Cameroon: Transport Sector Support Programme Phase 2

AFRICAN DEVELOPMENT BANK GROUP

PROJECT: CAMEROON: TRANSPORT SECTOR SUPPORT PROGRAMME PHASE 2:

- REHABILITATION OF THE YAOUNDE-BAFOUSSAM- BABADJOU ROAD

- DEVELOPMENT OF THE GRAND ZAMBI-KRIBI ROAD

- DEVELOPMENT OF THE MAROUA-BOGO-POUSS ROAD

COUNTRY: CAMEROON

PROJECT APPRAISAL REPORT

OITC

November 2016

Translated Document

TABLE OF CONTENTS

I. PROJECT STRATEGIC THRUSTS AND RATIONALE ...... 1 1.1 Key Development Issues ...... 1 1.2 Project Linkages with the National Strategy and Objectives ...... 2 1.3 Rationale for Bank's Involvement ...... 2 1.4 Donor Coordination ...... 3

II. PROJECT DESCRIPTION ...... 4 2.1. Project Objectives and Components ...... 4 2.2 Technical Solutions Retained and Alternatives Explored ...... 5 2.3 Project Type ...... 5 2.4 Project Cost and Financing Arrangements ...... 6 2.5 Project Target Area and Beneficiaries ...... 8 2.6 Participatory Approach for Project Identification, Design and Implementation, Including Active Private Sector Participation ...... 8 2.7 Bank's Experience and Lessons Reflected in Project Design ...... 9 2.8 Key Performance Indicators ...... 9

II. PROJECT FEASIBILITY ...... 10 3.1. Economic and Financial Performance ...... 10 3.2. Environmental and Social Impact ...... 10

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

V. LEGAL FRAMEWORK ...... 18 5.1. Legal Instrument ...... 19 5.2. Conditions for Bank's Involvement ...... 19

VI. RECOMMENDATION...... 20

LIST OF TABLES AND FIGURES No. TITLE Page Table 1-1 - Donor Coordination ...... ……………..4 Table 2-1 - Project Components ...... 5 Table 2-2 - Alternative Solutions Explored and Reasons for Rejection ...... 6 Table 2-3 - Estimated Cost by Component (in UA million) ...... 6 Table 2-4 - Summary of Estimated Cost by Category and Source of Financing for the Entire Project …….…………..7 Table 2-5 - Summary of Project Cost by Source of Financing (in UA million) ...... 7 Table 2-6 - Summary of Project Component by Source of Financing (in UA million) ...... 7 Table 2-7 - Expenditure Schedule by Source of Financing (in UA million) ...... 8 Table 3-1 - Summary of Economic Analysis ...... 12 Table 4-1 - Project Monitoring and Supervision ...... 15 Table 4-2 - State of the Road Network ...... 17

APPENDIX I: NOTE ON THE PORTFOLIO AND COMPLIANCE WITH REQUIREMENTS OF PD-02/2015 APPENDIX II: DETAILED DESCRIPTION OF MAIN PROGRAMME ACTIVITIES APPENDIX III: JUSTIFICATION OF THE LEVEL OF COUNTERPART CONTRIBUTION TO PROGRAMME FINANCING APPENDIX IV: COMPARATIVE SOCIO-ECONOMIC INDICATORS APPENDIX V: CAMEROON’S PORTFOLIO SITUATION AS AT 31 JULY 2012 APPENDIX VI: KEY RELATED PROJECTS FINANCED BY THE BANK AND OTHER DEVELOPMENT PARTNERS IN THE COUNTRY APPENDIX VII: PROJECT LOCATION MAPS

Currency Equivalents

July 2016

UA 1 = USD 1.398 UA 1 = EUR 1.260 UA 1 = CFAF 826.499

Fiscal Year 1 January - 31 December

Weights and measures

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

ACRONYMS AND ABBREVIATIONS

ACFA Accelerated Co-financing Facility for Africa ADF African Development Fund AFCON 2019 African Cup of Nations 2019 AFD French Development Agency AfDB African Development Bank AGTF Africa Growing Together Fund BD Bidding Documents BDEAC Development Bank of Central African States BEAC Bank of Central African States CAA Autonomous Sinking Fund CAR Central African Republic CEMAC Economic and Monetary Community of Central Africa CRP Comprehensive Resettlement Plan

CS Construction Sector CSEPR-BAD-BM Coordination and Monitoring Unit for the Implementation of AfDB- and WB-financed Road Projects DD Detailed design DGTI General Directorate of Infrastructure Works ECCAS Economic Community of Central African States ECOWAS Economic Community of West African States EDF European Development Fund ERR Economic Rate of Return ESMP Environmental and Social Management Plan

EU European Union FR Road Fund GENiS Maintenance Management by Service Level GESP Growth and Employment Strategy Paper HCR High Commission for Refugees IMF International Monetary Fund INS National Institute of Statistics JICA Japanese International Cooperation Agency LOP Land Occupation Plan

MINEPAT Ministry of Economy, Planning and Regional Development MINMAP Ministry Delegate in charge of Public Contracts MINPROF Ministry of Women’s Promotion MINTP Ministry of Public Works NPV Net Present Value PIA Project Impact Area PIP Priority Investment Plan PMP Priority Maintenance Plan PRSP Poverty Reduction Strategy Paper RBCSP Results-Based Country Strategy Paper RFP Request for Proposal RN National Road SME Small- and Medium-Sized Enterprises STDs Sexually Transmissible Diseases TFPs Technical and Financial Partners

UA Unit of Account UNDP United Nations Development Programme VOC Vehicle Operating Cost iii

PROJECT INFORMATION SHEET

Client Information

Borrower : REPUBLIC OF CAMEROON

Project Name : CAMEROON: TRANSPORT SECTOR SUPPORT PROGRAMME PHASE 2:

. REHABILITATION OF THE YAOUNDÉ- BAFOUSSAM-BABADJOU ROAD . DEVELOPMENT OF THE GRAND ZAMBI-KRIBI ROAD . DEVELOPMENT OF THE MAROUA-BOGO-POUSS ROAD

Project Area : CENTRE, WEST, NORTH-WEST, FAR NORTH AND SOUTH REGIONS OF CAMEROON

Executing Agencies: MINISTRY OF PUBLIC WORKS THROUGH THE AfDB/WB PROJECT MONITORING UNIT (CSEPR BAD/BM)

1. Financing Plan

Source Amount in Amount in Amount in Instrument UA million EUR million CFAF billion ADB 214.408 270.155 177.208 Project loan ADF 12.820 16.153 10.596 Project loan BDEAC 60.449 76.165 49.961 Project loan Government of Cameroon 74.213 93.508 61.337 Public Investment Budget TOTAL 361.890 455.982 299.102

2. Key AfDB Financial Information

Loan currency: Euro (EUR) Loan type: Total flexibility loan Maturity: To be determined (up to 25 years maximum) Grace period: To be determined (up to 8 years maximum) Weighted average maturity**: To be determined (depending on the amortization profile) Repayments: Half-yearly payments after the grace period (payments are not necessarily equal – To be determined) Interest rate: Base rate + Margin on financing cost + Loan margin + Maturity premium Base rate: Floating (6 Month EURIBOR revised on 1 February and 1 August) base rate with a free-fixing option Margin on financing cost: Bank’s margin on financing cost revised on 1 January and 1 July and applied on 1 February and 1 August with the base rate

Loan margin: 80 basis points (0.8%)

Maturity premium: To be determined: - 0% if the weighted average maturity <= 12.75 years - 0.10% if 12.75 < the weighted average maturity <= 15 - 0.20% if weighted average maturity >15 years

Opening fee: 0.25% of the loan amount payable not later than the date of signature of the loan agreement

Commitment fee: 0.25% per year of the undisbursed amount. It started running 60 days after the date of signature of the loan agreement and is payable on the interest payment dates. Base rate conversion option*: Besides the free option to set the base rate, the borrower is offered the possibility to return to the floating rate or reschedule all or part of the disbursed loan amount. Transaction costs are payable Caps or collar rate option*: The borrower is offered the possibility to place a cap or collar on the base rate for all or part of the disbursed loan amount. Transaction costs are payable

Loan currency conversion option*: The borrower is offered the possibility to change the currency of all or part of the loan, disbursed or otherwise, into another AfDB loan currency. Transaction costs are payable NPV (baseline scenario): CFAF 380.599 billion IERR (baseline scenario): 28.1% *Conversion options and the transaction costs relating thereto are governed by Bank Conversion Guidelines available on its website. **A calculator of the weighted average maturity is available on the AfDB website.

3. Key ADF Financial Information – Conditions for Lending to Blend Countries Loan/grant currency Unit of Account (UA) Interest type 1% Interest rate margin Not applicable Service fee 0.75% per annum on the loan amount disbursed but not yet reimbursed Commitment fee 0.5% on the undisbursed loan amount 120 following the signing of the loan agreement Other fees Not applicable Maturity Up to 30 years maximum Grace period Up to 5 years maximum ERR, NPV (base scenario) Not applicable TRE, VAN (base scenario de base) 20.8% and CFAF 135 billion

4. Duration – Key Milestones (projected) Activities (Month, Year) Concept Note approval June 2015 Project approval November 2016 Effectiveness January 2017 Final disbursement December 2020 Completion December 2021 Final AfDB loan repayment December 2036

EXECUTIVE SUMMARY

General Programme Overview

1. The transport sector is a key link of the Cameroonian economy and an essential support to the country’s growth strategy. It comprises road transport, which is the most widely used means (freight + passenger), as well as air, rail and maritime transport, which also occupy an important place. It accounts overall for less than 10% of the economy’s tertiary sector and contributes about 4%, in current prices, to the GDP. Convinced of the dynamic role of infrastructure in trade facilitation and the promotion of strong and sustainable growth, due to the competitiveness generated by its good quality, the Government intends to invest massively in infrastructure during the period of implementation of the Growth and Employment Strategy Paper (GESP). GESP is a medium- and long-term policy instrument that seeks to scale up the paved road network from 10% in 2010, to 17% by 2020, or an average annual paving of 350 km of roads.

2. In this context, the Government requested the Bank to contribute to financing its road programme. Considering the said programme’s scale of works, relative to available resources, it was agreed that Bank intervention should be in phases. The first phase, covering the Batschenga-Ntui-Yoko-Lena segment (248.60 km) and approved in November 2014, is currently being implemented. The second phase concerns: (i) the rehabilitation of the Yaoundé-Bafoussam-Babadjou road; (ii) the development of the Maroua-Bogo-Pouss and Grand Zambi-Kribi roads; and (iii) ancillary socio-economic activities. The implementation period of this phase of the programme is 4 years and its total cost is estimated at UA 361.890 million. Through the ADB window, the Bank intervenes for UA 214.408 million and the Development Bank of Central African States (BDEAC) for UA 60.449 million. The counterpart contribution stands at UA 74.213 million. The main project beneficiaries are the 4 624 051 inhabitants of the Centre, West and Far North Regions of Cameroon. Project beneficiaries will contribute to the construction, management and maintenance of some ancillary facilities.

Needs Assessment

3. The Yaoundé-Bafoussam-Babadjou segment, targeted by this phase of the programme, is a link in the regional integration corridor linking Cameroon to Nigeria, including the Bamenda-Mamfé-Ekok-Enugu road, which connects to the Lagos-Mombassa trans-African highway, prescribed by the Lagos Plan of Action, and which is being completed with multi-source financing under Bank leadership.

4. Commissioned in the 80s, this road is in an advanced state of degradation. The road accounts for about 11% of accident cases and 16% of deaths recorded on Cameroonian roads. The infrastructural weaknesses (narrow lane, inadequate signalling) are mentioned among the most frequent causes of accidents.

5. The Maroua-Bogo-Pouss road actually combines urgency and development, and is the best response to the concerns of technical and financial partners (TFPs) who met in Yaoundé to reflect on the urgent need for further development in the poorest regions of the Far North and East, plagued by Boko Haram incursions and the war in the CAR. Indeed, the development of this road is expected to enhance the area’s economic potential, notably cotton and cereal crops, cattle breeding and handicraft activity.

6. Similarly, at the national level, the Yaoundé-Olama-Bigambo-Grand Zambi-Kribi road will connect Yaoundé to the recently commissioned Kribi port and industrial complex. This is currently the shortest route between the two cities and will be useful for transporting the exports and imports of neighbouring countries, without passing through the Douala port.

7. Lastly, to amplify impacts and strengthen the exclusive nature of the programme, basic socio-economic infrastructure will also be built to help improve the living conditions of the population living along the roads developed under the programme.

Bank’s Value-added

8. The Bank’s value-added comes from the experience gained in this sector for more than 15 years. The Bank has devoted enormous resources to finance infrastructure in Cameroon. Since 1972, when it started operating in Cameroon, the Bank has participated in financing 27 operations in the transport sector (including multinational projects) for a total UA 908.97 million, accounting for 24.84% of all AfDB operations in the country. With this new operation, the Bank will consolidate the achievements of previous projects, with a view to achieving the objectives set in the country’s infrastructure development strategy. The implementation of all these operations has helped the Bank to develop expertise in the conduct of transport sector operations, taking into account experience from past operations.

Knowledge Management

9. The project will provide an opportunity to improve knowledge in the area of road infrastructure development. To better draw lessons from this phase of the programme, a monitoring/evaluation system will be established by the executing agency with the support of the National Institute of Statistics (INS), which is responsible for monitoring the socio- economic impact indicators of the programme and of GESP. The establishment of key indicators before the start of the programme and the assessment of its impact at the end of the implementation phase will help to generate useful information on its outputs and outcomes.

10. A training programme is also planned under this operation for administrative officials of the Ministry of Public Works. The lessons, experiences and knowledge that derived from its implementation will be managed from a database in MINTP and disseminated in annual reports and the AfDB website.

Compliance with Requirements of PD 02/2015 on Programme Preparation

As of 31 August 2016, the portfolio comprised 20 projects with total commitments amounting to UA 723.479 million. This amount is distributed as follows: 10 national projects, 6 regional projects and 4 private sector projects. The public sector envelop covers the following areas: transport and ICT (68%), energy (13%), water and sanitation (12%), agriculture and environment (5%), and governance (2%). The performance of national public sector portfolio was deemed satisfactory during the last portfolio review, with a cumulative disbursement rate of 29.5% as of 31 August 2016. In the transport sector, the portfolio comprises 5 operations, of which 3 regional totalling UA 361.22 million, for an average disbursement rate of 32.60%.

