Dounient of

The World Bank

FOR OmCIAL USE ONLY

Report No. 12932

PROJECT COMPLETION REPORT

REPUBLIC OF MADAGASCAR

URBAN DEVELOPMENT PROJECT(CREDIT 1497-MAG)

APRIL 5, 1994

Infrastructure Operations DivisionSouth Central and Indian Ocean DepartmentAfrica Region

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = FMg (Malegasy franc)US $1.00 = FMg 400 (June 1984)US $1.00 = FMg 1873 (May 1993)

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS AND ACRONYMS

BCT Traffic Management BureauBFV Bank of Commerce of MadagascarBPU Project Management UnitBTM Rural Development Bank of MadagascarCCM National Tender Board

CENAM National Artisan CenterCIMATEC Wood Production UnitCTNDU Technical National Committee for Urban DevelopmentDAUH Directorate of Architecture, Urban Planning and HousingDCA Development Credit AgreementDCOU Directorate of Coordination of Urban ProjectsDCU Directorate of Construction and UrbanizationFIHIU Infrastructure Fund for Urban HousingFMg Malagasy FrancHAIVY Metallic Tools Production UnitIDA International Development AgencyJARY SEIMAD Consulting FirmJIRAMA National Water and Electricity AuthorityMA Municipality of AntananarivoMATRACEM Bricks and Tiles Production UnitMDUT Ministry of Urban Development and TourismMT Municipality of ToamasinaMTP Ministry of Public WorksPCR Project Completion ReportSAR Staff Appraisal ReportSDR Special Drawing RightsSEIMAD Madagascar Housing CorporationUNCHS UN Center for Human SettlementsUNDP United Nations Development Programme

FOR OFFICIAL USE ONLY

THE WORLD BANKWashington, D.C. 20433

U.S.A.

Office of Director-GeneralOperationa Evaluation

April 5, 1994

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on MadagascarUrban Development Project (Credit 1497-MAG)

Attached is the Project Completion Report on Madagascar - Urban DevelopmentProject (Credit 1497-MAG) prepared by the Infrastructure Operations Division, South-Central andIndian Ocean Department (Country Department 3) of the Africa Regional Office, with Part IIcontributed by the Borrower. Part II highlights the positive start of the institutional improvementprocess, and the importance of the technical assistance in this respect.

This project was prepared on the basis of a UNDP assisted technical assistance andfeasibility study which took several years to complete. At the end, the Bank provided PPF fundingfor detailed design of components and provision of necessary equipment. At appraisal in 1983, theproject objectives were focused on two key areas: (i) improving the financial and managementcapacity of the two participating municipalities, Antananarivo and Toamasina, with an emphasis onmaintenance of municipal services, and project development and implementation; and (ii) improvingliving conditions and employment opportunities of poor and middle income families. The Borrowerfavored direct impact construction, with the Bank putting more emphasis on capacity building. Thissituation caused complications during project implementation resulting in a delay of several years inproject completion.

The project achieved a substantial part of its physical goals thus improving livingconditions of over 100,000 inhabitants in poor neighborhoods of the two cities. Permanentemployment was provided as the project helped establish three private companies producingconstruction materials and tools. With regard to the institutional goals, the project increased theawareness of the municipalities towards the urban development process and achieved at least partialoperational improvements, especially in Toamasina, including increased municipal revenues. Thedirect cost recovery mechanism envisaged in the project proved to be unrealistic.

Overall, the project outcome is rated as satisfactory. Its institutional achievements arerated as modest, and the sustainability of the project benefits as uncertain.

The PCR is of satisfactory quality, and it discusses the sensitive nature of the projectand related implementation issues candidly and in detail. The project may be audited.

Attachment

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

FOR OFFICIAL USE ONLY

PROJECT COMPLETION REPORT

MADAGASCAR

URBAN DEVELOPMENT PROJECT)(Credit 1497-MAG)

TABLE OF CONTENTS

Page No.

PREFACE ..................................................EVALUATION SUMMARY .ii

Project Identity .1Background .1Project Objectives and Description. 2Project Design and Organization. 2Project Implementation. 3Project Results. 6Project Sustainability. 9Bank Performance. 9Borrower Performance .10Project Relationship .10Consultant Services .10Project Documentation and Data .10

PART TWO: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ... 11

Project Background and Objectives .11Brief Project Description .12Results upon Project Completion .13Special Circumstances from mid-1991 onwards .23

PART THREE: STATISTICAL INFORMATION .26

Related IDA Credits .26Project Timetable .26Credit Disbursements .27Project Implementation .29Project Costs and Financing .31Project Results .34Status of Covenants .40Staff Inputs .42

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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PROJECT COMPLETION REPORT

MADAGASCAR

URBAN DEVELOPMENT PROJECT(Credit 1497-MAG)

PREFACE

1. This is the Project Completion Report (PCR) for the Urban Development Project, for whichCredit 1497-MAG in the amount of SDR 12.1 million was approved on June 6, 1984. The Creditwas closed on December 31, 1992, after a one year extension, except for Parts F(1), F(4) and H(5)of the Project for which the closing date was further extended to June 30, 1993. The lastdisbursement was on October 6, 1993, and the outstanding balance of SDR 1,864,508.04 wascancelled.

2. The PCR was jointly prepared by the Infrastructure Operations Division of the South-Centraland Indian Ocean Department, Africa Regional Office (Preface, Evaluation Summary, Parts I andHI) and the Borrower (Part II).

3. Preparation of this PCR was started during a completion mission, carried out in June/July1993 and the Bank's final supervision mission of the Project in July 1993. It is based, inter alia, onthe Staff Appraisal Report; the Credit and Project Agreements; progress reports; supervision reports;correspondence between the Bank and the Borrower; and internal Bank memoranda.

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PROJECT COMPLETION REPORT

MADAGASCAR

URBAN DEVELOPMENT PROJECr(Credit 1497-MAG)

EVALUATION SUMMARY

Objecties

1. The project's major objectives were to: (i) improve the financial and management capacityof municipalities; (ii) strengthen the ability to maintain the most critical municipal services at leastat current levels; (iii) expand the income-earning opportunities of poor and middle-income families;(iv) demonstrate neighborhoods upgrading as a technically effective means of improving livingconditions while reducing the need for new housing investment; and (v) build up capacity to designand carry out similar projects on a sustained basis (para. 3.01).

Implementation

2. The Project faced many difficulties during implementation because the Government and theAntananarivo Municipality (MA) never fully agreed with Project objectives and method ofimplementation. While for the Government the major objective was to improve the living conditionsof the urban poor, for the Bank reforms in the structure of municipal revenues and services came tobe the central focus (paras. 4.01 and 4.02). From this point of view, the Bank required that the scopeof the works and provision of equipment be adjusted, at every stage of the Project, to theimprovement of municipal revenues and cost recovery performance. This approach lead to years ofdelay, cost increases and to the deterioration of relationships between the Bank and MA (para. 5.02).

3. After having approved bidding documents, the Bank often refused to approve the award ofthe contract, requiring to review the scope of the works, in the light of the municipal revenue, or tocancel the bidding process. For the upgrading works in Antananarivo, the contract was awarded inFebruary 1988, three years after Credit effectiveness, following three bidding processes, and the costwas twice as much as the first award proposal (para. 5.04). Another bidding process was cancelledbecause the Bank did not reply on time (without any reason) to the proposal of contract award (para5.06).

Results

4. The physical targets of the Project were substantially achieved. In Antananarivo, the oldwards of Isotry and Anatihazo were rehabilitated, on a surface of 50 ha. Unfortunately, the seweragesystem was not constructed, and this was a technical mistake, made by the Bank, due to the fact that

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no engineer was involved in the Project, on the Bank side, from 1977 to 1989 (para. 6.02). InToamasina, four neighborhoods were upgraded, and the impact on the population was very positive(para. 6.04). Concerning the Employment and Income Generation component, the Proje ct helpedestablish three private companies producing wood works, metallic construction materials and bricksand tiles. These firms employ a total of 210 workers (para. 6.06).

5. On the institutional side, the main result of the Project was that the authorities haveunderstood the importance of the urban sector in the development process. The Project Unit, BPU,created for coordination and management of the Project, was efficient, even though it had noinfluence on MA. In addition, the Infrastructure Fund for Urban Housing (FIHU) was created andthe reimbursements of the subsidiary loans from the National Artisan Center (CENAM) and theMunicipality of Toamasina (MI) have been deposited in this Fund. An indirect consequence of theProject was, in September 1991, the establishment of the Ministry of Urban Development andTourism (para. 6.07). However, the project was unable to improve the municipal services ofAntananarivo, the capital city and the central focus of the Project.

6. Financial results were mixed. The Project helped the Municipalities reassess the property taxbase (in 1985 and 1990), and the property tax rate, in Antananarivo, was raised by 600% to 1900%,in nominal terms, or by 100% to 500% in real terms. It is clearly the main financial impact of theProject. Cost recovery never worked as proposed at Appraisal, because it was not realistic (para.6.15).

Sustainability

7. The project helped the Government establish the FIHU, which will work as a mechanism forreplicating actions undertaken and recycling the funds recovered from the Project and other urbanprojects (para. 7.02). BPU has the capacity to replicate the project, and to manage efficiently otherurban projects in the future (para. 7.03). The Project also had a positive impact on the financialsituation of the Municipalities of Antananarivo and Toamasina, but the benefits resulting from theproject are likely to be sustained only if very serious attention is provided to the municipal revenuesand expenses (para. 7.01).

Findings and Lessons Learned

& Project preparation was very long, from 1977 to 1983, partly because the use of UNDPfinancing for the feasibility study led to long delays (para. 2.03). The financial arrangements weredifficult to implement owing to the reluctance of the Municipalities to enforce the cost recoverymeasures and to reduce the personnel (para. 6.08). The Bank shared with MA the responsibility formost of the difficulties, because the Project was too sophisticated (para. 8.01), and the Bankobjectives were not those of the Government (para. 4.02). In addition, the practice to adjust thescope of the works, in the course of the Project, to improve the municipal finances and cost recovery,even after approval of bidding documents, was not adequate, because this made the implementationchaotic. A mid-term review would have been more appropriate, because the physical, financial andinstitutional components would have been implemented in parallel, and the Mayor of Antananarivowould have probably been more flexible (para. 5.02).

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Overall Project Assessment

9. The Project achieved its physical targets. From the financial point of view, it can beconsidered as a good start and new efforts should help consolidate the present project's achievementsover the long term, in particular by ensuring better cost recovery. Institutional improvements wereobtained in Toamasina, but not in Antananarivo, the main city of the project. Overall, because ofthe institutional failure in Antananarivo (inefficiency of the technical and financial departments) andof its inefficient implementation, the project can be considered only partially successful (para. 8.01).

I I

PROJECT COMPLEION REPORT

MADAGASCAR

URBAN DEVELOPMENT PROJECT(Credit 1497-MAG)

PART ONE: PROJECT REVIEW FROM BANK'S PERSPECTIVE

1. Project Identity

Name : Urban Development ProjectCredit Number : 1497-MAGRVP Unit : Africa RegionCountry : MadagascarSector : Urban Development

2. Background

2.01 Urban Development was the responsibility of the Directorate of Architecture, UrbanPlanning and Housing (DAUH), within the Ministry of Public Works (MTP). DAUH mainly reliedon the experience of the Madagascar Housing Corporation (Socidtd d'Equipement Immobilier deMadagascar, SEIMAD), a 80 percent Government owned company, to design, promote and managehousing programs. In 1974, an Urban Master Plan was prepared for Antananarivo, with Governmentfinancing, but the plan was never approved.

2.02 The Government initially approached the Bank for assistance in January 1977. Thefirst Bank identification mission took place in September 1977, and a second identification missionin November 1978. The pre-appraisal mission took place in February 1982. The long time elapsedbetween identification and preappraisal may have been a sign of low Government commitment to thisproject.

2.03 A third mission, in April 1979, proposed that SEIMAD be given overall supervisoryresponsibility for the feasibility study. Since UNDP was discussing with the Government the financingof urban planning studies, one to update the 1974 Master Plan and the other to prepare planningguidelines and sectoral strategies for the Greater Antananarivo area, it was decided in September1979 that the feasibility study would be financed by UNDP, together with the above studies. On thewhole, the use of UNDP funds delayed the preparation by at least one additional year.

2.04 On November 19, 1979, UNDP granted the Government US$979,800, to finance aproject called "Development of Urban Programmes", including: (i) study tours; (ii) technical assistanceto DAUH; (iii) a pilot urban project; and (iv) the feasibility study. The Bank was executing agencyand UNCHS associated executing agency for the three first items. Although the Bank wasresponsible for the recruitment of a consulting firm, this took more than one year. The firm waschosen in July 1980, negotiations took place in October 1980, and the contract was signed inDecember 1980.

2.05 On December 11, 1982, Government requested from IDA a project PreparationFacility (PPF), for detailed design and equipment. It was approved on January 20, 1983, for anamount of US$150,000. The Appraisal Mission took place in June 1983, with six staff andconsultants, but without any engineer. On February 24, 1984, an additional PPF of US$91,000 wasrequested by the Government and approved on May 14, 1984.

2.06 Madagascar had experienced a long-term decline in per capita production and income,widespread deterioration of its physical and social infrastructure, and extreme scarcity of financialresources, compounded with a heavy debt burden. Since 1982, the Government embarked onstabilization and adjustment policies supported by four IDA adjustment operations. While significantprogress was achieved in restoring macro-economic equilibrium, real GDP growth remained belowpopulation growth during the project life (1983-1993). There was an evident economic recovery fromabout mid-1988, but the political unrest, which began in May 1991, led to an important deterioration.As regards the Mayor of Antananarivo, his policy was based on his marxist gospel, which made himreluctant to implement necessary reforms. In addition, he did not want to increase the property taxrate before improving the living conditions of the population, which is politically understandable.

3. Project Objectives and Description

3.01 Project Objectives. The project's major objectives were to: (i) improve the financialand management capacity of municipalities; (ii) strengthen the ability to maintain the most criticalmunicipal services at least at current levels; (iii) expand the income-earning opportunities of poor andmiddle-income families; (iv) demonstrate neighborhoods upgrading as a technically effective means ofimproving living conditions while reducing the need for new housing investment; and (v) build upcapacity to design and carry out similar projects on a sustained basis.

3.02 Project Description. The project consisted of: (a) Strengthening of Municipal RevenueGeneration and Financial Management in the Municipalities of Antananarivo and Toamasina; (b)Reinforcement of Municipal Technical Services in the same two municipalities, with provision ofequipment and training; (c) Upgrading in the Isotry district of Antananarivo and in four neighborhoodsof Toamasina, including improvements in basic infrastructure and community facilities; (d) Employmentand Income Generation, including technical and financial assistance to artisans and small contractors;(e) Traffic Management, including improvements in traffic flows at the main junction of Isotry and fiveother intersections in Antananarivo, and creation of a Traffic Management Bureau (BCI); and (f)Project Management and Studies, including technical assistance and studies related to Land Legislationand means of improving the financial and managerial capability of SEIMAD.

4. Project Design and Organization

4.01 The project concept was developed, with inputs from Bank staff, over a five and a half-year period (09/77 to 06/83), by the participating institutions and ministries, mainly SEIMAD with thehelp of a consulting firm, which performed well. SEIMAD and the consulting firm had completeddesign and cost estimates for two new housing sites and four upgrading programs. The AppraisalMission only retained two upgrading operations, and the reason is given by the SAR, para.2.04: "duringpreparation, the Government attached great importance to actions that would improve the livingstandards of the urban poor. Although the project as designed will indeed better the living conditionsof lower-income families, this was not seen as reason enough for Bank support. Reforms in thestructure of municipal revenues and services came to be considered the central focus...".

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4.02 It is clear that the major objective for the Government was to improve the livingconditions of the urban poor, while financial and managerial improvements of the municipalities wereonly a means to reach this major objective. On the other side, for the Bank, municipal finance andinstitution building were the main objective. This difference of concept was the cause of manydifficulties during project implementation, because MA never fully agreed with project objectives andmethods of implementation.

4.03 The Municipalities of Antananarivo and Toamasina were responsible for carrying outmeasures to strengthen their financial management and technical services. On March 13, 1992, themunicipalities were replaced by "Delegations Sp6ciales", nominated by the Government. For bothupgrading operations, SEIMAD was responsible for implementation, as well as for housing loans.Traffic management was the responsibility of the Traffic Management Bureau (BCT). Managementof the whole project and coordination was the responsibility of the Project Unit (BPU), assisted by atechnical assistance team. BPU was established by decree No.84.071 of February 15, 1984, andreported to the Public Works Minister.

4.04 In 1988, a National Technical Committee for Urban Development (CTNDU) wasestablished, under the auspices of the Prime Minister. In September 1991, a new Ministry of UrbanDevelopment and Tourism (MDUT) was established, comprising DAUH and BPU. By decreeNo.92.046, dated January 15, 1992, DAUH became Directorate of Construction and Urbanization(DCU), and BPU became Directorate of Coordination of Urban Operations (DCOU). However, theseinstitutions, MDUT and DCOU, disappeared in July 1993, in a Government's reorganization.

5. Project Implementation

5.01 Credit Effectiveness and Project Start-up. The Credit was negotiated in April 1984,approved on June 12, 1984 and signed on July 3, 1984. The conditions of effectiveness included, inaddition to the usual conditions, the establishment by Antananarivo and Toamasina of surcharges torecover a portion of upgrading costs from the beneficiaries. The Credit was declared effective onFebruary 22, 1985.

5.02. Implementation Schedule. Table 4.A, Part HI, gives the actual implementationschedule, compared with that estimated at appraisal. Project implementation was originally scheduledto be completed by June 30, 1990. Although the Credit was effective as forecast at appraisal, most ofthe works were long delayed. In addition to the lack of commitment of MA to reform, this is due tothe Bank's position, clearly stated in paras. 6.09 and 6.11 of SAR, that the scope of the works andprovision of equipment would be adjusted, at every stage of the project, to the improvement ofmunicipal revenues and cost recovery performance. This approach led to years of delay and costincreases, without taking account of the deterioration of relationships between the Bank and MA. Theuse of a Mid-term review would have been more appropriate.

5.03 The most significant illustration of the inefficiency associated with this approach isrelated to the rehabilitation works in Isotry, to be realized from 1985 through 1988. Invitation for bidswas advertized on December 7, 1985, and submission of bids took place on February 6, 1986. OnMarch 23, 1986, BPU proposed to award the contract to Colas, for FMg 985 million. In May 1986,a supervision report states that 'the Mayors of Antananarivo and Toamasina will decide which physicalactions should move ahead on the basis of realistic projections of municipal revenues and prospectsfor cost recovery". After an exchange of many telexes, the Bank proposed, on September 10, 1986,

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to cancel the bidding process and to phase out the works, because municipal finances had not improvedas forecast at appraisal. By telex of October 31, 1986, the Bank declared that the Colas contract couldnot be financed under the Project. The Mayor of Antananarivo, by letter of December 6, 1986, statedthat the November 1986 supervision mission had verbally agreed to start the works and questioned thegood faith of the Bank staff.

5.04 On February 12, 1987, the Bank insisted on the necessity to phase out the works,because of the deterioration of the municipal financial situation. A new bidding process was launchedin May 1987 and another contractor was retained for an amount of FMg 884.5 million, for a first phaserepresenting about 50 percent of the works initially planned. This bidding process was also canceledin September, but by the Central Tender Board (CCM). A third bidding process was immediatelylaunched, on September 22, 1987, and concluded by a non-objection telex on February 2, 1988, forFMg 1,700.3 million, or about twice as much, in nominal terms, as the first award proposal of March1986, two years earlier !

5.05 The second phase of the works was also delayed,because the Bank, by letter datedMarch 11, 1987, required that the loss of the Municipality be reduced to FMg 200 million by June 30,1988, before launching the second phase. This objective was met, but the aide-memoire of theSeptember 1988 supervision mission required that five new other conditions be met before the secondphase of the works be undertaken. The Bank authorization was only given by telex of March 17, 1989,following another supervision mission, and the appointment of a new task manager.

5.06 A second example of unjustified delays is related to the improvement of five streetintersections in Antananarivo. The bidding process was advertized on May 31, 1986, and bidssubmitted on July 16, 1986. On September 23, 1986, BPU proposed to award the contract for FMg89.1 million, and specified that the limit of bid validity was October 16, 1986. The Bank replied onFebruary 19, 1987, by a non-objection telex, but it was too late: not one contractor accepted tomaintain its bid. Finally, after a new consultation, the contract was signed in April 1987 with the samecontractor for FMg 114.1 million.

5.07 This method of adjusting the construction works to the financial capacity of themunicipalities lead the Bank to request at every supervision mission the review of their financialsituation. The consequence was that the financial technical assistance, planned to stop in June 1988,was extended through the end of the project, in December 1992. When the Loan Committee packagewas cleared by the Senior Vice President Operations, on February 27, 1984, one of his comments wasthat the total of technical assistance and studies represented 19 percent of the base cost, and herequested this percentage be lowered. At the end of the project the actual percentage had reached42 percent.

5.08 The Development Credit Agreement included, as Part E of the Project, a housing loanscomponent for a total of SDR 470,000. This component was a failure, since only 15 loans, for a totalof FMg 15,535,672 (about US$10,000) were granted. This component was canceled in 1992. Thereason is that SAR proposed SEIMAD as executing agency for the loans, although SEIMAD was nota mortgage bank, nor simply a bank. It was a developer, without any experience in housing loanmanagement. The loans should have been granted through a financial institution. Under the CycloneProject, appraised six months later, housing credits for a total of two million US dollars were easilygranted through two local banks, BFV and BTM.

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5.09 Procurement. The procurement process was hampered and delayed because the scopeof the works were reduced and tenders were canceled after the approval of the bidding documents, forreasons not related to this bidding process (paras. 5.02 to 5.06). In addition, Bank guidelines were notalways followed:

(a) Schedule 3 of the Development Credit Agreement, section D.1, specifies that onlycontracts estimated to cost more than US$100,000 for civil works and US$50,000 forgoods would require a prior review by the Bank. However, BPU requested Bankapproval for many small contracts, and the Bank did not remind the BPU that it wasnot required. An example is a telex, dated November 5, 1986, requesting authorizationfor the purchase of printer cartridges and printing paper, to cost about US$1,200 and900, respectively. The Bank replied by a non objection telex;

(b) SAR states, para. 4.12, that prequalification of contractors would not be required,because the works are not excessively complex. This could be questioned, particularlyfor drainage works and the pumping station to be built 8 meters below ground in aflooded area. Nevertheless, short lists for civil works or purchase of goods wererequested: (bl) for a civil works contract, the Bank requested by telex dated April 16,1986 and, by telex dated April 23, 1986, confirmed its request to receive the "short list"of contractors; (b2) for a goods contract, the Bank had no objection to a "short list"proposed by BPU (telex of August 2, 1988); and (b3) in the same telex, for a civilworks contract, the Bank approved a "short list" of six local firms.

5.10 Project Costs. A comparison between the appraisal estimates and the actual costs ofthe project is given in Part III, section 5 A. The appraisal cost estimate was US$18.0 million (aboutSDR 17.0 million), and the final cost was US$16.7 million, i.e. a cost underrun of 7.2 percent. TheGovemment's contribution, estimated at appraisal at FMg 2.08 billion, jumped to FMg 5.2 billion but,expressed in USS was reduced from US$5.2 million to US$3.7 million. During project implementation,the US dollar/SDR exchange rate went from US$1.06 to US$1.40 to SDR 1, increasing the US dollarvalue of the Credit from US$12.8 million to US$15.8 million.

5.11 Disbursements. In Part mI, Table 3, actual quarterly disbursements of the Credit arecompared with the appraisal estimates and the profile of urban project disbursements in Africa.Disbursements were spread over nine years, which compares with a seven-and-a-half-year disbursementperiod for the appraisal estimate, as well as for the profile of urban projects in Africa. The originalclosing date of December 31, 1991 was extended to December 31, 1992, then to June 30, 1993, butonly for the tiles plant (Part F1), assistance to small contractors (Part F4) and audit reports (Part H5).Disbursements on commitments took place through October 6, 1993, and the outstanding balance ofSDR 1,864,508.04 was canceled.

5.12 Credit Allocation. The original and revised allocations by category and the actualdisbursements under Credit 1497-MAG are shown in table 5.D, Part m. It is worth noting that therewere twenty six disbursement categories in Schedule 1 of the Development Credit Agreement.Although category 4, consultants' services and training, was overdrawn by SDR 1.67 million, no formalreallocation of funds was made, and this amount was drawn from category 9, unallocated. On theother hand, categories 1 and 2 were only used at 82 percent and 79 percent, because the works werereduced. For category 6, housing loans, 12 percent were disbursed, out of a total of SDR 470,000(para. 5.08).

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6. Project Results

6.01 Project Objectives. Overall, the project was not successful in meeting its key objectiveof improving the financial and management capacity of the municipalities. Nevertheless, it helpedthe municipalities reevaluate the property tax basis, and significant improvements have been obtainedand can further be expected for the next years. It also improved the living conditions in low incomeareas of the cities of Antananarivo and Toamasina. The project also assisted in strengthening themanagement and organization of the executing agencies involved in the urban sector, the BPU andSEIMAD, and their capacity to implement subsequent projects. In addition, the employment andincome generation component, after a slow and difficult start, lead to the creation of three privatecompanies for wood, steel and tiles.

6.02 Physical Results. The physical targets of the project were substantially achieved. InAntananarivo, the districts of Isotry and Anatihazo were rehabilitated, but not as planned. Thefeasibility study had proposed separate drainage and sewerage systems. In order to reduce the cost,the Bank requested the consulting firm to design a combined system. The consultant refused, sayingthat the system would be over-flooded during the rainy season, and that the sewage could not beevacuated during the dry season. Instead of using the experience of other Bank staff, knowledgeableof country conditions and responsible for other projects under implementation, a consultant wasrecruited to give an advise without any mission to Madagascar. On December 15, 1982, theconsultant concluded that "the solution which appeared feasible is to design and construct an effectivestorm water drainage system. The thought was that by eliminating the regular storm water flooding,then the existing pit latrine type sanitation could function effectively". Probably, the consultant didnot know that the plain has a surface of 50 km2, and an effective storm water system on 0.5 km2

cannot lower the entire water table. When the works were completed, in 1989, the residentsconnected their waste water systems to the drainage system which, therefore, does not functioncorrectly. To give an explanation to this mistake, it is worth noting that, from 1977 to 1989, not oneengineer was member of a Bank mission (see Part III, Table 8.B).

6.03 Due to the delay, and to the decision to adjust the scope of the works to the financialcapability of the municipality, all the works planned were not realized. Nonetheless, the livingconditions of 80,000 inhabitants have been dramatically improved. A surface of 50 ha has beenrehabilitated, including improvement of existing streets and construction of access roads, pedestrianstreets, lined channels and box culverts, standpipes, street lighting, containers for solid waste andupgrading of the Isotry market. These works have been supplemented by the improvement of fivestreet intersections in Antananarivo and the resurfacing of 9 km of paved roads. This lattercomponent, which had not been planned at appraisal, was realized in 1992 .

6.04 In Toamasina, four neighborhoods were rehabilitated, for a surface of 154 ha:Ambalakisoa, Ankirihiry, Mangarivotra and Morarano. The program included paving and resurfacingof 3 km roads, construction of drainage canals, installation of 37 standpipes and 7 fire hydrants,construction of 112 washing points and extension of the street lighting network. The scope of theworks was also reduced: 14 standpipes were installed instead of 37, no fire hydrant and no washingpoint. Nevertheless, the living conditions of a population of 30,000 inhabitants were substantiallyimproved. The Project also financed a dispensary to provide first aid to the poorest population ofToamasina. In addition, the Emergency Cyclone Project (Credit 1526-MAG) financed in 1988 therehabilitation of about 10 km of paved roads, which had a great impact on the whole city.

