Report No. 1625a-BO Bolivia Urban Development Project September 9, 1977 Urban Projects Department FOR OFFICIAL USE ONLY Document of the World Bank 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. CURRENCY EQUIVALENTS I Bolivian Peso ($b) = US$0.05 US$1 = $b 20.0 1 million $b = US$50,000 MEASURES AND EQUIVALENTS mm = millimeter (0.03937 inches) cm = centimeter (0.3937 inches) 1 meter (m) = 3.28 feet 1 ilometer (km) = 0.62 mile l = square centimeter (0.1550 square inches) m = square meter (10.764 square feet) ha = hectare (2.471 acres) km = square kilometer (0.386 square miles) 1 = liter (0.264 US gallons) 1/cd = liters per capita per day 1sec = liters per sec. (15,833 US.gallon per min) m 3/sec = cubic meters per sec. (86,400 m/day) m /day = cubic meters per day (264 US gallons per day) ABBREVIATIONS AND ACRONYMS AC = Accion Communal, The Community Development Department of the La Paz Municipality BANVI = Banco de la Vivienda - The National Housing Bank BC = Banco Central - The Central Bank BISA = Banco Industrial, S.A. - The Industrial Bank BPC = Bolivian Power Company CONAVI = Consejo Nacional de Vivienda - The National Housing Council CONES = Ministry of Education's Department of Education Construction FOMO = The National Manpower Development Agency HAM = Honorable Alcaldia Municipal - The Municipality of La Paz JV = Juntas Vecinales - Neighborhood Committees MH = The Ministry of Health MPC = The Ministry of Planning and Coordination MUV = The Ministry of Urbanization and Housing SAMAPA = The Autonomous Water Supply and Sewerage Agency of La Paz SSE = Small-Scale Enterprises FISCAL YEAR January 1 - December 31 FOR OFFICIAL USE ONLY BOLIVIA APPRAISAL OF THE URBAN DEVELOPMENT PROJECT Page No. SUM4ARY ............................... * ................ i-iii I. INTRODUCTION ........................................... I II. BACKGROUND ............................................. 2 A. Patterns of Urbanization ........................ 2 B. National Urban Policies ........................ 3 C. Major Urban Problems . 4 D. The City of La Paz ...... ...... .............. .. 6 E. The Marginal Settlements ........................ 6 F. Urban Development of La Paz ....................... 7 III. THE PROJECT ...... .................. ................. . 9 A. Scope and Objectives ................. ........... 9 B. Project Description .................. * ............ 9 IV. COST ESTIMATES, FINANCING AND COST RECOVERY ........... 18 A. Cost Estimates ................................. .. 18 B. Financial Arrangements .......................... 19 C. Cost Recovery ... ............. ................ . 22 D. Procurement .... .................... # .... ........ . 24 E. Disbursements ................ .................... 24 F. Accounts and Audits ............................... 25 V. ORGANIZATION AND MANAGEMENT ............................ 26 VI. SOCIAL AND ECONOMIC JUSTIFICATION ...................... 32 VII. CONDITIONS ............................................. 35 This report was prepared by Messrs. M. Rothschild (Chief of Mission), G. Gattoni, M. Penalver-Quesada, and Mrs. E. Williams. 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. -2- ANNEXES 1. Detailed Features: Sites and Services, Urban Upgrading and Market Components 2. Credits for Artisans and Small-Scale Enterprises 3. Technical Assistance 4. Institutions and Organizations 5. Project Cost Estimates, Cost Recovery, Pricing and Cash Flows 6. Estimated Schedule of Loan Disbursements 7. Economic and Social Justification CHARTS IMPLEMENTATION SCHEDULES WB 17484 Serviced Sites and Retail Markets WB 17485 Upgrading ORGANIZATION WB 17482 BANVI -- Banco Nacional de Vivienda WB 17628 CONAVI -- Consejo Nacional de Vivienda WB 17483 CONAVI -- Project Unit WB 17626 HAMLP -- Honorable Alcaldia Municipal de La Paz WB 17627 Accion Comunal WB 17605 Flow Chart of Applications for Artisan Credits MAPS IBRD 13035 BOLIVIA -- General Map IBRD 12703 LA PAZ -- Project Locations BOLIVIA APPRAISAL OF THE URBAN DEVELOPMENT PROJECT SUMMARY i. Despite its substantial potential for economic growth, Bolivia is the poorest country in South America (1974 per capita GNP of US$280). Approximately 1.9 million people or 34% of its population live in urban centers--many of them unemployed or underemployed and lacking adequate housing or access to essential urban services. ii. This project has been designed to assist the Government in a concerted effort to alleviate some of the most urgent problems in the urban sector. It will do so by concentrating on a few strategic elements: the development of efficient mechanisms for the promotion of adequate urban growth and the accelerated delivery of urgently needed urban services, the provision of low-cost but adequate housing and related infrastructure schemes, and the generation of employment opportunities for the lower income groups. A main objective of the project is to demonstrate how most of the investments needed for such schemes can be recovered, thus making the replicability of such programs feasible on a larger scale. The project incorporates Bolivia's extensive experience of mutual-aid and self-help traditions and community participation through the cooperation of the long established Neighborhood Committees (Juntas Vecinales). iii. In support of the Bolivian Government's national spatial develop- ment plans, this first urban project is located in the city of La Paz which is, with an estimated 650,000 inhabitants and growing at a 3.5% annual rate, the largest population center and has the largest concentration of urban poor in the country. The project components are: (a) sites and services, community facilities, and construction materials credits for an estimated 5,525 families, and another 142 industrial/commercial plots in El Alto of La Paz; (b) urban upgrading (including some community facilities) and construction materials credits for about 4,500 house- holds in the marginal settlements surrounding the La Paz city center; (c) construction of five new food retail markets in low- income areas of La Paz; (d) establishment of a credit line to benefit artisans and small-scale enterprises (SSE), primarily in the areas of the project's sites and services and upgrading components, expected to directly provide about 1,560 jobs; and - ii - (e) provision of technical assistance required for the efficient implementation of this project and for the preparation of similar future programs in La Paz and other parts of the country. iv. The estimated cost of the project is US$22.50 million, of which the direct and indirect foreign exchange costs represent about 32%. The proposed loan of US$17 million will cover about 76% of the four-year project costs and the balance will be provided by the Government (US$5.0 million), and BISA, the Industrial Bank, (US$0.5 million). v. The borrower is the Government of Bolivia who will on-lend funds at the same interest rate to the La Paz Municipality (HAM), to the Consejo Nacional de Vivienda (CONAVI), to Banco Industrial, S.A. (BISA) and to the Banco de la Vivienda (BANVI). For this purpose the Government would deposit funds in two accounts with Banco Central (BC); BISA will draw funds from one account for the credits for artisans and small-scale enterprises, while BANVI will draw funds from the second account on behalf of itself and on behalf of HAM and CONAVI. BANVI will act only as a financial agent for the Gov- ernment, while project implementation will be carried out by individual agencies, namely, the La Paz Municipality (RAM) for the Urban Upgrading and Markets components, Consejo Nacional de Vivienda (CONAVI) for the Sites and Services component and BISA for the credits to artisans and SSE. These agencies will bear the corresponding financial risks and the Government will bear the foreign exchange risk. The Technical Assistance component will be administered by BANVI. vi. The coordination of all matters and the settling of all issues that might arise during the implementation of this project will be by the new Coordinating Committee established under the chairmanship of the Under- secretary of Coordination of the Ministry of Planning and Coordination (MPC). Project implementation will be over a period of four years. vii. Because of the relatively small size of most civil works, their scattered location and the inclusion of mutual-aid in many of them, it is not anticipated that international contractors would be interested in most of these works. It is therefore expected that most civil works will be carried out by force account (US$3.36 million of the Upgrading component and US$3.70 million of the Sites and Services) or through contracts awarded according to local bidding procedures. All civil works procurement will be done on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. Disbursements of the Bank loan will be against 100% of foreign exchange cost of imported vehicles and equipment or 100% of ex-factory price of domestically manufactured goods; 100% of technical assistance; 84% of disbursements against the BISA credit program; and 76.6% of all civil works and construction materials credits. - iii - viii. Recovery of costs for the project will come mainly from charges and sales to final users. Only the costs of schools and technical assis- tance elements, designed to strengthen institutional capacities benefiting a much larger population, will be recovered through general taxation. Actual cost recovery will be by each of the implementing agencies, according to individual loan contracts to be signed between the respective agencies and the beneficiaries, or through appropriate charges as in the case of the mar- kets. These funds will then be returned by the implementing agencies to the Government by depositing them in the above mentioned account at BC. ix. The overall rate of return on the quantifiable elements of the project is about 18%. The project will result in direct permanent employ- ment for about 2,660 persons and generate about 10,400 man-months of tem- porary jobs during the construction period. More than 55,000 people will be provided with new or improved housing and infrastructure services and about 100,000 will benefit from better health and food distribution ser- vices. Significant savings will be made in time, effort and financial resources previously expended by many in pursuance of jobs and services far from their places of residence. The credit line for artisans and small- scale enterprises will provide a new mechanism to reach and gradually incor- porate hitherto marginal and subsistence entrepreneurs into the market economy of the country. The new urbanization and design standards developed during the preparation of this project will demonstrate the feasibility of provid- ing adequate housing and other basic urban services at a cost affordable to the lowest-income urban groups. Technical assistance programmed as part of the project will strengthen existing and help create new elements needed to establish an effective system to control urban growth and provide a potential solution to some of the most extreme urban problems in Bolivia. Part of this assistance will also be used to establish a project monitoring mechanism at BANVI. x. Subject to the special conditions of para 7.01, the project is suitable for a Bank loan of US$17 million to the Government of Bolivia for a term of 20 years, including a grace period of 5 years. INTRODUCTION 1.01 The Government of Bolivia has requested Bank assistance in implementing a project directed at the urban poor and designed to provide low-cost housing and urban infrastructure services, generate low capital intensive employment opportunities and promote the establishment of an effective delivery system for such programs. A project that was consistent with these objectives and with Bank policies in the sector was identified by an urban mission to Bolivia in March of 1976. Further missions to Bolivia reviewed the progress and assisted in the preparation of this project in May, August and November of 1976. 1.02 Given the high concentration of urban poor in La Paz, the city's pivotal role in the Government's national development plans, and the logistic and institutional aspects that had to be solved as a precondition for the establishment of a long term program for the provision of urban services, the mission concurred with the Government that this first urban project should be concentrated in the city of La Paz. 1/ Following the successful establishment of appropriate institutional arrangements and the development of sufficient technical capacities, the government plans a much larger program of housing and other urban services, as well as employment creating schemes directed at the lower income urban groups, which could then be developed across the country. 1.03 The project is based on plans prepared by Government agencies and on the findings of an appraisal mission comprising Messrs. M. F. Rothschild (Chief of Mission), R. A. Sison, G. Gattoni, M. Penalver-Quesada and Mrs. E. Williams, Ms. L. Suslow of the Bank and Mr. C.R. Wynne-Roberts (Consultant), who visited La Paz for various periods between February I and 19, 1977. I/ The population of La Paz is now estimated to be 655,000 people, or about 35% of total urban population (about 1.9 million). About 400,000 people, or more than 61% of households in la Paz can be considered to represent the poor ("marginals"). - 2 - II. BACKGROUND A. Patterns of Urbanization 2.01 According to figures published for 1975, about 1.9 million people or 34% of Bolivia's population live in urban centers of more than 2,000 people. I/ This is a substantial increase over the 1.3 million people (30.5% of total population) that lived in cities in 1965. Although the average 3.8% annual growth rate of these cities in the past ten years is not considered extreme in itself, the unorganized urban expansion patterns and the inadequacy of available housing and infrastructure programs have jointly led to major urban problems. The largest growth rates in the country (1950-1976) have been recorded in the main cities of La Paz (3.5%), Cochabamba (3.9%) and Santa Cruz (7.3%). La Paz now has about 655,000 people and is expected to grow to 750,000 and 1,500,000 by the years 1980 and 2000, respectively. Santa Cruz, with about 252,000 people, is now the second largest city in the country and Cochabamba, with 204,000, has slipped to third place. The joint population of the main urban centers (i.e., the nine departmental capitals) 2/ has grown from approximately 552,000 in 1950 to almost 1,500,000 in 1976 and is expected to reach about 1.7 million in 1980 and more than 4 million in the year 2000. 2.02 The pattern of urbanization in Bolivia has developed as a function of existing population concentrations, the availability of employment oppor- tunities and the existence of unusually difficult physical conditions in large parts of the country. Nearly 80% of Bolivia's population is concentrated in the Altiplano and Valles regions; vast areas of the country are sparsely populated and difficult to reach. Previous migration to the once expanding mining centers has, with the development of alternative economic opportunities, given way to increasing flows to the larger cities in the country and primarily to the three cities mentioned above. An important factor related to the pattern of population growth in Bolivia is the strong migration into neighbor- ing countries. It is estimated that about 900,000 Bolivians (or 15% of the estimated 5.6 million total population) are presently residing in neighboring countries. 2.03 Much of the gain by the urban centers can be explained in terms of the economic attractions of these expanding centers and the expectations of the rural population to find better jobs in cities (see para 2.13). Pre- liminary figures from the 1976 Census indicate that the rural population may 1/ Preliminary figures from the 1976 Census indicate total urban population has reached 2,035 million people, or about 43.0% of total population, now estimated at only 4,687,700 people. 2/ La Paz, Cochabamba, Santa Cruz, Oruro, Potosi, Sucre, Tarija, Trinidad and Cobija. - 3- have dropped in absolute terms from 3 million (in 1965) to 2.65 million people, and constitute only 56% of the now estimated 4.7 million residents of Bolivia. While in 1965 employment in the agricultural sector amounted to 1.15 million people, or almost 66% of total employment, it then only grew at an annual rate of 2%, reaching by 1975 some 1.4 million but decreasing to about 62% of total employment. During the same period, employment in Industrial Manufacturing, Energy, Transport and Commerce have grown at 3.5%, 3.2%, 3.3% and 3.6% per annum, respectively. Employment in construction grew at an annual rate of 8.8% in the last ten years. Recent studies indicate that at least 5% (and possibly 10%) of the population is unemployed and large additional numbers are underemployed. B. National Urban Policies 2.04 Although the definition of general goals and objectives in the urban sector is formally the function of the Ministry of Urbanization and Housing (MUV), in practice sectorial plans and programs are controlled by the Ministry of Planning and Coordination (MPC), whose function it is to review all such plans and, based on this review, prepare a multi-sectorial global development plan. MPC considers the rationale for spatial develop- ment and urban growth in Bolivia to be primarily a function of social, economic and geo-political considerations. Its strategy for urban growth is therefore based on these considerations and not on simple extrapolations of past trends in the pattern of physical expansions. 2.05 The main criteria underlying Government plans in the spatial con- text is to support in a balanced manner and with appropriate types of invest- ment those areas which it considers important in order to generate economies of scale and expand national markets. A major element of this strategy is the Government's objective to consolidate and strengthen the internal linkages in the country, and specifically to encourage the growth of what it considers the most important development axis containing the cities of La Paz, Cochabamba and Santa Cruz (see Map IBRD 13035). This axis is to be complemented by development along the cities of Oruro-Potosi-Chuquisaca-Tarija, in Mutun, in the Benin and Pando regions, and in the salt mining regions of the southwest. In support of these objectives, the Government has established a weighted distribution of all public and private investments to be made in the country. Thus, La Paz, Santa Cruz and Cochabamba are to receive 19%, 18.6% and 14.4% of all investments, respectively, while the rest is to be distributed among Oruro (9.5%), Potosi (7.9%), Tarija (6.7%), Chuquisaca (5.9%), Beni (2.8%), Pando (2.1%) and across the nation (12.1%). The new Government's Five-Year Develop- ment Plan (Plan de Desarrollo Economico y Social 1976-1980) spells out the type and amount of each approved and planned investment by sector and by city. In water and sewerage, for example, total investments for the five year period are estimated at $b 2,447 million (US$122.3 million). In housing, the goal for this period is $b 997 million (US$49.9 million) and the complementing figure for other urban construction (Desarrollo Urbano) is $b 950 million (US$47.5 million). 2.06 Because of its social and economic implications, housing is con- sidered one of the most important sectors by the Government. National finan- cing of housing in the 1970-1975 period amounted to $b 495 million (US$24.8 million) while foreign funds during this period provided another $b 439 mil- lion (US$22 million). C. Major Urban Problems 2.07 Although the present urban population of Bolivia (about 2 million people, or 43% of its 4.7 million total estimated population) and its annual rate of growth (about 3.8%) are not unusual by Latin American standards, the Government has not been able to match this growth with appropriate levels of urban services and adequate housing programs. Less than 57% of the urban population has access to piped water supply (many only through standpipes) and less than 23% to any type of sewerage facilities. Average life expec- tancy at birth in Bolivia is 47 years, infant mortality is more than 147 per thousand, and malnutrition among pre-school chidren is about 22%. According to official sources, the total number of housing units built annually across the nation by both the public and private sectors varies between 1,500 and 2,300 units, while the number of additional units needed every year (to provide everybody with at least minimum shelter solutions) is about 10,000. Average cost per unit built by the private sector programs is estimated at about US$8,600, while housing units built by the public sector are estimated to cost about US$7,000. Such costs clearly make these programs inaccessible to the vast majority of the urban population. 1/ 2.08 A number of important steps have been taken by the Government to improve the living conditions in both the rural and urban areas, and in par- ticular those of the low-income2groups. In the urban sector, large urban holdings (in excess of 10,000 m ) have been expropriated and redistributed (Urban Reform Law of 1963), a special housing council (CONAVI) was established in 1964 to accelerate the construction of public housing, a new housing bank (BANVI) was created in 1974 to promote and coordinate the financial aspects of low-cost housing and infrastructure schemes, and new emphasis has been given to the active participation of low-income groups in the implementation of infrastructure and housing programs for these groups. 1/ Assuming an 80% mortgage on a US$7,000 unit (US$5,600), at 10% interest and 20 years, this would require monthly payments of US$54 or $b 1,080. If such payments constitute 20% of monthly incomes, it would require incomes of about $b 5,400 (US$270). As can be seen from the income distribution table in Annex 5 (Attachment 5), only households in the top 33% of the income distribution would be able to finance such hous- ing. This situation is actually more serious if one considers the cost of land and other expenses not included in these computations. - 5 - 2.09 Although these programs have helped to improve the conditions of some, the living conditions of most low-income groups continue to be charac- terized by make-shift shelters and complete lack of, or inadequate levels of other essential services. The ability of the urban poor to be served by basic urban services is constrained by both the relatively high standards and costs of traditional schemes of urban services and by the very low income of these groups. The least expensive housing presently available to low- income groups costs about US$4,750 per unit and is totally inacessible to these groups. As a result, these groups have no alternative but to erect by themselves very primitive and inadequate forms of shelter that are mostly achieved through a very lengthy and inefficient process. The lack of basic urban services such as water supply, sewerage, waste disposal, health and sanitation and access roads is even more serious because these services usually require official support and substantial resources. Even where special programs have been established to provide housing and other services for the urban poor (like the Accion Comunal program in La Paz), such schemes have not been able to provide these services in sufficient quantities and in an efficient manner. This is due, in part, to the subsidy usually contributed from public sources to such programs, which in turn, has limited the scope of these operations. 2.10 The Government has recognized the shortcomings of its programs in the urban sector in general and the lower-income groups in particular and is therefore keenly interested in expanding and supporting those elements that will contribute to a solution of these shortcomings. In this context, and in response to the mission's recommendations, the Government has decided to increase its financial support of BANVI, the housing bank; to establish new, more appropriate and less ambitious layout and design standards for low-cost housing and infrastructure schemes; and to increase the efficiency and coor- dination of the institutional mechanisms in charge of coordinating, promoting and implementing such programs. The proposed project would support these efforts by (a) establishing the viability of housing and infrastructure schemes based on appropriate development standards; (b) strengthening the operational capabilities of BANVI; and (c) establishing an appropriate frame- work (a Coordinating Commission) for the coordination of this and similar projects in the future. In addition, and through the shelter programs, basic infrastructure, retail markets and other services that would be provided, the project would make a significant contribution in reducing the deficit of these services in the largest city of the country. 1/ 1/ Additional aspects of this project that have an impact on the conditions of the urban poor (e.g., Credits for Artisans) are treated elsewhere in this report. - 6 - D. The City of La Paz 2.11 Located on the western slope of the Andean mountains at an altitude ranging between 3,500 and over 4,000 meters 1/, the city of La Paz provides what is probably one of the most difficult environments for human settlement. In addition to the very harsh climatic conditions typical of its location, the city is also characterized by unusually difficult physical constraints. The city itself, including most of its residential areas, the business dis- trict and all Government offices, is located in a narrow valley surrounded by steep slopes that fall off (about 500 meters) the eastern edge of the Altiplano plateau. Most of these slopes consist of extremely unstable geo- logical layers of very loose materials which, when saturated by the water carried by some of the more than 200 rivers and streams that crisscross the city, collapse and cause massive mudflows and landslides. Enormous efforts and resources are continuously allocated by the municipality to prevent or at least control the damages caused by these regularly occurring phenomena. The landslides and mudflows primarily affect the lower-income groups that have settled on the steep slopes of the city. The very establishment of marginal settlements on these slopes and their lack of appropriate sewerage systems has significantly increased the amount of water that filters into the ground, thus aggravating the conditions that cause mudflows and landslides. Under these conditions, and considering that most areas in downtown La Paz have already been completely built up, the city's expansion possibilities are very limited and one of the few options available is on El Alto, the Altiplano area that is still part of metropolitan La Paz. E. The Marginal Settlements 2/ 2.12 The population of La Paz is presently about 655,000. About 62% of this population, or more than 400,000 people, live in "irregular housing" along the periphery of the city or in some of outright slum areas, many without formal land tenure to their plots. The population in these "marginal" settlements is growing at an annual rate estimated at between 8% and 10%, compared to the present 3.5% for La Paz as a whole. Probably close to 30% of the population in the marginal settlements is unemployed or endures severe underemployment. The principal sources of employment in these areas are 13% in commerce such as food, groceries, clothing, etc., (mainly women are engaged 1/ The city center is at about 3,500 m, but most marginal settlements and lower-income neighborhoods are located at higher elevations. 2/ Most of the information in this section is based on a detailed socio- economic study conducted in 1976 in four representative settlements of the city, by the Accion Comunal department of the La Paz Municipality as part of this project's preparation. - 7 - in these activities) about 11% "employees" (e.g., messengers, porters, guards, a few teachers, etc.), 11% artisans, 7% construction workers, 5% in services (mainly maids), and about 5% wage workers. About 32% of the adult population in these neighborhoods is made up of housewives. Almost a quarter of the population of La Paz has monthly (household) incomes below $b 1,500 (US$75) and about half earn less than $b 3,500 (US$175). The conditions in marginal areas are even more difficult. Almost 40% of the families in the marginal areas have incomes below $b 1,000 (US$50) and only 7% of all households in these settlements are estimated to have incomes above $b 2,500 per month. Almost 93% of the residents of the marginal settlements located on the slopes surrounding La Paz are below the 43rd percentile of the city's income distribution (Annex 5, Attachment 5). 1/ 2.13 The demographic structure in these settlements is characterized by a large proportion of people in the younger (not employed) age groups, namely, about 43% of the population consists of children below 15 years of age. Another 27% are in the 15 to 29 age group, 23% in the 30 to 49 group, and only 7% is 50 years old or older. About 13% of the population in the low-income neighborhoods are illiterate, 45% have had some form of primary schooling, only 12% some secondary education and less than 1% have had any higher education. 2/ Migration flows from the rural areas into La Paz are significant and about 37% of the population in the marginal settlements of La Paz are only first generation residents in the city. Of all migrants, 93% have come from the rural communities of the Department of La Paz, and mostly (68% of all household heads) in the expectation of finding better employment opportunities. F. Urban Development of La Paz 2.14 La Paz has grown from an area of approximately 533 ha in 1935 to more than 3,800 ha in 1976. The Municipality of La Paz (HAM) initiated in 1975 a concerted effort to study the urban needs of the city and propose appropriate solutions, as a result of which, a growth model for the metro- politan area (Modelo de Crecimiento) was completed and published in July of 1976. The new document has been conceived as an indicative framework for the city's future urban development schemes, it assesses the city's future growth potentials and needs and proposes a suitable expansion pattern. The model identifies a number of physical expansion axes and assigns to each one implementation priorities based on criteria such as physical constraints, historic growth patterns, existing and planned major infrastructure works, 1/ Actual incomes are probably higher by about 30% from the figures given here. This is the level of "underreporting" estimated by the municipality team that carried out the socio-economic study from which these figures are taken. 2/ Over 19% of the population are children under 4 years of age. accessibility to regional and national transport networks, etc. 1/ The conclusions of the model are appropriate, in particular in that they recommend that the future growth of the city should mainly concentrate on the less problematic (in geo-physical terms) areas of El Alto. The three axes which were given the highest priority are indeed all on this high plateau westward of the city. The size of the city is projected to increase to about 4,900 ha in 1980 and 6,550 ha in the year 2000. The model estimates that the land needed in the next 25 years for residential, industrial, recreational, commer- cial, public facilities and transport infrastructure (excluding the city's core) would be about 2,313 ha, 587 ha, 116 ha, 143 ha, 10 ha and 471 ha respectively. Most of this expansion will be concentrated in El Alto. 1/ The selected axes and their hierarchical order of priority are along the "Panamericana" highway, and towards: Oruro Viacha, Ovejuyo, Rio Abajo, Yungas, Achumani, Achocalla, Pampahasi, El Alto-Rio Abajo, Achachicala and towards Llojeta. (See Map No. IBRD 13035). -9 - III. THE PROJECT A. Scope and Objectives 3.01 This project addresses some of the most acute urban problems in Bolivia in general, and of the lower income groups in particular. Its general aims are to contribute toward increasing the access to shelter and other essential urban services and to strengthen institutional arrangements needed to promote such programs efficiently while improving the prevailing income distribution and environmental conditions in urban centers. The project would demonstrate the feasibility of providing essential urban services to low-income groups at affordable costs, therefore making such schemes replicable on a much larger scale and without Government subsidies. It would provide and improve shelter solutions for the lowest urban income groups, in effect, reaching down to beneficiaries in the lowest 5th percentile of the income distribution. A particularly important feature of the project is the credit line designed to expand job opportunities and the economic participation of artisans and small-scale entrepreneurs. By using BISA as implementing agency, this component will also complement and strengthen past Bank support to this institution (Loan 1290-BO and Credit 455-BO). The project will also help develop effective systems for the delivery of urban services and for the rational management of urban growth through the establish- ment of new and the strengthening of existing institutional arrangements such as the new Coordinating Commission and the envisaged technical assistance to the Housing Bank (BANVI), to the Consejo Nacional de Vivienda (CONAVI), and to Accion Comunal (AC) of the Municipality of La Paz (HAM). 