51950 I n tern atIo n al D evelo p men t asso cIatIon Urban Development IDa at WorK HarnessInG UrBanIZatIon For GroWtH anD poverY allevIatIon september 2009 sUstaInaBle Development netWorK contents Harnessing Urbanization for Growth and Poverty Alleviation 2 Benin: Improving Access to Urban Services 10 Uganda: Public Service Delivery Through Decentralized Government 12 Georgia: Developing Municipal Infrastructure, Improving Lives 14 Vietnam: Urban Upgrading Project 16 Yemen: Local Economic Development in Yemen Port Cities 18 d | IDA at WORK: Urban Development Internat Ional IDa at WorK Development a ssoc Iat Ion Urban Development HarnessInG UrBanIZatIon For GroWtH anD povertY allevIatIon Urbanization is a defining phenomenon of this century. Over the next two decades, 90 percent of urban growth will take place in developing countries. In the two poorest and least urbanized regions ­ Sub-Saharan Africa and South Asia -- the urban populations are projected to double. The poorest developing countries today face the dual challenge of expanding services to urban populations in slums, while proactively preparing for new urban growth, fueled in part by rural migration. This booklet describes how the International Development Association (IDA), the concessional lending arm of the World Bank, supports countries as they seek to promote economic growth and reduce poverty in urban areas. Improving access to services, releasing the constraints that trigger the emergence of slums, and enabling cities to attract private investment and create new economic opportunities are just a few of the approaches promoted by the World Bank. This booklet offers several illustrations of how poor countries have proactively addressed this agenda, while also responding to the spread of informal settlements. Decentralization has placed greater responsibility in the hands of local governments, but fiscal resource transfers have often not kept pace. The international development community has recognized the importance of promoting locally-owned approaches to ensure sustainable development. Increased donor support is needed to help establish local governments on a sound footing through capacity building, the promotion of participatory approaches to local planning and budgeting, and the provision of financing that will help to address the backlog of urban service delivery requirements. The World Bank remains committed to supporting its partner countries in preparing their cities and towns for the urban transformation ahead. We look forward to working with other donor agencies and partners in advancing this important development agenda. Zoubida Allaoua Director, Finance, Economics and Urban Development The World Bank IDA at WORK: Urban Development | 1 IDa at WorK Harnessing Urbanization for Growth and Poverty Alleviation Of the nearly 6 billion people on the planet, more strained as population increases. Traffic clogs the than half now live in cities. The crossing of this streets and smog pollutes the air. Land and housing demographic milestone signals a key development become prohibitively expensive, which is why the challenge, particularly in the developing world. Over poor are often found living on hillsides and in flood the next 20 years the United Nations projects that 90 plains, along railroad tracks, waste dumps and in percent of urbanization will take place in developing densely packed slums. countries, which are projected to grow by almost 2 Over the past decade, many countries have billion during that time, equivalent to almost 70 million learned an important lesson ­ that while its pace may each year. Urban populations in Africa and Asia will vary from one country to the next, urbanization is double in this period. By 2030, developing countries inevitable. The challenge is no longer framed as one will host 80 percent of the world`s urban population. of how to stop it, but rather how to harness its power This demographic transformation raises important in enabling growth and improving the prospects for questions about how to deliver development assis- the poor. The International Development Association tance in the decades ahead. (IDA) has played an important role in helping govern- No country has reached a higher stage of ments facing the challenges that come with urban- development without urbanization. Nearly all ization in some of the world's poorest countries. countries become at least 50 percent urbanized Over the past decade, IDA contributed US$6 billion before reaching middle-income status, and all to 101 operations in more than 70 countries. The high-income countries are 70-80 percent urbanized. number of IDA operations doubled over the past Economic research shows that urbanization and eco- decade and IDA funding now comprises over 40 nomic growth move in tandem. Over time, develop- percent of the World Bank's urban development ing countries are rapidly increasing the urban shares portfolio. More than half of IDA-funded urban of their economies, with most countries already projects are in African countries. surpassing 60 percent. But the forces of urbaniza- tion also exact costs. Existing infrastructure is At a Glance · InIDAborrowingcountries,therearesome800millionpeoplewholiveinurbansettlementsnow comprising almost one-third of the population. By 2030, the least urbanized regions of the world -- Africa and South Asia -- are projected to become half urban. · Anestimated1billionor32percentofurbanresidentsworldwideliveinslumsettlements,a disproportionate number of them in IDA countries. · Overthepastdecade,US$6billionofIDAfundswereprovidedforurbandevelopmentactivitiesin 101 operations in over 70 countries. · Infiscalyear2009,85percentofIDAprojectsinvolvingurbandevelopmentwereratedassatis- factory or highly satisfactory by the World Bank's Independent Evaluation Group. 