Guinea - Second Urban Project

v Document of The World Bank FOR OFIICLAL USE ONLY Repor No. P-5204-GUI MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 43.0 MILLION (US$57.0 MILLION EQUIVALENT) TO THE REPUBLIC OF GUINEA FOR A SECOND URBAN PROJECT FEBRUARY 28, 1990 L Thk docn has a restricted dtibutdon and may be used by reipients ody In dte pefoncm of du official duties. Its contens may not othrwise be dislosed wiou World Ebnk autorization.  C1SSt3lC EWUtAL13fn Currency Unit a Guinen Franc (OF) A. of January 2S. 190 US81.00 a OF 68 OF 1,OW a =US11.6 US112.82 a SOR 1.0 FISCAL YEAR January O1 - December 81 SYSTEM OF WEIONTS AM IMEASURES (METIC) I moter (s) = 8.28 tet (Vt) 1 k:loa.tr (km) a 0.62 mites (ml) i llt.r (I) a 0.26 US Iallon. 1 cubic mster (m8) = 85. cubic feet ABOREIATIONS AMD ACRONYMS CCCE Cal.s. Central. do Coop6ration Econosique (France) FAC Fonds d'ildn et de coop6ration (France) mum MInistry of Urban Planning and Housing/Minlst4r. de I Urbanieme et de l'Habitat UNDP United Nation. Development Proraa/Progra. de Nations Unies pour I1 dlveloppennt (QND) UPSU Unit& de P1 lotage d. Services Urbain. - Conakry  FOR OMCIAL USE ONLY REPUBLIC OP GUINEA SECOND URBAN PROJECt CREDIT AND PROJECT SUMMARY Borrower: Republic of Guinea Beneficiaries. Ministry of Urban Planning and Housing (MUH), City of Conakry, and Secondary Cities through HUH. Amounts SDR 43.0 million (US$57.0 million equivalent) Terms: Standard IDA terms, with 40 years' maturity. Financint Plan: Government USS 8.2 million IDA US$57.0 million Cofinancing USS16.5 million Total US$81.7 million Economic Rate of Returns Economic rates of return calculated for road improvement components, representing about ha-f of total project cost, average 32? with a maximum of 36S and a minimum of 12?. Economic evaluation of the other components would be of limited significance. Staff Arioraisal Re :ort: Report No. 8218-GUI line: IBRD 22005 Population Distribution IBRD 22006 Conakry Priority Infrastructure Program This document has a suicted dtibution and may be used by is -ipienv nmly in the pes_bme of their offlcial duties. Its contents any not otherwise be disboseai without'?odd Bank aubton.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT Oe THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 43.0 MILLION (US$57.0 MILLION EQUIVALENT) TO THE REPUBLIC OF GUINEA FOR A SECOND URBAN PROJECT 1. The following memorandum and recommendation on a proposed development credit to the Republic of Guinea for SDR 43.0 million (US$57.0 million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms with 40 years' maturity and would help firance a Second Urban Project. The project would be cofinanced for US$16.5 million equivalent by the United Nations Development Program (UNDP), the Caisse Centrale de Coop6ration Economique (CCCE) of France, and the Fonds d'Aide a la Cooperation (FAC) of France. 2. Background. Although predominantly rural, Guinea is experiencing rapid urbanization. The urban population has grown from 450,000 inhabitants in 1960 to 1,650,000 in 1989 and is expected to reach 4,500,000 by the year 2010. Over 602 of the urban population is concentrated in Conakry, the capital city, the principal port and the major industrial and commercial center. As a result of the lack of infrastructure, other cities have found it difficult to attract economic activities and are confined to a secondary role. The Government of the Second Republic initiated, in late 1985, a far-reaching stabilization and adjustment program. The initial response of the private sector to the new economic environment has been encouraging. The bulk of growth in manufacturing value added has been generated by micro-enterprises in the urban informal sector. These developments have had a strong impa-t on Conakry's economy which has accommodated most of the newly created enterprises. 3. When the Government of the Second Republic came to power, Guinean cities, including Conakry, were ill-equipped to support the development of economic activities. After more than 25 years of severe neglect, most infrastructure was in a state of utter disrepair. In a limited time the new Government, with the support of the international donor community, has initiated significant improvements to the urban physical environment. Continuous efforts are, however, indispensable to make up for the accumulated backlog in the provision of essential urban infrastructure and services, as well as to be able to accommodate the rapid ongoing economic expansion and population growth. Existing deficiencies result not only from the lack of appropriate investments; they are also the consequence of the pervasive weakness of the institutions responsible for the planning, provision and maintenance of basic urban services. 