Document of The World Bank FOR OFFICIAL USE ONLY /-tV L32'-UaN/ Repor No. 7488-UNI STAFF APPRAISAL REPORT FEDERAL REPUBLIC OF N-GERIA OYO STATE ;JRBAN PROJECT APRIL 12, 1990 Infrastructure Operations Division Western Africa Department This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. 4 A CIURUDCY PQUIVALENTS Currency Unit * Naira US$1.C0 - 37.50 N1.00 - USS0.1333 WIGHTS AAD HASURZS Metric Syt *m - SI Units ABBREVIATIONS AND ACRONYMS ADB - African Development Bank- CBN - Central Bank of Nigeria CMB - Continental Merchant Bank CIP - Community Improvement Program DLIA - Department of Local Government, EPC - Environmental Protection Commission FMBN - Federal Merchant Bank of Nigeria FMFED - Federal Ministry of Finance and Economic Development FGN - Federal Government of Nigeria FMWH - Federal Ministry of Works and Housing GOJ - Government of Japan ICON - ICON Merchant Bank IDF - Infrastructure Development Fund IMB - International Merchant Bank IHG - Ibadan Municipal Government IMPA - Ibadan Metropolitan Planning Authority LG - Local Government LGA(s) - Local Government Authority(ies) LGC - Local Government Council LPA - Local Planning Authority MFEP - Ministry of Finance and Economic Planning MLHS - Ministry of Lands, Housing and Surveys MWT - Ministry of Works and Transport NAL - NAL Merchant Bank NICON - National lInsurance Corporation of Nige a NISER - Nigerian Institute for Social and !conomic Research NMB - Nigerian Merchant Bank OYSG - Oyo State Government PCU - Project Coordination Unit PFI(s) Participating Financial Intermediary(ies) SOE - Statement of gxpenditure TPS - Town Plan!ing Section WCoB - Water Corporation of Oyo State Notet LG, LGA, and LGC are used interchangeably. FISCAL YEAR \ January 1 - December 31 FOR OFFICIAL USE ONLY FEDERAL REPUBLIC OF NIGERIA OYO STATE URBAN PROJECT (IDF II) STAFF APPRAISAL REPORT TABLE OF CONTENTS LOAN AND PROJECT SUMKARY . . . . . . . ... . . . . . . . . . . J I. PROJECT BACKGROUND . . . . . . . . . . . . . . . . . . . . . . 1 A. Macroeconomic Setting .. .................. 1 B. Urbanization and Demographic Trends . .. . 1 C. Oyo State. . . . . . . . . . . . . . . . . . . . . . . 2 D. Institutional Framework ... . . . . . . . . .... 3 E. Project Origin . . . . ...... .. . . . . .. 4 F. Rationale for Bank Involvement . . . . . . . . . . . . . 5 G. Bank Sector Strategy ................ . . 6 II. THE PROJECT . . . . . . . . . . .. . . . . . 7 A. Project Objectives . . . . ... . . . 7 B. Project Description . . . . . . . . . . . 7 C. Project Costs and Financing Plan . . . . . . . . . . . . 9 III. PROJECT IMPLEENTATION. 11 A. Institutional Arrangements . . . . . . . . . . . . . . . 11 B. Procurement . . ... . . . 17 C. Disbursement . . .. . . . . . 18 D. Accounting and Auditing . . . . . . . . . . . . . . . . 19 1II. FINANCIAL AND ECONOMIC ANALYSS . . . . . . . . . . . . . . . 20 A. Merchant Bank Organization, Finances and Performance . . . . ..... ..... 20 B. State and Local Government Finances . . . . . . . . . . . 23 C. Project Benefits .......... . . . . . . . .. 25 D. Economic Analysis . . . . . .... 26 E. Poverty Impact. . . ..... . 26 F. Project Risks . . . . . . . . . . . . . . . 27 G. Environmental Impact .......... ....... 27 This repozt is based on the findings of an appraisal mission in June/July 1988 by Mr. H. Unger (Mission Leader), Mrs. A. Artaza, Messrs. J. Bahal, H. Ueno (AF4IN), C. Banes, J. Cracknell, B. diZitti, and P. Sandersorn (Consultants). Mr. T. Pankaj (AF4IN) provided support for the economic analysis, and Mr. G. Faillace (RMN) was responsible for the merchant banks appraisal. The report was typed by Mrs. Annette Williams, Miss Earnestine Binns and Mrs. Maria Victoria Montes. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. V. AGRIAMENTS AND ASSURANCES REACURD AND IECOIEEND&TION 28 A. Agreements and Assurances ......... . . . . . 28 B. Conditions of Loan Effectiveness . . . . . . . . . . . . 29 C. Conditions of Disbur¶ements . . . .. . . . . . . . . . 29 D. Recommendation . . . . . . . . . . . . . . . . . . . . . 29 ASlXS 1-1 Selected Local Government Towns 1-2 IDF Policy Framework, and Guidelines for Merchant Bank Participation and Project Selection 2-1 Detailed Description of Storm Drainage and Solid Waste Components 2-2 Detailed Description of Traffic and Transport Component 2-3 Detailed Description of Community Improvement Program .-4 Detailed Description of Local Government Towns Component 2-5 Detailed Cost Tables 3-1 Procurement Arrangements 3-2 Disbursement Schedule 3-3 Implementation Arrangements 3-4 Implementation Schedule 3-5 Organizational Structure of EPC 4-1 Organization, Finance and Performance of Participating Financial Intermediaries 4-2 Credit Guidelines and Functions of Participating Financial Intermediaries 4-3 State and Local Government Finances 4-4 Economic Analysis and Poverty Impact 5-1 Documents in the Project File MAPS IBRD No. 21145: Community Improvement Areas in Ibadan and Oyo State Towns IBRD No. 21146: Metropolitan Ibadan and Locations of Major Project Components FEDERAL REPUBLIC oF NIGniAT OYO STATE URBAN PROJECT (ID II) LOAN AND PROJECT SIMIARY Borrower: Federal Government of Nigeria beneficiaries: Oyo State Government Federal Ministry of Works and Housing ParticipAting financial intermediaries Local Governments in Oyo State Auount: US$50.0 million equivalent Term3t Twenty years, including a five-year grace period, at the Bank's standard variable interest rate Qalending Teorms The Federai Government of Nigeria (FGN) would onlend US$31.7 million to Oyo State Government (OYSG) at the Bank's interest rate. For the Local Government line of credit FGN --ould onlend US$17.5 million to eligible participating Nigerian financial intermediaries (PFIs) at the Bank's standard variable interest rate. The PFIs would relend Bank loan proceeds to OYSG at interest rates to be negotiated between OYSG and PFIs for onlending by OYSG to Ibadan Municipal Government (IMG) and selected local governments (LGs). Thze loans from the PFIs would be for a period of seven to fifteen years with a two to three year grace period. OYSG as the main beneficiary of these portions of the loan would bear the foreign exchange risk. US$0.8 million of the Bank loan proceeds would be provided to the Federal Ministry of Works and Housing (FMWH) for technical assistance and training. Project Description: The main objectives of the project are to promote the efficient functioning of Ibadan and Oyo State's other major towns through city-wide infrastructure rehabilitation, and through strengthening the institutions responsible for urban management and local resource mobilization. The project would con-sist of: (a) infrastructure rehabilitation in Ibaaan: flood control program through channelization and maintenance of major storm drains; improved solid waste management; and integrated community improvement programs in three pilot areas; (b) infrastructure improvements in selected LG towns and other LG centers; (c) revenue enhancement and institutional strengthening: technical assistance, training and equipment to Oyo State and local governments to help plan and implement improved financial management - ii - systems and enhanced revenue generation, particularly property taxation, and to strengthen their capacities to plan, implement, matnage, operate and maintain urban infrastructure and services; and (d) support to the FMWH for coordinating and monitoring project implementation. The project would continue the application of the Infrastructure Development Fund (IDF) mechanism for funding urban infrastructure investments, and eligible PFIs would, in addition tc onlending the loan funds for the LG line of credit, finance 10 of the project costs and be responsible for the preparation, appraisal and supervision of the infrastructure improvement sub-projects in selected LG towns of Oyo State. Project Benefits and Risks: Benefits under the project are expected froms (a) more efficient allocation of limited financial resources and mobilization of additional funds; (b) more appropriate and better coordinated urban development, planning and management systems and practices; (c) improved urban infrastructure and services enhancing prospects for industrial investments and employment in Oyo State's major towns; and (d) reduction of flood damage to lives and property, increased property values, and improved sanitation and environmental conditions, particularly benefitting the urban poor. Continued involvement of Nigerian financial intermediaries through the operation of the IDF mechanism vould provide an opportunity fer PFIs to consolidate and further develop their experience and expertise in urban infrastructure lending. One of the main risks of the project is the potential difficulty in obtaining the inter-agency coordination which will be necessary for efficient project implementation. This risk has been minimized through the establishment of an interministerial committee, and by the clear definition and delineation of responsibilities as well as by training and technical assistance for the key implementation -gencies. Another risk is the possible political reluctance to fully implement the proposed resource mobilization measures in the face of public unwillingness. This risk will be reduced by ensuring that improvements in tax management, billing and collection will be preceded by visible improvements to infrastructure and service delivery so as to increase the public's willingness to pay. There is a further risk of political interference with PFIs. The risk of - iii - political interference in the credit decisions of PFIs has been minimized by the selection of merchant banks with strong management and technical capabililty. Economic Rate of Return: Flood control, storm drainage and community improvements in Ibadan - 222 Naps: IBRD Nos. 21145 and 21146 :~~~~I _ iv - Estimated Project qosts: a/ Local b/ Foreign Total …--- -(USS millions)…----------- Infrastructure Rehabilitation (Ibadan) 6.5 22.1 28.6 LG Towns and Sub-projects 3.2 13.9 17.1 Revenue Enhancement and Institutional Strengthening 1.3 6.2 7.5 FHWH Support 0.1 0.6 0.7 Total Base Cost 11.1 42.9 54.0 Physical Contingencies 1.4 5.4 6.8 Price Contingencies 2.6 5.4 8.0 Total Project Costs 15.1 53.7 68.8 Financing Plan: Oyo State Government 3.0 2.0 5.0 Local Governments 1.5 1.0 2.5 Financial Intermediaries 7.6 - 7.6 Cofinancing (GOJ Grant) - 3.7 3.7 Bank 3.0 47.0 50.0 Total 15.1 53.7 68.8 a/ Totals may not add because of rounding b/ Include taxes and duties estimated at US$1.1 million equivalent Estimated IBRD Disbursementes: IBRD Fiscal Years 1991 1992 1993 1994 1995 1996 --- USS Millions ------------ Annual 5.0 13.6 12.0 9.5 5.9 4.0 Cumulative 5.0 18.6 30.6 40.1 46.0 50.0 FMDERAL RIPUBLIC OF NIGIRIA OYO STATE URBAN PROJECT (IDF II) I. PROJECT BACKGROUND A. Macroeconomic Setting 1.01 Nigeria has responded to the sharp drop in its foreign exchange earnings which coincided with mushrooming debt service requirements, by embarking on a bold structural adjustment program aimed at correcting macroeconomic distortions and curtailing public and private sector expenditures. This has entailed exchange rate adjustments, price adjustments (particularly of food and cash crops), trade liberalization measures and sweeping cuts in Government spending, particularly capital investments. While these measures have contributed to restoring fiscal discipline and international confidence in Nigeria, they were achieved at considerable financial and social cost, particularly affecting Lhe urban poor. The diminished public sector investments in infrastructure and urban services have also led to further deterioration of systems upon which much economic activity depends. The rehabilitation and maintenance of urban infrastructure and utility systems with high economic returns, as well as measures that mitigate the social cost of adjustment, particularly among the poor, are now of the utmost priority. B. Urbanization and Demographic Trends 1.02 In 1988, Nigeria's urban population was estimated at over 30 million, or more than 30? of the national population. The rapid urban growth rate of about 71 p.a. during the 1970s has slowed somewhat as a result of the economic downturn of the 19808 and changes in the urban-rural terms of trade. Despite the recent dampening of the rate of growth, however, no foreseeable circumstances will reverse the continuing increase in urban population. 1.03 Existing urban infrastructure and utility systems are characterized by a large backlog of unmet needs and by financial and institutional constraints. Investments made in urban areas in the past decade have not kept pace with growth, and were often poorly selected and executed. Maintenance of all assets was neglected, leading to their rapid deterioration and need for costly reconstruction. The anticipated urban population growth (4 to 5? per annum) will add to the unmet needs, further hampering the development of industrial, commercial and other productive sectors of the economy located in the cities. 1.04 In spite of their problems, Nigerian cities account for a high proportion of the national value added and are important production, service and administrative centers. They also absorb a large proportion of new entrants into the labor market, particularly in the informal sector, and account for a considerable portion of the non-petroleum tax base. The environment for private sector businesses, already impaired by infrastructural deficiencies, will be further eroded unless steps are taken to adequately maintain and rehabilitate existing infrastructure and provide for future growth. 1 -2 C. Oyo State 1.05 Oyo State, with a 1988 populatioh of over 10 million, of which some 60Z live in urban areas, is the most urbanized stite in Nigeria, with the exception of Lagos. The towns in Oyo State, many of which pre-date colonial times, are primarily trading and service centers although a significant proportion (between 25Z and 351) of their inhabitants are still direct:-, engaged in agricultural activities. This is a result of the traditional Yoruba tribal settlement patterns, which favored farming village agglomerations over dispersed farmhouses, and these close urban/rural links persist to this day. Indeed, compounds in the larger towns were allocated on the basis of geographical origin, and a town's older core area generally still reflects its residents' agricultural hinterland and holdings. 1.06 The towns of Oyo are linked in a well-established, hierarchical and specialized urban system. At the apex is the State Capital Ibadan, which grew from a military camp early in the nineteenth century. Spread mainly across the southern and eastern portions of Oyo State is a second tier of major local commercial and market centers with fairly substantial populations (300,000 to 600,000), some of which pre-date Ibadan (e.g. Ile-Ife, Ilesa), while others grew as a result of their strategic location along modern communications and transportation routes (e.g. Osogbo - rall, Ogbomoso - road). A degree of specialization has developed among these cities, with Ile-Ife noted as a center for higher education and trade, (in addition to its traditional claim as the cradle of Yoruba civilization), Ogbomoso as a medical and relioLous center, and Osogbo more recently as an industrial center (steel rolliig mills). However, the towns, with their older, densely-populated urban core areas (which resemble overgrown villages, surrounded by haphazard newer developments) lack any organizing structure, planning and basic services, and are not geared to meet the modern demands of industry for infrastructure streams, systems, communications and services. Indeed, they are characterized by inadequate, unreltable and inefficient utility and service systems, that greatly add to the r,ost of production and business generally. Roads are rutted and full of potholes, drains non-existent, housing stock in poor condition, water supplies either unreliable or non-existent, while public finances are limited and local institutions weak. Detailed descriptions of the conditions in Oyo State's major towns are presented in Annex 1-1. 1.07 Ibadan Metropolitan Area. Ibadan, the second largest city in Nigeria, with an estimated population of about 3 million, is the major commercial, industrial, educational and administrative center in the highly urbanized, densely-populated southwestern region of the country (see IBRD Map No. 21146). The provision of basic services and infrastructure, particularly to the poor, has lagged behind the city's rapid growth (about 5X per annum). Past neglect of the local revenue base and of operations and maintenance of assets has led to deteriorated infrastructure, costly and inefficient services and scarce financial resources. Generally poor service delivery has, in turn, made it difficult for government snd utility agencies to institute appropriate cost recovery mechanisms. To aggravate the situation further, the absence of a comprehensive planning and investment framework as well as weak development control has encouraged unplanned, uncontrolled and extensive urban sprawl which has made it difficult to improve access and services to the newly developed areas. The past lack of any environmental planning or enforcement of protection measures is causing increasing deterioration of the urban environments encroachment and erosion of essential watersheds, flooding, silting and pollution of surface streams, illegal waste disposal and unsanitary refuse dumps. 1.08 Ibadan has traditionally been an important commercial, production and distribution center. It was for many years the capital of the then Western Region (1952 to 1976). However, relative to the size of its population, the modern industrial sector is smaller than that of Kano, Port Harcourt or Kaduna. Lack of infrastructure and urban services, which add significantly to the cost of private sector business activities, has stifled industrial investment. There is, therefore, an urgert need to establish an effective planning and investment framework while simultaneously addressing past deficiencies and mobilizing financial resources for preventive infrastructure maintenance and rehabilitation. D. Institutional Framework 1.09 Federal, state and local governments share responsibility for the urban areas. The federal government, through Federal Ministry of Works and Housing (FMWH), is responsible for setting and coordinating overall urban development and shelter policy. Federal ministries, parastatals and corporations are also responsible for major transportation links and factlities (federal roads, railways, ports, airports, etc.) between and within major towns. River Basin Development Authorities are responsible for the control, planring and development of water resources on a regional basis. 1.10 Responsibility for the management of urban areas is shared between state and local governments (LGs). Delineation of responsibility and authority between the two levels of government in the past has not always followed constitutional provisions or the demands of operational efficiency. The responsibilities and tasks entrusted to LGs under the constitution had often been taken over by the state, because of LGs' limited human and financial resources and a weak political base. As a result, the state government, either directly or through parastatals, is responsible for physical and development planning, land allocation and taxation, land use control, water supply and sanitation, road and drainage networks aud many social services such as health and higher education. LGs, in practice, provide and maintain markets, motor parks, minor roads, some solid waste collection, primary education (shared with state and federal governments), primary health care and some community facilities. The LG elections in December 1987, the federal government review of LG functions, roles and responsibilities, larger financial resources and reforms in the conditions of services, are among a number of recent developments, paving the way for a greater role by LG in managing municipal Affairs. Reaffirmlng this trend the President on October 1, 1988 granted greater autonomy to LGs by passing the LGs' share of the federal statutory allocations directly to LGs and by abolishing all state ministries of LGs and replacing them with departments in the Governors" offices. -4- E. Proiect Origin 1.11 Bonk involvement in the urban sector in Nigeria has evolved considerably since it began in 1977 at the request of the federal government'. Four projects have either been completed or are being implemented. The First Urban Development Project (Loan 1767-UNI, completed June 30, 1986) focused on shelter issues, and aimed at strengthening the management of the Federal Mortgage Bank of Nigeria (FMBN) while demonstrating low-cost methods of shelter provision and cost recovery on a pilot basis in Bauchi State. The Second Urban Development Project (Loan 2607-UNI, approved July 1985), similarly: focused on site-specific infrastructure and shelter issues in Imo State. Shese projects and the experience 8ained by the federal governaent, have influenced recent changes in shelter policy and the adoption of the sites and services concept as part of Nigeria's low-income housing policy. 1.12 The issues of city-wide infrastructure and urban fiinance began to be addressed under the Lagos Solid Waste and Sto=m Drainage Project (Loan 2620-UNI, approved September 1985) and during preparation of urban development feasibility studies in Benue, Ondo and Gongola States, which were later incorporated into the Infrastructure Development Fund (IDF) Project. The.,need for coordinated and integrated city-wide improvements to infrastructure and its maintenance was recognized both as a way to halt deteriorating urban living conditions and as a prerequisite for improved financial resource mobilization. The need for a sustainable mechanism'for funding urban investments also became increasingly apparent and, following sector work by the Bank and a broad discussion of the institutional and financial options, the Federal Executive Council approved the Infrastructure Development Fund concept in principle in June 1985. The decision to license several of Nigeria's merchant banks to operate the Fund as well aseco-finance eligible priority infrastructure investments, represented a major policy breakthrough by facilitating greater private sector participation in the financing of urban infrastructure. The IDF project (Loan 2925-UNI) -which was approved by the Board in March 1988, employs participating merchant banks (five have been licensed so far) to identify, prepare, appraise and supervise urban infrastructure projects in the Nigerian states, in addition to providing cofinancing funds (raised in the local capital markets) and financial advisory services, The benefits of this approach are the experience merchant banks gain in the urban infrastructure sector, the opportunity they have to familiarize themselves with state and LG constraints and capabilities, and the fiscal discipline and prudence they intioduce into public finance. Operation of the IDF mechanism is An accordance with the IDF Policy Framework and Guidelines for Merchant Bank Participation and Project Selection (Annex 1-2). 1.13 The proposed Oyo State Urban Project (IDF II) evolved from an urban priorities study by the Bank in 1984, when Ibadan was found to be in greatest need, after Lagos, of extensive infrastructure improvements among Nigeria's major cities. An integrated city-wide infrastructure improvement approach with an esehasis on rehabilitation and maintenance was deemed the most cost effective Investment strategy which would improve service delivery and thus justify enhanced cost recovery and generate increased tax revenues, especially at the local level. 1.14 The scope of the urban problems in Ibadan was of such magnitude as to varrant a distinct project, using the IDF mechanism adapted as needed to reflect recent developments and experience in Nigeria. In view of the size and complexity of Ibadan's infrastructure investment needs and given the still limited experience of merchant bank staff to appraise such a project, the Bank played a leading role in guiding the preparation and appraisal of the project as well as in the coordination of donor assistance. Following identification and early preparation work by the Bank for a major water supply component to address the most critical need, the state government and the African Development Bank (ADB) in November 1987 agreed to finance a US$45 million equivalent emergency water rehabilitation project, including design studies, for future water system expansions in Ibadan. Implementation of this emergency project is progressing well and substantial improvements to Ibadan's water supply are expected to be realized in the near future. 1.15 Bank preparation work subsequently had concentrated on storm drainage and solid waste management, and in November 1987 the state and federal governments proposed to also include in the project some of Oyo's other major urban centers chosen on the basis of development potential, needs, size, and regional balance. It was, therefore, agreed to include in the project funds for financing eligible priority infrastructure improvements, institutional strengthening and revenue enhancement measures in major towns and local government centers which met sub-project selection criteria according to the IDF project selection guidelines. At the same time, it was recognized that inadequate provision had been made in state and local government budgets for preventive maintenance of existing infrastructure. 1.16 A major road rehabilitation (involving about 30 km of arterials) and traffic management component in Ibadan had also been identified and was being prepared for inclusion in the project. However, following project appraisal FGN, OYSG and Bank decided that, since all the proposed road improvements affected Federal roads, the financing of these works should be the responsibility of FGN. It was further agreed that, the Highway Sector Loan (Loan 2963-UNI), approved by the Board in June 1988, would be the most suitable source of funding, and that the respective units within FMWH will cooperate to assure good coordination of road rehabilitation works and other urban infrastructure improvements in Ibadan. F. Rationale for Bank Involvement 1.17 The Bank has been approached by the Oyo State and the federal governments for assistance in financing an urban rehabilitation and development project in the second most urbanized state in Nigeria. The Bank is uniquely equipped to respond to this request given its extensive experience in similar projects in the sector, especially through the Infrastructure Development Fund (ID?) Project (para 1.12). In view of the severity of the State's investment needs in the major towns, and the lack of alternative financing, the participation of the World Bank is appropriate. The Bank's -6- participation will encourage fiscal prudence and discipline by the state and local governments and act as a catalyst for financial participation by other institutions, particul&rly Nigerian banks. 1.18 The project's emphasis on rehabilitation and maintenance of infrastructure assets fits into the country's short-term development strategy, while improved service delivery will be of particular significance to the urban poor. The project's other focus on longer-term institutional development and revenue enhancement, particularly at the local government level, will lay the foundation for stronger, more financially autonomous and self-sustaining local governments in the future. G. Bank Sector Strategy 1.19 The Bank's sectoral lending strategy focuses on the promotion of fiscal self-sufficiency at the state level and a more efficient, equitable and sustainable delivery of urban services. Improved financial performance will enhance the states' ability to raise the necessary capital to finance future urban infrastructure needs without undue recourse to public transfers. The greater efficiency of urban areas achieved through a better urban planning and management system will not only improve the living conditions of a sizeable portion of the country's population, but is essential to strengthening the country's productive base. In the current financial and economic context, characterized by severe resource constraints, the Bank's lending strategy, which has evolved from the lessons of past and ongoing projects, focuses on support for a wholesale mechanism (ID?) for preparing and funding priority investments with high returns, particularly on the rehabilitation and maintenance of existing assets. 1.20 The IDF approach combines institution-building for project preparation, along with incentives for states and municipal authorities to strengthen financial performance. It relies on the merchant banks, which in Nigeria represent a concentration of management, marketing, and financial expertise, to prepare, appraise, finance, and supervise urban projects and sub-projects. It is consistent with the Bank's overall financial sector strategy in Nigeria. That strategy combines support for the macroeconomic reforms that underpin efficient financial policies with specific support for financial reform, focussed on banking supervision and regulation, systemic solvency, and the instruments of monetary control. These issues are to be addressed in the proposed Budgetary and Financial Policy Loan, later this year. 1.21 A long-term sector financial and urban objective is to develop a market for state and municipal bonds through which a significant portion of the infrastructure programs of states and local authorities can be financed. In order to attain this objective, the capital market must develop confidence in state investment projects, and develop the capacity to appraise these projects. The states, in turn, must establish their creditworthiness and demonstrate the ability to prepare high priority infrastructure programs, within their financial and managerial capacity, and in balance with other state investment needs. The IDF approach will contribute to the achievement of these objectives, by enhancing the ability of state and municipal authorities--and domestic financial institutions--to prepare projects for financing through local bond markets. II. THE PROJECT A. Project Objectives 2.01 The main objectives of the project are tot (a) strengthen the financial, operational and management capacity of the institutions responsible for urban management and services at the state and LG levels; (b) improve strategic urban planning, investment programming, budgeting and coordination; (c) introduce appropriate cost recovery mechanisms and mobilize financial resources at the state and LG levels; and (d) remove major city-wide infrastructure and service constraints, thereby promoting the efficient functioning of Ibadan and Oyo State's other major urban areas as regional development and service centers, with emphasis on maintenance and rehabilitation of existing assets, as well as improved investment planning and management. B. Project Description 2.02 The project was designed to respond to the urgent need to break the vicious circle of financial and institutional constraints limiting the allocations for maintenance and infrastructure investments, and leading to inadequate urban services which, in turn, severely limit the scope for cost recovery and sustainability. The project would therefore finance: (a) priority infrastructure rehabilitation and maintenance in Ibadan; (b) a line of credit for priority investments in Oyo State's other major towns and LG centers; and (c) measures to enhance revenues and strengthen institutions involved in the urban sector. Detailed descriptions of the major project components are presented in Annexes 2-1 to 2-4. 2.03 Ibadan Infrastructure Rehabilitation. In Ibadan the project would include the following components: (i) storm drainage and flood control, involving channelization of about 14.5 km priority sections of major flood- prone urban streams, replacement of undersized bridges and culverts, essential drain maintenance equipment (excavators, loaders and trucks), and funds for dredging and rehabilitating 50 km of additional drains; (ii) solid waste management, providing 40 skip collection trucks, 300 Nos. 8 m3 skips, 6 transfer haulage trucks and 15 Nos. 60 m3 trailers, a 4000 ton/day refuse transfer station with attached central offices and workshop, development of a 150 ha new sanitary landfill site including a 3.5 km long access road, and heavy equipment for landfill operations; (iii) environmental rehabilitation - 8 - involving the reclamation of the existing 20 ha refuse dump site, and erosion restoration and control works on about 50 ha of eroding slopes (Annex 2-1); (iv) a spare parts credit facility for private minibus owners and assistance to the Vehicle Inspection Office (VIO) (Annex 2-2), and (v) a community improvement program (CIP) in three pilot areas covering some 140 ha and benefitting about 66,000 people with improved roads, footpaths, draina, water supply, waste disposal, power supply and street lighting, as well as telephone and community facilities (Annex 2-3). The CIP would also include the development of two resettlement areas comprising a total of 150 plots with basic services for about 150 families displaced by the drain channelization and the CIP. Locations and details of the project components are shown on IBRD Maps No. 21145 and 21146. 2.04 Selected LG Towns and other LG centers. The line of credit for the towns of Ile-Ife, Ilesa, Ogbomoso, Osogbo, Oyo and Saki as well as other eligible LG centers would financet (i) the preparation _f structure plans, infrastructure development plans and investment programs; (ii) priority works of city-wide infrastructure rehabilitation and integrated CIPs; and (iii) institutional support measures to strengthen revenue generation and municipal management particularly the planning and maintenance functions of LGs (Annex 2-4). 