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6.05 In November 1986, when JIRAMA was requested to install the 37 standpipes, itreplied that this was impossible, because the production capacity was only 12,000 m'/day, for a waterdemand of about 20,000 m3/day. The Bank accepted to finance from the Credit a feasibility study forthe reinforcement of the production facilities. The study was completed at the end of 1988. The costestimate was about US$5.0 million, of which 3 million for the treatment plant and the pumpingstation, and 2 million for the reinforcement of the distribution network. The Bank decided that therewere not enough remaining funds in the Credit to finance this component, not forecast at appraisal.A good opportunity to improve the living conditions in Toamasina was lost.

6.06 The employment and income generation component, after a slow and difficult start,was a success. Originally, the Project was to help create three cooperatives to make buildingmaterials and tools. Three private companies were established: (i) a wood-working unit to producedoors, windows and furniture, MATRACEM; (ii) a production unit of tools and metallic constructionmaterials, HAIVY; and (iii) a facility to produce bricks and tiles, CIMATEC. The first two are inoperation since 1990, and the third one is still awaiting some equipment, which should be deliveredby the end of 1993. These firms employ about 210 workers on a permanent basis.

6.07 Institutional Performance. On the institutional side, the main result of the projectwas that the Government, the ministries concerned, the municipalities as well as the urban agenciesrealized the importance of the urban sector in the development process, and the necessity to assuregood municipal management and finances. An indirect consequence was the establishment of aMinistry of Urban Development and Tourism, and the creation of a permanent institution for thecoordination of urban projects (DCOU). However, these institutions disappeared in July 1993 in aGovernment's reorganization. SEIMAD was reorganized under the project and its study departmentbecame a separate consulting firm (JARY). In addition, the FIHU was created by decree No.87-287of August 4, 1987 (instead of December 31, 1985, as required by section 3.06 of DCA). Allreimbursements of subsidiary loans were to be deposited in this Fund. This has already been doneby MT and CENAM.

6.08 The Project made a major impact on the strengthening of the institutions involved,except MA, which, up to 1989, for political reasons, made no effort to meet the conditions of theCredit Agreement. In particular, the Mayor never agreed to stop the recruitment, in order to reducethe staff which was redundant. He always was reluctant to implement the training program which,in fact, was too large (786 man/months). On the other hand, the project helped MT improve itsorganization and management. The staff has been reduced by extinction from 1000 to 357. Thefinancial department is working very well, and so was the technical department (until the departureof the technical director). The project helped MT build a dispensary to provide first aid to one ofthe poorest neighborhoods of Toamasina. The dispensary now has two physicians and a team ofnurses.

6.09 The Project also had a great impact on SEIMAD strengthening, which is now betterorganized to carry out its functions, because the project financed a reorganization study and has beensuccessful in training its staff. Concerning BPU, it performed well its functions of coordination, withthe same director from 1985 to 1991, but it was inefficient with MA. It would have the capacity tomanage new urban projects, with only minor external technical assistance.

6.10 The project included the creation of a Traffic Management Bureau (BCT) tocoordinate all the traffic and transportation actions. It was established temporarily within BPU, and

carried out traffic studies. Studies were carried out to decide on the future of BCT, and it wasproposed to transfer BCr to the Ministry of Transport. Unfortunately, no agreement was reachedwith this ministry, and BCT disappeared at the end of 1989.

6.11 Financial Performance. The project accounts of MT, BPU, SEIMAD and CENAMwere regularly audited by an external auditor, and the reports were received (with some delays) bythe Bank. For MA there were some problems until 1989 (see para.9.02)

6.12 The financial results of Antananarivo Municipality are shown in Part III, table 6.B.The global revenue was below appraisal estimate from 1984 to 1990. For 1991 and 1992, we do notknow yet the final collection rate of property taxes. It is assumed on the table to be 100 percent,which is not realistic. In the past, the collection rate was about 50 percent after one year and 80percent after two years. The property tax return is generally issued very late, and this has a negativeimpact on the municipal revenue. Nevertheless, the 1990 property census multiplied the propertyvalues by seven to twenty. It is clearly the main financial impact of the Project. In 1992, theMunicipality repaid FMg 500 million of its debt.

6.13 Concerning the municipal expenses, the Project helped resolve a long dispute overthe payment of water and electricity bills to JIRAMA. The Municipality had paid no bills for years,because of a controversy over assets owned by the Municipality. This lead to a non-compliance withsection 3.04 of the Project Agreement, which required that municipal arrears be reduced to threemonths of billing. On January 20, 1989, the two institutions signed an agreement and theGovernment decided to grant an indemnity of FMg 10 billion to settle the dispute. A first paymentof FMg 3.2 billion was directly made to JIRAMA, but the rest was not paid to the Municipality.Since that date, JIRAMA bills have been regularly paid, which is a significant result. In June 1993,the Government Council decided to pay the arrears of all the municipalities to JIRAMA.

6.14 The Project helped the Municipality of Toamasina improve its financial situation, withbetter results than in Antananarivo. The Mayor was more responsive and the staff more competent.Since 1988, the municipal revenue was superior to that forecast at appraisal (Table 6.B, Part III), witha positive average balance of about FMg 450 million. The Municipality has already reimbursed FMg900 million of its subsidiary loan.

6.15 Cost Recovery. It was expected at appraisal that on-site infrastructure costs in areasto be upgraded (22 percent of the Project costs) would be recovered directly through a surcharge tobe levied on residents. Establishment by the municipalities concerned of surcharges, based onproperty rental values and linked to the specific upgrading investments, were a condition ofeffectiveness of the Credit. Nonetheless, this was never done because it was totally unrealistic: inIsotry, the tax product from households was about FMg 12.7 million, which compared with thesurcharge of FMg 44.94 million. The tax collection rate was already very low, and obviously thepopulation of this ward, chosen for its poverty, was unable to afford such a big tax increase. MAresolved the problem by establishing, in 1990, a surcharge to the property tax, but for the whole city.In Toamasina, the Municipality charged a land rent to the residents of the rehabilitatedneighborhoods, instead of a surcharge. This rent product was only FMg 2.6 million in 1990, 1.9million in 1991 and 640,000 in 1992. This decline is due to the fact that tax collection is not yetcompleted.

6.16 Other Project costs, relating to the strengthening of revenues and financialmanagement, improvement of technical services, off-site upgrading works and traffic management willbe recovered indirectly through the property taxes payable by the population of each city. The restof the costs, concerning community facilities, assistance to CENAM and BCT, project management,studies and technical assistance will be absorbed by the Government.

7. Project Sustainability

7.01 The project has had a significant positive impact in that it has caused new institutionaland financial arrangements to be put in place in the urban sector, assuring a better management ofthe sector and improving the municipal finances of MA and MT. However, the Government and themunicipalities need to continue their efforts in the areas of tax property return and collection. Thebenefits resulting from the project are likely to be sustained only if very serious attention is providedto the municipal revenues and expenses.

7.02 The FIHU, established under the project, can help the Government financerehabilitation of infrastructure, as a permanent source of lending to local governments formaintenance or extension of drainage, sanitation and other urban infrastructure. It will work as amechanism for replicating actions undertaken and recycling the funds recovered directly from theProject and other urban projects.

7.03 The BPU, established at the start of the Project for its management and coordination,has the capacity to replicate the project and to manage efficiently urban projects in the future.

8. Bank Performance

8.01 The Bank shared with the Mayor of Antananarivo the responsibility for most of thedifficulties faced by the Project: delays, reduction in the scope of the works, procurement problemsand failure of the housing loan component. This was mainly due to the Bank's position, clearly statedin para. 6.09 of SAR, that the scope of the works and provision of equipment would be adjusted, atevery stage of the project, to the improvement of municipal revenues and cost recovery performance.A project cannot be timely implemented with these constraints. Moreover, the project appraisal hadseveral shortcomings: (i) the choice of SEIMAD for managing the housing loans was a mistake; (ii)the decision to move out the sewerage system in Isotry was a big technical mistake (due to the factthat no Bank engineer was involved in the Project); (iii) the financial analysis was not realistic; and(iv) the appraisal mission did not correctly assess the extent of the urban poverty in Madagascar in1983. Therefore, the direct cost recovery mechanism, from the beneficiaries, was inapplicable. Inaddition, during implementation, the Bank wasted a lot of time to manage directly the Projectthrough a lot of interventions on minor problems which should have been resolved by the BPU.

8.02 Supervision by IDA was relatively continuous, with only two task managers: a totalof 16 supervision missions visited Madagascar, at the rate of two a year, representing a total of 695staff/days in the field. Some 315.1 staff-weeks were spent on this project over the entire projectcycle, which is very high. The details of staff input and missions are given in Part III, section 8, tablesA and B.

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9. Borrower Performance

9.01 On the technical side, thanks to its competent staff, helped by a technical assistanceteam, the BPU turned in a good performance: the bidding documents were prepared on schedule,with the bid evaluation reports prepared on time and the contracts well supervised. On the otherhand, the Mayor of Antananarivo was reluctant to follow Bank recommendations, and hisperformance was very poor. A new Municipal Board was installed at the end of 1989, but they hadnot enough time to improve the situation before the political unrest of 1991 and 1992. Theperformance of MT was much better. SEIMAD and CENAM met their obligations under theProject, and their contribution was positive.

9.02 Quarterly reports were submitted by BPU to IDA in a timely manner up to March31, 1992. BPU retained independent auditors to prepare its own, and SEIMAD, CENAM and MTaccounts. The Mayor of Antananarivo refused to have the municipal project accounts audited by aprivate firm. It had been agreed at negotiations that the municipal accounts would be audited by theDirectorate of Financial Control, within the Ministry of Finance. Since this directorate was too busyto carry out this audit, nothing was done until 1989. The other accounts were regularly andsatisfactorily audited up to 1992. There were some delays at the beginning, but generally the auditreports were received within one year after the end of the fiscal year concerned, instead of the eightmonths stipulated in the DCA (Section 4.01.c.i.a).

10. Project Relationship

10.01 The relationship between the different parties involved in the project implementationwas not very good. IDA's relationship with BPU on the project has been relatively good, as well aswith SEIMAD, CENAM and MT. Relations with MA were rather strained in 1986/89, as a result ofproblems connected with delays in the start of upgrading works. Borrower-contractors relationshipswere not good, because of the delays in awarding the contracts. Relationships with consultants weregood.

11. Consultant Services

11.01 The feasibility study was a very good job, as well as the final design. Duringimplementation, the technical assistance provided by the consulting firm was in general competentand efficient. Nevertheless, the results of the technical assistance to MA are questionable, even ifthe main responsibility rests with the Municipality.

12. Project Documentation and Data

12.01 The original documentation for the project was adequate and appropriate. Theappraisal report provided a useful framework for both IDA and BPU in their review of projectimplementation.

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PART TWO: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

(This is an English Translation of the document originally written in French)

INTRODUCTION

In accordance with the new guidelines adopted by the World Bank, this documentconstitutes the Project Completion Report (PCR) prepared by the Direction de la Coordination desOperations Urbaines (DCOU - Directorate for the Coordination of Urban Operations) of the Ministryfor Urban Development and Tourism.

It summarizes the main activities carried out under IDA Credit 1497-MAG, followingits closing on December 31, 1992 (with the exception of one component relating to the completionof the Third Employment Unit (the brick and tile production unit in Ilafy, with CENAM as executingagency), for which an extension until June 30, 1993 was granted by the Donor.

Finally, the purpose of the PCR is also to convey the views of the Borrower, i.e. theRepublic of Madagascar, on the impact of the project and on project performance in general.

We would just remind the reader that the Donor prepares a separate document, whichforms Part II [sic] of the PCR.

1. PROJECT BACKGROUND AND OBJECTIVES

The Madagascar Urban Development Project was identified in 1978, appraised in July1983, negotiated in February 1984 and became effective in February 1985.

The project was originally scheduled for completion in December 31, 1991 but wasextended to December 31, 1992, with the exception of the Third Employment Unit, i.e. the brick andtile production unit, for which the closing date was set at June 30, 1993.

The project's major objectives were to:

- improve the financial and management capacity of the municipalities of Antananarivo,the capital city (with a population of approximately 1 million), and Toamasina, thecountry's most important maritime port (with a population of 150,000);

- strengthen the operating capability of the municipal technical services of these twocities;

- create employment opportunities for poor and middle-income urban residents;

- improve the living conditions of residents of the poorest neighborhoods by upgradingexisting-or building new-basic infrastructure and community facilities;

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establish permanent capacity (in institutional and financial terms) to plan andimplement similar projects;

improve, in general, the living and operating conditions of these two municipalities.

2. BRIEF PROJECT DESCRIPTION

The main components of the Project are:

a) Municipal revenue and the financial management of the Municipalities ofAntananarivo and Toamasina:

Improving management of property taxes and other municipal revenuesReorganizing financial servicesNormalizing budgetary "liabilities"Technical assistance

b) Municipal technical services

Reorganizing and equipping the servicesProviding basic and refresher training for personnelTechnical assistance

c) Rehabilitation of poor neighborhoods

- JUpgrading of basic infrastructure and community facilities in Isotry (Antananarivo)and in four neighborhoods of Toamasina

- Technical assistance to SEIMAD (Madagascar Housing Corporation), the designatedcontracting authority for the works

d) Technical and financial assistance to generate employment In the constructionmaterials and building tools sector

e) TraMc management in Antananarivo

- Improving automobile traffic and pedestrian flows in Isotry and at five other 'blackspots' in the city

- Setting up a Bureau de Circulation et de Transport - BCT (Traffic ManagementBureau - TMB)

f) Project management and studies

Technical, institutional and financial management of the projectStudies of various kinds: land ownership legislation, future status of the ProjectManagement Unit (PMU), reorganization of SEIMAD, Fonds de l'Infrastructure pourl'Habitat Urbain (FIHU).

