World Bank Document

Document of The World Bank

Public Disclosure Authorized Report No: ICR00002916

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-43670)

ON A

CREDIT

Public Disclosure Authorized IN THE AMOUNT OF SDR 22.0 MILLION (US$ 33.6 MILLION EQUIVALENT)

THE REPUBLIC OF UGANDA

FOR

A KAMPALA INSTITUTIONAL AND INFRASTRUCTURE DEVELOPMENT ADAPTABLE PROGRAM LOAN (APL) PROJECT Public Disclosure Authorized

June 27, 2014

Public Disclosure Authorized Urban Development & Services Practice 1 (AFTU1) Country Department AFCE1 Africa Region

CURRENCY EQUIVALENTS

(Exchange Rate Effective July 31, 2007)

Currency Unit = Uganda Shillings (Ushs) Ushs 1.00 = US$ 0.0005 US$ 1.53 = SDR 1

FISCAL YEAR July 1 – June 30

ABBREVIATIONS AND ACRONYMS

APL Adaptable Program Loan CAS Country Assistance Strategy CRCS Citizens Report Card Surveys CSOs Civil Society Organizations EA Environmental Analysis EIRR Economic Internal Rate of Return EMP Environment Management Plan FA Financing Agreement FRAP Financial recovery action plan GAAP Governance Assessment and Action Plan GAC Governance and Anti-corruption GoU Government of Uganda HDM-4 Highway Development and Management Model HR Human Resource ICR Implementation Completion Report IDA International Development Association IPF Investment Project Financing IPPS Integrated Personnel and Payroll System ISM Implementation Support Missions ISR Implementation Supervision Report KCC Kampala City Council KCCA Kampala Capital City Authority KDMP Kampala Drainage Master Plan KIIDP Kampala Institutional and Infrastructure Development Project LGDP Local Government Development Program M&E Monitoring and evaluation MDGs Millennium Development Goals MoLG Ministry of Local Government MTR Mid-term review NCRP Nakivubo Channel Rehabilitation Project NEMA National Environmental Management Agency

NPV Net Present Value OAG Office of the Auditor General PAP Project Affected Persons PCU Project Coordination Unit PDO Project Development Objectives PDU Procurement and Disposable Unit PEAP Poverty Eradication Action Plan PIP Project Implementation Plan QAG Quality Assurance Group QMS Quality Management System RAP Resettlement Action Plan SFR Strategic Framework for Reform TA Technical Assistance UFUP Uganda First Urban Project UJAS Uganda Joint Assistance Strategy Ushs Uganda Shillings VOC Vehicle Operating Costs

Vice President: Makhtar Diop Country Director: Philippe Dongier Sector Director: Jamal Saghir Sector Manager: R. Mukami Kariuki Project Team Leader: Martin Onyach-Olaa ICR Team Leader: Chyi-Yun Huang

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UGANDA Kampala Institutional and Infrastructure Development Project

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design ...... 1 2. Key Factors Affecting Implementation and Outcomes ...... 9 3. Assessment of Outcomes ...... 16 4. Assessment of Risk to Development Outcome ...... 25 5. Assessment of Bank and Borrower Performance ...... 25 6. Lessons Learned ...... 27 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ...... 28

Annex 1. Project Costs and Financing ...... 29 Annex 2. Outputs by Component ...... 30 Annex 3. Economic and Financial Analysis ...... 35 Annex 4. Bank Lending and Implementation Support/Supervision Processes ...... 62 Annex 5. Beneficiary Survey Results ...... 64 Annex 6. Stakeholder Workshop Report and Results ...... 66 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ...... 67 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ...... 75 Annex 9. APL Triggers, Benchmarks and Status ...... 76 Annex 10. List of Supporting Documents ...... 78

A. Basic Information

Kampala Institutional Country: Uganda Project Name: and Infrastructure Development Project Project ID: P078382 L/C/TF Number(s): IDA-43670 ICR Date: 04/12/2014 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: APL Borrower: UGANDA Original Total XDR 22.00M Disbursed Amount: XDR 21.74M Commitment: Revised Amount: XDR 22.00M Environmental Category: B Implementing Agencies: Kampala Capital City Authority Cofinanciers and Other External Partners: NA

B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 05/11/2004 Effectiveness: 11/19/2008 11/19/2008 12/03/2010 Appraisal: 05/07/2007 Restructuring(s): 12/27/2012 Approval: 11/06/2007 Mid-term Review: 04/30/2009 11/24/2010 Closing: 12/31/2010 12/31/2013

C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance:

C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Yes None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status:

D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Flood protection 23 23 Rural and Inter-Urban Roads and Highways 23 23 Solid waste management 23 23 Sub-national government administration 31 31

Theme Code (as % of total Bank financing) City-wide Infrastructure and Service Delivery 50 50 Municipal finance 25 25 Municipal governance and institution building 25 25

E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Philippe Dongier John McIntire Sector Manager: Rosemary Mukami Kariuki Jaime M. Biderman Project Team Leader: Martin Onyach-Olaa Solomon Alemu ICR Team Leader: Chyi-Yun Huang ICR Primary Author: Chyi-Yun Huang

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The project development objective (PDO) is to support the Recipient’s efforts to improve the institutional efficiency of KCC, through the implementation of the Strategic Framework for Reform of the KCC.

Revised Project Development Objectives (as approved by original approving authority) The PDO was not revised.

(a) PDO Indicator(s)

Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Reduction of KCC's overdue liabilities Value UGX0.5 quantitative or UGX 8 billion UGX 3 billion UGX 0 billion billion Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 103%. Target achieved and surpassed. While an amount of UGX 2.6 billion was still recorded as KCCA liabilities, there are no supporting documents for the Comments claims. KCCA is in the process of clearing off the liabilities officially through (incl. % the Accountant General. So far, public notices have been published in the print achievement) media requesting for potential claimants to come forward but no response was received. Thus the liabilities would be written off by mid-year after further verification by the Accountant General. Increase the percentage share of KCC own source revenue spent on service Indicator 2 : delivery. Value quantitative or 10% 30% 34% 32.7% Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 Comments 96%. Target mostly achieved. Original target was achieved but slightly below (incl. % revised target which was higher than original target. achievement) Indicator 3 : Increase KCC's own source revenue. Value UGX33.5 quantitative or UGX 22 billion UGX30 billion UGX55.71 billion billion Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 166%. Target achieved and well surpassed. KCCA performed well in increasing Comments its own source revenue collections from property rates, ground rent, licenses, (incl. % hotel tax, advertisements and other sources mainly due to improvement in achievement) efficiency of the Revenue Directorate. Increase in public satisfaction in service delivery in (a) Roads, (b) Drainage and Indicator 4 : (c) Solid waste (a) Roads (a) Roads 50%; (b) Value (a) Roads 18%; (b) 50%; (b) (a) Roads 29%; (b) Drainage 31%; quantitative or Drainage 22%; and (c) Drainage 31%; Drainage 22%; and and (c) Solid waste Qualitative) Solid waste 44% and (c) Solid (c) Solid waste 46% 60% waste 60% Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 (a) Roads 58%; (b) Drainage 71%; (c) Solid Waste 77%. Target not met. Level Comments of satisfaction is measured by the citizen report card surveys which pertain to (incl. % overall Kampala services, and not just KIIDP (which only marginally contributed achievement) to results).

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Indicator 5 : Average traffic growth on KIIDP upgraded roads. Value quantitative or 2% NA 20% 31% Qualitative) Date achieved 12/31/2010 12/31/2012 12/31/2013 155%. Target achieved and well surpassed. New indicator after restructuring. As not all road works were fully completed by project closing (but were eventually Comments completed by end May 2014), a calculation was made using Average Annual (incl. % Daily Traffic estimates which gives the average annual traffic growth from 2011- achievement) 2014 on KIIDP upgraded roads. (Note: The value 31% is an calculation taking an average on the five roads completed under the project; the corresponding value for each of the road ranged from 15% to 40%). Indicator 6 : Number of people directly affected by floods along Lubigi Channel. Value quantitative or 8800 people NA 0 0 Qualitative) Date achieved 12/31/2010 12/31/2012 12/31/2013 Comments 100%. Target achieved. New indicator after restructuring. No flooding has been (incl. % reported in the Lubigi channel catchment area in 2013. achievement)

(b) Intermediate Outcome Indicator(s)

Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Reduction in building plan permit approval processing. Value (quantitative 1 year 2 months 2 months 2 months or Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 Comments (incl. % 100%. Target achieved. achievement) Indicator 2 : Percentage of property rate demand notes issued to property owners. Value (quantitative 30% 90% 100% 100% or Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 Comments (incl. % 100%. Target achieved. achievement) Indicator 3 : Gravel roads upgraded (km) Value (quantitative 0km 9km 12.89km 8.73km or Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013

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68%. Below target. The actual total road length supported by KIIDP was Comments 11.81km (below restructured target) of which 8.73km of road (or 74%) was fully (incl. % completed and operational by project closing. The remaining portion was achievement) substantially completed by project closing and largely accessible by pedestrians; they were fully completed by KCC by end May 2014. Poor quality bitumen roads and associated drains improved and strengthened Indicator 4 : (km) Value (quantitative 348.08 kms 374.07km NA 0km or Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 Comments This activity was dropped during restructuring of the project since all roads (incl. % maintenance in the country is now being funded under the Uganda National Road achievement) Funds. Indicator 5 : Primary drainage channel expanded and lined (km) Value (quantitative 0km 3.6km 3.6km 3.6km or Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 Comments (incl. % 100%. Target achieved. achievement) Indicator 6 : Secondary drainage channels expanded and lined Value (quantitative 0km 4km NA 0km or Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 Comments Activity dropped following project restructuring due to decrease in balance of (incl. % funding for sub-components. achievement) Indicator 7 : Tertiary drainage “black spots” improved Value (quantitative 0 4 NA 0 or Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 Comments Activity dropped following project restructuring due to decrease in balance of (incl. % funding for sub-components. achievement) KCC utilizing results of annual Citizens Score Card to measure service delivery Indicator 8 : satisfaction Value Citizen Report Card (quantitative 2 2 2 completed for baseline or Qualitative) Date achieved 06/01/2006 12/31/2010 12/31/2012 12/31/2013 Comments 100%. Target achieved. Results of Citizens Score Card were used as feedback to (incl. % inform KCCA operations and services. achievement)

G. Ratings of Project Performance in ISRs

Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 11/30/2007 Satisfactory Satisfactory 0.00 2 05/20/2008 Satisfactory Satisfactory 0.00 Moderately 3 06/25/2008 Satisfactory 0.00 Unsatisfactory 4 11/20/2008 Satisfactory Moderately Satisfactory 0.00 5 05/28/2009 Satisfactory Satisfactory 1.61 6 12/01/2009 Satisfactory Moderately Satisfactory 1.79 7 06/10/2010 Satisfactory Moderately Satisfactory 3.34 8 01/29/2011 Satisfactory Moderately Satisfactory 4.47 9 07/12/2011 Moderately Satisfactory Satisfactory 5.97 10 01/30/2012 Moderately Satisfactory Moderately Satisfactory 9.62 11 07/29/2012 Satisfactory Satisfactory 14.61 12 03/30/2013 Satisfactory Moderately Satisfactory 22.55 13 08/04/2013 Satisfactory Moderately Satisfactory 26.15 14 01/17/2014 Moderately Satisfactory Moderately Satisfactory 30.11

H. Restructuring (if any)

ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions (i) Extension of closing date by twenty four months from December 31, 2010 to December 31, 2012; (ii) Reduction in total project funding (decrease in counterpart 12/03/2010 Y S MS 3.54 funding); (iii) Reallocation of the credit between components and; (iv) Additional category of eligible expenditure (grants to community for involuntary resettlement). A further extension of closing 12/27/2012 NA S S 18.72 date from December 31, 2012 to December 31, 2013.

If PDO and/or Key Outcome Targets were formally revised (approved by the original approving body) enter ratings below: Outcome Ratings Against Original PDO/Targets Moderately Satisfactory Against Formally Revised PDO/Targets Moderately Satisfactory Overall (weighted) rating Moderately Satisfactory

I. Disbursement Profile

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

Country Context

1. Kampala is the capital city of Uganda and its center of economic, political and administrative activities. Kampala has a population of about 1.8 million and a high annual population growth rate of about 3.9%, compared to the national rate at about 3.3%. With about 50% of Uganda’s urban population1, Kampala is the primate city of Uganda and the next largest urban center has less than 10% of its population. Kampala is also the political hub and economic engine of the country – accounting for around 50% of GDP. The economic future of Uganda is thus intrinsically related to the performance of Kampala as a locus of productive activity and investment.

2. Kampala is divided into five urban divisions namely Central, Kawempe, Makindye, Lubaga, Nakawa, totaling 189 square kilometers. Approximately 23% of its area is fully urbanized; a significant portion - around 60% - semi-urbanized; and the remaining 7% is rural settlements. Kampala is also part of a rapidly growing metropolitan area, linked to several adjacent towns, and therefore experiences a high transient population of about 1 million that commute daily into the city from the outskirts of the city or more distant locations.

Sector and Institutional Background

3. The infrastructure provision and service delivery levels in key sectors (such as roads, drainage, solid waste, markets etc.) in Kampala have not kept pace with its economic and demographic growth and have deteriorated over time. Most of Kampala's roads were constructed in the 1940s and 1950s and the majority has never undergone any major rehabilitation or reconstruction since. The city's roads outside the central business district are heavily potholed and in a high state of disrepair; and drainage systems are overloaded, clogged and poorly maintained. Only 10% of the city's population is connected to the sewer lines of the National Water and Sewerage Corporation; and the amount of solid waste generated overwhelms the capacity of the city authority to collect and dispose - only 30% of the total waste generated is removed by the authority.

4. Kampala’s local authorities have faced multiple challenges in delivering infrastructure and services effectively for the city. The Kampala City Council (KCC) and its five Divisions are primarily responsibility for infrastructure and service delivery for Kampala. Over the years, KCC developed serious deficiencies in organizational, management, financial and human resource capacities making it difficult to meet the needs of the city. The City has also had a fundamental lack of vision and weak public service orientation. In addition, while progress has been made in the areas of enhancing transparency and accountability, the service delivery process faced political interference, with weak internal control systems and a weak governance regime. These issues directly impacted on the areas of procurement, financial management and public disclosure, and subsequently affected KCC’s public image.

5. Over the past decade, various attempts had been made to deal with these problems, notably the formulation of the “Strategic Framework for Reform” (SFR) by KCC launched in January 1997 to push for fundamental reforms. The SFR focused on three broad areas of reform for achieving real changes in performance: (i) restructuring KCC aimed at changing the

1 2002 Uganda population and Housing census.

1 administrative structure to improve efficiency and rationalizing (down-sizing) staff; (ii) service delivery liberalization by enhancing private sector participation in service delivery; and (iii) financial and fiscal reform.

6. While a number of positive results had been achieved under SFR2, the progress of organizational reforms was not as fast as envisaged at the time of its formulation. This was compounded by the extremely weak financial position of the city at the time. As such the intermediate results of SFR needed to be carried forward and brought to maturity through institutionalization and application of the strategies, systems and procedures to KCC’s day-to-day operations. As these successes were unlikely to be sustained or integrated into KCC’s operations without additional support and deep commitment to mainstreaming the approaches and capacities, in 2004, KCC carried out a review of the SFR implementation achievements and developed a revised SFR-II.

7. The SFR-II aimed at consolidating the achievements KCC made during implementation of the first SFR; and enabling achievement of its vision under two pillars3 – good governance and good urban management. Priority activities to be implemented were identified, especially in the areas of institutional development (institutional restructuring, revenue enhancement, information and communication technology, urban planning), and infrastructure development (drainage system, traffic and road maintenance management, solid waste management and urban markets infrastructure). These activities were considered critical in realizing the SFR-II.

8. In March 2010, the Kampala Capital City Authority (KCCA) took over the operations of KCC. The Parliament of Uganda passed a new bill - the Kampala Capital City Act 2010 - which replaced the Local Government Act, 1997 as the legal basis for managing Kampala City. Kampala City was elevated from a Local Government to a Capital City with the main objective of improving its administration and improving the quality of services to the public under an effective, efficient and accountable framework placed under the direct supervision of the Central Government. This effectively led to the new KCCA, being converted to a central government agency, with an Executive Director (rather than a Town Clerk) at the rank of a Permanent Secretary. As a successor to the SFR-II and previous reform efforts, KCCA launched a new KCCA Corporate Strategy (2013 – 2018) which was formulated based on the SFR and retained similar focus and priority activities.

Rationale for Bank Assistance

9. The Bank has been supporting Kampala City since the late 1980s through three main operations – Uganda First Urban Project (UFUP), Nakivubo Channel Rehabilitation Project (NCRP), and Local Government Development Program (LGDP I). While each project brought about a number of positive results and supported the KCC to implement some aspects of its reform, KCC was still lacking in certain areas of institutional reform and financial sustainability. In response to the government request for a follow on operation to support SFR-II,

2 For example, in the areas of development of strategies, and systems and procedures in all facets of KCC operations including development of accurate information and data on revenues, manpower, financial situation, contracting out revenue assessment and collection, reliable and accurate budgeting, expenditure control, institutional restructuring, and ICT development and applications. 3 In addition to the pillars, particular strategies identified to be implemented are: (i) institutional policy formulation and enhanced performance; (ii) organizational reform through implementation of a new organizational structure that focuses on core functions; (iii) implementation of a financial recovery action plan with transparent budgeting; (iv) expenditure control and increasing revenue; (v) improved service delivery through enhanced private sector participation; (vi) adequate resource allocation for O & M; and (vii) effective contracts management.

2 the Bank prepared the KIIDP. This project aimed to support KCC to consolidate the gains made thus far, prevent an unraveling of the progress achieved and place Kampala on a solid foundation for sustained service delivery. KIIDP therefore, was to function as a more concentrated and comprehensive effort to promote the institutional and fiscal strengthening of city government than previously attempted.

10. The project was conceived as the first of a three phase Adaptable Program Loan (APL) to provide support for the implementation of KCC’s long-term development program which would require step-by-step policy reform and institutional development over a sustained period. The APL was designed to support the SFR and therefore phased its activities in a manner that was intended to focus on institutional strengthening in the first phase, to build a solid foundation for expanding the focus on infrastructure investments in later phases. The APL was also expected to enable an early adjustment in course in the event that institutional changes occurred or commitment to reforms dissipated. Project preparation activities leading to pre- appraisal were therefore made conditional on KCC taking key measures to demonstrate commitment to the reforms outlined in the SFR. (The original indicative financing plan and implementation period for the three phases are shown in table below.)

APL Indicative Financing Plan Estimated Implementation Period IDA % of Total GoU Total Start Date Closing (US$ Mil) IDA (US$ Mil) (US$ Mil) Date Program APL1 33.6 37 3.5 37.1 01/01/2008 12/31/2010 APL2 40.0 44 4.0 44.0 01/01/2011 12/31/2014 APL3 17.4 19 1.5 18.9 01/01/2015 12/31/2017 Total 91.0 100 9.0 100.0

11. The project was also aligned to the higher-level objectives of the country and the World Bank. In 2005, seven major Uganda’s development partners developed a Uganda Joint Assistance Strategy (UJAS) centered on three principles: supporting implementation of the country owned and led revised Poverty Eradication Action Plan (PEAP) to achieve the Millennium Development Goals (MDGs); collaborating more effectively among the development partners and with the government; and focusing on results and outcomes. The project (planned to be effective in FY 2008) was therefore identified as one of the instruments to support the UJAS;a key pillar of IDA’s Country Assistance Strategy (CAS) for Uganda (Report no. 16540-UG April 30 1997) and in the National Development Strategy (1998/99) as a tool for reducing poverty through increased economic activity, flowing directly from the positive effects of the institutional and infrastructure improvements under the project.

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)

12. The original project development objective is to support the Recipient’s efforts to improve the institutional efficiency of Kampala City Council (KCC) through the implementation of the Strategic Framework for Reform of the KCC. As KIIDP was designed as phase 1 of a three phase APL, an overall Program objective was also defined in the PAD, that is, to “develop a strong governance and management capacity in KCC to enhance service delivery and economic development”.

13. In line with the initial focus on institutional outputs intended by KIIDP, the original PDO level indicators were:

(i) reduce overdue liabilities from Ushs 8 billion to Ushs 3 billion; (ii) increase the share of KCC own source revenue spent on service delivery from 10% to 30%;

(iii) increase in KCC own source revenue from Ushs 22 billion to Ushs 30 billion; and (iv) increase in public satisfaction in service delivery in the following areas: roads from 18% to 50%, drainage from 22% to 31%, and solid waste from 44% to 60%.

14. The focus on institutional outcomes was also supported by the KIIDP APL triggers, which focused on five institutional outputs: (i) new organizational system operational; (ii) establish and implement a formal public consultation process; (iii) implementation of financial recovery action plan (FRAP); (iv) comprehensive O&M plan for infrastructure; and (v) effective implementation of the infrastructure rehabilitation and maintenance.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification

15. The project objective was not revised.

16. Changes were made to project-level indicators and targets during the mid-term review (MTR) and first restructuring completed on December 3, 20104. Two new project- level indicators were added and some of the original project-level indicator targets were revised. No further changes were made to the PDO or indicators in the second restructuring (which was only for an extension of closing date). A summary of the project-level revised indicators, targets and cited reasons for changes is included in the table below:

Changes to PDO-level Indicators and Targets Original (Project Approval) Revised Rationale for Changes5 (at MTR and 1st Restructuring) 1 Reduce overdue liabilities from No change in indicator. Target of Ushs 3 billion Ushs 8 billion to Ushs 3 billion. Target revised to Ushs 0.5 billion. achieved at MTR. 2 The share of KCC own source No change in indicator. Target of 30% achieved at revenue spent on service delivery Target revised to 34%. MTR. increase from 10% to 30%. 3 Increase in public satisfaction No change in indicator and targets. NA with service delivery in: - Roads from 18% to 50% - Drainage from 22% to 31% - Solid waste from 44% to 60% 4 Increase in KCC own source No change in indicator. Target of Ushs 30 billion revenue from Ushs 22 billion to Target revised to Ushs 33.5 billion. achieved at MTR. Ushs 30 billion. 5 NA New indicator: New indicator added as Average traffic growth on KIIDP best proxy for measuring upgraded roads (increase from 2% impact of city-wide to 20%). upgraded roads. 6 NA New indicator: New indicator added for Number of people directly affected measuring impact of main by floods along Lubigi Channel drainage works under the (decrease from 8800 to 0). project.