3.02 The implementation of this project will take full advantage of existing managing and executing agencies, strengthen these where needed and establish new complementary arrangements only where required. The project also makes use of the unusually high building skills of the local population, the availability of local construction materials, and the strong and cohesive community links that have traditionally characterized low-income groups in Bolivia. The fact that the costs of these services will be fully recoverable by the Government (with the exception of schools and technical assistance) offers a first practical solution to some of the most serious problems in the urban sector. B. Project Description 3.03 The project, details of which are presented in Annexes 1, 2 and 3, consists of the following components: -- a program to develop an estimated 5,525 new serviced sites with core dwelling units and 142 industrial/ commercial plots in El Alto of La Paz; - 10 - -- an upgrading program to provide about 4,500 families living in low-income areas of La Paz with essential infrastructure and other urban services, as well as construction materials credits; -- the construction of five new food retail markets to serve marginal settlements of La Paz; -- the provision of a special line of credit for artisans and small-scale entrepreneurs designed to increase incomes and provide about 1,560 new jobs among low-income groups in the Sites and Services and Upgrading areas of the project; and -- the provision of technical assistance elements required for the efficient implementation of this project, as well as for the preparation of additional programs of this kind in La Paz and elsewhere in the country. Serviced Sites 3.04 This component consists of a program to develop 5,525 urbanized plots in El Alto of La Paz at a total cost of about US$13.6 million. 1/ About 85% of these plots will be provided with a selection of core dwelling options. These plots will be developed on sites already owned by CONAVI (the implementing agency) and on approximately 20 ha of additional land adjacent to.these sites which CONAVI has agreed to purchase by December 31, 1977. All plots will be provided with basic essential services (water, electricity, sewerage, access roads) and community facilities. About 5.5 km of water trunk line expansions connecting the project sites with the main water supply network of La Paz will also be built and financed by the project. Assurances were obtained during negotiations that SAMAPA (the Water and Sewerage Company) will be responsible for all arrangements necessary to provide timely and adequate quantities of water to meet this component's scheduled needs. In addition to the provided basic infrastructure and dwelling cores, US$1.66 million in construction materials credits will be available for households wishing to develop, expand, 05 improve t eir initial units by self-help. Plot sizes will vary etween 90 and 135 m , while the core shelter units will range from 12m to 19.3 m with varying degrees of completion. This component also includes the construction of about seven new elementary schools, two community centers to be built by mutual- aid, and the establishment of an appropriate refuse collection system. As- surances were obtained during negotiations that adequate staffing and maintenance of all facilities financed by this project will be provided by the corresponding Ministries and agencies. Adequate bus services that connect the component sites with the center of La Paz are available. If required, these services could easily be expanded, for example, through the establishment of a transport cooperative by project settlers who could finance such a venture through the proposed credit line for small-scale enterprises (see para. 3.10). 1/ See Annex I for a detailed description of this component. - 11 - 3.05 As an integral part of these proposed residential areas, and imme- diately adjacent to them, approximately 142 additional plots averaging 400 m have also been planned for artisan activities, small-scale industrial and service enterprises. These sites will be primarily for labor-intensive non-polluting and simple technology enterprises and are expected to provide about 900 new employment opportunities for the area residents. 1/ Through the provision of adequate financial assistance as envisaged under the BISA line of credit (see also Annex 2) and with appropriate technical assis- tance through Accion Communal (AC) (see Annex 3) viable enterprises of this kind could be established or expanded and would receive support needed for their success. 3.06 The standards for each of the four types of shelter solutions provided in this component as well as their distribution (mix) were established in accordance with the expressed needs and the paying capacities of the -icome groups this project intends to reach. The total financial charge to the beneficiaries for the alternative solutions will vary between US$910 and US$2,285. This compares very favorably with the least expensive public housing units presently being built in Bolivia at a cost of about US$4,750 per unit. The following table shows in summary form the costs of each unit, financial charges to beneficiaries and required monthly incomes. Required Percentile Total Cost Loan Amount Monthly Income of La Paz Service Level /a per unit /b by beneficiaries /c Payments Level /d ir ome /e (in US$) (in US$) (in US$) (in US$) Serviced Plot 1,326 910 9.0 45 10 Option A 1,796 1,341 12.6 63 18 Option B 2,076 1,762 17.0 85 28 Option C 2,626 2,285 22.0 110 37 /a A detailed description of these levels is provided in Annex 1-A. /b Includes costs of community facilities and other costs chargeable to the Government. /c Includes cost of land, all infrastructure, physical and price con- tingencies but excludes downpayments (about 2%). /d Equals five times estimated monthly mortgage payments. /e The income distribution of La Paz and the marginal settlements is given in Attachment 5 to Annex 5. 1/ A complete listing of firms interested in settling and expanding on these sites and their characteristics is provided in Annex 2. Plot prices for the industrial sites will cover development costs plus operating expenses and will be compatible with current market prices. - 12 - The monthly charge for the lowest service level offered, (a serviced plot without a shelter unit), will be less than US$9.0. 1/ Based on the income distribution of La Paz 2/ and assuming that 20% of household incomes would be available for mortgage payments, it is estimated that this solution would be accessible down to the tenth percentile in the income distribution curve for La Paz. About 15% of the total number of units provided would be of this type. Two options, representing 65% of the total plots, would provide shelter to families from the 18th and 28th percentiles respectively, whereas the fourth option (20% of the sites) would be affordable to families from the 37th percentile and up. 3/ Optional construction materials credits will be available to beneficiaries in US$100 tranches and managed by CONAVI, who will establish appropriate material depots and provide supervision and necessary technical assistance. Construction materials credits averaging US$300 would increase monthly payments by US$6.40, assuming conditions of five years at 10% interest. The terms for these credits are 1-5 years at 10% interest and were agreed to during negotiations. Materials will be bought in bulk in accordance with purchasing procedures acceptable to the Bank. The lower standards for layout and construction for this project are more appropriate than conventional and formally accepted municipal standards. The municipality has indicated willingness to accept these new standards when applied to low-income housing projects and agreed, during negotiations, to collaborate with CONAVI in their development. In addition, it was agreed that HAM would apply special accelerated approval procedures for the site and services project. Urban Upgrading 3.07 This component will provide about 4,500 families in seven low- income areas of La Paz with basic urban services, i.e., water supply and sewerage, an improved refuse collection system, pathways and street pavement, and communal facilities 4/. An additional important benefit of the component will be the securing of land tenure for all participating settlers. A detailed proposal by the municipality on the procedures to be used for this purpose was agreed upon during negotiations and adoption of these procedures will be a condition of disbursement for the urban upgrading component. The program consists of a very basic level of essential improvements to be as 1/ Assuming a 20 year credit at 10% interest. 2/ See Attachment 5 in Annex 5. 3/ A detailed system for the selection of beneficiaries has been prepared by CONAVI in coordination with the mission and agreed to at the time of negotiations (see para. 5.12). 4/ In view of the unusally steep slopes that are characteristic of these areas, the only streets that were selected for upgrading were those that would be best suited to improve access by public transportation and refuse collection vehicles. - 13 - inexpensive as possible in order to make it accessible to the largest possible percentage of the population. Most households in these areas already have electric connections and for those still without it, the Bolivian Power Company (BP) will provide appropriate expansions at no additional cost to the project. 1/ In addition, optional construction materials credits ranging between US$50 and US$300 will be available for self-help housing improvements for a total of about 4,500 households--4,000 families in the communities with infrastructure upgrading and another 500 households in settlements that al- ready have basic infrastructure networks. Average financial charges for the basic upgrading level will be about US$466 per family. As a minimum, com- munal standpipes for water supply and laundry-shower facilities will be provided for all residents. Waterborne sanitation will be provided where technically and economically feasible in accordance with the paying capacity of residents (about 75% of all households could afford this service). Fami- lies will have the option of using part of the construction materials credits to secure individual water hook-ups and improved on-plot sanitary and laundry facilities. 3.08 For individual loans at 10% interest for 15 years, monthly loan repayments for the basic upgrading level will amount to about US$4.80. An additional US$200 construction materials credit 2/ (at 10%--five years) would add a US$4.25 monthly payment on each household. Additional expenses incurred by these households include local and revenue taxes (US$10 and US$5 per year respectively), electricity (minimal tariff of little more than US$1 a month)--and an average of about US$0.50 per month for water if supply is from a communal spigot. This amount would increase to about US$5 for individual connections. These additional expenses would increase monthly household expenditure by about US$2.50-7.50 per month depending on degree of service, and would be affordable to this group. Loan conditions to individuals were agreed upon during negotiations. Retail Markets 3.09 As a complement to the Sites and Services, Urban Upgrading and Credits for Artisans components of the project, five public retail markets will be designed, built and operated by HAM. Two of these would be an integral element of the supportive services and facilities in the Villa Adela and Rio Seco Sites and Services component. Two additional facilities will be located in other El Alto low-income areas in order to improve and expand currently deficient marketing facilities in these, and a fifth market will be located in the vicinity of Sagrado Corazon, one of the largest areas included in the Urban Upgrading component (see Map IBRD 12703). Designs for 1/ BP recovers these costs through its regular charges for electric con- sumption. 2/ Some settlers might only opt for US$50 while others could take advantage of the full US$300 limit. The smallest credit would be accessible down to the lowest 5th percentile (income). - 14 - t ese markets would emphasize low cost construction--a maximum of US$100 per m compared to recent designs costing more than US$200--in order to enable greater cost recovery possibilities of these investments by HAM. Proposed designs are based on least-cost materials and engineering that would permi maximum expansion flexibility. The typical structure would be about 600 m in size wit the possibility of future expansion by an additional 400 mI. About 900 m of paved area adjacent to the fixed stalls would provide appro- priate space for abou 200 ambulatory vendors. Each market site would thus require about 2,000 m of land. The preparation of final designs and detailed engineering for each market is the responsibility of the special unit of Ac- cion Communal. The municipality will maintain and operate these facilities under a new rate structure designed to secure full cost recovery. Assurances to this effect were obtained during negotiations. A total of 300 new stalls would initially be available in the new facilities in addition to transient selling space for about 1,000 vendors. Food preparation and dining spaces would also be provided and leased. (d) Credits for Artisans and Small-Scale Enterprises 3.10 This component would offer financing possibilities for small-scale entrepreneurs that until now have been excluded from the market system and thus, been limited in their expansion possibilities. A total of US$3.05 mil- lion of which US$0.5 million will be provided by BISA, will be made avail- able through a line of credit to BISA, which would establish and operate a revolving fund for on-lending to artisans and SSE. I/ Based on analysis of a sample survey conducted as part of project preparation, 2/ it is estimated that about 670 artisans would receive credits averaging US$1,500 for a total of US$1 million, while another 140 small-scale enterprises requiring an aver- age of US$17,500 would need the remaining US$2.05 million assigned to this .component. Actual demand for both types of credits is estimated to be much larger and could be covered by additional expansions of this program in the future. Prospective applicants would primarily come from the project's Sites and Services and the Urban Upgrading areas and be selected according to guidelines agreed upon during negotiations. These guidelines specifically define the characteristics of the proposed new program and make these com- patible to the existing scheme under a previous loan to BISA (Loan 1290-BO). The main differences between the two programs are the very low level of skills of the anticipated beneficiaries and the corresponding assistance needed for these, the fact that these new credits have been planned to be primarily given to artisans and enterprises in the areas of the project's other components and that the proposed credits would also be available for services enterprises not eligible under the previous BISA program. Further- more, the proposed credits would be smaller than in the existing scheme, namely up to a maximum of US$20,000 3/ versus US$30,000 in the previous loan. 1/ See Annex 2 for a full description of this component. 2/ Details of which are also presented in Annex 2. 3/ With a US$40,000 ceiling to firms relocating to El Alto (a maximum of US$800,000 of the component's funds may be used for these loans). - 15 - The applications for artisan credits will first be reviewed and screened by the respective Juntas Vecinales (Neighborhood Committees) assisted by experts attached to AC 1/ and only then submitted for consideration to BISA. BISA itself has approved a US$500,000 contribution which was confirmed during negotiations. 2/ BISA will offer the loans to artisans (in $b) at a net interest rate of 12%, while the larger loans will be at 12% plus up to six percentage points to cover financial risks and additional feasibility studies if required. During negotiations it was agreed that BISA's current 16% rate will be applied and reviewed jointly with the Bank during implementation. BISA would finance 90% and 70% respectively of the financial requirements of the artisans and small-scale enterprises. The loans will be for a period of five to eight years and with up to three years of grace as agreed upon during negotiations. 3.11 These credits are expected to increase the incomes or provide new employment to a total of at least 1,560 artisans and workers in the sites and services and upgrading areas of the project. The combined average cost per job would be about US$2,200. Under the assumption that about US$1 mil- lion would be required for artisans' credits, this type of credit should generate about 670 new jobs. 3/ In order to estimate the potential demand for such credits, four marginal zones were surveyed in detail as part of the preparation of this project. A total of 733 artisans and workers were thus identified as potential applicants for credits out of a working popula- tion of 4,188 persons. 4/ With comparatively little investment in better machines and tools and with some assistance in accounting methods and market- ing, most of them could be rendered more productive and competitive and generate additional employment. 3.12 The immediate employment which small-scale enterprises (SSE) are expected to provide on moving to the planned El Alto industrial sites is estimated to be at least about 890 jobs. It is reasonable to expect that across the period of three years this program is expected to run, this figure would increase considerably and might well reach 1,500 jobs as the firms settle and expand their activities. This would be an important contribution to employment among the more than 5,000 families that are expected to settle in the new residential areas of Villa Adela and Rio Seco, as well as among the older-established residents. Based on information available from a sample of firms interested in expanding and moving to El Alto, it is estimated that total credit demand for SSE would be about US$2.5 million. Therefore, it is expected that the US$2.05 million reserved for this line of credits could be wholly taken up by the firms 1/ This is the Municipality department in charge of implementing the Urban Upgrading component. See Annex 4 for a detailed description of these organizations and institutions. 2/ See also Annex 2, para. 11. 3/ Assuming average credits of about US$1,500 and that every credit would create at least one additional job. 4/ See Annex 2, Attachment I for a complete listing of these artisans. - 16 - which have already gone on record requesting credits and industrial sites in El Alto. The establishment of such industrial sites would be of great benefit to the firms concerned and to the population in El Alto. Not only would the firms be able to expand their operations and function more efficiently, and economically, in more spacious and convenient premises, but their new sites would also benefit from better access to all the main roads and railroads that enter La Paz through El Alto, as well as the nearness to the international airport also located there. 3.13 The initial screening of artisans and selection of those eligible for credits is to be made by the existing neighborhood committees (Juntas Vecinales). Applicants will be examined in terms of their capacity to benefit from and repay the received loans. Technical appraisal, supervision and promotion of artisans will be carried out by a special team within Accion Communal. 1/ This team will be supported by technical assistance involving foreign consultants for approximately 48 man-months, and local counterparts for an equivalent of 15 man-months. Appraisal, approval and supervision of credits to SSE will be handled separately by a special appraisal unit of BISA which will also act as final approving body for credits to both artisans and SSE. 3.14 The industrial sites in El Alto will be managed by an official of the CONAVI team supervising the total residential-cum-industrial complex. Provisions would be made for small workshops to be rented to artisans. Com- mon services on the sites would be provided subject to the expressed needs of the entrepreneurs. Technical Assistance and Training 3.15 Assistance will be provided to the various executing agencies in the project to strengthen management and productive capacity, to improve shelter design and construction technology, to monitor and evaluate project components, to identify and promote the development of artisans and small industrial and service enterprises, and to support the development of an integrated health and nutrition program in the marginal areas of the city. A total of about 214 man-months of consultancy, including local experts for an equivalent of 15 man-months, will be provided under this component. The US$1.9 million package also includes close to US$400,000 for equipment and another US$200,000 for other support and training programs. This assistance, and particularly the expatriate consultancy, is considered essential in view of the severe shortage of local expertise in a number of key sectors essential to the success of this project and for the preparation of future programs. A detailed description of this component is provided in Annex 3. BANVI would receive about 79 man-months of consultancy to support the operations of the new project unit to be established at the bank. The provided assistance would include experts in the fields of financial analysis, project engineering, economics and urban planning. Assistance to AC will include about 63 man- months of experts in fields relating to the promotion and support of artisans 1/ This is the agency also in charge of implementing the upgrading com- ponent. - 17 - (for the BISA credits), for support of local counterparts to be trained as promoters of artisan activities, and to help in reorganizing and preparing a computerized system for further socioeconomic analysis of the La Paz low-income groups. CONAVI will receive 24 man-months of experts' assistance in support of the project unit that will prepare and complete a new set of special design and construction standards for projects of "social interest", and for its planned conversion of most administrative tasks to a computerized program. BISA will also receive about 24 man-months of assis- tance in the management of the new credit line for artisans and small-scale enterprises. 3.16 Another 24 man-months of foreign experts will be provided to the Ministry of Health (MH) in support of its activities affecting the low-income groups of La Paz. 1/ Despite the fact that the health and nutrition condi- tions of the urban poor are among the worst in the continent, present pro- grams in the health sector are not well coordinated and their effectiveness is difficult to assess. The technical assistance element will address these issues simultaneously, namely, help integrate and support a few high priority on-going government programs in primary health care and nutrition services, while providing consultants to help review the needs and prepare a long-term program in this field. On the basis of this review, a more substantive program could be identified and considered for financing in a future Bank- supported project. The limited program of assistance in the present project will specifically support on-going efforts in the promotion of (a) preventive medicine and maternal-infant health care; (b) training and education programs relating to nutrition; (c) preventive care program related to epidemiology; and (d) training programs for community health promoters. 1/ A full description of this subcomponent is given in Annex 3. - 18 - IV. COST ESTIMATES. FINANCING AND COST RECOVERY A. Cost Estimates- 4.01 The estimated total cost of the project, including land and con- tingencies, is $b 450.20 million or US$22.51 million. The direct and indirect foreign exchange component amounts to US$7.17 million or about 32% of total costs. The cost estimates, described in more detail in Annex 5, are summarized below. SUMMARY PROJECT COSTS /a Local Foreign Total Local Foreign Total ---In $b (Millions)--- ---In US$ (Millions)--- A. Sites and Services Infrastructure 106.80 30.40 137.20 5.34 1.52 6.86 Materials Credits 30.80 2.40 33.20 1.54 .12 1.66 B. Urban Upgrading Infrastructure 11.80 15.00 26.80 .59 .75 1.34 Materials Credits 11.00 .60 11.60 .55 .03 .58 C. Markets 5.00 1.20 6.20 .25 .06 .31 D. Credits for Artisans 21.80 39.20 61.00 1.09 1.96 3.05 E. Technical Assistance 9.60 30.00 39.60 .48 1.50 1.98 Subtotal 196.80 118.80 315.60 9.84 5.94 15.78 Engineering 12.60 .40 13.00 .63 .02 .65 Supervision 5.40 .20 5.60 .27 .01 .28 Management lb 27.00 .80 27.80 1.35 .04 1.39 Subtotal 45.00 1.40 46.40 2.25 .07 2.32 Contingencies (i) Physical /c 15.60 6.80 22.40 .78 .34 1.12 (ii) Price Escalation /d 49.40 16.40 65.80 2.47 .82 3.29 Subtotal 65.00 23.20 88.20 3.25 1.16 4.41 Total cost of project . including land cost /e 306.80 143.40 450.20 15.34 7.17 22.51 /a Do not include mutual-help labor contributed by project beneficiaries of sites and services urban upgrading. /b Includes preparaing bidding procedures and organizing self-help programs. /c Physical contingencies are estimated to be 15% of civil works costs. /d Assuming annual price increases of 18% in 1977, 16% in 1978 and 14% there- after in the domestic component and 9% from 1977 to 1979 and 8% thereafter in the foreign component. /e Land acquisition costs for components A and C above amount to $b 21.20 and are included in respective local costs. - 19 - 4.02 These cost estimates are based on preliminary engineering and on unit prices of local construction and quotations as of February 1977 and are considered realistic. 4.03 Physical and price contingencies for those components that include civil works amount to about 41% of these component costs. 11 4.04 The project will be implemented over a four year period. Detailed implementation timetables for each component are presented in the attachments to Annex 1. B. Financial Arrangements 4.05 The sources of funds for the project are shown in the table below and described in the paragraphs that follow: Total Govern- Cost IBRD ment BISA ----------(in US$ million)---------- 1. Sites and Services Land 1.05 - 1.05 - Civil Works 10.93 8.37 2.56 - Construction Materials Loans 1.66 1.27 .39 - Subtotal 13.64 9.64 4.00 - 2. Urban Upgrading Civil Works 2.65 2.03 .62 - Construction Materials Loans .58 .44 .14 - Subtotal 3.23 2.47 .76 - 3. Markets Land .01 - .01 - Civil Works .60 .46 .14 - Subtotal .61 .46 .15 - 4. Small-Scale Enterprises (Credits) 3.05 2.55 - .50 5. Technical Assistance, Vehicles and Equipment 1.98 1.88 .10 - TOTAL PROJECT COST 22.51 17.00 5.01 .50 1/ These exclude the Credits for Artisans and funds for Technical Assis- tance. - 20 - 4.06 The Bank loan to the Government of Bolivia will be in the amount of US$17 million ($b 340 million) or 76% of the total project costs, while the Government of Bolivia will provide US$5.01 million ($b 100.2 million) or about 22% of the total project costs. BISA, the industrial bank and executing agency of the Credits for Artisans component, will contribute US$0.5 million ($b 10 million) or about 2% of total project costs. 4.07 The exchange risk would be borne by the Government, and the finan- cial risk will be passed on through appropriate surcharges to the benefici- aries by CONAVI, HAM and BISA for their respective components. The Government will deposit in separate accounts at BC all funds necessary for the implemen- tation of the project in quantities and according to a schedule acceptable to the Bank (see Chapter V). Funds recovered from the credit line for artisans will be transferred by BISA to BC for repayment of the Bank's loan according to a schedule agreed upon during negotiations. Funds recovered from all project components, except funds to BISA, will be passed on by CONAVI and HAM, as received, and immediately returned to the Government. Funds recovered by BISA will be deposited in a revolving fund for additional credits of this type; BISA will repay Government in accordance with terms specified in its subsidiary loan agreement with the Government. 4.08 BC will charge 1/4% commission for operating the two accounts for BISA and BANVI. BISA will charge 12% interest rate for its credit to arti- sans and 12% plus up to an additional 6% for its credits to small-scale enterprises. These rates are compatible with market conditions in Bolivia and with past Bank/IFC loans to BISA. 1/ The provided spread is estimated to be adequate to cover BISA's expenses and as a default reserve. In addition, the Government will directly guarantee the BISA credit line up to US$300,000 (see also para. 4.17). BANVI will withdraw funds from the account at BC and make these available to HAM and CONAVI at the Bank's interest rate plus the 1/4% commission charged by BC. In turn, CONAVI and HAM will grant individual loans at 10% interest and for payment periods between 5 and 20 years. These conditions are much more appropriate than the present rates of interest charged for housing loans to these groups and take into account other relevant factors such as the rate of inflation. For example, beneficiaries of housing units built by CONAVI and other housing councils have in the past been paying annual interest rates averaging not more than 6% and as low as 3%. Benefici- aries of Upgrading programs have in the past only contributed (part labor and part cash) 50% of the costs of such programs. The rest has been subsidized by the municipality. The present rate of inflation is estimated to be 10%, has been 7% in past years and is expected to fall again to such levels in the near future. Price escalation contingencies (Table, para 4.01) for domestic components of civil works were estimated by CONAVI, HAM staff and the mission based on the most recent experiences for this type of construction and proj- ect. While these are higher than the general inflation rate, the mission 1/ BISA's current lending rate is 16%. - 21 - believes they are appropriate to this specific project. Physical contingen- cies of 15% are applied due to the nature of civil works for upgrading and the extreme topographic/geological conditions of the project areas for both the upgrading and sites and services components. All terms and conditions of loans to implementing agencies and individual beneficiaries were confirmed during negotiations. Sites and Services 4.09 The total cost of this component, including contingencies, is estimated to be about $b 272.8 million. Funds for the construction of civil works and other expenses involved in the implementation of this component will come from Government and be deposited at BC. These funds will then be drawn by BANVI and transferred to CONAVI, as implementing agency, according to the established schedule of disbursements. CONAVI will be responsible for the planning, construction and supervision of this component. 4.10 The settlers of the new sites will enter into individual contracts with CONAVI for the repayment of land, infrastructure and construction mate- rials credits. Costs relating to community facilities, schools, 1/ off-site infrastructure and technical assistance will be covered by the Government and recovered through general taxation. These arrangements were confirmed during negotiations. The loan terms to individual households for regular units will be from 16 to 20 years, depending on the date of occupancy, at 10% annual interest, while for the commercial plots and construction materials credits the terms will be seven years and five years respectively, both also at a 10% annual rate of interest. CONAVI will collect monthly pay- ments from households and commercial plots which reflect capital costs of land, on-site infrastructure, housing and certain community facilities plus the corresponding contingencies and design, engineering, supervision and management during construction. After appropriate deductions (3.8%) to cover administration costs and possible defaults, CONAVI will transfer these monies as received to BANVI, which would in turn return them to BC. Urban Upgrading 4.11 The total cost of this component, including contingencies, has been estimated to be $b 64.6 million. Funds for the financing of this component will be deposited with BC and channeled by BANVI to AC of HAM, the implement- ing agency of this component. (This agency is described in Annex 4C of this report). The individual beneficiaries of the planned upgrading works, as well as the recipients of individual construction materials credits, will enter into contracts with AC. The terms for individual credits will be 15 years at 10% interest per annum, and for construction materials credits from one to five years, also at an annual interest rate of 10%. HAM will collect monthly 1/ These include health posts, day-care facilities and recreational spaces, and bus shelters (see Annex 1). - 22 - payments from households to cover the costs of provided infrastructure, con- struction materials credits and some community facilities. 