AFRICAN DEVELOPMENT BANK GROUP

PROJECT : WATER SUPPLY AND SANITATION IN: I) THE

RURAL AREAS OF TADJOURA, ARTA AND ALI

SABIEH DISTRICTS; II) THE DISTRICT CENTRES OF

TADJOURA AND ALI SABIEH

COUNTRY : REPUBLIC OF DJIBOUTI

APPRAISAL REPORT

Date : SEPTEMBER 2012

OWAS DEPARTMENT

Translated Document

Appraisal Team

Sector Director: Mr. S. JALLOW, Director, OWAS

Regional Director: Mr. S. KONE, Director, OREB

Sector Manager: Mr. O.M. CHANDA, Division Manager, OWAS.2

Team Leader: Mrs. M. MOUMNI, Chief Water and Sanitation Engineer, OWAS

TABLE OF CONTENTS Page

Currency equivalents, fiscal year, weights and measures, abbreviations and acronyms, project

information, project summary, logical framework, implementation schedule.......................................i-v

I – STRATEGIC THRUST AND RATIONALE ............................................................... 1

1.1 Project linkages with country strategies and objectives .......................................... 1

1.2 Rationale for the Bank's involvement ..................................................................... 1

1.3 Aid coordination ...................................................................................................... 2

II – PROJECT DESCRIPTION .......................................................................................... 3

2.1 Project components ................................................................................................. 3

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

2.3 Project type .............................................................................................................. 4

2.4 Project type cost and financing arrangements ......................................................... 4

2.5 Project target area and beneficiaries ........................................................................ 6

2.6 Participatory process for project identification, design and implementation .......... 6

2.7 Bank Group experience, lessons reflected un project design .................................. 7

2.8 Key performance indicators .................................................................................... 7

III – PROJECT FEASIBILITY ........................................................................................... 8

3.1 Economic and Financial Performance ..................................................................... 8

3.2 Environmental and social impacts ........................................................................... 8

IV – IMPLEMENTATION ............................................................................................... 10

4.1 Implementation arrangements ............................................................................... 10

4.2 Monitoring ..................................................................................................... ……12

4.3 Governance ............................................................................................................ 13

4.4 Sustainability ......................................................................................................... 13

4.5 Risk management .................................................................................................. 14

4.6 Knowledge building .............................................................................................. 15

V – LEGAL FRAMEWORK ............................................................................................ 15

5.1 Legal instrument .................................................................................................... 15

5.2 Conditions associated with Bank intervention ...................................................... 15

5.3 Compliance with Bank policies ............................................................................. 16

VI – RECOMMENDATION ............................................................................................ 16

Appendix I. Country's comparative socio-economic indicators

Appendix II. Table of ADB portfolio in the country

Appendix III. Key related projects financed by the Bank or other development partners

of the country

Appendix IV. Map of project area

i

Currency Equivalents June 2012

1 UA = DJF 275.565

1 UA = USD 1.51026

1 UA = Eur 1.21765

Fiscal Year 1 January – 31 December

Weights and Measures

1 metric tonne = 2,204 pounds (lbs.)

1 kilogramme (kg) = 2.204 (lbs.)

1 metre (m) = 3.28 feet (ft.)

1 millimetre (mm) = 0.03937 inches

1 kilometre (Km) = 0.62 mile

1 hectare (ha) = 2.471 acres

Abbreviations and Acronyms

ADF : African Development Fund

AFD : French Development Agency

AWF : African Water Facility

CSP : Country Strategy Paper

CVGE : Village Water Management Committee

DATE : Directorate of Territorial Development and the Environment

DE : Directorate of Water

DJF : Djiboutian Franc

DWSS : Drinking Water Supply and Sanitation

ESMP : Environmental and Social Management Plan

EU : European Union

FNE : National Water Fund

IEC : Information, Education and Communication

INDS : National Social Development Initiative

MAPERH : Ministry of Fisheries, Livestock and Fisheries Resources

MDG : Millennial Development Goal

MSP : Ministry of Public Health

NGO : Non-Governmental Organization

ONEAD : Djibouti National Water and Sanitation Authority

RWSSI : Rural Water Supply and Sanitation Initiative

SAWS : Stand-Alone Water Station

SC : Steering Committee

UA : Unit of Account

WB : World Bank

WHO : World Health Organization

ii

Project Information

Client Information

RECIPIENT : Government of the Republic of Djibouti

EXECUTING AGENCY : Ministry of Agriculture, Fisheries, Livestock and

Fisheries Resources (MAPERH)

Financing Plan

Source Amount

(UA million)

Instrument

ADF

3.500

Project Grant

RWSSI Trust Fund 2.464 Project Grant

Government 0.672 Contribution

Beneficiaries 0.079 Contribution

TOTAL COST 6.715

ADB’s key financing information

ADF grant currency

UA

RWSSI grant currency Eur

Interest type NA

Interest rate margin NA

Commitment fee NA

Other fees NA

Maturity NA

Grace period NA

ERR 18.6%

NPV DJF 1.08 billion

Timeframe – Milestones (expected)

Concept Note Approval

June 2012

Project Approval December 2012

Effectiveness March 2013

Last Disbursement December 2017

Completion June 2017

iii

Project Summary

1. Project Overview. The Project for Water Supply and Sanitation in: i) The Rural Areas

of Tadjoura, Arta and Ali Sabieh Districts; ii) The District Centres of Tadjoura and Ali Sabieh

regions is part of the Social Development Initiative and is consistent with Bank strategy for

the period 2011-2015 for Djibouti. It covers areas with a poverty rate of between 62% and

72%. The project targets rural populations of the three regions and those of Tadjoura and Ali

Sabieh centres. The main deliverables are: (i) 15 half-buried tanks, 5 DWS facilities and 5 new

stand-alone water stations (SAWS), 8 DWS facilities and 10 rehabilitated SAWS in rural areas

of the three regions; (ii) two water supply systems rehabilitated in Tadjoura and Ali Sabieh

centres; (iii) 450 household latrines and 15 blocks of school latrines built; (iv) IEC and

hygiene promotion campaigns targeting beneficiaries; (v) ESMP implementation and

monitoring; (vi) 30 Water User Management Committees (with women making up 30% of

members) set up, operated and trained in water point management and maintenance; and (vii)

at least 150 women trained in solar system maintenance.

2. The project will provide access to drinking water for 13,500 households, or about

80,000 people (44,000 rural inhabitants and 36,000 people in the Tadjoura and Ali Sabieh

centres - or 10% of the country's total population) and access to sanitation for 9,000 people. It

will also allow for the watering of about 42,000 head of cattle. It will enable: (i) rural

populations to shorten the distance to drinking water sources (from up to 20 km to less than

one km on average); (ii) the creation of 180,000 work days during project implementation and

205 permanent jobs. The project cost, net of taxes and custom duties, is estimated at UA 6.715

million or approximately DJF 1,850.418 million. The Bank's contribution stands at UA 3.50

million from an ADF grant and UA 2.464 million (Eur 3.00 million) from the RWSSI Fund.

The Government's counterpart funding is estimated at UA 0.672 million and that of

beneficiaries at UA 0.079 million.

3. Rural water supply access rate is estimated at 52.5%, while sanitation access rate is

estimated at 25% on average across the country. These rates fall below the sector's MDG

(100% drinking water and sanitation access rate). This limited access leads to a high incidence

of waterborne diseases, the second principal cause of death among children under 5 and a

major drawback to the country’s socio-economic development. With improved access to

drinking water and sanitation coupled with hygiene awareness campaigns, waterborne

diseases are expected to drop by 8% by 2016. Women can devote themselves to other

activities, including child up-bringing, while girls will have more time for training and

participation in associative activities.

