Zambia - Second Social Recovery Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6591-ZA MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN THE AMOUNT EQUIVALENT TO SDR 19.1 MILLION TO ZAMBIA FOR A SECOND SOCIAL RECOVERY PROJECT JUNE 5, 1995 Human Resources Operations Division Southern Africa Department Africa Regional Office 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.  CURRENCY EQUIVALENTS April 1995 Currency Unit: Zambian Kwacha (ZMK) US$1.00 = ZMK 700 ZMYK 100 = US$0.14 FISCAL YEARS IDA Fiscal Year = July 1 - June 30 Government Fiscal Year = January 1 - December 31 ABBREVIATIONS AND ACRONYMS CIR Country Implementation Review CPPR Country Portfolio Performance Review CSO Central Statistics Office IDA International Development Association LCMS Living Conditions Monitoring Survey MPP Microprojects program (European Community funded co-project) MPU Microprojects Unit (MPP/SRF joint administrative structure) NCDP National Commission for Development Planning NGO Non-Government Organization PAG Participatory Assessment Group SAC Structural Adjustment Credit SECAC Sector Adjustment Credit SERC Social and Economic Recovery Credit SRP Social Recovery Project  FOR OFFICIAL USE ONLY ZAMBIA SECOND SOCIAL RECOVERY PROJECT CREDIT AND PROJECT SUMMARY Borrower: Government of the Republic of Zambia Implementing Agency: Microprojects Unit, National Commission for Development Planning, Office of the President Beneficiaries: Rural and urban communities, social sector agencies Poverty: Program of targeted interventions to poor communities and part of Government program for devolution of safety net activities to local groups Amount: SDR 19.1 million (US$30.0 million equivalent). Terms: Standard IDA terms with a maturity of 40 years including a 10-year grace period. Commitment Fee: 0.50 percent on undisbursed balances beginning 60 days after signing less any waiver Financing Plan: IDA will finance 63%, the Government 8%, beneficiaries 23%, and donors the remainder. Details in Schedule A. Net Present Value: Not applicable. Project design based on cost-effectiveness Staff Appraisal Report: 14329-ZA Project ID: ZM-PA-3210 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.   MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO ZAMBIA FOR A SECOND SOCIAL RECOVERY PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed development credit to Zambia for the equivalent of US$30.0 million, on standard IDA te-ms, with a maturity of 40 years, to help finance a Second Social Recovery Project. The Government and beneficiaries will provide US$14.7 million and donors the remainder. 2. Background. In 1991 a national survey revealed that about 69 % of all Zambians were living below a level sutficient to provide basic needs. The Poverty Assessment (1994) suggests that the prevailing picture is still the same: within that poverty ridden majority the depth and severity of poverty varies from a mean of 29 % in rural areas to 8 % in urban aleas; .infant mortality has increased from 97 per, 000 in the eighties to 107 per 1000 in the nineties; more than one third of school age children do not attend school in the appropriate grade; 20% of rural households and 6% of urban households are numbered amongst the ultra poor, with expenditures of less than 25% of the core poverty baseline. The Zambian Government is pursuing a major restructuring and adjustment effort to put the country on a pro-poor growth path. Major areas of emphasis are: macroeconomic stabilization, facilitation of private sector development and targeted interventions for the poor. The existing Social Recovery Project (SRPI) was initiated as an integral part of this reform program, both helping expand infrastructure in poor areas, and providing targeted interventions to poor communities. Also, SRP I has played a role in helping to assure the political and social sustainabilitv of the reform program, by showing that Government, in partnership with communities, is willing and able to assist with high priority local development efforts. The Poverty Assessment highlights the need for community-based implementation of a number of activities such as feeder roads, water supply systems, peri-urban