Ghana - Urban Environmental Sanitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6745-GH 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 47.8 MILLION FOR AN URBAN ENVIRONMENTAL SANITATION PROJECT TO THE REPUBLIC OF GHANA MARCH 4, 1996 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 (as of December 14, 1995) Currency Unit = Cedi US$ 1.00 = Cedis 1,425.00 Cedis 1 million US$ 701.75 SDR 1.0 = US$1.485 ABBREVIATIONS AND ACRONYMS EPA Environmental Protection Agency ERR Economic Rate of Return GDP Gross Domestic Product GOG Government of Ghana GNP Gross National Product MA Metropolitan or Municipal Assembly MLGRD Ministry of Local Government and Rural Development MWH Ministry of Works and Housing NEAP National Environmental Action Plan O&M Operation and maintenance TSC Technical Services Centre (MWH) UESP Urban Environmental Sanitation Project FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY REPUBLIC OF GHANA URBAN ENVIRONMENTAL SANITATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Ghana Implementing Agencies: Ministry of Local Government and Rural Development (Lead Ministry); Technical Services Centre of Ministry of Works and Housing; Metropolitan and Municipal Assemblies of Accra, Kumasi, Shama-Ahanta East, Tema, and Tamale Beneficiaries: All residents of the five cities (total about 3.5 million); sanitation and upgrading would target some 500,000 low-income people Poverty Category: Included in Program of Targeted Interventions Credit Amount: SDR 47.8 million (US$71.0 million equivalent) Terms: Standard IDA terms with 40 years maturity Financing Plan: IDA US$71.00 m. Gov't US$ 8.94 m. Local Gov'ts & Benef. US$ 5.32 m. Co-Financing* US$ 4.01 m. *Nordic Development Fund ($3.40 m.); Netherlands ($0.60 m.) Economic Rates of Return: Calculated for drainage component (35 percent of project cost). Accra Odaw: 43% Accra secondary drains: 32% Kumasi: 48% Not applicable to other components Staff Appraisal Report: Report No. 15089-GH Map Number: IBRD No. 27584 Project ID No.: 973 This document has a restricted distribution and may be used by recipients only in the perfornance of their official duties. Its contents may not otherwise be disclosed wiuhout World Bank authorization.   MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF GHANA FOR AN URBAN ENVIRONMENTAL SANITATION PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed credit to the Republic of Ghana for SDR 47.8 million, the equivalent of US$71.0 million, on standard IDA terms with 40 years maturity, to help finance the Urban Environmental Sanitation Project. Parallel co-financing of about US$4.0 million equivalent is expected from the Nordic Development Fund and the Government of the Netherlands. The Government of Ghana (GOG) would contribute about US$8.9 million equivalent, and the participating Metropolitan and Municipal Assemblies would contribute about US$3.5 million equivalent. 2. Sector Background About half of Ghana's total GDP is non-agricultural, in industry and services. These largely urban-based sectors of the national economy have been the most dynamic. Between 1980 and 1994 the industry and services sectors grew on average by about four percent and seven percent per year respectively, while the agriculture sector grew at about one percent. The achievement of rapid economic growth over the medium term will depend in large part on improved agricultural production and export performance. At the same time, growth of agriculture is likely to foster the development of urban-based activities linked to it. These include the processing of agricultural and forestry products, the transfer and storage of farm outputs, and the provision of commercial and financial services. Ghana's current drive to promote new investment, both foreign and domestic, would also contribute to the development of new manufacturing enterprises (catering to both the export and domestic markets) in urban areas. 3. Comparative country data show that economic development and urban growth are closely linked, that per capita incomes are consistently higher in urban areas, and that urbanization increases with economic growth more rapidly at lower income levels than at higher ones. Ghana, with a GNP per capita of about US$430 (1994) and about one-third of its population urbanized, has a substantially smaller portion of its national economy in non-agricultural sectors than other countries with similar income and urbanization levels. This suggests that, as Ghana's national economic performance continues to improve, the share of urban-based economic activities is likely to expand considerably faster than in the past. 4. Economic growth in Ghana is bringing about a transition from a predominantly rural to a quasi-urban society. Over the past three decades, the urban population, estimated at 5.5 million in 1993, has consistently grown at a higher rate than the national population. The level of urbanization--the proportion of total population living in urban  2 areas--rose from 26 percent in 1965 to 35 percent in 1993. At the current urban growth rate of 4.2 percent per year, the urban population would double in 17 years. 5. In Ghana's five major cities, about 40 percent of the population pays to use public latrines that are unclean, inconvenient and lack privacy; 15 percent use bucket latrines which have been banned because of the health hazard to conservancy workers; 40 percent use household water closets that usually overflow to street drains; and 5 percent use traditional or improved pit latrines. Few schools have operational sanitation facilities, and few children are taught or allowed to use public facilities. At present, most fecal waste generated in Ghana's urban centers is discharged untreated into city streets and drains, and many neighborhood "sanitary sites" (plots where households take their solid waste and where public latrines are located) become focal points for disease transmission. Currently only about half of the solid waste generated within Ghana's five largest cities is collected and disposed in dumps outside neighborhoods. There are no proper landfills for solid waste disposal. Disease transmission and flooding due to inadequate drainage in densely populated areas cause huge economic losses. 6. Data from the Ghana Extended Poverty Study (1995) indicate that there were about 1.46 million poor people in urban areas in 1992. This breaks down into about 350,000 in Accra and about 1.11 million in other urban areas. The gap between urban and rural poverty appears to be much smaller than suggested by earlier profiles. In 1992 the incidence of poverty was 33 percent in the rural forest area and 38 percent in the rural savannah area. The percentage of poor people in urban areas was 23 percent in Accra and 28 percent in other cities and towns. While it is important for Ghana to focus on the alleviation of rural poverty, it is critical to simultaneously address urban poverty issues and take measures to address them before they assume unmanageable proportions. 7. The urban poor tend to cluster in identifiable areas of Ghana's major cities. Various studies have shown that lower-income urban areas have the highest densities, the lowest social indicators (education and health), and the lowest levels of infrastructure and services. They also account for the vast majority of all epidemic and preventable diseases. A 1991 survey of services in 17 lower-income communities Accra yielded the following profile: (a) Secondary roads are few or non-existent. Many sections of the communities are inaccessible by vehicle. About half of the existing secondary roads are rated "bad". (b) In 10 of the 17 communities less than half of the houses had piped water connections. The quality and reliability of the water supply is inadequate. (c) Drainage is poor, with numerous localized flooding problems. The few existing drains tend to be improperly built and clogged by rubbish and silt. (d) Sanitation is very bad, with few household toilets or latrines. Public toilets are in disrepair. Night soil is dumped in and around the communities and flows into drains. (e) Solid waste collection is erratic or non-existent. There are few communal rubbish containers; sometimes these are not emptied regularly. Open rubbish dumps are common. (f) Most houses have electricity, but quality is substandard (low voltages and interruptions). Street lighting is non-existent or inadequate.  3 8. The most important government policy related to urban development is the decentralization program mandated by the 1992 Constitution and the Local Government Act (No. 462) of 1993. Ghana's local government Assemblies, which are corporate bodies, are responsible for providing basic services and local infrastructure. Assemblies are composed of two thirds elected and one third appointed members. Their Chief Executives are appointed but must be approved by two-thirds of Assembly members. An Urban Strategy Review carried out jointly by the Government and the World Bank in 1993-94 concluded that: (a) continued improvements in basic urban infrastructure and services (roads, water supply, telecommunications, drainage, sewerage) are needed to increase the productivity of urban households and firms, but investments must be carefully selected; (b) basic infrastructure and services for the urban poor can be improved through targeted community upgrading programs; (c) urban service delivery should be made more efficient and sustainable through competition, more reliance on commercial principles, private sector participation, and attention to demand; (d) further efforts are needed to obtain long-lasting improvements in revenue mobilization by local Assemblies; (e) sanitation and waste management are the highest priority urban environmental problems; and (f) impediments to land transfer, land titling and private land development need to be removed. 9. Project Rationale. The project would deal with basic services whose deficiencies constrain urban economic development and depress living conditions for large numbers of people, especially the poor. Environmental sanitation has received relatively little attention, while other aspects of urban development--such as transport and water supply-- have been allocated substantial funding from the GOG and the donor community. Ghana's established decentralization policy clearly assigns to local governments the responsibility to provide environmental sanitation services. It is therefore an appropriate time to begin building up the capacity of the Assemblies to deal with these serious problems. The GOG's ten year (1991-2000) National Environmental Action Plan (NEAP) includes urbanization as one of four main areas for intervention. Sanitation and waste disposal are highlighted as major issues. The NEAP calls for the implementation of urban waste management and sanitation projects as a top priority; the improvement of urban drainage in coastal cities; the establishment and implementation of environmental and health standards; and the adoption of effective land use control mechanisms. The project is supported by prior, recent sector work (see paragraph 8). 10. Project Objectives. The objectives of the project are: (a) to promote productivity and raise living standards in Ghana's major cities, especially for lower-income people, by improving drainage, sanitation, and solid waste services; (b) to help establish better institutional and financing mechanisms and more effective policy frameworks so that improvements are sustained over time; and (c) build up the capacity of the Metropolitan and Municipal Assemblies (MAs) to manage urban environmental sanitation services. 11. Project Description. The project would cover Ghana's five major cities (Accra, Kumasi, Sekondi-Takoradi, Tema, and Tamale), which have a combined population of about 3.1 million. The project would have five main components: (a) storm drainage; (b)  4 sanitation; (c) solid waste; (d) upgrading of low-income urban areas; and (e) capacity- building. Physical components represent around 83 percent of total project costs; capacity-building, design, and supervision services the other 17 percent. The drainaze component would improve primary and secondary drains to alleviate chronic flooding problems in central business areas of Accra, Kumasi and Sekondi-Takoradi. The sanitation component would cover all five cities and include high-priority investments in household, school, and public sanitation facilities as well as septage treatment and disposal facilities. Emphasis would be placed on strengthening the city governments' capacity to plan and manage sanitation services while contracting with private providers for most construction, operation, and maintenance. Assistance in solid waste would cover the development of new landfill sites in Kumasi, Sekondi-Takoradi, and Tamale to replace exhausted open dumps. The project would also provide financial and technical assistance to privatize refuse collection and equipment maintenance in all the cities. The community upgrading component would cover seven lower-income areas in Accra, Kumasi, and Sekondi-Takoradi. Upgrading would include drainage, water supply, sanitation, solid waste, roads, paths, and street lighting. The upgrading component (expected to benefit around 265,000 people) is being undertaken with active community participation in preparation and implementation. The project's capacity-builing component would provide technical assistance, training, and equipment to improve the ability of the five participating MAs to manage basic services. Technical assistance would emphasize cost accounting of waste management, contract management, and municipal finance, especially revenue collection. The project would also seek to improve the capacity of central agencies such as the Ministry of Local Government and Rural Development (MLGRD), the Ministry of Works and Housing (MWH), and the Environmental Protection Agency (EPA) to set policies and standards for waste management and provide support to local governments. Finally, the project would include a small amount of financing to continue the modernization of the land titling system begun under the IDA-assisted Urban II project. 12. Project Financing. Total project cost is estimated at US$89.3 million. IDA would provide a credit of US$71.0 million (80 percent). The GOG would finance about 10 percent and the participating MAs and beneficiaries 6 percent. The MAs' contribution is estimated at about US$3.5 million, mainly representing a 10 percent share of the upgrading programs in Accra, Kumasi, and Sekondi-Takoradi and half of the privatized waste collection. The Nordic Development Fund and the Government of the Netherlands would provide a total of about US$4.0 million equivalent in parallel co-financing. 13. Project Implementation. The Ministry of Local Government and Rural Development (MLGRD) would be the lead sector Ministry for the project. MLGRD would head the Project Coordination Committee which would include the Ministry of Works and Housing (MWH), the five MAs, and the Environmental Protection Agency (EPA). MLGRD's existing Local Government Support Unit would oversee implementation of the project. The Technical Services Centre (TSC) of MWH would assist MLGRD with contract administration, coordination, monitoring, accounting, and procurement. TSC has served as the implementing agency for several Bank-funded  5 projects, including two under implementation (Urban II and Local Government Development). TSC combines some of the positive features of a well-functioning public sector agency (a small staff that focuses on managing contracts with private providers) with those of a more efficient private organization (nearly half its professional staff are privately contracted). MLGRD and TSC would manage the project's larger and more complex components (storm drainage, landfills, project-wide capacity building). To strengthen capacity at the local government level, the Metropolitan and Municipal Assemblies (MAs) would manage the small and medium size components (e.g., community upgrading and sanitation). The MAs would sign contracts for the components under their responsibility and would take the lead in handling procurement, contract supervision, and financial management of these components. TSC would help train the MAs to perform these functions and would support them during the initial learning period of actual implementation. All the MAs have Technical Departments and Waste Management Departments or Units which would be strengthened. Each MA would be required to put in place a technical/financial staff of about five to eight persons. Gaps in the MAs' existing staff would be filled with contract staff. Manuals are being prepared for the project dealing with procurement, disbursement, and financial accounting. Ghana has a sufficient number of qualified civil works contractors and consultants for the project. The performance of local civil works contractors under IDA- assisted projects has been generally good. 14. Lessons Learnedfrom Previous IDA-Supported Operations. (a) Decentralized service provision: local governments tend to be more efficient and responsive in providing basic