Document of The World Bank Report No: ICR00003619 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-43130 IDA-48200) ON A CREDIT IN THE AMOUNT OF SDR 53.3 MILLION (US$ 80 MILLION EQUIVALENT) AND AN ADDITIONAL FINANCING IN THE AMOUNT OF SDR 18.9 MILLION (US$ 28.7 MILLION EQUIVALENT) IN PILOT CRISIS RESPONSE WINDOW RESOURCES TO THE REPUBLIC OF CAMEROON FOR AN URBAN AND WATER DEVELOPMENT SUPPORT PROJECT FEBRUARY 29, 2016 Global Practice Water (GWADR) Country Department AFCC1 Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective 01/31/2016) Currency Unit = CFA Francs 1.00 = US$ 0.00165 US$ 1.00 = 605.909 FISCAL YEAR 2016 Senior Global Practice Director: Jennifer J. Sara Country Director Elisabeth Huybens Practice Manager: Alexander E. Bakalian Project Team Leader: Charles Delfieux ICR Team Leader: Véronique Verdeil ABBREVIATIONS AND ACRONYMS AF Additional Financing AFD Agence française de développement (French Development Agency) AfDB African Development Bank AM Aide-Memoire Camwater Cameroon Water Utilities Corporation CAS Country Assistance Strategy CBA Cost Benefit Analysis CDC City Development Contract CDE Camerounaise des Eaux CDPSP Community Development Program Support Project (see PAPNDP) CFAF African Franc CMU Country Management Unit CPF Country Partnership Framework CPS Country Partnership Strategy CRW Crisis Response Window DIP Douala Infrastructure Project DO Development Objective EIB European Investment Bank ESMF Environmental and Social Management Framework ERR Economic Rate of Return ESW Economic and Sector Work FY Fiscal Year GoC Government of Cameroon GPOBA Global Partnership for Output Based Aid HIPC Highly Indebted Poor Countries ICR Implementation Completion and Results Report IDA International Development Association ISR Implementation Status and Results Report IVA Independent Verification Agency JMP WHO/UNICEF Joint Monitoring Program M Million M&E Monitoring and Evaluation MDGs Millennium Development Goals MINEE Ministère de l’Eau et de l’Energie (Ministry of Water and Energy) Ministère de l’Habitat et du Développement Urbain (Ministry of MINHDU Housing and Urban Development) MS Moderately Satisfactory MTR Mid-Term Review MU Moderately Unsatisfactory NPV Net Present Value OBA Output Based Aid OP-BP Operational Policy and Bank Procedure PAD Project Appraisal Document PAP People Affected by the Project Projet d’Appui au Programme National de Développement Participatif PAPNDP (see CDPSP) PCU Project Coordinating Unit PDO Project Development Objectives PDUE Projet de développement urbain et du secteur de l’eau (see UWDSP) PIU Project Implementation Unit PP Project Paper PPP Public-Private Partnership PPPGPRP Public-Private Partnership for Growth and Poverty Reduction Project PRS Poverty Strategy Reduction QALP Quality Assessment of Lending Portfolio RAP Resettlement Action Plan RF Results Framework RFP Resettlement Framework Policy S Satisfactory SNEC Société Nationale des Eaux du Cameroun TA Technical Assistance TTL Task Team Leader UNDP United Nations Development Program UWDSP Urban and Water Development Support Project (see PDUE) UWSP Urban Water Supply Program WSS Water Supply and Sanitation Services XDR Special Drawing Rights CAMEROON Urban and Water Development Support Project and the Urban and Water Development Support Project Additional Financing CONTENTS A. Basic Information .................................................................................................... i B. Key Dates ................................................................................................................ i C. Ratings Summary ................................................................................................... ii D. Sector and Theme Codes........................................................................................ ii E. Bank Staff .............................................................................................................. iii F. Results Framework Analysis ................................................................................. iii G. Ratings of Project Performance in ISRs ............................................................. viii H. Restructuring (if any) ............................................................................................ ix I. Disbursement Profile .............................................................................................. ix 1. Project Context, Development Objectives and Design ............................................... 1 1.1 Context at Appraisal ............................................................................................. 1 1.2 Original Project Development Objectives (PDO) and Key Indicators ................. 2 1.3 Revised PDO and Key Indicators, and Reasons/Justification .......................... 2 1.4 Main Beneficiaries ................................................................................................ 2 1.5 Original Components ............................................................................................ 3 1.6 Revised Components ............................................................................................ 3 1.7 Other significant changes ...................................................................................... 3 2. Key Factors Affecting Implementation and Outcomes .............................................. 4 2.1 Project Preparation, Design and Quality at Entry ................................................. 4 2.2 Implementation ..................................................................................................... 6 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization ...... 8 2.4 Safeguard and Fiduciary Compliance ................................................................... 9 2.5 Post-completion Operation/Next Phase .............................................................. 11 3. Assessment of Outcomes .......................................................................................... 11 3.1 Relevance of Objectives, Design and Implementation ....................................... 11 3.2 Achievement of Project Development Objectives .............................................. 12 3.3 Efficiency ............................................................................................................ 14 3.4 Justification of Overall Outcome Rating ............................................................ 16 3.5 Overarching Themes, Other Outcomes and Impacts .......................................... 16 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ... 16 4. Assessment of Risk to Development Outcome......................................................... 17 5. Assessment of Bank and Borrower Performance ..................................................... 17 5.1 Bank Performance ............................................................................................... 17 5.2 Borrower Performance ........................................................................................ 19 6. Lessons Learned ....................................................................................................... 19 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 21 Annex 1. Project Costs and Financing .......................................................................... 23 Annex 2: Outputs per component ................................................................................. 24 Annex 3. Economic and Financial Analysis ................................................................. 29 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 42 Annex 5. Beneficiary Survey Results ........................................................................... 44 Annex 6. Stakeholder Workshop Report and Results................................................... 44 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 45 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 54 Annex 9. List of Supporting Documents ...................................................................... 55 MAP IBRD-421081 ...................................................................................................... 56 A. Basic Information CM-Urban and Water Country: Cameroon Project Name: Development Support Project Project ID: P084002 L/C/TF Number(s): IDA-43130,IDA-48200 ICR Date: 12/28/2015 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: SIL Borrower: CAMEROON Original Total XDR 53.30M Disbursed Amount: XDR 60.31M Commitment: Revised Amount: XDR 61.37M Environmental Category: B Implementing Agencies: CAMWATER (Cameroon Water Utilities Corporation) MINHDU (Ministère de l’Habitat et du Développement Urbain) Cofinanciers and Other External Partners: -- B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 12/22/2005 Effectiveness: 04/09/2008 04/09/2008 09/28/2010 Appraisal: 01/24/2007 Restructuring(s): 03/25/2014 09/19/2014 Approval: 05/29/2007 Mid-term Review: 04/18/2011 03/31/2012 Closing: 08/31/2012 08/31/2015 i C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: High Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Moderately Quality at Entry: Government: Satisfactory Unsatisfactory Moderately Implementing Moderately Quality of Supervision: Satisfactory Agency/Agencies: Satisfactory Overall Bank Moderately Overall Borrower Moderately Performance: Satisfactory Performance: Satisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Quality at Entry Project at any time Yes None (QEA): (Yes/No): Problem Project at any Quality of Yes Yes time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 4 3 ii General water, sanitation and flood protection sector 84 66 Other social services 5 5 Sub-national government administration 5 9 Urban Transport 2 17 Theme Code (as % of total Bank financing) City-wide Infrastructure and Service Delivery 33 40 Municipal governance and institution building 17 15 Other Private Sector Development 17 10 Urban services and housing for the poor 33 35 E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Hartwig Schafer Country Director: Elisabeth Huybens Marie Francoise Marie-Nelly Practice Manager: Alexander E. Bakalian Eustache Ouayoro Project Team Leader: Charles Delfieux Chantal Reliquet ICR Team Leader: Veronique Verdeil ICR Primary Author: Veronique Verdeil F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) (Loan Agreement) The objective of the project is to increase access of the urban population, particularly those living in low-income settlements, to basic infrastructure and services, including water supply. (Details added in the PAD) To achieve this objective, the project will (i) assist the various stakeholders of urban development in the preparation and implementation of tools and investments designed to increase access to services to as large a number of beneficiaries as iii possible; and (ii) support and facilitate the implementation of the public-private partnership in the provision of urban water services. Revised Project Development Objectives (as approved by original approving authority) N-A (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Number of people in urban areas provided with access to all-season roads within Indicator 1 : a 500 meter range under the project Value quantitative or 31,000 290,000 390,000 435,263 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Comments Achievement rate is 113%. (incl. % The initial indicator (access to all-year access to transportation and improved achievement) sanitation conditions) was later aligned with the Bank core sector indicators. Indicator 2 : Number of people benefiting from appropriate drainage Value quantitative or 31,000 290,000 390,000 565,101 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Comments Achievement rate is 149%. (incl. % The initial indicator mixed access to all-year access to transportation and improved achievement) sanitation conditions. It was later aligned with the Bank core sector indicators. Number of people in project areas provided with access to Improved Water Indicator 3 : Sources Value quantitative or 6,800,000 8,000,000 8,200,000 8,430,970 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Actual value: +1,630,970 people provided with access to improved water sources Comments across the PPP area (all sources of funding). (incl. % Of this, PDUE provided access to 378,710 people (22%). achievement) NB: baseline/target values not consistent with available sector data iv Indicator 4 : Direct project beneficiaries Value quantitative or 6,831,000 - 8,590,000 8,996,071 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Core sector indicator added at AF. Comments Target value: 1,759,000, as beneficiaries in urban/water components. (incl. % achievement) Achieved: 2,165,071 benefited from urban roads, drainage & access to water (across the PPP area, all sources of funding). Indicator 5 : Of which, direct female project beneficiaries Value quantitative or 3,700,000 - 4,600,000 54% Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Comments (incl. % Core sector indicator, added at the Additional Financing achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Roads rehabilitated, Non-rural (km) Value (quantitative or 8 33 41 63.2 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Comments (incl. % Achievement rate is 167% (increment increase above baseline). achievement) Indicator 2 : Length of newly built/rehabilitated drainage works in targeted areas (km) Value (quantitative or 5 37 49 108.5 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 v Comments (incl. % Achievement rate is 235% (increment increase above baseline). achievement) Indicator 3 : Length of newly built/rehabilitated water supply networks (km) Value (quantitative or 0 200 200 368.9 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Comments Achievement rate is 184%. (incl. % 341.9 km were built under the water component (Camwater) and 26.9 km were achievement) built/rehabilitated under the urban component. Indicator 4 : Improved community water points constructed or rehabilitated under the project Value (quantitative or 2,600 3,800 1,200 82 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Achievement rate is 7%. Comments The target value was an additional 1,200 standposts constructed. The activity was (incl. % cancelled under the water component. achievement) 82 additional community water points were constructed under the urban component. Indicator 5 : Number of social connections Value (quantitative or 0 70,000 70,000 35,411 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Achievement rate is 51%. Comments The target included 50,000 GPOBA-funded connections and 20,000 IDA-funded (incl. % connections. 25,254 connections were realized during the GPOBA program; achievement) 10,157 connections were realized with IDA funds New piped household water connections that are resulting from the project Indicator 6 : intervention Value (quantitative or 25,000 235,000 235,000 136,257 Qualitative) Date achieved 09/28/2010 08/31/2014 08/31/2015 08/31/2015 vi Achievement rate is 58% Comments Core sector indicator added at AF. (incl. % 136,257 new domestic connections were realized in the PPP area (all sources of achievement) funding). PDUE (indicator 5: 35,411 connections) contributed to 26% of this achievement. Indicator 7 : Number of city development contracts Value (quantitative or 0 6 6 6 Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Comments Achievement rate is 100%. (incl. % The 6 City Contracts (participatory strategic planning documents) were prepared achievement) and being implemented at project closing. Indicator 8 : Share of municipal budget allocated to maintenance of investments (%) Value (quantitative or 1% 10% 10% 10% Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Comments Achievement rate is 100%. (incl. % Source: PIU, based on municipal budgets achievement) Indicator 9 : Reduction of share of public customer in total water consumption (%) Value (quantitative or 40% 20% 20% 38.47% Qualitative) Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Comments Target not achieved. (incl. % Source: CDE data. An action plan to reduce public consumption was produced achievement) (EIB funding) but it is yet to be implemented. Indicator 10 : Progress towards financial equilibrium of the urban water supply sector Value Financial Financial Financial (quantitative or N/A equilibrium equilibrium equilibrium not Qualitative) reached (Year 5) maintained achieved Date achieved 05/01/2007 08/31/2012 08/31/2015 08/31/2015 Comments Target not achieved. vii (incl. % The financial equilibrium of the sector was maintained until 2011 and could not achievement) be restored since then. Indicator 11 : Annual tariff increase (%) Value 8% in year 1, then (quantitative or N/A 4% per year - DROPPED Qualitative) Date achieved 05/01/2007 08/31/2012 - - Comments (incl. % Indicator was dropped at AF achievement) G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 11/16/2007 Satisfactory Satisfactory 0.00 2 05/13/2008 Satisfactory Satisfactory 0.81 3 11/13/2008 Satisfactory Moderately Satisfactory 3.00 4 03/17/2009 Satisfactory Moderately Satisfactory 3.29 Moderately 5 09/24/2009 Satisfactory 7.24 Unsatisfactory 6 05/19/2010 Satisfactory Moderately Satisfactory 14.87 7 02/05/2011 Satisfactory Moderately Satisfactory 24.68 8 09/10/2011 Satisfactory Moderately Satisfactory 31.13 9 05/28/2012 Satisfactory Moderately Satisfactory 36.43 10 01/07/2013 Satisfactory Moderately Satisfactory 43.79 Moderately Moderately 11 07/09/2013 47.98 Unsatisfactory Unsatisfactory Moderately Moderately 12 02/03/2014 53.11 Unsatisfactory Unsatisfactory 13 11/25/2014 Moderately Satisfactory Moderately Satisfactory 75.46 14 05/29/2015 Moderately Satisfactory Moderately Satisfactory 83.69 15 08/27/2015 Moderately Satisfactory Moderately Satisfactory 86.61 viii H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Additional Financing, revised 09/28/2010 S MS 21.40 results framework and 2-year extension Change to legal agreements - 03/25/2014 MU MU 56.96 partial cancellation of funds Change to legal agreements - 1- 09/19/2014 MU MU 66.79 year extension I. Disbursement Profile ix 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. In 2006, Cameroon was still recovering from the late 1980s structural adjustment period and from a challenging economic and social climate. The economy was slowly returning to a steady growth path (3.3 percent per year); poverty was declining although remaining widespread with 40 percent of the population living below the poverty line of US$1 per day. Social indicators, including health and water supply, were lagging and the country was off-track in meeting most of the Millennium Development Goals (MDGs). 2. To address needed reforms and to reach the MDGs, the Government of Cameroon (GoC) focused its first poverty reduction strategy (PRS), adopted in 2003, on improved basic service delivery and on private sector driven growth. It initiated participatory consultations and pursued data collection and analysis on poverty. It introduced new regulatory frameworks to enhance business environments in the electricity, telecommunications, transport and water sectors. Such structural reforms led to the completion point of the Highly Indebted Poor Countries (HIPC) initiative in 2006. 3. Rapid urbanization, coupled with years of economic crisis and lack of investment in infrastructure, had brought major challenges to growing cities, primarily Yaoundé and Douala. Despite a decline in urban poverty, informal low-income settlements spread in urban areas, covering up to half of the capital cities’ areas and totaling two-thirds of their population. Some areas were isolated due to a lack of access roads and were plagued by unemployment and insecurity. People had little or no access to basic services (water, sanitation, drainage, etc.). Given the economic role of cities, the PRS outlined the need for a strategy of urban poverty reduction. In 2004, decentralization laws were enacted with the intent to foster local participatory planning and better service delivery to communities. 4. In the 2000s, less than half of the population had access to safe water: the PRS noted that the issue was key to achieving poverty reduction and growth. A Rural Hydraulic Program was designed to drastically increase access rate in rural areas, which then was below 30 percent. Water supply in urban areas was in a dire situation after 20 years of poor performance and weak governance on the part of the national water corporation SNEC (Société Nationale des Eaux du Cameroun). Due to lack of maintenance and fast growing demand, supply was unreliable and water was of poor quality. In 2006, only 25 percent of the urban population had access to piped water through private connections. Following the failed attempt to establish a concession contract with a private partner in the early 2000s, GoC decided to divest the SNEC. A presidential decree in late 2005 outlined a new Public Private Partnership (PPP) model supporting the urban water reform that involved a public asset-holding company and private operators to manage water supply services. 