0.00 1990/91/96 GAGL 4.50 8.11 2.55 0.00 4.50 8.11 2.55 0.00 1991 AEF Packrite 0.06 0.00 0.00 0.00 0.06 0.00 0.00 0.00 1991 GHANAL 0.00 0.00 0.44 0.00 0.00 0.00 0.44 0.00 1991/92 Hotel Inv. Ghana 1.40 0.00 0.00 0.00 1.40 0.00 0.00 0.00 1992 AEF BMK 0.57 0.00 0.00 0.00 0.57 0.00 0.00 0.00 1992 AEF CFL 0.28 0.00 0.00 0.00 0.28 0.00 0.00 0.00 1992/93 Ghana Leasing 1.01 0.00 1.48 0.00 1.01 0.00 1.48 0.00 1993 AEF Afariwaa 0.18 0.00 0.00 0.00 0.18 0.00 0.00 0.00 1993 AEF GHUMCO 0.02 0.00 0.00 0.00 0.02 0.00 0.00 0.00 1993/96 Ecobank - Ghana 4.70 0.00 0.00 0.00 0.60 0.00 0.00 0.00 1994 AEF Shangri-la 1.10 0.00 0.00 0.00 1.10 0.00 0.00 0.00 1994 GHACEM 0.75 0.00 0.00 0.00 0.75 0.00 0.00 0.00 1995 AEF Dupaul Wood 0.38 0.00 0.00 0.00 0.38 0.00 0.00 0.00 1996 AEF Pako Bay 0.00 0.00 0.05 0.00 0.00 0.00 0.00 0.00 1996 AEF Tacks Farns 0.37 0.00 0.00 0.00 0.37 0.00 0.00 0.00 1997 AEF PTS 0.00 0.31 0.00 0.00 0.00 0.31 0.00 0.00 1998 AEF NCS 0.00 0.67 0.00 0.00 0.00 0.67 0.00 0.00 Total Portfolio: 22.24 14.44 7.56 12.45 18.14 14.44 7.51 12.45
Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic
Total Pending Commitment: 0.00 0.00 0.00 0.00
-59- Annex 10 Countryat a Glance GHANA URBAN5
Sub- 9/7/99 POVERTY and SOCtAL Saharan Low - Ghana Africa income Developmentdiamond 1998 Population mid-year (milions) 184 628 351S Life expectancy GNP per capita (Atlas method USS) 390 480 520 GNP (Atlas method US$ bitlions) 7 2 304 1,844 Average annual growth, 1992-98 Population (%) 2 6 2 6 17 Labor force (YO) 2 7 2 6 19 GNP ____ Gross per ~~~~~~pnmary Most recentestimate (latest year available, 1992-98) capeta enrollment Poverty (% of population below national poverty line) 31 Urban population (% oftotalpopulation) 37 33 31 Life expectancy at birth (years) 59 51 63 Infant mortaltty (per 1000 live births) 69 91 69 Child malnutntion (% of children under 5) 27 Access to safe water Access to safe water (% of population) 56 47 74 Illiteracy (% of population age 15+) 36 42 32 Gross pnmary enrollment (% of school-agepopulation) 76 77 108 "- Ghana --- Low-incomegroup Male 83 84 113 Female 70 69 103
KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1977 1987 1997 1998 Economicratios* GDP (U/S$b lions) 3 2 51 6 9 7 5 Gross domestic investrnent/GDP 11 1 104 24 1 229 Trade Exports of goods and services/GDP 10 5 19 7 24 0 26 7 Gross domestic savings/GDP 10 0 3 9 9 8 13 2 Gross natonal savings/GDP 9 6 5 6 15 4 19 4 Cunrent account balance/GOP -4 5 -44 -11 1 -6 6 Interest payments/GDP 0 5 1 1 1 8 2 0 Domestic _ i - Investment Total debVGDP 334 646 922 92 0 Savings Total debt service/exports 3 7 45 8 32 6 28 0 Presentvalue of debt/GDP 54 2 50 8 Present value of debt/exports 220 3 186 6 Indebtedness 1977-87 1988-98 1997 1998 1999-03 (average annual growth) GDP 0 4 4 3 4 2 4 6 6 1 -Ghana GNPpercapita 27 14 17 1 g 35 Exports of goods and services -4 7 9 7 -0 4 14 4 5 6
STRUCTURE of the ECONOMY 1977 1987 1997 1998 VGrowthrates of output and investment(%) (% of GDP) 30 Agnculture 56 2 50 6 35 8 37 6 20 Industry 15 8 16 3 25 7 24 8 20- Manufacturing 108 99 82 82 a Services 280 33 1 38 5 376 0-- -
Private consumption 77 4 85 5 77 8 76 5 20 General government consumption 126 106 124 103 _ GDl - GDP Imports of goods and services 11 6 26 2 38 4 36 4
1977-87 1988-98 1997 1998 rowth rates of exports and imports(%) (averageannual growth) Agriculture 0 8 27 43 53 130r Industry -4 0 4 8 6 4 2 6 20 - Manufactunng -4 0 31 7 3 3 0 Services 19 58 34 45 104
Pnvateconsumption 0 3 37 12 1 1 6 o _ General govemment consumption 1 4 4 6 -11 7 11 3 93 94 95 97 98 Gross domestic investment -46 3 8 3 4 2 8 10 - Imports of goods and services -7 0 7 3 14 7 7 9 - Exports - mports Gross national product 0 2 4 3 4 3 4 6
Note 1998 data are preliminary estimates
* The diamonds show four key indicators in the country (in bold) compared with its income group average If data are missing the diamond will be incomplete -60- Ghana
PRICES and GOVERNMENTFINANCE 1977 1987 1997 1998 rviat % Domestic pricesInltoI% (% change) soT Consumerprices 116.5 39.8 27.9 19.3 60. Implicit GDP deflator 67.3 39.2 19.5 17.6 40 T
Governmentfinance 20 (% of GDP, includes current grants) o Current revenue .. 14.1 17.8 18.9 93 94 95 96 97 98 Current budget balance .. 2.9 1.6 1.6 -GDP deflator eCPi Overall surplus/deficit .. -5.1 -10.8 -9.7
TRADE 1977 1987 1997 1998 Exportand i rv ______(US$ millions) p ard importlevels (US$ millions) Total exports (fob) .. 824 1,491 1,830 3,000 Cocoa .. 495 470 629 Timber .. 91 172 170 200 Manufactures .i Total imports (cit) . 1,009 2,321 2,417 Food .. 73 10 Fuel and energy .. 145 240 212 Capital goods16 92 93 94 95 96 97 98 Export price index (1995=100) .. 97 93 98 Import price index (1995=100) .. 69 97 81 aExports a imports Terms of trade (1995=100) .. 141 96 121
