Document of The World Bank FOR OFFICIAL USE ONLY ReportNo: 27884-GH PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDCREDIT INTHEAMOUNT OF SDR41.6 MILLION (USD62.0 MILLIONEQUIVALENT) TO THE REPUBLIC OF GHANA FOR A SECOND URBANENVIRONMENTAL SANITATIONPROJECT April 5,2004 Water andUrban2 Country Department 10 Africa Region arestricteddistribution andmay be usedby recipients only inthe performanceoftheir official duties. Its contentsmay not otherwise be disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (Exchange rate effectiveFebruary 18,2004) CurrencyUnit = GhanaianCedi Cedis 8,920 = US$ 1 US$1.49313 = SDR 1 FISCALYEAR January I - December31 ABBREVIATIONS AND ACRONYMS AFD Agence Franqaisede Dkveloppement AMA AccraMetropolitanAssembly BADEA Arab Bank for Economic DevelopmentinAfrica CAS Country Assistance Strategy CFAA CountryFinancialAccountabilityAssessment CPAR CountryProcurementAssessment Review CPPR CountryPortfolioPerformanceReview DCA Development CreditAgreement DfID Departmentfor InternationalDevelopment DgMarket Development Gateway Market EA EnvironmentalAssessment EHD EnvironmentalHealthDepartmentofthe MA EMR EnvironmentalManagementPlan EO1 ExpressionofInterest EOP Endo fProject EPA EnvironmentalProtectionAgency EPZ ExportProcessingZone ERR Economic Rate of Return FAA FinancialAdministrationAct FMR FinancialMonitoringReport GIMPA GhanaInstitutefor ManagementandPublicAdministration GOG Government of Ghana GPN GeneralProcurementNotice GPRS GhanaPovertyReductionStrategy HIV/AIDS HumanImmunodeficiencyVirudAcquiredImmunodeficiencySyndrome ICQ Internal ControlQuestionnaires ICR ImplementationCompletionReport IDA InternationalDevelopmentAssociation KMA KumasiMetropolitanAssembly KVIP KumasiVentilatedImprovedPitLatrine LCS Least Cost Selection LSP Letter of Sector Policy MA Metropolitanor MunicipalAssembly MDG MillenniumDevelopmentGoals MFOs MunicipalFinanceOfficers MLGRD Ministry ofLocalGovernment andRuralDevelopment MOFEP Ministry ofFinanceandEconomic Planning MTR Mid-TermReview FOROFFICIAL USEONLY NCB National Competitive Bidding NDF Nordic DevelopmentFund PAC ParliamentaryAccounts Committee PCU Project Coordinating Unitof MLGRD PIM Project ImplementationManual PPR ProcurementPostReview PRSC-2 SecondPovertyReduction Support Credit PTA ParentTeacher Association PWCBT Project-Wide Capacity Building andTraining programofUESP-1 QCBS Quality andCost Based Selection RAP Resettlement Action Plan RCC Regional Coordinating Council RPF Resettlement Policy Framework SAEMA ShamaAhantaEastMetropolitan Assembly SBCQ SelectionBasedon Consultant Qualification SBD StandardBidding Documents SDR SpecialDrawing Rights SIL Specific InvestmentLoan SOE StatementofExpenditures SPN Specific ProcurementNotices SRFP StandardRequestFor Proposals SSP sss Strategic SanitationPlan Single Source Selection TAMA Tamale Metropolitan Assembly TMA Tema Municipal Assembly UESP-1 Urban Environmental SanitationProject, Credit 2836-GH UESP-2 SecondUrbanEnvironmental SanitationProject UNDB UnitedNations DevelopmentBusiness URTI Upper RespiratoryTract Infection VIP Ventilated ImprovedPit Latrine WMD Waste ManagementDepartmentofthe M A Vice President: Callisto Madavo Country Director: Mats Karlsson Sector Manager: Inger Andersen Task Team Leader: GerhardTschannerl This document has a restricted distributionand may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. GHANA Second UrbanEnvironmentalSanitationProject CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE .................................................................. 5 1. Country and sector issues .................................................................................................... 3 2. Rationale for Bank involvement .......................................................................................... 3 3. Higher level objectives to which the project contributes .................................................... 4 B. PROJECTDESCRIPTION .................................................................................................. 4 1. Lendinginstrument.............................................................................................................. 4 2. Project development objective and key indicators .............................................................. 5 3. Project components.............................................................................................................. 5 4. Lessonslearned andreflected inthe project design ............................................................ 7 5. Alternatives consideredandreasons for rejection............................................................... 8 C. IMPLEMENTATION ........................................................................................................... 8 1. Partnership arrangements.................................................................................................... 8 2. Institutional and implementation arrangements .................................................................. 9 3. Monitoring and evaluation of outcomeshesults ................................................................ 10 4. Sustainability ..................................................................................................................... 10 5. Criticalrisks andpossible controversial aspects ............................................................... 11 6. Loadcredit conditions and covenants ............................................................................... 12 D. APPRAISALSUMMARY ...................................................................................................... 13 1 . Economic and financial analyses....................................................................................... 13 2. Technical ........................................................................................................................... 14 3. Fiduciary ............................................................................................................................ 15 4. Social ................................................................................................................................. 16 5. Environment ...................................................................................................................... 16 6. Safeguardpolicies.,............................................................................................................ 17 * . 7. Policy Exceptions and Readiness...................................................................................... 18 Annex 1:Countryand Sector or ProgramBackground .......................................................... 19 Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies ..................25 Annex 3: ResultsFrameworkandMonitoring ......................................................................... 26 Annex 4: DetailedProjectDescription ...................................................................................... 28 Annex 5: ProjectCosts................................................................................................................ 43 Annex 6: ImplementationArrangements ................................................................................... 48 Annex 7: FinancialManagementand DisbursementArrangements ..................................... 53 Annex 8: Procurement ................................................................................................................ 61 Annex 9: Economicand FinancialAnalysis .............................................................................. 67 Annex 10: SafeguardPolicyIssues ............................................................................................. 75 Annex 11:ProjectPreparationand Supervision ...................................................................... 79 Annex 12: Documentsinthe ProjectFile .................................................................................. 80 Annex 13: Statementof Loansand Credits ............................................................................... 81 Annex 14: Countryat a Glance .................................................................................................. 83 Annex 15: Letterof Sector Policy .............................................................................................. 85 MapNo.IBRD27584 GHANA SECOND URBANENVIRONMENTAL SANITATION PROJECT APPRAISAL DOCUMENT AFRICA AFTU2 Date: March 31,2004 TeamLeader: GerhardTschannerl Country Director: Mats Karlsson Sectors: Sanitation(100%) Sector MangerDirector: Inger Andersen Themes: Other urbandevelopment (P) ProjectID: PO82373 Environmental screeningcategory: Full Assessment Lending Instrument: Specific InvestmentLoan Safeguardscreeningcategory: Limited impact For Loans/Credits/Others: Total Bank financing (US$m.): 62.00 I INTERNATIONAL DEVELOPMENT I 25.99 I 36.01 I 62.00 I ASSOCIATION LOCAL COMMUNITIES 2.96 0.00 2.96 MUNICIPALITIES OF BORROWING 3.25 0.00 3.25 COUNTRY NORDIC DEVELOPMENTFUND 0.00 10.35 10.35 Total: 34.57 46.36 80.93 Borrower: Republic of Ghana Accra, Ghana Responsible Agency: MinistryofLocal Government& RuralDevelopment Accra, Ghana L I Expectedeffectiveness date: October 29, 2004 Exuectedclosing:date: June 30. 2010 Does the project depart from the CAS incontent or other significant respects?Re$ PAD A.3 [ ]Yes [XINO Does the project require any exceptions from Bank policies? Re$ PAD D.7 [ ]Yes [XINO Have these beenapproved by Bank management? [[ ]Yes [XINO ]Yes [ IN0 I s approval for any policy exception sought from the Board? Does the project include any critical risks rated "substantial" or "high"? Re$ PAD C.5 [XIYes [ ]No Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [ ]No Project development objective Re$ PAD B.2, TechnicalAnnex 3 The project development objective is to improve urbanlivingconditions inregardto environmental health, sanitation, drainage, vehicular access, and solid waste management ina sustainable fashion, with special emphasis on the poor. Component 1 - Storm Drainage (US$16.5 million). Liningof primary and secondary drains and erosion Project description [one-sentencesummary of each component] Re$ PAD B.3.a, TechnicalAnnex 4 control inAccra, Kumasi, Sekondi-Takoradi andTema. Component 2 - Sanitation (US$ 7.8 million). Construction and rehabilitation of household, public and school latrines inthe five project cities, and liquidwaste management inTema. Component 3 - Solid Waste Management (US$25.7 million). (a) Constructionof 2 new sanitary landfills, (b) equipment for sanitary landfills, (c) closure and rehabilitation of existingrefuse dumps, (d) operation of sanitary landfills, and (e) private solid waste collection. Component 4 - Community InfrastructureUpgrading inlow-income communities (US$8.5 million). Component 5 - Institutional Strengthening incentral and local government agencies (US$9.6 million, tentatively financed by NDF). Which safeguard policies are triggered, ifany? Re$ PAD 0.6, TechnicalAnnex 10 EnvironmentalAssessment, OP 4.01 Involuntary Resettlement, OP 4.12 Significant, non-standard conditions, ifany,for: Re$ PAD C.7 Board presentation: None Loadcredit effectiveness: None Covenants applicable to project implementation: 2 A. STRATEGIC CONTEXTAND RATIONALE 1. Country and sector issues 1. The Government's strategy for urbanenvironmental sanitation is embeddedinthe GhanaPoverty Reduction Strategy 2002-2004 (GPRS) and elaborated in the Environmental Sanitation Policy of 1999. The Policy analyzes the causes o f the poor sanitation conditions that prevail, establishes the basic principles and objectives for better environmental management, and specifies the institutional responsibilities in the pursuit of these objectives. The Government's Letter of Sector Policy (LSP) on environmental sanitation o f December 30, 2003, confirms these provisions and contains targets and plans for their achievement (see Annex 15). 2. According to the Environmental Sanitation Policy, the underlying causes o f the unsatisfactory environmental situation are deficiencies in: national goals, a defined sub-sector for urban sanitation, sectoral responsibilities, technical capacity in the Ministry of Local Government and Rural Development (MLGRD), up-to date legislation, enforcement, funding on the national and local government level, and adequate professional staff. In addition it faults the Ministries for transferring the responsibility for environmentalsanitation to the Assemblies without a concomitant transfer of resources (see Annex 1). 3. Rapid urbanization requires the creation of more facilities, the construction of which depends heavily on central government and external agency financing. The Local Government Service Act, which was passed by Parliament in June 2003, provides the legal and administrative basis for significant advances on decentralization. The central government is providing subsidies to the Metropolitad MunicipalAssemblies (MAS)for refuse collection, which are particularly large for Accra, and is assisting the MASto create better institutional arrangements for the management of the urban environment. In principle, the responsibility for all urban infrastructure services has been transferred to the Assemblies under a decentralized system (see Annex 1). Civil society is also participating inthe sensitization on the problems and identification o f likely solutions, which are the subject of numerous workshops and other public fora. 2. Rationalefor Bankinvolvement 4. The Second Urban Environmental Sanitation Project (UESP-2) is a repeater project to the Urban Environmental Sanitation Project (UESP-1, Credit No. 2836-GH), which closed on December 31, 2003. In accordance with the procedures for repeater projects, approved by the Board in January 2003l, a Regional Review Panel was constituted - the first in the Africa Region - to review the advisability o f preparinga repeaterproject. The Panel's recommendation was positive, provided the sustainability issues that hadbeen identifiedinUESP-1 were adequately addressed. 5. The Panel's recommendations have beentaken into account inthe preparation o f the project (see Sections B4 and C4). As an improvement on UESP-1, the MAS will implement all of their subcomponents (see the tables in Annex 5). Moreover, the Grant Agreement o f the MASwith the MLGRDandthe Ministry of Finance and Economic Planning(MOFEP) will containperformance criteria for the MASunder which their implementation and general performance will be measured to determine their eligibility to access additional resourcesunderthe Performance-Based Fund(see Annex 6). 6. The project takes a comprehensive and environmentally sustainable approach to solid waste management, including the preparation o f integrated solid waste management strategies by the MAS, support to the operation and monitoring o f the new sanitary landfills, and the closure and rehabilitation o f the active and discontinued refuse dumps in the project towns. In other respects UESP-2 resembles UESP-1: it has the same components and similar implementationarrangements. Building on Success: More EfJicient Processing of RepeaterProjects, January 22,2003 3 7. The present assistance provided by other external development partners for urban infrastructure development is limited largely to road and drainage works by Agence Franqaise de De'veloppement (AFD). The Nordic Development Fund (NDF) has financed institutional strengtheningfor urban waste management and has tentatively agreed to do the same for this project. 8. The unique contribution of the Bank in the sector is the integrated approach to urban development, which combines infrastructureprovision with capacity building, puts in place systems that are sustainable in the long-term, and covers a whole range of institutional, financial, technical, and environmental reforms. The approach includes improvements in the revenue generation of local governments and increasedprivate sector participation. 3. Higher level objectives to which the project contributes 9. The Ghana Poverty Reduction Strategy 2002-2004 contains five medium-term priorities: infrastructure, modernizedagriculture and rural development, enhancedsocial services, good governance, and private sector development. The project responds to these priorities through the provision of infrastructure; the decentralization of responsibilities, which is part of the priority for good governance; and private sector developmentthrough the creation of an enabling environment for the private sector to deliver urbanservices. 10. HIV/AIDS prevention, the provision of safe water, and environmental sanitation are part of the strategies for human resource development and the provision of basic services contained in the GPRS. District Assemblies are expected to rationalize and updateby-laws for the effective management of liquid and solid wastes, aggressively market the construction and use of domestic latrines and enforce by-laws for the provision of sanitationfacilities by landlords2. 11. The 2000-2003 Country Assistance Strategy (CAS) for Ghana contains the provision of urban infrastructure as one of the elements for increasinggrowth and includesa new project for Greater Accra Urban Upgrading in the lending program for approval in 2001. The project was subsequently dropped from the lending program to streamline the Bank's urban sector assistance and to move towards programmatic lending. Some of the objectives of the deletedproject have been incorporatedinto UESP-2. The project is included inthe base-case lending programfor FY04 inthe CAS for 2004-2007 (see Annex 1). 12. Combating HIV/AIDS, malaria and other diseases is Millennium Development Goal (MDG) No. 6, and ensuring environmental sustainability is MDG No. 7. One of the millennium targets to which the project contributes is a significant improvement in the lives of at least 100 million slum dwellers in the world by 2015. The project has adopted one of the MDGperformance indicators, namely the proportion of people with access to improved sanitation (see Annex 3). Ghana is one of three countries that have been chosen to prepare an MDG water and sanitation action plan by June 30,2004, the contents of which will be taken into account inthe formulation andrevision of the detailedplans for project implementation. B. PROJECTDESCRIPTION 1. Lending instrument 13. The lending instrument is a Specific Investment Loan (SIL), processed as a repeater project to UESP-1, which also was a SIL (see SectionA2). GPRS p. 100 4 2. Project development objective and key indicators 14. The project development objective is to improve urban living conditions in regard to environmental health, sanitation, drainage, vehicular access, and solid waste management ina sustainable fashion, with special emphasis on the poor. 15. The intermediate objectives for the project componentsare as follows (see Annex 3): Component 1: Reduce the frequency, severity, and duration of flooding in low-lyingareas, Component 2: Increase the accessibility for low and middle-income residents and school childrento adequate latrines, Component 3: Increase the amount of refuse collected and disposed of in an environmentally sustainable manner, Component 4: Increase vehicular access and reduce flooding, erosion and dust in low-income communities, and Component 5: Enable central and local government agencies to more effectively fulfill their mandate regardingthe project objectives, especially the Waste Management Departments (WMDs). 16. Followingare the key End-of-Project (EOP) targets for Results Indicators (see Annex 3). Component 1: At least half the people living or working near the newly lined drains report reduced flooding. Component 2: At least 230,000 people and 70,000 children inschools gain access to satisfactory latrines. Component 3: Refuse collection increased by at least 5% per year in each o f the five project towns. Component 4: At least 11.5 km o f access roads are surfaced in low-income communities, with roadside drains. Component 5: At least 60% of the serviceable waste management equipment i s in operating condition inall WMDs by EOP. 3. Project components 17. The project area is comprised of the five largest towns in Ghana: Accra, Kumasi, Sekondi- Takoradi, Tamale, and Tema. It consists of five components, which are the same as those o f UESP-1, and addresses the main infrastructure-related aspects of urban environmental management, including institutional and financial capacity building. The subcomponents are high priority items taken from the MAS'Medium-TermDevelopmentPlan. (For details see Annex 4). Component 1 - Storm Drainage (US$16.5 million base cost). Liningo f primary and secondary drains, construction o f small bridges, and erosion control. The main target group of this component is the urbanpopulation inthe 5 towns living and/or working inlow-lying areas, which are subject to flooding. Many o f these neighborhoods are characterized by a high population density and low income. The expected outcome is a reduced frequency, severity, and duration o f flooding in low-lyingareas. Component 2 - Sanitation (US$7.8 million base cost). Subcomponents: (a) construction of household latrines and establishment o f a domestic latrine delivery program, (b) rehabilitation 5 and construction o f public latrines in public places, (c) rehabilitation and construction of school latrines combined with hygiene education and the provision of water supply where needed, (d) rehabilitation or construction of septage treatment facilities, and (e) improved sewerage management in Tema. The main target group i s the population living in low-income neighborhoods without household latrines, users o f public places (such as markets and transport terminals), and school children inschools without a safe means o f excreta disposal. The expected outcome is an increasedcoveragewith conveniently located and hygienic latrines. Component 3 - Solid Waste Management (US$25.7 million base cost). Subcomponents: (a) construction of new sanitary landfills for Accra and Tema and the completion o f the one in Sekondi-Takoradi; (b) equipment for sanitary landfills; (c) closure, and rehabilitation o f existing refuse dumps; (d) operation of sanitary landfills, preceded by the improved operation of some; (e) private solid waste c.ollection; and (f) supply of household bins, skips and skip pads. The main target group is the urban population of the 5 project towns that will benefit from one or the other of these measures. The population residingor working near the present refuse dumps will benefit from better environmental conditions. The expected outcome is an increase in the amount and regularity o f refuse collected and disposed of in a technically, institutionally,' financially and environmentally sustainable manner. Component 4 - Community Infrastructure Upgrading (US$8.5 million base cost). Infrastructure upgrading in low-income communities will consist mainly of access roads, roadside drains, street lighting, water supply, and sanitation. The main target group is the population living and/or working in select low-income communities. The expected outcome is better access to high- density neighborhoods that have been difficult or impossible to access with a motor vehicle, less flooding, erosion and dust, better neighborhood safety at night, fewer water pipe breakages, more registeredwater consumers, and improved sanitation. Component 5 - Institutional Strengthening (US$9.6 million base cost, tentatively financed by NDF). Subcomponents: (a) technical assistance and training, (b) capacity building in MLGRD and other central agencies, (c) capacity building in MAS, (d) malaria vector control and HIV/AIDS prevention, (e) project-wide monitoring, (f) reconditioning of waste management equipment, (g) house numbering, and (h) a communications strategy. The maintarget group is the administration (Assembly staff) o f the 5 project towns and particularly the Waste Management Departments (WMDs) and the Environmental Health Departments (EHDs). The expected outcome is a greater ability of the Assemblies ofthe project towns, especially the WMDs, to more effectively and efficiently fulfill their responsibilities in regard to environmental sanitation inthe long-term with their own resources. 18. The project also includes Pro-iectManagement (US$1.1 million base cost), the refundingof the PPF (US$0.6 million), and physical and price contingencies, which initially constitute the Performance- Based Fund3(US$1 1.1 million), adding up to a total project cost of US$ 80.9 million (see Table A5.1 in Annex 5). The Performance-Based Fund will be used to make allocations to the MASfor additional activities within the project objectives according to their achievement o f the MA Performance Criteria contained inthe Project Implementation Manual (PIM) and specified in the Grant Agreement. The MA's performance will be evaluated annually during the joint implementation review o f the Steering Committee and IDA (Annex 6). Expenditures for project implementation up to a total of SDR 4.0 million incurred in the period between May 1, 2003 and the signature o f the Development Credit Agreement (DCA) are eligible for retroactive financing from the credit (see Annex 7). The Performance-BasedFundwill initiallybe made up ofphysicaland price contingencies, amountingto 13.7% o fthe total project cost. It will be enlarged inthe course of implementationthroughpossible contributionsfrom NDF and AFD and the transfer o f funds that remainuncommittedat the time ofthe Mid-Term Review(Annex 6). 6 4. Lessons learnedand reflectedinthe project design 19. The following lessons have been learned from other World Bank-assisted projects and have been incorporated into the project design. Some o f them are also contained inthe report of the Regional Review Panel of June 16,2003, which assessedthe project's suitability as a repeater to UESP-1. a. The main lesson is that the capability o f the Assemblies to plan for and carry out adequate O&M of the infrastructure that has beenprovided by various projects has been inadequate inspite of past capacity building. Examples of the shortcomings are (i)the low operative state o f the waste management equipment, where at any one time more than half the vehicles may be out of order, (ii)thegrosslyinadequatedesiltingandmaintenanceofdraininsomeMAS,whichincreasesthe chance of flooding, causes erosion and road deterioration, and increases mosquito breeding; and (iii)severalkeypostsintheWMDshaveremainedvacantorarefilledwithunqualifiedstaff.The project design addresses this through (i)a comprehensive institutional strengthening component, linked to the other components, (ii)a greater budget allocation to areas where the O&M performance has been better, such as for latrine construction and community infrastructure upgrading, and (iii)financial support for recurrent expenditures, on a declining basis, for items where it has been particularly difficult to finance their O&M from internally-generated sources, namely the operation and monitoring o f sanitary landfills and private solid waste collection. The start of drain construction through the project in individual MASis predicated on the establishment o f adequate intuitional and financial arrangements for drain maintenance. Rather than providing more waste management equipment, the existing equipment will be reconditioned, where economically feasible, and the maintenance and spare parts supply system improved as part of the institutional strengthening component (see Annex 4). b. The three consultants who were engaged, jointly by MLGRDand each MA, to assist the MA with the implementation of UESP-1, were instrumental in the implementation of the physical components of the project, but were not sufficiently integrated into the MA. This limitedthe sense of ownership of the MASin the project and reduced their ability to carry on with the programs without project support, as evidenced by the unsatisfactory construction of the septage treatment facility in Tema after the contract o f the supervising consultants expired and the long delays in completing and using the Tamale abattoir. The project design will address this through the delegation of responsibilities for the implementation o f their share o f the project to the MAS(see Section C2, C4 and Annex 6). c. International experience with sanitation has shown that significant sanitation-related health improvements only occur with high household latrine coverage, about half the households in a neighborhood according to some studies (Annex 1). The latrine construction policy contained in Ghana's Environmental Sanitation Policy (May 1999) is in conformity with this finding by recommending that public latrines be limitedto public places and that residential areas be served with household latrines. The project design follows these recommendations and aims to establish a more sustainable household latrine program. Only in Tamale has the household latrine constructionprogram continued after fundingthrough UESP-1 stopped. Several MASare revising the by-laws that require latrines to be provided for existing housesand are preparingthe courts for their enforcement. The campaign will be concentrated in the communities chosen for infrastructure upgrading, andthe subsidy will remain at the same level as for UESP-1, that is 50% of the construction cost. The main aim o f the household latrine program will be the establishment of a latrine delivery program in every MA, which will continue even after the project has closed. The Strategic Sanitation Plans (SSPs) ofthe MASwill berevisedaccordingly. d. Project implementation units that have been specifically created for the implementation o f externally assisted projects and are staffed mostly with consultants should not be used in the long run.While they are often more efficient inthe implementationofthe agreedproject activities, they 7 tend to keepthe projects apart from the regular operationsofthe responsible government agencies and contribute little to capacity building on project management. The phasing out of these units and the mainstreamingof project management into the responsibleministries was one of the key recommendations of the Ghana Country Portfolio Performance Review of 2003. MLGRD has consequently decided to mainstream the implementation of externally assisted projects, starting with UESP-2, a process that is expected to be substantially completed by the time the project becomes effective (see SectionC2, D7 andAnnex 6). 5. Alternatives consideredand reasons for rejection 20. Dueto funding constraints, only a limited number ofactivities, which hadbeen identified through planning studies and beneficiary participation, could be carried out in UESP-1,including the provision of household and school latrines. The government initially proposed to take advantage of the momentum that had been created through UESP-1 by fulfilling the unmet demand through a supplemental credit. Since this instrument is not suitable for the financing of additional activities that were not included inthe original project, the option was rejected. 