Madagascar - Urban Development Project

Document of The World Bank FOR OFFICIAL USE ONLY C Report No. P-3738-MA( REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS FOR A PROPOSED CREDIT OF SDR 12.1 MILLION (US$12.8 MILLION EQUIVAL."'- TO THE DEMOCRATIC REPUBLIC OF MADAG FOR AN URBAN DEVELOPMENT PROJECT May 24, 1984 This document has a restricted distribution and may be used by recipients only . ormance of their official duties. Its contents may not otherwise be disclosed without World -[ank authorization.  CURRENCY EQUIVALENTS Currency Unit = Malagasy Francs (FMG) US 1.00 = FMG 400* FMG 100 = US$ 0.25 FMG 1,000,000 - US$ 2,500 WEIGHTS AND MEASURES (Metric System) 1 meter (m) = 3.28 feet 1 kilometer (km) = 0.62 miles 1 square meter (m2) = 10.76 square feet 1 square kilometer (km2) = 0.386 square miles 1 hectare (ha) = 2.47 acres 1 liter (1) = 0.26 US gallons 1 cubic meter (m3) = 264 US gallons GLOSSARY OF ABBREVIATIONS AND ACRONYMS BCT Bureau de Circulation et de Transport (Traffic Management Bureau) BPU Bureau du Projet Urbain (Urban Project Unit) BTM Rural Development Bank of Madagascar CATP Centre d'Application des Travaux Publics (Public Works Training School) CENAM Centre National de l'Artisanat Malagasy (National Artisan Center) CFC Centre de Formation de la Comptabilitg (Accountancy Training Center) CUR Centre Universitaire Regional (Regional University Center) DAUH Direction de l'Architecture, de l'Urbanisme et de l'Habitat (Directorate of Architecture, Urban Planning, and Housing, Ministry of Public Works) DGP Direction Generale du Plan (Directorate General of Planning, Office of the Presidency) faritany Local government unit: ("province") firaisana Local government unit: group of fokontany ("district") fivondronana Local government unit: group of firaisana ("municipality") fokontany Local government unit: ("neighborhood") INPF Institut National de Promotion-Formation (National Promotion and Training Institute) JIRAMA Jiro sy Rano Malagasy (Water and Electricity Authority) SEIMAD Societe d'Equipement Immobilier de Madagascar (Madagascar Housing Corporation) UNDP United Nations Development Programme FISCAL YEAR January 1 - December 31 * Rate prevailing as of second half of 1983  -1 FOR OFFICIAL USE ONLY MADAGASCAR Urban Development Project Credit and Project Summary Borrower: Democratic Republic of Madagascar Beneficiaries: Municipality of Antananarivo, Municipality of Toamasina, Madagascar Housing Corporation (SEIMAD) and National Artisan Center (CENAM). Amount: SDR 12.1 million (US$12.8 million). Terms: Standard IDA terms. Relending terms: The Government would relend US$5.9 million of the proceeds of the credit to the Municipality of Antananarivo, and US$3.2 million to the Municipality of Toamasina. Funds for civil works would be relent at 10 percent interest per annum with a repayment period of 18 years including three years of grace. Terms of the funds lent for municipal technical services, revenue generation, financial management, and traffic management would be 10 percent for 7 years including two years of grace. In addition, the Government would relend US$0.8 million of the IDA Credit to SEIMAD at 10 percent interest per annum over 18 years including three years of grace. US$0.6 million would be relent to CENAM to be repaid at 10 percent over 12 years including two years of grace. Finally the Government would make available US$7.5 million, including US$2.3 million from the proceeds of the IDA Credit, in the form of grants for components whose costs would not be recovered. Project Description: Objectives: The proposed project is designed to (i) improve the financial and management capacity of the two municipalities of Antananarivo and Toamasina; (ii) strengthen the ability to maintain the most critical municipal services at least at current levels; (iii) expand the income-earning opportunities of poor and middle-income families; (iv) demonstrate neighborhood upgrading as a technically effective means of improving living conditions while reducing the need for new housing investment; and (v) build up capacity to design and carry out similar projects on a sustained basis. 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 IFC authorization.  - ii - Components: (a) Improvement of municipal revenue generation and collection as well as financial management in the municipalities of Antananarivo and Toamasina; (b) Improvement of technical services in the same two municipalities; (c) Neighborhood upgrading in the Isotry district of Antananarivo and in four neighborhoods of Toamasina; (d) Technical and financial assistance to artisans in the building trades and to small contractors in construction; (e) Traffic management and transport studies; and (f) Technical assistance and project management; studies of land legislation and of means of improving the financial and managerial capability of SEIMAD. Benefits: The project would help generate employment for about 750 people including members of three building materials cooperatives, small contractors, and sidewalk merchants at the Isotry Market. In addition, close to 1,000 artisans and contractors are likely to be hired under loans for sanitation and housing construction. By the end of the project, conditions would have improved, often dramatically, for 65,000 residents of upgraded districts plus 60,000 daily users of 5 intersections in Antananarivo. The project would also increase the effectiveness of public investment by ensuring a more dependable supply of urban services to the economy, as well as the recovery of investment costs from beneficiaries. Risks: The project's major risks are that the executing agencies may have difficulty with project implementation because of inexperience in execution of these types of programs, that cost recovery will be slow to be implemented and that land acquisition procedures may result in delays. To minimize these risks, major emphasis has been placed on institutional development by providing resources for technical assistance, centralized coordination by the Urban Project Unit (BPU), and managerial as well as technical training. Resources are furthermore provided to improve the assessment and collection of municipal taxes. On the whole, the project presents an acceptable level of risk, considering the benefits which would be realized from it.  - iii - Estimated Project costs: Percent: US$ million Foreign Component Local Foreign Total Exchange Municipal revenue generation and financial management 0.6 0.5 1.1 50 Municipal technical services 1.5 2.2 3.7 59 Upgrading 2.8 1.5 4.3 35 Employment and income generation 0.6 0.8 1.4 55 Traffic management 0.2 0.4 0.6 64 Project management and studies 0.4 1.9 2.3 84 Design and supervision 0.5 - 0.5 _ Total Base Cost 6.6 7.3 13.9 53 Physical contingencies 0.4 0.4 0.8 50 Price escalation 2.1 1.2 3.3 36 Total Contingencies 2.5 1.6 4.1 39 TOTAL PROJECT COST1/ 9.1 8.9 18.0 49 Financing Plan: