Rwanda - Sixth Highway Project

Document of The World Bank FOR OMCIAL USE ONLY Repwt No. 12323 PROJECT COMPLETION REPORT RWANDA SIXTH HIGHWAY PROJECT (CREDIT 1641-RW AND A8-RW) SEPTEMBER 17, 1993 MICROGRAPHICS Report No: 12323 Type: PCR Infrastructure Operations Division Country Department III Africa Regional Office This document has a restricted distributio ad may be used by recipients only in the perfomance of their official duties Its contents may not otherwise be disclosed without World Bank authorization.  EXCHMGF.-RTE link Rwandeae FM c Year - US$1.00 Equivalent 1985 - 101 1986 - 87 1987 - 80 1988 - 76 1989 - 80 1990 - 80 1991 - 125 1992 - 132 1993 - 140 ABBRlAThONS AND BADEA - Arb Fund for Economic Development In Africa EDF - European Development Fund ERR - Economic Rate of Retur IDA - Itenadonal Developm Associadon KFAED - Kuwait Fund fob African Economic Development MP - Miistry of Fimance MPW - Ministry of Public Works RD - Road Directorate of the Mistry of Public Works SAR - Staff Appraisal Report SMEs Small and Medium Enterprises TA - Technical Assistance TORs - Terms of Reference UNDP - United Nations Development Program GOVERMIENQLOF RWANDA January 1- December 31  1 PART I: REVIEW FROM THE BANK'S PERSPECTIVE  2 RWANDA S lT HIMGAY PROJEC (CR 164I1-RW & AR-RWI pROJ= COmElIO REPOR PART I: REVIEW PEROM THE BANK'S PERSPECTIVE 1. Po0 d Namn : Sixth Highway Project Credit Number 1641-RW and A8-RW RVP Unit Af*ica Region Coutry Rwanda Sector Transport Sub-Sector Roads 2. Sector l)meloom Obii. Ihe Government of Rwanda considered transport as an impor factor to economic growth. Its objectives were to: (a) improve interational transport connectons; (b) upgrade the ma road network to facilitate the country's economic development and its social and amin ive integration; (c) improve the road network In general through better mainteance of existing roads; and (d) Improve transport services and lower transport rates i nural arem. 3. Policy contexL Among the above sectoral objectives, the Govemment had long emphasized the paving of ntereglmal roads. However, it acknowledged that more aention needed to be given to making optmal use of the existag road network and achieving the right balance between the upgradig of main roads and that of district and feeder roads and, more generally, between upgrading and maintenance 4. Lnka between proiect. sector and mo olicy oblectives. Rwanda's road network had reached a stage where its lengti was no longer a serious impediment to the county's economic and social development However, the economy of a land-locked country like Rwanda depends heavily on the trsportation costs of its imports and exports as well as on the reliability of sevea access coidors though neighboring countries. It was therefore critical to maintin the itaional road axes though Rwanda, and especially the Northern axe to Uganda which atracted about 80% of the inteaonl trffic. Loering ort costs was also ciical in rural areas to foster agricultural  3 prduction. Therefore, the Gov rent and IDA agreed to concentat their effrts on the mainnce of the count's exsting road network. S. Pxiect Oeves. he8 objectives of the Bank Group's inolvement in the highway sector were to: (i) improve public expenditure policies in the highway sector by assisting Governm to develop appropriate road maintenan and constuction pgrm; (ii) strengthen donor coordinaion in the sector to ensure that high priority item receive approprate extena assistance; (iI) impro road mnintenance and construction planning; (lv) strengthen the capcity of the Road Directorate (RD) to admser the cnty's road network; and (v) improve road manteace operatios and thereby reduce road transport costs. 6. e The proJect consisted of the following component: (a) Routine maint ce of earth and paved roads and regaveiling of earth roads as part of the mantenance progrm by force account; (b) Manpower development as pat of the taining program; (c) Reconstruction of the Kigali-Gana Road, first and second sections (50 kin); this road is part of the Norther access corridor and li Kigali wilth theborder wlh Uganda. (d) Improvement of the Soils Laboratory's capability; (e) Consulting Services for (i) the design and supervision of woks on the Kigall-Gatima road (80 km)); (i) the preparation of specificadons and biddng documents for the repair and rurfag of the Cyangugu-Bugarama road (40 kn) and for the reglling of the Rubengera-Ntendezi road (131 kin) and the Circult des Lacs (87 kn); and (-di) technicad aistce (TA) to help cary out the force account pr m implement the trining program and strengthen the Sois Laboratory; and (f) Studies to prepare comple sector actions on the following subjects: () maintenace of co l roads; ) traffic safety; and (iI) etrsport plang. Projet 12esiga and OrgogA 7. Des2ln of the nroiect. The project had a clear conceptual foundation. It built on the expeience gained through the five highway projects that IDA had previouly fianced in Rwada. Tbose projects put the emphasis either on capacity building and maitenac or on recoucdon and rehabilitation. Tds one was a combination of those two approaches. I ca yuilding component, mainenance componet. and reconstructionlrehabilcomponent ceary suppoted ail Its objectives (see para. 5) except for the strengthening of donor cooordinatio How this latter objective was to be met was not explained in the Staff Apprasal Report (SAR). 