Document of The World Bank Report No: ICR00001375 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H1880) ON A GRANT IN THE AMOUNT OF SDR 13.9 MILLION (US$20 MILLION EQUIVALENT) TO THE REPUBLIC OF RWANDA FOR AN URBAN INFRASTRUCTURE AND CITY MANAGEMENT PROJECT IN SUPPORT OF THE FIRST PHASE OF THE URBAN INFRASTRUCTURE AND CITY MANAGEMENT PROGRAM June 24, 2010 AFTUW (Urban and Water) AFCE2 (Kenya, Eritrea, Comoros, Rwanda, Seychelles, Somalia) Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2009) Currency Unit = Rwanda Franc (RWF) 1.00 RWF = US$0.0017513 US$1.00 = RWF 571.00 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS APL (I/II) Adaptable Program Loan (phase one or phase two) ASSETIP Public Works Contract Management Agency (Association d'exécution des travaux d'intérêt public) CAS Country Assistance Strategy CDF Common Development Fund EDPRS Economic Development and Poverty Reduction Strategy ERR Economic Rate of Return HDM-4 Highway Design and Maintenance Standards Model-4 HIV/AIDS Human Immunodeficiency Virus / Acquired Immune Deficiency Syndrome ICR Implementation Completion and Results Report IDA International Development Association IRI International Roughness Index ISR Implementation Status and Results Report M&E Monitoring and Evaluation MININFRA Ministry of Infrastructure MINALOC Ministry of Local Government (Ministère de l'Administration Locale, Développement Communautaire et Affaires Sociales) MTR Mid-Term Review n.a. not applicable NDF Nordic Development Fund NPV Net Present Value OP Operational Policy PAD Project Appraisal Document PCU Project Coordination Unit PDO Project Development Objective PEP Priority Maintenance Program (Programme d'Entretien Prioritaire) PIGU Urban Infrastructure and City Management Project (Projet d'Infrastructures et de Gestion Urbaine) PPF Project Preparation Facility RED Roads Economic Decision Model RHA Rwanda Housing Authority SME Small and Medium Enterprise TTL Task Team Leader UICMP Urban Infrastructure and City Management Project UNICEF United Nations Children's Fund VPD Vehicles per Day Vice President: Obiageli Katryn Ezekwesili Country Director: Johannes C.M. Zutt Sector Manager: Junaid Kamal Ahmad Project Team Leader: Déo-Marcel Niyungeko ICR Team Leader: Déo-Marcel Niyungeko ICR Primary Author: Christian Vang Eghoff Rwanda URBAN INFRASTRUCTURE AND CITY MANAGEMENT PROJECT CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 4 3. Assessment of Outcomes .......................................................................................... 10 4. Assessment of Risk to Development Outcome......................................................... 14 5. Assessment of Bank and Borrower Performance ..................................................... 15 6. Lessons Learned........................................................................................................ 16 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........... 18 Annex 1. Project Costs and Financing.......................................................................... 19 Annex 2. Outputs by Component.................................................................................. 20 Annex 3. Economic and Financial Analysis ................................................................. 23 Annex 4. Bank Lending and Implementation Support/Supervision Processes............. 28 Annex 5. Beneficiary Survey Results ........................................................................... 30 Annex 6. Stakeholder Workshop Report and Results................................................... 31 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 32 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 35 Annex 9. List of Supporting Documents ...................................................................... 37 Annex 10 (Supplemental Annex): Photo Documentation ............................................ 38 MAP A. Basic Information Urban Infrastructure Country: Rwanda Project Name: and City Management Project Project ID: P060005 L/C/TF Number(s): IDA-H1880 ICR Date: 06/25/2010 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: APL Borrower: RWANDA Original Total XDR 13.9M Disbursed Amount: XDR 13.3M Commitment: Revised Amount: XDR 13.3M Environmental Category: B Implementing Agencies: Ministry of Infrastructure Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 07/03/2003 Effectiveness: 06/02/2006 06/02/2006 Appraisal: 11/09/2004 Restructuring(s): 01/15/2009 Approval: 11/10/2005 Mid-term Review: 02/28/2008 03/24/2008 Closing: 03/31/2009 12/31/2009 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Highly Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Highly Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Highly Satisfactory Government: Highly Satisfactory Implementing Quality of Supervision: Satisfactory Highly Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Highly Satisfactory Performance: Performance: i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Yes None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General water, sanitation and flood protection sector 7 Other social services 20 6 Roads and highways 30 66 Sanitation 12 Sub-national government administration 38 21 Theme Code (as % of total Bank financing) Access to urban services and housing 40 52 Decentralization 20 9 Municipal finance 7 Municipal governance and institution building 20 7 Other urban development 20 25 E. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Gobind T. Nankani Country Director: Johannes C.M. Zutt Pedro Alba Sector Manager: Junaid Kamal Ahmad Eustache Ouayoro Project Team Leader: Deo-Marcel Niyungeko Sylvie Debomy ICR Team Leader: Deo-Marcel Niyungeko ICR Primary Author: Christian Vang Eghoff ii F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Development Objective of the first phase of the APL is to increase access to priority urban infrastructure in Kigali and two secondary cities (Ruhengeri and Butare). Revised Project Development Objectives (as approved by original approving authority) The PDO was not revised. (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Population having access to paved road in Kigali and Butare (Huye) Kigali: 488,322 No revision of (sector level) values but 675,150 (district Value Kigali: 415,800 Kigali: 355,800 adoption to level) quantitative or Butare (huye) Butare (Huye): 8,520 reflect Butare (Huye): Qualitative) 15,600 territorial 47,258 (sector restructuring. level) 290,677 (district level) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Target surpassed in both Kigali (117 percent) and Butare (303 percent). The Comments roads opened up new areas to development and benefited a larger catchment area (incl. % than anticipated. The restructuring was carried out to take into account the achievement) reconfiguration of the Population having access to improved municipal social facilities in Ruhengeri Indicator 2 : (Musanze) Value quantitative or 29,500 36,000 n.a. 70,258 Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments 195 percent achievement. The facilities constructed in Ruhengeri (Musanze) (incl. % attracted a much larger number of users than anticipated. achievement) Indicator 3 : Population having access to improved social and economic infrastructure Value Effective 605,828 PAD: 118,400 quantitative or PAD : 572,000 n.a. (sector) 1,036,075 Verified: 392,820 Qualitative) (district) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments 106 percent. Comments: this indicator has been disaggregated into roads and (incl. % social and economic infrastructure, as not all investments were known at the achievement) beginning of the project (demand-based) Percentage of financial resources allocated yearly through the municipal budget Indicator 4 : to finance infrastructure and facilities maintenance programs iii Kigali city: 17.7% Kigali city: 15% Kigali city: 2.5 % Kigali districts: Kigali districts: Value Kigali districts: 5.4 % 15,3% 10% Butare quantitative or Butare (Huye): 7.1 % n.a. Butare (Huye): (Huye): 10% Qualitative) Ruhengeri (Musanze): 2.2 27,44 % Ruhengeri % Ruhengeri (Musanze ): 10% (Musanze): 15,67% Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Target surpassed. All budget allocations for infrastructure and facilities Comments maintenance programs are above appraisal expectations. This is largely (incl. % explained by the drive of the local governments to make the best use of the tools achievement) and training provided by th (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Roads constructed, non-rural (kilometers). Core Indicator. Value (quantitative 0 20.00 n.a. 22.64 or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 The full program of road works was implemented (20 kilometers). This is a core Comments indicator, added to ISR#10 during AFTRL ISR reviews to include newly defined (incl. % core indicators to all project M&E frameworks. The target value has been achievement) erroneously entered in pre Indicator 2 : Total number of classrooms built or rehabilitated. Core Indicator. Value (quantitative 0 58 n.a. 58 or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 100 percent achievement. This is a core indicator, added to ISR#10 during Comments AFTRL ISR reviews to include newly defined core indicators to all project (incl. % M&E frameworks. The number includes the classroom built or rehabilitated in achievement) three schools and in the Kimisa Indicator 3 : Health facilities constructed, renovated, and/or equipped. Core Indicator. Value (quantitative 0 1 n.a. 1 or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 100 percent. One new 5-block facility constructed and equipped in Ruhengeri Comments (Musanze) as foreseen. This is a core indicator, added to ISR#10 during AFTRL (incl. % ISR reviews to include newly defined core indicators to all project M&E achievement) frameworks. Indicator 4 : Programmed projects satisfactorily completed by ASSETIP Value 0 (newly established 80% n.a. 100% iv (quantitative executing agency) or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments Target surpassed. 100 percent of programmed projects carried out satisfactorily, (incl. % as verified by an external technical auditor. achievement) Percentage of facilities built or rehabilitated by the project and effectively made Indicator 5 : operational by the end of the project by the beneficiary districts and city Value 0 (no infrastructure built (quantitative or rehabilitated at the 80% n.a. 100% or Qualitative) outset of the project) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments Target surpassed. 100 percent achievement. All facilities are operational, (incl. % including the Kicukiro bus station, which began operation in February 2010. achievement) Upgrading pilot projects effectively implemented in Kigali with appropriate Indicator 6 : standards Value (quantitative 0 (not existing) 1 n.a. 1 or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments 100 percent achievement. The pilot project covered two neighborhoods, which (incl. % were upgraded with appropriate standards. achievement) Pro-poor urban strategy complemented with lessons learned through the Indicator 7 : implementation of the pilot projects and during the project life Value (quantitative 0 1 n.a. 1 or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments 100 percent achievement. The strategy was elaborated as foreseen, including (incl. % lessons learned. achievement) One low-income zone serviced with revised basic standards and made available Indicator 8 : by the City of Kigali to low income dwellers Value (quantitative 0 1 n.a. 1 or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments 100 percent. The low-income zone was serviced with revised basic standards and (incl. % made available by the City of Kigali to low income dwellers as foreseen. achievement) Indicator 9 : Action plans to improve resource mobilization have been developed in each city Value 0 (no action plan (quantitative available at the outset of 3 n.a. 3 or Qualitative) the project) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments 100 percent. The three cities have action plans to improve resource mobilization. v (incl. % achievement) Indicator 10 : Municipal financial reports and ratios are produced annually by cities Value 0 (no reports available at (quantitative 3 n.a. 3 the outset of the project) or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments 100 percent. The three cities are producing annual municipal financial