The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 04-Feb-2022 | Report No: PIDA32570 Dec 06, 2021 Page 1 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) BASIC INFORMATION OPS_TABLE_BASIC_DATA A. Basic Project Data Country Project ID Project Name Parent Project ID (if any) Rwanda P177247 Additional Financing for P165017 Second Rwanda Urban Development Project Parent Project Name Region Estimated Appraisal Date Estimated Board Date Second Rwanda Urban AFRICA EAST 02-Feb-2022 31-Mar-2022 Development Project Practice Area (Lead) Financing Instrument Borrower(s) Implementing Agency Urban, Resilience and Land Investment Project Republic of Rwanda Ministry of Infrastructure, Financing Local Administrative Entities Development Agency, Rwanda Environmental Management Authority, City Administration of Kigali, Rusizi District, Nyagatare District, Huye District, Musanze District, Muhanga District, Rubavu District Proposed Development Objective(s) Parent To improve access to basic services, enhance resilience and strengthen integrated urban planning and management in the City of Kigali and the six secondary cities of Rwanda. Components Support to the City of Kigali Support to Secondary Cities Institutional Capacity Development and Project Management Contingency Emergency Response PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 10.70 Dec 06, 2021 Page 2 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) Total Financing 10.70 of which IBRD/IDA 0.00 Financing Gap 0.00 DETAILS -NewFinEnh1 Non-World Bank Group Financing Trust Funds 10.70 Africa Climate Change Program 10.70 Environmental and Social Risk Classification Substantial Other Decision (as needed) B. Introduction and Context Country Context 1. Rwanda has experienced strong, uninterrupted economic growth over the past two decades and is among the fastest growing economies in Africa. Rwanda’s per capita income increased from US$201 in 2000 to US$801 in 20191. Economic growth averaged 7.7 percent per year during the same period compared to the regional average of 4.4 percent. This was the second highest rate of economic growth in Sub-Saharan Africa. The annual percentage growth rate of Gross Domestic Product (GDP) reached 9.4 percent in 2019, accelerating from 8.6 percent in 2018 and 6.1 percent in 2017. Accelerated growth is attributed to robust performance across key sectors, as well as increased public investments for implementation of the National Strategy for Transformation (NST1). 2. While sustained economic growth has led to significant poverty reduction, it has been stagnant in recent years. Poverty declined from 60.4 to 38.2 percent of the population between 2000/01 and 2016/172 with an improvement in social indicators. Poverty has also become less severe with the distance between poor households’ consumption from the poverty line declining. However, the rate of poverty reduction has decreased 1Based on the World Development Indicators/World Bank 2Based on the Integrated Household Living Conditions Survey 5 (EICV5) - Poverty Panel Report conducted from October 2016 to October 2017 Dec 06, 2021 Page 3 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) following the 2016 drought, with unusual increases in food prices and reduction in household food consumption, coupled with a slowdown in structural transition.3 3. Sustainable urbanization has been one of the country’s key development strategies and has contributed significantly to economic growth and structural change in Rwanda. The Government has identified sustainable urbanization and off-farm job creation as critical for achieving its vision of becoming a middle-income country. Structural transformation or the movement of labor out of low-productivity agriculture to industry and services, and from farms to cities, has indeed accompanied Rwanda’s growth in the 2000s. Urbanization has accounted for 37 percent of national structural change (GDP growth through labor reallocation across sectors), and urban areas have accounted for 48 percent of national labor productivity growth over the past 15 years.4 Sectoral and Institutional Context 4. Rwanda is highly vulnerable to adverse effects of climate change as evidenced by the 2016 drought and the heavy rainfalls in 2018 and 2019. Since 1970, Rwanda’s average temperature has increased by 1.2˚C and relative to the period 1986–2005, average annual temperatures are projected to be between 2.5˚C to 3.3˚C warmer. This will be accompanied by an increase in the total number of warm days in a year. Models predict a change in average annual rainfall of between-100–400 millimeters in the next 30 years, anticipating shorter and more intense rainfalls during the rainy seasons, while dry seasons will be longer and drier.5 5. Scarce access to land in and around Kigali has resulted in unplanned settlements, many of which are exposed to climate hazards, particularly flooding. The city’s extensive network of wetlands has shrunk from 100 square kilometers in 2013 to 72 square kilometers in 2019 due to encroachment by activities such as industry and urban agriculture. Kigali is located within the Nyabugogo sub-catchment, which has been severely degraded due to deforestation, unplanned settlements and unsustainable agricultural practices on the hillsides. Loss of wetlands has also led to higher rates of point and non-point source pollution and negatively affected biodiversity, particularly native plant species and a rich diversity of migratory birds (for example, the threatened Madagascar Pond Heron and the near threatened Papyrus Gonolek). Industrial pollution from wetlands such as Nyabarongo and Gikondo threatens aquatic life in Kigali and downstream water users. 