8. The project was d6igned aong studard lines. The fi g of theontctiof gthe Kigali-Gatua road was shmxed among various donors: IDA financed the wods on section It of the  4 road whilo the works on section I were coflnanced by the Arab Fund for Economic Development in Africa (BADEA) and IDA (Fifth Highway Project); the European Development Fund (EDF) took over section m. Maintenance activities were catTied out by force account. TA services wer made available to implement a training program and to help operate the force account activides. 9. 'ne SAR acknowledged that the RD's capability was probably too limited to successfWlly organize the mantence by force account of Its whole road network. This problem could be addressed either by raising the RD's capability through the financing of a heavy TA to help run the force account brigades, or by easing the demand on RD's human resources tbrough the involvement by the domestic private sector in road maintenance. The first solution was chosen rather thae second one. In retospect, the second solution may have yielded more susainable results. 10. of _ the The scope of the project was large given its objective of mainta_nn the existng network. It was later assessed, at the time a subsequent project (Transport Sector Project) was appraied and a Road Fund was established, that the equivalent of about half the fancing provided by the project was necessary to fiane maintnce of the network throuogh prceeds from the Road Fund. The Government share In the finacing of the overall program, Including other donor fcing, was 23%S (SAR). 11. lE=Athd of de g . The project was well prepared as regards recostruction of die Kigal-Gatuna road. Since previous contuctionpjects In Rwanda had suffered from cost overrm, much care was given to the economic evaluation of the Kigali-Gatuna road. A sensitivity analysis was carried out for two critical variables: construction costs and inteaonal taffic. Ibis sensitiv analysis, however, could not foresee that a civil war would flare up and divert all internaional traffic from the road to two other main access corridors through Tanzania. 12. Concerning force account activities, the SAR spelled out ovedy detailed perfonnac Indicators which did not prove useful during Implementation because the RD was unable to provide accurate management information to substantiate these indicators. The SAR should bave provided for a few broad but realisdc indicators to assess force account performance through the project's implementation. 13. Consultants' services. Detailed Terms of Reference (TORs) for the sectoral studies on communa roads and transport planning were included in the SAR. Detailed TORs for the traing program were also included in the SAR, including usefil quantified targets. On the contay, TORs for suppot to force account actities were not detailed enough, which may have dto poor capacity building. They failed to define adequately the roles and responsibilities of the TA team on the one hand, and of the Adminisa on the other. No specific provisions were made for the taning of countrparts to the expate experts. 14. Ya=ancsiimglemnenado. There were no significant variances between the desip of the ptoject and its implementaton except for some reallocation of the credit proceeds. First, disbursement for civil works (section n of the Kigali-Gatta road) inceased by 15% (compared to the Ii amoun in SDR allocated to this category of disbursement) due to technical requireme_ n (to lay an asphaltic layer instead of a double surface treatmen to provide for a longer life for the road under the taffic conditions of that time) and to the paving of additional 8 km Cbretele de ).  5 An amndment to Credit Agreement 1641-RW was signed on August 24, 1990, in order to add to the financing of ivil works already provided by credit A8-RW. The share of redt 1641-RW resources allocated to the financing of force account activities was decreased Accordingly. Second, the disburements for consnltants' servi.es were increased by 136%, due to flnancial bids being higher than expected and due to the conclusion of several amendments to the TA contas dring poject imple aion (four to each of the two TA contracts). lhis increase of disbursements X* consultants' services consumed 90% of the unallocated resources, although they were initly to cover physical and price contingencies mainly for the civil works on the Kigali-Gatuna road and dhe mainance activities by force account. lbird, an undisbursed amount of SDR 400,O DR va allocated to the purchase of equipment to support maintenance activities tinder the subsequeat pject, the Transport Sectr Project (see pars. 15). 15. 