Document of The World Bank FOR OFFICIAL USE ONLY Report No: 19993 IMPLEMENTATION COMPLETION REPORT (Core ICR) ONA CREDIT 2157-GH IN THE AMOUNT OF SDR 53.7 (US$70.0 MILLION EQUIVALENT) TO THE REPUBLIC OF GHANA FOR AN URBAN 11 (SEC CITIES) PROJECT PROJECT ID: P000910 L/C NUMBER: 21570 January 4, 2000 Water & Urban 2 Africa Region This document has a restricted distribution and may be used by recipient only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Exchange Rate Effective 1990= 326.28 1991 = 367.73 1992= 437.09 1993= 648.98 1994= 956.73 1995 1,200.40 1996 = 1,637.24 1997 = 2,050.28 1998 = 2,314.15 Currency Unit = Cedis FISCAL YEAR January I - December31 ABBREVIATIONS AND ACRONYMS ADRP Accra District Rehabilitation Project AESC Architectural and Engineering Services Corporation AESL Architectural and Engineering Services Limited CBD Central Business District CPI Consumer Price Index DA District Assembly DRU- District Road Units DUR Department of Urban Roads EIA Environmental Impact Assessment EPA Environmental Protection Agency ERR Economic Rate of Return ERP Economic Recovery Program GERP Ghana Environmental Resource Project GoG Government of Ghana HEC Home Finance Company LGDP Local Government Development Project LVB Land Valuation Board MDSC Metropolitan/District Steering Committee MLGRD Ministry of Local Government and Rural Development MWH Ministry of Works and Housing NDF Nordic Developrment Fund OPEC Organization of Petroleum Exporting Countries PCC Project Coordinating Committee PWP Priority Works Project SAR Staff Appraisal Report SHC State Housing Corporation SSNIT Social Security and National Investment Trust l C Tema Development Corporation TMA Tema Municipal Assembly TSC Technical Services Corporation UESP Urban Environment and Sanitation Project UST University of Science and Technology UTP Urban Transport Project . Vlce P~~~~resident: Jean-Louis Sarbib Country Manager/Director: Peter Harrold Sector Manager/Director: Letitia A. Obeng Task Team Leader/Task Manager: Jagdish Bahal FOR OFFICIAL USE ONLY GHANA - URBAN II PROJECT IMPLEMENTATION COMPLETION REPORT CONTENTS Page No 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 1 4. Achievement of Objective and Outputs 4 5. Major Factors Affecting Implementation and Outcome 11 6. Sustainability 13 7. Bank and Borrower Performance 15 8. Lessons Learned 18 9. Partner Comments 19 10. Additional Information 19 Annex 1. Key Performance Indicators/Log Frame Matrix 20 Annex 2. Project Costs and Financing 22 Annex 3. Economic Costs and Benefits 24 Annex 4. Bank Inputs 26 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 27 Annex 6. Ratings of Bank and Borrower Performance 28 Annex 7. List of Supporting Documents 29 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Project ID: P0009l1 Project Name: URBAN II(SEC CITIES) Team Leader: Jagdish K. Bahal TL Unit: AFTU2 ICR Type: Core ICR Report Date: 1. Project Data Name: URBAN II(SEC CITIES) LIC Number: 21570 Country/Department: GHANA Region: Africa Regional Office Sector/subsector: UH - Urban Housing KEY DATES Original Revised/Actual PCD.' 04/19/88 Effective: 01/01/91 05/28/91 Appraisal: 01/22/90 MTR.' 07/30/95 09/18/95 Approval: 06/14/90 Closing. 06/30/96 06/30/99 BorrowerlImplementing Agency: REPUBLIC OF GHANA/MIN OF WORKS AND HOUSING & MIN OF ROADS AND HIGHWAYS Other Partners: Organization of Petroleum Exporting Countries (OPEC); Nordic Development Fund (NDF) STAFF Current At Appraisal Vice President: Jean-Louis Sarbib E.V.K. Jaycox Country Manager: Peter C. Harrold C. Koch-Weser Sector Manager: Letitia A. Obeng Tony Pellegrini Team Leader at ICR: Jagdish Bahal K. Robotham ICR Primary Author: Charles K. Boakye; Eleanor V. Warner; Jagdish K. Bahal 2. Principal Performance Ratings (HS-=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, I)N=Unlikely, HUN=Highly Unlikely. HU=Highly Unsatisfactory, H-High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability. L Institutional Development M Impact: Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3. 1 Original Objective:. The project objectives as stated in the Staff Appraisal Report (SAR) were to: (i) Local Government Rehabilitation: (a) help rehabilitate and improve essential infrastructure, services and environmental systems; and (b) strengthen the technical, financial and managerial capacity of local government; (ii' Housing Sector Reform: (a) help initiate the development of a sustainable housing finance system; (b) relorm the housing parastatals; (c) begin to relieve the acute shortage of affordable houses; (d) improve the environmental conditions; (e) provide essential infrastructure and service for the urban poor; and (f) strengthen the Ministry of Works and 1-ousing (MWH); and (iii) Environment: help improve en.vironmental management and. monitoring through support to the Environmental Protection Agency (EPA). Assessment of Objectives. The above project objectives were realistic and responsive to the Ghana Gcvernment's circumstances and development priorities. The project evolved from the Urban and Housing Sector reviews prepared in 1989, which identified the most critical areas in infrastructure development and in the provision of housing in Ghana's five largest cities. Following the success of the Accra District Rehabilitation Project (ADRP, Cr. 1564) in Accra and Tema, the Ghana Urban II project was devised to consolidate the gains and replicate the outcomes in the remaining four metropolitan/municipal cities, Tema, Kumasi, Sekondi-Takoradi and Tema. While the first two objectives dealt with the numerous problems that affected the urban sector in the five cities, the third objective, a secondary but important component, was incorporated to address the positive and negative environmental impacts of the project. 3.2 Revised Objective. N/Ak 3.3 Original Components: The project consisted of the following components: Local Government Rehabilitation (i) Infrastructure and environmental systems rehabilitation and ma:intenance works, such as roads, drains, sewerage, markets, solid waste management and environmental sanitation in five project cities; (ii) Municipal revenue mobilization, such as financial management improvements, property revaluation and tax reform and revenue mobilization in the five project cities; (iii) Land administration, such as mapping, pilot land adjudication, improvements to registration and conveyancing systems; (iv) Institutional support to the Ministry of Local Government and Rural Development (MLGRD), such as training program development, curriculum and teaching materials development, training trainers, project management support, and development of policy formulation and project management capacity; and (v) Institutional support to Department of Urban Roads (DUR), District Road Units (DRUs), City Technical Departments and Environmental Protection Agency (EPA), technical assistance, equipment, materials, training for sector and project studies, and for operational management and support for project agencies and the EPA. Housing Sector Reform (i) Urban upgrading works in Tema and Kumasi, such as roads, drains, water supply, environmental sanitation, training 100 women in construction techniques (with local NGOs assistance); and housing consolidation studies, for example completion/divestment studies for uncompleted GOG-owned units; (ii) Institutional reform (commercialization/ privatization) of housing parastatals, Architectural and Engineering Services Corporation (AESC), State Housing Corporation (SHC) and Technical Services Center (TSC); (iii) A line of credit to establish a pilot housing finance sub-project with -2 - institutional development and indexed mortgage financing for about 2,000 new sales units and the conversion of 1,000 existing parastatal-owned rental units to sales units; and (iv) Institutional support to TSC in such areas as technical assistance, training, vehicles, equipment and operational support for sector reform, project management and project studies, including studies aimed at increasing the participation of women in the housing construction sector. Assessment of Original Components: The Local Government Rehabilitation component of total cost US$77 million, was well designed to achieve their objectives. They covered most areas that were needed for improving urban infrastructure and strengthening the capacity of local governments, including major infrastructure facilities and services, namely, Accra and Kumasi roads rehabilitation, Tema!s sewerage reconstruction and solid waste disposal sites, local government schools works at Accra and Tamale, construction of seven offices and workshops for District Road Units of DUR in all five project assemblies, and procurement of road and waste management equipment for the assemblies. The project also computerized the accounting and billing system in the five assemblies and MLGRD; undertook property revaluation in Sekondi-Takoradi, Kumasi and Tamale; and provided assistance to the Land Administration system in Ghana. The environment part of the objectives was an essential feature of all the above components. The DUR and TSC implementing agencies handled the above components and relied on the capacity built from the previous ADRP (Cr. 1564) and Priority Works Project (PWP, Cr. 1874). The staff were civil and public servants seconded from other government agencies to perform the task. Management was stable and staff turnover negligible; this guaranteed a continued administrative and financial capacity in the implementation of the project. The components of the urban projects were similar to the two previous Bank urban projects and relevant lessons were taken into account by the agencies in the execution of the project. DUR and TSC now manage new Bank and other Donor supported projects. The Housing Sector Reform component, total cost US$32.6 million, was well designed to meet the objectives of the project. The component was very clear and focused mainly on urban upgrading of Ashaiman (Tema) and Suame magazine (Kumasi), and the line of credit that established the pilot housing finance subproject. The upgrading works were implemented by TSC while the housing finance component was implemented by HFC, a company set up under the project to implement and manage the component. The HFC was initially managed by key staff seconded from the Merchant Bank but later recruited its own staff while retaining the seconded staff who opted to stay. Shareholders increased the HFC capital to strengthen its financial base. Although there was no previous staff or Bank experience with housing finance in Ghana, the new management used their private sector experience and relied on technical assistance, provided under the project in line with similar successful institutions in Asia and USA, to make the component one of the most successful. The administrative and financial management capacity of IEC is sound and will sustain the operations of the company. The institutional reforms of housing parastatals, namely SHC, AESC and TDC were timely as the existing structures had virtually broken down and needed improved managerial capacity for efficient performance. 