Language: English Original: French AFRICAN DEVELOPMENT FUND

PROJECT : CAMEROON: KUMBA-MAMFE ROAD DEVELOPMENT PROJECT

COUNTRY : CAMEROON

PROJECT APPRAISAL REPORT

Team Leader J. K. NGUESSAN, Principal Transport OITC.1 Engineer A. KARANGA, Chief Transport Economist OITC.1 J.P. KALALA, Principal Socio-economist OITC.1 M. KINANE, Environmentalist ONEC.3 E. FLUET, Socio-economist ONEC.3 S. MBA, Senior Transport Engineer OITC.1 Appraisal Team K. SEKOU, Regional Financial Management ORPF.2 Coordinator C. AHOSSI, Regional Procurement ORPF.1 Coordinator

Sector Director G. MBESHERUBUSA OITC Regional Director M. KANGA ORCE Division Manager J.K. KABANGUKA OITC.1

J.N. ILBOUDO OITC.1 P. HORUGAVIE OWAS. 1 M. SOUARE OITC.2 Peer Reviewers M. BENARD OITC.1 P. MORE OITC.2 A. SOW OSAN.3 M. MBODJ, Transport Economist/Consultant OITC.1

TABLE OF CONTENTS

I. STRATEGIC ORIENTATIONS AND JUSTIFICATION ...... 1 1.1 Project Linkages with Country Strategy and Objectives ...... 1 1.2 Justification for Bank Intervention ...... 1 1.3 Donor Coordination ...... 2

II. PROJECT DESCRIPTION ...... 3 2.1 Project Objectives and Components ...... 3 2.2 Technical Solutions Adopted and Alternatives Explored...... 3 2.3 Project Type ...... 4 2.4 Project Cost Estimates and Financing Arrangements ...... 4 2.5 Project Area and Beneficiaries ...... 6 2.6 Participatory Approach for Project Identification, Design and Implementation including Active Private Sector Involvement ...... 6 2.7 Bank Group Experience and Lessons Reflected in Project Design ...... 7

III. PROJECT FEASIBILITY ...... 8 3.1 Economic and Financial Performance ...... 8 3.2 Environmental and Social Impact ...... 9

IV. IMPLEMENTATION ...... 13 4.1 Implementation Arrangements ...... 13 4.2 Procurement Arrangements ...... 14 4.3 Financial Management and Disbursement Arrangements ...... 14 4.4 Monitoring ...... 15 4.5 Governance ...... 15 4.6 Sustainability ...... 16 4.7 Risk Management ...... 17 4.8 Knowledge Building ...... 18

V. LEGAL FRAMEWORK ...... 18 5.1 Legal Instrument ...... 18 5.2 Conditions Associated with Bank Intervention ...... 18 5.3 Compliance with Fund Policies ...... 19

VI. RECOMMENDATION...... 20

LIST OF TABLES AND GRAPHS No. TITLE Page Table 1-1 – Donor Coordinator ...... ……………..2 Table 2-1 - Project Components ...... 3 Table 2-2 - Alternative Options Envisaged and Causes of Rejection ...... 5 Table 2-3 - Cost Estimates by Component (in UA million) ...... 5 Table 2-4 - Sources of Financing (in UA million) ...... 5 Table 2-5 - Costs by Expenditure Category (in UA million) ...... 5 Table 2-6 - Expenditure Schedule by Source of Financing (in UA million) ...... 5 Table 3-1 - Summary Economic Analysis ...... 9 Table 3-2 - Accident Statistics ...... 11 Table 4-1 - Project Monitoring and Supervision ...... 15 Graph 1: Trend of Road Fund Revenue ...... 17

ANNEX I: COMPARATIVE SOCIO-ECONOMIC INDICATORS ANNEX II: CAMEROON’S PORTFOLIO STATUS AS AT 31 JULY 2012 ANNEX III: KEY RELATED PROJECTS FINANCED BY THE BANK AND OTHER DEVELOPMENT PARTNERS IN THE COUNTRY ANNEX IV: MAP OF THE PROJECT AREA Currency Equivalents July 2012

UA 1 = USD 1.517 UA 1 = EUR1,55333 1.205 UA 1 = CFAF 790.664

Fiscal Year 1 January – 31 December

Weights and Measures

1 metric tonne = 2204 pounds 1 metre (m) = 3.28 feet 1 millimetre (mm) = 0.03937 inch 1 kilometre (Km) = 0.62 mile 1 hectare (ha) = 2.471 acres

ACRONYMS AND ABBREVIATIONS AADT : Annual Average Daily Traffic ADB : African Development Bank ADF : African Development Fund CAA : Autonomous Sinking Fund BDEAC : Development Bank of Central African States CEMAC : Central African Economic and Monetary Community Bank and World Bank-funded Road Project Coordination and CSEPR-BAD-BM : Monitoring Unit DIPER : Department of Road Investments and Environmental Protection ECCAS : Economic Community of Central African States ECOWAS : Economic Community of West African States ERR : External Rate of Return EU : European Union GESP : Growth and Employment Strategy Paper JICA : Japanese International Cooperation Agency MINEPAT : Ministry of Economy, Planning and Regional Development MINTP : Ministry of Public Works NIS : National Institute of Statistics NPV : Net Present Value PA : Project Area PRSP : Poverty Reduction Strategy Paper RBCSP : Results-Based Country Strategy Paper RF : Road Fund RMP : Road Master Plan STD : Sexually Transmitted Disease UA : Unit of Account VOE : Vehicle Operating Expenses

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PROJECT BRIEF

Client

Borrower : Republic of Cameroon

Project Name : Kumba-Mamfe Road Development

Project Area : South-West Region of Cameroon

Executing Agency : Ministry of Public Works through the ADB/WB Project Monitoring Unit (CSEPR BAD/BM)

1. Financing Plan

Source Amount Instrument (UA million) ADF Loan (Country Allocation) 47.26 Project loan BDEAC 31.62 Loan Government of Cameroon 29.57 Investment Budget TOTAL 108.45

2. Key ADF Financial Information Loan/Grant Currency Unit of Account (UA) Type of interest Not applicable Interest rate margin Not applicable ADF loan service charge 0.75% yearly on loan amount disbursed but not yet reimbursed ADF loan commitment charge 0.5% on loan amount not disbursed120 days after signature of the Loan Agreement Other charges Not applicable Tenor 50 years Grace period 10 years FIRR, NPV (baseline scenario) Not applicable ERR, NPV (baseline scenario) 19.36% and CFAF 41.92 billion

3. Time Frame – Main Milestones (expected) Activities (Month, Year) Concept Note Approval June 2012 Project Approval November 2012 Effectiveness June 2013 Last Disbursement December 2017 Completion December 2017 Last Repayment December 2063

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EXECUTIVE SUMMARY Project Overview

The project seeks to improve the level of service of the Kumba-Mamfe Road (NR8), which is an extension of the multinational Bamenda-Mamfe-Ekok-Nigeria border Corridor under constructed with Bank financing. The project road works cover a linear distance of 150.87 km. The project also comprises related works concerning the development of rural roads, rehabilitation of socio-economic infrastructure, and promotion of youth employment. The expected outcome is the overall reduction of transport costs in this region which has a high agricultural potential.

The project implementation will cover 5 years at a total cost estimated at UA 108.45 million. ADF’s contribution is estimated at UA 47.26 million. The other co-financiers are the Development Bank of Central African States (BDEAC) (UA 31.62 million), and the Republic of Cameroon (UA 29.57 million). The direct beneficiaries of the project are the 1,384,286 inhabitants of the three divisions of the South West Region, while the people of Nigeria’s eastern States will benefit from the project indirectly, given its regional nature. The beneficiary population will contribute to the construction, management and maintenance of some related infrastructure.

Needs Assessment

The development of the high potential South West Region is hampered by problems of access, mostly during the eight rainy-season months when the region is virtually cut off from the rest of the country. The very advanced state of deterioration of the road, coupled with the heavy traffic, have hampered all maintenance and resurfacing works from producing an acceptable level of continuous service on the road. Having gone beyond all maintenance thresholds of this road, development and/or rehabilitation are not only urgent but stand as the only possible alternatives. Furthermore, since this road is an extension of the Bamenda-Enugu Corridor between Cameroon and Nigeria towards the economic capital Douala, its development will help to generate higher returns on the investment made on this corridor constructed with Bank financing.

Value Added of the Bank

The Bank’s value added in financing this operation is knowledge of the South-West Region of Cameroon. For over 15 years, the Bank’s transport sector interventions have largely concentrated on this region. The Bank financed the development of sections of the Bamenda- Batibo, Bachuo Akagbe-Mamfe and Melong-Dschang roads under the road programme (1991-2002), as well as the Numba-Bachuo-Ajkagbe road (2006-2012) and the multinational Bamenda-Mamfe-Enugu corridor still under construction. This new operation will enable the Bank to consolidate the gains of previous projects and meet the objectives of the country’s infrastructure development strategy. Further, this project will support the implementation of the youth employment initiative in the construction sector by training youth groups in labour- intensive techniques and organizing “worksite schools” with the technical assistance of the International Labour Office (ILO).

