Malawi - Fourth Highway Project

Documnt of The World Bank FOR OFFICIAL USE ONLY Report No. 7568 PROJECT PERFORMANCE AUDIT REPORT MALAWI FOURTH HIGHWAY PROJECT (CREDTT 1099-MAI) DECEMBER 30, 1988 Operations Evaluation Department 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 disclosfd without World Bank authorization. CURRENCY EQUIVALENTS Appraisal Year Average US$ 1 - MK 0.812 Intervening Years Average US$ 1 - MK 1.564 Completion Year Average US$ 1 = MK 1.413 GLOSSARY OF ABBREVIATIONS ADMARC - Agricultural Development and Marketing Corporation DRIMP - District Roads Improvement and Maintenance Project EPD - Economic Planning Division IBRD - International Bank for Reconstruction and Development IDA - International Development Association MTC - Ministry of Transport and Communications MWS - Ministry of Works and Supplies NTC - Northern Transport Corridor OED - Operations Evaluation Department PPAM - Project Performance Audit Memorandum PPAR - Project Performance Audit Report PCR - Project Completion Report SAR - Staff Appraisal Report TPU - Transport Planning Unit VOC - Vehicle Operating Costs VPD - Vehicles Per Day REPUBLIC OF MALAWI FISCAL YEAR April 1 to March 31 FOR OFFICIAL USB ONLY THE WORLD SANK Washington. OC 20433 USA 01ke 4W Ootm-Gows Opegafut avalatum December 30, 1988 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on Malavi Fourth Highway Project (Credit 1099-MAI) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Malavi Fourth Highway Project (Credit 1099-MAl)" prepared by the Operations Evaluation Department. Attachment This document has a resticted distribution and may be used by recipients only In the pfornme of their olfial duties. Its contents mtay not otherwise be disclosed without WorM Bank authorinstion. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AU71 REPORT MALAWI FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI) Table of Contents Page No. PREFACE ........ . . . . . . . . ........... ............... ...... BASIC DATA SHEET ..... ............i...... EVALUATION SUM2MARY ................ .......................... iv PROJECT PERFORMANCE AUDIT MERORANDON I. Introduction ................................................. 1 II. Access to the Sea ............................................ 3 III. The District Roads Improvement and Maintenance Program ....... 7 PROJECT COMPLETION REPORT I. Introduction............ .............................. 17 II. Project Identification, Preparation, and Appraisal.*.......... 18 III. Project Implementation andCost............................... 20 IV. Institutional Development. ... .................. .. .... 24 V. Econmic Re-evaluation ........... ................ ...... 25 VI. Conclusions..... ........ ................... ............... 28 Tables 1. Actual and Expected Project Implementation ................... 29 2. Actual and Appraisal Estimates of Project Cost................ 30 3. Actual and Projected Cumulative Disbursements ................ 31 4. Actual and Forecast Traffic on Jenda-Ekwendeni Road........... 32 5. Vehicle Operating Costs... ...... .............. ..... *...... 33 6. Ex-Post and Original Estimates of Economic Rates of Return.... 34 7. Selected Reports Produced by Transport Planning Unit of Economic Planning Division .............................. 35 ANNEX 1. Borrower9s Comments ...........#6............. ..*............ 36 MAPS .............................. IBRD 15069R ....... IBRD 15070 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. PROJECT PERFORMANCE AUDIT REPORT MALAWI FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI} 1. This is the performance audit of the Fourth Highway Project for which Credit 1099-MAI in the amount of SDR25.7 million was approved on February 3, 1981, and which --except for a cancelled balance of SDRO.2 million-- was fully disbursed on December 31, 1984. 2. The Project Performance Audit Report (PPAR) consists of a Project Performance Audit Memorandum (PPAM) prepared by the Cperations Evaluation Department (OED), and a Project Completion Report (PC ' prepared by the Eastern and Southern Africa Projects Department. 3. OED reviewed the Staff Appraisal (SAR) and the President's Report (PR), the legal documents and the transcripts of the Executive Directors' meetings which considered the project, related documents in the Bank's files, and information supplied by the Borrower. After discussing the project with Bank staff in Washington, ORD conducted a field mission to Malawi in June 1988 to secure the views of the Borrower. The audit confirms that the PCR contains a comprehensive account of objectives and achievements, and that little can be added regarding aspects specific to the Fourth Highway Project. 4. In the process of studying the record of Bank Group assistance to the Malawi transport sector, OED identified two topics which have absorbed IDA and Government attention since the mid-1960s. First, the country's need for reliable access to the sea. Second, the use of labor-based construction and maintenance methods in the secondary road network. The PPAM discusses these two topics and suggests that, in both respects, Malawi will continue to need IDA assistance for some time to come. 5. Copies of the draft PPAR were sent to the Borrower, whose reactions and comments have been reflected in this final version and are reproduced in the Annex. PROJECT PERFORMANCE AUDIT BASIC DATA SHEET VALAWI FOURTH HIGBWAY PROJECT (CREDIT 1099-MI) BASIC DATA SHEET KEY PROJECT DATA Actual as Appraisal Actual or % of Appraisal Item Expectation Current Estimate Estimate Total Project Cost (SDR million) 42.2 38.5 a/ -- Credit Amount (SDR million) 25.9 Disbursed 25.7 -- Cancelled 0.2 -- Date Physical Components Completed 6130184 12131/84 -- Proportion completed by that date (%) 95W. -- Economic Rate of Return (%) 18 14 -- CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS FY81 FY82 FY83 FY84 FY85 Appraisal Estimate (SDR million) 0.8 15.2 23.2 25.7 25.9 Actual (SDR million) 0.0 6.4 16.3 22.5 25.7 Actual as % of Appraisal (2) 42 70 88 99 PROJECT DATES Actual as % Original of Original Item Plan Revisions Actual Plan First Mention in Filc; -- 10/24178 -- Negotiations -- 12/1-3/80 -- Board Approval -- 2/3181 -- Credit Agreement Date -- 2/20/81 -- Effective Date 06/1181 -- 7/16/81 -- Closing Date 12131/84 -- 12/31/84 -- ift STAFF INPUTS (staff weeks) FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 TOTAL Identification/ 1.4 7.1 8.5 Preparation Appraisal 26.9 11.3 38.2 Negotiations 5.9 5.9 Supervision 2.9 3.7 6.1 5.8 1.3 2.8 1.7 24.4 Other 1.6 2.6 4.6 Subtotal 1.4 35.6 22.7 3.7 6.1 5.8 1.3 2.8 1.7 81.2 MISSION DATA Date of Month/Year No. of Persons Man Weeks Report Identification 10178 1 1 10/78 Preparation 11/79 1 1 12179 Appraisal 2/80 2 5 12/80 Supervision 1 6/81 1 1 6/81 Supervision 2 2/82 1 1 3/82 Supervision 3 10/82 2 2.5 11/82 Supervision 4 3/83 3 2.5 4/83 Supervision 5 6/84 2 2 7/84 OTHER PROJECT DATA Borrower Republic of Malawi Executing Agency Ministry of Works and Supplies Fiscal Year of Borrower April 1 - March 31 Follow-On Projects: Name Fifth Highway Project Loan and Credit Number Loan 2363/Credit 1463-SF-6-MAI Amount (million) Loan US$18/Credit SDR 25.5 Agreement Date 1/6/84 a/ Including project components added during implementation. b/ Trunk road constructed under project was opened to traffic in early 1984. Construction was completed in December 1984. Completion date for District Road Improvement and Maintenance Prorram was December 31, 1984. - iv - ?ROJECT PERFORMANCE AUDIT REPORT MALAWI FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI) EVALUATION SUMMARY Background 1. The Fourth Highway Project, appraised in 1980 and completed in 1984, is one of the interlocking elements 'of IDA assistance to the Malawi transport sector begun in 1966 and continuing in 1988 with the Northern Transport Corridor Project (PPAM, para 3). The audit confirms the PCR findings pertaining to this project (PPAM, para 1). Review of IDA-Government collaboration in a series of operations in the transport sector yielded certain conclusions on two topics: first, access to the sea (PPAM, paras 5-11) and, second, labor-based construction and maintenance methods for rural roads (PPAM, parse 12-26). Highways IVt Objectives 2. These weres (a) continuing the upgrading of sections of the country's most important road to paved standard; (b) making a start in redressing the country's deteriorating road maintenance performance; (c) extending the coverage of the District Roads Improvement and Maintenance Program (DRIMP), which was initiated under the Second Highway Project; and (d) strengthening transport planning capacity (SAR, pars 3.01). Hithways IV: Implementation experience 3. At appraisal, the project was estimated to cost US$42.2 million . equivalent (SAR, Table 3.1). Total actual cost was US$36.8 million equivalent (PCR, Table 2), the reduction being due in part to a lower than estimated contract price for the main project component, in part to the deletion of some road Improvements, and in part to the devaluation of the Malawi Kwacha, in terms of the SDR and US dollar (PCR, para 3.13). 4. Completion of the Jenda-Luwawa road was expected in June 30, 1984 but was delayed by six months because of extremely heavy rains early in 1982 and the contractor's use of insufficient equipment (PCR, para 3.01-3.02). Improvement works were undertaken on 50 km of gravel road but such works on another section were deleted from the contract because the latter was to be fully reconstructed under the Fifth Highway Project (PCR, pars 3.02). 5. Implementation of DRIMP Phase II began in mid-1981, with works completed in 1984 in 6 of the 10 districts in the program. Works were not completed in 3 districts while works in the 10th district were transferred at the end of 1984 to Phase III under the Fifth Highway Project. The main causes of delays were shortages of skilled foremen and severe rains (PCR, parse 3.05- 3.07). V 6. A consultant study of road maintenance was completed in 1983 and the same consultants undertook detailed engineering of a portion of the roads to be rehabilitated (PCR, para 3.09). Various maintenance equipment items were procured by the Ministry of Works and Supplies (MWS) under the project (PCR, para 3.10). A new MWS training center was completed in June 1984 by a local contractor (PCR, para 3.11). Technical assistance was provided to the Economic Planning Unit of the Office of the President and Cabinet. In addition, overseas training was financed for two economists in this organization (PCR, para 3.12). 7. Upon project completion, traffic levels on the Jenda-Luwawa-Ekwendi road were lower than expected at appraisal because general economic conditions had deteriorated in the meantime, and because traffic disruption on the main road caused by construction activities led to significant divarsion of vehicles to a more-or-less parallel route. Consequently, the economic rate of return was re-estimated at 15% as compared with 18% at appraisal (PCR, para 5.04). 8. Traffic data on roads before DRIMP-related improvements took place are not available. A study on one District showed that motor vehicle traffic is low (PCR, para 5.0(. Available information may lead to the conclusion that the rates of returzi -i most DRIMP-improved roads remain at levels above 12% (PCR, paras 5.08 and 5.13). The audit recommends more systematic collection of "before" and "after" statistics during the remainder of the ongoing Phase III and the proposed Phase IV (PPAM, para 18). Highways IV: Sustainability of Benefits 9. This seems to be assured for the major highway link between central and northern Malawi both because of the improved conditions for domestic traffic flows, and because of facilitating import-export traffic throug"4 northern Malawi and Dar-es-Salaam (PPAM, paras 9-11). DRIMP benefits will be sustainable with improved attention to maintenance (PPAM, paras 23-26), and with greater participation of Malawi professionals in planning and headquarters management activities (PPAM, para 20). Findings and Recommendations 10. Since 1966, IDA assistance to Malawi has been focussed on major issues: access to the sea; geographic balance in development; and the creation of economically justified employment opportunities through greater use of casual labor in rural road construction and maintenance (PPAM, paras 2-3). Maturity in IDA-Government relations has enabled IDA assistance to be increasingly effective (PPAM, para 4). 