3.3 Revised Components: There was no formal revision of the project components. However, based on lessons learned during implementation, the following minor adjustments were made to the subcomponents which were effectively handled by the supervision team. Tema Sewerage project - Originally, designs of the sewerage project had envisaged the discharge of treated - 3 - effluent into the nearby Sakumono lagoon. Based on the EIA. report, the designs were changed to enable treated effluent to be discharged lkm into the sea, instead of the lagoon. This additional work, which was cofinanced by the Bank-supported Ghana Environmental Resource Management Project (GERMP, Cr. 2426), was to preserve the lagoon which had been earmarked as a Ramsar site. New Town and Patrice Lumumba roads - These roads, originally meant for reconstruction, were not done because of anticipated cost overrun, such as high level structural demolition and related compensation and resettlement costs. Moreover, the condition of the roads was relatively better than other roads in the project. The savings were used to improve traffic management and security systems on rehabilitated roads, which were not part of the original design. During the latter part of the project, savings from SDR exchange rates were used to finance asphalt resurfacing of 47km of additional roads in Accra, including Patrice Lumumba Road. 3.4 Quality at Entry: The Quality at Entry of the project was satisfactory. The project evolved during the implementation of ADRP (Cr. 1564) and PWP (Cr. 1874,), and was a priority for the sector and the country, according to the 198B9 Urban Sector and Housing Sector Reviews, and received Government support throughout imiplementation. The project was subsequently conceived at the initial stages of decentralization and received support from the highest level of Government through an Inter Ministerial committee of cabinet set up with oversight responsibilities to ensure smooth implementation; the then Chairman of the Committee of Secretaries (equivalent to Prime Minister) showed direct interest and full commitment to the preparatory work. The weak technical and managerial capacity in the MLGRD at that time, and the high importance and ownership government had for the project led to the setting-up of three separate and distinct implementing agencies to handle key aspects of the project, namely TSC, DUR and HFC. The agencies were under the Ministries of Works and Housing, and Roads and Transport. It incorporated lessons from the ADRP, especially with respect to thie financial management system as well as valuable implementation experience from the PWP. The Bank also committed a substantial input of staff effort for project preparation and supervision. Consistent with the Bank's safeguard policies, the project's environmental issues were highlighted as one of the three main objectives of the project. The project's bottom-up methodology complemented other IDA-financed urban development projects in the Bank. However, there were significant delays in project processing, (a) eleven months lapsed between Bank's boaLrd approval and effectiveness; and (b) difficulties were experienced identifying cofinanciers. (OPEC and NDF formally gave their consent in 1993, while the respective loans became effective in 1995.) Board processing delays did not affect the project as designs were still ongoing, but delays related to the co-financiers affected the Kumasi Kejetia contract and the NDF procurement of waste management component. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: Overall, the physical outcome of the project was satisfactory. The infrastructure and environmental rehabilitation and maintenance subproject has established the basis for effective traffic management in Accra; urban upgrading schemes have brought considerable improvement to the quality of life of certain low-income communities; and action has been taken to address the pollution of the Chemu Lagoon in Terna. For the first time in Ghana, the issue of solid waste disposal has been tackled in one major city, Terna, in a systematic and professional manner. The municipal revenue mobilization component fueled a surge in revenue generation capacity in the five - 4 - project cities and assemblies which could lead to substantial improvement in service delivery and infrastructure maintenance. The percentage increase in property tax revenue collected by the five Assemblies from 1988 to 1997 ranged in nominal terms from 2,713% in Accra to 62% in Tamale. Corresponding figures for total internal revenue for the same period range from 2,062% in Accra to 38% in Tamale. This is an annual increase of over 300% in property rates, and 230% for total internal revenue for Accra. Although the foundation for enhanced own source revenue mobilization was laid in Accra by the Bank-supported ADRP (Cr. 1 564-GH), Urban II further improved capacity to raise revenue. In economic terms, the outcomes are highly encouraging. The ex post high rate of return, particularly in the transport sector, indicates a sound application of capital. Traffic management activities have improved mobility in Accra, and the Kanda Highway/Castle Road scheme has reduced the waiting time and length of queues at transit stations. Significant increases have been recorded in traffic levels for this corridor. However, Kanda (in particular) had a low volume capacity ratio, indicating its ability to cope with future demand. Local Government Rehabilitation: The objective of rehabilitating and improving targetted infrastructure, services and environmental systems in Accra, Tema, Sekondi-Takoradi, Kumasi, and Tamale was achieved. Urban infrastructure (including roads, street lighting, sanitation, and solid waste management), which was in a state of disrepair in the project towns, was rehabilitated and is now beginning to see a structured attempt at maintenance. The objective of strengthening the technical, financial and managerial capacity of local government was substantially achieved. Significant advances have been made in local government reforms, including the following: (a) revenue collection has improved in all towns; (b) initiatives aimed at the reorganization of local government training have taken root; (c) project management expertise has been developed in key government agencies; and (d) up-to-date maps of appropriate scales are now available in Accra, Kumasi, Sekondi/Takoradi, Tema and Tamale. These gains have contributed towards the successful implementation of the Government's ongoing decentralization program, and given staff in these agencies a clearer sense of direction. Housing Sector Reform: The objective to initiate development of a sustainable housing finance system was fully achieved. An unsubsidized housing mortgage finance system has been put in place to largely cater to the middle income groups. The HFC which was set up under the project in 1991, exceeded its target of providing mortgages, thereby relieving the acute shortage of affordable houses in Accra. HFC, granted mortgage finance to fund 4,100 new houses as against SAR target of 2,000 houses. HFC has issued US$20 million in inflation indexed Cedi bonds, providing Social Security and National Insurance Trust (SSNIT) with its best performing asset over the period. HFC has also issued US$4.5 million in US dollar denominated bonds, the first private corporate bond issued ever in Ghana. HFC is now regarded as one of the premium non-banking private financial institutions in Ghana, with one of the best performing stocks at the Ghana Stock Exchange. The objective of reforming housing parastatals, commercialization, rationalization of organization and - 5 - staffing, and establishing partnerships with private developments, was largely achieved. The existing housing parastatals, namely TDC, AESL and SHC have been reorganized into commercially oriented and viable companies. TDC in particular. has successfully undertaken several housing schemes where TDC provided land and private developers provided capital and management of new housing schemes. Most of the houses were sold to individuals through HFC mortgage ifacilities. The impact of SHC, currently earmarked for divestiture, has not been very significant. The objective of improving the environmental conditions and providing essential infrastructure and services for the urban poor was achieved. Urban upgrading schemes in Ashaiman in Tema, Suame in Kumasi and Ward E in Tamale have given access to basic sanitation and other infrastructure facilities to otherwise deprived members of urban communities. The objective of institutional strengthening was partially achieved. The project helped identify and solve cril:ical issues in urban management. It has also improved inter-agency coordination, particularly between the Lands Valuation Board (LVB) on the one hand, and the Assemblies, on the other. However, differences between the newly created land title registry and the old deeds registry hindered the progress of land titling activities. Considerable effort would be required in the coming years to integrate the activities of these two agencies and carry out major land reforms on the basis of project findings through the pilot land component ancl the subsequent Land Administration Study. This will be addressed under a follow-on project. Environment: The objective to help improve environmental management and monitoring through support to LPA was achieved. Equipment, technical assistance and training were provided to EPA to reinforce its capacity to monitor the environmental components of the project. These included monitoring the sanitation situation in Tamale, Kumasi and Sekondi-Takoradi; collecting and reviewing studies conducted on Korle Lagoon; creating public awareness programs for Odaw and Korle catchment areas; and carrying out environmental impact studies for specific comments. 