Document of The World Bank Public Disclosure Authorized
Report No: 17437-ZIM
PROJECT APPRAISAL DOCUMENT
ON A PROPOSED CREDIT
Public Disclosure Authorized IN THE AMOUNT OF SDR 46.3 MILLION
AND A
GEF TRUST FUND GRANT
IN THE AMOUNT OF SDR 3.7 MILLION
TO THE
REPUBLIC OF ZIMBABWE Public Disclosure Authorized
FORA
PARK REHABILITATION AND CONSERVATION PROJECT
APRIL 30, 1998 Public Disclosure Authorized Transport Operations Eastern and Southem Africa Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective April 9, 1998)
Currency Unit = Zimbabwe Dollar (Z$) Z$1.00 = US$.0619 US$1.00= Z$16.15
FISCAL YEAR January 1 to December 31 (FY98 is transition year: July 1, 1997-December 31, 1998)
ABBREVIATIONS AND ACRONYMS
CAS = Country Assistance Strategy CAMPFIRE = Communal Areas Management Programme for Indigenous Resources CBA = Cost-Benefit Analysis CIDA = Canadian International Development Agency CITES = Convention on the International Trade of Endangered Species COP = Conference of the Parties to the Convention on Biological Diversity DNPWLM = Department of National Parks and Wild Life Management EA = Environmental Analysis ERR = Economic Rate of Return GEF = Global Environment Facility GNP = Gonarezhou National Park GRZ = Government of the Republic of Zimbabwe IC = Incremental Cost ICB = International Competitive Bidding IDA = International Development Association GFC = International Finance Corporation IUCN = International Union for Conservation of Nature MOF = Ministry of Finance MMET = Ministry of Mines, Environment and Tourism MPCNH = Ministry of Public construction and National NCB = National Competitive Bidding NORAD = Norwegian Agency for International Development NGO = Non-Governmental Organization NPV = Net Present Value NSB = Net Social Benefit PIP = Project Implementation Plan PPA = Project Preparation Advance PSC = Public Service Commission SA = Special Account SOE = Statement of Expenditure SBD = Standard Bidding Document SWR = Shadow Wage Rate TCA = Transfrontier Conservation Area TOR = Terms of Reference QCBS = Quality-Cost-Based Selection
Vice President: Callisto E. Madavo Country Director: Barbara Kafka Sector Manager: Yusupha Crookes Task Manager: Imogene Jensen Zimbabwe Park Rehabilitationand ConservationProject
CONTENTS
A. Project DevelopmentObjective 2
1. Project developmentobjective and key performanceindicators 2
B. Strategic Context 2
1. Sector-relatedCAS goal supportedby the project 2 2. Main sector issues and Governmentstrategy 3 3. Sector issues to be addressedby the project and strategic choices 4
C. Project Descripticn Summary 4
1. Project cormponents 4 2. Key policy and institutionalreforms supported by the project 6 3. Benefits and target population 6 4. Institutionaland implementationarrangements 7
D. Project Rationale 7
1. Project alte:rnativesconsidered and reasons for rejection 7 2. Major related projects financedby the Bank and/or other developmentagencies 9 3. Lessons learned and reflected in proposed project design 9 4. Indicationsof borrower commitmentand ownership 10 5. Value adde(dof Bank support in this project 10
E. SummaryProject Analyses 10
1. Economic 10 2. Financial 11 3. Technical 15 4. Instituticnal 16 5. Social 17 6. Environmentalassessment 18 7. Participatoryapproach 18
F. Sustainability and Risks 20
1. Sustainability 20 2. Critical risks 20 3. Possiblecontroversial aspects 22
G. Main Credit Conditions 23 1. Effectivenessconditions 23 2. Other 23
H. Readiness for Implementation 23
I. Compliancewith Bank Policies 23
Annexes
Annex 1. Project Design Summary 24 Annex 2. DetailedProject Description 27 Annex 3. EstimatedProject Costs 33 Annex 4. Cost-BenefitAnalysis Summary,or 34 Cost-EffectivenessAnalysis Summary Annex 5. Financial Summaryfor Revenue-EarningProject Entities, or 51 Financial Summary Annex 6. Procurementand DisbursementArrangements 64 Table A. Project Costs by ProcurementArrangements 66 Table B. Thresholdsfor ProcurementMethods and Prior Review 67 Table C1. Allocationof Credit Proceeds 67 Table C2. Allocationof GEF Grant Proceeds 68 Annex 7 EnvironmentalAnalysis 69 Annex 8. Project ProcessingBudget and Schedule 72 Annex 9. Documents in Project File 73 Annex 10. Statementof Loans and Credits 74 Annex 11. Country at a Glance 76 Annex 12. Letter of Sector DevelopmentPolicy 78 Annex 13. Park and Wild Life ConservationFund Constitution 87
Maps: (i) Location of National Parks IBRDNo. 29269 (ii) South East Lowveld IBRD No. 29301 ProjectAppraisal Document PageI Zimbabwe:Park Rehabilitation and ConseeNation Project INTERNATIONALBANK FOR RECONSTRUCTIONAND DEVELOPMENT INTERNATIONALDEVELOPMENT ASSOCIATION
Africa Regional Office AFC03 Project Appraisal Document
Date: April 30, 1998 Task Team Leader/Task Manager: Imogene Jensen Country Manager/Director: Barbara Kafka Sector Manager/Director:Yusupha Crookes ProjectID:ZW-PA-3318 Sector: Environment Program Objective Category: EnvironmentallySustainable Development GEF Supplement ID: ZW..GE-3261 Focal Area: Biodiversity Lending Instrument: SpecificInvestment Credit and GEF Program of TargetedIntervention: [ Yes [X] No Grant Y
ProjectFinancing Data []Loan [X] Credit [ Guarantee [[X ] Grant [] Other [Specify]
For Loans/Credits/Others:
Amount(US$m/SDRm): $62.5 million/SDR46.3 million Proposed terms: [X] Multicurrency [] Single currency, specify Grace period (years): 10 [O StandardVariable [ Fixed [ LIBOR-based Years to maturity: 35 Commitmentfee:: 0 Service charge: 0.75%
Financing plan (US$75.0 m): Source Local Foreign Total Government 7.5 0 7.5 IDA 24.7 37.8 62.5 GEF 2.7 2.3 5.0 Total 34.9 40.1 75.0 Borrower: Republic of Zimbabwve Recipient: Republic of Zimbabwe Guarantor:N/A Responsible agency(ies): Ministry of Mines, Environment and Tourism,Department of National Parks and Wild Life Management
Estimated disbursements (Bank FY/US$M): 1999 2000 2001 2002 2003 2004 2005 Annual 2.5 13.1 13.5 12.0 11.2 6.2 4.0 Cumulative 2.5 15.6 29.1 41.1 52.3 58.5 62.5
EstimatedGEF disbursements(B3ank FY/US$M) Annual 1.0 1.5 1.0 0.5 0.5 0.5 Cumulative 1.0 2.5 3.5 4.0 4.5 5.0
Project Implementationperiod: 6.5 years Expected effectivenessdate: 10/01/98 Expected closing date: 09/30/05 Project Appraisal Document Page2 Zimbabwe: Park Rehabilitation and Conservation Project A: Project Development Objective
1. Project developmentobjective and key performanceindicators (see Annex 1): The basic objective of the project is to enhance the Governmentof the Republic of Zimbabwe's (GRZ) ability to protect wildlife populationsand their habitats and to develop the parks and wildlife sector, by rehabilitating or improving essential elements of infrastructure, and by strengthening the institutional capacity of the agencies responsible for ensuring the sustainabilityof investments and for formulating policy and implementingwildlife programs.
The global environmentalobjective is to improve biodiversityconservation in GonarezhouNational Park and nearby SouthEast Lowveldareas. Key features of biodiversityconservation and managementwill be protection of adequate range for mobile wildlife populationsin this semi-arid and periodicallydrought- prone region, protection of vegetation from destruction by fire and other human-caused impacts, protection of water resources,re-establishment of migration corridors,protection of wildlife from illegal killing, and minimizationof conflict between wildlife and agricultureor other land uses outside the park.
B: Strategic Context
1. Sector-relatedCountry Assistance Strategy (CAS)goal supported by the project (seeAnnex 1): GASdocument number: 16541 - ZIM Date of latest CAS discussion: May 27, 1997
The primary development objective identified in the Bank's Zimbabwe Country Assistance Strategy (CAS) is to raise per capita income and reduce poverty. The CAS focuses on four elements to accomplish this objective: (1) macroeconomic reform; (2) rural development and natural resource management;(3) privatesector development;and (4) developmentof human capital. The CAS notes that this project will be a key operationfor one of the three major componentsof the rural developmentand natural resources management element, namely, the component directed at reducing vulnerability to drought and ensuring that economic development in rural areas is environmentallysound. This project will contribute to this componentby seeking to ensure that the infrastructureof parks and related eco- tourism resources are sustainably managed to the benefit of neighboring rural communities, thereby enhancingthe managementof wildlife, forestry and other natural resources. Elements of a coherent rural development strategy are addressed by the Rural District Council Pilot Capital Development Project (Credit No. N-0190-ZIM), the proposed Community Action Project and the proposed Agriculture Services ManagementProject.
As the third highest foreign currency earner, behind agricultureand mining, tourism is important to the Zimbabweaneconomy. Since independencein 1980, the number of visitors to Zimbabwe has increased an average of about 10% per year through the 1980s and 23% per year through the 1990s. In 1996, 1.4 million visitors spent nearly US$150 million in Zimbabwe. Estimates have placed the contribution of tourism to GDP in the order of 3%, with estimates of current employmentin tourism ranging from 20,000 to 37,000 (see Annex 4). Most of this tourism is wildlife-based(the number of registeredtour and safari operators, guidesand huntersapproximately tripled from 1985to 1992). The entireNational Parks Estate comprises approximately 13% of Zimbabwe's land area, with national parks constituting about 55% of the estate, safari areas 38%, and recreational parks 7%. Compared with the 23% recent average annual growth overall, annual growth in visitors to the Parks Estate has averaged only 11%. Constraints to the estate playing a more active role in the country's economic development include: inadequate planning, competition within the region, declining infrastructure, poor marketing, constraints to private sector participation, and low local participation. ProjectAppraisal Document Page3 Zimbabwe: Park Rehabilitationand ConservationProject
The project will help to address these constraintsby supportinginstitutional changes in the Departmentof National Parks and Wiild Life Management (DNPWLM) to decentralize departmental planning and management, support dlesignand implementationof park management planning processes that have strong communityparticipation, and provide opportunities for increased participation by the rural poor including small-scale farmers in wildlife utilization on communal lands. In the lower potential zones where most of Zimbabwve'spoor live, wildlife utilization can be a sustainable form of natural resource utilization that is less vulnerable to drought than crop or livestock agriculture, is less likely to cause environmental degradation, and provides economic diversification. Overall, the project will assist in raising per capita income and reducing poverty, particularly in semi-arid areas, through increased tourism; improved opportunities for rural development and indigenous participation in the parks and wildlife sector; and reduced risks to environmentalsustainability.
The economicvalue of Zimbabwe's wildlife species is reflected in: (i) the cash role it plays in the local and national economy; (ii) the non-cash role it plays in improving local livelihoods; and (iii) the contribution it makes through game ranching activities. The cash contribution is substantial. The emerging wildlife industry was estimated in 1995 to be worth at least Z$200 million; another recent estimate sets the total earnings in wildlife subsectors, including tourism, hunting, food production,game products and support services at Z$852 million. However, benefits accruingto communitiesare mixed, and depend largely on the existence of local institutional structures to take advantage of and distribute income. The distributionof benefits so as to compensate those who "produce" the wildlife by tolerating the opportunitycosts imposed is a key issue for long tern sustainability,particularly for the communal lands.
The maintenance of prctected areas managed by DNPWLM is vital to tourism, as the protected areas form the core attractioinfor wildlife-based tourism. Continued investment and management of the protectedareas is also essentialto the developmentof wildlife utilizationin both the communaland larger scale farms and game ranches. The genetic stocks of the Parks Estate have also made important contributionsto the ecologicaland economicresources of the nation. Other benefits includeprovision of live animals for reintroductioninto other areas, and the underlying breeding stock for migratoryanimals hunted in communal andtcommercial areas. Beyond these unquantifiedeconomic benefits are the non- market ecologicalbenefits of conservationprovided by the parks and wildlife estate.
Gonarezhouand the sunroundinglowveld, in particular, is recognized as a region of globally significant biodiversity. Supportfor the park is consistent with the GEF OperationalStrategy for Arid and Semiarid Ecosystems and will contribute to protection and management of important trans-boundary wildlife habitats which overlap Zimbabwe,Mozambique and South Africa. The project is consistent with COP guidance in that it involves participation of local communities and other stakeholders, is promoting capacity building,encouraging conservation through alternative livelihoodsand economic incentives and facilitating innovative iFinancialsustainability of the protected areas system. It will contribute to strengthened protection of endangered, vulnerable and endemic species, including threatened species such as rhinocerosand elephant.
2. Main sector issues aml Governmentstrategy: Zimbabwe has long been a world leader in wildlife and national parks managementand maintains strong programs in many areas, including protectionof vulnerable species as indicated above. However, in the past few years, fiscal, structuraland other problems have led to a deteriorationin park infrastructureand in DNPWLM's ability to protect and manage effectivelythe Parks and Wildlife Estate. Key issues in the wildlife sector therefore center around (i) the effective managementof the Parks Estate; (ii) regulationof wildlife resourcesoutside of the Estate; and (iii) development of the economicvalue of the sector to the ProjectAppraisal Document Page4 Zimbabwe:Paric Rehabilitation and Conservation Project national/regional/localeconomy.
Government is currently addressing these priorities and other key sector issues, including (a) the appropriaterole of governmentagencies in developingthe commercial potential of the sector; (b) the proper balance between biodiversityconservation and commercialdevelopment of each unit within the Parks Estate; (c) the role of the Department in ensuringpublic regulationof the wildlife resource; (d) the integration of protected area planning with regional and local developmentplanning activities; and (e) means to improve incentives and benefits to communitiesand households from effective conservation and utilization of wildlife resourcesand habitat.
3. Sector issues to be addressed by the project and strategic choices: To address these issues, Government's immediate priorities are: (i) infrastructure rehabilitation - to rehabilitatethe basic infrastructurein National Parks so as to improve DNPWLMoperations and access for tourism;(ii) commercialization- to improverevenue generationand operationalefficiency throughout the Parks Estate, thereby increasingthe economicvalue of the sector to the national economy; and (iii) resourcemanagement - to improve the Department's ability to ensure effective wildlife conservationand managementpractices within the Estate and in all areas where wildlife are to be found. The creation in January 1996 of the Parks and Wild Life Conservation Fund, which allows DNPWLM to retain its revenuesfor operating and maintenanceexpenses, addresses elements of the first two of these priorities. Improved control over revenue will allow the Department to allocate more furding to infrastructure rehabilitationand conservation. It will also provide both the institutionaVlegalbasis and the incentive for improvingcommercial functioning of the Parks Estate.
The project addresses those issues relevant to the capacity of DNPWLM and to the management of national parks and conservationof wildlife and habitats within them, and through the GEF component, regional issues in the GonarezhouNational Park area. The project does not attempt to deal directly with issues concerning other Parks and Wildlife Estate lands (such as safari areas, botanical gardens, sanctuaries),wildlife utilization on most communaland private lands (exceptingthose near Gonarezhou), wildlife on private lands, and tourism sector policy and development. Within the national parks, the project addresses all three of the Government's priorities, as it will assist Government in restoring the physical infrastructure in a manner consistent with the pressing resource conservationfunctions of the Department;it will provide improved roads and basic tourist access (administrativeoffices, interpretive centers, etc.) to further the balanced commercialdevelopment of the Estate; and it will help ensure the sustainabilityof these improvementsthrough improved management of the Fund.
C: Project Description Summary
1. Project components (see Annex 2for a detailed description and Annex 3for a detailed cost breakdown):
The projectcomprises three parts as follows:
I. Institutional Strengthening: Reinforce institutional and organizational capacity to ensure the sustainabilityof investmentsand the effective managementof the Parks Estate and wildlife resourcesby (i) supporting organizational development (strengthen decision-making, management and oversight functions, support the culture shift required to develop a strong service orientation and operationalong commercial principles, review decentralization options, assess skill and training needs, establish performance and evaluation review system); (ii) implementing Fund financial management and management information systems (commercial accounting practices, decentralized cost centers, integrated management, planning, resource base and financial information systems); (iii) instituting comprehensivepark planning (preparing an overall Parks and Wildlife Conservation Master Plan and Project Appraisal Document Page 5 Zimbabwe: Park Rehabilitationand ConservationProject
individual park management plans, strengthening the planning unit, linking park plans to budget and management systems); (iv) improving capacity for policy development; (v) supporting monitoring programs and applied research for protected area management and biodiversity conservation; and (vi) providing interpretive and educational materials and programs.
II. Infrastructure: Rehabilitate or improve elements of national park infrastructure essential to the management of parks for wildlife and habitat conservation and for sustainable commercial development, including: (i) rehabilitating infrastructure (roads, water supplies, electricity, communications) critical for park functioning and tourism access; (ii) providing basic "tractor-based" plant and equipment for road maintenance; (iii) improving existing staff housing and providing additional housing to replace sub- standard accommodations; (iv) providing improved park administrative facilities (office space) and equipment; and (v) providing vehicles and other equipment for improved park management and anti- poaching operations.
III. GEF - Gonarezhou National Park: Strengthen biodiversity conservation in Gonarezhou National Park and the nearby South East Lowveld, by supporting activities both in the park and in nearby areas (particularly communal lands), including: (i) rehabilitating and improving essential infrastructure in the park, and supporting implementation of the park management plan; (ii) establishing a consultative process to involve local communities and other relevant stakeholders in park planning and management and in promoting conservation opportunities outside park boundaries; (iii) supporting community-based subprojects outside the park to promote or develop sustainable wildlife utilization and other forms of land use that are compatible with biodiversity conservation; and, (iv) supporting monitoring and applied research programs, and initerpretive and education facilities and programs.
Component Category Cost Incl. % of Bank- % of Contingencies Total financing Bank- (US$M) _ (US$M) financing 1. Institutional Strengtheniing Policy Development Policy 0.3 0.4 0.3 0.5 OrganizationalDevelopment Institution 0.5 0.7 0.5 0.8 Building Fund ManagementSystem Institution 1.0 1.3 1.0 1.6 Building PlanningUnit Strengthening Institution 0.3 04 0.3 0.5 Building Park ManagementPlanning Institution 0.3 0.4 0.3 0.5 Building Interpretiveand Extension(Capacity Institution 0.2 0.3 0.2 0.3 Building Research,Monitoring and Evaluation Project 0.1 0.1 0.1 0.1 Management Training Institution 0.7 0.9 0.7 1.1 Building InstitutionalStrengthening Equipment Institution 0.8 1.0 0.7 1.1 Building II. Infrastructure Gonarezhou Physical 8.9 11.9 7.5 12.0 Hwange/KazumaPan Physical 24.5 32.7 22.1 35.4 ManaPools Physical 6.8 9.0 6.0 9.6 Nyanga Physical 4.1 5.5 3.6 5.8 Chizarira Physical 6.4 8.5 5.8 9.3 Matobo Physical 4.1 5.5 3.6 5.8 ProjectAppraisal Document Page6 Zimbabwe:Park Rehabilitation and Conservation Project
Component Category Cost Incl. % of Bank- % of Contingencies Total financing Bank- (US$M) (US$M) financing Chimanimani Physical 1.5 2.0 1.2 1.9 Zambezi/VictoriaFalls Physical 4.7 6.3 4.2 6.7 Matusadona Physical 4.8 6.4 4.4 7.0
III. GEF-Gonarezhou National Park In-ParkWorks at Gonarezhou Physical 3.0 4.0 Off-ParkInvestnents at Gonarezhou Institution Building and 2.0 2.7 Physical Total 75.0 100.0 62.5 100.0
2. Key policy and institutional reforms supported by the project: As indicatedabove the project is designed to contribute directly to the improvementof infrastructureand the underlying systemsand human resourcesthat are essentialto ensuring the long-term sustainabilityof planned investments. Key to this program of support are measures to strengthen organizational and institutionalcapacity as follows:
a) elaborationof policies guiding the managementof the Wildlife and Parks Estate, including financial self-sufficiencyin a context of public service and operational efficiency;the role of DNPWLM in communityconservation and sustainableuse; wildlife producer rights and responsibilities;and review and updating of relevant legislationin conformitywith formal policy decisions;
b) implementation of the Fund to provide a more autonomous structure emphasizing commercial operations and economicefficiency in keeping with the performanceof its conservationfunctions;
c) support for the development and implementation of financial management and management informationsystems for the Fund;
d) implementationof a coherent approach to culture change within the Department, emphasizing the developmentof a service-oriented,professional culture that values and rewards strong perforrnance and effective commercialoperation;
e) assessmentof organizationaloptions, such as the desirability of conversion of current staff from the public service to employment by the Fund, and appropriate levels of financial and managerial decentralizationby providing funds for detailed technical review, incorporating the results of the income and expenditureanalysis; and f) support for comprehensive,participatory, and integrated planning at both the Parks Estate level and for each unit of the Parks Estate. Specifically,the projectwill continuethe approach instituted during project preparationof developingpark plans with broad participationof local and regional authorities, communalneighbors, and other stakeholders.
3. Benefits and target population: a) Improved protected area managementwill contribute to healthy wildlife populations in both parks and adjacent lands, providingopportunities to local communitiesto benefit from wildlife tourism and wildlife utilization; b) Employeesof DNPWLMworking in remote areas will benefit from improved living conditions,and Project Appraisal Document Page 7 Zimbabwe: Park Rehabilitationand ConservationProject
from more reliable csompensationderived from stabilized financial management. c) Residents of lands neaLrnational parks will benefit from greater integration of park management in regional development. d) Park visitors, both residents and foreigners,and the populationsof communitiesnear parks, will gain a greater environmentalawareness and understandingfrom educationaland interpretiveprograms.
4. Institutional and implementation arrangements: Implementationperiod: 6.5 years
Executing agencies: Departmentof National Parks and Wild Life Management(DNPWLM)
Project coordination: Planning Unit within DNPWLM. Within this unit the project implementation team will comprise a project coordinator, engineer, planner, business development specialist, and accountant. In addition, independentconsultant engineers will be employed under the project to review the planning and execution of infrastructure works. Capacity to implement the engineering and procurement-relatedaspects of the project will be provided and developedunder the project.
Project oversight (poliicyguidance, etc.): Ministry of Mines, Environmentand Tourism (MMET)
Accounting, financial reiporting and auditing arrangements: The Project Accounting Unit within the Finance Departmentwill be responsiblefor coordinatingproject accounting,maintaining overall records in accordance with internationalaccounting standards,producing an aggregatedand consolidatedproject account for the project, managing disbursements, and ensuring timely audit of accounts. Assurances were obtained that: (i) DNPWLMwill maintain separate accounts for the project in accordance with generally accepted accountingprinciples; (ii) accounting records will be kept permitting identificationof all receipts and payments underthe project; and (iii) DNPWLMwill have accounts, includingthose of the IDA and GEF SpecialAccounts and Statements of Expenditure,audited by an auditor acceptableto IDA, sent to IDA within six months of the close of each fiscal year. (See Annex 5.)
Monitoring and evaluation arrangements: The Planning Unit within DNPWLMwill be responsible for overseeing the implementationof the project. The Planning Unit will regularly monitorand report on progress made in accordance with the framework provided in the Project Design Summary (Annex 1). An effective monitoring and evaluation program will be important to ensure that lessons learned in the early phases of the project, especiallywith respect to park planning and community participation,can be factored into the design of later phases. Environmentalaspects will be reviewed by the Department of Natural Resources withiniMMET. The monitoring and evaluation arrangements, including reporting formats, are spelled out in the borrower's Project ImplementationPlan.
D: Project Rationale 1. Project alternatives considered and reasons for rejection: The project has been prepared in two phases. The first, from 1989-94, provided extensive analytical support to the Ministry and Department through a Japanese Grant and a Project Preparation Advance (PPA) from GEF. The Japanese Grant assisted Government with analyses of environmental,economic, land use and managemnentissues, assessmentof the legal and institutionalframework, and evaluation of the potential for increasedwildlife tourism. The PPA supported the preparation of a management and developmentplan for GonarezhouNational Park, socio-economicstudies of the Sengwe communal lands and the Gonakudzingwasmall scale farning area adjacent to the park, and developmentof a consultative process to help the Sengwe community develop selected wildlife utilization projects in preparation for project implementation. A supplemental PPA provided additional support for carrying out engineering ProjectAppraisal Document Page 8 Zimbabwe: Park Rehabilitationand Conservation Project and tourism consultancies to finalize the infrastructure needs of Gonarezhou and continue the park planning/publicconsultation process.
Although significant progress was made, failure on the part of Government to take a decision on an institutionalreform program and structure caused the Bank in 1994 to put project processing on hold. The Bank resumed project processingwith the Government's passage of the Fund in 1996. Once this decision was made, the focus shifted to one of helping Governmentto implement and build on the Fund model. SubsequentBank missionshave provided suggestionsand support for institutionalreforms and organizational options that flow from this choice, to ensure that the resulting reforms achieve their desired goals. As the sector has been starved by Treasury for some years, maintenance,rehabilitation and upgrading of infrastructurehave been deferred. Thus, in conjunction with the implementationof the Fund, an important focus of the project became to restore the standard of infrastructure within the national park systemto an acceptablelevel.
While at first only five parks were included, the project now includes all eleven of Zimbabwe's designatednational parks. Together these parks represent all major habitat types within Zimbabwe and contribute to in situ conservationof the country's biodiversity. The eleven parks are: Chimanimani, Chizarira,Gonarezhou, Hwange, Kazuma Pan, Mana Pools, Matobo, Matusadona,Nyanga, Zambezi and Victoria Falls. Project activitieswere considered for other parks and wildlife estate lands such as safari areas, but this broader scope would have overextendedproject resources.
The rationale for selection of priority proposals, identified from the outline park plans, that will be supportedunder the project is as follows: (a) rehabilitationof critical infrastructurefor park functioning (e.g., roads, water supplies,electricity, communications);(b) provision of basic"tractor based" plant and equipment for routine road maintenance;(c) provision of further staff housing for those living in sub- standard conditions and for additional staff based on establishment levels; (d) provision of improved facilitiesand equipment for park administrationand efficiency (e.g., office space, office equipment);and (e) provision of vehicles and equipment to improve general park management and anti-poaching activities. Componentsof the outline plans put forward but which do not accord with this rationale and which, therefore, would not be supported under the project include: (a) tourist facilities; (b) animal translocation, as this needs to be considered carefully in the more detailed planning process to be followed for the development of the parks; and (c) recurrent costs, which are the responsibilityof the DNPWLMto provide.
For the GEF operation, both an in-country and regional orientation was envisioned in the original proposal,but early on, the decision was made to focus primarily on Zimbabwe. However, the South East Lowveld, including GNP, forms part of an important transfrontier conservation area (TCA), which overlaps parts of Zimbabwe, Mozambique and South Africa. Strengthening the protection and managementof Gonarezhouwill contribute to the Zimbabwean part of the TCA. Around the national park the project will support community and development activities that promote conservation and sustainableuse of habitat and wildlife, thus effectively extending the wildlife conservation estate over a broad area. In addition there are several private initiativeswhere private landownershave established conservancieson land of low agricultural potential, have abandoned cattle ranching and restocked their lands with wildlife. (The Save Conservancy is expected to receive GEF support through the IFC Small and Medium Enterprises program). National park authorities, local community leaders, NGOs and conservancylandowners are all working together to develop a program for the areas surrounding GNP that will support park conservation objectives and programs and allow communities to benefit from conservation initiatives. Together the combined activities of government, local communities and the private sector can provide a strong and comprehensiveconservation strategy for the area.
The Zimbabwe GEF project will complement, and provide management models for, the ongoing ProjectAppraisal Document Page 9 Zimbabwe: Park Rehabilitationiand Conservation Project
Mozambique GEF "T'ransfrontierConservation Areas Pilot and Institutional StrengtheningProject", December 1996, (Report'No. 15534-MOZ).
2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned): Sector issue - Project Natural ResourceManagement Other developmentagencies CIDA ZimbabweNatural ResourcesManagement Programme USAID CAMPFIREProject UNDP _ Capacity Building for National Parks Planning
3. Lessons learned and reflected in the project design: Project Design. The project design follows a phased approach in which GonarezhouNational Park has, and will continue to, serve as a testing and development ground for the Parks Estate as a whole. The phased approach will apply primarily to the developmentof consultative processes for park management planning and environmnentalassessment, as well as regional integration issues including mechanismsfor improvingpark-community relationships.
Institutional Strengtheniing.Although this project is the first in the sector in Zimbabwe, considerable experience exists in other such projects. Experience elsewhere has shown the importance of timely establishmentof: (i) a comprehensivepolicy base to guide parks and wildlife management;(ii) effective advisory, decision-making,and management structures and relationships for the various organizations involved in the parks and wildlife Govemment sector (e.g., Boards, Ministry, Departmnent,Fund); (iii) effective organization-wide financial and business planning to ensure long term sustainability of DNPWLMoperations; and (iv) effective financial and managementinformation systems.
Planning. It is important to (i) determine a clear process for preparation and authoritativeapproval of park managementplans so they will effectivelyguide park management;(ii) use such plans as a key tool for coordinating investmentsand managementin parks, and linking field planning and managementto central budget and decislion-makingsystems; and (iii) in so doing expand the role for local communities in park planning and mranagement,while accommodating park management confidentiality on some subjects and law enforcermentconstraints on public participation.
Infrastructure. Given the expanding role for private sector involvement in tourism activities, it is important to carry out only infrastructure rehabilitation and improvementsthat are essential to basic national park managementand services. From an environmentaland natural resourcesperspective, it also is important to avoid expansions of infrastructure that may have undesired environmental or tourism impacts (e.g., rehabilitate existinggame water suppliesbut do not construct new ones, repair roads but do not construct new ones except in limited,clearly needed situations).
GEF. Conservation,forestry, rural/regional development projects have all provided lessons that highlight the importance of (i) incorporating protected area concerns into regional planning and regulation; (ii) involving disadvantaged groups in participatory resource management; (iii) assessing incentives for beneficiaries; and (iv) developing transparent and verifiable monitoring to ensure accountability. Particularly in a regionalor sub-regionalcontext, there is a need to involveall stakeholders,and the GEF out-of-parkscomponent of the project addressesthis. ProjectAppraisal Document Page 10 Zimbabwe: Park Rehabilitationand ConservationProject
4. Indications of borrower commitment and ownership: Borrower commitmentand ownership have, in the recent phase of project preparation,been strong. The creation of the Fund provided a basis for a resumption of project processing and ensuring project viability. Follow-upactions to establish related managementand advisorystructures and procedures are underway,and there is general agreementamong the various players within governmentand the Bank on the appropriate directions to follow. Appointment of an energetic and highly committed project coordinator at headquarters has facilitated project preparation. Participation in project preparation activities by field staff from the eleven parks has been extensive and enthusiastic. The Gonarezhou National Park management plan has been completed, and follow-on detailed engineering design is underway. Similar activities have been initiated in all other national parks to get a head start pending projecteffectiveness.
As part of the reform process, the Public Service Commission (PSC) has completed a review of DNPWLMpositions and formallyapproved the proposedorganizational structure. DNPWLMhas begun filling vacant posts now allowed by the PSC review, or, for particular high-level positions,by settlement of court cases. A letter from Ministry of Finance reiterated Government's interest in the project, as have the Permanent Secretary,MMET, and the President's office in meetingswith Bank officials.
S. Value added of Bank support in this project:
The Bank's support of the parks and wildlife sector through preparation of this project has been instrumental in accomplishingbasic institutional changes and policy reforms, and will continue to be essentialfor establishmentof the structuresand proceduresfor effective policy implementationand sector management. The Bank project offers the only external donor support for park infrastructure rehabilitation identifiableat this time; this support is required to reverse the decline in park management and services and allow parks to fulfill their conservationand developmentroles. With Bank participation, other external donors may re-enter the field. The GEF project is the only significant source of funding for biodiversity protection projects in the Gonarezhou area, and can be well integrated with other planning activities underwayin the area to provide small project implementationfunding. GEF staff have also brought a wealth of experience from similar activities elsewhere, which in turn has helped to shape the policy dialog and implementationmodalities.
E: Summary Project Analysis (Detailed assessmentsare in the project file) 1. Economic (supported by Annex 4): [X] Cost-BenefitAnalysis: NSB=US$45million; ERR= 16.5% [X] Cost EffectivenessAnalysis: Park ConservationExpenditures [X] Other (GEF IncrementalCost Analysis) [X] Other (SustainabilityAnalysis)
Cost-BenefitAnalysis. The cost-benefitanalysis was undertakento comparethe project cost and benefit streams to a reference case in which the project investments did not take place. The reference case reflected flat tourism receipts during the project life, and escalating efficiency losses from infrastructure degradation. The project had a positive Net Social Benefit (NSB) at all discount rates evaluated; in the base case the NSB was approximatelyUS$45 million.1 Project viability was robust in relation to all evaluated sensitivity cases dealing with different shadow wage rates, different revenue forecasts, and a variety of park use forecasts. While the project would remain viable even if tourist volumes were to decline by 4% per year, the base case projects tourism increases of 5% per year (compared with recent
' TheNSB is definedas the differencebetween the NPVof the "withproject" case and the NPVof the "without project"case. ProjectAppraisal Document Page 11 Zimbabwe: Park Rehabilitationand Conservation Project annual growth of 11% for the parks overall).
Incrementalbenefits (before costs) from the project are approximatelyequally weighted between 'nature' gains and 'road efficiency' gains. With the project, benefits from wildlife and tourism are US$53.7 million greater than they would be in the referencecase. Efficiencygains from improvedroad conditions are expected to be slightly more: $54.9 million. This illustrates that both the infrastructure and the wildlife and tourism aspects are importantin realizing the project's economicviability.
Cost-EffectivenessAnaalysis. The cost-effectiveness of individual park interventions was assessed, along with an evaluationof the systemas a whole. For the system as a whole, it is estimatedthat the total intervention translates to an annualized cost of US$489/km2/yr of effective protection; this reflects the basic hypothesisthat improved decentralizedmeasures will ensure protection of a wider range of species and habitats; the 2.7 million ha of land area within the park estate would otherwise have experienced continuous degradation. Typical conservation expenditures around the world reflect international interventionscorresponding to approximatelyUS$201km 2 /year to US$2,000/km2 /year of protection. In the case of Zimbabwe, therefore, the project provides an opportunityto implement relatively efficient conservationexpenditures. Incremental Cost Anialysis. The financing plan for the project provides that, of the total financing requirement of US$75 million, US$5 millionwill be provided as a grant through the GEF. Because the GEF funding has already been approved at a previously determined funding level, an abbreviated incrementalcost (IC) analysis was undertaken. The primary purpose of the analysis is to assess GEF contributionsusing conventions that respect GEF appraisal procedures (requiring acknowledgmentof a 'baseline'), while also reflectingthe analyticalassumptions contained in the overallprojectappraisal. An IC analysis was not conductedof the individualsmall- and medium-scalesub-projects that will account for up to US$2 million in 'out-of-park' expenditures. The analysis focused on the minimum US$3 million that has been allocatedto GonarezhouNational Park; this analysis relied on a park-specificcost- benefit analysis coupled with adjustments for government baseline activities and commitmnents.The analysis suggeststhat, accountingfor baselineconsiderations and offsetting benefits, the incrementalcost of investmentsat GonarezhouPark is US$6.83million. In effect, internationalgrant aid of approximately US$7 million would be an economicallyappropriate intervention under GEF IC guidelines. Given that up to US$5 million was allocated in total under GEF (with at least US$3 million directly through 'in- park' investments),the scale of the GEF commitmentis of the right order of magnitude,though there is economicjustification for increasingthis amount. SustainabilityAnalysis. Analyses suggest that the activities included within the scope of this project will generate financial surpluses immediately. In a 'low case' revenue forecast, the ratio of recurrent revenuesto recurrent costs after project completion is 1.11:1. In the base case the revenue/recurrentcost ratio is 1.23:1upon completion of the investmentphase and approximately1.33:1 after an additional 10 years. Given the existence of the Fund, these revenues will be retained for Departmentaluse and there is thereforea high probability of achieving long-termsustainability.
2. Financial (seeAnnex 5): Detailed analysesof DNIPWLM'spast and current financialperformance and future financial projections are includedin Annex 5.
DNPWLM's Past FinanacialPerformance: As a governmentdepartment, the financial performance of DNPWLMhas been determinedby decisions made at the central governmentlevel in terms of pricing of Estate products, and revenue allocations for recurrent and capital expenditures. In the face of the continued decline in governmentallocations, inadequate funding for maintenanceand operations led to rapid deteriorationof major infrastructurefacilities, which in turn affected the revenue earning capacity of the Parks Estate. Since there has been no linkage between revenues collected by DNPWLM,which ProjectAppraisal Document Page 12 Zimbabwe: Park Rehabilitabtionand ConservationProject
were paid directly to the Appropriation Fund, and expenditures, which were deternined by funds available under the government budget, little importance was attached to issues of pricing of Estate productsand cost coverage.
On the basis of data collected at individualparks and at headquarters,DNPWLM's financial performance during the period 1993/4-1995/6was unsatisfactory. Operating revenues generated over the three year period to 1995/96 were insufficient to meet the costs of conservation and infrastructure development/refurbishmentresulting in funding deficits accumulatingto as high as Z$3 1.0 million over the three year period. The deficits are understatedas expenditure was limited by the availability of cash resourcesfrom the Government.
Historical financial performance ZSm 1993/4 1994/5 1995/6 1996/7(projected) Revenue 31.1 36.4 42.7 79 Costs 40.2 50.0 51.1 69.7 Deficit (9.1) (13.6) (8.4) 9.3 CapitalExpenditure 4.7 6.3 2.6 14.4 Entrance fees- Foreign Z$20 ZS20 ZS20 USSs Local ZSIO ZSIO ZSIo ZS20
DNPWLM's poor financial performance can be attributed to the following factors: (i) low tariffs; (ii) lack of incentives within DNPWLM,as its revenue was treated as part of Treasury's income flow and therefore not reinvested in the Parks Estate; (iii) increasingcompetition from the private sector; and (iv) expenditurewhich was dictated by the budgetary allocationsmade by Treasuryto the Department,which did not necessarilycorrespond to actual requirements.
The establishment of a Fund in 1996 allowing DNPWLM to retain its revenues for its operating and maintenance expenses rather than paying funds directly to Treasury has facilitated the introduction of commercial principles in the financial management of the park estate. The Fund was the result of a strategic shift in government's thinkingto enable DNPWLMto move towards self sustainability. Since the establishment of the Fund, DNPWLM has undertaken several initiatives to improve its financial position, including the adoption of public/private partnerships in the provision of tourist services, the revaluationof concessionsand leases, and modest expansionin the number of such leases.
Tariff Policy: DNPWLM is required to develop its tariff and fee recommendationsfor government approval, a lengthy process which has resulted in few tariff revisions over the years and the lowest tariffs in the region, although Zimbabwe offers similar wildlife as its neighbors. In July 1996, tariffs were increased by about 200% (individualincreases varied widely). Under the project, DNPWLMwill carry out an in-depth pricing studyby March 1999, and will adjust its price structures no later than September 1999. The study will assist in determining the appropriate structure and level of tariffs for each park based on the wildlife and other naturalresources offered, its competitiveposition vis a vis Zimbabweand the region, and the costs of providing the service. Thereafter, DNPWLMwill undertake to increase its tariffs and to maintain its operatingmargins in order to meet its stated financial objectives. As part of the interim governance structure for the Fund, the Parks Board will be responsible for the reviewing and approval of changes in tariffs, fees and other revenue items.
While an Economistis provided for in the new organization structure, the need remains for a Business Development Specialist whose key roles would be planning for and supporting this culture shift, to develop and implement a corporate strategy for commercializationof DNPWLM, including issues of pricing and public/private partnerships, and to oversee the development of an effective marketing strategy. The governmentintends to provide this expertise on a contractualbasis in the early years of the project, supplementedby technicalassistance as required. ProjectAppraisal Document Page 13 Zimbabwe: Park Rehabilitationand ConservationProject
Current Financial Performance: Governmenthas undertakena number of other initiativesto improve DNPWLM's financial position and financial management capacity, including the commissioningof a Revenue and ExpenditureStudy (1977) to estimate DNPWLM's future revenue and expenditurepatterns. Preliminary accounts for the first full year of DNPWLM operating under the Fund show a significant improvement in its revenue following the increase in tariffs and higher pricing of park services, particularly the hunting concessions and leases. Assuming a continuation of the recent experience, revenue is projected to irncreasefrom Z$42.7 million in 1995/6to Z$79 million in 1996/7,an increaseof 85% in nominal terms and operating profits as high as Z$9.3 million are anticipated (operating profit margin = 12%),against a backgroundof operatinglosses recorded in the three precedingyears.
Financial Objectives: DNPWLM's financial objectives are to increase its financial autonomy through generating sufficient revenues to cover its current and planned operations and maintenance costs. A related objective is to ensurethat, in line with the strengtheningof its financial capacity, DNPWLMbears an increasingshare of the,cost of dischargingits conservationduties as well as that of financing its capital expenditure programs. Achieving these objectives will require measures including the following: (i) establishmentand maintenanceof an appropriatetariff structure for all servicesprovided under the Fund; (ii) widening the revenue base by introducing new products/serviceswithout sacrificing the ecological balance; (iii) improvingcost effectiveness through measures to ensure transparency in expenditure, a major overhaul of the aLccountingsystem on commercial lines, and the introduction of "cost center" budget practices to identify clearly profit and non-profit operations, and performance measures to allow measuringperformance against financial targets.
Projections of DNPWLM's Financial Performance:DNPWLM has significant commercial and non commercial risks. As a newly constituted Fund, there is a risk that commercializationmight not be implementedsuccessfullly, that government approval of tariffs may not materialize or be less than that proposed, and that competitionfrom the neighboringcountries both in terms of facilities and pricing may increase. Securityconcerns may underminedemand. The cashflow risks inherent in DNPWLMare high. The financial base case scenarioassumes a 5% growth in demand and no real increases in entrance fees. This is considered conservative,but realistic should DNPWLM fail to implementa more commercially oriented approach or if the benefits of such an approach are not realized due to failure to market effectivelyand exploit public/privatepartnerships. Under this scenario, DNPWLMwould cover neither its operating costs nor conservation costs, which underscores the need to manage effectively the commercializationprocess and pricing issues. Annual losses before conservationcosts would increase from Z$6 million in 1997/8to $19 million by 2001, before improvingto a loss of Z$8 million in 2005. Apart from 1999 when DNPWLM benefits from a one time sale of ivory, DNPWLM's free cashflow would either be negative, or marginally positive, indicating the need for additional funding from Governmentto meet the deficit.
However, given the improvementsthat could result from the implementationof the project and effective managementof commercialization,DNPWLM's financial performancecould improve. Under a scenario of 5% growth in demand, accommodationand local entrance fees increasingat the rate of local inflation, but with real increases in foreign entrance fees where the price elasticity of demand is low, DNPWLM would be in a profit making position by 2002, with benefits accruingto both governmentand DNPWLM. This scenario depends on continued strong demand for Victoria Falls, which is easily accessible from other tourist destinationsin the region.
A sensitivity analysis confirrmsthe volatility of DNPWLM's financial performance and that of the cashflows available to finance capital expenditure and borrowings (details in Annex 5). DNPWLM's financial position is highly sensitive to demand and pricing. Assuming a 2% annual growth in demand instead of 5% growth in the base case, DNPWLMwould not be able to cover its operating, maintenance and conservationfunds until 2005; whereas a 10% annual growth would ensure full cost coverage by ProjectAppraisal Document Page 14 Zimbabwe: Park Rehabilitationand ConservationProject
2002. In cases of nil devaluationand a 5% annual negative growth in demand, DNPWLMwould be in a loss making position throughoutthe projection period. Regarding free cashflow(which is arrived at after making adjustmentsfor depreciation), in the case of a 5% negative annual growth, DNPWLM would have cashflow deficits throughout the reference period, increasing to Z$103 million by 2005. In the worst case scenario of negative growth, nil devaluation, and no real increase in tariffs, DNPWLM's annual cash deficitswould increaseto Z$220 million by 2005.
With the introduction of a Fund, it is Government's objective to have DNPWLM financially self sustaining. In light of the volatility of DNPWLM's revenues, it is essentialthat Governmentsupports the managementof the commercializationprocess includingtimely revision of tariffs, and the sharing of risk with the private sector through public/privatepartnerships. The success of DNPWLM would increase Treasury revenues as it is current Government policy to have 50% of profits, after the provision of adequate conservation and operations and maintenance costs and depreciation, paid to Treasury. However, in cases of shortfalls, the Department would have no automatic recourse to the exchequer. Requestsfor fundingfrom Treasury could be made but would have to compete with Government's other commitments. Given the uncertaintiesinherent in DNPWLM's operating environment,both internal and external, the annual planning cycle will be the important tool for setting operating parameters on a shorter,and therefore more predictable,horizon.
Agreementwas reached duringnegotiations that:
(a) each year from 1998/9,DNPWLM would prepare and submit to IDA for review and comment by March 31 of each year its annual business plan to establish DNPWLM's five year business and financial objectives. The plan shall include financial targets, proposed tariff increases, investrnentprogram and financing (internally generated cash, external financing plan, government subventions), a forecast of profitability and cash flows, and the projected balance sheet, and thereafter implement it, taking into account IDA's views;
(b) DNPWLM would prepare an annual work program that would include information on measures to: (i) strengthenDNPWLM management, including details of implementation of the training program (ii) improve the financial managementand accounting systems; (iii) tariff adjustments and measures to increase revenue collection; (iv) procurement plans; (v) specific financial and conservationgoals for each park; and (vi) allocationof surpluses and financingof anticipateddeficits. The work plan, as a subcomponentof the business plan, would be prepared by January of each year, and discussedwith IDA by no later than March 31 each year for the following year's program;
(c) DNPWLM's annual investment plan would be reviewed annually with IDA, and DNPWLM would make revisions to such plans taking into account any comments by IDA; and
(d) DNPWLMwould hire consultantsto review the adequacyof salary levels of its staff and propose an appropriate incentive system. The results of these findings would be submittedto IDA for review by June 30, 1999 and implementedthereafter.
The project will support the implementationof financial management and accounting systems and DNPWLM would have decentralized commercial accounting systems in place by June 2000. The appointmentof the Chief FinancialOfficer is a conditionfor credit effectiveness. ProjectAppraisal Document Page 15 Zimbabwe: Park Rehabilitationand ConservationProject
3. Technical: Infrastructure. All elements of the infrastructure component have been prepared with detailed professional engineering expertise in appropriate specialties. Bank and Government consultant engineers, together with experiencedparks field staff, have identifiedand planned in successivelygreater levels of detail the infrastructurerehabilitations and improvements included in the project. Pragmatic choices have been made about the level of capability to establish within DNPWLM for major works (primarily road constnrction)and the operations and maintenancecost implicationsof alternativetypes of equipment or development, with the decisions generally made to provide a basic but not excessive capabilityand to minimize operationand maintenancecosts.
Although past proposals have suggested upgrading (bitumenizing) roads in a number of parks given present and projected vehicle flows within the parks (other than Hwange), this does not appear warranted from technical, financial, economic as well as environmental viewpoints. Thus, other than for the rehabilitation of existing bitumenizedroads where distressed, priority park road networks will remain as gravel roads but will be reshaped and drained as necessary. Class 1 roads will be formed such that they could be sealed in the fiuture,should traffic demand dictate, with little further structural work. This is considered a prudent policy which pays due regard to environmentalconsiderations.
The national parks are generally remote and contractorsavailable for minor works and maintenanceare few. Historically parks staff have been fairly self-sufficient in being able to carry out routine maintenanceof infrastructurein the parks. Thus basic vehicles and equipmentto allow staff to continue this practice will be provided under the project. Simple tractor-based road maintenance equipment is deemed appropriateand will be provided. Major road plant, which is both expensive and more difficult to maintain, will not be provided; works requiring periodic rehabilitation and maintenance using such plant would be expected to be carried out by contractor. This will be the case for major road rehabilitationand buildingsrehabilitation to be supportedunder the project.
As gleaned during missions, wardens and staff at GonarezhouNational Park remain unconvincedof the proposals contained in previous park plans for separating tourist facilities from park administration facilities. They also expressed concern over proposals to relocate administrativefacilities near to park entrance points for considerations of poaching (i.e., staff to be kept away from easy contact with surroundingcommunities) and cost (i.e., given the many needs the cost of relocating major administrative and accommodationfacilities could not be justified). Accordingly,there will be no major relocation of facilities althoughadditional facilitiesat certain entrancepoints to the park will be improved.
Given that park developmentproposals regarding, for example, tourism and game stocks/parkcapacity, would only be consideredand evaluated in the courseof the detailed planning process to be carried out at all of the parks under the project, the project will not provide for animal translocationnor for additional game water supplies. Only equipment and works necessary to rehabilitate existing supply points, replacementengines and equipmentat boreholeswill be includedin the project.
Costs. The costs are based on current costs for similar rural infrastructurework, but given that detailed survey, engineering investigation and design is to be carried out during the course of the project (excepting GonarezhouNational Park for which detailed survey and engineeringof the roads has been completed), a 15% allowance for physical contingencieshas been allowed for in the project costings. Estimates of approximateforeign and local costs have been made and current price contingenciesfactors for internationaland local inflation appliedto these estimates.
Design and Supervision. For the major infrastructureproposals in each of the parks, design will be carried out by local consultants engaged after suitable bidding processes (other than for Gonarezhou ProjectAppraisal Document Page 16 Zimbabwe: Park Rehabilitationand Conservation Project
National Park where the consultants who prepared the preliminary road proposals for part of the Gonarezhouregion carried out the detailed design of roads).
The Engineer within the Planning Unit of DNPWLM will have overall responsibilityto ensure design, tendering,contract managementand constructionsupervision are satisfactorilycarried out, but use will be made of local consultants engagedfollowing competitivebidding to assist in the constructionsupervision.
4. Institutional: Project preparation studies have clearly identified a number of weaknesseswithin DNPWLMand in the relationshipsbetween DNPWLM and MMET. Significantproblems include: a) absence of permanentappointments in the DNPWLMdirectorate and financial managementareas; b) relative lack of experiencein the areas of commercialmanagement and practice; c) inadequatefunding from Treasury; d) deterioratinginfrastructure and inadequateequipment; e) weak financial and informationmanagement; f) absence of a clearly defined system for park managementand budget planning; g) an inadequatepark entry and accommodationsbooking system; h) slow response to DNPWLMissues by MMET; and i) weak coordination between DNPWLM with other Ministry activities, including environmental assessmentprocedures and tourism planning.
Governance Issues. DNPWLMcurrently exists as both an administrativedepartment of MMET, and as the Parks and Wildlife ConservationFund, a fund established in January 1996 under the provisions of Section 30 of the Audit and Exchequer Act (Chapter 168). The base legislation governing the Department is the Parks and Wild Life Act, 1975 and relevant amendments,while the Fund has its own constitution(see Annex 13).
The long-tern strategy agreed to by Governmentis based on the objective of harmonizingand updating key legislationfor the sector, and in particular the Parks and Wild Life Act. This will be accomplished through a process of formal technical and participatoryreview to be coordinatedby DNPWLMwith the support of the Parks Board. Draft legislationwill be submittedto the Parks Board by the Department for review and recommendationfor action to the Minister. The latter is responsibleunder the Act for tabling the legislation before Parliament. This review process, the redrafting of base legislation, and formal submissionto Parliament for considerationis anticipated to be completed within the first 18 months of implementationof the project. Funding for the technical review and redrafting of base legislation is provided for in the project budget.
As an interim measure while awaitingthe revision of base sector legislation,it was agreed that a coherent and authoritative governance and oversight structure will be established through revision of the constitution governing the Parks and Wildlife ConservationFund. The constitution is a legal document governing the administrationand operationof the Fund. It may be amended by Treasury without undue delay and tabled before Parliament without requirement of debate to become effective. The revision of the Constitution will be backed by a letter from the Minister providing specific instructions to the members of the designated oversight body regarding both their responsibilitiesand limitations to their authority in the daily managementdecisions of the Department.
Formal approval by Treasury of the draft constitution specifying the designatedoversight body for the Parks and Wildlife ConservationFund and the Department, its functions, and specific authority in the following areas will be a condition of effectiveness: (i) review and approval of DNPWLM annual and ProjectAppraisal Document Page17 Zimbabwe: ParkRehabilitation and ConservationProject supplementalbudgets; (ii) review and approval of changes in tariffs, fees, and other revenue bases; (iii) review and approval of park plans; and (iv) review and approval of substantivepolicy recommendations.
Organizational Issues. The Public Service Commission's approval of the proposed organizational structure for DNPWLMenabled the filling of key positions,and recruitmentis under way. Progress has been made in filling critical vacancies at mid and lower levels, and key higher level positions are expectedto be filled soon. Coordinationbetween MMET and DNPWLMhas also improved greatly over the past two years. More fundamentally,the key institutional strength of DNPWLM is the cadre of experienced, dedicated, hard working staff that has persisted over the years under very difficult conditionsto maintain Zimbabwe's still prominent position in national parks and wildlife conservation and management.
The requisite institutionalfoundation for effective operations is expectedto result from revised structures and proceduresfor DNPWLM,designed on the basis of the experience of similar institutions elsewhere and applied to the particular conditions of Zimbabwe. The institutional componentof this project will support the resolution of problems in systems and capacity identified above. Institutional issues at the level of the DNPWLMdirectorate, MMET and the Parks Board are being addressedand are included in institutionalrestructuring analyses and recommendationsthat have been part of project preparation.
5. Social: The project has been prepared in consultation with NGOs and other interest groups in the parks and wildlife sector in Zimbabwe, with the most detailed consultations to date occurring in the South East Lowveld area with the assistance of the PPA made available under the GEF-funded component. Socioeconomic studies performed in the earlier stages of project preparation included village-level surveys in the commwuallands adjacent to GNP, and an analysis of the Gonakudzingwasmall scale commercialfarming area. Regionaldevelopment issues were further addressedduring preparation of the GNP managementplan, also financedunder the PPA. Issues highlightedin these effortsare as follows:
a) Ecologicalconstraints: GNP is in a low-productivityarea. Gonakudzingwais of interest because it is an area in which simallscale commercial farming had been tried and failed. The Gonakudzingwa study documented the limited potential of livestock husbandry possibilities and of agricultural potential. Wildlife-basedactivities are considered to have somewhat more potential. It has been proposed that further work on this area may be warranted under the GEF out-of-parkscomponent.
b) Compositionof communities: Some immigration has occurred through recent decades, including many refugees from Mozambique. Many such immigrants live in poverty, particularlythe refugees, though it appearsthat the refugees have begun to return to their home country. Although only limited problems have developedbetween long-timeresidents and the relative newcomers,ensuring the new residents a voice will be critical.
c) Communityrepresentation: There appear not to be major issues of governance. Local governmentat the village and ward levels is fairly democraticand representative.