11. IDA has been instrumental in the conception, preparation and financing of a major project whic will give Malawi a new access to the sea. Experience from the implement.ion of this project is expected to benefit corridor projects elsewhere in Africa (PPAM, para 11). - vi - 12. The audit has verified that labor-based techniques have been firmly adopted for rural road improvement and maintenance. Low daily wages (about US$1.00) ensure economic justification of these methods, in comparison with equipment-based techniques. Mechanisms for road selection and evaluation, works programming and monitoring, and maintenance supervision are in place and functioning well (PPAM, paras 19-20). 13. A detailed review of the Malawi experience with labor-based road construction and maintenance methods will yield useful lessons for similar programs that might be introduced in other countries with resource endowments comparable to that of Malawi. The audit recommends a thorough evaluation of DRIMP when the program is completed in 1994 (PPAM, para 18). The evaluation would focus on comparisons of socio-economic conditions before and after the road network is improved in a given area, on the appropriate "mix" of labor and equipment for getting the job done, and on the cost of the different inputs over time (labor, equipment, materials, expatriate and local supervision) In the remainder of DRIMP Phase III, and during the proposed Phase IV, attention might be given to three issues. First, greater participation of Malawian professional staff to DRIMP operations.1/ Second, establishment of training and other activities ior the success of the "lengthman" system in maintenance operations. Third, systematic compilation of the data necessary for an evaluation of the entire program in terms of its impact on the rural economy (PPAM, para 28). 14. As with access to the sea, IDA assistance for the consolidation of DRIMP gains will be as invaluable in the futu.e as it has been in the past (PPAM, para 12). 11 The Borrower has the following comment (see Attachment, para 2(i)): "Page (vi) of the Evaluation Summary paragraph 13 refers to greater participation of Malawian professional staff to DRIMP operations as one of the issues that needs to be followed up. This, according to paragraph 20 of Project Performance Memorandum, refers to Engineers and Economists. While this is true and important, we feel that the design of DRIMP roads and supervising of works could as well be done by local Malawians especially after the first phase. We feel there is enough capability in the private sector for such works if given the chance." PROJECT PERFORMANCE AUDIT MEMORANDUM MALAWI FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI) I. INTRODUCTION 1. In member countries where the Bank Group has extended assistance to the transport sector for more than fifteen years, OED endeavors to review recently completed projects both on their own merits and in relation to earlier and subsequent operations. File review on the Fourth Highway Project, and a June 1988 OED mission to Malawi, confirmed that the PCR contains a comprehensive account of project experience, and that the audit could add little to the PCR. In order to consider the project's contribution to Malawian transport development, the audit studied the evolution of IDA- Government collaboration in the transport sector and the PPAR summarizes the experience from IDA-assisted operations aimed to Improves (a) access to the sea, and (b) labor-based methods for the construction and maintenance of rural roads through Malawi's District Roads Improvement and Maintenance Program. 2. Independent since 1964, Malawi is landlocked, poor, and with its southern part more developed than the north. Access to the sea, geographic balance in development, and increased employment opportunities for a growing population, are three major objectives for the Government and for Donor Agencies. All three have figured prominently in IDA assistance to the transport sector. IDA Assistance to Transport, 1966-1988 3. The first assistance extended by IDA to newly-independent Malawi was approved in September 196611 to help finance detailed studies of a number of proposed investments. The Credit contributed to the preparation of the First HiRhway Proiect2l which made possible the construction of the Zomba-Lilongwe road, and the preparation of a study on transport regulation. OED has published an audit3l concluding that the project was successful. The audit noted the need for further institutional Improvements (particularly training and localization), that IDA's presence in the sector declined in intensity after credit signature, that supervision was not sufficient, and that some sectoral issues (e.g., the regional imbalance in feeder road investments) had not been given sufficient emphasis. The Second Highway Proiect4/ and the 11 Credit S2-MAI for US$490,000. 21 Credit 112-MAI of February 1968 for US$11.5 million. f1 Report No. 946, dated December 15, 1975. 41 Credit 523-MAI for US$10.0 million. - 2 - Third Highway Prolect5/ (approved in December 1974 and December 1977 respectively), were both designed to support access to the sea, integration between the northern and the southern part of the country, and better mobility in the rural areas. OED has published an audit6/ concluding that the two projects were successful. The audit noted that, with the cost savings from construction of the Lilongwe-Kasungu road, it was possible to establish the District Roads Improvement and Maintenance Project (DRIMP). The audit emphasized that, when many other operations were brought to a standstill, labor-based construction and maintenance activities were able to continue because of their low fuel requirements. The Fourth Highway Project (approved in February 1981), had three main objectives: continue to upgrade sections of the country's most important road to paved standardg start in redressing the deteriorating road maintenance performance; and extend DRIMP coverage. The Fifth Hi&hay Project of 1983,./ focussed on road maintenance, in addition to assisting the third phase of DRIMP, constructing a two-lane paved road between Luwawa Turnoff and Champhoyo, and providing weighbridges for axle load control, as well as equipment for the Ministry of Works and Supply (MWS) training center. With the approval, in February 1988, of the Northern Transport Corridor Project, IDA endeavors to assist Malawi in gaining access to the sea, through the port of Dar Es Salaam. 4. Transport components have been included in IDA projects in other sectors,j/ with the result that IDA-Government collaboration over the 1966- 1988 period has touched upon most of the policy,/ technical and economic 5/ Credit 758-MAI for US$10.5 million. 6/ Report No. 5184, dated June 29, 1984. / Loan 2363/Credit 1423/Credit SF6-Mai. g/ Credit S17-MAI of 1974 assisted planning and engineering of infrastructure for the Viphya timber exploitation scheme. Agricultural projects in the Lower Shire Valley (Credits 114, 363 and 823-MAI), in the Lilongwe area (Credits 113, 244 and 550-MAI), and the more widespread National Rural Development Project (Credit 857-MAI)have included improvement and construction of about 4,000 km of feeder roads, while the Karonga Rural Development Project also included port improvements at Chilumba and Chipoka as well as procurement of a self-propelled barge for the lake service. 9/ Policy issues have included road maintenance (Second and Third Highway Project, PPAM paras 20-22; Second Highway Project, PCR paras 3.21 and 4.02; Third Highway Project, para 4.02); axle load control (Second Highway Project, SAR para 2.09; PPAM para 23; Fourth Highway Projek-t, SAR para 2.09); road-rail competition, railway investments, and airport construction (Second and Third Highway Projects, PPAM para 24). I questionslOl arising in transport planning and implementation. IDA- Government relations have, on the whole, been satisfactory, and progress has been made in review of transport investments, economic analysis, and maintenance procedures. Two major constraints impede Government from rapidly developing the transport sector with its own resources: the financial squeeze, which obliges Malawi to rely upon not fully coordinated Donor support for large portions of both capital and recurrent expenditures; and the low number of technically experienced nationals, which makes indispensable the continuing presence of expatriate staff in executive positions. II. ACCESS TO THE SEA 5. Landlocked Malawi needs access to the sea because its exports cannot be moved by air, and because imports are indispensable to keep its economy going. Demand for a reliable transit corridor is not unique to Malawi; it is also present in Uganda, Rwanda, Burundi, Zambia, the Central African Republic, Chad, Niger, Burkina Faso and Mali. The Bank Group has endeavored to assist landlocked countries by contributing to port, railroad and highway improvements. In the 1960s and 1970s, the theory behind transport corridor projects in Africa was straightforward: regional cooperation, to say nothing of transport economics, would suggest to littoral countries advantages to be derived from providing corridor services to their landlocked neighbors. Since landlocked countries are not rich, they should, as a matter of policy, devote resources to developing and operating the shortest available route and, for cost reasons, they should avoid multiplication of alternative facilities. 6. Things have not worked out as neatly as theory would have them. Disagreements between neighbors may lead to border closure or to war, and upheavals in littoral areas may often stop the foreign trade flows of 10, Technical and economic issues have included traffic forecasting (Second and Third Highway Projects, PPAM paras 12-16; Second Highway Project, PCR paras 5.02-5.03; Third Highway Project, PCR paras 5.01-5.05); geometric design standards (Second and Third Highway Projects, PPAM paras 6-7 and 16); labor-based construction and maintenance methods (Second and Third Highway Projects, PPAM, paras 9-11), and vehicle operating cost data collection and elaboration (Second and Third Highway Projects, PPAM paras 17-18). countries further inland.11/ In the 1980s, landlocked countries do what they can to multiply their options because --as experience has taught Malawi, Rwanda, Burundi, Niger and Burkina Faso-- the route available today will probably not be available tomorrow. For about twenty years, Malawi relied on a southern route. Then it had to switch to a northern one, and the case is instructive because it shows that the significance of political realities must not be discounted in investment planning. At the same time, it demonstrates the effectiveness of IDA assistance in a country where IDA has bLen present for an extended period, and where IDA-Government relations have matured. 7. When Malawi became independent in July 1964, its economy was based on agriculture. It has remained an agricultural country, with this one sector occupying some 90 per cent of the labor fotce. The majority of the population is self-employed in the smallholder sector and, to a large extent, remains outside the monetary economy. The most important crops are tobacco and tea which, together with sugar, account for arouid 80 per cent of all exports. Export crops are produced mainly, but not entirely, on estates. In the past, substantial foreign exchange earnings came from remittances from workers abroad, particularly in the mining industry in South Africa and Rhodesia, but this export of labor has now been restricted because the country's orientation has been modified as a result of political developments in southern Africa. 8. In 1953, Malawi was conscripted into the Central African Federation but broke away in 1963, and its opposition to the Federation was the main cause of the latter's collapse. Until the early 1980s, Malawi's main external transport links were with the south and most of the trade was with South Africa.12/ Roads connected Malawi to the vest: from Lilongwe to Lusaka, and from Blantyre through the Tete Province of Mozambique to Harare. Until the early 1980's, international connections to the north were virtually non- existent. Although a short stretch of Malawi's border adjoins Tanzania, there was no transport infrastructure across it to deal with anything more ll/ Corridor aspects in East Africa are discussed extensively in the PPAR on the East African Community - Third Railroad Project (OED Report No 4533 of June 3, 1983), and in the PPAR on the Burundi- Second Highway Project (OED Report No 6255 of June 4, 1986). Corridor aspects in West Africa are discussed extensively in the PPAR on the Republics of Ivory Coast and Burkina - Regional Railway Project (OED Report 5735 of June 25, 1985); in the PPAR on the Benin - Second Highway Project (OED Report No 3986 of June 30, 1982); in the PPAR on the Benin - Cotonou Port Prolect (OED Report No 6139 of April 8, 1986); and in the PPAR on the Togo - Second Highway Project (OED Report No 3987 of June 30, 1982). 