CURRENCY EQUIVALENTS ABBREVIATIONS AND ACRONYMS€¦ · Association) was signed on September 22,...

CURRENCY EQUIVALENTS

(Exchange Rate Effective M a y 30,2008)

BCECO BOP DRC EMP E S I A E S M F MODRU NGO O&M PDO PRSP RAP SDR UCOP

Currency Unit = U S Dollars 1 SDR = 1.63 U S $

1 Congolese Franc = 550 U S $

F I S C A L YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS

Bureau Central de Coordination (Delegated Contract Manager) Balance o f Payment Democratic Republic o f Congo Environmental Management Plan Environmental and Social Impact Assessment Environmental and Social Management Framework Delegated Contract Manager Non-Governmental Organization Operation and Maintenance Project Development Objectives Poverty Reduction Strategy Paper Resettlement Act ion Plan Special Drawing Rights Project Coordination Unit

Vice President: Obiageli K. Ezekwesili

Sector Director Inger Andersen Sector Manager: Eustache Ouayoro

Country Director: Marie Franqoise Marie-Nel ly

Task Team Leader: Mahine D i o p

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Restructuring of the DRC Emergency Economic & Social Reunification Support Project

(Credit 3824) & (Grant H064)

Project Paper

TABLE OF CONTENTS

Page

Data Sheet for Project Paper .......................................................................................... iv

Introduction ....................................................................................................................... 1

Background and reasons for restructuring .................................................................... 1

Project implementation performance ............................................................................. 4

Proposed changes .............................................................................................................. 4

Expected outcomes ............................................................................................................ 7 Annex 1: Assessment o fp ro jec t achievements ............................................................... 8

Annex 2: Results Framework of restructured project ................................................... 12

Annex 3: Summary o f Proposed Changes .................................................................... 15

Annex 4: Revised Table o f Expenditures categories o f the project .............................. 16

Annex 5: Project Costs by Component ........................................................................ 17 Annex 6: Results Framework o f restructured project .................................................. 18

... 111

Data Sheet for Project Paper DRC Emergency Economic & Social Reunification Support Project (P081850)

Date: August 2 1, 2008 Country: Democratic Republic o f Congo

& Social Reunification Support Project

Task Team Leader: Mahine Diop Sector Manager: Eustache Ouayoro

Environmental category: B

Responsible agency: UCOP

Does the restructured project require any exceptions to Bank policies?

Original project Development Objective and Outcomes The objective o f the Project i s to assist the Borrower in i t s economic and social reunification efforts thereby stabilizing countrywide administration, through: (a) balance o f payments support; (b) institutional strengthening o f entities and governance systems throughout i t s territory; (c) infrastructure rehabilitation; (d) urban rehabilitation; and (e) community empowerment. Revised project development objective/outcomes: The objectives o f the project are: (i) to assist the Borrower in i t s efforts to economically and socially reunify the Eastern provinces to the rest o f the country; and (ii) to increase access to and use by the local population o f basic infrastructure and social services in the provinces o f Orientale, Maniema, Nord %vu, Sud %vu, Nord Equateur, Nord Katanga, Nord Kasai Oriental. Does the restructured project trigger any new safeguard policies? N o

' The S D W S Dollar exchange rate rose from 1.4 at appraisal to 1.63 by M a y 30, 2008.

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Project Paper

INTRODUCTION

1. This Project Paper seeks the approval o f the Executive Directors to introduce the fol lowing changes in the Democratic Republic o f Congo (DRC) Emergency Economic and Social Reunification Support Project (Credit 3824 and Grant H064) and any accompanying amendments to the project’s legal document.

2. The proposed changes will support the full realization o f the revised project development objective and outcomes as we l l as optimal utilization o f undisbursed funds f rom IDA (US$58.0 m i l l i on undisbursed as o f M a y 30,2008)

3. The restructuring measures being proposed are to:

(i) reduce the scope o f works o n the RN2 (Bukavu-Mbuji-Mayi) road; (ii) cancel the forest zoning sub-component; (iii) reformulate the Project Development Objectives (PDO) and the results

framework; (iv) reallocate the Project Grant proceeds; and (v) extend the project closing date f rom September 30,2008, to September 30,

2010.

4. As a result o f these changes, the project i s expected to be more effective at achieving the proposed PDO. The objectives o f the project are to (i) assist the Borrower in its efforts to economically and socially reunify the Eastern provinces to the rest o f the country; and (ii) increase access to and use by the local population o f basic infrastructure and social services in the provinces o f Orientale, Maniema, N o r d Kivu, Sud Kivu, N o r d Equateur, N o r d Katanga, N o r d Kasai Oriental. As revised, this PDO is in l ine with the government strategy o f creating an environment for an economic and social reunification o f the country.