2.05 Revenue Enhancement and Institutional Strengthening. The project would provide training, technical assistanae and supporting equipment for all institutions involved in planning, implementation and management of urban infrastructure and services as follows: (t) Project Coordination Unit (PCU) within the Oyo State Ministry of Finance and Economic Planning (MFEP) through short- and long-term technical assistance, staff training, funds for public education and information; (ii) Internal Revenue Department of MFEP through training support, equipment and vehicles, and technical assistance; (iii) Department of Local Government (DLG) through coordination and training for tenement rating and valuation, and assistance for LG development; (iv) Ibadan Municipal Government (IMG) by, firstly funding the tenement valuation exercise including external key staff, specialist technical assistance, training, equipment and vehicles necessary for introducing the enhanced tenement taxation system, and secondly financing operational technical assistance and training in administration, maintenance planning and financial management in the context of the municipal partnership with the City of Gothenburg; (v) Ministry of Lands Housing and Surveys (MLHS) by financing the production of digitized 1:1000 maps of Ibadan (using aerial photography from ADB-financed emergency water project) including the necessary equipment, training and technical assistance and by financing the preparation of structure and investment plans for Ibadan and other towns; (vi) Environmental Protection Commission (EPC) through drainage maintenance assistance, operational assistance to solid waste management (including promotion and rationalization of private sector involvement in refuse collection), and technical assistance training and studies to support the Environmental Management Unit; and (vii) Ministry of Works and Transport (MWT) through technical assistance and training for transport and traffic planning, and for maintenance operations. -9- 2.06 FMWH Support. Support would also be provided to FMWH to enable them to perform their policy guidance and monitoring role. Provision would be made for: (i) staff training in project selection, approval and supervision; (ii) training and study funds for post-evaluation of urban infrastructure projects; (iii) consultant services to undertake regular project performance audits; (iv) study funds to prepare other state projects; and (v) vehicles and equipment to support project activities. C. Project Costs and Financing Plan 2.07 The total cost of the project is estimated at US$68.8 million equivalent and the foreign exchange component is estimated at US$53.7 million equivalent which is 78Z of project costs. Base costs were estimated in June 1988 and have been updated to January 1989 and converted into US dollars at US$1.00 to M7.50. Physical contingencies have been calculated at 15Z of base costs for works, and lor for equipment and services. Price contingencies for the foreign exchange component have been estimated on the basis of international inflation rates (import weighted MUV index for Nigeria) projected at 7.7 percent in 1989, -1.2 percent in 1990, 1.4 percent in 1991, 1.7 percent in 1992, 3.3 percent in 1993 and 5.3 percent annually from 1994 to 1996. Price contingencies for the local cost component have been estimated using local inflation rates assumed to be 25 percent for 1989 and 10 percent annually for 1990 to 1996. 2.08 Financing Plan. A Bank loan of US$50.0 million equivalent and cofinancing of approximately US$3.7 million equivalent would finance US$50.7 million of the foreign exchange cost of the project and US$3.0 million equivalent of local costs. The balance of US$3.0 million of foreign costs would be financed by OYSG and the LGs. US$31.7 million would be used to finance the Bank-appraised Ibadan project components and US$17.5 million equivalent would be provided to finance sub-projects in selected LG towns to be appraised by the participating financial intermediaries (PFIs) (the LG line of credit); US$0.8 million would be provided as support to FMWH. The PFIs selected by Oyo State Government (OYSG) would finance 10 percent of the project costs and OYSG and participating LGs would contribute the balance %approximaLely 1jZ an counterpart funding. OYSG will be responsible for the Ibadan Infrastructure Rehabilitation components (except the CIP) and the Revenue Enhancement and Institutional Strengthening; IMG and other participating LGs would be responsible for the CIP and for improvements financed out of the LG line of credit. 2.09 The cofinancing is being provided by the Government of Japan (GOJ) which, under an agreement executed on July 31, 1989 between the Bank and GOJ will provide Japanese Yen 494.5 million equivalent on a grant basis to finance selected studies and technical assistance elements of the project. A Japanese Grant Agreement between the Bank and Federal Government of Nigeria (FGN) covers the application of the grant facility. NIGERIA OVO STATE tM PIIOJECT (iDF 11) Stmry Cost Tb* s/ (Uin Cost * of Jmar. 1969) Percntg local Foreign Total Local Foroip 1 of ar Cost A. I3fraetxturo Rehab Iitation (lbadn) (S$ 'ODD) (oire '000) Stom Drel_sg A Flood Control brais Chaol "Ietic 3,214 9,46 12,060 24,10, 70,.9 906.09 231 DOrals shabi Iitatioa 269 177 1,065 1,943 S,Jt 7.771 2X Malatmuac Ee,iput de lA9 1.149 L17 9,0in 5,15 2% Solid i_t Mamasmt Civil Sarka 63 1.660 2,06 4,032 11,62 16,M 41 Eml_t 23D 4,925 6,15 1,723 me,"? 5,61 105 ELWIlrmetal Ibabllitation 110 119 13 1.498 *0 2,J4 1% Pabilc Trimpot Asaistnoe U 455 605 401 S,416 &.N10 Caimity hVrovnt, Pregrm Mowel GM 1.151 1.746 4,239 5,966 13.095 31 Ydofte "03B 1,107 1.1I 4.70J ,7631 15,40D 31 A_. 7in 1.424 2,16 6.6325 10,70 3.212 4% SubtLotl 6,495 22,144 26,60 40. 36,017 214.,m$ 635 . Prierlit f _ d iL Smbprojects 1,.36 13.95 17,125 28,71 104,61 n 3,01 1 C. Nesom EmaAt a Inst.S"rentus. PrJect Cwdiamti.li 70 26 331 622 2,005 2,U1 I1 Ml*. efiFImas & Ec. Plan1 17 45U 63 Sri 8,246 l,2? ux itpotmFt of LJal Gs,ermmt PUtA) 6w 812 we 61 2,I3m 2,641 is Ib Din.icI,ia Oswerwt (EM) 466 1,35 I'M0 3,645 6,601 12,147 as 111.d Lda"Iq A SWV. * U6) 26 2,03 I'm 2,1U 10.57 21.7U, s EavSsm.t.l Protection, Camisoles (BC) 1 1,064 1,5 1,440 ,63 3,04 26 Misisty of UsbS s. Tromp. tIT) so 40 D 2,5 .05 1s Subtol 1,2f 6,2U1 1,40 0,0 40, ",1I0 143 O. F S*_rt 141 U1 1 1'M 4.010 6,65 Ax Total Projet Sass Cost 11,016 42.9, 64,00D U,06 65,002 405,061 ioOs bphyical Contlopmciei 1,421 6,M0 0.72 10,10 40,1w S0,D,6 13X Price toti. _ et 2,631 ,86M 16 @0,2W 161, 2.6 M,01 I5 lotal Project Coot 36,114 ",U4 65,73 143 ,51 631,611 e6Ju s/ C_ / n m - d d t rounding. a/ Cole._. / Rome _ y sot add dba to r.emding. - 11 - 2.10 On-lending Termss US$31.7 million of the Bank loan proceeds would be onlent by the FGN to OYSG at the standard variable Bank rate, for 20 years including 5 years, grace for the Bank-appraised components of the project; PFIs would act as administrators of loan funds and charge a negotiated fee therefor. For the sub-projects appraised by PPIs under the LG line of credit, FGN would onlend US$17.5 million equivalent to PFIs which in turn would relend Bank funds to the OYSG at a rate to be negotiated between OYSG and the PFIs for a period of seven to fifteen years with two to three years' grace period. The spread between the PFIs borrowing and onlending rates would reflect operating costs and the credit risk to be borne by the PFIs for the sub- projects appraised by them and would be comparable to the prevailing gross spread, administrative expenses and interest income/interest expense ratios. OYSG would bear the foreign exchange risk for all onlent Bank funds. PFIs would lend their own Naira funds to OYSG at local capital market rates and other terms to be agreed with OYSG. OYSG has already selected a PFI for the first phase (the Ibadan components) of the project and has reached agreement in principle on the PFI's role and the terms of their participation. 2.11 For the CIP and similar tertiary/minor infrastructure rehabilitation and improvement sub-projects for which LGs are directly responsible, OYSG will re-lend loan proceeds to IMG and other selected LG towns on the same terms and conditions as the loan funds borrowed from the PFIs. 2.12 Retroactive Financing: OYSG and FMWH are exploring suitable options for the interim funding of priority activities. The following items would be eligible for retroactive financing by the Bank: (i) preparation of detailed design and tender documents for the main physical components; (ii) investment studies and preliminary design for selected LG towns; (iii) first-stage development work at the landfill site; and (iv) preparatory training activities. Consultant selection and procurement would have to comply with Bank guidelines and procedures and the total amount retroactively financed would not exceed US$1.5 million equivalent. All these expenditures will be incurred after September 1, 1989 within 12 months of the expected date for signing. During negotiations agreement was reached on retroactive financing. III. PROJECT IMPLEMENTATION A. Institutional Arrangements 3.01 The Federal Ministry of Works and Housing (FMWH) would have the primary responsibility for the project at the federal level, administer the IDF Project Guidelines (see Annex 1-2), and hold semi-annual meetings with the (Federal Ministry of Finance and Economic Development (FMFED) and Central Bank of Nigeria (CEN) to review the general progress of the project. These three agencies would also meet annually to review the annual performance audit and the overall financial status of the project. To enable FMWH to perform its - 12 - functions, provision' would be made under the project for continued training of PMWH staff in the evaluation of infrastructure projects and programs, and for the procurpment of vehicles and equipment to support project activities. 3.02 The Federal Ministry of Finance and Economic Development (PMFlD) would assist FMWH to review the performance of the merchant banks and to formulate and implement changes to the IDF Policy Statement and IDF Project Guidelines that may be necessary to expedite project -plementation. During negotiations, assurances were obtained tha. FGN will adopt the IDF Policy Statement and IDP Project Guidelines for this project, will review them from time to time, and discuss proposed changos with the Bank. Agreement was reached during negotiations that PMYED will assist HMWH to monitor the performance of the PFIs. 3.03 The Central Dank of Nigeria (CBN) would open and operate an IDF Control Account (see paras. 3.05 and 3.26) in which it would record all transactions relating to Bank disbursements and merchant bank withdrawals from the line of credit, as well as merchant banks' payments of principal, interest and any other charges and fees connected with the line of credit. This control account would enable CBN to provide FHWH, FMFED and the Bank with timely date on the overall financial status of the project. CBN would also undertake regular monitoring of the banking aspects of the project, advise FPMWH on the financial performance of the merchant banks, and assist FMWH to formulate and implement any changes to the IDF Policy Statement and the IDF Project Guidelines deemed necessary. Agreement on these functions of CBN was reached at negotiations. 3.04 The Financial Intermediaries' Role. The financial intermediaries would continue to play the role they have under the IDF Project. They would be responsible for (i) supervising the implementation of the Ibadan project components jointly with World Bank staff; (ii) under the LG line of credit, assisting Oyo State in the preparation of the LG towns sub-projects and subsequently carrying out their appraisal and supervision; and (iii) opening and operating Special Accounts through which project funds for approved expenditures would be disbursed. They would also be responsible for financing 101 of all project costs and perform functions and provide services under terms and conditions as set out in the credit guidelines (Annex 4-2). The PFIs would present the LG towns sub-projects to be financed together with the agreed term and conditions to their Boards fo-, acceptance and approval. Maximum sub-loan amount for any one LG town would be US$2.5 million equivalent; sub-loans below US$1.0 million equivalent would be *free-limit sub-loans which would not require the prior approval of the Bank. Subsidiary Loan Agreements between FGN and PFIs, and Sub-loan Agreements between PPIs and Oyo State Government would be required. Draft Subsidiary Loan Agreements and Sub-loan Agreements have been prepared for the IDF Project; similar forms of agreements would be used for this project. 3.05 The financial intermediaries, as noted above, would appraise the LG towns sub-project on the basis of the IDF Guidelines previously agreed to by the Bank and the FGN. They woulds assist Oyo State in project preparation by providing financing; guide the preparation of terms of reference for studies - 13 - and the employment of consultants; process project disbursements; monitor procurement and accounting; and report annually to CBN, PMWH and the Bank on the physical and financial status of the project. They would also be required: to submit their own audited accounts to the Bank on an annual basis, together with any other documentation regarding the status of their portfolios that the Bank may reasonably requestg to liaise with CBN by providing sufficient documentation to enable CBN to operate the Control Account; and to liaise with FMWH in conducting the annual performance audits of the project (para. 3.01). Finally, the PFIs would bear the sub-loan credit risk, so they will be responsible for debt collection from Oyo State and sub-project loan repayment to FGN. Details of the P11. roles, functions and responsibilities are presented in the Credit Guidelines (Annex 4-2). Oro State Government's Role 3.06 The Oyo State Government (OYSG) would be responsible for: project coordination and implementation, including detailed designs, preparation of contract documents and awarding and administering contracts; maintaining project accounts; and commissioning independent project audits - all in accordance with the IDF Project Guidelines. Oyo State would also liaise with FMWH in conducting the annual performance audits of the project. Oyo State would negotiate a sub-loan agreement with interested PFIs and submit the LG towns sub-projects for PFI appraisal and financing. Together with the PFIs, OYSG will supervise and monitor LG sub-project implementation by LGs under the sub-project onlending agreements to be executed between OYSG and participating LG8. Local Governments' Role 3.07 The local governments in Ibadan and in each of the project towns, representing the third tier of government, would play a key role at the local level. They would closely work with their Town Planning Section (TPS) in identifying community noeds, formulating CIPs and local development plans. The LGs would propose sub-projects for financing under the LG line of credit and apply for sub-project financing from OYSG under onlending agreements to be executed with OYSG and administered by the PFIle. LGs would be responsible for 10 percent of sub-project costs and for the sub-project implementation. They would play a central role in the maintenance of tertiary infrastructure and provision of urban services for which they are constitutionally responsible, such as refuse collection and disposal, markets, motor parks and community facilities. They would benefit greatly from technical assistance and training programs designed to enhance their revenue base as well as their administrative and operational capabilities. Particular attention would be given by the TPS to the evaluation of environmental implications of sub- project proposals including resettlement functions for the LO towns and training would be provided for the TPS in this area. - 14 - Proiect CoordinatioA 3.08 The main responsibility for overall coordination at the state level would rest with the Project Coordination Unit (PCU) within the MFEP. The PCU, which has been established but not yet fully staffed, would be responsible for: coordinating and monitoring the activities of all project implementing agencies; convening inter-agency meetings; reporting to OYSG (through MFEP), FMWH and the Bank; obtaining and managing budgetary allocations for project preparation activities; assisting implementing agencies in selecting and recruiting key staff; assisting in selection of consultants, procurement of civil works and equipment, while ensuring compliance vith Bank guidelines and OYSG regulations; and setting up and maintaining project accounts and financial management systems. The OYSG Interministerial Committee which has so far guided and overseen project preparation, would continue its highly effective coordinating role as Project Monitoring and Implementation Committee. To ensure continuing effective project coordination, the appointment of a senior engineer and a senior accountant for the PCU would be a condition of loan effectiveness. Proiect Implementation 3.09 The project will be implemented by the agencies responsible for the various sector components (see Annex 3-3). In addition to MFEP, the primary responsibility for project implementation will be shared t- the EPC, MLHS, MWT and LGs as set out below. 3.10 Environmental Protection Commission (EPC). The EPC was recently established by OYSG to replace the Sewage and Refuse Matters Department. EPC comes directly under the Military Governor's office and would be responsible for the execution of the storm drainage/flood control, the solid waste management and environmental management components. With respect to storm drainage and flood control, EPC would be responsible for: routine maintenance of natural streams and secondary channels; design of channelization and rehabilitation works; construction supervision; and initiating and coordinating new projects. With respect to the solid waste management component, EPC would be responsible for: policy development; licencing, control, and supervision of private refuse collection contractors, and the continued prnmotion and rationalization of private sector involvement in refuse collection; refuse collection from towns' inner core areas and communal collection points, public buildings and facilities not couered by private contractors; planning; implementation, maintenance and operation of transfer stations, sanitary landfill sites and zonal workshops. EPC would also be responsible for: establishing and enforcing environmental standards statewide; environmental monitoring and control; preparation (by consultants) of an environmental assessment study; and priority environmental rehabilitation and protection measures such as reclaiming refuse landfill sites and rehabilitating severely eroded areas. 3.11 The EPC has only recently completed the definition of its organizational structure (see Annex 4-3), manpower and financial needs in relation to its extensive mandate. It is still short of suitably qualified - 15 - staff, rquipment and finance, and its operations would be strengthened through technical assistance, staff development, nw recruitment, and equipment support to be provided under the project. OYSG has prepared a draft edict with respect to the EPC including the organizational structure and key positions. 3.12 Ministry of Lands, Housing and Surveys (MLUS). The MLHS would be responsible for overall land management, planning and information systems aspects of the project. The Ministry would be responsible for the establishment and maintenance of the multi-purpose land-related information system, while the Survey Department would be responsible for the digitized mapping. The Town Planning Division would supervise and coordinate the work of local town planning sections, particularly in their preparation of structure plans and priority infrastructure investment programs. It would also be responsible for: review of planning and development control procedures and legislation; preparation and guidance in the implementation of regional development policies (in conjunction with MFEP); review of land and housing delivery systems and proposals for more effective town planning schemes and involvement by the private sector; formulation and implementation of an equitable compensation and resettlement policy; and ;rould assist EPC in the formulation of environmental management policies. 3.13 Ministry of Works and Transport (MWT). The MWT would be responsible for the preparation of the state transport planning and the state highway maintenance studies. MWT would also provide guidance and oversee (i) the spare parts credit scheme for private transport operators and (ii) the assistance to the Vehicle Inspection Office (Annex 2-2). 3.14 LG Town Planning Sections (TPS). The Tfr3 in Ibadan and in the LG towns would be responsible for both CIPs and improvements in planning, coordination and programming of urban investments in their jurisdictions. As such, they would be responsible for: preparation of structure plans and integrated infrastructure development plans; preparation of rolling infrastructure investment programs; liaison with all sectoral agencies involved in urban development activities to ensure coordinated development in accordance with the structure plans and infrastructure plans prenared; liaison with the private sector to encourage more involvement in residential and industrial development; preparation and implementation of CIPs (Annex 2-3), including socio-economic surveys, engineering surveys, establishment of Planning and Development Committees" and liaison with local community groups. 3.15 Ibadan Municipal Government (IMG) and other LGAs. The IMG would play a crucial role in the maintenance of minor access roads and drains constructed as part of Ibadan's community improvement program. In view of severe manpower constzaints and a weak financial resource base, IMG will be a primary focus of the institutional strengthening and revenue enhancement measures of the project. In addition to strengthening its operations and maintenance capabilities through a twinning arrangement, IMG would also benefit from extensive assistance through the prolect fort establisbment and maintenance of a multi-purpose land-related information system, including an updated property roll; and a value-based assessment of properties; setting and - 16 - effective collection of property taxes and licence fees (Annex 4-3, tart IV); planning, budgeting and monitoring of mnmicipal maintenance work; development and operation of markets, motor parks, car parks and collection of fees; improved administrative procedures nd financial management. The technical assistance and training in 1MG'. main operational areas (administration, financial management, maintenance and planning) would be provided by practitioners from the City of Gothenburg (Sweden) which has agreed to enter into an agreement on a municipal partnership (twinning) with IMG. 3.16 Project implementation will extend over a period of six years until June 30, 1996 with major civil works in lbadan completed within 4-5 years (Amuex 3-4). Infrastructure improvements in the LG towns would lag about two years. During negotiations, agreement was reached with OYSG that funds provided for the LG towns would have to be committed to viable sub-projects by the end of the third year after loan effectiveness, failing which the Bank would cancel uncommitted funds. 3.17 Status of Project Preparation. Following the initial slow progress of preparation, momentum had picked up considerably since early 1988 and preliminary design works and preparation of terms of reference for detailed engineering design and tender documents have been complfbted for the major components. OYSG has already invited consultants' proposals for the detailed design of the storm drainage works. With respect to the implementing agencies, the EPC has been established and key staff have participated fully in the final stages of project preparation. Communities in Ibadan as well as in the LG towns are being mobilized by the LG Councils and TPS staff and are participating fully in the preparation of the upgrading proposals and designs. The PCU, although not yet fully staffed, has been effective in coordinating project preparation and appraisal, and the Project Coordinator (appointed in April 1988) has already taken training in Bank procurement and disbursement procedures. Suitable sites for the two resettlement areas, the sanitary landfill and the solid waste office, workshop, transfer station have been identified at appraisal, and OYSG has already alloc&:ad the necessary land for these sites. Completion of the land acquisitions would be a condition of loan effectiveness. - 17 - B. Procurement 3.18 Procurement arrangements which are detailed in Annex 3-1 are uvmnarized as follows: ftocurewmt Nsthods ------- --- (US$ million) ----------- Internat. Local ICB LCB Shopping Shoppina Other Total Civil Works 23.3 19.4 42 8 (18.5) (14.7) (33.2) Equipment and Vehicles 8.2 1.4 0.7 0.5 10.7 (7.8) (1.2) (0.6) (0.5) (10.0) Design and Supervision 4.0 4.0 (1.5) (1.5) Studies 1.9 1.9 (1.0) (1.0) Technical Assistance 3.9 3.9 (1.5) (1.5) Training 1.8 1.8 (1.0) (1.0) Happing and Valuation 1.7 0.7 2.3 (1.6) (0.2) (1.8) Land and Compensation 1.3 1.3 (0.0) (0.0) Total 33.2 20.1 1.4 0.7 13.5 68.8 (27.8) (15.0) (1.2) (0.6) (5.5) (50.0) Note: Figures in parentheses are the respective amounts financed by IBRD. 3.19 Infrastructure improvements in seven or more towns with possibly several contracts for each town would involve at least 25 civil works contracts ranging from approximately US$100,000 to a maximum of US$5 million equivalent. The large civil works contracts totalling about US$18.5 million would be procured thrvugh ICB, and procurement of smaller civil works contracts of less tttan US$1.0 million each would be through local competitive bidding (LCB) u. to a maximum aggregate of about US$20 million equivalent. On the basis of current experience in Nigeria these contracts are too small and scattered to interest foreign contractors unless they are already established in Nigeria. In any case, foreign contractors would not be precluded from participation in LCB. There will be prequalification of contractors for all civil works contracts exceeding US$1.0 million equivalent. Oyo State procurement regulations have been reviewed during appraisal and generally comply with Bank guidelines. Assurances by OYSG were obtained that no selective tendering will be used and that contract awards would be made without negotiations to the lowest evaluated, responsive bidder. In addition, _ 18 - OYSG will be required to sutit the first LCB bidding document for civil works for prior review by the Bank, and standardized bidding documents will be agreed upon. Prior Bank review will also be required for any contract exceeding US$1.0 million equivalent, and the Bank would review smaller contracts by sampling prior to award. 3.20 Vehicles and equipment would, whenever feasible, be grouped to obtain packages of at least US$1.0 million equivalent to be of a size suitable for ICB in conformity with Bank procurement guidelines. For materials and equipment of less than US$300,000 equivalent per contract, local or international shopping up to a total of US$3.0 million would be permitted. A minimum of three quotations would be obtained from local suppliers, overseas suppliers or their local agents for specialized equipment, such as computers, where prompt servicing and repairs are considered to be essential. Staff of PFIs would be associated with Bank staff in monitoring procurement for the Ibadan components of the project. Following this familiarization period, which would be supplemented by suitable training, PFI staff would be responsible for procurement monitoring under the LG line of credit. 3.21 Consultant services for design and supervision, studies, technical assistance and training would be procured in accordatce with Bank guidelines for the use of consultants and in consultation with the PFIs. A substantial portion of design and supervision services are of a nature and scope to allow extensive use of Nigerian consultants and experts, and activities involving foreign firms and specialists would be linked with specific training programs for Nigerian staff. Training of local staff will also be fully integrated with the technical assistance assignments to assure the maximum transfer of expertise. C. Disbursement 3.22 As in the case of the IDF Project, assurances were obtained during negotiations that special accounts would be established for each PFI and that these special accounts would be established in foreign currency and operated on terms and conditions acceptable to the Bank. The PFIs would be entitled to periodic withdrawals from their respective special accounts as well as from the OYSG special account to finance eligible foreign exchange expenditures under the project. It was agreed that as conditions of disbursement, (a) a sub-loan would be made between OYSG and a PFI in accordance with agreed procedures and terms and conditions acceptable to the Bank; and (b) the PFI making the sub-loan agreement would have entered into a Subsidiary Loan Agreement with FGN. It was further agreed that the PFIs would undertake periodic audits and provide reports as the Bank may reasonably request. 3.23 At the time of project effectiveness, and upon receipt of duly authorized withdrawal applications, the Bank would make an initial deposit of US$0.5 million into each PFI special account and US$1.5 million in respect of Oyo State special account representing the equivalent of three months' expenditures. Replenishment of special accounts by the Benk would require submission to the Bank of full documentation or, in the case of smaller contracts, certified statements of expenditure (SOEs) for all eligible project - 19 - expenditures (para. 3.22) by the relevant PFI. Bank replenishment of the PlIs' Special Accounts will be geared to the rate of withdrawals and will be reviewed periodically. A special account in foreign currency would also be established for the FMWH with an initial deposit of US$.2 million. Replenishment of this special account by the Bank would require the submission to the Bank of full documentation or certified SOE's for smaller amounts for all eligible expenditures by FMWH. 3.24 PFI disbursements from their respective special accounts would be on the basis of architect's or engineer's certificates against approved contracts or, where appropriate, under Bank Procurement Guidelines against certified SOEs approved by the PCU on hehalf of OYSG. Full contract documentation would be required for all eligible expenditures except for contracts of less than US$50,000 equivalent. Where a PYI's existing disbursement documentation requirements are more extensive than those outlined above, these requirements way prevail. S0I, limits could be liberalized based on experience gained during project implementation. Detailed contract and disbursement documentation would be retained by the PFIs and made available for review by periodic Bank supervision missions. 3.25 The project will be substantially completed by December 31, 1995 and the loan fully disbursed by June 30, 1996. The estimated disbursement schedule shown in Annex 3-2 approximates the Nigerian profile for all sectors. Category allocations and percentages to be financed by the loan are as follows: Disbursements b, CateQories Category Amount Percentage Financed US$ million (1) Civil works 32J% 1001 of foreign experditures and 75X of local expenditures (2) Equipment & Vehicles 8.1 1001 of foreign and 752 of local expenditures (3) Consultants' services 4.6 1001 and training (4) Unallocated 5.3 Total 50.0 D. Accounting and Auditing 3.26 The PFIs would be required to provide the Bank with audited project accounts (including SOEs), as well as audited financial statements of the PFIs themselves, including details on arrears and structure of portfolios. In keeping with its responsibilities under the IDF Project, the FMWH would be - 20 - required to undertake an annual performance audit of the project. As in the case of the IDF Project, CBN would operate a Control Account for the project and report annually to FMPED, FMWH and the Bank on the PFIs' financial performance and the overall financial status of the project. The PFIs' audits, CBN's annual report and the project performance audit would be submitted to the Bank annually within six months of the close of each fiscal year. IV. FINANCIAL AND ICONOKIC ANALYSIS A. Merchant Bank Organization PFinances and Performance 4.01 The five PFIs (CMI, 1MB, NAL, NP and ICONT) already selected to participate under the ITF project would be eligible, in principle, to participate under the proposed project. The first foutr Banks have continued to demonstrate their financial strength and technical capacity. ICON has in the past demonstrated these attributes, but recently CBN's stringent measures to restrict credit expansion, including the dramatic withdrawal of Government and parastatal deposits from the banking system (Annex 4.1, para. 6) have revealed weaknesses in ICON's liquidity management and portfolio quality. Therefore ICON can continue to participate only if a more detailed assessment of ICON's recent financial sitatus, currently underway, confirms its continued financial strength. The other four Banks, however, have weathered well the recent liquidity squeeze, which attests to the quality of their management and policies. At the request of the PGN, additional banks are currently being appraised by the Bank, on the basis of the eligibility criteria established under the IDF. The five banks already selected (including ICON) account for about 70Z of the assets held by merchant banks in Nigeria, and three of these banks are associated with prominent international banks whose equity participation is between 30-40Z. Despite the fact that the Nigerian Government retains majority shareholding, the banks are relatively free of Government intervention, except for the appointment of managing directors. They operate on the basis of comercial criteria, and have a reputation of being among the most profitable and efficiently run organizations in Nigeria. The banks are generally well organized and competently staffed, with more than 5OX of their middle and upper level management holding master's degrees or equivalent qualifications in finance, accounting or marketing. On average, managers have had at least ten years of banking experience, and have been in their present posts for five years or more. Their operating procedures are generally sound and well documented. 