Morocco - Social Housing Project

Report No. PIC1262 Project Name Morocco-Social Housing Project (@+) Region Middle East and North Africa Sector Housing Project ID MA-PA-5479 Borrowers Kingdom of Morocco Lead Implementing Agency Societe Nationale d"Equipement et de Construction (SNEC) Angle Rue Youssef Ibn Tachfine et Rue Moulay Cherif Rabat, Morocco Tel: 212.7.76.14.22 Fax: 212.7.76.76.73 Date initial PID prepared August 1994 Date this update prepared February 1997 Projected appraisal date September 1997 Projected Board date March 1998 Background 1. The Bank's assistance strategy for Morocco during FY94-98 has been designed to respond to a post-adjustment development agenda, covering the following priorities: developing the social sectors to alleviate poverty, promoting the private sector, improving public sector management, and enhancing environmental and water resource management. The loan for the ongoing Land Development Project for Low Income Families, made in December 1993, as well as the proposed loan, support poverty reduction, promotion of the private sector and enhancement of the environment. 2. Despite a decline in the percentage of the population living in absolute poverty over the past two decades, the latest Living Standards Measurement Survey indicates that: (a) a large number of households remain vulnerable, even if they are now above the poverty line; and (b) basic social indicator levels (access to safe water, basic health care, and primary schooling) continue to be low when compared to countries with similar per capita incomes. Land development and the provision of affordable housing for low income families remain, therefore, an important priority for the Government. 3. The growth rate of the urban population in Morocco has for years exceeded the rate at which urban services have been provided. The lack of serviced land is particularly striking, and the net result has been a proliferation of squatter settlements surrounding the larger urban areas. In addition, there is a need to supply poor households with apartments (for rent) and basic shelters. Thus, there is a clear case for Bank assistance to provide serviced land  and affordable housing to low-income families. Project Objectives and Description 4. The proposed project has two main objectives: (a) increase the supply of serviced residential lots and houses at affordable prices to squatter and low-income families; and (b) encourage private industry participation in the housing sector by first, selling large tracts authorized for development to private developers, and second, providing medium-term financing to eligible private property developers/contractors for the development of serviced lots, apartments and basic shelters for low-income families. 5. The proposed project comprises four components, namely: (a) development by SNEC of trunk infrastructure, sale of large tracts, as described above, to private developers for the development of secondary and tertiary infrastructure; (b) development by SNEC of serviced lots, apartments and basic shelters; (c) lines of credit to CIH and private bank(s) to provide medium- term financing to private developers for the development of housing for low-income families; and (d) technical assistance to Ministry of Housing (MoH) to install a Geographic Information System (GIS). 6. With reference to project components (a) and (b) above, it should be noted that SNEC and the municipalities will be responsible for management; actual design and construction is carried out by private organizations. Under item (a) a contract will be drawn-up between SNEC and a private developer, which stipulates the sizes and numbers of lots to be sold to low-income families, business/industry and non-low-income families so that the cross-subsidization scheme used in the ongoing project can be maintained. Government practice, when developing serviced lots for low-income families, is to integrate these lots with serviced lots for non-low-income families rather than having the former lots in one location. The private developers will be required to respect the same strategy. Implementation of item (a) will be in or near one or two cities/villages. The lines of credit to private developers will be arranged through CIH and private bank(s) in accordance with criteria adopted for the ongoing project (Report NO 11693-MOR). The project will have wide geographic coverage; in the city of Tangier, the project will build on the results of the 1993 Tangier Environmental audit. Project Cost and Financing 7. The estimated total cost of the project of about DH 2.8 billion (US$300 million) represents about 25 percent of Morocco's annual housing production. The foreign exchange cost is about DH - 2 -  1.5 billion (US$160 million) with a projected Bank loan of $150 million. Project Implementation 8. SNEC will be responsible for components (a) and (b); CIH for (c); and MoH for (d) of the project description (para. 5). Sustainability 9. The organizations involved in the project execution, including the project beneficiaries, have the competencies to maintain and operate the facilities and equipment provided under the project. The ongoing Land Development Project provides technical assistance to enhance financial sustainability for SNEC. Lessons Learned from Previous Bank Operations 10. The Bank has financed two urban development projects in Morocco (now completed), two housing finance projects (first one completed, 98% of loan related to second one disbursed), and an ongoing Land Development Project for Low-Income Families. The principal lessons learned from the first four projects relate to the need to: (a) overcome impediments to project implementation (shortages of adequately trained personnel, poor decision-making channels, and prohibitive hiring restrictions); and (b) improve targeting the poor. The early experience with the Land Development Project indicates that these impediments are now avoided since: (a) SNEC is a semi-autonomous agency which has been accorded recognition as a high priority institution with a broad license to set its operational policies and procedures; and (b) the Ministry of Housing (MoH) has improved targeting the poor by introducing stricter eligibility criteria. The same criteria will be applied in the proposed project. In addition, further improvement of this targeting will be sought by introducing up front grants in the proposed project. Rationale for Bank Involvement 11. The project is consistent with the orientation of the Bank's lending program for Morocco and the decision to help the Government pursue a more active social policy in meeting the needs of the poorest population groups. Housing conditions in squatter areas present serious health hazards because of the lack of proper sanitation facilities and water supply. In addition to positive social effects, Bank assistance will spur activity in the construction industry and private banking sub-sector, contribute to employment generation, and introduce a major change in the government's policy on subsidized loans. The project's approach is also in line with the Bank's policy paper "Housing: Enabling Markets to Work". Environmental Aspects 12. Consistent with the provisions of the Bank's Operational - 3 -  Directives the project has been rated category B. Please see attached Annex. Contact point: Mr. H. Beenhakker, Task Manager The World Bank 1818 H Street, N.W. Washington, D.C. 20433. Tel. (202) 473-2611 Fax. (202) 522.1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending March 28, 1997. - 4 -  Annex Environmental Aspects Resettlement procedures established under the on-going Land Development Project (Loan 3618) in Morocco appear to be working well; it is therefore expected that the same procedures will be followed in the proposed project. As the project will reduce the number of urban slums, it is expected to have a positive environmental impact since all squatters involved would have access to fully serviced lots. Land development sub-projects shall comply with the following conditions: (a) resettlement of squatters will not involve a move or more than 2 kilometers from their present location, unless this is done for reasons of bringing them closer to places of potential employment or the present location is dangerous in view of landslides; these exceptions are subject to Bank approval; (b) items spelled out in the Government's resettlement policy; and (c) adequate and regular collection and disposal of solid wastes are provided in relocation sites in order to prevent any health hazards for the communities concerned.