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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 31006 IMPLEMENTATION COMPLETION REPORT (COFN-03460 TF-27975 IDA-24660 IDA-24661) ON A CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 12.9 MILLION TO THE REPUBLIC OF CAPE VERDE FOR A TRANSPORT AND INFRASTRUCTURE PROJECT Public Disclosure Authorized DECEMBER 23, 2004 Transport Sector Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective ) Currency Unit = Cape Verde Escudo (CVE) CVE 64.89 (appraisal) = US$ 1 CVE 85.11 (Nov. 2004) US$ 1.404 (appraisal) = SDR 1 US$ 1.511 (Nov. 2004) FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ARE Economic Regulatory Administration BADEA Arab Bank for Economic Development in Africa CAS Country Assistance Strategy CFD Caisse Francaise de Developpement CPU Coordination Project Unit DCA Development Credit Agreement DGI Directorate General of Infrastructure DGMP Directorate General of Shipping and Ports DGTR Directorate General of Road Transport EIB European Investment Bank ENAPOR National Port Authority GoCV Government of Cape Verde IDA International Development Association IMP Institute of Maritime and Ports IRR Internal Rate of Return ISPS International Ship and Port Facility Security Code KFW Kreditanstalt fur Wiederaufbau MIT Ministry of Infrastructure and Transport OPEC Organization of Petroleum Exporting Countries PIT Infrastructure and Transport Project PPF Project Preparation Facility RF Road Fund RI Road Institute SAR Staff Appraisal Report SDR Special Drawing Rights SLA Subsidiary Loan Agreement STCW 98 Standards of Training, Certification and Watchkeeping for Seafarers UCP Project Coordination Unit Vice President: Gobind T. Nankani Country Director Madani M. Tall Sector Manager Sanjivi Rajasingham Task Team Leader/Task Manager: Gylfi Palsson CAPE VERDE Transport and Infrastructure Project CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 10 6. Sustainability 11 7. Bank and Borrower Performance 12 8. Lessons Learned 14 9. Partner Comments 14 10. Additional Information 15 Annex 1. Key Performance Indicators/Log Frame Matrix 16 Annex 2. Project Costs and Financing 18 Annex 3. Economic Costs and Benefits 20 Annex 4. Bank Inputs 24 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 26 Annex 6. Ratings of Bank and Borrower Performance 27 Annex 7. List of Supporting Documents 28 Project ID: P000435 Project Name: Transport and Infrastructure Project Team Leader: Gylfi Palsson TL Unit: AFTTR ICR Type: Core ICR Report Date: December 23, 2004 1. Project Data Name: Transport and Infrastructure Project L/C/TF Number: COFN-03460; TF-27975; IDA-24660; IDA-24661 Country/Department: CAPE VERDE Region: Africa Regional Office Sector/subsector: Ports, waterways and shipping (53%); Roads and highways (44%); Central government administration (3%) Theme: Export development and competitiveness (P); Other financial and private sector development (P); Other trade and integration (P); Public expenditure, financial management and procurement (S) KEY DATES Original Revised/Actual PCD: 11/15/1991 Effective: 06/17/1993 07/22/1993 Appraisal: 06/25/1992 MTR: 11/15/1995 06/26/1996 Approval: 03/04/1993 Closing: 06/30/1998 06/30/2004 Borrower/Implementing Agency: GOV'T, ENAPOR,/MIT/PIT; ENAPOR Other Partners: OPEC, BADEA, AfDB, FCC, SDC, EDF, EU, FAD, KFW, Portugal, Netherlands STAFF Current At Appraisal Vice President: Gobind T. Nankani Edward V. K. Jaycox Country Director: Madani Tall Katheleen Marshall Sector Manager: Sanjivi Rajasingham Peter Watson Team Leader at ICR: Gylfi Palsson Michel Loir ICR Primary Author: James Wright; Gylfi Palsson 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The project objectives, as listed in the Staff Appraisal Report of February 1993 and the Development Credit Agreement of March 2003, were: (i) To promote international competitiveness through port modernization, reorganization of the shipping industry and development of offshore information industries. (ii) To foster national economic integration by streamlining transport sector investment planning and achieving a more balanced and cost effective allocation of resources. (iii) To prevent further erosion of the capital stock in the road network by setting up a road maintenance organization. (iv) To support the promotion of the local contracting industry through the execution of a four year road maintenance program. (v) To promote economic growth and alleviate poverty in Fogo Island through rehabilitation of its only port. (vi) A longer-term objective was to build capacity in the Ministry of Transport and Communications. The objectives were important for Cape Verde’s development. The 1980s had seen a deceleration of economic growth, but by the end of the decade the country was beginning to reform its economy to attract foreign capital, develop the private sector and adopt a more outward-looking development strategy. However, the country lacked adequate port and road infrastructure, and direct government management of ports, roads and shipping constrained economic growth. In particular, roads and ports were poorly maintained. Bureaucratic management and inefficient labor policies hampered port and shipping services. Inter-island shipping involved sixteen vessels, many very old, and thirteen companies, many of which were barely solvent. Maintenance of the roads was directly by force account, which was inefficient and unable to keep up with the need. Funding for road maintenance was inadequate. This project followed the Infrastructure Rehabilitation and Technical Assistance Project (Credit 1954-CV) which had supported the adoption of new legislation liberalizing the transport sector. The Government’s strategy was developed in discussions with the Bank and other donors. A donors’ round-table meeting was held in 1991 where donors made commitments to finance different components. The strategy was to support the structural change of the economy to be more outward looking by streamlining transport policies and modernizing transport infrastructure. The strategy supported: (i) creation of new port facilities at Porto Grande (Mindelo) which was to be the center for international and inter-island transshipment; (ii) reorganization of shipping to restore profitability, improve service and create opportunities for joint ventures as feeders of transshipped cargo; and (iii) development of private sector led information processing activities. The strategy also aimed at reducing development imbalances among the nine inhabited islands. The World Bank served as the catalyst to mobilize other donors to fund a transport sector program with the intention of financing components that other donors would not. The project objectives as well as the text of the SAR and Schedule 2 of the DCA detail a transport sector - 2 - program, identified in the SAR as costing US$ 78.4 million, while the IDA credit was for a project of SDR 8.9 million. By this, success of the program became integral to the success of the IDA funded project and required the Bank to be an active partner in all sector discussions. A Project Preparation Facility (PPF) and a Japanese grant financed project preparation. Other donors financed most port components. The Bank financed mostly roads and capacity building, but also cofinanced some activities with other donors. The Bank’s Country Strategy at the time called for, inter alia, the elimination of infrastructure bottlenecks and improving public administration. The project objectives were consistent with the country’s economic needs and the Bank’s country strategy. 3.2 Revised Objective: Concerning objective (i), a study concluded that offshore information industries would not have the foreseen outcome due to technology changes in the world. At the mid-term review this part of the objective was dropped, but the DCA was not amended accordingly. IDA and other donors had committed to financing various sections of the Santiago island ring road and it was expected that Government would secure assistance in financing the Sao Domingos-Vila da Assomada section. However, during the course of project implementation, unforeseen climatic conditions necessitating emergency rehabilitation, execution difficulties in road construction in Fogo and port rehabilitation in Mindelo among other occurances, required that Government redirect resources. This situation, combined with limited resources of the country and competing priorities, made it impossible for Cape Verde to secure the necessary resources prior to project completion. Therefore, and consistent with objectives (ii) and (iii), a Supplemental Credit Agreement for US$5 million was approved on January