'he project took seven years for completion instead of the programmed five. Half of the extension schedule was needed for the procurement of road mainan equipments to be jointy fianced by the project undisbursed balance and by proceeds from the subsequent project (Franspt Sector Ptoject). The project disbursement performance was satisfictory overall. 16. ELak. Two rsks were identifled in the SAR. First, maintece activities by force accout could be hampered by managerial weaknesses and shortages of imported fuel and parts. This risk was partly addressed by IDA's financing of TA services and imports of fuel and parts Te SAR mentioned that contracting out periodic maitenance works would help to addes the issue of dto limited capability of the RD. But it did not propose that IDA finance small maintenance wors by private coators (SMEs). lI retrospect, it appeas that this risk was under-estimated Despite de support from the TA team, the RD could not carry out the amount of work ially planned uud dsbursements for force account acdvities tumed out to be less than expected (see para 14). A second risk was the potntial ruption of works on the road Kigali-Gatuna and cost overu asociated with shortages of materias and fuel, as occurrd during prvious construction project in Rwanda following disturbances in neighboring countries. This issue was addressed In the SAR by allowing for larger stocks of materials and fuel in contract documents. Yet, the works suffered from cost overruns which made it necessary to amend the credit agreement (see psa. 14). 17. 'Te SAR mentioned that there were difficulties in meeting the accouing and audtg requirenents during implementation of the preceding Fifth Highway Project. Yet, this was not considered as a risk for the project following the creation of an accounting unit within the RD, which would be supported by a foreign expert financed by the project However, given the size of force account activities to be financed by IDA and the required analytical accounting to follow-up on such activities, this issue should have been addrsed more carefully. In fact, as several audit reports ler demonstated, the RD did not keep accoun for the IDA-financed opeations separated from ose of other RD activities. As a result, compliance with finacial covenan was poor (see Part I, table 6). 18. _. The Credit Agreement 1641-RW was amended to realocate funds from force account acdvWies to civil works on the Kigali-Gatuna road (see para 14). Four amendments to each of the two technical assistanc con were oved by the Bank in an effort to meet the capacity building objectves of the projecL The SAR io that periodic maintenance wors by contractors would be financed by the Kuwait Fund for Afica Economic Development (KFAED). After the KFAED's wihdrawal of the proJect in 1981 (no explanation for this withdrawal can be found in the flles), and given the mportane the Governmet  6 saw in these works, IDA provided the ncessary financing trough a new Agreent (cr. AS-IRlW) amending the African Facility Credit A8-RW. Prioec Ruht 19. oi csty. The project objectives did not change during impletion. The project maiy failed to improve the RD's capacity to progru and manage maitenance of the road network. No sustainable capacity was built at the managerial level despite extensive technical asistce. Me RD's capacity In accounting did not improve as audit reports pointed to serious regularities and the Bank's missions reptedly doubted the reliability of the cost accounting system managed by the rA experts. lbis poor perfonmance stems from both poor TA and uereceptive Adminiaon (see par 32 and 36). However, at the lower levels of the administrWtlon (among the 'catomieW, site supervisors and truck drivess), capacity was built through the successful Implementaton of the manpower training program for which all quantified targets were met. 20. The physical targets of the project were achieved substantially as planned. Sections I and 1X of tha Kigall-Gatuna road (respectively, cofinanced by IDA and BADEA, and fhnanced by IDA) were well contucted and are still now in excellent condition. This demotaes that the technical difficulties along marshes were successfully addressed and that adequate manenance has been carried out since then. In sectdon m (flnanced by the EDF), the crossing of a marsh at PK 68 was notgiven appropriate tratment during the stage of constuction although the Jdifficulty was identified In toe SAR. When hostilities flared up, it became impossible to reach tis spot safely. It has not been properly reloaded with earth since then, has slowly sunk in the marsh and is now almost tmpassal As regards to maintenance of the road network, quantified routine mintenan objecti wer achieved (see Part m, table 5). With respect to periodic maintece, costs of force account activities were estimated to be higher than expected and disbursements were lower than inity planned. It can therefore be assumed that the quantified objectives were not fully met (see Part , table 5). 