AFRICAN DEVELOPMENT FUND

PROJECT:

NYAKARARO-MWARO-GITEGA ROAD (RN18)

IMPROVEMENT AND ASPHALTING PROJECT-PHASE 1/

NYAKARARO-MWARO-KIBUMBU SECTION (30 KM)

COUNTRY: REPUBLIC OF BURUNDI

OITC DEPARTMENT

September 2014

Translated Document

TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................................................................................................. iii

1. STRATEGIC THRUST AND RATIONALE ......................................................................... 1

1.1. Project Linkages with Burundi’s Strategy and Objectives .................................. 1

1.2. Rationale for Bank Involvement ............................................................................... 1

1.3. Donor Coordination .................................................................................................. 2

2. PROJECT DESCRIPTION ...................................................................................................... 2

2.1. Project Objectives ...................................................................................................... 2

2.2. Project Components ................................................................................................... 3

2.3. Technical Solutions Retained and Other Alternatives Explored ......................... 3

2.4. Project Type ............................................................................................................... 4

2.5. Project Cost and Financing Mechanism .................................................................. 4

2.6. Project Area and Beneficiaries ................................................................................. 7

2.7. Participatory Process for Project Identification, Design and Implementation .. 7

2.8. Bank Group Experience and Lessons Reflected in Project Design ..................... 8

2.9. Key Performance Indicators ..................................................................................... 8

3. PROJECT FEASIBILITY ........................................................................................................ 9

3.1. Economic and Financial Performance .................................................................... 9

3.2. Environmental and Social Impact .......................................................................... 10

4. IMPLEMENTATION ............................................................................................................. 13

4.1. Implementation Arrangements ............................................................................... 13

4.2. Project Monitoring-Evaluation Mechanisms ....................................................... 16

4.3. Governance .............................................................................................................. 16

4.4. Sustainability ........................................................................................................... 17

4.5. Risk Management .................................................................................................... 18

4.6. Knowledge Building ................................................................................................ 18

5. LEGAL INSTRUMENTS AND AUTHORITY ................................................................... 18

5.1. Legal Instrument ..................................................................................................... 18

5.2. Conditions Associated with Bank’s Intervention ............................................... 19

5.3. Undertakings ............................................................................................................ 19

5.4. Frontloading Constraint ........................................................................................ 19

6. CONCLUSION AND RECOMMENDATION ..................................................................... 20

6.1. Conclusion ............................................................................................................... 20

6.2. Recommendations .................................................................................................... 20

APPENDICES

Appendix I: Comparative Socio-economic Indicators

Appendix II: Table on Procedures for Procurement of Goods and Services2

Appendix III: AfDB Portfolio as at 29/01/2014 (amounts in UA)

Appendix IV: Major Projects Financed by the Bank and Other Development Partners

in Burundi

Appendix V: Assessing Eligibility to FSF Resources

Appendix VI: Map of Project Area

i

Currency Equivalents

(August 2014)

UA 1 = BIF 2381.48

UA 1 = EUR 1.13

UA 1 = USD 1.55

Fiscal Year

1 January – 31 December

Weights and Measures

1 tonne (t) = 2.204 pounds 1 millimetre (mm) = 0.03937 inches

1 kilogramme (kg) = 2.204 pounds 1 kilometre (km) = 0.62 miles

1 metre (m) = 3.28 feet 1 hectare (ha) = 2.471 acres

Acronyms and Abbreviations

BADEA Arab Bank for Economic Development in Africa

ADF African Development Fund

BIF Burundi Franc

CPPR Country Portfolio Performance Review

CSP Country Strategy Paper

DD Detailed designs

ESIA Environmental and Social Impact Assessment

ESMP Environmental and Social Management Plan

EU European Union

GDP Gross Domestic Product

GPRSF II Growth and Poverty Reduction Strategy Framework (second generation)

IDA International Development Association

IRR Internal rate of return

ISTEEBU National Institute of Statistics and Economic Studies of Burundi

JICA Japanese International Cooperation Agency

MFPDE Ministry of Finance and Economic Development Planning

MTTPE Ministry of Transport, Public Works and Equipment

NEPAD New Partnership for Africa’s Development

OdR Roads Authority

OFID OPEC Fund for International Development

PIA Project Impact Area

PAP Priority Action Programme

RSDP Road Sector Development Project

PIU Project Implementation Unit

SME Small and medium-sized enterprises

TSF Transition Support Fund

PD Preliminary Designs

UA Unit of Account

VOC Vehicle Operating Costs

VTCs Vocational Training Centers

ii

Grant Information

Client Information

BENEFICIARY : REPUBLIC OF BURUNDI

EXECUTING AGENCY : ROADS AUTHORITY (OdR)

Financing Plan

SOURCE

Amount (in UA million)

F.E. Local

Currency Total %total INSTRUMENT

ADF Grant 15.54 3.88 19.42 95.01% Institutional Support and

Construction Grant

GoB

1.02 1.02 4.99% Counterpart funds

TOTAL 15.54 5.88 20.44 100%

ADF’s Key Financial Information

Grant Currency

Unit of Account

Interest Type Not applicable

Interest Rate Spread Not applicable

Other Charges Not applicable

NPV (baseline scenario) BIF 6.4 billion

ERR (baseline scenario) 15%

Timeframe – Main Milestones (expected)

Concept Note Approval March 2014

Project Approval September 2014

Effectiveness December 2014

Completion December 2017

Last Disbursement June 2018

iii

EXECUTIVE SUMMARY

Project Overview

1. Burundi places particular emphasis on road infrastructure development which is

necessary for the expansion of its economic and commercial activities. Indeed, over 80% of

its trade is conducted by road and this percentage is likely to remain unchanged due to the

country’s geographical position. The Nyakararo-Mwaro-Gitega Road Improvement and

Asphalting Project/Phase 1, Nyakararo-Mwaro-Kibumbu Section, is part of Burundi´s road

network improvement programme. This road, which is approximately 30 km long, is a

section of National Highway No.18 (RN 18), and part of the economic and strategic link

between the capital and the central, northern and eastern parts of the country.

2. The project comprises the following four components: (A) improvement and

asphalting works on the Nyakararo-Mwaro-Kibumbu road (30 km), including environmental

protection measures; (B) related improvements, comprising 41 km of rural roads,

rehabilitation of grassroots socioeconomic infrastructure and support to women´s groups; (C)

institutional support in the form of technical assistance to build the capacity of the

professionals in the executing agency ; and (D) project management and monitoring support.

Project activities will be implemented from January 2015 to December 2018. The financing

of RN 18 (Nyakararo-Mwaro-Kikumbu-Gitega), amounting to UA 19.42 million, will be

provided through Burundi´s Performance-based Allocation (PBA) for 2014 which is UA

12.94 million. The resulting gap of UA 6.48 million will be filled by frontloading.The total

project cost is estimated at UA 20.44 million, including a UA 1.02 million contribution from

the Government of Burundi .

3. The project impact area (PIA) covers all the municipalities of Mwaro Province with

a population of over 270,000 inhabitants, 53% of which are women. The project is expected

to facilitate mobility, boost regional trade and open up access to rural areas. More

specifically, it will facilitate the movement of goods and persons along the Nyakararo-

Mwaro-Kibumbu road with a view to boosting trade with the rest of the country and with the

sub-region and increasing community access to basic services.

Needs Assessment

4. The Fund’s involvement is based on an analysis of the country´s current

socioeconomic situation and the need to support the Government’s strategy to opening up

access to the country, particularly regions with high economic potential. The investment

needs under this project are determined by the current poor condition of the road (earth road),

which has become a weak link in the alternative route of the central corridor. Furthermore,

the project’s implementation will substantially reduce poverty whose incidence is particularly

high in Burundi (67% at the national level and 63% in the PIA). Indeed, project

implementation will improve quality of service along the road while guaranteeing community

access to basic services and to the agricultural zones of the PIA.

Fund’s Value Added

5. By financing the project, the Fund will help to implement the priority action

programme in Burundi´s transport infrastructure sector. The Fund will also build on the

achievements of similar previous national/multinational operations. This project is financed

as part of the Fund’s assistance strategy in Burundi and is aimed at helping the country to

iv

establish the necessary conditions to achieve Burundi Vision 2025 goals, i.e.achieving

double-digit growth and reducing poverty by 50%. To this end, in June 2014, the Fund

approved the CSP Mid-Term Review and Burundi´s eligibility to the Transition Support Fund

(Pillar I). Similarly, this project is consistent with the Infrastructure Action Plan for Burundi,

financed by the Bank in 2009, and aimed at promoting the country´s regional integration. The

Fund’s long-standing experience in the implementation of anchor projects in Burundi,

especially in the infrastructure sector, gives it a comparative advantage.

Knowledge Management

6. Experience acquired from the implementation of similar road projects was reflected

in the design of this project. The technical knowledge acquired by the executing agency

(mainly regarding the procurement and financial management procedure) from previous and

ongoing road projects financed by the Fund and other donors, will be taken into account

during the implementation of this project.

7. The emphasis placed on the project impact monitoring-evaluation mechanism will

enable consolidation of knowledge in view of enhancing the design of future projects. The

resulting knowledge will be disseminated through the Fund’s communication channels

(website, workshops, etc.).

v

RESULTS-BASED LOGICAL FRAMEWORK Country and Project Name:Burundi:Nyakararo/Mwaro/Gitega RN18 Improvement and Asphalting Project

Project Goal:Facilitate the movement of goods and persons and improve the living conditions of PIA communities

RESULTS CHAIN

PERFORMANCE INDICATORS MEANS OF

VERIFICATION RISKS/ MITIGATION MEASURES INDICATOR (INCLUDING

CSI)

BASELINE

SITUATION TARGET

IMP

AC

T

Help open up access to the country

and boost regional trade in order to

build the productive capacity of the

economy and thus reduce poverty

levels.