2 | IDA at WORK: Urban Development capacity which is critical in facilitating-evidence IDA CONTRIBUTIONS & RESULTS ON based policy making, budgeting, expenditure THE GROUND targeting, and performance management of public sector agencies. Ultimately, these activities are IDA has assisted many countries to deal with the designed to improve the livelihoods and access to profound changes and effects of urbanization. By services of the urban poor. supporting projects that bolster economic develop- IDA's support to cities and local governments is ment, IDA has helped open doors to economic provided through five business lines. These include: progress. At the same time, by supporting efforts to (i) City Management, Finance and Governance; (ii) cushion the challenges that can accompany the Urban Poverty and Slum Upgrading; (iii) Cities and process of urbanization, IDA programs and projects Economic Growth; (iv) Urban Land, Housing and have helped minimize the consequences for the Planning; and (v) Urban Environment, Climate most vulnerable urban populations. Change, and Disaster Management. IDA's approach to development of cities ­ like urbanization itself ­has been multi-faceted and embraces many economic and social sectors. Many Improving Urban Governance and Management. A central issue in urban management is the inad- urban projects have multiple, but related objectives. equate or unequal provision of basic infrastructure-- For example, in Lagos, Nigeria, the Lagos Metropoli- water, waste disposal, and power--to urban resi- tan Development and Governance Project includes dents. Over 50 percent of the urban population in activities as wide-ranging as slum upgrading, South Asia and 40 percent of the urban population in drainage management, solid waste management, Sub-Saharan Africa still lack access to sanitation public finance and budget reforms. In addition, this services. At the same time, statistical data mask project focuses on strengthening of local statistical IDA at WORK: Urban Development | 3 IDa at WorK: Urban Development large discrepancies in service levels by socio-eco- dard are rewarded with additional grant funds. Poor nomic status or area of the city. For example, over performers may lose access to such funds until they 80 percent of Africa's urban population has access meet their contractual obligations. While formal to an improved water source, but the figure in some evaluations have not yet been carried out, IDA cities is less than 20 percent. These deficiencies experience in Senegal, Uganda, Tanzania, Ethiopia, have real economic consequences. In the case of India's Andhra Pradesh, and Punjab in Pakistan has Latin American cities, poor or missing infrastructure been promising. is estimated to have reduced urban economic output Helping cities to strengthen data collection and by 10 to 15 percent. The burden is even higher on management systems ­ and training managers to small firms and home-based enterprises, which use these systems ­ will be a key focus of urban cannot afford to provide their own power if it is development support for IDA in the decade ahead. unavailable or unreliable. The new Global City Indicators Program, which was Decentralization of both decision-making and established by the World Bank with a number of resources is one key to improving the quality of life other development partners, will help IDA countries in for all urban residents. As cities expand their this regard. Its aim is to provide a standardized set footprint ­ often spilling over existing boundaries ­ of indicators that will enable cities to compare and municipal governments become saddled with an benchmark their performance against their peers. ever-growing list of responsibilities, services and With regard to training, the city management certifi- activities to manage. This increase in responsibilities, cation tool implemented in India by the World Bank however, is often not accompanied by increased Institute demonstrates good practice. Certification resources. The challenge is greatest for cities in the courses are taught at local institutions to train poorest countries in the developing world where the government administrators in municipal financial situation is often compounded by constrained management, municipal services management, and national budgets, uneven local capacity, and lack of municipal governance including procurement and trust among city residents. contracting. The impact of the certification in India is One way IDA is working to address these issues is evident across many cities and in many facets of the by focusing on capacity building for local govern- government, notably in property tax system reform, ments, and helping to establish the concept of systems of self-assessment, and improved service municipal contracting. In Senegal, the IDA- funded provision. Local Authorities Development Program is building the capacity of 67 municipalities to deliver much Cities and Economic Growth. needed infrastructure by implementing ongoing Stimulating economic growth is critical to addressing management training and municipal contracting poverty. The highest payoff for economic growth lies procedures. Municipal contracts provide a formal in infrastructure that functions at the scale of the set of "rules" and a framework to combine gover- urban or broader metropolitan region, or where urban nance reforms with financing incentives to make wise infrastructure assets are key hubs in national or even choices about urban investments. Local govern- international networks. Research has shown that the ments that perform well or meet the contractual stan- stock and quality of electricity networks, road and 4 | IDA at WORK: Urban Development other transportation systems, and telecommunica- tion systems matter most for national growth. In India, the quality of transport linkages between cities is closely related to urban growth and urban produc- tivity. Other evidence shows that improving urban airport accessibility and size in countries such as Uzbekistan and Honduras can reduce total air initiative. Completion of this work has resulted in transport costs by 10 percent. Similarly, improving substantial increases in the number of fishermen that urban seaport efficiency, port infrastructure and dock their boats in the adjoining bay area, in the handling can reduce shipping costs by more than 12 number of fish sellers, and in the number of fish percent. The opposite also is true. An analysis of the restaurants in the vicinity of the fish market, global competitiveness of Africa's manufacturing ultimately contributing to an increase in economic sector find that power failures in Tanzania account activity. for the equivalent of a 10 percent sales loss for the median manufacturing firm. Urban Poverty and Slum Upgrading Improving the investment climate within a country Across all the regions where IDA is engaged, the is often the first place to start in