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Knowledge Management

The project will be an opportunity to improve knowledge of national infrastructure. It comprises a major institutional study that will allow for proper programming and rational planning of road investments. Furthermore, in order to draw lessons from this project, a monitoring and evaluation mechanism will be established by the executing agency with the support of the National Institute of Statistics (NIS), tasked with tracking project and GESP indicators. The definition of key impact indicators before project start-up and the assessment of impacts at project completion will help to generate useful information on the project outputs and impact. The project lessons, experiences and knowledge will be managed in a database in the MINTP and disseminated through the Bank’s annual reports and website. The database will facilitate the management of all knowledge acquired during implementation of project activities.

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RESULTS-BASED LOGICAL FRAMEWORK

REPUBLIC OF CAMEROON : KUMBA-MAMFE ROAD DEVELOPMENT PROJET

Project Objective: Contribute to opening up and developing the South-West Region of Cameroon

PERFORMANCE INDICATORS VERIFICATION RESULTS CHAIN RISKS/MITIGATION MEASURES Indicator MEANS Baseline Situation Target (including ISC)

Contribute to Cameroon’s economic Report of the Ministry of growth through quantitative and 1. Volume of average 1. In 2011 : 665 In 2017 : 990 vehicles/day, or Public Works qualitative strengthening of transport daily traffic on the vehicles/day a 33% increase infrastructure and its integration with road network of the Statistics of the Ministries West Africa South-West Region in charge of external trade

IMPACT of Cameroon and Nigeria 2. % of exports to 2. In 2011: 8% In 2020: 15% Nigeria

Impact 1 : The level of service on the Vehicle operating expenses In 2011, the VOE were: (i) As from 2017, the VOE will Risks (i) Failure to honour commitments in respect of inspection Kumba-Mamfe road is improved (VOE). CFAF 456/km for light be: (i) CFAF 276/km for light of axle load and total laden weight; (ii) low mobilization and, in vehicles, and (ii) CFAF vehicles, and (ii) CFAF 976 particular, use of resources for road maintenance; (iii) fragility 1,688 for heavy vehicles. for heavy vehicles Project impact and lack of adherence of youth organizational structures monitoring/evaluation reports produced by NIS Mitigation Measures. (i) A programme to phase in axle-load Travel time In 2011, the average travel As from 2017, travel time inspection stations on major roads is implemented by the country time was 5 hours in the dry will be 2 hours all year round MINT studies and surveys while complying with the relevant regional guidelines; (ii) Road season and 8 hours in the Fund revenue has increased significant every year since 2004 to rainy season CFAF 64 billion in 2010, and today covers nearly 80% of road maintenance needs, including all routine maintenance

Impact 2 : Rural accessibility and the (i) Rural access index is In 2011 : (i) the rural access In 2017: (i) the rural access requirements, as well as improved planning and programming of

TS living conditions of the PA residents are measured by the percentage index in the PA was 5% ; index will rise to 20% in the road maintenance through the expected project support; (iii) C improved of people living at less than (ii) CFAF 1,230,453 per PA; (ii) CFAF 1,538,066 per youth organizations benefit from the active supervision of the 2 km from motorable roads; inhabitant inhabitant, or a 25% increase Ministry of Youth Affairs and all youth structures. Furthermore, EFFE (ii) level of per capita the ILO will support the implementation unit, particularly in the income conduct of training sessions and creation of youth economic interest groups. Impact 3 : Conditions of access to youth (i) Percentage of 0% youths trained in 2011 At least 200 youths trained, Statistics of the Ministry employment improves youths trained in LI 30% of them females of Youth Affairs techniques At least 40 rural road (ii) Percentage of committees formed Impact report produced by rural road committees At least 20 youth groups NIS formed formed and trained (iii) Percentage of youth economic interest groups formed and trained

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PERFORMANCE INDICATORS VERIFICATION RESULTS CHAIN RISKS/MITIGATION MEASURES Indicator MEANS Baseline Situation Target (including ISC)

Output 1 : Road works 1.1 Linear distance of 2.1. In 2017, 150.87 km of 1. Progress 1.1 Works on the main road the road Main road degraded roads developed and reports of executing 1.2 Works inspection and 1.2 Number of works paved agencies supervision inspection and 2.2. In 2017, at least 8 half- 2. Project 1.3 Public sensitization on STIs, road supervision reports yearly works progress supervision reports safety and environmental produced reports 3. Project protection 1.3 Number of people 2.3. In 2017, at least 1,000 completion reports Risks : (i) Delays and lack of transparency in the procurement sensitized in the two people sensitized in the process; (ii) increase in the cost of works; (iii) late mobilization of countries (HIV, road area on HIV, road counterpart contributions; (iv) weak capacity to manage and safety, and safety and maintain socio-economic infrastructure and facilities provided to environmental environmental issues the population; (v) weakness of the national youth employment issues). support system.

Mitigation measures: (i) Creation of a Ministry in charge of Output 2 : Related works 2.1. Linear distance of Poor quality of rural roads 2.1. 118 km of rural roads Statistics of the Ministry Public Procurement; broadening of competition by differentiating 2.1 Rural roads rural roads in the area developed of Public Works contracts by their size; a priori review of the procurement process 2.2 Rehabilitation of basic socio- 2.2. Number of basic 2.2.1. 5 markets rehabilitated by the Bank; (ii) Project costs determined based on detailed economic infrastructure socio-economic Deterioration of socio- 2.2.2. 4 women’s centres and technical studies and cost of similar ongoing projects in the area; 2.3 Inspection and supervision of infrastructures economic infrastructure 4 for youth centres, (iii) Government’s determination to channel close to 70% of related works 2.3. Number of works 2.2.3. 6 schools rehabilitated official assistance to road infrastructure; opening and inspection and 2.2.4. 132 lots of minor replenishment of the counterpart funds account stipulated as a supervision reports agricultural equipment loan condition; the country’s proven capacity to mobilize supplied to women internal resources through public borrowing; (iv) maintenance of 2.2.5. 2 ambulances investments through the contributions system already put in delivered, 50 lots of place by women’s associations; (v) Establishment of support emergency first-aid structures by the Government for youth employment. materials supplied and a health centre rehabilitated 2.3. 60 related works inspection reports available

Output 3 : Institutional support to the Study reports produced Out-dated road sector policy 3.1. In 2015, one RMP - - Study report submitted to transport sector update study report the Bank by the Government 3.1. Update of Road Master Plan available and validated; - - Impact monitoring report 3.2. Support for the creation of 3.2. In 2017: 200 youths - Training report youth employment trained in road maintenance tasks and 10 youth EIGs created

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PERFORMANCE INDICATORS VERIFICATION RESULTS CHAIN RISKS/MITIGATION MEASURES Indicator MEANS Baseline Situation Target (including ISC)

Output 4 : Project management Reports produced 20 quarterly project 4.1. Project financial audit implementation monitoring 4.2. Monitoring and evaluation reports submitted between 4.3. Support for the Unit 2013 and 2017 4.4. Road safety audit 1audit report per year between 2014 and 2018 3 road safety audit reports

COMPONENTS RESOURCES 1. Road works: 150.873 km of road, actions and measures to mitigate negative environmental impacts, road works supervision, sensitization on environmental protection, road safety, AIDS/STD and malaria prevention Components UA million 2. Related works: development of about 118 km of feeder roads, rehabilitation of social infrastructure, rehabilitation of market 1. Road works 85.77

facilities, supply of minor agricultural equipment to women’s associations, support for road safety and inspection and 3. Related works 4.90 S supervision of related works IE 4.Institutional support for the transport sector 1.64 3. Institutional support for the transport sector: Update of the Road Master Plan, support for youth job creation. 5. Project management 1.29 4. Project management: Equipment and operation of the project executing agency, project monitoring-evaluation, financial audit Base costs 93.60 and road safety audit.

ACTIVIT Physical contingencies 9.18

Price escalation 5.67

KEY Total Project Cost 108.45

Sources of financing ADF : UA 47.26 million CASDB : UA 31.62 million Gov’t of Cameroon: UA 29.57 million

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PROJECT IMPLEMENTATION SCHEDULE CAMEROON: KUMBA-MAMFE ROAD DEVELOPMENT

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REPORT AND RECOMMENDATION OF BANK GROUP MANAGEMENT TO THE BOARDS OF DIRECTORS CONCERNING A PROPOSAL FOR A LOAN OF UA 47.26 MILLION TO THE REPUBLIC OF CAMEROON TO FINANCE THE KUMBA-MAMFE ROAD DEVELOPMENT PROJECT

I. STRATEGIC ORIENTATION AND JUSTIFICATION

1.1 Project Linkages with National Strategy and Objectives

1.1.1 This project is in line with the strategy defined in the Growth and Employment Strategy Paper (GESP) for 2010-2020 in which the Government of Cameroon reaffirms its determination to continue striving to achieve all the Millennium Development Goals (MDGs), allocate nearly 70% of official assistance to road infrastructure, gradually raise the proportion of public investment in the total State budget from 20% to 30%, and enhance supervision in the construction of visible infrastructure.

1.1.2 Furthermore, the project is consistent with the “Cameroon Vision 2035” Paper, which considers that infrastructure development should closely comply with economic objectives aimed at transforming the country into a major trade hub in Central Africa.

1.1.3 This road project also complies with Cameroon’s transport sector policy guidelines which lay emphasis on the importance of developing road infrastructure as a means of helping to open up rural areas, reduce poverty, improve access to basic social services, and promote regional integration. In view of its regional scope, the road forms part of the priority components of the ECCAS Central African Consensual Transport Master Plan (PDCT-AC) and will help to increase trade between two Regional Economic Communities – ECCAS and ECOWAS.

