IMPLEMENTATION COMPLETION REPORT (ICR) Lebanon

Document of The World Bank Public Disclosure Authorized Report No: ICR00001141

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-70260 LE)

ON A

Public Disclosure Authorized LOAN

IN THE AMOUNT OF US$80.00 MILLION

TO THE

LEBANESE REPUBLIC

FOR A

FIRST MUNICIPAL INFRASTRUCTURE PROJECT

Public Disclosure Authorized

June 1, 2009

Sustainable Development Department Public Disclosure Authorized Middle East Country Department Middle East and North Africa Region

CURRENCY EQUIVALENTS

(Exchange Rate Effective June 1, 2009)

Currency Unit = LP LP 1,500 = US$1

FISCAL YEAR

ABBREVIATIONS AND ACRONYMS

Vice President: Daniela Gressani Country Director: Hedi Larbi Sector Manager: Anna M. Bjerde Project Team Leader: Robert Maurer ICR Team Leader: Robert Maurer Lebanon First Municipal Infrastructure Project

CONTENTS

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

1. Project Context, Development Objectives and Design ……………………………… 1 2. Key Factors Affecting Implementation and Outcomes……………………………… 4 3. Assessment of Outcomes ..…………………………………………………..……… .8 4. Assessment of Risk to Development Outcome …………………………………. 11 5. Assessment of Bank and Borrower Performance …………………………... 12 6. Lessons Learned ………………………………………..…………………………. 14 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ………. 16

Annex 1. Project Costs and Financing ……………………………………………17 Annex 2. Outputs by Component ……………………………………………….….. 18 Annex 3. Economic and Financial Analysis ……………………………………21 Annex 4. Bank Lending and Implementation Support/Supervision Processes …... 23 Annex 5. Beneficiary Survey Results ………………………………………….. 25 Annex 6. Stakeholder Workshop Report and Results ………………………….. 37 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ………….. 38 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders ………….. 48 Annex 9. List of Supporting Documents ………………………………………….. 50 MAP A. Basic Information LB - First Municipal Country: Lebanon Project Name: Infrastructure Project Project ID: P050544 L/C/TF Number(s): IBRD-70260 ICR Date: 06/23/2009 ICR Type: Core ICR LEBANESE Lending Instrument: SIL Borrower: REPUBLIC Original Total USD 80.0M Disbursed Amount: USD 75.4M Commitment: Environmental Category: B Implementing Agencies: Ministry of Interior and Municipalities Cofinanciers and Other External Partners:

B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/13/1997 Effectiveness: 11/28/2000 Appraisal: 03/20/2000 Restructuring(s): Approval: 06/22/2000 Mid-term Review: 11/06/2003 Closing: 12/31/2005 12/31/2008

C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Low or Negligible Bank Performance: Satisfactory Borrower Performance: Satisfactory

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

C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Yes Quality at Entry None

i at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status:

D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 6 6 General transportation sector 23 23 General water, sanitation and flood protection sector 45 45 Roads and highways 23 23 Sub-national government administration 3 3

Theme Code (as % of total Bank financing) Access to urban services and housing 67 67 Municipal governance and institution building 33 33

E. Bank Staff Positions At ICR At Approval Vice President: Daniela Gressani Jean-Louis Sarbib Country Director: Hedi Larbi Inder K. Sud Sector Manager: Anna M. Bjerde Sonia Hammam Project Team Leader: Robert Maurer Sonia Hammam ICR Team Leader: Robert Maurer ICR Primary Author: Richard James

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) To: (i) address urgent municipal works while setting the stage for gradual assumption of responsibility for municipal services at the local level. The project would: (a) in the short term, restore selected basic municipal infrastructure to improve the living conditions; and (b) in the medium term, set the stage for the development of the municipal sector by enabling municipalities to begin addressing local infrastructure maintenance and rehabilitation needs.

Revised Project Development Objectives (as approved by original approving authority) The Project development objectives were not revised.

(a) PDO Indicator(s)

Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years PD0-1: Repairs and upgrading of selected basic municipal infrastructure and Indicator 1 : services: Km of restored roads and retaining walls (a) Roads - 13,400 km (distribution: 9400 km on internal roads and (a) Roads - Value Roads = 3,175 km 4000km on principal 1800km; (b) quantitative or Retaining walls = roads) Retaining walls - Qualitative) 257 km 320km (b) Retaining walls - 3,800 km; Date achieved 11/28/2000 06/30/2008 12/31/2008 Comments 176% achievement in roads restoration (incl. % 80% achievement in retaining walls achievement) Indicator 2 : PD0-1: Improving Road safety: Number of street lighting poles Light poles = 210,300 (distribution: 15,083 Value 136200 poles on internal On internal Roads = quantitative or 14,000 roads and 64100 poles on 13,990 Qualitative) principal roads) On principal roads = 1,093 Date achieved 11/28/2000 06/30/2008 12/31/2008 Comments (incl. % 108% achievement achievement) Repairs and expansion of existing networks (storm water drains, potable water, Indicator 3 : sewerage) Storm drainage = (a) Storm Drainage (a) Drainage 290 km; Value network - 14,000 km; (b) network - 287.78 Potable water = 28 quantitative or Potable water - 10,000 km; (b) Potable km; Qualitative) km; (c) Sewerage - 3500 water - 65km; (c) Sewerage network km. Sewerage - 55km = 36 km Date achieved 11/28/2000 06/30/2008 12/31/2008 Comments 101% achievement in storm drainage network repairs and expansion (incl. % 43% achievement in potable water repairs and expansion achievement) 65% achievement in sewerage repairs PDO-1: Improved Access to Investment Funding in Municipalities with a Indicator 4 : population smaller than 7,000 (% ratio of the total amount in US$ disbursed for project implementation). Value 5% 50% 52.33% quantitative or

iii Qualitative) Date achieved 11/28/2000 06/30/2008 12/31/2008 Comments (incl. % achievement) PDO-2: Initiate Central Government Transfers based on well-planned priority Indicator 5 : needs: Total no. of municipalities that have identified priority investment projects. Value quantitative or 707 707 704 Qualitative) Date achieved 11/28/2000 06/30/2008 12/31/2008 Comments Almost 100% of the target was achieved (99.6%). The only three municipalities (incl. % that were not able to identify priority investments were (i) Butshay, (ii) Wasat Al achievement) Laqlouq and (iii) Kafra Rimein. PDO-2: Providing municipalities with their share of Government transfers: Indicator 6 : equivalent amount of projects implemented in municipalities. Value quantitative or N/A $97.39 million $86.42 million Qualitative) Date achieved 11/28/2000 06/30/2008 12/31/2008 Comments (incl. % 89% target achieved achievement)

(b) Intermediate Outcome Indicator(s)

Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Municipal revenues/Government transfers. A decreasing ratio will show Indicator 1 : improved financial sustainability. Value (quantitative 50% 30% 36.52% or Qualitative) Date achieved 11/28/2000 06/30/2008 12/31/2008 Comments (incl. % 122% of the target was achieved achievement) Capacity-building at MOMRA for project implementation; technical assistance Indicator 2 : for project implementation. (a) % of expenditures of (a) 42.79% Value municipalities on (b) 36.52% (quantitative N/A investment; (c) 13.92% or Qualitative) (b) % of revenues (d) 17.70% of municipalities

iv from ImF; (c) % of tax on drainage and sidewalks to total local revenues collected; (d) Ratio of area served by project to built total built up area. Date achieved 11/28/2000 06/30/2008 12/31/2008 Comments (incl. % achievement)

G. Ratings of Project Performance in ISRs

Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/29/2000 Satisfactory Satisfactory 0.00 2 12/27/2000 Satisfactory Satisfactory 0.00 3 06/14/2001 Satisfactory Satisfactory 2.00 4 06/29/2001 Satisfactory Satisfactory 2.00 5 12/21/2001 Satisfactory Satisfactory 3.73 6 02/07/2002 Satisfactory Satisfactory 4.12 7 03/05/2002 Satisfactory Satisfactory 5.31 8 09/30/2002 Satisfactory Satisfactory 11.17 9 03/14/2003 Satisfactory Satisfactory 20.55 10 08/29/2003 Satisfactory Satisfactory 25.68 11 12/09/2003 Satisfactory Satisfactory 30.18 12 06/01/2004 Satisfactory Satisfactory 36.31 13 09/29/2004 Satisfactory Satisfactory 43.40 14 04/18/2005 Satisfactory Satisfactory 49.45 15 11/29/2005 Satisfactory Satisfactory 56.11 16 06/02/2006 Satisfactory Satisfactory 61.18 17 01/30/2007 Satisfactory Satisfactory 65.48 18 12/18/2007 Satisfactory Satisfactory 69.43 19 06/25/2008 Satisfactory Satisfactory 70.47 20 12/26/2008 Satisfactory Satisfactory 73.29

H. Restructuring (if any) Not Applicable

v I. Disbursement Profile

vi 1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

Sector background: Lebanon has maintained a strong tradition of local government in the country since receiving its independence in 1943. This tradition was however interrupted by various internal conflicts, particularly during a lengthy civil war during 1975-1990 disrupting the entire municipal infrastructure. Lebanon has since made progress toward rebuilding its political institutions. Under the 1989 Taif Accord (National Reconciliation Accord), an agreement was reached to provide the basis for the ending of the civil war and the return to political normalcy in the country. In the same accord, the concept of an independent municipal sector was reaffirmed endorsing administrative decentralization and strengthening of municipal powers and responsibilities.

Since the end of the civil war (in 1990), Lebanon conducted several successful elections and established a framework for locally elected bodies. Over time, municipalities were provided control, though very gradually, over their own fiscal and investment decisions with their own sources of revenues to assume expenditure responsibilities for local services.

The municipal sector nevertheless faced many challenges that included inadequate infrastructure -- disparities between districts, with the poor districts of the North and South having limited sewerage coverage and much lower rates of access to piped water. Roads, drainage and water networks were in a state of disrepair due to prolonged lack of expenditure on maintenance because of several years of civil strife.

The municipalities also faced difficulties raising their own revenues to meet local needs. Because of the absence of reliable information on resident population, most municipalities were unable to count on their fair share of inter-government transfers that were legally due to them for capital projects. The central government used a complicated formula for distribution of these transfers based on the number of registered population rather than the actual inhabitants. In withholding these distributions, the Lebanese Treasury had accumulated an estimated $0.5 billion at the time when this project was being designed.

The municipal sector also had limited institutional capacity at both, central and local government levels. The Ministry of Municipal and Rural Affairs (MOMRA) - now renamed as the Ministry of Interior and Municipalities (MOIM) - and many of the municipalities were in a dire need of institutional strengthening. With the exception of a few larger municipalities, most had weak administrative competence and many had none whatsoever. The main reason for this was the major dislocations caused by the prolonged civil war, the hiring freeze, and the absence of locally elected authorities until June 1998. It is against this backdrop in which the First Municipal Infrastructure Project was conceived.

1 Recent Hostilities: While the project was in full swing performing satisfactorily, the works came to a total stop in February 2005 because of massive demonstrations in Beirut after the assassination of former Prime Minister, Rafiq Hariri. Later, on August 14, 2006, the UN-brokered ceasefire brought an end to the thirty-days of hostilities. An estimated one million Lebanese, out of an estimated population of four million, fled their homes during the height of hostilities. The affected areas experienced a total disruption of basic services and suffered from lack of safe drinking water, running sewage disposal systems, and functioning social services.

According to the Government’s estimates the municipalities located in the conflict- affected areas suffered wide-scale destruction. Partial or complete destruction was reported to around 30,000 housing units, about 140 bridges, close to 210,000 m2 of roads, around 200 public and 80 private schools, and over 30 vital infrastructure facilities1/. The damage to the municipal sector included, among others, urban roads, retaining walls, street lighting, water and sanitation and municipal buildings and was estimated at around $100 million. The reconstruction program following the 2006 Israeli invasion and later the post conflict activities following the 2007 crisis in the Nahr El Bared Palestinian Camp resulted both in a significantly increased work load for the project team.

Despite these conditions, the project succeeded in preserving satisfactory implementation performance ratings. It received highly satisfactory ratings by the project team which was endorsed by the Country Management Unit. Through most of the implementation period, this project was regarded as the best in the Lebanon country portfolio in terms of achieving its Project Development Objectives.

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

To address urgent municipal works while setting the stage for gradual assumption of responsibility for municipal services at the local level. The project would: (a) in the short term, restore selected basic municipal infrastructure to improve living conditions; and (b) in the medium term, set the stage for the development of the municipal sector by enabling municipalities to begin addressing local infrastructure maintenance and rehabilitation needs. The key performance indicators, at approval, were evidence of sustainable rehabilitation of basic municipal works, number of beneficiaries impacted, as well as evidence of use of resources for capital investment and maintenance.

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

The PDO was not revised. The project team nevertheless, fine-tuned some of the existing indicators to reflect the changed realities on the ground. The new indicators are presented in more detail in paragraph 2.3 below.

1.4 Main Beneficiaries

1 Airports, seaports, sewage treatment plants, water reservoirs, power plants etc.

2 The project was implemented at a national level excluding the four biggest self sustaining municipalities of Beirut, Tripoli, Sidon and Zahle. The local population of 704 municipalities constitutes almost 25% of Lebanon’s total population that benefited from tangible and significant improvements in their living conditions. Most had experienced virtually no local investment in essential infrastructure for over 30 years when the civil war ended in 1990. Specifically, the project benefited smaller municipalities with population of 7,000 or less. The Ministry of Interior and Municipalities (MOIM) also benefited from the project by way of receiving capacity building support.