urban infrastructure and services than central government agencies. Wherever possible, the capacity of local authorities to shoulder these responsibilities should be built up. This is one of the project's key objectives. (b) Commercialization and competition: world-wide experience shows that infrastructure and services can be provided more efficiently through market-oriented mechanisms. The project aims to improve the provision of basic services through cost recovery and competitive arrangements, including private sector participation. (c) Institutional issues: previous operations have shown that institutional aspects need to receive adequate, early attention. Institutional arrangements have been a major subject of discussion and analysis throughout the project preparation period (including preparation of an Institutional Options paper and a workshop on institutional arrangements at pre-appraisal). (d) Client ownership: the MAs, as the key clients of the project, have played a leading role in project identification and preparation. (e) Operation and maintenance: in preparing the project, the ability and motivation of the responsible agencies to mobilize funds for operation and maintenance, through user fees and general revenues, has been an important determinant of the scale of new investments. (f) Demand orientation: the preferences and willingness/ability to pay of prospective beneficiaries are being taken into account in project design. Demand is also guiding the design of the sanitation and solid waste components, for which different levels of service at varying costs would be provided.  6 15. Rationale for IDA Involvement. The project supports four of the five objectives of the Bank's Country Assistance Strategy for Ghana (discussed by the Executive Directors on May 9, 1995): (a) poverty reduction, by improving services which have a high impact on the productivity and welfare of the urban poor both city-wide and in lower-income areas; (b) capacity-building, by strengthening the ability of the Metro and Municipal Assemblies to plan and manage the delivery of basic services; (c) private sector development, by promoting the contracting out of various waste collection and sanitation services; and (d) environmental improvement, by directly addressing the highest priority urban environmental problems through policies, institutional structures, and physical investments. The project is a logical next step for continued IDA support to the urban sector in Ghana. IDA remains the largest provider of external assistance for urban development in the country. Through its involvement since 1985 in several major urban projects, the World Bank has established an ongoing partnership with the institutions involved in urban development. This relationship is alleviating infrastructure deficits, improving the policy environment, and building capacity. 16. Agreed Actions. At negotiations, agreement was reached on credit covenants requiring (a) the issuance of regulations and by-laws providing an enabling environment for financially accountable and semi-autonomous Waste Management Departments to function in all five cities; (b) actions by each MA to increase own source revenue collection in real terms during each year of the project; (c) independent performance monitoring of waste management operations in the five cities; and (d) allocation by each MA of appropriate funds for waste management in their budgets. In addition, Government agreed to establish a mechanism for formalizing the MAs' obligations under the project through agreements between the central government and the MAs. Credit effectiveness would be conditioned on (a) MLGRD issuing a directive to the five MAs requiring them to establish separate budget lines for waste management and drain maintenance; (b) initial deposit of counterpart funds in the main project account and the MAs' sub-project accounts; (c) the MAs filling all of the required contract staff positions; (d) adoption of the Project Implementation Manual, satisfactory to IDA; and (e) execution of grant agreements between the central government and each MA. 17. Poverty Category. The project's improvements in urban drainage, sanitation, and solid waste services would benefit all income groups in the participating cities, which account for about 59 percent of the total urban population. Because the urban poor in Ghana suffer disproportionately from ill health, mortality, and low productivity caused by inadequate environmental sanitation, systematic improvements in the provision of these services would provide substantial benefits to the poor. The project is included in the World Bank's Program of Targeted Interventions. About 30 percent of the project's total cost would cover components that specifically target the poor (community infrastructure upgrading, low-cost sanitation) or from which the poor are more likely to benefit than the overall population (solid waste collection). The community upgrading component would directly benefit about 265,000 residents of predominantly low-income urban communities which have severe deficiencies of basic infrastructure. The sanitation component would provide better services to around 400,000 additional lower-income urban dwellers.  7 18. Environmental Aspects. The project's environmental category is "B". The project would improve environmental conditions in urban areas by providing safer removal, treatment, and disposal of liquid and solid wastes. The main environmental issue is the protection of ground and surface water from contamination by sewage, septage, and refuse leachate. Environmental impact assessments are being carried out as part of the design of the drainage works, sanitary landfills, and liquid waste treatment facilities. Treatment and disposal facilities as well as any drainage outfalls would incorporate design features for mitigating risks to ground and surface waters. Local residents have been or are being consulted regarding site selection. Sites identified are located away from built-up urban areas and have favorable topographic characteristics. Geophysical studies are being done to confirm the environmental suitability of the sites. The preliminary design studies for primary drainage and upgrading include assessments of any relocation that may be needed. Relocation can largely be avoided by seeking drainage and road alignments that do not displace people. If any relocation is needed, it is expected to be on a small scale. World Bank guidelines on participation and compensation would be followed. 19. Program Objective Categories. Besides its poverty alleviation aspects, the project would promote private sector development by supporting private contracting of construction, waste collection, operation and maintenance of facilities, and surveying of properties for issuance of land titles. In addition, the strengthening of policy-making and implementation capacity in MAs and sectoral ministries would contribute to the broader objective of improving public sector management. 20. Participation. One of the project's main objectives is to build the capacity of the Metropolitan and Municipal Assemblies to provide environmental sanitation services. Accordingly, a major concern of the project preparation process has been to foster ownership of the project by the participating MAs and other involved institutions (e.g. TSC and MLGRD). The client consultation and participation process has consisted of several formal activities linked by continuous informal exchanges. Through appraisal, four major events took place in which major stakeholders participated: (a) an initial preparation workshop in October 1994; (b) a municipal finance workshop in February 1995; (c) a workshop on project implementation in April 1995; and (d) a workshop on the privatization of solid waste collection in July 1995. For preparation of the community infrastructure upgrading component, a Ghanaian research institute conducted focus group discussions with local residents, household surveys, and workshops with community leaders to identify priorities, determine willingness to pay for improvements, and reach consensus on the scope of improvements. Community participation would extend, through one or more local organizations, to operation and maintenance.  