AFRICAN DEVELOPMENT FUND Language: English Original: English

REPUBLIC OF LIBERIA

LABOR-BASED PUBLIC WORKS PROJECT

APPRAISAL REPORT

NB: This document contains errata or corrigenda (see Annexes)

HUMAN DEVELOPMENT DEPARTMENT OSHD October 2007

Table of Contents PROJECT INFORMATION SHEET, LIST OF ABBREVIATIONS, PROJECT MATRIX, EXECUTIVE SUMMARY (i-v) 1. ORIGIN AND HISTORY OF THE PROJECT 1 2. POST-CONFLICT RECONSTRUCTION AND DEVELOPMENT 1

2.1 Overview of the Post-Conflict Socio-Economic Situation 1 2.2 National Policy for Reconstruction and Development 2 2.3 Institutional Framework 2 2.4 Financing of Capacity Development for Reconstruction 2 2.5 Main Constraints to Reconstruction Efforts 3

3. INTERVENTION DOMAINS 3 3.1 Improving Road Accessibility 3 3.2 Improving Access to Basic Social Services 3 3.3 Capacity Building for Road Maintenance in Labour Based Methods 4

4. THE PROJECT 4 4.1 Project Concept and Rationale 4 4.2 Project Area and Project Beneficiaries 5 4.3 Strategic Context 6 4.4 Project Objective 6 4.5 Project Description 6 4.6 Environmental Impact 8 4.7 Project Costs 9 4.8 Sources of Finance and Expenditure Schedules 9

5. PROJECT IMPLEMENTATION 10 5.1 Executing Agency 10 5.2 Institutional Arrangements 10 5.3 Supervision and Implementation Schedules 11 5.4 Procurement Arrangements 11 5.5 Disbursement Arrangements 13 5.6 Monitoring and Evaluation 13 5.7 Financial Reporting and Auditing 13 5.8 Donor Co-ordination 14

6. PROJECT SUSTAINABILITY AND RISKS 14 6.1 Recurrent Costs 14 6.2 Project Sustainability 14 6.3 Critical Risks and Mitigating Measures 15

7. PROJECT BENEFITS 15 7.1 Economic Benefits 15 7.2 Social Impact Analysis 16

8. CONCLUSIONS AND RECOMMENDATIONS 16 8.1 Conclusions 16 8.2 Recommendations and Conditions for ADF Grant Approval 16

This report was prepared by Mr. Yero Baldeh, Senior Socio-Economist, OSHD.2(Ext. 3421), and Mrs. Ginette Nzau Muteta, Principal Socio-Economist, OSHD.1 (Ext. 2488). Any enquiries relating to the report may be directed to Mr. Sibry Tapsoba, Division Manager, OSHD.2 (Ext. 2150) or Mr. Thomas Hurley, Director, OSHD (Ext. 2046)

AFRICAN DEVELOPMENT BANK TEMPORARY RELOCATION AGENCY

B.P. 323 1002 TUNIS BELVEDERE Tel: (216) 71 333511 Fax: (216) 71351933

Email: afdb@afdb.org

PROJECT INFORMATION SHEET Date: October 2007

1. COUNTRY: Republic of Liberia 2. NAME OF PROJECT: Labor-Based Public Works 3. LOCATION: River Gee and Maryland Counties 4. BORROWER: The Government of Liberia 5. EXECUTING AGENCY: Ministry of Public Works P.O. Box 9011, Lynch Street, South, Monrovia, Liberia 6. PROJECT DESCRIPTION: The Project will consist of 3 components:

Rehabilitation of Socio-Economic Infrastructure Capacity Development for Infrastructure Maintenance Project Management

7. TOTAL COST: UA16.04 Million 8. BANK GROUP FINANCING: ADF Grant: UA15.24 Million 9. OTHER SOURCES OF FINANCE: GOL: UA0.80 Million

10. DATE OF APPROVAL: December 2007 11. ESTIMATED STARTING DATE AND DURATION: March 2008 for 3 years 12. PROCUREMENT: All procurement of goods, works and services financed by the Bank

will be in accordance with the Bank’s Rules of Procedure for the Procurement of Goods and Works or as appropriate, Rules of Procedure for the Use of Consultants.

13. CONSULTANCY SERVICES REQUIRED YES, for technical assistance, design

of civil works, institutional support and audit services

CURRENCY EQUIVALENT (October 2007) National Currency Unit: = Liberian Dollar (LRD) UA 1 = USD1.55665

LIST OF ANNEXES

I Map of Liberia II Environmental and Social Management Plan III Financial Management Arrangements IV Implementation Schedule V Provisional List of Goods and Services

ii

EXECUTIVE SUMMARY 1. Project Background Liberia’s 14 years of civil war has clearly undermined its human development and devastated the country’s infrastructure. To address this unfortunate situation, there is the need to rebuild infrastructure, human, institutional and societal capacities. Therefore, the Government of Liberia (GOL) with the support of its technical and financial partners, including the Bank Group, has recognized that the infrastructure rehabilitation and capacity challenges in Liberia have to be addressed as priorities. 2. Sector Goal, Project Objective and Brief Description

The sector goal is to contribute to the improvement of productive livelihoods and service delivery. The specific project objective is to improve capacities for infrastructure maintenance and local development. 3. Project Cost and Source of Financing Total project cost is UA16.04 million, of which the total African Development Fund (ADF) contribution amounts to UA15.24 million, or 95 percent of total project cost. The total ADF contribution will be provided as a grant and used to finance the project’s total foreign exchange costs and part of the local currency costs. A Government counterpart contribution of 5% of the total project costs, amounting to UA0.80 million is required. 4. Project Implementation

The Ministry of Public Works (MPW) will be the executing agency for the proposed project. The Special Implementation Unit (SIU) under the MPW will be responsible for the day-to-day management of the project. ILO and Liberia Agency for Community Empowerment (LACE) will be engaged to implement parts of the Project in conformity with specific responsibilities to be outlined in Delegated Management Contracts with GOL. 5. Conclusions and Recommendations The I-PRSP of Liberia identifies infrastructure rehabilitation and capacity building as key to the country’s recovery, economic growth and poverty reduction. Therefore, by focusing on these aspects, the project will address the very negative effects of the conflict on Liberia’s reconstruction and development. Therefore, it is recommended that an ADF Grant not exceeding UA15.24 million be granted to the GOL for the purpose indicated in this report, subject to the conditions stipulated in the Protocol Agreement. It is also recommended that the Government’s contribution to the proposed project be reduced to 5 percent of total project cost, in compliance with Bank Group ADF X Financing Policy Guidelines.

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LIST OF ABBREVIATIONS ADB African Development Bank ADF African Development Fund CDP Country Dialogue Paper CMC Contracts and Monopolies Commission DDC District Development Committee EC European Commission EPA Environmental Protection Agency ESMP Environment and Social Management Plan GEMAP Governance and Economic Management Assistance Program GOL Government of Liberia HIPC Heavily Indebted Poor Countries ICB International Competitive Bidding IDP Internally Displaced People ILO International Labor Organisation IMF International Monetary Fund I-PRSP Interim Poverty Reduction Strategy Paper JISN Joint Interim Study LACE Liberia Agency for Community Empowerment LCA Local Currency Account LEAP Liberia Employment Action Plan LIPA Liberia Institute of Public Administration LRD Liberian Dollar LRDC Liberia Reconstruction and Development Committee M&E Monitoring and Evaluation MCH Maternal and Child Health MDGs Millennium Development Goals MOF Ministry of Finance MOP Ministry of Planning and Economic Affairs MPW Ministry of Public Works NCB National Competitive Bidding NGO Non-Governmental Organization NPWP National Public Works Program PCCF Post-Conflict Country Facility PCR Project Completion Report PFMU Project Financial Management Unit PRSP Poverty Reduction Strategy Paper RFP Request for Proposal SC Steering Committee SES Senior Executive Service SIU Special Implementation Unit TMC Technical Monitoring Committee TOKTEN Transfer of Knowledge Through Expatriate Nationals TOR Terms of Reference UA Unit of Account of the ADB Group UN United Nations UNDP United Nations Development Program UNMIL United Nations Mission in Liberia USAID United States Agency for International Development WB World Bank WFP World Food Program

iv

LABOR-BASED PUBLIC WORKS PROJECT RESULTS-BASED MATRIX

Hierarchy of Objectives Expected Results Reach (Target Population)

Performance Indicators Indicative Targets and Time Frame Assumptions / Risks

Sector Goal: Contribute to the improvement of productive livelihoods and service delivery.

Longer-Term Outcomes: 1. Infrastructure rehabilitated and

maintained 2. Reduced unemployment 3. Reduced poverty.

Liberian population

1.1 Increased rate of rehabilitated and well

maintained roads 2.1 Reduction of the unemployment rate 3.1 Reduction of poverty incidence

Source: National statistics from the UN System, and other partners, PRSP

By 2015: 1.1.1 From the current 35% to 65% 2.1.1 From the current rate of 85% to

50% 3.1.1 From the current rate of 80% to

50%

The GOL with the support of its partners continues implementation of the I-PRSP and the subsequent PRSP’ objectives

Project Objectives: To rehabilitate socio-economic infrastructure and improve capacities for infrastructure maintenance.