4. The Bank's value added. The main lesson to be learnt from the project is the need to

assist the Government in its efforts to implement the National Social Development Initiative

(INDS) which aims to sustainably improve the living conditions of the populations by

enhancing, among others, access to drinking water and sanitation services.

5. Knowledge management. The project will adopt solar energy as a source of power for

the water systems and will contribute to enhance water resource knowledge and monitoring.

The experience and lessons from previous operations which informed the design of this

project will certainly enrich the knowledge of the Bank and the country concerning DWSS in

Djibouti, an arid country on which drought has taken a severe toll in recent years. Information

and lessons from the project’s implementation will also help the Bank in the design of future

operations and consolidate the latter’s position and visibility in the rural water supply sector.

iv

RESULTS-BASED LOGICAL FRAMEWORK

REPUBLIC OF DJIBOUTI: Water Supply and Sanitation in: i) The Rural Areas of Tadjoura, Arta and Ali Sabieh Districts; ii) The District Centres

of Tadjoura and Ali Sabieh

Project Goal: Sustainable improvement of access to drinking and pastoral water as well as sanitation services for populations of rural areas and district

centres of Tadjoura, Arta and Ali Sabieh

RESULTS CHAIN

PERFORMANCE INDICATORS MEANS OF

VERIFICATION

RISKS/MITIGATION

MEASURES Indicators

(including CSI) Baseline Target

IMP

AC

T

Sustainable improvement of the living conditions of the

populations of rural areas and

district centres of Tadjoura, Arta and Ali Sabieh regions.

1) Drinking water access rate 2) Sanitation access rate

3) Prevalence rate of

waterborne diseases

1) 40% in 2011

2) 25% in 2011

3) More than 56% en

2011

1) 68% in 2025

2) 45% in 2025

3) Less than 34% in 2025

Sources: EPCV- MAPERH,

MICS surveys

Method: National surveys

OU

TC

OM

ES

Outcome 1: Improved access to drinking and pastoral water

Populations and livestock provided with water

Number of people (328,000) and size of

livestock (324,000 head)

supplied in 2011

408,000 people or 80,000 additional people; and 356,

400, or 32,400 additional head

of livestock will be supplied in 2016.

Sources: MAPERH,

MSP, INS

reports and project progress

reports.

Risks

- Fluctuation of water

resources

- Inadequacy of the water point management system

Mitigation Measures

- Better understanding of water resources and

adoption of a resource

management mechanism - Adoption of a water

point management

strategy as part of the study on national DWS

programme to be

financed by RWSSI.

Outcome 2: Improved access to

sanitation services

Populations covered by

sanitation services

Number of people

(205,000) covered in

2011.

214,000 people, or 9,000

additional people will have

access to sanitation services in 2016

Outcome 3: Improved hygiene

practice

Number of people affected by

waterborne diseases

More than 56% in 2011,

or 459,200 people affected by waterborne diseases

At least 48% in 2016 (65,600

people at least)

Outcome 4: Improved

management of groundwater

resources

Number of boreholes

monitored (in terms of

quantity and quality)

No borehole was

monitored in 2011

200 boreholes monitored in

2016

Outcome 5: Capacity building and job creation

No job related in 2011 205 permanent jobs created in 2016

OU

TP

UT

S

Output 1: Development of

drinking water and sanitation

infrastructure

1. Drinking water infrastructure

works

2. Sanitation works

3. IEC and hygiene campaign

1) DWS structures and

systems built

2) Latrines built

3) Number of people

sensitized

NA

NA

NA

1) 20 boreholes, 15 tanks, 10

stand-alone water stations, 14

DWS facilities and 700 subsidized connections made,

SAWS and DWS equipped

with fountains and troughs 2) 450 household latrines and

15 school latrines with

separate compartments for men and women, built

3) 80,000 people, including

about 42,000 women trained and sensitized

Project progress

reports

Monitoring and evaluation

system

Risk

The slow pace of

projection implementation.

Mitigation measures

- Strengthening of the

DE’s capacity of the; - Conduct of negotiations

for the preparation of bid

invitations - Sensitization and

training of beneficiaries

Output 2: Institutional support

1. Technical equipment 2. Training of DE staff

3. Training of DWS systems

management committees

1) Number of equipment

2) Number of staff trained 3) Number of committees

trained

15 test kits provided in 2013.

10 DE staff trained. 30 management committees

trained

150 women trained

Project status

reports and Bank

supervision

reports

Output 3: Project management

1. Supply of office equipment and

rolling stock 2. Audit of annual accounts and

quarterly progress reports

1) Number of office

equipment supplied

2) Audit and quarterly progress reports submitted on

time

NA

NA

Office equipment and two

vehicles supplied.

Timely submission of four audit reports meeting

international standards and 16

quarterly reports

COMPONENTS RESOURCES

KE

Y

AC

TIV

ITIE

S

COMPONENT A: Infrastructure development: UA 5.832 million (86.85 %)

COMPONENT B: Institutional support : UA 0.084 million (1.25 %)

COMPONENT C: Project management : UA 0.799 million (11.90 %)

Total Project Cost : UA 6.715 million

ADF/RWSSI: UA 5.964 million

Government: UA 0.672 million

Beneficiaries: UA 0.079 million

V

PROJECT IMPLEMENTATION SCHEDULE

No. ACTIVITIES

IMPLEMENTATION YEARS

2012 2013 2014 2015 2016 2017

Quarter (Q) Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1. Approval of ADF and RWSSI Grants

2. Deployment of project staff

3. Signing/Effectiveness of Grants

4. Procurement/Consultants and Experts

5. Preparation of the procedures manual

6. Works studies, supervision and control services

7. Technical assistance services

8. Procurement of scientific equipment

9. Procurement of furniture/IT equipment/vehicles

10. Procurement of 15 water tanks

11. Construction of 15 tanks

12. Contract award for 10 new boreholes/rural areas

13. Drilling of 10 new boreholes /rural areas

14. Contract award for five SAWS and 5 DWS facilities

15. Construction of five SAWS and five DWS facilities

16. Contract award for the rehabilitation of 10 DWS facilities

17. Rehabilitation of 10 DWS facilities

18. Contract award for the rehabilitation of eight DWS facilities

19. Rehabilitation of eight DWS facilities

20. Contract award for the Tadjoura DWS (Drilling + Res.)

21. Works of the Tadjoura DWS (Drilling + Res.)

22. Contract award for Ali Sabieh Water Supply (EPA) (Drilling +

Res.)

23. Ali Sabieh Water Supply Works (Drilling + Res.)

24. Contract award for institutional latrines

25. Construction of latrines in schools

26. Contract award for family latrines

27. Construction of family latrines

28. Training of staff (DE) and local stakeholders

29. IEC campaigns

30. Accounts Audit

31. Project management

32. Mid-term review

33. Completion Report

1

BANK GROUP MANAGEMENT REPORT AND RECOMMENDATION TO THE

BOARD OF DIRECTORS ON A PROPOSED ADF AND RWSSI GRANT TO DJIBOUTI

FOR DRINKING WATER SUPPLY AND SANITATION IN i) THE RURAL AREAS OF

TADJOURA, ARTA AND SABIEH DISTRICTS; ii) THE DISTRICT CENTRES OF

TADJOURA AND ALI SABIEH PROJECT

Management is submitting this report and its recommendation on a proposed ADF grant of UA

3.50 million and a grant of Eur 3.00 million from the RWSSI Fund to the Republic of Djibouti to

finance the Drinking Water Supply and Sanitation in: i) The Rural Areas of Tadjoura, Arta and

Ali Sabieh Districts; ii) The District Centres of Tadjoura and Ali Sabieh Project.