BALANCE of PAYMENTS 1977 1987 1997 1998 kurrent accountba lance to GDPratio (%) (US$ millions) I Exports of goods and services 1,018 903 1,656 2,004 0 . Importsof goods and services 1,121 1,203 2,645 2,732 Resource balance -103 -300 -989 -728 -4 Net income -35 -127 -134 -142 Net current transfers -6 202 380 378 - Current account balance -144 -225 -763 -492 Financing items (net) 254 363 787 591 Changesin net reserves -109 -138 -25 -99 -16 Memo: Reserves including gold (US$ millions) 182 332 508 502 Conversionrate (DEC, local/US$) 3.5 147.0 2,050.2 2,314.0
EXTERNAL DEBT and RESOURCE FLOWS 1977 1987 1997 1998 (US$ millions) Compositionof total debt, 1998 (US$ millions) Total debt outstanding and disbursed 1,067 3,280 6,345 6,900 IBRD 43 151 30 27 G:737 A 27 IDA 79 700 2,617 2,962 Total debt service 38 415 552 572 IBRD 22 1 84 IDA 1 7 31 34 8 2.962 Composition of net resourceflows Official grants 65 122 160 230 Official creditors 70 254 333 295 Private creditors 22 3 88 -25 E: 1,432 Foreign direct investment 19 5 110 152 Portfolio equity 0 0 46 80 D 566 C 334 World Bank program Commitments 57 233 54 147 A -IBRD E - Bilateral Disbursements 30 194 237 261 H- IDA D - Othermultilateral F - Private Principal repayments 3 13 23 19 C- IMF G - Short-term Netflows 27 181 214 241 Interest payments 3 16 22 20 Net transfers 24 165 192 221
DevelopmentEconomics 917199
-61- Annex 11: Profile of 25 Project Towns GHANA: URBAN 5
Region District Assembly Project Town Population (1999)
ASHANTI Asante Akim North 1. Agogo 24,665 Asante Akim North 2. Konongo Odumase 29,600 Ejura Sekye-Dumase 3. Ejura 34,418 Sekyere West 4. Mampong 34,648 Adansi West 5. Obuasi 124,642 247,973 BRONG AHAFO Berekum 6. Berekum 35,788 Nkoranza 7. Nkoranza 33,273 Wenchi 8. Wenchi 25,490 94,551 CENTRAL Upper Denkyira 9. Dunkwa 20,225 Awatu/Efutu/Senya 10. Winneba 33,888 54,113
EASTERN Birim South 11. Akim Oda 35,670 Kwaebibirem 12. Akwatia 19,902 West Akim 13. Asamankese 32,220 Fanteakwa 14. Begoro 26,622 Kwahu South 15. Nkawkaw 44,498 Aquapem South 16. Nsawam 31,383 Suhum/Kraboa/Koltar 17. Suhum 30,953 221,248 GREATER ACCRA Ga 18. Madina 118,161 118,161 NORTH Savelugu/Nanton 19. Savelugu 30,426 Yendi 20 . Yendi 46,516 76,942
VOLTA Ketu 21. Aflao 40,051 Hohoe 22 . Hohoe 31,768 Kpando 23. Kpando 23,852 95,671 WESTERN Wassa West 24. Prestea 20,761 Wassa West 25 . Tarkwa 34,242 55,003
TOTAL POPULATION: 963,662
-62- ASHANTI REGION
Agogo, the largest single settlement in the Asante-Akim North District is located along the Accra-Kunasi trunk road The population of Agogo for 1960, 1970 and 1984 were 10,356, 14,710 and 18,879 respectively This shows an intercensal annual growth rate of 1 78 percent between 1970 and 1984 Agriculture, at the subsistence level, is the main occupation inAgogo as in the Asante Akim North District, engaging about 50 percent of the labor force The location ofAgogo as a gateway to the Afram Plains, and the road to Konongo and other urban markets enhance the town's role as an important trade and commerce center in the district This sector employs about 14 percent of the working population Trading and commercial activities are carried out within two markets and a few shops in the town The markets which are local in status deal mainly in agricultural produce and manufactured goods Their sphere of influence go beyond Agogo to the Afram Plains and Konongo
Ejura, the capital of Ejura Sekyedumase District is about 360km North-West of Accra and 90km from Kumasi The population census report of Ghana for 1961, 1970 and 1984 shows the respective population of Ejura to be 7,078, 10,644 and 18,775 This shows an intercensal growth rate of 1 8 percent between 1970 and 1984 Ejura is an administrative, agricultural and commercial center As a liner settlement along the Mampong-Atebubu-Yeji trunk road, Ejura is linked to Sekyedumase, the only major town in the district apart from Ejura It is also linked to adjacent districts The major economic activities in the district are agriculture and trading especially in agricultural goods Cattle rearing is also a major activity, especially in and around Ejura Many sheep and goats are also reared in the district More than 80 percent of the population in the district depend on agriculture for their well-being, and it accounts annually for more than 70 percent of total incomes of households The district is the leading producer of maize and yams in the Ashanti Region Trading employs the highest number of people (39 percent) public servants constitute 30 percent whilst 26 percent of the people are engaged in farming
Konongo/Odumase, the district capital of the Asante Akim North District is located about 204km North West of Accra, along the Accra-Kumasi trunk road, and about 66km from Kumasi, the Ashanti Regional Capital The soils are of the forest ochrosols of Ghana's forest belt and support crops such as cocoa, cassava, plantain, oil palm, cocoyam and vegetables such as tomatoes, garden eggs and pepper The forest constitutes a major natural resource and consists of different species of tropical woods which have high economic value The population of Konongo/Odumase for 1960, 1970 and 1984 were 16,311, 17,375, 22,279 respectively A greater proportion (54 9 percent) of the active labor force are engaged in commercial activities notably trading whilst only 9 1 percent are employed in agriculture Konongo/Odumase is one of the main commercial centers in the Ashanti Region The presence of the railway line, which helps in the transportation of food crops cheaply from the hinterland to the market center as well as timber to feed local sawmills, also enhances the town's role as a marketing center
