African Development Bank Group

PROJECT: MULTINATIONAL: RUMONGE – GITAZA (45 KM) AND KABINGO-KASULU-MANYOVU (260 KM) ROAD UPGRADING PROJECT

COUNTRIES: BURUNDI, TANZANIA ------PROJECT APPRAISAL REPORT

November 2018 RDGE/PICU/RDRI/COBI/COTZ

TABLE OF CONTENTS

I. STRATEGIC THRUST AND JUSTIFICATIONS ...... 1 1.1 PROJECT LINKAGES WITH NATIONAL AND REGIONAL STRATEGIES...... 1 1.2 RATIONALE FOR BANK INVOLVEMENT ...... 1 1.3 AID COORDINATION ...... 2 II. PROJECT DESCRIPTION...... 2 2.1 PROJECT OBJECTIVES...... 2 2.2 PROJECT COMPONENTS ...... 2 2.3 TECHNICAL SOLUTIONS ADOPTED AND ALTERNATIVES CONSIDERED ...... 3 2.4 PROJECT TYPE ...... 3 2.5 PROJECT COST AND FINANCING MECHANISMS ...... 3 2.6 PROJECT AREA AND BENEFICIARIES ...... 5 2.7 PARTICIPATORY APPROACH TO PROJECT IDENTIFICATION, DESIGN AND IMPLEMENTATION...... 6 2.8 BANK GROUP EXPERIENCE AND LESSONS REFLECTED IN PROJECT DESIGN ...... 6 2.9 KEY PERFORMANCE INDICATORS ...... 7 III. PROJECT FEASIBILITY ...... 7 3.1 ECONOMIC AND FINANCIAL PERFORMANCE ...... 7 3.2 ENVIRONNEMENTAL AND SOCIAL IMPACT ...... 8 3.3 REGIONAL INTEGRATION ...... 10 3.4 ROAD SAFETY...... 11 IV. IMPLEMENTATION ...... 11 4.1 IMPLEMENTATION ARRANGEMENTS ...... 11 4.2 MONITORING ...... 14 4.3 GOVERNANCE ...... 15 4.4 SUSTAINABILITY ...... 15 4.5 RISK MANAGEMENT...... 16 4.6 KNOWLEDGE BUILDING ...... 16 V. LEGAL FRAMEWORK ...... 17 5.1 LEGAL INSTRUMENT ...... 17 5.2 CONDITIONS ASSOCIATED WITH THE BANK’S INTERVENTION ...... 17 5.3 COMPLIANCE WITH BANK POLICIES ...... 18 VI. CONCLUSIONS AND RECOMMENDATIONS ...... 18 6.1 CONCLUSIONS...... 18 6.2 RECOMMENDATIONS ...... 19 VII. APPENDIX I. COMPARATIVE SOCIO-ECONOMIC INDICATORS OF THE TWO COUNTRIES ...... 20 VIII. APPENDIX II. TABLE OF BANK GROUP OPERATIONS IN THE TWO COUNTRIES ...... 22 IX. APPENDIX III. PROJECT COSTS ...... 23 X. APPENDIX IV. TAKING INTO ACCOUNT RISKS RELATED TO FRAGILITY FACTORS IN THE PROJECT ...... 25 XI. APPENDIX V. JUSTIFICATION OF THE GOVERNMENT COUNTERPART LEVEL FOR BURUNDI ...... 29 XII. APPENDIX VI. JUSTIFICATION OF THE GOVERNMENT COUNTERPART LEVEL FOR TANZANIA ...... 31 XIII. APPENDIX VII. ADB FINANCING CONDITIONS FOR TANZANIA ...... 34 XIV. APPENDIX VIII. REGIONAL INTEGRATION ...... 35 XV. APPENDIX IX. MAP OF THE PROJECT AREA ...... 38

Currency Equivalents August 2018

UA 1 = TZS 3195.19 UA 1 = BIF 2515.18 UA 1 = USD 1.4 UA 1 = EUR 1.19706

Fiscal Year: Burundi: 1 July-30 June Tanzania: 1 July-30 June

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

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Acronyms and Abbreviations

ADB African Development Bank ADF African Development Fund BTC Belgium Technical Cooperation CSP Country Strategy Paper CCTTFA Central Corridor Transit and Transport Facilitation Agency DPG-T Development Partners Group – Transport EAC East African Community EIRR Economic Internal Rate of Return ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan EU The European Union GDP Gross Domestic Product GOB Government of Burundi GOT Government of the United Republic of Tanzania HDM-4 Highway Development and Management Model HIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome ICT Information and Communication Technology ISESB Institute of Statistics and Economic Studies in Burundi JICA Japan International Cooperation Agency OdR Office de Route (Burundi’s Roads Authority) OSBP One Stop Border Post PAR Project Appraisal Report PCR Project Completion Report PMT Project Management Team PIA Project Impact Area RAP Resettlement Action Plan RBLF Results Based Logical Framework PBA Performance Based Allocation SC Steering Committee TANROADS Tanzania National Roads Agency TSIP Transport Sector Investment Plan UA Units of Account USD United States Dollar VOC Vehicle Operating Cost WB World Bank

Project Information Sheet Client Information

BORROWERS & RECIPIENTS: Republic of Burundi and United Republic of Tanzania PROJECT TITLE: Multinational: Rumonge-Gitaza (Burundi)/Kabingo-Kasulu- Manyovu (Tanzania) Road Upgrading Project. PROJECT AREA: Rumonge Province and Kigoma region EXECUTING AGENCIES: The Office des Routes (OdR) and the Tanzania National Roads Agency (TANROADS). Financing Plan Source Amount (UA) Instrument AfDB ADB Tanzania1 93 000 000 Loan (USD 130,200,000) ADF XIV (PBA) Tanzania 45 000 000 Loan ADF XIV (ROE) Tanzania 45 000 000 Loan ADF XIV (PBA) Burundi 18 900 000 Grant (UA 17.15 million PBA available in 2018) and (UA 1.75 million frontloaded from the 2019 indicative PBA) ADF XIV (ROE) Burundi 28 350 000 Grant Counterpart contributions Government of Tanzania 18 300 000 Counterpart funds Government of Burundi 960 000 Counterpart funds EAC Secretariat 210 000 Counterpart funds CCTTFA 210 000 Counterpart funds TOTAL COST 249 930 000 Key ADF Financial Information

Loan/Grant currency Unit of Account (UA) Interest* type Not Applicable Interest rate margin* Not Applicable Commitment fee on the ADF loan* 0.5% per year of the undisbursed loan amount, 120 days following signature of the Loan Agreement Service charge on the ADF loan 0.75% per year of the disbursed but unreimbursed amount. Other charges* Not applicable Maturity 40 years for Tanzania Grace period 5 years for Tanzania NPV (baseline scenario) USD 524.93Million ERR (baseline scenario) 30.6% Timeframe – Main Milestones (expected) Concept Note approval July 2018 Project approval November 2018 Loan signature February 2019 Last disbursement 31st December 2024 Completion 31st December 2023 Final repayment ADF: December 2058 ADB: December 2044

1 Key ADB financial information is provided in Appendix VII v

EXECUTIVE SUMMARY General Project Overview 1. The proposed Project concerns the upgrading of Kabingo – Kasulu - Manyovu Road Section (260 km) in Tanzania and Rumonge - Gitaza Road Section (45 km) in Burundi on the Central Corridor. This road section is part of the East African roads network and links the Port of Dar es Salaam to the regional markets in Tanzania, Burundi, Rwanda, Uganda and the Democratic Republic of Congo (DRC). The Corridor is also a priority under the Project for Infrastructure Development in Africa (PIDA). 2. The Project Impact Area (PIA) covers the regions of Kigoma in Tanzania and Rumonge in Burundi with a population of 3.7 million inhabitants which includes the disadvantaged groups (women and children), who constitute the majority of the population (61%)2. The project is expected to facilitate mobility, boost regional trade and open up access to rural areas. More specifically, it will facilitate the movement of goods and persons along the Kabingo – Kasulu – Manyovu – Gitaza - Rumonge road thereby boosting trade between the two Countries and with the EAC region and increasing community access to basic services. 3. The project will be implemented over a 5-year period. The total cost of the project is estimated at UA 249.93 million, of which UA 169.43 million in foreign currency and UA 80.50 million in local currency. Needs Assessment 4. In Burundi and Tanzania, the Gitaza-Rumonge and Kabingo-Kasulu-Manyovu road sections form an integral part of the Central Corridor, which plays an important role in the development and facilitation of national and international trade flows in the sub-region. This corridor is among the priority roads identified under the East African Regional Integration Strategy Paper (RISP 2018-2022) and forms part of the transport strategy of the East African Community (EAC). In addition, the project is consistent with two of the Banks’s High 5s, Integrate Africa and Improve Lives of the African People. 5. The regional nature of the project will enable the road to attract and facilitate higher volumes of traffic currently constrained due to poor conditions of the road in both the Tanzania and the Burundi sections. Given that, Burundi is landlocked and has very high transport costs and longer transit times, the creation of a new corridor will reduce transport costs and boost Burundi’s exports as well as cutting the cost of imports. Lower transport cost inputs should benefit all sectors of the Burundi economy including agriculture, transport associated services, and enhance the growth of Burundi’s economy. Whereas for Tanzania, the road will help local and regional traffic in particular and open up areas of large agricultural potential. Greater economic integration with Burundi is expected to foster regional wide economic expansion and lower transport costs across all corridors. Value-added for the Bank 6. The Bank’s added value stems from its long experience in the financing of road projects in both countries including multinational road projects. The project will provide development stimulus, foster regional integration, enhance tourism and cross-border and international trade. The project has benefited from the Bank’s extensive experience in the

2 EAST AFRICAN COMMUNITY SECRETARIAT, East African Community Facts and Figures (2016) Report vi road sub-sector in both countries in implementing similar projects in an environmentally and socially acceptable manner. The Bank will bring, throughout the project cycle, engineering, environmental, social, regional integration and economic expertise and experience to realize the objectives and benefits of the project. Knowledge Management 7. In addition to the multinational road upgrading works in both countries, the Project has included social infrastructure, which includes construction of markets, health centres, rural roads and community water sources along the project road sections. The knowledge acquired will guide both countries and the Bank on how to increase the development impact of packaging road improvement with social infrastructure facilities. In addition, the introduction of Transport Observatories to monitor cross-border crossing for freight will assist the countries and the EAC region with knowledge on how to improve mobility at borders. Roll out of the Corridor Observatory is an extension of the existing observatory managed by CCTTFA on the Central Corridor. It will generate information to track corridor performance on a range of issues such as transit time and delays, freight volumes, transport rates and costs and make recommendations on policy reforms to improve corridor efficiency.

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MULTINATIONAL: RUMONGE-GITAZA (45 KM) AND KABINGO-KASULU-MANYOVU (260KM) ROAD UPGRADING PROJECT RESULTS-BASED LOGICAL FRAMEWORK Country and project name: Burundi/Tanzania: Multinational: Rumonge-Gitaza (45 km) /Kabingo - Kasulu-Manyovu (260 km) Road Upgrading Project Purpose of the project: Facilitate the movement of goods and persons and improve the living conditions of Project Impact Area communities RESULTS CHAIN PERFORMANCE INDICATORS MEANS OF RISKS/MITIGATION MEASURES Indicator Baseline Target VERIFICATION Improved economic and social Source: welfare of persons in the zone TBD 20% increase in Tanzania National

of influence of the corridor household income by Bureau of Statistics Average household income 2023 in the Project zone Institute of Statistics and of influence (30% Economic Studies in

IMPACT female) Burundi Outcome 1: Transportation Risk: Failure to sustain the road networks. costs on the Road Corridor Average vehicle operating costs USD 0.52 per veh-km Burundi/Tanzania: 0.34 CCTTFA Annual Mitigation: The two countries have established stable Road reduced (VOC) (2018) USD /km (2023) performance monitoring Funds. reports Outcome 2: Strengthen Annual volume of exports Central Corridor Transit regional integration and trade through Central corridor (metric 12,192 (Burundi) 20,000 (Burundi) Transport Facilitation in EAC Region, particularly tons) 1,103,445 2,000,000 (Tanzania) Agency (CCTTFA) Annual performance between Tanzania & (Tanzania) Burundi. monitoring reports

Outcome 3: Reduction in Average transit times Transit 4.3 days (2018) 2.5 days (2023) CCTTFA Annual Risk: Increased traffic volumes may result in delays at the Border. transit and border crossing times (Dar to Bujumbura) performance monitoring Mitigation: Introduction of 24 hour OSBP operating time will be

times reports recommended, up from 8 hours/day current Time taken to cross the border 2 hours 30 minutes TZ and Burundi Revenue (Disaggregated) Authorities Access to social services (%) 30 40 Integrated Household Surveys

OUTCOMES Component 1: Road construction and related facilities civil works Road Construction Civil Works Corridor Section upgraded O (2018) By 2023: Quarterly Progress Risk: late start-up in project implementation resulting from (km)/Rehabilitation (km)? 260 Tanzania Reports, Bank delayed effectiveness of the loans/Procurement delays 45- Burundi supervision mission Mitigation: Make use of advance contracting reports, PCR Risk: Project Costs escalation Component 2: Related Facilities Mitigation: Project costing has allowed physical and price Improved social facilities for Markets rehabilitated (No.) (% of 0 (2018) 4 (2023) Project reports contingencies to cover possible price increases. local communities and traders women’s markets) Risk: Delay in implementing of the RAP resulting in delay in Schools Construction 0 (2018) 3 (2023) Project reports possession of construction sites by the contractors; Health centres (No.) 0(2018) 4 (2023) Project reports Mitigation: Commencing the process with a target of completing Rural/feeder roads rehabilitated O (2018) By 2023: Project reports it before the Project civil works commence. (km) 117 km in Burundi TANROADS & ODR Risk: Fragility in Burundi, which can lead to the delays of the

1 km in Tanzania Reports project implementation. Mitigation: The efforts of the international community to restore inter-Burundian dialogue could help to mitigate these risks. In addition, Burundi’s EAC membership also reduces this risk as the EAC is strongly committed to preserving stability and security in

OUTPUTS viii

its member States. Component 3: Road Safety, Institutional Support and Capacity Building Creation of Regional Excellence n/a Regional Excellence Capacity to train road Centre for Road Safety at NIT in Centre for Road Safety safety professionals and Road Safety Capacity Tanzania created at NIT initiate research works Building Capacity of TANROADS and TBD Enhanced technical Improved technical OdR strengthened capacity capacity of TANROADS & OdR Road Safety audit of the Road Road safety measures Safer project roads Project in the two Countries identified and implemented Component 4: Transport and Trade Facilitation Trade facilitation measures OSBP Not yet constructed OSBP constructed at Bank Supervision implemented Manyovu/Mugina Mission Reports border by 2023 Operationalization of Coordinated Not yet CBM operationalized by Bank Supervision Border Management (CBM) operationalized 2023 Mission Reports CCTTFA Annual Perf. Monitoring Report Border authorities trained in CBM 0 50 Bank Supervision (of whom 30%, women) Mission Reports Transport Logistics Observatory Not yet implemented Operationalized by 2020 CCTTFA Annual Perf. on Corridor section Monitoring Report Informal cross-border traders Operationalization of simplified Not yet done STR implemented by Bank Supervision facilitated trade regime (STR), with trade 2023 Mission Reports information desk (TID) Women traders accessing STR and 0 70 Bank Supervision Informal cross-border traders facilitated TIDs (across Africa, women constitute Mission Reports 70% of informal cross border traders, as reported by AfDB ). COMPONENTS INPUTS

