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Malawi-Zambia AFRICAN DEVELOPMENT FUND NACALA ROAD CORRIDOR DEVELOPMENT PROJECT- PHASE IV COUNTRY: MULTINATIONAL (MALAWI/ ZAMBIA) PROJECT APPRAISAL REPORT OITC DEPARTMENT November 2013 TABLE OF CONTENTS I - STATEGIC THRUST & RATIONALE……………………………………………………………………………………………………………………………………………………………………………..1 1.1 Project linkages with country strategy and objectives……………………………………………………………………………………………………………..1 1.2 Rationale for the Bank's involvement……………………………………………………………………………………………………………………………………………..2 1.3 Donors coordination…………………………………………………………………….……………………………………………………………………………………………3 II- PROJECT DECSRIPTION……………………………………………………………..……………………………………………………………………………….4 2.1 Project development objctives components…………………………………………………………...............................................................................4 2.2 Project components…………………………………………………………...............................................................................4 2.3 Technical solution retained and other alternatives explored……………………………………………………………………………………..5 2.4 Project type…………………………………………………………………………………………………………………………………………………………………..5 2.5 Project cost and financing arrangments……………………………………………………………………………………………………………………..5 2.6 Project's target area and population……………………………………………………………………………………………………………………….7 2.7 Particpatory process for project identification, design and implementation…………………………………………………………………………………………8 2.8 Bank Group experience, lessons reflected in project design…………………………………….……………………………………………………………..8 2.9 Key performance indicators………………………...................................................................................................................................................9 III- PROJECT FEASIBILITY…………………………………………………………………….……………………………………………………………………………………….10 3.1 Economic and financial performance…………………………………………………………...……………………………………………………………………………10 3.2 Environmental and social impact……………………………………………………………….……………………………………………………………………………….11 IV - IMPLEMENTATION…………………………………………………………….………………………………………………………………………………………………………………14 4.1 Implementation arrangements………………………………………………………………….…………………………………………………………………………14 4.2 Monitoring…………………………………………………………………………………….……………………………………………………………………………………………18 4.3 Governannce………………………………………………………………………………….………………………………………………………………………………………………..18 4.4 Sustainability…………………………………………………………………………………..…………………………………………………………………………………………….18 4.5 Risk management……………………………………………………………………………..………………………………………………………………..19 4.6 Knowledge building…………………………………………………………………………...…………………………………………………………………………19 V - LEGAL INSTRUMENTS…………………………………………………………………….………………………………………………………………………………………………………..20 5.1 Legal intrument………………………………………………………………………………..………………………………………………………………………….20 5.2 Conditions associated with Bank's intervention………………………………………………...………………………………………………………………………………….20 5.3 Compliance with Bank Policies………………..……………………………………………….………………………………………………………………………..20 VI - RECOMMENDATION……………………………………………………………………..……………………………………………………………………………………………20 Appendix IA. Malawi's Country comparative socio-economic indicators Appendix IB. Zambia's Country comparative socio-economic indicators Appendix IIA. Table of AfDB's portfolio in Malawi (September 2013) Appendix IIB. Table of AfDB's portfolio in Zambia (September 2013) Appendix IIIA. Key related projects financed by the Bank and other development partners in Malawi (September 2013) Appendix IIIB. Key related projects financed by the Bank and other development partners in Zambia (September 2013) Appendix IV. Map of the Project Area Appendix VA. Justification of 10% counterpart funding waiver for Malawi Appendix VB. Justification 10% counterpart funding waiver for Zambia CURRENCY AND EQUIVALENTS 19, August, 2013 1UA = 1 SDR 1UA = USD1.53481 1UA = MWK499.192 1UA = ZMK8.129 FISCAL YEAR Malawi: 01 July - 30 June Zambia: 01 January - 31 December WEIGHTS AND MEASURES 1metric tonne = 2204 pounds (lbs) 1 Kilogramme (kg) = 2.200 lbs 1 metre (m) = 3.28 feet (ft) 1 millimetre (mm) = 0.03937 inch (“) 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 i ABBREVIATIONS AfDB African Development Bank ADF African Development Fund CPIA Country Political and Institutional Assessment CSP Country Strategy Paper DANIDA Danish International Development Agency DFID Department for International Development DPs Development Partners EU European Union EIB European Investment Bank GoM Government of Malawi GoZ Government of Zambia IRR Internal Rate of Return JICA Japan International Corporation Agency MDC Mtwara Development Corridor MGDS Malawi Growth and Development Strategy MWFO Malawi Field Office MoTPW Ministry of Transport and public Works MoTWSC Ministry of Transport, Works, Supply and Communications NGO Non-Governmental Organization NPV Net Present Value