I. STRATEGIC THRUST AND RATIONALE

1.1 Project Linkages with Country Strategy and Objectives

1.1.1 This project is part of the National Social Development Initiative (INDS) established in

2007 and updated in 2011 to cover the period 2011-2015. One of the objectives of this Initiative

was to consolidate the progress made since 2000 towards achieving the Millennium Development

Goals (MDGs). The strategic thrusts relate to: (i) growth, competitiveness and employment; (ii)

access to basic social services; (iii) reduction of poverty and vulnerability; and (iv) public

governance.

1.1.2 The INDS identified water scarcity and limited availability and mobilization of water

resources as some of the major challenges facing the country. The project, which is part of

strategic areas ii and iii of the INDS, will sustainably improve the living conditions of the

populations of the Tadjoura, Arta and Ali Sabieh regions. These regions, which are among the

country's poorest, are experiencing severe water stress which can be alleviated by improving

access to drinking water and sanitation services.

1.1.3 The project is in line with the sole pillar of the CSP whose main objective is to enable

the country to establish a more inclusive growth momentum through infrastructure establishment,

particularly in the area of water and sanitation. This operation is consistent with the pillar’s

objective to reduce the dismal living conditions of the populations. In addition, the project is

listed among the operations planned for the period 2011-2015. It is also consistent with the

objectives of the Rural Water Supply and Sanitation Initiative (RWSSI) which aims to improve

the rate of access to drinking water and sanitation services for rural populations and is in line with

the initiatives planned under of Drought Resilience and Sustainable Development Programme

(PRSDD).

1.2 Rationale for Bank Involvement

1.2.1 Djibouti is an arid country which receives, on average, 150 mm of rain annually and has

no permanent source of surface water. Nearly 95% of the water used comes from underground

aquifers that are replenished primarily through infiltration and rainwater runoff. Access to water

in Djibouti is a major challenge for the development of socio-economic activities. Furthermore,

harnessing surface and ground water to improve, among other things, access to drinking water

and sanitation services for vulnerable populations is a Government priority.

2

1.2.2 The drinking water supply access rate is estimated at 52.5% and that of sanitation at 25%

on average across the country. These rates are well below the Government's MDG target (100%

for drinking water and sanitation access). Limited access to drinking water and sanitation leads to

a high incidence of waterborne diseases, the second major cause of consultations and deaths

among children under 5 in Djibouti. Moreover, restricted access to water limits development of

the primary sector which, as a result, contributes only marginally to the country's GDP

(agriculture or livestock).

1.2.3 The Bank's intervention through this project: (i) addresses the Government’s major

concern and its desire to reduce water stress in the various regions, in line with the INDS; (ii)

contributes to bridging regional disparities in access to drinking water and sanitation services; and

(iii) aims to strengthen the Drought Resilience and Sustainable Development Programme

(PRSDD) in the countries of the Horn of Africa, especially the Programme's "natural resource

management'' component that aims to strengthen drinking water mobilization and storage

infrastructure and protect the watershed for human use as well as for agricultural and pastoral

activities.

1.2.4 Furthermore, the Bank's intervention is justified by its perfect mastery not only of the

urban water supply systems in Djibouti, where it has financed four operations since the 1990s,

but also of water supply in rural areas where the it has acquired significant regional experience in

RWSSI programme implementation. Also, in the project design, the problem of

compartmentalization of government services, the high cost of works due to the contracts’ lack of

appeal, the slow pace of implementation and the weak management capacity were all taken into

account.

1.3 Aid Coordination

1.3.1 The country lacks an effective donor intervention coordination and harmonization

mechanism. However, several donors recently initiated, in coordination with the Government, the

preparation of a roadmap for the establishment of a coordination mechanism to assist the country.

This mechanism is expected to focus on three priority areas: water, energy and food security. The

goal is to ensure information exchange and harmonization of donor interventions with a view to

enhancing aid effectiveness. This mechanism is expected to help: (i) target priority projects; (ii)

strengthen existing national programmes; (iii) provide better internal oversight and supervision

capacity; and (iv) act as a catalyst for mobilizing funds and improving project monitoring,

evaluation and audit.

1.3.2 The DWSS sector is financed mainly through donor contributions in the form of loans

and grants, given that the national contribution remains inadequate. Donors currently contribute a

total of DJF 13.8 billion (UNICEF/Wash in schools and rural water points programme;

FAO/Water Points Rehabilitation; JICA/RDWS in the southern region; WB/Rural Community

Development and Water Mobilization in Obock and Dikhil; EU-AFD/Sanitation in Djibouti City

and MDG Project and AFESD/Strengthening in Djibouti). The Bank Group is one of Djibouti’s

main donors, contributing a total of DJF 2.16 billion (16% of the funding).

3

Table 1.1 : Water Sector Funding

Water

and sanitation sector

GDP Export Labour

3.9% - -

Stakeholders – Annual public expenditure in UA million (PTIP 2008-2010)

Government WB/IDA ADB AFD/EU ARAB FUND UNICEF

3.5 4.52 7.88 17.32 17.72 2.76

Aid coordination level

Existence of thematic working groups NO

Existence of an overall sectoral programme NO

Bank’s role in aid coordination NA

II. PROJECT DESCRIPTION

2.1 Project Components

2.1.1 The project's sector goal is to contribute to the sustainable improvement of the living

conditions of the populations in rural areas and district centres of the Tadjoura, Arta and Ali

Sabieh regions. The total population targeted is estimated at about 216,000 people.

2.1.2 The specific objectives are to: (i) improve the access rate for drinking water (40% to

50%) and sanitation (25% to 35%) by providing drinking water and sanitation infrastructure; and

(ii) strengthen the capacity of the Water Directorate (DE), local players and beneficiaries.

Table 2.1 : Project Component

Component Name Estimated Cost

(in UA million)

Component Description

A. Development of

drinking water and

sanitation

infrastructure

5.832

(i) Construction of DWS systems in rural areas (15 half-buried water tanks,

10 new boreholes, 5 DWS facilities and 5 new stand-alone water points

(SAWPs); 8 DWS networks and 10 SAWPs to be rehabilitated;

(i) Rehabilitation and extension of water supply systems in the district

centres of Tadjoura and Ali Sabieh (9 new boreholes, 21 km of water

supply pipes and 700 subsidized connections);

(ii) Construction of 450 latrines and 15 latrine blocks in schools with

separate male/female compartments;

(iii) Service delivery for the conduct of technical studies and supervision of

DWSS works;

(iv) Conduct of IEC campaigns and hygiene promotion for beneficiaries;

(v) ESMP implementation and monitoring.

B. Institutional

Support and

Capacity Building

0.084

(i) Provision of technical equipment to the Water Directorate for capacity

building in water resource monitoring;

(ii) Training of Water Directorate staff in participatory community

development, integrated water resource management and drilling of

boreholes;

(iii) Training of DWS systems management committees.

C. Project

Management

0.799

(i) Provision of office equipment, rolling stock and IT equipment;

(ii) Operation;

(iii) Project coordination, monitoring, evaluation and audit activities

(including preparation of the procedures manual and procurement of

accounting software).

4

2.2 Technical solutions selected and alternatives explored

2.2.1 The technical design of this project is based on: (i) technical solutions framework

adopted by MAPERH; and (ii) basic planning carried out at national level to achieve the MDGs

in the water sector. Regarding the DWS, preferential drinking water supply solutions were

adopted, involving technologies best tailored to the local context: (i) drilling to feed water supply

stations and village water supply systems; and (ii) building of water tanks for harnessing surface

water. Renewable energy (solar energy) will be used to power water supply stations and systems.

Provision has also been made for related facilities such as drinking troughs and water fountains.

2.2.2 The stand-alone sanitation system was adopted as a technical reference framework.

Ventilated improved pit (VIP) latrines, consisting of blocks (4 boxes) and separate men/women

compartments, including urinals and two hand-washing basins, will be built.

Table 2.2 : Alternative Solutions Explored and reasons for Rejection

Alternative

Solution

Brief description

Causes of their rejection

Building of hillside

catchment reservoirs

Construction of catchment

reservoirs for greater harvesting

of surface water resources

Volumes of water available for harvesting are

low compared to the enormous water needs

that cannot be met due to climatic conditions;

High cost of investment

Boreholes with

hand-operated

pumps

Drilling of low-flow boreholes,

equipped with hand pumps

Low water flows may cause conflicts between

users (drinking water for people and pastoral

water for livestock)

Use of a thermal

energy source

Boreholes equipped with thermal-

powered pumps

High cost of maintenance

Accessibility problems, causing delays in fuel

deliveries

Building of

collective sanitation

facilities

Construction of wastewater

drainage systems

High investment costs

The quantity of wastewater discharged is not

enough to ensure the self-cleaning of pipes

Manually flushed

toilettes

Structure equipped with a small

water tank High water consumption compared to the small

quantities available.

2.3 Project Type

The project is a stand-alone operation funded by investment project grants.

2.4 Project Cost and Financing Arrangements

2.4.1 The project cost, net of taxes and customs duties, is estimated at UA 6.715 million or

approximately DJF 1,850.418 million. The ADF will contribute UA 3.50 million in form of grant,

representing approximately 52.12%. The RWSSI Fund will contribute UA 2.464 million (Eur

3.00 million), representing approximately 36.69%. The Government's counterpart contribution is

estimated at UA 0.672 million (10.01%) and the beneficiaries' at UA 0.079 million (1.18%).

5

Table 2.3 : Cost Estimates by Component (in UA million)

Components Foreign

Exchange Local Currency Total Cost

% Foreign

Exchange

Water infrastructure development 4.128 1.032 5.160 80.00

Institutional support 0.074 0.000 0.074 100.00

Project Management 0.177 0.528 0.705 25.10

Total Baseline Cost 4.379 1.560 5.939 73.73

Provision for Physical Contingencies 0.438 0.156 0.594 -

Provision for Price Escalation 0.096 0.085 0.181 -

TOTAL COST 4.914 1.801 6.715 73.18

Table 2.4 : Project Cost by Expenditure Category (in UA million)

Categories Foreign

Exchange Local Currency Total Cost

% Foreign

Currency

GOODS 0.761 0.180 1.237 80.91%

WORKS 3.054 0.763 3.511 80.00%

SERVICES 0.453 0.088 0.542 83.67%

RECURRENT 0.111 0.417 0.529 21.05%

Total Baseline Cost 4.379 1.560 5.939 73.73

Provision for Physical Contingencies 0.438 0.156 0.594 -

Provision for Price Escalation 0.096 0.085 0.181 -

TOTAL COST 4.914 1.801 6.715 73.18

Table 2.5 : Cost Estimates by Financing Source (in UA million)

Sources of Financing Foreign

Exchange Local Currency Total Cost % Total

ADF Grant 2.450 1.050 3.500 52.12%

RWSSI Grant 2.464 0 2.464 36.69%

Government 0.000 0.672 0.672 10.01%

Beneficiaries 0.000 0.079 0.079 1.18%

TOTAL COST 4.914 1.801 6.715 100%

Table 2.6 : Project Cost by Expenditure Category and Financing Source (in UA million)

Categories/Sources ADF RWSSI Govt. BEN. Total %

WORKS 1.897 1.683 0.315 0.079 3.974 59.18%

GOODS 0.523 0.781 0.096 0 1.400 20.85%

SERVICES 0.614 0 0 0 0.614 9.14%

RECURRENT 0.466 0 0.261 0 0.727 10.83%

Total Costs 3.500 2.464 0.672 0.079 6.715 100%

Table 2.7 : Expenditure Schedule by Component (in UA million)

COMPONENTS 2013 2014 2015 2016 2017 total

Infrastructure Development 0.292 1.166 1.750 2.041 0.583 5.832

Institutional 0.004 0.017 0.025 0.029 0.008 0.084

Project Management 0.034 0.134 0.201 0.235 0.195 0.799

Total Cost 0.329 1.317 1.976 2.305 0.787 6.715

6

2.4.2 The project cost was determined on the basis of technical studies and recent similar

contracts financed by other donors (World Bank, JICA and the Arab Fund) with a 10% allowance

for physical contingencies and 5% for price escalation. Regarding cost breakdown, 73.18% is in

foreign exchange and 26.82% in local currency.

2.5 Project Area and Beneficiaries

2.5.1 The project areas are Tadjoura, Arta and Ali Sabieh districts, which have poverty rates

of between 62% and 72%. The beneficiaries targeted are the rural populations of these three

districts and the populations of Tadjoura and Ali Sabieh district centres. The choice of these areas

is justified by the relatively high poverty levels and the low rate of access to sources of good

quality drinking water (46% on average). The population lives essentially on livestock products

(sale of animals) and income from petty trading in consumer products in rural and urban areas,

and also from unskilled labour and financial support from family members in the city. The socio-

economic situation is more critical in Tadjoura and Ali Sabieh regions which are located on

migrant routes and have greater economic development potential.

2.5.2 The project will directly benefit 13,500 households, or 80,000 people. This population

comprises 44,000 people in rural areas and 36,000 people in district centres or about 10% of the

country's total population. Approximately 9,000 people have access to improved sanitation. The

people have at least 20 l/day/ht in rural areas and 30 l/day/ht in district centres. The population's

distance from a sustainable source of drinking water will be reduced from 20 km to 1 km. The

project will create 180,000 work days during its implementation and 205 permanent jobs after its

completion. The private sector will benefit from the project by participating in the procurement of

works, goods and services. The implementation of project activities will enable MAPERH to

strengthen its project management capacity and the control of water resources.

2.6 Participatory Approach in Project Identification, Design and Implementation.

2.6.1 The project preparation was based on a participatory approach involving all the sector's

stakeholders. It was the subject of a preparation mission undertaken in January 2012. Its

components and activities were defined in consultation with MAPERH and the beneficiaries.

Field missions and consultations were organized with local government authorities, beneficiaries

and development partners for better coordination. Public consultations (NGOs, local authorities

and the populations) in the target regions made it possible to identify the specific problems of

each region, detect institutional weaknesses and provide for appropriate project implementation

and operation support measures.

2.6.2 The project design took into account the limited water availability for people and

livestock and the increasingly high demand for DWS infrastructure. The choice of investments

and their nature and siting were based on socio-economic criteria and the proximity of water

points to users. Implementation arrangements and the various forms of support required were

discussed and agreed on by stakeholders. The involvement of beneficiaries in project

implementation is evidenced by their commitment to contributing financially or in kind

(provision of materials, advocacy works and activities). The establishment of local management

committees will be entrusted to people chosen by beneficiaries. The project includes hygiene

awareness campaigns, especially in the area of water and sanitation.

7

2.7 Consideration of the Bank Group’s Experience and Lessons learnt from the Project

Design

2.7.1 The combined report on RBCSP 2007-2010 completion and portfolio performance

review identified the major drawbacks to the operational performance of projects in Djibouti,

namely: (i) the quality at entry and design of projects; (ii) ignorance of the Bank's procurement

and disbursement rules of procedures; (iii) lack of an appropriate planning system and the

inefficiency of the monitoring and evaluation mechanism; (iv) lack of coordination and

communication; and (v) non-compliance with some provisions and conditions of funding

agreements. The performance of water sector projects was deemed satisfactory, with a score of

2.05 at the last portfolio review in 2010. The issues raised related mainly to implementation

delays due to poor quality at entry. The situation has since improved significantly, with the two

projects (the Djibouti City Sanitation Project and the Project to support the harvesting of water

for domestic and agricultural use) achieving an overall disbursement rate over 83% at end-August

2012.