1.1.4 Lastly, the Bank’s involvement in this project is in line with Pillar II of the Country Strategy Paper (2010-2014) for Cameroon concerning infrastructure development and continued support for sustainable transport sector growth, as well as with the Central African Regional Integration Strategy Paper (RISP) for 2011-2015.

1.2 Justification for Bank Involvement

1.2.1 The Bank’s involvement is justified by the project’s compliance with its medium- term strategy (MTS) for 2008-2012 which prioritizes infrastructure, while laying emphasis on regional integration. Furthermore, the South-West Region of Cameroon, an area of high agricultural and tourist potential, is unable to play a leading role in the country’s economic development mainly because of problems of accessibility and mobility of factors of production. The advanced state of deterioration of the road, compounded by the heavy vehicle traffic on it, calls for its urgent rehabilitation. Furthermore, given that the road is an extension of the Bamenda-Enugu Corridor between Cameroon and Nigeria towards the economic capital, Douala, its development will help to generate higher returns on the investment made on this corridor constructed with Bank financing.

1.2.2 For some fifteen years now, the Bank is the most active transport sector donor in the South-West Region of Cameroon. This project is a continuation of previous projects financed by the Bank, namely: (i) the development of sections of the Bamenda-Batibo, Bachuo Akagbe-Mamfe and Melong-Dschang roads under the road programme (1991-2002), as well as the Numba-Bachuo-Akagbe road (2006-2012), the Bamenda-Mamfe-Ekok-Nigeria border Corridor under construction and the transport facilitation programme between the Douala-

Bangui-Ndjamena corridors. With this new operation, the Bank will consolidate the gains of previous projects and help to achieve the objectives set in the country’s infrastructure development strategy.

1.3 Donor Coordination

1.3.1 The Ministry of the Economy, Planning and Regional Development (MINEPAT) is responsible for aid coordination and cooperation with donors at national level. It includes the Department of Regional Integration (DRI), which is the Bank’s focal point for economic and technical cooperation. As regards the Technical and Financial Partners, the Multi-Partner Committee for PRSP Monitoring set up in June 2001 is a platform for dialogue and exchange on all key development issues in Cameroon. The Committee is supported by technical and thematic sub-committees for the alignment and harmonization agenda. The Bank is member of all these thematic and sector groups, participates in IMF and WB dialogue missions in Cameroon and, since September 2008, is the Lead of the Public Finance Sector Committee.

1.3.2 Concerning the transport sector specifically, sector dialogue is organized around a sub-committee established in 2007 under the CEMAC Zone Transport Facilitation Pilot Programme. It comprises the EU (Lead), WB, AFD and the Bank and meets at least once every three months when convened by the Lead. During these meetings, sector problems are regularly discussed with the Government.

1.3.3 The Bank team held discussions with these key TFPs during the project identification, preparation and appraisal missions. The discussions helped to harmonize views on the project components and on the financing of road maintenance. All the partners recognized the importance and interest of the project, which is fully consistent with the interventions of the other partners.

Table 1.1 – Donor Coordination Importance Sector or Sub-sector* GDP Exports Labour Transport 6.47 % 11.87 % 14.1 %

Stakeholders – Annual public expenditure (2005-2010 averages) * Government (USD million) Donors Amount (USD million) [%] 405 ADF 74.33 29.72% AFD 28.2 11.28% European Union 48.99 19.59% JICA 10 4.00% WB 88.57 35.42% TOTAL 250.09 100.00% Level of aid coordination

Yes, the MSC was set up in 2008 Existence of thematic working groups Existence of SWAP or global sector programme YES ADB’s role in aid coordination [L] L : Lead; M: Member (not Lead) : None: no role Sources : MINFI, Cameroon 2004 and 2005, TOFE 2002 to 2010 and Cameroon’s Economic and Financial Report from 2005 to 2010, NIS, MINTP

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II. PROJECT DESCRIPTION

2.1 Project Objectives and Components

2.1.1 The overall goal of the project is to contribute to Cameroon’s economic growth through quantitative and qualitative enhancement of the transport infrastructure on the national road network. The specific objective is to help open up and develop the South West Region of Cameroon by improving the level of road service between Kumba and Mamfe and the living conditions of the people of this region.

2.1.2 To achieve these objectives, project activities have been divided into four components summarized in the table below:

Table 2.1 – Project Components Component Name Cost Description of Sub-Components Estimate (UA million)  Development of 101.32 km of roads comprising 2 sections : Kumba-Kumbe Bakundu (54.439 km) and Nfaïtock-Bachuo Akagbe (46.880 km) and rehabilitation of the road between Kumbe Bakundu and Nfaïtock (49.544 km); Road works  Actions and measures to mitigate the negative environmental impacts; 85.77  Sensitization on environmental protection, road safety, the prevention of AIDS, sexually transmitted diseases, and malaria;  Works inspection and supervision.

 Development of 118 km of rural roads  Construction of 5 multi-purpose centres for women and 4 for youths Related works  Rehabilitation of 6 primary schools and 6 market sheds  Construction of two footbridges  Supply of 132 lots of minor agricultural materials to women’s associations and 4.90 Intermediate Means of Transport (IMT)  Construction of 30 drying areas  Construction of the Konye Foresty and Wildlife Station  Support for the improvement of road safety (ambulances and other emergency first- aid equipment)  Inspection and supervision of related works Institutional support for the transport 1.64  Update of Road Master Plan sector  Support for the creation of jobs for the youths  Support for the Road Project Monitoring Unit (RPMU-ADB), Project management  Monitoring/evaluation of the project’s socio-economic and environmental impacts, 1.29  Audit of road safety on the project roads  Accounts and financial audit of the project

2.2 Technical Solutions Adopted and Alternatives Explored

2.2.1 The development solution proposed for sections 1 and 3 consists in constructing a 10-m-wide platform, consisting of a 7 m-wide roadway and two road shoulders 1.5 m each. The road shoulders in inhabited areas will be 2 m wide. The roadway will have a bituminous concrete surfacing 5cm thick, a 20 cm clayey lateritic sub base, and a passage for fibre optic. In Section 2 of the road, the roadway will comprise: (i) a 5 cm bituminous concrete surface layer, (ii) a 15 cm crushed gravel base course, and (iii) a 20 cm sub base obtained from recycling the existing surface and sub base. The shoulders will have a double-layer surface dressing.

2.2.2 Construction of suspended footbridges: The PA has very remote villages and plantations sometimes situated on the other side of streams and rivers (for instance, the Mongo or Mbu), which are impossible to cross during the long rainy season. Villages on the 3

other side of river banks are linked to the main road by liana bridges, which the local population cross bare-foot carrying heavy loads on their backs (50 kg - 70 kg). These woven liana bridges are fragile and weakened by wear and tear. People often have accidents or even die using them. The project intends to build two suspended footbridges in Konye and Bakebe. These two bridges will provide a secured passage between two banks thanks to guard rails on both sides and a bridge floor. Moreover, it will be possible to use goods transport tools such as wheel-barrows and carts.

2.2.3 The alternatives studied and the reasons for their rejection are summarized in Table 2.2 below.

Table 2.2 – Alternatives Explored and Reasons for Rejection Item Alternative Brief Description Reasons for Rejection Roadbase in coarse Earth and roadway works account for  High cost due mainly to bitumen Sections 1 aggregate bitumen an average of over 55% of the cost of and 3 works. For the roadway, coarse  Lack of control of road works costs. aggregate bitumen is usually used for the roadbase given its good physico-  Lack of good quality massive rock quarries chemical characteristics. at distances that are economical to transport Section 2  Downscaling given the expected traffic and Recycling of the Reconstitution of a new subbase by residual carrying capacity of the existing existing roadway and recycling the existing roadway to a roadway laying of 5cm-thick depth of 20 cm, laying of a 15cm-thick  Roadway durability deemed shorter bituminous concrete crushed aggregate base course and especially in case of steadily growing spreading of a bituminous concrete traffic of heavy trucks layer 5 cm thick.

2.3 Project Type

2.3.1 The ADF loan will contribute to the construction and rehabilitation of the road and identified economic and social infrastructure. The investments to be financed are defined specifically.

2.3.2 Consequently, the loan is deemed an appropriate instrument for the Bank’s involvement in the project. All donor interventions in the transport sector in Cameroon are through this type of operation (investment projects).

2.4 Project Cost Estimates and Financing Arrangements

Project Costs by Component

2.4.1 The total cost estimate of the project, exclusive of taxes and customs duties, is UA 108.45 million (equivalent to nearly CFAF 85.74 billion at July 2012 exchange rate of UA 1 = CFAF 790.660). This cost estimate was based on the final design studies and unit costs of road contracts being implemented or bids received in recent competitive bidding for similar road projects in the zone.