Poverty rate in the PIA

Transport sector contribution to

GDP

In 2014:63% of the

population live

below the poverty

line

Less than 4% of

GDP

In 2018:60% below the poverty line

In 2018:1% increase

Sources:National

Statistical Report

OU

TC

OM

ES

Outcome 1: Conditions for freight

and passenger traffic flow(level of

service) on the Nyakararo-Mwaro-

Kikumbu highway are improved

Average vehicle operating costs

(VOC) for heavy vehicles

In 2014:BIF 2.438

/km

In 2018:BIF 1.312 /km

(representing a 47% decline)

Sources: traffic counts,

surveys and activity

reports of the Roads

Authority (OdR)

Risks:

The upcoming elections in 2015 could

disrupt the project’s smooth implementation.

Mitigation measures:

The Government’s resolve to pursue the

consultations initiated during the Inter-

Burundian Dialogue in 2013 as well as

support from the international community

could mitigate this risk.

Risks:

Higher cost of works

Late mobilization of counterpart funds

Early deterioration due to non-

compliance with the axle load limit

Lack of road maintenance due to lack of

National Road Fund resources

Mitigation Measures:

International competitive bidding

procedure for works, control and

monitoring;

Annual availability of counterpart fund

resources, in accordance with the

expenditure schedule as a grant condition.

Technical assistance and capacity-

building for professionals of the executing

Heavy vehicle travel times on

RN18:Nyakararo-Kikumbu

In 2014:1.0 hr

In 2018:0.4 hr

(representing a 60% reduction)

Total traffic on RN 18:Nyakarao-

Kikumbu

In 2014:171

vehicles/day

In 2018:at least 400 vehicles/day

(representing an increase of 116%)

Outcome 2:Living conditions of

PIA communities improved

2.1 Rural Access Index (RAI) in

the PIA

2.2 Number of p/days of jobs

created

2.1 In 2014: 20 %

2.2 N.A.

2.1 : In 2018: 25%

2.2 : 70 000 person-months including

30% for women

Sources:National

Statistical Reports and

monitoring-evaluation

reports

OU

TP

UT

S

Output 1:Road sections improved

and commissioned

Length of asphalted section of RN

18:Nyakararo-Kikumbi rehabilitated

1.1 In 2014: 0 In 2018:30 km

Source:OdR report and

ISTEEBU survey

Output 2:Related facilities

constructed and commissioned

1. Length of rural roads improved

2. Number of markets rehabilitated

3. Number of Vocational Training

Centers (VTCs) supported and

classrooms rehabilitated

4. Number of footbridges

constructed

5. Number of women´s groups

supported

In 2018: 1. 41 km of feeder roads rehabilitated

2. One rural market rehabilitated

3. One VTC supported and 6

classrooms rehabilitated

4. Three footbridges constructed

5. One women´s cooperative supported

Source:OdR report

vi

Output 3:Institutional support

provided

1. Study reports available

2. Number of professionals trained

In 2018:

1.1 Transport Plan adopted

1.2. Technical audit reports

1.3. Road safety reports

2 At least 15 professionals trained

Source: OdR report agency; close supervision by BIFO

Government’s commitment to protect

infrastructure through controls and axle

load limits (procurement of mobile axle

scales)

Increase of the resources of the National

Road Fund (NRF) mainly by raising

additional resources through the road toll

and broadening the fuel tax base.

KE

Y A

CT

IVIT

IES

COMPONENTS RESOURCES (UA MILLION)

1. Road Works and Environmental Measures

2. Related Improvements

3. Institutional Support

4. Project Management and Monitoring

5. Clearing the right-of-way

1. Road Works:14.66

2. Related improvements:2.13

3. Institutional Support:0.17

4. Project Management and Monitoring:0.37

Contingencies: 3.06

5. Clearing the right-of-way: 0.04

TOTAL RESOURCES: 20.44

vii

PROJECT IMPLEMENTATION SCHEDULE

Name of Task

Burundi – NYAKARARO – KIBUMBU (30 Km) – RN18 – Phase 1

1 - GENERAL ACTIVITIES

Project approval by ADF Board of Directors

Publication of General Procurement Notice

Effectiveness of ADF Grant

2 - ROAD WORKS

2.1 Procurement process right up to notification (AAA)

2.2 Execution of works

2.3 End of works

3 - RELATED WORKS

3.1 Procurement process right up to notification (AAA)

3.2 Execution of rural roads works

3.3 Execution of construction of classrooms and markets

4 – CONSTRUCTION OF PEDESTRIAN BRIDGES

4.1 Contract award process right up to notification

4.2 Delivery of equipment and accessories

4.3 Execution of works

4.4 End of works

5 - CONTROL AND SUPERVISION OF RELATED WORKS

5.1 Contract award process right up to notification

5.2 Delivery of related works supervision services

5.3 End of services

6 - SENSITIZATION

6.1 Contract award process right up to notification

6.2 Delivery of sensitization services

6.3 End of services

7 – TECHNICAL ASSISTANCE AND TRAINING OF OdR OFFICERS

7.1 Contract award process right up to notification

7.2 Delivery of training to OdR officers and support to projects

7.3 Validation workshop of final report

8 – PROCUREMENT OF GOODS

8.1 Contract award process right up to notification

8.2 Delivery of goods

9 – SOCIO-ECONOMIC IMPACT MONITORING AND EVALUATION

9.1Contract award process right up to notification

9.2 Periodic delivery of impact monitoring and evaluation services

9.3 Validation workshop and final report

10 – TECHNICAL AND ROAD SAFETY AUDITS

10.1 Contract award process right up to notification

10.2 Delivery of individual consultancy services

11 - FINANCIAL AUDITING

11.1 Procurement process

11.2 Conduct of accounting and financial audit

1

REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARD

OF DIRECTORS CONCERNING A GRANT TO THE REPUBLIC OF BURUNDI

FOR THE NYAKARARO-MWARO-GITEGA (RN 18) ROAD PROJECT/ PHASE 1

Management hereby submits this report and recommendation concerning an ADF grant

proposal of UA 19.42 million for the Republic of Burundi to help finance the Nyakararo-

Mwaro-Gitega (RN 18) Road Project /Phase I: Nyakararo-Mwaro-Kibumbu Section.

1. STRATEGIC THRUST AND RATIONALE

1.1. Project Linkages with Burundi’s Strategy and Objectives

1.1.1. As part of Burundi’s development policy, defined in the "Burundi Vision 2025"

paper, the Government has designed and implemented an Infrastructure Action Plan (2010-

2015) which gave rise to the Road Network Improvement Programme aimed at supporting

the productive sectors of the economy. In this respect, the Government’s main objectives for

the 2011-2015 period are to: (i) protect the national road network; (ii) pave national roads

that open up domestic and external access; (iii) increase the budget resources allocated to

financing of the road network; and (iv) build institutional capacity and increase the resources

of the National Road Fund (NRF). The improvement and asphalting of RN18 (Nyakararo-

Mwaro-Kikumbu-Gitega) is part of this programme. This project is, therefore, consistent

with the national transport infrastructure improvement policy, especially for highly-populated

regions with high economic potential.

1.1.2. The project is also consistent with the second-generation Growth and Poverty

Reduction Strategy Framework (GPRSF II), whose second pillar focuses on “Transformation

of the Burundian economy to generate sustained and job-creating growth". The Bank´s

Country Strategy Paper for Burundi (2012-2016) whose two pillars are: (i) consolidation of

governance; and (ii) the improvement of infrastructure, and the Bank´s Ten-year Strategy for

2013-2022, are both in line with GPRSF II. Once the Nyakararo-Mwaro–Gitega Road

Improvement and Asphalting Project/Phase 1: Nyakararo – Mwaro- Kibumbu section, has

been completed, it will boost the sectors that drive economic growth in the region. This

project was identified in December 2010 and the financing request was sent to the Bank in

January 2013.

1.2. Rationale for Bank Involvement

1.2.1 The total length of Burundi´s national road network is approximately 5200 km, of

which 30% is paved. An assessment of the paved road network’s condition reveals that 45%

of the network is in fairly good condition. However, about 40% of the paved road network

has reached its maximum life span and, consequently, needs rehabilitation. Furthermore, only

40% of the unpaved network is passable all year round.

1.2.2 The improvement and asphalting of RN18, scheduled to be implemented in two

phases, will open up access to the project area and ease congestion on RN1 (Bujumbura–

Kayanza) which carries the heavy traffic on the North Corridor (to/from the Port of Mombasa

in Kenya) and the Central Corridor (to/from the Port of Dar es Salaam in Tanzania) as well as

the national traffic between the centre, north and east provinces. The newly constructed road

will, therefore, serve as a principal route to the Central Corridor via RN12: Muyinga –

Gitega. After it has been asphalted, it will boost trade between the western, central and

eastern regions of the country.

2

1.2.3 In light of the foregoing, the various project components identified are based on the

need to improve community access to social, administrative and economic infrastructure.

The project is also consistent with operations financed by the Bank in Burundi´s transport

sector, including studies for the construction of the railway that will link the country to

Tanzania and Rwanda and for rehabilitation/modernization of the Port of Bujumbura.

Moreover, the Fund financed and carried out the study on “the Infrastructure Action Plan for

Burundi” in 2009, identifying priority investments at the national and regional levels. These

different operations confirm the Fund’s comparative advantage in Burundi´s transport

infrastructure sector.

1.3. Donor Coordination

1.3.1. The aid coordination mechanism in Burundi emphasizes complementarity between

the various operations of technical and financial partners (TFPs). The established

consultative framework is operational through active dialogue with the Government. In this

regard, regular meetings involving civil

society are held within the Economic

Infrastructure Sectoral Group (EISG), thus

facilitating consultative discussions on the

planning and programming of the different

projects and ensuring regular monitoring of

sector activities. This consultative

mechanism helps to enhance the

complementarity of the operations of the

different TFPs, thus creating synergy that

increases the projects’ impact on Burundi´s

economic and social development.

1.3.2. The Fund is the lead donor in the

area of transport infrastructure (over 60% of

its portfolio), thus consolidating its position

as the TFP leader in this sector. The other

main donors involved in the sector are the

World Bank (WB), European Union (EU),

Japanese Cooperation (JICA) and the Arab

Funds. The Fund held discussions with all

partners during the project’s identification,

preparation and appraisal missions.

Furthermore, the Fund and the other TFPs

generally maintain sustained dialogue with

the Government. Table 1 presents the

commitments of the different TFPs in the

sector.