Mampong-Ashanti,the capital of Sekyere West District is located 51km North-East of Kumasi along the Kumasi-Yeji Trunk Road and lies on the Mampong scarp which has an average elevation of about 1268 metres above sea level The vegetation of the area is part of a belt of mixed patches of dry forest and grassland which borders to the north of the rain forest belt to the country The population of Mampong-Ashanti for 1960, 1970, 1984 were 8,462, 14,990, 22,463 respectively This shows an intercensal annual growth rate of 5 7 percent between 1960 and 1970, and 2 9 percent between 1970 and 1984 Conditions in the Sekyere West District favours agriculture and hence agriculture is the most predominant occupation It engages about 49 percent of the working population
Obuasi, the capital of Adansi West District is located about 61km from Kumasi the regional capital Obuasi has been experiencing increasing population According to the population census reports of Ghana, the population of Obuasi for 1960, 1970 and 1984 were 22,827, 31,022, and 60,709 respectively The 1984 population made Obuasi the second largest settlement after Kumasi in terms of population in the Ashanti Region This gives an annual intercensal growth rate of 4 8 percent between
-63- 1970 and 1984. The town owes its growth and development to the gold mining industry. The major economic activities in Obuasi are mining, other industries, services, trading and agriculture. According to the Adansi West District Development Plan, agriculture accounts for 51 percent of the total labor force in the district. Though agriculture constitutes a major source of income for a large number of people, industry, specifically mining and its related subsidiary and ancillary sectors provide employment to a sizeable number of people. Farming has therefore been overshadowed by mining.
BRONG AHAFO REGION
Berekum, the capital of Berekum District, is located in the Western part of the Brong Ahafo Region, a distance of about 32km from Sunyani the Regional Capital and 437km from Accra. The population for Berekum for 1960, 1970 and 1984 were 11,143, 14,296 and 22,269 respectively. This gives an intercensal annual growth rate of 3.16 between 1970 and 1984. Berekum is an important administrative center in the District and is also an important commercial center in theBrong Ahafo Region. It is well linked to the towns in the district and to adjacent districts. The major economic activities in Berekum are trading, services, agriculture and industry. According to the Five Year Development Plan for Berekum District, about 67 percent of the working population are engaged in the agricultural sector. Agricultural production and productivity in the district are relatively high. In 1994, the district achieved the highest average yield of plantain per hectare (12.30 metric tones per hectare) in Brong Ahafo Region, higher than the national achievable yield of 10 metric tones per hectare. There are also a number of small-scale industries which include palm oil extraction, cassava processing,akpeteshie distilling, wood processing and soap making.
Nkoranza is the Capital of Nkoranza District in the Brong Ahafo Region. The population of Nkoranza for 1960, 1970 and 1984 were 6,250 7,191 and 15,065respectively. This shows an intercensal annual growth rate of 5.3 percent between 1970 and 1984. The main economic activities undertaken in Nkoranza are commerce, industry and agriculture. According to the District Development Plan for Nkoranza District, the predominant occupation in the District is agriculture engaging over 90 percent of the population. This is basically due to the fact that even those engaged in other occupations still take up agriculture as a minor activity. Nkoranza being an urban town however, portrays a different trend. Commerce and services engage 47 percent of the working population, agriculture engages 24 percent, public services engage 18 percent and industry engages 11 percent of the working population.
Wenchi the Capital of Wenchi District is located in the Western part of the Brong Ahafo Region. The population census reports of Ghana gave the population of Wenchi for 1960, 1970 and 1984 as 10,672, 13,837 and 18,583 respectively. This shows an intercensal annual growth rate of 2.11 percent between 1970 and 1984. The major economic activities are commerce, industrial activities and agriculture. According to the Wenchi Development plan, the agricultural sector employs the majority of the economically active population in the district (40 percent). Industrial activities inWenchi comprise small-scale manufacturing, construction, artisans, craftsmen and food processing.