To enhance operational effectiveness and comply with the requirements of PD-02/2015, a number of actions were taken to improve the portfolio disbursement rate in general, and the rate in the transport sector, in particular. vii

These actions include: (i) building the capacity of executing agencies in procurement and financial management through training organized by the Bank; (ii) enhancing coordination between the Bank and other partners by multiplying joint project preparation and supervision missions with the major donors on the ground; (iii) strengthening project implementation monitoring through regular monitoring meetings; (iv) organization of quarterly meetings by the Ministry of Economy and Planning with a view to deciding on which projects to implement and recommending appropriate measures to overcome difficulties encountered; and (v) putting procedures manuals in place to improve implementation arrangements.

During project design, Bank teams also made sure of the existence of a Unit to monitor sector operations, an updated procurement plan, the status of procurements and a projected table of disbursements prepared in concert with the Borrower. Therefore, works could start on schedule and the first disbursement made within six (6) months following the loan approval by the Board.

All these points are developed in Appendix I of this report.

viii

RESULTS-BASED PROJECT LOGICAL FRAMEWORK

REPUBLIC OF CAMEROON Country and project name: Transport Sector Support Programme - Phase 2: Rehabilitation of the Yaoundé-Bafoussam-Babadjou Road – Development of the Maroua-Bogo-Pouss and Grand Zambi-Kribi Roads Project goal: Contribute to opening up access and developing agricultural potential and increased trade between and within the country’s regions

Performance indicators Results Chain Means of Verification Risks/Mitigation Measures Indicator (including ISCs) Baseline Situation Target

Contribute to opening up access and developing agricultural The country’s volume of intra-regional trade In 2015: 27% In 2020: 33% Statistical reports published potential and increased trade between and within the country’s by the Government of

Impact regions. Rural access Index 5% in 2015 15% in 2020 Cameroon

Outcome 1 Vehicle Operating Costs (VOC) In 2015, the VOC stands at: (i) CFAF In 2020, the VOC would be: (i) CFAF Statistics published by Risks: (i) permanent loss of the FR’s Drop in generalized transport costs 397/km for a light vehicle; and (ii) CFAF 333/km for a light vehicle and (ii) CFAF Cameroon’s Ministry of 2nd generation status; and (ii) 1 283/km for a heavy vehicle. 916/km for a heavy vehicle. Public Works (BTP Annual) insecurity situation in one of the areas of the programme. Travel time between the Yaoundé-Bamenda In 2015, average travel time is 6 hours In 2020, average travel time would be 4 hours Monitoring Reports – segment or a 40% reduction. Evaluation of the National Mitigation measures: (i) the Institute of Statistics Government’s commitment to adopt Travel time on the Maroua-Bogo-Pouss section In 2015, average travel time is 4 hours In 2020, average travel time would be 2 hours the structural reforms of transforming or a 50% reduction. Statistics of the Ministry of the road fund into a 2nd generation Agriculture Travel time on the Grand Zambi-Kribi section In 2015, average travel time is 4 hours. In 2020, average travel time would be 2 hours fund, included in the loan conditions;

or a 50% reduction. Bank support through a strategic Statistics of the Ministry of study for the implementation of Outcome 2 Number of jobs created by gender 2015: 0 2019: 50 000 persons/month, including 20% Transport and the road safety structural reforms; and (ii) Improved living conditions of the people in the PIA for women office involvement of authorities and Average income by household and by gender 2015: CFAF 18 529 2020: CFAF 29 234 support of the armed forces by public MINTP activity report Outcome 3: Improved legal framework of the executing agency Rate of execution of road maintenance works 2015: 52% 2019: 80% authorities.. Reform on migration of the Road Fund 2015: 0 2010: 82 Reform on the audit of the Project Monitoring 2015: 2019: one study report on the organization of Unit road maintenance 2019: one report on the organizational audit of the Unit Output 1: Public works Length of road segments In 2015: (i) 249 km of roads in bad In 2020: (i) 249 km of paved roads on the  Progress reports of Risks: (i) Slowness and lack of condition on the Yaoundé – Bafoussam - Yaoundé - Bafoussam – Babadjou section; (ii) executing agencies transparency in the procurement Road segments rehabilitated Length of road networks developed Babadjou section; (ii) 93 km of roads in bad 93 km of paved roads on the Maroua – Bogo –  Control mission process.

Segments constructed Length of urban roads constructed or rehabilitated condition on the Maroua – Bogo – Pouss Pouss section; and (iii) 53 km of a constructed reports section; (iii) 53 km of impassable earth and paved road between Kribi and Grand  Project supervision Mitigation measures: (i) early Length of urban roads constructed or rehabilitated. comes roads between Kribi and Grand Zambi Zambi reports launch of the project’s main activities Roads rehabilitated  Project completion in the formulation phase in Out In 2015: 0 km of urban roads constructed or In 2020: (i) 50 km of urban roads constructed reports accordance with Directive rehabilitated in the main localities crossed or rehabilitated in towns situated on the PD/02/2015; (ii) extension of Yaoundé-Bafoussam-Babadjou and Maroua- competition by playing on the size of Bogo-Pouss sections. works contracts, and the major

Output 2: Ancillary facilities (i) length of tracks developed, (ii) number of In 2015: 0 In 2020: (i) 250 km of tracks developed; (ii) 5 reforms undertaken by the women’s promotion centres constructed or women’s promotion centres constructed or Government through the creation of a Ancillary facilities provided rehabilitated, (iii) number of youth multipurpose rehabilitated; (iii) 5 youth multipurpose Ministry in charge of Public centres constructed, (iv) number of community centres constructed; (iv) 2 community centres Contracts. centres developed, (v) number of health centres developed; (v) 2 health centres rehabilitated; rehabilitated, (vi) number of women’s markets (vi) 15 women’s markets constructed; (vii) 18 constructed, (vii) number of classrooms classrooms constructed or rehabilitated; (viii) constructed or rehabilitated, (viii) number of 20 boreholes constructed; (ix) 2 mini water boreholes constructed, (ix) number of mini water networks constructed; and (x) support to networks constructed; and (x) support to produce produce marketing provided. marketing provided.

In 2020: 330 ha, including Lokoundjé (60 ha), Planting of trees and restoration of mangrove areas Total surface area restored or planted In 2015: 0 hectare Mpolongwe (60 ha), Bwandjo (60 ha), Lolabé (40 ha), Eboundja 2 (10 ha), Eboundja 1 (5 ha), Londji (5 ha), Mpalla (5 ha), Nziou (5 ha), Mahalé (5 ha), Mabiogo (5 ha), Ebodjé (5 ha), Nlendie-Dibé (1 ha), Mboamanga (1 ha), Elabe (1 ha) and Mbenji (1 ha). Output 3: Road studies and Institutional support to the . Study on the reform of the Cameroon road 2015: 2020: transport sector sector conducted; . Report of the study on the reform of  Activity reports of . Studies conducted . Study to set up a sustainable road . Inadequate organization of the road the Cameroon road sector executing agencies maintenance management and financing sector; . Report of the study to set up an assets  Study reports system in Cameroon conducted; . Weakness in the road assets management system and a road  Project supervision . Study on the priority structuring urban roads management system and absence of maintenance financing mechanism; reports conducted. a road maintenance financing . Report of road studies and bidding  Project completion mechanism; documents reports . Absence of a structuring roads study

Components Resources

1. Roadworks COMPONENTS 2. Ancillary facilities Total 3. Studies and institutional support 4. Project management 1. Road paving works 292 786 s 2. Road ancillary facilities 11 837

3. Studies and institutional support 6.921

Key activitie 4. Project management 1 736 Base cost 313.280 Physical contingencies 31.328 Financial contingencies 17.282 Total cost, net of taxes 361.890

PROJECT IMPLEMENTATION SCHEDULE

REPORT AND RECOMMENDATION OF BANK GROUP MANAGEMENT TO THE BOARD OF DIRECTORS ON A PROPOSAL TO GRANT AN ADB LOAN OF EUR 270.155 MILLION AND AN ADF LOAN OF UA 12.820 MILLION TO THE REPUBLIC OF CAMEROON FOR FINANCING THE TRANSPORT SECTOR SUPPORT PROGRAMME - PHASE 2: REHABILITATION OF THE YAOUNDÉ- BAFOUSSAM-BABADJOU ROAD AND DEVELOPMENT OF THE GRAND ZAMBI-KRIBI AND MAROUA-BOGO- POUSS ROADS

I. PROJECT STRATEGIC THRUSTS AND RATIONALE

1.1 Key Development Issues

1.1.1. The land transport sector is a key link of the Cameroonian economy and an essential support to the country’s accelerated growth strategy. It comprises road transport, which is the most widely used means of transport (freight + passenger) as well as air and rail, which also occupy an important position. Although it accounts overall for less than 10% of the economy’s tertiary sector, it contributes approximately 4% to GDP, at current prices. This national road network remains largely inadequate both in terms of quantity and quality. At the quantity level, the density of the paved national network (excluding urban networks) was estimated at 9 km/1000 km2 of territory and at 0.185 km/1000 inhabitants in 2015, far below the situation of African countries presenting an identical profile, such as Côte d’Ivoire (16; 0.384) and Ghana (25; 0.354).

1.1.2. Aware of this infrastructural gap, the Government has set out to define the medium- and long-term thrusts of its Growth and Employment Strategy (GES), which seeks to scale up the paved road network from 10% in 2010 to 17 % by 2020, or an average of 350 km of roads to be paved annually.

1.1.3. To help the Government meet the challenges of this strategy and based on various texts organizing public action in general, and the Ministry of Works in particular, the Bank is currently financing a major structural study through an organizational and operational audit aimed at reforming the ADB-WB Projects Monitoring Unit. On completion, this reform should lead to the establishment of a road agency charged with designing and monitoring the implementation of transport infrastructure projects. The organization of the agency will be consistent with the volume and complexity of projects, the multiplicity of technical and financial partners. Its anchoring in MINTP would guarantee the efficient implementation of activities, the quality of project supervision and optimal human resource management.

1.1.4. These Government medium- and long-term strategic thrusts over the strategy period are consistent with the ambitious scenario of the Road Master Plan being updated with Bank financing. Over the strategy period, road maintenance operations will help to significantly improve the service level, through the establishment of a relevant intervention strategy. The rehabilitation of the road network (2 000 km of paved roads to be rehabilitated by 2020), as well as the intensification of the paving of earth roads (more than 3 500 km by 2020) will come to complete this mechanism. Major institutional reforms are expected to support this strategy.

1.1.5. Thus, special emphasis should be laid on: (i) responsibility for and enhancement of the control of roadworks; (ii) enhanced planning and programming through the preparation and implementation of an intervention strategy, which focuses on meeting work standards instead of hodgepodge operations; (iii) improved governance in the construction sector; (iv) reinforcement of the civil engineering equipment pool; (v) organization of the private sector

in order to have a network of contractors and efficient consulting firms; (vi) the search for materials and processes with emphasis on the sustainability of interventions, especially in road maintenance; and (vii) the use, wherever possible, of labour intensive (LI) techniques to reduce cost and promote employment.

1.1.6. This operation is expected to contribute significantly to achieving these objectives, especially through the rehabilitation of one of the major roads of the country’s backbone network (Yaoundé-Bafoussam-Bamenda), the construction of the missing link to connect the capital Yaoundé to the new Kribi Port Complex and the construction of a major road in the country’s Far North, as a response to the fight against poverty in a security context marked by Boko Haram incursions. At the level of sector governance, technical assistance is planned for the institutional strengthening of the Ministry of Public Works, the main contracting authority and State engineer in charge of designing and implementing major projects. Lastly, the current project will enable the government to establish a sustainable road assets management system in Cameroon as well as provide technical assistance for the establishment of the road maintenance by service level method (GENiS).

1.2 Project Linkages with the National Strategy and Objectives

1.2.1. Based on the objectives and assumptions set for the transport sector by the Growth and Employment Strategy Paper (GESP), as well as on the available strategies of productive sectors (agriculture and rural development, mining, industry, urban development, trade, etc.), the Government requested the Bank to contribute to the financing of its road programme. The Government of Cameroon expressed its desire to continue working towards achieving the Millennium Development Goals (MDG), in general, to direct nearly 70% of public aid to road infrastructure and to gradually raise the share of public investments in total government expenditure from 20 to 30% as well as ensure supervision over the building of visible infrastructure.

1.2.2. Considering the scale of the works under this request and future Bank operations in the sector following the country’s reclassification as a "blend country", it was agreed that Bank intervention will follow the programme-based approach, through multi-phased support to the transport sector. The first phase concerned the development of the 248.6-km long Batschenga-Ntui-Yoko-Lena road. This second phase of the programme will concern the Yaoundé-Bafoussam-Babadjou road rehabilitation project, and the Maroua-Bogo-Maga- Pouss and Grand Zambi-Kribi roads development projects. It will also include socio- economic facilities to increase the programme’s impact and inclusive nature, as well as a study and institutional support component to contribute to the maturation of operations and help to establish investment sustainability mechanisms.

1.2.3. This Bank intervention falls within the framework of the country’s Growth and Employment Strategy Paper (GESP 2010-2020), through its first pillar - "infrastructure development". It is also aligned on the Regional Integration Strategy Paper (RISP) and the Country Strategy Paper for Cameroon covering the period 2015-2020, through its second pillar on infrastructure development. Lastly, it is consistent with the Road Master Plan and aligned on the thrusts of Cameroon’s transport sector policy, adopted in 2010, which lays emphasis on the importance of road infrastructure development.

1.3 Rationale for Bank’s Involvement

1.3.1. The Bank’s intervention seeks to help the country to improve its transport services, while encouraging green and inclusive growth. This objective is consistent with the Bank’s Ten- Year Strategy (2013-2022), which emphasizes support to infrastructure development, taking into account the challenges of green and inclusive growth, through the implementation of a major economic and social development programme combining infrastructure and socio- economic facilities, while preserving the impact area’s natural resources. The project also meets four of the Bank’s top five priorities (“High 5s”): improving the quality of life of the people of the project impact area by placing the necessary socio-economic structures at their disposal, contributing to agriculture development and food security by opening up agricultural production areas, and promoting industrialization by reducing transport, transaction and logistical costs.