21. An alternative considered by the Bank was to include environmental sanitation as part of the programmatic approach in the urban sector, that is to add some of the proposed activities in the five largest towns to the second phase of the Urban V project, an Adaptable Program Loan. This alternative was rejectedearly on infavor of arepeater projectbecausethe plannedUrban V, PhaseI1already covered a large geographic area -- 37 secondary and medium-sized towns in the country -- and focused on integrated municipal development. The addition of the five largest towns, with their sizable environmental infrastructure investment needs, would not have fitted well into this approach. It was also recognized that the success of some of the components of UESP-1, notably community infrastructure upgrading, could be better replicatedthrough arepeater project. The decisionnot to follow this alternative provedto be opportune in the later stages of project preparation, as Urban V, Phase 2 was dropped from the lending programcontainedinthe new CAS inthe originally plannedform. 22. Another option was to use the same demand-driven approach for the UESP-2 activities as for Urban V, whereby the local governments decide, within the confines of their developmentplans, which subprojectsto include inthe project. This approachwould not always have resulted inthe choice of long- term solutions for environmental sanitation, such as the DAs' demand for public latrines rather than household latrines (see Section A4), and a preference for an engineered final disposal site rather than a sanitary landfill. A final disposal site would have been less expensive to build and operate, but can cause considerable environmentaldegradation, and financing it through an IDA credit would violate the present safeguards policies of the Bank. Environmental sustainability was therefore maintained as part of the project objectives. C. IMPLEMENTATION 1. Partnershiparrangements 23. NDFhastentatively agreedto finance the Institutional Strengtheningcomponent for anamount of EUR 9.5 million. A representative of NDF participated in the appraisal mission. The lending policy of NDF emphasizes capacity building, with the possible addition of civil works and/or goods when they are directly related to capacity building. NDF operates with a relatively small staff and relies on close cooperationwith the Bank for both preparationand supervisionof projects. 24. AFD is planning to participate in the project through parallel financing of additional infrastructureworks and cofinancing ofthe Performance-BasedFundusingIDA procurementguidelines. 8 2. Institutionaland implementationarrangements 25. The overall responsibility for project implementation will be with the Ministry of Local Government and Rural Development(MLGRD), since this is the central government agency in charge of local government affairs. In order to mainstream the management of externally assisted projects in the Ministry, MLGRD createda Project CoordinatingUnit(PCU) inJanuary 2004 for the implementationof all donor-assisted projects. It will replace the existing Local Government Support Unit before project effectiveness. The PCU will be staffed by civil servants from the Ministry, supplementedby short-term consultants for specific tasks. Various departments of the Ministry will be associated with the project, notably the Environmental Sanitation Department.As stipulated in the Development Credit Agreement, MLGRD will appoint key project staff, consisting at least of the Project Manager, Project Engineer, Institutional or Training Specialist, and Project Accountant, with adequate qualifications and experience, by November 30,2004. 26. All componentsofthe project, except for institutional strengthening, will be implementedby the five Metropolitanhlunicipal Assembles4. The MASare headed by appointed Metropolitanhlunicipal Chief Executives (also called Mayors), whose staff is managed by a Coordinating Director and various headsof departments. 27. A UESP-2project team was formed inevery MA, the key members of which are the heads ofthe departments of Waste Management, Environmental Health, Works, Roads, Planning, Town and Country Planning, and the Coordinating Director. One of the members is designatedas the coordinator. Each MA is required to maintain the project team with qualified staff (see Section C6). An assessment of the implementation capacity of every M A was made during project preparation. Consideration was given to the caliber of the top managers and their ability to cooperate, and the absorption capacity of the MA for the available assistance, mainly interms of having developedtheir own programs andhaving made good progress with sustainability. The difference in the implementation capacity of the MASwas taken into account inthe project design: the scope of activities, as comparedto the population size and the identified needs, i s larger in MASwith good capacity and somewhat smaller in those with weak capacity. In addition, a portion of the project budget is being set aside in a Performance-Based Fund, to be periodically allocated to MASwith a satisfactory performance according to the performance criteria specified inthe Grant Agreement (see Annex 6). 28. The main beneficiary institution in the MAS will be the Waste Management Departments (WMDs), which were considerablystrengthenedunder UESP-1. They are incharge of all liquid and solid waste management and increasingly of drain maintenanceand street cleansing. Each M A will be required to maintain their WMD with qualified staff (see Section C6). Closely related to the WMDs are the Environmental Health Departments, which carry out hygiene inspections and sanitation awareness campaigns. Insome Assemblies they are also incharge of street anddrain cleansing. 29. To clarify the respectiveroles and to assure the adequate preparedness of the MASto participate inthe project, each MA will sign a Grant Agreement with MLGRD and MOFEP inthe beginning of the project as a condition for the implementationof its part ofthe project (see Annex 6). 30. A Steering Committee will meet at least once a year with staff of the World Bank to review the progressof project implementationand to resolve major issues that may have arisen. It will be composed of representatives from the project Assemblies, MOFEP, MLGRD, Ministry of Works and Housing, Ministry of Health, Urban Roads Department, and Environmental ProtectionAgency. Accra, Kumasi, Sekondi-Takoradi, and Tamale have the status of a Metropolitan Assembly, while Tema is a Municipal Assembly. Metropolitan Assemblies have a slightly different structure and in some respects greater autonomythan Municipal Assemblies. 9 3. Monitoring and evaluation of outcomes/results 31. The performance indicators as well as the responsibility for monitoring and reporting will be specified in the Project Implementation Manual (PIM; Annex 6). A preliminary list of performance indicators is shows in Annex 3. The coordinator of the UESP-2 project team in the M A will be responsible for collecting the information needed for the preparationof the Financial Monitoring Report (FMR Annex 7) andsendingit to MLGRD. The day-to-dayresponsibility for monitoring progress onthe subcomponents will be assignedto one ofthe departments inthe MA. 32. The project-wide responsibility for monitoring and reporting lies with MLGRD, which will assist the MAS with monitoring, provide technical assistance as needed, and consolidate the results for incorporation into the semi-annual FMR (Annex 6). The monitoring results are meant to serve as an indicator of progress with project implementation for the leadership of the MA and will be reviewed during supervision missions of the Bank, the annual project implementation review workshop, and the Mid-Term Review. 33. The Regional Coordinating Council (RCC) will be kept informed of the monitoring results, may carry out its own monitoring as part of its assigned functions, and will participate in the annual reviews (see Annex 6). 4. Sustainability 34. Waste management is one of the most frequently raisedconcerns by people inurbanareas and by government representatives. Considerable progress has been made in recent years to improve the situation, notablythrough the creationand empowermentof the WMDs, the increasinginvolvement ofthe private sector in rehse collection, the increasing reliance on user charges for solid and liquid waste collection, improvements in internal revenue collection by the MAS,and a greater awareness that refuse dumps have to be replacedwith sanitary landfills. The requiredsubsidy from the MAS,which amounts to nearly half their discretionary budget, is not regularly available. The central government is providing substantial subsidies,tosome of the Assemblies (see Annex 1). Urged on by external assistance agencies, it is in turn putting pressure on the MASto increase their internal revenue generation. Experience has shown that consumers are ready to pay more for waste management services as they improve, especially iftheseservicesareprovidedbytheprivatesector.Theprojectdesigntakesintoaccountthelessonson sustainability that have been learned from UESP-1 and other projects, as described in Section B4. Other measures in the project to improve sustainability, particularly those that are part of the Institutional Strengtheningcomponent, are describedinAnnexes 4 and 6. 10 5. Critical risksand possible controversial aspects Risks RiskMitigationMeasures RiskRatingwith Mitigation ~ Infrastructureinvestments,once they have Improvementshavebeenmade inthe project design Modest beencompleted, may notbe operatedand and implementationarrangementsinthis regard maintainedina sustainablemanner. over UESP-1,which will reducethe risk (Sec. B4). The liningof moresecondarydrains may The hydrologicalcalculationswill be reviewedwith Negligible increasethe severityofflooding currentdata and modifications inthe drainage downstream. networkmade as necessary. The sanitary landfillsinKumasi, Tamale, Practicalguidelines for operatorshavebeen Substantial and Sekondi-Takoradimaynot be developedandtrainingprovided; hrther training operatedaccordingto the guidelines, will be givenperiodically; IDAwill finance part of which would shortentheir life andcause the operatingand monitoringcost (see SectionB4 environmentaldamage. andAnnex 4). The MASwill be assistedunderthe NDF-financedcomponentto develop tools for introducingthe privatesector in management arrangements for the landfills. To component results The resettlementplan, includingevidence The Bank's safeguardpolicy inregardto High o f landrights, for the Kwabenyasanitary involuntaryresettlementwill be followed; an RPF landfill for Accra may not be has beenpreparedanddisclosedand an RAP will be implementedintime to allow for the prepared, the implementationof which will be completion of constructionbeforeEOP; closely supervisedbythe Bank. resettlementcould cause considerable controversy, The resettlementplan, includingevidence The Bank's safeguardpolicy inregardto Negligible o f landrights, for the sanitary landfill in involuntaryresettlementwill be followed; an RPF Tema may notbe implementedintime to has beenprepared[and disclosed] andan RAP will allow for the completionofconstruction be prepared, the implementationof which will be beforethe endofthe project. closelysupervisedbythe Bank. One or two MASmaynot be able to MAShavebeeninformedo fthis requirement since Modest implementthe drainagecomponent the start o fprojectpreparation; the Ministero f becausethey could not meetthe condition Local GovernmentandRuralDevelopmenthas o f establishingsatisfactory institutional undertakento resolvethis issuewith the other and financial arrangements for drain Ministriesconcerned. maintenance. The MASmayhave insufficientcapacity The budgetallocationto the differentMAStakes Modest to implementtheir part ofthe project. their capacity intoaccount.They will be given institutionalstrengtheningassistance, andtheir performancewill be monitored. MLGRDmay have insufficientcapacity The appointmentofthe key staffin MLGRD is a Modest to coordinatethe project implementation conditionofproject effectiveness.MLGRD intends after the mainstreamingofprojects into to engage short-termexperiencedconsultantsto the Ministry inJanuary 2004. supplementthe civil servants o fthe Ministry. Some consultants andlor contractors may Strict adherence to the procurementguidelinesand Negligible notbe able to performadequately. the provisionsofthe contract; trainingincontract management; independentmonitoring; early start of implementation NDF will not financethe Institutional The Performance-BasedFund(see Annex 5). which Negligible Strengtheningcomponent. is meant for additionalactivities o f well-performing I, MAS,could be usedto finance this component instead. Overall riskrating Modest 11 6. Loanhedit conditions and covenants Conditionsof Boardpresentation: None Conditionsof effectiveness: 1. Appointment of an external auditor for the project; 2. Adoption of a satisfactory Project Implementation Manual, specifying, inter alia, performance indicators, procedures and other arrangementsfor project implementation. SpecificImplementation Conditions: 35. N o later than November 30, 2004, MLGRDwill appoint the key project staff, consisting at least of the Project Manager, Project Engineer, Institutional or Training Specialist, and Project Accountant, with adequatequalifications and experience. 36. Before the implementationo f its part of the Project each Assembly will sign a Grant Agreement (see Annex 6). 37. Before signingworks or goods contracts, each Assembly will: a) Establish and maintain a satisfactory financial management system; b) Establish a project preparation and implementationteam inthe Assembly, with staff in sufficient numbersandwith adequatequalifications and experience; c) Appoint key staff in its Waste Management Department, with adequate qualifications and experience; and d) Make the initial deposit into the MA MatchingFundAccount (Annex 7). 38. Before startingthe construction of (i) sanitary landfills at Kwabenya and Tema, (ii) improved use, closure, and rehabilitation of refuse dumps at Mallam and Oblogo inAccra, Kpone inTema and Essipon in Sekondi, and (iii)community infrastructure upgrading, (a) prepare, and thereafter implement, a satisfactory Resettlement Action Plan (RAP) accordingto the Resettlement Policy Framework, specifying the arrangements for resettlement, including compensation, relocation and rehabilitation of the affected persons, and (b) acquire all the necessary land. The acquisition o f land for the sanitary landfills is a condition of disbursement. 39. Before startingthe construction o f storm drainage, sanitation, solid waste management, other than that inthe above paragraph, (a) compensate and resettle all the affectedpersons accordingto the RPF, and (b) acquire allthe necessaryland. 40. Before starting the construction of (i)a sanitary landfill in Tema and (ii)the improved use, closure, and rehabilitation of refuse dumps at Mallam, Oblogo, Kpone and Essipon, prepare and thereafter implement a satisfactory EnvironmentalManagement Plan(EMP). 41. Before starting the construction of storm drains, each MA will provide evidence o f having established satisfactory institutionaland financial arrangements for drain maintenance. 12 D. APPRAISAL SUMMARY 1. Economic and financialanalyses ECONOMIC ANALYSIS 42. The project is a "blueprint"-type project, whereby the major investments are being identified and designed in detail before effectiveness. Cost-benefit analysis is an inappropriate method to determine the economic viability of the investmentsfor the project, since the outputs have no market price that can be readily assessed and the benefits cannot be measured in monetary terms. The analysis instead uses the cost-effectiveness method. Two subcomponents were chosen for the analysis, namely storm drains and latrines in residential areas. The stream of costs over the economic life of the investment has been discountedto the present to determinethe least-cost solution. Inthe choice of the best option, additional information on non-quantifiablecosts and benefits was considered. Storm Drains 43. A cost-benefit analysis for storm drainage had been carried out for UESP-1, whereby the structural damage of flooding was estimated inmonetary terms. This captures only one of the benefits and requires estimates of the cost of damage repair over a large area for which market values are not readily available. The benefit-cost ratio of four drains or sections of drains that were analyzed in 1991 ranged from 2.9 to 5.2, with a discount rate of 12%, and an ERR between 32% and 47%. These results are a strong indication that the construction of major storm drains is economically viable. Since UESP-2 is a repeater project of UESP-1 and the results for UESP-1 were positive and relatively robust in the sensitivity analysis, it was not considered advisable to undertake further studies to obtain current data for a repetition of the cost-benefit analysis, particularly consideringthe poor reliability and limitedrelevance of the data. Instead, a cost-effectiveness analysis was carried out to compare different design alternatives for drains, namely (a) dredgingto increase the channelprofile without lining, (b) dredgingand liningwith atrapezoidal profile, and (c) dredgingand liningwith arectangularprofile. 44. The results are shown in Table A9.1 in Annex 9. The least-cost solution is channel dredging without lining for a discount rate of 12% -- as well as 10% and 15%. The trapezoidal channel is the second-best solution. The solution is sensitive to the annual recurrent cost (see Annex 9). When supplementing the results with additional information, significant additional benefits emerge for the rectangularchannel over the other designs, namely (i) substantialreduction inthe land surface required a for the channel and (ii) its low risk of structural failure even if regular desilting is not carried out, which makes the rectangular channel design a better option where land is scarce or of high value and where involuntary resettlementis necessary for construction. Latrines 45. The results of the cost-effectivenessanalysis for three different latrine types in residential areas are shown inTable A9.2 inAnnex 9. The presentvalue of total costs per personover the 8-year life of the latrine is nearly the same for non-bucket household and bucket latrines. However, non-buckethousehold latrines provide distinct advantages by avoiding the handling of fecal matter, which is unsanitary and socially degrading, and do not limit the use of the latrine to defecation (i.e. no urination) and to the volume that can be depositedinthe bucket before it is emptied. The total cost of a public latrine from the standpoint of the operator is muchhigher due to the greater constructioncost as well as recurrentcost per user. An additional cost calculation was made for public latrines from the standpoint of a user who pays Cedis 300 per sitting. The total cost is about three times that for the operator, which explains why public latrines are consideredto be a lucrative business to manage. It also explains why many people do not use them and insteaddefecate inthe open, especially childrenand women without independent income. 13 FINANCIALANALYSIS 46. The project does not involve revenue-earning entities. 47. The counterpart funding requirements for the investments are shown in Tables A5.2 to A5.8 of Annex 5, broken down by source (that is Central GovernmentMLGRD, Assemblies, and beneficiaries) and by subcomponent. It is estimated that the total counterpart contribution is approximately equal to the taxes that will be collected in the form o f a 7.5% withholding tax on civil works and a 12.5% Value Added Tax for consulting services provided by firms. The internal revenue generation of the MAShas increased slightly in recent years inreal terms due to greater efforts to collect revenues. The consolidated fundtransfers from the Center to the Assemblies5,on the other hand, has substantially increased and are expected to increase further with the reaching of the HIPC completion point towards the end of this calendar year. It was agreed during Negotiations that the Central Government would finance the counterpart contribution for the capital cost of the larger investments, that is for storm drains, new sanitary landfills, and community upgrading, to lighten the burden o f the Assemblies in making the capital cost contribution. 48. The recurrent costs o f waste management and drainage weigh heavily on the MAS,as described in Annex 1. Several of the subcomponents of the project are designed to improve the financial sustainability, as for example subsidies for private solid waste collection on a declining basis untilboth the service and the rate collectionhave been improved, and a reorientationo f liquidwaste management in Tema. 2. Technical 49. The technical solutions that were chosen are based largely on the results o f previous Bank- assisted projects, particularly the Urban Environmental Sanitation Project (UESP-l), of which UESP-2 is a repeater. All the technologies and service delivery mechanisms have beenwell tried internationally; the challenge lies intheir applicationto Ghana. 50. A comprehensive drainage study was carried out in Accra, Kumasi and Sekondi-Takoradi inthe early 90's and prioritized master plans for the dredging and lining o f drains prepared. However, there is a riskthat further liningof storm drains upstream may result inflooding downstream due to the more rapid conveyance o f floodwaters to the lower parts of the drainage basin (Section C5). Attempts to preserve natural flood basins and to build retention basins upstream - now the standard practice in industrialized countries - have failed due to uncontrolled land development. "Encroachment" on public lands is a serious problem for infrastructure development and makes it difficult to implement Resettlement Acton Plans. 51. The choice of sanitary landfill designs for refuse disposal is necessitatedby the needto safeguard the environment, but entails high construction and operating costs. One could argue that the costs of environmental degradation are being internalized into the sanitary landfill. While the construction of the two completed sanitary landfills inGhana has beendone accordingto internationalpractice, there is a risk that inspite of the recurrent cost, monitoring, and capacity buildingsupport provided through the project, the operation may not follow the guidelines, which would convert the land fill into a common refuse dump (see Section C5). 52. While latrine technologies and service delivery mechanisms for school and public latrines are well established in Ghana, a sustainable delivery program for household latrines, with an appropriate See the analysis o f local government revenues inthe ICR o fthe Ghana - Local Government Development Project, October 28,2003 14 technology choice, still needs to be developed. No financing mechanismto subsidize household latrine construction in poor communities has as yet emerged, such as the one in BurkinaFaso, which finances latrine subsidies through water tariffs, nor have the bylaws on the provision of houses with latrines been enforced. Rather than repeating an untargeted latrine construction program aimed at maximizing the number of latrinesbuilt, UESP-2will concentratethe larine campaigns inselect low-income communities with the aim of developinga replicabledelivery system. 3. Fiduciary PROCUREMENT 53. The Bank carried out a Country Procurement Assessment Review (CPAR) in 2003, the main findings of which were: (i)lack of a comprehensive legal framework; (ii) use of merit point system for evaluatingbids for works contracts; (iii) use of "bracketing" for evaluating bids for works contracts; (iv) excessive use of single source; (v) repeateduse of the same firms under selective tendering procedures; (vi) lack of procurement planning; (vii) poor record keeping; (viii) weak oversight of procurement; (ix) poor contract management; (x) weak procurementcapacity, and (xi) weak commitment control leadingto contract payment arrears. The key actions that arose from the CPAR are the implementationof the Public Procurement Act, and the establishment and operationalization of the Public Procurement Institutions (Procurement Board, Secretariat, Entity Tender Committees and Tender Review Boards). These are part of the triggers for the proposed Second Poverty Reduction Support Credit (PRSC-2), which is scheduled for BoardPresentationinMay 2004. 54. The Public Procurement Act was signed into law in December 2003 and includes most of the features of good public procurementpractice: (i)effective and wide advertisingof upcoming procurement opportunities; (ii)public opening of bids; (iii)pre-disclosure of all relevant information including transparentand clear bid evaluation and contract awardprocedures; (iv) clear accountabilitiesfor decision making with segregation of executive and oversight responsibilities; and (v) an enforceable right of review for bidders when public entities breach the rules. The Government is also preparing a set of Standard Tender Documents and a Standard Request for Proposals. The Public Procurement Act is comprehensive and covers all procurementin central management agencies, Ministries, Departmentsand agencies and inMetropolitan, Municipal and District Assemblies. 55. The overall procurement risk assessment is Average (see Annex 8). The proposed procurement arrangements of the project are in harmony with the provisions of the Public Procurement Act. The ProcurementProcedures under the project will be describedinthe ProjectImplementation Manual, a draft of which was submittedat appraisal. The procurementarrangements inthe PIM will be harmonizedto the extent possible with the provisions in the Public Procurement Act to ensure that MLGRD and the Assemblies are not overburdened with the use of different procedures, depending on the source of funding. The act contains different thresholds for procurement review on different levels, such as at the level of the RegionalTender Review Board andMLGRD. FINANCIAL MANAGEMENT 56. A Country Financial Accountability Assessment (CFAA) for Ghana was conducted in 2001 and updated in 2003. The Assessment identifies the main accountability issues in Ghana and provides recommendationsto address them (see Annex 7). 57. A Financial Management Assessment of MLGRD and the five project MASwas carried out to determine whether they have acceptable financial management arrangements in place for the implementationof UESP-2. The assessment included the use of an Internal Control Questionnaires (ICQ) 15 for each MA, a review o f the agency's accounting system of recording and reporting, payment and funds flow mechanisms, internal controls, adequacy of staffing, and monitoring and auditing arrangements. 58. The responsibility for financial management o f UESP-2 will be with the Head o f Accounts at MLGRD and the Municipal Finance Officers (MFOs) of the MAS.It is stipulated in the DCA that the accounts office of MLGRD will be headed by a professionally qualified accountant who will be responsible for maintaining adequate accounting records, preparing financial reports and statements and ensuring that the project's financial management arrangement is acceptable to the Government and the World Bank. The Financial Management Assessment found that the MFO o f the MAS have the qualifications and experience that will enable them to perform the requiredtasks. The project will provide training in the area o f Bank disbursement to ensure that they are able to carry out their functions satisfactorily. 4. Social 59. Different groups of beneficiaries and other stakeholders are affected by the various project components, as described in Section B3. Subcomponents which concentrate on specific neighborhoods, such as community infrastructure upgrading, storm drainage, sanitary landfill construction, and the rehabilitation of refuse dumps, will involve consultations with the local communities in planning and implementation. Other subcomponents, such as solid waste collection by contractors and latrine construction, will involve consultations with local leaders on an as-needed basis. In all cases will the consultations be specific to the type o f intervention, the variety of the options involved (e.g. choice of community infrastructure to be upgraded), the degree to which community participation i s essential for success (e.g. household latrine program), the risk of negative impacts (e.g. sanitary landfills), and the vulnerability of the community (e.g. scavengers at refuse dumps to be closed). 60. Up to now, during the identification of the areas o f intervention, the MAShave played the lead role together with MLGRD. Consultants together with local government officials will confer with the affected communities through various fora, sometimes through public meetings and sometimes through meetings with community leaders. Some subcomponents require close consultation with the affected communities also during implementation, notably community upgrading and the household latrine program. Special attention will be paid to the inclusion o f vulnerable groups, such as the urban poor and women. The interests o f persons who will be negatively affected by project activities are protected through the social safeguard provisions specified inthe DCA. 5. Environment 61. The legal and institutional arrangements in Ghana are by and large adequate for environmental and social management. The Institutional Strengthening component will also cover some aspects of the environment, such as improving the functioning of the Solid Waste Management Departments and the Environmental Health Departments o f the MAS,which together are charged with the management o f solid and liquidwastes inthe cities. The main institutional issues relate to the sustainability o f the infrastructure that will be created through the project and urban environmental infrastructure in general, particularly (i) the intuitional andfinancial responsibility for the cleansing andrepair of storm drains, (ii) operation of the sanitary landfills inthe prescribed manner to safeguardthe environment and to prologuetheir life, (iii) the financing of subsidies for solid waste collection in poor neighborhoods, and (iv) the disposal of all septage without damage to the environment. (see Annex 10) 16 Summary of Safeguard Work Completedinthe ProjectEnvironmentaland SocialAssessment and Resettlement PolicyFrameworkand Work Remainingto be DoneDuringProjectImplementation Sub-component Location Works EMP RPF RAP Storm drainage All 5 Construction Done Done To be done Towns later NIA NIA To be done later To be done To be done later To be done later Source: SecondUrbanEnvironmental SanitationProject, Environmental and Social Assessment (EA), December 2003, ExecutiveSummary EMP EnvironmentalManagement Plan RPF ResettlementPolicyFramework RAP ResettlementActionPlan N/A: Not Applicable 6. Safeguard policies 62. The project has been classified as falling into Environmental Category A because there are potentially serious environmental and social issues with one of the sanitary landfills, located at Kwabenya, which is to serve Accra and the nearby urban areas of Ga District (see Annexes 4 and 10). The safeguards screeningcategory is S2, indicating that one or more safeguardpolicies are triggered, but the effects are limited to their impact and are technically and institutionally manageable. A project-wide EA and an RPF were submitted to the Bank on December 2, 2003 and were publicly disclosed at the Infoshop in Washington on January 16 and in the Project Information Center of the World Bank Ghana Office on January 19, 2004. At that time two sets of reports were also sent to every Metropolitan/ Municipal Chief Executive of the five project cities with instructions to make one set available to the public inthe public library, with noticespostedin prominent places. Details ofthe safeguardimplications of the project are contained in the IntegratedSafeguards Data Sheet. The environmentaland social work of the EA report is summarized inthe table in SectionD5 and inAnnex 10. 