4.02 These merchant banks are well versed in project lending, syndication and supervision, and possess considerable experience, particularly in the manufacturing, real estate and construction sectors in the various states of the federation. Their experience with direct state lending for urban projects, however, has been limited, and their staff are not well trained in municipal engineering matters or in the intricacies of state finances, revenue mobilization and institutional development. These deficiencies are being overcome through staff recruitment, training programs and utilization of - 21 - outside consultants under the ongoing IDF project. In addition, all the PFIs have created specialized project units staffed with qualified engineers and financial analysts and can recruit additional staff or consultants as required. The experience being gained now by the PPIs in the implementation of the IDF project--from initial discussions with states through to project identification and appraisal--and the fact that they participated in nearly all discussion during project appraisal, will greatly facilitate the PFIs' involvement in the proposed project. FGN and the Bank are satisfied with the initiative and approach the PFIs have displayed so far in implementing the IDF Project; the PFIs have matched their enthusiasm for this novel mechanism with the necessary technical competence, financial expertise and political skills. The proposed Health System Fund (HSF) Project, recently negotiated follows the same approach. Under that project the PFIs have again demonstrated their competence and have assisted the States in all phases of the preparation process. Sub-project states under both the IDF and the proposed HSF projects are benefitting greatly from the frequent advice. timely assistance and solid support they receive from their PFIs on all financial and management aspects of their sub-projects. Relationships of mutual trust are evolving not only between states and PFIs, but also between PFIs and FMWH (or the Federal Ministry of Health in the case of the HSF project). For both facilities, the corresponding federal ministries rely in part on She PFIs to generate interest and follow up on initial enquiries by the states. PFIs' Finances and Impact of Proiect 4.03 Total assets of the five PFIs have grown at an average annual rate of 45Z over the past eight years. The fastest growth took place in the 1981-82 period, during which the banks grew at an unprecedented annual rate of 782. During the 1986-1988 period, the PFIs grew at an annual rate of 45X; however in 1988, when restraints on credit growth were applied by the Government (Annex 4-1, para. 6), growth dropped to 211. The financial structure of the PFIs is characterized by relatively short-term deposits, with little medium- and long-term debt. In general, cash, receivables, short-term loans and advances, and other short-term assets accounted for well over 60? of total assets during 1984-1988. While limiting earnings, these assets have generally helped the banks through periods of tight liquidity such as the recent sudden withdrawal of Government deposits from the system. This liquidity is particularly important given that an average of 40S of their portfolio is in loans and advances with maturities of over three years, and given that over three-fourths of their total resources are represented by short term liabilities. (See Annex 4-1 for more details on the PFIs, Including the most recently audited financial statements and portfolio information). 4.04 Historically, the PFIs have maintained debt/equity ratios of roughly 22sl, which is on the high side for a medium to long term lending institution. Given the risk profile of their asset structure and the significant term transformation the PFIs continue to undertake, a higher level of capitalization is clearly desirable. With the exception of ICON, the PFIs have already taken steps to reduce their debt/equity ratios. The Bank with support from CBN would closely *nonitor the quality of the portfolio of the PFIs during implementation of the project. During negotiations, it was agreed - 22 - that CBN would review with the Bank annuallys (i) the financial performance of the PFIs with particular reference to their capital adequacy and their liquidity position; and (ii) where necessary, measures to improve the financial performance of the PFF1, provided that such measures are consistent with the overall credit and monetary policy objectives of the CBN. Continued PFI eligibility to participate in the IDF scheme would be determined on the basis of such performance reviews. As indicated in para. 4.01 above, such reviev of ICON's recent performance is already underway to establish its continued eligibility. 4.05 Detailed information on arrearages and the affected portfolio is regularly being supplied to the Bank on a confidential basis. Based on this data, it is generally concluded that some deterioration of the PF13' portfolio has taken place over the past few years. The recent measures taken by the Governnent portaining to the withdrawal of deposits has exacerbated the situation and brought to light some weaknesses in portfolio quality. The provisioning levels of the PFIs range from 7Z to 27? of the gross portfolios. About 12? of the gross portfolio (up from 9Z in 1986) is over 90 days in arrears. However, there are differencea between PFIs, with ICON showing a weaker portfolio quality. 4.06 The profitability of the PFFI has been high in the past in spite of the interest rate ceilings which did not distinguish adequately between real and nominal profits of banks. The PFIs managed to maintain a positive return on equity through commissions and other charges on loans and through the substantial interest free advances placed with banks by importers pending release of foreign exchange by CBN. Following the liberalization of interest rates in 1987, the PFIs have improved their real rate of return on equity. Nominal after tax rates of return on average equity during the 1981-89 period ranged from 182 to 66X. During 1988 after taz returns on equity ranged from 36? to 981 (but this latter figure reflected extraordinary profits due to revaluation of foreign assets). Thus, during 1988, the PFIs on the whole had positive rates of return in real terms. While no audited figures are available for 1989, some deterioration in their profitability seems to hive occurred. As a percent of average total assets, the gross spread (interest income less interest expense) shows narrow margins (1.8? to 3.9Z in the last year), but when other income is included, the margins increase significantly (4.9? to 7.0?). In general, administrative costs expressed as a percent of average total assets have been kept in the range of 1? to 2? which is very reasonable. During the periodic detailed reviews of the PFIs' financial situation, an assessment would need to be made to determine the degree to which profitability has been overstated due to underprovision for problem loans and other potential losses. 4.07 Projections of financial statements carried out for the five PFIs incorporating the ongoing IDP loan, and the proposed Oyo Urban Project (assuming an even distribution of the proposed line of credit to the priority towns amongst the PF1s), show that at no time would borrowing from IBRD exceed about 16? of outstanding liabilities. - 23 _ B. State and Local Government Finances Oyo State 4.08 Oyo State, like most States in Nigeria, receives over 80Z of its revenue from its share of the Federation account. The fluctuations in oil prices have tended to create serious financial problems for the State ad a result of decreased income from the Federation account. At the direction of the Federal Government, the State has set up a Stabilization Account,* since January 1988, and contributes 10? of its total revenue in order to offset the impact of fluctuations in statutory allocations. 4.09 Debt service was not a major problem before 1984, as internal loans were largely lmI.ted to long-term Federal Development Loan Stock at relatively low interest rates. External loans which were ma*Wy raised between 1980 and 1983 carried .% 3-5 year moratori@u but involved high Interest imtes and shawt repayment periods. The decline in the exchange rste of the Ni-ra against major international currencies has considerably increased the Ng ir cost of external debt servicSlg. The State's ability to meet its debt service obligation was further adversely affected by severe budgetary constraints. The total debt outstanding at the end of 1988 was about N3 billion (32.5 billion external and N0.5 billion internal). A rescheduling of the debt service, which is being contemplated by FGN, will give the State time to take appropriate measures to strengthen its financial position over the next few years. The internal measures that the State needs to take includet (i) improvement in the Internal Revenue mobilization and financial management; (ii) constant review and monitoring of user charges to ensure cost recovery; (iii) control on growth of recurrent and capital expenditure with much greater emphasis on rehabilitation and maintenance of infrastructure and priority projects with cost recovery potential; and (iv) rescheduling of debt to local banks and contractors over five years.. 4.10 The state government in 1989 has implemented a revised organizational structure of the Internal Revenue Department in line with the guidelines from the Federal Government which has already led to more effective use of existing resources (see chart on page 2 of Annex 4-3). The project will provide management support to the Internal Revenue Department in the form of transport equipment and staff training. In addition, the project will also provide audio-visual equipment and transport to the Civil Service Training School in order for it to run courses designed to enhance skills of all Internal Revenue staff. During the implementation period of the project, the Internal Revenue Department would draw up a staff training development plan covering all staff. The training courses would be developed jointly by the Civil Service Training School and the Internal Revenue Department. 4.11 Assurances were obtained from OYSG to improve overall ikternal revenue collection starting in 1990 by an average of five percent annually in real terms over a five year period. OYSG would propose specific measures for reaching this overall target, but would retain flexibility to modify their proposals in accordance with changes in tax rates and allowances as determined from time to time by PGN. No rare increases or new taxes are proposed, but - 24 - the Increases in internally generated revenue would be achieved through: (i) more assessments; (ii) improved billing and collection procedures; (iii) reduction of tax arrears; (iv) creation of an updated master tax file, and tv) frequent review of user charges to reach economic levels. During the first six months of 1989, OYSG intensified billing and collection efforts which resulted in a 21 percent increase in internally generated revenues over target levels. The projections in Annex 4-3 present a specific example of how the overall target could be reached by OYSG. Training, equipment and technical assistance would be provided under the project to support the implementation of the revenue enhancement measures. 4,12 There is a need to shift emphasis from new investment to rehabilitation of axisting infrastructure so that OYSG optimizes the returns on its a3aets. OYSG has set up an Infrastrtcture Hainterance and Rehabilitation Fund to ensure that maintenance takes priority over other expcidituris except those for sal*ries and wages. As a cousequence of this action, there would be less funding available from. OSGIc own resources for new investment, and OYSG has provided the Bank with a draft of its 1990-92 three year rolling development plan. 4.13 It is expected that with the above measures, the State government would realize a steadily growing current account surplus from 1988 to 1992 followed by a deficit for two years in 1993 and 1994, as a result of the full impact of the debt servicing burden at the end of the five-year assumed grace period on existing foreign debt. It would then again continue to realize steadily increasing surpluses. The project would have an overall positive impact on OYSG's finances because it will enable the State to carry out proper maintenance of all its infrastructure. In the absence of the project, the State's dependence on Federal allocations would increase thus putting it in a more uncertain position during times of falling Federal revenues. Details of State finances are presented in Annex 4-3. Local Governments 4.14 The LG Councils in Oyo State arn facing a difficult financial situation due to a narrow tax base, poor financial management, frequent late or non-receipt of their share of the Federation account and State revenues, and a heavy burden placed upon them to meet a significant part of the cost of primary education. In some cases, over 0S of the revenues were used to meet their share of the primary school teachers' salaries. 4.15 The LGs, hitherto in Nigeria, have played a very peripheral role in the development process, as most of the traditional LG functions have been performed by the State Governments. However, there is a renewed awareness of the importance of the local democratic institutions' key role in the local development process. Federal Government is now placing much greater emphasis on rural development and the role of LGs. In order to reduce the financial burden of primary education on LGs, the Federal Government in 1988 has decided to finance 65Z of the cost of primary school teachers' salaries and, in addition, to channel their share of the Federation account directly to the LGs rather than through the State Governments. This arrangement will lead to - 25 - significant lmproveuent in the financial position of municipal governments in Oyo State over the medium term. 4.16 LGs also need to enlarge their taz base and improve their financial management and revenue collection in particular. The latter would be addressed by improving staff skills for which provision would be made in the project. Increased revenue generation at the local LG level would best be achieved through the introduction of an anhanced"tenement rating system, and IMG conmmitment was given to its establishment in Ibadan. The Bank has been furnished with existing legislation on the tenement rating system. 4.17 Draft terms of reference for a State Rating Valuation Coordinator and for a Chief Rating Valuation Officer for IMG and presentation by IMG of outline proposals for achieving improved rate collection perforance comencing in 1990 have been prepared by OWSG and IM and were presented to the Bank. The public advertisements for the State Rating Valuation Coordinator and the IMG Chilef Rating Valuation Officer have been Issued. Once these two key posts have been filled, implementation of the enhanced tenemeat rating system by IMG would proceed with the recruitment of staff, acquisition of equipment and the engagement of private sector valuers to carry out the property valuations. Details of the present and the proposed saystems are described in Annex 4-3. C. Proiect Benefits 4.18 The project would have a significant physical/environmental, economic and social impact on Ibadan, the other major towns of Oyo State and their surrounding areas. Implementation of storm drainage and flood control measures will help prevent flood damage--a frequent occurrence--which affects infrastructure and property and results in loss of lives and economic activity. Furthermore, the servic roads to support the drainage system will provide greater ease of maintenance and improved access to neighborhood commtuities. 4.19 Implementation of the solid waste management component will improve sanitation and thus reduce health risks, reclaim lands from illegal dump sites and contribute to flood mitigation by keeping drainage channels clear. The spare parts credit scheme to private transport operators will assist to keep mass transit vehicles running in better and safer conditions thereby providing affordable urban transport to middle and lower income groups. 4.20 The CIP will directly enhance the living environment of three communities with a total population of about 66,000. The provision of basic infrastructure services and sanitation measures will be reflected in increased property and rental values. The LG towns rehabilitation will be evaluated by the selected PFIs and thus the specific benefits will be determined then, though they are expected to be similar to those discussed above, because the general nature and scope of the LG towns sub-projects will be similar to the Ibadan rehabilitation components, in particular the CIP. - 26 - D. Economic Analysis 4.21 A summary of the ecnnomic analysis of the appraised project components is presented in Annex 4-4. The P11. would be required to undertake the economic analy,ls of the LG towns sub-components following the criteria and methodological approaches established under the IDF project. 4.22 Quantifiable benefits were measured for each major component except for solid waste management where the least cost solution was applied. The total cost of the storm drainage and flood control, and the CIP components is 562 of the Ibadan rehabilitation component. The weighted average ERR is estimated at 222. Cost streams include calculations for civil works, equipment and machines, demolition and resettlement, engineering design and mnmagement, physical contingencies and provision for routine and periodic maintenance. Economle costs and benefits were expoce&sed in international border prices, in Ma dollars at January 1989 prices and at the current exchange rate An overview of the economic evaluation is given below. 4.23 Storm Drainage and P-lod Control. A study of past floods and resulting damage identified three levels of flood damage: (a) annual damage of about Ml million; (b) damage due to a 5-year flood of about N2.6 million, and (c) damage due to a 25 year flood of about 1540 million in 1989 prices. Benefit streams were calculated by taking the probabilities of the occurrence of this damage. The result shows an ERR of 24Z which is conservative as the physical damage is believed to be underestimated. If the benefits decrease by 2O2 the ERR becomes 152, and if the costs increase by 20? the ERR becomes 17?. 4.24 Community Improvement Program. Benefits were quantified on the basis of the more reliable property value approach rather than rental value. Based on a sample survey in the target and two comparable communities, property values would increase by 76? with the project resulting in an ERR of 24t. If the benefits decrease by 20?, the ERR is reduced to 15?, and if costs increase by 20? the EU is reduced to 17?. E. Poverty Impact 4.25 The urban poverty threshold was estimated at 1696 per capita per annum, as compared with N497 based on the Bank's definition of the threshold. The former is used in the project analysis (Annex 4-4). In Ibadan city the percentage of the poor is estimated at about 571; the share of the poor in the three communities to benefit from the CIP is estimated at 66?. 4.26 the project components have been targeted to improve areas least served by basic infrastructure and public services. These areas tend to coincide with a high concentration of lower incomv groups. The detailed poverty impact analysis shows that about 64? of the capital expenditures for the Ibadan infrastructure will benefit the poor. A similar percentage is expected for the LG towns component. - 27 , F. Proiect Risks - 4.27 The main risks of this project relate to the institutional and financial weaknesses of the State and Local Governments. The first problem, evidenced most strongly by lack of coordination and weak management, has begun to be-addressed already in the course of project preparation. The Interministerial Committee, established by OYvG for guiding the preparation and implementation of the project, has been evolving into an increasingly effective inter-agency coordinating body. Under the strong leadership and direction of the MFEP, responsibilities of State bodies and LG organizations have been clearly defined. Technical assistance and training under the project have been specifically designed to remedy the deficiencies in urban infrastructure management and development during project implementation. In addition, a municipal partnership arrangement ('twinning agreement') has been concloded between IMG and the City of Gothenburg, Sweden, to provide operationually more relevant support and training in municipal and financial management, planning and adainistration for Ibadan. 4.28 The risk of political reluctance to implement the resource mobilization measures in the face of public unwillingness or inability to pay will be minimized in two ways. No new taxes or levies will be introduced, but revenue increases will be achieved through Improved management, billing and collection of ezisting sources of revenues realistic targets which take ability to pay into account have been agreed on. Secondly, the introduction of intensified collection efforts will be timed in such a manner as to be preceded by tangible improvements in infrastructure and service delivery so as to enhance the population's willingness to pay. In addition, public information and education programs will precede and accompany the resource mobilization measures. There is the further risk of political interference with PFIs. The risk of political interference in the credit decisions of PFIs has been minimized by the selection of merchant banks with strong management and technical capability. G. Environmental Impact 4.29 The proposed project would lead to significant improvements and tangible benefits to-Ibadan's environment. The unsightly and hazardous refuse disposal sites would be rehabilitated, refuse collection improved and a new sanitary landfill site developed. An Environmental Management Department would be established witnin the EPC to develop statewide environmental policy and programs; establish and monitor standards; and undertake environmental improvement programs. The project would begin to address the severe erosion problems in Ibadan's hilly zones through-a pilot erosion control project, which would also reduce silting of stream beds and the incidence of flash- flooding. Througn an educational program the public would be sensitized to environmental issues and ways in which irreversible degradation can be avoided at the individual and cosunuity level. 4.30 About 150 residential structures in total would be affected by the drain widening and by the CIP in Agugu and Yemetu. Land has been identified adjacent to both these communities for the development of resettlement areas - 28 - where plots with basic infrastructure services would be provided for the affected families. The residents displaced by the drain construction would be accommodated at the Yemetu site which is close to their present community. Substantial efforts have been made during preparation and appraisal to mini-mize disruption and the number of families affected, and these efforts would be continued and intensified during detailed design and implementation. OYSG has formulated a draft compensation and resettlement policy which would avoid undue hardships without encouraging further illegal construction in other streams or road reserves; OYSG would also prepare a resettlement plan dealing with credit and material assistance, re-establishment of employment, community facilities and other implementation details. OYSG has already allocated land suitable for a resettlement zone. Completion of land acquisition for the resettlement areas would be a condition of loan effectiveness. V. AGRE4ETS AND ASS ES EACHED AND RCO,MMUTION A. Agreements and Assurances 5.01 Agreements and assurances were reached on the following at negotiations: (a) expenditures incurred by OYSG after September 1, 1989, for design, studies, landfill site development and preparatory training activities would be eligible for retroactive financing not to exceed US$1.5 million equivalent (para. 2.12); (b) FGN would, through FMWH, FMFED, CBN and the PFIs implement the project in accordance with the IDF Policy Statement and the IDF Project Guidelines and following the procedures previously established and agreed to by FGN for the IDF Project (paras. 3.02, 3.03, and 4.04, Annex 1-2); (c) funds provided for the LG line of credit would be committed by thu end of the third year from loan effectiveness failing which the Bank would cancel the uncommitted funds (para. 3.16); (d) procurement, disbursement, monitoring, accounting, auditing and reporting requirements (paras. 3.19, 3.22, 3.26); (e) OYSG would undertake to achieve, starting in 1990, agreed overall internal revenue targets (para. 4.11); (f) IMG's commitment to the introduction of an enhanced tenement rating system in Ibadan (para. 4.16). B. Conditions of Loan Effectiveness 5.02 Conditions of loan effectiveness are: - 29 - (a) appointment by OYSG of a senior engineer and a senior accountant to the PCU (para. 3.08); and (b) completion of land acquisition for resettlement areas, sanitary landfill site and site for central offices, workshop, refuse transfer station (paras. 3.17 and 4.30). C. Conditions of Disbursements 5.03 Conditions of loan disbursement in reopect of the line of credit component are: (a) execution of a sub-loan between OYSG and a PFI in accordance with agreed procedures and terme and conditions (par&. 3.22); and (b) the PFI mAking the sub-loan would have entered into a Subsidiary Loan Agreement with the Borrower (para. 3.22). D. Recommendation 5.04 On the basis of the above agreements and conditions, the proposed project would be suitable for an IBRD loan of US$50.0 million at the prevailing terms and conditions. AF4IN April 12, 1990 - 30 - ANNEX 1-1 Page 1 of 7 nRaL UPULIC oF NIGz4u OYO STAT MI, PROJECT (IDF II) SELECTED LOCAL GOVuMNY TOWIS A. ILI-IFN (1) -Al*-Ife, with a population of about 400,000 and considered the cradle of YorubA civilization, is now an Important produce marketing, trading *nd educational center set amidst a rich agricultural area. A traditional trading center for kola nuts vhich are exported to the north, Xle-fe also has established saw mills and a clay brick manufacturing plant. (2) The town suffers from severe water shortages although supply from the Osogbo-Ede system, as well as the town's distribution network, are currently being expanded. In the meantime, wells aro extensively used. Sanitation is generally by pit latrine or bush, vith never properties required to install septic tanks. Roads are in extremely poor condition: most are unpaved or in urgent need of reconstruction. Formal drainage is either non-existent or poorly constructed and 111- maintained. Electricity supply, since the recent commissioning of a major transformer station, is now reasonably stable. As in some other towns in Oyo Stato, house-to-house garbage collection is by private contractors who charge ElO per month. However, there is no landfill site and, despite the designation of environmental sanitation day once a month, much garbage still accumw.'ates in drains and watercourses. (3) The Local Planning Authority (LPA) had no development plan to guide development, which has been haphazard and uncontrolled. A master plan exercise, begun in 1980, is to be resuscitated, although the validity and usefulness of a rigid master plan is questionable in the absence of an adequate development framework, data base, controls and enforcement. The LPA has two layout schemes under development but whereas most plots have been sold, very few have been consolidated. Changes in building permlt regulations in 1988. requiring applications to include a survey plan with boundary coordinates, has led to a significant drop in building applications. (4) The LO has been constructing some local access roads but has funding problems. Propertieos are being numbered but the new tenement rate has yet to yield significant revenues and is meeting public resistane. - 31 - ANNEX 1-1 Page 2 of 7 I. ILSA (5) Lying in the eastern cocoa-rich area of the state, Ilesa is a town of over 500,000 in the smallest Local Governmnt area of Oyo. The urban economy is characterized by the large informal sector, engaged primarily in trading, and in the marketing of food crops, although it is also the cite of a brewery and a number of saw mills. (6) Only 10? of the town is estimated to have actess to piped water supply, the cemainder using shallow wells, There are plans to .zpand the treatment plant, which is fed from a source some 20 kms from the town. Sanitation is generally by pit latrine or bush, with newer properties required to install foptic tmnk*. The town has a reasonable network of roads, many of which are surfaced. The major stream (the Ora) floods frequently and needs dsailting and channelization. Electricity supply is erratic and subject to frequent outages. (7) Ilesa has no development plan as a tool for assessing development applications, although a master plan was begun in 1980. Building applications have been increasing although development appears predominantly land-driven with availability of infrastructure and services havLng influence on development decisions. The urban sprawl has spilled over the LG boundary and the LPA deals also vith planning applications from outside the LPA area. One planning scheme was started by the LPA but this is now largely inactive, possibly because of the poor infrastructure and location. (8) The LG has been providing some access roads. Generally, however, services provided are limited and maintenance inadequate. The major LG revenues are from markets, taxi and motor parks. The numbering of properties has recently been carried out in preparation for the introduction of a tenement rate, which is strongly resisted by the public because of the paucity of services. Currently a 17.50 per annum capitation or 'head tax" is levied. C. OGSAME8 (9) Ogbomoso, the second largest town in Oyo Stute, with a population estimated at over 600,000 lies on the main route from Lagos and Ibadan to the north. It is an important food marketing center. particularly yin, cassava and maize, as well as the home of a major Baptist Seminary and other faclities (teaching, clinic, etc.). The town, in addition to active informal trading, has attracted a number of industries such as a brewery, a flour mill, paper processing, soap and candle manufacturing, saw mills and poultry farms in the vicinity. - 32 - ANNEX 1-1 Page 3 of 7 (10) Lack of an adequate water supply is a major problem and, although there is a large water reservoir, the treatment plant and pumping equipment has not been expanded since its installation in 1962. Water rationing is common and shallow wells are used extensively. There are plans for expanding the system. Sanitation is generxlly by pit latrine or the bush, while newer houses use septic tanks. A major federal road to the North passes through the town and street lighting is currently being installed along this road. Many local roads are tarred, but large residential areas are poorly served. Maintenance of roads and drains is virtually non-existent. Major stteams flood regularly although few propertjes are directly affucte4. Road drainage i&' very poor and the steep slopes extensively eroded. The LG is constructing some culverts, but without an apparent drainage plan or appropriate levels. Electricity supply is unstable, with transformer capactty sufficient to met only 50 of demand. Rationing is therefore common with rotating outages affecting all areas of town. There has been a noticeable improvement in solid waste management, but garbage is still apparent in low-lying areas and in drainage channels. (11) The LAP had no development plan to guide growth and prevent haphazard development. A master plan exercise, begun in 1978, was limited to data-gathering and is of no use to planners in guiding investments and development. Relatively recent (1972) base maps at a scale of llOOO are available and the LPA was trying to update these on an area by area basis. The LPA, using such maps, had begun a comprehensive infrastructure improvement plan in the Alapata area. The town is growing at a rate of about 20,000 people per annum but has no effective housing delivery system particularly in the older core area. The LPA had ambitious plans to extend their planning schemes, which have been largely ineffectual in dealing with demand. At the same time it appears powerless to stop illegal construction, including encroachment of drainage basins. Generally services provided by LG are limited and the maintenance of roads and drains has been totally neglected. D. 050Gb (12) A traditional trading center on the main railway line to the north, Oeogbo, with a population of between 500,000 and 600,000, lies a rich agricultural and densely populated area. The local economy, which had sagged with the waning of railway traffic and unfavorable agricultural pricing policies of the past, has received a boost from the sitting of a steel rolling mill and machine tools factory, augmenting the older industries based on pottery, traditional cloth- making, and flour and seed mills. (13) Inadequate and poor infrastructure systems in Osogbo severely constrain its efficient functioning and future development prospects. Water supply in areas served with piped distribution - 33 - ANNEX 1- 1 Page 4 of 7 (mostly the western area of town) is intermittent while the many leaks in the distribution system waste much of the limited supply available. Many residents use shallow wells which are prone to contamination and exhaustion. The water supply and treatment works on the River Erinle at Ede are currently being extended to augment supply to Ouogbo as well as Ede and Ile-Ife. Sanitation is generally by pit latrine or bush, vith newer properties required to install septic tanks in the urban area. Roads are mainly graveled and severely eroded due to high rainfall intensities and steep slopes, while most roads lack proper drainage. The Okooko and Ogbagbaa streams which flow through the town are not maintained and flood annually. The garbage deposited in the streams exacerbates the problem. Electricity supply to the town is reasonably stable, thanks to the national control center in Osogbo which takes power from the national grid for regional distribution. (14) The Local Planning Authority has no plan to guide development and this, as well as inadequate control and enforcement legislation, encourages haphazard development and urban sprawl which bear no relation to proximity of infrastructure and services. The town is probably growing at about 20,000 people per annum but there is no effective land servicing and housing progrm. The LPA began the development of a 89 ha planning scheme about 5 kms from town in 1981 but only a few of the 541 plots have been developed. Poor location relative to the town, lack of utilities and services, and leasehold purchase arrangement, as well as lack of funds for the purchase of costly building materials appear to be primary causes for the lack of development on site. A large, part-privately-owned industrial estate was planned in the town, but the site has attracted only one factory and is said to be under litigation. (15) The LG is currently constructing some access roads and has recently numbered properties in preparation for the levying of a *tenement tax. This is meeting strong comunity resistance and outright opposition in view of the poor state of services and apparent lack of maintenance programs for infrastructure and services. I. 010 (16) Oyo, one of the oldest Yoruba towns, lies 50 kms north of Ibadan on the main road to Ilorin and Kaduna. The town, with a population of about 300,000, is renowned for its traditional weaving, carving and leather work but is also an important center for informl sector trading, education and agricultural processLng (maize, cassava, yazis, groundnut). It serves as a major service center for the highly successful Oyo