5. Rationale for Bank intervention. The proposed operation built on ongoing operations and financing opportunities created by debt relief initiatives. The Fiscal Year (FY) 04-06 Country Assistance Strategy (CAS) was fully aligned with the PRS goals to support basic service delivery and private sector-led growth: it aimed, among other objectives, to test models for improving service delivery in urban centers, and to improve 1 access to water in selected urban communities. In the urban sector, a Bank review 1 highlighted the need for capacity building and institutional support for decentralized authorities, and potential to complement the IDA-funded Douala Infrastructure Project (DIP) that piloted urban strategies and infrastructure works in slums, to learn from participatory approaches promoted in the Community Development Program Support Project (CDPSP), and to coordinate with other development partners.2 6. On the water side, the divestiture of SNEC was part of the IDA-funded Public Private Partnership for Growth and Poverty Reduction Project (PPPGPRP), in effect since 2000, which targeted other sector reforms to enhance competitiveness and growth. Building on the Bank experience in water PPPs in West and Central Africa, this project financed preparatory studies and a transaction officer to set up a series of contracting agreements, including a lease contract with a private service operator, to support the water PPP (see Box 1).3 Several donors, including the European Investment Bank (EIB) and the French Development Agency (AFD), were interested in coordinated support to the PPP to restore and expand good quality water services in urban and semi-urban centers. 1.2 Original Project Development Objectives (PDO) and Key Indicators 7. As stated in the Loan Agreement, the objective of the project was to increase access of the urban population, particularly those living in low-income settlements, to basic infrastructure and services, including water supply.4 The project outcome indicators were the additional population benefiting from: (i) all-year access to transportation and improved sanitary conditions; and (ii) access to safe water services in the targeted areas. 1.3 Revised PDO and Key Indicators, and Reasons/Justification 8. The PDO was not revised. Outcome indicators were later revised to align with the Bank’s core sector indicators to measure the number of (i) people in urban areas provided with access to all-season roads within a 500 meter range under the project, (ii) people benefiting from appropriate drainage, (iii) people in project areas with access to improved water sources, and (iv) direct project beneficiaries, of which female (see ICR datasheet). 1.4 Main Beneficiaries 9. The project targeted: (i) the population of the cities of Douala, Yaoundé, Bamenda, Maroua, and Mbalmayo, particularly those living in low-income settlements benefiting from infrastructure upgrading; and more broadly, (ii) the urban population to be serviced by the private operator in the water PPP area, especially poor households without access to piped water through private or collective connections. 1 World Bank, 2004: Cameroon Urban Sector (Report 29089-CM) 2 France, the European Union and the United Nations Development Program (UNDP) in particular. 3 The 2007 Sector Policy Letter (Lettre de politique sectorielle pour l’hydraulique urbaine et semi-urbaine) further detailed the PPP structure and objectives of the Urban Water Supply Program (UWSP). 4 The Project Development Document (PAD) added: “To achieve this, the project will (i) assist the various stakeholders of urban development in the preparation and implementation of tools and investments designed to increase access to services to as large a number of beneficiaries as possible; and (ii) support and facilitate the implementation of the public-private partnership in the provision of urban water services.” 2 10. The project also included a large capacity-building program, targeting (i) local authorities and staff in the beneficiary cities, (ii) local community groups, social focal points and small enterprises, (iii) central agencies and their decentralized bodies in charge of urban development, and (iv) the Project Coordinating Unit (PCU) and the Cameroon Water Utilities Corporation (Camwater) as implementing agencies. 1.5 Original Components 11. Component 1: Capacity building and support to decentralization (US$4.00 M). This component was designed to strengthen urban management capacity to plan, implement, and maintain the delivery of infrastructure and urban services, primarily in the cities of Bamenda, Douala, Maroua, Mbalmayo, and Yaounde. Activities included capacity building, the completion of a national urban strategy, and the development of management tools and planning instruments (national urban database, city development contracts, etc.). 12. Component 2: Infrastructure works in low-income settlements (US$40.45 M). To increase access to basic services in low-income settlements of the five target cities, this component was designed to finance small infrastructure works (primarily roads and drainage systems) and upgrading of social facilities (such as classrooms) selected through participatory diagnostics. Local governments would progressively take over financial management and procurement of such sub-projects. 13. Component 3: Support to the implementation of the public-private partnership in the provision of urban water services (US$33.00 M). This component was designed to (i) provide Camwater with capacity building and technical assistance (TA) to manage the PPP, (ii) fund priority rehabilitation of production and distribution facilities in Douala, Yaoundé, and secondary centers, and (iii) promote access of the poor to piped water through the following: (a) the construction of standposts and a social connections program, funded through IDA, an expected US$10 million (M) grant from the Global Partnership for Output Based Aid (GPOBA), and US$2 M from Camwater, and (b) the expansion of tertiary networks. As per the Financing, Project and Subsidiary Agreements, Camwater would implement this component (see Box 1 below on the PPP design). 14. Component 4: Project management (US$2.55 M). This component provided funding for the efficient management of the project, including PCU staff and operating costs, monitoring and evaluation, information and communication, and costs of technical and financial audits. 1.6 Revised Components 15. The content of the original components was not revised. However, their allocated budget changed with the Additional Financing (AF) granted in 2010 (see section 1.7). 1.7 Other significant changes 16. Additional Financing. AF of US$28.70 M to the initial IDA credit of US$80.00 M was approved in September 2010. The rationale was threefold: (i) to scale-up activities to enhance the project development impact (50 percent of funds for urban infrastructure and services); (ii) to close the financing gap (see Box 1) of the urban water investment plan (40 percent); and (iii) to cover cost overruns of TA activities to Camwater, and to support project management for an extended project duration (see section 2.2). 3 17. Funds Cancellation. Due to important delays, GoC and the Bank agreed to cancel activities that could not be completed in due time and to refocus the project on selected high-impact activities. In March 2014, US$16.8 M of project proceeds were cancelled, mostly under the water component. 18. Extension of closing date. The project was designed for a duration of five years, but was restructured to provide sufficient time to implement the AF activities, and to achieve the PDO. The closing date was extended by two years, from August 31, 2012, to August 31, 2014. Together with the partial cancellation of funds, the decision to pursue the achievement of two strategic contracts under the water component translated into a second extension of the project closing date up to August 31, 2015. Box 1 – The urban water sector reform: the PPP structure and financing mechanisms 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 19. Bank experience from other operations influenced the proposed design. The initial concept was focused on urban development. It built on the 2004 urban sector review, on early lessons from the PID, and to a lesser extent on the CDPSP. It then focused on the 4 sector governance and cities’ capacities to plan, deliver, and maintain social infrastructure and services. Participatory planning would be key in scaling-up projects in poor settlements by means of direct, small-scale interventions. Budget support and sector-wide approaches were therefore discarded as potential alternatives for the project. Bank experience in the region (Senegal, Niger) was later utilized to support the water PPP. A lesson learned was that providing IDA investment financing was instrumental to influence the sector dialog, and to also be in a position to monitor the execution of related contracts. As a result, the project financing would be through regular investment lending, rather than through support the ongoing IDA-funded Privatization Project (PPPGPRG). This third component was fine-tuned in 2006, taking advantage of other donors’ interest in the PPP. 20. Project preparation spanned over more than two years. It took 18 months between the concept review meeting in December 2005 and Board approval in May 2007. Preparation funds granted in April 2006 mostly benefited the urban components, including the municipal financial assessments and scoping studies. As in typical urban framework projects, sites and infrastructure would be selected later with beneficiaries. As a result, detailed studies and environmental and social screenings could not be carried out during preparation, and the ex-ante economic analysis was limited to a portion of road to be constructed in Yaoundé. For the water component, the PPPGPRP funded transaction advisory services to set up contracting agreements and an investment plan for the sector. The latter provided data supporting the economic analysis at PPP level, which included support from several financiers, including IDA. A GPOBA grant was requested to leverage IDA support for increased water access. 21. The PDO was consistent with proposed components and reflected strategic design features. Key themes included a focus on cities, under pressure from increased demand for infrastructure and services, and poverty targeting through participatory approaches in low- income settlements and subsidized access to water. The components supported the achievement of the PDO, through: (i) small-scale infrastructure in slums, (ii) the provision of improved water services through the water PPP, and (iii) an important capacity-building program aimed at sustaining access to targeted infrastructure and services. Key outcomes indicators identified expected improvements in terms of access to urban roads, drainage, and water supply. 22. The multi-sectoral design involved complex implementation arrangements and institutional challenges. In addition to overall project management, the PCU would implement component 1, and would support municipalities to progressively take over the implementation of component 2. The PCU was established within the Ministry of Housing and Urban Development (MINHDU), and would have to deal with other agencies in charge of decentralization and local governments. It would also coordinate with Camwater, responsible for component 35 and a key stakeholder within the PPP architecture. PDUE water activities were partly interrelated with those from other financiers, and therefore depended on the smooth and timely implementation of the PPP. 5 Component 3 included dedicated funds and covenants under the legal Agreements. The GPOBA sub-project was also embedded in component 3. For details, see the GPOBA ICR (2014). 5 23. The project risk was rated high, even with the proposed mitigation measures. At PDO level, the risk of low Government support for decentralization and PPP reforms would be mitigated by (i) the cautious approach to deploy the urban strategy through “city development contracts”, and (ii) other donors’ support for the PPP. To prevent sector and operational risks, extensive training and capacity building would address low institutional (central level) and technical (local level) capacities of urban stakeholders. A Bank assessment confirmed that the PCU and Camwater had adequate financial management capacities to handle the project. Transfer of fiduciary responsibilities to municipalities would be progressive and would include support to local small enterprises, boosting infrastructure works. Technical assistance from the PPP auditors and other African water utilities would strengthen Camwater’s capacities to manage the PPP. Improved services and pro-poor measures to expand access would overcome resistance to tariff increases. Settling arrears by public customers would limit the financial risk of the private operator and help sustain the sector equilibrium. 2.2 Implementation 24. The project, known as PDUE (projet de développement des secteurs urbain et de l’eau), had some periods of difficulties in implementation, but ended up performing reasonably well. Project implementation spanned over 88 months instead of the original timeframe of 60 months. It disbursed XDR60.3 M (98 percent) of the revised allocation of XDR61.3 M resulting from additional funding that was partially cancelled at a later date. Rated as satisfactory (S) until mid-2013, the project was then downgraded to moderately unsatisfactory (MU) due to delays that put the achievement of the PDO at risk. After funds were cancelled, and until project closing, the PDO was rated moderately satisfactory (MS). Implementation progress and several dimensions or components received temporary negative ratings aimed to prompt action and draw management attention. At closing, the PDO was achieved, despite contrasted results (see section 3.2). 25. The project started slowly while piloting innovative approaches. It became effective in April 2008, 11 months after approval, and the disbursement condition for water was met in February 2009. The urban training program started up after completion of the municipal, administrative, and financial audits that year. Most of component 2 works were underway, despite late engineering studies and slow procurement processes. Participation of local stakeholders in selecting priority infrastructure and services, labor-intensive works, and simple technologies proved adequate to respond to the needs of informal neighborhoods. This triggered, in mid-2009, a Government request to scale-up the project in other settlements. Under component 3, the private operator Camerounaise des Eaux (CDE) launched the social connections campaign subsidized by GPOBA and sold 4,000 connections in 2009. But, as reported in the GPOBA ICR, CDE could not meet all demands due to the lack of tertiary networks in targeted areas, and Camwater had limited ability to invest without the GoC financial support. By the end of 2009, disbursements stood at 9 percent, and components 2 and 3 were rated MU. A quality assessment review of the project (2007-2009 period), completed in early 2010, also rated implementation progress as MU (Quality Assessment of Lending Portfolio, QALP-2). 26. Additional financing of one-third the amount of the initial credit was approved in September 2010. The AF benefited from the new IDA16 Crisis Response Window (CRW) 6 to assist low-income countries in coping with the global economic crisis. The rationale for using CRW funds was to upgrade living conditions for the urban poor, to provide job opportunities, and to expand access to basic infrastructure. The disbursement rate had progressed, but risks remained rated as high. To allow the full implementation of activities and disbursement of proceeds, the closing date was extended by 24 months. 27. The AF successfully scaled up development impacts in urban poor settlements. The additional funds enabled the project to provide more social infrastructure and to strengthen maintenance of works in municipal budget planning and management trainings. Outputs for road and drainage were increased, leading to highly satisfactory outcomes (see section 3.2). Such results benefited considerably from community participation and social intermediation of local development committees involved in maintaining works. Initial audits had over-estimated municipal fiduciary capacities, but over time, municipalities gained new skills in recruiting municipal engineers who were involved in procurement commissions. Capacity-building activities continued until completion; the PCU completion report noted that institutional strengthening could have benefited from more coordination with central entities in charge of decentralization. 28. The PCU managed to overcome issues that affected the implementation of the urban components. Implementation of social safeguards, in particular, proved difficult in densely populated areas (see section 2.4). This delayed some works contracts in Phase 2 (2012-2015), which were only completed in the last months of the project. The PCU was not well equipped to deal with this unanticipated problem of compensation, from documenting cases and transactions to mobilizing funds from municipalities and GoC, and it also did not have control over lengthy national procedures required to assess and pay compensation to affected people. In total, despite staff turnover, the PCU successfully handled numerous contracts and dealt with recurring issues with small firms that had only limited procurement and financial management capacities. It provided intensive support to municipalities, and spent considerable energy to complete the payment of compensations, although these could not be fully settled before the project closed. 29. The remainder of the CRW AF was intended to boost the water PPP. Investments from various financiers in production and distribution capacities and GoC subsidies to Camwater took time to materialize. This financing gap (see Box 1) hampered the execution of IDA-funded rehabilitation works and GPOBA-funded social connections sub-program.6 Water shortages and poor service were critical for existing customers, and limited the private operator’s capacity to sell more connections. Addressing an emergency situation, the AF would finance needed rehabilitation of water production facilities in Douala and Yaoundé; supply of production and distribution meters; and tertiary networks to speed up new connections’ rates, particularly in poor neighborhoods far from existing networks. 30. The Mid-Term Review (MTR) in March 2012 considered that the PDO was achievable, but raised flags on counterpart funding related to the PPP situation, and on procurement. It reported that the implementation of the ambitious PPP rehabilitation program suffered from the continuous deterioration of the sector’s financial situation. Since 2010, the Bank and other donors urged the Government to pay crucially needed investment 6 The approved GPOBA grant itself was lower than expected in the PDUE financing plan; see Annex 1. 7 subsidies to Camwater and expressed their concerns about the situation. Delays affected investments, which further disrupted the overall financial mechanisms supporting the PPP (see Box 1). Partners, through the Steering Committee, agreed in 2011 that the financial equilibrium was broken. 7 In addition, the creation of the new Ministry of Public Procurement in 2012 affected progress of the PDUE and other projects (see section 2.4). 31. A partial cancellation of funds helped refocus the water component on achievable activities. By the end of 2013, after the mixed results of the GPOBA social connections sub-project (see GPOBA ICR), two-thirds of IDA allocations for Camwater were not yet committed (~US$30 M). This triggered the decision to cancel US$16.8 M or 57 percent of the AF, mostly for water investments, including rehabilitation works that had been included in the AF, and the construction of 1,200 standpipes. During negotiations in March 2014 however, at the Water Minister’s request, two high-impact activities were maintained— additional tertiary network extensions, and IDA-funded social connections—and a one- year extension was granted to execute them. At completion, the two contracts were fully executed, as were all other project activities. At sector level, the financial situation remained an issue, despite debt swap agreements between GoC, Camwater and CDE. An action plan requested by donors was agreed upon in the summer of 2014 but was suspended soon thereafter when the Government decided to assess the PPP (see section 2.5). 