AFRICAN DEVELOPMENT BANK

Public Disclosure Authorized Public Disclosure UNITED REPUBLIC OF TANZANIA

DODOMA CITY OUTER RING ROAD (110.2 km) CONSTRUCTION

PROJECT

APPRAISAL REPORT

Public Disclosure Authorized Public Disclosure

RDGE/PICU DEPARTMENTS

April 2019

TABLE OF CONTENTS

I. STRATEGIC THRUST AND JUSTIFICATIONS ...... 1

1.1 PROJECT LINKAGES WITH NATIONAL AND REGIONAL STRATEGIES ...... 1 1.2 RATIONALE FOR BANK INVOLVEMENT ...... 1 1.3 AID COORDINATION ...... 2 II. PROJECT DESCRIPTION ...... 2 2.1 PROJECT OBJECTIVES ...... 2 2.2 PROJECT COMPONENTS ...... 3 2.3 TECHNICAL SOLUTIONS ADOPTED AND ALTERNATIVES CONSIDERED ...... 3 2.4 PROJECT TYPE ...... 4 2.5 PROJECT COST AND FINANCING MECHANISMS ...... 4 2.6 PROJECT AREA AND BENEFICIARIES ...... 6 2.7 PARTICIPATORY APPROACH TO PROJECT IDENTIFICATION, DESIGN AND IMPLEMENTATION...... 6 2.8 BANK GROUP EXPERIENCE AND LESSONS REFLECTED IN PROJECT DESIGN ...... 7 2.9 KEY PERFORMANCE INDICATORS ...... 7 III. PROJECT FEASIBILITY ...... 7

3.1 ECONOMIC AND FINANCIAL PERFORMANCE ...... 7 3.2 ENVIRONNEMENTAL AND SOCIAL IMPACT ...... 8 3.3 REGIONAL INTEGRATION...... 10 3.4 ROAD SAFETY ...... 11 3.5 URBAN DEVELOPMENT ...... 11 IV. IMPLEMENTATION ...... 12

4.1 IMPLEMENTATION ARRANGEMENTS...... 12 4.2 PROCUREMENT ARRANGEMENTS ...... 13 4.3 FINANCIAL MANAGEMENT ARRANGEMENTS ...... 14 4.4 IMPLEMENTATION AND SUPERVISION SCHEDULE...... 15 4.5 MONITORING...... 15 4.6 GOVERNANCE ...... 16 4.7 SUSTAINABILITY ...... 17 4.8 RISK MANAGEMENT ...... 17 4.9 KNOWLEDGE BUILDING ...... 18 V. LEGAL AND COMPLIANCE SECTION ...... 18

5.1 LEGAL INSTRUMENT ...... 18 5.2 CONDITIONS ASSOCIATED WITH THE BANK’S INTERVENTION ...... 18 5.3 COMPLIANCE WITH BANK POLICIES ...... 20 VI. CONCLUSIONS AND RECOMMENDATIONS ...... 20

6.1 CONCLUSION ...... 20 6.2 RECOMMENDATION ...... 20 APPENDIX I: COMPARATIVE SOCIAL ECONOMIC INDICATORS ...... I APPENDIX II: TABLE OF BANK GROUP OPERATIONS IN TANZANIA AS AT APRIL, 2019 ...... II APPENDIX III: PROJECT COSTS...... IV APPENDIX IV: JUSTIFICATION OF THE GOVERNMENT COUNTERPART LEVEL FOR ...... TANZANIA ...... VII APPENDIX V: MAP OF THE PROJECT AREA ...... X

Currency Equivalents December 2018

UA 1 = TZS 3195.19 UA 1 = USD 1.4

Fiscal Year Tanzania: 1 July-30 June

Weights and Measures 1 metric ton = 2 204 pounds 1 kilogram (kg) = 2.2 pounds 1 meter (m) = 3.281 feet 1 millimeter (mm) = 0.03937 inch 1 kilometer (km) = 0.62 miles 1 hectare (ha) = 2.471 acres

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Acronyms and Abbreviations

AADT Annual Average Daily Traffic AC Asphalt Concrete ADB African Development Bank ADF African Development Fund BADEA The Arab Bank for Economic Development in Africa BPS Borrower Procurement System BTC Belgium Technical Cooperation CAG Controller and Auditor General CBA Cost-Benefit Analysis CC Central Corridor CFRA Country Fiduciary Risk Assessment CPAR Country Procurement Assessment Report CPIA Country Policy and Institutional Assessment CSP Country Strategy Paper CT Country Team DPG-T Development Partners Group - Transport DRC Democratic republic of Congo EAC East Africa Community EIRR Economic Internal Rate of Return ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan EU The European Union FM Financial Management FYDP II Second Five Year Development Plan (of the United Republic of Tanzania) GDP Gross Domestic Product GHG Green House Gas GEF Global Environmental Facility GOT Government (of the United Republic) of Tanzania HDM-4 Highway Development and Management Model SSHSMP Health and Safety Plan HIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome IFMS Integrated Financial Management System IMF International Monetary Fund ICT Information and communication technology ISS Integrated Safeguards System JICA Japan International Cooperation Agency KfW Kreditanstalt für Wiederaufbau ("Reconstruction Credit Institute") KPI Key Performance Indicators MoFP Ministry of Finance and Planning MoWTC Ministry of Works, Transport and Communication NDP National Development Plan NEMC National Environment Management Council NIT National Institute of Transport NGO Non-Government Organization

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NPV Net Present Value OpsCom Operations Committee (of Senior Management) PAP Project Affected Persons PAR Project Appraisal Report PCN Project Concept Note PCR Project Completion Report PEFA Public Expenditure and Financial Accountability PFM Public Finance Management PIA Project Influence Area PMMR Performance-based Management and Maintenance of Roads PPAA Public Procurement Appeals Authority PPPD Public Procurement Policy Division PPRA Public Procurement Regulatory Authority PMT Project Management Team PRCA Procurement Risk and Capacity Assessment RAP Resettlement Action Plan RBLF Results Based Logical Framework RFB Road Fund Board RMC Regional Member Country (of the African Development Bank) RSS Roadside Station SCF Standard Conversion Factor SSESMP Site Specific Environmental and Social Management Plan RSS Road-Side Stop SBD Standard Bidding Document SGR Standard Gauge Railway SNSC Safeguard and compliance department STI Sexually transmitted infections TAH Trans-African Highway TANROADS Tanzania National Roads Agency TARURA Tanzania Rural & Urban Roads Agency TB Tuberculosis TSF Transition States Facility TSIP Transport Sector Investment Plan UA Units of Account UNCITRAL United Nations Commission on International Trade Law USAID United States Agency for International Development USD United States Dollar VOC Vehicle Operating Cost VTC Vocational Training Centre WB World Bank

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Project Information Sheet

Client Information

BORROWER: United Republic of Tanzania

PROJECT TITLE: TANZANIA: DODOMA CITY OUTER RING ROAD (110.2 km) CONSTRUCTION PROJECT

PROJECT AREA: Dodoma City/Region

EXECUTING AGENCY: Tanzania National Roads Agency (TANROADS).

Financing Plan Source Amount Instrument (( (USD millions)

ADB 138.00 Loan

AGTF 42.00 Loan

Government of Tanzania 34.69 Counterpart Funds

TOTAL COST 214.69

Key African Development Bank (AfDB) Financial Information ADB and AGTF Loan Financing Terms Loan/Grant currency USD Dollars Loan Type Fully Flexible Loan Tenor 24 years including Grace Period Grace Period 5 years Average Maturity 14.75 years Repayment: 38 Half Yearly instalments after expiry of the Grace period. Interest Rate: Base rate + Financing margin + Lending spread+ Maturity premium (10 Basis Points) Base Rate: Floating Base Rate (6-month USD LIBOR, 6m JPY LIBOR or 6m EURIBOR reset each 1st February and 1st August; 3m JIBAR resets each 1st February, 1st May, 1st August and 1st November). A free option to fix the Base Rate is available Financing Margin: The Bank funding cost margin as determined each 1st January and 1st July and applied to the Base Rate each 1st February and 1st August for USD, EUR and JPY and each 1st February, 1st May, 1st august and 1st November for ZAR. The prevailing Funding Margin rate for USD is -0.01000 Loan Margin: 80 basis points (0.8%) Front-end Fee: 0.25% of the loan amount payable no later than 60 days after the date of Entry into Force of the Loan Agreement or at first disbursement, which is the earlier. Commitment Fee: 0.25% per annum on the undisbursed loan amount, commencing 60 days following the date of signature of the Loan Agreement and payable on each interest payment dates, including during the grace period.

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Base Rate Conversion Option*: Besides the free fixing option, the Borrower may revert to the floating rate or reset the rate on all or part of the disbursed amount of its loan.

*Transaction fees apply Rate Cap or Collar Option*: The Borrower may cap or collar the base rate for all or part of the disbursed amount of its loan.

*Transaction fees apply Loan Currency Conversion Option*: The Borrower may change the currency of all or part of its loan, whether disbursed or not into an approved bank lending (does not apply to AGTF) currency.

*Transaction fees apply NPV (baseline scenario) USD 306.5 million EIRR (baseline scenario) 35.4%

Timeframe – Main Milestones (expected) Concept Note approval October 2018 Project approval April 2019 Loan signature June 2019 Last disbursement 31st December 2024 Completion 31st December 2023 Final repayment ADB: December 2043

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EXECUTIVE SUMMARY

Project Overview

1. The proposed DODOMA CITY OUTER RING ROAD PROJECT IN TANZANIA comprises construction to bitumen standard of a new dual-carriage way Outer Ring Road of 110.2 km around Tanzania’s capital city, Dodoma. The project is planned to be implemented over a four-year period (including the Defects Liability Period) at a total cost of USD214.69 million. 2. The Project is aligned with the Bank Group’s corporate objectives of assisting Regional Member Countries transition towards more inclusive and green growth. The Project is likewise directly related to two of the Bank Group’s High 5 operational priorities (integrating Africa and improving the quality of people’s lives on the continent). The Project was identified as part of the Road Transport Infrastructure Needs Assessment for Dodoma City during the preparatory work of Dodoma City Master Plan, which is currently under preparation. The Project provides vital infrastructure necessary for a more efficient development of the fast-growing Dodoma metropolitan region. Furthermore, it will also greatly boost regional integration for Tanzania and its neighbours given that the Project site lies at the crossroads of two major continental road corridors: (i) the Central Corridor which connects the Port City of Dar es Salaam to the Tanzanian interior including the country’s second City of Mwanza, as well as landlocked Rwanda and Burundi, and the eastern part of the Democratic Republic of the Congo; and (ii) the Trans-African Highway 4 (TAH4) connecting Cape Town in South Africa to Cairo in Egypt via the cities of Gaborone, Lusaka, Nairobi, Addis Ababa and Khartoum. 3. The Project’s design includes several complementary interventions, notably: (i) consulting services related to the road works and road studies; (ii) various specially-tailored social infrastructure benefitting women and youth; (iii) institutional capacity building; (iv) urban development related activities aimed at transforming Dodoma into a sustainable City in Tanzania, development of a water and sanitation master plan for Dodoma; and (v) compensation for Project Affected People (PAPs).

