Senegal - Urban Mobility Project

Report No. PID7577 Project Name Senegal-Urban Mobility Improvement Project (@ Region Africa Sector Urban Transport Project ID SNPE55472 Borrower(s) Government of Senegal Implementing Agencies Oversight: Ministry of Equipment and Land Transport (MELT) Day-to-day Coordination: Conseil Executif des Transports Urbains de Dakar (CETUD) Tel: (221) 832 47 42 Fax: (221) 832 47 44 Civil Works Component: AGETIP or other qualified agency Railways rehabilitation : SNCS Leasing scheme : Financing Cooperative Environment Category B Date PID Prepared January 13, 1999 Appraisal February 2000 Projected Board Date May 25, 2000 Country Background 1. Senegal has a population of approximately 8 million, of which 41% lives in the urban areas. The population growth rate is approximately 2. 7% per annum. During the period 1989-1993 GDP growth rate was 1.7%. At end 1993 however, economic growth was a negative 2.1% and internal and external arrears reached 221 billion CFA Franc. In the urban areas the standard of living has deteriorated. Poor economic performance was mainly due to: inappropriate policies undertaken by the Government which placed excessive regulation on the private sector; insufficient internal adjustment measures undertaken; and the overvaluation of the exchange rate of the CFA Franc. 2. In addition to the devaluation of the CFA Franc in January 1994, the Government of Senegal (GOS) has taken steps to improve the economy and enhance the activities of the private sector through structural and institutional reforms. In 1994, following an initial phase in which the private sector adopted a cautious attitude, primary sector production and export oriented activities started increasing significantly. Structural reforms have covered price and trade liberalization, labor and regulatory legislation, public enterprise reform, the public administration, agriculture, energy, transport, social sectors and the environment. As a result, in 1995 the economy grew at 4.8% in real terms, in 1996 at 5.6 %, and in 1997 growth was about 4.7%.  Sector background 3. The urban transport sector in Dakar has been facing a major crisis for the last fifteen years, due to a combination of increasing population growth (4t a year on average, with 2.4w in Dakar and 8.5 W in Pikine-Guediawaye), massive daily pendulum commuter migration due to the geographical configuration of the Peninsula of Cape Vert, aging of the fleet (especially the public transport vehicles with an average age is 18 years), lack of traffic management measures, inappropriate regulation, institutional fragmentation, lack of intermodal coordination. As a result, commuter rides take longer and are more hazardous. In addition, due to the lack of pedestrian facilities, weak law enforcement, and insufficient road accidents preventive measures, the number of traffic accidents has increased significantly during the last decade. The level of air pollution generated by motorized traffic increases dramatically in some urban areas. 4. Dakar's population has grown from 18,000 in 1902, to 2.2 million in 1998 (54 percent of the urban population and 24 percent of the total population), and is expected to reach 3.2 million by the year 2010. Dakar is not equipped for the large migration, forcing most of the immigrants to settle in inhabitable areas. The rapid pace of expansion severely tests the capacity of the public and private sector to efficiently deliver basic urban services and manage economic, environmental and investment resources. Those most affected by the mobility crisis are the urban poor : they live in suburban areas, requiring to travel long distance, use, when affordable, over-crowded minibuses, generating increasing air pollution, and causing most of the traffic accidents in Dakar. By lack of affordable and/or reliable transport services, 27t of the population walk long distance. A study carried out in September 1998 shows that they are 4,3 millions daily travels in the metropolitan area of Dakar. Out of these figures, 56t are motorized, among which 80t are using public transport services. Hence, 2 million trips a day are made by public transport . Ninety four (94) percent of the trips made for work purpose and made by using public transport services. 5. Dakar has a long tradition of public transport, reinforced by the geographical configuration of the Cape Vert Peninisula (34 Km between Dakar- City and Bargny). Meanwhile, the system is in crisis for many years and generates important negative externalities in terms of air pollution, traffic accidents, traffic congestion. Public transport system in Dakar, a potentially efficient mode of transport, is hindered by slow operating speeds and the combination of vehicle-related accidents and air pollution posing serious health threats to the urban population. A study finalized in November 1998 indicates that the annual cost of externalities (traffic accidents, air pollution, traffic congestion and noise) caused by urban transport amounts to FCFA 108 billion (equivalent to US$ 190 million), e.g. 4.6w of the Senegalese GDP. Calculation indicate that the annual costs of delays caused by traffic congestion is about US$ 70 million. - 2 -  Project Objective 6. The Development Objective of the Urban Mobility Improvement Project is to contribute to the improvement of the safety, efficiency and environmental quality of urban mobility in the Dakar metropolitan area and, as far as road safety is concerned, in Thibs and Kaolack. Special attention will be paid to improve the mobility of the urban poor by (i) promoting public transport services and (ii) ensuring the safe movement of pedestrians and road users. This objective will be pursued by supporting further institutional