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 32. M&E design. The PCU was responsible for overall consolidation and reporting. It would collect data related to the urban components, including from technical audits and municipal budgets. Camwater would report on water indicators, some of them to be produced by the private operator or the water ministry, with the assistance of the PPP technical auditors. Fiduciary performance would also be monitored. The results framework (RF) was consistent with the PDO, despite weaknesses for some baseline/target estimates; some baselines would need to be fine-tuned once detailed studies would be completed. 33. M&E implementation. The PCU developed a dashboard to monitor progress of the different outputs in each target city, building on regular field visits, contracts’ and audits’ data. The M&E expert consolidated a methodology taking into account the specifics of investments in roads and drainage to measure the number of beneficiaries. The PCU also produced documentaries to visually demonstrate the impact of the project on upgrading low-income settlements and on beneficiary satisfaction. At completion, it noted that data on municipal budgets still needed to be improved to better track maintenance allocations, a key indicator for municipalities. On the other hand, relevant data were regularly provided by CDE and the auditors, but some of the project indicators would have deserved clearer definitions, as some measured activities directly supported by project funds, while others referred to the overall progress in the PPP area (all sources of funding). This made it more difficult to assess achievements in water, and the extent to which the project contributed to 7 The PPP financial model developed with IDA funding was first presented in 2010. In this preliminary assessment, the financial situation of Camwater was considered balanced. But the model was not yet fully operational, and needed to be updated with the 2009 balance sheet data, and with revised assumptions on investments and demand. In 2012, AFD suspended its non-sovereign loan to Camwater and restructured it as a sovereign loan to minimize risk and alleviate Camwater debt service. 8 the PPP, in terms of beneficiaries or operational and financial performance. For instance, while the indicators on reduced public consumption and on the sector equilibrium were crucial for the sector, they did not directly result from project activities such as developing the financial model or providing technical assistance to Camwater (see section 3.2). 34. M&E utilization. The PCU submitted regular progress reports documenting activities and results. The PCU also prepared a detailed mid-term report (2012) that made useful recommendations for the second phase of urban activities, and provided a candid assessment of the project performance at completion, including lessons learned and proposals for a potential follow-up operation (see Annex 7). Reporting on fiduciary aspects improved over time (see section 2.4), but the lack of a tool to easily consolidate project financial data contributed to delays and the PCU underscored this lesson to improve efficiency in future operations. Similarly, a tool to monitor safeguards and compensations would have helped keep track of transactions, and mitigate potential complaints. Overall, the M&E system would have benefited from stronger coordination between the PCU and Camwater, to ensure shared understanding of the objectives, consistency of data and enhanced ownership. This could have triggered a restructuring of the RF to better capture the project accomplishments at completion. 2.4 Safeguard and Fiduciary Compliance Safeguards compliance 35. The project was approved as a Category B, with limited adverse environmental and social impacts linked to civil works for urban infrastructure under Component B. Operational Policy and Bank Procedure (OP-BP) 4.01 and OP-BP 4.12 were triggered. 36. OP-BP 4.01 on Environmental Assessment. A satisfactory Environmental and Social Management Framework (ESMF) was published in 2006 and was duly updated before the AF to reflect new requirements on environmental license under the national environmental regulation. Implementation was rated S until AF, then MS. The PCU then recruited a permanent environmental and social specialist to further streamline environmental and social requirements, from public consultations to capacity building for contractors and local authorities, coordination with the ministry of environment for the environmental screenings, and better documentation of related processes. 37. OP-BP 4.12 on Involuntary Resettlement. Consistently with the framework approach of the urban components, a Resettlement Policy Framework (RPF) was prepared and published during preparation. Compliance was downgraded during AF appraisal: the PCU had duly updated the RPF, but not prepared standalone Resettlement Action Plans (RAPs) in areas where infrastructure works had affected fractions of urban plots. In practice though, as noted in supervision reports, the PCU had complied with the policy’s requirements through consultations on the project’ benefits. In many cases, affected owners agreed to formally transfer land to the public domain without financial compensation, resulting in a significant gain of time to advance works. Other families were compensated for damages incurred. The PCU was urged to fully document these transactions, maintain extreme vigilance over safeguard compliance, and secure sufficient counterpart funding for compensations. Completion of Phase 1 infrastructure works then followed a procedure acceptable to the Bank: works could continue should compensations be paid. 9 38. Given delays in providing compensations, OP 4.12 was enforced more strictly for Phase 2: works were not allowed to start before people affected by the project (PAPs) received due compensation. The project only partially complied with this policy (MU rating in early 2014 and at closing), due to delays that were beyond its control. Indeed, the institutional framework governing land acquisition and compensation involved several administrative steps, including a Presidential Decree clearing the list of PAPs that could take months to be issued. RAPs for Phase 2 were approved by the end of 2014. Several decrees—including those incorporating PAPs omitted in initial assessments—were prepared and filed for legal clearance. Counterpart funding was secured to allow the PCU, directly or through the concerned municipalities, to pay compensations to the 585 people affected by PDUE. In total, 88 percent of the PAPs were compensated as of January 31, 2016 (a drastic increase from 51 percent at closing on August 31, 2015), for a total of CFAF 401 M, or 88 percent of the total amount due (see section 2.5). Fiduciary Compliance 39. Procurement. Both the PCU and Camwater performed procurement activities in accordance with Bank standards, despite delays in the first years. At MTR, transfer to municipalities of the procurement role for component 2 works was considered acceptable by the Bank, given the skills that had been built throughout the project and continued PCU support. From mid-2012, however, the rating was downgraded to MU during three semesters. In addition to changes of both the PCU’s and Camwater’s procurement specialists at that time, the creation of the new Ministry of Public Procurement further disturbed procurement processes. While the special commission in place for the urban components was maintained, Camwater faced conflicting requirements between procurement arrangements established in loan agreements, and those promoted by the new ministry. In December 2013, eight months before expected closing, US$20 M of contracts were ready to start for the urban components, while the water component had a backlog of over US$30 M of contracts at different stages of procurement. This triggered a highly unsatisfactory rating and the partial cancellation of funds. At closing however, both implementing agencies had successfully handled a large number of contractors and contract amendments, contributing to the PDO achievement. 40. Financial management (FM). FM performance was rated S and MS until 2012. Although there were no major deviations from the FM policy, supervision reports noted important payment delays due to dealing with many small enterprises lacking experience with administrative and tax requirements. Close FM supervision helped resolve these issues. From the end of 2012, FM performance was downgraded to MU during three semesters, and risk was upgraded to substantial. The new PCU accountant had to overcome weaknesses in accounting practices and budget planning, including counterpart funding to support the PCU. A new, inexperienced financial team took over during a sensitive managerial transition period at Camwater. Interim financial audits were submitted with delays in the initial years, but practices improved over time. While the qualification of the 2008 financial audit was quickly cleared, subsequent audits carried out recommendations to improve internal control and financial consolidation. The final financial statements and audit reports were expected at the end of February 2016. 41. Disbursement. After a slow start and the difficult years of 2012-2013, disbursements reached 94.6 percent of the allocated credits (including additional and 10 cancelled funds) at project closing on August 31, 2015. They increased to 98.28 percent, or US$90.02 M equivalent (XDR60.3 M) when the credits closed on December 31, 2015, after the grace period. Despite delays in submitting disbursement requests, including during the grace period, the urban components slightly over-disbursed, using uncommitted funds of the water component. The definitions of the disbursing categories, which differed between the initial and additional credits and did not overlap with the project components, sometimes created budgeting and reporting issues. 2.5 Post-completion Operation/Next Phase 42. On the urban side, the PCU has been maintained within MINHDU. Full payment of outstanding compensations to affected people remains of utmost importance. Payments have markedly progressed since the closing date (see section 2.4), but two for Yaoundé were still awaiting the presidential clearance at the time of this report. Other post- completion activities include minor but strategic activities that were not fully completed at PDUE closing, such as dissemination of the national urban strategy. The PCU was also mandated to prepare a new operation, building on lessons learned during PDUE, scaling- up its successful approach to slum upgrading, and further strengthening municipal capacities for urban management. The Bank expressed its interest in supporting this operation on “Inclusive Cities”, with the condition to fully resolve PDUE compensation legacy before Board approval (see section 2.4). 43. On the water side, committed works and studies were fully completed at closing. Camwater will launch a bid based on detailed feasibility studies funded by the project to build 200 standpipes. The Government’s ongoing assessment of the PPP performance, and Camwater’s draft investment plan for the next 25 years will guide strategic decisions on the shaping of the urban water sector in coming years. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Relevance of Objectives: Substantial 44. The project objective remained relevant in the context of rapid urbanization and demand for social infrastructure and services, including water supply. It was aligned with both the Government’s second Poverty Reduction Strategy Paper (2009) and its Growth and Employment Strategy (2010) that aimed to transform Cameroon into an upper-middle income country, boost growth, and reduce poverty. The PDO also contributed8 to Pillar 2, Outcome 9 of the 2010-2013 CAS, later extended until 2015, that targeted improved access to basic infrastructure, including transportation, sanitary conditions (drainage) and water supply in targeted urban areas. The ongoing Systematic Country Diagnostic for Cameroon9 recognized the low quality of service delivery and access to water as constraints to poverty reduction, and acknowledged urban development as a source of economic growth. 8 2010-2015 Country Partnership Strategy Completion and Learning Review (World Bank, 2015). 9 A new Country Partnership Framework for 2016-2020 will be developed on this basis. 11 Relevance of Design and Implementation: Substantial 45. The logical framework was consistent with the PDO. Working across various interrelated policy areas made sense in the context of urbanization growth and lagging investments to support poor urban dwellers, even though it involved institutional and coordinated challenges. Key selected areas (roads, drainage, water) as well as institutional strengthening indicators were captured in the RF, despite weaknesses for some baseline/target estimates. 46. The project design adequately balanced infrastructure development and institutional strengthening to address sector reforms together with tangible progress in service delivery and living conditions of the urban poor. Lessons learned from earlier operations were useful to design the project scope and key features to support the PDO, including: (i) a shift from traditional approaches to slum upgrading, based on participatory decisions on priority infrastructure and services, small-scale, labor-intensive works with quick and high- impact results, (ii) empowerment of the municipalities to progressively take over responsibilities in planning and managing contracts on their own territory, (iii) a focus on maintenance, involving more municipal financing and contractual arrangements with local communities, (iv) a comprehensive capacity-building program to strengthen urban stakeholders, from central to local levels. 47. For water, the overall PPP structure provided (i) contractual incentives to improve operational and financial performance, (ii) pro-poor measures, and (iii) financial mechanisms that were intended to secure the sector viability. The PDUE supported these features in, among others: (a) allowing direct contracting with the private operator for some of the works contracts, (b) supporting the implementation of the GPOBA program of subsidized connections in addition to IDA-funded the social connections, (c) coordinating with other donors to help Camwater develop regulatory tools such as the financial model and the tariff study, and strengthening its capacity as asset-holding company. 3.2 Achievement of Project Development Objectives 48. The PDO was substantially achieved. The project performed extremely well in increasing access to urban roads (high) and to drainage infrastructure (high), while access to water supply services (modest) increased at a more moderate pace (see Annex 2). 49. Over 435,000 people were provided with all-year access to urban roads in targeted settlements (achievement: 113 percent; rating: high). The project funded a total of 63.2 kilometers (km) of urban roads (achievement: 167 percent). Trunk roads connecting the areas with other areas of the cities (voies structurantes) facilitated, among others, mobility and better access to economic and job opportunities, with public transportation and other means within a 500-meter reach. Proximity roads and streets within the areas (desserte de proximité) enhanced access to schools, markets, offices and small businesses and dramatically reduced hardship of walking, as they came with other small works like footbridges and pedestrian paths. 50. Over 565,000 people benefited from appropriate drainage in low-income settlements (achievement: 149 percent; rating: high). The project funded 108.5 km of new and rehabilitated drainage mains (achievement: 235 percent). Identified by communities as priorities, such works helped address poor sanitary conditions, due to 12 stagnating water, oftentimes mixed with uncollected garbage and, in case of low water tables, possible overflows of domestic latrines. These investments also mitigated the impact of frequent floods, a major issue in Cameroonian cities, particularly in informal settlements. In Douala and Yaoundé, works were coordinated with other partners to optimize water runoffs towards larger canals. 51. In addition, the project provided other small infrastructure and services contributing to slum upgrading by improving security (street lighting points, fences), developing socio-economic activities (small markets), improving sanitation conditions (wastewater collection platforms, public latrines, and community water points), and enhancing social cohesion (classrooms in Maroua). Populations, as reported in PCU reports and documentaries, expressed their satisfaction for the works and reported a better quality of life in their settlements due to improved sanitary conditions, especially during the rainy season. Urban works under the project provided over 318,500 man-days of local job/income opportunities. 52. 378,710 people were provided with access to water supply services (modest) directly by the project. Component 3 was deemed to support the implementation of the PPP, and Camwater confirmed during supervision and the ICR preparation that “project areas” referred to the affermage service area under the PPP. Over 2008-2015, the PPP provided10 an additional 1,630,970 people with access to improved water sources, of which 378,710 resulted directly from the PDUE contribution (22 percent). Indeed, the PPP gained 136,157 new domestic connections and 898 standposts over that period. PDUE contributed directly to this result through 35,411 domestic connections under the GPOBA and IDA- funded social connection program (26 percent contribution), and 82 community water points under the urban component (9 percent contribution). Progress in access, however, was below targets, both for the PPP and for PDUE. PDUE social connections program was achieved at 51 percent, and only a handful of community water points were provided in urban slums (achievement: 7 percent). This performance followed the same curve as the overall PPP: over the same period, the UWSP target for new domestic connections was achieved at 56 percent and the target for new standposts at 15 percent. 53. In addition, the project constructed and rehabilitated almost 370 km of water supply network extensions, far above the objective of 200 km (achievement: 184 percent); 342 km were executed through Camwater and covered Douala, Yaoundé, and secondary centers, and 27 km resulted from works in urban slum (component 2). The latest contract to develop an additional 215 km was completed before closing: it will enable CDE to reach more areas in demand for connections and ultimately increase the number of beneficiaries. The project also contributed to the rehabilitation program through emergency works and upgrading of water production and distribution facilities in Douala and Yaoundé, and supported various equipment and supplies, including 60,000 meters. Other PPP investments added new production capacities to the supply system over the last years. It is reasonable and fair to 10 Source: CDE commercial data, validated by the PPP auditor and partners; data from Dec. 2007 to Aug. 2015, at project closing. Beneficiary populations are calculated with the ratios used by Camwater and CDE on people per domestic connection and per standpipe. CDE actual data can be compared to objectives set in the Urban Water Sector Program for 2006-2015. 13 assume that as a result of these combined efforts, operational performance will continue to improve and progressively restore reliable and continuous water services. 54. Additionally, the project supported institutional capacity strengthening needed to improve operation and maintenance of infrastructure and services, and to ensure their sustainability in the medium and long term. To support municipalities and other urban stakeholders, the project successfully assisted municipalities in developing planning and management tools to monitor progress in urban development and municipal finance (tax collection, maintenance, etc.). The six City Development Contracts (CDCs) prepared in target cities are now being implemented. The share of municipal budget allocated to maintenance of investments reached 10 percent, even though the PCU noted that progress remained to better track maintenance expenses. It also supported: (i) the completion of the National Urban Strategy; (ii) the created of a national urban database; (iii) the training of more than 1,000 people, scaling up moving project results to a national momentum. 