1.3.2. At the economic level, the regions served by the Yaoundé-Bafoussam-Bamenda road depend almost entirely on agriculture and trade. The improvement of the road condition after works is expected to bring economic gains, thanks to the quicker distribution and sale of commodities (perishable for the most part) in the country’s high-consumption centres as well as trade facilitation between these regions and neighbouring Nigeria and the Douala port. Indeed, the section targeted by the project is a link of the regional integration corridor connecting Cameroon and Nigeria, and whose development of the downstream segment (Bamenda-Enugu, part of the Lagos-Mombassa trans-African highway included in the Lagos Plan of Action) is being completed with multi-source financing, under Bank leadership. Lastly, the Yaoundé-Bafoussam-Bamenda road, commissioned in the 80s or more than 35 years ago, is in an advanced state of degradation. About 11% of accident cases and 16% of deaths on Cameroonian roads have been recorded there. Infrastructural weaknesses (narrow lane, inadequate signage) are mentioned among the most frequent causes of accidents.

1.3.3. The Maroua-Bogo-Maga-Pouss road actually blends urgency and development, and is the best response to the concerns of TFPs (AfDB, the World Bank, the European Union, AFD, UNDP, HCR) that met in Yaoundé to reflect on the urgent need for further development in the poorest regions of the Far North and East, plagued by Boko Haram incursions and the war in the Central African Republic. The construction of this road is expected to help develop the impact area’s economic potential, notably cotton and cereal crops, cattle breeding and handicraft activities. The area is also renowned for tourism activities, namely the Waza and Kalamaloue National Parkes, the Rhumsiki and Djingliya Sites of Beauty, the Mindif Peak and the Koza Pass.

1.3.4. At the national level, the Yaoundé-Olama-Bigambo-Grand Zambi-Kribi road will link Yaoundé to the recently commissioned Kribi industrial and port complex. It is co- financed with the Islamic Development Bank and the Abu Dhabi Fund that are funding the Olama-Grand Zambi section. It is now the shortest route between the two cities and will be useful in the transportation of exports and imports of neighbouring countries, without passing through the Douala port.

1.4 Donor Coordination

1.4.1 Aid coordination and cooperation with donors at the national level is the responsibility of the Ministry of Economy, Planning and Regional Development (MINEPAT). This ministry comprises the Department of Regional Integration, which is the

AfDB focal point for economic and technical cooperation. At the level of technical and financial partners, the Multi-Partner Committee (CMP) for GESP Monitoring, established in June 2001, is a platform for dialogue and exchange on key development issues in Cameroon. To support this structure, technical and thematic sub-committees, dedicated to the alignment and harmonization agenda, are active. The Bank sits in all these thematic and sector groups. From 2008 to 2014 when it handed over the baton to the European Union, the Bank played the role of leader of the CMP Sector Committee for Public Finances.

1.4.2 With specific reference to the transport sector, dialogue is organized around a sub- committee set up since 2007, within the framework of the pilot programme for transport facilitation in the CEMAC region. It includes the Bank, EU, WB, JICA, BDEAC and AFD, and meets at least once every three months. These meetings regularly include discussions with Government on sector challenges. Considering the transport sector’s weight in its portfolio (65%), the Bank has since January 2015 played the role of sub-committee leader.

1.4.3 During the project identification, preparation and appraisal missions, the AfDB team had exchanges with these key TFPs. These discussions helped to harmonize views, especially on project components and road maintenance financing. All partners recognized the importance and relevance of the current programme, which is fully consistent with the interventions of other partners.

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

Stakeholders – Annual public expenditure (2010-2015 averages) * Government (USD Donors million) Amount (USD million) [%] ADB 65.36 18.80% 580 ADF 84.33 24.26% AFD 28.2 8.11% BDEAC 19.23 5.53% European Union 48.99 14.09% JICA 23 6.62% WB 78.57 22.60% TOTAL 328.45 100.00% Level of aid coordination Yes, the CMP was established in 2008 Existence of thematic working groups Existence of SWAP or an overall sector programme YES AfDB role in aid coordination [L] Transport sector L: Leader; M: member (non-leader): None: no role Sources: MINFI, Cameroon 2004 and 2005, TOFE 2002 to 2015 and Cameroon’s economic and financial report from 2005 to 2015, INS, MINTP

II. PROJECT DESCRIPTION

2.1. Project Objectives and Components

2.1.1. The project’s overall objective is to contribute to opening up, developing agricultural potential and increasing trade between and within the country’s regions. The project’s specific objective is to improve the performance of the transport logistical chain between the cities Yaoundé-Bamenda, Maroua-Bogo-Pouss and Grand Zambi-Kribi, and thus improve the living conditions of the people in these areas.

2.1.2. To achieve these objectives, project activities were grouped into four components, summarized in the table below and detailed in Appendix 1 of this report:

Table 2.1 Project Components No. Component Name and Description Amount in UA million 1 ROAD WORKS 1.1. Rehabilitation works of the 241-km long Yaoundé-Bafoussam-Babadjou road 292.786 1.2. Development works of the Maroua-Bogo- Maga- Pouss road (93 km) 1.3. Development of the Grand Zambi-Kribi road (53 km) 1.4. Construction of the Obala interchange 1.5. Development of 50 km of urban roads in the main towns crossed 1.6. Environmental protection and road safety awareness-raising 1.7. Works control and supervision. 2 ANCILLARY 2.1 Development of 250 km of rural access roads to production areas FACILITIES 2.2 Supply of 200 agricultural produce processing equipment kits to women’s groups 11.837 2.3 Construction of 20 drinking water boreholes and 2 mini DWS systems 2.4 Construction/rehabilitation of 14 market sheds 2.5 Construction/rehabilitation of 18 primary and secondary school classrooms 2.6 Construction of 5 multi-purpose centers for women and 5 for youths 2.7 Control and supervision of ancillary works

3 STUDIES AND ROAD 3.1. Study on the reform of the Cameroon road sector SECTOR 3.2. Study to set up a sustainable road maintenance management and financing system INSTITUTIONAL in Cameroon 3.3. Study on priority structuring urban roads SUPPORT 6.921 4 PROJECT 4.1 Support to the Project Monitoring and Coordination Unit MANAGEMENT 4.2 Monitoring/evaluation of project socio-economic and environmental impacts 1.736 4.3 Project accounting and financial audit 4.4 Project technical audit. Details on these activities are given in Appendix 1 of this report.

2.2. Technical Solutions Retained and Alternatives Explored

2.2.1. Technical studies conducted retained for each section of the programme. For the Yaoundé-Bafoussam segment, the existing pavement will be fragmented, recycled and incorporated into the old base course to form a new sub-base course of 20 cm thick with addition of cement, water intake and possible contribution of selected materials to correct the grain size of the mixture. Thereafter, a geo-fibreglass grid, a sand-gravel aggregate base course of 10 cm and a bituminous concrete surface course of 7 cm, will be put in place. The pavement structure retained for new roadworks comprises a surface course of 5 cm in bituminous concrete (0/10), a base course of 15 cm in sand-gravel aggregate (0/20), and a base course of 20 cm in lateritic gravel.

2.2.2. For the Maroua-Bogo-Pouss and Grand Zambi-Kribi sections, the pavement structure retained comprises an improved subgrade that varies in thickness depending on the area, a sub-base course of 30 cm in Type-1 lateritic gravel, a base course of 20 cm in untreated sand-gravel aggregate and a surface course of 5 cm in semi-coarse asphalt concrete. All the segments will be provided with insulators for the passage of fibre optic cables. Other technical solutions were explored and rejected, especially as concerns the pavement structure. They are outlined in the table below.

Table 2.2 Alternative Solutions Explored and Reasons for Rejection

Alternative Solution Brief Description Reason for Rejection

Base course in soil concrete and 10-m platform comprising a pavement with 2 lanes Quality risks related to poor mastering of paving with semi-coarse asphalt (each 3.50 m wide) and a 1.5 m shoulder on each side, soil concrete construction methods and concrete with a base course in soil concrete and asphalted with material behaviour over time. bituminous concrete. Base course in bitumen sand- 10-m platform comprising a pavement with 2 lanes Technically the most interesting solution, gravel and paving with semi- (each 3.50 m wide) and a 1.5 m shoulder on each side, but presenting very high costs coarse asphalt concrete with a base course in bitumen, sand-gravel aggregate and asphalted with bituminous concrete Base course in soil cement and 10-m platform comprising a pavement with 2 lanes Technically a viable solution, but paving with semi-coarse asphalt (each 3.50 m wide) and a 1.5 m shoulder on each side, presenting high costs concrete with a base course in soil cement and asphalted with bituminous concrete. Base course in untreated sand- 10-m platform comprising a pavement with 2 lanes Economically the most interesting gravel aggregate and with a (each 3.50 m wide) and a 1.5 m shoulder on each side, solution, but presenting lower durability double-layer surface course with a base course in untreated sand-gravel aggregate due to the foreseeable heavy traffic. and a double-layer surface course.

2.3. Project Type

The AfDB loan will help to finance roadworks, ancillary facilities and institutional support. The investments to be financed are specifically defined. Consequently, the project loan was considered appropriate as an instrument for Bank contribution to the financing of this phase of the programme. 2.4. Project Cost and Financing Arrangements

2.4.1 The total project cost, net of taxes and customs duties, stands at UA 361.890 million (or CFAF 299.102 billion, at the July 2016 exchange rate of UA 1 = CFAF 826.499). Provision for physical contingencies is 10% of the base cost. Provision for financial contingencies is equal to 5% of the base cost plus physical contingencies. This cost was established based on the November 2014 detailed design and similar contracts signed recently or being executed in the country. The summary of cost estimates by project component is given in the table below:

Table 2.3 Summary of Cost Estimate by Component for the Entire Project

CFAF Billion UA Million COMPONENTS Foreign Foreign Exchange LC Total Exchange LC Total 1. Roadworks 191.760 50.228 241.987 232.014 60.771 292.786 2. Ancillary facilities 1.994 7.789 9.784 2.413 9.424 11.837 3. Studies and institutional support 4.004 1.716 5.720 4.845 2.076 6.921 4. Project management 0.545 0.890 1.435 0.659 1.077 1.736 Base cost 198.303 60.623 258.926 239.931 73.349 313.280 Physical contingencies 19.830 6.062 25.893 23.993 7.335 31.328 Financial contingencies 10.939 3.344 14.284 13.236 4.046 17.282 Total cost, net of taxes and customs duties 229.073 70.029 299.102 277.160 84.730 361.890

2.4.2 The summary of cost estimates by category for the entire project is given in the table below:

Table 2.4 Summary of Cost by Expenditure Category for the Entire Project

CFAF Billion UA Million EXPENDITURE CATEGORIES Foreign Foreign Exchange LC Total Exchange LC Total 1. Works 187.070 54.787 241.857 226.340 66.288 292,628 2. Services 11.233 4.996 16.229 13.591 6.044 19,636 3. Operation 0.000 0.840 0.840 0.000 1.016 1,016 Base cost 198.303 60.623 258.926 239.931 73.349 313.280 Physical contingencies 19,830 6.062 25.893 23.993 7.335 31.328 Financial contingencies 10.939 3.344 14.284 13.236 4.046 17.282 Total cost, net of taxes and customs 229.073 70.029 299.102 277.160 84.730 361.890 duties

2.4.3 Financing mechanism: The programme will be financed by the Bank Group, through the ADB window, the Development Bank of Central African States (BDEAC) and the counterpart contribution, as per the financing plan below. The Bank Group intervenes through a UA 214.408 million (EUR 270.155 million) ADB loan and a UA 12.82 million ADF loan, or 62.79% of the total project cost, and the BDEAC for UA 60.449 million. The counterpart contribution is estimated at UA 74.213 million, accounting for 20.51% of the total project cost. The criteria set out in the Policy on Expenditure Eligible for Bank Group Financing to justify this level of counterpart contribution are detailed in Appendix I.

Table 2.5 Summary of Project Cost by Source of Financing Source of UA Million EUR Million CFAF Billion Percentage Financing FE LC Total FE LC Total FE LC Total ADB 163.950 50.458 214.408 206.577 63.577 270.155 135.505 41.704 177.208 59.25% ADF 7.343 5.477 12.820 9.252 6.901 16.153 6.069 4.527 10.596 3.54% BDEAC 48.359 12.090 60.449 60.932 15.233 76.165 39.969 9.992 49.961 16.70% CAMEROON 57.508 16.705 74.213 72.460 21.048 93.508 47.530 13.807 61.337 20.51% TOTAL 277.160 84.730 361.890 349.222 106.760 455.982 229.073 70.029 299.102 100.00%

Table 2.6 Summary of Project Cost by Component and Source of Financing Components AfDB ADF BDEAC CAMEROON TOTAL 1 Roadworks 177.322 0.729 52.329 62.405 292.786 2 Ancillary facilities 8.286 1.712 0.000 1.839 11.837 3 Studies and institutional support 0.000 6.921 0.000 0.000 6.921 4 Project management 0.000 1.736 0.000 0.000 1.736

Total base costs 185.609 11.098 52.329 64.245 313.280 Physical contingencies 18.561 1.110 5.233 6.424 31.328 Financial contingencies 10.239 6.612 2.887 3.544 17.282 Total cost, net of taxes and customs duties 214.418 12.820 60.449 74.213 361.890

2.4.4 The expenditure schedule (EUR million) by source of financing is presented in the table below:

Table 2.7 Expenditure Schedule by Source of Financing (in UA million) SOURCE 2016 2017 2018 2019 Total

AfDB 0.294 76.476 77.022 39.299 193.070 BDEAC 0.000 20.932 20.932 10.466 52.329 Government of Cameroon 0.068 26.721 26.519 13.581 77.178

Base cost, net of taxes 0.362 124.129 124.45 63.345 312.288 % of base cost 0.12% 39.75% 39.85% 20.28% 100%

2.5. Project Area and Beneficiaries Targeted

2.5.1 The Yaoundé-Bafoussam-Bamenda road covers National Road 4 (RN4) as well as RN1 and RN6 road sections up to Bafoussam, headquarters of the West Region, and continues up to Bamenda, headquarters of the North West Region. This route is a link in the regional integration corridor linking Cameroon to Nigeria, including the Bamenda-Mamfé- Ekok-Enugu road, which connects to the Lagos-Mombassa trans-African highway, included in the Lagos Plan of Action. Hence, it is the natural extension of the Bamenda-Enugu road corridor being completed with AfDB financing, and serves as a transit corridor for trade between Cameroon and Nigeria, particularly, and between the CEMAC/ECCAS and ECOWAS regions, in general. Crossing some twenty administrative units, the Yaoundé- Bafoussam-Bamenda road serves more than 4 million inhabitants spread over nearly 50 000 km2 with important agricultural basins.

