Morocco - Rabat Urban Development Project

Document of T'n~e world Bank FOR OFFICIAL lUS}i ONLY Report No.1 800-MOR ,IUCDOM 0OF MOROCCO RBAT CURB DrVELOPfEfT PROJECT STA FF ApPRAI SAL REPORT February 3, 1978 Urbafl projects Depatentinhe \ ff t has a restictezt distribution andX Maiy bte djsclosed ihttWolitn*  CURRENCY EQUIVALENTS Currency Unit : Dirham (DR) US$1 = DH 4.4 DH l = US$0.23 MEASURES AND EQUIVALENTS 1 millimeter (mm) = 0.04 inches 1 centimeter (cm) = 0.4 inches 1 meter (m) = 40 inches 1 kilometer (km) = 0.62 mile 1 square meter (sq.m) = 10.8 square feet 1 hectare (ha) = 2.47 acres 1 square kilometer (sq.km)= 247 acres 1 liter (1) = 0.264 US gallon I gram (gr) = 0,002 pound I ton (t) = 2,200 pounds ABBREVIATIONS AND ACRONYMS BCP Banque Centrale Populaire GOM Government of Morocco IDC Interest during construction MASA Ministere des Affaires Sociales et de l'Artisanat MEN Ministere de l'Education Nationale MHAT Ministere de l'Habitat et de l'Amenagement du Territore MJS Ministere de la Jeunesse et des Sports MF Ministere des Finances MSP Ministere de la Sante Publique MTFP Ministere de Travail et de la Formation Professionelle ODCO Office de Developpement des Cooperatives RED Regie Autonome Intercommunale de Distribution d'Eau et d'Electricite de Rabat-Sale SCET Societe Centrale pour l'Equipement du Territoire UNESCO United Nations Educational, Scientific and Cultural Organization GOVERNMENT OF MOROCCO FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE uNLY KINGDOM OF MOROCCO RABAT URBAN DEVELOPMENT PROJECT STAFF APPRAISAL REPORT Table cf Contents Page No. I. URBAN DEVELOPMENT IN MOROCCO, RELATED GOVERNMENT POLICIES AND PROGRAMS ................................................ 3 Il. RABAT-SALE, THE URBAN SETTING, PROBLEMS AND ISSUES. 6 III. PROJECT COMPONENTS, COSTS, FINANCING AND BUDGETING. 8 A. Project Objectives and Scope ..................... ..... . 8 B. Detailed Project Description . . ....... 9 C. Project Cost Estimates . . ..... ...... 13 D. Project Financing . . .20 E. Project Budgeting and Loarn Application ......... .. . 21 IV. EXECUTING AGENCIES .23 A. Project Implementation Organization .. 23 B. Ministere de l'Habitat et de l'Amenagement du Territoire. 27 C. Ministere des Finances ..28 D. Ministere de Travail et de la Formation Professionelle 28 E. Banque Centrale Populaire ............................... 29 V. PROJECT IMPLEMENTATION ...... ............................... 31. A. Implementation Schedule .....31 B. Procurement .....33 C. Disbursement ............ . .. ........... 34 D. Consultant Services . . . ................................ 35 E. Technical Assistance ..... 36 F. Accounts and Audits ..................................... 37 G. Operations and Maintenance .....38 H. Monitoring and Evaluation .....38 I. Supervision ..... 40 This report is based on the findings of an appraisal mission to Morocco in June 1977. Mission members included: Hans J. Peters (chief of mission), John Burfield (architect), Peter Midgley (planner), Maurice Mould (financial analyst), Dirk Ossen (consultant engineer), Dieter Unverzagt (consultant, employment generation), and Bernard Verdier (economist). This document has a restricied distribution and may bc und by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -2- Page No. VI. FINANCIAL ANALYSIS ........ ................................ 40 A. Cost Recovery Principles .40 B. Pricing .43 C. Affordability Analysis .48 D. Project Cash Flow .50 VII. PROJECT JUSTIFICATION .53 VIII. CONCLUSIONS AND RECOMMENDATIONS .54 ANNEXES 1. Project Specifications and Design Standards 2. Detailed Project Cost Estimate 3. Inventory of Project Background Documents, Data and Details available in the Project File. PHOTOGRAPHS 1. Aerial Views of Douar Doum, Douar Maadid and Douar Hajja 2. Typical Conditions in Douar Doum 3. Typical Conditions in Douar Maadid 4. Typical Conditions in Douar Hajja MAPS 1. Rabat-Sale, Land Use 2. Rabat, Project Area, Community Services and Infrastructure Improvement Program 3. Upgrading Scheme for Douar Doum 4. Site Layout Scheme for La Butte  I. URBAN DEVELOPMENT IN MOROCCO AND RELATED GOVERNMENT POLICIES AND PROGRAMS 1.01 Morocco is one of Africa's most urbanized nations. Since the be- ginning of this century the urban population has increased 15-fold; annual urban population increases have averaged about 4.5% over the last ten years. The country's 1977 population was 17.2 million, with 6.9 million in urban areas. By the end of this century the urban population is expected to have reached 20 million, representing about 60% of Morocco's total population. The most serious problems facing the country's cities are housing shortage and unemployment. In early 1977 the total housing stock in urban areas comprised some 1.37 million units of which almost 25% were in slum-like squatter settlements, and another 15% represented aged, deteriorated housing beyond repair. Accounting for the many dwelling units occupied by two or more households, and for housing upgrading requirements, current unsatisfied urban housing demand is of the order of 810,000 dwelling units. This demand will continue to increase by some 85,000 units annually. In 1976, about 50% of urban households were without water connections, 30% without electricity, and 45% without sanitary installations. Deteriorating utility networks and inadequate community services pose another problem. Limited financial re- sources and implementation capacities constrain attempts to mitigate these problems. Many municipalities, because of lack of staff and the volume of work required have ceased to exercise effective control over development of their jurisdictions. Education and health care services, although they are better on average in urban areas then in rural areas, remain inadequate. Thirty percent of urban households have monthly incomes below the country's absolute poverty level; between 20% and 25% of the labor force in urban areas is estimated to have no regular income and might be broadly referred to as the informal sector. 