4.2 Outputs by components: The status of achievement of project components as against SAR targets is summarized below: -6 - TARGETED AND ACHIEVED OUTPUT ITEM i SAR TARGET ACHIEVEMENT COMMENTS (1989) (JUNE 30,1999) 1. Local Government Sector Rehabilitation (i) Reconstruction of arterial & 17.4 km 13.3km Successfully achieved collector roads in Accra (ii) Rehabilitation and asphalt overlay 0 47.6km Not originally intended. This was of roads in Accra executed with funds accrued from SDR savings against the US Dollar (iii) Construction and widening of 240m Not implemented Inadequate budget for bridge over railway between Asafo recommended alternative. market circle and UTC circle in Available funds were used to top up Kumasi the Kumasi Kajetia component (iv) Rehabilitation of Kumasi Kajetia Involve market improve- Ongoing, 85% complete. This component largely financed by market and construction of Kajetia ment, telecommunication Not yet achieved OPEC delayed due to counterpart road & traffic management system facilities, drainage, road & funds problems. Also cofinanced traffic management works by IDA. (v) Tema Sewerage System Rehabilitation, provision of Fully achieved. System currently not functional. Rehabilitation 3 Pumping stations, cons- 36,000m3 fully aerated Remedial works are being rectified truction of new treatment pond by year 2010 and expected to be completed by facility, sewer outfall etc. April 2000. (vi) Property revaluation of 87,000 Kumasi (40,000), Sekondi- Substantially achieved. Sekondi-Takoradi was not fully buildings in Kumasi, Tamale and Takoradi (30,000) and Kumasi (40,000) achieved because of the poor state Sekondi-Takoradi Tamale (17,000) Sekondi-Takoradi of some of the buildings. (27,000) and Tamale (20,000) (vii) Construction of new local Govt. 2 Schools. Fully achieved The schools have been training school in Accra and commissioned and are now in rehabilitation of existing school in operation Tamale (viii) Procurement of various road and Over 250 pieces. Fully achieved The road equipment were financed waste management equipment for by the NDF credit while IDA DRU and WMD of the five (5) financed the waste management metropolitan assemblies. equipment (ix) Undertaking studies to identify Foreign and local firms to Done Critical measures include the waste management problems confront- carry our study in Tema, construction of landfill sites in ing three cities and recommend urgent Sekondi-Takoradi and Tema and toilets in Tamale and measures to address critical needs. Tamale. Sekondi-Takoradi. (x) Land Administration - Issue titles to land in Accra and 1,000 1,200 Kumasi - Large scale photomapping in Accra 180 sq.km 250 sq.km - Large scale photomapping in Kumsai 220 sq.km 250 sq.km - Extensive education and short-term Exposure to advanced and Fully accomplished Team visited Thailand, Canada, training programs for Executive Direc- new land titling and records Australia and another developing tors and Project Officers of the Land management methods. country. Administration Steering Committee. -7- TARGETED AND ACHIEVED OUTPUT ITEM SSAR TARGET ACHIEVEMENT COMMENTS 2. Housing Sector Reform (i) Establishment of Home Finance 2000 units 4,100 units Very successful Conipany (HFC) and mortgaging of houses under the scheme (ii) The sale of existing SHC and TDC 1000 units 3,175 units Due to a court injunction, it was rental units through SSNIT and HFC impossible to pursue this compo- nent. Later when the injunction was lifted, TDC succeeded in carrying this action through a Home Ownership Scheme (HOS) without HFC, SSNIT assistance (iii) Restructuring of GoG housing TDC, AESL, SHC to be Fully achieved TDC and AESL have shown parastatals through diagnostic commercialized, substantial economic growth since institutional studies. 1995. SHC is now earmarked for diverstiture. (iv) Training of women in 100 women 60 women fully trained 60 women who were fully trained in construction techniques with the Ashaiman & Gomoa Essakyir assistance of local NGOs received certificates. Others did not complete the training (v) Upgrading of three suburbs, Involved the construction of Fully achieved Property value increased in namely Ashaiman in Tema, Suame in roads and drains, water Ashaiman and Ward E. Increased Kumasi and Ward E in Tamale supply and sanitation, street revenue for artisans in Suame. and security lighting, etc. Crime wave reduced in Ashaiman. 3. The Environment (i) Aissist EPA in the drafting of Done This was very useful for the appropriate environmental legislation formulation of Ghana's for C,hana Environmental Action Plan (ii) Carry out environmental impact EIA reports needed for all Done All EIA recommendations were assessment studies to assess the impact major contracts implemented, especially major ones of civil works under the project. on Tema sewerage and Accra roads. (iii) Strengthen EPA to monitor and Public education and short Fully achieved evaluate implementation of term courses environment component (iv) Developing public awareness and Studies Done These two studies led to two reviewing past studies on Odaw river projects, KLERP and Odaw and Korle Lagoon Ecological drainage portion of UESP Restoration Project ___ (v) F'rocurement of water and Air Not originally in SAR. Done Financed by NDF monitoring equipment for EPA Added to further strengthen EPA's monitoring role. -8 - Infrastructure and Environmental Systenm Rehabilitation and Maintenance Works: The Accra road rehabilitation work was successfully completed. It included construction of 13.3 km of new arterial roads and rehabilitation of 47.6 km involving asphalt overlays on selected sections of roads with heavy traffic, surface dressing of selected local roads, intersection improvements, provision of pedestrian facilities and drainage. At the initial stages, works suffered considerable delays as a result of demolition of a number of property walls adjacent to the roads and relocation of utilities. This component was the most significant aspect of the project and had the greatest impact on the average Accra resident, as it resulted in the opening of the Central Business District (CBD) corridor through the western part of Accra (Dansoman and Darkuman roads), which hitherto, was either inaccessible or characterized by poor road network. The construction of the Kanda highway and Castle roads also improved traffic from the northern part of Accra to the CBD through the newly constructed middle corridor. The construction of Kanda highway has considerably improved the north-south mobility in the city of Accra, reduced travel time from more than one hour to less than twenty minutes, improved riding quality of arterial roads and reduced vehicle operating cost. Security lighting, traffic management and other safety works were also carried out on the roads as additional works. About 211 households/families were affected by the construction works and were paid compensation by GoG. In the last year of the project, funds accrued on the project from SDR exchange rate gains against the Dollar were used to carry out rehabilitation and asphalt resurfacing of 14 roads in Accra, totaling 47.6km. These include Osu, Cantonments, Link, Patrice Lumumba, etc. The contract for redevelopment of Kejetia (CBD in Kumasi) involving rehabilitation of the Kumasi market, road rehabilitation and drainage works was terminated on account of non-performance by the lowest evaluated bidder, but was subsequently re-awarded to the second lowest bidder. This component was financed by OPEC under a cofinancing agreement which had been extended to June 2000 to accommodate time overruns. The upgraded works in Tema, Tamale -and Kumasi significantly improved services through the construction of roads, water supply, storm water drainage, power supply and street lighting, public toilets, and refuse collection facilities. In Ashiaman, a suburb of Tema, the following were constructed: (a) road and drainage works; (b) water supply and ancillary structures; (c) liquid and solid waste facilities; and (d) security lighting. About 24,000 people benefitted from these facilities that resulted in property value increases. The provision of street lighting in Ashaiman also reduced significantly, the high crime rate in Ashaiman. In Tamale Ward E, basic infrastructure and services (roads, storm water drainage, water supply, power supply, solid waste collection points) were successfully completed benefitting about 13,000 inhabitants. About 765 affected residents were resettled in the adjoining Kaladan area, where similar facilities were provided. To reduce incidents of flooding, about 2.4km of drains were constructed in the Sakasaka area, and an additional lkm road now links the remote sections of this community to one of the arterial roads in the town. In Kumasi, about 3,830 mechanics and artisans have benefited from this scheme and studies have shown high increases in income of the artisans. New offices and workshops built under the project would be utilized by the Kumasi District Road Offices as their operational base for routine and periodic maintenance of urban roads, including roads financed under the project. There is adequate financial support from assemblies for O&M of the upgraded areas, including contributions from the beneficiaries in the form of increased property tax payments. The pilot component to train women in rural housing construction, normally a male dominated area, was successful and about 100 women were trained on two key projects at Essiakyir (in the Central Region) and Ashaiman (in Tema). Rehabilitation of the central sewerage in Tema comprised work on three pumping stations, sections of the trunk mains, retention basin, 1.6km submarine outfall sewer and 920meter domestic sewer. A laboratory and a new domestic waste treatment plant (oxidation ponds fitted with floating aerators) were constructed. -9.