attracting investment share of urban poverty is increasing. Recent esti- to cities. Over the past several years the World Bank mates show that more than one-third (36.5 percent) has expanded the scope and coverage of sub-na- of urban populations are living in slums globally. tional surveys of investment climate in cities within Sub-Saharan Africa has the highest share at 62 IDA client countries such as Dar es Salaam, Tanza- percent. Much of the growth in urban slums in nia; Lusaka, Zambia; and Phnom Penh, Cambodia, developing countries is fueled by in-migration from among others. These surveys provide critical rural areas, although in some places the natural rate information about a city's ability to attract investment of population growth exceeds that of in-migration. based on a private sector perspective. Cities can The persistence of informality within cities and compare their performance to their peers and informal settlements along the fringes of cities in establish benchmarks for improvement. places such as Lagos, Mumbai and elsewhere poses City development strategies are another tool with a special challenge. Slums are the nexus of poverty, a strong local economic development focus, and are poor housing, inadequate infrastructure and ser- administered in partnership with Cities Alliance. The vices, crime and violence, evictions, and now, strategies help IDA clients consider how best to increasingly, man-made and natural disasters. leverage their economic assets and mobilize subse- Countries that are farthest from reaching the slum quent donor financing and technical assistance. In improvement targets under the Millennium Develop- Aden City, Yemen, for example, the City ment Goals are mainly in Sub-Saharan Africa where Development Strategy enabled the identification of local governments do not have sufficient capacity to priority small-scale investments, such as a local fish plan for and accommodate the influx of new market as part of a broader seafront redevelopment residents. IDA at WORK: Urban Development | 5 IDa at WorK: Urban Development Helping countries meet the Millennium Develop- Local level initiatives have also been effective ment Goals is a priority for IDA assistance. IDA has when linked to other social programs and done in helped cities prepare to absorb the expected partnership with local community organizations. For demographic growth and avoid further expansion of example, a program in Bolivia focused on enhancing informal settlements and urban slums in many transportation mobility and expanding sewerage countries. Vietnam is an example that stands out for coverage incorporated women's needs into every its success in growth and poverty reduction, in both aspect of the project, from design and job creation to urban and rural areas. The country invested heavily empowering women through titling and community in infrastructure, prioritizing large infrastructure organizations. In places as diverse as Latin America, investments over rural infrastructure, targeted to Tanzania and Yemen, IDA investments in social regions with high numbers of poor people and high infrastructure for day care, youth training, and health growth potential. The idea was to promote urban care are combined with physical upgrading of slums. centers where capital and skills were more plentiful and to redistribute returns through public transfers to Encouraging Progressive Land and Housing rural areas. The growth and poverty impact of this Markets strategy has proven to be very successful. Between Land scarcity is as much or more likely to result from 1992 and 2003, urban poverty in Vietnam was ill-considered policies and regulations than from lowered by an impressive 11 percent per year natural, physical limitations. In Mumbai, for example, (notwithstanding the reductions in rural poverty of 4.2 strict limits are placed on the amount of floor area percent per year). Georgia: Municipal Development & Decentralization Project II: Solving the Road Problem in Leonidze Street in Kutaisi BEFORE AFTER 6 | IDA at WORK: Urban Development that can be put on a lot, in an effort to discourage systems related to these assets. Where appropriate, both density and further in-migration to the city. governments are advised on the design and However, migrants keep coming, attracted by the execution of market-based auctions of some public opportunities the city offers. The limitations on land land assets. In recent years, such auctions have and housing development result in a city that is raised significant sums in places like Bangalore, comprised of mostly low-rise buildings with densely Cairo, and Mumbai , which can in turn be invested in packed "illegal" slums, and land and housing costs needed infrastructure. beyond the reach of much of the population. During the last decade, IDA has helped local Similarly, restrictions in many countries on land use governments in Africa implement a system of street conversion from rural to urban uses also produce addressing to fill the very large gap left by conven- shortages of affordable land resulting in high land tional land administration projects. Street addressing and housing costs. In many African and Asian cities, projects have now been implemented in over 50 the average ratio of the median house price to the African cities. These projects set out to map existing median annual household income is twice that in settlement patterns regardless of the land tenure or many large U.S. cities. In Bangladesh where the per ownership complexity and record that information. capita income (US$1,230) is less than 3 percent of Although it stops short of full titling, addressing that in the US (US$44,070), prime land prices in the recognizes occupancy and enables agencies to capital city Dhaka are similar to those in New York deliver urban services by making it easier to locate City. residents, respond in emergencies, and enforce Land and housing markets in many IDA countries collection for user-pay services, such as water and are further hampered by the insecurity of tenure that electricity. prevails among the urban poor. Lack of tenure leaves residents living in constant fear of eviction, Promoting Safe and Sustainable Cities prevents families from building up assets and A majority of the world's cities are located on coasts accessing credit, inhibits use of their home for or river flood