CENTRAL REGION
Dunkwa the Capital of the Upper Denkyira is about 144km from Cape Coast and is located at the northern part of the Central Region. The area falls within the wet semi-equatorial climate and supports a moist semi-deciduous forest. Dunkwa had a population of 12,689, 15,437,andl6,905 for 1960, 1970 and 1984 respectively. Between 1970 and 1984 the population increased at a meagre average annual rate of 0.65 percent. The removal of the headquarters of the Cocoa Marketing Board of the Western Region from Dunkwa to Sefwi Wiaso in the mid 1980s partly accounts for this low population growth rate. The 1984 population of Dunkwa accounted for 25 percent of the population of the Upper Denkyira District. Trading, agriculture and mining are the major economic activities in Dunkwa. Mining activities are carried out by private companies such as Continental Goldfields and NEVSUN Goldfields Ltd, who
-64- employ the local people but operate outside the settlement. Dunkwa is one of the major towns on the Western Railway line, and this forms an important link with the rest of the country. Dunkwa is linked to Kumasi, Awaso and Takoradi thus making trading, especially in agricultural produce, viable. As one of the major markets in the district, it serves as one of the assembling points for agricultural produce. There are a number of small-scale industrial activities in Dunkwa. These are cassava processing, palm oil extraction, baking, distilling, dress making and soap making. Mining is also an important activity in Dunkwa. The people engage in small-scale mining of alluvial gold.
Winneba is the district capital of the Awutu-Effutu-Senya district, which is in the Central Region. The population of Winneba for 1960, 1970 and 1984 were 25,400, 30,800, and 27,105 respectively. Between 1970 and 1984, the population declined at an intercensal decline rate of about 1.1 percent per annum. Winneba developed as the administrative headquarters of the Central Province of the Gold Coast and major trading port servicing Agona and West Akim Districts. However, the northward movement of the trading firms to Agona Swedru after 1940 affected the growth of the town. Winneba, being a District Capital at the coast was a port town. With the completion of theTema Harbor after the 1960s, the port activities were shut down and all commercial activities moved toTema, thus the decline of activities in the town. The major economic activities in the district are fishing, farming, trading and education. The School of Education was established in Winneba in 199?. Pineapple is grown on commercial basis.
EASTERN REGION
Nsawam, the district capital of the Akwapim South District is located within the Densu Valley along the main highway from Accra to Kumasi; a distance of about 35km from Accra. Nsawam as a district capital has experienced fluctuations in population growth. However, the population is now increasing due to the emergence of a number of manufacturing companies, the status of the town as the Akwapim South District capital, and the use of Nsawam as a dormitory town by people who work in Accra. The population of Nsawam for 1960, 1970 and 1984 were 20,240, 25,518 and 20,439 respectively. This shows an annual growth rate of 1.9 percent between 1970 and 1984. The major economic activities are commerce, agriculture, and industry. According to Ghana Export Promotion Council, the Akwapim South District is the source of about 60 percent of pineapples exported from the country. With the strong agricultural base, there are a number of agro-based industries at Nsawam; these include Astek Fruit Processing Industry, AgriPlast Ltd, and Nsawam Cannery. Trading at present accounts for about 26 percent of the service sector labor force. Increasing interaction with Accra has boosted the trade and transport sector. However, commerce has generally declined with the diversion of the Accra-Western Region traffic through Winneba Junction. Agriculture is the main source of employment in the District (40.1 percent), followed by trading, services and industry.
Suhum, the Capital of the Suhum-Kraboa District is located in the south-western sector of the Eastern Region. The major soil type in the area promotes the cultivation of both cash and food crops and are well drained by rivers and streams like Densu, Suhum, Essisem and Kua. The population of Suhum in 1960 was 10,193, while in 1970 and 1984 it was 12,421 and 18,298 respectively. The growth rate between 1960 and 1970 was 1.98 percent and 3.15 percent between 1970 and 1984. Commercial activities provide a source of income to 32 percent of the population. About 27 percent of the working population are engaged in industrial activities.
Asamankese is the Capital of the West Akim District. The vegetation is principally moist semi- deciduous forest, which contains a lot of valuable tree species such as Odum, Wawa, Sapele, Obeche and Emire. The vegetation gives Asamankese the unique advantage of producing a wide range of crops. The population of Asamankese in 1960, 1970 and 1984 were 16,718, 16,905 and 23,077 respectively. This shows an annual intercensal growth rate of 2.2 percent for the 1970-1984 period. Asamankese is principally an agricultural and commerce-oriented town. The economic structure of the district since
-65- 1970 has always had agriculture dominating with commerce in the second place. The main crops grown are cassava, maize, plantain and vegetables, while the main cash crops are cocoa and oil palm.
Akwatia is located in the Kwaebibrim District and lies about 9km south-east of Kade which is the District Capital. The vegetation in the area is basically of the semi-deciduous forest type with predominantly medium height hardwood tree species. Also prominent are large plantations of teak, which have been cultivated by individuals and institutions outside theAyaola and Atiwa Forest Reserves. These reserves cover very large areas of the District. Apart from agriculture, Akwatia is noted for its prominent mining activities. Ever since mining began in the town, most of the people have engaged in small-scale mining as a means of earning their livelihood. Mining operations have resulted in the deforestation of most of the land and this has resulted in soil denudation. Akwatia had a population of 12,177 in 1970, and 15,000 in 1984. The town owes its growth to the operations of Ghana Consolidated Diamonds Ltd, which owns and operates a mining concession in the area. This has attracted a number of immigrants into the area, thus increasing the population. Akwatia is also an agricultural town. Information available in the 5-year Development Plan for the District indicates that apart from the numerous small-holder farmers, there are large scale oil palm plantations located adjacent to the mining concessions.
Akim Oda, the district capital of Birim South District with a decidual forest type vegetation. However, human activities such as farming and lumbering has reduced the vegetation to secondary forests. The population of Akim Oda for 1960, 1970 and 1984 were 19,666, 20,957 and 24,629 respectively. This shows an intercensal annual growth rate of 1.15 percent between 1970 and 1984. The major economic activities are agriculture, trading, lumbering and small-scale mining. According to the occupational structure of the district, majority of the labor force are engaged in agriculture (60 percent) followed by industry (20 percent), commerce/service (15 percent) and public service (5 percent). Akim Oda is one of the main commercial centers in the Eastern Region, and this is enhanced by its role as the district capital of the Birim-South District. Many of the outlying settlements depend onAkim Oda for their shopping needs.