2.7.2 These constraints and lessons learnt from on-going projects were taken into account in

the project design which provides for: (i) capacity building (provision of equipment and training)

for the entities involved in project implementation; (ii) support to the executing agency for the

recruitment of an administrative and financial manager, an accountant and a procurement expert;

and (iii) training and sensitization of beneficiaries to ensure greater ownership. Moreover, the

study for the development of national DWSS in rural areas, which will serve as the planning and

investment tool, is expected to be funded from RWSSI resources.

2.8 Key Performance Indicators

2.8.1 Project performance will be measured using key indicators of the logical framework.

Impact indicators will be measured by 2016 in terms of: (i) trends in waterborne disease

prevalence rate; (ii) drinking water access rate; and (iii) sanitation access rate. As for the

intermediate effects, performance will be measured by: (i) the additional number of people and

head of livestock having access to drinking water; (ii) the number of people with access to

sanitation services; and (iii) the number of people who contracted waterborne diseases. Regarding

the outputs, performance will be measured by: (i) the number of DWS structures constructed; (ii)

the number of sanitation facilities built in schools; (iii) the number of household latrines

constructed; (iv) the number of staff trained; (v) the number of water user committees trained in

water supply system management; and (vi) the number of women trained.

2.8.2 Baseline data were collected from socio-economic studies and surveys (EDIM) and

MAPERH database. The project executing agency will pool the data collected and ensure project

monitoring and evaluation. Quarterly progress reports on the project will include a section on

indicator trends. Towards the end of the project, a socio-economic survey will be conducted to

identify the project's overall impact on drinking water and sanitation access, health and the

prevalence of waterborne diseases in the project area.

8

III. PROJECT FEASIBILITY

3.1 Economic Performance

ERR 18.6%

NPV DJF 1.08 billion.

3.1.1 The project targets three regions -Tadjoura, Arta and Ali-Sabieh - whose populations

depend on agricultural and pastoral activities for their livelihood. From an economic standpoint,

the project benefits will be reflected in the improved quality and conditions of life of the

beneficiaries. Water supply will reduce the incidence of waterborne diseases, lessen the burden of

water-fetching and livestock-watering chores, which are important activities in the

abovementioned regions. Thanks to the project, the time spent fetching water will be devoted to

regular school attendance for children, securing of livestock, job creation during its

implementation and operation phases and facilitating women’s integration in the development

process. Lastly, it will also make water available to migrant populations crossing Djibouti to

several destinations.

3.1.2 Taking into account quantifiable benefits such as the economic value of the water

supplied to beneficiaries, livestock watering, easing of water-fetching chores, health budget

savings, earnings from days of work put in during the project and benefits resulting from

protected defecation, the project’s economic rate of return may be estimated at 18.6% and the net

present value at DJF 1.08 billion. The project performance sensitivity was analysed in relation to:

(i) a 10% increase in operating expenses; (ii) a 10% decrease in the economic benefits; and (iii) a

combination of both factors. The test showed that the rate of return increased respectively to

17.9%, 16.0% and 15.2%, which proves that profitability levels are enough to buttress the socio-

economic rationale of the project.

3.2 Environmental and Social Impact

Environmental Aspects

3.2.1 This project aims to improve access to drinking water and sanitation in rural areas as

well as in district centres. The activities fall under Category 2 according to the Bank’s

environmental guidelines. The expected key positive environmental impacts relate to: (i)

reduction in the prevalence of waterborne diseases by improving access to drinking water; (ii)

improvement in the populations’ living standards through better access to sanitation services; and

(iii) better monitoring of the quantity and quality of water resources. The major negative impacts

that may be expected relate to: (i) the accelerated decline of groundwater levels, resulting from

climate change; (ii) risks related to water and soil pollution during works; and (iii) the risk of

conflict over water point management.

3.2.2 The negative environmental impacts will be limited, reversible and controllable through

implementation and monitoring of appropriate mitigation measures, including: (i) systematic

analysis of water quality prior to the equipment of points; (ii) monitoring of piezometric

groundwater levels in the project area; (iii) compliance with environmental management

standards in force and rehabilitation of the soil once the work is completed. Prompt impact

studies will be carried out for each type of structure and the mitigation and/or enhancement

9

measures systematically taken up by the project to ensure compliance with the principles of

sustainable management of resources and environmental conservation defined in the

Environmental and Social Management Plan (ESMP) developed as part of the project. ESMP

implementation will be monitored by the Directorate of Territorial Development and the

Environment (DATE).

Climate Change

3.2.3 Surface water resources in Djibouti are subject to climate change variations (fluctuations

in rainfall and increase in temperatures). The groundwater in some areas is of poor quality

(salinity) and with low piezometric levels. The adverse effects of rising temperatures and

declining rainfall have a direct impact on the replenishment of water tables which may affect the

sustainability of the project outcomes. However, to cope with these fluctuations, regular

monitoring of groundwater levels will be strengthened through the project. The regeneration of

vegetation cover through compensatory reforestation around water points will create a carbon

sink to soak up carbon dioxide, thus reducing greenhouse gas emissions. By using solar power

technology to pump water in DWS systems, the project will positively impact climate change. It

is worth noting that UNDP is funding a national climate change adaptation programme, which

aims to strengthen the Ali Sabieh population’s resilience through the development of agro-

pastoral perimeters. This project can only help to boost the programme.

Forced Resettlement

3.2.4 The project does not involve displacement or resettlement. The choice of sites is

relatively easy in rural areas due to the availability of uninhabited spaces. In district centres, the

network extensions will take the existing houses into account.

Gender

3.2.5 In Djibouti, women account for 52.6% of the total population and 34% of the workforce.

In addition, 19.7% of Djiboutian households are female-headed and unemployment affects more

women than men (70% of women aged over 15 years are unemployed compared with 56% for

men). In rural areas, women are more likely to be unemployed (83.8%). They suffer from huge

disparities and their participation in decision-making remains marginal. The main obstacles to

women’s integration in development relate to customary and traditional restrictions, despite

efforts by the authorities to establish a legal framework conducive to enhancing the social and

economic status of women. In this regard, the National Union of Djiboutian Women (UNFD) has

spared no effort to carry out awareness campaigns aimed at creating conditions for the emergence

of several associations and NGOs that could initiate activities designed to meet the local needs of

women.

3.2.6 The project will generate valuable time savings for women, allowing them to develop

other activities and concentrate more on monitoring children's welfare and up-bringing. Girls will

have more time for training or participation in associations. The project will support the

integration of women in village water point management committees to ensure their involvement

in the management of water services, decision-making and maintenance (150 women will be

trained in solar system maintenance, which is a gainful employment). The project will ensure that

the percentage of women in these committees is at least 30% compared with the current 10%.

10

This issue was discussed during consultations on the ground. Awareness campaigns will focus

mainly on women in such areas as hygiene, maternal and child and nutritional health, and

HIV/AIDS.

Social

3.2.7 The project will benefit the rural poor as well as migrants from Ethiopia and Somalia

(Tadjoura region) whose passage increases the pressure around water points. In siting the

structures, the project will take this social phenomenon into account in order to avoid any conflict

between communities over the use of facilities and meet the needs of local populations. It will

ensure: (i) permanent access to drinking water for more than 13,500 households or 80,000 people;

(ii) improvement of living conditions, hygiene and sanitation, resulting in a reduction in the

prevalence and spread of waterborne diseases; (iii) time savings of two to eight hours on water-

fetching; (iv) increased school enrolment and attendance among rural children; (v) strengthening

of social cohesion through awareness activities and the formation of village water management

committees; and (vi) creation of 180,000 work days during implementation of the project and 205

permanent jobs during its operation.

