Madagascar - Integrated Growth Poles Project

Page 1 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE I. Basic Information Date prepared/updated: 07/27/2005 Report No.: AC1455 1. Project Statistics Country: Madagascar Project ID: P083351 Project Name: Integrated Growth Poles Task Team Leader: Ivan Rossignol Estimated Appraisal Date: May 10, 2005 Estimated Board Date: July 12, 2005 Managing Unit: AFTPS Lending Instrument: Specific Investment Loan Sector: Ports, waterways and shipping (30%);General industry and trade sector (30%);General transportation sector (20%);General water, sanitation and flood protection sector (10%);Power (10%) Theme: Small and medium enterprise support (P);Infrastructure services for private sector development (P) IBRD Amount (US$m.): 0.00 IDA Amount (US$m.): 129.80 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER/RECIPIENT 0.00 0.00 Environmental Category: A - Full Assessment Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) Yes [ ] No [X] 2. Project Objectives The overall purpose of the proposed project is to help provide the adequate business environment to stimulate and lead economic growth in three selected regional poles. The specific objectives are to assist the GOM to: (i) construct and rehabilitate critical infrastructure essential for sustained economic activity in the tourism, manufacturing, agribusiness and mining sectors; (ii) put in place appropriate incentive measures to achieve rapid growth; (iii) develop the instruments to ensure equitable, sustainable growth; and (iv) strengthen the capacity of local authorities to formulate, prepare, implement, and manage medium- and long-term integrated of future regional development projects. 3. Project Description The project is comprised of 5 components: Component A: Strengthening the business environment Page 2 (US$55 million equivalent of which IDA will contribute US$21 million equivalent). Based on demand, the project will aim to provide proactive support to the Micro, Small and Medium Scale enterprises (MSME) sector and to strengthen the business environment in the three geographic poles to allow Malagasy firms play a greater role in the economy. The component will also provide support for capacity building in tourism and will monitor specific policy changes. The main activities under this component to be developed and implemented in cooperation with the IFC and Multilateral Investment Guarantee Agency (MIGA) include: (i) improving MSMEs' access to finance including through an IFC-managed risk sharing arrangement to provide guarantees to commercial banks; (ii) MSME capacity building to develop value chains (including in view of a possible development of the Antisrabe agribusiness zone); (iii) tourism capacity building; (iv) supporting the JIRAMA operation restructuring; and (v) improving the business environment including monitoring of policy and regulatory changes to be taken by the GOM, strengthening of the investment promotion agency and creation of registries. Component B: Supporting export led growth in Antananarivo-Antsirabe (US$7 million equivalent of which IDA will contribute US$6 million equivalent). The project will help develop off-site investments allowing the creation of an ICT business park in Antananarivo (Antanetibe site) and provide technical assistance for an industrial and agribusiness zones in Antananarivo and Antsirabe. The main activities of this component include: (i) provision of technical assistance to relevant ministries and EPZ authorities to enhance the sector?s competitiveness, including to develop a new regulatory framework, to develop of one or more industrial parks (EPZ) in Antananarivo and Antsirabe, to develop skills development program(s) and on the issue of trade negotiations; (ii) supporting the development of an ICT Business park in Antanetibe. Finally, the project will provide support to the municipalities of Antananarivo and Antsirab? through: technical assistance, training, rehabilitation of existing facilities. Component C: Supporting tourism led growth in Nosy Be (US$55 million equivalent of which IDA will contributeUS$32 million equivalent). The project will create an infrastructure platform and regulatory environment to expand the tourism industry significantly. The infrastructure will be designed to accommodate a demand of 2,000 international-level hotel rooms by 2010. Core activities under this component include: (i) adoption by the municipality of a tourism development master plan and urban development plan for Nosy Be to regulate and manage development in existing protected areas; (ii) technical assistance to develop and implement business incentives measures to attract investments; (iii) upgrading of the road network to provide access to the isolated eastern part of the island and improve travel conditions between the airport, the main city (Hellville) and tourism sites; (iv) upgrading of the Hellville and Ankify ports (the latter under another ongoing IDA project); (v) upgrading the public utilities system by supporting power generation and distribution, upgrading the water and sewerage system, upgrading urban solid and liquid waste management, and telecommunications; and (vi) upgrading the urban infrastructure of Hellville and providing its hospital with a surgery block. Finally, the project will provide support to the Page 3 municipality of Hellville and the local tourism authorities through: technical assistance, training, rehabilitation of existing facilities and creation of ecotourism facilities. Component D: Mining and Tourism led growth in Taolagnaro (US$166 million equivalent of which IDA will contribute US$55 million equivalent). The project will create the infrastructure platform and regulatory environments to open up the landlocked region of Taolagnaro to facilitate the growth of tourism, agribusiness and to catalyze private sector growth in ilmenite mining. The infrastructure will be designed to accommodate a demand of 850 international-level hotel rooms by 2010. The principal activities under this component include: (i) the adoption by the municipality of a tourism development master plan and urban development plan for Toalagnaro, (ii) the development (under a public private partnership) of a new public port on the Ehoala peninsula to support the ilmenite mining operations and to facilitate market access for local production and exports, (iii) a