1.4 Main Beneficiaries

17. The primary project beneficiaries are the residents, visitors and businesses of Kampala city, including the flow of both daily and long term migrants who will benefit from KCC/KCCA

4 Date of countersigning by client indicating agreement to the amended Financing Agreement. 5 Rationale for changes as quoted from restructuring paper.

4 institutional enhancement and better infrastructure/service delivery. Kampala City has an estimated population of 1.5 million people in 2013. In addition, about 1 million people from outside the city commute to Kampala daily. Other beneficiaries include contractors and workers hired to implement the various civil works financed under the project. KCC/KCCA staff also benefitted directly from capacity building and training activities.

1.5 Original Components (as approved)

18. Project Funding. The KIIDP IDA Credit was SDR 22 million (equivalent to US$33.6 million). The total value of the Project was equivalent to US$37.1 million, including co-financing of US$3.5 million (9.4%) from GoU.

Original Financing Plan Funding / Percentage Contribution Total % of IDA GoU Component (US$ Mil) Project (US$ Mil) IDA % (US$ Mil) GoU % 1. Institutional Development 5.80 15.6% 5.22 90.0% 0.58 10.0% 2. Kampala city Infrastructure and Services Improvement 28.49 76.8% 25.87 90.8% 2.62 9.2% 3. Project Implementation, Monitoring and Evaluation 2.79 7.5% 2.51 90.0% 0.28 10.0% Total 37.08 100.0% 33.60 90.6% 3.48 9.4%

19. The project consisted of the following three components and various sub-components:

20. Component 1 - Institutional Development. The component focused on institutional development activities that support organizational development and governance, the implementation of the Financial Recovery Action Plan (FRAP), and actions to enhance effectiveness of service delivery. The sub-components were:

i. Support to Organizational Development and Governance: to develop a comprehensive approach to municipal development. Sub-components include: (i) human resource management and training; (ii) general administration; (iii) education information system; (iv) gender, welfare and community services; (v) planning and M&E; (vi) communication strategy; and (vii) environmental management.

ii. Support to Financial Recovery: to implement a detailed financial recovery plan designed to place KCC on a sound financial position by the end of the program. The sub- components are: (i) enhancing revenue management capacity; (ii) enhancing expenditure management capacity; and (iii) establishing a framework for the reduction, and control of expenditures.

iii. Strengthening Service Delivery, providing support to strengthen KCC’s capacity in service delivery. Activities in the following areas were to be supported: (i) public health and environment; (ii) quality assurances for infrastructure; (iii) urban planning and land management; (iv) information and communication technology; and (v) environmental monitoring and preparation of environmental studies.

21. Component 2 – Kampala City Infrastructure and Services Improvement. This component supported activities aimed at improving the provision of critical services to the city. The investment in infrastructure and service improvements sought to address the following five

5 priority areas which were critical for public confidence and contributed to the economic and commercial development of the city:

i. Drainage system improvement - to increase the capacity of the Lubigi primary channel (total length 3.6km); expand the capacities and lining of secondary channels (total length 4km); and undertake remedial measures on 4 tertiary drainage “black spots” in various parts of the city;

ii. Traffic management –to improve (i) area traffic management including measures for improved traffic flow through provision of traffic management infrastructure such as guard rails, signs etc.; and (ii) improvements in five junctions by providing localized widening and signalizing;

iii. Road maintenance and upgrading – to undertake (i) maintenance of about 26km of selected tarmac roads and (ii) upgrading of about 14.42km of high priority gravel roads to bitumen standard;

iv. Solid waste management – to support (i) expansion of a landfill by 6 acres, (ii) testing and installation of a landfill gas collection and flaring system at the existing landfill, and (iii) design of a new landfill site to be identified and acquired by KCC; and

v. Urban markets infrastructure - provide infrastructure to two markets (Kibuli and Kawempe) through improved access roads, lighting, and sanitation.

vi. Resettlement Action Plan implementation.

22. Component 3 - Project Implementation, Monitoring and Evaluation. This component encompassed the management activities associated with the implementation of the project, the establishment and implementation of a monitoring and evaluation (M&E) system and the preparation of the next phase of the project. Activities included: (i) project implementation support; (ii) monitoring and evaluation, (iii) the annual citizen’s report card; and (iv) staff and councilor survey.

1.6 Revised Components

23. The original components were not revised. However, changes were made to sub- components in response to practical constraints that emerged - mainly implementation delays and escalating project costs. The changes are detailed in the next section.

1.7 Other significant changes

First Restructuring.

24. A level-2 restructuring was completed on December 3, 2010 and allowed for: (i) extension of the closing date by twenty four months from December 31, 2010 to December 31, 2012; (ii) reduction in total project funding (to reflect a decrease in counterpart funding); (iii) reallocation of the credit between components and; (iv) additional category of eligible expenditure (grants to community for involuntary resettlement).

25. The restructuring was both corrective and adaptive in nature. The main reason for the extension in project closing was to accommodate a 9 month delay incurred when obtaining Parliamentary approval for the project (also experienced by various other Bank projects). More time was also required to complete the Component 2 civil works. Delay in the implementation of Component 2 activities was mainly due to the long procurement turnaround time when the

responsibility rested with the Ministry of Local Government (MoLG) 6 (discussed later in the Fiduciary section).

26. The reduction in total project funding occurred as GoU was unable to fully meet the agreed funding contribution 7 due to budget deficits. The original total project funding was reduced from US$37.1 million to US$35.15 million - GoU contribution decreased from US$3.5 million to US$1.55 million (IDA funding remained at US$33.6 million). The majority of the GoU funding was dedicated to resettlement compensation.

27. The reallocation in funding between components was necessary mainly to: (i) accommodate increased consultancy and operating costs (from SDR 4.4 million to SDR 6.7 million; and from SDR 530,000 to SDR 622,000 respectively) over the additional two years of project implementation period; and (ii) supplement funds required to pay involuntary resettlement costs8 under the Resettlement Action Plan (RAP) – with IDA credit financing. The resettlement cost was originally to be fully funded by GoU but as the full contribution was still not availed by MTR, in order to avoid further delays in the implementation of civil works (which could not start before the payment of the associated involuntary resettlement cost), the Bank agreed with GoU to fund the shortfall from the IDA credit through reallocation of funding between components9.

28. Adjustments were made to project sub-components in response to the reallocation in funding and delay in project effectiveness. Several sub-component activities were dropped due to the decrease in funding available to support them (as IDA funds were directed to RAP costs, extended consultancies and additional operating costs, as explained above.) The sub-components which remained were those identified as having the highest priority, largest potential impact10, and no funding from other sources. Some of the sub-components which were dropped were planned to be taken up in future phases of the APL. The changes in project sub-components are summarized in the table below.

Original and Revised Project Sub-Components

Original Components Revised Reasons for (Project Approval) (After 1st Restructuring) Sub-Component Changes

Component 1: Institutional Development

• Human Resource Management• Human Resource Management and Ministry of Public Service and Development Development implemented an Integrated – training, general – training, general administration, Personnel and Payroll System administration, education education information system, (IPPS) information system, welfare & welfare & community service,

6 Contract execution/implementation delays across the board due to failure by Solicitor-General’s office to expeditiously approve/clear contracts. 7 The exact reason for GoU not being able to fully meet the co-funding contribution was unknown, but generally attributed to budget constraints or inavailability of alternative funding. While IDA funding was reallocated to cover the outstanding GOU contribution (mainly RAP costs) at MTR, an additional valuation conducted for the RAP (after the MTR) led to even higher RAP cost being assessed. After KCCA was formed it took over GoU’s responsibility for the Project’s RAP cost. The revised RAP cost - not covered through the IDA reallocation - was therefore financed by KCCA. 8 During the restructuring, the estimated full amount of outstanding RAP costs that need to be paid was US$1.684 million or SDR 1.155 million. 9 As approved by the IDA Land Committee in September 2010. 10 Priority and impact were determined mainly from the result of two strategic studies – the Kampala Drainage Master Plan and the Kampala Urban Traffic Improvement and Road Maintenance Plan - carried out under the NCRP.

community service, communication strategy, communication strategy, environmental management. environmental management. (HR management system dropped.) • Support to Financial Recovery No Change NA - Enhance revenue and management capacity, enhance expenditure management, expenditure control • Strengthening Service Delivery No Change NA - Public health and environment services, quality assurance for infra, urban planning (Kampala structure plan), InfoComm technology

Component 2: City Wide Infrastructure and Services Improvement

• Drainage system improvement Lubigi primary channel Lack of funding (escalated - Lubigi primary channel (total (total length 3.6km) construction costs) length 3.6km) - secondary channels (total (Secondary and tertiary drainage length 4km) channel works dropped) - remedial measures to 4 tertiary drainage “black spots” in various parts of the city. • Traffic management • (Traffic management dropped) Lack of funding (escalated – area traffic management construction costs) - junctions improvement • Road maintenance and Upgrading of about 12.00km11 of• New funding source from upgrading high priority gravel roads to central government through the - maintenance of about 26km bitumen standard Road Fund was made available of selected tarmac roads (Maintenance of roads dropped) to finance road maintenance. - upgrading of about 14.42km - of high priority gravel roads to bitumen standard • Solid waste management Solid waste management • Lack of funding (escalated - developing land adjacent to - Develop land adjacent to existing construction costs) existing site, site - landfill gas collection and - Design for new landfill flaring system, (Landfill gas collection and flaring - design for new landfill system dropped12) • Urban markets infrastructure • (Urban markets infrastructure • -Lack of funding (escalated - Provision of infrastructure for dropped.) construction costs); two markets (Kibuli and • -Land availability issues Kawempe) eg access, lighting • - ADB plan to finance the etc., detailed design for high development of seven markets priority markets in Kampala.

11 Namely Bukoto-Kisasi Road, Kalerwe Road, Kawempe-Mpererwe Road, Kimera Road, Soweto Road and Salaama Road. 12 An assessment on the potential yield of the landfill gas was carried out under the project.

• Implementation of the • No change • NA Resettlement Action Plan

Component 3: Project Implementation Support, Monitoring and Evaluation • Project Implementation No Change NA Support • Monitoring and Evaluation No Change NA • Annual Citizen’s Report Card No Change. NA • Staff and Councilor Survey No Change NA

Second Restructuring 29. The second restructuring (level 2) was completed on December 27, 2012 13 . and allowed for a further extension of closing date from December 31, 2012 to December 31, 2013. Delays in civil works, mainly due to compensation for resettlement issues and contractual issues, required a further extension of project closing in order for Component 2 works to be completed (challenges in implementation are further discussed below). No change in scope of work was required.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

Analytical

30. The analytical foundation and project design of KIIDP was in full alignment with the SFR-II, and thus enabled high ownership by the client. The project components and sub- components mirrored the two main categories of activities in the SFR-II (see table below) - Component 1 therefore directly supported the improvements in institutional efficiency while both Components 1 and 2 contributed to the implementation of priority activities identified in the SFR- II. In particular, the civil works in Component 2 were a selection of those identified as priority activities in the SFR-II.

31. In addition, many results indicators and APL triggers were borrowed from the SFR-II monitoring and evaluation framework. The project design was and remains highly relevant to the needs of the city, in response to the mainstream government strategy and framework. As the project design was intertwined with the drafting of the SFR-II (both occurred around the same time, and KIIDP was intended to support SFR-II), the wider public and stakeholder consultation undertaken for the SFR-II was also directly relevant to KIIDP. The consultations included an independent consultant review of the SFR, a high level workshop with major stakeholders, and creation of Kampala’s first-ever Citizens Report Card. The project scoping and preparations were also carried out with full participation of the key KCC staff across all directorates.

13 Date of countersigning by client indicating agreement to the Financing Agreement.

SFR-II Strategies & Priorities and KIIDP Project Design SFR-II KIIDP Components

SFR-II Strategies Priority Activities identified to implement SFR-II strategies

1. Institution policy 1. Institutional development Component 1: Institutional formulation and • Institutional restructuring Development (US$5.8 million) performance • Revenue enhancement • Human Resource Management • ICT • Support to Financial Recovery 2. Political support, • Urban planning • Strengthening Service Delivery management and teamwork 2. City-wide infrastructure and Component 2: Kampala City service improvement Infrastructure and Services 3. Communication and • Drainage system Improvement (US$28.5 million) corporate image • Traffic and road maintenance • Drainage system improvement building management • Traffic management • Solid waste management • Road maintenance and upgrading 4. Organizational reform • Urban markets infrastructure • Solid waste management • Urban markets infrastructure 5. Financial recovery 3. Civil society participation and • Implementation of the management Resettlement Action Plan 6. Works and physical • Support CSOs for effective planning participation Component 3: Project • Increase transparency (SFR) Implementation, Monitoring and 7. Public Health Evaluation (US$2.8 million) 4. Monitoring & Evaluation of • Project Implementation Support 8. Management systems SFR-II • Monitoring and Evaluation • Annual Citizen’s Report Card • Staff and Councilor Survey

32. Besides a strong alignment with the SFR-II, the analytical basis of KIIDP was also built upon previous projects and informed by studies conducted under them. Its focus on institutional improvements filled in the gaps and reinforced the efforts of past operations (UFUP, LGDP 1 and NCRP). In particular, the scoping and selection of the Component 2 infrastructure sub-projects were mainly based on two strategic studies carried out under the NCRP – the Kampala Drainage Master Plan and the Kampala Urban Traffic Improvement and Road Maintenance Plan. Under these two studies, qualified international consultants prioritized sub-projects which would address immediate needs of the city, and prepared the detailed design including draft bidding documents for these priority interventions. Unfortunately, as significant time elapsed from the preparation of these studies and sub-projects to the time that the implementation of KIIDP could begin, most of the detailed designs required updates. This took additional time and caused delays in implementation.

Assessment of project design

33. KIIDP was designed as the first of a three phase APL with the intention to strengthen and build institutions in order to create a foundation for sustainable infrastructure investments. The first phase primarily targeted institutional outcomes, while the infrastructure component was intended to be smaller and more targeted to enable the implementation agency to “learn-by-doing”. This is reflected consistently in its PDO, and throughout the design of the results framework and the APL pre-conditions and triggers for phase 2. The APL was designed to leave more substantial infrastructure works to its second and third phases, and although the APL instrument was discontinued, the follow-on operation, KIIDP2, has continued its alignment with the original thinking and included large scale infrastructure works with more substantial funding.

34. The project implementation arrangement was appropriate and relatively straight-forward, with one main counterpart (KCC, and later KCCA). The project also intended to mainstream the Project Coordination Unit (PCU) functions within the agency. This took varying forms under KCC and subsequently under KCCA. In KCC, the key consultants were hired by the PCU and attached under the various KCC directorates; they tended to act rather independently from the directorates. When KCCA was established, in-house staff was appointed to implement KIIDP and implementation was integrated into the agency. However, the staff had to work both on KIIDP and other KCCA work and was at times overstretched.

35. The project design made provisions for institutional reforms in anticipation of the impending constitutional changes – resulting in the KCC to KCCA transition. A specific clause was included in the Financing Agreement (FA) to first notify the Bank of the change and to ensure that, in consultation with the Bank, the new entity will be designated and assume all the responsibilities of KCC for the project. This put in place a vital transitional arrangement that ensured continuity of activities, and enabled a seamless transfer of KCC’s responsibilities and obligations for KIIDP to KCCA.

36. The original scope of works (with activities spanning 11 institutional improvements and 5 types of infrastructure works) was rather ambitious. However these investments were derived from the SFR-II and were intended to ensure alignment of objectives outlined in both documents. In addition, it was expected that a suite of complementary activities undertaken together would yield greater synergies and achieve better results especially in support of institutional improvements; and that rapid service delivery improvements were expected to address the urgent needs.

Assessment of risks

37. The project rightly recognized several risks affecting achievement of the PDO and the components. During project design, three risks were rated as high: (i) failure to develop and implement an effective fiscal discipline in KCC; (ii) change in current policies/Acts by central government that would affect Kampala’s ability to implement the SFR; and (iii) lack of capacity in Directorates to carry out project implementation activities effectively. The project was largely successful in mitigating these high risks, especially through provisions in the financing agreement (as discussed earlier), and building in the various Component 1 activities focused on supporting organizational development and governance, financial recovery and service delivery capacity. In addition, again by closely aligning the project design with the SFR II, this helped to increase the sense of ownership and strengthen client commitment, thus reducing potential implementation risks. (Despite these, implementation delays were still encountered – these are discussed in the subsequent sections.)

38. No quality at entry review for the project was carried out by the Quality Assurance Group (QAG).

2.2 Implementation

39. The project went through two project restructurings and was extended by 3 years in total, largely due to an initial delay in securing parliamentary approval14 and several implementation challenges, especially on contractual issues encountered for infrastructure works. The major factors that affected implementation are summarized here:

14 KIIDP was approved by the Board of Directors on November 6, 2007, signed on 20 February 2008 and became effective on 19 November 2008.

Factors outside the control of government or implementing agency - a. Contractual issues and delays due to external factors; b. Technical challenges of relocating utility services15 in order to clear the right of way for civil works; c. Inadequate staffing and capacity of KCC/KCCA, due to a general country-wide skills and human resource issue;

Factors generally subject to government control – a. Delay in Parliament approval of project; b. Delay and failure in fulfilling the total committed amount of counterpart funding to support RAP costs; c. Delay when procurement was being approved by the MoLG before being taken over by the dedicated PDU under KCC; d. Transition from KCC to KCCA and complete staff change (which is inherently disruptive and resulted in, to certain extents, the loss of institutional capacity and knowledge ); e. Unresolved structural issues in KCCA – friction between political and technical wing16.

Factors generally subject to implementing agency control - a. Inadequate staffing and capacity of KCC/KCCA; b. Ineffective enforcement and implementation of RAP, resulting in escalated RAP costs and delays; c. Contract management and supervision issues 17 : a general lack of capacity to effectively handle contract management and supervision, poor packaging of the civil works contract packages, ineffective due diligence conducted to verify contractors capacity and qualification, and delayed and ineffective procurement; d. Inadequate capacity to follow up with safeguards requirements.

40. A MTR was conducted in end 201018and appropriately recommended that the project should be extended by 24 months to allow completion of project activities. The MTR also provided valuable inputs for managing the implementation delays. For example, as the GoU was still unable to fully supply the committed funding to cover the RAP cost then, the team proposed the alternative of reallocating the IDA funds to cover this cost in order to prevent further implementation delays.

41. Although the various sub-component activities that were dropped or deferred inherently compromised or delayed the potential project impacts which could have been achieved – mainly

15 There is a common challenge associated with the identification and relocation of underground utility lines (water and telephone). These utility lines were laid many years back and there are no proper records or maps showing where they are located. 16 There are two wings within KCCA - a political wing headed by the Lord Mayor and an administrative wing headed by the Executive Director. The tension between the technical and political leadership of KCCA, and the governance environment is largely due to the interplay between the interests of central Government, KCCA locally elected leaders, and staff. 17 Various contractual and contractor issues were experienced in KIIDP which led to much delay of the infrastructure works. For example, several contracts were awarded to the lowest cost bidders, whom under quoted and also have insufficient capacity and capital fund flow to complete the assignment within the specific time and budget. This leads to delays and sometimes further complications from renegotiations and re-bidding of contracts for incomplete works packages. In other cases, inadequate supervision, court injunctions and other administrative reviews also delayed the infrastructure works and caused additional costs. 18 The MTR was conducted later than the April 30, 2009 date per the legal covenant due to delay in project effectiveness.

12 from the greater improvements to roads and drainage network, traffic management and new or enhanced markets and landfill gas collection and flaring system – it should be noted that the institutional objectives were largely achieved, including all triggers to move to APL 2.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

42. M&E Design: The M&E framework design had a good coverage of indicators to measure the two main project components. At the PDO-level, three out of the four original indicators were directly relevant to the PDO of institutional improvement, giving it the necessary emphasis. In addition, it was commendable that the targets of these three indicators were further increased during restructuring to set a higher bar of performance. It was also laudable to have aligned the indicators with the borrower’s own system – the SFR-II monitoring and evaluation framework, which allowed easier tracking and measurement, and laid the foundation for systematic assessment of progress at city level. However, one indirect result of this, was that some of the indicators cannot be solely attributed to actions taken/investments made under KIIDP. They relate to city wide impacts, influenced by a broader context and external actions (for example, in addition to specific measures supported by the project KCCA took additional measures (e.g. passed policies) which also boosted their financial performance).

43. A specific example is the indicator on “public satisfaction in service delivery”. This indicator did not provide an accurate and objective reflection of KIIDP impacts because it was measured using the Citizens Report Card Surveys (CRCS) which pertains to city wide improvements rather than KIIDP-specific infrastructure and services. It is thus not a good proxy of the public satisfaction with infrastructure and services provided by KIIDP. (This is further discussed in Section 3.2.) In addition, given the lower level of investment in infrastructure that was expected under the first phase of the APL, this indicator is likely to improve after completion of KIIDP II and as other donor and government funded investments are scaled up.Lastly, the two new PDO-level indicators which were added during the first project restructuring, while having useful intent, were not convincing PDO-level indicators, and perhaps could have been intermediate result indicators instead.