- Work defined in the SAR was completed to a very high standard. However, late identification of additional works, such as the replacement of permalon lining with clay and the parts of the industrial sewer pipes, have causecd the system not to function well. This has rendered the part of the system serving the industrial area inoperable, which largely explains the very low ERR for the sewerage component (section 4.3). Firancing for the completion of these remedial works have been provided under the on-going UESP (Cr. 2836) and wvork is expected to be completed by April 2000. Mllnicipal Revenue Mobilization: The property revaluation exercise was successfully completed in the five project towns, and billing and collection systems based or revised property valuations were installed. There has been a significant increase in the collection of own source revenue, far exceeding SAR expectations. The improved revenue mobilizaton and effective expenditure control has enabled assemblies to generate significant surpluses, providing much needed resources to help finance their O&M requirement as well as their capital programs. A table showing the improvement in revenue collection is included in Annex 7 (List of Supporting Documents). Land Administration: In support of land reforms the project assisted the establishment of a digitized registry mapping system and the formulation of a strategic plan for the Survey Department. Institutional support (technical assistance, training, vehicles and equipment) was provided to the Lands Commission, Survey Department, Deeds Registry. Land Title Registry and tvwo faculties of the University of Science and Technology (UST). Also, studies were carried out for a records storage and management system and a statistical survey of land titling activities for the land agencies, providing government with the basis for initiating major land reforms, including the merger of the deeds and title registries. Institutional Support to MLGRD: Construction of the local government training school in Accra anld rehabilitation of the local government training school in Tamale were successfully completed. Technical support was provided to the five assemblies for building capacity in the areas of planning, municipal engineering and municipal finance and to the LVB for property valuation. However, due to lack of capacity in the MLGRD some of the manuals have not yet been fully operationalized, and the MLGRD was not able to fully utilize the project to build its own internal institutional framework and provide capacity building support to the assemblies. Institutional Reform of Housing Parastatals: Extensive studies, carried out on the performance of three housing parastatals, Tema Development Corporation, State Hlousing Company and Architectural and Engineering Services Limited (AESL), led to downsizing and reorientation of efforts with the private sector in an attempt to make the three housing parastatals financially viable. There has been considerable improvement in TDC's performance, measured in terms of number of houses constructed in partnership with private developers and sites prepared for sale annually. The company has also been able to settle all tax liabilities and pay dividends to the Government, its major shareholder. As part of the reorganization, TDC staff were reduced from 450 to 310 over two years. TDC's commercial operations relating to delivery of serviced land and new housing made substantial progress (over 5,000 new houses). The sale of 1,000 existing TDC rental units through SSNIT and HEFC was initially frustrated by a court injunction initiated by the Tema Tennants Association but TDC made special arrangements with the Association and was able to sell over 3,000 rental units by close of the project. SHC was unable to obtain head leases from the Lands Commission and its internal bureaucracy adversely affected its operations. SHC could not compete in Accra, and therefore moved its operations primarily to the regions and districts where business was less active. SHC is now earmarked for divestiture. As part of the restructuring process, AESC, which had a monopoly of executing Government consultancy assignments, was incorporated as a limited liability company in 1995. It was downsized and its Hydro department was made autonomous. AESC now - 10- competes in the open market for consultant assignments and is fiancially viable. Housing Finance Component: The Home Finance Company was established eight years ago under the pilot housing finance component of the project. The component was an innovative scheme to create unsubsidized long-term finance for moderate income home ownership with the multiple goals of facilitating private investment in housing, helping to develop a market for large scale efficient production of housing, and strengthening the financial system by developing a long-term, low-risk financial asset. HFC is the first housing finance institution south of the Sahara in Africa which has established a viable index linked mortgage finance system. The pilot had a target of providing mortgages to 2,000 households; however, HFC actually issued 4,100 mortgages. BFC's young but dynamic management team has tapped the successful international experience in similar schemes and turned HFC into a highly successful company. HFC has issued about US$20 million equivalent of Cedi denominated inflation linked bonds providing SSNIT with its best performing asset over the period. It has also issued $4.5 million US denominated bonds, the first private corporate bond issue ever in Ghana. HFC's success can be measured in terms of (a) the enabling environment created for successful real estate development; (b) the increase in housing stock, particularly in Accra over the past six years; (c) the number of loans processed; (d) the financial structures and linkages established for mortgage financing; (e) the invaluable amount of data on the housing sector that has been collected over the years; and (f) the indigenous technical expertise developed under the project. However, HFC needs to double its volume of middle income mortgage operations to become financially viable from mortgage operations only. Overall, HFC is financially viable as it provides other financial services, including issuing and managing its own local and foreign currency bonds and providing mortgages to Ghanaians abroad wishing to buy houses in Ghana and to institutions to provide housing for their staff. As a result of the inability of the financial sector to respond to the construction finance needs of the developers, the housing finance component of the project was extended to provide continued support to HFC through the revised credit closing date of June 30, 1999. 4.3 Net Present Value/Economic rate of return: The economic objectives of the project 'were met. The overall ex post ERR for the project is 82%, compared to the SAR estimate of 44%. The weighted rate of return for all road and drainage works in Accra is 116%, as compared to the SAR estimate of 105%. The current ERR calculation was based on actual road traffic as of August 15, 1998. This information was obtained from traffic counts conducted on the rehabilitated roads, specifically for the purpose of this report, between July 18 and August 15, 1998. The road overlays presented the highest returns. This could be attributed to the fact that, even though overlays costs less per kilometer than new roads, its finish was of the same quality as the new roads. The rehabilitated roads also cost less per kilometer, however, the finished surface was not of the same quality as the asphalt concrete roads. Thus, its returns have been lower than the overlays. The urban upgrading works also presented high returns, ranging from 43% in Ashaiman compared to the SAR estimate of 37%; to 29% in Tamale as against 24% in the SAR. The ERR for Tema sewerage was computed to be 100% in the SAR. The current figure, based on the proposed tariff for sewerage, is 1% due to the exclusion of a major sector of the system serving the industrial area in the original design, and the current mal-functioning of the system. However, when the remedial works now being implemented under the ongoing UESP (Cr. 2836) is completed, the ERR will be 154%. 