ORPF Procurement and Fiduciary Services of the Bank OSBP One Stop Border Post PAPs Project Affected Persons NRFA National Roads Fund Agency RA Roads Authority RAP Resettlement Action Plan RDA Road Development Agency RFA Roads Fund Administration RMCs Regional Member Countries RDA Roads Development Agency RISP Southern Africa Regional Investment Paper RSP Road Sector Programme SADC South African Development Community SDI Spatial Development Initiative SNDP Sixth National Development Plan SWG Sector Working Group TA Technical Assistant TSIP Transport Sector Investment Programme VOC Vehicle Operating Costs WB World Bank ii LOAN/ GRANT INFORAMTION Client’s information BORROWER: REPUBLIC OF MALAWI REPUBLIC OF ZAMBIA EXECUTING AGENCY: ROADS AUTHORITY ROADS DEVELOPMENT AGENCY Financing plan Source (Amount in UA million) Country ADF-12 ADF-12 ADF-12 CF Total PBA RO Grant Malawi 17.400 24.960 0.610 2.42 45.390 Zambia 5.000 - - 0.5 5.5 Total 22.400 24.960 0.610 2.920 50.890 Note: CF: Counterpart Funding ADB’s key financing information Loan / grant currency UA (Unit of Account) Interest type N/A Interest rate spread N/A Commitment fee 0.5% Service Charge 0.75% Tenor 50 years Grace period 10 years NPV (base case) US$ 14 million EIRR (base case) 15.5% Timeframe - Main Milestones (expected) Concept Note approval date 20 June 2013 Project Approval date 04 December, 2013 Effectiveness date 30 June, 2014 Completion date 30 June 2018 Last disbursement date 31 December 2018 iii PROJECT SUMMARY Project overview: The proposed project will involve rehabilitation of a 75 km road between Liwonde and Mangochi in Malawi along the Nacala Road Corridor as well as establishment of One-Stop-Boarder-Posts (OSBPs) between Malawi and Mozambique and between Malawi and Zambia. The total project cost estimate for Malawi is UA45.390 million net of taxes. The Bank is expected to contribute UA 42.970 million (95%), and the Government of Malawi will contribute UA 2.420 million (5%). Bank financing will comprise of an ADF loan in the sum of UA 42.360 million and an ADF grant of UA 0.610 million. The total project cost estimate for Zambia side is UA5.500 million net of taxes. The Bank is expected to contribute an UA 5.00 million (91%) and the Government of Zambia will contribute UA 0.5 million (9%). The project duration is expected to be 5 years as follows: design review, preparation of bidding documents and tendering (12 months), construction period (36 months), and defects liability period (12 months). Project objectives: The project development objectives are two-fold: (i) at regional level, the objective is to contribute to improving road transportation and trade facilitation along the Nacala Road Corridor. The Nacala Road Corridor stretches from Lusaka in Zambia and through Malawi to the port of Nacala in Mozambique; and (ii) at national level, specifically in Malawi where a 75 km road is planned to be rehabilitated between the towns of Liwonde and Mangochi, the project is expected to contribute to improving transport services in the Balaka-Mangochi districts as a result of reductions in transportation, which in turn is expected to support stimulation of local economic activities in agriculture, agro-forestry, fisheries and tourism. Project beneficiaries: The project target area is the entire Nacala Road Corridor starting from Lusaka in Zambia through Malawi and Mozambique to the Nacala Port with an estimated population of over 2 million people. In Malawi in particular, where a 75 km road is planned to be constructed between Liwonde and Mangochi as well as spot-improvement of about 100 km of feeder roads, the target area is Balaka and Mangochi districts which have a combined population of approximately 1,266, 000 comprising 70% youth. The proposed road to be rehabilitated and spot-improvement of feeder roads in this area, is expected to create about 400 temporary direct jobs and 100 permanent jobs during project implementation and after project completion respectively. In addition to the above, roadside markets will be constructed at selected locations along the road and will provide business opportunities for women as they make the majority of people selling in markets. It is expected that, the above social-inclusiveness activities shall contribute to improved incomes and therefore poverty reduction of the households living in the Balaka-Mangochi districts. Project Rationale and Need: Long distance to the sea-ports grossly contributes to high transportation costs in Malawi and Zambia and is a major impedance to regional and international trade. At the moment several projects are underway, including improvement of port facilities at Nacala and road and rail infrastructure leading to Nacala Port being financially supported by various International Financial
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