Component 1: Road construction and related civil works facilities -Tanzania (260 km) Tanzania: Costs - millions UA: TANZANIA and Burundi (45 km) Component 1 :145.41 Sources of financing (million UA) Component 2: Related Facilities Component 2 : 7.60 ADF- 90.00 Component 3: Road Safety, Institutional Support and Capacity Building Component 3 : 6.23 ADB- 93.00 Component 4: Transport and Trade Facilitation Component 4 : 8.79 GOT 18.3 Component 5: Project Management Component 5 : 2.37 Total 201.3 Base Cost 170.40 Physical Contingencies 12.78 BURUNDI Price escalation 13.74 Sources of financing (million UA) Project cost 196.92 ADF 47.25 BURUNDI: Costs - million UA: GOB 0.96 Component 1:23.88 Total 48.21

ACTIVITIES Component 2: 6.48 Component 3: 0.26 EAC Component 4: 8.95 Sources of financing (million UA) Component 5: 0.88 EAC Secretariat: 0.21 Base Cost 40.45 Physical Contingencies 4.05 CCTTFA Price escalation 3.11 Sources of financing (million UA) Project cost 47.61 CCTTFA: 0.21

Project Implementation Schedule

REPORT AND RECOMMENDATION OF BANK GROUP MANAGEMENT TO THE BOARD OF DIRECTORS CONCERNING A PROPOSAL TO AWARD LOANS/GRANT TO BURUNDI AND TANZANIA FOR THE MULTINATIONAL: RUMONGE-GITAZA/KABINGO-KASULU- MANYOVU ROAD UPGRADING PROJECT Management hereby submits this report and recommendation concerning a proposal to grant ADB Loan of USD 130,200,000 (UA 93,000,000) to Tanzania, ADF Loan of UA 90,000,000 (USD 126,000,000) to Tanzania and ADF Grant of UA 47,250,000 (USD 66,150,000) to Burundi, to finance the MULTINATIONAL: RUMONGE-GITAZA/KABINGO-KASULU-MANYOVU ROAD UPGRADING PROJECT. I. Strategic Thrust and Justifications 1.1 Project Linkages with National and Regional Strategies 1.1.1. The Road Project responds to the orientations of sectoral transport policies and the National Development Plans of Burundi and Tanzania. It is in line with the priorities expressed in the Transport Sector Policy Papers and in the Development Plan of both countries, which focus on the development of road infrastructure from the point of view of their contribution to opening up rural areas, reducing poverty and economic growth and improving access to social services and regional integration. 1.1.2. In Tanzania, the Second Five Year Development Plan (FYDP II 2016/17-2020/21) sets as a target raising the contribution of the transport sector from 8% of GDP in 2015 to 12% by 2020 to facilitate linking the country to regional and global networks, to reduce the cost of doing business and increase competitiveness, promote growth and enhance regional integration in line with the Tanzania Development Vision 2025. 1.1.3. In Burundi, the proposed intervention is in line with the two pillars of the Country Strategy Paper (CSP), namely: "strengthening governance" and "improving infrastructure" and is consistent with national priorities as indicated in the GPRSF II, highlighting the fundamental role of strengthening state institutions as well as infrastructure investments in order to contribute to economic growth, notably in the agricultural sector, the opening up of rural areas and regional integration. In addition, the project is consistent with the National Development Plan 2018-2027. 1.1.4. The Project has also been identified as a priority in the EA RISP (2018-2022) Indicative Operational Program (IOP). The project will include establishment of a One Stop Border Post at Manyovu/Mugina (Tanzania/Burundi) to complement the physical road infrastructure and reduce trade costs related to cumbersome border procedures. This is one of the 12 border posts in the Region prioritized for conversion into OSBP by the EAC. 1.2 Rationale for Bank Involvement Key Development Issues 1.2.1 The Bank has a comparative advantage in financing regional integration infrastructure in Africa, compared with other financial and technical partners. Thus, it was designated by NEPAD to lead the implementation of its transport infrastructure project. 1.2.2 The Project is consistent with two of the Bank’s High 5s, Integrate Africa and Improve Lives of the African People and is in line with the Bank’s Ten-Year Strategy (2013-2022) especially on basic priorities including infrastructure development and regional integration. In addition, it is important to highlight that the Project is consistent with the Bank Gender Strategy (2014 – 2018) pillar II on women’s economic empowerment by increasing women’s access to services, leveraging infrastructure for gender equality, increasing women farmers’ access to markets and skills training.

1.3 Aid Coordination 1.3.1 In addition to the Bank, there are several other Development Partners supporting the transport sector in both countries. These include the World Bank (WB), the European Union (EU), Japanese International Co-operation Agency (JICA) and Belgium Technical Cooperation (BTC). During the Appraisal Mission, the Bank consulted these Development Partners in both Countries; EU and JICA; and World Bank in Tanzania and solicited possible Co-Financing on the above Project in view of the expected financing from the Bank being insufficient to cover all the proposed road sections. Due to prior engagements most of the Development Partners met by the Bank expressed inability to co-finance the Project. 1.3.2 Overall, a Development Partner Group (DPG) is the coordinating body for bilateral and multilateral development partners in Tanzania. The Development Partner Group for Transport (DPG-T) in which the AfDB is the Lead/Chair, is a sector sub-group of the DPG that provides a platform on which financing and implementation issues regarding the Transport Sector Investment Plan (TSIP) and other policy documents are discussed. There is continuous dialogue between Government and Development Partners (DPs) to ensure that results and outcomes are achieved in line with the targets agreed to. II. Project Description 2.1 Project Objectives 2.1.1 The project sector goals is to strengthen regional integration and trade in EAC Region, particularly between Tanzania & Burundi through improved cross-border transport thereby contributing to poverty reduction and improved living conditions of the people. 2.1.2 Its specific objectives are: (i) the reduction of vehicle operating costs and improvement of road safety; (ii) reduction in logistical costs and; (iii) improvement of access to socio-economic and health infrastructure located along Project roads in the region of Kigoma and province of Rumonge in Tanzania and Burundi respectively. 2.2 Project Components 2.2.1 To achieve the above goals and results, the project will focus on five components summarized in the following Table: Table 2.1 Project Components Nr. Components Est. Cost Description of Components (UA million) 1 Road development 196.15 i) Paving of the Kabingo-Kasulu-Manyovu (260 km) in Tanzania and Rehabilitation of Rumonge- and mitigation of Gitaza (45.00 km) in Burundi, (ii) Road safety audit and sensitization; (iii) Community negative awareness - raising on HIV/AIDS (the contractor shall recruit a sexual abuse specialist), and environmental and environmental protection; (iv) ESMP implementation; and (v) works supervision services social impacts i. Specific measures in favour of women and youth: Fruit processing unit in Ndava and Tree 2 Related nursing unit in Gitaza for reforestation in Burundi; developments and Transport infrastructure (Rural and Urban Roads) : Burundi (117km); women’s 16.41 ii. empowerment iii. Paving streets with stones in Magara centre, Makamba and Rutana (15 km) in Burundi; measures iv. Rehabilitation of Markets at Minago and Magara centre in Burundi; and Makere and Manyovu in Tanzania; v. Construction of a High School at Bitare and Buhigwe in Burundi and Tanzania, respectively, and a Primary School at Busunzu in Tanzania; vi. Construction of a new Bus Stand at Manyovu and Kibondo; vii. Community Water supply and sanitation at Minago (including one fire hydrant) in Burundi; and at Busunzu, Kasulu, Buhigwe and Manyovu (including four fire hydrants) in Tanzania; viii. Health Centres at Makere and Busunzu including 1km of access road, four Ambulances; and a Hospital; in Kasulu and Kibondo Districts; ix. Supervision of related development works and women's empowerment measures; x. Pedestrian Trail Bridges (in Burundi side-8 nos.) xi. Gender sensitization of the two executing agencies, contractors and supervision consultants ; and xii. Apprenticeship/Internship program for young male and female engineers 2

i. Supporting the National Institute of Transport (NIT) in Tanzania towards the creation of a 3 Road safety, 7.50 regional centre of excellent for road safety; Institutional Capacity Building of the Executing Agencies in Burundi (OdR) and Tanzania (TANROADS) support and ii. through training of Staff and basic logistical support Capacity Building i. Construction and equipping of a One Stop Border Post (OSBP) at the Manyovu (TZ) / Mugina 4 Transport and 20.70 (Burundi) Border (USD12m for each country); Trade Facilitation ii. Implementation of a Border Management System at Kobero OSBP; iii. Customization and harmonization of instruments and capacity building for Implementation of Coordinated Border Management line with EAC OSBP Act 2016, OSBP Procedures Manual and Regulations; iv. Rolling out of a Transport Logistics Observatory to enhance monitoring of corridor performance in Burundi; v. Diagnostic Study on Road Safety in Burundi. (i) Socio-economic impact monitoring/evaluation of the Project in the 2 countries; 5 Project 3.77 (ii) Financial and accounting audit of the Project in the 2 countries; (iii) technical audit; (iv) Road Management Safety Audit of the Project in the two Countries; (vi) Support to regional coordination activities (Technical Committee and Steering Committee); Organization of PSC and TC meeting for Coordination of Regional Aspects with co-financing contribution from the EAC Secretariat and Central Corridor Secretariat.

2.3 Technical Solutions Adopted and Alternatives Considered 2.3.1 In Burundi, the development solution proposed involves building an 11-metre-wide platform, comprising a 7-metre-wide road carriageway with two shoulders of 2 m each. The pavement structure will comprise: for reinforcement on existing: (i) a 250mm subbase resulting in recycling the existing base and pavement with additional material when required; (ii) a 200 mm base of Graded Crushed Stone (GCS); (iii) and a surface course of 50mm Asphalt Concrete (AC). For widening: (i) a 350mm subbase of natural gravel; (ii) a 250 mm base of Graded Crushed Stone (GCS); (iii) and a surface course of 50mm Asphalt Concrete (AC). 2.3.2 In Tanzania, the road will comprise of a 7 metre-wide carriageway and two sealed shoulders of 2 m each for the main roads. Typically, structure of the pavement will include: (i) a sub-base course (of C1 and C2), 200mm – 300mm; (ii) a base course, 150 mm of CRR for the four lots; and (iii) a surface course of 50 mm of AC for the four lots. 2.3.3 The alternative technical solutions explored were related with the pavement structure and because of reasons including some being applicable to part of the section of the road and with the consideration of durability and cost the AC surface with crushed aggregate base course was selected. 2.4 Project Type 2.4.1 This is an autonomous regional investment operation. The resources requested from the ADF will be used to finance known social and economic infrastructure. Moreover, the investments for which funds will be disbursed will be specific and clearly defined. Hence, the specific loan is the best instrument for the Bank's intervention in this Project. 2.5 Project Cost and Financing Mechanisms 2.5.1 The estimated total Project cost, net of taxes and customs duties is UA 249.93 million (USD 349.90 Million), of which UA 169.43 million or 67.79 % in foreign currency and UA 80.50 million or 32.21.% in local currency. The cost of the components is UA 48.42 million (USD 67.79 million) or 19.37% of the total cost in Burundi and UA 201.51 million (USD 282.11 million) or 80.63% in Tanzania. This cost is calculated based on final design studies and similar services in 2018. It includes a physical and price contingencies. The summary of costs by component, category and Country is presented in Tables 2.3, 2.4 and 2.5 below. The summary of costs by category and the disbursement schedule by source are presented in Appendix III. The detailed cost by component, expenditure category and expenditure schedule are presented in Technical Annex I. Table 2.3: Cost Estimates by Component

TOTAL PROJECT COST

USD Million UA Million COMPONENTS FE LC Total FE LC Total

A/ Road Construction Civil Works 161,38 75,63 237,01 115,27 54,02 169,29

B/ Related Facilities 14,41 5,30 19,71 10,29 3,79 14,08

C/ Institutional Support and Capacity Building 7,72 1,36 9,08 5,51 0,97 6,49

D/ Transport and Trade Facilitation 17,46 7,39 24,84 12,47 5,28 17,74

E/ Project Management 3,55 1,00 4,55 2,54 0,71 3,25

Base cost 204,52 90,68 295,19 146,08 64,77 210,85

Physical contingencies 16,34 7,21 23,56 11,67 5,15 16,83

Price escalation 16,34 7,25 23,59 11,67 5,18 16,85

Cost excluding VAT 237,20 105,14 342,34 169,43 75,10 244,53

Resettlement compensation 0,00 6,97 6,97 0,00 4,98 4,98

Total Cost Excluding VAT Including Settlement of 237,20 112,11 349,31 169,43 80,08 249,51 Compensation

EAC Counterpart 0,00 0,29 0,29 0,00 0,21 0,21

CCTTFA Counterpart 0,00 0,29 0,29 0,00 0,21 0,21

PROJECT TOTAL COST 237,20 112,70 349,90 169,43 80,50 249,93

Table 2.4: Cost Estimates by Component and Country BURUNDI TANZANIA

USD Million UA Million USD MILLIONS UA Million COMPONENTS FE LC Total FE LC Total FE LC Total FE LC Total A/ Road Construction Civil 23,82 9,61 33,43 17,02 6,86 23,88 137,56 66,02 203,58 98,25 47,16 145,41 Works

B/ Related Facilities 6,46 2,61 9,08 4,62 1,87 6,48 7,95 2,69 10,64 5,68 1,92 7,60

C/ Institutional Support and 0,31 0,05 0,36 0,22 0,04 0,26 7,41 1,31 8,72 5,29 0,93 6,23 Capacity Building D/ Transport and Trade 8,82 3,71 12,53 6,30 2,65 8,95 8,64 3,67 12,31 6,17 2,62 8,79 Facilitation E/ Project Management 0,73 0,50 1,23 0,52 0,36 0,88 2,82 0,50 3,32 2,02 0,36 2,37

Base cost 40,14 16,49 56,63 28,67 11,78 40,45 164,37 74,19 238,56 117,41 52,99 170,40

Physical contingencies 4,01 1,65 5,66 2,87 1,18 4,05 12,33 5,56 17,89 8,81 3,97 12,78

Price escalation 3,09 1,27 4,36 2,21 0,91 3,11 13,25 5,98 19,23 9,47 4,27 13,74

Cost excluding VAT 47,25 19,40 66,65 33,75 13,86 47,61 189,95 85,74 275,69 135,68 61,24 196,92

Resettlement compensation 0,00 0,84 0,84 0,00 0,60 0,60 0,00 6,13 6,13 0,00 4,38 4,38

Total Cost Excluding VAT Including Settlement of 47,25 20,24 67,49 33,75 14,46 48,21 189,95 91,87 281,82 135,68 65,62 201,30 Compensation

EAC Counterpart 0,00 0,15 0,15 0,00 0,11 0,11 0,00 0,15 0,15 0,00 0,11 0,11

CCTTFA Counterpart 0,00 0,15 0,15 0,00 0,11 0,11 0,00 0,15 0,15 0,00 0,11 0,11

PROJECT TOTAL 47,25 20,54 67,79 33,75 14,67 48,42 189,95 92,16 282,11 135,68 65,83 201,51 COST

2.5.2 The Project will be jointly financed by the Bank, the Tanzania Government, Burundi Government, EAC Secretariat and CCTTFA. The Bank will finance 92.13% of the total cost, or UA 230.25 million (USD 322.35 million) through a loan of UA 183.00 million (USD 256.20 million) to Tanzania and a grant of UA 47.25 million (USD 66.15 million) to Burundi. Counterpart funds from Tanzania, Burundi, EAC and CCTTFA respectively represent 7.32% (UA 18.3Million), 0.38% (UA 0.96 million), 0.08% (UA 0.21 million) and 0.08% (UA 0.21 million). The financing plan is presented in Table 2.5 below.

