Document of The World Bank

Report No: 29368

IMPLEMENTATION COMPLETION REPORT(IDA-28360 PPFI-P8830 PPFI-P8831)

ON A

CREDIT

IN THE AMOUNT OF SDR47.8 MILLION(US$71.0 MILLION EQUIVALENT)

TO THE GOVERNMENT OF

GHANA

FOR AN

URBAN ENVIRONMENTAL SANITATION PROJECT

June 28, 2004

Water and Urban IICountry Department AFC10Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 23, 2004)

Currency Unit = Cedi (GHC) Cedi 10,000 = US$ 1.10

US$ 1 = Cedis 9,080

FISCAL YEARJanuary 1 December 31

ABBREVIATIONS AND ACRONYMS

AFD Agence francaise de DéveloppementAMA Accra Metropolitan AssemblyCAS Country Assistance StrategyCBD Central Business DistrictDCA Development Credit AgreementEHD Environmental Health DepartmentEOP End of ProjectICR Implementation Completion ReportIDA International Development AssociationKMA Kumasi Metropolitan AssociationKVIP Kumasi Ventilated Improved Pit LatrineLGPSU Local Government Project Support UnitMA Metropolitan/Municipal AssembliesMLGRD Ministry of Local Government and Rural DevelopmentNDF Nordic Development FundO&M Operations and MaintenancePDO Project Development ObjectivesPPF Project Preparation FundPSR Project Status ReportPTA Parent Teacher AssociationPWCBT Project-Wide Capacity Building and TrainingSAETA Shama Ahanta East Metropolitan AssemblySAR Staff Appraisal ReportSDR Special Drawing RightSSP Strategic Sanitation PlanTAMA Tamale Metropolitan AssemblyTMA Tema Municipal AssemblyTSC Technical Services CentreUESP Urban Environmental Sanitation ProjectVBT Van’s Biological ToiletWC Water ClosetWMD Waste Management Department

Vice President: Callisto E. MadavoCountry Director Mats KarlssonSector Manager Inger Andersen

Task Team Leader: Gerhard Tschannerl

GHANAURBAN ENVIRONMENTAL SANITATION

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 65. Major Factors Affecting Implementation and Outcome 196. Sustainability 217. Bank and Borrower Performance 238. Lessons Learned 259. Partner Comments 2610. Additional Information 29Annex 1. Key Performance Indicators/Log Frame Matrix 30Annex 2. Project Costs and Financing 31Annex 3. Economic Costs and Benefits 36Annex 4. Bank Inputs 38Annex 5. Ratings for Achievement of Objectives/Outputs of Components 40Annex 6. Ratings of Bank and Borrower Performance 41Annex 7. List of Supporting Documents 42

Project ID: P000973 Project Name: URBAN ENVIRONMENTAL SANITATION

Team Leader: Gerhard Tschannerl TL Unit: AFTU2ICR Type: Core ICR Report Date: June 28, 2004

1. Project DataName: URBAN ENVIRONMENTAL SANITATION L/C/TF Number: IDA-28360; PPFI-P8830;

PPFI-P8831Country/Department: GHANA Region: Africa Regional Office

Sector/subsector: General water, sanitation and flood protection sector (78%); Central government administration (9%); Sub-national government administration (8%); Roads and highways (5%)

Theme: Access to urban services for the poor (P); Other urban development (P); Municipal governance and institution building (P); Municipal finance (P); Pollution management and environmental health (P)

KEY DATES Original Revised/ActualPCD: 10/11/1994 Effective: 09/03/1996 09/03/1996

Appraisal: 06/01/1995 MTR: 09/03/1999 02/08/2000Approval: 03/26/1996 Closing: 12/31/2002 12/31/2003

Borrower/Implementing Agency: MINISTRY OF FINANCE/Government of Ghana/Ministry of Local Government & Rural Development/Municipal Assemblies

Other Partners: NDF, VNG, AFD

STAFF Current At AppraisalVice President: Callisto E. Madavo Kim JaycoxCountry Director: Mats Karlsson Olivier LafourcadeSector Manager: Inger Andersen James O. WrightTeam Leader at ICR: Gerhard Tschannerl Alan CarrollICR Primary Author: Rohit Khanna

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: UN

Institutional Development Impact: M

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry:

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The objectives of the Urban Environmental Sanitation Project (UESP) were to:

(a) Promote productivity and raise living standards in Ghana’s major cities, especially for lower-income people, by improving drainage, sanitation, and solid waste services.

(b) Help establish better institutional and financing mechanisms and more effective policy frameworks so that improvements are sustained over time.

(c) Build capacity of the Metropolitan and Municipal Assemblies to manage environmental sanitation services.

The project supported four of five objectives of the World Bank Ghana Country Assistance Strategy (CAS) for 1999-2003.

(a) Poverty reduction, by improving services which have high impact on the productivity and welfare of the urban poor;

(b) Capacity building, by strengthening the ability of the Metropolitan and Municipal Assemblies to plan and manage delivery of basic urban environmental sanitation services;

(c) Private sector development, by promoting the contracting out of various waste collection and sanitation services; and

(d) Environmental improvement, by directly addressing the highest priority urban environmental problems highlighted by the Government’s National Environmental Action Plan.

The project was identified as a result of the Urban Development Strategy Review, conducted jointly by the Bank and the Government in 1993-94. The Review concluded that sanitation and waste management are the most urgent urban environmental problems, and that improvements in basic urban infrastructure and services are needed to increase productivity of urban households and firms. The Review also recommended that urban service delivery should be made more efficient and sustainable by greater competition, more reliance on commercial principles, private sector participation, and attention to consumer demand.

The objectives and design of the project need to be assessed in the context of the Government’s urban development strategy and the decentralization policy. Under the 1992 Constitution and the Local Government Act of 1993, Ghana’s Metropolitan, Municipal and District Assemblies are autonomous local governments with legislative and executive powers within their areas. The project supported the nascent Metropolitan and Municipal Assemblies in the five project towns in carrying out their functions of preparing and approving annual waste management budgets, raising revenues, and providing basic urban environmental sanitation services (which are the largest discretionary expenditure items for the local governments). The five project towns of Accra, Kumasi, Sekondi-Takoradi, Tamale and Tema have an estimated combined 2004 population of 4.3 million, constituting 23 % of Ghana’s total population. All three project objectives contained cause and effect statements, which made it difficult to identify a consistent set of Performance Indicators for impact. Moreover, the general nature of the objectives statement perhaps over-stated the more modest intent of the project, given the

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limited experience with decentralization and local government waste management services in Ghana.

3.2 Revised Objective:The development objective was revised in October 1997: To improve environmental sanitation services in Ghana’s five main cities. This was the “retrofitted” development objective in accordance with the log frame format. This revision eliminated the cause and effect statement in the original Project Development Objective (PDO) and provided a clearer understanding of the project’s intent.

In June 2000, the project objectives were revised again: To improve the urban environment in Ghana's five main cities in a sustainable manner. Five performance indicators for impact were developed (see Annex 1).

Neither change amounted to a restructuring, since they were refinements of the original objectives, which were broad enough to accommodate the revisions.

3.3 Original Components:The project consisted of five components:

Component 1 - Storm Drainage (US$33.38 million). Improving primary and secondary drains in Accra, Kumasi and Sekondi-Takoradi to alleviate flooding, particularly in the central business districts:

(a) Accra: Dredging and reconstruction of approximately 7 km of the city’s primary drainage channel, the Odaw. Reconstruction of about 20 km of secondary drains serving 13 neighborhoods.

(b) Kumasi: Construction of four new secondary drains, widening the existing primary channel from the Zoo through Kejetia to Asafo Market, and reconstruction of a 4 km stretch of the Nsuben primary channel.

(c) Sekondi-Takoradi: Desilting covered drains in the Market Circle area, restoring capacity of existing drains, and providing additional capacity in the Market Circle drain.

Component 2 – Sanitation (US$9.84 million). During project preparation, each of the five Metropolitan/Municipal Assemblies (MAs) prepared a Strategic Sanitation Plan (SSP) that sets out its strategy for providing comprehensive sanitation services by 2005. The SSPs included a prioritized listing of the mix of household, public and school facilities needed to serve the city’s low and middle-income households. The MAs used their SSPs to identify the specific sanitation sub-projects to be included in the UESP.

(a) Construction of about 5,560 household latrines in the five project cities through cost sharing arrangements between the beneficiaries and the project.

(b) Rehabilitation and construction of public latrines at markets and other commercial locations in all five cities (about 65 facilities).

(c) Construction of about 305 sanitation facilities at primary and junior secondary schools in the five cities.

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(d) Construction of septage treatment facilities in each of the five cities.(e) Rehabilitation of selected segments of the sewerage systems in Tema and Kumasi. (f) Construction of an abattoir in Tamale.(g) Extension of water distribution in East Ashaiman in Tema.

Component 3 - Solid Waste Management (US$18.93 million).

(a) Construction of new sanitary landfills for Kumasi, Sekondi-Takoradi and Tamale, and provision of equipment to manage the landfills.

(b) Technical and financial support for privatized solid waste collection in the Accra metropolitan area, Kumasi, Sekondi-Takoradi, Tamale, and the Ashaiman area of Tema, through cost sharing arrangements between user fees and general revenues.

Component 4 – Community Infrastructure Upgrading (US$15.1 million). Infrastructure upgrading in seven lower-income communities of Accra, Kumasi, Sekondi-Takoradi, consisting of access roads, roadside drains, street lighting, water supply, solid waste management facilities, and sanitation.

Component 5 - Institutional Strengthening (US$12.05 million).

(a) Local-Level Organization: Assisting the MAs to recruit additional qualified personnel through the hiring of individual contract staff; involving their existing officials and staff in project preparation and implementation; providing the MAs with technical assistance in waste management and municipal finance; and providing equipment and training.

(b) Capacity-Building: A Project-Wide Capacity Building and Training (PWCBT) Program, financed by the Nordic Development Fund and the Association of Netherlands Municipalities, covering environmental sanitation and municipal finances.

(c) Land Titling: Providing resources for strengthening the field operations and records management of the Land Title Registry and establishing a small unit in the Survey Department which would employ digital methods on a routine basis in the production of Registry Maps and Registry Plans.

(d) Operation and Maintenance: Support for initiatives of the MAs to increase the funding of O&M through both user fees and general revenues.

