Language: English

Original: English

PROJECT: ROAD SECTOR SUPPORT PROJECT II

COUNTRY: TANZANIA

PROJECT APPRAISAL REPORT

Date: September 2011

Appraisal Team

Team Leader: L. Kiggundu, Infrastructure Specialist, TZFO

Team Members: G. Bezabeh, Transport Engineer, OITC.2

N. Kulemeka, Socio-Economist, ONEC.3

D. Gebremedhin, Transport Economist, OITC.2

T. Harada, Transport Engineer, OITC.2

U. Duru, Environmentalist, ONEC.3

B. Y. Hija, Procurement Specialist, TZFO

G. Kaijage, Financial Management Specialist, TZFO

Country Manager: T. Kandiero

Sector Manager: A. Oumarou

Sector Director: G. Mbesherubusa

Regional Director: G. Negatu

Peer Reviewers

J M Chirwa, Infrastructure Specialist, ONRI.1; D M Isooba, Infrastructure Specialist,

UGFO; E Ntagwabira, Infrastructure Engineer, OSAN.2; A Hamza, Gender Specialist,

OWAS.2

TABLE OF CONTENTS

Currency Equivalents i

Fiscal Year i

Weights & Measurements i

Acronyms & Abbreviations i

Loan Information ii

Project Summary iii

Result-Based Logical Framework v

Project Timeframe vii

I. STRATEGIC THRUST AND RATIONALE 1

1.1 Project Background 1

1.2 Project Linkages with Country Strategy and Objectives 2

1.3 Rationale for Bank’s Involvement 2

1.4 Development Partners’ Co-ordination 3

II. PROJECT DESRIPTION 4

2.1 Project Objectives 4

2.2 Project Components 4

2.3 Technical Solutions Retained and Other Alternatives Explored 5

2.4 Project Type 5

2.5 Project Cost and Financing Arrangements 5

2.6 Project Target Area and Population 6

2.7 Participatory Processes of Design and Implementation 6

2.8 Bank Group Experience and Lessons Reflected in Project Design 7

2.9 Key Performance Indicators 7

III. PROJECT FEASIBILITY 7

3.1 Economic and Financial Performance 7

3.2 Environmental and Social Impacts 9

IV. IMPLEMENTATION 11

4.1 Implementation Arrangements 11

4.2 Monitoring 13

4.3 Governance 13

4.4 Sustainability 13

4.5 Risk Management 14

4.6 Knowledge Building 15

V. LEGAL INSTRUMENTS AND AUTHORITY 15

5.1 Legal Instrument 15

5.2 Conditions Associated with Bank’s Intervention 15

5.3 Compliance with Bank Policies 16

VI. RECOMMENDATION 16

Appendices

I. Country’s Comparative Socio-Economic Indicators

II. Table of ADB’s Portfolio in Tanzania

III. Similar Projects Financed by the Bank and Other Development Partners

IV. Project Map

Annexes

Annex A

Currency Equivalents September 2011

1UA = TZS2,532.55

1USD = TZS1,573.64

1UA = USD1.60936

Fiscal Year

Tanzania: 01 July-30 June

Weights and Measures 1 metric tonne (t) = 2,205 lbs.

1 kilogram (kg) = 2.205 lbs.

1 meter (m) = 3.281 ft

1 foot (ft) = 0.305 m

1 hectare (ha) = 0.01 km2 = 2.471 acres

Acronyms and Abbreviations

AADT Annual Average Daily Traffic MKUZA Mkakati wa Kukuza Uchumi na Kupunguza

Umasikini Zanzibar

ADB African Development Bank MOIC Ministry of Infrastructure and

Communications

ADF African Development Fund MTEF Medium Term Expenditure Framework

AIDS Acquired Immune Deficiency Syndrome NEMC National Environmental Management

Council

CBO Community Based Organization NEPAD New Partnership for Africa’s Development

COMESA Common Market for Eastern & Southern

Africa NGO Non-governmental Organization

CSP Country Strategy Paper NPV Net Present Value

CRR Crushed Fresh Rock NSGRP National Strategy for Growth and

Reduction of Poverty

DANIDA Danish International Development Agency PAP Project Affected Persons

DFID Department for International Development PCR Project Completion Report

DP Development Partners RAP Resettlement Action Plan

DPG-T Development partners Group-Transport RFB Roads Fund Board

EAC East African Community RFP Request for Proposals

EIRR Economic Internal Rate of Return RTRN Regional Trunk Road Network

ESIA Environmental and Social Impact Assessment SADC Southern Africa Development Community

ESMP Environmental and Social Management Plan SPN Specific Procurement Notice

EU European Union STI Sexually Transmitted Infection

FE Foreign Exchange TANROADS Tanzania National Roads Agency

GOT Government of the United Republic of

Tanzania TB Tuberculosis

GOZ Revolutionary Government of Zanzibar TSIP Transport Sector Investment Program

IPCC Intergovernmental Panel on Climate Change TZS Tanzania Shilling

JAST Joint Assistance Strategy for Tanzania TZFO Tanzania Field Office

JICA Japanese International Cooperation Agency UA Unit of Account

MCC Millennium Challenge Corporation

VOC Vehicle Operating Costs

MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza

Umasikini Tanzania WB World Bank

ii

Loan Information

Client’s information

BORROWER: UNITED REPUBLIC OF TANZANIA

EXECUTING AGENCIES: TANZANIA NATIONAL ROADS AGENCY, MINISTRY OF

INFRASTRUCTURE AND COMMUNICATIONS

(ZANZIBAR), ROADS FUND BOARD

Financing plan

Source Amount (UA) Instrument

ADF

140.00 million

Loan

JICA 62.14 million Loan

GOT 10.64 million counterpart funds

TOTAL COST 212.78 million

ADB’s key financing information

ADF loan Currency

UA

Interest type Not Applicable

Interest rate spread Not Applicable

Service Charge 0.75%/annum on amount

Disbursed and outstanding

Commitment fee 0.50%/annum on un-

disbursed amount

Duration 50 years

Grace Period 10 years

Dodoma-Babati Road EIRR (Base case) 16.2%

NPV (Base case) USD45.07 million

Tunduru-Mangaka Road EIRR (Base case) 15.8%

NPV (Base case) USD19.92 million

Mangaka-Mtambaswala Road EIRR (Base case) 14.6%

NPV (Base case) USD6.01 million

Timeframe - Main Milestones (expected)

Concept Note approval

September, 2011

Project approval April 2012

Effectiveness December 2012

Launching January 2013

Project Completion Report December 2016

Works Completion March 2017

Last Disbursement September 2017

iii

PROJECT SUMMARY

Project Overview: Road Sector Support Project II comprises: (a) civil works for upgrading

from gravel to bitumen standards: (i) the Dodoma (Mayamaya)-Babati (Bonga) (188.1km);

and (ii) the Tunduru-Mangaka-Mtambaswala (202.5km); (b) consulting services for: (i)

design review and supervision of the civil works; (ii) road safety; (iii) sensitization of

HIV/AIDS, STI, TB and gender; (iv) baseline data collection and monitoring of ESMP

implementation; (v) road sub-sector studies; and (vi) audit; (c) capacity building; and (d)

compensation and resettlement. The total cost of the project amounts to UA212.78 million

comprising UA163.63 million in foreign exchange and UA49.15 million in local costs. The

project components are to be financed through an ADF loan of UA140.00 million or 65.8% of

the total cost and UA62.14 million or 29.2% from JICA as joint financing. Government will

finance UA10.64 million or 5.0% of the total cost to entirely cover compensation and

resettlement and 2.4% of the civil works. The project will be implemented over a five year

period.

Project Beneficiaries and Participation: The main beneficiaries of the project include

export/import operators, freight operators, the business community in the region and

communities in the zones of influence of the two roads. The communities in the project zones

of influence will benefit from improved road safety, HIV/AIDS, STI, TB and gender

awareness. The project will create job opportunities during the construction phase which will

benefit the communities through direct employment and supply of goods and services to the

two roads and related works.

Project Rationale and Need: The project will support economic and social development

programs of the country through efficient and cost-effective movement of passengers and

freight transport, in line with the objectives of the Ten Year Transport Sector Investment

Program (TSIP 2002/03-2012/13), the White Paper on Transport Policy, the Tanzania

Development Vision 2025, the Second National Strategy for Growth and Reduction of

Poverty (NSGRP 2010/11-2014/15) or MKUKUTA II/MKUZA II, the Country Strategy

Paper (CSP 2011-2015) and the Medium-Term Strategy of the Bank (2008-2012). The roads

proposed for upgrading will provide access to the communities in the zones of influence, to

better markets and social services, contribute to reduction of poverty and improve cross-

border trade with neighbouring countries at the same time enhance tourism and regional

integration.

Bank’s Value Added: The Bank under Phase I of Road Sector Support Project is already

financing roads linking to the ones referred to herein namely the Dodoma-Iringa and

Tunduru-Namtumbo roads. The project will address the development challenges resulting

from poor transport infrastructure and connectivity in line with the Bank Medium Term

Strategy (2008-2012) that promotes support to infrastructure with high development impact.

The Dodoma-Babati and Tunduru-Mangaka-Mtambaswala roads are missing links on the

Trans-Africa Highway and the Mtwara Corridor respectively and their upgrading will

promote cross-border trade, enhance tourism and contribute to the achievement of the

development objectives of the country and the EAC and SADC regions at large. The capacity

building component for TANROADS and MOIC will strengthen their project management

capacities.

iv

Knowledge Management: The capacity building component has incorporated a road safety

pilot project that will generate and transfer knowledge on effective measures of reducing

accident rates on the Tanzanian road network. Baseline data collection by an independent

consulting firm will provide knowledge on the impact of the project on the prevalence of

HIV/AIDS, STI, and TB prior to project commencement, during execution and completion.

v

RESULTS-BASED LOGICAL FRAMEWORK Country and project name: Tanzania: Road Sector Support Project II Purpose of the project: To improve services between Dodoma and Babati, Tunduru and Mangaka and Mangaka and Mtambaswala

RESULTS CHAIN

PERFORMANCE INDICATORS

MEANS OF VERIFICATION ASSUMPTIONS/RISKS/MITIGATION MEASURES Indicator

(including CSI) Baseline 2011 Target 2016/17

IMP

AC

T

Impact

Improved access

Improved living standards

% of paved trunk roads on

the network

Economic growth

Currently at 42.9%

GDP Growth at 6.8%

To grow to 62%

GDP growth projected to 12%

TANROADS and National

Statistics and project baseline

data

National, Regional (RECs), and

International Statistics.

Risk: Failure by GOT to implement the

recommendations of the Transport Investment program

(TSIP).

Mitigation: Progress of the implementation of the projects within the TSIP is monitored by the

Development Group-Transport (DPG-T) and regular

dialogue meetings held with GOT.

OU

TC

OM

ES

Outcome 1 Increased paved network

Paved road density

6.86km/1000 km2

8.91km/1000 km2

TANROADS Directorate of

Planning, Monitoring &

Evaluation

Outcome 2

Reduced transport costs

Annual average composite VOC

per vehicle km.

Dodoma – Babati USD 0.824;

Mangaka - Tunduru USD 0.877; and

Mangaka – Mtambaswala

USD 0.949

Reduced by 33% to

USD0.555. Reduced by 41% to

USD0.516 and Reduced by

43% to USD0.54.

Outcome 3

Reduction in travel times

Average Vehicle travel time 5 hrs for Dodoma-Babati;

3.5 hrs for Mangaka-Tunduru; 1.5 hrs for Mangaka –

Mtambaswala

Reduced by 40% to 3hrs.

Reduced by 30% to 2.5 hrs and

Reduced by 33% to 1 hr.

OU

TP

UT

S

Component 1: Upgrade to

Bituminous Standards

1.1: Upgrade Dodoma-Babati

(Mayamaya-Bonga) and Mangaka-

Tunduru-Mtambaswala roads

Condition of the Dodoma-

Babati- and Mangaka-Tunduru-Mtambaswala roads

390.6 km of road in poor

condition

390.6km of road in good

condition

Monthly and Quarterly Progress

reports; Project Completion Report

Risk: Escalation of costs due to late start-up in project

implementation resulting from delayed effectiveness of the loans from ADF and JICA.

Mitigation: The loan conditions are to be minimized and

aligned to the implementation schedule. Advance Contracting procedures are to be utilized. Project costing

has allowed physical and price contingencies to cover

possible price increases.

Risk: Failure by GOT to finance to completion of 59km

of the Dodoma-Babati Road.

Mitigation: GOT counterpart financing is limited to 5.8% to reduce pressure on the budget.

Risk: Premature failure of pavement due to overloading.

Mitigation: The project has incorporated weighbridges for overload control.

Component 2: Cross-Cutting Issues

2.1: Sensitization (HIV, Safety,

Gender);

2.2 ESMP and Forestation;

2.3 Local job Opportunities 2.4: PAP compensated /resettled

Number sensitized

Execution of the ESMP

Number of local jobs

Implementation of RAP

No sensitization

No ESMP to implement

No construction jobs

No RAP to implement

Full compliance with

ESMP

Complete RAP implementation

At least 30 communities

sensitized (10/road section)

At least 1,500 of local jobs created (30% are women)

at construction; 300 routine

maintenance (50% women);

vi

Component 3: Sub-sector Support

3.1 Staff trained

3.2 Bidding documents for pipeline

projects finalized 3.3 Experts procured

3.4 Road safety knowledge

Number of staff trained;

Availability of study reports

Experts’ commencement of

services

Personnel trained in road safety.

No staff trained;

No reports;

No experts recruited.

30 staff members trained

(With gender equity)

2 sets of feasibility, detail

design and bidding

documents produced

4 experts completing

contracts

At least 20 road safety

personnel trained with gender equity

KE

Y A

CT

IVIT

IES

COMPONENTS INPUTS

Component 1: Upgrade to Bituminous Standards

1.1: Civil works

1.2: Supervision services

1.3 Road Safety 1.5: Audit services

Component 2: Cross-Cutting

2.1 Sensitization, HIV/AIDS, Gender 2.2 Monitoring of ESMP and Baseline Data Collection

2.3: Compensation of PAP

Component 3: Sub-sector Support

3.1 Capacity Building

3.2 Road Sub-sector Studies 3.3 Road safety pilot Project

Costs - millions UA:

Civil works 162.18

Supervision 8.01

Road safety 0.56 ESMP and Baseline 0.41

Sensitization, HIV/AIDS, Gender 0.45

Capacity Building 2.35 Studies 2.53

Audit 0.24 Compensation/Resettlement 5.24

Base Cost 179.98

Physical Contingencies 18.00 Price escalation 14.80

Project cost 212.78

Sources of financing (million UA) ADF Loan 140.00

JICA Loan 62.14

GOT 10.64

Total 212.78

vii

Project Timeframe: Road Sector Support Project II (RSSP II)

Activity 2012 2013 2014 2015 2016 2017

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

I. Civil Works 1. Compensation, Resettlement 2. Bidding/Contract Award 3. Works Execution a) Dodoma-Babati Road

b) Tunduru-Mangaka-Mtambaswala Road

II. Contract Supervision; 1. Short-list/RFP 2. Contract Award 3. Mobilization 4. Works Supervision Services a) Dodoma-Babati Road

b) Tunduru-Mangaka-Mtambaswala Road

TO : E. Ntiruka

Driver, TZFO

FROM : Tonia Kandiero

Resident Representative, TZFO

SUBJECT: Terms of Reference (TOR) for Kampala, Uganda Drivers Training level 2:

1. You are hereby requested to attend the driving course in Kampala, Uganda from 28,November to 7, December 2011organized by SECU

2. The purpose of the Training is to improve (build) the skill in driving and precision space management, developing accuracy and consistency, looking

though and planning within a fluid driving environment, and to manage vulnerable driving situations.

3. At the conclusion of the mission, you will prepare and submit a Back-to-Office Report within five working days.

III Sensitization of HIV/AIDS, STI, TB and Gender; Baseline data Collection and ESMP Monitoring; Road Safety; Audit Services and Capacity Building 1. Short-list/RFP 2. Contract Award 3. Mobilization 4. Services IV Road Sub-sector Studies 1. Short-list/RFP 2. Contract Award 3. Mobilization 4. Services

Defects Liability Period

ROAD SECTOR SUPPORT PROJECT II

REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE ADB GROUP

TO THE BOARD OF DIRECTORS ON THE PROPOSED LOAN TO TANZANIA

Management submits the following report and recommendation on a proposed loan of UA140.00

million to the United Republic of Tanzania to jointly finance with JICA Road Sector Support

Project II.

I. STRATEGIC THRUST AND RATIONALE

1.1 Project Background

1.1.1 Road transport accounts for over 90% of transportation of freight and passengers and therefore

plays a pivotal role in supporting economic and social development programs. The Dodoma-Babati

road is an important link (T05) on the national road network meant to link the central and northern

regions of Tanzania. It is also part of the EAC Trunk Road Network (Route 5), the SADC Regional

Trunk Road Network (RTRN-Route 25) and the Trans-Africa Highway from Cape Town to Cairo

(Highway No 4), meant to link Tanzania to firstly the neighbouring countries and secondly to the

southern and northern African countries. The Tunduru-Mangaka-Mtambaswala road is T06/T42 on

the Tanzania network and a link on the Mtwara Corridor designated as Route 35/122 on the RTRN

linking Mozambique to the Mtwara port over the Unity Bridge and westwards to northern Malawi

and eastern Zambia. The Mtwara Corridor commencing from the Mtwara port is part of the SADC

Regional Spatial Development Initiative (SDI) which is meant to attract private sector investment

through adequate, reliable, cost-effective, efficient and seamless transport systems to reduce the

cost of doing business. The handling capacity of the Mtwara port currently stands at 0.4 million

tonnes per annum which is far below the projected requirement to serve southern Tanzania, northern

Mozambique, northern Malawi and eastern Zambia across Lake Nyasa/Malawi when the Corridor is

completed. The Tanzania Ports Authority (TPA) has commissioned the preparation of a Master

Plan to determine short, medium to long-term improvements required to handle future traffic which

at completion will be followed by detailed design studies required for implementation of the

recommendations of the master plan.