4.4 Financial rate of return: N/A - 11 - 4.5 Institutional development impact: The institutional component has helped equip implementing agencies with tools needed for their mandated work. The Assemblies have a permanent database for property valuation, while the LVB has demonstrated its capability for undertaking similar assignments in the future. The project provided an opportunity to use the services of local engineering consultants in designing and supervising the Accra roads and the Tema sewerage without any external technical assistance and with a satisfactory outcome. The HFC has been established as an exemplary, highly successful and sustainable housing finance institution. Project assistance was effective in helping to restructure the housing parastatals (especially TDC and AESL), into commercially viable entities which have established partnerships with the private sector. The MLGRD and the five project cities' assemblies benefitted from technical assistance and systems improvements to make their operations more efficient. The project was conceived at the initial stages of decentralization of management functions of Government to appropriate administrative levels. It provided considerable support in terms of clearer direction to the Assemblies. Some transitional inefficiencies in management were unavoidable. The Government admits to a continuing need for more assistance, particularly to the MLGRD, and the Bank's advice is sought via ongoing urban projects on how urban and decentralization problems might be tackled more effectively in the future. 5. Major Factors Affecting Implementation and Outcome 5. 1 Factors outside the control of government or implementing agency: These include (a) significant reduction in the water level in the Volta Lake due to lack of rainfall which caused serious power shortages adversely affecting the availability of key inputs, such as cement, required to complete some of the components involving civil works; and (b) poor contractor performance on the Kejetia redevelopment in Kumasi which led to the termination and contract re-award to another contractor delaying completion of this OPEC-funded component to February 2000. 5.2 Factors generally subject to government control: Chiefly among these are (a) procurement: there were delays with equipment procurement which was critical to the startup of the property valuation component; there were similar delays in obtaining government approval for the appointment of the Land Information Systems Advisor for the pilot land component (these were isolated cases, as procurement generally proceeded smoothly); (b) the failure to make timely release of countervart funds to meet Government's obligation under the project caused some delays which particularly affected the Kejetia redevelopment scheme co-financed by OPEC; (d) fiequent transfer of staff in the Assemblies, led. to erosion of some of the benefits of the training program; (e) delays related to land acquisition for construction of project facilities as in the case of the site for the MLGRD training school in Accra; and () resettlement cost and time overruns associated with relocation of utilities and possession of site for rcad and drainage works in Accra. There were similar delays in Tamale for payment of compensation to the affected residents of Ward E upgrading by the Tamale Municipal Assembly. 5.3 `actors generally subject to implementing agency control These include (a) cost overruns associated with the revision in design of Tema Sewerage project. The agency did not foresee the need to include the industrial area of Tema in the original design of the subproject; and (b) late completion of the Institute of Local Government Studies in Accra. The scope of the subproject was changed without consulting the Bank. Resolving this issue resulted in delays. - 12 - 5.4 Costs andfinancing: The total original cost of the project was US$100 million, financed as follows: IDA US$70 million (SDR 57.3 million), SSNIT US$16 million, cofinancing of US$10 million, and GoG US$4 million. The total US dollar amount however, increased to $110.2 million due to the following: (i) US dollar depreciation against the SDR increasing the total IDA contribution from US$70 to US$76.4 million; (ii) at the time of project preparation, the co-financiers had not been identified. When they were finally identified, OPEC and NDF each contributed US$5.9 million. The US dollar value of the NDF component of SDR4.5 million, subsequently depreciated increasing the total NDF contribution to US$6.1 million; and (iii) the SSNIT component remained at $16 million, while the total GoG budget increased to $5.8 million due to increased GoG counterpart funding on the Kumasi Kejetia component and further GoG commitments on the Accra Local Government Training School contract. The major project components with significant cost increases were (a) the Infrastructure and Environmental System rehabilitation and (b) the Housing Sector Reform which absorbed most of the exchange rate gains. The total increase of about US$5.46 million in the Infrastructure and Environmental System Rehabilitation mainly due to: (i) traffic management, and asphalt resurfacing/road rehabilitation works that were undertaken by Messrs. Sonitra Construction Ltd. on major roads in Accra, (ii) additional works on the Accra Local Government training school contract, and (iii) increase in the contract sum of the Tema sewerage project to accommodate cost of laterite filling material, the removal of ship-wreck and repair of 1.6km submarine sewer outfall to enable effluent to be discharged into the sea. The importation and haulage of laterite filling material for the Tema sewerage works became necessary because the original design assumed that material excavated from the site would be used for filling embankments, which proved to be unsuitable. During the repair of the 1.6km sewer outfall, it was discovered that a sunken vessel was sitting on part of the pipeline and a specialized subcontractor was called from Portugal to remove the vessel. It is worth noting that the original design of the Tema sewerage project had envisaged the discharge of treated effluent into the nearby Sakumo lagoon but the Environmental Impact Assessment report recommended that the effluent be discharged into the sea instead. This was to avoid any possible pollution of the lagoon which had been earmarked as Ramsar site. Subsequently, a 920-meter domestic sewer outfall, with 50 meters protruding into the sea surf zone was constructed at a cost of US$560,000. The IDA-supported Ghana Environment Resource Management Project (GERMP, Cr. 2426) which had been promoting the Ramnsar site project co-financed the construction work of the sewer outfall at a cost of US$435,000. The US$2 million increase in cost of the housing finance component was due to (i) the construction of about 200 houses under a special construction finance facility which was converted to HFC mortgages, and (ii) the increase in cost of the Kumasi Suame Industrial upgrading contract to accommodate additional works (streetlighting, drainage, etc.). The pilot scheme had assumed that construction finance, being of a short term nature, would be adequately provided by the banks in Ghana but this was not the case, as the banks did not offer any significant funding due to the fact that, Government treasury bills offered attractive yields. 6. Sustainability 6.1 Rationale for sustainability rating: Sustainability is likely to be achieved. Considering the positive trend in revenue build-up in all the Assemblies, the foundation for putting them on a sound financial footing has been laid. More needs to be - 13 - done to continue to develop prudent and accountable financial practices, and support is being provided under follow-on projects approved in 1994 and 1996, Local Government Development Project (LGDP, Cr. 2568) and UESP (Cr. 2836). Also, the establishment of training facilities in Accra and Tamale has strengthened MLGRD's role to provide support to the DAs for capacity building. There is a sound program in place for operation and maintenance of roads and drainage to ensure sustainabilily supported by proceeds fiom the Road Fund (from levies on fuel). Since the beginning of 1997, funds have been allocated to DUR on a quarterly basis from the Road Fund (about US$20 million annually) for the routine and periodic maintenance of the urban road network in the five metropolitan assemblies in the country, and the maintenance work have beeni effectively done by the private sector. The OUR is committed to the establishment of an effective -maintenance culture, and a maintenance mranagement system for assessing annual work load and allocating available funds according to given priority levels has been installed in each of the DRUs of the five assemblies. An Infrastructure Maintenance Fund has been put in place to generate an amount of $300,000 annually for the operation and maintenance of the Tema Sewerage Project, and a maintenance manual has already been prepared through a collaborative effor1: of Tema Municipal Assembly (TMA), NILGRD, the consultants and suppliers, with inputs from the Bank. For the Tema sewerage project, (TMA) has effectively increased tariffs for domestic sewerage by 100%. The industrial sector will be expected to meet its increased share of the cost of operations and maintenance when the works on the pumping station and the industrial sewer have been rectified under the ongoing UESP. Anticipated revenue from industries constitutes about 80% of the total revenue accruing to the se werage unit. Sustainability of the entire system is therefore dependent on completion of the remedial works. The housing finance system has developed into one of the most innovative and successful private financial institutions in Ghana, and its sustainability is highly likely. It has achieved a record of steady growth in professional staff, revenues