AFRICAN DEVELOPMENT FUND Language : English

Original: English

ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

APPRAISAL REPORT

INFRASTRUCTURE DEPARTMENT NORTH, EAST AND SOUTH, ONIN JUNE 2005

TABLE OF CONTENTS

1 BACKGROUND ...........................................................................................................1

2 THE WATER SECTOR ................................................................................................1

2.1 Main Sector Issues: Resources, Institutions, Socio-Economic Aspects, Policies and Sector Development Programme ...............................................................................1

2.2 Major Related Programmes and Projects Financed by Donors ...............................8

3 THE RURAL WATER SUPPLY AND SANITATION SUB-SECTOR....................10

3.1 Institutional Framework ..........................................................................................10

3.2 Access to Rural Water Supply and Sanitation Services ...........................................12

3.3 The National Rural Water Supply and Sanitation Programme (2005 to 2015) ......15

4 THE SHORT-TERM RURAL WATER SUPPLY AND SANITATION PROGRAMME (2005-2007).......................................................................................19

4.1 Programme Concept and Rationale.........................................................................19

4.2 Goal and Targets .....................................................................................................21

4.3 Strategic Context......................................................................................................22

4.4 Programme Description...........................................................................................23

4.5 Beneficiaries and Target Population .......................................................................24

4.6 Impact on Cross Cutting Issues ...............................................................................24

4.7 Cost Estimates for the Short-Term Programme.......................................................28

4.8 Financing Plan.........................................................................................................28

5. PROGRAMME IMPLEMENTATION.......................................................................29

5.1 Executing Agency.....................................................................................................29

5.2 Institutional and Implementation Arrangements .....................................................29

5.3 Supervision and Implementation Schedule ..............................................................32

5.4 Procurement Arrangements .....................................................................................32

5.5 Disbursement Arrangements....................................................................................34

5.6 Monitoring and Evaluation......................................................................................35

5.7 Reporting and Auditing............................................................................................36

5.8 Aid-Coordination .....................................................................................................36

6. PROGRAMME SUSTAINABILITY AND RISKS....................................................37

6.1 Sustainability............................................................................................................37

6.2 Risks .........................................................................................................................38

7. IMPACT EVALUATION ...........................................................................................38

8. CONCLUSIONS AND RECOMMENDATIONS ......................................................40

8.1 Conclusions..............................................................................................................40

8.2 Recommendations and Conditions for Grant Approval...........................................40

LIST OF TABLES

Table 2.1 2004 Population Estimates by Region Table 2.2 Summary of Investment Plan for WSDP (US$ million) Table 3.1 Short Term, Medium Term and Long Term MDG Targets Coverage Estimates Table 3.2 Summary Programme Cost Estimates by Component Table 3.3 Average per capita cost by type of scheme Table 3.4 Comparison of Funding Needs and Available Funding for 2005 - 2007 Table 4.1 Government’s Budget Allocation Formula Table 4.2 Short Term Programme Cost Estimates by Component Table 4.3 Short Term Programme Cost Estimates by Category of Expenditure Table 4.4 Short Term Programme Financing Plan by Source of Finance Table 5.1 Summary Procurement Table

ANNEXES

Annex 1 Map of Ethiopia Annex 2 Organogram of MOWR Annex 3 Bank Group Financing in Ethiopia Annex 4 Technology Choices Annex 5 Environmental and Social Management Plan Summary Annex 6 Detailed Cost Estimates Annex 7 Cost Estimates, Expenditure Schedules, Procurement Table for ADF Financing Annex 8 Programme Organisational Chart Annex 9 Implementation Schedule Annex 10 Indicators Annex 11 Computation of EIRR and Assumptions This Pre-Appraisal Report was prepared by Messrs. Sering Jallow, Principal Sanitary Engineer (Ext. 2334) and Lamin Barrow, Senior Financial Analyst (Ext. 2592), following a mission to Ethiopia in June 2005. All enquiries should be addressed Mr. A. Rakotobe, Director, ONIN (Ext. 2040) or Mr. N. Matondo Fundani, Manager, ONIN.2 (Ext. 2191) or the authors.

AFRICAN DEVELOPMENT FUND

BP 323, TUNIS, TUNISIA Tel: (216) 71 10 23 34 Fax: (216) 71 33 36 80

PROGRAMME INFORMATION

This information given hereunder is intended to provide some guidance to prospective suppliers, contractors, consultants and all persons interested in the procurement of goods and services for projects approved by Boards of Directors of the Bank Group. More detailed information and guidance should be obtained from the Executing Agency of the Recipient

1. COUNTRY : Federal Democratic Republic of Ethiopia:

2. NAME OF PROJECT : Rural Water Supply & Sanitation Programme

3. LOCATION : Throughout the country

4. RECIPIENT : Federal Democratic Republic of Ethiopia

5. EXECUTING AGENCY : Ministry of Water Resources (MOWR)

P.O. Box 5744, Addis Ababa, Ethiopia Tel: +251 (0)1 625516 Fax: +251 (0)1 610885

6. PROGRAMME DESCRIPTION : Programme Components include:

A) Provision of new and rehabilitation of existing water supply facilities;

B) Provision of latrine facilities to schools, health centres, communal latrines in crowded settlement area, and demonstration latrines for associations, cooperatives and communities, and conduct hygiene promotion and health education campaign;

C) Capacity building: Community sensitisation, awareness raising, organization, training in water supply and sanitation management, operation and maintenance; Capacity building at the MOWR, MOH, Regional Water Bureaus, Regional Health Bureaus, Woreda Water Desks and Woreda Health Desks and Woreda Support Groups; Capacity building for Community Facilitation Teams, Local Service Providers, artisans, Health Extension Workers and spare parts suppliers for development of supply chains.

D) Programme Support at the federal and regional government level institutions, and for communities in the form of office equipment, furniture, transportation; establishment of a database, technical and financial audits, Monitoring & Evaluation, and Technical Assistance to MOWR.

7. SHORT-TERM PROGRAMME COST : UA 180.37 million

Foreign Component : UA 59.93 million

Local Component : UA 120.44 million

ii

8. BANK GROUP FINANCING

GRANT : UA 43.61 million

9. OTHER SOURCES OF FINANCE

OTHER DONORS : UA 80.36 million

GOVERNMENT : UA 46.22 million

COMMUNITIES : UA 10.17 million

10. DATE OF APPROVAL : December, 2005

11. ESTIMATED START DATE AND DURATION : January 2006, 30 months (implementation of the

WB financing commenced in July 2005)

12. PROCUREMENT : In accordance with the Bank's Rules of Procedure for the procurement of Goods, Works and Services and the Government’s Procurement Rules.

Civil works : Mostly NCB, some ICB and direct negotiation.

Goods : Mostly NCB with some ICB and International shopping (IS) and National Shopping.

Consultancy services : Short-listing.

13. CONSULTANCY SERVICES : Needed for studies, scheme designs, capacity building, community sensitization and mobilization, project audits, reviews and supervision of works.

iii

EQUIVALENTS AND ABBREVIATIONS

CURRENCY EQUIVALENTS

(June 2005)

1 UA = USD 1.47495 1 UA = ETB 13.0821

WEIGHTS AND MEASURES

l/c/d = litres per capita per day m3 = cubic metre m3/d = cubic metre per day Ml/d = thousand cubic metres (million litres) per day Mm3 = million cubic metres Km = kilometres

ABBREVIATIONS AND ACRONYMS

ADF = African Development Fund DRA = Demand Responsive Approach ESIA = Environmental and Social Impact Analysis ESMP = Environmental and Social Management Plan ESRDF = Ethiopian Social Rehabilitation and Development Fund ETB = Ethiopian Birr EU = European Union FINIDA = Finnish International Development Agency FMP = Facilities and Management Plans GOE = Government of Ethiopia HEHD = Hygiene and Environmental Health Department ICB = International Competitive Bidding IDA = International Development Association JICA = Japan International Cooperation Agency MOFED = Ministry of Finance & Economic Development MOWR = Ministry of Water Resources NCB = National Competitive Bidding NGO = Non-Governmental Organisation ODA = Official Development Assistance OMSU = Operations and Maintenance Support Unit PID = Project Implementation Document PCU = Programme Coordination Unit PSC = Programme Steering Committee RHB = Regional Health Bureau RWB = Regional Water Bureau RWSS = Rural Water Supply and Sanitation RWSSD = Rural Water Supply and Sanitation Department SNNR = Southern Nations and Nationalities Region STP = Short Term Programme TA = Technical Assistance UNDP = United Nations Development Programme UNICEF = United Nations Children’s Fund UWSS = Urban Water Supply and Sanitation WHD = Woreda Health Desk WHO = World Health Organization WRDF = Water Resources Development Fund WSDP = Water Sector Development Programme WSSP = Water Supply and Sanitation Programme WWD = Woreda Water Desk

iv

v

MPDE Matrix for Short-Term Water Supply & Sanitation Programme (2005 – 2007)

Hierachy OF Objectives Expected Results Reach Objectively Verifiable Indicators Means of Verification Assumptions/Risks Sector Goal 1. To improve social

well being, enhance national economic performance and ensure equitable provision of adequate water and sanitation services to all competing users at affordable cost and on a sustainable basis.

1. Healthier population with easier access to water supply and sanitation

1. Rural population

2. Rural Population

3. Rural population

1. Rural water supply coverage increased to meet the MDG targets: from 24% in 2004 to 35 % in 2008, 45% in 2010 and to reach 62% of the population by 2015.

2. Rural sanitation coverage increased to meet the MDG targets: from 8% in 2004 to 21% in 2007, 32% in 2010, and to reach 54% by 2015.

3. Incidence of water borne diseases halved by 2015; from 60% of the population in 2004, to 45% in 2007, 40% in 2010, and to reach 30% by 2015.

1. National statistical reports.

1. High level of public expenditure and donor support maintained for the water and social sectors.

Programme Objectives (Medium Term Outcome) 1. To improve access to

rural water supply and sanitation in Ethiopia, thereby contribute to the achievement of water related MDGs .

1. Increased water

supply coverage within easy reach

2. Increased sanitation coverage

3. Improved

information about the water sector

1. An additional 8.12

million rural people served.

2. outreach to 8.4

million people in rural areas

3. Federal, regional

and local Government institutions

1.1 Rural Water Supply access increased from 24% to

35% by mid 2008. 1.2 Average distance to nearest water points reduced

from 3km. in 2004 to 1 km by mid 2008. 1.3 Average travel time of women and children to water

points reduced from 3 hours in 2005 to 1 hour in Participating Woredas by mid 2008.

1.4 Per capita water consumption increased from about 10 l/c/day in 2004 to 20 l/c/day by mid 2008.

2.1 Sanitation coverage increased from 8% to 21% and

Improved hygiene and Sanitation practices adopted by mid 2008.

3.1 Effective M&E System in place 3.2 Improved information about the sector

1. Programme

Completion Report

2. National/Regional statistical reports.

3. Audit reports.

1. Government remains committed to increasing access to water and sanitation services at the national level.

vi

Outputs (Short Term Outcome) 1. Increased number of

effectively functioning Rural Water supply and sanitation schemes.

2. Capacity of

MOWR, RWBs, WWDs and beneficiary communities, local consultants and contractors and artisans enhanced.

3. Improved

community awareness of water quality and hygiene.

4. Improved

mechanisms for spare parts distribution to communities.

5. Improved and

decentralised database and MIS for RWSS coordinated by MOWR

1. Increased number

of effectively functioning Rural Water supply and sanitation schemes.

2. Capacity of

MOWR, RWBs, WWDs and beneficiary communities, local consultants and contractors and artisans enhanced.

3. Improved

community awareness of water quality and hygiene.

4. Improved

mechanisms for spare parts distribution to communities.

5. Improved and

decentralised database and MIS for RWSS coordinated by MOWR

1. 8.4 million rural

population, villages, schools, and clinics in rural areas.

2. MOWR and

MOH staff at federal, regional and district level, artisans, community representatives

3. 8.4 million rural

population and 96,000 Community representatives

4. Private entrepreneurs and 12,300 Rural Water committees

5. MOWR and MOH staff at federal, regional and district level.

1.1 Construction of 24,500 water points, 10,000

demonstration latrines and 6,500 communal latrines in schools, clinics and rural growth centres by mid 2008.

1.2 Up to 1.45 million improved traditional pit latrines constructed by communities with own financing by mid 2008.

1.3 Non-functional services reduced from 33% to 15% through rehabilitation of 1,550 water points by mid 2008;

2.1 15 staff of MOWR and MOH, 108 staff of RWBs and

RHBs and 5,500 staff of WWDs and WHDs, 800 artisans as LSPs, 600 CFTs, 52 WSGs trained and implementing the RWSS Programme by mid 2008.

2.2 About 96,000 community representatives, including 30% women, of 12,300 water committees trained and managing their own water services by mid 2008.

2.3 Increased number of contractors and consultants working on rural WSSP by mid 2008.

3.1 Over 100,000 community representatives receive

hygiene education by mid 2008 3.2 Field water quality testing on-going in 550 Woredas

by mid 2008 4.1 Spare parts available at community level by private

sector by mid 2008. 5.1 Computer hardware and software for database and

MIS installed at MOWR, MOH and RWBs, RHBs, WWDs, WHDs and staff trained to use them by mid 2008

1. Programme

Quarterly Progress Reports.

2. Supervision Mission Reports

3. National/Regional / District statistical reports.

4. Audit reports.

1. Government and Community contributions for O&M are sustained.

2. Trained staff of RWBs and WWDs are retained.

vii

Activities/Inputs 1. Procure the required

goods, works and services.

2. Rehabilitate existing rural water and sanitation services and construct new ones.

3. Sensitise Communities and train in scheme management.

4. Conduct Hygiene education.

5. Establish supply chains for equipment and spare parts.

6. Train, equip and organise artisans into local service providers.

Short-term programme costs: UA 180.37 million. Resources: Short-Term Programme ADF UA 43.61 million Other Donors UA 80.36 million GOE UA 46.22 million Communities UA 10.17 million Total: UA 180.37 million

1. Appraisal

Estimates 2. Approved

Government annual budgets

3. Audit Reports 4. Disbursement

Records 5. Quarterly

Progress Reports. 6. Supervision

reports

viii

EXECUTIVE SUMMARY

Background

Ethiopia is among the five countries selected for initial implementation of the Bank Group’s Rural Water Supply and Sanitation Initiative (the Initiative), which seeks to assist Regional Member Countries achieve the Millennium Development Goals (MDGs) and the African Water Vision targets for water supply and sanitation in rural areas. Since 1999, the Government of Ethiopia (GOE) has formulated a Water Resources Management Policy, Water Sector Strategies, Water Sector Development Programme, Water Supply and Sanitation Master Plan, and also articulated a National Water Supply and Sanitation Programme through a participatory process involving the key stakeholders. However, rural water supply and sanitation coverage ,at 24% and 8% respectively, is low. Under the National Water Supply and Sanitation Programme (NWSSP), GOE intends to increase the national coverage to 62% and 54% respectively by 2015, through application of the Demand Responsive Approach (DRA) to services delivery.

The financing requirements for the NWSSP are quite high, with the cost of the Rural Water Supply and Sanitation Programme (2005-2015) alone estimated at UA 922 million (UA 83 million per annum). The total cost for the Short-term Programme (STP), which covers the period 2005/06 – 2007/08, is estimated at UA 214.56 million. Out of this amount, only UA 180.37 million is currently available from donors, NGOs, Government and the communities, which implies a financing gap of UA 34.19 million. The Programme costing is based on the available funding.

Purpose of the ADF Grant

The purpose of the UA 43.61 million ADF grant is to co-finance the Short-Term Programme.

Programme Objective

The objective for the STP is to improve access to rural water supply and sanitation services in Ethiopia, thereby contribute to the achievement of water related MDGs.

Programme Components

The Programme components include:

A. Provision of new and rehabilitation of existing water supply services;

B. Sanitation: Provision of latrine facilities for schools, health centres, communal latrines in crowded settlement areas, and demonstration latrines for associations, cooperatives and communities, and conduct hygiene and health education campaign;

C. Capacity Building: Community sensitisation, awareness raising, organization, training in water supply and sanitation; Capacity building at the MOWR, MOH, Regional Water Bureaus, Regional Health Bureaus, Woreda Water Desks and Woreda Health Desks and Woreda Support Groups; Capacity building for Community Facilitation Teams, Local Service Providers, artisans, Health Extension Workers and spare parts suppliers for development of supply chains.

ix

D. Programme Support at the federal, regional and local government level institutions, and to communities; Establishment of a database, annual financial and technical audits; Monitoring and Evaluation; and Technical Assistance to MOWR and MOH.

Programme Costs

The cost of the STP, which covers the period 2005/06 – 2007/08, is based on the available funding of UA 180.37 million, of which 36% is in foreign costs and 64% in local costs.

Source of Financing

The STP will be parallel co-financed by the ADF, other donors, GOE, NGOs and the beneficiary communities. ADF will contribute UA 43.61 million (24%); other Donors will contribute UA 80.36 million (45%), GOE UA 46.22 million (26%), and UA 10.17 million (5%) by the communities.

Programme Implementation

Programme implementation for the ADF financing of the water supply component will utilise existing institutional structures and funds flow channels at the Federal, Regional and Woreda (District) levels as well as the Implementation Manuals, Financial Management Manual and Procurement Manual developed for the National Water Supply and Sanitation Programme. The sanitation component will utilise the institutional structures, implementation manuals and materials developed by the Government and UNICEF. The Ministry of Water Resources (MOWR); supported by the Ministry of Health (MOH), will serve as the Executing Agency for the Programme. The Programme Coordination Unit already established in the MOWR will be expanded to include MOH and MOFED. The Rural Water Supply and Sanitation Department (RWSSD) of MOWR and the Hygiene and Environmental Health Department (HEHD) of MOH will serve as Programme Implementation Units at the Federal level while the Regional Water Bureaus and Regional Health Bureaus will serve as PIUs at the regional level with the Woreda Water Desks and Woreda Health Desks serving as Implementing Agencies at the district level. The flow of funds and the financial management will be through the Ministry of Finance and Economic Development (MOFED) and regional and woreda Bureaus of Finance and Economic Development (BOFED).

Conclusions and Recommendations

The state of water sector policy and institutional reforms in Ethiopia is fairly advanced. However, the low level of access to water supply and sanitation services in the rural areas, where 84% of the population live, calls for urgent actions to put the country on a sustainable path to achieving the water and sanitation MDGs. The Programme design, which is based on the Demand Responsive Approach, will permit the communities to make informed choices about the types and levels of services to be provided, taking into consideration their affordability. Moreover, it gives the communities ownership and responsibility for operating and managing the selected options. The Programme is technically feasible, economically viable (ENPV=ETB 2.82 billion and EIRR= 38%), environmentally sustainable and provides significant socio-economic benefits. The Programme will also impact positively on the achievement of the other MDGs including reducing extreme poverty and hunger, promoting gender equality and empowerment of women, reducing child mortality, improving maternal health and combating malaria.

x

It is recommended that a grant not exceeding UA 43.61 million from ADF resources be extended to Federal Democratic Republic of Ethiopia for the purpose of implementing the RWSSP as described in this report, subject to the following grant conditions:

Grant Conditions

a) Conditions Precedent to Entry into Force

This Protocol Agreement shall enter into force upon signature by the Recipient and the Fund.

b) Conditions Precedent to First Disbursement

The Fund’s obligation to make the first disbursement of the Grant to the Recipient shall be conditional upon the entry into force of this Protocol Agreement as set forth in section 3.01 above and to the fulfilment by the Recipient of the following conditions: (i) Provided evidence satisfactory to the Fund of the opening of Special Accounts at the

National Bank of Ethiopia, managed by Ministry of Finance and Economic Development (MOFED) and which are acceptable to the Fund, as follows: (a) a foreign currency account for the deposit of proceeds of the Grant; and (b) a local currency account into which funds from the afore-mentioned foreign currency account shall be transferred to cover eligible expenditure in local currency;

(ii) Provided evidence satisfactory to the Fund, of having established a Programme Steering Committee (PSC) comprising of senior officials from the following organisations: MOWR (chair), Ministry of Finance and Economic Development (MOFED), Ministry of Health (MOH), Ministry of Education (MOE), and one representative from each of the Regional Administrations, with the Programme Coordinator from MOWR as ex-officio secretary; and

(iii) Provided evidence of having designated the Team Leaders for the MOWR and MOH

Project Implementation Units (PIUs) whose qualifications and experience are acceptable to the Fund.

Undertaking

The Recipient undertakes that it will ensure that: (i) funds held in the Special Accounts cannot be used, set-off or blocked for any purpose other than that of the Grant; (ii) prompt monthly statements of account will be issued to the Fund; and (iii) authorized Fund staff and appointed auditors will have access to the Special Accounts and related documents.