17 Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.01) X Natural Habitats (OP/BP 4.04) X PestManagement(OP 4.09) X Cultural Property (OPN 11.03, beingrevisedas OP 4.11) X Involuntary Resettlement(OPBP 4.12) X IndigenousPeoples (OD 4.20, beingrevisedas OP 4.10) X Forests(OP/BP 4.36) X Safety of Dams (OPBP 4.37) X Projects inDisputedAreas (OP/BP/GP 7.60) X Projects on International Waterways (OP/BP/GP 7.50) X 7. Policy Exceptions and Readiness 63. The project does not require any exceptionfrom Bank policies. 64. At the time of Negotiations the project was ready for implementation with the following exceptions: a. In January 2004, MLGRD decided to mainstream the management of all externally assisted projects in response to one of the recommendationsof the 2002 Country Portfolio Performance Review and a reminder contained in a letter from the Bank to the Minister for Local Government and Rural Development, dated December 15, 2003. While this will undoubtedly benefit the sector in the long run, this is likely to cause some delays inthe transition period and has been identified as a risk (see SectionC5). As stipulated inthe DCA, the key staff for project implementationwill be appointedby MLGRDno later thanNovember30,2004. b. While the capacity for financial management at the MA level is adequate, a Financial Procedure Manual for the MASneedsto be preparedand implementedso that uniform proceduresare used for particular financial transactions. MLGRD is engaging a consultant to assist the financial controller ofthe MASto preparethis manual. c. It was agreed that the MAS,assisted by MLGRD, will prepare a procurement plan by April 30, 2004. d. Designs exist for about half of the first years' implementation. They will be updated and the remainder completed, with tender documents for the first year's implementationpreparedby the time of effectiveness, with financing through a Project PreparationFacility, the agreement for which was signed on October 31,2003. e. In December 2003 the NDF Board approvedthe inclusion of the project in the NDF pipeline. It is expected that the agreement between NDF and the Government will be signed before effectivenessof UESP-2. By supportingthe proposedproject, the Bank does not intend to prejudicethe final determination o f the parties' claims onthe disputedareas 18 Annex 1: Countryand Sector or ProgramBackground GHANA: SecondUrbanEnvironmentalSanitationProject Poverty Reduction Strategy 65. Infrastructure is one of the medium-term priorities in the Ghana Poverty Reduction Strategy 2002- 2004 (GPRS; see Section A3). A new Country Assistance Strategy (CAS) has been prepared for Board presentationin late March 2004 and proposes to support the GPRS through three strategic themes. The project responds all three of the themes. Sustainable growth and job creation will be supported through the expansion and upgrading of infrastructure works, primarily to the urban poor, while at the same time providing a better environment for economic growth, promoting a favorable environment for private sector growth, and creating employment; human development and service delivery will be supportedthrough the provision of basic urban services (including refuse collection, sanitation facilities, access roads, storm drainage, and water supply), especially in poor neighborhoods; and governance and empowerment will be supported through strengthening of urban governments in the management of environmental sanitation and assistingthem to acquire experience with the implementation of their own infrastructureprojects, which would further the decentralizationof responsibilitiesfor urbanservices (see SectionA3). Decentralization 66. Under the decentralizationstrategy containedinthe GPRS, power will be transferredto the local governments. "The aim must be to decompose power to the District to the extent that Assemblies are in effective andtotal control of their departments and staff within the context of relevant legislation. Ultimately District departments must have the capacity to carry out all District level programs and projects funded from their own resources and by central government. In the latter case decisions on resource utilization including priorities and intra-District location must lie with the local authority.'" 67. The Local Government Service Act of 2003 provides the legal basis for this transformation. In line with the decentralizationobjective, each Assembly will implement its own share of the project. To enable them to do so and to ensure that the provisions of the Credit Development Agreement are being fulfilled, a comprehensive institutional strengthening, technical assistance, and monitoring component is included, in line with the strategy of the GPRS to strengthen the capacity of the Assemblies on en,vironmentalsanitationandto involve the private sector inwaste management. 68. Decentralization has been part of Ghana's development program for over a decade. While significant advances have been made in this regard, much remains to be implemented. The Bank and other external assistance agencies are providing support, mostly though mechanisms of decentralized service delivery in sector-related projects (see Annex 2). While UESP-2 is contributing to this effort through a decentralized approach, it will be able to advance the decentralization agenda only in the context of a wider program that links the various decentralization efforts into a coherent strategy. A project which has the potential of doing this is in the early stages of preparation, namely the Accountability, Capacity Building, and DecentralizationProject, programmedfor 2006. ' GPRS,p.28 19 Urban EnvironmentalConditions 69. The GPRS contains a bluntassessmentofthe urban environmentalconditions: "Environmental sanitation and lack of capacity to deal with solid and liquid waste has shown little signs o f improvement. Flooding, erosion and siltation of drains remains a major problem. The rezoning of amenity open space and sites for public services for development as residential, commercial or industrial land continues unabated. The promotion o f efficient and environmentally seemly settlements continues to be constrained by poor planning and by land tenure systems. The latter limit access to landand provision o f contiguous development. Despite policies to the contrary in the Medium Term Development Plan, the physical environment of large and mediumsized towns continues to be chaotic, unhealthy and inefficient. *" 70. The main constraints for the performance of urbanenvironmental sanitation are (i)frequent staff changes and low qualification of some of the urban staff due to the low remuneration in the public service, attrition to the private sector, and frequent transfers within the civil service, and (ii) low revenue generation by the urbanAssemblies and insome cases too little cost recovery. The MASfind it difficult to operate and maintain the existing systems and, in addition, to carry out their own infrastructure investments. 71. Waste management is one o f the biggest problems for the MAS.They spendnearly halftheir total revenues on it, and still the situation is far from satisfactory. Kumasi estimates that their annual cost of solid management is around Cedis 40 billion(US$4.5 milli~n)~. Hardly a day goes by without a complaint inthe media about the poor sanitary conditions inAccra or Tema, be it refuse accumulation, lack ofdrain maintenance, or inadequate toilet facilities. While people try to keep their environment clean, no matter whether they live in upper or low-income areas, the city governments are unable to maintain a regular refuse removal service. On the average only about 68% o f the solid wastes generated inthe project towns is collected (Table A1.1). Household latrine coverage in the project cities is estimated at 30%, with an additional 30% of the residents covered through public latrines. Open-air defecation is widespread, particularly among the itinerant traders and workers who live in rural areas and stay in Greater Accra" only duringthe day or the workweek, estimated to number 500,000 (Annex 4). Takoradi won an award in 2002 as the cleanest city in the nation. This success can partly be ascribed to a more vigorous internal revenue generation effort that yielded good results, enforcement of by-laws related to the urban environment, and a well-working contractingsystem for refuse collectionthat includes drain cleansing. 72. Revenues and budget transfers for waste management fall chronically short o f the requirements. User charges for such services as refuse collection and septic tank emptying are regulated by the Assembliesand for some charges by the central government, and are generally kept below cost and below the ability to pay. Payment authorizations for expenditures by the Assemblies are often seriously delayed, depending on the availability o f funds and the current priorities. In August 2003 it was reported that AMA was Cedis 28 billion (US$3,1 million) inarrears inpayments to the memberso f the Association of - Service Providers, mostly for evacuating communal containers in low-income areas, where the residents pay no collection fee." The central government has on occasion financed the arrears of AMA, as it has been unable to do so on its own. 73. The accounting system inthe MASthat is prescribed by the Accountant General's office does not allow for a separate accounting for waste management, and the WMDs would have to keep their own parallel accounts if they wanted to track the revenues and expenditures for the different waste * GPRS,p.4 Daily Graphic, May 1,2003. lo Greater Accra comprises Accra, Tema, andthe urban expanse adjacentto Accra, which lies in Ga District. It has a combinedpopulationo f about2.5 million(2004). Ghanaian Times,August 30,2003, p. 6 20 management activities. Some WMDs have started doingtheir own cost accounting. It is stipulated inthe Development Credit - and will be part of the Grant Agreement - that every project Assembly will establish and maintain, a cost accounting system for solid waste management (collection and disposal), liquidwaste management, and drainmaintenance. 74. An additional problem is the low prospect for professional advancement for staff in the waste management and urban environment departments. Experienced and capable operators are rarely promotedto management positions ifthey do not have a higher degree, even after many years of service. Those inmanagement positionshave no career path, akin to the opportunitiesinsuch sectors as education androads that would allow them to advance further inthe Assembly or the centralgovernment. Solid Waste Management 75. The accumulationof uncollectedrefuse inthe cities is the most obvious urbanwaste management problem. Being heavily criticized for their failure to manage the situation, the MASare expanding the participation of private contractors in refuse collection in addition to deploying their own equipment, more than half of which tends to be out of order at any one time. All MAShave divided their city into waste collection zones andaward franchises or contractsfor some ofthem. Table Al.1 Municipal Solid Waste, 2004 2010- Sekondi- 1,343 348 228 437 4,260 MSW generated, kglcapitdday 0.79 0.82 0.68 0.66 0.59 0.76 MSW generated, tonslday 1,500 1,100 236 150 260 3,246 MSW collected, tonslday 950 850 170 85 155 2,210 77% 72% 57% 60% 68% 2010 Population, thousand * 2,340 1,651 404 MSW generated, kglcapitdday 0.80 0.80 0.70 MSW generated, tonslday 1,872 1,321 283 MSW collected, tonslday 1,498 1,123 226 Percent collected 75% 85% 80% Collection cost, US$lton 10.0 8.0 7.0 * See Table A4.1 inAnnex A 76. Refuse has up to now been disposed of in refuse dumps with very little consideration for the environmental and social impact. None of the dumps are being covered, and leachate is polluting the surface and groundwater. There were times when a refuse dump had to be discontinuedand another one started elsewhere due to the fierce opposition of nearby residents. The project is designedto address the refuse disposal problem in a comprehensive manner. At present, data collection and analysis for solid waste management is woefully inadequate, and will be improved through the project as a basis for the preparationof integratedsolid waste management strategies. These strategies will address, inter alia, the 21 safe disposalof hazardous wastes andthe creationof transfer stations where the new sanitary landfills are locatedat some distance from the city center. 77. The response of the city administrations to the solid waste management problems has at times been sporadic. Accra created a politically motivated private monopoly for refuse collection in 1999 and imported 65 used refuse trucks, mostly compactors. Accra could not afford the collection fee of US$12 per ton, and in 2001 the new government abrogated the contract. Since then the participation of the private operators has been revived and most of the imported equipment leasedto them, but as of August 2003, AMA was Cedis 28 billion in arrears in payments to the contractors (see above). Consequently, they have been unable to maintain a regular service even in high-income areas where the maximum monthly charge is $7 per 240-liter refuse bin (63 US gallons). In September 2003 the then Mayor of Accra createda "sanitation gang" to be deployedfor garbage removal and cleaning inthe central business district. In Kumasi, where the city government allocates proportionally more resources to the Waste Management Department, refuse collection is more regular and in some neighborhoods twice a day. Burning of refuse is common, and when it is carried inthis condition to the refuse dump in containers it sets the refuse dump on fire. Informal recycling takes place all along the collection route, with refuse from higher income neighborhoodsand industrial areas more indemand. Scavengingis also taking place at the refuse dumps, which needs to be taken into account when designing and operating new sanitary landfills. DrainMaintenance 78. Ambiguities in the responsibility for maintenanceof storm drains have led to inadequate service and financial waste. Muchof the drain cleansingis done ad-hoc, and occasionally contracts are awarded by two agencies for the same area. In Accra, the Hydrological Service Department of the Ministry of Works and Housing is responsible for the maintenance of large drains and AMA for the rest. The Departmentof Urban Roads, which operates in all five project cities, maintainedthe street-sidedrains for some years as atemporary measure, but in2002 it handedover the responsibility to the Assemblies, albeit without correspondingbudget transfers.A proposalto establisha drain maintenanceunit inAMA was not implemented because AMA did not want to assume the responsibility of financing from its own resources. The preparation of a database to plan drain maintenance was started in AMA, but was discontinued. Betweenthe handover of the completedlower sectionof the Odaw channel inAccra inJuly 2002, built under UESP-1, and October 2003, an average silt and solid waste deposit of about 1 m had accumulatedinthe 30m wide rectangularchannel, which cost about US$450,000 to remove. 12 Sanitation 79. Reliable statistics on urban latrine coverage are difficult to come by, and coverage as well as the type of latrine usedvary considerablyfrom one neighborhoodto another. Inthe latestversion ofthe MDG Country Assessment Plan for Ghana, the nationwide urban water access is 61%, and urban sanitation access is 40%. Insome poor communities where there are mostly tenements with absentee landlords, the coverage with household latrines is below 10%. The overall coverage in the five project cities is estimatedat about 30% with household latrines and 30% with public toilets (see above). All Assemblies have by-laws on requiring the provision of latrines, which are not enforced and in most cases need revision, at least in the amount of the fine imposed. Older settlements in traditional areas with owner- occupiedhouses and large families also have low coverage due to their poverty and socialconditions. 80. Twenty-five years ago the predominant urban latrine type in Ghana was still the pan latrine. A concertedeffort was made at that time to phase out this socially degradingand unhygienic system, largely l2 Part o f the silt load deposited in Lot 1 comes from the construction of Lot 2 upstream,the completion o f which, with AFD financing, hasbeenseriously delayed. 22 through its replacement with the KVIP latrine.13It is presentlythe predominantform, but has come under heavy criticism in recent years because of its smell, space requirements,drainageproblems, and the high cost. Aqua privies, which are favored for public latrines and in areas with a high water table, have occasionally exploded, mainly due to poor operation.In 1999 a new, imported, expensive make was made compulsory for a short time for new public and school latrine construction, calledthe Enviro-loo. Today, about 10%ofthe householdlatrinesstill use pans that are emptiedmanually, which the government wants to phase out. A mechanical pan emptying system was recently introduced in some neighborhoods of Accra with assistance from Danida. The Pour Flush and the single-pit latrines are only known in academic circles, limiting the choice of latrine types for well-drained soils unnecessarilyto the KVIP and the WC. The project intends to widen this choice and, in line with Ghana's Environmental Sanitation Policy, to support the constructionof householdrather than public latrines inresidential areas (see Annex 4). A cost-effectivenessanalysis of residentiallatrines is presented inAnnex 9. 81. Problems encountered with latrine construction under UESP-1 are poor road access for construction and emptying, high water tables, and a slow response in some neighborhoods. The information about the availability of the program did not go far enough or was initially not found attractive, with the result that many applications arrived towards the end of the project, when the funds had already been fully committed. Some subsidies under UESP-1 were paid for latrines in new houses, where the owners would probably have builtthem even without a subsidy. 82. A sizableproportion of urbanschools is without toilets and some even without water supply. The worst case is Tamale, where less than 40% of the nearly 4,000 schools have toilets. The latrine construction and rehabilitation program under UESP-1 will be resumed and supplementedwhere needed with water supply. The government's emphasis on hygiene educationcan have little effect on the children without the availability of water andtoilets inthe school. InfrastructureIn Low-IncomeCommunities 83. Most low-income communities had originally a planned layout, but their growth from within has createda situation where some neighborhoodsare difficult to access with a vehicle (making it impossible, for example, to empty latrines with a vacuum truck). Other problems are flooding and soil erosion, haphazard flow of sullage water, and a maze of long service lines (popularly called spaghetti lines) leading to householdsthat can afford such -- mostly unauthorized - connections. The removal o f these deficiencies in a comprehensiveway has been part of nearly every Bank-assistedurban project in Ghana. Under UESP-1, 7 communities were upgraded: 3 in Accra, 2 in SekondVTakoradi, and 2 in Kumasi. All or some of the following infrastructurewere provided: surfacingof local roads, street-side drains, supply lines for water, renovationor constructionof public latrines, and street lighting. The work was started in 1998 and was substantially completed in 1999. The interventions have had a significant and lasting impact inthese communities, making it one ofthe most successfulcomponentsofUESP-1.14 Other EnvironmentalHealth Hazards 84. While high-income residents can shield themselves to some extent from the environmental hazards intheir living and working space, poorer inhabitants are exposed to a variety of hazards, often in fatal combination. They are more affected by flooding because they tend to occupy the lower-lying areas. With refuse, feces and sullage water entering the drains in their neighborhood, disease is rampant, especially among children who have less immunity. Malaria, upper respiratory tract infections (URTI) and diarrheaare the leadingcauses of outpatient visits, with URTI accountingfor 50 percent. Malaria and anemia account for 40 percent of reported deaths of children up to 15 years. Tuberculosis is on the l3 KumasiVentilatedImprovedPit latrine. For an explanationofthis andthe other latrine types see the footnote in Annex 4. l4 MLGRD, Baselineandlmpact Surveysfor UESP-I in Accra, Kumasi, Tamale, and Sekondi-Takoradi,2002. 23 increase also as a result of HIV/AIDS. The project will contribute to the reduction of malaria infection through the removal of breedinggrounds for mosquitoes, accompanied by public awareness campaigns about protectionagainst malariaand itstreatment (see Annex 4). 85. The prevalence rate of HIVIAIDS infectionin Ghana of 3.8 % is still low relativeto the rest of Africa. However, infection rates are higher in urban areas with 6 large urban centers recordingover 5 percent prevalence rates. It is spread through different transmission routes than the above-described diseases, which are linkedto the urban environment, but some of the underlyingsocio-economic causes are the same. The disease affects people in the productive age of 15 -49 the most, is having a great impact on economic activity and is creating a large number oforphans. Ghanais implementinga national strategy to address the problem, the main objectives of which are: to prevent new transmissions among the most vulnerablegroups, especially aged 15 - 49, by 30 percent; to improve service delivery; and to mitigate the impact o f the disease on individuals, the family and communities, all by 2005. Ongoing HIV/AIDS programs will be supported through the project, aimed particularly at constructionworkers who constitute a major target group of the national program and at the residents of the low-income communities inwhich infrastructurewill be upgraded(see Annex 4). 24 Annex 2: Major RelatedProjectsFinancedby the Bankand/or other Agencies GHANA: Second UrbanEnvironmentalSanitationProject ~ PROJECT IP RATING DO RATING SECTORISSUE ADDRESSED Urban I1 - closed Urban infrastructure; decentralization; S improved fiscal management Local Government Development - closed Urban infrastructure; decentralization; S improved fiscal management Urban Environmental Sanitation - closed Urban waste management; environment; S S decentralization Second Community Water and Sanitation, Water supply and sanitation; Phase 1 - ongoing S S decentralization Road Sector Development - ongoing S S Roads and transport Urban 5, Phase 1 - ongoing Urban infrastructure; decentralization; S S improved fiscal management SecondCommunity Water and Sanitation, Water supply and sanitation; Phase 2 - inpreparation decentralization Water Sector Restructuring - in Water supply; management preparation OTHER DEVELOPMENT AGENCIES AFD: Road rehabilitation inKumasi - Roads and transport ongoing AFD: Drainage improvement project, Floodingand urbandevelopment Accra - ongoing Netherlands:Drainage inAccra - in Floodingand urbandevelopment preparation Belgium: Korle Lagoon Restoration Flooding and urbandevelopment Project EuropeanUnion: Capacity building Capacity building for district Assemblies program - ongoing CIDA (Canada): (1) Local Government (1) Adopting budgeting and expenditure Reform Study - ongoing, (2) Fiscal managementreforms undertakenat the Decentralization central level to the local level; (2) Implementation of fiscal decentralization DFID (UK): PerformanceImprovement Supportscivil service reform for the Program - ongoing entire public sector (ministries, departmentsand agencies) For ongoing projects, the Implementation Progress ratings and the Development Objective (DO) ratings are taken from latestProject Status Report; for closedprojects the DO ratings are taken from the ICR, when available, inthe absence of a rating by the Bank's OperationsEvaluation Department (OED). H S - Highly satisfactory, S Satisfactory, U Unsatisfactory, HU Highly unsatisfactory - - - 25 Annex 3: ResultsFrameworkandMonitoring GHANA: SecondUrbanEnvironmentalSanitationProject ResultsFramework ProjectDevelopment OutcomeIndicators se of Ou rmation Objectives Improve urban livingconditions Reduction innumber of residents Assess the relevance of the inregardto environmental of the communities inthe project project design at EOP health, sanitation, drainage, complaining about refuse vehicular access, and solid waste accumulations and flooding management ina sustainable fashion, with special emphasis on the poor IntermediateResults ResultsIndicatorsfor Each Use of ResultsMonitoring (One per Component) Component Component 1: Component1: Component1: Reduce the frequency, severity, Percent of people living or Evaluate effectiveness of the and duration of flooding inlow- working near the newly lined drain liningprogram at EOP lyingareas drains who report reduced flooding Component2: Component2: Component2: ~~ ~ Increase the accessibility for low Additional number of people" Evaluate effectiveness of the and middle income residents and and number o f school children latrine delivery program at MTR school children to adequate gaining access to satisfactory latrines latrines Component3: Component3: Component3: Increase the amount of refuse Number ofproject towns in Gauge the efficiency o fthe collected and disposed of inan which the total MSW collected refuse collection system, environmentally sustainable increased by at least 5% per year especially the pilot solid waste manner collection contracts Component4: Component4: Component4: Increase vehicular access and Lengthofaccess roadsto Feedback to the communities reduce flooding, erosion and dust communities surfaced, with about whether their expectations inlow-income communities roadside drains l6 inchoosing these interventions have been met Component5: Component5: Component5: Central and local government NumberofWMDs inwhich at Gauge the effects o f institutional agencies to more effectively least 60% o fthe serviceable strengtheningo f WMD and fulfill their mandateinregardto waste management equipment is identify additionalneeds the project objectives, especially inoperating condition the WMDs Is Householdor public latrines inresidentialor public areas l6 This output indicator is used as a proxy for better vehicular access and reduced dust, mud, flooding and soil erosion, which could be measuredonly throughwell-designedand costly surveys. 26 /H v, nE P 8 n t-, e t IP n e I I I Annex 4: DetailedProjectDescription GHANA: Second Urban EnvironmentalSanitationProject THE PROJECT TOWNS 86. The five project towns of Accra, Kumasi, Sekondi-Takoradi, Tamale and Tema have a combined 2004 population o f 4.3 million, constituting 23 % of Ghana's total population. The project towns are expected to increase to 5.2 million by 2010 (Table A4.1). Nearly halfthe population o f the project towns lives in Accra. The built-up urban area that extends from the boundary of Accra into Ga District houses about 200,000 people, who are not included in the table. Neither is the itinerant population of about 500,000, which lives in rural areas and stays in Greater Accra during the day or during the workweek, mainly for petty trading or casual employment." i 1 Table A4.1 Populationin the Project Towns Population Population Population Population 2000 IinPercent Growth 2000 2000-2010 2004 2010 Accra 1,658,940 45% 3.5% 1,903,672 2,340,099 Kumasi 1,170,270 31% 3.5% 1,342,912 1,650,781 Sekondi-Takoradi 315,593 8% 2.5% 348,356 403,986 Tamale 202,320 5% 3.0% 227,713 271,90 1 Tema 380,770 10% 3.5% 436,942 537,114 3.4% I 4,259,594 I 5,203,881 Notes: 1. Basedon the 2000 populationcensus 2. Sekondi-Takoradi includes Shama, together forming SAEMA 3. Tema includesNewtown, Ashaimanand Lashibi Table A4.2 Project Cost by Agency TownlAgency II cost US$ I % I I Accra 19.32 23.9% Kumasi 15.34 18.9% Sekondi-Takoradi 8.60 10.6% Tamale 4.62 5.7% Tema 15.20 18.8% MLGRD 6.73 8.3% Total basecost 69.81 86.3% Contingencies (Performance- Based Fund) 11.12 13.7% 1 TOTALCOST I 80.93 I 100.0% I l7 Daily Graphic, September 20,2003 28 87. The project description for components 1 to 5 is given below. An overview of the cost estimate per MA is shown in Table A4.2 above. Annex 5 provides a summary of project costs by component, the cost breakdown by subcomponentand MA, and a detailed financing plan. A description of component 6, ProjectManagement, is given inSectionB3 and Annex 6. COMPONENT 1. STORMDRAINAGE Estimatedbasecost US$16.5 million - 88. A comprehensive drainage study was carried out in Accra, Kumasi and Sekondi-Takoradiinthe early 90's and prioritized master plans for the dredging and lining of drains prepared. The storm drain construction entails the risk that further lining upstream may result in flooding downstream due to the more rapid conveyance of flood waters downstream(Section C5). Sporadic attempts to preserve natural flood basins andto buildretention basins upstream-now the standard practice in industrialized countries -have failed due to uncontrolled land development. "Encroachment" on public lands is a serious problem for infrastructuredevelopment and makes it difficultto implementResettlement Acton Plans. 89. The dredging and lining of major primary and secondary storm drains under the Urban Environmental Sanitation Project, Credit 2836-GH (UESP-1) has significantly reduced the frequency, severity, and duration of flooding in these areas, according to residents and government officials. It is expectedthat additional drain lining will result in further reductionsin flooding. 90. The project will includethe realignment, dredging, and lining of about 16.7 km of primary and Takoradi, and Tema. Drains will be built with atrapezoidal channel profile - either with concreteor stone secondary drains; erosion control measures; and construction of small bridges in Accra, Kumasi, pitching - or with a rectangularprofile. The latter has a higher investment cost and is generally preferred where the land values are higher, where construction involves significant involuntary resettlement, and where accessfor drain cleansingwould otherwisebe restricted (see Annex 9). 