Madagascar - Second Rural Transport Project (APL)

Report No. PID10409 Project Name Madagascar-Rural Transport Project-(@) ... APL-Phase 2 Region Africa Regional Office Sector Rural Roads Project ID MGPE73689 Borrower(s) GOVERNMENT OF MADAGASCAR Implementing Agency Address MINISTRY OF TRANSPORT AND MINISTRY OF PUBLIC WORKS Program Executive Secretariat Address: Ministry of Transport, Antananarivo, Madagascar Contact Person: Madame Justine Rasovahiny Tel: 032-02-52254 Email: dpp-mtp@dts.mg Environment Category A Date PID Prepared February 5, 2002 Projected Appraisal Date January 31, 2002 Projected Board Date May 30, 2002 1. Country and Sector Background The transport sector plays a key role in Madagascar's growth and poverty alleviation strategy and rural transport features prominently in the Government's PRSP. Increased foreign investment, development of the country's eco-tourism potential, growth in agricultural output, and improved delivery of basic social services all depend on the competitiveness of transport services and the availability of basic transport infrastructure. Unfortunately, transport services and infrastructure are in short supply both in quality and quantity. The considerable size of the country and its formidable topography, compounded by long-lasting neglect of maintenance for transport infrastructure have exacerbated the situation. In recent years severe cyclones had devastating effects on the transport infrastructure. Furthermore the sector is hindered by inappropriate policies, a flawed institutional framework and lack of managerial incentives, unbalanced funding, and the absence of an appropriate regulatory framework. The Bank decided to support Government's intention to tackle these issues through an adaptable program loan, of which this project forms APL-2.Poverty in Madagascar. The population of Madagascar, to a large extent, has experienced a long descent into extraordinary misery as average real income fell by a third over 1960-99. The growth of real GDP recovered in the 1990s but this did not reduce poverty rates. Instead, the poverty rate was broadly stable in the 1990s, rising from 70 percent in 1993 to 73% in 1997 and then slipping to 71% in 1999. Physical measures of nutrition are an alternative and basic indicator of poverty. Stunting (age/height) improved only marginally over the decade and so was roughly consistent with the poverty rate.However there were some significant changes in the profile of poverty in the 1990s. The rural poverty rate rose from 74.5% in 1993 to 76.7% in  1999, despite migration of poor rural families to urban areas -- which led to a smaller increase in the poverty rate there. The worsening of rural poverty seems associated with physical isolation caused by a breakdown of the road system.The distribution of income among provinces shifted significantly in the 1990s. Toliara was the poorest province in 1993, with a poverty rate of 81%, but poverty fell to 72% in 1999. In contrast, poverty in Mahajanga province deteriorated dramatically from 53% in 1993, which was the most moderate poverty rate in the country, to 76% in 1999 -- well above the national average. Similarly, poverty in Antsiranana (Diego Suarez) was relatively modest in 1993 at 60%, but the rate deteriorated to 73% in 1999. The poverty status of Fiananrantsoa also deteriorated rapidly, becoming the poorest province in 1999 with a poverty rate of 81%. Finally, poverty in Antananarivo moderated over the 1990s and reached 62% in 1999.Poverty and rural isolation can be illustrated by the following data (source: EU):ProvincePopulation% with reliable access- with unreliable access- with no motorable accessAntananarivo4,307,935761311Fianarantsoa3,024,747453916Toamasina2,520, 17580218Mahajangal,517,291166915Toliara2,054,274205030Antsirananal,345,1893 05812Totall4,760,611523216The Poverty Reduction Strategy Paper (PRSP). The Government's draft PRSP outlines a poverty reduction strategy built on three pillars: (a) higher and more sustainable levels of economic growth, (b) governance and institutional reform, and (c) improved basic service delivery. Rural roads feature prominently in the PRSP and improved access has been identified as a key aspect to improve livelihood and foster economic growth. A final draft of the document has been received by the Bank and the final report is expected before the end of 2001.Government Program. The Government plans a number of short-term actions in the context of its emerging poverty reduction strategy. These actions stress institutional development and good governance to enhance the environment for investment and promote stable growth and efficient delivery of basic services to the poor. Thus, key elements of the program are: (i) improving the budget control for public services, financial monitoring mechanisms and dissemination of information, (ii) strengthening the natural resource management system, especially in the forestry sector, (iii) strengthening judicial systems, (iv) improving rural infrastructure, (v) increasing access to education for the poor, (vi) broadening the health system, and (vii) establishing a poverty monitoring system.Heavily Indebted Poor Country (HIPC) Relief and Use of Resources. Madagascar's external debt would be reduced significantly with the delivery of assistance under the enhanced HIPC initiative. Debt service savings would amount to about US$59 million per year (1.1% of GDP) on average during the period 2001-2019. Government has provided IDA and IMF staff with a detailed plan for using those resources in support of its poverty reduction program. The plan allocates resources to four areas: education, health, water, and rural roads. The government has agreed to allocate at least US$ 10 million equivalent per annum for the improvement of rural roads within the framework of the rural transport policy (see Letter of Sector Policy in Annex 13). Decentralization in Madagascar. The Malgasy Government has fully subscribed to the notion of political, administrative, and fiscal decentralization and the Constitution provides for the establishment of autonomous provinces and communes. A number of 1,392 rural and urban (municipalities) communes, each with an elected mayor and council, were established in 1999. Elections for provincial councils were held in December 2000 and governors were nominated in June 2001. Various efforts are underway to support and strengthen this newly -2 -  established system. There is some concern that the new established provinces might lead to a re-centralization to the detriment of the independence and vibrancy of the rural communes.Rural Transport in Madagascar. Madagascar is characterized by a low population density and a formidable topography and climate; making the provision of rural transport infrastructure and services a significant challenge. The project will attempt to provide adequate transport solutions for the different regions of the country, and, while the focus is on roads, investments will also be made in the rail and water transport sub-sectors. Realizing the importance of rural access to improved economic growth and better quality of life for the rural population, Government decided to tackle the void of institutional, financing, and technical provisions for rural transport by formulating a Rural Transport Policy and Strategy (the policy). This process was assisted by the Africa Rural Travel and Transport Program (RTTP) through a participatory process with national and regional workshops. The policy's objective is to improve the rural population's access to markets and basic social services in order to promote economic development and enhance rural livelihood. The policy covers rural transport services (RTS) and intermediate means of transport (IMT), as well as all types of rural transport infrastructure (RTI) including river and maritime landings, air strips, railways and rural roads, paths and footbridges. The implementation of the policy, which is binding for all development partners, is being facilitated and monitored by a Rural Transport Unit (RTU) attached to the Program Executive Secretariat (PES). The PES is responsible for the implementation of the government's transport sector program jointly managed by the Ministry of Transport and Meteorology (MTM) and the Ministry of Public Works (MPW). RTU works in close coordination with the Rural Development Program and the Regional Working Groups (Groupes de Travail pour le Developpement Regional-GTDR). The policy has three strategic orientations: (i) improved provision of rural transport services and intermediate means of transport; (ii) sustainable management and financing of network maintenance, and (iii) improvement of the rural road network. Gender issues are mainstreamed into these strategic axes and particular attention will be paid to an equitable access of women to employment opportunities, for example as contractors or laborers on road improvement contracts. The rural road network that is covered by the policy consists of temporary national roads (RNT) (temporarily managed by the central government until sufficient capacity is available in the provinces), provincial roads (RP), and community roads (RC). The road network. The road network of Madagascar has been gazetted, based on the Charte routiOre, as 2,560 km of national primary roads (RNP - also called the structural network, connecting the provincial capitals), 4,691 km of secondary national roads (RNS), 4,598 km of temporary national roads (RNT), 13,170 km of provincial roads (RP), and 7,500 of communal roads (though not yet gazetted) for a total of 32,470 km. Of these only 7,770 km are currently in good and fair condition (that is, are maintainable), and of the roads in good and fair condition 5,070 are paved. 24,700 km of the road network are in bad condition, that is, are in need of rehabilitation. Most of these roads in bad condition are only seasonally practicable (and some not at all) and induce very high costs on users. In the framework of the APL-1 currently 530 km of national roads are being rehabilitated, thus increasing the stock of roads in good and fair condition by 530 km by mid 2002.The road network of Madagascar (situation in 2001)Type of RoadLength (km)Of which in good and fair condition (km)Of which with bituminous surface (km)In bad condition -3 -  (km)RNP2,5602,3002,100260RNS4,6911,6001,3003,091RNT4,5491,0008003,549RP13,1 701,87037011,300RC7,5001,0005006,50OTotal32,4707,7705,07024,700 The rail network: The rail network of Madagascar consists of the Northern and Southern Railway. The Northern Railway with a network of 732 km is being concessionned to a private operator. Funding for the rehabilitation of the infrastructure is being provided under the APL-1 and on-lent to the concessionaire on commercial terms. Connecting the main port of Toamasina (Tamatave) with the capital, the Northern Railway, although in need of rehabilitation, has substantial commercial potential. The Southern Railway with a track length of 163 km connecting Fianarantsoa with the East Coast and the port city of Manakara, is of essential economic and social importance to this unique eco-region. It provides the only access for about 100,000 people who are not served by road and has about 