IV. IMPLEMENTATION

4.1 Implementation Arrangements

4.1.1 The Ministry of Agriculture, Fisheries, Livestock and Fisheries Resources (MAPERH)

will be the project executing agency, acting through the Water Directorate (DE), which will be

responsible for project coordination. As part of its mandate, this Directorate is responsible for

implementing the Ministry’s water and sanitation policy, especially in rural areas, through its

services (Services in charge of Water Resources, Engineering and Works, Decentralized

Management of Water Points and Sanitation). The Presidential Directive of 28 April 2012 vested

the Directorate responsible for project implementation with greater powers in the areas of rural

water supply, livestock watering and irrigation of agro-pastoral perimeters.

4.1.2 Given its limited capacity, the Water Directorate (DE) will be reinforced by an

Administrative and Financial Manager, an Accountant and a Procurement Specialist to be

recruited through a call for candidatures, as well as a support staff. To build the capacity of the

Water Directorate (DE) in the area of sanitation, there are plans to mobilize resources from the

Trust Fund managed by the Bank for the recruitment of a Sanitation Specialist to assist the DE in

the monitoring and evaluation of performance indicators. A summary of the ToR is provided in

the technical annexes.

4.1.3 The technical implementation of activities in rural areas will be carried out by DE

services and in the two district centres by ONEAD. DE and ONEAD will be responsible for the

procurement of goods, works and consultancy services in their respective areas of activity. Both

agencies will each appoint a project manager with proven project management experience.

However, the DE will be responsible for overall project coordination.

4.1.4 The DE will be responsible, among other activities, for: (i) acting as interface between

the ADB and structures involved in project implementation; (ii) coordinating and monitoring the

project; (iii) reporting regularly on the progress achieved; (iv) preparing and coordinating

11

supervision missions; (vi) preparing and monitoring the procurement plan including contracts

awarded by the ONEAD; and (vii) ensuring the archiving of all project documents and files for

ex-post audit and review purposes.

4.1.5 A Project Steering Committee (CP) will be set up to strengthen consultations and serve

as a project steering and monitoring forum. This Committee will be chaired by the MAPERH

Secretary-General and will include representatives of the Ministry of the Economy and Finance in

charge of Industry and Planning (Directorate of External Financing/DFE), MAPERH (DE), the

Ministry of Energy (ONEAD), the Ministry of Town Planning (Directorate of Territorial

Development the Environment/DATE) and Prefects of the regions concerned. The Secretariat of

the Steering Committee will be provided the DE.

4.1.6 Procurement Arrangements: All goods, works and consultancy services financed from

the Bank's resources will be procured in accordance with Bank Rules of Procedure for the

Procurement of Goods and Works (May 2008 Edition, Revised July 2012) or, as appropriate, its

Rules and Procedures for the use of Consultants (May 2008 Edition, Revised July 2012), using

the Bank's standard bidding documents. DE and ONEAD will be responsible for the procurement

of goods, works and services and other items as described in Annex B5. A review of the

resources, capacity, expertise and experience of DE and ONEAD revealed that the DE's capacity

needs to be built in the area of procurement, and that ONEAD has the capacity to ensure the

procurement process (It is currently implementing the Djibouti City Sanitation Project). A

Procurement Plan was prepared in cooperation with DE during the appraisal mission and will be

updated during the negotiation of Grant Agreements. A summarized version of this Plan is also

included in Annex B5.

Financial Management, Disbursement and Audit Arrangements

4.1.7 The existing financial management systems at the DE are generally not satisfactory and

the overall fiduciary risk is substantial, due to the weaknesses noted the budgeting, internal

oversight, accounting, cash management and information system. As a result, the DE shall: (i)

prepare a budget plan coupled with the provisional schedule of activities and a half-yearly budget

plan as well; (ii) hire a consultant to prepare the administrative financial and accounting

procedure manual, templates for the monitoring of fuel, missions and the maintenance of rolling

stock; (iii) hire an administrative and financial manager as well as an accountant and carry out an

appropriate division of financial duties; (iv) assign premises and cabinets for the storage of

supporting documents; (v) establish a numbered and initialled assets register; (vi) establish a

project-specific general, analytical and budget accounting plan and procure an accounting

software; (vii) open a special Djiboutian-franc account in a commercial bank; (viii) establish a

plan for cash flow as well as quarterly and half-yearly status reports, including interim financial

statements; and (ix) recruit an external audit firm to audit the project.

4.1.8 The project’s administrative, financial and accounting management will be ensured by

the DE which will keep project-specific general and analytical accounts and ensure budget

monitoring based on an integrated accounting system. An administrative, accounting and

financial management procedure manual will be prepared from the start of project

implementation. The project accounts will be subject to the usual government and Bank

oversight. Annual audits of the special account will be conducted.

12

4.1.9 Disbursement Arrangements: Disbursement for expenditure will be made either by direct

payment or through a special account opened for project recurrent expenses. Expenses relating to

consultancy, contracting and supplier services will be settled using the direct payment method.

Disbursements will be made in compliance with Bank procedures.

4.1.10 External Audit Arrangements: The project's financial statements will subject to annual audits

conducted by an independent auditing firm recruited on the basis of a short list, in accordance with

Bank Rules of Procedure. External audit will be performed in accordance with International Standards

on Auditing (ISA). The ToR will be established following the Bank-proposed template. Audit and

internal oversight reports will be submitted to the Bank within six months of the end of each fiscal

year.

4.2 Monitoring

4.2.1 Project implementation is planned to span five years, from January 2013 to December

2017. The DE will be primarily responsible for the internal monitoring of implementation of

project activities and their impacts. The latter will establish, using the Bank-recommended

format, quarterly and annual status reports on the monitoring of the project's logical framework

indicators. External monitoring will be carried out at the central level by the Steering Committee

which will be required to review the progress of the project, assess its performance and the

quality of its management and its outcomes and, as necessary, refocus the project, in consultation

with the Bank. Compliance of implementation with the ESMP will be supervised by DATE, the

structure responsible for ensuring project implementation conformity with environmental and

social standards.

4.2.2 The Bank will monitor the project through supervision missions and technical and

financial audits. The Bank Departments responsible for financial management (ORPF) and

disbursements (FFCO) will be involved in these missions to back up the assessment of financial

and fiduciary management. The East African Regional Resource Centre (EARC) in Kenya will be

involved in implementation monitoring by providing required assistance in the area of close

supervision and monitoring of implementation of the recommendations relating thereto. The

implementation schedule is as follows:

Activities Responsible Date /Period

Financing Approval ADF November 2013

Establishment of the Coordination Team Govt. January/March 2013

Grant Effectiveness ADF/Govt. March 2013

Preparation/Launch of Bidding Services Water Directorate /ADF April 2013

Start of Consultants’ Services Water Directorate October 2013

Launch of Bid Invitations/Works Water Directorate/ADB January 2014

Award/Start of Works DE /Enterprises April 2014

Mid-Term Review ADF/Water Directorate July 2015

Physical Project Completion Water Directorate June 2017

Completion Mission ADF/Water Directorate December 2017

13

4.3 Governance

4.3.1 CPIA assessments and other rankings (Ibrahim Index or Transparency International)

show that there are major challenges to be addressed in the area of governance. Generally, the

country is suffering from the ineffectiveness and poor quality of its public services. The CPIA

rating for the "governance" factor, specifically the effectiveness of management of the public

sector and institution, has stagnated at the score of 3 since 2005 for most of the sub-components,

with the exception of the score for resource mobilization efficiency. The findings of the PEFA

assessment, conducted in 2010, pointed out weaknesses in budget preparation, implementation

and oversight. It noted, in particular, that 51% of public procurement made in 2009 followed non-

competitive procedures. It should be noted that a new procurement code was adopted in July

2009. It is worth pointing out, however, that in 2011 the Bank conducted a review of national

procurement rules and procedures in Djibouti to discuss the possibilities of implementing the

provisions of the Paris Declaration on the use of national procedures for project implementation.