121/ A relatively short railway line from Blantyre connected with the Mosambique railway to the port of Beira (making a total of 649 km from Blantyre to the port) and a rail link to the east connected with the Mozambique railway system at Nova Freixo, giving Malawi rail access of 807 km to the Mozambique port of Nacala. - 5 - than minor traffic.13/ During the 1970s virtually all overseas trade moved by rail to Beira and Nacala, and even the trade with South Africa was carried on by sea via Beira and South African ports. In sum, during the 1960-1980 period, Malawi had no significant contacts, either economic or transport, with the countries of East Africa, and there appeared little potential for the development of such links. All this changed after 1980. 9. Mozambique has been troubled by military insurgency since it became independent and the operation of transport routes through its territory soon became uncertain and irregular. In the late 1970s, breakdowns and delays on Mozambique Railways caused growing disruption to Malawi's traffic, and led to a severe fuel shortage in 1979. In early 1984, access to Beira was virtually closed, and all the trade of Malawi had to be diverted from that route. From April 1984, the flow of traffic to Nacala was also reduced to a trickle. The routes that had traditionally been used for all of Malawi's trade were closed and the effect on Malawi's import-export flows was dramatic. At first there was increased use of Nacala, but events in 1984 created the need for a diversion of traffic from that route. The main alternative was Durban and it could be reached by two principal routes, both of them long1/ and problematic. On the route via Lusaka the capacity of the railway was limited by the reluctance of other railway authorities to exchange wagons except on a one-to-one basis, because of the long turn-around time in Zambia. Also, it was difficult for non Zambian road transporters to obtain permits for transit across Zambia. Road traffic through Tete had to be in army escorted convoys which, all the same, were periodically attacked, and the road was sometimes mined. What all this amounted to was that the use of the route to South Africa increased transport costs for Malawi by up to four times more than what it had been in the past, and translated into annual losses of about 20 percent of the value of all Malawi exports. A much shorter, northern route, through Tanzania and the port of Dar-es-Salaam, might have saved up to 40 percent of the costs incurred on the southern alternative but the technical, economic and political aspects seemed to be daunting. 10. Could a new route to the north be opened up? An Emergency Road of 54.6 km from Karonga to Ibanda had already been built to gravel standard, opening a rudimentary "northern corridor' in October 1984. It would not be easy to establish a regular route, apart from any stumbling-blocks on the Tanzanian side, because of the difficulties of transport between the south, which accounted for perhaps 60 per cent of all Malawi's external trade, and the Tanzanian border. The obvious connection with the Tanzanian system would be at Mbeya, which is some 850 km from Dar es Salaam. From Lilongwe to Mbeya 131 For a time, during the period of Rhodesia's Unilateral Declaration of Independence, Malawi became one of Zambia's routes to the sea. Traffic travelled by road to Salime and was there transshipped to rail for the journey to Beira. With the increased availability of routes for Zambia through Tanzania, this traffic declined. 141 2,661 km to Durban via Tete and Lusaka; 3,100 km via Lusaka. - 6 - is about 750 km and from Blantyre/Limbe 1,000 km. A studyL1 concluded that a road link to TAZARA at Mbeya should be constructed, with the use of Lake Malawi for transport from the south of the country to a new port at the head of the Lake. IDA and the Government understood that the undertaking would be complicated and expensive,16/ but realized it would have to be done. In response to the argument that the troubles in Mozambique might come to an end even before the new route could be completed, there were two replies: the lines to Beira and Nacala were in such a bad state that it would be many years before they could be brought back to efficient operation; the construction of the northern corridor was necessary insurance for Malawi against the disruption of any alternative routes. 11. The Northern Transport Corridor Prolect (NTC) was approved in early 1988, and it is neither simple, 7/ nor inexpensive.18/ Anticipated completion date is 1994, and implementation difficulties are almost certain to 15/ Malawi: Office of the President-- Transport System Study of the Blantyre-Dar es Salaam Corridor, (Blantyre, 1985), 3 volumes. 16! Principal difficulties were lack of a paved road between Malawi and Tanzania; inadequate transhipment facilities at the Mbeya rail terminal; inadequate facilities at Dar-es-Salaam for transhipment of Malawi cargo between the port and the railway; limitations in ship and port facilities on Lake Malawi; and poor condition of a road link between Blantyre (the main center of activity) and Chipoka (the princip-l lake port). 17/ Project planning and implementation requires collaboration between the Malawi and Tanzanian governments. In Malawi, three different agencies (the Ministry of Transport and Communications, the Ministry of Works and Supply, and Malawi Railways) are responsible for different component-,. In Tanzania, TAZARA and the Port of Dar-es- Salaam will be involved in the i-rI ucation of other components. The project's principal components are: road strengthening between Karonga (in Malawi) and Uyole (in Tanzania), and between Blantyre and Chipoka in Malawi; construction of dry-cargo and fuel storage transhipment facilities in Dar-es-Salaam and Mbeya; procurement of railway tank wagons for TAZARA and tank containers for shipment of Malawian fuel; improvement of shipping services and cargo handling capabilities on Lake Malawi; and construction of a border post and weighing station at the Malawi-Tanzania border crossing. 181 The total estimated cost is US$110 million, of which US$91 million represent costs in foreign exchange. Project size has required a cofinancing package in which the Government of Malawi, EDF, ODA, USAID, KfW, the Government of the Netherlands, and IDA are participating with sums ranging from US$3 million to US$20 million. - 7 - arise.191 However --given Malawi9s need for access to the sea at a cost lower than that of the southern corridor-- the project is indispensable and IDA played a central role in developing the project concept, in mobilizing cofinancing, and in facilitating the Malawi-Tanzania dialogue. None of these contributions would have been possible if IDA had not earned the Government's trust in the course of a collaboration which began with the First Highway Project twenty years ago, and which continues to the present. The fact that troubles in Mozambique will eventually be resolved would present IDA with fresh challenges --currently being confronted in the preparation of the Beira Corridor Project-- because reconstruction of transport facilities in that country will demand technical advice and coordination support similar to that extended to Malawi. The changing pattern of IDA assistance to Malawi --from projects devoted largely to civil works, towards complex, multi-modal transport operations such as the NTC-- seem to presage the novel type of services that the Bank Group might be called upon to provide to its member countries. Thus, monitoring NTC implementation deserves more than the usual care because experience gained will be useful for the design of future corridor projects in both East and West Africa. III. TH DISTRICT ROADS IMPROVEMENT AND MAINTENANCE PROGRAM 12. In 1977, and with IDA assistance, the Ministry of Works and Supply's District Roads Improvement and Maintenance Program (DRIMP) experimented for tie first time with labor-based construction and maintenance methods. Results were encouraging and in 1979 DRIMP shifted to labor-based techniques in a four-phase program planned to be completed by 1994. The Fourth Highway Project has contributed to the implementation of Phase II and the audit concurs with the PCR findings (paras 3.05-3.07, 4.03, 5.05-5.13, and 6.03- 6.05). With the program almost three-fourths of the way towards completion, the audit believes that accomplishments and prospects would be appreciated more if they were placed against the proper background. This would also bring into focus the importance of certain operational aspects (maintenance of completed roads, monitoring DRIMP impact on area development, and participation of Malawi professionals in planning and management) which DRIMP is trying to resolve both during the ongoing Phase III (supported by the Fifth Highway Project), and during the proposed Phase IV. The audit feels that, as with access to the sea, IDA assistance to Malawi for the consolidation of DRIMP gains will be as invaluable in the future as it has been in the past. 191 A delay of 14 months was experienced after negotiations due to delays in signing of the Bilateral Agreement between Malawi and Tanzania. Some problems ought to be anticipated regarding resettlement of squatters living on the designated site for the Malawi Cargo Center near the port of Dar-es-Salaam (Northern Transport Corridor Project, SAR, paras 3.38-3.40). -8- Background 13. In the late 1960s, population growth, foreign exchange shortages, and strong demand for rural road and minor irrigation works in much of the developing world, prompted the Bank Group to search for what is now called "appropriate technology". The starting point was a hypothesis: In countries with a lot of labor and little capital, using people to build and maintain civil works might produce rural infrastructure facilities competitive in terms of cost, speed of completion, technical quality, and public acceptability with works produced by methods that rely more on mechanical equipment and less on unskilled labor. Despite apparent reasonableness in this supposition (which suggests not to abolish but to reduce dependence on equipment), labor-based methods were not then, and are not now, widely accepted. Between 1970 and 1980, the Bank Group investigated the reasons why machinery is popular and, then, tried out a variety of approaches for building and maintaining rural road and irrigation works by different combinations of labor and equipment.201 14. Research revealed four principal reasons for unwillingness to use more men and fewer machines in rural works:211 The first is that, as traditionally practiced, labor-intensive methods are not efficient. They do not make the best use of the workers they employ. Consequently, they are not financially competitive with equipment-based construction methods. To make them competitive much would have to be done differently: project planning and management; local manufacture of better tools; adoption of incentive payment systems. Such changes would upset established habits, or would adversely affect comfortable sinecures. The second is that political and technical leaders in many developing countries feel offended by the suggestion that they 20/ The Bank's "Study of Labor and Capital Substitution in Civil Engineering Construction" encompassed research, experimentation, physical construction and monitoring of rural infrastructure works in Asia, Africa, Latin America and the Caribbean. Detailed technical findings were published between January 1975 and June 1976 in 26 Memoranda whose topics range from comparisons of alternative designs for wheelbarrows to aggregate production. The overall structure of the research and implementation work are described in The Study of Labor and Capital Substitution: Report on the Bank-Sponsored Seminars in Washington Cologne. Copenhagen, London (Washington, September 1978). 