and profits, and a sustainable level of operations. However, it needs to at least doulble in size to achieve the economies of scale that would provide an appropriate return to shareholders. This will require continued access to real rate, long-term resources. Additionally, now that Ghanaians have accepted the principle and discipline of repayment of full loarn balances, future borrowers need to move towards market-determined mortgage terms. This would allow HFC to operate on a basis that is less dependent upon special funding and move towards a market basis of institutional funds and possibly retail deposits. Sustainability of the land administration component is uncertain, but the difficulty surrounding this uncertainty is going to be addressed under the proposed Urban 'V project. During the project, the steering committee on the pilot land component recommended the merger of the Lands Title Registry and the Deeds Registry, but this could not be achieved due to poor interagency collaboration. A new Government Land Policy, based on an Urban Administration Study, sponsored by the Ministry of Lands & Forestry and the World Bank in May 1998, supports the merger and involvement of the private sector in the delivery of titles. The Urban V project will be used to facilitate implementation of the key elements of the policy, including the merger of the lands title and deeds registries. A table of the sustainability considerations of physical works completed under the project is part of the list of supporting documents. 6.2 Transition arrangement to regular operations: The Metropolitan/Municipal Assemblies will be responsible for future operation and maintenance of the - 14 - physical outputs of the project. Road and drainage elements will be taken over by the Assemblies' DRUs. A maintenance management system, established in the DRUs, has put in place a suitable basis for planning maintenance activities. There are already indications of its benefits spreading to other Departments. The City Treasurer's Department will be responsible for continued revenue collection and financial management. Sound revenue bases have been established in the five Assemblies. High speed computers have been installed to assist computerization of the billing system, and store data on property valuation. The surpluses in income over expenditure recorded by most of the Assemblies, if continued, will enable the District Assemblies (DAs) to increase allocations for operation and maintenance and investments. Sanitation, sewerage and solid waste facilities will be maintained by the Health Department and buildings will be maintained by the City Engineer's Department. Other beneficiary agencies, such as the Survey Department, LVB, Lands Commission, Land Title Registry, EPA, DUR and TSC, will build on the projects foundations to develop actions and measures aimed at reaching their institutional goals. These agencies have been strengthened through provision of plant and equipment, technical assistance including financial, technical and management training and exposure to good practices elsewhere. Although the present managers appear to be capable, the agencies are young, in the new era of decentralization, and would therefore require continued support. 7. Bank and Borrower Performance Bank 7.1 Lending: The Bank prepared this project in full consultation and collaboration with the Borrower. The project evolved during the implementation of ADRP (Cr. 1564) and PWP (Cr. 1874), as a priority for the sector and the country, according to the 1989 Urban Sector and Housing Sector Reviews. It incorporated lessons from the ADRP, especially with respect to the financial management system as well as valuable implementation experience of the PWP. There were delays in project processing: (a) eleven months lapsed between Board approval and effectiveness; and (b) difficulties were experienced identifying co-financiers (OPEC and NDF formally gave their consent in 1993, while the respective loans became effective in 1995). Board processing delays did not affect the project as designs were still ongoing, but delays due to the availability of co-financiers affected the Kumasi Kejetia contract and the NDF procurement of waste management component. 7.2 Supervision: During the initial stages of implementation a high supervision input was required because of the administrative complexity, and the geographical spread of the project. There were an average of three supervision missions in each of the first three years of implementation. From 1993 onwards, in addition to a minimum of two formal supervision missions, the project was supervised on a continuous basis by the Task Manager, based at the Resident Mission in Accra. With respect to the supervision content, the project was rated S throughout its implementation period. The implementing agencies recognized the value of a disciplined framework of regular progress review, accompanied by short-term, time-bound action plans and fully collaborated with Bank supervision missions. Working relations with the Ghanaian staff were cordial and highly productive. - 15 - 7.3 Overall Bank performance: Overall the Bank's performance was satisfactory. Borrower 7.4 Preparation: The Government preparatory work for the project was very satisfactory. As part of the Economic Recovery Program (ERP) launched in 1983, the Government took measures to encourage greater local government autonomy and to decrease their reliance on the national budget. The project was subsequently conceived at the initial stages of decentralization and received support from the highest level of Government, through an Inter-Ministerial cabinet committee set up with oversight responsibilities to ensure smooth implementation (the Chairman of the then Committee of Secretaries showed direct interest and full cornmitrnent to the preparatory work). The Project Coordinating Committee (PCC) and Metropolitan/District Steering Committee (MDSC) were also established to oversee project preparation at the Agency and Metropolitan Assembly levels, and the Bank mission attended some of the PCC meetings before credit effectiveness. Three separate and distinct implementing agencies were on hand to handle the major financial, operational and managerial aspects of the project, and the entire Borrower's team fully participated with the Bank during project preparation. The TMA and MLGRD saw to the availability of land for the construction of the Tema Sewerage projects. All studies that were carried out prior to project preparation had strong Government ownership, and the Banik also received copies of previous studies that had been carried out by the Government which was useful for the preparatory work. The Government's environmental monitoring agency, the EPA, was effective in engaging consultants to carry out assessment of the major EIA reports before bidding and award of contracts. 7.5 Government implementation performance: Government's performance during project execution was satisfactory. The project was implemented during its iirst four years within a sound macro-economic framework, but a serious downturn of economy in 1995 arising out of high interest rates, high inflation and depreciation of the Cedi affected some aspects of the project, namely, the housing finance component and the increased cost of construction materials. While HFC resolved the former by arranging a cap on interest rates with SSNIT and the Government, the increase in construction materials was largely resolved by application of the price adjustment formula in the contracts. Generally, the real Cedi depreciation against the US dollar was higher than the SAR forecast, but this did not affect the foreign currency contracts. The record of four Ministries, three implementing agencies, five metropolitan/municipal authorities and six other agencies involved in the execution of the project was generally satisfactory. Transfer of trained staff to other non-participating metropolitan assemblies affected the capacity building efforts of the project. Government appointed experienced managers for the three key implementing agencies at the beginning of the project and the key staff were stable with very negligible turnover. There was little Government interference in the management and day-to-day operations of the project. Problems that arose related to the timely release of counterpart funds on the Kumasi Kajetia project which was co-financed by OPEC, and land acquisition for the construction of the local government school in Accra. These led to implementation delays, but were largely resolved through constant dialogue, consultation and interaction between Bank and GoG staff. - 16 - 7.6 implementing Agency: The performance of the three key implementation agencies (TSC, DURM EC) was very satisfactory in the execution of a relatively complex multi-agency project with many components and financiers. The DUR, set up under the previous ADRP (Cr. 1564), was responsible for the reconstruction and rehabilitation of roads in Accra and Kumasi, HFC dealt with the pilot housing finance component, and TSC, the lead agency also set up under ADRP, with experience under the PWP, handled all the remaining components of the project. The performance of the other agencies and assemblies was generally satisfactory. The specific performance of each of the three key implementation agency is highlighted below. Technical Services Centre: The TSC, as the lead implementation agency for the project with overall procurement, financial management and reporting functions, performed very well throughout the project. TSC ensured compliance with all project covenants and submission of progress and audit reports on a timely basis. With the exception of the housing finance and roads components, the TSC handled all remaining components