Cameroon - Second Urban Project

Document of The World Bank FOR OFFICIAL tiSE ONLY /A/ 2 CM Report No. 7398-CM STAFF APPRAISAL REPORT REPUBLIC OF CAMEROON SECOND URBAN PROJECT October 3, 1988 Occidental and Central Africa Department Infrastructure Operations Division This document has a restricted distribution and may be used by redpients only in the performance of their official duties. Its contents may not otherwise be disdosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit - CFA Franc (CFAF) USS1.0 - CFAF 290 CFAF 1 million - US$3448 FISCAL YEAR July 01 -- June 30 SYSTEM OF WEIGHTS AND MEASURES (METRIC) 1 meter (m) - 3.28 feet (ft) 1 square meter (m2) 10.76 square feet (sq ft) I cubic meter (m3) - 35.3 cubic feet tcu ft) 1 kilometer (kn) = 0.62 mile (mi) 1 square kilometer (ki2) 0.39 square mile (sq mi) 1 metric ton (t) 2,205 pounds (lb) ABBREVIATIONS AND ACRONYMS Item ----------------------------------- French/English ------------------------------------ ARAN Agence de Restructuration et d'Amenagement de Nylon/Nylon Land Development Agency CFC Crd4 t Foncier du Cameroun/Cameroon Housing Loan Bank CUD Communaute Urbaine de Douala/Municipality of Douala CUY Communaute Urbaine de Yaoundd/Municipality of Yaounde DDA Direction de la cooperation au ddveloppement et de l'aide humanitaire/Swiss Department of Development and Humanitarian Aid FEICOM Fonds Spdcial d'FYuipement et d'Intervention Intercommunale/Special Fund for Municipal Equipment MAETUR Mission d'Amenagement et d'Equipement des Terrains Urbains et Ruraux/Urban and Rural Land Development Agency MAGZI Mission d'Amenagement et de Gestion des Zones Industrielles/Industrial Land Development Agency MINAT Ministere de l'Administration Territoriale/Ministry cf Territorial Administration MINFI Ministere des Finances/Ministry of Finance MINMEN Ministere des Mines et de l'Energie/Ministry of Mines and Energy MINPAT Ministere du Plan et de l'Amenagement du Territoire/Ministry of the Plan and Regional Development MINTPT Ministere des Travaux Publics et des Transports/Ministry of Public Works and Transport MINUH Ministere de l'Urbanisme et de l'Habitat/Ministry of Town Planning and Housing NGO Organisation non-gouvernementale/Non-governmental Organization PSU Cellule Spdciale du Projet/Project Special Unit SDAU Schema Directeur d'Amenagement et d'Urbanisme/Urban Master Plan SIC Socidt6 Immobiliere du Cameroun/National Housing Company of Cameroon SNEC Societe Nationale des Eaux du Cameroun/National Water Company of Cameroon SONEL Societe Nationale d'Electricite du Cameroun/National Electricity Company of Cameroon SOTUC Soci6te des Transports Urbains de Cameroun/Urban Trap-sport Conpany of Cameroon  FOR OmCIL USe ONLY REPUTLLIC OF CAMEROON SECOND URBAN PROJYZT STAFF APPRAISAL REPORT Table of Contents Page No. LOAN AND PROJECT SUMMARY ....... ................ ....... 1. THE URBAN SECTOR ...................... 1 A. Urban Services Demand ... I ............................ 1 B. Supply of Urban Services ............... ............... 2 C. Investments in the Urban Sector ................... O.. 5 D. Deficiencies of Urban Services 8...................... 8 E. Government Policies for Urban Development 9 F. Bank Experience ......... . .... ....................... 10 II. THE PROJECT ................12.... A. Origin, Objectives, and Description ................. 12 B. Project Costs and Financing .......................... 16 C. Implementation Schedule and Responsibilities ......... 17 D. Procurement ....... ......................... * .... . . 19 E. Disbursements .............................................. 20 F. Accounting, Auditing and Reporting ...... ............. 22 G. Beneficiaries, Justification and Risks .....* ........ 22 11I. AGREEMENTS REACHED AND RECOMMENDATIONS .......... ......... 24 ANNE!S 1-1 Policy Action Plan .................... ......... ....... 26 1-2 Implementing Institutions ...... .......................... 30 2-1 Detailed Description of Project Components .............. 41 2-2 Training, Technical Assistance and Sectoral Studies ...... 51 2-3 Summary and Detailed Cost Tables ......................... 61 2-4 Disbursement Schedule ..... .............................. 67 2-5 Douala Infrastructure Project -- Economic Justification .. 68 3 Documents in the Project File ...... ...................... 74 MAPS: IBRD 19632R Major Urban Centers IBRD 19662 Douala Diagnostic Map This report is based on findings of an appraisal mission which visited Cameroon in November 1987, consisting of Messrs. Barry H. Van Waes (Mission Leader), Bernard Delaval (Task Manager), Frangois Amlot (Economist), and Francois Lagier (Consultant). Secretarial work and typing were done by Mrs. GeneviAve Nixon and Miss M. E. Houle. 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.  REPUBLIC OP CANEROON SECOND URBAN PROJECT LOAN AND PROJECT SUMMARY Borrower: Republic of Cameroor Financial Intermediary: Crddit Foncier du Cameroun (CFC) Beneficiaries: Ministry of Town Planning and Rousing (MINUR); Municipalities of Douala and Yaoundd (CUD, CUY); Ministry of Territorial Administration (MINAT); secondary cities; MAETUR and CFC. Amount: US$146.0 million Terms: Amortization over seventeen years, including five years of grace, at the Bank's standard variable interest rate. Onlending Terms: Part of the proceeds (USS9.0 M) will be onlent at least on the same terms as the Bank loan, through CPC to: (a) Municipalities for financing of income-generating projects (US$4.0 M); and (b) MAETUR for land develop- ment operations (USS5.0 M). Prolect Descrintion: The proposed project will consist of: (a) the improvement of urban resources mobilization through: (i) the preparation of a fiscal cadastre for Douala and Yaounde; (ii) better management of state-owned lands; (iii) the implementation of an action plan to improve billing and collection of municipal taxes; and (iv) the financing of income-generating municipal projects; (b) a program of civil works for completing, upgrading and rehabilitating priority urban infrastructure in the cities of Douala, Yaoundd and other secordary centers, including: (i) traffic management improvements; (ii) road and drainage construction and upgrading; (iii) rehabilitation of urban road networks; (iv) continuation of civil works in the Nylon district started under the First Urban Development Project (Ln. 2244-CM); and (v) development of a 35-ha resettlement area in Douala; and (c) the formulaticn and implementation of a sound policy framework and the strengthening of institutions in the urban and housing sectors through: (i) implementation of a policy actiox. plan to consolidate urban policies; (ii) provision of technical assistance, studies and equipment for urban agencies; (iii) the preparation and implementation of an action plan to rehabilitate parapublic urban and housing sector enterprises and promote private sector housing development; and (iv) a program of studies and pilot actions to improve the management and delivery of basic urban services.  - it - Project Benefits: The project is expected to yield lasting benefits to Cameroon, first, by its three-prongr.d approach of resource mobilization, infrastructure improvement and policy and institutional strengthening, the project vill consolidate the basis for sustainable urban development itiitiated under the First Urbau: 3evelopment Project; second, through the combined action oZ upgrading and resettlement in the least-developed areas of the cities, the poorer segment of the population will benefit proportionately more than other segments of the urban population, which will greatly contrib- ute to the social and economic growth in the urban setting; and third, by adjusting and improving urban and housing policies under the policy action plan, the project will enable the Government to gradually transfer responsibility for urban and housing development to the private sector, thereby freeing Government resources for other sectors of the economy and increasing overall efficiency. Project Risks: The Covernment's continued financial difficulties might put the project as well as sector development at risk. This risk is being minimized through: (a) the Bank's continued financial support of a major resource-generating and replicable component started under the First Urban Development Project (Ln. 2244-C); and (b) the resource mobili- zation components of the project which will improve the munici*.,al revenue basis and help project financing in the later years. Another risk would be the Governmeit's slow implementation of policy reforms. This risk is addressed through the policy action plan by clearly defining the combina- tion of studies and actions required to bring about policy changes. The close monitoring of the policy action plan and the annual reviews of operating and investment budgets of the institutions benefitting from the project would also contribute to minimizing the project risks. Summary Proiect