Upper Volta - Urban Development Project

Report No. 1660a-UV FIL COPY Appraisal -of FILE COP Upper Volta Urban Development Project January 3, 1978 Urban Projects Department FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$1 = CFAF 245 The CFA (Communaute Financiere d'Afrique) Franc is fixed with respect to the French Franc (1 FF - CFAF 50) and floats with respect to the US dollar. In this report the following conversion has been used: US$ 1 = CFAF 245 CFAF 1 million = US$4,082 ABBREVIATIONS BND - Banque Nationale de Developpement - Haute Volta CCCE - Caisse Centrale de Cooperation Economique CESAO - Centre d'Etudes Economiques et Sociales de l'Afrique de l'Ouest CIDA - Canadian International Development Agency CNPAR - Centre National de Perfectionnement des Artisans Ruraux FAC - Fonds d'Aide et de Cooperation FED - Fonds Europeen de Developpement FONASEN - Fonds National d'Assainissement et Entretien HER - Hydraulique et Equipement Rural KfW - Kreditanstalt fur Wiederaufbau ONE - Office National des Eaux OPEV - Office de Promotion de l'Entreprise Voltaique ORD - Office Regional de Developpement SACS - Service d'Assistance, Conseil et Soutien UNDP - United Nations Development Program FISCAL YEAR October 1 - September 30  FOR OFFICIAL USE ONLY UPPER VOLTA APPRAISAL OF URBAN DEVELOPMENT PROJECT Table of Contents Page No. SUMMARY AND CONCLUSIONS .............................. i-iii I. INTRODUCTION ..... ..................................... 1 II. BACKGROUND: THE URBAN SECTOR IN NATIONAL DEVELOPMENT I A. Migration and Urban Growth ...................... 1 B. Managing Urban Development .. .................... 3 C. The Search for Solutions: The Cissin Experience 5 D. Implementing National Urban Development Policy: Phased Intervention ........................... 6 III. THE PROJECT .......... ................................ 7 A. Objectives .. .................................... 7 B. Main Components ....... .............. 8 C. Detailed Features ............................... 10 IV. ORGANIZATION AND IMPLEMENTATION ................ 16 A. The Ministry of Public Works, Transport, and Town Planning ................................. 17 B. The Municipalities . ............................. 18 C. National Water Office (ONE) ..... ................ 19 D. The Inter-Ministerial Coordination Committee .... 20 E. Implementation ... ............................... 20 V. PROJECT COSTS, FINANCING AND COST RECOVERY .21 A. Cost Estimates ..21 B. Financing .. 23 C. Cost Recovery ..26 D . Procurement ..31 E. Disbursements ..32 F. Supervision ..32 G. Monitoring and Evaluation . .32 VI. PROJECT JUSTIFICATION ................................ 33 VII. AGREEMENTS REACHED ................................... 36 This report is based on the findings of the appraisal mission, consisting of Mr. Cohen (chief of mission), Ms. Tager, Messrs. Biderman, Delapierre, Mould, and I. Nahmias (consultant), which visited Upper Volta in February, 1977. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization  -2- ANNEXES 1. The Urban Sector 2. Community Organization: Expanding the Cissin Experience 3. IDF Project 4. Organization and Management of Project Entities 5. Design Standards and Detailed Cost Estimates 6. Monthly Charges and Target Population 7. Cost Recovery and Cash Flows 8. Technical Assistance 9. Economic Evaluation 10. Monitoring and Evaluation 11. Supervision 12. The Municipal Assistance Component 13. Construction Loan Program SKETCHES Construction Stages - Traditional Housing No. 17303 Typical Plot Layout - Traditional Housing No. 17304 MAPS IDA Project Locations 12845 Ouagadougou 12842 Bobo-Dioulasso 12843 Indicative Upgrading Layout 12844  UPPER VOLTA URBAN DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS i. The Government of Upper Volta has requested an IDA credit to imple- ment its national urban development policy through a phased program of infra- structure investment, training, and "learning by doing" in three urban centers: Ouagadougou, Bobo-Dioulasso, and Gaoua. The project, the first IDA credit in the urban sector in Upper Volta, one of the "least developed countries", extends and improves the experience of a UNDP-financed pilot squatter upgrad- ing and sites and services project in the Cissin neighborhood of Ouagadougou. The proposed project builds on low-cost methods of provision of infrastructure developed in Cissin, increasing the scale ten-fold, while emphasizing cost recovery, strengthening of local municipal institutions, and a phased approach to the implementation of all components. The project seeks to expand the capacity of national and local institutions to provide low-cost urban services and to extend improvements in housing, water supply, and drainage, to some 100,000 persons. ii. The Government has two objectives in the urban sector: to improve living conditions and to increase productive employment. The urban project addresses the first of these objectives and is closely linked to an artisan and small enterprise project to be financed by IDA which will address the second. These projects have been prepared together, are designed to reinforce each other and will be implemented simultaneously with several components operating in the same neighborhoods of Ouagadougou and Bobo-Dioulasso. iii. The Government faces serious constraints in improving living conditions in its rap'dly growing urban sector. These include insufficient budgetary resources to allocate to urban development in a largely rural country, a scarcity of qualified personnel, financially weak local institu- tions unable to maintain past investments, much less undertake new ones, and the urgency of extending health care and education and other social services to the needy rural areas. The Cissin project offered a low-cost method for improving urban living conditions through self-help and community participa- tion. This approach was adopted in late 1975 as the cornerstone of Government policy in the sector following a national seminar which evaluated the project. IDA assistance was requested at that time and the present project was prepared during 1976 with the financial support of the Project Preparation Facility. iv. The project includes the following components: (a) Squatter Upgrading: servicing of about 11,000 plots on 432 hectares with water standpipes, stormwater drainage and earth roads in two neighborhoods in Ouagadougou (7,000 plots) and one in Bobo-Dioulasso (4,000 plots); (b) Sites and Services: preparation and servicing of about 1,100 plots with water standpipes, stormwater drainage  - ii -- and earth roads on 50 hectares in Bobo-Dioulasso and a pilot project for 100 families in Gaoua; (c) Water Supply Distribution: public standpipes in three additional neighborhoods of Ouagadougou, inhabited by approximately 20,000 persons; (d) Home Construction Loans: loans for house construction and improvements; (e) Community Facilities: construction of neighborhood com- munity centers, markets, rehabilitation of 65 schools and 17 dispensaries in Ouagadougou and Bobo-Dioulasso, a pilot community development project for community education, public health, and women's activities; (f) Assistance to Municipalities: technical asslstance for training of maintenance personnel, improving financial management and tax collection, reorganization of the Departments of Roads and Buildings, expansion of Municipal Housing Offices; equipment for maintenance activities, 11 garbage trucks, and insecticide spraying; (g) Technical Assistance to Department of Town Planning: 168 man-months of technical assistance for project execution, training, and preparation of a second project; consultant services for detailed engineering and supervision; equipment purchase, and operating costs of Project Unit; (h) Monitoring and Evaluation: a study evaluating the per- formance of project components during and after project execution. v. Estimated plot development costs in upgraded neighborhoods and sites and services areas will vary from about CFAF 63,600 (US$260) to CFAF 131,872 (US$538), including the cost of land acquisition, at present municipal rates of CFAF 10 or CFAF 100 per square meter, according to previous tenure status. The implied monthly charges, including water charges, municipal taxes, and home construction loans, represent from 15 to 25% of average household monthly incomes in squatter areas. vi. Total project costs are estimated to be CFAF 2,656.2 million (US$10.8 million), including contingencies, of which 55% is foreign exchange. Taxes amount to CFAF 437.9 million (US$1.8 million) or 16% of total project costs. The proposed IDA Credit of US$8.2 million to the Government will be used to finance 90% of total project costs net of taxes (CFAF 2,218.3 or U$9.1 million). It will cover 100% of foreign exchange costs (US$6.0 million) and 72% of local costs net of taxes (CFAF 745.2 or US$3.0 million). The balance of CFAF 209.3 million (US$0.9 million) will be provided by Government.  - iii - vii. All contracts over US$50,000 for the procurement of equipment and vehicles will be through international competitive bidding in accordance with World Bank guidelines (US$2.1 million, with taxes, but without contingencies). These contracts will be grouped in packages of at least US$50,000 whenever possible. The channeling of the Zogona gulley, amounting to US$1.1 million, will also be offered for international competitive bidding. Civil works con- tracts for water supply, plot surveying, and off-site drainage (US$1.0 mil- lion), and construction of community facilities, and office repairs (US$0.3 million) will be too small to attract international contractors and will there- fore be awarded on the basis of local competitive bidding, advertised locally in accordance with local procedures, which are acceptable to IDA. Earth road construction and on-site drainage (US$1.0 million) within individual neighbor- hoods will be carried out by force account by the Ministry of Public Works, Transport, and Town Planning. Consultant services will be procured according to procedures acceptable to IDA (US$1.9 million). viii. Project implementation will take about 3.5 years. Execution of civil works will be the responsibility of the Department of Town Planning within the Ministry of Public Works. Household selection, plot allocation, distribution of urban occupancy permits, and collection of plot charges will be carried out by the Municipal Housing Offices in Ouagadougou and Bobo- Dioulasso. The Gaoua pilot project will be designed by the Department of Town Planning. The water supply components will be executed by the National Water Office. The channeling of the Zogona Gulley will be executed by the National Fund for Land Reclamation and Maintenance (FONASEN), a service of the Depart- ment of Water Affairs. ix. The Borrower will be the Government of Upper Volta which will pass on funds to the Department of Town Planning, the Municipalities, the National Water Office and FONASEN. x. The project will improve the living conditions of some 100,000 low-income persons in Ouagadougou and Bobo-Dioulasso. The economic rate of return of the project, accounting 75% of total project costs, is 34%. The economic rate of return for squatter upgrading varies from 24% to 40%, accord- ing to neighborhood, and 37% for the sites and service area. The economic rate of return for the water supply component is 37%. xi. Given the scarcity of qualified personnel and the weakness of existing institutions, the project involves considerable risks. However, final project design reflects these constraints as well as opportunities inherent in this project to build up an urban development capability in the country. In addition, given the strong interest expressed by Government in this project, and the substantial benefits derived from the project, these risks are worth taking. xii. Subject to the agreements set forth in paras. 7.01 and 7.02, the project is suitable for an IDA credit of US$8.2 million.   UPPER VOLTA URBAN DEVELOPMENT PROJECT I. INTRODUCTION 1.01 The Government of Upper Volta has requested IDA financing to implement its national urban development policy whose objectives are the improvement of living conditions through provision of low-cost urban services and the generation of productive employment. The proposed project, the first IDA credit in the urban sector in Upper Volta, represents the Government's effort to replicate and expand its experience with a UNDP pilot project in the Cissin neighborhood of Ouagadougou, which demonstrated the feasibility of providing low-cost infrastructure and housing through self-help methods and community participation. The project will extend the Cissin experience to other neighborhoods in Ouagadougou and two other towns, Bobo-Dioulasso and Gaoua, and seek to strengthen the capacity of national and local insti- tutions to provide urban services through a phased program of training, infrastructure investment, and "learning by doing". 1.02 The project is linked to an artisan and small-scale enterprise project to be financed by IDA and implemented by the Government and the National Development Bank. These projects have been prepared together and are designed to be mutually reinforcing, with some components to be executed in the same neighborhoods of Ouagadougou and Bobo-Dioulasso. 1.03 The Government prepared the project during 1976 with the assistance of consultants financed by the Project Preparation Facility and in close coordination with UNDP and the UN Center for Housing, Building and Planning. 1.04 This report is based on the findings of the appraisal mission consisting of Mr. Cohen (chief of mission), Ms. Tager, Messrs. Biderman, Delapierre, Mould, and Mr. I. Nahmias (consultant), which visited Upper Volta in February 1977. II. BACKGROUND: THE URBAN SECTOR IN NATIONAL DEVELOPMENT A. Migration and Urban Growth 2.01 Upper Volta, with a population of 6 million and average GDP per capita of US$110 in 1976, is classified by the United Nations as one of the 25 "least developed countries". It is also one of the most rural countries, with more than 90% of its labor force working as self-employed farmers and animal herders, and only 8.2% of its population living in urban areas in 1975. Low agricultural productivity, providing less than 35% of GDP, declined during the 1971-73 drought, stimulating steady out-migration from rural areas.  2.02 To reverse this trend, the Government is pursuing an agricultural development strategy, emphasizing self-sufficiency in food production, increasing production of all crops in rainfed areas, freeing fertile lands infested by river blindness, and a program of regional development being implemented by 11 regional development organizations (ORDs). The Govern- ment is also encouraging migration from the densely populated Mossi plateau to the relatively under-populated, fertile, southwest region of the country. However, these efforts will have essentially medium and long-term impacts which will not markedly affect out-migration from rural areas in the fore- seeable future. 2.03 The slow growth of the rural economy has fueled very large out- migration of Voltaics, about 200-250,000 annually, consisting of about 100-150,000 seasonal workers, 40-50,000 temporary migrants (staying less than 5 years), and 20-25,000 permanent migrants, in search of employment in towns and in coastal African countries, such as Ghana and the Ivory Coast. If opportunities for wage employment did not exist in these countries, rural-urban migration within Upper Volta would be many times greater than the present rate. Existing migratory patterns have resulted in population leficits in some regions and the rapid growth of the few urban centers with- in the country. The two largest towns, the capital Ouagadougou (220,000), and Bobo-Dioulasso (150,000), are presently growing at 7% per year, but some squatter areas on the periphery of the cities are expanding up to 20% annually. 2.04 Over the past decade, urban growth reached 5% annually in comparison to a national growth rate of 2.7% and is expected to increase the urban population from 500,000 in 1975 to 1.7 million by 2000, doubling the urban share of national population. More than half of this growth can be attributed to rural-urban migration caused, in the recent past, by extreme deprivation and drought in rural areas. Urban growth thus represents a relocation of households from rural to urban areas and traditional rural settlement patterns on the periphery of a few rapidly growing towns. Ouagadougou, Bobo-Dioulasso, and Koudougou (60,000) account for 430,000, or 86% of the total urban popula- tion. The remaining population is found in small semi-urban centers such as Dedougou, Fada N'Gourma, Gaoua and Ouahigouya, each with a population of about 10,000. 2.05 Ouagadougou and Bobo-Dioulasso historically developed around admin- istrative and commercial areas in the town centers, surrounded by residential neighborhoods. On the periphery of these neighborhoods, squatter areas extend in all directions. The principal differences between the older central neigh- borhoods and the squatter areas are the legal tenure system and grid layout. There is also a skeletal infrastructure network consisting of some paved streets and lighting, public water taps, and drainage ditches. However, en- vironmental conditions are as hazardous as in the newer squatter neighbor- hoods, because municipal maintenance and repair of existing services simply do not exist. 