1 BACKGROUND

1.1 The Bank Group has developed a Rural Water Supply and Sanitation Initiative (RWSSI or the Initiative) to assist Regional Member Countries achieve the African Water Vision and Millennium Development Goals (MDG) for water supply and sanitation in Africa. Ethiopia is among the five countries selected to start the Initiative as the country meets the requirement of being advanced in the development of sector policies and strategies. Besides having prepared a Water Sector Development Programme and Water Supply and Sanitation Master Plan, the Government of Ethiopia (GOE) has also put in place a decentralized institutional framework that is suitable for scaling-up the implementation of the National Rural Water Supply and Sanitation Programme.

1.2 Ethiopia is among the poorest countries in the world, ranking 170 out of 177 in the UN Human Development Index, and is the second most populous countries in Africa (population estimated at 71 million). Yet Ethiopia’s rural populations are among the least served, with rural water supply and sanitation access at only 24% and 8% respectively.

1.3 Following initial consultations with GOE, the Bank fielded a Preparation mission in August 2003 to support the Government’s RWSS Programme. Pre-Appraisal and Appraisal missions were subsequently launched in November 2004 and June 2005 respectively, and this Report is the outcome of these missions.

2 THE WATER SECTOR

2.1 Main Sector Issues: Resources, Institutions, Socio-Economic Aspects, Policies and Sector Development Programme

2.1.1 Water Resources: Ethiopia has abundant water resources, with a per capita renewable fresh water resources from 9 river basins estimated at 1,924 m3/year. However, the uneven spatial and temporal occurrence and distribution constitute the main water resources problem. Between 80% to 90% of the surface water potential comes from the 4 major river basins of Abbay (Blue Nile), Tekeze, Baro-Akobo and Omo-Gibe in the western and south-western parts of the country where rainfall is highest but where less than 40% of the population live. The remaining 10% to 20% of the water resources is found in the east and central river basins, where 60% of the population live. The true groundwater potential is not known but is estimated at 2.6 billion m3. However, yields from most aquifers are low, providing less than 5 l/s and the groundwater resources in some areas are too deep to justify economic exploitation.

2.1.2 Ethiopia has a huge irrigation potential, which is estimated at 3.73 million hectares (ha). However, only 186,500 ha (4.3%) is developed and accounts for about 3% of total food production, which includes 86,500 ha of small-scale irrigation and about 100,000 ha under medium and large-scale irrigation. Hydropower potential is estimated to be about 650 billion KWh/yr but only about 2.5% of this potential has been developed.

2

Key Sector Institutions

2.1.3 Ethiopia’s decentralised local government structure consists of federal level ministries, 9 Regional Administrations, 2 administrative areas (Addis Ababa and Dire Dawa), and about 550 Woreda (district) level administrations. Each Woreda consists of a number of Kebeles (villages), which is the lowest level of government at the community level.

2.1.4 Over the past 50 years, the institutional structure of the water sector has undergone significant changes. The Water Resources Department was established in 1956 under the Ministry of Public Works. This was followed by the establishment of the Ministry of Natural Resources in 1992 with the water administration as part of its mandate, and the establishment of the Ministry of Water Resources (MOWR) in 1995 with the Water Development Department, the Water Resources Department, the Water Works Construction Enterprise the Water Well Drilling Enterprise, as well as the Water Works Design and Supervision Enterprise created to undertake water resources development studies, and the design and supervision of water works.

2.1.5 In line with the Government’s ongoing decentralisation strategy, the responsibility for both urban and rural water supply was transferred to the regional governments in 1995 while the Addis Ababa Water Supply and Sewerage Authority (AAWSSA) remained an autonomous public Authority. Presently, the main institutional players in the water sector are the Ministry of Water Resources (MOWR), Ministry of Health (MOH), Regional Water Bureaus (RWBs), Regional Health Bureaus (RHBs), the Woreda Water and Sanitation Teams comprising Woreda Water Desks (WWD), Woreda Health Desks (WHD) and Woreda Administrations; the Water Resources Development Fund, the private sector, artisans, communities, NGOs and donors. NGOs and communities are more involved with rural water supply and sanitation activities and are discussed in more detail in Chapter 3.

Ministry of Water Resources

2.1.6 The Ministry of Water Resources is entrusted with the role of improving the sector by setting appropriate policies, strategies, goals, rules and regulations, standards and priorities. It also acts as regulator to remove legal obstacles for the involvement of the private sector and communities; providing/facilitating financing for new investments and rehabilitation of existing facilities; coordinator of efforts of the different players; monitoring of progress, and water quality control.

2.1.7 MOWR’s organogram, which is presented in Annex 2, shows that a number of departments have been created for these new tasks, including a Rural Water Supply and Sanitation Services Department. Under the new institutional set-up, MOWR’s role as implementer has ceased. Key functions now involve providing support to the regions, particularly the emerging regions of Afar, Somali, Benishangul and Gambela, to upgrade their skills, and providing support for training, water resources management planning, research and information documentation, donor coordination, monitoring and evaluation.

Regional Water Bureaus

2.1.8 Each of the 9 regions and the Dire Dawa Administrative Area has a Regional Water Bureau. In the smaller regions these are combined as Water, Mines and Energy Bureaus. Previously, RWBs roles included project implementation and scheme operation, but this has

3

changed to one of programme planning, management, coordination and capacity building in the region. RWBs are now responsible for approving the Woreda programmes as well as consolidating M&E reports of the Woredas for transmittal to MOWR.

2.1.9 The planning and management of town water supply and sewerage services are the responsibility of Town Water Boards who are expected to contract out operation and maintenance services to Town Water Utility Operators under performance or service contracts. Addis Ababa Water Supply and Sewerage Authority (AAWSA) has the responsibility for management of water and sewerage services in Addis Ababa.

Woreda Water Desks

2.1.10 In the evolving decentralized system, the Woredas are responsible for planning and managing their own programmes; financial and procurement management; monitoring and evaluation; and for contracting and supervising Local Service Providers at the Woreda and community levels. The Woreda Water Desk (WWD) is responsible for the promotion, planning and implementation of water supply activities within the Woreda, as well as the coordination of NGO activities in the Woreda; carry out simple feasibility studies and appraisals of simple projects; approve projects financed from the Woreda development budget; and ensure that schemes financed by others have been properly appraised and implemented to the required standards. WWDs will have a role in initiating, facilitating and providing motivation for community management of rural water services, the application of cost recovery principles, and in monitoring and evaluation. WWDs will be assisted by the regions and Woreda Support Groups (WSGs) to build capacity in preparing woreda level Water Supply and Sanitation Programmes. Communities will be assisted by Local Service Providers (LSPs) for developing proposals for water supply and sanitation schemes and the associated Facilities and Management Plans (FMPs). Maintenance work beyond the capabilities of the communities is currently undertaken by the RWBs, but in future will be outsourced to contractors and the Operation and Maintenance Support Units in the Regions. However, there are major capacity constraints in the WWDs, but the Government is actively pursuing efforts to strengthen their capacity through the national capacity building programme.

Ministry of Health

2.1.11 The Ministry of Health, through its Hygiene and Environmental Health Department (HEHD), has the primary responsibility for sanitation and hygiene promotion in the country. The instruments governing sanitation in the country are the Health policy, the Environmental Health policy the National Water Resources Management policy, and the recently developed Sanitation Strategy. The responsibilities of the MOH include: to Finalise and enact the sanitation and hygiene promotion strategy and guidelines through a consultative process; Develop the advocacy campaign – raise the sanitation profile, lobby for ear-marked funds, seek influential sanitation champions; Support the testing and development of appropriate IEC materials (PHAST approaches); Liaise closely with training institutions to ensure consensus on the sanitation strategy, the inclusion of ‘best’ practice in the curriculum and the equipping of extension staff with appropriate tools; Source funds from donors and the private sector – promote the sector wide approach; Support Research, development and dissemination

4

Regional Health Bureaus

2.1.12 The regional health bureaux will be the principal drivers of sanitation and hygiene promotion through their existing institutional mandates but working in tandem with water and education bureaux to ensure integrated planning and co-ordinated complementary activities. Their work will focus on strengthening woreda capacity and commitment through: Woreda mobilazation, advocacy, capacity building, research, monitoring and evaluation, planning, resource mobilization and support the development of sanitation and hygiene promotion technical manuals as well as guidelines for regulatory frameworks (with systems for enforcement). They will also be responsible for quality assurance.

Woreda Health Desks

2.1.13 The woreda administrator is the key body to spearhead sanitation and hygiene promotion throughout the woreda and to ensure targets set are achieved. The Woreda Health Desk will take the lead but work closely with the water, education and rural development desks. Under the programme, the Woreda Health Desks assisted by two Health Extension Workers in each Kebele and by two Village Health Motivators (volunteers) in each village will be responsible for the hygiene and health education campaign as well as social marketing and generating demand for sanitation. Many WHDs have the required capacity and there are on going programmes to increase capacity in the remaining WHDs.

Water Resource Development Fund (WRDF)

2.1.14 Under the new water policy, the regional administrations are responsible for financing water development projects in their regions from their Federal allocations. This has made it difficult for small regions with small Federal allocations to undertake major water development projects. To address this issue, the Government established the WRDF in 2002 to fund all manner of water sector projects on the basis of their prioritisation, financial and economic viability and the principles of cost recovery. WRDF is administered under a Board of Directors accountable to the Minister of Water Resources, and funds its activities from budgetary allocations by the federal government, grants and loans from foreign governments and international donor agencies, and other sources.

Private Sector

2.1.15 The private sector has been playing the role of consultants, contractors, suppliers of equipment and spare parts in the water sector. They have also played an informal role as water vendors in Addis Ababa, and in many towns and rural communities. Currently, local contractor capacity for drilling and other civil works is low and not likely to meet the requirements for achieving the MDGs considering the huge investment needs. Consultant capacity is also low but is expected to improve relatively fast as more work becomes available in the sector.

2.1.16 An important area of private sector participation will be in the supply of equipment and spare parts. Currently, while a number of suppliers of pumps exist in the country, and most spares can be found in the main cities and regional capitals, they are not always available in the remote communities who have to travel to the cities to secure supplies of minor spares. The low demand for these spare parts as well as the lack of standardization resulting in a multiplicity of pumps on the market prevents local entrepreneurs from stocking

5

them or knowing which types to stock. The Programme will increase the demand for pumps and support efforts to promote standardization of a few models, which will ease the choice of models to stock.

2.1.17 A hand pump manufacturing venture was established in Ethiopia in the 1970’s, but closed down after a few years because it was unable to compete with cheaper imports. With the increased demand, it may again be possible to re-establish it particularly if it targets neighbouring countries as well.

Socio-Economic Aspects

2.1.18 Ethiopia had a population of 71 million (2004) spread over an area of 1.13 million km2. About 59.9 million (84% of the population) is rural and the remaining 11.1 million (16%) is classified as urban. Table 2.1 below gives the 2004 population by region, and living in rural and urban areas.

Table 2.1: 2004 Population by Region Population Estimate by Region, in 2004

Region Population '000 % of Nation Rural Urban Total % Rural % Urban % of Total

Tigray 3,367 746 4,113 4.74 1.05 5.79 Affar 1,213 117 1,330 1.71 0.16 1.87 Amhara 16,138 2,005 18,143 22.71 2.82 25.53 Oromiya 21,891 3,207 25,098 30.80 4.51 35.32 Somali 3,438 671 4,109 4.84 0.94 5.78 Benishangul 538 56 594 0.76 0.08 0.84 SNNPRS 12,922 1,163 14,085 18.18 1.64 19.82 Gambela 191 43 234 0.27 0.06 0.33 Harari 71 114 185 0.10 0.16 0.26 Addis Ababa 0 2,805 2,805 0.00 3.95 3.95 Dire Dawa 98 272 370 0.14 0.38 0.52 National 59,867 11,199 71,066 84.24 15.76 100.00

2.1.19 Based on the 1995/96 and 1999/00 Household, Income, Consumption and Expenditure Surveys (HICES) and Welfare Monitoring (WM) surveys, the proportion of people in absolute poverty declined only marginally (1.3%) from 45.5% in 1995/96 to 44.2% in 1999/00 with rural poverty incidence declining by 4%, while urban poverty increased by 11%. Based on the latest available information, about 44% of the population continues to live below the poverty line as a result of the continuous deterioration in Ethiopia’s terms of trade (in view of the declining international coffee prices) and the depressed cereal prices, both of which impacted negatively on rural household income and the poverty situation.

2.1.20 The 1999/2000 poverty analysis revealed that poverty indices in Ethiopia are higher for households with larger family sizes, thus indicating the poverty effect of large families. The incidence, depth and severity of poverty also increase the lower the level of education of the head of the household. In urban areas, the female-headed households tended to have higher poverty incidence, depth and severity than the male-headed households, but no significant difference was observed among rural households in terms of gender.

6

2.1.21 Ethiopia’s abundant water supply has not yet benefited the population to any significant extent. Access to safe water supply and sanitation services are among the lowest in sub-Saharan Africa. National water supply coverage in 2004 was estimated at 36.7% with urban water supply coverage estimated at 82.5% and rural water supply at only 24.2%. Sanitation coverage 2000 was among the lowest in the world at 18% with urban sanitation coverage at 71.6% but rural sanitation coverage at only 8%. While urban water supply coverage estimated at 83% is reasonable by developing country standards, however access close to home is low with only 4% of the urban population having access to in-house supplies and another 23% having access to water in their own yard, while the rest depend on communal supplies. Based on a recent survey, water consumption in urban areas is also low averaging 15 l/c/d due to the price for collecting it – both in terms of the time and money spent. The survey also showed that the larger the town, the higher the number of households with access to safe supplies of water.

2.1.22 Urban sanitation has increased significantly, from 57% coverage in 1994 to 71.6% in 2000. However, sanitation coverage stands at only 18% due to the very low level of coverage (8%) in rural areas. Again, coverage tends to be higher in large towns than in small ones. The state of the many household latrines and most public latrines is generally poor. Addis Ababa is the only sewered town but with connections for about 15,000 people, which is less than 1% of the city’s population). Most urban dwellers with access to sanitation therefore use septic tank and soakaway systems or pit latrines. Very few towns have sludge collection services.

2.1.23 Until recently, the lack of a comprehensive sector policy and strategy, and the lack of a sector programme negatively impacted on sector development. Though decentralization is critical to Ethiopia’s development, the transfer of responsibilities to the regions and woredas, has compounded the weak institutional capacity. Further aggravating this problem was the poor coordination between the various institutions at federal and regional levels, and with NGOs and donors. There are huge investment needs in an environment of low financial resources and competing demands for these limited resources, low tariff levels in urban schemes which have remained unchanged for many years and have little bearing to the cost of service provision. Use of technologies that are not appropriate for local situations has also been a problem in past interventions, as has been the low involvement of stakeholders in the development process.

2.1.24 Policy Framework: To address these constraints, an integrated water resources management policy was adopted in 1999. Since 2000, there has been a comprehensive review of the sector, followed by the development of sector strategies and a 15 year Water Sector Development Programme (WSDP) for the period 2001 to 2015 through a participatory process involving all major stakeholders. GOE also approved Proclamation no. 268/2002 establishing a Water Resource Development Fund (WRDF), for channelling Government budgetary resources and donor funds for the rehabilitation, expansion and development of urban water supply and sanitation systems and other water sector activities like hydropower and irrigation development.

2.1.25 The objectives of the Water Resources Management Policy are: Development of water resources of the country for economic and social benefits of the people on equitable and sustainable basis; Allocation and apportionment of water based on comprehensive and integrated plans and optimum allocation principles that incorporate equity of access and efficient use of water resources; Managing and combating drought as well as other associated slow on-set disasters through, inter-alia, efficient allocation, redistribution, transfer, storage

7

and efficient use of water resources; Combating and regulating floods through sustainable migration, prevention, rehabilitation and other practical measures; and conserving, protecting and enhancing water resources and the overall aquatic environment on sustainable basis.

2.1.26 The guiding principles of the water policy are:

Water is a natural endowment commonly owned by all the peoples of Ethiopia As far as conditions permit, every Ethiopian citizen shall have access to sufficient

water of acceptable quality, to satisfy basic human needs; In order to significantly contribute to development, water shall be recognised as

both an economic and a social good; Water resources development shall be underpinned on rural centred decentralised

management, participatory approach as well as integrated framework; Management of water resources shall ensure social equity, economic efficiency,

systems reliability and sustainability norms; and Promotion of the participation of all stakeholders, user communities, particularly

women’s participation in the relevant aspects of water resources management.

2.1.27 The main elements of the water sector strategy are to:

establish effective institutions to secure sound institutional basis for sustainable development and management of water resources;

develop and implement capacity building programmes at all levels (federal, regional, zonal, Woreda, private sector and grass root level) on the relevant areas of water resources management; and

formulate appropriate and essential water legislation required expediting water resources development and management.

Water Sector Development Programme (WSDP) and Water Supply & Sanitation Master Plan (WSSM)

2.1.28 The WSDP was completed in 2002 and addresses the needs of the different sub-sectors under different development programmes and projects, namely: Water Supply and Sewerage Development Programme (WSSDP), Irrigation Development Programme, Hydropower Development Programme, Water Resources Development Programme, and Institution and Capacity Building Programme. It produced an investment schedule for the various sub-sectors with priority ranking of projects within and between sub-sectors. The programme, estimated to cost US$ 7.44 billion (ETB 63,282.5 billion) is sub-divided into short, medium and long-term programmes of 5-year duration as detailed in Table 2.2 below:

Table 2.2: Summary of Investment Plan for WSDP (US$ million) Sub-sector Short-term

(2005) Medium-term

(2010) Long-term

(2015) Total

1. Water Supply & Sewerage 876.2 1,057.9 1,001.7 2,935.8 2. Irrigation 307.9 456.9 918.3 1,683.1 3. Hydropower 649.1 525.9 776.7 1,951.7 4. Water Resources 183.9 231.9 240.5 656.3 5. Institution/Capacity Building 92.9 63.3 61.7 217.9

Total 2,110.0 2,335.9 2,998.9 7,444.8

8

2.1.29 While sanitation issues were addressed in the water policy and strategy, only urban sewerage was addressed in the WSDP, while rural sanitation was completely left out. At the time there was overlap concerning the institutional responsibilities, which has affected the development of the sub-sector. However, this has now been resolved and the general understanding is that the Ministry of Health is responsible for all sanitation issues, including awareness creation, demonstrations, hygiene and health education. In addition, a Sanitation Strategy is under preparation, which will bring together policy guidelines and lessons learnt, to help forge consensus among the many stakeholders on sanitation development. Currently, the budget for sanitation is less than 1% of the health budget. The regional governments only allocate resources for hygiene education, awareness raising and demonstration projects for generating demand, with little resources for provision of on-site sanitation facilities except for those funded and provided by NGOs and agencies like UNICEF. While this partly explains the very low sanitation coverage, effective hygiene education last year yielded positive results in some parts of the country, primarily SNNPR and Amhara.

2.1.30 Following the WSDP, a Water Supply and Sanitation Master Plan framework was completed in 2003. The Master Plan reviewed the targets of the WSDP and developed strategies for prioritisation based on an analysis of opportunities and constraints in the physical, financial and institutional aspects. The Master Plan complements the WSDP particularly in the institutional aspects by formulating capacity building projects with the aim of strengthening management and implementation capacity in the sector.

2.1.31 During programme development, Issues Papers were prepared on a number of topics to identify specific issues that need to be resolved to implement the Water Resources Management Policy. These include: Project Design: Technical, Financial and Economic Feasibility; Sanitation & Hygiene; Supply Chains for Water Supply and Sanitation; and Management Models, Contractual and Legal Arrangements for Water Supply in Urban and Rural Areas.

2.1.32 The Government also recently conducted comprehensive MDG Needs Assessments in various sectors including water supply and sanitation. The estimates in the MDG Needs assessment for water supply and sanitation are higher than all other estimates as they apply different access standards and include operation and maintenance costs as well as higher rehabilitation costs.

2.2 Major Related Programmes and Projects Financed by Donors

2.2.1 Donor Financed Activities: There are a number of donors actively supporting the Government in the implementation of the WSDP. The main donors are UNDP, UNICEF, Agence Française de Développement (AFD), Finnish Development Agency (FINIDA), Japan International Cooperation Agency (JICA), GTZ, KfW, CIDA, Development Cooperation Ireland, DfID, Government of the Netherlands, European Union, World Bank and African Development Bank.

2.2.2 UNDP has provided support in policy and strategy development through the US$ 7.5 million Water Resources Development and Utilisation Programme in 8 regions. This developed the National Water Resources Policy, the water sector strategy and the WSDP, as well as gender guidelines for the water sector and national irrigation guidelines. The programme also developed master plans in two dry water basins, providing equipment and staff training for meteorological stations in 5 regions. The WSDP has also been supported in

9

the development of the national water supply and sanitation Master Plan and natural resources and environmental information management by the Netherlands Government and an irrigation master plan development in the Meki area financed by JICA.