1,000,000 people in its zone of influence. A group of donors, including USAID, AfDB and Japan are currently funding urgent repair works with the understanding that concessioning will be concluded by end of 2002. IDA would complete the financing gap after concessioning is effective.Water transport: In many parts of the country, river and coastal transport is vital for the marketing of produce, supplying isolated communities and providing crucial socioeconomic mobility. Lack of small river craft and water-based rural transport services has been identified as a limiting factor during the elaboration of the rural transport policy and strategy. Of particular importance are the Sofia River, the Tsiribihina River, the Canal des Pangalanes, the waterways around the rice-growing region of Maravoay, and coastal trading. In the framework of the APL-1 pilot river transport improvements are being executed on the Sofia and Tsiribihina rivers by constructing landings and removal of obstacles in the rivers. APL-2 will build on the experience gained.Air Transport: There are 43 rural airstrips in Madagascar which provide vital linkages to isolated groups of rural population. Needed rehabilitation of such airstrips, if at all, is being studied and would be financed under the APL-3. 2. Objectives The development objective of the project is to sustainably improve the access of rural communities to markets, schools, health centers and other economic and social infrastructure, and to enhance the mobility of the rural population, in order to improve their quality of life and promote economic development. 3. Rationale for Bank's Involvement The value added by the Bank comes through its experience in a large number of rural transport projects, in Africa and elsewhere, as well as from the knowledge created by the Africa Rural Travel and Transport Program (RTTP) and from the rural transport thematic group. Through the RTTP the Bank has supported the preparation of the national rural transport policy and strategy. The Bank transport sector team has taken the lead in the preparation of this multi-donor funded rural transport program. Good practice, cutting edge rural transport knowledge, e.g. in respect of the participatory road intervention selection process and the promotion of intermediate means of transport is being applied in this project. 4. Description The project has five components:1) Capacity building. Assistance to the Rural Transport Unit (RTU) to oversee the implementation of the rural transport policy and strategy (further capacity building relevant to this -4 -  project in respect of the Provincial Road Agencies (PRA), the Provincial Road Departments (PRD) and small scale labor based contractors is being done under APL-1). 2) Rehabilitation of rural transport infrastructure. This component includes the following: (i) the rehabilitation of about 8,000 km of rural roads. The vast majority of these roads (where traffic is less than 50vpd) will be improved to "basic access standard" which is defined as the least cost investment to make the roads all-round passable (with the exception of short periods of heavy rains) for the prevailing means of transport. Basic access interventions focus on the elimination of trouble spots. For roads with higher traffic levels (50-150 vpd) full rehabilitation to earth road standard will be sought and above 200 vpd paving of the road will be an option. A first year program has been selected and detailed design and bidding documents are being prepared. Further annual programs in five tranches have been identified. These will be reviewed and adjusted in annual provincial planning workshops. The program will be appropriately packaged in lots for small scale labor based contractors (about 40t of the volume) and for medium to large scale contractors (about 60t of the volume). The program will provide reliable access to an estimated 6 million people or 83t of the population which currently has no reliable access or does not have road access at all. Additionally, it is estimated that each year 5 million person-days of work (at one dollar per day) will be provided in rural areas; (ii) the component also includes a pilot for the improvement of appropriate rural transport infrastructure at community level. This might include the construction of foot bridges or appropriate tracks for ox-carts.3) Maintenance of the rehabilitated network. This component has been made an integral part of the project to ensure that maintenance of the rehabilitated network is executed adequately and appropriately, and that this is closely monitored. Finance for this component will be provided by the RMF (90w) and the provincial governments (10W), and for a limited period by the EU and the central government (which plan to subsidize the RMF from 2002 to 2004). IDA will contribute only a modest amount in respect of a study for the introduction of a heavy vehicle licence fee and, possibly, the continuation of the financing of the technical and financial audit, after expiry of the respective EU financing. The result of the technical and financial audit will be presented to the partners at the annual transport sector conference in May each year. A satisfactory outcome of the audit is a requirement for the continuation of the program. In the case of defaulting provinces, these will be excluded from the following year program. It is estimated that an additional amount of 2.5 million person-days of work will be created on average each year by the maintenance program. 4) Rehabilitation of the corridor Fianarantsoa-Manankara: This corridor relies heavily on the FCE Railway (Fianarantsoa-C