2.06 Squatter areas cover about 1,500 hectares (1,300 in Ouagadougou and 200 in Bobo-Dioulasso) and are populated by about 150,000 persons (120,000 in  Ouagadougou and 30,000 in Bobo-Dioulasso). These lower density areas cover more than half the area of the capital, with between 40 and 90 persons per hectare living in family compounds of mud huts. Most families are young, with an average household size of 6.4 persons and are recent migrants to the city. Most have no piped water supply, garbage collection, waste disposal, stormwater drainage, schools or clinics. Of the 58 standpipes in Ouagadougou, only 4 are found in the squatter areas. Clean water is purchased from private vendors who buy water at public standpipes in central neighborhoods and resell it to squatters at five times the price. Squatter households buy the equivalent of 7-10 liters per capita per day from vendors during most of the year, and consume an additional amount from shallow, polluted wells. During the 2-3 month hot season, when wells are dry, households may purchase up to 15-20 liters per capita per day. 2.07 Squatter households depend on traditional chiefs for permission to occupy a designated plot of land. Households pay the chiefs a fee, either in money or in kind, for traditional occupancy rights. They rarely pay taxes and are individually unknown to the municipal administration. In 1976, about 83% of the households in Ouagadougou owned and occupied their houses, with only a small minority renting rooms. In contrast to the lack of municipal jurisdic- tion, traditional chiefs continue to wield substantial authority over the squatter areas, determining the physical layouts, type of construction, and most importantly, influencing the popular will, such as community reactions to improvements which are proposed by Government and private agencies. 2.08 Urban growth has not been accompanied by increased labor produc- tivity or substantially higher incomes for migrants who have remained outside the formal sector. About 80% of the urban labor force of 120,000 work within the many branches of the informal sector, earning an average household monthly income of CFAF 10,000 (US$40). Only some 37,000 persons work within the formal sector. The majority of squatters are under-employed within the in- formal sector. Only 10% of the Ouagadougou population is literate, but even if they had educational qualifications they would face many obstacles to finding productive employment within the very small formal sector. Outside of the public administration, which employs about 19,000 persons, there are very few jobs in small enterprises. The lack of training, access to credit, the costs of transport and marketing, and the small size of local markets, have inhibited growth of the private formal sector, which now numbers about 18,000 persons. Many migrants have moved to Ouagadougou, the center of public sector employment, but have been unable to obtain desired positions. Others have passed through Bobo-Dioulasso, the commercial capital in the relatively prosperous southwest region, on their way to Ghana and the Ivory Coast. B. Managing Urban Development 2.09 Institutions - Responsibility for urban development is jointly shared by several ministries: the Ministry of Public Works, Transport, and  -4- Town Planning, the Ministry of Interior, which supervises all municipal activities, and the Ministry of Rural Development, whose Department of Water Affairs supervises rural and urban water supply. The Ministry of Public Works, through its Department of Town Planning, proposes urban de- velopment policies and projects which are reviewed by the National Town Planning Council before submission for approval to the Council of Ministers. Decisions concerning urban development are highly centralized, with the President and Council of Ministers reviewing all legal documents affecting urban infrastructure, including site plans for neighborhood development. 2.10 Although responsible for execution of urban projects, the Depart- ment of Town Planning lacks sufficient personnel and equipment to carry out its assigned tasks. The three-year UNDP pilot project consumed the majority of its resources even with a large technical assistance component. Many Voltaic staff, have left the Department to continue their studies or to enter the private sector. 2.11 The Ministry of Interior and the Department of Water Affairs of the Ministry of Rural Development perform important supervisory functions over the municipalities and the National Water Office (ONE), but do not have major roles to play in the daily execution of urban development programs. The ministries participate in the deliberations of the National Town Planning Council and the Council of Ministers but do not initiate policies and programs in the urban sector. 2.12 At the local level, the municipalities are responsible for (a) maintenance of streets and drainage canals and social service facilities, including schools and clinics; (b) environmental sanitation, such as garbage collection, insecticide spraying, and waste disposal; (c) fire prevention; and (d) regulation of land development and housing construction. However, these have not been performed effectively, if not abandoned altogether be- cause of meager budgetary resources. 2.13 The Municipality of Ouagadougou has a budget of only CFAF 347.5 million (US$1.4 million), or $6.50 per capita for a city of 220,000 persons. About half is allocated to personnel expenditures with 17% devoted to services and only 3% for investments. The combination of a low income tax base, low tax rates, infrequent and inaccurate assessments, and inadequate collection procedures limits the ability of the Municipality to fulfill its responsi- bilities, because it lacks necessary equipment, trained manpower, and operat- ing funds. A municipal reform decree for Ouagadougou was issued in 1976 and a new Prefect-Mayor appointed to reorganize and revive municipal administra- tion. This process has started, but requires substantial technical and financial support. 2.14 The Municipality of Bobo-Dioulasso is in slightly better condition with a longer tradition of municipal administration and maintenance, going back to its previous role as colonial capital. However, as in the case of Ouagadougou, the Municipality requires training of its staff, purchase of equipment and tools, and assistance in management and fiscal reform to upgrade and increase its operations as the city continues to grow.  - 5 - 2.15 Urban Development Programs - The above institutions have faced many serious constraints in implementing urban development programs. These irclude the difficulty of allocating scarce budgetary resources to urban development in a largely rural country, the almost total absence of skilled manpower in urban-related fields, such as architecture, planning, and engineering, and the inability of municipal institutions to maintain past investments, much less undertake new ones. Efforts to provide urban services have been stymi_u by these problems, leading to partial solutions whereby limited services have been provided for upper income groups. Prior to the Cissin experiment, a broad mandate to address urban development as national policy did not exist, resulting in ad hoc responses to the demand for services and virtually no dialogue among agencies with responsibilities in the urban sector. 2.16 These dilemmas are well illustrated in the case of primary educa- tion and health care delivery, and are further complicated by seemingly overlapping interests and responsibilities among ministries and agencies. National development strategy places increased emphasis on the "social services" sector, which is community or village-based, and embraces a spectrum of activities from well-digging to functional literacy. At the same time, ministries tend to exercise their mandates on more traditional, sectoral lines. The lack of coordination and a clear policy orientation are parti- cularly acute problems and have been the focus of an emerging national discussion on development options. While the priority need for all services is in the rural areas, scarce resources and trained personnel for health and education tend to be assigned to urban areas. Nevertheless, existing urban programs have few funds for operations and reach a very limited population. Schools and health clinics have never been maintained and are frequently unsanitary and unsafe. These conditions suggest that a program of construc- tion be deferred until critically needed improvements are made to existing facilities and national policy and strategy are more clearly formulated. 2.17 Against this background, the Government has devoted increasing attention to urban development, particularly as the demand for housing, urban water supply, drainage, and social services has increased dramatically in the past few years. Infrastructure investments of the colonial period and of the period immediately following independence in 1960 are no longer sufficient to meet the needs of a growing urban population. This realization is coupled with the understanding that the Government must also increase the capacity of national and municipal institutions to formulate and implement policies and programs consistent with the scale of this growth. C. The Search for Solutions: The Cissin Experience 2.18 In 1973, the Government, with UNDP assistance, launched its three- year experiment to improve the housing conditions of poor households in Cissin. The project provided 600 serviced plots and upgraded an adjacent 8 hectares of squatter area, inhabited by 266 families. Initial infrastructure  -6- works included roads, minimal drainage, pit latrines, and wells. Households were given urban occupancy permits, as guarantee of land tenure. This legalized tenure arrangement stimulated neighborhood participation and led to the emergence of community organizations and activities. Community investment in infrastructure and private investment in housing construction and improve- ments have substantially improved the living conditions of people in the neighborhood. 2.19 Although modest in scale, this pilot effort proved extremely popular and highlighted the extreme shortage of serviced plots throughout the city. Some 1,800 applications were filed for the 600 serviced plots in the two weeks of open candidacy. The community organizations, known as caisses populaires, started in one area of Cissin, have spread throughout a larger area and now include 1,600 members. Most importantly, the project demonstrated that housing and community improvements could be carried out at costs lower than conventional methods and that households were willing to participate in these efforts. 2.20 By late 1975, the Cissin project had attracted considerable atten- tion within the Government and interest outside the country. The Minister of Public Works convened an international conference in November 1975 to evaluate the experience and to determine its applicability on a larger scale. While this evaluation was not entirely positive--the economic and financial arrange- ments for the project, such as cost recovery and loans for construction and improvements, needed improvement--the Government endorsed the Cissin concept as the cornerstone of its policy towards the provision of urban services. The importance of this experiment has also not been lost on other sectors, as the Ministry of Education has adopted Cissin construction methods, using stabilized earth bricks, in building rural schools. While this pilot project represents a major step in the formulation of a low-cost approach to urban development, the task of replicating and improving this experience on a larger scale still faces formidable constraints. D. Implementing National Urban Development Policy: Phased Intervention 2.21 To expand the Cissin experience into a viable national program for the provision of urban services, the Government acknowledges the need for (a) strengthening urban institutions, particularly the Department of Town Planning and the municipalities of Ouagadougou and Bobo-Dioulasso, through training, purchase of equipment, and technical assistance in specialized areas, (b) im- proved methods of cost recovery and tax collection to recover public invest- ments in infrastructure and extend services, and (c) improved environmental sanitation not only for neighborhoods to be included in individual projects, but for entire urban areas, which are poorly serviced. All of these areas not directly addressed in a pilot project become more critical with an increased scale of upgrading and sites and services operations. In view of manpower and budgetary constraints, however, these improvements cannot be undertaken simul- taneously, but must be phased according to a plan of progressive reinforcement  - 7 - and expansion of infrastructure networks, institutions and financial mech- anisms. Thus, the IDA project and each of its components reflects a delib- erate effort to shape project design to the realities of these especially severe constraints. 2.22 The principle of phased intervention constitutes the basis for the Government's urban development policy and the rationale for the pro- posed project. This principle operates at several different levels: 1) not all towns can be provided with infrastructure improvements in the short term, 2) within selected towns, not all neighborhoods can be included, but some must be postponed for future operations, 3) within neighborhoods, not all infrastructure improvements can be introduced at once, but must be gradually phased according to their urgency and size of population served, 4) infrastructure standards must be minimal in the first stage, but pro- vide for progressive upgrading, 5) institutional development and train- ing must be gradual, building on initial experiences to develop the basis for further increasing local capacity to plan and implement programs, and 6) not all services can be provided in first phase operations, but given present Government priorities in areas such as rural health care delivery and primary education, direct intervention must be postponed to subsequent phases. III. THE PROJECT A. Objectives 3.01 Based on the Cissin experience, project objectives are: (a) to assist the Government in the implementation of its phased urban development policy; (b) to provide low-cost services to low-income households in urban areas; (c) to strengthen national and local institutions responsible for urban development, through a program of training, technical assistance, and purchase of equipment; (d) to establish a system of cost recovery for urban services in order to permit replicability of projects of this type; and (e) to strengthen the maintenance and tax collection capacity of municipalities. 3.02 The project is closely linked to an artisan and small scale enter- prise project whose objectives are:  - 8 - (a) to stimulate investment in small enterprises, particularly those located in and with an impact on neighborhoods to be upgraded; (b) to strengthen the Banque Nationale de Developpement (BND) as a financial intermediary, particularly for small and medium scale enterprises; (c) to develop and deliver a program of technical assistance to small entrepreneurs and artisans through the Centre National de Perfectionnement des Artisans Ruraux (CNPAR) and the Office de Promotion de l'Entreprise Voltaique (OPEV). 3.03 Together, these two projects represent a major Government effort to improve urban living conditions and productivity in Upper Volta. They are intended to reinforce the capacity of public institutions to implement similar programs, focused on the urban poor, in the future. B. Main Components 3.04 The project consists of the following components: (a) Upgrading: Provision of basic urban infrastructure including water supply, drainage and earth roads to approximately 11,000 plots in existing squatter neighborhoods, covering 432 hectares in Ouagadougou (7,000 plots) and Bobo-Dioulasso (4,000 plots); (b) Sites and Services: Preparation and servicing of about 1,100 new plots, a planned residential area covering 50 hectares adjacent to the upgraded neigh- borhood in Bobo-Dioulasso. A pilot site and service area for 100 families will be developed in Gaoua; (c) Water Supply Distribution: In addition to the upgraded neighborhoods and sites and services area, water supply will be provided to some 20,000 persons living in three other squatter neighborhoods in Ouagadougou; (d) Construction Loans: Financing of loans for housing improvements and start-up construction; (e) Social Services and Community Facilities: Rehabilita- tion of 65 schools and 17 dispensaries in both cities; construction of neighborhood community centers, and  markets, a pilot community