public infrastructure and rehabilitation of social service delivery systems. It also endorses the Government's emphasis on devolution of safety net activities to local groups and the need to ensure that interventions are planned and implemented with the participation of the poor. 3. Three independent evaluations and several beneficiary assessments have shown the importance of such interventions. The ongoing project has enjoyed an accelerated rate of disbursements resulting in the project being fully committed by February 1995, and expected to be fully disbursed one year ahead of schedule. Government has recognized that in the SRP, they have created an efficient mechanism for creating and refurbishing social sector infrastructure. 4. Project Objectives. The overall objective of the project is to assist the Government of Zambia's poverty reduction program through financing community initiatives and building capacity for poverty monitoring and analysis. In addition to funding community initiatives to help mitigate the negative effects of the economic crisis on the poor, the same mechanism will be utilized to stimulate economic growth at district and community level through the support of economic infrastructure such as markets, rural bridges and earth surface roads, safe water points etc. The project will thus support community-based rehabilitation and improvement of the social sector and  economic infrastructure. This support will facilitate ongoing decentralization efforts in Zambia and assist communities, NGOs and Government to learn how to become partners in the country's development. Additionally, the Project will support both participatory and quantitative systems for monitoring living conditions in the country. It will also continue to support action oriented poverty research through a Study Fund which builds on the success of the Fund established under SRP 1. 5. Project Description. In order to achieve the above objectives, the Project will work closely with provincial and district level management in the line ministries to identify community needs and promote community participation in the preparation and execution of Project activities. The Project will consist of three major components: (a) Community Initiatives (US$35.8 million or 75% of total project costs): community-based micro-projects identified, prepared and implemented by communities, with appraisal and supervision from the Micro-projects Unit (MPU); a sub-component vill finance capacity building in the processes of identification, preparation, appraisal and implementation of micro-projects for communities and local agencies of the line ministries; (b) Poverty Monitoring (US$2.7 million or 5.7% of total project cost): an annual quantitative Living Conditions Monitoring Survey (LCMS) based in the Central Statistics Office of the National Commission for Development Planning, and a number of complementary qualitative participatory assessments to be carried out by the Participatory Assessment Group (PAG), an NGO being created for the purpose; (c) Poverty Analysis (US$I. I million or 2.3% of total project cost): policy relevant research on poverty and social issues in a demand-driven framework, through a Study Fund designed to be particularly responsive to sector ministry needs. Institution building runs as a thread through all components of the Project, and includes the extension of limited technical assistance to the Microprojects Unit until the mid-term review; limited technical support for the Poverty Monitoring component; community, district and provincial capacity building; and logistical support including office equipment and vehicles. Because of procurement/disbursement definitions and procedures the costs for these elements are drawn together and represent 17% of total Project cost. 6. A breakdown of the costs and the financing plan are showvn in Schedule A. The methods of procurement and the disbursement schiedule are shoNvn in Schedule B. A timetable of key processing events and the status of Bank Group Operations in Zambia are shown in Schedule C and D, respectively. The Staff Appraisal Report No. 14329-ZA dated May 25, 1995 is also attached. 