Begoro, the Capital of Fanteakwa District is about 58km to the north-west of Koforidua the Regional capital. The district mostly has a semi deciduous forest vegetation, but human activities such as farming and lumbering, have reduced the vegetation to secondary forest. In the northern part of the district, the vegetation is mainlysavannah woodland. The population of Begoro for 1960, 1970 and 1984 were 9,289, 11,043 and 23,077 respectively. This shows an intercensal annual growth rate of 1.73 between 1970 and 1984. The central location of Begoro enhances commercial activities. These activities are focused more around the Begoro market.
Nkawkaw, the commercial capital of the Kwahu South District has a total land area of 1,876 km2. The population of Nkawkaw for 1960, 1970 and 1984 were between 15,627, 23,219 and 31,785 respectively. This shows an annual intercensal growth rate of 2.24 between 1970 and 1984. The major economic activities in the district are subsistent agriculture, services and industrial activities. Occupational distribution of the labor force shows that majority of the labor force are employed in agriculture (50.4 percent) while the service sector, which also includes trading, employs 42.2 percent with the industrial sector still at its teething stage, employing only 7.4 percent of the labor force at the district level. Nkawkaw the project town, has commerce as the highest employer of the labor force. As a junction town, it is one of the main commercial centers in the Eastern Region and this is enhanced by its location on the Accra-Kumasi trunk road.
GREATER ACCRA REGION
Madina is located to north-east of Accra, a distance of about 17.6km. It is in the Ga district and a fast developing satelite of Accra. Madina had a handful of people in 1960, but by 1970, the population was 7,480 and this increased to 28,364 in 1984. Between 1970 and 1984, the town grew at a rate of 9.5
-66- percent per annum, one of the highest growth rates in the country. The main economic activities in Madina are industrial, commercial and services. Using the 1984 census data, about 49 percent of the labor force in Ga district were engaged in agriculture. This is followed by commerce and services (23.4 percent), industry (15.9 percent) and public service (11.9 percent). The construction industry is a very vibrant one within the area. A number of estate developers such as Redco Estates are operating in the area. Also located in Madina are industries engaged in brick and sandcrete block manufacturing, food processing and wood processing. Nkulenu Industries, engaged in fruit processing is also located in Madina.
NORTHERN REGION
Yendi, the capital of East Dagomba District, is about 96km from Tamale the Northern Regional Capital. The population of Yendi in 1960, 1970 and 1984 was 16,090, 22,072 and 31,633 respectively. This gives an annual intercensal growth rate of 2.57 percent between 1970 and 1984. Yendi, is the traditional capital of the Dagombas and occupies an important position as an administrative and commercial center in the District. Yendi is well linked to adjacent districts as well as major settlements in the districts. The major economic activities are services, trading, farming, public services and industry. In Yendi, agriculture employs only 20.6 percent of the working population. Crops produced in and around Yendi include yam, millet and other grains, groundnut and beans. In addition, the area is noted for livestock, cotton and shea nut. Industrial activities in the town are mainly agro-based and provides employment for 8.8 percent of the working population. These include rice mills, shea butter extraction factories and breweries that process local drinks. Cotton gining is also carried out on a small scale at the household level.
Savelugu is the District Capital of the Savelugu-Nanton District in the Northern Region. According to the population census reports of Ghana, Savelugu had a population of 5,949, 9,835, 16,965 for 1960, 1970 and 1984 respectively. This shows an intercensal annual growth rate of 3.85 between 1970 and 1984. According to the five-year Development plan for the district, agriculture employs about 53.4 percent of the economically active population with commerce employing 17 percent, manufacturing 25 percent and other occupations 4.3 percent. In the township however, trading employs most people followed by farming, cottage industries and, public services. The major economic activities undertaken in Savelugu are trading, agriculture and small-scale industrial activities. SinceSavelugu is an urban town, agriculture is not very intensive. However, at the district level, agriculture (farming, fisheries and animal husbandry) accounts for over 50 percent of the working population.
VOLTA REGION
Aflao is about 186km from Accra, the national capital. It is located in theKetu District of the Volta Region. Aflao had a population of 7,439 in 1960. This increased to 11,397and 20,904 in 1970 and 1984 respectively. This shows an intercensal growth rate of 4.33 percent between 1970 and 1984. Agricultural activities are limited in Aflao. The sandy coastal soil supports vegetables. Industrial activities in Aflao are mostly on a small-scale. These include cassava processing into dough and gari, and akpeteshie distilling. There is also a nail manufacturing factory at Aflao.
