Madagascar - Urban Infrastructure Project, (AGETIP II)

Report No. PIC5397 Project Name Madagascar-Urban Infrastructure Project, AGETIP II (+ Region Africa Region Sector Urban Development Project ID MGPE48697 Borrower Government of Madagascar Implementing Agency AGETIPA Zaza Ramandimbiarison Directeur General 31, rue Kasanga B.P. 8590 - Antananarivo- 101 Madagascar Fax:(261-2) 330 88 Tel: (261-2) 330 84 Date this PID was prepared April 15, 1997 Date PID updated June 16, 1997 Projected Appraisal Date May 1997 Projected Board Date June 1997 Country and Sector Background With about 70t of its population living in poverty and with a GDP of about US$230 per capita growing at a mere 2t in real terms, Madagascar is among the poorest countries in the world. Two decades of ill advised economic policies have blocked economic growth at various intervals and set the country back for many years. While stabilization measures and structural reforms have helped, Madagascar still remains steeped in poverty. Clearly, the Government's main objective is to steadily reduce the incidence of poverty over the next 20 years, mainly by achieving ambitious economic growth rates. Such high growth will require opening up to foreign investment and tourism. Provision and maintenance of the basic infrastructure necessary for fostering investments has, hence, become a Government priority. However, so far the management of contracts for urban works and maintenance by public sector entities has been inefficient and plagued by cost and time overruns. The ongoing Urban Works Project, which is focused in Antananarivo, has been effective in demonstrating the effectiveness of the delegated contract management approach while improving infrastructure throughout the city and achieving low administrative costs (less than 4t of investment costs). The Government is now interested in encouraging the use of the delegated contract management system outside of the capital and introducing efficiencies in other regions of the country and in other sectors.  Project Objectives The proposed project is expected to create employment, improve the efficiency of local public works and build private sector capacity by establishing a regional capacity for delegated management for small-scale works. Project Description The project includes a program for improvement of infrastructure in four to six cities as well continuation of works in Antananarivo and technical and sectoral support for public institutions and SMEs. Benefits will include improved roads, drainage and other infrastructure in Antananarivo and regional towns. Reduced traffic congestion and flooding would benefit all population groups. Establishment of a regional capacity for efficient delegated contract management of urban infrastructure and other types of investment such as inter-city roads, schools and health clinics, would be a long-term benefit. The project would generate about 25,000 man months of employment to benefit the urban poor during implementation. Project Financing The project financing will be secured through a proposed IDA Credit of US$35 million, and local and Central Government contribution of about US$10 million. Project Implementation Works will be contracted through a delegated contract management system already in use under the ongoing Antananarivo Urban Works Project (AGETIPA). This project has been highly successful both in implementing small-scale works and in building capacity for delegated contract management in the capital, Antananarivo. AGETIPA is also beginning to create four branches in regional cities. Under the proposed project these branches would be further developed to contract urban works sub-projects to the private sector and build regional capacity. The new branches would eventually be available for managing additional types of investment. Project Sustainability Additional revenues generated from project investments are projected to be higher than maintenance costs. Parallel efforts will be made to improve local government finances and maintenance efforts. Poverty Category Almost 50t of urban dwellers are beneath the poverty threshold. The project will assist development of small and medium sized public works companies thus creating jobs and enhancing the livelihood of population in secondary urban areas. Improved basic infrastructure will also improve the living conditions of people in the project area. - 2-  Lessons Learned In Madagascar in the past, institutional development at the local level has been based on top-down approaches, heavily dependent on foreign technical assistance and incumbent local officials. These efforts have not proven sustainable. AGETIPA provided a new impetus to urban development. It has proven an efficient way to contract small-scale works and have a rapid and direct impact on poverty by creating employment, building private sector construction and consulting capacity through steady demand, fast payment and transparent procedures and increasing infrastructure services demanded by local governments and user groups. Similar success has been reflected in other AGETIP projects in Africa . The strengths of AGETIPs have been their independence from government and transparent involvement of the private sector; they have quickly provided highly visible results. The risk of this pattern is that AGETIPs could take over resource allocation and subvert the prerogatives of elected authorities and user groups. For this reason, more recent AGETIP projects are placing a greater emphasis on enhancing the municipalities' ability to plan for and manage urban facilities. Environmental Aspects The sub-projects financed under the new project would provide localized improvements in the urban environment, as has been the case under the ongoing AGETIPA project. This is consistent with experience under most AGETIP projects in Africa. In order to identify relevant environmental issues for each type of sub- project, AGETIPA carried out environmental assessments for a representative sample of each type of project in each city before appraisal. During implementation AGETIPA supervising engineers will ensure that any mitigation measures called for are taken by contractors. The communes (local governments) will also monitor environmental impacts and mitigation measures as they take over the new investments. Program Objectives Category The project would support private sector and human development, poverty reduction on an environmentally sustainable basis. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington, D.C. 20433 Telephone No.: (202) 458-5454 Fax No.: (202) 522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. -3 -  Processed by the Public Information Center week ending July 4, 1997. - 4 -  Annex Environment The sub-projects financed under the project would provide localized improvements in the environment, as has been the case under the ongoing AGETIPA project, consistent with experience under most AGETIP projects in Africa. The project has, therefore, been given a "B" rating. As was the case under the ongoing project, environmental assessments have been carried out for a representative sample of each type of sub-project in each city before appraisal. Based on this information and on experience under the ongoing project, a questionnaire has been developed for screening sub-projects which deserve special investigation and specific mitigation measures. Sub-projects likely to have significant environmental impact, and all revenue generating sub- projects, will be subject to an environmental assessment. During implementation, AGETIPs and supervising engineers will ensure that any mitigation measures called for are taken by contractors. The adequacy of environmental assessment and mitigation procedures will be carefully examined at annual reviews. - 5-