44. M&E Implementation and Utilization: KCCA was primarily responsible for all M&E data collection. The majority was made available through mainstream data collection performed by KCC/KCCA such as through their quarterly/annual financial reports and the mid-term and annual review reports. Several of the indicators, especially those on KCCA’s financial performance, have been mainstreamed into the overall KCCA corporate M&E framework, and would be monitored beyond the project period. Generally, reporting of the results was done regularly and consistently during implementation. For the two PDO-level indicators added during project restructuring, a baseline was established when they were first introduced. However, for the indicator measuring “average traffic growth on KIIDP upgraded roads”, as some road works were delayed and not fully completed by project closing (but were completed by end May 2014), the actual traffic count could not be carried out and has therefore only been estimated.

2.4 Safeguard and Fiduciary Compliance

Safeguards

45. Environment. KIIDP was an Environmental Category B project, triggering OP4.01 Environmental Assessment and OP 4.04 Natural Habitats. During project preparation, an Environmental Analysis (EA) of the planned infrastructure investments was carried out. The EA included an Environmental Management Plan (EMP) which outlined institutional arrangements for the implementation of appropriate mitigation and monitoring measures, as well as capacity building measures and cost estimates.

46. During project implementation, there were deficiencies in complying with environmental mitigation or safeguard measures. (The last five Implementation Supervision Report (ISR) until project closing rated overall safeguards as moderately unsatisfactory.) This was mainly due to KCC/KCCA lacking sufficient capacity in environment and social safeguards and had no relevant specialists in the Procurement and Disposable Unit (PDU) – which was responsible for carrying out this function. Therefore, KCC/KCCA was generally slow in following up with the necessary actions such as conducting the environmental audit which had been recommended since 2010 (but this was eventually completed by project closure).

47. Deficiencies in safeguards implementation were observed especially for the landfill operations, starting with initial land acquisition and including: (i) poor handling of the landfill acquisition with no proper due diligence undertaken prior to the purchase of the 6-acre extension landfill (existing encumbrances delayed KCC from taking possession until fully resolved); (ii) KCC/KCCA relied on temporary licenses19 to operate the landfill for a longer period of time than expected (while awaiting resolution of environmental issues), (iii) incomplete fencing around landfill site (which was eventually completed by project closure); and (iv) inadequate leachate monitoring and treatment system, not commensurate with the national wastewater treatment and discharge standard, posing health and safety risks to the public (landfill extension work including satisfactory leachate monitoring and treatment system was eventually completed by 31st January, 2014).

48. Social. OP 4.12 Involuntary Resettlement was triggered for the project. While a detailed RAP was completed during project preparation, there was a general lack of capacity in KCC/KCCA to manage the RAP process effectively. This, compounded by a difficult external environment, resulted in multiple challenges to the implementation of the RAP, including: (i) inadequate GoU funding for compensation; (ii) increased RAP costs from the original valuation, (iii) discrepancies and inadequacies in documentation; and (iv) weak enforcement by KCCA in fully securing the areas acquired. Three valuation reports20 were carried out throughout the project period, each with different compensation costs identified. As a result some RAP compensation remained outstanding at project closing - as of 31st December 2013, a total of 494 Project Affected Persons (PAPs) had been compensated with UGX 7,562,420,039 (approximately US$2.95 million), leaving a balance of 239 PAPs to be compensated and a total outstanding compensation of UGX 1,404,337,726 (approximately US$550,000). However, these outstanding payments were largely due to unsubstantiated claims. With a further round of public advertising and verification, all eligible claims were paid off at the time of concluding this ICR.

19 The landfill operation licenses are issued by the National Environmental Management Authority (NEMA). NEMA required the environmental audit to be completed before issuing the permanent license. 20 In the 1st and 2nd valuation reports, UGX 5,764,909,478 was approved as payment to the 689 PAPs on the Lubigi channel, phase I and II roads and Kiteezi landfill site. A total of UGX 4,850,017,492 was paid to 480 PAPs, leaving a balance of UGX 914,891,986 to be paid to 209 PAPs. During construction, additional properties and land were affected following a change in the design of the Lubigi channel, roads and junctions. Additional complaints were also registered by the people who had been assessed and/or compensated under the 1st and 2nd valuations. This resulted in the third and final supplementary valuation report comprising a total of 46 beneficiaries with a total compensation of UGX 801,848,287. In March 2013, out of the 46 beneficiaries, a total payment of UGX 312,402,547 was made to 16 of them, leaving a balance of UGX 489,445,740. The total outstanding RAP compensation resulting from the 1st, 2nd and 3rd valuation is therefore UGX 1,404,337,726. Out of these, UGX 1,187,067,720 did not have the necessary supporting documentation. In an attempt to conclude the exercise, KCCA publicly advertised the call for claimants and the deadline for submission of claims expired on February 19, 2014. 21 submissions were received, of which, only 10 had complete documentation and were eligible for further verification; the other 11 were requested to provide additional information by 7 June 2014, and if not, will be deemed as ineligible. Out of the 10 with complete documentation, 6 were found to be valid claims (totaling UGX21,376,675) and these have been paid for; while the other 4 were found to be ineligible as they had been previously paid off. Since the deadline for submission has passed, no further claims will be eligible.

Fiduciary

49. Financial Management. In general, the project complied with project financial management requirements and GoU financial regulations. The financial management system of the project was generally adequate to manage project resources and a Financial Management Manual was prepared as part of the Project Implementation Plan (PIP). Over the course of the project implementation, quarterly financial and progress reports were prepared and reviewed timely. Formal audits including review of financial statements were carried out annually in accordance with the International Standards on Auditing. The last available audit confirmed that “adequate records have been maintained concerning the project progress and financial statements were adequately supported and presented a true and fair view of the financial position of the project and of its operating expenditures” (as of 30 June 2013).

50. Procurement. The procurement processes, including procurement initiation, planning, publications, bidding, evaluation and award were generally compliant with the GoU law and IDA Procurement and Consultant guidelines. The PIP and the Procurement Plan as approved at project design was generally adhered to and complied with, and updates were made and approved by IDA as and when it has been required.

51. The project rightly assessed the procurement risk as High during project preparation and built in measures to mitigate this risk. These measures included the establishment of a Procurement and Disposable Unit (PDU) in KCC, preparation of overall project procurement plan satisfactory to IDA, providing training to staff, sensitizing councilors on the procurement system and law, amongst others. As KCC initially lacked procurement capacity, the procurement function was held by the MoLG until May 2010. This introduced another layer of approval and both contributed to, and resulted in, further unnecessary delays. A fully staffed PDU was established in KCC only at the first project restructuring, after which, the PDU took over the responsibility for all project procurement. The PDU greatly reduced the procurement turnaround time (time required for Contracts Committee clearances reduced from two months to two weeks) and improved progress on the implementation of project activities. However, the general lack of procurement capacity in KCC/KCCA 21 was a factor throughout the project. Delays were frequently experienced in the procurement process (the final two Implementation Status and Results Report both rated procurement as moderately unsatisfactory).

52. In general, KCCA had developed controls for Internal Audit, Financial Management and Procurement and made efforts to integrate financial management into the KCCA framework. The draft KCCA financial management manuals, internal audit manuals and procurement management manual are underway to be approved. Arrangements were also made to bring on board the Quality Assurance Unit within the Internal Audit Directorate to address weaknesses in covering project procurement activities.

2.5 Post-completion Operation/Next Phase

53. Preparation of a follow on project, KIIDP II has just been completed and Board Approval obtained on March 20, 2014. KIIDP II adopts the Investment Project Financing (IPF) instrument as the APL instrument is no longer available. The objective of KIIDP II builds upon the foundation of KIIDP and, along the same lines, seeks to “enhance infrastructure and institutional

21 The procurement audit conducted in October 2013 for FY2011/2012 found that “the PDU team lacked appreciation or proficiency in procurement management under IDA financed projects with limited experience especially in procurement processing for works contracts. This is based on the findings carried out on all assessed civil works files where there is little or no participation of the PDU with contract management issues.”

15 capacity of KCCA to improve urban mobility in Kampala.” KIIDP II continued the alignment with the original thinking of KIIDP as an APL, and focused its support on scaling up service deliver through large scale infrastructure works with more substantial funding. Its design has also incorporated various lessons learnt from KIIDP and built in appropriate measures to enhance results. This includes: (i) supporting the client to develop capacity for rigorous due diligence before award of contracts; (ii) preparing larger contract packages so as to attract bigger and more competent firms, with option of joint ventures or sub-contracting of critical elements such as drainage structures; (iii) improving capacity to manage safeguards, including technical and financial arrangements for timely compensation; and (iv) further strengthening of KCCA technical capacity through technical assistance and recruitment of critical staff in the relevant technical departments.

3. Assessment of Outcomes

54. As the PDO level indicators changed during the first restructuring, a split evaluation has been carried out.

3.1 Relevance of Objectives, Design and Implementation

55. The overall relevance of objectives, design and implementation is Satisfactory.

56. The overall project objectives was and remains highly relevant and consistent with the country’s current development priorities, as well as the Bank’s current country and sectoral assistance strategies and corporate goals (cross reference to section 2.1). At the country level, the project objectives were in line with the IDA’s long-term CAS for Uganda. The project objectives were highly in line with, and referred directly to supporting the implementation and priority activities of the SFR-II.

57. The project design addressed the objectives of the KCC/KCCA institutional reforms which were critical for delivering the much-needed services and infrastructure for Kampala. The project components mirrored the priority activities identified in the SFR-II, which the project sought to support (as discussed earlier under the project design section). The project design is commendable for striving to be fully integrated within the mainstream government strategy and framework. It is notable that KCCA maintained their focus on the reform agenda outlined in APL 1 and as a result by project closing all triggers for proceeding with the second phase of the APL (APL 2) were met.

58. The Bank’s implementation assistance was responsive to changing needs and context. When the new KCCA was formed to replace KCC, the PDO and project design were re-examined during the MTR and found to continue to be relevant to the new institution and needs of Kampala. In addition, as some sub-component activities were dropped due to a decrease in the funding balance for such activities, the team worked with KCCA to select those sub-projects of the highest priority and potential impact, based on previous studies conducted (for example, the Lubigi primary channel works was retained while secondary and tertiary drainage channel works were dropped) .

3.2 Achievement of Project Development Objectives

59. The project development objective was to “support the Recipient’s efforts to improve the institutional efficiency of Kampala City Council (KCC), through the implementation of the Strategic Framework for Reform of the KCC”. The PDO consisted of two inter-related parts, the achievements against each are further assessed below. (The complete results framework and details are included in the datasheet on page vii.)

(i) Improve institutional efficiency of KCC

60. The overall focus and objective of the project was to support the institutional improvements of KCC and later KCCA. Indeed, during the lifetime of the project, KCC/KCCA’s institutional efficiency improved dramatically despite the challenging broader environment. Impressive achievements have been made especially in two areas: KCC/KCCA’s (i) financial health and (ii) governance.

61. The financial health improvements were clearly demonstrated through three of the four original PDO-level indicators (ie. reduce overdue liabilities, increase in KCC own source revenue (OSR) and increase share of KCC own source revenue spent on service delivery). These indicators were more closely related to the PDO and therefore should receive a higher weightage in determining how well the PDO is achieved. These three PDO-level indicators were all met by the first restructuring and in fact, performed exceptionally well (although the indicator on “increase share of KCC own source revenue spent on service delivery” was slightly short of eventual target). KCCA greatly reduced its stock of overdue liability, from UGX 8 billion to 0 billion; and increased its OSR from UGX 22 billion at project start in FY2005/2006 to UGX 55.71 billion by FY2012/13 at the end of the project - a 166 percent achievement above the set target. This is largely a result of the successful implementation of KCCA’s Financial Recovery Action Plan (FRAP) and the notable improvements made in the collection of current property rates, local service tax and hotel tax.

62. In addition, substantial improvements in governance have been achieved, especially after the transition to KCCA. The last assessment of implementation of the KIIDP governance assessment and action plan (GAAP) showed a significant paradigm shift towards better governance and anti-corruption (GAC). The leadership team introduced a new results-driven working culture that included a dynamic and aggressive approach to addressing GAC issues. KCCA management has been taking action on a range of transparency and accountability issues, key of which is the enforcement of a zero tolerance policy for corruption, taking appropriate disciplinary actions22 on errant staff and immediate sanctioning of staff involved in corrupt activities. In addition, KCCA management introduced a performance based compensation system for key staff and staff is being appraised bi-annually using the balance score system. There is also enhanced engagement of citizen and civil society organizations (CSOs), as reflected by: (i) holding a series of grassroots neighborhood dialogues modelled along the traditional “baraza” meetings, (ii) establishing a formal public consultation process with annual budget meetings held for all stakeholders; and (iii) increasing public engagement through websites and social media. Many of these were a result of KIIDP inputs including, amongst others, the staff performance- based compensation system, enforcing the code of conduct, improvements in records management system of the general administration, various communication strategy implementation and trainings for staff.

63. KIIDP’s contribution to institutional improvements are mainly achieved through the following: (i) revenue enhancement activities supported under the project which led to increase in own-source revenue; (ii) technical assistance (TA) and policy dialogues conducted as part of the project which influenced changes in behavior and mindset of KCC/KCCA leadership and staff; (iii) effective systems put in place and supported under KIIDP to improve governance; (iv) capacity building activities such as training for staff, equipping them with necessary skills relevant to their functional roles; and (v) enhanced communication, consultation and rebranding activities supported under KIIDP which improved KCCA’s image and relation with the public. It is noted that the KIIDP served a demonstrative role and supplemented the overall institutional improvement efforts being concurrently undertaken through non-KIIDP initiatives and resources.

22 In FY2012/13 disciplinary actions were taken on a total of 31 KCCA staff (16 termination, 8 interdictions, 3 warnings, and 4 interdictions being lifted).

64. In addition, the institutional focus of KIIDP as a phase 1 APL is also illustrated by: (i) the key actions/conditions to be met as agreed during KIIDP project preparation23 (these included formal adoption of the SFR-II; approval of codes of conduct for KCC Councilors and Officers; preparation of the Kampala Financial Recovery Action Plan (FRAP) including completion of the valuation rolls of all properties in Kampala and setting up a revenue task team; completion of the process for organizational restructuring of KCC on the basis of the approved structure; and incorporation of the Kampala Citizens’ Score Card in the SFR); and (ii) APL triggers (such as performance based compensation system implemented for key staff, enforcement of the leadership code, media strategy implemented, reduce the stock of overdue liability, increase own source revenue, provision and release of adequate O&M budget, infrastructure investments selected based on sound appraisal and public consultation etc.) under the project. As the institution was required to meet these conditions and targets before embarking on the project and before moving to the second phase of the APL respectively, this provided large incentives to achieve the required institutional improvements

65. By the first restructuring in November 2010, great progress had already been made with regards to institutional reform of the then KCC - three of the four PDO-level outcomes more closely related to the PDO had all been achieved24. Due to the impressive achievement, the final targets for these three indicators were further raised during the restructuring, setting the bar even higher.

(ii) Implementation of the SFR-II.

66. Implementation of the SFR-II was the key vehicle chosen to support realization of the PDO, and it is an appropriate one. As discussed in Section 2.1, the SFR-II strategies largely addressed institutional improvements and it further identified priority activities in four key areas: (i) institutional development; (ii) city-wide infrastructure and service improvement; (iii) civil society participation and management; and (iv) monitoring and evaluation. As the overall achievement of the PDO on improving institutional efficiency has already been discussed above, the following discussion focuses on the achievements of the infrastructure and services.

67. One of the original four PDO-level indicators was directly related to the implementation of infrastructure ie. the “Increase in public satisfaction in service delivery in (a) Roads, (b) Drainage and (c) Solid waste”. This indicator has not been met by project closure. This indicator is measured by results from the CRCS25. It is noted that the CRCS does not pertain solely to KIIDP-specific infrastructure and services but measures performance in the whole of Kampala, which KIIDP infrastructure only contributed marginally to26. As such, the results from the CRCS could not be taken as a direct reflection of the beneficiaries’ satisfaction with infrastructure and services provided under KIIDP. While the indicator is not a good proxy of project impact, it is a key indicator of the SFR-II and a useful measure reflecting overall improvements of infrastructure and service delivery in the city. The CRCS showed that overall, there was vast improvement in

23 The project preparation was pre-conditioned to KCC taking certain initial measures towards implementation of the SFR to enable KCC to demonstrate its commitment to the reform agenda. 24 The PDO indicators achieved were: (i) Reduce overdue liabilities from Ushs 8 billion to Ushs 3 billion; (ii) The share of KCC own source revenue spent on service delivery increase from 10% to 30%; and (iii) increase in KCC own source revenue from Ushs 22 billion to Ushs 30 billion. 25 The methodology for the Citizens Report Card survey combined both quantitative and qualitative methods that included face-to-face interviews, focus group discussions, personal interviews and literature review. 26 For example, in terms of roads improvement, approximately 12km of road upgrading was targeted to be completed under KIIDP, compared to approximately 100km of roads reconstructed by KCC/KCCA during the same period, and in a city with about 1,200 km of road network in total.

18 the satisfaction level with KCCA services from 2005 to 2011 and 2012. Satisfaction levels have risen in the areas of solid waste, roads and drainage, which in fact coincide with the areas of infrastructure improvements undertaken in KIIDP. (Refer to Annex 5 for more detail.) In addition, two new PDO-level indicators added during the first restructuring were associated with measuring infrastructure implementation: (i) average traffic growth on KIIDP upgraded roads; and (ii) number of people directly affected by floods along Lubigi Channel. Both indicators were met by project closing.

68. However, some of the infrastructure works were not completed27 by project closure: (i) the Lubigi Channel works was 98% complete; (ii) three out of six roads were 100% upgraded (while Kimera Road was at 90% completion, Soweto Road at 75% completion and the funding of Salaama Road was taken over by KCCA during project implementation; all road works were completed by end May 2014); and (iii) solid waste management works were around 90% completed.

69. As implementation of the infrastructure works faced multiple challenges throughout the project, little progress had been made in the infrastructure works by the first project restructuring (mainly due to the delays in credit effectiveness and delays in RAP implementation, as explained earlier). The infrastructure work scope was then reduced during the restructuring as the balance in funding for such works was reduced (four out of eight intermediate level indicators were dropped as a result). This inherently reduced the potential impact that could have been achieved if the original scope of work was kept (however, several priority works have been moved to KIIDP II). After project restructuring, the implementation challenges were largely attributed to poor contractual management and supervision (as the then KCC had inadequate capacity) and insufficient contractors capacities (inadequate financial and equipment). Rigorous contract management measures came too late in the project implementation by the time of the new KCCA administration. (Factors affecting project implementation were discussed in Section 2.2.)

70. The infrastructure built under the project achieved visible, positive impacts. On the upgraded roads, the immediate impact included improved accessibility and better traffic flow. In addition, observations made during site visits and discussion with residents and road users post project completion revealed additional benefits such as: (i) general improvement in the environment (due to better road conditions and roadside drains provided), (ii) improved safety and security (due to the provision of sidewalks and street lights), and (iii) longer business hours enabled for the business and shops along the improved roads. For the Lubigi channel improvement, it allowed for better drainage, reduction in flooding in the Bwaise, Kawala and Kalerwe areas and other environmental benefits (such as reduced incidences of diseases and enhanced public health and environmental cleanliness). From focus group 28 conducted with communities in the area, respondents indicated that the construction has resulted in an immediate reduction in flooding. Lastly for the landfill improvements, it allowed for extended life and increased capacity of solid waste disposal.

3.3 Efficiency

71. The overall efficiency of the project is Satisfactory.

Economic and Financial Analysis of Components

72. For Component 1, the relevant PDO-level indicators performed exceptionally well – especially the stock of overdue liability was reduced from UGX 8 billion to 0 billion; and its OSR

27 KCCA has set aside budget within its own resources and will fund the necessary completion of remaining works. 28 Conducted as part of the CRCS 2012.

19 was increased from UGX 22 billion to UGX 55.71 billion. A potential economic analysis on this component will examine the performance of in a with-and-without project scenario. However, data to support such a counterfactual analysis is unavailable. As a proxy and taking the indicator on increase in OSR for KCC/KCCA, a comparison is made between the period before the project commenced and that during the project implementation. The results showed that the average annual growth rate of the OSR for the seven years (FY00-06) leading up to the start of the project was 6.4%. In contrast, that for the project period (FY0629-FY14) was at 12.2% - almost double that of the previous period. (See figure below.)

Comparison of OSR Annual Growth Rate Before and During KIIDP 60000

50000

40000

30000

UGX (Billion) 20000

10000

Year

73. In addition, there are two main sub-components in KIIDP which directly supported the outcome of institutional achievement: Organizational Development & Governance (project cost of US$1.46mil) and Support to Financial Recovery (project cost of US$0.16 mil), at total project cost of US$1.62mil. This is, comparatively a much smaller sum with respect to the leveraged gain – such as the OSR increase of approximately UGX33.71 billion (or approximately US$17 mil) (in addition to many other benefits as discussed earlier), demonstrating potentially very high efficiency (as noted earlier not all the institutional gains could be attributed solely to KIIDP.)

74. For Component 2, the economic analysis was conducted for the infrastructure works mainly for roads and drainage system (details of the analysis are included in Annex 3). Results of the project efficiency and economic analysis showed that the main infrastructure investments yielded largely positive NPVs with an overall EIRR of 29.8% for the roads improvements and approximately 17.5% for the Lubigi Channel.

Roads Improvement

75. The approach used for the economic analysis is the cost-benefit analysis of a “with” or “without project” case. The economic analysis is based on homogenous road sections, in terms of physical characteristics, traffic and road condition. The Highway Development and Management Model (HDM-4) was used as the analytical tool. The roads analyzed are those completed under KIIDP, including Bukoto-Kisaasi Road, Kalerwe-Tula Road, Kawempe-Mpererwe Road, Kimera Road and Soweto Road. The discount rate used for the analysis is 12 percent, and the analysis period is 20 years with the base year for the analysis as 2012.

