Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) Report Number : ICRR0020199 1. Project Data Project ID Project Name P084002 CM-Urban and Water D. SIL (FY07) Country Practice Area(Lead) Additional Financing Cameroon Water P121027,P121027 L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IDA-43130,IDA-48200 31-Aug-2012 111,700,000.00 Bank Approval Date Closing Date (Actual) 29-May-2007 31-Aug-2015 IBRD/IDA (USD) Grants (USD) Original Commitment 108,700,000.00 0.00 Revised Commitment 90,437,006.46 0.00 Actual 90,855,911.76 0.00 Sector(s) General water, sanitation and flood protection sector(84%):Sub-national government administration(5%):Other social services(5%):Central government administration(4%):Urban Transport(2%) Theme(s) City-wide Infrastructure and Service Delivery(33%):Urban services and housing for the poor(33%):Municipal governance and institution building(17%):Other Private Sector Development(17%) Prepared by Reviewed by ICR Review Coordinator Group Ranga Rajan Krishnamani Fernando Manibog Christopher David Nelson IEGSD (Unit 4) 2. Project Objectives and Components a. Objectives The project development objective as stated in the Financing Agreement (Schedule 1, page 5) and in the Project Appraisal Document (PAD, page 5) was: "To increase access of the urban population, particularly those living in low-income settlements, to basic infrastructure and services, including water supply." The PAD adds: To achieve this objective, the project will (i) assist the various stakeholders of urban development in the preparation and Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) implementation of tools and investments designed to increase access to services to as large a number of beneficiaries as possible; and (ii) support and facilitate the implementation of the Public-Private Partnership (PPP) in the provision of urban water services. b. Were the project objectives/key associated outcome targets revised during implementation? No c. Components Component 1. Capacity Building and support to decentralization. Appraisal estimate US$ 3.50 million. Revised estimate US$4.50 million. Actual cost US$5.99 million. This component aimed at strengthening the urban management capacity in the cities of Barmenda, Douala, Maroua, Mbalmayo and Yaounde. Activities in this component included capacity building, completing a national urban strategy, and developing management tools and planning instruments such as, a national urban database and city development contracts. Component 2. Infrastructure works in low-income settlements. Appraisal estimate US$36.39 million. Revised estimate US$51.04 million. Actual cost US$48.43 million. This component aimed at upgrading infrastructure in low-income settlements in the cities mentioned above. Activities in this component included investing in small infrastructure works (primarily roads and drainage), constructing and repairing social facilities (such as classrooms or health centers), and capacity-building for local governments in the areas of procurement and financial management. Component 3. Support to the implementation of Public-Private Partnerships (PPP) in the provision of urban water services. Appraisal estimate US$40.31 million. Revised estimate US$43.71 million. Actual cost US$34.65 million. Activities in this component included developing the regulatory framework and tools, technical assistance and capacity-building to the Ministry of Water and Energy (MINEE in French), tariff restructuring and water sanitation studies, strengthening of the Cameroon Water Utilities Corporation’s (Camwater) financial management system, and capacity-building (in the areas of project and financial management, environmental and social safeguards), and public information and communication activities. Component 4. Project Management. Appraisal estimate US$2.55 million. Revised estimate US$3.65 million. Actual cost US$5.18 million. Activities in this component provided project implementation support. d. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost. Appraisal estimate (including costs of physical and price contingencies) US$82.75 million. Revised estimate US$102.90 million. Actual cost US$94.25 million. Actual cost was lower than estimate as some water sector activities were dropped. Project Financing. The project was financed by an IDA grant. The appraisal estimate was US$80.00 million. Additional Financing of US$28.70 million was approved on September 2010. With this, the total grant for the project was US$108.70 million. US$16.80 million was cancelled. The amount disbursed at closure was US$90.02 million. There was financing from the Global Partnership for Output- Based Aid (GPOBA). The appraisal estimate was US$10.00 million, the revised estimate was US$5.25 million, and the actual amount disbursed was US$1.82 million. There was parallel financing for complementary urban water sector activities from the European Investment Bank (EIB), the Exim Bank of China and the French bilateral assistance. Borrower Contribution. The appraisal estimate was US$2.00 million, the revised estimate was US$5.75 million, and the actual contribution was US$2.41 million. Dates. The project was restructured three times. The first restructuring was on September 28, 2000. Additional Financing was approved for three reasons: (i) scale up urban infrastructure and services activities; (2) cover the cost overruns associated with the technical assistance activities to Camwater; and (3) extend the project closing date by two years. The second restructuring was on May 25, 2014. There were delays associated with implementing some water sector activities and as these activities could not be completed in due time, they were cancelled. The third restructuring was on September 19, 2014. The project closing date was extended by an additional year for completing ongoing activities. The project closed three years behind schedule on August 31, 2015. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) 3. Relevance of Objectives & Design a. Relevance of Objectives At appraisal, over 50% of Cameroon’s population was living in urban areas and the urban population was growing at the rate of 6% per annum as compared to the population growth of 2.9% in the country as a whole. Given that the urban infrastructure stock was almost the same as it was at the end of 1980’s while urban population more than doubled, nearly 70% of the urban population had no access to public utilities and services. The lack of access was particularly severe in the low-income settlements spread in urban areas. Alongside this, there were issues with the financial viability of the national urban water utility – Cameroon National Water Authority (SNEC in French). The Project Development Objective (PDO) was aligned with the agenda identified in the Government’s Second Poverty Reduction Strategy (PRS) issued in 2009, which identified the goal of reducing poverty through improving service delivery and spurring private-sector led growth. In the years before appraisal in 2005, a presidential decree was passed which outlined a new PPP model supporting urban sector reform that involved a public asset holding company and private operators to manage water supply services. The PDO was relevant to the Government’s Growth and Employment Strategy, issued in 2009 for the 2010-2020 period, which aimed at boosting growth and reducing poverty and transforming Cameroon to a upper middle-income country. The PDO was also central to achieving two targets of the United Nation's (UN) Millennium Development Goals (MDG) namely, improving access to water and sanitation services to increased proportion of the population (Target 10) and achieving significant improvement in the lives of slum dwellers (Target 11). The PDO continues to be relevant to the Bank strategy for Cameroon. At appraisal, the project supported three outcome clusters in the Bank’s Interim Strategy Note (ISN) – supporting infrastructure and urban development, fostering private sector development, and strengthening governance, anti-corruption and public finance management. The PDO was aligned with the Africa Action Plan approved by the Bank in 2005, which highlighted the need for increasing infrastructure investments, promoting Public-Private Partnership (PPP), and strengthening local government accountability. The PDO also contributed to Pillar Two, Outcome Nine of the Country Assistance Strategy (CAS) for the 2010- 2013 period, later extended until 2015, which targeted improved access to basic infrastructure, including transportation, sanitary conditions (drainage) and water supply in urban areas. The ongoing Systematic Country Diagnostic for Cameroon, which was to form the basis for the CPS for the 2016-2020 period, highlighted the low quality of service delivery and access to water as constraints to poverty reduction and acknowledged urban development as a source of economic growth. Rating Substantial b. Relevance of Design The project design balanced infrastructure development, institutional strengthening, and capacity-building to address sector reforms together with tangible progress on improving service delivery. The statement of PDO and the results framework were well defined. The causal links between the project activities, their outputs and the intended outcomes was logical. The intended outcomes were measurable. The outputs associated with Component Two activities aimed at upgrading infrastructure (such as construction of roads, drainage and social facilities) in conjunction with the outputs of Components One and Three activities (aimed at strengthening the urban management capacity in the five cities and implementing PPP in the provision of urban water services), can be expected to contribute to the intended outcome of increasing access of the urban population, particularly those living in low-income settlements to basic infrastructure and services, including water supply. Rating Substantial 4. Achievement of Objectives (Efficacy) PHREVISEDTBL Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) Objective 1 Objective To increase access of the urban population, particularly those living in low-income settlements, to basic infrastructure and services, including water supply. Rationale Outputs The following output achievements reached or exceeded their original targets. • The National Urban strategy was prepared and endorsed by the government. • Six city development contracts (municipal management tools) were completed and technical assistance was provided (in the areas of restructuring of public finances, designing taxpayer identification, financial management and archiving systems). • Training was provided to municipal staff, staff in the ministries of urban planning and decentralization and local community agents and a communication strategy was designed as targeted. • 63.2 kilometers (Kms) of non- rural roads (trunk roads connecting the targeted settlements with other areas of the cities) were rehabilitated. This exceeded both the original and revised targets of 33km and 41 km respectively. • 108.5 km of drainage works were rehabilitated in target areas. This exceeded