21/ These points are discussed in Labor-based Construction Programs: A Planning and Management Handbook (World Bank, Oxford University Press, 1983). -9- should sponsor methods that are "backward" and much at variance with what is being taught at the universities of the industrialized world. The third is that, as compared with equipment-based methods, labor- based techniques are more management-intensive and the one skill that is r,ally scarce in the developing world is management. The fourth reason is quite simple: money. It is easier for a developing country to get aid funds for an equipment-based construction program than for a labor-based one. 15. Research also showed that labor-based methods may be technically and economically feasible and still not be successful when they are adopted. The correct large-scale application of such methods requires a myriad of administrative and organizational modifications, for which the full commitment of a country's technical and political leadership is indispe.Able. This support will materialize only after visible proof is availablp. that labor- based techniques are suitable for the local socioeconomic realities. "Demonstration", or "pilot", projects may persuade a country to adopt labor- based construction methods because, by actually building a number of infrastructure works under a variety of terrain and labor supply conditions, these projects constitute a real-life feasibility test. Equally important, pilot projects establish the foundations, largely through staff training, of the institutional and management structure needed for the efficient application of labor-based methods. Thus, the ground is prepared for the eventual expansion from demonstration to full-scale construction programs. "Demonstration" projects initiated by the Bank Group have included road and irrigation works in Kenya, Honduras, Chad, Lesotho, Benin,221 the Dominican Republic, and Malawi. The demonstration project in Malawi was intended to improve DRIMP construction and maintenance practices. Roads in Malawi and the District Roads Improvement and Maintenance Program 16. The total length of the "designated" road network in Malawi --which is to say, roads with claims on the maintenance budget-- has increased by only about 1000 km between 1964 and the late 1980st from approximately 10,000 to 11,000 km. Within this total, there was a five-fold increase in the length of paved roads (from about 400 km to about 2200 km), and a reduction in earth and gravel roads from about 9700 km to about 8650 km. Emphasis was therefore placed on upgrading rather than expansion, but most of the funds went for main road improvements. Gravel and earth roads did receive some maintenance funds but the amounts were small and most of them were used to pay for mechanical grading. Annual allocations from the central government could not keep up with rising costs and not all roads could be graded every year. District Councils had money only for work of the highest priority and many of the 221 For a detailed review of IDA-assisted labor-based operations in Benin, see the PPAR on Benin - First and Second Feeder Roads Projects (OED Report No. 6105 of March 21, 1986). - 10 - lesser roads fell into disrepair, leading to disruptions of access which, given the importance of agriculture, had serious repercussions for production and marketing. 17. In the middle 1970s, the Bank Group's research suggested that labor- based techniques were economically justified in countries with daily wage rates around US$1.0. Malawi was such a country and DRIMP seemed a suitable vehicle for trying to substitute labor for machinery because its equipment- based work was becoming too expensive. Before deciding on the most appropriate labor-equipment mix, precise information on costs and outputs of alternative combinations had to be gathered in the field. In 1976, consultants conducted a pilot project in Kasungu District to determine the costs of equipment-based road maintenance. In 1977, the same consultants designed a pilot labor-based project, and demonstration work, involving the 42 km long Thuchila to Phalombe Road, was carried out in Mulanje District between July 1979 and July 1980.231 Phase I of the revamped DRIMP was launched in December 1979 and showed significant benefits: lower costs in foreign exchange; increased employment opportunities; on-the-job training in construction, clerical, technical and supervisory skills; injection of cash in the rural areas through the payment of wages to local laborers; increased flexibility in the scheduling of work which would no longer depend upon the availability of graders and other pieces of major equipment. DRIMP objectives were clearly defined: *** improve District Roads to bring them up to maintainable standard, *** establish a maintenance capability in each District to ensure that roads are maintained to that standard. During the first year of operations, more tasks were identified that could be done economically by manual labor and DRIMP Phase II was designed to be even more "labor-intensive" than Phase I. 18. Phases I and II have now been completed. Phase III is ongoing and Phase IV is proposed. Duration and geographic coverage are as follows: Phase I (December 1979-January 1982) covered the Mzimba, Kasungu, Salima and Mulanje Districts. Phase II (July 1981-March 1986) covered the Chitipa, Dowa Karonga, Lilongwe, Dedza, Ntcheu, Mangochi, Machinga and Chikwawa Districts. Phase III (June 1985-June 1989) covers Rumphi, Nkhata Bay, Nkhota Kota, Ntchisi, Mchinji, Thyolo, Nsanje, Zomba and part of the Mwanza District. 231/ A full description of the demonstration project is given in Appendix 4 (Malawi: Action plan for a labor-based pilot project) of Labor- based Construction Programs: A Planning and Management Handbook, op.cit. - 11 - Phase IV (April 1989-1994) will cover Chiradzulu, Blantyre and the remainder of the Mwanza District. There is little evidence of systematic data gathering to describe conditions in a particular area before a road is improved. However, such data will be indispensable for the evaluation of the full program because they make possible comparisons of "before" and "after". The audit appreciates the manpower shortages at DRIMP headquarters, and realizes that statistical exercises of this sort would impose further demands on the energy of the available staff. Nevertheless, unless reliable figures are collected in time, any evaluation of the impact that DRIMP has had upon rural areas will be conjectural. The ongoing Phase III, and the proposed Phase IV, offer opportunities to design and implement a monitoring system that would not make undue demands for professional manpower and would enable Malawi to quantify on a solid basis the costs and benefits of labor-based rural road improvements. Road Selection and Performance Monitorina 19. District Councils propose roads for improvement on the basis of clearly defined screening criteria. Proposed roads should connect either with existing roads in good condition, or with facilities such as a local market; there should be no other transport alternative within a distance of about 2 km from the proposed road; the area to be served by the proposed road should be covered by a development program, such as an agricultural extension service, or a cooperative. All proposed roads should be below a maximum per kilometer cost. Road proposals that pass these screening criteria are subjected to evaluation by consultants who review traffic volumes (to ensure that the road will have at least 10 vehicles per day), agricultural benefits (to establish the producer's surplus likely to be attributable to road improvement), and social benefits (such as better access to health, educational and other social facilities). 20. The administrative framework for planning and monitoring work in the field was weak in Phase I but has been properly strengthened since Phase II. DRIMP Headquarters issued a comprehensive Foreman's Manual in 1983, and revised it in 1987, while a thorough system for progress reporting and expenditure control has been put in place with excellent effect. Headquarters staff visit DRIMP sites on a regular basis to consult with field supervisors and solve problems as they arise. One aspect that deserves attention is the relative absence of Malawian professionals in DRIMP planning and headquarters management activities. While granting that there is hort aupply of Malawian engineers and economists, and that other parts of the civil service --to say nothing of the private sector-- compete for them, the audit feels that the long-term success of DRIMP would depend on the presence, and commitment, of local staff. This is a lesson which experience in Benin fully supports.241 241 See, PPAR on Benin - First and Second Feeder Road Projects and, in particular, para 43. - 12 - Interim Results: Construction 21. So far, DRIMP has upgraded over 4,200 km in 18 Districts, with another 1,300 km scheduled in the remaining 6 Districts over the 1988-1993 period. Ever since labor-based construction operations were launched, DRIMP's popularity has been increasing because (while the cost of mechanical equipment25/ continues to rise, especially in relation to the cost of labor26/), DRIMP employs unskilled workers to build rural roads at an acceptable standard.27/ DRIMP operates on an 8-hour work day during which certain construction tasks must be finished. Tasks are set in the morning, monitored during the 8-hour working period and checked at the end of the day. A typical construction unit may employ 1000 unskilled laborers, 60 locally recruited gangleaders ("capitaos"), 8 technical assistants, 2 road supervisors, 1 unit engineer, and 1 senior road supervisor. 22. Including supervision, construction costs per km (in 1987 prices)28/ have ranged from K3,958 (Lilongwe District, Phase II) to K18,365 (Mangochi District, Phase II), and with a national average of K7,581. Even after allowing for inflation, as well as slippages in the pace of physical implementation, there have been substantial cost overruns, compared to the 25/ DRIMP does use some plant and equipment and a typical construction unit may have: 2 seven-ton flat trucks for stores collection and haulage; 4 Tractor/trailer combinations for site haulage; 2 four- wheel drive vehicles for the supervisory staff; 7 motorcycles for foremen; 12 pipe molds for culvert fabrication. 261 In 1980 the tractor used by the construction units cost the equivalent of 45,000 mandays, whereas in 1987 the cost was over 80,000 mandays. 27/ There are no specified geometric standards for horizontal or vertical alignment. Until recently the standard running surface width was 5.50 m within an 8.50 m. formation. Reduced standards (5.00 m width and 7.50 m formation) have been adopted to minimize costs. Similarly, the earlier culvert standard of 7 pipes has now been reduced to 6. Drifts and vented fords are used when stream flows do not warrant a bridge. So far, masonry substructure and timber superstructure have been used for bridging but there are increasing hardwood shortages and DRIMP is considering cement decking which would reduce maintenance costs. In general, DRIMP roads are not graveled. Short lengths of gravel are used on steep sections where the surface is slippery in the rainy season. 281 Source: DRIMP -- Phase IV Draft Final Report, Table 2.5 (Ministry of Works and Supplies, March 1988). - 13 - estimates of the feasibility study which preceded each Phase.291 This is partly because the labor productivities observed in the Mulanje pilot project have not been duplicated on a countrywide basis;0/ partly because there have been substantial variations in drainage standards from one District to the next; partly because deterioration of the roads between the feasibility and construction stages led to increases in the required work; and, finally, because the unit costs in feasibility studies were not based on sufficient field work and proved to be too optimistic. Interim Results: Maintenance 23. DRIMP success will stand or fall on the quality of the maintenance organization. A total of 19 maintenance units has been established, and they are operating in all districts of the Northern Region, in 7 districts of the Central Region, and in 6 districts in the Southern Region. In mid-1988, about 6,200 km are under maintenance with about 3,500 persons employed in maintenance operations.311 24. DRIMP-maintained roads account for almost 30% of Malawi's total network but consume about 15% of the road maintenance budget.31 DRIMP maintenance requirements will continue to rise as more roads are built.331 Between 1982 and 1988, the maintenance budget for DRIMP roads (in 1987 29/ The average cost overrun for Phase II Districts was 128% for the Northern Region, 155% for the Central region, and 225% for the Southern Region. The average cost overrun for work in Phase III Districts completed until March 1988 is 58%. 