AFRICAN DEVELOPMENT BANK

ZAMBIA

LUSAKA SANITATION PROGRAM - CLIMATE RESILIENT SUSTAINABLE INFRASTRUCTURE PROJECT

APPRAISAL REPORT

OWAS DEPARTMENT June 2015

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TABLE OF CONTENTS

Currency Equivalents .................................................................................................................. i Fiscal Year .................................................................................................................................. i

Weights and Measures ................................................................................................................ i Program Summary .................................................................................................................... iv

I – STRATEGIC THRUST AND RATIONALE ...................................................................... 1 1.1 Program linkages with country strategy and objectives ............................................. 1

1.2 Rationale for Bank’s involvement .............................................................................. 1 1.3 Donor Coordination .................................................................................................... 2

II – PROJECT DESCRIPTION ................................................................................................. 3 2.1 Project Objective......................................................................................................... 3

2.2 Technical solution retained and other alternatives explored ...................................... 4

2.3 Project Type ................................................................................................................ 5

2.4 Project Cost and Financing Arrangements ................................................................. 5 2.5 Project’s target area and population............................................................................ 7 2.6 Participatory process for project identification, design and implementation ............. 7 2.7 Bank Group experience and lessons reflected in program design .............................. 8

2.8 Program’s performance indicators .............................................................................. 8

III – PROGRAM FEASIBILITY .............................................................................................. 9

3.1 Economic and financial performance ......................................................................... 9 3.2 Environmental and Social Impacts ............................................................................. 9

IV – IMPLEMENTATION ..................................................................................................... 13 4.1 Implementation Arrangements ................................................................................. 13

4.2 Procurement Arrangements ...................................................................................... 13

4.3 Financial Management and Disbursement Arrangements ........................................ 13 4.5 Governance ............................................................................................................... 15 4.6 Sustainability ............................................................................................................ 15

4.7 Risk management ...................................................................................................... 16 4.8 Knowledge building .................................................................................................. 16

V – LEGAL INSTRUMENTS AND AUTHORITY .............................................................. 17 5.1 Legal instrument ....................................................................................................... 17

5.2 Conditions associated with Bank’s intervention ....................................................... 17 5.3 Compliance with Bank Policies ................................................................................ 18

VI – RECOMMENDATION ................................................................................................... 18

i

Currency Equivalents As of April 2015

Currency Unit = US Dollars

1 UA = USD 1.40

1 USD = ZMW 7.40

1 UA = ZMW 9.70

Fiscal Year January 1

st – December 31

st

Weights and Measures

1 metric tonne (t) = 2,205 lbs.

1 kilogramme (kg) = 2.205 lbs.

1 metre (m) = 3.281 ft.

1 kilometre (km) = 0.621 mile

1 square kilometre (km2) = 0.386 square mile

1 hectare (ha) = 0.01 km2

= 2.471 acres

ii

ACRONYMS AND ABBREVIATIONS

AfDB African Development Bank Group MGCD Ministry of Gender and Child Development

ADB African Development Bank NCB National Competitive Bidding

ARAP

Abridged Resettlement Action Plan

NUWSSP

National Urban Water Supply and

Sanitation Program

CCA Climate Change O&M Operation and Maintenance

CLTS

Community Led Total Sanitation

PID Project Implementing Department

CP Cooperating Partner RBCSP Result Based Country Strategy Paper

DFID Department For International

Development R-SNDP Revised Sixth National Development Plan

DHID Department of Housing and

Infrastructure Development SA Sustainability Agreement

EIB European Investment Bank SAG Sector Advisory Group

ESMP Environmental and Social Management

Plan SEA Strategic Environmental Assessment

GIZ German Agency for Technical

Cooperation SESA

Strategic Environmental and Social

Assessment

GRZ Government of Republic of Zambia SOMAP Sustainable Operation and Maintenance

Program

HH House Hold TA Technical Assistance

KfW German Government through the

German Bank for Development UA Unit of Account

ICB

International Competitive Bidding UNICEF United Nations Children's Fund

IMS Information Management System USAID United States Agency for International

Development

IPR Implementation Progress Results USD US dollar

IWRM Integrated Water Resources Management WASHE Water, Sanitation and Hygiene Education

JASZ Joint Assistance Strategy for Zambia WB World Bank

JICA Japan International Cooperation Agency WSS Water Supply and Sanitation

LCC Lusaka City Council Water Sector Cooperating Partner Group

LWSC Lusaka Water and Sewerage Company Zambia Environmental Management

Agency

MCC Millennium Challenge Corporation WSCPG

MCDMCH Ministry of Community Development,

Mother and Child Health ZEMA

MDGs Millennium Development Goals

M&E Monitoring and Evaluation

MLGH Ministry of Local Government and

Housing

MMEWD Ministry of Mines, Energy and Water

Development

MOE

Ministry of Education

MOF Ministry of Finance

MOH Ministry of Health

MOU Memorandum of Understanding

iii

Loan and Grant Information

Client’s Information

BORROWER: Republic of Zambia

EXECUTING AGENCY: Lusaka Water and Sewerage Company

Financing plan

Source Amount (UA) Amount (USD) Instrument

ADB 35.53 million 50 million Loan

WB 46.18 million 65 million Loan

GRZ/ LWSC 9.12 million 12.83 million Counterpart

Contribution

TOTAL COST 90.83 million 127.83 million

ADB’s key financing information

LOAN

Loan currency USD

Interest type Enhanced Variable Rate Spread Loan

Interest rate spread Floating Base Rate + Funding Margin + Lending

Spread

Funding Cost Margin 1

Lending Spread 60 basis points (0.60%)

Commitment fee None

Repayment Semi-Annual

Tenor 20 years

Grace period 5 years

EIRR (base case) 17.01%

Timeframe - Main Milestones (expected)

Project approval June 2015

Effectiveness November 2015

Completion December 2019

Last Disbursement Deadline December 2020

Last repayment December 2040

1 The six-month adjusted average of the difference between: (i) the refinancing rate of the Bank as to the borrowings

linked to 6-month LIBOR and allocated to all its floating interest loans denominated in USD; and (ii) 6-month LIBOR

ending on 30 June and on 31 December. This spread shall apply to 6-month LIBOR which resets on 1 February and on 1

August. The Funding Cost Margin shall be determined twice per year on 1 January for the semester ending on 31 December

and on 1 July for the semester ending on 30 June.

iv

Program Summary

1. Overview: The Lusaka Sanitation Program aims to increase access to sustainable sanitation

services to Lusaka’s residents especially the urban poor and strengthen Lusaka Water and Sewerage

Company’s (LWSC) capacity to manage sanitation services. The program aims to address one of

Zambia’s most binding constraints to economic growth through infrastructure investment in Lusaka,

the rapidly urbanizing capital.

2. The program cost is estimated at US$ 127.83 (equivalent UA 90.83 million), of which AfDB is

financing US$ 50 million (equivalent UA 35.53 million) or 39%, the World Bank 51%, and the

Government of the Republic of Zambia/ LWSC 10%. The program is expected to start in 2015 with a

duration of five years.

3. The program invests in (i) rehabilitated and newly constructed climate resilient sewerage

infrastructure, (ii) decentralized sanitation and hygiene promotion, (iii) support to Lusaka Water and

Sewerage Company, Lusaka City Council (LCC) and the regulator NWASCO for Institutional

Strengthening and Capacity Building including development of faecal sludge management guidelines

and a water and sanitation emergency preparedness disaster risk management plan. The program also

supports the Government of Zambia’s ongoing water sector reform efforts by strengthening sector

institutions. The main beneficiaries in Lusaka are the approximately 600, 000 residents in the project

area who will gain better health from improved environmental and sanitary conditions; especially

those in peri urban areas were most of the urban poor are residing. The beneficiaries will be involved

in the program through customer mobilization and sensitization campaigns and capacity building

initiatives. Indirectly, urban residents in the whole of Lusaka city will benefit from improved

performance of Lusaka Water and Sewerage Company in delivering water and sanitation services.

4. Needs Assessment: The program interventions aim to address a crisis in sanitation that is costing

Zambia 1.3% of GDP per year. Lusaka is worst affected by poor sanitation with annual outbreaks of

cholera, typhoid and dysentery. Rapid urbanization in Lusaka will lead to a doubling of the population

over the next 20 years (from 2.2 million to 4.9 million) exacerbating the problem. 70% of the city’s

population live in peri-urban areas and 90% rely on pit latrines, most of which are poorly constructed.

In addition, 60% of Lusaka’s water supply is from groundwater abstracted within the city, which is

vulnerable to pollution from leaking pit latrines. It is also estimated that at least 75% of the faecal

waste generated in the city is not adequately collected, treated and disposed of and ends up polluting

the environment and water supply sources. Addressing these various faecal waste flows will be the

primary focus of the program.

5. The Banks’ added value in supporting the program is built on its continued focus on (i) poverty

focused components (such as decentralised sanitation in high-density areas); (ii) improved public

health through hardware (investments) and highly cost effective software methodologies (sanitation,

environmental health and hygiene promotion), and (iii) collaborative partnerships and leveraging other

Cooperating Partner funds to increase investments in sanitation.

6. Knowledge management: The Bank will support the development of a monitoring system to

assist LWSC better understand sanitation management and also develop faecal sludge management

guidelines for better management of sludge. These knowledge products will contribute to the

country’s urban sanitation sub-sector in improving its performance as well as help the Bank to

replicate the good practice in other regional member countries. In relation to climate change, with

mounting international concern at the rising frequency and severity of natural hazards and disasters, in

part due to factors related to climate change, a Water and Sanitation Sector Emergency Preparedness

and Disaster Risk Management Plan will be developed to strengthen institutions, mechanisms and

capacities at all levels, in particular at the community level that can systematically contribute to

building resilience to hazards and disasters.

v

Results Based Logical Framework Country and Project Name: Republic of Zambia: Lusaka Sanitation Program

Project Purpose: To increase access to sustainable sanitation services to Lusaka’s residents especially the urban poor.