8 21. Project Benefits. Health: The project's improvements in drainage, sanitation, and waste management would contribute to better health and thereby raise the productivity of all urban residents, but especially the poor, in the five cities. Research shows that a majority of significant diseases in Ghana's urban areas are linked to poor housing and ventilation, an unsanitary environment, contaminated drinking water, poor drainage, and lack of facilities for waste disposal. The higher occurrence of disease in low-income areas means greater loss in work days and a higher outlay of expenditure for medical attention for the poor than for those living in better physical environments. It has been clearly established that the prevention of diarrhea, intestinal parasites, and vector-borne diseases, which affect hundreds of thousands of persons each year, requires improved water supply, sanitation, drainage, and solid waste collection. However, the health benefits of such infrastructure interventions typically are not quantifiable due to the methodological problems of attributing outcomes to separate factors. 22. The sanitation component would provide about 5,500 household, 300 school and 65 public sanitation facilities in the five participating cities, from which some 400,000 people would benefit. While this represents only 15 to 20 percent of the total number of potential beneficiaries, the project would also lay the foundation for reversing the trend in environmental health degradation by establishing the public and private support structures needed to construct and maintain these facilities on a large scale. In the case of school facilities, physical works would be complemented with teacher training in the use of the facilities and practical ways to improve personal hygiene and encourage environmental awareness among children. More generally, each of the cities would benefit from a new septage treatment facility that would allow wastes from household and public facilities to be properly disposed of rather than dumped into local street drains and watercourses. 23. The project would support measures to improve the efficiency and coverage of solid waste collection through private contracting, thereby removing a greater share of the waste from neighborhoods, storm drains, and local watercourses. The project would also finance new sanitary landfills in three cities, which would benefit their entire populations. The new facilities would replace the existing, nearly exhausted dump sites, provide environmentally safe disposal, and permit the elimination of many neighborhood refuse dumps. These measures would eliminate breeding grounds for pests (rats, flies and cockroaches) and focal points for excreta related diseases (as many people, especially children, use local dump sites for defecation). The assistance to be provided under the project for privatized solid waste collection is expected to increase the efficiency of this service. No precise data are available on the actual costs per ton of solid waste collection in Ghana's main cities. However, the inefficiency of present services is evident in low utilization rates of municipal collection equipment, overstaffing, and cumbersome procedures. Data from other countries suggest that competition encourages the public sector to significantly improve its efficiency and to lower costs. Monitoring systems would be introduced under the project to quantify the performance of traditional public sector collection as compared with private contractors.  9 24. Flood abatement: The project's primary and secondary storm drainage improvements aim to reduce the incidence and severity of flooding in dense, flood-prone central city areas. The health dimensions of poor drainage range from nuisances such as bad odors to serious problems like excreta-related diseases, malaria, schistosomiasis, and filariasis. Apart from their contributions to improved health, the drainage works would generate other economic benefits in the form of: (a) reduced damage to properties; (b) decreased loss of industrial and commercial turnover; (c) reduced losses of stocks of goods; and (d) avoidance of damage to infrastructure. In Accra, the project would have an immediate impact on some 1,300 properties housing at least 17,000 people which are flooded nearly every year. It would also benefit several thousand other structures which are flooded within 5 to 15 year cycles. Moreover, it would provide large benefits to 71 industrial properties that are flooded within a 15-year period and 98 industries that would be affected by a major 50-year event. In Kumasi, the project would directly benefit 1,290 shops and around 25,000 traders in the Central Market and nearby areas which experience five year cycle floods. 25. Economic analysis shows that the drainage investments (35 percent of total project costs) would be amply justified. Economic rates of return have been calculated for the Kumasi and Accra drainage works. Results are summarized in Schedule B. The Kumasi estimates were carried out in late 1995 as part of preliminary design work, with benefits quantified for the first three categories mentioned above. The ERRs are 48 percent for the full improvement scheme and 36 percent for the prioritized improvement scheme (which has somewhat lower capital costs, higher maintenance costs, and slightly lower benefits). The net present values of these schemes are US$31.8 million and US$26.9 million respectively. The ERRs for Accra come from the 1991 drainage master plan studies, upon which the UESP investments are based (new preliminary engineering studies are currently underway, and these will include an updated economic analysis). The ERRs for Accra, using all but the last of the above benefits categories, are 43 percent for the Odaw channel enlargement and 32 percent for the Priority I secondary drains. Net present values are Cedis 6.3 billion and Cedis 5.9 billion respectively (1991 values). The high ERRs obtained in 1991 for Accra are expected to be confirmed by the updating studies presently being carried out. Details are presented in Annex B. 1. 26. Cost effectiveness has been a major consideration in the choice of technologies for the project. Of the US$8.5 million allocated for sanitation in the project, 79 percent (US$6.8 m.) is devoted to household sanitation with VIP latrines and on-site sanitation facilities in schools and commercial areas. VIP latrines, which cost US$20 to US$60 per capita, are clearly the least-cost solution for medium-density areas. Simplified piped sewerage in similar areas would cost at least twice as much. For solid waste disposal, the selected technology is landfill, which is the lowest-cost, environmentally acceptable method. Landfill costs roughly US$3-5 per metric ton, compared with tidal land reclamation ($5-15/m.t.), composting ($5-20/m.t.), and incineration ($40-60/m.t.). Composting is often thought to be financially viable, but experience in Ghana and similar countries shows that it is not, due to insufficient demand.  10 27. Strengthening of institutional and financial capacity to operate and maintain facilities would prolong their useful life and save on repair and rehabilitation costs. The project's support for improved local revenue mobilization, cost recovery through user fees, and privatization of services would provide more resources for the provision of basic infrastructure and services and help reduce the MAs' reliance on the central government budget. Greater local government self-reliance and better financial management would establish a basis for multi-year planning and budgeting, which would help to make the use of scarce resources more efficient. 28. Project Sustainability. The project would provide financial and technical support to build up the MAs' capacity to finance, operate and maintain sanitation facilities and services. To achieve greater efficiency, MAs would be helped to reduce their use of in- house staff and to contract an increasing share of operation and maintenance (O&M) functions--such as drain cleaning, vehicle maintenance, public toilet operation, and refuse collection--to the private sector. The project would support initiatives of the MAs to increase the funding of O&M through both user fees and general revenues. It has been agreed with the MAs that user fees should finance 100 percent of the O&M costs of household latrines, public toilets, piped sewerage, and septage removal. The costs of solid waste collection would be financed by a combination of user fees and general revenues. Precise shares are to be determined according to the characteristics of the areas served. The operating costs of solid waste landfills and septage treatment facilities may in principle be covered largely through tipping fees paid by private waste haulers. However, this requires a licensing and enforcement capability that will take a long time to establish in Ghana. In the short to medium term, a large share of the recurrent costs of these facilities will have to be paid from general revenues. Roads and drains are public goods that must be financed primarily through general revenues. Assembly officials recognize that they must begin to set aside increasing amounts of general revenues for the recurrent costs of waste management and for the upkeep of facilities and equipment (see Risks, below). Prior to credit effectiveness, MLGRD would issue a directive to the five MAs requiring each of them to create separate budget lines for waste collection and disposal and maintenance of storm drains. The MAs have agreed to allocate, as of the third year of implementation, appropriate amounts, to be determined with IDA, in these budget categories. 