Table 2.5: Sources of Financing [in UA million] Bank Financing Counterpart Funds Country/Organisation Total Cost Amount (UA M) % Amount (UAM) % Burundi 48.21 47.25 18.91% 0.96 0.38% Tanzania 201.3 183 73.22% 18.3 7.32% EAC 0.21 0.21 0.08% CCTTFA 0.21 0.21 0.08% Project Total 249.93 230.25 92.13% 19.68 7.87% 2.5.3 The Bank's contribution, entirely in the form of a Loan for Tanzania and a Grant for Burundi, will come from ADB (40.39%) and ADF (59.61%), Performance Based Allocation (27.75%) and the Regional Envelope (31.86%). It will finance 90.81% of the cost of works and of services. The remaining cost of works will be financed by Tanzania (9.08%). For Burundi, the Bank will finance 100% of the works and services. The EAC and CCTTFA each will finance 0.08% of the total project cost. ADB and ADF sources of financing are presented in Table 2.6 below.

Table 2.6: Sources of Financing [in UA million] Burundi Tanzania Total

SOURCE Total % Total % Total % ADB 93 50.82% 93.0 40.39% ADF XIV - PBA 18.90 40.00% 45.00 24.59% 63.9 27.75% ADF XIV - ROE 28.35 60.00% 45.00 24.59% 73.3 31.86% TOTAL 47.25 183 230.2 100.00% Percentage 100.00% 100.00% 2.6 Project Area and Beneficiaries 2.6.1 The Project area population is 3.7 million inhabitants and especially the disadvantaged groups (women and children), which constitute the greater majority. Boosting the socio-economic development in the region cannot go without emphasizing the role of women and without addressing the challenges that they face.3Furthermore, the demographic characteristics show that the Project area has young population estimated to 30%4. The average population density in the project impact area is 401.6 people/Km2 in Burundi and 57 people/Km2 in Kigoma region in Tanzania.

3Situation Analysis of the EAC partner states on implementation of gender equality commitments study commissioned by EASSI January 2016 4 EAST AFRICAN COMMUNITY SECRETARIAT, East African Community Facts and Figures (2016) Report 5

2.6.2 Beneficiaries: The main beneficiaries of the project are farmers who experience difficulties in procuring inputs and in marketing their produce due to the poor state of the roads. The project will have a positive impact, especially on women and young people because it will improve their access to socio-economic infrastructure and create new initiatives. The other beneficiaries are industrialists, traders and transporters whose operating and logistical costs will be significantly reduced due to the improvement and upgrading of the main road and rehabilitation of the rural roads. These positive impacts will be further increased since the road will serve as a strategic economic link connecting Bujumbura to Dar es Salaam and EAC countries. 2.7 Participatory Approach to Project Identification, Design and Implementation 2.7.1 The participatory approach was adopted during Project preparation, technical studies, environmental and social impact assessments, and Project appraisal mission. During the appraisal mission, the team members conducted field visits along the project zone in Tanzania and Burundi. Consultations were done in Kasulu, Makere, Kibondo, Buhigwe, Mvugwe, , Manyovu, Minago, and Gitaza. The participation of these communities was high and active (women, men, youth, children, the elderly, community leaders, and officials) in the different locations of the project zone. The current challenges, the benefits of the project, community expectations, and their involvement during the pre and post construction was discussed. The preparation of the project involved meetings with Provincial /District officials as well with different development partners. 2.7.2 Other stake-holders met with include Development Partners, key Ministries and Authorities (in both Countries) including the EAC Secretariat, CCTTFA, stakeholders in selected towns and villages. During these meetings, the Bank was able to receive feedback on the receptiveness of the Project and validate measures proposed for mitigation of the negative impacts expected from the Project. The consultations stressed on lessons learned, and the need for effective coordination of monitoring and supervision of the implementation of the Project. Consultation will also continue during project implementation. 2.8 Bank Group Experience and Lessons Reflected in Project Design 2.8.1 The Bank plays a major role in financing the improvement and asphalting of several regional roads in the EAC region. The Bank is currently financing three major multinational road projects in the EAC region, namely the Arusha-Holili-Taveta-Voi Road Project between Tanzania and Kenya, Kapchorwa-Suam-Kitale Road Project between Uganda and Kenya, and Kampala-Mpigi and Kayonza-Rusumo Road Project between Uganda and Rwanda. In Burundi, the Bank Group has since 1974 financed 24 operations in the transport sector amounting to UA 454.4 million. Currently there are 7 ongoing projects in the transport sector. In Tanzania, the Bank Group in the transport sector commenced operations in 1971, and to date has financed operations totaling UA1.1 billion, with over 1,200km of roads paved/rehabilitated. Five projects are currently on-going. The Projects financed by the Bank have made a significant impact on mobility and access to socio-economic opportunities for several millions of people in addition to promoting regional integration. Despite the above impact, implementation of the Transport Sector Projects in the two Countries face challenges of implementation such as start up delays, inadequate designs, poor performance of some contractors, and price escalations of civil works contracts. All these important lessons have been taken into consideration during the preparation and appraisal of this Project. 2.8.2 For Tanzania, the performance of the portfolio is rated satisfactory, however, startup delays, slow pace of procurement and low disbursements remained the key challenges to the quality of the portfolio. The portfolio has one transport project (Dar es Salaam Bus Rapid Transit) at risk with total commitment at risk of UA 104.2 million. Furthermore, the portfolio has no project with pending fulfillment of CPs in the transport sector.

2.8.3 For Burundi, the performance of the portfolio is rated satisfactory and is facing the same challenges in term of long startup delays and slow pace of procurement. The average age of operations is 5.12 years. It is important to highlight that there are no problem projects nor potential problem projects in the portfolio. The current portfolio of the energy sector includes two national projects and four multinational projects. 2.8.4 Lessons learnt from implementation of previous and on-going roads sub-sector interventions have been incorporated in project design with the following interventions: (i) ensure proper designs are made and design review prior to commencement of civil works; (ii) delay in implementation will be mitigated by use of advance contracting to facilitate early procurement for the contracts; (iii) use of post qualification will encourage wider participation of bidders for the civil works and result in competitive bidding; (iv) proper design review and works supervision during project processing will reduce possibility of cost overruns, in addition adequate contingencies to cater for cost escalations have been included; and (v) a Transport and Trade Facilitation component which is included in the project, including the One-stop-Border- Post (OSBP) results in efficiency gains in operations at Border crossings. 2.9 Key Performance Indicators 2.9.1 The key performance indicators and expected outcomes upon project completion are: (i) travel duration and border crossing time; (ii) vehicle operation costs (VOC); (iii) trade flows between the countries along the Central Corridor; (iv) number of jobs created during the works and (v) regular monitoring reports to track corridor performance through operationalization of Transport Logistics Observatory. Some baseline data for these indicators are indicated in the Results Based Logical Framework (RBLF) and more will be collected early in the project. The Project budget has catered for Consultancy Services to carry out Survey. III. Project Feasibility 3.1 Economic and financial performance 3.1.1 The methodology for the economic analysis is based on cost-benefit analysis (CBA) by comparing the “with” and “without “ Project scenarios for each of the two Project Road Sections in Burundi (Rumonge-Gitaza; 45km) and Tanzania (Kabingo-Kasulu-Manyovu; 260 km), over a period of 20 years, using the Highway Development and Management Model (HDM-4). A discount rate of 12%, a standard conversion factor (SCF) of 0.83%, and construction period of 3 years starting in 2019 were adopted. The economic costs consist of: (i) the capital investment costs and (ii) the routine and periodic maintenance expenses. The benefits consist of savings in: (i) vehicle operating costs; (ii) motorized traffic travel time for passenger and cargo; and (iii) maintenance costs. The current (2017) Annual Average Daily Traffic (AADT) on the different Project road sections range from 1,809 to 4,415 vehicles per day on Tanzania Road sections and 1,277 to 5,285 vehicles per day on Burundi Road sections. The measures of assessing project viability used are the Economic Internal Rate of Return (EIRR), and Net Present Value (NPV). Details of Traffic and Economic Analysis are presented in Technical Annex B7. The summary of the economic analysis is presents in Table 3.1. Table 3.1: Key Economic and Financial Figures Section Burundi Road Tanzania Road Sections Project Road Sections Parameter NPV EIRR NPV EIRR NPV EIRR (US $ Million (%) (US $ Million (%) (US $ Million (%) Base Results 19.28 16.5 243.24 24.8 524.93 30.6 Sensitivity Results: (+20% 12.00 14.4 114.89 17.8 319.47 22.7 costs & -20% benefits)

3.2 Environnemental and Social Impact Environmental Aspects 3.2.1 Compliance with the Bank’s Requirements : The project was categorized as Category 1 and the justification of this classification was derived from the main negative environmental effects identified which are: (i) reduction of the vegetation cover on sites within the right-of-way, access roads, etc.; (ii) risks of physical and chemical pollution of soil and water in the direct Project impact area due the nature of the river basin and soils (the road is alongside the Lake Tanganyika on Burundi side which a sensitive receptor), and (iii) increased pressure on the wildlife and plant life due to the opening of construction sites which could remain non- rehabilitated after completion of the new infrastructure. The potential impacts trigger the Bank Operational Safeguards – OS1: Environmental Assessment– OS3: Biodiversity Conservation and Ecosystems - OS4: Pollution Prevention and Control, Greenhouse Gases, Hazardous Materials and OS5: Labor Conditions, Health and Safety. The Bank Policy on Involuntary Resettlement is also triggered due to the number of involuntary resettlement required for the planned investments. As a category 1 Project and in line with the Banks Disclosure Policy, the ESIA, ESMP and RAP documents were disclosed starting from 18th June 2018. Capacity to Monitor EMP Implementation 3.2.2 The capacity to manage environmental and social risks in TANROADS was found to be adequate due to the availability of staff that has got considerable exposure to the Bank’s Safeguard Policy. However, due to heavy workloads, the project will recruit environmental and social staff to support the TANROADS Kigoma Regional Office in implementing the ESMP during the project implementation phase. On the other hand, the capacity on the part of OdR will be enhanced with the services of an individual consultant to implement social aspects under ESMP. Both NEMC and OBPE in Tanzania and Burundi respectively remain committed to providing policy guidance and implementation strategies. Involuntary Resettlement 3.2.3 In relation to involuntary resettlement, Resettlement Action Plan (RAP) was prepared in line with the Bank’s ESAP Procedures and summaries disclosed on the Bank’s website. The cost of the RAP including the cost of procuring services is BIF 1,511,845,014 (USD 839,914) in Burundi and TZS13.95 billion (USD 6,131,868) in Tanzania. The Bank observed that whereas TANROADS has had extensive experience in implementing Resettlement Action Plans, OdR will procure the services of a firm to implement the social aspects of the project including compensation. In order to avoid delays in RAP implementation, both Governments have made financial commitments for the RAP budgets within their budgets of 2018 – 2019. Climate Change and Green Growth 3.2.4 The project has been screened for climate risks under the Bank’s Climate Safeguard System and categorized as category 1 because of its high vulnerability to the climate risks such as droughts and flooding. In addition, due to the geography of the project area, a number of climate- related issues have been taken into consideration in project design; they include: (i) poor watershed management on the Mumirwa foothills which is characterized by steep slopes; (ii) historical evidence of frequent droughts in northern and eastern provinces of Burundi based on decadal decrease in annual precipitation of 50-100mm; and (iii) future projections of flooding due to rainfall intensity in Western Imbo plains and erosion in the southern zone and central plateau. 3.2.5 Given the lifetime design of the road (with asphalt concrete) being 20 years, high intensity and frequent flooding and erosion due to climate change will cause serious damages to or overtopping of hydraulic structures (bridges, culverts). A number of climate change risk mitigation measures have been taken onboard in the project design; they include a landslide management and preparedness plan, which shall be prepared by a hydro/geological engineer. 8

3.2.6 By adopting a sustainable infrastructure design model, the project contributes to green growth by contributing to climate resilience for most of the 3.7 million beneficiaries of the project. Overall, this project aligns with the priorities of both Burundi and Tanzania in their respective nationally determined contributions under the Paris Agreement. Gender 3.2.7 The two countries have National Gender Policies. The National Gender policy in Burundi (2003 and its updated action plan 2011) primary purpose is to combat the different types of discrimination and inequality affecting women in order to achieve equality between the sexes. Similarly the Tanzania National Gender Plan (2011) and the National Gender Diagnostic Study - Final Report (2012) recognising gender inequality as an obstacle to socio-economic and political development. Despite the fact that both countries Tanzania and Burundi have taken a number of measures to address the gender inequality in the country’s women's access to social services and financial resources are limited especially in the rural areas. Long-standing socio-cultural and economic inequalities in the gender have placed women at a disadvantage relative to men in their capability to participate in, contribute to and benefit from broader processes of development. 3.2.8 Women represent the majority of the road users as; traders, petty cross-border traders, commutators for daily and weekly market and for social services. They face many challenges that hinder their socio-economic wellbeing. For instance, women and girls go long distances to get (approximately 5 hours and from unprotected sources). Children per classroom are above the national requirement (60 per classroom); hence, they have been sent to nearby schools; this is challenging girls to attend school because of their household chores. Communities’ access to health services is limited especially for the mothers and children. Market places including women’s markets are not adequately addressing the need of the buyers and sellers i.e. inadequate public sanitation facilities or food storage to avoid crop losses. Bus stop terminals are not equipped with the necessary requirements that causes inconvenience to travelers . Annex B8 – Gender Analysis. 3.2.9 The proposed outcomes of the project will significantly reduce time and cost of transportation, facilitate for small traders movement, and improve the economic and social welfare of the communities in the project zone. The project has positive impact on reducing economic and social vulnerability that challenges women’s ability to improve their wellbeing. The project has been therefore categorized (II) under the African Development Bank Gender Marker System because of its expected positive gender outcomes. A gender-mainstreaming approach will be an integral part of the entire project implementation and post implementation. However, to be able to monitor the gender-related activities, an action plan with estimated budget was developed (please see annex B8). Gender and Social Effects 3.2.10 Due to the temporary displacement or destruction of properties especially for women trading installations, they will suffer loss of income, which will be offset by the compensations scheduled under the Project. To reduce the risk of marginalisation of women, the compensations will be managed by separate committees, one for each country, set up by the Governments of the two countries, with community participation. Moreover, with an influx of migrant workers and increased traffic in the Project area, there is the risk of an increase in HIV/AIDS, violence against women and road safety hazards. These risks will be mitigated through HIV/AIDS campaigns and the code of conduct that Contractors must uphold to avoid violence and sex abuse. 3.2.11 However, the project will have much positive impact, through: (i) improvement of individual wellbeing for men and women during the construction and operational phases of the infrastructure. (ii) Job creation and promotion of the local content; women have particularly asked the local authorities to sensitize the Contractors to enable them to access to employment, which will be created during works. (iii) Enhanced economic empowerment for women in 9