1.5 Original Components (as approved)

The project consists of three components: (1) upgrading and rehabilitating basic municipal infrastructure, (2) capacity building and (3) support to project coordination unit. The total project cost including contingencies is estimated at $100.00 million, of which the Bank financed $80.00 million and the Government financed $20 million.

Component 1: upgrading and rehabilitating basic municipal infrastructure (estimated cost: $72.81 million; actual cost: $68.27 million). The component objective stated: “carrying out a program for the rehabilitation and upgrading of essential infrastructure in all the municipalities with the exclusion of the four largest municipalities of Beirut, Tripoli, Sidon and Zahle.”

Component 2: capacity building (estimated cost: $4.86 million; actual cost: $3.22 million). The component has two activities: (i) support to municipalities, and (ii) support to MOIM. The objective of first activity stated: “developing, implementing and maintaining a program for infrastructure rehabilitation, including feasibility studies, tender document preparation, sub-project technical design and supervision and maintenance programming through the provision of consulting services to the municipalities”. The objective of second activity stated: “strengthening capacity of MOIM to manage the project and to monitor municipal sector”.

Component 3: support to project coordination unit (estimated cost $2.33 million; actual cost: $3.32). The objective stated: “establishing and operating of the project coordination unit, including provision of equipment and consultant services”.

1.6 Revised Components

Although overall project components remained the same, the scope of work was nevertheless slightly modified under capacity building component (component 2). This modification did not warrant any change in the Loan Agreement. Only minor change was introduced in the capacity building component i.e.: the activity related to integration of municipal data into MOIM’s monitoring system was cancelled from under the loan and was carried out under a separate reconstruction Grant that Lebanon received after civil conflict ended in 2006.

1.7 Other Significant Changes

3 Amendment to Loan Agreement: At the borrower’s request, the Loan Agreement was amended twice. The first amendment was made in August 2006 to reallocate Loan proceeds from one category to another to address price escalation in contracts that were affected by the closure of quarries in 2003 following heavy rainfall seasons which created shortages of construction inputs. The second amendment was made in September 2008 to raise disbursement ratio from 78% to 100% to provide financing for additional compensation cost for civil work contractors out of unallocated amount2. All other terms and conditions of the Loan Agreement remained in full force and effect.

Extensions of Loan Closing Date: Due to circumstances beyond the control of the project team (civil unrest, political uncertainties, hostilities and deteriorating security conditions), the project was extended three times to facilitate completion of appraised sub-projects and to focus more on the capacity building component which had received relatively limited attention until that time. The first extension was for eighteen months from January 1, 2006 to June 30, 2007; the second was for one year from June 30, 2007 to June 30, 2008, and the third and final extension was for six months from June 30, 2008 to December 31, 2008.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

The Quality at Entry was not formally reviewed through QAE process by Quality Assurance Group (QAG). However in retrospect, the project is rated fully satisfactory as it addressed immediate municipal needs and helped develop institutional support at MOIM level. The project was prepared in close consultation with, and active involvement of MOIM, the Ministry of Finance, the General Directorate of Urbanism, and active participation of 704 municipalities that reshaped the municipal sector and reoriented the strategic role of MOIM.

The project’s development objective at appraisal was wholly consistent with and supportive of the overall Country Assistance Strategy for Lebanon (CAS document No.17153) which intended to strengthen municipal capacity and implement local rehabilitation projects rather than rely on central institutions to provide needed infrastructure.

The project preparation was supported by a PHRD grant (TF022549) which allowed for a range of technical expertise to assist the Government with project preparation activities. The Bank supported this process through several preparation missions with the right blend of specialists in all relevant areas3.

2 As a background, the Government was not able to put forth its contribution to pay local contractors because of a shift in its priorities due to 2006 hostilities. The Bank, as an exception, raised the disbursement ratio from 78% to 100% and allowed the use of un-allocated amount to pay the contractors.

3 Municipal specialists, urban economists, sociologists, environment specialists, financial management and procurement specialists

4 2.2 Implementation

The project became effective on November 28th, 2000, five months after being approved by the World Bank Board on June 22, 2000.

Project Readiness: The project was implemented by MOIM with the support of the project coordination unit. The project team carried out essential activities prior to Board presentation that reflected its readiness i.e.: (i) completion of demand assessment surveys of twenty municipalities; (ii) agreement on eligibility criteria for municipality participation; (iii) preparation of project implementation plan; (iv) preparation of full tender documents for the first six months of sub-projects in the pipeline; and (v) preparation of draft operations manual.

Project Implementation: Other than the times of civil unrest during 2006, the project implementation continued to be satisfactory. The project teams successfully overcame the country’s challenging environment, and the project maintained good operational performance. Action plans and work programs were mostly fully implemented and followed through within the agreed time frame after every project supervision mission, the country portfolio performance review and the mid term review. This achievement was repeatedly reflected in Bank’s aide-memoirs and Implementation Status Reports.

Mid Term Review (MTR): The MTR was carried out in November 2003 at which time the project was found to be one of the most successful projects in the Lebanon country portfolio. The MTR revealed that the project was contributing measurably to local employment opportunities and in living conditions of participating municipalities. Because of the project’s satisfactory status, even though a summary matrix of MTR findings were prepared, with a six month action plan, nothing major was proposed that was not already being implemented – most recommendations only encouraged closer monitoring of activities.

Country Portfolio Performance Review (CPPR): The Country Management Unit carried out a CPPR in Mach 2007 and confirmed project’s strong focus on implementation against country’s difficult environment. The review recommended extension of project closing date to complete institutional development component and to appraise role, organization and future of Directorate General of Local Administration, MOIM.

Use of Loan Proceeds for Water and Wastewater sub-projects: Even though Bank supervision missions repeatedly emphasized the need and importance of water and wastewater sub-projects, the investment in this sub-sector was extremely modest (less than three percent). This was primarily because of environmental concerns and additional regulatory steps that were needed to approve these types of sub-projects. As of closure of this project the municipal law, still under review, had not been passed which would have eased stringent environment requirements for water and wastewater projects. In addition, there was also a mismatch between the high cost of these projects and the small per capita allocation of the loan proceeds across hundreds of municipalities. The

5 situation was exacerbated by the limited propensity of local authorities to undertake these municipal investments in partnership with the neighbors.

Project at Risk Status: The project teams adequately highlighted three main risks to the project - high to moderate - throughout its life and suggested mitigating measures. Risks highlighted were: (i) government’s weak capacity to finance maintenance of investments; (ii) MOIM’s weak capacity to carryout project management activities; and (iii) government’s inability to make timely counterpart funds available, especially during 2006 civil unrest period when the government’s priorities got slightly shifted to national security issues.