1/ HAM will repay the funds provided for this component to the Government according to a sched- ule to be defined in the respective subsidiary loan agreement. The cost of schools will be covered by the Government; assurances to this effect were obtained.during negotiations. Retail Markets 4.12 The total cost of this component is estimated at $b 12.2 million. The financial arrangements for this component are similar to those in the upgrading scheme, i.e., funds will be provided by the Government and chan- neled by BANVI from BC to AC of the municipality. The municipality will be responsible for the construction and management of the markets and will recover construction and maintenance costs from monthly charges from stall operators and daily fees from transient vendors. HAM will keep these funds as a government contribution to its operations. Credits for Artisans and Small-Scale Enterprises 4.13 Total cost of this component is estimated at $b 61.0 million. BISA, the implementing agency, will provide $b 10 million from its own re- sources (Beneficiaries would constribute an estimated $b 14 million as down- payments). The planned loans to artisans and craftsmen will be for terms averaging six years (including a one to three year grace period and a 12% annual interest rate. The loans to small-scale enterprises will also be for an average of six years (including two years of grace) and an annual interest rate of 12% plus up to six additional points depending on the amount of assessed risk or appraisal work required. 2/ Technical Assistance 4.14 This component will be administered by BANVI which will for this purpose draw funds from BC. C. Cost Recovery 4.15 Recovery of project costs will come mainly from charges and sales to final users. Altogether, about US$17.7 million, or 78% of total project costs will be recovered from the individual beneficiaries who would be charged for the full development, construction and administra- tive costs. The only costs that will not be recovered directly relate to certain community facilities, technical assistance, and some off-site infrastructure which benefit a much larger population than the households directly participating in the project. Recovery sources are described in detail in Annex 5 and summarized in the table below. 1/ Such as community centers, reforestation, etc. 2/ These conditions are comparable to those presently applied by BISA (16%) in the previous Bank loan. Additional details are given in para. 11 of Annex 2. - 23 - Recovery Sources Government Project Beneficiaries Costs Charges (US$ --------(US$ million)--- % million) % (a) Sites and Services Land 1.05 .98 ( 93) .07 ( 7) On-site infrastructure and housing 8.50 8.50 (100) - - Off-site infrastructure and community facilities 2.43 .13 ( 5) 2.30 ( 95) Construction materials loans 1.66 1.66 (100) - - Subtotal 13.64 11.27 (_83) 2.37 (17) (b) Urban Upgrading Infrastructure 2.00 2.00 (100) - - Community facilities .65 ( 23) .50 ( 77) Construction materials loans .58 .58 (100) - - Subtotal 3.23 2.73 ( 85) .50 (15) (c) Markets Land .01 - .01 (100) Construction .60 .60 (100 - - Subtotal .61 .60 ( 98) .01 (2) (d) Credits for Artisans 3.05 3.05 (100) - - (e) Technical Assistance 1.98 - - 1.98 (100) TOTAL 22.51 17.65 ( 78) 4.86 ( 22) 4.16 Maximum cost recovery was also the criteria used in designing the planned retail markets and the credits for artisans. Prior to this project, fees and charges obtained by the La Paz municipality from the operation of existing markets barely covered operating expenses of these facilities. Agreement was reached with the municipality during the preparation of this project to raise all charges for the use of market stalls to levels that would eventually permit cost recovery of both current operations and capital investments. Appropriate increases will also be made in the levies charged to transient vendors in order to ensure fair conditions to market stall occu- pants. Assurances to this effect were obtained during negotiations. 4.17 Subloans to artisans and small-scale enterprises will also be fully recovered through appropriate arrangements between BISA and the individual recipients of credits. The Government will establish, to the satisfaction - 24 - of the Bank, and operate a guarantee system to provide coverage against credit risk in term lending to artisans and SSE which shall compensate BISA for 75% to 85% of losses incurred due to a default of each individual subloan but the total compensation shall not exceed 30% of such term lend- ing at any given time or a total of US$300,000 whichever is lower (see also Annex 2). D. Procurement 4.18 Considering that most civil works are relatively small in size and scattered, while in some cases mutual-aid labor is also envisaged, it is unlikely that foreign contractors would be interested in participating in many of these works. Therefore, most contracts will be done according to local competitive bidding procedures, or in those areas where mutual-aid is envisaged, the works will be carried out by force account. It is anticipated that the Urban Upgrading component (US$3.36 million 1/) and about 27% (or US$3.70 million) of the Sites and Services component will be carried out by force account. The supply of major equipment and vehicles will be secured under international competitive bidding. All other civil works procurement and supply of minor equipment will be done on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. Local bidding procedures have been reviewed and found to be satisfactory. E. Disbursements 4.19 Disbursement of the Bank loan will be against the various cate- gories as follows: (a) 100% of foreign exchange costs of imported vehicles and equipment or 100% of the ex-factory price of domes- tically manufactured goods; (b) 76.6% of civil works, construction materials credits, design, engineering, supervision, and management; (c) 84% of disbursements against the BISA credit program; and (d) 100% of technical assistance. All disbursements will be fully documented with the exception of the credit component for artisans and SSE, documentation which would be retained for ex post facto review by project supervision missions. Details on disbursement of the Bank loan are shown in Annex 6. I/ Without the Construction Materials Loans, but including all contingencies and professional services. - 25 - 4.20 A total of US$300,000 will be made available for retroactive finan- cing of expenditure (engineering and other preparatory studies) made after February 1, 1977. In the event that total expenditure should exceed the estimated cost of $b 450.2 million, such overruns would be met by the Govern- ment. In order to facilitate initial project implementation, the Government has agreed to allocate up to US$1 million for disbursements during the 1977 calendar year. F. Accounts and Audits 4.21 Two separate accounts will be established at BC for 'the BISA credit line and for all other project components. BISA, BANVI, HAM and CONAVI will keep separate accounts for all transactions relating to the Bank project. As facilities are completed, the executing agencies (except BISA) will submit to BANVI semiannual financial reports on pertinent subprojects. Documentation for disbursement under the Artisans Credit Program will be submitted to the Bank directly by BISA or retained for review by Bank supervision missions. During negotiations, agreement was reached that annual auditing reports of BANVI, BISA, CONAVI and HAM and of the project accounts will be made avail- able to the Bank no later than six months following the close of the respec- tive agency's fiscal year, until the completion of project implementation and during the time required for cost recovery. Details on the accounts and audits of the participating agencies appear in Annex 4. - 26 - V. ORGANIZATION AND MANAGEMENT Formal Arrangements 5.01 . The implementation of the main project components will be carried out by HAM, by CONAVI and by BISA. HAM will implement the Urban Upgrading and the Markets components; CONAVI will be in charge of the Sites and Ser- vices component; and BISA will implement the Credits for Artisans. 5.02 The loan will be made to the Government, which will open two project accounts with the Central Bank (BC) into which the Government counterpart funds will be deposited. One account would be for the funds needed by BISA for the proposed credit line for artisans and SSE, while the second account would be the channel for all other project funds. BISA will implement the credit line for artisans and SSE directly and also manage its account at BC without any further intermediaries. Funds from the second BC account will be channeled by BANVI to HAM and CONAVI, the respective implementing agencies of the other project components. BANVI will in this case only act as an agent for the Government and not bear any financial risk in these activities. BANVI will receive a one-time contribution of US$100,000 to cover these costs. 5.03 Although these arrangements are appropriate for the successful implementation of this first project, further urban projects in Bolivia particularly in other cities of the country, would be very difficult to implement without the active participation of BANVI, the National Housing Bank. Thus, and following a specific request by the Government to support its efforts to strengthen the capabilities of BANVI, BANVI has been assigned a limited role in this project (see para 5.14 and 5.15), which will introduce BANVI to the type of activities it would carry out by itself in the future. As part of the technical assistance element planned in this project, BANVI will receive significant support designed to help develop these capabilities (See Annex 3). 5.04 In addition to the loan agreement between the Bank and the Govern- ment, as borrower, subsidiary loan agreements will be signed between the Government and BISA (for the Artisans and SSE Credit), HAM (for the Upgrad- ing and the Markets components), and CONAVI (for the Sites and Services component). BANVI's role as a fiscal agency for the Government will be regulated through a separate agreement between the two. Project agreements will also be signed between the Bank and BISA, BANVI, CONAVI and HAM. In turn and wherever necessary, individual contracts will be signed between the implementing agencies and the beneficiaries. Separate project units located in each of the implementing agencies have already been set up and will be in charge of every project component. - 27 - The Implementing Agencies and Procedures 5.05 The La Paz Municipality (HAM) by virtue of its formal definition and the abilities of its new mayor and his staff, is the most important and powerful public authority in the metropolitan area (see Annex 4-C). In addition to its regular functions, HAM has increasingly devoted its attention to the plight of the urban poor and devised innovative measures to assist them. In order to coordinate these efforts in an efficient manner, HAM has developed a well-organized department (Accion Communal) that, among other activities, assists the communities in the establishment of infrastructure and other urban services (e.g., water, access paths, containment walls, community facilities, etc.). These works are carried out in close coordina- tion and with the full participation (mutual-aid) of the affected communities (see Annex 4-D). 5.06 Since the appointment about two years ago of the present mayor, HAM has been able to improve significantly the technical and administrative levels of its operations as well as its financial performance. HAM's staff has been reduced between 1975 and 1976 by about 190 employees (from 3,760) and is planned to be further reduced in 1977 by another 354 people (almost 10%). Various private consulting firms are presently advising HAM on means and ways to raise the administrative efficiency of its operations. In terms of financial performance, HAM has steadily improved collecting procedures and substantially increased its revenues with the help of a newly introduced value-added tax on property (plusvalia). HAM expects to become completely self-supporting and independent of direct government budgetary allocations by 1981. HAM's capacity to implement effectively the proposed Urban Upgrading and Markets components has been assessed and is considered appropriate. 5.07 Implementation Procedures of Urban Upgrading. A special imple- mentation team of AC will prepare data, preliminary designs and costs for consultation with the respective community. The corresponding Junta Vecinal (JV) will participate in planning and assisting the AC's social workers and technical staff in organizing the mutual-aid groups for implementation. Final proposals and detailed engineering for each area would be approved by the Bank. Elected community representatives would be responsible for specific tasks related to project implementation, administration and maintenance. This arrangement will not only reduce AC's staff inputs during implementa- tion, but would also involve the community directly in this process, thus, helping to establish a permanent mechanism for on-going improvements and maintenance. Installation of infrastructure and construction of facilities will be by a combination of voluntary community labor and contracted labor. 5.08 The Consejo Nacional de Vivienda (CONAVI) is the most important national agency involved in the construction of low-cost public housing. CONAVI is a semi-autonomous agency dependent on the Ministry of Urbaniza- tion and Housing (MUV) and is in effect the implementing arm of the Ministry in the housing sector. CONAVI has a well-operating team of administrative and technical staff and is presently engaged in improving its operations - 28 - by shifting some of its resources from administrative to operational activ- ities and through the introduction of more mechanized and computerized sys- tems for its bookkeeping operations. CONAVI has a steady source of income from a 2% tax on wages and salaries paid directly by public and private em- ployers. 1/ Its recent campaign to increase the collection and reduce the amount of outstanding dues has been so effective that it has in fact accu- mulated a short-term surplus of more than $b 20 million (US$1 million). 2/ The Sites and Services component, for which CONAVI will be implementing agency, would constitute a significant expansion of its present level of activities from an average of 800 to 2,000 units per year. Its technical and financial capabilities to deal with such an expansion effectively have been reviewed and are considered to be appropriate. CONAVI intends to pre- pare, by December 1, 1977, a detailed three-year investments plan to coordi- nate its future activities. Assurances to this effect were obtained during negotiations. 5.09 Implementation of Sites and Services. A special unit of CONAVI will be responsible for all implementation tasks related to this component. The director of this unit will report directly to CONAVI's general manager. Additional staff, physical facilities and a separate accounting system will be formally established. In order to maintain design continuity and facil- itate project implementation, an initial unit is already in operation and its incurred operating expenses will be eligible for retroactive financing. The expansion of this unit, its staffing and organization were confirmed during negotiations. This unit will design and prepare detailed engineering and tendering documents for all project sites and offsite infrastructure networks that are directly related to the functioning of the project sites. Prior to tendering, all designs are to be approved by the Bank, the munici- pality and the autonomous water supply agency of La Paz (SAMAPA). 3/ Special approval arrangements for these projects have been developed by the munici- pality in order to accelerate the process, reduce the normal approval fees and permit special design standards applicable to sites and services programs. These arrangements were confirmed during negotiations. 5.10 Construction will be by contractor or force account and combined with mutual-aid groups of project beneficiaries wherever feasible. These groups would be organized and supervised by the CONAVI project unit. Con- tracting would follow I.C.B. or local bidding procedures acceptable to the 1/ This includes most workers and employees, but for a few groups organized in separate councils. A detailed description of CONAVI is provided in Annex 4-B. 2/ These funds will be used to purchase additional lands required for this project (see para. 3.04). 3/ The semi-autonomous municipal agency in charge of water supply and sewerage in La Paz. - 29 - Bank (see para. 4.18). The construction materials credits and a technical assistance program will be available to project beneficiaries for expansion and completion of dwellings by self-help. The project implementation team will construct and stock temporary on-site warehouses from which general construction materials would be disbursed in tranches of US$100 up to a maximum of US$400. This team will also supervise these credits and provide appropriate technical assistance. After each instalment, the owner-builder would be eligible for additional tranches of materials only after satisfying the requirements of this supervision. Construction manuals will be prepared and model houses built to explain the completion and expansion options avail- able to the loan recipients, as well as efficient, economical and safe con- struction techniques. While it is expected that most families,applying for the construction materials loans would undertake the expansion or improvements themselves, some may not have the capacity or time to do so. Provisions for cash payments for labor will thus be possible for families to contact masons, plumbers, etc., subject to prior approval of the warehouse supervisor, the presentation of receipts for services and site inspection of the work com- pleted. 5.11 Industrial/Commercial Sites. CONAVI's implementation team will also design, implement and sell or lease the planned industrial/commercial sites. Designs and site planning will be in consultation with BISA and the AC team in charge of promoting the activities of artisans and small- scale enterprises. 5.12 Selection of Beneficiaries. The project will be advertised by CONAVI through various media (e.g., newspapers, radio, television, etc.) to inform and interest potential beneficiaries. Participants will be pre- selected according to their economic capacity, family size and skill capa- bilities, present housing conditions, and subject to the condition of having been residents of La Paz for at least two years. The specific conditions to participate in the program are: (a) a minimum of three members per family; (b) that participating families do not own any real estate in the city of La Paz or in other cities; (c) that they have the income and paying capacity correspond- ing to the selected options and on the other hand, that their incomes are not above levels set for each option; (d) the understanding that the units purchased are not completed dwellings and would have to be expanded by self-help over time; and (e) that they agree to making the commitment of their labor in the mutual-aid elements of the project. - 30 - Selected beneficiaries will be allocated plots through a system of drawing lots. The range of possible beneficiaries would start with families having incomes as low as $b 900 who would generally not be affiliated with any housing council. It would also include families affiliated to the various housing councils, but who, because of their lower incomes are not able to participate in these Councils' conventional programs. An estimated 35% of che participants would be from the latter group; a maximum of 40% would be regular members of CONAVI; and at least 25% of the beneficiaries would come from the first mentioned nonaffiliated applicants. A special selection committee chaired by CONAVI's director will be in charge of selecting proj- ect participants. This committee will coordinate its activities with the technical, legal and financial sections of CONAVI and with external institu- tions such as the National Manpower Development Agency (FOMO), the National Council of Social Action, and the Ministries of Health, Labor, and Education. These conditions for selection of beneficiaries have been confirmed during negotiations. 5.13 BISA is a private development bank engaged mainly in financing industrial and mining ventures. BISA is a well-functioning and financially solid institution that has been thoroughly examined by previous Bank missions in connection with other Bank/IFC financing (see Annex 4-F). Although its present staff is relatively small (17 professionals), its management is experienced and competent. A major effort is currently underway to recruit new required staff. In order to manage the proposed new credit line for artisans and small-scale enterprises, BISA will establish a special unit headed by an industrial manager and assisted by other supporting staff. Most of the work related to the selection of credits for artisans (about US$1 million) would be done by AC of the municipality in conjunction with the neighborhood committees (see Annex 4-E). Both AC and BISA will also be supported by appropriate technical assistance elements envisaged as part of this project (see Annex 3). BISA is considered to be well-qualified to implement this component successfully. 5.14 The institution which by law should be the financial intermediary and coordinator of urban projects of this kind (but for the Credits for Artisans and SSE Component) is BANVI. This institution though, has only recently been founded (1974) and has not yet developed the capability to fulfill this role adequately. Under these circumstances, and in agreement with the Government, the technical coordination of this first Bank-financed project in Bolivia will be handled by a special Coordinating Commission, while the flow of funds will be channeled through the Central Bank. 5.15 The Coordinating Commission has already been established under the chairmanship of the Undersecretary of Coordination of the Ministry of Planning and Coordination. This Commission is responsible for the formulation of policy to insure the efficient implementation of the project and the effective coordination of all agencies participating in the project. In addition, the Commission provides policy guidance and coordination among other institutions whose investments are likely to have an impact in the region. The technical secretariat of the Commission is BANVI, and in this capacity it will also - 31 - set up an evaluation and monitoring system of the project. It will be supported in this task by consultants to be provided under the technical assistance program included in the project. The experience gained through the proposed monitoring is expected to assist BANVI and the other agencies and institutions involved in this project to prepare better and more efficient programs in the future. The roles of the Commission and of BANVI were con- firmed during negotiations. - 32 - VI. SOCIAL AND ECONOMIC JUSTIFICATION 6.01 The main objectives of this project are to develop an efficient delivery system of shelter and urban services that reflects the priorities and financial capacities of the urban poor, to establish a new and more struc- tured mechanism for extending business credits to artisans and small-scale entrepreneurs, and to provide an actual program of shelter, urban services and credits expected to have a significant impact on the present social and economic conditions of the urban poor. By promoting in an integrated manner the general welfare levels and the productivity of these groups, the project would increase their social and economic mobility and contribute to their integration into the mainstream of Bolivia's society. The project has been designed to demonstrate the feasibility of financially recoverable programs that, while benefiting low-income groups, can also contribute to national economic objectives such as increased capitalization and market expansions. 6.02 Compared to the costs of available "social housing" 1/ offered until now in the country (costing about US$4,750 and more), this project will provide shelter solutions, the least expensive of which (serviced plots) will cost the beneficiaries about 20% of that price, thus making urgently needed urban services also available to those groups of society which until now have had no access to them. Significant cost reductions will be achieved by modifying traditional layout, design and construction standards used in the past by agencies in charge of promoting urban services. Important improvements in the institutional arrangements of pertinent imple- menting agencies have already been reached during project preparation. The planned sites and services component will be the largest housing program undertaken in Bolivia until now. The provided units will be much smaller and simpler than in the past, and CONAVI, which is the leading national builder of social housing in the country, will be providing through this program alone (on an annual basis) about twice as many units as it did until now in the country as a whole. 6.03 The urban upgrading component will help to strengthen a unique on-going program through which marginal areas lacking even the most minimal infrastructure and other essential urban services (e.g., waste disposal, environmental health programs, community facilities, etc.) are provided with such services. 2/ Many of these elements are based on the active participa- tion of the affected communities (mutual-aid) and contribute not only to better living conditions in these areas, but also to the strengthening of the communities' social fabric. The project will generate a significant expansion in the level of the present municipal program of urban upgrading. Compared to the few hundred households presently reached by AC every year, the program 1/ Housing promoted at subsidized rates of interest for low-income groups. 2/ This is the AC program in the marginal areas of La Paz. - 33 - will annually benefit an average of about 1,500 families. Furthermore, the new program will eliminate the heavy subsidy (50% of costs) presently paid by the La Paz municipality, thus making the replicability of such operations on a much wider scale possible. Technical assistance to be provided to the munici- pality, as part of the project, will ensure the development of appropriate capabilities to carry out in an efficient manner such program expansions. 6.04 Municipal markets in La Paz have until now been a heavily subsidized operation (present fees and charges barely recover operational costs) and have seldomly been built in low-income areas. Food products in many of these areas are therefore presently purchased by the residents either at distant central markets, in which case significant travel expenses and time are spent, or from small-scale vendors at higher than average prices and lower qualities. The new markets to be built as part of the project will for the first time provide adequate levels of this service in marginal areas, while at the same time introduce a new system of higher fees and tariffs charged to stall users designed to recover eventually all construction and operating costs. Cost recovery will also be made easier by significantly reducing the exag- gerated construction and design standards that have traditionally been applied to this hype of facility. Construction costs will then be reduced from over US$200/m to about US$100/m . 6.05 The new credit line for artisans and small-scale firms will stren- gthen, improve and expand the operations of existing entrepreneurial activities as well as establish new small-scale, labor intensive enterprises. In conjunc- tion with the technical assistance planned as part of this scheme, the new program will lead to significant new employment opportunities, increase the incomes and productivity of hitherto marginal, often inefficient and under- capitalized operations, and lastly, provide a unique channel for gradually integrating a potentially important reservoir of skills and entrepreneurial activities into the more dynamic market structure of the national economy. 6.06 In terms of direct employment provided under the various elements of this project, about 1,560 new jobs will be created by the credit line for artisans and small-scale entrepreneurs and another 1,100 jobs through the markets component. Another 10,400 man-months of temporary jobs will be generated during the construction period of the project. 6.07 In estimating the rates of return of the Sites and Services compo- nent, the benefits were valued in terms of the imputed rental values of the housing units based on the market value of similar units, while costs were based on investment and maintenance cost estimates. Investment costs include the opportunity cost of land, construction costs, material costs (used in construction materials credits), imputed cost of mutual-aid and self-help labor, plus administrative and technical assistance costs related to this labor. Similarly, in the case of the Upgrading component, the cost streams include capital, imputed labor, technical assistance and maintenance costs. - 34- Benefits reflect imputed rental value of the improved houses. The useful life of the components was estimated to be 20 years in each case. 6.08 Although many of the benefits from this project are difficult to quantify, in those cases where it was possible the computed rates of return appear to be quite reasonable. Thus, the Economic Rates of Return (ERR) of the Sites and Services and Urban Upgrading components, which comprise about 75% of total project costs, have been estimated to be about 16% and 27% respectively. The corresponding social rates of return are probably much higher. The ERR for both components together is estimated to be 18%. The sensitivity of this joint rate of return to variations by 15% in the combined cost and benefit streams fluctuates between 15% and 22%. 6.09 The project does not present any special risk, but for the risk inherent in this type of project which is the extent to which the implementing agencies will be able to execute the project expeditiously and efficiently. Delays in implementation could materially affect project costs. Cost overruns would, in turn, affect the number in the lowest decile who can effectively participate in the program. These risks have been discussed and reasonable safeguards are included in the Project. To ensure proper project execu- tion, appropriate and adequate executing agencies have been selected, and in order to coordinate them, a Coordinating Commission has been established. It is hoped that with the experience gained during project execution and with technical assistance, BANVI, the financial agent for the project, would be able to develop the capability to implement projects of this type in the future. With appropriate technical assistance, monitoring and supervision from Bank staff it is expected that the project can be successfully exe- cuted. - 35 - VII. CONDITIONS 7.01 During negotiations, Government confirmation was obtained that: (a) CONAVI will acquire, by December 31, 1977 lands totalling at least 20 ha adjacent to the Rio Seco and Villa Adela sites for the construction of the remaining 1,277 sites and services and industrial plots, the precise location of these to be subject to Bank approval (para 3.04); (b) the Government will ensure that SAMAPA will provide ade- quate quantities of water in time to meet the project's requirements (para. 3.04); (c) the Government will ensure that it will adequately staff and maintain the schools and health programs financed in this project (para. 3.04); (d) HAM, La Paz, will agree to appropriate layout design and construction standards for these projects (para. 3.06); (e) legal arrangements to provide secure tenure in the up- grading areas will be presented to the Bank as a condi- tion of disbursement for the Urban Upgrading component (para. 3.07); (f) the terms and conditions of the individual loan to beneficiaries in the Sites and Services and Urban Up- grading components are acceptable to the Bank (paras. 3.06 and 3.08); (g) HAM will maintain and operate the market facilities under a new rate structure to secure full cost recovery (para. 3.09); (h) the selection of artisans and small-scale operators eligible for the BISA loan will be according to guide- lines acceptable to the Bank (para. 3.10); (i) BISA will contribute US$500,000 of its own funds to the credits for artisans and small-scale enterprises (para. 3.10); (j) the Government will cover the costs of all schools and other facilities to be provided under the project (paras. 