2.5.2 The Maroua-Bogo-Maga-Pouss road is situated in the country’s Far North, and stretches over the Diamare and Mayo Danay Division. Therefore, the direct project impact area comprises Maroua city (Maroua I, Maroua II and Maroua III) and Bogo Sub-divisions, in Diamaré Division, and Maga Sub-division in Mayo Danay Division. Numbering about 425 040 inhabitants, the project area is economically rich, especially with cotton and cereal crops, cattle breeding and craft activity. It is renowned for rice development with the Yagoua Rice Expansion and Modernization Company (Société d’Expansion et de Modernisation de la Riziculture de Yagoua - SEMRY) and fishery development on Lake Maga, which stretches over 40 km² and has a capacity of up to 625 million m3 of water. Lastly, the area is also renowned for tourism activities, especially in the Waza and Kalamaloue National Parks as well as the Rhumsiki and Djingliya Sites of Beauty, the Mindif Peak and the Koza Pass.

2.5.3 The Grand Zambi-Kribi road is the Olama-Kribi segment of provincial earth road No. 28, and which is a continuation of the Yaoundé-Olama section. It stretches over Bipindi, Lokoundje and Kribi II Sub-divisions, situated in Ocean Division (South Region). Eleven villages will be crossed by this road section. Numbering about 199 011 inhabitants, the project area is characterized by agricultural activities, fishing, livestock farming, petty trading, timber and non-timber product exploitation and handicraft. A seaside resort, Kribi remains one of the country’s key tourist destinations and also hosts the country’s first deep seaport.

2.5.4 The programme’s main beneficiaries are transport users and the economic operators active in the impact area. The 4 624 051 inhabitants of the area also benefit from better social and economic infrastructure, which improves their living environment as well as their living conditions.

2.6. Participatory Approach for Project Identification, Design and Implementation, Including Active Private Sector Participation

2.6.1 During the entire programme preparation cycle, the participatory approach was adopted at all stages. The various stakeholders (the beneficiary population, local communities, the local and central administration, civil society organizations, youths, women, technical and financial partners) were consulted during the conduct of detailed technical studies as well as during programme preparation and appraisal missions. Disclosure sessions were organized at various levels to share the field results.

2.6.2 Consultations with stakeholders sought mainly to: (i) present the programme; (ii) identify direct beneficiaries and determine the induced benefits; and (iii) determine the ancillary facilities that can be included in the programme, in consultation with NGOs, women’s associations, village communities of the impact area and other stakeholders.

2.6.3 The needs and expectations expressed in relation to this programme concern mainly rehabilitation of rural roads, construction of youth promotion centres, construction of market sheds and mini-drinking water supply systems, rehabilitation of primary schools and health centres along the roads and construction of multipurpose centres for support to women’s empowerment. The participatory approach will be maintained during programme implementation, especially during activity coordination meetings and within the framework of monitoring/evaluation of socio-economic impact, and monitoring of the implementation of environmental impact mitigation measures.

2.7. Bank’s Experience and Lessons Reflected in Project Design

2.7.1 Since 1972, when it started operating in Cameroon, the Bank has financed 27 operations in the transport sector (including multinational projects) for a total UA 908.97 million, accounting for 24.84% of all Bank operations in the country. Bank-financed projects have contributed significantly to improving mobility and access to basic services for a major section of the country’s population, in addition to promoting regional integration. Ongoing operations are: (i) the Kumba-Mamfé road paving project; (ii) the Ketta-Djoum Road Project and Transport Facilitation on the Yaoundé-Brazzaville Corridor phase; (iii) the Bamenda- Mamfé-Ekok-Enugu Programme; and (iv) the Batchenga-Ntui-Yoko-Lena Road Project, a component of Phase 1 of the Transport Sector Support Programme. Implementation of these projects has helped to open up many regions, reduce road transport costs, improve the service level, improve access to socio-economic infrastructure in the areas crossed, open up agricultural production areas and increase trade with neighbouring countries.

2.7.2 This proposed project takes into account lessons learnt from implementing previous projects in the country and helps to boost their positive effects and also to correct the weaknesses noted, especially those related to the quality of design studies, delays in the launching of works, cost overruns, financing of compensation, formulation of conditionalities and procurement. The following measures were planned: (i) conduct of detailed technical studies and establishment of a realistic implementation schedule, taking into account the

institutional constraints for each stage; (ii) limitation of the number and clear definition of loan-related conditions, to avoid long start-up delays. This involves retaining a limited number of key effectiveness and first disbursement conditions in order to expedite project commencement; (iii) close monitoring of the budgeting of the counterpart contribution; (iv) use of Advance Contracting (AC) to minimize procurement delays. As concerns compensation management, the Ministry of Public Works (MINTP) is preparing a procedures manual for the management of environmental protection-related aspects in the context of road project implementation as well as a procedures manual for expropriation and resettlement due to road projects. Through previous projects, the Bank assisted MINTP in finalizing the said manuals and ensuring their dissemination.

2.8. Key Performance Indicators

2.8.1 The key performance indicators and the expected project outputs identified are those listed in the logical framework with due dates. The core sector indicators (CSI) on which the project will lay emphasis are: (i) the volume of the country’s intra-regional trade; (ii) the rural access index, which measures the percentage of persons having access to an all-season main road at less than 2 km from their home; (iii) the vehicle operating cost; (iv) the reduction of travel time between the towns crossed by programme roads; (iv) the number of jobs created; (v) the average income by household; (v) the rehabilitated/developed road length; and (vi) institutional support to the transport sector.

2.8.2 MINTP is responsible for data collection and analysis, with the support of Cameroon’s National Institute of Statistics (INS). The INS, which is familiar with this type of exercise, will: (i) establish the baseline situation for these indicators at the start of the programme; (ii) conduct an impact assessment at the end of the programme; and (iii) continue this assessment after the commissioning of programme roads, through a framework contract with the ministry.

2.8.3 To undertake these projects on time, in addition to these performance indicators, implementation performance indicators were established and aligned on the Bank’s institutional performance indicators. These mainly are: (i) the timeframe for loan effectiveness; (ii) the timeframe for fulfilment of conditions precedent to first disbursement; (iii) procurement timeframes; (iv) the average project implementation progress (IP) indicator; and (v) the trend of the disbursement rate as per the expenditure schedule. These indicators will be monitored during supervision missions and in daily project management.

III. PROJECT FEASIBILITY

3.1. Economic and Financial Performance 3.1.1. An analysis of the economic performance of investments to be carried out was made on the Yaoundé-Bafoussam-Babadjou (241 km), Maroua-Bogo-Maga-Pouss (93 km) and Grand Zambi-Kribi (53 km) roads, or a total length of 387 km. These road sections are located in various geographic areas, with varied socio-economic environments. 3.1.2. The economic assessment was made using the HDM IV model based on cost/benefit analyses between the “no project” and “project” situations, over a 20-year period and a 12% discount rate. To take into account the range of origins and destinations of vehicles plying these roads, the roads were considered separately as single-traffic homogenous sections. Vehicle operating costs were then calculated based on the average prices of inputs identified in the country in recent years. Due to the levels of development selected and the projected

traffic, the average residual value of investments at the end of the study period was limited on average to 28%.

3.1.3. The various sections of the Yaoundé-Bafoussam-Babadjou road are paved, but overall in a degraded state, which hampers their service level and renders the smooth movement of goods difficult. Traffic speeds scarcely exceed 50 km/h for a truck carrying goods. For its part, the Maroua-Bogo-Pouss section, situated in a near Sahel region, is a highly degraded dirt track, with a non-operational drainage system. Traffic speeds are very low (30 km/h) and the level of service remains poor. Lastly, the Grand Zambi-Kribi road is located in the country’s forest region, with abundant rainfall. This is an earth road with very marked structural degradation, characterized by the presence of gullies, sloughs and undulating land. Traffic speeds are also very low and do not exceed 30 km/h.

3.1.4. Even though transport demand is very significant on the Maroua-Bogo-Pouss and Grand Zambi-Kribi road sections, effective vehicle traffic remains rather low. Therefore, the traffic composition and volume cannot be representative of traffic in the “no project” situation. Consequently, normal traffic in the commissioning year was determined from the estimated transport demand both for persons and for goods, on the basis of traffic counts conducted in 2013 and 2014.

3.1.5. The project technical analysis indicates that roadworks will stretch over a period of 36 months from 2017. In the year of commissioning in 2020, there will be average annual daily traffic (AADT) of 5.794 veh./d, including 12.8% of heavy vehicles on the Yaoundé- Bafoussam-Babadjou road; 625 veh./d, including 11.1% of heavy vehicles on the Maroua- Bogo-Pouss road; and 284 veh./d, including 40.2% of heavy vehicles on the Grand Zambi- Kribi road.

3.1.6. The economic benefits expected by the community are divided essentially into endogenous benefits related to reduced vehicle operating costs (VOC), road maintenance gains, reduced travel time, savings on user transport costs and road assets residual value at the end of the project. Exogenous benefits relating to agricultural and agro-pastoral surpluses, remain very marginal.

3.1.7. The economic analysis resulting from project implementation during the study period (2020-2039) shows an economic rate of return (ERR) of 33.8% on the Yaoundé- Bafoussam-Babadjou section, 14.6% on the Maroua-Bogo-Pouss section, and 18.3% on the Grand Zambi-Kribi section, or a consolidated ERR of 28.1% on the entire road length. Net present values (NPV) stand, respectively, at CFAF 351.87 billion, CFAF 10.28 billion and CFAF 18.45 billion, or a consolidated NPV of CFAF 380.6 billion. The summary of the economic analysis is given in the table below. By carrying out a sensitivity test (10% increase in project cost and 10% reduction in benefits), the project ERR finally stands at 24.4%. Therefore, the project is economically profitable for the community.

Table 3.1 Summary of Economic Analysis Yaoundé- Maroua-Bogo-Maga- Grand Zambi-Kribi Economic Parameters Analysed Bafoussam- Overall Project Pouss Section Section Babadjou Section

Economic rate of return (ERR) 33.8% 14.6% 18.3% 28.1% Net present value (NPV) in CFAF 351 874.0 10 274.5 18 451.3 380 599.8 million ERR sensitivity test (10% variation in 29.5% 12.2% 15.5% 24.4% costs and benefits) Residual value of the investment after 28% 28% 29% 28% 20 years

3.2. Environmental and Social Impact

3.2.1. At the environmental and social level, the project is classified in Category 1, in view of its scale and the combined environmental and social impacts of all the works planned. In terms of climate change, the project is classified in Category 2. The Yaoundé-Bafoussam- Bamenda and Grand Zambi-Kribi sections were subject to an Environmental and Social Impact Assessment (ESIA), along with an Environmental and Social Management Plan (ESMP) in 2015 and 2013, respectively. The necessary updates have been made at the Bank’s request. These reports were disclosed at the national level in 2013 and 2015 and environmental compliance certificates were issued, in accordance with the regulations in force. The summaries of the ESIA and the Resettlement Plan were published on the AfDB website on 3 November 2015.

3.2.2. The project’s main negative environmental and social impacts relate to: (i) the destruction of property (see section on resettlement) and trees on about 121 ha mainly on the Grand Zambi-Kribi section; (ii) risks of water pollution from various construction site wastes; (iii) traffic disruption during works; and (iv) accident risks during works. The ESMPs that were updated include appropriate mitigation and improvement measures, in accordance with the requirements of applicable operational safeguards. In particular, these concern good construction site management practices at the environmental, health and work safety level, including environmental protection awareness-raising for the population and company staff. The project will also support MINTP to prepare and implement a more efficient compensatory tree planting approach within the framework of road projects in Cameroon. For the Maroua-Bogo-Pouss section, the ESIA is being finalized. Although the expected impacts on this section are of minor importance, the related requirements will be considered in the specifications of the contractor in charge of this lot. For this reason, the submission of the ESIA report to the Bank before the signature of the works contract will be a loan condition. The ESMP cost (excluding resettlement and ancillary facilities) is estimated at CFAF 400 million.

3.2.3. The main stakes at the level of climate change relate to: (i) the presence of flood- prone areas on certain sections of the Grand Zambi-Kribi road; and (ii) the combined production of greenhouse gas (GHG) emissions. For flood risks, the project incorporated the appropriate measures in the design of hydraulic structures. For the production of GHGs, traffic flow and speed control help to mitigate them. The establishment of an efficient compensatory tree planting approach under the project will ensure greater long-term mitigation of emissions.

3.2.4. Monitoring of ESMP implementation: ESMP implementation will be monitored by the control mission’s environmentalist for each road section, in close collaboration with the DAET/MINTP environmentalist. Given that the project concerns several regions of Cameroon, an environmentalist from MINEPDED’s ESMP Monitoring Sub-Department will be designated to oversee the project’s ESMP implementation. Quarterly monitoring reports will be submitted for this purpose to the said sub-department and the Bank, in accordance with national regulations and AfDB requirements.

3.2.5. Gender and specific activities for women: The project area (3 roads combined) numbers about 2 329 134 women. About 25.6% of households there are headed by women. Despite the strong commitment of Cameroonian decision-makers to mainstream gender in development policies, an analysis of the gender situation in Cameroon, and especially in the project area, reveals persistent inequalities. The incidence of poverty among women is more significant - 42.8% in the Centre Region, 30.5% in the West, 45.9% in the North West, 31.7% in the South and 62.9% in the Far North. Literacy for females aged 15 to 24 years remains worrying, especially in the Far North Region with only 17.4%. As concerns the time dedicated to household chores, by and large women devote more time than do men (17 hours compared to only 9 hours). The refusal of parents to send their children to school with the aim of confining them to work that should be eradicated, is fairly widespread and affects slightly more than one girl in four against 14.4% for boys. The proportion of girls who engage in economic activity is significantly higher than that of boys. The proportion of girls who do not go to school and do not work, is higher than that of boys with the same characteristics. By sector of activity, women dominate in the tertiary sector (services and trade) compared to the secondary and primary sectors.