plains, especially mega-cities like income generating activities, and discourages public Dhaka, Mumbai, and Lagos. Worldwide, some 360 investments in infrastructure and service provision. million people live in urban areas in coastal zones, To address these issues, IDA has provided thus increasing their vulnerability to climate change technical assistance to governments on public land impacts considerably. Recovering from disasters is management, and that work is paying dividends. also particularly difficult for the poor as they do not While not all governments are large land holders, have resources or adequate safety nets, and public those that do control a large stock in the public policies often prioritize rebuilding in other parts of the sector need to be strategic in the way they manage city. those assets. IDA technical assistance for public The urban poor often live in environmentally land management has addressed issues of invento- unsafe areas, such as polluted sites near solid waste rying and accounting for public land assets, clarifica- dumps, with open drains and sewers, and near tion of rules and decision making chains related to industrial sites as these are the only lands available. the use of these lands, and improving information The sites are typically more vulnerable to floods, IDA at WORK: Urban Development | 7 IDa at WorK: Urban Development landslides, and earthquakes, with substandard using a new technology that has virtually eliminated housing. For example, the IDA-funded Taiz the use of energy-intensive bricks. Aside from achiev- Municipal Development and Flood Project in Yemen ing substantial reductions in carbon emissions, the provided new flood channels that benefited an units are affordable and the technology transferable. estimated 10,000 households and 1,000 businesses Future IDA projects will focus on helping cities in the city by improving safety and access within the achieve environmental sustainability as part of the city and greatly reducing the loss of lives and broader objective of increasing economic prosperity. property due to flash floods. For IDA countries in particular, environmental LESSONS LEARNED health, energy efficiency and livability concerns are A number of reviews have been carried out in recent linked to their sustainability for the future. Adaptation years to assess our work and distill key lessons to climate change will require investments in improv- learned on policy and implementation issues relating ing living conditions for the poor, and in some cases to urban projects in IDA countries. This assessment may entail the resettlement of whole communities process is important to continued improvements in from precarious locations. In addition, greater the work that we do. emphasis needs to be placed on public transit, and A recent evaluation by the World Bank's Indepen- affordable technologies in new, safer and higher dent Evaluation Group on Municipal Management density construction. Many structurally sound, Projects is an important one as such projects low-cost, low-tech green technologies exist in represent a substantial portion of our portfolio. The developing countries. For example, in India, some review had a number of interesting findings such as 6,000 units of low-income housing are being built the relative success of wholesale municipal develop- ment projects, i.e. those that simultaneously serve a large number of municipalities (greater than six), as compared to retail approaches which serve just a few municipalities. This approach has several advantages. For one, the risk of failure is spread more broadly across many municipalities. For another, it can be used to encourage competition among municipalities for scarce resources based on well defined performance criteria. Finally, it creates economies of scale in capacity building and institu- tional development among municipal staff. All this is important because secondary cities are the fastest growing in many countries, and wholesaling is the best way to deal with the simultaneous challenges of multiple urban centers. The evaluation found the overall impact of our projects on strengthening municipal finance to be 8 | IDA at WORK: Land Policy strong and recommends expanded support for housing and land markets, the general principles of improvements to municipal financial management, enabling markets are still valid, but must be com- automation of systems accounts and reporting, bined with sensible policies and pragmatic approach- raising of municipal own revenues, municipal es to urban planning and targeted subsidies for the contracting and facilitating access of municipalities to urban poor. local credit markets when appropriate conditions are Finally, expanding and replicating successful slum present. Ultimately, cities and local governments upgrading efforts is essential. So, too, are policies that are able to collect local revenues commensurate promoting macroeconomic stability, defined property with the level of services they deliver will be the most rights, a good investment climate, responsive sustainable. governments, well-functioning markets, and broad Data collection and diagnostic tools also are access to infrastructure, health services, and critical to helping national governments and their education. These are the conditions that ensure municipal partners understand the dimensions of the that efforts to alleviate poverty are lasting. problems they are trying to address. New technolo- gies such as satellite imagery and computerized THE WAY FORWARD geographical information systems, have on the one Going forward, a focus on the strategic importance hand, made it easier to get a "bird's eye view" of of urban development at the national level is needed. urban conditions. Yet, information on the ground ­ Despite the urgency of the urbanization challenge, even for such basic items as the number of house- urban issues remain somewhat marginal in many holds and businesses served by infrastructure, the low-income developing countries. In IDA countries, family composition of informal settlements, and the particularly, urbanization often is viewed as compet- ownership of contested parcels of land ­ often is ing with agriculture or, even worse, contributing to its unknown. Here, lack of information becomes an decline. In fact, urbanization can spur demand for impediment to action. IDA, along