4.10 and 4.11); - 36 - (k) the Government will guarantee 30% of the outstanding term-lending, up to a limit of US$30,000, against defaults in the credits for artisans and small-scale enterprises (para. 4.17); (1). auditing reports of BANVI, BISA, CONAVI, HAM and their respective project accounts will be made available to the Bank not later than six months following the close of each fiscal year until the completion of the project (para. 4.21); (m) CONAVI will prepare a detailed three year investment plan by December 1, 1977 (para. 5.08); (n) CONAVI will establish and maintain a team whose staffing and organization would be acceptable to the Bank, for the implementation of the Sites and Services component (para. 5.09); (o) HAM, La Paz, will establish special arrangements for the accelerated approval of the designs for the Sites and Services programs (para. 5.09); (p) beneficiaries for the Sites and Services component will be selected according to their economic capacity, family size, and present housing conditions as specified in criteria satisfactory to the Bank (para. 5.12); (q) a Coordinating Commission will be established to ensure the efficient implementation of the project and effec- tive coordination of all participating agencies (para. 5.15). 7.02 Subject to the above conditions, the proposed project is suitable for a Bank loan of US$17 million equivalent to the Government of Bolivia for a term of 20 years, including a grace period of five years. ANNEX I BOLIVIA URBAN DEVELOPMENT PROJECT Detailed Features: Sites and Services, Urban Upgrading and Markets Components A. Sites and Services 1. The component will be implemented by CONAVI in Rio Seco and Villa Adela, two separate areas of El Alto, the high plateau located southwest of La Paz. El Alto is the primary expansion axis in the new development plans for La Paz. Each site has even terrain with minimal slopes (less than 5%) to minimize costly grading and lower the costs of on-site infrastructure. All project areas will be easily serviced by extensions of existing infrastruc- ture networks.2 The Rio Seco site (32.8 ha) will have 1,842 5esidential plots averaging 96 m each and 58 industrial sites averaging 400 m will be de- veloped on it, Villa Adela, (40.8 ha), will have 2,406 residential plots and 62 industrial sites. Both tracts are owned by CONAVI. The additional 20 ha required for the remaining 1,277 plots and industrial sites planned under this component have already been identified adjacent to the Villa Adela and Rio Seco locations and will be purchased by CONAVI. The proposed project will be integrated into a new development plan presently being prepared for El Alto by the municipality (see Map IBRD 12703). 2. Preliminary site plans and engineering for the Villa Adela site were prepared by a joint team of CONAVI and MUV (the Ministry of Urbanization and Housing). These layouts incorporate new design and service level stan- 2 dards prepared specially for this low-cost project, e.g., 90 m plots versus the traditional 300 m , reduced street and footpath reserves, etc. The lay- outs are simple, efficient and emphasize economic construction and infra- structure networks. Centrally located open spaces are provided for schools, sports fields, markets, community meeting places and traditional parks and plazas. The configuration of smaller parks throughout the layout provides ready access to play areas essential in projects with reduced plot sizes. A small number (about 10%) of serviced plots without core shelters will be in locations of prime commercial activity within the layout. These special plots will be reserved for shops or businesses combined with r2sidential dwellings in the rear of the plot or on a second story. Average site den- sity, an important efficiency determinant for layout design, is 64 units/ha, which is well within acceptable efficiency standards. Land utilization is similarly efficient--salable (private) land is over 62%, land for public use is about 24%, and circulation areas are below 14%. Refuse collection will be through the existing municipal service and based on garbage containers located at appropriate points throughout the sites and emptied by special municipal trucks. ANNEX I Page 2 3. A major planning innovation is the provision of about 140 small- scale industrial or commercial plots as an integral part of the project layout. These plots are directly linked to the employment generation com- ponent and are expected to provide about 1,560 jobs, mostly within the community (see Annex 2). Industrial and commercial enterprises for these plots will be selected on the basis of employment generated, non-polluting effects and compatibility with community needs and labor skills. The loca- tion of these industrial/commercial areas has been carefully planned to optimize infrastructure and access, both in terms of the operational require- ments of the enterprise and of optimum integration with the communities' activities. These plots will be leased or sold and managed by CONAVI according to the above-mentioned criteria. Component Elements 4. The component has been designed and planned with the objective of reaching the lowest possible income groups in the city. All plots will be provided with at least a basic level of services plus access to a modest con- struction materials loan with which dwellings may be initiated. Three op- tional core shelters are also offered as a basis for further self-help and/or mutual-aid expansions in the future. These options will be distributed within each project site in proportion to the socioeconomic background of the intended population. Analysis of the data prepared by the CONAVI project unit indicates the following distribution: Approximate Percentage of Service Level Monthly Payment Plots per Site (in $b) Serviced Plot 180 15% Option A 250 30% Option B 340 35% Option C 440 20% 5. All plots will have provisions for individual water, sanitary wate5borne sew1rage and storm drainage, Plots will vary in size from 90 m to 135 m and average about 96 m . The 90 m plot (6 m frontage by 15 m depthl has proven elsewhere to be functional and2ample for dwellings of about 40 m (four rooms plus kitchen/bath) and a 40 m courtyard. These plot dimensions maximize party wall construction and therefore economize in construction costs. Plot frontage of 6 m permit ease of vertical expansion of the dwelling. In addition to plot size options, four basic service level options will be offered (see Illustrations): (a) Serviced Plot. A plot with basic infrastructure con- nections, including water meter, valves and faucet, sanitary fittings for an eastern-type, manually flushed toilet (designed for easy conversion to western-type flush unit by plot occupant) and a surface drainage gully with grating for evacuating ANNEX 1 Page 3 waste water to the collector system. All plot con- struction will be by contractor, except for the installation of water pipes and faucets which will be done by occupant upon possession 2f the respective plots. Development costs for a 90 m plot at this service level are as follows: (In US$) Land 132.52 Urbanization (all infrastructure and facilities 493.82 Professional services and contingencies 430.42 Subtotal 1,056.76 On-plot connections, meters, registers, etc. (see Attachment 1, Annex 5 for details) 143.80 Professional services and contingencies 125.34 Subtotal 269.14 Total development cost US$1,326 (b) Level A Core Option. A serviced plot as described above plus a basis dwelling core. The core con- sists of a 12.0 m dwelling room built by the con- tractor with provisions for expanding the structure through self-help and the optional construction materials credit. Total development costs are as follows: Development Costs (In US$) 2 Land (90 m ) 132.52 Urbanization 493.82 Professional services and contingencies 430.42 Subtotal 1,056.76 Core Construction Base cost (see Attachment 2, Annex 5 for details) 374.08 Professional services and contingencies 364.71 Subtotal 738.79 Total development cost US$1,796 ANNEX 1 Page 4 (c) Level B Core Option. This level includes a serviced plot and a dwelling core as in Option A, with more finishing, but with doors, windows, floor and ceiling to be finished by mutual-aid. Additions, expansions and other finishes are to be done by self-help with technical assistance. Total development costs are as follows: (In US$) Land and urbanization (as in Option A) 1,056.76 Core construction (see Attachment 2, Annex 5 for details) 598.92 Professional services and contingencies 420.32 Total development cost US$2,076 (d) Level C Core Option. Consists of the serviced plot plus a two-room core dwelling with provisions for further exp nsions through self-help. There will be a 19.3 m dwellin space (divisible into two rooms) on the standard 90 m plot and the same basic installa- tions. Doors, windows, floors and ceiling and finish- ings will be completed by self-help. Total development cost for this option will be as follows: (In US$) Land, urbanization, etc. (as in Serviced Plot) 1,056.76 Core construction (see Attachment 2, Annex 5 for details) 878.45 Professional services and contingencies 691.12 Total development cost US$2,626 Roads, Parking and Pedestrian Footpaths 6. Each site will have a network of main and secondary circulation roads providing convenient vehicular access from off-site roads, while re- stricting through-traffic to a minimum. Road rights-of-way will be 10-12 meters in width, with carriageways of seven meters. Adequate parking areas served by the access roads will also be provided. Most access roads will be paved; others will be graded and compacted. Final paving of pedestrian walkways and secondary streets is planned to be done by mutual-aid after project occupancy. ANNEX I Page 5 7. An internal footpath network will provide access to pedestrians, bicycles and emergency service vehicles (ambulances, fire trucks, trash removal trucks, etc.). Footpath reserves are four to five meters in width of which a one to two meter strip will be paved by mutual-aid after plot occupancy. Water Supply 8. Individual metered water supply terminals for the connection to a water closet, shower, and laundry and dishwashing sinks will be provided to each plot. The main water distribution system follows the road and foot- path layout and consists of two to six inch diameter pipes of asbestos cement or cast iron.1/ Consumption and design standards for each site were based on specific SAMAPA standards for such areas. The SAMAPA installation charge for the meter and box is $b 585 (approximately US$29); these costs are paid by the beneficiaries. 9. Fire hydrants will be located at appropriate points in the cir- culation network. The maximum hydrant distance from any lot will be 150 meters. Storm Drainage 10. One of La Paz's major problems is the hydro-geological conditions peculiar to the area. The valley's glacial formation, combined with the adjacent mountain ranges on the Altiplano and the heavy seasonal rains, generate continuous subsurface water flows. Special attention was therefore given to the project's drainage network design. Drainage will be accom- plished by a combination of surface run-off and subsurface piping network. Piping will be of plain and reinforced concrete in diameters as required. Each plot will be provided with a gully/grate drain with piped discharge to the main collector system to minimize the volume of earthworks and differ- entiation in level of plot and footpath. This system also eliminates open drainage channels along the sides of the footpath walkways which would carry waste water from patios (service areas). Final discharge will be into existing CONAVI or municipal systems, where available, or into streams or adjacent natural courses by means of protected outfalls. Sanitary Sewerage 11. Each plot will be provided with individual sanitary collection boxes and individual connections to the combined storm drainage collection network. The sewer collection network will consist of four-inch laterals from the plots, leading to 12- to 32-inch concrete pipe mains of the com- bined network. Where required, steel and reinforced concrete pipe will be used. Minimum depth to top of pipes laid in roadways is 30 centimeters. Manholes are planned in brick masonry with concrete rings and covers. The overall sewerage specifications are especially designed to enable conversion 1/ The more expensive cast iron pipes which are specified by SAMAPA (the water company) were used in the cost estimates. ANNEX 1 Page 6 to a separate sewerage network, should a special sewerage treatment for El Alto be constructed in the future, The projected interim combined system reduces costs by about 20% and construction time by about four months per project site. Electricity 12. Service levels in plots with the B and C core options are pro- vided with simple, expandable electrical systems consisting of a terminal board, fuse and switch and outlets. The Bolivian Power Company (BP) will install the electrical distribution network on poles along roads and foot- paths. Each plot may be provided with a metered electric connection on re- quest. A connection (including the meter) fee of $b 31.50 (US$1.56) plus a security deposit of $b 42.00 (US$2.10) is charged. Street lighting on these poles is also installed by BP at a spacing of approximately 50 meters. An additional municipal surcharge of $b 75.00 (US$3.00) is collected at installation to cover public lighting installation; recovery of the addi- tional cost will be through monthly service billings (see Annex 5 for cost recovery details), Community Facilities 13. The requirements for community facilities in each community were determined by the availability of similar facilities in adjacent areas. Certain facilities, except schools, will be built by mutual-aid with the assistance of CONAVI. The community will also be responsible for the con- struction of sports fields, such as volleyball, soccer and basketball courts. Eight of these have been planned for the project sites. The project will include the construction, equipping and furnishing of 7 basic schools with 3,000 student places (2,100 in grades 1-6 and 900 in grades 7-9) to serve 6,000 students on a double shift basis. The provided facilities will serve approximately 90% of the estimated number of children aged 7 to 12 (grades 1-6) and 65% of those aged 13 to 15 (grades 7-9) who will live in the ser- viced site areas of the project. Two existing schools immediately adjacent to the sites will cover the additional classroom needs. Based on the expected numbers and location of project sites in El Alto to be constructed and proxi- mity to existing facilities, five schools will be needed to serve students in grades 1-6 (420 student places each) and two schools to serve students in grades 7-9 (450 student places--15 classrooms each). CONAVI's Project Unit will design the schools in coordination with the Ministry of Education's Department of Education Construction (CONES). CONES will approve designs, specifications and tendering. Supervision during construction will be by CONAVI in coordination with CONES. The Ministry of Education will be respon- sible for staffing and maintenance of all schools. ANNEX 1 Page 7 Off-Site Infrastructure 14. Water supply and sewerage networks in La Paz are the responsibility of SAMAPA 1/, a semi-autonomous municipal agency whose board director is the mayor of La Paz. Water supply for the city comes mainly from the Achachi- cala plant and is of good quality. 2/ Supported by technical and financial assistance from the German Federal Republic, SAMAPA is presently expanding its water distribution capacity through the tapping of the Tuni lake and the river Condorini. Sufficient water resources are available for La Paz until at least the year 2000. Water for the proposed sites and services component will be supplied by trunk line expansions to the SAMAPA network and are financed by the project (4 km and 1.5 km lines for Villa Adela and Rio Seco respectively). B. Urban Upgrading General 15. As a complement to the development of the sites and services com- ponents, the proposed upgrading program will provide secure tenure, improve- ment of basic infrastructure and services, improved environmental hygiene and health, and construction materials loans to residents of the squatter settle- ments of the very steep slopes that surround La Paz. The program will allow about 4,500 families to improve their dwellings by means of mutual-aid and self-help schemes. The program will focus on nine low-income areas of the city (see Map IBRD 12703). Criteria and Objectives of Upgrading Schemes 16. The upgrading elements provided in the component meet specific de- velopment criteria, standards and objectives that include: (a) servicing standards that allow progressive improve- ment of present services, including the introduction of basic, generally-shared facilities; (b) different types of service and design standards for each project area to be determined in consultation with the affected population and in accordance with the level of existing amenities, community priorities and their financial capacity; (c) full cost recovery of provided services in order to demonstrate the feasibility of expanding this first project into a large-scale program of similar schemes in other areas of La Paz and elsewhere; 1/ Servicio Autonomo Municipal de Agua Potable y Alcantarillado. 2/ Additional plants are the Pampahasi and Caiconi facilities. ANNEX 1 Page 8 (d) land tenure is to be secured in all cases; and (e) resettlement of families displaced by the installa- tion of the provided improvements should be minimal. Upgrading Areas 17. The urban upgrading areas were selected on the basis of proxi- mity to employment, size, degree of consolidation, longevity, topography, landslide hazards and costs of servicing. The preliminary numbers of house- holds and tentative settlements identified are: (a) Achichicala--400 families; (b) Sagrado Corazon--1500 families; (c) Mariscal Santa Cruz--500 families; (d) San Antonio Este--500 families; (e) Chamoco Chico--600 families; and (f) Tembladerani--750 families Another 500 families of El Tejar will participate in a special program under which only the dwelling improvements loans will be provided as this area is already serviced with adequate infrastructure and communal facili- ties. Proposed Upgrading Designs 18. Designs, standards and costs will differ for each community due to varying topography, densities, degree of consolidation, existing services and facilities. Preliminary proposals developed by AC will be presented and explained to each Junta Vecinal (JV) 1/ and subsequently to the community. Options and priorities will be discussed and a final development plan and costs will be agreed upon and presented for Bank approval. Contracts will be signed between AC and the individual settlers spelling out their obliga- tions and in particular, their repayment commitments. I/ Juntas Vecinales are the neighborhood committees. ANNEX I Page 9 Provided Improvements and Services 19. Detailed designs and implementation proposals for the Sagrado Corazon area have been prepared by AC as a model for component cost esti- mates. Typically, the following services will be provided (see Attach- ments 3-4, Annex 5, for details): (a) Infrastructure (i) Water Supply Networks and Washing Areas; (ii) Access Roads, Footpaths, Earthworks (paving of major access roads, footpaths, steps and sta- bilization of steep gradients in the area to facilitate access and reduce erosion); (iii) Storm Drainage (improvement of existing canals and introduction of drainage along footpaths, registers, inverts, concrete pipe and outfalls); (iv) Sewerage (provision of sewerage mains to permit individual plot connections); (v) Stabilization of Embankments (simple masonry re- taining-walls and soil-cement protection for con- trol of erosion and minor mud-flows); and (vi) Electricity and Public Lighting. (b) Community Facilities (i) Community/Day-Care Centers; (ii) School (construction of new schools, or expansion and renovation of existing primary schools staffed by the Ministry of Education); (iii) Sports Fields; and (iv) Green Areas (planting of trees within the commu- nity and provision of small parks and recrea- tional spaces). (c) Services (i) Employment Agency (an employment service within the Community Association to assist residents in job placement and training. This element will be coordinated with the BISA credit line for ar- tisans and small-scale enterprises); ANNEX 1 Page 10 (ii) Provision of Secure Tenure (through special legal arrangements being prepared by the municipality); (iii) Home Improvements. Optional construction materials loans will be provided in US$50 ($b 1,000) tranches up to US$300 per family. These loans will be supported by appropriate technical assistance and supervision. A construction materials warehouse will be built, stocked and operated by AC within each community. Individuals participating in the construction materials credit program will draw materials as needed from the on-site supply. (iv) A new refuse collection system will be initiated in each upgrading area. Special refuse collection re- ceptacles and corresponding bases will be installed and serviced by the municipality. The internal refuse collection in each community will be carried out by the settlers themselves and supervised by the respec- tive neighborhood committees. Estimation of Costs 20. Costs of this component were estimated by using preliminary up- grading schemes and engineering studies done for Sagrado Corazon. Water network costs were estimated based on SAMAPA prices (see Attachments 3 and 4 of Annex 5 for a detailed cost breakdown). C. Retail Markets General 21. The management of food retail markets in La Paz has traditionally not been a very profitable operation. Charges and fees collected by the municipality barely cover operational expenses and have contributed little to the recovery of initial capital investment. Furthermore, exaggerated design and construction standards have unnecessarily raised the financial cost of these facilities. In the course of project preparation these issues were openly discussed with the mayor of La Paz, and his staff, and as a result of these discussions the municipality agreed both to reduce the design standards of planned new markets to appropriate levels and to increase substan- tially the charges and fees applied to stall operators and market-adjacent street vendors. 22. The program will build and equip five new retail markets, of which two are planned to be integral parts of the Villa Adela and Rio Seco Sites and Services component, two others are planned to serve the Villa Esperanza and Alto Lima communities in El Alto that have no formal marketing facilities, and the fifth will probably be located near Sagrado Corazon--the location of a major upgrading area. ANNEX I Page 11 Implementation Schedule 23. The Sites and Services, Urban Upgrading and Markets components are anticipated to be implemented over a period of about four years from the date of loan-effectiveness. Detailed schedules of implementation for these com- ponents are given in Attachments I and 2 of this Annex. BOLIVIA URBAN DEVELOPMENT PROJECT IMPLEMENTATION SCHEDULE FOR SITES AND SERVICES COMPONENT AND RETAIL MARKETS COMPONENT 1977 1978 1979 1980 __ _ __ _ __ _ 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Selection of Beneficiaries A B C Land Acquisition C. Detailed Engineering, Bidding and Awards B. C. Construction A. B. C. Community Facilities A.n B. Mutual Aid Works A. Off-Site Infrastructure A. B.gmmmm imlm C. MRll ill M 1 2 3 Plot Occupancy A3 1 2 3 Construction A Materials Credits B Villa Esperanza Markets Design, Villa Adela Bidding, Construction Rio Seco Other er I- Other r~ 0) A = Yilla Adela B a Rio Seco TechicalAssisaneWorld Bank 17484 C =Adjacent Sites Technical Assistance BOLIVIA URBAN DEVELOPMENT PROJECT IMPLEMENTATION SCHEDULE FOR URBAN UPGRADING COMPONENT 1977 1978 1979 1980 Design & Engineering Al C BB Construction J C Mutual Aid A B C ma m Construction A- Materials Credit .M Prograrn (Warehouses in operation) C Technical Assistance- - A = Sagrado Corazon & Achachicala B = 3 other areas C = 3 other areas World Bank-17485 > D = El Tejar (Construction Materials Credits Only) r-r Z \jjc tLI - d_ ó WATE3 METER KITOHEN........ ij...."..''. iýi ........... S 4E WERAGE %COLLECT OR KITCHEN jL COURTYARD DRAIN COURTYARD DRAIN iEDROOM II I PATIO (COURTYARD) BEDROOM BEDROOM 6m SERVICE LEVEL "C" SERVICE LEVEL "B" SERVICE LEVEL "A" D POSSIBIE FUTURE EXPANSION AREA OF CONSTRUCTION: 16.0 m2 AREA OF CONSTRUCTIO: 9 M2 OF DWELLING UNIT. AREA OF INFRASTRUCTURE CONNECTIONS INFRASTRUCTUE CONNECTIONS CONSTRUCTION: 19.2 m2 WITH TOILET, SHOWER AND SINK 黛葬 UPGR却ING CO浮0工伍NT:The Sagrado Corazon and Temblade員は即eas In加Paz. Note 5七eep slopes on wはch dwelLngs aN weユ1 adopted. Prox生滋もy to eltyfs co肌eN土にcenter(t叩of Pho七ogr叩h on rlght)15 excellen七． ��� � - , :п,гу г --..:-.-�.�.-т-....�.+и вй'� .�,...�.. ,с.с.нике ч#с.г�:^� _ - ��1 � . � г-�у,� � м �'� у у„�.. 9'i•}\t � ����"'.,. � � • .'+ti�.`г�, ��� �yrL�. ` -. в� н�-.ч�'4'< - , ��' , у' • � ,� � . ' ^i: - ` - �, у.� �' г eik ���.�7 , иЕ � •Х�":tй � ц � �г�"�°F'. 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Эи.. . _ \ ' � 5 Т� ц� � � '�,� � � � � `А4°�: #:-„ . ,�, �� , _ •ь +�. �, Е '.� J;�4 �;� - � • � ., •9.�•, • � `• - сгт�_ - • r � �',µ ' . , .t А у. ,. .''��'4 -� ' w•r�. . ,,#д',� • . , У ��' 'а. ' �•w��„ •. . .;�в��, ' � �'•� У � w �` . . ' �. . �' А. ', � � _ ���-� � �в ° . . � �' �. �� . � � � �1�r�; 4'. , � 4• �* t ' . .� .� �,. .�� :а., 7FN"ps,r .r . � . г� � в • .,�, • '.;,у�,.� ��, .PIJ$�а. ; � . - • г гv} ' - .л. ' � ' ..� i �t � - И" , � • '.�- �' и-.т. . ..�'�974 У .- trьi-.` '�а �. I+'',.�1.� i 0`` •.•,ю . 1��г U:GRAAING CCMF'ONENT: Sagrado Corazon area�s topograptLy requires stabi].ization о£ foo�paths, streets апд embanFanents. Some iп.provemвnts have been таде by the community�center left); most streets have n�ajor access апд erosion proЫems (e�cLreme right). Nø j Qk ' Ikk ep ja Ml E Ei Ik UPGRADING COMPO TÆNT: A wide range of dwelling ng areas. consolidation is typical in the upgr adi Many are bullt o£ dscarded materials (upper left), most are, in need of substantial improve- ments and expansion (lower left). Self-help and mutual-aid programs will provide improve- ments through construction materials credits z-ý and technical assistance. q.L . A I UPGRADING COMPONENT: Erosion is one of these areast most urgent problems (above right). Accion Communal has developed community im- provement projects for paving of streets and i t. footpaths in some areas (left). V4 4 $ ~~~At0-c * 4- c2 -j- UPGRADING COMPONENT: Water supply is difficult - - and unsanitary in many marginal settlements in La Paz (upper left). Community mutual-help pro- jects have successfully addressed the problem in some settlements (above right). Accion Comunal has also initiated programs for community installation of sewerage (left). ANNEX 2 BOLIVIA URBAN DEVELOPMENT PROJECT Credits for Artisans and Small-Scale Enterprises (SSE) A. Objectives 1. The main objectives of this component are the creation of addi- tional economic opportunities for the low-income groups of La Paz and, pri- marily, for those living in the marginal zones around the city and in El Alto where the upgrading and sites and services schemes have been planned. The new credit line would try to reach these objectives by means of: (a) the promotion of new and established artisans from among residents in the upgrading areas; (b) the establishment of artisans moving in as dwellings are completed in the sites and services areas; (c) the transfer of existing SSE from the city, where possibilities of expansion are limited, to sites in El Alto where planned extensions can take place; and (d) establishment of new labor-intensive SSE to sites provided in El Alto. 2. By making these credits available, this component would promote growth opportunities for artisans and those small firms that would normally have difficulty in obtaining credit through existing banking channels. The provision of appropriate technical assistance will complement these efforts and help ensure the success of this program. B. Credit Applicants Artisans 1/ 3. Four zones, with a combined working population (including house- wives) of about 4,188 persons, were examined by the mission. More than 700 artisans and skilled workers were identified in these areas, in addition to the many housewives who, mostly in "Clubes de Madres" (mothers' clubs), earn additional incomes by knitting sweaters and similar garments for re- tailers in the city. It is estimated that there will be about 1,000 arti- sans and skilled workers in the Villa Adela and Rio Seco sites and services 1/ The following analysis is based on information obtained in a detailed survey of four representative upgrading areas (Achachicala, Sagrado Corazon, Escobar-Uria, and San Antonio) done by Accion Communal in 1976-1977 as part of project preparation. ANNEX 2 Page 2 areas once these are completed. In addition, there are many artisans and very small industries already established in other areas of the city or in El Alto, who may eventually also be considered as potential applicants for the proposed credit line. Small-Scale Enterprises in Villa Adela and Rio Seco 4. Apart from the artisans and other self-employed workers mentioned above, the possibility was also examined to generate additional job oppor- tunities through the expansion of existing or the creation of new SSE, for the many non-artisans, unskilled and semi-skilled workers who will settle in the new sites in El Alto. In this connection, firms were identified that required expansion and were interested in industrial plots located near the residential areas in El Alto. 5. In order to determine the potential demand for possible sites in El Alto from among existing small industrialists in the city, a written questionnaire was sent by the Chamber of Industries to its members in the third category (firms having a nominal capital of less than US$30,000) asking for indication of interest and an estimate of required land. The result surpassed expectations. Of the 130 firms that were approached, 43 had replied affirmatively by the time the appraisal mission left the coun- try. As may be seen from Attachment 2, most of these firms are quite small, although a few have outgrown the small firm category laid down by the Camara. Fourteen of these firms were visited and individuallly analyzed. This analysis (a detailed description of which is given in Attachment 3) revealed that these firms could expand their employment by about 78%. 6. Virtually all the firms visited appeared to be prosperous, going concerns. Some of them have expanded to the limit of their present premises within a very few years. In many cases conditions are very cramped, causing inefficient operations and high operating costs. In some cases, firms have even been forced to take separate premises in other parts of the city, fur- ther complicating their operations and supervision. All the managements in- terviewed complained that they were not allowed to expand further within the town (in some cases it would have been physically impossible), and that there were no prepared sites elsewhere in the vicinity of La Paz. 7. Estimates of additional employment that could be generated by the 14 firms visited are 311 jobs. Extrapolated to the total of 43 firms which expressed interest in new sites of El Alto, this would make some 955 new jobs. Even if some of those which applied were to drop out or were refused sites and/or credits, it is reasonable to expect that others would take their places. There are only 130 small industries members of the Chamber of In- dustries out of about 600 registered with the Ministry of Industry of Commerce. No attempt was made to tap any firms outside the Chamber. ANNEX 2 Page 3 C. Credit Demand Artisans 8, Preliminary studies carried out in Achachicala and San Antonio suggested that out of nine artisans interviewed (which included a baker, a silversmith, a carpenter, a tailor, a taxi driver, textile weavers, and embroiderers) there were good possibilities for granting loans in three or four of these cases. As stated earlier, there are some 733 artisans and skilled workers living in the four marginal zones in which surveys were carried out, while there may be as many as another 1,000 persons in this category in the residential areas in El Alto. If an average of only 40% of these 1,733 persons proved eligible for loans and assuming an average loan of not more than US$1,500, those alone would absorb the US$1 million proposed by BISA for this type of credit. Artisan is defined as the proprietor of a business employing up to five persons. Small-Scale Enterprises 9. Attachment 3 lists the characteristics and credit requirements of 14 firms visited out of the total of 43 which applied for sites in El Alto. It can be seen from this chart that total estimated capital requirements are about US$1.5 million. Since BISA will only finance up to 70% of capital requirements, BISA loans for these firms would amount to about US$1.05 mil- lion. If this sum is extrapolated to 43 companies, and eliminating those firms that are too large to qualify for this type of credit, total credit requirements would be about US$2.5 million. The average investment of fixed capita-per job created by the 43 companies is about US$4,000. 10. It is therefore safe to assume that virtually all the US$2.05 mil- lion which BISA estimates will be needed for small-scale enterprises may be spent in credits to the firms which have already shown a firm interest in land on the proposed El Alto sites through the Chamber of Industries. 