2. PROJECT DESCRIPTION

2.1. Project Objectives

2.1.1 The project sector goal is to help open up access to the country and boost regional

trade in order to build the productive capacity of the economy thereby reducing the poverty

rate.

Table 1: Commitments of Key Donors

Donor* UA million

ADF 159,55

EDF 117,07

WB 73,67

OFID 31,68

CTB 29,81

SFD 19,8

KFAED 6,6

Level of Donor Coordination

Existence of sector working

groups in Burundi

Yes

Existence of SWAp (sector-wide

approaches) :

No

ADF involvement in aid

coordination**:

Yes/L

* Total amount per donor over the last five years (2007-

2012)

** L:leader, M:member but not leader, zero:no involvement

3

2.1.2 Its specific objective is to: (i) facilitate the movement of goods and persons along the

Nyakararo-Mwaro-Kibumbu road with a view to increasing trade with the rest of the country

and with the sub-region; and (ii) increase community access to basic services.

2.2. Project Components

The project will focus on five components, summarized in the following Table:

No.

Components

Estimated cost

(net of taxes

and customs

duty) in EUR

million

Component Descriptions

A Road Works 17.25

A.1. Improvvement and asphalting works on the Nyakararo-Mwaro-

Kibumbu main highway over a length of 30 km, including environmental

mitigation measures

A.2.Road works control and supervision

A.3.Community sensitization in the project zone of influence on road safety,

environmental protection, control of STIs including HIV/AIDS, and family

planning.

B Related

Improvements 2.51

B.1. Improvement of rural roads (41 km);

B.2.Rehabilitation of socioeconomic infrastructure (rural market); and

support to Vocational Training Centres (VTCs)

B.3.Control and supervision of related improvements

B.4.Construction of 3 footbridges

B.5.Support to women´s groups

C

Institutional

Support 0.20

C.1.Technical assistance and capacity-building for Roads Authority

professionals in road engineering and project management, etc.

D

Project

Management

and Monitoring 0.44

D.1.Accounting and financial audit

D.2.Project technical audit

D.3.Road safety audit

D.4.Monitoring/evaluation of the project´s socio-economic impact

D.5.Operation of the Project Implementation Unit

E Clearing of

Right-of-Way 0.04 E.1- Compensation of land, property and crop owners.

2.3. Technical Solutions Retained and Other Alternatives Explored

2.3.1. The improvement of the Nyakararo-Kibumbu road section, over a length of

approximately 30 km, will concern a platform large enough for the construction of a 7 metre-

Table 2: Summary of Project Components

4

wide road pavement and two 1.5 metre standard road shoulders. The pavement structure will

comprise: (i) a 30cm subgrade in certain sections of the road alignment; (ii) a 20cm sub-

base of lateritic gravel (LG); (iii) a 15 cm improved base courseobtained by mechanical

stabilization (a mixture of lateritic gravel and untreated gravel aggregate (0/31.5) prepared

with a pulvimixer); (iv) and a surface course of 5 cm in asphalt concrete (AC0/10),

representing a total thickness of 70 cm. The road shoulders will have a single surface

treatment course. A variant, which is a double surface treatment course , is envisaged for the

section that runs through the Mwaro community, forming a loop that deviates from the main

road alignment. Indeed, since this road section is part of the Central Corridor, it was deemed

appropriate to readjust the road alignment by bypassing the locality of Mwaro to ensure a

smooth flow of traffic.

2.3.2. The alternative technical solutions explored and the reasons for their rejection are

summarized in the table below.

Alternative Solution Brief Description Reason for Rejection

Flexible pavement:Base

course of 20 cm in lateritic

gravel paved with asphalt

concrete (AC).

The envisaged based course is

composed of 20 cm of lateritic gravel, a

sub-base course of 25 cm also of

lateritic gravel and a pavement layer of

5 cm in asphalt concrete.

This solution is the most economical. However, the

project region lacks road pavement structure material

(laterite) with solid mechanical characteristics to

withstand the projected heavy vehicle traffic.

Flexible pavement:Base

course in untreated 0/31.5

gravel paved with asphalt

concrete (AC).

This is a road structure with a sub-base

course of 20 cm in lateritic gravel and a

base course of 15 cm in untreated

0/31.5 gravel .

Technically, this solution is the most advantageous.

However, it greatly increases the cost of works due to

the prohibitive unit price of untreated gravel.

2.4. Project Type

The improvement and asphalting of the Nyakararo-Mwaro-Kibumbu road is an

investment project for the construction of a new road. The financing instrument is an ADF

grant to be awarded to the Government of Burundi.

2.5. Project Cost and Financing Mechanism

Estimated Cost

2.5.1. The estimated project cost, net of taxes and customs duties, is UA 20.44 million,

comprising UA 15.54 million in foreign cost and UA 4.9 million in local cost.The unit cost

of works was determined taking into account: (i) the results of the detailed design finalized

in 2013; (ii) the unit costs from bids received between 2012 and 2013 for similar works

implemented in the country; (iii) the programming of procurement of works for 2014/2015;

and (iv) the works implementation schedule for the 2015-2017 period.The provision for

physical contingencies is estimated at 10% of the base cost, while financial contingencies

represent 7% of the total cost. The estimated project costt is summarized in Tables 4 and 5

and presented in detail in Annex B.2.

Table 3: Alternative Solutions Explored and Reasons for Rejection

5

COMPONENTS UA million

Foreign

Exchange

Local

Currency Total

A. Improvement and Asphalting of the Nyakararo-Mwaro-Kibumbu Road

Section (30 km) 11.71 2.95 14.66

B. Related Improvements 1.24 0.89 2.13

C. Institutional support 0.12 0.05 0.17

D. Project Management and Monitoring support 0.13 0.24 0.37

Base Cost 13.20 4.13 17.33

Physical Contingencies (PC), 10% 1.32 0.41 1.73

Financial Contingencies and Price Escalation [7%x (baseline cost + PC)] 1.02 0.32 1.33

TOTAL COST (NET OF EXPROPRIATION) 15.54 4.86 20.39

E. Clearing of Right-of-Way 0.00 0.04 0.04

TOTAL COST, NET OF TAXES AND CUSTOMS DUTY, INCLUDING

EXPROPRIATIONS 15.54 4.90 20.44

F.E. L.C. Total

A. WORKS 12.28 3.58 15.86

B. GOODS 0.00 0.06 0.06

C. SERVICES 0.93 0.37 1.31

D. MISCELLANEOUS 0.00 0.11 0.11

Base Cost 13.21 4.12 17.33

Physical Contingencies (PC), 10% 1.32 0.41 1.73

Financial Cccontingencies and Price Escalation [7%x (base

cost + PC)] 1.02 0.32 1.33

TOTAL COST 15.55 4.85 20.40

E. Clearing of Right-of-Way 0.04 20.44

Table 4: Summary of Cost Estimates by Project Component

Table 5: Summary of Costs by Project Expenditure Category

6

Financing Mechanism

2.5.2. The project is financed with ADF and Government resources.The ADF grant of UA

19.42 million represents 95.01% of the project cost (NTCD). The grant will be used to

finance all works on the main highway, works control and supervision services, community

sensitization activities and audits (accounting, technical and road safety). Related

improvements, institutional support and project impact monitoring-evaluation will be

partially financed by the grant. Financing resources by expenditure category and by

expenditure schedule for the various components are detailed in Annex B.2.

2.5.3. The Government contribution of

UA 1.02 million, or 4.99% of the project

cost (NTCD) will be used to finance: (i) all

the operating costs of the Project

Implementation Monitoring Unit (PIMU)

and the cost of clearing the right-of-way; and

(ii) part of the cost of related improvements,

institutional support and

monitoring/evaluation of project impacts.

Expenditure Schedule

The expenditure schedule by project component is presented in Table 7 (see details in Annex

B.2.).

Components 2014 2015 2016

2017 Total

A – Improvement and Asphalting of the

Section: Nyakararo-Mwaro-Kibumbu Road 0.00 5.96 8.70

0.00 14.66

B – Related Improvements 0.00 0.79 1.21 0.13 2.13

C - Institutional Support 0.00 0.10 0.07 0.00 0.17

D - Project Management and Monitoring

Support 0.00 0.15 0.17 0.06 0.37

Base Cost 0.00 7.01 10.14 0.18 17.33

Physical contingencies 0.00 0.70 1.01 0.02 1.73

Price contingency 0.00 0.54 0.78 0.01 1.33

Total 0.00 8.25 11.93 0.22 20.40

E. Clearing of Right-of-Way 0.02 0.02 - - 0.04

TOTAL COST 0.02 8.27 11.93

0.22 20.44

% Total 0.09 40.46 58.37

1.08 100.00

Table 6: Project Sources of Financing

SOURCES UA million

F.E. L.C. Total %

ADF GRANT 15.54 3.88 19.42 95.01

GOV’T

1.02 1.02 4.99

TOTAL COST 15.54 4. 90 20.44 100.00

Table 7: Expenditure Schedule by Component (in UA million)

7

2.6. Project Area and Beneficiaries

2.6.1. The direct project impact area (PIA) covers all the municipalities of Mwaro

Province, with an estimated population of over 270,000 inhabitants, 53% of whom are

women. The average population density in the PIA is 273 inhabitants/km², compared to the

national average of 326 inhabitants/km². The population age structure in the PIA shows a

predominance of youths under the age of 25 years who represent about 65% of the

population. Acccording to ISTEEBU statistics, 63% of the PIA population lives below the

poverty line.

2.6.2. Over 90% of the population is engaged in foodcrop farming (potatoes, maize, peas,

beans, taro, cassava, sweet potatoes, etc.) and the main export crops are tea and coffee.

2.6.3. The main beneficiaries of the road are farmers who experience difficulties in

procuring inputs and in marketing their produce due to the poor state of the roads. The project

will have a positive impact, especially on women and young people because it will improve

their access to socio-economic infrastructure and create new intitiatives. The other

beneficiaries are industrialists, loggers and transporters whose operating and logistical costs

will be significantly reduced thanks to the improvement and asphalting of the main road and

rehabilitation of the rural roads. These positive impacts will be further increased since the

road will serve as a strategic economic link connecting Bujumbura to the central, northern

and eastern regions of the country. It will also serve as an alternative road to the current

central corridor linking Bujumbura to the Port of Dar es Salaam in Tanzania via

RN12:Gitega-Muyinga –Kobero (Tanzanian border).