Medium-Term Outcomes: 1. Increased number of primary and

feeder roads rehabilitated 2. Increased access to social

services 3. Improved capacities of MPW,

local contractors and communities to maintain roads using labor-based (LB) methods

4. Improved service delivery from MPW

MPW, 2 counties (RiverGee and Maryland), localcontractors, inhabitants ofthe 2 Counties, especially,women and unemployedyouth

1.1 Increased % of primary and feeder roads

rehabilitated and subject to sustainable maintenance

2.1 In creased % of access to social services 3.1 Reduction in the number of defective

works 4.1 A sustainable maintenance system based

on LB methods established

Source: MPW Reports, Supervision reports and Project Completion Report

1.1.1 From the current 25% to 45% by

2010

2.1.1 Reduction by 50% by 2010 3.1.1 An operational manual containing

standardized modalities of LB maintenance roads responding to ILO standards and field handbooks is accepted by the SC and released by end 2008

4.1.1 Increase the number of households with access to schools and health services by 10% by end 2010

Risk: Fragile and underdeveloped security apparatus

Mitigating measure: UNMILpresence and enhanced efforts toimplement reforms of securityinstitutions and reintegration of ex-combatants

Activities (Inputs)

1.Rehabilitate Fishtown – Harper Road

2. Rehabilitate selected schools and health facilities

3. Training of MPW, local contractors and communities in LB methods

Short-Term Outputs:

1.1 Fishtown – Harper Road rehabilitated

1.2 Bridges ad drainage points constructed

2.1 Selected schools and health facilities rehabilitated

3.1 MPW staff trained in planning, designing and supervision of maintenance contracts using LB methods

3.2 Small-scale local contractors selected on agreed upon criteria, trained on LB-based methods, project and contract management, and provided with the necessary

30 engineers & techniciansfrom MPW, 30 localcontractors, about 1500persons from the 2 targetedcounties, including at least450 women (30%)

1.1.1 Number of Km of roads rehabilitated and worker hours generated

1.2.1 Number of bridges and drainage oints constructed 2.1.1 Number of schools and health facilities

ehabilitated

3.1.1 % of all maintenance contracts in the country using LB methods designed and supervised by the MPW

3.2.1 Contractors trained and acting as trainees supervisors, setting out tasks, managing the workers and reporting the outputs

1.1.1.1 About 125 km of primary road rehabilitated creating over 270,000 worker hours by end 2010

1.2.1.1 About 4 bridges and 229 drainage points constructed by end 2010

2.1.1.1 20 schools and health facilities rehabilitated by end 2010

3.1.1.1 At least 50% by 2010

3.2.1.1 Thirty contractors trained and successfully assessed by June 2009

Risks:

(a) Low retention rate of trained civil servants

(b) Low absorptive capacity of local contractors to execute road rehabilitation and maintenance

(c) Lack of MPW’s capacity to

maintain the equipment provided

(d) Short-term nature of jobs

created

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Hierarchy of Objectives Expected Results Reach (Target Population)

Performance Indicators Indicative Targets and Time Frame Assumptions / Risks

4. Institutional support to MPW through provision of IT lab equipment, 3 dump trucks, and establishment of a M&E system BUDGET: ADF - UA15.24 M GOL - UA0.80M

equipment

3.3 Community trained to participate in LB roads maintenance

3.4 Successful and gender-sensitive demonstration of labor-based works

3.5 Staff of MPW, local contractors and communities exposed to best practices in LB roads maintenance

4.1 Enhanced design, engineering and planning capabilities of the MPW and improved monitoring and coordination of public works

20 persons selected from the MPW, local contractors and community, including at least 5 women and 5 youth MPW, donors involved in public works

3.3.1 Community maintenance groups established and trained in the project area

3.4.1Number of Km of roads rehabilitated using LB methods in the project area, where tools and tasks are fitted for women

3.4.2 Number of jobs created at least 30% of work force are women

3.4.3 Percentage of jobs created being equally paid, gender-wise

3.5.1 Improvement(s) of the implementation of the maintenance using lessons learnt from the study tours

4.1.1 % of all on-going public works

coordinated by MPW Source: (a) Disbursement records (b) MIS reports and returns (c) Quarterly progress reports

3.3.1.1 Sixty (60) groups established, comprised of 1500 persons including

3.4.1.1 At least 450 women participate in the LB maintenance works of 600 km of feeder road by end of 2010

3.4.2.1 More than 2,500 direct and indirect permanent jobs generated, by end 2010

3.4.3.1 Hundred (100%) by end 2010

3.5.1.1 At least one case reported in each county by 2010

4.1.1.1 At least 75% by end 2010

Mitigating measures:

(a) Broad based civil service reforms and a rolling training program with bonding features

(b) Training of contractors on technical, project and contract management skills and the setting up of a sustainable equipment support scheme

(c) Adequate budgetary

allocation and the development of preventive maintenance plan for the equipment acquired under the project

(d) More permanent demand

created by the development of the labor-based maintenance strategy of the MPW and in general, by local economic development efforts

1. ORIGIN AND HISTORY OF THE PROJECT 1.1 Liberia’s 14 years of civil war has clearly undermined its human development and devastated the country’s infrastructure. Liberia’s vital infrastructure such as roads, health and education facilities, water and electricity supply have been destroyed as a result of the conflict and lack of investment and maintenance. The newly established government has made progress in restoring some basic services and infrastructure, and in creating the mechanisms to support human rights, good governance, economic growth and public sector reforms. However, it is still handicapped by limited institutional and technical capacity and a lack of resources and equipment with which to implement its national reconstruction and development program. To address this unfortunate situation, GOL in its I-PRSP approved in 2006 has clearly identified the capacity challenge in Liberia as a priority area of attention, and in parallel, labor-based rehabilitation of infrastructure as one of the major means to rebuild the destroyed infrastructure and at the same time, create jobs in the context of the very high unemployment rate estimated at 85%. 1.2 Liberia fell into arrears with the Bank in 1984. The suspension occasioned the cancellation of the entire Bank Group active portfolio in the country amounting to a total net commitment of UA 94.1 million for 26 operations. Nevertheless, the Bank provided in 1999 and 2003 two emergency assistance grants, amounting to USD500,000 each. With a view towards preparing the ground for the resumption of normal operational activities in Liberia, the Board approved in October 2006 an Institutional Support Project of UA3 million for the rebuilding of national capacity in the area of good governance and economic management. A Country Dialogue Paper (CDP) which recommends the use of the Post Conflict Country Facility (PCCF) for arrears clearance was also approved the same month. 1.3 Following on the Bank’s dialogue mission to Liberia in November 2006 to discuss post-arrears clearance support to Liberia under ADF-X, the GOL submitted a request to the Bank for financing a project in support of the country’s labor-based National Public Works Program (NPWP) in December 2006. In response to this request, the Bank undertook a preparation mission for the project in January 2007 and an Appraisal Mission in August 2007. This report is the outcome of the project appraisal mission. 2. POST-CONFLICT RECONSTRUCTION AND DEVELOPMENT 2.1 Overview of the Post-Conflict Socio-Economic Situation 2.1.1 Owing to the economic, social, and physical destruction caused by the protracted civil conflict, Liberia finds itself deeply impoverished. In 2005, the country was counted among the world’s poorest with a GDP per capita of USD163. Apart from the consequences of the conflict, the economic collapse was directly linked to the high dependency of the Liberian economy on natural resources (iron ore, harvest timber, rubber plantations) that were negatively affected by the fall in prices since the 1970s and the illicit trade of gold and diamonds in the framework of the state collapse. Consequently, most Millennium Development Goals (MDGs) and other socio-economic indicators have recorded a continuous downward trend over the last decade. Available data shows that the proportion of Liberians living on less than USD1 a day increased from 55.1 percent in 1997 to 76.2 percent in 2001, life expectancy at birth is estimated at 47.1 years. The war led to the internal displacement of thousands of civilians and the exile of more than 1.5 million refugees, with more than 300,000 people still to be resettled.