91. No involuntary resettlement is anticipated, but some moving of temporary destruction or compound walls, rooms, toilets, bathhouses, or other structures that have encroached on the drains is likely. Most of the dislocation will be temporary to allow access to the drain during construction. A Resettlement Action Plan will neverthelessbe prepared before the beginning of construction (see Annex 10). The start o f drain constructionis predicatedon the establishment o f a satisfactory drain maintenance unit in every MA, with adequate staffing and financing, according to the provisions of the Grant Agreement (see Annex 6), and on the preparation of an acceptable Resettlement Action Plan for the drains. 92. A US$6.7 million Storm Water Drainage Project for flood control and improved sanitation inthe Tamale Metropolis startedinOctober 2003. It is assisted by the Arab Bank for Economic Development in Africa (BADEA) and includes the construction of 8.7 km of major rectangular concrete channels in the central business district and 9.2 km of roadside drains.18 Accra 93. The Greater Accra Metropolitan Area is drained by 10 major drainage basins in which severe flooding occurs annually. They fall under the administrative jurisdiction of three local governments: Accra Metropolitan, Tema Municipal and Ga District. 94. In 1996 a comprehensive plan for the reconstruction of storm drains in Greater Accra was preparedunder UESP-1, which focused mainly on the four most populatedbasins: Chemu West, Odaw, Osu Klottey and Kpeshie. The high priority drains were identifiedand have been completed or are under 18 Daily Graphic,October 1,2003, p. 28 29 construction, including the Odaw channel, a primary drain. The remaining secondary drains and bridges were prioritized accordingto the projectedeconomic benefitsand other considerations. 95. Under the project, the lower half of the OnyasiaDzorwulu drain will be dredged and lined with concrete to a length of 3.5 km, which will reduce the frequency and duration of flooding in Dzorwulu, Accra New Town, Maamobi, Kotobabi and Alajo. The entire drain of 7.2 km has a catchment area of about 245 km2.The Hydro Departmentof the Ministry of Works and Housing is currently reconstructing three road bridges and one railway bridge over the OnyasiaDzorwulu drain. The drain designs will be reviewedandrevisedas needed. 96. The following additional drains have been proposedfor dredgingand lining, to be consideredfor financing from the Performance-BasedFund: a. Constructionof the Matahekodrain as a buried rectangularreinforced concrete box culvert, the designofwhich will be re-evaluated;restorationofthe road(2.8 km); b. Reinforcedconcreteliningofthe Adabrakaand West Ridge drains (1.6 km); c. Dredging and concrete lining of the Chemu drain, to reduce the frequency of flooding in Sukura, Russia, New Dansoman, Mamprobi, Mamponse, and Shiabu(4.5 km); d. Reconstructionofthe Lafa drain(11.5 km); e. Reconstructionof priority drains inthe ChemuEast Basin(7.8 km); and f. Reconstructionof priority drains inthe Sakumo basin. Kumasi 97. The Kumasi Metropolitan Area extends over five main drainage basins, namely Kwadaso, Nsuben, Aboabo, Sisai and Wiwi. A drainage master plan was prepared in 1991, according to which the Nsubendrain was constructedunder UESP-1as the highestpriority. 98. Under UESP-2 the Aboabo drain, which was listed as the second highest priority in the master plan, will be dredged and lined to a length of 5.5 km. This will alleviate flooding in Amakom, Aboabo extension, Asawasi and Old Tafo. The work will be coordinated with the upgrading of the Link Road, which is proposedfor AFD financing. Sekondi-Takoradi 99. The drains to be dredgedand linedunder the project are: a.Chapel- Axim Roaddrain (1.5 km); and b.OIC -Effia drain (2 km). 100. The following additional drains with a combined length of 3.5 km have been proposed for dredgingand lining, to be consideredfor financing from the Performance-BasedFund: c.EffiaNkwanta Hospital-EgyamoaBakamudrain; d.Continuationofthe West Tanokromdrainto Kwesimintsim (1 km); and e. Kokompe drain. Tema 101. The flood prone areas in Tema are Communities 20, 18, and 5, Tema Newtown, Ashaiman, and Kpone. The area under TMA is drainedby th,reebasins: Mokwe basin, Sakumonubasin, and Chemu East basin. Under the project a comprehensive study of the Sakumonu basin will be carried out, which will include a drainage maser plan. The basin covers over two-thirds of the area under the Assembly and is drainedby two major streams, the Onukpawaheandthe Dzorwulu. 30 102. Studies are currently under way on the Onukpawahe stream, and detailed designs are available for the Community 18 drain, atributary ofthe Onukpawahe. Underthe projectthese designs will be reviewed and the constructioncarried out to a lengthof 2.7 kmto reduce the frequent flooding inthe area. 103. Inrecent years there has beenfrequent flooding at the estuary ofthe East Chemu Lagoon, which has been attributed to the desilting o f the channel that drains into the lagoon. The 1.5 km lined channel connecting the lagoon with the sea, which has a trapezoidal profile, has collapsed due to floods and requires rehabilitation. The design for this work is being prepared by Hydrological Services Division of the Ministry of Works and Housing. The designs will be reviewed under the project and the construction work carried out. COMPONENT 2. SANITATION Estimatedbase cost US$7.8 million - 104. Under UESP-1 all MASexcept for Accra prepared Strategic Sanitation Plans (SSPs) that set out their strategy for providing comprehensive sanitation services by the year 2005. The SSPs include a priority listing o f the mix of household, public and school facilities neededto serve the cities' low-income households and a description of the management and financing arrangements needed to implementeach component. The key objectives are: a. Elimination of pan latrines and a move from public facilities to household sanitation facilities, b. Improved public facilities inneighborhoods and commercial centers, c. Improved school facilities, and d. Provisionof new septage treatment facilities. 105. The SSPs contain recommendations about technology options, depending on housing densities and household income. Subsidies are targeted to low-income households. Another option is to provide community systems consisting o f simplified sewers and small treatment ponds, whereby the communities manage and finance the O&M. 106. The project will assist AMA to prepare an SSP and the other project MASto revise their SSPs through the Institutional Strengthening component. The number o f latrines o f different types to be constructed is shown in Table A4.3. Three options for latrine coverage in residential areas - extended household, bucket, and public latrines- are compared in Annex 9. The results of the cost-effectiveness analysis are that household latrines are the best choice. Town Household Latrines Public Latrines SchoolsLatrines (Number ofdrop holes) (20-seaters) (10 or 12-seaters) Accra 1.500 20 34 1Kumasi 1 2,000 I 26 I 47 Sekondi- Takoradi 1,700 15 32 Tamale 1.500 12 32 Tema 1,500 18 22 TOTAL 8.200 91 167 31 2.1 Householdlatrines 107. The objective o f the household latrine delivery program is to enable project cities to operationalize the Environmental Sanitation Policy relating to domestic sanitation by mainstreaming this activity in the MAS'routine sanitation programs. Inthe process, the project will deliver 8,200 household latrines, to serve about 160,000 people. The project MASare expected to adopt an integrated approach involving education, enforcement o f bylaws, and engineeringand to continue to carry out this program after the project has closed. Although the increase in latrine coverage through the project will be small, the project will contribute to the broader objective of institutionalizingthe delivery of household latrines (see Section B4(c)) The project will assist the MASin revising and enforcing the applicable bylaws, supplementedby an awarenesscampaign and hygiene education. 108. Following the good response to the city-wide household latrine program under UESP-1, where the physical target was exceeded by 42%, the program will concentrate mainly on the low-income communities where infrastructure upgrading will be carried out. This will allow a more comprehensive approach to environmental sanitation in selected low-income neighborhoods through combining improvements in solid waste collection, drainage, paved access roads, and water supply, where needed, with an intensive household latrine construction program and hygiene education. It will be supported by the enforcement of bylaws in the provision of latrines and the participation of local traditional councils and churches. The IDA subsidy for latrine construction will remain at 50 %, the same level as for UESP- 1, with the remainder contributed by the beneficiaries in cash andor in kind. The program will generally exclude new housing construction and will set a subsidy ceiling of $150 per latrine. More details o f the household latrine delivery strategy and a sustainable financing plan, with variations for the differentMAS, will be based on the results of a Study of the Impact of Household Latrines and Review of Standard Latrine Designs, The Consortium, December 2003. 109. The success of the household latrine component in exceeding the physical targets can be attributed in large part to the strategy adopted inmarketing and administering the scheme through the use o f "Management Intermediaries." Under UESP-2, this approach will be fostered, with more emphasis on using artisans as "agents o f change" to bring about behavioral change as well. This will require more training o f latrine artisans inthe appropriate skills to undertake both technical and software activities. The MASwill thus contract one or more local firms as "Management Intermediaries" to managethe household latrine program, who in turn will prequalify and train small local contractors in marketing and construction of the latrines. Their responsibilities will include vetting household grant applications received through the contractors, reviewing the design at the site, awarding individual contracts, making payments to contractors, and monitoring the implementation. The option of directly administering the program through W M D and EHD, with prequalified artisans doing the construction, will be piloted in some cities. Marketing support will then be provided mainly through direct consumer contact methods possibly, with the assistanceo f a marketing firm. The latrine program will be closely coordinated with the community infrastructure upgrading and common areas o f logistical support will be defined. The choice o f technology will be widened to include other robust and tested low-cost sanitation technologies, such as the Pour Flushlatrine and single pit latrine. 19 2.2 Public latrines 110. The project will include the rehabilitation or construction o f 91 20-seater units of public latrines. Normally, a latrine block will consist o f 20 seats, half for men and half for women, but an occasional 10- l9 The Pour Flushlatrine has a siphonto maintainawater seal that keeps out odors from the soakaway pit. It can be single or double pit and can be located either under the squatting plate or away from it, connected with a pipe. It requires at least 1 liter o f water per sitting to flush and maintain the water seal. HouseholdVIPs can be built with single pit (VIP) or twin pits (KVIP), depending on the number o f people, the geology, and the available space. Single pits are generally not recommended for high-density urban areas since they are difficult and unsanitary to empty, andthere is usuallyno spaceto constructanother pit. 32 seater may also be constructed. These will benefit about 70,000 people.New constructionwill take place in public areas such as markets, lorry parks and light industrial areas in accordance with the Environmental Sanitation Policy of 1999. Operation and maintenance will be contracted to private contractors through competition, as was the case with UESP-1. Some public latrines in low-income residentialareas will also be rehabilitatedor convertedto more suitabletypes. 2.3 Schoollatrines 111. School latrines consisting of 167 10 or 12-seater blocks will be renovated or constructed in primary and junior secondary schools, hygiene education given in the classroom, and water supply connections made to those schools that don't have them. This will benefit about 70,000 school children and teachers. Schools will be able to obtain a new or improved sanitation facility provided that (i) a Facilities ManagementPlan is prepared, and (ii) sufficient funds are collectedto pay for O&M for at least one year. A local "Management Intermediary" will then manage the implementation, including promotion, assistance to individual Parent-Teacher Associations (PTAs) to prepare a Facilities Management Plan, selection of a contractor, construction supervision, training of selected teachers in hygiene education, and monitoring. 112. The enrolment in schools averages about 400, divided into morning and afternoon sessions. In some instances two or three schools are clusteredat the same site. Each will typically be served by a 12- seater block, consisting o f a unit of 5 seats for girls and 1 for women teachers, and an identical unit for boys and men teachers. The technology will be a KVIP latrine with alternatingpits or a Water Closet or Pour Flush2' with a septic tank and a drain field. Schools will be grouped in batches of five to ten where feasible to facilitate implementation. Operation and maintenance arrangements will be determined by school officials, in consultation with the PTA, and will be described in individual Facilities and ManagementPlans. PTAs will be encouraged to contract a qualified private company to maintain their facility, with support from school custodial workers. Private sludge haulers will periodically be hired to empty the latrine pits or septic tanks. 113. The existing hygiene education materials, including those that were developed under UESP-1, will be reviewed and disseminatedto participating schools. The project will in addition provide support to hygiene education, including the ongoing national handwashing campaigntargeted at school children. Each MA will discuss and finalize an annual hygiene and sanitation Information, Education and Communication (IEC) Campaign with the School Health Education Program with emphasis on hand washing with soap and will allocate resources for implementing the campaignon a city-wide basis. The campaign materials have already been developed under Phase 1 of the Second Community Water and Sanitation Project, UESP-2 and will only support the reproduction of printed materials for each city, airtime for messages and direct consumer contact activities. 2.4 Liquidwaste managementinAccra and Tema 114. Two septage treatment facilities were constructed under UESP-1, one in Kumasi and one in Tema. The one inTema requires the constructionof an access road inthe direction of Tema. The existing septage treatment facility at Achimota, Accra, which receives a high proportion of fecal matter, will be rehabilitatedand expanded. 115. Several projects for improving sewage treatment in Tema were carried out over the last decade, including some under UESP-1. However as of the end o f 2003, no sewered wastewater was being treated -exceptforsomefactoriesthatprovidepre-treatment mainlydueto(i) - objections to noxiousodors from residents who live next to the treatment ponds, and (ii) the inability of the Tema municipality to pay the high electricity cost for sewage treatment with aerators and for pumping. The possibility of handing over *'See the footnote above. 33 management of pumpingstation No. 3, serving the industrial and commercial zone inthe east, to a private operator through a franchise will be explored under UESP-2. Studies will be carried out of alternative treatment or pumping for the remainder of the sewage network, and minor works will be rehabilitatedor constructed. Some sewers will be rehabilitated and a community-driven restoration of lagoons undertaken. COMPONENT 3. SOLID WASTE MANAGEMENT Estimated base cost US$25.7 million - 116. The aim of this component is to increase the service level for solid waste and septage collection and achieve an environmentally sustainable final disposal. Data on municipal solid waste are given in Table Al.l of Annex 1. A similar component was part of UESP-1 with the same objective. The planned outputs were by and large achieved, consisting o f the construction of three sanitary landfills (one remaining incomplete), provision of equipment for their operation, introduction of private waste collection contracts, construction of septage treatment facilities in Accra, Kumasi and Tema (only one of which has been put to use as o f February 200421),and remedial works on the Tema sewerage system. When assessing the impact of these measures in regard to the objective o f increased waste collection, one has to recognize that the baseline figure was an approximation at best, coming from interviews with solid waste managers. The same sources estimate that the solid waste collection inthe 5 towns has increasedby 10 - 20 % duringthe life of the project. What can be said with certainty, however, is that (a) the creation of engineered disposal sites for solid wastes and sludge is a big improvement for the environment over dumping at uncontrolled sites, and (b) the increased participation of the private sector in solid waste collection has improved the collection. 117. UESP-2 will comprise similar activities to UESP-1, providing a geographic expansion as well as an intensification of the approach. They will consist o f (i) construction of sanitary landfills in Accra the and Tema, supply of equipment for their operation, and the completion of the sanitary landfill in Sekondi- Takoradi; (ii)support for effective operation of the three landfills in Kumasi, Tamale, and Sekondi- Takoradi that were constructed under UESP-1, including monitoring for environmental compliance and the involvement of local private operators intheir operation; (iii) improved use of the refuse dumps that still have to be exploited until the new facilities are ready, followed by their closure and rehabilitation; (iv) rehabilitation o f discontinued refuse dumps, and (v) scaling up private solid waste collection on the basis o f lessons learned from the pilots. 3.1 Sanitary Landfills 118. Two sanitary landfills will be constructed, one at Kwabenya for Accra and one for Tema. They will include weighbridges, a site office, water supply and a surroundingbuffer zone. Access roads already exist, on which traffic flow and safety improvements will be made. The advisability o f adding a sludge disposal facility and an incinerator for hospital and other hazardous wastes suitable for incineration will be considered in the designs o f both landfills. The WMDs will receive technical assistance on the operation of the sanitary landfills through the Institutional Strengthening component, including monitoring for environmental compliance once completed. 119. Accra sanitary Zandfirz at Kwabenya. The construction o f a new landfill near the village of Kwabenya in Ga District, 18 km north of the city center o f Accra, will be completed. This landfill will serve Accra as well as the urban areas o f Ga District adjacent to the city o f Accra and has an estimated No septage treatment facility could be built for Accra due to the inability to secure land rights for a site in Accra or Ga District. In Tema, the constructionwas substantiallycompleted, but some works remainto be done before the facility can be used. An access roadto Tema was originally includedin another project, but was eventuallynot built. The road is includedinUESP-2. 34 loading of 500,000 tondyear. Refuse is currently dumped in an old quarry at Oblogo in the McCarthy Hills andat various unplannedlocations on the perimeter of the city. 120. The construction was started in 2000 with financial assistance from the U.K. Department for International Development (DFID). Following the preparation of detailed designs and an environmental impact assessment and resettlement plan, Phase Iof the Kwabenyalandfill was constructed, consisting of an access roadand a covered conduit for storm water drainage. Inspite of prior consultationswith various stakeholders, claims of land rights resurfacedduring construction, and some nearby residents put up stiff resistance, delaying the start of Phase I1 of the construction, with DFID ultimately withdrawing its support. The local government authorities have recently reached a tentative agreement with the Chiefs for the acquisition of land. The three design options that were identified by the original designers will be reviewed in light of the risk of seismic activity at this site. An environmental and social analysis was carried out in 1999. Before the start of construction aResettlementAction Planwill be prepared, with the inclusion of all stakeholdersand with adequate stakeholder consultationand compensation, and evidence of landrights obtained (see Annex IO). 121. Temusanitary landfill.. In 1997the existing landfill inTema was reengineeredwith World Bank assistance under the Urban I1project for a life of 5 years. All the cells are now full, and a buildup of 1-2 meters aboveground has been created, turning the site into an uncontrolled refuse dump. While a new sanitary landfill for Tema and nearby townships is being designedand built, the existing refuse dump can possibly be used for another 2-3 years ifefficiently engineeredand managed. Another reason for the early closure of the present refuse dump is that it projects partly into the Tema Export ProcessingZone (EPZ), which was created under the Trade and Investment Gateway Project, Credit 3114-GH. Smoke from the perpetual burning at the landfill could create a nuisance for the industries that will eventually be located inthe EPZ. 122. A site for a sanitary landfillhas been identified about '/z kmfrom the existing refuse dump, which seems well suited for a sanitary landfill. It lies in a former laterite and stone mining area with no settlement and no major economic activity on the site. It is easily accessed by road, and the geology is favorable for a landfill. The preparation of designs and an environmental and social assessment are underway, financed through the Gateway project. It will receive refuse from Tema as well as parts of Accra and Ga District, estimated at 100,000 tondyear. A satisfactory environmental assessment and resettlement action plan will be prepared and evidence of land rights obtained before the start of construction(see Annex IO). 123. Sekondi-Takoradi sanitary landfill. Since the contractor failed to complete the construction in time under UESP-1,the landfill will be completedunder UESP-2. An EA and RAP were preparedaround 1996 and implementedat the start ofconstructionin2002. 3.2 Equipmentfor SanitaryLandfills 124. The specific equipment needs for the eventual operation of the two new sanitary landfills for Accra and Tema will be determinedjointly with the consulting engineers responsible for designing the landfills and will include a front loader, a compactor, a tipper truck, a water tanker, motorcycles, and communications equipment. Training and technical assistance for their efficient operation and maintenancewill be part ofthe Institutional Strengtheningcomponent. 3.3 ImprovedUse, Closure, and Rehabilitationof RefuseDumps 125. While sanitary landfills are being constructedinAccra, Tema and Sekondi-Takoradi, optimal use will be made of the existing refuse dumps inthese cities to allow their continueduse inthe interim, and to take remedial measures for safeguardingthe environment. Once the new landfills are ready for use, the existing dumps as well as those that have already been closed, will be rehabilitated as to minimize their 35 negative environmental and social impact. They include (i) discontinued controlled dump at Mallam the inthe McCarthy Hills near Accra, which was terraced but not cappedand has no leachatecontrol, (ii) the active refuse dump o f Oblogo in the McCarthy hills is being operated as a dump and has no leachate control; its use will be improved before closure and rehabilitation; (iii) the controlled dump at Kpone in Tema, the use of which will be improved before it is closed and rehabilitated, and (iv) the dump at Essipon, which also will be improved for use before closure and rehabilitation. In addition there are 4 small, discontinued dumps in Kumasi and 3 in Tamale which will be rehabilitated. Technical, environmental and social studies will be carried,out to determine the specific requirements for each refuse dump. Closure and rehabilitation is likely to include relocation o f scavengers, leachate captivation and treatment, methane ventilation, contour stabilization, soil cover, and fencing. Before the start of the improved use, closure, and rehabilitation of refuse dumps, an environmental management plan and a resettlement action plan will be prepared and evidence of land rights obtained (see Annex 10). 3.4 Operationof SanitaryLandfills 126. The landfills that were recently completed in Kumasi and Tamale under UESP-1 and the one at Sekondi-Takoradi that will be completed under UESP-2, were designed for efficient use and to meet environmentally sound standards. Their operation demands good management, including the optimum utilization of the equipment that was supplied through UESP-1. The resulting cost is difficult for the Assembly to afford under the current revenue generating arrangements. There is a risk that the landfill will revert to a dump and will fillupmuch faster ina shorter period ifthe operating principles of sectional filling, compaction and covering are not followed (see Section CS). As waste collection improves, cost recovery can be increased, and with economic growth the financial situation in the project towns is expected to improve to the extent that they can finance the operation and monitoring of the landfills eventually ontheir own. Inthe meantime, IDA will provide limitedfinancial support for the normal O&M costs associated with the operation of the sanitary landfills through operational subsidies applied on a declining basis. Operating subsidies will be at the rate o f 50% for the first two years, 35% for the next two years, and 25% for the remainder of the project. 22 Technical assistance will be provided through the NDFfinanced InstitutionalStrengtheningcomponent. 127. To help the MASwith better plans for bridgingthe funding gap by the end o f the project, each MA will prepare an annual operating plan for the landfill with evidence of adequatebudgetary provision for meeting the funding shortfall. The project will assist with exploring the feasibility o f landfill gas recovery from the recently completed sanitary landfill in Kumasi, with the aim of qualifying for carbon financing to defray part of the cost of the landfill operation. Carbon financing provides resources to projects that generate, or are expected to generate, green house gas (or carbon) emission reductions inthe form of compensation for such emission reductions. The city must meet some minimum qualifications, including a population size o f at least 1 million. The recovered landfill gas is normally used for power generation, but other methods o f gas disposal, such as flaring, may also qualify for financing from the Carbon Fund. 128. The monitoring o f landfills and the reconditioning of waste management equipment will be carried out as part o fthe Institutional Strengthening component. 3.5 PrivateSolid Waste Collection 129. Contracting out solid waste collection by following a competitive process was introduced in the MASthrough UESP-1 on a pilot basis. The MAS were zoned into collection areas suitable for competitive collection contracts, and model contracts were developed for engaging private collection firms on a competitive basis. Initially, the MASwere collecting the fees from the users and paying the 22 Identical to the IDA financing of the waste management contracts. 36 contractor, but franchising is increasingly used, whereby the contractor recovers at least part of the cost directly from the customers. Each city selected a pilot collection zone for generating lessons for wider replication and IDA financed part of the cost of the collection contracts in the pilot zones on a declining basis. After a long delay in starting up, the pilots were implemented in Kumasi, Sekondi-Takoradi, Tamale, and Tema. No program was carried out in Accra because one company was given a monopoly for solid waste collection by the previous government (see Annex 1). The experience has shown that high-income users are willing to pay in full for the service while middle-income users for part of it. Collecting fees directly from low-income users has been difficult partly because waste collection is not door-to-door. The pilot has also shown that all the key aspects of the mutual obligations should be specified inthe contract. The program will be continued under UESP-2 to apply the experiences learned andto extendthis kind of service to other middle and low-income areas. Two such contracts inaddition to the old pilots are planned in each of the 5 MAS.IDA will finance the contracts at the rate of 50% for the first two years, 35% for the next two years, and25% for the remainder of the project. 3.6 Household bins, skips and skip pads 130. Experience under UESP-1 has shown that the supply of refuse bins to households by the waste collection contractor constitutes a large initial outlay. These bins tend to be imported and designed for mechanical lifting by specific types of trucks. An alternative arrangement is for the Assembly to provide cheaper, locally manufactured general-purpose bins under terms specified in the contract. The project will finance bins for households, and skips and skip pads in areas where door-to door collection is not feasible. COMPONENT4. COMMUNITY INFRASTRUCTUREUPGRADING Estimatedbasecost - US$8.5 million 131. Community infrastructureupgradinghas beenpart of nearly every Bank-assistedurbanproject in Ghana. It was carried out in 7 communities under UESP-1: 3 in Accra, 2 in SekondVTakoradi, and 2 in Kumasi. All or some ofthe following infrastructurewas provided: upgradingof local roads, drains, water supply, public latrines, and street lighting, with roads taking up more than halfthe budget. The work was started in 1998 and was substantially completed in 1999. The interventionshave had a significant impact inthese communities,making it one ofthe most successful componentsofUESP-1. 132. Under UESP-2, 13 communities inthe five project towns will be upgraded, which will benefit an estimated 80,800 residents.It is anticipatedthat the same list of infrastructure improvements as inUESP- 1 will feature prominently in the communities' list of priorities. The communities in Accra and Tema were chosen from a long list of 32 low-income communities in Greater Accra (which includes the urban part of Ga District adjacent to Accra) with severe infrastructure deficiencies, following the results of a study and community consultations that were completed inAugust 2002. A menu of roads, drains, water supply, toilets, refuse collection, and street lighting was offered to the communities, and their priority choices were usedto prepare preliminary plans. The communities to be upgradedinKumasi and Sekondi- Takoradi were identified in 1996during the preparationfor UESP-1, but could not be included inUESP-1 due to budgetconstraints.Designs will be preparedfor a few additional communities inthe project cities for which infrastructure upgrading could possibly be carried out during the later part of the project through financing from the Performance-BasedFund. 