The final report is not yet available.

4.3.2 The project's governance risk relates to the procurement process for goods, works and

services and financial resource management. Risks in these areas will be mitigated by closely

monitoring the strict implementation of the Bank's procurement rules of procedure. Supervision

missions and technical and financial audits will ascertain compliance and consistency between

the resources committed and the services actually provided. Training sessions organized by the

Bank on project cycles and procurement for RMCs will help improve governance. On the

Government side, the involvement of the Directorate of External Financing (DFE) in the project’s

Steering Committee will strengthen good governance insofar as this Directorate will have a right

of oversight over the management of financial resources and the quality of achievements.

4.4 Sustainability

4.4.1 To ensure the maintenance and operation of water points in rural areas, the State

established, in 2001, the National Water Fund (FNE), whose resources are primarily derived

from: (i) the annual contribution set at 3% of the revenue actually collected by ONEAD; (ii) the

DE's annual budget allocation for maintenance of the facilities; (iii) an annual subsidy of DJF 4

per litre of water produced locally; (iv) a dewatering fee paid by private operators; (v) any other

State subsidies and donor contributions. The FNE's Central Bank account is jointly managed by

the DE and the Ministry of Finance. Moreover, since 2007, and with AFD support, the MAPERH

has been setting up water point management committees (there are currently 45 operational

committees), each composed of seven members, including at least one woman (the treasurer or

vice-president). In addition, a water point participatory management strategy is currently being

formulated. It will specify the conditions for setting up management committees and lay down a

set of specifications defining the rights and obligations of beneficiary members. In the project’s

rural areas, planned awareness campaigns and training are expected to culminate in the setting up

of 30 committees with an expected female participation of at least 30%. At least 150 women will

be trained in solar system maintenance.

14

4.4.2 At the Tadjoura and Ali Sabieh centres, the Djibouti National Water and Sanitation

Authority (ONEAD) is responsible for the management of production facilities (wells, networks

and pumping stations) and drinking water distribution. The domestic water bill collection rate

stands at approximately 80%.

4.4.3 The issue of sustainability of individual sanitation investments does not arise because: (i)

sanitation is culturally rooted in the lifestyle of the Djiboutian people and the quality of facilities

depends on the availability of funds; (ii) the people are ready to contribute financially to the

construction of household latrines. Field missions revealed that this contribution may be up to

20% of the total investment cost. It is expected that household latrine beneficiaries, to be selected

on the basis of specific criteria (lack of latrines, low income and willingness to contribute), will

participate in the construction of structures (pit-digging mostly).

4.5 Risk Management

4.5.1 The biggest risk facing the project is the fluctuation of groundwater resources as a result

of climate change. Since the project is unable to influence these changes, it recommends ways of

coping therewith through better knowledge of water resources that should lead to the introduction

of mechanisms for the management of these resources, including the provision of groundwater

monitoring technical equipment. As part of preparation of the study on the RWSSI-funded

national DWSS programme for rural areas, a water point management strategy will be defined.

Building the capacity of the executing agency as well as training and sensitizing the beneficiaries

will help mitigate this risk. Moreover, post-project completion failure of the water point

management system could constitute a risk to project sustainability. In that regard, the project

design was based on the implementation of community-based water point management strategy,

in addition to the strategic management thrusts that will be identified under the national DWSS

programme.

4.5.2 The project could also face delays in implementation start-up. To mitigate this risk, it

was agreed during the appraisal mission to: (i) discuss the following documents during

negotiations: the curricula vitae of project focal points at the DE and ONEAD; review the terms

of reference for the services of the consulting engineer in charge of studies, works supervision

and IEC; the terms of reference of the expert in charge of procurement, administrative and

financial framework and accounting; technical specifications for the procurements of various

items (scientific and technical equipment, information technology and office automation

equipment); and (ii) mobilize authorities and beneficiaries in the three regions for in-depth

consultations. The Bank has already provided documents defining rules and procedures for the

procurement of goods and works and the use of consultants and the bidding template, all of which

are necessary for the preparation and award of the procurement contracts provided for in the

project.

4.6 Knowledge Building

4.6.1 Project implementation will allow the Water Directorate to control the design,

implementation and management of DWSS projects in rural areas. The involvement of local

entities and beneficiary populations will help ensure the choice of appropriate sites for water

points and technical solutions adapted to the context, without losing sight of the environmental,

15

financial and socio-economic aspects. The inclusion of provisions on knowledge transfer in the

technical specifications of bidding documents will help develop the capacity of DE and ONEAD

managers.

4.6.2 The project will enhance knowledge of the state of water resources, the influence of climate

change on these resources and the potential for their renewal to allow for optimum utilization.

Developing water conservation and management skills by setting up, organizing and training Water

Management Committees and expanding the network of civil society organizations working to protect

the environment will help increase the level of participation of the community (men and women

alike).

4.6.3 The overall approach envisaged in the construction of latrines will make it possible to

measure the effectiveness of the sensitization method used and its outcomes will serve as a

benchmark for future operations. This knowledge will be systematically captured and recorded in

the monitoring and evaluation reports of supervision missions and the periodic reports that will be

shared at Government and Bank levels. During the mid-term project review, the partial results

and lessons learnt from these findings will be disseminated by the project team, implementing

partners and beneficiaries. Finally, the knowledge gained will also be reflected in the Bank’s

project completion report and entered into MAPERH’s database.

V. LEGAL FRAMEWORK

5.1 Legal Instrument

The Republic of Djibouti will be awarded an ADF grant and an RWSSI grant to fund this project.

5.2 Conditions related to Bank intervention

A. Conditions precedent to grant effectiveness

5.2.1 The Grant Agreements will become effective once they are signed.

B. Conditions precedent to the first disbursement of the ADF and RWSSI grant resources

5.2.2 The Fund will proceed with the first disbursement of the grant resources only after the

Donee, in addition to the effectiveness of Grant Agreements, has met the following conditions

and commitments to the Fund’s satisfaction:

(i) Provide ADF with evidence of the opening of an ADF grant special account on

behalf of the project in a bank acceptable to the Fund, to receive the grant

resources and evidence of the opening of a bank account to receive the

Government’s contribution.

C. Other Conditions: The Donee shall, in addition:

(i) Forward to the ADF for approval no later than six months following the signing of

Grant Agreements, the procedures manual on implementation and administrative,

16

financial and accounting management of the project, including the procurement

process;

(ii) Provide the ADF with evidence of competitive recruitment of the Administrative

and Financial Manager, Accountant and Procurement Expert within three months

of the signing of Grant Agreements;

(iii) Provide the ADF with evidence of establishment of the Steering Committee and

appointment of its members no later than six (6) months after the signing of Grant

Agreements

D. Commitment: The Donee undertakes to implement the Environmental and Social.

Management Plan

5.3 Compliance with Bank Policies

The project is consistent with all applicable Bank rules.

VI. RECOMMENDATION

Management recommends that the Boards of Directors approve the proposal to award an ADF

grant of UA 3.50 million and RWSSI grant of Eur 3.00 million to the Government of the

Republic of Djibouti to finance the project according to the conditions set out in this report.