BACKGROUND AND REASONS FOR RESTRUCTURING

Objectives, Design and Scope

5. The objective o f the Project i s to assist the Borrower in its economic and social reunification efforts thereby stabilizing countrywide administration, through: (a) balance o f payments support; (b) institutional strengthening o f entities and governance systems throughout i ts territory; (c) infrastructure rehabilitation, (d) urban rehabilitation; and (e) community empowerment. The Project was approved by the Board o f Directors o n September 11,2003, for a total Credit amount o f SDR 35.7 m i l l i on (about US$50 mi l l i on equivalent) and a Grant amount o f SDR 117 m i l l i on (about US$164 m i l l i o n equivalent).

The Development Financing Agreement for the Project, between the Democratic Republic o f Congo (the Borrower) and the International Development Association (the Association) was signed o n September 22, 2003, and declared effective o n December 5, 2003. The in i t ia l closing date o f the Agreement i s September 30, 2008. A s o f M a y 30, 2008, SDR 35.7 m i l l i o n has been disbursed (representing 100 percent o f the Credit) and SDR 81.38 m i l l i on has been disbursed (representing about 69.5 percent o f the Grant).

6. The Project includes f ive components:

a- Balance of Payments support (BOP) (US$50 million equivalent) to assist the government in carrying out i ts Program

b- Institutional Strengthening (US$15 million equivalent): pr ior i ty areas were: (i) economic governance and reform -- improve revenue generation capacity (capacity for fiscal administration, customs administration, and the central bank, in eastern and northern provinces); (ii) improve capacity to manage public resources with a focus o n strengthening public resource management in reunified provinces; (iii) strengthen transparency by extending the scope o f the recent reforms to the entire country including the anti- corruption commission's activities, conducting audits o f tax and customs administrations, screening payrolls to help remove ghost workers, and building constituency for the fight o f corruption through information dissemination and public relations; (iv) improve public dissemination and economic debate; (v) support the PRSP process; (vi) support for forestry reforms (further work in this area i s being dropped under the proposed restructuring); (vii) reunite and decentralize publ ic institutions; and (viii) prepare engineering and other studies for preparing the extension o f the Emergency Multi-sector Rehabilitation and Reconstruction Program (EMRRP).

c- Infrastructure Rehabilitation (US$90 million equivalent): This component was to finance (i) rehabilitation o f a 750 km highway, the Kisanani-Beni road (RN4) at a cost o f US$42 m i l l i on equivalent; (ii) rehabilitation o f a 780 ktn highway, the Bukavu-Mbuj i - M a y i road (RN2) at a cost o f US$44 mi l l ion equivalent; (iii) rehabilitation o f a 10 km section o f RN1 highway including patching, backfill ing, cleaning o f ditches and maintenance o f shoulders (US$4 m i l l i on equivalent); and (iv) maintenance o f the rehabilitated R N 4 and RN2 roads for a two year period. Maintenance was to be also contracted through a performance-based arrangement with an agreed level o f service as part o f the contracts for the roads rehabilitation. Contractors were to re ly to a large extent o n communities living along the roads for such maintenance works. During project implementation, i t became clear that the number o f kilometers to be rehabilitated was more than anticipated at appraisal (1,779 km instead o f 1,540 km). In addition, under the Indigenous People Development Plan prepared for the Pygmies, a 155 km road linking Niania-Wamba-Maboma- Mungbere would be repaired where needed and two small wooden bridges would be built. The improvement o f this road wou ld benefit 16,000 Pygmies

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and would cost US$260,000. Management Plan (ESMP) would be prepared pr ior to launching the repairs.

An aggregated Environmental and Social

d- Urban Rehabilitation (US$30 million equivalent): (i) micro-grants (US$18 m i l l i on equivalent) to finance subprojects to develop and implement mechanisms for rehabilitation o f local infrastructure and service delivery in four large cities o f Bukava, Goma, Kindu and Kisangani, and (ii) micro-grants (US$10.5 m i l l i on equivalent) to finance subprojects to develop and implement mechanisms for rehabilitation o f local infrastructure and service delivery in eight smaller cities o f Bummba, Butembo, Isiro, Kalemie, Kalima, Kassongo, Lusambo and Uvira. Activities envisaged were education, health, community centers, water, markets, slaughterhouses, transport, energy, sewerage and drainage network rehabilitation, public squares, and other labor intensive projects. The focus was o n ensuring sustainable O&M o f the rehabilitated infrastructure. About US$1.5 m i l l i on equivalent was for project management.

e- Community Empowerment (US$lO million equivalent): sub-grants to communities to support participatory decision making and strengthen social capital, capitalize village assets, facilitate local recovery, improve service delivery in poor rural communities, inject liquidity in a cash deprived rural economy; and hence restore some purchasing power and revive monetary transactions.

7. The total project cost was US$214 m i l l i o n equivalent and it was fully financed by IDA (credit for the BOP support and a grant for the rest o f the project). Because o f the SDR/US dollar exchange rate movements the project has US$58.0 m i l l i on undisbursed as o f M a y 30, 2008 (and US$132.6 m i l l i on equivalent disbursed) f rom the Grant. The BOP support disbursed amount was equivalent to US$52.7 m i l l i on because o f the SDWS dollar rate. A s a result, in dollar terms, the total disbursed and undisbursed financing i s about US$243.3 million.2

8. The project i s being implemented by the Project Coordination Unit (UCOP), under the Ministry o f Planning. Implementation o f components 4 and 5 are entrusted to Delegated Contract Managers.

