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The World Bank for OFFICIAL USE ONLY Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 47613-ET PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED CREDIT IN THE AMOUNT OF SDR 23.6 MILLION (US$35.00 MILLION EQUIVALENT) TO THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA FOR AN Public Disclosure Authorized ETHIOPIA SUSTAINABLE TOURISM DEVELOPMENT PROJECT JUNE 5,2009 Finance and Private Sector Development Africa Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective April 30,2009) Currency Unit = Ethiopian Birr (ETB) 11.24 ETB = US$ 1 US$1.488 = SDR 1 GOVERNMENT FISCAL YEAR July 8 - July7 ABBREVIATIONS AND ACRONYMS APL Adaptable Program Lending ASC Audit Services Corporation CAS Country Assistance Strategy CHP Cultural Heritage Project cso Civil Society Organization DPL Development Policy Lending ESMF Environmental and Social Management Framework ESTDP Ethiopian Sustainable Tourism Development Project FM Financial Management FMR Financial Management Report FMS Financial Management Specialist GoE Government of Ethiopia GTZ German Technical Cooperation IDA International Development Association IFC International Finance Corporation IFR Interim Financial Report LIL Learning and Innovation Loan M&E Monitoring and Evaluation MGS Matching Grant Scheme MoCT Ministry of Culture and Tourism MoFED Ministry ofFinance and Economic Development MPO Marketplace Operator MSME Micro, Small and Medium Enterprise OD1 Overseas Development Institute OFAG Office of the Federal Auditor General PASDEP Plan for Accelerated and Sustained Development to End Poverty PBS Protection of Basic Services PCU Project Coordination Unit PFM Public Financial Management PIM Project Implementation Manual PIP Project Implementation Plan PPF Project Preparation Facility PSC Project Steering Committee FOR OFFICIAL USE ONLY PSNP Productive Safety Net Project RPF Resettlement Policy Framework RAP Resettlement Action Plan SME Small and Medium Enterprise SNV Netherlands Development Organization SIL Sector Investment Loan SMU Site Management Unit SNNPR Southern Nations and Nationalities People’s Region SOE Statement of Expenditures STEP Sustainable Tourism for Eliminating Poverty TOR Terms of Reference TSA Tourism Satellite Account UNDP United Nations Development Program UNESCO United Nations Educational, Scientific and Cultural Organization UNWTO United Nations World Tourism Organization USAID United States Agency for International Development VCA Value Chain Analysis WTTC World Travel and Tourism Council Vice President: Obiageli K. Ezekwesili Country Director: Kenichi Ohashi Sector Manager: Gerard0 M. Corrochano Task Team Leader: Francois Nankobogo This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. ETHIOPIA Ethiopia Sustainable Tourism Development Project CONTENTS Page I STRATEGIC CONTEXT AND RATIONALE ................................................................ -9 A . Country and sector issues .................................................................................................... 9 B. Rationale for Bank involvement ........................................................................................ 13 C . Higher level objectives to which the project contributes .................................................. 15 I1. PROJECT DESCRIPTION............................................................................................... 15 A . Lending instrument. financing arrangements and other approaches ................................. 15 B. Project development objective and key indicators ............................................................ 15 C . Project components ............................................................................................................ 16 D. Lessons learned and reflected in the project design ............................................ 19 E. Alternatives considered and reasons for rejection., ............................................ 21 I11. IMPLEMENTATION ........................................................................................................ 21 A . Partnership arrangements / Harmonization ...................................................................... 21 B. Institutional and implementation arrangements ................................................................ 22 C . Monitoring and evaluation of outcomeshesults ................................................................ 23 D. Sustainability ..................................................................................................................... 24 E. Critical risks and possible controversial aspects ............................................................... 24 F. Credit conditions and covenants ........................................................................................ 27 IV. APPRAISAL SUMMARY .................................................................................................. 28 A . Economic and financial analyses ....................................................................................... 28 B. Technical ........................................................................................................................... 28 C . Fiduciary ............................................................................................................................ 29 D. Social ................................................................................................................................. 31 E. Environment ...................................................................................................................... 32 .. F. Safeguard policies.............................................................................................................. 33 G. Policy exceptions and readiness ........................................................................................ 34 Annex 1: Country and Sector or Program Background.......................................................... 35 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................. 43 Annex 3: Results Framework. .......................................................................... 45 Annex 4: Detailed Project Description ..................................................................................... 50 Annex 5: Project Costs ............................................................................................................... 63 Annex 6: Implementation Arrangements................................................................................. 64 Annex 7: Financial Management and Disbursement Arrangements .................................... 67 Annex 8: Procurement Arrangements...................................................................................... 81 Annex 9: Economic and Financial Analysis ............................................................................. 91 Annex 10: Safeguard Policy Issues ............................................................................................. 97 Annex 11: Project Preparation and Supervision .................................................................... 100 Annex 12: Documents in the Project File ................................................................................ 101 Annex 13: Statement of Loans and Credits............................................................................. 102 Annex 14: Country at a Glance ................................................................................................ 104 Annex 15: Map ........................................................................................................................... 106 ETHIOPIA ETHIOPIA - TOURISM DEVELOPMENT PROJECT PROJECT APPRAISAL DOCUMENT AFRICA - AFTFP Date: June 4,2009 Team Leader: Francois Nankobogo Country Director: Kenichi Ohashi Sectors: Other domestic and international Sector ManagerDirector: Gerard0 M. trade (100%) Corrochano/Marilou J. Uy Themes: Other trade and integration (P);Export development and competitiveness (S);Other financial and private sector development (S) Project ID: PO98 132 Environmental screening category: Partial Assessment Lending Instrument: Specific Investment Loan Project Financing Data [ 3 Loan [XI Credit [ ] Grant [ ]Guarantee [ ]Other: For Loans/Credits/Others: Total Bank financing (US$m.): 35.00 Borrower: Ministry ofFinance and Economic Development P.O. Box 1905 Addis Ababa, Ethiopia Tel: 251-1 1-522-6698 / Fax: 251-1 1-555-1355 Responsible Agency: Ministry of Culture and Tourism P.O.Box 1907 Addis Ababa, Ethiopia Tel: 251-1 1-551-7020 / 553-7361 Fax: 251-1 1-551-2889 tour.corn@,teIecom.net .et Estimated disbursements (Bank FY/US$ US$m) ’Y I 10 I 11 i 12 I 13 I 14 1 15 I 4nnual 3.00 6.00 7.00 8.00 7.00 4.00 kmulative 3.00 9.00 16.00 24.00 31.00 35.00 The project development objective is to contribute to enhancement of the quality and variety of tourism products and services in targeted destinations so as to increase the volume of tourism, foreign exchange earnings, and jobs. It is expected that the implementation ofthe project will yield the following key outcomes in key destinations: (i)an increase of annual international
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