21. ecit FM. It is not possible at this stage to recalculate with canty the ERR on the Kigali-Gatuna road. The civil war that broke out in 1990 dramatically affected the underlying assumptions on which the traffic estimates were based, and updated data are not available to recalculate the ERR. The border with Uganda was closed and the international traffic was divertet from the road Kigali-Gatuna to two other access corridors through Tanania. Menwhie, military vehicle traffic has increased but no precise data are available on this subject A new pattem of international traffic may emerge after peace is restored because of enhanced competition bet he various access corridors. ERR estimates (SAR) for sections 1, 1U and m of the Kigall-Gatuna road were respectively 43% and 16% and 12%. When peace is rstored, ERR on setonI should remain high and close to the SAR estmate because there was no significant overrnu in construction -Osts, and becaue most traffic on this secticn stems from economic ties between Kigali and Its immediate surondings. On the contrary, ERR on section ! will be lower than the SAR esdmate becaus of higher construction costs and a decline in international traffic. Tentative asumpions on the decrease in traffic during wardme (1990-1993) are presented in Part m (see Part m, table 5 B). SAR estimates for vehicle operating costs, mainmtan costs and tic count in 1988 (and after 1988, in time of peace) being unchanged, these assumptions indicate that the ERR for Section I would not be significantly changed as a result of the war: it would decrease from 43% to 40%. On the other hand, the ERR for Section I would decrease from 16% to about 10%. These resuts, however, provide only limited insights on whether or not the decision to fiance the wors was economically  7 ise insofar as the war could not be foreseen at the time of appraisal. Concening section Il, it is not possible at this stage to assess the future value of the ERR because the problem of crossing the marshes at PK 68 has not yet been addressed and the final construction cost Is therefore unkown. 22. With regrd to maintenance activities, the data nmade available by the RD were not consistent arid supervision missions repeatedly raised doubts on their validity. It can be assumed that force account costs were higher than expected and that the ERR for periodic maintenance by force account was lower than the ERR assessed at appraisal time. 23. EmM of Sies. IDA flnced a study on communal roads. Ihe study was well recelved by the Borrower and the donors and it proved instrumental in designing a rural road component during appraisa and Implementation of the subsequent project (Transport Sector Project). Studies on asport policy, coflnanced with UNDP (RWA/861005), provided a comprehensive view of the transport sector in Rwanda and were instrumental in appraising the subsequent project (Transport Sector Project). 24. ImymOfte ULnos g y. IDA ftinanced the purchase of equipment while French COOPeation provided a technical assistant. No evaluation per se of this compont can be found in the files. No Performce indicators were definet in the SAR. However, the files menton shortcomings in the management of the Soils Laboratory. The efforts made did not meet the objectives since further equipment and training were providtA through a subsequent African Facility gra ](Belgium Gran). 25. As read the capacity building objective of the project, sustinablity is low. Six moths after the departure of the TA for manpower development, the training center ceased to funmction and its equipment and furniure were reallocated to other departments. Although the expatriate accountant had st up a cost accountng system, the RD did not undertake any cost accounting exercises and barely kept its books of accounts between his departure and the arrival in the field of another expatiate acounta with the subsequent Transport Sector Project one year later. 26. Sections I and II of the Kigali-Gatuna road have been well maintained and are ready for the return of international trafflc once peace is restored. With regard to the road routine maintenance objective, sustainability can also be deemed satisfactory: routine maintenance is still carried out on most of the national network, and in particular on the paved roads, by 'Cwonde' paid through the Road Fund established under the subsequent Transport Sector Project. With regard to periodic maintence activities, the RD's brigades probably carry out a lesser amount of work since project completion and since the war stared. The RD does not have the capacity, given its scarce hulm resorces, to maintain the entre road network by force account. The contracting out of maintenance works is a necessity for the fiutre. Arrangements must be made to lease the equipment of the RD to private contors. 27. Bak staff contributed to projectimplementation through professional advice. However, some shortcomings wene evident, as oudined further below.  8 28. Us mix of skills among supevision mission membr was not always appropriat For stc uperviion missons staffed with fincal analysts, identfied seious shortcomig In the accountng of the RD and made specific recommeon as early as October 1987. However, no flnai analyst went on mission to foillow-up on tho recommendations before October 1989. Moreover, supvision was apparently affected by the changes that occurd In 1989 In the Bank staff assigned to the project. Oily one mission visited Kigali in 1989. The number of man-days-per-year In the field drlrng supervision missions increased considerably in 1991 and 1M (see Part i, table 7 B). 29. Ihe Bank approved, although with reluctancy, the signature of sevetra amendments to the two TA contS (4 amendments for each of them) following repeated requests from the Govemment. Ihe Bank should eithe have reviewed more carefully the draft TORs included in the SAR and the fia TORI tiat were used for the consultation, or have discouraged this practice of signing seve amendments. Ile conslting company thatbeld TA responsibilities in the RD, and whose leader was the Minister's close counselor, was awarded ser contracts for feasibiity studies. In retrospect, it seems that the overall quality of consultants' services would likely have been enhanced by hatg more consulting companies opeang and compedng in the road sector (see para. 37). ho Bank should have fostered more compedtion among consulting companies by insisting that the couting company holding TA responsibilities not be short-listed for works to be awarded by the entity in which it was working as counselor. 30. The Bank should have been more forcef in demanding that a reliable cost accountng system be set up to measure the peformance of force account brigades and thereby bet monitor th use of proceeds from the Bank credit (see pam. 17). Furtheore, the Bank should have put more emphasi on the capacity building objectives of the project by insistng on the transfer of mnwledge betwe epate experts and L elr countpars. The Bank should bave applied remedies when audit reports were delayed and when serious accounting problems were ideified. Borjrower Perfomae 31. The Borrower proved dedicated to routine maintenance and financed more 'camonnies' than what was planned in the SAR. The Borrower also supported the periodic maintenance program fr works carried out by mechanized brigades, but its performance is difficult to assess because of poor analytical accounting. It provided several activity reports but the data were often inconsistent. 32. In general, the RD showed poor commitment to capacity building. It considered TA as a mangment resource rather ta a moam to transfer knowledge to local managers. In general, the top magement in the Ministry of Public Works (MPW) and in the RD did not encourge a participatory attide among their staff thus preventing them for building a fruitful relationship with the technial assistants and learning from them. This attitude exacerbated the constns already created by the scarcity of human resources within the RD. In part II of the PCR the Goverment puts the blame on TA for poor results. If it is indeed their perception, they should not have repeatedly asked the Bank to approve extensions of the TA contract. 33. Compliance with the Credit Agreements covenants was low especialy with regard to the financial covenas (see Part m, table 6). Audit reports were delayed uptD two years after the due date and pointed to Irrelarities. Records and accounts in respect of expenditu for the project were not kept separate. Audits for 1990 and 1991 resulted In adverse opinions.  9 34. 'Me Bank and the RD's management failed to establish sound working relatioships. in particular, supervision missions could barely discuss technical matters with RD's engineen becase only a few top officials within the MPW were allowed to express their views and to take initiatives. lhis situation improved slighdy towa*ds the end of the prject's implementaton after chges occurred within the MPW's top management. 35. The SAR stated strengthened donor coordination in the road secor as one of the prject objecdves. However, it did not explain how this objective was to be achieved. Donor cootion trned out to be pcor with respect to policy definidon in the road sector. However, the reconstrucon of the Kigali-Gatuna road was successfully financed by three separate donors (BADEA, IDA and EDF). In particular, a quesdon arose du!ing implementation as to whether the contacts for the three sections of the road could be awarded to a single conactor if ftis could lower the oveail1 constructions cost. Eventually, the contracts for section I and II (with IMA fnacing) were awarded to one contractor and the contract for section m (DF financing) to another contract. The German Coperaidon-financed and the IDA-financed TA teams were eventually able to coopa satisfactorily to make the manpower development component successful. The Bank and the UNDP were in close coordination concerning transport planning and studies on the transport sector. Conmiting Service 36. 