development project to finance experiments in community education, public health and women's activities; and purchase of in- secticide, spraying pumps, and a small truck for insecticide spraying in Ouagadougou and Bobo- Dioulasso. (f) Assistance to the Municipalities: (i) technical assistance for: - training maintenance workers; - improving management and tax collection procedures; - reorganization of technical services; and - expansion of housing offices; (ii) equipment: - garbage trucks for the Municipality of Ouagadougou; - tools for vehicle repair, carpentry, metal works, and construction; and - vehicles and equipment for municipal housing offices; (iii) rehabilitation of the Ouagadougou municipal garage for maintenance vehicles; and (iv) start-up costs for garbage collection in Ouagadougou and insecticide spraying and municipal housing offices in both cities for two years; (g) Assistance to the Department of Town Planning: (i) technical assistance for project execution; (ii) consultant services for feasibility study and de- tailed engineering and design of the project, and preparation of a second project; (iii) start-up costs of the Project Unit within the Department of Town Planning for three years, from 1978 to 1980; (iv) purchase of equipment, supplies, and vehicles; and  - 10 - th) Monitoring and Evaluation: Local consultant services for sample surveys and case studies of the performance of project components during and after project execution. C. Detailed Features Squatter Upgrading 3.05 The Cissin approach, emphasizing self-help, affordable standards, and use of local materials, will be applied in the proposed project and modified where necessary. Upgrading and sites and services areas are shown on the maps of the project towns (see Maps 12842 and 12843). 3.06 Improvements will be provided to 300 hectares in Ouagadougou: 200 in Cissin and 100 in Zogona; and 132 hectares in the Sonsuribugu neighborhood of Bobo-Dioulasso. In Ouagadougou, these areas represent older settlements dating from the late 1950s. Sonsuribugu, meaning "in a temporary situation" in the Bobo language, is a more recent neighborhood which has grown rapidly since the expulsion of Voltaics from the Ivory Coast. These neighborhoods were chosen according to the following criteria: Government desired to complete the upgrading of the Cissin area within its first phase operations. Given the UNDP experience in Cissin, it was also felt that it would be easier to expand the scale of upgrading activities here than in other neighborhoods. Government designated Zogona as top priority due to its poor conditions com- pared to other neighborhoods. In Bobo-Dioulasso, Sonsuribugu was chosen as the largest squatter area, with the highest potential for absorbing new residents through densification. 3.07 Upgrading operations will follow the existing settlement pattern, with realignment and widening of roads and footpaths to increase access within sub-neighborhoods. All plots will be within 120 meters of vehicular access. Secondary and tertiary roads will be 15 and 10 meters wide, respec- tively. The stormwater drainage system will consist of lateral earth drainage channels. Water standpipes will be constructed at intervals of 400 meters, each serving about 1,500 people. Human waste disposal will be provided by owner-installed pit latrines in accordance with municipal requirements. In Ouagadougou, garbage collection will be extended to project areas by the Municipality with trucks financed under the credit. Plots will be reduced from an average of 450 sq. meters to 300 sq. meters to permit densification, without disrupting traditional Voltaic settlement patterns which include small multiple dwellings within the family courtyard and which accommodate vegetable gardening. (See Figure 17304.) About 4,700 new plots will be created through this process and allocated according to criteria described in para. 3.12. Densities will increase from about 20 plots per hectare in Cissin to an average of about 23.3 plots or 186 persons per hectare. (See Table 2, Annex 5.)  - 11 - 3.08 Upgrading and densification will require the demolition of up to 10% of existing houses and relocation of families to sites near their pre- vious plots. Displaced families will receive new plots, at the same costs as residents of these neighborhoods. Relocation assistance will be through a grant amounting to CFAF 35,000 (US$143), towards the cost of new construc- tion. This grant will be in addition to the optional CFAF 30,000 construction loan offered to all residents in upgraded areas. (See para. 3.15 below.) Neighborhood improvements will be accompanied by a legalization of land tenure for current residents. Existing residents who, according to Voltaique law have customary rights to the land, will make a one-time payment of CFAF 15,000 at which time they will be granted an urban occupancy permit (permis urbain d'habiter). This permit is a renewable long-term lease with right of resale. Remaining residents and new residents who will be allocated plots by the Municipal Housing Office will be granted a provisional urban occupancy permit upon down payment, and after payment of the total plot obligation, an urban occupancy permit. Plot charges will include a land acquisition charge, according to previous tenure status as established by Gov rnment decree in 1970: residents with customary ten re will pay CFAF 10/m (US$.04) and all other residents will pay CFAF 100/m (US$.40). These arrangements were agreed upon during negotiations. 3.09 Off-site infrastructure for Zogona and Sonsuribugu will consist of approach roads, water mains, and drainage works. No off-site works are needed for Cissin. In Zogona, the major off-site work involves the channeling of the 4 kilometer Zogona gulley, a major health hazard for the entire city, and concrete reinforcement of two kilometers of its banks. Densification and development in the 1,400 hectare flood plain around the gulley requires these drainage improvements and reinforcement of three existing bridges. Drainage works are also required in Sonsuribugu, due to the slopes on the sites and relatively higher rainfall in the region. 3.10 Sites and Services: Fifty hectares of sites and services adjace2t to Sonsuribugu will be developed providing 1,126 eew plots averaging 300 m Plots will be of three sizes: 240, 300 and 360 m , to attract a mix of income groups, respond to the general demand for housing at all income levels and to experiment with smaller plot sizes. The site will be served by a water distribution system of public standpipes with the possibility for 20% private connections. Service levels will be similar to those in the upgraded areas. 3.11 The project includes a pilot sites and services area for about 100 families in Gaoua, a town of 6,000 in the agriculturally rich southwest of the country. This operation is intended to demonstrate the applicability of Cissin methods, including construction with stabilized earth bricks, on a smaller scale and introduce them to the southwest region. 3.12 Allocation criteria for new plots will be developed by the Project Unit and Municipal Housing Offices. Although it is known that average house- hold monthly incomes are about CFAF 10,000 in squatter areas, additional  - 12 - household income surveys are now underway and will be used to develop more precise income criteria for household selection. In the absence of current data on the income distribution of the cities, a system will be developed, based on the Cissin experience, which will allocate the majority of new plots to families with monthly incomes between CFAF 15,000 (US$60) and 20,000 (US$82), with the average monthly income ceiling fixed at CFAF 40,000 (US$163). Once families have been classified according to income, those meeting the officially announced criteria will be placed in a lottery, from which the Prefect-Mayors will publicly draw names of families to be offered new plots. These procedures were agreed upon at negotiations. Water Supply 3.13 The project will extend the existing water distribution system of Ouagadougou from the central city area to three neighborhoods, Tampouy, Tanghin-Sambin and Hambdallaye, serving some 20,000 residents. These neigh- borhoods will be more fully upgraded in future operations. These extensions require the construction of a trunk main around the three reservoirs to the north of the city (see Map 12842) and branching off to distribution systems in each neighborhood. In this first stage, public standpipes will be constructed along major arteries at 400 meter intervals. 