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

The project coordination unit recruited an M&E specialist from the beginning of the project to head the M&E unit. The unit generated key performance indicators throughout the life of the project. Initially, during project preparation, two sets of indicators were designed including (i) outcome and (ii) output indicators. Within first year into the project however, it became apparent that additional measures of M&E were required. For example, due to the extremely small size of sub-projects, expecting significant increase in revenues from municipal taxes was considered unrealistic and to have an indicator measuring only this aspect was considered imprudent; similarly for sub-projects eligibility, least cost solutions were considered more acceptable than carrying out full blown economic cost-benefit analysis. It was also noted that only a small portion of municipal expenditure was being spent on capital investment due to accumulating arrears owed to municipalities from the central government. With this in mind, the project team fine-tuned some of the existing indicators and introduced a new set to reflect the changed realities on the ground i.e.: (i) cost per direct beneficiary indicator; (ii) municipal finance indicator; (iii) asset management indicator; (iv) sustainability indicator; and (v) beneficiary indicator. Seen from the results on the ground, the revised set of indicators proved to be more relevant. As indicated in Annex 1, almost all indicators were either fully achieved or in some cases exceeded targets.

6 2.4 Safeguard and Fiduciary Compliance

Environment and social safeguards:

Environment safeguard: Project design took into account Bank’s safeguards policies and included procedures to ensure full consideration of environmental safeguards in accordance with OP 4.01. Guidance on procedures for environmental screening, environmental assessment, consultations disclosures, and environment management plan was clearly stated in the operation manual (chapter 7).

Social safeguard: OP 4.12 was not triggered since no land acquisition was anticipated to result from any sub-project. The operation manual included a check list to be used as part of the feasibility of sub-projects, thus any that was to trigger OP 4.12 would be detected and eliminated at project preparation stage.

Financial Management: Financial Management was carried out in accordance with the project design and the legal agreement. The project continued to maintain satisfactory financial management arrangements in terms of human resources, computerized network and well defined segregation of duties between different departments. The accounting software was specifically designed for the project and was used to follow-up on project accounts and to generate timely financial management reports, including Bank required Financial Monitoring Reports. The Special Accounts were reconciled periodically with timely bank statements. The project’s chart of accounts was designed to provide the required information about various Loan categories and other financial requirements needed for the day to day activities.

Formal audits of the project were carried out on annual basis in accordance with the International Standards on Auditing. The audits repeatedly confirmed the adequacy of accounting system and the internal controls, and the reliability of the statements of expenditure as the basis of Loan disbursements and compliance with the legal covenants.

Procurement: The procurement tasks were managed by the project preparation and procurement department which consisted of the Head of the department, the preparation and procurement Engineer, and eight appraisal/supervision individual consultants/engineers. The procurement staff received the necessary World Bank procurement training to manage civil works contracts.

The municipalities were responsible to carryout their own procurement of civil works contracts while the PCU procurement department was responsible for monitoring these activities, including compliance. The levels of approval of the bidding process were clearly set which included the Quaim Maqam (the Governor), the Minister, and the Technical Office of the Director General Urban and Planning.

The bidding documents used for civil work was the translated version of the Bank standard document and contained all the necessary instructions and information,

7 including environmental ‘good practices and mitigation appendices’. The document was applied in all participating municipalities regardless of sub-project size.

The evaluation report prepared by the municipalities followed a standard format developed by the PCU and consisted of bid opening details, recorded minutes and a checklist of submitted documents. The evaluation process and results were subject to the PCU approval.

2.5 Post-completion Operation/Next Phase

Transition arrangement to post-completion operation: The results-oriented CAS that was submitted to the World Bank Board on December 15, 2005 (Report No. 34463-LB) covering 2006-2009 period, clearly envisaged a municipal infrastructure supplemental loan in its Base-Case lending program (CAS Annex B3; page 49). However, an Interim Strategy became necessary after the 2006 hostilities which fundamentally changed the underlying economic and political context, rendering certain CAS assumptions and projections untenable. On July 9, 2007 therefore, an Interim Strategy for Lebanon (Report No. 39779-LB) was presented to the Board which did not explicitly include any plan for a follow-up operation after the completion of FMIP.

At present a Country Partnership Strategy (CPS) is being discussed internally in the Bank to discuss future strategic focus/priority for Lebanon4. In this context, it might be useful to consider including a new/follow up project on municipal for its forthcoming CPS/CAS.

In parallel, the Government has also made requests to several donors, including the World Bank, to capitalize on the experience and lessons learned from FMIP and design a new municipal development project with a regional development approach. In this regard, the World Bank team is already at an advance stage of discussions with the key Government counterparts with a goal to design a national municipal development project by 2010/11. Formal request for assistance is yet to be received by the Bank.

Since 2006, the project coordination unit has been assigned additional responsibilities by the Government to coordinate an FMIP-Grant, in the amount of $30 million, to help reconstruct public infrastructure of the war affected municipalities in Lebanon. Also, the coordination unit is adequately managing US$2million for the Nahr El Bared reconstruction financed through a PCF grant. The existing project coordination unit is technically sound, has well trained staff, and is capable to take on additional responsibilities if the need arises.

3. Assessment of Outcomes

Overall Rating: Satisfactory

4 Chaired by the Country Director, a brainstorming CPS meeting was held on April 27, 2009 (minutes available).

8 3.1 Relevance of Objectives, Design and Implementation

The relevance of project development objectives (PDO) is rated high. The PDOs are as relevant to the country’s municipal development needs today as they were at appraisal. The objectives focus on rehabilitating country infrastructure needs after thirty years of civil war and sets up a stage for the development of the municipal sector. The project design provides municipalities with the tools and financing to enhance service delivery, encourage private investment, and promote economic growth through improved infrastructure services.

The development objectives are also squarely aligned with the Government’s own priorities of improving municipal infrastructure needs and are clearly stated in its National Emergency Reconstruction Program (NERP).

The objectives are also in line with the global priorities, as municipal projects of this nature remain an important vehicle in helping municipalities around the world in strengthening their capacity and in managing service delivery. The project design and implementation therefore remain very relevant for the current stage of Lebanon’s development.

Monitoring project performance was relatively easy because of the simple and straight forward design of the project.

3.2 Achievement of Project Development Objectives

The achievements of PDO are rated satisfactory. The project successfully contributed to the improvement of living conditions in communities across Lebanon. This was reconfirmed during beneficiary assessment survey, conducted by the ICR mission. Major achievements of PDO are summarized below:

The project was successful in upgrading essential infrastructure in 704 municipalities that included construction of about 3,175 km of roads; 257 km of retaining walls; distribution of 15,083 streetlight poles; improvement of 290 km of storm drainage network; improvement of 28 km of potable water; and rehabilitation of 36 km of sewerage network.