of the project and performed creditably. Management stability guaranteed a stable administrative and financial capacity during project implementation. Apart from the Director, who resigned midway through the project, the entire team was in place throughout the project. The experience gained by the staff in the execution of this, and the previous projects made it possible for staff to prepare the Local Government Development Project (Cr. 2568) and the Urban Environmental Sanitation Project (Cr. 2836). Department of Urban Roads: The DUR was responsible for the operational and financial management of the roads components in Accra and Kumasi. Performance was satisfactory. It was headed by a Director who was a public servant and recruited specifically to oversee the preparation and administration of the project. The staff consisted of a core group of civil servants, mostly recruited immediately after graduating and performed very creditably. Technical assistance was provided to the team at the initial stages of the project by the recruitrnent of three key Ghanaian contract staff to provide financial management, engineering and procurement capacity to the team. Apart from the Director who sought leave-of-absence to establish a similar roads agency under a Bank project in East Africa, the core staff remained throughout the project. The experience gained by the staff made it possible to prepare the followup Urban Transport project. Home Finance Company: EfC's performance in project implementation has been very satisfactory. The HFC was established in 1991 under the project to float the mortgage-backed housing bonds which were subscribed by GoG, SSNIT and Merchant Bank. It was initially structured to be managed by a Merchant Bank as one of its subsidiaries but later, as it became clear that housing finance was different from the bank's main line of business, the shareholders accepted to set up HFC as a separate institution by increasing its stated capital. It was listed on the Ghana stock exchange in March 1995 by offering 25% of its shareholding to the public, and in early 1998, the Government sold its shares in the company. Today, the company is owned by 472 shareholders, but it is still dominated by SSNIT, Merchant Bank, Bank of Ghana, Ghana Union Assurance and other institutions who together hold up to 97%. HFC has made a profit since its second year of operation and has consistently paid dividend to shareholders. Although there was no previous staff or Bank experience with housing finance in Ghana, the new management used their private sector experience and relied on technical assistance, provided under the project through similar successful institutions in Asia and USA, to make the component one of the most successful. The administrative and financial management capacity of NEC is sound to sustain the operations of the company. At a critical point of the project (1995) when there were threats of mass default due to very high inflation levels (70% as against design of 20%), a review of the Consumer Price Index - 17- (C;Pl) was made which resulted in the temporally capping of indexation. The terms of the bond were renegotiated with the lenders and this restored confidence in the mortgage. In addition to the headquarters of HFC in Accra, branches in Kumasi and Tema are now well established and are doing brisk business in selling savings products, i.e., the Unit Trusts and the informal sector savings scheme. HFC expects the mortgage business in Kumasi to significantly increase when developers start delivering houses that meet market requirements. Apart from the pilot scheme, the company provides for other mortgage products financed with loans from institutions. BFC also manages the HFC Unit Trust and the HFC Real Estate Investment Trust, from which it earns fee income. The balance sheet of HFC as at March 31, 1999 showed a total assets of Cedis 90 million, equivalent to about US$40 million. Liabilities are in the form of bonds and owners fund. 7.7 Overall Borrower performance. The performance of each implementing agency involved in the project was satisfactory. Key staff of implementing agencies showed commitment to the objectives of the project and worked hard to improve the:ir own skills. The complex nature of the project demanded a high level of coordination and attention to details. Procurement procedures were adjusted with the Government's approval requirements, and a high standard of reporting was maintained throughout the project. The Bank was kept informed of all critical developments and, in most cases, proposed solutions to problems. With the experience gained by staff and Agencies, it was possible to prepare and implement follow-on projects (UTP, LGDP, and UESP) more efficiently and effectively. The issue of counterpart funding now receives more attention in the Ministry of Finance, but still remains an issue. 8. Lessons Learned Key lessons learned from the project are as follows: 1. In the absence of adequate monitoring capability in the lead Ministry, a multisector project involving many implementing agencies can be successfully implemented through a proper institutional support mechanism. The success of the Urban II project has been largely due to the adequacy of the supporting infrastructure within the implementing unit. 2. An unsubsidized mortgage housing finance system is viable in a developing country in the medium to long term if the design takes account of local conditions, including the choice of appropriate management, loan indexation mechanism and streamlining of foreclosure laws. The success of HFC is attributed to its dynamic leadership, which helped build a very capable management and technical team, tapped into successful international experience, coordinated activities of developers, land holders, financial intermediaries and land titling institutions to ensure that housing production, delivery, titling and financing were properly facilitated. 3. Large civil contracts involving foreign construction firms must use the services of Claim Specialists to facilitate better contract management and minimize claims and have the work executed efficiently. The success of DUR in implementing the Accra Roads project was partly due to the considerable time and effort the senior management staff devoted to analyzing and negotiating claims submitted by the contractor. This at times over-extended their capacity to perform substantive activities until they contracted the services of a Claims Specialist. 4. By designing civil works packages to encourage participation of local consultants to help build local capacity, local consulting firms can provide competitive design and supervision support. Design and supervision of the Accra Roads, Tema Sewerage and indeed all civil works sub-projects were undertaken by local consultants without any external technical assistance. - 18 - 5. The key to ensuring project sustainability is to strengthen municipal capacities. The maintenance of infrastructure, presently carried out by the Metropolitan and Municipal Assemblies, is still done in an ad hoc manner. Municipal financial resources, including transfers and own-source revenue, are often inadequate for pursuing maintenance in a systematic manner. It is therefore important to recognize that local governments need to be encouraged to further develop technical and managerial capacity for long-term investmnent programming as well as resource mobilization through improved user charges, tax levies and collection. Under the project, a strong tax base and billing and collection system has been established for the five Assemblies. 6. The rate of transfer of trained staff in the Metropolitan assemblies affected the capacity building efforts of the project. The Controller and Accountant General, who is responsible for posting finance staff to the DAs, has recently agreed that in future Finance Officers within project assemblies will be rotated within the participating assemblies during a project. 7. Borrowers should identify cofinanciers at the time of project preparation so that respective loans become effective on time. The effectiveness of OPEC and NDF loans in the fourth year of the project adversely affected implementation of the respective components. Also, the existence of unrealistic funding arrangements can lead to undue delays, as in this case, Government was committed to providing about 27% of the cost of the component financed by OPEC, including the foreign exchange portion, but was unable to meet its commitment. 8. The absence of a broad development framework and a sectoral development strategy including lack of strategyforfiscal decentralization, points towards the need for a development framework as has been done under the Urban V Project. In addition, the Urban V project has followed a demand-driven approach. 9. Partner Comments (a) Borrower/implementing agency: Borrower reviewed a copy of the draft ICR and is in agreement with what has been prepared. A copy of their ICR is available as part of the list of supporting documents (Annex 7). (b) Cofinanciers: A copy of the draft was sent to the cofinanciers, OPEC and NDF, for their review, but no feedback was received. (c) Other partners (NG Os/private sector). 