55. The project also promoted the institutional strengthening of the water PPP structure. Donors coordinated their efforts to develop regulatory tools and capacity- building support, especially for the new public corporation Camwater. The PDUE funded the setup of the financial model, the first contract of the technical auditors and the PPP Tariff Study. The EIB funded the Action Plan for the reduction of public consumption, which is yet to be implemented. The AFD funded the updating of the financial model and recruitment of the model administrator, among others. The PDUE also provided technical assistance and trainings for Camwater staff, as well as a study tour to learn from the Senegalese asset-holding company, SONES. The two sector-level project indicators, one on the share of public consumption in total water consumption, and the other on the sector financial equilibrium, could not be reached. Both became sensitive issues for the PPP, involving factors beyond Camwater’s sole control (see Box 1). 56. Finally, the project reached its objective to support access to infrastructure and services in urban poor areas. The PAD did not provide quantitative criteria to define targeted low-income settlements; however, the selection of beneficiary areas was based on non-monetary qualitative criteria describing deprived settlements, including: the level of urban services and infrastructure (access roads, drainage, existing sources of water and sanitation facilities, etc.), the urban fabric and quality of housing, zones prone to flooding, etc. Local authorities backed such criteria, and field visits and physical evidence confirmed these areas were poor settlements. The GPOBA ICR also reported that beneficiaries from subsidized connections were mostly located in deprived areas, distant from the existing networks; they also had consumption profiles similar to the poorest quintiles of households based on the PPP Tariff Study issued in 2013.11 More than half of the OBA connections consumed below 5 m3/month and on average, only 2.3 m3/month, far below the average 13 m3/month for domestic consumption. 3.3 Efficiency 11 The PPP Tariff Study (2013), funded by IDA, included a willingness to pay survey and data on average consumption per person and expenses for water in several big cities, sorted out by poverty quintiles. 14 57. Overall, efficiency is considered modest. This assessment balances (i) reasonable economic efficiency estimates for three sets of investments provided by PDUE—-roads, drainage and water supply, and (ii) administrative efficiency. Indeed, the project lasted 88 months instead of the initial duration of 60 months, which increased both Bank supervision and overall project management costs. 58. At appraisal, separate economic analyses were undertaken given the diversity of proposed investments and target areas. The ex-post analysis undertaken to assess efficiency at completion built on the ex-ante analysis, including Cost Benefit Analyses (CBA) for (i) the urban road Ngoa-Ekele in Yaoundé, and for (ii) the water component at PPP level. The ex-ante analysis did not quantify benefits for other investments under component 2. Given their large share in project costs and important achievements, a quantified ex-post economic analysis was performed for drainage investments (See Annex 3). 59. Economic efficiency for the urban road Ngoa-Ekele sub-project was substantial. Although actual costs were slightly higher than planned, investments for this strategic road section to enter this settlement in Yaoundé 3 generated a return higher than estimated at appraisal. The Economic Rate of Return (ERR) was 44 percent at completion (Net Present Value (NPV) of CFAF 1.3 million), compared to 39 percent at appraisal (NVP of CFAF 1.5 million), at a 12 percent discount rate; the NVP would be slightly higher at a 5 percent discount rate. Other socio-economic benefits associated with urban road investments, such as time saved to access this settlement, or economic opportunities for street vendors along the road, are not reflected in this assessment. It is likely that other sections of trunk road funded by PDUE would generate similar results. 60. Investments in drainage systems usually generate a wide range of benefits, including flood prevention and reduction of losses resulting from heavy rains, better control of water discharge and pollution of water tables, and reduction of waterborne diseases. Considering data availability and the complex modelling of other benefits, the ex-post CBA focused specifically on benefits resulting from avoided costs of illness related to waterborne diseases, mainly diarrhea and malaria. Results varied widely, with ERRs (at a 12 discount rate) ranging from 65 percent in Mbalmayo, 26 percent in Yaoundé, and 12 percent in Bamenda, to 10 percent in Maroua, and a negative ERR in Douala. Differences in the size and types of drainage works, and related costs in the different cities, partly explain the variability. These results represent a very conservative lower-bound value, because many important benefits could not be quantified, especially flood prevention in project areas known to be prone to intense flooding with dire consequences for lives and properties. 61. Efficiency for the water investments was severely affected by the challenges that affected both the PPP and PDUE. At a 12 percent discount rate, the ex-ante ERR was estimated at 12.2 percent (NPV of CFAF 10 billion), for an ex-post ERR limited to 5.43 percent (NPV of CFAF -41 billion, but of +6.1 billion at a 5% discount rate). PPP investments were actually higher than expected at appraisal, but delays and cost overruns weighed heavily on several investments, resulting in the postponement of expected benefits. The number of new customers increased, but were less than planned in the sector strategy, reducing the consumer surplus from ex-ante to ex-post CBA. The sector financial disequilibrium has become a highly sensitive issue, and as a result, not all factors could be fully assessed in this ICR. The Bank, through PDUE, put a particular emphasis on access 15 to water. In total, with only five percent of actual PPP investments, PDUE provided one in four of the PPP new connections. The sensitivity analysis demonstrates that this contribution increased the PPP ERR, albeit moderately. Finally, costs per connection were in the range observed in other West African countries, validating the cost-effectiveness of the project investment: US$ 153 for GPOBA connections (including a subsidy of over 30 percent of the cost), US$ 197 for IDA-funded connections (subsidy of 90 percent for the regular connection length), for an average of US$ 200 in neighboring countries. 3.4 Justification of Overall Outcome Rating 62. Project Outcomes are Moderately Satisfactory. The relevance of objectives and of design and implementation are substantial, as is the achievement of the PDO, while the efficiency is modest. Project Outcomes are therefore rated as moderately satisfactory. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 63. PDUE pro-poor orientation was discussed above (see section 3.2). Recent economic and poverty data 12 confirmed that (i) urbanization continued to bring more people to urban centers, maintaining pressure to provide them with housing, infrastructure and services, employment, etc., and (ii) overall, the urban poor represented only 10 percent of the total poor in Cameroon, a real decrease over the last 10 years. While PDUE contribution to this trends is probably limited, this kind of project interventions including small scale works, local materials, and intensive labor, may have played a role in it. 64. While the project did not report particular gender-related aspects, it included consultations and participatory decision making to select priority investments in target areas to ensure ownership and to strengthen social development. Communities were involved as well as local development committees (comités de quartiers). According to the PCU completion report, in the first phase these groups had contractual arrangements signed with the municipalities to maintain the works and to develop other social activities. This dynamic was not as successful in the second part of the project, due to delays in works and compensation issues. More attention to proper communication with beneficiaries should help get buy-in and maintain involvement of beneficiaries (see Annex 7). (b) Institutional Change/Strengthening 65. Related issues are discussed below in section 4. (c) Other Unintended Outcomes and Impacts (positive or negative) N.A. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 66. No beneficiary survey was undertaken to prepare this Core ICR. 12 Cameroon, 2014, ECAM4, National Survey on Household Consumption and Activities; World Bank, 2016, Systematic Country Diagnostic for Cameroon 16 4. Assessment of Risk to Development Outcome Rating: High 67. For the urban development sector, governance needs further consolidation to sustain the project’s achievements. At policy level, the National Urban Strategy developed by PDUE needs to be fully owned by MINHDU and promoted to keep the momentum. The urban database was set up, but was not fully operational at completion. The new urban operation may help enhance these tools to ensure that the investment will be sustained and will generate more outcomes in a later phase. Municipalities still need some support to build on PDUE’s achievements and apply what they have learned ‘on the job’ to replicate these types of interventions, to plan and implement their budget balancing maintenance and investments, and to foster a culture of participation and accountability towards urban dwellers/beneficiaries. Support from the Ministry in charge of local governments to further champion the decentralization reform is a substantial risk, but on the other hand, the Bank- funded Community Development Program Support Project III will support municipalities country-wide to promote such approaches. On the technical side, and given the urbanization rate, small investments may not be sufficient in the mid-term, and it is unclear whether the urban local councils will fully integrate the urban planning approach in the future. Maintenance is also a critical risk. 68. On the water side, risks to development outcomes are high as long as the PPP situation remains uncertain. To date, two years from the end of the affermage contract, the positive scenario where the sector would stabilize and take advantage of all investments completed or near completion, remains to be confirmed. Additional water produced, and increased access to water services through additional networks and connections, together with actual progress in operational performance (e.g. reduction in non-revenue water), are likely to result in additional revenues for the PPP and better services to the population. It should be supported by clear actions to restore the financial equilibrium, starting with the full execution of debt swaps agreements and implementation of the action plan to reduce public water consumption. The results of the Government’s assessment of the PPP should pave the way for future institutional arrangements of the urban water sector that is facing large needs to adequately provide safe water services to more than half of the Cameroonian population. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 69. To prepare this complex operation that spanned over two policy areas and stakeholders, the Bank brought together expert support to build bridges between the two sectors. The decision to combine small-scale urban interventions in slums and altogether engage in the complex structure of the water PPP was risky but bold, as it aimed to optimize supervision resources and to reach an overall project cost that would give the Bank some leverage in the sector dialogs. 17 70. The Bank provided preparation funds and mobilized support from another Bank- funded operation to support (i) programmatic studies and safeguards instruments that structured the urban components’ framework approach, and (ii) transaction services to complete the water PPP contracts and support the recruitment of the private operator, the development of the investment plan that provided the water component’s economic analysis at appraisal, as well as the initiation of the first financial model of the sector. 71. In hindsight, as noted in the quality assessment report (QALP-2) issued in 2010, the expected pace of implementation and disbursements proved optimistic given the existing capacity: this may be related to the HIPC context that drew enthusiasm from donors at that time. Similarly, there were high expectations from the water PPP, which could have been better defined in the results framework. But overall, the PDO well reflected the project components and incorporated lessons from both Cameroon and other regional operations in the design of the project. (b) Quality of Supervision Rating: Moderately Satisfactory 72. The Bank deployed important efforts to support the project with over 220 staff- week time spent on supervision over eight years. Some team members provided support from preparation to completion, ensuring an institutional continuity, even if four Task Team Leaders (TTLs) were successively in charge; co-TTLs also mixed both urban and water expertise. The team undertook regular supervision missions, even though, at times, internal reporting was delayed. The PDO was rated satisfactory until early 2013, despite lagging disbursement rates and accumulated risks. ISRs were reasonably candid, and flags were triggered to alert management on issues encountered. Some sudden ups or downs in ratings, in retrospect, appeared as signs of active internal discussions around various issues. Before completion, the team candidly reported gaps in M&E and design issues, but rated the project MS, considering the results that were achieved. 73. The PCU noted the quality of support provided, including technical advice, comprehensive reviews, and reasonable delays to provide non-objections. The close engagement of procurement, FM, and safeguards specialists, mostly based in the Country Office, was particularly important to provide just-in-time expert support on specific issues, and to facilitate relations, as needed, with high level authorities or entities—the Ministry of Public Procurement, Ministries in charge of land issues and decentralization, or the Prime Minister’s office, to name a few. This helped following up on compliance with fiduciary and safeguards policies and overcome problems. 74. Proactivity measures ultimately supported the achievement of the PDO. The decision to approve an additional financing and an extended implementation period boosted the impacts of investments in slum upgrading and capacity strengthening. Given existing difficulties of the PPP, the AF had a more limited success for the water component, but it enabled strategic activities that were not initially included in the IDA funding. Remedy measures were not envisaged to avoid negative effects of the project as a whole. In this regard, the partial cancellation of funds and another year of project duration were a good decision to refocus the project on activities that could be realistically achieved. At completion, the project fully completed its revised scope of work. A restructuring of the RF would have allowed to do more justice to the project performance. 18 (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 75. Both quality at entry and quality of supervision are considered moderately satisfactory. The overall Bank Performance is consequently rated moderately satisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory 76. The Government of Cameroon did not comply with its financial and sector obligations stated in the Urban Water Sector Program and Development Policy Letter, explicitly referred to in the legal Agreements. As such, GoC played a major role in the difficult implementation of the PPP and the limited performance of most projects supporting the PPP, including the Bank intervention through PDUE. 77. On the urban side, more coordination at policy level with central agencies in charge of decentralization and local governments could have enhanced project implementation. However, GoC secured sufficient funding to cover the full cost of compensations owed to people affected by PDUE, and strengthened its support to PCU and municipalities to ensure outstanding payments. Although with much delays, this sped up payments and the process is nearly completed at the time of this ICR. Counterpart funding for the urban part of PDUE amounted to over US$ 2.8 M. (without taxes). (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 78. Both the PCU and Camwater conducted their work programs until the completion of the vast majority of activities, and they both developed skills in project management and other core fiduciary and safeguards functions, while maintaining active relations with the Bank. Both should be commended for their dedication to the project success. 79. Weaknesses were noted during implementation, sometimes due to staff turnover for the PCU, or the lack of a dedicated team within Camwater with enough time and resources to manage the water component. However, there was no major deviation from Bank requirements and they sometimes had to cope with factors beyond their full control. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 80. The PDO was achieved, despite shortcomings in the Borrower performance. Given the overall outcome rating of moderately satisfactory, the overall Borrower Performance is rated moderately satisfactory. 6. Lessons Learned 81. A solid Monitoring and Evaluation (M&E) framework is instrumental for efficient and result-oriented project management. M&E provisions in PADs are often limited and focused on project indicators in the results framework. To ensure full ownership of the implementing agency/borrower, the M&E framework must be thought through together 19 with design and its implementation get sufficient support. A M&E plan must be grounded in shared understanding of project objectives and implementing arrangements. Templates and other dashboards have to be customized to needs, meaningful and easy to use for both data providers and data users. A good M&E system is able to monitor all dimensions of project performance: smart output and outcome indicators, fiduciary performance, and safeguards. It helps the agency/borrower to make decision on the project course. 82. Obstacles to handling land acquisition and compensation in accordance with national regulations and safeguards provisions can jeopardize infrastructure development programs. In poor, informal settlements in developing cities, properly identifying affected people and documenting their eligibility may speed up the overall process leading to effective and timely compensation, and reduce risks of complaints from affected people left aside in such process, or claims from people trying to benefit from the opportunity. Adequate environmental and social screenings should, early in preparation, assess the scope of potential land acquisition and compensation in project areas and bottlenecks stemming from national regulations. Implementing units should develop and use customized tools to closely monitor all transactions. Land issues may also be addressed at the country portfolio level as they cut across sectors and project teams’ mandates. 83. Sound and clear institutional and implementing arrangements strengthen project ownership, especially when the project covers more than on sector. Prioritizing areas of interventions can also mitigate risks. Even within one area of intervention, institutional responsibilities can be fragmented across several line ministries, as is the case of urban development and decentralization in Cameroon. A PPP structure also involves various entities, including outside the sector itself. To address complexity, project design must include an action plan clearly defining responsibilities at all stages of implementation, and coordination mechanisms between implementing units and other stakeholders. This will ensure that each agency involved has a good grasp of its role in the project architecture. A stakeholder analysis and a good understanding of the sector(s)/country’s political economy could also help assessing sector and stakeholder risks, and thereafter adjust the level of support and mitigation measures to riskier areas of intervention. 