6. To help address the problem, the NDF during the preparation of the RUDP II initially approved parallel funding of Euro 6.1 million for wetlands rehabilitation in the Kigali. This financing includes funding for the rehabilitation of the Rwampara wetland as part of the Wetland Master Plan prepared for the CoK. As part of detailed project preparation, the World Bank and the government then undertook a comprehensive review of wetland restoration needs and opportunities to identify the intervention areas that would provide maximum protection to Kigali residents and assets from increasingly recurrent flood events. Considerable work was carried out to collect baseline data, engage with relevant stakeholders, consult with the local population, and prepare preliminary designs, including engineering solutions and cost estimates. With this additional work, it became clear that insufficient funding was available to rehabilitate the entire system of interconnected wetlands in the CoK. Therefore, the 3 World Bank and National Institute of Statistics Rwanda (NISR) household surveys. The impact of the heavy rainfalls in early 2018 is yet to be seen as it is not included in the latest household survey released in late 2018. 4 Diao, Randriamamonjy, and Thurlow. 2017. “Urbanization and the Future of Economic Development in Rwanda.� International Food Policy Research Institute, Washington, DC. Background paper for Future Drivers of Growth in Rwanda. 5 World Bank Climate Change Knowledge Portal. Dec 06, 2021 Page 4 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) government requested further additional finance from the NDF to focus on wetland restoration and flood prevention under the RUDP II. 7. This Project Information Document (PID) outlines an Additional Financing (AF) in the amount of Euro 9 million (US$10.64 equivalent) grant from the Nordic Development Fund (NDF). to the Republic of Rwanda to scale up and restructure the RUDP II. The Additional Financing will be provided by the Nordic Development Fund (NDF) as a grant to be managed by the World Bank through a trust fund. The Ministry of Finance and Economic Planning requested the Additional Financing from the NDF in a letter dated August 4, 2021. There are no changes in the Project Development Objective (PDO), environmental and social risk rating, and applicable environmental and social standards. The objective of the proposed NDF financing is to support the City of Kigali (CoK) and its inhabitants to improve climate resilience through better management and flood control measures in urban wetlands. The Bank team will manage the funds for the project, following all Bank policies and procedures. C. Proposed Development Objective(s) Original PDO 8. To improve access to basic services, enhance resilience, and strengthen integrated urban planning and management in the City of Kigali and the six secondary cities of Rwanda. Current PDO The PDO remains the same with the AF. Key Results 9. The outcomes below are expected from the NDF financing, in addition to activities already being financed under RUDP II. The results framework has been adjusted to reflect the proposed changes to the scale and scope of the parent project. • Over 51,000 people (disaggregated by gender) benefitting from NDF’s flood risk reduction and wetland rehabilitation investments. • Nearly 200 hectares of wetlands area providing multiple ecosystem services, such as (a) reduced flooding, (b) increased species diversity and numbers inhabiting the wetlands, and (c) increased numbers of visitors to the wetlands for recreational purposes. • A long-term strategy and business plan for the management and maintenance of rehabilitated wetlands will be developed and approved. It will consider technical, financial and environmental aspects. The business plan will consider the potential for private sector investments. D. Project Description 10. The project comprises three components. These are: Component 1: Support to the City of Kigali. This component is supporting the comprehensive upgrading and flood risk management of four unplanned settlements, reduce flood risks at selected locations Dec 06, 2021 Page 5 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) identified as flood hotspots in the city, pilot an integrated approach to sustainable wetland management and carry out a series of technical assistance (TA) to develop tools for evidence-based, integrated urban planning and provide institutional capacity development and support to the CoK. Specifically, RUDP II is financing: (a) urban upgrading, (b) infrastructure to reduce the risk of flooding, (c) development of a stormwater management master plan, and (d) support for institutional and capacity development; (e) rehabilitation works and