Niger - Urban Infrastructure Rehabilitation Project

Report No. PIC4675 Project Name Niger-Urban Infrastructure rc N Rehabilitation Project Region Africa Sector Urban Transport Project ID NEPA49691 Borrower Republic of Niger Implementing Prime Ministry Agency Ministry of Equipment and Infrastructure Ministry of Interior and Land Development Urban communities NIGETIP (Agence Nigerienne d'Execution des Travaux d'Interht Public) Environment Category B Date this PID Prepared February 1997 Projected Appraisal Date April 1997 Projected Board Date September 1997 1. Country Background. Niger is one of the poorest countries in the world with a per capita GDP of US$220 in 1995 and social indicators which are among the lowest in the Sahelian countries. Its rapidly growing population (8.9 million in 1994 with a 3.3w growth rate) is about half under 15 year old and 809 rural. Long dominated by an inefficient public sector, the formal economy depends on uranium, a primary commodity with poor prospects. Other source of wealth consist of subsistence agriculture and livestock. The Government has taken initial steps to improve economic management and to maintain a stable macroeconomic framework, conducive to private sector activity. In particular, it has taken full advantage of the devaluation of the CFA franc to restore competitiveness, provide a policy environment favorable to the private sector, and redirect public resources toward human resource development, infrastructure maintenance, and the provision of efficient services to support agriculture and preserve the fragile natural resource base. In reaction to a military takeover in January 1996, several donors have suspended aid causing uncertainty for the budget situation and medium term prospects. The Government has adopted in early 1996 a macro-economic program supported by an ESAF arrangement with the IMF. Government continued action on key reforms, the rapid solution to the political transition towards democracy and the resumption of donor assistance will be key to the success of the program. 2. Urban Sector Background. The Government has launched a process to decentralize responsibilities in urban management to local Governments. Although this decision was taken in response to political pressure, the process should help to address urban development issues. Nigerien cities have developed without control. Their organization result from cutting  up available space in parcels and juxtaposing housing development plans without planning and coordination, integration with the existing urban environment, and programming of basic infrastructure. Niger urban centers have been growing at an average annual growth rate of 5.5 percent. Niamey's annual growth rate is estimated at 10 percent. The capital, with about 600,000 inhabitants represents 45 percent of total urban population. 3. The decentralization process, as defined by the Government, is complex. The proposed structure involves the creation of 14 regions, 55 districts, 155 counties, 156 urban communities and 618 rural communities. Regions, counties and communities would become administratively and financially autonomous. This structure would coexist with the State administration present at most of the levels. This complexity and the lack of financial as well as human resources to operate the structure are likely to hampers its implementation. The process should start by strengthening the capacity of the 15 most important urban communities, including Niamey. 4. To overcome the social effects of the economic crisis which has resulted in increased unemployment in urban areas, the Government has established with IDA's assistance a framework to promote labor-based methods and small and medium enterprises in the execution of small urban civil works. This framework was initiated under the Public Works and Employment Project (Cr. 2209-NIR, dated , 1991). An autonomous, not-for- profit and independent agency, NIGETIP, was created to manage the execution of works programs. NIGETIP uses streamlined procedures to speed up project implementation. Since its creation, most donors (Caisse Frangaise de Developpement, European Union, Gesellschaft far Technische Zusammenarbeit, the OPEC Fund) have used NIGETIP's services. In 1994, NIGETIP's portfolio amounted to CFAF7 billion of which 20 percent were financed by IDA. In 1995, the portfolio amounted to CFAF3.5 billion of which 13 percent were financed by IDA. The same year, 219 contracts had been awarded to small and medium enterprises, and 208 contracts awarded to local consulting firms for the engineering studies or the supervision of works. 395 small and medium enterprises and 84 consulting firms have been preselected by NIGETIP. Payment of salaries represent about 22 percent of the amount of civil works contracts. 5. Objectives. The development objectives are: (a) to strengthen the capacity of municipalities to manage the development of urban infrastructure by improving resource mobilization and planning methods; and (b) to reduce poverty by improving access to basic urban services, and using local engineering firms and contractors and labor-based methods, where appropriate. The project will support this capacity building program through execution of a program of small urban civil works. 6. Description. The project consists of: (a) provision of technical assistance to support the decentralization process, to establish simplified tools to plan urban infrastructure development, to define a methodology to help urban communities to develop a strategy for urban development including provision of urban services and mobilization of resources; (b) carrying out of a pilot operation of integrated urban development in association with a private property developer; and (c) -2 -  execution of a program of small urban works including rehabilitation of urban infrastructure generating revenues. 7. Financing. The total project cost is estimated at US$26.7 million. IDA's contribution will amount to US$20 million. Central Government and municipalities will finance counterpart funding equivalent to US$3.7 million. Financing is sought for the equivalent of US$3.0 million. 8. Implementation. The Prime Ministry will be responsible for the overall coordination of the project through the National Bureau of Coordination (NBC). Because of the large number of institutions involved in the urban sector, NBC will be responsible for the coordination of technical assistance provided in the sector. NIGETIP will be responsible for the execution of the program of small urban civil works, which will be defined by Niamey's municipality and districts in consultation with beneficiaries. 9. Sustainability. Sustainability will be achieved through: (a) institutional reforms in the urban sector to improve the planning and management capacities of sector institutions and the mobilization of resources; (b) management of urban infrastructure by private operators, involvement of private developers in urban development and consultation of beneficiaries in the design of small urban infrastructure; (c) development of the Nigerien construction industry; and (d) execution of a focused training program. 