2.7. Participatory Process for Project Identification, Design and Implementation

2.7.1. A participatory process was adopted at all stages of the project. Participatory

meetings were organized during the project preparation phases within PIA communities,

30% of whom were women. These public information and consultation plenary sessions

were organized during the preparation and appraisal missions, and they brought together the

administrative and political authorities, the heads of decentralized services and the local

branches of national NGOs and farmers´organizations including those headed by women.

Participants also noted that the poor state of the road section caused travel difficulties,

especially during the rainy season, thus adversely affecting economic activities and travel to

Mwaro, Gitega and Bujumbura.

2.7.2. The participatory process also made it possible to more clearly determine the

expectations of beneficiary communities and agree on supportive actions likely to provide

appropriate solutions, especially to the most pressing social problems faced by local

communities. The related improvements agreed upon during these meetings with

representatives of beneficiaries are intended to reinforce project ownership. These

improvements concern 41 km of rural roads, rehabilitation of basic socio-economic

infrastructure (rural market in Kibumbu, support to VTCs through the rehabilitation of

classrooms), the construction of 3 footbridges and support to women´s groups. This

participatory process will be continued within the PIA during project implementation through

community sensitization.

2.7.3. Furthermore, the consultations conducted by the Administration also revealed the

need to support the province by organizing awareness-raising on family planning during

project implementation. Indeed, contraceptive prevalence is less than 6% in the PIA,

compared to over 40% in the municipality of Bujumbura.This activity will improve the

dissemination of information to, and sensitization of the community regarding this issue,

especially as Mwaro province has one of the highest population density rates in Burundi.

8

2.8. Fund’s Experience and Lessons Reflected in Project Design

2.8.1. The Fund plays a major role in financing the improvement and asphalting of several

regional roads linking Burundi and Rwanda (Kirundo-Kicukiro road; Nyamitanga/Ruhwa-

Ntendezi/Mwityazo road with the construction of two One-Stop-Border Posts) and national

highways (RN15 Gitega-Nyangungu-Ngozi, implemented in two phases, with Phase I

completed in July 2013). Furthermore, in June 2012 and December 2013, the Bank

repectively approved the financing of Phase II of the Burundi/Rwanda regional road on the

North-South corridor: Mugina-Mabanda-Nyanza-Lake section and the Makebuko-

Butaganzwa national highway.

2.8.2. As at 31 July 2014, the Fund’s active portfolio in Burundi comprised 25 operations

including 15 national projects. These included one budget support and 10 regional projects

for a net total commitment of UA 257.24 million.The sector distribution of the portfolio is

consistent with the priority pillars of the Country Strategy Paper ( 2012-16 CSP)

:infrastructure (transport and energy) represent 72% followed by agriculture/rural

development/natural resource management (11%), multi-sector (7%), water and sanitation

(6%) and the social sector (4%).

2.8.3. The 2013 portfolio performance review was satisfactory on the whole with an

overall average of 2.46 on a scale of 0 to 3, indicating a slight improvement since 2009 (score

of 2.01). In general, completed Fund-financed operations in the transport sector were

relatively well implemented and the main lessons learnt have been factored into the design of

the current project. These include: (i) proper review and execution of DD to ensure good

project quality at entry; (ii) timely fulfilment of conditions precedent to first disbursement;

(iii) adherence to deadlines at all phases of the procurement and project implementation

process; (iv) timely conduct of audits; (v) assessment of the impact of Fund operations on the

country´s development by integrating the monitoring/evaluation system; (vi) establishment

of a committee to monitor the Fund’s portfolio in Burundi; and (vii) inclusion of a budget line

for project counterpart funds in the budget law for 2015 and subsequent years.

2.9. Key Performance Indicators

2.9.1. The main results indicators identified are those which are presented in the logical

framework matrix with timeframes. They relate to: (i) the ratio of the paved network in a

good state; (ii) vehicle operating costs (VOC); (iii) average journey time between Nyakararo

and Kibumbu; and (iv) the rural access index (RAI).

2.9.2. The implementation performance indicators to be established and monitored are

essentially: (i) deadlines for fulfillment of conditions precedent to first disbursement of the

grant; (ii) deadlines for the award of contracts; (iii) project implementationn deadlines; and

(iv) changes in the disbursement rate in accordance with the expenditure schedule.

2.9.3. The weakness of the monitoring-evaluation system at project start-up accounts for

the difficulties encountered in assessing the degree of attainment of the development

objectives adopted in the results matrix. It is, therefore proposed to establish a

monitoring/evaluation mechanism for this project in order to: (i) compile and manage

information on the status of the different project components; (ii) establish the baseline

situation to be used in monitoring project impact; and (iii) assess project impact upon

completion by applying the same methodology used in establishing the baseline situation.

9

3. PROJECT FEASIBILITY

3.1. Economic and Financial Performance

3.1.1. The proposed improvement works concern a 30 km-long road section from

Nyakararo to Kibumbu which crosses Mwaro. In order to assess the project’s economic

performance, the entire road section was considered a single homogeneous traffic unit.

3.1.2. Economic assessment was conducted using the HDM IV model based on cost-

benefit analysis between the “no project” and “project” situations over a period of 20 years

and at a discount rate of 12%. To cover the entire spectrum of origins and destinations of

vehicles using this section, vehicle operating costs were calculated based on the average

input prices recorded in East African countries. Given the improvement levels retained and

the projected traffic, the residual value of the investments after the above-mentioned period is

33%.

3.1.3. The annual average daily traffic (AADT) recorded in October 2013 by consultants

reponsible for the economic assessment is 163 vehicles/day, including 15.3% heavy vehicles.

Induced average traffic was estimated at 35% of normal traffic for light vehicles and 37% for

heavy vehicles. Also recorded was the diverted traffic, composed of 30% of national vehicles

currently using RN13 and all the international traffic using this road to reach Tanzania since

the RN18 offers shorter journey times. Lastly, given the possible development of businesses

established in Mwaro and operating in the tea and stevia crop sub-sectors, consideration was

given to additional agricultural and industrial traffic, composed of lorries transporting these

products to Kenya.The annual growth rates retained for normal and diverted traffic are 6%

for light vehicles and 7.5% for heavy vehicles. The annual growth rate for induced and

international traffic is estimated at 4.5% for all categories of vehicles.

3.1.4. With regard to the economic benefits, consideration was given to an agricultural

surplus that will result from the expected increase in the volume of foodcrops sold, thanks to

the improved state of the road. Indeed, during discussions with farmers, it emerged that the

volume of in situ sales was directly linked to traffic flow and, consequently, the state of the

road.

Economic Parameters Analyzed Values Obtained

Economic rate of return (ERR) 15.0%

Net present value (NPV) in BIF million 6 404.2

ERR sensitivity test (10% variation in costs and benefits) 12.4%

Residual value of the investment after 20 years 35%

3.1.5. In light of the foregoing, assessment of the investment costs and economic gains

gives a 15% economic rate of return (ERR) and a net present value (NPV) of BIF 6.4 billion.

A summary of the economic analysis is provided in the above table. After conducting the

sensitivity test (10% increase in project costs and 10% reduction in benefits), the project´s

final ERR is 12.4%. The project is, therefore, economically viable for the community.

Table 8: Economic Analysis

10

3.2. Environmental and Social Impact

Environment

3.2.1. The project was classified under Category 2 based on: (i) the scope of works (less

than 50 km); (ii) the number of project affected persons (less than 200); and (iii) the negative

environmental and social impacts identified which range from weak to average. An

Environmental and Social Impact Assessment was conducted in 2014, accompanied by an

Environmental and Social Management Plan (ESMP) and an Abbreviated Resettlement Plan

(ARP). Summaries of the ESMP and ARP have been posted on the Fund’s website since 9

May 2014.

3.2.2. From the environmental standpoint, the main negative impacts are: (i) felling of trees

(mainly eucalyptus and pine trees) over a total surface area of 3 ha around the borrow pits,

quarries and along the road; (ii) risk of deterioration in the quality and quantity of water

during the works; (iii) air pollution by dust generated by the works and greenhouse gases

during operation. These negative impacts can be mitigated through the planting of 4000

replacement and roadside trees and the implementation of a plan to protect the environment

of the site, including an internal operation plan, a waste management plan, etc. as well as

awareness-raising on environmental protection targeting local communities and the

contractor’s workers. From the social standpoint, the main negative impacts relate to the

expropriation of land as detailed in the section on involuntary resettlement, risk of accidents

and spread of HIV/AIDS. In this regard, awareness-raising measures on road safety and

HIV/AIDS control have been included under the project.

3.2.3. The project is expected to generate positive environmental impacts which include:

(i) enhancement of Mwaro’s ecotourism potential; (ii) reduction of the risk of flooding and

erosion as a result of the appropriate sizing of water management facilities, road drainage

structures, etc.; (iii) reduction of dust emissions relative to the “no project” situation.The

socio-economic impacts are substantial and mainly relate to an improvement in the living

conditions of project area communities in terms of access to socio-economic infrastructure,

boosting of trade and the development of agro-pastoral activities. Provision is also made for

measures that enhance the socio-economic benefits of the project, namely: (i) construction of

rural roads; (ii) rehabilitation of classrooms; and (iii) support to women´s groups. The

estimated cost of the ESMP, excluding resettlement and related improvements is BIF 700

million.

Climate Change

3.2.4. The main challenges identified concern the risk of flooding in the bottomlands and

marshlands as well as the risk of landslides in certain sections due to a combination of

unfavourable hydrological and geotechnical factors. The adaptation and mitigation factors

retained are: (i) inclusion of appropriate road drainage measures; (ii) installation of balancing

culverts in the marshes and proper treatment of slopes (riprap blankets, revegetation and

erosion-control plants, etc.); (iii) appropriate sizing of hydraulic structures, taking into

account the peak-flow rate return periods; (iv) better management/design of water outlets.

During the operation of the road, the OdR will be responsible for the regular cleaning and

maintenance of the water management and drainage facilities. An increase in the emission of

greenhouse gases such as CO2 is expected, mainly due to the increase in traffic. However, the

net contribution to greenhouse gas emissions along this road section will remain negligible.