2 2.1.2 Liberian women have been actively pursuing and promoting peace, human security, and the restoration of central authority in Liberia. They constitute today 31 percent of the Cabinet. However, they still have unequal access to education and public administration where in 2005 only 5.3 percent of members of Parliament and other public sector agencies were female, and in 1999, women's share of wage employment in the sectors outside of agriculture was just 11.4 percent. In the formal employment sector, women are concentrated in careers such as nursing, teaching, secretarial, and clerical work that pay less than professions dominated by men, and offer very few opportunities for training and advancement. 2.2 National Policy for Reconstruction and Development 2.2.1 After the coming in place of the new Government in early 2006, the GOL introduced a short-term 150-Days Action Plan, spearheaded by the Office of the President. In addition, the Government developed an Interim Poverty Reduction Strategy Paper (I-PRSP) that focuses on maintaining security and building peace; improving governance and the rule of law; revitalizing the economy; and rebuilding infrastructure to restore basic services. Capacity building as well as job creation and service delivery measures have been mainstreamed into each pillar of the I-PRSP. 2.2.2 The employment element of the I-PRSP is further elaborated in the Government’s Liberia Employment Action Program (LEAP). The LEAP provides a strategy that incorporates 5 key initiatives for immediate job creation: (i) boosting employment in public works projects, (ii) skills training, (iii) graduation of the informal economy and support to small and medium sized enterprises and cooperatives, (iv) labor statistics and labor market information and analysis, and (v) promoting social dialogue and strengthening labor administration. In the short term, the focus will be on increasing the employment intensity of the reconstruction effort, as is described in Key Initiative 1: Boosting Employment in Public Works Projects. In this regard, GOL prepared the labor-based National Public Works Program (NPWP) whose objective is to create stability in the country by the provision of work opportunities for 78,000 people between 2007 and 2009 in roads, public buildings and urban upgrading sub-sectors. The NPWP is intended to draw significant numbers of the unemployed into productive work, enhance the skills of workers and increase their income earning capacity. 2.3 Institutional Framework The GOL established the Liberia Reconstruction and Development Committee (LRDC) in February 2006 as the main body and mechanism to strategize, develop, coordinate and monitor the implementation of the national reconstruction and development program. The LRDC chaired by the President, consists of key GOL ministers and donor representatives and is organized around four pillars. The four pillars include: (i) Security; (ii) Economic Revitalization; (iii) Governance and Rule of Law; and (iv) Infrastructure and Basic Services. The latter, chaired by the Minister of Public Works, includes all infrastructure sectors. The LRDC is also in charge of coordinating and monitoring the implementation of the I-PRSP. 2.4 Financing of Post-Conflict Reconstruction and Development

Donors play a major role in the financing of public works in Liberia which consists essentially of emergency works. Ongoing interventions include those shown in Annex VIII. The United Nations Mission in Liberia (UNMIL) is playing a key role in securing stability in the country and operates as a direct counterpart to the Government. In addition to a peace

3 keeping role, it coordinates the various UN agencies working in development and humanitarian relief such as UNDP, UNOPS, UNICEF, UNHCR, WFP and ILO. Furthermore, it is also involved in road emergency works given the fact that the lack of access and bad roads conditions throughout Liberia presents major obstacles to humanitarian and recovery assistance. Major donors active in the Liberian public works program include the World Bank, European Commission and USAID, Britain (DFID), Sweden (SIDA) and the Netherlands (through ILO). There are also many NGOs active in the program such as German Agro Action and the Danish Refugee Council’s work on labor-based roads in the south of the country. 2.5 Main Constraints to Reconstruction Efforts Some of the key constraints faced by GOL for its reconstruction efforts include: (i) poor state of infrastructure especially key roads and bridges that have become impassable and as a result limiting access to the interior, especially in the remote south-east; (ii) limited capacity to undertake all the reconstruction efforts and implement the necessary reforms agreed upon within the I-PRSP due to serious losses in experienced and competent management and technical level staff; and (iii) high unemployment rates, especially for the ex-combatants, who has limited employment opportunities in the formal sector. 3. INTERVENTION DOMAINS 3.1 Improving Road Accessibility

Much of the country’s minimal road infrastructure has fallen into a state of serious disrepair or has been completely lost. The roads, especially in the south-eastern counties, are muddy and difficult to use even during the dry season. Bridges on the dirt roads are made of logs, or logs and planks and are particularly hazardous in south-eastern counties. Many bridges and culverts were washed away, collapsed or are severely damaged. The country’s very few paved roads are full of potholes and the rest of the road network is dirt. With less than 7% of the roads paved, most of the road network in Liberia is unpaved and made out of local lateristic materials. During the rainy season, segments of the rural roads become partially or completely unpassable causing not only the substantially higher transport costs of passengers and cargo, but also resulting in total isolation of adjacent communities. Even, urban roads in the central business district of Monrovia are in a very poor state especially at the end of the rainy season due to months of heavy rain and flooding. Therefore, GOL has accorded top priority to improving road accessibility in order to: (i) encourage and accelerate the process of social and economic rehabilitation of the affected populations; (ii) provide employment opportunities; and (iii) enhance market access for rural communities. 3.2 Improving Access to Basic Social Services

Despite positive growth trends, the poverty and social situation remains dire. A recent survey on poverty conducted by the UNDP using the poverty line of one dollar a day shows that roughly 80 percent of all households are considered poor. Access to social services remains very low. It is estimated that only 42 percent of the population has access to health care facilities and over 50 percent of the children and youth are out of school, with 70 percent of the schools destroyed during the war. The closure of internally displaced persons (IDP) camps and withdrawal of humanitarian relief service providers is expected to further reduce the level of social services delivered. It is generally recognized that improving education and health outcomes is key to rebuilding Liberia’s human resource capacity and reducing poverty.

4 3.3 Capacity Building for Road Maintenance Using Labor-Based Methods 3.3.1 As mentioned in paragraph 2.2.2, GOL’s reconstruction strategy focuses on the use of labor-based methods for infrastructure rehabilitation and maintenance in order to maximize the job creation potentials of its reconstruction program. However, MPW has no experience in designing, managing contracts and overseeing labor-based works. As in most institutions in Liberia, the MPW’s capacity has been destroyed and it has lost its ability to effectively manage its respective functions. The lack of vital equipment, years of skills atrophy, and very little training limits the capacity of the MPW to carry out most of the tasks associated with reconstruction efforts. MPW’s human resource and institutional constraints are compounded by inadequate logistical equipment, notably the lack of an appropriate Information Technology (IT) infrastructure to facilitate the establishment of a functional monitoring and evaluation system, and support the planning processes and informed decision-making of MPW senior staff. The capacity of the MPW needs to be reinforced accordingly. 3.3.2 The local construction industry has also been significantly impacted by the brain drain, disinvestments and destruction of equipment due to the conflict. The industry is re-emerging and as at October 2007 about 135 national contractors are registered under the Association of Liberia Construction Contractors (ALCC). The majority (101) is composed of small-scale contractors with contract value capacity not exceeding USD500 000, and are mostly newly established companies set-up by young graduates, returning refugees and demobilized combatants searching for opportunities in the booming construction sector due to the ongoing reconstruction efforts. Most of them lack basic equipment and have not been exposed to labor-based works. Communities, mostly with little or no technical skills, living along the road corridors constitute the work-force of labor-based road maintenance. Their involvement in the reconstruction efforts is a way of successfully revitalizing communities as a whole but with particular attention to the most seriously war-affected segments of the population such as ex-combatants, returning refugees and internally displaced persons (IDPs). It is also a way of fostering local ownership of the community assets within their areas. Given this context, there is a need to re-build the institutional capacity not only for MPW, but also those of the small scale local contractors and communities. 4. THE PROJECT 4.1 Project Concept and Rationale 4.1.1 Despite the continued increase of the GDP in 2006, the economic recovery process has been quite slow and improvements in living standards and job creation have not been significant. In recognition to the correlation between youth unemployment and security, there is an urgent need for job creation, and labor based works in road rehabilitation is one of the key tools in this regard. As mentioned in the recent Economic Commission for Africa report on “Meeting the Employment Challenge in Africa” which was endorsed by the African Ministers of Finance, labor-based road construction and rehabilitation programs are quick ways to promote employment in the short-term because these programs have low requirements in terms of capital but high return in terms of labor employed. The design of this project is influenced by this premise. In order not to compromise the quality of the works, labor substitution for machinery will be applied only where it is technically and economically feasible to do so. In this regard, the proposed project has been designed to include an appropriate mix of labor and equipment.