The GEF out-of-parkscomponent of the project will support sustainable biodiversityconservation and use through a range of activities including enhanced alternative livelihood options and community conservationinitiatives around Gonarezhou. The lessons learned will in turn be applied,first throughthe planning process and then during implementation,in communities in the proximity of other parks. Benefits are expected to include employment in park tourism and a lessening of damage to community lands through better managementof wildlife populations. ProjectAppraisal Document Page 18 Zimbabwe: Park Rehabilitationand ConservationProject
6. Environmental assessment: Environmental Category []A [X] B []C The project is fundamentally directed at improving environmental conditions and natural resource management,specifically the status and management of wildlife and the condition and managementof national parks. However, the project will include rehabilitation of roads, buildings and other infrastructurein parks. As there is potential for undesirableenvironmental impact from project activities, it is therefore classed as an Environmental Category B project and is subject to an environmental analysis, a simpler preparation studythan environmentalassessment under Bank regulations. The project involves no resettlement or any negative impacts on indigenous peoples as such. The GEF project includes positive support for sub-projects on rural, communal lands occupied by groups traditionally resident in the area.
Given the sensitivityof the ecosystemswhere the works will take place, it is essential that these works should be conducted in such a way that the relationship with neighboring communities should be harmonious, the disposal of waste (including spoil and dredging material) should be conducted safely, and erosion should be avoided or mitigated in any of the public works conducted. The capacity of the Parks' administrationat all levels needs to be strengthenedto make it competent in the environmental supervision of works and proper maintenanceof the facilities. These are a few of the issues that have been dealt with in the EnvironmentalAnalysis (EA) that is being conductedfor the project.
The EA comprises two complementaryparts. The first comprisesa programmaticsection which focuses on Zimbabwean rules and regulations; the capacity of park wardens to supervise and help mitigate potentially negative environmental and social impacts; and on ways and means to introduce environmentalsafeguards in capacity building and in standards and norms to be used for all works perforrnedwithin the National Parks and in their immediate surroundings,where relevant. The second deals with the potential environmentalimpacts of the works to be conductedin GonarezhouNational Park and the mitigation, monitoringand capacity building measures that are recommended,where the nature and magnitude of the works have already been defined. Annex 7 summarizes the results of the environmentalanalysis.
The EnvironmentalManagement Plan (partly programmatic,partly GonarezhouNational Park-specific) that has come out of the EA forms the basis of a small capacity building and technical assistance component of the project, the implementation of which will help to avoid potential negative environmentalimpacts, and ensure environmentalaspects will be properlymonitored during supervision.
7. Participatory approach [key stakeholders, how involved, and what they have influenced; if participatory approach not used, describe why not applicable]: StakeholderGroups Identification/ Implementation Preparation
Community groups IS + CON IS + CON + COL Local / International NGOs IS + CON IS + CON + COL Private sector IS + CON IS + CON + COL Academic institutions IS + CON IS + CON Local government IS + CON IS + CON + COL Other ministries IS + CON IS + CON Other donors IS + CON IS + CON (CIDA, NORAD,USAID)
[Note: IS = information sharing; CON = consultation; COL = collaboration.] ProjectAppraisal Document Page 19 Zimbabwe: Park Rehabilitationand ConservationProject
As discussed in Section 5, numerous stakeholders at the national level have been involved in preparation studies and consultations,including wildlife and rural developmentNGOs (both internationaland local), staff of the Centre for Applied Social Sciences and the Department of Agricultural Economics and Extension at the University of Zimbabwe, private sector participants in the wildlife and tourism sector, and other ministries. For the GEF component in the Gonarezhou National Park area, diverse local community groups -- including community representativesand all levels of local government,existing environmentallyrelated NGOs, and private sector wildlife and tourism interests -- have participated in extensivestudies and consultation.
Preparationof the draft managementplan for GNP in 1993 representeda major step in increasingpublic participation for DNPWLM. A formal process was adopted whereby all stakeholders in the park, particularlyneighboring communities,would be consulted regarding issues that affect them. With GEF preparation funds, a community liaison consultant was employed to establish ongoing communication between the planning team and community representatives. A land use consultant also researchedland use-related community interests and issues. After project preparation resumed in 1996, DNPWLMhas taken the lead in holding meetings involvingrepresentatives from a wide range of community interests. In addition to reviewing the park plan, these meetings have focused on the GEF-funded community subprojects.
With respect to the latter, the SouthEast Lowveld CoordinatingCommittee has met on a regular basis to discuss park-related issues and the GEF out-of-parkssmall grants component. The Committeeincludes representatives from villages, several branches of local government,NGOs, private conservanciesand other land owners, and provides a forum for a park-community dialogue. A structure has been establishedwhereby this Committee is to report back to a larger group of stakeholdersas required. The Committeehas developedproposals for project selection criteria. Furtherdesign questionsbeing debated include the desirable geographicalscope, distribution,phasing, subproject sizes, beneficiaries,reporting responsibilities,monitoring and assessment. A facilitatorwill assist the group in finalizing project design prior to project effectiveness. This same group will be involved throughout project implementation,and funds will be made available under the project to cover a portion of meeting costs, including transportationcosts of representativesfrom remote areas.
Development of an improved planning system is envisioned as a key part of institutionalizingpublic participation in park managementplanning. The planning system will build on the experiencespiloted in GNP and, as additional plans are prepared, those experiencesas well. Important elements in the system would be a hierarchy of plans (system-wide plan down to annual budget and implementationplans), a procedures manual to ensure consistency in implementationof policies, initial technical assistance to get participatory planning under way in other parks (a number of preliminary workshops has already been held with Departmental funds in several parks), training for Departmental staff in procedures and experience elsewhere, and embedding participatory planning in the Department's overall decision- making system. Public participation in park planning would occur through membership in working groups, initial issues identification and data gathering, and review of draft assessments, alternatives, preferred scenarios, and the final plan. These activities will be formalized under the project, which will support participatoryplanning efforts in each of the national parks.
The Departnent considers that the major scope for expanded public participation is in planning for actions based within a park that affect the welfare of residents in the adjacent areas, e.g., by creating opportunities for tourism or park management-relatedbusinesses or employment;displacing wildlife or affecting the movement of wildlife in and out of the parks, or affecting other ecological processes that span park boundaries; or by influencingthe existence or scale of infrastructureand other public facilities and services in the surroundingareas. Hence an important purpose for increased public participation in ProjectAppraisal Document Page20 Zimbabwe:Park Rehabiliaton and Conservaton Project park planning is to improve the coordination of park managementand developmentin the economic and environmentalmanagement of the surroundingareas.
F: Sustainability and Risks 1. Sustainability: Critical factors for sustainabilityinclude:
Institutionaland InfrastructureComponents a) Continued adequate tourism in the national parks, to provide revenue for operations (this is considereda realistic expectation,although tourism is subject to various risks -- see below; park fees are set and expendituresplanned with conservativetourism growth assumptions). b) Success at developingeffective managementsystems and staff skills within DNPWLM.
GEF Component a) Continued interest by communal land residents near Gonarezhouin developingcompatible wildlife utilization, particularlytourism, on their lands. b) Continued favorable policy environment for wildlife on all categories of land ownership near Gonarezhou.
2. CriticalRisks (reflectingassumptions in thefourth column of Annex 1): ProjectAppraisal Document Page 21 Zimbabwe: Park Rehabilitationand ConservationProject
Risk Risk Rating Risk MinimizationMeasure
Annex l, cell "from Outputsto Objective"
* Growth in tourism sector and particularly Modest Collaborativeplanning and tourism to and around national parks does integrationof national park not result in increasedincome for rural managementin regional poor and reduced rural poverty. developmentto channel some of the economic benefits from tourism directly to communalland residents. * Strengthenedmanagement of national parks Low Supportre-establishment of strong does not result in improved biodiversity national park system with clear conservation. conservationmandate. * Revenue from park and wildlife-related Modest Design of community-basedsub- activities on commtnal and other lands projects,with strong local near Gonarezhoudoes not result in greater collaboration. willingnessby residents to tolerate wildlife and therefore protect biodiversityin the SouthEast Lowvelcl.
Annex 1, cell "from Componentsto Outputs"
* Tourism in Zimbabweparks declinesdue to Modest to None - true risk factors external to the project (decline in Substantial country of origin economies,international terrorism, disease, etc.) and does not produce enoughrevenue for DNPWLMto be financially self-sustaining. * Strengthenedmanagement of national parks Modest Build DNPWLMcapacity to does not result in increasedtourism and coordinatewith national tourism greater revenues. planning,marketing and private sector operatorsto influenceother factors determiningtourism levels. * Increased wildlifeutilization and improved Modest Careful design of community-based compatibilityof wildlifewith other land use sub-projects,coordination with on communal landsnear Gonarezhoudoes DNPWLMand private sector. not result in increasedrevenue to residents. * Internationalevents (e.g., resumptionof Modest Supportcoordination with insecurity,maintenance of wildlife barriers) wildlife/parksagencies in stymie re-establishmentof wildlife Mozambique,South Africa (no movementsand populationsin Gonarezhou measuresto affect resumptionof area. insecurity). * Comprehensivepolicies supportiveof Modest Supportstudies demonstrating compatiblewildlife utilizationand importanceof such policies; biodiversityprotection are not adopted. develop capacity within DNPWLM and MMET to articulateand implement policy. Project Appraisal Document Page 22 Zimbabwe: Park Rehabilitation and ConservationProject
Risk Risk Rating Risk MinimizationMeasure
* DNPWLMinternal managementis Modest Skills and training needs inefficientand ineffective(staff skills and assessments,financial analyses, capabilities,financial managementsystems, build informationmanagement managementinformation systems). systems. * Infrastructurerehabilitation and Low Supportconsultant engineer and constructionare not carried out to a high developmentof supervisory standard in accordancewith detailed plans. capacity in DNPWLM. * Infrastructuremaintenance is not carried Modest Training;continued supervision by out on a needed regular schedule. engineer; inclusionof maintenance in management plan work programs. * A systematicprocess for preparingpark Modest Preparationof planning process as managementplans is not followed and integral part of DNPWLM adequate managementplans are not managementsystem, Department- prepared for all parks. wide training. * All stakeholdersare not given the Modest Preparationof manual for process to opportunity,or do not choose to participate use in park planning;DNPWLM in park planning. staff training. * Park managers do not participatefully in Modest Supervisionfrom regions, integratingpark managementwith regional headquarters;staff training. economicand natural resource management in the areas near the parks. * Park plans are not used as the basis for Low Developmentof budgetingprocess. annual budgeting. * Park plans are not implementedthrough Low Preparationof process for annual annual work programsin all fields of work program planning, activity. implementation. * Strongeducation and interpretiveprograms Modest Constructionof facilities,provision are not established,or are not used much by of technical assistance,support for the public. adequate staffing and training.
Overall Risk Rating Modest Risk Rating- H (HighRisk), S (SubstantialRisk), M (ModestRisk), N (Negligibleor Low Risk)
3. Possible ControversialAspects: The problems that beset the Departmentthroughout the 1990s remain of concern. The problems became so serious in the mid-1990sthat some donors pulled out of the sector at the same time that the Bank put project processingon hold. The Bank only resumed processing after the Fund was establishedin 1996 and there appeared to be serious commitrnentto reform. Further, despite the paucity of well qualified staff in headquartersduring this period, mission members continuedto be impressed by the commitment and competenceof field staff, many of whom will be responsible for project implementationat the park level. More recently, approval by the PSC of the new Departmentalorganizational structure, settlement of court cases against two of the four members of the directorate, steps in turn to appoint permanent (as opposed to acting)employees in key positions,and the adoptionof the Fund, indicatethat these problems are now being addressedin a systematicfashion. ProjectAppraisal Document Page 23 Zimbabwe: Park Rehabilitationand ConseivationProject
G: Main Credit Concditions 1. EffectivenessConditions: * formal,approvalof the revisedconstitution for the Parksand Wildlife Conservation Fund (Treasury) * implementationof transitionalfinancial accounting arrangements (DNPWLM) * appointmentof ChiefFinancial Officer (MiMET/PSC) * Departmentof Waterand MPCNH agreement to transferof existingassets to DNPWLM(MMET) * final ProjectImplemenitation Plan (DNPWLM) * final ProcurementPlan (DNPWLM)
2. Other. Condition for Disbursement- GEF out-of-parkssub-component
* finalizeddetailed operational manual
H. Readiness for Imp,lementation [X] The engineeringdesign documents for the first year's activities are complete and ready for the start of project implementatioln.Road componentcompleted; other componentsunderway. [X] The procuremenitdocuments for the first year's activities are complete and ready for the start of project implementation. [X] The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. [ ] The followingitems are lacking and are discussed under loan conditions(Section G):
I. Compliance with Bank Policies LX] This projectcomplies with all applicableBank policies. [ ] [The followingexceptions to Bank policies are recommendedfor approval. The project complies with all other applicableBank policies.]
[signature] Task Manager: oge4neJensen
[signature] Sector Maragokes [signature] Acting CountryDirector: onnel ProjectAppraisal Document Page24 Zimbabwe. ParkRehabilitahon and ConservationProject Annex 1 Zimbabwe: Park Rehabilitation and Conservation Project
Project Design Summary
Narrative Summary Key PerformanceIndicators Monitoring and Supervision Critical Assumptionsand Risks Sector-related CAS Goal: (Goal to Bank Mission)
Raiseper capita income and Revenues from utilization of Park and tourism records. reduce poverty,particularly in the parks and wildlife estate. Surveys. semi-arid areas, through Concessionsand permits (a) increasedtourism; (number and share held by (b) improvedopportunities for Zimbabweans). rural developmentand Rural employment in tourism indigenousparticipation in the sector. parks and wildlife sector; and Wildlifepopulations (numbers, (c) reduced risks to distributions) environmentalsustainability. Habitat conditions in parks. Conditionof parks infrastructure. Protect biodiversity in the Wildlife populations,diversity Surveys, studies. South East Lowveld by and distributionsare stable or Reports. strengtheningmanagement of increasing. GonarezhouNational Park and Habitat conditions are stable or increasingthe role of improving. compatiblewildlife utilization Communalland revenues from in the surrounding region sustainablewildlife utilization (GEF). are increasing.
Project Development (Objectiveto Goal) Objective: EnhanceGovernment's ability Clearly defined policies Policy documents. Political and economic to manage and protect wildlife Efficient institutions(operating Financial and management environment stable. populations and their habitats. ratio, revenue per employee) reports. Political will exists to effect Good business practices in Commercializedaccounting change. place. system. Zimbabwe's nationalparks and Revenue increase by x percent. Business plans. tourist offerings are Needed treasury subvention Licenses and permits issued competitive. reduced. Progress and project Benefits from tourism accrue Tourism increase. completion reports. to Zimbabwe. Adequate infrastructure. Minutes of meetings. Improvementswill contribute Increased community to economic growth. involvement and indigenous I participation.
Outputs - IDA and GEF: (Outputs to Objective) Comprehensivepolicy Essentialpolicies adopted, Policy documents Policies guide decisions framework for parks and including: Revised legislation throughout Government. wildlife estate * overall plan for parks and Policies compatiblewith and wildlife conservationand supported by policies in other management; sectors, e.g., land, agriculture, * the role of DNPWLM in transport. community conservation ProjectAppraisal Document Page25 Zimbabwe:Park Rehabilitationand ConservationProject
and sustainableuse; balance between conservationand revenue generation Relevantlegislation updated. Efficient and effective Betterservices. Financial statements. Enablingenvironment for institutionsfor managing parks Hiigherrevenues in line with Managementreports. private sector participation. and wildlife conservationobjectives. Tourism demand remains Reducedcosts of doing strong. business. Ministryof Environmentand Opportunitiesfor private sector Tourism facilitates intra- and participationin commercial inter-ministerialcoordination. aictivities Decisions on structure and power of the Fund Board. Timely treasury subventions. Funding from alternative sources continues. Transparent and accountable B3usinessplans. Financial statements. Ministerial support. financial managementand P'roceduresmanual. Reports. managementinformation Accountingpolicies. Site visits. systems P'ricingstructure. Transparent,accountable, ciecentralizedfinancial rnanagementand management information systems. Participatoryand adaptive park Plarkplans. Park plans. Park/stakeholdercooperation and estate managementplans Overall estate plan. Overall estate plan. and effective participation. and planning systems Customized M & E plans for each nationalpark. Research and monitoring Current status of Reports. programs towards conservation environmentalconditions and and management wildlife apd tourismlparkuse issues.
Increased environmental Number of people attending Records. Sufficient interest to attend awarenessthrough educational programs. Reports. programs. programs Suitable infrastructureto km of class I and II roads Progress reports. support core activitiesin parks rehabilitated;km of class III Supervisionmissions. roads rehabilitated;x water supplies rehabilitated/ constructed;x units of staff housing constructed/improved; x units of communications equipment;km of telephone lines; vehicles,plant and equipment;interpretive centers; office equipment; workshops. Cooperationbetween Implementationof Minutes of meetings. Governmentpolicies remain communitiesand parks in recommendationsof South supportiveof community wildlife management- South E.astLowveld Coordinating wildlifemanagement. East Lowveld Region Committee. Continued support from other ______sourcesfor relatedactivities. ProjectAppraisal Document Page 26 Zimbabwe:Park Rehabilitationand ConservationProject
Projectsto integrate wildlife Sub-projectsproposed and Proposals. Positive response to request for into communityresource implemented Progressreports. proposals. utilization- South East Supervisionmissions. Lowveld Region
Project Components/Sub- components: (see Annex 2 for Inputs: (budget for each
project description) component) _ 1. InstitutionalStrengthening
1. I Policy Development US$0.3 million 1.2 OrganizationalDevelop- US$0.5million ment 1.3 Fund ManagementSystem US$ 1.0 million 1.4 Park Planning US$0.6 million 1.5 Interpretiveand Extension US$0.2 million Capacity 1.6 Research,monitoring and US$0.1 million evaluation
1.7 Training US$0.7 million __._ _ 1.8 InstitutionalStrengthening US$0.8million Equipment I[. Infrastructure
2.1 Rehabilitationof US$62.0million infrastructure;improvement and expansionof staff accommodation;and provision of improvedfacilities for park functioning. 2.2 Provisionof basic "tractor- USS3.8 rhillion based" plant and equipmentfor routineroad maintenance; and vehicles and equipmentto improvepark managementand anti-poaching activities. III. GEF
3.1 Rehabilitate,improve US$3.0 million infrastructurein Gonarezhou National Park (e.g.,interpretive center, rehabilitationof game and domestic water supplies) 3.2 Establish consultative US$2.0 million process and support community-based projects. Project Appraisal Document Page 27 Zimbabwe: Park Rehabilitationand ConservationProject Annex 2 Park Rehabilitation and Conservation Project Project Description
1. The project is envisioned as a tool to assist GRZ in strengthening the management system for parks. To meet this objective, the project will include institutional strengthening, infrastructure investments in each of the eleven designated national parks, and a GEF grant which will provide incremental financing to support conservation and sustainable use in and around the Gonarezhou National Park. The key elements of each component are summarized below.
Project Component 1 - Institutional Strengthening - US$4.2 million (total cost of component)
2. The project will provide a program of support, comprising nine sub-components, to help GRZ maintain the overall integrity and biodiversity value of the Parks and Wildlife Estate. The project will contribute directly to the improvement the underlying systems and human resources that are essential to ensuring the long-term sustainability of current and planned investments. Key to this program of support are the measures described below to strengthen organizational and institutional capacity.
(i) Policy Development
3. This sub-component will seek to build upon recent initiatives in policy review, formulation and presentation undertaken by the Department. Draft policy statements have been formulated for a number of specific topics. Workshops were held in early 1997 on specific species (elephant, rhino, crocodile and ostrich), community wildlife management (CAMPFIRE and Conservancies) and biodiversity conservation. In addition, with the assistance of a CIDA-funded consultancy and in broad consultations with the stakeholders, the Ministry/Department has begun the process of developing policy to address the transition of the Departnient from a traditional government service to a more autonomous and responsible public body operating aLlongcommercial lines.1 Such policy would address, inter alia, the following priority areas:
* financial self-sufficiency in a context of public service and operational efficiency; * the role of DNPWLM in community conservation and sustainable use; * wildlife producer rights and responsibilities; and * review and updating of relevant legislation.
4. As further work is required before a definitive policy recommendation can be forthcoming, the project will provide technical resources to assist with the policy development in these and other priority areas. In so doing, project support will be available to (a) undertake necessary data collection and analysis to provide the infonnation base for policy review and fornulation, (b) provide expert assistance in identifying and presenting policy options in key areas as the basis for policy development by Department staff, (c) finalize draft policy documents, and (d) undertake a review and reformulation of relevant legislation with the objective of harmonizing current and emerging wildlife and protected area policy with the defining legislation.
' It is noted that the issue of the balancebetween conservationand intemal revenue generationimperatives could be misconstruedto implythat every park has to generateenough incometo survive. The Departmenthas now embarkedon clarifyingthis issue to ensure that there is no compromiseof Parks' core businessof conservationin the face of commercialization. Project Appraisal Document Page 28 Zimbabwe: Park Rehabilitationand ConservationProject
(ii) OrganizationalDevelopment
5. The process of culture shift required for the successful transition of the Department from a traditional line agency to a modern, service-oriented,professional and technically proficient organization operating along sound commercial lines will be assisted by the project. Support is provided for the developmentof a business plan for the Parks Estate, the incorporationof business plans as a component of park management plans, technical assistance in change management (to be led by the Change ManagementUnit established in the Ministry), focused organization-widein-service training in support of a culture of excellenceand integration of the ethic of commercialoperation, and specializedtraining for senior managers.
6. The project will also contribute to the assessment of organizational options, such as the desirability of conversion of current staff from the public service to employment by the Fund, by providing financing for detailed technical review. The financial and management implications of employment status conversionwill be assessed, incorporatingthe results of the income and expenditure analysis and estimationof alternative compensationpackage requirements. A related activity will be the establishment of a comprehensive performance evaluation system for the Department. This will necessitate a review of all position descriptions, their revision and updating as needed, and the clarification of career paths and promotionrequirements for each post. The completion of this exercise would be a preconditionfor any change in employment status of Departmentstaff.
7. The project will support a long-term strategy to ensure proper governance and oversight of the Department by (a) assisting with the implementationand review of interim governance arrangements provided for under the revised constitution of the Fund (a condition of effectiveness), (b) providing training for Parks Board members in effective stewardshipand constructiveoversight strategies,and (c) undertakinga review and revision of sector legislationwith the express objective of harmonizingcurrent policies,priorities and principleswith the base legislation,including the incorporationof an authoritative and effective oversightand governancestructure.
8. Other issues to be addressed under the project include the appropriate level of financial and managerial decentralization of departmental functions, the effectiveness of oversight structures and specifically the role of the National Parks Board in financial and management oversight, and the establishmentof transparentand accountablemechanisms for the granting of concessionsand leases.
(iii) Fund ManagementSystems
9. This sub-componentwill support the developmentand implementationof financial management and management information systems for the Fund. Implementationwill be over a two year period, during which the following actions will be accomplished: (a) computerizationof accounting functions, (b) decentralization of accounting and computerization to the provincial and station levels, (c) development of internal control systems, (d) determninationof accountingpolicies, (e) production of the procedures manual, (f) determinationof cost and revenue structure of different parks and stations; (g) pricing structure of the Parks Estate; (h) the valuation of assets; and (i) business planning linked to the park planning process. Other activities critical to the efficiency of the financial operations of the Department will be supported under this component, including updating of a study on the Central Booking Office at Headquartersand implementationof recommendations,systems for management of ivory stores, and permits and licenses. The consultancy will also design a system for accounting for project funds. Studies funded under the sub-componentwill include: (a) pricing structure study; (b) commercial potential of the National Parks Estate consistent with conservationobjectives; (c) valuation of fixed assets; and (d) the bookingoffice. These studies are all linked to the TOR for the consultants and would be outputs of this assignment ProjectAppraisal Document Page 29 Zimbabwe: Park Rehabilitationand ConservationProject
(iv) National Parks Estate Plan
10. The planning component of the project will provide technical assistance support for preparation of an overall strategic plan for the Parks and Wildlife Estate. The national plan will present strategy on a wide variety of issues for the entire system of protected areas in the Estate, and help guide management planning in individual parks.
(v) Park Managernent Planning
11. The park planning component will also consist of strengthening park planning processes within the Department (including integration of park planning into overall management systems), preparation of management plans for the parks included in the project investment program, and preparation of a practical manual for planning. The project will provide short term technical assistance to help refine the park planning process, and help prepare the planning manual. The project also will directly support management planning in particular parks by funding equipment, planning team meeting costs, and data collection and analysis.
(vi) Planning Unit Strengthening
12. The project will provide support to the new Planning Unit in the Department through a package of specialized training and short term technical assistance.
(vii) Park and Wildlife Research and Monitoring Programs
13. The project will support applied research relevant to protected area management such as monitoring of habitat change, population ecology of key indicator species, visitor carrying capacity, and visitor impact on park habitats and wildlife. It will also support research to determine carying capacity of key animal species and impact of harvesting on wildlife populations in parks and surrounding lands. The project will involve local people in participatory monitoring and provide support, training, expert assistance, equipment and materials for a research and monitoring program.
14. The research and monitoring program will support: (a) ecological and socioeconomic monitoring to measure the status an,d impact of project interventions and to measure the effectiveness of project institutions and processes; (b) ecological research (e.g. visitor impact within protected areas, population dynamics of key species; ecosystem dynamics); (c) socioeconomic research (e.g. long term impacts of protected areas on people, indigenous resource management systems, wildlife management and utilization); (d) capacity building programs to facilitate experimental learning and demonstration; and (e) collaboration in regional research and monitoring programs, e.g., elephant surveys with Mozambique and South Africa and exchaLngeof regional information and expertise.
15. A monitoring and evaluation plan will be prepared prior to project effectiveness in accordance with GEF and World Bank Monitoring and Evaluation Biodiversity Guidelines.
(viii) Interpretation and Education Capacity
16. Provision of interpretive, educational and awareness services in the wildlife field are activities of the Department that deserve considerable expansion. The project will support the strengthening of interpretation programs directed at park visitors by funding interpretive facilities as part of park infrastructure renewal, preparation of displays and other materials, equipment, training, and technical assistance. The project will provide similar support for education programs directed towards the Zimbabwe public, inclluding preparation of materials and programs, equipment, staff training, and ProjectAppraisai Document Page30 Zimbabwe: Park Rehabilitationand ConservationProject technical assistance.