Hohoe is the capital of Hohoe District and is the second largest town in the Volta Region after Ho. Hohoe had a population of 9,502 in 1960 which increased to 14,775 and 20,994 in 1970 and 1984 respectively. This shows an intercensal annual growth rate of 2.5 percent between 1970 and 1984. The major economic activities in Hohoe are commerce, small-scale industrial activities and agriculture. About 44.4 percent of the population are in the commercial sector, 23.8 percent in public services, with 20.6 percent and 11.1 percent being in the industrial and agricultural sectors respectively. Agricultural activities are limited in the township. Hohoe is also a major marketing center in the district in both agricultural and industrial goods. Its position makes it a major nodal and cocoa storage center. The
-67- District forms part of the Volta Tourist Development Zone Hohoe's position on the primary route makes it a strategic tourist stopover and enhances its commercial activities
Kpando, the district capital of Kpando district is about 85m from Ho Kpando had a population of 8,070, 12842, and 15,717 in 1960, 1970 and 1984 respectively This shows an intercensal growth rate of 4 7 percent and 1 44 percent respectively Trading and light industrial activities such as carpentry, pottery, ceramics, and automobile repairs are the main economic activities at Kpando Because Kpando is an urban and vibrant marketing center, agricultural activities in the town are limited Commerce employs majority of the labor force (41 2 percent), followed by industry (27 4 percent), public service (21 6 percent) and agriculture (9 8 percent) Agricultural activities are however not limited Crops such as water yam, maize, and cassava etc are grown Mangoes also appear to be gaining commercial value in the district Fishing is also an important economic activity atKpando Torkor, a suburb of Kpando There is yet to be a fishing harbor at Kpando Torkor, one of the major fishing markets in the district, to boost up fishing
Tarkwa is the District capital of Wassa West District The population of Tarkwa in 1960, 1970 and 1984 were 13,545, 14,702 and 22,107 respectively This shows an annual intercensal growth rate of 2 91 percent between 1970 and 1984 The major economic activities in the district are subsistence agriculture, mining, and commerce Occupational distribution of the labor force shows that a sizeable number of the force (42 6 percent) are employed in agriculture After agriculture, is the industrial sector (dominated by mining activities) which employs 21 6 percent of the labor force, commerce employs 20 3 percent and services 15 5 percent Tarkwa is one of the main commercial centers in the Western Region and this is enhanced by its location on the Takoradi-Dunkwa trunk road as well as its advantage of being the District administrative capital Many of the towns in the District depend onTarkwa for most of their shopping needs Availability of industrial enterprises and supporting services such as hotel facilities are factors of population attraction Industrial establishment is dominated by mining activities withAshanti Goldfields Company, Taberebe Goldfields, Ghana Australia Goldfields, Ausdrill etc, operating in the project town
Prestea is a mining town located in the Wassa West district in the Western Region Prestea is the second largest town in the District Prestea has been experiencing increasing population at a low rate According to the population census reports of Ghana, the population figures for Prestea for 1960, 1970 and 1984 were 13,246, 15,242 and 17,030 respectively This shows an annual intercensal growth rate of 0 75 between 1970 and 1984 The major economic activities in the District are mining, agriculture, commerce, lumbering/sawmilling, palm oil and kernel oil extraction Occupational distribution of the labor force shows that sizeable number of the labor force is employed in agriculture (42 2 percent) After agriculture is the industrial sector (dominated by mining activities) which employs 21 6 percent of the labor force, commerce employs 20 3 percent and services 15 5 percent Prestea is one of the main commercial centers in the western region and is enhanced by its location on theTarkwa-Samrebol Trunk Road Many of the outlying settlements depend on Prestea for their shopping needs Industrial enterprises is dominated by mining, with Barnex Gold mines formally State Gold Mining Company (SGMC), employing about 6,000 people
-68- Annex 12: ProgrammeLetter
GHANA:URBAN 5 In case of reply thSe Miistry of Loal Goverzunent number and date of this and Rural Development Letter should bc quoted. P. 0. Box M 50 Our Ret. No ...... Accra Your Ref ...... Tel. M 6654 21 D 666030 o November, 1999. D 6647 63 REPUBLICOF GHANA ......
URBAN V PROJECT
Programme Letter
MR. PETER HARROLD COUNTRY DIRECTOR THE WORLD BANK ACCA
Dear Mr. Harrold:
The purpose of this letter is to describe the sector policy framework within which the Governmentof Ghana (GOG) will work during the implementation of the Fifth Urban Project to address the development needs of 23 urban settlements.
Background
Cities and urban towns, as centers of industry and services, contribute more than half of Ghana's GDP. Urban settlements also play a vital role in rural development as market and service centers. The severe inadequacy of urban infrastructure and services such as roads, water supply, electricity, telecommunications,sanitation, and solid waste management,human excreta management is a major constraint on the productivity of urban households and eri(erprises and consequently on both local and national development. Improving the coverage of urban services requires not only investment in physical infrastructure,but also major efforts to build institutional capacity in the fields of planning, management, finance, and operations and maintenance.
The Government of Ghana's initiatives in the urban sector over the last few years include a number of multilateral and bilateral-assisted urban projects, the provision of incentives for private developers to become involved in housing, and the provision of some municipal services, such as solid and liquid waste management.
-69- GOG is implementinga comprehensivedecentralisation programme which is required by the Constitution of the Fourth Republic and the Local GovemmentAct of 1993 (Act 462). The Act gives District Assemblies (DAs) the power to "exercise political and administrativeauthority in the District and provide guidance, give direction to and supervise all other administrative authoritiesin the District". The Act also gives the DAs the responsibility for "*overalldevelopment", "development control", and "the development of basic infrastructure", "the provision of municipal services", and the "management of human settlements and the environment", among other activities.
Urban Sector Strategy
The Govemment'surban sector strategy is to: i) continue to improve basic urban infrastructure and services to increase the productivity of urban households and enterprises by carefully selecting investments in a participatory way; iii) improve services to the urban poor through targeted upgradingprogrammes, and focusing on secondaryurban towns where many of the urban poor live; iii) make urban service delivery more efficient, sustainableand relevant to the people through needs based on demand and competition; iv) improve and make more efficient local government; v) increase private sector participationin the sector; vi) build human resources capacity for urban planning and management.
GOG is applying to the World Bank for an Adaptable Programme Loan (APL) to support the Government of Ghana's urban sector strategy. The programme will provide the framework for institutional development and capacity building for District Assemblies to enable them to meet their responsibilities of ensuring adequate urban service delivery and improving basic infrastructure.
Policy Issues and Actions
As part of the programmeloan, GOG will addressthe following policy issues.