5 4.1.2 The training and skill enhancement for the use of labor-based approaches can only be done through demonstration works, thus offering opportunities for learning by doing which has the dual added advantages of rehabilitating the infrastructure and creating jobs in the process. The design of the project is also influenced by GOL’s recognition of the need to outsource road maintenance to the private sector and road side communities based on successful experiences in Ghana, Burundi, Rwanda, and Sierra Leone. 4.1.3 Finally, the project design takes into account the Paris Declaration on Aid Effectiveness, which lay greater emphasis on partnerships and the strengthening of national systems through the delivery of development assistance. Lessons Learnt 4.1.4 Lessons learnt on the delivery of assistance to post-conflict countries have been taken into account into the proposed project. These include: (i) the need to strengthen the mechanism for effective transfer of skills between long-term Technical Advisors (TAs) and the local counterparts; (ii) the need for greater utilization of national expertise and training institutions; and (iii) the need to provide additional technical assistance to sector ministries to enable them to contribute to project and program formulation and implementation. In addition, experience in all post-conflict countries highlights the importance of broad partnership and efficient coordination among agencies to ensure rapid and effective implementation of emerging projects. These focus particularly on rebuilding service delivery capacity as well as the rehabilitation of the country’s socio-economic infrastructure and the promotion of local economic development. 4.1.5 Other generic implementation issues taken into account include delays in the fulfillment of conditions prior to disbursement, including the establishment of the Project Implementation Unit (PIU); inadequate knowledge of PIU staff of Bank procurement rules and financial procedures; lack of an appropriate accounting system; and weak monitoring and evaluation capacity. With a view to these lessons, the proposed project will be implemented by the Special Implementation Unit (SIU) under the MPW that will be strengthened by experienced staff, including a Monitoring and Evaluation expert. In line with Government practice, the Project Financial Management Unit (PFMU) in the Ministry of Finance (MOF) that has a sound accounting system in place will be in charge of the financial management of the project. Furthermore, the number of conditions prior to disbursement has been rationalized. 4.2 Project Area and Project Beneficiaries 4.2.1 The project area includes two counties located in Southeast Liberia – River Gee and Maryland (see Annex I). These counties have been largely neglected in terms of aid flows, mainly due to the inaccessibility of the region. Despite quick-fix repairs made by UNMIL, the area remains practically isolated from the rest of the country during the rainy season. Unemployment is also a serious problem across these counties. Petty-trading, casual laboring and small scale farm to market agriculture activities constitute the economic life-blood of these counties, where community projects targeting youth and women offer limited employment opportunities. 4.2.2 Beneficiaries of the project will include: (i) local population living along the Fishtown – Harper Road; (ii) transport owners; (iii) MPW staff, which will be trained to use labor-based methods in the construction and maintenance of roads, (iii) staff of existing small scale local construction enterprises that will receive (a) training in technical, managerial and

6 business issues relative to infrastructure construction and maintenance using labor-based methods and (b) basic labor-based equipment; and (iv) the 60 community maintenance groups (including a significant number of women) to be formed, trained and engaged by the project for demonstration of the labor-based approach, and earn an income in the process. 4.3 Strategic Context The proposed project is in line with GOL’s I-PRSP which identifies institutional capacity building and the rebuilding of critical infrastructure as essential in supporting the country’s recovery, economic growth and poverty reduction. The proposed project is also consistent with the Bank Group Strategic Plan 2003-2007, the Fragile States Strategy (under review), and the ADF-X financing policy. Finally, the project is in conformity with the Bank Dialogue Paper for Liberia, approved in October 2006 and with the World Bank – ADB Joint Interim Strategy Note (JISN) approved in September 2007. 4.4 Project Objective

The sector goal is to contribute to the improvement of productive livelihoods and

service delivery. The specific project objective is to rehabilitate socio-economic infrastructure and improve capacities for infrastructure maintenance. 4.5 Project Description 4.5.1 The project will have three components, namely Rehabilitation of Socio-Economic Infrastructure; Capacity Development for Infrastructure Maintenance; and Project Management. Component I: - Rehabilitation of Socio-Economic Infrastructure 4.5.2 This component will have two sub-components: (i) Fishtown – Harper Road Rehabilitation and (ii) Social Infrastructure Rehabilitation. Sub-Component I: Fishtown – Harper Road Rehabilitation 4.5.3 This sub-component will focus on the rehabilitation of the Fishtown – Harper Road. This is the primary road that links the Southeast (Maryland and River Gee Counties) with the rest of the country. The road from Monrovia to Fishtown has been rehabilitated by GOL with support from its partner donors. Therefore, this sub-component will seek to complete the road link to Harper city. The 125 km two lane gravel road will be rehabilitated to all weather access level including upgrading and repair of bridges and culverts. The road works shall include earthworks, construction or rehabilitation of short span reinforced concrete bridges of standard design, installation of new pipe and box culverts as well as repairs and extension of culverts. 4.5.4 One consulting firm will be recruited to undertake: (i) the engineering design study of the road; (ii) preparation of bidding documents; (iii) pre-contract services (assistance during tendering process until award of contract); and (iv) supervision of works and Defects Liability Period. 4.5.5 In order to optimize the job creation potentials of the project, the road works will apply labor-based methods where feasible. In this regard, communities living along the road side will be recruited by the contracted firm(s) working on the road to carry out the following

7 tasks amenable to the use of labor-based methods: (i) construction of concrete drains; (ii) compaction of culverts and bridges; and (iii) spreading of gravel material within 3km from towns. Labor-based equipment/hand tools will be provided by the project to the participating communities. The contracts to be signed with the contractor(s) will make provisions for these labor-based elements. Sub-Component II: Social Infrastructure Rehabilitation 4.5.6 This sub-component will focus on providing an enabling environment and ensure accessibility to quality basic education and health care services by rehabilitating selected facilities along the road corridor noted to be in a deplorable state. In this regard, the following activities will be undertaken: (i) rehabilitation of 10 existing school facilities and (ii) rehabilitation of 10 existing health facilities (with priority given to Maternal and Child Health (MCH) units. Civil works will include provision of appropriate water and sanitation facilities and a staff house for the Medical Officer in each of the 10 health facilities. The standard designs for the classroom blocks and health facilities (MCH units) have been completed. 4.5.7 In addition to the civil works, all the rehabilitated and upgraded facilities (10 schools and 10 health centres) will be provided with furniture and equipment in line with the recommended standards. Component II: - Capacity Development for Infrastructure Maintenance 4.5.8 This component will focus on building the capacities of the MPW and small scale contractors, and the establishment of community maintenance groups knowledgeable in the use of labor-based methods for routine and recurrent maintenance. The component will support the demonstration of feeder road rehabilitation using labor-based methods, with the aim of introducing and including such an approach in the longer term maintenance strategy of the MPW. 4.5.9 A maintenance specialist will be recruited for a three-person months duration to develop a Maintenance Operations Manual which will specify: (i) the roles and responsibilities of the several actors involved in the road maintenance; (ii) the guidelines for the engagement of the communities in the labor-based works and for the procurement of the services of the small scale contractors; (iii) quality assurance mechanisms; (iv) remuneration and payment procedures; and (v) administrative procedures for the proposed maintenance system, including leasing arrangements for equipment provided by MPW. The specialist will also develop maintenance field handbooks to be used by MPW, county officials and local communities in labor-based maintenance works. 4.5.10 Thirty (30) engineers and technicians of MPW drawn from the national and county levels will be trained in maintenance planning, design and supervision of maintenance contracts. Thirty (30) small scale local contractors will be trained in the use of labor-based methods for the maintenance of the road network and public buildings and contract administration in general. The selection of these contractors, subjected to approval by the Bank, will be through an open and transparent competitive process under the guidance of ILO based on the following criteria: (i) proven performance in road maintenance for at least 2 years; (ii) Liberian nationality; (iii) qualification and experience of the contractor and his/her key staff, (iv) commitment to labor-based methods and its guiding principles, (v) working capital; and (vi) compliance with GOL legal and regulatory requirements.

8 4.5.11 In view of the resource capacity constraints in the local construction industry, ten (10) sets of labor-based equipment made up of a tractor, a pedestrian roller, trailer and a towed grader estimated at UA38,000 per set will be procured and given to the MPW. The MPW will assume full responsibility and ownership for this equipment during project implementation and will be leasing it out to the trained contractors engaged in the demonstration works. The leasing arrangements will be adequately defined in the Maintenance Operations Manual. 4.5.12 The project will establish and train at least sixty (60) community maintenance groups, which will include war-affected inhabitants of rural communities (especially the youth and women) living along the feeder roads selected for demonstration in the project influence area, in accordance with the Maintenance Operations Manual described in 4.5.3. Each maintenance group will comprise of about 25 workers, of whom at least 30% would be women, to carry out the following demonstration works on a feeder road stretch of about 10kms: (i) grass and bush clearing; (ii) culverts cleaning; (iii) minor repairs to culverts; (iv) pothole filling; (v) road patching (with gravel); and (vi) stock piling of gravel for road patching. 4.5.13 Two (2) study tours will be organized to visit successful infrastructure maintenance schemes within the West African region. Participants in the study tours will include selected MPW staff and representatives from small scale local contractors and community maintenance groups. Number of people in each tour should not exceed ten (10). 4.5.14 Activities geared towards strengthening the institutional capacity of MPW will also be supported. These will include (i) provision of Information Technology Laboratory equipment to enhance the design, engineering and planning capabilities of the ministry; (ii) provision of three dump trucks (one for each county) for the demonstration road works; and (iii) recruitment of a monitoring and evaluation specialist for 6 person-months to assist the Ministry in putting in place and managing a consistent monitoring and evaluation (M&E) system to make the ministry more results-oriented. Component III: - Project Management 4.5.15 The day-to-day management of the project will be the responsibility of the existing Special Implementation Unit (SIU) established under MPW by GOL with support from the World Bank. The SIU will be supported with funds for communication, transport, office supplies and consumables in keeping with increased operating costs due to the project. A transport engineer, a procurement officer, a monitoring and evaluation officer, and a gender specialist will be recruited under the project for 30 months. In addition, the MPW will designate a Project Coordinator, at the level of deputy project manager who will be responsible for coordinating the activities of this project within the SIU institutional framework. This has been included as a condition precedent to first disbursement. 4.6 Environmental Impact

In accordance with the Bank's environment and social safeguard policies, the project is classified as Category 2. It is estimated that the project’s labor-based road works will not generate significant negative impacts, since they will be small to medium in size, simple in terms of construction, and executed within the current right of way, so they will not require the acquisition of land or population relocation. The environmental analysis completed confirm that the potential environmental and social impacts of the selected roads will be direct, temporary, localized, and relatively insignificant, and will require the execution of specific management plans for the work activities. An Environment and Social Management Plan (ESMP) prepared by GOL, in collaboration with the Environmental Protection Agency is shown under Annex II.