7. Project Financing. Total Project costs are estimated to be US $47.7 million over a five year period, with IDA financing 63%. The Country contribution consists of 'cash and kind' inputs from bencficiary communities towards their micro-projects (23%), and Government (8%) to a total of 31%. Participation of donors involved in the previous project (Sweden, Norway) has been assured, but details are still being finalised.  - 3 - 8. Project Implementation. The Project will be managed by the existing MPU in the Office of the President, attached for administrative purposes to the National Commission for Development Planning. The Project will follow the procedures established under SRP1 and the guidelines found in the implementation manuals prepared during SRP1 and revised as a result of the various evaluations and the mid-term review of that project. Recognising the need for long term sustainability of community involved development, IDA will assist Government in devising an effective modus operandi which, by mid-term review, will enable functions of the Project to be absorbed into channels acceptable to IDA and the Government. 9. Project Sustainability. The sustainability of Project activities is enhanced by the fact that microprojects are all proposed and implemented by local communities and thus reflect their own assessment of the situation. As most of the civil works are rehabilitation, there will only be a minor impact on the recurrent budget of the Government; where there is need for additional staff or other expenditures, the relevant line agency will be required to indicate that such resources are available. The restructuring of the Government's budget in favor of social sectors and basic infrastructure in general, and particularly towards operating costs for primary level services supported under the Economic and Social Adjustment Credit (No. 2577-ZA), will help ensure that sufficient Government funding is available. 10. Lessons from Previous IDA Involvement. IDA has supported more than 30 social funds, including several in Africa. These have proved to be effective ways of providing resources for poverty reduction as long as the initiatives are managed autonomously, have rigorous but simple procedures, are flexible in procurement and disbursement, and emphasize supervision, monitoring and community participation. Strengths and weaknesses in SRP 1 have been identified through three external evaluations: (a) a Technical Evaluation, which examined the project designs utilized, the implementation procedures used, and the capacity of the communities to implement self-help projects; (b) Beneficiary Assessments which reviewed the evaluation of community needs, appropriateness of microproject identification and their impact from the perspective of the actual beneficiaries; and (c) a Management Audit which assessed the efficacy of the project cycle and its disbursement procedures. The overall picture from these evaluations is very positive. However, three areas for improvement did emerge and have been emphasized in the Project. First, the Project will aim to diversify the portfolio of microprojects, assisted by a participatory process which will build community capacity and create a sensitivity to the importance of a multi-sector approach to the reduction of poverty (as of now, 70% of SRP I's microprojects are in the education sector, 11% in health, 5% in safe water supply). Secondly, sector Ministries will be encouraged to perceive the Project as an implementing agency for their policies by the MPU working in closer cooperation with their agencies at provincial and district levels. Finally, the Project will pay greater attention to the problem of targeting communities designated as poor and vulnerable because of difficulty of access or other reasons. Here too, increased use will be made of participatory methods in assisting such communities to articulate their priorities and meet requirements for microprojects. 