(ix) Training
17. DNPWLM is in the process of filling numerous vacancies in key technical, professional and support posts. Targetedtraining will be essentialto derive full benefit from new and existing staff. The establishment of the Fund and the associated need to train staff in commercial financial and administrative practices will also require attention to skill development and formal training. A comprehensivetraining program that offers both short courses and diploma training is required and will be supported under the project, as will training to attain degrees as required by the PSC for the professionalizationof incumbent staff. Regular in-service training will also be re-instituted in core substantiveand skill areas. Training in park planning will be providedto the PlanningUnit and park staff through on-the-job supervision by a short term technical assistant, study tours and short courses. A training needs assessment will be undertaken by staff in the Training Unit, with external technical assistance as required.
Project Component2 - Infrastructure- US$65.8 million (total cost of component)
18. This componentwill include civil works and equipmentin all eleven designatedNational Parks, together with provisionof facilities and equipment to assist the respective parks staff in their day to day management operations. The priority requirements are restoration of the main road networks, improvementof staff housingand provision of new housing, improvementsto communicationsystems to and within parks, electrificationof park administration complexes where they are still without mains supply and the rehabilitationof both potable and game water supplies. In addition parks staff will be re- equipped with appropriatevehicles for day to day managementof the parks and for carrying out basic routine road maintenancethrough the provisionequipment for the simpletractor based maintenanceunits. Detailed listings by park are contained in the PIP and project file.
19. These priority infrastructureinvestment proposals were identified from the outline park plans developedunder the project. Componentsof the outline plans also put forward, but which did not accord with the above rationale and thus, will not be supported under the project, include: (i) tourist facilities that could be provided by the private sector; (ii) animal translocation as this needs to be considered carefully in the more detailed planning process to be followed for the developmentof the parks; and (iii) recurrent costs which are the responsibilityof the DNPWLMto provide.
20. With regard to design and constructionaltematives, initialproposals included sealing many of the park roads in GonarezhouNational Park, developing major causeway constructionover rivers as well as major relocation of managementfacilities. Such proposals were not deemed appropriatefor reasons of cost, sustainabilityand environmentalconsiderations. Whereas proposals were also put forward in some parks for major schemes for both potable and game water supplies, both the Government and Bank missions considered it prudent to focus only on rehabilitatingsuch supplies and limited rehabilitation is included. The necessity,or otherwise,for expansion of both potable and game water supplies expansion of water resourceswill become clearer when detailed park managementplans are prepared for all parks, a sub-componentof the project.
21. Existing plant and equipment in the parks is generally old, worn out, hired from the Central Mechanical Equipment Division (CMED) or borrowed. Generally parks staff have managed to keep basic equipmentoperational although much might be considered to have reached the end of its useful life. Staff in the respective parks has historically carried out its own routine maintenance of the parks road networks. Proposals from some parks included major investment in heavy road construction and maintenance plant, such as bulldozers and motorized graders. Such equipment was not deemed Project Appraisal Document Page 31 Zimbabwe: Park Rehabilitatioii and Conservation Project appropriate as major gravel road reconstructionwill be carried out by contractorsas will the rehabilitation of bitumenized roads, where these are in need of repair, and most building works. The investment proposals thus provide for re-equipping parks staff, where necessary, to carry out routine road maintenance, not major periodic maintenance and rehabilitation. The existing road maintenance units will thus continue to be tractor based. Existing park staff will thus be able to carry out regular servicing of equipmentprovided.
Project Component 3 - GEF - Gonarezhou National Park and the South East Lowveld Region - US$5 million(total cost of component)
22. The GEF componentwill provide incrementalfinancing of US$5 million to support biodiversity conservationand sustainableuse in and around GonarezhouNational Park. Gonarezhouis recognized as a region of globally significant biodiversity and support for the park is consistent with the GEF Operational Strategy for Arid and Semi-Arid Ecosystems. The overall investment plan for the park currently exceeds the total GEF grant of US$5 million (with the overrun included in Component 2, above). GEF resources thus will provide incremental financing to support only the most urgent investments needed to secure the protection and managementof the park and its biological resources. Outside of the park G,F :resourceswill support activities that contributeto park objectivesand have clear and direct linkages to conservationand sustainableuse, particularlythose that reduce threats to the park and its biological resources,and contributeto maintenanceof the integrityand connectivityof the wildlife estate in the SouthEast Lowveld and transborderregion.
23. The out of park subcomponentis being designed via a consultative process led by DNPWLM through the Southeast Lowveld CoordinatingCommittee. Out of the US$5 million grant, a figure of US$2 million is proposed for out-of-park activities. While the eligibility criteria and criteria for project selection are still under review by the Committee, it has been agreed that three obligatory criteria for all project proposals would be as follows: (i) proposals should have clear relevance to, and potential for, positive impacts on conservation of the protected area (GNP) and its biological resources; (ii) be technically and operationallyfeasibile and consistent with the capabilities of the proposing groups; and (iii) provide a contributionfrom the recipient group either "in kind" or in cash, equivalentto 10% of the total project cost. For most activities, a ceiling of Z$300,000 has been proposed, although under exceptionalcircumstances it may be possible to consider projects of greater value than Z$300,000. Such larger projects (i) would need to be justified by the number of beneficiaries,demonstration effects and greater areas of habitats includedunder conservationmanagement; and (ii) would require more rigorous evaluation, environmentaland technicalreview.
24. Of the US$2 muillion,approximately 25% will be reserved for contingencies,recurrent costs of stakeholder meetings, which provide a forum for exchange of information and discussions on park- community relations, expenses associated with the scientific and technical review process, monitoring and evaluation, and technical assistance to build capacity among stakeholders for preparation and implementation of project proposals. Up to one-third of the remaining funds could be allocated to projects in the first yezr. The remaining funds will be retained for eligible projects submitted in subsequent years, to accommodate new ideas, further broadening of stakeholder participation, and to build on the successes of the initial group of projects. The completed operational manual will be a condition for disbursementof funds for sub-projectsunder this sub-component.
25. As the in-park subcomponentis consistent with the other in-park project activities,the monitoring and evaluation plan will Followthe plan for the project at large and will includebiodiversity indicators (monitoringof key species) as well as indicatorsof managementeffectiveness. A separate monitoring and evaluation plan will Ibeprepared for the out of park subcomponentalong with the operationalmanual. Project Appraisal Document Page 32 Zimbabwe: Park Rehabilitation and Conservation Project
This latter plan will include social and participationindicators as well as indicatorsto monitor the impacts of funded activitieson park integrityand biodiversity. Project Appraisal Document Page 33 Zimbabwe: Park Rehabilitationand Conservation Project
Annex 3 Park Rehabilitation and Conservation Project Estimated Project Costs
------(Z$ Million)------US$ Million-----
% Total Foreign Base Components Local Foreign Total Local Foreign Total Exchange Costs A. Institutional Strengthening Policy Development 2.0 1.5 3.4 0.2 0.1 0.3 42 - OrganizationalDevelopment 3.2 1.8 5.0 0.2 -0.1 0.4 35 1 Fund ManagementSystem 6.0 5.3 11.3 0.5 0.4 0.9 47 1 PlanningUnit Strengthening 1.6 0.8 2.4 0.1 0.1 0.2 33 - Park ManagementPlanning 2.0 1.6 3.6 0.2 0.1 0.3 44 Interpretive& ExtensionCapacity 2.5 1.2 3.7 0.2 0.1 0.3 33 Research, Monitoring & Evaluation - 0.4 0.4 - 0.0 0.0 100 Training 6.4 - 6.4 0.5 - 0.5 - 1 InstitutionalStrengthening Equip. 1.0 7.9 8.9 0.1 0.6 0.7 89 1 Subtotal Institutional Strengthening 24.8 20.5 45.2 1.9 1.6 3.5 45 6
B. Infrastructure, Ops. & Maint. a/ 1. Gonarezhou 72.1 82.5 154.6 5.5 6.3 11.9 53 20 2. Hwange/KazumaPan 115.7 156.6 272.3 8.9 12.0 20.9 58 35 3. ManaPools 26.6 35.4 62.1 2.0 2.7 4.8 57 8 4. Nyanga 15.3 22.2 37.5 1.2 1.7 2.9 59 5 5. Chizaria 26.4 39.6 66.0 2.0 3.0 5.1 60 8 6. Matobo 17.5 25.3 42.8 1.3 1.9 3.3 59 5 7. Chimanimani 5.6 8.3 13.9 0.4 0.6 1.1 60 2 8. Zambezi/VictoriaFalls 19.9 28.7 48.6 1.5 2.2 3.7 59 6 9. Matusadona 19.5 24.1 43.6 1.5 1.9 3.4 55 6 Subtotal Infrastructure, Ops & Maint. 318.8 422.7 741.5 24.5 32.5 57.0 57 94 Total Baseline Costs 343.5 443.2 786.7 26.4 34.1 60.5 56 100 Physical Contingencies 34.4 44.3 78.7 2.6 3.4 6.1 56 10 Price Contingencies 272.0 246.3 518.3 5.8 2.6 8.4 31 14 Total Project Costs 649.8 733.8 1383.7 34.9 40.1 75.0 54 124 a/ Includesvehicles & Equipmen, Designand Supervision. Project Appraisal Document Page 34 Zimbabwe: Park Rehabilitationand Conservation Project
Annex 4 Park Rehabilitation and Conservation Project Economic Analysis
(Cost-Benefit and Cost Effectiveness Analysis)
I. INTRODUCTION
1. This Annex presents an economic analysis of the project, with a view to assessing its overall economic desirability and the cost-effectiveness of selected investments within theproject.l Part II discusses the role of tourism and wildlife in Zimbabwe's economy. Part III covers economic assumptions that are common to all of the economic analyses contained in the Annex. Part IV provides the assumptionsand results relating to a social cost benefit analysis (CBA) of theproject. Part V provides a brief look at the cost-effectivenessof the proposed institutionalarrangements, as well as of individual park expendituresin the context of typical international conservationexpenditures. Part VI provides a separate economic analysis in support of the $5 million of GEF funds that are dedicated to the project, and Part VII provides a long-termlook at economicsustainability once theproject is completed. In all of these instances, economic sensitivity analyses are conducted as appropriate to assess the project's economicrobustness.
1I. ROLE OF TOURISM AND WILDLIFE IN THE ZIMBABWEANECONOMY
2. MacroeconomicSetting. Zimbabwe's GDP increased an average of 2.7% per year through the 1980s, while population grew at 3.2% per year. An Economic Structural Adjustment Program was instituted in 1990, and by 1996, the exchange rate and most consumer prices were market determined; domestic marketing was liberalized; many controls on wages, investment and the labor market were eliminated; the civil service was downsized; and non-interest budgetary expenditureswere reduced by 7.6%. The economy is now more competitive and the investment environmentmore favorablethan five years ago, and recent growthof agriculturaland mineral exports and tourismhas been rapid. The benefits of structural reform have been hampered,however, by droughts and the persistenceof high fiscal deficits, in the range of 8-11% of GDP. Poverty, less prevalent in Zimbabwethan in many sub-Saharancountries, is largely rural; 81% of the poor live in communal and resettlement areas, on environmentallyfragile, drought-prone lands, threatened in some areas by unsustainable farming practices. AIDS, currently infecting 30% of the sexually active population, is worsening acute malnutrition and the under-five mortality rate, and is straining social services. While estimates of poverty differ, it is likely to have increasedover 1990-95,due to drought-inducedfood insecurity,and a decline in real urban wages.
3. Role of Tourism Sector. Even before the structural reforms, tourism was Zimbabwe's third highest foreign currency earner, behind agriculture and mining. Visitors to Zimbabwe increased 325% from 1980 to 1994. In 1996, 1.4 million visitors came for holidays, and the number has increasedby an average of 23% per year in the 1990s. Visitors to Zimbabwe spent US$147.5 million in 1994, a 63% increase since 1980, of which $80 million was from the 3.2% of visitors coming from North America. Use of the tourist multiplier,estimated at 1.69, increases the contributionof tourism to GDP from 1.8% to 3.1%. While the data are inconsistent,estimates of employment in tourism in 1992/3range from 20,000 to 37,000, and of the increase from 1987-90 of formal employment in the sector from 13-20%. The
'The complete report is available in the project file. ProjectAppraisal Document Page35 Zimbabwe:Park Rehabilitatioin and Conservation Project number of registered tour and safari operators, guides and hunters approximatelytripled from 1985 to 1992.
4. The national park systemwas originally establishedwith the 14,500km 2 Hwange National Park and eventually almost doubled in size to its current extent. Compared with nationaltourism growth of about 23% annually,annual growth in parks visits has averaged 11% over the same period for the Parks Estate. Of the 761,000 people visiting national parks in 1995/6, about two-thirds were foreigners. DNPWLMnow manages approximately850 beds in lodges,chalets and cottages,as well as about 380 in campsites. Attempts are being made to increase local involvement, and a new guideline allows indigenous hunting operators to pay discounted concession fees for two years, with full fees payable thereafter.
5. Value of Wildlife. Once legislation had been changed to allow landowners to benefit from wildlife conservation through utilization, the wildlife utilization industry developed rapidly. Wildlife numbershave increased significantlyin commercialranching areas and managementof many species has improved in some of the parks. Key species that are specially protected (no killing except in defense of life) includepangolin, black rhino, wild dog, and 6 bird species. Also, a number of species are restricted for hunting and require a special permit; these include aardwolf, cheetah, gemsbok, Lichenstein's hartebeest, and over 10 bird species. The value of Zimbabwe's wildlife species is reflected in: (i) the cash role it plays in local and national economy; (ii) the non-cash role it plays in improving local livelihoods,and (iii) the contributionit makes through game ranching activities.
6. The cash contribution of wildlife is perhaps most marked. The emerging wildlife industry was estimated in 1995 to be worth at least Z$200 million; another estimate sets the total earnings in wildlife subsectors, including tourism, hunting, food production, game products and support services at Z$852 million. Revenue for hunting in the safari areas alone in the late 1980s was Z$1.67 million. The summary shown in Table,A4. 1 provides some other examples illustratingthat: (i) wildlife earnings have contributed importantlyto foreign exchange; (ii) sport hunting has grown significantly since the 1980s; and, (iii) community capture of benefits is mixed, and depends primarily on existence of local institutional structures toDtake advantage of and distribute income. In addition, it is possible that heretofore restricted products may become an important component of wildlife trade. The CITES meeting in June 1997 agreed that Zimbabwecould make one-time ivory sales to Japan (along with two other nations) with a credliblemonitoring program put in place.
7. The distribution of benefits so as to compensatethose who 'produce' the wildlife by tolerating the opportunitycosts im]posedis a key issue for long-term sustainability,particularly for the communal lands. In one case study, the total revenue generatedby wildlife was US$7.00per hectare, of which only US$0.24accrued to the communalfarmers; returns to agriculture, although lower than to wildlife,accrue to households, so that a 35% increase in annual household income could result from eliminating wildlife.' Revenue fiom the CAMPFIREprogram, which returns wildlife benefits to producer wards, rose from Z$628,000in 1989,to Z$9,741,000in 1993, to Z$14,082,000in 1995.
8. The non-cash role is also important. For example, wild-laid crocodile eggs, provided by DNPWLM under permit, forrned the initial breeding population of the crocodile ranching industry in Zimbabwe, which is not only profitable- worth around US$4.5 million annually by 1995 - but has eliminated the threat of eradicationfaced by the species in the 1950s, has fully restored wild population levels, and has minimized poaching and illegal trade. This is only one demonstrationof the support provided by the genetic stocks of the Parks Estate to the ecologicaland economicresources of the nation. Other benefits include provision of live animals for reintroduction into other areas, and the underlying
' Kay Muirand Robert C'unliffe, Economic Policy and WildlifeManagement in Zimbabwe, February 1993. ProjectAppraisal Document Page36 Zimbabwe:Park Rehabilitation and Conservation Project breeding stock for migratory animals hunted in communal and commercial areas. Beyond these unquantifiedeconomic benefits are the non-market ecological benefits of conservation provided by the parks and wildlife estate.
9. A number of studies over the past two decades has demonstrated that in arid and semi-arid savannas, the economic yields from game ranching significantly outweigh those from cattle. Further, economicprofit per hectare from cattle is negative, even when the substantialenvironmental costs are not counted, demonstrating that conventional beef production is an ecologically and economically unsustainableland use. The search for profitabilityhas resulted in the rapid spread of game ranching and other wildlife utilization enterprises. The initial cropping enterprises have in many cases diversified into additional on-ranch safari hunting, game viewing, and tourism. The evolution of multi-species wildlife utilization in the 1990s has turned several very large tracts of land into conservancies,formed by the cooperationof a number of contiguouslandholders, where animals requiring large ranges, such as lion or elephant,can be successfullysupported. As well as the major ecologicalbenefits created, employmenton one such conservancyhas increasedsix-fold with the change in land use. m. COMMON ECONOMIC ASSUMPTIONS
10. Basic Assumptions. A number of economic assumptions are common to all of the economic analyses containedin this Annex. These relate to the project description,evaluation parameters, and key assumptionsthat were made while forecasting economic conditions. Although, for the most part, the project descriptions rely on the engineering design work, the financial forecasts, and the individual componentdescriptions described elsewherein the PAD, the economic analysis accommodatesadditional factors, notably: (a) the project life is extendedto 40 years to reflect the full life of the project, with investmentsoccurring over a four-year period commencing in 1998, and long-term costs and benefits projected to 2037; (b) revenue and expenditure forecasts, which are based on the financial projections (see Annex 5), have been adjusted to reflect slightly different assumptions relating to macro-economic factors (especially exchange rates and inflation); (c) as opposed to financial values, pecuniary effects such as inflation and taxes are removed and unrarketed values given some greater emphasis; (d) a potential adjustmentis made to reflect that the social opportunitycost of domestic labor may be less than the market price of the labor, with in the Base Case domestic labor valued at "shadow wage rates" correspondingto 80% of market rate; (e) all costs and benefits exclude nominal price inflation (and contingencies)but include real physical contingencies;(f) the base case discount rate, for calculation of present values, is taken to be 10%/year in real terms; and (g) a real exchangerate in the base year is taken as Z$13 per US$1. The real exchangerate of 13:1 is maintainedthrough the life of the project.1
11. As a basic principle, wherever there is uncertainty of project timing or level of costs and expenditures, the evaluation selected parameters that would, in effect, moderately understate the economic viability of the project. This approach resulted in (i) a slight compressionof project capital expenditures into a four year period, (ii) acceleration of all institutional investments to Year 1 of the project, to reflect the idea that many of the investmentcomponents require strong institutionalcapacity if they are to be executed effectively,(iii) long-termrevenue generation based on conservativeincreases in fees and tourist arrivals, with compensatingescalation in real operatingcosts to service the higher arrival levels, (iv) exclusion of domestic consumersurplus in the benefit calculations,and (v) assumptionthat all core agency overhead costs are related to a primary function of running the national parks, even though such overheadsalso performnsecondary functions such as overseeingrecreation and safari areas.
'This may causethe basecase to overstatelocal costs if currencydevaluation occurs and if somelocal costs (especiallywages) do not keeppace with this devaluation. Given the uncertaintyin thisparameter and recent exchangerate volatility,the assumptionshere, again, provide a conservativeevaluation bias to the economic analyses. Project Appraisal Document Page 37 Zimbabwe: Park Rehabilitationancl Conservation Project
12. Project Costs. ]Prcjectcosts are summarizedin Table A4.2. The table is in two parts. The base project costs are shown in the top half, generating a total cost of US$64.6 million (Z$840 million). The bottom half shows the lonlg-term(recurrent costs) associatedwith continuedoperations of the park estate during and beyond the investment phase of the project. The recurrent costs in this table should be regarded as a 'reference scenario' assumingno real changes with time; in the general evaluationmodels they are linked to actual forecast activity variables, such as tourism levels. These recurrent costs are factored from consultant estimatesl developed in the course of a Revenue and Expenditure Study conducted for DNPWLLM,with the following adjustments: (i) changes in costs caused by variations in nominal exchange rates and inflation were removed; (ii) accounting costs associated with depreciation and interest during constructionwere removed to reflect social valuation; and (iii) a series of factored adjustmentswere made to generate park-by-parkestimates for three parks not includedin the study.
13. During the project investment period, average real costs associated with park and related operations will be approximatelyZ$80 million (US$6 million) annually. These costs are included in the project economic analysis but are assumedto be financed by the government. For the five year period 1998-2002 inclusive, including price contingencies, these costs are estimated to be US$37.3 million. Offsettingthis, it is anticipatedthat revenues duringthis same period (from service fees plus the one time sale of elephant products under CITES) will generate approximatelyUS$46.7 million in funds to the government. Financingthese recurrent expendituresduring the project life is not, therefore,a constraint to implementation;such costs have been excluded from the project description and are not generally regarded as eligible for financing.
14. Base Case Revenue Forecast. The economic analysis assumes that payments made by individualsfor park and related services reflect the direct benefits accruing to those individuals. These revenues are summarizedin Table A4.3. Some of these revenues are collected directly (e.g., through entry fees) while others are collected through the operations of private enterprises (e.g., concession and license fees). Revenuesduring the forecast period are primarily from three sources: (i) tourism services, (ii) park services, and (iii) the one-time sale of approximately33 tons of elephant ivory is anticipatedto occur on the international market in 1999 under an experimental sale through CITES. In addition, smaller domesticsales -- which are not subject to CITES regulations- will occur on an annual basis.
15. The projectionswere based on the revenue forecasts contained in the consultant study adjusted for inflationaryeffects. While annual growth in parks visits has averaged 11% for the Parks estate, the projections were more conservativelybased on a 5% annual growth for most parks (Gonarezhou was assumed to be 10%). These growth rates were selected to reflect the fact that tariff increasesmay reduce volumes somewhat; and that DNPWLM intends to control traffic in the estates to maintain their ecological balance. Nonetheless, the study parameters were regarded as optimistic, given trends in regional tourism, and vveretherefore taken as a potential 'high' case for revenue forecasting purposes. Assumptionsrelating to the main scenarios in the economic studyare:
* High Case Revenue. Tourism arrivals grow at an average rate of 5% per year, real tariff levels for tourists increase by 7% per year, and real park service fees increase by 5% annually. Revenues in Year 40 are 1400%of revenues in the Base Case.
* Base Case Revenue (Appraisal Base Case Assumptions). The High Case is regarded as optimisticto the extent that it may be difficult to sustain increasedtourist arrivals and increasedfee levels in the face of competitionfrom other countries in the region. The Base Case therefore reflects a 5% annual increase in tourist visits with no rises in tariff levels.
Projected DNPWLM Revenue and Expenditures, Matlow (Pvt.) Ltd., 1997 Project Appraisal Document Page38 Zimbabwe: Park Rehabilitationand ConservationProject
* Low Case Revenue (Appraisal "No Project" Case). Both tourism levels and fee levels show no change over the 40 year period. This would, it is believed, be the most optimistic projection in the event that the project does not proceed, and it is therefore used as a reference case against which the project is compared. Revenues in Year 40 in this scenario are 16% of those in the Base Case.
IV. COST BENEFIT ANALYSIS
16. CBA requires that only additional costs and benefits be included in the analyses, where the additionalcosts and benefits are with reference to a 'most likely alternative in the event that theproject does not proceed as anticipated.' Table A4.4 provides a summary of all of assumptions relating to the relevant real cost and benefit streams consideredin the CBA.
17. Assumptions"With PARC". The estimates for direct benefits and costs have been provided previously. The revenues in effect capture both wildlife and tourism values, while the costs reflect investmentand operatingcosts with the project. Althoughthere is considerableuncertainty over the price of the one-time ivory sale in 1999,the one-timeinternational sale and legal domesticsales will occur with and without the project, and thus will not affect the project valuation results. As for- labor shares, domestic labor in domestic components was estimated to range from 0% to 75% (values per cost componentlisted in complete report). In addition to direct benefits, there are further benefits associated with the preservationof genetic values. Conservationof native vegetation, fauna and ecosystems in the protected areas preserves genetic stocks, some of which have clear marketablevalue. Further benefits protected by the project investmentinclude the ability to sustain a comprehensiveprotected area system which is capable of conserving and sustaining globally significant and representative biodiversity. A partial accountingof erosion costs caused by cattle ranching, based on the replacementcosts of three soil nutrients, was found to increase with aridity from US$8 to US$80/ha/year,a measure which does not account for the many other losses. Such other losses includethe local loss of species, the loss of soil, and impaired water catchmentquality. Continuedprotection of many additional ecological functions, and of option and existencevalues, is an unquantifiedbut large benefit to the global community.
18. Assumptions"Without PARC". A scenario was developed,based on experienceof the Appraisal Mission members and others, regarding what would be most likely to happen in the absence of the project. The initial effects that are likely to ensue in the absence of the project - such as continued deteriorationof roads, inadequate communications,and a lack of institutionalmanagement equipment and systems- will result in various forms of damage,such as reduced tourism, loss of potential revenues, and environmentaldeterioration. These damages have multiple causes: for example, impassable roads will lower tourism, hinder anti-poachingefforts, raise vehicle operating costs, increase staff time costs, raise long-mn maintenance and rehabilitation costs, and reduce capacity to undertake conservation activities. Since a simple 'dose-response' correlation between initial effects and resulting damages cannot be precisely established, the assumptionssummarized in Table A4.4 represent a best estimate about ultimateeffects.1
19. Values "At Risk". As many values in the economy depend to a greater or lesser extent on the wildlife and park sector, the viability of the Parks Estate acts as an underpinningto these values, which could be jeopardized by its degradation or loss. This section gives some general areas at risk and provides economic value estimates of those areas that may be vulnerable. As some of these values cannot be readily analyzedin the frameworkof a 'with' and 'without' project scenario, they are excluded from the general CBA results.
'The assumptionsand related quantitative adjustnents are describedin detailin the completereport. ProjectAppraisal Document Page39 Zimbabwe: Park Rehabilitationand ConservationProject a) Tourism Sector. The tourism sector is not only a significant componentof GDP anda large contributor to foreign currency earnings, it also supports private conservation efforts through the wildlife utilization industry. Gross receipts from holiday visitors to Zimbabwe in 1996 totaled Z$1,060 million. Assuming a modest 5% growth in tourism, the present:value of this annual amount discounted over the 40-year project time horizon is an estimated Z$26,000 million. This is the potential gross PV of tourism at risk. Whiletourism does not fully depend on the park estate, it is clear that the estate is a critical component in the national tourism strategy; one expert suggests it is directly or indirecitlyresponsible for 95% of tourism in Zimbabwe.
b) Other Wildlife. Out-of-parkwildlife production also dependson the habitat and wild populationsof the FParlksEstate. The value added from wildlife production,excluding a further $783 millionidependent on the tourism industry, was estimated at Z$125 million in 1992 (or $344 million real 1997). In addition to these actually marketed values, the annual trophy value of a sustainable off-take of a selection of current animal populationsamounts to Z$92.7 million, giving annual non-tourism and non- marketed values of $Z437 million annually. Using 1997 real values, and conservatively assuming no increase in production volumes, this translates to a discounted PV of Z$4,700 million, representingthe PV of wildlife values potentially at risk.
c) Induced Investment. Expanded infrastructure provision has additional benefits of induced investment, reduced fiscal burden, and incremental efficiency gains elsewhere in the economy. Studies elsewhere have demonstatedthat benefits of such impacts can exceed by up to an order of magnitude the direct benefits that may be realized by any specific project.
20. In the absence of the park system,present values of at least Z$30,700million (US$2,360million) are at risk. It is impossibleto specify precisely all the linkages between the Parks Estate and the wildlife and tourism values at risk, or to demonstratetheir magnitude,but it is clear that even a 3.2% decrease in these values would more than justify the US$75million cost of the project.