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3. RESULTS UPON PROJECT COMPLETION

The results achieved, as compared to the project objectives and to the stipulationscontained in the Credit Agreement, are as follows:

a) Municipality of Antananarivo

a.1 Financial management and efforts to rehabilitate the municipal institution

i - Establishment of a financial rehabilitation contrat-plan between the CentralAdministration and the Municipality:

Signature in 1988 and beginning of implementation in 1991 of debtrescheduling agreements between the Treasury Department (Subsidiary Loansof the PDA Project) and the Directorate of Taxes (taxes generated by theurban project and the PDA Project).

Signature in 1989 of a protocol of agreement concerning thesettlement of JIRAMA's invoices between the latter and the Municipality:settlement by the Government of all arrears dated prior to December 31,1987, settlement of 1990 invoices by the Municipality, with a delay equivalentto three months of invoicing, resolution under preparation for the settlementof 1989 invoices by offsetting the respective debts of the Government and theMunicipality, in accordance with the findings of an ad hoc commission(Ministry of Finance, Industry and Public Works) responsible for studying thelegal dispute concerning the compensation of the Municipality ofAntananarivo, following the nationalization of this company in 1979.

ii - Updating in 1990 of taxes on market places in addition to the provisionscontained in the Credit Agreement (+ 140 percent), coupled with the reorganizationof collection methods and the redistribution of retail spaces (eviction of illicit streetvendors).

iii - Updating in 1990 of municipal sector revenues (in accordance with projectrecommendations), particularly, the increase in the monthly rent payable on salesbooths at the Analakely market from FMg 7,500 to FMg 30,000.

iv - Updating of tax bases on land and constructed property (property census in1987 and 1990) and the tax rates. Provision of data processing equipment to theDirectorate of Taxes in order to speed up assessments.

v - Establishment of a Financial Directorate at the Municipality level and thena reorganization of this office and its management methods by introducing an internalaudit system.

vi - Freeze on the staff recruitment to replace members of staff who retire.Nevertheless, this measure does not concern senior management staff.

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vii - Establishment of a unit attached to the Maine to provide support to theservices, study development prospects and provide programming and monitoringservices (CARPS) and thereby implement project recommendations concerning theneed to form a commission to program and monitor municipal activities.

The overall result (particularly since 1990) is that the new municipal team hasbeen able to program, into the 1991 budget, compliance with various financialagreements among the Mairie's priorities (particularly payment of installments dueunder the 'urban project" subsidiary loan).

a.2 Rehabilitation of municipal technical services

i - Reorganization of Direction de Developpement Urbain (DDUE - Directorateof Urban Development) within the Mairie

The following activities were achieved under the project: the provisionof permanent technical assistance by the project (two years, starting in 1986), trainingcourses abroad for municipal engineers at Mainies in France (total immersion method),the production of a reorganization program for the Directorate that could beimplemented immediately. Some roadblocks (blocages) were encountered in theranks, however, during the implementation of this component. A certain number ofthe reorganization measures recommended were, in fact, not put into effect.

ii - Reorganization of the "equipment maintenance" service and provision ofequipment: Problems relating to the physical distribution of the workshops and thesupply system still remain. The equipment management methods recommended bythe permanent technical assistance (two years, starting in 1987) were not assimilated.

The lower-echelon staff (laborers, mechanics and other supervisory staff) were,on the other hand, very receptive to the training they received either on the job orat specialized local agencies.

Similarly, the equipment renewaVupgrading program was carried outrelatively smoothly.

a.3 Rehabilitation of the Isotry Anatihazo neighborhood.

The rehabilitation works were carried out in step with the progress made inthe area of municipal finances. It had, in fact, seemed a good time to encourage theMunicipality to go ahead with implementing the financial rehabilitation measures inorder to provide the means for project cost recovery.

This step resulted in a reduction in the amount of works to be carriedout, with the elimination of the sewerage system component.

The various delays in the start-up date of the works (tied to the actualprogress made in implementing the financial rehabilitation measures and further delayed bythe cancellation of the invitations to tender, followed by their reissue, based on revised

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technical specifications) resulted in the total costs being caught up by the effects of inflation,which thus canceled out the savings aimed for in the reduction of the initial works program.

In technical terms, the operational objectives were achieved: the stormwater drainage system (open channels, buried gutters, pumping basin, pumpingstation) and the tertiary road system (whether suitable for vehicular traffic or not)were completed.

Failure to build a main sewer has left behind the problem of sewage disposaland misunderstanding on the part of the residents. The latter use the "storm water"channels (illegal connections), already causing obstructions in the system, which wasnot built for this type of use and puts an excessive strain on the water in the pumpingbasin.

There is therefore a constant risk that the pumping station will sufferdeterioration unless the Municipality commits to a continuous maintenance andcleaning program of the gutters and the basin.

a.4 Improvement of urban traffic and mass transit

Five intersections were rehabilitated (road resurfacing) and three of theseequipped with traffic lights. In addition, in the center of Isotry two bus shelters werebuilt and the "storm water" gutters were cleaned and rehabilitated.

A second tranche of similar works are currently in progress in the same areaand will be completed by early 1991.

The Traffic Management Bureau (a specialized unit within the ProjectManagement Unit) was commissioned by the Mauie to prepare a bus terminalreorganization plan. Implementation of this plan began in 1990 (terminaldepartments at the entrances to the central zones of the city, thus relieving trafficcongestion along the main artery of the Avenue de l'Inddpendence, one of the ofmain generators of traffic).

a.5 Rehabilitation of the Isotry Market

In accordance with the program planned, the work carried out focused on thebooths used by butchers and other traders, the platforms, food stands and part of thegrain warehouse.

Here, too, regular maintenance of the premises will only be effective providedthat the users ensure the appropriate maintenance of the equipment.

a.6 Rehabilitation of certain streets in Antananarivo (1992)

During the second half of 1992 it was possible to rehabilitate almost 7 km ofroads in the city of Antananarivo, using the remainder of the Credit. The stretchesof road selected were in various neighborhoods where the deterioration was advanced

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and where the traffic is always as heavy as everywhere else: Lac de Behoririka,descent to the Route des Hydrocarbures (Hydrocarbon Road), a portion of theCircular Road, South exit from the city toward the Route Digue (EmbankmentRoad).

b. Municipality of Toamasina

b.1 Financial rehabilitation of municipal management

i- Implementation of a contrat-plan for financial rehabilitation between theMairie of Toamasina and the Central Government.

Launched in 1988, this plan produced very encouraging results once the termsof the agreement were accepted by the local authorities.

The first signs of recovery were seen in the 1988 administrative accounts,which showed a budgetary surplus in the order of FMg 400 million on an originalbudget in the order of FMg 600 million.

This trend was maintained and led to a threefold increase in the originalbudget by the end of three years of using the rehabilitation measures.

The first consequences were seen in the investment budget, which enabled theMunicipality to rehabilitate the main roads of the city.

The excessive payroll of the local government was cut from 400 to 180 people,thanks to a plan not to renew short-term contracts and because of the retirement ofsome staff (result: drop in salary costs).

Relationship with JIRAMA have more or less normalized, based on a contractfor the settlement of arrears (appropriately executed). There is no longer any delayin the payment of current invoices thanks to a method of establishing invoicescalculated in consultation with the two parties and the installation of standpipe meters(managed by the grassroots communities themselves).

The Mairie of Toamasina makes regular payments on the due dates pertainingto the various finance agreements entered into with the Treasury Department(subsidiary loan agreement under the urban project):

Agreement for the consolidation of arrears on social security contributions;

Agreement for the staggered payment of the taxe unique des transactions (TUT -standard transaction tax) incurred by the urban project.

Similarly, any invoices not paid to private suppliers have now been paid in full.

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ii - Improvement in municipal revenues

Two property tax censuses were carried out (1987 and 1990). Efforts arecurrently focusing on recovery performance, which leaves room for improvement inthe poorest neighborhoods.

The new taxes on contracts and the tax on water have been in force since1989.

The negotiations entered into by the Ministry of Finance have, to some extent,improved the regularity of transfers (refunds).

iii - The financial service

The improvement of working methods, the recruitment of new professionalstaff, the conduct of an organizational audit of the service were all usefulachievements, but proved insufficient.

The management structure remains rather fragile because of the shortage ofprofessional staff capable of doing anything more than simple accounting. Efficientutilization of municipal resources requires, in the short-term, the establishment of aprogramming and monitoring service.

iv - Reorganization and equipping of technical municipal services

The project has enabled the city to appropriately equip itself with householdtrash collection equipment, equipment for emptying septic tanks, equipment for quickrepair of roads and gutters, and also to install maintenance equipment in therenovated municipal repair shops.

The technical service obtained, on a short-lived basis, the services of a civilengineer. The unsuccessful conclusion of procedures for the permanent hiring of thisvaluable professional raises, in light of his departure, the question of how thissituation can be corrected. The main procedure will require the authoritiesresponsible to agree to a restructuring of the organization chart of the Maire and tothe institution of salaries that are more attractive to candidates of this level.

v - Rehabilitation of neighborhoods

Despite the fears triggered by the fact that this was a pilot civil engineeringproject and by the weakness of the "installation," the project operations went smoothlyand were completed on time.

The "pedagogic' approach adopted in Antananarivo received no negativereactions from the local authorities of Toamasina. The implementation of the contrat-plan without any major problem facilitated the execution of the physical operationsof the project.

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Here, too, the risk of the lack of maintenance of the new infrastructure is areal one. The solution to this problem lies in the capability of the technical staff(nonexistent as of today) to schedule the maintenance work, issue bidding invitationsfor it in accordance with appropriate procedures and to monitor it, in the capacity ofcontracting authority. This is a responsibility that no technician currently employedby the Mairie is able to assume.

vi - Establishment of a health center (or urban community clinic)

The building of this center provided an opportunity to test the "smallcontractor assistance" component of the project.

The results observed at the start of the works revealed the very poor technicalstandard and site management skills of these subcontractors. Similar, in legal terms,to a small enterprise, the subcontractor used for the construction of the center hadto relinquish its contract because of its totally inadequate performance.

A new invitation to bid was issued in order to hire a competent and reputablecontractor. The conversion of the existing building then went smoothly and wascompleted in a highly satisfactory manner. The Center has been in operation (withadequate staff and budget) since 1990.

C. CENAM (Centre National de I'Artisanat Malgache)

The employment generation program for poor and middle-income residents is currently 70percent completed.

This program initially aimed to promote artisans in the construction materials and tools sector(metal-working, wood-working and earthenware production). The technical, financial and economicstudies did not guarantee the maintenance of the "artisan" level of such enterprises. Similarly, thepolitical-economic circumstances of the country favour more the promotion of small and medium-scale industry.

It was thus decided to maintain and execute three wood-working, metal working/tool-makingand brick- and tile-making SMI units.

The first two units (wood and metal) are now in operation and the results for the start-upyear (1990) look promising.

The third unit (brick- and tile-making) is not yet in operation because it was not possible tocomplete the furnace in time.

CENAM's experience with this type of activity is undocumented. The establishment of aspecial division within this agency marks the beginning of some direction of these activities within theSMI promotion sector.

Real-life experience with this project, however, demonstrates the need to upgrade the skilllevel in this Center, since its current staff are still unable to properly handle the administrative,

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technical and financial management of this type of project. The low salary level also precludes thehiring of high-caliber staff.

d. Soci6t6 d'Equipement Immobilier de Madagascar (SEIMAD) was involved in the project inseveral capacities: organizational audit of its services (see section on the PMU), contracting authorityin charge of the rehabilitation of the neighborhoods, executing agency of the "housing loans" and"small contractor assistance' components of the project.

The activities of the small contractor assistance component involved the various civilconstruction works. The forms for inviting small contractors to bid were various in nature: directinvitations to bid (Health Center), subcontracting through more experienced enterprises (roadmaintenance and drainage in Isotry Anatihazo and Isotry Center).

The appropriations made to this component were therefore used, in practice, depending on theindividual case, to pay for trainer fees (SEIMAD in Toamasina) or to honor the discounts ofenterprises that held contracts and that subcontracted some of the works (Isotry). In accounting terms,however, only those items directly related to the works under consideration were mobilized.

The "housing loan" component had poor success among the residents, despite a publicitycampaign and awareness-raising meetings conducted in the neighborhoods (Isotry) and thecommitment of the Municipality to guarantee the loans (Toamasina).

Some 15 small loans were issued. The main problem in Isotry seems to concern propertyownership (joint ownership in most cases, and residents being reluctant to take formal steps to changethe joint ownership status into sole ownership).

In Toamasina, borrowing is frowned upon by the population despite very favorable lendingterms.

e. Project management and various studies (PMU and TMB)

e.1 The institutional building component of the project

Thanks to the total commitment of the executing agencies to the projectimplementation system, it was possible to test whether or not they were capable offully performing their role as contracting authority for the components that involvedthem.

The traditional administrative structure of the executing agencies has notalways lent itself to the specific working methods entailed in project implementation.The creation of special units within the agencies was intended to overcome this typeof problem (the "employment" unit, in the case of CENAM, the "urbanization" unit,in the case of SEIMAD).

In the case of the Municipalities, it was decided, in light of the organizationalprogress expected, to use the existing services. However, the customary workingmethods were not compatible with the performance expected, (rate of disbursement,role of contracting authority in general).

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The Project Management Unit primarily served as promoter and technical,administrative and financial coordinator.

This was Madagascar's first experience of coordinating a project in the urbansector, in which responsibility for subprogram implementation was entrusted todecentralized local authorities that were experiencing difficulties of several types(financial, equipment, human resources, organization of services, socio-politicalcircumstances of the cities).