9. The main reasons for the proposed restructuring are (i) the inabi l i ty to finance, with the existing resources, the cost overruns associated with road works o n RN4 (Kisangani-Beni) road and 1,020 kilometers o n RN2 (Bukavu-Mbuji-Mayi); (ii) the high likel ihood that the R N 2 will be financed through the DRC-China Infrastructure Program; (iii) the recognition that managing the important forestry issues in D R C requires long term and comprehensive efforts that cannot be addressed through an emergency operation; and (iv) the need for the client to achieve in i t ia l results and sustainable outcome in view o f the fact that this operation i s one o f the f i rs t in the country fo l lowing the Bank’s re-engagement in DRC after more than ten years o f interruption.

The S D R N S dollar exchange rate rose from 1.4 at appraisal to 1.63 by M a y 30, 2008. 2

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PROJECT IMPLEMENTATION PERFORMANCE

10. In spite o f a very di f f icul t implementation environment, the overall project performance i s rated satisfactory and the overall, broad PDO is l ikely to be achieved. The positive project impact o n the ground can be clearly seen, even though a l l the works are not yet completed. The project has been instrumental in helping the country achieve the reunification o f i t s economic activities and has supported social reunification. The project has also contributed to jumpstarting the economy in the eastern part o f the country which had been cut o f f f rom the other parts o f D R C for several years. Thanks to the ongoing road rehabilitation, the project has enabled a population estimated at over six m i l l i on people to escape geographic isolation. Secluded inhabitants f rom the eastern part o f the country can n o w travel by car f rom Kisangani to Bafwasende and Beni to Nia-Nia for the first t ime since 1998 when only bicycles and motorcycles could be used. Goods and services are n o w available in areas l ike Bafwasende that could not have benefited f rom these services f ive years ago. Road traffic has resumed on the rehabilitated sections and vehicles can n o w travel at an average speed o f about 70 km/h. Transportation costs have been reduced by 40 percent as a result o f substantial time savings recorded in the movement o f people and goods. Before the project, i t took not less than five hours to cover 60 kilometers, but now, f ive hours are enough to cover 290 kilometers. The rehabilitation o f urban infrastructure has facilitated access to basic social services (education, health) in many urban centers. Finally, the project has financed 1,030 micro- projects which benefited more than 412,000 people.

1 1. Despite these results, the project has experienced the fol lowing constraints:

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Huge logistical problems encountered in moving heavy equipment, and acquiring goods and construction materials; Remote location o f project sites and size o f the country; Delays in implementing some o f the activities; Weak supervisory capacity f rom executing agencies; Cost overruns due to the lack o f detailed technical studies as a result o f the poor security conditions prevailing in the eastern part o f the country during project preparation. This will have an impact on the scope o f the road component; and Weak local capacity in c i v i l engineering activities: Works were carried out in an environment o f a weak local private sector and a local construction industry with a l imi ted number o f large scale local firms and/or subsidiaries o f international firms that lacks competitiveness as a result o f years o f conflicts that have plagued the construction industry.

Proposed Changes

12. The proposed changes will concern:

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(i) Reformulating the Project Development Objectives (PDO). The original PDO was too general and it was difficult to directly correlate project results and i t s objectives.

(ii) Adapting a new results framework to the new changed PDO in order to better capture achievements on the ground. In the revised results framework, particular focus i s given to providing a baseline and targeted value for each outcome. This aspect was not taken into account in the original results framework where baselines and targets were not clearly established and where most o f the indicators measured outputs. Arrangements have been made with the implementing agencies to closely monitor the impact o f the project, in accordance with the revised results framework.

(iii) Reducing the scope o f the works on the RN2 road. Delays in rehabilitation o f the RN4 (Kisangani-Beni) road and the RN2 (Bukavu-Mbuji-Mayi) road and the resulting cost increases mean that not all the planned work can be completed with the available resources. Thus, an agreement was reached between the Bank and the Government to complete the rehabilitation o f RN4 and to reduce works on the rehabilitation o f RN2 road on the Bukavu- Kasongo section at Kamituga @.e., at PK177) by discontinuing works on the Mbuj i -Mayi Kasongo section at Nkwawi (i.e,, at PK40). The Congolese government intends to complete the works on RN2 road with financing from China (this was officially confirmed to the Bank on July 17, 2008). As a result, the section to be rehabilitated on RN2 road will be reduced by 803 kilometers.

(iv) Cancelling the forest concessions sub-component. The Government and the Bank have agreed to cancel the forest zoning sub-component and instead provide support to the Ministry o f Environment in the forestry reforms. The original activities involved a complex set o f issues that would be better addressed in a comprehensive way and not through an emergency operation which cannot allocate the resources needed. Based on the above, the government and the Bank have concluded that this sub-component f i ts better in a specific operation and should be considered under the forest project under preparation.