9 4.7 Project Costs

The total cost of the project, net of taxes and customs duties, is estimated at UA16.04 million, of which UA5.57 million in foreign exchange and UA10.47 million in local currency. Physical contingencies are set at 6% of base costs for all categories of expenditure. Price contingencies are estimated at 5% inflation per year both for foreign and local currency costs since the project is priced in USD. The provisional list of goods and services is shown in Annex V. A summary of project cost estimates is given below in Tables 4.1 and 4.2.

Table 4.1: Summary of Project Costs by Component USD million UA million F.E % COMPONENT F.E. L.C. Total F.E. L.C. Total of Tot

I. Rehab. Of Socio-Econ Infrastructure 6.042 8.446 14.488 3.882 5.425 9.307 24% II. Capacity Development for Inf. Maint 1.617 5.177 6.794 1.038 3.326 4.364 0% V. Project Management 0.136 1.010 1.146 0.087 0.649 0.736 1%

Base Costs 7.795 14.633 22.428 5.007 9.400 14.407 25% Physical Contingencies 0.467 0.878 1.345 0.300 0.564 0.864 1% Price Contingencies 0.413 0.775 1.188 0.265 0.498 0.764 1% Total Project Costs 8.675 16.286 24.961 5.572 10.463 16.035 27%

Table 4.2: Summary of Project Costs by Category of Expenditure

USD million UA million F.E % CATEGORY F.E. L.C. Total F.E. L.C. Total of Tot

A) Goods 1.723 0.459 2.182 1.107 0.295 1.402 2% B) Works 5.552 9.749 15.301 3.567 6.263 9.830 22% C) Services 0.520 3.563 4.083 0.333 2.289 2.622 1% D) Operating Expenses 0.000 0.817 0.817 0.000 0.525 0.525 0% E) Miscellaneous 0.000 0.045 0.045 0.000 0.029 0.029 0% Base cost total 7.795 14.633 22.428 5.007 9.401 14.408 25% Physical contingencies 0.467 0.878 1.345 0.300 0.564 0.864 1%

Price Contingencies 0.413 0.775 1.188 0.265 0.498 0.763 21% Total project cost 8.675 16.286 24.961 5.572 10.463 16.035 27%

4.8 Sources of Financing and Expenditure Schedule 4.8.1 The project will be financed jointly by the ADF (95%) and the Government (5%) as shown in Table 4.3. The ADF’s contribution, with a grant of UA15.24 million will meet 100 % of all foreign exchange costs and 92% of local costs. The Government will finance 8 % of the local costs, estimated at UA0.80 million. The reduction of the Government’s contribution to 5 percent is justified, given its persisting fiscal strain and the willingness to reduce the risk of a stalled project start, in accordance with the Bank Group ADF X Financing Policy Guidelines, approved in May 2005.

Table 4.3: Sources of Finance (UA mill.) SOURCE F.E. % L.C. % TOTAL % ADF 5.57 100.0 9.67 92.35% 15.24 95.0 GOVERNMENT 0.00 0.0 0.80 7.65% 0.80 5.0 TOTAL 5.57 10.47 16.04

Table 4.4: Financing Plan by Source of Finance and Component (UA mill.) ADF GOL. Total Components F.E. L.C. Tot. L.C. F.E. Tot. Costs % Tot. Rehab. of Socio-Econ Infrastructure 4.31 5.63 9.94 0.41 0.00 0.41 10.35 65% Capacity Development for Inf. Maint 1.15 3.52 4.67 0.19 0.00 0.19 4.86 30% Project Management 0.11 0.52 0.63 0.20 0.00 0.20 0.83 5% Total 5.57 9.67 15.24 0.80 0.00 0.80 16.04 100%

10

Table 4.5: Financing Plan by Source of Finance and Categories of Expenditure (UA mill.) ADF GOL. Total F.E. L.C. Tot. L.C. F.E. L.C. Tot. % Tot.

A. Goods 1.232 1.328 1.560 0.000 1.232 0.328 1.560 10% B. Works 3.969 6.504 10.473 0.467 3.969 6.971 10.940 68% C. Services 0.371 2.369 2.740 0.179 0.371 2.548 2.919 18% D. Operating Expenses 0.000 0.430 0.430 0.154 0.000 0.584 0.584 3% E. Miscellaneous 0.000 0.032 0.032 0.000 0.000 0.032 0.032 1%

Total Project cost 5.572 9.663 15.235 0.800 5.572 10.463 16.035 100% 4.8.2 Tables 4.4 and 4.5 above show the financing plan by component and by category of expenditure and source of financing respectively.

5. PROJECT IMPLEMENTATION 5.1 Executing Agency

MPW will be the executing agency for the proposed project. A Project Steering Committee (PSC), chaired by the Deputy Minister of MPW responsible for Technical Services, and consisting of a representative from each of the following ministries: Finance; Labor; Youth; and Internal Affairs will be responsible for overall project oversight and policy guidance. ILO and LACE will also be represented at the PSC. The Special Implementation Unit (SIU) under the MPW will be responsible for the day-to-day management of the project. Furthermore, a Technical Monitoring Committee (TMC) will be formed at each of the counties, and will include the County Superintendent, MPW Resident Engineer and relevant district agencies in order to facilitate the local level monitoring of project implementation and coordination with other ongoing county initiatives. ILO and the Liberia Agency for Community Empowerment (LACE) will be engaged to implement parts of the Project in conformity with specific responsibilities to be outlined in Delegated Management Contracts with GOL. 5.2 Institutional Arrangements 5.2.1 The SIU, through strengthened staff complement (Project Coordinator, Road Engineer, Procurement Specialist, Monitoring and Evaluation Specialist and Gender Specialist) will oversee the day-to-day implementation of the project. It has an appropriate skills mix, including technical, project management, fiduciary as well as environmental and safeguard skills to carry out its functions. This capacity will be further enhanced by the multi-disciplinary consulting firm being recruited by GOL and World Bank to strengthen its project implementation capacity. The SIU will be responsible for: (a) assuring steady progress of the procurement in accordance with annual work plans and accompanying implementation schedules; (b) ensuring satisfactory implementation of activities included in all contracts; (c) ensuring that a high ethical standard and transparency is maintained throughout the entire project implementation; (d) preparing the quarterly progress reports and annual audit reports; and (e) monitoring and evaluating performance indicators and envisaged results achieved. 5.2.2 The SIU through MPW will delegate the implementation of Sub-component II of Component I to LACE, which is an autonomous agency, created by GOL for the implementation of community-based socio-economic infrastructure. The decision to use LACE for the implementation of this component is justified by (i) their experience in the implementation of socio-economic infrastructure, (ii) the technical backstopping provided to the agency by the World Bank, (iii) the availability of adequate staff level with appropriate skills-mix for the implementation of the component, and (iv) their operational presence in the two project counties.

11 5.2.3 The SIU through MPW will delegate the implementation of Component II to ILO. This delegation, which is in line with the existing Cooperation Agreement between the Bank and ILO, is justified by ILO’s extensive experience in the use of labor-based methods in post-conflict countries and the Bank’s successful collaboration with the institution in several other ADF countries. In addition, ILO will be supporting from their ongoing project the services of a full-time Technical Advisor in labor-based methods (for overseeing the day-to-day implementation of this component) for the first 15 months of this project. Moreover, as part of its parallel ongoing project, ILO will provide technical assistance in the implementation of the recommendations of the feasibility study on an equipment scheme for small scale local contractors. 5.2.4 The financial management responsibilities of the project will be in the PFMU, in line with the GOL decision to centralize the financial management tasks associated with donor projects. Coordination between the SIU and the PFMU will be based on the Memorandum of Understanding signed between the MPW and the Ministry of Finance (MOF), defining the responsibilities of and levels of service required from both parties. An outline of these responsibilities is shown on Annex III. The PFMU has a unit manager with international accounting qualifications acceptable to the Bank, project accountant and an internal auditor. 5.3 Supervision and Implementation Schedules

The project will be implemented over a period of 3 years (36 months) from effectiveness of the grant, assumed to be in the first quarter of 2008. The implementation schedule is presented in Annex IV. At least two supervision missions with an appropriate skills-mix will be undertaken every year and a mid-term review will be carried out in the middle of 2009. 5.4 Procurement Arrangements 5.4.1 Procurement arrangements are summarized in Table 5.1 below. All procurement of goods, works and services financed by the Bank will be in accordance with the Bank’s Rules of Procedure for Procurement of Goods and Works or, as appropriate, Rules of Procedure for the Use of Consultants, using the relevant Bank Standard Bidding Documents.