2.2.3 Most donor support in the sector has focused on urban water supply. For instance, the IDA financed US$ 65 million Water Supply Development and Rehabilitation project conducted feasibility studies and prepared engineering designs for the rehabilitation and expansion of services to meet 2015 demand; and capacity building in the areas of technical, institutional and financial management of water supply and sanitation services in 25 towns. EU financed the rehabilitation of some urban water supply and sanitation schemes and some community-based sanitation activities for Euro 19.5 million, and is expected to provide additional Euro 14.5 million for updating the Addis Ababa Sewerage Master Plan financed by the Bank Group. The Government of the Netherlands financed the Netherlands Guilders (NLG) 30 million Environmental Support Project, with feasibility studies and detailed designs for 10 towns. KfW has completed the 12 Towns Rehabilitation project for DM 13 million and is now involved in the 3 Centres Project whose feasibility studies have been completed. GTZ is providing technical assistance for capacity building in Oromia region, while JICA is financing the 11 Towns water supply project in the Afar and Amhara regions.

2.2.4 UNICEF has been the main donor, in rural water supply and sanitation in the past 25 years. Its Water and Environmental Sanitation programme for 2002 to 2006 totals US$ 17.3 million and will involve construction of 1,550 new rural water supply schemes and the rehabilitation of 850 old schemes; strengthening capacity at the regional, Woreda and community level focusing on the 5 emerging regions; enhancing sustainability of water schemes through institutional strengthening; and reducing drilling costs by up to one-third; community training and establishment of spare parts shops. The Environmental Sanitation and Hygiene Education Programme will support construction of 275,000 households latrines, 650 community latrines and 550 school latrines; facilitate the capacity building to promote sanitation and hygiene at national, regional, and Woreda level; facilitate behavioural change at personal and community level by creating awareness on sanitation and hygiene practices; strengthen water quality monitoring at all levels; and contribute to the reduction of blindness attributable to trachoma, parasitic infections, and diarrhoea. UNICEF is also developing a programme with GOE for funding of USD 100 million by the Netherlands Government as part of the Government of Netherland’s programme to reach 10 million people with water supply, sanitation and hygiene (WASH) by 2011. In Ethiopia the programme is expected to provide 3 million people with access to water supply and 3.6 million with basic sanitation. UNDP is providing operation and maintenance support for rural communities in rural water supply through the provision of spare parts and training. Following the Third World Water Forum in Kyoto, UNDP has been developing a global Community Water Initiative, focusing on rural water supply and sanitation.

2.2.5 The IDA financed Water Supply Development and Rehabilitation project also included a demonstration project for sustainable rural water supply and sanitation services in 4 regions and has developed generic and regional implementation manuals and guidelines for rural water supply and sanitation. In April 2004 IDA approved a new US$ 100 million grant and loan for the Water Supply and Sanitation Project focusing on new scheme development, rehabilitation of existing ones in both urban and rural areas, and building capacity at the Woreda, regional and federal levels. 50.5% of the financing is for RWSS, 39.9% for UWSS and 9.6% for program management. FINIDA is financing rural water supply and sanitation in Amhara region, which is now in its third phase valued at Euro 8.1 million. JICA is in an

10

advanced stage of developing a rural water supply intervention in Amhara and SNNPR regions at a cost of USD 10.2 million. The Government also expects to benefit from support to the WSDP under the EU Water Initiative.

2.2.6 Many NGOs are also active in the development of rural water supply and sanitation services in the country, spending between ETB 50 and 75 million a year in water supply and sanitation. Apart from scheme development activities, NGOs are also important players in community mobilization, in organizing communities and training them in operation and maintenance of the services while promoting an active role for women in the sub-sector.

2.2.7 Due to the capacity constraints at the regional and Woreda levels, a number of donors and NGOs are increasing their focus on capacity building in central and local government institutions as well as communities. These include Development Cooperation Ireland, UNDP, the World Bank and FINIDA, while JICA has been involved in capacity building in water supply through the Groundwater Development and Water Supply Training project involving the establishment of the Addis Ababa Water Technology Training Centre.

Bank Group Financing

2.2.8 Since it started operations in Ethiopia in 1975, the Bank Group has financed a total of 25 operations in the water sector in Ethiopia in the form of basin Master Plans, projects and studies in water supply and sanitation, irrigation, hydropower and drainage for a total amount of UA 153.17 million (see Annex 3 on Bank Group Operations in Ethiopia). The Water Supply and Sanitation sub-sector accounts for 10 of the operations (for UA 73.93 million), all of which have been completed except for the Harar Water Supply and Sanitation Project, which was approved in 2002. The Bank has funded water supply and sanitation studies in Addis Ababa and 37 of the main secondary towns in Ethiopia, and has gone on to finance the investments in 15 of the towns while GOE, the World Bank and KfW financed the follow on infrastructure investments in 18 others serving a total 2003 population of about 3.5 million people and continue to benefit these populations. The basin Master Plan studies and hydropower studies have attracted project funding from the Bank and other donors or been implemented by the regional administrations resulting in significant improvement to water resources management, irrigation production and marketing and hydropower production in the country. Although none of the previous water supply interventions have been in rural water supply and sanitation, the sub-sector has benefited from interventions in social sector (education and health) and agriculture projects. Overall, the Bank’s interventions in the water sector have been of major benefit to the sector and to the Ethiopian economy.

3 THE RURAL WATER SUPPLY AND SANITATION SUB-SECTOR

3.1 Institutional Framework

3.1.1 The main players responsible for rural water supply and sanitation are the Ministry of Water Resources, Ministry of Health, the Regional Water Bureaus, Regional Health Bureaus, Woreda Water Desks, Woreda Health Desks, and the Ethiopian Social Rehabilitation and Development Fund (ESRDF), private sector in the form of contractors and consultants, equipment and spare parts suppliers, and water vendors, artisans, communities with support

11

from NGOs and donors. The roles of the MOWR, MOH, RWB, RHBs, WWDs, WHDs private sector and donors have been described in Chapter 2.

Ethiopia Social Rehabilitation and Development Fund (ESRDF)

3.1.2 ESRDF was established in 1996 as a social fund to support poverty alleviation and building grass root capabilities through the support of community based sub-projects, particularly basic social and economic infrastructure essential to improve the economic and social standards of the poor. It has financed over 3,827 projects, including 1,973 in rural water supply (i.e. 52% of projects) throughout the country. Other areas of intervention include education, health and sanitation, small-scale irrigation, soil and water conservation, income generation and capacity building. About 2.5 million people benefited from their water supply and sanitation projects.

3.1.3 ESRDF projects are financed mainly from an IDA loan but also from Government support, bi-lateral grants and community contributions (10% in labour and/or materials, and sometimes cash). However, the Government is of the view that ESRDF has no further role to play in the decentralised structure and has decided to phase it out and re-deploy its staff to other institutions. The human resources capacity it has built and the implementation tools and manuals it has developed will continue to play major roles in the WSSP and other rural development activities.

Non-Governmental Organisations

3.1.4 Over 500 local and foreign NGOs operate in Ethiopia. The earliest started with relief work in the late 1960s and early 1970s in the north during the drought years. Since the 1980s, most have turned to long-term development activities. All NGOs are required to register with the Disaster Prevention and Preparedness Commission (DPPC) who have developed Operational Guidelines for NGOs and are required to get the approval of the regional administration before embarking on any projects in the region. They are governed by a Code of Conduct to promote transparency and accountability. The Government is currently developing legislation for NGO activities. About 50% of NGOs are registered with the Christian Relief and Development Association (CRDA), the umbrella organisation for NGOs in Ethiopia. Many NGOs are involved in rural water supply and sanitation and in peri-urban areas in service provision, community sensitisation and training in different aspects of rural water supply and sanitation, standardizing equipment, promoting village level operation and maintenance (VLOM) pumps, promoting establishment of water committees with the strong involvement of women, and promoting sanitation. They have been responsible for many rural water supplies and sanitation facilities, and spending between ETB 50 and ETB 75 million annually on water supply and sanitation activities.

3.1.5 While most NGOs source their own funding, CRDA has set up a Delegated Fund into which bi-lateral and multi-lateral agencies can provide development assistance through NGOs. They have developed Guidelines for the Provision of Support Services with criteria for project submission, approval, monitoring and evaluation. They are active in most parts of the country and can complement Government capacity in areas where this capacity is low.

12

3.2 Access to Rural Water Supply and Sanitation Services

3.2.1 For the rural areas, access to safe water supply and sanitation is estimated at 24% and 8% respectively. Rural water supply coverage is lowest in the smaller, lower capacity and drier low-lying regions of Somali (7%), Gambella (14%), Affar (14%), Benishangul (18%) and Harari (19%), and higher in the larger and higher capacity highland regions of Amhara (23%), SNNPR (24%), Oromiya (25%) and Tigray (25%). Among the worst affected are the 8 million nomadic peoples with their livestock concentrated in the arid and semi-arid lowlands of Afar and Somali regions, the Borena zone of Oromia region and the Debub Omo zone of SNNPR with their sandy soils, sparse vegetations, with acute shortage of water and pasture and exposed to frequent droughts. Despite the low coverage figures, 33% of the rural water services are estimated to be non-functional due to lack of funds for operation and maintenance, inadequate community mobilization and commitment, and lack of spare parts. This means that effective coverage is even lower.

3.2.2 In the past, sanitation did not receive a high priority from the Government, donors and communities, which partly explains the low coverage (18%) in comparison with the neighbouring countries of Kenya, Uganda and Tanzania.

3.2.3 Lack of safe drinking water supply constitutes a serious problem in the Woredas (Districts) where the vast majority of the rural communities do not have access to potable water. In the dry months, most of the people and livestock depend primarily on traditional water sources such as rivers, streams and lakes, which are very often contaminated. A majority of households lack knowledge of personal hygienic practices as a result of which a large percentage (up to 70% in rural areas) of cases of morbidity and mortality is attributable to inadequate water supply and unhygienic waste (including excreta) management.

3.2.4 In the rural areas, responsibility of fetching water for the family lies with women and children, and a considerable amount of time is spent travelling long distances to fetch water. A 1997 study found that up to one third of women in some Woredas spent more than two hours each trip to fetch water, and many required to make two or three such trips a day. Moreover, the per capita water consumption in rural areas is very low (about 10 l/day), mainly due to low quantity of available water in some areas and the long distances to water sources. The effect of the lack of adequate services on economic development is significant. Government, therefore, recognises the links between inadequate access to these basic services to the high levels of poverty in the country as evidenced by the prominence given to it in the SDPRP.

3.2.5 In response to the low sanitation levels in Ethiopia, the Ministry of Health has prepared a Health Extension Program with 16 components out of which 7 are dedicated sanitation packages: excreta disposal, solid and liquid waste disposal, water quality control, food hygiene, proper housing, vector control and personal hygiene. The Ministry of Health and the Regions are training Health Extension Workers (HEWs) and two HEWs will be assigned to each Kebele (village).

Constraints

3.2.6 Although the Government has well articulated sector policies and strategies, complemented by a Water Sector Development Programme, a Water Supply and Sanitation Master Plan and a Water Supply and Sanitation Programme, the major challenge now is to

13

implement them. However, the weak institutional capacity in sector institutions at the federal government, local government institutions and the communities continues to pose a significant constraint for the sub-sector development. This has limited the planning, implementation and monitoring capacity at federal, regional, and Woreda levels, while low private sector participation has resulted in limited competition and high implementation costs of water and sanitation projects. The Government’s decentralization programme, though critical to the nation’s development, has also contributed to the fragmentation of scarce human resources and equipment among the 9 regions and 2 administrative areas. The emerging regions have had limited resources to implement their programmes.

3.2.7 Major capacity constraints exist at all levels of government in the sector. Institutions are weak, afflicted with insufficient and inadequate equipment, staff/skills shortages, poorly motivated staff and a general lack of funds. MOWR and MOH have lost many of their professional staff to the private sector, donor agencies and NGOs, and the low salaries have reduced its ability to attract new competent professional staff. While the staffing levels are better for the 4 biggest regions – Oromia, SNNPR, Amhara and Tigray – the situation in the other emerging regions (Affar, Somali, Benishangul, and Gambella) is much worse. Therefore, apart from investments in water supply and sanitation scheme development, there is need for major human resources capacity building at the regional level, for the Woreda Water Desks and Health Desks for them to effectively discharge their responsibilities. Furthermore, the capacity of rural communities in planning, operation and maintenance of the services, and financial management needs significant strengthening.

3.2.8 The 2004 MDG Needs Assessment indicates that in order to meet the MDGs targets during the next 11 years, about 62,629 community Water Supply Sanitation and Hygiene Committees (WASHCOMs) need to be established; 36,262 Woreda Staff; 811 Woreda Sanitarians and 29,711 Village Health Workers recruited and trained and 3,850 Regional Water Bureaus staff has to be trained. A fully staffed WWD requires a staff complement of 9 key staff and 5 support staff, but in most cases, the number of staffs in each Woreda at present is not more than 7. The Woreda Health Desk also requires 4 professional staff and two support staff, in addition to the two Village Health Extension Workers in each village. Government is committed to provide the required staff, though in the short term these will mainly come from ESRDF, RWBs, RHBs or NGOs or recruited from the private sector. Implementation staff constitutes 5% for community mobilization, design and supervision and 95% for construction, about half of which is unskilled labour.

3.2.9 Notwithstanding, GOE has embarked on a major capacity building initiative, retaining the capacity at Woreda level poses a major challenge, particularly in the emerging regions. As these numbers cannot be generated from the current vocational and technical institutions in the country, MOWR has established eight technical training institutes, which together produce about 3000 graduates annually for all sub-sectors, with plans to reach 19,000 technicians by 2012. The Ministry of Health and the Regional Health Bureaus are also undertaking an intensive training program to increase the Health Extension Workers capacity from the current 9,990 to 30,000 using 35 Health Extension Schools staffed by 314 Health Extension teachers. In the mean time, NGOs will continue to play an important role in filling in the capacity gap.

3.2.10 Water availability is a problem, particularly in the arid and semi-arid lands. The frequent droughts have also resulted in further lowering of groundwater tables, thus reducing yields of wells and springs and rendering some pumps ineffective.

14

3.2.11 There is a dearth of financial resources for the huge investment needs, as well as for operation and maintenance. Considering the low returns in rural water supply and sanitation, there appears to be little scope for private sector financing in the short to medium term. Thus the Government and beneficiary communities will continue to bear the burden of providing the required financing, with assistance of donors either directly or through NGOs. A top-down approach with low stakeholder participation in the choice of services and technologies, delivery of investment projects and their eventual operation and maintenance, and inappropriate technology choices resulting in adoption of high cost solutions, and lack of spare parts in the past resulting in frequent breakdown has affected project sustainability resulting in high level of non-functional schemes.

3.2.12 Poor hygiene practices has contributed to contamination of water supplies at source, during transportation and storage, poor water quality and water borne diseases. According to a Heath survey conducted in 2000, the causes of most of the top ten morbidity and mortality ailments are associated with the low level of environmental sanitation and poor hygienic practices. It is reported by MOH that diarrhoea alone is responsible for 46 percent of the under-five mortality in the country.

3.2.13 Limited local contractor and consultant capacity for the huge investment needs as well as limited involvement of the private sector in the provision of spare parts through well developed supply chains are other constraints the sector has to grapple with. Poor coordination of external support has also favoured easily accessible areas, which receive more support than remote areas. This has contributed to the inequities in the levels of coverage, with only 7% of Somali region population having access to rural water supply compared to 25% in Oromiya or 29% in Tigray. It has also contributed to the proliferation of several types of pumps, generators, and other water supply equipment and difficulties in their operation and maintenance. The sector also experiences slow project implementation (on average project identification to completion takes 5 to 8 years) thus projects benefits and outcomes tend to be delayed.

Opportunities

3.2.14 These constraints notwithstanding, a number of opportunities exist which could contribute to the achievement of the MDGs in Ethiopia. The well articulated policy and sector strategies, the water sector development programme, the National Water Supply and Sanitation Master Plan and the MDG Needs Assessments provide solid entry points for development of the sector and attaining the MDGs. The move from project to the programme approach will create a conducive environment for rapid and sustainable scaling-up of activities.

3.2.15 While institutional capacity is weak at central and local government structures, the capacity and experience built up in ESRDF could be utilised when the Fund is phased out. The recognition of the capacity problems by donors, NGOs and the Government and the refocusing of their capacity building efforts will also help resolve this problem.

3.2.16 Another opportunity is presented by the large number of NGOs working in Ethiopia’s water sector that are responsible for many of the rural water supply schemes. Together with UNICEF, these NGOs have made important contributions to the sector and their experience provide important lessons to guide other players. Moreover, there are cases of successful community managed rural water supply and sanitation services, which provide useful lessons.

15

Cases in point include the over 20-year old motorized borehole Tagito Scheme in Oromia region serving over 200 households with the farthest household living over 2 hours away from the source; and the Siraro water supply scheme also in Oromia region serving a population of over 50,000 in 3 Woredas, 20 Kebeles and 3 small towns from 10 boreholes (see box).

3.2.17 Encouraging results have also been realised with respect to traditional pit latrine construction in rural areas through appropriate hygiene and health education and community mobilization in 2004. The SNNPR region reports 75% latrine coverage; which has been achieved over a relatively short period, while the communities in one Woreda in Amhara region have constructed 19,000 pit latrines within one year after an intensive health and hygiene education campaign. Experience from these areas will serve as useful lessons for other parts of the country.

3.2.18 The commitment made by donors at Monterrey to increase levels of ODA and demonstrated in the ADF X replenishments, pledges and commitments made at the Paris Donors’ Conference for RWSSI, backed by the commitment of the Ethiopian Government to increase financing for the sector and the willingness of beneficiary communities to contribute to the investment costs of their schemes present a significant opportunity for bridging the funding gap for the rural water supply and sanitation investment needs of Ethiopia.

3.3 The National Rural Water Supply and Sanitation Programme (2005 to 2015)

3.3.1 The Government has prepared a National Water Supply and Sanitation Programme with the assistance of donors and participation of the key stakeholders in the sector with the objective of increasing rural water supply coverage to 71% and rural sanitation coverage to 24% by 2015. These targets have been brought in line with the MDG targets of reducing by half the proportion of people lacking access to adequate water and sanitation services. Accordingly, rural water supply coverage is expected to increase from 24% in 2004 to 62% by 2015 and rural sanitation coverage from 8% to 54% during the same period. However, these targets are lower than the Bank’s RWSSI targets, which seek to achieve 80% coverage for both rural water supply and sanitation by 2015. The water supply and sanitation coverage for 2000 and 2004 and the forecasted overages for 2007, 2010 and the 2015 MDG targets are shown in the table 3.1 below..

Siraro Community Managed Water Supply Scheme: The scheme serves over 50,000 people in 3 woredas, 20 Kebeles and 3 towns, each of which has its own 7-member water committee 2 of whom are on the Water Board General Assembly of 46, out of which 9 are elected to the Water Board Executive Committee. The Board Administrative Office has 88 hired staff made up of water sellers, plumbers, guards, an accountant, an administrator and a technical head. (All elected members provide free services). The scheme tariff is set on the basis of cost recovery and covers O&M, and replacement costs, taking into account affordability. Tariff is determined and set by the RWB and the Zonal office after discussion with the beneficiaries. Current level is ETB 4.0 /m3 for public fountains (or ETB 0.1/25 l container) and ETB 5.0/m3 for house connections. They take care of most O&M activities and get technical support from the Oromia RWB.

16

Table 3.1 Short, Medium and Long Term MDG Targets Coverage 2000 2004 2007 2010 2015 (MDG) Gap (2004-

2015) Pop Acc Acc Pop Acc Acc Pop Acc Acc Pop Acc Acc Pop Acc Acc Pop to serveComponent

(m) (m) (%) (m) (m) (%) (m) (m) (%) (m) (m) (%) (m) (m) (%) (m) Rural Water Supply

54.6 12.6 23% 59.9 14.5 24% 64.6 22.3 35% 70 31.4 45% 78 48.4 62% 33.9

Rural Sanitation

54.6 4.4 8% 59.9 4.8 8% 64.6 13.2 21% 70 22.5 32% 78 42.1 54% 37.3

(m) = Million; Pop. = Population; Acc. = Access

3.3.2 Considering that there was only a 1% increase in rural water supply and no increase in sanitation coverage between 2000 and 2004, there is need for a substantial increase in investments if the targets are to be achieved. Based on information provided from the regions, it is estimated that under the Programme the number of rural water supply facilities will increase from the current level of 16,000 to 78,000 in 2015. This entails the construction of about 62,000 new water schemes (consisting of 4,200 deep wells, 9,300 shallow boreholes, over 26,300 hand dug wells, and 18,900 spring developments), as well as rehabilitating 2,900 existing supplies and construction of 10,800 livestock watering facilities.

3.3.3 The number of different types of water schemes to be constructed is based on assumptions of 250 to 500 people per well or protected spring, 2,500 people per motorised borehole, 250 to 500 per public water point or public water outlet for supplies with small distribution systems. The standard level of service is based on consumption of 20 l/c/day and maximum walking distance of 1 km from the water sources (though this changes to 3 km in the arid regions where the current distances are as high as 10 km in some instances), and reduction in collection time to about one hour.