Cost Estimate --------- (USS million) --------- % Item Local Foreign Total of Base Cost A. Urban Resources Mobilization 4.7 8.8 13.5 7 B. Priority Infrastructure Program 71.5 90.8 162.3 86 C. Institutional Development 3.9 9.7 13.6 7 Total Base Cost 80.1 109.3 189.4 100 Physical Contingencies 7.5 9.5 17.0 9 Price Contingencies 19.9 27.2 47.1 25 Total Project Cost 107.5 146.0 253.5 134 Of which Taxes 31.1 --- 31.1 Total Project Cost (Net of Taxes) 76.4 146.0 222.4 Percent 34 66 100  - lli - Summary Financing Plan -------- (USS million) --------- Item Local Foreign Total IBRD Loan --- 146.0 146.0 Government 107.5 --- 107.5 Total 107.5 146.0 253.5 Estimated Disbursements Item FY89 FY90 FY91 FY92 FY93 FY94 Annual 6.5 32.2 40.1 32.1 23.4 11.7 Cumulative 6.5 38.7 78.8 110.9 134.3 146.0 Rate of Return: Weighted average of 20%, ranging from 32% without time savings for road and traffic Improvements in Douala to 12% minimum ERR for all other components. Estimated Project Completion: December 31, 1993 Maps: IBRD 19632R Major Urben Centers IBRD 19662 Douala Diagnostic Map tor,N | ~~October 3, 1988  REPUBLIC OF CAMEROON SECOND URBAN PROJECT I. THE URBAN SECTOR A. Urban Services Demand 1.01 The annual non-oil GDP growth of over 6% that Cameroon has experi- enced between 1976 and 1986 results, to a large extent, from the steady rate of urbanization which has produced a population distribution well suited to the economic potentials of the country. With an annual rate of growth of 7%, the urban population has increased from 2.2 million inhabitants in 1976 (28% of total population) to an estimated 4.3 million inhabitants in 1986 (41% of total population). During the same period, urban-based activities have generated over two thirds of new employment opportunities and non-oil GDP real growth. Cameroon's maturing economic structure and increasing division of labor between rural and urban areas have proven beneficial for both sectors, as agricultural productivity has increased by an annual average of 2.1% during the 1976-85 period. 1.02 These notable economic performances resulted, in part, from Cam- erocn's unusually well-developed and dense network of urban settlements, which coincides with the couatry's overall population distribution an.' major econom- ic regions. Douala, a major West African port, is the largest city, with an estimated population of 842,000 in 1986. It is the center of the Coastal Region which concentrates most of the country's industrial activities. Yaound6, the second largest city, with an estimated population of 648,000 in 1986, is Cameroon's political and administrative capital, as well as the economic pole of the Central Region. The agriculturally rich Western Region accounts for 25% of urban population and presents a dense urban network with 12 of Cameroon's 39 largest cities. Garoua and Maroua in the North, and Ngaound4r4 in the Adamaoua, have experienced also rapid growth due to their economic roles as regional centers. This well-structured urban network has allowed, through the development of the internal food market, for increased agricultural production and the related shift from subsistence into market-oriented agriculture. Recent estimates indicate that by the year 2000, more than half of Cameroon's population will be urban. This will lead to a dramatic decrease in the ratio of rural producers to urban consumers from three-to-one in 1973 to one-to-one in 2000. This structural shift will create powerful incentives to further improve agricultural productivity. 1.03 The pursuit of Cameroon's development -elies increasingly on the support tbat efficient urban centers will give to the creation of economic activities ana the generation of employment opportunities. With a 3.3% annual population growth rate, Cameroonian cities are expected to absorb over 4 mil- i lion new inhabitants and over 1.6 million new wcrkers between now and the turn of the century. This formidable task will take place in the context of the country's financial constraints which severely restrain public investments. Prudent use of public resources in consolidating the network of urban centers and strengthening their economic efficiency is one of the country's key development challenges. The preservation of economic growth depends on an environment that favors the expansion of the domestic market which is the major potential supplier in terms of economic activities, jobs and incomes.  - 2 - Cities have a critical role to play in that respect. Not only can they, through urban-rural linkages, support the development of their hinterlands, but they are also capable, through their informal economy, of satisfying basic needs and of generating employment and income with a high mul.lplier effect. Labor-intensive activities within the private sector already provide for one half of all new jobs, and probably constitute the best potential engine of economic development. Similar to experiences in other African countries, recent observations also indicate that the informal sector proves much more resilient than the modern one to economic and financial constraints. 1.04 The diversity of Cameroon's uiban cer-ters requires the formulation of a multi-faceted strategy to strengthen the support that the city can give to the development of economic activities. Yaound4 and Douala, as the largest centers with national functions, require special attention encompassing substantial improvement in infrastructure and urban management to stimulate private investment in housing and economic activities. The other fast-growing regional centers face increasing demands for supply of services and warrant development of more dynamic local initiative to be able to cope with growth. There is a third group of smaller urban centers which have a strong role to play in improving agricultural production of their hinterlands and in provid- ing better access to urban services and marketing, storage, and processing facilities. B. Supply of Urban Services 1.05 Because of the sheer size of the demand for urban services and the costs involved, the Government has a key role to play in stimulating and facilitating the supply of these services. Emphasis in Cameroon on strength- ening urban centers began in earnest only in the late 1970s when the Govern- ment established the Ministry of Town Planning and Housing (MINUH), formerly a department of the Ministry of Public Works and Transport (MINTPT). Con- strained at first by a limited manpower and lack of technical expertise, MINUH concentrated its earlier efforts on preparing urban master plans for Dcuala, Yaound6 and many of the secondary cities, while major urban projects continued to be executed by other technical ministries or executing agencies such as MINTPT for roads and urban transport, and the Ministry of Mines and Energy (MINMEN), through its parastatals SNEC (National Water Company) and SONEL (National Electricity Company), for water and electrification. Also, the Ministries of Education, Health, Welfare, Youth and Sports continued to handle the programing and implementation of various community projects under their respons',bility. Coordiaation among all of these urban activities remained poor. Land registration and management actirities, also entrusted to MINUR, were flow to develop, and improved property demarcation and land rights regularization only began with the implementation of the Bank's First Urban Development Project, which was approved in 1983. Enforcement of the urban master plans continues to be hampered by uncontrolled rapid urban growth and the limited staff and financial resources of central as well as local urban institutions. The Government now expects to address all of these issues under its Sixth Development Plan (1986-91) and specifically under the proposed project. 1.06 As in most other developing countries, the institutional set-up for providing urban services is complicated by the large number and general weakness of the institutions, their inadequate organization, their multiple reporting responsibilities, the limited resources available, and the heavy demands placed on the narrow qualified human resource base. The institutions  are described in detail in Annex 1-2. They consist of three separate levels: first, at the central Government level, the Ministries of Town Planning and Housing (MINUI), and Territorial Administration (MINAT); second, at the parastatal level, a number of parapublic executing agencies: SIC, the Nation- al Housing Company; MAETUR, the Urban and Rural Land Development Agency; and MAGZI, the Industrial Land Development Agency, as well as tC.o fimancial intermediaries: CFC, the Housing Bank; and FEICOM, a special fund for munici- pal development; and third, at the local level, the municipalities and the local offices of the central ministries and of the public agencies and finan- cial intermediaries. MINUH directly supervises SIC and MAETUR, while MAGZI operates under the supervision of the Ministry of Plan and Regional Develop- ment (MINWPA). CFC reports to the Ministry of Finance (MINFI), while 11EICOM reports to MINAT. The municipalities operate under the supervision of MIN#T. This complex mesh of responsibilities makes the coordination and implementa- tion of urban policies and investments extremely difficult. Under the pro- posed project, .his institutional arrangement would be streamlined through an Urban Development Steering Committee which has just been created, consisting of the various Ministries and institutions involved in the sector. This committee would implement a policy action plan (Annex 1-1) with, as a first measure, the rationalization of public investment in the urban sector through the clarification of functin"-l res.ponsibilities of the various urban institu- tions. 