Results
21. Results of the C13Aare presented in Table A4.5a for the Base Case and Table A4.5b for a number of sensitivitycases. Sensitivityresults for discount rates of 5% per year and 15% per year are shown in additionto the Base Case assumptionof 10% per year. The NSB of the project is defined as the NPV of cost and benefit streams 'with' the project less the NPV of cost and benefits streams 'without' the project. The table separates the 'direct' costs and benefits from 'other adjustments'. These other adjustrnentscan be equivatlentlytreated either as 'gains' to the 'withproject' scenario or as 'losses' to the 'without project' scenario; analytically all have been calculated with reference to the 'withoutproject' case, as they are, technically, efficiency losses that could be expected to occur if nothing is done in the sector. From an evaluationperspective, therefore, these are 'avoided efficiency losses' in the CBA of the project.
22. The Base Case analyses demonstratethat the project shows a positive NSB at all discount rates evaluated. It is thereforeeconomically efficient to proceed with such an intervention. In the Base Case at a discount rate of 10% per year, the direct social benefits and costs of the project show a small net loss of US$4.5 million. "Doing nothing," however,would generate a net social loss of US$49.2 million because of ongoing recurrentcosts and efficiency losses. The NSB in the Base Case is therefore approximately US$45 million. A sensitivitytest was undertakento determine the discount rate at which NSB equaled ProjectAppraisal Document Page 40 Zimbabwe: Park Rehabilitationand Conservation Project
zero. Simulationsshowed that this occurred at a discount rate of 16.547%peryear. The Economic Rate of Return of the projectis therefore approximately16.5%.
23. Incremental benefits (before costs) from the project are approximatelyequally weighted between 'nature' gains and 'road efficiency' gains. With the project, benefits from wildlife and tourism are US$53.68 million greater than they would be in the Reference Case. Efficiency gains from improved road conditionsare expected to be slightly more: $54.92 million. This illustrates that, from an economic efficiency perspective, both the infrastructure and the wildlife and tourism aspects are important in realizing the project's economicviability.
24. The sensitivity results in Table A4.5b show the economic robustness of the project. Specific conclusions are: (i) even with a shadow wage rate = 100% of market rates, the project shows a positive NSB at all discount rates; (ii) In a 'low' revenue scenario, in which tourism revenues are 'flat', the project remains economic at a 10%/year discount rate and becomes marginally uneconomic (NSB= -US$4 million) at a 15%/year discount rate. The fact that it remains economic at the 10% discount rate (even though the revenue forecasts in the 'with' and 'without' project cases are identical) demonstrates the importance of the efficiency gains in justifying the project; (iii) The base case assumed an average park road use of 10 km/visit. Variation of this parameter within a five-fold range (low of 2 km/visit; high of 50 km/visit) still demonstrateda positiveNSB at a 10%/yeardiscount rate. Finally, an iterative test was conducted to determine the 'break-even' point within the tourism growth forecast, to find the point at which declining tourism might compromiseproject economics. The base case assumed that tourism numbers escalated by 5%/year,that there was no growth in tariffs, and that operating costs to service the tourism volumes increasedby 4%/year. The break-evenanalysis assumedthat both tariffs and operating costs remained constant at current levels. The result was that if tourism levels showed a sustaineddecline of 4.33%/year throughoutthe 40 year project, the projectNSB would equal zero. This demonstratesthat the project economicsare quite robust in the face of tourism declines.
V. COST EFFECTIVENESS ANALYSIS
25. Base Case Institution. A range of alternatives was considered in developing the institutional strengtheningcomponent of the project, from a highly centralizedand publiclymanaged agency to handle park functions,to regionallydecentralized structuresthat were financiallyand manageriallyautonomous from central government. The highly centralized model reflects the traditionalpark managementsystem in Zimbabwe. In Zimbabwe,as elsewhere,such centralizedstructures were generally larger than required and were typically ineffective in fulfilling conservation mandates because they did not empower decentralizedexpertise and management in individual parks. This model was, therefore, regarded as a priori unsustainable.
26. Decentralized structures, relying on private firms, NGOs or quasi-governmentalagencies to operate individualparks, have been adopted in some countries. In Zimbabwe,however, the sustainability of some of the parks would be questionable in such a model. Financial analyses indicate that some popular parks would thrive while others, which are equally important from a biodiversityconservation perspective,would languishbecause of their location or the nature of their 'salable' features. Because the project addresses Zimbabwe's entire Parka Estate as a system, promotion of highly decentralized structures would unduly threaten the sustainabilityof the system. Appropriately,a model for the project was adopted that: (a) takes advantage of decentralized management expertise through strengthening infrastructureand institutionsat the Park level; (b) maintains a strong coordinatingand planning role for a centralized DNPWLMthat will promote the park estate as a sustainablesystem; and, (c) promotes cost- effective operationsthrough establishinga more commercializedDNPWLM that can cooperate with the private sector in providing tourism and park services in Zimbabwe. Moreover,through discussionswith Project AppraisalDocument Page41 Zimbabwe: Park Rehabilitationanid Conservation Project government,this model -, of a commercializedDNPWLM that supportsa strong decentralizednetwork of parks - has the greatest degree of political support of all of the alternativesconsidered.
27. Per Unit Cost-ef,ectiveness. While no complete monetizationof the global benefits of such an intervention has been completed, it is possible to provide some indication of the cost-effectivenessof such an interventionin comparison to interventionselsewhere on a unit area basis. For the system as a whole, it is estimated that the total interventiontranslates to an annualized cost of US$489/km2/year of effective protection; this reflects the basic hypothesesthat improved decentralized measures will ensure protectionof a wider range of species and habitats and that the 2.7 million ha of land area within the park estate would otherwise have experienced continuous degradation. The literature indicates that typical conservation expenditures around the world reflect international interventions corresponding to approximately US$201kmn2/year to US$2,000/km2/year of protection. In the case of Zimbabwe, therefore, the substantial investments in the project provide an opportunity to implement relatively efficient conservationexpenditures.
VI. INCREMENTAILCOST ANALYSISOF GEF COMPONENTS
28. The project finaincingplan provides that, of the total financing requirement of US$75 million, US$5 million will be provided as a grant through the Global EnvironmentFacility (GEF). Because the GEF funding has already been approved at a previously determined funding level, an abbreviated incrementalcost (IC) analysis is presented here. As opposed to calculating an appropriate level of GEF funding (that an ex ante analysis would provide),the IC analysis here provides an ex post 'reality check' on the GEF funding that has been allocated. The primary purpose is, therefore, to provide an economic assessmentof the GEF contributionsusing conventionsthat respect GEF appraisal procedures(requiring acknowledgmentof a 'baseline'), while also reflecting the analyticalassumptions contained in the overall project appraisal.
29. The project calls for splitting the GEF allocation between two sets of activities: First, the GonarezhouPark program represents support for the direct costs within GonarezhouPark as describedin this PAD. The total level of funding for this program has been set tentatively at US$3 million, but could potentially be increased if expenditures under the activities under the 'Out of Park' program are not totally committedor disbursed. The IC analysis in this section focuses on these 'in park' expenditures. Second, funds have been reserved for a series of small- to medium-scale investments outside of Gonarezhou Park, totaling US$2 million. Most of this will be reserved for relatively small projects (having funding ceilingsof US$25,000each), although depending on proposals received in the courseof the project,some could be used for medium scale projects (having fundingceilings of US$300,000each). The scale of these individualprojects precludes the need for an IC analysis for each activity under current GEF guidelines, and the current level of definition of these projects would make it impossible in any event to conduct a detailed IC analysis.
30. The incremental cost analysis for the GonarezhouPark component of the project commences with the same form of (CBAas for the project as a whole (results shown in Table A4.6). A 'with' and 'without' case is again defined, although in this case the expenditures include only the 'in park' investments and recurrent costs. Costs associated with central institutional strengthening are not allocated on a pro rata basis to the park, as these could be regarded as a 'Baseline' investmentthat would be spent by the governmentin any event. Efficiency gains are computed using similar conventionsto those used previously, with the exception that a higher share of the 'borehole adjustment' that was applied for the systemas a whole was, in this case, attributed to Gonarezhou. For the system as a whole, it was assumed that only 5% of the tourism revenue was at risk due to the lack of water supply. Given that much of this amount was, in fact, because of Gonarezhou,the CBA for Gonarezhouassumed that 100% of the locally derived revenue was at risk. This has the effect of increasingthe projectNSB for the ProjectAppraisal Document Page42 Zimbabwe:Park Rehabilitation and Conservation Project park as it results in a greater efficiency gain; the efficiency gain is small relative to other benefits and costs and even with this high assumed level of revenues at risk, the projectNSB is not greatly affected by it.
31. The net result of the CBA for Gonarezhou Park is that there is a negative NSB of US$7.14 million at a 10% per year discount rate. This is in contrast to the positiveNSB for the project as a whole, and is attributable to a number of factors. First, the revenue share attributable to Gonarezhou Park is small compared to that in other parks while costs are comparable on a per hectare basis. The lower revenue share is reflected,for example, in lower vehicle use. The vehicle use for the system as a whole is approximately84,000 vehicles annually whereas the highest historical use rate in Gonarezhouover the past five years has been just under 3,000 vehicles; this analysis assumes for a 'reference case' that 3,000 vehicles will use the Park. This relatively low use rate shows up in two ways in decreasingthe NSB for this park: (i) there are fewer direct revenues from tourists; and, (ii) there are fewer efficiency gains from improvingroad infrastructure. As a consequencenet benefits are lower. These factors alone provide an important rationale for directing GEF funds to this Park, apart from the biodiversity objectives of conservingthe natural assets in this area.
32. While the above provides an assessmentof the net social benefits, some additional adjustments are warranted to provide a more accurate assessment of the incremental costs. First, although an SWR=80%was used for the CBA, it is more conventionalin incrementalcost analysis to use full market prices for all project inputs. In this case, such an adjustment, as shown in the table, would provide an additional net present value cost to the interventionsof US$0.85 million relative to the Reference Case. Second, it may be argued that Gonarezhouis a key part of the entire protected area system and that, as such, the Government would in any event be willing to pay a greater share of recurrent costs as part of any 'baseline' activity. In this case, it was assumed that all additional recurrent costs under the project would be covered by the Governmentas a Baseline commitment. This, as the table shows, results in a 'benefit' adjustment of US$2.35 million. In effect, the result of these two adjustments is simply equivalent to evaluating the project at market prices and excluding all recurrent costs to reflect the idea that the Governmentwill cover these as any Baseline expenditureprogram. Even with these adjustments, however,the Park NSB shows a negative value of US$5.65million. This can be broken down as follows: Incremental investment cost of US$9.82 million, and offsetting benefits of US$4.17 million (US$0.88 million from incrementalwildlife and tourism benefits plus US$3.29million from incrementalefficiency gains.) This implies that the net present value of the incremental cost stream is US$5.65 million. Assuming that any compensatorydisbursements occur in equal installmentsover a three year period to the Park, then, using the inflation assumptionsthat were common throughout the economic analysis, the 'as spent' equivalentthat would generate this NPV of incrementalcosts would be US$6.83million.
33. The analysis suggests that, accounting for Baseline considerations and offsetting benefits,the current 'as spent' incrementalcosts of investmentsat Gonarezhou Park is US$6.83 million. In effect, internationalgrant aid of approximatelyUS$7 million would be an economicallyappropriate intervention under GEF IC guidelines. Given that, under the project, up to US$5 million was allocated in total under GEF (with at least US$3 million directly through 'in park' investments), the scale of the GEF commitmentis of the right order of magnitude,though there is economicjustification for increasingthis amount.
VII. SUSTAINA.BILITYANALYSIS
34. Project sustainability is a concern with all interventions in which local revenue sources are expectedto cover recurrent costs. It is especially relevant given the historical experience of DNPWLM, whose operating profits over the three years prior to 1995/6were insufficientto meet costs, resulting in funding deficits accumulating as high as Z$31 million over the 3-year period. Disbursementsto the Project Appraisal Document Page 43 Zimbabwe: Park Rehabilitation and Conservaton Project
Department did not generally cover actual requirements. Tariffs were set at well below market rates, accounting systems were inadequate, and no incentives were in place to generate revenue or improve management efficiency. The establishment of the Fund, and the planned project institutional strengtheningand infrastructurerehabilitation will change these factors, and create conditionsthat will enable positivenet revenue flows.
35. Based on the revenue and recurrent cost projections presented earlier in this section, analyses suggest that the activities included within the scope of this project will generate financial surpluses immediately. Analyses of revenues under the three revenue forecasts show the following (thousandsof 1998 Z$):
Year Operating Revenue Costs* Low Case* Base Case High Case 3 85,185 94,133 103,258 114,058 5 92,136 94,133 113,318 138,226 10 112,097 94,133 143,213 223,638 15 136,384 94,133 181,368 362,157 20 165,93-1 94,133 230,065 586,932
*The operatingcost projectionsaXe those shown under the 'Base Case' and 'High Case' assumptionsof tourist arrivals. In the 'Low Case' (no changein touristarrivals) operating costs are also projectedto remain flat at Z$85,185. 36. In the Low Case revenue forecast, the ratio of recurrent revenues to recurrent costs after project completion is 1.11:1. In the Base Case the ratio is 1.23:1upon completion of the investmentphase and approximately1.33:1 after an additional 10 years. Given the existence of the Fund, these revenueswill be retained for Departmental use and there is therefore a high probability of achieving long-term sustainability. ProjectAppraisal Document Page44 Zimbabwe:Park Rehabilitation and Conservation Project
Table A4.1 Selected Indicators of Wildlife Value in Zimbabwe Foreign Estimatedfinancial contribution of wildlifesubsectors to the nationaleconomy (1992): Exchange Total Earnings(Z$million) Foreign Share Role Tourism 731.0 73% Sport Hunting 52.2 100% Wildlifemanagement services 62.0 0% Gameproducts 1.0 n/a Crocodileproduction 26.6 100% Ostrichproduction 35.4 100% Total 852.4 -76% Sport mid- to late 1980s 1993 Hunting Gross value of sport hunting >US$2 million >US$12 million Huntingdays 4,255 14,142 Fee to safari operators US$475/d US$550/d Averagetrophy fees by safari operators • Elephant* US$2,691 US$7,609 * Buffalo 645 1,046 * Sable 903 1,524 * Leopard 1,322 1,888 • Kudu 403 544 * Zebra 377 553 Averagehunt value 6,078 9,970 * Elephanthas accountedfor 22% of trophy fees paid from 1986 to 1993. Community Sport huntingis the primary source of funds. From 1989-1995, only 2% of revenue was from Involvement tourism in districtswith 'appropriateauthority'. Revenuesto district councilshaving 'appropriateauthority' in 1995: * Sport hunting Z$13,080,000 93% X Tourism 479,000 2% • Hides/ivory 101,000 1% • Other 421,000 4% * Total Z$14,082,000 Kanyuriraward, almost surroundedby Parks and Wildlifeland in the Chewore and Doma SafariAreas, fenceditself in to 20km2 out of 400km2, keeping the remainderfor wildlifeand leasedthe concessionfor trophy hunting. This was valuedat US$33,000to US$276,000/year. Majorityof funds from safarihunting went to communityprojects and remainderwent as dividendto householdsof $200/hhin 1989, $400/hhin 1991 and $1000/hhin 1993. Commercial Wildlifehas comparativeadvantage over beef in Natural RegionsIV and V, borne out by Lands increasingchangeover to wildlifesystems. Commerciallands depend primarily on sport hunting,but in certain areas there is a progressionfrom sport huntingto non-consumptivetourism. Conservancies(Save 3,368 km2, Bubiana 1,860 kI 2) are using both, as are growingnumber of ranches and fanns. Gross value of trophy fees to commerciallands (1991)= US$1.4million Gross value of wildlifeutilization to commerciallands (1991) = Z$200 million. Sources:Bond 1997;Cumming 1991a cited C 1994; Cumming1994; Jansen 1992;Swift 1997. Project Appraisal Document Page 45 Zimbabwe: Park Rehabilitation and Conservation Projects
= Table A4.2 Base Case ProjectCosts
(Z$ '000s) Period Calendar Year 1998 1999 2000 2001 2002 2007 2012 2017 2022 2027 2032 2037 Item Sub- Project Year 1 2 3 4 5 10 1 20 25 30 35 40 Totals Totals BASE PROJECT COSTS
NATIONAL PARKS Road rehabilitation & civil SD,67, 201,100 104,690 92,473 47s,940 works Electrification 7,52(l 4,200 3,360 500 15,5S0 Telephonelines 350 560 0 0 1,410 Buildingrepairs, other 0 1,570 14,045 3,115 23,730 rehabilitation Water supplies o 6,710 200 1,065 7,975 New housing, other buildings (1 779 13,685 20,530 34,994 Road maintenanceplant 20,790) 0 0 0 20,790 Vehicles 12,811) 0 0 0 12,10 Anti-poaching& 2,37i 0 0 0 2,371 communications Other equipment 4,462 0 0 0 4,462 Office equipment 694 0 0 0 694 Design and supervision (10%) 13,06 21,492 13,598 12,26_ 60,426 Physical contingencies (10%) 14,374 23.641 14,953 13,495 66,468 Total parks project costs 153,116 260,052 164,536 148,446 - - - - -i--
CENTER SERVICES Institutional Strengthening Policydevelopment 3,146 3,146 Organizationaldevelopment 4,550 4,550 Fund managementsystem 10,400 10,400 PlanningUnit strengthening 2,210 2,210 Park managementplanning 3,328 3,328 Interpretiveand extension 3,341 3,341 capacity Research, monitoring, evaluation 3SO 390 Training 5,6c3 5,603 Institutional strengthening 8,s54 8,554 equipment Physical contingencies 4,1.32 4,152 Total center services project 45,674 45,674 costs Total Project Costs 203,750 260,052 164,536 143,446 - - 776,24
OPERATING COSTS N'ATIONAL PARKS Direct costs- tourism Salaries and wages 14,112 14,676 15,264 15,874 16,509 20,086 24,437 29,732 36,173 44,010 53,545 65,146 1,341,000 All other 2,624 2,729 2,s33 2,952 3,070 3,735 4,544 5,528 6,726 8,133 9,956 12,113 249,347 Total direct tourism costs 16,76 17,405 13,102 18,326 19,579 23,821 28,981 35,260 42,s99 52,194 63,502 77,260 1,590,347 Direct costs - park services Salaries and wages 15,734 16,363 17,018 17,699 13,407 22,394 27,246 33,149 40,331 49,069 59,700 72,634 1,495,131 All other costs 4,6:59 4,845 5,039 5,241 5,450 6,631 3,063 9,316 11,942 14,530 17,678 21,50S 442,724 Total direct parks services costs 20,3M3 21,209 22,057 22,939 23.357 29,026 35,314 42,965 52,273 63.59 77,377 94,142 1,937,835 Indirect expenses Salaries and wages 3,9D3 4,064 4,227 4,396 4,572 5,562 6,767 8,234 10,017 12,133 14,823 13,041 371,360 All other less depreciation 11.62S 12,093 12,577 13,030 3,603 16,550 20,136 24,493 29,306 36,264 44,120 53,679 1,104,957 Total indirect expenses 15,536 16,157 16,S04 17,476 18,175 22,113 26,903 32,732 39,323 48,451 58,94E 71,720 I,476,316 Conservation costs Salaries and wages 963 1,001 1,041 1,o03 1,126 1,370 1,667 2,028 2,468 3,002 3,653 4,444 91,430 All other costs 2,71 2,936 3,106 3,230 3,359 4,087 4,972 6,050 7,360 s,955 10,395 13,255 272,355 Total conservation costs 3,834 3,s97 4,147 4,313 4,485 5,457 6,639 3,073 9,823 11,937 14,54S 17,700 364,336 Total parks operating costs 56,499 53,759 61,I09 63,554 66,096 80,416 97,331 119,035 144,824 176,201 214,375 260, 21 5,363354 Project Appraisal Document Page 46 Zimbabwe: Park Rehabilitation and Conservafton Project
CENTERSERVICES Salaries and wages 11,197 11,645 12.111 123595 13,099 ts,937 19.390 23.590 28.701 34,920 42.48s5 1,689 1,064,001 All other costs, net of 11i062 11,504 11,965 12,443 12,941 IS,745 19.156 23,306 28.355 34,499 41.973 51.066 .051,172 depreciation Total center services operations 22.259 23,149 24.075 s,03 26,040 31,681 38,54 46,996 57.057 69.411u 4,45 102.756 2,115s.73 Total Operating Costs 78,758 81.908 85.185 88.592 92.136 1122097 136,384 165,931 2016821 24S5619 299s.33 363.576 7.4s4.027
TOTAL DIRECT COSTS 282548 341,s960 249,721 237.039 92,136 112097 136,384 165,9321 201282 245619 298.833 363.S76 I8,260,85
Table A4.3: Base Case Revenue Forecast (ZS '000s) Period Calendar Year 1998 1999 2000 2001 2002 2007 2012 2017 2022 2027 2032 2037 Item Project Year 1 2 3 4 5 10 15 20 25 30 35 40 Totals FORECASTEDREVENUES
NATIONVAL PARKS Tourist services 89,022 93,473 98,147 103,054 108.207 138,102 176,257 224,9s4 267,105 366.427 467,664 596,870 10.753,838 'Park Services* 5.121 30,741 5,112 s.112 5.LI1 5,111 5,111 5,121 5,111 5,11 5.11 5,111 230,070
TOTAL REVENUES 94,133 124,214 103,258 108,165 113,318 143,.213 181,368 230065 29.16 371,5381 472775 601,9821
f~~~~~~~~~~~~ ~~~ ~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Project Appraisal Document Page 47 Zimbabwe: Park Rehabilitationand Conservaton Project
Table A4.4: Summaryof EvaluationAssumptions (Base Case; millionsof constant 1998Z$)
Analysis Category Valuation Assumptions Project DirectBenefits & Costs Revenues Tourismand wildlifevalues (1998) = Z$94 Tourist escalation = 5%/o/year One-offivory sale in 1999 = Z$25.6 Annualfee increasesper tourist = nil Investments Total investmentof Z$777 (see Table A4.2) Operating costs OperatingCost (1998)= Z$79 Escalation= 4/o/year (see Table A4.2) Adjustments relatingto Project B&Cstreams Labor adjustment SWR = 80% of market wages and salary in labor componentof ProjectInvestments and OperatingCosts Geneticvalues >0; no estimateavailable for system as whole OtherEcosystem Services >0; no estimateavailable for system as whole ConsumerSurplus >0; no estimateattributed Adjustmeqntsrelati toReference Case Revenues Same as 'with Project' case except: Tourist escalation = nil Operating Costs Same as 'with Project' case except: Tourist escalation = nil Labor adjustment SWR = 80% of marketwages and salary in labor componentof ReferenceCase OperatingCosts Efficiency losses- Road Degradation Increasein vehicle operatingcosts from 0-10%over 10 year period, resultingin eventualefficiency loss of Z$S10/year in ReferenceCase Efficiencylosses - Powerand Telecom Unmetdemand results in single staff efficiencyloss of 15%of labor componentof ReferenceCase Operating Costs, resulting in efficiency loss of Z$6.9/year. Efficiencylosses - Staff Productivity Generalstaff efficiencydecline from 0-20%over 4 year period, appliedto labor componentof ReferenceCase OperatingCosts, resultingin eventualefficiency loss of Z$9.2/year. TourismLosses from Water SupplyDegradation Tourismrevenue at risk = 5% of gross revenue. Impactfrom water supply degradationescalates from 0- 20% over 4 year period, resulting in eventuallosses of Z$0.9/year. EfficiencyLosses - RevenueC'ollection Revenuesat risk, for valuationpurposes, includeonly foreigncomponent, estimated to be 89% of (non-ivory) revenue. Collectionefficiency loss of 5% resultsin eventualloss of Z$4.2/year. Project Appraisal Document Page 48 Zimbabwe: Park Rehabilitationand ConservationProject
Table A4.5a: Net Social Benefits- Base Case ZimbabwePARC Project (1998 constant US$ million; annualdiscount rates as indicated)
50/I/yr 10%lyyr1
Direct Social B&C "With Project" 51.12 -4.51 -21.00 Project Benefits 282.87 133.24 81.40 Project InvestmnentCosts -56.07 -52.90 -50.15 Project Recurrent Costs -202.31 -99.29 -62.20 Labor Adjustrnent (SWR=80%) 26.63 14.43 9.95
Adjustments for Direct Social B&C "Without Project" -35.91 -22.11 -16.14 Reference Case Benefits 132.34 79.68 57.02 Reference Case Recurrent Costs -109.15 -65.17 -46.27 Labor Adjustment (SWR=80%) 12.73 7.60 5.40
Other Adjustments 139.72 71.33 43.55 AEL from Road Degradation* 111.54 54.92 32.19 AEL from Umnet Demand (Power & Telecom)* 9.54 5.70 4.05 AEL related to Staff Productivity* 11.70 6.60 4.42 Avoided Tourism Losses from Water Supply Degradation* 1.13 0.64 0.43 Collection Efficiency Gains* 5.81 3.47 2.46 Genetic Value Capturable Benefits* + + + Ecosystem Service Benefits* + + + Additional Domestic Consumer Surplus in Benefits + + +
NSB of Project 154.93 44.70 6.41
* Relative to 'without Project' case. Note: B&C = Benefits & Costs; AEL = Avoided Efficiency Losses. Project Appraisal Document Page 49 Zimbabwe: Park Rehabilitationand Conseration Project
Table A4.5b: Net SociialBenefits - SensitivityCases Zimbabwe PARC Project (1998 constant US$ nmillion;annual discount rates as indicated)
Sensitivity Case 50/elyr 10%/yr 15%/./yr
Base Case Direct Social Benefits & Costs "With Project" 51.12 -4.51 -21.00 Adjustments for Direct Social Benefits & Costs "Without Project" -35.91 -22.11 -16.14 Other Adjustments 139.72 71.33 43.55 NSB of Project 154.93 44.70 6.41
SWR=100% Direct Social Benefits i& Costs "With Project" 24.49 -18.95 -30.95 Adjustments for Direct Social Benefits & Costs "Without Project" -23.19 -14.51 -10.75 Other Adjustments 139.72 71.33 43.55 NSB of Project 141.03 37.87 1.85
High Revenue Scenario Direct Social Benefits & C'osts "With Project" 1,152.90 297.40 83.92 Adjustments for Direct Social Benefits & Costs "Without Project" -35.91 -22.11 -16.14 Other Adjustments 139.72 71.33 43.55 NSB of Project 1256.71 346.61 111.33
Low Revenue Scenario Direct Social Benefits &kC(osts "With Project" -17.12 -27.93 -31.31 Adjustments for Direct Social Benefits & Costs "Without Project" -35.91 -22.11 -16.14 Other Adjustments 139.72 71.33 43.55 NSB of Project 86.69 21.29 -3.90
Nil Efficiency Gains Direct Social Benefits & C(osts"With Project" 51.12 -4.51 -21.00 Adjustments for Direct Social Benefits & Costs "Without Project" -35.91 -22.11 -16.14 Other Adjustrnents 0.00 0.00 0.00 NSB of Project 15.21 -26.63 -37.15
Park Kilometers Driven Per Vehicle = 2 Direct Social Benefits & Costs "With Project" 51.12 -4.51 -21.00 Adjustrnents for Direct Scicial Benefits & Costs "Without Project" -35.91 -22.11 -16.14 Other Adjustrnents 50.49 27.39 17.80 NSB of Project 65.70 0.76 -19.35
Park Kilometers Driven Per Vehicle = 50 Direct Social Benefits & Costs "With Project" 51.12 -4.51 -21.00 Adjustrnents for Direct Scicial Benefits & Costs "Without Project" -35.91 -22.11 -16.14 Other Adjustments 585.87 291.02 172.32 NSB of Project 601.08 264.39 135.17
Break-even Case: Operations Change 0% & Tourism Volume Decrease = 4.329%/yr Direct Social Benefits & Costs "With Project" -65.29 -49.22 -42.90 Adjustments for Direct Social Benefits & Costs "Without Project" -35.91 -22.11 -16.14 Other Adjustments 139.72 71.33 43.55 NSB of Project 38.52 0.00 -15.49 ProjectAppraisal Document Page50 Zimbabwe:Park Rehabilitation and Conservation Project
Table A4.6: Net Social Benefits& IncrementalCost Analysis for GonarezhouPark (1998 constantUS$ million;annual discount rates as indicated)
50/./yr 10//yr 15%tyr
Direct Social B&C "With Project" -16.36 -12.80 -11.46 Project Benefits 4.90 2.33 1.43 Project Investment Costs -9.91 -9.82 -9.74 Project Recurrent Costs -13.91 -6.83 -4.28 Labor Adjustment (SWR=80%) 2.56 1.51 1.13
Adjustments for Direct Social B&C "Without Project" 3.96 2.37 1.68 Reference Case Benefits 2.44 1.46 1.03 Reference Case Recurrent Costs -7.50 -4.48 -3.18 Labor Adjustment (SWR=80%) 1.10 0.66 0.47
Other Adjustments 6.29 3.29 2.06 AEL from Road Degradation* 3.97 1.95 1.15 AEL from Unmet Demand (Power & Telecom)* 0.83 0.49 0.35 AEL related to Staff Productivity* 1.01 0.57 0.38 AEL from Water Supply Degradation* 0.37 0.21 0.14 Collection Efficiency Gains* 0.11 0.06 0.05 Genetic Value Capturable Benefits* + + + Ecosystem Service Benefits* + + + Additional Domestic Consumer Surplus in Benefits + + +
NSB of Project -.6.11 -7.14 -7.71
Incremental Cost Adjustments 4.95 1.49 0.43 SWR@100% -1.45 -0.85 -0.66 Base Line Recurrent Cost Commitment 6.40 2.35 1.09
Adjusted NSB -1.16 -5.65 -7.28
Incremental Cost (NPV) 1.16 5.65 7.28 Incremental Cost Real US$ over 3 Years 1.22 6.20 8.32 Incremental Cost Nominal US$ over 3 Years 1.34 6.83 9.17
* Relative to 'without Project' case. Note: B&C = Benefits & Costs; AEL = Avoided Efficiency Losses. Project Appraisal Document Page 51 Zimbabwe: Park Rehabilitation and Conservation Project
Annex 5 Park Rehabilitation and ConservationProject
FinancialSummary
INTRODUCTION
1. As a government department, the financial performance of DNPWLM was determined by decisions made at the central government level in terms of pricing of Estate products, and revenue allocations for recurrent and capital expenditures. In the face of the continued decline in government allocations, inadequate f'unding for maintenance and operations led to rapid deterioration of major infrastructurefacilities, which in tum affected the Parks' revenue earning capacity as tourist volumes declined. Since no linkage existed between revenues collected by DNPWLM,which were paid directly to the Appropriation Fund, and expenditures, which were determined by funds available under the government budget, little importance was attached to issues of pricing of Estate products and cost coverage.