other ecological restoration activities in the Gikondo , and Kibumba wetlands, (f) an aerial Light Detecting and Ranging (LiDAR) survey, (g) development of a long-term management strategy and business plan for targeted wetlands, and (h) development of a greenhouse gas accounting and reporting framework for the CoK. Component 1 is also supporting the preparation of feasibility studies for sites and services for two sites in the CoK, and their implementation as pilots (this activity was previously under component 3, but should be managed by the implementing agency, rather than the national government to ensure that the work is in line with the masterplan). This additional financing will serve to extend wetland rehabilitation in Kigali by covering the Nyabugogo and Rugenge-Rwintare wetlands that have been identified as priorities.6 It will also support advocacy, knowledge exchange and partnerships for sustainable urbanization. The NDF additional support will complement the World Bank and NDF initial support to RUDP II and make transformational change possible for a climate-resilient and rapidly-growing CoK. While wetland rehabilitation will seek to address flood risks, Kigali will benefit from a broad suite of enhanced ecosystem functions and values. Restoration is expected to include re-establishing large wetland habitat areas, which will provide essential refuge for plant, bird, and animal species. Wetland rehabilitation will also serve to trap sediments and pollutants and, in so doing, mitigate the impacts of urban development on downstream users. • Component 2: Support to Secondary Cities. This component is financing basic infrastructure in six secondary cities in two phases, feasibility studies, detailed design and construction supervision, and institutional and capacity development support for the newly established city management offices (CMOs). The Local Development Authority (LODA) will procure construction supervision consultants to assist secondary cities project teams to supervise investments and transfer skills to district technical staff. Component 2 is also supporting the preparation of feasibility studies for sites and services for two sites in secondary cities, and their implementation as pilots (this activity was previously under component 3, but will now be managed by the implementing agency, rather than the national government to ensure that the work is in line with the masterplan). • Component 3: Institutional Capacity Development and Project Management. This component is supporting institutional and capacity development at the national level, overall project coordination by the Ministry of Infrastructure (MININFRA) and project management costs across implementation agencies at the national level, CoK and secondary cities. The development of an urbanization monitoring information system has been dropped from the project after identifying the ongoing procurement of similar TAs being led by the Rwanda Space Agency. • Component 4: Contingency Emergency Response (US$0). In accordance with the World Bank Policy on Investment Project Financing dated October 1, 2018, Paragraph 12 and 13 for situations of urgent need of assistance, the project includes a project-specific Contingency Emergency Response Component 6The Wetland Master Plan has identified significant additional wetland areas for rehabilitation that are not included in the project, but will require investment in the future. Dec 06, 2021 Page 6 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) (CERC). This component has no initial funding allocation but will draw resources from other expenditure categories at the time of its activation. 11. The Additional Finance involves changes that are fully aligned with the original PDO and fall under existing components. Hence, both the PDO and the project components will remain unchanged with new activities incorporated into the existing components. The following activities will be incorporated under subcomponent 1b: Evidence-based, sustainable wetland management, flood risk management and greenhouse gas monitoring. These are: • Technical assistance services to supervise the implementation of detailed designs for wetland rehabilitation works in Nyabugogo and Rugenge-Rwintare wetlands, environmental and social risk management, monitoring and evaluation, and development of plans for operation, long-term management, and business development. • Investments in the rehabilitation of Nyabugogo and Rugenge Rwintare wetlands to enhance wetland functions, reduce flooding, and promote access and use of wetlands by communities and tourists. • Knowledge development, management, dissemination and outreach, and partnerships to supporting effective monitoring and profiling of the rehabilitation work undertaken in the CoK. 12. The following activities will be incorporated under subcomponent 3b: Project management. These are: • Local supervision and oversight, monitoring, and environmental and social risk management. 