Through workshops and hands-on training, the project familiarized municipalities with the technical, social, environmental and economic criteria for the prioritization of their project needs and encouraged them to consider operations and maintenance implications of their investment choices. All participating municipalities are now fully aware of the processes of identification and appraisal of sub-projects, preparation of bidding documents, bid awards, as well as construction supervision. By monitoring municipal performances, a wealth of information on actual financial and technical opportunities has now become available for the first time in the history of Lebanon which would be helpful in the design of future municipal projects.

9 Achievement was also visible at MOIM level whose staff received specialized training on how to monitor municipal progress. MOIM also recently completed a Local Economic Strategy Study which is expected to help stimulate economic growth in five potential cities.

Core staff of the Directorate of Local Administration and Local Councils also received training in areas related to public administration and management; computerization of accounting system for payroll; electronic information on archiving; and integration of project management information system into the Directorate’s operations.

3.3 Efficiency The Project Appraisal Document recognized that roads, sewerage and wastewater treatment sub-projects, in particular, would yield significant external economic benefits but it would be difficult to quantify such benefits because of the small population size (7,000 or less) of targeted municipalities. Therefore, as a proxy to the economic rate of return analyses, the sub-projects were designed and appraised based on the least-cost technical alternative which translated into a per capita allocation of about $32 equivalent over the life of the project. No economic analysis was therefore carried out.

During 2001 through 2008, all municipalities received total transfers of US$906 million from the central government. This translates into an average annual government support of US$113 million to all the municipalities in the country. Taking into account the local population of 704 municipalities that constitutes about 25% of Lebanon’s total population of four million (that benefited from the project) the sub-national transfers per capita allocation comes out at about US$28 per year. Comparatively, the Bank financial support provided under the FMIP loan represents slightly more than one year of government transfers to the targeted population.

3.4 Justification of Overall Outcome Rating Rating: Satisfactory The overall outcome of the project is rated as satisfactory on the basis of high relevance of the project, the level of achieving PDOs, efficiency of investments made, and citizens’ satisfaction, as revealed during the beneficiary survey carried out during ICR mission.

Effectiveness of municipalities in sub-project identification, planning, and preparation of tender documents was noticeably significant. To attract funding from the project, 704 out of 707 eligible municipalities identified their own priority needs and prepared their own Project Appraisal Forms that were later endorsed by the Directorate of Urban Planning and the MOIM. Additionally, although improvements are still needed, the local budget system has become more transparent as a result of integrated system of financial reporting established at MOIM. Building upon the achievements and the lessons learned so far, the project has positively set the stage and standards for future municipal infrastructure investments and municipal borrowing.

3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development The direct impact of the project on lower-income urban population and other vulnerable groups was not taken into consideration at appraisal, and no poverty analysis was conducted at the project preparation stage. Similarly, gender issues were neither reflected at the preparation stage, nor its impact monitored during implementation.

Through sub-project implementation, the project nevertheless did assist the general population in municipalities to gain improved access to infrastructure and municipal services. Road rehabilitation sub-projects undoubtedly improved the mobility of a large number of local citizens. While sub-projects cannot improve the livelihood of the entire citizenry of beneficiary municipalities, they were highly appreciated by local citizens, as per the findings of the beneficiary survey and the meetings conducted with the municipal council members during ICR mission.

(b) Institutional Change/Strengthening The project’s institutional development impact, which is defined in the ICR guidelines as the extent to which the project ‘has improved the agency’s ability to make effective use of its human and financial resources’ is rated as satisfactory at the municipality level. The objective of the project to ‘increase the effectiveness of participating municipalities in identification, planning, preparation of tender documents, and delivery of investment sub- projects for local infrastructure’ is directly linked to the institutional change and capacity strengthening. The creation of an integrated project management information system, at the central level, strengthened the capacity of MOIM to manage the project and to monitor performance in the municipal sector.

(c) Other Unintended Outcomes and Impacts (positive or negative) An unintended benefit that stands out clearly was the employment opportunities that the project was able to generate while being implemented in different municipalities.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops A beneficiary survey was conducted by the ICR team in March 2009. The survey aimed to identify the extent to which citizens in the participating municipalities benefited from infrastructure improvements under the project, and their satisfaction. The survey team also evaluated sustainability of the civil works financed under the project.

The assessment included a sample survey of ten municipalities within five Districts5: (i) two municipalities in North Lebanon; (ii) two in South Lebanon; (iii) three in Mount Lebanon; (iv) one in Nabatiyeh; and (v) two in Bekaa Valley. The beneficiary survey carried out in-depth interviews and collected performance indicators including evidence of post-project physical infrastructure (photographs) to examine before-and-after project

5 North Lebanon; South Lebanon; Mount Lebanon; Nabatiyeh; and Bekaa Valley

11 scenarios. As per survey’s findings, residents were positive about the road improvements in their municipalities and the impact they had made in improving accessibility, travel time, environment and improving economic livelihood. Roads generally show signs of wear and tear over time however, all roads visited during this survey showed no signs of distress even though some had been completed for over five years. Citizens in general did raise concerns about future maintenance of roads. The survey also noticed that street light sub-projects were widely appreciated. People interviewed appreciated the improved public safety, convenience and economic opportunities that they had experienced because of outdoor lightings.

4. Assessment of Risk to Development Outcome Rating: Low The likelihood that changes may occur that would be detrimental to the ultimate achievement of the project’s outcome is low. Municipalities are now signaling additional financing and technical assistance needs based on their unique socioeconomic conditions. For example, in 1960s, Shiyeh6 city was a thriving manufacturing base operating on the periphery of Beirut’s urban center. Today, Shiyeh has completely shifted to a service economy with the growth of Beirut. The project supported the upgrading and rehabilitation of basic infrastructure in the core of this city and now the city plans for a multi-purpose complex housing, a 1800 seat sports arena, and a 550-seat theatre for the city residents.

Most of the elected municipal leaders have shown great interest in continuing this trend and have signaled MOIM their willingness to request even larger amounts if a new World Bank project were to be made available again.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry

Rating: Moderately Satisfactory

As mentioned earlier, the Quality at Entry was not formally reviewed through the QAE process by QAG. The project was prepared under difficult circumstances, in a country which had emerged from long civil unrest and armed conflicts and where the municipal infrastructure sector had essentially collapsed.

The project preparation was supported by a PHRD grant which allowed for a range of technical expertise to assist the Government with project preparation activities. The Bank carried out several preparation missions which were adequately staffed with specialists needed to support project preparation in all relevant areas. The project team

6 Shiyeh: City serves 75,000 residents and was supported by $400,000 intervention under this project. Road resurfacing and new storm-water drainage systems helped this community recover from the past years of civil strife

12 avoided a complex model and intentionally kept the project design simple yet responsive to the country’s needs in providing immediate municipal requirements. Planning was brought to many smaller municipalities for the first time in their history. Potential risks were rightly identified.