(v) Reallocating the Grant proceeds. For the Grant, the reallocation proposed will help increase amounts available for Categories 2 (Works), 5(b) (Subprojects under Part E) and 6 (Operating costs). The total reallocation amount involved i s SDR 10,864,000 (9.3 percent o f the total Grant amount) as follows:

a) Increase Category 2 Works by SDR 14,319,000 to cover cost overruns and complete the revised agreed rehabilitation work program.

b) Reduce Category 3 Goods by SDR 5,536,000 to cover costs under the road component which i s in Category 2 (Works). No new purchases are

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expected under this category and reducing the financing will have no impact o n the outcome.

c) Reduce Category 4 Consulting Services by SDR 1,330,000 to cover costs under the road component.

d) Reduce Category 5(a) Urban subprojects by SDR 3,998,000; this category was overestimated and al l the sub-projects identified by the Implementing Agency are completed; increase Category 5(b) Community sub-projects by SDR 1,953,000, to complete ongoing works.

e) Increase Category 6 Operating Costs by SDR 892,000 to cover the cost o f managing the project during the extended period.

f ) Reduce Category 7 Unallocated by SDR 6,300,000 to cover costs under the road component and provide assistance to indigenous populations.

(vi) Extending the Project Closing Date to al low the completion o f delayed activities. The work program under the restructured Project wil l not be completed by the current Closing Date o f September 30, 2008. Specifically, rebuilding the Ruziz i power station will require an additional 21 months. W e therefore propose an extension o f the Closing Date o f the Development Financing Agreement until September 30, 2010. The Borrower has prepared an action plan acceptable to the Bank to complete a l l activities.

13. The arrangements above were discussed with the Government during the supervision missions in February and March, 2008. The Bank and Government agreed to complete the fo l lowing works within the extension phase: (i) finalize works o n RN4 and RN2 (as described above); (ii) rehabilitate the power supply station at Ruzizi I; (iii) extend electricity supply to Kindu; (iv) complete the construction o f the water supply systems in Kindu and Goma; (v) complete the rehabilitation o f the industrial avenue at Bukavu; (vi) Rebuild the Basoko School at Kindu; and (vii) provide assistance to the indigenous populations who may be negatively impacted by the opening o f the Kisangani-Beni road.

14. Analysis: The proposed changes will not have a major effect o n the original economic and social aspects o f the Project. The environmental category will remain as B because the changes are l imi ted to an existing road and the restructuring will not involve any exceptions to Bank policies, nor will i t have any impact or changes o n the policies that are already triggered or add new ones. In effect, the rehabilitation works which have already been planned during the original phase are not expected to produce any negative effects in terms o f land acquisition or displacement. However, should they become necessary during implementation; R A P s will be prepared where needed in accordance with the principals and requirements o f the RPF. In relation to road rehabilitation works, R A P s and EMPs have been prepared for the completed segments and were rated satisfactory by Bank supervision missions. For the remaining segments, the same process and procedures will continue. A Development Act ion Plan for the Pygmies has been

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prepared and approved and i s under implementation. The first supervision by the Wor ld Bank will take place in September 2008.

EXPECTED OUTCOMES

15. The outcome and intermediate outcome indicators have been redefined in accordance with the revised PDO. There i s a need to more accurately capture the project’s outcomes v ia the PDO and the key project indicators.

BENEFITS AND R I S K S

16. Benefits: As restructured, the project will help reduce the scope o f the infrastructure component and strengthen the linkage between the achievements on the ground, the current results framework and the PDO.

17. Risks: The main r isk which could jeopardize achievement o f the restructured PDO or outcome targets i s the possible delay in managing the administrative requirements associated with the cancellation and the signing o f addenda to some o f the contracts. There have been delays in completing the power and water subprojects because o f a weak response f rom the construction industry and cost overruns arising mainly f rom implementation delays. Sky rocketing o i l prices could also impact the completion o f the works as contractors may be tempted to renegotiate approved contracts. In addition to that, the fiduciary r isk i s high in the country. The team will closely monitor activities to ensure that works are completed within the extended period. Realistic cost estimates and contingencies based on recent experience have been prepared and annual technical audits, including selective post-procurement audits, will be conducted to ensure that works are properly implemented.

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Restructuring o f the DRC Emergency Economic & Social Reunification Support Project

ANNEX 1 : ASSESSMENT OF PROJECT ACHIEVEMENTS

1. Balance of Payments Support Component (US$50 million) providing budget support for critical imports has been fully disbursed. This component has been satisfactorily implemented. I t has improved the country’s ability to pay for i t s imports and ensure the stability o f the macro-economic framework. Audit o f the use o f budget support proceeds was unqualified.