and regulatory reforms and policy enhancements in the urban transport building on the achievements of the current Urban Transport Reform (TA) Project. Project Description 7. The Urban Mobility Improvement Project is designed along two phases within an Adaptable Lending Loan (APL). The first phase of the APL will be implemented in four (4) years, the second phase in three (3) years, each phase being considered as a "Project". The first phase (Project) will include the following five (5) components: (i) Rehabilitation of urban roads and infrastructure targeted on public transport, and pedestrians, complemented by road safety action plans and traffic management measures: (ii) Rehabilitation of the basic infrastructures of the suburban line of the Railways: (iii) Financial support and capacity building to the establishment and operation of a commercial leasing scheme to assist the small urban transport operators (microenterprises) in the -partial -renewal of their fleet; (iv) Design and implementation of an Urban Air Quality Management Strategy, including the construction of vehicle technical control centers and the definition and monitoring measures to abate Air Pollution (combination of fuel and vehicles measures) : (v) Capacity Building on Air Pollution, Road Safety, Land Use, Transport Planning, studies on urban mobility issues and support to the continuing implementation of the institutional reform. Project Cost and Financing 8. The total project cost of the Program is estimated (with contingencies and inflation) at US$ 134.40 million. The first phase (considered as a "Project") will cost US$ 103 million. IDA contribution for the first phase would be US$ 70 million. The Agence Francaise de Developpement (AFD) would finance US$ 17.30 million and the Nordic Development Fund (NDF) would finance US$ 7 million. The IDA contribution to the second phase is estimated to amount to US$ 25 million. Project Implementation 9. The Ministry of Equipment and Transport (MET) will be the supervisory Ministry. The Conseil Executif des Transports Urbains de Dakar (CETUD, established by the Law of February 24, 1997) will act as the Implementing Agency, under the technical tutelage -3 -  of the MET and the financial tutelage of the Ministry of Economy and Finance (MEF). As far as the rehabilitation of the suburban line of the Railways is concerned, the Government of Senegal (GOS) shall relent the proceeds of the IDA credit to the Societe Nationale des Chemins de Fer Senegalais (SNCS) under a subsidiary loan agreement to be entered between the GOS and SNCS. As far as the leasing scheme is concerned, the GOS shall relent the proceeds of the IDA credit to a Financing Cooperative under a subsidiary financing agreement. The CETUD is composed by three main bodies : (a) the Assemblee PleniOre, gathering all three major actors of the sector : Ministries, Local Government, the transport industry -operators (b) the Permanent Secretariat acting as technical and regulatory body and (c) the President who is appointed by the President of the Republic, under a vote by the Assemblee PleniOre. Project Sustainability 10. Sustainability of the proposed leasing scheme Even though there is a strong need to renew and rehabilitate the Cars Rapides fleet, there has been no supply response of the market so far because of the high risk of any credit or leasing scheme as perceived by the private banking and leasing profession. In the proposed project, this risk has been recognized up-front. Accordingly, the efforts put in the preparation of this component have been focused on devising a series of measures aimed at mitigating the risk of payment or technical default under the scheme. (a) Phasing of the pilot project: Phase 1 of the proposed APL will keep the planned investment to an amount of $25.20 million. It is only under Phase 2, based on the progress achieved and lessons learned during Phase 1, that most of the need identified for the renewal and rehabilitation of the old public transport vehicles would be satisfied if the leasing scheme component under this phase becomes effective. (b) Private operators to be certified eligible to the scheme: Only the private operators who will be certified as eligible will have access to the proposed financing facility. To be certified as professionally proficient, a private operator will have to follow an introductory training program on the basic principles of fleet management and undertake to hire only drivers who will have received professional training. (c) Private operators must belong to a professional partnership (Groupement d'Interot Economique ou G.I.E.): Eligible private operators will belong to one of the G.I.E.'s which will be constituted for that purpose. The G.I.E.'s, not the individual private operators, will enter into leasing agreements with the leasing cooperative. (d) Vehicles to be assured with insurance companies accredited for that purpose: The vehicles to be financed will be covered under an insurance policy covering civil responsibility, theft, fire and third party collision damage, subscribed by one of the G.I.E.'s with one of the insurance companies which will be - 4 -  accredited for that purpose by the Minister of Finance and satisfactory to IDA. (e) Eligible operators to be member of the leasing cooperative: In order to be eligible to the scheme, the private operators will have to be members of the leasing cooperative. They will contribute an amount equal to 25t of the amount of their participation in the leasing scheme to the capital of the leasing cooperative. Accordingly, the private operators will have a significant pecuniary interest in the success of the scheme and a strong sense of ownership in it. (f) Mutual guarantee fund: A monthly