3.2.6. Based on this situation and the needs and complaints expressed by the people contacted and public institutions, specific actions are planned to improve the living conditions of women and encourage their economic empowerment. Specifically, these actions include: (i) the supply of agricultural produce processing equipment kits to women’s groups to support their income-generating activities; (i) the construction of drinking water boreholes to meet family consumption needs; (iii) the construction/rehabilitation of market sheds for marketing of the abundant agricultural produce in the project area; and (iv) the construction of Multipurpose Centres for women and youths to enable them to receive vocational and management training as part of their socio-economic empowerment.

3.2.7. Road safety: A road safety technical audit will be conducted and will consist in validating the road safety aspects contained in the project design, before the commencement of works. This assessment will be based, among others, on the identification of accident- prone areas, from past information on the occurrence of such accidents. The audit will propose adequate mitigation measures (speed bumps, speed-limit signs). Thereafter, the monitoring and control of road safety aspects will be conducted during the works execution phase. At the same time, road safety awareness campaigns will be undertaken for the population of the programme area and road users. A final audit will also be conducted at the end of works, to ensure the proper enforcement of measures planned under the project.

IV. IMPLEMENTATION

4.1 Implementation Arrangements 4.1.1 The project’s executing agency is the Ministry of Public Works (MINTP) through the AfDB/World Bank Road Projects Monitoring and Implementation Unit (CSEPR- BAD/BM), established since 1998 by the Bank, and then extended in 2008 to World Bank transport projects. This unit currently comprises a coordinator, twelve (12) civil engineers, a procurement expert, one environmentalist, three (3) accountants, and support staff. It has a procedures manual, which governs its functioning. The Unit has the necessary experience to carry out sector operations. For the implementation of this project, this staff will be strengthened by a road engineer and an accountant, whose profiles and qualifications will be submitted to the Bank for non-objection opinion. The Unit’s staff is subject to regular assessment, on the basis of a half-yearly performance contract. 4.1.2 Furthermore, as part of this project’s implementation, the Ministry of Housing and Urban Development will undertake activities related to the execution of urban road works and studies through a contracting agreement with the Ministry of Public Works.

4.2 Procurement Arrangements

4.2.1. Procurement of goods and works by international competitive bidding (ICB), and Bank-financed consultancy services will be in accordance with the Bank’s procurement policy in force, using appropriate AfDB standard bidding documents. Procurement of goods and works by national competitive bidding (NCB), will be in accordance with national legislation on public contracts (Decree No. 2004/275 of 24 September 2004), using the country’s standard bidding documents, subject to the consideration of differences identified in connection with the Bank’s fiduciary requirements.

4.2.2. The AfDB/World Bank Road Projects Monitoring and Implementation Unit (CSEPR-BAD/BM) of the Ministry of Public Works (MINTP) will be responsible for procurement management. The Unit will have a Special Procurement Board (CSPM) created by Order of the Minister of Public Contracts, in accordance with the provisions of Article 41 of Decree No. 2012/074 of 8 March 2012. This board examines and gives opinions on BDs, DDP, bidding reports and draft contracts or amendments, within the limits of its competence. Beyond these thresholds, the Ministry of Public Contracts (MINMAP) will be responsible for procurement operations, through its central boards, in accordance with the provisions of the same decree. The Unit shall respect the national procurement control circuit, before forwarding dossiers to the Bank for non-objection. The Bank approved the use of Advance Contracting (AC) for roadworks and the related control. Competitive bidding for the three road sections have already been launched.

4.3 Financial Management and Disbursement 4.3.1. The AfDB/World Bank Road Projects Monitoring and Implementation Unit (CSEPR-BAD/BM) of the Ministry of Public Works (MINTP) will be responsible for project financial management. The administrative, financial and accounting management tools (TOM²PRO computer management system, management procedures manual) are available and satisfactory, and the fiduciary team (Coordinator, Administrative and Financial Officer, two accountants and assistants, a Procurement Specialist and an assistant) has the required financial management and disbursement qualifications and was given varied training in AfDB and WB financial management, disbursement and procurement procedures. However, in view of the

significant number of AfDB projects implemented by the Unit, the recruitment of an accounting officer, on a competitive basis, is planned under this project. The CSEPR-BA/BM has an internal auditor, who is responsible for ensuring compliance with procedures and provisions, and control of the regularity of operations. 4.3.2. Disbursements: under this project, AfDB resources will be disbursed in accordance with the provisions of the disbursement manual in force in the Bank. The disbursement methods proposed for the project are: (a) the special account method for operating expenditure and capacity building for the Unit; (b) the direct payment method for payment of goods and services contracts; and (c) the reimbursement method in case of pre-financing of expenditure chargeable to the Bank using the counterpart contribution, authorized beforehand by the Bank. Counterpart funds will be disbursed annually in a single tranche, following the promulgation of the Finance Law, the opening of lines of credit to authorizing officers and the availability of expenditure records. 4.3.3. The overall risk related to financial management was deemed moderate. The identified fiduciary risks and the proposed mitigation measures are summarized in the project fiduciary risk assessment table, attached as Annex B4 on project financial management.

4.4 Monitoring The implementation of the various project components will be monitored by the AfDB-World Bank Road Projects Monitoring Unit in the Ministry of Public Works. Joint supervision missions (donors and government) and inter-donor coordination meetings will also report on project performance in terms of physical and financial achievements. The current organization of the Monitoring Unit and the mechanisms established are also expected to meet the requirements of Directive PD 02/2015 on the project’s ability to meet prescribed deadlines. With respect to assessing the level of achievement of development objectives, a socio-economic impact monitoring/evaluation system will be established with the support of the National Institute of Statistics (INS), which benefited from several AfDB capacity building programmes. A directly negotiated agreement will be signed with INS, which is familiar with this type of mission within the framework of Bank-financed operations in the country.

Table 4.1 Project Monitoring and Supervision Deadline Stage Process Feedback effect T4 - 2016 Project approval T1 -2017 Project signature and launching Field mission Status reports T2-2017 Project consideration – Status reports contracts, resettlement T3-T4 – 2017 Construction works Field/supervision mission Status reports/Checklist T1&T2&T3&T4-2017 Construction works Field/supervision mission Status reports/Checklist T1&T2&T3&T7-2018-2019 Construction works Field/supervision mission Status reports/Checklist T4 -2019 Guarantee period & first year of Field mission Status reports/Checklist activities T1 -2020 Project completion report

4.5 Governance

4.5.1 Project implementation could be affected by risks related to sector, fiduciary and institutional governance problems. At the level of sector governance, there is no programme- based approach to investments and the assets protection system is weak. It is to address these shortcomings that technical assistance is planned under this project for the institutional

strengthening of the Ministry of Public Works, which is the State’s main contracting authority and engineer in the design and implementation of major projects.

4.5.2 As concerns sector governance, and based on various instruments organizing public action in general, and the Ministry of Public Works in particular, the Bank is currently financing a major structural study, through an organizational and operational audit for the reform of the AfDB-WB Projects Monitoring Unit. This reform should result in the eventual creation of a road agency, responsible for designing and monitoring transport infrastructure projects, whose organization is consistent with the volume and complexity of projects, the multiplicity of technical and financial partners, and whose anchoring within MINTP can guarantee efficiency in the implementation of activities, project management quality and optimum human resource management.

4.5.3 The current project will also assist the government in establishing a sustainable road assets management system in Cameroon as well as provide technical assistance in setting up the road maintenance by service level method (GENiS).

4.5.4 Risks related to fraud, corruption, poor use of funds, ineligible expenditure, etc., mainly at the level of the contract award and execution process and financial management will be mitigated by the establishment, through the project management manual, of a procurement activity control mechanism defining the roles and responsibilities of various actors, the preparation of a detailed results-based procurement plan consistent with the project implementation schedule, as well as selection and competitive bidding rules and processes adapted to the targeted objective.

4.5.5 As concerns project financial governance, the executing agency will keep separate accounts for the project, which will help to identify expenditure by component, category and source of financing. Project accounts will be audited annually by a consultancy firm recruited for the purpose. Financial and audit reports will be submitted to the Bank within six months following the closing of the accounting period. Project monitoring and regular supervision, especially through the Field Office in Cameroon, will help to strengthen governance audit and project performance.

4.5.6 In relation to procurement and financial management, poor governance risks were analysed during project appraisal and feature in the technical annex. Progress has been made in budget management since 2008, but major weaknesses are still an impediment to public expenditure efficiency. The adoption in 2007 of the Law on the State Financial Regime (LRFE) was accompanied by significant results-based management reforms. This reform strengthens the contracting authority’s responsibilities in the design of sector reforms and the preparation of medium-term expenditure frameworks (MTEF).

4.5.7 Lastly, weaknesses inherent in the entire planning-programming-budgeting- monitoring (PPBM) chain, and the absence of an integrated public finance management system – all of which are major challenges to public expenditure efficiency - will be mitigated by strengthening public expenditure efficiency in the transport sector. To improve the sector’s governance, the Bank carried out a review of public spending in 2015, the recommendations of which led to the preparation of the Public Expenditure Efficiency Improvement Support Project. The project aimed to contribute to improving budget management and strengthening the impact of public expenditure in the energy and transport sectors.

4.6 Sustainability

4.6.1. Road maintenance in Cameroon is managed by MINTP, through the Road Assets Maintenance Department (DEPR). It ensures the programming of road maintenance (RM) works from a data bank, feeding the road maintenance planning and programming model. It prepares bidding documents and the related contracts, approves contracts and supervises works that are executed by SMEs, after competitive bidding. DEPR has human and material capacity to efficiently ensure its mission. It receives assistance regularly from financial partners through training and equipment supply programmes.

4.6.2. Cameroon has a road network maintenance strategy which, backed by the law on decentralization, should lead to the transfer of the RF’s maintenance budget resources (10%) to decentralized regional authorities (CTD). For the total financing of current maintenance expenditure, Cameroon, by Decree No. 98/162 of 26 August 1998, established a second generation road fund. However, the low absorption of RF resources prompted the Government in 2012 to decide, as a transitional measure, to transfer resources destined for the Fund to an account opened in its name in the State Treasury, which moves the funds to the RF account in BEAC, as they are raised. Since then, Road Fund performance has remained far below sector expectations. The RF now receives only 50 to 70% of current road maintenance needs, causing substantial arrears of payment to SMEs recruited to carry out road maintenance works. The low absorptive capacity of RF resources results from: (i) slowness in awarding contracts; (ii) the weak organizational and material capacity of the SME base identified as main contractors; and (iii) the operations programming system, in which the RF does not intervene but acts solely as an instrument of payment.

Table 4.2 Status of the Road Network Priority Network Length (km) State of the Network (%)

Classification Paved Earth Total Good Average Bad National Roads 4061 3045 7107 42 35 23 Provincial Roads 846 4849 5695 16 40 44 Divisional Roads 340 7521 7861 10 24 66 Rural Roads 386 440 826 33 38 28

Total 5634 15855 21489 23 32 45

4.6.3. To address these weaknesses, the government has taken a series of measures: (i) establishment of an emergency programme, consisting in the execution of periodic maintenance by big and medium-sized enterprises and likely to be extended to other roads, in case of an increase in resources; (ii) improvement of works programming and monitoring with the creation of a Road Assets Maintenance and Protection Department, and the establishment of a Digital Information Processing Centre, which makes it possible to precisely know the network and road selected during the year N-1; (iii) voluntary policy of devolution of network maintenance responsibilities; and (iv) reintroduction of day labour through the creation of a day labour brigade in each region of the country. These measures helped to increase the network in good condition from 13% to 23% between 2013 and 2015.

4.6.4. Over the past five years, the volume of financing necessary to meet network maintenance needs are estimated on average at CFAF 112 billion, compared to an average mobilization of CFAF 62 billion (i.e. a gap of CFAF 50 billion). Therefore, the solution consists in transforming the current road fund into a second generation fund. This Second

Generation Road Fund will make it possible to have a secure and sustainable financing mechanism that can quickly mobilize the level of resources needed to cover real network maintenance needs.

4.6.5. This major structural reform is the focus of ongoing sector dialogue between the Government and partners. Under this project, a thorough road maintenance diagnostic is planned, with a view to establishing a sustainable road assets management mechanism to help transform the road fund. This study will examine the entire institutional and regulatory framework for road maintenance, road maintenance outcomes and the performance of various stakeholders, as well as propose the corresponding reforms. Within the Road Programme I framework, a diagnostic of weighing stations and the axle load control system existing in Cameroon is also planned. The main expected outcomes include: (i) diagnosis of maintenance mechanism governance; (ii) audit of the chain of actors; (iii) maintenance financing mechanisms; (iv) proposal of a sustainable management framework; and (v) proposal of major structural reforms and monitoring/implementation systems. This study will lead to findings and recommendations aimed at putting major structural reforms in place.

4.6.6. Lastly, the Bank is currently examining a public expenditure efficiency improvement operation, in which capacity building in investment programming, planning and budgeting is planned for the main contracting authorities.

4.6.7. The range of support activities identified above as well as the sector dialogue with the Government and other partners under the platform of the transport sector group of partners, should lead, in the medium term, to the improvement of road investment effectiveness and sustainability in Cameroon.

4.7 Risk Management 4.7.1. The risks that can hamper the achievement of outcomes are two-fold, namely: (i) loss of the RF’s second generation status; and (ii) the insecurity situation in one of the programme impact areas. As concerns mitigation measures, we can note: (i) Government’s commitment to adopt the structural reforms to transform the road fund into a second generation fund, included in the loan conditions; Bank support through a strategic study for the implementation of structural reforms; and (ii) the involvement of authorities and the support of the armed forces by the public authorities.

4.7.2. The risks that can hamper the achievement of outputs are two-fold, namely: (i) the possible delay in project implementation; and (ii) slowness and lack of transparency in the procurement process. The mitigation measures planned are: (i) the early launching of key project activities during the preparation phase in accordance with Directive PD/02/2015; and (ii) the extension of competition by playing on the size of contracts for works, and the major reforms undertaken by the Government through the creation of a Ministry of Public Contracts.