11. Rationale for IDA Involvement and Relationship to CAS. The overall objective of the Bank's assistance strategy in Zambia, as stated in the most recent Country Assistance Strategy (CAS)(Memorandum of the President, Economic and Social Adjustment Credit Report No. P6248- ZA, 2/15/94), discussed by the Board in March 1994, has been to promote sustainable economic growth, and to reduce poverty by: (i) supporting macroeconomic stabilisation and structural reform policies; (ii) promoting private sector development and greater public sector efficiency; and (iii) increasing targeted direct assistance to the poor and vulnerable groups. This Project is fully consistent with the CAS in its focus on targeted assistance to the poor and vulnerable, with its  - 4 - emphasis on building capacity at community, district and provincial levels. SRP1 has already made a significant contribution to the CAS through increased public sector efficiency, tapping private community resources, and promoting poverty reduction. The Project continues this approach with increased attention to targeted interventions. Other donors are supporting other aspects of safety net operations. The Government has asked for IDA's involvement in this area based on its considerable experience with other social fund operations across the world and the central role IDA has played in the past, both conceptually and directly through SRP 1 and the development of integrated sector operations ongoing in health and agriculture, and under preparation in education. 12. Agreed Actions. As a condition of effectiveness, the Government will have demonstrated that at least half of the 1995 budget allocation for the Social Recovery Fund will have been disbursed to the MPU. As a condition of effectiveness for the Nonvegian Grant, the Government will present a workplan acceptable to IDA, indicating the proposed and ongoing activities for the Central Statistics Office, and the staff allocations. Agreements were also reached on arrangements for the implementation agency, government counterpart contribution, and procurement, audits, and reporting. 13. Environmental Aspects. As the Project is focused on the rehabilitation or expansion of existing infrastructure, it has been placed in category C. The microprojects selection criteria, as spelled out in the Implementation Manual for the MPU, include environmental impact evaluations consistent with the recently completed National Environmental Action Plan. The overall impact on the environment is expected to be small but positive. In particular, rehabilitation of water supplies, and sanitation facilities have a direct, positive impact on the environment of affected communities. 14. Poverty Category. The project is part of the core poverty program for Zambia and is included in the program of targeted interventions because of its emphasis on support to poor and vulnerable communities in the rehabilitation of essential community infrastructure. The project also contains significant elements of civil service reforrn in supporting the decentralization process through capacity building at district and provincial levels. 15. Participatory Approach. Preparation of the Project has been built on extensive client consultation and participatory assessment which became part of the implementation for SRP 1. The recommendations in three Beneficiary Assessments carried out in SRP I are being implemented in this follow-up Project. Discussions bctwecn the MPU and line Ministry officials at hcadquarters, provincial and district levels have also contributed to the development of the Project. Involvement of the SRP I implementation team and oversight of the Project's preparation by the SRP steering committee, ensure that projcct design reflects a consensus vieNv within Government and the NGO communitv. 16. Project Benefits. Thc Project will provide improved and more extensive infrastructure for the delivery of health, education and safe water serviccs to poor urban and rural communities. Through the provision of small scale economic infrastructure it will enhance the capacity of communities (especially of women's groups where these projects are in water supply) to increase incomes, reduce vulncrability and strengthen self-reliance. The mechanisms utilized for the delivery of micro-project support stimulate increased community ownership, and an improved capacity to create and manage participatory development. In the medium tcrm, the experience will help solidify ongoing decentralization efforts and enhance the capacity of community groups to manage their own development programs.  - 5 - 17. Project Risks. The main risks of social fund type projects have been lack of community participation and poor implementation because of Government's limited capacity - particularly at local level. SRP I has a proven track record which suggests that the methods which have evolved for identifying, appraising and implementing micro-projects will minimize these risks. In addition, the Project will include positive steps to broaden community participation in the identification process, and improve district level capacity through training and involvement in the microproject cycle. There is a,so a risk that changes in policy or ministerial structures and responsibilities will threaten the non-sectoral base from which the MPU operates. This risk will be minimized by actively pursuing sector ministry involvement and responsibility for the infrastructure being developed or reh, bilitated. 18. Recommendation. I am satisfied that the proposed Credit wvould comply with the Articles of Agreement of the Association, and I recommend that the Executive Directors approve it. James Wolfensohn President Washington D.C. June 5, 1995 Attachments  -6 - SCHEDULE A ZAMBIA SECOND SOCIAL RECOVERY PROJECT ESTIMATED PROJECT COSTS AND FINANCING PLAN Table 1. Estimated Costs (US $ thousands) % % of Total Project Component Local Foreign Total Foreign Cost Conmnunity Initiatives 35,500 300 35,800 0.8 % 75.0 % Institution Building 7,500 600 8,100 7.4 % 17.0 % Poverty Monitoring (LCMS) 1,500 400 1,900 21.1 % 4.0% Poverty Monitoring (PAG) 750 50 800 6.3 % 1.7 % Poverty Analysis 1,050 50 1,100 4.5 % 2.3 % TOTAL 46,300 1,400 47,700 2.9 % 100.0 % Table 2. Financing Plan (US$ millions) USS Million IDA Beneficiaries GRZ SIDA Norway Total Community Initiatives 22.5 10.8 2.5 0.0 0.0 35.8 Inst. Building & Support 7.2 0.0 0.9 0.0 0.0 8.1 Poverty Monitoring (LCMS) 0.0 0.0 0.5 0.0 1.4 1.9 Poverty Monitoring (PAG) 0.1 0.7 0.0 0.8 Poverty Analysis (Study 0.2 0.0 0.0 0.3 0.6 1.1 Fund) TOTAL 30.0 0.0 3.9 1.0 2.0 47.7  SCHEDULE B Page 1 of 2 ZAMBIA SECOND SOCIAL RECOVERY PROJECT PROCUREMENT METHODS AND DISBUR3EMENTS Table 3: Procurement Arrangements (USS million) [CB NCB Community Other Not IDA Totil _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ' . : ' : . . . _ _ _ . _ _ _ ' _ _ _ _ . fin an ed X : _ _. _. _- _ 1. Microprojects: Cis;l 0.0 6.6 12.5 0.0 12.2 31.3 Works (0.0) (5.9) (10.6) (0.0) (0.0) (16.5) 2. Mi roproject: Goods 0.3 1.2 1.4 3.0 0.0 5.9 (0.3) (1.2) (1.3) (2.6) (0.0) (5.4) 3. Microproject training 0.0 0.0 0.0 0.6 0.0 0.6 services (0.0) (0.0) (0.0) (0.6) (0.0) (0.6) 4. Consultant Services (inc. 0.0 0.0 0.0 2.1 0.0 2.1 MPU consultant services) (0.0) (0.0) (0.0) (2.1) (0.0) (2.1) 5. Capacity Building 0.0 0.0 0.0 1.1 0.4 1.5 (0.0) (0.0) (0.0) (1.1) (0.0) (1.1) 6. Studies and Surveys 0.0 0.0 0.0 0.5 3.0 3.5 (0.0) (0.0) (0.0) (1.5) (0.0) (1.5) 7. Vehicles & Equipment 0.4 0.8 0.0 0.4 0.0 1.6 (0.4) (0.8) (0.0) (0.4) (0.0) (1.6) 8. Incremental Recurrent 0.0 0.0 0.0 1.2 0.0 1.2 Costs of MPU (0.0) (0.0) (0.0) (1.2) (0.0) (1.2) Total 0.7 8.6 13.9 8.9 15.6 47.7. (Total EDA) (0.7) (7.9) (11.9) - (9%5) (0.0) . (300) . ..,.. ,. , .,..- w : .. - -,.  -8 - SCHEDULE B Page 2 of 2 Table 4: Allocation and Disbursement of IDA Credit (US$ million) Amount Percent of expenditures to be Allocated financed (US$ M. equivalent): ::0; ; :: ::tj30 :: -a : : 1. Community Initiatives (microprojects) 19.7 90 percent of amounts disbursed by the MPU expenditures 2. Training, workshops, consultant services, 4.8 100 percent studies under the poverty analysis component participatory poverty monitoring sub-component 3. Vehicles and cquipment for the MPU 1.4 100 percent of foreign expenditures, 100 percent of local ex-factory costs, and 90 percent of other local expenditures for other items procured locally 4. Incremental Recurrent Costs 1. 