Project Beneficiaries and Participation

4. The immediate beneficiaries of the project include the residents in Dodoma City, its suburbs and the surrounding rural areas with a population of approximately 2.4 million people (2018), of which about a third (0.8 million people) live in the City. More efficient transit times as a result of bypassing the City centre and associated traffic congestion will enhance the project’s regional impacts. The Project will also contribute to easier and faster transportation of tourists and agricultural produce within and outside Dodoma City/Region. Under the Social Infrastructure component, the project will provide water, schools, health centres, markets and upgrade of selected access roads to production centres and social amenities. The Urban Development component will contribute to greening Dodoma as well as improved urban planning and urban management, improved provision of basic services, development of road side resting places and the provision of dedicated amenities for truck drivers and other travelers. Needs Assessment 5. The proposed Project is a direct response to the need for improved logistics services to cope with the expected population boom and expansion of economic activities in the political capital of Dodoma, to which all central government ministries and key government agencies have relocated in recent years. In particular, the Project will improve the mobility of goods and services within Dodoma as well as in the Eastern and Southern Africa regional economic blocs vi

by providing key road transportation links transiting through and around Dodoma. In so doing, the Project will foster regional co-operation and integration within the Eastern and Southern Africa regions and beyond. 6. The heavy vehicles entering Dodoma City from the four main trunk roads will be diverted into the Outer Ring Road either to bypass Dodoma City completely or to transfer to another radial route to avoid the City centre. The Project will support the socio-economic growth and development of Dodoma City and the surrounding regions, by improving accessibility and mobility to a growing and strategically located city in the centre of the country. It will also contribute to reduction of Greenhouse Gas (GHG) emissions within the Dodoma city centre as heavy traffic would bypass the city. Bank’s Value Added 7. As the premier, specialized, regional long-term lending intermediary in Africa, the Bank has, over the years, gained a unique position and vast experience in supporting its Regional Member Countries (RMCs) to link long-term development finance to bankable projects. With its deep knowledge, both of Africa and of development solutions, its unique structure, its AAA rating in the financial markets, the Bank is well positioned to leverage contributions from its shareholders and multiply them into financing at low cost. This technical and financial capacity further crowds in other sources of finance, including from the Africa Growing Together Fund (AGTF), which confirmed its interest to avail a loan of USD42 million for the Project through a signed Certificate of Approval of the Loan received on 25th March 2019. The AGTF is a co-financing fund signed between the AfDB and the People’s Bank of China (PBOC) in 2014 to provide additional resources for large infrastructure projects on identical terms as the loans provided by the AfDB. 8. The Bank’s partnership with the government of Tanzania as well as with other development partners active in the country, goes back at least four decades during which time it has acquired deep knowledge in designing, financing, implementing, monitoring and supervising projects in the transport sector. The accumulated lessons from this partnership with Tanzania and the other RMCs has, in turn, produced numerous lessons which are brought to bear in all new projects, including the planned Dodoma City Outer Ring Road. Knowledge Management 9. The core mandate of Bank is to finance development projects in its RMCs, including Tanzania. In line with this goal, operations knowledge forms the base and backbone of the Bank Group’s knowledge resources. Operations knowledge that will be captured from this Project will be shared and reused, thereby greatly improving the design and implementation of future Bank Group projects. This Project includes planned interventions specifically related to the green urban development agenda in partnership with the GEF – something new for this type of project and which will facilitate knowledge building, management and transfer across the Bank Group.

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TANZANIA: THE DODOMA CITY OUTER RING ROAD (110.2 KM) CONSTRUCTION PROJECT RESULTS-BASED FRAMEWORK

Country and project name: Tanzania: Project: The Dodoma City Outer Ring Road Construction Project. Purpose of the project: Improve transport within Dodoma City and decongest the City by Construction of 110.2Km of the Outer Ring Road

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

Impact Nationals Statistics from:

Improved economic and social - Population below the poverty line 33.3% (2017) 31% (2028) (reduction of about 2.3%)  National Bureau of welfare of people living along the (%) (in the Project Area) Statistics

Project Road corridor - Average Household Income of  Household Surveys population along the Project 450 USD/Year (2018) Average Household Income increased by  Targeted Area Socio- 10-20% by 2028. Road Area of influence economic studies IMPACT

Risks: 2.1 Insufficient Outcome 1 Reduction in Average vehicle USD0.52 per veh-km (2018) 0.34 USD per veh-km (2024)- TANROADS (Project maintenance financing operating costs (VOC) Reduction by 35% Completion Report), GOT Transportation costs on the Project 2.2 Damage of pavements due to and Bank review reports; heavy goods overloading

Road (110.2km reduced.

Mitigation: 2.1 The established Outcome 2 Reduction in Travel time (Hours) - 2 Hours & 20 minutes (2018) 1 Hour & 20 minutes (2024) Targeted area socio- Road Fund will cover maintenance requirements. Improved Logistical Performance economic studies. 2.2 The GoT is committed to Reduced Travel Times on the Project through Dodoma City (Time Taken (Reduction by 1hour [43%]) OUTCOMES Road (110.2km). using existing Weighbridges and in Minutes for Transit Trucks ) 50 minutes (2018) 20 minutes (2024) (reduction by 30 other axle load management minutes[60%]) National Statistics from: measures to control overloading on the Project road.

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Outcome 3  Number and % of women and  00 (2018)  500 (30% female) by 2024  National Bureau of Risk: Delay in compensation and Improved economic and social welfare men employed during Statistics resettlement will delay project of persons in the area of influence of construction, operation and  Household Surveys start-up. Mitigation: The GOT is the Project Road maintenance of the road  Social-economic survey of committed to complete  % of men, women and youth in  10 (2018)  40 (2024) the PAP Compensation and resettlement the PAPs running Income of the first sections prior to Generation Activities (IGAs) commencement of civil works;  Average time (mins) taken by  120 (2018)  30(2024) persons in the Project Influence Area (PIA) to & from the water supply point (by sex)

Component 1: Road Construction 1. Length (km) of Construction 1. In 2018: 110.2 km of gravel 1. By 2024: 110.2 km constructed to Quarterly Progress Reports, Risk : late start-up in project Civil Works section of the Outer Ring Road: road. bitumen standard (AC). disbursement and financial implementation resulting from 1.1 Road Construction of: Nala-Veyula-Ihumwa- 2. 00 2. 2 (Road/CCTV Cameras) reports from the executing delayed effectiveness of the (i) Nala – Veyula - Ihumwa (50.2km) Matumbulu-Nala upgraded to 3. 00 3. 08 Boreholes agencies loans. (ii) Ihumwa-Matumbulu-Nala (60.0km) bitumen standard (Asphalt 4. 00 4. 4/1,000 (50% women) Bank supervision mission and Works Supervision services for Concrete pavement) 5. 00 5. 02 Initiatives reports Mitigation: The loan conditions (i) and ii. 2. No. and type of traffic calming 6. 00 6. 1,000 (50% women) Project completion reports will be minimized and made (iii) Community awareness-raising and safety features constructed 7. 00 7. 200 (20% Women) realistic and achievable. (iv) Sensitization environment protection 3. No. of boreholes constructed in Advance Contracting procedures HIV, Road Safety, Gender ) the PAPs are to be utilized. (v) ESMP and RAP implementation. 4. No. of Communities/Participants Risk: Project Costs escalation attending awareness events on project job opportunities Mitigation: Project costing

OUTPUTS conducted has allowed physical and price 5. No. of initiatives put in place by contingencies to cover possible the contractor to promote women price increases employment Risk: Delay in implementing 6. No. of community members of the RAP resulting in delay sensitized on HIV/AIDS, human in possession of construction trafficking, teenage pregnancy sites by the contractors. 7. Number of Persons employed during the construction phase.

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Component 2: Related Facilities 1. Length of urban/rural roads In 2018: By 2024 Mitigation: Commencing the 2.1 Development of related urban/rural improved 1. 00 km of roads 1. 28.4 km of feeder roads process with a target of roads leading to key social services 2. Number of markets rehabilitated 2. 00 No (#)market rehabilitated finishing it before project the 2.2 Markets, Road-Side Stops; 3. Number of women and youth 3. 00 2. One urban/rural market civil works commence. Community Water Sources, receiving Enterprise Development 4. 00 RSS rehabilitated Strengthening of health Centers Assistance services 5. 00/00 Health

2.3 Provide Enterprise Development 4. No. of Road-Side Stops (RSS) Centre/Ambulanaces 3. 500 women; 500 youth (Over 50% of Social Infastructure Assistance to women and youth 5. No. of Health Centres and Beneficiaries will be Women) Ambulances 4. at least 2 RSS constructed 5. 4 Health Centre/5 Ambulances

Component 3: Institutional Support  Number of Staff Trained 00 (2018) - 82 Staff (2024) (Atleast 20% and Capacity Building women) 3.1 Training of TANROADS and 26 TARURA & 56 TANROADS

TARURA Staff, Studies for Pipeline  Studies for Pipeline carried out 00 (2018) Studies Development - 2 Studies (2024) Component 4: Project Management 4.1 Reference situation of the Project TANROADS Reports 4.1 Socio-economic impact - Baseline indicators established 00 (Indicators) known and at the end socio- monitoring/evaluation of the Project - Number and Quality of the economic impact of the Project known 4.2 Financial and accounting audit of the Reports Produced n/a Project. - Number of recommendations n/a 4.2 Reports of financial and accounting 4.3 Technical and Road Safety audit of audit of the Project approved the Project. 4.3 Reports of technical and road safety audit of the Project approved

COMPONENTS COSTS – MILLIONS UA/USD INPUTS

Component Cost Millions USD Million UA Tentative Sources of Millions UA Millions USD Component 1 : Construction Works Millions UA Component 1 : Construction Works 165.56 118.26 Financing (Millions Component 2 : Related Facilities Component 2 : Related Facilities 8.20 5.86 USD/UA)Source Component 3 : Institutional support /Studies 3.43 2.45 BANK (ADB) 98.57 138..00 Component 3 : Institutional support and Component 4 : Project Management 3.06 2.18 128.57 Capacity Building AGTF 30.00 42.00 Base Cost 180.25 128.75 15.72 Component 4 : Project Management GOT 24.78 34.69

KEY ACTIVITIES Physical Contingencies (10% of Base Cost) 18.03 12.88 12.90 Price Escalation (5% of Base Cost) 9.01 6.44 TOTAL 153.35 214.69 Compensation of PAPs 7.4 5.29 157.19

Total Project Cost 214.69 153.35

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Project Implementation Schedule

ACTIVITY 2019 2020 2021 2022 2023 2024 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 I DODOMA CITY OUTER RING ROAD CONSTRUCTION PROJECT (110.2 km) 1 Advance Contracting 2 Project Approval 3 Loan Sigtnature 4 Effectiveness II CIVIL WORKS & OTHER INTERVENTIONS 1 Compensation & Resettlement 2 Bidding/Contract Award 3 Mobilization & Works Execution 4 Lot 1: Matumbulu-Nala-Vyeyula 5 Lot 2: Vyeyula-Ihumwa-Matumbulu 6 Road Safety Interventions III SUPERVISION 1 Shortlisting up to proposal for award 2 Contract Award 3 Mobilization 4 Works Supervision IV PROJECT MANAGEMENT & SUPPORT TO THE EA 1 ESMP Monitoring & HIV/AIDS Sensitization 2 Road Safety Awareness & Audit 3 Technical Audit 4 Studies for pipeline Development 5 Training to TARURA and TANROADS Staff

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REPORT AND RECOMMENDATION OF BANK GROUP MANAGEMENT TO THE BOARD OF DIRECTORS CONCERNING A PROPOSAL TO AWARD LOANS TO TANZANIA FOR DODOMA CITY OUTER RING ROAD (110.2KM) CONSTRUCTION PROJECT

Management hereby submits this report and recommendation concerning a proposal for a loan from the African Development Bank (ADB) of USD 138.00 million and co-funding of USD 42.00 million from the Africa Growing Together Fund (AGTF) to the United Republic of Tanzania, to finance the Dodoma City Outer Ring Road Construction Project. I. Strategic Thrust and Justifications 1.1 Project Linkages with National and Regional Strategies 1.1.1. The Road Project responds to the orientations of sectoral transport policies and the National Development Plan of Tanzania. It is in line with the priorities expressed in the Transport Sector Policy Papers and in the Development Plan of Tanzania, which focusses on the development of road infrastructure to open rural areas, reduce poverty and accelerate economic growth, improve access to social services and foster regional integration. The Project is also among the key infrastructure Projects identified by the Task Force preparing the Dodoma City Master Plan aimed at transforming Dodoma into the first sustainable City of Tanzania. 1.1.2. In Tanzania, the Second Five Year Development Plan (FYDP II 2016/17-2020/21) sets as a target raising the contribution of the transport sector from 8% of GDP in 2015 to 12% by 2020 to facilitate linking the country to regional and global networks, reduce the cost of doing business and increase competitiveness, promote inclusive growth and enhance regional integration towards operationalizing the country’s Development Vision 2025. 1.2 Rationale for Bank Involvement Key Development Issues 1.2.1 The Bank has a comparative advantage in financing road infrastructure projects in Tanzania and Africa, based on its development partnership with Tanzania for over four decades. Thus, it has been approached by the Government of the United Republic of Tanzania to finance this key Road Project essential to address the accessibility and mobility needs of Dodoma City/Region, and the North-South (Cape Town to Cairo) Trans-African Highway (TAH4) and the Central Corridor criss- crossing in Dodoma City. 1.2.2 The Project is in line with the Bank’s Ten-Year Strategy (2013-2022) whose objectives are to support Regional Member Countries (RMCs’) transition to a more inclusive and greener growth. The Project is likewise consistent with two of the Bank’s High 5 priorities: Integrate Africa and Improve Lives of the African People. It is also consistent with the Country Strategy Paper (2016- 2020) and the East African Regional Strategy Paper on the pillars of Infrastructure Development. Furthermore, the Project is consistent with the various institutional sector policies and strategies including; the Urban Development Policy that provides guidance for Bank Group operations in the urban sector, builds the foundation for dialogue with counterparts and promotes cooperation with other development partners; the Bank Gender Strategy which specifically seeks to increase women’s economic empowerment through expanding access to services, leveraging infrastructure for gender equality, and increasing women farmers’ access to markets and skills training. 1.2.3 Addressing Infrastructure Bottlenecks. The Project addressess transport infrastructure bottlenecks in Tanzania around Dodoma City. The Project is therefore in line and consistent with the Country Stragey Paper (2016-2020) which identified infrastucure bottlenenecks in transport 1