business through their training in and agribusiness facilities at women’s market places. (v) Improvement of access to health facilities, through feed roads and construction of co-education school. Moreover, the infrastructure construction and rehabilitation of modern segregated latrines and drinking water points will alleviate women’s workload. Finally, (vi) the alleviation of the hardship of post-harvest activities and household chores through the provision of farm produce processing kits and Intermediate Means of Transport. Social 3.2.12 In Tanzania, the project area is located in Kigoma Region, which is characterized by communities’ high poverty levels as compared to the rest of country. In Burundi, the project is located in Rumonge Province, which is also characterized by high level of poverty and weak infrastructure. In the project zone the majority of households engage in small-scale agriculture with limited access to basic social services. The labour force comprises of largely less educated and unskilled workforce mainly working in the informal sector of the economy with low wages. Demographically a young population is a characteristic of the corridor indicating youth internal migration from other regions and rural areas. 3.2.13 Apart from its positive impact on domestic and sub-regional transport, the project will help to improve community living conditions. To increase the project's socio-economic impact and contribute to the improvement of community living conditions in the PA, rural and district roads will be developed to open up access to the main farming areas. Markets, health and social promotion centres, vegetable farming equipment and boreholes will be provided to women's groups to increase their production. The project is expected to come with major benefits that will promote trade and boost household productivity. The project will allow them access to employment and increase their revenue. The income will improve their livelihood and access to social services such as education of their children and health care. It will permit them to diversify their productive activities. 3.2.14 Specifically, implementation of the operational phase will: (i) create permanent jobs (transporters, other activities generated through construction of the road). (ii) Facilitate access to markets for the sale of products at attractive prices and provision of supplies to the area. (iii) Increase the intake and safety of health and educational infrastructure, thus contributing to enhancement of the facilities and improvement of learning conditions for children. (iv) Reduce the time needed to evacuate patients to health centres and facilitate the redeployment of grassroots social service personnel in the programme area; (v) support youth entrepreneurship and (v) develop tourism and handicraft activities in regions traversed by the road as well as fuel the development of hotel and restaurant businesses. 3.3 Regional Integration 3.3.1 The Project will promote regional integration in Eastern Africa, as it provides the shortest route to a seaport for landlocked Burundi. The proposed road project will reduce the travel distance to the sea by 200 km compared to the existing alternative route through Kobero border. The road corridor is a spur of the Central Corridor, which provides transport connectivity among Tanzania, Burundi, DRC, Uganda and Rwanda. Moreover, since most of the road project runs along Lake Tanganyika, it will improve multi-modal transport networks in the region by providing a vital link to the Lake Tanganyika transport corridor, which is shared by four countries, namely Burundi, Tanzania, DRC and Zambia. 3.3.2 Underscoring its potential to promote regional integration, the Project has been prioritized to benefit from additional resources under the ADF Regional Operations Envelop (ROE). A total of UA73.35 million, comprising UA45 million and UA28.35 million for Tanzania and Burundi respectively, has been leveraged from the ROE. The project was also fully prepared with funding

from the NEPAD-IPPF, a Bank-hosted multi-donor facility for preparation of regional infrastructure projects, and was found to be economically viable. 3.3.3 To fully exploit the benefits of regional integration, complementary ‘soft’ components aimed at lowering transport costs and improving transit time and overall corridor efficiency have been mainstreamed in the project design. Accordingly, UA20.70 million, equivalent to 28.22 % percent of the ROE contribution, has been allocated to activities aimed at improving trade and transport facilitation along the corridor. These activities include: (i) The establishment of a One- Stop-Border Post (OSBP) and operationalization of Coordinated Border Management (CBM) at the Mugina (Burundi)/Manyovu (Tanzania) border; (ii) Roll out of the Central Corridor Transport Observatory (CCTO) as a tool to monitor corridor performance and inform advocacy and evidence-based policy reforms to improve corridor efficiency; and (iii) Operationalization of a simplified trade regime for local vendors and informal cross-border traders, 60% of whom are women. 3.3.4 To facilitate efficient coordination of the project activities as a regional operation, the EAC and Central Corridor authority will be involved in the Project Steering Committee and Technical Committee as Chair and co-Chair (see paragraphs 4.1.5 and 4.1.6). Appendix VIII provides detailed analysis of the regional dimensions. 3.4 Road Safety 3.4.1 Tanzania has different road safety institutions and instruments in place, but lack of qualified and skilled manpower has been one of the drawbacks affecting the achievement of planned targets. The project will support the National Institute of Transport (NIT) towards the creation of Regional Centre of Excellence for Road Safety. The Center will provide the necessary training and certification for road safety managers, practitioners, and initiate problem solving research works for Tanzania as well as for the region. A road safety audit and sensitization have also been incorporated in the project design. Communities living along the road sections will be provided with road safety sensitization to enhance their road safety awareness. During the project appraisal, the importance of preparing a strategy and action plan for implementing the study on “harmonization of standards and regulations of road transport in EAC countries”, which was completed under the Bank-funded East African Trade and Transport Facilitation Project (EATTF) was recognized. Further consultations will be undertaken with the Governments and the EAC on the implementation. IV. Implementation 4.1 Implementation Arrangements Implementation Arrangements at the National Level 4.1.1 In the two countries, the Project components will be implemented by their respective Roads Authorities. In Tanzania, the Executing Agency will be the Tanzania National Roads Agency (TANROADS) under the Ministry of Works , Transport and Communication. In Burundi, the Project Executing Agency will be the Office des Routes (OdR) of the Ministry of Transport, Public Works, Equipment and Land use Planning. The two executing agencies have acquired substantial experience in managing Bank-funded projects with satisfactory results. The Executing Agencies will collaborate with other relevant ministries and agencies to implement the complementary activities. For Burundi and Tanzania, OdR and TANROADs have been respectively mandated with the implementation of road projects in their Countries, on a non-revenue generating basis, and as such the Recipient/Borrower will on-grant the Grant/Loan to OdR/TANROADs, for the execution of the project components in the both countries and in support of development of the infrastructure sector.

4.1.2 In Burundi, for routine monitoring of Project activities, the Project Management Team (PMT) which comprises a Civil Engineer, Procurement Specialist, Environmentalist, Monitoring Officer and an Accountant; within the Projects Implementation Unit (PIU), established under ongoing Bank-Funded projects will support the proposed Project and is reinforced by a Project Coordinator. The detailed PMT is included in Technical Annex B.3 4.1.3 For both Countries, the Executive Agencies appointed Project Coordinators with qualifications and experience acceptable to the Bank, subject to the Board Approval of the project. 4.1.4 In addition and given the complexity of the project, OdR intends to procure the services of an individual consultant to implement social aspects under the RAP and ESMP of the projects during the implementation phase. Implementation Arrangements at the Regional Level 4.1.5 Project implementation will be overseen by two committees, namely, a Steering Committee (SC) that is responsible for policy issues and a Technical Committee (TC) that facilitates, coordinates, monitors, assists and guides as necessary the technical aspects of the project and advises the SC. Membership of the SC shall comprise; (i) the Secretary General of the EAC Secretariat (Chair) and the Executive Secretary of the Central Corridor Transit Transport Facilitation Agency - CCTTFA) as a Co-chair ; (ii) the Permanent Secretaries of the Ministries responsible for roads in each Country; the Permanent Secretaries of Finance; the Permanent Secretaries of the Ministry/State Department of the EAC and the Heads of the two Executing Agencies. 4.1.6 Technical Committee shall comprise of: (A) the Director (Infrastructure), EAC Secretariat (Chair) and Head of Logistics Department Central Corridor Agency as CO-Chair; (B) the Director of Projects, TANROADS, the Roads Works Directors, OdR; (C) Technical representatives from the Ministries/ State Departments responsible for finance, Public Works and EAC affairs; (D) the two Project Coordinators; and (E) two civil engineers one from the EAC Secretariat and the other from the Central Corridor Agency as joint Secretaries. The TC shall meet quarterly or by notice. 4.1.7 The Bank Supervision Missions will be fielded at least two times annually to the sites to monitor progress and if required a mid-term review will be carried out in the second year of project implementation. Procurement Arrangements 4.1.8 Procurement of Works, Goods (including Non-consultancy services) and the acquisition of Consulting services, financed by the Bank for the project, will be carried out in accordance with the Bank’s “Procurement Policy for Bank Group Funded Operations”, dated October 2015 and following provisions to be agreed in the Financing Agreements. Use of advance contracting will be made for civil works, civil works supervision, technical review of the design and civil works, socio-economic impact monitoring/evaluation in accordance with the requests by both countries. 4.1.9 Specifically, Procurement would be carried out following: (i) Borrower Procurement System (BPS) for Tanzania: Specific Procurement Methods and Procedures (PMPs) under BPS comprising its Laws and Regulations, Public Procurement Act, 2011 revised 2016 and its Regulations using the national Standard Bidding Documents (SBDs) or other Solicitation Documents for certain transactions to be entailed under the project; and (ii) Bank Procurement Methods and Procedures (BPP) for Burundi and Tanzania: Bank standard PMPs, using the relevant Bank Standard or Model Solicitation Documents SDs, for contracts that are above certain financial thresholds detailed in the Procurement Technical Annex.

4.1.10 Executing Agencies: the responsible organs in Burundi and Tanzania to handle procurement contracts in the project are (OdR) and (TANROADS) respectively. The Executing Agencies have been assessed and were found generally acceptable, but the necessary capacity building interventions and risk mitigation measures have been included in the project to strengthen the existing procurement and function. 4.1.11 Procurement Risks and Capacity Development: the assessment of procurement risks at the Countries, Sector, and Project levels and of procurement capacity at the Executing Agencies (EAs), were undertaken for the project and the output have informed the decisions on the procurement regimes BPS and Bank be used for specific transactions or groups of similar transactions under the project. The details are reflected in the Procurement Technical Annex 5. 4.1.12 Procurement Plan: The Project’s Procurement Plans comprising details of the contracts packages in the components of the project was discussed during appraisal and agreed with the respective Executing Agencies. Financial Management Arrangements 4.1.13 Financial Management: The adequacy of the Project Financial Management (FM) and Executing Agencies, Tanzania National Roads Agency (TANROADS) and Office des Routes in Burundi were assessed based on the Bank’s FM implementation guidelines -2014. The FM arrangements put in place meet the Bank’s minimum requirements and is adequate to provide, with reasonable assurance, accurate and timely information on the status of the project required by the Bank; provided FM action plan in the technical annex are implemented. The assessments concluded that the overall project risk is “Moderate”. 4.1.14 In line with the Paris Declaration on Aid Effectiveness and Accra Agenda for Action, the project will substantially make use of the Country’s financial management systems. The project management will be as per the rules and procedures as stipulated in TANROADS financial policies and procedures. The maintenance of Project accounts will use applicable computerized accounting system. The Director of Business Support assisted by the Head of Finance and Chief Accountant (TANROADS) will be responsible for the FM function of the Project. At OdR, the Project Management unit will be responsible for the financial management function and will use the applicable computerized accounting system. The Internal Control applicable to the two organization will apply to the Project including internal audit. A dedicated Project Accountant with qualification and experience acceptable to the Bank will be part of the Project team. The Project will prepare quarterly reports (Financial and Physical) and submit them to the Bank within 45 days after the end of each quarter. 4.1.15 The two institutions are experienced in managing Bank financed project including other financiers like the World Bank. There was a concern over timely availability of counterpart funds and contract management as reported in the external audit reports of projects financed by the Bank. The two Government have shown commitment to avail the resources timely and mitigation measures are incorporated in this assessment. Disbursements 4.1.16 The Project will mainly use the Direct Payment method to pay contractors/suppliers whereas the Special Account method will be for financing part of the operating costs of the Project Management Team, training activities and workshop organized by them for Burundi. The other methods also prescribed in the Disbursement Handbook are applicable when need arises after consultation with Bank and obtaining prior approval. The disbursement handbook is accessible through the Bank’s website. 4.1.17 TANROADS and OdR will open Special Accounts (a foreign and a local currency) or one convertible foreign currency to receive fund from the Bank at a bank acceptable to the Bank before first disbursement. The Bank will issue a disbursement letter, which will provide specific 13

guidelines on key disbursement procedures and practices negotiable during negotiations. The Bank will have the right, as reflected in the General Conditions to suspend disbursement of the Funds in case of non-compliance with reporting requirements. Audit 4.1.18 Audit: Each country shall maintain and prepare separate Project financial statements for Burundi and Tanzania project respectively. The supreme audit (SAI) of each country will undertake the audit of the Project or an independent audit firm recruited with the involvement of the SAI in accordance with Bank’s audit terms of reference. The submission of the audit report, complete with a Management Letter, to the Bank within six months after the end of the financial year. The project will be subject to Value for Money/Technical Audit/Performance audit at Mid- Term Review or after completion of substantial work and shared with the Bank once completed. Implementation and Supervision Schedule 4.1.19 The project will be executed Over 5 year-period. The corresponding implementation schedule, summarized at the beginning of this report, is presented in detail in Technical Annex C.1. As soon as the loan/grant are approved, the Bank will launch the Project and subsequently organize supervision missions whose schedule and composition are outlined in Technical Annex VI. 4.1.20 The Bank supervision missions will be conducted in coordination with EAC Secretariat, CCTTFA and the two Executing Agencies in the two Countries. At the mid implementation period, a mid-term review mission will be conducted by the Bank to assess the progress achieved in the Project implementation in order to attain their assigned objectives. 4.2 Monitoring 4.2.1 Monthly and quarterly progress reports will be prepared by Consultants tasked with civil works supervision, and submitted to the relevant national organs and the regional organs. The national executing agencies in the countries and at the regional level will regularly submit quarterly Project status reports which will also cover ESMP implementation, based on the Bank's standard template and covering all Project activities. These reports will also cover physical, financial, social and environmental aspects, thus making it possible to measure the degree of attainment of Project objectives. Half-yearly coordination meetings of the SC, which bring together the national organs and the regional organs, will be held to ensure the required coherence and collaboration within the Project. Furthermore, the Bank's supervision mission will be conducted every 6 (six) months, in accordance with the Bank's operations manual. Provision is also made for a mid-term review, as appropriate, and a final evaluation, including the completion reports of Borrowers, EAC/CCTTFA and the Bank. Table 4.1: Project Implementation Monitoring Schedule Duration Stages Monitoring Activities/Feedback Loop 1st Quarter – 2019 Project launch Progress reports Completion of procurements for civil Procurement plan/progress report 2nd Quarter -2019 engineering works 2nd Quarter - 2019 Mobilization of service providers Supervision report and progress reports Civil engineering works execution rate of 1st Quarter - 2020 Supervision report and progress report 25% Civil engineering works execution rate of 3rd Quarter - 2021 Mid-term review and progress report 60% 3rd Quarter - 2022 Completion of civil engineering works Supervision and progress reports 3rd Quarter - 2023 End of defects liability period Supervision report and progress report 4th Quarter - 2023 Project completion Project completion report