1/ SSE is defined as a business with a paid-in capital of less than US$20,000. D. Credit Arrangements 11, Agreement has been reached with BISA on the following credit arrangements and terms. Of the US$3.05 million envisaged for this com- ponent, US$1 million will be made available to artisans and US$2,05 mil- lion to small-scale enterprises. Some flexibility will be allowed in the 1/ One small firm outside La Paz has been singled out for special treat- ment. This is a cooperative of salt producers (CRECIS of Uyuni), which has requested funds in order to open a distribution network in La Paz. This activity would be in support of a new government program which calls for the iodizing within five years (four of which have elapsed) of all salt consumed in Bolivia. This program was established in order to combat the high levels (40%) of goiter which prevail on the Altiplano. ANNEX 2 Page 4 disposition of these sums. BISA will offer the subloans to artisans (in $b) at an interest rate of 12% p.a., while subloans to SSE will be between 12% and 18% p.a., given the higher spread needed to cover higher administrative costs, additional feasibility studies and to allow for possible bad debts. The 3.5% markup on subloans to artisans and the (up to) 9.5% markup on subloans to SSE will give a "mix" markup of about 8%, of which 3-1/2% p.a., will be allocated periodically by BISA to a special provision account for bad debts under the program. Such allocations will be made until the ratio of the provision for bad debts to the total outstanding portfolio of subloans to artisans and SSE reaches 1:10 and is maintained at this level. 12. Subloans to artisans will be financed 90% by the credit line, while in the case of subloans to SSE, BISA will finance up to 70% of the applied sums. BISA has agreed to modify its credit policy which now limits the maximum percentage of project cost to be financed by BISA at 80% for enter- prises with capital not exceeding US$50,000 equivalent. The subloans will be for periods from five to eight years for fixed assets (with one to three years of grace), and from one to three years for working capital; these conditions were agreed upon during negotiations. 1/ All funds recovered under this component will be kept in a separate account to be used exclusively for similar purposes. E. Implementation Procedures Artisans 13. Granting credits to artisans operating at the low economic levels generally found in the marginal zones is usually considered a risky proposi- tion. Most of them have no solid form of collateral except, perhaps, their dwelling houses, which are worth very little, and their comparatively few machines or tools, which are usually worth even less. The creditworthiness therefore depends mainly on their personal characters, especially their honesty and entrepreneurial qualities. These are generally only known to their immediate associates in the zones in which they live and possibly to some of their clients. The selection of artisans for credits must there- fore, in the first instance, be in the hands of those who know them best. The second major problem in granting credits to small artisans is one of sheer volume. If, as seems quite possible, there may be several hundred or even thousands of artisans interested in credit, some way has to be found for simplifying the procedures used to process these applications. I/ In view of the particular needs of artisans small-scale entrepreneurs, it was considered essential that the proposed credit line also provide funds for working capital. A maximum of US$5,000 will be available to artisans. ANNEX 2 Page 5 14. The implementation procedure outlined here and illustrated in Attachment 4, is designed to overcome these major problems. The Junta Ve- cinal (JV) of the zone in which the artisan lives is the initial and key element of the selection process. The JV presidents and members generally know, among themselves, everyone in their neighborhoods and have a sound idea of their personal traits and personalities. They are furthermore in a position to exert strong social pressure on the residents in their areas. The JV through an appropriate committee, that will also include representa- tives from AC 1/ and BISA, will review and make a firs- selection of artisans it considers worthy of receiving credits. 15. Applications processed by the respective JV will then be forwarded to AC. This agency will be the main technical screening body for all appli- cations for credits from artisans, performing for the artisanal sector iat the Appraisal Unit in the BISA will do for small-scale enterprises. After screening the applicants, AC will prepare packages of tentative credicworthy applications and forward these to BISA. Because of the potential.y very large number of such applications, AC would relieve BISA of a considerable amount of work. 16. A special appraisal unit at BISA will then review these applica- tions and, if acceptable, forward them for approval and processing through the usual channels of the bank. Once a credit is approved, the funds will be released through the local BISA agent for payment to the applicant accord- ing to an established schedule. Notification of payment will also be made to Accion Communal and the Secretary of the respective JV. 17. One of the principal tasks of the special team to be established at the AC for this component is the monitoring and supervision of the artisans. The AC team will also organize and coordinate all necessary training and other forms of technical assistance for the artisans--either by using its own or outside staff. In some cases, training or basic preparation can become a precondition for granting individual loans. Many of the artisans may require, for example, substantial assistance in the form of technical or vocational training. It might be necessary in such cases to have recourse to other national institutions such as FOMO, the national organization that specializes in this type of training. FOMO runs training programs for adult workers, including skill-upgrading programs, in several of the principal fields such as metalworking, machine shop practice, automobile repairs, woodworking, electrical appliances, etc. FOMO has agreed to establish additional programs geared to the special needs of the artisans if this should become necessary. A special US$100,000 fund for this purpose will be made available through AC. Small-Scale Enterprises 18. Processing credits to small-scale enterprises will probably be simpler than dealing with artisans because routines for the assessment of such loans are already well established at BISA and the expected volume of work associated with each loan to SSE is proportionately much smaller. The selection, monitoring, and supervision of the small firms expected to seek I/ This organization, which will also be the implementing agency of the urban upgrading component, is described in more detail in Annex 4-C. ANNEX 2 Page 6 credits under this scheme will be done by a special Appraisal Unit to be set up within the Operations Department of BISA. This Unit will be headed by an industrial manager and supported by foreign consultants. Assistance in financial and cost accounting, a particularly important area in the case of small businesses, will be available from regular BISA staff. The de- termination of a firm's suitability for credits will be a matter of normal banking practice. The monitoring and supervision of the performance of firms to which loans have been made are likely to demand substantial atten- tion, especially if one considers that the smaller firms will be less likely to have good accounting and costing systems. Assistance by outside consul- tants (such as the Centro Boliviano de Productividad Industrial) shall also be considered in order to provide both expert advice and training pro- grams in these fields. F. Schedule of Implementation 19. The pace of disbursements for artisans might take as much as three years. This pace is conditioned by the fact that the requirements in capi- tal of individual artisans are relatively small, and that the identification, appraisal and processing of more than 700 artisans and their requirements are likely to be a lengthy job. Regarding the proposed loans to SSE, dis- bursements in this case will probably be a function of the progress in prepar- ing the El Alto industrial sites. The sites are planned to be completed as an integral part of the infrastructure of the residential areas and should thus be completed within four years. 20. In general, the disbursement of funds to artisans may be expected to start slowly, due to the amount of initial work involved in identifica- tion and problems of starting up the Accion Communal Unit, but should then accelerate about mid-1978 and further accelerate until the end of 1979. The disbursements of credits for SSE seems likely to start more rapidly, building up just because most borrowers will require funds for buildings in El Alto and for purchases for their equipment. It should then taper off and be completed by 1980. The rates of disbursement of the combined funds should thus proceed at a relatively even rate, approaching a straight line. BOLIVIA URBAN DEVELOPMENT PROJECT ARTISANS AND SKILLED WORKERS IN FOUR PERIPHERAL ZONES OF LA PAZ (Source: Accion Comunal Survey 1976-77) Sagrado Escobar San Achachicala Corazon Uria Antonio Subtotals Grand Totals Total Working Pops 799 1980 455 954 4188 M F M F M F M F M F Artisans by Trade /1 Embroiderers n.E7 n.a. 2 7 - - - - 2 7 9 Tailors 25 2 121 13 1 3 10 6 157 24 181 Weavers 33 21 14 25 1 7 2 24 50 77 127 Shoemakers 7 - 51 - 5 - 10 1 73 1 7h Leather Goods - - 6 - - - - - 6 - 6 Hatmakers 3 - 7 - - - - - 7 - 7 Buttonholers - - 2 - 2 - - - 4 - 4 Welders - - 3 - - - 4 - 7 - 7 Ceramists (Potters) - - 6 - - - 4 - 10 - 10 Jewelers 10 - 8 - 1 - 4 - 23 - 23 Totals 78 23 220 17 10 10 3 31 34 109 71 Skilled Workers Mechanics 13 - 20 - 6 - 19 - 58 - 58 Plumbers 1 - 5 - 1 - 6 - 13 - 13 Carpenters 9 - 63 - 5 - 22 - 99 - 198 Electricians 2 - 6 - 1 - 4 - 13 - 13 Totals 2 - - 13 - 3 - - 282 /1 Note: n.a. = no complete information available. ANNE 2 BOLIVIA Attachment 2 URBAN DEVEIDIMENT PROJECT Firms which have applied for Sites in El Alto NOTE: The particulars of most of these firms have been taken from the Guia-Directorio de la Industria Boliviana - 1975, issued by the Camara Nacional de Industrias. Figures for naminal capital and numbers employed in the Guia are for the most part out of date. Firms marked * were visited and revised figures obtained. Nominal Numbers Land Name of Firm Products Capital employed required Us m2 1* Fabrica de Muebles FAMA Ltda Metal furniture, children's furniture 40,000 20 1,000 2* Fabrica Nacional de Calzados Children's shoes, MA RATHON Ltda. army boots 24,000 19 1,200 3* Industrias Metallicas Metal office furniture, Nacional IMNA Ltda. structural steelwork 50,000 58 3,000 4* Textiles PUNTO BLANCO Ltda. Knitwear 60,000 100 6,000 5* INCOBOLFA Ltda. Work clothes, protective clothing, camping gear 30,000 17 1,000 max. 600 min. 6* Imprenta y Libreria Book printing 25,000 17 1,000 RENOVACION Ltda. 7* Laboratorios QUIMFA Ltda. Pharmaceuticals 30,000 32 2,000 8* CUEREX Ltda. Artisanal leather products 35,000 50 1,200 9* Productos Alimentarios CORONA Ltda. Chocolates 20,600 22 5,000 10* Construcciones Metallicas ENSADE Ltda. Structural steelwork NA 14 5,000 11* Jaboneria INCA Ltda. Detergent soap, shampoos 80,000 18 10,000 12* TRAIL Ltda. Furniture, light trailers 12,000 6 1,000 13* Fabrica de Helados FRIGO Ltda. Ice cream 57,500 15 1,000 14* Fabrica de Telas MIRTEXA Ltda. Machine knitted shawls 9,000 15 5,000 15 Offset MILLAN Ltda. Offset printing NA NA 1,000 16 Clave Textile Boliviana Ltda. Textiles NA NA 2,500 17 SOCIEL Ltda. NA NA NA 5,000 18 Fabrica de Camisas CORONA Shirts, pants, Ltda. handkerchiefs 42,400 11 1,000 19 Industrias BOUTE Bolivianas Ltda. Clothing 19,400 NA 400 20 Industrias Boliviana A. Quila Ltda. Chocolates 9,200 9 2,000 21 ALBATEX Artesanal Ltda. Knitwear 8,000 10 1,000 22 Fabrics de Tejidos RANGLAN Ltda. Sweaters 5,300 10 500 23 FLE)CPIAST Ltda. Plastic foam 15,000 12 5,000 24 GRAFICA Ltda. NA NA NA 1,000 25 HERES Industrial y Comercial Ltda. NA NA NA 2,000 26 Fabrica de Calzados ROXANA Ltda. Footwear NA NA 1,500 27 Fabrica de Tejidos ROSEMERY Ltda. Sweaters 2,500 12 2,000 28 Fabrica de Puertas y Muebles TUNARI Ltda. Doors and furniture NA NA 500 29 Manufactureras de Kilo Ltda. Thread spinning 8,800 NA 1,000 30 INDERPA Ltda. Carton plates and cups 12,400 11 1,000 31 Pasamaneria y Textiles fines JOURME Ltda. Shoe laces and elastic 6,0o 9 3,000 32 Industrias El Cuerito Ltda. Ldather goods NA NA 1,000 33 Fabrica de Tejidos ORLONTEX Ltda. Sweaters 17,350 6 5,000 34 Contabilidad RUF (Bolivia) Ltda. NA NA NA 1,000 35 Polimeros Nacionales SRL Ltda. General plastics 6,000 3 1,000 36 Fabrics de Tejidos de Punto JUANITA Ltda. Knitwear 12,400 6 5,000 37 HORvET SA Cia. Metalurgica Manufacture of lead and Industrial y Comercial tin 176,700 45 5,500 38 Fabrica Chocolates EL ORIENTE Ltda. Chocolates 6,000 12 1,000 39 Industrias Canelas INCAS Ltda. NA NA NA 1 2,000 40 Rattan y Cia NA NA NA 4,ooo 41 SIMETAL Ltda. NA NA NA 4,000 42 SIMECORTEX Ltda. NA 1A NA 200 43 METALEX Ltda. NA NA NA 5 000 USBA?IIWVELCPFMENT eJECTi Details of Firms Visited and Credits Required Possible Capital Requiremente Nominal Land Build- Equip- Work- Spec. Eviron- Est. Invest. Capital Nu. Re9. ings ment ing Infrast. ment Date Incre. Per $b/US$ Products Empl. n Ui US$ US$ Needs Effects Ree'd in Jobs new Job /1 1. Fabrica de Muebles "Fama" Ltda ¯ 60,000 Metal Forn. 20 1,000 20,000 - 9,000 None Chrome 10 2,000 Chi lirens' ti Furniture S~ew.rage 2, Fabrica Naciona de Calzados "Marathon" 24.000 Childreno' Shoes, Army 19 1,200 20,000 17,000 - None None 8 4,625 BOOtS 3. Industrias Metallicas Nacionales "1MNA" 50,000 Oftere Furn. 74,000 min. Heavy Structural 58 3,000 20,000 120,000 max. 30,000 Elemtr. None Now 30 14,666 Steelwork Contrue. 4. Textiles "Punto Blanco" Ltda 60,000 Nylon Water for Dye Knitvear 100 6,000 100,000 - - Dyeing Into 60 1,666 Sewerage 5. "INCOBOLFA" Ltda 30,00Q Work Clothes 1,000 max. mid Protective )2 - 600 min. 15,000 40,000 - None None 1978 10 5,500 Clothing 5 home 6. Imprenta & Libreria "Renovacion" Ltda 25,000 Book mid Printing 17 1,000 40,000 40,000 - None None 1978 17 4,706 7. Laboratories "Quiifa" Ltda 30,000 Phanna- mid ceucicals 32 2,000 50,000 - 25,000 None None 1978 30 1,667 8. Cuerex Ltda /not trom Canara de Indust/ 35,000 Leather Bags, Begin Suitcases 50 1,20 32,000 30,000 40,000 None None mid 78 50 1,240 /2 Jackets 9. Produntos Alimentarios Corona Ltda (20,60Q Chocolates Begin n.a. 22 5,000 75,000 150,000 - None None mid 78 4 56,250 n.a. 10. Construcciones Metallicas "Ensde" Ltda Structural Steelwork 14 5,000 18,000 /280,000/ 100,000 None None Mid 78 20 14,900 Roofing. etc. 11. Jaboneria "Inca" Ltda 80,000 Detergent 3 /4 Begin Soap 18 10,000 ma, 1.50,000 - - None None- 1978 30 5,000 Shampoos 12. Trail Ltda 12,O0 Furniture Begin Small 6 1,000 15,000 8,000 5,000 None None mid 78 6 3,833 Trailers 13. Fabrica de Relados "Frigo" 57,500 Tre Cream 15 + Begin 20-30 1,000 40,000 100,000 20,000 None Nne 1978 20 7,000 Sals 14. Fabrica de elas "Mirtexa" 9,000 Knitwear Begin Shawls 15 5,000- 100,000 - - None None 1978 20 5,000 - - - -- /6 - --7 390 3P,400 max. 620,000 635,300 max.229,000 311- fl INNA Lda maximum --quirement includes a steel skip lolding machine cstiatod -o saoe US$153,600 in foreign exIlage per aun,, o " w<i't i"tl tineS psid out in wages to Boliiar labor. /2 The proprietor of CORONA Ltda stted that oe was eyduc lhr ishLv and f , perrhed to eedce ni an th. high .apitalc,,tetityv-on e'd thei Slb eapitol i i volved, t i t1m would prob)ablv nc bt: accepted o, the El Alto Site and is therefore only ne-ced for the record. It is mint-d ir-, all cai ua n 3 The eropriet-or osated Lhat 1s l rge requirement fo' land was mainlv for bulk storage of ioported taw an l feI oon ware:osi' ood bi upp ed, he could manage Iih abo,ut 3,000 m' L4 The ncw planc beng purchased on credir trom supplIers ricycles wate ond eliminates odors. L5 The rquirement seemed excessive in relation to existing premises. L6 Based on stated estimates and interviceet' judgment. /7 Based on fixed caital demaands only for which loans may be required. The inr)d Bank compoent o invesnnent pei job ereated wo'U I 7C, h BOLIVIA URBAN DEVELOPMENT PROJECT FLOW CHART OF APPLICATIONS FOR ARTISAN CREDITS JUNTA VECINAL ACCION COMMUNAL B. 1. S. A. ARTISAN SECRETARY COMMI TTE TECHNICAL UNIT DIRECTOH APPRAISAL UNIT GENERAL MANAGER REJECTED ACCEPTED Who confirml op. RE-ruRNE FOjR Gms To and forwardv FURTHER iNFORMATIO Ibatch of apphations Crd- to 8330Y for Cradîts to ezt~bid , APPLICATIO N wappted Or mpoe.--- -- APPLICAï IONS ocrtioi Checks fesbok Who d scuses h Where it is Appreisals by A.C foaporised for L.-- Twchnical Unit & and he Cps him t t technical and 'i nmvY the corret iorm economic cl.arifias doubtful feasibility. points APPLICATION committen of the Junta under the APPLICATIONS Chairrngnsh p of the Approsa - president, It includes 0ofi,,owns and the A.C. Social ACCEPTED authorizes payment Worker ansd local o REJECTED* u woA rkenair J hs texst) fiJodl CuO BISA Rtpres r (rejoctions--s~ text) APPLICATION FUNDS RETURN ED TO _R'LCNTtE4JF;C I WITH REASONS NOTIFICATION ~resntative ,- - of SISA who (1) FUNDS FORI IýYÄ AL---E wI PCy out tn, sch'duled. In consultation with the applicart wil arratige tor 12) FUNDS FOR PILICHASE OF FORIEIGN election & purchffse of eetuipKnent, letters EoUiPMENT OR MATERIALS of credit (via BlSA) t etc r AND WieL PROVIDE SUCH MANDATORY TECHNICAL ASSISTANCE AS JUDGED NECESSARY TO ENABLE THE t LOAN TO BE GRANTED OR AS REQUESTED BY APPLICANT Werld Bank-17605 ANNEX 3 BOLIVIA URBAN DEVELOPMENT PROJECT Technical Assistance General 1. Technical assistance is required in this project, both in support of the agencies directly involved in the management or implementation of the various components and in support of other institutions participating in complementary activities crucial to the success of the project. Among the first group of assistance recipients are CONAVI, AC and BISA which are the implementing agencies of the Sites and Services, the Urban Upgrading and the Credits for Artisans components, respectively. The principal recipients of assistance in the second group are BANVI, and the Ministry of Health. 2. Technical Assistance will consist of 214 man-months of consultancy, of which about 15 man-months are estimated to be local and the rest foreign (at US$6,000 per man-month). Approximately US$395,000 have been allocated for equipment and US$200,000 for other institutional support and training pro- grams. Appropriate terms of reference have already been prepared for most required experts. Detailed listings of requested equipment have also been submitted and reviewed by the mission. Accion Comunal (AC) 3. Assistance to this agency will be in the form of about 63 man- months of foreign and local experts: (a) in support of the planned program for artisans and small-scale enterpreneurs in the upgrading areas of La Paz; (b) to train local counterparts that will take over this function in future programs of this kind; and (c) to assist AC in developing a proper methodology for the analysis of its ongoing socioeconomic surveys. AC will also manage a US$100,000 fund made available for training programs, as well as studies required in connection with the implementation of the proposed credit line for artisans. Finally, AC will receive US$100,000 for the purchase of equipment needed to support and strengthen its ongoing program of urban upgrading schemes. 4. The consultant for artisans will be attached to AC's project unit in order to support its operations and help train local experts in this field. He would have an all-round competence in handicrafts and artisan industries and experience in promoting and marketing the products of handi- craft workers and modern artisans. Additional short-term consultancies will also be provided to give intensive courses in specific fields of in- terest.to the artisans. ANNEX 3 Page 2 Consejo Nacional de Vivienda (CONAVI) 5. Assistance to CONAVI will include about 24 man-months of foreign and local experts in fields relating to the mechanization and computerizing of administrative and accounting procedures, as well as in support of CONAVI's efforts to complete the development and formalize a package of new design and construction standards for low-cost housing programs. CONAVI will also receive about US$120,000 for equipment to be used in implementing the Bank- supported project and for future similar projects to be developed in the course of this program. Banco Industrial S.A. (BISA) 6. Approximately 24 man-months of foreign consultancy will be provided to BISA in support of the new unit to be created for the management of the proposed credit line for artisans and small-scale enterprises. A substan- tial part of the expert's time will be devoted to training BISA staff in these fields in order to establish local expertise in this type of opera- tion. This assistance will be attached to the bank's Appraisal Unit. The selected consultant would be an expert with substantial experience in general management and in management consultancy, preferably in medium-size industry. While primarily intended to supervise BISA's program for SSE, the expert will also provide support to improve the performance of the operations staff as a whole. He will work closely with his colleagues at AC. Banco de la Vivienda (BANVI) 7. About 79 man-months of foreign and local experts' consultancy will be given BANVI to strengthen its technical capacities in general and to support the unit that will supervise and monitor the implementation of this project in particular. The planned assistance will include experts in the fields of financial analysis, project engineering, economics and urban planning. In addition, a one-time contribution of US$100,00 would be made (and absorbed by the Government) in support of the new project unit. 8. The Financial Analyst will be responsible for analyzing the financial and economic policies of BANVI's operations and specifically the financial aspects related to the Bank-supported project. He will also advise the General Manager on the resources available and the investment opportunities of BANVI and define a comprehensive financial plan for future programs of the bank. 9. The Senior Engineer will be responsible for supervising proper execution of the engineering and technical aspects for each of the project components and for procurement procedures and the selection of contractors. He will also assist BANVI in identifying and preparing additional programs of this kind. ANNEX 3 Page 3 10. The Urban Economist will assist the project unit in BANVI in evaluating overall plans and programs in key sectors affecting housing, and in the economic evaluation of potential investments in which the participa- tion of BANVI is proposed. In addition, he will coordinate the identifica- tion of urban issues for discussion by the proposed Coordinating Commission. During this period of activity, the Urban Economist will also be respon- sible for training staff of BANVI. 11. The Urban Planner will be responsible for reviewing different growth strategies and capital investments proposed for La Paz and other cities, as well as identifying future sites and upgrading projects which BANVI could execute. He will also provide training for BANVI's staff. Technical Assistance in the Health Sector 12. Special efforts were made to include a scheme designed to address the needs of the low-income urban groups in the health and nutrition sectors. This was very difficult to achieve because of the prevailing fragmentation and lack of coordination of existing public and private services in La Paz, and because most Government efforts in this sector are presently directed toward the rural areas of the country in response to even grimmer conditions there. 13. Under these circumstances, the decision was taken to include only a modest pilot program designed primarily to initiate Bank involvement in this sector. The proposed program, based on the operation of a mobile super- vision and coordination team in the marginal areas, will assist integration of existing activities among the public and private institutions engaged in the provision of primary health and nutrition services, facilitate in-depth analysis of local health care and nutrition needs, and enable preparation of a future more comprehensive integrated program in these sectors. Specifi- cally, the technical assistance would be used to assist the Government in the preparation of such a comprehensive health program and in the implemen- tation of the proposed limited program. The provided technical assistance will include 24 man-months of expatriate consultancy as well as US$175,000 for equipment and'_aterials. Technical assistance will be provided by ex- perts in the fields of environmental health, (including training of community health promoters) and community nutrition planning (including nutrition com- munications and home preparation of foods). These experts will be assigned to work with local counterparts under the supervision of an inter-divisional committee of the Ministry of Health (described in para. 15). 14. The benefits derived from the provision of utilities and basic ser- vices to the communities participating in the proposed Sites and Services and Upgrading components would be significantly increased by a well-coordinated educational and preventive health program. Given the strength and cohesive- ness of community organizations (Juntas Vecinales) and mothers' clubs within these areas, the promotion of such a program will be conducted through these organizations. OJ) ANNEX 3 Page 4 Implementing Responsibilities 15. The organizational structure proposed for the implementation of the proposed technical assistance places institutional responsibility with the Ministry of Public Health and Social Service, through the Unidad Sanitaria de La Paz and the assistance of an inter-divisional Ministry of Health committee for program integration. This committee consists of the chiefs from the following four divisions: Maternal-Infant Health Care (whose chief will head the committee); Nutrition; Epidemiology and Environmental Sanitation and representation from the Unidad Sanitaria de La Paz. In addition, this committee will coordinate its activities with the head of Fundacion San Gabriel, a semi-private organization that will implement some elements of the environmental sanitation program and train community health promoters. This committee will coordinate all actions required to: (a) implement the proposed program of technical assistance and supervise its implementation; (b) administer the assigned budget; (c) maintain the provided vehicles and equipment; (d) investigate the prevailing health conditions in the marginal areas and monitor the effects of the proposed programs; and (e) coordinate this program with other health establishments and community working groups. 16. The Unidad Sanitaria de La Paz will select and make available the required staff which will include doctors, nurses, social workers, statisticians, health aides, nutritionists, nutrition aides, epidemiologists, health education specialists, vaccinators, and technicians in environmental health. This working team will be responsible to the Ministry of Health committee previously mentioned and all program activities will be supervised by them. Responsibility for all aspects related to the implementation, supervision, staffing, maintenance and monitoring of this component will rest with the Unidad Sanitaria de La Paz as the designated operational unit for the Ministry of Health. 17. The estimated duration of the project will be about two years from the time all requested material and equipment are received. Monitoring and evaluation of the project will be carried out by the proposed committee and supervised by the Bank. ANNEX 4 BOLIVIA URBAN DEVELOPMENT PROJECT Institutions and Organizations A. Banco de la Vivienda (BANVI) 1. BANVI was established in January 1974 by Government decree DL No. 11308. A semiautonomous agency, BANVI reports to the Ministry of Finance and is under the direct supervision of the Ministry of Urbanization and Housing (MUV). It has an authorized capital of $b 100 million (US$5 million) of which 51% of shares is to come from the public sector (Series A) and the remaining 49% from the private sector (Series B). Functions 2. BANVI's specific functions are to stimulate internal savings for housing and to promote and finance through short-, medium- and long-term operations the following activities: (a) Construction as well as expansion and rehabilitation of housing; (b) Construction of basic infrastructure works with spe- cial emphasis on water supply and sewerage programs; (c) Development of new technologies in the construction industry and assistance in the identification of adequate construction materials; and (d) Imports of construction materials and related equip- ment. 3. To carry out these functions, BANVI is empowered by its Charter to: (a) obtain loans, warranties and guarantees from national and foreign financial organizations, in national or foreign currency; (b) participate with other public and private, national and foreign organizations in financial operations for the execution of housing and urban development plans; and (c) channel the resources coming from the Government and internal and external loans for water supply and sewerage projects. ANNEX 4 Page 2 Organization and Management 4. The management of BANVI is entrusted to a Board of Directors con- sisting of the Minister of Urbanization and Housing, as President, a repre- sentative of the Ministry of Planning and Coordination as Vice President, and one representative each of the Ministry of Finance, Housing Councils, Savings and Loan Associations, the Ministry of Urbanization and Housing, and two representatives elected by the private shareholders of the bank. 5. Administratively, BANVI is headed by a General Manager assisted by a Vice Manager and has six operational divisions, namely, Administrative, Credit, Finance and Programming, Technical, Auditing and Accounting and Legal. (BANVI's organizational structure is shown in Attachment A-1 of this Annex). Being a new institution, BANVI is developing its administrative structure slowly and consistently with the expansion of its housing and construction business. The personnel strength of BANVI during 1976 was only 32 employees, of which ten are professionals representing various disciplines. The num- ber of staff is expected to increase to 44 in 1977. Accounts and Audits 6. Although BANVI's financial reporting system is adequate for a new institution, forecasts submitted to the mission were prepared hurriedly and are therefore not meaningful. However, improvements can be expected as a result of .the technical assistance proposed under the project (see Annex 3). BANVI's statements are, according to its Charter, supposed to be audited by internal auditors under the direct supervision of the Board of Directors. Although BANVI has so far had its statements only audited by external audi- tors, it expects to start internal audits in 1977. Financial Operations and Performance 1/ 7. In operation since June 1975, BANVI had paid-in capital of $b 51.1 million (US$2.6 million) as of December 31, 1976. Most of its capital came from Series A shares to the public sector, while only $b 9 million equi- valent represented the private sector. BANVI has been operating at a defi- cit which in 1975 was $b 1 million. Although the net deficit in 1976 was $b 0.5 million, between July and December, it made a modest profit of $b 43,901. 8. BANVI has in the past granted two types of mortgage loans: (1) with maturities from five to 20 years at 12% interest (92% of total loans) and (2> with maturities from one to eight years at 15% interest. In 1976, BANVI's portfolio increased from $b 18.8 million to $b 46.8 million and had $b 7.8 million worth of loans approved but not disbursed. During the same period, BANVI's assets grew from $b 36.5 million to $b 57.5 million. I/ Financial statements for BANVI are shown in Attachments A-2, A-3, and A-4 of this Annex. ANNEX 4 Page 3 Government support to BANVI 9. Although BANVI's performance in the past two years has not been the best, a number of recent developments indicate Government support and determination to help BANVI become a financially viable institution. Through decree DS 14040 the Government has assigned a line of credit of up to $b 10 million in favor of BANVI to be used for medium- and short-term credits. In addition, the United Nations Environmental Programme (UNEP) has just approved a seed capital loan to BANVI in the amount of US$300,000. BANVI's Role in the Bank-Supported Project 10. In order to carry out the function of financial agent in the proposed Bank-supported project, BANVI will establish a project unit to assist in the implementation, financial control and general supervision of this project during implementation and will, in addition, start promoting similar projects for future implementation. To perform this task the new unit will hire five additional senior level professionals assisted by at least two new administrative personnel. This new unit will be responsible to the general manager of BANVI, and will receive technical assistance included in the project. Consultants will be available to assist the Project Unit specifically in the areas of financial planning, engineering (e.g., procure- ment, scheduling, inspection, etc.) economics and urban planning. (See Annex 3 for details of this assistance.) 