North Agrlcultural Developmnt Projoct and has also attracted significant industries such as pharmaceutical and alumina. With the planned improvement of the Ibadan-Ilorin highway to expressway standard, the town has considerable development prospects. - 34 - ANE 1-1 Page S of 7 (17) The water supply system in Oyo town is considered to be adequate (unlike most other towns in the state) although an expansion scheme is planned. Metering is fairly comon wLth most users paying an average of P10 per month. Sanitation, as is in other towns, is mainly by pit latrine or bush, with septic tanks mandatory for newer buildings. Local roads are in poor condition, unpaved and subject to severe erosion, particularly on steeper slopes lacking lined drains. Erosion has in many instances undermined buildings and gouged steep roadways. glectricity supply Is reasonably stable Private contractors collect about SOS of the garbage for a monthly fee of PlO per household, while the LO collects the remainder, mostly from the poorer traditional core areas. (18) There is no effective development plan although the first volua of a master plan was prepared in 1978. In order to have same data base to work with, the LPA in 1982 prepared a land use map (showing existing conditions) with the assistance of students. (19) The LPA had embarked on a number of planning schemes and has 2 ambitious plans to acquire vast tracts of land (more than 16 km ) as a way of controlling development and guLding growth. The LG is undertaking some capital works (local roads construction) but maintenance of roads and drains is neglected. V. RlSAK (20) Saki, at the heart of an agriculturally rich though remote northern region of Oyo State, is the smallest of the major towns selected for improvement and the headquarters of the Dak funded Oyo North Agricultural Development Project (ONADEP-Ln.1838-UNI). However, vith improved commuications and transport its role as a major regional agricultural marketing and processing center for commercial crops will be further enhanced and its current population oflabout 200.000 iw likely to jow rapidly. The proposed expansion of ONADEP into a State-wide Agricultural Development Project will ensure Saki's contintied importance. Saki, LA and zonal headquarters is also an important adainistrative center. (21' The settlement pattern in Saki is not as dens* as in the larger, older and more traditional Yoruba towns to the south. However, localized traffic bottlenecks occur around the main market and surrounding co ercial area, while residential cowr'unLties lack basic amenities such as all-weather roads, drainage, water supply, solid waste collection and streetlighting. The road network ia poorly defines and lacks hierarchy. There is no road or drain mintenance by the LO. Due to lack of any organised refuse collection and disposal services, there is Indiscriminate dumping of waste throughout. - 35 ANNME 1-1 Page 6 of 7 (22) The LPA had commenced a town planning scheme which is only partially (30) developed and lacks essential infrastructure. Neither master plan nor up-to-dat. base maps ezist and there is practically no development control. F, OUTLIM STEAUGY 11 KAJOl TOWNS (23) All the urban areas in Oyo State display a surprisingly similar array of problems and issues that vary only in emphasis at the local level. It is possible therefore to outline, in broad terms, as strategy and a set of measures that would generally respond to the needs of the towns. These ares (i) Assistance to the Town Planning Section (TPS) of LGs to improve the data base, planning and development control procedures and to prepare a simple 'Integrated Infrastructure Development Plan. Such a plan, augmented by a strategic 'Structure Plan' would lay the guidelines for physical development, and would assist the LG in guiding development and in preparing a rolling public investment program. (ii) Rehabilitation of existing waterworks or early completion of water supply expansionk scheme and rehabilitation and eztension of the town's distribution network. (iiI) With Liproved water supply, a program to improve sanitation practices, e.g.. provision of Improved pit latrines, to improve health and, in time, productivity should follow. (iv) Desilting and channelization of the main streams through the towns to alleviate seasonal flooding. (v) Paving and drainage of partially a:terial crosstown road links. (vi) A prioritixed program to provide paved access roads and lined drains in the town in concert with water supply distribution. For efficient execution, the program should be implemented within an integrated&framework or plan for infrastructure, as proposed in (i). (vil) Assistance to the LG to establish routine programs for maintenance of roads and drains, establishment of improved solid waste management practices, and markets, lorry and taxi park development. (viii) Assistance to the LG to improve its revenue base and financial managemnt generally, as well as budgeting, control and administrative procedures. - 36 - ANNEX 1 - 1 Page 7 of 7 (iz) Apart from *city-wida* infrastructure links, the remainder of the secondary and tertiary lnfrastructure, e.g., local toads, drains, water distribution, sanitation, etc. could be carried out via comprchensive 'area upgrading or *comunity lmprovement programs such as those priposed for Mokola, Yemetu and Agugu ln Ibadan. These would bo planned by the LO and with active ccinity participation and TPS staff suitably (e.g., particularly in umicipal angineering) providing the essential technical inputs. (z) Vina0cing of infractructure rehabilitation, particularly at the comunity level, and their subsequent maintenance would be through indirect cost recovery. A valuatLon-based tenement rating system would capture the propcrty value increases due to improved infrastructure and would provide the LGs with the revenue necessary for maintenance end further rehabilitation under the project. If $creased rates are linked to tangible lmprovents, the i would be a willingness to pay. AP4IN October, 1989 3 7 J Page I of 4 FURL UUL1C OF WIIGKZ OTO tJII PIOJCT ID? POLICY I IU AND GhLDs FOR 1CIA3? MM PARTIC A?TOI AND PIOJUCT SMIDC?IO9 1. This sumarises the policy framework for the Infrastructure Developmnt Fund (ID?), the guidelines for mrchant bank participation and the criteria for subprojoct selection to be finaced through the Fund. The Statement of Policy which sets out the objectives of the ID? mechaniss was adopted by the Federal Executive Council on February 5. 1987. The mechanism addresses the neod for viable financial intenrdiaries to help fund urban infrastructure invostments. The Policy Statement was included in the IDF Project (La. 2925-UNI approved in March 1988) along vith Project Guidelines which set out the criteria for the soloction and appraisal of state infrastructure subprojects. These documents are also included Ln the project file. A. POLICY P3ANM R& 2. The objectives of the IDF are: (a) to assist state and local governmant in Nigeria to plan. finance, construct, maintain and manage urban infrastructure and services; (b) to submit states to tho financia discipline of the capital market, improve thelr project preparation, implementation and financial management capabilities, and help place urban infrastructure and services on a more self-financing basis throuhb improved cost recovery and other means of local revenue enhanc smnt; (c) to ezpand the role of the private sector by utilizing merchant banks as financial intermediaries foa urban infrastructure development projects; and (d) to explore the potential for tapping Ntgeria's capital market to finance state and local government infrastructure investments. 3. The IDF Project Guidelines set out the criteria for the selection and appraisal of state infrastructure subprojects which focus primarily on rehabilitation and maintenance of existing assets in the following sub-sectors: 38 -AHNEX I3.2 Page 2 of 4 - water supply - roads and drainagl - solid vaste manageaent - sanitation - street lighting markets and motor parki - high priority infrastructure investments related to industrial, coasrcial and residential projects that are in accordance with the IDF Project Guidelines. 4. in addition to physical works, the $D? will finances (i) studies simed at subproject identification and preparation. institutional de.elop.ent, resourco mobilization, and improved financLal and technical manageoent; and technical assistance for subproject impleomntation and monitoring. Such studile my be financed on both a loan or grant basis, when grant funds are available. S. 1CZAM Nt PARTICIPATION S. In keeping with the Federal Government's policy to increose the participation of the private sector in the development of the economy, five merchant banks which expressed an interest have been selected initially to serve as financial intermediaries for the ID?t Continental Merchant Bank Limited - ICON Limited (Merchmat Bankers) sInternational Merchant Bank Limited (D1M) - Nigeria Merchant Bank Limited (MG) - NAL Merchant Bank Limited (NUL) 6. The banks were included on the basis of size of assets (the minimum asset base requirement range from 300 to M400 million), technical, capabilities, interest in the ID? progrm and readiness to make the changes in their operations and procedure. necessary to help states improvo their project execution, resource mobilization and financial management capabilities lncluding, where necessary, supplementing theLr staff, either by direct hire or by use of consultants, Ln order to achLove the objectives of the %DI. 7. The urchant banks are expected to prepare and appraise infrastructure subproject in a manner similar to that employed by the World Bank. They vill appraise not only the financial and technical feasibility of proposed subprojects but also the economic and institutional capabilities of the borrowing state and local government institutions. Subprojects wvil be revied on a selective basis, as stated in the Project Guidelines, by the World Bank in consultation with the Federal Ministry of Works and Housing prior to final approval by the merchant banks. ANNEX 1-2 Page 3 of 4 C. PILOJEC SLCTOM 8. tliaiblo Infrastructure Subsectors. The following types of infrastructure are illustrative of the subproject components that would be financed under the ID?t (a) voter supply, including the repair and rehabilitation of existing plant, equipment, distribution networks and network extensions; (b) roads and drainage, in particular the rehabilitation of existing road and drainage networks and the construction of now linkages to aid traffic flow and relieve congestion; (c) solid waste management, including the provision or rehabilitation of vehicles, equipment and containers for collection and disposal; cd) sanitation, including the provision or improvement of low cost public sanitary conveniences; (s) street lighting; (f) markets, in particular the rehabilitation of ezisting facilities and the improvemnt of services; and (g) other high priority infrastructure Lnvestments related to industrial, comercial and residential projects that are in accordance with ID? objectives. 9. In addition to physical works, the ID? will finance: (i) studies aimed at pubproject identification and preparation. institutional development, resource mobilization, and improved financial and technical management; and (Li) technical assistance for subproject implementation and monitoring. Such studies may be financed on both a loan or grant basis, when grant funds are available. 1. General Sector Obiectives. The general sector development objectives are to: Wa) maximize the productivity of existing investments in plant, equipment and service networks; (b) relieve bottlenecks and to fill strategic gaps in the urban service network; (c) facilitate rational and orderly growth and extension of urban systems; (d) strengthen the capacity of state L-d local government institutions to efficiently plan, manage, finance, maintain and improve the provision of urban infrastructure and services. Pag a of - 11. Selection Criteria. The individual states and local goveruenats themselves, together vith whichever merchant bank agroes to flnance a particular project, shall be responsible for the selictlou of projects to be financed under the ID?. Projects are to be solocted in accordance with the following criteria: (a) economic and financial bonefits: (b) technical feasibility; (c) effective demnd for services and willingness of consu ers to pay, directly or indirectly, for the sorvicos provided^ (d) feasibility of the cost recovory uechanisa(s); (c) institutional capability of the borrowing state or local government to prepare and executo the project; (f) the availability of technical assistance from domestic or international sources to supplemnt the borrover'S implementation capabilitLes, where necessary; and (') creditworthiness, includLng the ability of the borrower to carry the additional debt imposed by the project to be financed. Projects selected should have a* econoaic rate of return (KU) of at least 20 percent, and only in special circumstances where benefits are difficult to quantify should projects with lower MUe be selected; ln no case should a project's ERR be lover than 12. October 1989 -41- ANNEX 2-1 Page 1 of 4 FEDnAL RPURLIC o NIGRIA OYO STATB USA PROJECT DETAIL DISCRIPTION Of Sf4 DR Mp SOLID WAS2 CCPONO T5S A. Storm Dranaa ad Flood Coitrol 1. With the rapidly growing urbanization of Ibadan, the city has experienced over the last 30 years about seven major floods of increasing severity. The most recent flood of the Ogunpa Stream in 1980 caused the loss of some 150 lives and damages estimated around 1500 million. OYSG and FGN had recogaized the major threat posed by these streams and in 1970 comuissioned channelizatLon works of the Middle Ogunpa. Only 1.2 km havo been completed so far, and 2.7 km are under construction with very slow progress due to lack of adequate funding. N1o million have been provided from the Federal Ecology Disaster fund through the Ogun-Osun River Basin Development Authority to complete the ongoLng contract. The comitted funds are estimated to be adequate for completion of these works. 2. During pre-appraisal, priority strems and stream sctions had been selected using frequency and severity of flooding, entent of built-up areas, population density, and coherence of the drainage netvork as the main critoria. From April to June 1988, OYSG with the assistance of World Bank consultants prepared preliminary designs for 31.5 km of priority sectlons of 3 main streams and major secondary channels, namely the Lower, Middle and Upper Ogunpa Stream, the Kudeti/Yemetu Stream, and a short section of the Ogbore (see IBID Map No. 21146). Due to overall cost constraints a further process of prioritization roduced the total length to be channelLzed in the first phase to about 14.5 km of the Ogunpa and the KudetL main channels. For the major secondary channels only the required structures (culverts, brldges) wi1l be included in the program; a now brldge will also be constructed for the Ogbere Stream. 3. Available rainfall records and the modifiod ratLonal method were used to design the works for a flood wLth a 1 ln 25 years recurrence. Least cost design approaches were employed for selecting rectangular reinforcad concrete and trapezoLdal stone masonry sections to achieve the following main objectives: (i) minimize demolitions of structures adjacent to the stream beds (ii) provide access roads where space is available to facilLtate regular maintenance and better access to residential areas; and (iii) maimizo use of labor intensive construction methods. Culverts, bridges (including pedestrian bridges), drop and junction structures would be included in the works. Channel bed widths range from 40 a for the Lower Ogunpa to 3 m for the Upper secondary channels. The length of the finally selected sections to be channelized would be as follows: - 42 - ANNEX 2-1 Page 2 of 4 Length in km. Lower Ogunpa 2.47 Middle Ogunpa (Main Chlamel) 2.84 Middle Ogupa (Coge) 1.98 Upper Ogunpa (Main Channel) 3.95 Kudetl Stream 3 09 4. Due to lack of adequate planning control, i.e. without buildLng approval, structures had been erected within the liits of the setOacks (reserves) promalgated in 1962. The proliminary surveys and desig attempted to reduce the number of affected structures to an absolute miaLnmm. Approximately 100 structurom would be affected, but the defLiLte nusber can only be doteomlned following detailed survey and desip. A resettlemnt area will be developed in Yemetu as part of the coaunAty upgrading program for that area and basic serviced plots would be provLded for affected families. The OY5 Kzecutive Council has already approved a Compensation and Rosettlemnat policy which avoLds undue hardships without encouraging further illegal constructions in other stream setback. S. Since lack of adequate drsn maintenance is one of the major causes of froquent flooding, provLseu; would be made ' the project for funds for rehabilitation of approz. 50 kb of streams and secondary drains not included in the priorlty channelLiation schem. While most of the storm drainge maintenance works would be done by contract, a provision for the purchase of essential drainage maintenance equipment (3 excavators, 3 loaderts 12 tlpper trucks) would also be included in the project. B. Solid Waste Kamaanot 6. lefuse collection in lbadan is Lnadequate and uncollected refuse causes unsanitary conditions and clogging of storm drains and streams. There are insufficient refuse collection vehicles and the collection sorvices by licensed private contractors, initiated in 1984, cover only the well laid-out areas of the city. A 310 monthly fee is collected directly by the contreactor from his customers. The only avaLlable dumpuite is located iL a fully built-up area of lbadan and is presently filled well beyond capacity. Two new landfill sites have been identified some 4 km southeast and southwest rcspectively of the cLty and OYSG is in the process of acquiring the sites. A prelilinary design study was prepared to detenrmie the priority needs in equipmn at nd facilLties to improve solid waste management tn Ibadan. 7. As access to other areas Wmproves, refuse collection by private contractors would be ratlonalited, better supervLsed and promoted by the WPC. Refuse collection in areas with pooz access (the core areas and the uncontrolled outer urban sprawl areas) would be managed by ZPC forces and the project would provide 50 skLp collectLon poLits. fifteen cars would be provLded as transportation for KPC supervisors and inspectors. - 43 - ANNEX 2-1 Page 3 of 4 8. soeuse of the large extension of Ibadan and the longer distances to the nov landfill site, a refuse transfer station is required. Two potentially suitable sites have been identified and OYSG is procecding with efforts to acquire one of the sites. Site acquisition would be completed by loan effectiveness. The transfer station would be designed to handle up to 4,000 tons of solid waste daily, for transfer from collection vehicles to 60 cu.a trailers hauled by tractor trucks to the landfill site. Six trucks and 15 trailers would be provided. 9. For increased oconmy and efficiency the transfer station would be combined with a central office and workshop. The office buLlding would accoomodate technical, administrative and supervisory staff and also house facilities for the workers. A workshop with a floor area of about 1800 sq.m with aechanical equipment and spare parts store would be provided for servicing and repalring the vehicle and equipment fleet. which would include the storm drainage maintenance equipment. 10. Preliminary surveys and investigations indicated that the selected sites would be suitable for propor sanitary landfill op*rations without risks to the nvironment. OYSO has already acquired the 10 ha Ajakanga Pit* and has provided assurances thit the additionally required adjacent site of approximately 150 ha would be acquired by loan effectiveness. The project would lnclude funds for the construction of a 3.5 km long access road to the landfill site, a weigh bridge and miscellaneous site works. Three bulldozers and two wheeled loaders would be provided for land-filling operations. 11. Also provided would be funds for spare parts to refurbish broken down collection vehicles. for aLiscellaneous tools and equipment, and for design, tendor document preparation, contract administration and construction supervision. 12. The acquisition of vehicles and *quipment for the EPC would in no way interfere with the operations of the private contractors, but only equip the EPC in the short and medium term to carry out refuse collection in areas lacking good access and ease of direct fee collection. The long term objective would be to contract out collection services altogether to the prLvate sector, but this would only be feasible after LGs have improved thelr revenue situation. The proposed enhanced tenement rating system would constitute a means of indirect cost recovery for solid waste management services. C. ftviron.sntal Kanag nt 13. The major reason for the increased incidence and severity of flooding in the lbadan area is the incressed run-off of surface water during and following heavy rainfall. This is due primarily to the removal of vegetation cover in the water catchaent areas and its replacement with high-density urban development, which reduces water retention and increases the chances of flash-flooding. The project would begin to focus on the - L4 - ANNEX 2-1 Page 4 of 4 severe environmental problems of lbadan through the establishment of an Environmental Hanagement Departmeat within ZPC and the Oxecution of *mergency civil works. 14. Emrgency civil works to be funded through the project would include a labor-intensive environmental rehabilitation program to restore som 50 hectares of eroded areas, particularly on Ibadan's steep slopes in the Upper Ogunpa catchmont areas. Zrosion gullies would be filled, top soil and the vegetation cover restored and the area stabLlized through tree-planting and grassing. These masures would reduce erosion of slopes and silting of drains, white increasing water rctention. 15. The refuse disposal landfill site oan Ring load has boen overflowing and burning out of control slnce 1962. It lo an *yesore and an environmental hazard to neighboring residential areas while leakages pollute ground and surface water. The project would finance the rehabilitation of the 20 ha landfill site as soon as an alternative landfill site is brought into servico. AF411 October 1989 - 4j - Anne% 2-2 Page 1 of 2 DUL IMIC of NIgCT 01O S1AT3 USUAl LZOaCT (IDFI 1U) DITAfIM D MSCK O 0 TO AlIXC AND TAUNSPOR? CMPONI! 1. Public ranaegort Submoepont n. While the publicly owned bus company (TCTC) comenced operations in July 198, private sector minibuses will continue to supply significant public transport capacity at least iu the short/medium term. To support the ainibus operations and to alleviate the major funding and maintenance problems faced by operators, the project would: (a) provide a line of credit to enable spare parts to be purchased. The credit would bo administered by the owners and operators cooperatives (b) fund a service contor (provision of a small workshop and parts center, equipment and technical assistance) where minibuses could be effectivoly maintained. The center would be operated on a commercial, cost recovery basis; and (c) fund equipment for the Vehicle Inspection Office (VIO) for testing the roadworthiness of minibuses thereby providing an incentive for minibus drivers to utilizo the service center. 2. Discussions have been held with the relevant owners and drivers associations and cooperatives (Nigerian Transport Owners Association, Road Transport Employers Association, and National Union of Road Transport Workers - Ibadan) rogarding the line of credit and service center, and agreement has been reached on the principles of the program. The Pfis would be involved in financing the subcomponent, the Ibadan Municipal Government (DIG) vould administer the credit through the trahsport owners" associations. 3. The equipment for the VIO is required to enable the inspectorate to fulfill its duties of testing public transport vehicles for roadworthiness and drivers for competence. The equipment will include items such as patrol cars, light towing vehicles, communications equipment and equipment to test vehicles on street (head lights, brakes, tires, etc.). OYSG would establish a regulation that any minibus failing a test would be,2equired to be nsupected at the service center and although repairs at the center cLamot be made mandatory. it is anticipatod that most vehicles will use the facilities to carry out the necessary repairs. - 46 - Anne 2-2 Page 2 of 2 4. The VIO would be responsible for the technical coordination of the public transport subcoponent. The line of credit would finance all aspects of the private sector program. 1.. design and building of the service antor, technical assistance to establish and start up thd center and procu;*a. and stacking procedures for the spare parts. The facilities would be oporated on a fully cost recovering basis. Outline SCOD for toad MAintenaneo Studr S. This study will bo carried out by consultants but vith.the involvement of the Maintenance Division, Kiistry of Works and Transport (MWT) and the scopo of work will includes Ca) a review of agency (Federal, State MG and other LOS) responsibilities for road maintenance in Ibadan and state-wides Cb) a review of MWT and other agency road maintenance planning and budgeting proceduresl (c) an appraisal of the procedures and techniques appiled by each agency, including identification of costs, appraisal of their effectiveness (cost/km ete); (d) a review of equipment, facilities and staff available for force account maintenance and its condition; (e) determination of existing road and traffic facility conditions for the A & I class roads and a sample of C class roada; (f) definition of proposed maintenance standards. procedures and responeibilities; (g) preparation of a 5 Year Maintenance Plan; and (C) preparation of an action plan, target dates, budgets, staff levels, etc. requa.red to implemnt the Maintenance Plan. AP4IN October 1989 ! - 47 - 'Pag'eIof aL U LiC OF wSCu OYO STATE U3A PfLOJKCt DETAXLtD DZSCIPTION OP coSnITY IMPIOY NTOGRM A. ackground and Objectives 1. The Counity Improvement Program (CIP) will be the flrst major effort in Oy State, and probably Ln NLgeria as a vhole, to provide a comprehensive range of essential Infrastructure and sorvices iMprovements in an integrated mannor to poorly sorvod and predominantly low inco=e neighborhoods of Ibadan. The program is seen as the beginning of a longer term program vhich over time, would upgrade all such neighborhoods in Ibadan estimated to cover some 4,800 hectares and accoumodating about 2 million people. 2. The infrastructure and services to be provLded would Mprove the efficient functioning of the areas, the health of the inhabitants and the general quality of life by improving internal access, circulation, drainage, water and electric power supply and community facilitLes such as health clinics, and open spaces. 3. In 1984 the Town Planning Division of the Kinistry of Local Government (nov of the Ministry of Lands, Sousing and Survoys) stuOlod a number of densely populated and poorly served areas of the city with a view to selecting a number of priority areas to be included Lu a possible World Bank supported project. The studied areas ezhibited similar characteristics in that they vere predominantly low incom areas generally unplanned, densely populated and lacking in infrastructure and services. From a preliminary study three areas, were selected for more detailed analysis, namely, (i) Mokola, an old well laid-out core area of the city that once had an adequate infrastructure which had fallen into disrepair; (ii) Yemotu, another old core area which had never been adequately served; and (iII) £gugu a newer fringe area which had developed on the edge of the city with no planning and aLnimal lnfrastructure and services typical of many of the newr 'urban sprawl areas Lsnide and outside the Expreseway along the eastern fringe of the city. 4. After the early preliminary work by the Town Planning Division of the State government, in February 1988 the former Ibadan Metropolitan Planning Authority (INPA) w&3 given the task of preparing detailed proposals for the areas. The initial proposats prepared by uIA and its consultants proposed layouts which contained a high level of new roads and new comunity space with consequent high cost, extensive demolitLon of properties and leaving many propertLes remote from paved access. After consultation with the Bank, the adoption of more innovative planning and engineering approaches and the utilizatiots of fuictional standards su;ceeded in achieving lower cost and more affordable solutions. This will !I ANNEX 2-3 Page Z of 5 directly benefit a greater number of people ai*d dramtically reduce the number of houses requiring removal (and hence resettlement and compensation). Occupied buildings requiring demolition and families requiring resettlement now number 0 in Mokola, 24 in Yomtu and 23 in Agugu. At each site, resettlement areas have already been Ldentified. Rteettlemnt costs and replacement valuo of buildings demolished would be included in the costs of the program. The larger area available at Yemetu would also be laid out with serviced plots to resettle those families to be displaced by the proposed major drainage works in the nearby Kudeti-Yemetu stream. 5. Participation of the commities in the planning and design of the progrm has been an important part of the planning and design process, and which is to continue during implementation and subsequent operation and maintenance. The final proposals represent those which each commlty has played a part in developing and has concurred with. Separate meetings were held with each of the communities where DKPA and its consultants presented and discussed the proposals at length with the communities. The significant number of people who attended tho meetings shows the enthusiastic support gilven to the program by the comnAitios. S. Detailed Description of the Proarm 6. The program would provide comprehensive and integrated infrastructure and serwices improvements to Nokola (gross area 44 ha, population of 22,000); Yemetu (gross area 46 ha. population of 25,000); and A6gugu (gross area 47 ha, population of 18,500). Thus some 139 hectares housing approximately 65,500 people would benefit from improvements which would include roads, footpaths, drainage, water supply, electric power supply, street lighting, toilet facilities, public telephone facilities and community facilittes. Improved access would also permit more efficient refuse collection by IG and its contractors. Necessary off site' infrastructure to link the proposals to city wide systems would also be provided to ensure son site' provisions are able to operate at optimum levels. 7. Given the variation in existing conditions, topography, age, levels of servici and population densities in the comunities, it is not possible nor desirable to adopt rigid planning or engineering standards. Standards applied have thus been flexible and modified according to the particular situation and conditions. 8. The lack of water supply in the coamuaities and ln the city as a whole is probably the most critical infrastructure problem. At present. works to rehabilitate water supply installations to allow plants to deliver up to their design capacities are underway. However, despite this program, water rationing in the city is likely to continue for some years. Thus Water Corporation of Oyo State (WCOS) is to relax its policy of 'elimination of standpipes' for the communities in the CIP and permit existing stgndpipes to be rehabilitated provided they are manned and - 49 - ANNEX 2-3 Page 3 of 5 metered and the communities take responsibility for operation. IMPA and its consultants have agreed on this concept with WCOS. 9. During preparation of the detailed engineering proposals, dialogue would also continue with the other sectoral agencies involved in the CIP, namely NEPA, NITEL, EPC, as well as 1IG to ensure final proposals meet with the requirements of these agencies and agreement is reached on the take-over of the respective facilities on satisfactory completion. 10. The proposals to be included in the program have been identified from longer term developmqnt plans prepared by IMPA (decentralized in early 1989 to the LG Town Planning Sections) and its consultants for each community. Such proposals generally accord with these longer term plans and would be capable of incremental improvement over time, as aad when, further improvements are able to be afforded and the communities are prepared to make available the necessary land and buildings that would be required for such further improvement. To better be able to control further development in the areas and particularly on infrastructure alignments, each community area will be declared a Town Planning Scheme Area under Cap 123 of the Laws of Oyo State. In addition to the physical improvements, technical assistance would be provided to IMG for detailed design and supervision of the implementation of the program. C. Progrsm Costs and Financin, 11. The total cost of the ('IP is estimated at US$7.5 million, of which the foreign exchange component is estimated at US$4.8 million, 64? of the total program cost. The improvements will cost an average of US$55'237 per hectare gross or an average US$112 per capita gross. 12. The program for Mokola and Yemetu would be financed by IMG using (i) project loan funds borrowed from OYSG under a LG onlending agreement, and (ii) their own LG counterpart funds (10?). Cost recovery will be achieved by IMG through the revised tenement rating system to be introduced through the project and by user charges. The IMG would also be responsible for maintaining certain facilities i.e. roads, drainage, and solid waste collection. The IMG would allocate maintenance funds annually for this purpose from tax revenues. Operation and maintenance of water supply, electricity supply, telecommunication and solid waste management would be the responsibility of the respective delivery agencies (i.e. UCOS, NEPA, NITEL and ESC) who will recover their costs through regular user charges. The coumunities would be responsible for maintenance of footpaths, tertiary drainage and public toilets. D. Progra ImDlemntation 13. The LGs through their Town Planning Sections (TPS) would be responsible for implementation of the CIP'. They will coordinate and prepare the program with the help of consultants. A Steering Committee is to be established to help implement the program. The Steering Caomittee - 50 - ANNUl 2-3 Page ' of S vould consist of officere representing the concerned Klni'tries of the stato governments, the celevant local government; the relevant sectoral agencies including WCOS, NIP&. NITIL, and hPC. as well as a representative from each of the thcee conmities to initially benefit from the program. This Comittee would met regularly, to monitor progress of the final designs and subsequent UIpl _ ntation: to aseist in solving problem as and when they occur and to ensure coordination of the iulti-sectoral program. 