5.4.2 Civil Works (UA10.94 Million): The civil works for the Fishtown – Harper Road (UA8.29 million) will be carried out under International Competitive Bidding (ICB). The works will be packaged into two lots with an average value of UA4.15 million per lot around 62.5 km of road distance. The contractors will be permitted to bid for either one lot of a combination of the two as long as they have the capabilities to do so. This will allow for international competition whilst encouraging the participation of national contractors as well. 5.4.3 The civil works for the social infrastructure (UA1.01 million) will be carried out under National Competitive Bidding (NCB) packaged into four lots with an average value of UA25.25 million per lot. The demonstration works on labor-based methods (UA1.63 million) will be carried out in accordance with the Maintenance Operations Manual. Individual contracts for the demonstration works will be in small lots with the value of each contract not exceeding UA 0.20 million.

12 Table 5.1 : Procurement Arrangements (UA mill.)

CATEGORIES ICB NCB OTHERS SHORTLIST TOTAL

CIVIL WORKS: 10.94 1.Fishtown –Harper Road Rehab 2.Social Infrastructure Rehab 3.Demonstration works on Feeder Roads

8.30[7.92] 1.01[1.01]

1.63 [1.54]

8.30[7.92] 1.01[1.01] 1.63 [1.54]

GOODS: 1.57 4.Social Infrastructure Equipment 5.Equipment for Private Contractors 6.Equipment for ILO 7.Vehicles 8.IT Lab Equipment 9.Dump Trucks 10.Office & general equipment

0.32[0.32]

0.15[0.15] 0.15[0.15]

0.56 [0.56]0.11 [0.11]

0.13[0.13] 0.15[0.15]

0.32[0.32] 0.56 [0.56] 0.11 [0.11] 0.15 [0.15] 0.15[0.15] 0.13[0.13] 0.11[0.15]

CONSULTING SERVICES & TRAINING: 2.91 11.Design and Supervision Fees 12.LACE Management Fees 13.ILO TA Services for labor-based works 14.Community Maintenance Training 15.Short-Term Consultancy Services (inc. training). 16.PMU services(inc. audit)

0.23[0.23] 0.17 [0.17]1.39 [1.30]

0.23[0.23]

0.51[0.51] 0.38[0.30]

0.23[0.23] 0.23[0.23] 0.17 [0.17] 1.39[1.30] 0.51[0.51] 0.38[0.30]

OPERATING COSTS: 0.59[0.43] 0.59[0.43] MISCELLANEOUS 0.03[0.03] 0.03[0.03] TOTAL 8.30[7.92] 1.63[1.63] 4.99[4.65] 1.12[1.04] 16.04[15.24]

* Amounts in brackets are financed by the Fund.

Table 5.2: Other modes of Procurement Procedure Goods/Services Direct Purchase (i) TA services for labor-based works – ILO; (ii) LACE (iii) Project Vehicles (7) – IAPSO International Shopping Equipment for (i) Private Contractors; (ii) ILO; (iii) MPW Trucks National shopping (i) Office & general equipment ; (ii) Miscellaneous

5.4.4 Goods (UA1.57 million):NCB will be used for the procurement of: (i) equipment and furniture (UA0.32 million) for the social infrastructure and (ii) IT Lab equipment (UA0.15 million). International shopping mode will be used for: (i) labor-based and office equipment (UA 0.67 million) by ILO and (ii) three (3) dump trucks (UA0.13 million) by SIU. Seven (7) project vehicles valued at UA0.15 million will be procured directly from IAPSO. National shopping will be used for the procurement of general office equipment (UA0.15 million). Given the small size of the contracts, this is the most efficient and economical way of procuring these goods. 5.4.5 Consulting Services and Training (UA2.91 million): Management services from LACE will be procured directly at a value of UA0.23 million. This method is justified by the reasons explained under section 5.2.2 above. Under Component II, Technical Advisory services in labor-based maintenance valued at UA0.17 million for 18 person-months will be procured directly from ILO. This method is justified by the reasons explained under section 5.2.3 above. Community Maintenance Training valued at UA1.39 million, will be procured in accordance with the Maintenance Operations Manual approved by the Bank. This will be packaged into small lots for the 60 community maintenance groups to be formed and engaged in the demonstration works. Other services valued at UA1.12 million will be procured through short-listing following the procedure of technical quality with price consideration. These include: the services for a design & supervision consultant, contract management expert, a maintenance specialist, a monitoring and evaluation specialist, external auditors, and PMU staff (Monitoring and Evaluation expert, Procurement Expert, Transport Engineer and Gender Expert). The Project Co-ordinator for the project will be designated by GOL through Direct Negotiation subjected to the Bank’s No Objection.

13 5.4.6 Operating Costs (UA0.59 million): All items financed under operating costs for project management (UA 0.59 million) will be procured in accordance with Government procedures acceptable to the Fund. 5.4.7 Miscellaneous (UA0.03 million): All items financed under operating costs for project management (UA 0.03million) will be procured in accordance with Government procedures acceptable to the Fund. 5.4.8 The text of a General Procurement Notice (GPN) has been discussed with the government and will be finalized at negotiations. The following documents are subject to review and approval by the Bank before promulgation: Specific Procurement Notices; either shortlists and Requests for Proposals (RFP) including TORs for consultancy services and training institutions; Lists, Designs, Specifications, Tender Documents, Tender Evaluation Reports; and Draft Contracts. 5.5 Disbursement Arrangements

Disbursement will be by Direct Payment and Special Account. Under the Special Account method, GOL will be required to open and maintain, on terms and conditions acceptable to the Bank, a foreign currency denominated special account into which disbursements of the grant would be deposited. For the first disbursement, GOL will provide the Bank with a detailed work program and provisional budget for the activities to be financed over a four-month period. For the replenishment of the special account, GOL will provide a statement of expenditure showing that the previously disbursed amount had been utilized up to at least 50 per cent, together with the activities to be financed with the requested replenishment. GOL will ensure that all documents supporting disbursements on the project are well kept and will be made available to ADF supervision teams and external auditors. 5.6 Monitoring and Evaluation

Monitoring and evaluation will comprise internal and external monitoring, supervision missions of the Bank, a mid-term review and an evaluation upon completion of the project by GOL and the Bank. The SIU will submit progress reports to the Bank on a quarterly basis. The M&E expert to be recruited under the project will also be responsible for setting up an M&E system for the project which is consistent with the results-based matrix of the project and informed by (i) the baseline survey to be undertaken at the beginning of the project and (ii) the results framework on the Bank’s interim strategy note for the country. This will be further complemented with the establishment of a technical monitoring committee comprising of key stakeholders at the county level. 5.7 Financial Reporting and Auditing In accordance with Government policy, all financial management tasks of the proposed project including disbursement will be handled by the PFMU at the MOF. The PFMU’s financial management system is capable of generating financial reports, which will provide sufficient information to monitor the use of funds and allow the provision of funding on a timely basis to meet the needs of the project. The internal auditor within the PFMU will ensure that agreed operational, accounting, payment and procurement arrangements are respected. In addition, the project accounts will be audited by an external auditor acceptable to the Bank, to be financed from project resources. The PFMU shall submit to the Bank audited financial statements at least 6 months after the end of the financial year. Follow-up

14 procedures for audit recommendations would be in line with Bank practice. The Delegated Management Contracts will require that both ILO and LACE: (i) maintain separate accounts for the proceeds of the Grant, (ii) submit monthly financial reports to the PFMU on the utilization of the funds disbursed to them, and (iii) submit annual audited accounts. 5.8 Donor Co-ordination 5.8.1 The LRDC as described under section 2.3 has proved to be an effective platform for coordination and cooperation between the Government and development partners, and as a result, is expected to play a key role in fostering donor coordination within this project. In the project design, efforts have been made to build synergies and complement the efforts of the major donors involved in the reconstruction of Liberia. For example, the labor-based approach proposed under this project is consistent with the on-going ILO program, the EC-funded Community-Based Recovery program and the USAID-funded Liberia Community Initiatives Program (LCIP). 5.8.2 Furthermore, the JISN of the World Bank and the ADB provides a shared vision and common platform for the two donors financed interventions. The use of the SIU jointly established by the World Bank and GOL to implement this project encourages the use of harmonized instruments to increase efficiency and reduce transaction costs. The proposed establishment of a technical monitoring committee in each of the counties will also enhance donor coordination at the county level, especially with the international NGOs active in these counties, such as German Agro Action and Danish Refugee Council. 6. PROJECT SUSTAINABILITY AND RISKS 6.1 Recurrent Costs

The recurrent maintenance activities will consist of routine and periodic maintenance. During the construction and guarantee periods (one year Defects Liability Period), recurrent cost for maintaining the project roads will form part of the road works cost and will be the responsibility of the Contractor. However, after this period, the cost, which is estimated at USD198,000 becomes the responsibility of the Government financed mainly through the country Budget allocations. The impact of these costs on government budget may be considered high taking into account the limited fiscal space the Government has for maintenance work. There will be no recurrent costs in the training activities of the project. The recurrent costs for the maintaining of the equipment provided under the project are also minimal and will be the responsibility of the Government. 6.2 Project Sustainability 6.2.1 The current re-establishment of the MPW’s regional maintenance centers with support from USAID will be crucial in the sustainability of all the ongoing works. Meanwhile, there is need to provide additional guidance and advice to Government for the implementation of sustainable maintenance practices. Component II of this project seeks to address this limitation. In addition, the envisaged support from GTZ and the EC towards the transport sector will help enhance the development of a maintenance policy for the transport sector, especially the road sub-sector. The creation of a Road Fund as envisaged under the NPWP will also provide a mechanism for the sustainable maintenance of the road infrastructure in the country.