4.3 Governance 4.3.1 Corruption risks during contract award and the execution of relatively significant civil engineering contracts will be detected and mitigated through: (i) the process of preliminary review by the national procurement structures of the two countries; (ii) the review of procurement documents that enables the Bank to control the process by giving its formal approval for each of the major stages; (iii) regular supervision by the Bank and financial and accounting audits of the Project which reveal abnormal discrepancies between the terms of reference, services and works effectively executed, and the disbursements and loan/grant agreements; (iv) adoption of the direct payment method for the disbursement of funds to contractors and service providers; (v) the use of procedures that ensure broader competition and (vi) awareness (community regulations, road users' rights, etc.) of road users and State officers on transport facilitation procedures in order to curb bribery. 4.4 Sustainability 4.4.1 The project's sustainability hinges on the quality of works, the operating and maintenance of infrastructure in place. It is in this light that extensive technical studies were conducted for the Project and the roads designed to comply with acceptable standards. Furthermore, the trunk road and ancillary works will be procured through international competitive bidding (ICB), thus guaranteeing the quality of the contractors selected. Regarding infrastructure maintenance, the two countries have dedicated structures/institutions for the national roads (TANROADS/OdR). 4.4.2 In both countries (Burundi and Tanzania), the mechanisms that ensure road network sustainability are generally in place. In Tanzania, maintenance of roads is financed by the National Road Fund (NRF), which enjoys autonomous management. The resources of the Fund mainly come from a tax on petroleum products. 4.4.3 In Burundi, the financial resources of the National Road Fund (FRN) are set by the law n°1/06 dated on 10 September 2002. These resources consist of: the road user taxes on fuel; the road toll levy on domestic and foreign vehicles paid at the border posts; the axle fee; the revenues from motor vehicle tax; the revenue resulting from the granting of a driving license; the overload penalties for transport vehicles; the possible contributions from the State and the donations and contributions from multilateral and / or bilateral donor agencies for road maintenance. The financial resources mobilized by the NRF for maintenance of the classified road network, have been increasing steadily since 2007 despite a sudden drop in 2015 due to the prevailing crisis. Currently, the resources of NRF have begun to increase again, because at the end 2017, they were Burundian Frank 17.5 Billion, equivalent USD 9.7 million. In addition, the new decree n°100/036 dated on 13 April 2018, related to the financial penalties for damage caused to the road domain, reinforces the state efforts in the road maintenance sector and will further increase the FRN resources. 4.4.4 In Tanzania, the Government through Road Fund Board (RFB) allocates road maintenance funds to TANROADS for maintenance of trunk and regional roads. RFB and TANROADS have placed highest priority to routine maintenance of all bitumen roads in maintainable condition. Furthermore, the roads sub – sector continues to undergo reforms in order to ensure its sustainability. The Government through TANROADS is currently undertaking a Performance - Based Management and Maintenance of Roads (PMMR) where Contractors and Consultants are procured to maintain certain sections of roads; all this is to ensure the sustainability of roads investments. Already in the Financial year 2018/19, ten (10) regions are incorporated under PMMR to ensure that no investment whether current or previous is lost. 4.4.5 The project design took into account the environmental sustainability aspect throughout the project cycle. First, the design took into account environmental and social considerations, where impacts could not be avoided; an ESIA and RAP for each country were prepared for the construction and operation phase. During construction, the sustainability aspects will be

considered in sourcing of materials, creation of job opportunities through implementation of subsidiary plans and synergies with existing projects of planned project will further necessitate the staff from OdR and TANROADS to enhance environmental and social sustainability throughout the project cycle especially the issue of landscape restoration in Burundi that requires a multi-stakeholder approach. The planned social investments in communities are meant to enhance ownership and community support to the project infrastructure and also stimulate investments in the project area. 4.4.6 For social aspects, the social infrastructures like schools and health centers which have been prioritized by the project in both two countries are part of the health and education sectors program and the functioning and maintenance will be supported by the government. It is the same thing for the training of youth, which will be organized in collaboration with public training centers. 4.5 Risk Management 4.5.1 Successful implementation of the Project and attainment of its objectives depend on several factors that could each constitute a risk to the Project. Apart from risks linked to governance and sustainability, the main ones are: Risks Pertaining to Outcomes 4.5.2 Divergence of regional regulations: This is a low risk, mitigated by ongoing harmonization of transport related regulations in EAC as well as awareness-raising for transporters, border control officers and users on their rights and obligations relating to international road transit. Lastly, the monitoring of performance indicators instituted within EAC is likely to mitigate this risk. Risks Pertaining to Activities (Outputs) 4.5.3 Cost overruns: Increase of costs above appraisal estimates may put pressure on Governments’ budgets. This risk is mitigated by; (i) critical review of the design reports; (ii) ensuring that the cost estimate is based on recently awarded tenders; (iii) reasonable contingencies in the cost estimates have been included; and (iv) Deployment of competent Contract Management Experts (CMEs). 4.5.4 Fiduciary risks (Procurement and financial management): The risk is moderate and will be mitigated through regular supervisions, annual audit of project account, the implementation monitoring systems (reports, etc.) and launching of the Project, which will provide an opportunity to have an in-depth exchange on the Project implementation arrangements. 4.5.5 Political instability and the fragility of peace in Burundi are major risks for the implementation of this Project. However, according to the UN Security Council declaration adopted on August 22nd 2018, the security situation in the country is generally calm. The efforts undertaken by the international community to restore inter-Burundian dialogue could also help to mitigate these risks. In addition, the Bank is encouraging and supporting the peace process through its support of strengthening state institutions in the area of governance, its job-generating interventions, particularly for displaced persons reinserted in the agricultural sector and through public work programmes. Burundi’s EAC membership also reduces this risk as the EAC is strongly committed to preserving stability and security in its member States, through a Peace, Security and Economic Growth Programme. 4.6 Knowledge Building 4.6.1 The Project affords an opportunity to improve knowledge on priority regional infrastructure in accordance with Bank Group’s RISP (2018-2022). The project includes studies that will define: (i) additional specific and appropriate transport facilitation measures that will

take into account the physical specificities of the borders of both countries; and (ii) the actions to be implemented to reduce transport cost on the corridor. V. Legal Framework 5.1 Legal Instrument 5.1.1 The instruments that will be used to finance this Project are ADB and ADF concessional loans. Tanzania will receive the ADB loan of USD 130.2 million, ADF loans of UA 45.0 million from the ADF-14 Performance Based Allocation and UA 45.0 million from the ADF-14 Regional Operations Envelope. Burundi will receive ADF grants of UA 18.9 million from the ADF 14 Performance Based Alocation and UA 28.35 million from the ADF 14 Regional Operations Envelope as broken down in Table 3.4 of Annex III. 5.2 Conditions Associated with the Bank’s Intervention A. Conditions Precedent to Loans and Grant Effectiveness A.1 Conditions Precedent to ADB and ADF Loan Effectiveness The loan agreements shall each become effective subject to the Borrower’s fulfilment of the conditions provided for in Section 12.01 of the applicable General Conditions. A.2 Conditions Precedent to ADF Grant Effectiveness The ADF Grant agreement with Burundi shall become effective subject to the Recipient’s and the Bank’s signature.B. Conditions precedent to first disbursement Apart from Grant effectiveness, the first disbursement of the Grant/Loans resources shall be subject to fulfilment by the Borrower/Recipient of the following conditions to the complete satisfaction of the Fund: B.1 Conditions precedent to first disbursement of ADF Grant for Burundi Apart from Grant effectiveness, the first disbursement of the Grant resources shall be subject to fulfillment by the Recipient of the following condition to the complete satisfaction of the Fund: (i) provide the Fund with proof of the approval of the manual for administrative, financial and accounting duties. B2. Conditions precedent to first disbursement of ADB/ADF Loans for Tanzania Apart from Loans effectiveness, the first disbursement of the loans resources shall be subject to fulfillment by the Borrower of the following condition to the complete satisfaction of the Fund: (i) Appoint/assign/recruit a project accountant with qualification and experience acceptable to the Bank before the launch of the project. B3. Condition Precedent to Disbursements for Works Involving Resettlement Subject to the Entry into Force of the agreement and the fulfillment of the Condition Precedent to First Disbursement, the obligation of the Bank/Fund to disburse the Loan/Grant for works that involve resettlement shall be subject to the fulfillment by the Borrower/Recipient of the following additional conditions: (a) Submission of a works and compensation schedule prepared in accordance with the Resettlement Action Plan (RAP) and the Bank’s Safeguards Policies, in form and substance satisfactory to the Bank detailing: (i) each lot of civil works under the Project, and (ii) the time frame for compensation and/or resettlement of all Project Affected Persons (PAPs) in respect of each section; (b) Submission of satisfactory evidence that all Project Affected Persons (PAPs) in respect of works in a given section of each lot have been compensated and/or resettled in accordance

with the Environmental and Social Management Plan (ESMP), the RAP, the agreed works and compensation schedule and the Bank’s Safeguards Policies, prior to the commencement of such works in such sections of each lot and in any case before the PAPs’ actual move and/or taking of land and related assets; or (c) In lieu of paragraph (b) above, submission of satisfactory evidence indicating that the resources allocated for the compensation and/or resettlement of PAPs have been deposited in a dedicated account in a bank acceptable to the Bank or remitted to a trusted third party acceptable to the Bank, where the Borrower can prove, to the satisfaction of the Bank that, compensation and /or resettlement of PAPs in accordance with paragraph (b) above could not be undertaken fully or partially, because of the following reasons: (i) The identification of the PAPs by Borrower is not feasible or possible; (ii) Ongoing litigation involving the PAPs and/or affecting the compensation and/or resettlement exercise; or (iii) Any other reason beyond the control of the Borrower, as discussed and agreed with the Bank.] C. Other conditions The Borrower/Recipient must also provide the Bank/Fund, to its full satisfaction, with: i) Proof of provision, in the annual budget, of an allocation for counterpart funding at the beginning of the fiscal year; ii) Provide the Fund with proof of the signed convention defining the terms and conditions for collaboration between Burundi and Tanzania, EAC and CCTTFA for implementation of the Project's Transport and Trade Facilitation component, which must be submitted to the Bank/Fund for approval by 31 October, 2019; iii) Provide the Fund with proof of East Africa Community Secretariat and Central Corridor Transit and Transport Facilitation Agency allocation of counterpart contribution in their respective annual budget allocations to support the Project. D. Undertakings The Borrower/Recipient undertakes to execute the following activities to the full satisfaction of the Bank/Fund: i) Execute the Project, the Environmental and Social Management Plan (ESMP) and the Resettlement Action Plan (RAP) and have them implemented by its contractors in accordance with national laws, recommendations, prescriptions and procedures contained in the ESMP and the RAP, and with the applicable ADF rules and procedures; ii) Not commencing works in a given area until the affected persons in that area have been fully compensated; and iii) Provide the Fund with quarterly reports on ESMP and RAP implementation, including, where applicable, any weaknesses and corrective actions initiated or to be initiated. D.1 Additional undertakings for Burundi i) Train the Internal Control Unit staff to internal audit and internal control standards within 6 months as from Loans/Grant effectiveness. 5.3 Compliance with Bank Policies * No provision is made for exceptions to the policies. * The proposed Project complies with all applicable Bank policies. VI. Conclusions and Recommendations 6.1 Conclusions 6.1.1 The Project addresses the missing segments of economically significant priority roads in the East African Community region. It aims to meet the objectives of EAC, NEPAD and the

poverty reduction strategies of the countries concerned. It is consistent with the Bank's 2013- 2022 Long-Term Strategy and the High 5s. By contributing to the reduction of transports costs, economic growth and the improvement of living conditions for Project area communities, it helps to boost trade and connect the two Countries to the rest of EAC. 6.2 Recommendations 6.2.1 Management recommends that the ADB Board of Directors approve the proposed (i) ADB loan of USD 130,200,000 to the United Republic of Tanzania, (ii) ADF loan of: (i) UA 90, 000, 000 to the United Republic of Tanzania and (iii) ADF grant of UA 47,250,000 to the Republic of Burundi to finance the Project described in this report and in accordance with the conditions set out above.

VII. Appendix I. Comparative Socio-economic Indicators of the Two Countries Burundi Principaux indicateurs macroéconomiques

Indicateurs Unité 2000 2013 2014 2015 2016 2017 (e) 2018 (p)

Comptes nationaux RNB aux prix courants du marché Million $ E.U. 880 2 930 3 137 3 130 3 235 ...... RNB par habitant $ E.U. 130 280 290 280 280 ...... PIB au prix courants Million $ E.U. 709 2 452 2 706 2 814 2 874 3 053 3 406 PIB aux prix constants de 2000 Million $ E.U. 709 1 127 1 174 1 170 1 191 1 188 1 205 Croissance du PIB en termes réels % -0,9 4,9 4,2 -0,3 1,7 -0,2 1,4 Croissance du PIB par habitant en termes réels % -3,0 1,5 0,9 -3,6 -1,6 -3,4 -1,8 Investissement intérieur brut % du PIB 7,5 14,3 15,2 11,7 9,6 10,0 11,7 Investissement public % du PIB 6,4 5,2 4,9 3,3 3,1 3,4 3,7 Investissement privé % du PIB 1,2 9,1 10,3 8,5 6,5 6,6 8,1 Epargne nationale % du PIB -4,2 -4,3 -3,4 -6,7 -4,1 -5,7 -7,2

Prix et Monnaie Inflation (IPC) % 24,3 7,9 4,4 5,6 5,5 14,5 15,4 Taux de change (moyenne annuelle) monnaie locale / $ E.U. 720,7 1 555,1 1 546,7 1 571,9 1 654,6 1 735,2 1 820,5 Masse monétaire, variations annuelles (M2) % 34,8 11,1 14,6 5,5 1,5 10,6 ... Vitesse de circulation de la monnaie (PIB / M2) % 24,6 30,7 32,0 32,0 30,2 29,9 ...

Finances publiques Recettes totales et dons % du PIB 22,3 26,6 19,8 16,7 15,9 20,4 20,2 Dépenses totales et prêts nets % du PIB 24,7 28,5 23,6 24,4 23,0 26,9 29,0 Déficit (-) / Excédent global (+) % du PIB -2,3 -1,8 -3,8 -7,7 -7,1 -6,5 -8,8

Secteur extérieur Variation en volume des exportations (marchandises) % 4,7 -19,8 23,1 5,6 14,8 -4,8 1,8 Variation en volume des importations (marchandises) % 1,7 -0,5 10,3 -35,9 -2,2 -1,9 5,1 Variation des termes de l'échange % -22,0 -9,6 25,4 -42,7 28,0 -2,8 -7,2 Solde des comptes courants Million $ E.U. -61 -254 -394 -374 -355 -354 -353 Solde des comptes courants % du PIB -8,6 -10,4 -14,5 -13,3 -12,3 -11,6 -10,4 Réserves internationales mois d'importations 2,9 3,6 3,5 1,7 1,7 2,9 3,1

Dette et flux financiers Service de la dette % des exportations 70,1 14,5 14,4 20,7 22,4 27,5 36,7 Dette extérieure totale % du PIB 126,3 21,0 18,9 18,2 16,7 25,9 35,2 Flux financiers nets totaux Million $ E.U. 79 589 539 260 734 ...... Aide publique au développement nette Million $ E.U. 93 559 515 367 742 ...... Investissements nets directs en prov. de l'étranger Million $ E.U. 12 7 47 7 0 ......

Taux de croissance du PIB réel, Inflation (IPC), 2006-2018 Solde du compte courant en pourcentage du 2006-2018 PIB,2006-2018

% 30,0 6,0 0,0 -2,0 5,0 25,0 -4,0 4,0 20,0 -6,0 3,0 15,0 -8,0 2,0 -10,0 10,0 -12,0 1,0 -14,0 5,0 0,0 -16,0

-1,0 0,0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016 2017 -18,0 2018

Source : Département de la statistique de la BAD; FMI: Perspectives de l'économie mondiale, avril 2018 et Statistiques financières internationales, avril 2018; Département de la statistique : Plateforme des données (base de donnée), avril 2018; OCDE, Division des systèmes statistiques. Notes: … Données non disponibles ' ( e ) Estimations ( p ) Projections Dernière mise à jour : mai 2018

Tanzania COMPARATIVE SOCIO-ECONOMIC INDICATORS

Develo- Develo- Year Tanzania Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2017 947 30 067 80 386 53 939 Total Population (millions) 2017 56.9 1 184.5 5 945.0 1 401.5 2500 Urban Population (% of Total) 2017 32.2 39.7 47.0 80.7 2000

Population Density (per Km²) 2017 64.2 40.3 78.5 25.4 1500 GNI per Capita (US $) 2016 900 2 045 4 226 38 317 1000 Labor Force Participation *- Total (%) 2017 78.5 66.3 67.7 72.0 Labor Force Participation **- Female (%) 2017 74.0 56.5 53.0 64.5 500

Sex Ratio (per 100 female) 0

2000 2012 2016 2010 2011 2013 2014 2015 2017 98.9 0.801 0.506 0.792 2005 Human Dev elop. Index (Rank among 187 countries) 2015 151 ...... Popul. Liv ing Below $ 1.90 a Day (% of Population) 2011 49.1 39.6 17.0 ... Tanzania A frica Demographic Indicators Population Grow th Rate - Total (%) 2017 3.1 2.6 1.3 0.6 Population Grow th Rate - Urban (%) 2017 5.2 3.6 2.6 0.8 Population < 15 y ears (%) 2017 45.0 41.0 28.3 17.3 Population Growth Rate (%) Population 15-24 y ears (%) 2017 19.2 3.5 6.2 16.0 3.5 Population >= 65 y ears (%) 2017 3.2 80.1 54.6 50.5 3.0 Dependency Ratio (%) 2017 93.2 100.1 102.8 97.4 2.5 Female Population 15-49 y ears (% of total population) 2017 23.1 24.0 25.8 23.0 2.0 Life Ex pectancy at Birth - Total (y ears) 2017 66.4 61.2 68.9 79.1 1.5 Life Ex pectancy at Birth - Female (y ears) 2017 67.7 62.6 70.8 82.1 1.0 Crude Birth Rate (per 1,000) 2017 37.6 34.8 21.0 11.6 0.5

Crude Death Rate (per 1,000) 2017 6.4 9.3 7.7 8.8 0.0

2000 2010 2014 2016 2012 2013 2015 2017 Infant Mortality Rate (per 1,000) 2016 40.3 52.2 35.2 5.8 2005 Child Mortality Rate (per 1,000) 2016 56.7 75.5 47.3 6.8 Total Fertility Rate (per w oman) 2017 5.0 4.6 2.6 1.7 Tanzania Africa Maternal Mortality Rate (per 100,000) 2015 398.0 411.3 230.0 22.0 Women Using Contraception (%) 2017 40.7 35.3 62.1 ...