In summary, the PMU focused its efforts on the following aspects:

i - The coherent management of the components entrusted to different contractingauthorities (Municipalities, SEIMAD, CENAM, Ministry) and ensuring that theimplementation of all the components was consistent with the original objectives ofthe project. This coordination function was performed primarily by distributinginformation among the partners, issuing opinions (whenever necessary) on thetechnical files prepared by the contracting authorities, and by the operation oftechnical controls through the permanent technical assistance provided by PMU.

i - The operation of accounting and financial management grouped by the differentcomponents in the form of consolidated balance sheets on the operations in relationto the estimates of the Credit Agreement.

ini - The monitoring of the setting in place of credits through "certifications" drawnup for all disbursement requests made by the contracting authorities.

iv - Ensuring the replicability of the project by submitting new programs andpresenting a sustainable system of rolling over funds recovered from operationscarried out.

The coordination function is thus rather broad in scope and is performedhorizontally, in the case of all spatially distributed components, and vertically, fromthe study phase through to the implementation of the system for recovering the fundsinvested and including project execution along the way.

At the start-up of the project, the ambiguity caused by the extremely unclearby-laws of the PMU, which was "set up within the Ministry of Public Works" but wasmissing from this Ministry's organization chart, meant that its activities did notconform to usual practices.

As a matter of fact, the Director of the PMU is, in actual fact, neither thehead of a service nor of a directorate in the administrative sense of the term. ThePMU is not an administrative unit but a "complex operation" similar to a "Mission."Its interministerial role makes it crucial that its responsibilities be more clearlydefined.

During project implementation, its main concern was to "protect" the projectby ensuring that it proceeded normally. As works on the project advanced, ideas

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matured and a clearer understanding developed in the individual government agenciesas to the scope of the actions involved in such a complex project, and as to thecoordination required in relation to the PMU, which paved the way for a renewal ofinstitutional dialogue.

A Comite National Technique du DAveloppement Urbain (CTNDU) was thusestablished in 1987 under the chairmanship of the Prime Minister and withrepresentatives from the government agencies involved in the Urban Project, inparticular, and in the urban sector, in general (Ministries of Public Works, Finance,the Plan, Internal Affairs, Industry and Transport and the Ministry responsible forland ownership).

This body was put to work in examining the most complex project documents,which called for extensive consultation:

- Law case between JIRAMA and Municipality of Antananarivo- Proposed final by-laws of the PMU- Fonds d'Infrastructure pour Habitat Urban (FIHU - Urban Housing Infrastructure

Fund)- Proposed revision of land ownership legislation in urban areas.

f. Technical Assistance to executing agencies and to the project in general

This activity, which was carried out by the PMU, was, for several reasons, one of themainstays of project implementation.

First, because many exploratory studies, construction plans, institution reorganization plansand proposals concerning institutions were carried out within the framework of Technical Assistance.

Then, because the introduction of institution rehabilitation measures and measures for theclose monitoring of the project's progress called for a permanent presence within the executingagencies, which was not always immediately accepted (Fivondronana Antananarivo), or because it wasimportant not to attempt to take the place of existing services.

This technical assistance was launched in 1985 and is scheduled to come to an end in 1991,i.e. the original date for project completion.

Specialists in several areas were mobilized: Administrator, Civil Engineer, MunicipalEngineers, Financiers (public finance), Architects, Urban Planners, Economists, Expert Mechanics,Tax Specialist, Industrial Engineers, experts specializing in the production of wooden, metal andearthenware products.

g. Financial management and gublic contracts and disbursement mechanisms

i - The PMU gained valuable experience from the management and mobilization of the IDAcredit, and from working with local counterpart staff from different backgrounds (TreasuryDepartment and Ministry of Public Works).

- 22 -

A special effort was made to speed up the mobilization of funds, their deposit inspecial accounts, cash flow management, and the monitoring of payments in the currenciesrequested by the payees. It will be noted that the matter conceming the payment of taxesby the people of Fivondronana was settled by the signing of an agreement to deferredpayment between the Treasury Department and the Municipalities. In the practical case ofdisbursement procedures, the work was made somewhat harder, however, by the need to havethe payees systematically produce an "attestation de destination" (certificate of purpose) toprove that the undertaken activities undertaken were part of the project.

The most significant difficulties encountered concerned the management of the specialforeign currency account, due to the weak information system on the real time monitoringof this account.

A special account called a "first generation" account, opened at the Banque CentralMalgache (BCRM) was used at the start of the project for some of the financing of certainproject operations. This special account was subsequently converted into a "secondgeneration" account at a primary bank in Paris.

The PMU had some difficulties in monitoring the movement of this account (delayin the transmission of account statements, which systematically affected the speed ofdisbursements and the replenishment of the special account).

In addition, the administrative channels typical of this type of multisectoral project,using several executing agencies, are particularly complex but essential nonetheless. Forexample, an invoice (bill) is first checked by the appointed works supervisor, then passed onto the contracting authority for preparation of the disbursement file and recording in theaccounting documents of the executing agency. It is then submitted to the PMU to becertified and entered into the accounts and then sent to the Treasury Department forforwarding, together with a payment order, to BCRM. At this point in the routing, BCRMcontacts the primary bank of the interested party to arrange for the latter's account to becredited (Government counterpart payment) or notifies the foreign bank to cover theexpenditure in foreign exchange from the special account.

In the case of payments by direct drawdown, the Treasury Department directlyforwards a request for payment to the World Bank.

ii - The management of contracts for supplies and services has always required a specialprocedure.

The requirement to strictly respect the hierarchical structure of the supervisoryMinistry (despite the absence of the PMU in the organization chart of the Ministry of PublicWorks), the multiplicity of supervisory and consultative services and authorities, decision-making authorities at both the national level and the individual donor level (a priori financialsupervision, Commission Centrale des March&s, IDA Departments, the Treasury Department,the External Finance Service, the contracting authorities, etc.) is indicative of the obligationsinvolved and also the unwieldiness and complexity of procedures.

- 23 -

The problems usually encountered have made it particularly difficult to obtain aconsensus of opinion among the various agencies and services referred to above.

The consequences always impact on the time it takes to start up the subprogramunder consideration and on the overall period of execution. Sometimes it takes so long thatprice revisions are needed, which inevitably have a detrimental effect on appropriationsearmarked, particularly where local counterpart funds are concerned.

4. SPECIAL CIRCUMSTANCES FROM MID-1991 ONWARDS

Everyone is aware of what took place in Madagascar, starting in mid-1991, when theso-called transitional regime came into being, which then gave way, in October 1991, to the regimewhich was to last until August 1993, following various elections, and which led to the establishmentof the new institutions of the Third Republic: new constitution, election of the President of theRepublic, the election of Deputies, elections for Prime Minister and the birth of the first Governmentof the Third Republic.

During the transitional regime the First Urban Development project of Madagascar wasplaced under the authority of a Consultant appointed to the Directorate of Coordination of UrbanOperations (replacing the Bureau des Projets Urbains [sic] - BPU), itself a part of the new Ministry ofUrban Development and Tourism. This Ministry has authority over the former DAUH (Directorateof Architecture, Urban Planning and Housing) of the Ministry of Public Works, the Antananarivo PlainDevelopment Project, the Directorate of Tourism and hence the former PMU (BPU).

All this occurred following a redeployment in 1991 of the balance remaining fromCredit 1497-MAG, which included both:

- the continuation of the activities of the First Urban Development Project ofMadagascar, and

- the preparation of the Second Urban Development of Madagascar.

The 1993 budget, prepared by the Borrower in 1992, included provisions for thecontinuation of these two types of activities.

So it was that, following the agreement of Specialist Missions, the portion availablefor reallocation to the repair of certain roads in Tananarive was well and truly earmarked for thispurpose. In view of the favorable outcome of the bidding invitation, it would then have been possibleto use some of this earmarked amount to extend the repairs to other roads, but this did not receivethe Donor's approval.

It was during the same year also, i.e. 1992, that the Second Urban DevelopmentProject was prepared, i.e. the preparation and issuing of the bidding invitation, the short-listing ofbidders, the award of the contract, in an effort to ensure that the feasibility studies could be finalizedas much as possible before the end of 1993, while it known all the time that these studies were goingto take 12 months (two 6-month phases).

- 24 -

And all this despite the general circumstances prevailing in the country, which couldhardly be described as conducive to the smooth progress of any project.

But the World Bank's decision to close Credit 1497-MAG on December 31, 1993, withthe exception of certain components linked to the completion of Employment Unit No. 3, has nowcompletely placed under a cloud of uncertainty the prospects eyed in 1992 of using the balanceremaining from the Credit.

With respect to the preparation of the Second Urban Development Project, theactions taken in 1992 were jeopardized by the impossibility of mobilizing the balance remaining fromCredit 1497-MAG, following its closure at the end of 1992. This has resulted in the revision of theTerms of Reference, even though, after a joint supervision mission in January 1993 by the WorldBank and the Caisse Frangaise de Ddveloppement (CFD), it proved possible to establish a contractagreement in February 1993 as part of a US$750,000 PPF prefinancing arrangement. This wassubsequently reduced to US$300,000, which led to a second revision of the Terms of Reference.

While it is true that these two Urban Development Projects are quite distinct, wewould simply point out that it took two years (from June 1991 to June 1993) to identify the SecondUrban Development Project, invite bids and select the consulting firm before the feasibility studiescould even be really started.

T'he Borrower hopes that the Second Urban Development Project will not suffer fromthe same extremely long preparation delays as the first one.

With respect to the implementation of the first project, however, the period runningfrom mid-1991 until the closing of the Credit at the end of 1992 should be regarded as quite separatefrom the preceding period from the start of the project.

As mentioned earlier, given the fact that the country's circumstances are in a state offlux, it has not even been possible to maintain the gains made earlier, such as the progress achievedby the Fivondronana of Toamasina in terms of the rehabilitation of local finances and recognized byprevious supervision missions.

The project did prove, however, that such progress and rehabilitation were feasible,thanks to the determined efforts displayed by the authorities of the city of Toamasina before the endof 1991.

With reference to the period prior to mid 1991, the first point to mention is, as always,the inadequate disbursements, which resulted in there being an unused balance, which had to beredeployed in 1991. During this period, the World Bank's decisions on the undertaking of physicalrehabilitation activities were always subject to proof that improvements had been made in the areaof local finances and particularly in the city of Antananarivo.

This translated into delays in bidding procedures and the downsizing of the technicalwork (elimination of the sewerage system in Anatihazo-Isotry). At the purely technical level thisactually resulted in the communities being prompted to use the only storm water drainage system builtfor the disposal of household waste water and sewage, which was contrary to what had been plannedin the feasibility study and hardly acceptable in technical terms.

- 25 -

In financial terms, the delays in the bidding procedures canceled out any savings thatmight have been expected from the downsizing of the technical work because of increased costs.

It would have been preferable to have first carried out all the technical work, whichwould have brought about improvements in:

the service and size of the systems accessible to the people;the cost of the works.

This would have had a much greater impact on the health status of the rehabilitatedneighborhoods and their residents, which is, after all, the main objective of a project of this type.

The savings in time thus achieved would also have provided more opportunity to givethe people a greater understanding of the cost recovery measures adopted. It might have alsosignificantly reduced the unused balance as at the closing date of the project.

On the other hand, another point to be made is the fact that the final cost of theTechnical Assistance component proved much higher than originally estimated. The thing is that theWorld Bank has always shown great latitude where this component is concerned, unlike its approachto the rehabilitation works component. The Borrower would have preferred the contrary to havebeen the case, since the portion of the credit used would have thus amounted to a greaterachievement in concrete, perceptible terms, and would have consequently been better accepted bythe people.

- 26 -

PART THREE: STATISTICAL INFORMATION

1. Related IDA credits

Credit Purpose Approval Status

Credit 1002-MAG: To improve water and 04/01/80 Closed onAntananarivo Water sanitation in 06/30/86and Sanitation AntananarivoProject

Credit 2117-MAG To protect suburbs of 03/29/90 On-goingAntananarivo Plain Antananarivo againstDevelopment Project flooding and

rehabilitate drainageand sewerage systems

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ -_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __--- - -

Credit 1526-1-MAG To rehabilitate and 08/05/86 Closed onCyclone Project II repair infrastructure 06/30/89

damaged by CycloneHonorinina in Toamasina

---------------------------------------------------------------- __-----------_

2. ProJect timetable

Planned date Revised date Actual date

Identification 09/77-11/78

Preparation 04/79-02/82

Pre-appraisal 02/82-12/82

Appraisal 06/83 06/83

Negotiations 01/09/84 04/16/84

Board approval 03/13/84 06/12/84

Credit signature 07/03/84

Credit effectiveness 10/03/84 02/22/85

Credit closing 12/31/91 06/30/93

Project completion 06/30/90 06/30/93

- 27 -

3. Credit Disbursements

Cumulative Estimated and Actual Disbursements(in millions of dollars)

WB Fiscal Year SAR Estimates Actual % Disbursed Africaand Quarter Profile

1985

Sept. 30, 1984Dec. 31, 1984 0.70March 31, 1985 0.95 0.62 4.80June 30, 1985 1.20 0.70 5.40 0.77

1986

Sept. 30, 1985 1.54 0.70 5.40 1.03Dec. 31, 1985 1.89 0.74 5.78 1.28March 31, 1986 2.24 1.31 10.23 1.53June 30, 1986 2.59 1.52 11.87 1.79

1987

Sept. 30, 1986 3.17 1.62 12.65 2.04Dec. 31, 1986 3.76 1.68 13.12 2.30March 31, 1987 4.40 1.94 15.15 2.81June 30, 1987 5.04 2.57 20.07 3.32

1988

Sept. 30, 1987 5.70 2.82 22.03 3.83Dec. 31, 1987 6.36 3.14 24.53 4.35March 31, 1988 6.99 3.89 30.39 5.11June 30, 1988 7.62 4.68 36.56 5.88

1989

Sept. 30, 1988 8.20 5.36 41.87 6.39Dec. 31, 1988 8.79 5.93 46.32 6.91March 31, 1989 9.31 6.76 52.81 7.67June 30, 1989 9.84 8.31 64.92 8.44

1990

Sept. 30, 1989 10.28 8.43 65.80 8.95Dec. 31, 1989 10.73 9.40 73.43 9.47March 31, 1990 11.09 9.46 73.90 9.98June 30, 1990 11.45 9.66 75.46 10.49

1991

Sept. 30, 1990 11.73 9.88 77.18 11.00Dec. 31, 1990 12.02 9.90 77.34 11.52March 31, 1991 12.22 10.65 83.20 12.03June 30, 1991 12.43 11.23 87.73 12.54

- 28 -

1992

Sept. 30, 1991 12.61 11.23 87.73 12.67Dec. 31, 1991 12.80 11.47 89.60 12.80March 31, 1992 11.47 89.60June 30, 1992 11.51 89.92

1993

Sept. 30, 1992 11.92 93.12Dec. 31, 1992 12.68 99.06March 31, 1993 12.97 101.30June 30, 1993 12.98 101.40

1994

Sept. 30, 1993

us s Minin Apprisa Actual Africa Profile

14 -- - --

12 -

10 . .......

