Zambia - Roads Sector Investment Program

Report No. PIC3488 Project Name Zambia-Roads Sector Investment Program Region Africa Sector Transportation Project ID ZMPA3236 Borrower Republic of Zambia Implementing Agencies Ministry of Communications and Transport PO Box 50065, Lusaka. Zambia Telephone: 260-1-251444 Fax: 260-1-251795 Ministry of Works and Supply, Roads Department P.O.Box 50236, Lusaka. Zambia Telephone: 260-1-253192 Fax: 260-1-253404 Ministry of Local Government and Housing PO Box 50027, Lusaka. Zambia Telephone: 260-1-251942 Fax: 260-1-254733 National Roads Board PO Box 50065, Lusaka, Zambia Telephone: 260-1-253145 Fax: 260-1-253154 Date this PID Updated December 31, 1996 Appraisal Date June 1996 Projected Board date September 1997 1. Country and Sector Background. Since 1991, the Zambian government has sustained a reform program designed to encourage movement towards a full market economy and to significantly reduce the role of government. Increased incentives have been provided for agricultural production and the promotion of the private sector, which, inter alia should reduce dependence on the mining sector for output, employment and exports. Creation of the necessary enabling environment for both private sector growth and greater agricultural production have been, and continue to be, hampered by inadequate and poorly maintained economic infrastructure, including roads. 2. In terms of the Roads and Road Traffic Act, a number of ministries and agencies have responsibilities in the road sector. Three ministries presently fill the most significant roles - Ministry of Communications and Transport (MCT) which is responsible for planning the network, the Ministry of Works and Supply, Roads Department (RD) which is responsible for constructing and maintaining the main and trunk roads, and the Ministry of Local Government and Housing (MLGH) which is responsible for planning and overseeing the maintenance of roads which fall under urban  and rural local authorities. None of these ministries possess the requisite resources, staffing and tools to effectively execute their assigned responsibilities. A further shortcoming is that the policy and legislative framework has not been updated in recent times. As a result the roles of some road sector institutions are not clear, financing is not provided for on a systematic basis and the responsibility for managing some roads is unclear. 3. The designated road network in Zambia is about 36,000 kilometers of which 20% is paved. Road expenditures have typically remained well below the level needed to maintain the network in a stable condition in the long term. It was estimated in 1993 that 20-40 percent of the current requirement for maintaining nearly 9,000 kilometers of trunk and main roads is being covered. The percentages were far less for urban roads, of the order of 10-20 percent, and were negligible for rural feeder roads. In addition there is a large body of roads which are not designated so that no responsibility for maintenance is established. If not addressed, the consequent erosion of capital tied up in Zambia+s road network would bring about the need for wholesale replacement. Road deterioration has increased the isolation of some rural areas and limited their market access as well as increased costs to all road users. Currently it is estimated that over 50% of roads are in poor condition and under 20% are in good condition. 4. Sector Strategy. The Zambian government fully recognizes the seriousness of the problem and is addressing this past neglect in an appropriate and innovative fashion. Progress has been made with regard to the financing of road maintenance. A National Roads Board (NRB) with strong private sector representation was established in October 1994 and has been carrying out its mandate to channel monies raised through a fuel levy and deposited in an earmarked Road Fund account into a priority maintenance program. Financing for the roads sector however remains a problem in that funding for maintenance is still below the levels required and in that funding for priority rehabilitation programs is not available on a timely or reliable basis. In this regard the NRB complements but does not replace the need for effective structures for the financing and management of roads. Government with the assistance of the Bank funded Transport Engineering and Technical Assistance Project (TETAP), has undertaken a program of studies and stakeholder consultations to identify specific actions needed to strengthen the institutional framework in the road sector. Out of this process has come inter alia the proposals to strengthen NRB and to restructure existing road authorities with a view to improved road management and to develop a program involving community stakeholders to increase accessibility in rural areas. In addition, stakeholders have endorsed the objectives and broad composition of a medium term (15 year) road sector investment program to bring the whole network under regular maintenance and thus improve road quality. 5. Program Objectives. The overriding objective is to support the economic growth and diversification through appropriate investments in road infrastructure. Medium term goals for the sector are: to create a sustainable system for the financing and management of roads; to address poor accessibility; to improve the quality of the network thus reducing vehicle operating costs. The five specific objectives for the first -2 -  five year time slice of the program (1997-2001) which is proposed for support by the IDA lending operation are: reform of the road sector policy and institutional framework; strengthening of road sector financing mechanisms; strengthening of local construction and consulting industry; addressing the road sector rehabilitation and maintenance backlog; and establishing a pilot program for community road infrastructure. 