29 Baseline was set using FY06 figures although project was approved in 2007.

76. The main benefits of the roads improvement are savings in vehicle operating costs (VOC) and savings in passenger travel time. Net benefits were estimated using HDM-4 which simulates road life cycle and vehicle operation conditions and costs for multiple road design and maintenance alternatives. Vehicle operating costs were for nine vehicle classes. Periodic maintenance and upgrading costs estimated in financial terms were converted into economic terms (net of taxes). The benefits are calculated in terms of savings in road user costs. It was found that the savings in VOC is US$17.37 million and the savings in travel time cost is US$3.00 million, both discounted over the analysis period. (It is assumed there are no savings in accident costs for the KIIDP road improvements as much anecdotal evidence in Africa suggest that the frequency of accidents may actually increase after unpaved roads are improved to tarmac surface as vehicle speed increases.) In addition, when compared with estimated benefits during appraisal, those at project closing were higher for both the savings in VOC and travel time cost.

77. The economic analysis of KIIDP road improvements at project closing found that the overall Net Present Value (NPV) is US$13.098 million with an EIRR 0f 29.8%, NPV/RAC ratio 1.31 and overall Benefit-Cost Ratio of 2.31. Three road projects yielded positive NPVs and EIRRs greater than the discount rate of 12% and two roads gave negative NPVs and EIRRs less than 12%. (As compared with analysis done during appraisal, phase 1 roads – Bukoto-Kisaasi, Kalerwe-Tula and Kawempe-Mpererwe all yielded much higher NPVs and EIRRs at project closing than the appraisal estimates. However, phase 2 roads – Kimera and Soweto roads had much higher actual construction cost per km and both yielded negative NPV. Overall, the EIRR at project closing is slightly less but close to that determined at appraisal. The net benefit at project closing is greater than that at project appraisal by US$4.45 million.) The approximate timing when the discounted cumulative net benefit of investments will become positive (i.e. the break- even point) was determined to be Year 7 (i.e. 2018 since the base year for this analysis is 2012).

Comparison of Economic Indicators for Roads at Appraisal and Project Closing

Road Economic At Appraisal At Project Comments Name Indicators (from PAD) Closing Bukoto - EIRR % 38 67.8 The net benefit at project closing is Kisaasi NPV (US$ mil) 2.113 10.372 almost 5 times higher than that at B/C Not available 5.36 appraisal. The difference is US$ 8.259 Unit Cost 403,333 779,636 million, notwithstanding the relatively US$ per km higher actual cost per km. Kalerwe - EIRR % 17 25.5 The net benefit at project closing is Tula NPV (US$ mil) 0.399 2.601 almost 6.5 times higher than that at B/C Not available 1.94 appraisal. The difference is US$ 2.202 Unit Cost 368,421 869,261.32 million, notwithstanding the relatively US$ per km higher actual cost per km. Kawempe- EIRR % 15 17.7 The net benefit at project closing is Mpererwe NPV (US$ mil) 0.191 0.738 almost 4 times higher than that at B/C Not available 1.37 appraisal. The difference is US$ 0.547 Unit Cost 333,333 873,736.55 million, notwithstanding the relatively US$ per km higher actual cost per km. Kimera2 EIRR % 32 7.9 The net benefit at appraisal is positive NPV (US$ mil) 0.225 -0.378 but the net benefit at project closing is B/C Not available 0.73 negative US$ 0.378 million. This can be Unit Cost 805,714.11 1 1,753,480.89 attributed to the very high actual US$ per km construction cost per km (more than twice the estimated unit cost). Soweto2 EIRR % Not analysed 9.6 This road was not included in the NPV (US$ mil) Not analysed -0.256 economic appraisal (not stated in PAD). B/C Not analysed 0.84 Unit Cost Not analysed 303,921.31 US$ per km

Overall3 EIRR % 32 29.8 The EIRR at project closing is slightly NPV (US$ mil) 8.648 13.098 less but close to that determined at B/C Not available 2.31 Appraisal. The net benefit at project Unit Cost Not available 1,027,621.21 closing is greater than that at project US$ per km appraisal by US$ 4.45 million. However, it is important to consider the notes below the table. Notes Used conversion of UGX1 = US$0.0005 according to PAD conversion 1 Based on estimated cost in 2007 2 Values assume fully completed roads. 3 For PAD the list includes other roads that were dropped (e.g. St Barnabas Road)

78. After being subjected to sensitivity analysis using 15% increase in construction and maintenance cost and 15% decrease in total benefits in both cases, the NPVs of the three roads remained positive and of the other two roads remained negative. A simultaneous increase of 15% in total construction and maintenance costs on one hand and a decrease of 15% in total benefits on the other resulted in an overall NPV of US$8.951 million at a discount rate of 12% and an overall EIRR of 23.1%, indicating that the selected projects represent a positive return on investment even in a worst case scenario.

Drainage system improvement

79. The Lubigi primary drainage system is 14km long with 17 secondary channels totaling 45km located within and outside the Kampala District boundary. Under KIIDP, the improvement of 3.6km of the Lubigi channel was implemented. The basis of the economic analysis of the drainage sub-component is the cost-benefit analysis of a “With Project” and a “Without Project”. The cost-benefit analysis evaluates the project capital and maintenance costs for the channel improvement, compared with the associated benefits of better drainage. The design of the channel is for a 10-year return storm period with an economic life of 40 years and the base year of analysis is 2011, at the start of project implementation, with actual construction period of 2.5 years. In addition, it is assumed: GDP growth rate at 5.5% per annum, population growth rate of 3.9% and inflation rate at 7.8% per annum. The cost-benefit evaluations of the drainage subcomponent are based on detailed data collected and presented in Kampala Drainage Master Plan (KDMP) in March 2003 with updated costs to December 2013.

80. The estimated cost for Lubigi channel under KIIDP is US$ 8,755,463 and the actual cost of implementation is US$ 11,633,655 (including consultancy services and resettlement compensation). A conservative value of 1% of capital investment costs has been assumed to cover the annual operating and maintenance costs for the Lubigi channel. The operational and maintenance costs are therefore US$ 116,337 per annum.

81. The main inferred benefits are both quantifiable and non-quantifiable. Among the quantifiable are: savings from prevention of road damage and damage to property and structures, prevention of disruption to commercial and industrial activities and traffic, additional income from rentals. In addition, notional amounts are assigned to savings in agricultural produce and reduced health and environmental impacts.

82. Investment in Lubigi channel yielded positive NPVs at US$6.5 million for the base scenario and EIRRs greater than 12%. The sensitivity analysis indicates that the implemented project has a positive return on investment even for the worst case scenario of 15% increase in cost and 15% decrease in benefits. In addition, the net benefit determined at project closing is much greater than the amount estimated at appraisal, at a difference of US$ 5.793 million. The approximate timing when the discounted cumulative net benefit of investments will become positive (i.e. the break-even point) was determined to be Year 15 (i.e. 2025 since the base year for this analysis is 2011).

Comparison of Economic Indicators for Lubigi Channel at Appraisal and Project Closing Economic At Appraisal At Project Comments Indicators (from PAD) Closing EIRR % 14.0 17.5 The net benefit determined from evaluation at NPV (US$ mil) 0.708 6.501 project closing is much greater than the amount estimated at appraisal. The difference is US$ 5.793 million.

3.4 Justification of Overall Outcome Rating

83. Based on all the assessment discussed earlier, the overall project outcome is rated Moderately Satisfactory, with a rating of Moderately Satisfactory as measured against the original PDO/targets and Moderately Satisfactory against revised PDO/targets (refer to split evaluation calculations in table below).

Overall Outcome Rating Ratings Against Original Against Revised PDO/Targets PDO/Targets Overall 1. Relevance Satisfactory Satisfactory Satisfactory Moderately Moderately Moderately 2. Achievements Satisfactory Satisfactory Satisfactory Moderately 3. Efficiency Satisfactory Satisfactory Satisfactory Moderately Moderately Overall Rating - Satisfactory Satisfactory Rating Value 4 4 - Weighted (% disbursed before/after 10.54%30 89.40% 99.94%31 revision) Weighted Value 0.42 3.58 4.00 Moderately Final rating (rounded) - - Satisfactory Note: Ratings and values- Highly Satisfactory=6; Satisfactory=5; Moderately Satisfactory=4; Moderately Unsatisfactory=3; Unsatisfactory=2; and Highly Unsatisfactory=1

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

84. The project contributed to poverty reduction, gender and social development. While no detailed analysis or data were conducted to demonstrate the poverty dimensions of the project, KIIDP benefitted all the residents, visitors and businesses of Kampala. As described earlier, improvements supported under KIIDP contributed to the more efficient functioning of Kampala, and therefore supports firm growth and job creation which in turn reduces poverty. In addition, attention to gender and community issues were reflected on various levels under KIIDP, including the project design (as a sub-component under Component 1 and as capacity building activities)

30 Project disbursement is US$3.54 million as on October 5, 2010, before the first project restructuring. 31 Total project disbursement is US$33.58 million i.e. 99.94% of the total US$33.6 million IDA credit.

23 and approach (adopting the Harmonized Participatory Planning Guidelines (HPPG) 32 ). The investments identified, prioritized and funded have been done in a participatory, transparent and accountable manner. Similarly, the same participatory processes were observed during implementation and for monitoring and evaluation. Related to this were the efforts in public consultations (“barazas” and CRCS) and the piloting of a gender community welfare policy under the KIIDP (this is awaiting the final approval for implementation).

(b) Institutional Change/Strengthening

85. KIIDP significantly contributed to strengthening the institutional efficiency and capacity of KCC/KCCA, as well as overall governance. The development objective of the project is directly linked to institutional change and improvements. In particular, Component 1 was designed to enhance the efficiency and effectiveness of KCC/KCCA and capacity/productivity of its staff while Component 2 supports this objective as well. (Refer to earlier sections.)

86. NA

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

87. No specific beneficiary survey or stakeholder workshop was conducted for KIIDP. However, throughout the project period, various stakeholder meetings (citizens’ forum and “barazas”) were held and two CRCS (in 2011 and 2012) on service level and quality for Kampala as a whole, were conducted. Various consultative and feedback meetings were also held with different stakeholders at ward and divisional levels.

88. In general, there was vast improvement in the satisfaction level with KCCA services from 2005 (which set the baseline for KIIDP) to 2011 and 201233. Even just focusing on 2011 to 2012, respondents who were either very satisfied or satisfied with KCCA services rose significantly from only 5% in the 2011 CRCS to 30% in 2012; the level of dissatisfaction has also fallen dramatically from 70% in 2011 to 25% in 2012. For specific areas including solid waste, roads and drainage, satisfaction levels have also risen. These coincides with the infrastructure improvements areas under KIIDP. (Refer to Annex 5 for more details.)

4. Assessment of Risk to Development Outcome

89. The likelihood of risks occurring which will be detrimental to maintaining the development outcome is Moderate.

90. All new and rehabilitated assets of KIIDP are expected to be managed and maintained by KCCA and the relevant division urban councils. Under the directorate of Engineering and Technical Services of the KCCA, budgetary provisions have been made to regularly repair and maintain the infrastructure built under the project, including the roads, Lubigi channel and the extension of landfill. Also, Kampala receives funding for road maintenance under the Road Fund34 which will ensure the sustainability of KIIDP roads.

32 The HPPG is a framework formulated and promoted by both local authorities and civil society in Uganda and has the aim of promoting citizen empowerment and social inclusion. 33 The Citizens Report Card Survey was conducted twice during the project period, in 2011 and 2012. While designed as an annual exercise, the lapse in the early years of KIIDP was mainly due to the transition from KCC to KCCA. 34 The Road Fund allocation to KCCA is assumed to increase by 5 percent per annum, taking FY2012/13 as the base year which will adequately cover the future maintenance of KIIDP roads.

91. Other relevant reasons which reduces the risk to development outcomes are: a. Strong commitment demonstrated by GoU and KCCA to the new Corporate Strategy, the successor to the SFR; b. Adequate capacity and resources of KCCA and the relevant division urban councils in managing and maintaining the infrastructure built under the Project especially given its relatively small scale; and Continuity of support. KIIDP was conceived as part of a larger program. Indeed, the Bank will continue to support institutional and infrastructure investments in Kampala through the follow-on KIIDP II. This will enable continued efforts in improving capacity development and ensure the sustainability of KIIDP outcomes.

92. However, the sustainability of the outcome is at risk from the relative instability of KCCA as a new organization. KCCA is yet to be fully staffed (currently at about 30% of the approved establishment) and faces friction between political and technical wing (as mentioned earlier under factors affecting implementation). This poses risks to the overall effective institutional functioning of KCCA and its delivery of infrastructure and services.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry

Rating: Moderately Satisfactory 93. KIIDP was a continuation of the Bank’s engagement with GoU in support of the development of Kampala City since the 1990s. The Bank appropriately identified the key issues and designed a highly relevant operation, adopting the country’s own strategy, and responded to the critical needs of the city. The project design was based on analytical work from previous projects and the process was carried out with full participation and buy-in from the GoU and KCC. However, the project could have been more conservative and designed to have fewer infrastructure activities and a longer implementation period. The indicator targets on “increase in public satisfaction in service delivery” could have been tailored to KIIDP work scope (documented as a subset of the CRCS) to allow better attribution of impacts.

(b) Quality of Supervision

Rating: Satisfactory 94. Supervision was adequate and intensive, averaging two full missions per year with continual support by staff in the Bank's Kampala office (averaging one meeting every fortnight). The team worked effectively with both KCC/KCCA teams during the transition period to ensure proper handing over and continued commitment towards achieving the PDO. Missions responded to implementation issues in a timely manner as they were emerging and repeatedly urged for necessary actions to be taken by the implementing agency. For example, restructuring and extension of project closing dates were initiated when the project was not on track to meet its development objective. The team also focused on contractual, procurement and supervision issues which prevented further such problems from arising. However, the revision of indicators and targets of the monitoring and evaluation framework during project restructuring could have been more rigorous (e.g. revise the public satisfaction indicator and targets).

95. Based on the assessment of performance at project entry and during supervision, the overall Bank performance is rated Moderately Satisfactory.

5.2 Borrower Performance (a) Government Performance

Rating: Moderately Satisfactory 96. The government remained committed to the project and its objectives throughout the project period. There was close cooperation between GoU, KCC/KCCA and the World Bank and responses from GoU were generally prompt. GoU continuously showed concern and followed up on the project progress with the implementation agency. However, project effectiveness was delayed for almost a year while waiting for parliament approval. Government commitment of project counterpart funding was not fully realized, and not paid on schedule, causing major delays in implementing the RAP, and thus negatively impacting the overall project implementation timetable and costs. (However, after KCCA took over the counterpart funding responsibility from GoU from 2012, it has adequately provided for the counterpart funding to the project since.)

(b) Implementing Agency or Agencies Performance

Rating: Moderately Satisfactory 97. There were inherent challenges during the transition from KCC to KCCA, mainly due to changes in leadership and direction, funding constraints, entire staff turnover, time required for staff recruitment, general uncertainty during the change, tension between outgoing and incoming KIIDP project team etc. Despite the statutory, administrative and structural changes during the transition, the implementing agency remained committed to the project and its objectives, devoting a core team of staff to oversee the implementation. The new KCCA KIIDP project team also demonstrated an improvement in attitude and performance. The KCCA team maintained close engagement with Bank staff, and its Executive Director showed keen interest regarding project implementation issues. A number of innovative solutions (such as use of escrow accounts to address working capital constraints for contractors) were employed leading to improvements in the implementation progress of civil works.

98. However, KCC/KCCA faced multiple challenges during implementation, largely due to inadequate staffing and capacity constraints. Lapses were encountered in the enforcement and implementation of RAP, resulting in escalated overall costs. Capacities in procurement, safeguard measures, contractual management and supervision were lacking during implementation and therefore, the environmental mitigation or safeguard measures recommended could not be taken up speedily sometimes.

99. Based on the assessment of government and implementing agency performance, the overall borrower performance is rated Moderately Satisfactory.

6. Lessons Learned

100. Strengthening country systems and strategy. The KCCA made impressive progress in governance and institutional efficiency. One key factor was that instead of re-inventing the wheel, KIIDP adopted, complemented and strengthened the organization’s strategy – the SFR and filled in the resource gap where needed. This was essential to the sustainability of the institutional objectives as it ensured ownership, was not disruptive, avoided duplication and increased efficiency in resource usage and implementation. It also allowed transferability and flexibility - where possible, when conditions matured and capacity was sufficiently built up, project activities were mainstreamed within the directorates of the KCCA. For example, activities to enhance revenue management capacity and expenditure management, and to establish a framework for reduction and control of expenditure originally planned under KIIDP were mainstreamed and

26 taken over by the relevant KCCA directorates during the course of the project. The process was largely seamless and ensured high sustainability and ownership.

101. Managing external influences and risks. KIIDP made a commendable effort in proactively addressing such external risks through its project design. These proved to be largely effective. This was demonstrated through two main examples: (i) provision of conditions in the FA to ensure continued commitment and uninterrupted implementation of KIIDP in view of the transition of KCC to KCCA; and (ii) building in a KIIDP specific GAC action plan (as part of a larger KCCA wide GAC action plan) to strengthen GAC around KIIDP and reduce corruptive practices which may affect the project impacts.

102. Sustaining Institutional and governance improvements. Broader lessons could be drawn from the improvements made by KCC/KCCA in its institutional efficiency and governance.

- Firstly, there is a strong continuity in the reform direction despite the transit of KCC to KCCA. The new entity did not abandon the original SFR, rather built upon it. The successor to the SFR- the Corporate Strategy (2013 – 2018) – has largely similar focus: (i) KCCA institutional development, (ii) infrastructure and civil works; (iii) social services development, and (iv) economic growth, sustainability and development. - Secondly, the SFR was comprehensive and adopted a multi-pronged approach, covering a range of areas from institution policy formulation and performance; political support, management and teamwork; organizational reform; management systems; communication and corporate image building; to financial recovery; works and physical planning and public health. - Thirdly, the implementation of the SFR, through translating the strategies into actual actions, was effective overall. A detailed analysis will be needed to properly study the multitude of reasons for effective implementation. However, a few of the observable factors were strong leadership and commitment and increased capacity of staff. KIIDP also played a key role contributing to the implementation.

103. Strengthening contract management and implementation.. One of the key challenges of the project was effective and timely implementation of the infrastructure works. Several lessons can be drawn from the experience:

- Rigorous client due diligence – Implementing agencies should enforce more stringent standards when conducting due diligence before contract award so as to avoid awarding contracts to firms which do not have the requisite technical staff, equipment and financial resources to deliver the task. - Contract packaging – Civil works contracts should be packaged in such a way that they provide sufficient incentives to attract competent firms with the necessary capacity and resources to deliver on the assignment. - Supervision – It is crucial for the implementing agency to check on the performance of both the contractor and supervising consultants directly and frequently. The team should also be vigilant in detecting any indication of any potential issues so as to take the necessary mitigation measures as soon as possible.

104. Ensuring timely RAP implementation. Ensuring that there is sufficient human and financial capacity for timely and complete implementation of RAPs requires upfront planning and preparation. Weak capacity in safeguard handling can significantly delay infrastructure investments, inflate project costs and may lead to adjustments to project design. Making adequate arrangements to prepare quality RAPs, setting aside funding for each RAP, and completing compensation in a timely manner are critical factors. While these were not sufficiently provided for in KIIDP, the design of KIIDP II RAP has taken the lessons learned into account. In particular, the following factors were considered: (i) streamlining the RAP preparation and implementation

27 process; (ii) specifying/clarifying cut-off dates early on; (iii) setting aside funding for compensation and resettlement; (iv) establishing clear grievance management mechanism; and (v) strengthening grievances resolution processes.

105. Application of lessons learned. The follow-on operation, KIIDP II, has taken into consideration the above lessons from KIIDP and put in place appropriate mitigation measures. These include: (i) supporting the client to develop capacity for rigorous due diligence before award of contracts, (ii) preparing larger contract packages so as to attract bigger and more competent firms, with option of joint ventures or sub-contracting of critical elements such as drainage structures, (iii) improving capacity to manage safeguards, including technical and financial arrangements for timely compensation, and (iv) strengthening of KCCA technical capacity through technical assistance and recruitment of critical staff in the relevant technical departments.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies

106. No specific issues raised (refer to Annex 7 for a Summary of Borrower's ICR).

(b) Co-financiers NA

Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Appraisal Estimate Actual Percentage of Components (USD millions) (USD millions) Appraisal 1-Institutional Development 5.80 6.93 119.48% 2-Kampala City Infrastructure 28.50 25.64 89.96% and Services Improvement 3-Project Implementation, 2.80 3.07 109.64% Monitoring and Evaluation Total Project Costs 37.10 35.64 96.06% Front-end fee PPF NA NA NA Front-end fee IBRD NA NA NA Total Financing Required 37.10 35.64 Total Undisbursed 0.023 Percentage Disbursed 99.94%

(b) Financing

Actual Appraisal Expenditure Type of Percentage Source of Funds Estimate (including Cofinancing of Appraisal (USD millions) committed) (USD millions) Parallel Borrower 3.50 2.06 58.85% Co-financing International Development 33.60 33.58 99.94% Association (IDA) Total 37.10 35.64 96.06%

Annex 2. Outputs by Component

Comments Actual Components/ Final Outputs (including outputs designed at Expenditure Tasks appraisal but not delivered) (USD)

Component 1: Institutional Development Focus on institutional development activities that support organizational development and governance, the implementation of the Financial Recovery Action Plan, and actions to enhance effectiveness of service delivery.

Component 1.1 Organizational Development & Governance  Training (refer to detailed table HR Management System was below.) dropped during project -Total number of staff trained: restructuring as the Ministry of 76 Public Service rolled out the -Technical Cooperation with Integrated Personnel and Payroll Hyderabad Municipal System (IPPS). Corporation. (Exchanges through visiting delegations) Visit to Hyderabad took place between 19th and 25th July 2010 in Israel and Cape Town.

 Performance-based Human Resource compensation system $582,000 Management (Performance based compensation system for key staff being fully implemented.)