3.4 Revised Components:There were no changes in components during implementation. However, the design of the project was revised slightly at the level of sub-components.

(a) IDA assisted the reconstruction of Lot 1 of the Odaw Channel (3.25 km), rather than 7 km as envisaged in the original design. The revision was necessary due to cost escalation caused by the final engineering design, which changed first from an earth lined trapezoidal channel to a concrete lined trapezoidal channel and then to a reinforced concrete rectangular design. The rationale for the changes was a greater durability and a saving in space to reduce the extent of involuntary resettlement. The cost of reconstructing the bridges was also not included in the Staff Appraisal Report. AFD joined the project by assisting the reconstruction of Lot 2 (1.25 km), two bridges, and some secondary drains in Accra (see Section 4.2).

(b) The land-titling sub-component was cancelled because financing became available from a

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parallel project aimed at improving land adjudication by the Ministry of Land and Forests.(c) Construction of the Kejetia transport terminal in Kumasi was added to the project, which

was an emergency response to the delay of more than one year in allowing the traders who had been temporarily displaced to return. The delay was caused by a contractor’s failure to complete the works under another project and the Government’s failure to pay him the counterpart funds.

(d) During the mid-term review in February 2000, the Development Credit Agreement (DCA) was amended to delete the Government of Ghana contribution to the household latrine construction, due to continuing delays in the release of its 15% share. Thus only the beneficiaries’ contribution of 50% remained as counterpart financing. The change seems to have removed a bottleneck in the approval and construction process for household latrines and resulted in an appreciable acceleration of the construction program.

(e) Construction of a septage treatment facility in Accra had to be abandoned, because an appropriate site could not be identified. A septage treatment facility was added in Kumasi (at Buobai), initially to divert the unauthorized fecal sludge disposal from the Nsuben storm drain while it was under construction. It is now heavily used as an alternative site to the sludge treatment plant at the sanitary landfill.

The project was extended by one year to permit sufficient time to complete the construction of sanitary landfills in all three cities and the septage treatment facility at Tema. The reason for the delay was land acquisition and reconstitution of the tender boards after the new government assumed office in January 2001.

3.5 Quality at Entry:The quality at entry is rated satisfactory, based on the strength of:

(a) Consistency of objectives with the priorities for urban development and urban environmental sanitation in Ghana, as reflected in the CAS, National Environmental Action Plan and the Urban Strategy Review;

(b) Responsiveness to the government’s decentralization initiative, which strongly influenced urban development.

(c) Extent of client consultations and participation, which fostered ownership of the project by the participating MAs and local communities and ensured that the project sub-components were based on agreed priorities, particularly in the community infrastructure upgrading component.

The project evolved during the implementation of the Urban II project (Cr. 2157-GH) and was a priority for the sector and the country. The Urban II project (1992-1999) was the first major infrastructure intervention of such kind in these five cities and addressed road, housing and local government reforms and environment, and the UESP was conceived to address sanitation and drainage challenges in the same cities as a complementary measure. At the time of the preparation of the UESP in 1995, the Urban II project was in progress, financing infrastructure rehabilitation, environmental services, and local government reforms. Therefore, it was thought –somewhat optimistically -- that no further reforms of the local government sector were needed.

The Staff Appraisal Report (SAR) documented the project and its background in a clear and

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comprehensive manner, and accurately listed the risks to the project. However, the SAR under-estimated the substantial risk of inadequate capacity of the MAs to assume their responsibilities for urban environmental sanitation services and of inadequate funding of operation and maintenance.

The project implementing agency, as it existed at the start of the project (see Section 5.2) had implemented three Bank-financed projects since 1985 and most of the personnel were in place. Therefore, procurement, project accounting and fiduciary knowledge of the client were adequate for project implementation.

The project complied with the Bank’s safeguard policies relating to resettlement, land acquisition, impact on livelihood, and environmental assessment and mitigation, with minor exceptions. Environmental Impact Assessments were carried out as part of the design of the drainage works, sanitary landfills and liquid waste management facilities. The project design sought to minimize relocation; resettlement and compensation issues were appropriately flagged during preparation. However, the resettlement plan was not completed until after project approval, once project design was finalized. Delays in environmental assessment caused design problems with the landfills.

One shortcoming in project design was the lack of agreed monitoring indicators for impacts and outputs, which was not a Bank requirement when the project was approved. The project was retrofitted subsequently with performance indicators following the logframe approach, and these were refined over the course of implementation. The project’s monitoring and evaluation framework provided for baseline and impact assessments. However, the measurement of results in terms of productivity, poverty-reduction and health benefits of the project, as outlined in the Staff Appraisal Report, encompasses higher-level objectives that depend on other efforts outside the scope of the project. Therefore, the project employed more direct measures of outcomes for the MAs and the Waste Management Departments.

Project design could also have paid more attention to – and make available more funding for -- monitoring arrangements to provide data for sound urban environmental management. For example, inadequate funds were allocated to the procurement of monitoring equipment for the Environmental Health Departments (EHDs), which was needed for the smooth operation of the solid waste collection contracts/franchises. The EHDs could also have been strengthened to provide reliable data on water-associated diseases and effectiveness of interventions to facilitate better decisions by the MAs with respect to water and sanitation investments.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:The overall outcome of the project is rated satisfactory. The project reached the target of four out of five outcome/impact indicators. Considering the fact that this was the first investment operation in Ghana to provide comprehensive urban environmental sanitation services, and taking into account the challenges inherent in a decentralization agenda and in establishing institutional arrangements for sustained operations, the project has yielded significant benefits to the residents of the five cities. Output targets were substantially met, with varying time periods for the different

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components, ranging from 4 years for community infrastructure upgrading to 7 years for the sanitary landfills.

From the longer-term perspective, an important project outcome is the emergence of a shared vision -- among the central government ministries, MA Chief Executives and Waste Management Departments (WMDs) -- for urban environmental sanitation services. It is based on a growing policy consensus in the sector – although not fully reflected in the actions of key policy-makers -- that meeting the cities’ sanitation and waste management needs requires private sector participation and increased financial sustainability of services. The project took a critical first step in the long-term process of improving local revenue collection, by beginning to build public confidence in local government responsiveness and thereby enhancing the willingness of communities and residents’ to pay for urban sanitation services.

Assessment of achievement of objectives is based on the project’s five performance indicators of impact (see Annex 1):

Waste Management Departments are established and performing effectively in all five project towns. This performance indicator was substantially met. All five towns enacted legislative instruments to include WMD under the list of Departments that MAs can have. Simultaneously, the MA also prepared organizational, staffing and budgeting frameworks for WMDs and began the process of implementing them. An amendment to the Local Government Act was enacted to allow MAs to maintain separate accounts and budgets for WMDs. Model by-laws were drafted covering topics such as levying user charges on piped sewerage, public toilets and refuse collection; managing separate bank accounts utilizing revenues from such charges; privatizing selected aspects of WMD services; and regulating and enforcing waste generation, hauling and disposal. The project reinforced the decentralization agenda by demonstrating that the fledgling MAs could assume responsibility for waste management.

The Project-Wide Capacity Building component resulted in the creation of better working teams at the central and MA levels, with improved communication, leadership, negotiation and conflict-resolution skills, as well as enhanced technical competence in urban environmental management and computerized systems. However, it achieved only modest results regarding (a) the capability of the Ministry of Local Government and Rural Development (MLGRD) to facilitate and monitor waste management in the Metropolitan and Municipal and District Assemblies, and (b) the institutional and financial capacity of the five MAs for sustainable waste management (see Sections 4.5 and 6).

Percentage of solid waste collected rises to 70% in Accra, 60% in Kumasi, 55% in Sekondi-Takoradi, 30% in Tamale, and 70% in Tema. This performance indicator was substantially achieved, with an increase in the percentage of refuse collected in all five cities. The target was met – and in fact far exceeded – in Kumasi, Sekondi-Takoradi and Tamale. Refuse collection was largely unchanged in Accra, which may be related to the fact that it did not participate in the pilot solid waste collection program of the project because the previous government established a monopoly for solid waste collection in Accra in 1999.

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Project City Baseline EOP Target EOP ActualAccra 60% 70% 63%

Kumasi 45% 60% 77%Sekondi-Takoradi 40% 55% 72%Tamale 10% 30% 57%Tema 50% 70% 60%

Source: Project Appraisal Document for the Ghana: Second Urban Environmental Sanitation Project

While the base line figures were approximations, the EOP figures are based on substantially improved records kept by the WMDs. Other achievements besides an increase in solid waste collection are that (a) the creation of engineered disposal sites for solid wastes and sludge is a big improvement for the environment over dumping at uncontrolled sites, and (b) the increased participation of the private sector in solid waste collection has increased the chances of attaining a sustainable collection system in the long-run.

The MAs have gained valuable experience in introducing cost recovery principles and the management of private sector contracts. The pilots solid waste collection program has been highly successful in demonstrating that (i) private refuse collectors generally perform better than the public sector, (ii) services are better when the contractors operate through a franchise, and (iii) residents are willing to pay more for services provided by private operators because of their better service record. The solid waste management pilots have resulted in plans for further private sector participation in solid waste management, expansion of coverage, and in more cost recovery.

In Tema the pilot solid waste collection program is in its second phase of implementation and has improved significantly over the years. Almost all areas in Tema are currently receiving privatized services (with the exception of rural and part of peri-urban communities). In the Tamale pilot zone for privatized waste collection, the predominant mode of refuse disposal has shifted from public containers and burning (prior to project implementation) to door-to-door private collection services. Ninety percent of respondents in a field survey of the service area in Tamale indicated that the post-implementation environmental conditions in their neighborhoods had improved. The project has released children, especially girls, from the burden of walking long distances to dispose of household refuse.

Flooding in central Accra and Kumasi prevented to 15-year storm level. It is projected that this performance indicator has been achieved. Assessment of whether the reconstructed drains meet the 1:15 storm level is constrained by the long-term nature of such statistics and uncertainty in estimating the originally planned 1:15 or the revised 1:25 year storm. Property loss statistics are not available to quantify the impacts of the project. It is likely that the benefits from flood control are slightly less than anticipated – but not drastically - due to a reduction in the length of primary drains built in Accra and Kumasi, as compared to what was planned (see Section 4.2 and the Economic Analysis in Annex 3).