14. The LGIPS would, with the aid of consultants, be responsible for preparation of final deigine and tender documnts for the various contract packages proposed, continued liaison with the reopective comunities, tendering aud contract award procedures in accordance with state govenmnt norn. suporvision of the construction worc, pament of contractors (following PCU approval) and all necessary tasks until the handoavr of the cowested facilities and network to the alncies rosponsiblo for their subsequent oporation and maintenance. The core staff of the former DGA has beoe retained to implemnt the CSP on behalf of DO. 15. The mjor physical worcs in each of the commuitLos would be carried out by local contractors registered with 0yo State Covernment. Only contractors aolding tte hithest claosificatLoz and appropriately . - experienced to carry out ilti-sectoral works in difficult conditions would be prequallfied. It is envisaged that the type of works, the sixe of contracts (US$2.0 million approximtely), the difficult working conditions and the need for close liaison with each comuanity sro unlikely to attreact foreign contractors other then those already established in Nigeria who would be eligible So bid for the contracts. 16. The works will be packaged on an "area" basis and not a "component" basis, for the following reasons: (i) many diverse elements are involved, e.g. roads, drainage, water supply, electricity supply, etc; (Li) the works would be carried out in densely populated and gonerally unplanned communities; Ciii) the need for the works to cause minimum disruptLon over the shortest possible time (iv) the risk of one contractor daaging other contractors* workes Cv) the need to reduce roschoduling and coordination of the differcnt progrms. Comprehenlve contracts which would lnclude all or nearly all of the components planned for the particular comunity, would be arcded and only one contractor would be rcsponsible for work ln any one area at any one tlm. 17. It is envisaged that 3 major infrastructure contracts would be awarded with each arcea being divided into 3 sub-areas for construction phasing purposes. Contracts would likely range from USS2.0 sillion to US$2.5 million. Tender documents would be prepared to a standard appropriate for international bidding although local competitivo bidding procedures would be followed. In all mattors relating to approval of tender documents, tender evaluations. contract awards, payment of contractors and such similar matters, DIM would refor to and seek the approval of the PCU situated in the UhSP which has responsibility for overall coordination of the Project and operation of the Project accounts. _ SL _ ANNEX 2-3 Page 5 of 5 E. !Lesttlme_at 18. In addition to about 50 structures affected by the CTP, somn 100 buildings would be demolished due to the storm drain channelization works. In order to address the specific needs of the 150 famdlies requiring resettlemont OYSC would formulate a compensation policy and draw up a concrete reoettlement plan which would be based on the findings of the socio-sconomic survey which were carried out for the commiity improvement areas (similar housing and income conditions prevail in the zones along the storm drain channels). Government's policy and plan would deal with procedures for property valuation, payment of compensation, issuLng of certificates of occupancy for new plots, assistance wLth credit and materials if necossary, reestablishment of employment, comunity facilities, and other needs such as restoring the social network of the comunity. 19. Preliminary plans for the resettlement areas had boen reviewed during appraisal, and detail designs, tendering and construction of the resettlement areas (comprising small plots with basic infrastructure) vill be carried out together vith, and as part of, the CIP. The cost of developing the resettlement areas would be financed under the project. October 1989 k~~~~~~~~~~~~~ - i2 - ANNEX 2 - 4 Page 1 of 8 MUkL U?ILZC OF GC OTO Ss PIOJUC 1. D3TAnL DoscUtIOW or LOCAL TO1S C011 DICLUDI: DRAF? ofN OFUOILZ 0 P?A136 AND EUYISTHMU PROGRAM STTThIIS A. sackaround and Obiectives 1. The large number of urban centers of substantial size and importance in Oyo State led to the inclusion of the Prlority Towns Component in the project. The six LO tos were solected by OYSO in consultation with the Division of Urban and Regional Planning of M E. The lnitial selection criteria employed wore population size, economic base, growth potential administrative importance, comitment to Cost recovery principles, infrastructure and services deficiencies, regional balance and equity within the stato. following government's selection of Ile-Ife, Ilesa, Ogbomoso, Osogbo, Oyo and Saki, an overview assessment of goneral conditions, needs and developent prospects wa* carriod out by the Bank during project preparation which conflmed the high priority accorded to these towns. Very important aspects are the strong will and support of the comunities. The proliminary proposals presonted in June 1988 indicate compotence, good knowledge of local conditions and constraints, a great degreo of enthusiasm for the project, but also a need for additional support with the preparation of prioritization studies and detailed proposals. 2. The objectlves of this Component would aim to improve the efficient functLoning of the towns, to assist in stimulating economic activity and to improve the quality of life of the inhabitants (improved health and environmental conditions). To achieve this *city-vidoe infrastructuro and services, invostments would be supported where these were considered important and achieved sufficLent benefits. Similarly. comunaity improveuent programs would be undertaken to facilitate the upgrading and ehbabllitation of, for the most part, secondary and tertiary infrastructure, arca by area across the town in a comprchensive and integrated mann,r. These would involve the active participation of the bonefitting comunities in. planning and implementation phases as well as ln subsequent maintenance of facilities to be provided. 3. The improvements to be identified would be the initial investments of the prLorLtized in"qstment programs to be determined in detail as part of the planning exercise to be carried out for each of the selected towns. Simple Structure Plans and Infrastructure Development Plans would bo prepared from which rolling Infrastructure Znvestment Programs would be formulated. These plans and programs would be prepared by consultants working with the TPS and LO Counciid of each town. and engaged, coortdinated and suporvised by the Town Planning Division of MLHS. - 53 - ANNEX 2-4 Pazg 2 of 8 The planning exercises in each town, vhich are seen as intense ctivities of short duration, would beo omneed early to ensure that say priority investment proposed is in concert with the overall infrastructure developmat plans for that town and that it is able to operate at its optimum level once copleted. (See Section It for draft 'Terms of Reference for the Preparation of Plans and Program'.) 4. In addition to preparation of plans, the Town Planning Division, the LGC TPS and the consultants would review land and plot delivery iystems (including Town Planning Schemes) with a view to determining whether such systmem can be made more *ffective. The *ntire planing and developmeat control legislation would be reviewed with the objective of developing planning policies and regulations that are more effective in gpeerally guiding development, in protecting the environment, in delivering appropristo infrastructure and services, and in ensuring the optioma use of such infrastructure and servic*s. 5. Three other important objectives of the component would bat (a) the strengthening of programs of routine and periodic maLntenance of infrastructure by the LGC to ensure that investments made In infrastructure are properly m*intained in the future: (b) the iLprovement in the finacial position of each of the LGs involved in the project in order that the efforts coimenced under the Project can be replicated In future over other areas of the towns and also that tho facilities provided will bo properly maintained (thus during the course of the project a study of the finncos of each LGA would be carried out and improved resource mobilization and cost recovery measures recomended); finally, (c) the improvement of the information database comencing vith aerial photography and the production of line maps for both technical and cadastral use. S. Component Description. Cost and Vincfing 1. A line of credit would be established undor the Project for the rehabilitation and improvement of infrastructure beginning in the towns of Oyo,Ilesa. Ile-Ife. Ogbosoo. O.ogbo and Saki. Based on the preliminary work already carried out by the former Local Planning Authorities (LPAs) in conjunction with the LG's, and the studies referred to earlier, detailed proposals will be finalized. appraised by the Pfls following IDF appraisal criteria and impleownted accordingly. A total of US$35.8 million base cost plus contingoncies would be availablo for this component. 2. Initial programs to be carried out over the first two years of the project, costing up to US$2.50 million for each town, would be prepared and appraised as a matter of priority. Subsequent availability of funds for further sub-projects in each of the towns would be dependent on the perfonmnce of the LG's and their Town Planning Section (TPS); in the quality of the initial project ia terms of design and construction: the speed of implementation and the arrangements established, both within the LC and the bonefitting comunities: the provision of adequate counterpart fund"; and for operation and maintenance of facilities provided in the - 34* - ANNEX 2-4 Page 3 of 8 Lnitial prograns. In addition. subsequent availabilLty of funds would also be dependent on the performanco of tho La's in adopting improved revenue generation policies and actual performance in the impleomntation of such polLcios (e.g. tenemsent or property tax systm and collections). nitial progrm performnce indicators would bo developed together vith the modalities for the implemetation by a caltteo within the state governmat with rolovant ministries represented as well as representatives fro, each LO and the PFIs. all coordinated by the PCU. C. XMliUtatloM 1. The Town Plnning DivLsion of the MLUS woald have overall responsibillty for the whole component. Yor preparatLon of the Structure Plans, Infrastructure Development Plane end Investment Programs for each town, the Town Plnning DivLiLon would b. responsLble for engagement of consultants and supplyLng counterpart staff and supporting facilities. The DLvisLon would be responsible for coirdination with the TIS and Lo's in each tovn and would involve the Departmaet of Local Governent as necessary. 2. ResponsLbliLty for implementation of the physical works progrms in each town will rest primarily with the La who would be the contractual party with contractors carrylng out physical works. However, the LPA would act as advlsors or agents of the LG all under the supervision of the Town Planning Dlv-l.von of the .HES. ResponsibliLty for project supervlsion vill rest with the Kerchant Banks. A Steering Comsittee vould guide and monitor implementation of the overall component. D. Tecbnlcal Asslstance and Consultina ServLces I. The Town Planning DLvLsLon of the MLHS would engage consultants to work with staff of the DivlsLon and LG's of the priority towns to prepare the Structure Plans, Infrastructure Development Plans and Investment Program. It is envisaged that consortia of local and foreign consultants would provLde multL-disciplinary teams to carry out the studies. or economy and speed the fLrst six towns would be divLded into 2 groups wLth one consultancy for Oyo, Ogbomoso and SakL and the other for Oeogbo, ilesa and Ilc-Ife. This grouping has bcqn based on geographical considerations. Suggested draft Tern of Reference for consultancies had been preopaed at appraisal. It is envLsaged that for each town approxiaately 15 person months of professional lnput would be requLred. Thus for each consultancy covering 3 towns each approzxmately 45 person months of piofessional input is envisaged each study being completed withLn 6 months from comiencement. 2. In addition to the two consultancy assignments for detailed plan and program preparation in the 6 towns a small expert advLsory and training ten would work wLth the Town PlIannin Dlvislon. This teas would asstst the Division ln overseeing and rewlewiLg the work of the consultants,'TPS and LGs preparing the plans and programs for each town Licluding ANMEX 2-4 Page 4 of a preparation of the Ibadan plan. In addition the team would, inter alia assist the Division in the review of the whole planning and development control guidance legislation for the state including the serviced land and housing delivery systems. Ii. DRAn MMU OVF MUMUM FOR PRVARATlOI OF A SThBCTOU PtAN. IN0M.£?XD DIN1ST UU DhMVAOI PLAN AND -sM I? POGRAM OF smucDTOMS A. Itroduction 1. It is apparent that many of the larger towns In Oyo State have developed in a largely unplanned and ad-hoc mnner. Local Planning Authorities (LPA) without any 'Development Plan to work to and little or no Legislative powers to guide developmnt, essentially were 'Building Approval* rather than 'Planning' authorities. The lack of a *Development Plan' or even up-to-date accurate base maps showing the existing situation. and the lack of effective planning powers was exacerbated by tho fragmented administration at the local level. There was no formal link between the local governmnt and an area and the Local Planning AuthorLtys water supply is the responsibility of the Water Corporation of Oyo State (WCOS); eLectricity is the responsibility of the National Electric Power Authority .?NEPA); and solid waste managument is the responsibility of the State's Environmental Protection Comission (EPC). 2. The above factors together with funding constraints on the part of those responsible for delivery of infrastructure and urban services, have resulted in the haphasard development of areas which are largely unserviced. The Land Use Decree appears to have further worsened the situation with regard to planed and properly serviced development. Development of larger tracts of land in a planned manner by private developers appears to be no longer possible as larger areas of Land could be assembled only by the aPA's under the 5Town Planning Schemes'. The LPA'e had attempted to demonstrate how development might bo more efficiontly planned and imploented under these Town Planning Schemes (LPA'. can appropriate land with compensation payable only for the crops thereon). However, these schemes have generally been poorly located, inefficieot in terms of land use (e.g. large square plots) and largely unsorviced. With few ezcoptions they have been unsuccessful. 3. In sumary, Oyo State therefore has sizeable towns (250,000 - 600,000 population) with no coherent planning, and no effective plot delivery/housing programs (public or private). There is overcrowding in the older existing core aresas and individual developments taking place in many cases on unsuitable land, such as natural drainage channels, good agricultural land And steep slopes. These developments are both difficult and expensive to service by the responsible delivery agencies and thus, in most cases, have not been provided with serviceas Owners and occupiers normally fend for themselves with regard to water supply, sanitation and - 56 - ANNEX 2-4 Page s of 8 drainage. Acces is predominantly by unsurfaced gravel roads subject to severe erosLon in the steeper areas. The existing infrastructure in many of tho towns has often not boon fully optimized in terms of its use nor has it generally been well maintained. 4. There is clearly a need to begin to address the problems and deficiencies of the secondary towns and to deal wLth thelr uncontrolled growth through the preparations of simploe structure Planes and short range 'Integrated Infrastructure Development Plans. These plans would constitute the framework for formulating infrastructure investment program., likely to be rolling programs of a 3 year - 5 year time horizon. S. It might be expected that the 'traditional master plan (wherever such a plan existed) would assist in a balanced, orderly and economic development of infrastructure. This tends not to be the case. TraditLonal master plans usually take a long time to produce, and are often out of date when completed, thus failing to respond to the dynamic nature of development. Furthermore, emphasis is usually on land use without sufficient consideration for topography, buried utilities and other constraints. Their most significant shortcoming, is that in most cases, the inablilty of implementing agencies to fund such physLeal proposals is not taken into account. Plans are based only on percelved need and traditLonal standards, i.e. such plans are often totally unrealistLc as they disregard the available financial mans. Bence lt is proposed that simple *Structure Plans' 'Integrated Infrastructure Development Plans' and 'Infrastructure Investment Programs' be prepared based on reasonable funding projections. 6. To prepare the plans as quickly as possible it is envLsaged that the HinLstry of Lands, Housing and Surveys State Town Planning DlvisLon, and the Town Planning Seoctions in the various LGs would require the assistance of consultants. (Note: The formerly separate Local Planning Authorities have as of January 1, 1989 been transformed Lnto Town Planning Sections which are part of the LG Council administration). Significant inputs to the exercise would however be necessary not only from the Town Plannlng DivisLon, but also from local governme nts, sectoral and utillty agencies and co unity groups wLthln the respective towns. Planners, engineers, fLnancial officers, administrators, social workers, non- governoental organizations and the private sector should all be involved. 7. Key factors in plan development would not only be priorLty needs, but also implementation capacLty of delivery agencLes, consLderation of the beneflts to be gained from discrete plan proposals, and affordability at state government, local government, sectoral agencies and beneficiaries levels. Attention would thus be paid to existing resource mobillzation and the scope for lts enhancement. This would be of paramount Lmportance for the successful and timely implementation of plan proposals. 8. The structure plans would cover a 5-7 year time frame (to year 1995) and proposals would be prLoritized. The assembly and review of on- AM=EX 2.4 Page 6 of a going and proposed plans of the various sectoral agencLos involved in development vould be an important part of plan preparation. B. Isti ote. of taits R qr 1. The preparation of the plans and programs would be an intense exercise taking no more than 6 months of elapsed tim and requiring no more than 12-15 person months of profeasional input from consultants por town. The following disciplines would, inter all&, be necessarys urban planning, municipal engineering, financial analysisleconomics, sociology and environmental sciences. A counterpart toer from the Tows Planning Division, TPS, La-s, with input from sectoral agencies would be nocessary to assist the consultants in the plan preparation exercise. C. Detailed Sc2eo of Work and Sasks--Data Collection. Review and Assessent 1. Base line planning data to be roviewed will include statistics, plans and reports which, with field visits and dLicussLons with the relevant department officials, will detecrfne the existing situation regarding engineering infrastructuro, municipal services, housing, coomrcial and industrial plots dolivetry population distribution; projected growth; present 'pd proposed land use; environmental problems; areas of high agricultural potentiall natural drainage cournes etc., and organization and financial arrangemnts of dolivery of infrastructure. housing and services. 2. Previously prepared, partially completed 'Master Plans. and available data, records, maps. ete. for infrastructure system will be reviewed. 3. Field visits to verify data will be carried out where necessary. 4. Plans for ongoing and future development (residential, institutional, ceoercial. and industrial) together vith infrastructure proposals will be studied with particular regard to current water supply (rca and treated) augmentation proposals: waste water disposal proposals: major roads and drainage proposals and electrification proposals, as well an natural (topography, geology, etc.) opportunities and constraints. 5. To assist in determining alternatiOes for water supply, waste water collection and/or disposal, road and drainage routing, the following will be studieds hydrological data, watercourse profiles, areas suitable for irrigation, groundwater recharge. sludge/solid waste disposal areas, soil characteristics, deovelopmnt densities, topography of the various catchmnet areas of town, and existing WlA use. 6. For water supply, the ezisting plan and iquipment, collection and distribution networks will be studied, and options for expansion and rehabilitation of the system will be-evaluated. - j8 - MIN2X 2-4 Page 7 of 8 7. To be reviewd and assessed in the light of present economic and financial realities are the existing practices, standards and specifications, historically used in the planning, design, and construction of infrastructure. The provision of services both primary, secondary and tertiary as well as housing, co mrcial and industrial plot delivery will also be considered. 8. Annual capital expenditures on infrastructure separated by state and local government in the twnus wil be roviewd as with comitted and actual expenditures. Operating costs expended annually over the previous 5 years will also be reviewed. Present cost recovery systems and their efficiency will be ezamaod with emphasis on deterring appropriate improvemets thereto. D. Plan Desim sad Investmat Proaras Preparation 1. On the basis of the data collected and reviwwed and further guided by the population projections, the infrastructure and maintenance requirewats for the subsequent 3-7 yoer period will be assessed with regard to* potable water, waste water generation, electrical supply, telecomunications, housing, cormercial and industrial plots, transportation, access and circulation, garbage collection and disposal. 2. Deficiencies and requiroents to cope with growth (residential, comercial, and industrial) will be identified and strategies for providing affordable infrastructure and services suggested. Where facilities ezist, devolopmnt plans will, as a first priority, attempt to optimize the use of such facilities through rehabilitation and other suitable means. 3. Technically feasLble alternatives for infrastructure and services delivery (water supply, drains and roads) will be developed and reviewed. Where appropriate, evaluation of alternatives will be carried out to determine least-cost solutions. Affor4ability by Los, beneficiaries and ratepayers would be an important consideration in the acceptability of proposals put forward. Developmnat of appropriate functional and affordable standards for Lafrastructurelservices would therefore be necessary. 4. A simple Structure Plan map indicating existing and proposed land uses to guide directions of growth would be prepared, and from this staged plan vhich would provide infrastructure iL a balanced and a coordinated manner, would be proposed. The plan would be clearly shown on base maps of appropriate scale. 5. Based on this plan, a suggested investment program appropriately prioritized, costed and phased will bo prepared. 6. In addition, for selected priority areat in each town e.g. central districts, major market, etc., detailed local devoloptient plans would be prepared to appropriate scale and to a sufficiont level of detail ANNX 2- - Page a o; 3 to ^erzit rapid preparation of detailld engineering. bid documents and subsequent implementation. E. MUtUt and Report Repuir!_Uts 1. An Inception Report setting out the consultants detailed approach and work plan. timing of individual consultants inputs. counterpart requirements would be prepsrad and subsitted within 2 weeks of coemncoment of the study. 2. A Draft Final Report (30 copies) with the Structure Plan and Integrated Infrastructure Developm_nt Plan, would be prepared and submitted within 4 months of co me ncement of the study. The report would include all necessary text, maps, charts, table diagrams etc. to support the plan recommendations and to respond fully to the scope of wock and tasks set out earlier. The recommendations would clearly indLcate how Structure Plan proposals for improvements to urban services and infrastructure network expansions would increase the level, efficiency and coverage of infrastructure and services and be of economic, as well as social, benefit to the town. Where appropriate, rates of return calculations would support sub-projects proposed within the plans/investment programs 3. A detailed Investment Progrm would be produced (as part of the draft report) for a ten year period. AnAual prioritized programs would be presented for the first S year period with lndicative costs for the subsequent 5 year period of time. Unit costs used in estimating investing program tequirements would be clearly shown together with any foreign exchange requirement duties and taxes. Present day costs at the time of plan preparation would be used throughout the investment program. Price contingencies, physical contingencies and other costs would be estimated separately on the annual base costs. 4. The draft report will also make preliminary recomendations for the maintenance arrangements for infrastructure elemonts to be provided and for assets operations and maintenance costs. These vould be considered together with capital costs in arriving at optimum solutions. S. Following reviewv and come nt on the Draft Final Report* by relevant Government agencies within one month of submission, a 'Final Report' (30 copies) which would be similar to the Draft Final Report but suitably amended to reflect coments, vould be submitted within one mounth of receipt of such comments (i.e. 6 months after commencement of the study). October 1969 - 60 - Annex 2-5 Page 1 of 8 OVO STATE U IAnLITATION P6JCT (IDF II) KETALD COST TAKLS TOTAL coaw LOCAL FUSON TOTAL QJS '000) A. MRASRUCRME N4IUTATION (UPS" Stom Draimp A Flood Contrel Orain Chamimeiastie. Ls_ egups 801 1,200 1,508 Middle arm" 817 1,2" 1,5l" Mid OgMpW Sc Drne(Struct.only) TO 314 898 Cop Strom 22 918 1,141 Upper Oape 8 1,54 1,94U Up OguIp. Sec Orns(Struct. only) 78 292 66 YC_ u (Struct./Eroelon Protetn) 169 as6 794 Kudeti Str nm 2,274 2,648 Obsre (3rlds only) is 817 896 Subbotal Chsmllion 2,192 c,770 10,162 Clearing of Rere 78 0 781 Oraln R.hbilltatioe 777 m 1,01 iblntenanc Equipesnt 09 1,060 1,149 Dlon 187 411 s4 Supervision 1in 266 486 Storm Drnage. A Flood Control Bo 8,42 11.828 14,665 Physical Conting ,cis 521 1,624 2,145 Price Conting ies 6sz 1,664 2,556 Storm Drnao . A Flood Control Total 4,965 14,611 19,606 so I d waste Manasest CivilI Works Off lao 7 227 824 Works 111 S4 448 Transfer Station 12 515 644 LanIllI Site Incl. aoo_a road lII 54 471 CO_pAalon S2 0 C2 Design nd Supervision 80 121 151 Subtotal Civil Works Su 1,660 2,066 Equipmet Collection Vehicles so 1,619 1,674 ContAinsr (O cubic mate skips) a1 208 264 Transfr Trucks 11 841 851 Tra lora (60 cublc mnter) 16 611 627 Bulldozers 19 S18 682 Wheled Leaders 10 VA $19 Viac. Vehicles and Equipmant U 841 461 Cars for Supe"lrsro 5 164 169 Workshop Equipmeit 14 216 280 lisc. Tools un Equilpmnt 11 101 118 Sper. Parts 7 227 284 Procur ntm Assistance 0 e1 101 Subtoltl Equipmnt 280 4,0V6 5,155 Sol id Wate Mabnagmnt oe Cost 7?7 6,475 7,248 Phylical Conti nies 10 752 a66 Price Contin_ les 15C 640 796 Solid wasts t nagmat Total Coot 1,C01 7,967 6,60 - 61 - Annex 2-5 Page 2 of 8 TOTAL cowmuw LOCAL FUIN TOTAL (U '000) Enviromental Ra illtstlon Lan III SIt Re habhi ItatIon 79 79 159 Erosion Control Messures 116 20 16 Delsn and Superilon 5 19 24 Envir_omental RTebiltation Sow 190 119 a1l Physical Contiin elnci 20 12 82 Price Continncie -I " 44 Environmntal Rehlbilltation Totel 25 189 a0 Pubilc Transport Assitane Line of Crdit (Spero part.) 42 m1 424 VID 5quaitnt 11 74 a Subtotal Public Transport U 4CC 509 Public Tranoport Assist. s Cost U 465 Sao Physical Contingencl 5 46 51 Price Contngenci 11 4 59 Public Transport Asist. Toatl Cost 70 549 619 Cossunity Iprovewt Progrm Access Roads Rehabiltation 2 6 I DistributorRoad 7.8 15 85 50 AcesRood Ty"sW6 51 116 186 Accsf Rood Typ I W 4 11 25 85 tpth Typ W1S 16 42 60 Footpath Type W 2 SD 12 27 t9 Subtotal Access IN 25 861 Drainage Stor Ser 25 57 82 Ope Channel Typo Lined 111 2619 71 Open Channl Typo Lined 6 6 9 CulVerte PIP 2 C 7 Ancillary Works 21 s0 71 Subbotal Drainep 162 870 58 Waer Supply 200m dil. Pipllnes is 64 60 lC0 _ dim. Pipeline 10 B9 49 loom di_. Pippllnm 5 19 24 Oooster Pmp Station 13 71 69 Service Reservoir 1i 70 Is Subtotal Water Supply so 264 80 Sanitation Publilc Toileft VP (20 plac) 9 21 s0 Electric Supply 500 (vs Tranwformr S/S * C2 s0 #00 Klv Tranorer S/3 2 11 12 11 Kv A 415 v Cbe d OJH Lin 2 12 14 41 v S Pha Supply 1 10 11 Rehabilitation 1 6 7 Subtotal Electricity Poer Supply 14 91 104 - 62 - Annex 2-5 Page 3 of 8 TOTAL aw@u4 LOCAL FREMI TOTAL -tes( - "ODD) . a Col & Lumiir A Control I 8 41 4 x 10 q. Cable 7 49 6 .4 x 6 q.mCabe 1 7 9 Ki Oak 0 8 8 Subtotal Stresetllghtng 14 9t 100 TeI4c_nunlcation Publie Coll oxm 8 21 24 Rehbt I ItAton 0 2 2 Sabtotal 'Tleaemunicatonw 8 25 86 C@nunity Foci ItI.. lispsnry 2 6 4 PCl le Post 4 9 it O%n Speo 1 8 4 Subtotal Camuity Factllties 7 17 24 Off-site Infrstructure Eleeltricity 4 24 28 Lan -Ad Compeetlon Land - Counity Feelitie. I 0 Coepenstion - Ce. Facilitle 27 0 27 Subtotal Lnd a Compeation a8 0 o Dslan an Supervision 148 10 1S Mokola Total _su coot Us 1,1 1,746 Physical Contl_iscles 76 170 262 Prub Cootingencies 184 1i6 290 Maklolm Total Cot 77 1,618 2,23 v-TlU Access Road Rhabilitatio 1 1 44 Distributor Rlod W 7.8 17 40 a Acce sRod Ty W 4 JC 41 llC Ace_m Rso TadT IeVs 1s 8 o0 Footpth Typw 2 AC 6 18 19 Footpth Typ W 1 Sp 1C 5 51 Subtotal Acces 101 286 8S Draina" Stom Seser 44 106 147 Ope Channl Type Lined 79 1 2864 Opon Channe Typ Lined 1 2 2 Open Chanl Typ Lined 5 12 is Open Channel Earth 1 2 2 Culvert. Pipe 1 2 8 Cuulverts ox 9 20 29 Subtotal rainaW .140 827 467 Witr Supply 200 m dim. PipelInes 14 57 160_ dim. Pipl In" 15 00 76 l0 dil. PipelInes 11 44 a Subtotal Mote, Supply 40 S0O 201 Sanltation Pub le Tol lets VIP (20plaes) 27 St 90 - 63 - Annex 2-5 Page 4 of 8 TOTAL cowa N LOCAL rMI TOTAL * ~~~~US '000) Electric Supply N0 Kvy Trantorm S/S 12 73 00 11 Kv & 415 v C.blnW OdH Liro 4 23 82 41S v * Pha SS ly 7 44 s0 ebabl lttlon 2 11 12 Subtotal Electricity Por Supply 24 11 1i6 Streel ight ng .S a Col & 2 Lminnire Ca1i. 1 I 10 .S a tol A12 w L&miire C.l. I 10 11 .6 Col A 12 L.iniru Cowl. 2 12 18 4 xlOq.mCable 1 7 3 4 x 6 sq.m Cbl 7 46 2 Ktooko 0 8 I Subbotal Sbreatlighting 1 C 9 Teleo_4nncatlosw Public Call BoK 4 29 U Aerial Cable IPole 2 18 1s R.i I ltation 0 a 1 Subtotal Talcoenunicatlons 7 46 52 Ceunity Folit lties Diepeary 2 6 I Poe Office 8 7 10 Coinaty Center i 4 6 Open Spce is 11 U Subbotal Comunity Fociltte 12 26 41 Off-site Infrastructure Electriecty 18 14 24 New Serviced Plote (100) sO 82 62 SubtotAl Off-ait. Infrestructuro 48 47 90 La and Compensation Land 12 0 14 Building Cc.pestion as 0 6O SubtteI Lend and BulIdinp s0 0 s0 Delgn and Supervislon 140 1 15 Yastu Total Bow Cost 621 1,167 1,796 Physical ContingsCies a 174 2 Pric Contingencis 146 164 800 Y_tu Total Coot 61 1,496 2,82 Accesee Distributor RoW 7.8 25 59 64 Acmom d Type I W 4 U 119 170 Acces ROad Type 2 W 12 29 41 Footpath Type 2 C6 14 20 Footpath Typl SD 1n 40 5 Footpth Type W 2 SD 2 4 5 Sbtotal Access 118 28 *87 - 64 - Annex 2-5 Page 5 of 8 TOTAL cuwmE LOCAL FCMEfN TOTAL Drainge Stor Swer u a 11l Open Channel Typ Line 94 219 312 Open Channol Typ Line 6 is 19 Open Channel Earth 1 2 8 Culverts Pipe 2 5 s Culverts Box 1 34 40 Subtotal Orainms in2 au5 so bOtr Supply 20 _ dim. PipolimI 27 100 136 160 _ dim. PIpollr 22 s 1Oo loo m dim. Pipellnm 1i 61 70 Boostr Pusp Station 18 U 66 Subtotal ater Supply 77 866 Sanitation Public Tolots VIP (20 place) 27 a 90 Electric Supply 500 Kva Transformer S/S 10 65 76 i1 Kv A 41 v Cebled O/H Line 1 1 21 415 v l Phae Supply 9 a9 67 Rhab I litation 1 7 9 Subtotal Electwicity Poer Supply 22 149 171 Streetl ightino 8 a Col & 25 Lminelre Cool. 2 1C 17 *m Col a 12s Lainal.o Cowpl. 1 C 6 a * Col & 125s Lainnre Cowl. 2 16 19 4 x o q.m Cabl 1 9 10 4 x 6 q.m Coble s 58 61 Klesk 0 * t Subtotal Streeblightiql 15 100 115 Teleconications Public Coll oxes 28 26 Aerial CsblA&Pole 4 24 27 Ancillary Works 0 8 8 Subtotal Telecmunications 7 50 57 C.umity Fcl I ltie Nleeth Clinic I 19 25 Pos Office 3 7 10 Fir. Statlon 6 14 20 Ope Spec 2 4 6 SubtotAl Comunity Fcil Iltl 19 48 62 Off-.lit fratructre Electriclty 4 24 29 New Serviced Plots (25) 21 48 as Subtoal Off-aits Infreetructur. 24, 72 96 Lnd nd Coepeastion Lend 11 0 11 Sol dino Cospeatlan 101 0 101 Subtotal Land and Buldidln 11U 0 11* - 65 - Annex 2-5 Page 6 of 8 TOTAL ~PC OWT LOCAL FEIOM TOTAL Ooign aN Supervison 19 1N Aa Total _s. Cost m 1,424 2,162 Physical Continogmloie 07 213 we5 Prlc Contlng.ncie 18 16i 3 Agug Total Cot 1,006 1,2 2,6 Community Iq.vemut Pregme ase 1,900 3,m 5,702 P"ial Contingmn--es 2s Su Si Price contingnlel 446 490 947 Commnity Inrovmn Pegre Total 2,64 4,U4 7,46 D4FRASICTWE MM. (Me"N USE COST 6,491 22,144 26, PHYSICAL CITIOSICIE 2,996 3',m2 PRICE CWTDMEDCNS 1,54 2,6" 4,408 DIFR5IC1iu1E IMM. (NaD TOTAL COST 6,94 27,9S9 #,941 B. PRVIRITY Tooas N W IAAa Future Subpjects ,1 1, 17,125 PRIMIY BA SE COST 3,1 1 17,15, PHYSICAL C%NTINEBCIES 3 1,675 2,0" PRICE C ICNIES On 1,930 2,739 PRIORlIY TOlI TOTAL COST 4,87 17,12 21,910 C. REVEIS S CEMT A DIST.3121114T. PrJect Coor4latilon - PCU Support Long an short-t.rm T.A. 84 1i6 109 Tralning 15 so 74 Public Edtuclon an Iomation 1I a5 V,.l.z aN supot 3 06 s6 Subtotl Proj. Coord. - PC. Support 70 26 UT Mir. of Finn i Ea. Planning Civil I Servi Training Sool Ewlpmt 0 * Vehicle 1 28 25 internal 1 venu_ Tech. Asiste 27 109 S Trainlng U 14 46 quwipme"t 2 8 3 Vehieles 8 249 262 Subte. Vin.of FlnacA&gc.Plang 77 4U 510 epobrtm of Ls1 Gormot 0W) Loc..O.. Cooed. ad Moaltoring Rating Coordination an Training so 1i7 197 LA Developmen Assetda 20 so 128 EuIpwIt an Vehiles 8 so 19 Subtotal Deort,t of Locl Goent 67 s12 S7s - 66 - Annex 2-5 Page 7 of 8 TOTAL 0w WN LOCl. P03206 TOTAL QJS6 '000) Iada4 Mnicipel Gevsrnmnt (IU) Operet. A Admn. Jmprv. (twinnnlg) Len-te T.A. 80 196 226 Short-term T.A. 11 41 96 Training U 146 182 Equipwat l0 as 76 Rating aN Valuation Velutian (hdm) a17 212 no T.A. 22 6 106 Tralning (Lol) 80 1s 48 Equip" 2 47 40 Vieles 6 11s 11t Ci llotian T.A. 0 40 46 Training I 8 1i Equipsant I so a5 Vehicles 5 *4 91 Subtotal lhadm Munleipeal 0v.QUM) 416 1,18 1,60 Min-.o LandA,Hoemng A Surv.