Furthermore, greater traffic flow compared to the current situation, the planting of rows of

trees and the planned landscape improvements will all help to curb such emissions.

11

Gender Impact

3.2.5. At the national level, women are still marginalized and their vulnerability is mainly

compounded by an illiteracy rate of nearly 78% among young women aged 15-24 years. With

regard to school enrolment for girls, the gender parity index is close to 1 in primary schools

but remains low in secondary schools at 0.48 for general eduction and 0.37 for technical

education. Maternal and child health may not improve rapidly in the project area unless

efforts are made to improve rate of usage of contraception. However, it is important to note

that progress has been made over the last few years (Annex B. 7). Women are increasingly

considered for elective posts, both nationally and in the project zone of influence.

3.2.6. The jobs created under the project will also benefit women who will earn additional

incomes that will improve their living conditions. Women will also benefit from group

capacity-building activities that will help them to acquire the skills needed to start income-

generating activities. These groups will receive support in terms of equipment and assistance

in sourcing for funds from microfinance institutions.

3.2.7. Lastly, support in terms of teaching aids provided to the Makamba Vocational

Training Centre, where the ratio of girls to boys is 0.68, will enhance the employability of

girls in the province. The same applies to the support to be provided by the project for the

start-up of an IT section in Bisoro Technical School which could help to improve girls’

education and access to vocational training.

Social

3.2.8. By improving traffic conditions, the project will increase the incomes of

beneficiaries by creating jobs and by facilitating the marketing of agricultural produce.

Furthermore, support in terms of structuring and capacity-building for women´s groups will

bring together the various social groups.

3.2.9. As is the case nationwide, Mwaro Province has a high proportion of unemployed

youths. The project will provide temporary job opportunities for young people, who could

help in improving safety within the project area.The youths who will be recruited to

implement the works will be trained, especially in the identification and start-up of income-

generating activities. Furthermore, project support to the Makamba Vocational Training

Centre and the Bisoro Technical School will boost youth employability.

3.2.10. The increased flow of goods and persons thanks to the development and asphalting

of RN18 will also create new income-generating activities in the project area, thereby

improving community well-being. For instance, since the stevia and tea companies

established in the province intend to gradually entrust collection of the green leaves to

farmers´ organizations, the improvement of transport conditions will generate a positive

impact in terms of reduced transport costs, thus improving farmers´ incomes.

3.2.11. Project implementation could have a negative impact on the spread of HIV/AIDS

due to the influx of workers from different areas. Project activities will, therefore, include

awareness-raising campaigns on the prevention of HIV/AIDS and STIs. Awareness-raising

on family planning will also be carried out to help raise contraceptive prevalence in the

project impact area. Since the number of accidents could increase because of higher vehicle

speeds on the improved road, the project will install speed speed bumps along the road,

especially at bends and in settlement areas. Similarly, awareness-raising campaigns targeting

road users (pedestrians, cyclists, drivers) will be organized during works

implementation.Traffic police will control and ensure compliance with speed limits.

12

Regional Integration

3.2.12. Burundi´s geostrategic position, which could enable it to play the role of a sub-

regional corridor and a trade hub for the East, Southern and Central African regions, is one of

the country´s major assets and creates enormous opportunities for trade and labour mobility.

An improved RN18 will therefore be a key driver of Burundi´s integration into the sub-

region.

Involuntary Settlement

3.2.13. On the whole, 112 people will lose their property and and two dwellings for 9

people will be destroyed. The total number of project affected persons (PAP) is 121,

including 20 vulnerable persons (over 65 years of age, female household heads, etc.).The

other types of property that will be affected are:(i) shops and other commercial facilities

situated along the road; (ii) fences and enclosures; and (iii) farms and planted (fruit and non-

fruit) trees.The Abbreviated Resettlement Plan (ARP) was finalized in accordance with the

rules and procedures of the Bank and of Burundi.The estimated cost of the ARP is BIF 117

million and comprises:(i) compensation for property; (ii) assistance to vulnerable persons;

and (iii) operating costs of the compensation and ARP implementation monitoring

commission.The ARP costs will be covered by the Government of Burundi and the PAPs will

be compensated prior to works start-up.This will be a condition precedent to first

disbursement of the grant (Condition B.ii).

Monitoring of ESMP Implementation

3.2.14. The OdR, through its Environment and Standards Service (SEN), has the capacity to

monitor ESMP implementation. SEN’s experience and capacity-building in previous road

projects will help it to more effectively monitor ESMP implementation jointly with the

environmentalist from the control mission. Furthermore, “external” monitoring will be

conducted by the General Directorate of the Environment at the Ministry of Environment.

The project team must ensure that the ESMP and, where applicable, the ARP for related

improvements are prepared and submitted to the Bank for approval prior to the start-up of

works on these improvements.

Road Safety

3.2.15. In Burundi, road safety is the responsibility of four institutions, namely: (i) the

Burundi Revenue Office (OBR) under the authority of the Ministry of Finance and Economic

Development Planning as regards vehicle registration; (ii) the Public Transport Authority

(OTRACO) under the oversight of the Ministry of Transport, Public Works and Equipment

which is responsible for the technical control of vehicles; (iii) the Special Haulage Office

(BSR) under the oversight of the Ministry of Public Security which is responsible for the

issuance of driver´s licenses and traffic regulations; and (iv) the General Directorate of

Transport at the Ministry of Transport which is responsible for preparing and monitoring

sector policy.

3.2.16. Road safety data indicates that Burundi´s roads are highly accident-prone. Indeed,

the number of accidents reported is high, even though it fell from 3305 to 3171 over the

2009-2012 period. The average number of persons killed per year is 88 over a period of 8

years (from 2005 to 2012). The main causes of these accidents are: (i) human errors (drunk

driving, speeding, lack of civic behaviour, etc.); (ii) the poor mechanical state of most

vehicles; and (iii) road infrastructure shortcomings (lack of specific facilities, inadequate road

signs and markings, poor maintenance, etc.).

13

3.2.17. To correct this state of affairs, provision is made in the project´s design for the

improvement of road safety, mainly through: (i) compliance with technical regulations and

standards applicable relating to road signs, slopes, embankments and diversions; (ii)

development of spaces for temporary parking of vehicles; (iii) awareness-raising campaigns

targeting road users and local communities; and (iv) road safety audit during and upon

completion of the works.

3.2.18. The project intends to recruit a road safety auditor to define road safety actions to be

adopted and ensure their effective implementation; these will be proposed in the terms of

reference for road works. A technical auditor will also be recruited to ensure compliance

with works specifications, standards and quality.

4. IMPLEMENTATION

4.1. Implementation Arrangements

Executing Agency and Institutional Arrangements

4.1.1. The project executing agency is the Roads Authority (OdR) of the Ministry of

Transport, Public Works and Equipment (MTTPE).The OdR has acquired considerable

experience in the management of Bank-financed projects and yielded satisfactory

results.However, its capacity needs to be strengthened in the areas of procurement as well as

financial and accounting management. For daily monitoring of project activities, the Project

Management Team (PMT) will rely on the institutional mechanisms set up under ongoing

Bank-financed projects.

4.1.2. The PMT is placed under the authority of the Director-General (DG) of the OdR and

under the technical supervision of the Director of Road Works within the OdR.The team will

be responsible for the technical, administrative, accounting and financial management of the

project and be composed of (i) a project engineer (civil engineer), (ii) an environmentalist,

(iii) a monitoring/evaluation expert, (iv) a procurement expert, and (v) an accountant.1 For the

purposes of annual evaluation, performance contracts will be signed between each member of

the project management team and the DG of the OdR. These contracts will have to be

submitted to the Bank beforehand for opinion. Furthermore, the ODR will have to prepare a

procedures manual on the management and monitoring of Bank-financed projects. Evidence

of the adoption of the manual by the Ministry is a one condition for the implementation of the

project (Condition C(i)).The operating cost of the PMT is included in the national counterpart

contribution.

4.1.3. Furthermore, the project provides for the recruitment, on a competive basis, of two

young engineers who will be included in the supervision of works team, for the transfer of

knowledge and the training/retraining of OdR professionals, including the PMT in

engineering and fiduciary management of the project. Their remuneration will be paid by the

supervision consultant.

1 It should be noted that the procurements expert and the accountant are already in place working on previous projects and will take charge of these components to ensure greater efficiency.

14

Procurement

4.1.4. A review of Burundi´s National Procurement Procedures (NPP) by the Bank

concluded that the legislative and regulatory framework has to be improved to make it more

consistent with international standards and best practices on procurement. Indeed, these

legislative and regulatory frameworks have major inconsistencies that make them premature

for use in the implementation of Fund projects. The Government has decided to revise the

Public Procurement Code (PPC) and the Standard National Competitive Bidding Documents

(SNCBD) in order to correct certain inconsistencies relative to the Bank´s Rules and

Procedures for the Procurement of Goods and Works. After the revision and adoption of the

new PPC and SNCBDs by the authorities in Burundi, the Bank will have to prepare the Main

Report (MAR), which includes the Global Action Plan (GAP).

4.1.5. All goods and consulting services financed by the Bank will be procured in

accordance with Fund Rules and Procedures for Procurement of Goods and Works (May

2008 edition, revised July 2012) and the Fund Rules and Procedures for the Use of

Consultants (May 2008 edition, revised July 2012), using the Fund’s standard bidding

documents (SBDs), and with the provisions set out in the Protocol Agreement.The Project

Management Team will be responsible for the procurement of goods, works, consulting

services and other items as described in Annex B5. A review of the resources, capacities,

expertise and experience of the OdR shows that this entity needs procurement capacity-

building. As regards fiduciary risk mitigation measures, it has been proposed that a skilled

procurements expert be recruited to build the procurement capacity of the OdR under another

ongoing project. A procurement plan (PP) was prepared during the appraisal mission and will

be regularly updated during the project implementation phase. Detailed procurement

arrangements are presented in Annex B.5.

Disbursement and Financial Management Arrangements

4.1.6. Direct disbursement will be used for all components financed with ADF resources.

Components financed with national counterpart resources will be paid from a special account

opened to that end. Evidence of the opening of a special account at the Bank of the Republic

of Burundi to receive the counterpart funds is one of the conditions precedent to first

disbursement of the grant (Condition B(i)).