30/ The Thuchila-Phalombe pilot project showed that 2,100 mandays of casual labor were required to build one km of road. The corresponding 1978-79 figure (including graveling of 500 m) for the Kenya Rural Access Roads Programme was 2,000. The current DRIMP average is 2,912. 311 Each maintenance unit is standardized in terms of staff and equipment: 1 Officer-in-Charge; 1-5 Road Foremen (depending on the total length of the roads to be maintained in the District); 4 Clerical Officers; 1 four-wheel drive supervision vehicle; 1-2 tractoritrailer combination; 1 truck; 1 motorcycle for each Road Foreman. 32/ Current allocation per km is K450 per km but the DRIMP --Phase IV Draft Final Report shows, in Appendix E, that K600 per km are required for effective maintenance. 331 At the current level of K450 per km, maintaining the full planned DRIMP network of about 7,200 km will cost K3.25 million in 1987 prices. - 14 - prices)141 has been decreasing in per km terms, as the total length of the network has been increasingt K414 per km in 1982/83 K545 1983/84 K650 1984185 K499 1985/86 K516 1986/87 K461 1987188 K451 1988/89 Moreover, distribution among different expenditure items is not what it should be: provisions for vehicle replacements are inadequate, too much is spent on depot staffing, and too little is devoted to periodic maintenance. Effective and Actual DRIMP Maintenance (Percentages of Expenditure) Equipmentivehicle Replacement 19% 1% Running 24% 28% Depot Staff 12% 21% Running 4% 5% Labor Routine 18% 30% Periodic 7% 7% Materials Routine 4% 3% Periodic 12% 4% Total 100% 100% (Sources DRIMP - Phase IV Draft Final Report, Table 2.8) 25. The financial shortfall has not influenced operations because most of the plant and equipment is still fairly new, and failure to provide for replacements has not yet affected availability. Also, the fairly recent construction of most of the structures means that funding under-allocation of periodic maintenance has not been felt. On the other hand, Phase IV proposals 341 Sources Table 2.7 of the DRIMP- Phase IV Draft Final Report. - 15 - include rather extensive spot improvements on recently completed roads35/ and this suggests that maintenance is not adequate.361 26. Effectiveness of DRIMP maintenance procedures has been variable. Infrastructure for maintenance operations support and supervision (depots and housing) is now almost complete. Routine maintenance is carried out by small gangs, headed by a locally-recruited supervisor ("capitao"). Gang size is determined by the length of the road but varies throughout the year with the level of work. Staff at all levels are not very clear about their role and wasted effort is combined with a standard of maintenance which, in many Districts, is not satisfactory. Aware of the shortcomings in the present regime, MWS is reviewing different organizational options for DRIKP maintenance at the headquarters level with a view to introduce the "lengthman" system in the field.371 This is a new system for Malawi, very different from the gang system used in construction, and will require extensive staff training at all levels. Findings and Recommendations 27. The audit has verified that labor-based techniques have been firmly adopted fov the improvement and maintenance of rural roads. They enjoy Government support and public acceptability --a significant accomplishment in the face of continuing resistance in many other developing countries as well as within many international development agencies. The fact that daily wages continue to be about US$1.00 ensures the economic justification of these methods, in comparison with equipment-based techniques. Institutional mechanisms for road selection and evaluation, works programming and monitoring, and maintenance supervision are in place and functioning well. 28. A detailed review of the Malawi experience with labor-based road construction and maintenance methods will yield useful lessons for similar programs th&t might be introduced in other countries with resource endowments comparable to that of Malawi. The audit recommends a thorough evaluation of 35/ DRIMP - Phase IV Draft Final Report, Appendix I. 361 Preparatory work for Phase IV included the survey of over 3,500 km of the DRIMP network. Road deterioration was noted in many instances, including potholes, rutting, silted drains and culverts, as well as loss of carriageway shape. The immediate cause of many of these problems lies in inadequate maintenance methods but, on a long-term basis, serious problems are expected to emerge is the overall level of maintenance resources is not increased, and if funds are not better distributed between the depots and the field. 371 One laborer is deployed every 2 km of road to carry out routine tasks (reshaping the camber, reshaping side drains; cleaning out culverts and drains; repairing drainage structures; filling potholes). On difficult stretches, the length for one laborer can be reduced to 700 m. - 16 - DRIP when the program is completed in 1994. The evaluation would focus on comparisons of socio-economic conditions before and after the road network is improved in a given area, on the appropriate "mix" of labor and equipment for getting the job done, and on the cost of the different inputs over time (labor, equipment, materials, expatriate and local supervision). In the remainder of DRIMP Pahse III, and during the proposed Phase IV, attention might be given to three issuest First, greater participation of Malawian professional staff in DRIMP operations. Second, establishment of training and other activities for the success of the "lengthman" system in maintenance operations. Third, systematic compilation of the data necessary for an evaluation of the entire program in terms of its impact on the rural economy. - 17 - MALAWI PROJECT COMPLETION REPORT FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI) I. INTRODUCTION 1.01 Malawi, a landlocked country in Southern Africa with an economy based primarily on agriculture, has a multimodal transport system consisting of about 12,000 km of roads, a 645 km railway, and lake and air transport facilities. (Map IBRD 15069R). Roads dominate internal transport. Road development with strong support from the World Bank Group has proceeded along two parallel lines, that is, (1) improvement of main roads, particularly the north-south artery linking the three regions of the country and (ii) development of lower standard roads that reach into isolated rural areas, thus providing widely scattered farmers with better access to markets, health centers, schools, and the like. The Fourth Highway Project is illustrative of this kind of development as it included construction of a portion of the main north-south road and carried out a program of improvement and maintenance of district roads in several of the country's 24 districts. 1.02 A primary objective of the Malawi Government has been the development to a paved standard of the main road from the Mosambique border in the south to the northernmost border, linking not only the three regions but also principal commercial and governmental centers such as Blantyre, Zomba, Lilongwe, and Mauzu. The First Highway Project financed reconstruction of the section from Zomba to Lilongwe; the Second Highway Project finaAced upgrading of the 113 km section from Lilongwe to Kasungu. Under the Third Highway Rroject, an 85 kt. extension of the road was built reaching as far as Jenda in the Northern Region. The Fourth Highway Project extended the paved road 32 km beyond Jenda to the Luwawa Turnoff in the Viphya mountains and 37 km between Mbowe and Ekwendeni via Mzuzu; in addition, it included some improvements of the existing road between Luwawa Turnoff and Mbowe. Under the Fifth Highway Project the paved road is being extended 50 km from Luwawa Turnoff to Champhoyo. With these and other related projects a major transport artery has been developed which has contributed much to the economic, social, and political integration of the country. 1.03 In recent years, improvement of district roads in Malawi has also had high priority. Previously, these rural roads had been neglected, mainly because the district councils lacked the skills and other resources needed to improve and maintain them adequately. The Second Highway Project - 18 - included a pilot program in Kasun-u District to determine the most effective way to carry out that effort. The results of that pilot program were promising and, in the Fourth Highway Project, resources were provided to expand the program to several more districts. Under the Fifth Highway Project the remaining districts are included in the program. 1.04 The information required for this repo,t was obtained, in part, from a project completion report prepared by the Government of Malawi in accordance with Section 3.04(d) of the Credit Agreement. This report is essentially a technical summary of the project implementation without a detailed reevaluation of the economic viability of the various project components, and without a critical review of the Association's performance. In addition, information was secured from supervision reports, consultant and Government progress reports, and other materials in the Association's files. II. PROJECT IDENTIFICATION, PREPARATION, AND APPRAISAL Oritin of the Project 2.01 In 1978, soon after starting construction of the Kasungu-Jenda section of the M1 with financing under the Third Highway Project, the Government pressed for further extension of the road under a proposed Fourth Highway Project. In fact, the Third Highway Project, approved in 1977, financed a feasibility study of the Jenda-Mzuzu stretch and the Government expected that the results of this study would provide the basis for defining a road construction component in a follow-on Bank Group project. 2.02 The other major component of the Fourth Highway Project, the District Roads Improvement and Maintenance Program (DRIMP), had its origin in the District Roads Pilot Program of the Second Highway Project. If the results were promising it was planned to extend the program to other districts in later projects. The results were known in 1978 and Phase I of DRI4P was undertaken in four districts using funds derived from project cost savings. Although the detailed study was still underway, Phase II of DRIMP was ready for appraisal in early 1980 and, therefore, it was timely to include it in the Fourth Highway Project. Project Preparation 2.03 The feasibility study and detailed engineering for the Jenda-Mzuzu road was done by British consultants, and work began in July 1978. Detailed engineering for the 143 km route was initiated in September 1977; only 54 km of engineering was carried out at this time because 89 km had already been designed under the Viphya Pulpwood Primary Road Network Project. In October 1980, all the detailed engineering and the tender documents were completed for a paved road on the route. Also, a - 19 - feasibility study and detailed engineering of the 20 km Mzuzu-Ekwendeni section, completed in 1976, was updated in 1979 by the same consultants. Thus, by early 1980, detailed engineering was ready on the entire 163 km Jenda-Luwawa Turnoff-Champhoyo-Mbowe-Mauzu-Ekwendeni stretch. 2.04 Preparation of the DRIMP Phase II Component of the Fourth Highway Project consisted largely of an engineering and economic appraisal prepared by British consultants; the detailed study, begun in January 1980 and completed in August 1980, was financed retroactively under the Fourth Highway Project. This study screened and selected specific roads for the DRIMP Phase II Program based on engineering and economic criteria, specified the resources needed to carry out the program and prepared work schedules for each of the 10 districts selected. Appraisal 2.05 The project was appraised in February 1980. During the appraisal mission, it was decided that construction to a paved standard should be confined to the 85 km Jenda-Luwawa Turnoff-Champhoyo section plus the Mbowe-Ekwendeni section. The principal issue was the economic justification of constructing the Champhoyo-Mbowe section to a paved standard. The Government stressed the high probability of major forestry development projects going forward in the near future and consequent large traffic generation; Bank staff were skeptical. By June 1980, it seemed clear that such developments would be delayed and therefore the decision was reached to include only the Jenda-Luwawa Turnoff and Mbowe-Ekwendeni section for paved road construction and to include the remaining sections for improvements to a low gravel standard. 2.06 In the appraisal, the DRIMP Phase II component of the project included 2,600 km of roads in 10 districts using both intermediate technology and labor intensive methods which had proved successful in Phase I. It was also accepted that the project include financing, on a declining basis, of the incremental foreign exchange portion of recurrent maintenance costs of Phase II roads after improvement. 2.07 The appraisal mission found that the maintenance of the national road network had deteriorated seriously and that the project should, therefore, include components to alleviate the problem. Accordingly, provision was made in the project for a road maintenance study and the procurement of road maintenance equipment for the Ministry of Works and Supplies (MWS). A new training center was also included in the project. 2.08 Total project costs were estimated during the appraisal mission at US$44.5 million, net of taxes and duties, with a foreign currency component of US$31.1 million (70%). These costs included physical and price contingencies. During the months between the appraisal mission and Credit negotiations, the project composition was refined and the costs revised (see Table 2). In the Staff Appraisal Report, the total project cost, excluding taxes and duties, was US$39.2 million with a foreign currency elemert of US$26.67 million (68%). - 20 - Credit Ne&otiations and Subsequent Processing 2.09 Negotiations were held from December 1 to 3, 1980 in Washington. No significant disagreements arose in these meetings. With regard to Phase II of DRIMP, Section 3.07 of the Development Credit Agreement, as then agreed, provided that the Malawi Government furnish the Association, annually, for its concurrence, the proposed work program for the forthcoming fiscal year. A supplemental letter that would satisfy this requirement was drafted during negotiations. The official letter, dated February 20, 1981, was subsequently furnished to the Bank. Signing of the Credit Agreement also took place on February 20, 1981. 2.10 The Credit did not become effective until July 16, 1981, about 6 weeks later than had been estimated in the Staff Appraisal Report. Government delay in submitting a legal opinion on the credit agreement was the reason for the additional time before effectiveness. III. PROJECT IMPLEMENTATION Physical Implementation of Main Road Construction 3.01 Tender documents for the main road construction were sent to 17 prequalified contractors early in 1981. The tenders were in two lots. Eight firms submitted bids, 6 for the first lot, 5 for the second, and 5 for both lots combined. A British contractor had the lowest combined bid at MK 18 million. The base price at the March 1981 price level was MK 16.74 million, slightly lower than the appraisal estimate of MK 17.80 million. The contract was awarded in May 1981. 3.02 Construction began in September 1981 but extremely heavy rains from December 1981 to April 1982 severely hampered progress. It also became evident that the contractor needed additional equipment and in the latter part of the year did, upon some urging of the Government and the Association, obtain supplemental equipment that expedited the work. In March 1983, the work was 5 months behind schedule. In the meantime, a study had been initiated by British consultants to determine whether the Luwawa Turnoff-Champhoyo section warranted construction to a paved standard under the proposed Fifth Highway Project. In consideration of this study and the delay in the contractor's work, the Government and the Association agreed to postpone all improvement works until near completion of the construction works. Improvement works on the 50 km Champhoyo-Mbowe section r were completed by the contractor but improvement works on the 50 km Luwawa Turnoff-Champhoyo section were deleted from the contract, with a savings of about US$1.3 million, because this section was selected for reconstruction under the Fifth Highway Project. - 21 - 3.03 As the construction and improvement works neared completion it became apparent that some additional spot improvements between Champhoyo and Mbowe were needed. The original contractor subcontracted this small task to another British firm, for MK 369,000 (contract amount); the subcontractor undertook the work in October and completed it in Dezember 1984. 3.04 The quality of construction and improvement works was satisfactory. The contractor submitted claims for nearly MK 3 million but they were reduced by more than half and finally settled in 1985. DRIMP 3.05 Implementation of Phase II of DRIMP began immediately upon the effectiveness of Credit 1099-MAI because it was an extension of work already in progress under a preceding project. In mid 1981, DRIMP works were initiated in the three districts of Lilongwe, Karonga, and Chikwawa. In 1982, such works were begun in Chitipa, Dedza, Mangochi, and Dowa districts. No district was added in 1983 but in 1984 Ntcheu and Machinga were incorporated into the active program. The works were completed in 6 of the districts; three districts where works were not completed (Chitipa, Ntcheu, and Machings) and Thyolo District where planned works did not begin under Phase II were all transferred at the end of 1984 to Phase III under the Fifth Highway Project. 3.06 In carrying out the work, depots and housing were completed early. Procurement of materials was accomplished by local shopping. As road improvement works were well underway, attention focussed on establishing a maintenance capability at the district level. Maintenance was carried out by district personnel trained under the project, both on the job and in the training center of MS. Government supplemented the meager district council resources available for road maintenance. Also the project assisted Government by financing incremental maintenance costs on a declining basis over the-first 3 years of maintenance activities in each district. During this period, NWS supervised all district council maintenance both for control of funds and to monitor staff skills and for taking corrective action where further training needs were evident. 3.07 The principal problems faced in implementation of Phase II were the shortages of skilled foremen, unforeseen additions of extra work, such as new roads and more drainage structures than originally planned, and consequent delays in carrying out the works. These shortages are being met through expanded training activities. Severe rains, particularly in the period December 1981 to April 1982, were also a major cause of delays. Notwithstanding these problems, the Phase II activities were carried out satisfactorily, although not all the works were completed. - 22 - Miscellaneous Project Components 3.08 Supervision of road construction and improvement of the Jenda-. Ekwendeni road was carried out by the design consultants. The same firm also supervised Phase II of DRIMP and completed a preparation report for Phase III. Under both contracts performance of the consultants was satisfactory. 3.09 The road maintenance study was conducted by Swiss consultants; the firm was selected in April 1981 after evaluation of technical proposals received from 5 invited consulting firms. The contract was not awarded, however, until January 1982; work began nearly a year later than expected at appraisal. The study was substantially completed in 1983 after stich, in August of that year, the firm was assigned detailed design of some of the roads to be rehabilitate4. 3.10 Maintenance equipment for MWS, including mini-batch asphalt mixing plants, was procured by local shopping in accordance with planned procurement procedures. In 1982, MWS and IDA agreed on a list of equipment needed for minor repairs of bituminous surfacing. Subsequently that year, the items of equipment were purchased and were put into operation and has been used by MWS for patching road surfaces. 3.11 The new MWS training center in Lilongwe was long delayed because of design problems. During appraisal, it was expected that the center would be completed in August 1982. Design of the building was not finished until about May 1982. After local competitive bidding for construction of the center (9 bids were received), a Malawian firm was awarded a contract in October 1982. The training center was completed in June 1984 and the quality of construction was satisfactory. Furnishings for the center, however, could not be covered because of a shortage of funds and it was necessary to shift this element to the Fifth Highway Project. Training of foremen and artisans formerly done in the old facility is now being accomplished in the new Lilongwe training center. 3.12 Technical assistance was provided to the Transport Planning Unit (TPU) of the Economic Planning Division (EPD) of the Office of the President and Cabinet. A transport planner was in place in June 1982; he produced a number of useful reports (see Table 7), established a statistical data collection system and aided the IDA mission appraising the Fifth Highway Project. In addition to the technical assistance made available to EPD, this component financed overseas train4ng for two economists who subsequently have been employed by TPU.Y& Proiect Costs 3.13 The total cost of the Project, as presented in Table 2, was US36.8 million equivalent of which US$28.3 million or 77% was foreign cost. The cost of the road construction and improvement component was 1/ The Borrower notes in para. 2 (ii) of Annex 1: "In paragraph 3.12 page 6 of Project Completion Report apprises the work done by the consultant (Transport Planner) during his first contract. Agreeably, the assistance went a long way in establishing a sound database and producing reports, some of them need updating. However, in the subsequent contract of the consultant the development and improvement of the database was not rigorously done so too the updating of some of the reports and also continuation of some of the studies. Up to now, the usefulness of the data, reports and studies is felt and as such the need to continue is felt. Further assistance is needed for the completion of the work. (May be the comments made could come under the Fifth Highway Project). - 23 - USS22.2 million or about 60% of total cost. A cost comparison indicated that the actual total cost of US$36.8 million was significantly lower than the estimate of US$42.2 million. One cause of this difference was that the contract price for the main project component was slightly lower than the estimate. Another reason is that savings were realized when improvements on the Luwawa Turnoff-Mbowe section were deleted. Also, the devaluation of the Malawian Kwacha, in terms of SDR and US dollar, over the years of project implementation reduced project cost. 3.14 While the overall project cost was comparatively low, the US$10.5 million cost of the DRIMP Phase II component was slightly higher than the appraisal estimate of US$9.5 million. This comparison does not reveal the full impact of the additional work, and labor and materials cost increases because some work planned for Phase II was not accomplished under the project but transferred to the Fifth Highway Project (see 3.05). The US$1 million increase in costs for Phase II were covered by reallocation of project funds. The costs of all other components, except for the minor item of maintenance equipment for MWS, were lower than appraisal estimates. Disbursements 3.15 Disbursement of funds from the project credit are shown in Table 3. On September 30, 1981, actual disbursements were close to the target represented by the appraisal estimate of cumulative disbursements, but during the following two years they lagged substantially below the estimates, primarily because of delays in construction works. The situation subsequently improved so that on September 30, 1984, when the total Credit was to have been disbursed, about 90% of it had actually been disbursed. A year later the full Credit had been disbursed except for SDR 180,000 which was cancelled. 