3.3.4 The Programme will seek to maximize health benefits by integrating water, sanitation and hygiene education interventions. The sanitation activity will comprise hygiene and health education, production of promotion material, social marketing, participatory promotion and training of community promoters, construction of improved traditional pit latrines with concrete squatting and ventilated improved pit latrines to increase the rural sanitation coverage from 8% to 54%. Recent developments in Ethiopia have demonstrated that marked improvements in sanitation coverage can be achieved through appropriately targeted hygiene education backed by political will.

3.3.5 The Programme is based on the Demand Responsive Approach (DRA) that puts the communities as the prime movers of the whole process. GOE has developed Regional Implementation Guidelines for the Water Supply and Sanitation Programme, which include Regional Implementation Manuals and all associated documentation (forms, model contracts, model Terms of Reference, etc. These are being used by the World Bank for implementing the national RWSS programme through the local government structures. The Bank intervention will use the institutional arrangements put in place and the implementation manuals developed for the national programme. The Government plans to encourage other donors to adopt these institutional structures and implementations manuals in their future interventions.

17

3.3.6 The Guidelines identify roles for the different players: MOWR, MOH, the Regional Water Bureaus, Regional Health Bureaus, Regional Rural Development Bureaus, Woreda Water Desks and Woreda Support Groups, communities and Local Service Providers, including NGOs, artisans, consultants and contractors. It gives prominence to the role of women in water supply and sanitation services provision and requires their participation in the Water Committees and Water Boards. In fact, 3 out of 7 members of Water Committees are required to be women. The sanitation and hygiene education will use the methods, publicity and training materials developed jointly by the Ministry of Health and UNICEF for scaling up.

3.3.7 Under the guidelines, the RWSS strategies include:

Ownership and control of facilities vested in the community, including formal written agreement with the Woreda.

Community selection of service level to correspond with what they want, can afford and can sustain with the human and financial resources at their disposal.

Siting of water points by the community, within technically feasible limits. Significant cash contribution by the community of about 5% of the capital cost of

the facilities in cash and/or in-kind labor. Establishment of a committee representative of all social groups of users

(particularly women), accountable to the community and responsible for all aspects of management of the services.

Complete community responsibility for operation and maintenance of water systems, including the collection, management and safekeeping of funds, and the purchase of those goods and services required for the system to continue to function.

Designation by the community of caretakers who will be responsible for preventive and simple corrective maintenance of the facilities, with training and tools provided by the programme.

Community self-help action to assist with repairs and maintenance, and to clean and maintain the areas around water sources.

Woreda planning, resource allocation, programme management, and outsourcing to local service providers.

Capacity building of community facilitators to assist communities to plan and learn to manage their water supply, to improve their sanitation and hygiene practices, and address other environmental issues that affect the community. Promote and construct household and school latrines. Install, service, repair and distribute spare parts for handpumps. Construct hand dug wells, spring catchments and borehole aprons.

3.3.8 Each sub-project under the programme will be subjected to the community level project cycle, in accordance with the checklist stipulated for the six phases as follows. The details for each step are provided in the Program Implementation Manual in the PID:

Promotion Project Identification Project Preparation Project Appraisal Project Implementation Monitoring and Evaluation

18

Programme Costs

3.3.9 The requirements for achieving the national rural water supply and sanitation programme targets are estimated at US$ 1,382 million (UA 922 million) (See table 3.2 below), out of which US$ 1,110 million is for water supply and US$ 272 million for sanitation and hygiene education. This is equivalent to investments of US$ 125.6 million (or UA 83.8 million per annum) for the 11 years from 2005 – 2015. However, due to capacity constraints, the programme will start slowly with costs estimated at US$ 105.5 million per annum or US$ 316.5 million for the first 3 years (2005 to 2007) before picking up later.

Table 3.2: Summary Programme Cost Estimates

ComponentPer capita cost 2005 to 2007 2008 to 2010 2011 to 2015 2005 to 2015

Additional Pop Served (m)

Total Cost (m USD)

Additional Pop Served (m)

Total Cost (m USD)

Additional Pop Served (m)

Total Cost (m USD)

Additional Pop Served (m)

Total Cost (m USD)

Water Supply 32.70 7.79 254.77 9.14 298.98 17.01 556.16 33.94 1109.91Sanitation 7.30 8.45 61.69 9.23 67.36 19.65 143.45 37.33 272.49Total 40.00 316.46 366.33 699.61 1382.40 3.3.10 The cost of the programme is based on the comparison of costs by different players in the sector, namely, government, donors, ESRDF, NGOs, as derived in the RWSS Master Plan and the mission’s estimates. The per capita costs of the different types of rural water supplies ranged from US$ 8 for hand dug wells, to US$ 10 for spring development, to US$ 29 for shallow wells with hand pumps and between $40 and $92 for motorized boreholes depending on number of people served, while improved traditional pit latrines costs US$ 5.2 per person and communal latrines cost about US$ 12.5 per person (Table 3.3). Adding the management costs brings the average per capita cost of providing water supply and sanitation to about US$ 40. It must be noted that these are the average unit costs and that the costs differ from region to region and in different parts of regions based on issues such as water availability / scarcity, type of terrain, etc.

Table 3.3: Average Per Capita Water Cost by Type of Scheme

Water Source Capital Cost ($/capita) Hand dug wells with hand pump 8.1 Small boreholes with hand pump 28.9 Deep boreholes for 500 people 92.5 Deep borehole with distribution for 3000 people 40.5 Spring on spot 10.4 Spring with distribution for 3000 people 27.7

3.3.11 Based on information collected by the appraisal mission, the available financing for the period 2005/06 to 2007/08 is detailed in the table 3.4 below:

19

Table 3.4: Comparison of Funding Needs and Available Funding (in Million USD)

Short-Term Programme 2005/06–07/08

(Million USD)

Required Funding 316.46 Donor Funding: World Bank 36.00 African Development Bank 64.00 Netherlands Government 18.00 UNICEF 15.00 UNDP 3.92 FINIDA 9.72 JICA 10.21 Sub-total for Donors 152.85 Government 68.18 Communities 11.00 NGOs 30.00 Total Available Financing 266.03 Financing Gap 50.43

4 THE SHORT-TERM RURAL WATER SUPPLY AND SANITATION PROGRAMME (2005-2007)

4.1 Programme Concept and Rationale

4.1.1 The Ethiopian Water Sector Development Programme and Water Supply and Sanitation master plan were developed with the involvement of all the key stakeholders. The Government and other stakeholders are strongly committed to its implementation, as are donors many of whom have indicated their commitment to provide increased funding to the sector. The Programme design has taken into account experiences and the lessons learnt from past interventions in the rural water supply and sanitation sub-sector. The Programme has adopted the Demand Responsive Approach, which provides the communities with the opportunity to make informed choices about the types and levels of services they want and can afford, gives them ownership and responsibility for the management and operation and maintenance of the selected option, thus more likely to be sustainable.

4.1.2 Consistent with the DRA, the Programme does not dwell on identifying sub-projects up-front but leaves the decision primarily to the communities assisted by local service providers to take care of this during the implementation phase. Instead, the Programme focuses on putting in place an institutional arrangement and financing mechanisms with criteria that will allow community requests to be evaluated in a transparent manner, prioritised and funded, while implementation agents will also be procured in a transparent fashion. The Bank Group intervention will utilise the existing institutional arrangements and the implementation manuals developed for the national programme. Hygiene education will use publicity and training materials developed jointly by the Ministry of Health and UNICEF for scaling up. It will address the links between water quality and health, pollution of water at source and during transportation and storage, etc. as well as generating demand for sanitation services.

20

4.1.3 The process will involve reviewing community requests, selecting sub-projects based on agreed criteria as per the operations manuals, designing new services to meet community demands, procuring contractors and implementing the works and handing over to the beneficiary communities. Choices will be based on the effective demand of the communities taking into account their ability to operate and maintain the services and on technical, financial and economic feasibility. These criteria will include:- affordability, adequacy, quality of service, acceptability, ease of O&M, and proximity of service. The range of technology choices taking such criteria into account is given in Annex 4. Many regions already have long lists of sub-projects, which have been identified and applied for by communities, prepared and appraised. These will be subjected to the same selection criteria as per the implementation manuals.

4.1.4 The Programme design has taken into account emerging lessons from the Bank’s past and ongoing projects, as well as the experience of other donors. In particular, the decentralized framework has compounded the capacity limitations in the regions and Woredas, where project activities are being implemented. Among other problems, it has also contributed to delays in the consolidation and submission of accounts and reporting. Hence a lot of emphasis will be placed on capacity building early in programme implementation to strengthen capacity at the regional and Woreda level, in areas such as accounting, procurement and auditing. The procurement packaging will favour national competition and extensive use of post reviews while disbursements will favour the use of Special Accounts. To ensure adherence to the Bank’s fiduciary requirements, there will be frequent technical and financial audits.

4.1.5 The programme design has also taken into account the overall needs as expressed in the national rural water supply and sanitation programme, and used the current level of financing to determine the outputs. In identifying the components for intervention, it has taken into account the capacity constraints and the planned and on-going interventions of other donors. Also taking into account the capacity constraints within the local government set-up, the programme implementation will also involve NGOs who have sourced their own funding.

4.1.6 Currently, while a number of suppliers of pumps exist in the country, and most spares can be found in the main cities and regional capitals, they are not always available in the remote communities who have to travel to the cities to get minor spares. The low demand for them as well as the lack of standardization resulting in a multiplicity of pumps on the market prevents the local entrepreneurs from stocking them or from knowing which types to stock. The Programme will increase the demand for pumps and promote standardization of a few models, which will ease the choice of models to stock. Market-based approaches will be promoted, involving private sector participation in the development of supply chains. Problems of low capacity of contractors will be addressed by training and assisting artisans to organise themselves into small teams of local service providers to carry out small works like well digging, while at the same time packaging the procurement of some of the works to attract big contractors.

4.1.7 Problems of inappropriate technology will also be addressed by adopting technologies that the communities can sustain, and ownership will be enhanced through community contributions to the investment costs. Cost recovery will be addressed by ensuring that communities give prior consent for O&M responsibilities and that they are well organised to collect contributions for this purpose.

21

4.1.8 Monitoring & Evaluation activities will be directed at progress made towards achieving MDGs in all RWSS activities throughout the country.

4.1.9 The move towards a programme approach will help ensure faster implementation. Under the project approach, which was adopted previously, the process from identification of a study to its implementation to appraisal, approval and effectiveness of the follow on project used to last up to 6 years before commencement of project implementation. The programme approach, which combines these different activities, can cut this implementation lag to one to two years. The use of national procurement documents for most of the NCB packages and Post Review procedures for small contract packages, as well as increased use of disbursement via Special Accounts will minimize procurement and disbursement delays experienced in the past. The move towards the demand responsive approach, with communities involved in making informed choices about the type of schemes and agreeing up front to take responsibility for their operation and maintenance as well as the easy access to spare parts at local level will also help reduce the very high levels of non-functioning schemes, currently estimated at about 33%.

4.1.10 The ADB’s Ethiopia Country Office (ETCO) will support Programme implementation through participation in the supervision activities, and the review of procurement and disbursement activities, as well as through their participation in the organization of the annual reviews.

4.2 Goal and Targets

4.2.1 The sector goal is to improve social well being, enhance national economic performance and ensure equitable provision of adequate water and sanitation services to all competing users at affordable cost and on a sustainable basis. The objective for the STP is to improve access to rural water supply and sanitation services in Ethiopia thereby contribute to the achievement of water related MDGs

4.2.2 The Short-term Programme (STP) targets are to increase rural water supply coverage from 24% in 2004 to 34% by 2007 and sanitation coverage from 8% to 21% over the same period. The additional number of people that will be supplied by mid 2008 is estimated as 8.12 million for rural water supply and rural sanitation will target improving the sanitary behaviour of 8.4 million people.

4.2.3 The indicators for achieving the targets of the Short-Term Programme are the provision of water supply to 8.12 million people by construction of 24,500 new water points and the rehabilitation of about 1,550 existing ones; providing hygiene education to 8.4 million people; the construction of 10,000 demonstration household latrines and 6,500 public/communal latrines in schools, clinics and rural growth centres under the programme; and provision of 550 water testing kits. The indicators for the capacity building component are: training of 10 staff of MOWR and 5 staff of MOH; training of 108 staff of RWBs and RHBs in all 9 regions; training of 5,500 staff of WWDs and WHDs in 550 woredas; training of 96,000 community representatives of 12,300 water committees; training of 800 artisans as Local Service Providers and providing them with basic equipment, 600 Community Facilitation Teams, and 52 Woreda Support Groups, and providing water quality monitoring equipment for all the 550 woredas; and training of 20,000 Health Extension Workers. Other indicators for the programme support include the provision of computer hardware and software for the establishment of the database and the Monitoring and Evaluation system. The outcomes of the programme include a healthier rural community with lower incidence of

22

water related diseases, with communities mobilized and built about 1.4 million household latrines on their own.

4.2.4 While the STP is being implemented throughout the country, the ADF financing will focus on 120 Woredas (Districts) in the 9 regions. The outputs of the ADF financing in the 120 woredas will be: providing 2.45 million people with about 7,000 new water points and rehabilitation of 400 existing ones; hygiene and health education for 2.5 million people; construction of 3,000 household demonstration latrines and 1,900 public/communal latrines in schools, clinics and rural growth centres under the programme; and provide 120 water testing kits. It will build capacity at the MOWR, MOH, 9 RWBs, 9 RHB, 1200 staff of 120 WWD and 120 WHDs, about 12 WSGs, about 150 CFTs and 200 LSPs and about 4,400 HEWs; training of 26,000 community representatives of 3,700 communities. The programme support will provide computer hardware and software for the establishment of the database and the M&E system.

4.3 Strategic Context

4.3.1 While the weak policy environment is largely addressed by the new policy and sector strategies, the Programme will address the policy principles and strategies by providing sufficient water to all Ethiopians to satisfy the basic human needs; promoting rural based decentralised management, participatory approach with the participation of all stakeholders, user communities particularly women; integrating water supply and sanitation; and building institutional and community capacity at all levels, mobilizing additional funding, introducing appropriate technologies, ensuring greater community ownership and enhanced sustainability through the demand responsive approach. It will ensure faster rates of access; improve hygiene education and reduce contamination of supplies between points of collection and consumption. By adopting a programme approach, the government will also better coordinate donor interventions.

4.3.2 The importance of the sector to growth of the economy and poverty alleviation is demonstrated by the inclusion of the investment programme for the period 2002/3 to 2004/5 in the Government’s Sustainable Development and Poverty Reduction Programme (SDPRP I). The total investment is estimated at ETB 6,814.9 million (US$ 801.75 million), of which water supply and sewerage accounts for ETB 3,562.7 or 52.3%. The Government expects to maintain the priority pillars and strategic thrust of SDPRP I, in terms of poverty reduction policies, strategies and sector programmes, in the successor SDPRP II, which will cover the period 2005-2009. Generally, investments in infrastructure, including the water sector, would be scaled up with a view to accelerating progress towards achievement of MDG targets. Hence, the water sector is expected to feature prominently in the Bank’s support for infrastructure and rural development priority pillars under SDPRP II. Furthermore, the proposed ESW to carry out an in-depth assessment of the impact and implications of the ongoing decentralisation under the CSP (2005-2009) will be utilised to reinforce the bank supported capacity building activities for the regions, woredas and communities under the Programme.

4.3.3 Furthermore, the Programme is in line with the Bank Group Strategic Plan, the African Water Vision and Framework for Action, Millennium Development Goals, and the targets set at the World Summit on Sustainable Development. The Programme is also in line with the Government’s draft Sanitation Strategy, the Bank’s Integrated Water Resources Management Policy and the Rural Water Supply and Sanitation Initiative. The sector is

23

prioritized in the current CSP and intervention in the RWSS programme will complement the Bank’s other interventions under the WSDP.

4.4 Programme Description

4.4.1 The components of the Programme are as follows:

A) Water Supply: Provision of new and rehabilitation of existing water supply services and livestock watering troughs will be provided where required based on the DRA. Technology choices for water supply will range from hand dug wells, drilled wells, protected springs, boreholes, gravity schemes, water harvesting, sub-surface dams, small piped systems, and pumping systems (hand pumps, motorized, solar or windmill pumps). Based on an estimate of about 250 persons per water scheme, it is expected that 23,000 new water points will be constructed, and about 1,550 existing ones rehabilitated.

B) Sanitation: Provision of latrine facilities for schools, health centres, communal latrines in crowded settlement area, and demonstration latrines for associations, cooperatives and communities, and conduct hygiene and health education campaign for 8.4 million people. Sanitation options will be limited to on-site sanitation systems, mostly improved traditional latrines with sanplats and VIP latrines for individual households or communal latrines for institutions and rural growth centres. About 10,000 demonstration latrines in communities and 6,900 public/communal latrines in schools, clinics and rural growth centres will be constructed under the programme.

C) Capacity Building: Beneficiary communities will be sensitised about the programme, on how to apply for assistance (technical and financial), the need to contribute to capital and O&M costs, assisted to establish Water Sanitation and Hygiene Committees (WASHCOMS) consisting of at least 3 women out of the 7 members, opening and operating bank accounts, provided training in water management, operation and maintenance; Capacity building at MOWR, MOH, the Regional Water Bureaus, Regional Health Bureaus, Woreda Water Desks and Woreda Health Desks for carrying out their responsibilities under the programme. Woredas will also be assisted to establish Woreda RWSS programmes and WWDs will be provided with and trained in the use of water testing kits for monitoring water quality as well as dip meters to monitor groundwater levels in their areas at frequencies in line with EPA requirements; Capacity building for Woreda Support Groups (WSG), Local Service Providers (LSP), Community Facilitation Teams (CFT) and Health Extension Workers (HEW), and spare parts suppliers for development of supply chains; Capacity building for artisans to provide training to prepare them for carrying out very small works like well digging, spring development, hand pump installation and maintenance, etc. Artisans will also be provided with basic tools/equipment required for their trade.

D) Programme Support: involves the inputs of the staff of the federal and local government institutions to the implementation of the programme. These are MOWR, MOH, RWBs, RHBs, WWDs, WHDs and Woreda Administrations. It includes their salaries, allowances, office rental, office equipment including computers, printers, scanners and faxes as well as the setting up of a database, and office furniture, and other logistical support. It includes provision of Technical

24

Assistance in the form of Procurement and Financial Management experts as well as other rural water supply and sanitation experts at MOWR, MOH, RWB and RHBs as required. Programme support also includes the annual technical and financial audits, part of the monitoring and evaluation costs and the cost for the annual review meetings involving all stakeholders. It also includes the cost of a Water Engineer based at the PCU who will provide implementation support to the programme. Programme support includes an allocation of funds for some studies to be undertaken as required during programme implementation.

4.5 Beneficiaries and Target Population

4.5.1 Ethiopia has a population of 71 million, growing at a rate of 2.4% per annum. About 59.9 million (84.3%) live in the rural areas (communities with population of less than 2000 inhabitants) and 11.1 million (16.7%) in urban areas. However though water supply coverage in urban areas is fairly high, at 85%, coverage for rural water supply and sanitation is only 24% and 8% respectively. The national Short-Term Programme (2005-2007) will benefit the 8.12 million of the rural population in Ethiopia who are currently without access to water supply and sanitation services. Among the beneficiaries will be the nomadic populations concentrated in Afar, Somali, SNNPR and Oromia regions and their livestock. Other beneficiaries include the federal and local government institutions whose capacity will be enhanced, artisans who will be trained and assisted to establish small companies, and entrepreneurs who will benefit from selling spare parts, and the consultants and contractors.

4.5.2 Bank Group financing for the Short-Term Programme will target rural populations in all the regions, (except Addis Ababa and Dire Dawa Administrative Areas). To assure equity in development, the Government applies an allocation factor for distribution of budget subsidies to the regions, which takes into account population size and levels of development, and offsets additional funds provided by donors to specific regions. The Bank’s intervention will be guided by the Government’s formula for allocation of resources to the regions with minimal offsetting (no more than 15%), while also maintaining performance-based incentives to encourage the Regions.

4.5.3 Within a region, selection criteria for the Participating Woredas shall include, inter-alia, the water supply coverage, proximity, geographic balance, population, prioritization of water supply in the Woredas planning process, and level of commitment as reflected in the collection of the communities’ contribution to the financing of the schemes, and the proposals for O&M cost recovery for the schemes through user charges. To promote synergy with other sectors and enhance the development impact, priority for the ADF supported Program will be accorded to those Woredas benefiting from prior or ongoing Bank funded interventions in the country.

4.6 Impact on Cross Cutting Issues

Environmental Impact

4.6.1 The programme has been classified as category II, according to the Bank’s environmental guidelines, given that the services entail relatively simple technologies with no major environmental impacts. The rural water supply and sanitation programme will include many sub-projects, with technology choices ranging from hand dug wells, drilled wells, protected springs, boreholes, gravity schemes, rainwater harvesting, sub-surface dams, small

25

piped systems, and pumping systems (hand pumps, motorized, solar or windmill pumps). Sanitation options will be limited to on-site sanitation and hygiene promotion.