4.1.7. The appraisal mission noted a certain number of shortcomings2 in the financial

management of projects by the OdR. In order to address these constraints, it was agreed that

the OdR should:(i) establish at the beginning of each year, a detailed budget and activity

schedule in addition to the other budgets; (ii) draft a procedures manual for the Roads

Authority; (iii) immediately establish a fixed assets register and register for monitoring fuel

consumption, maintenance and repairs, and missions; (iv) prepare a manual of administrative,

2 The financial management systems within the Roads Authority (Project Executing Agency) are not satisfactory on the whole.There is a

major overall fiduciary risk, due to:(i) the absence of detailed budget and cashflow plans coupled with activity schedules in the OdR and Project Management Unit; (ii) the lack of updated (administrative, financial and accounting) procedures manuals; (iii) the absence of

fixed asset registers and registers for monitoring fuel consumption, maintenance and missions within the OdR and the Project

Management Unit; (iv) inadequate distribution of financial tasks within the Project Management Unit; (v) insufficient staff capacity for internal control; and (vi) the poor quality of OdR audit reports.

15

financial and accounting procedures of the project and submit them to the Bank for

validation, as soon as the project is launched; (v) provide the Project Management Unit with

premises for filing supporting documents, prior to project launch; (vi) establish a projected

cash-flow plan at the beginning of each year; (vi) require the Project Management Unit to

include the interim financial statements in the half-yearly activity reports during project

implementation; (vii) post two experts with the appropriate profile to the Internal Control

Unit to replace the two project officers before 31 March 2015; (viii) provide the Internal

Control Unit with a vehicle for field missions and metal cabinets for filing documents before

31 March 2015; (ix) train Internal Control Unit staff in internal auditing and internal control

standards before 31 March 2015; and (x) recruit an external audit firm responsible for project

auditing within six months after grant effectiveness. A detailed assessment of financial

management systems is presented in Annex B.3. Evidence of the adoption of a procedures

manual on the management and monitoring of Bank-financed projects by the Ministry

responsible for Public Works is a grant condition (Other Conditions Ci).

External Audits

4.1.8. Pursuant to Bank rules and procedures, the project financial statements and accounts

will be audited and validated periodically by an independent external audit firm and the

relevant reports will be transmitted to the Bank. The Roads Authority will have to submit an

audit report to the Bank for consideration, not later than 6 (six) months following the end of

the accounting year concerned.

Implementation and Supervision Schedule

4.1.9. The project components implementation schedule is summarized at the beginning of

this report. It focuses, in particular, on the relevant experience of the executing agency in

managing works implementation and the Bank’s document processing experience gained

from similar past projects. According to the projected schedule, project activities will

commence as soon as the grant is approved in the third quarter of 2014 and end in December

2017 for all components. The closing date for the grant is 30 June 2018. At the level of the

Bank, the activities to be implemented upon approval of the loan will be closely monitored in

accordance with the schedule outlined in Table below.

Period Stages Monitoring Activities/Feedback Loop

Q3 to Q4 2014 Approval and

Effectiveness

Grant approval General Procurement Notice Signature of grant agreement ADB Launching Mission Effectiveness of Grant Agreement Lifting of conditions precedent to first disbursement

Q3 2014 to Q1 2015 Procurement

Procedures

Recruitment of works company (ies) Recruitment for works control and supervision Recruitment of an account audit firm Recruitment of a consultant for project

monitoring/evaluation Recruitment of an awareness-raising consultant

Recruitment of Technical Assistance

Q2 2015 to Q4 2017 Project’s Physical and

Financial

Implementation Works Monitoring/Supervision (Bank/OdR)

Q1 to Q2 2018 Project completion Joint drafting of project completion report (Bank/OdR)

Table 9: Monitoring/Evaluation Schedule

16

4.2. Project Monitoring-Evaluation Mechanisms

4.2.1. Monitoring/evaluation will comprise the Bank’s launching and supervision missions

and a final evaluation, including works completion and project completion reports. The

project executing agency will provide the Bank with periodic and specific project status

reports. These will be monthly and quarterly reports comprising aspects related to the

physical and financial progress of the project. They will report on the implementation of

environmental and social measures and also on the progress of the awareness-raising

campaigns while indicating the results obtained. These reports should reach the Bank not

later than 15 (fifteen) days after the end of the relevant period.

4.2.2. Furthermore, a monitoring/evaluation mechanism has been scheduled for this project

in order to: (i) compile and manage information on the status of various project components;

(ii) establish the baseline situation to be used in monitoring the road’s impact; and (iii) assess

project impact upon completion by applying the same methodology used in establishing the

baseline situation. A consultant will be recruited to provide monitoring/evaluation services

under this project. Provision is also made for a monitoring-evaluation officer within the PMT

under this project who will handle these aspects jointly with the Consultant. Moreover, the

Bank plans to conduct at least two supervision missions in the field per year and the number

could be increased if need be. At the end of this project and six months following the

completion of works, the OdR shall conduct a traffic audit on the road to verify the traffic

data.

4.3. Governance

4.3.1. The conflict experienced by Burundi for over 15 years has disrupted the country´s

administration and weakened its management capacity. Since 2004, the Government and its

partners, including the Bank, have made significant efforts to address this situation. However,

corruption remains a major concern, although according to Transparency International,

Burundi improved its Corruption Perceptions Index ranking from 165th in 2012 to 157th in

2013.The authorities are satisfied with this performance and wish to step up reforms, mainly

by applying the Good Governance and Corruption Control Strategy adopted in October 2011

and building the capacity of the General State Inspectorate and the Anti-Corruption Brigade.

4.3.2. Regarding financial management, the Government has embarked upon a vast

second-generation public finance management programme adopted in December 2012 with

the support of development partners. Within this framework, the Bank provided support

through the Economic Reforms Support Programme whose fifth phase (PARE V) is

underway. This programme mainly seeks to improve budget transparency and efficiency and

to consolidate internal, external and public procurement control systems.

4.3.3. In the road transport sector, governance reforms have been implemented. They

include the establishment of an institutional and regulatory framework of administrative

services as well as public procurement control and management mechanisms. Furthermore,

the Bank supports the country in its bid to join the Construction Sector Transparency

Initiative (CoST) which brings together the private and public sectors as well as civil society.

This initiative will, inter alia, facilitate the publication of information on the various stages of

the project cycle such as content and cost of the project, participating agencies and

enterprises, contract procurements and any variation of the initially agreed provisions. Such

transparency would be appropriate to ensure greater efficiency and boost the confidence of

national and foreign investors.

17

4.3.4. Within the OdR, the agency responsible for project execution, there are persistent

weaknesses and shortcomings which could undermine the effectiveness of the procurement

mechanisms. An assessment of the procurement processes in Bank-financed projects

confirms these shortcomings which are due to: (i) lack of familiarization with the Bank’s

rules and procedures; (ii) poor document preparation/processing quality; and (iii) lack of

qualified procurements expert in the OdR. To address this situation, an enhanced

collaboration framework with the Public Procurement Regulatory Agency (ARMP) was

established in 2012. Furthermore, the recruitment of a procurement expert scheduled under

the RN13 project will also help to build the capacity of OdR professionals in procurements

and contract management. Lastly, special attention will be paid to OdR capacity-building on

Bank disbursements, internal control and the conduct of annual financial audits.

4.4. Sustainability

4.4.1. In Burundi, the mechanisms that ensure road network sustainability are generally in

place. The national road network is, therefore, in good condition, on the whole. Its

maintenance is financed by the National Road Fund (NRF) which enjoys autonomous

management. The resources of the Fund mainly come from a tax on petroleum products.

Since its establishment, the NRF has been able to raise steadily growing revenue from BIF

2.1 billion in 2004 to BIF 16 billion in 2013. However, these resources are insufficient to

cover network maintenance needs estimated at BIF 27 billion, thus reflecting a financing gap

of 11 billion. To raise additional resources, the Government established a mechanism to

increase the tax on fuel and diversify NRF´s revenue sources through the introduction of tolls

on certain roads and operation of the heavy vehicle parking area being constructed in Gitega

under the NH15 improvement and asphalting project (Gitega-Nyangungu-Ngozi road, phase

II), Gitega-Nyangungu section. This resource constraint is exacerbated by the limited

capacity of national SMEs in road maintenance. Only 4 companies were identified as having

proven skills in this area. Faced with this situation, the Government established an exemption

mechanism for civil engineering equipment in order to build the capacity of SMEs.

Furthermore, multi-year maintenance contracts are increasingly awarded to efficient

companies. To enable the Bank to assess the maintenance system set up within the OdR,

submission of the annual maintenance programme and budget, as well as the annual status

report will be one of the grant conditions (Condition C.iii).

4.4.2. The duties of the OdR include management of the national road network and works

planning and programming. Consequently, the ongoing establishment of a road database will

ultimately yield an appropriate tool for the planning of maintenance and rehabilitation works

and for monitoring network status. This mechanism will be supplemented by the installation

of an electronic archiving system under the Makebuko-Ruyigi Road Rehabilitation Project

financed by the Bank in 2013. It should be noted that, from the institutional standpoint, the

OdR does not have all the skills needed to successfully carry out its mission. Hence, Bank

projects systematically include a capacity-building component to address this shortcoming.

4.4.3. With regard to operation of the infrastructure, especially the road and its related

facilities, the instruments governing compliance conditions applicable to trucks, their

authorized weight and axle-load limits, as well as the fines to be paid in case of violation,

have not yet been fully applied because of delays in the procurement and installation of axle

scales. Similarly, the lack of harmonisation between national and regional regulations

undermines the proper operation of road infrastructure. Nevertheless, under the ongoing RN5

project, the Bank provides support for the procurement of mobile axle scales that will be

supplied at the end of 2014. At the same time, discussions are underway at the sub-regional

level to improve harmonization of regulations governing axle load limits.

18

4.5. Risk Management

4.5.1. Three types of major risks were identified at this stage of project analysis:

Risks related to project implementation concern: (i) the increased cost of

works; and (ii) the delayed mobilization of counterpart funds. These risks will

be mitigated through: (a) the adoption of competitive bidding procedures for

works and a realistic cost assessment based on current market unit costs and

provision for contingencies; and (b) the annual provision of counterpart fund

resources, in accordance with the expenditure schedule (grant condition (Cii)).