The main target group of this component is the urban population living and/or working in

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low-lying areas subject to flooding. High population density and low income characterize many of these neighborhoods. The lining of primary and secondary storm drains constructed under the project has significantly reduced the frequency, severity, and duration of flooding in these areas, according to residents and government officials (Urban Environmental Sanitation Project, Baseline and Impact Assessments, prepared by The Consortium [CIHSD], 2003).

Only Sekondi-Takoradi and Tamale can be said to have adequate drain maintenance arrangements. In Kumasi the activity is severely underfunded, while the absence of adequate institutional and financial arrangements in Accra jeopardizes the achievement of the project’s objectives. The silt accumulation in the Odaw channel in Accra since the completion of construction has created a flood hazard that was removed towards the end of the project at considerable cost.

New landfills/septage treatment facilities in Kumasi, Sekondi-Takoradi, and Tamale operating as planned and receiving all collected city refuse. Of the three planned sanitary landfills, two (Kumasi and Tamale) are fully operational, but they may not be operated as required for such a design due to shortfalls in financing of the recurrent costs. The incomplete landfill site at Takoradi creates the risk of soil erosion and siltation of the river. The MAs have drafted operational guidelines, identified which aspects could better be carried out by the private sector, and prepared a budget for O&M. They are considering the option of private sector participation in the landfill operation on a competitive basis. The experience so far with the two completed landfills is that the smaller one, in Tamale, is being operated according to the recommended procedures, while the large one, in Kumasi, is experiencing difficulties with equipment breakdown and the restricted movement of refuse trucks due to the rains. The current dumping in Kumasi runs the risk of a significantly reduced life of the landfill and an odor problem.

Percentage of population in the five cities using pan latrines and public toilets in residential areas decreases by 10%. The target of reducing the use of pan latrines has been achieved, but the continued reliance on public toilets in some neighborhoods (rather than on household latrines) limits the health benefits in the long run, as studies in other countries have shown. Overall, the outcome is an increased coverage of latrines, resulting in greater convenience and reduction in the incidence of infectious diseases (Study of the Impact of Household Latrines and Review of Standard Latrine Designs, The Consortium (CIHSD), 2003).

In all the project cities, residents in high-density, lower-income communities, as well as users of public places (such as markets and transport terminals) and school children, benefited from improved facilities. The estimated number of beneficiaries for household latrines is 60,000, for school latrines 100,000, and for public latrines 30,000. Indiscriminate defecation has decreased and environmental conditions have improved (Ibid). Residents also had cost savings in fees/charges for public toilets, and there has been reduced pressure on public toilets (which is expected to significantly increase the life span of the public facilities).

The impact of the project was perhaps greatest in Tamale, which was the only city to continue the promotion of household sanitation after the project closed. In Tamale, 1300 households installed in-house toilet facilities under the project, and the use of pan bucket latrines dropped from 30% of

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the households to 12% (Ibid). The Tamale MA intends to use the experience it acquired through the UESP to improve upon the delivery and coverage of this component. In other cities, the catalytic effect of stimulating demand for household latrines was more modest. One critical factor was the inadequate enforcement of by-laws on household sanitation. A full assessment of the impact of the household latrine program – for example, the effect of the subsidy program -- is constrained by the absence of socio-economic data on the beneficiaries.

The provision of toilet facilities in schools resulted in reduced defecation and improved environmental conditions around schools, reduced costs of fees for school children to use neighborhood facilities, and reduced incidence of truancy because students now stay on the school premises. However, the greater impact of this component is likely to be the behavioral change among children who received hygiene education (including hand washing) and improved sanitation facilities, and the broader societal benefits of the attitudes they carry forward into adulthood. The impact studies are silent on the availability of water supply in these schools and the effects, if any, of the national hand washing program that was being carried out as a parallel project, both of which is vital to better hygiene practices.

In this context, the impact of the school latrine program might have been greater had there been more systematic and sustained participation of key stakeholders, such as school health coordinators, the Ghana Education Service and Environmental Health Departments. Hygiene education materials were developed under UESP, but the record of their utilization was mixed. For example, Bank missions had observed that there were instances where flip charts distributed to the beneficiary schools had been put away in the Head Teacher’s office.

An assessment of the school latrine program indicates two basic problems (Study of Impact of Household Latrines and Review of Standard Latrine Designs prepared by the Consortium [CIHSD], 2003). First, the capacity of the toilets should be commensurate with the size of the school. For example, a school with 655 students had been provided with only a 10-seater WC, with two cubicles reserved for teachers. In some schools with KVIP latrines, school officials have opened up all the drop holes to meet high demand during break time rather than using alternate drop holes per cubicle, thereby creating problems for the periodic emptying the pits. Second, most toilets were malfunctioning due to substandard materials used in their construction and/or poor workmanship, thus placing additional burdens on the PTA for maintenance costs.

Most users and toilet attendants agreed that the public WC was an improvement on their previous sanitation means, such as defecation in open spaces, pan latrines, public KVIP and public aqua privy. However, they said this was only true if the flushing mechanism and the water tank were functioning. An impact assessment of the latrine program (Ibid) found a low user opinion of KVIP latrines, because they are frequently overloaded and not adequately maintained, thus impairing their function and making them unsanitary. This may however be more a consequence of inadequate management and maintenance (Section 6.1, Item 6) than faulty design or construction.

Community Infrastructure Upgrading. The most visible impact of the project resulted from the community upgrading activities, which brought about a striking transformation in the lower

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income neighborhoods. (The results for Community Infrastructure Upgrading are taken from the Baseline and Impact Assessments, The Consortium [CIHSD], 2003.) The combination of access roads and street lighting has resulted in a surge of economic activity in the beneficiary communities, particularly when compared with neighboring communities that did not benefit from the project. In the project communities, the majority of shop owners (many of whom are women) experienced increased patronage – and increased revenue – as well as reduced expenditure on kerosene, as a result of street lighting. Most commuters in the communities reported that access to vehicular (public and commercial) transport – as well as average waiting times and costs – have improved compared to the pre-project conditions. Surveys showed that a remarkable number of new small and medium scale businesses opened after completion of the works -- bringing more jobs and reduced prices of goods and services to the communities. Similarly, the average rent in the project area has increased substantially and the quality of housing stock has improved.

A large percentage of households either no longer experience flooding after rains or experience reduced flooding in the areas near the lined drains. Reclamation increased land supply for civic, residential, educational and other uses. There has also been a positive correlation between the provision of drains in the project localities and internal circulation (sullage). Before the project, an overwhelming majority of residents in the project communities disposed of their sullage directly onto access roads, resulting in pools of stagnant water and erosion of road surfaces. These trends have been reversed since the completion of the project. Comparative studies showed that the majority of residents now use gutters that feed into secondary drains. However, many newly lined drains were already becoming choked, raising concerns about maintenance.

In the project communities, most households reported reduced incidences of communicable diseases such as typhoid, malaria, diarrhea and cholera since the completion of the sanitation component of the project. No attempt was made however to determine whether these impressions were supported by clinical evidence.

The provision of water supply reduced the drudgery for women and children, improved hygiene practices, and reduced the cost of water for most households. For example, in Tema’s East Ashaiman area, the community water supply component resulted in the average distance from water supply mains decreasing from 800m to 100 m. Kumasi had similar levels of reduction in distances to fetch water. The proportion of households dependent on illegal connections in the communities in Takoradi dropped from around 60% to less than 4%. In all cities, communities reported that the quality of the water had improved as a result of the project. The reduction in the proportion of households that depend on wells and runoff water -- which in is contaminated -- is also a factor in this improvement. Results are more mixed in Accra, where project standpipes did not become operational for a long time due to disputes over management responsibility within the community.

In terms of poverty reduction impacts, competition from the project standpipes and the entry of more private retail outlets have broken local monopolies in the water delivery sector and reduced the price per bucket of water. For example, in pre-project conditions, residents in Takoradi paid about one and half times the charges announced by the Ghana Water Company for a bucket of water. In Kumasi, the length of service connections was reduced from about 1km to a maximum

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of 80 meters, resulting in a large saving for initial connections. Moreover, a number of residents have found jobs either as operators or attendants at public standpipes.

In most cases, arrangements for O&M of the standpipes are in place. The increased volume of sullage in the communities resulting from the provision of water has in some cases not been dealt with and constitutes an environmental hazard.

4.2 Outputs by components:See Annex 1 for the output indicators.

Component 1 - Storm Drainage (Actual: US$33.82 Million). The output of the component is rated satisfactory. The first output indicator -- lining of agreed parts of major drains in Accra and Kumasi completed – was fully achieved for the revised targets (see below). However, the second output indicator – adequate drain maintenance program established in every project town – was achieved only in 3 out of 5 towns.

In 1996, a comprehensive plan for the reconstruction of storm drains in Greater Accra was prepared under UESP, which focused mainly on the four most populated basins: Chemu West, Odaw, Osu Klottey and Kpeshie. IDA financed re-construction of 3.25 km as Lot 1 of the Odaw as a reinforced concrete lined channel based on a 1:25 year flood. AFD funded reconstruction of 1.25 km of the Odaw channel as Lot 2, which was completed in April 2004. A works contract has been signed for Odaw Lot 3, with Dutch financing. AFD also financed reconstruction of the 3.25 km Mukose Secondary drain, which was completed in December 2001, and two bridges over the Odaw. Reconstruction of Kpehe, Adabraka, West Ridge and circle drains in Accra was dropped due to budget constraints caused by substantial design changes. The construction of a closed channel at the downstream section of the Mataheko Drain – the section prone to the most severe flooding – was completed. The extent of the relocation of utilities and reconstruction of boundary walls was greater than expected and involved considerably higher costs than anticipated.

The Kumasi Metropolitan Area extends over five main drainage basins. About 5.5 km of Nsuben drain (the highest priority according to the 1991 master drainage plan) was reconstructed, compared to the target of 7.6 km, the shortfall caused by budget constraints due to under-estimation of construction costs. However, the reduction in benefits is minimal (see Section 4.1 and Annex 3).

Approximately 800m of the Market Circle drain in Sekondi-Takoradi were rehabilitated. The Sekondi drainage works also included provision of new and larger culverts at three road junctions and enlargement of the 110m long rectangular drain downstream of the Kumasi/Wiawso road junction.