84. A water sector reform is a long-term process that needs a conducive environment to mature, and clear incentives for all partners to perform. In Senegal, Niger, or Burkina Faso, successful water reforms have enabled the development of performing utilities and improved the quality of water services, resulting in high rates of access and financially viable sectors. The Bank has supported these processes for 10 or 20 years. In Cameroon, after eight years in an environment that was not conducive to success, water production and distribution capacities have increased, as well as operational performance. Incentive mechanisms to enhance the private operator performance were useful, for instance to sell domestic connections for the poor or implement water works through direct contracting with the asset-holding company. On the other hand, appropriate mechanisms were missing to ensure that the Government would implement its sector commitments, and successive technical assistance supports were not fully effective to strengthen Camwater’s capacity in long-term sector development, asset management and control of operations, in a relatively short timeframe. Continued sector dialog is critical to consolidate the reform and address the needs of half of the population in Cameroon. However stronger mechanisms, such as 20 guarantees or result-based financing, could provide additional incentives to perform, and therefore also leverage more external funding. 85. The PDUE experience is consistent with other projects in Cameroon or countries with similar governance patterns: working at the local level yields better results than large reforms at the central level that often involve competing institutions. Anchoring a project in local institutions and involving communities through well-designed participatory approaches can be more conducive to success than centrally organized projects with top- down approach. In this regard, the progressive transfer of project responsibilities to decentralized authorities is only one part of the equation. Building local ownership also rely on mechanisms to involve communities in local development activities going beyond external, time-bound projects. Contractual arrangements defining roles and objectives to achieve are a good way to strengthen accountability on results between local authorities and their constituents. 86. In developing cities where informal economic activities prevail, it is important to build capacity of local small and medium-size enterprises to improve both project efficacy and efficiency. Dealing with small local firms with low procurement capacity and limited experience of financial management and administrative requirements may overwhelm project implementing units, create delays and affect procurement and disbursement processes. Trainings customized for this audience, at the early stage of the project, can positively impact project implementation. In a broader, longer-term perspective, working with and supporting local/informal firms may help improve business standards and professionalize local markets. 87. Communication is a key function within a project implementing unit and requires adequate skills and resources. Project management, procurement and contract management, and financial management are usually the primary functions and positions of an implementing unit. Particularly for projects working with local communities and across large geographic areas, strengthening communication skills is important to complement M&E efforts and to build trust with project beneficiaries and other partners. External consultants recruited for punctual events and products, like documentaries, are not as fully committed as internal resources could be to promote the project ideas, objectives and achievements. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 88. The Executive Summary of the Borrower Completion Report, including a section on lessons learned from the project, is attached in Annex 7.B (b) Cofinanciers N.A. 21 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Revised Actual Percentage Percentage Components Estimate Estimate (**) Estimate of Appraisal of Revised Component I. Capacity building and support to decentralization 3.50 4.50 5.99 171% 133% Component II. Infrastructure works in low-income settlements 36.39 51.04 48.43 133% 95% Component III. Support to the implementation of the PPP in the provision of urban water services 40.31 43.71 34.65 86% 79% Component IV. Project Management 2.55 3.65 5.18 203% 142% Total Costs (*) 92.00 102.90 94.25 102% 92% Notes: (*) Total costs at appraisal include physical contingencies (US$1.68 M) and price contingencies (US$7.57 M). (**) The revised estimate considers IDA revised amount (additional financing and partial cancellation), and the GPOBA sub-project allocations (GPOBA and Camwater) as per the GPOBA Grant Agreement (that was signed after the PDUE was approved), as detailed below. The GPOBA sub-project was an activity of component 3.3. (b) Financing (in USD Million equivalent) Appraisal Revised Actual Percentage Percentage Source of Funds Estimate Estimate Estimate (**) of Appraisal of revised International Development 80.00 91.90 90.02 113% 98% Association (IDA) Borrower 2.00 5.75 2.41 121% 42% (CamWater/GoC) GPOBA 10.00 5.25 1.82 53% 35% Total Costs (*) 92.00 102.9 94.25 102% 92% Notes: (*) No counterpart funds were included in the financing plan in the PAD. Actual support from counterpart funding to support the PCU and compensations amounts to US$ 2.8 M. This amount does not include taxes. (**) For GPOBA sub-project estimates, see GPOBA ICR (2014). 23 Annex 2: Outputs per component Component 1: Capacity building and support to decentralization Subcomponents and objectives Achievement of outputs 1.1 Support to the completion of the National Urban Strategy The National Strategy was prepared, presented during the 1st National Urban Forum in 2014 and endorsed by the Government. Objective: foster a common approach to urban development that is supported by all partners 1.2 Developing of a national urban database The urban database was created and needs to be operationalized: - Feasibility studies: completed Objective: establish a system for regular collection, storing, and - Equipment purchased monitoring of urban data and - Training provided to municipal staff management indicators independent from projects and technical assistance (i) Support to the development of municipal management tools: - City Development Strategy (CDS) of Yaoundé and its metropolitan area: partially achieved (diagnostic, strategic action plan and monitoring system 100% completed) 1.3. Capacity building: - Other CDS (Mbalmayo, Bamenda & Maroua): 100% achieved - Investment and Maintenance Programs (Yaoundé III, Yaoundé IV, Objective: improve urban management Douala II): 100% planning, programming and - Organizational and financial audits: completed in 2009 for 12 local maintenance of investment. authorities (communes d’arrondissements et communautés urbaines) within the 5 beneficiary cities of the project. Support will provide municipal (ii) Technical Assistance to municipalities management tools, training, and - Support to the restructuring of the public finances: completed for 12 technical assistance to the local authorities in the 5 beneficiary cities municipalities in order to improve planning, programming, maintenance - Support to the design of taxpayer identification systems: completed management, as well as mobilization for 22 local authorities in the 5 beneficiary cities and utilization of local financial, and - Support to the implementation of a financial management system TA to central agencies in charge of (SIM-BA): completed for 22 local authorities in the 5 beneficiary urban development. cities - Support to the implementation of archiving systems (Mbalmayo, Bamenda & Maroua, Yaoundé III, Yaoundé IV, Douala II): 100% 24 (iii) Technical Assistance to MINHDU (Ministry of Housing and Urban Development): - Studies for the Housing Policy: only 1 study realized out of 5 planned - Concept Note for a new Urban Development Project Support to be submitted to the World Bank: completed (iv) Training of municipal staff, ministries in charge of urban planning and decentralization, local community agents and SMEs: all were implemented, over 1,000 participants - Municipal staff: financial management, procurement - Local community agents: social communication, accounting, operation and maintenance of communal works - SMEs: bid preparation, financial management, - Others: study tours, individual training in specialized centers The preparation of the city contracts followed an active participatory process: 1.4 Preparation and implementation In Phase 1 of the project (2008-2011); 6 « partnership protocols » and of city development contracts in pilot 2 application conventions signed cities – Bamenda, Douala, Maroua, Mbalmayo, and Yaoundé In Phase 2, the 6 city contracts were developed and signed, and are now being implemented The objective of the city contracts is to The project also applied this approach at community level, to render the municipalities responsible enhance local involvement in managing local works or service, for the choice and financing of a set of through contracts between community groups (comités de quartier) actions to be carried out within the and municipalities. framework of a program by contracting interventions. In Phase 1, all (100%) targeted settlements had signed for such local contracts (conventions de quartier). In Phase 2, community groups showed less interest, no contract was signed (0%). Project communication strategy: - A communication strategy was designed: newsletters produced, website partially up to date, communication materials disseminated Project Coordination Unit: during local events, etc. Only Bamenda benefited from radio spots on communication strategy the project. - The PCU also produced 4 documentaries (videos) – DVDs were distributed to municipality officials and populations in target areas. 25 Component 2: Infrastructure works in low-income settlements Investments/outputs unit Bamenda Mbalmayo Douala Yaoundé 3 Yaoundé 4 Maroua Total Target Mobility - Urban roads Paved roads km 10.219 3.55 0.814 9.342 9.537 4.7 38.2 63.2 41 Unpaved roads km 0.74 4.186 6.135 0.911 8.291 4.818 25.1 Walkways km 0.91952 0.93735 0 1.05 0.7225 0 3.6 Footbridges # 5 3 20 4 4 2 38 Drainage, Sanitation, Water Drainage mains - new km 13.529 17.346 18.397 13.069 19.811 8.649 90.8 108.5 49 Drainage mains - rehabilitated km 0 1.148 12.429 0.852 3.222 0 17.7 Water supply networks ml 2.781 5.1 0 11.873 3.2218 3.978 27.0 Community wells # 6 10 0 3 13 16 48 82 Standpipes # 0 4 4 0 0 26 34 Public latrines # 0 5 35 0 0 6 46 Waste collection platforms # 3 2 0 6 5 0 16 Security Street lighting point # 105 20 119 263 140 0 647 Fences m 222.6 35 321 105.8 54 315 1,053 Social and economic activities Case communautaire Unité 2 1 0 0 1 1 5 Small markets m² 51 538 0 234 0 0 823 New classrooms Unité 0 0 0 0 0 13 13 Rehabilitated classrooms Unité 0 2 0 0 0 10 12 Standpipes in schools Unité 0 0 0 0 5 0 5 Playgrounds m² 0 400 0 0 400 400 1,200 Job/income opportunities person.day 22,987 31,030 84,714 62,703 85,888 31,252 318,574 Beneficiaries Drainage people 111,046 123,986 146,297 28,432 61,394 93,945 565,101 390,000 Urban roads people 102,121 58,958 43,337 76,864 93,769 60,215 435,263 390,000 26 Component 3: Support to the implementation of the public-private partnership in the provision of urban water services Subcomponents and objectives Achievement of outputs (i) Regulatory framework and regulatory tools developed - Technical audits of PPP contracts (concession and lease): the auditor was recruited by the Bank for 2010-2011), final report submitted in Jan. 2012; the auditor’s follow up contracts were paid by other donors (latest available report mid-2015); - Support to the updating and implementation of the financial modeling: consultant recruited in end 2008; Camwater recruited a person to administer the model in 2009, staff trained to the model; initial report May 2009; report on updated model in July 2010; From 2012 on, the updating of the financial model was supported by AFD (latest update in 2014 with 2012 data); (ii) Studies carried out: - Tariff Study: the consultant was recruited in early 2012; interim report defining the average cost in October 2012; final report submitted 3.1. Capacity strengthening in May 2013; - Study on sanitation Objective: enable a smooth - Study on standpipe management systems: not realized; instead, implementation of the PPP in Camwater finalized detailed feasibility studies (including bidding supporting the development of the documents, ready to launch) for the construction of 200 standpipes; regulatory framework and supporting Camwater’s capacities to manage the - environmental and social safeguards: environmental management development of water services framework for l’Akomnyada treatment plant completed; - Note: the Action Plan to reduce public water consumption was funded by EIB in 2012. (iii) TA and capacities strengthened for Camwater and the e Ministry of Energy and Water - Software ERP: procured in 2012; operationalization 2014 - Strengthening of Camwater’s financial management capacity: Tompro and Tommarket used since 2008 for procurement and accounting; - Technical assistance in project management: contract 2009-2010, trainings in water demand, electromechanical, hydraulic modeling, investment planning, etc. - Technical assistance from African Water Utilities: a study tour was organized in 2011 for 3 managers of Camwater to learn from SONES (Senegal); no follow up to this visit (SONES was supposed to share its status before a partnership could be set up); ONEP (Morocco) provided technical proposal to set up a support program. 27 - TA to Ministry of Water for monitoring evaluation and regulation: (iv) Public information and communication activities - Communication strategy developed by a consultant in early 2012; implementation weak (i) Emergency works in Douala and Yaounde - Rehabilitation of production and distribution facilities: 100% 3.2. Rehabilitation of urban water facilities - Complementary works (filters, chemicals) at the Akomnyada treatment plant (Yaoundé): 100% Objective: contribute to the PPP (ii) Rehabilitation of production facilities and distribution in the rehabilitation program secondary centers (where other donors are not funding rehabilitation): - Renewal of master meters and distribution meters to improve reliability of billing and quality of services: due to cost savings, Camwater bought 60,000 meters instead of the expected 35,000 (i) PDUE social access to water > Social connections program: achieved at 51% -- GBOPA: 25,254 connections executed during the program, including 18,854 which were subsidized by GPOBA, with a contribution from beneficiary households and from Camwater (those not subsidized by GPOBA were sold at subsidized price, so were de facto subsidized by Camwater instead); 3.3. Expansion of networks and development of access -- IDA: 10,157 social connections executed from Jan. to June 2015, as per the contractual objective of 10,000 (allocation reduced to put more funds for network extensions: contract 100% achieved, but PAD Objective: increase access to water objective of 20,000 is only 50% achieved) services, especially for the poor: > Standpipes program: achieved at 7% - secondary and tertiary networks in The planned 1,200 standpipes were dropped when funds were areas far from the main lines cancelled in 2014 (target had been reduced to 200 in 2013); the urban - GBOPA: 50,000 social connections component developed 82 community water points in urban poor settlement. - IDA: 20,000 social connections - Total: 70,000 subsidized (ii) +369 km of network extensions of Douala, Yaoundé and in connections secondary cities - IDA: 1,200 standpipes - Network extensions Phase 1, Douala and secondary centers: 74.5 km (contract 100% achieved) - Network extensions Phase 2, Douala: 51.8 km (contract 100% achieved) - Network extensions AF: Yaoundé, Douala and secondary centers: 215.8 km (contract 100% achieved) - Component 2: 27 km of extensions in project areas 28 Annex 3. Economic and Financial Analysis The project approach including distinct types of activities, namely infrastructure works in low-income settlements in selected cities (component 2), and improved water services under the water PPP (component 3), led to separate analyses for these two components. Therefore, there was no overall economic rate of return calculated for the entire project, neither in the ex-ante nor in the ex-post analyses. The ex-post analysis undertaken during the ICR preparation built on the ex-ante analysis prepared at appraisal (see PAD, Annex 9), wherever possible: - A Cost Benefit Analysis (CBA) was undertaken ex-ante for (i) one urban road sub- project in Yaoundé, and for (ii) the water component, at PPP level; the analytical frameworks used for calculating returns on investment ex-ante and ex-post for these two subsets are similar to allow for necessary comparison; - The analysis at appraisal did not provide quantified benefits and rate of return for other investments planned under component 2 as preparation for some sub-projects were not sufficiently advanced to enable such an analysis. Given its large share in project costs and the importance of its outputs and outcomes achieved, a quantified analysis was performed ex-post for drainage works, even though there is no ex-ante ERR or NPV to compare results. A. Component 2. Infrastructure works in low-income settlements The urban component was based on an approach designed to increase access to services to a section of the population as large as possible. As explained in the PAD, the beneficiaries would identify specific operations and the level of desired service based on the availability of resources. This participatory process enabled them to appreciate the benefits that would stem from the proposed improvement in terms of improved mobility, reduced flooding, access to water, improved sanitary conditions, reduction of water-borne diseases, reduced health-related expenses, added safety (through street lighting), and overall improvement of living conditions and social cohesion within the settlements. A.1. Mobility Increasing access to urban roads in low-income settlements was one of the objectives contributing to support the PDO. Overall benefits The main benefit of urban road infrastructure stemmed from improved mobility in poor settlements of targeted cities. The project invested in several types of road infrastructure. Trunk roads (voies structurantes), connecting the major areas of city, and proximity road within the areas (desserte de proximité) infrastructure enhanced access to schools, markets, offices and small businesses (see Borrower completion report). Furthermore, the proximity roadways in poor settlements dramatically reduced hardship of walking: the average distance to reach a public transportation means decreased from more than 700m to less than 500m. Improvement of comfort and security (less accident) were other associated benefits. Such benefits accrued primarily to the most vulnerable pedestrians (elderly, sick, pregnant woman, etc.). Increase of income-generating activities were also observed along the trunk roads. 29 Cost Benefit Analysis (CBA) of the Ngoa-Ekele sub-project At appraisal, the most dramatic improvements were expected in the Ngoa-Ekele settlement in Yaounde 3, and the preparation process did not allow to carry out a CBA for other road sub-projects at that time. To allow for comparison, the CBA conducted during ICR preparation focused on that same settlement and followed the same methodology. As reported in Aide-Memoires during preparation, Ngoa-Ekele settlement in Yaoundé 3 was representative of poor settlements in the city, not structured and lacking basic services and infrastructure. It was also an important residential student area with growing attraction, where improved mobility and access to the settlement were a challenge. It was therefore considered of strategic importance by the Yaoundé Urban Community and selected for project investments. Benefits were estimated based on operational costs avoided by vehicles thanks to the construction of the road, building on traffic data and operation costs of vehicles using the roadwork: 1) The Average Daily Traffic (ADT) was estimated based on field surveys conducted at the different points along the street ‘Cité des Nations-pharmacie’ bordering the roadway, at appraisal (2007), and after completion (early 2016). The following table presents estimates before and after the project: Table 1: Estimation of the average daily traffic (ADT) at appraisal and completion Vehicle Category Total Average Daily Traffic (ADT) At appraisal At completion Taxi 15262 3286 Private vehicles 7441 11859 pick up 452 809 Minibus 155 286 2-axle Trucks 97 85 3-axle Trucks 26 26 2) At appraisal, operation costs (in CFAF/km, not including taxes per vehicle) were based on those estimated for a similar investment for the Douala road network (Lot N3) in 2004.13 At completion, the same estimated operation costs are used due to lack of reliable data from similar projects and investments. Table 2: Operation costs (in CFAF/km) 13 The data on vehicle information were extracted from the PAD. The ICR Team could not get access to the original document mentioning the data. 30 Costs 1) Investment costs: at completion, actual cost of the Ngoa-Ekele roadway (0.985 km) was estimated at CFAF 672.5 million, which was higher than the allocated budget of CFAF 340 million. This cost may appear in the upper-range value of road costs in Sub-Saharan Africa, 14 but this should be balanced against the nature of road construction: Ngoa-Ekele settlement is located on an uneven and hilly landscape. 