133. The upgradingcarried out under UESP-1 improvedthe living conditions o f people in slum areas at the cost of US$52 per capita of the total population or $25,000 per hectare. The cost in other Bank- assisted projects has been higher: $75 per capita or about $47,500 per hectare for typical upgraded sites. The communitiesthat will be upgradedthrough the project are shown inTable A4.4. 37 1 Table A4.4 Communitiesto be Upgraded city 1 Communities Estimatednumber 1 ofbeneficiaries Accra I Alajo,James Town, andKpehe 1I 15,800 1I Kumasi Old Tafo and Ayigya 24,800 Sekondi-Takoradi Effia-Kuma, New Takoradi, and 13,400 Kojokrom/Anoe Tamale Tishegu-Moyahibili-Nyanshegu,Buillpala 13,400 KakpalylliNalonfon, and PoliyafanAboabo Ward I Tema East Ashaimanand Kpone 13,400 TOTAL POPULATION 80,800 134. The preparationfor the infrastructure improvementswill proceedas follows: a. The MASwill finalize the choice of communities inconsultationwith MLGRD; b. Consultative meetings will be held with the communities at a place insidethe community and a community-basedorganizationidentified or formed for collaborationwhere possible; c. The priorities of the community representatives will be reconciled with the preliminary engineeringplans from previous needs assessments; d. The consultantwill prepare designs and a Resettlement Action Plan(RAP; Annex 10); e. One or more consultative meetingsopento the public will be heldwith the communitieson the design andthe RAP; f. The RAP will be submittedto the Bank for clearance; and g. The designs will be finalized andthe contractor selected. COMPONENT 5. INSTITUTIONAL STRENGTHENING - Estimated base cost $9.6 million, tentatively financedby NDF 5.1 TechnicalAssistance and Training 135. A Project-Wide Capacity Buildingand Training (PWCBT) programwas carriedout under UESP- 1 with assistance from the Nordic Development Fund. This program ended in January 200323after substantially completing all the targeted outputs, which mainly consisted of (i) a number of reports, manuals, and guidelines, and samples documents; (ii) training; (iii)provision of office facilities, vehicles, etc.; and (iv) policy dialogue. The impact of these activities was substantial in regard to the creation of functioning Waste Management Departments and on certain topics, such as the promulgation of the National Environmental Sanitation Policy, but achieved only modest results regarding the capability of the Ministry ofLocal GovernmentandRuralDevelopmentto facilitate andmonitor waste management in the MetropolitadMunicipal Assemblies and the institutional and financial capacity of the five MASfor sustainable waste management. 136. The underlying causes for the small improvements that were achieved in the sustainability of urban waste management are mainly related to unattractive terms of employment in local governments 23 The original closing date o f UESP-1was December 31, 2002. The project was extendedto December 31, 2003 to allow the completion ofthe 3 sanitary landfills. 38 and insufficient revenues to finance the environmentalsanitation services (see Annex 1). The experience with the capacity building program in UESP-1has shown again the limitations of attemptingto improve the sustainability of urbanenvironmentalsanitationthrough capacity building without the introduction of reforms in the civil service and without a substantial increase in local government revenues. However, without capacity building the situation would undoubtedly have been much worse than it is now, which provides a strong justification for continued support in this area, combined with assistance to the Governmenton civil servicereform and fiscal management. 137. The Institutional Strengthening Component will build on the achievements of the PWCBT programand will aim at further improvementsinthe institutional and financial capacity of all the relevant institutions for the improved management of the urban environment. The beneficiary institutions will be (i)the ones that are directly responsible for urban environmental sanitation, namely the Waste Management Department and the Environmental Sanitation Department in the five MAS;(ii) other units in the MAS, such as the Finance and Planning departments and the Environmental Sanitation Subcommittee of the Assembly; (iii)MLGRD (particularly the Environmental Sanitation Department); and (iv) other relevant central government agencies (including EPA), the RCCs (Annex 6), local traditional authorities,NGOs, andthe private sector. 138. The support to the five MASwill mainly relate to (i) capacity building aimed at institutional and financial improvements in environmental sanitation, and (ii) the necessary skills and facilities for every M A to implement its own share of UESP-2. The assistance will be provided mainly in the form of technical assistance, long-term and short-term training (including on the job and workshops), equipment (e.g. computers, motorbikes, communications, etc.), hiring of consultants, and operating support to the MAS. 139. Facilitating project implementation by MAS. This is aimed at enabling the MASto implement the portion of UESP-2 under their responsibility and will include improving key skills needed by the private sector. The assistance can take various forms, from training to the furnishing of model contracts, andwill include, but not be limited to: a. Procurement, b. Planningand commitmentcontrol, C. Accounting, d. Operationof sanitary landfills, e. Closureand rehabilitation of sanitary landfills, f. Solid waste management contracts, g. Householdlatrine campaign, and h. Hygiene education. 140. Review and implementation of studies and guidelines. Follow-up on the use of various model agreements, guidelines, manuals, accounting systems, monitoring systems, MIS systems, computerization, etc., which had been prepared under the PWCBT program and partly implemented(see Annex 12) to include, but not be limited to: a. Preparationof an integratedsolid waste management strategy, b. Preparationof an Strategic SanitationPlan (SSP) by AMA and review and implementation of SSPs inthe other project cities, c. Every MA to develop a sustainablehousehold latrine program, including financing, as part ofthe SSP, d. Use of the databases and data collection and analysis for solid waste management, e. Managingsolid waste management contractsandanalyzingtheir performance, 39 f. Refiningand operationalizing solid waste management, and g. Implementing guidelinesfor operating sanitary landfills. 141. Improving municipal Jinancial systems. A major focus of technical assistance is to provide policy advice to the MASon the fundamentals of sound municipal finance. The project will also address the quality of municipal taxation, regulation, and administrationto promote the efficient and sustainable delivery o f urban services. The objective will be to improve the overall fiscal, institutional and regulatory framework for the delivery of municipal services. These fundamentals include the rational intergovernmental assignment of functions. The consultants for technical assistance shall assist the MA to improve three key areas of municipal finance, expenditure management, revenue mobilization, cost recovery, and financial administration. a. Expendituremanagement. Capital and recurrent budgetingand investment selection practices, including decisions to transfer activities and investments from local government departments to separate corporate entities, such as utilities, with full or partial municipal ownership or private sector participation, as appropriate; and management of assets. Efforts will be made to adopt the composite budget system currently being designed for all local governments in Ghana. b. Revenue mobilization and cost recovery. Sound pricing for public services, use of suitable fees and charges, property rate, and other local taxation, depending on decisions about what activities should be financed privately, for example, on a non-recourse basis. Both sound financing and good overall city management involve establishing links between the services provided by the city and the payment for them by users and beneficiaries through fees, tariffs or taxes. c. Financial administration, including generally accepted accounting, auditing, disclosure, asset and liquiditymanagement, procurement and payment procedures. Most MAShave some basic computerized financial management system in place, and the intervention shall take into account existing arrangements and MASfutureneeds. 142. National Environmental Sanitation Communications Program. One o f the recommendations contained in the National Environmental Sanitation Policy o f 1999 is to formulate and implement a coherent National Environment Sanitation Communications Program, in consideration o f the importance o f attitudinal and behavioral factors inthe successful implementation o f the Policy. It will go beyond the dissemination o f information, to aim at maximizing the participation o f all actors through a two-way communications approach. It will consist of identifying problems, knowledge gaps, disincentives to adopting new behavior patterns and available options. It will provide feedback into the policy debate, implementing actions, and monitoring progress at all levels. In order to enhance ownership of the Program, MASwill be assisted in usingtheir own approach to the development of the programrather than employing a standardmethodology. 143. The actions to be taken for the formulation and operationalization o f the proposed Communications Program include (i)identify and review existing communications initiatives and the establishment a mechanism for coordinating them in an efficient, effective, harmonised and sustainable manner; (ii)pull together the various initiatives and strategies to develop a National Environmental Sanitation Communications Program; (iii)establish a program coordinating team to oversee the implementation; (iv) integrate and mainstream communications within MLGRD and strengthening the Ministry's public relations unit to coordinate the implementation of the Program more efficiently and effectively and to provide further technical assistance to MASto develop and implement their own Information Education and Communication (IEC) strategies as part o f the broader Communications Program; (v) provide communications training to key staff of relevant MDAs and MAS;(vi), develop and produce communicationmaterials for dissemination; (vii) carry out further IEC campaigns; (viii) develop 40 an outreach strategy for the UESP-2 project; and (ix) establish an evaluation and feedback mechanisms, such as impact assessment surveys for M&E purposes. 144. Communicationsthrough the Internetwill be facilitated, to allow efficient interactions amongthe project staff and with the general public. This will facilitate the dissemination and sharing of knowledge and will ensure that all stakeholders are well informed about the project. Specific measures will include the use of e-mail, creatingand maintaining a web site for urbanenvironmentalsanitation andthe project, andthe establishingnetworks. 5.2 CapacityBuildinginMLGRDand other centralagencies 145. Under the decentralizedservice delivery system, central agencies have an important role to play in planning, coordination, support and monitoring. For urbanenvironmentalsanitation the key agency is MLGRD, and specifically its EnvironmentalHealth Unit, which will participate inthe implementationof the institutional strengtheningcomponent, The support provided to this unit by UESP-2 will complement the plannedinstitutional supportduringthe next 5-year cycle ofDanida's assistanceprogram,which starts in 2004. Another agency to be supported is the RCC (Annex 6). Other beneficiary agencies, and the specific nature of the assistance to be provided, will be identified in the course of further preparation of this component. 5.3 CapacityBuildinginMAS 146. Every MA will prepare annually (for the period of the GOG fiscal year) an institutional strengtheningplan to improve its performanceon environmentalsanitation, inconsultationwith the RCC, and submit it to MLGRD for approval and support. The project implementationteam (PIT) that has been formed ineach MA to coordinate its portion of the project activities (see Annex 6, Grant Agreement) will also be responsible for the preparation of the annual capacity building plans and for coordinating their implementation.The assistance will include, but not be limitedto: a. Follow up on the approval and implementation of environmental sanitation bylaws by the MAS,which was also a subject for the PWCBT program, b. Introducing and operationalizinga drain maintenanceunit inevery participating MA, c. Improving planning and accounting practices, including the introduction of cost-based accountingfor solid waste management, sanitation, andto other urbanservices, d. Improving internalrevenue collection and financial management, e. Strengtheningthe Submetros, f. Strengtheningthe RCC inits monitoring function, and g. Facilitating the implementationofthe Local Government Service Act. 147. Monitoring of project implementation and of sanitary land$lls. Assistance will be provided to the implementingagencies with monitoringthe project implementation, including progresson outputsand impact as well as processes, such as procurement, contract management, and financial management.The monitoring will also cover key aspects of the performance of MASaccording the Performance Criteria specified inthe Grant Agreement (see Annex 6). 148. Part of the operating plan of sanitary landfills is to monitor their environmental impact, so that remedial actions can be taken in case of an unforeseen negative impact. The environmental effects will also be monitored. The project will finance the environmental monitoring of (i)the sanitary landfills in Kumasi, Tamale, and Sekondi-Takoradi, (ii) active and closed refuse dumps inthe project cities, and the (iii) restorationworkscarriedoutontheoldrefusedumps. the 41 149. House Numbering. The current haphazard and incomplete system of house numberingmakes it difficult to implement a well managementrefuse collection system with cost recovery, which requiresthat the customers be identified by their location. The same is true for other municipal services. The project shall support MASwith street naming, identifying the owners and renters, and house numbering. The information will be entered into a database of the M A for several purposes, including the delivery of urban services, the collection of property rates, and census taking. It will also improve on land-use controls and zoning system in the cities. Each city shall prepare a comprehensiveproposal for approval before funds are committed for the work. The proposal shall state the purpose, methodology, budget, output, and the impact of the program and Departments that will be responsible for the exercise. To ensure that the program conforms to the national plan, a workshop shall be organized for all MASwith representatives of Town and Country Planning Departments and other relevant agencies to review the proposedprograms. 5.4 Malaria Vector Controland HIV/AIDS Prevention 150. MASwill be provided with technical and financial assistance to organize a Roll Back Malaria (RBM) program in collaboration with the Ghana Health Service, consisting of (i) elimination of the various types of breeding grounds for mosquitoes, including choked or faulty drains, discarded tires, puddles and pools, and open water containers - whether public or private; and (ii) campaign to raise a public awareness about the need for a comprehensive approach for combating malaria, including the removal of sources, spraying, scaling up the use of impregnated bed nets (especially for children and pregnantwomen), and early treatment ifinfected(se Annex 1,Other Environmental Hazards). 151. Inline with the country's policy ofrequiring avigorous effort to combatthe spreadofHIV/AIDS before it assumes epidemic proportions, the project will support HIV/AIDS prevention and control activitie~.~~HIV/AIDS awareness materials promoting behavior change and condoms will be distributed to the public at local government offices participating in the project and site offices of consultants and contractors. Furthermore, contractorswill be required, through provisions intheir contract, to give AIDS awareness and protection to their employees, including the distribution of condoms, promoting changes in behavior among them, and assisting HIV positive individuals to access antiretroviral therapy as well as treatment for opportunisticinfections. 5.5 Reconditioning of Waste ManagementEquipment 152. The state of the existing waste management equipment inthe WMDs will be assessed and those that are still serviceable will be reconditioned and the stock of spare parts replenished.The activity will include improvements in the transport log of vehicle use and of the maintenance register; training of transport supervisors in vehicle scheduling, tracking and maintenance; and improvements in the spare parts storage and management. An expert mechanic on heavy vehicles will do the assessment of the equipment andthe drawing up of an improvement plan. 24 See thejoint agency publication: World Bank Group, Local Government Responses to HIP/AIDS: A Handbook, MSN:F4P-400, Washington, DC, September2003. 42 Annex 5: ProjectCosts GHANA: SecondUrbanEnvironmentalSanitationProject Table A5.1 Estimated ProjectCosts % %Total (US$ Million) Foreign Base Local Foreign Total Exchange Cost 1.STORM DRAINAGE 7.50 9.00 16.50 55 24 2. SANITATION Household latrines 2.61 0.07 2.68 3 4 Public latrines 1.04 0.45 1.49 30 2 School Latrines 1.57 0.67 2.24 30 3 .LiquidWaste Management 0.82 0.53 1.35 39 - 2 Subtotal SANITATION 6.04 1.72 7.75 22 11 3. SOLID WASTE MANAGEMENT Landfill construction 4.35 11.59 15.94 73 23 Landfill equipment 1.27 1.27 100 2 Closure & rehabilitation of dumps 0.62 0.87 1.49 59 2 Landfill operation 2.26 0.93 3.19 29 5 Private solid waste collection 2.42 0.89 3.30 27 5 Bins, skips & skip pads 0.32 0.22 0.54 40 - 1 Subtotal SOLID WASTE MANAGEMENT 9.96 15.76 25.72 61 37 4. COMMUNITY INFRASTRUCTUREUPGRADIF 2.56 5.98 8.54 70 12 5. INSTITUTIONALSTRENGTHENING Project-widetechnical assistance and training 2.25 2.25 4.50 50 6 Capacity building in central & regional governmt 0.25 0.25 0.50 50 1 Capacity building in MAS 1.64 1.50 3.14 48 5 Malaria vector control & HIV/AIDS prevention 0.48 0.21 0.69 30 1 Reconditioning of waste management equipmt 0.07 0.67 0.74 90 1 Subtotal INSTITUTIONALSTRENGTHENING 4.70 4.87 9.57 51 14 6. PROJECT MANAGEMENT 0.71 0.42 1.13 37 2 7. PPF Refund 0.27 0.33 0.60 - 1 Total BASELINECOST 55 31.74 38.07 69.81 55 100 CONTINGENCIES(Performance-BasedFund) Physical Contingencies 1.83 2.93 4.77 62 7 Price Contingencies 1.oo 5.35 6.35 84 9 Subtotal CONTINGENCIES 2.84 8.28 11.12 74 16 Total PROJECT COST 34.57 46.36 80.93 57 116 43 Table A5.2. Accra MetropolitanAssembly (Base cost, in US$) 3.5 Private solid waste collection 700,000 210,000 175,000 315,000 3.6 Household bins 90,000 84,600 5,400 4.1 Community infrastructure upgrading I/ 1,485,000 1,431,000 54,000 5.3 Capacity building in AMA 4/ 690,000 690,000 5.4 Malaria vector control & HIWAIDSprevention 140,000 140,000 5.5 ]Reconditioning of waste man. equipment TOTAL I I 160,000 I I 160,000I 19,321,800 I16,994,400 I 990,000I 478,000I 299,400I 560,000 1. Includingconsultingwork 2. Contingentupon satisfactorydrain maintenancearrangements 3, Constructionof new publiclatrinesonly in public places 4. Includesconsultingservices for projectimplementation,equipmentand operatingcosts: house numbering:and communicationsstrategy Table A5.3. KumasiMetropolitanAssembly (Base cost, in US$) 1, Includingconsultingwork 2. Contingentupon satisfactorydrain maintenancearrangements 3. Constructionof new publiclatrinesonly in public places 4. Includesconsultingservices for projectimplementation,equipmentand operatingcosts: house numbering;and communicationsstrategy 44 Table A5.4. Sekondi-TakoradiMetropolitanAssembly (Base cost, in US$) 1. Includingconsultingwork 2. Contingentupon satisfactorydrain maintenancearrangements 3. Constructionof new publiclatrines only in public places 4. Includesconsulting servicesfor project implementation,equipmentand operatingcosts; house numbering:and communicationsstrategy Table A5.5. Tamale MetropolitanAssembly (Base cost, in US$) No. Descrlptlon I cost I IDA I I MLGRDI MA Bene- I C:*:-&.... ,,b,a,,=q 2.1 Constructionof 1,500 household latrines 1/ 490,000 II 245,000 II NDF1 II 245,000 2.2 Rehabilitation and constructionof 12 public III 207,900 I 192,800 I 15,100I latrines 113/ 2.3 Rehabilitation and constructionof 32 school 445,500 413,100 32,400 latrines 1/ 3.3 Rehabilitationof refusedumps 1/ 128,700 125,200 3,500 3.4 Operation of sanitary landfill (5 years, incl. 300,000 90,000 110,000 100,000 IIncludingconsultingwork 2 Contingentupon satisfactorydrain maintenancearrangements 3 Constructionof new publiclatrines only in public places 4 Includesconsultingsewices for project implementation,equipmentand operatingcosts house numbering.and communicationsstrategy 45 Table A5.6. Tema MunicipalAssembly (Base cost, in US$) 1. Including consulting work 2. Contingent upon satisfactory drain maintenance arrangements; includes studies 3. Construction of new public latrines only in public places 4. Includes consulting services for project implementation, equipment and operating costs: house numbering; and communications strategy Table A5.7. Ministry of Local Government and Rural Development (Base cost, in US$) Subcomponent Estimated Financing No. Description cost IDA NDF MLGRD Bene- MA ficiaries 5.1 Technical assistance and training, project- 4,400,000 4,400,000 wide 46 Table A5.8 Financing Plan by CalendarYear Source 2004 2005 2006 2007 2008 2009 2010 Total IDA 2.00 9.00 12.50 13.00 12.50 9.00 4.00 62.00 NDF 0.10 1.80 2.00 2.00 2.00 1.90 0.55 10.35 GOGIMLGRD 0.07 0.20 0.35 0.48 0.48 0.48 0.31 2.37 GOGIMA 0.10 0.42 0.60 0.63 0.60 0.50 0.40 3.25 Beneficiaries 0.07 0.25 0.41 0.60 0.65 0.60 0.38 2.96 Project Total 2.34 11.67 15.86 16.71 16.23 12.48 5.64 80.93 (b) Total cost in billion Cedis, including contingencies Source 2004 2005 2006 2007 2008 2009 2010 Total IDA 17.84 80.28 111.50 115.96 111.50 80.28 35.68 553.04 NDF 0.89 16.06 17.84 17.84 17.84 16.95 4.91 92.32 GOGlMLGRD 0.62 1.78 3.12 4.28 4.28 4.28 2.77 21.14 GOGIMA 0.89 3.75 5.35 5.62 5.35 4.46 3.57 28.99 Beneficiaries 0.62 2.23 3.66 5.35 5.80 5.35 3.39 26.40 Project Total 20.87 104.10 141.47 149.05 144.77 111.32 50.31 721.90 47 Annex 6: ImplementationArrangements GHANA: Second UrbanEnvironmentalSanitationProject INSTITUTIONAL RESPONSIBILITIESFOR IMPLEMENTATION 153. As this is a repeater project, the implementation arrangements are similar to those o f UESP-1, with modifications, mainly consisting of a greater decentralization o f project implementationto the MAS and a better integration o f the institutional strengthening component with the other project components. The implementation arrangement for UESP-2 take into account (i)the lessons learned from UESP-1, especially regarding sustainability (see Section B4); (ii) the recommendations from the 2002 CPPR; and (iii) Government's currentdecentralizationpolicyasembodiedinvariouslawsandlegislations, both the current and pending. Under the decentralization policy, MAS have the responsibility for policy formulation, planning, implementation and maintenance of infrastructure works. While they are still dependent on the central government in several ways, particularly concerning staffing and capital investments, the situation is gradually changing. Recent examples o f this evolution are the return of the responsibility for roadside drain cleansing from DURto the MASand the strengthening of the sub-metros to increasingly provide services on their level. The Institutional Strengthening component is designed to helpinthe implementationofthis objective. 154. The Ministry of Local Government and Rural Development (MLGRD) will be the implementing agency for the project and will provide policy guidance, planning, coordination, technical assistance, and monitoring to MASin project implementation. The Project Coordinating Unit (PCU) of MLGRD will coordinate the project implementation. All components of the project, except for Institutional Strengthening, will be implementedby the MAS.They will be responsible for all aspects, including procurement, signing o f contracts, contract management, making payments under contracts, and reporting. To assist them with these tasks, MLGRD will provide technical assistance, monitoring, and capacity buildingthrough the Institutional Strengtheningcomponent. 155. The cost estimates by MA are shown in Table A4.2 o f Annex 4 and Tables A5.2 to A5.6. The distribution of subcomponents takes into account the needs o f the MAS,as reflected intheir proposals and inthe submissions from MLGRDand the capacity of the MASto implement the project and to manage the sector. The applicationofthese criteria is meantto reducethe riskof anunsatisfactory performance by individual MAS, especially concerning the management o f project funds. An assessment of the implementation capacity o f the different MASwas made during project preparation and consisted of (a) overall capacity of senior staff, demonstrated ability to manage its own affairs, and performance on internal revenue generation, (b) procurement capacity, and (c) financial management capacity (see Annexes 7 and 8). The relatively large budget allocation for Accra and Tema is mainly due to the construction of sanitary landfills in these towns. The other three towns have already benefitedfrom the construction of sanitary landfills under UESP-1. 156. The MAS- with the possible exception of Kumasi - have in the recent past not implemented sizable infrastructure projects on their own, and particularly no substantial donor assistedprojects, which require a close adherenceto guidelines. These works have beencarried out for them by one o f the various Ministries. UESP-1 was no exception, with the placement of a team o f consultants into every MA. UESP- 2 will be the first project where the MASwill be responsible for the implantation o f their part of the project. Ministry of LocalGovernmentand RuralDevelopment 157. MLGRD is headed by a Minister, two Deputy Ministers, and a Chief Director. In January 2004 the Ministry decided to mainstream the implementation of all externally assisted projects and created a 48 Project CoordinatingUnit(PCU) for this purpose. It is being staffedwith civil servants ofthe Ministry,to be assisted by technical advisors engaged as short-term consultants to perform specific tasks. MLGRD also has an Environmental Sanitation Department (ESD), which is composed o f staff from its former environmental sanitation unit and from the environmental health unit of the Ministry of Health, which was transferredto MLGRD in 1995. 158. The PCU is to take over the functions of the Local GovernmentProject Support Unit, which has implementedurban projects since its formation in MLGRD in 1999. At that time the local government project support functions were transferred from the Technical Service Center of the Ministry of Works and Housingto MLGRD. As stipulated inthe Development Credit Agreement, MLGRD will appoint key project staff, consisting at least of the Project Manager, Project Engineer, Institutional or Training Specialist, and Project Accountant, with adequate qualifications and experience, by November 30, 2004. 159. MLGRD will implement the Institutional Strengthening component and will coordinate and monitor all project activities. It will undertakethe prior reviews of procurementby the MASas specified inthe PIM and will provide technical assistance and monitoring to the MASwith the implementation of their portion of the project. It will set up and maintain an MIS for monitoring implementation progress and will prepare implementation progress reports, as specified below, including reports on the performance indicators. The project will provide PCU with vehicles and operating costs relatedto project management. 160. A functional study and reorganizationplan of MLGRD was carried out in 2002, according to which the Environmental SanitationDepartmentis the centralagency overseeingthe WMDs andEHDsof the Assemblies. The project will assist in the implementation of this recommendation through the Institutional Strengtheningcomponent.Institutional support for ESDis also beingprovided by Danida. MetropolitanMunicipal Assemblies 161. The MetropolitanMunicipal Assemblies25 were established through separate Legislative Instruments. While the MAS are autonomous corporate entities in the context of the country's decentralizationprogram, the central government, through the MLGRD, exercises broad oversight over the MAS, appoints staff, and provides subsidies. The MAS are headed by an appointed Metropolitaflunicipal chief Executive (also called Mayor) whose staff is composedof a Coordinating Director and various heads ofdepartments. 162. The Local GovernmentLaw of 1988 (PNDCL 207) and the Local GovernmentAct of 1994(Act 462) empowers the MASto carry out all development activities within the District. Each MA has a planning department that prepares a 5-year development plan. Based on this plan the MAShave prioritized the investmentsfor inclusion in the project. Implementation will be based on an annual work program inthe form of aprocurementplan and a budgetpreparedby eachMA. 163. An implementationcapacity assessment of every MA was carriedout during appraisal, as well as a separate capacity assessment on procurement and financial management (see Section C2). Every MA will implement the subcomponents under their responsibility that have been agreed on during appraisal with technical assistance and monitoring by MLGRD. For these subcomponents they will carry out the planning, procurement, contract management, financial management, monitoring, and reporting. Each MA has formed a UESP-2 project team and has appointeda coordinator. The team is responsiblefor the project preparation, implementation, and progress reporting by the MA. Satisfactory evidence that MAS 25Accra, Kumasi, Sekondi-Takoradi,andTamalehavethe status ofMetropolitanAssemblies, while Tema is a MunicipalAssembly.They are abbreviatedAMA, KMA, SAEMA, TAMA, andTMA, respectively.Metropolitan Assemblies havea slightly differentstructure and insome respects greater autonomythan Municipal Assemblies. Bothtypes ofAssemblies are calledMASinthis report. 49 have hired qualified staff as head of departments and for the main sections of the WMDs will be a condition for participation, as specified inthe Grant Agreement(see below). 164. WasteManagement Department (WMD). The main institutional beneficiary of the project will be the Waste ManagementDepartment(WMD), which was created under UESP-1inall towns except for Accra, where it had already existed. It is incharge of liquidand solid waste management and increasingly drain maintenance and street cleansing. WMD will be the lead agency in the M A to implement the Sanitationand the Solid Waste Managementcomponents, with support from the EHD. 165. Environmental Health Department (EHD). Closely related to the work of WMD is the Environmental Health Department (EHD) in the MA, which until the advent of the WMDs was also in charge of street and drain cleansing. While the MASare in various stages of transition regarding the redefinition of responsibilities between WMD and EHD, in all cases has EHD retained the hygiene inspection of businesses and public places and the mobilization of the population to engage in better sanitationpractices. EHDwill also benefit from the Institutional Strengtheningcomponent. 