15 6.2.2 The sustainability of the project will be enhanced by Government’s commitment to capacity building as demonstrated in the I-PRSP and its broader civil service reform. In addition, the design of the project implies a wide range of built in measures fostering sustainability. These include: emphasis on practical short-term focused training, use of an on-the-job training approach through demonstration, development of field manuals and a long-term labor-based maintenance system, emphasis on drawing on Liberian expertise where possible and on partnership between the actors (Government, local contractors, communities and NGOs), thereby reinforcing capacities at all levels. 6.2.3 Other important elements ensuring project sustainability relates to the (i) peace dividend to be generated through the project’s implementation, in particular, by strengthening the social capital due to the envisaged involvement of the different strata of the community in the demonstration works and (ii) the focus on building capacities for the long-term as Liberia moves into the development stage of its recovery process. Furthermore, the proposed project does not create any new Government unit or agency that would imply the burden of additional budgetary allocations to be sustained upon the completion of the project.

6.3 Critical Risks and Mitigating Measures

There are critical risks that may limit the successful implementation of the proposed project. These risks and their corresponding mitigating measures include: (i) the fragile and underdeveloped security apparatus of the country to be mitigated by UNMIL’s presence under a strong Security Council mandate and effective implementation of security reforms and reintegration of ex-combatants into Liberian society by GOL and its partners; (ii) the low retention rate of trained civil servants to be mitigated by GOL’s broad-based civil service reforms including special initiatives such as TOKTEN and SES, and a rolling training programme with bonding features; (iii) the low absorptive capacity of local contractors to execute infrastructure projects to be mitigated by enhanced technical, project and contract management skills and the setting up of a sustainable equipment support scheme; (iv) MPW’s weak capacity to maintain the equipment provided to be mitigated by adequate budgetary allocation and the development of preventive maintenance plan for the equipment acquired under the project; and (v) the short-term nature of the jobs created to be mitigated by the establishment of a parallel local economic revival strategy and GOL’s development of a long-term maintenance strategy and program. 7. PROJECT BENEFITS

7.1 Economic Benefits

International experience suggests that investments made in primary rural roads similar to the Fishtown – Harper Road usually have an economic rate of return between 20 and 26 percent depending on the level of economic and agricultural transformation activities in the project influence area. Therefore, it is envisaged that this project will generate an economic rate of return within this range due to the increased agricultural and logging activities in the area. The rehabilitation of the Fishtown – Harper Road is expected to directly generate over 270,000 workdays. In addition, due to the on-the-job training approach adopted by the project, about 600kms of rehabilitated feeder road will be maintained over the 3-year project period creating over 120,000 worker days and at least 2,500 direct and indirect jobs. In the short to medium term, the income realized by participating communities in the labor-based public works will enhance food security in the area and also increase community assets. There will also be reduced transportation costs. In the long run (2015), the project will contribute to achievement of the GOL’s objectives, namely increase in the rate of rehabilitated and well maintained roads by 30% and reduction of the national unemployment rate by 35%, especially among the youth.

16 7.2 Social Impact Analysis 7.2.1 Community participation in the project’s activities will enhance positive social equity outcomes through (i) reducing isolation and improving access to social services and markets, by the poor and (ii) decreasing social exclusion of certain groups such as ex-combatants, women, etc. The project will have an impact on poverty reduction and local development through strengthened capacities of county MPW staff in the use of labor-based methods, the establishment and training of sixty community maintenance groups comprising of 1,500 persons, and improved access to social services due to the schools, health facilities and feeder roads rehabilitated. In addition, the project will improve the stability in the two counties by alleviating the immediate frustration among beneficiaries by providing the means for civilians and ex-combatants to work together on improving the common infrastructure and thereby provide for a rise in economic turnover and a more reconciled and peaceful environment that will contribute to building social capital and reconciliation. 7.2.2 Furthermore, the project’s design and implementation arrangements will contribute to the correction of gender imbalances noted in the country’s socio-economic indicators as follows: (i) women will be represented at all levels, with a minimum ratio of 30% in the number of people to be engaged in the Fishtown – Harper Road rehabilitation and trained at community level and 40% in the number of participants in the study tours; (ii) demonstration of road maintenance will be gender-sensitive in ensuring that the tools and tasks are fitted for women and by imposing equal pay for similar works; (iii) the selection of health facilities to be rehabilitated will give priority to those facilities with deplorable MCH units; and (iv) the inclusion of a gender expert in the SIU for mainstreaming gender issues in the project, especially in the definition of gender-sensitive indicators for the proposed M&E system. 8. CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusion

The I-PRSP of Liberia identifies infrastructure rehabilitation and capacity building as key to the country’s recovery, economic growth and poverty reduction. Therefore, by focusing on these aspects, the project will address the very negative effects of the conflict on Liberia’s reconstruction and development. 8.2 Recommendations and Conditions for ADF Grant Approval

It is recommended that a Bank Grant not exceeding UA 15.24 million be granted to the Government of Liberia for the purpose stipulated in this report. It is also recommended that the Government’s contribution to the proposed project be reduced to 5 percent of total project cost, in compliance with Bank Group ADF X Financing Policy Guidelines. The grant will be subject to the following conditions: A. Conditions Precedent to Entry into Force of the Grant Agreement The grant agreement shall enter into force on the date of signature of the Recipient and by the Fund.

B. Conditions Precedent to First Disbursement The obligations of the Fund to make the first disbursement shall be conditional upon the fulfillment by GOL of the following conditions:

17

i. Provide evidence in the form and substance satisfactory to the Fund of the opening of one (1) Special Account and one (1) Local Currency Account (LCA) in a Bank acceptable to the Fund (Para 5.5).

ii. Provide evidence in form and substance satisfactory to the Fund, of the designation of the Project Coordinator to work within the SIU (Para 4.5.15).

iii. Provide evidence in form and substance satisfactory to the Fund, of the appointment of other additional members of the SIU (consisting of a transport engineer, a monitoring and evaluation specialist, and a gender specialist), each with qualifications and terms of reference acceptable to the Fund (Para 5.2.1).

iv. Entered into delegated management contracts with ILO and LACE, the terms of which should have been approved by the Fund before signature of such contract (Para 5.1).

C. Other condition GOL shall on an annual basis and within four (4) weeks of the approval of the national budget of Liberia by the Parliament, ensure that adequate funds for the maintenance of equipment purchased with the proceeds of the grant are made available to the MPW (Para 6.3(iv)).

Annex I Page 1 of 1

MAP OF LIBERIA

Annex II Page 1 of 1

LIBERIA LABOR-BASED PUBLIC WORKS PROJECT

SUMMARY OF THE ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN

Country: Liberia Project Number: P-LR-IZO-001 Department: OSHD Division: OSHD.2 Category: 2 1. Brief Description of the Project and Key Environmental and Social Components Liberia’s 14 years of civil war has clearly undermined its human development. The conflict devastated the country’s social structure and inflicted very high human development costs. To address this unfortunate situation, there is the need to rebuild basic infrastructure, human, institutional and societal capacities. The specific project objective is to rehabilitate socio-economic infrastructure and improve capacities for infrastructure maintenance. 2. Major Environmental and Social Impacts Positive Impacts: Positive social and environmental impacts have been identified. These include: (i) boosting employment opportunities for locals; (ii) improvement in food security; (iii) improved access to social services and markets, especially for women; (iv) increased income and ability to engage in income generating activities; (v) re-built social capital; and (vi) peace dividends. Negative Impacts: Some negative impacts are also expected to be generated. These include: (i) changes in the landscape, erosion and loss of the aesthetic value of the areas with quarries; (ii) increase in noise and vibrations; (iii) air quality and other construction related pollution; (iv) water quality degradation; and (v) possible loss of existing land use. 3. Enhancement and Mitigation Program Enhancement and mitigation measure for the identified negative environmental impacts have been considered as part of the Environmental Management Plan (EMP). Since most of the negative impacts are anticipated during the construction and operational phases and result directly from methods and practices adopted by the construction contractors, code of good practices for construction will be included in the work contract to prevent, to the extent possible, negative environmental impacts. As well, taking into account the overall positive contribution of the project’s activities towards the promotion of a sound and sustainable environment, especially as it relates to reconstruction of roads and development works, a number of specific enhancement and mitigation measures at the institutional operational levels have been proposed in order to optimize the overall environmental performance of the project. 4. Monitoring Program Environmental monitoring is a requirement of the project in order to check that planned mitigation measures have been implemented, to measure their level of effectiveness and to provide early warning of environmental change. Environmental monitoring activities for this project are being proposed at different levels: (i) the EPA will have a full-time representative at the SIU; (ii) EPA will carry out annual monitoring of the implementation of the ESMP; (iii) specific environmental indicators will be included in the proposed M&E system taking into account biophysical factors.