2. Institutional Strengthening Component (US$15 million) which aims to complement existing capacity enhancement programs i s being implemented satisfactorily. The project portfolio to b e financed under the component included 44 activities covering six major sectors comprising: governance and economic reforms, support to PRSP process, support to forestry reforms, reunification and decentralization o f public institutions, preparation o f forthcoming programs and environmental and social protection. 25 projects accounting for a total commitment o f US$5.1 mi l l ion have been carried out. In total, 16 projects are being executed for a commitment o f US$9.2 million. These projects account for 64.3 percent o f the total commitment. Ongoing activities concern mainly: (a) support to the central Bank and the financial institutions, (b) funding the reform o f the procurement system, and (c) support to the forestry reforms. These activities are expected to be completed by late September 2008. The remaining three activities focus on logistic support to the General Directorate o f administrative and land revenues. Among the completed activities, i t i s important to mention the funding o f participatory consultations within the framework o f PRSP, support to institutions o f transition, organization o f a workshop on decentralization, technical studies for the preparation o f bidding documents in view o f the rehabilitation o f the R N 5 and RN6 roads, the draft procurement code as well as i t s eight enforcement decrees. The draft procurement code was sent to the parliament for adoption and i s expected to be adopted during the next parliamentary session in October 2008. The enforcement decrees will be enacted only after the procurement code has been adopted. The project financed preparatory studies for the Emergency Living Conditions and Improvement Support Project (ELCISP) which built on the experience o f three ongoing sectoral Bank-funded projects: the Emergency Economic and Social Reunification Project, the Emergency Multisectoral Rehabilitation and Reconstruction Project and the Emergency Urban and Social Reconstruction Project. This project i s being implemented in the western and southern parts o f the country. The legal review o f the logging concessions i s making good progress and the process i s expected to be completed by the end o f August 2008. Support provided to the financial institutions in the Eastern part o f the country has increased revenue collection by 68 percent on average compared to the forecasted 40 percent. However, several activities including the legal review o f the logging concessions and the procurement reforms have been delayed mainly due to the 2006 elections, political difficulties in making the new institutions operational, and challenges in the field. The disbursement rate o f this component i s 71 percent.

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3. Infrastructure Rehabilitation Component (US$90 million) which aims at rehabilitating 1,779 kilometers o f the interurban road network i s being implemented satisfactorily. Implementation delays experienced at the beginning o f the project were l inked to huge logistical issues associated with the remote location o f project sites, lack o f transportation facilities compounded by the poor security conditions prevailing in the areas and the poor organization o f the contractors. Commitments o n this component amount to US$98,417,492.3. About US$85,122,800 has been disbursed. As o f today, 896 km have been reopened out o f the expected 1,779 km, i.e., about 50 percent o f the in i t ia l objective. Considering the cost overruns recorded, fo l lowing an increase in ini t ia l contract quantities, rehabilitation o f 803 km cannot be funded. This reduction in the length o f the roads to be rehabilitated will mainly affect the rehabilitation o f RN2 road. Concerning RN4 road there are funds available to finance the works. Civil works o n RN4 are expected to be completed by late November 2008, during the period o f project extension whi le for the FCN2 road, works are expected to be completed by late August 2008. After the road completion, maintenance o f these roads will be ensured for a period o f one year. Within the framework o f the new road project funded by the Bank, a Road Fund is expected to be created to take in charge road maintenance. This Road Fund is expected to be operational by the end o f 2009. With regard to the program agreed with the government to complete the rehabilitation o f 976 km o f roads, an additional amount o f US$30.5 m i l l i on (including maintenance costs) i s needed within the reallocation (see Annex 5). As o f today, major sections o f the road network have been opened up to traffic, making a huge difference in the lives o f many poor communities that had been secluded for decades. The disbursement rate o f this component i s 88 percent.

4. Urban Rehabilitation Component (US$30 million) aims to help activate adequate implementation mechanisms for rehabilitation o f local infrastructure and service delivery in urban areas. This component was implemented by the two agencies as follows: Bureau Central de Coordination (BCECO) (US$2,688,000) and MODRU (US$27,312,000) As o f today, the works carried out by BCECO have been completed whi le those carried out by MODRU s t i l l has US$11,569,064, (i.e., 42%) to disburse. However, the fo l lowing large scale works amounting to US$14,400,000 are yet to be completed:

a- Rehabilitation o f the Ruziz i power station: US$6,250,000 b- water supply at Goma, Bukavu and Kindu: US$4,500,000 c- Power supply in Kindu: US$700,000 d- Rehabilitation o f the industrial avenue at Bukavu: US$2,500,000 e- Rebuilding the Basoko School at Kindu: US$450,000

Most bidding documents relating to these works have been launched and the sub-projects are expected to be completed during the extension period.

5. Completed infrastructure facilities include markets, health centers and schools in eight secondary urban centers. These infrastructure facilities have been transferred to the beneficiaries and are operational. The most noticeable achievements are the rehabilitation o f the Kisangani and Bukavu hospitals where occupation rates went up f rom 56 to 89 percent and f rom n o attendance to 70 percent respectively. In the schools

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rehabilitated in Goma, Bukavu, Kindu and Kisangani, the number o f pupils registered rose f rom 7,245 to 8,945, i.e. an increase o f 36 percent. The rehabilitation has also improved the learning and teaching conditions for pupi ls and teachers. Before the rehabilitation, 30 percent o f learning time was lost due to bad weather. Implementation progress i s moderately satisfactory due to delays described above and the disbursement rate o f this component i s 45 percent.