Component 2 – Sanitation (Actual: US$10.7 million). The output of this component is rated satisfactory. The first output indicator – construction of at least 5,560 household latrines (drop holes) – was exceeded by 42%, with a total number of 7,920 drop-holes constructed. All the towns exceeded their targets, except for Sekondi-Takoradi, where the high water table made construction of KVIP latrines impossible and the low-income beneficiaries could not afford to pay

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their share of the higher cost of WC latrines.

The other two output indicators – at least 65 public toilet facilities constructed and operated by private operators selected competitively and construction of at least 305 school toilet facilities -- were substantially achieved, with 245 school latrines and 42 public latrines built. However, the number of seats per unit was much larger than planned, bringing the total number of seats constructed close to the target.

Number of Facilities House hold Toilets

(Number of Drop holes) School Toilets Public Toilets

Project City

Target Achievement Target Achievement Target Achievement

Accra 1,200 1,805 150 115 36 19

Tema 460 613 10 12 0 0

Sekondi-Takoradi 1,200 848 40 45 13 7

Kumasi 1,700 3,613 95 63 9 9

Tamale 1,000 1,041 10 10 7 7

TOTAL 5,560 7,920 305 245 65 42

The success of the household latrine component in exceeding the physical targets can be attributed in large part to the strategy adopted in marketing and administering the scheme through the use of “Management Intermediaries” contracted by the MAs. Their responsibilities included vetting household grant applications received through the contractors, reviewing the design at the site, awarding individual contracts, making payments to contractors, and monitoring the implementation.

Following a revision of the financing arrangements during the Mid-term Review (Section 3.4), IDA financed 50% of the cost of household latrines, with beneficiaries providing the other 50%, either in cash or in kind. The types of domestic toilets provided under the scheme were the Water Closet (WC) with attached septic tank and soakaway system, the Kumasi Ventilated Improved Pit Latrine (KVIP) and Van’s Biological Toilet (VBT). There were two main principles involved in technology selection: (a) technologies should be technically viable and (b) subsidies should be targeted on the poor. Accordingly, project support for WC with septic tanks was limited. In the high-density housing areas, they were not technically viable; in the medium-density areas, low-income residents did not have running water or could not afford them.

The project included the rehabilitation or construction of public latrines, mostly WC with attached septic tank and soak-away system and some rehabilitated public KVIPs. New construction took place in public areas such as markets, lorry parks and light industrial areas, in accordance with the Environmental Sanitation Policy of 1999. Operation and maintenance were contracted to private contractors through competition. Some public latrines in low-income residential areas were also

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rehabilitated or converted to more suitable types.

The project financed the renovation or construction of school latrines – WC with attached septic tank and soakaway system and KVIPs -- in primary and junior secondary schools, hygiene education in the classroom, and water supply connections to those schools that did not have them. Schools were able to obtain a new or improved sanitation facility if (a) a Facilities Management Plan was prepared, and (b) sufficient funds were collected to pay for O&M for at least one year. A local “management intermediary” managed the implementation, including promotion, assistance to individual PTAs to prepare a Facilities Management Plan, selection of a contractor, construction supervision, training of selected teachers in hygiene education, and monitoring. PTAs were encouraged to contract a qualified private company to maintain their facility, with support from school custodial workers. Private sludge haulers are periodically hired to empty the latrine pits or septic tanks.

Standard latrine designs were prepared at the beginning of the project, to be adapted by the MAs to suit specific conditions. A review of standard latrine designs was conducted near EOP. It concluded that some of the modifications prevented the latrines from functioning as intended. The report recommended which design features, essential to the proper functioning of the latrine types in question, need to be maintained during the adaptation of the standard design for future latrine construction (Study of the Impact of Household Latrines and Review of Standard Latrine Designs, The Consortium (CIHSD), 2003).

The project had a target to construct septage treatment facilities in Accra and Tema. Only the facility in Kumasi, which was added to the project (Section 3.4), is operational. No site could be found in Accra (Section 3.4). The Tema septage treatment facility suffered major delays in completion due to inadequate supervision by the Tema Municipal Assembly, design faults, and poor workmanship. In addition, an access road in the direction of Tema, the construction of which had been planned under another program, was not constructed and will need to be financed through a follow-up project.

The rehabilitation of the Tema sewerage system was substantially completed, involving sewerage rehabilitation works in five communities, clay lining of Treatment Pond No. 3 and rehabilitation of Pumping Station No. 3, including the pumps, rising main, and the sewer to the sea outfall. The construction work at Pumping Station No. 3 was the subject of delays, first in the replacement of parts of the rising main, then due to the deterioration of the sewer line, and then theft and deterioration of equipment at the pump house. At the end of the project, no sewered wastewater was as yet being treated in Tema – except for some factories that provide pre-treatment - mainly due to (a) objections from communities adjacent to the treatment ponds, and (b) the inability of the Tema municipality to pay the high electricity cost for pumping and sewage treatment. A more fundamental problem is the inability of TMA to put in place a viable management system for the sewage system, which could be largely financed by the users, especially the industries. After the closure of the project, TMA is continuing the rehabilitation work with its own resources and is currently testing the rehabilitated facilities.

The construction of the Tamale abattoir was completed after a delay of about 3 years due to procurement problems, delays by the contractor, and delays in awarding the management

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contract.

Component 3 - Solid Waste Management (Actual: US$13.69 million). The outputs of this component are rated satisfactory. The first output indicator – at least eight new private solid waste collection contracts awarded competitively – was fully achieved. The other output indicator – construction of three sanitary landfills completed – was not fully achieved, with one remaining incomplete in Sekondi-Takoradi. The actual costs were 72% of the original estimate due to the fact that the winning bids were substantially below the engineering cost estimates in the Staff Appraisal Report.

Initial construction delays for the landfill were due to the long process of land acquisition. Subsequently, contracts for the construction of the landfills were further delayed due to the reconstitution of tender boards after the election of the new government in 2001. The incomplete status of the Takoradi sanitary landfill has created serious concerns about soil erosion and siltation of the river.

The planned equipment for the sanitary landfills was supplied and the electrical weighbridges installed. The sanitary landfill designs followed the environmental guidelines and incorporated septage treatment facilities with joint treatment of leachate and sludge. The possibility of operating the landfills by private contractors is still being explored.

Eight (as planned) pilot solid waste collection schemes were implemented in Kumasi, Sekondi-Takoradi, Tamale, and Tema. In the pilot solid waste collection zones of all four cities, door-to-door service services were offered in high-income areas and communal container service in medium and low-income areas. Accra was omitted because the Government had established a monopoly (Section 4.1, Percentage of solid waste collected). Model contracts were developed for engaging private collection firms in waste collection. In all cities, except for Tema, it took 2 to 3 years to award the solid waste management contracts, mainly due to a long drafting and review process of the contracts, which do not follow a standard format, and to award the contracts.

IDA financed part of the cost of the collection contracts/franchises in the pilot zones on a declining basis. To maintain the subsidy at the intended level in spite of the delay, the dates of the declining percentages of IDA funding were amended in the DCA. Every WMD prepared periodic financial analyses -- comparing the projected with the actual costs, the costs of different service providers, and financing sources by socio-economic status of the zone -- and made adjustments in the program accordingly.

Component 4 – Community Infrastructure Upgrading (Actual: US$13 million). The outputs of this component are rated satisfactory, although no performance indicators had been established for this component.

Community infrastructure upgrading has been part of nearly every Bank–assisted urban development project in Ghana. It was carried out in 7 communities under UESP: 3 in Accra, 2 in Sekondi/Takoradi, and 2 in Kumasi. All or some of the following infrastructure was provided: upgrading of local roads, drains, water supply, public latrines, and street lighting, with roads

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taking up more than half the budget. The work was started in 1998 and was substantially completed in 1999.

The outputs were generally below target because the cost of the items was underestimated in the SAR for the reason that the “area sensitivity” or “population/household sensitivity” of the unit costs was not adequately taken into account.

Indicator/Matrix Projected in SAR

Actual / Latest Estimate

% SAR

Length of roads completed, m 37,230 18,730 50%

Length of drains completed, m 54,590 29,221 54%

Length of pipeline installed, m 39,100 43,575 111%

No. of standpipes provided 306 99 32%

No. of streetlights installed 3,003 509 17%

The upgrading carried out under UESP improved the living conditions of people in slum areas at the cost of US$52 per capita of the total population or $25,000 per hectare, which is on the high end of the range projected in the SAR. The cost in other Bank-assisted projects has been higher: $75 per capita or about $47,500 per hectare for typical upgraded sites.

The project promoted participatory means of selecting and implementing projects within the communities through Joint Management Committees (comprised of chiefs, assemblymen and opinion leaders in the beneficiary communities), which enhanced the willingness of the communities to own the projects, manage them, and ensure their sustainability. The component also brought together various groups within the communities to focus on common projects, resulting in some level of empowerment within the community.

Some issues occurred during the initial part of implementation that were resolved later on. At the start the tendency was to take an “engineering dominated” approach in some communities, rather than a “people and property sensitive” one (Aide Memoire of December 1998). In these cases, there was an insistence on following design standards and drawings, which in some cases affected properties unnecessarily and resulted in higher costs. For example, drains were constructed in straight lines, while the alignment could have been modified with little difference to functionality. In some cases road centerlines were strictly adhered to according to the designs, when their adjustment could have involved less demolition of drains, boundary walls and other structures without a substantial deviation from the city development plans. Electricity supply poles had to be relocated, when a slight reduction in the road width could have avoided it. The disagreements between residents, supervisory engineers and contractors on “flexible standards” would suggest that the community participation arrangements established under the project did not work as effectively in the beginning. . Similarly, there were complaints about the lack of sensitivity of MA

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staff, supervisory consultants and contractors with respect to the daily needs of property occupants to gain access to their properties.

Component 5 - Institutional Strengthening (Actual: US$10.12 million). The outputs of this component are rated satisfactory. The output indicator – creation of a separate line item in the budget for waste management O&M in each project town – was substantially achieved. Four towns did so, although cost recovery plans and their implementation were inadequate.