reports (incl. % and ratios. achievement) Indicator 11 : Percentage of works amounts executed by local SMEs Value (quantitative 0 50% n.a. 48% or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Comments 96 percent achieved. The two largest contracts (roads) were executed by one (incl. % foreign contractor, since no local contractor had the technical capacity to execute achievement) this type of works. Indicator 12 : Percentage of operating costs of the ASSETIP to investments program amounts Value (quantitative 0 (new agency) 5% 8% 7.2% or Qualitative) Date achieved 10/03/2005 03/31/2009 04/04/2008 12/31/2009 Target surpassed. At MTR, it was agreed to revise the indicator from 5 percent to Comments 8 percent. The reason was that ASSETIP, as a newly established entity with (incl. % related start-up cost, was not realistically able to live up to initially specified achievement) demands. An au Indicator 13 : Number of days for paying invoices to works contractors Value (quantitative 45 (average) 10 n.a. 6.9 or Qualitative) Date achieved 10/03/2005 03/31/2009 03/31/2009 12/31/2009 Target surpassed. ASSETIP handled payment of invoices better than expected. Comments The performance of 6.9 percent for 2009 represents a slight increase compared (incl. % to the average payment time over the life of the project of 5.6 days, justified by achievement) the high number of G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 12/01/2005 Satisfactory 0.00 2 05/11/2006 Satisfactory Satisfactory 0.00 3 09/26/2006 Satisfactory Satisfactory 3.39 4 11/11/2006 Satisfactory Satisfactory 3.39 5 05/10/2007 Satisfactory Satisfactory 4.93 vi 6 11/06/2007 Satisfactory Satisfactory 7.05 7 05/06/2008 Satisfactory Satisfactory 12.03 8 10/30/2008 Satisfactory Satisfactory 18.11 9 04/30/2009 Satisfactory Satisfactory 18.99 10 07/30/2009 Satisfactory Satisfactory 19.92 11 12/30/2009 Satisfactory Satisfactory 20.29 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Third level restructuring (approved by the Country Director) to drop the indicator 01/15/2009 N S S 18.11 and APL II trigger relative to urban audits and City Contracts and revise the operating cost target for ASSETIP. I. Disbursement Profile vii 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal At the time of appraisal, the urban sector in Rwanda faced many challenges stemming from a mismatch between infrastructure development/service delivery and a high urban population with high growth rates. The country was still predominantly rural but the urbanization rate had reached 17 percent, up from 6 percent in 1991. The population growth rate had been particularly high in Kigali (6 to 8 percent per year), with a threefold increase in population between 1994 and 2002. The level of infrastructure in Kigali was programmed to accommodate about 450,000 people, whereas the population had reached over 800,000 inhabitants. Secondary cities registered a twofold increase in population over the same period. Rapid urbanization had resulted in unplanned and squalid settlements, urban sprawl, and increasing urban poverty. More than 80 percent of the population of Kigali and 85 to 90 percent of the population of secondary cities lived in informal neighborhoods, often in areas considered precarious or unsafe. The country was still addressing the legacy of the 1994 genocide, in which more than one million people were killed and two million were driven into exile. Insecurity of land occupancy was a major problem in urban areas. Due to land availability constraints and the legacy of the social crisis, strategic choices for land use and for urbanization were highly sensitive. Rwanda had, however, made remarkable efforts in economic recovery and social reconstruction. Decentralization was a priority of the government and significant progress had been achieved in operationalizing the decentralization framework and transferring capital funding to local levels. Medium Term Expenditure Frameworks and Community Development Plans had been institutionalized at the local levels. But faced with high infrastructure costs (in part due to the landlocked nature of the country), and without accompanying urban planning tools and financial and human resources, cities were ill equipped to provide needed infrastructure and services to their growing populations. Government and donor response Because of the magnitude of poverty in rural areas and the focus on post-conflict recovery, the Government and development partners had not placed much emphasis on resolving urban development issues in the previous decade. However, recognition was growing that the urbanization trend had resulted in a majority of city dwellers being poor and vulnerable. The central government and the city of Kigali had implemented small- scale, labor-intensive infrastructure projects, demonstrating a willingness to test and develop alternative arrangements for infrastructure development and an interest in urban development. Various development partners had financed similar activities and supported local development plans in selected districts, with UN-Habitat having developed particularly good experiences in urban land development in Kigali. The strategic objectives of the Poverty Reduction Strategy and Vision 2020 were being translated into concrete intervention frameworks to address these urbanization challenges through new strategies and policies in the areas of decentralization, land use, and 1 housing, including through the Kigali City Development Strategy. In spite of these advances, financing for infrastructure and decentralization remained limited and did not substantially address broader urban development issues. World Bank response Through the Country Assistance Strategy (CAS), the World Bank clearly identified infrastructure development and good governance as a key element of poverty reduction. The IDA-funded Decentralization and Community Development Project and the Public Sector Capacity Building Project were providing specific training and capacity building support to decentralized entities. The World Bank was the only external assistance agency able to commit significant resources to a broad program in urban policies, capacity building, and investment over a long period of time. Through this project, the Urban Infrastructure and City Management Project (UICMP), the Bank was to support consistent and incremental capacity building programs over an extended period of time and consolidate efforts in urban areas under a coherent framework. In addition, it was to contribute to the CAS objectives of local economic development and employment generation. 1.2 Original Project Development Objectives and Key Indicators (as approved) The Project Development Objectives (PDO) of the first phase of the Adaptable Loan Program (APL) was to increase access to priority urban infrastructure in Kigali and the secondary cities of Butare (later named Huye) and Ruhengeri (later named Musanze).1 The overall development objective of the APL (2 phases) was to increase access to urban infrastructure and services in Kigali and five secondary cities. The key indicators would measure: (a) the increase in the population having access to improved social and economic infrastructure; and (b) the increase in resources allocated to finance infrastructure and maintenance programs. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO and key indicators for the first phase of the APL were not revised. The second phase of the APL which was to expand coverage to three additional cities was cancelled in 2009. 1.4 Main Beneficiaries The impacts of the project were intended to benefit primarily the population of Kigali through city-wide and inter-district investments. Some of the poorest neighborhoods of Kigali and the two secondary cities would benefit from district level investments in roads, pathways, schools, health facilities, sports and recreational facilities, drainage, bus stations, and other economic investments. The benefits would be felt primarily in terms of: (a) improved physical living conditions, access to basic services and environmental management; (b) increased security of tenure and increased property value due to 1 An administrative reorganization took place in 2006 just before commencement of project implementation by which the city of Butare was transformed into the district of Huye, incorporating the rural hinterland into an enlarged local government. Similarly, the city of Ruhengeri became the district of Musanze. 2 improved overall amenities; and (c) improved health with reduction in waterborne disease and reduced medical costs. On a broader scale, both the population and the local private sector would benefit from: (a) employment generation through using labor-intensive construction techniques and promoting small- and medium-enterprises (SMEs) in construction and urban services; (b) decreased production costs due to lower vehicle maintenance and transport costs resulting from road improvements; (c) increased productivity and efficiency arising from reduced flooding and avoided flood damages to economic property; and (d) enhanced investment climate due to improved service delivery. Local governments, as the entities responsible for delivering most of these services, would benefit from increased capacity to mobilize local resources, to identify, prioritize, and undertake sustainable investments relevant to the needs of their populations, and to maintain these assets through the development of a systematic approach to financing, and operations and maintenance arrangements. 1.5 Original Components (as approved) Component 1: Urban infrastructure (Appraisal/actual cost: US$10 million/US$13.8 million) This component aimed at improving the provision of priority infrastructure and services in Kigali, Butare (Huye), and Ruhengeri (Musanze) through: (a) city-wide and inter- district investments, in particular for Kigali, that benefit several districts, support economic development, improve the urban environment, and contribute to improving the functioning of the city as a whole; and (b) district-level investments identified in Community Development Plans prepared by local Community Development Committees. Component 2: Slum upgrading and low-income development zones pilot-project (Appraisal/actual cost: US$1.9 million/US$2.0 million) The objective was to initiate pro-poor urban upgrading and land development strategies through pilot projects. Sub-component 1: (a) Program to upgrade one poor neighborhood in Kigali, with focus on improving access roads and pathways, drainage and run-off control, and public space improvements; (b) pilot "street addressing" operation in one poor neighborhood. Sub-component 2: Pilot the establishment of a development zone for low-income dwellers to define and test new practices to help control urban sprawl and provide serviced plots to low-income households. Component 3: Institutional capacity building and project management (Appraisal/actual cost: US$4.0 million/US$3.6 million) The component aimed at improving the capacity of stakeholders to use improved urban and municipal management tools to plan, deliver, and manage urban infrastructure and services. Sub-Component 1: Institutional capacity building in beneficiary cities and districts, ministries, and the local private sector with focus on: (a) resource mobilization; (b) accounting procedures and municipal and financial management, including priority maintenance programs; (c) improvement of urban planning practices and sector studies in support of decentralized urban development, urban planning, land management, and urban environment (carried out through a partnership with Cities Alliance and UN- 3 Habitat); (d) urban environment management, support to HIV/AIDS programs in Kigali; strategic drainage plans and anti-erosion infrastructure (the latter financed by the Nordic Development Fund (NDF)); and (e) studies and cross-cutting activities (such as update of City Contracts and preparation of APL II), and other training activities for districts, central government, and local contractors. Sub-component 2: Funding to implement resettlement action plans and any unexpected resettlement. Sub-component 3: Support to project implementation, monitoring and evaluation, and technical assistance and training to the Project Coordination Unit and to the newly created Public Works Contract Management Agency (ASSETIP). 