1.07 MINUB, established in 1979, is responsible for the preparation and implementaition of the Government's land and housing policies, anid the execu- tion of Government-sponsored urban operations. It was reorganized in 1985 and comprises four main departments: Town Planning, Surveys, Lands, and Housing. MINUH is represented at the provincial level through delegations which also provide technical assistance to municipalities. It has a staff of more than 1900 employees of vThich 110 are assigned to headquarters in Yaounde, 200 to the littoral province (Douala), and the others evenly spread over the remain- ing nine provinces. MINUH's senior staff is limited, howe-er, to 59 higher level managers of which only 29 are engineers. A training program is included in the proposed project to increase the capabilities of MINUH, and project management would be strengthened by a special project unit (PSU) established in February 1988 (para 1.26). The investment and operating budgets directly managed by MINUH are shown below. They do not include investments fully financed by donors or managed by parapublic enterprises. The latter are listed in paras 1.15 aid 1.16. Category NF81/82 FY82/83 FY83/84 NY84/85 FY85/86 FY86/87 FY87/88 FY88/89 --------- __-------------- (FCFA billions) ----------------------------- Special Budget 11.5 16.6 5.0 19.4 0.0 0.0 0.0 0.0 Investments Budget 4.8 7.0 11,3 12.0 24.0 27.7 10.0 12.0 Operating Budget 6.7 8.2 9.7 12.1 15.0 16.8 15.6 14.0 Total 23.0 31.8 26.0 43.5 39.0 44.5 25.6 26.0 The special budget which was used to channel oil revenues into public invest- ments has not been available for the urban sector since 1985/86. the marked decline of investments in 1987/88 is a direct result of the diminution of these oil r_--tnues and the financial difficulties besettl.g the Government.  - 4 - 1.08 For the 4mplemeintation of its land and housing programs MINUH is primarily assisted by threa parastatal agencies: SIC for housing, MAETUR for land development and CFC as the financial intermediary. SIC, created in the 1960s, constructs high-cost housing units for rent, sale or lease-purchase intended for civil servants and other high-income individuals. The porfor- mance of SIC has not been sacisfactory and its financial situation is criti- cal. Government subsidies to SIC are being reduced, and a general change in the role and policies of SIC would be studied and implemented under the project. A rehabilitation or phasing out plan would be lucluded under the project (para 2.07 (c)). MAETUR was established in 1977 to develop serviced sites for house construction. Its staff of about 250, including thirty technicians and four expatriates, prepares and supervises land development operations on behalf of IIINUH. MAETUR's central office is located in Yaounde; Douala's regional office has a staff of about 30, and a small technical unit is located in Garoua. MAETUR's operations over the period 1981-86, which are reviewed i-i para 1.16, represented a total investment of FCFA 77 billion. ARAN, a unit of MAETUR, was established in 1981 for the upgrading of the Nylon neighborhood in Douala, a program supported by the Bank's First Urban Develop- men. Project (Ln. 2244-C1). ARAN, with a staff of 40, ir':luding nine engi- neers, supervises implementation of the infrastructure and resettlement contracts currently estimated at about US$60 M equivalent. MAETUR's and ARAN's performances have been satisfactorv. 1.09 Financial intermediation fo. land development and housing is done by CFC, an independent, commercially oLiented and financially autonomous para- statal enterprise reporting to MIINFI. CFC, which has local offices in most of the major cities, provides financing for housing construction including land development for both private and pdblic (SIC and MAETUR) operations. CFC receives Government revenues through the proceeds of a housing tax on salaries which represented FCFA 12.4 billion in 1986. CFC was the financial intermedi- ary under the Bank's First Urban Development Project (Ln. 2244-CM) and has performed satisfactorily. 1.10 To facilitate econamic investments, the Government also established MAGZI, an agency which operates under the supervision of MINPAT and develops industrial sites, mostly in Douala. It also established FEICOMI, a Special Fund for Municipal Equipment, which came into operation in 1974 under the supervision of MINAT. FEICOM provides earmarked funds, mostly on a grant basis, to municipalities for the firancing of local projects such as road maintenance equipment and other urban facilities. Its resources come from municipal taxes, the Government budget, sad, until 1981/82, subsidies from ONCPB, the national agriculture stabilization fund. Its financial situation has deteriorated gradually, mostly as a result of large discrepancies between expected revenues and expenditures; as a result, FEICOM's lending operations have virtually stopped. The agency has been reviewed as part of the Govern- ment's audit of public enterprises, and because of its experience with munici- palities, it would continue in an advisory capacity to MINAT. CFC would become the financial intermediary for municipal projects. 1.11 Municipalities, which operate under the supervision of MIMAT, play a major role in providing basic urban services, and the Government is increas- ingly interested in strengthening their autonomy and improving the management of their financial resources. The budgets of the municipalities are approved by MINAT but depend upon MINFI for their resources. A comprehenisive reform was initiated in 1987 (Law 015/87 of July 15, 1987) clearly delineating the responsibilities of the urban communities and confirming their authority to  raise taxes, borTow for municipal projects and generally strengthen their autonomy. For the time being, application of this law is limited to the main cities, but would be broadened as municipalities are being strengthened. 1.12 Municipal budgets rely mostly on fiscal resources, representing 602 to 90% of total revenues, which are assessed, billed and collected by the local offices of MINFI on behalf of local governments. Due to an iradequate tax base and poor collection systems, only about 50% of potential revenues are collected. Delays in releasing tax receipts to the municipalities are exces- sive, often up to 18 months. The existing taxation system is such that resources are directly proportional to modern sector activities and this favors major cities like Douala and Yaound6 which, respectively, receive 60% and 22% of total revenues collected in the municipalities. Locally collected fees only represent 17%, on the average, of municipal revenues; the remainder are funds allocated by Government. To improve municipal finances, the Govern- ment has commissioned a study which is expected to be completed by March 1989. Twiplementation of the recommendations of this study, financed under the Bank's Second Technical Assistance Credit (Cr. 1168-CM), would be part of the pro- pcsed project, and during negotiations, agreement was reached with Government that a report on municipal finances would be submitted by March 31 annually to the Bank for review and comment (para 2.13). 1.13 However, despite their limited financial resources, municipalities have undertaken substantial infrastructure improvement operations. In addi- tion to their conventional tasks of garbage collection and disposal, roads and drainage maintenance, market construction and maintenance, street lighting, and public standpipes operation, local governments allocate a substantial shere of their limited budgets (close to 50% for the major cities) to invest- ments in basic infrastructure. The Urban Community of Yaounde (CUY), for instance, has developed over 9,000 minimally-serviced plots over the last twenty years. The Urban Community of Douala (CUD) has carried out substantial programs of access roads as part of the upgrading of squatter settleuients and has also benefitted from the implementation of the Bank's First Urban Develop- ment Proiezt (Ln. 2244-CM) about to be completed (para 1.27). C. Investments in the Urban Sector 1.14 Urban investments increased from CFAF 59 billion under the Third Development Plan (1971-76) to CFAF 120 billion under the Fourth Plan (1976-81), and doubled again to CFAF 253 billion, or 11% of total investments, under the Fifth Plan (1981-86). Under the Sixth Development Plan (1987-92), the Government expected to invest CFAF 690 billion for urban development, including CFAF 330 billion directly managed by MINUH. This objective is now seriously compromised because of reduced Government revenues resulting from the drop in commodity prices, in particular oil, in CFAF terms. Already in 1987!88, MlNUH's expected annual investment of CFAF 66 billion was reduced to CFAF 10 billion, (para 1.07), a level insufficient to continue the investment programs of the Sixth Development Plan. MINUH' s average annual investment budget, excluding foreign financing, is now expected to be as follows for 1988/89 through 1990/91:  -6- Annual Investment Budget CategorY for FY88/89 through FY90/91 ----- (FCFA billions) ----- Studies 0.7 Infrastructure, other than Second Urban Project 3.0 Construction and Land Development 2.0 Compensation 0.6 Equipment 0.4 Subsidy MAETUR (VY88/89 only) 0.3 Second Urban Project 5.0 Total 12.0 The budget reflects Government policy to eliminate subsidies for parastatals, in particular for SIC, in the housing sector, while MAETUR, the land develop- ment agency, would receive declining subsidies to be phased out in FY90/91. During loan negotiations, assurances were obtained from Government that the three-year rolling urban investment budget would be updated annually and furnished to the Bank for review by March 31 of each year starting March 31, 1989. 1.15 The Fifth Plan (1981-86) integrated the housing policy defined by the recently created MINUR and its parastatal agencies. SIC was to build 15,000 housing units or 20% of estimated urban housing demand. MAETUR was expected to develop, in addition to the land and infrastructure required for the SIC operations, 26,250 serviced sites for individual construction repre- senting an additional 35% of estimated urban housing demand. Considerable financial resources were allocated to achieve these objectives. Over the period 1981-86, the Government invested close to CFAF 170 billion in MAETUR and SIC operations. However, actual achievements fell short of objectives. SIC constructed only 8,327 housing units, or 56% of its program. MAETUR developed only 7,105 serviced plots, or 27% of its program. Government funded, on a grant basis, the total cost of infrastructure, or CFAF 39.2 bil- lion for SIC housing, and CFAF 11.7 billion for MAETUR plots. CFC contributed CFAF 32.7 billion in loans to SIC, and CFAF 16.1 billion to MAETUR. In addit;on, CFC has also lent CFAF 39.2 billion to wage-earning households for servic%d sites accuisition anid housing construction. 1.16 SIC's and MAETUR's limited accomplishments result primarily from the high bul'ding standards whi-k were selected for housing construction. SIC's averagr. housing unit cost has been CFAF 17 million (about US$60,000) while MAETUR's average land development costs amount to CPAF 52 million per ha, or CFAF 3.6 million (about US$13,000) per serviced plot. By comparison, the average cost of municipal land development operations carried out in Yaounde was CFAF 0.35 million (US$1,300) per plot. As a result of the limited number of housing units and plots completed, the vast majority of the urban popula- tion was left with no other alternative but to settle on unserviced land, which resulted in the uncontrolled urban spatial growth now hampering imple- mentation of urban master plans (para 1.05). Learning from '.iis experience, the Government has decided to increase the role of the private sector in the land development and housing sectors. Therefore, it has agreed, as part of the policy action plan (Annex 1-1), to redefine the role of SIC and SAETUR in  -7- the sector In order to stimulate a more active participation of private developers and to broaden the role of CFC to that of financlal intermediary in private housing and land development operations. 1.17 The Government has already moved to eliminate subsidies to housing parastatals and including, among other measures, modifications of SIC's tax advantages and a general review of its operations aiming at a clear distinc- tion between the management of its existing housing stock and its new housing development functions. For MAETUR, the modifications would imply more empha- sis on the development of low cost plots, improved cost recovery and optimiza- tion of already developed sites. Regarding CFC's operations, emphasis would be placed on the financing of low cost housing; onlending rates would be revised and a full cost recovery policy for Government investments in the housing sector would be generally the main objective. During negotiations, agreement was reached that the Government would conduct an audit of the above parastatal agencies and prepare by December 31, 1988, submit to the Bank for comment, and thereafter implement, action plans for their rehabilitation (para 2.07). 1.18 Other major urban investments over the period 1981-86 have included: (a) the construction of 120 km of urban roads for a total cost of FCFA 83.9 billion: 37% in Yaounde, 11% in Douala, and 52% in the secondary cities; (b) the rehabilitation and upgrading of water supply systems in 64 secondary centers for a total cost of CFAF 82 billion; and (c) the con- struction of administrative buildings throughout the country for a total cost of CFAF 129 billion. The Fifth Plan also included significant funding (CFAF 7.2 billion) for the improvement of land registration. 1.19 Land Tenure Situation. Rapid urban growth has created considerable pressure on land which is, no longer, a communal inalienable asset as it was in the traditional tenure system but has instead become a marketable commodity indispensable to individual economic agents. In 1974, Cameroon adopted a set of Land Laws which provide the framework for the transformation of traditional into modern tenure rights as well as for state management of the undeveloped lands. The limited implementation capacities of MINUH's Surveys and Lands Departments have not allowed, until now, for effective enforcement of these Laws. Less than 20% of all urban properties are registered, and in the absence of properly maintained cadastral maps, locating the few existing land titles on the ground is virtually impossible. 1.20 These deficiencies in land registration hamper the proper func- tioning of the land market in a context where over 30,000 new urban plots are created annually. The vast majority of businesses and households have no alternative but to settle illegally on inadequately serviced lands. For most newcomers, access to urban land results from informal and unregistered ar- rangements with traditional occupants who, frequently, consider these transac- tions as revocable leases. This prevents the efficient management of urban land resources. The lack of land tenure security severely restricts private investment in small enterprises and housing as well as the use of land as collateral for borrowing. T.ie complex land tenure situation constrains the pace of land acquisition for public projects and hampers the implementation of priority infrastructure, community facilities and land development operations. Furthermore, State and municipal properties are aot clearly identified and the proper management of these public assets is impossible. This also hampers the implementation of a property tax. Since 1985, MINUR has initiated the prepa- ration of cadastral maps for Yaound4 and Douala and has embarked on a first  - 8 - program on the implementation of appropriate mechanisms to improve the land tenure situation under the First Urban Development Project. This Project has been instrumental in identifying appropriate mechanisms to regularize the land tenure situation in squatter settlements. Continuation of these actions is included under the proposed project through the streamlining of procedures to assess and register land rights. D. Deficiencies of Urban Services 1.21 The considerable financial efforts, accomplished during the Fifth Development Plan, have not kept up with demand, as a consequence of inadequate prioritization of urban investments and lack of coordination dmong the many agencies involved (para 1.05). A backlog has developed and the provision of basic urban services has remained insufficient. Consequently, basic infra- structure for most of the urban population remains inadequate, and Cameroon is confronted not only with the task of accommodating future urban growth, but also of making up for this backlog. Close to 70% of the urban population lives and works in haphazardly subdivided and inadequately serviced settle- ments. Uncontrolled urban growth induces densification of central settlements and diffuse urbanization of peripheral areas which increase the cost of urban infrastructure provision. Inadequate flood control, drainage, and waste disposal create serious security and health hazards. Congestion of the urban road network increases considerably the cost of travel and thus of business and, in many instances, generates accidents and prevents access of priority vehicles into the densely populated central settlements. 1.22 The urban infrastructure backlog is particularly critical in Douala, the country's main commercial, industrial, and economic center, where limited public investments took place within the last ten years. Douala's road network is underdeveloped: the ratio of surfaced roads to population is a third of that of Yaounde and the primary network is only about a quarter of what is needed for adequate coverage. Moreover, Yaounde's road network is in need of rehabilitation which is provided for under the proposed project. Traffic in Douala is concentrated on the primary road system where, on key intersections, saturation levels were already reached in 1982. There are few carparks or sidewalks, and roadsides are encumbered by pettv traders. Pedes- trians are not adequately separated from vehicle traffic. There are no taxi stops, bus terminals are inadequate, through traffic connections do not exist, and traffic is forced to make long detours through busy central districts, adding to congestion and hampering economic activity. Road networks in secondary cities are inadequate for current traffic demands, and drainage systems have become insufficient to cope with population growth. 1.23 Much of the city of Douala is low-lying. Drainage channels are insufficient and lead to frequent floods damaging houses and businesses, inconveniencing residents, disrupting traffic, and eroding the road surface. Leaks from latrines during floods are a serious health hazard. Poor solid waste collection services force residents frequently to use drains for refuse disposal, in some cases completely blocking major culverts. Recent initia- tives by CUD to improve waste collection and drain cleaning have reduced the problem somewhat, but the basic issue of limited drainage capacity remains. Upgrading of drainage in Nylon, Douala's lowest-lying neighborhood, started under the First Urban Project. A program to improve the rest of Douala's primary drainage system has been prepared, and its priority components would be executed under the proposed project. CUD is also speeding up its program of secoitdary and tertiary road and drainage systems, and improving and  - 9 - expanding its solid waste collection and disposal services. The latter would also be addressed under tne pilot sanitation operations included under the proposed project. CUD's technical services are being strengthened through the substantial expertise and financial assistance that the French Ministry of Cooperation is providing to Douala as part of the fourth FAC Agreement signed in 1987. Additional assistance for institutional development would be provid- ed througlh the proposed project. E. Government Policies for Urban Development 1.24 Although considerable improvements in the Government's institutional set-uip in the urban sector are required, efforts undertaken since the early 1980s have provided the basis for the preparation of an adequate sectoral strategy. As the proprams implemented fell short, however, of the Fifth Plan's (198i-86) objectives, the Government, recognizing the difficulties encountered, has embarked on ambitious programs for the removal of critical bottlenecks to urban development. The Sixth Plan (1986-91), currei.tly under implementation, fully integrates a revised urban strategy which aims at: (a) implementing workable mechanisms to prioritize public investments; (b) im- proving the mobilization of local resources; (c) securing land tenure as an incentive for private investments; and (d) increasing the role of the private sector in housing and land development. Due to current financial constraints, planned investments of the Sixth Development Plan are likely to be substan- tially scaled down. Therefore, the Government has identified the first slice of a priority infrastructure program and is seeking to supplement its limited resources through the proposed project in order to improve its chances of reaching the critical objectives needed for its urban strategy. 1.25 Among its priority objectives, the Government is seeking donor community assistance to implement its revised urban strategy through the following measures: (a) Rationalization of public investment in the urban sector. Actions include: (i) analysis of the sharing of responsibilities between central and municipal institutions for planning, financing, imple- menting and maintaining urban infrastructure and services; (ii) im- proved identification of priority urban development needs; (iii) ad- justment of design standards of priority programs to economically justified levels and available resources; (iv) study and implementa- tion of cost recovery mechanisms for secondary and tertiary infra- structure; and (v) development of an urban investment programming strategy in line with macro-economic development objectives. (b) Strengthening municipalities and gradually building up their techni- cal and financial capabilities to cope with the development needs of their cities. Actions include: (i) providing more autonomy, a process already started in 1987, to municipalities; (ii) studying and implementing means to improve cost recovery and local resources mobilization through the reform of local taxes assessment and collection systems; (iii) strengthening of financial intermediaries to improve lending mechanisms for municipal projects; and (iv) assisting in defining programs to improve the provision and maintenance of basic urban infrastructure. (c) Improving the management of urban land resources and the functioning of the land market. Actions include securing land tenure to a  - 10 - larger share of households and businesses through: (i) the produc- tion of cadastral maps and the identification of state-owned land in major cities; (ii) the streamlining of procedures to assess land rights and accelerate their legal registration; and (iii) the strengthening of land agencies' implementation capacities. (d) Developing the role of the private sector in housing and land development. Actions include: (i) the refocusing of the role of the public sector (MAETUR) towards the provision of secondary infra- structure; (ii) the implementation of financing mechanisms to recover the costs of these infrastructures; (lii) the streamlining of procedures allowing private developers and municipalities to subdivide, service and sell lots; (iv) the broadening of CFC's activities towards the financing of municipal and private land development; and (v) the phasing out of SIC's past activities and its refocusing towards assistance to the development of the private housing sector. 1.26 Government has already initiated implementation of this strategy by extending MINUR's terms of reference to include operational responsibility for major urban road works and extension and rehabilitation of urban infrastruc- ture. This requires a close partnership with the local governments through the regional offices of MINUH which will guide them in assuming responsibility for operating and maintaining the networks implemented by MINUH. Government has also undertaken, iyith French technical assistance, the identification of appropriate mechanisms to improve the financing of urban investments and to .efocus the activities of the parapublic enterprises in the framework of the adjustment of the housing strategy to the prevailing financial constraints. In addition, a "Project Special Unit" (PSU) was created within MINUR by Presidential Decree 88/202 of February 4, 1988 to coordinate, under the authority of a Project Director, the activities of the various departments involved in the proposed project and act as che technical secretariat of the Steering Commitcee to be created to coordinate implementation of the urban policy (para 2.11). F. Bank Extaerience 1.27 The First Urban Development Project (Ln. 2244-CM) for US$20.0 M, was approved in Mi,rch 1983. The project's main objective was to develop appropri- ate institutional mechanisms to upgrade unserviced squatter settlements. It included: (a) basic infrastructure and public facilities in Nylon, a 700 ha settlement, housing 15% of Douala's population; (b) land development and land tenure regularization of a 50-ha pilot neighborhood; and (c) assistance to community economic and social development. The project is being implemented by ARAN (para 1.08), with the assistance of the Swiss Development Cooperation and Humanitarian Aid (DDA) which finances public facilities and provides support to community development. The First Urban Development Project also provided funds for the strengthening of MINUH's project preparation and management capability including engineering studies for the proposed project. 1.28 The First Urban Development Project proved instrumental in develop- ing and implementing adequate mechanisms for replicable squatter upgrading operations. Procedures were developed to streamline land rights assessment and reglstration within irregular settlements. Land development based on detailed land surveys and physical plans has started, and actions to regular- ize tenure and recover costs within the 50-ha pilot neighborhood are  - 11 - proceeding well. The program of communitv development implemented with the assistance of local and foreign NGOs proved successful in trairning small-scale contractors and assisting households with houses and latrines construction, in providing housing financing through the integration of the neighborhood savings associations ("tontines") within the formal banking system, and in associating the local population in community works and land tenure regular- ization. Appropriate procedures were also developed to resettle and compen- sate the households displaced from the infrastructure right-of-way (see working document in the project file). The same procedures would be followed for the resettlement component under the proposed project (para 1.20). Two thousand serviced plots have been completed to resettle the households, and house construction and cost recovery procedures are proceeding satisfactorily. A central market, sites for small-scale enterprises, schools and clinics were built under DDA financing. 1.29 Civil works in Nylon were initially delayed by about three years due to the complexity of the land tenure situation (para 1.19), inadequate coordi- nation between various levels of Government (para 1.06), and slow procurement of the major project components. Difficulties have now been largely overcome, construction contracts have been awarded and implementation is proceeding satisfactorily. However, infrastructure construction, mostly roads, which started early in 1987, ran into unanticipated geotechnical difficulties requiring the construction of special road bases insensitive to water. This led to substantial increases in costs. Also, due to the Government's current financial constraints, the Bank agreed in 1987 to increase its share of project financing so as not to delay implementation of the replicable upgrad- ing operation which is expected to provide substantial economic benefits to the urban population and, in particular, to the inhabitants of Nylon. All these difficulties, combined with the depreciation of the US dollar, have resulted in project cost overruns in CFAF terms. Despite reduction of the project description to priority comDonents, total expected costs exceed available funds by about US$20 M which would be financed under the proposed project. Loan 2244-CM was fully committed as of June 30. 1988. 1.30 The experience gained through the implementation of this first project and the institutional mechanisms which were developed will be contin- ued and reinforced under the proposed project. In December 1987, DDA and the Government signed a new CFAF 3 billion complementary agreement to continue community development in Nylon through the construction of community facili- ties and support to neighborhood associations and small-scale enterprises. This complementarv agreement also covers the 35-ha resettlement area for the proposed Second Urban Project (para 2.06 (a)). Furthermore, DDA has started a study on the replicability of the first operation which will include a criti- cal analysis as well as a socio-economic assessment of the project's impact on the population. The conclusions of this study will lead to the detailed formulation of a community development action program to be implemented in conjunction with the infrastructure upgrading actions, which will be continued under the proposed project.  - 12 - II. THE PROJECT A. Origin, Objectives, and Description Background 2.01 The proposed project results from a continuous sector dialogue between the Government and the Bank since 1977. The Fir - Urban Development Project was approved In 1983 and an urban sector strategy paper was discussed with Government in 1984 (Report No. 4540-CM). The strategy paper identified the priorlty areas for Bank-supported urban investments. These include: (a) priority infrastructure in Douala; (b) improvement in the land rights, assessment and registration procedures; (c) reorientation of public interven- tion in housing and land development activities; and (d) strengthening of municipal capabilities. The Government requested the Bank to consider a Second Urban Project focusing essentially on the upgrading of urban transport and drainage infrastructure in Douala. Engineering studies, financed under the First Urban Project, began in early 1985 and appraisal of an Infrastruc- ture Project for Douala took place in February 1986. However, while detailed engineering continued, the Government -eviewed the appraised project, and in September 1987, requested that it be broadened in scope to complete elements of the First Urban Development Project, to undertake priority infrastructure improvements in Yaounde and other cities, and to support policy actions in line with its strategy for the urban sector including improved resource mobilization. A revised project was appraised in November 1987. Rationale for Bank Involvement 2.02 The proposed project would provide the means to continue implementa- tion of the Government's urban development strategy at a time when, because of financial constraints, the country's continued emphasis on the strengthening of its urban centers to support its future economic growth is at risk. The Bank would provide the financial means to the Government to continue implemen- tation of a replicable urban upgrading program started under the First Urban Development Project and to continue its urban development strategy while giving municipalities the necessary time to carry out studies and adjustments of the tax basis to mobilize new resources for the sector. The Bank's partic- ipation at this crucial junction would help the Government consolidate poli- cies which would enable strengthening of sector institutions and increased participation of the private sector. The Bank's experience, analysis and advice on the specific elements of the urban strategy would help Government address key issues appropriately. Moreover, various central, parastatal and local institutions would be given incentive to work together. The Bank's assistance to the sector would also stimulate a coordinated and concerted international donor community participation. The French Ministry of Coopera- tion has already agreed to provide technical assistance (16 advisers) in support of the proposed urban strategy, and DDA has extended its support to community development in Nylon (para 1.28). Other support for strategy implementation would be forthcoming from other donors and various NGOs already operating in the sector, which provide basic urban services and promote population participation in the development and upgrading activities.  - 13 - Proiect Objectives 2.03 The main objective of the project is to consolidate, through its three-pronged approach of resource mobilization, infrastructure improvement and institutional strengthening, rhe basis for sustainable urban development initiated under the First Urban Development Project. The project would also improve distribution of -sponsibilities between the central Government and municipalities and betv n public and private providers of urban services while raising urban living and working conditions, especially of the poorer sections of the populstion now settled in the least developed parts of the urban centers. Urban poverty ':ould be alleviated and urban employment stimu- lated as a result of better access to economic and social services. The project would also strengthen management capabilities of urban agencies and prepare for implementation of replicable urban operations financed through improved cost recovery and local resource mobilization mechanisms. Building upon past involvement in the sector, the project would be a stepping stone for the implementation of Government's urban strategy leading to a broad-base sectoral approach in future lending. Project Description 2.04 The project would have three major components: (a) an urban re- sources mobilization component; (b) a priority urban infrastructure improve- ment program; and (c) a policy and institutional development component. These components are summarized below and described in detail in Annex 2-1. 2.05 The urban resources mobilization component would include four subcomponents, all of which would ultimately benefit the financing of urban services: (a) The fiscal cadastre subcomponent would include continuation of preparation works for the establishment of cadastral base maps in YaoundA and Douala. In addition to support for the Surveys Depart- ment through the financing of cartographic works, equipment, techni- cal assistance and training, this subcomponent would include the means to improve implementation of a property tax established July 1, 1988. A program satisfactory to the Bank was prepared by MINUR and finalized at negotiations. (b) The land resources management subcomponent would consist of techni- cal assistance and support in equipment and t-:aining for MINUR's Surveys Department and Lands Department to proceed with: (i) the identification and demarcation of state-owned lands and lands owned by local collectivities; and (ii) the improvement and implementa- tion, with Canadian assistance, of a computerized land data base for Yaounde and Douala. A program satusfactory to the Bank was prepared by MINUR and finalized at negotiations. (c) The municipal finance improvement subcomponent would consist of technical assistance to help MINAT implement an action plan to be recommended by the municipal finance study (para 1.12). This would include strengthening of financial accountability and improvement of tax billing and collection through updating of tax registers and the possible creation of a new urban development tax. The municipal finance study is expected to be completed by March 1989 and at negotiations, agreement was reached with the Government that an  - 14 - action plan would be prepared and furnished to the Bank by March 31, 1989 for comment, and carried out taking the Bank's comments into account, and that a report on municipal finances would be submitted annually to the Bank for review and comments (pa- ra 1.12). (d) A Municipal Credit Fund of FCFA 2 billion administered by CFC would be created for medium-term lending at interest rates, at least equivalent to those of the Bank Loan, for municipal income-generating projects such as markets, truck and bus terminals and commercial or industrial sites development. The initial line of credit provided by the Bank would be FCFA 1 billion. CFC would provide 1 billion FCFA from its own resources. Municipalities throughout the country would be eligible to borrow. Projects prescreened by MINAT would be studied by FEICOM on CFC's behalf and proposed for financing to CFC. Eligibility criteria and sub-loan apDroval procedures would be defined by the municipal finance study (para 1.12). Onlending terms, including Government and municipali- ties' own contributions, would be such that the Municipal Credit Fund can continue to lend on the basis of the disbursements of subsidiary loans, after serving the Bank loan. At negotiations, agreement was reached with the Government and CFC that eligibility criteria and lending terms would be prepared as part of the munici- pal finance study and agreed with the Balik by March 31, 1989. 2.06 The priority urban infrastructure improvement program would consist of civil works to complement, upgrade and rehabilitate urban infrastructure in the country's main economic centers. The program, confirmed at negotiations, includes: (a) The Douala Priority Infrastructure Program consisting of: (i) traf- fic management improvements in the central business district through the rehabilitation of about 17 intersections to be equipped with traffic signals and street markings and the upgrading of about 20 km of sidewalks; (ii) road improvement through the upgrading or con- structior of about 10 km of primary roads providing access to commercial and industrial areas; (iii) drainage improvement through widening, deepening and lining of about 4.5 km of storm water drains in the central business district; (iv) continuation of civil works in the Nylon district including primary infrastructure, land devel- opment of a 50-ha pilot neighborhood and housing credit; and (v) the development of a resettlement area of about 35 ha to relocat- an estimated 1,000 households currertly settled on the right-of-way of roads and drains to be improved under the project, including compen- sation and housing credit. Appropriate sites have already been acquired and would be developed as part of the project. DDA would provide for complementary investments in community facilities (para 1.30). At negotiations, Government confirmed that the 35-ha resettlement area is reserved for the project, that appropriate engineering documents have been prepared and that resettlement will be done in accordance with a resettlement action plan satisfactory to the Bank (Annex 2-1, paras 13 and 14). (b) The Yaound4 Priority Infrastructure Program will comprise: (i) traffic management improvements through the rehabilitation of about four intersections in the central business district and  -15 - completion of a traffic managefient study for central Yaound6; (ii) ro_d improvements through the upgrading of a 6-km segment of the ring road giving access to the new General Hospital; and (iii) a rehabilitation program for Yaounde's paved road network. (c) The Secondary Cities Priority Infrastructure Program will include: the continuation of rehabilitation and upgrading programs of the urban road and drainage networks in about five secondary cities, including paving and upgrading of the road networks, lining of storm water drains, and improvement of access roads to commercial and industrial developments as well as social services. 2.07 The policy and institutional development component would assist the Government in implementing its urban strategy, which would also facilitate future international assistance to the sector including that of the Bank. This component includes the following subcomponents: (a) Implementation of a policy action )lan (Annex 1-1) to consolidate, through the implementation of a program of studies, technical assistance and policy decisions, the Government's urban strategy. The action plan includes the definition of institutional and financ- ing nechanisms and the preparation and coordination of appropriate investment programs. As a first s.ep in the policy action plan, the Government has set-up an Urban Development Steering Committee whose role would be to oversee implementation and coordination of the program. At negotiations, agreement was reached on the detailed scope and content of the action plan, as well as on the establish- ment of the Urban Development Steering Committee (para 2.11). Further, at negotiations, agreement was obtained from the Government that by June 30 of each year starting June 30, 1989, the Bank and the Government will exchange views on the implementation of the policy action plan on the basis of a report to be prepared by PSU (para 2.11) and endorsed by the Urban Development Steering Committee prior to being furnished to the Bank for review and comments. (b) Strengthenirg of MINUH's project management capability through: (i) the provision of technical assistance lo coordinate and super- vise project implementation; and (ii) on-the-job and overseas training. A program satisfactory to the Bank for technical assis- tance and training has been prepared by MINUH and was finalized and confirmed at negotiations. (c) Preparation and implementation of action plans to reorganize the parapublic enterprises in the urban and housing sectors. Based upon the recommendations of the ongoing diagnosis by a special Government Committee on parapublic enterprises to be completed by November 15, 1988, detailed action plans taking account of modifications in the role of the enterprises being considered by the Government would be prepared for the reorganization of the enterprises of the urban and housing sectors (SIC, MAETUR, CFC and FEICOM) including the possible selling of their assets. At negotiations, agreement was obtained from the Government that by December 31, 1988, MINUH will prepare and furnish to the Bank for review and comments, a detailed action plan for each of the parapublic enterprises concerned and, there- after, that Government will cause each action plan to be implemented in accordance with the plan agreed with the Bank.  - 16 - (d) Strengthening of MHunicipalities' project preparation, infrastructure maintenance, and flnuacial umnageent capabilities t'rough the provision of training, technlcal assistance, equipment and pilot programs for CUD, CUY, and other secondaTy cities. This would include the improvement of solid waste management and a pilot program to train small contractors In the constructlon of improved latrines. A program satisfactory to tte bank has been prepared and was confirmed at negotiations. B. Project Costs and Financing 2.08 The project costs, confirmed at negotiations, are estimated at US$253.5 M, including taxes and duties of US$31.1 M. Base cost estimates are in June 1988 prices. The project would be esxcuted over the five-year period 1989-93. Physical and price contingencies are Included. Inflation rates for local and foreign costs are estimated at 72 for 1988-90, and 4Z thereafter. A summary of cost estimates is presented in the table which follows. Detailed project costs are provided in Annex 2-3. Table 2.1 Estimated Costs MUS$ million) ^ of Item Local Taxes Poreian Total Base Cost A. Urban Resources Mobilization 2.9 1.8 8.8 13.5 7 Bl. Douala Infrastructure 34.9 ll.S 52.8 99.2 52 B2. YaoundA Infrastructure 8.5 4.1 19.0 31.6 1I B3. Secondary Cities Infrastructure 8.3 4.2 19.0 31.5 17 C. Institutional Development 2.1 1.8 9.7 13.6 7 Base Cost S6.7 23.4 109.3 189.4 100 Physical Contingencies 5.S 2.0 9.5 17.0 9 Price Contingencies 14.1 5.8 27.2 47.1 25 Total Project Cost 76.4 3 146.0 253.5 134 Percent 30 12 58 100 2.09 The Bank would fianmce technical assistance, studies, equipment, vehicles, materials, supplies, and training for the implementation of the following programs: (i) the fiscal cadastre (para 2.05 (a)); (ii) land resources management (para 2.05 (b)); (iii) uunicipal finance (para 2.05 (c)); (iv) policy action plan (para 2.07 (a)); and (v) MINUR and other munici- palities institutional strengthening (para 2.07 (b) and (d)). Financing for the Municipal Credit Fund component (para 2.05 (d)) would be for goods and services needed for the income-generating projects proposed by the Municipali- ties and approved by the Municipal Loan Coulttee. Rehabilitation of para- public urban and housing sector enterprises (para 2.07 (c)) would involve the financing of audit, preparation of rehabilitation pvograms, technical assis- tance, training, as well as equipment and supplies. For the priority urban infrastructure program (para 2.06), the loan would finance consultants' services for detailed engineering studies, technical assistance for bid  .- 17 - evaluation, civil works, construction supervision, special expertise assign- ments, and traffic management equipment. For the civil wLrks in the Nylon neighborhood (para 2.06 (a), (iv)) the Bank would finance the cost overrun on the infrastructure and land development works and construction supervision contracts started under the First Urban Project (para 1.27). These include primary infrastructure works as well as the upgrading of the 50-ha pilot area. For the project's additional 35-ha resettlement area, Bank financing would be limited to technical assistance, civil works for land development, and consul- tants' servi'.es for construction supervision. The Government would finance compensation for displaced households while MAETUR would finance plot develop- ment. For the secondary cities, the Bank would finance civil works and consultants' services for detailed engineering and construction supervision. 2.10 The proposed IBRD loan of US$146.0 M would finance 58% of total project costs representing 100% of the foreign exchange cost of the project. The Government would cover all remeir.ing costs. The proposed financing plan, reviewed and confirmed at negotiations, is as follows: Table 2.2 Financing Source Local, Plus Taxes Foreign Total % Government 107.5 --- 107.5 42 IBRD 146.0 146.0 58 Total 107.5 146.0 253.5 100 Retroactive financing of eligible expenditures incurred after January 1, 1988, for a total amount not exceeding US$7.0 M, is included for technical assis- tance, detailed engineering studies, expenditures for the Nylon infrastructure and land development contracts started under the First Urban Development Proj- ect, and infrastructure rehabilitation in secondary cities. C. Implementation Schedule and Responsibilities 2.11 The project would be implemented through existing institutions. Overall responsibility for project management would rest with MINUH. As the first step in the Policy Action Plan (Annex 1-1), an Urban Development Steer- ing Committee, including MINPAT, MINAT, MINFI, MINMEN, MINTPT, and MINUH, or their representatives, has been set up to coordinate urban development poli- cies and programs (para 2.07 (a)). MINUH would be responsible for the general supervision of the resettlement action plan (para 2.06). A Project Special Unit (PSU) was established February 4, 1988 within MINUH to be directly responsible for the administrative coordination of the proposed project. This inclvAes the management of procurement, general project supervision, account- ing, disbursement monitoring and follow-up. The PSU would also be responsible for informing the Urban Development Steering Committee, on a monthly basis, and on a quarterly basis the Bank, on the status and progress of the project's components and policy actions. PSU would be headed by a qualified project manager and assisted by adequate staff. The Decree establishirg PSU is available in the project file. The project manager, procurement specialist, chief accountant and principal economist of PSU would be nominated in agree- ment with the Bank. CFC would be responsible for the Municipal Credit Fund  - 18 - and for the financing of the land development components being executed by MABTUR (paras 2.14 and 2.15). 2.12 MINUH would be directly responsible for implementing the roads and drainage imptovement and maintenance programs in Douala, Yaoundt and th.e secondary cities with the assistance of the relevant municipal technical departments. MINUH, through its Surveys and Lands Departmernts, would imple- ment the fiscal cadastre and land management compone..ts and liaise with the Taxes Department of MINFI for the feasibility study of the property tax (pa- ra 2.05(a)). MINUH would also be responsible for implementation of the institutional development components including the urban policy action plan and the housing sector parapublic enterprises rehabilitation program. MINAT, through its Directorate cf local governments would implement the municipal finance subcomponent (para 2.05(c)) and assist in the strengthening of mnitici- palities (para 2.07(d)). 2.13 CUD and CTY would suervise implemertation of their respective traffic management and municipal strengthening subcomponents. They would also, through their respective technical departments, assist MINUH in imple- menting the road and drainage improvement programs. CUD, CUY, and the secon- dary cities would be responsible for maintaining their infrastructure. Agreement was reached at negotiations that CUD, CUY and secondary cities benefitting from the project would develop and carry ou! road maintenance and drainage programs agreed with the Bank but financed from their own budgets. For this purpose, CUD, CUY and the secondary cities will prepare and furnish to the Bank, for review and comment, beginning March 31, 1989 and by March 31 for each year thereafter, a report on municipal finances for the current year including current and investment expenditures and a work program and draft budget for the following year. 2.14 CFC would administer the FCFA 2 billion Municipal Credit Fund with the technical assistance of FEICOM, who would study the technical proposals submitted by the Municipalities and screened by MINAT. CFC would be the direct beneficiiry of the line of credit. Funds from the loan would be onlent to CFC on terms at least equivalent to those of the Bank loan. Eligibility criteria, procedures for the use of the loan funds and onlending terms would be defined by the Municipal Finance Str.dy and agreed with the Bank by March 31, 1989 (para 2.05(d)). Agreement was obtained from the Government at negotiations that conclusion of a financing agreement betwpen the Government and CFC acceptable to the Bank would be a condition of effeotiveness of the loan. 2.15 MAETUR/ARAN would be the executing agency for the *ontinuation of the civil works in the Nylon district of Douala and the v"pgrading of the 50-ha pilot neighborhood for which contracts are under execution (para 2.09). MAETUR/ARAN would also be the executing agency for the 35-ha resettlement area related to the other infrastructure components, which would be financed through CFC on terms at least equivalent to those of the Bank loan but could include a margin for CFC. The serviced plots would be sold by MAETUR/ARAN to qualified individuals at prices covering at least the aggregate cOsts to MAETUR/ARAN. At negotiations, agreement was obtained from Go-ernment that conclusion of financing agreements between the Government and CFC and CFC and MAETUR/ARAN, on terms satisfactory to the Bank, would be a condition of effectiveness.  - 19 - D. Procurement 2.1S Amounts and procurement methods are given in Table 2.3. These were confirmed at negotiations. Table 2.3 Amounts and Methods of Procurement (US$ million) ------------------- Procurement Method /a ------------------- Project Element I_B LCB Other N/A Total 1. Civil Works (a) Douala 87.9 2.9 ._ 13.9 /b 104.7 (48.4) (1.6) --- (---) (50.0) (b) Yaouade 38.0 2.9 40.9 (20.9) (1.6) --- --- (22.5) (c) Secondary Cities 40.3 --- --- --- 40.3 (22.2) --- --- --- (22.2) (d) Nylon --- --- 16.2 --- 16.2 (13.8) --- (13.8) 2. Materials, Equipm nt 2.7 1.0 0.5 --- 4.2 (2.2) (0.8) (0.4) --- (3.4) 3. Works, Goods, and Services for --- --- 8.8