6. Program Description. The main components of the proposed program are: civil works which will have four subcomponents - routine and periodic maintenance of the core network in good and fair condition; rehabilitation (spot improvement and reconstruction) of selected trunk, main, district and urban roads; upgrading of selected feeder roads and improved feeder road accessibility in selected provinces; community road infrastructure program initially in three provinces; support to local contracting and consulting industry; and technical assistance and training in the areas of policy support, implementation support and institutional development. The program for the first two years has been defined and agreed with Government, whereas the program for later years will only be firmed up after annual review of implementation performance. 7. Program Cost and Financing. The program cost is estimated as US$640 million of which about 61% in foreign exchange. Government will fund a portion of the cost of the rehabilitation program. Road users will fund the costs of maintenance through road user charge payments, including fuel levy, channeled through the Road Fund. The balance of the financing will come from IDA and from ongoing and new commitments of donor funding. Known external commitments amount to be about US$0 million with the balance of funding required expected to be firmed up as the program proceeds. 8. Program Implementation. The program is to be implemented over a five year period commencing in 1997. A Program Management Committee (PMC) with public and private sector participation has been established to oversee the program. Day to day program coordination will be devolved by the PMC and will be the responsibility of a management team under the NRB. Policy and institutional improvements are to be managed by the Ministry of Communications and Transport (MCT) which chairs the PMC. The Roads Department (RD) will manage the implementation of the trunk and main road rehabilitation and maintenance program. MLGH will manage the implementation of the urban and rural district road program and the program for feeder roads with the participation of the relevant local authorities. NRB will channel funding for agreed maintenance programs which will be executed by private sector contractors. 9. Program Sustainability. Strengthened institutions, improved management and adequate funding for road maintenance are key factors for sustainability. The program is expected to enhance sustainability by addressing these factors in a coherent and effective manner. An appropriate sector policy framework supported by strong and appropriate institutions should improve planning, programming and implementation of high priority road projects. Road financing will be addressed in such a way to ensure greater regularity and predictability of financial flows to the sector which should reduce the fiscal burden. The participatory - 3-  nature of project preparation, the involvement of the private sector in the management of the NRB and the Road Fund as well as in opportunities created by the roads program augur well for a high degree of project ownership on the part of all Zambian stakeholders. 10. Lessons Learned from Past Operations. Experience from three past highways projects in Zambia indicate the persistence of a number of problems hampering effective sector development, i.e.: lack of commitment to road maintenance; weak institutions and a shortage of qualified staff; inadequate planning and programming; and insufficient and unpredictable budget allocations for road maintenance. These shortcomings are already being addressed through TETAP under which Government has agreed to a program of studies and technical assistance to develop a sustainable system for the management and financing of roads. 11. Poverty Reduction and Alleviation. The program will help address poverty through reducing transport costs and increasing farm gate prices for small scale farmers. The program component dealing with community roads will help open up a number of parts of the country and create new marketing opportunities as well as enhance participation. Better roads will help alleviate poverty by improving access to health and education facilities and improving the delivery of relief programs. In addition, new jobs will be created through the program, especially as a result of the labor based approach that will be used on some of the urban, feeder and community roads. 12. Environmental Aspects. The program is Category B. An environmental assessment has been carried out as part of the program preparation process. Findings and recommendations have been discussed with the Zambian government and an action plan is under development. A mitigation plan will be put in place prior to launch of the program. It is expected that road sector institutions will have to be given strengthened environmental management capacity. The environmental impact of the program is not expected to be major, although any road realignment, traffic diversion and the quarrying of fill material will have to be carefully managed. In the case of preparatory engineering work being carried out under TETAP, bid documents will include clear instructions relating to the location and operation of construction camps, treatment of borrow pits and routing of traffic to offset any potential environmental hazard, including road safety, arising out of road works. 13. Program Objective Categories. The primary program objective category is environmentally sustainable development. Secondary program objectives are improved public sector management, creation of an enabling framework for greater private sector participation in roads sector development and poverty alleviation through employment creation in labor based works. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington D.C. 20433 - 4 -  Telephone No.: (202)458-5454 Fax No.: (202)522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by The Public Information Center week ending January 10, 1997. - 5 -