2. The establishmentof a Fund in 1996 allowingDNPWLM to retain its revenues for operatingand maintenance expenses has facilitated the introduction of commercial principles in the financial management of the Parks Estate. Creation of the Fund is thus an important step in helping DNPWLM become a more competitive and effective entity which, Government hopes, may in time become financially self sustaining. Since the establishment of the Fund, DNPWLM has undertaken several initiatives to improve its financial position, includingthe adoption of public/private partnerships in the provision of tourist facillities,and the revaluation of concessions and leases. DNPWLM intends to conduct further studies on improved cost recovery, ways of diversifying into new income sources, and pricing of park services. The projectwill support and strengthenthis ongoingwork.
3. Althoughmuch progress can be made within the current context, the existing structure does not accord the Department/Ftmda high degree of autonomy in key respects. At present the Departrnent/Fund cannot borrow through public or private markets. The Department also remains bound by civil service rules and requirements,and as such has little control over its wage bill, at least in the short run. Such restrictions potentially limit its ability to respond quickly and effectively to changing markets and conditions,and thus could compromisethe achievementof greater financial self sufficiency. At the same time, there may be advantages,given government'sfundamental obligation to protect wildlife populations and their habitats, in retaining a traditional departmentalstructure. The project will provide resourcesto assist Government in a review of institutional and organizationalalternatives. This review will lead to the development of a time-bound strategy for completing the Department's transformation into a commercially-oriented organization, which is concurrently appropriately equipped to fulfill its conservationmandate.
FINANCIAL MANAGE'MENTAND ACCOUNTING SYSTEM DEVELOPMENT
4. Financial Management and AccountingSystems: Prior to the Fund, DNPWLMwas usingthe government system of accounting,whose emphasis is on expenditure management in relation to the budget. With this system, information on the performanceof the Departmentwas lacking, as accounts are prepared and consolidatedfor the Ministry as a whole. Although still under Treasury for financial matters as a governmentdepartment, the change to a Fund in 1996 requires that DNPWLM develop its own commercialaccounting system to provide managementinformation for decision making. DNPWLM now prepares its own accounts, but has yet to implementfully its own commercial accounting system. The project will support the implementationof financial managementsystems at both headquartersand ProjectAppraisal Document Page52 Zimbabwe:Park Rehabilitation and Conservaton Project the individualpark levels, including internal controls over cash collection and inventory systems. It has been agreed that decentralizedcommercial accountingsystems will be in place by June 2000. To ensure the sustainabilityof these investments,the appointment of the Chief Financial Officer is a condition for effectiveness.
5. Booking Office: As part of its booking function, the Booking Office is responsible for cash collection, which has created problems relating to internal controls over the cash collected and its allocation to individual parks. The project will build on earlier studies of the Booking Office, and support work to introduceinternal controls, procedures,and systems in this area.
PRODUCTS,DEMAND AND SUPPLYPATTERNS AND COMPETITION
6. DNPWLM's product lines in its eleven main parks consist of: (i) tourism services comprising accommodation, park entry fees, and trails and views; and (ii) parks services comprising licenses, permits, rentals, leases, hire of facilities and services, research and consultancy services, sale of game products and other. Tourismservices are the most significantsource of DNPWLM's revenue.
7. As documentedearlier in the PAD, the Parks Estate has not been able to capture a proportional share of the growth in tourism. This is partly due to increasingcompetition from private tour operators and wildlife conservancieswho are able to provide similarproducts of high quality, and to the inadequate supply of appropriate facilities such as accommodationwithin the Parks Estate. Although DNPWLM offers various types and combinations of accommodationranging from lodges to cottages, chalets and campsites, lack of maintenancehas caused these facilitiesto deteriorate and occupancylevels to decline. Occupancy levels are below 50% in a significant number of parks. While the Fund should permit DNPWLM to improve its maintenancerecord, the Department is also examining ways of engaging in private/publicpartnerships to enable it to concentrateon those areas it can do best, such as maintenance and conservation. The intention would be to leave the provision of tourist facilities other than possibly campsitesand other basic accommodationto the private sector. The project will support studies to assist DNPWLMin this area.
TARIFF POLICY
8. DNPWLMis required to develop its tariff and fee recommendationsfor governmentapproval, a lengthy process which has resulted in tariff revisions that are both few and unrelated to the cost of providing the service. Between 1993/4 and 1996, entry fees remained at Z$20 (approximatelyUS$2 equivalent) for foreigners,and Z$10 (US$1 equivalent)for Zimbabweresidents. Leases and concessions were under priced, as they did not reflect the market value to the private organizationsoperating in the Parks Estate. The impact of the low tariffs on the financial performanceof DNPWLMhas to be viewed in the light of inflation (averagingabout 22% annually)which increasedthe costs of running the parks. Zimbabwe enjoyed the lowest tariffs in the region, although it offers similar wildlife as its neighbors. Comparative entry fees in the region are as follows: Kenya- US$25; South Africa- US$25; Tanzania- US$15.
9. In July 1996, tariffs were increased by about 200% overall (individual increases varied widely). The increases caused an uproar, in part because the higher fees became effective almost immediately, with the result that tour operators could not initially pass the costs on to tour package customers, and in part because the park accommodationswere continuingto deteriorate at the same time higher fees were being charged. While still adjusting its tariffs in the short term to absorb increasingoperating costs, the project will support a tariff study to be completed by March 1999. This study will assist in determining the appropriate structure and level of tariffs for each park based on the wildlife and other natural resourcesoffered, its competitiveposition vis a vis Zimbabweand the region, and the costs of providing Project Appraisal Document Page 53 Zimbabwe: Park Rehabilitationgnd Conservation Project the service. Based on the study DNPWLMwill adjust its price structures no later than September30, 1999. Thereafter DNPWLMwill undertaketo increase its tariffs and to maintain its operatingmargins in order to meet its stated financialobjectives.
10. While an economist is provided for in the new organization structure, the need remains for a business development specialist whose key roles would be to plan for and support the culture shift, to develop and implement a corporate strategy for enhancing the commercial oreintation of DNPWLM, includingissues of priicingand public/privatepartnerships, and to overseethe developmentof an effective marketing strategy. DNPWLMintends to acquire this expertise on a contractual basis, supplementedby technical assistance under the project. As part of its strategy to enhance revenues, DNPWLMhas begun to renegotiate its leases and open hunting concessionsto public auction. Under the interim governance structure for the Fund, tlheParks Board would be responsible for the review and approval of changes in tariffs, fees and other revenue items.
PAST PERFORMANCEAND PRESENTFINANCIAL POSMON
11. Past Financial Performance. An accurate assessment of the past financial performance of DNPWLM is not possible since revenue generated went directly to Government, and no independent financial statementswere prepared for DNPWLM. Shortcomingsin existing accountingand information processing systems fiirther limit the accuracy of the information. To enable an assessment of the historical position, the historical revenues and expendituredata were extracted by a firm of consultants from the accounting records maintained at the individual parks and the DNPWLM head office and reconstituted into a format more appropriatefor analysisof performanceby product line. A consolidated picture of the DNPWLM's historical performance using the consultants' reconstituted revenues and expendituresfrom the Revenue and Expenditure Studyis summarizedin Table A5.1 below.
Table A5.1. ConsolidatedHistorical Financial Performance
Actual Actual Actual Estimate ZSM 1993/4 1994/95 1995/96 1996/97 Revenues: 31.1 36.4 42.7 79.0 Tourism Activities 15.7 21.2 19.1 20.2 Parks Services 15.4 15.2 23.6 58.8
Direct Operating Expenditure: 16.8 20.7 22.3 37.6 Tourism Activities 4.7 5.7 6.2 10.3 Parks Services 12.1 15.0 16.1 27.3
Gross Profit (Loss): 14.3 15.7 20.4 41.4 Tourism Activities 11.0 15.5 12.9 9.9 Parks Services 3.3 0.2 7.5 31.5
Overhead Costs:- 18.0 21.6 22.8 24.1 Indirect 15.2 18.2 19.2 20.2 Head Office (50% share) 2.8 3.4 3.6 3.9
Operating Profit (Loss): (3.7) (5.9) 2.4 17.3
Conservation Costs:- 5.4 7.7 6.0 8.0 Direct 2.6 4.3 2.4 4.2 Head Office (50% Share) 2.8 3.4 3.6 3.8
NET SURPLUS/(LOSS) (9.1) (13.6) (8.4) 9.3
Capital expenditure 4.7 6.3 2.6 14.4
12. As the above summary table indicates, DNPWLM's financial performance during the period 1993/4-1995/6was umsatisfactory. Revenue generated over the three year period to 1995/96 was ProjectAppraisal Document Page54 Zimbabwe: Park Rehabilitationand ConservationProject insufficient to meet the costs of conservationand infrastructuredevelopmentlrefurbishment, resulting in funding deficits accumulatingto as high as Z$31.0 million over the three year period alone. The deficits are understatedas expenditurewas limited by the availability of cash resourcesfrom the Government.
13. Salientfeatures of DNPWLM'shistorical financial performanceare as follows:
* Market Share: DNPWLM's market share in terms of total tourist numbers declined from 77% in 1992/3 to 53% in 1996/7. DNPWLMwill need to develop a strategy to harness the demand, already evident from total tourist volumes in Zimbabwe, but within the overall objective of maintainingthe ecologicalbalance.
* Growth in revenue: Total revenue generation over the period shows a steady annual growth of about 17% until 1996/97,when there is a significant increase in revenue due to modest increase in visitors, the devaluation of the Zimbabwe dollar where about 50% of revenues are US dollar denominated, the opening up of new hunting areas, and the revaluation of concessions and leases. The dollar depreciated from Z$8.15 in 1994 to Z$11.32 in 1997. However,the revenue mix is distorted by the governmentcash accounting system where all cash due on five year leases and hunting concessionsis accounted for on a cash rather than accrual basis, thereby increasing the revenue due from parks services. Under the project DNPWLM would change its accounting policies in line with generally accepted accountingpractice.
* Relative importanceof product lines: The contribution of park services to total revenues increased from 50% in 1993/94to about 75% by 1996/97due to increases in hunting-related activities at Matetsi and MarongoraParks estates, and the renegotiationof leases. Revenues from tourism services have remained largely static in absolute terms from about Z$21.2 million in 1994/95down to about Z$20.2 million in 1996/97.
* Overall DNPWLM Costs: DNPWLM's costs comprise direct costs for the parks and tourism services, conservationcosts, and overhead costs. DNPWLM's costs are understated as they reflect the funds availableunder the Governmentoverall budget, rather than the true cost of running the national parks. Until 1995/6,about 45% of DNPWLM's expenditurewas spent on overheads, and only 13% on conservation. Under the project, DNPWLM would take measures, under the financial management consultancy, to improve its cost effectiveness,reduce overhead costs, and ensure adequate funding for conservationactivities. Between 1993/4 and 1995/6,total costs increasedfrom Z$40.2 million to Z$51.1 million, an average annual increase of 9%, against an average annual inflation of 22%, where costs are substantiallylocal, and therefore failing to keep up with inflation.
* Profitability: Until 1995/6, tourism was the most profitable product, although the profit percentage has been declining, from 73% in 1993/4 to 51% in 1996/7. Conversely, the profitabilityof park services has been improvingfrom 21% in 1993/4to 54% in 1996/7 due to increasedactivity and the revision of pricing, although again the picture is distorted by the cash accountingpolicy.
* Capital Expenditure: Capital expenditure was modest due to Government liquidity constraints. From 1993/4to 1995/6,only Z$13.6was spent on capital expenditure,an annual average of Z$4 million. Most of this was on motor vehicles,with little spent on maintenance of infrastructure.
14. In sum, DNPWLM's poor financial performancecan be attributedto the following factors: ProjectAppraisal Document: Page55 Zimbabwe: Park Rehabilitationand ConservationProject (a) expenditurewhich was dictated by the budgetary allocations made by Treasury to the Department,as opposedto actual requirements;(b) low tariffs; (c) lack of incentiveswithin DNPWLMwhere its revenue was treated as part of Treasury's income flow and not reinvested in the Parks Estate; and (d) increasing competitionfrom the private sector. The establishmentof a Fund in 1996 enabling DNPWLMto retain its revenues provides a framework for building incentives and performance indicators for DNPWLM's activities.
15. Current Finiancial Performance. Preliminary accounts for 1996/7 show a significant improvement in revenue following an increase in tariffs and improved pricing of park services particularlythe hunting concessionsand leases. Revenue is projected to increase from Z$42.7 million in 1995/6 to Z$79 million in 1996/7, an increase of 85% in nominal terms (inflation was 22%), and operating profits as high as Z$9.3 million are anticipated (operating profit margin of 12%), against a background of operating losses recorded in the three preceding years. Costs are projected to increase from Z$51.1 million in 1995/6to Z$69.7 million, reflecting the improved cash position of DNPWLM where it is meeting some of its needs. In the Revenue and ExpenditureStudy, DNPWLMhas estimated the funds required for operations and maintenance. Capital expenditure is projected to increase from Z$2.6 million in 1995/6to Z$14.4million in 1996/7. The project would supportthese ongoingefforts.
FINANCIAL OBJECT'IVES
16. DNPWLM's financial objectives are to increase its financial autonomy through generating sufficient revenues to cover its current and planned operations and maintenance costs, and provide a return on its revenue generating activities. A related objective is to ensure that in line with the strengthening of its financial capacity, DNPWLM bears an increasing share or all of the cost of discharging its conservationduties as well as of financing its capital expenditure programs. Achieving these objectives would r equire measures includingthe following: (i) establishmentand maintenanceof an appropriatetariff structure for all services provided under the Fund; (ii) wideningthe revenue base by introducing new products/services without sacrificing the ecological balance; (iii) improving cost effectivenessthrough measuresto ensure transparencyin expenditure,a major overhaul of the accounting system on commercial lines, and the introduction of "cost center" budget practices to clearly identify profit and non profit operations,and performancemeasures to assess actual performanceagainst financial targets.
17. To achieve this balance, DNPWLM would undertake to do the following: (i) recognize the dichotomybetween commercialoperations and conservationactivities and treat them as distinct strategic units; (ii) reflect these strategic units in the organizationand managementstructure of the commercialized DNPWLM,with overall financial control of both catered for at the top of the structure; and (iii) structure the management informationand reporting system so as to enable distinct measurement of the financial and operationalperfonnmnce, and attainmentof the respectiveobjectives, of the two units.
18. With the introductionof a Fund, it is Government's objective to have DNPWLMfinancially self sustaining. In cases of shortfalls,the Department would have no automatic recourse to the exchequer. Requests for funding ,fromTreasury could be made but would have to competewith Government's other commitments. In cases of surpluses made by DNPWLM, after the provision of adequate conservation and operations and maintenancecosts and depreciation,Treasury would take 50% of the surplus, while allowing DNPWLMto build reserveswith the balance.
19. AgreementweLs reached during negotiationsthat: a) each year from 1998/9, DNPWLM would prepare and submit to IDA for review and comment by March 31 of each year its annual business plan to establish DNPWLM's five ProjectAppraisal Document Page 56 Zimbabwe: Park Rehabilitationand ConservationProject year business and financial objectives. The plan shall include financial targets, proposed tariff increases, investment program and financing (internally generated cash, external financing plan, government subventions),a forecast of profitability and cash flows, and the projected balance sheet, and thereafter implementit, taking into account IDA's views; b) DNPWLM would prepare an annual work program that would include information on measures to: (i) strengthen DNPWLMmanagement, including details of implementationof the training program, (ii) improve the financial management and accounting systems; (iii) tariff adjustments and measures to increase revenue collection; (iv) procurement plans; (v) specific financial and conservationgoals for each park; and (vi) allocation of surpluses and financing of anticipated deficits. The work plan, as a subcomponent of the business plan, would be prepared by January of each year, and discussed with IDA by no later than March 31 each year for the followingyear's program; c) DNPWLM annual investment plan would be reviewed annually with IDA, and that DNPWLMwould make revisions to such plans taking into account any comments by IDA; and d) DNPWLM would hire consultants to review the adequacy of salary levels of its staff and propose an appropriateincentive system. The results of these findings would be submittedto IDA for review by January 1, 1999 and implementedthereafter.
The project will support the implementation of financial management and accounting systems and DNPWLM will have decentralized commercial accounting systems in place by June 2000. The appointmentof the Chief FinancialOfficer is a condition for effectiveness.
DNPWLM'sPROJECTED FINANCIAL RESULTS
FinancialBase Case Scenario
20. The financial base case scenario developedby the consultants for the Revenue and Expenditure Study assumes a 5% annual increase in tourist visits, an increase in foreign entrance fees from US$5 in 1996/7 to US$32 by year 2005, a revaluation of leases and hunting concessionsto market value, and gradual increases in accommodationfees in line with rehabilitation of the tourist facilities. As discussed in Annex 4, this scenario is consideredoptimistic as it may be difficult to sustain both increaseddemand and increased fees in light of increasinglyintense competitionboth within Zimbabwe and throughoutthe region. The financial base case projectionsherein assume 5% growth in demand, with no real increase in entrance fees over the forecast period. This is considered conservative,but realistic should DNPWLM fail to implementa more commerciallyoriented approach or if the benefits of such an approach are not realized due to failureto market effectivelyand exploit public/privatepartnerships.
21. Other assumptionsof the financial base case scenario are that DNPWLMwould be able to: (a) achieve certain cost efficiency levels; (b) introduce financial and other performancetargets to motivate performanceat the park level; (c) seek the least cost alternativesto increase its revenue; and (d) find way to share or offload some of the risk associated with variable tourist demand through private/public partnerships. Key financial data are summarizedin Table A5.2 below; the detailed assumptionsrelating thereto are attached as Annex Sb. Project Appraisal Document Page 57 Zimbabwe: Park Rehabilitation ard Conservation Project Table A5.2: SummarizedFinancial Projections
199 1999 2000 2001 2002 2003 2004 2005 zsm Revenue 98.7 164.3 132.4 152.6 181.1 257.5 251.0 299.2 Gross Profit 52.3 111.4 71.8 80.0 93.9 107.3 125.5 148.6 Indirect Costs 58.4 76.4 87.3 99.3 111.0 120.0 136.7 156.7 Op. Profit/(Loss) (6.1) 35.0 (15.5) (19.2) (17.0) (12.6) (11.1) (8.0) Less:- Conservation 17.2 19.5 22.3 26.7 32.0 38.3 46.0 55.1 Net ProfitV(Loss) (23.3) 15.5 (37.8) (46.0) (49.0) (51.0) (57.1) (63.2)
FREE CASHFLOW (10.0) 28.2 2.2 7.1 4.2 2.2 (4.0) (9.9)
22. Under the base case scenario, DNPWLM would cover neither its operating nor conservation costs, which underscores the need to manage effectively the commercialization process and pricing issues. Annual losses before conservation costs would increase from Z$6 million in 1997/8 to $19 million by 2001, before improving to a loss of Z$8 million in 2005. Apart from 1999 when DNPWLM benefits from a one time sale of ivory, DNPWLM's free cashflow would either be negative, or marginally positive, indicating thal: it would to require funding from Government to meet the deficit.
23. Alternatively, given the improvements that could result from the implementation of the project and effective management of commercialization, DNPWLM's financial performance could yield satisfactory results. Under a scenario of 5% growth in demand, accommodation and local entrance fees increasing at the rate of local inflation, but with real increases in foreign entrance fees at Victoria Falls where the price elasticity of demand is low, DNPWLM would be in a profit making position by 2002, with benefits accruing to both Government and DNPWLM.
Financial Risks and Sensitivity Analysis
24. As a new entity, there is a significant risk that commercialization might not be implemented successfully, that governmaentapproval of tariffs may not materialize or be less than proposed, and that competition from the neighboring countries both in terms of facilities and pricing may increase and prove damaging. Security concerns may also undermine demand. The cashflow risks inherent in DNPWLM are high, and DNPWLM needs the capacity, both in terms of management and control systems, key and trained personnel as well as managerial authority, to manage these risks.
25. A number of sensitivity tests were performed to analyze the impact of less than favorable events on DNPWLM's profitability and free cashflow (defined as cash available for funding capital expenditure and debt service) after providing for conservation costs, and in surplus years, the 50% contribution to Treasury. 1 The results are summarized in Table A5.3 below.
'Details of the sensitivity anialyses are available in the project file. ProjectAppraisal Document Page58 Zimbabwe:Park Rehabilitaton and Conservation Project TableA5.3: Sensitivity Analysis (1) Scenario Assumptions
BaseCase Case 1 Case2 Case3 Case4 Case5 Case6 Nil Negative 10% Combination Devaluation Annual Annual Growth Growth 5% DemandGrowth % 5% 5% 2% 5% -5% 10% decline Entryfees- Foreign(US$) 1999 5.25 8 8 8 8 8 5.25 2002 5.66 12.5 12.5 12.5 12.5 12.5 5.66 2005 6.09 15 15 15 15 15 6.09 VictoriaFalls (US$) 1999 10.51 15 15 15 15 15 10.51 2002 11.31 20 20 20 20 20 11.31 2005 12.18 25 25 25 25 25 12.18 Local (Z$) 1999 27.13 27.13 27.13 27.13 27.13 27.13 27.13 2002 40.2 50 50 50 50 50 40.2 2005 59.55 110 110 110 110 110 59.55 ExchangeRate (Z$to US$). 1999 17 17 17 13 17 17 13 2002 21 21 21 13 21 21 13 2005 26 26 26 13 26 26 13 Inflation (%) 1999 14 14 14 14 14 14 14 2002 20 20 20 20 20 20 20 2005 20 20 20 20 20 20 20
(2) Key Results - Profitability
(Z$000) 1997/8 2000 2002 2005 Base case Profitbefore conservation -6108 -15502 -17056 -8097 ConservationFunding 17174 22317 32031 55176 50% profit to Treasury 0 0 0 0 Retainedprofit (loss) -23282 -37819 -49087 -63273
Case 1 Profit beforeconservation -6109 4139 51752 133513 ConservationFunding 17174 22317 32031 55176 50% profit paidto Treasury 0 0 9860 39168 Retainedprofit (loss) -23283 -18178 9861 39169
Case2 Profit beforeconservation -7299 -2057 32055 78355 ConservationFunding 17174 22317 32031 55176 50% profit paidto Treasury 0 0 12 11590 Retainedprofit (loss) -24473 -24374 12 11589 ProjectAppraisal Document Page59 Zimbabwe:Park Rehabilitation and Conservation Project
Case3 Profit beforeconservation -12631 -13879 2645 18484 ConservationFunding 17174 22317 32031 55176 50%profit paidto Treasury 0 0 0 0 Retainedprofit (loss) -29805 -36196 -29386 -36692
Case4 Profitbefore conservation -10077 -23008 -39552 -101185 ConservationFunding 17174 22317 32031 55176 50%profit paidto Treasury 0 0 0 0 Retainedprofit (loss) -27251 -45325 -71583 -156361
Case5 Profitbefore conservation -4124 15280 88645 249867 ConservationFunding 17174 22317 32031 55176 50% proft paidto Treasury 0 0 28309 97345 Retainedprofit (loss) -21298 -7037 28305 97346
Case6 -Combinationof abovefactoni Profitbefore conservation -16058 -44193 -75617 -131683 ConservationFunding 17174 22317 32031 55176 50% profitpaid to Treasury 0 0 0 0 Retainedprofit (loss) -33232 -66510 -107648 -186859
(3) Key Results- Free Cashflow Key Results (Z$000) 1997/8 2000 2002 2005 Base case Cashflowfrom operations 7120 24581 36196 45188 ConservationFunding 17174 22317 32031 55176 50%profit to Treasury 0 0 0 0 FreeCashflow -10054 2264 4165 -9988
Case 1 Cashflowfrom operations 7120 44222 105004 186798 ConservationFunding 17174 22317 32031 55176 50%profit paid to Treasury 0 0 9860 39168 FreeCashflow -10054 21905 63113 92454
Case 2 Cashfiowfrom operations 5930 38206 85307 131640 ConservationFunding 17174 22317 32031 55176 50% profitpaid to Treasury 0 0 12 11590 Free Cashflow -11244 15889 53264 64874
Case 3 Cashflowfrom operations 589 26204 55897 71739 ConservationFunding 17174 22317 32031 55176 50%prorit paidto Treasury 0 0 0 0 Free Cashflow -16585 3887 23866 16563 ProjectAppraisal Document Page60 Zimbabwe:Park Rehabilitation and Conservation Project
Case4 Cashflowfrom operations 3152 17075 13700 -47900 ConservationFunding 17174 22317 32031 55176 50%profit paid to Treasury 0 0 0 0 FreeCashflow -14022 -5242 -18331 -103076
Case5 Cashflowfrom operations 9105 55363 141901 303119 ConservationFunding 17174 22317 32031 55176 50%profit paid to Treasury 0 0 28309 97345 FreeCashflow -8069 33046 81561 150598
Case 6 -Combinationof abovefactors Cashflowfrom operations -7859 -22304 -61379 -165687 ConservationFunding 17174 22317 32031 55176 50%profit paid to Treasury 0 0 0 0 FreeCashflow -25033 44621 -93410 -220863
26. The results confirm the potential volatility of DNPWLM's financial performance and of the cashflowsavailable to financeconservation costs and capital expenditure. DNPWLM's financial position is highly sensitive to demand and pricing (the same expenditureprojections have been used throughout). If annual growth in demand were 2% (case 2) instead of the 5% in the base case, DNPWLMwould not be able to cover its operating, maintenance and conservation funds until 2005; whereas a 10% annual growth (case 5) would ensure full cost coverageby 2002. In cases of nil devaluation(case 3) and a 5% annualnegative growth in demand (case 4), DNPWLMwould be in a loss making position throughoutthe projection period. Regarding free cashflow (which is arrived at after making adjustments for depreciation),in the case of a 5% negative annual growth (case 4), DNPWLMwould have cashflow deficitsthroughout the referenceperiod, increasingto Z$103million by 2005. In the worst case scenario of negative growth, nil devaluation, and no real increase in tariffs (case 6), DNPWLM's annual cash deficitswould increaseto Z$220 million by 2005.