29. Risks. Project implementation could be delayed by the weak capacity of the Metropolitan and Municipal Assemblies. Sanitation, refuse and drainage are most efficiently managed at the local government level. Thus, the incorporation of the MAs as implementing agencies is an essential objective, in order to build their capacity to assume responsibility for these services. The project would attempt to minimize the risks associated with the MAs' weak capacity by: (a) limiting the numbers and sizes of components that each MA would manage; (b) requiring each MA to have a basic core staff assigned to the project; (c) providing support for the hiring of contractors to help with technical and financial tasks; (d) ensuring that the central implementing agency supervises and monitors the MAs adequately; and (e) providing substantial training to the  11 MAs' officials and staff. An implementation delay of one or two years would not jeopardize the benefits of the investments. 30. There is a risk that counterpart funds for investment may not be available as required, either from the central government or the MAs. While this has not been a serious problem in past IDA-supported urban projects in Ghana, it continues to be a general issue for the IDA portfolio. It would be addressed by keeping the required counterpart fund contribution modest (10 percent for the GOG and 3.9 percent for the MAs as a group). The GOG and MAs' combined contribution would reach a maximum of US$3 to 4 million per year during the three peak years of project implementation. This represents only about 1.3 to 1.8 percent of the national 1996 development budget. 31. The project's impact could be reduced if cost recovery and general local revenue mobilization are not be implemented effectively, resulting in inadequate funding of operation and maintenance. Household, school, and public sanitation facilities pose a low risk, as these would be provided on a demand basis and would depend largely on direct user maintenance (except public facilities which would be operated on franchise). Drainage also has a low risk of maintenance failure. Sensitivity analysis (see Schedule B) indicates that primary and secondary drainage would provide high economic benefits even if maintenance is well below the optimum. This probably applies also to the sanitary landfill facilities, whose ideal O&M costs are considerable. The septage treatment facilities would be simple, modest-sized stabilization ponds with O&M costs that are easily absorbed by the cities' budgets. The risk of inadequate O&M funding is being addressed through: (a) a credit covenant requiring the MAs to allocate O&M funds to separate program budget lines for waste management and drainage; (b) an intensive effort to build ownership of the project on the part of the Metropolitan and Municipal Assemblies during preparation and up to effectiveness; and (c) the provision of a considerable amount of capacity-building relating to O&M during implementation. Recommendation 32. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve it. James D. Wolfensohn President Attachments Washington, D.C. March 4, 1996  12 Schedule A. I Page 1 of 2 REPUBLIC OF GHANA URBAN ENVIRONMENTAL SANITATION PROJECT Summary of Project Costs Base Cost With Contingencies Project Components (US$ Million) (US$ Million) Base Local Foreign Total Local Foreign Total Cost % Components to be Implemented/ Procured by Central Government A. Primary & Secondary 7.68 17.92 25.60 9.38 21.89 31.27 34.06 Drainage Works B. Landfill & Septage 3.06 7.14 10.20 3.70 8.63 12.33 13.57 Treatment Facilities C. Disposal Equipment 0.00 1.56 1.56 0.00 1.66 1.66 2.08 D. Institutional Strengthening 2.28 1.72 4.00 2.53 1.91 4.44 5.32 E. Vehicles & Equipment for 0.22 1.10 1.31 0.23 1.16 1.39 1.74 Inst. Strengthening F. Training 0.48 0.20 0.68 0.53 0.23 0.76 0.90 G. Design & Supervision 1.07 1.61 2.68 1.18 1.76 2.94 3.57 H. Land Titling 0.00 0.52 0.52 0.00 0.57 0.57 0.69 1. Studies 0.25 0.25 0.50 0.27 0.27 0.55 0.67 BASE COST 15.03 32.02 47.05 Physical Contingencies 1.07 2.51 3.58 Price Contingencies 1.71 3.56 5.28 SUB-TOTAL 17.82 38.09 55.91 17.82 38.09 55.91 62.60 Components to be Implemented by Metropolitan/ Municipal Assemblies A. Community Infrastructure 4.67 7.01 11.68 5.71 8.56 14.27 15.54 Upgrading B. Household Sanitation 1.84 1.22 3.06 2.24 1.50 3.74 4.07 Facilities C. Public & School Sanitation 1.53 1.02 2.55 1.87 1.25 3.12 3.39 Facilities D. Septage Treatment Facility 0.32 0.48 0.80 0.39 0.59 0.98 1.06 E. Sewerage Rehabilitation 0.32 0.38 0.70 0.39 0.46 0.86 0.93 F. Community Water 0.10 0.15 0.25 0.12 0.18 0.31 0.33 G. Design & Supervision 1.47 0.00 1.47 1.63 0.00 1.63 1.96 H. Institutional Strengthening 3.90 0.00 3.90 4.33 0.00 4.33 5.19 1. Solid Waste Collection 3.45 0.00 3.45 3.83 0.00 3.83 4.59 J. Abattoir 0.10 0.15 0.25 0.12 0.18 0.31 0.33 BASE COST 17.70 10.41 28.11 Physical Contingencies 0.89 1.04 1.93 Price Contingencies 2.05 1.27 3.33 SUB-TOTAL 20.64 12.72 33.36 20.64 12.72 33.36 37.40 Total Base Cost 32.73 42.43 75.16 100.00 Total Physical Contingencies 1.96 3.55 5.51 Total Price Contingencies 3.77 4.83 8.60 TOTAL PROJECT COST 38.46 50.81 89.27 38.46 50.81 89.27  13 Schedule A.2 Page 2 of 2 Financing plan Including Contingencies Financiers Local Foreign Total (US$ Million) IDA 28.80 42.20 71.00 Co-Financing 1.77 2.23 4.01 Government 3.18 5.76 8.94 Metro/Municipal Assemblies 2.53 0.92 3.45 Beneficiaries 1.12 0.75 1.87 TOTAL 37.41 51.86 89.27  14 Schedule B. I Page 1 of 3 REPUBLIC OF GHANA URBAN ENVIRONMENTAL SANITATION PROJECT Economic Analysis Accra and Kumasi Drainage: Benefits and Costs Kumasi Kumasi Accra Odaw Accra Priority I Recommended Prioritized Channel Secondary Scheme Scheme Enlargement Drains 1995 US$ m. 1995 US$ m. 1991 Cedis m. 1991 Cedis m. Present Value of Benefits 43.03 38.54 7,856 8,983 Present Value of Costs 11.26 11.63 1,502 3,112 Net Present Value 31.77 26.91 6,354 5,871 Benefit-Cost Ratio 3.82 3.31 5.23 2.89 Economic Rate of Return 47.8% 36.4% 43% 32% Main Assumptions Discount rate = Kumasi 12 percent (1995). At the time the Accra study was done in 1991, 10 percent was the norm. However, the updated study now underway ( to be completed by March 1996) will use the current standard 12 percent. The variations between the discount rates is slight and does not alter the thrust of the findings of economic viability. Real exchange rate constant. Sensitivity Analysis Kumasi: Assume both a decrease of benefits by 20 percent and an increase of costs by 20 percent. ERR then becomes 33.6 percent for Recommended Scheme and 24.4 percent for Prioritized Scheme. Accra: Sensitivity analysis not performed in 1991 but will be done in 1996 updated study. Switching Values Kumasi: For NPV to become negative benefits would have to decrease by 74 percent (Recommended Scheme) or 75 percent (Prioritized Scheme). Accra: Switching values not calculated in 1991 but will be done in 1996 updated study. Nature of Benefits Surveys were conducted in Accra and Kumasi to inventory structures, contents, and economic activities affected by cycles of flooding. Using these data, flood incidence figures, and topographic maps, estimates were made of the monetary values of benefits due to flood alleviation in the following categories: (1) residential and commercial contents damage; (2) building fabric damage; and (3) curtailment of industrial production and commercial trade. These benefits alone produce the high ERRs reported above. Major non-quantified benefits are: (1) reduced deaths and illnesses; (2) reduced damage to infrastructure; (3) lower costs associated with traffic disruptions; and (4) indirect or multiplier costs averted (e.g. extra economic costs due to utility disruptions) Main Beneficiaries Businesses, small-scale traders, and residents of flood-prone areas.  