1 100 percent 5. Project Preparation Facility 0.3 6. Unallocated 2.7 Total 30.0 Table 5. Estimated Disbursements of IDA Credit (US$ million) IDA Fisral Year _1FY96 I FY97 I FY98 I FY99 I FY2000 Anntial 3 0 9 0)90t 3 0 ICumulative 30 110 210 27 0 30 0 Ciim0ilative % 0n 40% 0 0 100%  -9 - SCHEDULE C ZAMBIA SECOND SOCIAL RECO VERY PROJECT TIMETABLE AND KEY PROCESSING EVENTS Time taken to prepare: 9 months Prepared by: Government with IDA assistance' First Bank/IDA mission: October 1994 Appraisal mission departure: March 5, 1995 Date of negotiations: May 15-19, 1995 Planned date of effectiveness: August 1995 List of relevant PCRs/ICRs and PPARs: None i This report is based on the findings of a appraisal mission which visited Zambia in March, 1995. The external participants in the appraisal were Alan Dock (Task Manager, AFIHHR), Daniel Owen (Beneficiary Assessment Specialist, AFI DSMz), Ingeborg K]eppe (Economist/Social Survey speciahist, AFTHR), Margerite Salah (Operations Officer AFIHHR), Alexandria Valerio (Policy Analyst, AFIHR), David Booth (SIDA Consultant), Anne-Kristina Hermansen (Norwegian Ministry lForeign Affairs), Gertrude Ssali (Admin. support, AFIHR). The mission was joined in all discussions and in the report preparation by Government counterparts: Mrs. Irene Kamanga, Team Leader and Permanent Secretary NCDP, Cosmas Mambo (SRPI Coordinator), Clare Barkworth (TA, SRPI), Geoff Chipota (SRPI Finance), Wedex llunga (Head Tech Services SRPI), Ed Mwale (Head Field Services SRPI), Ben Zulu (Project Coordinator MPP), Mel Jones (TA MPP), Emmanuel Silanda (Director Soc Research CSO), Ms. Chulu (CSO), John Milimo (Poverty Assessment Group). Lead Advisor is Steen Jorgensen(AFRCA). Peer Reviewers are Julie Van Domelen (LA I IR), Mary Barton-Dock (AF3AE), and Alexandre Marc (EC4HR). Gertrude Ssali assisted in report production. Messr.slMmes Roger Grawe, Phyllis Pomerantz and Katherine Marshall are, respectively, the Division Chief, Country Operations Manager, and Department Director for this operation.  - 10 - SCHEDULE D Page 1 of 3 AFRVP - Africa Regional Office AFIOR - Southern Africa Department AF1C2 - COUWNTRY OPERATIONS 2 Status Of Bank Group Operations In ZAMBIA PFOBR25 - Sumrary Statement Of Loans and IDA Credits (LOA data as of 4/30/95 - MIS data as of 05/25/95) .............................. ................................................ ..... ..... By Country Country: ZAMBIA Amount in USS million (less cancellations) Loan or FiscaL Undis- Closing Credit No. Year Borrower Purpose Bank IDA bursed Date Credits 29 Credits(s) cLosed 761.21 3.86 C17430-ZM 1987 ZAMBIA COFFEE 11 20.40 18.59 06/30/99(R) C17460-ZM 1987 'ZAMBIA AGR. RES.& EXT. 13.00 4.80 12/31/96(R) C22690-ZM 1991 ZAMBIA MINING TAS 21.00 9.22 06/30/97 C22730-ZM 1991 ZAMBIA SOCIAL RECOVERY PROJ 20.00 4.84 07/31/97 C24060-ZM 1992 ZAMBIA PIRC TECHNICAL ASSIS 10.00 6.72 12/31/97 C24220-ZM 1993 ZAMBIA MKTG. & PROCESS. 33.00 28.31 06/30/99 C24290-ZM 1993 ZAMBIA EDUCATION REHAB. I 32.00 20.58 06/30/98 C25150-ZM 1993 ZAMBIA TRANSPORT ENGINEERIN 8.50 8.53 06/30/97 C25230-ZM(S) 1993 ZAMBIA PIRC II 100.00 68.08 06/30/95 C25350-ZM 1994 ZAMBIA FINANCIAL & LEGAL MA 18.00 18.08 06/30/99 C25770-ZM(S) 1994 ZAMBIA ECON & SOCIAL ADJUST 150.00 11.31 12/31/95 C26210-ZM 1994 ZAMBIA PETROLEUM RENAB 30.00 34.04 06/30/00 C25771-ZM(S) 1995 ZAMBIA ECO! ' SOCIAL ADJUST 13.70 15.29 12/31/95 C26600-ZM 1995 ZAMBIA HEA. SECTOR 56.00 60.24 12/31/00 C26980-ZM 1995 ZAMBIA AGRICULTURE SECTOR 1 60.00 64.92 12/31/99 C27250-ZM 1995 ZAMBIA URBAN RESTRCT SWATER 33.00 33.00 12/31/01 TOTAL number Credits a 16 618.60 406.54 Loans 28 Loans(s) cLosed 582.13 ALl closed for ZAMBIA TOTAL number Loans = 0 TOTAL*** 582.13 1,379.81 of which repaid 458.71 3.93 TOTAL held by Bank & IDA 123.42 1,375.88 Amount soLd 28.58 of which repaid 28.58 TOTAL undisbursed 410.41 Notes: Not yet effective Not yet signed ^ Total Approved, Repayments, and Outstanding balence represent both active and inactive Loans and Credits. (R) indicates formalLy revised Closing Date. CS) indicates SAL/SECAL Loans and Credits. The Net Approved and Bank Repayments are historical value, all others are market value. The Signing, Effective, and Closing dates are based upon the Loan Department offical data and are not taken from the Task Budget file.  