A Project-Wide Capacity Building and Training (PWCBT) program was carried out under UESP with assistance from the Nordic Development Fund (NDF). The main target group was the administration (Assembly staff) of the 5 project towns and particularly the staff of the Waste Management Departments (WMDs). This program ended in January 2003 after substantially completing all the targeted outputs, which mainly consisted of (a) a number of reports, manuals, and guidelines, and sample documents; (b) training; (c) provision of office facilities, vehicles, etc.; and (d) policy dialogue. However, there was no sustained follow-up in applying the outputs and insufficient integration of the PWCBT component with the physical aspects of the project. Moreover, documents that were distributed to the MAs tended to remain with individual officers, who did not share the information with others concerned with the subject.

Support to MLGRD comprised two engineers, a quantity surveyor and a planner contracted to assist in the management of the centrally implemented part of the project. In addition, three long-term contract staff for each of the five MAs (project coordinator, sanitary engineer, and accountant) were contracted. Capacity building activities included: solid waste collection analysis; study of operation, management and maintenance of selected infrastructure works; preparation of revenue roll/database for Accra and Tema; safeguards on Y2K project; planning and design of infrastructure works; and, training in computer appreciation and application of programs.

Transport terminal and adjacent road works at Kejetia, Kumasi, (Actual: US$1.23 million), which was added to UESP as an emergency measure (Section 3.4). While the roads were satisfactorily completed and in time, the completion of the transport terminal was delayed for more than a year due to the poor performance of the contractor. After its handover, serious problems with the paving occurred, which appears to be partly due to poor design and partly due to poor workmanship. The investigations were only recently concluded and remedial works are planned.

4.3 Net Present Value/Economic rate of return:The Staff Appraisal Report for UESP of 1996 contains a benefit-cost analysis for flood mitigation through drainage works in Accra and Kumasi. This analysis could not be repeated at EOP because (i) the report containing the original calculations (not done by the Bank) is no longer available, and (ii) the time of two years that has passed since the completion of the lining of the part of the channel would not have given sufficient data to make an extrapolation to the 1/25 year flood levels, and no new field interviews were conducted to update the cost of flood damage.

Instead, the present value data that were presented in the SAR were updated with known EOP values: the projected costs were replaced with actual costs, and the PV of the benefits was reduced to take account of the shorter actual length constructed as compared to the planned

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length (see Annex 3).

The results are that the EOP benefit-cost ratio for Kumasi (3.8) is about the same as projected (3.3), and that the EOP benefit-cost ratio for Accra (1.6) is considerably less than projected (5.4). Both are greater than 1, i.e. the PV of benefits exceed the PV of costs. The difference for Accra is due to a gross underestimation of costs and an overestimation of benefits. The actual costs for Accra were substantially greater due to (i) a change in the channel design, at first from unlined trapezoidal to lined trapezoidal and then to reinforced rectangular, and (ii) a reduction of the design flood frequency after appraisal from 1/15 to 1/25 years.

The adjusted PV of benefits for Accra as well as Kumasi is slightly less than projected because a shorter length of the two channels than planned was actually lined. However, based on the experience with flood control benefits in other cities, it is likely that the benefits for Accra were underestimated, and that the actual benefit-cost ratio for Accra is substantially greater than shown in the analysis. Other benefits that have not been included in the calculation are fewer deaths, reduced illness from polluted water overflowing the drains, reduced damage to infrastructure, fewer traffic disruptions, and gains in land surface and in land value.

4.4 Financial rate of return:N/A

4.5 Institutional development impact:The institutional development impact is rated as modest. The DCA contained three covenants related to institutional and financial arrangements, which were substantially complied with:

(a) Establishment of WMDs; (b) Establishment of separate budget lines for waste management; and (c) Authority of MAs to enact by-laws regarding key aspects of waste management.

Waste Management Departments (WMDs) were established in all the towns except for Accra (where such a department already existed). They are the only such departments in Ghana, with organizational and staffing plans, financial management systems, record keeping for waste management, and introduction of cost accounting. This provided for the first time a clearly defined institutional home for environmental management in the MAs. The head of WMD became a member of the MA’s management team, on the same functional level as public works or accounting. Another positive institutional impact was the acquisition of expert knowledge in the WMDs on various aspects of environmental management, aided by the capacity building component, which complemented the considerable amount of empirical knowledge of the practitioners. (See also Section 4.1, Waste Management Departments.)

There has been an increase in public awareness on waste management. Recently, hardly a day would go by without an item on this subject in the newspapers. Numerous conferences and workshops have taken place, and the performance of the Metropolitan Chief Executives is being partly judged on how well they deal with waste management and sanitation in their city.

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The Waste Management Departments face common difficulties in carrying out their functions:

(a) Employees are frequently transferred, retire, or take employment in the private sector due to poor remuneration. They are not promptly replaced with qualified staff, leaving key positions in the WMDs vacant.

(b)The Local Government Service Act was not enacted until 2003, and the key provisions remain to be implemented. An earlier enactment would have given the Assemblies the legal mandate to recruit and retain their own staff, and fill the critical vacancies.

(c) The financing of WMD operations is inadequate and is constrained by Assembly decisions – and in some cases national decisions on rate capping – to set waste management charges below the cost recovery level.

The use of contract staff to support the MAs helped to ensure the delivery of works, but contributed little to long-term institutional development. They were seen as operating outside the MA structure, even though some of them were former MA staff. The contract staff, rather than the MA management and staff, were considered responsible for project outputs. However, through their work they demonstrated a professionalism that set a standard for the WMDs to emulate, and they served as a conduit of information and dialogue between MLGRD and the MAs on urban environmental management.

While significant institutional advances were made, the required financing to make the changes operational and sustainable is not forthcoming (see Section 6). Moreover, many staffing changes have taken place in the project cities whereby in time many officials who benefited from the capacity building component are no longer in their original posts.

Overall, the project placed somewhat more emphasis on capital investments than on capacity building for sustaining the investments and related sector reforms. With the benefit of hindsight, the capacity building component should have reached beyond the WMDs to the decision makers and administrators of the MAs to change their attitudes towards waste management, to address sector policy issues more directly (such as revenue generation), and to include public awareness campaigns.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:International cocoa prices fell in the course of the project, weakening the revenue base of the towns and reducing the size of the central government’s Common Fund for the MAs. A power shortage affected the availability of cement, which slowed down the latrine construction program.

Large fluctuations in the value of the US Dollar vis-à-vis the SDR made budgeting difficult, resulting first in the deletion of some items when the Dollar rose and then in the addition of others when the Dollar fell.

5.2 Factors generally subject to government control:The change of government in January 2001 resulted in the dissolution of the central and local

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tender boards, whose clearance was required for the contract award for the major project works. The delays in reconstituting the boards and delays in decision-making by the newly appointed Ministers resulted in a considerable delay in implementation, particularly for the construction of the sanitary landfills and Tema septage treatment plant.

Constraints for the Waste Management Departments to carry out their functions are described in Section 4.5.

Land acquisition remains a tenuous and complex process in Ghana with different areas having different forms of land tenure, leading to complicated compensation arrangements and disputes. As land is often communally owned and put in trust for the community by the chief, the chief receives compensation on behalf of villagers. In particular, land rights affected the timely completion of the sanitary landfills. Compensation to the chiefs for land for the Kumasi landfill had to be paid twice due to a dispute over land rights by two contending families.

The withholding tax of 5% for contractors was increased to 7.5 % during the project. Since the Internal Revenue Service does not consider this to be a tax, but only a withholding, contractors were not entitled to a corresponding increase in the contract price. Difficulties in preparing tax returns and getting refunds is said to have resulted in a substantial loss to some contractors. The Value Added Tax was increased from 10% to 12.5% during the life of the project, but very few if any price adjustments in the value of the affected contracts (mainly for consultants) were made.

Many procurement decisions were reviewed on different government levels, causing delays and confusion over responsibilities. Decentralization of the procurement functions to the MAs – combined with capacity building – could have improved the efficiency of the procurement process and avoided many of the delays. The recently enacted procurement act clarifies the institutional responsibilities for public procurement decisions.

The implementing arrangements were changed in 1999 when the Technical Services Center (TSC) of the Ministry of Works and Housing, which initially implemented the project, was absorbed into MLGRD as the Local Government Project Support Unit. LGPSU continued to be staffed by consultants and retained its quasi-autonomous status. While the leadership in MLGRD changed over time, the implementing unit provided a certain continuity, albeit at the expense of long-term capacity building for project implementation. At the time the project closed, MLGRD decided to mainstream all future externally assisted projects, a transformation which is still ongoing.

5.3 Factors generally subject to implementing agency control:Procurement delays and weak contract management resulted in several components falling well behind schedule. The weak enforcement of contract provisions contributed in some cases to poor quality and additional costs.

LGPSU staffing was stable throughout the project, and the unit had qualified staff for its functions. It continued to play its original role of providing technical assistance for the implementation of civil works – with tacit support from MLGRD - and was not sufficiently engaged in the institutional aspects essential to project sustainability in collaboration with other departments of the Ministry, as had been recommended by numerous supervision missions.

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Poor financial planning of project commitments and expenditures allowed for a cost overrun to occur (Section 5.4). This happened in spite of the repeated advice of supervision missions on the use of the correct method for the forecasting of expenditures and commitments from the credit and on the need for closer collaboration between engineers and accountants of LGPSU in the assessment of the financial status.

5.4 Costs and financing:Total project cost, as projected in the SAR, was US$89.3 million, comprising US$38.5 million (43%) in local costs and US$50.8 million (57%) in foreign costs. Financing was to be provided as follows: IDA US$71 million (79.5% of total project cost); Government of Ghana, Municipal/Metropolitan Assemblies, and Beneficiaries: US$14.3 million (16%); Co-financing (Nordic Development Fund and Government of Netherlands): US$ 4 million (4.5%).

Final disbursements were: IDA US$63.77 million; Government of Ghana, MAs and Beneficiaries: US$6.4 million; Co-financing (AFD, NDF, and Netherlands): US$12.7 million. The total final disbursements were: US$ 82.96 million (see Annex 1).

The most significant changes in the financing plan were (a) addition of financing from AFD for the Odaw Channel, 2 bridges and secondary drains; (b) deletion of the Government of Ghana contribution for the latrine program; (c) the reallocation of about US$1.7 million of the credit to a new category for the completion of the Kejetia transport terminal in Kumasi (see Section 3.4); and (d) the US Dollar appreciation against the SDR decreased the total IDA contribution by $7.24 million However, a large part of the exchange loss- was offset by lower construction costs. (For an example see Section 4.2, Component 3.) Government contributions were also reduced due to the large foreign exchange ratio of payments for civil works. Counterpart contributions were received in a reasonably timely manner.