2) The maintenance costs were estimated at 1 percent of the investment costs and expected to be invested every year. Results For both with and without project scenarios, an estimation of the annual operating costs for the different vehicle categories was undertaken multiplying the operating cost per km by the annual total number of km by each vehicle. The annual benefit, which represents the total operating costs saved for a given year, is the difference between the costs without the project and the total costs with the project. A 15-year time horizon was considered for the ex-post CBA as it was at appraisal. A linear progression of the traffic was assumed between 2007 and 2015 and remained to be constant from 2015. At appraisal, calculations were made with a 10% and a 12% discount rate; at completion, results were compared using a 12% discount rate. The Net Present Value (NPV) and Economic Rate of Return (ERR) ex-ante and ex-post are presented in the table below: Table 3: Economic efficiency of the urban road Ngoa-Ekele sub-project, at appraisal and completion At appraisal At completion NVP (CFAF million) 12% 1,539 1,309 NVP (CFAF million) 5% NA 2,826 ERR (%) 39% 44% Sensitivity analysis Due to uncertainties on data sources, a sensitivity analysis was conducted to test the robustness of the results. Sensitivity analysis shows that even if actual costs were 10% higher than estimated the project would remain economically justifiable with a NPV of CFAF 1,255.1 million and an ERR of 40%. If actual benefits were 10% lower than estimated, NPV would be CFAF 1,117.6 million and ERR 39%. At a 5% discount rate, NVP would provide a higher return. Therefore, sensitivity tests results show that economic results are robust. 14 According to Africon (2008), the upper quartile road construction cost of new paved roads is CFAF 306, 964, 500/km. See Unit Costs of Infrastructure Projects in Sub-Saharan Africa Africon June 2008. Africa infrastructure Country diagnostic. 31 Conclusion The ex-post NPV is slightly lower than that estimated ex-ante, likely because actual investment costs were higher than planned. The ex-post ERR on the other side is higher than that estimated ex-ante. As mentioned before, the methodology does not take into account other socio-economic benefits from urban road investments. Some benefits may not have been quantified - owing to the lack of data and complexity of modeling these effects. The CBA supports the conclusion that investments undertaken in Ngoa-Ekele settlement were fully justified. A.2. Drainage and sanitation Increasing access to appropriate drainage in low-income settlements was one of the objectives contributing to support the PDO. Overall benefits This section presents the ex-post CBA of project drainage investments. No ex-ante economic analysis was performed at appraisal, but the PAD underlined the different benefits expected from the project investments, and how they could vary according to the target cities: - Control of floods and avoided cost of damages (Mbalmayo and Douala). - Reduction of losses (damage construction sites) due to landslides in steep and eroded areas (Bamenda, Yaoundé, and Mbalmayo) - Better control of water discharge, including preserving water tables from contamination from waste water, especially where tables are very high like in Douala. - Reduction of waterborne diseases, especially when combined with interventions on waste collection or water supply. By reducing stagnating water, improved drainage system can considerably reduce the incidence/prevalence of water related diseases including malaria, cholera and various types of diarrhea. In addition, improving drainage systems also provides an array of benefits including: • Less school absenteeism for children • Lower health expenses incurred for waterborne diseases; and • Less time spent by parents providing health care to themselves or their children and, as a result, greater opportunity to increase their income; • Time saved, principally by women, for activities associated with household wastewater removal. • Improved well-being as a result of healthy life. Cost Benefit Analysis (CBA) for drainage works in the target cities The ex-post analysis was carried out for some of these important expected benefits. Considering data available, it focused on benefits resulting from avoided expenses related to waterborne diseases that is diarrhea and malaria. According to WHO, children under 5 32 years old represent 90% of those suffering from diarrhea in the world; this percentage is probably higher in developing cities with limited access to improved sanitation, water supply and drainage. The analysis focused on the benefits for this vulnerable group of beneficiaries. The methodological approach A Cost Benefit Analysis was used for the ex-post analysis and calculated the net benefits stream generated by drainage interventions in the different sub-projects in the target cities. The benefits are equal to the difference between the incremental benefits and the incremental costs of two scenarios: “with” and “without” the project. The “with” project scenario considered the actual achievements obtained with the drainage systems. The “without” project scenario considered that the situation would have likely remained the same during the project life cycle. The project life cycle was estimated at 30 years based on similar projects. Project Benefits The assessment of benefits was based on the avoided cost method. Based on similar projects and literature, it was assumed that investments in drainage systems would at least partially avoid costs occurring from water-borne diseases (malaria and diarrhea). Benefits would in particular focus on health costs for children under 5 years who represent the most vulnerable group. Without project scenario To assess avoided costs in the without investment scenario, the following information was collected from existing literature: 1- Health expenses data were sourced from a health survey undertaken in 2009 in major cities in Cameroon. Data from the report was corrected for subsidies. 2- Prevalence of major water-borne diseases were also sourced from “troisième Edition du tableau de bord social” (TBS3)15. The data is presented in table 4. It was assumed that, for the treatment duration, each child will be taken care of by one adult. Time spent by this adult translates into an opportunity cost as the adult will forgo revenues he/she could otherwise earn. The daily revenue of the average adult was estimated at CFAF 1500/day (TBS3). Therefore, given the population in the different sub-projects, avoided costs included (i) the direct costs incurred for different water-borne diseases for children under 5 years, and (ii) indirect costs related to the opportunity costs of adults’ time spent on care.16 With project scenario 15 TBS3: troisième Edition du tableau de bord social. Reference : TBS3. 2009. troisième Edition du tableau de bord social sur la situation des enfants et des femmes au Cameroun (TBS 3). 200p. 16 Prevalence based assessment method of the disease cost was used because it requires less data and less assumptions than other methods. Reference: Segel, J, E. 2006. Cost-of-Illness Studies—A Primer. RTI International RTI-UNC Center of Excellence in Health Promotion Economics. 33 It should be noted that although the positive impact of drainage system on waterborne diseases is largely recognized (FAO, Sasaki et al, 2011), a limited number of studies analyses the quantitative relationship between the provision of drainage network and the decrease of the incidence/prevalence of specific water-borne diseases. A study by Moraes et al. (2003) is one of the few to address this critical issue. After controlling for all compounding effects, their results suggest that drainage reduces the incidence of several waterborne diseases by approximately 40%. Based on this indication, the ex-post analysis assumed that drainage systems reduced the costs of related medical care by 40%. Table 4: Prevalence of diseases in project areas benefiting from drainage Cities Diarrhea (%) Malaria17 (%) Population benefiting from drainage systems Yaoundé 10,4 14,9 89,826 Douala 6,6 10,9 146,297 Bamenda (Nord-Ouest) 7,3 12,0 111,046 Mbalmayo (Cntre) 15,1 28,7 123,986 Maroua (Extreme Nord) 35,3 12,2 93,945 Sources: TBS3 and project results for beneficiary populations affected and ICR calculations Project Costs Costs include investment costs and maintenance costs: 1) Investment costs data were provided by the PCU, referring to actual costs based on completed works contracts. It should be noted that such costs included, as per contracts, support infrastructure needed for a proper functioning of the systems such as security fences or footbridges. 2) The annual maintenance costs, estimated at 1% of the total investment based on other similar projects. Results The Net Present Value (NPV) and Economic Rate of Return (ERR) ex-ante and ex-post (using a 12% discount rate) are presented in the table below: Table 5: Economic efficiency of drainage investments in the project areas at completion Cities NPV (FCFA) 12% ERR (%) Yaoundé -43,091,998 9% Douala -1,859,256,204 -3% Bamenda (Nord-Ouest) 7,482,897 12% Mbalmayo (Region du centre) 1,113,256,600 65% Maroua (Extreme Nord) -200,278,322 10% 17 Fever was used as a proxy for malaria in TBS3 34 Conclusion Results vary from one city to the other due to differences in the size and types of drainage system built, the population of the cities and the initial prevalence of diseases. For example, in Douala, drainage works also included rehabilitation of a river systems resulting in higher costs. These results represent a very conservative lower-bound value as many important benefits could not be quantified. As noted above, one of the objectives and source of benefits of improved drainage is protection against flooding. Floods can in particular generate high costs to repair damages incurred on household assets (house, etc.), in addition to expenses to recover from one particular event (health, etc.). Due to climate and rainfall patterns, several large cities in Cameroon including Douala, Mbalmayo are exposed to intensive annual flooding with dire consequences for lives and properties. For example, in 2015, Douala suffered dramatic flooding that affected many parts of the city, resulting in considerable losses. Overall, the analysis supports the conclusion that PDUE investments in drainage systems were fully justified. B. Component 3. Support to the implementation of the public-private partnership in the provision of urban water services The urban water component of the project aimed to increase access to water services in the framework of the water PPP. The Bank, through IDA and GPOBA funds, would be one of the financiers of the PPP. As various donors’ investments would support the sector investment plan, expected benefits (additional production and distribution capacities, increased access, and better services) would be inextricably linked. Therefore, the economic analysis at appraisal was carried out at PPP level. The economic analysis undertaken during the ICR preparation, to allow comparison of key efficiency indicators, used the same methodology as the one used at appraisal. It took into account changes in IDA and GPOBA allocations during implementation, and actual costs and achievements of both the Bank intervention and the PPP. A sensitivity analysis was conducted to assess the robustness of the results. Economic analysis at appraisal The ex-ante analysis (PAD, Annex 9) was based on a standard methodology for the calculation of the net present value (NPV). Economic costs included the cost of water investments (all donors) and the incremental operation and maintenance (O&M) costs associated with the increased access and water consumption. Capital cost estimates were based on the rehabilitation and expansion 5-year program of Camwater (2007-2011), amounting to about US$230 million (CFAF115 35 billion) and including investments financed by IDA, GPOBA, the Exim Bank of China, AFD, EIB and the Government of Cameroon.18 Economic benefits included the value of incremental water consumption (using tariffs as a proxy of profits (service provider) and the consumers’ surplus) together with the cost savings resulting from the rehabilitation program. The component was expected to provide access to safe water to an additional 1.2 million people, of whom about 700,000 would benefit from subsidized water connections. Results. On this basis, the NPV was estimated at about US$20 million (approximately CFAF10 billion) and the economic internal rate of return at 12.2 percent. Economic analysis at completion Scope of work. The ex-ante analysis was based on the project’s scope of work that evolved during implementation. Changes included: 1) For the Bank intervention/PDUE: IDA additional financing was granted in 2010, adding US$28.70 M to the initial IDA credit of US$80.00 M for the entire project. 50% of the AF supported to water component (initial allocation of US$33 M), and aimed to finance needed equipment and rehabilitation of water production facilities in Douala and Yaoundé; supply of production and distribution meters; and long-expected tertiary networks to speed up new connections’ rates. 19 However, given important implementation delays, almost all those funds were cancelled in 2014 (see section 2.2); the construction of 1,200 standpipes was dropped; due to availability of remaining funding, the contract for social connections was targeting 10,000 social connections, and no more 20,000 as planned at design; The GPOBA sub-project was fully embedded in component 3 (see GPOBA ICR for more details). In the PAD, the expected grant from GPOBA was US$10 M for a target of 55,000 connections. However, following a decision from the Government to change the connection cost formula, the GPOBA grant was revised to US$5.25 M while Camwater expected contribution, deemed to cover the difference between the actual connection costs, GPOBA subsidy and beneficiary households’ contribution, grew from US$2 M to US$5.75 M. The GPOBA Grant Agreement was targeting a more conservative objective of 40,000 connections that would benefit from the GPOBA subsidy. 18 The investment program was building on the investment plan prepared during the SNEC divestiture transactions; listed donors had expressed their interest and these assumptions were included in the pilot financial model for the sector. 19 An economic analysis was conducted at AF to assess the proposed additional investments in urban water supply. Assumptions differed from those at appraisal as they did not include the consumer surplus and progress made in number of connections and standpipes at that date. The economic benefits included: (i) the value of incremental water sales that are made possible through the rehabilitation of water production facilities; and (ii) operational cost savings resulting from the improvement of metering. Economic costs included the cost of the additional water investments, the incremental operation and maintenance (O&M) costs associated with the increased water consumption and renewal costs. On this basis, the Net Present Value (NPV) (with a discount rate of 12 percent) of the additional water investments was estimated at about US$11.7 million and the economic rate of return at 17.3 percent. 36 2) At PPP level: As reported in the ICR report (see section 2.2), the level of expected investments to support the PPP varied during project implementation. Some investments, including those from the Government, experienced delays; for instance, the AFD loan was approved in 2010, but was suspended in 2012 and restructured as a sovereign loan to the Government, to be on- lent to Camwater as subsidy. In parallel, Camwater benefited from other loans that were not included in the initial economic analysis, for instance from the AfDB, Dexia or additional investments from the Exim Bank of China. Other factors contributed to disrupt the financial mechanisms planned to support the PPP (accumulated arrears from the public customers, new HR policy that affected the private operator’s operational costs, etc.). PPP partners agreed that the financial equilibrium of the sector was broken in 2011. Despite high level discussions and action plans to resolve this sensitive issue, the financial equilibrium was not restored yet when the project closed in August 2015. Assumptions supporting the ex-post CBA Ex-ante assumptions were updated considering actual costs and achievements during the project implementation, using sector data available from Camwater, CDE and the PPP audit reports. Benefits included: 1) The profit generated by the incremental water produced and supplied as a result of the PPP program; it includes: a. The total revenue from water sales (water sales, connection fees and rental fees) minus operating costs (energy for water pumping, chemicals for water treatment and staff costs); b. Various cost savings (energy and chemical) resulting from reduced non- revenue water. 