3.16 The Credit was closed on December 31, 1984, as originally planned. On October 15, 1984, the Government formally requested a 6 months extension of the closing date to allow more time to complete certain tasks and settle claims of the contractor .for the main road construction and improvement work. The Association did not agree to the extension but rather offered to keep the account open until June 30, 1985 for final processing of applications for disbursements. Credit Covenants 3.17 Most of the covenants in the Credit agreement were satisfied. The Government did not, however, comply with Section 3.08 which required completion of the road maintenance study by May 31, 1982; the study was completed about 9 months late. The other problem was noncompliance with Section 4.01(c) requiring submission, within 6 months of the closing of each fiscal year, of an audit report on project accounts; the first such report was submitted nearly a year late and the second report about 6 months late. In general, compliance with covenants was satisfactory. - 24 - Performance of Borrower and Association 3.18 Borrower performance in carrying out the project has been generally satisfactory. Early in the implementation, cost control of DRIMP expenses was inadequate but this deficiency was soon corrected. The project was adequately supervised by the Association with an average of two supervisions per year. There was little the Association could have done to prevent delays in execution. IV. INSTITUTIONAL DEVELOPMENT 4.01 Prior to 1983, MWS had a relatively strong and stable management staff. A considerable number of technical assistance personnel, financed by the Overseas Development Administration (ODA), in the ministry were a major asset and Malawians were taking on increasing responsibilities. In March 1983, however, an Association mission noted a deterioration of management caused in large part by the replacement of many expatriate staff during a short period of time by Malawians with much less experience; among the reasons for the departure of many expatriates was the sharply reduced ODA financial assistance for this purpose. To raise the quality of management, a substantial amount of technical assistance was provided to XWS in the Fifth Highway Project. In the meantime, under the Fourth Highway Project, considerable expatriate assistance was made available: the project preparation work as well as supervision work were undertaken by the British consultants, and the road maintenance study and subsequent design work done by the Swiss consultants, constituted indispensable assistance to MWS. 4.02 An already difficult management problem in MWS was aggravated by two additional events in 1984s in March the Engineer-in-Chief and the Controller of Works for the Central Region, both able Malawians, were killed in an automobile accident, and in June the MWS Permanent Secretary retired. These large gaps in the management staff required a number of personnel reassignments within MWS. Fortunately, a well-qualified ODA expert with excellent experience in MWS was available to fill the position of Permanent Secretary. 4.03 DRIMP has made a major contribution to institutional development by strengthening organizations both at the district.level and the MWS level to deal with improvement and maintenance of rural roads. The DRIMP staff at MWS headquarters will eventually provide the nucleus of a Rural Roads Division under the MWS Roads Department. Significantly too, the new training center at Lilongwe is the primary source of training for various skills required in DRIMP. 4.04 The project has also made a major contribution to strengthening the institution responsible, in part, for national transport planning, that is, TPU of EPD. The transport -lanner provided to TPU under the project - 25 - filled a key position; his services are being continued under the Fifth Highway Project. Malawian staff are being upgraded by the overseas training of selected economists of TPU under financing of both the Fourth and Fifth Highway Projects. As a result of this institutional strengthening, it is expected that the transport planning capacity accumulated in TPU will play an increasingly important role in national transport planning. The Association has recommended that TPU be shifted from EPD to the Ministry of Transport and Communications (MTC) to rovide necessary strengthening of the transport planning capacity of MTC.1/ V. ECONOMIC RE-EVALUATION Main Road Construction 5.01 The principal benefits from the main road construction and improvement component were the savings in vehicle operating costs and road maintenance costs. Major beneficiaries of transport cost reductions are farmers, other shippers, and consumers located in the zone of road influence. Traffic volume on the road in the short period since construction was completed is shown in Table 4. 5.02 Vehicle operating costs (vo,) for different classes of road, in 1980 when the project road was appri,ised and in 1985, are shown in Table 5. voc increased substantially for cars, landrovers, and trucks but show a slight decline for buses. Whether the latter anomaly is due to poor data or a decline in the average size of buses is not known. Unit savings in voc in 1985 were greater than in 1980. 5.03 At the time of appraisal, the main road component was found to have an economic rate of return of about 181. As indicated in Table 6, this component constituted 60Z of the total actual investment in the project. In the re-evaluation, all costs were based on voc as of 1985, adjusted to reflect costs for the period of actual investment. 5.04 The economic cost of the actual capital investment in the main road construction and improvement was MK 19.5 million. Traffic for the opening year (1984) is estimated in the re-evaluation at levels of vehicles per day (vpd) as shown in Table 4. Actual traffic levels in 1985 and 1986 have been generally lower than forecast because of adverse economic conditions in the country and the continued disruption of traffic because of construction work between the Luwawa Turnoff and Champhoyo; this disruption will disappear in 1989 when the road between Luwawa Turnoff and Mbowe will be completed, as a consequence of which some traffic will be diverted from the M1 to the new road. An additional favorable long-term factor is that beginning about 1989 the Northern Transport Corridor Project is expected to be completed leading to an increase in north/south truck traffic on the project road. Future traffic is assumed to increase at 7% p.a. (as assumed in the appraisal) except that between 1985 and 1990, a 1/ The Borrower notes in para. 2 (iii) of Annex 1: "Paragraph 4.04, page 9 of the Project Completion Report mentions of an IDA recommendation to shift TPU to KrC. Understandably, the MTC's planning section needs strengthening. However, it would defeat the purpose TPU was created for if the unit is transferred to MTC. The current thinking is that EPD's TPU should liaise with the MC's Planning Section. A strong planning unit in the Ministry should be established. This Unit will then work closely with TPU of EP&D just as the other sectors are doing." - 26 - more modest rate of 5% p.a. was assumed. Unit voc for 1985 used in the reassessment are those shown in Table 5, adjusted for price level changes to place them on the same price basis as project investments. On the basis of the various factors, the economic rate of return was found to be 15%, as shown in Table 6. DRIMP 5.05 Benefits from the DRIMP works include primarily (1) vehicle operating cost savings to non-agricultural traffic and (2) increases in agricultural production made possible by easier access to farms and markets. Other benefits are institution-building, reduced spoilage of produce, and improved access to health, education, and other facilities. The main beneficiaries are those residing in the vicinity of the roads. 5.06 The project preparation study for Phase II of DRIMP selected district roads for inclusion in the program based on socio-economic criteria and all roads selected were expected to have an estimated economic rate of return of at least 12%. Although comprehensive data on the actual impact of the roads in DRIMP Phase II are not available, a study was made by EPD in 1985-86 to determine the impact of the DRIMP roads completed in 1980 in Kasungu District. Presumably, the effects of Phase II roads would be similar in character and magnitude to those found in Kasungu District. Therefore, a brief review of the findings of that study is instructive. 5.07 A survey of smallholder farmers in Kasungu District sought to ascertain changes in certain activities in 1985 from the pre-DRIMP year of 1980. Some of the findings were that, of the total group surveyed: 80% increased their maize production, 82% had an increased marketable surplus of maize, 75% increased their crop area, and 50% used more fertilizer. Government reports show that purchases of agricultural produce in Kasungu District by the Agricultural Development and Marketing Corporation (ADMARC), the state-owned agricultural marketing agency, rose sharply to 26,407 metric tons from 6,440 metric tons in 1976. 5.08 The Kasungu study revealed that the increase in motor vehicle traffic on DRIMP roads was small, though the data on pre-DRIMP traffic was sketchy; there was a large increase in the use of non-motorized farm carts, while bicycle traffic and headloading declined. The apparent shift from bicycles and headloading to farm carts is significant; for the short distances involved-in farm-to-market transport (often within 5 km), the farm cart is a more economic solution for most farmers than purchasing a motor vehicle. While the use of farm carts on DRIMP roads is undoubtedly facilitated by the development and improvement of these roads, the improvements were largely intended for motor vehicles. In future, increased motor vehicle traffic will occur as the availability of trucking services increase and traders with trucks penetrate into the relatively remote areas served by DRIMP roads. Gradually, truck operators/traders will develop a pattern of picking up produce at the farm gate and delivering fertilizers and other supplies to the farmers. The Association and the Government have discussed a possible cpmponent in a proposed Sixth Highuty Project to strengthen rural trucking. - 27 - 5.09 The Kasungu study also found a significant increase in the number of mobile clinics and health units and a sharp rise in the number of patients treated in the various health centers. Primary school enrollment rose to 34,777 in 1984 from 22,276 in 1976. 5.10 The various positive changes that have occurred in the area of influence of the DRIMP roads, as noted above, are attributable to many factors and specific attribution to the DRIMP road improvements .is difficult. Undoubtedly, these improvements have made a major contribution to economic progress in the area; clearly, however, this subject needs further study, particularly in districts where better data exist than in Kasungu District, on socio-economic conditions prior to DRIMP improvements. 5.11 While the economic benefits of the Phase II roads are not directly ascertainable, the case of Kasungu DRIMP roads suggests that they have been substantial, except that motor vehicle traffic, and thus savings in vehicle operating costs, have not increased as much as anticipated at appraisal. The MK 12.9 million economic costs of the improvement works, was 5% higher than the MK 12.3 million estimated at appraisal. Although this difference is small, the works accomplished fell somewhat short of the total works included in the project; the works were incomplete in 3 districts and not started in another. The combined effects of the higher investment costs of works completed and perhaps lower economic benefits than anticipated at appraisal, would lower the economic rate of return of DRIMP Phase II. 5.12 The cost per kilometer for DRIMP works was estimated at MK 2,900 at appraisal. In 1984, consultants found such costs had increased from 132 to 105% in four sample districts. These cost increases largely reflected additional works and general inflation during the period, and project benefits as well as costs were affected by the inflation. 