4.8 Knowledge Building The project will provide an opportunity for improving knowledge on national infrastructure. To better draw lessons from this project, the executing agency will establish a monitoring/evaluation system, with the support of the National Institute of Statistics (INS), responsible for monitoring project and GESP indicators. The establishment of key impact indicators before project commencement and impact assessment on completion, will help to produce useful information on project results and outcomes. Under this operation, a training

programme is also planned for administrative officials of the Ministry of Public Works. The lessons, experiences and knowledge that will be drawn from this project’s implementation will be managed from a database in MINTP and will be disseminated in annual reports and the AfDB website. This database will effectively facilitate the management of all the knowledge accumulated during the implementation of project activities.

V. LEGAL INSTRUMENT

5.1. Legal Instrument The programme will be financed through an ADF and an ADB loan granted to the Republic of Cameroon.

5.2. Conditions for the Fund’s/Bank’s Involvement

5.2.1. Conditions Precedent to Effectiveness

5.2.1.1 Conditions precedent to effectiveness: The effectiveness of this Agreement shall be subject to the Borrower’s fulfilment of conditions provided for in Section 12.01 of the General Conditions.

5.2.1.2 Conditions precedent to first disbursement of the loan’s single tranche: In addition to effectiveness of this Agreement as set forth under Section 4.1 above, the disbursement of the loan’s single tranche shall be subject to the Borrower’s fulfilment of the following conditions, to the Bank’s/Fund’s

full satisfaction:

(i) Provide evidence to the Fund/Bank of opening a special account in a bank acceptable to the Fund, into which solely the counterpart funds for the compensation of programme affected persons will be lodged, as well as evidence of payment into this account of at least one hundred and forty million francs CFA (CFAF 140 000 000) out of the total compensation amount;

(ii) Provide evidence to the Fund/Bank of opening a special account in a bank acceptable to the Fund, destined only to receive counterpart funds.

5.2.2. Other Conditions: Furthermore, the Borrower shall provide to the Fund’s/Bank’s satisfaction:

(i) Evidence of programme financing approval by the BDEAC or, failing which, evidence of the Borrower’s commitment to cover any financing deficit;

(ii) Evidence, not later than 30 April of each year, of inclusion of the counterpart contribution to the programme in the Finance Law, for the year concerned; and

(iii) Evidence of the compensation of programme-affected persons in this area, as works progress and, in any case, before any commencement of works on the area concerned, in accordance with relevant AfDB rules and procedures, the Environmental and Social Management Plan (ESMP) and the Comprehensive Resettlement Plan (CRP).

5.2.3. Commitments: The Borrower commits to:

(i) Successfully conclude the structural reform of the Projects Monitoring Unit to ensure the future establishment of a Road Management Agency;

(ii) Successfully conclude the process of transforming the Road Fund into a second generation fund;

(iii) Implement the programme, the ESMP and the CRP and have them implemented by its contracting parties, in accordance with: (1) AfDB rules and procedures; (2) national law; (3) the recommendations, prescriptions and procedures contained in the ESMP and CRP;

(iv) Not start works on an area concerned without first paying full compensation to the affected persons in the area; and

(v) Provide the Fund/Bank with half-yearly reports relating to ESMP and CRP implementation, including, where necessary, the weaknesses and corrective actions taken or to be taken.

VI. RECOMMENDATION

Management recommends that the Boards of Directors approve the proposal to grant an ADB loan of EUR 270.155 million and an ADF loan of UA 12.82 million to the Republic of Cameroon for the Transport Sector Support Programme - Phase 2: Rehabilitation of the Yaoundé-Bafoussam-Babadjou road; Development of the Grand Zambi-Kribi road and Development of the Maroua-Bogo-Pouss road, in line with conditions set out in this report.

APPENDIX I

NOTE ON THE PORTFOLIO AND COMPLIANCE WITH THE REQUIREMENTS OF PD-02/2015 ON PROGRAMME PREPARATION

1.1. Overview of the Bank’s Portfolio in Cameroon

1.1.1. As of 31 August 2016, the portfolio comprised 20 projects with total commitments amounting to UA 723.479 million. This amount is distributed as follows: 10 national projects, 6 regional projects and 4 private sector projects. The public sector envelop covers the following areas: transport and ICT (68%), energy (13%), water and sanitation (12%), agriculture and environment (5%), and governance (2%).

1.1.2. The performance of the national public sector portfolio is deemed satisfactory, with a rating of 3.05 on a scale of 1 to 4. As of 31 August 2016, the average age of the national public sector portfolio was 4.2 years, with no aged project. Furthermore, the national public sector portfolio contains no project eligible for cancellation. The cumulative disbursement rate of the active portfolio in the country stood at 29.5% as of 31 August 2016.

1.1.3. In the transport sector, the portfolio comprises 5 operations, of which 3 regional totalling UA 361.22 million, for an average disbursement rate of 32.6%. Actions taken to improve the disbursement rate mostly in the transport sector include: (i) building the capacity of executing agencies in procurement and financial management; (ii) enhancing coordination between the Bank and other partners; and (iii) monitoring project implementation. The outcomes obtained are enumerated below:

(i) Significant improvement in the quality of procurement documents and payment requests. The procurement and financial management capacity of executing agencies was strengthened through training organized by the Bank (7 sessions during the quarterly meetings organized by the Ministry of Economy and Planning (MINEPAT) between 2014 and 2016; one session on procurement organized jointly with the World Bank in Yaoundé in 2014; one session on TOMPRO organized in May 2014; one fiduciary clinic organized in September 2015; one workshop on duties and taxes applicable to projects, organized jointly with the World Bank in Yaoundé in February 2016; and one regional workshop on portfolio performance organized in Yaoundé in April 2016). The good knowledge of Bank rules and procedures by the executing agencies led to a reduction in the number of rejections by the Bank.

(ii) An increase in joint project preparation and supervision missions with the key technical and financial partners testifies to increased coordination efforts with the World Bank, AFD, JICA, BDEAC, etc. Due to its preponderance in the country’s road sector portfolio, the Bank has been the leader of the transport sub-group of the Multi-partner Committee.

(iii) Close monitoring of project implementation. Apart from project supervision missions (2 missions per year per project), the field office initiated the following actions: (i) periodic meetings with the authorities to lift major obstacles to project start up or implementation; (ii) periodic meetings with executing agencies (once monthly), representatives of contractors and service providers to take stock of the status of projects that lag behind in terms of implementation (PAMOCCA, PAEPA, CNIC); and (iii) monthly

meetings with MINEPAT to review action plans prepared based on Portfolio Flashlight reports. Regarding actions taken by the national authorities, it is worth mentioning the organization of quarterly meetings by MINEPAT to decide on which projects to implement and recommend appropriate measures to overcome difficulties encountered.

(iv) Procedures manual put in place: this involves the preparation of a standard procedures manual for projects financed by development partners, which spares executing agencies the long procedure of recruiting a consultant to produce the same document.

2. Programme Design and Implementation Phase

2.1. Negotiation of Agreements

Negotiations with the Government of Cameroon were held from 3 to 4 October 2016. The Government approved the ADF and ADB loan conditions.

2.2. Existence of Detailed Technical Studies and the Procurement Process

The PAST 2 Road Programme is based on detailed technical studies that were updated in 2014 and 2015 with Government resources at the Concept Note phase.

The availability of the studies facilitated programme appraisal. The bidding documents were also prepared on time.

Therefore, this operation has a highly satisfactory maturation level. On this basis, the Bank granted the Government the leeway to use Advance Contracting (AC).

As of 30 September 2016, all bids had already been launched. For the Yaoundé-Bafoussam- Babadjou section (the most important section of the programme), the contractors’ bids have already been submitted. Therefore, works could start on schedule and the first disbursement obtained within six (6) months following the loan approval by the Board.

2.3. Executing Agency

To monitor transport sector operations in Cameroon, all technical and financial partners depend on the AfDB/World Bank Roads Project Monitoring and Implementation Unit (CSEPR-BAD/BM) set up by the Bank in 1998 and subsequently extended in 2008 to transport projects funded by the World Bank. The Unit has a procedures manual that guides its operation, as well as the necessary experience to conduct operations in the sector. With a view to implementing this project, the Unit’s staffing will be strengthened with a road engineer and an accountant, whose profiles have been submitted to the Bank for non- objection. The performance of the Unit’s staff is regularly evaluated based on a six-monthly performance contract.

2.4. Existence of a Procurement Plan

The programme has a procurement plan approved by the Bank. All bids invitations are called based on the plan.

RATE RATE RATE APPROVAL CLOSING AMOUNT IN DISBURSEMEN RATE DISBURSEMEN RATE DISBURSEMEN RATE DISBURSEMEN DISBURSEMEN DISBURSEMEN PROJECT NAME 31/12/201 31/12/201 31/12/201 DATE DATE UA T 31/08/2016 31/08/2016 T 31/12/2016 31/12/2016 T 30/06/2017 30/06/2017 T 31/12/2017 T 31/12/2018 T 31/12/2019 7 8 9

21/11/2012 31/12/2017 29 395 299 29 395 299 47 260 000 Kumba-Mamfé Road 47 260 000 13 503 883 28.57% 17 902 088 37.88% 62.20% 62.20% 100.00%

26/11/2014 31/12/2019 4 041 304 27 475 304 27 475 304 63 797 304 80 200 304 Road Programme 1 136 273 369 0 0.00% 2.97% 20.16% 20.16% 46.82% 58.85%

02/11/2016 31/12/2021 40 537 531 40 537 531 82 917 984 147 403 000 Road Programme 2 227 240 000 0 0.00% 17.84% 17.84% 36.49% 64.87%

Sub-total National Transport Projects 410 773 369 13 503 883 9.52% 21 943 392 13.62% 97 408 134 33.40% 97 408 134 33.40% 193 975 288 61.10% 227 603 304 61.86%

Bamenda-Enugu Facilitation 25/11/2008 31/06/2017 90 390 000 49 427 993 54.68% 80 239 203 88.77% 80 500 000 89.06% 90 390 000 100.00%

Ketta-Djoum Road 1 25/09/2009 30/12/2016 59 270 000 45 133 425 76.15% 51 055 178 86.14% 49 300 000 83.18% 59 270 000 100.00%

6 046 990 8 046 990 26 988 563 42 693 156 Ketta-Djoum Road 2 21/10/2015 31/12/2020 49 242 562 0 0.00% 98 485 0.20% 12.28% 16.34% 54.81% 86.70%

Sub-total Regional Transport Projects 198 902 562 94 561 418 43.61% 131 392 866 58.37% 135 846 990 61.51% 157 706 990 72.11% 26 988 563 54.81% 42 693 156 86.70%

TOTAL TRANSPORT PORTFOLIO 609 675 931 108 065 301 26.57% 153 336 258 25.15% 233 255 124 47.45% 255 115 124 52.76% 220 963 851 57.95% 270 296 460 74.28%

III

APPENDIX II

DETAILED DESCRIPTION OF KEY PROGRAMME ACTIVITIES

The Programme has four (4) components as presented below. Component 1 Roadworks The programme is designed to place the Cameroonian road network at an adequate service level in terms of the volume of traffic drawn and the rapid growth of heavy traffic, responsible for the accelerated degradation of pavement structures and increased accident risks. Consequently, the segments selected under this programme were identified based on their current inadequate service level with traffic needs, and the need to serve production areas and ensure the harmonious development of the territory. PAST 2 concerns: (i) the rehabilitation of the 253.75-km long Yaoundé-Bafoussam-Babadjou road; (ii) the development of the 93-km long Maroua-Bogo-Pouss road; (iii) the construction of the 53-km long Grand Zambi-Kribi road; and (v) the development of 50 km of urban road networks. The improvement of hydraulic structures and rainwater drainage networks planned under the programme, will help to protect water resources and fight against soil erosion. The project concerns only existing roads, already integrated into the natural environment and does not affect natural habitats, fauna and flora. It does not have any negative impact on natural parks, biosphere reserves or sensitive or protected areas. The standardized operation of the roads developed, rehabilitated and integrated into their natural environment will not present major risks against natural habitats. Similarly, no major additional degradation of the abiotic environment (air, water, soil) is planned. The improvement of certain urban roads and the resulting road capacity and traffic improvements can gradually lead to changes in the living environment (speeding, safety, roadside development, reorganization of the built environment, land speculation, etc.). The longitudinal profiles selected as well as the establishment of a more efficient signalling system will help to meet growing demand for road safety. The specific measures taken to mitigate or eliminate the identified negative impacts are, for the most part, adequate and will be included in contractor specifications. Considering Cameroonian legislation, the contractors will have to comply with the special legal provisions that will be set out in the works bidding documents. Generally, the works are located in the existing public domain of the State. The few substitutions of agricultural land required by the few route adjustments do not constitute a loss of activity, but a minor loss of earnings. There is no population displacement and, therefore, no forced resettlement. Urban road works, asphalting, lighting and sanitation will be executed in the localities crossed as follows:

Locality Length (km) Obala 2 Monatele 5 Ombessa 2 Bafia 5 Makenene 2 Tonga 2 Bagangte 5 Bandjoun 5 Bafoussam 7 Mbouda 5 Maroua 7 Bogo 5

Component 2 Socio-economic Facilities

The actions selected under the component of socio-economic facilities result from the identification of priority needs (access roads, rehabilitation and equipping of Family and Women’s Promotion Centres, construction and equipping of Youth Multipurpose Centres, rehabilitation and equipping of health structures, support to the marketing of fishery products, support to Women’s Groups, construction of markets, construction/rehabilitation of classrooms, etc.) that affect the operation of the road. The participatory approach used during preparation and appraisal helped to find points of consensus as to the priorities.

Component 2.1 Rehabilitation of 250 km of roads and opening up of agricultural production areas

As concerns access roads, works consist in preparing a platform on a 9 to 10 m right-of-way, implementing a surface course of 15 to 20 cm thick in natural sand-gravel aggregate on a width of 5 to 6 m following a cross-sectional profile of the road, the digging of ditches and the installation of road signs at appropriate places as well as the construction of drainage structures.

This component will help to open up rural areas for better development of their potentials. The development of these access roads will have induced effects on the country’s socio- economic development with substantial social and economic fallouts, namely: (i) greater accessibility of the population to socio-economic facilities and various activity centres; and (ii) job creation in agriculture, fisheries, etc.

Component 2.2 Promotion of women and youths

PAST 2 includes activities aimed at strengthening the well-being and economic empowerment of women and youths. This component is an adapted response to the specific problems identified to support government efforts in the promotion of women and youths.