1.6 Revised Components The pilot street addressing activity was moved from Component 2 to Component 3. Otherwise, the components were not revised. The second phase of the APL was dropped, but this did not affect the first phase, which is the subject of this ICR. 1.7 Other significant changes During discussions for the FY09-12 CAS, the Government requested to drop APL II, wishing to focus World Bank resources on a limited number of operations and move towards budget support, including for urban development. The Intermediate Outcome Indicators and APL II trigger relative to urban audits and City Contracts was dropped through a third-level project restructuring approved by the Country Director on January 15, 2009. However, the project updated the urban audits to allow the beneficiary cities to prepare for follow-up operations in the sector. The modification did not affect the achievement of PDO or outcome indicators. The project was extended by nine months to allow full implementation of the remaining activities planned under APL I and to consolidate project achievements and ensure sustainability of the developed urban management tools (see section 2.2 Implementation for details). 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Preparation Preparation of the UICMP took place in a context of growing recognition of the importance of urban sector issues. Project preparation took four years. However, this should be seen in light of the difficulties faced in preparing an operation in a sector for which there was neither experience nor data on urban development. The previous Bank- financed project closed more than 10 years ago. Project preparation was used constructively to conduct the necessary background analysis and carry out basic studies with the participation of district staff, communities and local consultants trained for this purpose. It was also used to build consensus around a strategy for urban development and the Common Development Fund (CDF) for transfers to the districts, and to establish the ASSETIP. Enlarging the geographic coverage of the project beyond Kigali was another central element of project preparation that took time to prepare, as was coordination with other donors. Further, the project was prepared, appraised and negotiated as a Specific Investment Loan for an amount of US$40 million 4 over five years, but due to IDA allocation shortage the project was redesigned as an APL in two phases of US$20 million each before renegotiation. The UICMP responded to the objectives of the CAS and the Poverty Reduction Strategy Paper regarding integration of social concerns of the population into the development process. Communities in impoverished areas were empowered through their involvement in the design of the slum upgrading program and in a workshop on the modalities for delegated contract management. The Bank's intervention was justified by the experience brought to the table, especially in terms of urban management tools, the City Contract approach building on audits, and safeguards in relation to urban upgrading. The preparation of the UICMP benefited from strong Government support and swift response to project preparation activities such as the establishment of a delegated contract management agency and adequate resource allocation. During preparation, the Government laid the groundwork for developing pro-poor urban development and upgrading strategies, based on a number of key documents and studies: (a) a strategic framework detailing key elements of an urban strategy; (b) a strategy for slum upgrading in Kigali, marking a shift from the practice of eviction and demolition of irregular zones to solutions which focus on improving the living conditions of the affected population; (c) a strategy for low-income development areas; and (d) a resettlement policy framework for the project. Design The PDO was highly relevant, focusing on access to priority urban infrastructure as the overall objective. To achieve this objective, the project directly financed infrastructure investments, while the design also included well-targeted activities aimed at strengthening beneficiary cities' use of improved urban management tools for programming, implementing and monitoring their investment programs, and improving municipal management and maintenance capacity. This would lay the groundwork for continued improvements in access to infrastructure. The project design built on the idea of the City Contract, a document signed between the city and the central government, detailing performance targets and commitments on both sides. Other types of contractual approaches were already known in Rwanda, but the Bank was able to contribute lessons learned elsewhere in Africa on the specific City Contract approach, and facilitate institutionalization and adaptation to the local context. The City Contract links investments, financed by the Government for the cities (priority investment program), with the cities' obligations in terms of infrastructure and facilities maintenance budgets (priority maintenance program), along with a municipal support program detailing the technical assistance to be provided to the local government. The content of the City Contracts was finalized based on urban, financial, and organizational audits carried out during the project preparation phase to identify physical and institutional interventions. The audits built on existing local development plans, and involved the active participation of the local government concerned, assuring continuity of interventions and full ownership of the process. The extensive consultations with all stakeholders also contributed to bringing to light any implementation risks and developing mitigation measures. These included capacity 5 building and technical assistance required to assure that implementation arrangements were sound, that SMEs were able to participate actively, and that counterpart contributions were made on a timely basis. In coordination with the Cities Alliance and UN-Habitat, the project would test the new urban strategy, developed during project preparation, through a number of pilot projects. The objective was to develop a platform to advocate and test principles and mechanisms that take account of specific needs of low-income populations in city planning and to better address urban poverty in national poverty reduction strategies. The project was further designed to assure full coordination of investments financed by IDA and the NDF, including common implementation procedures. A Project Coordination Unit (PCU) would assure overall project coordination and reporting while a delegated contract management agency, the newly created ASSETIP, would implement infrastructure investments. Quality at entry Quality at entry is rated highly satisfactory. The four year preparation and consultation process was used constructively and productively to lay the groundwork for well-targeted interventions, and was necessary to assure shared ownership of the project and coordination of activities financed by different donors. The project preparation dialogue with involvement of all stakeholders resulted in a project with potential significant impacts beyond the project context. The design was sound, as testified by the fact that even in the absence of an APL II, the project was largely able to consolidate and assure sustainability of achievements. 2.2 Implementation Project implementation encountered challenges with regard to the evolving decentralization process, implementation of works, assuring full operation of all sub- projects, consultant performance, and not least the cancellation of APL II. All these problems were handled proactively by the PCU and the Bank team in a manner that assured achievement of project outcomes. Responding to the evolving decentralization process The decentralization process evolved during implementation, with a transfer of competencies, particularly regarding financial management, between the City of Kigali, districts, and sectors. Modernization of the financial management of Kigali was an activity that was initially intended to be carried out in parallel to the UICMP under a Cities Alliance grant. To facilitate implementation of this grant, implementation responsibility was transferred to IDA. This provided an opportunity to restructure and align activities to make accounting assistance available to the districts and sectors, building capacity to fulfill their newly transferred mandate. Quality of technical studies and implementation of works During the project's civil works activities, replacement of Electrogaz (electricity and water utilities) networks initially caused some delays, since the utility had not been consulted during the technical studies and the networks had not been taken into account. After the mid-term review (MTR), ASSETIP was active in assuring that the technical studies took into account the location of utility networks and all works were finished 6 before project closure and utility networks fully reestablished. Technical audits have confirmed the satisfactory quality of all works. Assuring full operation of sub-projects The MTR carried out an extensive review of project achievements and implementation progress and was used to make minor adjustments. In Musanze district, two sub-projects that were not fully operational were actively sorted out by transferring the operation of a multipurpose hall to a private operator and reaching an agreement with UNICEF to assure water provision to the Karwasa health center. Cancellation of ALP II and adjustments to implementation The dialogue between the Bank and the Government on the new CAS resulted in APL II being cancelled. This happened shortly after the MTR had confirmed that progress towards meeting APL II triggers was satisfactory and preparations for APL II had been launched (see Sections 1.7 and 3.2 for the reasons for cancelling APL II). Following this decision, the project was restructured on January 15, 2009 to reflect the impact of this dropping in the project result framework. The original closing date was extended by nine months to consolidate project achievements and ensure sustainability of the developed urban management tools. The extension also allowed to make up for delays in the construction of the Kicukiro bus station resulting from several site modifications due to land issues, delays in implementation of the street addressing (see paragraph below), and update the urban, organizational, and financial audits for Kigali and the beneficiary districts in preparation of a future operation in the sector. In addition, the Bank team and PCU developed mitigation measures and an action plan to assure sustainability of investments in the absence of continued support within a project context. This action plan was actively implemented during the project extension, and the restructuring of the Ministry of Infrastructure (MININFRA) with establishment of the Rwanda Housing Authority (RHA), incorporating the mandate and tools of the PCU, is a result of this dialogue. Consultant performance All investments and activities except for one phase of a pilot sub-component for Kigali have been completed. This is Phase II of the street addressing sub-component, which is now being finalized using city revenue and MININFRA allocations. The reason for the delay in completing this activity is poor performance of the consultant, whose contract had to be terminated following several warnings, with the result that only the soft part of the work (design of the system) was completed. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Design The results indicators in the Project Appraisal Document (PAD) focused on the key elements of the PDO: improving access to priority urban infrastructure in the short term and making the necessary funds available to maintain infrastructure and facilities, while developing the tools that would lay the foundations for continued improvements in the long term. The performance of ASSETIP would also be monitored, while the City Contracts and tracking of selected municipal financial ratios would provide information 7 on the performance of the local governments. The M&E framework design was sound, based on simple data collection methods. Implementation The project was implemented in a general context of strong focus on results, with all levels of the Rwandan administration involved in regular performance reviews. Shortcomings in attribution of M&E responsibility were solved early on and responsibility was clearly given to the PCU, with input from the various implementing agencies. M&E data was collected, consolidated and systematically evaluated by the PCU and shared with the Bank, as evidenced by the regular updates to the Implementation Status and Results Report (ISR). Utilization The M&E framework was actively used to make minor adjustments to project implementation. As detailed in the Datasheet, the project disaggregated some indicators to enable the tracking of impact of different types of infrastructure. The indicators were also adapted to take into account the incorporation of rural areas into the new districts. The MTR was timely and was used to review project progress in depth, confirming the progress towards meeting key performance indicators. The high operating cost of ASSETIP compared to the target was analyzed, appropriate solutions found, and the indicator adjusted to a new realistic target.2 Most of the tools used to assure regular data collection, such as the City Contracts and financial ratios, will continue to be useful tools to follow performance of the local governments both in terms of self-evaluation and oversight. 2.4 Safeguard and Fiduciary Compliance Safeguards compliance The project was rated Category B as no adverse long-term impacts were anticipated. OP4.01 Environmental Assessment and OP4.12 Involuntary Resettlement were triggered. The use of the resettlement framework initially caused some delays due to the novelty of the approach in Rwanda and the necessity to modify technical specifications of sub- projects to minimize adverse social impacts. However, all involved parties (the PCU, ASSETIP, land agencies of Kigali and its district land boards, and the Rwanda Environment Management Agency) collaborated to adopt the resettlement procedures. The Environmental Management Plan has been well implemented and recommendations to improve infrastructure sustainability, security of beneficiaries, and environmental management have been taken into account. The Resettlement Action Plans have been completed and recommendations to finalize compensation taken into account. A total of 866 persons were compensated in accordance with the Resettlement Action Plans. The June 2009 and March 2010 implementation support missions by Bank safeguards specialists confirmed that Bank safeguards policies have been respected. 2 The adjustment was approved by the CD along with the dropping of the APL II City Contract trigger. See Datasheet for details. 8 Fiduciary compliance Procurement and financial management is rated Satisfactory. The post-procurement review at the MTR confirmed satisfactory procurement performance and the implementing agencies have implemented the audit action plan as required. 2.5 Post-completion Operation/Next Phase Reflections on implementation modalities for the APL II were launched at the MTR. Based on these reflections, work was started to fully mainstream the PCU capacities and tools into the government administration. An action plan was developed prior to the closing of the project to transfer capacities and institutionalize the use of project tools by the involved parties. Most of the urban management tools developed under the project have been mainstreamed into national programs piloted by MININFRA and districts. These include (a) urban audits and City Contracts; (b) street addressing; and (c) slum upgrading. Most importantly, following the completion of the project, MININFRA has decided to establish the Rwanda Housing Authority (RHA) as a new institution within the Ministry. The establishment of the RHA is a clear indication of the Government's intention to sustain the project's key contributions to urban management, as it will adopt the work programs and urban management tools developed under the project. The financial management tools have been transferred to the Ministry of Local Administration. The City Contract approach is being institutionalized and five districts are in the process of elaborating urban audits, based on which contracts will be prepared and signed. The ASSETIP is foreseen to play a key role in the implementation of RHA activities and the Government is in the process of establishing the legal framework that would allow ministries, cities, districts, and other public institutions to enter into delegated contract management agreements to implement infrastructure programs. ASSETIP has recently signed, with the District of Huye, the first contract not related to the UICMP. The full program of street addressing activities will be completed by the end of 2010 with funding already assured jointly by the City of Kigali and MININFRA. All other investments and activities have been completed and transferred to beneficiary entities and are functional. An APL II would have allowed further support to assure continued improvements in performance at all levels, in line with what was foreseen at appraisal. However, the basic capacities and the political will exist to start the process of applying the tools developed by the project to all cities in the country, in line with the PAD expectations that this process would be well under way at the end of APL II. MININFRA has allocated US$2.6 million to the continued implementation of urban planning tools for 2010-2011. In addition, anticipated support from other donors for road investments and general urban management issues in Kigali will carry forward some elements of the urban development strategy while some of the policy reform elements will be taken on in the Poverty Reduction Support Grant series. The rehabilitation of 35 kilometers of asphalt roads in Kigali is being supported by Chinese financing and UN-Habitat continues to support the implementation of Urban Audits in other urban centers. 9 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design, and Implementation Objectives The objectives remain highly relevant. The program design reflected proper diagnosis of development priorities, which remain relevant. While the urbanization rate continues to increase, reaching 20 percent in 2007 and projected to reach 30 percent by 2020, poverty in Kigali and other urban areas declined by only 3 and 5 percent respectively. This means that on the whole, the total number of poor in urban areas remains unchanged. Further, although the slum population as a percentage of the total population decreased from 88 percent in 2001 to 72 percent in 2005, the total slum population has continued to increase, reaching 1.3 million. The urban context continues to be marked by numerous under-serviced neighborhoods, significant lack of infrastructure and the need to develop capacities at the decentralized level to support economic growth and poverty reduction. There is also still a need to develop the economic potential of secondary cities to counterbalance the attractiveness of Kigali. In line with these challenges, the Government has increased the MININFRA budget allocated to urban development and housing from US$1.8 million in 2009 to US$12.3 million for the 2010-2011 period. The funds are earmarked towards mainstreaming project outcomes and tools into current government practices and budget procedures, such as the continued use of the CDF. The decision by the Government to drop APL II should thus not be interpreted as lack of priority given to the sector, but should be seen as a push for stronger division of labor among donors, in line with the principles of the Paris Declaration on Aid Effectiveness. Regarding the current CAS (FY09-12), the City Contract approach is in line with the theme on promoting economic transformation and growth, particularly in relation to strengthening management of public resources at local levels. The culture of maintenance, which the UICMP has helped instill based on the accompanying tools, supports the focus of the CAS on long term sustainability of infrastructure services. The project has also provided a number of tools that can help mitigate the weak implementation capacity, particularly at the decentralized levels, a risk specifically identified in the CAS. The Economic Development and Poverty Reduction Strategy (EDPRS) continues the focus on development of improved urban human settlements consistent with the contemplated sustainable land use and environment protection schemes. The habitat sub- sector aims to develop a sound policy and strategy for urbanization in a sector-wide approach, and will include all the stakeholders in an effort to strengthen the sub-sector. Partnerships between government and the private sector will be of essence, building on the experiences of the UICMP. Design As described above (Section 2.1), the design was relevant to the challenges identified at appraisal and remains relevant to the current challenges in the urban sector. The 10 incorporation of lessons learned regarding the City Contract and slum upgrading were key success factors. Implementation During implementation, the project was adapted to meet the challenges posed by the evolving decentralization process and the dropping of APL II. The Bank's implementation team responded to these changing needs through changes to project implementation schedule, activities, and approval of restructuring of triggers and targets. 3.2 Achievement of Project Development Objectives Achievement of the PDO is rated highly satisfactory, as the project was implemented with no shortcomings within the resources initially allocated. All key performance indicators and intermediate outcome indicators have been met or surpassed. The target number of beneficiaries has been exceeded. For Kigali and Butare (Huye), 535,580 people have gained access to paved roads, representing 129 percent of the end-of-project target. For Musanze (Ruhengeri), 70,258 people have gained access to improved or new social services, representing 195 percent of the target. Between 15 and 27 percent of municipal budgets are now allocated to infrastructure and facilities maintenance, compared to a target of 10 or 15 percent, demonstrating the ability of decentralized entities to continue delivering services to their inhabitants and assure sustainable maintenance. The achievement of the specific objectives, outlined in the PAD, is described below: (i) Development of programming and financing mechanisms for priority urban investments through programmatic and participatory approaches. This objective has been achieved. The City of Kigali and its three current districts, and the districts of Musanze and Huye signed a City Contract with the Government, validated through a broad participatory process, setting the requirements for investment, maintenance, and capacity building. A second generation of urban audits has been conducted during the project, paving the way for other development programs of decentralized structures to be delivered through City Contracts. Further, the City Contract approach (known as "Imihigo" in the local language) formed the basis for the performance contracts which are now signed between the President and the mayors, based on local development plans and mayors are rewarded according to the terms of these contracts. (ii) Upgrading of infrastructure and service delivery in urban settings. This objective was also achieved. In terms of access to infrastructure and services, the project has achieved the following results in various sectors: Transport Construction of 22.64 kilometers of asphalted and stone paved roads has assured access to roads in slums and poor neighborhoods, better circulation, and inter-connection of districts. Transport cost has been reduced by up to 60 percent due to these additional roads, and businesses are able to get provisions on a regular basis. Prices of staple foods have gone down by 18 percent in neighborhoods surveyed, due to the improved accessibility of the vendors. At least 51 new businesses have opened up along the rehabilitated roads in Huye. 11 The bus stations in Kicukiro and Kimironko favor inter-district movements and ensure a smoother flow in the direction between Kimironko City, Kimironko-Nyabugogo, the City of Kigali and the rest of the country. The bus stations generate US$40,000 per year in revenues for the districts, but could show better results if operation was privatized based on competitive bidding, which is foreseen. Social infrastructure The project has built and equipped: (a) three primary schools, resulting in a decrease in the number of children in each class from 60 to 46, and an increase in the pass rate from 28 to 93 percent in the schools surveyed; (b) a health care center, reducing transport time from three to two hours for the most distant population, and resulting in a tenfold increase in family planning consultations, an increase in the number of assisted births from 466 in 2008 to 5,130 in 2009, and a reduction by 50 percent in the number of home births; (c) a youth center in a poor neighborhood benefiting 500 youths on a daily basis; and (d) a district administrative building and a sector office has improved security and contributed to reducing the number of violent crimes and rapes in the neighborhood by 80 percent. Land development The project has developed a 33 hectare, low-income area in Akumunigo and improved the condition of precarious neighborhoods with roadways, bridges and street lighting. Erosion control Considering the hilly nature of Kigali and Huye, the project has contributed to erosion control through construction of drainage infrastructure, some of which is financed by NDF. (iii) Assisting local governments to improve local resource mobilization, financial management, and capacity building of municipal management. This objective has been achieved. Overall, financial resources have improved considerably (30 percent on average) due to the tools made available by the project (financial ratios, hands-on technical assistance, and equipment) and the culture of performance at central and local government levels. Street addressing has been developed in Huye, Musanze, and partially in Kigali, and pilot local development plans and restructuring plans have been prepared for Musanze. Beneficiary districts are now able to use those tools. Based on project achievements, a guide to municipal management tools has been developed that includes all the tools used in the project such as urban audits, financial ratios, the City Contracts, resettlement action plans, etc. (iv) Testing the mechanisms of inter-government transfers through investment in urban infrastructure. The provision of government funds to districts through the Common Development Fund (CDF) to cover at least 5 percent of district investments costs has been fully operational and the CDF is foreseen to continue funding investment programs through the institutionalized City Contract arrangements. (v) Strengthen the capacity of municipalities, urban actors, and local governments to develop, implement, and evaluate strategies and urban development programs. This was achieved from the preparation stage of the project through (a) a preparatory document for urban strategy development; (b) preparation of a slum upgrading strategy and a concept 12 note for establishment of low-income development zones; (c) elaboration of documents on urban audits and safeguards, to better manage the district's investments; and (d) a pilot for a simplified local development plan and restructuring zone plan for Musanze and Huye. Together with the Government's strategy for slum upgrading in Kigali, the use of Bank safeguards facilitated a departure from the practice of eviction and demolition of irregular zones to consultative solutions with a focus on the needs of the affected population. The Government took the initiative to integrate the project's resettlement approach into the resettlement and compensation law (see Section 3.5(c)). Training has been provided to a wide range of stakeholders, including the land agencies, based on the experience developed by the project in this field. 3.3 Efficiency Efficiency of the project is high, as shown by the economic analysis carried out for the Implementation Completion and Results Report (ICR) (see Annex 3). At appraisal, an economic analysis was carried out only for the major roads in Kigali. Economic Rates of Return (ERRs) for these roads were estimated at between 23 and 56 percent, and Net Present Value (NPV) was US$8.4 million for an investment of US$7.0 million. These roads are still economically justified at project closing, with ERRs of between 33 and 120 percent, and NPV of US$20.7 million for an investment of US$8.7 million. For the ICR, an economic analysis was also carried out for the majority of the other roads financed under Components 1 and 2 (US$11.6 million investment cost, including the roads in Kigali) showing ERRs ranging from 29 to 120 percent and NPV of US$24.3 million. 3.4 Justification of Overall Outcome Rating Rating: Highly satisfactory The project is rated highly satisfactory as its objectives were achieved with no shortcomings and most of its targets being surpassed. The project was soundly designed as APL I of a two-phase APL. The objectives of the project and the APL remain relevant, as City Contracts are being prepared for other cities, in line with an enlarged geographic spread of APL II compared to APL I. The components met or surpassed intermediate results for APL I. Outcomes for APL I were achieved with no shortcomings and relevant triggers for APL II were met. Efficiency of the completed investments is rated high (see Section 3.3). Only one minor activity (street addressing for Kigali) was not completed before the project closing, but will be completed in the coming months. The upgrade to highly satisfactory compared to the satisfactory ratings in the ISRs is specifically justified by the final evaluation of outcome and efficiency after project closure. In addition, the establishment of the RHA further contributing to sustainability is worth recognition. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development By using labor-intensive construction techniques, the project generated more than 539,511 person-days of employment and distributed US$2.2 million in income to manual labor. The impact evaluation showed that the additional income was primarily used to pay for school fees for the workers' children, or spent on health insurance and other basic needs. 13 (b) Institutional Change/Strengthening The project acted as a catalyst, bringing together multiple actors in the sector and facilitating the establishment of the RHA as a single organizational unit to implement the Government's policies in the sector. (c) Other Unintended Outcomes and Impacts (positive or negative) Resettlement laws were updated as an indirect result of Bank safeguards requirements. On the basis of the project resettlement action plans, the Government mainstreamed market-based compensation into land management laws and the land agencies were established to implement this government policy. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops A two-day stakeholder workshop was held during the MTR, with particularly strong participation by the districts and city mayors. The participants expressed overall satisfaction with the project and with the implementing agencies. The Government in particular underlined the continued relevance of the UICMP to the decentralization process. The relevance of the CDF and the City Contract approach was also stressed by the beneficiaries and the performance in terms of maintenance was noted. The workshop recommended continued training of new political leaders and technical staff in the use of the management tools provided by the project and providing strong support to decentralized structures for resource mobilization and financial management. The details of the stakeholder workshop are provided in Annex 6. 4. Assessment of Risk to Development Outcome Rating: Moderate The risk to development outcome comes primarily from three factors: (a) the cancellation of APL II and consequently lack of continued Bank support to implement urban management tools in a project context; (b) effective maintenance of infrastructure; and (c) the implementation of the Kigali master plan developed by the Government, without any Bank inputs, but whose implementation, especially in slum upgrading, could result inconsistent approach to the UICMP slum upgrading approach. Following the decision to cancel APL II, the Government and Bank teams collaborated closely to develop and implement a mitigation action plan. Concerning the continued use of urban management tools, the establishment of the RHA (see Section 2.5) combined with significant demand from the districts substantially reduces the risk to development outcome. Further, UN-Habitat is actively assisting other cities with the elaboration of City Contracts, based on audits and local development plans. The execution of the clauses of the City Contracts for maintenance has initiated a culture of maintenance. For the three cities, budget resources allocated to and spent on maintenance of infrastructure have increased as a result of the introduction of city contracts and the enforcement of annual monitored maintenance plans. The satisfaction of the mayors with project tools is another element that has contributed to improving maintenance. In all districts, budgets for maintenance are higher than the targets, with a 14 minimum of 15 percent of municipal financial resources allocated to infrastructure and facilities maintenance. Districts continue to allocate and execute resources for maintenance, with 59 percent spent at mid-year (end 2009). Despite these improvements, the amounts remain at the lower end of what is needed to assure full maintenance, but the strong commitment by districts to continue to use the tools and by the Government to extend the experience of priority maintenance programs to all districts under the leadership of the MININFRA give some measure of assurance that improvements will continue. For the large roads, adequate maintenance funds are available through the national Road Fund. Contacts have been made with ASSETIP to see how this organization could support the implementation maintenance programs at the district and national level. The Bank was not involved in activities regarding the development or implementation of the Kigali master plan, which was developed by the Government. However, in the absence of an APL II, the Bank will maintain dialogue with the client through the policy reform elements to be taken on in the Poverty Reduction Support Grant (PRSG) series to avoid reputational risks that may result from the implementation of the Kigali master plan and affecting negatively the project outcomes. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Highly Satisfactory The Bank facilitated a participatory process in the emerging urban sector, bringing knowledge and tools that could be adapted to the Rwandan context and used productively, including leveraging Bank safeguards policies in the dialogue to improve resettlement processes. The Bank further facilitated the coordination of initiatives financed by the Cities Alliance and UN-Habitat, and played a central role in bringing in the NDF financing. (b) Quality of Supervision Rating: Satisfactory Bringing extensive experience from the region in improved urban management, IDA was able to support consistent and incremental capacity building programs over an extended period of time and consolidation of efforts under a coherent framework. Project supervision was ahead of its time in terms of the Bank investment lending reform, moving towards implementation support rather than supervision. The Bank was proactive in its dialogue on mainstreaming PCU capacities into permanent administration structures. The 2009-2012 CAS was prepared by the Bank with active participation of the Ministry of Finance and in short time. The dropping of APL II was decided for the valid reasons described above (see Sections 1.7 and 3.1) although preparations for the second phase had already begun. This resulted in the Task Team having to react very quickly to help the PCU mitigate the impact of dropping APL II. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 15 The Bank team continuously supported the client through preparation and implementation and facilitated a focus on results. There was continuity in team leadership and members, a co-Task Team Leader was based in the field and carried out intermediary technical missions, and field-based fiduciary and safeguards specialists actively contributed to discussions on overall results. The overall performance of the Bank project team is satisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Highly Satisfactory Government and beneficiary funds have been provided on time through the CDF. The Government provided funds to cover additional expenses due to the displacement/renovation of Electrogaz networks and for some PCU operating costs. Despite many change in the line ministry, the Government's commitment to the project has been constant. The City of Kigali provided funds for the resettlement of the Akumunigo site and the expansion of the youth center. The Government has drafted the law establishing the RHA which has been forwarded to the parliament for scrutiny and adoption, making sure the tools developed by the project will continue to be used and that the project knowledge will be incorporated into a permanent structure. Beneficiary cities and districts have assured that 100 percent of project-financed facilities are operational. The City of Kigali lived up to its obligations, except for effective management of the Kimironko bus station by privatization through a competitive basis. (b) Implementing Agency or Agencies Performance Rating: Highly Satisfactory The PCU and ASSETIP have retained qualified, efficient, and skilled staff. Technical, financial and progress reports were provided on time and good programming was developed early in project implementation. Contacts with the Government and the Bank team have been regular and excellent. The PCU was highly active in involving beneficiaries in the definition and implementation of project activities. In a culture of keeping local Government departments lean, with a minimum of permanent staff, ASSETIP proved to be an efficient light structure to deliver timely and quality investments through delegated contract management agreements. The agency has lived up to key performance indicators. Delays in works execution, mainly due to the shortage of cement, have not affected the quality of investments and only minor increases were noted in supervision costs. 100 percent of programmed projects were satisfactorily implemented by ASSETIP, as verified by an independent technical auditor. (c) Justification of Rating for Overall Borrower Performance Rating: Highly Satisfactory Both the Government (including beneficiaries) and implementing agency performance is rated highly satisfactory, justifying an overall highly satisfactory rating of borrower performance. 6. Lessons Learned 16 The City Contract approach can be an efficient tool to facilitate improvements in service delivery and municipal and urban management, and to accompany decentralization, even within a limited timeframe. The project confirmed findings from other urban development projects in the Africa Region that this approach and its tools (priority investment program, priority maintenance program, municipal support program, and financial ratios) can be used to effectively link infrastructure financing, maintenance, and capacity building. The City Contract approach is flexible and could be adapted to the Rwandan context. It proved highly effective in focusing activities on results in a context marked by a combination of lack of capacity and rapidly evolving decentralization. Bank safeguard policies can be used as a basis for a constructive dialogue on management of social and environmental impacts of development efforts in general, bringing about changes that reach beyond the project context. Land management is highly sensitive in Rwanda and the needs for slum upgrading are immense. Clearly demonstrating the benefits of a market-based land valuation and participatory approach to determining compensation led to changed approaches to slum upgrading and resettlement, with a focus on the needs of the affected populations. With the majority of the urban population living in slums, recognition of their needs and rights is an important element in sound urban land management. Shared ownership, simplicity, and integration underpin the M&E framework as a tool to manage actively for results. Discussions on project results were initiated early in project preparation, based on the participatory urban, financial, and organizational audits carried out within the beneficiary local governments. This assured a shared understanding of problems, solutions, and expected results among stakeholders, enshrined in the City Contract. The simplicity of the tools, such as the financial ratios, meant they could be understood and used by all parties. Further, their support to and integration into the ongoing decentralization process assured their relevance as management tools. This meant that the M&E framework could be used to assure achievement of results even in a changing context. The ownership of project M&E tools is evidenced by the fact that they now form the basis for signing performance contracts between the President and mayors, assuring continued support for a results-based approach after project closing, both in terms of self-evaluation and oversight. The delegated contract management arrangement provided needed implementation capacity and was well-suited to the Government's desire to keep the administration lean in a post-conflict environment. Delegated contract management arrangements have proved to be efficient in delivering quick results on the ground in the Rwandan context, where the Government has an express desire to keep the administration lean and the numbers of permanent staff on the government payroll to a minimum. The operating costs for the ASSETIP were low towards the end of the project, and the quality was beyond what the administration was able to deliver, both in terms of quality and quantity. The relevance of the delegated contract approach is confirmed by the continued role of the ASSETIP in delivering infrastructure services. 17 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The Government's comments on the substance of the draft ICR relate to the process of establishing the RHA and the compensation policy for resettlement. These comments (see Annex 7 for details) have been incorporated into the final ICR. (b) Cofinanciers The NDF endorses the assessments in the draft ICR and notes that the cooperation has been good. The ICR notes that key missions were well coordinated between the two partners such as appraisal, mid-term review, and closing missions. The PCU was implementing both UICMP and NDF-financed activities and all UICMP supervision missions included review of NDF-financed activities. (c) Other partners and stakeholders The task team has followed up with Cities Alliance, UN-Habitat and UNDP, which received the draft ICR, but no formal comments have been provided. 18 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) Urban Infrastructure 10.60 13.76 129.81 Slum upgrading and low income 1.90 2.03 106.84 development zones pilot projects Institutional capacity building 4.00 3.61 90.25 and project management Total Baseline Cost 16.50 18.70 113.33 Physical Contingencies 1.00*) 0.00 0.00 Price Contingencies 1.20*) 0.00 0.00 Total Project Costs 18.70 19.41 103.80 Front-end fee PPF 1.30 1.26 96.92 Total Financing Required 20.00 20.67 103.35 *) Transferred to actual cost of investments. (b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower (Government of Rwanda) Co-financing 1.70 1.74 102.35 Borrower (local governments through Co-financing 0.90 0.90 100.00 CDF) IDA grant 20.00 20.67 103.35 Parallel Nordic Development Fund (NDF) 6.40 7.13 111.41 financing Japan Policy and Human Resources Grant 0.46 0.48 104.35 Development (PHRD) 19 Annex 2. Outputs by Component Component 1: Urban Infrastructure Appraisal cost: US$10.00 million. Percent of appraisal cost: 53.0 percent. Actual cost: US$13.76 million. Percent of actual total project cost: 66.6 percent. City of Kigali · Roads: 12.81 kilometers of asphalt roads: o Giporoso-Kabeza-ISAE: 5.06 kilometers. o Mémorial-Fawe-Nyarutarama: 7.76 kilometers. · Bus station: Construction of Kimironko bus station. · Youth center: Construction of Kimisagara youth center including furniture and computer equipment. · Erosion protection: 1,063 meters of protective works for ravines: o Bibare: 862 meters. o Migina: 55 and 146 meters. · Erosion protection: protection of five other ravines and construction of 29 outlets. District of Gasabo (Kigali) · Roads: 2.08 kilometers of stone paved road Ministères-Kinamba. · Administration building: construction of the Gasabo district office building. District of Nyarugenge (Kigali) · School: Extension of Cyahafi primary school. Construction of 12 classrooms, Information Technology (IT) room, and management offices. · School: Rehabilitation and extension of Intwari primary school. Rehabilitation and construction of 25 classrooms, construction of IT room and management offices. · Administrative building: Building rehabilitation and modification of Mageragere sector office. · Water: Improvement of one water source in a rural area. · Roads: 0.78 kilometers stone pavement on four small access roads to Biryogo market. District of Kicukiro (Kigali) · Bus station: Construction of the Kicukiro bus station. 20 · Low-income development area. Studies and bidding documents only for the development of the Kimisange site: 75 hectares with roads, drainage, electricity, and water, in preparation of APL II. Ruhengeri (Musanze) · School: Extension of Kabaya primary school. Construction of 14 classrooms and office for the school director (including additional brick wall fence works) and furniture. · Health center: Construction and full equipment of 5 buildings in Karwasa (including additional access road works and minor improvements). · Multi-purpose hall: Construction of the Mubona multi-purpose hall (including additional works to improve parking conditions). Butare (Huye) · Roads: 4.04 kilometers of asphalt roads: o Mukoni-Rango: 2.31 kilometers. o Librarie Universitaire-Matyazo: 1.73 kilometers. Component 2: Slum upgrading and low income development zones pilot projects Appraisal cost: US$1.90 million. Percent of appraisal project cost: 9.5 percent. Actual cost: US$2.03 million. Percent of actual total project cost: 9.8 percent. Sub-Component 1: Neighborhood upgrading. · Kimisagara: 2.93 kilometers of stone paved roads, bridges constructed, and rehabilitated installation of public lighting. Sub-Component 2: Low-income development area. · Akumunigo pilot project: 33 hectares developed. Component 3: Institutional capacity building and project management Appraisal cost: US$4.00 million. Percent of appraisal cost: 20.0 percent. Actual cost: US$3.61 million. Percent of actual total project cost: 17.5 percent Sub-Component 1: Institutional capacity building. · Technical assistance to the City of Kigali and its districts and to the districts of Musanze and Huye. · Training of city, district, and sector staff in financial management and accounting, including targeted accounting assistance mission to the City of Kigali. 21 · Provision of facilities for the classification of tax records for the 35 sectors of Kigali City. · Resource mobilization plan for each of the three local governments. · Equipping the computer room of the City of Kigali. · Street addressing in Kigali, Musanze, and Huye and provision of equipment for street addressing units in Kigali City and the districts of Huye and Musanze (including pilot street addressing in poor neighborhood). · Financial data collection and establishment of financial ratio guides. · Local Development Plan for Musanze and support to implementation. · Initial urban audits for the City of Kigali and its districts and to the districts of Musanze and Huye, and update of the audits. · Priority Maintenane Program (PEP) evaluation report. · Guide to municipal management tools (urban, financial, and organizational audits, City Contract, financial ratios, performance indicators, resettlement action plans, priority maintenance program, and street addressing). · Developed practical guidelines for resource mobilization and training of the financial district staff on the same. · Accounting assistance to the City of Kigali and its three districts. · Training in computer skills of Musanze and Huye district staff. · Training on the preparation of resettlement action plan for all the 35 executive secretaries of Kigali, civil engineering consulting firms, and resettlement committee. · Counseling and voluntary HIV testing for all the beneficiary districts and the City of Kigali. · Equipping the finance departments of the districts and Kigali sectors with office furniture and computers. · Fiscal census in Musanze and Huye districts. · Training on the preparation of environmental and social impact study. · Training of small and medium enterprises on procurement and contract management. · Training of the Kigali district land committees on land law and land policy. · Training of PCU and ASSETIP staff. Sub-Component 2: Resettlement. · Financing of three resettlement action plans. · Socio-economic impact assessment. Sub-Component 3: Implementation assistance. · Support to implementation, monitoring and evaluation, technical assistance and training to the implementing agencies. · Financing of implementing agencies operating cost (PCU) and delegated contract management fees (ASSETIP). 