 Code of Conduct The staff code of conduct is being enforced. In FY2012/13 disciplinary actions were taken on a total of 31 KCCA staff (16 termination, 8 interdictions, 3 warnings, and 4 interdictions being lifted.)

 Records management system (in legal department),  Records management equipment General  SFR performance workshops $155,722 Administration  Completing strategic plan development process Printers, 25 vehicles were procured.  PR Strategy The following items were not  Public consultations & implemented/deferred: Stakeholders engagements – 5  "Knowledge, attitudes and Implementation of barazas & workshops perception survey" in end 2010 Communication  Publicity of new Mission,  Complaints management system $365,719 Strategy Vision & Core Values;  Customer care desks Rebranding; Unveiling new  Client Charter corporate identity;  communication equipment

Education Information System for Education  PC, Vehicles $39,999 KCC was dropped.  Piloting gender community Gender Welfare & welfare policy Community  Implementation support of $321,296 Development RAP (incl. training, legal services) Component 1.1 Sub-Total $1,464,736 Component 1.2 Support to Financial Recovery - Enhance revenue and management capacity, enhance expenditure management, expenditure control Various activities on enhancing revenue and management Support to  PCs, Vehicles capacity, enhancing expenditure Financial  A study on documenting owner management and expenditure Recovery occupied costs control were mainstreamed and taken up directly by KCCA as they acquired sufficient capacity. $160,707 Component 1.2 Sub-Total $160,707 Component 1.3 Strengthening Service Delivery

Strategic Plan for  HIV/AIDS workplace strategy Health &  Capacity Building for EMP Environment  Environment audit Services  Vehicles, PC $414,806  Quality assurance system for Works infra; (Engineering  Vehicles, PC Services)  Engineering software $298,328  Update Kampala Physical Urban Planning & Development Plan;

Land Management  Hardware/software - GIS  Vehicles $3,789,022  Extension of network; IT equipment (Network servers, radios, UPS, Routers and switches ICT  75 computers, 5 multipurpose photo copiers, 75 IP phones, 2 smart board screens and a 65” LED smart screen  Software $672,992 Component 1.3 Sub-Total $5,175,148 COMPONENT 1 SUB-TOTAL $6,800,591 Component 2: Kampala City Wide Infrastructure and Services Improvement Component 2 will finance infrastructure mainly focusing on rehabilitation of high priority infrastructure which were identified as critical to maintaining the productivity and welfare of the City and that the proposed activities are ready for implementation. The objectives of the physical investments are the preservation of the current assets and arrest the deterioration of the assets. It will enable KCC to be a functioning capital city and position itself to attract investors. Lack of funding (escalated construction costs) led to dropping Lubigi primary channel Drainage Works (i) secondary channels (total $11,755,148 (total length 3.6km) length 4km); and (ii) remedial measures to 4 tertiary drainage “black spots” in various parts of

the city.

Lack of funding (escalated Urban Traffic construction costs) led to dropping Nil $0 Improvements of: (i) area traffic management; and (ii) junctions improvement. Upgrading of 11.81 km of roads. Lack of funding (escalated (Namely Bukoto-Kisasi Road construction costs) led to dropping (3.0km) from Kira Road to Kisasi of: i) maintenance of roads; and ii) Road, Kalerwe Road (3.27 km) and dropping of incomplete from Gayaza Road to Tula Road, Salaama road from KIIDP (cost to Kawempe-Mpererwe Road complete taken over by KCCA) Road Maintenance (2.46km) from Bombo Road to $11,905,563 & Upgrading Gayaza Road, Kimera Road (0.90km) from Apollo Road to Kawala Road, Soweto Road (1.22km) from Gaba Road to Lukuli Road and Salaama Road (0.96km) from Wavamuno Road to Kabaka’s landing site.) Developed land adjacent to Landfill gas collection and flaring existing site (Kietz Landfill); system dropped. Solid Waste Design for new landfill was $1,977,481 Management dropped due to unavailability of land. KCCA is in the process of acquiring land. Originally targeted for provision of infrastructure for two markets (Kibuli and Kawempe) eg. access, lighting etc. and detailed design for high priority markets. Markets Nil This was dropped due to: • Lack $0 of funding (escalated construction costs); • Land availability issues; and • ADB had a plan to finance the development of seven markets in Kampala. COMPONENT 2 SUB-TOTAL $25,638,192 Component 3: Project Implementation Support, Monitoring and Evaluation (US$2.8 million) Component 3 will support project management and M & E activities. Operating costs, personnel, equipment, Project Audit, MTR, Project Support Study, ICR Preparation, Procurement Audit $2,104,030  KCC M&E framework produced. Economic Planning  2 Citizen Score Cards $124,825 Unit  Staff & Council Surveys conducted Project Preparation Facility $973,900 COMPONENT 3 SUB-TOTAL $3,202,755 PROJECT TOTAL $35,641,538

Summary of Training under KIIDP (KCC) Course Dates and Location Number of Cost in Participants US$ Monitoring and Evaluation February 15-March 15, 2010, 2 18,616 Durban, South Africa Design and Implementation of a Performance April 19-30, 2010, Mombasa, 3 19,254 Management System Kenya Performance Auditing May 3-14, 2010, Mbabane, 2 13,948 Swaziland Goods and Equipment Procurement June 7-25, 2010, Mombasa, Kenya 3 34,515 Programme Environmental Management July 5-30, 2010, Lilongwe, Malawi 2 26,675 Strategic Environmental Assessment (SEA) August 9-20, 2010, Arusha, 5 31,840 Tanzania Computer assisted Financial Management 18th April – 13th May 2011 2 20,090 Procurement procedures for World Bank November 1-12, 2010, India 5 48,801 aided projects Total Number of Staff Benefiting and Cost 24 213,739

Summary of Training under KIIDP (KCCA)

Names Course/Program Institution Cost in US$

1 Harriat Mudondo Exposure visit Municipal of Cape Town 2,971 2 Jennifer Kaggwa Exposure visit Municipal of Cape Town 2,971 3 Kaujju Peter Exposure visit Municipal of Cape Town 2,971 4 Bolingo Robert Exposure visit Municipal of Cape Town 2,971 5 Mpaata Elizabeth Exposure visit Municipal of Cape Town 2,971 6 Mutyaba Robert Exposure visit Municipal of Cape Town 2,971 7 Ndagimana Richard Exposure visit Municipal of Cape Town 2,971 Kapan Norton Balanced 8 Musoke Patrick Strategy Management (Boot camp) 15,306 S.Card Kapan Norton Balanced 9 Tumwebaze Charles Strategy Management (Boot camp) 15,306 S.Card Kapan Norton Balanced 10 Nantamu Simon Strategy Management (Boot camp) 15,306 S.Card 11 Jill Aijuka Property & Asset Management ESAMI 10,094 12 Naggayi Vanessa PR and customer care ESAMI 6,085 Modernising HRM & 13 Mbatudde Shiela ESAMI 8,529 Development 14 J.S Musisi Exposure visit - Israel Benchmark 3,381 15 Charles Ouma Exposure visit - Israel Benchmark 3,381 16 Jacqueline Asiimwe Exposure visit - Israel Benchmark 3,381 17 Bidong Bosco Bernard Exposure visit - Israel Benchmark 3,381 18 Bwambale Eddger Exposure visit - Israel Benchmark 3,381 19 Prisca Asiimwe Exposure visit - Israel Benchmark 3,381 20 Isaac Sempebwa Exposure visit - Israel Benchmark 3,381 South Africa - Compensation & 21 Thomas Ssentongo ESAMI 6,238 Benefits

22 Richard Lule South Africa - Org. Dev. IMTC 7,937 Africa Institute for 23 Nuwe Saison Swaziland - PCA 4,946 Capacity Development South Africa - Protocol and Events 24 Bukirwa Juliet Walakira IMTC 8,219 Management 25 Josephine Mukasa South Africa - Gender IMTC 5,385 26 Kabatabire Donny Swaziland - PCA Africa Institute 7,066 London - Modernizing Public 27 Jennifer B. Kaggwa Ripa 12,884 Institutions London - Modernizing Public 28 Phoebe Lutaaya Ripa 12,884 Institutions 29 Mudondo Harriet Uganda/ISRAEL UMI 9,080 30 KITONSA Edward Uganda/ISRAEL UMI 8,864 31 Edison Maseruka Uganda/ISRAEL UMI 8,864 32 Elizabeth Kamanyire Uganda/ISRAEL UMI 8,864 33 Robert Nowere Uganda/ISRAEL UMI 8,936 34 Moses Wasswa Uganda/ISRAEL UMI 8,864 35 Prosper Lwamasaka Uganda/ISRAEL UMI 8,864 36 Nambi Diana Uganda - Land Acquisition World Bank 919 37 Faridah Kiggwe Uganda World Bank 919 38 Ndiwalana Robert Uganda - Land Acquisition World Bank 919 39 Grace Abenitwe Uganda - Land Acquisition World Bank 919 40 Asiimwe Christine Uganda - Land Acquisition World Bank 919 Hospitality Corporate 41 Politicians 45,632 Governance Consultants Corporate 42 Politicians 8,654 Governance 43 Disaster Preparedness Uganda 6,000 M & E of projects in Private and 44 Luzinda Janet South Africa 8,340 Public Sector Project and program management, 45 Ishaq Mawanda Setym 10,971 monitoring and control Effective Leadership and project 46 Charles Tumwebaze Setym 10,506 team management 47 Innocent Silver Project management master class USA 9,437 48 Henry Kikonyongo ISO 26000 Project management Kenya 600 Strategy management and business 49 Patrick Musoke Dubai 10,499 development Cost analysis to support strategic 50 Fred Andema Dubai 7,110 decisions 51 Francis Waligwa Budgeting and cost control Dubai 7,110 Building leaders in Urban 52 Kizza Micheal Seoul 9,650 Transport Planning Jacob Betubiza Building leaders in Urban 53 Seoul 9,650 Byamukama Transport Planning TOTAL 391,739

Annex 3. Economic and Financial Analysis

A. METHODOLOGY AND ASSUMPTIONS FOR ECONOMIC ANALYSIS

1. For Component 1, the two most relevant PDO-level indicators both performed exceptionally well - the stock of overdue liability was reduced from UGX 8 billion to 0 billion; and its OSR was increased from UGX 22 billion to UGX 55.71 billion. A potential economic analysis on this component will examine the performance of these two indicators in a with-and-without KIIDP scenario. However, data to support such a counterfactual analysis is unavailable. As a proxy and taking the indicator on increase in OSR for KCC/KCCA, a comparison is made between the period before the project commenced and that during the project implementation. The results showed that the average annual growth rate of the OSR for the seven years (FY00- 06) leading up to the start of the project was 6.4%. In contrast, that for the project period (FY0635-FY14) was at 12.2% - almost double that of the previous period. (See table and figure below).

Comparison of OSR annual growth rate before and during KIIDP 60000

50000

40000

30000

UGX UGX (Billion) 20000

10000

Year

Year 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 13/14 Total Local Revenue (UGX Billion) 14433 18276 15816 21342 20409 24274 22251 24301 27804 30230 38296 44596 41690 55710 Average Annual Growth Rate (%) 6.4 12.2

2. In addition, there are two main sub-components in KIIDP which directly supported the outcome of institutional achievement: Organizational Development & Governance (US$1.46mil) and Support to Financial Recovery (US$0.16 mil), totaling US$1.62mil. This is, comparatively a much smaller sum compared to the leveraged gain – such as the OSR increase of approximately US$17 mil (in addition to many other benefits as discussed earlier), demonstrating potentially very high efficiency. (It is noted that not all the institutional gains could be attributed solely to KIIDP.)

3. For Component 2, the economic analysis was conducted for the infrastructure works under the three categories of intervention:

35 Baseline was set using FY06 figures although project was approved in 2007.

 Roads improvement, and  Drainage system improvement  Solid Waste improvement

1. Roads Improvement

1.1 Analytical Framework and Tool

4. The approach used for the economic analysis is the cost-benefit analysis of “with” or “without project” case. The economic analysis is based on homogenous road sections, in terms of physical characteristics, traffic and road condition. The list of roads considered for economic analysis is given in Table 3.

5. HDM-4 was used as the analytical tool for this project. The HDM-4 analytical framework is based on the concept of pavement life cycle analysis, which is typically 15 to 40 years. This is applied to predict road deterioration, road works effects, road user effects and socio-economic and environmental effects (Odoki and Kerali, 2000).

6. After its construction, a road pavement deteriorates as a consequence of several factors, most notably: traffic volume and loading, pavement design, material types, construction quality, environmental weathering and the effect of inadequate drainage systems. The rate of pavement deterioration is directly affected by the standards of maintenance applied to repair defects on the pavement surface or to preserve the structural integrity of the pavement thereby permitting the road to carry traffic in accordance with its design function. Consequently, in addition to the capital costs of road construction, the total costs that are incurred by road agencies will depend on the standards of maintenance and improvement applied.

7. The impacts of the road condition (as well as the road design standards) on road users are measured in terms of road user costs (RUC), and other social and environmental effects. RUC comprise: vehicle operation costs (i.e., fuel, lubricating oil, parts consumption, maintenance labour, tyres, depreciation, crew and overhead), costs of travel time for both passengers and cargo due to road condition and traffic congestion, and costs to the economy of road accidents (i.e., loss of life, injury to road users, damage to vehicles and roadside objects). The social and environmental effects comprise: vehicle emissions, energy consumption, traffic noise and other welfare benefits to the population served by the roads.

8. The interacting sets of costs, related to those incurred by the road authority and those incurred by the road users, are added together over time in discounted present values. Economic benefits are then determined by comparing the total cost streams for various maintenance and construction alternatives with a base case, typically a ‘do nothing’ or minimum maintenance scenario. For this research, economic benefits were calculated as the difference between the do nothing option and the various scenarios for both options. The HDM-4 model was used to simulate future changes to the KIIDP roads from current conditions. The reliability of the results is dependent upon two primary considerations.

 How well the data provided to the model represent the reality of current conditions and influencing factors, in the terms understood by the model; and,

 How well the predictions of the model fit the real behaviour and the interactions between various factors for the variety of conditions to which it is applied.

Application of the HDM-4 model thus involves two important initial steps:

 Data input: a correct interpretation of the data input requirements, and achieving a quality of input data that is appropriate to the desired reliability of the results.

 Calibration of output: adjusting the model parameters to enhance the convergence of the computed road behaviour with that observed in the field for the various interventions. Calibration of the HDM model focuses on the components that determine the physical quantities, costs and benefits predicted by the analyses.

9. Since HDM-4 is designed to be used in a wide range of environments, it needed to be configured to reflect the situation in Kampala Capital City Area. The data for this relates to traffic flows, climate zones and road types. Calibration is intended to improve the accuracy of predicted pavement performance and vehicle resource consumption. A fundamental assumption made prior to using HDM-4 is that the pavement performance models will be calibrated to reflect the observed rates of pavement deterioration on the roads where the models are applied.

10. The calibration data used were obtained from Uganda National Road Authority (UNRA). For this level of analysis, this together with HDM-4 default data was considered adequate.

1.2 Data Requirements

The main data sets required as inputs for HDM-4 analyses are categorised as follows: (i) Road network data: include inventory, geometry, pavement type, pavement strength, road condition (ii) Vehicle fleet data: include vehicle physical characteristics, tyres, utilisation, loading and performance. (iii) Traffic data: include details of traffic composition, volumes and growth rates, speed-flow types and traffic flow pattern. (iv) Road works data: include a range of construction and maintenance work items together with their unit costs. (v) Economic analysis components and parameters

11. The sources of data used in this study included the following: Kampala Capital City Authority, Uganda National Road Authority, previous studies conducted in Kampala, Internet literature review and HDM-4 parameter default values.

Road Network Data 12. The KIIDP roads were defined as a series of homogeneous road sections with unique characteristics. The list of sections studied and the key data requirements are given in Table 2. A major assumption made in this study was that the data used was reasonably accurate for this level of analysis. The overall confidence level in the project data used have been qualitatively assessed and categorised by the Consultant as “Medium”.

13. The KIIDP roads analysed are: (i) Bukoto-Kisasi Road (3km) from Kira Road to Kisasi Road, (ii) Kalerwe-Tula Road (3.27 km) from Gayaza Road to Tula Road, (iii) Kawempe-Mpererwe Road (2.46km) from Bombo Road to Gayaza Road, (iv) Kimera Road (0.90km) from Apollo Road to Kawala Road, and (v) Soweto Road (1.22km) from Gaba Road to Lukuli Road. Salaama Road (0.96km) has not been completed with KIIDP funds.

Vehicle Fleet Data 14. A representation of the vehicle fleet that use the North-South Corridor was based on grouping vehicles of similar characteristics and the types of goods they carry. This resulted in the

following 10 vehicle types: (i) Cars (ii) Matatu Mini Bus (iii) Medium Bus (iv) Four-wheel Drives and Pick-up (v) Light Trucks (vi) Medium Bus (vii) Medium Truck (viii) Heavy Truck (ix) Articulated Truck & Trailers, and (x) Motorcycles. The key vehicle fleet data used in this study were obtained from UNRA and these are presented in Table 3. HDM-4 default data were used where local data were not available.

Traffic Data 15. The traffic data used in this study includes annual average daily traffic (AADT) and composition by vehicle types for each road section, and average traffic growth rate. The AADT data was estimated on the basis of road functional class and data obtained from KCCA.

16. Details of two-way AADT including traffic composition for each of the roads studied are given in Table 4. Traffic growth rate is assumed to be 5% per annum.

Road Works and Unit Costs 17. The primary sources of the unit cost data were KCCA and UNRA. Table 5 shows the road work costs and a summary of the unit costs used for future periodic and routine maintenance.

Table 2: KIIDP Roads ID Road Length Road Class and AADT Road Condition Type of Implementation Costs (US$) Name (Km) Surface Class Intervention Period Before Current Before Current Start End Estimated in Actual (2011) (2014) (2011) (2014) 2007 1 Bukoto - 3.00 Collector road C B Poor Good Full upgrade Feb Feb 2013 2,130,522.6 2,338,908.5 Kisaasi (C) from gravel to 2012 2-lane single paved carriageway bituminous Unsealed standard 2 Kalerwe - 3.27 Local road (D) D B Poor Good Full upgrade Feb Feb 2013 2,730,042.6 2,842,484.5 Tula 2-lane single from gravel to 2012 carriageway paved Unsealed bituminous standard 3 Kawempe - 2.46 Local road (D) D B Poor Good Full upgrade Feb Feb 2013 2,245,335.8 2,149,391.9 Mpererwe 2-lane single from gravel to 2012 carriageway paved Unsealed bituminous standard 4 Kimera 0.90 Local road (D) D C Poor Good Full upgrade Feb Dec 2013 725,142.7 1,578,132.8 2-lane single from gravel to 2012 carriageway paved Unsealed bituminous standard 5 Soweto 1.22 Local road (D) D C Poor Good Full upgrade Feb Dec 2013 950,269.4 1,869,988.4 2-lane single from gravel to 2012 carriageway paved Unsealed bituminous standard 6 Salaama 0.96 Local road (D) D D Poor Fair Full upgrade Feb Has not 674,152.8 Not 2-lane single from gravel to 2012 been available carriageway paved completed Unsealed bituminous standard

Table 3: Vehicle Fleet Unit Costs (in US$) Vehicle Type New Replace- Fuel Lubricant Maintenance Crew Annual Annual Passenger Cargo Passenger Vehicle ment (per (per litre) Labour (per Wages Overhead Interest Non-Work Holdin Work Time Price Tyre litre) hr) (per (%) Time (per g (per (per hr) hour) hr) hr) 06-Light truck 25,000 75 1.30 3.00 0.65 0.65 1,200 12.00 0.65 0.26 0.01 02-Four Wheel Drive 40,000 75 1.30 3.00 0.65 0.65 1,200 12.00 4.00 1.60 0.00 09-Articulated Truck & 130,000 400 1.30 3.00 2.24 1.62 3,050 12.00 0.65 0.26 0.03 Trailer 04-Medium bus 70,000 100 1.30 3.00 0.65 0.82 2,020 12.00 0.65 0.26 0.00 10-Motorcycle 900 35 1.30 3.00 0.17 0.17 110 12.00 0.65 0.26 0.00 05-Large bus 80,000 300 1.30 3.00 2.24 1.62 2,870 12.00 1.42 0.57 0.00 03-Matatu 33,000 60 1.30 3.00 0.65 0.82 1,380 12.00 0.65 0.26 0.00 01-Car 20,000 50 1.30 3.00 0.65 0.65 650 12.00 4.00 1.60 0.00 07-Medium truck 50,000 150 1.30 3.00 0.65 0.82 960 12.00 0.65 0.26 0.02 08-Heavy truck 95,000 270 1.30 3.00 0.65 0.82 1,330 12.00 0.65 0.26 0.03

Table 4: Roads Hierarchy and Traffic Levels Code Road class name Traffic Functionality Attributes KCCA Traffic movement is a primary function No property access; Over 20000 Speed limits 80 to 100 km/hr; Urban expressway U Representative No local transit service; AADT 30,000 Pedestrians and cyclists prohibited; Grade-separated intersections (no traffic signals) Traffic movement is a primary function Over 20000 Subject to access controls; Representative Greater than 20,000 vehicles per day; Major arterial road A AADT 25,000 Public transport route for Bituminous Speed limits 50 to 60 km/hr; roads Sidewalks on both sides; may have bicycle lanes

Traffic movement is a primary function 8000-20000 8,000 to 20,000 vehicles per day Representative Public transit route AADT 14,000 Speed limits 40 to 60 km/hr Minor arterial road B for Bituminous No “Stop” signs; main intersections roads and 1000 controlled by traffic signals; for Unsealed Sidewalks on both sides; may have bicycle roads lanes

2500-8000 Provide access to property and traffic Representative movement AADT 5,000 for 2,500 to 8,000 vehicles per day Collector road C Bituminous roads Public transit route and 750 for Signalized intersections at arterial roads; Unsealed roads Sidewalks on both sides of the road 0 – 2500 Provide access to properties Representative Less than 2,500 vehicles per day AADT 1,000 for Local road D Low traffic speed; Bituminous roads No public transit routes and 400 for Sidewalks on at least one side of road Unsealed roads

Table 5: Road Works and Unit Costs

Financial Economic Work Type Description Costs Units Costs (US$) (US$)

Repair of surface distresses such as 30.50 Patching Potholes potholing, wide structural cracking 35.00 m2 and ravelling

Edge Break Repair Patching edge failures on paved roads 30.50 35.00 m2

Single sealing of the carriageway with shape correction in order to delay Surface Dressing 3.91 4.6 m2 major intervention and to renew the skid resistance.