1.1.2 The road safety situation in Tanzania is among the worst in Sub-Saharan Africa with the trend

of reported accidents worsening at an annual rate of 10%. Reported road crash fatalities in 2010,

were over 9 per 100,000 inhabitants. The rate compares with the one in Kenya at 9, Nigeria at 5;

Ghana at 9; Uganda at 9 and Ethiopia at 3. Recently Parliament approved the National Road

Safety Policy which provides direction for addressing multi-sector road safety issues

comprehensively including the establishment of a National Road Safety Agency (NRSA) and

Driver and Vehicle Examination and Licensing Agency (DVELA) under MOW. In order to

support the efforts of Government, a pilot road safety project has been incorporated in this project

to build capacity of the major road safety stakeholders through learning by doing. The component

involves the engagement of a road safety expert for the implementation of the pilot project and

preparation of a nationwide road safety strategy and programme and will complement the World

Bank funding for the establishment and capacity building of NRSA and DVELA.

1.1.3 The ADF transport portfolio at approval of this intervention will comprise a total of 39

contracts, 15 for civil works and 24 for consulting services amounting to UA352 million or 44% of

the overall ADF country portfolio. To ensure effective management of the portfolio, capacity

2

enhancement of the roads sub-sector entities is essential to consolidate the gains achieved from

similar support under Phase I. Provision has therefore been made for four experts, namely, one

procurement expert and one contract management expert, for TANROADS; one institutional reform

expert for the Ministry of Infrastructure and Communications (MOIC) to alleviate the capacity

constraints that have negatively affected the restructuring component financed under Phase I; and

one road safety expert for the road safety pilot project. Provision has also been made for short-term

training including the training of women contractors, procurement of support equipment and three

road sub-sector studies, one for mainland (Ifakara-Songea road-512km), one for Zanzibar (48km of

road on Unguja Island) as pipeline projects and a study for the widening of the road user charging

system for the Road Fund (RF) to ensure sustainability of the road network.

1.2 Project Linkages with Country Strategy and Objectives

1.2.1 The Second National Strategy for Growth and Reduction of Poverty (NSGRP II 2010/11-

2014/15) or MKUKUTA II/MKUZA II recognizes that infrastructure development is at the

centre stage of the economic development process and reduces the cost of doing business,

attracts private sector investment, enables production and social service delivery, links market

centres and contributes to sustaining of the quality of life through re-distribution of wealth. The

strategy under Cluster I: Growth for Reduction of Income Poverty identifies road infrastructure

as one of the cross-sector drivers of broad-based growth. The White Paper on National Transport

Policy (NTP) also mirrors the NSGRP objective of supporting socio-economic development

through the development of an efficient and cost-effective transportation system that integrates

regional and domestic economic centres and contribute to the reduction of poverty through

access to services and markets for agricultural produce. As such, Phase I of the Transport Sector

Investment Program (TSIP 2007/08-2011/12), has been developed with wide stakeholder

consultation including development partners which will be followed by Phase II currently under

preparation. The TSIP reflects the objectives of the Tanzania Development Vision 2025, the

NSGRP I and NSGRP II and the Country Strategy Paper (CSP 2011-2015).

1.2.2 The CSP has identified the two roads for Bank intervention in the ADF XII Cycle under

Pillar I: Infrastructure Development. The CSP responds to the objectives of the NSGRP II or

MKUKUTA II/MKUZA II that targets improvement of the quality of life and social well-being.

MKUKUTA II/MKUZA II is consistent with the Bank’s Medium Term Strategy (2008-2012)

that has identified infrastructure as one of the major focus areas for new commitments especially

projects that have high development and regional integration impact. The two roads therefore,

have been identified as priority for intervention to facilitate economic development and poverty

reduction and contribute to the attainment of the objectives of MKUKUTA II/MKUZA II

through easy movement of goods and people that will enhance intra-regional trade and tourism,

improve competitiveness in international trade and promote regional integration.

1.3 Rationale for Bank Involvement

1.3.1 Phase I of the TSIP is under implementation with support from development partners

including the Bank. The projects in the TSIP financed by other development partners are

presented in Appendix III. On-going interventions that link to the proposed road sections include

the Dodoma-Iringa road (260 km) and the Arusha-Namanga-Athi River Road Project (244km)

3

both jointly financed by the Bank and JICA and the Babati-Minjingu road (60km) financed by

the Bank and GOT. Further the Bank and JICA under the on-going Phase I are jointly financing

the Tunduru-Namtumbo (193km) a section on the Mtwara Corridor which links with the

Tunduru-Mangaka-Mtambaswala road and the Namtumbo-Songea road currently under

construction. The civil works contracts for Phase I were awarded in December 2010, one year

after Board approval and work has commenced on the ground an indication of good

implementation performance. Due to the importance attached to the project, Government is

through the budget; (i) financing the upgrading 59 km of the Dodoma-Babati road; (ii) financed

together with the Mozambique Government the construction of the Unity Bridge over the

Ruvuma River. The Mozambique Government has already approached the Bank for financing of

the studies for upgrading the Mueda-Negomane road leading to the Unity Bridge as a pipeline

project. This reinforces the two Governments’ commitment to development efforts that enhance

regional cooperation and integration. Bank financing for the upgrading of the road sections

herein is therefore justified firstly, as continuation to Phase I under implementation from the

Bank and JICA resources and secondly, as support to TSIP implementation in line with the other

DPs’ financing of the sub-sector to achieve the development objectives of the Government.

1.4 Development Partners’ Coordination

1.4.1 At national level a Development Partner Group (DPG) is the coordinating body for bilateral

and multilateral development partners in the country and the Bank is the Chair of Cluster I:

Growth for Reduction of Income Poverty. At sector level a Development Partner Group for

Transport (DPG-T) in which the EU is Lead and the ADF and JICA are Deputy Leads, is a sub-

group of the DPG that provides a platform on which financing and implementation issues

regarding the TSIP are discussed. Issues discussed inter alia include financing of; the trunk and

regional road networks; feeder roads; the rail network; and governance issues in the sector. There

is continuous dialogue between Government and Development Partners (DPs) to ensure that

results and outcomes are achieved in line with the targets agreed to. The Bank is one of the

leading active DP in the transport sector. Other major players include the WB, JICA, DANIDA,

EU, NORAD, MCC, OPEC and the Kuwait Fund. For the 2010/11 financial year the DPs

financed 35.5% of the roads sub-sector expenditure. The Bank’s intervention is in line with the

other DPs involved in the sector and is mostly through direct project financing for most DPs. The

EU is the only DP channelling its intervention through non targeted sector budget support. JICA

and MCC have on-going interventions in feeder roads through direct financing. An assessment

carried out on sector budget support identified challenges in financial management, contract

management and delays in disbursement. A full fiduciary risk assessment is necessary prior to

ADF’s participation in sector budget support.

1.4.2 During preparation and appraisal extensive consultations with the major DPs active in the

transport sector, were conducted to share experience, harmonize procedures and co-ordinate

interventions. As a result of effective donor coordination, JICA participated in the preparation

and appraisal missions and is considering joint financing for the project.

4

Players - Public Annual Expenditure 2010/11**

Total Government Donors

302.1 m UA194.9 m UA107.2m

[64.5%] [35.5%]

Level of Donor Coordination

Existence of Thematic Working Groups [Yes]

Existence of SWAPs or Integrated Sector Approaches [Yes]

ADB's Involvement in donors coordination** [Cluster Chair]

ADB’s Involvement in Transport Sector donor group [Deputy Lead]

II. PROJECT DESCRIPTION

2.1 Project Objectives

2.1.1 The sector goal is to contribute to socio-economic development, poverty reduction and

integration of the regions of the country through an improved transport system that links centres

of economic activity. The project objective is to improve road transport infrastructure to reduce

road maintenance costs, vehicle operating costs and travel time between Dodoma and Babati and

between Tunduru, Mangaka and Mtambaswala and provide the communities in the zones of

influence access to bigger markets and social services and contribute to reduction of poverty.

2.2 Project Components

2.2.1 The project comprises the following components:

I. Civil Works: UA189.27 million: Dodoma (Mayamaya)-Babati (Bonga) Road (188.1km), and

Tunduru-Mangaka-Mtambaswala Road (202.5km): The component involves upgrading the

existing gravel roads to bitumen standards of 6.5m carriageways and 1.5m sealed shoulders on

either side. The civil works are to be implemented in five contracts; Lot A: Mayamaya-Mela

(99.3km); and Lot B: Mela-Bonga (88.8km) for the Dodoma-Iringa road and Lot 1: Mangaka-

Nakapanya (70.5km); Lot 2: Nakapanya-Tunduru (66.5km); and Lot 3: Mangaka-Mtambaswala

(65.5km) for the Tunduru-Mangaka-Mtambaswala road.

II. Consulting Services: UA14.56 million: Consulting firms will provide services for: (i) design

review and supervision of the civil works; (ii) road safety; (iii) sensitization of HIV/AIDS, STI

and gender; (iv) baseline data collection and monitoring of ESMP implementation; (v) Studies;

widening of the road user charging system and two road sub-sector studies, one each for the

mainland and Zanzibar; and (vi) audit;

III. Capacity Building: UA2.81 million: The component consists of technical assistance to

TANROADS and the MOIC in Zanzibar, road safety pilot project; training for female

contractors, short-term training of staff and procurement of support equipment;

IV. Compensation and Resettlement: UA6.14 million: The component provides for

compensation and resettlement of the project affected people (PAP) in accordance with the

Resettlement Action Plans (RAPs).