However, assessment of the central government’s readiness to undertake key policy and institutional reforms were somewhat optimistic. The MOIM, for example, was able to implement the improved monitoring and financial reporting system only after the project was extended. At project preparation stage, monitoring outcome and impact indicators were set out too broadly to be measurable. These indicators emphasized more on counting the delivery of project components rather than the achievement of outcomes and impacts. This meant that M&E indicators were able to provide precise information about the number of light poles installed and the roads/sidewalks rehabilitated, as well as their exact unit costs, but not how much of these facilities were utilized and the degree of impact they had on the citizens. The M&E indicators had to be fine-tuned later during implementation.

To establish baseline data, neither poverty assessment nor social impact assessments were conducted at the time of project preparation pointing to more work in this area. Five conditions were set for project Effectiveness hinting that project could have been polished further before being presented for Board approval.

(b) Quality of Supervision Rating:

Rating: Satisfactory

The quality of Bank supervision is rated as Satisfactory. The Bank supervision teams continued their hands-on approach and remained close to the clients even during difficult internal country situations which earned them praise inside the country and the Bank.

The supervision teams worked extensively with various municipalities during the first years of the operation to build a solid pipeline of investments and helped assess capacities of participating municipalities. During later years, the supervision teams helped prepare the framework to resume sluggish disbursement rate once the country emerged from civil unrest in 2006. The three extensions of the project were mainly attributed to the country’s political and security situation and to fine-tune the institutional strengthening component.

The field presence of the Bank supervision team, during later years, was essential in maintaining a continuous dialogue with the clients especially with the changing leadership halfway through the project. This presence was also essential in maintaining effective coordination with other partners (donors, NGOs), who looked for Bank’s advice and direction.

Safeguard and fiduciary policies were also monitored closely and were addressed on a timely basis. Procurement for example, was constantly monitored with periodic post-

13 reviews and was made part of the supervision mission activities. The Bank teams were ever ready to provide immediate delivery of training/support to the client when needed.

The project also continued to maintain a satisfactory financial management system capable of generating quarterly reports including the Bank required Project Management Reports.

Aide Memoires were descriptive and well-written and two ISRs were archived annually. Action plans/work programs were mostly fully implemented and followed through within the agreed time frame after each supervision mission. The ISR appropriately reflected the situation on the ground.

Rating: Satisfactory

The rating of overall Bank performance is Satisfactory - being moderately satisfactory at entry and satisfactory during supervision. It has been widely acknowledged, by the Borrower and the sectoral stake holders, that Bank’s support during project supervision has made significant contribution towards setting a stage for future development of municipal sector.

5.2 Borrower Performance

(a) Government Performance

Rating: Satisfactory

The Government’s performance is rated as Satisfactory on the basis of its strong supporting role during project preparation and implementation. Because of good dialogue maintained, the project always enjoyed support from both old and the new governments. The only period during which the Government did not directly engage in regular strategic support was during the conflict in 2006, this however changed soon after the UN-brokered ceasefire brought an end to the hostilities.

Following the parliamentary elections in June 2005, the new Government reiterated its top priorities matching perfectly those with the development objectives of the project and reaffirmed its support to infrastructure investments, municipal sector reforms, and increased fiscal discipline.

(b) Implementing Agency or Agencies Performance

Rating: Satisfactory

The implementing agency performance is rated as Satisfactory. The project coordinating unit located in MOIM implemented the project well and went extra mile to achieve project development objectives. It organized several workshops to introduce project to

14 over 150 municipalities and to disseminate technical information. It established a robust database to track municipalities’ progress. The PCU succeeded in establishing good rapport with the municipalities, an element considered essential to implement over 1,000 successful sub-projects. Its institutional capacity was proven to be adequate to handle increasing number of sub-projects and technical assistance activities. The PCU adequately carried out required fiduciary, legal and safeguard activities (technical audits, financial audits, post-procurement reviews) and responded effectively and in a timely manner when required to take over additional responsibilities to manage FMIP Grant in parallel.

(c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory Overall Borrower performance takes into consideration both the Government and Implementing Agency’s performance during preparation and implementation. On the basis of justification provided above, the Borrower’s overall performance is rated as Satisfactory. The Borrower complied with all covenants and agreements towards achieving development outcomes.

6. Lessons Learned

The design and implementation experience of the project offers following considerations that might be useful in shaping future projects of this nature:

(1) The FMIP experience confirms that project design needs to be kept simple and within the capacity of the staff and agencies who are responsible for its implementation.

(2) In countries where political influence is difficult to avoid, the project team was able to successfully adopt a decentralized implementation mechanism which shielded the municipalities and the implementing agency from various political interferences in the country.

(3) The project lacked clearly defined monitoring indicators. For M&E to succeed it should focus on achieving results, particularly for the poor and should not be unduly burdensome to the municipalities. Strong M&E can also help reduce the expense of cost-benefit analysis by providing data needed to carry out economic analyses.

(4) The project did not have any cost recovery mechanism built in its design, possibly because it was evident that full cost recovery would almost be impossible for several municipal infrastructure investments. It would be prudent however, if consideration could be given during future project design to define realistic cost recovery system.

(5) In Lebanon, where access to finance for municipal infrastructure is limited, Municipal Development Fund (MDF) type of financial intermediary can play an

15 important role in providing financing (in grant and credit depending on the credit capacity of the municipality), and in increasing municipal capacity in the identification and implementation of municipal investments. With proper design of MDF financial and cash flow model, revolving funds can significantly contribute to new financing that can cover MDF’s own operational cost, thus ensuring sustainability.

7. Comments on Issues Raised by Borrower/Implementing

Agencies/Partners

(a) Borrower/implementing agencies

No issues were raised by the Borrower.

(b) Co-financiers

N/A

16 Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent) Appraisal Actual/Latest Percentage of Components Estimate (USD Estimate (USD Appraisal millions) millions) 1. Upgrading and rehabilitating backlog of essential municipal 92.81 85.57 92.19% infrastructure 2. Capacity building at MOMRA; technical assistance to municipalities for project 4.86 3.33 68.51% implementation and project management, Municipal Database 3. Project Coordination Unit 2.33 3.33 142.91% Total Project Costs 100.00 92.23 92.23% Total Financing Required 100.00 92.23 92.23%

(b) Financing Type of Co- Appraisal Actual/ Estimate Percentage of Source of Funds financing Estimate($M) ($M) Appraisal Government 20.00 17.52 87.60% IBRD 80.00 74.71 93.38% Total 100.00 92.23 92.23%

17 Annex 2. Outputs by Component Component 1: Upgrading and Rehabilitating Basic Municipal Infrastructure The following outputs were produced under this component:

Roads:

Repair: The bulk of the funds was allocated for backlog repairs of existing internal roads. Out of 10,857 km of internal roads, 2,913 km (poor, inaccessible, non-functional, and some with life span less than 2 years) were repaired under FMIP. Similarly, out of 4,326 km of existing principal roads, only 37 km were repaired. This small number represents project’s focus on smaller municipalities with less than 7,000 populations where principal roads were limited in number. Upgrade: Out of 10,857 km of internal roads, 166 km of internal and 58 km of principal roads were upgraded.