and energy sectors as the primary constraints to Tanzania’s economic transformation and inclusive growth. 1.2.4 The Project further responds to Tanzania’s efforts to address climate change challenges. By redirecting heavy commercial transport trucks away from Dodoma inner-city, the project is expected to reduce greenhouse gas emissions, air pollution and other transport related pollutants while improving inner-city air quality. This and the greening Dodoma campaign will enhance the city’s long term goal of becoming the first sustainable city in Tanzania 1.3 Aid Coordination 1.3.1 Overall, a Development Partner Group (DPG) is the coordinating body for bilateral and multilateral development partners in Tanzania. The Development Partner Group for Transport (DPG-T) in which the AfDB is the Lead/Chair, is a sector sub-group of the DPG that provides a platform on which financing and implementation issues regarding the Transport Sector Investment Plan (TSIP) and other policy documents are discussed. There is regular dialogue between Government and Development Partners (DPs) to ensure that results and outcomes are achieved in line with the targets agreed to. Major players include the European Union (EU), World Bank (WB), and Japanese International Co-operation Agency (JICA), KfW and Korea-Exim Bank. Other Developement Partners were consulted for co-financing possibilities include: British High Commission-Department for International Trade (BHC-DIT) and Belgium Technical Cooperation (BTC). 1.3.2 The Project is to receive co-financing in form of a Grant from the Global Environmental Facility (GEF) for a tentatively approved amount of USD 7.00 million. The Grant will be innovatively used to finance an integrated Urban Development Component of the Project. Specifically, funds from the Grant will address biodiversity, land degradation and climate change around the city and along the length of the Outer Ring Road. The funds will be used toward integration of informal settlements into the Dodoma City Master Plan, greening Dodoma, improving waste management at the household level, and develop the first Dodoma City Water Supply and Sanitation Master Plan to address the chronic water challenges. 1.3.3 The Project has received co-financing in the form of an Africa Growing Together Fund (AGTF) Loan from the People’s Bank of China (“PBOC”). Following a request made by the Bank, the AGTF provided a loan of USD42.00 million for the Project and a signed Certificate of Approval of the AGTF Loan was received on 25th March 2019. 1.3.4 It is also noted that whereas JICA is not directly co-financing this Project, it is currently designing an Inner Ring Road (whose length and cost are yet to be determined) in Dodoma City with the same objective of addressing congestion challenges and improvement of mobility in the Dodoma City.

II. Project Description 2.1 Project Objectives 2.1.1 The overall goal of the Project is to support Tanzania achieve more inclusive and sustainable economic growth through development of crucial transport infrastructure that significantly contributes to the country’s poverty reduction initiatives. 2.1.2 The objectives of the Project are to provide efficient road transport access to Dodoma City, the rest of the Country as well as other countries in the EAC region. The Project is expected to improve accessibility of the people and goods to important economic centres and social services in

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its zone of influence, thereby contributing to poverty reduction in general, and in affected communities in particular. 2.1.3 Significant expected outcomes include: (a) improved overall accessibility to, around and from Dodoma (i.e., increased ability of businesses to provide goods and services, and people’s ability to access education, employment and services); (b) a reduction in transportation costs (including travel time, vehicle operating costs, road and parking facility costs, accident and pollution damages); (c) improved urban planning and management; (d) increased economic productivity, employment generation and, in turn, regional economic development; and (e) a boost to regional integration – a crucial national and continental development objective. 2.2 Project Components 2.2.1 To achieve the above goals and results, the project will focus on four components summarized in Table 2.1: Table 2.1 Project Components Components Description of Components Tentative Cost (USD million) 1. Road Works: 156.19 Construction & (i) Construction of the 110.2km Dual Carriageway ring road to Works supervision: 9.37 Supervision bitumen standard between Ihumwa-Matumbulu-Nala-Veyula and Ihumwa; ; (ii) Community awareness-raising on HIV/AIDS, and 165.56 ESMP/RAP implementation; and (ii) Civil works supervision services.

2. Related (i) Specific measures in favour of women and youth to cover: Road- developments and Side Stops (RSS), Community Water Sources, and Strengthening of women´s Health Centres. (ii) Transport infrastructure: rehabilitation of feeder 8.2 empowerment roads. (iii) Pilot Road Safety Measures around Project Road in measures Dodoma City 3. Capacity Building (i) Capacity Building to TANROADS and TARURA staff through training to address capacity gaps. (ii) Studies for development of 3.43 Pipeline Projects. Technical Audit and Road Safety Audit of the Project. Financial Audit 4. Project 3.06 Management and related Project management costs. Sub Total (Components 1-4) 180.25

Physical contingencies (10%) 18.03 Variation of Prices: (5%) 9.01

TOTAL PROJECT COST (Excluding RAP Costs) 207.29 Resettlement Action Plan 7.4 (RAP)/Compensation of PAPS) PROJECT COST TOTAL PROJECT COST FOR ALL COMPONENTS 214.69

2.3 Technical Solutions Adopted 2.3.1 Various pavement structure options for the implementation of the project were considered and the recommended ones are outlined in Table 2.2 below:

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Table 2.2: Project alternatives considered and reasons for adoption or rejection

Traffic Construction Base Load Sub base Surfacing Reason for Adoption or Rejection Alternative course Class

The CRR Base option is cheaper compared to DBM Base although their structural integrities are 150 mm C2 Alternative 1 150 mm relatively comparable. + 150 mm 50 mm AC (Recommended) CRR The project is also endowed with naturally available C1 materials (Gravels and rocks). This option is Considered the best option - Adopted.

With the use cement-stabilized layers for both Base course and Sub base, the pavement will likely be TLC 20 subjected to extensive cracking. 150 mm C1 But, use of CRR layer which is unbound will help Alternative 2 150 mm C2 50 mm AC + 150 mm preventing reflective cracking from reaching the C1 surfacing layer. Cement requirement is very high hence more costly. This option was rejected.

DBM Base is slightly stronger than CRR Base but 200 mm 175 mm Alternative 3 50 mm AC more expensive than CRR, so this option was CM DBM40 dropped in favor of alternative 1.

2.4 Project Type 2.4.1 The ADB and AGTF financing will support the construction of the Outer Ring Road and rehabilitation of identified socioeconomic infrastructure. The investments against which funds are to be disbursed are clearly defined. The Project loan instrument is considered the most appropriate instrument for this intervention by the Bank Group. The GEF financing being sought will finance the complimentary urban development components. 2.5 Project Cost and Financing Mechanisms 2.5.1 The estimated total Project cost, net of taxes and customs duties is UA 153.35 million (USD 214.69 million), of which USD 156,04million or 72 % is foreign currency and USD 58,65 million or 28% is local currency. The cost of the components excluding compensation of PAPs is USD 207.29 million. This cost is calculated based on final design studies and similar services in 2018. It includes physical and price contingencies. The summary of costs by component is presented in Tables 2.3below. The summary of costs by category and the disbursement schedule by source are presented in Appendix III. Table 2.3: Cost Estimates by Component TOTAL PROJECT COST

USD Million UA Million COMPONENTS FE LC Total FE LC Total A/ Road Construction & Supervision 132.45 33.11 165.56 94.61 23.65 118.26 B/ Related developments and women´s empowerment measures 8.2 8.2 5.86 5.86 C/ Capacity Building 0.43 3.00 3.43 0.31 2.14 2.45 D/ Project Management 1.53 1.53 3.06 1.09 1.09 2.18

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Base Cost 134.41 45.84 180.25 128.75 Physical contingences 14.424 3.606 18.03 10.30 2.58 12.88 Price escalation 7.208 1.802 9.01 5.15 1.29 6.44 Cost excluding VAT 156.04 51.248 207.29 111.46 36.60 148.06 Resettlement Compensation (GoT) - 7.4 7.4 5.29 5.29

Total Cost Excluding VAT, Including Settlement of Compensation 156.04 58.648 214.69 111.46 41.89 153.35

PROJECT TOTAL COST 156.04 58.648 214.69 111.46 41.89 153.35

2.5.2 Financing Plan: The Project will be jointly financed by the Bank, AGTF and the Government of Tanzania. Additional financing is being sought from the Global Environment Facility with a tentatively approved amount of USD 7.0 million. The Bank will finance 64.28% of the total cost, equivalent to USD 138.00 million through an ADB loan, while the AGTF will finance USD42.00 million representing 19.56% of the total project cost. For its part, the Government of Tanzania with finance 16.16% of the total project cost, or USD 34.69 million as counterpart funds. The financing plan is presented in Table 2.4 below. Table 2.4: Sources of Financing [in USD million] Counterpart Total Cost Bank Financing AGTF Funds Co-Financing Country/Organisation % Amount Amount Amount (USD M) % (USD % (USD % (USD M) M) M) Tanzania (AfDB) 138.00 64.28 138.00 64.28 Tanzania (AGTF) 42.00 19.56 42.00 19.56 Tanzania (Counterpart) 34.69 16.16 34.69 16.16 Project Total 214.69 100 138.00 64.28 42.00 19.56 34.69 16.16

2.5.3 Use of ADB Resources in Tanzania: The justification for the choice to use ADB resources instead of the ADF resources to finance the Project is that the ADF 14 resource allocations for 2019 for the United Republic of Tanzania are fully committed to other Projects. Tanzania is currently categorized as an ADF Advance country and has access to the resources from the ADB Window. Section 13 of the amended Bank Group Credit Policy, 2014 provides access for ADF Countries to the ADB Sovereign Window if the countries meet the eligibility criteria. Tanzania met the eligibility criteria stated as follows: (i) the country has a low or moderate risk of debt distress; (ii) the country must have headroom for non-concessional borrowing; (iii) the country must have a sustainable macroeconomic situation; and (iv) the country must have a positive rating approved by the Bank’s Credit Risk Committee. The Bank’s Credit Risk Committee cleared the Project for access to the ADB sovereign window as a source of the Project financing. 2.5.4 The Bank’s contribution (i.e. 64.28% of the total project cost) and the AGTF (i.e. 19.56% of the total project cost) will be used to finance civil works and associated consultancy supervision services. The Government’s contribution will primarily be used to finance the compensation of project affected persons (PAPs) as well as part of the civil works. The GEF Grant funds once approved will finance various urban development activities detailed in section 3.5.