6. Community Empowerment Component (US$lO million) aimed at financing demand-based sub-projects in several remote rural locations. Despite concerns relating to the number o f geographic locations, lack o f access to the respective areas and the nature o f the interventions, progress in implementing this component has been satisfactory and interest and commitment f rom the communities have been very high. 1,030 sub-projects have been financed out o f 1,867 identified, for an amount o f US$6 mil l ion; with fishing, agriculture and animal husbandry representing 37 percent o f funded micro projects, 27 percent for social micro projects in health, education and water, and 7 percent o f the funds devoted to infrastructure micro projects l ike road rehabilitation and small drainage facilities. In the schools rehabilitated under this component, the number o f pupils registered rose by 35 percent. The activities carried out in the water sector contributed to a drastic reduction in water-related diseases in the ci ty o f Isiro from 8,637 cases before the project to 1,665 during the project. The disbursement rate o f the component i s 58.5 percent.

Environmental and Social Safeguards: Six Wor ld Bank safeguard policies were triggered during project preparation and the pertaining mit igation measures identified. The triggered policies are: 4.01 (Environmental Assessment), 4.04 (Natural Habitats), 4.1 1 (Cultural Property), 4.12 (Involuntary Resettlement), 4.20 (Indigenous Peoples), and 4.36 (Forests). Because o f the emergency status o f the project, the Environmental and Social Impact Assessment (ESIA) had to be prepared within the first six months o f project effectiveness. The Environmental Impact Assessment for Component 3 and the Environmental and Social management Framework for Components 4 and 5 required by OP/BP 4.01, the Resettlement Pol icy Framework (RPF), required by OP/BP 4.12 and the Indigenous Peoples Plan, required by OP/BP 4.20 were prepared. These documents were disclosed in D R C and at the Bank Infoshop. Copies were disseminated to NGOs, academics, Pygmy associations, and news agencies. Since there are n o new activities under the restructured project, the same safeguards documents will be used. The ESMF for components 4 and 5 address environmental issues related to the remaining works to be completed under the urban rehabilitation component as listed in paragraph 4. This E S M F will be reviewed during the next supervision mission in September and updated i f needed, mainly regarding the Ruziz i power plant, prior to the beginning o f the works. UCoP, the project management unit, along with the “Bureau de Controle” are in charge o f monitoring the implementation o f the mit igation measures which are to be completed by the contractors before launching construction works. SOFRECO, an international environmental and social consulting firm has been hired to assist and train UCoP staff, the contractors and the Bureau de Control in the areas o f environmental and social impact and management as w e l l as Bank safeguards, in terms o f procedures and requirements. During the last supervision mission, site visits did not reveal major environmental and social problems. The environmental and social aspects o f the project have improved

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since the Inspection Panel investigation. An action plan for the pygmy population aimed at promoting citizenship education, improved housing and access to basic services, especially women’s health, has been developed and approved by the Bank. A Non- Governmental Organization (NGO) has been recruited to implement this action plan. The Environmental and Social Management Framework accompanied with additional mit igation measures in the f ield was also reviewed by the Bank and considered as satisfactory. To reduce the negative impact o f the Kisangani-Beni road on the forest reserve, the project financed the acquisition o f some vi ta l equipment and activities (communication devices, vehicles, sensitization campaigns, etc), the construction o f a control faci l i ty at the entrance and exit o f the reserve, and the pertaining recurrent cost. This financing has helped the reserve management to better protect the forest reserve Furthermore, to take into account the recommendations o f the EISA, the Contractor, the supervising consulting firm and the forest reserve management team set up an ‘Environmental Committee” to prepare plans and follow-up o n their implementation. Specific recommendations regarding the safeguards management issues were included in the contract and a dedicated specialist was hired to implement them during construction even though more capacity would be needed. The supervising firm also appointed an environmental specialist to deal with these issues during construction and the recommended actions f rom the E ISA have been gradually implemented The Resettlement Act ion Plans (RAPS) and Environmental Management Plan (EMP) have been prepared for each 30 km segment o f roads. Training and technical assistance activities have also been developed and are under implementation. The Bank has increased i ts safeguards supervision missions. A s part o f funds reallocation, a budget o f US$2 m i l l i o n has been put aside to finance the environmental and social measures, main ly in the area o f logging and poaching. This budget will finance sensitization campaigns, help the Ministry o f Environment to better fight against logging and poaching and provide logistical support to the Ministry o f Environment. The environmental and social safeguards were rated moderately satisfactory and will be upgraded, once the action plan for the pygmies i s implemented o n the ground in the next two months.

7. Financial Management: The proposed financial management will fo l low the same approach as the implementation arrangements in place for the ongoing Project. These are considered appropriate by IDA, having been improved through the implementation o f the action plans prepared by the project fo l lowing IDA supervision missions and previous audit reports. The audit report for the period ended Dec 3 1,2007, was unqualified. The Inter im Un-audited Financial Reports (IFR) are submitted to the Bank regularly in a form and substance that complies with IDA Financial Management requirements, and are current. The FM rating o f the project i s deemed Moderately Satisfactory based o n the findings o f the supervision mission carried out in March 2008.

8. Procurement: Procurement plans are regularly updated and there i s a good filing system in place for bidding documents. The last independent review o f procurement procedures did not revealed any major problems.

9. and two that deal with annual audits are ongoing.

Legal covenants: Out o f the seven legal covenants, f ive have been complied with

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ANNEX 2: RESULTS FRAMEWORK OF RESTRUCTURED PROJECT

PDO Assist the Borrower in i t s efforts to economically and socially reunify the Eastern provinces to the rest o f the country; and increase access to infrastructure services in the provinces o f Orientale, Maniema, Nord Kivu, Sud Kivu, N o r d Equateur, Nord Katanga, Nord Kasai Oriental

Intermediate Results One per Component Component 1: Balance o f payments support component for critical imports Component 2: Institutional Strengthening

Component 3 Infrastructure Rehabilitation component Component 4 Urban Rehabilitation

Component 5: Community Empowerment

dica Number o f people in the previously isolated provinces having access to 2 17km o f rehabilitated sections o f RN2 and 750km o f RN4;

Increase percentage o f fiscal revenues collected in the reunified provinces;

Increased access to water supply in areas benefiting f rom water services;

Increased access to health facilities in selected communities (urban centers);

Increased access to improved school facilities in selected communities;

Reduction o f the percentage o f learning time loss due to bad weather at selected schools;

Number o f communities successfilly implementing projects in the isolated rural areas. Results Indicators for Each Component The budget has been fully disbursed

Legal review o f the logging concessions completed; New procurement code adopted by the government; PRSP adopted by the Government. Average speed o f 25 km/hour o n the rehabilitated sections o f RN2 and RN4 rehabilitated A t least 80% o f the rehabilitated urban infrastructure are operational

At least 500 communities in eligible areas have benefited f rom Micro- grants.

Use of Results Information T o verify implementation performance and impact o f the Project.

T o assess impact o f works on, access to potable water supply, schools, health centers and roads services.

Use o f Outcome Monitoring

Audit o f payments

Annual project report

On site survey



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Arrangements for results monitoring

Data Collect Frequency and Reports Annual

o and Reporting Data Collection Outcome Indicators Baseline Responsibility

for Data Instruments Collection UCOP Number o f people in the

previously isolated provinces having access to 2 17km o f rehabilitated sections o f RN2 and 750 km o f R N 4 Percentage increase o f fiscal revenues collected f rom the financial institutions o f the reunified urovinces

6,000,000 people Survey o f served areas

None

Annual Survey o f supported institutions

Level o f revenues in 2003

50% UCOP

Annual On site survey Percentage o f population benefiting f rom water supply rehabilitation works in the targeted cities Percentage o f number o f people using the health centers rehabilitated Reduction in the percentage o f learning time loss due to bad weather in the schools rehabilitated

39% 60% UCOP

50% 70% Annual On site survey UCOP

Annual On site survey UCOP 30%

500

0%

5 00 Annual On site survey Number communities supported in the isolated rural areas Results Indicators for Each Component

UCOP

Baseline Data Collection Instruments

At end of component Implementation

Frequency and Reports

ility

Component 1: Balance o f payments support component for critical imports. Amount o f budget disbursed to support critical imports

US$50 mi l l ion

Annual l l S 9 5 0 mi l l ion Audit o f payments

Contracted Auditor

Component 2: Institutional Strengthening Number o f institutions supported by the project Number o f concessions recalled Component 3 Infrastructure Rehabilitation component Number o f kms o f roads in

5 5 Annual UCOP

156 156 Annual UCOP

750 km 750 Annual On si te survev UCOP

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R N 4 Number o f kms o f roads in RN2 Umber o f kms o f roads in RN1

Urban Rehabilitation Increase in number o f schools rehabilitated Increase o f number o f health centers rehabilitated Number o f kilometers o f newlyhehabilitated water supply network Component 5:

Empowerment

Component 4

community

500 Number o f sub-projects financed and successfully completed

Annual

217

9

43

18

0

500

217

9 I Annual

Annual

41 km I Annual

O n site survey

O n site survey

O n site survey

O n site survey


UCOP

UCOP

UCOP

UCOP

UCOP

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ANNEX 3: SUMMARY OF PROPOSED CHANGES

W h a t has changed 1. Development Objective has been reformulated to make i t more specific.

2. The indicator relating to j o b creation opportunities has been cancelled.

3. The indicator relating to the increase in and in the quality o f basic services has been better specified through the funded activities (water, education, health, roads).

4. The indicator relating to the creation o f new forest concessions has been cancelled 5. The number o f kilometers o f roads to be rehabilitated was reduced.

6. The indicator relating to the reunification and decentralization o f key institutions was better specified through the functioning o f k e y services in eastern regions through financial institutions.