2.4.2 The summary cost estimates by component and expenditure category for the entire project are given in Tables 2.3 and 2.4 respectively below:

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Table 2.3 - Summary Cost Estimates by Component for the entire Project COMPONENTS CFAF Million UA Million Foreign Local Foreign Local Exchange Currency Total Exchange Currency Total A – Road works 53,315.48 14,498.36 67,813.85 67.43 18.34 85.77 B – Related works 2,302.02 1,569.33 3,871.35 2.91 1.98 4.90 C – Support to the transport sector 910.00 390.00 1,300.00 1.15 0.49 1.64 D- Project management 543.20 477.94 1,021.14 0.69 0.60 1.29 Base cost 57,070.70 16,935.63 74,006.34 72.18 21.42 93.60 Physical contingencies 5,679.91 1,576.11 7,256.02 7.18 1.99 9.18 Price escalation 3,516.83 968.53 4,485.36 4.45 1.22 5.67 TOTAL COST 66,267.44 19,480.27 85,747.71 83.81 24.64 108.45

Table 2.4- Summary Costs by Expenditure Category for the entire Project CFAF Million UA Million Foreign Local Foreign Local Categories Exchange Currency Total Exchange Currency Total A – Goods 204.00 84.00 288.00 0.26 0.11 0.36 B – Works 52,854.11 14,127.03 66,981.13 66.85 17.87 84.72 C – Consultancy services 3417.60 957.97 4375.57 4.32 1.21 5.53 D – Miscellaneous 595.00 1,766.63 2,361.63 0.75 2.23 2.99 Base costs 57,070.70 16,935.63 74,006.34 72.18 21.42 93.60 Physical contingencies 5,679.91 1,576.11 7,256.02 7.18 1.99 9.18 Price escalation 3,516.83 968.53 4,485.36 4.45 1.22 5.67 Total 66,267.44 19,480.27 85,747.71 83.81 24.64 108.45

Financing Arrangements

2.4.3 The project will be jointly financed by the ADF (UA 47.260 million, or 43.7%), the Development Bank of Central African States (UA 31.62 million, or 29.16%) and the Government (UA 29.57 million, or 27.27%). The following tables present in detail the donor financing and expenditure schedule. The ADF loan will partly finance the main road works, related works and the institutional component of the project.

Table 2.5 - Source of Financing Foreign Local Source Total % Exchange Currency

ADF Loan 37.11 10.15 47.26 43.57% CASDB loan 24.93 6.69 31.62 29.16% Gov’t 21.77 7.80 29.57 27.27% Total 83.81 24.64 108.45 100%

Table 2.6 - Expenditure Schedule by Source of Financing (in UA million) Source 2013 2014 2015 2016 2017 Total ADF loan 9.44 14.15 18.63 4.82 0.09 47.26 CASDB loan 6.32 9.49 12.65 3.16 31.62 Gov’t 3.75 8.48 11.04 6.34 0.10 29.57 Total 19.51 32.12 42.31 14.32 0.19 108.45 % Total 17.99% 29.62% 39.02% 13.21% 0.17% 100%

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2.5 Project Area and Beneficiaries

2.5.1 The project area (PA) covers 4 administrative subdivisions in 3 of the 6 divisions of the South-West Region (SWR); the subdivisions are Kumba, Konye, Nguti and Upper Banyang Subdivisions, while the divisions are Meme, Kupe Manegouba and Manyu Divisions. The total PA population is estimated at 1,384,286 people. As is the case with the entire SWR, the immediate PA is replete with natural resources and its soil is suitable for several cash crops such as oil palm, rubber, tea, banana and a wide range of foodstuffs.

2.5.2 The main beneficiaries are the people of the PA. However, given the regional scope of the project, its economic and social impacts will directly or indirectly benefit the population of the extended PA covering the city of Douala, the key towns of the South-West of Cameroon and the people of the eastern States of Nigeria. The target groups are users of the transport system, particularly the most fragile population consisting mainly of youths and women.

2.5.3 The project is expected to improve travel conditions and accessibility to basic infrastructure for the PA population. Conditions of access to youth employment will improve thanks to “worksite schools”. Similarly, the target groups’ incomes will increase and their working conditions improve as a result of the establishment of promotion centres and the resources that will be made available to women’s associations for the processing and transportation of agricultural produce.

2.6 Participatory Approach in Project Identification, Design and Implementation including Active Private Sector Involvement

2.6.1 Priority was given to the participatory approach in the final design studies (FD) and the environmental and social impact assessment conducted during the project preparation and appraisal missions. Participatory sessions organized in Kumba, Konye, Nguti, Nfaïtock and Mamfe (the key administrative centres of the region) witnessed a massive turnout of the population of the project area with over 500 people, nearly 60% of them women, taking part in the meetings. The local elected officials, as well as administrative, religious and political authorities and the general population, including youth and women’s associations, were consulted so as to better identify the environmental and social challenges and achieve the sustainable development objectives of the project.

2.6.2 The objectives of the consultations with stakeholders were to: (i) present the road construction project; (ii) identify the direct beneficiaries and determine the induced benefits for them; (iii) determine, in consultation with the NGOs, women’s associations and rural communities of the project area and other stakeholders, the related works that could be incorporated in the project. The needs and expectations with respect to the project mainly concern the rehabilitation of rural roads and primary schools, the construction of women’s and youth centres and provision of agricultural produce processing equipment. The participatory approach will be maintained during project implementation, particularly in meetings to coordinate project activities, and during monitoring-evaluation of the socio-economic impact of the project and monitoring of environmental impact mitigation measures.

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2.7 Bank Group Experience and Lessons Reflected in Project Design

2.7.1 Since 1972 when the Bank started its operations, it has participated in financing 22 transport sector operations in Cameroon (including multinational operations) for close to UA 479.161 million, representing 41.57% of all Bank operations in the country. The current portfolio has sixteen (16) operations for total net commitments of UA 516.37 million including UA 187.03 million (36%) for national public projects, UA 197.66 million (38%) for regional projects, and UA 131.68 million (26%) for the private sector. The public portfolio has eleven (11) operations – 3 of them regional and 8 national – with 6 projects, 1 study and 1 emergency assistance for net commitments of UA 384.69 million. The transport sector still occupies a dominant position, representing 64% of the public operations portfolio, followed by the energy sector (20%), public utilities (14%) and multi-sector (2%).

2.7.2 The ongoing transport sector projects are: (i) the Nandeke-Mbere Road Rehabilitation Project, (ii) the Numba-Bachuo Akagbe Road Project, (iii) the Technical, Social, Environmental and Economic Studies Project for the Batchenga-Ntui-Yoko-Tibati Road, and (iv) the Bamenda-Mamfe-Ekok Programme. The completed projects have helped to open up many areas, reduce road transport costs, improve the level of service, improve access to socio-economic infrastructure in project areas and increase trade with neighbouring countries.

2.7.3 The performance of transport sector projects is deemed satisfactory; the satisfaction is based on the progress noted in road infrastructure works, as well as on the fact that all the road programmes are coordinated by a single Bank-World Bank joint unit whose capacity is regularly strengthened.

2.7.4 The key generic problems affecting project implementation include: (i) delays in procurement procedures, (ii) late mobilization of counterpart contributions, (iii) unrealistic project implementation schedules, (iv) cost overruns, (v) poor quality of preliminary design studies, (vi) the financing of compensations, and (vii) the large number of loan conditionalities.

2.7.5 The design of this project took into account lessons learned from previous Bank interventions, in general, and those in the road sub-sector, in particular, mainly through project completion reports. The following provisions were made for this project: (i) limiting the number of loan conditions and defining them clearly to avoid lengthy delays in project start-up; (ii) close monitoring of counterpart contribution budgeting; (iii) use of Advance Contracting (AC) to reduce procurement timeframes to a minimum, (iv) submission of audit reports within the timeframes stipulated by Bank rules, and (v) preparation of a realistic implementation schedule that takes into account institutional constraints and the actual time for each stage, including time required for implementation of works.

2.7.6 As regards the management of compensations, the Ministry of Public Works (MINTP) is preparing a procedures manual for environmental management during road projects and a procedures manual for expropriations and resettlement as a result of road projects. This project will assist the MINTP in finalizing and disseminating the said manuals.

2.8 Key Performance Indicators

2.8.1 The key performance indicators and expected project outcomes are presented in the logical framework with time frames. The core sector indicators (CSI) on which the project will focus are: (i) the volume of exports between Cameroon and Nigeria; (ii) the rural access

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index, which measures the percentage of people with all-year-round access to a main road less than 2 km from their homes; (iii) the reduction of transport costs and travel time between Kumba and Mamfe; (iv) the percentage of roads in good state compared to the country’s entire road system; (v) the incomes and working conditions of target groups considering the resources that will be made available to women’s associations for the processing and transportation of agricultural products; (vi) the vehicle operating expenses (VOE); and (vii) youth employability through capacity building programmes and “worksite schools”.

2.8.2 The MINTP will be responsible for data collection and analysis; it will be supported by Cameroon’s National Institute of Statistics (NIS). NIS will: (i) present the baseline situation of these indicators at project start-up; (ii) undertake an impact assessment at project completion; and (iii) continue the assessment after the road is commissioned through a framework agreement with the MINTP.

2.8.3 For these works to be completed on schedule, project implementation needs to be efficient. Thus, in addition to these results indicators, performance indicators were prepared in line with the Bank’s institutional performance indicators. The indicators include: (i) the effectiveness time frame, (ii) the time frame for fulfilling conditions precedent to first disbursement, (ii) procurement time frames, (iii) average indicator of project implementation progress (IP) and (iv) the disbursement rate trend compared to the expenditure schedule. These indicators will be monitored during supervision missions and day-to-day management of the project.

III. PROJECT FEASIBILITY

3.1 Economic and Financial Performance

3.1.1 For purposes of economic analysis, the project benefits were determined based on the “without-project” and “with-project” scenarios over a 20-year period for the main road. The costs retained for the project economic analysis are: (i) investment costs; (ii) vehicle operating expenses; (iii) road maintenance costs for routine and periodic maintenance.

3.1.2 The expected economic benefits of the project concern accessibility to the project area, increased mobility within the region and with other economic centres in Cameroon and neighbouring countries (especially Nigeria), higher agricultural production and development of commercial activities in the PA. The economic benefits of the project will be seen at several levels: (i) gains in vehicle operating expenses (VOE); (ii) gains in travel time for passenger and goods transport; (iii) the agricultural surplus generated; and (iii) the creation of jobs.

3.1.3 The agricultural value added is the surplus production that will be generated by the road for some key export crops (cocoa, coffee, palm oil, rubber, banana, pineapples) whose main production centre in the country is the PA. The increase in production of these crops observed in 2010 and 2011 will be sustained by the development of the road which will not only link Kumba and Mamfe, but also open up areas with high agricultural potential.

3.1.4 Apart from the agricultural sector jobs considered when estimating the increase in production in this sector, the project will, on completion, lead to the creation of direct employment as a result of activities such as new gas filling stations, garages, small eating houses, and various petty trades likely to develop along the road. Preliminary estimates for the

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first three years following the road works completion show that 350 new jobs will be created in these activities.

3.1.5 The project impacts were measured using the economic rate of return (ERR) and net present value (NPV) obtained from a community-point-of-view comparison of the economic costs and benefits of the “without-project” and “with-project” situations over the above- mentioned 20-year period following commissioning of the structures. An adjusted rate of 12% and a residual value corresponding to 30% of the investment cost and amounting to about CFAF 22.178 billion were used in the economic calculation.

3.1.6 The net cash-flow of the project is calculated as the difference between the “with- project” and “without-project” situations. The calculations (presented in the table below) show that the project will generate an economic rate of return of 19.36%. This rate, which is far higher than the capital opportunity rate in Cameroon, goes to support implementation of the project.

Table 3.1 - Summary of Economic Analysis ERR (baseline scenario) 19.36% NPV CFAF 41.92 billion ERR/Assumption of a 20% increase in the investment cost 16.89% NPV CFAF 31.64 billion ERR/Assumption of a 20% fall in net benefits 18.99% NPV CFAF 39.22 billion ERR/Combined assumption of a 20% increase in the investment cost and 20% fall in 16.53% exogenous benefits NPV CFAF 28.95 billion

3.2 Environmental and Social Impact

Environmental Aspects

3.2.1 The project has been classified in Category 1 because of the nature of works and total number of people affected. A detailed Environmental and Social Impact Assessment (ESIA) was prepared in 2011 and validated in 2012. The summaries of the ESIA and Compensation and Resettlement Plan (CRP) were approved and posted on the Bank’s website on 13 July 2012.

3.2.2 The key negative environmental impacts of the project concern: (i) the destruction of trees; (ii) risks of surface and ground water pollution; (iii) risks of erosion; (iv) increase in greenhouse gas emissions (GGE); (v) risks of accidents with elephants and in the project villages; (vi) risks of increasing illegal exploitation of forestry and wildlife resources. The key positive environmental impacts expected from the project are: (i) development of the area’s eco-tourism potential; (ii) reduction of risks of landslides and erosion through reinforcement and monitoring of embankment areas.

3.2.3 These negative impacts can be controlled by the following mitigation measures: (i) planting of 8,000 trees; (ii) strict implementation of appropriate measures for managing liquid and solid wastes on works sites and living environment; (iii) protective measures for embankment areas; (iv) easing of traffic and regulation of speed; (v) building and equipping a forestry and wildlife control post at Konye; (vi) construction of physical speed brakes and signs close to the elephant crossing corridor; (vii) sensitization of the population and company staff on environmental protection. The cost estimates of the ESMP measures stand at CFAF 1,627,933,437.

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3.2.4 The Ministry of Public Works (MINTP) has the capacity required for implementing and monitoring all the ESMP and CRP measures. The Ministry is preparing a procedures manual for environmental management during implementation of road projects and a procedures manual for expropriations and resettlement as a result of road projects. This project will help the MINTP to finalize and disseminate the said manuals.

Voluntary Resettlement

3.2.5 A preliminary survey helped to identify 164 owners (including 30 women) of 192 buildings that will be partially or completely destroyed during construction of the road. Given that households in the project area have an average of 6 members each, the affected population is estimated at 984 people. In addition, there are also people who will suffer expropriation and will be compensated for loss of crops (126), land or other developments (10), making a total of 1,120 people. A complete Resettlement Plan (CRP) has been prepared in line with Bank rules and procedures. Compensations are estimated at CFAF 1.358 billion. These expenses will be borne by the Government of Cameroon, and its payment is one of the conditions of this loan. However, this amount will be adjusted/confirmed during the establishment of Divisional Property Identification and Assessment Commissions chaired by the territorially competent Prefect.

Climate Change

3.2.6 Key challenges: The key challenges identified are: (i) a long rainy season of 8 months with a southward slide of isohyets; (ii) the production of greenhouse gases (GHG) by the transport sector.

3.2.7 Adaptation measures: The adaptation options chosen are: (i) appropriate sizing of water management structures taking into account the rainfall and peak flow periods; (ii) protection of the road from overflow of rain water; (iii) the planting of 8,000 trees and construction of protective structures in embankment areas (constructed rip-raps, revegetation, gabion, etc.).

Road Safety

3.2.8 Since the early 80s, Cameroon has experienced serious economic crisis, resulting in failure to maintain road infrastructure and bankruptcy of public transport companies, as well as an increase in road accidents.

3.2.9 To increase road safety in Cameroon, the Government has requested assistance from development partners to take preventive measures and has adopted a national road safety strategy to serve as reference framework for programming and monitoring road safety activities in the country. Thus, the 9th EDF has a road safety component to reverse the rising trend of road accidents that often accompany any infrastructure improvement.

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The table below gives the trend of accident statistics on the inter-urban network over the past eleven years.

Table 3.2 - Trend of Accident Statistics Indicators 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Number of 2,410 2,046 1,911 1,837 2,326 2,201 1,942 1,751 1,796 1,738 1,741 accidents Injured 5,028 5,831 5,789 5,246 6,408 6,610 5,597 4,829 4,635 4,019 5,292 Deaths 1,372 861 917 1,096 1,106 1,122 969 990 1,056 936 1,259 Source: Ministry of Transport

3.2.10 The project design provides for measures to improve road safety through: (i) compliance with road safety regulations and technical standards in force concerning road signs, slopes, super-elevations and deviations; (ii) creating areas for temporary parking of vehicles and for drivers to have some rest; (iii) road safety sensitization campaigns targeting road users and the local population.

3.2.11 A road safety audit will be conducted before and during works execution. The audit will consist in validating the road safety aspects contained in the project design before works start-up. This evaluation will be based mainly on the identification of accident-prone areas using past information on the occurrence of accidents. The audit will propose adequate mitigation measures (speed brakes, speed limit signs). Subsequently, road safety aspects will be monitored and inspected during the works implementation phase. Concurrently, road safety campaigns will be organized for the PA population. The creation of groups in villages to sensitize their fellow villagers will be considered. A final audit will be conducted at works completion to ensure proper implementation of the proposed measures.

3.2.12 As regards specific actions for rapid care for people injured during road accidents, the project intends to support the Konye and Mamfe health centres by training the local population and staff in emergency first aid techniques, delivering two ambulances to the two health centres, and rehabilitating the Konye health centre.

Gender

3.2.13 Although the farm lands and related gains are often still controlled by men, women provide between 60% and 80% of the labour for food production and transport most of the products to markets. In addition to farming, trading in processed agricultural and catering products is a substantial source of income for women.

3.2.14 The working conditions of women are difficult because farms are often located along rural roads that are not motorable during the rainy season or on the other side of the numerous waterways that can only be crossed on liana bridges. Accidents and death often occur when people cross these bridges barefoot and with heavy loads on their backs. With regard to petty trade, women tend to spread their products on the ground due to the lack of suitable marketing facilities along the main road, thereby heightening the risk of accidents and product contamination. In this regard, the inadequacy of road and transport infrastructure affects women in particular.

3.2.15 The project will help to improve the situation of women through income-generating activities and by alleviating their painful tasks. Furthermore, the construction works will generate temporary labour jobs and foster petty trade and catering activities. Lastly, the tarring of the road, the rehabilitation of 118 km of rural roads and construction of suspended footbridges at Konye and Bakebe will reduce the cost, time and strain of transporting goods. Through socio-economic and commercial facilities that will be constructed, the project will 11

also promote the development of women’s petty trade activities long after works completion. The rehabilitation of women’s centres along the road will make it possible to organize training sessions and workshops to foster female entrepreneurship.

3.2.16 The project could have a negative impact on the beneficiary population in terms of the spread of HIV/AIDS and sexually transmitted diseases (STD) because of the presence of construction workers. This is a real cause for concern because HIV/AIDS prevalence in the South-West Region (6.8%) is higher than the national average (5.6%) and has not stopped rising over the past few years. The project therefore has a strong HIV/AIDS/STD sensitization component targeting the inhabitants of the region and the construction workers.

Social

3.2.17 Despite its abundant resources, about 27.5% of the population of the South West Region lives below the poverty line.1 The incidence of poverty is high in the administrative divisions of the project area: 22.8% in Meme, 28.1% in Kupe-Manengouba, and 59.9% in Manyu. Poverty is predominant in rural areas, mainly because most of the localities are highly inaccessible. In general, the PA does not have adequate basic social services and infrastructure. Most of the PA localities are not electrified and lack drinking water supply systems.