3.14 These extensions, coupled with the servicing of project neighborhoods will bring potable water from the central treatment plant on the northeast of the city to the majority of population now consuming water from polluted wells and untreated water from the public reservoirs. Water for Ouagadougou presently comes from the Lumbila Dam, some 14 kilometers outside of the city. Projected future consumption, about 20 l.c.d., with the proposed extensions under this project, is guaranteed by sufficient production from this source until 1981. (See Annex 4.) The Government and the National Water Company (ONE) are now reviewing a study of alternatives for increasing production after 1981, including pipelines to the Black Volta River, White Volta River, and areas in the southeast of the country. This matter is of high priority to Government, which has indicated that sufficient water supply will be available to permit the efficient long-term use of the proposed extensions. Home Construction Loans 3.15 Loans for home improvements and start-up construction will be offered to all households in upgrading and sites and services areas. House- holds occupying new plots will qualify for loans up to CFAF 65,000 (US$265), while households remaining on their plots could receive up to CFAF 30,000 (US$122) for housing improvements. Displaced residents will receive grants of CFAF 35,000 (US$143) and an additional CFAF 30,000 as an optional loan. Assurances covering these arrangements were obtained during negotiations (see Annex 13). Social Services and Community Facilities 3.16 The large demand for social services throughout the country, par- ticularly health care and primary education, requires a community-based, low- cost approach to provision of these services in the relatively better-served urban centers as well as in rural areas. Personnel and financial constraints  - 13 - coupled with the ineffectiveness of current operations mitigate against a major community facilities program under this project until Government policy in the social services sector is more clearly defined. The project will attempt to improve the delivery of social services through programs which do not require additional personnel or major recurrent budgetary commitments for national or municipal institutions. Improved water supply and environmental sanitation represent the first stage in the upgrading of existing health conditions. 3.17 The project provides for: (a) the repair and rehabilitation of 40 schools and 10 dispensaries in Ouagadougou and 25 schools and 7 dispensaries in Bobo-Dioulasso, involving pro- vision of latrines and water taps, repair of fall- ing ceilings and roofs, and the construction of fencing around schools. These improvements re- spond to the urgent need to upgrade existing facilities, a service which the municipalities have been unable to perform and will provide on-the-job training for programming municipal maintenance operations which will be instituted under the municipal assistance component. (b) the construction of 19 neighborhood community centers, one for each 25 hectares in upgraded and sites and services areas, exc2pt where they presently exist. These centers, 40 m , will be minimally equipped to shelter community organization activities and a municipal collection office. These small centers represent the first phase in the construction of more extensive facilities for these neighborhoods. (c) the construction of six markets, four in Ouagadougou and two in Bobo-DioVlasso, each covered and with a sur- face of about 350 m and containing 100 box stalls. They will be constructed by trainees from the neighborhoods in CNPAR skills training programs, under the Artisan and Small Scale Enterprise Project. (d) a pilot community development project will finance small-scale operations in community education, public health, and women's activities. These activities will be identified and designed by the Project Unit during project execution, with interested Government agencies, the caisses populaires, and other community groups. The pilot approach is intended to encourage flexibil- ity and experimentation, in order to give Government  - 14 - experience in evaluating the potential role of com- munity participation in the delivery of social services. (e) insecticide, spraying pumps and a light truck for the Municipalities of Ouagadougou and Bobo-Dioulasso. This equipment will revive the public disinfection program for the first time in four years, an additional element in the broad package of environmental health and sanitation measures being introduced under the project. Assistance to the Municipalities 3.18 The project provides for assistance to the municipalities of Ouagadougou and Bobo-Dioulasso to improve their environmental sanitation and maintenance services, revenue collection, and implementation of housing operations. The programs are based on analysis of the needs of each munici- pality and consequently have some different features. Both municipalities, however, require major strengthening to perform their responsibilities as executing agencies within the Government's urban development policy. This assistance is intended to permit the municipalities to gradually take on increasing responsibilities, while improving their maintenance capacity and financial situation in the short term. 3.19 Municipal assistance includes the following: (a) four and a half man-years of technical assistance for each municipality for: (i) the reorganization of the Roads and Buildings Departments involving assignment of responsi- bilities to individual services within the Departments and appointment of middle-level managers for specific activities. (ii) training of maintenance workers within the Roads and Buildings Departments. This will be a two year on-the-job training program designed to up- grade the skills of personnel. Training will focus on vehicle repair and maintenance, use of tools, and programmed maintenance procedures for drainage canals, public buildings, and other facilities. (iii) improving tax collection and financial management. An expert will spend six months in each municipality, reviewing revenue collection procedures, including assessment and rates, and financial practices, in- cluding budgetary planning, and recommend improved methods and policy reform where necessary. This review will begin no later than June, 1978 and recommendations will be ready for review by June, 1979. Assurances to this effect were obtained during negotiations.  - 15 - (iv) expanding the Municipal Housing Offices through estab- lishment of new procedures for land registry, plot allocation, and developing a system of collections for project beneficiaries. (b) purchase of equipment: (i) 11 garbage trucks will be purchased for the Municipality of Ouagadougou to enable it to carry out citywide garbage collection more effectively and cheaply than the current cost of operations by a private enterprise. The present contract consumes 13% of the municipal budget, while providing less than 30% coverage of the city. (ii) tools for the Department of Roads and Buildings for both municipalities. These tools include those for vehicle repair, carpentry, metal works, and construction, and will be used by personnel in on-the-job training programs. (iii) vehicles and equipment for Municipal Housing Offices, including two cars for each office, furniture, filing cabinets, typewriters, and calculating machines. (c) rehabilitation and expansion of the municipal garage for maintenance vehicles in Ouagadougou. These vehicles are not protected from weather conditions and have no place for extended repairs and maintenance. (d) start-up expenditures for: (i) garbage collection in Ouagadougou for two years. This support is needed to assure the effective start-up of operations, which will subsequently be financed by general municipal revenues, including a garbage collection tax. (ii) Municipal Housing Offices in both cities for two years. This support is required to provide the start-up of operations which will be self- financing after two years of project execution. (iii) insecticide spraying for two years for both cities. 3.20 Taken together, these components of municipal assistance are in- tended to reinforce performance of critical municipal functions. Short-term improvements in these areas will be essential if urban development operations are to be successful in subsequent projects.  - 16 - Assistance to the Department of Town Planning 3.21 Assistance for project preparation, execution, training, purchase of equipment and vehicles, and recurrent expenditures will be provided to the Department of Town Planning. This assistance has the following features: (a) 12-1/3 man-years of technical assistance for project execution and training will be provided, consisting of: engineer-manager (3 years), accountant (3-1/3 years), urban planner (1 year), socio-economist (2 years), and one caisses populaires development expert (3 years). Following recent experience in Upper Volta, the cost per man-year of technical assistance, recruited through a consulting firm, is estimated to be US$80,000. (b) consultant services for a feasibility study, aerial photographs, and topographical surveys were financed by the Project Preparation Facility in 1976-77. Consultants are presently being recruited for detailed engineering for infrastructure components. An addi- tional 2-1/2 years of consultant services are provided for preparation of a second project and short term consultancy assignments. (c) purchase of equipment and vehicles needed for project execution. (d) start-up expenses for the Project Unit within the Department of Town Planning for three years, 1978 - 1981, including additional Voltaic staff salaries. Monitoring and Evaluation 3.22 Funds are included for a small monitoring and evaluation component to be undertaken by a local consulting firm. The component provides for two years of a local applied researcher, 18 months of a survey team of eight full- time interviewers, and an operating budget (including computer time) to cover two years of the evaluation exercise. This work will be supplemented by tech- nical assistance in economic analysis and research methods to be provided by the United Nations Center for Housing, Building and Planning (UNCHBP) in New York. IV. ORGANIZATION AND IMPLEMENTATION 4.01 Responsibility for project implementation will be shared between the Ministry of Public Works, the principal executing agency, the Municipalities of Ouagadougou and Bobo-Dioulasso, the National Water Office (ONE), and the National Fund for Land Reclamation and Maintenance (FONASEN), a service of the Department of Water Affairs. The responsibility for execution of project components is presented in Chart 1.  - 17 - Chart 1: Project Components and Implementing Agencies Component Agencies Squatter Upgrading Dept. of Town Planning/Municipal Housing Offices Sites and Services Dept. of Town Planning/Municipal Housing Offices Water Supply Distribution ONE Zogona Gulley Fonds National d'Assainissement et d'Entretien Drainage Works (FONASEN) Home Construction Loans Dept. of Town Planning/Mfunicipal Housing Offices/BND Community Facilities Dept. of Town Planning/Municipal Dept. of Roads and Buildings Municipal Assistance Municipalities Assistance to the Depart- ment of Town Planning Dept. of Town Planning Monitoring and Evaluation Voltaic Consulting Firm A. The Ministry of Public Works, Transport and Town Planning 4.02 A Project Unit with primary responsibility for all project compo- nents (exclusive of water supply and Zogona Gulley drainage works) will be established in the Department of Town Planning. The Project Unit will be headed by the Director of Town Planning, supported by an Assistant Director. These arrangements were confirmed at negotiations. Since the scale of this project is ten times greater than the Cissin pilot effort, the staff currently working in the Department will require considerable support, particularly in engineering and accounting. As agreed with Government, preference will be given to Voltaic nationals, and technical assistance will be phased to permit Voltaics to assume project level positions as experience and progress warrant. However, where nationals are not available, expatriates will be hired as indicated in para. 3.21. 4.03 The Project Unit will oversee project implementation in all three towns. Specifically, it will handle, inter alia: (a) supervision of detailed design; (b) preparation and evaluation of bidding documents and contracts; (c) supervision of execution of civil works, including construction of community facilities and markets;  - 18 - (d) supervision of loans program and design and supervision of the pilot community development project; (e) assisting and supervising operations of the Municipal Housing Offices; and (f) management and control of the disbursement of project funds. B. The Municipalities 4.04 The municipalities of Ouagadougou and Bobo-Dioulasso are responsible for: (a) city-wide provision of services, such as environmental sanitation, garbage collection, maintenance of schools and dispensaries, and insecticide spraying; (b) housing-related activities presented below; and (c) reorganization and strengthening of Departments of Roads and Buildings, tax collection and financial management. Specific support for these activities is described in paras. 3.16-3.19. 4.05 The city-wide provision of services will be carried out by the Departments of Roads and Buildings, under the responsibility of the Depart- ment Directors and the Prefect-Mayors. The staff of these departments will receive on-the-job training from technical assistants to increase the coverage frequency, and efficiency of operations throughout each city. 4.06 Housing-related activities will be carried out by the Municipal Housing Offices which will be established within the existing Bureau Domanial. Staff will be expanded and supported by technical assistance. Assurances to this effect were obtained during negotiations. The office will be divided into three sections: Accounting: The section will be headed by a Voltaic accountant under the supervision of the Project Accountant in the Department of Town Planning. It will be responsible for establishing pro- cedures for collection and recording of downpayments and plot charges, and developing a system to provide the individual with an immediate accounting of his payment status. Collection offices will be set up in each community center with some fixed agents and others mobile.  - 19 - Technical: This section, staffed by Voltaics, will continue to be responsible for identification and registration of land titles, assembling dossiers and establishing applicant lists, processing claims of conflict and compensation for action by the Mayor's Commission, preparation of contracts for signature, and processing all urban occupancy permits for title transfer. Community Development: This newly created section will be super- vised by a community development expert who will assist the Head of the Office to define appropriate liaison and on-site procedures for beneficiary activities. The Community Development Section will be responsible for the following activities: (1) Project publicity: consultation within the neighborhoods to be upgraded concerning, inter alia, project objectives, residents' participation and responsibilities; (2) Establishment of selection criteria; (3) Establishment of allocation procedures; (4) Review of applicant dossiers for Selection Committee; (5) Notification of beneficiaries; and (6) Assistance for contract signature. This section will work in coordination with the caisses populaires expert in the Project Unit to coordinate and facilitate contact within the project neighborhoods. C. National Water Office (ONE) 4.07 The preparation execution and maintenance of the water supply in- vestments will be the responsibility of ONE. This company, as described in Annex 4, operates as a state-owned enterprise, under the supervision of the Department of Water Affairs of the Ministry of Rural Development. Created in 1970, it is fully staffed by Voltaics, well managed, and has been earning adequate profits since its establishment. It is presently divided into three technical divisions, one each for Ouagadougou, Bobo-Dioulasso, and smaller systems. These divisions will supervise the preparation of detailed engineer- ing, construction, maintenance, and repair. The Director-General will super- vise preparation and evaluation of all bidding documents. The provision of water through the extended distribution systems will follow the present  - 20 - procedure, with ONE-paid water vendors selling water from standpipes on a quantity basis. This system has worked well in the past, with very little loss in the system and a good degree of financial accountability. D. The Inter-Ministerial Coordination Committee 4.08 Coordination of project execution will be assured through an Inter- Ministerial Coordination Committee headed by the Minister responsible for Town-Planning. The creation of this Committee was proposed