ADF 16.2%

WB 14.7%

JICA 13.4%

DANIDA 5.7%

EU 3.9%

NORAD 1.1%

5

2.3 Technical Solutions Retained and Other Alternatives Explored

2.3.1 Project design considered three pavement alternatives, namely (i) Double Bitumen Surface

Treatment (DBST); (ii) Asphalt Concrete (AC); and (iii) gravel rehabilitation with a 150mm

gravel wearing course on compacted sub-grade. The pavement structures retained comprise a

50mm AC surfacing with sealed shoulders on 150mm cement stabilized granular base (C2) on

200mm natural granular sub-base (G45) for the Dodoma-Babati road and a DBST with sealed

shoulders on 150mm crushed stone base (CRR) on 200mm cement stabilized granular sub-base

(C1) for the Tunduru-Mangaka-Mtambaswala road. The AC surfacing was retained for the

Dodoma-Babati road because of; its high NPV; its suitability for the projected high heavy

vehicle traffic on the road; the mountainous terrain; and, continuity of surfacing with adjacent

road sections under construction. For the Tunduru-Mangaka-Mtambaswala road, the other two

alternatives were rejected due to the high construction costs for the AC; lower economic returns

for both as compared to DBST and environmental considerations for the gravel rehabilitation

alternative.

2.4 Project Type

2.4.1 The modality of operation is through direct project financing typical of the nature of

intervention, as compared to sector budget support. The Bank and other DPs are exploring the

best way of using sector budget support in line with the recommendations of the Paris

Declaration and Accra Plan of Action.

2.5 Project Cost and Financing Arrangements

2.5.1 The project cost estimate is UA212.78 million net of taxes, which is, made up of UA163.63

million (76.9%) in foreign exchange and UA49.15 million (23.1%) in local cost. Abridged cost

estimates are Table 2.1 below.

Table 2.1: Summary of Project Cost Estimates (UA million net of taxes)

Component TZS billion UA million

FE LC Total FE LC Total

Civil Works:

Dodoma-Babati 169.70 42.43 212.13 67.01 16.75 83.76

Tunduru-Mangaka-Mtambaswalwa 154.83 38.71 193.54 61.14 15.29 76.43

Sub-total 324.53 81.14 405.67 128.15 32.04 160.19

Design Review and Supervision

Dodoma-Babati: 8.49 2.12 10.61 3.35 0.84 4.19

Tunduru-Mangaka-Mtambaswala 7.74 1.94 9.68 3.06 0.76 3.82

Sub-Total 16.23 4.06 20.29 6.41 1.60 8.01

Other Services 9.49 11.20 10.60 3.75 0.44 4.19

Capacity Building 5.36 0.60 5.96 2.11 0.24 2.35

Compensation & Resettlement - 13.27 13.27 - 5.24 5.24

Sub-Total 14.85 25.07 29.83 5.86 5.92 11.78

BASE COST 355.62 100.19 455.81 140.42 39.56 179.98

Physical Contingency (10%) 35.56 10.02 45.58 14.04 3.96 18.00

Price Contingency (FE: 3%; LC: 7%) 23.24 14.26 37.50 9.17 5.63 14.80

Total (Net of Taxes) 414.42 124.47 538.89* 163.63 49.15 212.78

1UA=TZS2,532.55 1UA=USD1.60936 * The Base Cost includes cost of weighbridges, service ducts and tree planting

6

2.5.2 The proposed financing from ADF amounts to UA140.00 million to cover 65.8% of the

project cost comprising 62.0% of the foreign exchange cost of UA101.49 million and 78.4% of

the local cost (UA38.51 million). JICA will finance the balance of foreign exchange cost

amounting to UA62.14 million or 29.2% of project cost. GOT will finance 5.0% of project cost

amounting to UA10.64 million or 21.6% of local costs and taxes. Annex A presents the

justification for GOT’s financing below 10%.

Table 2.2: Sources of Finance (UA million - net of taxes) SOURCE FE LC Total %

ADF 101.49 38.51 140.00 65.8

JICA 62.14 - 62.14 29.2

GOT - 10.64 10.64 5.0

Total 163.63 49.15 212.78 100

2.6 Project’s Target Area and Population

2.6.1 The project constitutes three road sections namely the Dodoma-Babati road situated in

Dodoma and Manyara Regions; the Tunduru-Mangaka and Mangaka-Mtambaswala roads

situated in the Ruvuma and Mtwara Regions respectively. The road sections traverse the districts

of Babati, Kondoa, Dodoma, Tunduru and Nanyumbu directly serving a combined population of

over 2.4 million people. The project must be seen in the broader regional and sub-regional

contexts as it forms part of the SADC regional network and the Cape to Cairo Trans Africa

Highway and therefore will serve beyond the population in the direct zones influence. Similarly,

the Tunduru - Mangaka and Mangaka – Mtambaswala roads are part of the regional Mtwara

Corridor connecting Tanzania to Malawi through Songea and Mozambique through the Unity

Bridge hence indirectly serving the vast populations of these countries including the Iringa –

Mbeya triangle through to Zambia and Northern Malawi.

2.6.2 Among the main project related impact is the consequential socio-economic development

which will result in increased income levels and therefore improved living standards. The areas

are rich in agriculture, natural resources and tourism. Improved wellbeing will be as an outcome

of improved transport systems derived from reduced transport costs and travel time; increased

movement of people, goods, and services; enhanced regional integration; improved road safety;

increased accurate and timely dissemination of information regarding awareness and prevention

of HIV/AIDS/STI and TB. The capacity building component will enhance the capacities in

managing the roads sub-sector; and female contractors.

2.7 Participatory Process for Project Design and Implementation

2.7.1 The preparation of the TSIP underwent extensive consultation at local, regional and

national levels including consultation with development partners through the DPG-T. The project

roads therefore were identified within an elaborate mechanism complying with best practice in

determining priority development projects. At roads sub-sector level, the Ministry of Works and

TANROADS led the process of identification of priority road projects on the trunk and regional

road network during the development of the TSIP.

2.7.2 Additional community and stakeholder consultations were conducted during the

Environmental and Social Impact Assessment (ESIA) and Resettlement action Plan (RAP)

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exercises which covered both the national level institutions and communities down to village

levels, and with project affected persons (PAPs). All relevant ministries and bureaus dealing

with the environment, resettlement and compensation as well as NGOs and CBOs operating in

the project areas were also consulted. The Bank missions during project preparation and

appraisal also conducted consultations with various stakeholders including regional and district

administrations, community representatives, the donor community, government institutions and

NGOs. All concerned people and institutions consulted confirmed the need for the project, and

expressed willingness to cooperate towards its successful implementation. They equally

expressed specific concerns for mitigation actions of negative environmental and social impacts.

These concerns and opinions of the stakeholders have been incorporated in project design.

2.8 Bank Group Experience, Lessons Reflected in Project Design

2.8.1 Lessons learnt from management of previous and on-going road sub-sector interventions

have been incorporated in project design as follows: (i) delay in implementation has been

mitigated by use of advance contracting to facilitate early procurement and timely award of

contracts; (ii) pre-qualification has in the past limited participation. Use of post qualification will

encourage wider participation of bidders for the civil works which will result in favourable

tender rates; (iii) conditions precedent to first disbursement that are not aligned with project

implementation have delayed disbursement. The conditions have been streamlined to avoid start-

up delays due to late fulfilment of the conditions precedent to first disbursement; and (iv) under-

estimates not detected during project processing has in the past resulted in bid offers far above

available financing. The studies have been critically reviewed during project preparation, with

respect to unit rates and quantities to reduce the possibility of cost overruns; and (vi) low

capacity of executing agencies contributes to delays in project implementation which has been

mitigated through capacity strengthening that will enhance project execution.

2.9 Key Performance Indicators

2.9.1 At completion of project implementation four outcomes are expected; (i) reduction of

transport costs; (ii) reduction of travel times; (iii) increased paved road network; and (iv)

enhanced implementation capacity. The outputs of the project will be; (i) upgraded 390.6 km to

bitumen standards; (ii) implemented cross-cutting issues comprising sensitization of HIV/AIDS,

STI, TB and gender; forestation, creation of job opportunities and compensation/resettlement of

PAP; and, (iii) national road safety programme and road sub-sector studies for pipeline projects.

An independent consultant will be responsible for the collection of base line data at various

intervals throughout project implementation as a means of monitoring progress towards the

projected targets. The output indicators will be measured during project implementation as

sections of the roads are opened to traffic and after project completion.

III. PROJECT FEASIBILITY

3.1 Economic and Financial Performance

3.1.1 The methodology for the economic analysis: The methodology is based on cost benefit

analysis by comparing the “with” and “without “ project scenarios over a period of 20 years,

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using the Highway Development and Management Model (HDM-4). The economic costs consist

of (i) the capital investment costs and (ii) the routine and periodic maintenance expenses. The

base year estimated annual average daily traffic (AADT) of Dodoma (Mayamaya)-Babati

(Bonga); Mangaka-Tunduru; and Mangaka-Mtambaswala are 129, 126 and 109 vehicles per day

respectively. The traffic projection is discussed in Annex C2. The benefits consist of savings in

(i) vehicle operating costs, (ii) motorized traffic travel time for passenger and cargo, and (iii)

exogenous benefits. The measures of project worth used are the EIRR and NPV at 12.0%

discount rate, which is the opportunity cost of capital in Tanzania.

3.1.2 Assumptions taken and the Economic Analysis Result: The project construction is

assumed to commence in June 2013. With a construction period of 36 months, the first year of

opening the road to traffic is assumed to be 2016 and the analysis period goes up to 2035. The

maintenance strategies “without project” do minimum and “with project” improved road have

been considered in the analysis. Residual values are assumed as 20 % of the initial capital

investment and credited to the project in the final evaluation year of 2035. The economic costs

taken into account in the cost benefit analysis are the Road Agency costs in the “with” and

“without” project scenarios, which include both the capital investment cost of upgrading to AC

and DBST for the three roads of the project (390.6km) and the maintenance cost. Construction

cost was revised in October 2011 to take into consideration the detailed engineering design cost

estimate, the recent tender offers and the 2011 oil based input prices into civil works. The revised

economic capital investment cost of three roads is put at USD 237.8 million (USD 127.2 million

for Dodoma-Babati, USD 75.7 million for Tunduru-Mangaka and USD 34.9 million for

Mangaka-Mtambaswala. AC pavement is selected for Dodoma-Babati while DBST for the

others.

3.1.3 The principal benefits of the road upgrading project are expected to derive from reduction

in road user costs, comprising VOC and passenger time costs, as a result of lower road roughness

and higher average travel speeds. The annual average composite VOC per vehicle km is

estimated within a range of USD 0.824 to USD0.949/veh-km on the existing gravel roads to be

reduced to the range of USD0.516 to USD0.555/veh-km when the project roads are completed

and open to traffic in 2016 with AC and DBST pavement interventions. During the same period,

average travel time on the entire three roads is reduced by 38% from 10 hours on the existing

three gravel roads to 6.5 hours when the roads are open to traffic in 2016. The summary of the

economic analysis result is presented in Table 3.1. The traffic analysis and detailed economic

analysis results are presented Annex C2.

Table 3.1 Summary of the Economic Analysis

Parameter Dodoma -Babati Mangaka-

Tunduru

Mangaka-

Mtambaswala FIRR, NPV (base case) n/a n/a n/a

Economic Internal Rate of Return (EIRR) 16.2% 15.8% 14.6%

Net Present Value (NPV) in USD 45.07 million 19.92 million 6.01 million

Sensitivity of EIRR of concurrently 10%

increase in cost and 10% decrease in traffic 14.7% 13.9% 13.1%

9

3.2 Environmental and Social Impacts

3.2.1 Environment: The project is classified as a Category 1 based on its potential adverse

social and environmental impacts - this is with respect to issues of involuntary resettlement and

impacts on the environment including forest resources. Accordingly full ESIAs and ESMPs and

RAPS were developed. The Summary of ESIAs and RAPs were posted on the Bank’s website on

01 December 2011.

3.2.2 It is noted that the road routes are along existing alignments and as such will only require

minimal land acquisition for widening the road widths. The Tunduru-Mangaka road passes in the

vicinity of three wildlife protected areas, game reserves, forest areas and also crosses an

important animal migration corridor between Lukwika-Lumesule-Selous Game Reserves in

Tanzania and Niassa National Park in Mozambique.

3.2.3 Adequate measures for mitigating adverse impacts have been identified and have been

described in the projects ESMPs. A provision of UA0.41 million has been made to implement

the ESMPs and baseline data collection. These measures include controlled excavations and

sourcing of construction materials, traffic control, location of site works from sensitive

environmental receptors, watering of the road works during implementation, adequate signage

and tree planting. The project will also bring environmental benefits in the form of erosion and

flood control measures.

3.2.4 Climate Change: During the construction phase, TANROADS will ensure that site

vehicles and equipment are adequately and timely maintained to keep exhaust emissions at a

minimum. It is envisaged that the tree planting programme associated with the project will in the

long term contribute to offsetting green-house gas emissions.

3.2.5 In terms of adaptation to climate change, the government has provided national policies

and strategies that have substantial elements of climate change adaptation. At the national level,

the National Adaptation Plan of Action (NAPA) has been prepared to identify priority activities

that respond to their urgent and immediate needs to adapt to climate change. In this context by

facilitating mobility and access to economic resources, the road project will contribute to

strengthening climate change adaptation capacity of the local communities.

3.2.6 Project design has considered the impact of climate change on the longevity of the road.

Climate change projections according to the Intergovernmental Panel on Climate Change (IPCC)

reports predict a rise in average annual temperatures of 0.90C (2030), 1.3

0C (2050), and 2.2

0C

(2100). Average annual precipitation changes are projected to increase by 4.1% (2030), 1.3%

(2050), 10.2% (2100). The engineering design has given sufficient consideration to the

temperature rise and changes in annual precipitation resulted from climate change.

3.2.7 Gender: During project feasibility, gender issues have been analysed and several impacts

have been identified and mitigation measures to curb gender related negative outcomes put in

place. Among the areas assessed were socio-cultural barriers of gender, gender biased access to

resources, policy factors and legislations, production and reproductive issues, impact of

HIV/AIDS and food security, access to social services (education and health), and employment

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opportunities and economic empowerment. Both positive and negative gender related impacts

were isolated and mitigation measures as well as benefit enhancement measures were identified,

such as equal employment opportunities, attention to women during resettlement, targeted

HIV/AIDS messages to women and girls, among others.

3.2.8 On the whole the project is expected to benefit both women and men through creation of

employment and project design has included interventions aimed at expanding chances for

women’s economic empowerment. During implementation TANROADS will ensure that women

are encouraged to seek employment and that they are not discriminated against in the recruitment

process. Through a women empowerment program of TANROADS and MOW, women

contractors get training in routine road maintenance works with the aim of having women

contractors win at least 25% of contracts to do routine road maintenance. This project, therefore,

has made a provision of USD0.12 million under the capacity building component of additional

training of women contractors in Manyara, Dodoma, Ruvuma and Mtwara Regions.

3.2.9 During operation, improved transportation systems will empower women through

accessibility to markets for agricultural produce; easy access to social services such as hospitals

and schools and seizure of discriminatory practices by transport operators who don’t offer

transport to women during rainy season or charge a premium of 25% on the premise that women

would not help push vehicles when stuck in mud.

3.2.10 Among the negative impacts perceived in the project that are likely to disproportionately

impact on women are (i) those associated with relocation where-by women’s workload will

increase; (ii) increase of the incidence of HIV/AIDS and STI; (iii) potential for women being

harassed or attacked by construction workers. In order to address these and other issues raised,

the project has incorporated gender sensitization and mainstreaming activities to be carried out

by a specialized service provider who will combine delivery with HIV/AIDS, STI and TB

awareness and prevention program.

3.2.11 Social: One of the important and immediate means of income creation and poverty

alleviation are the direct and indirect job opportunities that will be created for the local people.

Direct employment will be in the form of skilled labour as well as semi- and non-skilled labour

during construction and maintenance. Indirect employment will include employment by

suppliers to the contractor, food vendors (especially women) and other small businesses like soft

drinks and essential grocery sales. It is estimated that the project will create approximately 1500

jobs during construction and 300 jobs during routine maintenance. Recruitment of semiskilled

and unskilled workers will be reserved for the local communities and these are expected to be

approximately 80% of the total jobs created.

3.2.12 Other wealth creation opportunities will result from an improved transportation system.

The project roads once operational will be catalysts for economic diversification including

agriculture. Dominant crops grown are maize, cashew nuts, oilseeds, groundnuts, pigeon peas,

coconut, rice, sesame and sorghum. It is anticipated that the improved road will attract new

investors to the areas; this will have a multiplier effect on the availability of other services such

as hotels, schools and medical services, in so doing create even more job opportunities. The

improved transportation systems will also make it possible for local and regional trade to

11

flourish. The improved road will increase the number of transport operators and increase demand

for agricultural produce in turn increasing farm-gate prices. Output will also increase due to easy

access to agricultural inputs and contact with extension services. The project areas have potential

for tourism hence upgrading of the roads to bitumen standards will attract high paying tourists

and will have a significant influence in increasing tourist activities in the zones of influence

especially the Selous Game Reserve. Improved accessibility will result in improved management

including quick response to emergencies and combating illegal harvesting of forest products as

well as poaching.

3.2.13 The most common diseases in the project areas include malaria, diarrhoea, acute

respiratory infections including coughing, TB, pneumonia, eye and skin diseases. The

prevalence rates for HIV/AIDS infections vary among the three project areas with Dodoma–

Babati area experiencing the highest rates. The 2007 Comprehensive Council Health Plan

indicated a prevalence rate of 12%. Updated figures for Kondoa and Babati Districts gave

prevalence at much higher rates in excess of 12.8%, compared with the national rate of 7%. On

the other hand Tunduru, Mangaka and Nanyumbu areas have lower rates ranging between 3.5%

and 4.5%, respectively. The project has made provisions for HIV/AIDS and STI and TB

awareness and prevention activities to complement what is already being carried out by the

District Health Offices where each district has District Aids Control Committees overseen by the

Tanzania Commission for AIDS (TACAIDS). NGOs and CBOs are also actively implementing

programs in both HVI/AIDS and malaria control including home-based care. One major

challenge in all project areas which contributes to high incidence of diarrhoea is lack of potable

water. The project will, where feasible, include provision of water to communities through

drilling of boreholes.