ACCOUNTING, FINANCIAL REPORTING AND AUDITING ARRANGEMENTS
27. The Project Accounting Unit within the Finance Department would be responsible for coordinatingproject accounting,maintaining overall records in accordancewith internationalaccounting standards, producing an aggregated and consolidated project account for the project, managing disbursements,and ensuringtimely audit of accounts. To ensure satisfactoryaccounting arrangements at project effectiveness,a project accountingsystem, incorporating adequate internal controls, is includedin the PIP. The accounting system enables an analysis of project expenditures by project component, disbursementcategory, and source of funding. DNPWLMwill staff the Project Accounting Unit with appropriately qualified staff, including a qualified accountant, and two assistants. Assurances were obtained that: (i) DNPWLM would maintain separate accounts for the project in accordance with generally accepted accounting principles; and (ii) accounting records would be kept permitting identificationof all receiptsand paymentsunder the project.
28. DNPWLMhas agreed to have accounts, includingthose of the IDA and GEF Special Accounts, the Statements of Expenditureand the Fund, audited by an auditor acceptable to IDA, and sent to IDA within six months of the close of each fiscal year. In addition to the audit report, a managementletter (includingobservations and recommendationsregarding possible improvementsin financial management practices and controls)will be submittedto IDA, within six months of the end of the fiscal year (June 30). ProjectAppraisal Document Page61 Zimbabwe:Park Rehabilitation and Conservation Project
29. To ensure satisfactory accounting for DNPWLM under the project, DNPWLM will change its accounting policies in line with generally accepted accounting principles, and will formulate and introduce policies governiing commercial and non commercial operations and activities down to the Parks Estate. The computerizedaccounting and financialmanagement and the stock and materialsmanagement system under implementationwill ensure the provision of timely and accurate financial information,the strengtheningof internal control systems, and enable the implementationof appropriate performance measures and targets at all levels in the Department. Project Appraisal Document Page 62 Zimbabwe: Park Rehabilitationand Conservation Project ANNEX 5B PARK REHABILITATION AND CONSERVATION PROJECT
Assumptionsfor the FinancialProjections
The following assumptionswere used in the base case financial projections,and varied as noted in Table A5.3 for the sensitivityanalyses:
1. Inflation and ExchangeRates: The following rates are based on projections supplied by the World Bank:
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 Inflation: % 20% 19% 14% 20% 20% 20% 20% 20% 20% Rate: US$1 = Z$13 16 17 18 19 21 22 24 26
2. Income and ExpenditureAccount - Revenue a) Demand : Assumedan annual growth in visitor numbersof 5%. b) Product Range: Assumed the existingproduct range would be maintained,pending further studies on alternativerevenue sources for the Parks Estate. c) Accommodation:Projections of revenue from accommodationmade on the basis of existing facilities. d) It has been assumed that accommodationfacilities would be refurbished and modernized at all parks to achieve acceptable market standards, and that additional accommodationwould be provided by the private sector. e) Rentals and leases: Revaluationsof leases and concessionsto market value would increase revenue from this source. Revenue was based on revaluation of existing individual leases and concessions. f) Hunting: The hunting quotas ascribed to 1997 would continuewith negligible change in the projection period. The floor auction price would increase by 5% at the expiry of the concession,and trophy prices would be quoted in US$ and increaseat 5% per annum. g) Ivory Trade: It was assumed 33 tonnes of ivory currently in stock would be exported, per the current CITES agreement. The current 1997 ivory price on the Japanese market of US$300/kghas been taken as the base rate and increasedat 5% per annum. h) Tariffs: Assumedno real increasein tariffs.
3. Income and ExpenditureAccount - Costs a) Overall costs: Direct operating and other overhead costs have been restructured and allocated to the various profit and cost centers in the projections as follows: (a) Tourist Services: salaries and wages of tourist service personnel and consumables and other costs associatedwith tourist facilities; (b) Park Services: anti-poachingand monitoringcosts, game ProjectAppraisal Document Page63 Zimbabwe:Park Rehabilitation and Conservation Project products costs, game water costs, vehicle hire, and aircraft hire. b) Overheadcosts were allocatedequally between tourism and parks services. c) Staff Costs: Staff costs have taken account of the proposed staff rationalizationplan which would reduce the staff compliment (mainly general hands) by 764, and the recruitment of new staff under civil service norms in required skill areas. No provision made for retrenchmentas these costs would be paid by the Ministry of Social Services, or for higher salary costs shouldthe decision be taken to remove staff from the civil service. d) Operationsand Maintenance costs: Based on engineer's estimate, which also took account of current cost impliicationsof the proposed investment program. Costs were increased by inflation. e) Conservationcosts: Include bird, noxiousweed, and problem animal control; soil and water treatment;roads and fire guards.
4. Balance Sheet a) CapitalExpenditure: Projectionsbased on estimates under the project. b) Financing: Assumedcapital expenditureunder the project would be financedby the Government. c) Valuationof assets: In accordancewith Government accountingpractices, DNPWLMhas not been capitalizingexpenditure on fixed assets as this has traditionallybeen expensedwhen incurred. Fixed assets incorporatedin the financial projectionsbased on valuationsprovided by engineers. The value of assets such as the Parks Estates encompassingwildlife, forests and land has not been incorporated into the financial projections. ProjectAppraisal Document Page 64 Zimbabwe: Park Rehabilitation and ConservationProject
Annex 6 Park Rehabilitation and ConservationProject
Procurement and Disbursement Arrangements
Procurement
Procurementmethods (TableA)
1. Civil Works and Goods. The procurementof works and goods will be carried out in accordance with the Bank's Guidelines for "Procurementunder IBRD Loans and IDA Credits" (publishedJanuary 1995, updated in January and August 1996, and revised in September 1997). In excess of 60 civil/buildingworks contracts are envisaged spread across the eleven parks. Because of the relativelysmall size of many contracts and remotenessof most locations, foreign contractorsare not expected to be interested or competitive except in the case of the large road constracts. Thus, other than for roads (approximately US$39 million), most civil works contracts will be awarded on the basis of NCB (approximatelyUS$17 million). For ICB, the Bank's Standard Bidding Documentswill apply. Procedures for NCB being followed by GRZ are consistent with Bank procedures and the tender documents used will be based on the StandardBid Documents of the Bank. Simplified proceduresequivalent to shopping,based on three quotations, will be used for small works under US$50,000. Procedures for small civil works will apply to an estimated US$2 million. Force account may be used for very small works that are scatteredand in remote locations,up to an estimated US$300,000.
2. Most vehicles and equipmentto be provided to the eleven parks will be aggregated into one large Goods contract (estimated value US$3.0 million) and be awarded on the basis of ICB using the Bank's StandardBidding Documents. Of the remaining contracts,US$1.0 million will be awarded on the basis of NCB; for items under US$50,000,international shopping based on 3 quotations will apply (an estimated US$200,000); and for items under US$10,000, national shoppingbased on 3 quotationswill apply (an estimatedUS$ 100,000).
3. Consulting Services. The procurement of consulting services will be carried out in accordancewith Bank's "Guidelinesfor the Selectionand Employmentof Consultantsby World Bank Borrowers", published in January 1997. The total value of consulting services will be US$10.4million.
4. Most consultant selection will be addressed through competition among short listed firms and using the Quality-and-CostBased Selection(QCBS) method by evaluatingthe quality of proposal before comparingthe cost of the service to be provided. The shortlist for contracts estimated under US$100,000may be comprised entirely of national consultants if a sufficient number of qualified (at least three) are available at competitive cost. However if foreign firms have expressedinterest, they will not be excluded.
5. Of the above, the GEF grant (US$5 million) will include civil works in Gonarezhou National Park (GNP) totaling US$3 million, which will be procured on the basis of ICB and NCB. For the GEF out-of-parks sub-component, consultant services will also be required totaling approximatelyUS$0.44 million, which will generally be procured based on individual appointmentsor using the single source method of selection. Facilitation costs for the out-of- ProjectAppraisal Document Page65 Zimbabwe:Park Rehabilitation and Conservation Project parks component, approximatelyUS$60,000, (workshops, consultative meetings,travel costs, etc.) would be handled in accordance with governmentprocedures acceptable to the Bank. The remainder of the out-of-parks sub-component,US$1.5 million, will comprise a grant facility which will award small grants (subgrants)to communitiesand other groups in the vicinity of the parks based on a participatoryprocess to be carried out under the project. All contracts under the grant facility are estimated to be small, and thus simplified procedures for small works and national shoppingwill apply.
Prior review thresholds (Table B)
6. All contracts for procurement of works above the threshold of US$500,000 and of goods above the threshold of US$100,000will be subject to IDA's prior review. About 20% of contractsduring the first year of the project will be subject to post review unless covered by the above; in subsequentyears the ratio of post review would be lowered based on the experience from the first year.
7. Prior IDA review for consultants will be required for: (a) all contracts for individual consultants costing more than US$50,000per contract; (b) all contracts based on single source selection; and (c) all contractswith firms costing more than US$100,000per contract. All other contracts will be subjected to post review. For all contracts with a consulting firm exceeding US$100,000per contract, where the selection is based on quality and cost method of selection, the quality evaluation report will be sent to IDA first, for no objection prior to opening of the cost envelope,and then the combinedquality and cost evaluation report will also be transmitted to IDA for no objectionprior to the negotiation of the contract.
Disbursement
Allocation of credit proceeds (Table C)
8. The proceeds of the IDA credit and GEF grant would be disbursed against the percentagesshown in Table C.
9. As projected by the Bank's standard disbursement profiles, disbursement would be completed by six months after project closure. Disbursement would be made against standard IDA documentation.
10. Disbursementand withdrawal procedures are detailed in the World Bank Disbursement Handbook (1992 edition). All disbursements are subject to the conditions of the Credit Agreementand the proceduresdefined in the DisbursementLetter. All applicationsto withdraw proceeds from the Credit account will be fully documented, except for: (a) expendituresof contracts with an estimated value of US$500,000 each or less for works, and US$100,000for goods; (b) US$100,000or less for consultingfirms unless single source selection has been used; (c) US$50,000or less for individualconsultants and training which may be claimed on the basis of Certified Statementsof Expenditure(SOE). Documentationsupporting expenditures claimed against SOEs would be retained at DNPWLMand available for review as requested by IDA supervisionmissions and project auditors.
Use of statements of expenditures (SOEs):
11. Disbursement would be made on the basis of statement of expenditure (SOE) for ProjectAppraisal Document Page65 Zimbabwe:Park Rehabilitation and Conservation Project contracts and purchase orders with an individual value less than those requiring IDA's prior review.
Special account:
12. To facilitate disbursementsof eligible expenditures,the Governmentwill open a Special Account (SA) in a commercialbank to cover part of IDA's share of eligible expenditures. The authorized allocationfor this Special Account will be US$3 million, covering an estimated four months of eligible expendituresfinanced by IDA. The Governmentwill also open a GEF Trust Fund Grant Account in commercial bank to cover part of the GEF's share of eligible expenditures. The authorized allocation for this Special Account will be US$300,000. Replenishment applications should be submitted regularly, preferably monthly, after monthly bank statements are received and reconciled, with appropriate supporting documents for local and foreign expendituresas required. To the extent possible, all of IDA and GEF's share of eligible expendituresshould be paid through the respective SpecialAccounts.
Annex6, Table A: Project Costs by ProcurementArrangements
(in US$millionequivalent)
ExpenditureCategory ProcurementMethod Total Cost (including contingencies) ICB NCB Other N.B.F
1. Civil Works 38.91/ 16.72/ 2.34/ 57.9 (33.2) (13.3) (1.6) (48.1)
2. Goods, Vehicles and 3.9 1.0 0.3 5/ 5.2 materials (3.6) (0.7) (0.2) (4.5)
3. ConsultantsServices and 10.4 10.4 Training3/ (9.9) (9.9)
4. GEF small grants 1.5 1.5
Total 42.8 17.7 14.5 75.0 (36.8) (14.0) (11.7) (62.5)
Note: figures in parenthesis are the respective amounts financed by IDA 1/ $2.3 million GEF In-park 2/ $0.7 million GEF In-park 3/ $0.5 million GEF off-park 4/ Small works (2.0) and Force account (0.3) 5/ Shopping:international (0.2); national (0.1) Project Appraisal Document Page 67 Zimbabwe: Park Rehabilitadon and ConservationProject
Annex 6, Table B: Thresholdsfor ProcurementMethods and Prior Review
Expenditure ContractValue Procurement Contracts Subjectto Category (Threshold) Method Prior Review / Us$ 1. Works >1,000,000 ICB All > 500,000 NCB All > 50,000 NCB < 50,000 Smallworks
2. Goods > 200,000 ICB All > 100,000 NCB All > 50,000 NCB < 50,000 Internationalshopping < 10,000 National shopping
3. Services > 100,000 QCBS (Firms) All > 50,000 Individual All < 100,000 Single source selection All (firms)
Total value of contracts subject to prior review: US$58 million
Annex 6, Table Cl: Allocationof CreditProceeds
ExpenditureCategory Amount in FinancingPercentage US$million
Civil Works 43.5 100% foreign and 80% local Vehicles and Equipment 4.5 100% foreign and 80% local Consultants,Technical Assistance and Training 8.3* 100%
Unallocated 6.2 Total 62.5 *includes design and supervision Pr*jd APPrasalDot Page68 Zbnbabwe:Pa* Rehdbtton andConsernan Projed Annex 6, Table C2: Allocation of GEF Grant Proceeds
ExpenditureCategory Amount in FinancingPercentage US$million
Civil Works - In park 2.8 100% foreign and 80% local Out-of-parkSub-projects
Small grants 1.3 100% Consultants' services and training 0.4 100% Operating costs (workshops,travel) 0.1 90% Unallocated 0.4 Total 5.0 ProjectAppraisal Document Page69 Zimbabwe:Park Rehabilitation and Conservation Project
Annex 7
Summary of the Environmental Analysis
An EnvironmentalAnalysis (EA) of the projectwas conductedduriing the November97-January 98 period by a team of independentconsultants. It includedfield visits and consultationwith the Park administrationat the local and national levels as well as with the potentiallyaffected groupsand communities.
The main findingsof the EA are summarizedhereafter.
Legal Framework The national rules, regulationsand guidancedocuments which govern the mitigation of potential environmentalimpacts of the works conductedin the NationalParks, other protected areas and surroundingareas in Zimbabweinclude:
* the National ConservationStrategy * the Natural ResourcesAct * the Parks and Wildlife Act * the WaterAct * The Regional,Town and Planning,Rural DistrictCouncils and CommunalLand Acts * Internationaland RegionalTreaties and Agreements,which Zimbabwe is a signatoryof, notably the Conventionon InternationalTrade of EndangeredSpecies (CITES),World Heritageand Natural Heritage Sites, Conventionon the Conservationof BiologicalDiversity, FrameworkConvention on ClimateChange, Conventionto CombatDesertification and Drought, Protocol on Shared WatercourseSystems in SADC.
The World Bank rules and regulationsthat apply to this project include mainly:
* OD 4.01. on EnvironmentalAssessment * OP 4.04. on Natural Habitat
Zimbabwehas developedits EnvironmentalImpact Assessment(EIA) policy which recommendsthat a planned developmentshould be submittedto EIA under conditionsspelled out in a policy document (1994). The Policy for Wildlife (1992) states that ".... all significant development in the Parks and Wildlife Estate will be suject to an EIA....
This EnvironmentalAnalysis addresses both aspects of the project: * specific environmentalimpacts of the Gonarezhouproject * generic environmentalimpacts of the programmaticpart of the project.
Baseline EnvironmentalConditions The eleven National Parks in Zimbabwehave distinct environmentalfeatures:
* HwangeNational Park/KazumaPan (over 14,000 km2), * NyangaNational Park * Mana Pools National Park (2,200 kni2 ) Project Appraisal Document Page 70 Zimbabwe: Park Rehabilitation and Conservation Project * ChizariraNP (2,000 kin2) * MatoboHills NP (3,200 km2) * ChimanimaniNP * Zambezi/VictoriaFalls NP (570 kin2) * MatusadonaNP (1,370 km2) * GonarezhouNP (5,050 km2)
Tourism in these parks depend closely on the quality of the wildlife, vegetation, landscapesand general quality of services, as well as on the availability of natural resources(water in particular)all of which can be negatively affected if developmentis not properly planned.
Potential Environmental Impacts The followingactivities have potentialenvironmental impacts in the National Parks:
* road development,including road alignment and routing, managementof borrow areas, use of water for construction,road design, drainageand deviations, * river crossings,including causeways and foot bridges * fire breaks, * water supplyfor games, for Park staff and facilitiesand for tourists, e proposedtourism developments(which will be managedby the private sector), with potential impacts from solid waste management,effluent disposal, energy supply,clearance of vegetation,visual intrusionsin high areas, competitionon space for buildings in certain high areas and the risk of landslide,erosion and degradationof areas, increasedpressure on particular areas, e.g. paths and competitionon scarce resourcese.g. water.
Environmental Management Plan The EMP for this project includes: * institutionalarrangements: responsibilities for environmentalmatters in DNPWLM,at headquarters and within each National Park will be assigned and the means for planning, launching,supervising and reviewingEA will be provided. A new organizationalchart for integratingenvironmental managementcapcity in DNPWLMis proposed,with the Planning Unit taking on board responsibility for EA and review, with the additionalassistance of two independentrepresentatives to ensure stakeholderinvolvement. Links with the Departmentof Natural Resources(DNR) within the Ministryof Mines, Environmentand Tourism need to be strengthened. The role of the Parks AdvisoryBoard shouldalso be reconsideredto integrate EA concernsmore effectively. * human resourcesand capacity building:an assessmentof the training needs for DNPWLMat headquarterand park levels has been conducted. Trainingtopics shouldcover the wide spectrum of environmentalissues that are to be met at various stages of park planningand management,as well as EIA methodologies. * technical activitiesincludes the refinement and implementationof guidelinesand design standardsfor the works, supervisionof the works and monitoringof the state of the environmentwithin the National Parks. A list of indicatorsthat need monitoringis proposed in the EA, * proceduresto be followed: developmentsin the other National Parks will be financedunder the project following a schedule that will be designed during project implementation.In due time, these developmentswill be submittedto EA. These EA will be conductedin parallel with the engineering studies and will establishbridges with these studies in order to cross-fertilizeand to benefitfrom the latest knwledgeon the design of the developments.In turn, the EA will influencethe design of the developmentsby adding an environmentalprotection component for the physical works. The future works in National Parks other than Gonarezhouwill benefit from the new and improvedinstitutional arrangementsproposed above. Project Appraisal Document Page 71 Zimbabwe: Park Rehabilitationand ConservationProject It is estimatedthat the total cost to the project of implementingthe Enviromnental ManagementPlan will be US$0.5 million (including0.3 for future EA on developmentsin "new" National Parks - i.e. other than Gonarezhou,and 0.1 for trainingand capacity building),which will be implementedand financedas an integral part of the project. ProjectAppraisal Document Page72 Zimbabwe:Park Rehabilitatonand Conservation Project Annex 8 Park Rehabilitationand ConservationProject Project ProcessingBudget and Schedule
A. Project Budget (US$000) Planned Actual
n/a n/a
B. Project Schedulel Planned Actual
Time taken to prepare the project(months) n/a n/a First Bank mission (identification) _ /19 _/_/19_ Appraisalmission departure / /19 11/04/1997 Negotiations 03/21/1998 _/_/19_ PlannedDate of Effectiveness 08/15/1998 _/_/19_
Preparedby: Departmentof National Parks and Wild Life Management,Ministry of Mines, Environmentand Tourism
Preparationassistance: GEF Project PreparationAdvance, PHRDGrant, SupplementalGEF Project PreparationAdvance, Trust Funds
Bank and consultantstaff who worked on the project after processingresumed in 1996 included: Name Specialty Bank Staff: Caesar Chidawanyika SeniorProgramming Officer AsamanetchFantaye OperationsAnalyst Steve Gaginis DisbursementOfficer Imogene Jensen Senior Economist Kathy Mackinnon Senior BiodiversitySpecialist Judy Makanda FinancialAnalyst Jean Roger Mercier SeniorEnvironmental Specialist Annette Minott Task Assistant RenganadenSoopramanien SeniorCounsel Consultants: Jim Allaway Ecologist/ParkPlanner Chris Banes MunicipalEngineer Robert Hall InstitutionalSpecialist Shelagh Huston Economist Jack Ruitenbeek Natural ResourceEconomist
'As indicatedin SectionDl, the projectwas prepared in two phases:Phase 1 from1989-1994; Phase 2 from1996- 1998. Theproject was taken through pre-appraisal in February/March1994, but puton holdpending creation of a Fund. Projectprocessing resumed in early 1996,and the projectwas re-pre-appraisedin April/May1997. The schedulereflected here is for Phase2. ProjectAppraisal Document Pap 73 Zimbabwe:Park Rehabilitaton and Conservation Project Annex 9 Park Rehabilitation and Conservation Project Documents in the Project File*
Documentsin the Project File
A. Project Implementaion Plan
BorrowerImplementation Plan, includingProcurement Plan, January 1998. SubprojectProcedures Manual (pending)
B. Bank StaffAssessments
Aide-Memoires: MissionReport (GEF), January 1992 Preparation,Phase 1, May 1992,November 1993, February 1995 Preparation,Phase 2, April/Mayand November 1996 Pre-appraisal,April/May 1997 Appraisal,November 1997
EconomicAnalysis (Cost-Benefit and Cost EffectivenessAnalysis) for the Park Rehabilitationand ConservationProject, Jack Ruitenbeekand ShelaghHuston, December 1997.
FinancialAnalysis for the Park Rehabilitationand ConservationProject, includingdetailed scenarios, April 1998.
C. Other
Capturingthe Value of NationalParks in Zimbabwe,Gardner Brown, MichaelWard and Doris Jansen, January 1995.
EnvironmentalAnalysis - EnvironmentalManagement Plan for GonarezhouNational Park, Parks Rehabilitationand ConservationProject, Final Report, Coyneand Bellier in Associationwith Scott Wilson,January 1998.
IndegenousParticipation in the Wildlife Based Tourism Sector in Zimbabwe,Jennifer Day Willis, February 1995.
Minutesof the South East LowveldCoordinating Council, 1996-1998.
ProjectedDNPWLM Revenue and Expenditures,Matlow (Pvt) Ltd., Two volumes and electronicfiles,
1997.
*Includingelectronic files. Status of Bank Group Operations in Zimbabwe IBRD Loans and IDA Credits in the Operations Portfolio 0 i'
ID Difference Between 3 expected Original Amount in USS Millions and actual i Loan or Fiscal disbursements a/ ° Project ID Credit Year Borrowex Purpose 0 No. IBRD IDA Cancellations Undisbursed Orig Frm Rev'd . 00 Number of Closed Loans/credits: 26 a
Active Loans 2 ZW-PE-45029 IDAN0190 1997 PILOT RDC 0.00 12.25 0.00 11.99 2.47 0.00 ZW-PE-35628 IDA28510 1996 GOV ENTERPRISE DEVELOPM 0.00 70.00 0.00 47.58 -8.18 -4 .299 ZW-PE-3309 IBRD36960 1994 ZESA POWER III 90.00 0.00 0.00 40.08 40.07 0.00 -X ZW-PE-3333 IDA25160 1993 GOV STI 0.00 64.50 0.00 24.06 12.51 0.00 CD ZW-PE-3286 IBRD32730 1991 GOVT. RAILWAYS II 38.60 0.00 0.00 14.81 14.82 0.00 E ' ZW-PE-3302 IBRD33390 1991 GOVT FAMILY HLTH.II 25.00 0.00 0.00 .55 .55 .55 08 ZW-PE-3287 IBRD31790 1990 GOVT OF ZIMBABWE FOREST RESOURCE MGT& 14.50 0.00 0.00 .05 .04 0.00 _ ZW-PE-3294 IBRD30790 1989 GOVT. URBAN II 80.00 0.00 0.00 31.34 31.33 16.18 o. Total 248.10 146.75 0.00 170.46 93.61 12.44 r :
Active Loans Closed Loans Total Total Disbursed (IBRD and IDA): 217.73 1,084.59 1,302.32 r of which has been repaid: 17.35 413.09 430.44 1D Total now held by IBRD and IDA: 377.50 669.17 1,046.67 a Amount sold 0.00 70.32 70.32 ad Of which repaid : 0.00 70.32 70.32 Total Undisbursed : 170.46 .46 170.92
a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. b. Rating of 1-4: see OD 13.05. Annex D2. Preparaticn of Implementation Suimmary(Form 590). Following the FY94 Arnual Review of Portfolio performance (ARPP), a letter based system will be used (HS = highly Satisfactory, S - satisfactory, U - unsatisfactory,HU highly un:iat.sfactory):see proposed Improvements in Project and Portfolio Performance Rating Methodology (SecM94-901), August 23, 1994.
Note: Disbursement data is updated at the end of the first week of the month.