(MUH) Multi-urpows L.I.S. Fasibililty Pilot Study 1s 11 1m7 Data V%wtilealton/Aupantatlon 46 162 226 Mpwing (badn) n 1,5m 1,422 T.A. 27 176 205 TrainInog 1i 9 114 Equipmnt NW Settwar. 14 28 277 Vehliles 1 20 80 Twn Planing Division Plnng. oglilat.4& Pect. Study 1 a1 62 T.A. (Flaning Ceerdintion) 22 67 106 Stnoatur A Invatmw t Plans a 286 29 Subtotal Min.Ld.W. ,NIngkburv. (IlS) 26 2,610 2,696 Environnntsl Preotation Commiasion (EPC) Storm Drainae an Flood Control Minetanne Assiatarns 4 17S 219 Solid Wast Mament Op0 1ation Awl sisoo 72 480 In Traliin 21 a 106 P lob SudiRey/Cempt/Tst 84 1a6 10 E&Wwirmndtal Management T.A. 16 119 IU twipme (Educ.) 2 42 44 Vabielas 1 24 s0 Sebtel Env.Pratactn.Cminisn.(EPC) 1# 1,064 1,256 ministr of Works sow Trop.(Wr) Trat lc en Transport UIkit T.A. 80 120 IS0 Trn ort Plaming Study 11 54 a Highways (Maintanano) Maintnaos T.A. 146 162 MainbRAnat Study 16 77 U Subtotal Min. Wor* and Trnep.(ON) Is 7 490 WONB WIC.& DMT.SllSlti. MLE COST 1,278 6,217 7,490 PIM .>L CtonD 127 ' 22 746 RiCE wWIEc' 24 501 747 E1G nWC.& DT.SIh.TOTAL CT 1647 7,34 6,97 .-- |~ 0 I |Ig 'hi'8ss II Cx K~~~~~~~~~~~~~~~~ c o - 6d- Annex 3-1 Page 1 o-f--I ;§ g!gt| iglX|g^ ''4"' '4^^#^-^^ '4 3S1 a *- a a - I at ]~~~~~~~~~~*** .41 -tl .4 4' §~~ E I IfifX*#l 1Z 4. |g^c-o-.X i101it }1SSi2SS{22 js22:sfi |~~ b sI. I iit" I. Jj^i lN j l'II j a}j I dle ij'49} 113RI I} z Annex 3-2 -69- Page l oft NI'IA OTO STATE USM4 POJECT (IDF 11) Disburpinnt Schedule v/ OMXe_ Elh II on Csalstlv. Olebummte (16 mllieo) quartr Apraisl App.. Estimat Ending Etimat FY90 HEad, 0.0 0.01 June 0.0 0.05 FY91 Setemb 0.4 0.81 Deember 1.0 2.05 Moreb 2.8 4.63 June 6.0 10.05 FY92 September 6.5 17.05 0ecoer 12.2 24.4X Hbach 16.4 80.8 June 13.0 87.21 FY98 Septeer 21.3 48.6 Deco.r 24.8 49.X Meadr 27.8 55.61 Jwu 80.6 61.21 FY94 September 88.2 66.41 December 85. 71.6X March U.1 76.11 June 40.1 60.1U FY66 September 42.1 64.131 December 48.6 a?. U3 March 44.8 99.51 June 48.0 91.1K FY66 September 47.2 94.11 December 4.2 66.81 March 49.2 $0.0 June 60.0 100.05 Leo dtecwtIvnm Is tareaind In Hoe ouer 160 NIGEIWA OYO STATE URBAN PROJECT mpI.m*nta&Uon Arrang.ments f--&ED-F ----- GoWEIIT I Pfl o-j- I C ~-[ caiveN1FcaS ~~~~~~~~~~~~~~~~~~~~~~ _{ I AW Lxa l~~~~ R-X"tua rH I. rf k*E0 R- fe hbl V_ lt V inS&E.MO *dPM 1L(I-ophw tLclGww LTE - L *CN CoimddSnky bqof amuenle - apig& n of andsg. ftfouod CniU way * AovmiF E. Wtia of e * Phyumv pSIAU-S * So|bsS W..SO boAul -- ClloalIS * 11S b* C I * Enavv _Iinui anoemn .* h1ui48Mbnu.o £ RtegeWmm * bhIaaukuclSwOHab {FfI- Fed h^b~y i Intance £ Es.unc 0 1doimn (JLG - D.at tn ci Loca Gommu ICUNI - CeaIr Bnk0 olhia (RLI - oLadst. hual * &g, (FUWIS) - fed.ka y OS wwk £ liui EJoaC - |agg.fI Pioloclio Couag 5S a -Po I -amdncwd bIaln 4UA) - SUG0 &AFWM nl Ova- State kbu.VtI oiIf sat § -& Ec iaa uLm - Lal - W - 71 - z'-qt 34* OYO STATE U"DUMJICT aItlewtation Schdule 90 *i 92 93 04 95 W A. Rnfreetitu tehab. (thada:) : * sWs Osiaesa^ ri1 Canree * : : : :. O nir, Chor l;oetio .:OWT:ACCC:CCCC:CCCC:CCCC:CC 0eels lRe ZeIli tati : CCC:CCCC:CCCC:CCCC;CCCC: b ;"tenanq. £qu; _.t : OOTAM:1E: Solid Wa"* Ia & : : : : : : : Civil worts :oot:ACCC:CCCC:CCCC: Iqusma~t :OOTA:E11: : IOvif$nM_tol ehabillitation : DOOTAC:CCCC:CCCC: Comunity Ipoevment Proga : : : : Mekele :OOTA:CCCC:CCCC:CC : YTitU : D00:CTACC:CCCC:CCCC : Aguge : 00:OTAC:CCCC:CCCC: : : : : : O. Priority Tons Subsejeeta :0000:TTAA:CCCC:CCCC:CCCC:CC Utile Vauaton: D: TA: KU: M: : - t x rf. Ab o AdorCi*ft. Supporth| : : :' : : : : =__ _ ____________ Mapping______ . C :: : : : .evenue a ahacat.e A .ista S: I.ggm: % : : : 3*b;^ . e t.…"..e * studies: : : TI enwt. P Anln. Sudey UEEE:KA:IIU:1111:B1 : : tIba S tructure Plan : .151E:5£: : : : : Ibda happin (US) : 0:00? :41:11: : : : P?C Op. * Moint. Ao;ieanceo :Eoo£:t£EE:EEoE:tEE£: : : : Envhonamn"tal Pilot Studio : :1511:EE: : Tigngp.,t Plgn"ing Study : 1: 11E:1 Maintenance Study :EEE:E: : 0. FMU Suoport Training T *: : : 11: gm: a Project Prparotion Studie : : E:E1EE:EEUE: E* A-AA Awerj CCCC Construct ie 000 0 Oin g£1 Execution TM YToder Call - 72 - Annex 3-5 Page 1 of 3 FEDnRAL IU3LIC Of mIGnlIA OO STATE URA PROJT (IDF II) OYO STATE UVltOIWKNTAL PMOTRCTION COMM4SSION Sch dulo of Functians and Obiectives (1) Responsibility for forulating and enforcing policios, sta'utory rules and regulations on waste collection and disposal general nvironme ntal protection, control and rogulation of the ecological system and all activities islatod thereto. (2) Oo-ordinating the activities of all agencies in Oyo State connected with environmental and ecological matters. (3) Conducts public enlightenment campaigns and disseminates vital information on environmentL%l and ecological matters. (4) Randers advisory services and support to all Local Governments in the State in areas of flood control, solid waste management, ecological and sanitation matters. (5) Responsibility for measures to guarantee consistent effectiveness of environmntal structures throughout the state for flood control, solid waste collection and disposal, and general sanitation. (6) Preparation of master plan for drainage, solid and liquid wastes, and general aesthetics. (7) Monitoring of sources of toxic pollution in air, land and water and offering of necessary advice to industrial establishments. (8) To mobilize the inhabitants of all areas in the State for effective observance of environmental rules and guidelines for purpose of healthy and safe environment. (9) To initiate measures to ensure pollution-free air. land and water throughout the State including any other steps to obviate, mitigate or elaimnate environmental discomfort to individuals or groups, or danger to lives and properties. (10) To carry out ad$inistrative. supervision and establishment duties with a view to ensuring good financial msnagement and administration of the Commission in line with Government policies. OOSTATE L A RJC OYO STATE ENVIRONM ENA PTECION COMISSION ORGANIZATION STRUCTUR SUL I~~~~CN MAN - ALFaSe m6 SMm nS : - P-C l Cm_d wamm £ ftm. Bdmm. L . ___ s^ G~ "r I _uhh I .1 . - 0 ~~~~~~~~~~~~~~~Elcg*; P_f IEO_*_ a . a" _ur sk~~ lboamft gwaiounidm fMmcw4amm *'pmml, A e V AWMkSU -I.a C e~1 EOVUC - - 0_W UlUda4 *s 1wd -e. f& Cc* - P~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~a C~ickgM'z21 s 4 _11 & _ - 0b_ de1_ Cb0_*C &mm. meR _ _ ms wd -iWB Ic EvmUiS PIuu.- * c._ r m ,,.-,,,,m_ * _ua,. _~m Op_ _ olUW.US. d SSl _ me "_ £_k4lsfL II*LY ~ ~ ~ o~mMS.i ai MwdO. Tiiu 9 Wa_m _ _* * N_.poO C lh_ 1 01 01 Ud kU X GovoW ~~~~mww o b &aim S.uCi d %aId. Acv.o a m a.sae T.ewd.c01 bamo SAM 0106Omose a w _U *#Siva Sm _Imle at Fm__ ieclj Pnwaa 0 Viajs mwwinmmm pbor ss&W.aa nata AmAbabiv.M 01 gOIMA NIGRIA OYO STATE URBIAN PROJECT OYO STATE ENVRONMENTAL PROTECTIO COMSSION Key Staff Postons RAm.c 8"olAm4s AM 4A meCM1 FaU -LIFEm AIPO" m GMCT osUTom niT rai 1cCWA Ft 000 me &Me V"IIIE~~EC 01C ciecvo MANA(hEUEv4T MAJIEPA & ~~~~~~ASq'IANI- ___ -- DCTOH Vin~~acc" weonDMTO lftCI4ML I SILAN a "iS.A_ AI NL I ANAMULNI4A cuoAWAG9 ION i3SALe4 I A -- BTATAMA6TAblN __ _ _ _ _ _~ ~~~ ~~_ _ _ _ AbIbIANI ASSSaAMI SW2IANT CYON oftclowamcgI DIICTON amu EHNA OA5C Afl [ 7 ~ _ _ _ _ 1 _ ___L don 0i&C ION EN~~~~aw30@ENIFAL 1001.00CM rc-. r-. ] r s | rs l ANNEX 4-1 ~ 75 ~ Page'l of 20 FEDERAL REPUBLIC OF NIGERIA OYO STATE URBAN PROJECT (IDF II) ORGANIZATION, FINANCE AND PERFORMANCE OF PARTICIPATING FINANCIAL INTERMEDIARIES (PFIs) A. THE FtNANCIAL SECTOR SETTING 1. Nigeria has a relatively well-developed and diversified financial sector, comprising the Central Bank and about 89 commercial and merchant banks (with over 1,833 branches throughout'the country), several insurance companies, ieveral pension funds and a provident fund, leasing companies and saving banks, two stock exchanges, three major public development finance institutions and a public mortgage bank and some twenty regional development finance companies. Since 1977, foll9wing the promulgation of the Nigerian Enterprises Promotion Decree, all banking institutions in tne country are required to be at least 60Z owned by Nigerians. Host of the leading commercial and merchant banks have significant foreign minority ownership, ranging from 20 to 40Z. 2. The Central Bank embodiea the monetary authority in the country and as such, is the lender of last resort to the banking system. It also manages foreign exchange reserves and pay*ents. Commercial Banks predominate in the financial system in terms of total asset holdings, accounting ior about 74 perceat of assets held between commercial and merchant banks. Merchant banks, however, have been gaining very rapidly both in terms of numbers of banks and of total assets. Merchant banks concentrate exclusively on corporate and institutional clients and serve a role as wholesale banks while providing a wide range of investment and commercial banking services. 3. Despite this relatively sophisticated institutional framework, a high degree of Governmeit regulation and control has in the past retarded the full development of the financial sector and limited its allocative efficiency. The result has been the evolution of a relatively rigid and compartmentalized credit system with limited market determination of the terms and conditions of financial intermediation. The financial sector has been subjected to a complex system of controls by the Central Bank of Nigeri* (CBN) regarding the sectoral allocation of loans and their maturities, and to low legal limits on nominal interest rates for both borrowers and savers. In general, as inflation increased, traditional deposit and lending instruments of the banking sector have been limited by low nominal interest. rate ceiling which, until recently, did not permit the adjustments necessary to ensure positive yields in real terms. - 76 - ANNEX 4-1 Page 2 of 20 4. In October 1986, the CBN began to liberalize the interest rate policy; time deposits were allowed to be negotiated between banks and borrowers, the maximum lending rate was increased by two points to 15? and the differential between preferred and nonpreferred sectors was eliminated. In August 1987 the Government eliminated all ceiling on lending and deposit rates, and the discount and treasury bill rates were increased by 4 percentage points from 11Z to 15? and from 10? to 14?, respectively. The discount rates, however, were reduced in December 1987 by 2.25 percentage points, to stimulate growth in the economy. While the rate of inflation was less than 10? in 1987, it was 38.3Z in 1988. This situation continued- -and even worsened--until mid-1989 when the CBN sharply tightened credit (see below). The result was a jump in interest rates and a reduction in inflationary pressures. Indeed, after rising by 35? in the first 6 months of 3989, prices fell by 9? in the following 4 months. With lending rates in the 30 percent range and deposit rates in the 20 percent range, real interest rates are now positive. Late last year the CBN introduced a treasury bill auction. Interest rates on that market have averaged 17 percent and the discount rate has been set at 18 percent. 5. The main restriction to the activities of commercial and merchant banks is now through annual ceilings on the expansion of loans and advances, and sectoral credit allocations criteria which specify minimum percentages of the portfolio for certain sectors. The credit ceilings on the growth of the bank's credit to the private sector was raised from 7.4? to 12.5Z in January 1988 to assist in stimulating the economy, and was lowered to 10? in 1989 as a result of an increase in the inflation rate. For 1990, the aggregate credit ceiling was again increased to 12.5Z but the. - ceiling now applied to all types of credits, not just loans and advances. 6. During 1989 the CBN applied a series of stringent measures to restrict the credit expansion beyond the regulated ceilings. The first measure taken in May 1989, involved the abolition of offshore guarantees of Naira-denominated loans. Unless borrowers were able to provide alternative local guarantees the loans were recalled. The second measure taken in June 1989, invclved the transfer of Government (Federal, State and parastatal) deposits from the commerciaL and merchant banks to the CBN. The result of this w."eaare was to pull out over 10? of the total assets of the banking system (roughly NO billion out of P80 billion) and obviously a higher percentage of the deposit base. The result was that several banks becamt- illiquid and have overdrawn by large margins in their CBN accounts. How many of these banks will become insolvent is still open to question. The end result was to boost both deposit and lending rates; however, interest rates are still negative 1/. 7. Nevertheless, the most impovtant structural problem facing the banking system is its lack of stability, resulting from the readjustments taking 'ace in the economy urder the Government's Structural Adjustment I/ Interest rates on savings account and certificates of deposits now range from 132 to 20Z and lending rates range from 221 to 28?. Also Banks are now required to pay interest on current accounts. J. - 77 - ANNEX 4-1 Page 3 of 20 Program. As a result, banks are foced with potentially high arrears, and CBN is not strictly enforcing their power to request additional provisioning for doubtful loans. In this context, the capital adequacy of banks is critical. Commercial banks and to a lesser extent merchant banks, have in the past, been highly leveraged, and there is a need to subject the banks to stronger regulatory pressure to classify their portfolios properly, work out their non-performing assets, make up the provision shortfall, and strengthen their capital base. B. BANKS' ORGANIZATION, STAFFING AND PROCEDURES 8. The five Nigerian merchant banks 21 already selected to participate in the IDF project would be eligible to participate under the proposed project. Four of the banks have continued to demonstrate their financial strength, technical capacity and interest in participation. ICON has in the past also demonstrated these attributes, but the recent CBN measures to restrict credit expansion has revealed some weaknesses in ICON's liquidity management and portfolio. ICON's continued participation will depend on the outcome of a more detailed assessment of ICON's recent fiuancial status which is currently underway. Together, these five banks account for about 702 of the assets held by Merchant Banks in Nigeria, and three of the above selected banks are associated with prominent international banks. The ownership, organization and staffing, operations and procedures of the tanks and their financial structure and performance are analyzed and described below. In addition, several commercial and merchant banks have expressed their interest in participating in the project and will very likely participate once their eligibility is confirmed 3/. Some preliminary financial information is also included and a detailed mnalysis of their management, organization and finance is still underway. 9. Ownership. Nigerian banking institutions are required by law to be at least 602 Nigerian,owned, and the five participating banks conform to this ruling. In the case of three of the banks (CMB, IMB and NMB) this 602 shareholding has been retained directly by the Federal Government through the Ministry of Finance Incorporated (MOFI), a wholly-owned subsidiary of the Federal Ministry of Finance. MOFI, in addition, continues to retain a 202 share holding with NAL. Nigerian parastatals are also figuring prominently in the ownership structure of the banks, with Nigeria Industrial Development Bank (NIDB) owning 452 of the shares of ICON, an,d the National Insurance Corporation of Nigeria (NICON) owning 15Z and 25Z of ICON and NAL, respectively. 21 HAL, ICON, International (IDM), Continental (CMB), and Nigerian (NMB) Merchant Banks. 3/ lgigeria International Sank (NIB, a Citicorp affiliate); Grindlays Merchant Bank, Chartered Bank Ltd. and Merchant Bank of Africa (an affiliate of Bank of America). - 78 - ANNEX 4-1 Pago 4 of 20 10. Three of the five banks (NAL, IMB and CMB) have had strong foreign banking participation. American Express and Credit Lyonnais together own 28.6? of NAL while First National Bank of Chicago and Chase Manhattan Overseas Banking own 40Z, respectively, of IMB and CMB. Until 1985, Morgan Guarantee and Baring Brothers tngether held 40t of the shares in ICON, however, they decided to relinquish these holdings several years ago. ICON is still seek5,ig a foreign banking partner, although Morgan and Baring Brothers continue ,o provide them with correspondent banking services. NMB is unique among the five banks since it does not have any direct foreign banking participation, and is not planning to have any in the near future; however, this does not appear to have limited their operations. 11. The active participation of the above mentioned foreign banks in the ownership and operations of the Nigerian banks has added greatly to the range and depth of experience, skills and services available, as well as provided a sense of stability and confidence to the banking sector. Contrary to what might have been expected because of their importance in the banking sector and their specific financial business with the parastatal eaterprises, the banks have been largely free of ¢overnment intervention in their lending and syndicating operations, as well as in the management of their portfolios. Merchant banks can now make equity investment operations, which by regulation is limited to no more than 102 of its capital in a single company. The total of the equity shareholding cannot exceed 1/3 of the merchant banks capital. In fact, banks compete intensely among themselvas, for savings, letters of credit, syndications and borrowers, and with the development banks for long-term projects. Basically, the difference between merchant and commercial banks consist of business size. The merchant banks are primarily in wholesale financial activities (dealing w.th relatively large corporate, parastatal and Government clients) while the commercial banks also handle retail banking business, which means providing services to individuals. The merchant banks operate strictly on the basis of commercial criteria and have developed the reputation of being among the most profitable, effective and efficiently run organizations in Nigeria. The following table summarizes the ownership structure of the five eligible banks selected as PFIs; also indicated is the size of their assets and staffing. Preliminary data is also included for Merchant Bank of Africa (MBA) and Nigeria International Bank (NIB) (a commercial bank); Grindlays Merchant Bank and Chartered Bank (a merchant bank); their eligibility as PFIs is pending detailed appraisal of their management, organization, operations and finances. - 7Q - ANNEX 4-1 Page 5 of 20 TABLE 1 OWNERSHTP STRUCTURE OF THE PFIs Total PFI Year 41 Assets Staff 5/ Shareholding (N mil) Local Foreian NAL 1960 1,504 bi 407 202-MOFI 26Z-American Expr. 252-NICON 102-John Holt Group 10-New 2.61-Credit Lyonnais Nigeria Dev. Co. 6.42-NAL Staff ICON 1974 2,389 a/ 604 452-NIDB 352-(Reserved for 15-NICON Foreign Partner) 5Z-Staff (Reserved) iMB 1974 1,868 a/ 586 60X-MOFI 402-First National City Bank/Chicago CIIB 1975 1,678 a/ 661 602-HO0I 402-Chase Manhattan Overseas Banking MeD '.979 1,540 b/ 331 60X-MOYI None (UBA is in turn 40Z-United owned 402 by Banque Bank for Nationale de Paris) Africa (UBA) MBA c/ 1982 850 a/ N/A 552-private 402 Bank Of America 5X-MOFI NIB c/ 1984 1,604 a/ N/A 602-private 402 Citicorp Nigerian Grindlay c/ 1984 339 a/ bb 602-private 402 ANZ Banking (none more group than 52 of shares) Chartered c/ 1988 207 a/ N/A 1002-private (Nov. 1989) (none more than 5 of shares) a/ 31/12/88 b/ 31/03/89 c/ For MBA and NIB, Grindlay and Chartered appraisal is pending and are not yet PFIs. 4/ Formation Year. 5/ July, 1989 ; - 80 - ANWNX 4-1 Page 6 of 20 12. Orianization and Staffing. The five eligible PFIs are all fairly simIlAr in their organizational structure and staffing, reflecting the similarities in their operations. They are generally organized into three main sectors (corporate banking, corporate finance and management services), within which there are specialized divisions (credit and marketing, trade and correspondent banking, operations, securities, corporate affairs, finance and administration, etc). While the reporting relationships differ somewhat among the banks, the basic organizational elements are quite similar. The main sectors are usually headed by a general manager, and the divisions by an assistant general manager. During the appraisal mission it was confirmed that most of the five PFIs for the Project start up phase have already organized and are operating Special Units within their respective Corporate Finance Divisions, and through them most financial intermediation operations are being handled. The creation of these Special Units represents an important achievement for both the IDF Project and for the proposed Project. The selected PFIs' new Units are in fact development finance windows of the PFIs. At present their main operation is channelling the World Bank's various lines of credit. Each Special Unit is headed by a well qualified officer who is directly assisted by at least three professionals and two support personnel. For these Units, specialist staff and occasional short-term consultants have been assigned to manage all the development projects as well as to improve their capacity to deal with the intricacies of state finances and become familiar with urban infrastructure sectoral issues. Nevertheless, it is necessary to strengthen the installed capa;*ty of these Units by biring additional professionals (as required) witha arckground in areas related to the sector objectives, since there is a :kck of personnel with training in this area. It is expected that under the Project's technical assistance component the PFIs would be assisted in strengthening their technical skill in subprojects preparation, evaluation and supervision. For specific t.;echnical aspects of the project, consultants would be hired, as needed. The Special Units' functions cover a wide range of activities starting from promotion and advisory services to subproject preparation, evaluation, and supervision. The Special Units will be assisted by other PFIs' divisions particularly by the Marketing And Credit Divisions. 13. Currently, ICON is in the process of making some adjustments to its institutional framework, and the new scheme will be presented to its Board of Directors in the near future for approval. The following table presents the geographic distribution of the PFI's branchest 2~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ - 81 - ANNEX 4-1 Page 7 of 20 TABLE 2 SELECTED PFIs BRANCHES 6/ NAL ICON IMB CONTINENTAL NMB Branchess Kaduna Kaduna Kano Kaduna Kano Kano Kano Joe P-Harcourt Owerri Calabar P-Harcourt Kaduna Ibadan Benin Aba Port Harcourt Abuja Onitsha Veadquart: Lagos Lagos Lagos Lagos Lagos Total: 5 6 6 6 3 14. The decisions for subproject financing approvals are centralized in Lagos Headquarters, but for subproject preparation and supervision activities the Special Units would be supported by the above 20 branch offices, which would also carry out initial promotional activities. The three largest banks average just over 600 staff. The professional staff in all the banks are strong in financial and accounting skills but lack many of the technical skills that would be directly relevant to urban infrastructure subproject lend'ng. In spite of this significant gap, the general caliber of the staff is impressive, particularly at the middle and senior management levels (project officer, assistant manager and upwards). Typical of the banks as a group, more than half of staff is at the level of deputy manager and above possessing masters degrees or equivalent in finance, accounting or marketing, and the rest possessing bachelor's of equivalent degrees in disciplines relevant to banking. 15. Some banks are clearly stronger than others in specific subject areas, however, none is considered significantly better organized or more strongly staffed than the others. In general, they are all well run and capably staffed. The typical middle and senior level managers have had 10 years experience in the banking sector. As a result of the rapid proliferation of banks in the past two years, all PFIs have lost some high quality staff to newly established banks, but have managed to fill the vacancies left from within without too much difficulty, as many competent staff remains. Nevertheless, the staffing status will need to be closely monitored. In the future some of the newly established institutions may be considered as future PFle given the tested management some have recruited. 16. Operations and Procedures. While the banks offer a wide range of services to their clients, the Bank appraisal mission focussed most specifically on syndications and project lending, these areas being most relevant to the project. The operations and procedures of the banks are, again, quite similar. In general, they attempt to spread their risks by 6/ At June, 1989 - 82 - ANNEX 4-1 Page 8 of 20 syndicating their larger loans. But given both the size of the PFIs and the average cost of the proposed priority towns subprojects ($1-2.5 million), the syndicating of loans may not be necessary. The procedures for loan syndication are well established, regulated and supervised by CBN. Though not regulated by CBN, the procedures for project lending and supervision are fairly standardized, vell developod and documented in the operations manuals of each of the banks. 17. The banks have the capacity to evaluate as well as to advise on the technical and financial viability of the projects, and in most cases project lending involves both operations. Existing project lending is concentrated in the manufacturing (46.3Z average for the five PFIs) the real estate and construction (1OS average) and more recently the agriculture, forestry and fishing (14Z average) sectors. Two types of projects ar, ypical. In the usual industrial project the banks rely on the participation of a strong technical partner, and the operational procedures focus on the financial viability of the project. This is especially the case where proprietary technology is being provided by the technical partner. In most such cases, however, the bank spot-checks equipment specifications and prices, and seeks comparisons with similar projects. The experience of foreign banking partners has proven particularly helpful in this regard as international price comparisons can be quickly and easily checked by telex with foreign branch offices and corporate headquarters. In cases where the technical partner is found to be weak, the banks assist the client to identify a suitable technical partner or to retain appropriate consultants. I8. In both of the above cases, banks are willing to supply consulting advice in the areas of marketing and finance--the areas in which they are well \ndowed with staff resources. Most clients require advice and assistance with project preparation, and the banks have offered this consulting service, seeing it as a growing and lucrative source of revenue. Over the years, particular bank officers have developed a familiarity with certain sectors and types of projects and this has, to some extent, compensated for the lack of engineering expertise. 19. Because of the variability of the quality of project preparation done by the banks' clients and the consequent variability in the extent of consulting assistance required, it is difficult to generalize about the loan appraisal period. However, where adequate preparatory work has been uadertaken by the client, the technical partner is strong and legal and collateral requirements are not overly complex, loan appraisal and processing can be completed within a six month period. The typical appraisal consists of thorough (and standardized) analyses of recent and projected performance based on assessments of balance sheets, income statements and cash flow projections. Audited financial statements for the past three years of operation are normally required. Based on the above, a standardized set of ratios is derived, assessing project profitability, liquidity, asset utilization, capital structure and degree of risk. These quantitative indicators are supplemented by qualitative evalaations of company history, management capability, stability and the probabilities of successful project implementation. in addition, clients are required to - 83 - ANNEX 4-1 Page 9 of 20 demonstrate the capacity to adequately (and quite conservatively) capitalize projects from their own resources, often in the form of cash equity to be deposited with the banks on the approval of a loan. 20. Project assessment would usually be the responsibility of a particular project officer who is responsible for undertaking the necessary financial and managerial analyses, ensuring that sound and appropriate technical advice has been obtained by the client, and that the project is feasible. On completion of this assessment, a report is submitted, through a senior manager, to a loan committee comprising the senior officers of the bank. This loan committee recommends to the managing director that a particular loan be approved or otherwise disposed of. Managing Directors are allowed discretionary approval limits which vary from bank to bank. Above these limits, approval has to be sought from a loan committee of the board and, in special cases, by the board itself. Once approval is given to a particular project, the client is informed in writing, and all the legal and financial conditions attendant on approval are stated. Loan disbursement is then contingent on the fulfillment of these conditions, including, inter alia, the payment of commitment fees, the pledging of equity and collateral, and gu*rantees of performance. Payments would normally be made only against engineer's or architect's certification. 21. In general, all the banks adhere to prudent and well documented procedures; in most cases, project supervision goes well beyond the simple monitoring of payments. The banks consider it not only normal but essential that their project officers should attend site meetin s during the construction stages of projects, and develop a firm grasp of the critical project activities and the progress of the project as a whole. 22. The five PFIs have the basic capability to appraise and supervise state urban infrastructure subprojects, provided that special unit staff are supported by consultancy services as required to cover the technical aspects of the subprojects to be financed. The banks have considerable experience in disbursing against appropriate documentation and in field supervision of industrial projects. However, there are two important project objectives which go beyond the narrow requirements of a typical bank project, namely: (a) reviewing the creditworthiness of the State Governments to ensure repayment of the subloans, and helping the Statqs, to the eztent possible, improve their creditworthiness; and aisessing and monitoring the creditworthiness of State Governments; and (b) helping the States and Local Governments prepare infrastructure projects, develop a capacity for project execution and improve their revenue bases--in particular, substantially improving cost recovery to make infrastructure services self-financing---and generally putting State's infrastructure on a sounder financial, technical and institutional footing. 23. These are important project objectivas on -which the Federal Government of Nigeria and the World Bank are in agreement, but which go .A - 84 - ANNEX 4-1 Page 10 of 20 beyond the normal business practices of the local banks. There are no existing institutions in Nigeria dealing effectively with these complex questions. The technical assistance and training to be provided under the project will address these larger objectives. The combination of technical assistance directly to the States, training of PFI staff to enhance their capabilities, competition among PFIs for State subprojects and the States' self-interest in improving their creditworthiness should help to achieve these objectives. C. FINANCIAL STRUCTURE OF THE PARTICIPATING FINANCIAL INTERMEDIARIES (PFIs) 24. The tables accompanying this Annex present the past audited financial statements, sammary financial ratios and structure and quality of the portfolio of the five PFIs which have so far been classified as eligible to participate in the on-going IDF and proposed Oyo Urban Project. Total assets of the five banks have grown at an average annual rate of 45Z over the past eight years. The fastest growth took place in the 1981-1982 period, during which the banks grew at an unprecedented annual rate of 782. During the 1986-1988 period, the PFIs grew at an annual rate of 45Z; however, in 1988, when restraints on credit growth were applied by the Government (para 4), growth dropped to 21Z. 25. The f ancial structure of the merchant banks is characterized by relatively ,..rt-term deposits (less than one year), with little medium and long-term debt (over five years). In general, cash, receivables, short-term loans and advances, and other short-term assets accounted for well over 601 of total assets during 1984-1988. While limiting earnings, these liquid assets have assisted the banks in reducing their exposure during economic downturns. Given that an average of 40Z of their portfolio is in loans with maturities of over three years, and given that over three- fourths of their total resources are represented by short term liabilities, this leads to a significant amount of term-transformation,7/ and liquidity problems can materialize to the extent that a sudden withdrawal of deposits do not flow back quickly into the banking s8stem. Precisely such a situation took place during June and July 1989 with the sudden withdrawal of all government deposits. Banks with significant percentage of gbvernment deposits hove had to rely on overdrafts from the,NDIC and CBN as a safety net. The survival of some of the Banks is still questionable and is being monitored closely. 