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2.6 Project Area and Beneficiaries 2.6.1 Beneficiaries: The main beneficiaries of the project are road users for both local, regional and international traffic including farmers to and through Dodoma City as a result of reduced congestion. The project will have a positive impact on area communities, and in particular, on women and young people because it will improve their access to socio-economic infrastructure and create new initiatives around Dodoma City/Region. It is estimated that over 50% of women will benefits from Social Infrastructure which will include 8 Community water sources, markets, health centres plus 6 ambulances, and 28.4 km of feeder roads. The other beneficiaries are industrialists, traders and transporters whose operating and logistical costs will be significantly reduced due to construction of the main Outer Ring road and rehabilitation of the feeder roads. These positive impacts will be further boosted through more efficient linkages with the Cape Town-Cairo Trans- African Highway 4 as well as the Central Corridor which connects the port of Dar es Salaam to regional markets in Uganda, Burundi, Rwanda and DRC. Improved urban planning and urban management will enhance the city’s profile to attract FDI and domestic private sector investments, improve access to basic services and improve overall quality of life for the citizens of the city of Dodoma. 2.7 Participatory Approach to Project Identification, Design and Implementation 2.7.1 Project preparation (including the various technical studies, environmental and social impact assessments), as well as the appraisal mission for the project followed a participatory approach. During the appraisal mission, the team members conducted field visits along the project zone of influence. Consultations were done in Nala (100 community members), Mahomanyika (94 community members), Veyula (194 community members), Matumbulu (269 community members) and Ihumwa (62 community members) wards with the aim of obtaining views of the communities on the project and documenting possible opportunities. The various events saw high and active participation reflecting the breadth of the communities (women, men, youth, the elderly, community leaders, government officials, etc.,) in the different locations of the project zone. Discussions revolved around current challenges, community expectations, anticipated project benefits, and local involvement during the pre and post construction. The preparation of the project involved meetings with Wards officials around Dodoma City. 2.7.2 Other stakeholders consulted include the City Council of Dodoma, key Ministries and Authorities and other key community stakeholders in selected towns and villages, and various Development Partners. During these meetings, the Bank team was able to receive feedback on the receptiveness of the Project and validate measures proposed for mitigation of some negative impacts expected from the Project. Some of the key issues discussed included: the need to document lessons learnt to inform planned projects, the opportunity to complement ongoing interventions in the Dodoma Master Plan (under preparation), water supply systems and climate change initiatives. Consultations will also continue during project implementation. 2.7.3 During Implementation, the City Council of Dodoma, Ministries/Agencies responsible for Works, Gender, Labour, Environment and Social will be responsible for oversight of the Project to ensure compliance with the relevant National and Regional Policies and Strategies through their staff based in the Project Area. Similarly, the Beneficiary Communities will provide labour for construction work and will also participate in the implementation of some of the project interventions such as awareness sensitization campaigns on HIV/AIDS, Road Safety and Gender Empowerment. The Grievances Redress Communities for the Resettlement Action Plan implementation will comprise of Project Beneficiaries in the Project Area of Influence.

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2.8 Bank Group Experience and Lessons Reflected in Project Design 2.8.1 The Bank Group commenced operations in Tanzania in 1971, and to date has financed operations in the transport sector totaling UA1.1 billion, with over 1,200km of roads paved or rehabilitated. The bulk of these projects were funded with funds from the African Development Fund (ADF). The Projects financed by the Bank Group have made a significant impact on mobility and access to socio-economic opportunities for several millions of people in addition to promoting regional integration. Four road transport projects are currently ongoing, in addition to two Projects completed at the end of 2018. Currently, the performance of the Bank financed transport portfolio in Tanzania is rated satisfactory. 2.8.2 Notable challenges in the implementation of Bank Group-financed transport sector projects in Tanzania include: startup delays, inadequate designs, poor performance of some contractors, and price escalations of civil works contracts. All these lessons have been taken into consideration during the preparation and appraisal of this Project. In addition, the urban integrated approach for implementation of the Outer Ring Road is expected to yield positive results. 2.8.3 Lessons learnt from implementation of previous and on-going roads sub-sector interventions have been incorporated in project design with the following interventions: (i) ensure proper designs are made and design review prior to commencement of civil works; (ii) mitigate implementation delays by use of advance contracting to facilitate early procurement for the contracts; (iii) use of post qualification to encourage wider participation of bidders for the civil works and result in competitive bidding; (iv) proper design review and works supervision during project processing to reduce possibility of cost overruns. In addition, adequate contingencies to cater for cost escalations have been included in the budget for this project. 2.9 Key Performance Indicators 2.9.1 The key performance indicators (KPIs) and expected outcomes upon project completion are: (i) reduced travel duration and city crossing time; (ii) decreased vehicle operation costs (VOC); (iii) improved urban planning and management; (iv) improved access to basic services; and (v) increased number of jobs created during the works construction phase. Some baseline data for these indicators are indicated in the Results Based Logical Framework (RBLF) and more will be collected early in the project implementation. The Project budget includes monitoring and evaluation consultancy services, and for the collection and analysis of survey data to monitor the various Project indicators. III. Project Feasibility 3.1 Economic and financial performance 3.1.1 The methodology for the economic analysis is based on cost-benefit analysis (CBA) by comparing the “with” and counterfactual Project scenarios for Dodoma City Outer Ring Road (110.2km), over a period of 20 years, using the Highway Development and Management Model (HDM-4). A discount rate of 12%, a standard conversion factor (SCF) of 0.82%, and construction period of 3 years starting in 2019 were adopted. The economic costs consist of: (i) the capital investment costs and (ii) the routine and periodic maintenance expenses. The benefits consist of savings in: (i) vehicle operating costs; (ii) motorized traffic travel time for passenger and cargo; and (iii) maintenance costs. The current (2017) Annual Average Daily Traffic (AADT) on the different Project road sections range from 4,901 to 15,667 vehicles per day. The measures of assessing project viability used are the Economic Internal Rate of Return (EIRR) and Net Present Value (NPV). Details of Traffic and Economic Analysis are presented in Technical Annex B4. The summary economic analysis results are presented in Table 3.1.

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Table 3.1: Key Economic and Financial Figures Section Project Road NPV EIRR Parameter (US $ Million (%) Base Results 306.5 35.4% Sensitivity Results: (+20% 160.1 21.8% costs & -20% benefits)

3.2 Environnemental and Social Impact Environmental Aspects 3.2.1 According to the AfDB’s Environmental and Social Assessment Procedures and the Country’s policies, the project is classified as Category 1. The justification for this categorization relates to: (i) the scope of the project (above 50 km); (ii) the presence of environmental and social sensitive receptors in the Project area. The potential impacts trigger the Bank Operational Safeguards – OS1: Environmental Assessment– OS2 related to involuntary resettlement; OS3: Biodiversity Conservation and Ecosystems - OS4: Pollution Prevention and Control, Greenhouse Gas emissions, Hazardous Materials and OS5: Labor Conditions, Health and Safety. 3.2.2 Disclosure: This being a Category 1 Project, in line with the Bank’s Disclosure Policy, an ESIA was prepared and its summary disclosed on the Bank’s website on 6th August 2018. Subsequently, a summary of the Resettlement Action Plan was disclosed on 3rd December 2018. The ESIA and RAP summaries will be disclosed for a 120 days period prior to Board submission. Capacity to Monitor EMP Implementation 3.2.3 TANROADS will be responsible for the overall implementation, administration, and enforcement of the recommendations of the ESIA. An assessment of their capacity revealed that most safeguard staff have considerable exposure to the Bank Group’s Safeguard Requirements. However, for the daily monitoring aspects, the project design has allowed for training and capacity enhancement for staff in Dodoma to ensure that: (a) effective coordinating and implementation of the ESMP is done; and (b) ensure that performance of environmental controls and proposed mitigation measures are implemented. 3.2.4 At construction level, the usual controls will be applied where, the Civil Works Supervising Consultant will be responsible for overall project management. The Consultant will be responsible for ensuring day-to-day implementation and compliance with the portions of ESMP and will recruit staff dedicated to oversight of environmental and social safeguards requirements on the Project. The Civil Works Supervision Engineer will ensure that the Contractors provide appropriate training for their staff on ESMP. The Contractor will ensure the control and limitations of disturbance to the project site, routes, and its surrounding environment and communities during the construction cycle of the project. Within 60 days upon notification of contract award, the contractor shall prepare and submit site specific Environmental and Social Management Plan (SSESMP) and Health and Safety Plan (SSHSMP). The Plan shall describe measures to be followed to protect the environment, public, local communities, workers, and biodiversity in proximity to the Project operational areas. 3.2.5 At national level, the National Environment Management Council (NEMC) is the main agency responsible for oversight and ensuring that development projects carried out in the United Republic of Tanzania adequately address environmental and social issues during the lifetime of the project. TANROADS will continue to engage with NEMC to ensure that there will be an 8

independent evaluator to carry out compliance monitoring to address any claims raised by members of the community, Community Based Organizations, or Non-Governmental Organizations on the negative aspects of the project. During monitoring, the District Environmental Officer shall accompany NEMC or an independent evaluator. The costs of the independent firm to do the monitoring has been included in the costs of construction contract. The Environment Department in the Vice President’s Office will also participate in monitoring the Urban Development Component activities tentatively approved for financing by a GEF Grant of USD 7.0 million (Technical Annex B.8). Involuntary Resettlement 3.2.6 Realignment of the road, extraction of naturally occurring construction materials, and construction of camps outside the Right of Way (Row) will cause some loss of properties in terms of buildings and land. Affected people will be compensated because payment of compensation is both a legal and constitutional right under Article 24 of the Constitution of the United Republic of Tanzania of 1977. A Resettlement Action Plan (RAP) was prepared with a cut –off date of 31st August 2018. 3.2.7 The Consultants estimate TZS 21,017,940,079.72 as the amount required for implementation and monitoring including the RAP. These costs include the expenses to be incurred towards consultants, NGOs and cover both internal and external monitoring efforts needed. The estimated number of the Project Affected Persons (PAPs) is 2,890. The percentage distribution of compensation entitlements is as follows: 32.18% towards buildings; 49.55% towards land; 2.92% towards trees and plantation; 8.05% towards disturbance allowances; 7.51% towards accommodation allowances; 0.87% towards transport allowances’; and 0.2% towards grave removal allowances. The Government of Tanzania has included the RAP budget in the budget of 2019 – 2020. Climate Change and Green Growth 3.2.8 The Project was screened for vulnerability to climate risks, and categorized as 1, due to Dodoma’s semi-arid climate (high temperature and low rainfall) which may affect the long-term durability of the road. Even at an average rainfall of 564mm per year, the low-lying nature of the terrain makes climate risk such as flush flooding problematic for some sections of the project. On Climate Adaptation, a number of the practical adaptation measures taken into the designs are either engineering-based or natured-based. Increasing the roadside drainage capacity and culvert dimensions, and road surface management, constitute the engineering-based measures. While the nature-based solutions include: tree-planting along road slopes and other forms of ecosystem-based land management systems. 3.2.9 The road project will contribute to the economic and social resilience of the millions of beneficiaries, especially women and vulnerable groups, for many decades. The tree-planting component will further contribute to climate change mitigation as well as the greening of the environment. In particular, the list of climate change and green growth related activities have been included as a sub-component under the Urban Development component. GEF funding will be used for implementation of this component. Approval by GEF Board of the funding is expected in June 2019.

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Gender and Social Effects 3.2.10 The gender analysis highlights a number of differential transport mobility and accessibility needs and priorities of women and men in Tanzania in general, and Dodoma in particular. These include: (i) the need for economic opportunities for women which are responsive to their limited mobility and time pressures compared to men; (ii) the need for gender responsive compensation and resettlement processes, particularly focusing on engaging women in consultations; (iii) the need for more equitable employment opportunities during project construction, operation and maintenance; and (iv) the need for improved road design features that are responsive to the specific mobility, safety and security needs of women, and in some cases, the young, disabled and elderly. 3.2.11 The Project has integrated a number of design-related features, and other interventions to address some of the gender gaps identified. For the road design, the following features have been included: - traffic calming and safety measures like rumble strips designed for 50km/h and repeated every 250m at the beginning of a village section; raised pedestrian crossings at local schools; standard bus bays and terminal points to provide a safe place for passengers to alight and board from public transport; 2m wide sealed shoulders on either side of the road to be used as pedestrian walkways and for cyclists/Non-Motorized Transport (NMTs); and security lights. 3.2.12 For the resettlement and compensation processes, women shall be involved in the consultation processes. The Resettlement Action Plan (RAP) acknowledges the higher risk that may be experienced by widows, female and child-headed households during the resettlement and compensation processes. The RAP notes that TANROADS will support sensitization of stakeholders on the resettlement plans as well as the preparation of monitoring of that plan. This sensitization will include discussion on gender aspects. Women in the PAPs shall be represented on the various committees TANROADS standard practice for compensation includes the whole family, particularly the wife and husband at the time of handing over the cheque to the beneficiary. Other details on Gender are in Technical Annex B.6. 3.3 Regional Integration 3.3.1 The Project will provide a major boost to the country’s and sub-region’s integration with a large swath of Africa given that it lies at the cross-roads key regional and continental trade routes, namely; the Trans-African Highway (TAH 4) Corridor and the Central Corridor (CC). TAH4 is a strategic route connecting Cape Town (South Africa) to Cairo (Egypt) through Gaborone (Botswana), Lusaka (Zambia), Dodoma and Arusha (Tanzania), Nairobi (Kenya), Addis Ababa (Ethiopia) and Khartoum (Sudan). The Central Corridor links the port of Dar es Salaam to Tanzania’s interior and secondary cities such as Mwanza, Kigoma and to four landlocked neighbouring countries namely Burundi, Rwanda, DRC and Uganda. The Central Corridor is significant for Tanzania in that it handles 90% of the Country’s total trade (imports and exports). Statistics show that in 2017, the Port’s throughput was 13.8 million metric tons and is projected to reach 28 million metric tons by 2025 due to the ongoing modernization projects and the fast growth of the economies it serves. 40% of the cargo handled by the Port of Dar es Salaam is transit cargo for DRC, Rwanda, Burundi and Uganda via the Central Corridor. 3.3.2 The Project will therefore contribute to enhancing overall logistics efficiency on key corridors, notably Central Corridor and North-South (Cape to Cairo) Corrior (TAH4), by providing an efficient route around the City of Dodoma, and improving access to tourism sites in central and north Tanzania. The Project has important synergies and will augment gains from the Bank’s other investments on the Central Corridor and on the North South Corridor. For example, in November 2018 the Bank approved upgrading of the multinational Kabingo-Kasulu-Manyovu/Rumonge- Bujumbura road, a spur of the Central Corridor, providing a gateway to the sea for landlocked