8

2

1 5 9 1 3 17 21 25 29 3 3 Quarten1985 1986 1987 1988 1989 1990 1991 1992 1993

- 29 -

4. Project Implementation---------------------- A: IMPLEMENTATION SCHEDULE

YEARS 1984! 1985 1986! 1987 1988 1989 1990! 1991 ! 1992 !1993 !LEGEND:

A.ANTANKNARIVO ! ! ! ! ! lAppraisal-------------- 1. ISOTRY ! ! ! ! ! ! ! !Estimate

Market -- ...... - Preparation! ! , ,,, I,,,,tttt ! !*. ! ! ! !

Roads, Drainage !.. . - - -......... ! ! ! 1 Construction

Water Supply ... --- ..... ! -!.. ! ! ! ! !,,,,,,!tttttt! ! ! Actual

Public Lighting ... --! --- .... ! ! ! ! Preparation! ! ! *,,,,,!,,,,,!tttt,t ! ! !

Housing Loans ! ! ! ---- -------- ! !Construction

2. TRAFFIC ! !

Isotry Center ! ! .---- ! ! ! ! ! ! ! !! !,,,,,,*,,,,,,r*,t*it ! !,,,t!tt ! !

Five Intersections! ! .---- !---

B. TOAlASINA ! ! ! ! ! ! ! ! ! !------------ Roads and Drainage! . . . ------------

! ,,,,,,I, *u**!**..*.I*...*.I ! ! ! !

Water Supply !............ - ! !

Public Lighting .------ .......... ! ,,,,,,I,,,,,,I,,,,,ttItttttt!t ! ! ! !1

Ankirihiry Health ...... --- ! ! ! Center ! I,,,,,,I,,,,,,I,,,,,,l,,,.I* I ! ! !

C. EMPLOYMENT PRODUCTION UNITS ! ! ! ! ! ! ! ! ! !------------------------------ ! ! ! ! ! ! ! ! ! ! !

Civil Works !.-!--- ! ! ! ! ! !

Equipsent ! ! ---!--------- …---!--------- ! ! ! !

! I I I I-- - -- - - - - - - - - - - - --I------I--- !--- -

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4. B: SUMMARY OF TECHNICAL ASSISTANCE

OFFICE/SPECIALTY MANMONTHS

PLANNED IN SAR ACTUAL PROVIDED

ANTANANARIVO MUNICIPALITY

Municipal Finance Advisor 15 38Fiscal Advisor 0 4Municipal Engineer 30 33Maintenance Engineer 42 30

TOAMASINA WUNICIPALITY

Municipal Finance Advisor 15 23Municipal Engineer 0 15Maintenance Engineer 42 42

SEIMAD

Roads and Drainage Engineer 42 45

CENAM (Employment Component)

Industrial Engineer 42 42Wood, bricks and steel Engineers 6 15

PROJECT MANAGEMENT UNIT

Management Specialist (Advisor) 45 41Transport Engineer 30 21Evaluation 0 4

TOTAL TECHNICAL ASSISTANCE 309 353

Increase in technical assistance (based on manmonths) 15 %

- 31 -

5.Prolect Costs and Financing

A. Prolect Costs

(US$ thousands)

Component SAR Estimate Actual (IDA) Actual Total

Municipal Finances 1,425 1,703 2,040

Municipal Techn.Serv. 4,792 4,309 5,161

AntananarivoIsotry Upgrading 2,478 1,488 2,116

Toamasina Upgrading 2,590 745 1,059

Employment generation 1,813 1,143 1,625

Traffic Management 777 994 1,413including 9 km streets

Housing loans 500 82 109

Project Management 2,978 2,339 2,959and Studies

Design and Supervision 647 178 225

TOTAL: 18,000 12,981 16,707

Government Contribution: US$ 3,725,400z=u - U WU U U

- 32 -

5 B. STIDIES

STUDY Cost in Fig YER lEchange Rate Cost inS S

Final Design PMUt 32,826,285 1984 400.00 82,065.71

Audit of SEIMAD 76,517,300 1984 450.00 170,038.44

ludit of Credit 1497/EPG 41,604,700 1986 680.00 61,183.38

Toaasina Vater Supply 9,663,750 1987 790.00 12,232.59

Toansilna Vater Supply 249,540,156 1989 1,600.00 155,962.60

Land Legislation Stndy 129,895,600 1987 1,350.00 96,218.96

ludit of Credit 1497/NAG 3,736,177 1988 1,280.00 2,918.89

Nahsjaug Irbau Study 2,426,668 1988 1,275.00 1,903.27

ludit of Credit 1497/NAG 26,026,000 1919 1,600.00 16,266.25

lAdit of Credit 1497/NAG 26,026,000 1990 1,530.00 17,010.46

lEcomoic Study 39,136,000 1990 1,500.00 26,090.67

Audit of Credit 1497/NIG 61,259,000 1991 2,000.00 30,629.50

Adit of Credit 1497/1AG 64,549,000 1992 2,000.00 32,274.50

lAdit of Credit 1497/NG 129,098,000 1993 2,000.00 64,549.00

Irbau II Study 257,869,106 1992 1,800.00 143,260.61

TOTU: 1,150,173,742 912,605

5 C. TECUICAL ASSISTANCE

Cost is FIg YE1 lichauge Rate Cost ID IS

PDIi 1,988,389,180 1985 575.00 3,458,068.14

SEIIAD 340,951,605 1986 750.00 454,602.14

51IWD 35,763,261 1984 400.00 89,408.15

F?Dl 350,000,000 1992 1,800.00 194,444.44

BPI 5,000,000 1918 1,260.00 3,968.25

BPi 147,640,569 1985 500.00 295,281.14

BPI 21,450,000 1992 1,900.00 11,289.47

Irba II 28,993,074 1991 1,1870.00 15,504.32

TOTAL: 2,918,187,689 4,522,566

9STUDIE AND T.A. 4,068,361,431 5,435,171

::::::::::;: :::::::::::::::::::::

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5 D: Credit Allocation by Category

(in SDR)

Category Estimate Actual Balance

1. Civil Works(a) 1,320,000 1,011,998.49 308,001.51

(b) 90,000 68,473.13 21,526.87

(c) 1,220,000 515,239.37 704,760.63

(d) 90,000 42,532.03 47,467.97

(e) 140,000 693,982.17 (553,982.17)

(f) 90,000 0.00 90,000.00

(g) 90,000 116,183.36 (26,183.36)

(h) 45,000 99,166.50 (54,166.50)

(i) 45,000 42,047.27 2,952.73

Total 1: 3,130,000 2,589,622.32 540,377.68

2. Equipment, saterials and vehicles(a) 1,500,000 503,021.64 996,978.36

(b) 560,000 751,341.11 (191,341.11)

(c) 190,000 223,936.55 (33,936.55)

(d) 90,000 93,079.49 (3,079.49)

(e) 90,000 216,087.19 (126,087.19)

(f) 90,000 208,441.61 (118,441.61)…

Total 2: 2,520,000 1,995,907.59 524,092.41

3. Services Part F.4(a) 25,000 0.00 25,000.00

(b) 25,000 0.00 25,000.00

Total 3: 50,000 0.00 50,000.00

4. Consultants and Training 2,580,000 4,253,153.66 (1,673,153.66)

5. Operating Costs(a) 470,000 178,575.06 291,424.94

(b) 140,000 74,384.10 65,615.90

(c) 50,000 30,575.58 19,424.42

(d) 140,000 440,043.82 (300,043.82)

Total 5: 800,000 723,578.56 76,421.44

6. lousing Loans 470,000 57,766.76 412,233.24

7. Initial Deposit 470,000 305,672.14 164,327.86

8. Refulding of PPF 230,000 170,228.72 59,771.28

9. onallocated 1,850,000 0.00 1,850,000.00

General Total: 12,100,000 10,095,929.75 2,004,070.25

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6. Project Results

A. DMELOPMENT OBJECTIVES. Key Indicators

CO-PO. IT OBJECTIVE !ACTUAL! COMhENTS-- -- - - -- -…-- - -- - - - - - -- - - - - - ---- ---- -!…-- - - - - - -- - - - - - - -

Municipal Revenue !Frequent updating of tax levels 100% !Done in 1990Generation in !Government transfers enhancement 100% !Multiplied by 2 from 1984 to 1992Autananarivo and Hmprove tax collection ! 30% Hs still the main problemToamasina !Strengthening financial management! 30% !Slight improvement at the end-------------------!----------------------------------!------!-----------------------------------------Municipal technical!Strengthening technical services ! 20% !Some improvement in ToamasinaServices ITraining ! 50% IBetter in Toaaasina-------------------!----------------------------------!------!-----------------------------------------Rehabilitation Himprove streets, drainage, water ! 80% !Done, except sewerageIsotry !supply, sewerage and solid waste

!Cost recovery froa beneficiaries ! 0% !LDone from the whole cityToamasina !Streets, water, drainage, sol. was! 100% !

!Cost recovery fros beneficiaries ! 80% !Surcharge replaced by a rent-------------------!----------------------------------!------!-----------------------------------------REployment !Creation of three cooperatives to ! 90% llnstead of cooperatives, three private

Iproduce building saterials ! lenterprises for wood, metal and tiles-------------------!----------------------------------!---- -----------------------------------------Traffic Managesent !Improve five intersections ! 100% !in Aiutaaanarivo llsotry Center isprovement 100% 1

!Creation of a Traffic Bureau ! 0% !Created fros 1986 to 1989 only!Prepare a traffic master plan ! 100% !But no follow up of this action

-------------------!----------------------------------!------!-----------------------…-----------------SBIKID !Management of housing loans ! 5% !SEIMAD was not the right institution-------------------…----------------------------------!---- -----------------------------------------Project Kanagement !Coordination of the Project ! 100% !BPU has functioned very welland Studies !Consolidated Project accounts ! 100% !

!Audit reports ! 90% !Not always submitted on time!Carrying out studies ! 100% !Other studies were also carried out!Creation of FIRU 100% !!Procurement ! 100% !Problems were caused by the Bank

-------------------!----------------------------------!------!-----------------------------------------

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6. B. Municipal Financial results

MUVICIPALITY OF ANTANANARIVO-INCONE (FMg uillious)

1984 ! 1985 ! 1986 ! 1987 ! 1988 ! 1989 ! 1990 ! 1991 ! 1992!---------!---------!---------!---------!---------!---------!---------!------…--!----------

Eschange Rate US$/FMg ! 400.00 ! 500.00 ! 679.00 !1,070.00 !1,405.00 !1,604.00 !1,495.00 !1,710.00 1,905.00 !CPI 1.00! 1.11! 1.25! 1.58! 1.94! 2.18! 2.56! 2.96! 3.37!

I I I I I I I I I I

I.Direct Taxes: Apprais.! 747.00 ! 930.00 !1,120.00 !1,265.00 !1,345.00 !1,410.00 !1,470.00 !1,550.00 1,650.00!Actual ! 771.35 ! 540.06 ! 634.58 ! 468.71 ! 995.75 !1,115.82 !1,945.73 !2,409.00 !5,421.00!Actual/CPI! 771.35 ! 486.98 ! 506.38 ! 296.37 ! 513.14 ! 511.58 ! 761.16 ! 815.21 1,606.38 !

2.Indirect Taxes: Appr. ! 530.00 ! 515.00 ! 515.00 ! 400.00 ! 400.00 ! 400.00 ! 400.00 ! 400.00 ! 400.00Actual ! 68.54 ! 106.41 ! 114.26 ! 128.19 ! 136.34 ! 93.42 ! 96.24 ! 221.50 ! 221.50 !Actual/CPI! 68.54 ! 95.95 ! 91.18 ! 81.06 1 70.26 ! 42.83 ! 37.65 74.96 ! 65.64 !

3.Incoue frou Property ! ! ! ! ! ! !and Services: Appraisal 1 226.00 ! 252.00 ! 284.00 1 324.00 ! 364.00 ! 364.00 ! 364.00 ! 364.00 ! 364.00 !

Actual ! 330.99 ! 291.25 1 315.49 1 332.65 1 404.56 ! 412.27 ! 477.41 !1,625.99 1,649.46!Actual/CPI! 330.99 ! 262.62 ! 251.75 ! 210.34 ! 208.48 ! 189.02 1 186.76 ! 550.24 ! 488.78 !

4.Other Receipts: Appr. ! 30.00 ! 30.00 ! 30.00 ! 30.00 ! 30.00 ! 30.00 ! 30.00 ! 30.00 ! 30.00 !Actual ! 55.09 ! 43.85 ! 20.30 ! 36.84 ! 31.93 ! 22.54 ! 55.10 ! 35.00 75.67 1Actual/CPI! 55.09 ! 39.54 ! 16.20! 23.29 ! 16.45 ! 10.33 ! 21.55! 11.84 ! 22.42 !