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2014 2.2 46.9 118.1 308.0 Life Expectancy at Birth Nurses and midw iv es (per 100,000 people) 2014 41.6 133.4 202.9 857.4 (years) Births attended by Trained Health Personnel (%) 2016 63.7 50.6 67.7 ... 80 Access to Safe Water (% of Population) 2015 55.6 71.6 89.1 99.0 70 60 Access to Sanitation (% of Population) 2015 15.6 51.3 57 69 50 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 40 2016 4.7 39.4 60.8 96.3 30 Incidence of Tuberculosis (per 100,000) 2016 287.0 3.8 1.2 ... 20 Child Immunization Against Tuberculosis (%) 10

2016 99.0 245.9 149.0 22.0 0

2010 2012 2015 2005 2013 2014 2016 2017 Child Immunization Against Measles (%) 2016 90.0 84.1 90.0 ... 2000 Underw eight Children (% of children under 5 y ears) 2011 13.6 76.0 82.7 93.9

Prev alence of stunding 2011 34.8 20.8 17.0 0.9 Tanzania Africa Prev alence of undernourishment (% of pop.) 2015 32.3 2 621 2 335 3 416 Public Ex penditure on Health (as % of GDP) 2014 2.6 2.7 3.1 7.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2015 80.7 106.4 109.4 101.3 Primary School - Female 2015 82.0 102.6 107.6 101.1 Infant Mortality Rate Secondary School - Total 2013 31.7 54.6 69.0 100.2 ( Per 1000 ) Secondary School - Female 2013 30.3 51.4 67.7 99.9 100 90 Primary School Female Teaching Staff (% of Total) 2014 51.5 45.1 58.1 81.6 80 Adult literacy Rate - Total (%) 2015 77.9 61.8 80.4 99.2 70 60 Adult literacy Rate - Male (%) 2015 83.2 70.7 85.9 99.3 50 Adult literacy Rate - Female (%) 2015 73.1 53.4 75.2 99.0 40 30 Percentage of GDP Spent on Education 2014 3.5 5.3 4.3 5.5 20 10

2005 2013 2016 2010 2011 2012 2014 2015 Environmental Indicators 2000 Land Use (Arable Land as % of Total Land Area) 2015 15.2 8.6 11.9 9.4 Agricultural Land (as % of land area) 2015 44.8 43.2 43.4 30.0 Forest (As % of Land Area) 2015 52.0 23.3 28.0 34.5 Tanzania A frica Per Capita CO2 Emissions (metric tons) 2014 0.2 1.1 3.0 11.6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : May 2018 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+)

VIII. Appendix II. Table of Bank Group Operations in the Two Countries Burundi: Bank Operations of November 9, 2018

NALTIONAL OPERATIONS Sector Name Window Long name ApprovalDte FinDisbDat Netloan VD Cap. Disb.Ratio Age (%) Proj. Multi-Sector ADF GRANT PROJET D'APPUI A LA 12/15/2017 6/30/2023 12,000,000.00 296,055.74 2.5% 0.90 TRANSFORMATION DE L'AGRICULTURE DANS LA Multi-Sector ADF GRANT SUPPORT ENERGY FOR COOKING AND 05/02/2018 6/30/2019 1,000,000.00 0.00 0.0% 0.52 RESTORATION OF THE ENVIRONMEN Multi-Sector TOTAL/ 13,000,000.00 296,055.74 2.3% 0.71 AVERAGE Power ADF GRANT HYDROENERGY JIJI MULEMBWE 06/23/2014 12/31/2019 14,340,000.00 0.00 0.0% 4.38 Power-Sector TOTAL/ 14,340,000.00 0.00 0.0% 4.38 AVERAGE Social ADF GRANT PROJET D’APPUI AU PROCESSUS 05/17/2017 3/30/2020 877,000.00 28,932.05 3.3% 1.48 D’ELABORATION DES STRATEGIES DE Social-Sector TOTAL/ 877,000.00 28,932.05 3.3% 1.48 AVERAGE Transport ADF GRANT PROJET D'AMENAGEMENT ET DE 06/29/2011 3/31/2019 10,000,000.00 2,793,242.32 27.9% 7.37 BITUMAGE DE LA ROUTE GITEGA- NYANG Transport ADF GRANT PROJET D'AMENAGEMENT ET DE 06/29/2011 3/31/2019 32,000,000.00 31,567,962.63 98.6% 7.37 BITUMAGE DE LA ROUTE GITEGA- NYANG Transport ADF GRANT PROJET DE LA ROUTE MAKEBUKO 12/18/2013 12/31/2018 8,940,000.00 8,430,497.96 94.3% 4.90 RUYIGI Transport ADF GRANT PROJET D’AMENAGEMENT ET DE 09/24/2014 6/30/2019 19,420,000.00 14,098,553.90 72.6% 4.13 BITUMAGE DE LA RN 18 NYAKARARO- MW Transport ADF GRANT PROJET RN 18 NYAKARARO-MWARO - 02/01/2017 12/31/2020 9,720,000.00 127,193.53 1.3% 1.77 GITEGA PHASE II TRONCON KIBUMB Transport ADF GRANT PROJET RN 18 NYAKARARO-MWARO - 02/01/2017 12/31/2020 4,080,000.00 0.00 0.0% 1.77 GITEGA PHASE II TRONCON KIBUMB Transport-Sector TOTAL/ 84,160,000.00 57,017,450.34 67.7% 4.55 AVERAGE National Operations 112,377,000.00 57,342,438.13 51.0% 2.78 MULTINALTIONAL OPERATIONS Power ADF GRANT NELSAP INTERCONNECTION PROJECT 11/27/2008 12/31/2019 15,150,000.00 3,039,815.24 20.1% 9.96 - BURUNDI Power ADF GRANT RUZIZI III HYDROPOWER PROJECT 12/16/2015 12/31/2022 19,290,000.00 0.00 0.0% 2.90 (BURUNDI) Power ADF GRANT REGIONAL RUSUMO HYDROPOWER - 11/27/2013 8/31/2019 16,700,000.00 229,237.30 1.4% 4.95 BURUNDI Power EU GRANT REGIONAL RUSUMO HYDROPOWER - 11/21/2013 8/31/2019 10,519,281.22 556,833.09 5.3% 4.97 BURUNDI Social ADF GRANT PROJET D'APPUI A LA REINSERTION 05/25/2016 6/28/2019 770,000.00 276,695.06 35.9% 2.46 SOCIO-ECONOMIQUE DES JEUNES Social ADF GRANT PROJET D'APPUI A LA REINSERTION 05/25/2016 6/28/2019 380,000.00 124,360.08 32.7% 2.46 SOCIO-ECONOMIQUE DES JEUNES Transport ADF GRANT PROJET DE ROUTE NYAMITANGA- 12/16/2008 12/31/2018 50,620,000.00 48,317,978.52 95.5% 9.90 RUHWA-NTENDEZI-MWITYAZO Transport ADF GRANT PROJET DE ROUTE NYAMITANGA- 12/16/2008 12/31/2018 49,380,000.00 48,513,134.19 98.2% 9.90 RUHWA-NTENDEZI-MWITYAZO Transport ADF GRANT BURUNDI- PROJET 06/27/2012 12/31/2018 27,500,000.00 22,815,722.17 83.0% 6.37 D'AMMENAGEMENT ET DE BITUMAGE DE ROUTES MUGI Multinational Operations 190,309,281.22 123,873,775.65 65.1% 5.99 National+Multinational 302,686,281.22 181,216,213.78 59.9% 4.66

Tanzania: Bank Operations as of November 9, 2018 22

Sector Name Window Long name ApprovalDte FinDisbDat Netloan VD Cap. Disb.Ratio Age Proj. (%) Agriculture ADF Loan TANZANIA INITIATIVE FOR 06/20/2018 (blank) 9,200,000.00 0.00 0.0% 0.39 PREVENTING AFLATOXIN CONTAMINATION ( Agriculture GAFSP TANZANIA INITIATIVE FOR 06/20/2018 (blank) 14,364,720.25 0.00 0.0% 0.39 PREVENTING AFLATOXIN CONTAMINATION ( Agriculture ADF Loan TANZANIA AGRICULTURAL 12/13/2016 1/31/2020 67,270,000.00 33,635,000.00 50.0% 1.91 DEVELOPMENT BANK Agriculture-Sector TOTAL/ AVERAGE 90,834,720.25 33,635,000.00 37.0% 0.89

Finance ADB Loan TANZANIA SHILLING LINE OF CREDIT 12/12/2012 6/30/2018 14,364,720.25 14,364,720.25 100.0% 5.91 TO FRB SUBSIDIARY, FIRST NA Finance ADB Loan CRDB BANK LIMITED LINE OF CREDIT 05/18/2016 11/30/2017 64,641,241.11 64,641,241.11 100.0% 2.48 2015 Finance Private Sect. CRDB BANK LIMITED LINE OF CREDIT 06/08/2016 8/1/2024 8,080,155.14 0.00 0.0% 2.42 Fund 2015 Finance-Sector TOTAL/ AVERAGE 87,086,116.50 79,005,961.36 90.7% 3.60

Multi-Sector ADF Loan GOOD GOVERNANCE AND PRIVATE 07/11/2018 12/31/2019 40,000,000.00 0.00 0.0% 0.33 SECTOR DEVELOPMENT SUPPORT PROGR Multi-Sector ADF Loan ISP FOR GOOD GOVERNANCE III 02/03/2016 6/30/2019 12,000,000.00 4,473,478.93 37.3% 2.77

Multi-Sector ADF Loan ISP FOR DOMESTIC RESOURCES 03/30/2017 12/31/2019 19,580,000.00 541,962.90 2.8% 1.61 MOBILIZATION AND NATURAL RESOURCE Multi-Sector ADB Loan HUMANITARIAN EMERGENCY 01/12/2017 3/31/2018 718,236.01 0.00 0.0% 1.82 (SRF) ASSISTANCE TO MITIGATE THE EFFECTS OF Multi-Sector TOTAL/ AVERAGE 72,298,236.01 5,015,441.83 6.9% 1.63

Power ADF Loan IRINGA -SHINYANGA TX PROJECT 10/26/2010 9/30/2020 45,360,000.00 24,509,245.43 54.0% 8.04

Power ADB Loan NORTH-WEST TRANSMISISON GRID 07/20/2018 (blank) 88,623,141.56 0.00 0.0% 0.31

Power-Sector TOTAL/ AVERAGE 133,983,141.56 24,509,245.43 18.3% 4.18

Social ADF Loan SUPPORT TO TECHNICAL 04/02/2014 12/31/2019 34,000,000.00 3,936,781.07 11.6% 4.61 VOCATIONAL EDUCATION AND TRAINING AND T Social ADF Loan ALTERNATIVE LEARNING & SKILLS 06/29/2011 12/31/2019 15,000,000.00 6,220,494.71 41.5% 7.37 DEVELOPMENT PROJECT (ALSD II) Social-Sector TOTAL/ AVERAGE 49,000,000.00 10,157,275.78 20.7% 5.99

Transport ADB Loan TRANSPORT SECTOR SUPPORT 11/26/2015 10/31/2021 194,606,047.55 22,541,003.61 11.6% 2.96 PROGRAM Transport ADF Loan TRANSPORT SECTOR SUPPORT 11/26/2015 10/31/2021 54,000,000.00 6,492,824.43 12.0% 2.96 PROGRAM Transport ADF Loan TANZANIA ROAD SECTOR SUPPORT 12/02/2009 12/31/2018 152,000,000.00 135,158,966.58 88.9% 8.94 PROJECT I Transport ADF Loan ROAD SECTOR SUPPORT PROJECT 04/05/2012 12/31/2018 140,000,000.00 129,536,216.06 92.5% 6.60 PHASE II Transport ADB Loan DAR ES SALAAM BUS RAPID TRANSIT 09/30/2015 12/31/2020 69,970,552.32 1,350,190.38 1.9% 3.11 INFRASTRUCTURE PROJECT Transport AGTF DAR ES SALAAM BUS RAPID TRANSIT 09/30/2015 12/31/2020 31,810,672.99 290,469.77 0.9% 3.11 INFRASTRUCTURE PROJECT Transport-Sector TOTAL/ AVERAGE 642,387,272.86 295,369,670.83 46.0% 4.61

Water Sup/Sanit ADF Loan ZANZIBAR URBAN WATER SUPPLY & 12/19/2012 12/31/2019 14,000,000.00 10,180,787.59 72.7% 5.89 SANITATION Water Sup/Sanit ADB Loan ARUSHA SUSTAINABLE WATER AND 09/16/2015 6/30/2020 103,172,448.47 8,477,882.04 8.2% 3.15 SANITATION DELIVERY PROJECT Water Sup/Sanit ADF Loan ARUSHA SUSTAINABLE WATER AND 09/16/2015 6/30/2020 18,000,000.00 2,187,577.87 12.2% 3.15 SANITATION DELIVERY PROJECT Water Sup/Sanit AGTF ARUSHA SUSTAINABLE WATER AND 09/16/2015 6/30/2020 30,165,912.52 1,459,098.33 4.8% 3.15 SANITATION DELIVERY PROJECT Water Sup/Sanit AWFF KIKONGE MULTIPURPOSE DAM 06/27/2016 6/30/2019 1,638,696.10 0.00 0.0% 2.37 HYDROPOWER AND IRRIGATION Water Sup/Sanit-Sector TOTAL/ 166,977,057.09 22,305,345.83 13.4% 3.54 AVERAGE National Operations 1,242,566,544.27 469,997,941.06 37.8% 3.49