11. At the request of the Government, the financial expert to be pro- vided under the technical assistance program will specifically assist BANVI in conducting a thorough analysis of its capital sources and long-term investment plans. In this context, he will prepare detailed recommendations which, if necessary, might include proposals to change or complement present regulations controlling BANVI's operations. B. Consejo Nacional de Vivienda (CONAVI) General 12. The Consejo Nacional de Vivienda (CONAVI) is the successor of the Instituto Nacional de Vivienda (INV) established in 1956 by the Gov- ernment to deal with what was considered to be a fragmented housing de- velopment process. CONAVI was established (by Decree D.S. No. 06816) in 1964 as an autonomous agency under the supervision of the Labor Ministry and given the responsibility of formulating national housing policy affect- ing workers of all professions who are members of the social security system. The role of CONAVI was revised in 1974 and adapted to a more effi- cient administrative structure. ANNEX 4 Page 4 Organization Structure and Management 13. After the revision of its charter in 1974, CONAVI was reorganized into four main units, namely, the administration, operations, regional offices and advisory departments. CONAVI's activities are controlled by an Executive Board presided by the Minister of Housing. An organizational chart describing the links among these departments is shown in Attachment B-1 to this Annex. The structure of the new project unit is shown in Attachment B-2. Functions 14. CONAVI's main objective is to provide low-cost housing to its affiliates who are workers and employees that pay a 2% payroll tax for this purpose. Its specific functions have been defined as follows: (a) participate in the formulation of the National Housing Plan; (b) initiate housing programs and promote execution of community development projects; (c) grant loans with mortgage guarantees for construction, expansion and upgrading of housing; (d) determine and, if necessary, expropriate areas for development of infrastructure, services and commu- nity facilities; (e) enter into agreements with financial housing institu- tions for repossession of mortgages; (f) provide technical and professional assistance to in- stitutions dealing with housing; and (g) participate in share equity of banking and financial institutions concerned with housing and receive na- tional and foreign credits. Financial Resources and Investments 15. CONAVI's major resources are the following: (a) Government allocations from the national budget; (b) a 2% payment tax on wages and salaries of all workers, except those represented by other housing councils; (c) mortgage loan repayments; ANNEX 4 Page 5 (d) sale of equity shares; (e) grants and credits from national and foreign sources; and (f) interest revenues and commissions from loans and in- vestments made by CONAVI. 16. The 1974 charter furthermore specifies the manner in which CONAVI should invest its resources: (a) 20% is to be applied to land acquisition, urban develop- ment and infrastructure projects; (b) 70% for the construction of housing (one-family and multi-family units); (c) 9% for upgrading and housing expansion loans; and (d) 1% for general research in housing, particularly in the field of construction methods and new materials. 17. The above requirements apply only after CONAVI's financial obliga- tions to all domestic and foreign financial institutions have been met. Costs of projects must be recoverable and, unlike its predecessor, INV, which collected only 50% of mortgages, CONAVI collects the full mortgage amounts and maintains ownership of all buildings until they are completely paid for. External Assistance 18. In its early years, much of CONAVI's operations were financed by loans from the Inter-American Development Bank (IDB). The first loan of US$4 million through the Corporacion Boliviana de Fomento was approved in 1963 for the construction of 3,500 housing units, of which 2,666 were in La Paz. The second housing loan was approved in 1968 for the construction of 3,620 housing units, of which 2,727 were in La Paz. Both projects in- cluded components for community facilities, schools, markets and health cen- ters. These projects were only partially successful due to the high stan- dards used and consequent high costs of the provided units. Accounts and Audits 19. CONAVI's past financial statements have varied in form from year to year, thus making comparisons difficult and although CONAVI lists in its organization chart an Office of Internal Audit, it has never had its state- ments audited. However, this practice is being changed and an auditor's report for 1976 is expected in mid-1977. ANNEX 4 Page 6 Operations and Financial Performance 20. Since 1974, CONAVI has constructed with its own finances an aver- age of 800 housing units per year. The cost-range for housing units at 1976 prices varied from an average of $b 95,000/unit (US$4,750) for a two-bedroom house to $b 105,000/unit (US$5,250) for a three-bedroom house. 21. Rates of default have been relatively low, about 2% in 1976. Mort- gage payments are made directly to CONAVI through its Departmento de Ingresos y Cartera, and back payments are collected by CONAVI's Departmento de Ser- vicio Social. In those cases where payments cannot be obtained, the houses are repossessed by CONAVI and resold. 22. CONAVI's financial performance has shown significant improvements since 1973. In 1974, CONAVI started the period with a deficit of $b 5.7 million. During 1974, 1975 and 1976, CONAVI had surpluses of $b I million, $b 6.8 million and $b 15.5 million respectively. These increases were largely due to previously uncollected payments from different government agencies and other large public institutions (e.g. the University). The percentage of arrears in 1976 is estimated at about 20%, a decrease over the 1973 estimate of 30%. 23. CONAVI's income statements for the years 1974, 1975 and 1976 are shown in Attachment B-3. (See also its Balance Sheets for 1974 and 1975 presented in Attachment B-4). CONAVI's annual administrative costs in re- lation to its total costs are also high. The ratios of general and technical administrative costs are on the high side. The ratio of general and technical administrative costs to total costs was 77%, 68% and 78% in 1974, 1975 and 1976 respectively. However, administrative costs in relation to total rev- enues show some reduction in costs. The ratios for this relationship were 48% in 1974, 45% in 1975 and 43% in 1976. CONAVI has been following a policy aimed not only at decreasing the total number of staff, but also changing its staffing structure from excessive administrative personnel in favor of a larger percentage of engineers and technicians. The Centro Nacional de Computacion (CENACO) has just completed a study on the feasibility of com- puterizing some of CONAVI's administrative tasks and a new system, to go into effect in mid-1977, is expected to eliminate about 20 administrative positions. (CONAVI's staffing for 1975 through 1977 is shown in Attachment B-5). 24. CONAVI's liquidity is high, and as of December 31, 1976, it had accumulated more than US$1 million in short-term surpluses which are de- posited in the Banco del Estado. These funds are expected to be used in programs already planned by CONAVI and for the purchase of additional lands required for this project. ANNEX 4 Page 7 C. Honorable Alcaldia Municipal-HAM La Paz Municipality General 25. The La Paz Municipality (RAM) is an autonomous agency with an appointed mayor. Its principal functions are to set general policy with regard to required urban infrastructure and services for the metropolitan area; execute public works according to the priorities given in the city's urban development plans; support technical reviews of public projects; pre- pare and approve municipal decrees that regulate taxes; prepare and approve its General Budget; and secure, either directly or through other agencies, loans for infrastructure works from national and international sources. 26. Originally, HAM was not directly involved in the implementation of infrastructure works (except access roads) or in housing construction. However, with the increasing housing pressures resulting from steady rural migration into the city, as well as the problem of landslides, common during the months of January-February and which often displace families already living in substandard conditions, HAM established the Accion Comunal (community action) office to assist in schemes to repair, improve and con- struct simple infrastructure expansions and low-cost shelter jointly with the communities affected. (For a description of Accion Comunal see paragraphs 35 to 39). 1/ Financial Performance 27. During 1975, 83% of HAM's total income came from recurrent revenues such as surcharges, taxes, service charges, etc., the balance coming from Government transfers, internal/external credits ($b 12.1 million) and other nonrecurrent revenues such as sale of land, etc. In 1975, 75% of HAM's ex- penses were financed from recurrent revenues, while in 1976, HAM was able to cover 84% of its total expenses from these sources. Ideally, HAM ought to be able to finance its entire operating expenses, but this has not yet been possible. However, HAM's management is experiencing a new era of in- novative procedures at the initiative of the present mayor who was appointed in June 1975. Under his administration, and with the assistance of a number of key aides he has recruited from the private sector, a new series of pro- grams designed to improve the management efficiency have been started. A particularly important innovation has been the introduction of plusvalia, a property tax on the reassessed incremental value of property. This pro- gram is alreay in effect and during 1975 it contributed to HAM additional revenues of about $b 1.42 million. In an effort to increase the effective- ness of this program, HAM has been training special staff in property re- assessment and other methods related to the new taxation scheme. 1/ An organizational chart of HAM is provided in Attachment C-1. ANNEX 4 Page 8 28. In the past, HAM has been supported through Government allocations, but as a result of the measures introduced by the new mayor, this support is being gradually reduced and is expected to be phased out completely by 1981. 29. In recognition of its improved performance, HAM received in 1975 the authority to solicit directly external financing, in addition to its regular domestic sources of funds. During 1975, HAM received external credits worth $b 12.1 million; in 1976 the amount was $b 64 million and for 1977 it is expected to reach a level of $b 214 million. 30. HAM's financial records are based on accounts showing expenditures against budgetary allocations. HAM's statements are audited annually by the Contraloria General de la Republica. HAM's budget is allocated according to programs rather than departments, although this practice is also being changed in favor of more specific accounting divisions. In general, the present accounting system provides adequate information for financial control and the accounts for each department are properly identified for budget control purposes. 31. HAM's comparative Balance Sheets for years 1973 through 1976 are shown in Attachment C-2. HAM carries its assets at historical costs and in- surance for buildings and other structures at historic book value, which probably understates their present value. Comparative Income and Expenditure Statements for years 1973 to 1976 are shown in Attachment C-3. 32. Total resources during 1976 amounted to about $b 380 million and the expected resources for 1977 are estimated to be $b 865 million. The major increase in 1977 will be the result of expected external and other financing worth $b 350 million. HAM's projected Sources and Uses of Funds between 1977 and 1982 are shown in Attachment C-4. During 1974, the actual revenues of HAM exceeded the amounts originally estimated, mainly as a re- sult of revenue increases from charges, while during this period, actual expenses were less than originally estimated. Both of these results demon- strate favorable performance. Similar analysis for other years would have allowed identification of possible trends and given a clearer picture of HAM's performance over a period of years, but this was not feasible due to lack of adequate data. Administrative Improvements 33. Under the mayor's direction, various efforts have also been made to increase the administrative efficiency of HAM's operations. Some muni- cipal employees have been released because of incompetence or inappropriate behavior. In an attempt to reduce overhead costs, others have been trans- ferred to alternative jobs through a special training program organized by the Servicio Nacional de Formacion de Mano de Obra (FOMO), and with the assistance of the Chamber of Commerce, they have been placed in various en- terprises in La Paz. (Attachment C-5 shows changes in the structure of HAM staff from 1974 to 1977). ANNEX 4 Page 9 34. Other efficiency measures introduced by the new administration in- clude the establishment of new and strict recruitment procedures based on proper qualifications. A study is presently being carried out by a foreign consulting firm (CONSAD), on the possibilities of computerizing HAM's account- ing system for most bookkeeping activities. Other private consulting agencies (IBAM and BCEOM) are also reviewing HAM's administrative structure with the objective of improving its administration and managerial capability. Accion Comunal (AC) General 35. Accion Comunal (AC) was created through a municipal ordinance in 1964 for the purpose of "organizing popular participation in the task of improving and equipping their barrios with the most indispensable and basic services." AC concentrates its activities mostly on communities which are located on the periphery of La Paz, i.e., the low-income and marginal settle- ments. Through promotional activities and work with communal organizations, AC seeks to achieve the following objectives: (a) to mobilize and channel human, material and economic resources of the various community organizations to undertake the work of supplying their basic infra- structure and minimal services through their own efforts; (b) to support community organizations that can promote contributions to such programs; (c) to coordinate the work of the municipal program for Communal Development with other public and private institutions who provide similar services; and (d) to study the feasibility and possibilty of forming cooperatives in communities where high unemployment and underemployment prevail. 36. AC, which started its operations with a group of only four people, presently has a staff of 43 assigned to three working departments: Social Services, Communal Development, and "Social Interest Housing." It is one of five departments under the Technical Office of the Municipality (see Attachment C-1) 1/ and as such, reports.-directly to the Mayor of La Paz. 1/ The organizational structure of AC is presented in Attachment C-6. ANNEX 4 Page 10 Past Activities 37. As an example of the scope of upgrading projects it is involved in throughout the city, during the second semester of 1975 alone, AC was able to carry out 63 projects in 22 zones of La Paz. The total cost of these projects was over $b 7 milion, or US$350,000. These activities included the construction of public sanitary/laundry posts, public water standpipes, sewerage gutters, container walls, etc. (see Attachment C-7 for detailed activities and costs). These programs are usually initiated by community organizations (Juntas Vecinales) and receive technical assistance from AC and often, 50% financial contribution from the municipality. Many more projects are often undertaken by community groups without outside financial support and only with technical assistance and supervision from AC staff. Simultaneously with the implementation of works and upgrading schemes, additional programs are constantly prepared by AC's staff, usually for a two-year planning period. The Bank-supported Project 38. With regard to the proposed Bank project, the Comunal Development department of AC has assumed the responsibility for analyzing the various communities and identifying preliminary packages of possible upgrading im- provements. AC has defined the upgrading priorities in four of the eight communities in close consultation with the residents of each neighborhood. The Social Services team has already gathered socioeconomic surveys on the selected communities and staff from the Social Interest Housing department of AC is presently refining cost estimates of the proposed schemes. 39. Previous experience with these communities, the formulation and successful execution of basic infrastructure projects, and good working re- lationships with community leaders and organizations, provide an excellent basis for AC to promote and prepare additional urban upgrading programs in other peripheric areas of the city. To support these efforts, technical assistance will be provided to AC as part of the present project. Details of the proposed assistance are provided in Annex 3. D. Juntas Vecinales (JV) General 40. Juntas Vecinales (JV) are community organizations of the various barrios of La Paz, some of which were already created by Municipal Ordinances as early as January 15, 1935. Since then, they have gradually expanded and become more numerous, but it was not until 1948 that they were put under a joint organization, namely, the Federacion de Juntas Vecinales de La Paz (FEJUVE). This became the head body to represent the needs and interest of all JV. For each zone there is at least one main JV (usually referred to as ANNEX 4 Page 11 a junta central), while in many cases there are sub-juntas representing smaller sectors of a given zone. All JV officials are elected by a general assembly of community members (only property owners); officials in the Federacion and Juntas Centrales are elected for a two-year term, while the heads of the Sub-Juntas usually only serve one-year periods. Federacion de Juntas Vecinales (FEJUVE) 41. The Federacion was formed (by Supreme Resolution No. 28967) in 1948 and has since been recognized (through a municipal decree) as the directive body for the city's (presently 102) juntas centrales and their respective sub-juntas. The administrative structure of the Federacion con- sists of a President, two Vice-Presidents, a Secretary General, and various Secretariats, who at the same time are the presidents of the various JV that form the membership of FEJUVE. There are presently 13 Secretariats operating within FEJUVE (Statistics, Financial Transactions, Public Rela- tions, Culture, Social Assistance, Archives, Transportation, Public Works, Legal and Organizational, Sports, Press, Housing) assisted by six directors who take turns serving as the head of special commissions. Each FEJUVE member participates in at least one working group or activity. The Fed- eracion has a modest $b 4,000/monthly budget provided by HAM (the munici- pality) to cover its operating costs--including the salary of one secretary who is the only paid staff of FEJUVE. Meetings are held once a week in order to discuss with the Presidents of each JV their respective plans and activities. The President of FEJUVE also participates in meetings of the Municipal Consulting Council (composed of various civic organizations) to discuss and suggest solutions to problems which arise in the implementation of municipal programs and activities. Juntas Vecinales 42. While FEJUVE is the ruling body for all juntas vecinales (cen- trales and sub-juntas), also some of the individual JV have legal status in their own right. JV have an organizational structure similar to that of FEJUVE and their members are usually the Presidents for the sub-juntas within their respective zone. Individual JV also meet once a week to discuss and analyze their members' plans and those activities which they seek to pro- mote and gain acceptance for. Each sub-junta in turn also has a similar organizational structure (on a smaller scale) and it determines what activi- ties or projects it would like to undertake. General meetings are called as needed to identify community priorities and acceptance of proposed plans. These plans must receive the approval of the respective JV and of FEJUVE before being submitted for final approval to the municipality. This approval is channeled through AC 1/ the municipal agency in charge of promoting community managed projects. AC usually coordinates all implementation works, provides technical assistance and equipment, if needed, and supervises the communities' work. In some cases, the municipality, alone or jointly with other public or private organizations, also provides financial support for such schemes. 1/ See Section C of this Annex for detailed description of AC. ANNEX 4 Page 12 43. The JV are supported by fixed monthly payments from each lot owner to cover the organization's occasional costs. Each JV, through its elected officials, determines the amount of these monthly charges and the labor requirements that must be provided by each family once a given project is agreed upon. In the past, a typical scheme would involve a contribution by the municipality of up to 50% of a project's costs, while the settlers provided about 10% in cash and the remaining 40% of costs in the form of labor contribution. I All costs are usually paid for by the time the works are completed. In schemes involving the delivery of basic services, only the fees for public water standpipes is payable through the JV to SAMAPA, the water supply company. Individuals are responsible for paying all other service fees directly to the respective agencies or to the municipal trea- sury. Only property owners can have voting rights in JV and thus partici- pate in contracts for services, while other (renting) settlers usually par- ticipate in upgrading or maintenance works only through labor contributions. Property owners who do not live in the community and refuse to pay their share for approved improvements or services can be held responsible through a municipal by-law called the "Seccion Coativa," which records all due pay- ments and makes these mandatory any time the owner wants to transfer his property. Areas Selected for the Project 44. The communities selected for the upgrading component were speci- fically selected according to the following criteria: (a) communities or zones with serious deficits of infra- structure and basic services, as well as severe em- ployment problems; (b) high potential for improvements (i.e. appropriate physical/topographic conditions); (c) existence of a strong community organization (and interest) and previous participation and experience in small-scale development projects with AC. These communities have a history of mutual-help programs (see Attachment C-7 of this Annex for details). I/ The principal change introduced through the proposed project would be that the individual communities would pay the full costs of pro- vided infrastructure and services. ANNEX 4 Page 13 E. The Banco Industrial S.A. (BISA) 45. BISA was created in 1963 as a private Development Bank and has already established itself as a major source of financing for the private industrial and mining sectors. Besides supporting existing firms, BISA has also been active in financing the creation of new enterprises and ex- pects to devote an increasing share of its resources for this type of en- terprise. 46. BISA has received several credits and loans from the Bank Group, starting with a component which was part of the 1974 IDA Mining Credit Pro- ject. 1/ A second Bank Group financing to BISA was approved in June of 1976 and consisted of a US$10 million Bank loan to assist BISA in the finan- cing of private mining and industrial enterprises, and an IFC investment of up to US$500,000 to strengthen BISA's capital base. By means of this finan- cing, BISA is expected to provide an "investment window" through which IFC can participate in the development of Bolivia's private sector. 47. The financial viability and management capacity of BISA have been thoroughly examined in the past in connection with previous Bank/IFC finan- cing and found to be very satisfactory. The following sections provide a summary of general background information and a description of BISA's own- ership, organization, management and other important aspects. A more complete description of BISA is found in previous Bank reports (455-BO and 1132a-BO). Ownership 48. BISA's shareholders consist of four different groups: (a) Private Bolivian banks (21% of share capital); (b) Industrial firms and individuals (32%); (c) Foreign investors (32%); and (d) Medium Mining Enterprises (15%). The largest shareholder is the ADELA Investment Company, with 23% of BISA's share capital. DEG of Germany has officially announced its decision to subscribe to BISA's share for an amount equivalent to US$385,000. BISA is presently negotiating with the association of Medium Miners for a subscrip- tion equivalent to US$400,000 and expects to meet its subscription target of US$1.9 million by 1978. 1/ Mining Credit No. 455-BO for US$6 million ANNEX 4 Page 14 Organization, Management and Operations 49. According to the previous appraisal of BISA (Report 1132a-BO), BISA's staff, consisting of 17 professionals, and its management, is ex- perienced and competent. In past years BISA has expanded its operations and opened branches in other cities. The quality of BISA's appraisal work, which in its financial and economic analysis includes computation of economic rates of return, is considered satisfactory. Supervision, which now re- quires clients to submit semi-annual financial statements, has improved with respect to small-scale enterprises and is also expected to be im- proved in the near future for large clients as well. BISA has lengthened the average loan terms and finances a large percentage of fixed assets as opposed to working capital, a sign of the bank's growing maturity as a term lending institution. Financial Structure 50. Actual and Projected Balance Sheets and Income Statements are shown in Attachments D-1 and D-2. BISA's total assets grew sharply from $b 109 mil- lion (US$5.45 million) in 1973 to about $b 341 million (US$17.05 million) by the end of 1976, and are expected to double by 1978 and almost quadruple by 1981. Total portfolio, including L/C's and guarantees, has grown from US$9.3 million at the end of 1975 to US$16 million in 1976. Parallel to the projected growth of assets, total portfolio is expected to grow to US$35 million in 1978 and to US$50 million by 1980. Profitability and Dividend Yield 51. Profitability is expected to improve significantly over the next few years and to reach a 15% return from 1978 onwards. BISA sustained an average cash dividend rate of 8% between 1966 and 1971, which was stopped during an interval of political instability. Cash dividend payments were resumed with a 8.4% rate of year-end share capital of 1976 earnings. In- creased levels of profitability should allow BISA to sustain a cash dividend rate of about 10% from 1978 onwards. Small-Scale Industries 52. BISA has been financing, since its establishment, small-scale industries defined as those with equity of not more than US$50,000 and which employ not more than 50 persons. In 1975, such loans represented 50% of the total number of loans approved and 8% of total amount approved--with some concentration in the areas of food products and construction materials. BISA expects to increase its future lending to small-scale industrial enterprises and to about 10% of total amount. Resource Mobilization 53. BISA has been successful in raising foreign resources from institu- tions such as IDB, AID and IDA. However, domestic resources have been ANNEX 4 Page 15 difficult to obtain, thus limiting BISA's flexibility in the financing of pro- jects. BISA is aware of its limitations in this area and is considering mobilizing domestic resources through the issuance of debt securities of at least one-year term. BISA has agreed to carry out a study to determine the feasibility of a program to enable the sale of such securities. 54. BISA is discussing with the BC the possibility of increasing the relending rate of interest for foreign funds from 12% to 12.5% or 13%. This would give BISA a satisfactory spread and result in higher earnings than projected, thus helping BISA in its efforts to mobilize more equity resources. Present levels of equity capital are not expected to be a constraint to the drawing down of the proposed credit line. BOLIVIA ORGANIZATION OF THE BANCO NACIONAL DE LA VIVIENDA BOARD OF DIRECTORS I INTERNAL AUDITOR GENERAL MANAGER DEPUTY MANAGER GENERAL ACCOUNTANT TEC NICAUNTPANN ARCHITECTURE SUIS ACCOUNTING PERSONNL AN D PROJECTS AND ENGINEERING PROGRAMMING FINANCIAL ADMINISTRATIONS CREDIT OPERATIONS ADMINISTRATION FINANCIAL Lrt OFLEGAL CREDITS TECHNICAL rt DE'POSITSII rt World Bank 17482 Attachment A-2 BOLIVIA URBAN DEVELOPMENT PROJECT /1 Banco de la Vivienda (BANVI) Balance Sheets as of December 31 ($b '000) 1975 1976 ASSETS Current Assets Cash bank 15,654 5,967 Accounts receivable 329 2,711 Inventories - 58 Total Current Assets 15,983 8,736 Long Term Loans 18,849 46,825 Gross Fixed Assets 723 1,065 Less: Accumulated Depreciation 37) 134) Net Fixed Assets 686 931 Investments 27 27 Deferred Charges 964 977 TOTAL *SSETS 36,509 57 46 LIABILITIES AND EQUITY Current Liabilities Short-term deposits 19 541 Accounts payable 304 169 Deferred income 2 2 Total Current Liabilities 325 712 Long-Term Debt Mortgage fund 27 541 Time deposits 623 6,438 Total Long-Term Debt 650 6,979 Reserve for Employee Benefits 78 221 Total Liabilities 1,053 7,912 Equity Share capital 36,489 51,076 Retained Earnings (1,033) (1492) Total Equity 35,456 49,584 TOTAL LIABILITIES AND EQUITY 36,509 57,496 Ratios Current ratio 49.2 12.3 Average Total Assets - 47f003 % Increase in Total Assets 57.5 Debt as % of Long-term Capitalization 1.8 12.3 '- ource: xv ANNE 4 Attachment A-3 BOLIVIA URBAN DEVELOPMENT PROJECT Banco de la Vivienda (BANVI) /1 Actual and Projected Income Statement-- ($b '000) 1975 1976 1977 1978 Revenues Interest on loans 1,327 4,553 8,017 14,673 Commission on loans 262 1,176 1,798 2,867 Other income 50 71 8,006 11,610 1,639 5,800 17,821 29,150 Expenses Interest/commission on borrowings - 147 958 1,350 Salaries & other personnel expenses 2,159 5,490 9,792 12,881 General administrative expenses 104 179 350 683 Depreciation 36 98 387 780 2,299 5,914 11,487 15,694 Operating Income ( 660) ( 114) 6,334 13,456 Other expenses 373 345 345 404 Income before taxes (1,033) ( 459) 5,989 13,052 Provision for taxes - - 1,797 3,916 Net Income (1,033) ( 459) 4,192 9,136 /1 Source: BANVI ANNEX 4 Attachment A-4 BOLIVIA URBAN DEVELOPMENT PROJECT Banco de la Vivienda (BANVI) /1 Actual or Projected Sources and Applications of Funds Statement ($ '000) 1975 1976 1977 1978 SOURCES From Operations Net income (1,033) ( 458) 4,192 9,136 Add back depreciation 36 98 387 780 Total from Operations ( 997) ( 360) 4,579 9,916 Sale of Shares--Series "A" 31,400 11,071 4,000 - Sale of Shares--Series "B" 5,089 3,156 2,000 4,000 Deposits - 4,344 10,200 20,000 Loan repayments 18 1,940 14,423 23,698 External and internal financing 624 1,471 50,000 200,000 Reserves 27 541 5,045 9,405 TOTAL SOURCES 36,161 22,163 90,247 267,019 APPLICATIONS Loans 8,520 53,963 73,489 127,766 Investments 749 343 1,894 20,000 TOTAL APPLICATIONS 9,269 54,306 75,383 147,766 Increase(decrease) in Cash 26,892 32,143 14,864 119,253 (Total Sources - Total Applications) Opening Cash Balance 0 26,892 (5,251) 9,613 Plus(&iinus) Increase(decrease) in Cash 26,892 32,143 14,864 119,253 Closing Cash Balance 26,892 (5,251) 9,613 128,866 /1 Source: BANVI воL�У�А UiiвAN DEVELOPMENT PRAJECT Coлavi Orgaaizatioa Chart BOARD ОР� OIRECTORB EXECUTIVE OIRECTOR LEGAI 1NTERNAL AUD1T AOMINISTRATIVE MANAGER РиЫт Rеlвиапв Generel Servlcee АссоиМlпр WвгеПоиеИр Рогвоппаl Pubuc Мвтtепвпсе Bookkeep�np General 1nlormвtlon Ргосигетепl Соа1а Works F11B8 Соттlвввгу Р --- TECHNICAL MANAGER FINAHCIAL MANAOER Works Dep1 АгсвПвсtигв t Сопвtгисиап Тгеввигег 9вУ1лр lпсоте 7вхее 8ос1в1 Services Urbвn Р1вппlп� Coпtrect Worke Сопаtгисlюп Ргlсlпр SuperИS�on Force Account РоЛ1о1Ю Woгke ЕПр1ПВlГ1ПQ �ГУ1вIОП 1Vlcee НЧеиСП А Evoluetwn �г I 5leustкs , � Г в п м Lв ►ez 8вМв Cruz СосhвЬвтЬв Огиго Poloei Тап�в Висге Вет Рапда I �� �г го о м сл Gueyaram 1 r+ R Е G 1 О N А L О F f 1 С Е S Riheralle WоГ1д БапК-7762В BOLIVIA ORGANIZATION OF SPECIAL PROJECT UNIT WITHIN CONAVi FOR SITES AND SERVICES COMPONENT DIRECTOR CONAVI I GENERAL MANAGER PROJECT UNIT - - - - - - - - - --- BISA PROGRAM L - - - - - - D E.SIGN AND ENGINEE ]G HOUSE IMPROVEMENT SOCIAL DEPT. [INANCIAL ADMINISTRA EMPLOYMENT GENERATION] MUTUAL OF 17 P S SELECTIO E]ESIGN W 7AR EH LP GROU G L L E M T F H E BENEFICIA IES EG World Bank 17483 > r1t rt ANNEX 4 BOLIVIA Attachment B-3 URBAN DEVELOPMENT PROJECT Consejo Nacional de Vivienda (CONAVI) Profit and Loss Statement for Periods Ending December 31 ($b '000) 1974 1975 1976 1977 (Estimated) REVENUES Revenues from taxes 14,855 16,044 28,310 11,888 Interest on investment & other 12,383 12,066 14,537 24,060 Sale of property, mortgage and rents 355 684 1,462 - Insurance premiums 216 337 129 3,556 Other income 11,597 9,035 9,336 20,300 Total Revenues 39,406 38,166 53,774 60,499 EXPENSES Administrative Wages and .salaries 9,434 7,825 8,170 Other administrative expenses 9,445 9,417 9,163 Subtotal 18,879 17,242 17,333 Other Expenses Losses on doubtful accounts 2,264 2,857 - Interest and commissions 2,852 4,630 3,411 Miscellaneous 464 766 383 Total Expenses before Transfers 24,459 25,495 21,127 Transfers 13,907 5,823 24,078 Total Expenses 38,366 31,318 45,205 Net Surplus 1,040 6,848 8,569 RATIOS Administrative/total expenses before transfers .77 .68 .82 /1 Source: CONAVI ANNEX 4 Attachment B-4 BOLIVIA URBAN DEVELOPMENT PROJECT /1 Consejo Nacional de Vivienda (CONAVI) Balance Sheets as of December 31 ($b '000) 1974 1976 ASSETS Current Assets Cash and Bank 23,914 45,117 39,075 Accounts Receivable (net) 280,679 259,462 325,065 Total Current Assets 304,593 304,579 364,140 Fixed Assets Land and Equipment 10,492 1o,644 15,078 Less: depreciation on equipment (3,081) (3,599) (14,201) Net Fixed Assets 7,411 7,045 10,877 Operating Assets 21,750 68,794 112,859 Investments 399 607 770 Deferred Charges 27 26 77 Government Jebt 13,576 104,053 15,521 TOTAL ASSETS 347,756 "85,10 504,244 LIABILITIES AND CAPITAL Current liabilities 4,693 8,323 13,401 Long-term Debt 168,165 193,431 189,570 Interest/commission to LDB 517 1,012 472 Other Liabilities Fund for housing and other social benefits 11,082 10,989 5,791 Reserve fund for construction 148,786 163,374 231,591 Other reserves 9,782 12,391 17,862 Total Other Liabilities 169,650 186,754 255,244 Total Liabilities 343,025 389,520 458,687 Capital 9,394 91,317 19,207 Results from Operations (5,703) (2,581) 17,781 Accumulated Surplus (Deficit) 1,040 6,843 8,569 Net Results (4,663) 4,266 26,350 TOTAL LIABILITIES AND CAPITAL 347,756 L8) lo 0 /1 Source:CORAVI - ANN1 4 Attachment B-5 STAFFING OF NATIONAL HOUSING COUNCIL (CONAVI) CODE DESCRIPTION 1975 1976 1977 1 Executives 4 4 4 2 Graduate Professionals 30 38 38 3 Middle-lavel technicians 44 38 35 6 Administrative 112 111 122 7 Services 39 39 30 8 Orkmen 31 30 - 9 Temporary 23 18 - 283 278 229 la Paz, February 7, 1977 A糾NLX森 Attac爪ent Gl BOLIVIA URB自闢0日VELOP開C開t PROJEC鸞 HONORA日LE ALCALbIA MUNIC面pALI闢義。） 