4.6.2 Ethiopia’s National Water Resources Management Policy and the implementation arrangements for the programme are aimed at ensuring environmentally and socially sustainable water supply and sanitation services to the people, and the programme lays strong emphasis on hygiene and sanitation to improve the environment of the beneficiaries. An Environmental and Social Management Plan(ESMP) has been developed for the programme. The summary ESMP is given in Annex 5. In terms of the criteria for participating Woredas under the Bank funded STP, environmental and social assessment will be carried out for each sub-project identified for the community groups, in accordance with the national environmental requirements, which are in line with the Bank Group environmental guidelines.

4.6.3 The likely adverse environmental impacts are those related to pollution of aquifers through wells, springs, boreholes and depletion of aquifers. To minimize pollution the wells and boreholes will be located away from and upstream of sources of pollution like latrines, sewer pipes, waste dumps and densely populated areas and they will be designed with proper seals to limit point source pollution, providing concrete lining, drainage aprons, and fencing. Aquifer depletion will be prevented through aquifer monitoring to determine the safe yield and limit abstraction levels to the safe yields. Construction related impacts like erosion and cut slope destabilization will be addressed by including the mitigation measures such as landscaping and grassing, carting away and proper disposal of construction wastes in the works contracts.

4.6.4 The communal water points will be designed and constructed in such a way as to ensure proper drainage of wastewater. This will prevent water stagnation, avoid the risk of groundwater contamination and development of breeding ground for mosquitoes, flies and other insects. Such care will minimise the transmission of water borne diseases and malaria. The hygiene education will sensitise the local community of the environmental health hazards associated with water infection and poor drainage and the need to keep the facilities clean. In cases where livestock watering is part of a sub-project as expected in the arid regions, separate-drinking troughs will be constructed for the animals.

4.6.5 Currently, the country has environmental guidelines and environmental assessment policy that are enforced by the Environmental Protection Authority (EPA). The PIUs will have the overall responsibility for supervising and monitoring the environmental aspects of the programme. They will ensure that the negative impacts are mitigated according to the programme design. In addition, the programme will provide the Woredas with simple portable water quality monitoring kits that will be used to test samples from all the water points in their areas. The kits will monitor a small number of water quality indicators and in case of alarming results, detailed water quality analyses from the specific water point will be undertaken in the laboratory, and the results reported to EPA.

4.6.6 The supervision missions of the Bank will also follow up the various environmental aspects of the programme as part of the overall implementation/supervision of the programme.

26

Social Impact

4.6.7 The programme will contribute positively to the social and human environment through improved safe drinking water supply and access for 7.6 million rural population, and improved sanitation facilities for 8.4 million rural populations. In Ethiopia, infectious and communicable diseases account for about 60 to 80% of the health problems. In 2003 the under 5-child mortality was 117/1000 of which 20% was attributed to diarrhoea. It is estimated that 50% diarrhoea reduction can be achieved through the use of latrines, 15% with the use of clean water, and 35% with proper sanitation. In 2003/4, malaria was the leading cause of outpatients’ visits accounting for 15.5% of all visits. Increasing water supply and sanitation coverage and hygiene practices will therefore reduce the incidence of water related diseases like cholera, malaria, gastro-intestinal disorders, worms infection, skin disorders, eye infections, etc. by up to 50%. The improved health will translate into lower healthcare costs for families and reduction in morbidity and mortality. The high incidence of HIV/AIDS, currently estimated at 6.6% is also impacting negatively on poverty. According to MOH, the cumulative number of AIDS deaths since the beginning of the pandemic was estimated at 1.7 million in 2002, and is expected to reach about 5.25 million by 2014 if present trends continue. Availability of water within easy reach will improve care for AIDS patients.

4.6.8 Gross primary school enrolment also increased significantly from 36% in 1995/96 to 64% presently but with the female enrolment rate at only 52%. However, in the nomadic areas, gross enrolment ratio in 2002 was only 10.3% in the Somali region and 11.5% in Afar region with female enrolment at only 17.2% in Afar region. School drop out rates were also higher for nomadic areas than the rest of the country. Compared with the 1995/96 levels, the overall literacy rate also increased by 7% in 1999/00. However, the illiteracy rate estimated at 60.4% in 2001 is still quite high. Females had higher illiteracy rate (65.3%) than males (55.6%). The lower female enrolment and literacy rates have been attributed to their preoccupation with water collection and the lack of sanitation facilities in schools. The availability of adequate and potable water close to the home and educational facilities will save the time spent fetching water over long distances. This will be particularly beneficial to women and children, especially girls, who bear the burden of fetching water and have to walk long distances or queue for long periods. It will mean more time for girls to attend schools and thus help address the education imbalances. It will also allow more time for women to engage in other economically beneficial activities. Such time could be utilised for other productive activities, leading to increased household incomes, and eventually to improved health and higher living standards.

4.6.9 In the ASAL where many families are nomadic, moving from place to place in search of water and pasture for themselves and their cattle, and in some instances leading to conflict with the settler communities, the programme is expected to improve the situation for these people. The provision of water for livestock would also reduce the burden of work on the pastoral communities and improve their livelihood.

4.6.10 Women will have more direct involvement in the selection, location and management of sub-projects through their participation in the WASHCOMs, and will constitute at least 30% of the membership of these committees. The programme will also impact positively on the achievement of the other MDGs such as reducing extreme poverty and hunger, promoting gender equality and the empowerment of women, reducing child mortality, improving maternal health and combating malaria.

27

4.6.11 The implementation of the programme will also create employment opportunities in different parts of the country for contractors, consultants, artisans, community workers, component suppliers and spare parts dealers. The numerous water points that will be developed will create jobs for pump attendants and mechanics.

Gender Issues

4.6.12 In Ethiopia, like in many developing countries, women are at the centre of the struggle for water. They spend between 2 to 6 hours walking long distances to collect water, thus exposing themselves to all sorts of hazards. A 1997 study found that up to one third of women in some woredas spent more than two hours each trip to fetch water and many required two or three such trips a day. The pre-occupation with collecting water prevents women from contributing to other economically important activities in the family and causes absenteeism from school by girls, particularly in nomadic pastoral communities where the distance to the water points can be longer than 5 km. Currently gross enrolment rate in grades 1 to 8 is at 64% but only 52% for girls while illiteracy rates for women is 65.3 compared to 55.6 for men. These discrepancies are attributed to the preoccupation of women and girls with collecting water and the lack of sanitation facilities in schools. The programme would contribute to addressing these imbalances in the education sector and eventually in the work place by bringing school enrolment rates for girls and literacy rates for women at par with those for boys and men. Moreover, the high incidence of water borne diseases implies that women spend long periods tending to other sick members of the family.

4.6.13 Overall, the prerequisites for gender mainstreaming in the sector are in place. Under the decentralized government system, a Women’s Affairs Desk exists in each Woreda to oversee gender issues. The government has shown a satisfactory level of awareness that community participation, and the involvement of women in particular, is an indispensable element of a vibrant WSS sector. The policy environment advocates for effective mainstreaming of gender issues at all levels. For example, in the SDPRP, gender equality in the process of decentralization and empowerment is emphasized, and the government’s intention is to invest in areas that contribute to reducing women’s workload such as water supply services.

4.6.14 Equally, the Ethiopian Women’s Affairs Office aims to facilitate the necessary conditions whereby rural women can have access to basic social services and to ways and means of lightening their workload. The Water Sector Strategy proposes (i) to pay special attention to the role of women while establishing community based structures and (ii) that the active involvement of women for the success of water projects and schemes and for sustainable services of water supplies should be enhanced. The government has also put in place comprehensive gender mainstreaming guidelines and a checklist, which provides key questions at each stage of the project cycle. It also outlines quantifiable and measurable indicators for the integration of gender in the water sector while also focusing on addressing constraints in collecting, analysing and reporting on gender disaggregated data.

4.6.15 The programmes being implemented by both the government and NGOs are actively promoting these issues as exemplified in the FINIDA financed Rural Water Supply and Environmental Programme (RWSEP) in Amhara region and in the support provided by institutions such as JICA, ESRDF, Ireland Aid, Action Aid and Water Action among others. Some NGOs such as Women Support Organization, Women Aid Ethiopia have utilized water supply and sanitation initiatives as an entry point for women empowerment through credit and for advocacy on related issues such as poverty, HIV/AIDS, human rights and

28

reproductive rights. The Implementation guidelines for the Water Supply and Sanitation Programme also stipulate clear roles for men and women in the programme, and even require that WASHCOMs have between 30 and 50% women membership in order to be eligible for support. However despite these efforts, cultural practices in some parts of the country prevent full realisation of the required levels of women participation in community development activities and the need for more advocacy and awareness building is widely recognised.

4.7 Cost Estimates for the Short-Term Programme

4.7.1 The cost for the Short-term Programme is estimated at ETB 2.36 billion (UA 180.37 million). The summary STP cost estimates by component are given in the Table 4.2 below and detailed in Annex 6.

Table 4.2: STP Cost Estimates by Component Component

FC LC Total FC LC TotalA Water Facilities 751.32 1,019.63 1,769.04 57.43 77.94 135.23 75%B Sanitation Facilities with Hygiene Education 30.21 133.27 165.37 2.31 10.19 12.64 7%C Capacity Building 26.82 107.28 134.10 2.05 8.20 10.25 6%E Program Support 13.70 277.36 291.06 1.05 21.20 22.25 12%

Total 822.04 1,537.53 2,359.57 62.84 117.53 180.37 100%

ETB (million) UA (million)

4.7.2 The STP cost estimates by category of expenditure is given in the table 4.3 below.

Table 4.3: STP Cost Estimates by Category of Expenditure CATEGORY

FC LC Total FC LC TotalCivil WorksWater Schemes 295.46 886.38 1,181.84 22.59 67.76 90.34Sanitation Facilities 8.67 49.16 57.83 0.66 3.76 4.42Goods 0.00 0.00 0.00Water Schemes 455.85 50.65 506.50 34.85 3.87 38.72Sanitation Facilities 3.61 10.84 14.46 0.28 0.83 1.11Office Furniture and Equipt. Water Quality Equipt. 7.62 0.85 8.47 0.58 0.06 0.65Services 0.00 0.00 0.00Design and Supervision - 84.19 84.19 0.00 6.44 6.44Implementation Support TA 3.73 14.90 18.63 0.28 1.14 1.42Hygiene and Health Education 17.92 71.67 89.59 1.37 5.48 6.85Training and Capacity Building 26.82 107.28 134.10 2.05 8.20 10.25Audits 0.89 3.55 4.43 0.07 0.27 0.34M&E 1.46 3.41 4.88 0.11 0.26 0.37Operating Costs - 254.65 254.65 0.00 19.47 19.47Total 822.04 1,537.53 2,359.57 62.84 117.53 180.37

ETB (million) UA (million)

4.8 Financing Plan

4.8.1 As per table 4.2 above the cost for the Short-Term Programme (2005/06 to 2007/08) is estimated at ETB 2.36 billion (UA 180.37 million) based on the available financing shown in table 3.4 above. Based on parallel co-financing arrangements, the ADF will fund UA 43.61 million (24%), other donors (World Bank, FINIDA, JICA, UNICEF, UNDP, the Netherlands Government) and NGOs will finance UA 77.93 million (43%). Based on their recent performance, it is estimated that NGOs can contribute about USD 30 million (UA 20.34 million). The Government will contribute UA 48.14 million (27%) and communities will contribute UA 10.69 million (6%).

29

Table 4.4: STP Financing Plan by Source of Finance (Million UA)

SOURCE AMOUNT % ADF Grant Other Donors (inc. NGOs) Government of Ethiopia Communities

43.61 80.36 46.22 10.17

24 45 26 5

Total (Million UA) 180.37 100

4.8.2 The cost tables and financing plan for the ADF financing are given in Annex 7

5. PROGRAMME IMPLEMENTATION

5.1 Executing Agency

5.1.1 The Ministry of Water Resources (MOWR) supported by the Ministry of Health will serve as Executing Agency for the National Rural Water Supply and Sanitation Programme financed by the World Bank, African Development Bank and the Government. The implementation arrangements described below are therefore for these parts of the programme. Other Donors like UNICEF, UNDP, FINIDA, JICA, and NGOs currently use different implementation arrangements, but the Government plans to gradually bring the others to adopt the implementation arrangements described here. It is in the process of finalizing a Memorandum of Understanding between the key Ministries involved.

5.1.2 Programme implementation is decentralised using existing institutional structures at the Federal, Regional and local/community levels, as well as the implementation, financial management and procurement manuals developed for the national programme, similar to the implementation arrangements adopted for the World Bank support. The Programme institutional framework is described below and the Programme Implementation Chart is provided in Annex 8.

5.2 Institutional and Implementation Arrangements

5.2.1 Programme Steering Committee (PSC): The PSC shall comprise senior officials from MOWR (chair), Ministry of Finance and Economic Development (MOFED), Ministry of Health (MOH), Ministry of Education, one representative from each of the Regional Administrations,. The Programme Coordinator, will serve as Secretary of the PSC whose functions include:

Overseeing implementation of Programme and provide strategic guidance to operations;

Approval of Programme operational guidelines that promote best practices and ensure participation of beneficiary communities, accountability and transparency;

Review and approval annual work plans and budgets;

Review and assess Programme performance through its Quarterly Progress Reports and Annual Report and audit reports; and

30

Review and recommend appropriate measures to resolve emerging issues and constraints.

5.2.2 The establishment of the PSC will be a condition precedent to first disbursement of the grant.

5.2.3 Programme Coordination: A Programme Coordination Unit (PCU) established within the MOWR will coordinate all the Programme activities. The PCU will be expanded to include the MOH for coordination of the sanitation component and MOFED for managing the finances. The Head of the Rural Water Supply and Sanitation Department will serve as Programme Coordinator. The Programme Coordinator will be assisted by a Water and Sanitation Engineer, a Socio-economist, an Accountant from MOWR, and the Team Leader for Water and Sanitation from the Hygiene and Environmental Health Department (HEHD) of MOH. A representative of MOFED will be responsible for the financial management of the programme. Technical Assistance in Programme Management, Financial Management and Procurement will be provided as centralised services from the PCU. The functions of the Programme Coordination Unit include:

Preparation of the annual national programme and coordination of implementation activities;

Administration of Programme accounts and ensuring speedy disbursement of funds per the approved budget and work plans of Regional Programme Implementation Units (PIUs);

Ensuring timely replenishment of the Special Account and release of funds to the Regional PIUs;

Providing adequate procurement and disbursement guidelines to the Regional PIUs;

serving as information clearinghouse for the Programme by preparing and disseminating the Programme operations manuals; progress reports, impact assessment studies and reports to all stakeholders;

Establishing and maintaining a computerized and regularly updated database on Programme activities, sub-projects, beneficiary groups and other pertinent project related statistical data;

Commissioning occasional consultancy studies aimed at compiling tested and working approaches for water services delivery, and to assess the impact of the Programme on target beneficiaries.

5.2.4 Federal Level Programme Implementation Units (PIUs): The RWSSD in the MOWR and the HEHD of the MOH will serve as Programme Implementation Units at the Federal level under the supervision of their respective heads. For the water supply component, a senior Water Engineer within the RWSSD of MOWR will serve as full time Team Leader for the ADF financed part of the programme, assisted by other staff of the Department. For the sanitation component, a senior sanitation specialist will serve as the head of the PIU at the MOH and will be supported by other staff of the Department. Monitoring & Evaluation of the Programme will be the responsibility of the Planning Departments of the two Ministries, with inputs provided by stakeholders at all implementation tiers.

31

5.2.5 Submission of evidence of nominating the Team Leaders of the PIUs whose qualifications and experience are acceptable to the Fund will be a condition precedent to first disbursement.

5.2.6 Regional PIUs: At the Regional level, the Regional Water Bureaus and Regional Health Bureaus will serve as Program Implementation Units (PIUs), with functions as follows:

Technical guidance, where feasible, to the Woredas in preparing their respective Water Supply and Sanitation Programmes, sub-project proposal or assisting them in liasing with WSGs;

Screening sub-project proposals submitted by the Woreda to ensure that they meet the selection criteria stipulated in the Implementation Manual;

Approving Regional Programme and sub-project proposals;

Screening the intermediary entities or “Local Service Providers” to ensure that they have adequate capacity and expertise to manage and implement sub-project activities;

Oversight and monitoring of all project-related activities; monitoring sub-project environmental impacts and proposing mitigating measures;

Collection and compilation of socio-economic data on beneficiary communities and sub-projects' performance to be fed to the computerized database at the PCU.

5.2.7 At the Woreda level, the Woreda Water and Sanitation Team (WWST - Woreda Water Desk, Woreda Health Desk and Woreda Administration) is responsible for Programme implementation at the community level, including financial and procurement management, and monitoring and evaluation. The WWST will be assisted by consultants (Woreda Support Group) to develop the Woreda RWSS Program, study community requests, prepare designs and carry out procurement and disbursement activities. For the water supply activities, community mobilization and training will be provided by Community Facilitation Teams CFTs). Local Service Providers will assist the communities to prepare their WSS investment proposals and related Facilities and Management Plans, while for the sanitation activities community mobilization and training will primarily be the responsibility of Health Extension Workers. NGOs that have secured their own funding will also be encouraged to serve as CFTs and LSPs.

5.2.8 The PCU and PIUs (RWSSD, HEHD, RWBs and RHBs), WWDs, WHDs already exist under the decentralised local Government structure and are being used at all levels by the Government, the World Bank, UNICEF and FINIDA in their interventions. MOFED and the Regional and Woreda Bureaus of Finance and Economic Development (BOFED) shall be responsible for maintaining the accounts and reporting the financial transactions under the Program. MOFED will be responsible for preparing regular accounting and financial reports, submitting the draft consolidated accounts to the external auditors, and coordinating the conduct of the financial and technical audits by external auditors acceptable to the Fund.

5.2.9 The following documents, which detail different aspects of the programme, would serve as the Programme Implementation Document: Regional Implementation Manuals; Handbook for Rural Water Supply and Sanitation; Technical Design Manual; Community and Institutional Manual; Operation and Maintenance Manual; Financial Management Manual; Procurement Manual; Water Sector Development Programme; Water Supply and

32

Sanitation Programme; Health Extension Package Implementation Guidelines; Issues papers for- Project Design: Technical, Financial and Economic Feasibility; Sanitation & Hygiene; Supply Chains for Water Supply and Sanitation; and Management Models & Contractual, Legal Arrangements of Water Supply in Urban and Rural Areas.

5.3 Supervision and Implementation Schedule

The Short Term Programme will be implemented over a period of 3 years, starting in mid 2005 and ending in mid 2008. Implementation by the World Bank commenced in mid 2005 while the Bank’s support will commence in January 2006 for 30 months). The first year will be devoted mainly to capacity building activities and the procurement of goods, though limited physical works will also be carried out in Woredas where there is adequate mobilization and capacity at the start of implementation. The Programme will be supervised at least twice a year from the Bank headquarters, with the participation of procurement and disbursement officers in the team. Regular supervision will be provided by the Water Engineer based at ETCO. A Mid-Term Review of the STP will be conducted not later than 15 months after grant effectiveness. The implementation schedule is detailed in Annex 9-

5.4 Procurement Arrangements

5.4.1 Procurements using International Competitive Bidding procedures shall be carried out in accordance with the Bank’s Rules of Procedure for Procurement of Goods and Works and the Rules of Procedure for the Use of Consultants, For procurements using procedures other than International Competitive Bidding procedures, the procurement rules and documents designed for the Rural Water Supply and Sanitation Programme shall be used. The national procurement rules and procedures were reviewed and found to be adequate, as there are no fundamental conflicts with the Bank’s procurement rules and procedures. Therefore, the adoption of the draft Implementation Guidelines and the Procurement Manual will not constitute risks concerning Bank’s procurement rules and procedures.

5.4.2 To ensure accelerated delivery of the Programme, yet abiding by the Bank rules and taking into account the type of works envisaged, procurement will mostly be by NCB except for large bulk procurement of goods, equipment and works valued at over UA 0.5 million, which will be by ICB. Procurement of all consultancy services, including Woreda Support Groups and Local Service Providers, will be by short listing. 5.4.3 The procurement of works for construction of wells and springs will be by direct negotiation with artisans based on agreed rates and for the procurement of consultancy services to be provided by Community Facilitation Teams who will carry out community mobilization also be by direct negotiation. Beneficiary communities will be involved in the procurement of all works and services for the communities. 5.4.4 Bank Group Standard Bidding Documents will be used for all ICB contracts. For NCB and other procurement, national procurement documents prepared for the programme will be used.

5.4.5 The capacity of some of the Regional Water Bureaus that were visited is sufficient to carry out the procurement activities. However, the present capacity of the Woredas requires strengthening. Therefore, the RWBs will be strengthened with Procurement specialists and staff of the Woredas will be trained on procurement and/or supported by the Regional Bureaus.

33

Procurement Packaging

5.4.6 Procurement under the Programme will be divided into two major groups. The first is the large bulk procurement of goods, equipment and works. The second is the smaller individual contracts. The bulk procurement will be carried out through ICB. The threshold for using ICB will be UA 0.50 million.