7/ Term transformation, which involves using short-term deposits for medium to long term lending, is a normal banking practice, but poses two main .Atsks; (a) the possibility that interest rates paid by the banks for t.. ir short-term deposits could increase over the interest rate charged % long-term loans outstanding, thereby causing a loss to the baniks; a. i (b) the possibility of illiquidirt from deposit withdrawals. - 85 - ANNEX 4-1 Page 11 of 20 26. Caoitalization. As shown below, historically, the PFIn have maintained debt/equity ratios of roughly 22:1, which is on the high side for a medium to long-term lending institution. As also shown below, with the exception of ICON, banks have already taken some steps to reduce their debt/equity ratios; however, the needed adjustments would be addressed under a proposed financial sector operation. In addition, the quality of the portfolio off the PMBs would be monitored during the implementation of the project, with the support of CBN (para. 31). TABLE 8 DQBy T RATIOS Chrr- Grlnd- Fiscal Year NAL g/ ICON IMS CMB NO B/ NIL MBA k torod loye kI 1981 - 21.4 21.2 22.8 - - 1962 15.6 21.2 28.7 27.9 14.7 - - 1983 18.5 29.9 25.8 82.4 25.5 - N/A 1984 19.4 19.5 23.9 81.8 25.9 - N/A 1985 17.2 2090 21.1 2090 22.4 19.6 27.0 15.7 1986 18.4 26.0 20.1 22.1 20.2 33.2 42.9 86. 1987 29.2 28.2 26.2 25.6 26.6 28.6 50.0 8.81 1988 12.6 29.6 20.8 17.8 19.3 16.4 84.0 26.9 1989 6.0 - - - 1. - - 6.8 16.0 Average 16.5 25.8 23.4 24.9 21.5 28.2 45.9 0.9 */ For NAL and7NWB the fiscal year (FY) ends in March. For Grlndlaio FY ends In Septmber. For all other banks the FY is tho smem as the calendar year. b/ NIB, MBA, Chartered and Orindiays are not yot eligible to partielpate sine, detailed appraisal of their organization/finances has not yet ben completed. 27. Profitability. The profitability of the PFI is adequate. The nominal after tax rates of return on average equity of the five PFI are shown below: TABLE 4 AFTER-TAX RETURNF ON EQUITY PFIs Char- Grind- Price Fiscal Year WAL ICON ImB CUs NMB NIB MSA tored lags Index 1981 - 86.1 85.1 35.5 - - - 20.6 1982 40.9 24.6 41.9 89.8 26.9 - - 7.7 1963 22.4 19.4 81.8 88.1 18.1 - n/a 28.2 1984 81.9 24.8 89.7 28.3 29.9 - n/a 39.6 1986 46.0 25.0 81.2 89.5 81.7 10.0 16.9 5.3 1986 86.6 44.8 41.6 89.5 86.6 127.0 40.8 51.6 5.4 1987 81.7 48.6 56.0 86.2 49.4 167.6 79.4 55.9 10.0 1966 96.0/ 87.5 88.2 61.5 6.8 120.0 90.9 64.6 87.9 1989 64.6&/ - - 45.4 - - 44.4 48.7 Average 46.6 82.5 89.4 J8.1 88.2 111.9 68.6 44.4 49.0 21.9 s/ Includes extraordinary profit due to revaluation of foreign assets. 28. In the past, the five PFIs earned very positive real rates oE return on equity during periods of low inflation, but lost much ground - 86 - ANNEX 4-1 Page 12 of 20 during years of nigher inflation due to the fixed loan margins (caused by interest rate ceilings) which did not distinguish adequately between real and nominal profits of financial intermediaries. They were able to maintain their profitability in spite of these restrictions through commissions and other charges on loans and through the substantial interest-free advances placed with banks by importers pending release of foreign exchange by CBN. Following the liberalization of interest rates in 1987, the PFIs have dramatically improved their real rate of return on equity. As a percent of average total assets, the grosa spread (interest income less interest expense) shows narrow margins (1.81 to 3.9Z during the last year), but when other income is included the margins increase significantly (4.9Z to 7.02). In gereral, administrative costs expressed as a percent of average total asb te have been kept in the range of 1.0 to 2.52 which is very reasonable. However, during subsequent reviews of the PPI's financial situation, a more detailed assessment would need to be made to determine the degree to which profitability has been overstated due to underprovision for problem loans and other potential losses. 29. Portfolio Structure. Quality and Reserves. In general, the portfolios of the five PFIs are concentrated in loans of NO.5 million and more with loans under N100,000 in size comprising less than 5Z of all lending. Both CMB and NAL have a majority of their portfolios in loans in excess of N4.0 million which reflects their emphasis on lending to large corporate names in Nigeria. As mentioned earlier, the term structure of the lending is medium term, with loans over three years representing an average of about 502 of all loans. The significant amount of term transformation has been encouraged actively by CBN despite the lack of medium-term sources of funds available to the banks. Unfortunately, this officially encouraged a mismatched situation which has recently become a source of vulnerability to the PFIs in particular as a result of the recent FGN directives (para 6). Loans to Government (State and Federal) represented a fairly insignificant proportion of the total portfolio, except for NMB which has about 7? of its portfolio in State Government loans. Loans to the public sector, including public utilities, in general are also relatively insignificant. 30. The real estate and construction portfolios have declined to 10.22 (down from 232 average three years ago), with relative increase in the agriculture, forestry, and fishing sector to 14.01 (up from 92 average three years ago) and the general commerce sector to 16.0? (up from 11.22). 31. Based on available data 8/, it is generally concluded that some deterioration of the PFIs' portfolio quality has occurred over the past few years. The recent measures taken by the Government pertaining to withdrawal of deposits has exacerbated the situation and brought to light 8/ Detail information on arrears over 90 days (principal and interest), portfolio affected by these arrears, and portfolio affected by provisions were supplied to ihe Bank on a confidential basis, and are thus not presented here, but 'have been retained in the project file. - 87 - ANNEX 4-1 Page 13 of 20 some intrinsic weaknesses in the portfolio quality. The provisioning levels of the PFIs range from 72 to 272 of their gross portfolios. About 122 of the gross portfolio '(up from 92 in 1986) is over 90 days in arrears. However, there are some differences between PFIs, with ICON clearly showing a weaker portfolio quality. During negotiations, it was agreed that CBN would review with the Bank annuallyt (i) the financial performance of the PFI* with particular reference to their capital adequacy and their liquidity position; and (ii) where necessary, measures to improve the financial performance of PFIs, provided that such measures are consistent with the overall credit and monetary policy objectives of the CBN. D. IMPACT OF PROJECT ON PFIS 32. Projections of balance sheets, income and funds flow statements for the five PFIs have been carried out. The projections assume the continued interest rate deregulation through 1995, and a relative conservative growth rate of 202. Continued interest rate premia on long- term deposits and long-term lending are expected to slowly alter the financial structure of the merchant banks; thus, merchant banks would increasingly play their intended role as providers of medium and long-ternm funds in the financial system. 33. The projections incorporate the on-going IDF loan, and the proposed Oyo Urban Project, and an even distribution of the proposed line of credit to the priority towns, amongst the PFIs. The projections indicate that at no time would borrowing from IBRD exceed about 16Z of outstanding liabilities. FAILLACE:mvm26 ANNI 4-1 88 Page 14 of 20 IPL0919 Ll Pc':s 0ORTOO!M ~0Is'1Eh'A1L 1"3 IlCL w .........._ .__ ..._................... ....... ................. .. ... ..... ........ .............. * .... ............... ------- Agatt 2 Amoun tI am t z Amunt % :mouat ' . ...~~~~~~~~~~~~~~.. _ . .._.. ........................_........_. ....... OKlWer :. 19 DecOeMr 31.190 NIeel 31. 19" OcMr" 191 !arn 1.14el I. LOv R IW ont 1OOO) . . . .. . ... ...... 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".3 22.4 223.3 27.3 :.3 a .) lvr-3yr 259.5 '5.4 7J.5 16.2 125.7 21.4 154.5 19.1 7I'.5 6. 3wr-Swr 34.7 4.1 103.0 21.2 157.0 35.1 143.0 18.0 322.2 33.5 over -Sr. '14.4 :9.1 111.1 22.9 57.3 13.2 69.4 3. 4 2.4 Il.o torsi I/ 732.7 100.0 4U.4 100,0 431. 100.0 620.5 100.0 335.9 100.0 . 9 Economic Sector Iqriculture For yt,, ad Fisbis 9.6 12.2 64 13.3 67.2 15.3 ".7 12.0 65.7 17.) mining Vu berrying 11.4 1.6 1LI 2.1 17.4 4.0 6.1 017 16.1 *.4 lamactwuh 39".2 S4.5 1.O t5.2 224.1 51.2 354.1 43.2 171.6 44.5 R"l Estate I Custrtim 49.0 61 5.6 11.t 653 14.9 t 6.6 6*, 42.h l1.0 Public Utilitie 0.6 0.0 7.5 1.5 1I.0 2.3 0.0 0.0 1:.2 3.4 semI Comce Eaerts 10.i 1.4 3.1 7.6 3.4 0.8 14.0 13.2 7. 1.9 lmts 77.6 10.6 43.2 B.9 16.2 3.7 4.5 5., 6.1 1.6 oentstIc 31.4 4.3 2.7 5.7 9.0 0.0 60.1 7.3 3.0 L: Tremaeertation I ouuicatiu 29.2 4.0 15.2 3.1 0.0 0.0 25.9 3.2 13.7 3.6 CreJit and Fimecial Inst. 14.7 2.0 5.7 1.2 0.4 0.1 7.6 0.9 13.1 '.4 enonwnat Fderal 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9 )l. 0.) state 0.0 OA 0.4 0.1 0.0 0.0 0.8 0.1 .5.7 O.? 6enral 20.2 2.3 32.2 .6 34.4 7.8 12.5 1.5 '.1 totgl 1/ 732.7 100.0 4.4 106.0 43J.9 100,0 r4O.5 100.0 395.4 I'JO. 11 Ain onCmntral 3UIk of lzeria's rNWt on LkOR and AdVuARnCSeCtiom 1612)18. endier fwui oj wr37F. .1 For 1 the amout is owr Ut100.000 £ 5 Itliu, 4fdfl s1511 1X I t~~j~ Ii - - - -~~~~~~~~~~~~~~~~~~~~~~~~~ .38@"& hpoll| 4""o" """"" ;so"" .M o"*"*b e* 3-J 8 o^Z4SPPe.r mtoks~I -- , .om.em&&o... ~ ~ wN ma..... -gFtO^QS 0w-*-""NZw *-b*v;0-0_&N O . a' Cl_;ftsFt~~~~~~~~~~~~~~~~~~~~~~~~A _ w 11 1" if t 04 lS~~~~~~~~9 'ws we Am.0 IX.4 UsA X.2 W.2 Ma 361- 611111 iQ~~~~~~~~~~~~~~~~~~U. 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The main objectives of the Oy State Urban Project are to: (a) strengthen the financial, operational and managem nt capacity of the institutions responsible for urban mana8-mnt and services at the state and local government levels; (b) improve urban physical and investment planning, coordination and evalu#tion; (c) mobilize financial isources at the state and local government levels; and (d) remove major city-wide constraints to promote the efficLent functionLag of Ibadan and of Oyo state's other major towns as regional development and service centers, wLth emphasis on rehabillitatLon and maintenance of existfrg infrastructure. Functions of the PFls 2. Selected igeig$an Banks will partLcLpato in financLng, appraising and supervlsing the project. The lbadan rehabilitation components, however, have been appraised by the Bank. In connection with the lbaan components of the project, the Merchant Banks' functions are: (a) to serve as financial intermediaries of the FGN. World Bank funds would be on-lent by FGO to OYSG, and PFIs would channel Sank proceeds plus lend their own funds (101) to Oyo State. The PuTs would negotiate the approprlate fees, charge., terms and conditions with Oyo State; (b) to operate one or more Special Accounts denominated in US dollars for disbursemnt ,of Bank funds; (c) together with the World Bank to supervise and monitor procurement of civil works, equlpment, and technical assistance in accordance with the sub-loan agreements, ensuring that they adhere to the applicable World bank procurement guidelines; (d) to maintaLn and operate one or more Project Accounts on bohalf of Oyo State and to assist Oyo State to set asLde the necessary local counterpart funds; - 96 * Annex 4-2 2&ae 2 of S (e) to disburse funds on behalf of Oy State to foreign or domestic suppliers, contractors, consultants (or as appropriate, reimbursing Oyo States' Project Accounts) for items eligible for financing under thk Subsidiary Loan Agreements and to ensure that disbursements are not made for items that have not been procured in accordance with stipulated procurement and disbursement conditions; (f) to lend to Oyo State the required local currency funds (102); (g) to assist Oyo State in securing any additional local funds tsquired to finance the project (bond issues, etc.); (h) to provide other banking servico (e.g. opening letters of ctedit, securing foreign esxhange etc.) as required by Oyo State; (i) to submit reports to I UB, FM ED, CBN and the Bank on the physical and financial,status of the project; Cj) to submit on an annual basis, audited accounts to the Bank, together with any other documntation regarding the status of the PVIs portfolio that the Bank may reasonably request; (k) to liaise with the CBN to enable CBN to open and operate a Project Control Account; (1) to liaise with TAM to conduct an annua., z-post performance audit of the Projects (m) to collect Xthe mounts of principal, interest and other charges due from Oyo State under the Subsidiary Loan Agreement and make thro necessary repayments to the PGN. 3. For the LO Towns CoMDent, their functions would be identical to paragraph 2, except that sub-paragrophs I) and (c) would be modified as followi, (a) to serve as financial intermdLaries of FGN end on-lend Bank loan proceeds plus their own funds (102) to OYSG for re-lending to LGs. PFls vould negotiate interest rates and the loans would for a period of seven to fifteen years vith two to three years grace ,period; (c) to supervise and monitor (with ptimary responsibility and in consultation with PM11) the implemntation and the procurement of civil works, equipent, and technical assistance in accordance with the sub-loan agreemonts ensuring that they adhere to the applicable World lank procurement guidelines and procedures. -97- Ann.X 4-2 Page 3 of 6 Throe further sub-paragraph are added to the P?Is functions, (n) to continue and complete preparation of the selected LG towns component which would include providing assistance vLth the (i) preparation of plnning and inestment priorititation studies for the selected LO townm; (Ui) preparation of detailed design for the solected project componentst and (iii) elaboration of institutional financial and cost recovery arrangements for the imple entation of the LG towns component; (o) to appraise the LO towns subprojects in compliance with the Infrastructure Developmnt Fund (1DF) Project Guidelines Criteria for Sub-project Selection and Appraisal"; and (p) following review by the World Bank, and approval by Oyo State Government, to present the LO towns sub-projects to the PITs Boards. Project Comeoteut 4. The followLng are the main project components: (i) lbadan Co2ponents - Storm Drainage and Flood control - Solid Waste Managemunt - Comunity improvement Program (covering Mokola, Yemetu and Agugu commnities) (b) Rehabilitation of Selected LG Tons A line of credit is established under the project for rehabilitation and lproveewnt of infrastructure and services in Ile-Ife, Ilesa, Ogbomoso, Osogbo. Oyo and Saki; (c) InttitutLon Strengthening and Revenue Enhancement - Investment Planning and Prioritization - Project Coordination - Local Government Strengthening - Land Management, Physil Planning and Development. iliaible oExe ,- S. The following are eligible expenditures under the project: (a) roads and qrainage, in partLcular the rehabilitation of existing road and drainage networks and the construction of new linkages to aid traffic flow and relieve congestion, public transport facilities parking areas; - 98 - Anme 4-2 Page 4 of 6 (b) solid wast&' anageusnt, inclu4ift the ptovision and/or rehabilitation of vehicles, equipment and containers for collectioka sd disposal, devlopment of snitary landfills, offlces, workshops, construction of traneker stations; Cc) sanitation, Including the provision or improvement of low coat public soaitary conveniences; (d) street lighting; Ce) markets, in particular the rehabilitation of ezisting facilities and the improvemnt of services; and (f) other high priority infrastructure investunts related to industrial, coeamrcial and residential projects that are in accordance with project objectives. 6. In addLtion to physical works, the aroject viii finance (C) studies aimed at sub-project ideutification and preparation, institutional developmont, resource mobilisation, and improved fi*an cal and technical mangemnet; and (Li) technical assistance for sub-project implementation and aonitoring. Sub-Loan Arnamts 7. The Bank loan of US$50.0 emllion equivalent and cofinancing of US$3.7 million equivalent will finance the foreign exchang component or 78Z of total project cost. Of this mount, US$35.4 sillion equivalent will- be used to finance the Bank-appraised Ibadan coaoonents and US$17.5 million equivalent will be for a line of credit to finance PPI-appraised sub- projects in selected LG towns. S. Maximum mount of Bank loan procteds for any LO town will not exceed 75Z of total sub-project cost, excluding land. 9. Sub-loan in amounts of less than US$1.0 aillion equivalent will not require the prlor approval of the World Bank ('free-limlit sub-loans'). 10. Maximms sub-project cost for any one LG town will not exceed US$2.5 mllion equLvalent. j 1. In order to ensure timely project implemwntation, the Pi1e are required to comit the Dank line of credit for the selected LG towns sub- projects by the end of year 3 aftor project effectiveness failing which those Bank loan funds would be cancolld. ? A~~~~~~~~ -99- Annex 4-2 Page 5 of 6 On-Lendins Term. for PPI-alpraised Subirolecte 12. The vari.ble interest rate applicable to on-lent Word Sank funds would reflect prevailing international rates and is to be agreed between Oyo state and the PFI* and reflocted in the Sub-Loan Agreoe_nts. Such agreed interest rate will incorporate the cost of Bank funds to the PFPs, and a spread to cover administrative cost and credit risk which is to be borne by the PFIs. Oyo State would bear the foreign exchange risk, as the beneficiary of the project. 13. The commitment charge of 314 of 12 on the Bank funds not withdrawn from time to time will be borne by Oyo State. 14. The terms and conditions applicable for the Pfle own on-lent funds will be those prevailing in the market and will be established between Oyo State and the PFIs. 15. The Bank loan will be on-lent to Oyo State by the PFis for a period of seven to fifteen years with a two to three year arace period. In case of prepayments by Oyo State, CBN must similarly be notif*td and this amount must also be prepaid to CIN. Withdrawals 16. Special Accounts in foreign currency will be established in each PFI. A maximum of US$1.5 million (equivalent approximately to 3 months disbursement) will be deposited by the Sank in respect of the Oyo Stateo Special Account and US$500,000 in respect of the PPI special account. The PFIs will be entitled to process periodic withdrawals from their respective Special Accounts to finance the foreign exchange component of the project. These accounts will be operated on terms and conditions acceptable to the Bank. 17. The initial depo$its into these accounts will be made at the time of project effectil ness. Replenishment of such accounts will require submission to the Bank of full documentation or, in the case of smaller contracts, certified statements of expenditures (SOEs) for all eligible project expenditures by the relevant PPI, as well as evidence that the PFI had submitted duplicate copies of its disbursement requests and documentation. l. PFIs disbursece:ts from their respectlve Special Accounts will be on the basis of architect's or engineer's certificates against approved contracts or, *here appropriate, under Bank Procurement Guidelines, against certified SOEs of approved project ministries or agencies. Full contract documentation is required for all eligible expenditures except for civil works contract \of less than US$50,000 equivalent and other contracts of less than US$20,000 equivalent. -100- Annex 4-2 Page 6 of 6 19. The detailed contract and disburseoent documentation iholl be retained by the PF'. and made available for review ,y the Bank. 20. lank loan disburseoeat shall be made on the basis of 1001 of foreign and 751 of localproject expenditure. for civil works and equlpmet, and 1001 of total costs for technlcal assistance and services. October 19S9 -101 - 101 ~~~~~~Annex 4-3 Pap 1 of 16 VEUA EEULC 0' NOUZ 00 STU I UMUM PSOJEC! (OP WS. STAIR AND LAL GOUVREEN? MNANCES I. Oro STATE GOERNTR A. Revenue Recurrent - External 1. The basic instrwment of revenue sharing is the Federation Account which is embodied in the Nigerian Constitution. The major constituents of the Federation Account ares (a) petroloua profit taxes, royalties and licenses (786); (b) customs and *zcise duties (15.5t); and (c) corporate profit taxes. The Federal Government retains 552 of the Federation Account and distributes 35S to the state governments and 102 to the local governments. The statutory allocation constitutes betveen 752 and 851 of Oyo State's total recurrent revenue. Interal 2. The maj,r sources of internal revenue from taxes arees Incoom Taz, Pay As You Earn (PAYE) and Direct Asseesment (relating to income of self employed persons); (LI) sales tax; (Cii) other taxes; and (iv) motor vehicle licenses. In addition, internal revenue is generated from licenses, fees, fines, rents and interest, etc. 3. The Internal Revenue collections from taxes increased from 037.8 million in 1981 to 552.3 maIlion in 1984 and then declined to 3148.3 million in 1987. The budgeted lnternal revenue from taxes in 1988 is N49 million, and N55.7 millLon for 1989. The main reasons attributable to the temporary decline in internal revenue aret (i) downturn in the economy in the recent past, and (ii) narrow tax base and poor tax administration and compliance in 0yo State. The poor tax administration is a result of inadequate institutional structure, lack of manpower equipmnt and transport in the Internal Revenue Department. There are 31 senior staff and 260 junior staff vacancies out of 267 and 666 established posts, respectively. Furthermore, thore are only 9 functional vehicles out of which only one is under seven years old. NIGERIA OVO STATE URBAN PROJECT OVO STATE MSTRY OF FIANCE PROPOSED ORGANISAllNAL CHART | INTEmL |.VL I DEPARTMENT r-1 }|1 '8 21 8.81 1. 8, WI~~~ Ii Ii ''1g- 111 I1 .ii ..i I~~~~~~~ .... 0XWk I & WiWi a iick to tA~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~o 81- I S~~~~~T - Plad Tax"sW - IPIT - Pwimanal Incowe Tim (Itd.. & PAYE) A SLa- SalsiemT I. - 103 - Annex 4-3 Page 3 of 16 4. A revised organization structure of the internal revenue section, in lino with the guidelines from the Federal Government, has beon submitted to the office of the Governor for consideration anl approval. The basic difference at the management level is that the existing two divisions, one dealing with personal incom tax *nd the other with remaining taxes have been replaced by four divliions with the following functions (see page 2)s Mi) Administration, and Board aatters and investigations; (ii) personal incom taz and a legal department, (iii) other taxes, (iv) bettLng business (pool, slot machines, lotteries, etc.). The chages to rationalize the structure at the branch and tax district level have also been incorporated in the proposed revised structure. 5. Although in practice individual states have little flexibility in determining tax rates, the tax base will enlarge as the population increases. Moreover, when the new managent structure is implemented and the manpower, transport and equipment constraints are adequately addressed, it is estimted that the existing level of total internal revenue (taxes and Kinisteries) of 8121 million would increase to 1208 million by 1992 and then continue to increase to 3414 million by 1998. This will ensure that the heavy dependence of the state governaent on the Federation account will not increase any further in the foreseeable future. 3. kaomadtare Recurrznt 6. The personnel cost in 1986 and 1987 smounted to 73.9? and 66.5S of the total recurrent expenditure, respectively. The expenditure on maintenance and overheads was 9.3Z and 9.71 respectively. The inadequate allocation for maintenance is apparent from the state of disrepair of economic and social infrastructure. 7. Debt service was not a major problem before 1984, as on internal loans it was largely limited to long-termn ederai ibeveoplopnt loan stock at relatively low interest rates and on external loans which were mainly raised between 1980 and 1983 and carried a moratorium of 3-5 years. The decline in the exchange rate of the Nairs against other currencies has considerably increased the cost of external debt servicing. The severe budgetary constraints have resulted in the state not being able to meet all its debt service obligations. The rescheduling of the debt service burden, agreed by FON in principle, will enable the state to muwt its obligations over the next ten years. a"5 STAtS 4*Ui flJK3 -.5~~~~~~~~~~~~~~~~~~~~~~~ 3,. Slt fImaiel Puehm.l,m _ ____.............. __. __.. __..... gOalm-o"lLe) obito $146is-) LOS? low aIwo aim. tw1 so": to" 1104 am.1 am14 191 a11 UR"11O ---- ---- ---- --- --- --- --- ..----_ .. ---- _----_ __ .... ..... ___. a Pedermi Ireeeferoez 48 a 512 0 82 a 311 a 1. ". .01 0 1.11.60 O. 0t.0S 0,31.0 .£-.0 1.4514 3. tebreaS i.e.... bi am0. u 20 tas la$I U4. a0 aIn a tooga 3_4 _ .1 345.a $69. Sm.0 4. Irooe Cr&eIGAs 0S.70 *I 74 IS 13. a* MS *3. 82 34.5 86.a 33. l8U . , 4. *totr to &CA 61 DA* i n_ a4 0 * ao s * X .2 It * sx * .W Wae so.A M-1 014w I. Bibs. rvi.e. .j1 *4 134 1 S" 4 a" a 3"4.? in.. S3 41 4*58 4330 au.. 341.4 54.6 1. 3t4&r Correel lssediure -It 03.S 33.3 AV6.4 4*8 4*3 mS0. o O0 n -* 0.. W. 5.064 3t.1 1.11S ~~~~~~~~~~~~~~~~.... - -- -- - ----- - ... ..- --.- --- --- .- -.-.- ---.- - -- ..... .. *.Tea.i Cme..l Gopemolis.ors 835.1 33413 M s M iW 644.: 91.0 a1.91A &AMuA a.M.1 2.m1.0 I.M.i Luca1 9. OJ_a. St- am. all.$ 344 0 * I M m a ° .1) (3-.) Mi Wa tue aM4 as. WeFAS SAu 1n. a s . n so Fe a a 4ar1 s. M 3.63 -G.tS .*.45 B." .5m St-S am? am am aom 1a am as In$ a1.1 am low am a. Foersm Tueeosthe.. 452 0 a O0 o" a n o ns.e o m .e a*a I.aJ. - *.am.e a.= a. m. t.4*.0 2 . dteteral Slaves. SI eIB. In2 a a45 4 t3" a t3310- SW&. M-5. 882. 311.8 M-* 31 453.0 S .50.5 05.55 ss v.5.5 .5~~Sass ea5 0.0-s0 maSie m 2. To"# Curres. maves. 31.1 I"4a *4t. 3410. 635.9 t.t *.t.e a.m.o *st. 1a.4m. a&.M. I.u.e m. *. 4. t,a.- La t" el 0O * s 32 4a to a t.4 13.6 13a s o-.* .1 a3.? W3. 414 S. Irsef be s.eba.e.aiom Agesma. dJ a o 15.4 14.a 34. 6., All. a IN.- t-.: t.a M am.n.e Ul a *. b USrvice *1 *W 3 4" I 2" *4 of.0 W.e S.* 33.3 335.1 .65.1 43.1 Ma .,a I Ctereo4A OK- ap. .a-i sb es.gg 3 3.. 3.8 4 4 5.1 58 3.4 5.0 a3 3 sabot Carvoes.,Ssoe0ALs.t. M a 331 3 15.4 43.5 431.3 3.3 la.S 6.3 5. Wt t.131.4 1.8" a _ _ . _ _ _ . . _ _ _ _ _ _ _ _ _ . . . . . . . _ _ . . .. _... -- - - ------- . . .. ._. _..... .. .. . .. ------- . 0. Pte- Corries. S.-e-dls.u. _ 12? 61.e 710.4 M-3 348.3 1.a tl.e a1. S * 2.4&3 a.Su.i I.M.8 t.44t 2 to c1l.l m us amo s at-9. s0 o 41. Me.a tIr.t (34 5) 10.0 45.5 164 133.8 40.t 1,. MOnAlk RAS 8t.43 aG." 4 = *.* 0.35 W.13 -4.3 * .n 3 .33 S." I.n m.M " am; " lso *for_o. o . el cos.trt_ed frim In 633 fldoo #W Uaeta. 4A..sgo too) bj Pr.jes.ime boed aOm mialieoumee is Se* _.o.s .4 ISo rows. a/Iseed at 135of imera. *t re"veso by Mhe CeeOs..s.s . ue e di teed.s atm to 1o4Sm rovemm, a. ver J'deres 4overeeei directive a. Sto" Bivie 9s _.1 a/ Aeoauod raocbodl ine.1s hof*dresa oaverne.e deabl over 31 posts as too eamee 4lget gvoagee o,e US.r :s.3 21- e:sone. eads fam :eer ::coo.e _ -*o.f.. gilb 0 local bomb, ever too* ra?er* as. !4 33. cematrctser ever fivegoaNro St an 1i~oue5 omi osloroal $Oeem over to gun froe am a s 1 s bt f*vwo tgoo* r. -erd orse_ tosppmwo. *Per 20 years at 6.20isLcoa -Xf l# ive year Se". ~Go Mae" "S oetar so.ee sasod La area bg 135g., oase.. *ta&t CM hsoge by M6 VW _mesS oeiaesoe D" ovehea *V_os by go0 pe *A_% vmpt s*lo so whe mm iaow ii os La esteblieka k* beb.l^s.at.oa 04 lbsotosee& Peed. Ae._od a. be A of trojoct, c.s_ *of _ee.. -Wt05 - Annex 4-3 Page 5 of 16 Capltal Xxnemodture 8. The capital expenditure incurred during 1982 and 1983 was financed largely with syndicated external loans contracted at inappropriate terms, i.e. high interest rates and slow repayment periods. The Federal Government loans were the biggest source of local borrowing. The state governmaet also undertook capital projects financed by contractors, local banks and surplus on the current account. 9. A comparison of the state's budgeted and actual performance of capital ezpenditure from 1981 and 1986 shomi that between 1981-83. the actual performance was between 1.62 and 21.22 of the planned levels, while between 1984-86 it was between 30.42 and 65.5. In 1987 the actual expenditure xceeded the budgeted figure, and in 1988 budgeted and actual capital expenditures were equal, primarily, due to realistic budgeting. Canital lintadlture - Comarilso of Budgst and Actual Performance 1981 1982 1983 1984 1965 1986 1987 1988 Budget 379.1 420.3 396.2 99.9 133.7 207.6 191.5 359.3 Actual 80.3 61.9 65.8 65.4 80.6 104.7 234.3 361.3 Achievement 1.22 14.7Z 16.61 65.51 60.31 50.4i 122.3Z 100.61 C. FinancLal Prolectiaris 10. Summary projections of revenue and expenditure for Oyo State 'without and with the Project' are shown on Page 4. Board of Internal Rvenue (i) Pay As You Zarn (PAYS) which constitutes over 55 of internal revenue is aspumed to grow at a nominal rate of 51 over the 1988-98 perlod because the deductions are made at source by the employers and remitted to the state. It is. however, possible to improve collections through improved inspection of employers' records to ensure that correct amounts are collected, all eliglble employees are covered and the tax deductions are promptly remitted to the State. WLth improved management, and enlarged tax base due to population growth, it is assumed that the revenue from this source will grow at the\rate of 102 per annum. (ii) The Direct Assqesment, which presently constitutes 151 of internal revenue, ls poorly collected and is not likely to grow by more than 101 per annum. At present only about 251 of the potential is exploited. With improved management, through - 106 - Ann*x 4-3 Pae p6 of 16 revised revenue mnagment structure, it is assumed that this will Increase by 15S in 1986 and 1969; 20? in 1990, 1991 and 1992 and then by 15? from 1993 to 1996. (III) The sales tax incom in 1986 was X6.3 million compared to 12.7 illion In 1966 this is an Impresslve 133t increase. Its contrLbutLon to internal revenue Increased from 5? to 13?. There is a lot of scope to further exploLt this source of revenue. Wlth the existing systm it Ls assumd to grow by 10? per annum but the administration of sales tax can be iproved in scope and effectlveness, More itme and Institutions would have to be covered. It is aisumd that salos taz will grow by 20? in 1988 and 1989, 30? in 1990, 1991 and 1992 and 202 from 1993 to 1998. (iv) The other tazes have been assomd to grow by 102 but with the project it is assumed that In 1969 and 90 the growth rate will be 2O0 and there after 10? from 1991 to 1998. (v) SLLlarly the license revenue is assumed to grow by 5? wLthout the project ant 10? with the project. Licenso revenue constLtutes about 5? of internal roevnue. 11. Contributions from Mnistries IL) The general growth In income fro M inistrLes is assud at 7.5? per annum. lowever, for education the growth rate is taken as 5? of the exlsting lovel. Incom is already over 336 million per &nnus, and lt is assumed that the government is not likely to impose heavy additional charges in the forn of school fees. (IL) The revenue from the Health Ministry is assumed to grov by 15? per annum from 1987 to 1996, because it is the government's declared intentLon to improve revenue generation to cover at least the cost of drug supplies. StMtutory Allocation 12. Oyo State's share of the Federation account has been calculated at 7.21 of the total projected Federation account allocations for all statee. Stabilixation icmOit 13. All state govern ments have been directed by the Yederal Governmnt to set aside 10? of thelr total revenue ln stabillzation accounts with effect from 1966 In order to offset the impact of fluctuations in statutory allocatLons due to changes in oil prLces on the world market. OYSG has set up a stablizatLon acc'unt. - 107 - Annez 4-3 Page 7 of 16 CaDital laceaDt 14. The major sources of capital receipts of the state government include recurrent budget surpluses domestic borrowing (Federal Govrnment. Banks and Bond Issues). The domestic borrowing from Federal Governsnt for financing capital projects, until 1986, had been from development loan stock (DLS) which was shared among the states using the same forala as the statutory allocation. Howver. Federal Government stopped Lssulng development loan stocks in 19$6. The state governcets are now expected to raise their own capital finance in the domestic capital market. The Oyo State GCovrnn t successfully floated its first bond issue in 1988 and raised 330 million repayable in 1999 at 15.Z coupon rate" Outstandlna Debt and Debt Service 15. The external outstanding debt at the end of 19$7 (at exchang rate of US$l a 34.3) was N1,457.7 million while the internal debt was 3507.9 million, giving a total of 31,965.6 million. This amount includes accumulated arrears of interest amounting to 365 million, which have been capitalized. The Federal Covernmeat has agreed in princlple to reschedule the debt. The debt service cost rcmains between 3164.7 to 3233.9 million during 1986 and 1992 and then rises up to 3532.4 million as a result of the epiry of the moratorium period. As the foreign debts are asomed to be rcocheduled oero the ton-year period from 1988. the debt service cost in 1998 drops to N34.5 million. 16. The State should be able to service the roschoduled debt over the next ten years although in 1993 there will be a budget deficit. This will be offset by the amount transferred fram the stabilization account. The projections show that the surplqs ratio is 4.2Z in 1996 and gradually grows to 15.72 by 1992. It will decline to (-4.2t) in 1993 as the full impact of the capital element of the debt service cost will be felt st the end of the five-year moratorium period and then steadily grow t, 23.02 in 1998. The state governmet will continue to be heavily dependent on its share of the Federation account in order to met its projected level of expenditure until 1996 and beyond. D. Infrastructure Wante.ance and hobabiltation gluad 17. The existing infrastructure such as roads, houses. cowmercial buildings and drains *etc. have been allowed to run down due to inadequate provision of funds for maintenance purposes. In order to reverse this trend, a separate ^lnfrastructure Maintenance and Rehabilitation Fund' has been established and a separate bank account opened, 152 of the annual Recurrent Budget of OYSG will be transferred to the above Fund on a monthly basis. The Fund vill be maintained, controlled and monitored by the Budget Department of OYSG. i6. The Fund wlll be exclusively used for expenditure in respect of rehabilitation and maintennco work relating to materials and equipmeIt. etc. but excluding cost of salaries and wages of staff as - 108 - Annex 4-3 Page 8 of 16 such costs vill remain under the Personnel Enrollments votes as at present. 