0唱a&i。白tion Chart 病手 W。一d日日n k17石麗 ANNEX 4 Attachment C-2 BOLIVIA HONORABLE ALCALDIA MUNICIPAL (HAM) Balance Sheets as of December 31 ($b '000) 1973 1974 1975 1976 ASSETS Current Assets Cash and Bank 9,151 28,201 37,735 10,163 Accounts Receivable 14,474 18,413 12,848 24,563 Inventories 918 850 1,870 16,712 Other Current Assets 47,501 50,004 53,117 57,656 Sub-total 72,044 97,468 105,570 109,094 Property and Equipment 45,886 47,952 50,670 75,338 Investments - 16,228 - 17,397 Prepaid Expenses 55,501 30,277 35,758 40,219 TOTAL ASSETS 173,431 191,925 191,998 242,048 LIABILITIES AND EQUITY Current Liabilities Accounts Payable 1,411 17,909 9,962 14,437 Bonds Payable 47,501 50,004 53,117 58,727 Deferred Income 3,138 4,089 8,300 3,349 Other 57,565 16,767 13,374 19,868 Total Current Liabilities 109,615 88,769 84,753 96,381 Long-term Liabilities Notes Payable - 48,338 53,214 111,316 Other 15,344 7,677 8,162 5,080 Total Liabilities 124,959 144,784 146,129 212,777 Equity Municipal Equity 45,886 38,073 50,670 73,530 Excess of Assets over Liabilities and Equity 2,586 9,068 (4,801) (44,259) Total Equity 48,472 47,141 45,869 29,271 TOTAL LIABILITIES AND EQUITY 173,431 191,925 191,998 242,048 ANNEX 4 Attachment C-3 BOLIVIA URBAN DEVELOPMENT PROJECT Honorable Alcaldia Municipal (HAM) Funds Flow Statement for the Periods Ending December 31 ($b '000) 1973 1974 1975 1976 SOURCES Revenues License charges 58,330 78,206 107,323 134,476 Municipal taxes 24,633 27,784 38,170 46,419 Fees for services 17,726 16,795 20,272 33,521 Other charges 31,987 41,488 59,493 79,319 Sub-total 132,676 164,273 225,258 293,735 Transfers 4,114 21,357 21,083 19,955 Internal credit - - 12,074 64,000 External credit - - - - Other income 7,460 1,952 2,901 2,234 TOTAL SOURCES 144,250 187,582 261,316 379,924 APPLICATIONS Administrative 14,012 19,949 20,051 29,850 Office of Financial Services 13,393 19,079 94,469 95,597 Offices of Culture, Health & Regional 12,296 20,679 23,279 11,563 Special & Technical Municipal Services 36,188 50,084 55,871 82,520 Public Debt 4,754 10,224 - - Transfers 29,986 36,420 - - Miscellaneous - - - 35,288 Sub-total 110,629 156,435 193,670 254,818 Public Works 34,742 25,044 41,405 96,076 TOTAL APPLICATIONS 145,371 181,479 235,075 350,894 Surplus (Deficit) ( 1,121) 6,103 26z241 29,030 ANNEX 4 BOLIVIA Attachment C-4 URBAN DEVELOPMENT PROJECT Honorable Alcaldia Municipal (HAM) Projected Funds Flow Statement For the,-Years ending December 31 ($b million) 1977 1978 1979 1980 1981 1982 SOURCES Tax receipts 287.2 350.3 429.0 527.6 650.8 756.6 Nontax receipts 76.7 165.5 258.4 374.2 397.2 449.0 Transfers 26.0 - - - - - Other income 91.3 154.3 177.6 202.4 212.8 229.7 Internal credits 30.0 - - - - - External credits 223.1 15.0 - - - Other credits 127.0 210.0 180.0 65.0 6o.o - TOTAL SOURCES 861.3 895.1 1,045.0 1,169.2 1,320.8 1,437.3 APPLICATIONS Personnel Services 131.3 138.0 144.8 152.0 159.6 167.6 Non-personnel Services 18.8 19.7 20.7 21.7 22.8 23.9 Miscellaneous 28.0 29.4 30.9 32.1 34.1 35.8 Transfers 136.2 105.0 120.1 145.1 175.8 201.4 Investments 471.0 518.1 569.9 626.9 689.6 758.6 Interest/Commission 34.3 35.7 50.1 57.1 49.8 37.8 Loan Repayments 45.2 48.5 107.2 133.0 184.8 161.4 TOTAL APPLICATIONS 864.8 894.4 1,043.7 1,167.9 1,316.5 1,386.5 CASH,BEGINNING OF YEAR 3.5 0 .7 2.0 3.3 7.6 Increase (decrease) in cash during year 3.5 .7 1.3 1.3 4.3 50.8 CASH, END OF YEAR 0 .7 2.0 3.3 7.6 58.4 ANNEX 4 Attachment C-5 BOLIVIA URBAN DEVELOPMENT PROJECT Honorable Alcaldia Municipal (HAM) Human Resources (Projected) 1974 1975 1976 1977 Professionals 111 120 119 1-51 Technical Staff 81 59 57 102 Administrative 911 893 752 789 Military - - 462 361 ;orkers 2,548 2,597 1,690 1,664 Servicing 68 63 338 120 Miscellaneous 42 29 161 38 Total 3,761 3,761 3,579 3,225 ；난［ ! ,WLIVIA kNNU 4 Attachment C-7 UUM DEVEWPMMT PROJECT ACCOUNT OF E)MCUTION OF WORKS UNDER THE DIRECTION OF ACCION COKUNAL - 197 SECOND SEMESTER WORK ZONE SECTOR TOTAL COST Social Center Villa Litoral San Antonio Alto 89,533-68 Open ebanneling of water Alto Miraflores Palvorin io,647.8o Open channeling of water Villa Fatima Las Delicias 13,022.00 Public water pumps Alto Miraflores 27 de Mayo Santa Rosa Grande 127,390-00 .-,,pen channeling of water Las Delicias Alto Rosasani 122,244.oo Open channel Tembladerani Sector 8 lO,io4.qo Classrooms Pura Pura Escuela Fe y Alegria 215,000-00 3 Bridge and pavement of sidewalk Tembladerani Jucumarini 25 de diciembre 34,38, -59 -,ewer,.ge depositories Villa nuevo Potosi 3,933-00 Water storage tanks Achachicala Camir Pats. 123,375.8,3 Stone steps and gutters Villa Copacabana Calixto Ascarrunz 407,026.00 Steps and storm drainage Chamoco Chico Calle Navarro 28,226.25 Sewerage Mariscal Santa Cruz Canchon Zua-o 291,65o.54 Stcne steps Munaypata Calls Laribaor 20,506-D7 chool fences Villa El Carmen Colegio Iren* Nava de Castillo 21,386.92 Public water facilities Achachicala. Bajo Vino Tinto 265,648.oo 7 Container walls Chamoco Chico Segaenkatj 15,140.71 3 Installation of drainage pipes Villa Nuevo Potosi 83,666.57 -9 Public water facilities Villa El Carmen El Roaal 77,360. Stone steps Villa Fatima Las Delicias 8,327-50 3anitary/laundry Chamoco Chico Poke Poke 81,352.21 '2 Bridge Villa Chapura 27,141.66 Bridge Alto Calvario Humahuaca 27,141.66 4 Gutters Villa San Antonio Padre Eterna 3-1,768.25 Public water facilities Alto Miraflores Cupilupaca 78,284.oo 0 Stone steps, gutters Tembladerani Lucrecia Sausal 133,99-.70 Social center, library, park El Tejar Calls Menacho y Colque 133097.70 Stone steps, gutters Tembladerani Las Nieves 26,417.co 19 Sewerage gutters Alto Meal. Santa Cruz P&rte Alta 29,375-71 Ditches Vino Tinto Geman Busch 19,475.43 Sewerage depositories Villa Nuevo Potosi Parroquia San Jose 36,724.lo 32 School Villa Santa Rosa Polvorin 230,255-35 3 Center for Mothers Alto Tejar 170,000.oo 34 Center for Mothers San Antonio Sector Este 63,526.67 35 Stone steps and walls Villa Nuevo Potosi Parte &Its 4 do Mayo y '6 Gozalves .95,651-50 Stone steps and gutters Obrajes Bella Vista 30,279-50 Walls, garbage dump Tembladerani Rio Melchuco 6o,39o.oo Channeling sewerage Sagrado Corazon Quints. Seccion 53,958.45 Stone steps Alto Miraflores 5 Dedos 6,425.5o Public water facilities Santa Rosa A.Miraflores 5 Dedos 109,089.00 Container wall Santa Rosa Tiji 26,053.20 Social Center Alto Miraflores Condorini 87,84).lo Artesan school El Tejar ---- 694,924.80 4 Sewerage depositories Rio Fuancarani Villa Fatima Las Delicias 10,979-50 5 Sewerage depositories Santa Rosa 5 Dedos 10,934-50 Stone steos Pura Pura Achachicala Febril 12,426.22 -7 Stone steps San Antonio de la Cruz Parada colectivos 24 39,419.1o Cloaed channels for water Villa CoDacabana Rio Venecia 272,8o5.oo 49 Gutters and walls Villa Fat-i=a Las Delicias 10j, 251.68 40 Gutters Villa El Carmen El Rosal 20:2o8.6o l Gutters Alto Miraflorea Pokeni Callejon A y B 14,261.52 92 Container wall Alto Vill& Copacabana 8,675.00 3 Reinforce concrete ceilings Challpampa 4,431-50 54 Store steps Tecagua 8,116.og 55 Onen channels for water Norte Alto Calvario 7,699.12 Sustaining walls Chamoco Chico Poke Poke 269003-00 57 Sustaining walls Chamcco Chico Seguenkani 10,659-98 58 Stone steps and sewerage gutters Alto Miraflores Santa Rosa 33,972.00 9 Sewerage deuositories Villa Copacabana Valle Hermoso 29,999.70 Stone steus Callampaya San Geronimo 5go62.25 01. Ca=unal Center San Antonio Lotec "FORNO" 153,023-00 62 Enlarging of a sanitary post El 7eiar Centro Parroquial 137,039.70 BOLIVIA BANCO INDUSTRIAL S. A. Projected Profit and Loss Statements for Periods ending December 31 (In $b million) .97 71980 1981 INCOME Interest on loans 28.2 45.3 69.1 88.0 109.5 136.3 Contissions 9.9 12.1 13.2 14.4 15.9 16.b Commissions8 .0 Others 12.8 Total Income EXPENSES Interest 15.9 24.9 38.0 h6.6 58.0 72.3 Gross Spread 247.0 70.2 Salaries 5.2 5.5 6.5 7.4 8.1 9.0 Administrative expenses 3.2 3.6 3.9 4.4 5.1 5.8 Contributions 0.4 0.4 0.4 0.5 0.6 0.7 Depreciation 0.4 0.5 0.8 0.9 1.1 1.5 Write-off of portfolio losses 1.4 3.6 3.6 7.3 10.2 13.9 Others 1.3 1.1 1.0 1.1 1.1 1.2 Total othrr expenses 11.9 1 T 6 32.1 Profit before taxes 12.7 20.3 30.8 36.9 44.0 51.3 Provision for taxes 3.8 6.1 9.2 11.0 13.2 15.4 Contribution to Eraployees Fund 0.9 1.4 2.2 2.6 3.1 3.6 Net Profit 19. 23.3 27.7 32.3 APPROPRIATIONS Legal reserve 0.9 1.4 2.2 2.6 3.1 3.6 Reserve for AID loan 0.9 1.2 -.- - Stock lvidends 3.1 5.1 8.6 10.4 12.3 14.4 Cash Dividends 3.1 5.1 8.6 10.3 12.3 14.3 RATIOS Total income as % of ATA 11.7 13.7 13.9 13.6 13.5 13.4 Financial expenses as % of ATA 5.8 5.7 6.2 6.1 6.1 6.2 Gross spread as % of ATA 8.9 8.0 7.7 7.6 7.4 7.2 Net profit as % of ATA 2.9 2.9 3.2 3.0 2.9 2.8 rt BOLIVIA Attachment D"2 URBAN DEVEIOPMENT PROJECT Banco IdAstriai S. A. . *L /2 Projected Balance Sheets as of Deceaber 3K .(In $b Mion) 1976 21 1978 179 1980 123. ASSETS (Actual) Current assets Cash and banks 12.3 17.8 10.6 10.0 12.3 6.8 .ccounts receivable 4.6 10.5 7.1 7.3 7.6 8.0 Current portion of loans outstanding . 13.0 18.8 211.0 226.0 241.0 Total current assets 9u.3 163.3 207.5 2 21 5.7. 79 -25.B Loana Outstanding 313.9 482.9 650.1 803.8 996.5 1,232.6 Investments 3.3 4.9 6.8 8.7 11.1 15.0 Less portfolio provisions (.f7 (3. U.5) (1). (4.0 (.0O) Total portfolio 314.5 184.6 653.4 809.0 1,003.6 1,243.6 Less current portion (77.4) (135.0) (189.8) (211.0) (226.0) (241.0) Fixed and other assets (net) 20-4 21.7 22-3 23-0 TOTAL ASSETS 4 b92.8 8.6 1,046.5 1 LIABILITIES AND EQUITY Current Liabilities Accounts Payable 2.6 5.5 6.0 8.2 9.0 11.9 Other Current Liabilities 1.2. 2 6. 0. .9 42.7 Total Current Liabilities 17.8 22.9 32.7 38. W.9 37. Long-term Debt AID 28.7 24.2 20.3 16.2 12.1 8.2 BID 82.7 156.9 175.0 173.3 171.6 169.? KW 26.7 39.9 39.9 38.2 36.5 34.8 Banco Central 17.2 18.6 21.1 21.3 11.2 13.1 ID 40.8 91.0 100.0 100.0 100.0 100.0 IBRD - 26.0 99.4 175.5 200.0 200.0 Others . 60.0 87.0 150. 00.0 500.0 Total Long-term Debt W29T. 8 . . 7.0 31,025.8 Other Liabilities 1.5 1.2 1.8 2.0 2.5 2.7 Equity Paid-in share capital 37.1 71.2 81.3 96.3 121.6 148.9 Legal reserve 2.6 4.0 6.6 9.2 12.,3 15.9 Reserves for AID loan 2.1 3.6 - 3.6 3.4 3.1 2.9 Retained Earnings 6.4 10.2 17.2 20.7 21.6 28.7 Total Equity 89.0 109.7 l9T AID Loan (quasi-equity) 3.6 3.6 3.6 3.1 3.1 2.9 TOTAL LIABIMITIES AND EQUITY 4.6 848.6 RATIOS /1 Current ratio / 5.3 7.1 6.3 5.9 5.5 4.7 Debt/equity 5.6 4.7 5.0 5.2 5.2 5.2 Percentage increase in total portfolio 54.1 31.8 23.8 24.1 23.9 Percentage increase in total assets 56.4 29.9 22.5 23.3 22.5 Current portion/Loans outstanding .25 .28 .29 .26 .23 .20 average Total &ssets (ATA) 276.0 L37.2 013.1 770.7 9L7.0 1,1h.5 /1 Does not include current portion of Long-term debt. /2 Source: 3I1S ANNEX 5 BOLIVIA URBAN DEVELOPMENT PROJECT Project Cost Estimates, Cost Recovery, Pricing and'Cash Flow A. Project Cost Estimates 1. A summary of project cost estimates is shown in the tables below. Further details are given in the attachments to this Annex. SUMMARY PROJECT COSTS /a Local Foreign Total Local Foreign Total ---In $b (Millions)--- ---In US$ (Millions)--- A. Sites and Services Infrastructure 106.80 30.40 137.20 5.34 1.52 6.86 Materials Credits 30.80 2.40 33.20 1.54 .12 1.66 B. Urban Upgrading Infrastructure 11.80 15.00 26.80 .59 .75 1.34 Materials Credits 11.00 .60 11.60 .55 .03 .58 C. Markets 5.00 1.20 6.20 .25 .06 .31 D. Credits for Artisans 21.80 39.20 61.00 1.09 1.96 3.05 E. TechVical Assistance 9.60 30.00 39.60 .48 1.50 1.98 Subtotal 196.80 118.80 315.60 9.84 5.94 15.78 Engineering 12.60 .40 13.00 .63 .02 .65 Supervision 5.40 .20 5.60 .27 .01 .28 Management lb 27.00 .80 27.80 1.35 .04 1.39 Subtotal 45.00 1.40 46.40 2.25 .07 2.32 Contingencies (i) Physical /c 15.60 6.80 22.40 .78 .34 1.12 (ii) Price Escalation /d 49.40 16.40 65.80 2.47 .82 3.29 Subtotal 65.00 23.20 88.20 3.25 1.16 4.41 Total cost of project including land cost /e 306.80 143.40 450.20 15.34 7.17 22.51 /a Do not include mutual-help labor contributed by project beneficiaries of sites and services urban upgrading. /b Includes preparaing bidding procedures and organizing self-help programs. /c Physical contingencies are estimated to be 15% of civil works costs. /d Assuming annual price increases of 18% in 1977, 16% in 1978 and 14% there- after in the domestic component and 9% from 1977 to 1979 and 8% thereafter in the foreign component. /e Land acquisition costs for components A and C above amount to $b 21.20 and are included in respective local costs. BOLIVIA URBAN DEVELOPMENT PROJECT COSTS OF SITES AND SERVICES COMPONENT P In 4b (millions) In US$ (millions) Project Component Local Foreign Total Local Foreign Total Land 21.00 - 21.00 1.05 - 1.05 On-site Infrastructure 18.00 16.40 34.40 .90 .82 1.72 Off-site Infrastructure 7.40 7.20 14.60 .37 .36 0.73 Community facilities 8.20 3.00 11.20 .41 .15 .56 Subtotal 54.60 26.60 81.20 2.73 1.33 4.0b Basic Units Serviced Plot 2.00 .40 2.40 .10 .02 0.12 Option A 13.40 1.00 14.40 .67 .05 0.72 Option B 18.40 1.40 19.80 .92 .07 0.99 Option C 18.40 1.00 19.40 .92 .05 0.97 Subtotal 52.20 3.80 56.00 2.61 .19 2.80 Direct Cost before Professional Services and Contingencies 106.80 30.40 137.20 5.34 1.52 6.86 Construction Materials Loans 30.80 2.40 33.20 1.54 .12 1.66 Professional Services /1 33.40 .80 34.20 1.67 .04 1.71 Contingencies 1. Physical 15% 12.80 4.60 17.40 .64 .23 .87 2. Price escalation /2 40.00 10.80 50.80 2.00 .54 2.54 Subtotal 52.80 15.40 68.20 2.64 .77 3.41 TOTAL 223.80 49.00 272.80 11.19 2.45 13.64 /1 These costs include: 7% design, 3% supervision, and 15% management on base cost plus physical contingencies, excluding land. /2 Assuming annual price increases of 18% in 1977, 16% in 1978 and 14% in 1979 and 1980, in the domestic component, and 9% in 1977-79 and 8% in 1980 in the foreign component. BOLIVIA URBAN DEVELOPMENT PROJECT COSTS FOR URBAN UPGRADING COMPONENT In $b (millions) In US$ (millions) Project Component Local Foreign Total Local Foreign Total Sewerage 3.00 5.80 8.80 .15 .29 .44 Water Supply 1.80 1.80 3.60 .09 .09 .18 Pavement 2.40 5.20 7.60 .12 .26 .38 Refuse collection .60 .20 .80 .03 .01 .04 Subtotal 7.80 13.00 20.80 .39 .65 1.04 Community Facilities Schools 3.40 1.20 4.60 .17 .06 .23 Community Center .20 .60 .80 .01 .03 .04 Health Post (upgrading of existing facilities) .40 .20 .60 .02 .01 .03 Subtotal 4.00 2.00 6.00 .20 .10 .30 Direct Cost before Professional Services and Contingencies 11.80 15.00 26.80 .59 .75 1.34 Construction Materials Loans 11.00 .60 11.60 .55 .03 .58 Professional Services /1 10.20 .20 10.40 .51 .01 .52 Contingencies 1. Physical 15% 2.00 2.00 4.00 .10 .10 .20 2. Price Escalation /2 6.80 5.00 11.80 .34 .25 .59 Subtotal 8.80 7.00 15.80 .44 .35 .79 TOTAL 41.80 22.80 64.60 2.09 1.14 3.23 /1 These costs include: 7% design, 3% supervision, and 15% management on base cost plus physical contingencies, excluding land. /2 Assuming annual price increases of 18% in 1977, 16% in 1978 and 14% in 1979 and 1980, in the domestic component and 9% in 1977-79 and 8% in the foreign component. BOLIVIA URBAN DEVELOPMENT PROJECT COSTS FOR RETAIL MARKETS COMPONENT In $b (million) In US$ (millioDs) Project Component Local Foreign Total Local Foreign Total Land .20 - .20 .01 - .01 Construction 4.80 1.20 6.00 .24 .06 .30 Subtotal 5.00 1.20 6.20 .25 .06 .31 Direct Cost before Professional Services and Contingencies 6.38 1.20 6.20 .25 .06 .31 Professional Services /1 1.40 .40 1.80 .07 .02 .09 Contingencies 1. Physical 15% .80 .20 1.00 .04 .01 .05 2. Price escalation /2 2.60 .60 3.20 .13 .03 .16 Subtotal 3.40 .80 4.20 .17 .04 .21 Subproject Cost 9.80 2.40 12.20 .49 .12 .61 /1 These costs include: 7% design, 3% supervision, and 15% management on base cost plus physical contingencies, excluding land. /2 Assuming annual price increases of 18% in 1977, 16% in 1978 and 14% in 1979 and 1980, in the domestic component, and 9% in 1977-79 and 8% in 1980 in the foreign component. UQ ANNEX 5 Page 5 B. Cost Recovery and Pricing 2. The recovery costs for the project will come mainly from charges and sales to final users. About 78% of total costs will be recovered from the beneficiaries. The remaining costs will be absorbed by the Government and recovered from general tax revenues, including local taxes. The summary costs and recovery sources for each of the subprojects and for the total project are shown in the table below: Recovery Sources (in US$ million) Beneficiaries Government Project Monthly Alloca- Costs Charges % tions % A. Sites and Services Land 1.05 .98 93 .07 7 On-site infrastructure housing 8.50 8.50 100 - - Off-site infrastructure and community facilities 2.43 .13 5 2.30 95 Construction materials Loans 1.66 1.66 100 - - Subtotal 13.64 11.27 83 2.37 17 B. Urban Upgrading Infrastructure 2.00 2.00 100 - - Community facilities .65 .15 23 .50 77 Construction materials loans .58 .58 100 - - Subtotal 3.23 2.73 85 .50 15 C. Markets Land .01 - - .01 100 Construction .60 .60 100 - - Subtotal .61 .60 98 .01 2 D. Credits for Artisans 3.05 3.05 100 - - E. Technical Assistance 1.98 - - 1.98 100 TOTAL 22.51 17.65 78 4.86 22 ANNEX 5 Page 6 Sites and Services in El Alto 3. Costs of this component (US$13.64 million) will be mostly re- covered through monthly payments by the beneficiaries. These payments will cover the costs of the urbanized sites, core shelter units and construction material credits. Total costs recovered from the beneficiaries will amount to US$11.27 million, or about 83% of total component costs. The balance, corresponding to the costs of off-site infrastructure and schools, will be recovered through surcharges of tariffs and government budgetary allocations to the Ministry of Education, respectively. The detailed costs and recovery sources for each element of the component are shown in the table below (in US$ million): Sites and Services Recovery Sources Charges to Beneficiaries Government Project Costs (US$ million) Amount % Amount % Land 1.05 .98 93 .07 7 Infrastructure 2.45 1.72 70 .73 30 Community facilities .56 .06 11 .50 89 Serviced Plot .12 .12 100 - - Core Option A .72 .72 100 - - Core Option B .99 .99 100 - - Core Option C .97 .97 100 - - Management 1.71 1.36 80 .35 20 Physical Contingencies .87 .69 79 .18 21 Price Escalation 2.54 2.00 79 .54 21 Subtotal 11.98 9.61 80 2.37 20 Construction Materials Loans 1.66 1.66 100 - - Total 13.64 11.27 83% 2.37 17% 4. The amou ts directly recovered from the development costs assigned to an average 90 m residential plot, i.e. costs of land, infrastructure net- works, community facilities and contingencies, but excluding on-plot develop- ment and the basic shelter unit, will be USJ641; while in the case of an average commercial/industrial site of 400 m , the corresponding costs directly recovered through monthly payments by beneficiaries will be US$3,800. These sums include the cost of individually allocated land plus a proportional share ANNEX 5 Page 7 of land for public use (streets and open sp ces). Different prices have been assigne to land cost, namely about $b 30/m for residential and about $b 70/m for commercial/industrial plots. This differentiation reflects the better location of the commercial plots and was also used to reduce the price of residential plots. The detailed breakdown of costs per plot are shown in the table below: Unit Costs Charged to Beneficiaries (US$) Residential plot (90 mn) Commercial plot (400 m2 Land 132.52 1,389.00 Infrastructure networks 256.97 1,210.25 Community Facilities 10.13 79.15 Engineering, Design and Management 83.41 369.84 Physical Contingencies 40.06 192.96 Price Contingencies 117.95 558.46 Total US$ 641.04 US 3,799.66 In addition to these costs which will be recovered through monthly pay- ments, downpayments amounting to another US$34.50, or approximately 5% of a residential plots' allocated cost, will be provided by the beneficiaries in the form of voluntary labor under a mutual-aid program. 5. The additional costs corresponding to the four options of con- struction provided on each residential plot are shown in the table below (including all contingencies). These costs will also be fully recovered through monthly payments. Option Unit Costs (US$) Serviced plot (sanitary installation only) 269.14 Core Option A (semi-finished core unit) 700.14 Core Option B (finished core unit) 1,120.58 Core Option C (larger unit) 1,644.14 6. The serviced plots and core shelter units will be sold to the beneficiaries and paid for in monthly payments over a period of 20 years. 1/ The larger commercial/industrial plots will be mostly rented or paid for 1/ A payments scheme based on progressive payments over time has also been considered and could be applied if preferable to the individual settler. ANNEX 5 Page 8 in seven years. Based on the figures and assuming an interest rate of 10% on the financial charges to the beneficiaries, the monthly payments (which in- clude urbanization) and the income groups that would be able to afford each of the options are as follows: Option Charge to Monthly Required (including land beneficiaries payment monthly income /a and urbanization) (US$) (US$) (US$) Serviced plot 910 9.0 45 Core Option A 1,341 12.6 63 Core Option B 1,762 17.0 85 Core Option C 2,285 22.0 110 Commercial plot 3,800 63.1 - /a Equals five times estimated monthly mortgage payments 7. The credits for construction materials available to the buyers of serviced plots and core units are estimated to average about US$300 per family and would amount to a total of US$1.66 million. The payment terms for these credits will be (on the average) five years and a 10% interest rate. The corresponding monthly payment for the average credit of US$300 will be US$6.38. 8. Total cost of this component includes connection costs of each plot to the water and sewerage networks, but not the connection to the electricity network. The charge for this connection is about US$7.40. Other project-related expenses for residents in the two areas will be water and electricity consumption charges; these amount to $b 25 and $b 18 per month, respectively, and correspond to the tariffs for minimum consumption in both cases. 9. The projected cash flow of this component is shown in Attach- ment 6. Urban Upgrading 10. Total costs for this component have been estimated at US$3.23 million, including construction materials loans for US$0.58 milion. These costs will mainly be recovered through monthly payments by the benefi- ciaries (US$2.73 million). The balance (US$0.50 million) will be absorbed by ANNEX 5 Page 9 the Government and covered through budgetary allocations to the Ministry of Education for the construction costs of the planned schools; and to SAMAPA, for off-site infrastructure. The beneficiaries will contribute US$.71 million in the form of labor under a mutual aid program. Detailed costs of this component and recovery sources are shown below (in US$ million): Urban Upgrading Recovery Sources Project Charges to Beneficiaries Government Costs Amount % Amount % Infrastructure 1.04 1.00 96 .04 4 Community Facilities .30 .07 23 .23 77 Management .52 .44 85 .08 15 Physical Contingencies .20 .16 80 .04 20 Price Escalation .59 .48 81 .11 19 Subtotal 2.65 2.15 81 .50 19 Construction materials loans .58 .58 100 - - Total 3.23 2.73 85 .50 15 11. This component will reach an estimated 4,500 families of which 4,000 will participate in the general upgrading program and another 500 households will only need construction materials credits. Financial charges to each of the 4,000 households will average about US$466. This amount will be repaid over a period of 15 years (at 10%) in equal monthly payments of US$4.80. Credits for construction materials to allow improvements in the existing dwellings will be available to all 4,500 families and total about US$584,000. The credits would also be fully recovered through monthly pay- ments by the beneficiaries. The repayment period will be an average of five years and the interest rate 10%. For an average credit of US$200, the monthly payments will be US$4.25. 12. Costs of the upgrading component do not include individual connec- tion costs to the water supply and sewerage networks; these could be covered by the individual materials credits. Individual water supply connections are ANNEX 5 Page 10 optional and families not wanting these will still have access to public spigots. Estimated costs of the materials for the sewerage connection are about US$37.50. 13. Other related expenses for the residents in the upgrading areas are municipal and revenue taxes, as well as water and electricity consump- tion charges. A summary of total anticipated monthly payments are shown below: Monthly Payment (US$) Infrastructure 9.54 Construction Materials Credit (US$200) 4.25 Taxes a) Municipal .83 b) State .42 Electricity (minimal tariff) 1.10 Water (from public spigot) .50 Total US$16.64/month 14. A projected cash flow is shown in Attachment 7. Markets 15. Total costs of this component have been estimated at US$0.61 million, inclujing land and contingencies. Each market will ini ially consist of a 600 m building for 60 fixed stalls, as well as a 900 m paved area for an es- timated 200 vendors. Both the stalls inside the building and the space out- side will be rented. 16. The cost of the markets (including contingencies, but excluding land costs) will be recovered through monthly rent charges to stall opera- tors and transient vendors over the estimated life of the building (20 years). Detailed costs and recovery sources of the subproject are shown in the table below (in US$ million): ANNEX 5 Page 11 Markets Recovery Sources Project Beneficiaries Government Costs Amount % Amount % Land .01 - - .01 100 Construction .30 .30 100 - - Management .09 .09 100 - - Physical Contingencies .05 .05 100 - Price Escalation .16 .16 100 - - Total US$0.61 US$0.60 98 US$0.01 2% 17. Assuming an interest rate of 10%, total mortgage charges per market (60 stalls + vendors) will amount to about US$1,160 ($b 23,200). Monthly rental charges of US$12.5 per stall ($b 250) will provide US$750, and the difference will be covered by the rental charges to the transient vendors. The municipality also requires the payment of two fees (Licencia and Patente) presently totaling US$25.60 per year to cover, among other expenditures, maintenance costs. 18. Attachment 8 shows the projected cash flow for this component. Credits for Artisans and Small-Scale Enterprises 19. The total amount envisaged for this component is US$3.05 million, of which US$1 million has been estimated to be needed for credits to arti- sans and craftsmen, residents of the upgrading and sites and services areas of the project. The remaining US$2.05 million would be available for credits to small-scale enterprises (SSE) located in the project areas. All costs of this component will be recovered through monthly payments by the credit beneficiaries. The Government has agreed to guarantee the loans to artisans with US$300,000. These loans, up to an amount of US$5,000 each, will be for a period of up to eight years at an annual interest rate of 12%. The loans to SSE up to an amount of US$40,000 per loan, will be for six per- centage points to cover possible defaults and additional administrative work, and feasibility studies where required. The loans to artisans will finance up to 90% of individual capital needs, while for SSE, the credits will finance up to 70% of the individual firms' investment requirements. 20. A projected cash flow for this component is shown in Attachment 9. 21. A consolidated cash flow of all project funds components is shown in Attachment 10. AnEX 5 Attachment 1 BOLIVIA URBAN DEVELOPMENT PROJECT Detailed Project Costs--Sites and Services Component. Base Costs for Infrgstructure & Facilities (January 1977 Prices--US$) Villa Adela Unit Cost Estimated for (Total) Villa Adela Total Project ON-SITE INFRASTRUCTURE - Water network base 196,138- 81.52 450,398- - Plot connections 82 405- 34.24 189 176- Sub-total 278,543- 115.76 639,574- - Sewerage and drainage (combined) 291,461- 121.14 669,294- - Septic holding chamber 16,255- 6.76 37,327- - Plot connections 33,684- 31.10 173,485- Sub-total 311,400- 142.00 783,971- - Earthworks 18,171- 7.55 41,727- - Paving footpaths and streets 73,821- 30.68 191,664 (22,146 mutual- help) - Curbs (vehicular streets) 4,200- 1.75 9,645- Sub-total 96,192 o.oo 243,036 - Refuse collection recepticles 20,h') 8.49 -- - Installation of bases 1,08U .45 -- - Collection vehicle 19,3? 8.23; 45j557- Sub-total 41,343 17.18 94,938- TOTAL ON-SITE INFRASTRUCTURE 757 ,70 31h.82 1,761,519- COMMUNITY FACILITIES Schools 253,000 506,oo Sports fields 3,398 8,495 Community centers 35,984 89,960 Community offices 5,275 12,500 Bus shelters 2,375 9,500 Reforestation 3,200 8000 TOTAL C.F. 305,232 12 3.86 634l455- OFF-SITE INFRASTRUCTURE Trunk water mains 91,534 Access roads (paved) 69, r2 Power and lighting _321 0 TOTAL OFF-SITE 193,126 80.26 733, 83 ANNEX 5 Attachment 2 Page 1 BOLIVIA URBAN DEVELOPMENT PROJECT Detailed Project Costs--Sites and Services Component Base Costs for Plot Construction (January 1977 Prices--US$) Unit Volume Unit Cost Total A. SERVICED PLOT 1. Site Preparation per plot - 5.00 5.00 2, Plot Levelling per plot - 2.50 2.50 3. Plot Sighting per plot - 3,00 3.00 4. Foundation Excavation m3 0.76 1.23 0.93 5. Foundations m3 0.70 16.20 11.34 6. Foundation Caping 3 0.30 24.40 7.41 7. Waterproofing m 3.80 0.14 0,53 8. Plumbing (Sanitary Drainage) - - - 29.25 9. Register - 2.00 19.00 38.00 10. Water Pipes - 2.00 - 24,46 11. Toilet - 1.00 12.50 12.50 TOTAL BASE COST 143.80 B. OPTION A 1. Site Preparation per plot - 5.00 5.00 2. Plot Levelling per plot 2.50 2.50 3. Plot Sighting per plot - 3.00 3.00 4. Foundation Excavation m3 2.87 1.23 3.52 5. Foundations m3 2.61 16.20 42.28 6. Foundation Caping m3 1.05 24.90 25.62 7. Waterproofing m 13.05 0.14 1.83 8. Adobe Walls 2 23.81 2.70 64.29 9. Lintles a 2.60 3.10 8.06 10. Gutters a 1.20 2.75 3.30 11. Roof (Corrugated Tin) m2 12.24 7.00 85.68 12. Doors m2 1.60 20.00 20,00 13. Windows m2 1.44 12.50 12.50 14. Plumbing (Sanitary Drainage) - - - 29.25 15. Register - 2.00 19.00 38.00 16. Water Pipes - 2.00 - 24.46 17. Electrical Installation - 1.00 6.78 6.78 18. Toilet (Eastern Type) - 1.00 12.50 12.50 19. Hardware - - - 8.40 TOTAL BASE COST 374.08 ANNEX 5 Attachment 2 Page 2 Unit Volume Unit Cost Total C. OPTION B 1. Site Preparation per plot - 5.00 5.00 2. Plot Levelling per plot - 2.50 2.50 3. Plot Sighting per 3plot - 3.00 3,00 4. Foundation Excavation m 2.87 . 