contribution equal to 3t of the monthly lease payments will be added to the monthly lease payments paid by the private operators and paid to a mutual guarantee fund managed by a local bank or financial institution satisfactory to IDA. (g) Semi-annual technical check: The public transport vehicles to be financed will be submitted to semi-annual technical checks to be performed by the technical control center to be set up and financed under the proposed project. The concession for the operation of the control center will be granted to a private specialized professional operator to be selected through competitive bidding. Detailed technical specifications and performance indicators will be included in the concession agreement. (h) Affordability of the scheme: One of the key factors affecting the sustainability of the scheme is the affordability of the lease payments relative to the monthly net operating revenues generated by vehicles to be leased. An analysis of the operating costs (other than financing) of the Cars Rapides has shown that, under the new mode of operations under the proposed reform, the net operating revenues available will cover the financing costs and to remunerate the owners of the Cars Rapides. Lessons learned from past operations in the Country/Sector 11. The ongoing Urban Transport Reform Project (CRNo.0240) has paved the way for a comprehensive reform in the urban transport sector. The main issues as well as the long term strategy to assist solving this crisis has been detailed in the Urban Transport Sector Policy Letter signed by the GOS on September 25, 1996 and complemented by a Letter signed on December 31, 1999 regarding the decision of the GOS to award the concessionning of the suburban line of the Railways to a private operator. The ongoing TA has helped the GOS to design and implement the first step of a comprehensive urban transport reform. The establishment and operation of the CETUD is a key development on a long term improvement of this key economic and social sector. The main lesson is that a sound institutional reform is the prerequisite for any major investments. In addition, there is a need to integrate all the components of the urban mobility : transport and planning, real estate, services, protection of pedestrians, consideration for safety and reduction of air pollution. 12. The project will also integrate lessons learned from (i) the - 5 -  Sub-Saharan Africa Transport Policy Program (SSATP) and (ii) the Clean Air Initiative in sub-Saharan African cities. Both Programs are coordinated by the World Bank. The proposed operation will integrate this comprehensive approach already defined in the Urban Transport Policy Letter. Finally, lessons and experiences from other urban transport projects in the world demonstrate that urban transport, to be sustained, needs to have consideration about moving people and goods, more than vehicles. Poverty Category 13. The proposed project is a poverty-focused intervention, geared to improve the safe mobility of the most affected by the persistence of the urban transport crisis in Dakar: the urban poor. Project benefits of safe travel and journey time savings will accrue the well-being of the population in Dakar. Specifically, accessibility of the low-income segment of the population to employment centers will be greatly enhanced. Construction of sidewalks, pedestrians facilities, footbridges would greatly improve travel environment of the low-income groups. Environmental Aspects 14. The project is expected to bring notable improvements to Urban Air Quality. In addition, it will also reduce congestion, road accidents rates and travel time, thus bringing a qualitative change in the urban area and contribute to the improvement of the urban productivity on a environmentally sustainable basis. The expected operational improvement of the urban railway line (PTB) will also reduce the level and gravity of air pollution. This project is a category "B" Project. An Environmental Assessment of the proposed operation has been carried out. The draft report was issued end of February 2000. The final report is expected by end April 2000. As the planned civil works are either minor or within the right-of ways (railways), involuntary resettlement will not occur. The adoption of the Environmental Plan is by the GOS is one of the conditions for credit effectiveness. Program Objective Categories 15. In addition to poverty alleviation, improvement of life conditions in the targeted populations, including the creation of gainful employment opportunities, the project will also ensure the most efficient use of the existing infrastructure and reduce the adverse effects of motorized vehicle use. Successful implementation of the project would result in improved personal mobility and urban efficiency in general, whilst reducing the potential for road accidents. Contact Points: The InfoShop The World Bank 1818 H Street, NW - 6 -  Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Task Manager Patrick Bultynck AFTU2 Room J1l-101 Tel: (202) 473 4549 Fax: (202) 473 8249 Note: This is information on an involving project. Certain components may not be necessarily included in the final project. Processed by the InfoShop week ending May 12, 2000. - 7 -  Annex Because this is a Category B project, it may be required that the borrower prepare a separate EA report. If a separate EA report is required, once it is prepared and submitted to the Bank, in accordance with OP 4.01, Environmental Assessment, it will be filed as an annex to the Public Information Document (PID) . If no separate EA report is required, the PID will not contain an EA annex; the findings and recommendations of the EA will be reflected in the body of the PID. -8-