Risks related to the achievement of project impacts are: (i) early deterioration

resulting from failure to adhere to axle load limits; (ii) lack of road

maintenance for want of resources. These risks will be mitigated through: (a)

the introduction of axle load limit controls accompanied by the application of

penalties for overloading and the offloading of defaulting trucks; and (b)

substantial improvement of Road Fund revenue mainly through diversification

of sources in order to cover recurrent maintenance needs.

The organisation of general elections in 2015 (presidential, legislative,

municipal and district) could upset the project implementation schedule. To

mitigate this risk, there are plans to undertake advance procurement action

(APA) for the main component. Furthermore, resumption of the Inter-

Burundian Dialogue under the aegis of the United Nations and the consensus

that characterized approval of the new electoral code are an indication that

politicians are aware of the need to maintain peace in order to successfully

hold all these elections.

4.6. Knowledge Building

Knowledge development falls under institutional capacity-building for the service

responsible for the project. As a result of previous operations, the OdR has greater knowledge

of the Bank’s procedures for the procurement of works, goods and services. This knowledge

will be consolidated under this project through the recruitment of technical assistance. The

terms of reference for such technical assistance will include the specific tasks of training

Executing Agency professionals in engineering designs, road engineering and project

management/monitoring.

5. LEGAL FRAMEWORK

5.1. Legal Instrument

A Protocol Agreement will be signed between the Republic of Burundi (the Donee),

on the one hand, and the African Development Fund (the ADF), on the other. The Donee and

the Fund are hereinafter called “the parties”.

19

5.2. Conditions Associated with the Bank’s Intervention

A. Conditions Precedent to Effectiveness of the Grant Protocol

B. Effectiveness of the Protocol Agreement is subject to its signature by the

parties.

C. Conditions Precedent to First Disbursement of the Grant

Apart from effectiveness of the Protocol Agreement, the first disbursement of grant resources

shall be subject to fulfilment by the Donee of the following specific conditions to the

satisfaction of the Fund:

(i) Provide the Fund with evidence of the opening of a special account in the

name of the project in the Bank of the Republic of Burundi to receive

counterpart funds (Paragraph 4.1.6);

(ii) Provide the Fund with evidence of (a) the effective payment of compensation

to each eligible project affected person (PAP); and (b) the resettlement of each

eligible PAP in accordance with the ARP (paragraph 3.2.13).

D. Other Conditions

Apart from the above-mentioned conditions, the Donee shall fulfil the following conditions to

the satisfaction of the Fund:

(i) Provide evidence, not later than 30 June 2015, of the adoption of a procedures

manual on the management and monitoring of Fund-financed projects by the

Ministry responsible for Public Works (paragraph 4.1.7);

(ii) Provide evidence each year, of the annual provision of counterpart fund

resources in accordance with the expenditure schedule (paragraph 4.5.1); and

(iii) Submit to the Fund: (a) at the beginning of each year, the routine and periodic

annual road maintenance programme and budget approved by the OdR Board

of Directors; and (b) at the end of each fiscal year, the annual programme

implementation report and budget (Paragraph 4.4.1);

5.3. Undertakings

The Donee undertakes to:

(i) Implement the Project, ESMP and ARP, and have them implemented by its

contractors in compliance with national laws, recommendations, requirements

and procedures contained in the ESMP and with the applicable rules and

procedures of the ADF; and

(ii) Provide the Fund with quarterly reports on implementation of the ESMP for

the road and related improvements.

5.4. Frontloading Constraint

Given the reduction of the ADF XIII allocation for Burundi and in accordance with the

frontloading rule which requires the commitment of 50% of next-year resources to the first

year, it is recommended that UA 6.48 million from 2015 resources be committed to 2014.

20

Total ADF financing for RN18 (Nyakararo-Mwaro-Kikumbu-Gitega) will be UA 19.42

million, or 49% of the PBA under ADF-13, which is UA 39.49 million.

E. Compliance with Bank Policies

The project complies with all applicable Bank policies.

6. CONCLUSION AND RECOMMENDATION

6.1. Conclusion

The improvement and asphalting of RN18, to be implemented in two phases will

ease congestion on RN1 (Bujumbura–Kayanza), which carries the heavy traffic on the North

Corridor (from/to the Port of Mombasa in Kenya), the Central Corridor (from/to the Port of

Dar es Salaam in Tanzania) and the national traffic between the Central, Northern and

Eastern provinces of the country. Hence, the constructed road will serve as a principal route

to the Central Corridor via RN12: Muyinga – Gitega. Its asphalting will boost trade between

the western, central and eastern regions of the country. The project is economically viable

and generates an average economic rate of return of 15%.

6.2. Recommendations

In light of the foregoing, it is recommended that an ADF grant, amounting to UA

19.42 million be awarded to the Republic of Burundi for the implementation of the project

under the conditions set out in this report.

Appendix I: Comparative Socio-economic Indicators

Appendix II: Table on Procedures for Procurement of Goods and Services

Table 9

Procurement Arrangements (in UA million) EXPENDITURE

CATEGORIES UA million

ICB NCB OTHERS SHORTLIST

(1)

NOT

FINANCED

BY THE ADF

(2)

TOTAL

ICB ADF ADF ADF ADF ADF GOV’T

A. WORKS

Road works, including mitigation of environmental

impact

13.94 13.94

- - 13.94 -

Improvement and construction of 41 km of rural roads

1.23 1.02

0.21

0.21 1.02 0.21

Development of socio-

economic and commercial infrastructure & support to

VTCs

0.37 -

0.37

0.37 - 0.37

Construction of footbridges 0.32 0.32 0.32

B. GOODS

Support to women´s groups 0.06 -

0.06 0.06 - 0.06

C. SERVICES

Works control and supervision on the main road and related

improvements 0.72 0.72

0.72

Awareness-raising for PIA communities

0.15 0.15

0.15

Technical assistance and

training/retraining of OdR experts

0.17 0.13 0.04 0.04 0.13 0.04

Financial and accounting audit of the project

0.04 0.04 0.04

Technical audit 0.04 0.04 0.04

Road safety audit 0.04 0.04 0.04

Monitoring/evaluation of the project´s socio-economic

impact

0.15 0.10

0.04 0.04

0.10 0.04

D. MISCELLANEOUS

Operation of the Project

Management Unit

0.11 0.11

0.11

Base cost

13.94 13.94 1.66 1.02

0.46 0.42 1.16 1.12

0.72 0.72 16.50 0.83

Physical contingencies (PC).

10% 1.39 1.39 0.17 0.10

0.05 0.04 0.12 0.11

0.07 0.07 1.65 0.08

Financial contingencies 1.07 1.07 0.13 0.08 0.04 0.03 0.09 0.09

0.06 0.06 1.27 0.06

TOTAL COST (NET OF

EXPROPRIATION)

16.41 16.41 1.95 1.20

0.54 0.49 1.37 1.32

0.85 0.85 19.42 0.98

Clearing of rights-of-way 0.04 0.04 0.04

TOTAL COST, INCLUDING

EXPROPRIATIONS 19.42 1.02

Appendix III: AfDB Portfolio as at 29/01/2014 (amounts in UA)

Sector Project Title Approval

Net

commitment

(in UA

million)

Disb. rate

%

Project

age

Agriculture

and Natural

Resource

Management

Lake Tanganyika Development Programme

(Regional) 17 Nov. 04 4.96 88.0

9.4

Watershed Management and Climate Resilience

Improvement Project (PABVARC) – FSF Grant 22 Apr. 13 6.23 21.9

0.8

Watershed Management and Climate Resilience

Improvement Project (PABVARC) – GEF Grant 22 Apr. 13 2.01 4.4

0.8

Bugesera Rural Development Project (Regional) 25 Sep. 09 15.02 23.8 4.5

. Sub-Total - Agriculture

28.2 33.3 3.9

Energy NELSAP Interconnection Project (Regional) 27 Nov. 08 15.15 5.3 5.3

Rusumo Hydropower - Burundi (Regional) 27 Nov. 13 16.70 0.0 0.2

Jiji Murembwe Hydro-electricity Dam 23 June 14 14.34

Sub-Total - Energy

46.19 5.3 0.2

Social Job-creation Project 24 June 09 10.00 89.3 4.7

Emergency Aid to Flood Victims in Bujumbura City 2 Apr. 14 0.64 0.0 4.7

. Sub-Total – Social Sector

10.64 89.3 4.7

Urban

Development Emergency Aid to Mitigate the Effects of the

Bujumbura Market Fire *** 10 Jul. 13 0.33 100

0.6

Transport

Gitega- Nyangungu-Ngozi Project, Phase 1 27 Sep. 10 24.10 99.0 3.4

Gitega-Ngozi Project, Phase 2 (FSF Grant) 29 June 11 32.00 34.8 2.7

Gitega-Ngozi Project, Phase 2 (ADF Grant) 29 June 11 10.00 8.9 2.7

Project on Road Improvement (Mugina-Mabanda-

Lake Nyanza Lac and Rubavu-Gisiza) and Transport

Facilitation on the North-South Corridor - Phase III

(Regional)

27 June 12 27.50 0.2

1.7

Nyamitanga-Ruhwa-Ntendezi-Mwityazo Road

(Regional) 16 Dec. 08 49.38 83.3

5.3

Makebuko - Ruyigi Road Project, Phase I 18 Dec. 13 8.94 0 0.2

Isaka-Kiga/Keza-Musongati Railway, Phase 2

(Regional) 17 Nov. 09 1.67 58.4

4.32

Feasibility study for the development of the Port of

Bujumbura 14 Oct. 13 0.80 0.0

Total Transport

154.39 50.6 2.9

Water and

Sanitation Lake Victoria Water and Sanitation Programme 17 Dec. 10 14.1 2.7

3.2

Multisector

Economic Reform Support Programme - V (ERSP V) 11 Jul. 12 12.00 58.3 1.6

Institutional, Employment and Entrepreneurship

Capacity Building 12 Nov. 12 1.35 33.9

1.3

Capacity-building in Poverty, Statistics and M&E 12 Nov. 12 1.92 36.3 1.3

Capacity-building in SP and Labour data collection 9 Nov. 12 0.40 61.2 1.3

Capacity-building Project in Public Finance

Management (PRCGF) 9 Nov. 12 1.24 22.1

1.3

Private Sector Development Support Project (PADSP) 9 Nov. 12 0.88 4.1 1.3

TA and Capacity-building in ICGLR 15 Jul. 13 1.49 0.0 0.6

Sub-Total – Multisector

19.3 45.2 1.6

Grand Total 271.17 41.4 2.5

Appendix IV: Major Projects Financed by the Fund and Other Development Partners

in Burundi DONORS PROJECTS AMOUNT

(million)