40mm overlay to existing asphalt 40mm Overlay 40.48 47.62 m2 concrete road.

Reconstruction of existing surface Reconstruction (STGB)1 treatment road comprising double 683,333.00 803,922.00 Per Km surface dressing on granular base

Pavement reconstruction of existing asphalt concrete road comprising Reconstruction (AMGB)2 800,000.00 941176.00 Per Km 50mm asphalt concrete surfacing on granular base.

Includes shoulder repairs, vegetation Miscellaneous Works for control, road sign repairs and Per km per 4,250.00 5,000.00 Paved Roads replacement, line marking, guardrail Year repair and replacement, etc.

Includes shoulder repairs, vegetation Miscellaneous Works for control, road sign repairs and Per km per 1,750.00 2,000 Unsealed Roads replacement, line marking, guardrail Year repair and replacement, etc.

Regravelling existing unpaved road to Regravelling 72 85 m3 a final grave thickness of 150mm

Heavy motorised grading of unpaved Grading roads with water and light roller 10,417.00 12,255.00 Per Km compaction

Spot regravelling to unpaved roads to Spot Regravelling 71 84 m3 replace 80% of annual material loss

1. STGB refers to road pavement type comprising Surface Treatment on Granular Base 2. AMGB refers to road pavement type comprising Asphalt Mix on Granular Base

1.3 Economic Analysis Components and Parameters

18. The study considered one improvement alternatives for each road section which was defined and compared against the Base Case. Thus for each section, two alternatives were defined as follows:  “Base Case” alternative: aimed at preserving the existing asset using the present practice without KIIDP investment.  Improvement alternative: aimed at improving the road standard and maintaining it by applying periodic maintenance and routine maintenance such that average long-term road condition will not exceed a certain threshold roughness value.

19. For each alternative, road work standards were defined in such a way that the objective of the alternative can be achieved. A work standard comprises one or more works item (e.g. overlay, reseal, patching), defined intervention criteria to determine the timing, design characteristics, the unit costs, and the after works effects.

Discount Rate and Analysis Period 20. The discount rate used for the analysis is 12 percent, and analysis period of 20 years starting from 2012. The base year for the analysis is 2012.

Salvage Value 21. By the end of the design life of the road most of the components would have low residual value. Earthwork (e.g. fills and cuts), culverts, bridges, etc. would have significant percentages of their values remaining. Salvage values estimated for the different road sections depending on the type of road investment works.

Standard Conversion Factor 22. To convert financial costs into economic costs a standard conversion factor (SCF) of 0.85 was used in this Study. The SCF was derived from the following expression: SCF = [border price value of all imports plus border price value of all exports] divided by [(value of all imports plus all taxes on imports) plus (value of all exports minus all taxes on exports)] 23. The SCF value of 0.85 was estimated using data on Uganda exports and imports from 2003 to 2008 obtained from Uganda Revenue Authority (URA).

Economic Indicators 24. The Net Present Value (NPV) of investment option m relative to base option n is the sum of the discounted annual net benefits or costs, calculated from the relationship:

Y NBy(m-n) NPV(mn) =  [1 + 0.01* r](y -1) y=1 where: NBy(m-n) is the net economic benefit of investment option m relative to base option n in year y

r discount rate (%) y analysis year (y = 1, 2, ... ., Y) 25. The IRR of a project is defined as the discount rate at which the present value of costs equals the present value of benefits, i.e. when NPV is zero. It is calculated by solving the implicit relationship for r:

Y NB y(mn) = 0  (y -1) y=1 [1 + 0.01* r] 26. This equation is solved for r by evaluating the NPV at 5 percent intervals of discount rates between -95 and +900 percent, and determining the zero(es) of the equation by linear interpolation of adjacent discount rates with NPV of opposite signs. Depending on the nature of the net benefit stream, NBy(m-n), it is possible to find one solution, multiple solutions, or none at all. The IRR gives no indication of the size of the costs or benefits of an investment; it acts as a guide to the profitability of the investment - the higher the better. If the computed IRR is larger than the planning discount rate, then the investment is economically justified.

27. The Benefit Cost Ratio (BCR) of investment option m, relative to base option n, is the ratio is calculated as follows:

NPV(m-n) BCR(m-n) =  1 Cm . where: BCR(m-n) benefit cost ratio of investment option m relative to base option n

NPV(m-n) discounted total net benefit of investment option m relative to base option n. This is the Net Present Value at discount rate r

Cm discounted total road agency costs (RAC) of implementing investment option m

28. If the NPV(m-n) is zero, then (NPV/C)(m-n) is zero. These ratios give an indication of the profitability of investment option m relative to base option n at a given discount rate. These measures eliminate the bias of NPV towards larger project options but, like the IRR, they give no indication of the size of the costs or benefits involved.

Project Benefits 29. The main benefits of the roads improvement are savings in vehicle operating costs and savings in passenger travel time. Net benefits estimates were based on Highway Development and Management Model (HDM-4), which simulates road life cycle and vehicle operation conditions and costs for multiple road design and maintenance alternatives. Vehicle operating costs were for nine vehicle classes. Periodic maintenance and upgrading costs estimated in financial terms were converted into economic terms (net of taxes).

30. The benefits are calculated in terms of savings in road user costs. The annual economic benefits are calculated separately by components (savings in VOC, savings in travel time costs and reduction in accident cost) and traffic categories as described below.

a) Savings in vehicle operating costs

31. Vehicle operating costs increase as a function of roughness (or riding quality) and the speed travelled. Vehicle operating benefits due to normal and diverted traffic is calculated as follows:   VCN(mn) =  VCNns -  VCNms   s s 

VCNns = TNnsk * UCnsk k

VCNms = TNmsk * UC msk k

Vehicle operating benefits due to generated traffic is calculated as follows:   VCG(mn) = 0.5 * TGmsk  TGnsk  * UC nsk  UC msk   s k 

The summations are over all the vehicle types (k = 1, 2, ..., K) specified by the user, and all road sections (s = 1, 2, ... ., S) being analysed, see Table 3 above.

The annual saving in vehicle operating costs is given by the following expression: VOC  VCN VCG mn  mn mn  where:

VCN(m-n) vehicle operating benefits due to normal and diverted traffic of investment option m relative to base option n VCNjs annual vehicle operating cost due to normal and diverted traffic over the road section s with investment option j TNjsk normal and diverted traffic, in number of vehicles per year in both directions on road s, investment option j, for vehicle type k UCjsk annual average operating cost per vehicle-trip over road section s, for vehicle type k under investment option j (where j = n or m) VCGjs annual vehicle operating cost due to generated traffic over road section s with investment option j

VCG(m-n) vehicle operating benefits due to generated traffic of investment option m relative to base option n TGjsk generated traffic, in number of vehicles per year in both directions on road s, for vehicle type k, due to investment option j

VOC(m-n) savings in vehicle operating costs due to the total traffic of investment option m relative to base option n b) Savings in travel time costs

32. Travel time is calculated from vehicle speeds. Vehicle travel time benefits due to normal and diverted traffic are calculated as follows:

  TCN(mn) = TCNns - TCNms   s s  TCNns = TNnsk * UTnsk k

TCNms = TNmsk * UTmsk k

Vehicle travel time benefits due to generated traffic are calculated as follows:   TCG(mn) = 0.5 * TGmsk  TGnsk  * UTnsk  UTmsk   s k 

The annual savings in travel time costs are given by the expression:

TTC  TCN TCG mn  mn mn  where:

TCN(m-n) travel time benefits due to normal and diverted traffic of investment option m relative to base option n TCNjs annual vehicle travel time cost due to normal and diverted traffic over road section s with investment option j UTjsk annual average travel time cost per vehicle-trip over the road section s, for vehicle type k, under investment option j (where j = n or m) TCGjs annual vehicle travel time cost due to generated traffic over road section s with investment option j

TCG(m-n) travel time benefits due to generated traffic of investment option m relative to base option n on the given road section in the given year

TTC(m-n) savings in travel time costs due to total traffic of investment option m relative to base option n c) Reduction in accident costs

33. The benefits from reduction in total accident costs are given by the expression:

ACC  AC - AC  (m-n) n m where:

ACC(m-n) the accident reduction benefits due to implementing investment option m relative to base option n ACj the total accident costs under investment option j (where j = n or m)

34. However, for unpaved road upgrading - to paved road surface - projects, no changes in accident rates are attributed. There is much anecdotal evidence in Africa to suggest that the frequency of accidents may actually increase after unpaved roads are improved to tarmac surface. Additionally, research evidence (from TRL in UK and VTI in Sweden) shows that accident rates, and the severity of injuries, increase geometrically with increases in vehicle speed. All roads implemented under KIIDP1 fall under this category of intervention.

Total road user benefits

35. The annual savings in road user costs are given by the expression:

RUCmn  VOC (m-n)  TTC (m-n)  ACC(m-n)  where:

RUC(m-n) the total road user benefits of investment option m relative to base option n

2 Drainage System Improvement

2.1 The Basis of Economic Analysis

36. Lubigi Primary drainage system is 14km long. It has 17 secondary channels, with a length of 45km located within and outside Kampala District boundary. Under KIIDP the improvement of 3.6km of the Primary Drainage System was implemented. The main features of the improved system are presented in Table 7.

Table 7: Lubigi Primary Drainage System Length Drainage channel Condition Type of Implementation Period (Km) maintenance Before (in 2010) Current (in 2014) Intervention Start End

3.6 Poor. Channels Good. Works Contract in 29/6/2011 30/12/2013 too small for the Frequency of Defects Liability peak flows. flooding greatly Period. De-silting Frequent flooding reduced. and solid waste and damages. removal.

37. The drainage systems in Kampala form integrated networks. The construction and rehabilitation works for Lubigi impacted on the performance of the channels both downstream and upstream. Improvement in the selected drainage is considered in terms of both local impacts and within the broader context of better operation of drainage channels as a whole. The scale of the impact of flooding in Kampala is reflected in the extent of present and anticipated socio-economic development in the City. This is considered within a broad context of the rapid urbanisation currently underway in Uganda.

38. The basis of the economic analysis of the drainage sub-component is the cost-benefit analysis a “With Project” and a “Without Project”. Thus, the cost-benefit analysis evaluates the project capital and maintenance costs for the channel improvement, compared with the associated benefits of better drainage. The design of the channel is for a 10-year return storm period with an economic life of 40 years. The cost-benefit evaluations of the drainage subcomponent are based on detailed data collected and presented in Kampala Drainage Master Plan (KDMP) in March 2003 with updated costs to December 2013 as part of the Appraisal of KIIDP.

39. As stated in the Terms of Reference (ToR), it is required to use the model, methodology and assumptions used during the project appraisal. The analysis period is 40 years and the base

year of analysis is 2011, that is the start of project implementation, with actual construction period of 2.5 years. In this analysis, future development within Kampala was considered as follows:

 GDP growth rate of 5.5% per annum  Population growth rate of 3.9% (National average is 3.2% from 1999 to 2011)  Inflation rate of 7.8% per annum

2.2 Project Costs

40. The estimated cost for Lubigi Primary Channel project under KIIDP is US$ 8,755,463 (source KCCA, 2007) and the actual cost of implementation is US$ 11,633,655 (including consultancy services and resettlement compensation).

41. Operational and maintenance costs for the Nakivubo Channel were estimated at 0.5% per annum of the cost of Channel Rehabilitation. Costs will, however, be a function of the type of channel (concrete or earth) as well as its size. A conservative value equal to 1% of capital investment costs has been used to cover annual operating and maintenance costs for the purpose of economic analysis of Lubigi Primary Drainage system. The operational and maintenance costs are therefore US$ 116,337 per annum.

2.3 Project Benefits

42. The main inferred benefits are both quantifiable and non-quantifiable. Among the quantifiable are: savings from prevention of road damage, property and structures, prevention of disruption to commercial and industrial activities, additional income from rentals and savings in agricultural produce.

43. The basis for impacts quantification by category is defined as presented in Table 8. Flooding from the channels has impact on residential, commercial and industrial buildings, road network, environment, health; mitigation measures to be used and even on peri-urban agriculture produces. Some of the costs to individuals and society attributed to flooding are quantifiable and others are non-quantifiable.

Table 8: Basis for Impacts Quantification by Category No Category Impacts 1 Residential Damage to buildings and structures Impact on property values Additional costs in flood prevention and reduction 2 Road Networks Physical damage Maintenance costs Traffic delays Additional vehicle operating costs 3 Commercial and Industrial Physical damage to property and goods 4 Environment Deterioration 5 Health Disease Loss of work-days 6 Mitigation Measures Applicable during construction 7 Agricultural Loss of crop areas Source: Kampala Drainage Master Plan (KDMP, 2003)

44. Where possible all the impacts and benefits attributed to improved drainage have been quantified as described below.

Damages to Residential and Commercial Properties 45. The flooding of residential property damages buildings and structures, adversely impacts the value of property, and causes additional expenses in cleaning-up and flood prevention and reduction measures. Flooding impacts significantly affect rental value. Residential houses in flooded areas have rents below the rents of similar houses in non-flooded areas of the city. For example, a residential room has rental value of UGX 550 per square metre per month in flooded areas. A comparable room in non-flooded areas rents for UGX 916 per square metre; represents an increase of 67% indicating the importance of drainage in residential investments. The savings in cleaning-up, maintenance and flood prevention measures attributable to improved drainage is estimated to be about 5% of the construction cost per m2 and is assumed to have grown at a similar rate to GDP growth at about 5.5% starting 2007. The updated values assigned by house categories are given in Table 9.

Table 9: Updated Values assigned by house categories Building Type Rental Values (UGX Construction costs per Attributed flood repair per room per month) m2 (UGX) costs (5%) Residential: 7,330 to 14,660 85,400 4,270 Low level Medium 14,660 to 21,990 170,810 8,540 High 21,990 to 36,650 256,220 12,810

Commercial: 36,650 85,400 4,270 shacks/boutiques Solid construction 87,960 170,810 8,540 (medium)

Table 10: Estimated flood damages in residential areas for a 10-year flood Building Type Areas affected Construction Flood repair costs Estimated Annual (m2) costs per m2 (5%) (UGX) costs (in 1000 (UGX) UGX) Low level 50,000 85,400 4,270 213,500 Permanent 45,000 170,810 8,540 384,300 (medium) Permanent 45,000 256,220 12,810 576,450 (medium – high) TOTAL 140,000 1,174,250

46. According to valuation officers consulted in the various Divisions, KDMP concluded that there is consensus that rental values of similar buildings in flooded and non-flooded areas have a differential of 100%. Table 11 gives the estimated annual rental value benefits of improved drainage.

Table 11: Estimated annual rental value benefits to improved drainage in Lubigi Channel Building Type Areas affected (m2) Increased Rental Annual Benefits (in Values ((UGX/m2 per 1000 UGX ) month) Low level 50,000 550 330,000 Medium 45,000 916 494,640 High 45,000 1,466 791,640 TOTAL 140,000 1,616,280

47. Table 12 gives the estimated damages to the commercial sector in terms of annual rental losses and flood repair costs. These will become annual benefits due to improvement in the drainage system.

Table 12: Estimated damages to the commercial sector Building Type Boutiques Medium (solid Annual Benefits (in construction) 1000 UGX) Areas affected by floods 2,500 5,000 (m2) Assumed Rental Values 855 1,710 (UGX/m2 per month) Annual rental losses 25,650 102,600 128,250 (in 1000 UGX) Construction cost per m2 85,400 170,810 (UGX) Flood repair costs 10,675 42,703 533,778 (5%) (in 1000 UGX)

Disruption of commercial and industrial activities 48. The impact of flooding on commercial and industrial activities is reflected both in delays to transport of goods, raw materials and personnel, as well as damages to goods in transit and storage. However, it is not easy to assess the full impact of the disruption to commerce and industry. An income survey of retail traders was carried out based on a sample of 251 traders in a Social Impact Assessment Study for the Nakivubo Channel (KDMP, 2003). The study estimated that the trader’s average income was around UGX 250,000 per month or UGX 3 million per annum. On this basis the estimated loss of benefit per trader per year due to lack of improved drainage was around UGX 150,000 or 5% of the average annual income. These figures have been updated to values in 2013 by applying GDP growth rate factor. The result gives an estimate of the trader’s average income to be UGX 427,000 per month or UGX 5,124,000 per annum. The loss of benefit per trader per year due to lack of improved drainage is estimated to be UGX 256,200, that is 5% of the average annual income. Assuming that around 150 traders would be severely affected, annual losses would be around UGX 38.43 million.

49. It is therefore proposed to use a total figure of UGX 100 million per annum to cover losses for the commercial sector, taking into consideration the impact categories of flooding mentioned above.

Road damages 50. A good drainage system reduces the rate of road network deterioration and results in savings in road user costs. With improved drainage systems, less frequent repairs and periodic maintenance and rehabilitation will be required. The expected economic life of the road network will be enhanced and the effect of reduced roughness results in savings of vehicle operating costs to the road users.

51. The JICA Study (1997) indicated approximately one kilometre of major roads and two kilometres of secondary roads in the Lubigi System will be seriously affected by floods, and will require to be rehabilitated more frequently than in a non-flood situation.

52. In the “With” project case, rehabilitation of primary roads will only be required twice over the project life of 40 years, compared with four times in the “Without” project case. In the 10- year flood case, some repair will be involved on the roadbase and total replacement will be needed of the overlay at a cost of UGX 800 million per km. This gives an estimated savings in road agency costs of two overlays.

53. Usually secondary (unpaved) roads are regravelled every second year, but it is assumed that flooded sections of secondary roads would require an annual treatment. Over the project life, there would, therefore be a saving of the costs of twenty treatments over 40 years. The cost of regravelling is estimated UGX 77 million per km.

Disruption to Traffic 54. Under the Uganda rainfall condition, the frequency of flooding in Kampala is between 10 to 15 times in a year lasing 3 to 4 hours per flooding. Private and commercial vehicles are blocked from passing or significantly delayed. The cost of this is measured in terms of additional vehicle operating cost (VOC) and the value of passenger time.

55. Table 13 shows the estimated coefficients for VOC savings and passenger value of time by vehicle type. The VOC coefficients were derived using HDM-4 for vehicles travelling at 30 km/h. The VOC figures shown are updated to 2013 values from those figures given in KDMP (2003) by applying annual inflation rate of 7.8% per annum. The time value figures were obtained from the latest HDM-4 customisation data by UNRA, see also Table 3 given above in Sub-section 2.1.2.

Table 13: Estimated Coefficients for VOC savings and passengers value of time Vehicle Type Potential savings in VOC when Passenger time value per the road roughness is reduced vehicle (in UGX per hour) from 7 IRI to 3 IRI (in UGX per km) Car 155 8,050 Pick-up 131 9,450 Bus 138 8,076 Medium Truck 394 1,300 Heavy Truck 1,129 1,300

56. These coefficient values are applied to the 2013 traffic and future traffic forecast as growing at 5% per annum and used to calculate the annual savings in VOC as presented in Table 14 and the annual savings in travel time as presented in Table 15.

Table 14: Estimated VOC savings on a “with” and “without” project case Vehicle Category Average hourly Traffic delayed Savings in VOC Annual Savings traffic in 2013 over 30 hours per per kilometre in VOC (in UGX) year (vehicles) (UGX) Private Vehicles 2,019 60,570 155 9,388,350 (Car and Pick-up) Heavy Vehicles (Medium 228 6,840 1,129 7,722,360 and Heavy Trucks) Public Buses 1,307 39,210 138 5,410,980 TOTAL 3,554 22,521,690

Table 15: Estimated Travel Time savings on a “with” and “without” project case Vehicle Category Average hourly Traffic delayed Travel time cost Annual Savings traffic in 2013 over 30 hours per per vehicle (UGX in Travel Time year (vehicles) per hour) Cost (in UGX) Private Vehicles 2,019 60,570 8,050 487,588,500 (Car and Pick-up) Heavy Vehicles (Medium 228 6,840 1,300 8,892,000 and Heavy Trucks) Public Buses 1,307 39,210 8,076 316,659,960 TOTAL 3,554 813,140,460

Other damages 57. There is a small amount of agriculture within Lubigi Drainage System. However, this is not estimated to be significant in terms of flood damage. Agricultural crops on the sides of the drainage channels are often damaged by flooding. The saving estimates in losses are valued on the basis of the compensation schedule agreed by KCC and the Ministry of Lands and Environment.

58. It is difficult to quantify the health impacts of bad drainage of the Lubigi System in terms of statistics, since many of these diseases might have been contracted in other areas of Kampala. In the city as a whole, water-borne diseases are one of the major causes of illness.

59. Improvements to the environment, health benefits from water borne disease due to improved drainage, better functioning of markets and reduction in the loss of goods, etc., are significant. The impact of such benefits is not fully reflected in the cost-benefit assessments indicating that the cost-benefit estimates are conservatives.

60. A notional amount of UGX 150 million per annum is attributed to these factors.

Summary of Project Benefits 61. Table 16 summarizes the benefits of the improvement to the whole Lubigi System, comprising both primary and secondary channels, for a 10-year flood.

62. According to KDMP (2003), it is assumed that 80% of the benefits are attributable to improvements of the primary channel. The adjustment factor of 0.8 was applied to calculate the benefits attributable to the KIIDP project of improving Lubigi Primary Channel. The result is presented in Table 17.