Specifically, these include: (i) the rehabilitation and equipping of Family and Women’s Promotion Centres; (ii) the construction and equipping of Youth Multipurpose Centres; (iii) the rehabilitation of social infrastructure (schools, health centres); (iv) the construction of marketing infrastructure to ensure better produce development and marketing; (v) the construction of mini drinking water supply systems and boreholes aimed at reducing the incidence of water-borne diseases endemic in the impact areas of the roads planned; and (vi) support to women’s associations, especially those of the Far North, in the marketing of fishery products. V

Details of socio-economic facilities

ROAD 1: YAOUNDÉ-BAFOUSSAM

Unit Cost in Total Cost in CFAF Total Cost in UA Item Quantity CFAF Construction of markets 10 137 312 711.00 1 373 127 110.00 1 650 974.57 Construction and 75 000 000.00 750 000 000.00 rehabilitation of classrooms 10 901 759.87 Rehabilitation of the access 12 000 000.00 2 400 000 000.00 roads of basins (km) 200 2 885 631.60 Rehabilitation/construction and equipping of community 2 100 000 000.00 200 000 000.00 centres 240 469.30 Rehabilitation and equipping 150 000 of Family and Women’s 2 300 000 000,00 Promotion Centres (CPFF) 000,00 362 976,85 Construction and equipping of 2 150 000 000.00 300 000 000.00 Youth Multipurpose Centres. 360 703.95 TOTAL ROAD 1 5 423 127 110.00 6 520 477.90

ROAD 2: MAROUA-BOGO-POUSS

Unit Cost in Total Cost in Total Cost in Item Quantity CFAF CFAF UA Rehabilitation and equipping of 8 75 000 000.00 600 000 000.00 schools/high schools 721 407.90 Rehabilitation of basin 12 000 000.00 600 000 000.00 access roads 50 721 407.90 Rehabilitation and equipping of health 150 000 000.00 structures 2 75 000 000.00 180 351.97 Support to the marketing of fishery 1 175 000 000,00 175 000 000,00 products 211 736,49 Construction of markets 3 137 312 711,00 411 938 133,00 495 292,37 Construction of fitted 10 8 500 000,00 85 000 000,00 boreholes 102 199,45 Construction of mini 2 30 000 000,00 60 000 000,00 DWS systems 72 140,79 Rehabilitation of the 1 250 000 000,00 250 000 000,00 Bogo cattle market 302 480,70 Establishment of 3 100 000 000,00 300 000 000,00 multipurpose platforms 360 703,95 Construction and equipping of Family and Women’s 2 150 000 000,00 300 000 000,00 Promotion Centres (CPFF) 362 976,85 Construction and equipping of Youth 2 150 000 000.00 300 000 000.00 Promotion Centres 360 703.95 TOTAL ROAD 2 3 131 938 133.00 3 765 674.85

ROAD 3: GD ZAMBI- KRIBI

Unit Cost Total Cost in CFAF Total Cost in Item Quantity In CFAF UA Construction of fitted boreholes 10 9 000 000 90 000 000 108 211.18 Support to Women’s Groups 1 75 000 000 75 000 000 90 175.99 240 469.30 Establishment of multipurpose platforms 2 100 000 000 200 000 000 Construction of markets 1 137 312 711 137 312.711 165 097.46

Construction and equipping of Family 1 150 000 000,00 150 000 000,00 and Women’s Promotion Centres (CPFF) 181 488,42 180 351.97 Construction and equipping of Youth 1 150 000 000 150 000 000 Multipurpose Centres 852 312 711 1 024 775.20 TOTAL ROAD 3

Component 3: Studies and Institutional Support (UA 4.9 million)

Component 3.1: Study on the Reform of the Cameroon Road Sector (UA 1.512 million)

This study will include two components:

- Sector governance improvement; and

- Support to establishment of a one-stop shop for compensations during the implementation of infrastructure projects.

The examination of MINTP’s situation shows that the institutional framework is advancing with difficulty, particularly as concerns planning and design tasks. The results thus achieved must be strengthened and continued. Hence, PAST 2 will provide support to MINTP to improve its operational and management methods, and strengthen its road project design, programming and planning capacity to ensure effectiveness and efficiency.

Training will be conducted by training institutes selected by direct negotiation, according to their specialties and periodic training programmes and/or on the basis of a short list. An overall training and capacity building plan will also be established from project implementation, and submitted to the Bank for non-objection before implementation. This plan will include themes, training centres, costs, the number of persons concerned, and the method of selection of these centres, etc. This assistance is expected to lay the foundations for a consistent strategy in the sector.

Furthermore, this study will also pave the way for the establishment of a one-stop shop for compensations.

The problem of clearance of rights-of-way is quite often complex because it requires the involvement of the population and public network operators. For this reason, expropriations or evictions are necessary for clearance of road rights-of-way and project implementation.

VII

Clearance of rights-of-way is “a condition precedent to effective commencement of works”. Quite often, clearance of road rights-of-way accounts for slippages in work execution deadlines and, at times, disputes with roadworks contractors. Most often, delays in providing financial resources to clear the compensation and/or cover the costs of displacing operators’ networks, account for this situation.

To address these delays in clearance of rights-of-way, PAST 2 has provided for support for the establishment of a single window to expedite the related procedures.

The implementation of this major structuring study should help to: (i) strengthen sector governance of the institutional framework, especially by improving the regulatory framework; (ii) strengthen the Planning – Programming – Budgeting – Monitoring/Evaluation chain; (iii) develop standardization and quality; (iv) strengthen sector management and performance through its reorganization and capacity development; and (v) develop human resources.

Component 3.2: Study for the establishment of a sustainable road assets management and financing system in Cameroon (UA 0.786 million)

Generally, technical assistance seeks to establish a sustainable mechanism and a consistent framework to ensure road investment sustainability in the country. This will involve defining the practical terms for transforming the Road Fund into a second generation fund through support for the implementation of appropriate structural reforms. This will further require the creation of a framework for exchanges between the Road Fund and stakeholders (authorizing officers, MINMAP, MINFI, BET, contractors, banks) on programme preparation and implementation, so as to encourage resource consumption. Specifically, there is need to:  Review the intervention institutional framework;  Coordinate interventions for purposes of effectiveness and efficiency;  Share data and information on project preparation, implementation and closing, in real time, including digitized archives;  Review the maintenance financing mechanism;  Evaluate the existing tolling systems  Build stakeholder capacity, etc. Furthermore, it will also involve setting up road maintenance by service level mechanisms (GENiS) at MINTP and providing dedicated training.

Despite the institutional reforms and progress made in road maintenance, problems of infrastructure sustainability remain one of MINTP’s concerns, due to delays in the execution of maintenance works. In view of this, PAST 2 will help the Government to innovate and experiment with the concept of road maintenance contract management by service level (GENiS), once the Yaoundé-Bafoussam-Bamenda road is rehabilitated. The aim is to ensure that the road is convenient for traffic in economic and safety terms. This is also to ensure that the lifespan calculated for the road is guaranteed, thanks to proper maintenance.

This component also includes provision to train MINTP officials in the following areas: establishment of a roads databank (BDR), road maintenance works management and design, works planning and programming system, site monitoring methods and service level indicator evaluation, as well as IT and office equipment associated with the development of the GENiS concept. VIII

The implementation of this study should contribute to: (i) improve the sustainability of the framework through infrastructure maintenance by the public sector and the private sector, if necessary; (ii) the rehabilitation of the existing infrastructural asset; and (iii) development of the national infrastructure backbone through the implementation of new major development projects and programmes that could combine financing and public-private partnerships.

Component 3.3: Study of the Priority Structuring Urban Roads (Yaoundé, Douala, Bafoussam, Maroua, Bamenda) (UA 3.629 million)

This study aims to: (i) improve traffic flow to avoid crossing Bafoussam city, which gives direct access to the Bamenda-Enugu corridor; (ii) decongest urban traffic suitable for the volume of traffic drawn and the rapid growth of heavy goods vehicles from neighbouring countries; and (iii) help to reduce accident risks. The envisaged study will make it possible to prepare a Preliminary Design, a Detailed Design as well as bidding documents.

Component 3.6: Detailed technical studies for the expansion of the Yaoundé City North and Bafoussam City North-South urban motorways

The technical studies seek to: (i) improve traffic flow to avoid the crossing of urban centres, especially by heavy goods vehicles, responsible for the accelerated degradation of pavement structures and increased accident risks; (ii) decongest urban traffic suitable for the volume of traffic drawn and the rapid growth of heavy goods vehicles; and (iii) help to reduce accident risks. The envisaged study will make it possible to prepare a Preliminary Design, a Detailed Design as well as bidding documents.

All these studies will contribute to the maturation of projects that may, in future, be subject to AfDB financing.

APPENDIX III

JUSTIFICATION OF THE LEVEL OF COUNTERPART CONTRIBUTION TO AfDB PROGRAMME FINANCING

1. The project will be financed by the Bank Group, through an AfDB loan of UA 214.408 million (EUR 270.155 million) and an ADF loan of UA 12.82 million, i.e. 62.78% of the total project cost. The national counterpart contribution is estimated at UA 74.213 million, accounting for 20.51% of the total project cost. These counterpart funds represent the current level that the country can release.

2. The level of the Government’s counterpart contribution to AfDB financing is less than 50% of the total project cost, as required by the Eligible Expenditure Policy (paragraph 4.2.2). Thus, in accordance with the provisions of Section 4.2.2 of this Policy on Eligible Expenditure for Bank Group Financing (Revised version of 19 March 2008), the level of the counterpart contribution for the AfDB Window was determined based on:

The country’s commitment to implement its overall development programme;

Financing allocated by the country to the sector targeted by Bank assistance;

The country’s budget situation and debt level;

The upper limit on cost sharing and guidelines specified in the country financing parameters.

The Country’s Commitment to Implement its Overall Development Programme

3. Drawing lessons from the implementation of its poverty reduction strategy, after the attainment of the HIPCI completion point in 2006, the Government in 2010 formulated a Development Vision up to 2035. This long-term vision seeks to make Cameroon an emerging, democratic and united country in its diversity. Specifically, Vision 2035 is the reference framework for: (i) substantially reducing the poverty threshold; (ii) reaching middle-income country status; (iii) becoming a newly industrialized country; and (iv) consolidating the democratic process and national unity.

4. These specific objectives inspired the thrusts of the Growth and Employment Strategy Paper (GESP) for the period 2010-2020, covering the first 10 years of Vision 2035. The major challenges of GESP implementation are centred on growth acceleration, formal job creation and poverty reduction. Consequently, there are plans to: (i) step up annual growth on average to 5.5% during the period 2010-20; (ii) scale down under-employment from 75.8% to below 50% in 2020; and (iii) reduce the poverty rate from 39.9% in 2007 to 28.7% in 2020.

5. To achieve these objectives, the Government opted to implement a three-pronged coherent and integrated strategy, with the support of technical and financial partners (TFP), including the Bank. The strategy comprises: (a) a growth strategy; (b) a governance and State strategic management improvement strategy; and (c) an employment strategy.

6. The presentation of this operation to the Boards comes in a particular context marked by Cameroon’s graduation to the ADB window as a “Blend Country”. In view of its recent macroeconomic performance, Cameroon moved in 2014 to the non-concessional windows of the World Bank and the AfDB Group, respectively. This double graduation marks the confidence of multilateral institutions and enables the country to benefit from the resources of the AfDB Group’s concessional and non-concessional windows. It should help the country X

finance its development, particularly its ambitious infrastructure programme, at less cost. The country’s new ambition is to graduate from the status of “Blend Country” to that of “ADB Country”.

Financing Allocated by the Country to the Sector Targeted by Bank Assistance 11. Since 1972 when it started operations in Cameroon, the Bank has taken part in the financing of 27 operations in the transport sector (including multinational projects) for a total UA 908.970 million, accounting for 27.27% of all Bank operations in the country. With this new operation, the Bank will consolidate the achievements of previous projects, with a view to achieving the objectives set in the country’s infrastructure development strategy.

7. Since 2005, the share of the Government in the financing of road projects has risen steadily. In this respect, it should be noted that in 2012, Cameroon contributed up to 27.27% to the financing of the Kumba-Mamfé road, approved by the ADF Boards in November 2012, and up to UA 35.517 million in funding the Transport Sector Support Programme Phase 1 or 11.27%. In other areas such as agriculture and the public utilities sector, the Government’s contribution is about 30%. 8. In light of the foregoing, and at Government’s request, it is proposed that the AfDB Window limit the counterpart contribution to 21.62% of the total project cost, net of taxes, to finance part of the works, all the expropriation costs and the operating costs of the executing agency as well as tax expenditure associated with this programme and resulting from exemptions from customs duties and other taxes. The Country’s Budget Situation and Debt Level 9. The budget policy over the last three years has been moderately expansionary, due to the cost of investments in major structuring energy and transport projects, in response to the strong demand for goods and services, in a context of economic recovery and the infrastructure gap accumulated for more than two decades. The increase in expenditure is financed mainly by external loans and oil revenue. Table 1 Cameroon’s Macroeconomic Indicators

2010 2011 2012 2013 2014

Real GDP growth 3.3% 4.1% 4.6% 5.5% 5.3%

Inflation 1.3% 2.9% 2.4% 2.1% 2.2%

Overall cash-based budget balance as % of GDP -1.1% -3.6% -1.9% -4.1% -5.2%

Current account balance as % of GDP -3.4% -2.8% -3.3% -3.8% -4.2%

Sources: AfDB Statistics Department, AEO 2015. 10. This expansionary budget policy, which remains sustainable, resulted in a budget deficit (cash basis) of about 5.2% of GDP in 2014, against 4.1% and 1.9% in 2013 and 2012, respectively. The 2013 and 2014 financial years were marked by a major reform, namely the XI

implementation of the programme budget, in accordance with CEMAC Directive No. 01/11- UEAC-190-CM-221. 11. Debt ratios are below community thresholds. Since the cancellation of its debt under the HIPC Initiative in 2006, the risk of debt distress has remained moderate, but requires more prudent management in view of the structural drop in oil exports, which could burden the country’s debt ratios if the trend continues. In 2014, Cameroon’s public debt on nominal GDP ratio stood at 26.6% (one of the lowest in the CEMAC region), for a community debt ratio threshold fixed at 70% of GDP. On the basis of this CEMAC community debt threshold and taking financing needs into account, especially in structuring infrastructure, and debt sustainability in view of its economic performance, authorities set themselves a debt objective over the period 2013-2017, which was not to exceed 35% of GDP (corresponding to 50% of the CEMAC threshold fixed at 70% of nominal GDP). In view of committed and undisbursed debt balances (SEND), which stood at CFAF 2 800 billion in 2015, the debt level has increased and could reach 35% in 2015. Prudent debt management will be necessary to avoid a high debt risk, in view of the preliminary debt sustainability analyses made by the IMF and the World Bank in September. 12. If it is true that efforts made by the country have started yielding positive results, the fact remains that the situation is still fragile and that donor assistance remains a necessity for the country. It will enable the Government to honour its budget commitments. In addition, although non-concessional, this assistance is less costly than that offered by the market and contributes to better debt management. The Upper Limit on Cost Sharing and Guidelines Specified in Country Financing Parameters