3.2.18 The precarious state of school and health infrastructure is a major cause for concern for the local population. Although the PA has several health centres and public and private hospitals, the quality of health coverage is poor due to the dilapidation of most of the facilities, as well as the lack of equipment and qualified staff. The paved road will facilitate evacuation for health reasons and foster the recruitment and retention of health professionals.

3.2.19 The youths (15-34 years) account for over 40% of the PA population. Most of them are engaged in informal agriculture, even though the unemployment rate remains high (34.5%). The rehabilitation of 4 youth centres, undertaken as part of the related works, will also offer the youths alternatives to this burning issue, since such centres will be used for training in petty trades, entrepreneurship, as well as sports and leisure activities.

Youth Employment Initiative

3.2.20 Given the scope of the problem confronting most countries on the continent, a Joint Initiative of the African Union (AU), African Development Bank (ADB), United Nations Economic Commission for Africa (ECA) and the International Labour Organization (ILO) was instituted in 2011 to encourage job creation for African youths.

3.2.21 This project will support the implementation of the Youth Employment Initiative by aligning with the national employment promotion strategy, especially in the construction sector which absorbs a large portion of the country’s investment budget and should therefore contribute significantly to achieving the objectives of the Initiative. This project’s support for the Initiative will be in the form of: (i) including incentive measures for the use of local labour in the works bidding documents; (ii) covering the cost of practical training courses to enhance the employability of youths and women in the road maintenance sector, through “worksite schools”; and (iii) constructing 10 km of rural roads using the labour-intensive (LI) technique.

1 Defined as an adult living on less than CFAF 738 per day 12

3.2.22 To ensure effective implementation of this activity, a technical assistance agreement will be signed between the MINTP and the ILO (International Labour Office) which is already in partnership with the Department of Rural Roads for the implementation of the National Programme to rehabilitate 6,000 km of rural roads (PN2R), including 1,000 km using LI approaches and techniques, in compliance with the National Rural Roads Maintenance Strategy.

3.2.23 ILO’s assistance in this project consists in optimizing the employment potential of the infrastructure investment undertaken. This will be done by fostering access by SMEs and youth groups in the region to works contracts and encouraging sub-contracting. The SMEs and youth groups will benefit from specific training programmes for managers and application of LI techniques in the construction of infrastructure, thereby ensuring high quality and cost effectiveness.

3.2.24 These actions will focus on: (i) building the capacity of local administrative services in the management of rural road maintenance contracts so as to enhance the ongoing decentralization process; (ii) building the capacity of youths in LI works supervision, and (iii) organizing post-rehabilitation maintenance programmes (training of youths in LI techniques and maintenance of rehabilitated rural roads). This activity will be entrusted to construction trades centres, thereby strengthening their capacity; (iii) diagnosing the capacity of Rural Roads Committees (RRC) and providing specific support (for instance, specific training and/or capacity building in management depending on the diagnostic study findings); (iv) sensitizing the population and organizing rural road committees (RRC) for post-rehabilitation maintenance; (v) assessing and training SMEs in the PA.

3.2.25 As regards training in manual and semi-mechanized through “worksite schools”, the ILO intervention will involve the National Advanced School of Public Works (ENSTP) – a public technical vocational training school under the supervision of the Ministry of Public Works, with an annex school in Buea and two Public Works Vocational Centres (CMTP) in Akonolinga and Garoua. This is the only institution in Cameroon that offers training in the public works sector and particularly in road maintenance. These schools are strategic for the country and need technical and financial support from development partners to enable them fully accomplish their missions. This type of agreement is also a means of helping to build the capacity of the institutions. Furthermore, using an existing national Institution guarantees sustainability of the impact monitoring activities and further proficiency in road maintenance.

IV. IMPLEMENTATION

4.1 Implementation Arrangements

4.1.1 The project executing agency is the Ministry of Public Works (MINTP) through the ADB/World Bank Road Project Monitoring and Implementation Unit (CSEPR-BAD/BM) put in place for ADB since 1998 and then extended in 2008 to WB transport projects. Today, this Unit has a Coordinator, five (5) civil engineers – two (2) for ADF projects and three (3) for an ongoing IDA project – a Procurement Expert, an accounts administrator, an accounting officer, an internal auditor and support staff. It has a procedures manual that governs its operation.

4.1.2 The performance of CSEPR-BAD/BM is deemed satisfactory by the ADB and World Bank, and its staff performance is evaluated regularly. For the implementation of this project, the current staff will be reinforced with two Road Engineers whose profiles and qualifications

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will be submitted to the Bank for no-objection opinion. An additional accounting officer is also being recruited with IDA financing.

4.2 Procurement Arrangements

4.2.1 All goods, works and consultancy services financed with Bank resources will be procured in accordance with the Bank’s Rules of Procedure for Procurement of Goods and Works, or, as the case may be, its Rules of Procedure for the Use of Consultants, using the standard bidding documents of the Bank. Since the review of national procurement procedures undertaken by the Bank in 2011 revealed divergences between some provisions of the procurement code and the Bank’s rules and procedures, the conditions for use of national procedures are not yet fulfilled.

4.2.2 The ADB/World Bank Road Project Monitoring and Implementation Unit (CSEPR- BAD/BM) of the Ministry of Public Works (MINTP) will be responsible for procurements. The Government of Cameroon requested and obtained from the Bank on 2 August 2012, approval of Advance Contracting (AC) for: (i) works on the main road; (ii) related works; (iii) consultancy services for inspection and supervision of the road and related works and the road safety audit. A procurement plan was prepared by CSEPR-BAD/BM and submitted to the Bank for review and approval. Details of the procurement methods, review procedures, national laws and regulations, and assessments of executing agencies are defined in Technical Annex B5.

4.3 Financial Management and Disbursement Arrangements

4.3.1 The financial and accounting management will be ensured by CESPR-BAD-BM through its Accounts Unit, which will be reinforced by an additional accounting officer being recruited with IDA financing. The unit has the IT tools and capacity required for the administrative and accounting management of projects. With regard to disbursements, the direct payment method will be adopted for goods, works and services, while Bank procedures will be used for ADF resources.

4.3.2 After verification and certification, the Administration will forward the invoices and due balances of suppliers, contractors and consultants to the Bank for settlement. Project financial statements and accounts will be audited periodically by an independent audit firm and the corresponding reports forwarded to the Bank, in accordance with the rules and procedures in force. A financial management evaluation was conducted by the Bank, and concluded that the ADB/WB Unit has adequate financial management capacity to provide, with reasonable assurance, accurate, complete and timely information on the project implementation status, as required by the Bank in fulfillment of its minimum project financial management requirements. The evaluation also concluded that the overall risk level of the project’s financial management is deemed moderate.

4.3.3 The ADB/WB Unit, which was set up over a decade ago, is currently implementing several Bank-financed projects. It has adequate management tools and its staff is familiar with Bank procedures. The Bank’s fiduciary teams will continue to provide capacity building support in accordance with the training programme adopted during the Fiduciary Clinic organized by the Bank in July 2012.

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4.4 Monitoring

4.4.1 All aspects of the project (procurement, conduct of works and studies, monitoring and evaluation of impacts, etc.) will be monitored by the Department of Road Investments and Environmental Protection (DIPER) of the Ministry of Public Works through the ADB/World Bank Project Monitoring Unit. Project engineers will be designated to conduct the day-to-day monitoring of project activities in a coordinated and consistent manner. The socio-economic impact of the project will be monitored and evaluated by the National Institute of Statistics whose capacity was deemed satisfactory.

4.4.2 The implementation and effectiveness of environmental and social impact mitigation measures (road safety, STIs and environment) will be monitored by a firm or NGO familiar with similar missions that will be recruited for the project. Bank supervision missions will also be undertaken periodically. Two qualified and experienced consulting firms will be recruited to inspect the works on the main road and related activities.

4.4.3 An independent accounting firm will be recruited to audit the project accounts.

Table 4.1- Project Monitoring and Supervision Time Frame Stage Process Feedback Q1 -2013 Launching of the project Field mission Progress reports Q1 – 2013 Consideration of project – Field mission/supervision Progress reports/Aide-memoire procurement and resettlement Q2&Q3&Q4-2013, Construction works Field mission/supervision Progress reports/ Aide-memoire Q1&Q2&Q3&Q4-2014-2015 Q1&Q2&Q3&Q4-2016 Construction works Field mission/supervision Progress reports/ Aide-memoire Q1 -2017 Guarantee period & first year of Field mission Project completion report activities

4.5 Governance

4.5.1 The fiduciary risk inherent in the country is significant due to the current quality of public finance management. Based on diagnoses by PEMFAR (public expenditure review, 2006) and PEFA (public finance review), Cameroon prepared a Public Finance Management Reform Strategy which is being implemented with support from various development partners. The Bank chairs the public finance management (PFM) group of development partners working in Cameroon. The overall goal of the public finance management reform strategy is to improve PFM efficiency at central and local government level and accountability, including greater transparency in the use of public funds as well as reduced likelihood of corruption. The said plan is currently being updated to: (i) consolidate fiscal discipline; (ii) strengthen the effectiveness of the role of the State and Public Services; and (iii) refocus public resources on the priority sectors of growth and poverty reduction. This will in the long run help to improve PFM performance and achieve a shift in management methods and attitudes towards a results-based PFM method.