I I I I I I I I I I

5.Governient Grants:Appr! 500.00 ! 500.00 ! 500.00 ! 500.00 ! 500.00 ! 500.00 ! 500.00 1 500.00 ! 500.00 !Actual ! 570.17 ! 600.68 ! 773.72 !1,730.34 !2,104.35 !2,537.76 !2,832.27 !3,570.00 13,570.00 !Actual/CPI! 570.17 ! 541.64 1 617.41 !1,094.11 !1,084.44 !1,163.51 !1,107.97 !1,208.10 1,057.88 1

6.Surtaxe: Appraisal ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 25.83 ! 38.74 ! 46.49 ! 46.49 1 46.49 !Actual ! 0.00! 0.00 ! 0.00 0.00 ! 0.00 ! 0.00! 0.00 ! 0.00 ! 0.00!

!---------…---------…!---------1------------------ …--------- …--------- …--------- i----------SUB-TOTAL: Appraisal !2,033.00 !2,227.00 !2,449.00 !2,519.00 !2,664.83 !2,742.74 !2,810.49 !2,890.49 ! 2,990.49 !

Actual !1,796.15 !1,582.28 !1,858.37 !2,696.73 !3,672.92 !4,181.81 !5,406.75 !7,861.49 !10,937.63 1Actual/CPI!1,796.15 !1,426.76 !1,482.94 !1,705.17 !1,892.77 !1,917.27 !2,115.09 !2,660.35 13,241.09 !

7.Other Receipts/loans ! ! ! ! ! ! ! ! !Appraisal ! 619.05 ! 713.94 ! 436.79 ! 312.14 ! 139.42 1 38.54! 0.00 ! 0.00 0.00!Actual ! 138.51 ! 24.32 8 88.82 ! 287.78 ! 286.59 1 141.21 ! 25.22 !1,438.65 ! 585.65 !Actual/CPI! 138.51 ! 21.93 ! 70.88 ! 181.97 ! 147.69 1 64.74 1 9.87 1 486.84 ! 173.54 !

!---------!---------!---------!---------!---------!---------!---------!---------!----------!TOTAL INCOKH: Appraisal !2,652.05 !2,940.94 !2,885.79 !2,831.14 !2,804.25 !2,781.28 !2,810.49 !2,890.49 ! 2,990.49!

Actual !1,934.66 !1,606.60 !1,947.19 !2,984.51 13,959.51 !4,323.02 !5,431.97 !9,300.14 !11,523.28 1Actual/CPI!1,934.66 !1,448.69 !1,553.81 !1,887.14 !2,040.46 !1,982.02 !2,124.95 !3,147.20 13,414.64 !

Asocuts to be recovered:! ! ! ! ! 1 ! ! ! !Actual ! 109.05 i 110.88 ! 261.02 ! 312.12 ! 372.94 ! 407.08 ! 487.31 !2,426.50 !3,174.65 1Actual/CPI! 109.05 ! 99.98 ! 208.29 ! 197.36 ! 192.19 ! 186.64 1 190.63 1 821.14 ! 940.73 !

!-------!-------!------!-------!-------!------!-------!-----------------!REVISID INCOMH ! ! ! ! ! ! ! ! !

Appraisal !2,652.05 !2,940.94 !2,885.79 !2,831.14 !2,804.25 !2,781.28 !2,810.49 !2,890.49 12,990.49 1Actual !2,043.71 !1,717.48 !2,208.21 !3,296.63 !4,332.45 !4,730.10 !5,919.28 !9,300.14 !11,523.28 !Actual/CPI!2,043.71 !1,548.67 !1,762.10 12,084.50 !2,232.64 !2,168.65 !2,315.59 13,147.20 ! 3,414.64!

- 36 -

MUNICIPALITY OF ANTANANARIVO-EIPENSES (FMq sillions)

! 1984 ! 1985 ! 1986 ! 1987 ! 1988 ! 1989 ! 1990 ! 1991 ! 1992 !!---------!---------!---------!---------!---------!---------!---------!---------!------…---!

Exchange Rate US$/FMq ! 400.00 ! 500.00 ! 679.00 !1,070.00 !1,405.00 !1,604.00 !1,495.00 !1,710.00 !1,905.00 !CPI ! 1.00! 1.11 1.25! 1.58! 1.94! 2.18! 2.56! 2.96! 3.37!

1. Services Appraisal !1,769.00 !1,887.00 !1,869.00 !1,850.00 !1,833.00 !1,816.00 !1,800.00 !1,783.00 11,768.00 !Actual !1,516.05 !1,295.99 !1,605.97 !2,144.98 !2,982.24 !3,420.27 !4,545.57 !6,070.10 17,359.03 !Actual/CPI!1,516.05 !1,168.61 !1,281.53 !1,356.29 !1,536.84 !1,568.12 !1,778.20 !2,054.14 !2,180.66!

2.Grants & other Appr.! 113.00 ! 113.00 ! 113.00 ! 113.00 ! 113.00 ! 113.00 ! 113.00 ! 113.00 ! 113.00Actual ! 171.44 ! 128.73 ! 145.08 ! 197.77 1 259.69 ! 436.08 ! 139.92 ! 301.37 ! 517.50 1Actual/CPI! 171.44 ! 116.08 ! 115.77 ! 125.05 ! 133.83 ! 199.93 ! 54.74 ! 101.98 ! 153.35 !

3.Investments Appraisal ! 712.05 ! 806.94 ! 529.79 ! 405.14 ! 232.42 ! 131.54 ! 93.00 ! 93.00 ! 93.00 !Actual ! 108.66 ! 169.63 ! 64.97 ! 140.41 ! 504.39 ! 429.45 ! 726.80 8 876.77 ! 746.10 !Actual/CPI! 108.66 ! 152.96 ! 51.84 ! 88.78 ! 259.93 ! 196.89 ! 284.32 ! 296.70 ! 221.09 !

4.Loan Repaysents Appr.! 0.00 ! 0.00 ! 160.60 ! 241.19 ! 304.18 ! 368.00 ! 415.45 ! 283.04 ! 199.13 !Actual ! 34.58 ! 4.40 ! 20.55 ! 27.16! 8.071 14.02 ! 6.96 ! 613.25 2,315.00!Actual/CPI! 34.58 ! 3.97 ! 16.40 ! 17.17 ! 4.16 ! 6.43 ! 2.72 ! 207.53 ! 685.99 !

5. Non Current Appraisal! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 !Actual ! 82.97 ! 1.18 ! 81.16 ! 217.83 ! 63.96 ! 0.00 ! 0.00 !1,438.65 ! 585.65 !Actual/CPI! 82.97 ! 1.06 ! 64.76 ! 137.74 ! 32.96 ! 0.00 ! 0.00 ! 486.84 ! 173.54 !

TOTAL EXPENSES Appraisal!2,594.05 !2,806.94 !2,672.39 !2,609.33 !2,482.60 !2,428.54 !2,421.45 !2,272.04 12,173.13!Actual !1,913.70 !1,599.93 !1,917.73 !2,728.15 !3,818.35 !4,299.82 !5,419.25 !9,300.14 !11,523.28 !Actual/CPI!1,913.70 !1,442.68 !1,530.30 !1,725.04 !1,967.71 !1,971.38 !2,119.98 !3,147.20 13,414.64!

Not paid Actual ! 91.29 ! 812.03 ! 636.80 ! 434.96 ! 451.46 ! 436.85 ! 102.84 ! 0.00 ! 0.00 !(JIRAMA) Actual/CPI! 91.29 ! 732.22 ! 508.15 ! 275.03 ! 232.65 ! 200.29 ! 40.23 ! 0.00 1 0.00 !

REVISED E7PBNSES ! ! ! ! ! ! !Appraisal !2,594.05 !2,806.94 !2,672.39 !2,609.33 !2,482.60 !2,428.54 !2,421.45 !2,272.04 12,173.13!Actual !2,004.99 !2,411.96 !2,554.53 !3,163.11 !4,269.81 !4,736.67 !5,522.09 !9,300.14 !11,523.28 !Actual/CPI!2,004.99 !2,174.90 !2,038.45 !2,000.07 !2,200.36 !2,171.67 !2,160.21 13,147.20 13,414.64!

BALANCE Appraisal ! 58.00 ! 134.00 ! 213.40 ! 221.81 ! 321.65 ! 352.74 ! 389.04 ! 618.45 ! 817.36 !Actual ! 20.96 ! 6.67 ! 29.46 ! 256.36 ! 141.16 ! 23.20 ! 12.72 ! (0.00)! (0.00)!Actual/CPI! 20.96! 6.01 ! 23.51 ! 162.10 ! 72.74 ! 10.64 ! 4.98 ! 0.00 ! (0.00)!

REVISED BALANCE, taking account of amounts to be paid and to be recovered:

Appraisal ! 58.00 ! 134.00 ! 213.40 ! 221.81 1 321.65 ! 352.74 ! 389.04 ! 618.45 ! 817.36 !Actual ! 38.72 !(694.48)! (346.32)! 133.52 ! 62.64 ! (6.57)! 397.19 ! (0.00)! 0.00 !Actual/CPI! 38.72 ! (626.22)! (276.36)! 84.43 ! 32.28 ! (3.01)! 155.38 ! (0.00)! 0.00 !

- 37 -

MUNICIPALITY OF TOANASINA-INCOME (Fig millions)

! 1984 1985 ! 1986 ! 1987 1988 1989 ! 1990 ! 1991 ! 1992 !!---------!---------!---------!---------!---------!---------!---------!---------!------…----!

EIchange Rate US$/TEg ! 400.00 ! 500.00 ! 679.00 !1,070.00 !1,405.00 !1,604.00 !1,495.00 11,710.00 ! 1,905.00 !CPI ! 1.00! 1.11! 1.25! 1.58! 1.94! 2.18! 2.56! 2.96! 3.37!

I.Direct Taxes: Apprais.! 82.53 ! 138.85 ! 132.53 ! 125.74 ! 117.03 ! 121.05 ! 126.15 1 131.00 ! 136.04 !Actual ! 129.50! 134.13 ! 176.30 ! 208.53 ! 349.18! 313.79 1 472.41 ! 392.46! 378.11 !Actual/CPI! 129.50 ! 120.95 ! 140.68 ! 131.86 ! 179.94 ! 143.87 ! 184.80 ! 132.81 ! 112.04 !

2.1ndirect Taxes: Appr. ! 76.00 ! 86.00 ! 96.00 ! 96.00 ! 96.00 ! 96.00 ! 96.00 ! 96.00 ! 96.00 !Actual ! 51.20 1 51.92 ! 76.68 ! 71.35 ! 74.42 ! 143.54 ! 86.98 ! 213.49 ! 75.83 !kctual/CPI! 51.20 ! 46.82 ! 61.19 ! 45.12 ! 38.35 ! 65.81 ! 34.03 ! 72.25 ! 22.47 !

3.Mucome from Property ! ! ! ! ! ! ! ! !and Services: Appraisal 1 60.20 ! 78.20 ! 78.20 ! 78.20 ! 78.20 ! 78.20 ! 78.20 ! 78.20 ! 78.20 !

Actual ! 61.90 ! 78.84 ! 83.95 ! 129.08 ! 214.25 ! 268.45! 301.83 ! 164.81 ! 153.71 !Actual/CPI! 61.90 ! 71.09 ! 66.99 ! 81.62 ! 110.41 ! 123.08 1 118.07 ! 55.77 ! 45.55 !

4.Other Receipts: Appr. ! 0.00 1 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 !Actual ! 3.40! 2.48! 1.73! 3.23! 10.80! 9.83! 20.86! 21.18! 16.14 !Actual/CPI! 3.40 ! 2.24 ! 1.38 ! 2.04 ! 5.57 ! 4.51 ! 8.16 ! 7.17! 4.78 !

5.Government Grants:Appr! 94.00 ! 94.00 ! 94.00 ! 94.00 ! 94.00 ! 94.00 ! 94.00 ! 94.00 ! 94.00 !Actual ! 102.90 ! 200.99 ! 139.93 ! 325.44! 400.39 ! 491.27 ! 549.26 ! 643.83 1 671.18 !Actual/CPI! 102.90 ! 181.24 ! 111.66 ! 205.78 ! 206.33 ! 225.24 ! 214.87 1 217.87 ! 198.89 !

6.Surcharge: Appraisal 1 0.00 ! 0.00 ! 22.13 ! 33.20 ! 39.83 ! 39.83 1 39.83 ! 39.83 ! 39.83 !Actual ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00! 0.00 ! 0.00 ! 0.00 !

!---------!---------!---------!---------!---------!---------!---------!---------!-----------!SIR-TOTAL: Appraisal ! 312.73 ! 397.05 ! 422.86 ! 427.14 ! 425.06 ! 429.08 1 434.18 ! 439.03 ! 444.07 !

Actual ! 348.90 ! 468.36 ! 478.59 ! 737.63 !1,049.04 !1,226.88 !1,431.34 !1,435.77 ! 1,294.97 !Actual/CPI! 348.90 ! 422.33 ! 381.90 ! 466.41 ! 540.60 ! 562.50 ! 559.93 1 485.87 ! 383.73 !