1.23 3.52 5. Foundations M3 2.61 16.20 42.28 6. Foundation Caping m3 1.05 24.90 25.62 7. Waterproofing m 13.05 0,14 1.83 8. Floor Structure m3 0.23 20,30 4.67 9. Adobe Walls m2 23.81 2.70 64.29 10. Lintles m 2.60 3.10 8.06 11. Gutters m 1.20 2.75 3.30 12. Roof (Corrugated 2 Tin) m 12.24 7.00 85.68 13. Ceiling (Thermal) m2 8.60 5,76 47.95 14. Doors m2 1.60 20.00 20,00 15. Windows m2 1.44 12.50 12.50 16. Exterior Plaster m2 13.50 2.55 34.43 17. Floor Frame m2 8.50 2.89 .24.57 18. Flooring m2 8.50 8.24 70.00 19. Plumbing (Sanitary Drainage) - - - 29.25 20. Register - 2.00 19.00 38.00 21. Water Pipes - 2.00 - 24.46 22. Electrical Installation - 2.00 6.78 13.55 23. Toilet (Eastern Type) - 1.00 12.50 12.50 24. Hardware - - - 12.30 25. Glass m2 12.50 0.77 9.66 TOTAL BASE COST 598.92 D. OPTION C 1. Site Preparation per plot - 5.00 5.00 2. Plot Levelling per plot - 2.50 2.50 3. Plot Sighting per 3plot - 3.00 3.00 4. Foundation Excavation m 3.76 1.23 4.62 5. Foundations m3 3.42 16.20 55.40 6. Foundation Caping m3 1.37 24.40 33.43 7. Waterproofing a 17.10 0.14 2.39 8. Floor Structure m3 0.36 20.30 7.31 9. Adobe Walls .3 34.91 2.70 94.26 10. Lintles m 7.30 3.10 22.63 11. Gutters m 1.60 2.75 4.40 12. Roof (Corrugated Tin) m2 20.91 7.00 146.37 13. Ceiling (Thermal) m2 14.90 5.76 85.82 14. Doors - 1.60 20.00 20.00 15. Windows - 1.92 16.50 16.50 16. Exterior Plaster m2 26.90 2.55 53.96 17. Floor Frame m2 15.10 2.89 43.64 18. Flooring m2 15.10 8.24 124.42 19. Plumbing (Sanitary Drainage) - - - 29.25 20. Register - 2.00 19.00 38.00 21. Water Pipes - 2.00 - 24.46 22. Electrical Installation - 1.00 6.78 6.78 23. Glass m2 16.70 0.77 12.60 24. Toilet (Eastern Style) - 1.00 12.50 12.50 25. Hardware - - - 15.67 TOTAL BASE COST 878.45 ANNEX 5 Attachment 3 BOLIVIA URBAN DEVELOPMENT PROJECT Detailed Project Costs--Urban Upgrading Component Base Costs for Infrastructure and Facilities-- Sagrado Corazon Upgrading Area (January 1977 Prices--US$) Infrastructure Volume Unit Cost Total Water distribution network - - 38,976.50 Sewerage and storm drainage --6 inch concrete pipe and registers 2,706 m 21.10 57,096.00 --8 inch concrete pipe and registers 858 m 28.30 24,624.00 Earthwork and stabilization of embankments 8,580 m3 1.25 10,725.00 Paving of pedestrian footpaths 10,800 m2 1.45 15,632.00 Paving of vehicular streets 2 (including curbs) 4,630 m 2.12 9,816.00 Masonry for access steps 2,640 m2 3.30 9,240.00 Refuse collection receptacles (3 m 3) 9 851 7,659.00 Installation of bases 9 30 270.00 Vehicles 11.5% 59,519 6,845.00 Measurement and documentation of plots 771 12 9,252.00 Subtotal 190,136.70 Community Facilities Schools 137,983.00 Sportsfields 2,242.00 Community centers 24,393.00 Community offices 3,956.00 Bus shelters 783.00 Reforestation 2,400.00 Subtotal 171,757.00 TOTAL 361,893.10 For 771 plots total base cost per unit = 469.38 ANNEX 5 Attachment 4 BOLIVIA URBAN DEVELOPMENT PROJECT Urban Upgrading Costs to Beneficiaries .Total Mutual-Help Charged to User Water 38,976 8,457 (21.7%) 30,518 Drainage 81,721 24,598 (30.1%) 57,123 Paving 45,413 15,667 (34.5%) 29,745 Refuse 14,774 - lh,774 Measurement and documentation of plots 9,252 - 9,252 Community Facilities 31,532 9,h59 (30%) 22,072 Subtotal 221,668 Schools/Sports Facilities/l 140,225 - - TOTAL 361,893 58,183 (16%) 163,485 15% Physical Contingency = 54,283.95 33,250 416,179.95 196,735 25% Management = 104,oh.23 63,729 520,221.18 260,o5 /2 Price Contingency 29.2% = 151,904.58 76,056 672,125.77 336,521 (871.75 per unit) US$436.50 per unit /1 All costs for schools and sportsfields, including management and contingencies, are charged to the Ministry of Education. /2 Average over 4 year implementation period. BOLIVIA URBAN DEVELOPMENT PROJECT I INCOME DISTRIBUTION LA PAZ PROJECT BENEFICARIES Upgrading Sites & Services Monthly Family Inemme % Cumulative Cumulative % Cumulative ,$b 1 - 500 2.09 2.09 8.67 8.67 501 - 1,000 lo.66 12.75 30.51 39.18 15.00 15.00 1,001 - 1,500 11.05 23.80 30.95 70.13 65.00 80.00 1,501 - 2,500 18.42 42.22 22.78 92.91 20.00 100.00 2,501 - 3,500 10.65 52.87 5.38 98.29 3,501 - 5,000 13.40 66.27 1.71 100.00 5,001 - 6,500 7.35 73.62 6,501 - 8,000 4.72 78.34 8,001 - 10,000 6.09 84.3 10,001 - 12,000 3.31 87.74 12,001 + 12.26 100.00 Source: B.C.E.O.M. Accion Comunal and Mission estimates. t+ C+ VIA BOLIVIA URBAN DEVELOPMENT PROJECT CASH FLOW--SITES AND SERVICES SUBPROJECT 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 TOTAL SOURCES (in US$ '000) IBRD Loan /1 304 4,695 3,953 688 - - - - - - - - - - - - - - - - - 9,640 Payments from Beneficiary charges /2 Residential Lots /3 - 56 614 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 755 19,632 Connercial Lots /4 - 24 105 110 110 110 110 110 87 4 - - - - - - - - - - - 770 Repayments of construc- tion Materials Credits/5 - - 134 391 422 432 432 299 41 - ---- Subtotal - 80 85 1,572 1,613 1,613 1,613 1,480 1,199 1,075 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 755 22,563 TOTAL SOURCES 304 4,775 4,806 2,260 1,613 1,613 1,613 1,480 1,199 1,075 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 755 32,203 APPLICATIONS Project Construction Land - 1,050 - - - - - - - - - - - - - - - - - - 1,050 Civil Works 475 6,440 3,855 160 - - - - - - - - - - - - - - - - - 10,930 Construction Materials Credits - - 1120 540 - - - - - - - - - - - - - - - - - Subtotal 475 7,490 4,975 700 13,640 Banco Central / 1 12 10 2 - - - - - - - - - - - - - - - - - 25 Expenses/7 - 3 32 59 60 60 60 55 45 40 40 40 40 40 40 40 40 40 40 40 28 842 IBRD--Debt Service /8 Conmnitment Fee 36 54 18 1 - - - - - - - - - - - - - - - " - 109 Interest - 197 577 759 771 771 733 681 630 578 527 476 424 373 321 270 219 167 116 64 13 8,667 Amortization - - - - - 321 643 643 643 643 643 643 643 643 643 643 642 642 642 642 321 9,640 Subtotal 36 251 595 760 771 1,092 1,376 1,324 1,273 1,221 1,170 1,119 1,067 1,016 964 913 861 809 758 706 334 18,416 TOTAL APPLICATIONS 512 7,756 5,612 1,521 831 1,152 1,436 1,379 1,318 1,261 1,210 1,159 1,107 1,056 1,004 953 901 849 798 746 362 32,923 Increase (decrease) in cash during period /9 (208) (2,981) (806) 739 782 461 177 101 (119) (186) (139) (88) (36) 15 67 118 170 222 273 325 393 (720) Cash at end of period (cumulative) (208) (3,189) (3,995) (3,256) (2,474)(2,013) (1,836)(1,735)(1,854)(2,040) (2,179) (2,267) (2,303)(2,288) (2,221)(2,103)(1,933)(1,711)(1,438) (1,113) (720) /I TBRD is financing about 76.67 civil works and construction materials credits /2 Includes a provision for defaults of 27 of monthly charges. /3 Terms: equal monthly installments over 18-20 years at 10% interest rate. / Terms: equal monthly installments over 7 years at 10% interest rate. /5 Terms: equal monthly installments over 5 years at 10% interest rate. /6 Banco Central requires a one-time charge of one-quarter of 1% on the amount disbursed (IBRD loan) /7 4.07 of revenues from beneficiaries (2.0% CONAVI spread plus 2% provision for defaults) /8 Terms: Repayable in 30 semi-annual installments with 5 years of grace at 8.0 annual interest and three-quarters of 1% commitment fee on the undisbursed amount. /9 Deficit to be contributed by the Government and surpluses to be remitted to the Government. rr (31 BOLIVIA URBAN DEVELOPMENT PROJECT CASH FLOW--URBAN UPGRADING SUBPROJECT 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 TOTAL (in US$ '000) SOURCES IBRD Loan /1 124 1,086 885 375 - - - - - - - - - - - - - - - - - 2,470 Payments from Beneficiary Charges /2 Residential L3 - - 140 247 265 265 265 265 265 265 265 265 265 265 265 265 265 125 18 - - 3,975 Repayments of Construction Material Credits /4 _ 11 93 147 152 152 JA 90 5 - - - - - - 791 Subtotal - 11 233 394 417 417 406 355 270 265 265 265 265 265 265 26.5 265 125 18 4,766 TOTAL SOURCES 124 1,097 1,118 769 417 417 406 355 270 265 265 265 265 265 265 265 265 125 18 . - 7,236 APPLICATIONS Project Construction Civil Works 194 1,497 645 314 - - - - - - - - - - - - - - - 2,650 Construction Material Credits - 130 290 160 - - - - - - - - - - - - - - - . 580 Subtotal 94 1,627 35 474 3,230 BancoCentral/5 1 4 2 1 - - - - - - - - - - - - - - - 8 Expenses L6 - - 9 15 16 16 15 13 10 10 10 10 10 10 10 10 10 5 1 - - 180 IBRD Debt Service /7 Commitment Fee 9 15 6 1 - - - - - - - - - - - - - - - - - 31 Interest - 41 136 192 198 198 188 175 161 148 135 122 109 96 82 69 56 43 30 16 3 2,198 Amortization - - - - - 82 165 165 165 165 165 165 165 165 165 165 164 164 164 164 82 2.470 Subtotal 9 5t 142 193 198 280 353 340 326 313 300 287 274 261 247 234 220 207 194 180 85 4,699 tTAL APPLICATIONS 204 1,687 1,088 683 214 296 368 353 336 323 310 297 284 271 257 244 230 212 195 180 85 8,117 Increase (decrease in cash during period /8 (80) (590) 30 86 203 121 38 2 (66) (58) (45) (32) (19) (6) 8 21 35 (87) (177) (180) (85) (881) Cash at end of period (cumulative) (80) (670) (640) (554) (351) (230) (192) (190) (256) (314) (359) (391) (410) (416) (408) (387) (352) (439) (616) (796) (881) /l IBRD is financing about 76.6. of civil works andconstruction materials credits. /2 Includes a provision for defaults of 27, of monthly charges. /3 Terms: Equal monthly payments over 15 years at a 10% interest rate. 74 Terms: Equal monthly payments over 5 years at a 107 interest rate. 75 Banco Central requires a one-time charge of 1/4 of one percent on the amount disbursed (IBRD Loan and Goverment contribution). /6 4.5% of revenues from beneficiaries (27 HAM spread and 2% provision for defaults), 77 Terms: Repayable in 30 semi-annual installments with 5 years grace at 8.0% annual interest and 3/4 of one percent annual commitment fee on the undisbursed amount. /8 Deficit to be contributed by the Government and surpluses to be remitted to the Government. rt BOLIVIA URBAN lDEVELOPMENT PROJECT CASH FLOWS--MARKETS 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 TOTAL (in US$ '000) SOURCES Covernment contribution 13 90 47 - - - - - - - - - - - - - - - - - - 150 IBD Loan /1 - 177 209 74 - - - - - - - - - - - - - - - - - 460 Subtotal 13 267 256 74 610 Revenues Stall operators /2 - 5 27 43 45 45 45 4S 45 45 45 45 45 45 45 45 4S 45 45 45 45 840 Transient vendors /2 - 2 15 23 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 24 448 ,i,cnces - 2 10 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 228 Licencs Sbtotal - 52 78 T T, T 1 81 81 8 T1 T 81 81 91 T 1,516 TOTAL SOURCES 13 276 308 152 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 2,126 APPLICATIONS Construction Costs Land 10 - - - - - - - - - - - - - - - - - - - - 10 Civil Works 1 253 271 75 - - - - - - - - - - - - - - - - - 600 Subtotal 11 253 271 75 610 Operating Costs-Maintenance - 2 10 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 228 Banco Central /3 - 1 1 - - - - - - - - - - - - - - - - - - 2 IBRD Debt Service /4 Commitment Fee 2 3 1 - - - - - - - - - - - - - - - - - - 6 Interest - 6 23 36 37 37 35 33 30 28 25 23 20 18 15 13 10 8 6 3 1 407 Amortization Sb- - :o 1 31 31 31 31 31 31 31 31 31 31 30 30 30 30 15 460 Subtotal 2 9 24 36 37 52 66 4 61 59 58 54 51 49 46 44 40 38 36 33 16 973 TOTAL APPLICATIONS 13 265 306 123 49 64 78 76 73 71 68 66 63 61 58 56 52 50 48 45 28 1,713 Increase (decreasc) in cash during period - 11 2 29 32 17 3 5 8 10 13 15 18 20 23 25 29 31 33 36 53 413 Cash at end of period (curmulative) - 11 13 42 74 91 94 99 107 117 130 145 163 183 206 231 260 291 324 360 413 1 IBRD is financing about 76.6% of civil works 2 Monthly rentals 3 Banco C-ntral requires a one-time charge of ¼ of 1% on the amount disbursed (1BRD and Government contributions) 4 Terms: Repayable in 30 semi-annual installments with 5 years grace at 8.07 annual interest rate and three-quarters of 1% annual commitment fee on the undisbursed amount. 00 BOLIVIA URBAN DEVELOPMENT PROJECT CASH FLOW--SMALL-SCALE ENTERPRISES SUBPROJECT 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 199i 1996 1997 TOTAL (in US$ '000) SOURCES IBRD Loan - 876 956 718 - - - - - - - - - . - - - - - - - 2,550 Repayments from Beneficiaries (BISA Debt Service) Artisans /l - 49 172 263 297 273 248 143 59 - - - - - - - - - - - 1,504 Small-Scale Enterprises /2- 159 295 646 819 905 806 458 15L - - - - - , -2 Subtotal - 208 467 909 1,116 1,178 1,054 601 244 5,777 TOTAL SOURCES - 1,084 1,423 1,627 1,116 1,178 1,054 601 244 - - - - - - - - - - - . 8,327 APPLICATIONS For Construction of Sub- Project - 1,144 1,144 762 - - - - - - - - - 3,050 Banco Central /3 - 2 2 2 - - - - - - - - - - - - - - - - - 6 IBRD Debt Service /4 Commitment Fee 10 16 9 2 - - - - - - - - - - - . . - - - - 37 Interest - 32 108 181 204 204 194 180 167 153 139 126 112 99 85 71 58 44 31 17 3 2,208 Principal - - - - - 85 170 170 170 170 170 170 170 170 170 170 170 170 170 85 2__ 2L Subtotal 10 48 117 183 204 289 364 350 337 323 309 296 282 269 255 241 228 214 201 187 88 4,795 TOTAL APPLICATIONS 10 1,194 1,263 947 204 289 364 350 337 323 309 296 282 269 255 241 228 214 201 187 88 7,851 Cash Increase(decrease)/5 (10) (110) 160 680 912 889 690 251 ( 93) (323) (309) (296) (282) (269) (255) (241) (228) (214) (201) (187) (88) 476 Cash at end of period (cumulative) (10) (120) 40 720 1,632 2,521 3,211 3,462 3,369 3,046 2,737 2,441 2,159 1,890 1,635 1,394 1,166 952 751 564 476 /1 Terms: Repayable over six years including one year grace at 127 annual rate of interest, /2 Terms: Repayable over six years including two years grace at 167 annual rate of interest. 73 Banco Central requires a one-time charge of 1/4 of 17. on the amount disbursed. 74 Terms: Repayable in 30 semi-annual installments with 5 years of grace at 8.0% annual interest rate and 3/4 of one percent commitment fee on undisbursed amount. 75 BISA is contributing from its resources about 16% of the cost of the project plus interest during the grace period on the IBRD loan. rt Z Ln rt BOLIVIA URBAN DEVELOPMENT PROJECT /l CASH FLOW--TOTAL PROJECT 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 TOTAL (in US$ '000) SOURCES Government Contribution 416 3,546 1,048 - - - - - - - - - - - - - - - - - - 5,010 IBRD Loan 530 7,410 6,610 2,450 - - - - - - - - - - - - - - - . - 17,000 BISA Contribution - 268 188 44 - - - - - - - - - - - - - - - . 500 Subtotal 946 11,224 7,846 2,494 22,510 Revenues from Beneficiary Charges Sites & Services Component 80 853 1,572 1,613 1,613 1,613 1,480 1,199 1,075 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 1,071 755 22,563 Urban Upgrading Component - 11 233 394 417 417 406 355 270 265 265 265 265 265 265 265 265 125 18 - - 4,766 Markets - 9 52 78 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 1,516 Small-scale Enterprises 108 467 909 Jj11 1j7 1.054 601 244 - - - - --- - 2577 Subtotal - 308 1,605 2,953 3,227 3,289 3,154 2,517 1,794 1,421 1,417 1,417 1,417 1,417 1,417 1,417 1,417 1,277 1,.170 1,152 836 34,622 TOTAL SOURCES 946 11,532 9,451 5,447 3,227 3,289 3,154 2,517 1,794 1,421 1,417 1,417 1,417 1,417 1,417 1,417 1,417 1,277 1,170 1,152 836 57,132 APPLICATIONS Project Construction Sites & Services 475 7,490 4,975 700 - - - - - - - - - - - - - - . . - 13,640 Urban Upgrading 194 1,627 935 474 - - - - - - - - . - - - 3,230 Markets 11 253 271 75 - - - - - - - - 610 Small-Scale Enterprises - 1,144 1,144 762 - - - - - - - - - - - - - - - - - 3,050 Technical Assistance 200 580 600 600 - - - - - - - - - - - - - - - - Subtotal 880 11,094 7,925 2,611 22,510 Banco Central 2 28 20 6 - - - - - - - - - - - - - - - - - 56 Expenses - 5 51 86 88 88 87 80 67 62 62 62 62 62 62 62 62 57 53 52 40 1,250 IBRD Debt Service 64 405 964 I,30 1,36 1,2 27 2 2,335 2 2,153 2,063 1 1,881 1.79 1 1,609 1,51 1 1 2 589 32314 TOTAL APPLICATIONS 946 11,532 8,960 4,004 1,448 2,015 2,512 2,415 2,311 2,215 2,125 2,034 1,943 1,853 1,762 1,671 1,581 1,485 1,390 1,299 629 56,130 Increase (decrease) in cash during period 0 0 491 1,443 1,779 1,274 642 102 (517) (794) (708) (617) (526) (436) (345) (254) (164) (208) (220) (147) 207 1,002 Cash at end of period (cumulative) 491 1,934 3,713 4,987 5,629 5,731 5,214 4,420 3,712 3,095 2,569 2,133 1,788 1,534 1,370 1,162 942 795 1,002 /1 For details see cash flows of individual subprojects, r (Dl CD ANNEX 6 BOLIVIA URBAN DEVELOPMENT PROJECT Estimated Schedule of Loan Disbursements IBRD Fiscal Year and Quarterly Cumulative Quarter Ending Disbursement Disbursement 1977-1978 December 31, 1977 .53 .53 March 31, 1978 1.13 1.66 June 30, 1978 2.08 3.74 1978-1979 September 30, 1978 2.26 6.00 December 31, 1978 1.94 7.94 March 31, 1979 1.85 9.79 June 30, 1979 1.84 11.63 1979-80 September 30, 1979 1.65 13.28 December 31, 1979 1.27 14.55 March 31, 1980 1.04 15.59 June 30, 1980 .75 16.34 1980-1981 September 30, 1980 .44 16.78 December 31, 1980 .22 17.00 ANNEX 7 BOLIVIA URBAN DEVELOPMENT PROJECT Social and Economic Justification General 1. The proposed project has been designed to assist the Government to- ward increasing the participation of the low-income urban residents in the social and economic benefits at present mostly available only to higher income groups. The main objectives of the project are the establishment of a long- term program for the provision of low-cost shelter and infrastructure solutions and the promotion of employment opportunities for Bolivia's urban poor. The project will also help support the Government's national development plans in the spatial context by promoting the largest ever shelter scheme in La Paz, a city which has been singled out to be a central pivot of these plans. 2. In addition, and by means of appropriate technical assistance ele- ments, the project will strengthen existing, and promote new institutional arrangements needed to establish an effective delivery system of urban ser- vices and a functional framework for the rational management of urban growth. 3. The costs of most standard housing and infrastructure programs pro- vided in urban centers have until now made these services practically in- accessible to a majority of urban dwellers, namely, to the lower income groups. Thus, more than half of La Paz's population (about 400,000 people) live in self-built units; basic services, if available to them, (e.g., water and sew- erage, electric power, footpaths, etc.) were only made possible by mutual-aid efforts of the various communities themselves. The Urban Upgrading and the Sites and Services component to be provided in the project will rationalize and introduce a systematic approach to such efforts. These components will introduce lower but adequate standards (e.g., smaller individual plots, more efficient layouts, less costly physical standards, etc.), thus making these projects fully recoverable, proving their replicability, and in turn, leading to significant expansions of such programs in the future. 4. Better access to water and sewerage facilities will greatly reduce the effort and time spent by the settlers on securing these services. To- gether with the planned environmental health and nutrition campaigns, as well as better waste disposal services, these elements will significantly improve the presently unacceptable health conditions in these neighborhoods. Proper canalization of waste waters and an appropriate system of footpaths and re- taining walls are of particular significance in La Paz because they constitute some of the primary conditions required to prevent the numerous and devastating land-slides and mud-flows that affect the steep slopes on which most of the urban poor live. Improved access roads will allow public transportation to reach many areas presently excluded from this service, thus significantly ANNEX 7 Page 2 reducing the time and effort spent by many of the urban poor in commuting to their places of work or other activities. Conversely, a better road system will probably constitute an incentive to establish enterprises in those areas which earlier could not be properly served. 5. The lower income groups of society are often considered a burden on national resources (rather than a potentially productive asset), while their access to private financial sources has more often than not been limited be- cause of what are considered to be unusually high risks. This project, and specifically the credit line that will be offered for artisans and small- scale enterprises, is intended to promote and exploit the productive potential of the low-income and non-organized sectors of urban society. The private character of the proposed financial channel for these credits (BISA, the in- dustrial bank) and the conditions under which they will be granted (e.g. real rates of interest) are intended to prove the financial feasibility and economic soundness of such enterprises. The success of this component is ex- pected to contribute significantly to the social and economic welfare of the low-income sectors, while accelerating the process by which they are inte- grated into society. 6. By generating substantial employment opportunities, both during con- struction of the various project components and through the proposed credit line, and by providing strategic training programs, the project will signi- ficantly increase the economic benefits and productivity of these sectors. It is estimated that about 2,660 new sources of permanent employment will be created through the credit line for small-scale enterprises and the new mar- kets, while another 10,400 man-months of temporary work will be generated during the construction period. Sites and Services 7. Under this component, a total of 5,525 residential plots and about 142 commercial/industrial plots in two areas of El Alto, plus community facili- ties (schools and community centers) will be provided. The first section to be developed (Villa Adela) will include 2,406 residential plots in an area of 408 ha, whereas in the second stage (Rio Seco) another 3,119 resi- dential plots will be provided. 8. To make the services offered in this component affordable to the lowest possible income groups, the basic and initial level provided is just a serviced plot plus an optional construction materials credit. This basic level can be upgraded by adding one of three different shelter cores of different sizes and degrees of completion. Construction materials credits will also be available to expand and improve these units through mutual aid or self-construction schemes. This mechanism will make the presently un- necessary long and onerous process of self-construction typical of the low- income groups a faster and more affordable solution. Moreover, it will also provide immediate access to essential services such as water supply, sewerage and electricity. ANNEX 7 Page 3 9. The lowest cost option will take up about 15% of the total number of serviced plots, and it will be affordable to families in the lowest 10% of the income scale in La Paz. The two next options, representing 35% and 30% of the total number of plots, will be accessible to families in the lowest 18% and 28% of the income scale, respectively. The fourth option, accounting for the remaining 20% of the plots, will be affordable to families in the lowest 37% of the income distribution scale for La Paz. The income distribu- tion pattern for the city of La Paz and for the beneficiaries of the project is shown in Attachment 5 of Annex 5. 10. The combination of mutual- and self-help construction with credits for construction materials and technical assistance will have a two-fold benefit, namely, it would (i) enable low-income families to have access to better housing levels than would be affordable to them if they had to rent or purchase finished dwelling; and (ii) it will generate additional techni- cal skills for a large number of the residents, a factor which in turn could increase their employment chances in a sector (building construction) with a large number of unfilled slots. 11. The provision of commercial and industrial sites suitable for small- scale enterprises, together with the fact that a number of residential plots are appropriate for mixed industrial/residential use by artisans, will also benefit the community by facilitating employment directly in the area. The employment creation effect will be reinforced by the credit line for arti- sans and small-scale industries proposed under the project. 12. An additional long-term benefit of the component will result from the provision of technical assistance to CONAVI, the implementing agency. Through this assistance, a new set of design and construction standards for low-cost housing will be prepared, which in turn will make possible the replicability of the project and the extension of the range of CONAVI bene- ficiaries. 13. In the computation of the rate of return of this component, the bene- fits were assumed to be the imputed rental values of the completed housing units. These imputed values were increased over time as the units are im- proved and completed, and they have been estimated by the market value of similar housing units. The costs streams were assumed to be investment and maintenance costs. Investment costs include the opportunity cost of (unde- veloped) land, contractor costs for infrastructure and basic core units, construction materials, and imputed costs of mutual- and self-help labor plus administrative and technical assistance costs for this labor. In the case of the commercial and industrial plots, the benefits are the imputed rental values of the services plots, while the capital costs are the opportunity cost of (undeveloped) land and the contractor costs for infrastructure. In both cases, the disposal value of land is added to the benefit stream at the end of the projects' life. ANNEX 7 Page 4 14. The useful life of the component is estimated to be 20 years and the computed rate of return is 16.25%. The figures used in these computations are given in the table below: Capital Maintenance Year Cost Cost Benefits 1 .45 - - 2 6.19 .01 .13 3 3.80 .05 1.18 4 .64 .09 1.96 5-21 - .10 1.96 22 .08 1.73 23 .02 1.47 Sensitivty analysis on the rate of return of the component showed the follow- ing results: ERR Present assumptions 16.25% 15% decrease in benefits 13.15 15% increase in costs 13.65 15%-increase in benefits 19.15 1% decrease in costs 19.55 Urban Upgrading 15. This component will provide approximately 4,000 families in six low-income areas of La Paz with basic urban services, i.e., water supply and sewerage, improved refuse collection system, street pavement, and communal facilities (schools and community centers). In addition, credits for con- struction materials will be available for housing improvements to these 4,000 and 500 households in another low-income area of La Paz. The population of these upgrading areas belong to the poorer groups in La Paz. As the income distribution for these areas show (see Attachment 5, Annex 5), 93% of the population is in the lowest 40% of the income scale for La Paz and more than 70% of the residents in the areas are in the lowest 24%. ANNEX 7 Page 5 16. The provisions of schools, health and nutrition programs and community centers will primarily improve the welfare of the settlers in these communities. In addition, and although these effects are difficult to quantify, it can be assumed that the schools and health programs will also have a direct effect on productivity through increased education levels and better health conditions. The planned community centers will facilitate the operation of the Juntas Vecinales (neighborhood committees) and therefore lead to improved operations of the mutual-aid programs. These programs should also increase community cohesion and create better conditions for social and economic mobility of these groups. 17. House improvements through self-construction are a typical fea- ture of marginal settlements, but usually a very lengthy process since con- struction materials have to be purchased out of current incomes. The cre- dits for construction materials, together with the planned technical assis- tance, will allow these house improvements to take place in a much shorter period of time, providing immediate access to better housing conditions. 18. The paving of access roads and streets will provide better access to these communities and lead to time savings in travelling, as well as re- duction in maintenance and operating costs of vehicles. Because these effects are difficult to quantify properly, it was decided to impute these benefits in terms of added rental value of the houses in the upgrading areas. Thus, the streams of costs and benefits corresponding to this program were computed jointly with the other elements of this component and a combined rate of return was obtained. 19. The rate of return of this component was thus based on combined benefits and cost streams and computed to be 26.55%. The cost streams include capital, labor and maintenance costs. In the new materials credit component, costs include the costs of construction materials and technical assistance, plus the opportunity cost of self-help labor. The benefit stream of the component reflects the increase in the imputed rental value of the houses as a result of the improvements. For an estimated life of the subproject of 20 years, the combined rate of return and the benefits and costs streams used in the computations are shown in the table below: Construction Maintenance Year Costs Costs Benefits 1 .18 - - 2 1.54 .002 .01 3 .83 .021 .45 4 .36 .035 .78 5-21 - .039 .83 22 - .039 .82 23 - .018 .38 24 - .002 .05 ANNEX 7 Page 6 20. The results of sensitivity analysis are as follows: ERR Present Assumptions 26.55% 15% Decrease in Benefits 22.25 15% Increase in Costs 22.95 15% Increase in Benefits 30.75 15% Decrease in Costs 31.25 Markets 21. Five retail markets will be built in the Sites and Services and Upgrading areas of the project, thus adding to the services and benefits provided by the previous two components. In addition, the proposed facili- ties will also benefit other residents already living in these areas. Currently, these residents have to make long, expensive and time consuming journeys to acquire most of their food and other products elsewhere, or pay higher prices for these products if available in their neighborhoods. In both cases, this implies a substantial social and economic cost which is going to be even larger with the population increase expected in El Alto in the near future. 22. By increasing the quantity and quality of food and other supplies, the retail markets will increase the welfare of the communities and result in substantial savings for the residents. The markets will also provide an additional source of employment for the communities, thus contributing to an increase in incomes. Assuming two jobs per stall and another 100 jobs for transient vendors in each market, the component will thus create about 1,100 new jobs. Credit to Small-Scale Enterprises 23. This component will provide credit to craftsmen, artisans and small-scale enterprises for a total amount of US$3.05 million. In selecting credit beneficiaries, special attention will be given to their impact on employment generation. Loans to craftsmen and artisans have been estimated to amount to US$1 million and it is assumed that the average loan will be about US$1,500. The direct employment generation of this subcomponent will thus be about 670 jobs. Loans to small-scale enterprises will amount to US$2.05 million and it is estimated that the cost per job is about US$2,800. Therefore, this subcomponent is assumed to generate about 890 new jobs. Altogether, the direct employment created by the component is estimated to be 1,560 jobs. In addition, substantial amounts of indirect employment generation are expected through multiplying effects of the directly supported enterprises. ANNEX 7 Page 7 24. The main objectives of this component is to assist small scale entrepreneurs in their efforts to move from subsistence levels of operation into more efficient, productive and rewarding levels of activity. The new line of credit should contribute to reduce the financial constraints that presently limit their scope of activities, thus releasing their entrepre- neurial talents to improve both their levels of welfare and their potential contribution to the national economy. 25. The success of this type of operation could have a significant impact on the national economic system because it will introduce a system by which a very large number of hitherto untapped skills and potential economic contributors could be gradually integrated into the market system. Although on an individual basis their contribution might be relatively small, the aggregation of such inputs might very well add up to become a significant economic factor. Together with the capitalization generated through the other components of the project, these schemes could in the long run expand local markets to such levels that would make the introduction of larger national, import-substituting enterprises a feasible proposition. 26. In summary, the joint effect of the proposed schemes will offer one of the few feasible programs by means of which large segments of the population will be able to live in more humane conditions, while gradually becoming, both in social and economic terms, fully integrated into modern Bolivian society. IBRD-13035 B R A Z l L ----- BOLiViA URBAN DEVELOPMENT PROJECT B R A Z l L p ERU .4 MKF J-a horñaSa José nSAN CRUZ O u uaquA le AcoUnciaPu 00G SUPuerto Suarez - 50 uo1 Pctosi- Rio Mulato o P A R A G U A Y CH I lE . T - -- .A R G E N\ T l N A - - - - -- - - - - - - - BO 0I lV l A Nj ' -ke-oo- ---·- NoRl SECOu e A:1171IAL 20 VLRRE FO ALE NEN OA -(RL ODGNIA VILAA DLABR ACHUMANI BOLIVIA URBAN DEVELOPMENT PROJECT la Paz Sites and Services | 9 Proposed SiLes S Urban Upgrading Areas G ý" L ExjFisting CONAVI Projects Bullt-op Areas< N Paved Roads Gravel Roads KILO'METEFS Railroads Contours (in meters)
Группа Всемирного банка · Staff Appraisal Report
Bolivia - Urban Development Project
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