APPENDIX I

COMPARATIVE SOCIOECONOMIC INDICATORS

1990 2011 *

EN.LND.TOTLArea ( '000 Km²) 30 323 98 461

SP.POP.TOTLTotal Population (millions) 0,6 0,9 1 044,3 5 733,7

SP.POP.GROWPopulation growth (annual %) 5,0 1,9 2,3 1,3

SP.DYN.LE00.INLife expectancy at birth, total (years) 51,4 57,9 57,7 77,7

SP.DYN.IMRT.INMortality rate, infant (per 1,000 live births) 113,1 77,0 76,0 44,7

SH.MED.PHYS.ZSPhysicians per 100,000 People 16,2 22,9 57,8 112,0

SH.STA.BRTC.ZSBirths attended by skilled health staff (% of total) ... 92,9 53,7 65,3

SH.IMM.MEASImmunization, measles (% of children ages 12-23 months) 85,0 85,0 78,5 84,3

SE.PRM.ENRRSchool enrollment, primary (% gross) 35,6 59,1 101,4 107,8

SE.ENR.PRIM.FM.ZSRatio of girls to boys in primary education (%) 73,4 90,2 88,6 ...

SE.ADT.LITR.ZSLiteracy rate, adult total (% of people ages 15 and above) ... ... 67,0 80,3

SH.H2O.SAFE.TO.ZSAccess to Safe Water (% of Population) 78,0 88,0 65,7 86,3

SH.STA.ACSNAccess to Sanitation (% of Population) 66,0 50,0 39,8 56,1

SP.DYN.HDIVHuman Develop. (HDI) (0 to 1) 0,4 0,4 0,5 ...

SP.DYN.HPIVHuman Poverty Index (% of Population) ... 25,6 33,9 ...

Economy 2000 2009 2010 2011

NY.GNP.PCAP.CDGNI per capita, Atlas method (current US$) 750 1 270 1 311 ...

NY.GDP.MKTP.CDGDP (current Million US$) 556 1 016 983 1 244

NY.GDP.MKTP.KD.ZGGDP growth (annual %) 0,4 5,0 3,5 3,5

NY.GDP.PCAP.KD.ZGPer capita GDP growth (annual %) -2,3 3,0 1,6 1,6

NE.GDI.TOTL.ZSGross Domestic Investment (% of GDP) 8,8 17,7 17,2 17,2

FP.CPI.TOTL.ZGInflation (annual %) 1,6 1,7 4,0 5,1

GC.BAL.CASH.GD.ZSBudget surplus/deficit (% of GDP) -1,8 -4,7 -0,6 -0,5

Trade, External Debt & Financial Flows 2000 2009 2010 2011

TG.WEO.TXG_R.ZGExport Growth, volume (%) 12,7 2,7 2,8 49,8

TG.WEO.TMG_R.ZGImport Growth, volume (%) 4,4 -28,3 -18,0 37,2

TG.WEO.TTT.ZGTerms of Trade (% change from previous year) 0,0 0,0 3,3 -21,6

BG.TBL.MRCH.CDTrade Balance ( mn US$) -175 -373 -283 -414

BG.WEO.ADB.TBL.MRCH.GDP.ZSTrade balance (% of GDP) -31,5 -36,7 -28,8 -33,3

BG.CAB.CD Current Account ( mn US$) -27 -95 -54 -86

BG.WEO.ADB.CAB.GDP.ZSCurrent Account (% of GDP) -4,8 -9,4 -5,5 -6,9

DT.WEO.TDS.PAI.EXP.ZSDebt Service (% of Exports) 7,6 7,3 9,0 8,0

DT.WEO.ADB.DOD.GDP.ZSExternal Debt (% of GDP) 52,0 61,7 64,4 52,1

DC.DAC.NTF.CDNet Total Inflows ( mn US$) 92 333 106 ...

DC.DAC.ODA.CDNet Total Official Development Assistance (mn US$) 72 167 132 ...

DC.UNC.PVF.FDI.CDForeign Direct Investment Inflows (mn US$) 3 100 27 ...

FI.RES.TOTL.MO External reserves (in month of imports) 2,3 3,2 3,9 ...

Private Sector Development & Infrastructure 2000 2009 2010 2011

PS.DB.SB.DAYTime required to start a business (days) ... 37 37 37

PS.DB.PI.IPI.INInvestor Protection Index (0-10) ... 2,3 2,3 2,3

IT.MLT.MAIN.P3Main Telephone Lines (per 1000 people) 13,3 19,3 20,8 ...

IT.CEL.SETS.P3Mobile Cellular Subscribers (per 1000 people) 0,3 147,7 186,4 ...

IT.NET.USER.P3Internet users (000) 1,9 39,6 64,3 ...

IS.ROD.PAVE.ZSRoads, paved (% of total roads) 45,0 ... ... ...

IS.RRS.GOOD.MT.K6Railways, goods transported (million ton-km) ... ... ... ...

* Most recent year Last Update: May 2012

Djibouti - Development Indicators

Developing

countries

Source: ADB Statistics Department, based on various national and international sources

DjiboutiAfricaSocial Indicators

23

Djibouti

APPENDIX II

TABLE OF ADB PORTFOLIO IN DJIBOUTI

Project Name Loan No. Date of

Approval

Date of

Signature

Date of

Effectivene

ss.

Closing

Date

Net Amount

in Loan

currency

(000)

Net Amount

(000 UAC)

Social sector 11.620

EDUCATION PROJECT III ** 2100150007897 14-Jul-04 28/09/2004 07/08/2006 30/12/2012 UAC 4.630 4.630

EDUCATION PROJECT III ** 2100155002671 14-Jul-04 28/09/2004 07/08/2006 30/12/2012 UAC 370 370

POVERTY REDUCTION PROJECT II **

2100155013273 17-Oct-08 13/11/2008 05/08/2009 30/06/2014 UAC 5.820 5.820

POVERTY REDUCTION

PROJECT II** 2100155019717 31-Jan-11 19/03/2011 11/01/2012 31/12/2013 UAC 800 800

Water and Sanitation sector

8.150

DJIBOUTI CITY SANITATION

PROJECT** 2100155010868 18-Dec-07 04/02/2008 07/04/2008 31/12/2012 UAC 6.500 6.500

SURFACE WATER HARESTING (AWF)

5600155001001 29-Jan-08 04/02/2008 13/05/2008 30/12/2012 Eur 1.937 1.650

Private sector

58.556

DORALEH CONTAINER

TERMINAL 2000120001819 24-Sep-08 15/11/2009 15/12/2009 16/12/2009 USD 79.343 52.002

DJIBOUTI BULK TERMINAL

PROJECT 2000120000115 3-Dec-03 11/06/2006 23/11/2006 11/06/2008 USD 10.000 6.554

Emergency relief assistance

grants

655

EMERGENCY AID TO

DROUGHT VICTIMS 5000199002518 14/11/2011 16/05/2012 31/03/2013 USD 1.000 655

TOTAL ADF** 18.120

APPENDIX III

KEY RELATED PROJECTS FINANCED BY THE BANK AND OTHER

DEVELOPMENT PARTNERS

PROJETCS COSTS PERIOD DONORS

Rehabilitation of the Djibouti City DWS

infrastructure

USD 25.0 million 2011-2013 AFESD

Rehabilitation of water and sanitation in the 4th

district

Eur 5.0 million 2008-2010 ADF

Sanitation and Solid Waste Management Investment

Programme

Eur 15.5 million 2011-2013 ADF

Djibouti City Sanitation Project UA 20.96 million 2010-2012 ADB/EE Project for the adaptation of rural communities in the

Ali Sabieh region to climate change

USD 1.00 million 2012-2013 UNDP

Rehabilitation of water points and construction of

water tanks

USD 0.85 million 2011 FAO

Surface Water Harvesting and Land Management

Project

USD 11.637 million 2010-2015 IFAD/GEF/UNDP

Construction of the Sadai dam USD 1.500 million 2012-2013 SAUDI

ARABIA

APPENDIX IV

PROJECT AREA

TADJOURA

ARTA

ALI SABIEH