'a Pmjed AppraisalDocument Page75 Zimbabwe:Park Rehabilitaion and Conseration Project
Zimbabwe STATEMENT OF IFC's Committed and Disbursed Portfolio As of 3 1-Mar-98 (In US Dollar Millions)
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1981/93 WankieColliery 5.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00 1990 FMB 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1990/92195 FMB Holdings 0.00 3.51 0.00 0.00 0.00 3.51 0.00 0.00 1991 T.A. Trading .20 0.00 0.00 0.00 .20 0.00 0.00 0.00 1991 Venture Cap-ZIM 0.00 .68 0.00 0.00 0.00 .52 0.00 0.00 1992 Meikles 3.33 0.00 0.00 0.00 3.33 0.00 0.00 0.00 1992 PETROZIM 4.37 0.00 0.00 0.00 4.37 0.00 0.00 0.00 1993 Triangle 1.40 0.00 0.00 0.00 1.40 0.00 0.00 0.00 1993 Victoria Falls 2.12 0.00 .36 0.00 2.12 0.00 .36 0.00 1994 AEF Abercrombie .19 0.00 0.00 0.00 .19 0.00 0.00 0.00 1994 AEF Bitcon .73 0.00 0.00 0.00 .73 0.00 ,0.00 0.00 1994 AEF Chiparawe .56 0.00 0.00 0.00 .56 0.00 0.00 0.00 1994 NMBZ 0.00 .16 0.00 0.00 0.00 .16 0.00 0.00 1994/96 Interfresh 1.60 .73 0.00 0.00 1.60 .73 0.00 0.00 1995 AEF Chimwala .22 0.00 0.00 0.00 .22 0.00 0.00 0.00. 1995 AEF Itachi Plast .29 .06 0.00 0.00 .29 .06 0.00 0.00 1995 AEF Stone Hidags 1.50 0.00 0.00 0.00 .60 0.00 0.00 0.00 1995 ZambeziFund 0.00 2.50 0.00 0.00 0.00 1.70 0.00 0.00 1995 Zambezi FMCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 AEF Shagelok, .86 .19 0.00 0.00 .86 .19 0.00 0.00 1996 AEF SolidIns 0.00 .02 0.00 0.00 0.00 0.00 0.00 0.00 1996 AEF ZambeziLodg 1.25 0.00 0.00 0.00 1.25 0.00 0.00 0.00 1996 TrinidadInd. .70 .58 0.00 0.00 .70 .58 0.00 0.00 1997 AEF Agflora .24 0.00 0.00 0.00 .24 0.00 0.00 0.00 1997 AEF IsfarLtd. .10 0.00 0.00 0.00 ;10 0.00 0.00 0.00 1997 AEF LowveldLthr .30 .20 0.00 0.00 .30 .19 0.00 0.00 1997 AEF SunfreshLtd .23 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Portfolio: 25.19 8.63 .36 0.00 24.06 7.64 .36 0.00
Approvals PendingCommitment Loan Equit Quasi Partic 1998 AEF ABERFOYLE .36 0.00 0.00 0.00
1998 AE.FINYATH MTEL .40 .17 0.00 . 0.00
Total Pending Commitment: .76 .17 0.00 0.00 Project Appraisal Document Page 76 Zimbabwe: ParkRehabilitation and ConservationProject
Annex 11 Country at a Glance
Zimbabweat a glance 8/2U97
Sub- POVERTY and SOCIAL Saharan Low. Zimbabwe Africa Income DOvelopment dlamond Populationmid-1996 (nzifirs) 11.2 600 3.229 GNPpercapita199g(UJS$) 610 490 500 LUfaexpectancy GNP 1996 wonsUSS) 6.8 294 1.601 Average annual growth, 1990.96 Population(%) 2.3 2.7 1.7 GNP GramG. Labor force (%) 2.2 2.6 1.7 primary Most recent estimate flateatyea availablssince 1989) capita / enrolilment Poverty: headcountindex (% of poou/afon) 26 Urban populaion (% of tohtipopulation) 32 31 29 Life expectancyat birth (years) 57 52 63 Infant mortality (per 1,0006ve oitfs) 55 92 69 Access to safewater Chiid malnuttion (% of ciddrenunder 5) 16 Access to safe water ( of populaton) 74 47 53 Illiteracy (36of popudatio age 15+) 15 43 34 Zmabwe Gross primary enmilment(5 of schooPagepopulation) 115 72 105 Mae 19 78 112Lowinc up Female 1'1 65 98
KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1986 1995 1996 GOP (bllonsUSS) 3.5 4.5 6.6 7.5 Econombatios, Gross domesticinvestmentfGDP 26.3 22.7 17.5 17.9 Openness ot economy Exports of goods and services/GOP 29.5 29.9 44.3 44.2 Grossdomesticaavings/GOP 25.1 2S.9 14.8 18.4 Gross national savings/GOP 20.9 23.1 11.7 18.5 Current accountbalanea/GDP -6.7 -3.4 -5.6 -1.8 Interest payments/GOP 0.1 2.8 2.9 . Savings Investment Total debtGOP 5.3 53.4 74.0 Total debt service/exports 0.8 34.0 23.6 .. Presentvalue of debtWGOP a .. .. 60.8 Presentvalue of debt/exports .. .. 145.9 .. Indebtedness
1975-46 198S-96 1996 1996 1997-05 (avage annualgowft) -Z mbabwe GOP 3.7 1.8 -2.3 8.1 5.3 __ nc_egioup GNP per capita -0.2 -1.0 -4.2 7.3 3.6 Exportsof goodsand services 5.3 5.3 3.0 8.8 5.3 j
STRUCTUREof the ECONOMY
(% of GOP) 11996 Growth rats of output andInvtment (%) Agriculture 17.0 20.2 17.1 13.9 20 . Industry 38.0 30.2 29.8 27.5 to Manufacturing 23.5 22.9 21.8 18.7o Services 45.1 49.5 53.1 58.6 *10r - s 3s \;
Prvate consumption 62.1 46.5 66.0 62.5 *201 General govemment consumption 12.8 28.6 19.2 19.1 -G OI -4-GOP Importsof goodsand services 30.7 25.7 46.9 43.7
197548 1986-96 1995 1996 (aveage annualgrowth) 9 Growth ratesof export. and Imports (% Agriculture 1.5 1.8 -19.0 41.1 25 Industry -0.3 0.4 -7.7 1.4 20 Manufacturing 3.2 -0.3 -14.0 2.1 1S Services 5.8 2.9 S.5 2.5 Private consumption 5.3 4.1 3.5 4.4 General govemmentconsumption 17.0 -1.0 2.9 8.3 Gross domesticinvestment -6.4 -1.7 -12.2 13.9 .13 Importsof goods and services 3.7 5.3 10.4 5.5 iExps 1mit Gross nabonalproduct 3.0 1.7 -2.1 9.2
Note: 1996 data are preliminaryestimates. Figuresin italics are for yearsother than those specified. The diamondsshow four key indicator in the country (in bold) comparedwith its income-groupaverage. If data are misaing.the diamond will be incomplete. Project Appraisal Document Page 77 Zimbabwe: Park Rehabilitaton and Conservaton Project
Zimbabwe
PRICESand GOVERNMENTFINANCE
Oomesic prIces 1976 1988 1995 1996 Inflaton(%) (X change) 50 - Consumerprices 10.0 14.2 22.6 23.0 o ImplicitGOP deflator 9.5 6.5 23.4 22.2 30 - 20 Govemmentfinance 10
(, of GOP) o I I Currentrevenue 33.3 31.4 28.6 91 92 93 94 95 SO Currentbudget balance -3.3 -4.2 -5.3 GOPdef. I CPI Overallsurplus/deficit -8.8 -10.2 -10.3 TRADE 1976 1988 1996 1996 (millonsUS$) Exportand import levels(mill US$) Total exports (fob) 1,124 2,217 2,499 2.500 Tobacco 225 478 694 Gold 124 303 294 2,000_ Manufactures 315 829 850 .soow Total imports(cit) 1.060 2.128 2,213 10 __ilim. Food 37 118 129 10-o Fueland energy 226 191 239 s* * Capital goods 298 901 1,046 0
Exportpriceindex(1987=100) 84 118 125 90 91 92 93 94 95 9o Importpriceindex(1987=100) 80 131 137 mExpons mimports Termsof trade(1987=100) .. 105 90 91
BALANCEof PAYMENTS 1976 1986 1996 1396 (millionsUS$) Currentaccount balance to GDPratio (%) Exportsof goodsand services 1,002 1,229 2,718 3,091 Importsof goodsand services 1,088 1,211 2,882 3,083 o I I Resourcebalance -86 18 -164 8 Net income -63 -126 -326 -295 Netcurrent transfers -84 -45 121 154 40 Currentaccount balance, beforeofficial capital transfers -233 -153 -369 -133 15s Financingitems (net) 226 253 623 90 Changesin net reserves 8 -100 -254 43 .20 Memo: Reservesincluding gold (miilL US$) 129 345 962 1,037 Conversionrate (locaUS$) 0.6 1.6 8.7 10.1
EXTERNAL DEBT and RESOURCE FLOWS 1976 1986 1996 1996 (milfionsUSS) Compositionof total debt, 1995(mill. USS) Total debtoutstanding and disbursed 187 2,416 4,885 IBRO 19 205 560 513 G A IDA 0 30 336 335 684 60 Total debtservice 8 422 651 IBRD 5 16 94 87 IDA 0 0 3 3 C Compositionof netresource flows 955 4as Officialgrants 0 114 307 Ofcial creditors -6 115 43 Privatecreditors 0 -68 41 Foreigndirect investment 0 3 40 E 719 Porftolioequity 0 0 18 1170 WorddBank program Commitments 0 10 0 70 A-IBRD E-Blatwa Disbursements 0 46 47 49 B - IDA D- Othermultilateral F -Pdvate Principalrepayments 5 0 48 46 C - IMP G- Shart-term Netflows -5 46 -1 3 _ Interestpayments 1 17 49 44 Net transfers -5 29 -50 -41 DevelopmentEconomics 8/28197 Projet AppraisalDocument Page 78 Zimbabwe: ParkRehabiDtation and ConservationProject Annex 12 Letter of SectorDevelopment Policy
DEPARTMENTOF NATIONALPARKS AND WILD LIFE MANAGEMENT SECTORDEVELOPMENT POLICY FOR WILD LIFE IN ZIMBABWE.
Approved by The Honourable S.K. Moyo, The Minister of Mines, Environment and Tourism
Signed...... Date ... I.7.7f ProjectAppraisal Document Page79 Zimbabwe:Park Rehabilitation and Conservation Project
PREAMBLE
This sector developmentpolicy statementaddresses issues relatingto the management of wildlife and the subsequentutilization of such wildlifein Zimbabwe.
Zimbabwe'swildlife industry has been growing steadily since the promulgationof the Park and WildlifeAct of 1975 and its subsequentamendments. This growth,which has paved theway for alienatedlandholders and RuralDistrict Councils to derive economic benefitsfrom wildlife on theirproperties, has brought an additional17% of Zimbabwe under wildlife uitilization,bringing the total area of the country set aside for the. developmentof wild life to approximately30%.
Wild life is a uniqueeconomic resource upon which a massive,growing globalindustry is developing. The advantage of this industry is its ecological sustainabilityin comparisonto other land uses and for Zimbabwe,its competitiveadvantage in world markets.The Governmentof Zimibabweregards its own protected areas and wild ife resources as extremely valuable and highly marketable assets and a legitimateand sustainableform of land use.
However,not sincethe establishmentof the country's first nationalpark in 1928,have therebeen so manyconverging factors which threaten the future viabilityand integrity of Zimbabwe's National Parks. The challengesare significantbut not overwhelming. Recovery will re(quirestrong leadership from within the Governmentof Zimbabwe, support and assistance from cooperatingpartners at home and abroad. At the same time,Zimbabwe is tryingnew approachesto deliveringservices in more cost effective ways by commercializingcertain programmes. The Departmentof National Parks and Wild Life Managementwas one of the first programmesto be identifiedfor a new approach to the delivery of services such that in January 1996 the Government established The Parks and Wild Life ConservationFund as a commercialentity to manage the Parks and Wild Life Estate. The Estate occupies 13.1% of the country's land base consistingof National Parks, Safari Areas, Sanctuaries,Recreational Parks, BotanicalGardens and BotanicalReserves.
The Government of Zimbabwehas put in place a mechanismwhich ensures broad participationin the wild life industrythrough equitable distributionof resources and access to opportunities for emergent entrepreneurship, without abrogating its fundamentalobligations to society for conservingAfrica's biologicalheritage.
The essentialwild life nature of Africa's flora and faunarequires special management ProjectAppraisal Document Page80 Zimbabwe: Park Rehabilitatonand Conservaton Project
techniquesand societalinstitutions in order to reaIiseits fullpotential. Govermment policy and the directionthis policy givesto all sectorsof the nationis fundamental amongstthe manyfactors which will contributeto the successof Zimbabwe'swild life industry. Prect AppraisalDocument Zimbabw: PwkRehabRitaton and Conseiaton Pro8e1
In this document:
Minister: meansthe Ministerresponsible for administratingthe Parksand WildLife Act Director: meansthe Directorof the Departnentof NationalParks and WildLife Management appointed in termsof Section107 of the Parksand WildLife Act Chapter20:14 Department: means the Departmentof National Parks and Wild Life Management Fund: meansthe Parks and Wild Life ConservationFund established by Section30 of the Auditand Exchequer Act (Chapter 168). Constitution: meansthe Constitutionof the Parksand Wild Life Conservation Fund Estate: meansthe Parksand WildLife Estate Alienatedland: for the purposesof wild life utilizationalienated land means private land; or State land held in terms of an agreementof purchaseor lease;or trustland held in termsof an agreementof lease,i.e. land outsidethe ParksEstate. ProjectAppraisal Document Page82 Zimbabwe:Park Rehabilitation and Conservation Project
POLICY STATEMENT
1. OWNERSHIP AND UTILIZATION OF WILD LIFE IN ZIMBABWE. Wild life in Zimbabweis a national heritage,the ownershipand control of which is vested in the State on behalf of the nation. However the State recognizesthe presence of certainwild life on alienatedland (i.e. privateland, communalland and resettlement areas) such that the State bestows the right of utilizationof wild life to the ownersof such land while it retains control and regulation of this utilization.
2. ADMINISTRATION OF WILD LIFE IN ZIMBABWE In the contextof policy, the Governmentconsiders all forms of aquatic and terrestrial indigenousplant and aninals as wild life ranging from microorganismsto the largest land mammal,the elephant.The Governmentaccepts its responsibilityto conserveall wild life includingthose species which may conflict with human interests fromtime to time. Many of the small animal species and less commonplants are seldomseen and can only be conservedby placing emphasis on complete ecosystems.Certain rare or endangeredspecies may requirelegal protection where they occur,whilst those species whichhave detnmentaleffects on legitimatehuman interests or ecosystemsmay require to be controlledunder particular circumstances.
3. RESPONSIBILITY FOR WILD LIFE IN ZIMBABWE The successof conservationin Zimbabwedepends on the recognitionthat land holders shouldbe the best custodiansof their natural resources providedthey have the right to use wild life and to benefit from that custodianship.Policy for wild life in Zimbabwe seeks to reinforce this principle and to ensure that it is universallyapplied to all categoriesof landholders.
4. MANAGEMENT OF THE PARKS ESTATE Managementin the Parks Estate is undertakenby The Departnent of NationalParks and WildlifeManagement, which is a scientificand professionalagency of Government responsiblefor preservingindigenous species and habitats and protectingthe Estate. It is alsoresponsible for administering,developing and promotingwild life management throughout Zimbabweas an economic and sustainable land use for enhancingrural productivity. Since wild life managementis a complexsubject in which many of the underlying ecological processes are poorly understood, the Department adopts an adaptive managementstrategy in which research and monitonrngare incorporatedas integral componentsof management. ProjectAppraisal Document Page83 Zimbabwe:Park Rehabilitaton and Conservation Project
The Parks and Wild Life Estate will be managed in terms of approved specificarea plans which state the objectivesfor each area, the system of management,permitted forms and levels of public use, authoriseddevelopment and internal zonation.These plans will be reviewedperiodically.
In January 1996 The Parks and Wildlife ConservationFund was establishedunder Section 30 of the Audit and Exchequer Act Chapter 168 to manage the Parks and Wildlife Estate along commerciallines. Setting up the Fund gave the Departmnenta higherdegree of aultonomyfinancially such that all revenue accruing fromthe activities of the Department are retained in the Fund to ensure sustainablemanagement of the. Parks and Wild Life Estate.
However, the Governmentof Zimbabweshall ensurethat conservationwhich is the core businessof the Departmientof National Parks and Wild Life Managementis not compromisedas the Parks and Wild Life ConservationFund improvesthe commercial basis of operations.
5. GOVERNANCE AND ADMINISTRATION OF THE FUND The Parks and Wild Life Act (1975) makes provisionsfor a National Parks Board whose main function is to advise the Minister on issues pertaining to wildlife management.However, the Constitutionof the Parks and Wild Life ConservationFund does not make any provisionfor the governanceand oversight of the Fund.
In an attempt to redress the situation, a governanceand oversight body shall be appointed with the authority to review and recommendto the Secretary of Mines, Environmentand Tourism for the approvalof the following: a) Fund's annual budgets and supplementarybudgets b) park managementplans, c) proposals affectingtariffs, fees and concessionsand d) policy issues affectingwildlife management
The fund shall be administered by the Director of National Parks and Wild Life Managementon behalf of the Secretaryfor Mines, Environmentand Tourismwho is the AccountingOfficer. The AccountingOfficer is accountableto Parliamentfor t4e operations of the Fund while The Minister retains overall responsibilitiesfor the governanceand adrministrationof the fund. ProjectAppraisal Document Page84 Zimbabwe:Park Rehabilitation and Conservation Project
6. FUNCTIONS OF THE DEPARTMENTIN THE PARKS AND WILD LIFE ESTATE The functionsof the Departmentof NationalParks and Wild Life Managementin the Parks and Wild Life Estate are to: a) Protect wild life against illegaluse; b) Manage and conserve the Parks and Wild Life Estate efficientlyand cost- effectivelyaccording to area plans for each protected area; c) Undertake or commissionall physical developmentin the Estate; d) Run its own tourist facilities and trading complexes, where appropriate, within its areas of jurisdiction; e) Allocate leases, concessions and access for wild life-based tourism and fisheriesin the Estate accordingto a systemwhich will allow competitionand result in maximumfinancial or managerialbenefits to the nation; f) Undertakeor commissionenvironmental impact assessments for all proposed developmentwhich may affect the Estate; g) Allocate areas and quotas for sport hunting in the Estate and areas where huntingis legally restricted; h) Conserve,manage and developaquatic resources in Zimbabweincluding fisheries and aquaculture; i) Controlaquatic weed withinthe Estate and cooperatewith other agenciesin controllingaquatic weed outsidethe Estate; j) Preventdomestic livestock from entering the Estate and limit and controlthe domesticpets of staff working in the Estate; and k) Promote conservationeducation.
7. MANAGEMENT POLICY STATEMENT To promote the extensionand integrationof wildlifeas a sustainable,complementary and economicallycompetitive land use to equitably benefitpeople and conservation of biodiversity through a participatory approach. To achieve the above goal the Governmentof Zimbabweundertakes to: a) Establish an enabling framework to stimulate sustainable wildlife conservationand management with particularreference to the clarification of roles; b) Establisheffective communication system between stakeholdersboth locally and internationally; c) Establishand improve economicincentives for the productionof wildlife; d) Enhancethe capacity, both ecologicaland economic,for wildlifeproducers and managers; e) Promote cross sectoral integrated land use and resource use planning; Page 85 ProjectAppraisal Document Zimbabwe:Park Rehabilitation and Conservation Project
f) Establishimaginative financing mechanism to support wildlifeproduction; g) Establishan improvedunderstanding of the ecologicalprocesses that underpinwildlife production; h) Establish systems and mechanisms for the exchange of informationon biodiversity,ecological issues and productionsystems; i) Establish and maintain monitoringand regulatory systems to ensure the sustainablemanagement of wildliferesources; and j) Continueto fund the social obligationsof the Departmentsuch as extension and researchservices and operationssuch as problemanimal and bird control and noxilousweed controlwhich cannot be finded from the Fund.
8. FUNCTIONS OF THE DEPARTMENT OUTSIDE THE PARKS AND WILDLIFE ESTATE Outside the Parks and Wild Life Estate the primary aim of the Departmentof National Parks and Wild Life Managementwill be to facilitate developmentof a diverse,resilient wild life industrywithout prejudice to wild life conservation.It will accordinglymake all efforts to streamlineadministrative procedures toward this goal in order tc):
a) Issue all permits required by law for wild life-relatedactivities and regulate access, trade, utilization,fisheries and research; b) Regulatetrade in wild life products so that illegalproducts do not enter the market and prejudice legitimatetrade; c) Market certain key wild life products; d) Maintain a statistical database on all wild life-related activities including tourism,trade and sport hunting; e) Undertake research in wild life and coordinate the research activities of externalwild life researchers; f) Carry out extension and public relations work outside the Estate in collaborationwith other Governmentand non-governmentagencies; and g) Set standardsand issue appropriatepermits and licencesto commercialwild life operators includingprofessional hunters, professionalguides, and wild life captuireunits.
9. FUNCTIONS AND OBLIGATIONS OF OWNERS OF ALIENATED LAND UNDER WILIDLIFE UTILIZATION The Governmerntencourages the conservationof wild life and their habitats outside the Parks and Wild Life Estate and recognises that this requires the active cooperation of landowners who, as wild life producers, should be the primary Pjct AppraisalDocument Page86 Zimbabwe:Park Rehabfitatlon and Conservation Project
beneficiariesof the returns.The National ConservationStrategy points out that by givingwild life an economicvalue and treatingit like any other renewableresource, albeitone that requiresspecial management and marketingskills, productivitymay be enhancedwithout detriment to the environmentand the benefitsmay be sufficient to offsetthe opportunitycosts of this land use form.
The Government wishes to ensure that the demonstrated benefits of wild life utiizaion is conferredto ownersand occupiersof alienateland throughthe granting of AppropriateAuthority to Rural District Councils and landownerswho wish to manage the wild life resources on their land. This authority, which may be withdrawnthrough failureto conformto conditionsand objectivesunder which it was granted,will be granted on the followingconditions: a) An acceptablemanagement plan in which objectivesfor wild life are stated and preliminaryintentions for achievingthese objectivesare outlined; b) For Rural District Councils,an acceptable institutionalplan which outlines clearlythe methodsby whichthe RuralDistrict Council intends (i) to involve wild life producer communitiesin district level management and (ii) to devolve the decision-takingprocess in local wild life managementand the distributionof wild life benefits to producer communities; c) The Departmentwill assist councilsin managingwild life and coordinatethe activitiesof NGOs who are assistingthe councils; d) TheDepartment will approve all annual quotas of wild life killed or sold on alienatedland; and e) The presentationsof annualreports fromcouncils to the Director and to their constituentsdetailing the year's performancein wild life managementin their district. Project Appraisal Document Page 87 Zimbabwe: Park Rehabilitationand ConservationProject Annex 13
PARKS AND WILD LIFE CONSERVATIONFUND (As established17 December 1995)
1. Establishmentand Title of the Fund
A fund to be called the Parks and Wildlife ConservationFund (hereinafterreferred to as "the Fund") is hereby establishedin terms of Section 30 of the Audit and ExchequerAct (Chapter 168).
2. Objectivesof the Fund
The objectivesof the Fund shall be:
a) the conservationand managementof Parks and Wild Life Estate as defined by the Parks and Wildlife Act (Act 14 of 1975as amendedin 1990);
b) to invest and deal with money of the Fund not immediatelyrequired upon such security and any such manner as determinedby the Treasury;
c) to ensurethe efficient mobilizationof the Fund to apply the money and other assets of the Fund for any purpose which is considered by the Director of National Parks to be in the interests of conservationand managementof Parks Estate.
3. Income of the Fund
The incomeof the Fund shall consist of:
a) money alppropriatefor the purpose by the Legislature;
b) any gifts or grants made to the fund by any natural or-juridicalperson or by the govenment of any country;
c) revenue receivedby the Departmentof National Parks and Wild Life Managementin the course of administeringits Parks and Wildlife Estate;
d) any interestor increase in value derived from the holding of money or any assets of the Fund in any form whatsoever;
e) any revenue, other than revenue referred to in paragraphs(a) to (d) pertainingto the Fund; and
f) all money and other assets which, immediatelybefore the establishmentof this Fund, pertainedto the generaland special account of the Departmentof National Parks.
4. Expenditureof the Fund
There shall be paid from the monies of the Fund: ProjectAppraisal Document Page88 Zimbabwe:Park Rehabilitationand Conservation Project
a) any expenditureincurred by the Fund in the performanceof the objectives and functionsof the Fund;
b) salaries and allowancesof the staff of the Fund;
c) the repaymentof loans made to the Fund and any interest on such loans'
d) any losses incurred on the realisation of any assets of the Fund and any decrease in the value of any assets of the Fund;
e) any other expenditurelawfully appertainingto the Fund;
f) all liabilitieswhich, immediatelybefore the establishmentof the Fund, pertainedto the general and special accounts of the Departmentof National Parks.
5. Administrationof the Fund
a) The Fund shall be administered by the Director of National Parks and Wild Life Management on behalf of the Secretaryfor Mines, Environmentand Tourism. The Secretaryshall be responsibleof the determinationof the administrativepolicy of the Fund and shall in accordancewith TreasuryInstructions issue detailed AccountingOfficers Instructions.
b) For the effective managementof tourism facilities in the Parks and Wild Life Estate, the Director of National Parks and Wild Life Managementmay enter into managementand sub- contracting agreementswith natural or juridical persons on such terms as the Secretaryfor Mines, Environmentand Tourismwith the concurrenceof the Treasury,may determine, in keeping with proceduresset by the oversightbody.
6. CapitalAssets
Subject to Treasuryauthority, the Fund may acquire such capital assets as considered necessary for the efficient operationof the Fund from time to time.
7. Financial Operations
a) Subject to the provisionsof the Audit and ExchequerAct (chapter 168), the Fund shall conduct its business on sound commerciallines.
b) Chargesapproved by the Treasury from time to time shouldbe aimed at the recovery of those costs involvedin administeringthe Fund.
c) Money in the Fund not immediatelyrequired for the purpose of the Fund may be invested subject to directionsissued from time to time by the Treasury.
8. Bank Account
a) There shall be a bankingaccount and all receipts shall be paid into and all payments made from the bankingaccount.
b) All cheques issued from the bankingaccount shall bear the signaturesof two officials from a ProjectAppraisal Document Page 89 Zimbabwe: Park Rehabilitationand Conservation Project panel of signatoriesapproved by the Director of National Parks.
9. AccumulatedFund
The accumulatedFund shall comprise of:
a) such amounts as may be appropriatedby Parliamentfrom time to time for the purpose of the Fund;and
b) any interestor increasein value (income)derived from the holding of money or any assets of the Fund in any form whatsoever.
10. Reserves
Such reserves as are deemed necessary shall be created in such amounts as may be approvedby the Secretaryof Mines, Environmentand Tourismwith the concurrenceof the Treasury.
11. Accountsof the Fund
Within three months of the end of the financialyear, the Secretaryfor Environmentand Tourism shall cause to be submittedaccounts for auditingto the Comptrollerand Auditor-Generalin accordancewith Section 31(4) of the Audit and ExchequerAct (chapter 168).
12. Amendmentsito the Constitution
No amendmentsto or replacementof this constitutionshall be made except by the Treasury.
13. Dissolutionof the Fund
In the event of the dissolutionof the Fund or its amalgamationwith any other fund, associationor body, the assets of the Fund shall be disposed of as directed by the Treasury. NOTES MAPSECTION ZAIRE ~~~~~~~~~~~~~~~~~~2'32' TANZANIA0' 2& 30' ~~~~~~~~~~~~~~~~~~~~~~~~~LakeCaboraBasso
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