166. Sub-MetropolitanAreas. The sub-metropolitan areas of the Assemblies will participate in the preparationand implementationof the project. Throughtheir electedrepresentatives,they will review the selection of the investment projects and will be responsible for the maintenance of some of the community level infrastructure.Eight new sub-metros were createdin Accra in September 2003 to play a leading role in managing sanitation, mobilizing revenues, controlling the erection of unauthorized structures, and undertakinglocal development projects. RegionalCoordinatingCouncils 167. The Regional Coordinating Councils (RCCs) are on the level of the Regional Minister. Its main function is the coordinationof affairs betweenthe Metropolitan, Municipal and District Assemblies inthe Region. There are 10 Regions in Ghana, and the project towns are located in 4 of them. The RCC will participate mainly in the monitoring and reporting, as it provides an important link between the Assemblies.andthe centralgovernment. Steering Committee 168. Other central government agencies that play a significant role in this sector are the Ministry of Finance and Economic Planning, Ministry of Health, Ministry of Works and Housing, Department of Urban Roads of the Ministry of Roads and Transport, and the Environmental Protection Agency. Together with the participating Assemblies and MLGRD, they will form a SteeringCommittee to review progress with project preparation, to resolve any major issues as they arise, and to make policy decisions for the project on behalf of the Government. INSTITUTIONALSTRENGTHENING 169. NDF has tentatively agreed to finance the Institutional Strengtheningcomponent.The assignment will be carried out by national consultants, complementedby a small number of international specialists who will provide knowledge that is not available locally. The consulting services will be described in a comprehensive Terms of Reference and will require about 320 person-months. The consultants will prepare an inception report and subsequently an annual work program in response to the needs of the client institutions and the activities of UESP-2. These reports will be submitted to MLGRD, NDF and the World Bank for review. The team will also prepare progress reports at least twice a year and a final report, summarizing the outputs and the impact of the entire assignment, for submission to MLGRD, NDF and the World Bank. The implementation of the Institutional Strengthening component will be jointly supervisedby NDF andthe World Bank. 50 GRANTAGREEMENT 170. For UESP-1 a Grant Agreement was signed between every participatingMA and MLGRD.This agreement hasbeenmodifiedandexpandedfor use inUESP-2. It will take the form of a memorandumof understandingand will be signedby eachMA with MLGRD as implementingagency andMOFEP as the funding agency before startingthe implementation of its part of the project. The Agreement specifies (i) the budget allocation of the project to every MA, (ii) respective roles in project implementation, (iii) the the preparatory actions to be taken by the MASbefore starting the implementationor construction(see Section C6); and (iv) the conditions under which the MA could access additional funds from the Performance-BasedFund duringthe annual implementationreview by the Steering Committee and IDA (see below). During the MTR, the provisions contained in the Grant Agreements will be reviewedand revisionsmadeas needed. 171. The ProjectImplementationManualwill contain a section for the MAS,where it will describethe agreed procedures for the project implementation by the MAS, including procurement, financial management(accounting, flow offunds, etc.), andreporting. REPORTING,ANNUAL REVIEWAND MID-TERMREVIEW 172. The consultants supervising civil works construction will be required to promptly prepare monthlyprogressreports,whichwill be copiedto the World Bank. 173. MLGRD will prepare comprehensive semi-annual Financial Monitoring Reports (Annex 7), with inputs from the MAS,which will also contain the results of data collection and surveys on the performanceindicatorsspecifiedthe Grant Agreement. 174. By November 30 of every year, the Steering Committee (see above) will hold a project implementation review workshop jointly with IDA. The government will distribute a comprehensive progress report at least 30 days beforethe workshop. The reviewshall cover the progressmade duringthe preceding year with project implementation, institutional issues, procurement, disbursements, the involvement of the private sector, and progress toward the project objectives. The part of the review dealingwith the financial performanceof the MASwill include the adequacy o f managingthe Advance Accounts, the MA Matching Fund Accounts and the Statements of Expenditures (SOEs). Based on the results of the review, recommendations for takingcorrectivesteps to improveproject implementationwill bemade. 175. Duringthe reviewachievementsofthe MASaccordingto the MA PerformanceCriteriacontained in the Grant Agreement will be evaluated. MASthat receive a high rating will be eligible to apply for additional funding from the Performance-BasedFund, providedthat their proposal is within the project objectives. Inpreparation for this eventuality, engineering studies will be carriedout in the beginningo f the projectfor a greater scope offinancingthanthat includedinthe initialbudget allocations to the MAS. 176. A Mid-Term Review (MTR) will be conductedjointly by the SteeringCommittee andthe World Bank no later than June 30, 2007, during which the different aspects of project implantation will be examinedindepthwith aview of improvingthe performance of the project.These will include, butnot be limitedto (i) the performanceofthe centralgovernment agencies andthe MASinproject implementation, (ii) extenttowhichtheinstitutionalobjectivesoftheprojecthavebeenachieved,(iii) performance the the of the private contractors and consultants employed under the project, (iv) compliance with financial, audit, and other obligations contained in the Development Credit Agreement, (v) the institutional arrangements and the level of cost recovery, (vi) procurement, (vii) the provision of counterpart (or matching) funds, and (viii) plans for the further implementationof the project. Any items in the project which remain uncommittedby the time o f the MTR, will be cancelled and the corresponding funds transferred to Performance-BasedFund. At least 30 days before the MTR, the Government will distribute 51 a comprehensive progress report, covering the above points. At the conclusion o f the MTR the Government will prepare an action plan for the further implementation o f the project, based on the corrective measures that have been identified. 52 Annex 7: FinancialManagementandDisbursementArrangements GHANA: SecondUrbanEnvironmentalSanitationProject Summary 177. An Financial Management Assessment was carried out of the Ministry of LocalGovernment and Rural Development (MLGRD) and the 5 MetropolitadMunicipal Assemblies (MAS),including a review of an Internal Control Questionnaires (ICQ) for each MA, a review o f the agency's accounting system o f recording and reporting, payment and funds flow mechanisms, internal controls, adequacy of staffing, monitoringand auditing arrangements. management o f the project --namely the Finance and Accounts unit of MLGRD and the 5 MAS-- have 178. The objective of the Assessment was to determine whether the entities identified for the financial financial management arrangements in place that meet the Bank's financial management requirements. These includethe entities' systems of accounting, reporting, auditing and internal controls. The entities' arrangement are acceptable if they are considered capable of (i)recording correctly all transactions and balances, (ii) supportingthe preparation of regular and reliable financial statements, (iii)safeguarding the entities' assets, and (iv) are subject to auditing arrangementsacceptable to the Bank. 179. MLGRD has in the past implemented several urban projects. The financial and procurement management responsibilities as well as project implementation have been carried out by a project unit within the Ministry, the Local Government Project Support Unit, with limited involvement o f the Ministry and the Assemblies. As part o f recommendations reached between Government and the Bank duringthe 2002 CPPR, future project implementationshouldbe mainstreamed inthe Ministry and carried out primarily by its civil servants. The financial management responsibility is also being mainstreamed in line with this decision. 180. The responsibility for financial management lies with the Head of Accounts at the Ministry and the Municipal Finance Officer (MFO) of the MAS.The accounts office of the Ministry will be headed by a professionally qualified accountant and will be responsible for maintaining adequate accounting records, preparing financial reports and statements and ensuring that the project's financial management arrangements are acceptable to the Government and the World Bank. The MFO o f the MAShave qualifications and experience that will enable them to perform the task requiredand be acceptable to the Bank. Presently all the MFOs hold various levels of the professional qualifications and have received training from the Controller and Accountant General's training school. The project will provide training on Bank disbursements to ensure that the MFOsare able to carry out their functions satisfactorily. 181. The accounting systems at the MASare partially computerized. The systems are in use and are capable of generating the MAS'monthly financial statements and will be modified to enable the MASto use them to report on the project activities. 182. The conclusion o f the Financial Management Assessment was that the MAShave the required staff inplace to implement the project and have financial management systems in operation, which are in line with the Financial Administration Act (FAA) and the Local Government financial regulations. However, these systems and procedures have not been documented inthe existing procedures manual for the MASandas aresult do notmeet the Bank's financial managementrequirements. 183. The participating MASunder the project are requiredto implementan action plan to ensure that they meet the Bank's requirements for financial management. These actions include (i) documentation of the MAS'system of accounting, recordingand reporting ina Financial Procedures Manual; (ii)agreeing to the content and format o f Financial Management Reports (FMRs; see below) and modifying the computerized systemto be able it to produce them; and (iii) training o f finance staff inBank disbursement procedures. 53 Country Issues 184. A Country Financial Accountability Assessment (CFAA) for Ghana was conducted in 2001 and updated in 2003, and has been discussed with the Government and other stakeholders. This document identifiesthe main accountability issues inGhana and provides recommendations to address them. It also recognizes the ongoing actions that, when implemented fully, will address some o f the identified weaknesses. The financial accountability risks are summarized in Table A7.1. The issues identifiedinthe CFAA include: i) Fragmented legal framework (partly addressedinthe FAA) and lack of enforcement of existing penalties for noncompliance; ii) Ineffective and inefficient internalauditing functions; iii) Weakhumanresourcecapacitybecauseofpoorpublicsectorremuneration; iv) Weak payroll and pension control systems; and v) Inadequate financial controls and human resource capacity at the Local Government (District Assembly) level. Table A7.1 SummaryofFinancialAccountabilityRiskAnalysis Risk I 1 Rating Risk RiskMitigationMeasure Fragmented legal framework. S Although the Government has introduceda comprehensive legal framework for public financial Management through the FAA, the absence of the related regulations i s affecting its implementation. The Government is being assistedthrough various projects to finalize the regulations and train financial management staff at all levels. Non-compliance of statutory H The Government will be assistedto institute regulations and non-enforcement measuresthat ensure the systematic review, of penalties. updating and enforcement o f penalties for non- compliance. The Government haspassedlegislationto establish a modern internal audit function. audit functions in country Assistance will be providedthough the relevant projects for its implementation. OverallInherent Risk I s 54 ICONTROLRISKS-at MLGRDand MAS Staffing at MLGRD andU s The Ministry and the Assemblies M Agreements should beconcluded to assign have inadequately qualified staff adequately qualified accounting staff from the assigned from the Controller and controller and Accountant General's Accountant General's departmentto MLGRDandthe MAS,and Department. agreements should be reachedto maintainthe key staffover the period ofthe project. Frequenttransfers o faccounting M The MA will ensure that suitable qualified key staff o fthe Ministryand the financial staff is inplace at all times. This will Assemblies. be partofthe requirementthe MASmust meet to manage their funds under UESP-2. Trained staff will leave M All new accounting staff will betrained before Government services altogether they assume office. and new staff is appointed. AccountingSystemsat Municipal Assemblies Control weaknesses inrevenue M Assemblies will be assistedthrough UESP-2 to collection strengthentheir systemsofcontrol over revenue collection. Weak controls over the M District accounting staff will be trained and preparation, approval of assistedto improve their accounting, booking transactions, payments, basis of and recording skills. accounting, accounting standards, cash and bank transactions, project assets, and commitment tracking. Funds Flow Delays inreleasing of funds from M Assemblies that meet an agreedminimumof the Center to the Assemblies. financial standards, including the existence o f financial procedures and adequate accounting staff, will managetheir project funds. This will make each Assembly responsible and accountable for its own funds. Difficulties inthe timely M The project will providetraining for the submission o f accounting returns account& staff and actions taken to strengthen from the Assemblies to the Center the financial managementsystemo fthe to facilitate preparation of Assemblies. withdrawal applications. , 55 InternalAudit a) No professionalinternalaudit S The Governmentis inthe processof settingup function exists at Ministry and a modernInternalAudit unit within Assembly levels. Government, with assistancefrom donors. b) The Government's Internal MLGRDwill be assistedto strengthenits Audit is limitedto pre-auditing, InternalAudit unitto performchecks and with no addedvalue. reviews as part of implementingarrangements. The projectwill assist MLGRDto hirean independent audit firms for routineand Deriodic audits. ExternalAudit Projectauditreports are likely to M The projectwill instituteamechanismwhereby be submitted late. the continuous participationofAssemblies will be dependentonthe timely submissionoftheir audit reports.The Assemblies will be assisted to select independentprivateauditors who will carry out their audits. Reporting and Monitoring Delaysinthe submissiono f / M The projectwill providetrainingto the FinancialMonitoringReports I Assembly finance staffto enable them carry (FMRs) andother projectreports. out their duties effectively. LimitedCapacity MLGRD and The FMRformatandcontents, to be agreed Assembly Staff. I with the Borrower,will be simple andeasyto aroduce. Information Systems Computerizedsystemsare not in M Inthe absenceofcomputerizedsystems,the placeat the Ministry andthe MASwill be assistedto maintainadequate Assemblies. The Ministry will in manual systems throughthe use of futurebenefitfrom the spreadsheets. computerizationo fthe Governmentaccounting system. Overall Control Risk M Ratings:H- High, S - Substantial, M- Modest, N-Negligible ImplementingEntitiesand Arrangements 185. See the InstitutionalResponsibilitiesfor ImplementationinAnnex 6. AccountingSystemsat the Assemblies 186. The accounting and budgetingsystems at the 5 MASare similar and operate on a cash basis of accounting with only limited information on commitments. The financial management systems of the MAS,likemost Ministries, Departments andAgencies, are governedmainly by the Government o f Ghana Financial Administration Act 2003 (formerly FAD 1979) and the Local Government Financial Regulations. The key features of the financial management system include the budgetingcycle, budget approvalandexecution, accounting andrecording, andthe reportingandauditingprocess. 56 Budgeting 187. The first stage involves fee fixing and .submission of departmental budget estimates for consideration by the Finance and Administration Sub-committee of the Assembly by end of October every year. The second stage involves budget hearings by the Sub-committee, which are expectedto be completed by the end of November to enable a draft of the annual budget to be laid before the General Assembly for final approvalbeforethe endof December. 188. Under the project, each MA will be requiredto prepare an annual work plan and ensure that it is incorporated into the annual budget prior to its approval. This will make the MA budget total complete and will ensure that all counterpart requirementsare properly included inthe budget. Itshould also leadto a situation where the MASprepare comprehensivebudgets, as comparedwith the present situation where some project activities at the Local Government levels are not included inthe budget. Accounting 189. Expenditures are initiated by the relevant head of department. This is checked by the budget section for verification to ensure that the department has funds under that expenditure category. The relevant procurement process takes place leadingto the issuance of a contract or a Local Purchase Order. When an item is supplied and taken into stores, stores receipt vouchers are issued and the payment is processed. Checks are issued and signed by the authorized signatories. These are then recorded in the books of the Assembly andfinally containedintheir financial statements. 190. All MASwere up to date on the submission of their monthly financial statements to MLGRD. The statements consist of (i) a Balance Sheet, (ii) revenueand expenditure statement comparedwith the a budget, showingvariances, and (iii) balance. atrial 191. The financial management responsibility in the MASis vested in the MFO. The MFOs of the participating MASare in post and have a pool of accounting staff to assist them in the performance of their duties. The accounting procedures are governed by the FAA and the Local Government Financial Regulations. They will prepareanAccounting ProceduresManual for the project. 192. The financial systems of the MASwill be strengthenedto enable them to manage the financial and accounting aspects of the project. This will involve assisting the MASin the implementation of the Accounting Procedures Manual, provide them with equipments to enable them to perform their jobs better and offer them additional training in financial management and World Bank disbursement requirements. AuditingArrangements 193. Independentand qualified external auditors acceptable to the Bank will carry out the audit of the project and MAS. The selection of auditors shall be on a competitive basis inaccordance with the Bank's guidelines, and their appointment is a condition of effectiveness of the project. It is recognized that although the Auditor General of Ghana is responsible for the audit of these government entities, an agreement will be obtained from him to recruit a qualified private auditor to do the audit. The auditors' reports and opinions, including the Management Letter, will be furnished to the World Bank within six months of the close of each fiscal year. DisbursementArrangements 194. Disbursements from the proceeds of the Credit will be made accordingto the schedule shown in Table A7.2. It is anticipated that the Credit will be disbursedover a six-year period. The closing date of the project is June 30, 2010. A period of four months after the closing date may be allowed to make disbursementsfor expenditures incurreduntilthe closing date. Operating costs eligible for disbursements under Category 4-B include project implementationcosts for office expenses, utilities, fuel, supplies, and 57 vehicle maintenance, but excluding salaries of the Government's civil servants. The acquisition of land for the construction of landfills is a condition of disbursement. Table A7.2 Allocation of the Proceeds of the IDA Credit Category US$ million Percent of Expendituresto be equivalent Financed l-A Civil Works - Other than for 43.3 100% o f ForeignExpenditures and household latrines 90% of local expenditures l-B Civil Works - For household 2.7 50% latrines 2-A parts - For Project Cities Vehicles, equipment and spare 1.9 100% o f ForeignExpenditures and 90% of local expenditures 2-B Vehicles, equipmentand spare parts - ForMLGRD 0.2 100% o f ForeignExpenditures and 90% of local expenditures 3-A Consultants' services, studies and 4.1 90% training - For Project cities 3-B Consultants' services, studies and 0.4 90% training - For MLGRD 4-A Operating Costs -For sanitary 1.7 50% upto December 31,2006; 35% landfills and private refuse upto December 31,2008; and 25% collection thereafter 4-B Operating Costs - Other 0.5 90% 5 Refundingo fPPF 0.6 I 6 I Unallocated I 6.6 I I I I TOTAL I 62.0 I I Exchangerate at the time o fNegotiations(February 18,2004): 1SDR =US$1.49313 Retroactive Financing 195. Withdrawals from the credit can be made to retroactivelyfinance project-related activities that are carried out betweenMay 1,2003, and the date of signature o fthe DCA, up to a total of SDR 4.0 million. Monitoring and Reporting 196. The Bank has newly introduced the Financial Management Initiative, which requires projects to prepare Financial Monitoring Reports (FMRs) in the areas of finance, procurement, contract management, and project progress, with the following content: a. Financial consists of sources and uses o f funds, uses of funds by project component and activity, special account reconciliation statement and a six-month project cash forecast where needed; b. Implementation Progress consists of an output monitoring report on contract management and on the unit of output by project activity; and 58 c. Procurement Management consists of procurement process monitoring for goods, works and consultants' services, anda contract expenditurereportfor goods, works andconsultants' services. 197. MLGRD will prepare the FMRs semi-annually, starting 6 months after the date of project effectiveness. The MASwill send their inputs for these reports on the subcomponents that they are implementing to MLGRD within 30 days of the end of every 6-month period. The Ministry will coordinate and consolidate the reports into a project wide FMR and submit copies to the Bank within 45 days of the end of each reporting period. The FMRs will be prepared according to the standard format agreedon duringNegotiations. Special Accounts 198. To facilitate disbursements, there will be one Special Account managed by MLGRD and an Advance Account in each of the 5 project MAS.MLGRD and each of the MASwill open and operate a US$ denominated account for this purpose in commercial banks, under terms and conditionssatisfactory to IDA. 199. The initial ceilings ofthese accounts are basedon estimated4-month cash flow requirements for the first year of implementation.UponCrediteffectiveness, a sumofUS$2,500,000 can be deposited into the Special Account, from which MLGRD will transfer advances of US$400,000 for AMA; US$400,000 for KMA; US$250,000 for SAEMA; US$250,000 for TAMA; and US$250,000 for TMA into their respective Advance Accounts (see Table A7.3). Further deposits into the Special Account will be made against withdrawal applications supported by appropriate documentation submitted by MLGRD to the World Bank. Similarly,further deposits intothe Advance Accounts ofthe MASwill be made by MLGRD against "withdrawal applications" prepared by the MAS, supported by statements of accounts and appropriatedocumentation, submittedto MLGRD. 200. The ceiling of the Special Account can be amendedto US$4 million once the total withdrawals and IDA commitments on the Credit reach the equivalent of SDR 6.5 million. Likewise, the ceilings of the Advance Accounts for Accra andKumasican be amendedto US$800,000 once the total withdrawals and IDA commitments on the Credit reach the equivalent of SDR 1.9 million for eachAssembly, andthe ceilings of the Advance Accounts for Sekondi-Takoradi, Tamale and Tema can be amended to US$400,000 once the total withdrawalsand IDA commitments on the Creditreachthe equivalent of SDR 900,000 for each Assembly. Table A7.3 Ceilings ofAdvance Accounts, inUS$ Assembly Initial ceiling Amended ceiling AMA 400,000 800,000 [KMA I 400,000 I 800,000 I SAEMA 250,000 400,000 TAMA 250,000 400,000 TMA 250,000 400,000 Total 1,550,000 2,800,000 MatchingFundAccounts 201. GOG will provide in its annual budget sufficient funds to cover the counterpart contribution neededto finance the implementationof the project. To facilitate this it will open an MLGRD Matching Fund Account in the name of MLGRD in Cedis in a commercial Bank and deposit into it an initial 59 amount of US$24,000 equivalent, and thereafter deposit into it the estimated quarterly counterpart fund requirement for MLGRD. Likewise, every project MA will open an MA Matching Fund Account in its name in Cedis in a commercial Bank and deposit into it an initial amount of US$5,000 equivalent, and thereafter deposit into it the estimatedquarterly counterpartfund requirementfor the MA. Statements of Expenditures(SOE) 202. IDA requires withdrawals from the Credit to be made on the basis of Statements of Expenditures (SOEs) for expenditureson account of (a) contracts for goods under contracts not exceedingUS$200,000 equivalent; (b) works under contracts not exceeding US$500,000 equivalent, (c) consulting firms under contracts not exceedingUS$100,000 equivalent; (d) individual consultants under contracts not exceeding US$50,000 equivalent; and (e) operating costs. All supporting documentationfor SOEs will be retained by the MAS and made readily accessible for review by periodic IDA supervision missions and the external auditors. Disbursementsfor all other expenditures will be made againstfull documentation. 60 Annex 8: Procurement GHANA:. SecondUrbanEnvironmentalSanitationProject Ghana's ProcurementEnvironment 203. Procurement in Ghana is in a reform stage. The Parliament of Ghana approved the Public Procurement Bill on December 18, 2003 and the President signed it into a Public Procurement Act December31,2003. The preparationof the billbegan in2000, and it was presentedto Parliamentinitially inNovember 2002. The ParliamentaryAccounts Committee (PAC) invited public input in March2003 and received comments from a broad cross-section of stakeholders, including the Bank. The Bill was widely discussed in the media, in round table conferences, and in meetings with the PAC. The final version ofthe Public ProcurementAct is assessedas a goodUNICTRAL-based procurementlaw. 204. The Act includes most of the features of good public procurement practice Le.: (i)effective and wide advertising of upcoming procurementopportunities; (ii) public opening of bids; (iii)pre-disclosure of all relevant information, including transparentand clear bid evaluationand contract awardprocedures; (iv) clear accountabilities for decision making with segregation of executive and oversight responsibilities; and (v) an enforceable right of review for bidders when public entities breachthe rules. The Government is also preparing a set of Standard Tender Documents and Standard Request for Proposals to be used in the country. The Public Procurement Act is comprehensive and covers all procurement in Central Management Agencies, Ministries, Departments and Agencies and in Metropolitan, Municipal and District Assemblies. 205. The Bank carried out a Country Procurement Assessment Review (CPAR) in 2003. The main findings of the CPAR include(i)lack of a comprehensivelegal framework; (ii) use of merit point system for evaluatingbids for works contracts; (iii)use of "bracketing" for evaluating bids for works contracts; (iv) excessive use of single source; (v) repetitive use of same firms under selective tenderingprocedures; (vi) lack of procurement planning; (vii) poor record keeping; (viii) weak oversight of procurement; (ix) poor contract management; (x) weak procurementcapacity; and (xi) weak commitment control leadingto contract payment arrears. The action plans of the CPAR will be agreed with government in early 2004. The key action of the CPAR, the implementation of the Public Procurement Act, establishment and operationalizationof the Public Procurement Institutions (Procurement Board, Secretariat, Entity Tender Committees and Tender Review Boards), are part of the triggers for the proposed Second Poverty Reduction Support Credit (PRSC-2), which is scheduled for Board Presentation in June 2004. The Procurement Procedures under the project will be described in the Project Implementation Manual (PIM), a first draft of which was submitted at appraisal.The procurementarrangements inthe PIMwill be harmonized to the extent possible with the provisions in the Public Procurement Act to ensure that MLGRD andthe Assemblies are not overburdenedwith the use of differentprocedures, dependingon the source of funding. The bill contains different thresholds for procurementreview on different levels, such as at the level ofthe RegionalTender Review BoardandMLGRD. Use of BankGuidelines 206. All works and goods financed under the IDA credit will be procured in accordance with the Guidelines: Procurement under IBRD Loans and IDA Credits, January 1995 and as revised in January andAugust 1996,September 1997and January 1999. Consultants will be selected inaccordance with the Guidelines: Selection and Employment of Consultants by World Bank Borrowers, January 1997 and as revised September 1997,January 1999 and May 2002. National Competitive Bidding (NCB) procedures will be in accordance with the procedures described in the Project Implementation Manual and will include: (a) an explicit statement to bidders of the evaluation and award criteria; (b) national advertising with public bid opening; (c) award to the lowest evaluated responsive and qualified bidders; and (d) foreign bidders will not be precluded from participation in NCB. RegistratiodClassifcation of 61 contractors may be used for establishing bidder qualification or for preparing a list for use under price comparisonprocedurebut not as criteria for bidding. With the exception of complex information systems, the merit point system shall not be used as the basis of bid evaluation. "Bracketing" or rejection of bids outside a range or "bracket" ofbidvalues shall not be permitted. 