13. The AF and restructuring will include the following changes to the parent project: (a) revision of the total project costs to account for an additional NDF grant of US$10.64 million; (b) revision of components 1b and 3b to add new activities; and (c) revision of the results framework to add new indicators to reflect changes in project activities, rephrase existing indicators for clarity, and adjust baseline and target values. . Legal Operational Policies Triggered? Yes Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 Summary of Assessment of Environmental and Social Risks and Impacts . E. Implementation Dec 06, 2021 Page 7 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) Institutional and Implementation Arrangements 14. REMA under the Ministry of Environment—which is implementing the RUDP II component 1b activities—will implement the activities to be financed under the NDF grant. At the national level, the MININFRA is leading the coordination through the National Steering Committee. The Project Technical Committee (PTC) consists of key institutions with clearly defined tasks, responsibilities, and mandates. The PTC advises the National Steering Committee. 15. REMA will be in charge of implementing activities to restore wetlands, technical assistance, M&E, advocacy, knowledge exchange, and partnerships. REMA has a fully-staffed SPIU with roles covering coordination, financial management, procurement, legal for contract management, accounting, internal audit for compliance, M&E, engineering, ecology, hydrology, and environmental and social risk management. REMA has recruited a financial management specialist dedicated to the NDF-financed activities. It is at the advanced stages of recruiting procurement and M&E specialists to focus on the same. It is also starting recruitment of a coordinator to oversee and manage the NDF- financed activities. The scale-up of activities can be accommodated in the context of the ongoing project implementation arrangements. 16. National level roles and responsibilities. Urban programs are inherently multi-sectoral and will also require continuous involvement of technical agencies. Therefore project will therefore aim to institutionalize this coordination through a high-level National Steering Committee (NSC), comprising the Permanent Secretaries, Director Generals and City Manager of the Ministry of Infrastructure, the Ministry of Local Government, the Ministry of Finance and Economic Planning, the Ministry of Environment, the Rwanda Water Resources Board, the Ministry of Emergency Management, the Local Administrative Entities Development Agency, REMA, and the CoK. The NSC will discuss policy and strategic issues related to urbanization, as well as review and approve annual work plans and provide high-level project oversight and policy coordination. Members of the NSC are expected to meet on a semiannual basis each year and as needed. 17. Project Technical Committee. The project will also form a Project Technical Committee (PTC), which will be comprised of the RUDP II project coordinators at the Ministry of Infrastructure, the Ministry of Local Government, REMA, and the CoK, as well as representatives from the Rwanda Revenue Authority, the Ministry of Infrastructure, Rwanda Transport Development Authority, Rwanda Housing Authority, Water and Sanitation Corporation, the Ministry of Local Government, the Local Administrative Entities Development Agency, the Ministry of Environment, REMA, Rwanda Water Resources Board, Meteo Rwanda and the Rwanda Land Management and Use Authority. The PTC will provide technical advisory support to project implementing agencies, contractors and consultants (through the implementing agencies) and review implementation progress on a periodic basis. The PTC is expected to meet on a quarterly basis each year and .as needed. CONTACT POINT World Bank Abebaw Alemayehu Senior Urban Development Specialist Hisham Mohammed Salih Osman Mohammed Environmental Engineer Dec 06, 2021 Page 8 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) Sheila W. Kamunyori Senior Urban Development Specialist Borrower/Client/Recipient Republic of Rwanda Gerald Mugabe External Finance Specialist gerald.mugabe@minecofin.gov.rw Implementing Agencies Ministry of Infrastructure Patricie Uwase Permanent Secretary patricie.uwase@mininfra.gov.rw Local Administrative Entities Development Agency Claudine Nyinawagaga Director General claudine.nyinawagaga@loda.gov.rw Rwanda Environmental Management Authority Juliet Kabera Director General jkabera@rema.gov.rw City Administration of Kigali Pudence Rubingisa Mayor mayor@kigalicity.gov.rw Rusizi District Ephrem Kayumba Mayor mayor@rusizi.gov.rw Nyagatare District David Claudian Mushabe Mayor nyagataremayor@nyagatare.gov.rw Huye District Ange Sebutege Mayor Dec 06, 2021 Page 9 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) mayor@huye.gov.rw Musanze District Jeannine Nuwumuremyi Mayor mayor@musanze.gov.rw Muhanga District Jacqueline Kayitare Mayor mayor@muhanga.gov.rw Rubavu District Gilbert Habyarimana Mayor mayor@rubavu.gov.rw FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Abebaw Alemayehu Task Team Leader(s): Hisham Mohammed Salih Osman Mohammed Sheila W. Kamunyori Approved By Practice Manager/Manager: Country Director: Rolande Simone Pryce 07-Feb-2022 Dec 06, 2021 Page 10 of 11 The World Bank Additional Financing for Second Rwanda Urban Development Project (P177247) Dec 06, 2021 Page 11 of 11