Communications ADF Loan TANZANIA - LAKE VICTORIA 10/24/2016 4/30/2021 3,770,000.00 56,204.51 1.5% 2.04 MARITIME COMMUNICATIONS AND TRANSPO Power ADF Loan KENYA - TANZANIA 02/18/2015 12/31/2019 75,290,000.00 18,728,751.85 24.9% 3.73 INTERCONNECTION (TANZANIA) Power ADF Loan REGIONAL RUSUMO HYDROPOWER 11/27/2013 8/31/2019 22,408,000.00 856,165.21 3.8% 4.95 - TANZANIA Social ADF Loan EAST AFRICA'S CENTRES OF 10/03/2014 12/31/2019 6,250,000.00 1,677,801.97 26.8% 4.10 EXCELLENCE FOR SKILLS AND TERTIARY Transport ADF Loan MULTINATIONAL: EAST 04/16/2013 8/31/2020 79,900,000.00 47,538,114.21 59.5% 5.57 AFRICA:ARUSHA-VOI (TANZANIA) Multinational Operations 187,618,000.00 68,857,037.75 36.7% 4.08

National+Multinational 1,430,184,544.27 538,854,978.81 37.7% 3.54

IX. Appendix III. Project Costs 23

Annex 3.1: Summary of Project Costs by Expenditure Category

BURUNDI (UA Million) TANZANIA (UA Million) CATEGORY

FE LC Total FE LC Total

A. WORKS 25,85 11,01 36,86 103,03 50,46 153,49 CONSTRUCTION

B. GOODS 0,04 0,01 0,04 0,92 0,16 1,09

C. SERVICES 2,56 0,45 3,02 13,45 2,37 15,83

D. MISCELLANEOUS 0,23 0,30 0,53 0,00 0,00 -

Base cost 28,67 11,78 40,45 117,41 52,99 170,40

Physical contingencies 2,87 1,18 4,05 8,81 3,97 12,78

Price escalation 2,21 0,91 3,11 9,47 4,27 13,74

Cost excluding VAT 33,75 13,86 47,61 135,68 61,24 196,92

Resettlement compensation 0,00 0,60 0,60 0,00 4,38 4,38

Total Cost Excluding VAT Including Settelement 33,75 14,46 48,21 135,68 65,62 201,30 Compensation

EAC 0,00 0,11 0,11 0,00 0,11 0,11 CCTTFA 0,00 0,11 0,11 0,00 0,11 0,11 PROJECT TOTAL 33,75 14,67 48,42 135,68 65,83 201,51 COST Annex 3.2: Disbursement Schedule by Source

SOURCE 2018 2019 2020 2021 2022 2023 TOTAL

ADB 0,00 28,24 28,38 24,67 11,70 0,01 93,00

ADF 0,00 42,44 47,60 35,74 11,39 0,08 137,26

GOV BURUNDI 0,20 0,47 0,07 0,07 0,07 0,07 0,96

GOV TANZANIA 1,46 7,46 3,87 3,72 1,79 0,00 18,30

EAC 0,04 0,04 0,04 0,04 0,04 0,21

CCTTFA 0,04 0,04 0,04 0,04 0,04 0,21 PROJECT TOTAL 1,66 78,70 80,00 64,29 25,04 0,25 249,93 COST

% Percentage 0,66% 31,49% 32,01% 25,72% 10,02% 0,10% 100,00%

Annex 3.3: Disbursement Schedule by Category (UA million)

CATEGORY 2018 2019 2020 2021 2022 2023 TOTAL

A. WORKS 0,00 61,43 58,94 50,52 19,45 0,00 190,35 CONSTRUCTION

B. GOODS 0,00 0,00 1,13 0,00 0,00 0,00 1,13 C. SERVICES 0,00 3,38 8,65 4,74 2,04 0,03 18,84 D. MISCELLANEOUS 0,00 0,11 0,11 0,11 0,11 0,11 0,53 Base cost 0,00 64,92 68,83 55,37 21,60 0,14 210,85 Physical contingencies 0,00 5,19 5,59 4,41 1,62 0,01 16,83 Price escalation 0,00 5,19 5,49 4,43 1,74 0,01 16,85 Cost excluding VAT 0,00 75,29 79,91 64,20 24,96 0,16 244,53 Resettlement 1,66 3,32 0,00 0,00 0,00 0,00 4,98 compensation Total Cost Excluding VAT Including 1,66 78,61 79,91 64,20 24,96 0,16 249,51 Resettlement Compensation EAC 0,00 0,04 0,04 0,04 0,04 0,04 0,21 CCTTFA 0,00 0,04 0,04 0,04 0,04 0,04 0,21 PROJECT TOTAL COST 1,66 78,70 80,00 64,29 25,04 0,25 249,93

X. Appendix IV. Taking into account Risks Related to Fragility Factors in the Project 25

1. Fragility context in Burundi After significant progress in consolidating peace and security, economic and financial reforms and improving living conditions of its citizens, in 2015, Burundi underwent a socio- political crisis, which slowed down the overall progress achieved. Fragility from the 2015 crisis resulted in a breakdown of socio-political cohesion. Recommendations from an inter-Burundi dialogue launched in May 2016 with the help of the international community are slow to be translated into concrete actions. Nevertheless, before the present situation, Burundi had experienced more serious and intense crises from which arose the launch of a peace process and signature of the Arusha Agreements in 2000, cited worldwide as an example of successful social dialogue and peace building. It has also made a significant effort to enshrine gender parity in the country’s laws and policies, as outlined in the 2000 Arusha Peace and Reconciliation Agreement for Burundi. This experience conferred upon Burundi internal conflict resolution and peace- building capacities, which could serve as a basis for moving out from the current crisis. On the economic front, the political crisis in 2015 led to a GDP decline of 3.9%. Burundi returned to growth in 2016, but at a slower pace (0.9%) to improve the living conditions of the population. Relations with Technical and Financial Partners (TFPs), in particular the European Union and several of its member countries have not improved much since the crisis. The country is among the poorest in the world, with a poverty rate of 64.6% in 2014 (67.1% in 2006). The latest UNDP Human Development Report 2016 ranks Burundi 184th out of 188 countries and territories. Burundi stands at 0.471, ranking it 114 out of 160 countries in the Gender Inequality Index 2017; showing high representation of women in parliament (37.8%) and high participation in the labour market is 80.2% compared to 77.5% for men. However, in the field of education and health, women are still lagging behind. 7.5% of adult women have reached at least a secondary level of education compared to 10.5% of their male counterparts. For every 100,000 live births, 712 women die from pregnancy related causes; and the adolescent birth rate is 26.8 births per 1,000 women of ages 15-19. In addition, the country faces a high unemployment rate, estimated at more than 50%, which particularly affects young people. In addition, the impact of the political crisis, combined with the freeze on external assistance, was further exacerbated in 2016 by the low level of service provision, especially in key sectors, following the decrease in budget appropriations. (29.8% for education,-54% for health and the fight against AIDS,-13.7% for agriculture and livestock and -85.4% for water, environment, urban and physical planning). These declines are attributable to freezing of 33% of the non-public financial assistance between 2014 and 2016. This resulted in: (i) the shortage of drugs, vaccines and supplies for health facilities; (ii) insufficient teaching materials in schools and teachers, difficulties in managing basic education and the exclusion of about 80,000 students from the education system every year; and (iii) pockets of starvation and high levels of malnutrition in some places. 2. Taking into account fragility in the project The various documents available on Burundi (DSP, regional fragility study, briefs, briefing notes, etc.) show that the main factors of fragility are political, economic, social and environmental. In the framework of the current project, the following interventions will reply to the main fragility factors identified and summarized below:

Appendix IV: Table of Fragility Assessment for Burundi

Fragility factors Situation and challenges Measures supported by the project intervention - 1. Low quality of - Lack of well-equipped - Construction of the school of excellence in Bitare education schools with well trained reduce teachers and teaching - Internship for technical training will be facilitated employability of materials during the implementation of the project through youth - Low opportunity for works. internship for youth trained in TVT centers - - 2 Conflicts due to - Rumonge province hosts a - high pressure on large number of returnees - The local authorities will work with the land use who have difficulties to have Contractors to prioritize the local population for a land for farming the jobs which will be created during the - more than 80% of land is implementation of the project used to palm oil farming and - Entrepreneurship capacity building for women and a little portion is reserved to youth will help to create alternatives sources of food farming income - - Special measures for women: fruit processing in Ndava.

-  3. Insufficient - Road network generally in - regional planning undertaken in collaboration with infrastructure bad conditions the relevant services of the other departments - Rehabilitation rural roads - - . - Community awareness raising on environmental protection. - Specific measures for youth entrepreneurship. - Improvement of rural roads. - Paving of cities roads to avoid the negative impact of the road dust on the inhabitants’ health. - Improve local resilience by opening up market opportunities for local population. - Facilitate regional trade opportunities. - Improve social relations among marginalized communities and economies.

4. Low - beginning of structuring in - Rehabilitation of existing markets and access to organization of associations, groups or water and sanitary facilities. producers, cooperatives - Construction of new markets processing and - private sector not developed - establishment of cooperatives marketing of despite some initiatives - Training of youth and women farmers. agricultural - informal marketing of - products agricultural products - sale of products either directly to consumers or to intermediaries 5. Poverty and - Families survival difficulties - increase women basic income inequalities - Several categories of - Employment and income opportunities for the vulnerable people poor, youths and women during the project implementation and after completion.

Fragility factors Situation and challenges Measures supported by the project intervention 6. Gender - High labour participation, inequality however, low education rate - Increase access to social services (health, combined with and high mortality rate. education, and water and sanitation) socio-economic - Triple roles of women - Leveraging infrastructure to increase women vulnerabilities challenges their abilities to mobility and access to markets and information. participate effectively in the - Improvement of women's living conditions and national development environment agenda. 7. Management - Combined effect of climate - Strengthening the resilience of ecosystems and of natural change communities to climate change through: Degradation of natural disasters and -  restoration of ecosystems resources (soils, forests, etc.)  reforestation activities, adaptation to - drying up and temporary  the construction of hydraulic structures climate change flooding of swamps allowing optimal water management, (drought, - poor access to drinking water  Landslide management and preparedness floods, plan. bushfires, ...)  Watershed management plan on the Mumirwa foothills along the road project by to restore the vegetation on the surrounding hills and improving management of run-off and storm water volume and speed along the road.

XI. Appendix V. Justification of the Government Counterpart Level for Burundi 1. The project will be financed for Burundi road section through an ADF grant of UA 47.25 million (UA 18.90 million from ADF Performance Based Allocation and UA 28.35 million from ADF Regional Envelope). The national counterpart is 1.99 % of the project cost for the Burundi component. 2. The level of the Government's counterpart funding is less than 10% of the total project cost, as required by the eligible expenditure policy, in paragraph 4.2.2. Thus, in accordance with the provision of Section 4.2.2 of the Bank Group's Eligible Funding Expenditure Policy (Revised Version of March 19, 2008), the level of government counterpart for the ADF Window was set based on the following four criteria: (i) the country's commitment to implementing its overall development program, (ii) the country's funding allocated to the sector targeted by the Bank's assistance, and (iii) budgetary situation as well as the country debt level; (iv) the upper limit on cost sharing and the guidelines specified in the country funding parameters. Burundi is subject to important factors of fragility 3. Burundi is one of the Regional Member Countries (RMCs) that have experienced recurrent socio-political conflicts. The resulting situations of violence and insecurity have led to a crisis of the political class mistrust but also and above all tensions between dominant coalitions and communities, by exploiting ethnic differences. The country has failed to develop sufficient resilience capacity to stem violence and address economic, social and environmental issues. Faced with all these hazards, the state and the political class were unable to meet the expectations of the population, women and young people in particular, even less to use the mechanisms of inclusive socio-political dialogue, yet foreseen and Guaranteed by the Constitution 4. In 2008, as a post-conflict country, Burundi was declared a "fragile state", and benefits from the commitment of partners including bank group, based on the New Deal (Busan New Deal), ten years ago up today. The fragility determinants can be summarized in the following five points: (i) political, security and institutional factors; (ii) Economic, financial and natural resource management factors; (iii) Social factors, poverty and gender issues; (iv) Environmental factors and effects of climate change and; (v) The interactions between external and internal factors (regional dimension in particular). A – Burundi is committed to implementing its new National Development Plan (PND 2018-2027) 5. In order to respond to the major challenges that persist in terms of economic and social development, and in response to the 2012-2016 Poverty Reduction Strategy, the Government of Burundi has drawn up a National Development Plan for Burundi over the decade. 2018-2027 (NDP Burundi 2018-2027). The NDP is part of a development approach based on a new dynamic of transformation of economic, demographic and social structures. These include generating multiplier and sustainable effects on improving economic growth and average per capita income and enabling basic needs, poverty reduction, human capital development, environmental sustainability to be met and social equity.

6. The NDP 2018-2027 was developed in a political, economic and social environment characterized by openness to dialogue and consultation between the Government and partners of political parties, civil society, religious denominations and of youth who are essential players in development. It aims to be the foundation of strong and inclusive growth in the year 2018 in order to enable Burundi to reach the level of emerging countries by 2027. 29

7.. The NDP 2018-2027 is structured around 11 pillars: (i) the modernization of agriculture; (ii) increased energy production; (iii) The improvement of knowledge based on technology and know-how; (iv) Development of the natural resources sector; (v) diversifying and promoting a competitive and healthy economy; (vi) The creation of an environment conducive to industrialization; (vii) The strengthening of human capital; (viii) The strengthening of transport infrastructure, trade and ICT; (ix) the promotion of tourism; (x) Public-private partnerships and; (xi) Regional integration and international cooperation. B - Funding allocated by the country to the sector targeted by Bank assistance 8. As of 11/09/2018, the Bank's active public sector portfolio in Burundi comprises 17 operations, with a total net commitment of UA 276.875 million, including UA 136.864 million for the 11 projects and UA 140.011 million for the seven regional operations. The analysis of the sectoral distribution of projects indicates the priority given to the transport sector (58%), then to energy (28%), agriculture (10%) and the environment (3%). 9. It should be noted that transport investment projects include components in the social sector. The types of activities financed are: construction / rehabilitation / equipment of socio-economic infrastructures (schools, health centers, markets, storage warehouses, women's promotion centers, etc.), support for income-generating activities in favor of groups training of young people in the context of labor-intensive work, awareness-raising campaigns on HIV-AIDS and road safety. It should be noted that on July 12th,2017, the Bank approved a project to support the provision of energy for cooking and environmental restoration in four refugee camps in Burundi, for a total of 1,000 000 USD. The program will be implemented by UNHCR. The grant agreement was signed on August 10th, 2018 10. 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. C – The country knows a tense budget situation with the risk of high debt

11. Since 2015, Burundi has been in a crisis that has had a significant impact on public finances and budgetary policy. The drastic decrease in external financing through the State budget has resulted in a deterioration of the budget deficit and insufficient budget savings for the financing of infrastructure investments from the State's own resources.