15 Schedule B.2 Page 2 of 3 Financial Summary Project Costs Implementation Period (US$000) 1996 1997 1998 1999 2000 2001 2002 Investment Costs 2.31 5.31 24.37 31.17 19.01 5.69 1.41 Recurrent Costs - - 0.04 0.11 0.65 1.72 1.75 Total 2.08 5.08 24.18 31.05 19.43 7.18 2.93 Financing Sources (Percentages) IDA 83 72 81 82 79 68 82 Co-Financiers 7 15 3 3 3 11 3 Central Government 2 3 11 11 11 7 11 Local Government - 4 4 3 5 7 3 Beneficiaries 8 6 1 1 2 7 1 Total 100 100 100 100 100 100 100 Note: Recurrent costs are expected to remain at 2002 level after implementation period.  16 Schedule B.3 Page 3 of 3 Monitoring and Performance Indicators Sanitation Facilities No. of Facilities No. of Beneficiaries 1. Household latrines 5,560 200,000 2. Public neighborhood facilities 85 80,000 3. School facilities 305 90,000 Delivery of Sanitation Services Number 1. Management intermediaries per city for household latrines and schools 2-3 per city 2. Active artisans building latrines 4-8 per city 3. Private operators for all public facilities 85 4. Cleanliness and working condition of public and school facilities sample to be checked quarterly 5. Cleanliness and working condition of household latrines sample to be checked quarterly Solid Waste Collection 1. New private collection contracts tendered competitively 2-3 per city 2. Full and timely payments to contractors by MAs as required to be established 3. Percentage of contract costs recovered from user fees as per contracts quarterly targets to be set 4. Cost per ton of waste collected quarterly targets to be set - WMDs' direct collection - Private contractors' collection 5. Percentage of generated waste that is collected quarterly targets to be set Drainage 1. Establishment of drain maintenance programs in each city as of year 2 2. Cleanliness of drains sample to be checked quarterly Waste Treatment & Disposal Facilities 1. Timely completion of construction as per implementation plan 2. Solid waste landfills % of waste reaching landfill; correct operation of facility 3. Septage treatment % of BOD removal Municipal Finances I. Annual growth of MAs' own source revenues in clI terms 10% if inflation less than 20% 7% if inflation 20-30% 5% if inflation over 30% 2. Ratios of billing to collection 50% in year 3; 80% in year 6 3. Improved accounting and budgeting annual review 4. Implementation of updated rate imposts for property taxes in the 5 cities as of year 2 of the project 5. Implementation of services or program budgeting systems in the 5 cities as of year 4 of the project Funding of Operation and Maintenance I. Establishment by each city of separate budget lines for O&M as of calendar 1997 2. Allocation of agreed amounts by each city for O&M in yearly budget targets to be set & monitored yearly or quarterly Institutional I. Establishment of fully accountable waste management departments in all by end of year 2 5 cities 2. Training of MA and other personnel as per annual training plan  17 Schedules C. 1. C.2 and C.3 Page 1 of 1 REPUBLIC OF GHANA URBAN ENVIRONMENTAL SANITATION PROJECT Cl: Allocation and Disbursement of IDA Credit Amount of Credit % of Expenditure to be Category (US$ million) Financed by IDA 1. Civil Works 49.85 100% of foreign expenditures 75% of local expenditures 2. Vehicles, Equipment, and 3.08 100% of foreign expenditures Spare Parts 90% of local expenditures 3. Consultant and TA Services, 9.25 100% of total expenditures Studies & Training 4. Operations (a) Refuse Collection 1.92 75% of total expenditures up to June 30, 1999; 50% of total expenditures up to June 30, 2001; and 25% thereafter (b) Others 0.42 90% of total expenditures 5. Refunding of PPF 1.50 (see DCA Section 2.02(d)) 6. Unallocated 4.98 TOTAL 71.00 C2: Procurement Methods Project Element Procurement Method N.B.F. TOTAL ICB NCB OTHER 1. Civil Works 42.99 20.44 3.74 -- 67.18 (IDA) (37.26) (16.20) (1.38) (54.83) 2. Equipment and Vehicles 2.88 -- 0.20 0.14 3.22 (IDA) (2.88) (0.20) (3.08) 3. Consulting Services -- -- 11.17 3.87 15.04 (IDA) (11.17) (11.17) 4. Operating & Maintenance Costs -- -- 3.83 -- 3.83 (IDA) (1.92) (1.92) TOTAL 45.87 20.44 18.95 4.01 89.27 (Of which IDA) (40.14) (16.20) (14.66) (0.00) (71.00) C3: Estimated IDA Disbursement Timetable (US$ million) 1996 1997 1998 1999 2000 2001 2002 Annual 1.9 3.8 19.9 25.6 14.9 3.8 1.0 Cumulative 1.9 5.7 25.6 51.2 66.1 70.0 71.0  Schedule D 18 Page 1 of 1 REPUBLIC OF GHANA URBAN ENVIRONMENTAL SANITATION PROJECT Timetable of Key Project Processing Events Time taken to prepare the project (identification to expected signing): 19 months Prepared by: Government with IDA assistance First IDA mission: July 1994 Appraisal mission departure: June 1995 Negotiations: January 1996 Planned effectiveness: June 1996 Relevant ICRs and PPARs: CR. 1564-GH Accra District Rehabilitation Project PPAR, June 30, 1994 CR. 1564-GH Accra District Rehabilitation Project ICR, July 1, 1993 This report is based on the findings of an appraisal mission in July 1995 and a post-appraisal mission in October 1995. The appraisal team comprised Alan Carroll (Sr. Urban Development Specialist and Task Manager), Robert Roche (Sanitary Engineer), Chris Banes (Consultant, Municipal Engineer), Godfrey Ewool (Civil Engineer), Alan Coulthart (Sr. Municipal Engineer), Jack Bahal (Sr. Finance Specialist), Sandra Cointreau-Levine (Consultant, Solid Waste Specialist), and Ato Brown (Sanitary Engineer). Farida Khan (Operations Assistant) prepared the financial tables and implementation schedule. Elizabeth Novatny and Perla San Juan (Staff Assistants) prepared the project documentation. James Wright is the Division Chief and Olivier Lafourcade is the Department Director for the operation.  1 9 Schedule E. I 9 ~~~~~~~~~~~~~Page I of 5 THE STATUS OF BANK GROUP OPERATIONS IN GHANA STATEMENT OF IBRD LOANS AND IDA CREDITS (As of December 31, 1995) Amount in US$ Million (less cancellation) Loan or Credit Fiscal Number Year Borrower Purpose Bank IDA Undisbursed 9 loans and 60 credits closed 186.22 1514.84 5.14 Of which SALs and Program Loansa Cr. 1393 83 Ghana Recon. Imports 40.00 0.00 F-0090 84 Ghana Export Rehab. 35.89 0.00 Cr. 1435 84 Ghana Export Rehab. 40.10 0.00 Cr. 1573 85 Ghana Recons. Import 60.00 0.00 A-0030 86 Ghana Recons. Import 26.97 0.00 Cr. 1672 86 Ghana Industrial Sector Adjust. 28.50 0.00 A-0130 86 Ghana Industrial Sector Adjust. 25.00 0.00 Cr. 1744 87 Ghana Education Sector Adjust. 34.50 0.00 Cr. 1777 87 Ghana SAC 1 34.00 0.00 A-0250 87 Ghana SAC 1 81.00 0.00 A-0251 88 Ghana SAC 1 15.00 0.00 Cr. 1911 88 Ghana Financial Sector Adjust. 100.00 0.00 Cr. 1911-1 89 Ghana Financial Sector Adjust. 6.60 0.00 Cr. 2005 89 Ghana SAC 11 120.00 0.00 Cr. 2005-1 90 Ghana SAC 11 5.70 0.00 Cr. 2005-2 91 Ghana SAC 11 8.30 0.00 Cr.2236-0 91 Ghana Private Invest. Promotion 120.00 0.00 Cr.2236-1 92 Ghana Private Invest. Promotion 6.10 0.00 Cr.2236-2 93 Ghana Private Invest. Promotion 6.54 0.00 Cr. 2345-1 94 Ghana Agricultural Sector Adj. 5.74 0.00 Cr. 2140 90 Ghana Education Sector Adjust. 11 49.94 0.00 Cr. 23452 95 Ghana Agric. Secal 5.00 0.00 Cr.23450 92 Ghana Agric. Secal 80.0 3.51 Sub-Total 934.88 3.51 Cr. 1847 88 Ghana Public Enterprise TA 10.50 2.60 Cr. 1854 88 Ghana Cocoa Rehabilitation 40.00 23.59 Cr. 1921 88 Ghana Mining Sector Rehab. 40.00 7.01 Cr. 1946 89 Ghana Telecommunications It 19.00 2.52 Cr. 1976 89 Ghana Forest Res. Management 39.40 13.62 Cr. 1996 89 Ghana Private SME Dev. 30.00 5.60 Cr. 2039 89 Ghana Water Sector Rehab. 25.00 12.31 Cr. 2061 90 Ghana Fifth Power (ECG) 40.00 10.31 Cr. 2109 90 Ghana VRA/Sixth Power 20.00 16.35 Cr. 2157 90 Ghana Urban 11 70.00 35.83 Cr. 2180 91 Ghana Agric. Diversification 16.50 13.89 Cr. 2192 91 Ghana Transport Rehabilitation II 96.00 35.00 Cr. 2193 91 Ghana Health & Population II 27.00 14.34 Cr. 2224 91 Ghana Econ. Management Support 15.00 5.50 Cr. 2247 91 Ghana National Agric. Research 22.00 18.20 Cr. 2318 * 92 Ghana Financial Sector Adjust. II 100.00 39.46 Cr. 2319 92 Ghana National Feeder Roads 55.00 43.12 Cr. 2346 92 Ghana Nat. Agric. Exten. 30.40 23.52 Cr.2349 92 Ghana Literacy & Functional Skills 17.40 9.58 Cr. 2426 93 Ghana Environmental Resource Mgt. 18.10 12.69 Cr. 2428 93 Ghana Tertiary Education 45.00 33.93 Cr. 2441 93 Ghana National Livestock Services 22.45 16.02 Cr.2467 93 Ghana National Electrification 80.00 79.53 Cr.2498 93 Ghana Urban Transport 76.20 78.63 Cr.2502 93 Ghana Enterprise Development 41.00 39.27 Cr.2508 93 Ghana Primary School Devt. 65.10 52.53 Cr.2555 94 Ghana Agricultural Sector Invest. 