with the World agricultural products and lead to greater productivity Bank Institute and other partners, is in a unique in fields and farms. position to help build the capacity of client countries Indeed, urban growth is a prerequisite to greater to create and maintain these systems. productivity in almost all sectors of the economy. The Starting in the early 1990s, many developing message is clear. Urbanization is not and cannot be country governments and donors adopted an resisted. Instead, countries should embrace its "enabling markets" approach to housing based on promise of growth while anticipating its downside policies encouraged by the World Bank. This effects by ensuring cities are ready and able to approach focused reforms on issues such as handle the urban transformation ahead. securing land property rights, providing access and cost recovery for infrastructure, and improving the balance sheets of housing institutions. Despite some successes, affordability problems persist and informality in the housing and land sectors abounds in IDA client countries. To address dysfunctional IDA at WORK: Urban Development | 9 IDa at WorK: Urban Development Benin: Improving Access to Urban Services Challenge Results Benin is a small, poor country with a population of As of June 2009, the project rehabilitated the about 8.7 million and a per-person income of paving and drainage for 19 kilometers of dense approximately US$550, which is below the average urban roads, thereby providing 180,000 resi- for Sub-Saharan Africa. Poverty remains widespread. dents better access to economic assets located Nearly half of Benin's population lives in cities--and in city centers (78 percent of end-of-project for many, the simple tasks of everyday life are target); and constructed 4.5 kilometers of new, demanding. As a consequence of continued rural-to- primary drainage network, protecting urban migration, large pockets of dense, poorly planned slums ring Benin's cities. There, people Highlights suffer from poor access to basic services, limited · Job creation. The project supported the Govern- infrastructure, and difficult living conditions. ment's efforts to create jobs by hiring community members to do the work where appropriate. Approach · Community participation. Community Initiative The IDA-financed Second Decentralized City Man- Support Units were created in all six cities for agement Project (PGUD-II) was launched in 2005 to outreach. Neighborhood Development Commit- improve access to infrastructure and basic services tees were established in all 14 poor neighbor- in Benin's primary cities of Cotonou, Porto Novo, hoods that the project targeted. Local community Parakou, and the selected secondary cities of members helped plan and implement the work. Abomey-Calavi, Kandi, and Lokossa. The primary · Stronger city finances. The project instituted beneficiaries were the poorest of Benin's urban poor, better tools for service delivery, infrastructure who live in select slums. Specifically, about one-half maintenance, and fiscal management in the of project funds aimed to provide better access to selected main cities. As a result, by the end of water and sanitation services, as well as shore up 2007 (just two years into the five-year project flood protection--thereby protecting the poorest term), five out of six cities had already exceeded neighborhoods from devastating seasonal flooding; the target of raising their own revenue by 30 an additional one-third targeted transport infrastruc- percent. More specifically, as of June 2009, ture, namely improving road maintenance. Building Lokossa had exceeded its target by 275 percent, on lessons from the previous IDA-funded PGUD-I Abomey-Calavi by 55 percent, Porto Novo by 40 that ran from 2000 to 2004, it integrated well with percent, and Cotonou by 10 percent. Benin's national poverty-reduction strategy--which · Solid waste management in Porto Novo. The had identified urban development as essential to project is in the process of completing the promoting economic growth and improving the construction of a new landfill site in Benin's quality of life for many of its poorest citizens. second-largest city, Porto Novo. A new Solid Waste Management Department opened at the Municipality of Porto Novo and currently oversees solid-waste collection systems. The new landfill has yet to be completed, but progress is on target. 10 | IDA at WORK: Urban Development IDA Contribution The Second Decentralized City Management Project was launched in March 2005. The total project cost--including an additional credit approved in 2008--is $75 million, which IDA provided in its entirety. Given the success achieved under PGUD-I & -II, an additional financing of US$40 million was prepared rapidly to scale up the gains to serve more people and communities. Partners Government partners include: the Ministry of Labor, Social Affairs and Equal Opportunity, the Ministry of As of June 2009, the project rehabilitated Education, the Department of Strategy and Donor Coordination and the Albanian Institute of Statistics. the paving and drainage for 19 kilometers The United Nations Development Programme (UNDP) and the UK's Department for International of dense urban roads, thereby providing Development (DFID) provided multi-year financial 180,000 residents better access to support. economic assets located in city centers. IDA at WORK: Urban Development | 11 IDa at WorK: Urban Development Uganda: Public Service Delivery Through Decentralized Government Challenge Highlights: Despite almost two decades of macroeconomic · Severalinnovationscontinuebeyondthelifetimeof stability, Uganda remains in the lower tier of low- the project. The Local Development Grants are income developing countries and carries substantial now funded by the Government of Uganda, and debt. Local service delivery lags as central and local the Capacity Building Grants have become governments face capacity constraints. In the institutionalized. mid-1990s the Government of Uganda devised a · Policyreformsunderthisprojectwereaccepted strategy for economic reform, the cornerstone of and implemented by government because there which was implementation of a decentralized system was a high level of ownership. Government played of governance with improved service delivery. an important role in the preparation of analytical Accountability at the local