12. In 2018, the objective was to contain the deterioration of the budget deficit, which had worsened in 2017 (8.2% of GDP versus 6.2% in 2016). Forecasts are based on a deficit of 8.9%. During the first half of the year, there was an improvement in tax and non-tax revenues, which increased by 19.2% compared to the same period of 2017, mainly due to the increase in internal trade taxes (+ 28.3%) and taxes on Revenues (+ 27.1%). However, a stabilization of taxes on foreign trade is noted. The increase in public expenditure should be limited to 4.6% compared to 2017 (7% for current expenditure, 4.6% for investments in national resources and 1.2% for investments in external resources). Overall, the budget deficit is expected to be slightly less than the initial forecast of 8.9% of GDP. To finance this deficit, the Government should resort to advances from the central Bank and the issuance of Treasury bills, the latest issue of which dates from July 2018. 13. Burundi reached the completion point of the Heavily Indebted Poor Countries (HIPC) Initiative in 2009. However, according to the IMF/World Bank Debt Sustainability Analysis (DSA) in 2015, Burundi remains exposed to a high risk of over-indebtedness, even if the net present value of the debt in relation to GDP, which was 18% in 2015, is significantly below the 30% threshold. The country is exposed to a high risk of indebtedness due to the net present value of external debt reported to exports of goods and services, which is estimated at 152% for 2015

(compared to 187% for 2012), which is largely above the threshold of refers 100%. The current crisis has deepened the overall debt of Burundi, which has risen from 34% of GDP in 2014 to 44% in 2016. Estimates are in the order of 50% for 2017. 14. It is then necessary to increase exports and broaden the range by exploiting the potential of other sectors than coffee (mining, tea, horticulture and tourism). To do this, short-term actions must be undertaken in order to improve the productivity and financial health of the coffee sector. 15. These findings call for more prudent and rigorous debt management. To alleviate the risk of over-indebtedness, the institutional debt management system has been strengthened. The framework for the management of public debt has been renovated by the promulgation of Law n ° 1/03 of 11 May 2016, which promotes the management of public debt at low cost and at least risk, without compromising the viability of public finances. The National Public Debt Management Committee, in charge of the development of the debt strategy, determines the overall debt ceiling, the maximum amount of treasury bills, the maximum amount of State guarantees and the degree of Concessionality acceptable for loans. However, despite this institutional framework, the country does not currently have a medium-term debt strategy. At the operational level, management is carried out by the debt management, which systematically checks the data from the DMFAS software (Debt Management and Analysis system) and confronts them with the maturity notices sent by the Creditors. However, internal capacities remain limited in terms of data production and debt sustainability analysis. D - Bank support in Burundi 16. Due to this high risk of over-indebtedness, the country has only limited resources within the bank. The funding of the indicative operations program for the 2012-2016 DSP extended to 2018 is mainly derived from ADF's resources in the form of donations. For the period 2017-2019, the performance-based Allocation (PBA) of FAD-14 amounts to UA 29.22 million plus the financing of the FAT of UA26.11 million. For the period 2020-2021, the assumption of a renewal of the same allowances was retained. The bank will also continue its efforts to mobilize additional resources, such as special/thematic and fiduciary funds, to increase the country's limited allocation of ADF. Finally, the regional envelope, with its significant leverage effect, will be used to finance integrating projects that are of great importance in terms of the country's level of isolation. The search for co-financing will also be favored for large-scale operations in the infrastructure sector. E – Conclusion 17. In conclusion, we recommend that the contribution of the Government of Burundi be limited to UA 960,000, which represents 2.03% of the Bank's financing. This amount will be used for the compensation costs and part of the operating costs of the Project Management Unit.

XII. Appendix VI. Justification of the Government Counterpart Level for Tanzania 31

Justification for ADB Financing of more than 50% of Project Cost

Based on the Bank’s policy on Expenditure Eligible for the Bank Group, this operation is proposing government financial contribution of less than 50%, justified as follows:

1 Country Commitment to Implement its Overall Development Program: Tanzania’s development framework and long-term development goals are laid out in the National Vision 2025 (TDV 2025), with the aspirations to transform the country into a middle income and semi-industrialized economy by 2025. The Vision has the following three targets: (i) a high quality livelihood for all citizens, (ii) good governance and rule of law, and (iii) a strong and competitive economy, including through the development of infrastructure. The Government’s medium term development agenda is outlined in the Second Five Year Development Plan (FYDP II: 2016/17-2020/21), which focuses on industrialization. The ambitious FYDP II, which bears the theme – “Nurturing Industrialization for Economic Transformation and Human Development” – focuses on: (1) growth and industrialization (2) human development and social transformation; (3) business environment strengthening; and (4) ensuring implementation effectiveness and efficiency. The Plan aspires to raise annual real GDP growth to 10% by 2021 (from 7% in 2015), per capita income to US$ 1,500 (from US$ 1,043 in 2014) and reduce poverty rate to 16.7% in 2021 from 28.2% recorded in 2011/12. 2 Financing Allocated by the Country to Sectors Targeted by Bank Assistance: Infrastructure development remains a top priority in Tanzania’s plans and strategies. The share of infrastructure (transport and energy) spending in the total budget is around 26%, and there are several multi-year master plans and programs in place, but funding remains a challenge. With regard to transport sector, the Second Five Year Development Plan (FYDP II: 2016/17-2020/21) aspires to transform Tanzania into a leading multi-modal transportation and logistics hub with wide scope for regional and global trade facilitation, presented with advantages for shipping, warehousing and bulk storage, serving a number of countries in the hinterland. To achieve these objectives, FYDP II estimates the total investment needs at about US$ 12.5 billion for five years (equivalent to an average annual budget of about US$ 2.5 billion). However, financing remains a major challenge, and for fiscal years 2017/18 and 2018/19, budget allocations for transport sector were about US$ 2.1 and US$ 1.8 million, respectively. The shares of transport sector in the budget are indicated in Table 1.

TABLE 1: INFRASTRUCTURE FINANCING IN TANZANIA

2017/2018 Budget 2018/2019 Budget

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

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

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

Share of transport budget in infrastructure budget 84% 71%

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

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

XIII. Appendix VII. ADB Financing Conditions for Tanzania

Loan/Grant currency USD Dollars Loan Type Fully Flexible Loan Tenor 24 years Grace Period 5 years Average Maturity 14.75 years Repayment: 38 Half-yearly instalments after expiry of the grace period. Interest Rate: Base rate + Financing margin + Lending spread+ Maturity premium Base Rate: Floating Base Rate (6-month USD LIBOR, 6m JPY LIBOR or 6m EURIBOR reset each 1st February and 1st august; 3m JIBAR resets each 1st February, 1st May, 1st august and 1st November). A free option to fix the Base Rate is available Financing Margin: The Bank funding cost margin as determined each 1st January and 1st July and applied to the Base Rate each 1st February and 1st August for USD, EUR and JPY and each 1st February, 1st May, 1st august and 1st November for ZAR. The prevailing Funding Margin rate for USD is -0.01000 Loan Margin: 80 basis points (0.8%) Front-end Fee: 0.25% of the loan amount payable latest 60 days following the date of effectiveness of the Loan Agreement or deducted at first disbursement. Commitment Fee: 0.25% per annum on the undisbursed loan amount, commencing 60 days following the date of signature of the Loan Agreement and payable on each interest payment dates, including during the grace period. Base Rate Conversion Option*: Besides the free fixing option, the Borrower may revert to the floating rate or reset the rate on all or part of the disbursed amount of its loan.

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

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

Transaction fees apply NPV (baseline scenario) USD 524.93Million ERR (baseline scenario) 30.6%

XIV. Appendix VIII. REGIONAL INTEGRATION Transport and Trade Facilitation Rationale: Operationalization of OSBP will be a key component of the trade and transport facilitation measures under the project. Within the EAC, notable transport and trade facilitation gains have been registered as a result of OSBPs, namely: (i) time and cost savings at border crossings for both passengers and freight (ii) improved information exchange and (iii) improved working environment for border officials and improved safety and security for cross-border traffic. For instance, available information indicates that the conversion of Malaba Border (Kenya/Uganda) into an OSBP has resulted into substantial time saving for cargo processing from 24hrs to 4hrs only leading into cost savings amounting to more than US$ 70 million per annum. Accordingly, the EAC Sectoral Council on Transport, Communication and Meteorology during its 15th Meeting prioritized 12 border posts within EAC, including the Mugina (Burundi)/Manyovu (Tanzania) border post on the Central Corridor, for conversion into OSBPs. The others are: Akanyaru (Rwanda)/Kanyaru (Burundi) OSBP on the Northern Corridor; Cyanika (Rwanda/Uganda) on the Northern Corridor; Nimule (Uganda)/Elegu (South Sudan) on a Northern Corridor feeder; Lwakhakha (Kenya)/Uganda on a Northern Corridor feeder; Suam/Suam River (Uganda/Kenya), on a Northern Corridor feeder; Oraba/Kaya (Uganda/South Sudan) on a Northern Corridor feeder; Lokiriyama (Kenya/Uganda) on a Northern Corridor feeder; Nadapal (Kenya/South Sudan) on the Northern/LAPSSET Corridors; Gahumo/Murusagamba (Burundi/Tanzania) on the Central Corridor; Murongo/Kikagati (Tanzania/Uganda) on the Mbara-Rusumo feeder to the Central Corridor; and Illasit/Tarakea (Kenya/Tanzania) on the feeder to the Northern and Tanga Corridor. The Mugina/Manyovu does not experience heavy traffic at present due to the poor condition of the road. The main users are local vendors and small-scale cross-border traders. Discussions with border agencies revealed that it takes between an hour and two to process traders through the border. However, it is expected that traffic will improve significantly once the road upgrade project is completed. In addition to improved road conditions, the proposed road project will cut the distance between Bujumbura and the Port of Dar es Salaam by 200km. OSBP and Coordinated Border Management (CBM): Under this component, the Project will finance construction of a One Stop Border Post at Manyovu/Mugina (Tanzania/Burundi) border in order to facilitate efficient cross-border movement of goods and people. This will ensure the gains from better road conditions and a shorter distance are not negated by border delays. Streamlined border processes will also be key in attracting traffic to the corridor from existing alternative routes. The Manyovu/Mugina border is one of the 12 border posts earmarked by the EAC for upgrading into an OSBP. The project will also finance consultancy services to customize and harmonize border procedures in order to operationalize Coordinated Border Management (CBM) at Manyovu/Mugina OSBP and border management system at Kobero border. This harmonization will follow the EAC OSBP Act (2016), OSBP Procedures Manual and Regulations, with the necessary customization, e.g. on border opening hours and translation of documentation into the official languages of the two countries. The Project will also support capacity building and awareness of Border agencies and traders crucial elements for OSBP design and operationalization. The Project will further support implementation of a Simplified Trade Regime (STR), to facilitate informal and small-scale cross-border traders and local vendors, 70% of whom are women and youths. The STR entails simplified procedures for such traders. In so doing, it also reduces the motive for them to use unchartered routes and facilitates capturing of data on such trading activities. Gender dimensions will be further mainstreamed in the design of the OSBP structure and operational procures; provision of trade information desks (TID) to provide information and guidance on border procedures, filling out of forms, etc., and training. The OSBP structure will be constructed in accordance with Architectural Building Designs prepared as part of the project design studies, and will replace existing structures at the Border. The site configuration is premised on a Juxtaposed site layout, where a one-stop process is facilitated by constructing the OSBP building in each country, i.e. each OSBP building is positioned against the border, and with the “One Stop” process facilitated in the entry or host country. This configuration therefore demands duplicate building and site layouts, comprising

similar building configurations and amenities on each side of the border. These buildings and amenities include a passenger terminal, police quarters, a warehouse, ICT hardware and software and ICT interface between the Border agencies of the two countries, security cameras, backup power, a scanner or x-ray building, cafeteria and external works (comprising control booths, washrooms, standby power source, as well as ancillary site works). Circulatory roads and sufficient truck, car, bus and staff parking lots will underpin the functionality of the proposed site layout in a manner that facilitates the flow of traffic and incorporates the OSBP operational procedures based on EAC Guidelines. OSBP Legal Framework: Operationalization of an OSBP and a coordinated border management (CBM) necessary to realize the efficiency gains from establishment of an OSBP is underpinned by an appropriate legal framework. Coordinated Border Management brings together under one roof, all the Government agencies performing border crossing controls procedures, doing away with need for motorized traffic and persons to undergo clearance twice at both sides of the border. This arrangement expedites movement, release and clearance of goods and persons across borders, by streamlining border procedures, automation of the border processes and simplification of trade documents. For the Mugina/Manyovu OSBP, the main Legal Instrument to be used will be the East Africa Community (EAC) EAC OSBP Act (2016) and its related OSBP Regulations (2017) and Procedures Manual (2018): This Act contains provisions governing the following aspects of the OSBP operationalization: i. Control zones (establishment and designation of control zones, limitations to effecting border controls, demarcation and security of control zones, exclusive use areas within control zones, traffic control, synchronized hours of operation) ii. Conduct of border controls (officers to carry out border controls, sequence of controls, joint controls, reversal controls, obligation to re-admit, use of single window system, free transfer of money and goods to own territory, higher levels of trade facilitation) iii. Application of Border Control Laws (non-discrimination, limitation to application of border control laws, consistent operational procedures, information and communication technologies) iv. Application of Criminal Laws (Criminal acts in terms of Border control laws, and non- border control laws, limitation to application of criminal laws, assistant and joint operation to combat crime) v. Conduct of Officers (officers to move freely within control zone, number of officers, names and designation, identification of officers, carrying of weapons, contact persons for communication, protection and assistance to officers, investigation officers) vi. Facilities in Control Zone (provision of facilities in control zones, equipment for official use, communication links to own territory, harmonization of structures and facilities, public use facilities) vii. Conduct of Facilitation Agents (Access to control zones by facilitation agents, vetting, registration, names and particulars, identification of facilitation agents, Laws applicable, Facilities for facilitation agents, Equipment for official use, Communication with national offices, Transfer of money, Access to electronic control systems) viii. Institutional Arrangements (coordination and monitoring of OSBP) ix. General provisions such as disputes between Partner States. Application of the Legal Instruments will be complemented by improved IT infrastructure at the border post, and Training for border agency staff, freight forwarders and traders. Currently, only three (3) Border agencies operate at the Manyovu (Tanzania) and Mugina (Burundi) border posts respectively. These are Revenue Authorities, Immigration, and Police. This number is expected to significantly increase, to include plant health and quarantine, standards bodies, among others, once the road upgrade activities are complete leading to larger traffic volumes through the border. In determining the appropriate legal and institutional framework under which the Manyovu/Mugina OSBP will operate efficiently, a consultancy services will be procured to identify Border Agencies operating at border posts and their roles examined. This consultancy will also identify provisions which permit, restrict or limit the establishment and operations of a OSBP at the borders between Tanzania and Burundi, as well

as the regional protocols and propose appropriate modifications in areas including but not limited to, harmonization of documentation (taking into consideration the language differences between the two countries),border opening hours (taking into consideration the differences in time-zones between the two countries), and other relevant aspects. Construction Programme: The indicative construction programme will be 18-month construction period, as well as the 12-month defects liability period. This estimate is based on similar OSBPs of a juxtaposed layout (e.g. Mchinji/Mwami between Malawi and Zambia on the Nacala Corridor). However, the exact timelines will be determined when the OSBP detailed designs are finalized. Simplified trade regime (STR) and trade information desks (TIDs) To enhance comfort and convenience, these structures and operating procedures will take into account the needs of women traders. In addition, simplified trade regimes (STR) will be implemented at the Border. The STR allows small-scale traders (defined as those carrying consignments worth below USD 2,000.00 in value), the majority of whom are women, to be processed using simplified procedures. In addition, the trade information desk will be established to provide information and awareness on border procedures. Rolling out of a Transport Observatory: In addition, the Project will support the roll out of the Transport Logistics Observatory as a tool for enhanced monitoring of corridor performance and policy reform to improve corridor performance. This will involve procurement of consultancy services to implement the Transport Observatory as a tool for enhanced monitoring of corridor performance and policy reform to improve corridor performance. This activity will build upon the Observatory currently being implemented by the CCTTFA on the Central Corridor by extending it to the section of the Corridor covered by the Project. Regional Coordination To facilitate efficient coordination of the project activities as a regional operation, the EAC and Central Corridor Authority will be involved in the Project Steering Committee and Technical Committee as Chair and co-Chair (see paragraph 4.1.6). Their role will be to convene member states to ensure they move at the same pace. These regional entities have a successful track- record in this regard, and have successfully coordinated the preparation studies for the Project. The regional bodies have also offered to contribute financial resources to complement the Bank allocation for coordination activities as indicated in the Financial Plan section of the PAR.

XV. Appendix IX. Map of the Project Area