7.Other Receipts/loans ! !Appraisal ! 130.33 ! 382.80 ! 408.22 ! 319.55 ! 21.49 ! 19.17 ! 0.00 1 0.00 ! 0.00 !Actual ! 10.50 ! 98.49 ! 101.25 ! 149.83 ! 434.21 ! 679.26 ! 494.47 ! 562.43 ! 527.48Actual/CPI! 10.50 1 88.81 ! 80.80 ! 94.74 ! 223.76 1 311.43 ! 193.43 ! 190.33 1 156.31

!---------!---------!---------!---------!---------!---------!---------!---------!-----------!TOTAL INCONE: Appraisal ! 443.06 ! 779.85 ! 831.08 ! 746.69 4 446.55 4 448.25 ! 434.18 ! 439.03 ! 444.07 1

Actual ! 359.40! 566.85 ! 579.84 ! 887.46 !1,483.25 !1,906.14 !1,925.81 !1,998.20 ! 1,822.45Actual/CPI! 359.40 ! 511.14 ! 462.70 1 561.15 ! 764.36 ! 873.93 ! 753.37 ! 676.20 ! 540.04

Imounts to be recovered:! ! 1 ! ! ! !Actual ! 0.00! 341.25! 365.65 ! 423.13 ! 619.37 ! 131.46 ! 150.89 ! 250.34 ! 472.11 !Actual/CPI! 0.00 1 307.71 ! 291.78 ! 267.55 1 319.18 ! 60.27 ! 59.03 ! 51.06 ! 139.90 !

!-------!-------!------!-------!-------!------!-------!------------------!RIVISKD IICOnE ! ! ! ! ! ! ! ! !

Appraisal ! 443.06 ! 779.85 ! 831.08 ! 746.69 ! 446.55 ! 448.25 ! 434.18 ! 439.03 ! 444.07 !Actual 1 359.40 ! 908.10 ! 945.49 !1,310.59 !2,102.62 !2,037.60 !2,076.70 !2,149.09 ! 2,294.56 !Actual/CPI! 359.40 ! 818.85 ! 754.48 ! 828.70 !1,083.54 ! 934.20 ! 812.39 ! 727.26 ! 679.94!

!---------------------------------- .-.

- 38 -

MUNICIPILITY OF ?OIAlSINA-EIPENSES (FNg millions)

1984 ! 1985 ! 1986 ! 1987 ! 1988 ! 1989 ! 1990 ! 1991 ! 1992!-------!--------------!--------------!--------------!------------------!

bchcage Rate 18$/FKg ! 400.00 ! 500.00 ! 679.00 !1,070.00 !1,405.00 !1,604.00 !1,495.00 !1,710.00 ! 1,905.00 !Ctl ! 1.00 1.11! 1.25! 1.58! 1.94! 2.18! 2.56! 2.96! 3.37!

1. Services Appraisal ! 229.84 ! 253.91 ! 277.98 ! 277.98 ! 277.98 ! 277.98 ! 277.98 ! 277.98 ! 277.98Actual 1 319.07 ! 376.85 ! 330.85 ! 342.09 ! 612.84 7 180.66 7 177.61 !1,027.80 ! 914.45Actual/CPI! 319.07 ! 339.81 ! 264.01 ! 216.31 ! 315.82 ! 357.92 ! 304.20 ! 347.81 ! 270.97 !

2.Grauts 6 other Appr.! 2.82 ! 2.82 ! 2.82 ! 2.82 ! 2.82 ! 2.82 ! 2.82 ! 2.82 ! 2.82 !Actual ! 8.81 ! 13.95 ! 15.72 ! 123.93 ! 106.92 ! 77.60 ! 97.30 ! 21.60 ! 33.14 !Actual/CPI! 8.81 ! 12.58! 12.54 ! 78.36 ! 55.10 ! 35.58 ! 38.06 ! 7.31 ! 9.82 !

3.Investuuts Appraisal ! 169.01 ! 421.48 ! 446.90 ! 358.23 ! 60.17 ! 57.85 ! 38.68 ! 38.68 ! 38.68 !lctual ! 24.29 1 62.11 ! 15.76! 3.50 ! 59.65! 506.27 1 298.95 ! 99.11 ! 61.24!Actual/CPI! 24.29 ! 56.01 ! 12.58 ! 2.21 ! 30.74 ! 232.11 ! 116.95 ! 33.54 ! 18.15 !

4.Loau lepayments Appr.! 0.00 ! 0.00 ! 20.12 ! 36.76 ! 99.97 ! 178.50 ! 206.56 ! 186.44 ! 169.80 !Actual 1 0.00 ! 0.00 ! 0.00 ! 0.00 ! 25.00 ! 51.38 ! 314.54 ! 364.90 ! 363.40 !Actual/CUI! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 12.88 ! 23.56 ! 123.05 ! 123.48 ! 107.68 !

5. lo Curreat Appraisal! 0.00! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00 ! 0.00Act ual ! 0.00! 61.36! 32.55! 0.00 ! 1.79 ! 0.00 ! 0.00 ! 0.00! 0.00 !Ictual/CPI! 0.00 ! 55.33 ! 25.97 ! 0.00 ! 0.92 1 0.00 ! 0.00 ! 0.00 ! 0.00 !

MT U I St Appraisal! 401.67 ! 678.21 ! 747.82 ! 675.79 ! 440.94 ! 517.15 ! 526.04 ! 505.92 ! 489.28 !Actual ! 352.17 ! 514.27 ! 394.81 469.52 ! 806.20 !1,415.91 !1,488.40 !1,513.41 ! 1,372.23 !Actual/Ctl! 352.17 ! 463.72 ! 315.10 ! 296.88 ! 415.46 ! 649.17 ! 582.25 ! 512.14 ! 406.63

lot paild Ictul 1 0.00 ! 59.51 ! 30.08 ! 40.45 ! 37.52 ! 41.80 ! 50.51 ! 0.00 ! 49.24 !Actual/Ctl! 0.00 ! 53.66 ! 24.00 ! 25.58 ! 19.34 1 19.16 ! 19.76 ! 0.00 ! 14.59 !

31uSD KIPUSES '

Appraisal ! 401.67 ! 678.21 ! 747.82 ! 675.79 ! 440.94 ! 517.15 ! 526.04 1 505.92 ! 489.28 1lctual ! 352.17 ! 573.78 1 424.96 ! 509.97 ! 843.72 !1,457.71 !1,538.91 !1,513.41 ! 1,421.47 !Actual/CUI! 352.17 ! 517.39 ! 339.11 ! 322.46 434.79 ! 668.33 ! 602.01 ! 512.14 ! 421.22 !

ALAUCI lppraisal u 41.39 ! 101.64 1 83.26 ! 70.90 ! 5.61 1 (68.90)! (91.86)! (66.89)! (45.21)!letual ! 7.23 ! 52.58 ! 184.96 ! 417.94 ! 677.05 ! 490.23 ! 437.41 ! 484.79 ! 450.22 !Actaul/CtI! 7.23 ! 47.41 ! 147.59 ! 264.27 ! 348.90 ! 224.76 ! 171.11 ! 164.05 ! 133.41 !

R17ISD tALAICI, takiag accout of amounts to be paid aid to be recovered:

lppraisal u 41.39 ! 101.64 ! 83.26 ! 70.90 ! 5.61 ! (68.90)! (91.86)! (66.89)! (45.21)!Actual ! 7.23 ! 334.32 ! 520.53 ! 800.62 !1,258.90 ! 579.89 ! 537.79 ! 635.68 ! 873.09 !kctual/CPI! 7.23 ! 301.46 ! 415.37 ! 506.24 ! 648.75 ! 265.87 ! 210.38 ! 215.12 ! 258.72 !

- 39 -

6. C. PROJECT STUDIES

Studies Purpose Status ! lmpact-------------------------- ------------------------------!---------!------------------

!1. Final Design !For Project works !Completed! Good

!2. Land legislation Study !To improve taxation !Completed! Good

!3. SEIMAD Reorganization !To improve management !Completed! Good

4. FIHU Study !To establish FIHU !Completed! Good

!5. Traffic Study !To improve traffic in !Completed!No foolow up!Antananarivo ! !

I I I I

!6. BPU Study !To establish permanent !Completed!Creation of DCOU!urban coordination institution! land CTNDU

!7. Audit Reports !To control accounts of !Completed! Good-!Project agencies

…--------------------------!------------------------------!---------!------------------!Studies not forecast at appraisal

!----------------------------

I8. Toamasina Water Supply !To increase water production ICompleted!No follow up

!9. Economic Study of !To plan urbanization of !Completed! GoodA ntananarivo Region lAntananarivo Plain !

10. Reorganization Study !To improve operations of !Coopleted!No follow up! of Antananarivo !technical services! technical services !--------------------------------------------------------------------------------------

- 40 -

7. Status of Covenants

!SBCTION! DESCRIPTION !COMPLIANCE! COMMENTS

!1. DEVELOPMENT CREDIT AGRE M NT !!------------------------------- !!2.02(c)!Special Account in Central Bank ! Full !Transferred to a commercial bank !

!3.02 !Qualification of Consultants Full! !satisfactory to IDA

!3.03(a)!Project Account at Central Bank Full

!3.03(b)!Balance of project Account of almost !Not systematically! lat least FHg 150 sillion

!3.04(b)!Presentation of quarterly reports ! yes !Until March 1992I I I I

!3.06 llstablishment of Fill ! Full !in Oct.1987 instead of Dec.1985

23.07(a)!Implementation Agreements between ! Full !! !BPU and executing agencies !

!3.07(c)!Appointeent of BPU managers Full !

!3.08 !SEIMAD Institutional Audit ! Full WOnly partially isplemented

!3.09 !Training program for BPU F Full

!4.01(a)!Cost accounting system for BPU ! Full !I II

!4.01(c)!project Accounts Audit ! Full !!- - ------------------------------------------!---------------------------------!B. PROJECT AGREEMENT WITE ANTANANARIVO MUNICIPALITY !!-------------------------------------------------------!2.07 !Training program ! partial !Only training abroad completed

!3.02(a)!Non/replacement of retiring staff ! No !Not respected

!3.02(b)!Recruitment of municipal managers ! Full !

!3.03 !Real increases in municipal tazes ! Full !Particularly since 1989, but! ! ! !decreases in 1991 and 1992

!3.04 !Payment to JIRAMA within 3 months ! No !Ouly paid up to August 1990

!4.02 !Municipal accounts audited each FY ! Yes lAccounts not certified…--------------------------------------------!----------!---------------------------------

- 41 -

7. Status of Covenants

!SECTION! DESCRIPTION !COMPLIANCE! COMMENTS!-----------------------------------------------------------------------------------------!!C. PROJECT AGREEMENT WITH TOAHASINA MUNICIPALITY!------------------------------------------------ !!!2.07 !Training prograt ! Full !

!3.02 !reorganization of technical services! Full

!3.03 !Real increases in municipal taxes ! Partial !Particularly since 1989, but! ! ! !decreases in 1992

!4.02 !Municipal Accounts audited each FY ! Full !Significant isprovements

!--------------------------------------------!----------!---------------------------------!!D. PROJECT AGREEMENT WITH SEIMAD

!2.04 !SEIMAD obligations ! Yes ! Except for housing loans

13.01 !Qualified sanagement and staff ! Full !Staff was reduced

!4.02 ISEIMAD Accounts audited each FY ! Full lAccounts have deteriorated!--------------------------------------------!----------!---------------------------------!!E. PROJECT AGREIMENT WITH CENAN!-------------------------------!!!!3.01 !Qualified lanagement and staff ! Full !

3.04 !Recruitment of Chief of ! Full !! lEmployment Unit

4 I e W i

14.02 !CENlh Accounts audited each FY ! Full !Ieanesses in maintaining accoants!! I…………---------- ------- = -- - - --- - -

- 42-

8. A: Staff inputs (staff-veeks)

1978 1990 1992to 1982 1983 1984 1985 1986 1987 1988 1989 1991 1993

LOP 1.5 0.5 6.5 0.1 0.1

LIN? 108.9 38.2

LBNA 15.5 24.1

LIN 6.7

PUD 0.2 1.8 0.3 0.5

SPR 0.5 9.7 11.8 18.3 11.6 22.2 18.7 12.84.6

PCR

TOTALS: 110.4 54.2 38 11.5 11.9 18.7 12.1 22.2 18.7 17.4

This gives a total of 315.1 staff-weeks for the entire project cycle.

- 43 -

8. O: Missions Data-- ---------------- RatingStage of Month/ Days in Nuber of Specialization Number of OverallProject Cycle Year Field persons represented Staff-days Status

Identification 1 09/77 8 1 U 8 n/aIdentification 2 11/78 11 2 F.F. 22 n/a

Preparation 1 04/79 8 3 E.F.F 24 n/aPreparation 2 11/80 8 1 S. 8 n/aPreparation 3 04/81 10 3 E.E.U 30 n/aPreparation 4 07/81 11 3 E.E.U 33 n/a

Pre-appraisal 1 02/82 11 6 E.E.U.F.F.O. 66 n/aPre-appraisal 2 10/82 4 1 E. 4 n/aPre-appraisal 3 12/82 15 3 E.F.O. 45 n/a

Appraisal 06/83 17 5 E.U.F.O.O. 85 n/a

Supervision 1 07/84 8 3 E.L.Lo. 24 1Supervision 2 03/85 7 2 L.F. 14 1Supervision 3 11/85 8 2 E.F. 16 2Supervision 4 05/86 11 1 B. 11 2Supervision 5 11/86 11 3 E.F.U. 33 2Supervision 6 05/87 8 3 E.F.U. 24 2Supervision 7 12/87 5 2 E.F. 10 2Supervision 8 09/88 8 4 E.F.U.U. 32 2Supervision 9 02/89 17 3 F.U.I. 54 2Supervision 10 12/89 12 2 F.l. 24 2Supervision 11 06/90 11 2 F.I. 22 2Supervision 12 02/91 13 2 F.I. 26 2Supervision 13 02/92 12 2 F.l. 24 2Supervision 14 07/92 11 2 F.l. 22 2Supervision 15 01/93 10 2 F.I. 20 3Supervision 16 07/93 3 2 F.I. 6

PCR 07/93 8 1 1. 8 n/a

Total of Mission/Staff Days: 695

Key to specialization: E. EconomistF. Financial AnalystU. Urban Planner0. Organization SpecialistL. LawyerLo.Loan OfficerI. Engineer