10. Additional Information - 9 Annex 1. Key Performance Indicators/Log Frame Matrix Outcome I jmpact Indicators: Reduction in population living below poverty level in communities being upgraded. Increase in property values (by 70% in Ashaiman; by 34% in Tamale, Ward E; by 100% in Kumasi Central Market Increase in roads capacity and improvement in traffic management. Inr.rease access to affordable housing. Lcwer cost and increase output of housing. Create productive employment L__ Oiatput Indicators: 1. Road & Transport Systems Mgmnt Road Rehabilitation in Accra Jan. 1994 (23.9km) Jan. 1995 (19,2) - Traffic Mgmnt at Kadjetia Jan. 1994 Ongoing (Cofin. extended to 12/99) - Traffic Mgmnt at Market Circle, Takoradi Jan. 1994 2. nfrastructure Improvements- Tamale June 1998 - Ward E Ulpgrading Oct. 1997 June 1998 - Road Rehabilitation Oct. 1997 June 1998 - Drainage Rehabilitation Oct. 1997 3. Sewerage System Rehabilitation March 1996 August 1996 4. Central market Improvement, Ksi Jan. 1992-Jan. 1994 Ongoing (Cof in. extended to 12199) 5. Waste Management System Dev. Oct. 1992-Oct. 1994 June 1998 6. Valuation of Properties -Target Valuation Properties in Kumasi Jan. 1990-June 1991 (40,000) Dec. 1993 (39,071) -Target Valuation Properties in SAEMA Jani. 1990-June 1992 (30,000) Dec. 1993 (25,578) - Target Valuation Properties in Tamale Jan. 1990-June 1993 (17,000) Dec. 1993 (20,000) 7. Revenue Mobilization - Nominal % increase in Prop. Tax Rev. 691% 1171% 1988-1996 Accra - Nominal % increase in Prop. Tax Rev. 426% 893% 1988-1996 Kumasi - Nominal % increase in Prop. Tax Rev. 718.60% 2341% 1988-1996 SAEMA - Nominal % increase in Prop. Tax Rev. 272.70% 614% 198&-1996 Tema - Nominal % increase in Prop. Tax Rev. 920% 2460% 1988-1996 Tamale - Nominal % increase in int. Rev. 186% 2855% 1986-1996 Accra - Nominal % increase in Int. Rev. 108% 560% 1988-1996 Kumasi - Nominal % increase in Int. Rev. 199% 1049% 1988-1996 SAEMA - Nonminal % increase in Int. Rev. 184% 1513% 1988-1996 Tema Nlominal % increase in lnt. Rev. 162% 560% |1983-1996 Tamale -20 - 8. Land Administration - Issue titles to land in Accra & Kumasi Jan. 1991-Dec. 1993 (1000) June 1997 (310) - Large scale photomapping in Accra 180 sq. km. 250 sq. km - Large scale photomapping in Kumasi 220 sq. km. 250 sq. km. 9. Ministry of Local Government Support - Completion of Training Schools in Accra Jan. 1991-Dec. 1993 June 1998 & Tamale - Training Program Development Dec. 1991 Not Done - Establishment of LGPSU Dec. 1991 June 1993 10. Urban Upgrading - Upgrading benefiting 24,000 residents in April 1991-April 1993 March 1995 Ashaiman - Upgrading benefiting 300 artisans in March 1992-March 1994 February 1997 Suame - Training of 100 women in construction April 1991-April 1993 February 1995 11. Study on 5,000 GOG owned Jan. 1991-Jan. 1992 December 1993 uncompleted houses 12. Study on Inst. Reform of AESC, SHC, June 1992 June 1992 TDC & TSC 13. Pilot Project to finance mortgages Jan 1991-December 1993 (3,000) Dec.1997 (3083 II. Modified Indicators 1. Additional Road Rehabilitation in Accra July 1, 1998 (31.7 km) July 1, 1998 (49 kmn) End of project - 21 - Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Local Government Sector Rehabilitation - Infrastructure and Environment System Rehab. 5 cities 43.09 73.34 57 - Municipal Revenue Mobilization 1.34 0.54 2 - Property Revaluation 1.45 1.05 2 - Land.Administration 1.68 1.78 2 - MLG Support 2.53 0.60 3 Housing, Sector Reform 25.40 32.63 34 Total Baseline Cost 75.49 109.94 Physical Contingencies 8.57 Price Contingencies 16.34 Total Project Costs 1.00.40 109.94 Total Financing Requirad 100.40 109.94 Profect Costs by Procurement Arrangements (Ap raisal Estimate) (US$ million equivalent) _- Tha ei . ;.oi,. _,.. 1. Works 44.90 230 2.80 0.00 50. 0 (39.90) (2.20) (0.10) (0.00) (42.20) 2. Goods 4.70 0.00 5.10 0.00 9.80 ._______________________ (2.90) (0.00) (0.80) (0.00) (3.70) 3. Services 0.00 0.00 15.10 0.00 15.10 (0.00) (0.00) (14.90) (0.00) (14.90) 4. Miscellaneous 0.00 0.00 3.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Housiing Line of Credit 0.00 0.00 25.50 0.00 25.50 (0.00) (0.00) (9.30) (0.00) (9.30) 6. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 49.60 2.30 48.50 0.00 100.40 (42.80) (2.20) (25.10) (0.00) (70.10) -22 - Project Costs by Procurement Arrangements (Actual/Latest Estimate)(US$ million e Vvalent) X _ _~~~~~~~~~~~ Tola Co$t 1. Works 49.12 2.45 2.37 3.83 57.77 (43.91) (2.32) (0.21) (0.00) (46.44) 2. Goods 4.35 0.00 1.15 5.87 11.37 (4.13) (0.00) (0.98) (0.00) (5.11) 3. Services 0.00 0.00 12.01 0.52 12.53 (0.00) (0.00) (11.29) (0.00) (11.29) 4. Miscellaneous 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Housing Line of Credit 0.00 0.00 0.00 25.68 25.68 (0.00) (0.00) (0.00) (12.34) (12.34) 6. Miscellaneous 0.00 0.39 1.26 0.00 1.65 (0.00) (0.38) (1.16) (0.00) (1.54) Total 53.47 2.84 16.79 35.90 109.00 (48.04) (2.70) (13.64) (12.34) (76.72) ' Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies 21Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. Project Financing by Coponent (in US$ million equivalent) Percentage of Appraisal Component Ap raisal Estimate Actual/Latest Estimate L__al _overn _eat S:ctor Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF. Local Governmient Sector 0.0 0.0 0.0 Rehabilitation - Infra. & F>nv. System 49.38 4.10 9.80 59.42 4.50 10.04 120.3 109.8 102.4 Rehab - Municipal Revenue 1.33 0.05 0.00 0.54 0.00 0.00 40.6 0.0 0.0 Mobilization - Property Revaluation 1.40 0.05 0.00 0.98 0.07 0.00 70.0 140.0 0.0 - Land Administration 1.64 0.04 0.00 1.71 0.07 0.00 104.3 175.0 0.0 - MLG Support 2.45 0.06 0.00 2.87 0.60 0.00 117.1 1000.0 0.0 Housing Sector Reforn 13.80 16.20 0.00 15.77 16.00 0.00 114.3 98.8 0.0 Total 70.00 81.29 116.1 0.0 0.0 -23 - Annex 3: Economics Costs and Benefits APPRAISAL ESTIMATE ACTUAL 1998 _ Sensitivity Analysis Sensitivity Analysis COMPONENTS ERR ERR ERR ERR ERR ERR BASE w/cost with benefits BASE with/cost with ben. CASE up 20% less 20% CASE up 20% less 20% LOCAL, GOVT. REHAB. &B REFORM Road & Transport Systems Mngmt. Accra Roads 105 116 98 106 Kumasi Kejetia Rd & Drg. 33 0 0 Sekondi-Takoradi Rds. & Drainage 345 0 0 Enviror.menta1 Systems Rehab. Tamale Drainage Tamale Roads 55 Tamale Ward E Upgrading 23.9 29 8 0 Tema Sewerage Rehabilitation 226 1 0 0 Kumasi Ce.ntral Market 107 Waste Management Systems Vehicle Equipment & Workshops Technical Assistance Training DUR Support EPC Support Municipal Revenue Mobilization Property Revaluation Land Administration 2 MLG Support HOUS1IG SECTOR REFORM Ashaiman Upgrading Ph. 2 37 43 28 25 Suamne NMagazime UJpgrading 49 23 21 Weigthed Average ERR 43.5 82 -24- ECONOMI ANALYS FOR RADWORKS SAR ESTIMATES ACTUAL SENSITIVITY ANALYSIS Read Name Estimated Cost ERR Actual Cost ERR Expected ERR % ADT (USS) % ADT (USS) ___ Value ZERO TRAFFIC 20% COST GROWTH INCREAStS Kanda Highway/Castle Rd. 7,116,700 49 42,368 18,518,000 64 38.71 56 56 Patrice Lumumba Road 1,260,000 74 25,120 310,760 1376 13.97 1400 1143 Darkuman Road 1,970,000 55 13,264 4,286,872 56 7.84 42 50 Kwashieman Road 790,000 176 18,848 2,289,000 64 4.79 60 57 DansomanVSakaman Road 2,926,700 26 14,032 5,210,000 49 8.34 27 44 Total & Weighted Av. ERR 30,614,632 74 74 63 64 ADDITIONAL WOIRKS Newtown Area Roads 3332 763,050 230 29.05 229 192 Kokomlemle Area Roads 4710 466,830 407 31.45 406 340 Osu Area Roads 6048 518,780 620 53.25 619 517 Royalt Castle Road 11,634 218,680 614 22.23 613 512 Eduardo Modhlana 11,880 985,780 417 68.05 416 348 Spintex Road 12,960 424,770 504 35.44 500 420 Ring Road 47,616 214,288 276 9.79 274 230 Nima Highway 11,634 213,138 165 5.82 158 139 High Street 21,266 255,545 815 34.48 810 680 Ouggisberg Avenue 22,036 267,259 137 6.06 136 114 Mantse Boi Street 8,648 62,860 383 3.99 378 321 Lokko Road 15,104 66,590 872 9.61 860 728 Farrar Avenue 9,884 81,310 547 7.36 546 456 Cantonments Road 20,288 176,010 552 16.08 551 460 1,325,515 Total & Weighted Av. ERR 6,040,405 333 333 240 201 Overall Weigthed ERR 36,655,037 116S 116 92 87 Annex 4. Bank Inputs (a) Missions: Montb/Y'"'-''ear Cout Spealt Prgrs Objecti''ve Id en tifica ti on/Pre;; paration 7 1 UP, 1 PA, 5 CON 11/88 10/89 10 2 UP, 1 PA, 1 EC, I LIS, 1 OA, 4 CON AppraiisallNegotiationl 01190 8 I1UP,I1FA,I1EC, 1OAA CON Supervision 07/90 3 2 EN, 1 FA HS HS 11/90 3 2 EN,1I FA 01/9:1 6 2 EN,U2 CON, IUP, I FA HS CS 05/91 2 1 EN, IFA HS US 10/91 4 2 EN, I FA, I HE 021/92 3 EN, I FA, 11C, S IS 07/92 4 2 EN, IUP, IFA S HS 121/92 2 1EN,1PA S HS 71/93-294 4 2 EN, 1 PA, 1 CON S HS 06/94 4 2 EN, I HF,1UF S S 02/95 4 2 EN, IUP, IUF S S 10/95 3 2EN, I UP 03196 3 2 EN, I UP, I T S S 04/97 2 I EN, I F S S 02/98 2 1EN, 1 UF S S 04/99 2 1 EN, 1 UF S S ICR 10/99 2 1 TL, I EN S S EN - Muniicipal/Civil Engineer; TL - Team Leader; FA - Financial Analyst, UF - Urban Finance; UP - Urban Planner; TS - Training Specialist; CON - Consultant; EC - Economist; OA - Operations Analyst; HF - Housing Finance; LIS - Land Information System (b) Staff: [~ ~ Stg f Proec Cy Acta/Lae Estimat Identification/Preparation 133.9 251.9 Appraisal/Negotiation 41.3 82.7 Supervision 148.1 289.7 - 26 - 1 ICR _ Not yet available Not yet available Total _ 1 323.3 1 624.3 - 27 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (Il-=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating LO Macro policies f1Sector Policies OH *SUOM ON ONA f- Physical O H *SUOM O N O NA N Financial O H *SUOM O N o NA M Institutional Development 0 H 0 SU O M 0 N 0 NA FE, Environmental 0 H *SUOM O N O NA Social F Poverty Reduction O H *SUOM O N O NA Z Gender OH OSUOM ON ONA LI Other (Please specify) L] Private sector development F Public sector management O H O SU *M O N 0 NA E] Other (PIlease specify) -28 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6. 1 Bank performance Rating • Lending OHS OS OU OHU F Supervision OHS OS Ou OHU F Overall OHS *OS O U O HU 6.2 Borrower performance Rating I Preparation OHS OS O U O HU • Government implementation performance O HS O S O U 0 HU F Implementation agency performance O HS 0 S 0 U 0 HU N Overall O HS OS O U O HU -29 - Annex 7. List of Supporting Documents 1. List of Studies included in Project 2. ICR Mission Aide Memoire 3. Borrower's ICR 4. Completion Report by Housing Finance Company (HFC) 5, Evaluation of Physical Works - Inventory of Activities 6.. Evaluation of Physical Works - Sustainability Considerations 7. Financial/Economic Evaluation of District Assemblies - 30 -