4. Rationale for IDA Involvement. The proposed project constitutes a balanced program of key infrastructure upgrading, resource mobilization, institutional development and sector policy reforms. Implementation of this program would result in more efficient and sustainable provision of urban infrastructure and services, improvement in the overall efficiency of Guinean cities, and a better working and living environment for the development of economic and social activities. The project will help clarify the respon- sibilities of urban agencies, rationalize urban investment programming, improve the financing of urban services, and promote better land management and implementation of a new housing policy. These programs would, in turn, generate better resource allocation in the sector, increase the volume of  -2- private savings and productive investments in housing and economic activities, and stimulate the develcpment of private sector activities in the provision of urban services. Moreover, local authorities would be strengthened in their capacity to intervene in a coherent and permanent way to provide and maintain essential urban services. Improved access to urban services would also promote employment-generating activities in Conakry and in major secondary centers, as well as in their rural hinterlands, and would thus contribute to the growth of agricultural productivity. 5. Proiect Obiectives. The proposed project aims at improving the functioning of Conakry and secondary cities as centers of economic growth through a three-pronged approach of infrastructure upgrading, institutional strengthening and local resource mobilization. Building upon the experience of the ongoing First Urban Project, the proposed project would assist Governmerit in implementing its urban strategy and would consolidate the basj.s for sustainable urban development. The project would support the implementa- tion of a new housing policy designed to increase the role of private and municipal developers in replicable land development operations. The project would also support tne development of local urban institutions and stimulate urban employment through support for the development of small enterprises. Further, through its multi-faceted approach, the proposed project would pave the way for future programs designed to improve the urban environment through appropriate support for local participation in the decentralization and liberalization process underway in Guinea. 6. Proiect Description. The proposed project would includet (a) financing of a priority urban infrastructure program to complement upgrade and rehabilitate key roads and drainage networks in Conakry ana selected secondary cities; (b) implementation of a 200-ha land development operation applying the institutional and financial mechanisms proposed in the new housing strategy designed to increase formally recognized housing production; (c) continuation of the program to assist the- development of small construction enterprises launched under the First Urban Project; and (d) strengthening of urban institutions responsible for infrastructure planning, construction and maintenance, including support for the improvement of local resource mobilization and the provision of urban services. The latter includes a program to improve the management and financing of UPSU, Conakry's urban services unit. 7. Agreements Reached. During negotiations, agreements were reached with the Government on the following: (a) Conditions of Effectiveness will be that (i) the Presidential Order establishing the organization and functioning of the City Council of Conakry be signed; (ii) the Presidential Order and Decree creating and establishirg the functioning of the land development fee and of the revolving fund for land development operations be signed; and (iii) the Order creating the Steering Committee for Urban Land Development be signed, and the project director be appointed. (b) Conditions of Disbursement will be (i) for the financing of works related to the land development component, that the plan, program and development strategy for thie first 200-ha operation be reviewed and agreed with the Bank; and (ii) for the financing of UPSU's  operational costs, that UPSU's financ.ng plan be reviewed and agreed with the Bank on an annual basis. 