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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 32170-CV PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED CREDIT IN THE AMOUNT OF SDR 9.9 MILLION (US$ 15.0 MILLION EQUIVALENT) TO THE REPUBLIC OF CAPE VERDE FOR A Public Disclosure Authorized ROAD SECTOR SUPPORT PROJECT April 22, 2005 Transport Unit Country Department 14 Africa Region This document has a restricted distribution and may be used by recipients only in the Public Disclosure Authorized performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective February 28,2005) CurrencyUnit = CVE 83.579CVE = US$l US$1.53057 = SDR 1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank BADEA Arab Bank for Economic Development CAS Country Assistance Strategy CCA Corzselho Consultivo de Estrndas - Road Consultative Council CVE Cape Verde Escudos CV-FMR Fundo de Mnnutenqiio Rodovidria - Road Maintenance Fund DFID Department for Intemational Development (UK) DGISB General Directorate of Infrastructure and Basic Sanitation DGTR General Directorate of Road Transport Services EMP Eiivironineiital Management Plan EU European Union FMR Financial Monitoring Report FR Fundo Rodovicirio - Road Fund GEP Directorate ofPlanning GMANS Gestdo e Mnriutencdo por Nivel de Servicio - Perfoniiance-Based Maintenance Contracts GPOBA Global Partnership for Output-Based Aid GPRSP Growth and Poverty Reduction Strategy Paper HDM4 Highway Design Standards Model IE Ivistituto de Estrndas - Road Agency IGOPP General Inspectorate of Public and Private Construction Works IRR Intemal Rate ofRetum ITP Infrastructure and Transport Project LEC Civil Engineering Laboratory M&E Monitoring and Evaluation MCC Millennium Challenge Corporation (USA) MIT Ministry of Infrastructure and Transport NPV Net Present Value PCU Project Coordination Office PIU Project Implementation Unit RA Road Agency (also referred to as Instituto de Estrndas) RED Roads Economic Decision Model RSSP Road Sector Support Project SIL Sector Lending Instrument SSATP Sub-Saharan Africa Transport Policy Program voc Vehicle Operating Costs Vice President: Gobind T. Nankani Country ManagedDirector: Madani M. Tall Sector Manager: C. Sanjivi Rajasingham Task Team Leader: Gylfi Palsson CAPE VERDE FOR OFFICIAL USE ONLY Road Sector Support Project PROJECT APPRAISAL DOCUMENT CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE ................................................................. 3 1. Country and sector issues .................................................................................................... 3 2 . Rationale for Bank involvement ......................................................................................... 4 3 . Higher level objectives to which the project contributes.................................................... 5 B. PROJECT DESCRIPTION ................................................................................................. 5 1. Lending instrument ............................................................................................................. 5 2 . Program objective and Phases .......................... ........................................................... 5 3 . Project development objective and key indicat .......................................................... 5 4 . Project components ............................................................................................................. 7 5 . Lessons leamed and reflected in the project design ............................................................ 9 6 . Alternatives considered and reasons for rejection ............................................................ 10 C. I&IPLEhIENTATION ........................................................................................................ 10 1. Partnership arrangements (if applicable) ...... ................................................. 10 2 . Institutional and implementation arrangeme ............................................................ 10 3 . Monitoring and evaluation ofoutcomesiresults .......... .................................................. 11 4 . Sustainability ..................................................................................................................... 11 5 . Critical risks and possible controversial aspects ............. ......................................... 11 6 . Credit conditions and covenants ....................................................................................... 12 D. APPRAISAL SUMMARY ................................................................................................. 13 1. Economic and financial analyses ...................................................................................... 13 2 . Technical ........................................................................................................................... 15 3 . Fiduciary ................................................................................................................. 16 4 . Social....................... ..................................................................................................... 16 5 . Environment ...................................................................................................................... 17 6 . Safeguard policies ............................................................................................................. 17 7 . Policy Exceptions and Readiness ...................................................................................... 18 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. Ii . Annex 1: Country and Sector or Program Background ......................................................... 19 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 25 Annex 3: Results Framework and Monitoring ........................................................................ 26 Annex 4: Detailed Project Description...................................................................................... 32 Annex 5: Project Costs ............................................................................................................... 41 Annex 6: Implementation Arrangements ................................................................................. 43 Annex 7: Financial Management and Disbursement Arrangements ..................................... 46 Annex 8: Procurement Arrangements ...................................................................................... 52 Annex 9: Economic and Financial Analysis ............................................................................. 62 Annex 10: Safeguard Policy Issues............................................................................................ 74 Annex 11: Project Preparation and Supervision ..................................................................... 78 Annex 12: Documents in the Project File ................................................................................. 79 Annex 13: Statement of Loans and Credits .............................................................................. 80 Annex 14: Country at a Glance ................................................................................................. 81 Annex 15: Letter of Sector Policy .............................................................................................. 83 MAPS: IBRD 33961 IBRD 33964 IBRD 33966 IBRD 33963 IBRD 33962 IBRD 33965 A. STRATEGIC CONTEXT AND RATIONALE 1. Country and sector issues Cape Verde is an archipelago, consisting of ten islands, covering an area of 4,039 square kilometers. In the year 2000, the population was about 463,000, living on nine ofthe ten islands. The country has few natural resources that can be exploited economically. In the years prior to 2000, the economy grew at an annual rate of 6.4%, with the growth sectors being services, tourism, fishing and light industry. In 2002 the overall poverty rate for the country was estimated at 37%, with a poverty rate of5 1.3% in rural areas and 24.5% in urban areas. Cape Verde’s Growth and Poverty Reduction Strategy Paper (GPRSP) is organized along five strategic pillars: (i)Promote good govemance, reinforcing effectiveness and guaranteeing equity; (ii)Promote competitiveness to foster economic growth and employment creation; (iii)Develop and upgrade human capital; (iv) Develop the infrastructures, promote land use planning and protect the environment; and (v) Improve the effectiveness and sustainability of the social security system. The GPRSP’s long-term growth and transformation strategy focuses on exploiting advantages offered by the country’s geographic location, i.e. promoting air and maritime infrastructure for sea-linked industries, such as fish processing and commercialization, as well as establishing Cape Verde as an air transport hub for goods and passengers, with continued development of tourism potential. Strong emphasis is also placed on agricultural development, aimed at establishing a national agro-food system to ensure an adequate and permanent supply of food products to the population, through distribution and the commercialization of the agricultural products. A dependable road system,
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