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Burundi. Similarly, the Bank financed the completed rehabilitation of Arusha-Namanga-Athi River and the Namanga One-Stop Border Post which is on the North-South Corridor at the Kenya- Tanzania Border. 3.3.3 In addition, the City of Dodoma is set to grow and become a major population and production hub following the move by GoT to relocate key Government functions from Dar es Salaam to Dodoma. The Outer Ring Road project will therefore provide an important link for this key economic node in the centre of Tanzania to other parts of the country and to regional and international markets. Trading opportunities will be further enhanced through the inclusion of markets and access roads, which will improve access to productive facilities including farms as well as social amenities 3.3.4 The Project has included complimentary facilities such as Roadside Stations (RRS). These facilities offer resting amenities for truck drivers and travelers thereby improving safety and enhancing comfort. The RSS may include facilities such as fuel stations, rest/lodgment facilities, sanitation amenities (with facilities for women), eateries/restaurants, and stalls to display merchandise such as fresh foods and horticultural produce. The East Africa Community (EAC) plans to enact enabling legislation to make it illegal for long-haul drivers to stop only at non- gazetted stops, making RSS a mandatory feature of new road designs in the Region. The inclusion of these facilities in the Project is therefore forward-looking. 3.4 Road Safety 3.4.1 The issue of Road Safety Coordination Lead Agency has regularly been discussed between the GOT and the Development Partners, including the Bank. In order to contribute towards improved road safety in Tanzania, the Project has included a provision for the road safety audit on the detailed design as well as at pre-opening and post-opening stages and the sensitization of communities/users of the project road. Provision has also been made on a pilot basis of Making Dodoma City Traffic Accident Free through installation of CCTV Cameras on very busy junctions in the City and enhanced awareness raising on Road Safety along the Project Road and in the City. The CCTV Cameras have been recommended by the Borrower/Recipient based on their important role on contributing to positive behavioral change on observance of traffic rules which subsequently contributes to reduction in traffic accidents on the sections where they are installed. 3.4.2 On the National level, it is observed that whereas there are various entities dealing with different aspects of Road Safety, the impact of all the good efforts needs to be greatly improved in a more coordinated and sustainable basis starting with the creating of a Lead Agency / Coordinator of Road Safety Activities. The Government of United Republic of Tanzania shall submit an annual progress report, within three months after the end of each fiscal year on the status of a Road Safety Lead Agency during the implementation phase of the Project to enhance sustainability. Creation of a Road Safety Lead Agency is a major missing aspect in the various ongoing Road Safety efforts by the Borrower/Recipient. Through dialogue with the Borrower/Recipient on Road Safety interventions during the implementation phase of the Project, specific interventions required to actualize the formation of the Road Safety Lead Agency will be agreed upon between the Borrower/Recipient and the Bank/Other Development Partners. 3.5 Urban Development 3.5.1 The Dodoma City Master Plan being updated aims to transform Dodoma into a sustainable city, an economic growth pole, academic city, and tourist destination. The Capital City vision aims to make Dodoma a recreational, an eco-friendly and green, smart, transit oriented and an inclusive city to meet expectations of its citizens and to serve the rest of the Republic of Tanzania and the

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wider region. The Master Plan is informed by integrated land use planning including rapid transport systems and utilities, commercial, residential, institutions, urban agriculture/farming, and mining. 3.5.2 The Master Plan Taskforce, Dodoma City Authorities and other stakeholders, have identified the following needs for Dodoma City among others: (i) integrated land use planning, zoning, and effective planning of existing informal and unplanned settlements (see Existing Land Use map in Appendix B8 in Technical Annexes), (ii) integrated transport planning and transit- oriented development, (iii) green mobility and Bus Rapid Transit (as in Dar es Salaam), (iv) incentive programs that encourage non-motorized transport modes, (v) reduction of energy demand, and investment in renewable energy for example for use on street lighting, (vi) enhance climate resilience, (vii) integrated low-emissions urban systems in the form of low emission zones, and (viii) strengthening capacity of the City of Dodoma administration to effectively deliver on its mandate within the context of the 2018 Master Plan. 3.5.3 The Project will support the implementation of the following interventions to address some of the above needs using a tentatively approved Grant of USD 7.0 million from the Global Environmental Facility (GEF). 3.5.3.1 Biodiversity – The AfDB will support the City of Dodoma to integrate biodiversity and ecosystem values in urban planning. This will include conservation and preservation of Dodoma’s natural environment, history, and critical agriculture, accounting for and managing Dodoma’s natural capital, and green space development / recreation parks. 3.5.3.2 Land Degradation – The AfDB will support the City of Dodoma in the restoration of degraded urban land and sustainable land management. This will include reforestation of the Dodoma city hill ranges, along the City Outer Ring Road, and other city roads, avenues and major highways, strengthen capacity of the City to develop alternative or sustainable income generating activities for artisanal miners, development of an integrated water supply and sanitation master plan, and undertaking drainage system improvements to control rain water runoff and soil erosion. 3.5.3.3 Climate Change: The AfDB and UNIDO will collaboratively support the City of Dodoma toward reduction of Greenhouse Gas (GHG) emissions through improving urban mobility through implementation of the Dodoma City Outer Ring Road project and feasibility studies for a rapid bus transit, development of hubs of innovation of standards for carbon neutral infrastructure, low- carbon urban mobility, eco-industrial parks, solid waste management and energy recovery from waste streams, renewables and industrial energy efficiency; development of Solar PV water pumping, renewable energy for street lighting, and other energy efficient building design and lighting.

IV. Implementation 4.1 Implementation Arrangements 4.1.1 Tanzania National Roads Agency (TANROADS) under the Ministry of Works, Transport and Communication (MoWTC) will be the Executing Agency for the Project. TANROADS is a non-revenue generating agency with mandate to implement road projects in the Country on behalf of the Government of the United Republic of Tanzania. TANROADS has acquired substantial experience in managing Bank-funded projects with satisfactory results. The Borrower will assume all responsibility for the receipt and utilization of the loan proceeds and shall ensure that the Executing Agency complies with the reporting, financial management, technical, fiduciary, safeguards, monitoring and evaluation requirements applicable to the Project.

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4.1.2 TANROADS is a semi-autonomous entity of the MoWT&C responsible for the maintenance and development of the trunk and regional road network in Tanzania Mainland. It is headed by a Chief Executive reporting directly to Permanent Secretary (Works), under the Ministry of Works, Transport and Communication. The Project will be under the Director of Projects. 4.1.3 For purposes of the implementation of the Complementary Initiatives, TANROADS will be supported by the respective institutions such as the Tanzania Rural & Urban Roads Agency (TARURA), Department of Water and Sanitation (DWS), Ministry of Education, Ministry of Health among others in drafting Terms of Reference, Specifications, and up to Commissioning of the Project. 4.1.4 Despite the satisfactory performance, during project appraisal it was observed that the ever increasing road transport portfolio in the country is overstretching the capacity of TANROADS. This is particularly the case in the areas of supervision, procurement, financial management, and environmental and social support, among others. While Bank-financed projects have included capacity building interventions valued at about USD14.00 million (over the past six years, the existing numbers of staff do not match the volume of work. The Borrower is therefore expected to update the Bank within four (4) months after Board Approval of the Project on the Government’s strategy for augmenting the staff capacity of TANROADS with additional staff. These measures to augment TANROADS staff capacities and the capacity building component minimise the capacity risks for implementing the Project. In addition. TANROADS will be supported by TARURA, Ministry of Water, Ministry of Education, Science and Technology, Ministry of Health, Community Development, Gender, Elderly and Children, for implementing some of the Components of the Project such as Rural Roads and complementary activities around the City. 4.1.5 The urban development component activities (after final approval of the GEF Grant) will be implemented by TANROADS together with City Council of Dodoma. The two implementing Agencies will involve and collaborate with all relevant Government Ministries/Agencies. 4.1.6 The Bank will conduct Supervision Missions at least twice a year to monitor progress. If required, a mid-term review shall be carried out in the second year of project implementation. 4.2 Procurement Arrangements 4.2.1 Procurement of Works, Goods (including Non-consultancy services) and the acquisition of Consulting services, financed by the Bank for the project, will be carried out in accordance with the Bank’s “Procurement Policy for Bank Group Funded Operations”, dated October 2015 and following provisions to be agreed in the Financing Agreements. 4.2.2 Specifically, procurement would be carried out following: (i) Borrower Procurement System (BPS) for Tanzania: Specific Procurement Methods and Procedures (PMPs) under BPS comprising its Laws and Regulations, Public Procurement Act, 2011 revised 2016 and its Regulations using the national Standard Bidding Documents (SBDs) or other Solicitation Documents for certain transactions to be entailed under the project; and (ii) Bank Procurement Methods and Procedures (BMP) for Tanzania: Bank standard PMPs, using the relevant Bank Standard or Model Solicitation Documents SDs, for contracts that are above certain financial thresholds detailed in the Procurement Technical Annex. 4.2.3 In accordance with “The Waiver of the Rule of Origin for Specific Cases” approved by the Board of the African Development Bank on 8th March 2017,the procurement of goods, works and services using the resources of the Bank shall be open to countries that are not member states of the Bank, where the Bank agrees to the use the Borrower’s procurement system, for contracts with a value not exceeding the equivalent of: (a) One Million Units of Account (UA 1,000,000) for

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goods; (b) Six Million Units of Account (UA 6,000,000) for works; and (c) Three Hundred Thousand Units of Account (UA 300,000) for consulting services. In such cases, the Borrower country’s Rule of Origin, including its local and/or regional preferences, if provided for in its national procurement laws, shall apply to contracts below the above mentioned thresholds. Contracts above such thresholds will have to be presented to the Board of Directors of the Bank for the Rule of Origin to be waived on a project-specific basis. 4.2.4 Executing Agency: TANROADS is the responsible organ to handle procurement contracts in the project. TANROADS will collaborate with other Agencies on procurement of contracts of some of Project components that will be implemented by other state agencies such as Dodoma City Authority and TARURA. The relevant Government Agencies (GIs) that will be supporting TANROADS to execute some of the project components ) have been assessed and were found generally acceptable, but the necessary capacity building interventions and risk mitigation measures have been included in the project to strengthen the existing procurement and function. 4.2.5 Procurement Risks and Capacity Development: The assessment of procurement risks at the Country, Sector, and Project levels and of procurement capacity at the EA, were undertaken for the project and the output have informed the decisions on the procurement regimes BPS and Bank be used for specific transactions or groups of similar transactions under the project. The details are reflected in the Procurement Technical Annex 5. 4.2.6 Procurement Plan: The Project’s Procurement Plans comprising details of the contracts packages in the components of the project was finalized by the Executing Agency (TANROADS) and shared with the Bank on 15th February 2019. 4.2.7 Advance Contracting: To avoid procurement delays, the Borrower/Recipient requested for the Bank’s No-Objection for Advance Contracting on 14th February 2019. Advance contracting has been cleared by the Bank. Advance Contracting will apply to Civil Works for the Outer Ring Road (110.2km) and Civil Works supervision services for the Project. Launching the Procurement Process through Advance Contracting before Board approval will contribute to minimizing procurement delays. 4.3 Financial Management Arrangements 4.3.1 Financial Management: The assessment of the financial management (FM) system of the Executing Agency National Roads Agency (TANROADS) was based on Bank’s FM Implementation Guidelines-2014. The FM arrangements put in place meet the Bank’s requirements and is adequate to provide accurate and timely information on the status of the project; provided Financial Management Action plan is implemented. The assessment concluded that the overall risk is “Moderate”. 4.3.2 The project will substantially make use of the country’s financial management systems, in line with the Paris Declaration on Aid Effectiveness and Accra Agenda for Action. The project management will be as per the rules and procedures as stipulated in TANROADS Financial policies and procedures. The maintenance of Project accounts will use the computerized accounting system of TANROADS (currently EPICOR 10.1 or other suitable accounting systems). The Director of Business Support (DBS) assisted by the Head of Finance and Chief Accountant (TANROADS) will be responsible for the FM function of the Project. The finance department is managing many projects financed by development partners and is over stretched, but cannot recruit more staff owing limitations imposed by the President’s Office, Public Service Management. Therefore the Government will assign to TANROADS Project Accountant with relevant knowledge and experience acceptable to the Bank.The Project Accountant will be part of the Project Team.