8. Benefits. The beneficiaries of the project will be the inhabitants of Conakry and secondary cities through improved sanitary condicions and better access to economic activitlea as a result of improved urban services and infrastructure network. Further, the project would have a positive impact on the physical, health and socio-economic environment of the urban population. Urban poverty would be alleviated and urban employment stimulated as a result of improvement to the economic and physical conditions supporting the development of small enterprises in the informal sector. 9. Risks. Major risks result from the weak implementation capacity of both central and local inst!.tutions. Also, delays in decision-making, for political reasons, may delay improvements in local resource mobilizatio.i and implementation of the proposed policy reforms. To minimize these risks, technical assistance and training would be provided to adequately strengthen urban agencies. Moreover, clear political commitment to the proposed urban strategy was obtained during project preparation and was confirmed at appraisal and negotiations. 10. Recommendation. I am satisfied that the proposed credit would comply with the Articles of Agreement of the International Development Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments Washington, D. C. February 28, 1990  4- Sche_ule A REPUBLIC OF GUINEA SECOND URBAN PROJECT ESTIMATED COSTS AND FINANCING PLAN Summary Proiect Cost Estimates (US$ million) Project Component Local ForeJgn Total Base Cost I Priority Infrastructure Program 14.4 33.1 47.5 77 Land Development Operations 0.6 2.2 2.8 5 Support to Construction SSE 0.2 0.8 1.0 2 Institutional Development 2.4 8.1 10.5 16 Total Base Cost 17.6 44.2 61.8 100 Physical Contingencies 1.7 5.3 7.0 Price Contingencies 7.2 5.7 12.9 Total Project Cost 26.5 5.2 81.7 Summary Financins Plan (US$ million) Source Local Foreisn Total Government 5.3 2.9 8.2 10 IDA 17.2 39.8 57.0 70 UNDP 0.2 0.8 1.0 1 CCCE 3.5 10.5 14.0 17 FAC 0.3 1._2 1.5 2 Total 26.5 55.2 81.7 100 AFlIN February 28, 1990  -5- Schedule B REPUBLIC OF GUTNEA SECOND URBAN PROJECT PROCUREHENT NETHOD AND DISLURSEMEIS Procurement Arraniements (IDA Share in Parentheses) (USS million) ---- Procurement Method---- Catest!Rry ICB LCB Other NLA Total 1. Civil Works 41.7 -- 14.6 3.7 60.0 (37.8) (--) C--) C--) (37.8) 2. Materials and Equipment 1.7 0.6 0.5 -- 2.8 (1.7) (0.6) (0.3) (--) (2.6) 3. Operating Costs -- -- 1.3 -- 1.3 C--) C--) (0.5) (--) (0.5) 4. Consultants and Training -- -- 17.6 -- 17.6 5--) (--) (t6.1) {!} (16.1) Total Project Cost 43.4 0.6 34.0 3.7 81.7 IDA t39.S) ( (16.9) (57.0) Allocation and Disbursement Categories Credit Allocation EPenditures Catesorv (USS million) to be Financed 1. Civii Works for: (a) Conakry Infrastructsire 25.5 902 (b) Secondary Cities 5.0 90% Cc) Land Development 1.8 100% 2. Materials and Equipment fort (a) MUH 0.6 100o (b) City of Conakry 1.1 100% (c) UPSU 0.7 100o 3. UPSU's Operating Expenses 0.5 40% 4. Studies and Supervision of Civil Works 6.4 100% 5. Technical Assistance and Training for: (a) MUH 4.7 100o (b) City of Conakry 3.0 100% (c) UPSU 0.3 100% 6. Unallocated 7.4 Total IDA Credit 57.0 AFlIN February 28, 1990  -6- Schedule C RPUBLIC OF GUINEA SECOND URBAN PROJECT TIMETABLE OF KEY PROJECT PROCESSING EVENTS (a) Time taken to prepares 2.5 years (b) Prepared bys Governuint with IDA and Consultants* Assistance (C) First IDA missions February 1987 (d) Appraisal mission departures October 6, 1989 (e) Date of Negotiations: January 19, 1990 (f) Planned Date of Board Presentations March 27, 1990 (g) Planned Date of Effectivenesss July 2, 1990 (h) Relevant PCR: None AP1IN February 28, 1990  -7- Schedule D REPUJBUC OF WUDN THE STATUS OF DANK GRC OEATIw lN TM REPUBLiC OF WUINEA A. Statement ot Bank Loan. and IDA Credits (as Of January W0 198V0 Amount In USS mlIIIon Loan or Fiscal (kmn Cane latlons) Credit No. Year Borroser Purpoe Uiik IPA Undisbursed Credits TrF-cit. Closed 159.78 C128U-GUI 1982 Gulnea Industry Rehab (DFC) 19.99 4.01 C13410-GUI 19S8 Guinea Fducation U1 11.00 4.61 C14800-UI 1984 Guinea Petroleum Expl. 8.99 .a8 C14C70-4UI 1984 Guinea Highwy III 29.00 14.80 C14860-GUI 198 Quinea Urban I and Suppleomnt 10.70 .W8 C159CO-0I 1986 Oulne Power Engineering YI 8.W 8.J9 Cle08s-GUi 1o9 Guinea Gueckedou Agri.. Devt. 0.69 1.15 Cl6889-GUI 1980 Guinea First Ag Services 7.O 8.698 C18709-GUI 1980 Guln Lln ral Sector MgrC. 8.90 .a0 C14661-GIl 1987 GuInao Urban I and Supplemnt 4.CO 8.21 C17280-GUI 1987 Guinea Livestock Sector Rob 9.80 9.17 C181CO-4UI 1987 Guine Transport Sector 65.90 49.69 C18870-GUI 1988 Ouinea Pop/Health 19.70 16.91 C1840-JI 1909 Guinea Agric. Seeds 9.00 7.71 Cl91SS-CUI 198 Quinea Highways IV SS.0 52.68 C192609-GI 1089 Guinea SAL 1 06.00 8".18 C195808G'I 1o9" Guln Reearch Extenslon 16.49 17.91 C19O8-Ji 1089 Guinea Second E