3.2.14 Involuntary Resettlement: The road works will inevitably affect a significant number of

persons and necessitate relocation of residential and associated buildings such as grain stores,

kitchens, commercial buildings; and also trees, crops, fences, social and community structures

e.g. prayer houses, schools, health facilities, water points and communal lands such as grazing

land. Approximately 753 residences will be affected on the Dodoma-Babati road, 402 on the

Tunduru-Mangaka road, and 472 on the Mangaka-Mtambaswala -- in total affecting

approximately 1627 residences. In accordance with the Bank’s Involuntary Resettlement Policy,

for all the three road sections RAPs have been prepared. A total budget of TZS13.27 billion

(equivalent of USD8.43 million) has been allocated for compensation and resettlement to be met

by Government as part of counterpart financing. TANROADS will be responsible for

implementing the RAPs.

IV. IMPLEMENTATION

4.1 Implementation Arrangements

Executing Agencies

4.1.1 Two semi-autonomous entities, namely, TANROADS, and the Roads Fund Board (RFB)

were established by Government as part of sub-sector reforms meant to improve road

12

management. TANROADS has been delegated the management of the trunk and regional road

networks and the RFB delegated to manage the Road Fund.

4.1.2 TANROADS’ organizational structure comprises five directorates namely, (i) Planning;

(ii) Procurement and Contracts; (iii) Maintenance; (iv) Projects; and (v) Business Support. Two

units, namely Internal Audit and Legal Counsel report to the Chief Executive. TANROADS has

successfully delivered positively on the management of the designated road network.

Participation of the private sector as members of the Boards of Directors of TANROADS and the

RFB has assured wide stakeholder input in decision making on the management of the road

network. Of the established engineering positions in TANROADS 87% are filled. The RFB has a

small compliment of staff which are all filled. The Environment and Social Units of

TANROADS will be responsible for implementing the RAPs. The implementation of the ESMP

will be by the contractors under the supervision of the Resident Engineers. TANROADS will

conduct regular inspections to ensure full compliance with the ESMP measures.

4.1.3 The road studies and institutional reform expert and associated support equipment for

Zanzibar will be MOIC’s responsibility. The MOIC is currently implementing a Bank financed

road project and therefore has the requisite experience to procure services for its component. The

road user charging widening study will be supervised by the RFB. The RFB has successfully

implemented donor funded studies and has the capability to oversee its component. The road

safety pilot project will be overseen by a Technical Committee comprising TANROADS, MOW

and Traffic Police. TANROADS will implement the remaining components. TANROADS has in

the past satisfactorily supervised similar projects financed by development partners including the

Bank and has the capacity to supervise its components. TANROADS has benefited from the

capacity strengthening component financed under Road Sector Support Project I which has

enhanced the young engineers’ project management capacity.

Procurement

4.1.4 The procurement of goods, works and acquisition of consulting services financed by the

Bank and JICA will be in accordance with the Bank's Rules and Procedure for Procurement of

Goods and Works, May 2008 edition or as appropriate Rules and Procedure for the Use of

Consultants, May 2008 edition using the relevant Bank Standard Bidding Documents. The

Procurement Plan has been discussed and finalized. Advance contracting is applicable to

procurement.

Financial Management and Disbursement Arrangements

4.1.5 The Financial Management Assessment concluded that the overall risk for this project was

‘moderate’ and there will be adequate capacity to record accurate and complete transactions and

deliver financial reports timely. In line with the Paris Declaration and Accra Agenda, the

project’s financial management transactions will be managed using the country systems. The

project’s financial management transactions will be managed within the existing set-ups.

TANROADS, MOIC and RFB are implementing projects financed by DPs with notable success

and have the experience to manage the financial and disbursement transactions for this project.

As part of the Internal control the Internal Audit Units will include in their audit programmes this

project and separate reports will be issued and shared with the Bank during supervision missions.

13

The financial statements will be audited annually by the Controller and Auditor General (CAG)

in line with the Bank’s Guidelines for Financial Reporting and Auditing of Projects. In the event

that CAG cannot undertake the audit, provision has been made for use of an independent auditor.

A value for money audit will be undertaken by the CAG or his appointee, tabled and discussed at

midterm review. The direct disbursement method will be used for the civil works and

consultancy services. Special Accounts will be utilized for the capacity building component.

4.2 Monitoring

4.2.1 Each of TANROADS, MOIC and the RFB, have assigned project coordinators with the

requisite qualifications and experience that were reviewed at appraisal that will monitor

implementation. The day to day activities of the civil works will be monitored by the supervision

team of the consultant. Independent consultants under the oversight of TANROADS will be

responsible for the sensitization of HIV/AIDS, STI, TB and gender; baseline data collection and

ESMP implementation, road safety and the road sub-sector study. The MOIC and RFB

coordinators will monitor the consulting firms appointed for the studies. The monthly and

quarterly reports submitted to the Bank will include physical, financial, social and environmental

indicators that the project has achieved. The reports will provide updated information on project

implementation highlighting key issues and problem areas and recommended measures for

resolving identified bottlenecks. At least two field missions will be undertaken annually to the

sites to monitor progress. At 85% completion of the project components or 95% disbursement of

the loan funds, the Bank and the Executing Agency will prepare a joint Project Completion

Report.

4.3 Governance

4.3.1 Governance and accountability is an important pillar of both MKUKUTA/MKUZA II

and the National Development Vision 2025. The Government is committed to putting in place

well-functioning systems that are representative, accountable and inclusive, scaling up and

following up on the implementation of all components of the National Framework on Good

Governance and improving the capacity of all representative bodies as well as strengthening

local level governance institutions. Anti-corruption efforts are spearheaded by the Prevention and

Combating of Corruption Bureau (PCCB), which was set up in 1991. Generally, the

Government’s governance agenda is comprehensive and well-focused and the Bank is supporting

the ongoing efforts through the Institutional Support for Good Governance Project (ISP II).

4.4 Sustainability

4.4.1 The roads sub-sector has undergone reforms that include the establishment of

TANROADS for the management and maintenance of roads and the Roads Fund Board (RFB) to

manage the Road Fund (RF). The sustainability of the project will depend largely on the ability

of TANROADS to implement timely maintenance and to exercise effective axle-load-control on

the roads.

4.4.2 The RF is ring-fenced financing (from fuel levies, transit fees and overloading charges)

for road maintenance and its revenue has increased annually on the average by about 21% from

14

TZS44.939 billion in 2000/01 to TZS256.045 billion in 2009/10. The increase in the fuel levy by

100% (from TZS 100/litre to TZS200/litre) in 2007/08 doubled the RF Revenues and shows

GOT’s commitment to the sustainability of the roads subsector. Of the total revenues, 1% of the

collection is set aside for the administration of the Fund. From the remaining balance, the RF

allocates 63% to TANROADS for maintenance of trunk and regional roads; 7% to MOW for

road development; 30% to local district and municipal authorities for maintenance and

development works of district, feeder and urban roads.

4.4.3 There is sufficient financing available to cover routine maintenance of the road network in

good and fair condition, from the Road Fund. Even though fuel levy collection is a major issue

(because of increasing revenue leakages due to adulteration, dumping of transit fuel and tax

evasion), the fuel levy is at a level equivalent to approximately US$ 0.16 per liter, slightly higher that

the optimal for maintenance of US$ 0.15 per liter and therefore adequately funding the country’s road

routine maintenance requirements and part of the periodic maintenance needs. A review of the periodic

maintenance and rehabilitation need and allocation of the last 3 years (2007/08 to 2009/10)

shows an annual average periodic maintenance gap of TZS64.3 billion.

4.4.4 In order to bridge the financing gap, the RFB has requested that this project incorporates a

study to review additional sources of finance to widen the road user charging system. The study

will review the efficiency of collection of revenues for the existing sources besides identifying

new sources.

4.4.5 To date, private contractors in Tanzania carry out 100% of the periodic and the routine

maintenance. The private sector role is in the right direction for the sustainability of investment

in the sub-sector and contributes to the enhancement of the development of the domestic

contracting industry. TANROADS through its regional offices enforces axle load control using

25 static and 17 mobile weighbridges on the road network, which are functioning fairly well. An

additional 6 static weighbridges are planned at strategically important locations. In addition, as

the project roads are part of the continental and regional transport corridors, the project has

provision for a weighbridge for each of the project roads to mitigate the risk of premature

pavement failure due to overloading.

4.4.6 With respect to the project roads, maintenance of the completed sections of the roads will

be the responsibility of the contractors during the construction phase. After completion,

TANROADS will be responsible for maintenance of the road through financing from the RF.

The financial requirement for routine maintenance of the three roads amounts to USD0.786

million per year, starting 2017. Periodic maintenance in 2024 for the newly constructed roads,

will amount to USD29.4 million. This is within the financing capacity of the RF. The

implementation of the above-mentioned measures will go a long way towards the sustainability

of the roads sub-sector.