Retaining Walls:

Repair: Out of 2,468 km of retaining walls (concrete and/or decorative), 38 km were repaired at internal locations while out of 1,523 km of walls at principal locations seven km were restored. Upgrade: 191 km were upgraded at internal locations; 22 km were upgraded at principal locations

Drainage Network:

Repair: Out of 2,499 km of drainage network, 37 km were repaired at internal locations and out of 1,654 km at principal location nine km were repaired. Upgrade: 206 km of network were upgraded at internal locations while 38 km of network were upgraded at principal locations.

Street Poles:

Repair: Out of 170,162 street light poles, 933 were repaired at internal locations while out of 75,793 street light poles, 156 were repaired at principal locations. Upgrade: 13,057 street poles were upgraded at internal locations while 937 poles were upgraded at principal locations.

Potable Water Network:

Repair: Out of 7,113 km of potable water network, 16.4 km were repaired at internal locations, while out of 3,191 km of network 8 km were upgraded at principal locations. Upgrade: Four km of network was upgraded at internal locations while none at principal location.

Sewage Network:

Repair: Out of 2,369 km of sewage network, 15 km were repaired at internal locations while out of 1,558 km of sewage network at principal locations, none was repaired.

18 Upgrade: No sewage network was upgraded at any internal locations while only four km of network was upgraded at principal locations

19 Output Component 1: Total Total Details of Repairs on Repairs on Repairs on Poor Average Good Total Repairs Upgrading Municipal Location Unit poor average good Condition Condition Condition Network under Under Infrastructure condition condition condition FMIP FMIP A B C D A’ B’ C’ E=A’+B’+C’ F

Total length I Km 4,208 4,646 2,003 10,857 2,811 101.37 0.46 2,913 166 of road network P Km 961 2,372 993 4,326 21 15.74 37 59

Total length I Km 719 606 1,143 2,468 36 1.32 0.03 37 190 of retaining walls P Km 278 360 885 1,523 5 1.20 7 22

Total length I Km 632 1,434 432 2,498 36 1.63 37 206 of drainage network P Km 390 806 458 1,654 4 4.61 9 38

Total number I No. 7,028 1,639 161,495 170,162 633 300.00 933 13,057 of street light poles P No. 2,345 611 72,837 75,793 156.00 156 937

Total length I Km 1,855 2,760 2,498 7,113 16 16 4 of potable water network P Km 702 1,231 1,259 3,191 8 8

Total length I Km 573 1,057 739 2,369 14 1.31 15 17 of sewerage network P Km 572 573 412 1,558 4 Poor implies inaccessible/non-functional roads, average implies life span < 2 years & good implies lifespan within 5 years; I=Internal roads; P=Principal roads

20 Output - Component 2: Capacity Building

At Municipal Level:

• Technical Assistance/hands-on training and workshops provided to participating municipalities in analyzing feasibility of investments (sub-projects), preparation of project designs, and preparation of bidding documents.

At MOIM Level:

• Rapid diagnostic and need assessment study to asses Directorate General of Municipal Administration’s capacity - completed; • Project Management Information System (PMIS) - developed; • Financial Management Information System (FMIS) - developed; • Database on local government expenditures and revenues - developed; • Technical Audit to provide feedback to MOIM regarding efficiency of project implementation and its impact on various levels – conducted; • City Development Strategy Studies for ten cities – completed under Phase I; • Local Economic Development Studies for five cities – completed under Phase II

Output - Component 3: Support to Project Coordination Unit

• PCU established which grew in size into 12 core staff, seven consultants including four field appraisal engineers and three supervision engineers. • PCU office furniture, equipment and vehicles put in place • PCU staff provided training

21 Annex 3. Economic and Financial Analysis (including assumptions in the analysis)

No Economic Rate of Return (ERR), Financial Rate of Return (FRR) or Net Present Value (NPV) was calculated at the time of appraisal. Currently available data does not allow estimating a meaningful ERR, FRR or NPV for any of the components.

Given the demand-driven nature of the project, the type and size of sub-project investments were unknown at the time of appraisal. Only sub-projects with clear community development objectives and those that met essential services criteria were selected (i.e. street lights, sidewalks, roads leading to schools, hospitals, dispensaries, religious buildings and roads that served the whole community). Although project appraisal document expected sub-projects to yield significant external economic benefits, it also recognized that it would be difficult to quantify such benefits because of the small population size of targeted municipalities. Therefore, instead of computing an economic rate of return, sub-projects were designed and appraised on the least-cost solution which translated into a per capita allocation of about $32 equivalent over the life of the project.

During 2001 through 2008, all municipalities received total transfers of US$906 million from the central government. This translates into an average annual government support of US$113 million to all the municipalities in the country. Taking into account the local population of 704 municipalities that constitutes about 25% of Lebanon’s total population of four million the sub-national transfers per capita allocation comes out at about US$28 per year. In comparison, the Bank financial support provided under the FMIP loan represents slightly more than one year of government transfers to the targeted population.

For the road rehabilitation sub-component, the largest activity under the first component, benefits were estimated as improved road conditions that lower vehicle operating costs, decrease maintenance costs and benefits resulting from improved road safety. As pointed out in the PAD, reduced vehicle operating costs, time savings for passengers and savings in road maintenance, following rehabilitation, are considered important benefits.

Following table reflects direct and indirect beneficiaries of the project.

% of direct % of indirect %of total of beneficiaries to beneficiaries to beneficiaries to Description resident population resident population resident population Mount Lebanon District Roads 15.23% 97.14% 112.36% Retaining Walls 15.74% 107.19% 122.93% Street Lighting 24.52% 228.60% 253.11% Sewerage 12.28% 22.27% 34.55% Storm Water Drains 16.62% 116.47% 133.09% North Lebanon District Roads 19.98% 120.32% 140.31% Retaining Walls 17.60% 126.64% 144.24% Street Lighting 29.94% 233.31% 263.26% Sewerage 3.71% 10.40% 14.11% Storm Water Drains 21.32% 76.83% 98.14%

22 Bekaa Valley District Roads 14.81% 64.10% 78.91% Retaining Walls 13.27% 69.24% 82.51% Street Lighting 37.44% 66.49% 103.92% Sewerage 26.67% 66.67% 93.33% Storm Water Drains 17.48% 57.93% 75.41% South Lebanon District Roads 27.86% 77.27% 105.13% Retaining Walls 30.09% 79.99% 110.08% Street Lighting 28.07% 32.71% 60.78% Storm Water Drains 29.00% 74.46% 103.45% Nabatieh District Roads 16.21% 90.74% 106.95% Retaining Walls 17.71% 109.33% 127.04% Street Lighting 16.15% 37.68% 53.83% Storm Water Drains 18.97% 145.04% 164.02% Direct beneficiaries are the registered residents of the municipalities, while indirect residents are non- registered residents and those who pass through the municipalities using its facilities.