5.13 The impact of higher investment costs on economic rates of return does not appear to have been serious. A study undertaken in mid-1984, about the time of project completion, reassessed the viability of 823 kilometers of DRMP road works that had been selected in 1980 for the Fourth Highway Project and later shifted to the Fifth Highway Project for completion. The study found that 86% of the 823 kilometers remained viable. Economic rates of return were not calculated for the roads but benefiticost ratios were derived and the overall benefiticost ratio for 823 kilometers of roads was about 7 to 1. In view of these findings and the fact that the rates of return found for DRIMP roads in the preparation study for the Fourth Highway Project were generally high, it is likely that the rates of return on most roads remain satisfactory at levels above 12%. - 28 - VI. CONCLUSIONS 6.01 The objective3 of the project were largely achieved, that is, (1) continuing the upgrading of sections of the country's most important road to paved standard; (2) making a start in redressing the country's deteriorating road maintenance performance; (3) extending DRIMP which was initiated under the Second Highway Project; and (4) strengthening the transport planning capacity of EPD. 6.02 Although the road construction and improvement work was completed at a cost within the estimate (but with some cost savings due to deletion of works) and the quality of work was satisfactory, the 38 months taken to do the job greatly exceeded the 18 months estimated time. In retrospect, the time estimate was probably unrealistically short. 6.03 Phase II of DRIMP was carried out satisfactorily in six of the 10 districts included in the project but was incomplete in 3 other districts and untouched in Thyolo District. Sharp cost increases, particularly for labor and additional works, caused this curtailment of the Phase II DRIMP. It is difficult to see how these cost increases could have been anticipated in the preparation and appraisal of the project. 6.04 The MWS technical assistance and managerial role in the DRIMP operations has been a particularly vital factor in the success of the DRIMP organization. 6.05 The experience of DRIMP suggests that there is considerable scope for development of intermediate low-cost transport technologies as a substitute for head loading in the rural areas of Malawi. MALAWI Fourth Highway Project (Credit 1099-MAI) Project Completion Report Actual and Expected Project Implementation Project Component Contractor Bid Receipt Contract Award Beginning of Work Completion of Work Percent of Wo Consultant Actual Expected Actual Expected Actual Expected Actual Expected Completed by Nationality Actual Expected Expected Comple Date A. Road Construction A Improvement UK 3/81 2/01 6/81 3/81 9/81 6/81 12/84 12/82 so1 8. Improvement sub- contract UK 11/84 10/84 12/84 C. Supervision of A 1 B UK 1/81 6/81 3/81 6/81 4/81 12/84 2/83 69 D. DRIMP Phase II Procurement MALAWI 12/84 8/83 65 Supervision of Improvement UK 12/81 4/81 7/81 4/81 12/84 8/84 86 1 DRIMP Phase III UK 8/82 3/82 7/82 4/82 3/83 2/83 95% F. Road Maintenance Study SWITZERLAND 4/81 2/61 1/82 5/81 2/82 6/81 2/84 9/82 695 C. New Training Center MALAWI 1/81 3/81 19/82 8/81 late 82 7/81 6/84 8/82 36% H. Procurement of Maint. Equipment MALAWI /81 8/81 3/83 9/81 651 March 1987 MALAWI Fourth Nihway Project (Credit 199-MAZI Project Completlon Report Actual and Appraisal Estimates of Project Cost (Thousands) Actual Total Actual Cos Contract Appralsal Estimate Cost as I of Prolect Component Local Foreign Total Amo t Local Foreign Total Appraisal Cost MK USS USS Equiv. USEITv. UK USS US$ Equiv. Estimate 1. Road Construction A Improvement 3,066 17,774 22,217 20,485 6,869 18,110 27,060 82 2. CRIMP Phase II Facilities & Improvements 4,125 6,269 9,63 8,176 3,116 7,680 138 Maintenance Operations a 904 984 1,140 950 2,376 36 3. Consulting Services A Training Supervision of 1 269 998 1,168 1,199 210 1,400 1,640 71 Tech. Asst. for 2 A Prep. of Phase II 155 628 968 929 226 1,530 1,810 53 Technical Assistance for EPO 48 288 822 48 400 476 69 Road Maintenance Study 120 579 81 290 116 8 61s 84 4. Maintenance Equipment for MWS 84 246 274 285 12 160 186 152 I 6. Now Training Center 227 438 626 455 396 336 81 77 Tbtal Project Cost 8.818 26.366 38,793 12.155 26.670 42,200 87 1/ Includes Contingencies March'1987 - 31 - TALE 3 MALAWI FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI) PROJECT COMPLETION REPORT (SDR Million) IBRDIIDA Fiscal Appraisal Actual as Z Year & Quarter Actual Estimate ofAppr. lat. 1980181 Sep 30 Dec 31 Mar 31 Jun 30 0 0.80 0 1981182 Sep 30 4.26 4.90 87 Dee 31 4.63 8.30 $4 Mar 31 3.90 11.70 SO Jun 30 6.42 13.30 42 1982/83 Sep 30 8.68 19.40 45 Dec 31 11.28 21.70 52 Mar 31 13.73 22.40 61 Jun 30 -16.25 23.20 70 1983184 Sep 30 17.85 23.90 73 Dee 31 20.02 25.00 80 Mar 31 20.48 25.40 81 Jun 30 22*53 25.70 88 198Al 8 5 Sep 30 23.18 25.90 90 Dee 31 23.S2 91 Mar 31 24.43 94 Jun 30 25.28 98 Sep 30 25.72 99 Match 1987 MALAWI FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI) PROJECT COMPLETION REPORT ACTUAL AND FORECAST TRAFFIC - JENDA-EKWENDENI ROAD Vehicle Jenda-Luwawa Champhoyo-Mbowo Mbowe- Mzuzu Mzuzu- Ekwendeni Year Class Unit Actual Forecast Actual Forecast Actual Forecast Actual Forecast 1983 Light vpd N/A 76 N/A 71 N/A 124 N/A 262 Heavy vpd N/A -g N/A 26 N/A 53 N/A 133 Total vpd 131 97 177 395 1985 Light vpd 154 87 69 81 94 142 73 300 Heavy vpd 70 6 12 30 4 61 11 152 Total vpd 224 150 81 111 98 203 84 452 N/A = Not Available NOTE: Traffic levels on the above road sections (except Jenda-Luwawa) were lower than normal as a result of traffic diversion, during construction years, from this road to a parallel gravel route to the west. Following completion of all sections, including the.Luwawa-Champhoyo section in 1986 under the Fifth Highway Project, and the Champhoyo-Mbove section (ADB- financed) in 1988, about 50 vpd of traffic are expected to be rediverted to this road in 1989. March 1987 - 33 - TABLE 5 MALAWI FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI) PROJECT COMPLETION REPORT VEHICLE OPERATING COSTS MK per km Earth Gravel Bitumen Vehicle Type 1980 1985 1980 1985 1980 1985 Car 0.87 0.72 0.25 0.49 0.19 0.31 Landover 0.84 1.32 0.53 0.83 0.35 0.47 Bus 1.19 1.19 0.90 0.87 0.75 0.62 Truck 7 ton 0.53 0.84 0.45 0.72 0.41 0.55 Truck 14 ton 1.04 2.60 0.96 2.09 0.76 1.60 Truck 27 ton 1.50 4.36 1.19 3.46 1.01 2.56 Net of taxes and duties Sources: 1980 date from Staff Appraisal Report, Fourth Highway Projectl 1985 data from Draft Staff Appraisal Report, Northern Transport Corridor Project, January 1986. March 1987 - 34 - TABLE 6 MALAWI 4 FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI) PROJECT COMPLETION REPORT REEVALUATED AND ORIGINAL ESTIMATES OF ECONOMIC RATES OF RETURN Proportion (2) Rate of Return (2) of Total Reevaluated Original Maior Components Investments Estimate Estimate Main Road Construction 60 15 19 Jenda-Luwawa Turnoff 24 18 13 Champhoyo-Mbowe 6 22 18 Mbove-Msuzu 14 14 16 Mzuu-Ekwendeni 16 12 30 DRIMP, Second Phase 28 12+ 12+ Consulting Services, Maintenance Equipment Training Center 12 - - Overall Project 100 14 18 March 1987 - 35 - TABLE 7 MALAWI FOURTH HIGHWAY PROJECT (CREDIT 1099-MAI) PROJECT COMPLETION REPORT SELECTED REPORTS PRODUCED BY TRANSPORT PLANNING UNIT OF ECONOMIC PLANNING DIVISION Road Network Analysis Inventory of Designated Roads in Malawi Transportation of Tea Vehicle Registration and Licensing System Road Transport Freight Rate Regulation Policy impact of DRIMP in Kasungu District (Draft) Transport Performance Bulletin (Annual) Growth of Road Traffic Densities Transport Demand Study Road Transport Passenger Policy Issues Transportation of Imports and Exports Road Vehicle Operating Costs - 36 - ANNEX I COMMENTS FROM BORROWER Page 1 of E2D/14/6 In reply please quote No. ........................** *. Tdphonw: t31t OFFICE OF THE PRESIDENT AND CABINET rekraims: PAsss ECONOMIC PLANNING AND SowM be suined IN DEVELOPMENT h E vre awr k comohdambg WA lk w P.O. BOX 30136 CAPITAL CITY LILONGWE 3 MALA*1 28th November, 1988 The Division Chief, Agriculture, Infrastructure and Human Resources Division, Operations Evaluation Department, The World Bank, 1818H Street, N.W., Washinaton DC 20433. (Attention : Mr. Graham Donaldson) Dear Sir, MALAWI-FOURTH HIGHWAY PROJECT CREDIT 1099 - MAI PROJECT PERFORMANCE AUDIT REPORT Thank you for your letter dated 20th October, 1988 on the above subject in which you requested for our comments on the enclosed report. The report comprehensively covers the said project. The analysis and its conclusions are also compatible. We concur with the recommendations in the report. We have, however, the following few comments: (i) Participation of Malawians in DRIMP Operations Page (vi) of the Evaluation Summary paragraph 13 refers to greater participation of Malawian professional staff to DRIMP operations as one of the issues that needs to be followed up. This, according to paragraph 20 on page 15 of Project Performance Memorandum, refers to Engineers and Economists. While this is true and important, we feel that the design of DRIMP roads and supervising of works could as well be done by local Malawians especially after the first phase. We feel there is enough capability in the private sector for such works if given the chance. ANN'r..%. Page 2 of 2 - 37 - (ii) Technical Assistance to TPU and EPD In paragraph 3.12 page 6 of Project Completion Report apprises the work done by the consultant (Transport Planner) during his first contract. Agreeably, the assistance went a long way in establishing a sound database and producing reports, some of them need updating. However, in the subsequent contract of the consultant the development and improvement of the database was not rigorously done so too the updating of some of the reports and also continuation of some of the studies. Up to now, the usefulness of the data, reports and studies is felt and as such the need to continue is felt. Further assistance is needed for the completion of the work. (May be the comments made could come under the Fifth Highway Project). (iii) ShiftinQ of TPU to MTC Paragraph 4.04, page 9 of the Project Completion Report mentions of an IDA recommendation to shift TPU to MTC. Understandably, the MTC's planning section needs strengthening. However, it would defeat the purpose TPU was created for if the unit is transferred to MTC. The current thinking is that EPD's TPU should liaise with the MTC's Planning Section. A strong planning unit in the Ministry should be established. This Unit will then work closely with TPU of EP&D just as the other sectors are doing. It is our hope that you will find these comments useful. Yours faithfully, Charles D. Nthenda for: SECRETARY FOR ECONOMIC PLANNING AND DEVELOPMENT MALAWI FOURTH HIGHWAY PROJECT TRANSPORTATION NETWORK if Chitipa Song. Poc -ood,construebon rPro:ect road, irnprovements * Koronga . - oas constructed urder Credits 12-MAl, 10 KARUNGA 523-MAI and 758-MAi KILOMETERS 0 20 40 6 0 100 P rod ,•--____ Poved , ods under construchfon MILES 0 20 40 60 ------ Poved roads, proposed \ Ch¡iumbo Pr inc . 9pagovel and e.rth rocids •••.. .. Roads being studied 1 .Railay s ngstiaO -- --.-+ Raia.-y under constructon <1' NYI KA Ch-riet. PLATEAU Mlowe Stamer res NOR T/H ER N . A,rports with schedulad werv.ces R U M P H 11 Rivers R p .- Nahol cap,tol r Ruarwei9 District administrative centers REG /O ousisya -- - ·''District bounda°.-s ··f----- Regional boundories Ekwendeni r---- nternational boundanies Mzuzu Mbowe • Nknu - - --- . ZIMBA NKHATA * MOJ,NTAINS ,B A Y/ Z A M B I A Mja CA - DISTRICT ROAD IMPROVEMENT AND i dOMA MAINTENANCE PROGRAM (DRIMP) -e -First phose ores (CR. 523-MAIl Seclod phose areas ... Dwangw. INKHOTAKOTA K A 1 N G U Nkhotoko MOZAMBIQUE C E N T R A 7 VilaCobral - Nrchs Benga N TCHMiS -- ' R G iv Chipara MCH N e D 0 W '-' S Mching, -.Snga Mar6 Z- M.ON E Chipoka - • ,k.n, \ B C,MIM.Mi 1:i bC inakey D D z A Gol omofi Nomrn~. A N G 0 C M!' cheu". - cA +N K A U P E , tEPUSLIC ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .1k i tu, i.snPNs.rofflon aaao,.rn.r,,u r,u..,.~ ýNCHEU..... Nyc supe 0_ M O Z A M B lQ U E mWA z • A OLANTYRE ç Ku.Chradzulu Blanr e • Umbe t M U t A N J E - REPUBL.lC TACNZJk 6° ZOF TANZAN ZARE -k) ANGOLA w - k- IMBAWE MOZAMBåQUE abiru NBIA WAA, S ANJE Nsonn 0 REPUBLIC\V SOUTH AFRICA" 331 - 33•mmW34 Emcisweni BUNGANYA FR. -< 1 Ekwendeni Eondeni NYNGWA to FOR Kotukule ZÄ M B IA Timbiri ZA M BIAj Mb4'' KALWE F.R (HATA AY Kamchocho Bando S U HNKHWADZJ F34, Ye y Eswanzini azamba _1n YsyMkosi ~aah VIPHYA SC, chitapoMoYe åjs ··. FOaR EoS T Chikanga~a MTANGATANGA F.R R 1 s~~-CHISASIRA Kofu\WIvF.R - z FR )) i RUvub IANZAÑA MALAWI i AFOURTH HIGHWAY PROJECT PÄ PROJECT ROADS --- Project road, construflo - ·· ·Proeict road, lnp'ovemnf KUWIL.WE - Road costructd undr Cr?5 MAI armbohawaF.R. 9 --~wo rood > ----o fPaved roads und.,er ontrucfit Earth and grl ronds: MåZAMBIQUE Ep10 n Mgin ALAWI ----- Distrkit aod others t *9 Regional heodquartera e Digtrict heoa.rters -Lo+ Airports -Rivort Areffi subiect to floigmrhsadsweml ------International boundorio CHIMAL1RO F.R. 4,r ________________/r__________(_T_M______ 34C rwNo