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4.3.3 The Project will prepare quarterly reports (Financial and Physical) which are in line with TANROADS and Bank’s reporting requirement and submit them to the Bank within 30 days after the end of each quarter. TANROADS has experience in managing projects financed by the AfDB Group, the World Bank, the Japanese International Cooperation Agency (JICA), and European Union and other development partners. The ongoing projects have complied with the submission of audit reports, though with some delays. The finalized automation of project accounts will enable TANROADS to submit Audit reports timely. There was concern over timely availability of counterpart funds and contract management as reported in the CFRA report 2018, PEFA 2017 and Controller and Auditor General’s (CAG) report 2017. The Government has shown commitment to avail the resources timely and mitigation measures are incorporated in this assessment. 4.3.4 The Internal Audit Department will audit the project financial transactions at least once annually and the internal audit reports will be shared with the Bank during supervision missions.

4.3.5 Disbursements The Project will mainly use the Direct Payment method to pay contractors/suppliers whereas the Special Account method will be for financing all eligible capacity building and project management costs. The other methods also prescribed in the Disbursement Handbook are applicable when the need arises after consultation with the Bank and obtaining prior approval. The disbursement handbook is accessible through the Bank’s website.

4.3.6 TANROADS will open separate Special Accounts (a foreign and a local currency) or one convertible foreign currency at a bank acceptable to the Bank for the ADB and GEF resources. The Bank will issue a disbursement letter, which will provide specific guidelines on key disbursement procedures and practices negotiable during negotiations.

4.3.7 Audit The audit arrangement will entail the project preparing and submitting financial statements to the auditors within three months after the closure of every financial year. The CAG or an independent audit firm recruited with the involvement of the CAG in accordance Bank’s audit terms of reference will undertake the Project audit. The audit report with an accompanying Management Letter will be submitted to the Bank within six months after the end of the financial year. 4.4 Implementation and Supervision Schedule 4.4.1 The project will be executed over a 3 year-period plus one year of defects liability period. Civil works are packaged into two Lots which include: Lot 1: Nala - Veyula – Ihumwa (50.2 km) Lot 2: Ihumwa - Matumbulu – Nala (60.0 km), as in the Results-Based Framework’.Packaging in two lots will facilitate completion of the civil works within three years. The corresponding implementation schedule is summarized at the beginning of this report (see page xiii). Upon approval of the loan, the Bank will launch the Project and subsequently organize supervision missions. 4.4.2 The Bank will conduct supervision missions in coordination with TANROADS. A mid- term review will be conducted by the Bank to assess the progress towards achieving Project objectives. 4.5 Monitoring. 4.5.1 This will be carried out by the Borrower/Recipient through the Executing Agencies. The Bank will also field at least two Supervision Missions every year during the implementation phase.

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The Project has included a Budget for Monitoring and Evaluation Consultancy services which will cover collection of Baseline Data on Project Indicators, Follow-up surveys and Project Completion Surveys. The results from the Baseline Surveys will be used to provide/refine Baseline Indicators. The Project Implementation Monitoring Schedule is given in Table 4.1,

Table 4.1: Project Implementation Monitoring Schedule Duration Stages Monitoring Activities/Feedback Loop Progress Reports/Baseline Surveys 2nd Quarter -2019 Project launch & Baseline Data Surveys Results Completion of procurements for civil Procurement plan/progress report 3rd Quarter - 2019 engineering works 1st Quarter - 2020 Mobilization of service providers Supervision report and progress reports 3rd Quarter - 2021 Civil engineering works execution rate of 25% Supervision report and progress report Civil engineering works execution rate of 60% Mid-term review and progress report 3rd Quarter - 2022 Follow-Up Surveys Follow-Up Surveys Reports 3rd Quarter - 2023 Completion of civil engineering works Supervision and progress reports End of defects liability period Supervision report and progress report 3rd Quarter - 2024 Project Completion Surveys Project Completion Surveys Results 4th Quarter - 2024 Project completion Project completion report

4.6 Governance 4.6.1 At national and sector levels, the GoT remains committed to well-functioning, representative, accountable, inclusive governance systems and it continues to scale-up and follow- up on the implementation of all components of the National Framework on Good Governance. The Government also continues to work with other stakeholders, including the Development Partners, to improve the capacity of all representative bodies as well as strengthening local governments including cities and municipalities. 4.6.2 The project will be carried out within the Public Finance Management (PFM) systems of the GOT hence it will adopt all the Governance and Anti-Corruption policies and guidelines of the Borrower. The Internal Audit of the Agencies and that of the Ministries under which TANROADS and other proposed Implementing Agencies operate will complement the oversight of management of the project. The proposed technical audits will further help in providing assurance that funds will be used for intended purposes. Further governance risk mitigation measures will include Bank prior review and approval of all project procurement activities. 4.6.3 The Bank Group’s policies and procedures shall be used to mitigate against any potential ccorruption risks during project implementation mainly at contract award and the execution of contracts through: (i) preliminary and continuous review of national procurement structures of the Executing Agency; (ii) the review of procurement documents that will enable the Bank to closely monitor the process for each of the major procurement stages; (iii) regular supervision by the Bank and financial and accounting audits of the Project (iv) adoption of the direct payment method for the disbursement of funds to contractors and service providers; (v) the use of procedures that ensure broader competition and (vi) awareness raising on negative implications of any corruption tendencies on the Project progress and success.

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4.7 Sustainability 4.7.1 The GoT allocates resources under Development Budget towards construction and major rehabilitation of road network within TANROADS. There are mechanisms that ensure road network sustainability with regard to investment and maintenance. Maintenance of roads is financed by the Road Fund Board (RFB), which enjoys autonomous management. The resources of the Fund mainly come from a tax on petroleum products. The Government through RFB allocates road maintenance funds to TANROADS for maintenance of trunk and regional roads. The Road Fund meets about 70% of the Annual Maintenance Needs. Though the Annual Maintenance needs are more than the allocations, the RFB and TANROADS have placed highest priority to routine maintenance of all paved roads in maintainable condition, including newly upgraded/rehabilitated National Roads. This implies that, the Dodoma City Outer Ring Road to be constructed will be given a priority on maintenance funding. The Government through TANROADS is currently undertaking a Performance-based Management and Maintenance of Roads (PMMR) where Contractors and Consultants are procured to maintain certain sections of roads to ensure the sustainability. Already in the Financial year 2018/19, ten (10) Regions (including Dodoma Region) are incorporated under PMMR to ensure that no investment whether current or previous is lost. When completed, the Project Road will also benefit from the PMMR, which will ensure sustainability of the investment. 4.8 Risk Management 4.8.1 Based on lessons learnt during implementation of the Bank financed Transport Projects, a review of the potential risks that could affect the realization of the Project Objectives and targets has been made. In addition to risks related to governance and sustainability, other major risks at outcomes and output levels have been reviewed and mitigation measures included as detailed below. Risks Pertaining to Outcomes 4.8.2 Inadequate Maintenance Financing: This could lead to deterioration of the completed road before its design life. Mitigation: The Borrower will cover maintenance requirements through the established Road Fund. 4.8.3 Inadequate Axle Load Management: This could lead to damage of pavements due to heavy goods overloading. Mitigation: The GOT is committed to using existing Weighbridges and other axle load management measures (fining and prosecuting non-compliant Vehicles) to control overloading on the Project road. 4.8.4 Inadequate Road Safety Measures: This could lead to loss of lives and property on constructed Outer Ring Road. Mitigation. The Borrower is committed to implementation of Road Safety measures, and has also included interventions in this Project to address Road Safety issues along the Project Road/Dodoma City. Progress on establishing a Road Safety Coordination Lead Agency (Road Safety Authority) will closely be monitored by the Bank/GOT during the implementation phase of this Project. Risks Pertaining to Activities (Outputs) 4.8.5 Risk: Late start-up of the Project implementation resulting from delayed effectiveness of the loan. Mitigation: The loan conditions will be minimized and made realistic and achievable. Advance Contracting procedures are to be utilized.

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4.8.6 Risk: Project Costs escalation: This could lead to inability to complete the Project within the allocated Budget. Mitigation: Project costing has allowed physical and price contingencies to cover possible price increases. 4.8.7 Risk: Delays in implementing of the RAP: This could result in delay in the contractors’ possession of the construction sites. Mitigation: The Borrower is committed to commencing the compensation process with a target of finalizing it before project civil works commence. The Borrower is also committed to sectional compensation to ensure Contractors’ possession of the sites are not delayed. 4.9 Knowledge Building 4.9.1 The Project has included interventions in Urban Development sub-sector, focusing on greening Dodoma City and supporting future planning using resources from GEF. Diversifying in the Urban Development sub-sector will facilitate knowledge building in this sub-sector.

V. Legal and Compliance Section 5.1 Legal Instrument 5.1.1 The legal instruments for the Project include the ADB and the AGTF loans and will be governed by the loan agreements between the Bank and the United Republic of Tanzania; and the Bank (as an administrator of the AGTF) and the Borrower respectively. The Bank as an Implementing Agency of the Global Environment Facility (GEF) will also establish the appropriate agreements for the management of the GEF Resources once approved by the GEF. 5.2 Conditions Associated with the Bank’s Intervention A. Conditions Precedent to Loans Effectiveness A.1 Conditions Precedent to ADB and AGTF Loans Effectiveness The loans agreements shall each become effective subject to the Borrower’s fulfilment of the conditions provided for in Section 12.01 of the applicable General Conditions. B. Conditions precedent to first disbursement of the Loans The Loan resources shall be subject to fulfilment by the Borrower of the following conditions to the complete satisfaction of the Bank: B.1 Condition precedent to first disbursement of ADB and AGTF Loans The obligations of the Bank to make the first disbursement of the Loans shall be subject to the entry into force of the Agreements in accordance with the relevant provisions for entry into force of the Loans Agreements.

B2. Conditions Precedent to Disbursements for Works Involving Resettlement Subject to the Entry into Force of the agreement and the fulfillment of the Condition Precedent to first Disbursement, the obligation of the Bank to disburse the Loan/ for works that involve resettlement shall be subject to the fulfillment by the Borrower of the following additional conditions:

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(a) Submission of a works and compensation schedule prepared in accordance with the Resettlement Action Plan (RAP) and the Bank’s Safeguards Policies, in form and substance satisfactory to the Bank detailing: (i) each lot of civil works under the Project, and (ii) the time frame for compensation and/or resettlement of all Project Affected Persons (PAPs) in respect of each section; (b) Submission of satisfactory evidence that all Project Affected Persons (PAPs) in respect of works in a given section of each lot have been compensated and/or resettled in accordance with the Environmental and Social Management Plan (ESMP), the RAP, the agreed works and compensation schedule and the Bank’s Safeguards Policies, prior to the commencement of such works in such sections of each lot and in any case before the PAPs’ actual move and/or taking of land and related assets; or (c) In lieu of paragraph (b) above, submission of satisfactory evidence indicating that the resources allocated for the compensation and/or resettlement of PAPs have been deposited in a dedicated account in a bank acceptable to the Bank or remitted to a trusted third party acceptable to the Bank, where the Borrower/Recipient can prove, to the satisfaction of the Bank that, compensation and /or resettlement of PAPs in accordance with paragraph (b) above could not be undertaken fully or partially, because of the following reasons: (i) The identification of the PAPs by Borrower/Recipient is not feasible or possible; (ii) Ongoing litigation involving the PAPs and/or affecting the compensation and/or resettlement exercise; or (iii) Any other reason beyond the control of the Borrower/Recipient, as discussed and agreed with the Bank.] C. Other conditions

The Borrower must also provide the Bank, to its satisfaction, with:

i. Not later than six (6) months after entry into force of this Agreement, evidence of the assignment of a Project Accountant for the Project Implementation Team (the “PIT”) with qualifications and terms of reference acceptable to the Bank;

ii. Not later than six (6) months after entry into force of this Agreement, evidence of an allocation for counterpart funding in the budget for the fiscal year July 2019-June 2020; and subsequently, submission of evidence of annual allocations for counterpart funding in the budgets for fiscal years July 2020 - June 2021; July 2021- June 2022; and July 2022 - June 2023 respectively;

iii. Not later than three (3) months after the end of each fiscal year, submit an annual progress report on the status of the lead agency responsible for the coordination of the road safety activities by the Borrower, during the project implementation period;

iv. Submission to the Bank a report indicating the measures undertaken by the Borrower to address road safety and Axle load management on the Borrower’s National Road Framework within three (3) months after the end of each fiscal year during the Project implementation. The requirement will take effect at the end of the Fiscal year July 2019- June 2020; and

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v. Submission to the Bank a plan for the additional staff for the Executing Agency annually within four (4) months after the end of each fiscal year during Project implementation.