Procurement Planning

5.4.7 At the regional level each Programme Implementation Unit PIU will prepare annual procurement requirements (plan), which will cover goods, works and services required for the period. The procurement plans will be consolidated and segregated into bulk and smaller procurement packages. The bulk procurement will be subjected to the thresholds stipulated for ICB and NCB procedures and will be procured as aggregated packages to benefit from the economy of scale. The other smaller packages will be procured according to the procedures stipulated in the PID.

Review Process

5.4.8 All procurement activities, which are carried out through ICB, and NCB valued more than UA 100,000 will require the Bank’s prior review at all stages of the process. On the other hand the non-ICB procurement activities and NCB procedures of values less than UA 100,000 which are expected to constitute the bulk of the procurement will be reviewed posteriori and will not require Bank’s prior approval. However, the internal Government’s review and approval mechanisms, which are governed by the Regional Implementation Manuals, will be followed at the stipulated levels. The mechanisms for the post review process will be included in the overall monitoring and audit of the programme activities. The procurement plans will be submitted to the Bank for review and approval annually.

Tender Documents

5.4.9 The Banks standard bidding documents will be utilized for the formal ICB procedures while more simplified tender documents will be adopted for the other modes of procurement. In this regard, the Bank’s guidelines for Procurement Under Community Based Investment Projects have been taken into account in preparing the procurement documents for the non-ICB procedures.

5.4.10 Table 5.1 below shows the different categories of the programme components and their modes of procurement:

Table 5.1: Summary Procurement Table

Items ICB NCB Shortlist Other

Goods Valued more than UA 0.50 m

Between UA 0.10 m and UA 0.50 m

IS, NS, DP, Less than UA 0.10 m.

Civil Works Values more than UA 0.50 m

Between UA 0.10 m and UA 0.50 m.

DP. Less than UA 0.10 m.

Consultancy Services

All values

Miscellaneous According to the PID (NS, IS, DP)

34

5.4.11 Suppliers of equipment will be required to procure spare parts as well and make them available for sale at outlets in selected centres in the regions. Funds from the sale of spare parts will be repaid to the Government and reused in subsequent procurement of spare parts.

5.4.12 The detailed procurement table for the ADF financing is also given in Annex 7B.

5.5 Disbursement Arrangements

5.5.1 The disbursement methods for the ADF grant shall include the Direct Disbursement and Special Account methods. Disbursements for International Competitive Bidding (ICB) contracts and associated supervision contracts, International Shopping (IS) and all National Competitive Bidding (NCB) contacts above UA 250,000 will be through Direct Disbursement method, in accordance with Bank Group rules. Disbursements for National Shopping (NS) and other contracts below UA 250,000 will be through Special Accounts for the ADF grant.

5.5.2 Disbursements from the ADF grant through Special Account will use the established funds flow channels of the Government of Ethiopia. Resource allocations to the Regions will be guided by the Government’s allocation formula. A system of Special Accounts will be operated at the national, regional and Woreda levels, and reimbursements will be based on Statements of Expenditure. Replenishment of the Special Account at MOWR will be upon utilization of at least 50% of the amounts disbursed from the ADF grant. Regional Administrations will cover the Government’s contributions for the activities to be carried out in their respective regions while the Federal Government will fund the federal tier activities.

5.5.3 Proceeds from the ADF grant shall be deposited into a Special Foreign Currency Account (FCA) to be opened at the National Bank of Ethiopia and managed by MOFED. A Local Currency Account (LCA), also managed by MOFED, will be opened at the National Bank of Ethiopia for purposes of transferring funds from the FCA to cover eligible expenditures in local currency, and transferring funds to the Regional and Woreda level BOFEDs. The opening of these two Special Accounts will be a condition precedent to first disbursement of the ADF grant. Each regional and woreda BOFED will open an LCA into which the portion of ADF financing for eligible expenditures will be deposited, based on the approved annual work plans, budgets and procurement plans of the Participating Woreda and Regional BOFEDs will submit regular reports on the utilisation of the funds to MOFED, for consolidation.

5.5.4 The initial disbursement into the Special Account will be UA 2.3 million and will be gradually increased to a maximum level of UA 5.0 million as the programme implementation progresses. The high levels proposed would ensure that adequate funds are available in the 120 woredas to be covered under the Bank financing.

5.5.5 The Financial Management Manual prepared for the WSSP has been designed for use under both computerised and manual settings. While the policies and procedures in accounting and reporting for funds provided, budgeting, internal controls and auditing arrangements are consistent with the Fund’s fiduciary requirements, and while MOWR has experience in the implementation of the Fund’s projects, the Programme will support a Financial Management Specialist position at the PCU and for each Region. This will help MOFED, MOWR and RWBs to meet their financial management and reporting responsibilities under the Programme.

35

5.6 Monitoring and Evaluation

5.6.1 The Bank supported activities of the STP shall be monitored and evaluated as an integral part of the Participatory Monitoring & Evaluation Framework that will be applied to all water sector activities in the country irrespective of financier or implementing agency. The M&E system is currently under development through World Bank support.

Performance Indicators

5.6.2 The Participatory M&E Framework has developed a detailed list of indicators (see Annex 10) for Woreda, Regional and Federal level activities that address organizational strengths of the communities, Local Service Providers, Woreda Support Groups; numbers of Water Committees established and having at least 30% women as members, and fulfilling the 5% cash contributions; number of water points constructed, functioning, and with adequate O&M by the communities etc.

Country Level Monitoring

5.6.3 Woreda Level Monitoring: At the District level, Woreda Water and Sanitation Teams (WWDs and WHDs) in conjunction with WSGs, CFTs and LSPs, will collect real time information on key output and outcome indicators from the villages and communities within their Woredas. They will aggregate the data from the communities into Woreda level data sets and provide quarterly reports to the Regional authorities.

5.6.4 Regional Level Monitoring: RWBs and RHBs, in conjunction with the WSGs, will aggregate information coming from the Woredas into Regional level databases and provide bi-annual reports to the Planning Departments of MOWR and MOH.

5.6.5 Federal Level Monitoring: The Planning Departments of the MOWR and MOH will be responsible for overall coordination, monitoring and evaluation system and procedures. The Units shall aggregate and compile monitoring and evaluation information from the regions, input the information to the database established at MOWR, and disseminate reports to all the stakeholders. MOWR with support from MOH will also organise annual review meetings of all relevant sector ministries, donors at the country level, NGOs and RWBs and RHBs to review progress made with respect to the MDGs and to set targets for the subsequent years to ensure achievement of the MDGs. The annual reviews will also provide an opportunity to identify best practices that have worked in parts of countries for possible scale up and replication in other areas.

Continent-wide Monitoring

5.6.6 The national reports will be sent to an African Regional Monitoring Mechanism Secretariat established at the ADB headquarters, which will input the M&E information from all countries into its database with Internet links to the country databases. The programme will assist African Governments to establish Internet linked databases of water sector activities in their countries which will be gradually built up to become reliable sources of all manner of water sector information in Africa.

5.6.7 The ADB secretariat will organise annual continent-wide review meetings with the participation of national representatives responsible for the country programmes, donors and

36

NGOs, possibly around the time of the ADB Water Week, to review the progress on the continent, and report to the Water Week meetings on progress or lack of it towards the attainment of the MDGs and make proposals for the future.

5.6.8 The annual continent-wide reviews will also provide an opportunity to identify practices that have worked in some countries for possible scale up and replication in others and assist governments and donors to identify the priority areas for directing their support in the future. The programme will provide logistical support to the Planning and Projects Department of MOWR, the Planning Department of MOH, RWBs, RHBs, WWDs, and WHDs in their respective M&E activities.

5.7 Reporting and Auditing

5.7.1 RWBs shall be responsible for keeping original documents maintaining consolidated accounting records for all funds received and disbursed by the Region and the Woredas receiving grants under the Program. RWBs will also be responsible for ensuring compliance with financial management and reporting requirements for Woreda. In this regard, the Woreda Water Desks shall prepare quarterly progress reports on all community selection, sub-project applications, approvals, procurement, disbursements, including relevant data and indicators on the WSSP. These reports will be submitted for compilation and reconciliation by the RWB for the region, and submitted to the PCU at MOWR for consolidation into Quarterly Progress Report (QPR) on WSSP activities. The QPRs, which relate physical progress and outputs to the financial information on the Program, shall be submitted to the Fund, Government and other donors within 45 days from the end of each Quarter.

5.7.2 The PCU at MoWR, the Implementing Agencies and Woredas shall maintain separate accounts and records for the RWSSP activities, showing at all times the expenditures by component and source of financing. Regional BOFEDs will prepare financial statements and supporting schedules at the end of each year, and from the Regions’ submissions, MOFED will prepare consolidated financial statements, which show the movement in the Special Account and Statements of Expenditures. MOFED, MoWR, MOH and the Regions have some experience in handling donor project funds, and a common implementation structure is utilised as for the World Bank’s support for the Program.

5.7.3 Woreda, RHB and RWB project transactions and reporting will be subject to periodic internal audit/spot checks by the RHB, RWB, MOH and MOWR respectively. The overall Fund supported Programme will also be subject to annual external audits by an independent auditing firm appointed by the Federal Auditor General, in line with the rules of the Fund. External audits are proposed to avoid overstretching the capacity of the Auditor General. To ensure proper accountability of the funds managed by the beneficiaries, these technical and financial audits shall focus on the technical execution of the works, systems in place to ensure appropriate maintenance, procurement, and the reliability of the financial reporting system in tracking the Program funds flow. The same auditing arrangements will be used with the World Bank, but other donors have different audit arrangements for their financing.

5.8 Aid-Coordination

5.8.1 Along with all other interventions in the WSDP, the WSSP implementation will be coordinated by the RWSSD, Planning and Projects Departments of the MOWR and HEHD

37

and Planning Department of MOH. The Bank will ensure regular exchanges with donors and NGOs operating in the sector to exchange implementation experience.

5.8.2 During the preparation of the programme for Ethiopia, the Bank participated in a meeting of the DAG Water Sector Group in 2003 chaired by UNDP, at which donors were sensitised of RWSSI and the Bank’s intentions to implement the Initiative in the country. The mission also met individually with representatives of key donors in the water sector. During the Pre-Appraisal mission held in November 2004, the Bank mission organised a one-day workshop for key stakeholders from the regions, donors and the Ministries of Finance, Water and Health in order to provide further information on the Bank’s planned intervention in the RWSS and consult on the way forward.

5.8.3 The Bank also played an advocacy role to draw attention to the low coverage for RWSS in Ethiopia and the huge financing requirements with a view to encouraging increased donor funding for the Programme. During implementation phase, the Bank will collaborate with donors already working on rural water supply in Ethiopia to coordinate interventions and monitor progress, thereby ensuring effective use of resources and a tangible development impact. The Stakeholders’ Annual Review Meeting will provide a platform for review implementation experience and make any necessary adjustments to the Programme in order to ensure that the targets are being met..

6. PROGRAMME SUSTAINABILITY AND RISKS

6.1 Sustainability

6.1.1 Overall sustainability will be assured by the participatory nature of the programme. Communities are likely to take better care of services that they selected and contributed to the capital costs and have responsibility for their O&M. Technical sustainability will be assured through the use of simple technologies for which the relevant technical expertise exists in Ethiopia. However there will be training of community representatives and local service providers in operation and maintenance of the selected technology option, and ensuring that spare parts are easily available to remote communities. Sustainability of communal latrines will be assured by allocating them to families who will ensure their proper management.

6.1.2 Financial sustainability will be assured by ensuring that the least cost options are selected for the sub-projects and making the beneficiary communities fully responsible for the operation and maintenance costs as well as the management of the services. Where pumping systems are to be used, efforts will be made to ensure use of renewable energy pumps like solar and wind pumps, which is currently used in some rural schemes. Various mechanisms will be put in place for the recovery of the O&M costs, depending on the individual community’s decision. In some places, the preferred mode is to charge consumers at the collection point per container (e.g. 20 l jerry can, 1 m3 drum, etc.) while in other places payment is a fixed monthly amount agreed by the community . Environmental sustainability will be assured by ensuring that all negative impacts of sub-projects are identified and addressed as part of sub-project implementation activities. The programme will make use of the mechanisms available within the different communities to identify and assist the poorest of the poor access their basic needs for water and sanitation services.

38

6.2 Risks

6.2.1 The human resources capacity constraints at all levels, particularly at Woreda level, poses a risk to timely programme implementation which can lead to delays and the failure to fulfil the MDGs and the programme targets. The risk is reduced by the high level of capacity building for government institutions at Federal, Regional and Woreda level, for beneficiary communities, artisans, local contractors and consultants during the early stages of programme implementation.

6.2.2 Implementation of Bank funded social sector projects like the Primary Health Care Services Programme and the Education III project in Ethiopia, involving the operation of Special Accounts at regional and Woreda levels, have experienced major delays due to problems linked to the operation of the Special Accounts and the collection of disbursement information from the Woredas. The current programme will address this potential risk by ensuring that MOWR and all regions are supported with procurement and financial management expertise and that all participating Woredas have the required technical and finance staff in place, and providing training for them.

6.2.3 The ready availability of spare parts is another risk to programme sustainability, which will be mitigated by supporting the involvement of the private sector, community associations and cooperatives in the importation and distribution of spares to all parts of the country.

6.2.4 The available financing of USD 88.7 million per annum is lower than the estimated financing requirement of USD 125 million per annum, and poses a risk that the MDGs will not be attained. While the Government and communities have shown commitment to meet their part of the financing, the risk of donors not increasing their contributions to the programme required levels remains. The annual review meetings will serve to show progress relative to the targets and encourage donors to increase their financing to the sector.

7. IMPACT EVALUATION

Socio-economic Impact

7.1 The proposed Programme will generate positive impact, which will enhance the livelihood and well-being of the target population. Readily accessible potable and affordable water for domestic use, especially to the rural population has been proven by many studies to have a direct impact on human health and an indirect one on labour productivity. Equitable and readily available water will also reduce drudgery of women and children who are usually responsible for collecting water in rural areas. It has been found that the average load carried per trip by an adult is 21 litres and the average trip (two-way) time for fetching water is 6 hours including 30 minutes of waiting time.

7.2 As a result, it is expected that the number of people getting safe drinking water will increase. Also, per capita consumption in rural areas will increase from 10 litres/person/day to 20 lit/person/day. Travel time to fetch water is also expected to decrease on average from 3 hours to 1 hour, and hence the burden of fetching water by women and children will be significantly reduced. The provision of water supply and sanitation services will impact

39

positively on the other MDGs, such as reducing poverty, improving health and access to education, and promoting gender equity.

7.3 Considering that this is a framework-type programme, with the individual sub-projects not pre-selected, the economic analysis assumed the profile of scheme types used for costing the STP. The economic analysis of the project presented in Annex 11, has been prepared under “with” and “without” project scenarios based on estimates of the costs and benefits that would accrue to various sectors as a result of the interventions to improve water and sanitation services in Ethiopia’s rural areas. The analysis also takes into account the impact of the project on the health and education sectors, as well as productivity and income effects to rural households. Gains related to fewer deaths are recognised but have not been included in the analysis due to lack of data.

7.4 Based on the underlying assumptions provided in Annex 11, the STP posts an Economic Net Present Value (ENPV) of ETB 2.82 billion and Economic Rate of Return (EIRR) at 38%. Being significantly higher than the 10% discount rate, the proxy opportunity cost of capital in Ethiopia, and these results indicates that the project is economically viable. The analysis also shows that the benefits are mainly attributable to time savings for households (64% of total estimated benefits) stemming from the convenience of having better access to water and sanitation services. This is followed by direct benefits (22% of total benefits) accruing from incremental water and sanitation services provided. Significant health sector benefits, in the form of health sector cost savings and patient costs saved (11.4%), and education sector cost savings (2.2%) are also derived from the STP. The analysis further indicates that the interventions under the STP are cost effective, with the return on ETB 1 investment estimated at ETB 12. These results are generally consistent with WHO regional and global estimates.

7.5 A long-term developmental impact will result from community participation in the planning, implementation, management and monitoring of water supply services including operations and maintenance. This will have an important dual effect of (i) enhancing ownership of the facilities and sustainability, and (ii) due to the built capacity, enhanced knowledge & information, as well as travel time saved, the communities will engage in other developmental activities (positive externality or spill over effect). In other words, the Water Committees could serve as Community Development Agents who can play an active and lead role on interventions in other sectors. The Programme would also open up new opportunities for development of natural resources and creation of job opportunities that benefit central, regional and local Governments.

7.6 Finally, the involvement of the private sector as the market for water supply services, local capacities and skills are built will also enhance the sustainability of the programme interventions. Most notably this will be achieved as the private sector encompasses a range of individuals and companies from the village blacksmith to international companies manufacturing pumps and diesel generators, and national experts and contractors. While creating new opportunities for the private sector, the closer proximity of such services to rural areas will enhance efficiency and effectiveness of the delivery of local developmental services.

40

8. CONCLUSIONS AND RECOMMENDATIONS

8.1 Conclusions

8.1.1 The RWSS Programme in Ethiopia will assist the government to achieve the MDGs by increasing rural water supply and sanitation access from the current levels of 24% and 8% to reach 62% and 54% respectively by 2015. The capacity of the decentralised local government structure and other key actors (private sector contractors, consultants and artisans) will also be strengthened. It would also leave communities better organised to manage their own water services in a more sustainable way. The Programme is technically feasible, economically viable (ENPV=ETB 2.82 billion and EIRR= 38%), environmentally sustainable and provides immense socio-economic benefits.

8.1.2 By increasing awareness of hygiene and health issues, it will also help reduce incidence of water borne diseases and associated high health care costs. The Programme will also impact positively on the achievement of other MDGs such as reducing extreme poverty and hunger, promoting gender equality and empowerment of women, reducing child mortality, improving maternal health and combating malaria.

8.2 Recommendations and Conditions for Grant Approval

8.2.1 It is recommended that an ADF grant not exceeding UA 43.61 million be extended to the Federal Democratic Republic of Ethiopia for the purpose of implementing the Rural Water Supply and Sanitation Programme as described in this report, subject to the following conditions:

Grant Conditions

a) Conditions Precedent to Entry into Force

This Protocol Agreement shall enter into force upon signature by the Recipient and the Fund.

b) Conditions Precedent to First Disbursement

The Fund’s obligation to make the first disbursement of the Grant to the Recipient shall be conditional upon the entry into force of this Protocol Agreement as set forth in section 3.01 above and to the fulfilment by the Recipient of the following conditions: (i) Provided evidence satisfactory to the Fund of the opening of Special Accounts at the

National Bank of Ethiopia, managed by Ministry of Finance and Economic Development (MOFED) and which are acceptable to the Fund, as follows: (a) a foreign currency account for the deposit of proceeds of the Grant; and (b) a local currency account into which funds from the afore-mentioned foreign currency account shall be transferred to cover eligible expenditure in local currency;

(ii) Provided evidence satisfactory to the Fund, of having established a Programme Steering Committee (PSC) comprising of senior officials from the following organisations: MOWR (chair), Ministry of Finance and Economic development (MOFED), Ministry of Health (MOH), Ministry of Education (MOE), one

41

representative from each of the Regional Administrations, with the Programme Coordinator from MOWR as ex-officio secretary; and

(iii) Provided evidence of having designated the Team Leaders for the MOWR and MOH

Project Implementation Units (PIUs) whose qualifications and experience are acceptable to the Fund.

Undertaking

The Recipient undertakes that it will ensure that: (i) funds held in the Special Accounts cannot be used, set-off or blocked for any purpose other than that of the Grant; (ii) prompt monthly statements of account will be issued to the Fund; and (iii) authorized Fund staff and appointed auditors will have access to the Special Accounts and related documents.