23 Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members Names Title Unit Responsibility Lending Sateh El-Arnaout Sr. Municipal Specialist MNSSD Municipal Dev. Sonia Hammam Sr. Urban Mgmt. Specialist MNSSD TTL Samir El-Daher Financial Advisor MNSSD Municipal Fin. Lead Urban Specialist (now Omar Razzaz MNCA2 Municipal Dev. Country Manager Beirut)

Supervision Mohammed Benouahi Sr. Urban Mgmt. Specialist MNSSD TTL Stephen Karam Sr. Urban Economist FEU TTL Robert Maurer Lead Urban Sector Specialist MNSSD TTL Imad Saleh Sr. Procurement Specialist Procurement Lina Fares Procurement Specialist MNAPR Procurement Mona El-Chami Sr. Financial Mgmt. Specialist MNAFM Financial Mgmt. Robert Bou Jaoude Sr. Financial Mgmt. Specialist MNAFM Financial Mgmt. Diana Masri Financial Mgmt. Concultant MNAFM Financial Mgmt. Sati Arnaout Implementation Consultant MNSSD Institutional Dev. Randa Nemer Environment Consultant MNSSD Environment Mutasem El Fadel Sr. Environment Consultant MNSSD Environment Olivier Lavinal Inst. & Local Administration Spec. WBI-MS Institutional Dev. Mouna Couzi Sr. Program Assistant MNCLB Project Support Sophie Umechlian Program Assistant MNCLB Project Support

ICR Richard James Operations Consultant MNSSD Primary Author Eileen Murray Lead Operations Officer MNSHD Peer Review Maha Armaly Sr. Urban Finance Specialist ECSSD Peer Review

(b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY97 - 10.64 FY98 - 241.20 FY99 - 55.67 FY00 61 381.62 FY01 3 21.50 Total: 64 710.73 Supervision/ICR FY01 19 66.35

24 FY02 18 90.10 FY03 17 74.50 FY04 14 72.41 FY05 16 58.72 FY06 19 68.69 FY07 12 50.52 FY08 9 57.31 FY09 6 0.00 Total: 130 538.60

25 Annex 5. Beneficiary Survey Results

Executive Summary:

In association with the PCU engineers and procurement specialists, the ICR mission conducted a Beneficiary Survey during March 2009 in ten municipalities, from across all the Districts that benefited from investments under the FMIP. This Beneficiary Survey included quantitative as well as qualitative opinion interviews that aimed to assess the impact of investments made in roads, street lights, and retaining walls sub-projects on households and businesses.

As a baseline, the survey team used the original photographs taken of the sites during sub-project preparation. The team also used photographs that were taken at the completion of these sites, some as early as 2005. Finally the survey team took photographs of the same sites from exactly the same vantage point where sub-projects were executed which permitted comparisons of sub-projects results. The Beneficiary survey focused on all the districts as follows:

(i) Mount Lebanon District (ii) North Lebanon District (iii) South Lebanon District (iv) Bekaa Valley District and (v) Nabatiyeh District

The sub-projects examined samples of randomly selected retaining walls, asphalt roads, water channels, streetlight poles, and sidewalks in ten municipalities: The samples were broken down as follows:

(i) Amyoun Municipality (retaining walls, street light poles, and sidewalks); (ii) Batroun Municipality (roads, street lights); (iii) Bhamdoun Municipality (roads, retaining walls, street light poles); (iv) Jounieh Municipality (roads, street light poles and sidewalks); (v) Kab- Elias Municipality (retaining walls and asphalt roads); (vi) Kefraye Municipality (street light poles and roads); (vii) Majdelyoun Municipality (roads, retaining walls, sidewalks); (viii) RasEl-Maten Municipality (street light poles, sidewalks, retaining walls); (ix) Sfarey Municipality (roads and sidewalks); (x) Zibdine Municipality (retaining walls, roads)

The survey team focused on business community, general citizens (beneficiaries of the infrastructure improvements) and Vice Mayor7 and his staff of Amyoun municipality, as well as the Secretary General8 and his staff of Kefraya municipality.

7 Mr. Ghassan Karam 8 Mr. Nizar Rohhal

26 The purpose of the meetings/interview was to evaluate the impact of several infrastructure projects among local residents/beneficiaries.

Citizens were generally very positive about the road improvements in the municipalities and appreciated the workmanship of the roads. Lighting projects were widely embraced. Participants raved about improved aesthetics, public safety, convenience, and economic opportunities they have experienced because of outdoor lighting. Participants confirmed increased feeling of physical safety on the streets.

Overall Conclusions of the Beneficiary Survey:

• Improvements to municipal infrastructure are one of the bright spots Lebanon has seen in a generally difficult economic and political picture;

• The residents are well aware of the road, water and light improvements made in their areas and see tangible improvements in their lives and business as a result. These benefits include improved circulation of traffic, reduced maintenance costs, quicker access to work, and better safety and improved municipal appearance for the lights.

• Lighting projects are unanimously praised as new lights offer immediate quality of life and economic benefits at a much smaller cost than water and road investments.

• The municipality of Batroun9 stood out during the survey. The offices in this municipality were in disrepair and sewage flowing in streets. The FMIP financing provided injection of new investment in Batroun that soon attracted EU, Italian, NGO and private sector funding. Because of FMIP intervention, private local fertilizer company donated $100,000 to replace old wooden shop front doors; 25 new restaurants/cafes and other businesses were established. The municipality was also able to increase property values and consequently municipal tax revenue to improve services; up to 250 new jobs were also created in the city.

9 Betroun, a city of approximately 25,000 residents spanning an area of 6 km2, had renovated internal street of the old city and installed street lighting, sidewalks, drainage canals and retaining initiated re walls through FMIP financing of about$375,000.

27 District: North Lebanon Casa: Amyoun Municipality: Amyoun Registered Population: 9,454 Activities: 1- Roads (Asphalt), 2- Retaining Walls Work Start Date: May 10, 2006 Work Completed: December 27, 2006 Contract Amount Original: $102,348 Contract Amount Actual: $117,481

Prior Situation May 2006

Situation at Completion December 2006