37% of IDA resources were spent for consultant's services though the iitial allocation (in the credit agreements) was 15% (see Part III, table 4 A). Yet, this sharp icrea (136%) yielded mixed results as far as capacity building is concerned (see pars. 19). TA to the RD consisted of two teams from two differem consulting companies. Ihe one responsible for implemenidg the manpower program performed well while in the field but failed to develop a sustainable system. On the other hand, the one responsible for implementing the maintenance program by force account and keeping the RD's bools of accounts performed poorly. First, it failed to train counterparts and Rwandese RD's managers; this failure can be partly explained by the atide of top _manges in the MPW and the RD (see para. 32). Secondly, it failed to establish a sound and sustnable accounting system for the RD; this latter shortcoming may stem from both a lack of commitment by the RD and a lack of qualification of the accountant-expert. This overall poor performance is all the more unortnmate as four amendments to the consultant's contract were approved to provide the consultant with the means to carry out the work. 37. The consultant responsible for the supervision of the works on section U of the Kigali-Gatuna road was not able to prevent construction cost overruns. In the future, as part of the Consultant's TORs, it should be specified that they have to find technical solutions to avoid cost overruns. Some feasibility studies were not well done and had to be reviewed by the consultan in charge of the supervision of thte works just before the works began. EMIMmmlonlft nDO .38. The legal documents did not provide for a clear breakdown of project financing between the two IDA credits involved (cr. 1641-RW and A8-RW). There was one SAR for two credit agrents with the same sched0fit 2 (description of the project) and similar categories of disbursement in  10 schedules . In the case of two credits financing a single project, it is important that the Credit Agreemes iiates which componen of the project ptn to which credi!. 39. Project reporting requirements were presented in the SAR. A better follow-up on compliance with project repoing requirements during implementation could have provided a usefl Indicator of the Borrowee's pefrmance. 40. Most of the data relevnt to the preparation of the PCR was rdily available in the division flles, Additional data could be retieved from the Africa Information Center. However, it was not posible to update the detailed costs table presented in the SAR from the data found in the fies. 41. The following lessons may be relevant to other Ba-fianced projects: (a) I retrospect, the decision to build up the capacty ofthe RD to maitainthenetwork by force account through a large technical assistance program was unsound. Contrag out a larger part of the works would have led to more sus8aib esults. --e low managerial capacity of the RD and the econmic objective of prvate sector development both suggest contcting out of a large share of maitnc opraton while down-scaling force account actvities in fuure project. (b) The defnition of efficiency indicators (in the SAR) aimed at meauring force account works performance should take into account the RD's low capability to provide accurate and meanful data Those indicators should be simple and reaic so that (i) the implemetng agency can provide reliable figures for these indicator, and (ii) the indicators can be traced throughout the project's implemenation (c) The TA was not adequately designed and supervised to help build local capacity. Capacity building should be considered as a major objective (and a means to achieve sustainability) to train local managers. The transfer of klowledge and of operatnal responsibilities from the TA team to its counterparts should be monitored accrding to a detailed schedule fnized with the Borrower and the TA team at the onset of the project implemnaIon. Moreover, draft TORs for TA included in the SAR should be deailed enough that it is not necesary during project implemn to conclude seral amedments to the TA conact. Fihally, the Bank should be more forceful ia insisting on good performance by consultants, terminag contracts if ncsary. (d) Consultants' TORs for the supervision of road works should include provision for mainining the costs of works within the parameters specified in the works contract. Thus, it should be the consultant's responsibility dufing the works implementation to make any technical proposal necessary to remain within the available financial package. (e) The Bank should be more forcefud in demanding compliance with financial covnas with respect to accounting and auditing of Bank-finaced projects. It should exercise remedies soon after problems are idendfied.  (t) If donor coordination is considered as one of the project objectives, specific procedures to enforce such coordination should be defioed durng appraisal. For instance, it could be agreed upon to carry out joint supervision missions on a regular basis throughout project implementation. (g) A detailed financing plan should be designed, based on the SAR and Credit Agreement, aid updated on a regular basis during implementaion and during every supervision mission, to follow-up closely on the parties' financial commitments and to facilitate the drafting of a PCR when the project is completed.  12 PART Il: PROJECT REVIEW FROM BORROWER'S PERSPECITVE  8 8 8 2 t ~~~~~~a 3 { ! 9 8 S t 8 3 { W