5.3 Compliance with Bank Policies

The proposed Project complies with all the applicable Bank policies with no exceptions.

VI. Conclusions and Recommendations

6.1 Conclusion 6.1.1 The proposed Dodoma City Outer Ring Road Project is technically feasible, socially/and environmentally acceptable, and economically viable. The Project will address accessibility and mobility needs around Dodoma City/Region and will serve international traffic through Dodoma Region along the Trans-African Highway Corridor (Cape Town to Cairo) and the Central Corridor. The Project will contribute towards the Bank Group objectives of assisting Tanzania achieve more inclusive growth and transition towards green growth. The Project is in line with two of the Bank Group’s High 5 priorities: Integrate Africa and improve the lives of the African People. That the project is fully integrated into the Dodoma City Master Plan enhances Dodoma’s transformation into a sustainable City. 6.1.2 Management will submit an addendum to the Board requesting for approval of the GEF Grant amounting to Seven Million United States Dollars (USD 7,000,000 million) on receipt of the GEF approval of the Grant

6.2 Recommendation 6.2.1 Management recommends that the ADB Board of Directors approve the proposed: i) ADB loan amounting to One Hundred and Thirty Eighty Million United States Dollars (USD 138.0 million) to the United Republic of Tanzania, to finance the Project described in this report and in accordance with the conditions set out above; and

ii) A loan from the Africa Growing Together Fund (AGTF) of the People’s Bank of China (PBOC) amounting to Forty Two Million (USD 42.00 million) United States Dollars to the United Republic of Tanzania to co-finance the Project.

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APPENDIX I: COMPARATIVE SOCIAL ECONOMIC INDICATORS

Tanzania COMPARATIVE SOCIO-ECONOMIC INDICATORS

Develo- Develo- Year Tanzania Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2018 947 30 067 92 017 40 008 Total Population (millions) 2018 59,1 1 286,2 6 432,7 1 197,2 2500 Urban Population (% of Total) 2018 33,8 42,5 50,4 81,5 2000

Population Density (per Km²) 2018 66,2 43,8 71,9 31,6 1500 GNI per Capita (US $) 2017 910 1 767 4 456 40 142 1000 Labor Force Participation *- Total (%) 2018 78,4 65,9 62,1 60,1 Labor Force Participation **- Female (%) 2018 73,9 55,5 47,6 52,2 500

Sex Ratio (per 100 female) 0

2007 2013 2014 2017 2011 2012 2015 2016 2018 97,9 99,8 102,3 99,3 2000 Human Dev elop. Index (Rank among 189 countries) 2017 154 ... … … Popul. Liv ing Below $ 1.90 a Day (% of Population) 2007-2017 49,1 ... 11,9 0,7

Tanzania Africa Demographic Indicators Population Grow th Rate - Total (%) 2018 3,1 2,5 1,2 0,5 Population Grow th Rate - Urban (%) 2018 5,4 3,6 2,3 0,7 Population < 15 y ears (%) 2018 44,7 40,6 27,5 16,5 Population Growth Rate (%) Population 15-24 y ears (%) 2018 19,5 19,2 16,3 11,7 3,5 Population >= 65 y ears (%) 2018 3,1 3,5 7,2 18,0 3,0 Dependency Ratio (%) 2018 92,6 79,2 53,2 52,8 2,5 Female Population 15-49 y ears (% of total population) 2018 23,4 24,1 25,4 22,2 2,0 Life Ex pectancy at Birth - Total (y ears) 2018 66,8 63,1 67,1 81,3 1,5 Life Ex pectancy at Birth - Female (y ears) 2018 68,5 64,9 69,2 83,8 1,0 Crude Birth Rate (per 1,000) 2018 37,3 33,4 26,4 10,9 0,5

Crude Death Rate (per 1,000) 2018 6,3 8,3 7,7 8,8 0,0

2012 2017 2007 2013 2014 2015 2016 2018 Infant Mortality Rate (per 1,000) 2017 38,3 47,7 32,0 4,6 2000 Child Mortality Rate (per 1,000) 2017 54,0 68,6 42,8 5,4 Total Fertility Rate (per w oman) 2018 4,9 4,4 3,5 1,7 Tanzania Africa Maternal Mortality Rate (per 100,000) 2015 398,0 444,1 237,0 10,0 Women Using Contraception (%) 2018 41,9 38,3 61,8 …

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2010-2016 2,2 33,6 117,8 300,8 Life Expectancy at Birth Nurses and midw iv es (per 100,000 people) 2010-2016 41,6 123,3 232,6 868,4 (years) Births attended by Trained Health Personnel (%) 2010-2017 63,5 61,7 78,3 99,0 80 Access to Safe Water (% of Population) 2015 55,6 71,6 89,4 99,5 70 60 Access to Sanitation (% of Population) 2015 15,6 39,4 61,5 99,4 50 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 40 2017 4,5 3,4 1,1 … 30 Incidence of Tuberculosis (per 100,000) 2016 287,0 221,7 163,0 12,0 20 Child Immunization Against Tuberculosis (%) 10

2017 99,0 82,1 84,9 95,8 0

2012 2016 2007 2013 2014 2015 2017 2018 Child Immunization Against Measles (%) 2017 99,0 74,4 84,0 93,7 2000 Underw eight Children (% of children under 5 y ears) 2010-2016 13,7 17,5 15,0 0,9 Prev alence of stunding 2010-2016 34,4 34,0 24,6 2,5 Tanzania Africa Prev alence of undernourishment (% of pop.) 2016 32, 18,5 12,4 2,7 Public Ex penditure on Health (as % of GDP) 2014 2,6 2,6 3,0 7,7

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2010-2017 85,3 99,5 102,8 102,6 Primary School - Female 2010-2017 86,2 97,4 102,0 102,5 Infant Mortality Rate Secondary School - Total 2010-2017 25,8 51,9 59,5 108,5 ( Per 1000 ) Secondary School - Female 2010-2017 25,9 49,5 57,9 108,3 100 90 Primary School Female Teaching Staff (% of Total) 2010-2017 51,3 48,7 53,0 81,5 80 Adult literacy Rate - Total (%) 2010-2017 77,9 65,5 73,1 ... 70 60 Adult literacy Rate - Male (%) 2010-2017 83,2 77,0 79,1 ... 50 Adult literacy Rate - Female (%) 2010-2017 73,1 62,6 67,2 ... 40 30 Percentage of GDP Spent on Education 2010-2015 3,5 4,9 4,1 5,2 20 10

0

2011 2014 2007 2012 2013 2015 2016 2017 Environmental Indicators 2000 Land Use (Arable Land as % of Total Land Area) 2016 15,2 8,0 11,3 10,4 Agricultural Land (as % of land area) 2016 44,8 38,2 37,8 36,5 Forest (As % of Land Area) 2016 51,6 22,0 32,6 27,6 Tanzania Af rica Per Capita CO2 Emissions (metric tons) 2014 0,2 1,1 3,5 11,0

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : Febuary 2019 UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports. Note : n.a. : Not Applicable ; … : Data Not Available. * Labor force participation rate, total (% of total population ages 15+) ** Labor force participation rate, female (% of female population ages 15+)

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Appendix II: Table of Bank Group Operations in Tanzania as at April, 2019

Long name Window Approval Completion Net loan/ Disbursed Disb. Age Rating Date Date Grant Amount Ratio (Yrs) (m. UA) (%) (m. UA)

Agriculture IP DP Overall

TANZANIA INITIATIVE FOR PREVENTING ADF LOAN 06/20/2018 5/31/2024 9.20 0.00 0.00 0.79 na na AFLATOXIN CONTAMINATION

TANZANIA INITIATIVE FOR PREVENTING GAFSP Trust 06/20/2018 5/31/2024 14.40 0.25 1.75 0.79 na na AFLATOXIN CONTAMINATION Fund

TANZANIA AGRICULTURAL DEVELOPMENT ADF LOAN 12/13/2016 1/31/2020 67.27 33.64 50.00 2.31 BANK

Sub Total 90.87 33.88 37.29 1.30

Finance

TANZANIA SHILLING LINE OF CREDIT TO ADB LOAN 12/12/2012 6/30/2022 14.40 14.40 100.00 6.32 na na FRB SUBSIDIARY, FIRST NA

CRDB BANK LIMITED LINE OF CREDIT 2015 ADB LOAN 05/18/2016 08/01/2017 64.46 64.80 100.00 2.88 na na

Sub Total 79.20 79.20 100.00 4.60

Multi-Sector

GOOD GOVERNANCE AND PRIVATE ADF LOAN 07/11/2018 12/31/2019 40.00 40.00 100.00 0.73 SECTOR DEVELOPMENT SUPPORT PROGR

INSTITUTIONNAL SUPPORT PROJECT FOR ADF LOAN 02/03/2016 6/29/2020 12.00 6.74 56.21 3.17 3.0 3.0 NPPP GOOD GOVERNANCE III

ISP FOR DOMESTIC RESOURCES ADF LOAN 03/30/2017 12/31/2019 19.58 0.65 3.33 2.02 MOBILIZATION AND NATURAL RESOURCE

Sub Total 71.58 46.60 65.10 1.97

Power

NORTH-WEST TRANSMISISON GRID ADB LOAN 07/20/2018 12/31/2023 88.84 0.00 0.00 0.71 na na

IRINGA -SHINYANGA TX PROJECT ADF LOAN 10/26/2010 9/30/2020 45.36 25.49 56.19 8.45

Sub Total 134.20 25.49 18.33 4.58

Social

SUPPORT TO TECHNICAL VOCATIONAL ADF LOAN 04/02/2014 12/31/2019 34.00 5.17 15.21 5.01 3.0 3.0 NPPP EDUCATION AND TRAINING AND T

ALTERNATIVE LEARNING & SKILLS ADF LOAN 06/29/2011 12/31/2019 15.00 7.02 46.78 7.77 3.0 3.0 NPPP DEVELOPMENT PROJECT (ALSD II)

Sub Total 49.00 12.19 24.87 6.39

Transport

TRANSPORT SECTOR SUPPORT PROGRAM ADB LOAN 11/26/2015 10/31/2021 195.09 29.53 15.13 3.36

TRANSPORT SECTOR SUPPORT PROGRAM ADF LOAN 11/26/2015 10/31/2021 54.00 9.39 17.4 3.36

DAR ES SALAAM BUS RAPID TRANSIT ADB LOAN 09/30/2015 12/31/2020 70.14 3.32 4.74 3.52 2.0 3.0 PP INFRASTRUCTURE PROJECT

DAR ES SALAAM BUS RAPID TRANSIT AGTF 09/30/2015 12/31/2020 31.89 0.97 3.05 3.52 2.0 3.0 PP INFRASTRUCTURE PROJECT

Sub Total 351.13 43.22 12.31 3.44

Water Sup/Sanit

ZANZIBAR URBAN WATER SUPPLY & ADF LOAN 12/19/2012 12/31/2019 14.00 11.28 80.58 6.3 3.0 3.0 NPPP SANITATION

ARUSHA SUSTAINABLE WATER AND ADB LOAN 09/16/2015 6/30/2020 103.43 23.76 22.98 3.55 3.0 3.0 NPPP SANITATION DELIVERY PROJECT

ARUSHA SUSTAINABLE WATER AND ADF LOAN 09/16/2015 6/30/2020 18.00 3.66 20.33 3.55 3.0 3.0 NPPP SANITATION DELIVERY PROJECT