22 Annex 3. Economic and Financial Analysis (including assumptions in the analysis) An economic analysis was carried out at appraisal only for the main investments in road infrastructure in Kigali. For the ICR, an ex-post economic analysis was carried out on the majority of road investments (five road sections in Kigali and Huye). Even though the same evaluation methodology was used for the PAD and ICR, comparison of the ERR can be misleading, as the three road investments initially anticipated were regrouped into two lots during implementation and evaluated as such for the ICR. However, with the data available today, it is possible to carry out an ex-post economic analysis on the majority of road sections financed by the project. Approach used for the economic analysis Following the same methodology as for the PAD, scenarios "with" and "without" project were considered to determine net incremental costs and benefits of the roads. On the basis of these scenarios, the net incremental financial benefits and actual costs of investment programs were assessed. Cash flows are discounted using a discount rate of 12 percent. Costs include capital costs, operation and maintenance costs, and rehabilitation costs. Benefits of provision of urban services improved the quality of life of the poorest residents in Kigali and in the two secondary cities. The economic rates of return calculated for the project understate some of these social and environmental benefits gained in the targeted cities. However, most of the following socio-economic quantifiable and non-quantifiable benefits are included in the overall evaluation of project outcomes (see main text, Sections 3.2 Achievement of Project Development Objectives and 3.5 Overarching Themes, Other Outcomes and Impacts): · Improvement in the quality of life through improved physical living conditions and environmental management; · Increased productivity and efficiency arising from reduced flooding and avoided flood damages to economic property; · Increase in property value due to improved overall amenities; · Enhanced investment climate due to improved service delivery; · Improved health with reduction in waterborne disease and reduced medical costs; · Enhanced local government capacity to fulfill their service delivery mandate; · Employment generation, market creation, promotion of increased private sector participation in the provision of services. By dimensioning public works appropriately and using labor-intensive methods, the project created employment opportunities for unskilled and semi-skilled labor and promoted SMEs in construction and urban services; and · Decreased production costs due to lower vehicle maintenance and transport costs resulting from road improvements. 23 From a macro-economic perspective, by targeting the main cities in Rwanda, the project had positive impacts linked to the following: · Economic growth: The project investments contributed directly to delivering economic growth, in particular through the provision of economic infrastructure (particularly roads and bus stations); · Employment generation: The project generated a considerable amount of short- term employment (SMEs and consultant firms) since labor (mainly unskilled labor) accounted for about 10 percent of total project investment costs (US$2.2 million). Given that interventions in all neighborhoods in the considered cities differ, as the access to services and physical characteristics are not homogenous, an overall Economic Rate of Return and Net Present Value are not calculated for the project. However, the analysis will show that the program overall is economically viable as the analysis of the major components have positive results. Road investments analyzed, accounting for US$11.6 million, i.e. 56 percent of total project cost and 68 percent of total project works, has a global ERR of about 76 percent and Net Present Value of US$24.3 million. Economic Analysis of Roads A full economic analysis was performed on the sub-component related to structuring road investments for Kigali using the Roads Economic Decision Model (RED), the same methodology used at appraisal. In addition, the other road sections included in the project, which were selected based on a demand-driven approach, and which could not be subjected to economic analysis at appraisal, are included in the economic analysis carried out for the ICR. RED is also used for the economic analysis of these roads. Following the methodology described in the PAD, the road investments have been assessed with an evaluation period limited to ten years, which is relatively conservative for this type of analysis. The ICR analysis is also conservative as many other benefits have not been quantified (i.e. cost of time, decreased production costs due to lower vehicle maintenance, and transport costs resulting from road improvements), also in line with the appraisal methodology. Economic unit costs (basic input data feeding into the RED analysis for each road section and calculated using the Highway Design and Maintenance Standards Model-4 (HDM-4) vehicle operating cost module) were updated to current (2010) costs. Other calibration data used in the RED analysis carried out at appraisal was maintained for the ICR analysis. ERRs at ICR are calculated based on actual investment costs for each road section and traffic counting carried out in March 2010. RED was run for each of the five major road sections financed in Kigali and Huye and the results of the economic analysis are presented below. All road sections are economically justified, with ERR varying from 29 percent to 120 percent and NPV from US$697,000 to US$17.1 million. The sections that were subjected to economic analysis at appraisal are still economically justified at project closing. Further underscoring the 24 economic justification of the investments, we note that the infrastructures that were selected based on a demand-driven approach, using socio-economic criteria (and not subjected to economic analysis at appraisal), also turn out to be justified from a purely economic point of view. Table 1 below summarizes the results and Table 2 gives details of one road section. Table 1: Summary of Economic Analysis of Road Rehabilitation Works for the project Road section Length Financial investment ERR NPV (km) cost (US$) (US$) Kigali Giporoso-Kabeza-ISAE 5.1 3,397,839 33% 2,974,000 Memorial-Fawe-Nyaturama 7.8 5,314,036 120% 17,727,000 Ministères-Kinamba 2.1 532,471 82% 1,797,000 Huye Mukoni-Rango 2.3 1,598,826 29% 1,089,000 Librarie-Matyazo 1.7 797,577 33% 697,000 Total/weighted 19.0 11,640,749 76% 24,284,000 The two major road sections in Kigali, Giporoso-Kabeza-ISAE and Memorial-Fawe- Nyaturama, have ERRs of 33 percent and 120 percent respectively. The other section in Kigali, Ministères-Kinamba, is also economically viable, with an ERR of 82 percent. The two sections in Huye have ERR of 33 percent (Librarie-Matyazo) and 29 percent (Mukoni-Rango). Table 2: Detailed Results Economic Analysis: Memorial-Fawe-Nyarutarama Country RWANDA Project PIGU Road Tronçon Memorial - Fawe ­ Nyarutarama Alternative 1 Upgrade to Asphalt Concrete Standard Net Present Value (million $) at 12% Discount Rate 17.727 Internal Rate of Return (%) 120% Equivalent Annual Net Benefits ($/km) at 12% Discount 557019 Modified Rate of Return at 12% Reinvestment Rate (%) 40% Net Present Value per Financial Investment Costs (ratio) 6.06 Net Present Value per PV of Economic Agency Costs 6.29 First-Year Benefits per Economic Investment Cost (ratio) 1.20 Financial Investment Costs (million $) 3.32 PV of Economic Agency Costs (million $) 2.72 PV of Economic Normal Traffic User Costs (million $) 23.30 PV of Economic Generated Traffic User Costs (million $) 1.17 PV of Economic Society Costs (million $) 27.18 Number of Fatalities per km-year After Investment 0.0000 Investment per Population Served ($/person) 7.793687669 Population Served per Investment (persons/1000$) 128.3 25 Ex-post economic analysis shows that structuring road investments made in Kigali under Component 1 of the project were highly profitable, with NPV higher than initially calculated at appraisal (US$20.7 million vs. US$8.4 million for these two roads). This is mostly due to higher than anticipated traffic. On these two roads, transport of persons (cars and buses) increased by 22 percent annually between appraisal and project closing. Transport of goods also went up, by 14 percent per year, while light transport by bicycle and motorcycle saw a more moderate increase of 5 percent per year. Sensitivity Analysis. As at appraisal, a sensitivity analysis was carried out for each of the road sections analyzed. An example is detailed below and supported by the results. The sensitivity analysis calculated the impact of single-variable changes in a static setting and shows that the results are robust for the cases analyzed. A factor of 0.75 was applied to the key main following inputs: Normal Traffic vehicules per day (vpd), Normal Traffic Growth Rate (%), Generated Traffic (vpd), Induced Traffic (vpd), Passenger Time Costs (US$/hr), Cargo Time Costs (US$/hr), Wet Season Duration (days), Project Dry Season Road Length (km), Project Dry Season Roughness (IRI), Project Wet Season Road Length (km), Project Wet Season Roughness (IRI), Project Accidents Rate (#/m veh-km), Project Investment Costs (US$000$/km), and Project Maintenance Costs (US$000/km/yr). 26 27 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Ernestina Attafuah Senior Program Assistant AFTUW Sylvie Debomy Sr Urban Planner LCSUW TTL Catherine D. Farvacque- TTL, initial Lead Urban Specialist WBIUR Vitkovic preparation Sophie Hans-Moevi Language Program Assistant AFTSN Paul Kriss Lead Urban Specialist EASCS Joseph Kizito Mubiru Sr Financial Management Specialist LCSFM Prosper Nindorera Senior Procurement Specialist AFTPC Deo-Marcel Niyungeko Senior Municipal Engineer AFTUW Isabelle Paris Sr Environmental Specialist CESI2 Emmanuel Tchoukou Financial Management Specialist AFTFM Denise R. Vaudaine Consultant AFTU2 Supervision/ICR TTL, preparation & Sylvie Debomy Sr Urban Planner LCSUW implementation Ernestina Attafuah Senior Program Assistant AFTUW Otieno Ayany Financial Management Specialist AFTFM Yvette Laure Djachechi Senior Social Development Specialist AFTCS Maya El-Azzazi Program Assistant MNSSD Diego Garrido Martin E T Consultant AFTRL Lungiswa Thandiwe Gxaba Sr Environmental Specialist AFTEN Bathilde Jyulijyesage Program Assistant AFMRW Chantal Kajangwe Procurement Analyst AFTPC Abdoulaye Kane Urban Specialist AFMBF Lucienne M. M'Baipor Social Development Specialist AFTCS Joseph Kizito Mubiru Sr Financial Management Specialist LCSFM Deo-Marcel Niyungeko Senior Municipal Engineer AFTUW TTL, ICR Africa Eshogba Olojoba Sr Environmental Specialist AFTEN Moustapha Ould El Bechir Senior Procurement Specialist AFTPC Helen Z. Shahriari Sr Social Scientist ECSS4 Marie-Adele Tchakounte Language Program Assistant AFTUW ChristianVang Eghoff Operations Officer AFCF1 ICR primary author 28 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY02 8 69.68 FY03 15 91.52 FY04 24 105.67 FY05 44 185.97 FY06 18 50.41 FY07 0.00 FY08 0.00 Total: 109 503.25 Supervision/ICR FY02 0.00 FY03 0.00 FY04 0.00 FY05 0.00 FY06 13.58 FY07 27 75.65 FY08 34 117.92 FY09 24 87.10 FY10 28 102.80 Total: 113 303.47 29 Annex 5. Beneficiary Survey Results A socio-economic evaluation was carried out at project closing, including a questionnaire survey of neighborhood heads. The relevant findings from the evaluation are presented in the main text. 30 Annex 6. Stakeholder Workshop Report and Results A two day workshop was held during the MTR with participation of all stakeholders involved in project implementation. The mayors of the City of Kigali and the beneficiary districts were particularly active participants during this workshop, which provided an opportunity to gather the views of all involved and develop suggestions to strengthen the project going forward. The main findings were: · Recognition by the Government and support expressed for the UICMP approach and the continued relevance to policy goals and decentralization; · Expression of general satisfaction by mayors and involved structures; · Need to strengthen communication and assure regular refresher activities for concepts and tools developed by the project, assuring increased involvement of new political leaders and technical staff; · The stakeholders were satisfied concerning the CDF financing mechanism and the City Contract approach had been embraced by beneficiaries; · There was a need for additional support to decentralized structures in resource mobilization and financial management; · Excellent performance in infrastructure maintenance programming and implementation by beneficiaries; · Good overall performance of the delegated contract manager (ASSETIP), established before the start of the project; · Good quality of works but weak performance of works supervisors; · Increase in cost compared to study and appraisal estimates due to: (a) shortage of cement and resulting price hikes (42 percent increase from July 2007); (b) cost of fuel; (c) impact of rains, which delayed works and occasionally broke down ongoing works; and (d) the insufficient quality of preparatory studies for roads. · Need to accelerate preparations for APL II given that 80 percent of APL I funds were already committed and works were ongoing. 31 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR (a) Summary in English of the Borrower's ICR The full text of the executive summary of the Borrower's Final Project Completion Report (November 2009) is included below, including the changes made to the text, by the client, after reviewing the version of the Borrower's ICR included in the draft Bank ICR. Begin quotation. Executive Summary In accordance with applicable guidance, the Project PIGU expires on 31st December, 2009. It has made commendable achievements, unanimously recognized by partners and beneficiaries. The project had the merit to have intervened at a crucial period corresponding to the relaunch in Rwanda of major reforms in the field of decentralization and infrastructure. The value added of the project in this process is grouped in three categories: The first added value is to have contributed to the creation of a synergistic framework through which the two actors MINALOC and MININFRA have been able to work jointly for the promotion of local government in a consistent linking capacity and implementation of infrastructure within a decentralized participatory approach. By integrating the two components through a unique coordination, the project has increased the efficiency more than if the two components were conducted in a juxtaposed manner in different structures. The second added value is providing an innovative instrument in this case the City Contract between the parties involved in mutual obligations contributing to the achievement of agreed objectives in the field of infrastructure and decentralization. While the idea of a performance contract is not new in Rwanda, there is indeed, a kind of city contract signed between the Executive on the top and local executive, in the framework of an instrument called "Imihigo". However, the tools provided in the mechanisms of the agreement proposed by the City Project will maximize the opportunity of achieving easier goals. In the particular case, the definition of priority plans contained in the contract stems from a more systemic and participative need for existing and potential real diagnosis available for respond to the needs by offering appropriate measures to increase the capacity for this potential. The third added value is the implementation of infrastructure projects through the agency endowed with the delegation by the districts, the mastery of structure, partly to reduce workloads, partly to support it in skills related to studies, execution and monitoring works. At the end of the first phase of the project, the impressive results observed are as follows: 32 - District staffing with infrastructure and bus stations that have helped change the face of Kigali and two other districts, and participating in dynamic activities in the areas of intervention; - The valuation of low income areas through the provision of basic services and improving the standard of living, such as the provision of public lighting, etc. - The construction of social infrastructure, such as schools and health centers, that contribute to increased numbers of classrooms thus reducing the congestion of students per classroom, or bring the health care facilities closer to the population Beyond the quantitative results that can capture all the practical realities, the project has transformed the lives of thousands of people in Rwanda. This applies to those young people who can now easily access different areas of interest including educational facilities like the Kigali Independent University or just earning a living on new roads by operating motorcycle taxis that have become more numerous and inexpensive than before. In its way, the project has contributed to the vibrancy of the city. This is the case of Tumba area in Huye District where life stopped at 18 hours due to the poor quality of the road. Today, the movements continue beyond 21 hours, to the delight of traders. The road has enhanced in the revitalization of activities, to influence other areas (extension of the city) or even to a more modest scale, to improve the stock management. A trader located along the reconstructed road indicated that since the road is paved, he mobilizes more cash in his stock, since he can now be supplied directly by the supplier, through vans that pass all the time in front of his business center. Elsewhere, we observe a significant injection of money. One house is cited as an example. Purchased at RWF 4 800 000 three months ago, the new owner after building the fence just resold it at RWF 22 million. This indicates major changes coming in the city. The project has also strengthened social ties within communities, among other things, with some built infrastructure serving as a meeting place and part of community development initiatives. All these achievements have been accompanied with the capacity building of municipal managers in resource mobilization, financial management, and accounting to enhance their skills not only to perform better but also to improve the district revenues. The project was entrusted to a team of honest, competent, and dedicated managers, clear and transparent rules, and regular monitoring, allowing expeditious decision-making when adjustments were needed on the project site. The initial objectives set for the project were conceived with the expectation of two implementation phases. When the project attained its completion with the implementation of only the first phase, there remained challenges associated with the sustainability of the tools developed during the project lifespan. 33 These challenges mainly include the following: - Sustaining the benefits acquired through the capacity building process; - Ensure the sustainability of implementation strategies promoted by the project, including the use of City Contract and the adoption by the districts of a delegated contract management system to an autonomous agency; - Make use of the experience gained in the development pilot low-income zones in formulating a policy for the management of slum areas; - Optimize the profitability of some investments and implement management mechanisms to ensure maximization of the district revenues; and - Strengthen the technical capacity of implementation partners commensurate with the decentralization and infrastructure development. End quotation. (b) Comments received from the government on draft Bank ICR The Government provided comments directly inserted in the draft ICR, including editing changes. The full, 47 page draft ICR annotated by the Government is not included here. Rather, the few comments on substance are presented below. The comments concerned the following sections: · 2.5 Post-completion Operation/Next Phase: The Government specified that the incorporation of PCU staff into the RHA, under establishment, is not finally confirmed. · 3.5 (c) Other Unintended Outcomes and Impacts (positive or negative): Request to rephrase the paragraph to take into account mainstreaming of market-based compensation policy. · 5.2 (a) Government performance: The Government pointed out that the law establishing the RHA has been drafted by the Government and forwarded to the parliament for scrutiny and adoption. · Annex 2. Outputs by Component: The activities were specified in more detail. These comments have been incorporated into the final ICR. 34 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Comments were received from the NDF and are included below in full. Begin quotation. NDF'S COMMENTS ON THE DRAFT ICR REPORT IDA-H1880 OF THE WORLD BANK URBAN INFRASTRUCTURE AND CITY MANAGEMENT PROJECT NORDIC DEVELOPMENT FUND CREDIT NO. NDF 439 Credit amount: EUR 5 million Key dates: Signing 14.12.2005 Effectiveness 21.09.2006 Closing 31.12.2010 Disbursement rate as per 31.5.2010 90% Interim rating (2009) Implementing Agency performance Satisfactory Lead Agency (WB) cooperation Satisfactory Project outcomes Satisfactory The project was designed jointly to coordinate the investments to be financed by IDA and NDF. NDF credit was earmarked for stormwater drainage and erosion control improvements and would finance master planning and design of stormwater drainage systems, related implementation and supervision of works, resettlement action plans and compensations for affected persons. Furthermore, the project was to finance some equipment for, and some operating costs of, ASSETIP. Parallel with the procurement of strategic planning consultants, investments could also be started early as the result of designs that had been prepared in advance for two ravines, Bibare and Migina, with the support of IDA. After this first NDF works contract, nine other works contracts for some 26 priority drainage and erosion control systems have been completed in Kigali, mainly in connection with road works financed by IDA. Favorable development of the value of Euro during the project made it further possible to provide some joint co-financing for IDA-financed road contracts in Kigali and Huye. Furthermore, a small road works contract is still ongoing at Kimisange site for new urban development. This is expected to be completed before the end of 2010. The works for the ten contracts have been completed satisfactorily with some short and some long delays, under good technical and financial supervision, and with high quality workmanship and materials. The stormwater systems are in priority locations and are expected to provide a sustainable solution to local drainage and erosion problems if 35 appropriate basic drains maintenance will be available. The contracts were carried out using labor-intensive methods and have been a welcome additional source of income to women and men living close to the various works sites. NDF endorses the assessments in the draft ICR report of IDA. The slightly lower ratings of the NDF project are mainly due to the administrative and other delays experienced during the project and due to shortcomings in progress reporting. The cooperation with the World Bank has been good but might still have benefited from better coordination of supervision missions. NDF/01.06.2010 End quotation. 36 Annex 9. List of Supporting Documents · Project Appraisal Document · Appraisal and ICR economic analysis of roads · Development Financing Agreement · ASSETIP Project Agreement · City Contracts · Project aide-mémoires · Implementation Status and Results Reports (ISRs) · Annual progress reports (2006-2009) · ASSETIP technical audit (2009) · Financial Audits · Government Project Completion Report · Socio-economic impact analysis of sub-projects · Socio-economic impact evaluation of slum upgrading strategy · Project restructuring ­ Official Memorandum (January 12, 2009) · Law Establishing the Rwanda Housing Authority 37 Annex 10 (Supplemental Annex): Photo Documentation ROAD: GIPOROSO-KABEZA (KIGALI) BEFORE (DURING CONSTRUCTION) AFTER ROAD: MÉMORIAL-FAWE-NYARUTARAMA (KIGALI) 38 BEFORE AFTER ROAD: MUKONI-RANGO (BUTARE) 39 BEFORE AFTER KARWASA HEALTH CENTER (RUHENGERI) THIS IS THE OLD RENTED DISPENSARY BUILDING BUT WHICH WAS LOCATED AT AFTER THE NEW HEALTH CENTER A DIFFERENT LOCATION FROM WHERE THE NEW HEALTH CENTER WAS CONSTRUCTED CONSTRUCTED 40 KABAYA PRIMARY SCHOOL (RUHENGERI) BEFORE AFTER ONE OF THE MANY OUTLETS CONSTRUCTED 41 BEFORE AFTER 42 BIBARE - RAVINE BEFORE AFTER 43 MAP 44