2) Consumer surplus (only domestic customers are taken into account) is measured based on changes in volume of water consumed per person and water expenses when a household gets connected to CDE/Camwater piped water: a. the PAD provides assumptions on water consumption and expenses levels for people without the project (using existing standpipes or alternative sources of supply); b. Consumption and expenses levels with the project, for customers using new standpipes and domestic connections, are based on actual sector data (volumes in liters/capita/day and expenses in FCFA/m3). Costs included: 1) Capital or investment costs, taking into account actual funds disbursed to support the investment program, through all sources of funding (including traditional donors (IDA, GPOBA, AfDB, AFD, and EIB), commercial banks (Exim China, Dexia Belgium) and the Government). They included rehabilitation and expansion of the overall water production and distribution capacities, as well as an increased number of connections and standpipes: 37 a. In total, capital costs injected into the sector (PPP level) amounted to CFAF268 billion or US$527 million from 2008 to 2015;20 b. PDUE contribution was as follows: - Out of the US$90 million of IDA credit, US$30.4 million supported the urban water sector component/PPP; - As reported in the GPOBA ICR, US$1.82 million of the GPOBA grant was actually disbursed; For the purpose of the CBA, the investment costs have been estimated in constant 2007 prices, costs having been corrected to account for depreciation assumed to be 2% per year.21 2) Operating costs directly related to the provision of services: chemical (CFAF 35/m3), energy (19/m3), and commercial (staff costs) costs (53% of sales revenue).22 The following table summarizes the main assumptions: Table 6: main assumptions on key variables in ICR and PAD Main assumptions Variables Value ICR Value PAD Source PDUE social connections (GPOBA + IDA) 35,144 70,000 Camwater/CDE PDUE standposts (IDA) 82 1,200 Camwater/CDE Energy (CFAF/m3) 35 39 PPP technical auditors reports Chemicals (CFAF/m3) 18 19 PPP technical auditors reports 53% of sales CFAF 3,500 / Staff costs revenue customer Camwater/CDE Results The ex-post economic analysis of urban water component is presented below for different discount rates. For the benchmark analysis at a discount rate of 12%, the net present value is CFAF -41.6 billion (US$ - 83.2 million). The ERR is 5.43%. This result indicates that the sector achieved less than the economic performance estimated at appraisal. However, for a more moderate discount rate of 5%, the NPV is positive at CFAF 6.1 billion. Several reasons may explain such result, clearly linked to the difficulties experienced by the PPP: delayed investments also delayed the expected incremental volumes to water to be produced and sold, the number of new domestic customers (household connections and 20 Data provided by Camwater 21 Average inflation data from 2007 to 2014 in Cameroon from World Bank website 22 Data collected from: the PPP technical auditors reports; operational data reported by CDE 38 standpipes) did not increase as much as planned, operational costs increased, including staff costs of the private operator. Some of these factors are tested below in the scenario analysis. Table 7: Results of economic analysis of the PPP for varying discount rates Indicator/Discount Ex-ante Ex-post Ex-post Ex-post Ex-post rate 12% benchmark 12% 10% 8% 5% Net Present Value 10 billion -41, 6 billion -35,9 billion -25,4 billion 6,1 billion ERR 12.2% 5.43% 5.43% 5.43% 5.43% While contributing 5% of the total investments, the IDA and GPOBA social connections account for more than 26% of the new domestic connections implemented the PPP area during project implementation. Additionally, the water supply networks funded by IDA are providing opportunities for future further extensions. The CBA methodology used in both ex-ante and ex-post analyses gives a lower-bound value of the benefits of the investment, as due to lack of relevant data, it could not quantify important benefits: 1) Benefits include only the surplus of domestic customers and not all customers; 2) Health externalities arising from improved access to good quality water were not assessed; 3) Future benefits that will arise from extended supply networks are not taken into account. Sensitivity analysis To test the robustness of the results, a sensitivity analysis was carried out to test alternative scenarios and to check if the project would still be economically justifiable under such scenarios. Table 8: Results of economic analysis of the PPP for alternative scenarios Scenarios ERR (%) Summary Comments Benchmark 5.4 1. Consumer surplus with lower water 4.9 expenses before project (-10%) ERR is only slightly sensitive to this variable 2. Consumer surplus with lower water 4.5 expenses before project (-20%) The PPP would have been more efficient if 3. Delayed investments (2 years) in PPP 5.8 investments had been executed with less delays implementation although the effect is modest 4. Delayed investments (4 years) in PPP The result confirms higher benefits associated with 6.2 implementation less delays in investments 5. Staff cost at 20% 12.1 Staff cost considerably affects ERR 6. Staff cost at 23% 12.8 39 The sector would have broken even for a staff cost 7. Staff cost at 23.3% 12.0 representing 23.3% of sales revenues 8. With no IDA+GPOBA contributions 5.0 9. With IDA+GPOBA at 100% achievement 5.6 IDA and GPOBA helped improve the PPP economic rate for social connections (70, 000 new impact connections) 1. Consumer surplus: consumer surplus calculation depends on the assumptions on expenses for water (using the cost paid by m3 as a proxy) in the “without project” scenario. Assumptions made in the PAD assumed that households not connected to piped water were buying water from vendors at very expensive rates, and used such cost for all consumption. As discussed in the GPOBA ICR, people without connections usually get water from available sources at different prices, and vendors represented only a relatively small share of water providers. Therefore, to be conservative, this scenario considers expenses for water (before being connected) that were 10% then 20% below the values used in the PAD. ERR values are of 4.9% and 4.5% respectively. 2. IDA+GPOBA contributions to the PPP: The ERR was calculated at the PPP level including contributions of all financiers. However, to have a sense of PDUE contribution, this scenario assumes that IDA and GPOBA investments and the related social connections did not occur. The resulting ERR would fall from 5.4% to 5.0% implying the significant impact of the Bank intervention to the PPP despite a relatively small monetary contribution. 3. 100% achievement rate of PDUE social connections program (IDA+GPOBA): if both GPOBA and IDA social connections had been fully realized as initially planned (total 70,000 new connections), the ERR would have increased to 5.6%. This result shows the impact of PDUE contribution although with modest effect. 4. Effect of delays in works: the PPP experienced delays; works planned under PDUE started at least one to two year later than planned, some were completed only before project closing, postponing benefits after the project closing date. This scenario tries to capture what would have happened if project activities had remained on schedule. ERR calculated for 2 year advance in activities is 5.8% and 4 year advance is 6.2%. This result implies that considerable economic value may be saved by keeping projects on schedule. 5. Sensitivity to staff costs: during the PPP implementation, the private operator experienced severe increase in staff costs, as a result of (i) the mandatory implementation of a new HR policy, (ii) the increase in service provision activities directly to the increased number of connections and water sales, and (iii) renewing of staff and retirement provisions. A PPP audit report noted in 2013 that staff cost as a percentage of the sales revenue was estimated at 35% while this value averaged around 23% for the main water supply companies in Africa; this percentage increased up to 53% in 2015. The analysis shows that for staff cost representing 20% of sales revenue, the ERR would be 12.8% and for a staff cost of 23% (the 40 average for SSA), this value would be 12.1%. Lower staff costs would have resulted in higher net economic values of the PPP. Benefit cost ratio and cost effectiveness The upfront connection cost is an entry barrier in the water supply for many poor households. The GPOBA sub-program directly subsidized 18,854 connections for an average of 38% of the average cost, and de facto enabled another 6,000 connections that were realized under the program but could not be eligible to benefit from an equivalent subsidy from Camwater (see GPOBA ICR: a total of 25,254 households benefited from the GPOBA connections). For the 10,157 social connections funded by IDA, beneficiaries were expected to pay 10% of the connection cost and the difference was paid through IDA funds. Overall; the project facilitated access to water services of poor urban dwellers that did not enjoy the benefits of piped water before the project. The average connection cost for GPOBA connections was US$ 153 per connection (including OBA subsidy, Camwater/GoC and beneficiary contributions). The average connection cost for IDA connections was US$ 197 per connection. PDUE-funded domestic connections are cost effective investment compared to average costs observed in West Africa (US$ 200). The project provided other benefits that could not be quantified in the CBA. These include: • The project built 369 km of secondary and tertiary water supply networks in Yaoundé, Douala and secondary centers. This will enable more connections to be realized, implying more people gaining access to safe drinking water. • Increased access to safe drinking water may have generated additional health benefits for more than 1.2 million people that got access to piped water during project implementation. • The project funded infrastructure rehabilitation that did not directly translate into additional connection but improved the lifetime of the infrastructure. 41 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility Names Title Unit / Specialty Lending Agnes Albert-Loth Sr Financial Management Spec. GGODR FM Zie Ibrahima Coulibaly Senior Infrastructure Spec. GSURR Urban Yvette Laure Djachechi Senior Social Development Spec AFTCS - HIS Safeguards Mohammed D. E. Feghoul Consultant GSURR Urban Jan G. Janssens Consultant GWADR Water Kouami Hounsinou Messan Senior Procurement Specialist GGODR Procurement Africa Eshogba Olojoba Lead Environmental Specialist GENDR Safeguards Fridolin Ondobo Financial Management Spec. AFTME - HIS FM Bernard N. Peccoud Consultant AFTTR - HIS Per Anders Persson Senior Program Officer GSUCA Krishnaswamy Rajivan WBISD - HIS Safeguards Chantal Reliquet Sr Urban Spec. GSURR Urban, TTL Amal Talbi Sr Water & Sanitation Spec. GWADR Water Marie-Adele Tchakounte Sitchet Language Program Assistant GWADR Richard Verspyck Consultant GWA07 Water Gilles Marie Veuillot Consultant GWADR Legal Aissata Z. Zerbo Senior Procurement Specialist GGODR Procurement Supervision/ICR Jan Drozdz Sr Water & Sanitation Spec. AFTU2 - HIS Water, TTL Sekou Keita E T Consultant AFTME - HIS Sung Heng C. Kok Shun Senior Program Assistant GSURR Jean Vincent Koua Temporary GWA07 Lucienne M. M'Baipor Senior Social Development Spec GSURR Safeguards Emeran Serge M. Menang Senior Environmental Spec. GENDR Safeguards Evouna 42 Kouami Hounsinou Messan Senior Procurement Spec. GGODR Procurement Etienne NKoa Sr Financial Management Spec. AFTME - HIS FM Irene Marguerite N. Ayinda- Program Assistant GTCDR Mah Fridolin Ondobo Financial Management Spec. AFTME - HIS FM Paula Dias Pini Senior Urban Development Spec. GSURR Urban, co-TTL Chantal Reliquet Sr Urban Spec. GSURR Urban, TTL Amal Talbi Sr Water & Sanitation Spec. GWADR Water Peter Ngwa Taniform Sr Transport. Spec. GTIDR Transport Marie-Adele Tchakounte Sitchet Language Program Assistant GWADR Francis Tasha Venayen Financial Management Analyst GGO13 FM Enagnon Eric Adda Sr Financial Management Spec. GGO19 FM Leonard E. Ngumbah Wolloh ET Temporary AFCC1 Miguel Vargas-Ramirez Sr Water & Sanitation Spec. GWASL Water, TTL Patrice Joachim Rakotoniaina Sr Municipal Engineer GSU13 Urban, co-TTL Charles Delfieux Sr Water & Sanitation Spec. GWA04 Water, TTL Veronique Verdeil Water & Sanitation Spec. GWA07 ICR TTL Yoro Sidibe Young Professional GWA07 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY04 50.82 FY05 76.58 FY06 192.08 FY07 234.94 Total: 554.42 Supervision/ICR FY08 34.12 157.23 FY09 33.32 162.56 43 FY10 33.87 227.46 FY11 21.79 136.68 FY12 25.99 141.52 FY13 20.71 104.62 FY14 23.74 84.63 FY15 17.26 80.84 FY16 10.35 42.68 Total: 221.15 1138.22 Annex 5. Beneficiary Survey Results N.A. Annex 6. Stakeholder Workshop Report and Results N.A. 44 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR The Borrower prepared a full Implementation Completion Report that was shared with the Country Director and Bank team. The following text is the Executive Summary and the synthesis of Lessons Learned extracted from PDUE Completion Report. A. OVERALL PERFORMANCE OF THE PROJECT 1. Project appears satisfactory and achieved its goals: The number of beneficiaries (people with access to drinking water and / or improved mobility conditions and / or saved from the floods) is estimated to have reached 2,098,000 by 25th August 2015. The water component performed relatively well despite delays in network extensions works and the remaining beneficiaries gap has been filled thanks to the urban component. 2. However in terms of execution, the performance is considered moderately satisfactory, since the project was restructured, the closing date was extended, and some planned activities were not fully achieved. The project implementation was negatively impacted by three main factors: (i) the initial delays in the signature of the Financing Agreement and the lifting of effectiveness conditions and the disbursement condition for the water component; (ii) the lack of project "maturity" at the beginning of the project, because preparatory activities were still in progress when implementation started; and (iii) the process of paying compensation to people affected by the project, which was both long and marked by numerous flaws. B. IMPACTS OF THE PROJECT AND SUSTAINABILITY OF UNDERTAKEN ACTIONS Socioeconomic aspects 3. The main impacts of the project are undeniable: improving access to transportation and walking conditions; improving drainage and sanitary conditions; improving water quality, water quantity and service continuity, as well as the quality of water service (complaints); enhancing security and building entertainment facilities in neighborhoods and, indirectly, improving housing. 4. The economic impacts of the project broadly cover impacts as expected during preparation: (i) improved production capacity and distribution of drinking water; (ii) household health expenses saved by increasing water quality and quantity, reduced water stagnation; (iii) reduced cost of water access for users leaving alternative supplies in their neighborhood (from neighbors or standpipes) and getting private water connections; (iv) reduced connection cost thanks to the extension of tertiary networks; and (v) reduced transportation costs giving the new access roads to connect target settlements. 5. Nevertheless, sustainability of these gains is threatened by the low importance given to the maintenance of equipment and infrastructure at the municipal level. Decentralization aspects 6. The project had significant positive impacts on the decentralization policy even if the impact is limited to the municipalities affected by component 2: (i) human capacity 45 strengthened; (ii) strengthened local project ownership; (iii) Local Councils’ finances restructured; (iv) improved resources; and (v) strengthened citizen participation in public governance. The main highlight is the significant improvement of municipal resources, specifically own resources. Gaps in municipalities’ management identified by the audits have not been fully corrected yet. Similarly, the relation the project has established between the neighborhoods and the councils remains precarious. Urban development policy aspects 7. The current or induced effects / changes on urban development policy are numerous: (i) the project has promoted a results-based management approach that is not strictly based on quantitative measures of infrastructure output, as it was usually the case; (ii) the project has tried to reverse the current trend consisting in concentrating resources on projects known as "structuring" to the detriment of those within the vicinity; (iii) the project has tried to get out of the policy of "road" only to demonstrate the benefits of an integrated approach to enhance the positive effects of the road; (iv) consultation with populations has been an innovative approach of urban management for activities within targeted neighborhoods. 8. The main weakness to note is that the ministry in charge of urban development does not yet have enough support tools for decision making; in particular, the urban database designed to be implemented in the project has yet to become operational. Water policy aspects 9. Results achieved have helped reinforce the major lines defined by the government in the sector policy letter, at least regarding the Public Private Partnership scheme implemented around the Contracting Authority (Government), the public asset-holding company, and the private operator (lease). The project, through the emergency operations in Yaoundé, Douala and secondary centers, has helped mitigate the water crisis and contributed to increase water production, which in turn has improved the financial position of the private operator. The fiscal balance, essential for the sustainability of achievements, is considered achieved and maintained since 2010 according to the criterion of "Net Cash Balance" of the CDE in the project assessment document; however the cash flow difficulties undermine the public asset-holding company functioning while the service provider faces higher than expected operating expenses, which jeopardizes this balance since 2012. Furthermore, the current pricing does not release a true social block, which limits access to water for low-income households. Finally, community access points are limited, which penalizes low-income households that live mostly of popular economy and are not able to settle monthly bills. C. PROJECT RELEVANCE / DESIGN 10. In terms of design, the project was in line with the policies and socio-economic context that prevailed during preparation. It remained so since, despite some changes, such as: updated guidelines set by the SDGE; decentralization progress with the effective transfer of resources; governance with the introduction of new instruments that control the activity of the public accountants’ number; or results-based management. Its objectives are still relevant, both for the urban component and for the water component, the needs still very important. 46 D. PROJECT EFFICACY 11. As for effectiveness, that is the level of achievement of results (products), the IDA funding disbursement rate (31 July 2015) is around 90 percent and should increase by the accounting close. Implementation of activities by component is as follows: 12. For component 1: Generally, planned activities were mostly realized, mainly the organizational and financial audit of Councils as well as certain related activities (consolidation of accounts, taxpayers file, introducing financial information management systems in 22 municipalities). In addition, seven LRA were granted with strategic planning documents (4 cities’ development strategies and 3 PIP / PEP) and six city contracts were signed. Some activities have not been fully realized: the urban database is not supplied (the collection pilot operation was not performed), the support surveys to the definition of housing policy were not all completed, the urban sector strategy was defined and adopted, but not broadcasted. 13. For component 2 : Almost all the planned activities (construction of basic and nearly infrastructure in the precarious housing area) were performed. 14. For component 3 : The main performed activities focus on the strengthening capacity of the public asset-holding company the private operator and the ministry of water (MINEE), the implementation of production facilities (emergency works) as well as network extension and the implementation of connections. Activities are implemented at 100 percent of the program after restructuring. The standpipes were removed and private connections are slightly above expectations; standpipes, just as low-cost connections, are nevertheless essential to improve household water supply. The main gap lies in the strengthening of public-private partnership: partners’ relations are fresh, public customers’ water consumption is still increasing, studies for the review of the financial model and the adjustment of the fee schedule were conducted but not applied and the financial model does not fully play its role as regulator and forecasting model. E. PROJECT EFFICIENCY 15. The assessment shows that the project as a whole was efficiently managed, even if some problems are to be reported. - The lead ministry, MINHDU: (i) ensured a constant monitoring of activities and, above all, (ii) helped to solve the difficulties encountered, particularly in the relationship with other departments. - The steering committee met regularly, according to its powers, to: (i) ensure the general strategic direction and supervision of project implementation; (ii) ensure communication and cooperation among stakeholders; (iii) approve work programs and annual budgets, and (iv) review progress reports. However, two weaknesses can be reported: the non-compliance of the six-month rate sessions and the non- consideration of audit reports and advices made by the World Bank. - Municipalities, as expected, took an active part in the implementation of the component 2 within phase 1 and completely assumed liability in phase 2. However, the transfer of responsibilities for fiduciary management expected from the third year of the project could not be made. It appears that many criteria were set to allow this transfer; this may be too many constraints for the relatively modest volume of 47 activities to be managed. This transfer was therefore not appropriate. On the other hand, the transfer of procurement responsibility was effective in Phase 2 of the project, as planned. - The established “neighborhood development committees” (comités de quartier), despite some misunderstandings, appear to have played their role. Especially during the planning stage, they played an active role in the selection of sub-projects related to the vicinity, highlighting issues that might not have emerged otherwise. However, their relationship with the municipal executive has hardly been effective. - The project coordination unit and CAMWATER have played the role assigned to them in project implementation. 