II

Long name Window Approval Completion Net loan/ Disbursed Disb. Age Rating Date Date Grant Amount Ratio (Yrs) (m. UA) (%) (m. UA)

ARUSHA SUSTAINABLE WATER AND AGTF 09/16/2015 6/30/2020 30.24 5.46 18.05 3.55 3.0 3.0 NPPP SANITATION DELIVERY PROJECT

KIKONGE MULTIPURPOSE DAM AWF 06/27/2016 6/29/2021 1.61 0.13 7.87 2.77 na na HYDROPOWER AND IRRIGATION Sub Total 167.28 44.29 26.48 3.95

National Operations 943.26 285.67 30.29 3.75 Multinational Operations

MULTINATIONAL (TANZANIA/BURUNDI) ADB LOAN 11/22/2018 12/31/2024 93.75 0.00 0.00 0.37 na na RUMONGE–GITAZA/KIBONDO-KASULU- MANYOVU

MULTINATIONAL (TANZANIA/BURUNDI) ADF LOAN 11/22/2018 12/31/2024 90.00 0.00 0.00 0.37 na na RUMONGE–GITAZA/KIBONDO-KASULU- MANYOVU

MULTINATIONAL: EAST AFRICA:ARUSHA- ADF LOAN 04/16/2013 8/31/2020 79.90 53.45 64.78 5.97 3.0 3.0 NPPP VOI (TANZANIA)

TANZANIA - LAKE VICTORIA MARITIME ADF LOAN 10/24/2016 4/30/2021 3.77 0.06 1.49 2.45 COMMUNICATIONS AND TRANSPO

KENYA - TANZANIA INTERCONNECTION ADF LOAN 02/18/2015 12/30/2021 75.29 25.41 26.55 4.13 3.0 3.0 NPPP (TANZANIA)

REGIONAL RUSUMO HYDROPOWER - ADF LOAN 11/27/2013 8/30/2021 22.41 0.86 3.82 5.36 2.5 2.5 NPPP TANZANIA

EAST AFRICA'S CENTRES OF EXCELLENCE ADF LOAN 10/03/2014 12/31/2019 6.25 2.24 31.60 4.51 3.0 3.0 NPPP FOR SKILLS AND TERTIARY Sub Total 371.37 82.01 22.08 3.31 National + Mults 1,314.63 367.68 27.97 3.53

III

Appendix III: Project Costs Annex 3.1: Summary of Project Costs by Expenditure Category Table 3.1: Cost Estimates by Component TOTAL PROJECT COST

USD Million UA Million COMPONENTS FE LC Total FE LC Total A/ Road Construction & Supervision 132.45 33.11 165.56 94.61 23.65 118.26 B/ Related developments and women´s - 8.2 8.2 - 5.86 5.86 empowerment measures C/ Capacity Building 0.43 3.00 3.43 0.31 2.14 2.45 D/ Project Management 1.53 1.53 3.06 1.09 1.09 2.18 Base Cost 134.41 45.84 180.25 128.75 Physical contingences 14.424 3.606 18.03 10.30 2.58 12.88 Price escalation 7.208 1.802 9.01 5.15 1.29 6.44 Cost excluding VAT 156.04 51.25 207.29 111.46 36.60 148.06 Resettlement compensation (GoT) - 7.4 7.4 5.29 5.29

Total Cost Excluding VAT Including 156.04 58.65 214.69 111.46 41.89 153.35 Settlement of Compensation

Annex 3.2: Disbursement Schedule by Source (USD Million)

Source 2019 2020 2021 2022 2023 2024 TOTAL

ADB 25.01 30.02 35.03 35.03 35.03 19.88 180

GOV TANZANIA 11.4 5.29 5.29 5.29 5.29 2.13 34.69 PROJECT TOTAL 36.41 35.31 41.32 41.32 40.32 22.01 214.69 COST

% Percentage 16.96 16.45 19.24 19.24 18.78 10.25 100

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Annex 3.3: Disbursement Schedule by Component (UA million)

CATEGORY 2019 2020 2021 2022 2023 2024 TOTAL

A/ Road Construction & Supervision 19.30 19.41 22.33 22.34 22.34 12.54 118.26 B/ Related developments and women´s 0.96 0.96 1.11 1.11 1.10 0.62 5.86 empowerment measures C/ Capacity Building 0.39 0.40 0.47 0.47 0.46 0.26 2.45 D/ Project Management 0.36 0.36 0.41 0.41 0.41 0.23 2.18 Base Cost 21.01 21.13 24.32 4.33 24.31 13.65 128.75 Physical contingencies 2.11 2.12 2.44 2.44 2.44 1.33 12.88 Price escalation 1.16 1.17 1.34 1.34 1.34 0.09 6.44

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Cost excluding VAT 24.28 24.42 28.1 28.11 28.09 15.07 148.07

Resettlement compensation 2.64 2.64 5.28

Total Cost Excluding VAT Including Resettlement 26.92 27.06 28.10 28.10 28.09 15.07 153.35 Compensation

PROJECT TOTAL COST 26.92 27.06 28.10 28.10 28.09 15.07 153.35

Annex 3.4: PROJECT COSTS BY CATEGORIES AND FUNDING SOURCES

SOURCE OF FINANCING (M USD Million COMPONENTS/CATEGORIES USD) FE LC Total ADB GOT AGTF

Project Road Construction Works 138.32 44.73 183.05 113.68 27.29 42.00

Construction of New Health Centres, Schools, Feeder Roads, Pilot Road Safety Measures 6.2 2.66 8.86 8.86

Sub Total Works 144.52 47.39 191.91 122.54

Road Construction Supervision 7.39 7.39 7.39

Sensitization 0.65 0.65 0.65

Baseline data collection ESMP RAP monitoring 0.71 0.71 0.7

Road Safety Audit 0.65 0.65 0.65

Technical Audit 0.41 0.41 0.41

Financial Audit 0.33 0.33 0.33

Capacity Building 0.5 3.34 3.85 3.85

Project Management 0.33 0.518 0.84 0.84

Sub Total Services 10.97 3.858 14.83 14.83

Purchase of Ambulances (GOODS) 0.56 0.56 0.56

Base Cost 156.04 51.248 207.29 138 27.29 42.00

Resettlement Compensation (GoT) 7.4 7.4 7.4

Total Cost Excluding VAT, Including Settlement of Compensation 156.04 58.648 214.69 138 34.69 42.00

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ANNEX 3.5: EXPENDITURE CATEGORIES

A. FOR ADB LOAN

In USD Millions

Foreign Local Category of Currency Total Cost Expenditure Currency Cost Cost

A Works 92.60 30.01 122.61 B Goods 0.56 0.00 0.56 C Services 10.97 3.86 14.83 Total 104.13 33.87 138.00

ANNEX 3.5: EXPENDITURE CATEGORIES

B. FOR AGTF LOAN

In USD Millions Local Category of Foreign Currency Total Cost Expenditure Currency Cost Cost

A Works 31.74 10.76 42.00

B Goods 0.00 0.00 0.00

C Services 0.00 0.00 0.00

Total 31.74 10.26 42.00

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Appendix IV: Justification of the Government Counterpart Level for Tanzania Justification for ADB Financing of more than 50% of Project Cost

Based on the Bank’s policy on Expenditure Eligible for the Bank Group, this operation is proposing government financial contribution of less than 50%, justified as follows: 1 Country Commitment to Implement its Overall Development Program: Tanzania’s development framework and long-term development goals are laid out in the National Vision 2025 (TDV 2025), with the aspirations to transform the country into a middle income and semi-industrialized economy by 2025. The Vision has the following three targets: (i) a high quality livelihood for all citizens, (ii) good governance and rule of law, and (iii) a strong and competitive economy, including through the development of infrastructure. The Government’s medium term development agenda is outlined in the Second Five Year Development Plan (FYDP II: 2016/17- 2020/21), which focuses on industrialization. The ambitious FYDP II, which bears the theme – “Nurturing Industrialization for Economic Transformation and Human Development” – focuses on: (1) growth and industrialization (2) human development and social transformation; (3) business environment strengthening; and (4) ensuring implementation effectiveness and efficiency. The Plan aspires to raise annual real GDP growth to 10% by 2021 (from 7% in 2015), per capita income to US$ 1,500 (from US$ 1,043 in 2014) and reduce poverty rate to 16.7% in 2021 from 28.2% recorded in 2011/12. 2 Financing Allocated by the Country to Sectors Targeted by Bank Assistance: Infrastructure development remains a top priority in Tanzania’s plans and strategies. The share of infrastructure (transport and energy) spending in the total budget is around 20%, and there are several multi-year master plans and programs in place, but funding remains a challenge. With regard to transport sector, the Second Five Year Development Plan (FYDP II: 2016/17-2020/21) aspires to transform Tanzania into a leading multi-modal transportation and logistics hub. The country has a wide scope for regional and global trade facilitation, presented with advantages for shipping, warehousing and bulk storage, serving a number of countries in the hinterland. To achieve these objectives, FYDP II estimates the total investment needs at about US$ 12.5 billion for five years (equivalent to an average annual budget of about US$ 2.5 billion). However, financing remains a major challenge, and for fiscal years 2017/18 and 2018/19, budget allocations for transport sector were about US$ 2.1 and US$ 1.8 million, respectively. The shares of transport sector in the budget are indicated in Table 1.

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TABLE 1: INFRASTRUCTURE FINANCING IN TANZANIA

2017/2018 Budget 2018/2019 Budget

Financing allocated to infrastructure UA 1,868.64 Million UA 1,829.45 Million

Share of infrastructure (energy and transport) in 20% 18% the budget

Financing allocated to transport sector UA 1,565 Million UA 1,297 Million

Share of transport budget in infrastructure budget 84% 71%

Source: Ministry of Finance and Planning 3 Country Budget Situation and Debt Level: In June 2018, the Government unveiled a TZS 32.5 trillion (approx. USD 14.3 billion) budget for FY 2018/19. The overall budgeted expenditure is about 24.5% of GDP, slightly lower than the 26% of GDP planned, and 24.1% of GDP likely outturn in fiscal year 2017/18. Domestic revenues are projected to increase modestly from likely outturn of 14.9% of GDP in FY 2017/18 to 15.2% of GDP in FY 2018/19. The budget situation is summarized in Table 2, which highlights the challenges the Government continues to face in securing external financing of the budget to support the development agenda. The share of foreign loans and grants declined from a likely outturn of about 9.2% of the 2017/18 budget, to an expected 8% in the 2018/19 budget. Tanzania’s public debt stands at around 37% of GDP, and the most recent debt sustainability carried out jointly the World Bank and IMF (DSA 2016/17) indicates that Tanzania’s debt is sustainable, and the country’s risk of debt distress remains low. The assessment further indicates that, Tanzania could expand its fiscal deficit up to 4.5% of GDP for a few years and still maintain a low risk of debt distress. TABLE 2: BUDGET SITUATION 2016/17 2017/18 likely 2018/19 Budget Total Expenditure as % of GDP 24.2% 24.1% 25.4% Domestic Revenues as % of GDP 15.1% 14.9% 15.2% Share of Foreign Loans and Grants in total Budget 8.7% 9.2% 8% Share of General Budget Support in total Budget 1.2% 2.0% 2.0% Foreign Loans and Grants as % of GDP 2.1% 3.3% 3.0% Source: Ministry of Finance and Planning

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4 Country Initiatives: The most notable initiative is the construction of Standard Gauge Central Railway line that links Tanzania with Burundi, Rwanda, Uganda and the Democratic Republic of Congo – with an estimated length of about 2,200km. The first phase of the project, involving construction of an estimated 205 km main line and 95km passing loop of the SGR line from Dar es Salaam to Morogoro is currently underway, for an estimated cost of about USD 1.22 billion. In March 2018, the second phase of the project was launched - which will involve construction of 336km main line and 86km passing loop of the SGR from Morogoro to Dodoma – estimated to cost about USD 1.92 billion. The Government of Tanzania is already in advanced stages of securing a loan from ECA and commercial window to finance the major part of the second face. Mobilization of resources for financing the remaining sections of the project is in progress. Other initiatives include upgrading of: Uyovu – Biharamulo (90km); Tabora- Nyahua (85km); Kyaka – Bugene (59.1km); and Uyovu – Biharamulo (90km) roads to bitumen standard – completed in 2018 at a combined cost of about USD 340 million.

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Appendix V: Map of the Project Area The map below shows the Dodoma City with the Project Road

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