1.02 Since the beginning of this century Morocco has undergone an eco- nomic transformation which resulted in substantial changes in the country's population pattern. The central western and northwestern parts of the coun- try, where most of the population, industry and modern agriculture are lo- cated, have developed rapidly. Differences in natural factor endowment are at the origin of this concentration, and the subsequent adjustment process in spatial distribution of population to resources, activities and income. Rapid urbanization is a salient feature of the spatial adjustment of popula- tion. In the past, concentration of urban population took place in large agglomerations, mainly along the Atlantic coast of the country's Northwest. More recently, a new trend has emerged in which the growth rates of these large cities were below the overall growth rate of the country's urban popu- lation. Many mid-sized cities elsewhere in the country have experienced fast population increases in response to local factors such as the growth of production in modern agriculture, and the growth of industrial production and administrative services. A transformation of most cities has taken place under the ever increasing population pressure caused by rural in-migration and natural population increase. This has resulted in population overflows into haphazard shanty towns and other densely populated, poorly planned and serviced districts which are now a permanent feature of Moroccan cities.  -4- 1.03 Government policies and program in urban development were not always effective in dealing with urban problems. During the first years of the French administration under the Protectorate a tradition was estab- lished of government interest and action at the highest levels; nothing but the best quality would do for the cities of Morocco. However, the momentum of the early activism in urban development was not maintained, and from the mid-1920s until the end of the Second World War central government interven- tion in urban affairs was minimal. The war left two important legacies for Morocco's cities; the first was the establishment of industries, the growth of which has transformed the appearance, character and problems of many Mor- occan cities. The second stems from the failure of government to cope with the development of cities both before and during the war. After the war, the administration addressed mounting urban problems through thoughtful planning and vigorous policies. An urban planning legislation, still valid today, was established. During the first decade after independence in 1956 the Govern- ment of Morocco's (GOM's) attention was focussed away from the cities and their development; it was also a period when resources were limited. Emphasis was put on measures to stimulate the growth of a stagnant agricultural sector. Rural development was first priority partly because the stagnation of the agricultural sector was viewed as the principal impediment to national de- velopment, but also because GOM hoped to check or at least to slow thereby migration to the cities. This policy found expression in Morocco's develop- ment plans between 1965 and 1972, but urban population continued to grow at a rapid pace. In the late 1960s GOM reassessed policies toward urban develop- ment. As a result, the 1973-1977 Development Plan provided for a sizeable public housing program. Unfortunately, the Plan fell substantially short of achieving its targets, especially in urban land development and housing. At the end of the Plan period it is evident that only about 40% of the housing construction target has been achieved. The reasons are primarily poor organi- zation, inadequate staffing and insufficient Government budgets. Costly design standards eroded budget provisions prematurely and rendered many hous- ing schemes unaffordable by urban low income groups. Another reason for the insufficiency of budget allocations for urban development was poor recovery of investment, operating and maintenance costs of urban schemes and services which necessitated substantial government subsidies. These subsidy require- ments consumed much of the budget allocations for urban development. Resource mobilization in the open market for financing urban development, especially housing programs was very limited due to unattractively low interest rates. Also, inadequate availability of public land required for urban extension, and capacity constraints in the local construction and construction material industry, had a negative impact on attempts to cope with urban problems. 1.04 GOM has now prepared the basis for the 1978-82 Development Plan. This plan is proposed to include a considerable urban development program which provides for upgrading the housing of about 500,000 urban low-income families and for constructing more than 300,000 new urban housing units. This program is guided by the basic concept of preserving and better utilizing  existing urban resources and reflects a remarkable reorientation in plan- ning and technical approaches to urban development. Many technical concepts have been introduced which aim at lowering the cost of housing construction and urban infrastructure. But the proposed urban development program in the 1978-82 Plan which addresses only some of the most pressing problems of Morocco's cities requires funds which are enormous for the national budget. It