16. The performance is also measured through specific activities : - Regarding payment terms, performance appears insufficient on the 2nd phase of the project. Bottlenecks were both at the Coordination Unit and municipality levels, as well as at the ‘Caisses Autonomes d'Amortissement’. The performance is similar with regards to delays for procurement, which regularly exceed the period of tenders’ validity; the delay is justified neither by delays in obtaining non-objection notices, nor by the delays of tenders analysis, but found primarily at the administrative level, in submitting files to IDA, and especially for contracts signature (conditioned in phase 2 for works contracts by the compensation of persons affected by the project). This situation, already difficult at mid-term, was exacerbated by the processing period at the Ministry of Public Contract (MINMAP). - Financial management appears fairly good; audits have not identified any major problems. The only weaknesses identified concern budget management and credit monitoring. - The monitoring and evaluation (in particular its internal control aspect) appears to be the main weakness of the organization. In fact, there is no monitoring of activities leading to the achievement of results, justifying delays in the absence of an internal warning system. - Relations with the IDA do not seem to pose any particular problem: Supervision missions were conducted regularly, non-objection notices and the reactions on the financial reports were given in a reasonable time period. F. SUMMARY OF LESSONS LEARNED FROM THE PROJECT ON THE PROJECT DESIGN Keep PDUE objectives which remain relevant 17. The project objectives, which were coherent and aligned with the context that prevailed at appraisal, are still relevant today. They perfectly fit in with national policies and strategies in the sectors concerned. They may therefore renewed be for a new project, while needs remain globally important, both for the urban and water sectors. 48 Establish links between investments and capacity building 18. For the water component, despite some progress made during the project and other financial supports obtained by CAMWATER, it is important, for the future, to continue to act in three directions: (i) supporting the implementation of the PPP, (ii) improving water production and (iii) improving access to potable water. 19. For the urban component, access to urban services remains limited, and an intervention in housing areas always seems indispensable. However, it must be supported by capacity building of stakeholders at different levels, mainly at the municipal level, which is at the center of urban policy of the Government. TO MAXIMIZE THE IMPACTS AND SUSTAINABILITY OF THE URBAN COMPONENT 20. Government resources help leverage improvements in local management, in five areas: (i) local organization; (ii) increasing municipal resources (own funds); (iii) the effective management of infrastructure and equipment maintenance; (iv) improving transparency; (v) beneficiary participation. - Municipal adjustment. Resources allocated to investments in cities should continue to serve as leverage to achieve improvements in terms of municipal management, as the government cannot be held responsible for deficiencies. PDUE has revealed the main areas of concern: (i) consolidation of municipal accounts, including outstanding payments due to contractors, social organizations and the State; (ii) mobilization of financial resources; (iii) better monitoring of operating expenses; (iv) management of financial information; (v) transparency and information of the citizen. Requirements of the Law regarding budget allocations for investment and operating costs, among others, must be respected. - Increasing financial resources of municipalities. Financial restructuring will not be sufficient. Acting simultaneously on tax recovery, mainly through better identification (including location) of taxpayers is needed. - Maintenance of infrastructure / equipment by municipalities. Maintenance of infrastructure and equipment is a key aspect of municipal management and require a minimum budget allocation. Financial audits have shown that it is currently difficult for most municipalities to contribute to investments. At the same time, major investments are made without clear maintenance prospect. Efforts made during PDUE by the municipalities to maintain infrastructure and facilities under their jurisdiction should be sustained. . Given PDUE achievements, it is appropriate that municipalities assign at least 10 percent of their own revenues to maintenance. - Participatory approach. Neighborhood committees should be better involved, and in a more sustainable way, for instance with leading activities that may have a more permanent dimension, beyond the project investment. This participatory approach should be used wisely, though, to avoid conflicts and unnecessary costs. People should be directly associated in decision making only as regards operations related to their immediate environment. There is therefore no interest to involve them in the decision making regarding trunk infrastructure, whose area of influence extends far beyond the boundaries of the neighborhood. 49 - Technical assistance, training and support. The project has demonstrated that “traditional” training actions produce their full effect only if they are complementary to ad hoc technical assistance missions focused on specific problems identified through thorough investigations (organizational and financial audits). This technical assistance may include the provision of context-specific tools (procedures, working methods, software or even hardware) that would be tested or implemented with the direct beneficiaries, ie staff concerned by these problems, participation of key actors from their workstation. 21. Targeting large cities for more impact at country level. The impact of the project on small towns, though very noticeable locally, does little to improve the situation at the national level in terms of both works and capacity building. It is usually less flexible to work with them, for instance because of their limited municipal workforce. This is what happened with the town of Mbalmayo. It was included in PDUE as a pilot city, after the experience in PACDDU cities, which were much larger in size. It therefore seems appropriate to target mainly large cities. The threshold of 100 000 inhabitants seems appropriate, these cities including around 72 percent of the urban population. 22. Operating at a more important scale. In view of both the scale of need and the cost (especially in time) of works, working at large it is more efficient and would maximize impacts. Below 100 ha, there may not be any impact on mobility, while populations are probably already located within 500 m of public transport. This also confirms the priority focus on large cities where it is possible to find such sufficiently large operational areas. In addition, densities are low in small towns, making prohibitive the intervention costs. 23. 500m from road is a good indication of isolation limit. The project enabled to test and confirm the idea of considering the distance of 500m as isolation limit. Therefore, a resident located more than 500m from a path from which he/she can use a public mean of transportation (other than the Moto-taxi or the informal taxi), is considered as located in a landlocked area, which is not well connected to other neighborhoods. This access distance also appears relevant and “feasible” in financial terms, given resources available. It is also increasingly used at international level. 24. Reduce land insecurity. Land regularization is essential for the servicing operations to produce their full effects. This difficult issue must be addressed. 25. Improve decision making tools. This is to complete or strengthen actions initiated with PDUE, following three directions: - The results-based approach should remain a key element of urban management. Within MINHDU, relevant services should be involved (Monitoring Unit, attached to the Secretary General) to the project monitoring and evaluation to build capacity in this area. Clarify or refining project outcome indicators is therefore crucial to ensure a shared understanding before sharing them with all actors of the urban sector. As for transportation, the project has confirmed that 500m is a relevant and “feasible” distance of access. The planning of interventions for trunk infrastructure should therefore be based on this result. Thus, contrary to what was done in PDUE, the areas of intervention shall be defined in relation with the trunk network. Within these areas, it is essential to rely on a number of constants that emerge from the current project (i) the priority is to have properly drained areas, the decision on 50 paved or earthen roads comes next; (ii) an integrated approach enables to include other services in neighborhoods, not strictly the road (garbage removal, access to piped water, access to social facilities, public lighting, etc.). - The effective urban planning initiated by MINHDU must be supported to give more light to future actions in urban areas. It is then recommended to: (i) disseminate the National Urban sub-sector Strategy that is now the compass for planning, programming, budgeting and monitoring and evaluation of MINHDU’s interventions with local actors (decentralized services and LRA); (ii) finalize all activities identified in the City Development Strategy for Yaoundé, including the establishment of POS / PSU. - Operationalizing the urban database should continue. For purely “Urban” information to be collected by the MINHDU relevant services, it may however be more realistic to initially rely on a short list of cities and to only gradually expand the number of items. - To strengthen synergies, the State Higher Control services and the Chamber of Accounts should be associated from the beginning to municipal adjustment measures, between the actors. TO MAXIMIZE THE IMPACTS AND SUSTAINABILITY OF THE WATER COMPONENT 26. Strengthening the Public-Private Partnership. Revising the financial model has become a critical issue, including the tariff structure and the lease contract. Normalizing the relations between the public asset-holding company and the private operator is also essential. In the present context, these important reforms would be difficult to conduct without a donor commitment that would back the process, as for the establishment of the public-private partnership (PPP). The support of an institution like the World Bank is essential, especially a technical support for the monitoring and consolidation of the PPP which is the main challenge. 27. Acting continuously in favor of the final beneficiaries. The connection rate and level of household access to water are low. It is important to continue developing the tertiary distribution, connections and standpipes, as significant funding is available for other segments (production, primary and secondary distributions). TO IMPROVE EFFICACY 28. More communication to support municipalities. To support local development, communication activities are essential and should be included in the process of improving the relationship between the town and the citizen. There is a need to go beyond the project activities to support municipalities in their overall communication vis-à-vis citizens. 29. Clearly separate trunk infrastructure and proximity. Identifying trunk facilities and infrastructure must be made from the outset by the municipality, as consultations with the beneficiaries are not essential for this level. Arbitration after consultations with beneficiaries should only concern proximity facilities or infrastructure. 30. Improving programming. TORs for programmatic activities should be revised to better reflect realistic expectations, for instance: 51 - To connect the area with the rest of the city, at the stage of diagnosis, clearly identify isolated areas (located within 500m of an accessible route to public transportation) and that will need to be developed; then, at the proposal stage, ways to open up these areas (and nothing more) ; - For mobility within the neighborhood, highlight priority issues for roadways as footpaths (will need to be coated); - For drainage, identifying problem areas: flood and/or prone to erosion, where ditches’ coating should be associated with the rehabilitation of earth road; - The summary of programmatic proposals must clearly present the expected results: Opened up areas and areas saved from floods. 31. Improving the process of decision making for the “service” level. Arbitration must well be understood as an exercise that involves matching the choices of people with technical concerns or concerns related to the city development. This does not implies giving in to all the wishes of the people, the opinion of the latter being only advisory because the final decision belongs to the mayor. Moreover, arbitration must be done only on the proposals of the main contractor from a trunk solution previously validated by the City Council. Targeting only one sector of intervention (eg roads - this is the easiest to implement and most politically sensitive) or only part of the intervention area should be avoided as it may jeopardize the balanced development of the area. 32. Carrying on activities related to water access to the poorest population. Under the current socio-economic context, it is crucial to: (i) adjust the tariff structure to set up a real social tranche , (ii) set up measures to support system for standpipes (tariff and others); and (iii) expand social connections. TO INCREASE EFFICIENCY 33. Having a more “mature” project. For, Contracts should be ready to sign at effectiveness, so that activities could start soon after. The preparation period must be harnessed to complete all the programming and detailed technical studies, and to sign the first contracts. 34. A project implemented by existing structures… Institutionally and in general, existing structures should be in charge of project implementation, in accordance with national legislative and regulatory frameworks and in line with the Paris Declaration on Aid Effectiveness (on Alignment). As such, municipalities must perform all activities relating to them, including procurement. This also applies at government level, regarding the different administrations. 35. … With a coordination unit. Given the multiplicity of stakeholders at different levels, it is essential to maintain both a steering committee (with its current role) and a coordination unit, whose role will be limited to: (i) supervising, including monitoring and evaluation and reporting to the Steering Committee, (ii) advisory support to implementing agencies, and (iii) financial management. However, and in line with the Accra Agenda for Action, it is crucial to set up safeguard measures to strengthen national systems and procedures, for example in involving various units within implementing agencies in the implementation of monitoring and evaluation activities. 52 36. Enhancing strategic management by the steering committee. Steering Committee meetings must be scheduled regularly to limit the discussions during the budget discussion in December. Moreover, general strategic management must be strengthened through a systematic review of the recommendations of the World Bank Missions. 37. A stronger involvement of the ministry in charge of local authorities. The ministry in charge of local authorities was not enough involved in PDUE. It should be represented in project management, according to its responsibilities regarding the improvement of town management. 38. City councils as client. At municipal level, the general principle is that the municipalities must fully fulfill their role as client, in line with the principle of subsidiarity. The operations carried out have confirmed interest in firmly set projects in the decentralization process. It appeared that decisions must be taken at the appropriate scale and will only be back up to the upper scale what cannot be decided below. The Municipalities taken as project owner appears thus fundamental, especially with regard to tasks such as programming. 39. Involvement of all entities in charge of urban networks. All stakeholders (government, municipalities and network concessionaires) put into practice the regulatory framework governing roads and networks in urban areas. 40. Adjusting/strengthening the role of neighborhood development committees. - Contractual arrangements must be signed and implemented from the project outset (neighborhood-municipality agreements, including monitoring arrangements); - The creation or revitalization of neighborhood development committees should not only rest on the project activities but on more comprehensive and permanent areas of interest, such as hygiene and sanitation, which the municipality may support regardless of the project. - Information on the project progress and the expected / achieved results should be widely disseminated, both at municipal level and at the level of neighborhoods; - Position social focal points in an intermediation role between the stakeholders\; their role should be sustained for at least one year after the end of works to consolidate local ownership and maintenance. 41. Review compensation process of People Affected by the Project. Regardless of the actors’ will, the procedure is too long and is a real constraint to implement PDUE-like projects consisting of small-scale activities. An option to explore could be to redirect the approval of compensation decrees to the minister in charge of domains, at least for certain thresholds or project categories (eg compensation decrees below CFAF 100 million, or if there is household to resettle). 42. The operation of Committees in charge of assessing compensations (CEC) must be better monitored: compensation levels should respect regulations and be harmonized for all Divisional Offices; Divisional Offices should not manage compensation funds; operating funds of CEC should be managed by the project; relevant provisions defined in the CPRP should be applied; assessing compensations should be done together with the Ressetlement Action Plan. 53 43. Budgeting counterpart funding. Costs that cannot be supported by external support should be estimated at the outset, budgeted and funding arrangements clearly defined. This is particularly the case of expenses for compensation, which are the responsibility of the project owner (municipalities). 44. Establish a real device of the project monitoring and evaluation. It is essential to define and design an effective monitoring and evaluation plan describing in a simple but detailed manner: (i) the information to report to the CSR (indicators) by different actors of the project; (ii) reports and indicators (monthly, quarterly, etc.) produced the CSR and (iii) the plan for dissemination of such reports. This system, which remains simple and reduced, must cover the entire project performance: Performance indicators, intermediate and efficiency results, (procurement delays, implementation delays, commitment rate, disbursement rate etc.). 45. Redirecting MINMAP in the execution of public contract monitoring. The Ministry in charge of public contracts was given a clear role, but it is not the case with regard to the “control”. Roles need to be clarified to avoid bottlenecks in procurement and improve control instead. Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders N.A. 54 Annex 9. List of Supporting Documents République du Cameroun, 2015: Rapport de clôture du Projet de Développement des Secteurs Urbain et de l’Eau (PDUE), MINHDU, Cellule de Coordination du PDUE, décembre 2015 World Bank, 2003: Country Assistance Strategy FY04-06 World Bank, 2004: Cameroon Urban Sector (Report 29089-CM) World Bank, 2004 to 2015: Urban and Water Development Support Project (P084002): Implementation Semi-Annual Status Reports (15 sequences); Aide-Memoires; Project files World Bank, 2007: Project Appraisal Document, Urban and Water Development Support Project (Report 37979-CM) and related Approval Package, including Safeguards documents (online) World Bank, 2008: Implementation Completion and Results Report, Public Private Partnership for Growth and Poverty Reduction, Republic of Cameroon (Report 0942) World Bank, 2010: Country Assistance Strategy FY10-13 (Report 52997-CM) World Bank, 2010: Implementation Completion and Results Report, Douala Infrastructure Project, Republic of Cameroon (Report 1413) World Bank, 2010: Project Paper, Additional Financing for the Urban and Water Development Support Project (Report 54914-CM) and related Approval Package, including revised Safeguards documents World Bank, 2014: Implementation Completion and Results Report, Cameroon Water Lease – OBA for coverage expansion, Republic of Cameroon/Camwater (Report 3080) World Bank, 2014: Implementation Completion and Results Report, Community Development Program Support Project-Phase II, Republic of Cameroon (Report 2814) World Bank, 2015: Cameroon Country Assistance Strategy 2010-2015, Completion and Learning Report World Bank, 2016: Cameroon Systematic Country Diagnostic (P151164) 55 MAP IBRD-421081 56