4.5.2 With respect to governance, the Government has taken various initiatives to enhance governance. Anti-corruption units have been established in all ministries and in some parastatals. Their activities are coordinated by a National Anti-Corruption Observatory placed under the authority of the Prime Minister’s Office. A new special court has been set up to try corruption cases, but it is not yet operational.

4.5.3 The governance risk that can appear in the procurement process and financial implementation of the project will be mitigated by the fact that the Bank will ensure strict

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application of the relevant rules of procedure. Furthermore, Bank supervision missions and technical and financial audit missions will help to ensure conformity between the specifications, services and works effectively done, disbursements and the loan agreement. Lastly, it should be noted that the Bank is lead of the Public Finance Sector Committee, and as such it is at the core of arrangements for implementing the public finance modernization plan.

4.5.4 The specific measures for mitigating this project’s governance risks include: (i) the recruitment of an independent financial audit firm to ensure that funds are used rationally and for the intended purposes, (ii) the Bank’s prior consideration and approval of all project procurement activities, and (iii) recourse to disbursement by direct payment in which funds are transferred directly to the contactors and service providers.

4.6 Sustainability

4.6.1 Road maintenance in Cameroon is managed by the MINTP, through the DPPER (Department of Road Protection and Maintenance). It schedules road maintenance (RM) operations from a data bank that provides inputs for the road maintenance planning and programming model. It also prepares bidding documents and related contracts, submits contracts for approval and supervises works executed by SMEs after competitive bidding. The DPPER has the human and material resources required for efficiently fulfilling its mission. It receives assistance regularly from financial partners through training programmes and supply of equipment.

4.6.2 To finance all routine maintenance expenses, Cameroon, by Decree No. 98/162 of 26 August 1998, established a second-generation Road Fund (RF) placed under the supervision of the Ministry of Finance, but enjoying a legal status and autonomous management. RF resources come mainly (over 90%) from the road use charge collected directly from the sale of fuel. RF resources, limited in 1998/1999 to CFAF 15 billion, rose to CFAF 35 billion in 2005, to CFAF 50 billion in 80 2008, and to over CFAF 64 64,1 billion in 2010, thanks 60 Graphique 1: Evolution des recettes du FR 60,9 especially to higher road use entre 2000 et 201042,4 charges (see Graph 1 opposite). 40 44,18 46 23,50 35 25,1 4.6.3 Until 2011, 20 19,6 23,90 20,3 Cameroon’s Road Fund 0 benefited from funds collected 200 200 200 200 200 200 200 200 200 200 201 directly from the petroleum Amount (FCFA Billion) 0 1 2 3 4 5 6 7 8 9 0 products charges. From then Total 20,3 19,6 23, 23, 25,1 35 42,4 44,2 46 60,9 64,1 onward and following amendment of the 2011 Finance Law, the Government decided as a transitional measure to put the resources intended for the Fund into an account opened in the Fund’s name in BEAC, which will transfer them as calls for funds are made. This new measure, which stems mainly from the relatively weak resource absorptive capacity observed despite commitments for contracts signed with SMEs, has not fundamentally disrupted the operation of the Road Fund which continues to receive resources required for accomplishing its mission. This weak absorptive capacity stems from: (i) delays in contract awards and weak organizational and material capacity of SMEs identified as prime contractors; and (iii) the operations programming system in which the RF is not involved since it only acts as a payment instrument.

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4.6.4 The mechanism put in place by Cameroon to ensure durability of the road network is deemed generally efficient. It has been noted that axle-load inspection measures has helped to: (i) sensitize transporters on compliance with loading standards; and (ii) reduce the offence rate from 80% before enforcement of the law to slightly over 7% currently. Furthermore, the Government has embarked on building new weigh-stations to cover a greater portion of the priority network; the number of stations is expected to increase from 18 currently to 23 by 2015. In all, these measures help to ensure that the road network is in relatively good state and regularly well-maintained. The Road Fund revenues currently cover nearly 80% of all road maintenance needs, including 100% of routine maintenance needs.

4.6.5 Within this context, it should be noted that the MINTP will include the maintenance of the Kumba-Mamfe Road in the priority network maintenance schedule after the works performance security period. Discussions with the Cameroonian authorities and the other Technical and Financial Partners revealed that: (i) the RF organizational arrangement was not affected by the measure suspending direct collection of charges, and (ii) the Fund has the resources required for fulfilling its routine obligations. A number of actions are also underway to help consolidate all these efforts, in particular: (i) updating the Road Master Plan under this project to help improve the programming of works; (ii) the training of SMEs in contract management (ongoing with financing from the European Union and World Bank); (iii) reform of RF internal procedures and those governing its relations with the contracting authority; and (iv) building RF capacity in planning and resource management.

4.6.6 Furthermore, as regards establishment of the structures of the new Ministry of Public Procurement, processes will be adopted to monitor contracts performed by SMEs in terms of transparency, equity and competiveness. Reflection on the form of the RF and the issue of absorptive capacity will be the subject of a sector dialogue with Government and other partners, and will focus on three (3) main aspects: (i) capacity building in the programming of maintenance operations; (ii) improvement of the quality of collection methods (return to direct collection) and management of resources earmarked for road maintenance; and (iii) capacity building for SMEs that are awarded road maintenance contracts. The reflection should, in the medium term, result in the streamlining of institutional and operational arrangements for sustainability of road investments in Cameroon.

4.7 Risk Management

4.7.1 Risks that can hamper the achievement of outcomes concern: (i) failure to meet commitments regarding the inspection of axle-load and the gross weight of vehicles; (ii) weak resource mobilization and absorption for road maintenance; (iii) fragility and non-adherence of youth organization structures.

4.7.2 Mitigation Measures: (i) a programme for gradual installation of axle-load inspection stations on major roads is implemented by the country in accordance with the relevant regional guidelines; (ii) the Road Fund revenue has steadily increased substantially each year since 2004 to CFAF 64 billion and currently covers close to 80% of road maintenance needs, including 100% routine maintenance needs, as well as project support through updating the Road Master Plan which will improve MINTP capacity in road maintenance planning and programming; (iii) youth organization structures will henceforth benefit from close guidance by the Ministry of Youth Affairs and all youth agencies. In addition, the ILO will support the implementation unit, especially in training and creating youth groups.

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4.7.3 Risks that can hamper the achievement of outputs concern: (i) delays and lack of transparency in the procurement process; (ii) increase in the cost of works; (iii) late mobilization of counterpart contributions; (iv) weak capacity in managing and maintaining socio-economic infrastructure and facilities made available to the population; and (v) a weak national youth employment support system.

4.7.4 Mitigation measures: (i) creation of a Ministry in charge Public Procurement; broadening of competition by differentiating contracts by their size; a priori review of the procurement process by the Bank; (ii) project costs based on detailed technical studies and costs of similar ongoing projects in the area; (iii) Government’s determination to channel nearly 70% of official assistance to road infrastructure; opening and replenishment of the counterpart account stipulated as a loan condition; the country’s proven capacity to mobilize internal financial resources through public borrowing; (iv) investments to be maintained by the contributory system already put in place by women’s associations; (v) establishment of support structures for youth employment by the Government.

4.8 Knowledge Building

4.8.1 The project will provide an opportunity for improving knowledge of national infrastructure. It provides for a major institutional study that allows for proper programming and rational planning of road investments.

4.8.2 The project’s impact assessment, conducted in the country by perennial structures mainly seeks to meet the need for knowledge building and ownership by the national administrative services. If the baseline situation is determined before project start-up, a basis of comparison will be established for a realistic appraisal of the level of achievement of the project’s development objectives. The comparison data will be obtained from the results of the project’s socio-economic impact assessment to be conducted at works completion.

V. LEGAL FRAMEWORK

5.1 Legal Instrument

The project will be financed by an ADF loan granted to the Republic of Cameroon.

5.2 Conditions Associated with Bank Intervention

5.2.1 Conditions precedent to effectiveness

Effectiveness of the loan agreement shall be subject to fulfillment, by the Borrower and to the satisfaction of the Fund, of the conditions defined in Section 12.01 of the General Conditions Applicable to Loan Agreements and Guarantee Agreements of the Fund.

5.2.2 Conditions precedent to the first disbursement

In addition to effectiveness of the Loan Agreement, the first disbursement of the loan resources shall be subject to fulfillment, by the Borrower and to the satisfaction of the Fund, of the following conditions:

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a. Submit the original or certified true copy of the attestation of opening a special account in a bank acceptable to the Fund, intended exclusively to receive counterpart funds for the compensation of people affected by the project, as well as evidence of payment, into the account, of at least CFAF 400 million, which is equivalent to about 30% of the total amount of compensations.

b. Submit the original or certified true copy of the attestation of opening a special account in a bank acceptable to the Fund, intended exclusively to receive counterpart funds for the financing of the Government’s share of works execution.

5.2.3 Other Conditions

Furthermore, the Borrower shall, to the satisfaction of the Fund:

a. Submit to the Fund, not later than 30 April each year, evidence of inclusion, in the Finance Law, of the Government’s counterpart contribution to the project for the year concerned; and

b. Submit to the Fund, as work progresses and in any case before works start-up in any given area, evidence of compensation of the people affected by the project in that area, in accordance with the relevant rules and procedures of the Fund, the Environmental and Social Management Plan (ESMP) and the Complete Population Resettlement Plan (CPRP).