ANNEX 1

ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

MAP OF ETHIOPIA

ANNEX 2 ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

ORGANOGRAM OF MOWR

MINISTRY OF WATER RESOURCES ORGANIZATIONAL CHART MINISTER

PLANNING AND PROJECTS DEPARTMENT

CIVIL SERVICE REFORM PROGRAM OFFICE

VICE MINISTER

AUDIT SERVICE

PUBLIC RELATIONS AND INFORMATION SERVICE

VICE MINISTER

ADMINISTRATION AND FINANCE SERVICE

POLICY, DEVELOPMENT COOPERATION & FOREIGN RELATIONS DEPARTMENT

PROCUREMENT, PROPERTY ADMINISTRATION, TRANSPORT AND VEHICLES MAINTENANCE SERVICE

LEGAL SERVICE

WATER RESOURCES INFORMATION, NATURAL RESOURCES &

ENVIRONMENTAL METADATABASE CENTRE

WOMEN’S AFFAIRS

DEPARTMENT

RESEARCH & DEVELOPMENT COORDINATION DEPARTMENT

HAYDROLOGY DEPARTMENT

BASIN DEVELOPMENT STUDY AND WATER UTILIZATION CONTROL

DEPARTMENT

IRRIGATION & DRAINAGE DEVELOPMENT STUDY

DEPARTMENT

BOUNDARY & TRANSBOUNDARY RIVERS AFFAIRS

DEPARTMENT

DAM AND HYDROPOWER DESIGN DEPARTMENT

CONTRACT ADMINISTRATION DEPARTMENT

RURAL WSS SERVICE DEPARTMENT

WATER RESOURCE ADMINISTRATION & URBAN WSS

SERVICE DEPARTMENT

WATER WORKS CONSTRUCTION ENTERPRISE

WATER WORKS DESIGN & SUPERVISION ENTERPRISE

NATIONAL METEOROLOGICAL SERVICE AGENCY

WATER RESOURCE DEVELOPMENT FUND OFFICE

AWASH BASIN WATER RESOURCES ADMINISTRATION AGENCY

ANNEX 3 Page 1 of 2

ETHIOPIA RURAL WATER SUPPLY AND SANITATION PROGRAMME

BANK GROUP OPERATIONS AS AT 30 SEPTEMBER 2005

SOURCE NET LOAN DISB UNDISB LOANYEAR OF DATE AMOUNT AMOUNT AMOUNT PERCENT CLOSING

APPROVED PROJECT FUNDS SIGNED Million UA Million UA Million UA DISB DATE

AGRICULTURE 1 1975 Southern rangeland Livestock ADF 20.02.1976 4.59 4.59 0.00 100.00 30-Jun-942 1977 Amibara Irrigation ADF 18.08.1977 4.25 4.25 0.00 100.00 31-Dec-873 1979 Finchaa Sugar Study ADB 16.05.1979 4.85 4.85 0.00 100.00 31-Dec-854 1980 Wush Wush Tea ADF 12.12.1980 7.36 7.36 0.00 100.00 31-Dec-955 1981 Addis Ababa Fuelwood ADF 25.06.1982 6.62 6.62 0.00 100.00 31-Dec-946 1982 Bebeka Coffee Plantation ADB 06.05.1982 10.00 10.00 0.00 100.00 31-Dec-947 1982 Agriculture Line of credit ADF 02.08.1983 7.33 7.33 0.00 100.00 30-Jun-908 1984 Gelena irrigation TAA 05.11.1984 1.10 1.10 0.00 100.00 11-Jul-959 1984 Dairy Rehabilitation & Dev. ADF 28.01.1985 5.01 5.01 0.00 100.00 31-Dec-95

10 1985 Small-scale irrigation ADF 09.05.1985 5.36 5.36 0.00 100.00 31-Dec-9511 1985 Awash Basin Water Supply TAA 09.05.1985 1.19 1.19 0.00 100.00 30-Jun-9412 1985 PADEP (Sidamo/Gamo/Gofa) ADF 07.05.1986 5.44 5.44 0.00 100.00 31-Dec-9513 1986 Tepi Coffee Development ADB 24.04.1987 4.68 4.68 0.00 100.00 31-Dec-98

ADF 24.04.1987 16.05 16.05 0.00 100.00 31-Dec-9814 1987 Amibara Drainage I ADF 27.08.1987 14.78 14.78 0.00 100.00 31-Dec-9715 1988 Finchaa Sugar Project ADB 25.04.1989 78.00 78.00 0.00 100.00 31-Dec-99

ADF 14.02.1989 14.46 14.46 0.00 100.00 31-Dec-9916 1989 South East rangelands ADF 01.12.1989 18.28 18.28 0.00 100.00 31-Dec-0017 1989 EVDSA Institutional Building TAF 01.12.1989 2.56 2.56 0.00 100.00 31-Dec-9318 1989 Wush Wush II ADF 14.02.1990 6.42 6.42 0.00 100.00 30-Jun-9919 1990 Meat Plan Feasibility Study TAF 21.02.1991 1.02 1.02 0.00 100.00 31-Dec-9720 1991 Omo-Ghibe Master Plan Study TAF 31.12.1991 5.07 5.07 0.00 100.00 31-Dec-9721 1991 Birr-Koga Irrigation Study TAF 24.12.1991 2.48 2.48 0.00 100.00 31-Dec-9722 1992 Amibara Drainage II Study TAF 22.01.1993 0.36 0.36 0.00 100.00 31-Dec-9523 1997 National fertilizer Project ADF 21.02.1998 36.43 36.43 0.00 100.00 30-Jun-0224 1998 National Livestock Dev. Project ADF 10.09.1998 27.00 17.69 9.31 65.52 30-Jun-0625 2000 Pastoral Area Development Study TAF 15.12.2000 0.71 0.53 0.18 74.65 30-Apr-0526 2001 Koga Irrigation Project ADF 19.07.2001 32.59 4.76 27.83 14.61 30-Jun-08

2001 Koga Irrigation Project TAF 19.07.2001 1.33 0.51 0.82 38.35 30-Jun-0827 2001 Genale-Dawa Master Plan Study TAF 16.11.2001 3.93 1.46 2.47 37.15 31-Dec-0628 2003 Rural Finance Intermediation ADF 16.07.2003 27.17 1.46 25.71 5.37 30-Jun-08

2003 Rural Finance Intermediation ADFGrant 16.07.2003 8.00 0.28 7.72 3.50 30-Jun-0829 2003 Awash River Basin Control ADF Grant 21.07.2003 1.83 0.17 1.66 9.29 31-Dec-0830 2003 Livestock Development Master Plan ADF Grant 10.8.2003 2.34 0.00 2.34 0.00 31-Dec-0831 2003 Agric. Support Programme ADF 5.11.2003 21.24 1.03 20.21 4.85 31-Dec-10

2003 Agric. Support Programme ADFGrant 5.11.2003 17.70 0.46 17.24 2.60 31-Dec-1032 2004 Fisheries Development Study ADFGrant 8.12.2004 0.92 0.00 0.92 0.00 31-Dec-08

SUB-TOTAL 408.45 292.04 116.84

TRANSPORT 33 1977 Jimma-Chida Road ADF 13.12.1977 6.45 6.45 0.00 100.00 16-Jul-8534 1980 Rural Roads (Sidam, Bale) ADF 22.06.1980 7.11 7.11 0.00 100.00 30-Jun-8535 1981 Rural Roads (Gondar and shoa) ADF 30.12.1981 10.94 10.94 0.00 100.00 31-Dec-9736 1984 Gore-Tepi Road ADF 10.02.1984 15.69 15.69 0.00 100.00 31-Dec-9437 1989 Assab Port Development ADF 29.05.1989 8.58 8.58 0.00 100.00 31-Dec-9438 1989 Road Maintenance & Rehabilitation ADF 01.12.1990 38.61 38.61 0.00 100.00 30-Jun-0139 1990 Ethiopian Airlines Infra. Dev. Proj. ADB 14.03.1991 24.55 24.55 0.00 100.00 31-Dec-9840 1992 Addis Ababa Airport Study TAF 22.26.1992 1.93 1.93 0.00 100.00 31-Dec-9541 1992 Chida-Sodo Road ADF 14.04.1992 20.76 20.76 0.00 100.00 31-Dec-9842 1996 Addis Ababa Airport Infra. Dev ADF 20-12-1996 17.20 17.20 0.00 100.00 31-Dec-0443 1998 Alemgena-Butajira Road Upgrading ADF 21-07-1998 18.50 18.50 0.00 100.00 15-Dec-0544 1998 Seven Road Studies TAF 16.12.1998 2.35 2.35 0.00 100.00 30-Jun-0545 2001 Butajira-Hossaina-Sodo Road Project ADF 16-11-2001 41.31 8.83 32.48 21.37 31-Dec-0846 2003 Wacha-Maji Road Project ADF 13-10.2003 22.71 0.00 22.71 0.00 31-Mar-10

2003 Wacha-Maji Road Project ADF Grant 13-10-2003 0.99 0.00 0.99 0.00 31-Mar-10SUB-TOTAL 237.68 ## 181.50 # 56.18

ANNEX 3 Page 2 of 2

ETHIOPIA RURAL WATER SUPPLY AND SANITATION PROGRAMME

BANK GROUP OPERATIONS AS AT 30 SEPTEMBER 2005

PUBLIC UTILITIES 47 1975 Addis Ababa Sewerage I ADF 16.01.1976 4.60 4.60 0.00 100.00 31-Dec-7948 1979 Rural Electricity ADB 16.05.1979 1.50 1.50 0.00 100.00 30-Jun-84

NTF 16.05.1979 5.00 5.00 0.00 100.00 30-Jun-8449 1979 Assab Water Supply ADF 27.02.1980 6.13 6.13 0.00 100.00 31-Dec-9050 1986 Power transmission Lines ADB 24.04.1987 9.37 9.37 0.00 100.00 31-Mar-99

ADF 24.04.1987 24.90 24.90 0.00 100.00 31-Mar-9951 1979 Addis Ababa Sewerage II ADF 16.05.1979 6.63 6.63 0.00 100.00 30-Jun-9452 1982 Six Centers Water Supply ADF 02.03.1983 13.58 13.58 0.00 100.00 31-Dec-9753 1983 Eight Centers Water Supply ADF 04.05.1984 11.60 11.60 0.00 100.00 31-Dec-9754 1984 Telecommunications I ADB 05.11.1984 24.01 24.01 0.00 100.00 31-Dec-9555 1985 Chemoga-Yeda Hydro Study TAA 07.05.1986 0.55 0.55 0.00 100.00 30-Jun-9456 1989 Five towns Water Supply TAF 29.05.1989 1.44 1.44 0.00 100.00 31-Dec-9557 1989 Addis Ababa Master Plan TAF 01.12.1989 1.09 1.09 0.00 100.00 30-Apr-9758 1990 Aleltu Hydro Feasibility Study TAF 21.02.1991 1.58 1.58 0.00 100.00 30-Jun-9859 1991 12 Towns Water Supply Study TAF 19.03.1992 1.79 1.79 0.00 100.00 31-Dec-9760 1992 Addis Ababa Water III Study TAF 12.05.1993 2.39 2.39 0.00 100.00 31-Dec-99

ADF 12.05.1993 3.05 3.05 0.00 100.00 31-Dec-9961 1992 Telecommunications II ADB 14.04.1993 23.79 23.79 0.00 100.00 30-Jun-02

ADF 14.04.1993 3.44 3.44 0.00 100.00 30-Dec-0262 1992 Nothern Ethiopian Power trans. ADF 14.04.1993 20.11 20.11 0.00 100.00 31-Dec-98

TAF 14.04.1993 26.72 26.72 0.00 100.00 31-Dec-9863 1993 Hydro-Power feasibility Study ADF 06.09.1994 2.35 2.35 0.00 100.00 30-Jun-0164 2001 Rural Electrification Project ADF 14-03-2002 37.67 5.90 31.77 15.66 31-Dec-0565 2002 Harar Water & Sanitation ADF 08.11.2002 19.89 0.33 19.56 1.66 31-Dec-08

2002 Harar Water & Sanitation ADF Grant 08.11.2002 1.12 0.00 1.12 0.00 31-Dec-08SUB TOTAL 254.30 ## 201.85 # 52.45

SOCIAL 66 1983 Primary Teachers & Sec. Education ADF 13.06.1983 14.98 14.98 0.00 100.00 31-Dec-9567 1992 Basic Educ., Tech. & Voc. Training ADF 22.01.1993 4.53 4.53 0.00 100.00 31-Dec-9968 1998 Education III ADF 19-09-1998 32.00 11.50 20.50 35.94 31-Dec-06

TAF 19-09-1998 0.30 0.00 0.30 0.00 31-Dec-0669 1998 Primary Health Care ADF 26.11-1998 29.67 8.81 20.86 29.69 30-Sep-05

SUB TOTAL 81.48 39.82 # 41.66

INDUSTRY AND MINING 70 1987 Legal Dembi Gold Project ADB 19.11.1987 16.55 16.55 0.00 100.00 31-Dec-9571 1989 Lega dembi Gold Study TAF 30.01.1990 2.02 2.02 0.00 100.00 31-Dec-9972 1993 Biklai Phosphate Study TAF 26.01.1994 1.22 1.22 0.00 100.00 31-Aug-02

SUB TOTAL 19.79 ## 19.79 # 0.00

MULTI-SECTOR73 1992 ERRP ADF 14.05.1992 86.62 86.62 0.00 100.00 31-Dec-9774 1993 SAL I ADF 09.07.1993 63.54 63.54 0.00 100.00 30-Jun-9675 2000 Privatisation Technical Assistance TAF 15-03-2001 3.00 0.60 2.40 20.00 31-Dec-0576 2001 SAL II ADF 16-1-2001 60.00 60.00 0.00 100.00 30-Jun-0477 2001 Capacity Building for MoFED TAF 15-01-2002 0.52 0.15 0.37 28.85 31-Dec-0578 2004 Support for Women Affairs Office ADF Grant 12.05.2004 1.05 0.26 0.79 24.76 31-Dec-0779 2004 PRSL ADF 12.01.2005 60.00 60.00 0.00 100.00 31-Dec-05

SUB TOTAL 274.73 ## 271.17 # 3.56

GRANT TOTAL 1194.95 ## 966.35 # 229.03 80.87

* Approvals net of cancellations.

ANNEX 4

ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

WATER TECHNOLOGY CHOICES

N0 Type of Technology

/Systems Economy /Income Population (000s) Livestock

Low Medium High <.5 0.5-1.0 1.0-2.0 >2.0 1 H.D.W+ HP √ √ √ 2 S.W+HP √ 3 S.W+MP+ER √ √ 4 S.W+MP+DS √ √ 5 S.W+MP+E.R+C.T 6 Sp on spot √ √ 7 Sp(Gravity ) √ √ √ 8 Sp+ MP+D-S √ √ √ 9 B.H on spot √ √ √ 10 B. H+ MP+R+D-S √ √ 11 B.H +MP+R+DS+W.P √ √ 12 Ponds √ √ √ 13 Pond +W.P √ √ √ 14 Cistern √ √ √ √ 15 Roof catchments √ √ √ √ 16 Sub surface dam √ √ √ Acronyms & Abbreviations H.D.W = Hand dug wells H.P = Hand pump S.W = Shallow well M.P = Motorized Pump E.R. = Elevated reservoir C.T = Cattle trough BH = Borehole D.S = Distribution system R = Reservoir

(P) W.P = (Public) Water Point I.P = Internal plumbing Y.C = Yard connection O.S.D = On spot distribution T.P = Treatment plant I.G = Infiltration Gallery Sp = Spring G = Gravity S.I = surface intake

ANNEX 5 ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN SUMMARY

Project Title: Rural Water Supply and Sanitation Programme Project Number: P-ET-E00-006 Country: Ethiopia Department: ONIN Division: ONIN.2 a) Brief description of the project and key environmental and social components The components of the Programme are as follows:

A) Water Supply: Provision of new and rehabilitation of existing water supply services and livestock watering troughs will be provided where required based on the DRA. It is expected that 23,000 new water points will be constructed, and about 2,000 existing ones rehabilitated.

B) Sanitation: Provision of latrine facilities for schools, health centres, communal latrines in crowded

settlement area, and demonstration latrines in communities. Sanitation options will be limited to on-site sanitation systems mostly improved traditional latrines with sanplats and VIP latrines for individual households or communal latrines for institutions and rural growth centres. About 10,000 demonstration latrines in communities and 3,000 public/communal latrines in schools, clinics and rural growth centres will be constructed under the programme. It also involves groundwater safe yield assessments and quality monitoring.

C) Capacity Building: Capacity building: Community sensitisation, awareness raising, organization,

training in water supply and sanitation, and hygiene promotion and health education; Capacity building at the Regional Water Bureaus, Woreda Water Desks and Woreda Health Desks using consultants and Woreda Support Groups; Capacity building for private contractors, Local Service Providers (LSP), Community Facilitation Teams (CFT), consultants, artisans and suppliers as well as development of supply chains.

D) Programme Support: involves support to the federal ministries, MOWR, MOH, the regional water

and health bureaus RWBs, RHBs, and the district/Woreda water and health desks WWDs, WHDs and Woreda Administrations. In the form of offices, office equipment including computers, printers, scanners and faxes as well as the setting up of a database, and office furniture, and other logistical support. It includes provision of Technical Assistance in the form of Procurement and Financial Management experts and other rural water supply and sanitation experts. It also includes the bi-annual technical and financial audits, part of the monitoring and evaluation costs and organising annual review meetings involving all stakeholders.

b) Major environmental and social impacts The Rural Water Supply and Sanitation Programme is classified in the environmental category 2 given that the services entail relatively simple technologies with no major environmental impacts. While they may cause some adverse environmental impacts, no major negative social or environmental issues have been identified or expected to warrant a full ESIA. The programme will consist of many sub-projects varying in magnitude and technical scope ranging from hand dug wells, drilled wells, protected springs, boreholes, gravity schemes, rainwater harvesting, sub-surface dams, to small piped systems, and pumping systems (hand pumps, motorized, solar or windmill pumps). Sanitation options will be limited to on-site sanitation from improved traditional latrines and Ventilated Improved Pit (VIP) latrines with special emphasis on hygiene and sanitation promotion. The large number of water points and sanitation facilities spread all over the country call for care in the design, construction and operation of the schemes.

2

The positive environmental and social impacts will include the following: Increased access to adequate quantities of water of good quality water to 7.6 million people, properly collected, transported and stored with proper disposal of faecal matter in properly located and constructed latrines with improved hygienic behaviour will improve the living environment, reduce water borne diseases like diarrhoea and dysentery, and water related skin and eye diseases, reduce morbidity and mortality from water related diseases and improve health conditions and well-being of the beneficiary communities as well as reduce healthcare costs. Bringing the water sources closer to the beneficiary communities will free time for other economic activities and reduce school drop-out rates for girls particularly in nomadic areas. It will also reduce the dangers they are exposed to from walking long distances to collect water. Proper monitoring will ensure that abstractions from the groundwater aquifers will be better controlled to prevent over-abstraction. The adverse environmental impacts are those related pollution of aquifers through wells, springs, boreholes, pit latrines and depletion of aquifers as well as construction activities. Pollution of water supplies due to poor handling during transportation and storage and/or poor drainage around the water points is also possible. There will be no displacement of people living in the project area. However, small parcels of land will be required for the construction of wells, boreholes, tanks, and communal water points, while construction activities could lead to temporal or permanent loss of land and/or crops. The communities will compensate for such losses. There will be no major water abstractions in transboundary waters to affect flows to riparian countries and no large dams will be constructed under the programme. c) Enhancement and mitigation program Environmental and social assessments will be carried out during sub-project appraisals by the WWDs and WHDs supported by the Woreda Support Groups to identify the potential negative impacts and propose mitigation measures and build them into the sub-project designs for implementation as part of the works. For Sub-projects for which specific impacts have been identified, specific ESMPs will be prepared. The sub-project specific ESMP will detail the type of assessment required and the frequency of monitoring according to the national guidelines. The Environmental Protection Authority (EPA) and Woreda /Regional officials will ensure that these have been done when reviewing proposals. The key adverse impacts and the mitigation measures are given in the table below.

Issue/Impact Mitigation 1. Water-borne diseases caused by drinking contaminated water (e.g. diarrhoea, dysentery) and stagnant water in surrounding of wells and water points (e.g. malaria and schistosomiasis) and groundwater contamination during operation.

1. Proper siting of water sources and water point away from and upstream of sources of pollution like latrines, waste dumps and densely populated areas; avoiding sites with poor drainage or flood prone areas; construction with proper seals, providing concrete lining, drainage aprons, and fencing; ensuring latrine are constructed to depths above the water table and sited away from areas where the groundwater level is less than 2 meters below the bottom of the latrine pit of infiltration pit; hygiene education to increase awareness and cause behavioural change; water quality monitoring and disinfection of contaminated sources.

2. Water-related diseases caused by inadequate quantities of water (e.g. skin and eye diseases)

2. Increase per capita water availability and hygiene education.

3. Aquifer depletion 3. Assessing the safe yields of aquifers during source development and ensuring abstraction levels stay within the safe yields.

3

4. Groundwater contamination during well/borehole construction

4. Use of bio-degradable drilling fluids, proper drainage, disinfection of wells/boreholes after development; and as in 1 above

5. Contaminated surface water sources

5. Treatment

6. Reduction of water flows to downstream users

6. Assess impact on downstream users to ensure that minimum flow requirements can be maintained, and if necessary change the design.

7. Overgrazing around water points in pastoral areas

7. Ensure proper assessment of livestock water needs and provide adequate drinking points to minimize the effects of overgrazing.