level, transparent and work, including identifying issues, preparing terms participatory decision-making, and monitoring of of reference, and recruiting and supervising implementation were vital to the implementation of consultants. IDA supported this process through this strategy. advice and technical assistance. · Theprojecthasalsobeeninstrumentalincreating Approach a national `market' for training. Local governments IDA funded two projects in Uganda, the Local procure training services from a list of accredited Government Development Program and the Second private and public providers in a competitive Local Government Development Project (LGDP II), to bidding process. support local governments and communities in better · LGDP-financedprojectshavegeneratedsignifi- managing economic and social development. LGDP I cant employment growth at the local level and was designed to support decentralization through a increased opportunities for female workers. sustainable, timely, and value-conscious system of · Theprojecthasprovideddiscretionarydevelop- transferring development funds from the central to ment budget for local governments to deliver basic local governments. The second project continued social services (primary education, primary health this support, with additional attention to building local care, water & sanitation, roads, and agriculture government capacity. extension) based on local needs and demands ­ services previously provided by sector ministries. Results By 2007, all major local governments had a three-year rolling development plan and almost all submitted final accounts on time to the Ugandan Office of the Auditor General. Many of these local governments registered an increase in their revenue base of 20 percent or more. 12 | IDA at WORK: Urban Development IDA Contribution · IDAcontributedUS$80.9milliontofundLGDPI with an additional US$9 million funded by both the Government of Uganda and participating local governments. · UnderLGDP1,IDAassistedwiththedevelop- ment of the software necessary for systematic input and output monitoring. · IDA'supportforLGDPIIcameintwobundles:a US$50 million credit and a US$75 million grant (for debt vulnerable countries). · IDA'sresourceswereprovidedincreasinglyas budget support when Uganda developed a systematic budget-performance monitoring tool By 2007, all major local governments had that reports on resource utilization. a three-year rolling development plan and Partners almost all submitted final accounts on time The success of LGDP I attracted four development partners who joined IDA in funding LGDP II: Danish to the Ugandan Office of the Auditor International Assistance contributed US$2.40 million, General. the Government of Austria contributed US$0.30 million, the Government of Ireland contributed US$7.50 million and the Government of the Nether- lands provided US$15 million. Next Steps In parallel with LGDP I and II, IDA financed the Second Economic and Financial Management Project (EFMP II) to improve the effectiveness of public expenditure management. In response to EFMP II and LGDP II, the government requested a follow-up operation. IDA is currently supporting the Local Government Management and Services Delivery Adaptable Program Loan with a US$170 million credit. IDA at WORK: Urban Development | 13 IDa at WorK: Urban Development Georgia: Developing Municipal Infrastructure, Improving Lives Challenge garbage-collection vehicles). The closed MD- Following the break-up of the Soviet Union, Geor- DPII project (2003-07) helped improve living gia's transition to independence was a rocky path. conditions of citizens in 9 cities where almost During the 1990s, the country experienced a 50 percent of Georgia's total population and up precipitous economic slump. Basic urban services, to 80 percent of the country's urban population especially water, wastewater, roads, and solid-waste lives. suffered a decline in quality, coverage, and mainte- nance, which dramatically reduced Georgian Highlights: · Wateraccessincreased.InGori,Ozurgeti,and Approach Tbilisi, 100,000 inhabitants have improved access IDA financed a series of projects to improve Geor- to water. Safe water supply was restored to gia's basic urban services. The IDA-financed Munici- 130,000 inhabitants in Tbilisi after the flood of pal Development and Decentralization Project 2005. (MDDPI) was launched in 1997 to restore infrastruc- · Roadsimproved.Roadswereimprovedandtheir ture services and support the decentralization capacity was increased, resulting in reduced travel process. The MDDPI established the Municipal time and reduced travel costs. Street lighting Development Fund (MDF) to help finance infrastruc- made conditions safer for pedestrians and traffic. ture and manage capacity-building activities. The · Energysavedandcostsdecreased.Energy-effi- Second Municipal Development and Decentralization cient water supply and street lighting resulted in Project (MDDPII) followed in 2003 to further develop cost savings for local utilities. Energy savings were the legal framework of decentralization and municipal attained by shifting to gravity-based systems in development. In 2008, IDA approved financing for a water supply and using energy efficient fixtures, third project, the Regional & Municipal Infrastructure bulbs, and cables for street lighting. Development Project (RMIDP), to help improve the efficiency and reliability of select municipal infrastruc- IDA Contribution ture and assist conflict-affected people by restoring Under MDDPI (1997-2002), IDA financed US$20.9 infrastructure, services, and housing conditions. million, of a total US$28.1 million. The MDDPII cost was US$30.9 million, of which IDA financed US$19.4 Results million. The current RMIDP (2008-12) has a total cost The first and second MDDP completed 129 of US$65.4, of which IDA finances US$40 million The investment projects in 20 Georgian cities. RMIDP includes the implementation of 43 infrastruc- Measurable improvements were seen in roads ture subprojects throughout the country, especially in infrastructure (paving 40 kilometers), water secondary cities and towns, and the construction of supply systems (improving delivery for 200,000 durable houses and infrastructure for internally housing units), street lighting, education ser- displaced peoples in conflict-affected areas. vices (fixing roofs and installing heating