5.2.4 Commitments

The Borrower undertakes, to the satisfaction of the Fund, to:

a. take appropriate measures to ensure that financial resources from the other donors are available on time;

b. implement the project, ESMP and CPRP and have its contractors do same, in accordance with national law and the recommendations, prescriptions and procedures contained in the ESMP and CPRP, as well as the relevant rules and procedures of the Fund;

c. refrain from starting works in any given area unless the affected population have been fully compensated;

d. submit to the Fund quarterly reports on ESMP implementation including, if necessary, the deficiencies and corrective measures taken or to be taken.

5.3 Compliance with Fund Policies

The project complies with the policies of the Fund. Since ADF’s financing of the project exceeds the performance-based allocation granted to Cameroon for 2012, an advance commitment request was made and obtained from the Operations Committee, upon demonstration of Cameroon’s compliance with the three requisite criteria: (i) the country’s performance; (ii) the country’s absorptive capacity; and (iii) the country’s adherence to reforms.

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VI. RECOMMANDATION

Management recommends that the Board of Directors should approve the proposal for the award of an ADF loan of UA 47.26 million to the Republic of Cameroun for the Kumba- Mamfe Road Development Project and under the conditions stipulated in this Report.

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ANNEX I COMPARATIVE SOCIO-ECONOMIC INDICATORS Cameroon – Economic and Financial Indicators

Cameroon Developing Social Indicators Africa 1990 2011 * Countries Area ( 000 Km² ) 476 30,323 80,976 Total Population (millions) 12.2 20.0 1,044.3 5,732.2 Population growth (annual %) 2.9 2.2 2.3 1.3 Life expectancy at birth, total (years) 55.1 51.7 56.0 67.1 Mortality rate, infant (per 1,000 live births) 84.1 83.7 78.6 46.9 Physicians per 100,000 People 7.7 … 58.3 109.5 Births attended by skilled health staff (% of total) … 63.0 50.2 64.1 Immunization, measles (% of children ages 12-23 months) 56.0 79.0 77.9 80.7 School enrolment, primary (% gross) 96.7 119.8 100.4 107.2 Ratio of girls to boys in primary education (%) 85.9 86.2 90.9 100.0 Illiteracy rate, adult total (% of people ages 15 and above) … 70.7 65.1 80.3 Access to Safe Water (% of Population) 49.0 74.0 64.5 84.3 Access to Sanitation (% of Population) 39.0 47.0 41.0 53.6 Human Develop. (HDI) Rank (over 187 Countries) … 150.0 N.A. N.A. Human Poverty Index (% of Population) … 30.8 34.7 … Cameroon Macro-economic Indicators 2000 2009 2010 2011 GNI per capita, Atlas method (current US$) 638 1,232 1,202 … GDP (current Million US$) 9,290 23,381 23,338 25,973 GDP growth (annual %) -3.9 2.0 3.2 4.1 Per capita GDP growth (annual %) -6.1 -0.2 0.8 1.0 Gross Domestic Investment (% of GDP) 16.7 18.5 19.7 20.5 Inflation (annual %) 0.9 1.3 1.3 2.9 Budget surplus/deficit (% of GDP) 4.4 -0.4 -1.1 -1.3 Trade, External Debt & Financial Flows 2000 2009 2010 2011 Export Growth Volume (%) -0.7 19.8 -32.2 17.4 Import Growth Volume (%) 14.9 14.2 -7.4 5.2 Terms of Trade (% change from previous year) 40.9 -17.2 25.1 -21.4 Trade Balance ( mn US$) 587.6 -250.8 -640.8 -1,372.0 Trade Balance (% of GDP) 6.3 -1.1 -2.7 -5.3 Current Account (mn US$) -143.3 -782.1 -852.5 -1,092.0 Current Account (% of GDP) -1.5 -3.3 -5.8 -6.3 Debt Service (% of exports) 36.6 1.3 1.0 1.0 External Debt (% of GDP) 80.4 5.3 6.3 6.6 Net Total Inflows (mn US$) 218.0 770.2 … … Net Total Official Development Assistance (mn US$) 376.7 649.4 … … Net Direct Investments (mn US$) 158.8 337.4 425.1 … Private Sector and Infrastructure Development 2000 2005 2010 2011 Business Start-up Time (days) … 45 19 15 Investor Protection Index (0-10) … 4.3 4.3 4.3 Fixed Telephone Subscribers (per 1,000 people) 6.1 5.7 25.3 … Internet Users (per 1,000 people) 6.6 128.3 416.1 … Paved Roads (% of total roads) … … … … Railways, Goods Transported (million ton-km) 1048.0 1052.0 … …

Source: ADB Department of Statistics, culled from national and international sources.

* Most recent year.

ANNEX II CAMEROON’S PORTFOLIO STATUS AS AT 31 JULY 2012

Approval Signature Age (MEV) Amount % Project Name Date Date Effectiveness (yr) Closing Date Approved Disbursed STATUS ADF LOAN NATIONAL /CMFO NON PP / NON PPP (2.64 - Batchenga-Yoko-Tibati Road Study 14.10.2009 11.01.2010 29.03.2010 2.8 31.12.2012 3.36 14.71% 3) NON PP / NON PPP (2.46 - Numba-Bachuo Akagbe Road Development 15.11.2006 12.02.2007 12.07.2007 5.8 31.12.2012 44.70 66.29% 3) TOTAL TRANSPORT 4.3 48.06 63.00% Electricity Networks Reinforcement/Extension 15.09.2010 15.10.2010 20.04.2011 1.9 31.12.2015 31.64 0.00% Not rated LOM PANGAR Hydro-Electricity Development 10.11.2011 18.01.2012 0.8 31.12.2017 44.93 0.00% No supervision TOTAL ENERGY 1.4 76.57 0.00% DWSS Project in Semi-Urban Areas (PAEPA-MSU) 28.01.2009 13.05.2009 02.11.2009 3.6 31.12.2013 40.00 1.68% NON PP / PPP (1.50 - 2.00) NON PP / NON PPP (2.21 – Rural DWSS Project (PAEPA-MRU) 12.05.2010 29.06.2010 18.04.2011 2.3 29.02.2016 14.50 7.37% 2.5) TOTAL PUBLIC UTILITIES 2.9 50 3.00% Cadastral Surveys and Business Climate Modernization Project NON PP / NON PPP (2.75 - (PAMOCCA) 15.11.2010 01.05.2011 17.05.2011 1.8 31.12.2015 7.00 3.92% 3) TOTAL GOVERNANCE 1.8 7.00 3.92% DIBAMBA Power Project 28.04.2010 11.05.2011 11.05.2011 2.3 18.49 100.00% NOT RATING AES SONEL Investment Programme 10.05.2006 08.12.2006 13.02.2007 6.3 49.81 100.00% NOT RATING TOTAL ENERGY 3.2 93.20 Maintenance Infrastructure Construction Project (CNIC) 12.12.2002 02.06.2003 29.04.2005 9.7 31.12.2012 29.92 41.67% NOT RATING TOTAL TRANSPORT 9.7 29.92 41.67% (UA 8 M line of credit, UA 035M TA GOWE 04.12.2006 04.09.2007 24.06.2009 5.7 8.35 disbursed 100%) TOTAL 8.35 ADF REGIONAL NON PP / NON PPP (2.43 - DOUALA-BANGUI-NDJAMENA CORRIDOR 05.07.2007 22.02.2008 06.10.2008 5.1 31.12.2012 48.00 68.44% 3) NON PP / NON PPP (2.14 - BAMENDA-ENUGU CORRIDOR 25.11.2008 13.05.2009 04.11.2009 3.7 31.12.2014 90.39 31.00% 3) NON PP / NON PPP (2.08 - KETTA-DJOUM CORRIDOR 25.08.2009 11.01.2010 29.03.2010 3.0 59.27 16.03% 2,) TOTAL TRANSPORT 3.9 197.66 TOTAL 480.57

ANNEX III

KEY RELATED PROJECTS FINANCED BY THE BANK AND OTHER DEVELOPMENT PARTNERS IN THE COUNTRY

Donor Projects Amount Remarks (CFAF million) Numba-Bachuo Akagbe Road Development 42,080 95% works done (50 km) Development of Garoua Boulaï-Ngaoundere 42,556 80% works done Road, Lot2: Nandeke-Mbere (82 km) Bamenda-Mamfe- Ekok-Enugu Corridor 87,726 55% works done ADF (about 153 km including 63 being rehabilitated and 90 new constructions) Brazzaville-Yaounde-Ketta section-Djoum 50,135 15% works done Corridor Batchenga-Yoko-Ngaoundere Road Study 2,768 50% works done (PD reports awaited) Transport Facilitation Programme 179,600 80% works done IDA Development of the Garoua Boulaï- EDF Ngaoundere Road, Lot 1 : Garoua Boulaï - 60,000 40% works done Nandeke (86 km) Construction de la route Ayos-Bonis (Lot 1 : BADEA - FKDEA Ayos-Abong Mbang 88 km 16,000 Works completed in 2012 Construction of Ayos-Bonis Road (Lot 2 : IDB – Saudi Fund – OPEC Fund Abong-Mbang –Bonis (103 km) 22,000 Works completed in 2012

Construction of Yaoundé-Olama bridge Road BADEA - FKDE – OPEC Fund (80 km) 23,000 80% works done

ANNEX IV: MAP OF PROJECT AREA

This map is provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of the territory nor any approval or acceptance of these borders.