19. The allocation to the Fund and the items qualifying for expenditure from the Fund vill 5e annually reviewed by the Bank/OYSG. I. Develo2pent Plan 1990-1992 20. OYSG submitted a revised Development Plan (1990-92) which was adopted in September 1989. The plan has allocated 11.18 billion to various sectors as follows: Sector Treasury Foreign Total Component Component - ------------ (Million)--------------- Agriculture and Rural Development 164.4 60.00 224.4 Industry 64.0 - 64.0 Rural Electrification 9.8 9.8 Commerce and Co-operative 12.8 - 12.8 Transport 128.0 39.2 167.2 Education 128.0 - 128.0 Health 138.0 15.0 153.0 Information and Culture 70.9 - 70 9 Social Development 19.7 19 7 Town and Country Planning 7.9 - 7.9 Water 98.5 50.0 148.5 Sewerage and Drainage 29.5 32.7 62.2 Housing 44.3 44.3 General Administration 6V9 - 68.9 Total 984.7 196.9 1,181.6 The Plan is based on the assumption that the statutory allocation over the three year period, at current prices, will contribute N3 billion and internal revenue 31.1 billion. This is expected to yield a budget surplus of 1984 million. The balance of the funding will come fram external loans. II. IBADAN MUNICIPAL GMVOaIENs FINANCES A. Revenue Internal 21. The municipal government derives its internal revenue from Community Tax (Head tax), tenement rates (property tax), markets, car parks, licenses, fees and rents. The internal revenue oi the Council in - 109 - Annex 4-3 Page 9 of 16 1982 was M1.6 million which rose to 13.9 million in 1985, then declined to 33.8 million in 1986 and rose again to N5.4 million in 1987. The estimated internal revenue in 1988 is N9.7 million. External 22. The Council is entitled to receive a share of 10 of the Federation account which is distributed among the 3011/ Local Governments (LGs) throughout the Country. In practice, the Council has received amounts varying from N2.9 million to 33.2 million between 1981 and 1986. The share of the Federation account is channelled by the FGN to the LGs through the state governments. 23. The OYSG maintained a state and local government joint account. The LGs were required to meet 651 2/ of the cost of primary school teachers salaries. The state government deducted this cost at source from the LGs' share of the Federation account. 24. The flow of funds from the FGN to the State Governments relating to the LGs' share of the Federation account for the past four years, is shown below. The table also shows the amount held at source by OYSG in respect of the local government authorities' share of the cost of Primary Education and the balance allocated to the joint account. 1984 1985 1986 1987 -----------(m million)-------- LGAs' Statutory Allocation 76.6 91.6 85.0 146.4 Contribution to Primary Education 47.9 49.8 48.0 70.1 Amount Allocated to Joint Account 28.7 41.8 37.0 76.3 25. The state government was also required to pay lOS of its total revenue (now internal revenue) to the LGs. In practice it was not paid. However, in line with the FGN's declared intention to channel the LGAs' share of the Federation account directly to the LGs, the system has been changed with effect from 1989. 1/ In Hay 1989 the number of LGs was increased to 449. 21 The FGN has established a National Primary Education Fund and from 1989 the FGN will contribute 65? of the cost of Primary School Teachers Salaries whereas the SGs and LGs share will be 20S Atnd 15? respectively. - 110 - Annex 4-3 Page 10 of 16 3. 3Oite 26. About 751 of the total recurroet expeaditure was used to f inanc the cost of salaries and wages of staff. During the period 1962-66 the ezpenditure on health and social services r- ;Se between 34? to 501 of the total recurrent expenditure. The sxpandiu4te on General works and services has rangd between 162 and 21.31 fir the same period. In 1967 the health and social servici wore responsiblo for 39.52 of the total rocurrcent expenditure while general administration, treasury and general works and services were responsible for 30.7S, 16.81 and 10.82 respectively. The expenditure for geoeral works and services department which is responsible for maintenanco of infrastructure Ls totally inadequate. The lbadan Municipal govern «t has allowed its existing infrastructure to deteriorate to such a poiAt that i ediate action is required to halt further deterioration and to reverse the trend. The allocation of maintenance and rchabilitation of infrastructure nueds to be substantially increased and in this regard a separate ahainteance and Rehabilitation Fund would be setup. The cont-ibutions to this fund would be on a progressively increasing basis which would be agreed with lbadan Mnicipal Covernment during implementation. Camital 27. The Council has a five-year development plan 1986-90 with a proposed investmnt program of 379.5 million. The Council is not likely to achieve this level of investment as the Council has defaulted on meeting its coamitments to contractors for three market construction projects. The Council's ability to financo capital projects from its own resources (apart from minor projects),is virtually non-existent at presont. but is likely to improve when the enhanced property rating system is fully operational and statutory allocations are directly channelled to the Council by the Federal Goverment. A summary of the Revenue and Expenditure Projections for Ibadan Municipal Government (MG) is shown on page 11. Cy of Lapeadi6ore P-seic*_a. .. c.. . . 1..1 i.aa.0 .... . ... 4 5.5 8 1... s..al.a 1i.... ..... ....u@ -a--s.. ................ *s c...ss, r. AlE . " asi son a ass sue. sue AM. so"e sosd aso". 1a am. saon a. a...... P... ....... -.-.. ... .... -- ..-..--- ---- ... . ... ---- . .mamI 6......a. A. c..a8.a ad.l.i.I,.t&m 104.0 ao.s i0.s a m.a 0.* 024.0 018 5 .Oas 1 .m.1 a.M.a e a. a s. as a A... . .i.. .....ead C&..,..o o.? 22. 2 M a a a" sa eo? a a.m.I a1'*-a m.a a.m am I D. .asestpi, "4.o"C * tO.7 1.0 t&.w S.M.8 a4.Oa. t *84.sa. 1 .4 .in.* *9.0 M.I t4,s5.1 17. 1. a *l.?" 2 ..................... ..................... cesta Admi^sbW_*6, t ,ntiam, 72. tO, § MS 2 GO- " ,6 8 24 t.0i a &.*s I U .0*".1 I &. . $.I a ,Zla a ..................... acia. tailF ut sad amm e. e s2 s.b a asm.as2 sa1 a o e.ss1.e 2.wa I 8.100a a.W&. a O.i000 .41..0 8.501 1 01.002 * U- ~~~~~~~~~~_..............._.._.._.._.._ ...............8..811 a. o...,.a hd.,.h.tr.t.i.. 5.------- -------- ... ... 3... ..0..------- -- -- - ....... .. . 4. . ........ 4....... .. .. .. .. .. . 8 V...wg 1.0020 J~~~~~~~ ~~~is. F" a 56.2045 18.2? 5166,1.1 O G 1,4 S. . M. S1 8.19.00 i2.111.0 31.861 4 ".10 a ".01" a &0601 V .fa ca _"ii 0t I 24 20 . ".4 Ut 4 as e.aaaa cmi 0445.0 1 gm7 a 411 n 2. Ge.s .^-AX.Aaea. ...2d2 a. am 2, 4 2,tU 4 A .& 8.51O a 4 84tl.5 8".4 4.4 . 41 5 *1 ,. a ca..,, C.._ a,ee II. Ss o s Ur I $.M. a,." aea.* a s.. m.as u F e.8 s 2.5 m 1 sLeS a. . .060as,, i U 6.6 7 .1 1.. ..S a a Is a Ita.. . a.a. Saa so a 8 a a S. c"|*A £" .p. .JhIau. r , 0.8 .S.54 &40.a 1 548.40. S.u.4 e.me 44s0., ',o"I. a.m.o a,.0v.4o sags0 1.s. 7 4aser.1 Wbsa &"ige as 6 say11 as ".4 S."t 7 *.Ms-* * .861 *, 4.8ts.6 6.11 I * .0.8 * .4s a 6,.8- 9.0 4 Cntr. ibuion t s.400@ 55.6. 0 o4 060 O * 90 t 0 t a *as ms. a S a. *. 4.0 4 I a a S I e....... ................................. ..... ... -------- ........ ........ ....... -------- -sl X,,t Carst opaiur 61 X,G st 4.0 * 0t . .4l0.4 60.1011 62.11 1 14.2".8 S6.6"4 U8.4a.8 29611, 28001 a, * 8 e 4 , oso fSOWS"& t,j8 *, 4AWS0, &,4wt§, #JSDA ,1."I 0.,. 6,6110.2 90.40.0 19.07.@ 82.641. 98.09 * **M G __._....... ...... ........__. . __..._...... ........._,___, ,,,,_._______ ....... __.__ .......... -------- ........ ........ ........... ------- ..... _ tSIl N"TAS& eOs 8.1-6 E40s so.16" at, 11601- W.m.* 0.9. 96.11 &".F U.wS n .# M9.Oft 41.8 IS*&a*l of ladj._ . d..evome See off N 2A00.4MW bit of. a: re : '. - _ _ yel .a. Ie.,.a" s&.i mr. S- ,w gas. at .at ey* 6l .. . s byll -..,... ,ohs0e.g sea w msas F 015 ap am. Ito- are _ to ar4Z.w b % _AS 04*6 *-u so 1,4 f he*of 94891 ..Its &t aews to ** bjpAG 60 IO- 1. so" is W-9 " in .-4. S" too la Wu to rtelt She, Somm *$&i^sfo nwdOs of obo*e- -1-12 - Annex 4-3 Page 12 of -5 C. Institutional Arrpeaeets 28. After the local government electlons held in December 1987, a new Council was constituted. The IMC had a full-time chairman and four councillors which constituted the Management Commattee. The chairman was the chief ezecutlve of the Council and each of the councillors was responsible for a specific function or functions such as finance, health and works, etc. The policies of the Council were implemented by the administration, headed by the secretary to the Council. The secretary is assisted by departmental heads of Legal, Estate, Health, Treasury and Engineering departments. Although Primary Education, Agriculture and Natural Resources are Council functions, they were performed by the state government due to the weak resource positlon of the Council. The Council in line wlth the FGN decision was dissolved and a sole administrator appointed in July 1989 to facilitate the holding of elections towards the end of the year 1989 in all Councils throughout the Federation. D. Staff and Trainin 29.. The overall, present managerial and technical capacLty of lbadan local goverrment is extremely limited. The Treasury Department which is responsible for all financial matters including revenue collection has one qualified accowtant. The post of Deputy Treasurer has been vacant for over eighteen months. The Treasury Department is short of trained staff, equipment and transport required for effective management of revenue mobllization and collection. 30. The training facilities, though limited in terms of space and resources, are available at the Clvil Service Training School in Ibadan for courses ranging from six weeks to six months for staff at the lowest level to the executive officer level. The higher executive offlcers can attend a two-year Diploma course at Obafemi Awolowo University, Ile Ife. Treasurers can attend one-year higher Diploma course at the same university. 31. The 1MG's ability to train its staff is limited by its lack of financial resources available for trainLng and the non-existence of training grade p"sta on iLt astablishment so that day-to-day operations of the CouncLi are not disrupted when staff are sent on training. 32. The efforts ln training of existing staff, in improving their operational skills, should be enhanced by joint effort of IMG the Civil Service Training School. The Civil Service Training School staff are very enthusiastLc and keen to assist by developing tailor made courses for IMG staff and with marginal assistance in the form of transport and audio visual aids the training school can improve its effectiveness. In the long run the state government has agreed, in principle' to turn the Civil Service Training School Lnto a Staff Development College to cater for civil servants at wll levels. It is advisable to create a number of trainee grade posts, particularly, in - 13 - Annez 4-3 Page 13 of 16 the Treasury DepartLmnt to Improve staff's technical and professional skills. B. Future Prospects of Reue u 33. The improved management through training, equipment and transport support will have a general positive effect on revenue collection. The biggest potential to enhance the Councils' internal revenue is from property rates based on Capital values. It is projected that at 1987 constant prices the revenue from property rates will increase from its ezisting level of under Ni million in 1987 to about 118.8 million in the next ton years. 34. The recent policy changes announced by the PGN indicate that the FGN is placing greater ephasis on rural develop nt and vish to give greater responsibilities to the LGs together with additional resources. The Council can now request the state or PGN for secondment of professional or technical staff. A new schem of service has been introduced for LG staff which is comparable to the civil service. This should make Council service more competitive and attract technically and profossionally qualified persons to the service. The Ministries of LG at the State level have boon abolished and the functions brought under direct control of the State Government. The LOs' share of the Federation Account is now being channelled directly from 101 to LOs. 35. The combination of significantly improved revenue from property tax and direct channelling and increased share of PFderatLon account should greatly improve the financial position of the Council. The PGN with effect from 1988 will meet 65Z of the cost of primAry school teachers salaries. 36. The state government operated a joint account for LGs and put the Local Governme t Authorities' (LGAs) share of the Federation account into that account. It mt the expenditure on teachers' salaries and other expenditure on provision of services which are the LGAs' responsibility and paid a part of the balance to the municipal governments in the state. -Under the arrangement it is difficult to disaggregate the expenadture lcurred by the state government on behalf of IM. It is possible to estimate the Council's share of the Federation account but since the net position cannot be reasonably ascertained, the projections of the Council's share of the Federation account are based on the actual net amounts received by the Council from the state government. However, now that the Federal Government is channelling tcn Council's share of the Federation account directly and as the Council starts meting its obligation of providing statutory functions, such as rural and semi-rural water supply, seveiage, roads, public housing, public parks, gardens and open spaces, nursery, primary and adult education, health, mternity centers and clinics and various licencing and devlopmental central functions, the position will become clearer in the future. - 114 - Annex 4-3 Page 14 of 16 II. Otm LOCAL CO,iMiNTs D= 010 STAS 37. The other LGAs in Oyo State also face problem highlighted in the case of IMG. They have a narrow tax bass, weak management structure, lack of skilled manpower and are heavily dependent on their share of the Federation account. 38. The project will provide assistance with training, address the management and structural constraints and establish system to address rehabilitatLon and minte ance problem. IV. nPOFUTY EATI A. Prosemt Systm 39. The present tenesent rating system in lbadan does not produce a significant contribution to LO revenue due to inadequate assessment methods and poor collection performance. The present system is siple as the assessmnts are based on a limLted number of variables. I.e. location and use of building. The system has many deficiencies, i.e. inequity between rate payers, inflexibility In alteration of scale. arbitrary nature of the scale and collection difficulties in determining targets and masuring performance. The, average yield under the present system in IM is about l million, although the potential on the existing basis is estimated at about US million. The poor collection is due to inadequate manpower resources, equipment. transport and ineffective control and supervision. S. Valuation-ased System 40. A valuation-based rating system will be more equitable, provide a wider taz base and considerably higher yield thus making LGs more self-reliant and relatively los7 dependent on state and Federal governments. 41. The valuation-based system tequires assessmnt of each rateable property and in view of the lack of skilled manpower available both at La and state levels, private sector valuation specialists would have to be used to prepare the valuation rolls which will form the basis of the rating system. The private sector valuers work will be supervised by the State's Rating Valuation Coordinator, and LG valwrtion staff will work side by side with the private valuers so that they gait the necessary expertise and experience in order to enabtle them to keep the valuation rolls up to date and tc prepare interim valuation rolls on an annual basis bringing new properties into the rating system. 42. The work already done on the *go-coding ezercise' to establish urban property informtion system by consultants for OYSG would provide useful inputs to the property valuation exercise in terms - 115 - Annex 4-3 Page 15 of 16 of street names and property numbers for indentification of rateable properties. 43. The valuation-based rating systm though involving initial high costs in setting up the system will provide potentially high revenue yields with main urban areas of Oyo state to *nhance the existing tenment rating system operated by LOs. It is estimated that the new system has the potential of yielding over 330 milllon as compared to the MI million per annum presently collected by IC. C. Action Plan for ftlmm_tatioa Actions alreaod taken 44. OYSG confirmed their coamitmnt to the introduction of an enhanced tenemnt rating system as agreed during project appraisal, and as outlined in the July 1988 aide memoir, and described in greater detail in the Deport prepared by IP. Sanderson (Consultant) of August 1988. Introduction of the enhanced system would concentrate on the urban areas of Oyo State, starting with the MG. 45. IMG prevented outline proposals for achieving Improved rate collection performance comencing In 1990. The proposals addressed three key areass (i) lproved management structure for direction, organJlation, control and supervision of the staffs (ii) additional resource requlrement such as staff, equipment and vehicles, and (i1i) staff training needs and corresponding training program. 46. OYSG Ministry of Local Government presented draft terms of reference for a Rating Valuation Coordinator to supervise implementation of Property Rating Component, initially in Ibadan and subsequently in select@d towns. 47. DMG presented draft terms of reference for a Chief Rating Valuation OfZicer and other senior professional staff required to implement property rating in Ibadan. 48. OYS¢ advertised for international recruitment, the post of Rating Valuation Coordinator and rMG the post of Chief Rating Valuation officer. 49. OYSG reviwed the existing legislation, identified modifications necessary to Implement the enhanced tenement rating system and submitted these to the Bank for comment. During Project Implementation 50. OYS¢ to appoint Rating Valuation Coordinator of appropriate ability and experience satisfactory to the Bank. 51. IMG to appoint Chief RUting Valuation Officer and other staff necessary for the rating valuation unit and provide it with - 116 - AnneX 4-3 Page 16 of 16 adequate acco odation, furniture and equipust to undertake the proposed functions. 52. OYSG to engage private sector valuation specialLsts to undertake the valuation program under toru of refer'nce prepared by the Rating Valuation Coordinator and reviewed by the Ban. 53. OYSG to establish a monitoring system to be rviewed by the Bank to ensure that adequate proguess is made with the introduction of the enhanced ratlng system and improved collection performance. The monitoring system would review on a quarterly basis agreed targets vs. actual performance of the following key indicatorst (i) staff resources deployed; (ii) number of propertios identified registered and valueds (iii) total value of assessmnts: (iv) total revenue collected: and (v) number of staff trained. Remedial action for shortfalls in performance would be proposed. 54. IrI to demonstrate continued improvement in their rate collection performance in accordance with the targets, outlined belows Year Tarmets to be collected (* million) 1990 3 1991 7 1992 11 1993 16 1994 S 1995 30 Notes The above targets are based on current inflation rates ,n the 10-12Z range. Should future inflation rates be substantially higher, the targets would be rcviewed correspondingly. AF41M October 1969 - 117 - Annex 4-4 Page 1 of 8 FLDUa U3PmLIC oF NiGnu OYO STATE SBWN PROJECT ECONOMIC AN&LYSIS AND POVUTY IMPACT A. iCOumaC W VAL.flO 1. Table I contains a sumary of the economic analysis including the two components for which benefits could be quantifieds (a) storm drainage and flood control; and (b) community improvemnt program. The total cost of the two subcomponents comprises 56S of the Ibadan rehabilitation component. The weighted average ERR is estimated at 22S. Stoim Drainame and Flod Control 2. To determine economic costs, total local costs wara converted into border costs by the standard conversion factor of 0.85. Foreign inputs were valued at c.i.f. import prices plus local transport costs Annual maintenance cost was assumed to be 3Z of physical capital costs plus physical contingencies and converted into border cost by its own conversion factor. The equipmnt for maintenance work was assumed to be replaced every 5 years and their costs were also converted into border costs. Project life was assumed to be 25 years. 3. The benefits of this 'omponent were measured by the reduction of physical flood damages. Based on data of past flood events and resulting damages as well as rainfall records, three levels of flood damages vere identifted and estimted at appraisal and subsequently updated to January 1989 pricess (a) annual damages of about Ml million (on average about 200 properties affected annually); (b) damages due to floods every 5 years of about N2.6 million (the average of past recorded damages): and (c) damages due to floodl every 25 years of about N540 million (value of damages due to the 1980 flood which war the largest and estimated to occur once in every 25 years based on precipitation patterns). The benefits were converted into US dollars at the current exchange rate, and the conversion factor was applied. The conversion factor was compated assuming that flood damages consist of 40? local cost and 60 foreign cost. Benefit streams wer* quantified by taking the probability of occurrence of these dmapges without the project. For example, a 5-year flood has a probability of one-fifth t4 - 118 - Page 2 of 8 9s > j a a U -*-*1---zv§oo- 6 i . t a ^^*^^*--"----, l j . a aje *i. . . i S i S > ~ ~ ~ ~ ~ ~ ~ ~ * , ; i i"ovv****Z^** i4 IPI . . 3 llsl l|ssXXXXXgEl:, s , .'l j ;";;;;;;;w*****.9 *6 0I66 1 :6..Zi i frsisailitisssisamiUnUiaai k ... li4 1.--- -----* a ii "r'*j , * aw 8- *m6eeUe OSeew****Z*@6@e!eeOa - ?, ? uBflBIUUEflIlhElhIhIflhEElUEhEi|§js s '. J5 ?i i a sd ?, aOg? e...U.e.@e.eeS66@66ee@@e@al * w3 .~ ___ unnnmn...1 - - 119 - Annex t4 PagC A Of 8 7.64|. s.aM or tCaiawC IRA1 or nu 3MM D0A8TWJCTUS U4SILITAIhCN (Unit: .d'00@ a Jery lS Pts) lb"" C _eet Plimel p_i. P.erentage lee Co" It.% of Shere i u2'000 X I Rehab. Seae Cost Store orlneg eA Flood CooSrl 10,110.0 40., 21.2 Cne-*it Improvemet Pu' em 6,4P.@ $8.4 241 MOA DW fIMW COST A I 1,44100.0 22.2 W 1.2 MODM fASThUC1W N SOS COST 23,254.0 100.0 WMO (1) Stere de* i no" and f Ilod .etnl e_%pemt oeuulude. rvehebui l.te oand malnateeg m. oigmet subcomponents. (2) Cunity TIp.'w_.m compose" ael_ne som oorvlea PIe -_. - 120 - Annex 4-4 PAge 4 of 8 occur each year. However, because the 25-year flood did not occur for 8 years after 1980 until pr*sent, its chance for occurrence will be higher in the next 17 yoars. The salvag value of the system after 25 years was assumd to be 501 of physical capital costs plus physical contingencLes. 4. The base case econosic analysis is presentod in Table 2. The net present value discounted at 101 is estimated at about US$11.6 million. The I is estimated at about 211. Community Imrovament Prograu mCI?) 5. The three comunities to bo Improved (Mokol*, Yoemtu and Agugu) were combined and evaluated as one. The standard conversion factor of 0.85 was also 4pplied. The total economic cost of capital was estimted at US$5.8 million at January 1989 prices. An amount equivalent to 2S of physical capital cost was assumed for the maitenance of the CIP. 6. Benefits of the CIP were measured in terms of an increase in property values of the three communities muntioned above. Two coimmities (Oke Ado and Old Ife) whlch show housing characteristics similar to Mokola, Yewtu and Agugu), and which do have adequate Infrastructure and servico, were selected as comparable comiunities. The average property value of a comparable structure in the CIP was about *44,000 compared with 377,000 in the comparable communities*-76.4Z higher. Bence it is assumed that property values in the CIP comiunities will increase by an average of 76.4% with the project. 7. Due to data constraints the total current property values of .the CIIP were measured by the average property value per room multiplied by the total number of room. in the CIP. The average property value per room was estimated tased on sample surveys conducted during the appraisal mission. Total economic benefits of the CIP was estimated at US$12.5 million in January 1989 prices. Since this amount represents addLtional benefits arising from improvements made by the CIP, this benefit will be realized immediately after completion of the CIP even though the actual market values of properties will rise gradually for several years. The ERB for the CIP was estimated at 24Z as shown in Table 3. Ote1N October 1989 a- - se U,@000D9999000000**e*.e4.*. '5 -50 . S:: ; : ** ~O p . ,. , p. p _. ___ , ._., . Z ' I' f.£ .5 ** *r * . . .a . . j 5° a - I : * I~~~~ ~ ~ ~ .~a a. i '. Si , ia. __ _ * . : .a.~ '0i rI *_ !f ffIiIIIIisu,ais*.5 :..es ** ..a . _,, iij-fuiiIiIiiUiiIUii _______'_______ 45 **O~~~ jt.*S*SSS@*~: . .': 9~~ _.O; £ b 7a ~ ~ ~ ~ ~ ~ > : Mi$ssiUUy8 *t ^^. - 122 - Anne% 4-4 Page 6 of 8 S. !Mx IWACT Povert Thrhold 1. CUP per capita-in 1968 Ls estimated at IS$221 based on the revised 11 model for Nigeria In the lank. The Sank's definition of rural powerty levl is 4O0 of per capita GUl: the urban poverty level is 252 higher. lsnce the urban poverty threshold iL 1gerA.a for 1966 was estimated at 3497.3 or S$1103.5 per capita per anum. The following adjutanuts were naG by the appraisal mission to reflect a sore realistic threshold for ThUdan. 2. The avvrasg household size for the urban area in CyO State in 1984 was estimated gt 3.86 persons. Assuming the saw size for 1986, the urban poverty tbreshold L estijipated to be U140(8 per household per vonth. In Tbadan, however, famlies with incam belof 1200 to W20 per wntli are considered to be low ncome. ?king the average oa tho two figures (3225) and assuming the average size of a household to be 3.88, th. poverty threshold of Ibadan was estimated at 5696 per capita per annus. These revised fiures wvre used for this analysis. Incime DistriUntiom and Poverty Shar 3. Table 4 gives the income diatribution in urban areas of Nigeria. Assuming that this distribution also applies to the city of Ibadan, its poverty share was estimted at 56.62. Based on available data. Table 5 gives the best estimates of incom distribution in the three CIP com mities. The poverty share was estimated at 65.92. -Its share is higher than that of Ibadan city implying that the average household in the comumnity improvement progru (CIP) areas is poorer than the average households in the city. Povert Ionact 4. The storm drainage and flood control component will banefit households with income levels almost equivalent to that of the CIP areas. The solid waste management component will mainly serve the poor and densely populated areas of the city where incom levels are equal to the CIP areas at the most. Tatble 6 su mirises the results of the poverty impact analysis which show that about 662 of the Ibadan infrastructuke rehabiltation ezpenditures would directly benefit the poor. Since poverty shares are estimated conservatively, as discussed above, 66S is considered to represent the mitnimm share of expendltures to benefit the poor. - 123 - ANNEX 4-4 Page 7 of 8 TABLWS 4t INCOME DISTRIBUTION IN URBAN NIGERIA (N at 84/85 Prices and 88 Prices) Income per HE per Morith Income per Capita per Distribution in 83/84 Annum in 1988 (2) (N) (MN) -99 -392 . 31.11 100-199 393-789 33.28 200-299 790-1.185 19.60 300-499 1.186-1,978 10.58 500" 1,979- 5.43 TOTAL - 100.00 SOURCEt I id, Table 6.12. NOTE- The household in&ome in 19a3/84 were converted into the per capita incoae in 1988 br using (1) the average size of urban households in 1.98314 bc-ing 6.68 persons (Social Statistics 1985) and (2) the inflation rnte of GNP between 83/84 and 88 being 54.592 (revised RMSH for NigeriW). TABLE S: INCOI DISTRIBUTION IN THE CIP COIUTIES (N at 1988 Prices and Z) Income per Income per Surveyed In. Capita per dividual per Annum in 1988 Agugu Yemetu Mokola Weighted Month in 1988 (1) (Z) (Z) Averne -100 -309 25.1 28.7 23.6 26.0 o00-200 310-619 33.9 36.8 30.3 33.8 211-300 620-928 27.4 23.0 24.9 24.9 301-500 9Z9-1.546 9.0 8.1 14.3 10.4 '01-1,000 1,547- 4.6 3.4 6.9 4.9 TOTAL 100.0 100.0 100.0 100.0 Estimated 18,500 25,000 22,000 65,500 SOURCE: Table 3.6, NISER, Socioeconomic Survey of Ibadan City, 1988 - 124 - A.FENEA 4-4 Page\8 of 8 TABLE 6: POVERTY IMPACT OF IBADAN INFRASTRUCTUt REHABILITATION COIeONENT Poverty Cost Share Basic Cost Share (Killion $) (2) (2) Storm Drainage and Flood Control :1.95 46.24 5.9 Solid Waste Management 7.25 30.6 65,9 Courwunity Improvement 5.50 2314 65.9 Weighted Average 23.70 loO.o 5S.9 AF4IN October 1989 -125- ANNEX 5-1 Page 1 of 3 NIGt*$A OYO ST UUAN PROJECT DOCUM S IN THE PROJECT FILS Ref. No. i No. A. Approved Oyo State of Nigeria Estimates 1988 D18991 including Sudget Speech B. Approved Oyo State or Nigeria Estdiates 1987 D18992 inclu4ding Vudget Spoech C. lbadan Municipal Government. u¶=4U1 ?tnanci1 - D18993 Statements 1982-88, prepared by: The Kunicipal Treasurer D. Oyo State - Analysis of Financial Structure D18994 and Performance, 1981-86 and Prospects, 1987-95, prepared by: Emmanuel C. Anusionnu February 1987 E. Report of the Inter-Ministerial Committee on D18995 the World Bank Assistance on the Improvement of Ibadan Metropolis, (incl. Upgrading of Three Core Areas) April 1985 F. Ibadan Transportation and Traffic Management Study D18995 Traffic Management Report, Part One and A,B,C Two; Transportation Study, Report of Surveys, prepared by: Associated Engineers and Consultants (Nigeria) Limited, Colin Buchanan & Partners, and Norman & Dawbarn Associates, January 1983 G. Master Plans for Wastes Disposal and Drainage, 422-07 Ibadan, Vol. I-IV prepared by: MacLaren (79-2-4) International Limited, May 1971 H. Master Plan for Ibadan Metropolitan Area - Phase D18997 I, Vol. I-IV. 1983 I. ADB Loan foT Emergency Rehabilitation Project for D15412 Ibadan Watet Supply, prepared by: African Development Bank, November 11, 1986 J. Ibadan Region, prepared by: Department of Geography D15406 University of Ibadan, April 1982 - 126 - ANNEX 5-1 Pago 2 of 3 Ref. No. PFl. No. K. Ibadan Infrastructure Development Project D18998 Identification Mission - Solid Waste Component, prepared bys L, Moore, May 1984 (Office Report) L. Ibadan Urban Drainage and Flood Control Component. D15411 prepared bys Hnk-oning July 1987 M. Ibadan Drainage Component, Photographic Impre.sions, D18999 prepared by: Haskoning June 1987 N. lbadeoz - Itnstitutiorva. Strengthening & Administrative, D1S406 Financial & Technical Services Improvement, prepared by: The Swedish Team, July 1987 0. lbadan Solid Waste Manatement Project preparation D19003 Mission. B-T-O Memorandum Prepared bys Sandra Cointreau (Consultant), March 1987 P. Ibadan Urban Project, Institutional Considerations D19000 Report, prepared by: A.R.A. Consultants, Murray Glow, July 1987 Q. Ibadan Water Supply, prepared by* B. Heine and D19001 A. Sweetnam, July 1987 R. Ibadan Storm Drainage Component Part 1, including D19002 Annex A (Strip Plans) prepared by: Haskoning, DUV, A,B & C Konsadem and Badafash, June 1988 S. Solid Wastes Component Preliminary Design, prepared D3.9004 by: Haskoning, DVH and Konsadem, June 1988 T. Socio-econamic Survey of Ibadan City prepared by: D19005 NISER, June 1988 U. Ibadan Urban Renewal Project Preliminary Design D19006 Report, prepared by: Osot Assoc., June 1988 V. Community Improvamernt Program. Proposals for D19007 Community Participation, Implementation, Maintenance, Finance and Cost Recovery, prepared by: University of Ibadan, June 1988 W. Preliminary Physical Planning Proposa3s for Agugu. D19008 Mokola & Yemetu Study Areas, prepared by: I.MHP.A., June 1988 - 127 - ANNEX 5- 1 Page 3 of 3 R4f. No tile No X. Civil Service Training School Ibadan - 1988 Course D19009 Calendar Y. Upgrading of Core Areas (Report on Three Selected D19010 Areas in Oyo), prepared by: Oyo Local Planning Authority. June 1988 Z. Preliminary Report on Upgrading of Thre* Selected D19011 Areas in OSOGRO, p"apared 'rte 05$0G0 Local Planning Authority, June 1988 AA. PrelLminary Report on I1*sa prepared by: Tlesa 019012 Local Planing Authority. June 1988 BB. Three Selected Areas in 1le-If*, prepared by: D19013 Oranmiyan Local Planning Authority, June 1988 CC. Upgrading of Core Area (A Report oan Two Areas in DI9014 Saki), prepared by: IPtDAPO Local Planning Authority, June 1988 DD. Upgrading of Core Area (Preliminary Report on the D19015 Three Selected Areas in OGBOMOSO), prepared by: OGBOMOSO Local Planning Authority, June 24, 1988 Et. Preliminary Plans for Upgrading in Priority Towns, D19016 June 1988 iFF. Oyo State Urban Project Rating Valuation Component D19008 Report, prepared by: 1. P. Sanderson, July 1988 GG. ID? Projoct Guidelines D00154 JIk. IDF Policy Statement D00964 II. Oyo State Urban Project State & Local Government D19273 Finances, prepared by: J. Bahal, September 1988 JJ. Oyo State Urban Project Economic Analysis D19272 prepared by: B. Ueno, September 1988 KK. Ibadan Traffic & Transport Component Tech. Note D19274 on Preliminary Economic Evaluation, prepared by: J. Cracknell, July 1988 NIGERIA OYO STATE URBAN PROJECT COMMUNITY IMPROVEMENT AREAS IN IBADAN MOKOLA, YEMETU, AND AGUGU LAND USE: - - Ri- od Shr0 Woler Sopply td tiol Pio..y DiWi.i EWZi Coo|eoPk olk - Mj T- - -o,OOOR,Co. --- S-- Boies Ploces of W-,'ohip ot-rootionol Bo.. daria. -1 000 - 1,0,OX0 200.001 - 500.000 I0 "- 20( / > t~~~~ , ; ~MOKOLA KWARA 5TATE .NIERIA O~~~~~~~~~~~~~ NIGERIAIER I . YEMETU~~ ~ ~ ~~~~ [/ /~ /GG KWAIRA ~~~~~ k ~~~~~~~~~~~~STATE -Z~~~~~~~~~~~~~~~ m~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~y (/k. t a ONDO OGIJN STATE STATE 0 S0p010 [ 6 00D 0010100 *YEMETU AGUGU F1.1~~~~~~~~~ I , -I- / N~~~~~~~~~~~~~~~~~4 -'9Of f ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~4 NIGERIA OYO STATE URBAN PROJECT hlETROPOLITAN IBADAN AND LOCATIONS OF MAJOR PROJECT COMPONENTS z r \ NIGERIA 0.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~O L. G_ ____ '. PO \g teOdktOtlon) \ X i-fe °;ct > ,e,e A K f N Y E t E X < | \~~~~~~~~~~~~~~~~~~~~~~~~~~~~R. -gep P1., 2i lp.o~at (lied z~~~~~~~~~~~~ X 0- f~~~~~~~~~~ai AGUGUX GOVE2N)/. c\ A _t dsin Siftn,,\/ nd . ObRjte \\11l 0 /t////PRO~~~~~~~~~~~~~~~~~~PRJECT {~~~~ ~ ~~~~~~~~~~~ - - - Rber Ogu.,w Ph-s I Imp-msb (pesybp6d ,-r > < @ * * e s ~~~~~~~~~~~~Ri.er Og-po Ph-e 2 Imp--fmets (rnd) / / \ / o o o o o~~~~~~~~~~... Ri-r Ogmpa Phie 2 Impoxnt (-Ibli- jBX | \ J Da~~~~~~~~~~~~~~~~~~~~~~~~~XSTING, r4s D* _ S z ~~~~~~~~~~~~~~Roilrood 5 fi ~~~ \'~~) 5> raina ~~~Rws- d St-s Ol ( / ro*_ ~~~~~~~~~~~~~~~~~~Etbnt f Ur-i-miti (I1°of) 6 p< r*r Zxeprreolodig 0 B~~~~~~~~~~~~~~~~~~~~~~~~~~~Z P- re.w F - btI. oudies 1 2 a I{D~~~~~~T