207. The Bank's Standard Bidding Documents (SBD) will be used for all International Competitive Bidding (ICB) and, with appropriate modification, for all NCB. The Bank's Standard Request for Proposals (SRFP) will be used for all consulting assignments. All the implementing agencies should ensure that each time they are using the most current version of the appropriate SBD or SRFP and standardforms of evaluation. Less competitivebidding and selection procedures should not be usedas an expedient to by-pass more competitive methods and fractioning of large procurements into smaller ones should not be done solely to allow the use of less competitive methods or to avoid Tender Board or IDA review. Advertising 208. A General Procurement Notice (GPN) is mandatory and will be published in the UN Development Business as provided under the Guidelines and in Development Gateway Market (DgMarket). The GPN will show all ICB and all consulting services estimated to cost US$200,000 or more. Specific Procurement Notices (SPN) will be required for contracts to be procured under ICB and NCB procedures and for consultant contracts (estimated to cost more than US$lOO,OOO) to obtain expressionsof interest (EOI) prior to the preparation of the shortlist. The SPNs will (as a minimum) be publishedina newspaper of wide national circulation'.All ICBs and consultantcontracts estimatedto cost US$200,000 or more shall be advertised in Development Business Online and in DgMarket. Sufficient time will be allowed (no less than six weeks for ICB and not less than 30 days for NCB and 14 days for EOI) to allow adequatetime for biddersand consultantsto obtain documentsand respondappropriately. ProcurementCapacity 209. A procurement capacity assessment has been carried out for four out of the five participating MASand the Local Government Support Unit of MLGRD. The latter has considerable experience in implementing Bank and other donor financed projects (including the predecessor project) and has the capacity to carry out procurement for the activities, which will be managed directly by the Ministry. In order to mainstream the implementation of all externally assisted projects, a PCU has been created and will be staffed with civil servants of the Ministry. Under the project, the role of the PCU will include some implementation; however, the emphasis will shift to mainly coordination and mentoring of staff of the MAS.The 5 MASare staffedwith qualified engineers, architects, plannersandquantity surveyors who have the potential capacity to carry out procurementunder the project. Some of the staff inthe MAShave attended the Bank-supported regional procurement course at the Ghana Institute for Management and Public Administration (GIMPA). Others have also attendedvarious procurementworkshops organizedby the Bank. 210. The summary assessment shows an "Average risk" for the project and the prior review thresholds have been set to reflect this rating. Procurement Post Reviews (PPRs) will be carried out annually by Bank staff andlor independent auditors and based on the findings of the reviews, the prior review thresholds will be reviewed. The main risks identified are: (i)insufficient familiarity with the Bank's procurement guidelines; (ii)tendency to circumvent agreed procurement procedures; (iii)delays in processingprocurementand payments; (iv) political interference; and (v) poor public perception of MAS. The actions planned to address the deficiencies are included in the project activities and include (i) preparation of a Project Implementation Manual with clear procurement procedures and responsibilities; (ii)trainingofMASintheapplicationoftheprocurementprocedures; (iii) ofstandardprocessing setting times; (iv) establishment of quarterly reporting requirements; (v) institutionalization of annual 62 procurement audits; and (vi) annual review of prior review thresholds based on finding of the procurementpostreview. 21I. A Project LaunchWorkshop will be held before the time o f project effectiveness, includingkey staff of the participatingMASand officials of the tender boards and will have sessions on BanMPublic procurement. The focus will be to orient key staff on the principles of good public procurement practice andto discussthe procurement arrangements under the project.The projectalso includes fundingfor key staff in MLGRD and the MASto attend Bank supported regional procurement training in GIMPA or ESAMI. Other areas of training supported under the project include contract management and project management. ProcurementPlans 212. Each MA and the Ministry of Local Government will prepare an annual procurement plan and submit it to IDA for review. The procurement planwill be for the first 18 months ofthe projectshowing individualcontract packagesandtheir estimatedcost, procurement methods andprocessingtimes for key activities until the completion of the contract. Prior to the start of each calendar year, each MA and MLGRD will submit updatedversions ofthe procurementplans inrespect ofthe following 18 monthsfor IDA review. This reporting should be harmonized as much as possible with the semi-annual Financial MonitoringReport (see Annex 7). 213. Any revisions to the formally agreed procurement plan shall require the concurrence of IDA. MAS and MLGRD shall apply the most competitive method of procurement appropriate to the circumstances of the specific procurement as described in the Project Implementation Manual and summarizedinTable A8.1. Implementingagenciesmay select a more competitivemethodfor a particular procurement ifthey wish to do so. However, IDA concurrence will be requiredto use a less competitive method other than the one set out in the agreedProcurement Plan. The absence of this concurrence may result inmisprocurement. 214. Training, workshops, conference attendance and study tours will be carried out on the basis of approved annual programs that will identify the general framework of training and similar activities for the year, including the nature of traininglstudy tours/workshops, the number of participants, and cost estimates. ContractManagementand ExpenditureReports 215. As its contribution to the FMR, each participating MA will submit semi-annual reports to MLGRD, which will consolidate the reports and will submit the FMR to IDA (see Annex 7). The FMRs should including (i)the status of the implementationo f the procurement plan, and (ii)information on contract managementandcontract expenditures. ProcurementImplementationArrangements 216. See the InstitutionalResponsibilitiesfor Implementationin Annex 6. Scope of Procurementand ProcurementMethods 217. The thresholds for the various procurement methods are shown in Table A8.l. Individual contracts for civil works estimated to cost US$2.0 million or more will be procured using ICB procedures.Works estimatedto cost betweenUS$50,000 andUS$2.0million equivalentper contract shall be procured using NCB procedures. Very small contracts estimated to cost less than US$50,000 equivalent may be procuredby way of solicitingquotations throughwritten invitationsfrom not less than three qualified contractors. Registratiodclassificationof contractors may be used to identify contractors for such very small contracts. The invitation shall include a detailed description of the works, basic 63 specifications, the required completion date, a simple form o f agreement acceptable to the Bank, and relevant drawings. Inall cases the award of contract shall be made to the contractor who offers the lowest price for the required work, and who has the experience and resources to successfully complete the contract. Table AS.1 Thresholds for Procurement Methods and Prior Review Expenditure Contract Value Procurement Contracts Subject to Category (Threshold) .Method Prior,ReiipP ,.t.' USD Works >=2,000,000 ICB All contracts >=50,000 -2,000,000 NCB 411contracts >= 500,000 < 50,000 Price Comparison None All values Direct contracting All contracts Goods and Services ' >=250,000 ICB All contracts other than >=30,000 - <250,000 NCB None Consulting Services <30,000 Shopping None All values Direct Contracting All contracts Consulting Services >= 100,000 for firms QCBS All contracts Below 100,000 for firms QCBS/SFB/SBCQ None Below 50,000 for firms LCS None Below 100,000 for firms SSS All contracts >=50,000 for individuals Individual Consultants All contracts <50,000 for individuals IndividualConsultants None QCBS Quality and Cost-Based Selection L Cs Least-Cost Selection SFB Selection under Fixed Budget SBCQ Selection Based on Consultants' Qualifications sss Single-SourceSelection 218. To the extent possible, goods that could be procured from one supplier will be grouped into contract packages, and packages estimated to cost the equivalent o f US$250,000 or more will be procured under ICB procedures. Procurement o f goods packages estimated to cost more than US$30,000 but less than US$250,000 will be procured using NCB procedures. Goods packages estimated to cost less than US$30,000 will be procured by shopping on the basis of comparison of quotations from at least three eligible and qualified suppliers.Requests for such quotations will include a clear description and quantity of the goods, as well as requirements for delivery time and point o f delivery. 219. Software, spare parts and accessories which are of proprietary nature may with IDA concurrence, be procured under contracts negotiated directly with the manufactureshppliers or their authorized agents. ~~ 26 All contractsproposedfor awardthrough Single-Source Selection are subjectto prior review. 64 220. Consultinrr Services and Training will consist of various engineering and design studies, construction supervision and technical assistance to be carried out by both national and international consultants as well as workshops and group discussions.As a rule, consulting firms for all assignments estimatedto cost the equivalent of US$lOO,OOO or more will be selected though Quality and Cost Based Selection (QCBS) methodology. Assignments estimated to cost the equivalent of US$200,000 or more will be advertised for EO1 in the UN Development Business (UNDB), in DgMarket and in at least one newspaper of wide national circulation. Inaddition, EO1for specializedassignments may be advertisedin an international newspaper or magazine. In the case of assignments estimated to cost less than US$200,000 but more than US$lOO,OOO the assignment will be advertised nationally. The shortlist of firms for assignments estimated to cost less than US$200,000 may be made up entirely of national consultants if at least three qualified firms are available at competitive costs in Ghana. However, foreign consultants who wish to participate should not be excluded from consideration. Consultant services estimated to cost less than the equivalent of US$50,000 may be contracted by comparing the qualifications of consultants. Auditors will be selected using Least-Cost-Selectionprocedures.In case of assignments requiring individual consultants, the selection will follow the procedures stipulated in SectionV of the ConsultantsGuidelines. 221. Training programs and workshops will be packaged in the project's work plans and budget and items thereinprocuredusing appropriatemethods. IDA will review and clear training packages as found appropriate. 222. The estimated aggregate values by procurement method and expenditure category are shown in Table A8.2. IDA Review 223. The requirements for prior review by IDA of procurement decisions are summarized in Table A8.1. All goods contracts estimated to cost US$250,000 or more and works contracts estimated to cost US$500,000 or more will be subject to the Bank's prior review in accordance with the procedures in Appendix Iof the Procurement Guidelines. Any amendments to existing contracts raising their values to levels equivalent or above the prior review thresholds are subject to IDA review. All contracts awarded on the basis of direct contractingwill requireprior review and clearance of IDA. 224. All single source selectionwill be subject to IDA prior review. Consultancy contracts with firms with estimatedvalue of US$l00,000 or more, and consultancy contracts with individuals estimatedvalue of US$50,000 or more will be subject to prior review by the IDA in accordance with the procedures in Appendix Iof the Consultants Guidelines. All attendance at training and workshops outside Ghana is subject to IDA review. 225. Contracts which are not subject to prior review will be selectively reviewed by the Bank during project implementation and will be governed by the proceduresset forth in paragraph4 of Appendix Ito the relevant Guidelines. Monitoring and evaluation of procurement performance at all MASwill be carried out for procurement during IDA supervision missions and through annual ex-post procurement audits. At a minimum, 1 out of 5 contracts will be subject to post review. Inaddition, post-reviews of in- country training will be conducted from time to time to review the selection of institutions/facilitators/ course contentshrainees and justifications thereof, and costs incurred. Annual independent technical audits (ex-post procurement audits) will: (a) verify that the procurement and contracting procedures and processes followed for the projects were in accordance with the Development Credit Agreement (DCA); (b) verify technical compliance, physical completion and price competitiveness of each contract in the selected representative sample; (c) review and comment on contract administration and management issues as dealt with by participating agencies; (d) review capacity of participating agencies in handling procurement efficiently; and (e) identify improvements in the procurement process in the light of any identified deficiencies. The Borrower and IDA will review all thresholds stated in this section on an 65 annual basis. Amendments may be agreed upon based on performance and actual values o f procurement implemented. Amendments to the DCA may be proposedaccordingly. Publicationof Resultsand Debriefing 226. Publication of results o f the biddingprocess will be required for all ICBs, NCBs, LIBs and Direct Contracting. Publication should take place as soon as the no objection is received, except for Direct Contracting and NCB, which may be done quarterly and in a simplified format. For selection of consultants, disclosure o f results is also required. All consultants competing for the assignment should be informed o f the result o f the technical evaluation (number o f points that each firm received) before the opening o f the financial proposals, and at the end o f the selection process the results should be published. The publication o f results in selection o f consultants applies to all methods; however, for SBCQ and SSS the publication may be done quarterly and in a simplified format. MLGRD and the MASshall debrief losing biddershonsultants on the reasons why they were not awarded the contract, if the losing biddershonsultants request for explanation. Table A8.2 ProjectCosts by ProcurementArrangements (US$ million equivalent) Procurement Method Expenditure Category ICB N C B Other ' N.B.F. Total Cost 1. Works 41.76 6.42 6.73 0.00 54.92 (40.53) (6.16) (5.08) (0.00) (5 1.77) 2. Goods 0.79 1.04 0.64 0.83 3.30 (0.79) (1.04) (0.60) (0.00) (2.43) 3. Services 0.00 0.00 5.75 9.52 15.27 (0.00) (0.00) (5.24) (0.00) (5.24) 4. OperatingCosts 0.00 6.27 1.16 0.00 7.43 (0.00) (1.88) (0.68) (0.00) (2.56) Total 42.56 13.73 14.29 10.35 80.93 (41-32) (9.08) (11.59) (0.00) (62.00) ` Figuresin parenthesesare the amountsto be financed by the Credit. All costs include contingencies.N.B.F. means Non-Bank Financed. ' Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project managementoffice, training, technical assistance services, and incremental operating costs relatedto (i)managingthe project, and (ii)re-lending project funds to local government units. OverallProcurementRiskAssessmeht: High Average Low Frequencyof procurement supervision missionsproposed: Once every 6 months, including procurement workshops and training. 66 Annex 9: Economicand FinancialAnalysis GHANA: SecondUrban EnvironmentalSanitationProject ECONOMIC ANALYSIS ConceptualFramework 227. The project can be classified as a "blueprint"-type project as opposed to a "framework"-type project. With blueprint-type projects, the major investments are identified and designed in detail before effectiveness, while with framework-type projects this is not the case; instead, the mechanisms for delivering the outputs are appraised. Cost-benefit analysis is considered inappropriate to determine the economic viability o f the investments for this project, since the outputs have no market price that can be readily assessedand the benefits cannot be measured in monetary terms. The analysis presentedhere uses the cost-effectiveness method instead. The following procedure was used for the cost-effectiveness analysis: (i)identification o f the beneficiaries and the benefits, (ii) statement o f the problem to be solved, (iii)identification ofalternatives, (iv) election oftheapplicable typeofanalysis (cost-effectiveness or weighted cost-effectiveness), and (v) choice o f the best course o f action.27 228. Two subcomponents were chosen for the cost-effectiveness analysis, namely alternative designs for storm drains and latrines in residential areas, because they have a clearly identifiable range o f alternatives and the costs are measurable. In both cases the benefits are constant over the different alternatives and the stream o f costs over the economic life o f the investment are discounted to the present to determine the least-cost solution. The Additional issues mentioned in the tables o f assumptions below provide supplementary information on non-quantifiable costs or benefits, which should be considered when selecting the best option. No provision was made for the replacement cost. Benefits and Beneficiaries 229. StormDrainage. The main benefit is reduced flooding inthe vicinity o f the drains and/or inlow- lyingareas interms o f a lower frequency o foccurrence, a smaller severity, and a shorter duration. A lined channel as compared to an unlined one will have a larger profile, allowing more storm water to pass. It will have a lower surface friction, largely due to the smaller and smoother surface, allowing the water to flow faster. The anticipated benefits are mainly: less damage to structures, roads, and vegetation; less damage to goods (furniture, merchandize in shops); less disruption o f peoples' activities (hindered movements, no work performed, no sales); smaller safety hazard (drowning, injury); smaller health hazard (spreading o f feces and other wastes); and less disruption o f communications (vehicular traffic, telephonejunction boxes). Over time, reduced flooding will result in increased property values. 230. Household latrines. About 160,000 people are estimated to benefit from the construction o f new household latrines. This will increase the household latrine coverage only by 1% in the project towns, a minor impact when consideringthat only about 30% o fthe people now have access to a household latrine. However, the project aims at developing and demonstrating a sustainable household latrine delivery program in conjunction with other decentralization support efforts outside the project, which is expected to significantly improve latrine coverage in the long run. Moreover, the target population for the pilot household latrine program lives in low-income communities that have been selected for infrastructure upgrading through the project. All who have access to household latrines benefit from greater convenience in terms o f distance, timing, privacy, and human dignity. Household latrines also provide greater accessibility for women and especially children, who often choose not use or are not permitted to 27 OperationalCore Services (Pedro Belli, et al.), Handbook on Economic Analysis of Investment Projects, World Bank, 1998, Chapter 8. 67 use public toilets, even though owners of household latrines sometimes restrict their use in a similar fashion. Significant health benefits are likely to occur only where there is a certain density of household latrines, covering more than 50% of households according to some studies.2sThis is because of the existence of "excess transmissionroutes'' for communicable diseases, whereby the spread of pathogens through various means has to be substantially reduced before a reduction in the infection rate can be expected. 231. Public and school latrines. Alternatives to household latrines are public latrines in residential areas, which provide much lower benefits than household latrines, both in terms of convenience and health impact. The rehabilitation of public latrines through the project in residential areas where household latrines are scarce will provide convenienceand possibly some healthbenefits inthe short-run to those who are willing to pay the user fee. However, they are essential inpublic places, such as markets andtransport terminals, for convenienceand improvedhealth. This is expectedto reduce the incidenceof open-air defecation. School latrines will provide similar benefits to pupils and teachers, with the additional gain of hygiene education, which is likely to encourage the formation of sanitary habits in I young people, who are likely to continuethe practice when they get older. 232. Sanitary landfills. The main beneficiaries of sanitary landfills are people who would otherwise be affected by the environmentalpollution caused by the uncontrolled dumping of refuse. Their numbers are relatively small, but to them the benefits are considerable. The benefits from a sanitary landfill as compared with an uncontrolled refuse dump are the control of odor through compaction and cover with impermeableoils, preventionof surface and groundwaterpollution by leachate, avoidance of burning and therefore smoke, avoidance of the spread of plastics by wind, and fewer hazards for scavengers due to restrictions placed on hospital wastes and controlled access to the site to avoid accidents with heavy equipment. The alternative would be to build an engineereddumpsite, which would avoid the excesses of environmental pollution, but would still cause a certain amount of degradation, which is unacceptableby the laws of Ghana and which violatesthe safeguardrequirementsof the World Bank. Propertyvalues are likely to go up near the landfill due to better accessibility created by the approach road, lessened by nuisanceeffect of the smell and noise ofthe landfill and the refuse trucks. 233. Private solid waste collection. About 55,000 households are expectedto benefit from additional contracts being given out on a competitive basis for private solid waste collection, mostly on a franchise basis. Most of them will be middle-income families with individual house collection. Experience has shown that private refuse collection increases the amount of refuse collected and its regularity. Refuse collection through a franchise with private operatorswill save public funds, which can be usedto finance refuse collection in low-income areas. The benefits of subsidies will thereby be shifted from high and middle incometo low-incomepeople. 234. Community infrastructure upgrading. It is estimatedthat about 80,800 people will benefit from community infrastructure upgrading in one way or the other. All will benefit from greater mobility in terms of easier walking on improved roads, greater availability of private or shared taxis, and in some places more business activity and employment due to better access. Those who live on or near the roads and side drains will be less affected by dust and soil erosion and are likely to enjoy increased security because of street lighting. Others may benefit from water supply or other interventions chosen by the community. Alternatives would have been not to provide surface dressing on the roads, at a considerable cost saving. Inthe absence of regular maintenancethis would have led to soil erosionand the creationof dust, and ultimately to a state of the road similar to the one before the project. Another alternative would have been to add landtitling and social infrastructure to the upgrading package, with considerably more benefits, but which would have added a new dimension to the project that would have made it too 28 Gordon Hughes, Meghan Dunleavy and Kseniya Lvovsky, The Health Benefits of Investments in Water and Sanitation - A case study ofAndhra Pradesh,India, 2000. 68 complicated to implement, given the land ownership situation in the country, and could have put the success and sustainability of the other activities injeopardy. Alternative designs for storm drains 235. A cost-benefit analysis for storm drainage was carried out for UESP-1, whereby the structural damage of flooding was estimated in monetary terms. This captures only one of the benefits and requires estimates ofthe cost of damage repair over a large area for which market values are not readily available. The benefit-cost ratio of four drains or sections of drains that were analyzed in 1991ranged from 2.9 to 5.2, with a discount rate of 12%, and an ERR between32% and 47%. These results are an indication that the construction of major storm drains is economically viable. Since UESP-2 is a repeater project of UESP-1 and the results for UESP-1 were positive and relatively robust in the sensitivity analysis, it was not consideredadvisable to undertake further studies to obtain current data for a repetition of the cost- benefit analysis, particularly consideringthe poor reliability and limitedrelevanceof the data. 236. Instead, a cost-effectiveness analysis was carried out to determine the economic viability of different design alternativesfor drains, namely (a) dredgingto increasethe channelprofile without lining, (b) dredgingand liningwith a trapezoidal profile, and (c) dredgingand lining with a rectangularprofile. Common assumptions for all 3 designs are an economic life of 15 years and a drain design that will preventfloods of morethan a 15-year frequency. (a) Dredging without lining Designfeatures Parameters Additional issues The unlinedchannels have silted Economic life 15 years Dueto the elevatedsurface up andhave narrowedthrough the (with dredging); roughness and irregularity, the dumping of refuse. Their sides are annualdredgingcost flow capacity is less than with a rough and irregular, reducingtheir US$50,000 per km; lined channel. Residents are likely capacityto drain storm water. constructioncost to continue dumping refuse into Dredgingwithout liningrequiresa US$250,000 per km the unlinedchannel. There is a substantialeffort of annual substantialrisk offlooding desilting. becausethe neededdesilting may not be carried out annually. (b) Trapezoidalchannel Designfeatures Parameters Additional issues The channelprofile is narrow on Economic life 15 years The wide profile ontop takes up the bottomandwide ontop. The (with periodic repair); valuable landand exacerbates sloping sides are cast onto the annualdesilting and repair resettlement during construction. earthembankment and are held in cost US$15,000 per km; Without periodic major repair its place by gravity. The sloping sides constructioncost life may only be about 5-8 years. needmajor repair periodically US$750,000 per km becausethe earth embankment provides an unstablesupport. 69 (c) Rectangular channel Designfeatures Parameters Additionalissues The channel is built with Economic life 15 years; The wide bottomofthe channel is reinforced concrete. The profile annual desiltingcost more likely to accumulate silt and has a self-supporting U-shape that US$l0,000 per km; refuse than the narrower one of has the same width onthe top as construction cost the trapezoidal channel. Desilting on the bottom. US$900,000 per km is more difficult becauseo f the straight wall, and there is a greater riskof someonefalling in.Less land is needed because o f the shape o fthe channel profile. Resultsfor storm drains 237. The results o f the cost-effectiveness calculation are shown in Table A9.1. With an annual recurrent cost of US$70,000, US$15,000 and US$lO,OOO for the three channel designs (see the assumptions above), ,the least-cost solution in terms o f the present values o f the total costs is channel dredgingwithout liningfor a discount rate of 12% -- as well as 10% and 15%. The trapezoidal channel is the second-best solution. The outcome is sensitive to the annual recurrent cost: if it is increased to US$lOO,OOO, US$25,000 and US$lO,OOO, the least-cost solution becomes the trapezoidal channel for a discount rate o f 12%. The higher cost assumption may better reflect the true maintenance requirements, since the maintenance that is actually carried out falls far short ofthe needs. 238. When supplementingthe results of the C-E analysis with the Additional issues described under the assumptions above, significant additional benefits emerge for the rectangular channel over the other designs, namely (i)a substantial reduction in the land surface requiredfor the channel and (ii) low risk a o f structural failure even if regular desilting is not carried out. Because o f these factors the rectanwlar channel is a better solution where land is scarce or of high value and where involuntary resettlement for the construction is involved. This has been born out in practice in Ghana. Unlined channels are not regularly maintained or dredged and are used by many residents as refuse dumps, which greatly reduces their floor prevention capacity. Trapezoidal channels were predominant some years ago, while inrecent years more rectangular channels have been built. InUESP-1, Lots 1 and 2 o fthe main channel, the Odaw, were constructed with a rectangular profile, while the Nsuben Drain in Kumasi was built as a U-shaped channel in the central business district and as a trapezoidal channel in the flood plane. In UESP-2 both trapezoidal and rectangular channels will be used, depending on the land values and the need for resettlement. 239. The total estimated base cost o f storm drain construction, including consulting services, is US$16.5 million for a total lengthof 16.7 km, which amounts to an average cost of US$1 million per km. If 80,000 people are assumed to benefit from flood reduction, the investment cost per capita becomes US$205. Latrinesin residentialareas 240. The unit of analysis is Cedis per person over the economic life o f the latrine, which was taken as 8 years for all three latrine types. The non-bucket household and the bucket latrines are assumed to be located in low-income neighborhoods, where several families in a tenement house or a large extended family share one larine. 70 x 2 2 0 s 3 0 P 2 20 3 0 E" E- 3 3 0- 0 0" x3 m m 3 i ln ln 3 00 00 m s 2 2 0 s 0 0 2 2 20 0- Nvi' 3 2 2 s 0 s 0 mb 0 2 2 0 0 ['" 0" 8 b 0 3 3 ln s 2 2 0 s 0 2 2 0 0 0. 4' 0" L n -. 