1. EDF

(i) Improvement and Asphalting of the Gitega-Karuzi-Muyinga Road

(ii) Improvement and Asphalting of the Ruyigi-Cankuzo Road

(iii) Improvement and Asphalting of the Cankuzo- Muyinga Road

(iv) Rehabilitation of RN4: Bujumbura - Gatumba

EUR 40.00

EUR 29.00

EUR 34.56

EUR 31.00

2. OPEC Fund (i) Improvement and Asphalting of the Gasenyi-Kirundo Road

(ii) Improvement and Asphalting of the Bubanza-Ntamba-Ndora Road

(iii) Rehabilitation of the Bujumbura-Nyamitanga Road

USD 12.00

USD 28.00

USD 8.00

3. Saudi Fund (i) Rehabilitation of the Bujumbura-Nyamitanga Road

(ii) Supplementary Financing for the Improvement and Asphalting of the

Bubanza-Ntamba-Ndora Road

USD 10.00

USD 20.00

4. Kuwaiti Funds Rehabilitation of the Bujumbura-Nyamitanga Road USD 10.00

5. BADEA (i) Improvement and Asphalting of the Bubanza Ntamba Road;(ii)

Rehabilitation of the Bujumbura-Nyamitanga Road USD 18.00

USD 10.00 6. IDA Road Sector Development Project USD 70.00

7. JICA Road and Infrastructure Rehabilitation Project for the City of Bujumbura

(Yaranda, Avenue du Large, Avenue de la Plage) USD 24.00

7. ADF

(i) Kicukiro-Kirundo Multinational Road Project (Gasenyi-Kirundo section) UA 14.9

(ii) Nyamitanga-Ruhwa-Ntendezi-Mwityazo Multinational Road Project

(Nyamitanga-Ruhwa section) UA 49.38

(iii) Project for the Improvement and Asphalting of the Gitega-Ngozi Road,

Phases 1 & II UA 24.1

(iv) Improvement and Asphalting of the Mugina-Mabanda and Rubavu-Gisiza

Multinational Roads (Burundi/Rwanda) UA 42.0

(v) Phase II – Dar Es Salam-Isaka-Kigali/Keza-Musongati Railway study

(multinational) UA 27.50

(vi) Lake Tanganyika Transport Corridor Development Project UA 1.67 Total USD 1.162

Appendix V: Assessment of Eligibility to TSF Resources

Indicator Window I Supplemental Support – First-Level Criteria Commitment to

peace-building and

security

After a cycle of inter-ethnic conflicts and violence, Burundi succeeded in signing the Arusha Accords

in 2000. These accords served as the framework for crisis resolution and national reconciliation

recognized by the international community. They enabled Burundi to make great strides towards

peacebuilding and security: formation of a transitional government supported by the international

community (November 2003); referendum on the adoption of a new constitution, with over 90% of the

electorate voting “yes” (February 2005); holding of municipal elections (June 2005); holding of

senatorial elections (July 2005); election of the President by the National Assembly and the Senate

(August 2005); holding of the 2010 elections and calming of the tension resulting from these elections;

resumption of political dialogue ahead of the 2015 elections under the aegis of the international

community, especially the United Nations Office in Burundi (BNUB) in March and May 2013,

bringing together all political parties including opposition politicians returning from exile in a peaceful

political environment.

However, the first quarter of 2014 was marked by a disturbing turn of events, which is an indication

that there are still major challenges which the Government and the international community must

address with the utmost care and attention in order to maintain Burundi on the path of peace and

democracy.

The major challenges currently facing the country relate to the 2015 elections. The country faces a

certain number of major risks inherent in the electoral process; risks which generally affect post-

conflict countries and from which Burundi has not been spared. In this regard, extension of BNUB´s

mandate only to the end of 2014, the proposal of a new press law, and the proposed amendment of the

Constitution ahead of the 2015 elections all constitute high risk factors. However, the return of

opposition leaders who left the country after the 2010 elections for security reasons is perceived to be a

positive sign.

Burundi must also be efficient in tackling the issues of justice and reconciliation, especially regarding

the many land conflicts that have arisen following the return of refugees, given the intensity and

complexity of such conflicts. These conflicts could re-ignite feelings of exclusion. Another concern is

the emergence of youth parties which could lapse into violence in support of their political positions,

especially as such parties are prone to manipulation. Furthermore, Burundi has not been spared by the

consequences of the conflicts in the Great Lakes Region, especially in Eastern DRC.

Unmet socio-

economic needs Poverty has increased in Burundi due to the decline in GDP per capita estimated at USD 117 in 2010,

compared to its pre-crisis level of USD 150 in 1990, representing a 22% decline in 20 years. It is

unlikely that Burundi will achieve the Millennium Development Goals (MDGs) in 2015. Hence, the

country needs increased support from the Fund and the other partners. According to the 2013 UNDP

report, Burundi´s human development index (HDI) has improved. The country gained 7 places, rising

to 178th out of 187 countries, with an index of 0.355 but remains in the last quintile. This

performance stems essentially from the progress made in the education and health sectors, especially

the introduction of free primary education and free health care for under-five children and pregnant

women. Burundi faces enormous socio-economic challenges which it must address in order to lay the

foundation for sustainable socio-economic development. Indeed, the structural poverty situation in

which the majority of Burundians live (estimated poverty incidence of 68%) is a major source of

concern. This poverty is exacerbated by population pressure and its negative impacts on natural

resource management and environmental protection. It is further compounded by the harmful

consequences of the long socio-political crisis of the 1990s which led to the destruction of economic

production capacity and basic social infrastructure, generating a high unemployment rate especially

among the youth (50% of the youth under the age of 30) and weak institutional capacity in the country.

Social cohesion also remains a challenge and urgent steps should be taken to strengthen it, especially

given the current context which is characterized by the ever growing risk of a resurgence of conflicts.

Indicator Window I Supplemental Support – Second-Level Criteria Improved

macroeconomic

conditions and

sound debt policies

Burundi has posted an average growth rate of 4% since 2010. The macroeconomic management efforts

made under the reform programme supported by the Extended Credit Facility (ECF) signed with the

IMF in 2012 have made it possible to achieve satisfactory results. Nevertheless, there are still

significant budget constraints that have created a structural deficit of 2 to 4% of GDP, resulting

essentially from limited domestic revenue collection capacity and the volatility of budget support. As

regards debt management, Burundi has made progress since attaining the completion point of the

HIPC Initiative in January 2009.However, the risk of a debt overhang remains high due to the

country´s significant resource needs, stemming from the structural imbalance of its trade and the

vulnerability of the national economy to external shocks.

Continue

implementing

policies, reforms

Since 2005, Burundi has embarked on the implementation of economic and financial reforms to

strengthen economic governance and improve the business environment so as to support the revival of

economic activity. Such reforms include: (i) the establishment of the Burundi Revenue Office and the

and best practices Investment Promotion Agency; (ii) liberalization of the tea and coffee sectors; and (iii) adoption of the

mining code. The Government intends to consolidate institutional reforms under Vision 2025 and the

Growth and Poverty Reduction Strategy (GPRS II) for 2012-2015.

Sound financial

management

practices and

restoration of

conditions that will

promote private

sector investment

The business environment in Burundi has significantly improved in recent years. However, it is still

necessary to push on with reforms that will stimulate the country´s embryonic private sector (less that

15% of GDP in 2013). The private sector development strategy adopted by the Government in 2013

provides an adequate framework for promoting the sector through an action plan that is oriented

towards upgrading of the judicial system and of the legal and regulatory frameworks. These efforts are

supported through the application of the Governance and Anti-Corruption Strategy adopted in October

2011.

Transparency of

public accounts As part of the ECF-supported reform programme, the Government carried on implementing its public

finance management strategy (2012-2014), thus displaying its readiness t to promote transparency

through: (i) the improvement of budget programming with the preparation of a Medium-Term

Expenditure Framework (MTEF); (ii) the monitoring of budget execution through systematic online

publication of budget review laws, final public contract awards, etc.; and (iii) reinforcement of public

contract control and management systems.

Other

considerations

justifying access to

Window I

resources

Certain factors/risks could undermine the peacebuilding and economic revival process. To get a better

appreciation of Burundi´s fragility trends, a fragility assessment will be conducted to evaluate CSP

implementation during drafting of the completion report in 2016.To that end, fragility factors will be

systematically considered in all phases of the Bank´s projects, including:

Difficulties related to political dialogue between the ruling party and opposition parties. The

lack of dialogue observed since the beginning of 2014 is not conducive to peace-building

and political stability in the country.

Vulnerability of the economy to external shocks due to its poor diversification and the

country´s heavy dependence on external aid which accounts for over 50% of the national

budget.

An underdeveloped and less competitive private sector due essentially to high factor costs

(energy, transport, telecommunications) and a weak legal and regulatory framework.

High unemployment especially among the youth, constitutes a major threat to the country´s

stability. The factors that aggravate the unemployment situation include high population

pressure, training-employment mismatch and the economy´s weak job-creating potential.

The limited supply of fertile land, which has resulted in recurrent land conflicts. These

conflicts are aggravated by population pressure and the return of refugees from neighbouring

countries. Moreover, this situation puts great pressure on natural resources which, combined

with climate change, could greatly increase the environmental risks.

The cycle of armed conflicts in the Great Lakes sub-region, especially in eastern DRC is a

potential source of domestic insecurity for Burundi, even though it has not yet generated any

significant socio-economic repercussions.

Appendix VI: Map of Project Area