RESULTS CHAIN PERFORMANCE INDICATORS MEANS OF

VERIFICATION RISKS/MITIGATION MEASURES

Indicator (including CSI) Baseline (2014) Target

IMP

AC

T

Impact: Improved health and poverty alleviation for the urban poor due to sustainable and equitable access to improved sanitation

1. Reduced Under-five mortality rate per 1,000 live births in Zambia 87 in 2013 50 in 2030 National Census, living condition survey

- Stable macroeconomic framework

continued - Consistency in sector reforms

2. Population below poverty line 75% in 2013 20% in 2030

OU

TCO

MES

Outcome 1: Increased access to improved sanitation and hygiene facilities in Lusaka Province

1.1 No. of residents benefiting from improved sanitation facilities 63% (>50% female)

77% in 2020 (>50% female)

National Census, Living Conditions Monitoring Survey and NWASCO Sector Reports

Risk #1. Sewers and WWTPs are expensive and may be unaffordable to many customers. Mitigation. Balance willingness to pay, affordability and technology options. Sustained extensive sensitization campaigns and community participation at the design stage to mitigate such a risk. Tariff and affordability study undertaken

Outcome 2: Improved hygienic and environmental practices among residents of Lusaka city

2.1 Proportion of people practicing hygiene behaviour / sanitation

practices including hand washing (+50% women)

2.2 People served by adequate faecal sludge management systems

39.7% 0

67% in 2020 (>50% female) 360,000 in 2019

Outcome 3: Improved management, institutional capacity and sustainability of WSS services

3.1 Operation and maintenance recovery by LWSC 3.2 Percentage of sewerage blockage complaints addressed satisfactorily 3.3 LWSC sanitation monitoring system established

110% 50% No system

>150% by 2020 95% by 2020 Ready by 2019

NWASCO Sector Reports, quarterly and annual reports

OU

TPU

TS

Component 1- Climate resilient Sewerage Infrastructure Development 1.1 Construction/ Rehabilitation of climate resilient Sewer networks 1.2 Rehabilitation of Sewage Ponds and pump Stations

1.1.1 Length of climate resilient sewer networks rehabilitated/ newly constructed

1.1.2 Number of new connections to sewer in project area 1.2.1 Volume Wastewater treated per year (‘000 M3 cumulative)

0 0 2,018

72 km by 2020 8,000 by 2020 4,789 by 2020

NWASCO sector reports, LWSC quarterly progress reports

Risk #2. Delay in making connections to the rehabilitated and extended sewer network Mitigation. Sustained sanitation marketing and appropriate technology Connection works will be built into overall sewer laying contract, and connection charges recovered from sanitation bills. Revolving fund to be set up Risk #3. Poor coordination between different institutions involved in the implementation of some components at local level. Mitigation. An MOU signed among LWSC and LCC, on the cooperation for implementation of the hygiene and sanitation promotion component, detailing the roles each of the four institutions will play during the implementation of the Project. Risk #4. Delayed ESMP implementation Mitigation. Budgetary allocation for timely implementation and Government to include budgets for this Risk #5: The project may be exposed to future climate risks Mitigation: Development of WSS emergency preparedness and disaster risk management plan and design of climate resilient sewerage infrastructure

Component 2-Decentralised Sanitation and Hygiene Promotion 2.1 WASH strengthened 2.2 Climate resilient demonstration HH sanitation facilities 2.3 Provision of sanitation facilities in public institutions (schools, health centres, and markets) 2.3 Construction of climate resilient Feacal Sludge management systems

2.1.1 No. of people trained to improve hygiene behaviour or sanitation

practices under the project (cumulative) (+50% women) 2.1.2 No. of Trainer of Trainers trained for improved environmental and

sanitation practices

2.2.1 No. of climate resilient demonstration HH facilities 2.2.2 No. of gender sensitive and disabled able friendly sanitation and

hygiene facilities constructed in schools, public places & health centres

2.3.1 No. of Climate resilient Faecal sludge management facilities constructed & used

0 0 0 0 0

150,000 by 2020 250 (>50% female) by 2020 2,000 by 2020 100 double units by 2018 2 facilities by 2020

LCC Team Reports, LWSC quarterly

Component 3- Institutional Strengthening & Capacity Building 3.1 Strengthen LWSC Operation and maintenance of sewers 3.2 Enhanced institutional capacity of

LWSC/LCC Authorities to manage

Sanitation services 3.3 Improved LWSC gender mainstreaming 3.4. Climate Change adaptation plans 3.5 ESMP implemented

3.1.No. of sewage blockages resolved

3.2.1 No. of LWSC/LCC staff trained and supported in sector investment

framework, sanitation and environmental health (% of female staff) 3.3.1 No. of women and youth trained and supported in sanitation related

economic opportunities within the project

3.3.2 Gender Strategy prepared 3.4.1 Guideline for Faecal Sludge Management prepared

3.4.2 Water and Sanitation Sector Emergency Preparedness and Disaster

Risk Management Plan prepared 3.5.1 ESMP implemented

990 0 0 0 0 0 0 0

<100 (annual) by 2018 200 (% female) by 2018 Done by 2017 Done by 2017 Done by 2017 Completed by 2020

Quarterly and Annual Progress Reports

vi

KEY

AC

TIV

ITIE

S Activities INPUTS

1. Climate resilient Sewerage Infrastructure Development: Rehabilitation/ construction new climate resilient sewer networks, rehabilitation of sewage ponds 2.

Decentralised Sanitation and Hygiene Education: Delivery of sanitation, environmental and hygiene education; Construction of climate resilient demonstration institutional/public sanitation facilities and Promotion of Good hygiene practices, Feacal Sludge Management systems constructed, 3. Institutional Strengthening &

Capacity building: Training, development of FSM guidelines, WSS Sector Emergency Preparedness and Disaster Risk Management Plan, support to development of social inclusion and gender framework, ESMP implementation, 4. Program Management: Program Auditing; Technical Assistance; Office Equipment; various goods, procurement of vehicles; and Mid Term Review of the project.

Total Program Cost: USD 127.83 million (Eqv UA 90.83 mil) ADB loan: USD 50 million (equiv. UA 35.53 mil) World Bank: USD 65 million (equiv. UA 46.18 mil) GRZ/LWSC: USD 12.83 million (equiv. UA 9.12 mil)

vii

Program Timeframe

Board Approval

Publication of GPN

Signing

Effectiveness

Launch Mission ◊

Institutional Support

Strategic Environmental Social Assessment

Operationalise LWSC Gender Strategy

Training and Capacity Building ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊

HH sanitation surveys

WSS Sector Emergency Preparedness and

Disaster Risk Management Plan

Decen Sanitation & Hygiene Promotion

RfP/bidding & contract award

mobilisation, sensitization, supervison of sanitation works

Engineering Services Consultancy

RfP/bidding & contract award

Design, Tender Doc prep and Tendering

Supervison of Sewerage works

Feacal Sludge Management units

Bidding & contract award

Implementation

Sewerage Works

Bidding & contract award

Implementation

Defect Liability Period

Mid Term Review ◊

Financial Audit (siubmission) ◊ ◊ ◊ ◊ ◊

Program Completion ○

ZAMBIA: LUSAKA SANITATION PROGRAM: CLIMATE RESILIENT INFRASTRUCTURE IMPLEMENTATION SCHEDULE

4 6 8 10 12 6 81012

2015 2016 2017 2018

2 4 126 8 10 10 1222 4 6 8 12Activity

2 4

2020

2 4 6 8 10 122 4 6

2019

8 10

1

REPORT AND RECOMMENDATION OF THE MANAGEMENT TO THE BOARD OF

DIRECTORS ON A PROPOSED LOAN TO ZAMBIA FOR THE LUSAKA SANITATION

PROGRAM

Management submits the following Report and Recommendation for a proposed loan for USD 50

million on ADB terms to the Republic of Zambia to finance the Lusaka Sanitation Program.

I STRATEGIC THRUST AND RATIONALE

1.1 Program linkages with country strategy and objectives

1.1.1. The Government of the Republic of Zambia’s (GRZ’s) development agenda are articulated in the

National Vision 2030 and the Revised Sixth National Development Plan (R-SNDP: 2013-2016). The

National Sector Vision is for clean, safe water supply and sanitation for all by 2030. The R-SNDP has

the goal of increasing “accessibility to reliable safe water by all sectors of the economy in order to

enhance economic growth and improve the quality of life. Thus, the Lusaka Sanitation Program (LSP)

supports the GRZ’s development plan by improving sanitation services of the poor in order to effect

improvements in public health and raise dignity.

1.1.2. In conformity with the thrust of the R-SNDP, the Bank’s Country Strategy Paper (CSP) for

Zambia covering the period 2011-2015 focuses on two pillars: Pillar I - Supporting Economic

Diversification through Infrastructure Development; and Pillar II - Support to Economic and Financial

Governance with Private Sector Development and Capacity Building. The LSP interventions

operationalize both pillars of Zambia’s CSP as the provision and improvement of key infrastructure has

a direct impact on the economic wellbeing of the population (Pillar I). This is part of the national sector

portfolio of activities aimed at improving environmental health and part of GRZ priorities’ to address the

required major investments for rehabilitation and expansion of the infrastructure in the fast growing

urban and peri-urban areas of the major towns through which the private sector would also be involved

(Pillar II). In this way, the LSP is also well-aligned to the Bank’s twin goals of green growth and

promoting inclusive growth. The LSP is also in line with Zambia’s Integrated Water Resources

Management (IWRM) articulated in the National Water Policy of 2010 and the Water Resources

Management Act of 2011.

1.1.3. The LSP is aligned with the Bank’s Ten-year Strategy (2013-2022), IWRM Policy and Urban

Development Framework and seeks to help manage urban growth and develop sustainable climate

resilient urban infrastructure systems, particularly urban water, sanitation and waste management. It is

also in line with the Bank’s Gender Strategy by supporting the Lusaka Water and Sewerage Company

(LWSC) to develop strategies to create economic opportunities for women combined with an operational

document on Faecal Sludge Management (FSM), taking into consideration the gender role-played by

men and women to guide implementation of sanitation and hygiene education in the high density areas

of the capital.

1.2 Rationale for Bank’s involvement

1.2.1 The GRZ has been undertaking water sector reforms since the early 1990’s and considerable

progress has been made in improving access to improved water supply and improved sanitation.

Currently, 63% of Zambians have access to clean drinking water while 49% have access to adequate

sanitation as defined by UNICEF/WHO Joint Monitoring Program. The national long-term vision for

2030 is to reach 80% access to clean water by 2015 and 100% by 2030; 68% access to sanitation by

2015 and 90% by 2030; rehabilitation and reconstruction of sewerage facilities in all major towns and

cities; and 80% of waste collected and treated by 2030. Recent studies show the trend of national water

coverage (in both rural and urban areas) on a slow upward trend while that for sanitation coverage is

even slower. While the national and MDG targets for water supply may be met by 2015, at the current

2

rate, the targets for sanitation will likely be missed. There have not been significant investments

especially in sanitation and capacity constraints both at local and national level have hampered growth

of the sector. This intervention specifically addresses these and hence the need for further investments in

this particular area.

1.2.2 The program interventions aim to address a crisis in sanitation that is costing Zambia 1.3% of

GDP per year according to a recent World Bank (WB) report. Lusaka is worst affected by poor

sanitation with annual outbreaks of cholera, typhoid and dysentery. Rapid urbanization in Lusaka will

lead to a doubling of the population over the next 20 years (from 2.2 million to 4.9 million) exacerbating

the problem. 70% of the city’s population live in peri-urban areas and 90% rely on pit latrines, most of

which are poorly constructed. In addition, 60% of Lusaka’s water supply is from groundwater abstracted

within the city, which is vulnerable to pollution from leaking pit latrines. It is also estimated that at least

75% of the faecal waste generated in the city is not adequately collected, treated, disposed of and ends

up polluting the environment and water supply sources. Addressing these various faecal waste flows will

be the primary challenge of the program.

1.2.3 The Bank’s comparative advantage in financing the LSP is a combination of its comprehensive

experience to sustainable service provision in Zambia and the region. The Bank has continued to focus

on supporting the unserved population to increase access to equitable, sustainable water supply and

improved sanitation, as inadequate access to clean, safe water supply and sanitation in Zambia is a major

contributing factor to poverty. The Bank’s support will complement on-going efforts by GRZ to improve

quality of life and livelihoods of people living in peri urban and high density areas of Lusaka where

women constitute 52% of the population. The Bank has had a long engagement with the LWSC through

the Lusaka Water Supply Rehabilitation Project (1991-2004) assisting in the formation of LWSC from a

municipality department to a private company. Although, it should be noted that at that time, the Bank

support to infrastructure only addressed water supply. GRZ has requested that the Bank this time

reorients its support towards sanitation to complement the substantial investments in urban water in

Lusaka by the Millennium Challenge Corporation (MCC) and investments by WB, European Investment

Bank (EIB) and Kreditanstalt fur Wiederaufbank (KfW). The Bank’s focus will be on (i) poverty

reduction focused components (such as decentralised sanitation in high-density areas); (ii) improved

public health through hardware (investments) and highly cost effective software methodologies

(sanitation and hygiene promotion), and (iii) leveraging other CPs funds to increase investments in

sanitation.

1.3 Donor Coordination

There is a comprehensive donor coordination framework that operates at national and sector level. At

national level, the coordination process is articulated in the Joint Assistance Strategy for Zambia which

involves a Memorandum of Understanding (MOU) that was signed by the GRZ and Cooperating

Partners (CPs). The MOU provides the platform for developing in practice, harmonization of

cooperation by CPs and alignment to Government procedures and processes. A Water Sector CP Group

chaired by the Bank and led by a Troika (AfDB, WB and Germany) has been responsible for enhancing

cooperation, coordination of policies, strategies and approaches in support of WSS development and

effective communication with GRZ. It is also worth-noting, two CPs, MCC and German Development

Corporation (GDC) are supporting the gender mainstreaming in the sector which this program will build

on. This includes policy formulation and development of gender indicators for the sector and technical

support.

3

Table: 1.1: Donor Support to Water (2014)

Sector or subsector*

Size

GDP Exports Labour

Force

Water 2.3 - 0.3%

Players - Public Annual Expenditure (average) : 2014 Budget

Government Donors AfDB 20% UNICEF

6% WB 4%

USD m USD 73 m USD 184 m

% 28% 72% DFID 2.3%

Germany 8.7%

USA 33%

Level of Donor Coordination

Existence of Thematic Working Groups Yes

Existence of SWAps or Integrated Sector Approaches No

ADB's Involvement in Donors Coordination Lead

* The estimate is based on the national budget, past budget performance and donor portfolio information.

*Other donors are not included with contributions less than 1%

II PROJECT DESCRIPTION

2.1 Project Objective

The objectives of the LSP are to increase access to sustainable sanitation services to Lusaka’s residents

especially the urban poor and strengthen LWSC’s capacity to manage sanitation services. The project

components are described in Table 2.1 below, with details provided in Annex B2.

Table 2.1: Project Components and Outputs [cost in million USD]

3 S/No 4 Component

name

*Cost Component description

1 Climate

resilient

Sewerage

Infrastructure

Development

79.86

(39.15)

Rehabilitation, upgrading and expansion of climate resilient sewer

collection networks (using labour intensive

contracts to support local employment) Rehabilitation of Noxious sewage pump station and construction of

Kafue road pump station

Rehabilitation of Matero, Ngwerere and Chelstone sewage ponds and

new climate resilient trunk mains in Kafue road and upgrade of

Western, Matero, Ngwerere interceptors

2 Decentralised

Sanitation and

Hygiene

Education

22.18

(9.05)

Advocacy, sensitization, promotion of decentralised sanitation &

hygiene education, development of gender responsive training and

promotional material

Construction of climate resilient demonstration household sanitation

facilities

Create public awareness to promote connection to the sewer systems,

highlight health and environmental risks associated with inadequate

sanitation.

Pro-poor service provision: develop a mechanism for promoting the

construction of safe sanitation facilities for vulnerable people who are

not able to access or afford a sewerage connection.

Construct Faecal Sludge Management units in selected peri urban

areas and improve FSM, particularly emptying pit-latrines,

transportation, sludge treatment and possible reuse.

Undertake WASH Friendly school campaign (hand washing and

sanitation facilities, responsive to gender and disability)

4

3 S/No 4 Component

name

*Cost Component description

3

Institutional

support and

capacity

building

12.34

(4.22)

Training and capacitating women community based enterprises in

service delivery along the full service delivery chain from collection

of human waste through to its recycle, reuse or disposal. Training of

youth and provision of toolkits to masons, artisans to construct onsite

sanitation facilities to enhance employment opportunities

Training and empowerment of community based enterprises in

production of sanitation products for communities (50% women)

Operationalizing of the LWSC Gender Policy and development of

Gender Strategy (increase women economic opportunities within the

program)

Mainstreaming Gender, Environment, Climate Change, HIV/AIDs &

cross cuttings Issues

Support in development & strengthening of a sanitation monitoring

system at LWSC

Support to National Water and Sanitation Council (NWASCO) to

enhance its capacity for developing sector guidelines and establishing

and enforcing standards in sanitation; Support to Lusaka City Council

to link up with environmental health services as well as a review and

improve relevant bylaws for appropriate design, enforcement of

connections and conforming with design standards and reuse of

wastes

Support to safeguards unit in LWSC to enhance its capacity for

monitoring environmental and social issues during and beyond project

implementation

4 Program

Management

and

coordination

13.50

(3.40)

Provision of technical assistance for design, supervision and program

implementation in accordance with good project management

practices.

Prepare and submit the required reports: (i) undertake annual external

audits; (ii) submit quarterly progress and ESMP reports;

(iii) undertake project mid-term review; and (iv) prepare a program

completion report (v) Program M&E and Reporting (including

baseline and endline), (vi) prepare Program Implementation Manual

* Cost in brackets is the AfDB-funded amount

2.2 Technical solution retained and other alternatives explored

2.2.1 Technical solutions that have been explored and retained are based on options that have been

adopted on similar interventions in Zambia. (i) The performance of gravity sewers is affected by poor

water supply. Therefore, priority has been given to carry out rehabilitation and expansion only in areas

where there is adequate water supply to ensure that cleansing velocities of approximately 0.6m/s are

achieved as per international best practices. This ensures blockages are minimized in the sewer network.

(ii) In terms of climate risks, for flood prone areas of Lusaka, sewers will be designed to be climate

resilient so as to collect, convey and discharge frequently occurring, low-return-period storms to

complement existing drainages in the areas. This minimizes overall capital costs, keeps operations and

maintenance costs low and minimizes pollution. Sustainable Urban Drainage Systems (SUDS) were

considered for Lusaka as a way of managing surface water runoff to prevent sewer flooding and to

improve water quality in streams in case of heavy storms but because of lack of green space in Lusaka,

there are no places to site these. The sewers will be designed to deal with low return period storms.

2.2.2 Construction of Feacal Sludge Management (FSM) facilities coupled with good onsite sanitation

facilities (properly designed and constructed lined pit latrines) are to be adopted in peri urban areas

which were not conducive for a sewer network. The sewer networks would have required good water

supply network, multiple sewage pump stations, large collectors and interceptors to get the wastewater

to treatment plants with a huge capital outlay.

5

Table 2.2: Project alternatives considered and reasons for rejection Alternative Brief Description Reasons for rejection

Sewerage system in some peri

urban areas with bad terrain

Sewer networks with multiple

sewage pump stations, collectors

and interceptors

No piped water, high capital,

operations and maintenance costs

Sustainable Urban Drainage

Systems (SUDS)

Managing surface water runoff to

prevent sewer flooding

No green space

2.2.3 For decentralized sanitation, hygiene promotion, Impact Evaluation and Sanitation Marketing

(SM) will be utilized focusing on community-based approaches (e.g. community decision to stop open

defecation; use of peer pressure to construct their own facilities; collective action to assist vulnerable

people and support public facilities) and support enforcement of bylaws on onsite sanitation The SM

promotes household-centered choice of latrine type. There is significant potential for increasing access

to climate resilient sanitation in flood prone peri-urban areas through introduction of ecological

sanitation technologies for on-site systems and lined latrines. Capacity building activities will be carried

out for ministries/national agencies, sensitization of communities in building sanitation facilities and

supporting Lusaka City Council (LCC) to enforce connections to sewerage systems and that sanitation

facilities built have appropriate design and conform with standards and reuse of wastes.

2.3 Project Type

This project is part of the National Water Supply and Sanitation Program (NUWSSP) which GRZ is

implementing with the aim of providing adequate sanitation facilities to all urban citizens of Lusaka

Province and starting with investments in Lusaka City. The program will implement investments

consistent with the Lusaka Sanitation Master Plan (2011-2030) and develop LWSC’s capacity to

manage all aspects of sanitation from conventional sewerage, on-site systems and FSM. The LSP will be

implemented in two parts, with each part being prepared and implemented concurrently. Part I supported

by the EIB and KfW will focus on the rehabilitation of Manchinchi and Chunga Wastewater Treatment

Plants, plus their associated main collectors, pumping stations and sludge treatment and Part II will

develop a comprehensive approach to sanitation in Lusaka, including on-site and off-site sanitation,

health, hygiene and sanitation promotion and technical assistance supported by the WB, AfDB and EIB.

2.4 Project Cost and Financing Arrangements

2.4.1 The total cost of Part II of the LSP is estimated at USD 127.83 million (UA 90.83 million), net of

taxes and duties, of which USD 82.39 million (64.5%) is foreign costs and USD 45.4 million (35.5%) in

local costs. The cost estimates are derived from the Lusaka Sanitation Master Plan and Pre-Feasibility

Study taking into account rates derived from suppliers and contractors, as well as from experience with

similar ongoing operations in the country and in the region. A physical contingency of 10% and price

contingency of 3% per annum have been taken into consideration in the estimates. A summary of the

program cost estimates by components and expenditure accounts is shown in Tables 2.3 and 2.4 below,

while details are provided in the Annex B.2

2.4.2 The cost of Part II of the program will be financed by ADB, WB and GRZ/LWSC, as

summarized in Table 2.4 below: Financing Plan by Source of Finance. ADB will provide loan of USD

50 million (equivalent UA 35.53 million), which represents 39% of the total costs, WB will provide

USD 65 million (equivalent UA 46.18 million), which represents 51% of the total costs and GRZ/LWSC

will finance the balance of USD 12.83 million (equivalent UA 9.12 million), which represents 10% of

the total program cost. In accordance with the “Policy on Expenditure for Bank Group Financing”, the

GRZ has requested the Bank to consider reducing the requirement for 50% counterpart funding on the

LSP due to the fact that Zambia has only recently transitioned to blend status and is yet to transition to

full ADB only. Zambia is also at the lower end of middle income status and will require substantially

more time to fully transition to a 50% counterpart funding level. A justification is provided in Appendix

V to reduce the requirement for counterpart funding.

6

Table 2.3: Program cost estimates by component

* In addition to the above, EIB and KfW are to provide equivalent of USD$ 137 and USD$ 55 million, respectively to fund the

Lusaka Sanitation Program.

Table 2.4: Sources of financing

Source of Funds (US$ ‘000) (UA ‘000) %

World Bank 65,000 46,185 51%

AfDB 50,000 35,527 39%

GRZ/LWSC 12,829 9,115 10%

Total 127,829 90,827 100%

2.4.3 The summary of the AfDB financed components is provided in Table 2.5(a), while a

summary of the same by category of expenditure is provided in Table 2.5 (b) below.

Table 2.5 (a): Project cost estimates by component

Table 2.5 (b): Project cost by category of expenditure

Table 2.6: Expenditure schedule by component [‘000USD]

Components 2016 2017 2018 2019 Total

A) Sewerage Infrastructure: Rehab and Expansion - 9,768 13,024 9,768 32,561

B) Decentralised Sanitation and Hygiene Promotion 2,440 2,440 1,410 1,410 7,700

C) Institutional Strengthening and Capacity Building 1,625 1,185 755 75 3,640

D) Program Management 1,943 1,454 1,054 1,054 5,505

Total Base Cost 6,008 14,847 16,243 12,307 49,406

Physical Contingencies (10%) 601 1,485 1,624 1,231 4,941

Price Contingencies (3%) 198 995 1,657 1,699 4,549

Total Costs 6,807 17,326 19,524 15,237 58,895

 Components FC LC Total FC LC Total F% %

A) Sewerage Infrastructure: Rehab and Expansion 46,868 20,086 66,955 33,302 14,272 47,574 70.0 62.4

B) Decentralised Sanitation and Hygiene Promotion 10,994 7,611 18,605 7,812 5,408 13,220 59.1 17.4

C) Institutional Strengthening and Capacity Building 7,507 2,844 10,351 5,334 2,021 7,355 72.5 9.7

D) Program Management 3,750 7,571 11,322 2,665 5,380 8,044 33.1 10.6

Total Base Costs 69,120 38,113 107,233 49,112 27,081 76,193 64.5 100.0

Physical Contingencies (10%) 6,912 3,811 10,723 4,911 2,708 7,619 64.5 -

Price Contingencies (3%) 6,356 3,517 9,873 4,516 2,499 7,015 64.4 -

 Total 82,388 45,441 127,829 58,540 32,288 90,827 64.5 -

(In US$ '000) (in UA '000)

 Components FC LC Total FC LC Total F% %

A) Sewerage Infrastructure: Rehab and Expansion 22,793 9,768 32,561 16,195 6,941 23,136 70% 66%

B) Decentralised Sanitation and Hygiene Promotion 4,550 3,150 7,700 3,233 2,238 5,471 59% 16%

C) Institutional Strengthening and Capacity Building 2,640 1,000 3,640 1,876 711 2,586 73% 7%

D) Program Management 1,823 3,681 5,505 1,296 2,616 3,911 33% 11%

Total Base Costs 31,806 17,600 49,406 22,599 12,505 35,105 64% 100%

Physical Contingencies (10%) 3,181 1,760 4,941 2,260 1,251 3,510 64%

Price Contingencies (3%) 2,928 1,620 4,549 2,081 1,151 3,232 64%

 Total 37,915 20,980 58,895 26,940 14,907 41,847 64%

(In US$ '000) (in UA '000)

Category of Expenediture FC LC Total FC LC Total %

1) Works 25,793 11,968 37,761 18,320 8,501 26,820 76%

2) Goods 2,240 - 2,240 1,591 - 1,591 5%

3) Services 3,523 2,481 6,005 2,503 1,762 4,265 12%

4) Operating Costs - 1,900 1,900 - 1,349 1,349 4%

5) Miscellaneous 250 1,250 1,500 178 888 1,065 3%

Total Base Cost 31,806 17,600 49,406 22,591 12,500 35,091 100%

Physical Contingency 3,181 1,760 4,941 2,259 1,250 3,509

Price Contingency 2,928 1,620 4,549 2,080 1,151 3,231

Total Cost 37,915 20,980 58,895 26,930 14,901 41,831

64% 36% 100% 64% 36% 100%

(In US$ '000) (in UA '000)

7

2.5 Project’s target area and population

2.5.1 Project Area: The LSP will be implemented in Chunga/ Matero/ Chelstone/ Kaunda Square

sewersheds where the sewerage infrastructure was constructed in the 1960’s. The priority sub-projects

were identified with the aim of covering the peri-urban and low cost areas which are most densely

populated areas in these sewersheds. The main criteria for the selection of interventions included: (i)

aged and dilapidated sewer networks (20% of the 50km network is functional in these areas), (ii)

waterborne disease prevalence, (iii) susceptibility to flooding, (iv) sewage overflows and blockages (994

complaints in 2014) and (v) low access rates of waterborne sewerage. The city’s current population is

expected to double over the next 20 years (from 2.2 million to 4.9 million) exacerbating the problem of

poor sanitation if not addressed.

2.5.2 Project Beneficiaries: The intervention will have direct and indirect benefits to Lusaka City’s

population with improved sanitation to about 600,000 indirect beneficiaries and 473, 000 direct

beneficiaries (52% women). Unlike the sewerage services, onsite sanitation for Lusaka’s urban poor

often depends on landlords and tenants who have few incentives to invest in quality services within

informal settlements, including sanitation facilities. Most of the households in the project areas are

sharing a few on-site latrines or relying on communally managed pay-and-use ablution blocks. Women

and children suffer more when having such arrangements. LCC and LWSC will be supported to engage

with Landlords and plots owners for enforcement of applicable laws bearing in mind balancing between

the need to improve the properties and the ability of the tenants to be able to pay higher rent.

2.5.3 Residents will gain better health from improved environmental and sanitary conditions;

especially those in peri urban areas where most of the urban poor are residing. Special focus will be

given to vulnerable households within the project area. The LSP will target and capacitate women

community based enterprises in service delivery along the full service delivery chain of FSM from

collection of human waste through to its recycle, reuse or disposal. About 615 youths and women, who

presently lack employment opportunities, will be targeted by the program through training in FSM,

business start-up and as masons, artisans and will participate in construction of decentralised sanitation

facilities. The LSP is expected to create at least 250 full-time skilled/semi-skilled and 600 part-time

unskilled jobs in masonry, pipe laying, steel fixing and construction which will benefit both men and

women. This in turn will contribute to reducing poverty and improving the quality of lives of people

from incomes gained. Schools, Markets and health centres lacking adequate sanitation facilities in the

targeted peri urban areas will also benefit from the program. The expected impact of these interventions

are reduction of water related diseases and associate health care cost, reduction of school-dropout rates,

particularly among girls and reduction in environmental pollution. Additional information is provided in

Annex B.8.

2.6 Participatory process for project identification, design and implementation

2.6.1 The program activities were selected through an extensive participatory process which was

initiated during the Bank’s preparation mission, continued throughout appraisal, the environmental and

social impact assessment of the project area which included focused group discussions, workshops and

field visits to understand current applicable technologies, current rates of access and levels of disease

burden.

2.6.2 Extensive consultations were held in a workshop in June 2014 in Lusaka with various

stakeholders including Ministry of Local Government and Housing (MLGH), MoF, MoH, LCC, WB,

other CPs, NGOs such as Water Supply for the Urban Poor and potential beneficiaries. As part of the

ESMF/ESMP preparation, a cross section of affected communities: women, men, youth, local leaders

and people with special needs were consulted in March 2015 in Matero and George peri-urban areas and

their views integrated into the program design. The issues that came out as affecting sanitation included:

(i) fragmented legal and policy framework; (ii) unclear definition of roles, responsibilities and poor

8

institutional arrangements; (iii) lack of enforcement; (iv) inadequate financial resources for

implementing agencies and households to effectively tackle sanitation (vii) lack of sanitary facilities and

poor environmental sanitation; and (ix) concerns on whether works shall affect people’s assets and

associated compensation. All stakeholders acknowledged that poor sanitation is affecting the social

wellbeing and posing serious risks to groundwater contamination and public health.

2.6.3 The LSP will therefore incorporate in its design: (i) development of a comprehensive new WSS

policy; (ii) LCC to review/adapt enforcement bylaws and standards for onsite sanitation; (iii) assist

vulnerable households with a subsidy to construct sanitation facilities; (iv) formal agreements between

LWSC and LCC on roles and responsibilities for decentralised sanitation systems and (v) extensive

sensitization, mobilisation campaigns and community participation during implementation.

2.6.4 Participation of national stakeholders and representatives of beneficiary groups in the LSP will

be through a steering committee that will be established to oversee and guide implementation. In

addition, seconded staff from MLGH, MoH and LCC will also be involved in the Program

Implementation Team. Additional information is provided in Annex B.3.

2.7 Bank Group experience and lessons reflected in program design

2.7.1 The overall performance of the portfolio is satisfactory2; with implementation progress (IP) and

Development Outcomes (DO) of 2.79 and 2.90 respectively in 2014. Ageing operations, as a percentage

of the entire portfolio reduced from 13% since the last CPPR in 2013 to 7% in 2014. The number of

projects at risk has reduced from 17% in 2010 to 7% in 2014. Overall disbursement ratio is 27% for

2014.

2.7.2 The Bank is among the largest and active CPs in the sector financing a total of 12 operations to

date. Recently completed projects include the Central Province Rural Water Supply and Sanitation

Project (Loan of UA 12.41 million) completed in 2009 and the Central Province Eight Centres Water

Supply and Sanitation Project (a blend of Grant and Loan of UA 24.62 million), completed in 2012.

There is no Project Completion Report (PCR) backlog on the two completed projects. The National

Rural Water Supply and Sanitation Program II (USD 15.5 million loan, Euro 3.5 million grant) was

approved in September 2014, with the Nkana Water Supply and Sanitation Project – NWSSP (UA 35

million) and the NRWSSP Phase I (UA 15 million) having closed on a on 31 March 2015. The current

supervision ratings are 2.41 and 2.35 for NWSSP and NRWSSP respectively.

2.7.3 Lessons learned from the Bank’s past and current projects are described in Annex B1. The main

lessons applied to the LSP are: (i) Implementing an integrated approach ensuring that sewerage system

are provided where there is adequate water supply to ensure adequate collection, treatment and disposal

(ii) effective community participation by involving the beneficiaries in project design, project

implementation using existing institutional arrangements for decentralized sanitation facilities, and the

need to strengthen sector institutions at the national and local levels including the LWSC and LCC, (iii)

as happened in Kitwe town on the NWSSP, addressing on-site sanitation through improved facilities and

improved FSM will have a greater impact on environmental pollution and public health than only

improvements to the sewerage system and (v) increasing sustainable demand and commitment for

improved WSS through consistent targeted hygiene behaviour change.

2.8 Program’s performance indicators

2.8.1 Achievement of the expected program results will be demonstrated by the key performance

indicators described in the results-based logical framework and process indicators in annex B9. The

program progress will be tracked through the following outcome indicators : (i) Increase in number of

2 Zambia Combined 2011-2015 Country Strategy Paper Mid Term Review and Country Portfolio Performance Review

9

residents benefiting from improved sanitation facilities , (ii) increase in proportion of people practicing

improved hygiene behaviour/ sanitation practices (+50% women), (iii) percent of sewage blockage

complains addressed satisfactorily. The key output indicators will include: (i) number of people trained

in hygiene behaviours and sanitation practices (ii) climate resilient sewer networks rehabilitated and

extended (kms), (iii) number of new connections to sewer, (iv) number of sewage pump stations and

ponds rehabilitated/ constructed, (v) number of climate resilient FSM facilities constructed, (vi) FSM

guidelines prepared, (vii) preparation of Water and Sanitation Sector Emergency Preparedness and

Disaster Risk Management Plan, (viii) preparation of gender strategy.

2.8.2 Progress towards achieving program outcomes and outputs will be measured and monitored

through bi-annual Bank supervision missions, quarterly progress reports, annual technical and financial

audit reports. The M&E Specialist in the PIT will be responsible for the M&E framework and data

collection, including baseline, impact and other relevant studies to be carried out as required to inform

the program progress. The M&E framework will be implemented in collaboration with stakeholders,

especially LCC, NWASCO and NGOs/CBOs. Internal monitoring systems of the LCC and LWSC will

be strengthened to facilitate post-program implementation monitoring.

III PROGRAM FEASIBILITY

3.1 Economic and financial performance

Table C.1: key economic figures

EIRR 17.01% and NPV ZMK 156.50 million (at 10% base case) NB: detailed calculations are available in Annex B6

3.1.1 The underlying assumptions for the calculation of the EIRR are provided in Annex B6. The main

assumptions are: health benefits from improved sanitation services comprising improved sewerage and

faecal sludge management systems, incremental sanitation revenue, as well as economic value of sludge

produced from the improved facilities. On the cost side, these include investment costs, replacement

costs, and other items as part of operation and maintenance costs comprising of staff costs, energy,

chemicals and repairs and other overhead costs have been taken into account. The incremental O&M

costs are estimated at 3% of investment costs. The economic life of the investment is estimated as 25

years, all the costs and benefits considered are net of duties and taxes. The LSP’s economic rate of

return is estimated at 17.01 %. The value is higher than the opportunity cost of capital of 12% and thus

is considered economically viable. Sensitivity analysis to test the robustness of the EIRR was carried out

to determine the impact of adverse variations. The EIRR changes to 14.64% assuming that investment

cost increases by 20%, and changes to 13.63% assuming that the benefits of the project are decreased by

20%. The analysis shows that the project is economically viable and socially beneficial for Zambia.

3.2 Environmental and Social Impacts

3.2.1 The LSP was classified as Category 2 on 28 November 2014 in line with the Bank’s

Environmental and Social Assessment Procedures (ESAP); mainly because most impacts are site specific

and have no significant and irreversible detrimental effect. Detailed Feasibility studies for the sewer

networks and trunk lines under Component 1 are yet to be completed and the sites for establishment of

FSSM and systems will be identified and selected by LWSC. For these reasons, the type of

Environmental Assessment tool for at this stage is the development of the Environmental and Social

Management Framework (ESMF). The categorization is in alignment with the national environmental

law of Zambia. The ESMF Summary has been prepared, validated by the Bank and disclosed on the

Bank’s website on 20 May 2015.

3.2.2 Potential adverse impacts are anticipated during construction. Direct impacts such as noise, dust,

public safety, disruption of surface water drainage, interruption of utilities, pollution, disposal of waste,

and social impacts will be mitigated and generally eliminated. Excavations to remove old sewer

10

networks and installation of new piping are likely to cause safety hazards to the communities if the

excavations are not protected. The excavation of trenches may also lead to temporary disruption of

businesses that are located along the wayleaves. The environmental impacts resulting from

implementation of civil works are expected to be minor and short-term since the rehabilitation and

expansion works are principally for the laying of buried pipelines.

3.2.3 Construction related impacts will be mitigated by (i) development of a construction ESMP

compliant with the AfDB Integrated Safeguards System; (ii) the contractors’ work practices, especially

those related to maintenance of access, methods of trench excavation, the storage of construction

materials and cleanliness of the work sites; (iii) cooperation by LCC with the contractor in terms of

traffic management and use of public space and utilities; (iv) project management’s strict enforcement of

the correct construction practices and standards; (v) the incorporation of mitigation measures identified

into the bid documents and specifications; (vi) public awareness including liaison at ward level in

advance of work in each work location; and (vii) close monitoring of the contractor’s implementation of

the required mitigation measures. The ESMF implementation and monitoring budget is estimated at

USD 240,000

3.2.4 Potential positive impacts from the program shall include; employment opportunities, for which

the enhancement measures require works contractors to have active employment policy favouring local

workers and women. This will be a requirement of works contracts. After construction, the impacts will

be positive through improved sanitation, reduced pollution incidents on surface and ground water in the

project area, improved health and hygiene among beneficiary communities.

3.2.5 Climate Change: According to the Bank’s Climate Safeguards System, the LSP is classified as

Category II, requiring the implementation of adaptation measures to increase the resilience of

communities and the infrastructure to be rehabilitated to withstand the impacts of climate change. Some

of the adaptation measures considered include (i) development of a Water and Sanitation Sector

Emergency Preparedness and Disaster Risk Management Plan to deal with extreme flooding and drought

scenarios that may affect the infrastructure; (ii) desludging of sewage ponds, strengthening of the

embankments of the ponds and building a wall fence around the facilities to be able to cope with larger

surges of rainfall without impacting the surrounding communities; (iii) improve operational risk

management to ensure preventive and routine maintenance is effectively carried out to reduce blockages

and spillages. For example, sewer manholes to be designed to align to the roads and with properly

designed manhole covers to prevent damage by traffic and stop heavy ingress of storm water to

minimize sewage blockages. as a result of adverse weather, (iv) modify existing sewerage system assets

to increase climate resilience by expanding the capacity of sewerage systems; (v) increasing access to

climate resilient sanitation in flood prone peri-urban centres through promotion of ecological sanitation

technologies for on-site systems and lined latrines; (vi) promotion of clean and hygienic environment,

including handling and disposal of solid wastes, FSM and integrating reuse of wastes to avoid polluting

groundwater sources and (vii) provide information to LWSC, national and municipal institutions and

carry out climate change awareness raising activities. Annex IV provides the adaptation summary.

3.2.6 Gender: The quality of water and especially sanitation services is highly gender sensitive,

therefore, women and men were consulted on their roles, responsibilities, challenges, and opportunities

within the scope of the program’s objectives. Furthermore, consultations with the two CPs supporting

gender mainstreaming of LWSC; MCC and GDC; was conducted. Discussions with LWSC, LCC,

Ministry of Health (MoH), Ministry of Community Development, Mother and Child Health

(MCDMCH) and Ministry of Gender and Child Development (MGCD) to determine the proper

interventions and costing took place. The outcome of these discussions materialized in adopting two

approaches, (i) mainstreaming of gender in program interventions, and (ii) gender focused activities with

total costing of USD 200,000, investing in women’s skill development and economic opportunities

within the sanitation sub-sector.

11

3.2.7 The gender negative impact of the current situation stated by women and men during the

stakeholders consultations were: (i) women workload increase with the rise of water borne diseases as

result of inadequate sanitation facilities and bad hygiene practice by member of the family, (ii)

moreover, women and girls have no sense of privacy because many families sharing one latrine

especially during menstruation. Sometime, women and girls opt to walk a quite a distance to access

other sanitation (communal) seeking privacy; risking their safety In addition, women expressed the need

to be consulted and engaged throughout the project cycle to enable them to share their views and

concerns, (iii) increasing of economic opportunities will help in household improvement.

3.2.8 These pose serious challenges in terms of health, security, and privacy for women and girls.

Vulnerability of household members feature in the way each individual ability tries to address these

challenges. The ability of households to have a decent sanitation facility and practice of good hygiene

is determined by the following: knowledge and attitude, financial ability and the facilitating

environment. To address beneficiaries concerns taking into account the needs of women and vulnerable

households, the LSP aims to support LWSC to address the three determinant factors mentioned above.

3.2.9 In terms of knowledge and attitudes, support will be provided to create demand among the

population on sanitation and good hygiene practice taking into account the gender and social

perspective. Regarding the financial ability of households to connect to the sewer line or to have an

improved on site sanitation facility, the LSP will develop a variety of financial models / support to

facilitate the process. This could be in form of recovering the connection fees through the water bills

over a period of time or through exploring other means of funding (revolving funds) such as use of the

sanitation surcharge which LWSC currently and manages.

3.2.10 While increasing the capacity of the local market to address the envisaged demand on

sanitation, the LSP aims to create an enabling environment for the employment of youth and women.

This will be carried out through training of artisans and masons (women and youth), training of women

and youth in sludge management including biogas in one of the vocational centres in Lusaka, and by

supporting a female engineer internship program, and creating practical attachment opportunities for

Zambia Women in Construction. Women will be trained in start-up business and how to manage public

sanitation and water kiosks. This includes financial literacy and book keeping.

3.2.11 Opportunities: In 2014, LWSC within its Strategic Business Plan (2014 – 2018) has approved

its Gender Policy, which was also guided by the Zambia National Gender Policy. Following that, a

Gender Strategy with detailed activities, costing, and indicators for monitoring was developed. In

addition, LWSC has designated a Gender Focal Point who is situated in the Monitoring and Evaluation

(M&E) Department. A committee to oversee the implementation on gender activities in the utility is

under formation. CP’s including the Bank have been heading the gender mainstreaming of the water

and sanitation national program including mainstreaming of gender for utilities.

3.2.12 Social: Lusaka has a population of about 2.2 million people (336,000 rural and 1,854,000 urban)

showing a high level of urbanization. Lusaka City itself is in size the smallest district in the province and

yet carries a population of 1.7 million meaning it has a high density (4853/ Km²) and is very congested.3

This is the result of many informal settlements in peri-urban areas (27 informal settlements) with a high

level of poverty (75% of the peri-urban population live on less than US$ 1 a day).4 Lusaka is badly

affected by poor sanitation with annual outbreaks of cholera, typhoid and dysentery. Only about 10 – 15

% of the population in Lusaka benefit from access to sewer networks. The remaining population

especially in the peri-urban areas is primarily dependent on pit latrines, which are located within the

household boundaries. The country’s urban system is dominated by Lusaka, which is a host to 32 % of

the total urban population in the country.

3 2010 Living Conditions Monitoring Survey Report

4 Ibid

12

3.2.13 Lusaka is experiencing typical urban development problems associated with population growth,

high levels of urbanization and unemployment, inadequate services and inadequate waste management.

The basic determinants of better health, such as access to water, and sanitation, are still in a critical state

in Lusaka. Limited access to WSS facilities accompanied by poor hygiene is associated with skin

diseases, Acute Respiratory Infections (ARIs), and diarrheal diseases, the leading preventable diseases.

ARI and diarrheal diseases are among the leading causes of child deaths in Zambia5. HIV prevalence

rate for Lusaka district stands at 20.8 per cent, making it the highest district compared to others, in 2013.

The program will continue building on the efforts made by the GRZ on sensitization and awareness

raising. Awareness raising is one of the activities programmed under the gender strategy of the LWSC.

3.2.14 From field visits and discussions with potential beneficiaries, the major findings were as follows:

(i) the state of sanitation in Lusaka has affected the population differently according to their economic

background, gender and their social status. (ii) The effect of the health situation as a result of poor

sanitation facilities is different from high cost areas with sewerage systems to poor-urban areas with

mainly on site sanitation facilities such as pit latrines. While the sewerage system is in a state of

disrepair and experiencing frequent blockages and spillages presenting a very high public health risk for

the population, the majority of residents in the peri-urban areas live in plots shared by a number of

families with one shared sanitation facility, and in some cases also with neighbour’s.