21.50 20.19 Cr.2568-0 94 Ghana Local Govemment Dev. 38.50 40.06 Cr.2604 94 Ghana Community Water & Sanitation 21.96 22.67 Cr.2665 95 Ghana Private Sector Development 13.00 12.77 Cr.2682 95 Ghana Thermal (P-VII) 175.60 185.39 Cr.2695 95 Ghana Educ/Voc.Tmg. 9.60 9.86 Cr.2713 95 Ghana Fisheries 9.00 9.26 Cr,2718 * 95 Ghana Priv.Sector Adj. 70.00 70.06 Cr.2743 95 Ghana Mining Sec.Dev. & Env. 12.30 11.80 Cr.27181 * 96 Ghana Priv.Sctr. Adjustment 4.80 4.76 Cr.2792 96 Ghana Non-Bank Fin. Ins.Assist. 23.90 23.78 TOTAL 186.22 2976.05 969.98 of which has been repaid 147.93 34.59 TOTAL now held by Bank and IDA 38.29 2941.45 Amount sold 0.38 of which repaid 0.38 TOTAL undisbursed 975.12 a Approved during or after FY80. b Not yet effective. * SALUSECAL  20 Schedule E.2 Ghana Page 2 of 5 Statement of IFC Investments (As of December 31, 1995) Amount in US$ millions Fiscal Obligor Busine.s Lba Equity Total Year 1985 Ashanti Goldfields Company Limited Mining and Extraction ofMetals and Other Ores 27.5 0 27.5 1988 Billiton Bogosu Gold Limited Mining and Extraction of Metals and Other Ores 0 1 1 1990 Alugan Company Limited Mining and Extraction of Metals and Other Otes 0.28 0 0.28 1990 Ashanti Goldfields Company Limited Mining and Extraction of Metals and Other Ores 35 0 35 1990 Billiton Bogosu Gold Limited Mining and Extraction of Metals and Other Ores 18.5 0.5 19 1990 CAL Merchamt Bank Limited Financial Services 0 0.88 0.88 1990 Ghanaian Australian Goldfields Limited Mining and Extraction of Metals and Other Ores 0 3 3 1990 Wabome Steel Limited Mining and Extraction of Metals and Other Ores 3.2 0 3.2 1991 Appiah Menka Complex Limited Chemicals and Petrochemicals 0.9 0 0.9 1991 Billiton Bogosu Gold Limited Mining and Extraction of Metals and Other Ores 0.85 0.39 1.24 1991 CAL Merchant Bank Limited Financial Services 3 0 3 1991 Hotel Investments (Ghana) Limited Hotels and Tourism 4.2 0 4.2 1991 Securities Discount Company Financial Services 0 0.23 0.23 1992 Ghana Aluminium Products Limited Mining and Extraction of Metals and Other Ores 0 0.44 0.44 1992 Ghanaian Australian Goldfields Limited Mining and Extraction of Metals and Other Ores 18.01 0 18.01 1992 Packrite Cartons and Packaging Industries Ltd. Timber, Pulp and Paper 0.6 0 0.6 1993 Ashanti Goldfields Company Limited Mining and Extraction of Metals and Other Ores 40 0 40 1993 Combined Farmers Limited Food and Agribusiness 0.4 0 0.4 1993 CAL Merchant Bamk Limited Financial Services 3 0 5 1993 Ecobank Ghana Limited Financial Services 6 0 6 1993 Ghana Leasing Company Limited Financial Services 0 0.6 0.6 1993 Ghana Leasing Company Limited Financial Services 0 0.15 0.15 1993 Polytex Industries Limited Manufacturing 0.4 0 0.4 1993 Primewood Products Limited Timber, Pulp and Paper 1.17 0 1.17 1993 Wahome Steel Limited Mining and Extraction of Metals and Other Ores 2 0 2 1994 Afariwaa Farms and Livestock Products Limited Food and Agribusiness 0.36 0 0.36 1994 Ghana Cement Works Limited Cement and Construction Materials 3 0 3 1994 Ghana Household Utilities Manufacturing Company Limited Manufacturing 0.57 0 0.57 1994 Ghana Leasing Company Limited Financial Services 5 0 5 1994 Palm Royale Apartment Hotel Company Limited Hotels and Tourism 1 0 1 1995 Billiton Bogosu Gold Limited Mining and Extraction of Metals and Other Ores 0 0 0 1995 Dupaul Wood Treatment (Ghana) Limited Timber, Pulp and Paper I 0 1 1995 Shangri-la Hotel Hotels and Tourism 0.3 0 0.3 1996 Ghanaian Australian Goldftelds Limited Mining and Extraction of Metals and Other Ores 2.56 0 2.56 Total gross commitments 187.99 Total commitments now held by [FC 59.07 Total undisbursed (including participant's portion) 2.16  2 1 Schedule E.3 Page 3 of 5 Ghana - Implementation Issues Although the performance of Ghana's portfolio has improved recently from previous low levels, disbursements continue to be slow in a number of projects. Greater attention by the Government and the Bank to implementation has helped to raise the disbursement rate for investment projects from 13 percent in FY94 to 17 percent in FY95. The May 1995 CPPR acknowledged improvement in the procurement process in almost all sectors. Similarly the availability of matching (counterpart) funds, a serious issue in previous years, has improved. IDA's Country Assistance Strategy of linking future lending levels to disbursement performance has contributed to the improved disbursement levels, and the disbursement outlook for FY96 is also good based on the performance of the first half of the year. The Resident Mission is playing an increasingly important role in project implementation and has a greater responsibility for project supervision, particularly in monitoring procurement and disbursement activities. The status of the only problem project is as follows: Water Sector Rehabilitation (FY90; $25 million credit). This is the only problem project, rated unsatisfactory for FY93, FY94 and FY95. Although works implementation is progressing, management of the water supply sector requires reform. To address this problem, fundamental changes are being planned for the water supply sector including a restructuring of the existing water utility and private sector participation. A Japanese Grant and bilateral commitments have been secured to finance a project encompassing these objectives. Several projects have continued to experience slow disbursement: Public Enterprise TA Project (FY88; $10.5 million credit). The project supported privatization and the implementation of performance contracts with state owned enterprises (SOEs). Disbursement was slow until 1992, largely because of slow progress on privatization, but it has recently accelerated with the privatization of Ashanti Goldfields in 1994 and 20 additional SOEs. Disbursement will be almost fully complete by June 1996 when the project will be closed and any remaining balance canceled. Cocoa Rehabilitation Project (FY88; $40 million credit). The project remains only about 50% disbursed. In the early years there were serious difficulties in contracting and with a contractor's inability to perform under the roads component. There were also long delays in procuring jute bags. This latter problem has been resolved, and a contract for jute bags of $4.5 million is about to be executed. Several civil works contracts are also nearing completion. The credit will close in June 1996, and the undisbursed amount of about $12 million will be canceled. VRA/Sixth Power Project (FY90; $20 million credit). The project became effective in September 1990. Its original design called for retrofitting the runners of the Akosombo plant. However, for operational reasons, the Borrower suspended the work and asked the Bank to  22 Schedule E.3 Page 4 of 5 redesign the project and suggested to replace the runners. The Bank has given no-objection to this and work is underway to prepare and proceed with the restructured project. NationalAgricultural Research Project (FY91; $22 million credit). The project was effective October 1991 and so far only US$6.9 million has been disbursed. It took three years to prepare an agriculture research master plan and translate it into a work program and funding plan. This was accomplished in 1995 and the major research programs are now beginning. Counterpart funding was a major problem in the first two years, especially for civil works. IDA increased the reimbursement percentage for civil works and the project received 100% of the required counterpart funds from Government in 1995. For 1996, counterpart funding is expected to be adequate. The pace of project implementation has picked up substantially since mid-1995, and disbursements are expected to total about US$7 million during FY96. Agriculture Diversification Project (FY91; $16.5 million credit). The project became effective in March 1991. To date, disbursements have been only US$5.3 million. Key problems have been poor management and coordination by the lead implementing agency and a number of specific problems associated with different project components. A mid-term review is in progress to resolve the main problems, and transferring responsibility for the project to another agency is one of the central actions recommended. A number of specific problems encountered in each of the project components have already been addressed and resolved. NationalAgriculture Extension Project (FY92; $30.4 million credit). The project became effective July 1992, but so far only US$11.8 million has been disbursed. Emphasis on reforms to create a unified agricultural extension service, counterpart funding constraints, and unfamiliarity with Bank procurement procedures caused disbursements to lag substantially behind