10. Lessons Learned from Past Operations in the Country/Sector. The NIGETIP experience and similar experiences of executing agencies in several sub-Saharan countries have demonstrated that theses agencies are an efficient way to successfully execute small urban works and, as a result, promote local small and medium enterprises and labor based methods. To date, NIGETIP has executed CFAF 5,914 million of works through the awarding of 239 contracts to 157 small contractors. The overall share of employment in total works is 26.4w as the wage bill is CFAF 1,041 million. Seven hundred eighty-eight thousand, eight hundred fifty-six (788,856) man/days of work have been created with an average daily wage of CFAF 1,319. 11. Rationale for IDA Involvement. The proposed project is consistent with the Country Assistance Strategy (CAS) discussed by the Board on 1994. The strategy is based on four major building blocks: (a) addressing long-term human capital (including poverty alleviation) and natural resource issues; (b) building public and private sector institutions to promote private sector based growth; (c) increasing efficiency of public resource management; and (d) supporting actions to facilitate supply response in the wake of the CFAF devaluation. The proposed project includes an urban civil works component, a follow-up to the Public Works and Employment Project (Cr. 2209-NIR, dated , 1991) whose primary objective was poverty reduction. The proposed project adds to this objective the objective of improving management of resources allocated to urban infrastructure, by improving the quality of preparation of urban projects and focusing on revenue-generating investments. 12. Issues and Actions. Before appraisal, the Government should: (a) -3 -  prepare a methodology for prioritization and appraisal of projects to be executed by NIGETIP and apply the methodology to define a set of integrated urban development projects; (b) carry out an ex-post environmental assessment of small urban works executed by NIGETIP; and (c) draft a letter of sector policy for the urban sector. During negotiations, the Government should agree: (a) to draft revised Manual of Procedures and General Agreement between the Government and NIGETIP; (b) to key performance indicators; (c) to the letter of sector policy; and (d) to the carrying out by IDA of a mid-term review at mid-execution of the project. As a condition for Board presentation, the Government should ratify the letter of sector policy. As a condition for credit effectiveness, the Government should: (a) appoint the auditor of the project accounts; (b) appoint the accounting firm to implement the project's computerized management information system in BNC; (c) complete the Project Implementation Plan; (d) sign the General Agreement with NIGETIP; and (e) submit to IDA the portfolio of urban sub-projects for the first year. 13. Environmental Aspects. The project is proposed to be rated category B. The cumulative impact on the environment of small urban civil works is expected to be positive as sub-projects are very small scale. The NIGETIP Manual of Procedures stipulates that sub-projects judged harmful to the environment will not be eligible for execution to ensure that they will not have a negative impact on the environment. Any environmental impact will be described in the summary project sheet prepared by the municipalities. An environmental impact assessment will be mandatory for all revenue earning projects. The project includes a component to strengthen the capacity of urban sector institutions to address environmental concerns and meet the requirements of the coming legislation on mandatory environmental assessment of all development projects. The proposed mid-term review will include a post-evaluation of the environmental impact of the project and formulate recommendations if necessary for the second half of the project. 14. Participation. (a) Urban development plans: The project will assist the municipalities to use simplified tools to prepare urban development plans and apply these tools to a group of cities. These plans should be discussed with the population concerned. (b) Small urban works: A process should be established to involve beneficiaries in the design of sub-projects. The environmental impact of sub-projects should be assessed in consultation with beneficiaries prior to the decision to execute the sub-projects and after their execution. 15. Program Objectives Categories. Environmentally Sustainable Development. Poverty Reduction. Private Sector Development. 16. Benefits. Benefits expected from the urban component are: (a) in the short term, poverty reduction by creating employment for unskilled workers which are most represented among the poor and by widening access of the poor to urban services; (b) in the mid term, an improved capacity of municipalities to finance urban infrastructure through increase of revenues generated by sub-projects executed during the project, and a boost in the local economy due to the multiplier effect resulting from the payment by the project of expenditures covering mostly local costs, thus improving the chances of successful implementation of adjustment - 4 -  reforms launched recently by the Government; and (c) in the long term, improved planning methods and capacity of municipalities to anticipate instead of lagging behind uncontrolled urban development. About (to be completed) person-days of employment are expected to be generated over the project execution. 17. Risks. The following risks have been identified: (a) To mitigate the risk of lack of counterpart funds, the municipalities will be requested to deposit counterpart funds for any works contract financed from the IDA credit under the road component on a project account in a commercial bank prior to the signature of the contract. (b) The risk of lack of funds to finance recurrent costs to maintain urban infrastructure financed under the project will be mitigated by contracting out their management. Although the project will assist the municipalities to establish an urban strategy aiming at increasing resource mobilization, the risk remains important for largest existing urban infrastructure and will not be fully alleviated during the period of project execution. Actually, decentralization including the right for municipalities to collect their own resources at a level sufficient to cover recurrent costs cannot reasonably expected to be fully implemented before several tens of years. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202)458-5454 Fax No.: (202)522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending February 7, 1997. - 5 -