Local Government Service Act. (1) GOG will take steps to ensure that, by the end of the Phase I programme period, at least the Metropoiitanand Municipal Assemblieshave full jurisdiction over their staff under the Local GovernmentService Act. (2) The passing of the Act and a plan for its implementation will be a condition of the programmeand will serve as a trigger to move from Phase 1 to Phase 2. District Assemblies currently do not have direct control over their staff who presently form part of the Civil Service and therefore report to central government ministries. The passing of the Local Government Service Act would place local government staff on a separate public service and enable DAs to participate, with a Service Council, in decision making regarding the recruitment and management of their staff.
-70- Fiscal decentralization. Donor-supported fiscal decentralization *studies are on-going. GOG will present to IDA the key recommendations of these studies along with a phased plan for implementation during the program period to minimise the mismatch
between the allocation of responsibilities/functions and funding of the DAs for their performance.
Key Principles of the Programme The program will be implementedin accordancewith the following principles:
* Demand-driven approach. DAs will have the responsibility for choosing and prioritizing sub-projects, in accordance with priorities in their Town Development Plans.
* Community participationlconsultation. A key objective of the programme will be greater participation of stakeholders in preparing and/or updating the Town Development Plans from which priority sub- projects will be chosen. Training in participatory planning will be continued through the programme
- Decentralization of planning, implementation and management of services. In accordance with the Local Government Act of 1993, the Ministry of Local Govemment and Rural Development (MLGRD) will continue to provide the necessary support to the DAs to enable them to adequately provide infrastructure and services. This includes continued support and giving the MMDAs greater control over both financial resources and personnel managementfunctions.
= Capacity building. Since the success of the urban sector strategy depends critically on the capacities of local governments, MLGRD will ensure continued supportto the Instituteof Local Government Studies established as a centre of excellence to provide, co-ordinate and manage training of the staff, Assembly Members, Councilors and Community leaders in collaboration with other relevant training institutions that are involved in building capacity of DAs.
* Financialprinciples. DAs will contributetowards the capital as well as O&M costs of every sub-project financed through the programme.
* Private sector participation. Implementationof sub-projects as well as O&M will be contractedout to the private sector to the extent possible.
-71- Programme Scope and Phasing
The proposedAPL seeks to improve basic infrastructure and services in the 25 urban secondarytowns (in 23 DAs)in Ghanawhich have not been covered in any of the previous Bank-financed urban projects. The program has three phases:
Phase 1: The objectiveof the first phase is to strengthen the capacity of DAs to prepare development plans, prioritize investments, prepare sub-project proposals, mobilize resources, improve service delivery and improve the efficiencyand managementof the DA through training and technical assistance. This phase will also provide funds for at least one infrastructure sub-project in every town. It is expected that the experience of implementing one sub-project will enable each DA to go through the process of procuring and managing consultants and contractorsfor sub-projectpreparation and implementationusing Bank guidelines (a learning-by-doing approach).
Phase 2: The second phase will (i) continue to provide training and technical assistance, and specific training needs for DAs will also be provided on a demand-drivenbasis to ensure relevance to the current needs of the Towns; and (ii) provide funds for physical infrastructure investmentswhich DAs will access on a competitive, demand-driven basis with clear selectioncriteria that each DA will have to meet before they become eligible for the funds. The second phase will also finance improvement of the capacities, infrastructure and services of the 12 other secondarytowns, currentlycovered under the Local Government Development Project.
Phase 3: The final phase will finance additional investments on a demand-driven basis, where all 37 towns (the original 25 plus the additional 12) will compete for funding for investments. There will be close monitoring of DA performance improvements, particularly regarding financial management,own source revenue generation and O&M of infrastructure during the last two phases. Training will continue to be provided on a demand-driven basis.
Programme Financing
The MMDAs funding and the provision of infrastructure and services is mainlythrough the District AssembliesCommon Fund (DACF). This currently constitutesthe main source of funding for DA capital expenditure. However, this is grossly inadequate to meet the infrastructure and services demands. The programmewill complementthe DACF to fulfill the unmet demands in the secondary and poorer Towns in the Districts.
DAs will provide at least 10% of sub-projectcosts and make provision for 3% of sub-project costs of O&M as their matching funds to funding through the programme. Because a strong focus of the programme is to help DAs to increase their financial managementcapacities, DA counterpart contributions
-72- towardssub-projects will be increasedduring the second and third phases of the programme to approximately 15% of sub-project costs.
GOG will provide matching funds to support the program. Total programme financing is estimated as follows:
(in US dollars) GOGIDAs IDA Total Phase 1 1.6 m 12.4 m 14.0 m Phase2 6.6 m 33.4 m 40.0 m Phase3 8.4 m 37.6 m 46.0 m TOTAL 16.6 m 83.4 m 100.0 m
Program Management and Implementation
MLG&RD has overall responsibility for providing policy guidance and for project management through its Local Govemment Project Support Unit (LGPSU). LGPSU has primary responsibility for promoting, facilitating, monitoring, evaluating and reporting on project activities. DAs will have primary responsibility for (i) identifying their training and capacity building needs and taking actions to fulfil these needs, and (ii) implementing sub- projects. The Institute of Local Government Studies (ILGS) will be responsible for the preparation and delivery of training activities while the LGPSU will manage all related contract issues.
Yours Sincerely
(KWAMENA AHWOI) HON. MINISTER OF LOCAL GOVERNMENT AND RURAL DEVELOPMENT ACCRA.
-73- In cose of reply the Ministry of C overnent numnbcrand date of this and oLoal Governmert Letters/ould be guokd. and Rural Development Our Ref.No ...... SCRIADM294SF1.1 O. BoxM50 YourRef...... Tel. M 665421 § D 66 60 30 March 10, 2000 D 6647 63 REPUBLICOF GHANA .. h 2......