8. Construction related impacts like erosion and cut slope destabilization

8. Including the mitigation measures like landscaping and grassing, carting away and proper disposal of construction wastes in the works contracts

9. Land needs for the construction of wells, boreholes, tanks, and communal water points.

9. The communities will provide the land required for these activities. Individuals will be compensated by land replacement if significant amounts of land are taken to affect their livelihoods. Crop losses will be compensated in cash.

d) Monitoring program and complementary initiatives Aquifer depletion will be prevented through aquifer monitoring to ensure adherence to the safe yield. In addition, the programme will provide the Woredas with simple portable water quality monitoring kits that will be used to test samples from all the water points in their areas during construction and at regular intervals. The kits will monitor a small number of water quality indicators and in case of alarming results, detailed water quality analyses from the specific water point will be undertaken in the laboratories. The results will be reported to EPA. e) Institutional arrangements and capacity building requirements The sub-project appraisals, designs and environmental and assessments will be the responsibility of the WWDs and WHDs, while the EPA has the responsibility of ensuring that all water related developments meet the national requirements prior to them being implemented. Due to capacity constraints at the woreda level in most districts, WWDs and WHDs will be assisted by and Woreda Support Groups who will also be required to train the staff of the WWD and WHDs. They will also be trained to use the water test kits for the water quality monitoring while the aquifer safe yields will be carried out by the drilling contractors. Sub-project management will be the responsibility of the WASHCOMS (consisting of 7 members at least 30% women), which will be established by all beneficiary communities, sensitised and trained by Community Facilitation Teams (CFT). Hygiene education and sanitation promotion and demonstration will be the responsibility of Health Extension Workers who will be trained in vocational institutions. f) Public consultations and disclosure requirements Public consultations will be an on-going exercise during programme implementation as sub-projects are studied, designed and the environmental and social impacts assessed. The sub-projects will be disclosed in line with the national requirements while WWD seek the approval of EPA for the proposed sub-project.

4

g) Estimated costs The cost of the environmental and social assessments, the mitigation measures and the monitoring activities are built into the programme cost estimates and estimated to be about UA 2 million. h) Implementation schedule and reporting Implementation schedule of the environmental and social issues is linked to programme implementation. WSGs will report to the WWD, WHDs, RWBs and RHDs who report to EPA.

ANNEX 6A

ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

DETAILED COST ESTIMATES

1 Works Cost1.1 Water Supply Cost

Type of Schemes % of Population Served

Population served per

Type of Scheme

Population Served per

Scheme

Number of Schemes

Cost per Capita Birr

Cost Per Capita USD

Total Cost USD Number of Schemes

Per Woreda

No. mm mmHand dug wells with hund pump 26 2,110,995 250 8,444 70 8.1 17,083,193 16Small boreholes with hund pump 26 2,110,995 250 8,444 250 28.9 61,011,405 16Deep boreholes 3 243,576 500 487 800 92.5 22,527,288 1Deep borehole with distribution 16 1,299,074 3,000 433 350 40.5 52,563,672 1Spring on spot 20 1,623,842 250 6,495 90 10.4 16,895,466 13Spring with distribution 9 730,729 3,000 244 240 27.7 20,274,559 0Sub-Total Water Supply Cost 100 8,119,210 24,547 190,355,582 47Consultant Design & Supervision 9,097,512Total Water Supply Cost 199,453,095Average per Capit Water Supply Cost 24.57

1.2 Sanitation Cost

Type of Schemes % of population served

Population served per

Type of Scheme

Population served per

Scheme

number of schemes

cost per capita Birr

cost Per Capita USD

Total cost USD Number of Schemes

Per Woreda

Improved tradtional pit latrines with slab 90 50,000 5 10,000 45 5.2 260,116 83Institutional/Public pit latrines 10 650,000 100 6,500 105 12.1 7,890,173 54Design and Supervision of Public latrines 394,509Total Sanitation Cost 100 700,000 16,500 8,544,798 138

Average per Capita Sanitation Cost 12.21

Total Water Supply and Sanitation Cost 207,997,893

Average per Capita WSS Cost 297.14

2. Services Costs

Item Capacity Building to

MOWR, MOH & RWB

Capacity Building to

WSG

Woreda Capacity Building

Technical Assistant to

Community (CFT or HEW)

Audit Monitoring & Evaluation

Total cost USD

Hygenic and Health Education 100,000 550,000 9,450,625 10,100,625Training and Capacity Building 175,000 164,700 5,390,000 9,389,257 15,118,957Sub total Capacity Building 275,000 164,700 5,940,000 18,839,883 0 0 25,219,583 Program support 2,750,000 500,000 550,000 3,800,000Salaries and other MOWR Costs 11,256,000 11,256,000Salaries and other MOH Costs 14,704,509 14,704,509Logistics 955,000 955,000TA to MOWR, MOH, RWBs, RHBs 2,100,000 2,100,000Sub total Program Support 29,015,509 0 2,750,000 0 500,000 550,000 32,815,509Total Service Cost 29,290,509 164,700 8,690,000 18,839,883 500,000 550,000 58,035,091Average per Capita WSS Cost 7.15

Total Works and Services Cost 266,032,984Average WSS Per Capita Works and Services Cost 32.8

ANNEX 6B

Item Unit Quantity Unit rate Amount Quantity Total cost

Professional Fee mm 1.80 1,500 2,700Support staff Fee mm 6.00 400 2,400Transport and other costs month 5.00 700 3,500Sub-total 8,600 677 5,818,767

Professional Fee mm 0.25 1,000 250Support staff mm 1.00 200 200Transport and other costs month 0.50 700 350Sub total 800 8,931 7,144,905

Professional Fee mm 1,500 0Support staff mm 600 0Transport and other costs month 1,000 0Sub-total 0 9 0

Professional Feemm 3.00 800 2,400

Support staff mm 200 0Transport and other costs month 1.00 1,000 1,000Sub-total 3,400 550 1,870,000

Professional Fee mm 0.50 200 100Support staff mm 100 0Transport and other costs month 0.25 500 125Sub-total 225 14,939 3,361,353

18,195,0259,097,512

Unit Quantity Unit rate Amount Quantity Total cost

Professional Fee mm 1,500 0Support staff Fee mm 600 0Transport and other costs month 1,000 0Sub-total 0 53 0

Professional Fee mm 1,000 0Support staff mm 400 0Transport and other costs month 800 0Sub total 0 550 0

Professional Fee mm 9.00 1,500 13,500Support staff mm 3.00 600 1,800Transport and other costs month 3.00 1,000 3,000Sub-total 18,300 9 164,700

Professional Fee mm 9.00 800 7,200Support staff mm 3.00 200 600Transport and other costs month 2.00 1,000 2,000Sub-total 9,800 550 5,390,000

Professional Fee mm 0.00 800 0Support staff mm 0.00 200 0Transport and Capacity Building month 1.00 1,000 1,000Sub-total 1,000 550 550,000

Professional Fee mm 3.00 200 600Support staff mm 0.25 100 25Transport and other costs month 0.70 200 140Sub-total 765 12,274 9,389,257

Professional Fee mm 0.00 200 0Support staff mm 0.00 100 0Transport and Capacity Building month 0.50 500 250Sub-total 385 24,547 9,450,625

24,944,583

Technical AssistanceProcurement Expert for MOWR mm 30 8000 240,000 1 240,000.00 Fin. Mngt. Expert for MOWR mm 30 8000 240,000 1 240,000.00 Proc. Expert for RWB mm 30 3000 90,000 9 810,000.00 Fin. Mngt. Exp for RWB mm 30 3000 90,000 9 810,000.00

2,100,000.00

Training and Capacity Building of WWD and WHD (by WSG)

Hygienic and Health Education and Promotion at Community Level

Consultants for Capacity Building of WSG

Training and Capacity Building for Community (by CFT)

Training and Capacity Building for Hygienic and Health education of WHD

Design and Supervision Cost Estimate

Capacity Building Cost Estimate

Consultants for Schemes with Distribution Network

Consultants for Borehole Siting and Supervision

Consultants for Schemes with Distribution Network

Consultants for Borehole Siting and Supervision

National consultants WSG capacity building

Woreda Support Group Woreda WSS Inventery and Planning of Woreda WSSP

Community Technical Assistance for Hand Dug Wells and Spring Caping

ANNEX 7A

ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

COST ESTIMATES AND EXPENDITURE SCHEDULES FOR ADF FINANCING

Programme Cost Estimates by Component

Component

FC LC Total FC LC TotalA Water Facilities 226.48 306.77 532.58 17.31 23.45 40.71 75%B Sanitation Facilities with Hygiene Education 9.04 39.68 49.39 0.69 3.03 3.78 7%C Capacity Building 7.71 30.84 38.55 0.59 2.36 2.95 5%D Program Support 10.82 78.23 89.04 0.83 5.98 6.81 13%

- Total 254.05 455.51 709.56 19.42 34.82 54.24 100%

ETB (million) UA (million)

Programme Cost Estimates by Category of Expenditure

CATEGORYFC LC Total FC LC Total

Civil WorksWater Schemes 89.07 267.20 356.26 6.81 20.42 27.23Sanitation Facilities 2.54 14.38 16.92 0.19 1.10 1.29

GoodsWater Schemes 137.42 15.27 152.68 10.50 1.17 11.67Sanitation Facilities 1.06 3.17 4.23 0.08 0.24 0.32Office Furniture and Equipt. Water Quality Equipt. 7.62 0.85 8.47 0.58 0.06 0.65

ServicesDesign and Supervision - 24.66 24.66 0.00 1.88 1.88Implementation Support TA 1.86 7.45 9.31 0.14 0.57 0.71Hygiene and Health Education 5.44 21.78 27.22 0.42 1.66 2.08Training and Capacity Building 7.71 30.84 38.55 0.59 2.36 2.95

MiscellaneousAudits 0.53 2.13 2.66 0.04 0.16 0.20M&E 0.80 1.86 2.66 0.06 0.14 0.20Operating Costs - 65.94 65.94 0.00 5.04 5.04Total 254.05 455.51 709.56 19.42 34.82 54.24

ETB (million) UA (million)

ANNEX 7B

ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

COST ESTIMATES, EXPENDITURE SCHEDULES, FOR ADF FINANCING

Expenditure Schedule by Component

Component 2005/06 2006/07 2007/08 Total

A Water Facilities 4.07 18.32 18.32 40.71 B Sanitation Facilities 0.57 1.51 1.70 3.78 C Capacity Building 0.74 1.18 1.03 2.95 E Program Support 1.82 2.56 2.43 6.81

Total (UA Million) 7.20 23.57 23.48 54.24

Expenditure Schedule by Source of Financing

Source of Financing 2005/06 2006/07 2007/08 TotalADF 5.23 19.19 19.19 43.61 GOE 1.62 3.30 3.20 8.12 Communities 0.34 1.08 1.09 2.51 Total (UA million) 7.20 23.57 23.48 54.24

Categories of Expenditure for ADB Financing

CATEGORY GOE CommunitiesFC LC Total Total FC LC

Civil WorksWater Schemes 6.81 20.42 27.23 21.37 6.81 14.57 3.36 2.50Sanitation Facilities 0.19 1.10 1.29 1.28 0.19 1.09 0.01

GoodsWater Schemes 10.50 1.17 11.67 11.67 10.50 1.17Sanitation Facilities 0.08 0.24 0.32 0.32 0.08 0.24Office Furniture and Equipt. Water Quality Equipt. 0.58 0.06 0.65 0.65 0.58 0.06

ServicesDesign and Supervision 0.00 1.88 1.88 1.88 0.00 1.88Implementation Support TA 0.14 0.57 0.71 0.71 0.14 0.57Hygiene and Health Education 0.42 1.66 2.08 2.08 0.42 1.66Training and Capacity Building 0.59 2.36 2.95 2.95 0.59 2.36

MiscellaneousAudits 0.04 0.16 0.20 0.20 0.04 0.16M&E 0.06 0.14 0.20 0.20 0.06 0.14Operating Costs 0.00 5.04 5.04 0.28 0.00 0.28 4.76Total 19.42 34.82 54.24 43.61 19.42 24.19 8.12 2.51

ADF Grant (UA million)UA (million)

ANNEX 7C

ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

PROCUREMENT TABLE FOR ADF FINANCING

Category ICB NCB Shopping Negotiation Shortlist Total CIVIL WORKS Water Supply 1. Hand dug wells and Springs 2. Small distribution systems 3. Shallow boreholes 4. Deep boreholes, large distribution systems 5. Demonstration household & Communal Latrines

12.23 (9.71)

4.14 (3.29) 6.18 (4.91)

1.41 (1.11)

4.57 (3.63)

4.57 (3.63) 4.14 (3.29) 6.18 (4.91)

12.23 (9.71)

1.41 (1.11)

GOODS 6. Hand pumps and accessories 7. Boreholes screens, casings,

pumps, etc 8. Logistics: Vehicles, motorcycles,

office equipment and furniture, water quality monitoring equipment,

2.37 (2.37) 9.67 (9.67)

0.60 (0.60)

2.37 (2.37) 9.67 (9.67)

0.60 (0.60)

SERVICES 9. TA to MOWR, MOH, RWBs,

RHBs 10. Capacity Building 11. Hygiene & Health Education 12. Supervision 13. M&E 14. Studies

0.71 (0.71) 2.95 (2.95) 2.08 (2.08) 1.89 (1.89) 0.20 (0.20) 0.05 (0.05)

0.71 (0.71) 2.95 (2.95) 2.08 (2.08) 1.89 (1.89) 0.20 (0.20) 0.05 (0.05)

MISCELLANEOUS 15. Operating Costs 16. Audits

4.99 (0.24)

0.20 (0.20)

4.99 (4.99) 0.20 (0.20)

TOTAL 24.27 (21.75) 11.73 (9.31) 0.60 (0.60) 4.57 (3.63) 12.07 (8.32) 54.24 (43.61)

ANNEX 8

ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

PROGRAMME ORGANISATIONAL CHART

PROGRAMME STEERING COMMITTEE (PSC) (MOWR / MOH / MOFED / MOE / Regional Administrations)

Program Coordinating Unit (PCU) MOWR / MOH / MOFED

Regional PIU (RWB / RHB)

Woreda Water & SanitationTeam (WWST)

WWD/WHD

WASHCOM

Federal Cosultants

Regional Consultants

NGOs

Consultants

Contractors

Woreda Support Group

LSPs / CFTs / HEWs

Federal PIU RWSSD of MOWR / HEHD of MOH

ANNEX 9

ETHIOPIA

RURAL WATER SUPPLY AND SANITATION PROGRAMME

IMPLEMENTATION SCHEDULE

ID Task Name Duration Start

1 Board approval 1 day Wed 12/28/052 GPN 1 day Tue 1/31/063 Grant Signature 1 day Tue 1/31/064 Fulfilment of Conditions for First Disbursement 44 days Wed 2/1/065 Technical Assistance to MOWR, MOH, RWB,

RHB, WWD, WHB676 days Mon 11/28/05

6 Development of LOIs 31 days Mon 11/28/057 Preparation & Approval of Shortlists 31 days Mon 11/28/058 Preparation & Submission of LOI for recruitment o

Procurement & Financial Management Experts30 days Tue 1/10/06

9 Evaluation & Approval 30 days Tue 2/21/0610 Signature and Commencement 22 days Tue 4/4/0611 TA Activities 28 mons Tue 5/9/0612 Procurement of Consultants for Training

WSGs, CFTs, LSPs410 days Mon 11/21/05

13 Development of LOI 30 days Mon 11/21/0514 SPN 22 days Tue 1/3/0615 Preparation and approval of Shortlists 30 days Thu 2/2/0616 Preparation & Submission of LOIs 22 days Thu 3/16/0617 Evaluation and Approval 22 days Mon 4/17/0618 Award, Signature and Commencement 22 days Wed 5/17/0619 Training of WSGs, CFTs, LSPs 261 days Fri 6/16/0620 Community Mobilization 501 days Mon 5/1/0621 Selection of CFT 88 days Mon 5/1/0622 Community Mobilization Activities 477 days Fri 6/2/0623 Hygiene Promotion and Health Education 651 days Mon 1/2/0624 Training of HEW 180 days Mon 1/2/0625 Development & Reproduction of IEC material 173 days Wed 2/1/0626 Dissemination of IEC material & implementation o

HEP with demonstrations566 days Mon 5/1/06

27 Procurement of Goods 487 days Wed 2/1/0628 SPN 30 days Wed 2/1/0629 Evaluation & Approval 30 days Wed 3/15/0630 Award, Signature and Ordering 30 days Tue 4/25/0631 Supply of Goods 90 days Tue 6/20/0632 Procurement of Works 521 days Mon 7/3/0633 Bid announcements 22.8 mons Mon 7/3/0634 Evaluation and approvals 22.8 mons Wed 8/2/0635 Awards, signature implementation 23.85 mons Fri 9/1/0636 Selection of WSGs for TA to WWDs and WHDs and fo

design and supervision of small works88 days Mon 5/1/06

37 Procurement of Consultants for design andsupervision of large works

681 days Mon 11/21/05

38 Development of LOI 22 days Mon 11/21/0539 SPN 30 days Wed 12/21/0540 Preparation of and Approval Shortlist 30 days Wed 2/1/0641 Preparation & Submission of LOI 30 days Wed 3/15/0642 Evaluation & Approval 30 days Wed 4/26/0643 Award, Signature and Implementation 539 days Wed 6/7/06

N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J JHalf 1, 2006 Half 2, 2006 Half 1, 2007 Half 2, 2007 Half 1, 2008 Ha

ANNEX 10

INDICATORS

The following indicators will be monitored at Woreda, Regional and National Level 1. Organizational Strength Index

a. No of WWDs, WHDs, RWBs, RHDs with Increased Capacity b. No of Woreda Support Groups, Community Facilitation Teams and Local Service Providers

established c. No. of Health Extension Workers trained

2. Purpose-Level And Results Indicators a. Purpose-Level Indicators

% of rural population in participating woredas with improved access to water % of woredas with effective water and sanitation programs

b. Results Indicators No. of Woredas with effective water and sanitation programs established % of participating WSS schemes covering O&M costs % of water points constructed in participating communities functioning as designated % of participating legally established WaSHCOMs with facilities and management plans

prepared % of participating WaSHCOMs with at least 30% female members % of participating woredas with approved RWSS programs % of participating woredas with teams effectively implementing plans

c. Increased Capacity of Participating Woredas No. of Woreda WSS programs prepared No. of Woreda staff adequately trained and equipped to support RWSS No. of LSPs capable of supporting RWSS at the community level

d. Increased Capacity of Woreda Support Groups No. of WSG fully trained in management techniques No. of WSG capable of supporting Woredas and LSPs at the community level WSG participatory approach institutionalised

e. Increased Capacity of Rural Programme Implementation Unit M&E System established, equipped and staff trained Participatory M&E capacity developed M&E reporting institutionalised including FMR

ANNEX 11A

ETHIOPIA RURAL WATER SUPPLY AND SANITATION PROGRAMME COMPUTATION OF NET ECONOMIC BENEFITS FOR STP

ANNEX 11B Assumptions for Computation of EIRR

1. The projections are based on constant 2005 US dollar and Birr (ETB) prices. 2. Project Life: A 15-year project life span is assumed. 3. Investment Costs: Include rehabilitation and extension of rural water supply infrastructure (based

on the RWSS Scheme types assumed), sanitation facilities, Capacity Building and Program Support expenses, and include replacement of point source water supply systems after 10 years useful economic life. A foreign exchange premium of 10% is added to costs incurred in foreign currency.

4. Population growth is assumed at 2% p.a for the rural areas, and a constant rural population is assumed from year 2008 onwards for purposes of the analysis. Average household size at 5 persons.

5. Savings in Time Spent Collecting Water: it is assumed that with the installation of a water point in a rural community, the average time spent fetching water will be reduced from 3 to 1 hour, which corresponds to an average saving of 2 hours. Given that both women and children are engaged in this activity, as well as the fact that a significant proportion of the rural population works in subsistence agriculture, time is valued at ETB 0.866/hour, which corresponds to 30% of the rural wage rate.

6. For calculating the additional income that can be earned by households as a result of savings in time fetching water, it is assumed that: (a) the daily labor rate for rural areas is at ETB 6.6, and (b) 30% of the time saved will be used on productive activities; no value is assigned to the remaining 70%, which could be spent on family, educational and leisure activities.

7. Operations and Maintenance: O&M costs, including water chlorination costs, are estimated at 10% of capital costs for water supply facilities.

8. Tariff: Average O&M tariff at ETB 0.003/litre, equivalent to 50% of the highest tariff currently levied per m3. It is assumed that rural communities will pay user fees to cover O&M costs associated with their systems, including non-routine maintenance and spare parts replacement.

9. Water Consumed: Average daily consumption attributed to the project is estimated to increase from 10 litres to 20 liters/per capita.

10. Health Sector Impacts: the assumptions used to evaluate health sector savings are as follows: (a) expected reduction in incidence of water borne diseases (diarrhoea as reference disease) at the rate of 30%1 would accrue from the project for the rural population without access to clean water while a 15% reduction will accrue for households already connected; (b) unit cost of treatment is assumed at the equivalent of USD 20/2case, including the full health care cost (consultation, medication, transportation and overhead costs; (c) 95% of cases are assumed to be ambulatory and the rest hospitalised.

11. Education Sector Impacts: assumptions used to evaluate education sector benefits include: (a) 68% primary school enrolment rate; (b) 4% repeaters rate and 30% expected reduction in repeaters as a result of the project interventions; (c) cost/pupil estimated at ETB 86 in public schools and ETB 228 for private schools.

1 Based on the 1991 WHO report “Effects of improved water supply and sanitation on ascariasis, diarrhoea, hookworm infections, schistosomiasis and trachoma” 2 Based on WHO regional unit cost data