The project was one of the few IDA-financed operations in Ghana to fully utilize the IDA credit. In fact, there was an overrun in the total project cost of about US$600,000. This was mostly due to unexpected progress in the last few months with the construction of the sanitary landfill at Sekondi-Takoradi, which had been far behind schedule and which remains incomplete, and the late submission of construction certificates for other works that were submitted by consultants just before or after the end of the grace period, which ended on April 30, 2004.

6. Sustainability

6.1 Rationale for sustainability rating:The sustainability of the project is rated unlikely, based on the fact that the significant achievements in institutional development (Section 4.5) have not been accompanied by the mobilization of the necessary funding to make the WMDs fully operational and by organizational plans for maintenance. In particular:

(a) Current financing arrangements are inadequate for the sound operation of the sanitary landfills. There is a risk that they will revert to dumps and will fill up much faster if the operating principles of sectional filling, compaction and covering are not followed.

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(b) The private solid waste collection schemes that were piloted through the project are expected to be continued as franchises, but user fees remain below the cost of service. The project’s experience has shown that high-income users are willing to pay fully for the service while middle-income users for only part of it. Collecting fees directly from low-income users has been difficult partly because waste collection is not door-to-door. Franchising, whereby the contractor recovers at least part of the costs directly from the customer, appears to be more sustainable as it reduces the payment commitment of the Assembly to the contractor. Most project cities, notably Accra, are far in arrears with their payments to waste management operators, which reduces the ability of the contractors to provide a regular service. The pilot has also shown that all the key aspects of the mutual obligations should be specified in the contract.

(c) The absence of a clear assignment of responsibilities for drain maintenance in Accra, and the related lack of funding, could undermine the achievements of the project in reconstructing the drains and reducing flooding.

(d) The household latrine construction program has not become part of the regular programs of the MAs and has no budget allocations for continued operations. The institutional separation of water and sanitation services makes it difficult to introduce a water levy for sanitation, thus reducing options for sustainable financing for sanitation. Only in Tamale can the program be considered sustainable, due to the replication of the scheme with the involvement of NGOs. Weak enforcement of by-laws on domestic sanitation is likely to undermine the demand for household latrines and limit the potential for replication.

(e) The main problem for maintaining the project’s impacts in the school latrine component lies in the quality of the materials used for the facilities and the adequacy of the facilities for the size of the student population. Project benefits are also dependent on the willingness of Parent-Teacher Associations to assume responsibility of the day-to-day maintenance, commitment of the MAs to finance major capital improvements and repairs, and resolving conflicts with neighboring communities on the unauthorized use of school facilities by nearby residents.

The Assemblies often award maintenance contracts for public latrines in a non-transparent manner, resulting in a high costs to the users, low revenue generation for the Assembly, inadequate cleaning and maintenance, infrequent sludge emptying which makes the system malfunction, unreliable supply of water and electricity, and sometimes conflicts between interest groups, such as the assemblymen themselves. (See Joseph Ayee and Richard Crook, “Toilet Wars:” urban sanitation services and the politics of public-private partnerships in Ghana, Institute of Development Studies, Brighton, England, Working Paper 213, December 2003.)

6.2 Transition arrangement to regular operations:In order to address the sustainability issues, the Bank is preparing a “repeater” project, the Second Urban Environmental Sanitation Project (UESP-2). It was approved by the Board in April 2004 and would provide a geographic expansion as well as an intensification of the approach where pointed out from the experience of UESP-1. As waste collection improves, cost recovery can be increased, and with economic growth the financial situation in the project towns is expected to improve to the extent that they can finance the operation and monitoring of the landfills eventually on their own. The greatest risk in a repeater project is that the Bank would support doing more of the same without substantially improving the sustainability. Therefore,

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UESP-2 seeks to deepen the sector policy and institutional reforms in collaboration with other IDA-assisted projects, including the PRSC.

UESP-2 addresses the sustainability issues in the following ways:

(a) It will subsidize the effective operation of the three sanitary landfills in Kumasi, Tamale, and Sekondi-Takoradi, which have been constructed under UESP, including monitoring for environmental compliance and the involvement of local private operators in their operation. UESP-2 would provide limited financial support for the normal O&M costs associated with the operation of the sanitary landfills through operational subsidies applied on a declining basis. To ensure that the MAs make a serious effort to bridge the funding gap by project closure, each MA will produce an annual operational plan for the landfill with evidence of adequate budgetary provision for meeting the funding shortfall during the operational year. Support to the private solid waste collection pilots will be continued, based on the lessons learned from UESP.

(b) A Performance-Based Fund will be used to make allocations to the MAs for additional activities within the project objectives according to their achievement of the MA Performance Criteria contained in the Project Implementation Manual and specified in the Grant Agreement.

(c) Implementation conditions include the requirement that, before signing works or goods contracts, each Assembly will appoint key staff in its Waste Management Department, with adequate qualifications and experience.

(d) Before starting the construction of more storm drains, each MA will provide evidence of having established satisfactory institutional and financial arrangements for drain maintenance.

(e) It will again include a capacity building component, which will be broader than in UESP to encompass other relevant units in the MAs and improvements in revenue-generation, planning and accounting practices, and public awareness campaigns.

The Bank will continue to assist the Government in exploring the potential for carbon finance as a source of revenue for meeting the recurrent cost of solid waste disposal. Emission reduction purchase agreements could contribute to cost recovery and could potentially reduce the need for subsidies for the operation of the sanitary landfills.

7. Bank and Borrower Performance

Bank7.1 Lending:The Bank’s performance in lending was satisfactory.

The Bank was responsive to the initiative of the government, arising out of previous IDA lending in the urban sector. The project was based on an Urban Strategy review carried out with Bank support. The Bank also arranged a PPF to finance project preparation activities. The nature and number of conditions of Board presentation, effectiveness and disbursement were realistic. However, the Bank under-estimated the land rights issues and the risks of weak capacity for sustainable waste management services.

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The Bank’s appraisal team had the appropriate broad range of expertise required for such a project, including engineers, urban specialists and financial analysts. The team would have been strengthened by the inclusion of specialists from the public health sector, given the important health impacts envisaged in the project. In order for the Bank’s clients to take a more cross-sectoral perspective, the Bank will need to do the same for UESP-2, by including a health specialist in its team.

7.2 Supervision:The Bank’s performance on supervision was satisfactory.

A Quality of Supervision Assessment was carried out by QAG in 2000, which rated the supervision performance satisfactory in the overall; highly satisfactory on adequacy of supervision inputs and processes; and satisfactory for all other aspects: focus on development effectiveness, supervision of fiduciary/safeguard aspects; and quality and realism of reporting. The assessment noted the positive impact of shifting supervision responsibility from headquarters to the field, in terms of responsiveness to implementation problems and close contact with the borrower. The assignment of an experienced task team leader, supported by a well-qualified team (mostly in the country office), contributed to supervision quality. In particular, the task team substantially improved the quality of project status reporting over the course of implementation.

The need to focus supervision efforts on the sustainability of the WMDs and O&M of works was identified in the QAG assessment, and this was the subject of much supervision attention – although with limited results.

The project was assessed in October/November 2002 by environmental and a social safeguards specialists. The safeguards supervision report indicated some issues, not considered major by the specialists. The mission recommended that due diligence was required to implement safeguards covering such aspects as land compensation, leachate control, and monitoring and training of staff in environmental planning and management.

One area of weakness in supervision was the lack of regular inputs on financial analysis and municipal finance on the task team, given the central importance of improving municipal financial systems to the project’s objectives. Budget constraints during supervision spread resources too thinly across specialists, considering the multi-disciplinary nature of skills needed for the project. Finally, coordination with NDF, as co-financier of the PWCBT component, could have been stronger. IDA as the “lead agency,” MLGRD as the implementing agency, and even NDF as the financing agency, provided insufficient supervision of the firm that implemented the capacity building component.

7.3 Overall Bank performance:The overall rating of the Bank’s performance is satisfactory.

Borrower7.4 Preparation:The Borrower’s performance in preparation is rated satisfactory. The project was a high priority for the government, and there was strong ownership, given the importance of urban infrastructure

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and sanitation services in the five project towns. The consultation and participation process included an initial preparation workshop with all the key central and local government officials, consultations with community leaders and residents, and a workshop on implementation arrangements.

7.5 Government implementation performance:The Government’s implementation performance is rated as satisfactory in view of the achievement of project objectives, as outlined in Sections 4 and 5. All the conditions of the credit were fulfilled. Counterpart contributions from the central government improved over time, although they had to be cancelled for the household latrine sub-component due to delays. Government fell short in providing support to the MAs in establishing the institutional and financial arrangement for O&M. Over the course of the project, leadership changes at the Ministry at times weakened the Government’s engagement with the project.

7.6 Implementing Agency:The implementing agency’s performance is assessed as satisfactory, in view of the achievement of project objectives, as outlined in Sections 4 and 5. The project unit was adequately staffed and motivated. However, the MAs were affected by turnover, with the resulting loss of skills. Much of the work being carried out by contracted consultants, and it was difficult to find champions for the project among senior MA staff.

7.7 Overall Borrower performance:The overall Borrower performance is rated satisfactory.

8. Lessons Learned

(a)Capacity building for urban environmental management should be broad enough to include strengthening capabilities in planning, budgeting and revenue collection and include all related departments of the MAs and the decision makers. The experience with UESP has demonstrated the limitations of attempting to improve the sustainability of urban environmental sanitation services through capacity building targeted to sanitation and waste management without the reforms in the civil service and without a substantial increase in local government revenues.

(b) Project budgets should be allocated – at least partially -- on the basis of O&M performance in order to provide an incentive for the local implementing agencies. The key to effective local government services is to establish measurable performance benchmarks, in order to promote accountability to its citizens for results. In the case of the urban environmental sanitation sector, these benchmarks could include: level of community ownership and empowerment in infrastructure and service delivery; establishment of performance-based contracting and targets for revenue collection; and a shift from service delivery to policy and regulatory functions in the WMDs.