3.2.15 The stakeholders and the host community were positive and there was broad support for the

program as it anticipated that the rehabilitation of the sewer networks and the provision of adequate

sanitation systems and facilities that will result in an improvement in health and hygiene for the

beneficiary population. Most of the respondents in the project area have a positive outlook towards the

Lusaka Sanitation Plan. The youth in particular, are looking forward to employment opportunities during

the construction phase and hence have a positive mind set about the development. There is no negative

impact envisaged.

3.2.16 The LSP therefore will address these issues highlighted above by having proper climate resilient

sewer infrastructure (to reduce spillages and blockages), improved sanitation facilities in public places

(markets, health centers, and the most disadvantage schools in the project peri-urban areas) will reduce

vulnerability to water borne diseases, increase education attainment, and improve health centers

infrastructure. Community Led Total Sanitation (CLTS) and Participatory Hygiene and Sanitation

Transformation (PHAST) will be used to increase awareness among residents with the objective to

create demand for better sanitation. The LSP will also focus on skills development, helping women and

youth to engage in business opportunities to contribute to increasing income for poor households.

Moreover, the LSP will help in sludge management by providing technical knowledge, protection, and

innovative emptying techniques that do not necessarily require manual handling. Annex B.8 provides

more details on the gender and social analysis.

3.2.17 Involuntary resettlement: There will be no involuntary resettlement. Trunk sewer lines and

laterals will be laid along road reserves and existing way leaves to reduce incidences and scale of

compensation. FSM units will be on existing parcels of land requiring minor adjustment within the

defined reserve area to the extent possible. Should the scope of the activities change in such a way that

results in land acquisition, the Bank’s Integrated Safeguards Policy, specifically the Operational Safeguards 2

on Involuntary Resettlement will be followed and implemented accordingly.

5 MoH, 2012a.

13

IV. IMPLEMENTATION

4.1 Implementation Arrangements

4.1.1 The LSP shall be implemented using existing structures of LWSC incorporating lessons and

experience gained from similar operations. The program is expected to start in 2015 with a duration of

five years. The GRZ is the borrower of the ADB loan, while LWSC, under the MLGH, will be the

Executing Agency (EA). LWSC has constituted within its Project Implementation Department (PID), a

Program Implementation Team (PIT), comprising a Program Coordinator, Wastewater Expert,

Environmental Expert, Social/Community Mobilization Expert, Procurement Expert, Onsite Sanitation

Expert, Monitoring & Evaluation Expert, Program Accountant, and seconded staff from MLGH, MoH

and LCC to be in charge of implementation. Gender mainstreaming and gender related activities would

be implementing in consultation with the TA on gender and social equity provided by MCC and the

LWSC Gender Focal Point. The PIT jointly with LCC will be responsible for implementation of

component 2 using NGOs and CBOs within Lusaka’s and especially in the peri-urban areas. The LWSC

shall be responsible for overall coordination of the Program and reporting obligations to the financiers

and GRZ. Technical Assistance to the PIT will be provided by an experienced Engineering Services

consultant for design review, supervision and implementation support for sewerage infrastructure

rehabilitation and development. A program steering committee shall be stablished chaired by MLGH

which will oversee the program implementation. The Bank, WB, EIB and KFW will share the use of the

PIT. See Annex B.3 for implementation details.

4.2 Procurement Arrangements

4.2.1 All procurement of goods and works and acquisition of consulting services financed by the Bank

will be in accordance with the Bank's Rules and Procedures for Procurement of Goods and Works”,

dated May 2008, revised July 2012; and “Rules and Procedures for the Use of Consultants”, dated May

2008, revised July 2012,, using the relevant Bank Standard Bidding Documents. However, all

procurements within the thresholds for National Competitive Bidding (NCB) and Shopping for goods

and works will be procured using the National Procurement Procedures (NPP) as set forth in the Public

Procurement Act, No.12 of 2008, as amended by the Public Procurement (Amendment) Act, 2011

applying the appropriate national standard bidding documents and in conformity with the provisions of

the Financing Agreement. The LWSC as the EA will be responsible for the procurement of goods, works

and service contracts.

4.2.2 Major civil works involving rehabilitation and expansion of sewer networks will be undertaken

through ICB with prequalification, while other sanitation options will be procured under NPP. The

nature, scope and monetary value of the goods, works and consultancy services has determined the

methods of procurement as detailed in the procurement Annex B.5.

4.2.3 The capacity and risk assessment of the EA was done in collaboration with the WB and is rated

as substantial. This rating takes into account that the program is of high value and technically complex

and therefore there is need for high level technical and procurement skills to compliment LWSC

capabilities. A detailed risk assessment with migration measures is in Annex B.5 and the rating is

expected to improve to moderate once most of the recommended measures are undertaken.

4.3 Financial Management and Disbursement Arrangements

4.3.1 Financial Reporting and External Audit: The Bank conducted in collaboration with the WB an

assessment for the LWSC’s Finance Division financial management arrangements for the

implementation of the LSP (that included a review of the budgeting, accounting, internal controls, flow

of funds, financial reporting and auditing arrangements).

14

The assessment indicates that these arrangements meet the Bank’s minimum requirements to ensure that

funds made available for program financing are used economically and efficiently and for the purpose

intended. The overall FM risk rating is Moderate.

4.3.2 The program FM will be handled within the existing structures of the LWSC’s Finance Division.

The program accounting system will be based on an automated accounting package being used by the

LWSC. The EA will produce a single quarterly progress reports, including all sources of financing and

program. The program financial statements (that will include all co-financiers funds and program

expenditures) will be audited annually by the qualified and independent private audit firm, with

involvement of the Office of Auditor General, in accordance with a Bank approved audit ToR. The audit

report together with management letter shall be submitted to Bank within six months after the end of

each fiscal year.

4.3.3 Disbursement Arrangements: Disbursement of the ADB resources will be done in accordance

with Bank’s procedures and the Disbursement Letter will document the disbursement procedures and

methods to be applied for the Loan. The LSP will have access to (i) Direct Payment, (ii) Special Account

(SA) and (iii) Reimbursement as prescribed in the Bank’s Disbursement Handbook. Two separate

Special Account denominated in USD and Kwacha sub-account will be opened at a Commercial Bank

acceptable to the Bank. Disbursement to contractors, suppliers and consultants will be by direct payment

or reimbursement guarantee. Small contracts of values up to UA 20,000, including community

mobilization, sanitation and hygiene, as well as related operational costs may be paid from the Special

Account. Detailed financial management, disbursement and auditing arrangements are included in

Annex B.4.

4.4 Monitoring and Evaluation

4.4.1 M&E of the program will be carried out as a regular management function by LWSC based on

the indicators defined in the result based logical framework. Support will be provided towards

developing a sanitation monitoring system which will capture existing sewer infrastructure, onsite

sanitation areas, operating information on incidences of sewer flooding and relevant public health

information. The M&E Expert PID will be fully responsible for collecting and analyzing data for

reporting.

4.4.2 Joint Bank and co-financiers supervision missions will be undertaken twice per year and the

Bank will undertake desk supervision quarterly, providing feedback and following up on progress

reports. A Mid-Term Review will be undertaken during the third year of implementation. LWSC will

prepare single quarterly Progress Reports, annual technical and financial audits including all activities by

the co-financiers for submission. Upon completion, LWSC will prepare and submit to the Bank a PCR.

Table 4.1: Key Milestones

Timeframe Milestone Monitoring process/feedback loop

June 2015 ADB Board of Directors Loan approval

November 2015 Loan Effectiveness Launching mission; Loan conditions approved by the Bank

February 2016 TA consultant engaged Procurement & contract documents; Bank’s “No objection”

February 2017 Construction works start Bidding & contract documents; Bank’s “No objection”;

Monthly construction supervision reports; Bank’s comments

on the annual and quarterly reports; Supervision missions

January 2016 Hygiene and sanitation

NGOs/consultants engaged

Procurement & contract documents; Bank’s “No objection

June 2018 Mid-Term Review Assessment of progress/performance, restructuring if needed

December 2019 Program completion Commissioning of works

December 2020 Program completion report Project completion mission

15

4.5 Governance

4.5.1 Successful implementation of the program requires good governance at National, Local and

Executing Agency level. The overall governance rating of Zambia is above Africa’s continental average

in many fronts and measures. Zambia ranks 13th

out of 52 countries in the 2014 Ibrahim Index of

African Governance and 83rd

out of 174 in Transparency International’s 2013 Corruption Perception

Index (a relative improvement from 88 compared to 2012). It ranked amongst the top 10 countries

performing reasonably in safety and rule of law. In terms of National Security it stands 6th

on the

Ibrahim Index of African Governance.

4.5.2 The governance of the WSS system goes beyond LWSC. GRZ has shown commitment to reform

the sector for better transparency and accountability. Revision of the WSS policy is ongoing to provide

clear guidance, as planning and implementation of WSS related projects has many socio-economic

aspects. In addition, the LSP is of high value, technically complex and therefore there is need for high

level technical and procurement skills to compliment LWSC capabilities. To mitigate against this, an

Engineering Services consultant will assist LWSC enhance appropriate procurement, technical, contract

management/dispute resolution skills to complement their capability to successfully manage the LSP. To

counter corruption and fraud, tenders shall be evaluated by an appointed evaluation committee whose

recommendations shall be submitted to the LWSC Tender Committee for approval before submission to

the Bank for No Objection and approval of contract award depending on the thresholds. The internal

audit arrangements at the LWSC have been reviewed and found acceptable. There will also be a

program steering committee chaired by MLGH which will oversee the implementation. These shall

reinforce transparency and accountability during tendering and award of contracts.

4.5.3 LWSC management operates under the overall oversight of a non-executive Board of Directors

which provides guidance, monitors executive activities and contributes to development of company

strategies. All board members are appointed by the shareholders who are the LCC, Chongwe, Luangwa

and Kafue District Councils and consists of members from both Government and private sector. The

Bank will support governance enhancement in LWSC through the institutional strengthening and

capacity building component which includes supporting the Sustainability Agreement (SA) entered into

between LWSC and GRZ.

4.6 Sustainability

4.6.1 GRZ’s commitment has been shown by the ongoing water sector reforms since the 1990’s which

culminated in the formation of 11 utilities to provide WSS to the urban town and cities. The LSP is an

integral part of the NUWSSP which Government launched in 2011, a holistic and integrated approach

which aims at improved livelihoods and public health of Zambia’s urban population. Currently, LWSC

has a SA with GRZ, to ensure that the utility moves towards technical, environmental, and financial

sustainability including improved operational performance, financial and corporate governance. In this

regard, renewal of rollover of the SA covering the period 2018-2020 has been made a condition of the

loan.

4.6.2 The tariff for sewerage services is not yet fully reflective of economic cost of service provision.

The current tariff policy is to recover at least O&M costs and in the long run recover full cost through

user charges. Therefore, there is need to review and update the structure to reflect efficient cost of

service so that tariffs are commensurate to the cost of these services. In this regard, LWSC is to finalise

the ongoing tariff and affordability study and implement a program of tariff adjustments for WSS

services in order to ensure sustainability of service provision including investment. These adjustments

should also take into account the social nature of services and the needs of the poor. This is one of the

conditions of the ADB loan.