Table 16: Benefits of improving the whole of Lubigi Drainage System Category Annual Benefits in Year Specific Benefits Observations 2014 (in 1000 UGX) (in 1000 UGX) Housing Repairs 1,174,250 Increasing in line with population growth Loss in residential rental 1,616,280 Increasing in line with values population growth Commercial and 533,778 Increasing in line with Industrial Sector damage GDP growth Loss in commercial and 128,250 Increasing in line with industrial rental values GDP growth Loss of commercial 100,000 Increasing in line with earnings GDP growth Savings in Vehicle 22,522 Increasing in line with Operating Costs GDP growth Travel Time Savings 813,140 Increasing in line with GDP growth Road damage (Primary 800,000 per In year 10 and year 30 paved roads) rehabilitation increasing in line with x 2 = 1,600,000 traffic growth Road damage 77,000 per operation Re-gravelling required (Secondary unpaved x 20 = 1,540,000 every other year roads) x 2 km = 3,080,000 instead of every year. Increasing in line with traffic growth Others 150,000 Notional

Table 17: Benefits of the improvement to the 3.6km of Lubigi Primary Drainage System Category Annual Benefits in Year Specific Benefits Observations 2014 (in US$) (in US$) Housing Repairs 469,698 Increasing in line with population growth Loss in residential rental 646,5132 Increasing in line with values population growth Commercial and 213,512 Increasing in line with Industrial Sector damage GDP growth Loss in commercial and 51,299 Increasing in line with industrial rental values GDP growth Loss of commercial 40,000 Increasing in line with earnings GDP growth Savings in Vehicle 9,008 Increasing in line with Operating Costs GDP growth Travel Time Savings 325,258 Increasing in line with GDP growth Road damage (Primary 320,000 per In year 10 and year 30 paved roads) rehabilitation increasing in line with x 2 = 640,000 traffic growth Road damage 30,800 per operation Re-gravelling required (Secondary unpaved x 20 x 2 = 1,232,000 every other year instead roads) of every year. Increasing in line with traffic growth. Others 60,000 Notional Note: 1 US$ = UGX 2,500

3 Solid Waste Improvement

63. This sub component supported two activities namely: (i) Expansion works of the existing Mpererwe landfill by 6 acres, including consulting services for design update, preparation of bidding documents; and construction supervision of the works; (ii) consulting services for testing, feasibility study and design for installation of landfill gas extraction and flaring system. The status of each is as follows:

(a) Expansion of the Mpererwe Landfill: A new landfill was constructed as an extension to the KCCA Mpererwe Landfill in the interim while KCCA procures land and constructs a new solid waste treatment facility. The new landfill extension covers 6 acres and it is adjacent to the old landfill. According to recent projections, it will be used for disposal of garbage for approximately 2 years (2014-2016). In addition to the 3 landfill cells constructed, this extension was constructed with a natural impervious liner to prevent groundwater contamination, a porous drainage layer which drains leachate to a collection pond for onward treatment, a new chain-link fence to prevent access to the landfill, a new groundwater monitoring well and internal circulation roads.

(b) Landfill gas extraction and flaring: A consultant investigated the potential for recovery of landfill gas from the existing Mpererwe Landfill through pumping trials, assessed the feasibility of utilization of land fill gas for power generation, and prepared detailed design for feasible landfill gas utilization. The results from this study are being used to inform the landfill management component of forthcoming Integrated Solid Waste Management Project which will be done using a Public Private Partnership (PPP) arrangement.

64. It is KCCA’s policy and budgetary allocation are made on a yearly basis to maintain the landfill. KCCA will extend the maintenance services to the new landfill after its completion. The maintenance of the land fill falls in the docket of the directorate of Public Health and Environment.

65. The actual expenditure on the implementation of the solid waste component is US$ 1,882,833. The information available was not sufficient to conduct a meaningful economic analysis of solid waste project. The function of the compositing facility is to optimize the operation of the existing facility and is considered the most cost-effective alternative available for KCCA in the short run.

B. ECONOMIC ANALYSIS RESULTS

66. The economic analysis results are presented below under the following headings:  Roads improvement  Drainage system improvement

1 Roads Improvement

67. The result of economic analysis of KIIDP road improvement sub-component is summarized in Tables 18, 19 and 20. The following are the key points: a) The overall NPV for KIIDP roads improvement project is US$ 13.098 million at a discount rate of 12% with an EIRR 0f 29.8%, NPV/RAC ratio 1.31 and overall Benefit-Cost Ratio of 2.31

b) Three road projects yielded positive NPVs and EIRRs greater than the discount rate of 12% and two roads gave negative NPVs and EIRRs less than 12% c) After being subjected to sensitivity analysis using 15% increase in construction and maintenance cost and 15% decrease in total benefits in both cases, the NPVs of the three roads remained positive and of the other two roads remained negative. d) A simultaneous increase of 15% in total construction and maintenance costs on one hand and a decrease of 15% in total benefits on the other resulted in an overall NPV of US$ 8.951 million at a discount rate of 12% and an overall EIRR of 23.1%, indicating that the selected projects represent a positive return on investment even in a bad case scenario.

Table 18: Economic Indicators of KIIDP Improved Roads Scenario ID Road Length Average Actual Net Present NPV/Road Economic Name in Km Financial Financial Value NPV Agency Internal Cost US$ per Cost in US$ in Cost Ratio Rate of km US$ million Return (EIRR %) 1 Bukoto – 3.00 779,636.18 2,338,908.5 10.372 4.36 67.8 Kisaasi 2 Kalerwe - 3.27 869,261.32 2,842,484.5 2.601 0.94 25.5 Tula 3 Kawempe - 2.46 873,736.55 2,149,391.9 0.738 0.37 17.7 Mpererwe 4 Kimera 0.90 1,753,480.89 1,578,132.8 -0.358 -0.27 7.9 5 Soweto 1.22 303,921.31 370,784.0 -0.256 -0.16 9.6 All Roads 10.85 1,027,621.21 11,149,690.1 13.098 1.31 29.8 Note: Salaama Road has not been completed and is not included in the economic analysis.

Table 19: Sensitivity Analysis for KIIDP Roads – Net Present Values ID Road Length Improved Roads Sensitivity NPVs (in US$ million) Name in Km Scenario Net 15% Increase in 15% 15% Increase Present Value Construction and Decrease in in Cost and NPV in Maintenance Cost total 15% Decrease US$ million benefits in total Benefits 1 Bukoto – 3.00 10.372 10.147 8.591 8.366 Kisaasi 2 Kalerwe - 3.27 2.601 2.307 1.916 1.622 Tula 3 Kawempe - 2.46 0.738 0.525 0.414 0.201 Mpererwe 4 Kimera 0.90 -0.358 -0.524 -0.471 -0.637 5 Soweto 1.22 -0.256 -0.447 -0.409 -0.600

All Roads 10.85 13.098 12.007 10.042 8.951

Table 20: Sensitivity Analysis for KIIDP Roads – Economic Internal Rate of Return ID Road Length Improved Sensitivity EIRRs (%) Name in Km Roads 15% Increase in 15% 15% Increase in Scenario Construction and Decrease in Cost and 15% EIRR (%) Maintenance Cost total Decrease in total benefits benefits 1 Bukoto – 3.00 67.8 60.0 58.8 52.1 Kisaasi 2 Kalerwe - 3.27 25.5 22.7 22.2 19.7 Tula 3 Kawempe - 2.46 17.7 15.6 15.3 13.5 Mpererwe 4 Kimera 0.90 7.9 6.6 6.4 5.2

5 Soweto 1.22 9.6 8.2 7.9 6.7

All Roads 10.85 29.8 26.5 26.0 23.1

Present Values of Benefits

68. Savings in vehicle operating cost is US$ 17.37 million, discounted over the analysis period. Savings in travel time cost is US$ 3.00 million, discounted over the analysis period. The magnitude of benefits determined at Appraisal and Evaluation are given in Table 21.

Table 21: Comparison of Evaluation to Appraisal (PAD) Present Values of Benefits Benefit component At Appraisal At Project Comments (from PAD) Closing Decrease in Vehicle Operating 14.27 17.37 The benefit determined at Costs (in US$ million) Evaluation is US$ 3.1 million more than that at Appraisal Decrease in passenger time costs 2.54 3.00 The benefit determined at (in US$ million) Evaluation is US$ 0.46 million more than that at Appraisal Decrease in accident costs (in 0.40 0.00 There are no savings in US$ million) accident costs for paving the 5 roads. This is explained in Sub-section 2.1.3 under reduction in accidents

69. The proportions of the road user benefit determined at Evaluation are illustrated in Figure 1.

Figure 1: Road User Benefits Distribution Road user benefits distribution

15%

85%

Savings in VOC Savings in Travel Time Costs

Cumulative Net Benefits Stream

70. Figure 2 shows the cumulative net benefits of investment over the analysis period. The approximate timing when the discounted cumulative net benefit of investments will become positive (i.e. the break-even point) was determined to be Year 7 (i.e. 2018 since the base year for this analysis is 2012).

Figure 2: Cumulative Net Benefits over the Analysis Period 15

5 (Millions) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Cumulative Net Benefits US$ -5

-10 Year

Appraisal Summary Results

71. The results of economic evaluation compared to the economic appraisal results (from PAD) are summarized in Table 22.

Table 22: Comparison of Evaluation to Appraisal (PAD) Economic Indicators Road Name Economic At Appraisal At Project Comments Indicators (from PAD) Closing Bukoto - Kisaasi EIRR % 38 67.8 The net benefit at project NPV (US$ mil) 2.113 10.372 closing is almost 5 times B/C Not available 5.36 higher than that at appraisal. Unit Cost US$ per 403,333 779,636 The difference is US$ 8.259 km million, notwithstanding the relatively higher actual cost per km. Kalerwe - Tula EIRR % 17 25.5 The net benefit at project NPV (US$ mil) 0.399 2.601 closing is almost 6.5 times B/C Not available 1.94 higher than that at appraisal. Unit Cost US$ per 368,421 869,261.32 The difference is US$ 2.202 km million, notwithstanding the relatively higher actual cost per km. Kawempe- EIRR % 15 17.7 The net benefit at project Mpererwe NPV (US$ mil) 0.191 0.738 closing is almost 4 times B/C Not available 1.37 higher than that at appraisal. Unit Cost US$ per 333,333 873,736.55 The difference is US$ 0.547 km million, notwithstanding the relatively higher actual cost per km. Kimera EIRR % 32 7.9 The net benefit at appraisal is NPV (US$ mil) 0.225 -0.378 positive but the net benefit at B/C Not available 0.73 project closing is negative Unit Cost US$ per 805,714.11 1 1,753,480.89 US$ 0.378 million. This can km be attributed to the very high actual construction cost per km (more than twice the estimated unit cost). Soweto EIRR % Not analysed 9.6 This road was not included in NPV (US$ mil) Not analysed -0.256 the economic appraisal (not B/C Not analysed 0.84 stated in PAD). Unit Cost US$ per Not analysed 303,921.31 km Overall 2 EIRR % 32 29.8 The EIRR at project closing is NPV (US$ mil) 8.648 13.098 slightly less but close to that B/C Not available 2.31 determined at Appraisal. The Unit Cost Not available 1,027,621.21 net benefit at project closing is US$ per km greater than that at project appraisal by US$ 4.45 million. However, it is important to consider the notes below the table. Notes Used conversion of UGX1 = US$0.0005 according to PAD conversion 1 Based on estimated cost in 2007 (see also Table 2 in Section 2.1.2 above) 2 For PAD the list includes other roads that were dropped (e.g. St Barnabas Road)

2 Drainage Systems Improvement

72. The result of economic analysis for Lubigi drainage channel and the sensitivity analysis results are summarised in Table 23. Investment in Lubigi Primary drainage systems projects yielded positive NPVs with EIRRs greater than 12%. The sensitivity analysis indicates that the implemented project has a positive return on investment.

Table 23: Economic Indicators and Sensitivity Analysis Results for Lubigi Drainage Channel Drainage Actual Base Scenario 15% Increase in 15% Decrease in 15% Increase in System Financial Construction Benefits Cost and 15% Cost and Maintenance Decrease in Cost Benefits NPV EIRR NPV EIRR NPV EIRR NPV EIRR (US$M) (%) (US$ M) (%) (US$ M) (%) (US$ M) (%) Lubigi 11,633,65 6.501 17.5 5.034 15.8 6.243 17.2 4.776 15.6 Primary 5

73. For the drainage system improvement the net benefits distribution over the Analysis Period (in US$) is illustrated in Figure 3 and summarized in Table 24.

Table 24: Benefits Distribution by Category Benefit Category Amount in US$ Reduction in building damage 72,761,972 Increase in rental values 67,013,778 Increased commercial and industrial earnings 5,464,225 Savings in road agency costs 44,235,079 Savings in road user costs 45,662,553 Others 60,006,096

74. Details of the methodology and methods used to determine the benefits by categories are provided in Section 2.2.

Figure 3: Benefits distribution Benefits distribution

Reduction in building damage Increase in rental values 20% 25% Increased commercial and industrial earnings 15% Savings in road agency 23% costs 15% 2% Savings in road user costs

Others

75. Table 25 gives a comparison of the economic appraisal result (from PAD) to the economic evaluation result at project closing.

Table 25: Comparison of Evaluation to Appraisal (PAD) Economic Indicators for Lubigi Channel Economic Indicators At Appraisal (from PAD) At Project Closing Comments EIRR % 14.0 17.5 The net benefit NPV (US$ mil) 0.708 6.501 determined from evaluation at project closing is much greater than the amount estimated at appraisal. The difference is US$ 5.793 million.

76. Figure 3 shows the cumulative net benefit of investment over the analysis period. The approximate timing when the discounted cumulative net benefit of investments will become positive (i.e. the break-even point) was determined to be Year 15 (i.e. 2025 since the base year for this analysis is 2011).

Figure 4: Cumulative Net Benefits over the Analysis Period 10 8 6 4 2 0 -2 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 -4

US$ US$ (Millions) -6 -8

Cumulative Net Benefits -10 -12 Year

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members Responsibility/ Names Title Unit Specialty Lending Modupe A. Adebowale Consultant AFTME Solomon Alemu Consultant AFTU1 Yvette Laure Djachechi Senior Social Development Spec AFTCS Serigne Omar Fye Consultant CICAF Edeltraut Gilgan-Hunt Consultant AFTTR Matthew D. Glasser Adviser OPSKL Katherine Kuper Sr Urban Spec. AFTU1 Rowena J. Martinez Consultant AFTU1 Barjor E. Mehta Lead Urban Specialist SASDU Lance Morrell Consultant IEGPS Edith Ruguru Mwenda Senior Counsel LEGAM Richard Olowo Lead Procurement Specialist AFTPE Perla San Juan Temporary AFTU1 Patrick Piker Umah Tete Sr Financial Management Specia AFTMW

Supervision/ICR Solomon Alemu Consultant AFTU1 Tewodros Tigabu Alemu Consultant FEUCA Mary C.K. Bitekerezo Senior Social Development Spec EASDE Martin Fodor Senior Environmental Specialis AFTN3 Edeltraut Gilgan-Hunt Consultant AFTTR Paul Kato Kamuchwezi Financial Management Specialis AFTME Agnes Kaye Program Assistant AFMUG Marie Claire M. Li Tin Yue Senior Program Assistant AFTU1 HRSSD- Barbara K. Magezi HIS Mbuba Mbungu Consultant AFTU1 Barjor E. Mehta Lead Urban Specialist SASDU Grace Nakuya Musoke Senior Procurement Specialist AFTPE Munanura Edith Ruguru Mwenda Senior Counsel LEGAM Naa Dei Nikoi Operations Adviser LCSDE Martin Onyach-Olaa Sr Urban Spec. AFTU1 Zara Inga Sarzin Senior Urban Development Speci AFTU1 Kristine Schwebach Social Development Specialist AFTCS Patrick Piker Umah Tete Sr Financial Management Specia AFTMW

(b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY03 18.62 FY04 37.70 FY05 110.48 FY06 209.72 FY07 188.96 FY08 73.90

Total: 639.38 Supervision/ICR FY03 0.00 FY04 0.00 FY05 0.00 FY06 0.00 FY07 0.00 FY08 38.90

Total: 38.90

Annex 5. Beneficiary Survey Results

1. No specific beneficiary survey or stakeholder workshop was conducted for KIIDP. However, throughout the project period, various stakeholder meetings (or “barazas”) were held and two Citizens Report Card Surveys36 (CRCS) (in 2011 and 2012) on the overall Kampala service level and quality were conducted. Various consultative and feedback meetings were also held with different stakeholders at ward and divisional levels. While multiple factors (such as design of survey, sample size, manner in which survey was conducted etc.) affect the results of such surveys and are generally subjective, they are useful engagement tools which shed light on the overall service delivery, quality and capacity of KCC/KCCA. In spite of this, it is to be noted that these engagements were not pertaining specifically to KIIDP but the whole of Kampala. Therefore, the results from the CRCS could not be taken as a direct reflection of the beneficiaries’ satisfaction with infrastructure and services provided under KIIDP.

2. In general, there was vast improvement in the satisfaction level with KCCA services from 2005 (which set the baseline for KIIDP) to 2011 and 201237. Even just focusing on 2011-2012, 30% of the respondents were either very satisfied or satisfied with KCCA services in the 2012 CRCS compared to only 5% in the 2011 CRCS; level of dissatisfaction has also fallen dramatically from 70% in 2011 to 25% in 2012. Satisfaction levels have also risen in the areas of solid waste, roads, drainage and public toilets. However, satisfaction fell in the areas of education services, water services, medical services and public transport services during this period.

3. On the satisfaction with roads, respondents were asked to indicate their levels of satisfaction with various aspects of the roads in Kampala such as condition of the roads, safety of the roads, safety of passengers, maintenance of roads, road width and pedestrian walkways as indicated in Table below. Respondents who overall rated roads to be outstanding or above average rose from 14% in 2011 to 23% in 2012. There has been a remarkable decline in the respondents who consider the condition of the roads as poor from 72% to 54%.

Table: Rating of roads (percent) Service Outstanding/ Above Average Below Average/ Average Poor 2012 2011 2012 2011 2012 2011 CRCS CRCS CRCS CRCS CRCS CRCS Conditions of roads 23 14 23 14 54 72 Safety of the roads 22 10 30 23 48 67 Safety of a passenger 18 n/a 34 n/a 48 n/a Maintenance of roads 13 8 35 16 52 76 Road width 16 17 31 19 43 64 Availability of 17 12 30 21 43 67 pedestrian walkways

36 The methodology for the Citizens Report Card survey combined both quantitative and qualitative methods that included face-to-face interviews, focus group discussions, personal interviews and literature review. 37 The Citizens Report Card Survey was conducted twice during the project period, in 2011 and 2012. While designed as an annual exercise, the lapse in the early years of KIIDP was mainly due to the transition from KCC to KCCA.

4. Levels of satisfaction with roads have more than doubled from 13% in the 2011 CRCS to 29% in the 2012 CRCS. There has also been a decline in the respondents who are dissatisfied with roads overall form 67% in 2011 to 53% in 2012. (Refer to figure below). This indicates a perceived improvement of the roads in Kampala as indicated in the efforts by in all urban council in the financial year 2011/2012.

Figure: Satisfaction with Roads overall

5. On the satisfaction with drains, respondents were asked to rate three aspects of the drainage system: condition, cleanliness and maintenance. The results are as indicated in the table below. However, a majority of the respondents, 64%, 61% and 61%, rated the 3 aspects of the drainage systems as poor and below average respectively. Only 12%-13% rated the various aspects as outstanding and above average. There was no substantial difference in the results of the 2 years apart from ratings on cleanliness and maintenance of the drains where the proportion of the respondents who thought these aspects were poor and below average declined from 78%and 73% in 2011 to 61% and 61% in 2012 respectively.

Table: Rating of drains (percent) Outstanding/ Average Below Average/ Above Average Poor 2012 2011 2012 2011 2012 2011 CRCS CRCS CRCS CRCS CRCS CRCS Condition of the drains 13 14 23 22 64 64 Cleanliness of the drains (litter, 12 12 27 10 61 78 rubbish, plastic bags “buveera” etc) Maintenance of the drains 13 11 26 16 61 73

6. Overall in terms of satisfaction, there was an increase of 10% in the levels of satisfaction by respondents from 12% in 2011 t0 22% in 2012. There was also a sharp decline in the proportion of the dissatisfied respondents with the state of drainage systems from 71% in 2011 to 57% in 2012. (Refer to figure below.) These are the result of efforts by KCCA in resolving the problems of flooding and other related issues.

Figure: Satisfaction with Drainage Overall

7. Challenges remain in various areas for effective service delivery, including limited funding, inadequate staff and capacity and need to continuously sensitize and educate the public and other stakeholders on proper usage and maintenance of public services and infrastructure, and their roles and responsibilities, in addition to that of KCCA’s.

Annex 6. Stakeholder Workshop Report and Results

Refer to Annex 5.

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

Background

1. Kampala started as a municipality in 1947 and became Uganda’s capital city at independence in 1962. Kampala has since grown to become the largest city in Uganda. The 2002 Uganda population and housing census indicated that 50% of Uganda’s urban population resides in Kampala. It’s the hub of the economic, political and administrative activities. It was estimated that 80% of the country’s industrial and services sector are located in Kampala and generates 65% of the national GDP. Therefore the economic future of Uganda is intrinsically related to the performance of Kampala as a locus of productive activities and investment and this in turn relies on the city’s ability to provide the services and infrastructure for which businesses and residents rely on.

2. Kampala City is currently divided into five urban divisions namely Central, Kawempe, Makindye, Lubaga, Nakawa, covering a total of 189 square km, with 169 squares km of land and 19 square km of water. About 23% of Kampala’s area is fully urbanized, a significant portion (60%) semi-urbanized and the rest considered rural settlements. Kampala displays a clear radial structure with a denser center and clear concentric rings around it. A further ring is developing in its peri-urban periphery. Kampala’s clear radial structure and network concentrates almost all activities of significance, apart from residence, in and around the city center. This has resulted in a very high transient population of about 2.5 million that are economically engaged in the city center and live in the neighboring districts.