4.5 Risk Management

4.5.1 TSIP Implementation: Failure by Government to implement the Transport Sector

Investment Program poses a risk of not achieving the objectives set by the transport sector. The

risk is mitigated by monitoring the implementation of the projects in the program by the DPG-T

15

and regular dialogue with Government through Joint Technical Committee meetings and Joint

Transport Sector Reviews;

4.5.2 Project Implementation: Delays in fulfilment of conditions precedent to first

disbursement can delay project implementation and result in escalation of costs. The preparation

of the project has ensured that conditions precedent to first disbursement are kept to a minimum

and are aligned with the implementation schedule. Furthermore Advance Contracting for works

and consultancy services will be utilized to fast track implementation. Project costing has made

contingencies to cover possible price increases;

4.5.3 Financing: Failure by GOT to complete the section it is financing internally poses a risk

to attaining the objectives of the project. The risk will be mitigated by limiting GOT’s

contribution to below the 10% minimum required by the Bank;

4.5.4 Operational: The risk of premature failure of the road structure has been mitigated by

incorporating the construction of a weighbridge for each road in the bill of quantities;

4.6 Knowledge Building

4.6.1 The road safety pilot project will collect data that will inform road safety practitioners in

the country on the best practices on reducing accidents; the data collection at project

commencement, execution and completion will generate knowledge on the indicators on the

benefits to the communities in the zone of influence that will be used to measure the achievement

of the expected outcomes and outputs. The use of independent service providers will provide

knowledge on best practices; and the capacity building component of the project will enhance

project management capacity of staff.

V. LEGAL INSTRUMENTS AND AUTHORITY

5.1 Legal Instrument

5.1.1 The legal instrument for the Project is a loan agreement (“Agreement”) between the

Republic of Tanzania (the Borrower”) and the African Development Fund. An ADF-XII loan of

UA140.00 million from the PBA allocation will be used to finance the project.

5.2 Conditions Associated with Bank’s Intervention

5.2.1 The ADF loans shall be subject to the following specific and particular conditions:

(A) Conditions Precedent to Entry Into Force: The entry into force of the loan Agreements

shall be subject to the fulfilment by the Borrowers of the conditions set forth in Section 12.01 of

the Fund’s General Conditions Applicable to Loan Agreements and Guarantee Agreements

(Sovereign Entities).

(B) Conditions Precedent to First Disbursement: The obligations of the Fund to make the

first disbursement of the loan shall be conditional upon entry into force of the Loan Agreement

16

as stated in paragraph 5.2.1 above and evidence provided by the Borrower, in a form and

substance satisfactory to the Fund, of the fulfilment of the following conditions:

(i) The Borrower shall have opened two (2) foreign exchange Special Accounts in a Bank

acceptable to the Fund for the deposit of part of the proceeds of the Loan to finance eligible

expenses for capacity building for TANROADS and MOIC;

(ii) The Borrower shall have developed and submitted a Resettlement Action Plan (hereinafter

referred to as the RAP) together with a schedule (the “Works and Compensation Schedule”)

detailing inter alia, (A) the sections into which each lot of the civil works will be divided and (B) a

timeframe for the compensation of the Project Affected Persons with respect to all such sections, in

each case, in form and substance satisfactory to the Fund; and;

(iii)The Borrower shall have fully compensated and/or resettled all Project-Affected Persons

(“PAPs”) with respect to the first sections of each lot of the civil works in accordance with the

Resettlement Action Plans (“RAP”) and the Works and Compensation Schedules prior to the

commencement of construction works; and

(iv) The Borrower having submitted written confirmation to the Fund that it has signed a

financing agreement for the joint financing required for the project;

(C) Other Conditions: The Borrower will provide evidence, in form and substance acceptable to

the Fund that prior to commencement of construction on any section of any lot of the civil works, all

Project Affected Persons have been compensated and/or resettled with respect to the relevant

section of the relevant lot in accordance with the RAP and any updates to the RAP as well as the

Works and Compensation Schedule.

(D) Undertakings: The Borrower undertakes; (a) to carry out traffic counts on the Dodoma

(Mayamaya)-Babati (Bonga) and Tunduru-Mangaka-Mtambaswala roads on annual basis as of

commencement of the civil works and on the national road network every four years; (b) to

implement all measures necessary to (i) mitigate the Environmental and Social Management Plan

(ESMP); (ii) comprehensively report on the said implementation of the ESMP every six-months;

(iii) adopt effective measures for the safety of the project roads, and to (iv) progressively

sensitize the local population on HIV/AIDS, STI, TB and gender issues; (c) Provide the Fund

with an annual report on measures adopted for the safety of the project roads, sensitization of the

local populations on HIV/AIDS, STI, TB and gender issues.

5.3 Compliance with Bank Policies

5.3.1 This project complies with all applicable Bank policies and does not require exception

from any Bank policies.

17

VI . RECOMMENDATION

6.1 Management recommends that the Board of Directors approve the proposed loan of

UA140.00 million to the United Republic of Tanzania to jointly finance with JICA Road Sector

Support Project II for the purposes and subject to the conditions stipulated in this report.

APPENDIX I: Tanzania - Comparative Socio-Economic Indicators

Year Tanzania Africa

Develo-

ping

Countrie

Develo-

ped

CountrieBasic Indicators Area ( '000 Km²) 945 30 323 80 976 54 658Total Population (millions) 2011 46.2 1,044.3 5,732 1,123Urban Population (% of Total) 2010 26.5 39.9 45.1 77.3Population Density (per Km²) 2011 48.9 34.0 59.9 33.2GNI per Capita (US $) 2010 532 1 565 3 304 38 657Labor Force Participation - Total (%) 2011 49.0 40.1 65.6 60.7Labor Force Participation - Female (%) 2011 49.3 41.0 51.7 52.2Gender -Related Dev elopment Index Value 2007 0.527 0.433 0.694 0.911Human Dev elop. Index (Rank among 187 countries) 2011 152 n.a n.a n.aPopul. Liv ing Below $ 1 a Day (% of Population) 2007 67.9 42.3 25.2 …

Demographic Indicators

Population Grow th Rate - Total (%) 2011 3.0 2.3 1.3 0.6Population Grow th Rate - Urban (%) 2010 4.7 3.4 2.4 1.0Population < 15 y ears (%) 2011 5.2 40.3 29.0 17.5Population >= 65 y ears (%) 2011 3.2 3.8 6.0 15.4Dependency Ratio (%) 2011 88.2 77.6 55.4 49.2Sex Ratio (per 100 female) 2011 99.9 99.5 93.5 94.8Female Population 15-49 y ears (% of total population) 2011 22.7 24.4 49.4 50.6Life Ex pectancy at Birth - Total (y ears) 2011 57.5 56.0 67.1 79.8Life Ex pectancy at Birth - Female (y ears) 2011 52.2 57.1 69.1 82.7Crude Birth Rate (per 1,000) 2011 40.5 34.2 21.4 11.8Crude Death Rate (per 1,000) 2011 10.4 12.6 8.2 8.4Infant Mortality Rate (per 1,000) 2011 57.9 78.6 46.9 5.8Child Mortality Rate (per 1,000) 2011 93.1 127.2 66.5 6.9Total Fertility Rate (per w oman) 2011 5.4 4.4 2.7 1.7Maternal Mortality Rate (per 100,000) 2008 790.0 530.2 290.0 15.2Women Using Contraception (%) 2007-09 26.4 … 61.0 …

Health & Nutrition Indicators

Phy sicians (per 100,000 people) 2007-09 1.0 58.3 109.5 286.0Nurses (per 100,000 people)* 2007-09 16.8 113.3 204.0 786.5Births attended by Trained Health Personnel (%) 2007-09 43.4 50.2 64.1 …Access to Safe Water (% of Population) 2008 54.0 64.5 84.3 99.6Access to Health Serv ices (% of Population) 2007-09 … 65.4 80.0 100.0Access to Sanitation (% of Population) 2008 24.0 41.0 53.6 99.5Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2007 6.2 4.9 0.9 0.3Incidence of Tuberculosis (per 100,000) 2010 177.0 294.9 161.0 14.0Child Immunization Against Tuberculosis (%) 2010 99.0 85.3 81.0 95.1Child Immunization Against Measles (%) 2010 92.0 77.9 80.7 93.0Underw eight Children (% of children under 5 y ears) 2007-09 16.7 30.9 22.4 …Daily Calorie Supply per Capita 2007 2 032 2 465 2 675 3 285Public Ex penditure on Health (as % of GDP) 2008 5.1 5.7 2.9 7.4

Education Indicators

Gross Enrolment Ratio (%)

Primary School - Total 2010 102.3 100.4 107.2 101.3 Primary School - Female 2010 103.1 90.0 109.2 101.1 Secondary School - Total 2007-09 … 37.7 62.9 100.1 Secondary School - Female 2007-09 … 33.7 61.3 99.6Primary School Female Teaching Staff (% of Total) 2009 49.1 41.4 60.5 81.4Adult literacy Rate - Total (%) 2009 72.9 65.1 80.3 98.4Adult literacy Rate - Male (%) 2009 79.0 74.3 86.0 98.7Adult literacy Rate - Female (%) 2009 66.9 56.2 74.8 98.1Percentage of GDP Spent on Education 2008 6.8 4.7 3.8 5.0

Environmental Indicators

Land Use (Arable Land as % of Total Land Area) 2008 10.8 7.8 10.6 10.9Annual Rate of Deforestation (%) 2007-09 … 0.7 0.4 -0.2Annual Rate of Reforestation (%) 2007-09 … 10.9 … …Per Capita CO2 Emissions (metric tons) 2009 0.2 1.1 2.9 12.5

Sources : ADB Statistics Department Databases; World Bank: World Development Indicators; last update :

UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports.

