Ghana - Urban housing project

 ICRR 10548 Report Number : ICRR10548 ICR Review Operations Evaluation Department 1. Project Data : Date Posted : 03/22/2000 PROJ ID : OEDID : C2157 P000910 OEDID: Appraisal Actual Project Name : US$M ) Urban housing project Project Costs (US$M) 100.40 109.94 Country : Ghana Loan/ US$M ) Loan /Credit (US$M) 70 81.29 Sector, Major Sect .: Urban Housing , US$M ) Cofinancing (US$M) 9.8 10.04 Urban Development L/C Number : C2157 FY ) Board Approval (FY) 90 Partners involved : Closing Date 06/30/1996 06/30/1999 Prepared by : Reviewed by : Group Manager : Group : Roy Gilbert Gregory K. Ingram OEDST 2. Project Objectives and Components a. Objectives (i) Help rehabilitate and improve essential infrastructure, services and environmental systems; (ii) strengthen the technical, financial and managerial capacity of local government; (iii) help initiate the development of a sustainable housing finance system; (iv) reform the housing parastatals; (v) begin to relieve the acute shortage of affordable houses; (vi) improve environmental conditions for housing; (vii) provide essential infrastructure and service for the urban poor; and (viii) strengthen the Ministry of Works and Housing (MWH); (ix) help improve environmental management and monitoring through support to the Environmental Protection Agency (EPA). b. Components Part A . Local Government Rehabilitation , including: (i) rehabilitation and maintenance of infrastructure and environmental systems in five cities; (ii) municipal revenue mobilization; land administration; (iv) TA and training for Ministry of Local Government and and Rural Development; (v) TA and training for roads and environmental agencies . Part B . Housing Sector Reform , urban upgrading in Tema and Kumasi; (ii) institutional reform of parastatals; (iii) line-of-credit to establish a pilot housing finance system for indexed mortgage financing; (iv) TA and training for Technical Services Corporation (TSC). c. Comments on Project Cost, Financing and Dates At completion project costs were US$ 109.9 million, slightly higher than the US$100.4 million estimated at appraisal. By completion, project financing shares --similar to those foreseen at appraisal --were as follows: Bank (72.2%); OPEC cofinancing (18.9%) and Government counterpart (8.9%). The Credit was fully disbursed. The project was approved in June 1990 and completed in June 1999, following a three year overrun that allowed the project to achieve more than foreseen in both Parts A and B . 3. Achievement of Relevant Objectives : (i) Roads, street lighting, sanitation, and solid waste management rehabilitated in Accra, Tema, Sekondi -Takoradi, Kumasi and Tamale with attempt at setting up permanent maintenance facilities . (ii) Capacity increased through greater local revenue collection, reforms and management improvements . (iii) A sustainable and unsubsidized housing finance system is more than just initiated; it is now in place . (iv) Three parastatals working on housing have been reorganized into commercially oriented and viable companies . (v) Through achieving twice its intended output, the project contributed to relieving Ghana's housing shortage . (vi) Urban upgrading schemes improved environmental conditions by giving access to basic sanitation in three cities . (vii) Beneficiaries of (vi) above were poor, deprived members of their urban communities . (viii) Inter-agency coordination improved and liaison with local assemblies became more intense . (ix) EPA was strengthened after project TA enhanced its environmental monitoring capacity . 4. Significant Outcomes /Impacts : Major development impacts simultaneously achieved in two fields, namely housing finance and municipal development; normally outcomes of two separate operations . The Home Finance Company (HFC), set up under the project, provided mortgages to finance 4,100 houses, more than twice the appraisal target . HFC raised US$20 million through issue of inflation-indexed bonds that were the best performing for the instutional investor, the Social Security and National Insurance Trust (SSNIT).  For first time in Ghana, solid waste management was tackled systematically and professionally in a major city (Tema) which can be used as model for the rest . Environmental impact very satisfactory A surge in revenue generating in the five project cities as a result of project's municipal revenue mobilization component. Important new urban infrastructure provided in the form of highways, street paving, storm water drainage, markets and street lighting. Reported reduction of crime in Ashaiman as a result of street lighting . Gender impact through training women in housing construction, traditionally a male dominated activity . 5. Significant Shortcomings (including non -compliance with safeguard policies ): Time overrun of 50% stretched implementation to nine years . Having so many components, each of which could stall, the project was inherently delay -prone. There were delays in procurement processing, release of government counterpart funds and land acquisition for the construction of project facilities . These led to some cost overruns which, however, could be financed through the SDR appreciation against the US dollar during implementation. 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Partial Substantial ICR rating does not reflect the many significant ID impacts reported, including : (i) HFC established as a sustainable housing finance institution; (ii) other housing sector parastatals became commercially viable with private sector partnerships; (iii) key assistance provided to government's decentralization strategy; (iv) local government financial autonomy increased; and (v) local consultants played a major role in design and supervision of major projects. Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory 7. Lessons of Broad Applicability : 1. The achievement of substantial development impacts across a broad front takes time and is something that needs to be factored into project design so that time overruns are not misconstrued as project failures . 2. It can be worthwhile to extend the life of a satisfactory project in order to extend the range and depth of its development outcomes. 3. An unsubsidized mortgage housing finance system can be viable in a developing country in the medium term if, among other things, it takes account of local conditions--notably inflation in the Ghanaan context, has high caliber management, and has streamlined foreclosure laws and processes . 4. With civil works packages designed to encourage their participation, local consulting firms can provide high quality and competitive design and supervision support, This is an important part of local capacity building within the private sector. 5. Public sector capacity building at the municipal level is a key to ensuring project sustainability. 8. Audit Recommended? Yes No Why? To verify and shed more light upon the outstanding achievements of this project and to learn more about how its successes may be replicated elsewhere . 9. Comments on Quality of ICR : A satisfactory report overall with candid descriptions of project achievements and shortcomings, although unduly modest regarding the outcome and institutional development impact ratings . On the other hand, project performance indicators are incomplete and poorly presented . ICR does not give latest estimates of outcome /impact indicators. Appraisal estimated of property value increases of up to 100% would be wiped out by 770% inflation over the period. ICR does not give output indicators in real terms . In three cases nominal increases in revenue mobilization reported actually represent falls in real terms after inflation is taken into account . ERR estimates in ICR are unconvincing . Lump sum property value increases fully accrued in year one of benefit stream can overstate ERR (assuming that those increases were positive in real terms, something that the ICR leaves in doubt .) Also, the absence of positive benefits throughout the remaining life of the project (years 2-15) is counter-intuitive for an operation that is likely to have a sustainable impact over a prolonged period . ERR estimates of road investments are also unconvincing . For most components, base case ERRs remain unchanged for sensitivity estimates for when traffic growth is zero .