3 s 2 2 0 x 0 0 2 z 2 0 oh In 3 N s 2 2 0 s 0 0 8 2 2 g 0' b 0 3 s 2 2 s 0 m 0 0 0 2 2 0 lf3 0- m * Ni 5? s 2 20 m 0 2 0- vi rri' 3 sf 3 N s220 s 0 0 2 2 0 0 0" 8 b s (a) Extended household latrine, other than bucket latrine Features Parameters Additionalissues The design is a KVIP (twin-pit) or Time periodfor PV Cleaning and routine maintenance similar calculation: 1year; are done by residents o fthe house 20 people per latrine; at no financial cost; conveniently construction cost $330; located for all family members; desludging once ayear at a accepts also urine cost o f d70.000 (b) Bucket (or pan) latrine Features I IAdditionalissues Also called pan latrine, needs I Parametersfor Time period PV IUnhygienicfor the users and even manual or mechanical emptyingat calculation: 1month; more so for the conservancy leasttwice a week; urine is 20 people per latrine; workers; residents o fthe house disposed o f in storm drains or soak construction cost $180; may have restrictedaccess to away pits cost of emptyingset by avoid rapid filling o fthe bucket AMA d30.000/ mo. (e) Residentialpublic latrine -from the standpointof the operator Features Parameters Additional issues Mostly Aqua privy or KVIPtype Time periodfor PV Inconvenience due to distance (not WC); managedby an operator calculation: 1month; from the house; children who cleans, controls access, and 700 people per latrine (i.e. sometimes not allowed; lack of collects a fee per sitting; about 35 tenement or privacy; sometimes not clean sometimes givenout by the City extended family houses); on a competitive basis; septic tank construction cost $17,000; or vault, usually poorly managed 20-seater; desludging once a month at a cost of # 200,000; staff cost #200,000/ mo. (d) Residentialpublic latrine -from the standpoint of the user Features Parameters Additional issues See (c) above Time periodfor PV Many people use open-air calculation: 1day; defecation instead because o fthe cost per sitting #300; fee charged, especially children, otherwise as in(c) some women, and casual laborers. The usualcharge for urination is Resultsfor latrines 241. The results o f the cost-effectiveness calculation are shown in Table A9.2. The present value of total costs per person over the 8-year life o f the latrine is nearly the same for non-bucket household and bucket latrines. However, group or extended family household latrines other than bucket latrines provide a distinct advantage over bucket latrines as they avoid the handling o f fecal matter, which is unsanitary and socially degrading, and - unlike bucket latrines - also accept urine and have no limit on the capacity of the bucket before emptying. 72 242. The present value of a public latrine is greater than that of household and bucket latrines due to the higher construction cost as well as recurrent cost per user. Even if their use were free, the present value o f the total cost would still be greater than that of household latrines. This is because the design of public latrines needs a more robust construction, separate wings for men and women, lockable gates, a room for the operator, and a large underground vault or septic tank. The septic tank or vault needs to be emptied more often as the heavy loading limits the decomposition and infiltration into the ground, and an operator has to be present during opening hours. Public latrines are much less convenient than household latrines, being located at some distance from the house, closed duringmost o f the night, crowded during the heavy hours of use, and sometimes with restricted access to children. Non-bucket household latrines are therefore the best solution by far. 243. An additional cost calculation was made for public latrines from the standpoint of the user, who pays Cedis 300 per sitting, assumedto use it once a day over the life o f the latrine. The total cost is nearly twice that for the operator, which explains why public latrines are considered to be a lucrative business to manage, often done by local politicians. It also explains why many people do not use it and are instead defecating inthe open, especially children and women without independentincome. Table A9.2 Comparisonof Latrine Types inResidentialAreas inCedis per person(1 US$ =Cedis 8,920) Non-bucket Bucket Public for - Public for - Household (or Pan) Operator User Time unit for recurrent Month Month Day ~ Discount ratehimeunit 12% 1.O% 1.O% 0.033% Number o f periods 8 96 96 2,920 Payment per period 3,500 1,500 2,000 300 PV o f recurrent cost 17,387 92,292 123,055 563,055 Capital cost 146,850 80,100 216,14: 216,14 TOTAL COST 164,237 172,392 260,891 779,19 244. The following latrines o f differenttypes are planned under the project (for details see Annexes 4 and 5): * Usuallya 10 or 12-seater WC or Aqua privy; includes water supply to the school where not yet provided 73 FINANCIAL ANALYSIS 245. The project does not involve revenue-earning entities. 246. The counterpartfunding requirements for the investments under the project are shown in Table A5.8 of Annex 5, broken down by source (i.e. Central GovernmentMLGRD, Assemblies, and beneficiaries) and by subcomponent. It is estimated that the total counterpart contribution in approximately equal to the taxes that will be collected in the form of a 7.5% withholding tax on civil works and a 12.5% Value Added Tax for consulting services provided by firms. The internal revenue generation of the MAShas increased slightly inrecent years in real terms due to greater efforts to collect revenues. There has been a substantial increase in the consolidated fund transfers from the Center to the Assemblies2', which is expected to increase further with the reaching of the HIPC completion point towards the end o f this calendar year. It was agreedduringNegotiationsthat the Central Government will finance the counterpart contribution for the capital cost of the larger investments, that is for storm drains, new sanitary landfills, and community upgrading, to lightenthe burden of the Assemblies for the capital cost contribution. 247. The recurrent costs of waste management and drainage weigh heavily on the MAS,as described inAnnex 1. Severalofthe subcomponentsofthe project are specifically designedto improvethe financial sustainability, such as subsidies for private solid waste collection (on a declining basis) and liquid waste management improvements in Tema. The main aim of the institutional strengthening component is to enhance sustainability by improving the institutional arrangements, the qualification of staff, internal revenue collection and financial management, etc. As a condition for starting construction of any storm drain inthe project, satisfactory institutional and financial arrangements for drain maintenance have to be in place. It is expected that within one year of effectiveness of the project, the MASwill establish a cost accounting system for (i)solid waste management, including collection and disposal, (ii)liquid waste management, and (iii) drain maintenance (see Section C6). This is expected to improve the planning and budgetingfor O&M. 29 See the analysis o f local government revenues in the ICR of the Ghana - Local Government Development Project, October 28,2003 74 Annex 10: SafeguardPolicy Issues GHANA: Second UrbanEnvironmentalSanitationProject SafeguardsIssues 248. This project falls into Environmental Category A because there are potentially serious environmentaland social issues with one of the sanitary landfills, locatedat Kwabenya, which is to serve Accra and the nearby urban areas of Ga District (see Annex 4). Another landfill is to be constructed at Tema, which is less contentious. The safeguards screening category is S2, indicating that one or more safeguard policies are triggered, but the effects are limited to their impact and are technically and institutionally manageable. The safeguards issues are described in the Integrated Safeguards Data Sheet (ISDS), which was disclosed in the Infoshop on January 16, 2004. A project-wide Environmental and Social Assessment (EA) and a Resettlement Policy Framework (RPF) were submitted to the Bank on December2, 2003 and were publicly disclosedat the Infoshop in Washingtonon January 16, 2004 and in the Project Information Center of the World Bank Ghana Office on January 19, 2004. At that time two sets of reports were also sent to every MetropolitardMunicipal Chief Executive of the five project cities (i.e. Accra, Kumasi, Sekondi-Takoradi, Tamale, Tema and Ga) with instructionsto make one set available to the public in the public library, with notices posted in prominent places. The applicable safeguard policies are OP/BP/GP 4.01 for environmental assessment and OP 4.12 for involuntary resettlement. Details ofthe safeguardimplications of the project are containedinthe IntegratedSafeguards Data Sheet. The environmental and social work of the EA report is summarized in the Table A10.1. The potential indirect and/or long term impacts due to anticipated future activities in the project area include soil erosion and air, soil and water pollution. 249. The following conditionalities regardingthe safeguards are containedinthe DCA: a. Before starting the construction of (i) sanitary landfills at Kwabenya and Tema, (ii) improved use, closure, and rehabilitation o f refuse dumps at Mallam and Oblogo in Accra, Kpone in Tema and Essipon in Sekondi, and (iii)community infrastructure upgrading, (1) prepare, and thereafter implement, a satisfactory Resettlement Action Plan (RAP) according to the Resettlement Policy Framework(RPF), specifying the arrangements for resettlement,including compensation, relocation and rehabilitation of the affected persons, and (2) acquire all the necessary land. The acquisition o f landfor the sanitary landfills is a condition of disbursement. b. Before starting the construction o f storm drainage, sanitation, solid waste management, other than that in (a) above, (1) compensate and resettle all the affected persons according to the RPF, and(2) acquireall the necessary land. c. Before starting the construction of (i)a sanitary landfill in Tema and (ii) improved use, the closure, and rehabilitation of refuse dumps at Mallam, Oblogo, Kpone and Essipon, prepare and thereafter implement a satisfactoryEnvironmental ManagementPlan(EMP). 250. The present environmentalconditions inthe project towns are characterizedby a lack of adequate sanitation coverage (with a residue of pan latrines that are gradually being phased out), uncollected accumulationsof solid waste, lack of all-year vehicular accessto some poor neighborhoods, flooding, and inadequate water supply. The sanitarv landfills are locatedon the fringe of the urban conglomerate of the three towns that they are to serve. Their area of influence is therefore partly urban and partly rural. They have a buffer zone of 200 - 250 m. Communities along the route that will be taken by dump trucks and those living near the landfills will be negatively affected. Surface and ground water pollution could extend 5 to 10 km downstream. The drain lining and communitv upgrading works will primarily be located in high-density, low-lying areas, most of which are inhabited by low-income people. In some of these neighborhoodscasual workers and smalltraders commute daily betweenthe city and rural areas. 75 TableA10.1 Summaryof SafeguardWork Completedinthe ProjectEA and RPFand Remainingto beDoneDuringProjectImplementation Source: SecondUrbanEnvironmentalSanitation Project, Environmentaland SocialAssessment, December2003, ExecutiveSummary EMP EnvironmentalManagementPlan RPF ResettlementPolicy Framework RAP ResettlementAction Plan N/A: Not Applicable 251. There is no potential large scale, significant and/or irreversible impact associatedwith the project. However, unless appropriate mitigatingmeasures are taken duringthe design and operation stage, the new sanitarv landfills at Accra and Tema are likely to have a negative impact on the environment through leachate pollution o f surface and ground water, bad odors, the spread of plastic bags through wind, noise, spread o f diseases, accidents caused by vehicles, unsightlyscenery, coverage of a larger surface area than necessary, and danger of refuse slides at unstable banks. The Kwabenva site for Accra will require involuntary resettlement and compensation for the loss of property and livelihood to a variety o f users and claimants. It is located in Ga District, and consultations with the communities involve the Accra Metropolitan Assembly, the Ga District Assembly, and the Regional Coordinating Council of Greater Accra Region. The determined opposition o f a group o f affected people at Kwabenya to further consultations on compensation and resettlement i s jeopardizing the preparations for the construction and poses the risk that the landfill could not be located at this site (see Section C5). The Kwabenya landfill will serve part of Ga District as well. The main risk for the completion o f the half-finished sanitary 76 landfill in Sekondi-Takoradi, for which an approved EA and RAP exists, is soil erosion, which could effect the nearby stream. The landfill site at Tema will require the compensation for land. Untilthe new sanitary landfills in Sekondi-Takoradi, Accra and Tema have been completed, the municipalities will continue to use the existing refuse dumps. Unless the new sanitary landfills are operatedaccordingto the operating guidelines, they could turn into uncontrolleddumps. 252. The other project subcomponents are expectedto have limited environmentalor social impacts; they are: a. Lining.of storm drains. The lining of additional drains to those that were done under UESP-1 will reduce the frequency, severity and duration of flooding, especially in low- lying, low-income areas. There is a risk that the lining of more secondary drains will cause flooding downstream. Some moving or destruction of compound walls, rooms, toilets, or other structures that have encroached on the drains may be necessary, but will be minimized. b. Latrine construction. Liquid wastes could pose a health hazard and an environmental nuisance if not properly disposed of, either through an appropriately located soak away pit or through emptying with a vacuum truck for disposal at an approved location for treatment. Guidelines for the location and design of latrines exist and will be followed during construction. Nearby residentscould be temporarily inconveniencedby dust, odor, and noise. c. Liquid waste management in Tema. None of the sewered wastewater in Tema was being treated as ofthe endof 2003, mainly due to objections from residents who live nextto the treatment ponds to noxious odors and the inability of the Tema municipality to pay the high cost of electricity for pumping. Studies will be carried out about alternative treatment or pumping, and minor works rehabilitated and/or constructed, which may involve restorationof lagoons. The septage treatment facility for Tema, for which an EA was preparedunder UESP-1,will be completed. d. Communitv infrastructureuurrradinn. These activities could cause localized flooding and soil erosion if not properly constructed. Some inconvenience to local residents could be created, such as the construction of retaining walls without stairs for pedestrian movement and the accumulation of wastewater in new areas. Some moving of kiosks, rooms, or other structures for small businesses or residences that project into the streets may be necessary, but will be minimized. The population living or working next to the construction site will be temporarily inconveniencedby restricted mobility, noise, dust, andthe cutting offandreconnectionof water supply. 253. The legal and institutional arrangements in Ghana are by and large adequate for environmental and social management. The Institutional Strengtheningcomponent will also cover some aspects of the environment, such as improving the functioning of the Solid Waste Management Departments and the Environmental Health Departments, which together are charged with the management of solid and liquid wastes inthe cities, and the environmentalmonitoring of sanitary landfills andrefuse dumps inthe project cities. A subcomponent has been added for malaria vector control. The main institutional issues relate to the sustainability of the infrastructure that will be created through the project and urban environmental infrastructure in general, particularly (i) institutional and financial responsibility for the cleansingand the repair of storm drains, (ii) the operation of sanitary landfills in the prescribed manner to safeguardthe environment and to prolong their life, (iii)the financing of subsidies for solid waste collection in poor neighborhoods, and (iv) the disposal of all septage without damageto the environment. 254. National legislation, policies, and strategies exist for environmental protection and involuntary settlement that also supports and guides the activities of the Ghana EPA. These provisions are described 77 in detail in the project-wide EA and RPF. Policies and strategies also exist at the national and local government level for environmental sanitation, notably the National Environmental Sanitation Strategy issued by the Ministry of Local Government and Rural development in 1999 and the EPA Best Practice Environmental Guidelines Series: No. 1 Ghana Landfill Guidelines, No. 2 Guidelines for the Management of Health Care and Veterinary Waste in Ghana, and No. 3 Manualfor the Preparation of District Waste Management Plans in Ghana, all July 2002. Institutional strengthening for urban environmentalsanitation was carried out inthe periodof 1997 to 2002 and various guidelines and models were prepared through the NDF-financed Project-Wide Capacity Building and Training Component of UESP-1. 255. The project-wide EA report identifies the applicable safeguards policies, the nature and extent of the anticipatedenvironmentaland social impacts ofthe various project subcomponents, andthe measures that should be taken to minimize the negative environmentaland social impacts during constructionand operation. An Environmental Impact Statement for a new sanitary landfill at Kwabenya, Accra, was prepared in 1999 with financing from another donor. The project EA contains an update ofthe findings of this report. A RAP for the Kwabenya landfill will be prepared and approved by MLGRD and the Bank, and disclosed before the start of construction. The constructionof a sanitary landfill in Tema will not be part ofthe first-year subprojects.An EA and RAP for the Tema landfill will be preparedand approved by MLGRD and the Bank, and disclosed before the start of construction. EAs and RAPs for the sanitary landfills at Kumasi (construction completed), Tamale (construction completed) and Sekondi-Takoradi (about half-way completed) were prepared under UESP-1 around 1997 and approved by the Bank. Operating and monitoring plans for these landfills were prepared in 2001 and training in their operation was provided in2003. 256. EAs were prepared for the proposed drainage works in Accra around 1997 and have been improved in the project-wide EA. The requirements for environmentaland social protection for the other subcomponents of the project are presented inthe project-wide EA. The RAPs that remainto be done for some of the components will be approved by MLGRD and the Bank, and disclosed before the start of construction. 257. Inthe early part of project preparationand inthe course of the preparation of the Environmental Assessment and the ResettlementPolicy Frameworkfor the project, consultationswere heldwith some of the people who are likely to be affected by the project, especially those near sanitary landfill sites and refuse dumps. Other stakeholders in,theproject have been identified in the project-wide EA and will be consultedaccordingto the provisions ofthe RPF. 78 Annex 11: ProjectPreparationand Supervision GHANA: Second UrbanEnvironmentalSanitationProject Planned Actual Project ConceptNote review April 29,2003 InitialProjectInformation Documentto Project May 22,2003 InformationCenter Initial ISDS to ProjectInformation Center May 22,2003 Appraisal January 19,2004 Negotiations February 5,2004 February 16,2004 Boardmegional Vice Presidentapproval April 29,2004 Planneddate of effectiveness October 29,2004 Planneddate of mid-term review June 30,2007 Plannedclosing date June 30,20 10 Key institutions responsiblefor preparationof the project: Ministry of Local GovernmentandRural Development Bank staff andconsultantswho worked on the project included: Name Title Unit GerhardTschannerl Task Team Leader, Consultant AFTU2 Alex McPhail Lead Water and Sanitation Specialist AFTU2 Charles Boakye Senior Municipal Engineer AFTU2 Arthur Swatson Water and Sanitation Specialist AFTU2 KarenHudes Senior Counsel LEGAF IsabelleParis Senior Environmental Specialist AFTS4 Kofi Awanyo Senior Procurement Specialist AFTPC TsriApronti Procurement Specialist AFTPC FredYankey Senior Financial Management Specialist AFTFM Edward Dwumfour Sr. Natural Resource ManagementSpecialist AFTS4 Evelyn Awittor OperationsOfficer - Health AFTH2 Smile Kwawukume Public Sector Management Specialist AFTPR KofiTsikata CommunicationsOfficer AFTPX ErnestinaAttafuah Sr. ProgramAssistant AFTU2 Charity Boafu-Portuphy Team Assistant AFC10 Bank funds expendedto date on project preparation: 1. Bank resources: US$130,714.74 2. Total: US$130,714.74 EstimatedApproval and Supervisioncosts: 1, Remainingcosts to approval: US$50,000 2. Estimatedannualsupervision cost: US$90,000 79 Annex 12: Documents inthe ProjectFile GHANA: Second UrbanEnvironmentalSanitationProject 1. Ministry of Roads and Highways, Departmentof UrbanRoads, Drainage Master Plan, Roadand Drainage Rehabilitation inAccra, UrbanI1Project, 3 Vols., Mott McDonald andWatertech, September 1991,GOG, Accra 2. MLGRD, Environmental Sanitation Policy, May 1999, GOG, Accra 3. MLGRD, Operations andMaintenanceGuidelines,Proposed SanitaryLandfill and Septage Treatment Facilities for Kumasi, Phase I1-Design Phase, Urban Environmental SatiationProject, Africon, JarrodBall, and Conterra, July 1999, GOG, Accra 4. Taywood Engineering, ProposedLandfill at Kwabenya - Environmental Impact Assessment, August 1999, Southall, UK 5. MLGRD, Workshopon Feasible Toilet Technologiesfor Low Income Communities,October 1999, GOG, Accra 6. ContinentalConsultants, Restructuring [of the] Ministry of Local Governmentand Rural Development, 6 Vols., September 2001, GOG, Accra 7. Governmentof Ghana, Millennium Development GoalsReport 2002, Accra 8. Ghana Center for DemocraticDevelopment,Report on Sanitation in the City of Accra, Workshop Proceedings,2002, Accra 9. Accra Metropolitan Assembly, KwabenyaLandfill Phase 1Construction (Contract), 3 Vols., Scott Wilson Kirkpatrick, April 2002, GOG, Accra 10. Environmental ProtectionAgency, GhanaLandfill Guidelines,Best PracticeEnvironmental Guidelines Series No. 1, July 2002, GOG, Accra 11. EnvironmentalProtectionAgency, Guidelinesfor the Managementof Health Care and Veterinary Waste in Ghana, Best PracticeEnvironmentalGuidelines Series No. 2, July 2002, GOG, Accra 12. EnvironmentalProtectionAgency, Manualfor thepreparation of District WasteManagement Plans in Ghana,Best PracticeEnvironmentalGuidelines Series No. 3, July 2002, GOG, Accra 13. Accra Metropolitan Assembly, KwabenyaLandfill Site Operation and Development, Scott Wilson Kirkpatrick, November2002, GOG, Accra 14. MLGRD, Baseline and Impact Assessment, UrbanEnvironmental SanitationProject, 4 Volumes: Accra, Kumasi, Sekondi-Takoradi, andTema, 2003, GOG, Accra 15. MLGRD, CompletionReport, Project Wide Capacity BuildingandTraining, Urban Environmental SanitationProject, CarlBro, PEMand CMS, January 2003, GOG, Accra 16. MLGRD, Final Stage 11Report, Proposed[Urban] Upgrading Project: Survey, Data Collection, Programming,Planningand EngineeringStudies, Kesse-Tagoeand OWACONSULT, 4 Vols., January 2003, GOG, Accra 17. MLGRD, Environmental and Social Assessment [of the] SecondEnvironmental SanitationProject, EEMC and ARCADIS, December2003, GOG, Accra 18. MLGRD, ResettlementPolicy Framework, SecondEnvironmental SanitationProject, EEMC and ARCADIS, December2003, GOG, Accra 80 Annex 13: Statementof Loans and Credits GHANA: SecondUrbanEnvironmentalSanitationProject Difference between expected and actual Original Amount in US$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb, Orig. Frm.Rev'd PO71157 2004 GH LandAdministration 0.00 20.51 0.00 0.00 0.00 21.59 0.00 0.00 PO71399 2003 Partnershipswl TraditionalAuthorities 0.00 0.00 0.00 0.00 0.00 4.78 -0.11 0.00 PO73649 2003 2nd Health Sect. Prog. Support 0.00 57.30 0.00 0.00 0.00 86.80 0.55 0.00 PO67685 2002 Ghana:GEF-NorthernSavanna - TF050723 0.00 0.00 0.00 7.90 0.00 8.12 2.95 0.00 PO50623 2002 GHROAD SECTOR DEVELOPMENT 0.00 220.00 0.00 0.00 0.00 220.07 47.45 0.00 PROGRAM PO00968 2001 Ghana:AGRIC SERVICES 0.00 67.00 0.00 0.00 0.00 56.86 72.87 0.00 PO7I617 2001 AIDS Response Proj. (GARFUND) 0.00 25.00 0.00 0.00 0.00 16.63 -10.77 0.00 PO50624 2000 URBAN 5 0.00 10.83 0.00 0.00 0.00 4.25 3.98 0.66 PO50616 2000 COMMUNITY WATER I1 0.00 25.00 0.00 0.00 0.00 15.21 -10.89 0.00 PO69465 2000 Ghana:RURAL FINANCIAL SERVICES 0.00 5.13 0.00 0.00 0.00 4.67 16.43 0.00 PROJECT PO00974 1999 Nat. Func.Lit. Program 0.00 32.00 0.00 0.00 0.00 24.26 14.49 7.64 PO00970 1999 TRADE GATEWAY & INV. 0.00 50.50 0.00 0.00 0.00 24.98 19.99 0.00 PO40659 1999 Community-basedPov. Red. 0.00 5.00 0.00 0.00 0.00 3.38 3.12 0.72 PO45188 1998 Ghana:FOREST BIODIVERSITY 0.00 0.00 0.00 8.90 0.00 6.62 4.79 0.00 PO41150 1997 Ghana:VILLAGE INFRASTRUCTURE 0.00 30.00 0.00 0.00 0.00 5.58 7.53 0.00 PO00973 1996 URBANENVIRONMENTAL 0.00 71.00 0.00 0.00 0.00 1.87 9.13 5.84 SANITATION PO42516 1996 PUBLIC ENTERPRISEPR 0.00 26.45 0.00 0.00 0.00 5.59 7.23 -17.44 PO00926 1995 GH THERMAL (P-VII) 0.00 175.60 0.00 0.00 0.00 23.13 27.38 26.67 Total: 0.00 821.32 0.00 16.80 0.00 534.39 216.12 24.09 GHANA STATEMENT OF IFC's HeldandDisbursedPortfolio InMillions ofUSDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1993 AEF Afariwaa 0.16 0.00 0.00 0.00 0.16 0.00 0.00 0.00 1995 AEF Antelope Co. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2000 AEF Computer Sch 0.15 0.00 0.00 0.00 0.15 0.00 0.00 0.00 2001 AEF GPPI 1.70 0.00 0.00 0.00 1.70 0.00 0.00 0.00 1998 AEF NCS 0.00 0.00 0.53 0.00 0.00 0.00 0.53 0.00 1997 AEF PTS 0.00 0.00 0.31 0.00 0.00 0.00 0.31 0.00 1999 AEF PharmaCare 0.18 0.00 0.00 0.00 0.18 0.00 0.00 0.00 1994 AEF Shangri-la 0.93 0.00 0.00 0.00 0.93 0.00 0.00 0.00 1996 AEF Tacks Farms 0.43 0.00 0.00 0.00 0.43 0.00 0.00 0.00 81 1989/91/93 ContAcceptances 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2001 DiamondCement 5.00 1.oo 0.00 0.00 0.00 0.00 0.00 0.00 2000 ELAC 0.00 0.10 0.00 0.00 0.00 0.10 0.00 0.00 GAGL 0.00 0.00 3.26 0.00 0.00 0.00 3.26 0.00 1990/91/96 1991 GHANAL 0.00 0.44 0.00 0.00 0.00 0.44 0.00 0.00 2001 MFISSLC 0.00 0.49 0.00 0.00 0.00 0.49 0.00 0.00 Totalportfolio: 8.55 2.03 4.10 0.00 3.55 1.03 4.10 0.00 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. 2000 GAGL IV-Restr 0.00 0.00 0.00 0.00 Total pendingcommitment: 0.00 0.00 0.00 0.00 82 Annex 14: Country at a Glance GHANA: Second Urban EnvironmentalSanitationProject Sub- POVERTY and SOCIAL Saharan Low- Ghana Africa income Development diamond' 2002 Population,mid-year (millions) 20.1 686 2,495 Lifeexpectancy GNIpercapita (Atlas method, US$) 270 450 430 T GNI (Atlas method, US$ billions) 5.4 306 1,072 Average annual growth, 1996-02 I Population (%) 2.1 2.4 1.9 Laborforce1%) 2A 2.5 2.3 GNI per M o s t recent estimate (latest year available, 1996-02) capita Poverty (% ofpopulationbelownationalpovertyline) Urbanpopulation (%of totalpopulation) 37 33 30 Lifeexpectancyat birth (years) 55 46 59 Infantmortality(per 1OOOlivebirths) 55 a5 81 Childmalnutrition (%ofchildten under5) 25 Access to improvedwatersource Access to an improvedwatersource (%ofpopulation) 73 56 76 I Illiteracy(%ofpopu/ationage 59 26 37 37 Gross primaryenrollment (%of school-age population) 80 66 95 -Ghana Male 84 92 a 3 Lowincome gmup Female 76 80 67 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1982 1992 2001 2002 Economic ratios' GDP (US$ billions) 4.0 6.4 5.3 6.0 Gross domestic investmentlGDP 3.4 0.8 24.0 22.7 Exports of goods andservicesIGDP 3.3 ll.2 52.2 51.0 Trade Gross domestic savingsiGDP 3.7 13 5.8 6.5 Gross national savingslGDP 3.5 3.6 18.2 15.6 Currentaccount balancelGDP -4.6 -9.2 -7.3 -6.1 interest paymentslGDP 0.7 13 13 2.1 Total debtlGDP 36.8 70.3 P7.5 Total debt servicelexports 15.5 28.2 P.8 Present valueof debt/GDP 74.4 1 Present value of debtlexports 150.4 Indebtedness 1982-92 1992.02 2001 2002 2002-06 (avenge annualgmvdh) GDP 4.7 4.2 4.0 4.5 5.O -----Ghana GDP percapita 1.1 2.0 19 2.6 3.6 Lowincomegrou~ ~ STRUCTURE of the ECONOMY 1982 1992 2001 2002 Growth of investment and GDP (Oh) (%of GDP) Agriculture 57.3 44.8 35.9 34.7 20 Industry 6.2 ll.4 25.2 24.9 Manufacturing 3.6 9.3 9.2 9.4 0 sa s Services 36.4 37.8 38.9 97 40.3 -20 Private consumption 69.6 66.6 78.7 76.1 Generalgovernmentconsumption 6.5 42.1 15.6 14.4 Imports of goods and sewices 3.0 26.6 70.5 67.1 -GDI A G D P 1982-92 1992-02 2001 2002 I (average annualgrowth) Growth of exports and imports (%) Agriculture 2.1 3.6 3.7 4.1 T Industry 7.1 3.7 4.0 6.3 40 Manufacturing 7.3 1.2 7.6 0a 20 Services 7.3 4.6 4.3 4.4 0 Private consumption 4.7 4.2 1.4 $3.3 -20 Generalgovernment consumption 4.5 4.5 15.0 -a.7 Gross domestic investment 7.1 19 -11 a.1 Imports of goods and services 7.4 9.4 2 .o 6.6 83 Ghana PRICES and GOVERNMENT FINANCE 1982 1992 2001 2002 Domestlc prlces Inflation (%) 1 (%change) Consumer prices 22.3 tI.0 33.0 5 9 Implicit GDP deflator 27.9 112 34.6 20.2 Government finance (%of GDP,includes currentganfs) Current revenue 6.0 18.5 20.7 22.3 97 98 99 00 01 Current budget balance -3.2 4.2 2.9 3.0 I Overallsumlusideficit -6.1 -5.4 -4.5 -GDPdeflator -CPI TRADE 1982 1992 2001 2002 (US$ millions) Export and import levels (US$ mill.) Total exports (fob) 966 2,360 2,661 Cocoa 302 503 535 Timber 114 215 265 /B,O0O T Manufactures 4,000 Total imports (cif) 1,569 3,761 4,099 Food 38 2,000 Fueland energy 162 257 275 I Capital goods 277 0 Export price index(895=WO) 65 76 81 96 97 98 99 00 01 02 Import price index(895=00) t13 99 96 nExports mlmports Terms of trade(895=WO) 83 79 65 BALANCE o f PAYMENTS 1982 1992 2001 2002 (US$ millions) Current account balance to GDP (Oh) Exports of goods and services 711 In5 2,433 2,607 Imports of goods and services 6U 1,645 3,426 3,662 Resourcebalance -a3 -740 -995 -1,055 Net income -69 -tI6 -l76 -185 Net currenttransfers -1 255 767 750 Current account balance -192 -592 -386 -490 Financingitems (net) 191 467 465 559 Changesin net reserves 1 a 4 -79 -69 20 1 Memo: Resenres includinggold (US$ millions) 431 679 Conversion rate (DEC,local/US$) 21.4 437.1 73'0.6 7,932.7 EXTERNAL DEBT and RESOURCE FLOWS 1982 1992 2001 2002 (US$ millions) :omposition of 2001 debt (US$ mill.) Total debtoutstanding and disbursed 1,484 4,506 6,759 IBRD t31 67 6 G:555 A:6 IDA 2 5 1631 33'2 Total debt service 111 319 3 6 IBRD 1s 21 4 IDA 1 14 59 Composition of net resource flows Official grants 30 218 305 Official creditors 56 309 269 Privatecreditors 14 45 154 Foreign direct investment 1s 23 69 Portfolio equity 0 0 0 World Bank program Commitments 0 375 433 - Disbursements 24 l70 193 A iBRD E Bilateral B IDA - D Other nwitilateral - F Private -- Principalrepayments 6 15 37 C-IMF G- Short-ten 84 Annex 15: Letterof Sector Policy GHANA: Second UrbanEnvironmentalSanitationProject 85 Annex 15: Letter of Sector Policy GHANA: Second UrbanEnvironmental Sanitation Project 87 ~ r o n n t dand ownershipof wastes; THECOUNTRY DIRECTOR WORLD BAMK ACCRA 88