(c) The Ministry of Local Government and Rural Development should be more pro-active in providing institutional development support to the MAs. In addition to the current assistance with physical investments in the MAs, the central government should also provide for the coordination and dissemination of expertise on waste management. This is a rapidly changing

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field, as the newly gained worldwide recognition of the importance of urban waste management yields new experiences and insights, which needs to be assessed and shared with the MAs.

(d) Addressing environmental health requires a cross-sectoral approach. Public health promotion and education strategies – such as programs to improve hand-washing habits -- are needed to change behaviors so as to realize the health benefits of improved sanitation. International experience suggests that public funds might be better spent on promotional campaigns and training/establishing latrine artisan businesses than on subsidies for constructing latrines. Education and information are key to increasing community demand for improved sanitation facilities.

(e) Bank assistance to decentralization requires a coordinated multi-sectoral approach. One project can achieve only minor results. Decentralization is a crosscutting theme that involves several sectors and coordination with work on improving the macro and governance. At the same time it should be recognized that the urban sector is a key player in that group.

9. Partner Comments

(a) Borrower/implementing agency:The Ministry of Local Government and Rural Development prepared its own evaluation

report, which is shown below, and contributed data for the Bank to prepare its ICR.

IntroductionThe UESP was implemented in 5 Metropolitan and Municipal Assemblies from September

1996 to December 2003. This report provides an assessment of the project from the point of view of the MLGRD and its implementing Agencies. The assessment covers:

(a) The degree to which the project achieved its development objectives as set out in the project documents

(b) Other significant outcomes and impacts(c) Prospects for the projects sustainability(d) Bank, Borrower performance, including compliance with relevant Bank safeguard and

policies and(e) Identify lessons learned from implementation.

Project Objectives and Components

The Urban Environmental Sanitation Project was formulated with the following key objectives:

(a) Promoting productivity and raising living standards in the 5 major cities, especially for lower-income people, by improving drainage, sanitation and solid waste services

(b) Helping establish better institutional and financing mechanisms and more effective policy frameworks so that improvements are sustained over time, and

(c) Building up the capacity of the 5 Metropolitan and Municipal Assemblies to manage

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environmental sanitation services.

These objectives were to be achieved through the implementation of 5 main components, listed in the table below.

Extent of Achievement of Component Objectives

Component Outcomes Achievements1. Reconstruction of Storm Drains in Accra, Sekondi-Takoradi and Kumasi to alleviate flooding, particularly in the Central business districts.

Two major primary drains in Accra and Kumasi, namely the Odaw and Nsuben, have been reconstructed to increase their discharge capacities from about 1:10 years to 1:25. Similarly, the major bottlenecks to storm water discharge in the Takoradi Central Business District have been removed

The objective of this component has been largely achieved. Much remains to be done however to complete the reconstruction of secondary drains, which belong to the drainage network that has been partly rehabilitated.

The provision of resources for routine maintenance of the completed drains would be critical for the sustainability of the achievements.

The output was highly satisfactory.2. Provision of Solid Waste management facilities (landfills and septage treatment facilities) in Sekondi-Takoradi, Kumasi and Tamale; provision of equipment to manage the landfills; and the establishment of pilot privatized refuse collection systems. The objective was to facilitate waste management and improve environmental sanitation.

Sanitary landfill facilities successfully provided in Tamale and Kumasi. The Sekondi facility was however only partially (70%) completed

Landfill management equipment was delivered more than a year before the facilities were completed.

With the exception of Accra, all other MAs established the pilot privatized refuse collection systems as planned.

The objective of this component was achieved to a large extent in Tamale, Kumasi.

Tema also achieved the objectives of the solid waste collection subcomponent, which was the only subcomponent provided to the city.

Sekondi achieved the objectives of the solid waste collection subcomponent, but would need further assistance to complete the Landfill facility.

The output of this subcomponent was generally satisfactory.

3. Provision of Sanitation facilities, including public, schools and household toilets

A total of 7,920 household facilities, 245 schools facilities and 42 public facilities were provided

The output of the component is highly satisfactory.

4. Community Infrastructure upgrading in Low-income Urban Areas, including roads, secondary/tertiary drains, improving access to water supply, street lighting and

A total of 18.73 km of community roads were upgraded in the 5 MAs, as against an original target of 37.23 km.

A total of 43.6 km of pipelines were installed as compared to a target of 39.1 km. Only 99 out of 306 public

The objective of the subcomponent was highly satisfactorily achieved. The extent was limited because of limited budget as road works tend to be much more expensive than other municipal services. However the impact was significant as general circulation in the

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provision of sanitation facilities

standpipes were provided.A total of 30 Skip pads were provided in KMA and SAEMA as against a target of 110. In addition 36 communal containers were procured. The subcomponent of AMA was cancelled as a result of decision of the AMA to privatize its activities.

A new abattoir has been constructed at Tamale.

communities significantly improved and there were rises even in property values The extended pipe reticulation system provided opportunity for residents to make direct connection to their houses.

The new abattoir in Tamale has however not been put to use since its completion in June 2002. Several reasons have been assigned for the inability of the MA to put the facility to use, including delays in award of a facilities management contract.

5. Capacity building including the provision of technical assistance, training and equipment to improve the capacity of the Assemblies to manage basic services

A 6-year programme of capacity building for MLGRD and the MAs comprising a mixture of training, technical assistance and on the job coaching was successfully delivered, with NDF Funding.

In addition, four professionals were hired for MLGRD, 3 professionals for each of the 5 MAs, and a number of studies undertaken by each MA, with IDA funding.

The objective of improving the performance of MAs waste management departments was largely achieved during the 6-year implementation period.

However, changes in MA staffing – both operational staff and Management staff- after the programme has had a negative effect on the impact of the component.

There is a need for a succession plan, which spells out how such programmes could be sustained.

Significant Outcomes and Impacts

The most significant outcomes and Impacts made under the project include:

(a) The reconstruction of Primary storm drains in Accra and Kumasi to mitigate flooding(b) Provision of Sanitary landfill sites in Tamale and Kumasi, acceptable to the community for

both solid and liquid waste management(c) Provision of about 8,000 household sanitation facilities benefiting an estimated 60,000

people(d) Provision of waste management and waste collection bins for MAs in support of waste

collection services.

Prospects for Project Sustainability

The probability of maintaining the achievements generated from the project in relation to its objectives vary from component to component. It is highest for the Storm Drainage component, and lowest for the institutional strengthening/capacity building component.

Bank/Borrower performance

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The Bank provided useful support during all stages of project identification, preparation and implementation. The Ministry, MAs and other implementing agencies also performed satisfactorily in meeting compliance with reporting and audits.

Lessons Learned from implementation

A number of issues directly or indirectly affected the outcome of the project. These can be classified under the following headings:

(a) Project Preparation: The project was well prepared with the involvement and inputs from all participating Metropolitan and Municipal Assemblies. As a result, the selected components were consistent with MAs priorities whilst the implementation arrangements ensured effective delivery of services for the urban poor. (b) Institutional development: Notwithstanding the extensive arrangements made to provide support for capacity building and project implementation, there appears to be the need for further support. This is largely the result of high staff turnover. A comprehensive long-term programme for decentralization implementation support may be able to fill this gap.(c) Ownership: The sense of ownership during project preparation and implementation was quite high. Unfortunately, this sense of ownership diminished at the later stages, following changes in leadership at the MAs.(d) Procurement Processes: The time taken for bid documents to be prepared, and bids to be evaluated are the main causes of delays, and not the procurement process per se. Although this was largely achieved under the project, there were still substantial delays on the part of contractors in completing works.(e) Consultant and Contractor’s Performance: As is the case with several other projects, consultant and contractor performance is one of the most important factors -affecting the delivery of infrastructure services. Delays in completion of the landfill designs, and the inability of the contractor to complete the Sekondi Landfill are examples of difficulties encountered with consultant and contractors performance. Even where works were completed before project closing, they were achieved after inordinate increase in original construction periods.

(b) Cofinanciers:No comments received.

(c) Other partners (NGOs/private sector):N/A

10. Additional Information

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

1. Waste Management Departments are established and performing effectively in all five project towns.

5 towns 5 towns

2. Percentage of solid waste collected by EOP rises to: Accra 70%Kumasi 60%Tema 70%Sekondi-Takoradi 55%Tamale 30%

Accra 60%Kumasi 50%Tema 60%Sekondi-Takoradi 55%Tamale 20%

Accra 63%Kumasi 77%Tema 60%Sekondi-Takoradi 72%Tamale 57%

3. Flooding in central Accra and Kumasi prevented at least to the 15-year storm level.

Yes Yes

4. New landfills/septage treatment facilities in Kumasi, Sekondi- Takoradi, and Tamale operating as planned and receiving all city refuse

2 2

5. Percentage of population in the five cities using pan latrines and public toilets decreases by at least 10%.

Yes Yes for pan latrines; no for public toilets

Output Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

1. Construction of at least 5,560 household latrines (drop holes).

5,560 7,920

2. At least 65 public toilet facilities newly constructed and operated by private operators selected competitively.

65 (same number of drop holes as planned) 42 (same number of drop holes as planned)

3. Construction of at least 305 school toilet facilities.

305 (same number of drop holes as planned) 245 (same number of drop holes as planned)

4. At least 8 new private solid waste collection contracts awarded competitively.

8 8

5. Lining of agreed parts of major drains in Accra and Kumasi completed.

100% 100%

6. Construction of 3 sanitary landfills completed.

2 2

7. Adequate drain maintenance program established in every project town.

5 5

8. Creation of a separate line item in the budget for waste management O&M in each project town.

5 5

1 End of project

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionStorm Drainage 33.38 33.82 101Sanitation 9.84 10.70 109Solid Waste 18.93 13.69 72Community Infrastructure Upgrading 15.10 13.00 86Institutional Strengthening 12.05 10.52 87Kejetia Transport Terminal 0.00 1.23

Total Baseline Cost 89.30 82.96Total Project Costs 89.30 82.96

Total Financing Required 89.30 82.96

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 42.99 20.44 3.74 0.00 67.17(37.26) (16.20) (1.38) (0.00) (54.84)