MR PETERHARROLD COUNTRYDIRECTOR THE WORLDBANK ACCRA
Dear Mr Harrold
Re: Urban V Project Program Letter
I refer to the Program Letter submitted by my Minister per letter dated November 30, 1999 and the Agreed Minutes of Negotiations dated January 28, 2000, and submit herewith performance indicators and triggers to be included as an annex to the Minister's letter.
Sincerely,
(S.Y.M. ZANU) CHIEF DIRECTOR FOR:MINISTER
-74- Key performance indicators:
PHASE I END-OF-PROGRAM IPERFORMANCE INDICATORS PERFORMANCE INDICATORS (to be achievedby FY2003) (to be achieved by FY2011) lnstitutionsl indicators Itstitutional indicators I. Local GovermmentService Act enacted' I. OperationalLocal Government Service Act 2. A phased implementationplan prepared to imnplement 2. By program end, full authority to DAs for staff key recommendationsof study on fiscal rccruitmentand personnel management decentralization where they relate to local ;. Competent teclhnicaland financial staff in key posts in soveniainents' all participating DAs, supported by effective human 3. Technical and financial staff in key posts (district resource development policy and procedures engineer, planner, financial officer) are trained and/or 4. DistrictDevelopment Plans and realistic annual competent staff are in key posts in place for.at least 6. budgets in all participating DAs developed with months in at least 60% of DAs* greater stakeholder participation; Structure Plans 4. District Development Plans are updated in all 23 DAs developedfor all 25 towns with adequate community participation* 5. Managenent tools in place (accounting and budgeting systems; quarterly managementreports; financial Training managementprocedures mrtanual;technical procedures I At least 70% of targeted days of training and coaching manual) in all participating DAs delivered 6. Timely planning and progranuning of investment and maintenance works Financialmanagement 1. Major tax base updated in all 23 DAs Financialmanagement 2. RIAPs & associated changes in the system of billing & I. Timely budget preparation, implementation and collection are implemented in all DAs on a phased basis monitoring: clear and well-targeted urban budget 3. Improvcd financial and accounting systers established allocationsand disbursements in 8 DAs 2. Improvedtransparency and accountabilityof DA fuids 4. Mapping completed for all 25 towns; digital maps througheffective reporting and public access prepared for participating towns in one region; regional 3. Local revenues improve by 2.5% per year in real terms staff (8) of Survey Dept trained with effect from the beginning of Pbase [I. S. Annual tax billing rate increases to total potential of ax 4. AdequateO&M funds established at DA level and base in at least 60%Xoof DAs* applied towards O&M expenditures; extensive use of 6. Ainnal collection rate of billed taxes is over 50%Yin all private sector in provision of O&M DAs* 7 Annual routine maintenance budgets for latstructure Itifrastructuresub-projects are prepared and are sufficient to cover rieeds estimated I. Expansionand rehabilitation of basic infrastructure in anmualrnaintenance programs in at least 60% of (related to the sub-projects approved) with resulting DAs* increase in access to basic services, panicularly by the poor (waler, sanitation, solid waste, access roads, etc.) Infrastructuresub-projects 2. Adequateroutine and periodic maintenance of facilities 1. At least one sub-project per town implemented by DAs 3. 90% of civil worklsand design contracts at the DA 2. O&M itiaidsare established for all approved sub- levelare contracted out to the private sector (10% projects. and an initial deposit of at least 3% of sub- minor works carried out in-house) projiectcosts is deposited (50% by the DA and 50% by IDA).*
Alsu Irig.ers for nioving from Phase I to Phase 2. See sectioniU4.
-75- TRICGERS FOR MOVING TRICGERS FOR MOVING FROM PHASE I TO PHASE It FROM PHASE II TO PHASE IlIl (to be achievedby FY2003) (to beachieved by FY2007) Institutional Institutional I. Local GovcrnmcntService Act enacted I . LocalGovernmnuie Service Act operational 2. A phasedinpicpmcntation plan preparedto implement key 2. Competenttechnical and financial staft (district rccomnicndationsof study on fiscal decentralizationwhere they engtncer.planner, financial officer) arein key postsfor rclatc to locA gtovemments at least 6 monthsin at Ieast60% of DAs 3. Tcchnicaland fin,ancial staff in key posts(distric engineer. 3. Capacityof SurveyDepartment adequately developed planner.financial officer) are trained and/orconpctent stalTare for thesustainabic delivery of mapsto DAs in pltaccfor at Icast6 monthsin at Ieast60% of DAs 4. MLGRD attachesone additional staff to LGPSUto 4. District DcvelopmcntPlans are updatedin all 23 DAswih nmakea total of 4. adequatecommunity parnicipation 5. MLGRD aaachcsat least3 professionalstaff to LGPSU Training Training 6. Al leastS0% of DAs will havetrained professionalsin 6. At least7 X.of targeteddays of training andcoaching delivered postsand will haveadopted participatory measures of planningand programming of investmentby end of Financialnianatziecen PhaseI. 7. Annualtax billing rateincreases to total potentialof taxbase in at Ieastt(l% of DAs Financialmanaerment S. Annualcoilcction rate of billed taxesis over 50%Ain all DAs 7. Localrevenues increase by 2.S%per year in real terms 9. Annualroutine maintenance budgets for infrastuuctureare duringPhase II in all DAs preparedand are sufficient to cover needsestinmted irt annual mainienanceprograms in at least60%/. of DAS lnfrastnctureand services S. Evidenceof privatesector involvement in O&M of Infrascnucturcsub-projects infrastrucwttrcand services in all DAs I 0. O&M fundsarc establishedfor all approvedsub-projects, and an initial depositof at least3% of sub-projcctcsts is deposited (51t%by DA and 50% by IDA).
-76- MAP SECTION
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