13. Country financing parameters (CFP) concerning cost sharing highlight the country’s commitment and ownership as concerns Bank-financed activities under the project. These parameters also offer flexibility in determining the counterpart contribution percentage. The Bank examined the level of commitment and ownership based on criteria, including: (i) the contribution of project activities to the achievement of the country’s development objectives set out in the Growth and Employment Strategy Paper (GESP) covering the period 2010- 2020; (ii) alignment on and linkage with the strategic pillars of the Bank’s Country Strategy Paper (CSP) for Cameroon approved in July 2015, for the period 2015-2020, as well as the project’s inclusion in the State budget financed by the Bank and other technical and financial partners. CFPs specify that the percentage of total costs financed by the Bank will be assessed case by case, based on the context and project-specific considerations, evidence of Government commitment and ownership in project implementation, the level of co-financing with other TFPs and the country’s budget situation. It should be noted that the parameters are aligned on World Bank CFPs in Cameroon prepared in 2005, when the country was only eligible for concessional resources. These CFPs indicated that World Bank financing could reach 100% of the total project cost (all taxes included), despite the fact that co-financing could be obtained for certain projects, especially in the transport sector. These parameters have not changed, despite Cameroon’s graduation to the status of IBRD/IDA “Blend Country” with the World Bank in April 2014, and ADB/ADF “Blend Country” with the Bank, in July 2014.

14. In conclusion, based on the foregoing and at the request of the Government, it is proposed that the national counterpart contribution be fixed at 20.51% of the total project cost, net of taxes. This level of counterpart contribution also takes into account the importance of co-financing mobilized by the Bank from other TFPs. Thus, Government’s

1 This directive relating to finance laws institutes the passage from a resource budget to a programme budget XII

contribution (UA 74.213 million) to the project will help to finance part of the works, all expropriation costs and the executing agency’s operating costs as well as fiscal expenditure associated with this project resulting from exemptions from customs duties and other taxes.

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APPENDIX IV

COMPARATIVE SOCIO-ECONOMIC INDICATORS

Cameroon COMPARATIVE SOCIO-ECONOMIC INDICATORS

Develo- Develo- Year Cameroon Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2016 475 30 067 94 638 36 907 Total Population (millions) 2016 23,9 1 214,4 3 010,9 1 407,8 2500 Urban Population (% of Total) 2016 55,1 40,1 41,6 80,6 2000

Population Density (per Km²) 2016 50,6 41,3 67,7 25,6 1500 GNI per Capita (US $) 2014 1 360 2 045 4 226 38 317 1000 Labor Force Participation *- Total (%) 2016 76,1 65,6 63,9 60,3 Labor Force Participation **- Female (%) 2016 71,1 55,6 49,9 52,1 500

Gender -Related Dev elopment Index Value 0

2009 2013 2005 2008 2010 2011 2012 2014 2007-2013 0,872 0,801 0,506 0,792 2000 Human Dev elop. Index (Rank among 187 countries) 2014 122 ...... Popul. Liv ing Below $ 1.90 a Day (% of Population) 2008-2013 29,3 42,7 14,9 ...

Cameroon Africa Demographic Indicators Population Grow th Rate - Total (%) 2016 2,5 2,5 1,9 0,4 Population Grow th Rate - Urban (%) 2016 3,5 3,6 2,9 0,8 Population < 15 y ears (%) 2016 42,3 40,9 28,0 17,2 Population Growth Rate (%) Population >= 65 y ears (%) 2016 3,2 3,5 6,6 16,6 3,0 Dependency Ratio (%) 2016 83,6 79,9 52,9 51,2 2,5 Sex Ratio (per 100 female) 2016 100,0 100,2 103,0 97,6 Female Population 15-49 y ears (% of total population) 2016 24,0 24,0 25,7 22,8 2,0 Life Ex pectancy at Birth - Total (y ears) 2016 56,4 61,5 66,2 79,4 1,5 Life Ex pectancy at Birth - Female (y ears) 2016 57,6 63,0 68,0 82,4 1,0 Crude Birth Rate (per 1,000) 2016 35,7 34,4 27,0 11,6 0,5

Crude Death Rate (per 1,000) 2016 10,9 9,1 7,9 9,1 0,0

2000 2010 2012 2015 2009 2011 2013 2014 Infant Mortality Rate (per 1,000) 2015 57,1 52,2 35,2 5,8 2005 Child Mortality Rate (per 1,000) 2015 87,9 75,5 47,3 6,8 Total Fertility Rate (per w oman) 2016 4,6 4,5 3,5 1,8 Cameroon Africa Maternal Mortality Rate (per 100,000) 2015 596,0 495,0 238,0 10,0 Women Using Contraception (%) 2016 30,0 31,0 ......

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2004-2013 7,7 47,9 123,8 292,3 Life Expectancy at Birth Nurses and midw iv es (per 100,000 people) 2004-2013 43,8 135,4 220,0 859,8 (years) Births attended by Trained Health Personnel (%) 2010-2015 64,7 53,2 68,5 ... 80 Access to Safe Water (% of Population) 2015 75,6 71,6 89,3 99,5 70 60 Healthy life ex pectancy at birth (y ears) 2013 50,3 54,0 57 68,0 50 Access to Sanitation (% of Population) 40 2015 45,8 39,4 61,2 99,4 30 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2014 4,8 3,8 ...... 20 Incidence of Tuberculosis (per 100,000) 10

2014 220,0 245,9 160,0 21,0 0

2010 2014 2005 2009 2011 2012 2013 2015 Child Immunization Against Tuberculosis (%) 2014 99,0 84,1 90,0 ... 2000 Child Immunization Against Measles (%) 2014 80,0 76,0 83,5 93,7

Underw eight Children (% of children under 5 y ears) 2010-2014 15,1 18,1 16,2 1,1 Cameroon Africa Daily Calorie Supply per Capita 2011 2 586 2 621 2 335 3 503 Public Ex penditure on Health (as % of GDP) 2013 0,9 2,6 3,0 7,7

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2010-2015 113,6 100,5 104,7 102,4 Primary School - Female 2010-2015 106,9 97,1 102,9 102,2 Infant Mortality Rate Secondary School - Total 2010-2015 56,4 50,9 57,8 105,3 ( Per 1000 ) Secondary School - Female 2010-2015 51,9 48,5 55,7 105,3 100 90 Primary School Female Teaching Staff (% of Total) 2010-2015 52,7 47,6 50,6 82,2 80 Adult literacy Rate - Total (%) 2010-2015 75,0 66,8 70,5 98,6 70 60 Adult literacy Rate - Male (%) 2010-2015 81,2 74,3 77,3 98,9 50 Adult literacy Rate - Female (%) 2010-2015 68,9 59,4 64,0 98,4 40 30 Percentage of GDP Spent on Education 2010-2014 3,0 5,0 4,2 4,8 20 10

2000 2005 2011 2015 2010 2012 2013 2014 Environmental Indicators 2009 Land Use (Arable Land as % of Total Land Area) 2013 13,1 8,6 11,9 9,4 Agricultural Land (as % of land area) 2013 20,6 43,2 43,4 30,0 Forest (As % of Land Area) 2013 40,7 23,3 28,0 34,5 Cameroon Africa Per Capita CO2 Emissions (metric tons) 2012 0,3 1,1 3,0 11,6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : August 2016 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 V CAMEROON’S PORTFOLIO SITUATION AS AT 31 OCTOBER 2016

st Bank financing (in UA million) PROJECTS Approval Signature Effectiveness Disbursement Date of 1 Closing SECTORS Date Date satisfaction disbursement AfDB ADF loan/ Grants Disb. rate loan NTF Land Registry Project (PAMOCCA 1). 15.11.2010 05.01.2011 17.05.2011 10.02.2012 21.03.2012 30.12.2017 7,00 34,6% Gouvernance Land Registry Project (PAMOCCA 2). 17.12.2013 08.06.2014 29.10.2014 29.10.2014 24.04.2015 30.03.2018 5,00 7,7% Total Gouvernance 12 21,15% Kumba-Mamfé Road Project 21.11.2012 09.02.2013 16.09.2013 07.11.2013 27.01.2014 31.12.2017 47,26 28,57% Road Programme 1: Batchenga-Léna 26.11.2014 28.03.2015 09.02.2016 12.04.2016 31.12.2019 122,25 12,45 0,10% Transport Transport Facilitation Bamenda-Enugu Corridor 25.11.2008 13.05.2009 04.11.2009 01.12.2009 24.12.2009 31.06.2017 90,39 54,6% Transport Facilitation Brazzaville -Yaoundé Corridor (Ketta –Djoum 1) 25.09.2009 11.01.2010 29.03.2010 13.02.2012 24.04.2012 30.12.2016 59,27 79,53% Brazzaville – Yaoundé Corridor (Ketta – Djoum 2) 21.10.2015 05.04.2016 05.08.2016 06.09.2016 31.12.2020 49,24 0,21% Total Transport 151,85 209,37 32,60% Info-Com Tech Central African Backbone 09.07.2015 29.10.2015 14.01.2016 14.01.2016 24.05.2016 31.12.2019 29,60 1,23 0,7% Total ICT 29,6 1,23 0,70% Yaoundé Sanitation Project (PADY 2) 19.06.2013 11.09.2013 17.03.2014 01.10.2014 13.11.2014 31.12.2018 20,99 2,88 11,2% Water and sanitation Semi-Urban DWSS Project 28.01.2009 13.05.2009 02.11.2009 28.05.2010 14.10.2010 31.12.2016 33,77 54,4% Rural DWSS Project 12.05.2010 29.06.2010 14.04.2011 02.05.2011 21.09.2011 31.12.2016 10,00 4,24 77,9% Total Water and Sanitation 43,77 7,12 47,83% 43,77 Reinforcement of Power Transmission and Distribution Networks (PREREDT). 15.09.2010 15.10.2010 20.04.2011 22.01.2013 25.02.2013 30.12.2017 31,64 11,4% Energy Lom Pangar Hydro-power Development 10.11.2011 18.01.2012 14.06.2012 14.12.2012 25.07.2013 31.12.2017 44,93 3,2% Chad-Cameroon Interconnection 07.10.2013 29.01.2014 03.09.2014 23.10.2014 15.12.2014 31.12.2016 1,25 41,3% Total Energy 77,82 18,63% Agriculture Support to Rural Infrastructure - Grassfield 2 23.10.2013 16.12.2013 10.04.2014 15.09.2014 07.10.2014 31.12.2019 13,61 3,19 13,3% Total Agriculture 13,61 3,19 13,30% Cameron Shipyard and Industrial Engineering Company (CNIC) 12.12.2002 02.06.2003 29.04.2005 29.04.2005 13.05.2005 31.12.2016 32,53 67,9% AES-SONEL Investment Programme 10.05.2006 08.12.2006 13.02.2007 15.02.2007 20.02.2007 31.12.2020 47,61 100% Private sector Dibamba Thermal Power Plant 28.04.2010 11.05.2011 11.05.2011 15.07.2011 22.07.2011 01.06.2023 17,67 100% Kribi Thermal Power Plant 15.07.2011 22.12.2011 22.12.2011 27.08.2012 13.09.2012 15.11.2025 22,68 100 % Total Private Sector 120,49 91,98% Regional Protection of Central African Elephants 22/07/2013 16.12.2013 11.11.2014 16.01.2015 30.04.2015 31.12.2017 0,25 33,7% Environment Lake Chad Basin Rehabilitation (PRESIBALT) 17/12/2014 02/07/2015 11.11.2015 15.03.2016 25.07.2016 30.09.2019 12,5 1,03% Total Environment 12,75 17,37%

ALL PORTFOLIO OPERATIONS : UA 723,4 million 321,59 390,31 11,54 30,44%

APPENDIX VI

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

Donors Projects Amount Observations (CFAF million) Development of the Numba-Bachuo Akagbe 42 080 Works completed in December 2013 road (50 km) Development of the Garoua Boulaï- 42 556 99% of works executed Ngaoundere road, Lot 2: Nandeke-Mbere (82 km) Bamenda-Mamfé-Ekok-Enugu Corridor 87 726 70% of works executed ADF (about 153 km, including 63 of rehabilitation and 90 of new construction) Brazzaville-Yaoundé Corridor, Ketta-Djoum 50 135 65% of works executed section Study of the Batchenga-Yoko-Ngaoundere 2 768 95% of study conducted road Transport Facilitation Programme 179 600 80% of works executed IDA Development of the Garoua Boulaï- EDF Ngaoundere road, Lot 1: Garoua Boulaï- 60 000 85% of works executed Nandéké (86 km) Construction of the Ayos-Bonis road (Lot 1: BADEA – FKDEA Ayos-Abong Mbang 88 km) 16 000 Works completed in 2012

IDB – BADEA Sangbeliman-Djoum 38 000 15% of works executed

Construction of the Ayos-Bonis road (Lot 2: IDB – Saudi Fund - OPEC Fund Abong-Mbang-Bonis (103 km) 22 000 Works completed in 2012

Construction of the Yaoundé-Olama Bridge BADEA - FKDE – OPEC Fund road (80 km) 23 000 80% of works executed

XVI

APPENDIX VII MAP OF THE PROJECT AREA REHABILITATION OF THE YAOUNDÉ-BAFOUSSAM-BABADJOU ROAD

PAVING

XVII

OF THE OLAMA-KRIBI ROAD

XVIII

DEVELOPMENT OF THE MAROUA-BOGO-GUIRVIDIG-MAGA-POUSS ROAD

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

XIX