sys- tems in schools), urban transport (maintaining Partners the electrical supply of Tbilisi's metro system), The World Bank and the U.S Millennium Challenge and solid waste management (purchasing Corporation (MCC) entered into an innovative partnership around the Municipal Development Fund. 14 | IDA at WORK: Urban Development Under this partnership the Millennium Challenge Corporation provides US$60 million for municipal infrastructure development over the period 2006 to 2010, and the World Bank provides technical, safeguards and procurement quality assurance and supervises implementation under a fee-for-service arrangement. Thus, the Millennium Challenge Corporation is leveraging impact with the accumu- lated expertise of the World Bank. Similarly, the World Bank and the European Commission shall enter a partnership agreement (2009-10) through which the European Commission provides Euro 3 million co-financing to the RMIDP toward the improvement of housing and infrastructure condi- The closed MDDPII project (2003-07) helped tions. Other parallel financing, most notably from the improve living conditions of citizens in 9 cities European Bank for Reconstruction and Develop- ment, German Cooperation (KfW), Asian Develop- where almost 50 percent of Georgia's total ment Bank, and Government of Japan, also targets improving municipal services and infrastructure population and up to 80 percent of the through the Municipal Development Fund. country's urban population lives. Next Steps Georgia appears to be on target to achieve the Millennium Development Goals pertaining to water and sanitation by 2015. However, significant invest- ment is still needed to rehabilitate poor water, wastewater, solid-waste management, and road infrastructure, as well as to continue institutional capacity building. Meantime, the Municipal Develop- ment Fund, which helps finance infrastructure and capacity building, has grown steadily as viable financial intermediary with a loan portfolio increasing from US$2.3 million in 2001 to US$18.6 million at the end of 2006. The Municipal Development Fund is expected to continue to grow and leverage additional financing for municipal infrastructure. It also aims to strengthen the capacity of local governments by supporting reforms in the legal and administrative framework of decentralization, and improve financial management procedures. IDA at WORK: Urban Development | 15 IDa at WorK: Urban Development Vietnam: Urban Upgrading Project Challenge Highlights: Vietnam is rapidly urbanizing, with an estimated one · Majordrainageandwastewaterworkshavebeen million new urban residents added each year. By completed in several cities benefiting over 400,000 2020, 40 percent of Vietnam's population of 100 additional people. million will live in urban areas/cities. As urbanization · Over36,000housingimprovementloanshave rapidly increases, the number of urban poor is also been made to low-income households in targeted expected to increase, with major problems of access communities with 95 percent repayment rates. to infrastructure and basic services. Low-income · Householdswithvalidland-usecertificateshave urban areas are facing the challenges of low quality increased from about 50 percent before the housing, high densities, poorly maintained infrastruc- project to over 80 percent in targeted communi- ture, health and environmental hazards, frequent ties. flooding due to poor drainage, and inadequate social · Propertyvaluesinupgradedlow-incomecommu- services. nities have increased 2 to 4 times. · Participatoryplanningandcommunitysupervision Approach of works has been introduced in all targeted cities. The Vietnam Urban Upgrading Project, launched in · TheNationalUrbanUpgradingStrategywas 2004, is intended to alleviate poverty in urban areas approved by the Prime Minister in 2009. by improving the living and environmental conditions · Phase2hasnowbegunandwillincludeupgrad- of the urban poor using participatory planning ing of low-income areas for over 600,000 addi- methods, and influencing planning processes so they tional people, plus major investments in drainage become more inclusive and pro-poor. These objec- and flood control, waste water collection, canal tives are reflected in components of the project, improvements and road networks. including use of partnerships between communities · Alltold,about1,865,000residentsareexpected and local governments to upgrade basic tertiary to benefit directly, and another 1,070,000 resi- infrastructure and other services in low-income dents will experience indirect benefits from the areas, providing affordable housing to low-income project. families that have to be resettled as a result of upgrading, establishing a housing improvement loan IDA Contribution program for low-income households in upgraded IDA contributed US$222.47 million to the Vietnam areas, and providing technical assistance to improve Urban Upgrading Project. In July 2009 an additional land administration processes in the project cities. US$160 million of IDA funding was approved to complete the Tan Hoa ­ Lo Gom canal improvement Results project in Ho Chi Minh City which will benefit about 1 Mid-way through project implementation, over million people. 200,000 low-income people have already benefited directly from improved infrastructure, such as health centers, kindergartens, commu- nity centers and primary schools. 16 | IDA at WORK: Urban Development Partners Local community groups contributed US$4.15 million, the Japan Ministry of Finance contributed US$4.84 million, and the Social Republic of Vietnam allocated over US$150 million of their budget to the program. Cities Alliance funded much of the original policy work leading to the program. Next Steps This project has paved the way for future planning by providing government capacity building, technical support for land and housing management, and the preparation of the National Urban Upgrading Pro- gram. IDA and the Social Republic of Vietnam are Mid-way through project implementation, currently preparing the Second Vietnam Urban over 200,000 low-income people have Upgrading Project (VUUP2) which will focus on cities in the Mekong Delta Region highly vulnerable to already benefited directly from improved climate change. The proposed project will focus on improving living conditions and the environment of infrastructure, such as health