Note : n.a. : Not Applicable ; … : Data Not Available.

COMPARATIVE SOCIO-ECONOMIC INDICATORS

Tanzania

October 2011

0102030405060708090

100

2003

2004

2005

2006

2007

2008

2009

2010

2011

Infant Mortality Rate( Per 1000 )

Ta nzania Africa

0

200

400

600

800

1000

1200

1400

1600

1800

2002

2003

2004

2005

2006

2007

2008

2009

2010

GNI per capita US $

Ta nzania Africa

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2003

2004

2005

2006

2007

2008

2009

2010

2011

Population Growth Rate (%)

Tanzania Africa

1112131

41516171

2003

2004

2005

2006

2007

2008

2009

2010

2011

Life Expectancy at Birth (years)

Ta nzania Africa

APPENDIX II: Table of ADF Portfolio in Tanzania (as of February 2012)

Project

Date

Approved

Amount

(UA million)

Disbursed

(UA million)

%

Disbursed

District Agricultural Sector Investment Project 24/11/2004 Loan: 36.00

Grant: 7.00

Total: 43.00

22.07

6.87

61.78

98.18

Roads Rehabilitation and Upgrading Project* 03/09/2001 Loan: 38.65 15.57 40.28

Zanzibar Roads Upgrading Project** 9/06/2004 Loan: 16.22

Grant: 0.71

Total: 16.93

13.23

0.71

81.58

100.00

Singida-Babati-Minjingu Road Upgrading

Project

17/11/2007 Loan: 60.00

37.89

63.15

Road Sector Support Project I 02/12/2009 Loan: 152.00 15.07 9.92

Rural Water Supply and Sanitation Programme 13/09/2006 Loan: 59.00

Grant:6.60

Total:65.60

29.57

-

59.31

-

Zanzibar Water Supply and Sanitation Project 11/11/2008 Loan: 25.00

Grant: 2.76

Total 27.76

1.27

-

5.08

-

Electricity V Project 14/12/2007 Loan: 28.68

Grant: 1.32

Total: 30.00

0.18

0.76

0.61

57.56

Iringa-Shinyanga Transmission Line 26/10/2010 Loan: 45.36 - -

Support to SAP for Vocational Ed & Training 09/07/2003 Loan: 14.22

Grant: 1.60

Total: 15.82

13.10

1.37

92.09

85.68

Support for Maternal Mortality Reduction

Project

11/10/2006 Loan: 40.00

20.57 51.41

Small Entrepreneurs Loan Facility 10/05/2010 Loan: 20.00 10.26 51.29

Alternative Learning and Skills Development 29/06/2011 Loan: 15.00 - -

Institutional Support for Good Governance 20/09/2010 Grant: 5.20

0.82 15.68

Poverty Reduction Loan IV 16/12/2011 Loan: 100.00 25.03 25.03

CRBD SME Partial Credit Guarantee facility 22/07/2008 Loan: 8.00 - -

Multinational Projects

Arusha-Namanga Road Development Project 13/12/2006 Loan: 0.54

Grant: 3.50

Total: 4.04

0.16

1.71

29.35

48.97

East Africa Transport and Trade Facilitation (EAC) 29/11/2006 Grant: 6.20 2.36 38.09

East Africa Transport and Trade Facilitation (TTFA) 29/11/2006 Grant: 1.00 0.94 94.00

Isaka-Kigali Railway Feasibility Study 20/10/2004 Grant: 9.20 - -

L Victoria Water Supply & Sanitation 17/12/2010 Loan: 17.48 - -

Support to Lake Tanganyika Integrated Regional

Development Program (PRODAP)

17/11/2004 Loan: 4.99 2.20 44.08

* The loan balance has been cancelled. GOT is financing the balance of works; ** The grant balance has

been cancelled; The loan closed 31 December 2011.

APPENDIX III: Key Related Projects Financed by Other Development Partners in

Tanzania

S.# Project Name & Description Financier

Loan/Grant

Amount

(USD

million)

Completion

Status (%)

Supervision Rating

Implemen-

tation

Progress

Develop-

ment

Objective

1 Upgrading of Taraka-Rombo-Mkuu Road

Section (32 Km) BADEA/GOT 9.6

Substantially

Completed S S

2 Upgrading of Marangu-Mkuu and

Mwika-Kilacha Road Sections (32 Km) NORAD 19.3 82 S S

3 Rehabilitation of Mandela (Port Access)

Road (16 Km) EU/GOT 42.2

Substantially

Completed S G

4 Rehabilitation of Chalinze-Segera-Tanga

Phase I: Chalinze-Kitumbi (125 Km) DANIDA 47.8

Substantially

Completed G G

5 Upgrading of Ndundu-Somanga Road

(60 Km)

KUWAIT/

OFID/GOT 6.6 63 S G

6

Rehabilitation of TANZAM Highway:

Iyovi-Kitonga Gorge and Ikokoto-Iringa

Road Sections (149.6 Km)

DANIDA/

GOT 111.6 93 G G

7 Rehabilitation of Regional roads to

Engineering gravel (145km) OPEC/GOT 8.0 Completed G G

8 Rehabilitation Korongwe-Mkumbara –

Same Road (172 Km) IDA 57.4 Mobilization S G

9 Bus Rapid Transit – Dar Es Salaam –

Phase 1: 20.9km IDA 98.2

Mobilization S S

10 Rehabilitation of Tanga-Hororo Road (65

Km) MCC 54.09 67 G G

11 Upgrading of Tunduma-Sumbawanga

Road (233 Km) MCC 175.9 27 G G

12 Upgrading of Namtumbo-Songea-

Mbinga Road (145 Km) MCC 109.22 22.5 G G

13 Construction of Malagarasi Bridge :

Design and Build South Korea 25.0 8.15 G G

14 Rehabilitation of Arusha – Minjingu

(98km) IDA 52.5 Mobilization S G

Key: G – Good; S – Satisfactory

APPENDIX IV: Map of the Project Area

The map on this page has been prepared by the ADB Group’s staff exclusively for the convenience of the readers of the

report to which it is attached. The dimensions used and the boundaries shown on the map do not imply on the part of the

Group and its affiliates, any judgment on the legal status of any territory or any endorsement or acceptance of such

boundaries.”

ANNEX A

Justification of Request of Government Contribution of Less Than 10% Based on the Bank’s policy on Expenditure Eligible for the Bank Group, this operation is

proposing government financial contribution of less than 10%, justified as follows:

A1 Country Commitment to Implement Its Overall Development Program: Tanzania’s

development strategy is the “National Strategy for Growth and Reduction of Poverty” (2010/11 –

2014/15). The Government is committed to implementing the NSGRP II and continues to both

mobilize domestic resources for the purpose and to strengthen the linkage between the plan and

the national budget, by enhancing sector- and cluster-based strategic planning and budgeting.

The NSGRP II is thus features fundable and implementable activities. The Government has also

aligned all national and sector policies, strategies and programs as well as plans of MDAs,

Regions and LGAs with the NSGRP II and has harmonized them with the national budget

process. The NSGRP II in turn feeds into sector and local processes through the outputs of the

monitoring systems of the development plan.

A2 Financing Allocated by the Country to Sectors Targeted by Bank Assistance:

Government continues to prioritize infrastructure (of which the road sector is the largest

component) in its annual budget allocations as indicated in Table 1.

TABLE 1: INFRASTRUCTURE FINANCING IN TANZANIA

2010/2011 Budget 2011/12 Budget

Financing allocated to infrastructure UA 590 million UA 1,100 million

Share of infrastructure in the budget 13% 21%

Financing allocated to roads sub-sector UA109.1 million UA240.76 million

Share of roads budget in infrastructure budget 18.5% 21.9%

Source: Ministry of Finance

A3 Country Budget Situation and Debt Level: The current budget situation is summarized in

Table 2, which indicates points to the country’s continued heavy dependence on external

financing of its budget. Roughly 30% of government spending is dependent on foreign aid.

Current public debt as a percentage of GDP for 2010 stands debt at 41%.Various debt

sustainability analyses find that Tanzania’s risk of debt distress is low, and that there appears to

be room for an increase in the debt, even on non-concessional terms, to step up financing of such

key sectors as infrastructure over the medium term. Consequently, overall debt levels are within

International Monetary Fund (IMF) debt sustainability levels.

TABLE 2: BUDGET SITUATION

2010/11 Budget 2010/11 Likely 2011/12 Budget

Total Expenditure as % of GDP 33% 30% 34%

Domestic Revenues as % of GDP 17.3% 16.0% 17.2%

Share of Foreign Loans and Grants in total Budget 28% 31% 29%

Share of General Budget Support in total Budget 7% 9% 6%

Foreign Loans and Grants as % of GDP 9% 9% 10%

Source: Ministry of Finance

A4 Country Initiatives: The Government’s initiative of letting out road works contracts for

59km of the Dodoma-Babati Road using budget financing amounting to UA21.04 million net of

taxes is an indication of a commitment to upgrade the road to bitumen standards. In addition the

Governments of Tanzania and Mozambique have completed the Unity Bridge entirely with

internal financing at a cost of USD22.67 million (UA11.40 million).