SCHEDULE D Page 2 of 3 ZANIIBLA STATEMENT OF IFC INVESTMENTS AsofMi.arch 31, 1995 (In Millions US Dollars) 1- Orgil Gros Conumhmentt - FYs ObUgor/Cocparty Typeo(Buuines/So~er IFC Lo.n IFC Equity Part Total IFC Held Pat Hold Total C, mmntted Anmunt Anl| at Amount A-' An-ul A.n.l U.d.b. 1972173 Zambia Bata Shoe Company General manufactunng 0.92 023 1 131 3 2.28 0.23 j 1975/78 Century Packages Limited al IGeneral manufactunng 0.88 0.21 - 1.09 | - 1 0 | 1976 Development Eank of Zambia aJ Development financing - 0.54 0.54 , . l 1980/82 Zambia Consolidated Copper Nonferrous metals 45.14 8.00 53.14| 2.82 _ - . | 1980185 Kafue Texble of Zambia Ltd Textiles 1 0.74 10.74 6.53 1982 Ethanol Company of Zambia a/ Chemicals and petrochem. 3.68 C.60 - 4.28 : 19084/91 Zambia Hotel Propfrties Ltd. Tourism 7.50 14.91 1022.4 6.51 1985 Mpongwe Development Company a/ Food and agribusiness 1.83 0.29 -| 2.12 _ - 1988 Gwembe Valley Development a/ Food and agribusiness 3.70 0.80 4.50 . ' | * 1989 Masstock Zambia Iimited Foodandagnbusiness 8.69 - 8.69 2.19 1994 Big Five Car Hire Zambia Industrial services 0.58 0.58 0 581 Total gross cominitments b/ 83.66 2.67 24.04 110.37 -_ | | Less cancellations, terminations, repayment & sales 65.58 2.44 7.23 75.25 - iTotalcommitmentsnowheld c/ 18.08 0.23 16.81 35.12 18.31 . 16.81 - ____ Pendin; commitrnents |__________ I -j iAEF-KAYILA LODGE | _ _ 0.19 0.19_ - | i_ |Total pendin commitments 1 0.19 0.19 1 Total commitments held and pending commitments 18.27 0.23t 16.81 35.31 |, Total undisbursed commitments | _ * ______ _| a/ Investments which have been fully cancelled, terminated, written-off, sold, redeemed, or repaid. bl Gross commitments consist of approved and signed projects c/ Held commitments consist of disbursed and undisbursed investments.  - 12 - SCHEDULE D Page 3 of 3 1. Zambia's investment portfolio is growing rapidly, with two new investment projects in FY94 and four more in FY95. As a result, annual disbursements under the investment credits are increasing and by May 31, 1995 reached US$ 39.8 million. The percentage of the total investment portfolio which has been disbursed remained constant in FY94 and FY95, at about 14 percent (low because most of the portfolio is under three years old). In FY95, disbursements for the structural adjustment credits have also remained constant, as compared to FY94, at about US$150 million. 2. As of March 31, 1995, the disbursement lag for the investment portfolio was about 17 percent'. To address issues associated with slow disbursements, during the past twelve months the disbursement officer visited Zambia more regularly, the Resident Mission appointed a local procurement/disbursement analyst and dormant Special Accounts were reactivated. As of March 31, 1995, only two Special Accounts remained inactive compared to seven in January 1994. 3. For the projects disbursing at a slower pace than originally estimated, the status is as follows: Petroleum Rehabilitation (C2621) Not yet effective; effectiveness conditions expected to be fulfilled by July 1995. PIRC II (C2523) Second tranche release is under management review and is expected to be recommended shortly to the Executive Directors. Financial and Legal Management Bids for the largest procurement packages, accounting for Upgrading (C2535) more than one third of the total IDA financing, were evaluated in March and are expected to be signed shortly. Transport Engineering (C2515) Nearly all contracts have recently been cleared by the Bank, and the Government has strengthened project management by appointing the Executive Director of the National Road Board as the Project Coordinator. Coffee II (C 1743) and Ag. Res. & The disbursement level is expected to increase with the Ext. (C 1746) integration of both operations into the Agricultural Sector Integrated Project (ASIP). 4. Zambia has made a commendable effort in bringing overdue audits of project accounts, special accounts, and statement of expenditures up-to-date, and currently has one of the best records for audits in the region. I For all active investment projects comprising the Bank's country portfolio, the percentage difference between actual disbursements and the cumulative disbursement estimates as given in the 'Revised Forecast' in the MIS system.     :.