centers, the urban poor by providing critical tertiary infrastruc- kindergartens, community centers and ture in low-income areas and support infrastructure in selected cities in the Mekong Delta Region. primary schools. IDA at WORK: Urban Development | 17 IDa at WorK: Urban Development Yemen: Local Economic Development in Yemen Port Cities Challenge Highlights: Yemen is facing the economic challenge of reducing · Thestrategiesintroducedaparticipatoryapproach its dependence on rapidly-depleting oil reserves, to urban planning--including workshops and while developing other promising sectors by attract- consultations with key stakeholders­ which ing private investment. The cities of Aden and Sana'a departed from previous centralized practices. are experiencing rapid population growth, as well as These strategies actively engaged civil society and high levels of poverty and unemployment, limited private sector stakeholders for the first time in capacity at the local level, and low foreign invest- strategy formulation and updating of the city ment. Ninety-eight percent of the manufacturing and master plans and are now being implemented by service sectors are made up of micro- and small- the newly established Local Economic Develop- enterprises, indicating constraints limiting growth into ment Departments at the government level staffed larger enterprises. by civil servants and supported by private consul- Adequate infrastructure and service delivery is tants. integral to attracting private investment, as poor qual- · InAden,theCDShasintroducedpoliciesto ity infrastructure can reduce business efficiency and develop the Port, Airport and Free Zone (the productivity. In Yemen's major cities, low revenue `Core'); to multiply economic value from the Core collection and low expenditures on service provision to the city economy through supply chain linkages; have compromised efficient delivery of critical to create an enabling business environment for services, such as road transport, solid waste new and existing investment (by streamlining management, water and waste water, and power, regulatory procedures, and providing efficient which have not kept pace with urban growth. private sector support institutions); to market Aden to national, regional, and international investors; to Approach develop a competitive labor pool and responsive Yemen's Port Cities Development Program (PCDP) skills development; and to create livable and aims to improve the investment climate and encour- well-serviced urban environments. age growth and the creation of employment opportu- · OneofseveralsubprojectsfinancedbyPCDPhas nities in three port cities: Aden, Hodeidah, and resulted in a profound transformation in a seafront Mukalla. The 12-year program began with small- fish market in Aden. The physical development of scale infrastructure investments and led to the the area provides an important link to an adjoining drafting of city development strategies for each port tourist attraction­ an ancient Portuguese castle on city. Sira Island ­ in addition to improving the working conditions and attractiveness of the market for Results Aden residents and visitors. City Development Strategies (CDS) have been · Fishingboatsthatdockatthemarkethave developed for all three cities, laying the founda- increased from 60 boats at project inception in tion for economic competitiveness. 18 | IDA at WORK: Urban Development 2003 to 200 boats in 2009. The number of fish sellers in the market has gone from 50 to 230, and the number of fish restaurants in the area has more than doubled. Management of the fish market has been contracted out to the local Fishermen's Association (a model of good practice), which cleans the facility and leases out stalls to small-scale fishermen, generating a new revenue stream for the local government of about US$25,000 annually. · Promisingresultstodateincludeamajorupgrad- ing of a small-scale industrial area, inner city road and mobility improvements, and restoration of two facilities that now serve as a city visitor center and City Development Strategies (CDS) have investor services office. Involvement of the local been developed for three port cities: Aden, community and tangible improvements to the city have inspired local businessmen to contribute Hodeidah, and Mukalla, laying the foundation funds to the newly-established Private-Public Partnership Fund, including over US$350,000 to for economic competitiveness. build a training center and initiate training pro- grams in Aden. · Citydevelopmentstrategiesandupdatedmaster plans have been completed for the other port cities of Mukalla and Hodeidah and investment project design is underway to promote IDA Contribution The project cost is estimated at US$96 million in three phases over 12 years. IDA has committed US$23.4 million in the form of an adaptable program loan for phase one. IDA technical assistance has also been mobilized in parallel, to advise on the develop- ment of a new port sector strategy, and in collabora- tion with the IFC in developing the city level invest- ment promotion capacity. IDA also organized a study tour and learning exchange with the city of Rotter- dam to provide Yemen's port city officials with a best practice example of port city rehabilitation and measures to integrate port activity with the city economy. IDA at WORK: Urban Development | 19 IDa at WorK: Urban Development Yemen Partners · TheArabFundforSocialandEconomicDevelop- ment is providing over US$44 million equivalent in co-financing to support the expansion of a major causeway linking two commercial districts of the city. · TheCityDevelopmentStrategiesweredeveloped with support from Cities Alliance, including funding to carry out competitiveness analysis for each city, support for participatory workshops, and develop- ment of capital investment plans. Next Steps The second phase of the Program, planned to begin in 2011, is expected to focus more investments on Hodeidah and Mukalla; investigate the creation of a value chain that could deliver local economic growth within four to five years; and improve the manage- ment capacity of the three port cities, Aden, Hodeidah, and Mukalla. 20 | IDA at WORK: Urban Development IDA at WORK: Urban Development | 21 Printed on recycled paper 1818 H Street, NW Washington, DC 20433 USA www.worldbank.org/ida www.worldbank.org/sustainabledevelopment