both the original and revised targets of 37 km and 49 km respectively. • 368.9 km of water supply networks were rehabilitated in in target areas. This significantly exceeded the target of 200 km. However, the following outputs had shortcomings vis-à-vis their targets. • 82 community water points were rehabilitated at project closure, as compared to the original and revised targets of 3,800 and 1,200 respectively. • 35,411 social connections were made as compared to the target of 70,000. • 136,267 new piped household water connections were provided as compared to the target of 235,000. • Although the urban database was created for collection, storing and monitoring of urban data, it was not operational at project closure. • One study (Housing Policy Study) was completed as compared to the target of five. Outcomes The following outcome achievements reached or exceeded targets. • Over 435,000 people had all year access to urban roads in the targeted settlements. This exceeded the original and revised targets of 290,000 and 390,000 respectively. • Over 565,000 people had access to drainage facilities in low-income settlements at project closure. This exceeded the original and revised targets of 290,000 and 390,000 respectively. • Over 318,500 man days of local jobs were created during implementation. • 8,996,071 persons (of which 54% were women) directly benefited from project activities as compared to the target of 8,590,000. However, the following outcome achievements had shortcomings vis-à-vis the targets and reform goals. • As a result of the project, 378,710 people were provided with access to water supply services. This represented 51% of the target. Additional information provided by the region indicated that the project in collaboration with activities financed by other donors, contributed to more than 1.6 million people getting access to water supply through investment in new connections. • The ICR provides discussion of the project’s performance vis-à-vis the PPP and sector reforms, which were designed to be an important instrument to achieve the PDO is not very clear. Additional information provided by the region indicated that Bank's financing vis-à-vis the larger PPP scheme had significant leveraging effect from other donors ( while contributing to only 5% of the project activity, the social connections provided under the project accounted for 26% of the new connections and this expanded access to piped water supply) and the indirect benefits of the project's distribution network expansion - of different sizes such that more customers could be reached - could have contributed to connecting more households and increasing access to piped water services in the project area. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) While the project's contribution to the construction of roads and drainage was rated as High given that the outcomes were either realized or surpassed, given that it is difficult to gauge the extent to which the Bank contributed to the outcome in activities pertaining to water supply services, social connections, new piped connections, community water points, PPP and sector reforms, the Bank's contribution to these activities were rated as Modest. Efficacy is rated as Substantial overall. Rating Substantial 5. Efficiency Economic analysis. A Cost-Benefit Analysis (CBA) was conducted for the urban road component of the project using the same methodology both at appraisal and at closure. This component accounted for approximately 51% of the total project cost. Benefits was assumed to come from improved mobility in the targeted cities and costs included investment and maintenance costs. The methodology did not take into account other socio-economic benefits from urban roads. The Net Present Value (NPV) at 12% discount rate at closure was 1,309 FCFA, as compared to the NPV of 1,539 FCFA at appraisal. The ex post Economic Internal Rate of Return (EIRR) was 44% as compared to the ex- ante EIRR of 39%. The ex post NPV was lower than the appraisal estimate as actual investment costs were higher than planned. An ex post CBA was conducted for urban drainage works and implementation of the PPP partnership in urban water services in the targeted cities. These components accounted for approximately 37% of the total project cost. The costs in both cases included investment and maintenance costs. Benefits from drainage works were assumed to come from reduction in water borne diseases (malaria and diarrhea). The EIRR ranged widely between the five cities due to differences in the size and types of drainage systems and the population of the cities. The average EIRR for drainage works using a 12% discount rate was 18.6%. The economic benefits in the case of urban water services were assumed to come from incremental water consumption and savings from the rehabilitation program. The NPV was estimated at about US$20 million and the EIRR was marginal at 12.2%. Operational and administrative issues. There were operational and administrative shortcomings. The project became effective in April 2008, 11 months approval. The disbursement condition for water component was met only in February 2009. There were delays associated with implementing the urban component and social safeguards. The delays associated with the implementation of the PPP program resulted in cancellation of 57% of the Additional Financing. Some water sector activities were dropped. There were time overruns with the project closing three years behind schedule. Efficiency Rating Modest a. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 51.00 Appraisal  39.00 Not Applicable 51.00 ICR Estimate  44.00 Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) 6. Outcome The relevance of the project's development objective and its design were both rated as Substantial. Efficacy was rated as Substantial. Outcomes relating to roads and drainage investments were rated as High given that all outcomes were either realized or surpassed. Outcomes pertaining to water supply services, social connections, new piped connections, community water points, PPP and sector reforms were rated as Modest, given that it is difficult to ascertain the extent to which this project contributed to the outcomes. Efficiency was rated as Modest as there were significant administrative and operational inefficiencies. The overall project outcome is rated as Moderately Satisfactory. a. Outcome Rating Moderately Satisfactory 7. Rationale for Risk to Development Outcome Rating Government Commitment and Ownership. There is high risk that the government may not remain committed to water sector reforms in the urban sector. Although the urban database was set up, it was not fully operational at project closure. It is also not clear whether the municipalities have the required capacities either to replicate these types of urban investments or make the budget plans required for investing and maintaining the urban works. PPP arrangements are also in doubt, as some investments in the water sector have not been completed. a. Risk to Development Outcome Rating High 8. Assessment of Bank Performance a. Quality-at-Entry The project was prepared based on the lessons from prior Bank financed projects in Cameroon (Douala Infrastructure Project, Community Development Program Support Project, and Public-Private Partnership for Growth Project and Poverty Reduction Project) and from lessons from PPP models in urban water services in West Africa in general, and from the successful models implemented in the neighboring countries of Cote d’Ivoire, Senegal and Niger in particular. Several risks were identified at appraisal, including High risks associated with the lack of technical capacity at the municipal level and financial sustainability risks associated with the Government’s commitment to approve timely tariff increases. Mitigation measures were incorporated at preparation and the overall project risk was rated as High. Appropriate measures were taken at preparation for Monitoring and Evaluation (M&E is discussed in section 10) and for addressing safeguards and fiduciary issues (discussed in section 11). The Bank overestimated the Government’s commitment to sector reforms (discussed in section 9a) and underestimated capacity constraints, which delayed the pace of implementation and disbursements. Quality-at-Entry Rating Moderately Satisfactory b. Quality of supervision Fifteen Implementation Status Reports (ISRs) were filed over an eight-year implementation period. There were four Team Leaders (TTLs) over eight years. The ICR however provides no reasons for this relatively quick succession of TTLs or whether this in any was detrimental to project implementation. In terms of skills mix, the team included both urban and water specialists and procurement, financial management and social safeguards specialists, which were located in country office. This aided in providing expert support on special issues to the Ministry of Public Procurement, the Ministry in charge of land issues and decentralization, and the Prime Minister’s Office. The team was proactive in addressing issues, and facilitated the process of seeking approval for Additional Financing, extension of the implementation period and cancellation of part of the grant so as to focus on activities that could be realistically achieved. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) Quality of Supervision Rating Moderately Satisfactory Overall Bank Performance Rating Moderately Satisfactory 9. Assessment of Borrower Performance a. Government Performance The Government did not comply with its financial and sector obligations referred to in the Loan Agreement. This contributed to limited performance of most activities aimed at PPP arrangements in urban water sector activities. The Government secured sufficient funding to cover the cost of the compensations owed to people affected by the project and strengthened its support to the Project Coordination Unit and municipalities. This aided in speeding up compensation payments to project affected people, although the process of compensation was not complete at closure (discussed in section 11). Government Performance Rating Moderately Unsatisfactory b. Implementing Agency Performance The Project Coordination Unit (PCU) established within the Ministry of Housing and Urban Development (MINHDU in French) was in overall charge of implementing the project and coordinating with local governments. Camwater Water Utilities Corporation was responsible for arrangements in accordance with the concessions contract for the PPP component of the project. The PCU within MINHDU was in overall charge of implementing the project and coordinating with local governments, key stakeholders and Camwater, which was responsible for the PPP component of the project. The PCU was committed to the success of the project and worked well with the Bank, which aided in project implementation. Implementing Agency Performance Rating Moderately Satisfactory Overall Borrower Performance Rating Moderately Satisfactory 10. M&E Design, Implementation, & Utilization a. M&E Design The key outcome indicators – the number of people with access to all season roads, improved sanitary conditions and access to water services in the targeted areas – were appropriate. The PCU was responsible for collecting data related to the urban components including from municipal budgets, and for overall consolidation and reporting. Camwater was responsible for reporting on the "access to water supply" indicator. The lack of operational and financial performance indicators for at design for Camwater was a significant shortcoming. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) b. M&E Implementation The outcome indicators were revised and the Bank’s core indicators ("people benefiting from appropriate drainage and direct project beneficiaries, of which female") were added during implementation. The PCU developed a dashboard for monitoring progress in each target city through regular field visits and also developed a methodology to measure the number of beneficiaries from investments in roads and drainage. c. M&E Utilization The indicators were used to measure project performance, for tracking progress on target 10 ("sustained increase in access to water and sanitation services to an increased proportion of population") and target 11 ("significant improvement in the lives of slum dwellers") of the UN’s MDGs. M&E Quality Rating Modest 11. Other Issues a. Safeguards The project was classified as a “Category B” project. Two safeguard policies were triggered: Environmental Assessment (OP/BP 4.01): Involuntary Resettlement ((OP/BP 4.12). An Environmental and Social Management Framework (ESMF) and a Resettlement Policy Framework (RPF) were prepared and publicly disclosed as required during project preparation. During implementation, although the implementing agency had updated the Resettlement Action Plan (RAP) following approval of Additional Financing, the agency had not prepared RAP in areas where infrastructure works had affected fractions of urban plots. There were delays associated with providing compensation to 585 people affected by the project due to the administrative formalities. Counterpart funding that was provided by the project speeded payment of compensation in the final years of the project. The Task Team Leader clarified that 95% compensation has been made to date. b. Fiduciary Compliance Financial Management. The ICR (page 11) notes that although there were delays associated with submission of interim financial audits and the 2008 financial audit was qualified, these were rectified during implementation and the final financial statements and audit reports were to be submitted at the end of February 2016. It is not clear if they have been submitted to date. Procurement. The ICR (page 10) notes that although there were delays in the initial years, both the implementing agencies performed procurement activities in accordance with Bank standards. c. Unintended impacts (Positive or Negative) --- d. Other --- Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) 12. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Moderately Satisfactory Moderately Satisfactory --- Risk to Development Outcome High High --- Bank Performance Moderately Satisfactory Moderately Satisfactory --- Borrower Performance Moderately Satisfactory Moderately Satisfactory --- Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate. 13. Lessons The following main lessons were drawn from this project's implementation experience: 1 Obstacles to handling land acquisition and compensation (in accordance with national regulations and safeguard provisions) can jeopardize infrastructure programs. Early in project preparation, adequate environmental and social screenings should assess the scope of potential land acquisition and compensation in project areas. Implementing units should develop and use customized tools to monitor all transactions. In the case of this project, the institutional framework governing land acquisition and compensation involved several administrative steps, including a Presdential Decree clearing the list of Project Affected People (PAP) that took months to be issued. This led to delays in payment of compensation to PAP. 2 Sound and clear institutional and implementing arrangements strengthen project ownership, especially when the project covers more than one sector. A PPP structure also involves various entities, including outside the sector. To address complexity, project design should include an action plan clearly defining responsibilities at all stages of implementation and the coordination mechanisms between implementing units and other stakeholders. 3 Water sector reforms can be a long-term process that needs a conducive environment and clear incentives for all partners to perform. In the case of this project, appropriate mechanisms were missing to ensure that the Government would implement its sector commitments; moreover, successive technical assistance support was not fully effective to strengthen Camwater’s capacity in long-term sector development, asset management, and control of operations in a relatively short time frame. 14. Assessment Recommended? No 15. Comments on Quality of ICR The ICR is well written and provides a good description of the lessons learnt from implementing the project. It also candidly discusses the problems associated with payment of compensation to project affected people. The ICR however says very little on the PPP arrangements and reforms. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CM-Urban and Water D. SIL (FY07)(P084002) a. Quality of ICR Rating Substantial