2. Goods 2.88 0.00 0.20 0.14 3.22(2.88) (0.00) (0.20) (0.00) (3.08)

3. Services 0.00 0.00 11.17 3.87 15.04(0.00) (0.00) (11.17) (0.00) (11.17)

4. Op. & Maintenance 0.00 0.00 3.83 0.00 3.83(0.00) (0.00) (1.92) (0.00) (1.92)

Total 45.87 20.44 18.94 4.01 89.26(40.14) (16.20) (14.67) (0.00) (71.01)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 30.47 17.57 3.64 8.70 60.38(28.41) (15.71) (1.68) (0.00) (45.80)

2. Goods 1.59 0.60 0.54 0.00 2.73(1.58) (0.56) (0.54) (0.00) (2.68)

3. Services 0.00 0.00 16.21 1.02 17.23(0.00) (0.00) (13.21) (0.00) (13.21)

4. Op. & Maintenance 0.00 0.00 2.61 0.00 2.61(0.00) (0.00) (2.14) (0.00) (2.14)

Total 32.06 18.17 23.00 9.72 82.95

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(29.99) (16.27) (17.57) (0.00) (63.83)

1/ Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

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PROJECT COSTS BY FINANCING SOURCE.doc

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Municipal Solid Waste Management, 2004

Characteristics Accra Kumasi Sekondi-Takoradi Tamale Tema All cities

Population, thousand 1,904 1,343 348 228 437 4,260

MSW generated, kg/capita/day 0.79 0.82 0.68 0.66 0.59 0.76

MSW generated, tons/day 1,500 1,100 236 150 260 3,246

MSW collected, tons/day 950 850 170 85 155 2,210

Percent collected 63% 77% 72% 57% 60% 68%

Collection cost, US$/ton 10.0 8.0 7.0 6.0 8.0 7.8

Disposal cost, US$/ton 2.0 1.0 - - - 1.5

Total cost, US$/ton 12.0 9.0 7.0 6.0 8.0 8.4

Source: Project Appraisal Document for the Ghana: Second Urban Environmental Sanitation Project

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Annex 3. Economic Costs and Benefits

A benefit-cost analysis for drainage in Accra and Kumasi was included in the Staff Appraisal Report for UESP (Annex 6). While the SAR is dated March 1996, the analysis for Accra drainage had been done in 1991 as part of the Accra Drainage Master Plan and that for Kumasi in 1995.

The analysis could not be repeated at EOP because (i) the report containing the original data, assumptions, and calculations (not done by the Bank) is no longer available, and (ii) the time of two years that has passed after the completion of the lining of the channel would not have given sufficient data to make an extrapolation to the 1/25 year flood levels. For these reasons no new field interviews were conducted near the closing of the project to update the cost of flood damage. Instead, the data that were presented in the SAR were updated with the information that was available: the projected costs were replaced with actual costs, and a percentage of the present value of projected benefits was used to take account of the shorter actual length constructed as compared to the planned length. The results are presented below in the form of a benefit-cost ratio, as the ERR at EOP could not be determined in the absence of a time stream of data.

Assumptions and methodology of the original analysis• Discount rate – Kumasi 12%, Accra 10% (SAR, p. 54)• US$ unadjusted for inflation• Tables of the relationship between water depth and flood damage potential were developed at the time of the original analysis. Based on the water surface profile that would result from a flood with a 15-year frequency, the expected mean flood depth over the flood-prone areas and the corresponding damage were estimated at that time with the aid of topographical maps. Estimated damages were spread evenly over the amortization period.CostsThe actual costs for Accra were substantially greater due to (i) a change in the channel design, first from unlined trapezoidal to lined trapezoidal and then to reinforced rectangular, and (ii) a reduction of the design flood frequency from 1/15 to 1/25 years after appraisal. The SAR is silent about maintenance costs, which presumably were not included in the analysis. If the considerable cost of desilting the lined sections of the Odaw channel, which is in the order of magnitude of $250,000 per year, were included, the benefit-cost ratio would be even lower.

BenefitsIn the SAR the projected benefits were assumed to consist of avoidance of damage to buildings due to flooding, avoidance of the damage to contents, and avoidance of sales losses. Lot 1 (3.25 km) of the Odaw channel in Accra was completed only 2 years ago, Lot 2 (1.25 km) has just been substantially completed (with assistance from AFD), and the construction of Lot 3 (2.75 km) has just started. In Kumasi the completion was also about 2 years ago. The short flood record of 2 years makes it impossible to extrapolate the flood levels to a frequency of 1/25 years and, thereby, to confirm whether the aimed-at reduction in the frequency of flooding had been realized. Since only the most flood prone 4.50 km long lower section of the planned 7.25 km of the Odaw Channel were actually lined, the benefits in Accra were reduced to 80% of the projected benefits. Similarly, since a portion at the end of the Nsuben Drain was deleted from the contract, the benefits in Kumasi were reduced to 90%.

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ResultsThe following table shows a comparison between projected and adjusted (EOP) costs and benefits of drainage works in Accra and Kumasi. They are not based on an EOP time stream calculation, for the reasons explained above.

Odaw Channel, Accra – Projected at Appraisal

Odaw Channel, Accra – Adjusted to EOP

Nsuben Drain, Kumasi – Projected at Appraisal

Nsuben Drain, Kumasi –Adjusted to EOP

Present Value of Benefits, US$ mill.

39.3 31.4 38.5 34.7

Present Value of Costs, US$ mill.

7.5 19.5 11.6 9.1

Net Present Value, US$ mill.

31.8 11.9 26.9 21.7

Benefit-Cost Ratio 5.2 1.6 3.3 3.8Economic Rate of Return 43 % n/a 36 % n/a

The estimated EOP benefit-cost ratio for both Accra and Kumasi is greater than one, i.e. the benefits exceed the costs. While the EOP B-C ratio for Kumasi (3.3) is nearly the same as the projected one (3.4), the ratio for Accra (1.4) is much less than projected (5.4). The difference for Accra is due to a gross underestimation of the costs and an overestimation of the benefits. Moreover, it is unlikely that the design flood frequency of 1/25 years will actually be reached.

Other benefits that have not been included in the projections are fewer deaths, reduced illness from polluted water overflowing the drains, reduced damage to infrastructure (bridges, telecommunications, etc.), fewer traffic disruptions, and gains in land surface and in land value. Moreover empirical studies of flood frequencies, mostly in Asia, have shown that the right tail of the flood frequency curves that are used in standard engineering estimates is far too narrow, thereby grossly underestimating the frequency of flooding. A new generation of flood frequency curves has been introduced under the title of robust and resistant estimators, but they have not been generally adopted by the profession due to their newness and analytical complexity.

Based on the experience with flood control benefits in other cities, it is likely that the projected benefits for Accra were underestimated, and that the benefit-cost ratio is substantially greater than shown in the analysis.

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation10/1994 1 URBAN DEV. SPEC./TTL; 2

SANITARY ENGINEERS; 2 MUNICIPAL ENGINEERS; 1 CIVIL ENGINEER; 1 SOLID WASTE MANAGEMENT SPECIALIST

Appraisal/Negotiation07/1995 8 1 URBAN DEV.

SPEC./TTL; 2 SANITARY ENGINEERS; 2 MUNICIPAL ENGINEERS; 1 CIVIL ENGINEER; 1 SOLID WASTE MANAGEMENT SPECIALIST

Supervision

10/04/1996 5 TTL/SR. URBAN SPEC. (1); CIVIL ENGINEER, CONS. (1); MUNIC. FIN, SPECIALIST (1); SANITARY ENGINEER (1); SOLID WASTE SPEC, CONS (1)

S S

03/07/1997 5 CIVIL ENGINEER, CONS. (1); SOLID WASTE SPEC. CONS (1); TTL/SR. URBAN SPEC. (1); SANITARY ENGINEER (1); MUNIC. FIN SPECIALIST (1)

S S

10/03/1997 7 SOLID WASTE SPECIALIST (1); TEAM LEADER/URBAN SPEC (1); MUNICIPAL ENGINEER (1); SANITARY ENGINEER (1); FINANCE SPECIALIST (1); MUNI. FINANCE SPEC. (1); CIVIL ENGINEER (1)

S S

04/30/1998 4 TEAM LEADER/URBAN SPEC (1); MUNICIPAL ENGINEER (1); SANITARY ENGINEER (1); URBAN PLANNER (1)

S S

12/18/1998 5 INCOMING TEAM LEADER (1); OUTGOING TEAM

S S

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LEADER (1); SANITARY ENGINEER (1); URBAN PLANNER (1); MUNICIPAL ENGINEER (1)

05/21/1999 7 MISSION LEADER (1); MUNICIPAL ENGINEER (2); SANITARY ENGINEER (1); CIVIL ENGINEER (2); PUBLIC HEALTH (1)

S S

12/15/1999 3 TEAM LEADER, ENGINEERI (1); HIGHWAY ENGINEER (1); CIVIL ENGINEER (1)

S S

03/15/2001 7 TTL ENGINEER (1); ROADS (1); SANITARY ENGINEERING (1); URBAN MANAGEMENT (1); PROCUREMENT (1); FINANCIAL MANAGEMENT (1); TEAM ASSISTANT (1)

S S

02/21/2002 3 TTL, MUNICIPAL ENGG (1); WASTE MANAGEMENT (1); TEAM ASSISTANCE (1)

S HS

11/14/2002 5 TEAM LEADER (1); URBAN MANAGEMENT (1); FINANCIAL MANAGEMENT (1); TEAM ASSISTANCE (1); CONTRACT MANAGEMENT (1)

S S

09/12/2003 5 TTL, ENGINEERING (1); SANITRY ENGINEERING (1); URBAN MANAGEMENT (1); PROCUREMENT (1); TEAM ASSISTANCE (1)

S S

ICR02/02/2004 TTL, ENGINEERING (1);

ENVIRONMENTAL SPECIALIST (1); TEAM ASSISTANCE

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/PreparationAppraisal/NegotiationSupervisionICRTotal 1,029

Year Range 1998 to 2004.

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

School childrenPrivate sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

1.UESP Staff Appraisal Report, March 19962. UESP Implementation Progress Report, June 20033. UESP Aide Memoires4. UESP Project Status Reports5. QAG, Quality of Supervision Assessment, 20006. UESP Baseline and Impact Assessments, The Consortium (CIHSD), 20037. UESP: Study of the Impact of Household Latrines and Review of Standard Latrine

Designs, The Consortium (CIHSD), 2003

8. UESP-2, Project Appraisal Document, April 20049. MLGRD, GOG, Draft Implementation Completion Report, May 2004

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