16

4.6.3 LWSC has capable staff and is already operating its WSS systems in Lusaka. In addition, the

LSP incorporates training and capacity building of LWSC personnel to operate and maintain the

sanitation facilities. As part of the LSP and with the expanding sewerage infrastructure, LWSC is

undertaking institutional assessment study to raise the profile of sanitation services, empower and

strengthen the Sewerage and Peri Urban Departments within LWSC. In this regard, LWSC will

complete the ongoing sanitation institutional assessment study and implement its recommendations by

2016.

4.6.4 Currently, LWSC collects revenue for sanitation services to cover the O&M costs of the existing

sewerage facilities. The refurbishment of dilapidated sewerage infrastructure will reduce the need for

and frequency of repairs, and hence allow for significant savings on O&M costs. At full capacity, the

incremental revenue (more than ZMK 15 million) generated from the LSP will more than offset the

incremental recurrent costs (ZMK 12 million). The incremental revenues as well as cost savings

generated from the program will more than offset the incremental recurrent costs. Consequently, there

will not be any need for budgetary support or subsidies from GRZ to the O&M of the sanitation system

in the project area.

4.7 Risk management

The following risks shall be monitored and mitigated to the extent possible.

RISKS MITIGATION MEASURES (rating) 1. Sewers are expensive and

customers might be unwilling

to pay for services and may

hinder connections to the

sewers and construction of

onsite systems

Carefully balance willingness to pay, affordability and technology options.

A detailed tariff study is currently underway and will be supported by

extensive social marketing and awareness raising. Customers to be

connected as sewers are laid and connection charges recovered from

sanitation bills. Recovered charges will form a revolving fund for LWSC

(Moderate)

2. Poor coordination between

different institutions involved

in the implementation of some

components at local level.

Before loan approval, Borrower to submit an MOU signed between LWSC

and LCC on the cooperation for implementation of the component 2,

detailing the roles each institution will play during the implementation

(Moderate)

3. Unauthorized program

expenditures

Existing internal control systems will be strengthened in the implementation

of the program (Moderate)

4. Program may be exposed to

future climate risks

Development of WSS emergency preparedness and disaster risk

management plan and design of climate resilient sewerage infrastructure

(Moderate)

5. Program is of high value

and technically complex

LWSC to enhance appropriate procurement, technical, contract management

/dispute resolution skills to complement their capability to successfully

manage the program. Engineering services consultant to assist carry out the

design review and prepare tender documents for the civil works.

(Substantial)

4.8 Knowledge building

The Bank will support development of a monitoring system to assist LWSC better understand sanitation

management and also develop guidelines for better management of sludge. The knowledge products will

contribute to improvement of Zambia’s urban sanitation sub-sector as well as assist the Bank replicate

the good practices in other member countries. With mounting international concern at the rising

frequency and severity of natural hazards and disasters, in part due to factors related to climate change,

there is increased impetus in Zambia and other countries to put in place legal, technical, financial and

institutional measures that will reduce the destructive effects on livelihoods of individuals and

communities. Therefore, support will be provided for development of a WSS Sector Emergency

Preparedness and Disaster Risk Management Plan, to strengthen institutions, mechanisms and capacities

at all levels, in particular in communities to systematically contribute to building resilience to hazards

and disasters.

17

V. LEGAL INSTRUMENTS AND AUTHORITY

5.1 Legal instrument

An ADB loan will be used to finance this program.

5.2 Conditions associated with Bank’s intervention

5.2.1 Condition Precedent to Entry into Force of the Loan Agreement

The loan agreement shall enter into force subject to fulfilment by the Borrower of the provisions

of section 12.01 of the General Conditions Applicable to the African Development Bank Loan

Agreements and Guarantee Agreements.

5.2.2 Conditions Precedent to First Disbursement for the Loan

The obligation of the Bank to make the first disbursement of the Loan shall be conditional upon

entry into force of the Loan Agreement in accordance with Section 5.2.1 above and the

fulfilment, in form and substance satisfactory to the Bank, of the following conditions:

Evidence of having opened one (1) foreign currency denominated Special Account and one

(1) local currency denominated Special Account, at a bank acceptable to the Bank into

which the proceeds of the Loan will be deposited; and

Evidence of having signed a Subsidiary Financing Agreement between the Borrower and

the Lusaka Water and Sewage Company in form and substance acceptable to Bank.

5.2.3 Other Conditions

The Borrower/Recipient shall provide evidence, in form and substance satisfactory of the following:

The Borrower shall, by November 2015, submit evidence in form and substance

satisfactory to the Bank, of having established the Program Implementation Team whose

skills and qualifications are acceptable to the Bank;

The Borrower shall report on the sustainability agreement entered into between the Board

of LWSC and the Borrower on an annual basis; and

The Borrower shall renew or rollover the Sustainability Agreement for the period 2018-

2020.

5.2.4 Undertakings

Under the ADB Loan Agreement, the Borrower/ Recipient undertakes the following:

The Borrower undertakes to implement the recommendation of the tariff study and cause

the implementation of a program of tariff adjustments for water supply and sanitation

services in order to ensure sustainability of service provision including investment;

The Borrower undertakes to implement the Program in accordance with national

legislation, and the Environmental and Social Management Plan (ESMP), and report to the

Bank on a quarterly basis in a form acceptable to the Bank and;

The Borrower undertakes to complete the institutional assessment study before end of June

2016, and implement the recommendations by 2017.

18

5.3. Compliance with Bank Policies

The project complies with all applicable Bank policies.

VI RECOMMENDATION

Management recommends that the Board of Directors of the Bank approve the proposal for an

ADB loan of USD 50 million (equivalent UA 35.53 million) to the Republic of Zambia for the

purposes and subject to the conditions stipulated in this report

I

Appendix I. Country’s comparative socio-economic indicators

Year Zambia Africa

Develo-

ping

Countries

Develo-

ped

Countries

Basic Indicators

Area ( '000 Km²) 2011 753 30,323 98,458 35,811Total Population (millions) 2013 14.5 1,109.0 5,909.3 1,252.8Urban Population (% of Total) 2013 40.0 40.2 47.7 78.3Population Density (per Km²) 2013 17.7 46.9 70.7 23.5GNI per Capita (US $) 2012 1 350 1 719 3 815 38 412Labor Force Participation - Total (%) 2012-2013 39.2 37.4 67.9 72.1Labor Force Participation - Female (%) 2012-2013 45.6 42.5 38.6 44.6Gender -Related Dev elopment Index Value 2007-2011 0.473 0.502 0.694 0.911Human Dev elop. Index (Rank among 187 countries) 2012 163 ... ... ...Popul. Liv ing Below $ 1.25 a Day (% of Population)2008-2011 74.5 40.0 20.6 ...

Demographic Indicators

Population Grow th Rate - Total (%) 2013 3.2 2.5 1.3 0.3Population Grow th Rate - Urban (%) 2013 4.3 3.4 2.5 0.6Population < 15 y ears (%) 2013 46.6 40.9 28.3 16.4Population >= 65 y ears (%) 2013 2.6 3.5 6.1 16.8Dependency Ratio (%) 2013 99.6 77.9 52.4 49.9Sex Ratio (per 100 female) 2013 99.5 100.0 103.3 94.4Female Population 15-49 y ears (% of total population) 2013 22.9 24.0 53.1 45.2Life Ex pectancy at Birth - Total (y ears) 2013 58.1 59.2 68.4 77.8Life Ex pectancy at Birth - Female (y ears) 2013 60.0 60.3 70.3 81.2Crude Birth Rate (per 1,000) 2013 42.8 34.8 21.2 11.2Crude Death Rate (per 1,000) 2013 10.2 10.4 7.6 10.4Infant Mortality Rate (per 1,000) 2013 64.4 61.9 39.8 5.5Child Mortality Rate (per 1,000) 2013 99.8 97.4 56.3 6.6Total Fertility Rate (per w oman) 2013 5.7 4.6 2.6 1.7Maternal Mortality Rate (per 100,000) 2010 440.0 415.3 240.0 16.0Women Using Contraception (%) 2013 47.1 34.9 62.6 71.3

Health & Nutrition Indicators

Phy sicians (per 100,000 people) 2004-2011 6.6 47.1 117.8 297.8Nurses (per 100,000 people)* 2004-2011 78.4 132.6 202.7 842.7Births attended by Trained Health Personnel (%) 2006-2011 46.5 52.6 66.3 ...Access to Safe Water (% of Population) 2012 63.3 68.8 87.2 99.2Access to Health Serv ices (% of Population) 2004 90.2 65.2 80.0 100.0Access to Sanitation (% of Population) 2012 42.8 39.4 56.9 96.2Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2012 12.7 3.9 1.2 ...Incidence of Tuberculosis (per 100,000) 2012 427.0 223.6 144.0 23.0Child Immunization Against Tuberculosis (%) 2012 83.0 83.0 81.5 96.1Child Immunization Against Measles (%) 2012 83.0 74.0 83.0 94.3Underw eight Children (% of children under 5 y ears) 2005-2012 14.9 19.7 17.0 1.4Daily Calorie Supply per Capita 2009 1 879 2 481 2 675 3 285Public Ex penditure on Health (as % of GDP) 2011-2012 3.7 2.9 3.0 7.5

Education Indicators

Gross Enrolment Ratio (%)

Primary School - Total 2012 113.6 101.9 109.4 100.9 Primary School - Female 2012 113.3 97.9 107.6 100.6 Secondary School - Total 2012 20.5 47.4 69.1 100.2 Secondary School - Female 2012 15.2 44.0 67.8 99.7Primary School Female Teaching Staff (% of Total) 2012 53.1 46.6 58.0 84.3Adult literacy Rate - Total (%) 2012 ... 62.0 80.3 99.2Adult literacy Rate - Male (%) 2012 ... 70.7 85.9 99.3Adult literacy Rate - Female (%) 2012 ... 53.7 74.9 99.0Percentage of GDP Spent on Education 2008-2012 1.3 5.3 4.3 5.5

Environmental Indicators

Land Use (Arable Land as % of Total Land Area) 2011 4.6 7.6 10.7 10.8Annual Rate of Deforestation (%) 2000-2009 2.4 0.6 0.4 -0.2Forest (As % of Land Area) 2011 66.3 23.0 28.2 35.0Per Capita CO2 Emissions (metric tons) 2010 0.2 1.2 3.0 11.6

Sources: AfDB Statistics Department Databases; last update :

United Nations Population Division, World Population Prospects: The 2012 Revision;

World Bank: World Development Indicators; UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports.

For any given interval, the value refers to the most recent year available during the period

Note : n.a. : Not Applicable ; … : Data Not Available.

May 2014

0102030405060708090

2005

2006

2007

2008

2009

2010

2011

2012

2013

Infant Mortality Rate( Per 1000 )

Zambia Africa

0

200

400

600

800

1000

1200

1400

1600

1800

2004

2005

2006

2007

2008

2009

2010

2011

2012

GNI Per Capita US $

Zambia Africa

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2005

2006

2007

2008

2009

2010

2011

2012

2013

Population Growth Rate (%)

Zambia Africa

111213141516171

2005

2006

2007

2008

2009

2010

2011

2012

2013

Life Expectancy at Birth (years)

Zambia Africa

II

Appendix II: Table of AFDB’s portfolio in the Zambia

Division Long name Status of

Project

Finance

project Sector Name Window

Approval

date

Entry into

force

Effective

1st disb

Planned project

completion date Amount App. Amount Dis.