SAR forecasts. In 1995, the Borrower provided 100% of the required counterpart funds and is expected to do the same in 1996. Disbursements from the credit are accelerating, with a substantial number of contracts finalized in 1995, and are anticipated to be US$11-12 million during FY96. National Feeder Roads Rehabilitation & Maintenance Project (FY92; $55 million credit). This project was approved in December 1991 and became effective in July 1992. Actual disbursement to December 1995 was US$21.52 million against scheduled disbursement of US$46.4 million. The project involves a large number of relatively small civil works contracts, the design and procurement processing of which has taken longer than expected. The lag in disbursements is, however, expected to decline significantly in the next year as 124 new contracts worth around US$30 million were awarded during the second half of 1995. National Livestock Services Project (FY93; $22.4 million credit). This project became effective in April 1993 and so far US$10.0 million has been disbursed. This project has picked up considerable pace after a slow start. The disbursement lag against SAR estimates is mainly attributable to the slower than anticipated start-up of civil works construction, but contracting and construction have both accelerated significantly in 1995.  23 Schedule E.3 Page 5 of 5 Urban TransportProject (FY93; $76.2 million credit). This project was approved in May 1993 and became effective March 1994. Actual disbursement to December 1995 was US$4.46 million against scheduled disbursement of US$3 1.8 million. The project involves three large urban road rehabilitation contracts costing around US$50 million. Although bid documents were prepared before the project became effective, bidding was not advertised as planned because the Borrower decided, as a result of problems which arose on similar works, to carry out service relocation in advance of the main civil works. The contracts were awarded in October 1995 and disbursement is expected to increase significantly in 1996. National Electrification Project (FY93; $80 million). The project has had limited disbursements to date. There was a one year delay in effectiveness due to delayed hiring of a management contractor and slow preparation of bids for the distribution network. These problems have now been resolved. Contracts totaling $28 million have now been negotiated, most of which will be disbursed during the next six to eighteen months. Community Water Project (FY94; $22 million credit). The project involves building an outreach capacity to encourage beneficiary participation and private sector capacity in 700 villages and 30 small towns. This has required a longer than expected inception period, but recent progress in this work should enable disbursements to reach about $5 million by the end of this fiscal year. Local Government Development Project (FY94; $38.5 million credit). The project has been delayed by the tender evaluation system involving district, regional and central tender boards. In addition, some tenders exceeded original estimates. Recent progress should enable contracts totaling about $10 million to have been signed by June 1996 which will lead to about 6 million in disbursements during FY97. Vocational Skills and Informal Sector Support Project (FY95; $9.6 million credit). This project was signed on June 30, 1995 and became effective on September 19, 1995. Since effectiveness, the credit has disbursed about $280,000 in the Special Account and several procurement activities are underway -- bids for the ICB procurement of equipment are under evaluation and award is expected around June 1996. The current disbursement lag is expected to be gradually reduced as project implementation accelerates on the basis of the agreed action plan.  24 Schedule F Page 1 of 2 Ghana: Povertv and Social Development Indicators Manu Sa,,v rq wlwo,,'ew group NC= Laesr i;ngIe yco re~ema .Yuo. kighier unit of CZ~ Sakwe, Lm.w- Infcomte !ndic.ror ~ ~ ~ ~ ~ ~ ~ ',-.~mearure 1970-73 198045 1987-9l .4frica iu,eOnv group Resources and Expendirures HUM.NL-, RELSOURCES Populanon (mre-1992) L~Ousands 9,835 12,620 15,783 546,390 3.194.535 942,547 .-ke cpcndency rado rado 0.93 0.98 0.98 0.95 0.67 0.66 Urcxi - of pop. 30.1 32334.9 2. 675. ?oculation -,o-th rate annual % ' 1 3.7 3.0 2.9 I.! 1.4 Urban 2.9 4-3 4.3 5.1 3.4 4.8 L~abor force (15-64) r.osns3,813 43963 6,041 =4,=2 1,473,954 A-ricultUre % of labor forc 57 16 Indus=y 17 is. . Ftrnaic ~42 41 40 37 33 36 Ftrnaies per 100 males Urban numrber ... NATL-R,AL RESOURCES -k:l 4~~~~~~~hu s.in ~ _4 "I 8.54 23j8.54 24,27j4.03 38,401.06 40,697.37 Density ~~~~~~~~~~Poo. e-r q. k:m 41.2 5239 64-2 2 1.9 31.7 =23 A-_-ictlrural land % of!aad area 34.3 33.8 34.0 527 50.9 Change: in ag:icutharml land zannual % 404 0.0 0.1 0.1 0.0 !g'clua and under irnigation V.0.1 0.1 0.1 0.3 18.2 Fore-st and woodland thou. so. lra 91 84 g0o Oe.fortstazion (net) Uaina % . .1.3- Housenold income Share of 'oP 20% of households V. of income ...44 - 2 Share of bocom 40% of households 1 3 19 Sh'nrc of bo:omn 20% of househioids 7 8 EX? EN D r-LtRE Food of GOP 39.3 .. 40.2 Me. fi sh. milk. cheese, eggs ..0.0 20. Caraa inloorzs dsou. rnclc tosmes 8 137y 319 20,311 46.5-37 743-24 Food aid i n cerels .3. 96 184 4,303 9.008 4,054 Food oroduco prco 98-100 133 97 97 90 12l3 F:ro-Il ze: consunnpdon 4a3.1 1.6 1.0 4.2 61.9 Saeaagriculturc inOD? %of GDP 47.7 44 .9 48.6 18.6 29.o Housing V. of GO? 8.4 ..5.6 - Ave.---;, household size- persons per household4. ..- Urban- ..- Fixed inves=cnc housing %of 00? ..04 Fuel and power %of GDP. .23 neycorsumpcion per capit& kg of oil equiv. -125 78 9 5 3 .8 House noids with eleenricity Urban %1*of households . .. Rural... Tr2nspors and communieadout % of OD? 2. .3.5 Fixed inves=nena oanspvrt equipment 1.3 1.2 2.1 .. 7oi:zl road le-ngth thou. iam 3 1 35 36 NVESTIMENT LN EFUM-AN CAPITAL Health Po pulation per physician --e-sons IZ,900 [4,394 22,970 - ?opuiaticn ;er nurse 693 640 1,669 - ?opulation per hospicn bed Soo 638 685 1.329 1,05051 Orai rehydyrazion sheeopv (under-S) V.of cases ... 21 36 39 Educarion C-ross enrollmenE ratio Sezondary % of school.age pop. 37 40 38 18 41 FentaJe 2~~~~~~~~~~~~~~~~~~'3 3 1 29 14 35 Puoiiteacer rtio:primary pupils per teacher 30 23 29 39 37 26 ?upoil-ceacirer ratio: secondary 23 20 19 .. 19 Pujoiis reaching. grade 4 V.0 of cohort 8% 75 .. Repeate race: primary . ofQM ocaleroll 2 2 . Mliteracy1 %of pop. (age 1S5-) 70 47 40 St 39 Fe-m-IaleC % offern. (age 1S#) .58, 49 62 52 Ncwsoaoer circulation per thou. pop. 5 1 38 13 14 ..100 -=orio a an.c .nwrnUaanau Eccnomlcs l~eatmtnefl ApnL l 994  25 Schedule F Page 2 of 2 Ghana: Poverty and Social Development Indicators Men SeawJ ro.WJtnWc me rp Mc= L=Cr,dngjeyCar reer 5t -o Neig*cr Un~ Qf _adn,w SaAww Lam- income ThSdkc.or 1970-7! 198045 1917-92 Affics incuma grOaup Pniorfty Poverty Indicators POV'ERfTY Upper -overcy linc lcai cur. .. .. 32.91 - He=d=cuntindcz '.o%Ofpop. _ _ 36 - 19 Lower povcr-y line IocaQ C.=. 16,491 . - Haacfiunt index % of pop. 7 _ - QNP per capim USS 2SO 370 450 520 390 SHO RT TEMNM -f COMM INDICkTORS Urtsilled urtan wasIe locA cz- - - - - Unsilled ruraL -ges* ., Ru.Mi -- ofde -Ad Corsumer;cc ; Index 19S7-100 0 57 293 Lawer income - - Food, * .0 2S;_ Ur.-an -- SOCL. IDLCATORS P,r. -xvendituzr on basic soed srric % of (MP 6; 3.2 7.4. - GCrss r . 11me-c =.os %sc'ool agppop. 7! 76 77 66 103 ale so* SO SS 34 79 11; F-aie * 62 6 69 62 96 trnb.c =or=lity per ou. live births L07.0 93.0 S1.0 99.0 ,..0 45.0 Under 5 -nar.aity *. - 1'9.1 169.0 !08.0 i9.0 Immu.izon M4e-1es 'S ag up . .. 39.0 :4.Q OFT *3 _ -o43.0 54.5 30.i C:iid malnut.fon (inder-5) * .. .. '7.1 5.4 ;g .ii: :X;C- nCY .cJ so 52 56 52 62 6& F--.sie advsnsage * 3.4 3.5 3.6 ;.4 '4 6.4 7oWai :--ity e birisoxrwocan 6.6 6.i 6.1 6.1 3.4 ;.1 ,M-ar.o.l .-ortiiry ram pa 100..000 live bircs .. 413 1000 Suppiementary Poverty Indicators Exc=di-r on social zecurnty % oovt ex. 6.9 4.0 6.4 Soc:al sc:-t-y czvergn % coon. 23ve pop. .. .. _ _ Ac_s to sate wacs LO / otf DOp. 35.0 56.0 *- 41.! i8.4 [;Man 86.0 93.0 _7.5 73.9 Ruro4 14.0 39.0 .. '7; 60J 0. Ac:-=s to heilth care *. 640 25.0 Population powth r2te GNP per capita growth rate Development diamond, (annual e, Pa c er ) i (annua lverage. percear) I0 cy nmr t9710-75 198045 1917.92 1970-75 198C.4S 1987-092 Ac1a'ea. Grsana _ (ll - Low-.ncome - Loinoone a. Sc: :he -=.nical noms p.339. b. The development diamond. based on four kcy indica rs, shows tbe aveg levd Of drdvelopnen: Itn he counc y cornzam._ *vUh its income group. Sea te inrwoducaon.   IBRD 27584 3 2