by Government. It will meet at least six times per year and will consist of the following members: the Minister of Finance or his representative, the Director-General of the Interior, the Prefect-Mayor of Ouagadougou and the Sub-Prefect of Bobo-Dioulasso, the Director of Town Planning, the Heads of the Municipal Housing Offices, the Director-General of ONE, the Director of the Department of Lands, the Director-General of the BND, and the Director-General of the Fonds National d'Entretien and d'Assainissement (FONASEN ). As deemed appro- priate, this committee will enlist the participation of representatives of other concerned institutions which will include: representatives of the Ministries of Education, and Health and Social Affairs, the Prefect of Gaoua, a representative of the monitoring and evaluation team, the Director of CNPAR and the Director of OPEV (both of whom will ensure liaison with the working committee to be established under the artisan and small scale enterprise project). The Inter-Ministerial Coordination Committee will ensure that all project entities fulfill their responsibilities in accordance with the project implementation schedule and will also approve quarterly reports to be sub- mitted by the Project Unit to IDA. Accounts and Audits 4.09 Assurances were obtained during negotiations that each executing agency will maintain separate project records and accounts. Assurances were also obtained that annual audits satisfactory to IDA will be made of the accounts, and that the individual audited statements will be furnished to IDA not later than four months after the close of the fiscal year. Government also provided assurances that the Project Unit will prepare and submit to IDA quarterly progress reports on the project, including monitoring and evaluation results. E. Implementation 4.10 Project implementation will take about 3.5 years. The detailed implementation schedule is presented in Annex 5, Table 6. The schedule has been designed to maintain the momentum of site preparation activities underway and almost completed in Cissin. An architect-planner completed preparation of the site plan in December. Technical assistance for the Project Unit and consultants for the detailed engineering are being recruited in the fourth  - 21 - quarter of calendar 1977. The full Project Unit should be in place during the first quarter of 1978. These preparatory activities and technical assistance will be financed by the Project Preparation Facility, which has advanced US$330,000 to the Government for these purposes. 4.11 In order to ensure efficient and low-cost execution of civil works, construction of roads and secondary drainage canals will be carried out by force account by the regional offices of the Department of Public Works of the Ministry of Public Works in Ouagadougou and Bobo-Dioulasso, with their own equipment. Major drainage works and water supply extensions will be executed by small contracting enterprises, assisted by OPEV. Construction of neighborhood community centers will be carried out by trainees from the CNPAR which will be training neighborhood residents in construction skills. Repairs and rehabilitation of municipal schools and dispensaries will be carried out by the municipal Departments of Roads and Buildings. Off-site drainage works in the Zogona area will be executed and maintained by FONASEN. V. PROJECT COSTS, FINANCING, AND COST RECOVERY A. Cost Estimates 5.01 Total project costs are estimated at CFAF 2,656.2 million (US$10.8 million), of which CFAF 1,473.1 million (US$6.0 million) or 55% is foreign exchange, and CFAF 437.9 million (US$1.8 million) or 16% of project costs are taxes. The following table presents summary project cost estimates:  - 22 - UPPER VOLTA URBAN DEVELOPMENT PROJECT SUMMARY PROJECT COST ESTIMATES (June 1977 Prices) CFAF Million US$ Million Taxes Local Foreign Total Taxes Local. Foreign Total I. Squatter Settlement Upgrading Ouagadougou 105.2 233.3 166.5 505.0 0.43 0.95 0.68 2.06 Bobo-Dioulasso 26.8 61.0 51.0 138.8 0.11 0.25 0.21 0.57 SUBTOTAL 132.0 294.3 217.5 643.8 0.54 1.20 0.89 2.63 II. Sites and Services Bobo-Dioulasso 9.8 23.7 19.2 52.7 0.04 0.10 0.08 0.22 Gaoua 1.1 2.5 2.5 6.1 0.00 0.01 0.01 0.02 SUBTOTAL 10.9 26.2 21.7 58.8 0.04 0.11 0.09 0.24 III. Water Supply Distribution 18.2 23.8 39.7 81.7 0.07 0.10 0.16 0.33 IV. Home Construction Loans 91.2 - 203.0 294.2 0.37 - 0.83 1.20 V. Community Facilities 28.8 28.0 59,6 116.4 0.12 0.11 0.25 0.48 VI. Assistance to Municipalities 36.5 70.8 279.1 386.4 0.15 0.29 1.14 1.58 VII. Technical Assistance 4.5 75.6 241.1 321.2 0.02 0.31 0.98 1.31 VIII. Project Preparation in 1976 3,0 0.7 23.8 27.5 0.01 0.00 0.10 0.11 IX. Final Design and Detailed Engineering 3.5 35.9 94.2 133.6 0.01 0.15 0.38 0.54 X. Monitoring/Evaluation 12.0 9.3 24.5 45.8 0.05 0.04 0.10 0.19 Total Project Costs Net bf Contingencies 340.6 564.6 1,204.2 2,109.4 1.39 2.30 4.92 8.61 (June 1977 Prices) Contingencies Physical: 25% Physical WorksLi 36.3 70.8 69.0 176.1 0.15 0.29 0.28 0.72 107 on Engineering 0.4 3.6 9.4 13.4 MO0 0.01 0.04 0.05 SUBTOTAL PHYSICAL CONTINGENCIES 36.7 74.4 78.4 189.5 0.15 0.30 0.32 0.77 Price Contiagencies 60.6 106.2 190.5 357.3 0.25 0.43 0.78 1.46 TOTAL CONTINGENCIES 97.3 180.6 268.9 546.8 0.40 0.73 l.LO 2.23 TOTAL PROJECT COSTS 437.9 745.2 1.473.1 .2.6562 L79 3,04 6A1 10,84 /1 10%7 for Zogona off-site drainage.  - 23 - 5.02 Cost estimates for the squatter upgrading, sites and services, and water supply distribution components are based on the project feasi- bility study prepared by consultants from August to December 1976. The study provided preliminary costs for road construction, water supply, drainage, surveying and off-site infrastructure for five neighborhoods in Ouagadougou and two in Bobo-Dioulasso, from which one was chosen for each city for the first phase. In addition, the Cissin neighborhood was added by Government to the upgrading program after completion of the feasibility study. The costs used for Cissin were based on an analysis of the average costs for infrastruc- ture for the other five Ouagadougou neighborhoods, coupled with cost data from the UNDP experience in Cissin. In reviewing this study, the appraisal mission concluded that the quantity of physical works might be under-estimated and has therefore recommended that physical contingencies of 25% be provided for all infrastructure and construction, 1/ including community facilities, with an additional 10% for detailed engineering. Cost estimates for technical assist- ance and equipment are based on recent contracts and mission discussions with the staff of the executing agencies. 5.03 Price contingencies were compounded annually on base costs in June 1977 prices and physical contingencies in accordance with the latest IDA Guidelines which appear realistic for Upper Volta: 1977-79, 7.5% for equip- ment and 9% for civil works; 1980, 7% for equipment and 8% for civil works. Price contingencies amount to 13% of total project costs. 5.04 The acquisition of public land by project beneficiaries was not included in the project cost table and was also omitted from the summary financing plan because there is no outlay for land by any project entity. Following Voltaic law, beneficiaries will pay an officially fixed price to their respective municipalities for urban occupancy permits, i.e., trans- ferable, long-term leases. B. Financing 5.05 The proposed IDA Credit of US$8.2 million to the Government will be used to finance 90% of total project costs net of taxes (CFAF 2,218.3 or US$9.1 million). It will cover 100% of foreign exchange costs (US$6.0 mil- lion) and 72% of local costs net of taxes (CFAF 745.2 or US$3.0 million). The balance of CFAF 209.3 million (US$0.9 million), will be provided by Gov- ernment. The project financing plan is summarized in the following table. 5.06 The Government of Upper Volta will make available the proceeds of the Credit to implementing agencies. The Government contribution to the project will be allocated in the national budget and advanced quarterly to the respective agencies. Funds will be provided as grants or as loans to be repaid at agreed terms on a case by case basis, following current practice in Upper Volta. These arrangements were confirmed at negotiations and are described in the following paragraphs. 1/ With the exception of the Zogona off-site drainage works for which 10% was used, based on preliminary engineering.  - 24 - UPPER VOLTA URBAN DEVELOPMENT PROJECT SUMMARY FINANCING PLAN --------CFAF Million------------- -- -----US$ Million----------