7. Safeguards (social and environmental) aspects have not changed. 8. Fiduciary aspects have not changed, but a reallocation i s proposed. 9. Closing date was scheduled for September 30, 2008.

Comments The last part o f the original PDO “through: (a) balance o f payment support; (b) institutional strengthening o f entities and governance systems throughout i ts territory; (c) infrastructure and urban rehabilitation; and (d) community empowerment.” This i s not the PDO but a means o f achieving the PDO (specifically the components o f the project). So i t was dropped out the project. The reformulated PDO gives a definition o f the actual impact expected (the changes induced by the project) rather than the means. This indicator objective i s achieved through the works carried out and micro credits granted to the communities. The performance indicators achieved t h the different basic social services can b e measured.

The forest concessions sub-component was cancelled. Due to cost overruns the number o f kilometers o f roads to be rehabilitated was reduced f rom 1,779 to 976 km. During the conflicts, financial services in the eastern region were not operational and revenues were not collected by the public fiscal services. The indicator relating to the increase in revenues proves that these services are functioning and have also been effective in reunifying the country. The social safeguards provisions have not changed.

Annex 4 provides a summary o f the original project costs versus the proposed project costs by category. An eighteen-month extension i s proposed. The new closing date i s September 30, 2010.

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1.

Current Credit Allocated SDR '

35,700,000

2.

3.

Current Grant Allocated SDR

7 1,700,000

8,000,000

4.

Proposed Grant Amount SDR

86,019,000

2,464,000

17,070,000

1,402,000

5.

% o f Expenditure to be Financed

100% o f foreign expenditures

100%

100%

100%

100% o f amounts disbursed

6. 4,492,000

7.

100%

Total


ANNEX 4: REVISED TABLE OF EXPENDITURES CATEGORIES OF THE PROJECT

Category

Eligible imports required for Part A o f the Project as specified in the Annex to this Schedule Works

Goods

Consultants' services and audits

Micro-Grants for:

(a) Subprojects under Part D o f the Project (b) Subprojects under Part E o f the Proiect Operating Costs

Unallocated

18,400,000

5,400,000

I 3,600,000

I 6,300,000

35,700,000 I 117,000,000

Proposed Credit Amount SDR 35,700,000

3 5,700,000

5,553,000

O 1

117,000,00 0 I

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Components Appraisal Estimate ActuaVLatest Estimate

(US$ million)

Balance o f payments 50,000,000 support

Infrastructure Rehabilitation

(US$ million)

52,700,000

90,000,000

Institutional Strengthening

120,500,000

15,000,000 17,300,000

Urban Rehabilitation

Community Empowerment

Operating Costs

30,000,000

10,000,0003 12,900,000

5,000,000 7,400,000

32.5,00,000

Unallocated 14,000,0004 - Total 214,000,000 243,000,000

Ths amount was not accurately converted to SDR equivalent in the DCA. The amount in the D C A i s

Ths figure i s not accurately converted to SDR equivalent in the DCA. The amount in the D C A i s overstated.

understated.

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ANNEX 6: RESULTS FRAMEWORK OF RESTRUCTURED PROJECT

PDO Assist the Borrower in i t s efforts to economically and socially reunify the Eastern provinces to the rest o f the country; and increase access to infrastructure services in the provinces o f Orientale, Maniema, N o r d Kim, Sud Kim, Nord Equateur, N o r d Katanga, N o r d Kasai Oriental

Intermediate Results One per Component Component 1: Balance o f payments support component for critical imports.

Component 2: Institutional Strengthening

Component 3 Infrastructure Rehabilitation component Component 4 Urban Rehabilitation

Component 5: Community Empowerment

isolated provinces having access to 217km o f rehabilitated sections o f RN2 and 750 o f RN4;

Percentage increase o f fiscal revenues collected in the reunified provinces;

Increased access to water supply in areas benefiting f rom water services;

Increased access to health facilities in selected communities (urban centers);

Increased access to improved school facilities in selected communities;

Reduction o f the percentage o f learning time lost due to bad weather at selected schools;

Number o f communities successfully implementing projects in the isolated rural areas. Results Indicators for Each Component The budget has been fully disbursed.

Legal review o f the logging concessions completed; N e w procurement code adopted by the government; PRSP adopted by the Government. Average speed o f 25 W h o u r on the rehabilitated sections o f RN2 and RN4 rehabilitated At least 80% o f the rehabilitated urban infrastructure are operational

At least 500 communities in eligible areas have benefited f rom Micro-grants.

Status of implementation 1,900,000 people in RN4 4,500,000 people in RN2

68%

Projects not yet implemented

60%

30%

30%

1,030

Status of implementation

The amount disbursed for BOP support i s equivalent to US$52.7 mi l l ion compared to US$50 mi l l ion anticipated because o f changes in the SDFUUS$ rate The process i s ongoing

The draft code i s submitted to the parliament for adoption.

7 0 W h

60%

1,030 communities have benefited f rom Micro-grants.

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