partial rehabilitation of the existing port of Taolagnaro to provide continuity for traffic during construction of the new port; (iv) upgrading the access road network, and the main rural roads, which could also become a support to tourism activities; (v) upgrading the key public utilities services (power, water, sanitation, urban infrastructure and services and solid waste management) and telecommunications to support the growth of tourism and other economic activities in the region, and (vi) upgrading of selected urban infrastructures including the Tsiranana hospital. The project will provide support to the municipality of Taolagnaro, the local tourism authorities through technical assistance, training, rehabilitation of existing facilities, construction of basic sanitary facilities. Component E: Program and project implementation, evaluation and monitoring (US$21 million equivalent of which IDA will contribute US$15 million equivalent). At the central and regional levels, the project will provide support for: (i) project implementation, project coordination, procurement and financial management and (ii) supporting the preparation and implementation of the provisions of the Environmental Management Plan, as well as the carrying out of all environmental and social activities under the project. 4. Project Location and salient physical characteristics relevant to the safeguard analysis Two of the three growth poles are coastal. At Tolagnaro, there are dune systems, beaches, brackish water lagoons, an existing port, and an area to be developed as a new port. A substantial expanse of ilmenite sands with scattered stands of forest and wetland vegetation is planned for mining by QMM in a project not being financed by the Bank but considered as an associated project and thus included in the environmental assessment. Nosy Be is itself an island surrounded by smaller islands including Nosy Tanikely, where there are coral reef systems of relatively good quality. Beaches, coastal waters, lowland and hill forests and scenic vistas are important tourism attractions, and there is a protected area adjacent to the port of Hellville that provides habitat to endemic lemurs. Fishery resources are important in both coastal areas. Lobster is of particular commercial value. The Ansirabe/Antananarivo pole has fewer sensitive features, being Page 4 situated mainly on high plateau with expanses of hills and vallies. River systems are important for floodplain agriculture including rice and vegetables. 5. Environmental and Social Safeguards Specialists Mr Bienvenu Rajaonson (AFTS1) Mr Amadou Konare (AFTS1) Mr Thomas E. Walton (AFTSD) Ms Charlotte S. Bingham (ENV) Mr Gordon Appleby (AFTS1) 6. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Cultural Property (OPN 11.03) X Indigenous Peoples (OD 4.20) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: There are no significant safeguards risks at the Antananarivo-Antsirabe Growth Pole. At Nosy Be, the significant risks are of adverse indirect impacts caused by tourist activities (e.g., sex tourism, and prostitution, increase in exposure to HIV/AIDS); damage to the natural and social environments resulting from poorly-controlled land development in response to real or anticipated tourism demand; and growth that exceeds the capacity of municipal infrastructure. At Fort-Dauphin, the situation is more complicated because of the cumulative impacts of the proposed ilmenite mine and its associated infrastructure, the infrastructure to be supported by IG2P, and the indirect impacts of both developments. One direct impact of concern is the conversion of a portion of the beach and nearshore water at Eahoala for construction of a new port. The natural habitat at Eahoala is not critical, and an offset will be provided in the form of protected status for the rest of the beach. Of more concern is the possible disturbance of dune formations in and around the port, its associated industrial development zone, and the access road that must traverse the dunes. It is imperative that the dune protection and stabilization measures in the EMP be judiciously carried out. Page 5 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: A specific impact of the associated mining project is the conversion of the occasionally- brackish lagoon system near the mine site to a permanent freshwater system. Essentially irreversible, the conversion may affect subsistence fishery. QMM is continuing to study the potential effects and plans to promote a freshwater fishery and to engage the local community in its management. More generally, there is a risk that success in achieving growth at the Tolagnaro and Nosy Be poles in particular may result in unplanned or unregulated development and in population growth and tourist arrivals that exceed the capacities of municipal physical and social infrastructure, especially water and wastewater systems, solid waste management, health. Preparation and implementation of regional development plans and capacity building for planning and plan implementation 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. In the case of the sub-projects related to development of an industrial zone in the Antananarivo'Antisrabe pole, an environmental planning approach was adopted in order to determine the areas to be developed so as to avoid environmental sensitive zones and to minimize involuntary resettlement. In the same way, the project took into account the requirements in terms of basic service provisions for water supply, energy, and solid waste and wastewater management and disposal. Concerning the Nosy Be ring road, the selected layout, for the most part, takes into account the existing Right of Way (ROW), but the originally-planned width of the proposed roadway and ROW have been reduced so as to minimize the impacts due to involuntary resettlement. A change in alignment was made to avoid a sacred tree. At the Fort Dauphin growth pole, detailed studies were carried out for site of the new port and the road connecting the mine and the port, and the options with greater impact were rejected. Thereafter, optimization studies, led by QMM, resulted in a layout for the port that would minimize the initial size of the breakwater in order to limit environmental impacts. The project has proposed a compensation program for unavoidable marine habitat loss in the form of a coastal protection system located at Fausse Baie des Gallions. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. Eleven separate safeguards instruments have been prepared: three policy frameworks (ESMF, RPF and Cultural Properties Framework); three ESIAs (Taolagnaro, Antananarivo-Antsirabe, and Nosy Be), three RAPs (two for Taolagnaro, one for Nosy Be), plus and EMP and a Resettlement Process Framework for the Nosy Tanikely Marine Protected Area. A ?gap analysis? was performed on the extensive ESIA and EMP prepared by QMM for the ilmenite mine, road and port. Each ESIA includes a management plan to deal with the direct social and environmental impacts. Managing cumulative social and environmental impacts, direct and indirect, requires more than anything else sound regional planning and functioning systems of land development administration and control, coupled with timely provision of necessary environmental management infrastructure, to support sustainable rather than self-destructive growth at the growth poles. The design of a regional planning process is presented in the ESMF, Page 6 and the EMP for each growth pole includes measures to strengthen it where it is already on-going (Taolagnaro) and establish it where it is not well developed. Borrower capacity to implement safeguards measures including regional planning varies, probably strongest in Taolagnaro, weak overall. A local steering committee is being set up in each growth pole, supported by AGETIPA and the PIC implementation unit in the VPM. The EMPs all include recommended capacity-building actions that will be funded as part of the project. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. In the context of the project environmental and social impacts assessment, the Vice Prime Ministry, concerned communes, in particular those of Fort Dauphin, Nosy Be and Antsirabe, as well as the Consultant conducted public consultations and formal and informal meetings relating to the IG2P, in general, and the individual growth poles in particular. The National Steering Committee of the project held regional workshops to launch the safeguards studies in the three growth poles, namely: Nosy Be, Antananarivo/Antsirabe and Tolagnaro. Communication and public consultation workshops were organized subsequently to discuss stakeholders concerns about the project's main environmental and social impacts. In addition, this process was an opportunity to expose stakeholders to the notion of regional planning and strategic environmental assessment and to explain in great detail World Bank safeguard policies. All the safeguards studies were publicly disclosed in final draft form on March 8, 2005, and are accessible for public review and comment at each of the three growth poles, in line with the Malagasy regulation on environmental assessment (the MECIE decree). GOM conducted public consultations in each growth pole during the statutory review and comment period that began at the time of disclosure. In the case of the Tana/Antsirabe growth poles, public consultations were mainly used to assist in selecting the sites of industrial parks in order to minimize adverse environmental and social impacts and to better meet the needs and expectations of local populations B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Date of receipt by the Bank 03/02/2005 Date of "in-country" disclosure 03/08/2005 Date of submission to InfoShop 03/08/2005 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors 03/09/2005 Resettlement Action Plan/Framework/Policy Process: Date of receipt by the Bank 03/04/2005 Date of "in-country" disclosure 03/08/2005 Date of submission to InfoShop 03/08/2005 Pest Management Process: Page 7 Date of receipt by the Bank 02/16/2005 Date of "in-country" disclosure 03/08/2005 Date of submission to InfoShop 03/08/2005 * If the project triggers the Pest Management, Cultural Property and/or the Safety of Dams policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? Yes If yes, then did the Regional Environment Unit review and approve the EA report? Yes Are the cost and the accountabilities for the EMP incorporated in the credit/loan? Yes OP/BP 4.04 - Natural Habitats Would the project result in any significant conversion or degradation of critical natural habitats? No If the project would result in significant conversion or degradation of other (non-critical) natural habitats, does the project include mitigation measures acceptable to the Bank? Yes OP 4.09 - Pest Management Does the EA adequately address the pest management issues? Yes Is a separate PMP required? No If yes, has the PMP been reviewed and approved by the regional safeguards team? Are PMP requirements included in project design?If yes, does the project team include a Pest Management Specialist? No OPN 11.03 - Cultural Property Does the EA include adequate measures related to cultural property? Yes Does the credit/loan incorporate mechanisms to mitigate the potential adverse impacts on cultural property? Yes OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan, abbreviated plan, or process framework (as appropriate) been prepared? Yes If yes, then did the Regional Social Development Unit review and approve the plan / policy framework / policy process? Yes OP/BP 4.36 - Forests Has the sector-wide analysis of policy and institutional issues and constraints been carried out? No Does the project design include satisfactory measures to overcome these constraints? No Page 8 Does the project finance commercial harvesting, and if so, does it include provisions for certification system? No BP 17.50 - Public Disclosure Have relevant safeguard policies documents been sent to the World Bank's Infoshop? Yes Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? Yes All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Yes Have costs related to safeguard policy measures been included in the project cost? Yes Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Yes Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? Yes D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Ivan Rossignol 06/22/2005 Environmental Specialist: Mr Thomas E. Walton 06/22/2005 Social Development Specialist Mr Gordon Appleby Additional Environmental and/or Social Development Specialist(s): Ms Charlotte S. Bingham Approved by: Regional Safeguards Coordinator: Mr Thomas E. Walton 06/22/2005 Comments: Sector Manager: Mr Demba Ba 06/22/2005 Comments: