Burkina Faso - Public Works and Employment Project

c2-i ZZ e - Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9535-BUR tI, s; 1!,~~ ':1 :', ic STAFF APPRAISAL REPORT BURKINA FASO PUBLIC WORKS AND EMPLOYMENT PROJECT MAY 31, 1991 Infr.structure Operations Division Sahelian Department Africa Region 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.  CURRENCX EQUIYALENT& Currency unit CFA Franc (CFAF) US$1.0 CFAF 250 CFAF 1 million US$4,000 SYSTEM OF WEIGHTS AND MEASURES: _NTRJP FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS AGETIP Agence d'Ex6cution des Travaux d'intfrtt Public Contre le Sous-emploi (Senegal) DANIDA Danish International Development Agency GTZ Deutsche Gesellschaft fur Technische Zusammenarbeit (Germany) KfW Kreditanstalt fur Wiederaufbau (Germany) ONPE Office National de la Promotion de l'Emploi OPEC Organization of Petroleum Exporting Countries SAL Structural Adjustment Loan SDA Social Dimensions of Adjustment UNDP United Nations Development Program This report is based on the findings of a World Bank mission consisting of Messre. Leslie P6an (Economist, Mission Leader), Peter Watson (Division Chief) Jean-Marie Lantran (civil engineer), Jacques Balanche and Magatte Wade (consultants) who visited Burkina Faso in March-April 1991 to appraise the project. Mr. Patrick Canel was the Peer Reviewer for 'ie operation. Mmes. Christiane Bliopoulos and JoAnne Nickerson provided see etarial support in the preparation of the report. Mrs. Katherine Marshall and Mr. Peter Watson are the Departmernt Director and managing Division Chief, respectively for the operation.  FOR OFICIL USE ONLY BU-RlXNA PASO PUBLIC WORIKS AND EPOMN RJC STF AZPISAL REPO Table of Contents Credit and Projct Sunmmary 9L.......L......... 11 I. THE ECOO1I AND SOCIAL COTET ., . . . . . . . . 1 A. Recession, Unamployrdnt, and Urbanization . . . . . 1 B. Government's PoliOy and Undertakings . . . . . . . 3 C. The Construction Industrys Performance and Constraints . . . . . . . . . . . . . o . . . 4 D. Th Bank's Previous Role . . .. .. ... . . . 6 II. TEPRC CT .......... .......... .................................. 7 A. Project Objectives . ......... o.. 7 B. Project Description ..... .........8 C. Rationale for Bank Group Involvement . . . . 13 Do Status of Project Preparation . . . . . . . . . . . 14 Eo Project Cost and Financing Plan . . . . . . . . .o. 14 P. Project Implementation . . . . . . . . . . . . . 16 G. Procuremnt 17 B. Disbursement 19 I. Accounting, Auditing, and Reporting . . . 20 J. Supervision Plan . .. .. . . . .. . 21 R. Environmental Impact ............... 23 L. Economic Analysis ............. . 23 M. Benefits and Risks ............ .. 23 111. AGREEMENTS REAC AND RBCOMMENDATIOg . . . . . . . . . 24 TMABLES IN TME MAiN TEXT Table 2.1 - Estimated Costs Table 2.2 - Financing Plan Table 2.3 - Procurement Table 2.4 - Disbursement by Categories Table 2.5 - Supervision Plan SSUPPORIN ANNXES. TABLES- * CRS. AnD MAPS 1. The Executing Agency's Statutes and Bylaws 2. The Executing Agency's Procedures Manual 3. Cost Tables 4. Project Execution Schedule 5. Allocation of IDA Credit 6. Zconomic Analysis 7. Training Program 8. Consultant Services 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.  - LL - PUBIC VOX N EPOMET PROJECT STAFF APPRAISAL REPORT Credit and Propo Swpimnar Ioeu zr Govornment of Burkina Paso ionsLiciaLrs MinLitry of Plan Credit Amo=unt US$20.0 million mens Standard IDA terms, wlth 40 years maturity Coftn^|S&ein Other donors (US$7.8 million) and Government of Burkina Faso (GOB) (US$2.2 m.l2lon) pxbi-ctivsn D-ccr1R&1on3 The main objective. of the project are: (a) to finance a program of small municipal works ln the area of urban infrastructure upgrading and rehabilitation; (b) to promote local private contractors and consulting firms in project execution; (c) to improve, through execution of the works financed by the project, the individual skills of the workers to be employed and the corporate competitiveness of the firms that will carry out works so as to develop their capacity to respend to increased opportunities for sustained employment after completion of the project; (d) to create, at least temporarily, substantial new employment in urban areas as rapidly as possLble using the private sector; (e) to review existing public worcs management ocedures and recast them with the intent of speeding up threr implementation and overall performance; and (f) to demonstrate the feasibility of labor-intensive projects and test the procedures that will enable the public sector to commision such projects. The componerts of the proposed project ares (a) a program of public facility and infrastructure rehabilltation and maintenance in urban areas to be carried out under labor-intensive schemes by local contractors; (b) a package of services related to work organization, management, and labor force traLning to be offered on a voluntary basis to the local contractors who will be awarded contracts under component (a); (c) a supervlison and monitoring component in order to closely monitor the progress of the project and to prepare the transition toward locallY supported wnployment of the target grouP; (d) a selective audit of public works programs to identify bottlenecks and design system improvements and (e) a package of consultant services related to a training program 'or the beneficiaries and engineering flrms on ths preparation of feasibility studies 4nd tachnical project proposals, and a program aimed at increasing grassroots participation ln urban Lnfrastructure maintenance. The main criterLa for subproject eligibility are: (a) the subproject should have a proven economic and social utility (i.e., for economic subprojects, the rate of return shall be no lus than that whlch is applied to the Public Investment Program and for social projects (schools,  - iLL - elinics, etc.) th- project shall be the least-cost 0olutLon I, and be ra dy for executlon without reruirLng substantLal detalled *ngineerLngg (b) the subproject lrplementatlon should not roquire the use of sophLstieated equip mnt and should be achLevable through labor-Lntenslve methods (i.e., wtth labor, as a percentage of the total coat, amounting to at least 20 peroent); (c) preference will be given to those subprojects whiLe are likely to Lmprove the skills of the workers Lnvolved and/or expose the contractor to an experience that would give him an advantage for future activities; (d) the subproject must fall wLthin the list of eligible "worka" or "services" activitles established by the Agency. Xn order to assure a primary focus on urban asset rehabilitation, lt was necossary to split the allocation of funds between works and services based on a 60/40 ratio. Such a mechanism would protect the majority of project funds from being spent on menLal service activities that do not contrlbute to buLlding the skilas of the local constructLon industry firms. The Agency will submit for IDAIs a roval, prior to effectiveness, a -list of subprojects for the first year of preject execution amc nting to a total of US$4.78 million. Also, the Agency will submlt for IDA's approval a second and a third batch of subprojects totalling US$4.78 million each no later than September 15, 1992 and September 15, 1993 respectively. Su projecto whose eatimated cost will exceed CFAF 100 million (US$400,000 wlll be subject to IDA's review and approval prior to final selectlon by the Executing Agency. Ju4tiftiption and Rinkst The project will assist municipalities and "collectivit6s localeo" to carry out useful investments in the rehabLlitation and maintenance of public infrastructure. it will help the private sector, especially the small firms in construction-related industries that will be engaged to execute the works. It will create employment as these firms will hire laborers and technicians to fulfill thelr contracts. It will promote the local engineerLng and archltectural consulting industry whlch will provLde subproject deaign and supervision servicee. The project wil1 also help the Government in the area of contract management. It will demonstrate the efflicency of prLvate sector approaches and procedures in public works management. The ultimate direct beneficiaries wlll be the low-paid temporary workers in the buildlng and constructlon trades. The maln risks arise from the poseible inability of Burklna Faso's economy to develop enough stable job opportunities at the and of the project perLod, leading to pressure froc the Government to extend the project beyond its inLtLal three years. This risk cannot be addressed withln the proposed project but should be alleviated lf the ongolng adiustment program li Lmplemented successfully. The rLsk will also be reduced by the development of stable infrastructure maintenance programs that are being developed under Bank-supported urban and transport projects. Another risk ls that there might be pressure for contlnued employment for those who would beneflt from the program to take the form of their being hLred by local govrnm nts when the program ends. Such contlnuation of employment would jeopardiLz efforts of publlc sector management improvement, lncludlng restrLctions on personnel hlring, implemented during the recent years by the central and local governments. Lastly, the control of proper use of  - iv - funds is more difficult with such a program than wlth regular lnvestment projects. The LmplementLng arrangments established during projiot preparatLon and appraisal and contained ln a Proesdures Manual (Anasx 2), whlch ls attached to the Conventlon entered Lnto by the Government and the Agency, have been carefully deuigned to addmass this rLsk. As a result, project selectlon wlll be carried out accordlng to economlc crlteria and approved by the Assoclatlon. PLnarcLal management wlll be closely monltored through sLA-monithly audlts of the Agency's operations.  v gro2illt Coosta$ | LocAL |FrORIlGZ | TOTAL | F RREIGY | Cb_ te(b)ch hnicai Assi stance to | 1.01 .49 1.50 32X V Tochnici A1 1fsm m Comoonent (c! Mont tarIr~a 36j 2 ~ 60A 40X. Cortract Manaaam..r StudY - .D * 30 .30 tO. Trainfna Program for Reneficiarles -L J052 202SbO Grassroot Partficiation Proarm .10 .0 .10 Executina Aaencm Oneratir Costs 158 08 I ."S Executing Ae Capital .48 .38 .86 442 Rudaet fra PPl Base Costs _1745 __.4.37 21. . _ 20X Price Continoencies AM 2.26 38 42X Total Prolect Costs 17.67 4L .5S 222020X Pgrare lel Efnanced Cfvfl Works . .54 1.26 78. 0 17X Total Program Costs ( 2 - (1) Numbers say not add due to romding. Financing Plan -. -. I I IX OF TOTAL LOCAL FOREIG TOTAL PROJECT Government 2.2 2.2 10Q IDA _ __ 12 1,tal Project Costs (GON IDA) 18.6 3.6 22_ 2 i .Z 100X Other donors (OPEC Fund DANIDA KfW. 5.2 2.6 7.6 GTZ) (to be determined- Total Proram Costs 63.8 6.2 30.0  - vi - Uulmte DIuburumntr IFY92 __Y93 j _ I9 Tota --6.0 7.0 7.0 Cumultive 6.0 613.0 20.0 utnimatod Projgct Completion 2ates June 30, 1995 Memrandum of the Premidents P-5565-BUR  B^IR FASO PUBLIC IkRKS AND NLQ yl fLquJT STAFF APPRAISAL REPOET I THE ECONOMIC AND SQCIAL CONTEXT A. Recession. Unemoloymen,. and Urbaniz tio 1.01 Burkina Faso's record for the decade of the 1980. is one of upheavals. The country has known two coupo d'itat and one attempted coup in that decade. The socio-political unrast, couplad with drought, rainfall fluctuations, and the fall in world market prices for it. main agricultural export commodities (cotton and groundnut oil have contributed to neduce its competitiveness. For example, between 1972 and 1989, Burkina Faso saw a 50 percent decline in its terms of trade. 1.02 A detGriocat;.ng public finance situation ensued as political turbulence created constraints, making it difficult to reduce domestic demand. The 3 7 percent real annual growth rate of GDP reached between 1986 and 1990 has not been translated into real investments. Budgetary discipline has not been obserasd and scarce resources have been used for non-budgeted outlays. From 1986 to 1990, consumption grew at almost the same rate as GDP and domestic savings remained at a level equivalent to 3.8 percent of GDP in 1990. As a result, foreign aid has financed an average of 84 percent of total government outlays. 1.03 In the meantime, Burkina Faso'o economic structure underwent some changes during the 1980s, indicating the diminution of agriculture and the rise of ser%ices. In 1980, agriculture contributed 39.9 percent to GDP while industry and services contributed 18.8 percent and 36.4 percent respectively. In 1990, it has been estimated that agriculture constituted 30 percent of GDP while industry and services contributed respectively 23 and 42 percent. Also, the financial crisis has reduced investments in urban areas while the diminishing contribution of agricul.ture has reinforced rural-urban migration. With higher population growth and a small modern sector, the social effects of the crisis have been the most visible at the urban level. 1.04 According to the last population census of 1985 Burkina Faso has a population of 8.3 million representing an average density of 30 persons Per square kilometer as compared to 20 in 1975. It has been estimated that by the year 2000, Burkina Faso will have a population of 12 million. The population of Burkina Faso is very young. Forty-five percent is less than 45 years old, 52 percent is between 15 anl 64 years old and 3 percent is over 65 years old. The bulk of the labor force, estimated at about 3.8 million, works in agriculture (82 percent), industry (13 percent), and services (5 percent). In the past 30 years (1960-1990), there has been a small increase in birth rates (from 49 to 51 percent), a marked decrease in death rates (from 32 to 19 percent), and an increase in life expectancy (from 32 to 48 years). Theae figures highlight the demographic forces at work that have led to serious tensions in the labor market. Intensive scrutiny further reveals that the most important dimension of this demographic trend is the fact that youth mortality has been reduced by a factor of 2.5 in the past 30 years (from 225 to 98). 1.05 The modern sector in Burkina Faso employs only a fraction of the labor force. The majority works in the informal sector which contributes about two-thirds of the value added in commerce, transportation, and communications, and about 40 percent in the industrial sector. The average informal sector worker corresponds to the age structure of the population. He/he is young and has little education. According to the 1987 survey done by the Office National de la Promotion do l'Emploi (ONPE) in Ouagadougou, 60 percent of these workers are between 20 and 40 years old. Eighty percent of informal sector workers are illiterate, 15 percent have completed primary school, and 3.7 percent have completed secondary school.  2- Eighty-two percent doclared themselves *elf-empioyed, a percent are ln an apprenticeship program, and 4 percent are employers. There exists a great deal of labor mobility ir the informal *sotor but the group of *employers" is made up of those who declared that they have been working for mnre than five years in their preosnt activity. 1 .)6 A high population growth rate of 3.3 percent and lntonse rural- urban mlgration have dramatlcally increased urbanization in the 1980s. The capital city, Ouagadougou, which had a small population of 276,000 in 1980, has more than doubled in population, reaching 600,000 in 1990. This population represents 40 percent of the urban population. Bobo-Dioulasso, the other large urban agglomeration, accounts for another 25 Percent of the urban population and has seen its population increaae to 300,000 since 1980. Th labor force growth of these urban areas has not been matchetd by job creation. For a long time, the traditional outlet for the youngest strata of the urban population has been emigratlon to neighboring COt- d'IvoLr- and Ghana. These workers sent remittances equalling 6 perient of GDP for the 1986-1990 period. 1.07 Despite the development of the formal sector since 1960, the informal sector continues to contribute 80 percent of he growth of the secondary and tertiary sectors to GDP. Micro-enterprises play an important role in that sector where employment creation is taking place. Howev- -, despite its importance, both in terms of contribution to growth and employment, the Go; ernment has pursued a policy of subsidy to large lmport substitution industries and of relative neglect toward the informal sector. The Investment Code favors new and capital intensive industries and gives them all kinds of incentives ranging from tax holidays on imports of raw materials to abatement on profit for five years. 1.08 The unemployment situation in th'e urban areas of Burkina Faso is very acute. The two traditional outlets for demand of labor (secondary private sector and public sector) are unable to satisfy the flow of new entrants to the labor market. The modern sector of light industries is not labor-intensive and does not create many jobs, while th public sector is saturated. According to a survey of the labor markets in the three largest cities (Ouagadougou, Bobo-Dioulasso, and Koudougou), carried out by ONPE in 1987, there were 31,974 demands for only 5,470 offers or a coverage ratio of demand to supply of 17 percent. The situation was worse in Ouagadougou where for a total of 22,147 demandv there were only 3,288 offers, or a coverage ratio of 14.8 percent. Since then, things have worsened due to intense rural-urban migration. The ONPE survey indicates that compared to a total of 50,089 informal sector workers identified in Ouagadougou, there were only 28,000 civil service employees, while the modern private sector had 23,570 employees. 1.09 Urban unemployment has been rising, especially as the policy environment has not been conducive to private investment and output growth because of too many regulations and controls hindering productive activity. Estimated unemployment figures range from 11 to 25 percent, depending on whether or not the informal sector is taken into consideration in the methodology used for the calculations. Urban unemployment is further aggravated by the return of many former emigrants. The possibilities of the emigration safety valve for Burkina Faso to neighboring Cote d'Ivoire and Ghana are dwindling. The recession in those countries has led to the return of many migrants to urban areas and to a drop in the level of remittances from US$192 million in 1986 to US$164 million in 1990. This last level of annual remittances for 1990 remains significant as it exceeds the combined earnings from cotton, gold and livestock exports estimated at US$130 million annually. 1.10 In trying to deal with the economic crisis and rising unemployment, the Government applied populist policies whose not economic effect has been to worsen the centr government's deficit to an average of 12 1 percent over the period 1986-' ). Even after corrective measures, in 1990, the deficit was estimated a, percent of GDP. Also, internal as well as external arrears have built up. Cumulated domestic and external  -3- arrears were built up to an *stimatGd CFAF 83.4 billion at the and of 1990. Current account deficits have been running at an average of around 14 percont of GDP between 1986 and 1990. It Is expected that deolininrg terms of trade and a rising debt service ratio wil1 tend to worsen the economic situation. 1.11 The recession has negatLvely afticted urbanization in the sense that the central government has not been able to help the municipalities supplv some basic services in terms uf infrastructure malntenance and rehabilitation. Street curbs, storm dralnage cleaning, sidewalk construction, culvert refitting and cleaning, garbage collection, road maintenance are some of the urban public services affected by the lack of remourcee of local gov*rnments. A shortage of government funds is preventing needed public investment in maintenanco of school, clinLer -d government buildings, all important elements tha%t create a conduclve environment for private invoestment and employment expansion. The postponement of these investments is likel? to have a crltical impact on sanitary and educational conditlons that w11 reduce the productlvlty of labor and general economic growth. It is in this regard and in order to alleviate the phycical decay in urban areaso especlally in Ouagadougou, that the Government is eager to complement ito adjustment efforts with a program of labor-intensive small urhan public works. such a program will also contribute to Ouagadougou's and other citilo' efficiency and attractiveness for investors. B. G ernMent'e Policy and Undertakingj 1.12 In light of the gravity of this situation, the Government has decided to adopt a set of auaterity measures to deal with the internal and external imbalances and to stabilize the economy. Of utmost importance in this regard are the negotiations that the Government has undertaken with the World Bank and IMF to start serious reforms to ad ust the economy. A structural adjuotment program war appraised in March 1991 and a donors, conference is planned for late May in Geneva. Its effects are likely to be: (a) improving public sector resource management; (b) allocating resources for actione dealing with the poor and the disadvantaged; (c) creating an environment conducive to greater private sector growth. 1.13 The Government has acknowledged its limitations in the area of economic policies, inatitutioral arrangements, and management, and is willing to implement the policy reforms necessary to make the critical changes that will affect the conditions of the poor. Changes in the area of reduction of the public wage bill, cost recovery, data collection, privatization of public enterprises, trade reforms, etc., have been identified in the SAL Action Program as levers that can make programs for the poor more effective but also more efficient. It is in th-i regard that actions have been identified to improve public resource management through restructuring and refocussing current expenditurea and better programming of public invoatment. In addition, the new Government has decided to adopt a more liberal stance toward the private sector. The proposed Public Works and Employment Project is considered by the Government as an element of its effort to promote private sector development and employment. It li expected that the use of labor-based technlques will be extended to other projects in the urban and transport sectors. 1.14 Employment creation is one of the priorities identLfied by the Goveriment for its second Five-year plan. The Government intends to carry two kinds of action towards this objective. The first is by making new investments to raise the level of national output and to keep it growing at an annual rate of 4 percent. The second is by giving incentives to the private sector to use more labor-intenaLve methods to generate more jobs. Considering an unemployment base rate of 25 percent in 1990, an employment growth rate of 3.8 percent and a population growth rate of 2.7 percent, t has been projected that the unemployment rate can be reduced to 16 percent by the year 2000. The unemployment rate can go down to 13 percent by the year 2000 if the annual employment growth rate increases to 4.2 percent.  -4 1.15 The Goverrnmont has boen examining various programs to deal with the growing unemployment problem and appointed a coordinated group under the Mtnist re d' stat A la Prdoidence. supported by UNDP and other donors, thio group haf come up with several reconmondetiono suuh as the proposod Public Works and Emplobment Project and the creation of a Fod n2noL d l_emn1lo_ (FNE - Nationid Employment Fund), an agency to provlde toehnical assistance to private entreprsneurn. Also, the Government, through the ONPE, has experimented with employment promotion schemes rsing labor- intensive public worse in the rural areas. Between 1981 and 1987, the ONPE .-ployed 805,000 man/days or 3,200 jobs uO.ng a 250 day/year basis. This proqram was f..nanced by UNDP and the Inte. .ational Labor Office (1WO) for an amount of 550 million CFAF, of which 52 percent went for the cost of labor. 1.16 The proposed project exemplifies the new relationships between the Government and the private sector. It is geared toward the needs of a pecific stratum of tho private secror (the building and construction industry) that has been adversely affected by the recession. Through the private sector, the project alao addresseo tne needs of the urban work force that will be h red by the private firms to execute the works. The proposal of the Government to name the Agency that will execute the propoanS project "Paso Baara" i.e., building the fatherland, reflects the attempt to combine traditional values with a willingness to lnnovaue and to introduce management systems capable of expanding the production function. C. The Construction Industry: Performance And ConstraAint 1.17 In order to better understand the characteristics of the construction indusary, a survey of the target enterpi>.ses was undertaken to uncover the constraints currently faced by them in connection with the labor regulatory framework, credit availability, and public sector contracting and contract administration. In particular, the survey was aimed at obtaining a description of the enterprises themselves, including: (a) overall financial position (fixed capital, working capital, short- and long-term debt, taxes owed, amounts owed by Government)7 (b) managerial aspects (qualifications of management and workera, proportion of cost overruns and implementation 0ela .i in recent contracts, overall orientations of the enteri -se in connection with public works); and (c) employment by category (indefinite contract, fixed-term contract, daily laborers) and any hiring/firing p.!actices worth noting. 1.18 The results of the survey indicate that, on the supply side, the construction industry is almost totally dominated by the pr ivate sector, while on the demand side, the public sector is predominant in Burkina Paso. 1.19 Generally, during the 1980'a, the construction industry followed the curve of political events. From 1977 to 1982, the constructlon industry ohowed an average growth rate of value-added of 8.5 percent per annum. From 1982 to 1985, activities fell by 8.5 percent per annum. From 1985 to 1987, the growth rate of value-added bounced back to 9.8 percent. in 1985, the enabling environment became more difficult as a result of new regulations concerning investments, housing and urban development, especially for the private sector. The enactment of a law against housing rent collection in order to incite investments in agriculture or manufacturing, led to a drop in the contribution of the construction industry to the gross domestic product. This contribution reached then a low of 5 percent as compared to the current 8 percent in 1990. 1.20 In 1987, the Government reversed its policy on private construction and embarked on a construction program for moderate income housing known ao Cit&o An II, An III, An IV et 1,200 dwelling units.  - 5 - Coupled with other activities much as road pavinag and the building of the Cam longa and Bagr- dame, the now atmoophero of liberal ization has led to a revitallzatLsl of the private construciyon industry. For the econd phaoe of the 1,200 dwelling units construction program which started in March 1989, the supply response was evident in the presentation of tendore by a total of 161 firms. Eighty-six of these fLrms were qualified and participated in the construction of 960 units which were completed in November 1989 for a total cost of 5,350,000,000 CPAP. 1.21 The construction industry is estimated to have a current sales volume of approximately 60 billion CPAF. Thio figure accounts for both the formal and the informal sector. The 100 or so modern enterprises registered in the former must be added to the 1600 micro-entrepreneurs or self- employed tradesmen in the latter to arrive at the full understanding of the composition and capacity of the construction industry. In the last three years, as a whole, the construction industry has shown a qrowth rate of approximately 4 percent. But from 1985 to 1990, the growth rate of the formal oector was higher than that of the informal sector. While in 1985, the formal sector contributed 38 percent of the sales volume of the construction industry, in 1990 this figure rose to 51 percent. The large investments of the Government mentioned earlier account for this growth. In 1985, it was estimated that there were a total of 11,073 persons working primarily in the construction industry out of which 8,709 were working in urban areas and the rest in rural areas. A second group of 8,629 working in the construction industry as secondary activities was divided between 979 in urban areas and 7,650 in rural areas. The group of workers in the construction industry includes masons, carpenters, plumbers, electricians, paint3re, laborers, etc. 1.22 The wage bill in total construction cost varies depending on whether the worxs are done in the formal or informal sector. Public works done with labor intensive techniques reveal that at least one-third of costs are distributed as salaries. In a similar project done in Senegal and executed by the Agence d'Ex6cution des Travaux dtInt6r6t Public contre le Sous-emploi (AGETIP), experience indicates that the wage bill constitutes 37 percent of total construction costs. Based on the above, it is possible to work with the hypothesis that the wage bill in total construction cost is in a range starting from a low 20 percent and reaching a high 40 percent depending on the formality or the informality of the firms used to carry the works. In an urban pilot project located in the city of Kaya, the ILO has arrived at a ratio of 37 percent for salaries in total project costs, at a market wage rate of 600 CFAF per day. In any case, the cost of labor is decided by the market between willing buyers and sellers of labor. 1.23 By all accounts, the construction industry is dominated by the public sector. Most contracts come from the Ministry of Equipment and are for works ranging from paved roads, unpaved roads, road maintenance, feeder roads, housing construction and transportation of construction materials. There are also other ministries, government entities and local governments or the technical services of municipalities that contribute to demand for public works to be executed by small construction-related firms. This is especially the case for municipalities whose budgets are too small to undertake large works of sanitation, water supply, and rehabilitation. For example, in 1990, the Haut Commissariat of Kad iogo, which is composed of the five commune of Ouagadougou, only had an investment budget of 321 million CFAF (US$ 1.3 million) allocated respectively for public building rehabilitation (11 million CPAF), road repair and cleaning of the urban drainage network (200 million CFAF), garbage collection (60 million), etc. The town of Bobo-Dioulasso, is facing a similar situation with a communal budget evaluated at 200 million CFAF to finance everything from construction of achools and clinics, garbage collection, to road and gqseral infrastructure maintenance. 1.24 The structural adjustment reforms are likely to affect particularly the constructlon industry as the Government will. not be able to carry a strong investment program in infrastructure construction and in  - 6 - the building construction area. As a consequence, it is posasble that several "contr8leurs de travaux" and engLneer. from the public sector might be lald off. They should be able to establlsh themselves on theLr own and serve as maltres d'oeuvres under the proposed project. 1.2S The domestlc constructlon lndustry is beoet by a number of constraLnts that hamper lts expansion capacity and Lts abllity to rtLcLpate ln the constructLon and malntenance of intrastructure. Even for works whlch do not requlre high quallficatlons and could be effLcLently carried out under labor-intensLve technlques by local small fLrms, most of theme firms cannot be awarded or even bid for contracts under Government projects, for two main reasons: (a) thelr low lovel of sophLst .cation with respect to adminietrative and flnanclal management "kes it difficult for them to submit acceptable proposals and to give evidence of their fulfilling the demanding admLniLtrative requirements in accordance with the cumbersome procurement procedures in force for publlc contracts; and (b) current delayo experienced by contractors for being paid through the Government's adminiLtrative procedures are measured in months ln the best cases, and too often in years; only large firms with substantial working capital can afford to awaLt payment for such a long time. The project is designed to address the Lssues that have been identified as constraLnts in the areas of access to financing and training, as well as with respect to simplifying bidding procedures and reducing pay-ment delays. D. The Bankls Previou Role 1.26 Burkina Faso is one of the target countries of the regional Social Dimensions of Adjustment program (SDA), the objectives of which are to measure the effects of adjustment on households' standards of living, especLally among the poorest segment of the populatLon and to propose specifically tailored programs to alleviate strain on those most vulnerable to the eff2'cte of adjustment policies. in this framework, a number of surveys in the areas of agriculture, household consumption, health, nutrLtion, demography, women condition, etc. are being planned for the period 1991-1995. These various surveys will contribute to making available needod data for the design of effective programs to alleviate the burden on certain strata of the population. 1.27 In addition, the Bank has financri two urban projects in Burkina- Faso. The First Urban Project (Cr. 766-BUR) was approved in March 1978 and completed on December 31, 1985. This US$10.8 milllon project, supported by a US$8.2 IDA Credit (Cr. 766-BUR), successfully launched Government upgrading and estes and services programs in Oua adougou and Bobo-Dioulasso under the auspices of a project unit created wLt iLn the Ministry of Iquipment, Directorate of Urbanism and Housing. The project took over six years to complete, nearly twice the appraLial estimated time, due to a Protracted debate on infrastructure standards, and water supply and housing credit components, amounting to less than 20 percent of pro ect costs, waLch were not implemented. Cost recovery and institutional objectives in the urban and housing sectors were mi;t and the project had a significant impact on urban policy and development in Burkina Faso. The project resulted in the zupgrading of 438 ha (over 7,000 dwelling units), 97 percent of the appraisal esiicmate and 250 ha of serviced sites (4,500 units), four tlmes more than the appraisal eatimate. 1.28 The Second Urban Project (Cr. 2067-BUR) was approved in September 1989, became effective in September 1990 and is just beginning execution. ThLi US$38.5 million project supported bv a US$22.2 IDA Credit li focussing chiefly on iLifrastructure rehabilitation and on institutional  development and policy reform, such as the strengthenLng of municipal functions and finances, including the revlsion of MuniCLpal and tax laws. 1.29 The proposed project, in focussing specifically on the building and construction tradem, offer. small-scale Lnfrastructure work. that will complemnt the very limited (due to flnancial constraints) *ot of larger- scals works financed under the Second Urban Project. Subsequent Oank) financed projects in the urban and transport sectors will benefit from the enhanced capacities ct domestic contractors and consultants, as well as from utreamlined procedures for contract management. 1.30 E from *tneal. In order to help solve contract management bottlenac an -o create smployment, IDA financed a similar Public Works and Em,-Ljroyent Project in Senegal where an agency with private status named AGETII has been created and is implementLng a labor-inteneive civil works program. he project was declared effective on March 7, 1990. AGETIP is currently loementing a total of 110 small projects for a total of CPAF 2.344 million. WETIP 'ias constituted a filo of 100 mattres d'oeuvre (consulting engIneers8 ancn 400 contracting f'.rms, some of which are currently implementing ; Ir-ojects. The performance of AGETIP is highly satisfactory, especiol X a& it has been able to complete the execution of 53 projects and pes contractors in ten days instead of the 30 days required in the Manual oJ Procedures guiding the works of the agency. The projects implemented by AGETIP have gonerated a total of 433,000 man/days or approximately 3,000 jobs for a seven months period. Experience has shown an employment ratio of 37 percent, higher than the estimated 33 percent used in project planning. A. Project Objeitive. 2.01 The main objectives of the project ares (a) to finance a program of small municipal works in the area of urban infrastructure upgrading and rehabilitation; (b) to promote local private contractors and consulting firms in project execution; (c) to improve, through execution of the works financed by the project, the individual skills of the workers who will be employed and the corporate competitiveness of the firms that will carry out works so as to develop their capacity to respond to increased opportunities for sustained employment after completion of the project; (d) to create, at least temporarily, substantial new employment in urban areas as rapidly as posi.ble using the private sector, thereby stimulating small local private contractors and consulting firms; (-) to review existing public works programs and recast them with the intent of speeding up their implementation and overall performance; and (f) to demonstrate the feasibility of labor-intensive projects and test the procedures that will ensure the public sector's ability to commission such projects. In pursuing these objectives, the following conditions should be fulfilleds (a) avoiding any increase in civil service employment;  (b) combining low cost and high visibllity; (C) supporting but not replacLng other development programol and (d) using transparent but expeditious and flexible procedures for *ubproject bidding, appraisal, contracting, and dieburoemente. B. Proiect Decri1tion 2.02 The components of the proposed project ares (a) a program of public facility and infrastructure rehabilitation and maintenance in urban areas to be carried out under labor-inteneive schemes by local contractors; (b) a Package of services related to work organization, management, an; labor force training to be offered on a voluntary basio to the local contractors who will be awarded contracts under component (a); (C) a supervision and monitoring component in order to closely monitor the progress of the project and to prepare the transition toward locally supported employment of the target group; (d) a selective audit of public works programs to identify bottlenecks and design system improvements; and (e) a package of consultant services related to a training program for the beneficiaries and engineering firms on the preparation of feasibility studies and technical projoct proposals; and a program aimed at increasing grassroots participation in urban infrastructure maintenance. 2.03 An Executing Agency will be created to execute component (a) of the project. The Agency will have a Board consisting of representatives of the Twin City Association of Burkina Faso, the Construction Labor Union, the Syndicate of Construction Firms, and Association of NGOs. The Agency will serve as a model for other public agencies in terms of achieving low costs and efficient work methods. It will have a small staff includ.ng an Executive Director assisted by one Financial Director and one Technical Dirsctor. The activities of the Executing Agency will be guided by a Procedures Manual outlining the policies and procedures to be followed in the conduct of its activities (see Annex II). Imolementation of a Program of Labor-intensive Civil Works Suboroiects 2.04 The subprojects to be executed under component (a) will be submitted by local overnments as well as by central and local branches of the c _ tra _ Ger n Ment. The Executing Agency (see para 2.19 et. seq.) will appraise the proposed subprojects, checking their eligibility in regard to precise criteria which are listed in para II-4-3 of the Procedure Manual. In the subproject selection process (Procedures Manual, paras II-3 and II-4), the following criteria will be followeds (a) the subproject should have a proven economic and social utility l.ee, tor econ=.ic subprojects, the rate of return shall be no leos than that which is applied to the Public Investment Program and for social projects (schools, clinics, etc.) the project shall be the least-cost solutionl, and be ready for execution without requiring substantial detailed engineering; (b) the subproject implementation should not require the use of sophisticated equlpment and should be achievable through labor- intensive methods (i.e., with labor, as a percentage of the total cost, amounting to at least 20 percent);  - (c) if competinq wlth other subprojects for funds avaLlable during a gLven perod, an ellglble subproject should have a higher rate of return (and/or a demonstrated hlgher intangLble benefit generatLon) than its competitoras (d) presfsrence wlll be given to those subprojects whleh are likely to improve the skills of the workers involved and/or expose the contractor to an experiLnce that would give him an advantage for future actLvLtiesi (a) the subproject must fall within the 1L.t of elLgible "works" or "services" activities mentioned below; (f) the subproject activities on site wlll start in less than three months from the time of adjudication; (g) employment created by the subproject will be for a time period greater than two weeks; (h) presence of at least two qualified enterhrises for the type of works and ln the geographical area in which the project will be executed; (i) the benefLicary has confirmed its financial and technical capacity to maintain the works; and (j) the project is not financed by another donor; and (k) project has not been eliminated from the public investment program (PIP). Although municipal expendLtures are not included in the PIP, the criteria for sub-project selection under the project will be equLvalent to those used for project selectLon in the PIp. 2.05 Eligible subprojects are expected to include (but not be limited to) construction and repair of urban infrastructure and public facilities, street and drainage network cleaning (especially sand and garbage removal), as well as services to the population, such as garbage collectlon (especially ln remote or difficult-to-access areas where the existing waste management system is not effective). Provided that the eligibllity criteria are met, eligLble subprojects will fall into two categories. The first category of subprojecto--urban works-to which at least 60 percent of funds will be allocated, include: (a) works for draLnage of low-lying areas, underground water mains, observation platforms, cesspools, channel headers, retaining walls, etc.; (b) minor infrastructure maintenance and rehabilitation works (fillLng in ravLnec, laying out sidewalks, repair of gutters and small sanitatLon works); (e) works like those under category (b) carried out on a recurrlng basis and requirLng work program organization (e.g., fillLng in potholes); (d) construction of simple buLldLngs such as schools or dispensaries; (o) repair of public buildings: this category is subdivided ln accordance with the specialized labor involved (plastering and painting, carpentry, plumbing, electrical work, roofing, finishing, minor masonry work); (f) demolitLon of condemned buildings and recovery of materials; (g) clearing of brush and terracing works (road shoulders, embankmento, gabiono) requLrLng construction based on pre- establlshed plans; and  - 10 - (h) works of water and soll conuervatLon. The second category of subprojacts--urban servlces--to whlih at most 40 percont of all funds wlll be allocated lncludess (a) specLfic works for cleanlng public property: removal of sand from roadways, cleanLng of draLnage dltcehs and gutters, garbage collectLon, etc. (b) works Like those undor category (a) carried out on a recurrLng basls and requLrLng work program organlsatLon; and (c) plantLng and park workc. In order to assure a primary focus on urban asset rehabllitatlon, it has been necessary to splLt the allocatLon of funds between works and servlces based on a 60740 ratio. Such a mechanLsm protects the majorLty of the funds of the project from belng spent on menlal servLce activitLes that do not contribute to buildlng the skills of the local constructlon lndustry firms. 2.06 The Agency will submit for IDA's approval, prlor to offectLveness, a llt of subprojects for the first year of project executLon amountLng to a total of US$4.78 million (para 3.03(b)). Also, the Agency wlll submit for IDA's approval a second and a thlrd batch of ubprojects totalling US$4.78 milllon each no later than September 15, 1992 and September 15, 1993 respectLvely Subprojects whose estimated cost wlll exceed CFAF 100 million (US$400,000) will be subject to IDA's revlew and approval prlor to flnal selectLon by the Executlng Agency (para 11-4-2 of the Procedures Manual). The Agency will, however, carry out the regular appraLsal procedure prior to submittlng the project and the appraisal report to IDA for approval. 2.07 Once a subproject has been selected, the public agency which has submLtted lt ("the benefLcLary") will enter lnto an agreement ("Convention d maltrAfe u dolf da u) with the Executlng Agency, accordIng to a pro-established model which is attachod to section II of the Agency's Procedures Manual. Thli agreement will lnclude Later alia the followLng provisions: (a) the Executing Agency is substituted for the beneficiary for the whole execution of the subproject and has full authority, on behalf of the beneficiary, to select the contractors, sign the contracts, supervLse the works, acknowledge delivery, and pay contractors; (b) the subproject is flnanced by the Executing Agency, on the basis of the funds made available to lt under the project, and therefore is addltlonal to the beneficLary's own capital budget or Lnvestment program. The beneflciary wlll not be requested to reLmburse the cost of the subproject; (c) the beneficlary pledges the respon:lbllity for the ongolng malntenance of the subproject; in case of non-compliance wlth thls clause, the boneficiary wlll not have access to the Agency's financlal resource, until the sltuatlon is rectLfied; and (d) provisions have also been devised to take care of possLble litigatLon upon delLvery of the completed work to the bon rLeLary. 2.08 In order to start up actual project lmplementatlon without delay after effectlveness, a fLrst sample of ellglble subprojects has been reviewed and approved by IDA. Flve oubprojects ranqing from CFAF 21 mllion (US$82 b00) to CFAF 77.5 million (US$310,000) will be carrled out as subproject* wlth flnanclng provLded by a second PPF advance. These fLve subprojeots comprise:  - 11 - (a) pavement, rehabilitation, and maLntonance of mLnor streets; (b) buildLng small damsp (a) rehabilitatiCn of a publLc buLlding; (d) cleaning of the urban draLnage network; and (e) garbage collection. These subprojects represent fLve of the maLn categorLes of work to be carrLid out under the project (Annex 2, SectLon II'). 2.09 An important feature of the project i the Executing Agency's dLibursoment procedure. As polnted out above (para 1.25), a xane-qua-non for small-scale enterprLses to be able to undertako works comnLsoioned by publlc agencLes wlthout endlng up in bankruptcy is that diabursement procedures be devised to avold the delays that are commonplace with regular public procedures. Initial advances to contractors executing the works will be given in exchange for a bank guarantee or a bond covering 100 percent of the amount of the advance that, ln any case, will not be more than 20 percent of the total amount of the contract. Payments will be echeduled accordLng to the terms and conditions set in Annex 2, Section V. Furthermore, inltlal advances to the consultant engineer and the contractor wlll be paLd in a tLmely manner and Ln a cashable form. For bld preparations, the consultant englneer wlll be pald a maximum of five percent of the estLmated coat of a subproject. For supervision and monitoring, the engineer will be paid up to a maximum of five percent of the total amount of the works. Iti1 expected that the majorLty of the enginsering services wlll be provlded by Burkinab& firms, thus helplng to strengthen the local consulting industry. The private legal status of the Executing Agency will allow the director to dlrectly order payments, by slgning checks and transfer orders, wlthout beLng submitted to numerous clearances and without belng obllged to surrender actual executlon of payments to a Treasury officer ("prInclpe de la Bdparation de 1lordonnateur et du comptable"). In order to glve incentives to the Executing Agency to dLsburse quLckly and not be tempted to invest lts cash instead of paying its contractors, timely payment of contractors, not exceeding 30 days between work completion and payment, is considered as a key evaluatlon criteria of the performance of the Agency. A PackacQ of Technical,assistance Offered to.Contractors 2.10 This component aims at Lncreasing the technlcal and managerial caacLty of small- and medLum-scale BurkLnab& contracting fLrms ln the building and construction trades. The rationale behlnd this component is twofold: (a) most firms in the target group are expected to show weaknesses, in terms of management work organlzation, and technlcal skills, which mlght jeopardize the succeesful implementatLon of the subprojects that they will be commLssioned to carry out: the provliion of some technLcal asslitance to contractors is deemed an effective way to address thie risk; and (b) conversely, those flrms which are going to be awarded contracts under the proposed projects may be expected to be comparatively more effLcient than others, if the .electlon process is effective. Therefore, wlth a view to strengthenLng comparative advantages lnstead of randomly spreadLng aselitance over the whole lndustry, these fLrms deserve more than others; to be supported to improve the overall effLcLency and competLtLveness of the industry. Three subprograms are proposed under this component: (c) a business adminLitratLon and fLnancial management program Lntended for entrepreneurs and thelr administratLve staff;  - 12 - (d) a work organization program primarily designed for foremen; and (a) various technical training courses to improve the skills of basic workers. 2.11 All three ubprograms will be very practical and will take the form of on-the-job :asistance and training. Potential beneficiaries will be free to accept or refuse this form of assistance, except in cases where technical assistance will be demed indispensable for successful implementation of the subproject and will therefore be a condition of contract award (para 3.02 (a)). A prellminary version of the training program is found in Annex 7. This preliminary version wao discused at negotiations and will be finalized no later than six months after effectiveness. Similar programs will be st up for tho implementation of the proposed Transport Sector Adjustment Project, and coordination of training components will be organized. PrZaQiegM. Hnit:ring 2.12 The monitoring component will broaden the scope of the regular supervision of any Bank pro ect. Given the wide margin of independence and initiative which is deemed nstrumental to ensure tho Executing Agency's efficiency and effectiveness, clooe and continuous supervision and monitoring are sosential to prevent the Agency from misusing its autonomous decision power. Moreover, the many innovative features of the proposed roject call for provisions enabling the Government and the donors to 3intly monitor progress of the project toward the proposed objectives and to take expoditious measures if they assess that some misconception has prevailed in the project design and that there is a danger of the objectives being missed. The Borrower and IDA will meet at least twice a year during the three-year period of project execution to exchange views with regard to the progress of the project and subprojects, the management of the Agency's operations, the performance of its personnel, includlng key personnel, the performance by the Agency of its obligations under the Convention between the Government and the Agency, and particularly the procurement practicea and procedures being followd by the Agency pursuant to the Procedures Manual. In order to make relevant information available for the above-mentioned meetings, consultant services (e.g., management and financial audits of the Executing Agency, studies of the impact and performance of already Lmplemented subprojects and performance of procurement procedures) will be identified and agreed upon with the Government by regular supervision missions and wll be commissioned by the Agency upon request by the Government in order to deliver findings and recommendations in a timely man.ner for the above meetings. Public Works Contract Manaaement Audit Study 2.13 This component will consist of a study and audit of the Public Investment Program to uncover the bottlenecks in procurement, contractIng, works supervis on, paents, and audits that impede project implementation A para 2.01(e). In PYB9, the Burkina Public Investment Program had a iseburement ratio of about 50 percent for project lending. The study and audit, to be carried out by a private firm, will help the Government to document problem areas and will at the sam time demonstrate the benefits of alternative procedures and contract administration methods that emphasize efficiency and transparency used bi the Public Works Employment Project. The terms of reference for the audit were agreed with IDA at negotiations (para 3.02(d)). It was also agreed at negotiations thats (a) within six months of the conpletion of the study and not later than January 31, 1993, the Government will present to the Bank for its comments an Action Plan to adopt the changes recommended by the study and to determine how they will be implemented; and (b) the Government will subsequantly implement the agreed Action Plan, no later than July 31, 1993.  13 - TrALning Proaorm frBnfcaisAnd Enaineere Firms. 2.14 This component would provide oupport to the beneficiaries and to local engineering firms to prepare the feasibility studies and technical project proposals that will be submitted to the Executing Agency for funding. The submission for IDA's approval of the program for the implementation of this component is a condition of Projeoct effectiveness (para 3.03 (e)). 9smarnots ParticinatIon Proaram 2.15 This component will help organize a program to increase grassroote participation in urban infrastructure project maintenance. This program will diseminate information (using the local languages, logos, appropriate colora and music) to the chefs de quartier, neighborhood committees and to the tAcherons and micro-entrepreneurs to increase their awareness of the project as a whole and to increase the level of responsibility that the community feels with respect to project works. In this framework, a number of activities will be periodically organized to increase public awareness and support for the project. At the beginnin , these activities will include an information seminar to distrIbute documentation and to sensitize the population on the project, a meeting of the general assembly of the Agency, and a week-long campaign in the media. These activities will be repeated at appropriate intervals to reinforce the messages. The objective of this effort is to improve communLcatLon between the grassroots and local authorities so that the former are consulted on projects that affect their neLghborhood, before they are presented to the Agency for funding and implementation. This is particularly important ln the case of garbage collection and sewer cleaning, where grassroots partLcipation can make a difference in terms of public hygiene. This component will be contracted out to specialized firms under the overall management of the Executing Agency. The initial seminar will be financed under the second PPF, and a detailed plan for follow-up activities will be presented to the AssocLatLon no more than six months after project effectiveness (para 3.02 (a)). C. Rationale for Bank group Involvement 2.16 The Government of Burkina Faso is faclng a serious fiscal deficit that is straining Lts public investment capacity. In order to improve this situation, it has committed itself to apply a series of measures and carrv out certain reforms to correct the external and internal imbalances. WhiL. preparlng a structural adjustment program whose aim is to improve public sector resource management, the Government approached IDA to undertake a program of small urban infrastructure upgrading and rehabilitation works that would complement the more extensive works being carried out under the Second Urban Project. Municipalities have a whole list of projects ranging from street paving, road maLntenance, drainage rehabilitation, refurbishing schools and clinics, etc., that cannot be funded because of the diminution of public investment brought by the austerLty resulting from the economic crisie. While having a long-term beneficial impact on economic growth, the execution of these needed urban works will also contribute in the short term to employment creation in the construction-related trades. Because the project provides the opportunity for the private sector to grow and to demonstrate its capacity to implement efficiently and effectively public programs, it will support the reforms that are being undertaken at the macro level. IDA knows the urban sector and, buildIng on Lts experience in eimilar projects in Senegal and Niger, can help the Government to support the municipalities to achieve theLr primary task of cleaning and iaintaLinng roads and drainage systems, collecting garbage, bulldlng and rehabilitatlng ochools, dispensarLes, and other small economic and social infrastructure.  - 14 - D. Sitatusf of ProieOt Pz02EoArtlo 2.17 A first US$600,000 PPF advance was granted to finance project preparation which included: (a) a survey of the target firms intended to provide information needed for deslgnling ligibility criteria and implementation arrangements and to claseify engineering firms and contractors in terms of capacity and specialty; (b) the hiring of a law firm to look into the appropriate legal status for the Executing Agency and to make roposals ln relation to the Agency's organization, procedures, and bylaws; (c) the short-term consultant services in various fields (law, engineering, accounting, organization, etc.) needed for project preparation; (d) the preparation of a listing of eligible works to be executed, as well as a listing of engLneerin and construction firm to serve as supervisors and contractors in line with the recomnendations of the Manual of Procedures of the Agency; (a) the preparation of bidding documents and engineering designs for the first five pilot subprojects; (f) a mission of Burkinabb officials to Dakar to acquaint themselves with a similar organization called AGETIPI and (g) a study of the participation and involvement of the population in the identification and routine maintenance of the public works to be executed under the project. 2.18 The liroject appraisal took place from March 23 to April 9 1991. Drafts of the Procedures Manual and the Convention, which were reviewed during appraisal, have been submitted to IDA, and were fLnalized during negotiatione (para 3.01(a)). Candidates for the position of Executive Director were reviewed during appraisal. A candidate for the position of Director has been selected by the Government and approved by IDA (para 3.01 (bM). He accompanied the delegation at negotiations held in May 1991. He ha started working as a consultant for the project and will work full-time starting June 1, 1991. A draft of the Agency's Procedures Manual has been completed and submitted to IDA. The Procedures Manual was reviewed and agreed upon at negotiations (paras 3.02(b) and is attached to the Ov I to be entered into by the Government and the Agency. 2.19 A second PPF advance of US$900,000 has been granted in order to execute five pilot subprojects, hire the staff of the Executing Aqency, fine-tune implementation arrangements (includlng accounting procedures) and fund the initial phase of the grassroot participation program before full- scale launching of the project. S. Proiect Coot and Flnanging plan 2.20 Proiect Cost. The project cost is estimated at US$22.2 million equivalent (CFAF 5.5 billion net of taxes and dutis) out of an overall program (including cofinancing) of US30 million. Th estimated foreign exchange component is US$4.5 million or 20 percent of the total cost. Base cost estimates are in mid-1991 prices. Annual inflation rates have beon *stimated as follows:  - 15 - 1992 . 1995 - -- -- -9 LcK6 4 4 4 Foreign 6 6 6 6 2.21 Since the volume of local works under tl. first component will be adjusted according to available funds, price contingencies have not been appliod to the estimated local cost of Component (a) which comprise 79 percent of total base costs. Price oontingencLes on tho remaining small components amount to 1 percent of base costs. A summary of cost estimates is presented in Table 2.1. Detailed project costs are provided in Annex 3. IabLe 2.1: Estimated Coats LOCAL FOREIGN TOTAL I l l . ! ~~~~~~~FOREIGNl _____~~~j U . . . ,,, lion) Cm oMnent (a): Llbor-intenalve Civil 13.87_ 2.68 16.55 M Corpnent (b): Technfcal ABsistance to 1.01 .49 1.50 32X Cafoonent ce: Monttorina * 36 .24 ,60 f4il Cgntract Nowanapunt Str . . . ..,J_ . ..StL .30 In%........ Trafnina Proaram for Beneff ciaries , .05 ... 2 .20S ...280 Grasoroot Partliclctlon Progrsa _ _____lx . ...!0 ............. .... Executfn Agencm Ooerat in Costs 1.58 , .08 1..66 SX Executing Ageney CaptteL .48 .38 .86 U4X M oot c _ro F) __ _ .I_ _ _ RBas costs ..,1 ..45 , ..7 21.Z ,. 20X as UntiMn .cJo .22 .16 Total Prolect Co ts 17.67 4.2L J 22.20L _ 20X P^rzlel1nenedCvfI Works 6.S4*.6 .8 __21 Total Program Costs (1 24.21 5.79 30.00 20 (1NuWwUs may not ad up di to roudrWng. 2.22 hnLnZgan. The proposed IDA credit of US$20 million will finance 6 percent of project costs not of duties and taxes. Thli will cover approximately USD3.9 million of foreign costs and US$20.45 aillion of local costs. All subproects to be carried out by the Executing Agency will be exempt from d arect duties and taxes. A US$2.2 million local contribution will be provided to the Executing Agency from Government budgetary resources to finance new subprojects (in addition to those financed by IDA and other codonors). It was agreed at negotiations that the Government will$ (a) cause the Executing Agency to execute new subprojects to the aggregate value of US$2.2 million equivalent before December 31,  - 16 - 1994, of which subprojects totalling the equivalent of at leaat US$730,000 would be completed by December 31, 1992. Additional sub-project. representing an aggregate cost of at least another US$730 000 equivalent shall be completed not later than December 31, 1963 (para 3.02 (f)(i))p and (b) make available to the Executing Agency, out of its own resources, all the funds necessary for the execution of those subprojects (see para 3.02(f)(Li) ) . Parallel financing totalling US$7.8 million equivalent (26 percent of total project coato) was identified during appraisal and will be finalized with DANZDA, OPEC Fund, GTZ and KfW. The proposod financinug plan in set out in Tablo 2.2: I _______ jX OF TOTAL LOCAL FOREi GH TOTAL PROJECT ICA 16..2AiA 3Li.6 .2fl Total Projec Costs GO e IDA) .....