Dis.

Ratio Age

OSAN1

GAFSP-AGRICULTURE

PRODUCTIVITY AND MARKET

ENHANCEMENT PROJEC

OnGo P-ZM-AA0-

019 Agriculture

[OTHERS] 3/26/2014 6/10/2014 10/20/2014 6/30/2020 22,493,675.5 463,050.9 2.1

1.1

OSAN1 LIVESTOCK INFRASTRUCTURE

SUPPORT PROJECT (LISP) OnGo

P-ZM-AAE-

001 Agriculture [ ADF ] 6/19/2013 12/30/2013 3/25/2014 12/31/2018 12,000,000.0 916,122.5 7.6

1.9

OSAN1 PROJECT PREPARATION FACILITY -

ZAMBIA LISP OnGo

P-ZM-AAE-

002 Agriculture [ ADF ] 3/29/2013 8/1/2013 2/26/2014 8/31/2015 300,000.0 196,935.9 65.6

2.1

OSAN3 LAKE TANGANYIKA DEVELOPMENT

SUPPORT PROJ APVD

P-ZM-AA0-

021 Agriculture [ ADB ] 12/18/2014 12/31/2018 16,253,704.4 0.0 0.0

0.4

OSAN3 LAKE TANGANYIKA DEVELOPMENT

SUPPORT PROJ APVD

P-ZM-AA0-

021 Agriculture

[OTHERS] 12/18/2014 12/31/2018 5,059,631.4 0.0 0.0

0.4

Agriculture 56,107,011.2 1,576,109.3 2.8 1.2

OSAN3 STRENGTHENING CLIMATE

RESILIENCE IN THE KAFUE BASIN OnGo

P-ZM-CZ0-

001 Environment

[OTHERS] 10/18/2013 12/18/2013 7/21/2014 6/30/2019 12,649,078.4 0.0 0.0

1.6

OSAN3 STRENGTHENING CLIMATE

RESILIENCE IN THE KAFUE BASIN OnGo

P-ZM-CZ0-

001 Environment

[OTHERS] 10/18/2013 12/18/2013 7/21/2014 6/30/2019 14,817,491.9 608,910.7 4.1

1.6

Environment 27,466,570.3 608,910.7 2.2 1.6

OFSD1

LINE OF CREDIT TO FRB

SUBSIDIARY, FIRST NATIONAL

BANK OF ZAM

APVD P-ZM-HAB-

022 Finance [ ADB ] 12/12/2012 5/21/2022 31,780,267.4 0.0 0.0

2.4

OFSD1

AFRICA SME PROGRAM LOC -

CETZAM FINANCIAL SERVICES

PLC ZA

OnGo P-ZM-HB0-

003 Finance [ ADB ] 10/21/2013 9/4/2014 10/1/2014 3/27/2020 1,084,206.7 1,084,206.7 100.0

1.5

Finance 32,864,474.2 1,084,206.7 3.3 2.0

ONEC2 POWER TRANSMISSION PROJECT OnGo P-ZM-FA0-

003 Power [ ADF ] 6/13/2012 9/24/2013 2/10/2015 12/31/2018 30,000,000.0 0.0 0.0

2.9

ONEC2 POWER TRANSMISSION PROJECT OnGo P-ZM-FA0-

003 Power [ NTF ] 6/13/2012 12/31/2018 6,400,000.0 0.0 0.0

2.9

OPSM3 ITEZHI-TEZHI HYDROPOWER

PROJECT APVD

P-ZM-FAB-

004 Power [ ADB ] 6/13/2012 4/14/2014 12/31/2018 25,298,156.9 0.0 0.0

2.9

Power 61,698,156.9 0.0 0.0 2.9

OSHD2

SUPPORT FOR SCIENCE AND

TECHNOLOGY EDUCATION PROJECT

(SSTEP/

OnGo P-ZM-IA0-005 Social [ ADF ] 11/20/2013 1/7/2015 1/7/2015 12/31/2019 22,220,000.0 767,358.8 3.5

1.5

Social 22,220,000.0 767,358.8 3.5 1.5

OITC2 BOTSWANA/ZAMBIA-KAZUNGULA

BRIDGE PROJECT OnGo P-Z1-DB0-031 Transport [ ADF ] 12/7/2011 9/3/2012 11/16/2012 12/31/2019 51,000,000.0 520,945.4 1.0

3.4

OITC2 MULTI-NACALA CORRIDOR

PROJECT-PHASE II (ZAMBIA) OnGo P-Z1-DB0-063 Transport [ ADF ] 9/27/2010 6/10/2011 10/24/2011 12/1/2016 69,369,000.0 18,971,132.7 27.3

4.6

Transport 120,369,000.0 19,492,078.1 16.2 4.0

AWTF MULTIPURPOSE SMALL DAMS OnGo P-ZM-EAZ-

002 Water Sup/Sanit

[OTHERS] 9/4/2012 8/28/2013 1/31/2014 5/28/2016 744,683.4 223,405.0 30.0

2.7

OWAS2 NATIONAL RURAL WATER SUPPLY

AND SANITATION PROGRAM OnGo P-ZM-E00-009 Water Sup/Sanit [ ADF ] 10/31/2006 11/15/2007 1/29/2008 3/31/2015 15,000,000.0 10,954,689.4 73.0

8.5

OWAS2

TRANSFORMING RURAL

LIVELIHOODS IN WESTERN ZAMBIA

- NATIONAL

APVD P-ZM-E00-028 Water Sup/Sanit [ ADB ] 9/10/2014 12/31/2019 11,203,469.5 0.0 0.0

0.7

OWAS2

TRANSFORMING RURAL

LIVELIHOODS IN WESTERN ZAMBIA

- NATIONAL

APVD P-ZM-E00-028 Water Sup/Sanit

[OTHERS] 9/10/2014 1/7/2015 12/31/2019 2,743,570.3 0.0 0.0

0.7

Water Sup/Sanit 14,691,723.1 223,405.00 37.6 3.1

Grand Total 335,416,935.6 23,752,068.70 7.08 2.2

III

Appendix III. Key related projects financed by the Bank and other development partners in the country Donor

Agency Program Title Project Coverage Total Budget (USD) Implementation Organisation Project Status

AfDB

National Rural Water Supply and

Sanitation Program II Western Province 15,500,000

Ministry of Local Government and

Housing On-going

To develop and field test guidelines for

community driven planning, design

and implementation of multi-purpose

small dams.

Nationwide 1,235,000 Ministry of Mines, Energy and

Water Development On-going

European

Investment

Bank

Zambia water and Sanitation Project

Mufulira,

Chililabombwe,

Chingola,

187,000,000 Mulonga Water and Sewerage

Company On-going

UK DFID/

UNICEF

3 million Sanitation and Hygiene

Project, 44 Districts 32,000,000

Ministry of Local Government and

Housing On-going

Germany

National Rural Water Supply and

Sanitation Programme (Basket

Financing Mechanism)

6 districts in five

provinces 13,000,000

Ministry of Local Government and

Housing On-going

Urban Water Supply and Sanitation

(Basket Financing Mechanism) Nationwide 10,400,000

Ministry of Local Government and

Housing On-going

Devolution Trust Fund - Financial

Support to DTF in 4 phases Nationwide 18,300,000

Ministry of Local Government and

Housing On-going

Urban Water Supply and Sanitation

Eastern Province

Eastern Province-

Nyimba, Chadiza, Katete

and Chipata districts

21,800,000 Eastern Water and Sewerage

Company

On-going

JICA

To establish and roll-out the SOMAP

O&M model

4 Districts in Luapula

Province 6,000,000

Ministry of Local Government and

Housing

On-going

To Construct 216 boreholes with

handpumps

Mansa, Mwense,

Milenge and Nchelenge

in Luapula Province

8,700,000

Ministry of Local Government and

Housing

On-going

US MCC Lusaka Water Supply, Sanitation &

Drainage (LWSSD) Project Lusaka Province 355,000,000

Lusaka Water and Sewerage

Company On-going

US AID

To provide water supply, sanitation

and hygiene facilities in more than 600

schools in 4 districts.

Chadiza, Chipata,

Mambwe and Lundazi of

Eastern Province.

20,000,000

Ministry of Education, Science,

Technology, Vocational Training

and Early Education

(MOESVTEE) and collaborating

with MLGH

On-going

UNICEF

Rural Water, Sanitation, Hygiene

Promotion

Nationawide 22,000,000

Ministry of Local Government and

Housing, Ministry of Chiefs and

Traditional Affairs and Ministry of

Education

On-going

World Bank

Water Resources Management Nationawide 50,000,000 Ministry of Mines, Energy and

Water Development On-going

Irrigation development and Support

project 3 Sites 115,000,000

M Ministry of Agriculture and

Livestock On-going

Livestock Development and Animal

health project Selected provinces 50,000,000 MAL On-going

IV

Appendix IV. Map of Zambia showing Lusaka Water and Sewerage Company and other utilities

Disclaimer

This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do

not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

V

APPENDIX V: CLIMATE CHANGE SCREENING

Adaptation Review Summary

Climate change is making sewage treatment plants and sewerage networks more vulnerable to

major failures and overflows due to more intense storms and increasingly heavy precipitation

events. Climate change that is already underway will lead to overwhelmed sewerage systems,

resulting in massive overflows of partially or untreated sewage into residential areas and receiving

waters such as Ngwerere and Chunga steams surrounding Lusaka; water that of the people of

Lusaka and Chongwe town rely on for food and health. The Lusaka Sanitation Program will

support the development of a Water and Sanitation Emergency Preparedness and Disaster Risk

Management plan for Lusaka which will be closely linked with preparation of Climate Change &

Climate Variability adaptation plans.

The plans will respond to climate risks by improving the design of the key sewerage

infrastructure, increase resilience to flooding of communities utilities by building new resilient

sanitation facilities, modify existing assets to be more climate resilience by increasing the

interceptor sizes from 300mm diameter to 750mm, whereas the major sewer collector lines will

be increased from 200mm diameter to 400mm to accommodate both the increase in population

and to cope with more intense rainfall and accommodate low level flooding;, improve master

planning and increase institutional capacity for responding to climate related damage. The plans

would also support increased local community knowledge of risks and responses when disaster

strikes and will contribute to increased resilience of communities.

Selected adaptation component Suggested activities

Improve disaster risk management by

developing a Water and Sanitation Sector

Emergency Preparedness and Disaster Risk

Management Plan to increase LWSC/

National and Municipal agencies and local

community knowledge of risks and

responses

- Provide information to LWSC, National

and Municipal institutions and carry out

awareness raising activities

- Train stakeholders in use of water and

sanitation facilities during climate related

emergencies

- Climate resilient infrastructure better able

to cope with hazards such as flooding and

extreme storms.

- Improve operational risk management to

ensure preventive and routine

maintenance is effectively carried out to

reduce sewage blockages and spillages as

a result of adverse weather

- Modifying existing sewerage system

assets to increase climate resilience by

expanding the capacity of sewerage

systems and ensure protection of local

environment