3. The Kampala City Council (KCC) and five Divisions have the primary responsibility for infrastructure and service delivery for Kampala. In 2010, the Government of Uganda (GoU) created Kampala Capital City Authority (KCCA) following the enactment of the KCC Act 2010 with the overall intention of streamlining operations and improving service delivery. The Act elevated Kampala from a district status under the Ministry of Local Government (MoLG) to a Central Government Agency under the Office of the President. Together with the development of a Strategic Plan, a successor to the Strategic Framework for Reform II (SFR II), these efforts seek to address the deteriorating quality of service delivery, rebuild key institutional structures responsible for the delivery of goods and services, and respond to the challenges of increasing urbanization influenced by a younger population and rural urban migration.

Brief Project Description

4. Adding to the efforts to address the service delivery concerns of the citizens of Kampala, one of the most significant was support by the World Bank through financing the Kampala Institutional and Infrastructure Development Project (KIIDP). The KIIDP was a three phase project funded by the World Bank through an Adaptable Program Loan (APL) equivalent to US$ 100million. The first phase (KIIDP i.e. current Project) was allocated US$ 33.6 million. The Project Development Objective (PDO) was to “improve institutional efficiency of the Kampala City Council (KCC) by implementing the Strategic Framework for Reform II (SFR II)”.

5. The scope of the project comprised three components namely: (i) institutional development, (ii) city wide infrastructure and services improvement, and (iii) project management, monitoring and evaluation. The first component aimed at assisting the then

KCC (and later KCCA) to improve its institutional efficiency by implementing strategies and measures as identified in the SFRII. The objective of component two was to preserve the current assets and arrest the deterioration of the assets which would enable Kampala to be a functional capital city and position its self to attract investors. The third component supported the implementation of the project as well as its monitoring and evaluation.

Project Outputs and Outcomes

Component 1 - Institutional Development 6. The project had positive institutional development impacts. The capacity building component in the project provided the new KCCA staff with skills relevant to their functional roles and also to identify, implement, and supervise projects. KIIDP team showed significant improvements in project management by the closure of the project in December 2013. Significant improvements in procurement, financial and project management were observed.

7. Some of the approved policies, strategies and plans are already in use. Communication within and outside the institution has greatly improved following the purchase of communication equipment as well as vehicles. The rebranding exercise re-oriented people’s minds away from the KCC bad experiences to a new institution (KCCA) with a difference. The financial standing of KCCA has also improved as shown in the results indicator, particularly on the improvement of KCCA’s own source revenue collection.

Component 2 - City Wide Infrastructure & Services Improvement

8. At project closure, not all infrastructure works were completed. The status of the infrastructure sub-components were:

i. Drainage System Improvements - All the critical civil works on the Lubigi Channel had progressed to 98% completion levels with minor works remaining on the greening, silt dredging and other minor reinstatement works for road crossings. Culvert crossings on Hoima road, Kawaala road, Bombo road & Kampala Northern bypass have been completed and the reinstatement works finalized. (By 31 January 2014 lanes of the Kampala Northern Bypass were open to traffic. All drainage works have been substantially completed however, cleaning of the main channel, construction of secondary channel and unblocking of the box culverts in still ongoing.)

ii. Upgrading of Gravel Roads to Bitumen Standard - Upgrading of Phase 1 roads (Bukoto – Kisaasi; Mpererwe – Kawempe and Kalerwe – Ttula roads) to bitumen standard had progressed to 100% level of completion by 31st March, 2013. Phase 2 roads, Kimera Road and Soweto Road, had progressed to approximately 90% and 75% completion levels respectively at project closure. (As of 31st January, 2014, the progress on Kimera and Soweto roads stands at 95% and 85.7% respectively and the pending works include: completion of the walkways particularly around the manholes, installation of street light protection pillars, signage and guard rails.) In addition, due to lack in KIIDP funding, the construction costs of Salaama Road was taken over by KCCA during the later stage of project implementation.

iii. Solid Waste Management - Landfill extension works at Kiteezi had progressed to 90% completion levels by 31st December, 2013 (and progressed to 100% completion levels by 31st January, 2014).

9. Overall, there are large positive impacts from the infrastructure works. The new road infrastructure constructed has increased traffic flow in the area and helped to decongest the nearby Bombo and Gayaza Roads. They helped to increase accessibility and connectivity, and opened up new catchment areas to economic development and new economic activities along the project road corridors have already emerged. This included the emergence of new buildings and developments such as retail shops. This in turn has enhanced the socioeconomic standards of the residents in Kampala city.

10. The project has improved the livelihoods of the people living close to the infrastructural improvements and generated skilled and unskilled employment for the local people, For example, in the area of Kawempe-Tula, Bukoto-Kisasi, Bwaise-Kawaala and Kawempe- Mpererwe, both short term and long term off-farm employment opportunities for local people were created, including maintaining existing roads, building new roads, driving vehicles, and working in automobile workshops. The roads were constructed using highly labor-intensive methods which generated greater employment. In addition, the people living at Kisaasi roundabout informed the team during the May 2013 mission that the hours of business have extended beyond mid-night, in contrast to before the project interventions when shops would close by 8.00pm.

11. The continuous flooding phenomenon in the area of Bwaise, Karelwe and Kawaala whenever it rains (which was a result of the previous small drainage channel) has not reoccurred after the construction of Lubigi channel. This has reduced sanitation related issues and in turn, less time spent in health centers as evidenced in the OPD utilization rate in the KCCA health centers. This implies more time devoted to work which translates into better living standards.

Other Impacts 12. Social and Economic Impact: The project was envisaged to enhance improvement in service delivery for Kampala city resident with an aim of bettering their lives. There was overwhelming stakeholder support for the KIIDP project as a whole, as it would lead to improved social and economic opportunities. As mentioned, the project generated local employment and benefitted the local economy through wages earned during construction and payment to service providers. The constructed roads established useful road linkages and increased accessibility amongst residents and market/employment centers and facilitated the flow of goods & services. This, in turn, enhanced the socioeconomic standards of the residents in Kampala city.

13. Environmental Impact: There was no major negative environment impact as the roads did not pass through any environmentally sensitive areas (wetland) and the infrastructure improvements generally led to better environment and improved public health (e.g. Lubigi Channel). However, some environmental challenges were experienced during project implementation. For the Lubigi Channel, the main challenge was the recurring water hyacinth growth on the completed section of the channel caused by stagnant water in the channel and inappropriate disposal of excavated materials (provision for waste- tipping areas in the design was inadequate, as was site supervision during excavation; disposal of waste improved during the later phases of the project implementation). Steps

have been taken to resolve this issue and the hyacinth was removed by project completion.

Implementation Issues and Challenges Encountered

14. Contracts management and construction supervision: The ISM for November 18 – 25, 2011 noted some delays in the procurement processes which were attributed to the delays in the review by the Contract’s Committee. Some contracts were awarded based on the lowest bidder principle. In most cases, these contractors under quoted the assignments which heavily constrained their capacity to deliver the expected outputs on time. This was exacerbated by diversion of advance payments by the contractors to other jobs rather than deploying the resources to the execution of the project. As a result, such contractors were always cash stricken and did not have sufficient cash flow to advance the works at the desired pace. Hence, delayed completion of the projects.

15. The special account threshold (US$ 2 million) was in some cases inadequate to support the project in meeting the payment requirements. Therefore, the team was compelled to issue direct payments in some cases. The direct payment process is quite lengthy and it increases the payment period by another two weeks. This has been mitigated by changes being implemented where the replenishment is guided by the Financial Management Reports (FMRs) that will be based on 6 months cash flow forecasts submitted by the project team.

16. Inadequate contract supervision resulting from incompetence on the side of the consultant but also due to dual role played by KCCA staff (supervising the project while carrying out other functional roles). Injunctions and other administrative reviews also delayed the commencement of some projects, for example, Kimera Road and Soweto Road. This did not only affect the completion dates but exposed the institution to additional costs.

17. Challenges in implementing RAP. Implementation of the RAP became a challenge. Originally it was the role of the Government of Uganda to implement the RAP. However, because of deficits in the budget, the Government was unable to honor its obligations. This resulted in delay in the implementation of the project since settlement of RAP has to be completed before infrastructure works could begin. During the midterm review, the Bank together with KCCA provided USD 1,860,000 (approximately UGX 5 Billion) for compensation. This was however insufficient to settle the affected people on all the KIIDP projects, as deemed by further valuations. By project closing on 31st December, 2013, UGX 1.4 Billion had not been resolved, causing damage to institutional image. However all outstanding eligible RAP has since been paid for.

18. Inadequate staffing. This posed a challenge when it came to implementation of project activities. This perhaps explains the delays in procurements, effective supervision and execution of project activities and fund replenishments. Previously in KCC, the project team was solely responsible for implementation of the whole project yet later in KCCA, the project was fully mainstreamed. However since KCCA was operating at 30% of the overall structure, this meant multi-tasking for the few staff. This probably explains the slow pace at which the project activities were executed.

19. Transition from KCC to KCCA. The transition process partially affected the performance of the project given that the new staff did not participate in the project development process and therefore required significant time to understand and thereafter implement

the project. The team was also not very conversant with the World Bank project implementation guidelines and this resulted in longer transaction time.

Sustainability

20. The sustainability of the Project is rated likely. The measures being put in place are summarized as below:

a. Institutional Improvements. KCCA has made a provision in its annual budget for the repair and maintenance of the IT equipment’s that were procured under KIIDP. KCCA is planning for a framework contract for the maintenance of the vehicles. To ensure sustainability of the capacity built, the Directorate of Administration and Human resource came up with the Staff Training and Development Bond agreement that bonds the beneficiary for a period not less than 3 years. Following approval of the Kampala Physical Development Plan, KCCA through the directorate of Physical planning is planning to develop the detailed master plans for the 5 Divisions and KCCA needs Parliament support and funds to execute this as a priority. The functionality of the installed GIS software in the Physical Planning Directorate will be instrumental in enhancing revenue collection although it needs to be enhanced. To ensure quality control, KCCA put in place a Quality Management System (QMS) for the Engineering & Technical Services directorate together with Physical Planning. Processes for the two directorates were re-engineered and standards of service developed. The QMS will be rolled to other directorates and once completed will form a critical input into the development of the Institutional service charter.

b. Infrastructure. It is the mandate of Technical Services directorate to keep all city roads and infrastructure in good condition and the maintenance of the land fill falls under the responsibility of the directorate of Public Health and Environment. KCCA is planning to budget and provide adequately for the repair and maintenance of the road infrastructure, drainage channel and landfill. KCCA is already maintaining the newly constructed roads by regularly sweeping them. Regular de-silting will be carried out in order to keep the Lubigi Channel in good shape. On a yearly basis, budgetary allocations are made to maintain the landfill and KCCA will extend the maintenance services to the new landfill.

Key Lessons Learnt and Recommendations 21. The project gives rise to a number of lessons learnt and recommendations as summarized below.

a) Construction works of both roads and drainage channels require a high level of site supervision to ensure timely delivery of the required output, quality standards and to support contractor in executing their works. Therefore in phase 2 of the project, provisions for resident clerk of works, planning advisor, site agent and quality assurance specialist should be made to ensure quality of works and timely delivery of works.

b) Advance recruitment of consultants, where possible, sufficient due diligence on contractors and establishing necessary project management systems should be undertaken in development projects to facilitate infrastructure works. This is to

avoid unnecessary delays in implementation. Staff should also be adequately trained and equipped with the appropriate project implementation skills to ensure better project management and supervision.

c) A simplified procedure for approval and payment to contractors should be established and put into operation before any construction starts. This will help address the delays that were experienced while implementing the project. Measures should be put in place to ensure that contractors pay service providers and laborers on time to avoid delay in provision of required inputs and strikes by the laborers. (KCCA had addressed this by opening up an Escrow account to pay for the required inputs from the service providers and the laborers.)

d) Road maintenance needs to be considered from the planning phase to the post - construction phase. Commitments need to be monitored against indicators during the implementation stage, so that a reliable mechanism to carry out operation and maintenance after construction can be put in place

e) An increase in the traffic flow was observed especially on Karerwe – Tula road which has resulted in traffic jam on peak hours and accidents during normal times because of speeding. KCCA needs to upgrade the nearby Mambule road and signalize junction so as to decongest the newly constructed Kalerwe –Tula road. Future road improvements should be informed by broader, more comprehensive city-wide transport planning so as to reduce traffic congestion as much as possible.

f) The project has been instrumental in building capacity of the KCCA staff in various fields. The acquired skills will be of great importance in operation and maintenance of KIIDP infrastructure as well as in implementation of KIIDP II. So the institution should devise ways of retaining the trained staff to ensure sustainability of the project outcomes.

g) The project did not generate any quantified data on the impact that the project has had on land use and the development of social, economic and commercial activities. The Bank and KCCA should include monitoring of socio-economic indicators in KIIDP II.

h) Community participation/involvement is very important especially when the Project is seen to be addressing urgent needs of the community. Community engagement activities under KIIDP, such as through the barazas and citizen scorecards could be further enhanced, in terms of the frequency, types of activities and how they are conducted. The engagement of local NGOs can also ensure that local people are better informed and mobilized.

Bank Performance 22. Project design and implementation support: Bank performance overall was considered efficient and effective. Bank provided adequate staff time for missions and field supervision. Eight (8) Implementation Support Missions (ISM) and one (1) midterm review missions were conducted regularly during project design, implementation and at closure of the project. The Bank also allowed flexibility and in the ISM of November 18 – 25, 2011 agreed to a number of adjustments to overcome problems that had arisen during the transformation process from KCC to KCCA. In that regard, the Bank agreed to

a one year extension of the loan closing date from 31st December, 2012 to 31st December, 2013 (which had already been extended by a year before). Bank supervision made it possible to resolve some issues encountered during the implementation phase and enhanced the progress of project implementation, in particular on technical and financial problems related to works on the Lubigi channel, phase 2 roads and extension and fencing of Kiteezi landfill. For example, in the November 26-30, 2012 mission, the Bank advised KCCA to negotiate with Lubigi Contractor to sub-contract the box culvert for the Northern bypass crossing and Bwaise culvert crossing to reduce time needed and finish the project within the extended contract date.

23. Environmental and Social management: The Bank environmental specialist provided guidance to mitigate the impacts as set out in the Environmental Analysis (EA) report and Environment Management Plan (EMP). The Governance and Anti-corruption team (GAC) also successfully monitored the transparency measures related to the institution.

24. Fiduciary: The Bank continuously carried out procurement capacity assessment for KCC as indicated in the successive implementation missions. For example in the November 2012 mission, the Bank agreed with KCCA to organize post procurement review mission and share findings with the borrower. Bank missions regularly reviewed Procurement Plan, audit reports and provided comments where necessary and the required clearances timely.

Borrower’s Performance 25. Project design and Implementation: The performance of the KCCA in carrying out the responsibilities assigned to them was satisfactory. KCCA prioritized the implementation of the KIIDP and ensured availability of the counterpart funding, after taking over from KCC. The assessment of KCC’s capacity at appraisal was reasonably accurate however staffing levels after the transition process into KCCA were not satisfactory (398 permanent staff or 30% of overall structure). However, KCCA provided as many as possible, suitable qualified and experienced staff, resources and support facilities for the project implementation. A KIIDP team led by the Project Coordinator, supervised by the Deputy Director Strategy Management and under the Deputy Executive Director was behind the project implementation. This team coordinated all the project activities well and provided support to component owners under the relevant Directorates so that they could implement their components successfully. However, delivery was adversely affected by (i) transition process from KCC to KCCA and (ii) lack of closer supervision of the contractor.

26. General Execution and Implementation: The project team strove to implement all the recommendations of the supervision missions in a timely manner, although there were lapses due to various factors and capacity issues. For the most part, the Borrower/Donor used the works progress reports, project account audit reports and the recommendations of supervision missions in their decision-making.

27. Fiduciary: The arrangements for implementation of the project, contracting and disbursements were kept the same throughout the project as was set out in the PAD, the loan agreement and the Protocol of Agreement. However, delays in procurement and sometimes ineffectiveness were encountered. (It is to be noted though, that the KIIDP project team does have other responsibilities within KCCA and thus a general lack in

sufficient capacity to support project implementation.) There were notable improvements in payment processing with minimum delays, although lapses exist (such as the automated accounting system was not functioning properly as expected). The project team has been active in submitting applications for both replenishments and direct payments through e-disbursements. External audit reports for the subsequent financial years were regularly prepared, approved and submitted to the Bank.

Comments on Draft ICR (if any)

28. No additional comments.

Annex 8. Comments of Co-financiers and Other Partners/Stakeholders NA

Annex 9. APL Triggers, Benchmarks and Status

Triggers Benchmarks Status (at Project Closure – 31 December 2013) Partially Achieved. As at December 31, 2013 a total of 399 permanent staff and 529 temporary staff have been appointed out of the 1332 staff required. Hence current staff level is 69.6% filled, higher than the 68% midterm review target for Staffing level 80%38 the financial year 2012/2013. Staffing level started at zero

filled. when KCCA was formed, in place of KCC and thus a longer time was required to increase the staff level. The filling of vacancies is also being halted by limited funds for staff salaries. Achieved. Performance based compensation system for key staff including Directors, Deputy Directors and other Senior Staff has been fully implemented. • Out of the 359 staff who had been appointed by June 2013, 230 had made six months and thus qualified for performance evaluation. Performance based • Out of the 230, 95.1% met and exceeded their compensation system performance expectations, while 4.8% required implemented for Key improvement. There were neither outstanding nor New organizational staff (Heads of unsatisfactory performances registered system operational Department, Deputy • Level 1 – Unsatisfactory performance – Heads and Senior Termination on performance grounds Principal Assistant • Level 2 – Needs improvement – Put on Town Clerks). Performance improvement plan (PIP) • Level 3 – Meets expectations – Paid a normal monthly salary and encouraged to improve further • Level 4 – Exceeds expectations – Promoted if a vacancy exists • Level 5 – Outstanding performance – Promoted immediately and paid a performance bonus. Achieved. The staff code of conduct is being enforced. KCCA management is committed to implementing GAC activities particularly those aimed at enhancing the culture of Enforcement of the transparency, accountability and due process. Management is Leadership Code. also enforcing a policy of “zero” tolerance to corruption. In FY2012/13 disciplinary actions were taken on a total of 31 KCCA staff (16 termination, 8 interdictions, 3 warnings, and 4 interdictions being lifted). Achieved. The Citizens Scorecard has been conducted annually except with lapses during the transition period from Establish and Framework for KCC to KCCA. Under KIIDP, two Citizen Scorecard Card implement a formal measuring KCCA reports were completed - in 2011 and 2012 and a copy has public consultation performance by been shared with the Bank. KCCA management has process stakeholders in place. continued to take on board the findings so as to address citizens’ views and concerns.

38 This is the percentage level recommended by Public Service.

Achieved. Following the preparation of the new KCCA Corporate Strategy, the media strategy has been discussed by Media strategy KCCA management and a rebranding process completed. implemented The new KCCA corporate identity and status, including a new logo was launched on November 29, 2012. The implementation of the media strategy is on-going.

Achieved. KCCA has continued to hold conference for all Budget and stakeholders. Since April KCCA has held five “barazas”39 development planning and shared three of the reports with IDA team during the consultation carried out November 2013 mission.

Reduce the stock of overdue liability from Achieved. Overdue liabilities had been reduced from UGX 8 billion to UGX UGX8bn to 040. Implementation of 0.5 billion financial recovery action plan (FRAP) Increase own source revenue from UGX 22 Achieved. OSR collection for FY2012/13 was UGX55.71 billion to UGX 33.5 billion. billion

Achieved. In the FY2012/13, out of a total OSR budget of Provision and release of UGX75.69 billion, UGX24.75billion (32.7%) was allocated adequate O&M budget to O&M. Comprehensive O&M plan for infrastructure Quality control system Achieved. The Quality Management System (QMS) were in place and introduced in Engineering and Works and Physical Planning operationalized for both Directorate. Plans are underway to roll out the system to the O&M and new other Directorates/Departments under the proposed KIIDP construction. II. Infrastructure investments selected Achieved. Infrastructure investments were selected based on based on sound Effective sound appraisal and public consultation. implementation of appraisal and public the infrastructure consultation. rehabilitation and Achieved. QAS has been started in the engineering and maintenance Quality Assurance technical services with plans to roll out the system to all the system is operational. KCCA departments.

39 Public stakeholders’ meetings. 40 While an amount of UGX 2.6 billion was still recorded as KCCA liabilities, there are no supporting documents for the claims. KCCA is in the process of clearing off the liabilities officially through the Accountant General. So far, public notices have been published in the print media requesting for potential claimants to come forward but no response was received. Thus the liabilities would most likely be written off by mid-year after further verification by the Accountant General.

Annex 10. List of Supporting Documents

1. Strategic Framework for Reform II (2005-2010), August 2006 2. KIIDP Project Appraisal Document, September 2007 3. KIIDP Financing Agreement, February 2008 4. KIIDP Project Agreement, February 2008 5. KIIDP Resettlement Action Plan, October 2006 6. KIIDP Environmental Analysis, November 2006 7. KIIDP Aide Memoires and Implementation Status and Results Reports, Various Dates 8. KIIDP Restructuring Papers and Amendments to Financing Agreement, October 2010 and December 2012 9. KIIDP Mid-Term Review Report (Technical Assessment Report), December 2010 10. KIIDP Audit Reports, Various Dates 11. The Kampala Capital City Act, 2010 12. KCCA Strategic Plan 2013/14-2017/18, Draft, November 2013 13. Community Baraza reports, Various Dates 14. Citizens Report Card Final Reports, November 2011 and February 2013 15. KIIDP Implementation Completion Report by KCCA, April 2014