5. Institutional Arrangements and Capacity Building Requirements The Ministry of Public Works, through the SIU will be the executing agency of the project. The SIU/MPW was established for the day-to –day coordination and monitoring of implementation of the project activities. The EPA will have a permanent representative at the SIU for the mainstreaming of environmental issues in the project. 6. Public Consultation and Disclosure Requirements During the identification and selection of demonstration feeder roads, communities will be consulted to identify and assess critical environmental and social issues. There concerns will be well documented and taken into account in the designs. These concerns will be made known to the public during the community sensitization activities of the project. 7. Implementation Schedule and Reporting Monitoring and environmental management will be carried out following the same implementation schedule because these activities are an inherent part of the project. Emerging issues will be reported on in the quarterly progress reports, which will be acted upon by the relevant parties. 8. Estimated Costs The costs for the enhancement/mitigation measures during project implementation have been mainstreamed into the project design and budget.

Annex III

Page 1 of 1

Financial Management Arrangements Project Financial Management Unit The PFMU has responsibility to:

i. Operate the financial management system in accordance with the approved Financial Procedures Manual (FPM) of the Unit

ii. Operate an effective financial control system to ensure that project funds are committed only after approval by the PFMU

iii. Only process transactions duly processed in terms of the FPM and approved by the Head of the SIU, or other staff of the SIU as may from time to time be duly designated by the Head of the SIU to authorize transactions

iv. Take responsibility for the issuance of cheques and authorising bank payments, as specified in the FPM

v. Ensure that all transactions approved are eligible in terms of the Protocol Agreement with ADF. vi. Appoint External Auditors acceptable to the Bank for the audit required in line with the

requirements of the Protocol Agreement. vii. Attend all project management and staff meetings

Special Implementation Unit The SIU is responsible for:

i. Day to day implementation of the project ii. Preparation of the annual work plans

iii. Monitoring and evaluation of project implementation iv. Procuring goods, works and services in line with established ADF procedures v. Receiving invoices and other payment request for initial vetting to ensure compliance with contract

terms. On completion of its review and approval SIU shall ensure that the copies of all contracts are lodged with the PFMU prior to the submission of any payment request

vi. Ensuring that the commitment control system is complied with and that all transactions are eligible in terms of the Protocol agreement with ADF

vii. Ensuring that all payment requests submitted to the PFMU are supported by relevant supporting documents.

viii. Stipulating the FPM processes and PFMU payment authorizations and approvals are binding upon the SIU.

General Policies and Guidelines:

i. The Head of the PFMU is part of the Project team and shall be invited to all its meetings ii. The PFMU will be granted full access to all project information, records and data, also for internal

and external audit purposes iii. All parties will comply with the procedures contained in the FPM and any addendum to it. They

shall ensure that the FPM is disseminated amongst staff and that adequate disciplinary measures exist to sanction non compliance to FPM

iv. All parties (SIU, PFMU and the Project Steering Committee) must be kept informed of all data and other information regarding the management of the project accounts

v. A regular(quarterly) review of the MOU between the parties and the operation of the FPM shall be carried out during the first year of the project, with involvement of all parties

vi. Any matter that requires resolution between Heads of the SIU and PFMU will be submitted by either party in writing to the Finance Minister and the Minister of Public Works for their joint arbitration.

Annex IV: Page 1 of 1

Implementation Schedule

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

ILO/GOL Contract SignedILO TA Recruited

Contract Management Expert

Maintenance Programmme DevelopedIT Lab Equipment AcquiredM&E Consultant RecruitedThee Dump Trucks Purchased

Supervisions

ACTION BY

PCRs

Sensitisation ActivitiesTraining Seminars DeliveryDemonstration Sites Identified

GOL/ILO/ADF

Works Begin GOL

GOL/ILO

GOL/ILO/ADF

Contractors Recruited ADF/GOL

GOL/ILOConsultant

Demonstration Works StartedField Handbooks Developed

Community Maintenance Groups Est.

GOL/ILO/ADF

GOL/ILO/ADFConsultant

Maintenance Specialist RecruitedOperations Manual Developed

Pre-Selection of ContractorsIdentification of MPW Trainees

ADF/GOL

ADF/GOL

ADF/GOL

GOL

GOL/ILOGOL/ILOGOL/ILOGOL/ILO

ADFADF/GOL

ADF/GOL

ADF/GOLADF

ADF/GOL

ACTIVITY

ADMINISTRATION

2008

Appraisal

YEARSMONTHS

INFRA. MAINTENANCE

Mid-Term Review

Board ApprovalGrant SignatureGrant EffectivenessProject Launching

FISHTOWN HARPER ROAD

2009 2010 20112007

Design and Supervision Consultant ADF/GOL

Equipment Purchased ADF/GOL

Works Begin GOLADF/GOLContractor(s) Recruited

SOCIAL INFRASTRUCTUREFacilities Selected

GOLADF/GOLADF/GOLADF/GOL

Annex V Page 1 of 1

PROVISIONAL LIST OF GOODS AND SERVICES (UA Millions)

Sources of Funds ADF GOL TOTAL Category of Expenditure FE LC Total LC Total FE LC Total

A.GOODS Equipment-FTH Road 0.034 0.049 0.083 - - 0.034 0.049 0.083 Equipment-Social Infrastructure 0.080 0.190 0.270 - - 0.080 0.190 0.270 Vehicles 0.128 - 0.128 - - 0.128 - 0.128 Equipment-Private Contract. 0.504 - 0.504 - - 0.504 - 0.504 Equipment Infrastructure Maintenance 0.058 0.030 0.088 - - 0.058 0.030 0.088

Equipment-MPW 0.303 - 0.303 - - 0.303 - 0.303 Office Equipment - 0.026 0.026 - - - 0.026 0.026 Total Goods 1.107 0.295 1.402 - - 1.107 0.295 1.402

B.WORKS Civil Works-FTH Road 3.567 3.547 7.114 0.336 0.336 3.567 3.883 7.450 Works-Social Infrastructure - 0.911 0.911 - - - 0.911 0.911 Demonstration Works - 1.385 1.385 0.084 0.084 - 1.469 1.469 Total Works 3.567 5.843 9.410 0.420 0.420 3.567 6.263 9.830

C.SERVICES Design & Supervision FTH 0.160 0.050 0.210 - - 0.160 0.050 0.210 LACE Management Fees - 0.206 0.206 - - - 0.206 0.206 TA-ILO 0.173 - 0.173 - - 0.173 - 0.173 Short Term Consultancies - 0.132 0.132 - - - 0.132 0.132 Community Maintenance Training - 1.305 1.305 0.083 0.083 - 1.388 1.388 Training Workshops/Seminars - 0.049 0.049 - - - 0.049 0.049 Community Sensitisation - 0.116 0.116 - - - 0.116 0.116 Study Tours for MPW Staff - 0.032 0.032 - - - 0.032 0.032 External Audit - 0.019 0.019 - - - 0.019 0.019 SIU Expert and Services - 0.220 0.220 0.077 0.077 - 0.297 0.297 Total Services 0.333 2.129 2.462 0.160 0.160 0.333 2.289 2.622

D.OPERATING COSTS Fuel & Maintenance - 0.064 0.064 - - - 0.064 0.064 ILO Backstopping - 0.084 0.084 - - - 0.084 0.084 Field Training Expenses - 0.050 0.050 - - - 0.050 0.050 Monitoring & Supervision - 0.119 0.119 0.039 0.039 - 0.158 0.158 Office Running Costs - 0.050 0.050 0.010 0.010 - 0.060 0.060 Launching Expenses - 0.008 0.008 - - - 0.008 0.008 Mid-term review - 0.014 0.014 - - - 0.014 0.014 County Staff Allowances - 0.029 0.029 0.058 0.058 - 0.087 0.087 Total Operating Costs - 0.418 0.418 0.107 0.107 - 0.525 0.525

E.MISCELLANEOUS Environmental Protection and Control - 0.029 0.029 - - - 0.029 0.029 Total Miscellaneous - 0.029 0.029 - - - 0.029 0.029

Base Costs 5.007 8.714 13.721 0.687 0.687 5.007 9.401 14.408 Contingencies 0.565 0.949 1.514 0.113 0.113 0.565 1.062 1.627

TOTAL COSTS 5.572 9.663 15.235 0.800 0.800 5.572 10.463 16.035

Annex

Table 4.5: Financing Plan by Source of Finance and Categories of Expenditure (UA mill.)

ADF GOL. Total F.E. L.C. Tot. L.C. F.E. L.C. Tot. % Tot.

A. Goods 1.232 0.328 1.560 0.000 1.232 0.328 1.560 10% B. Works 3.969 6.504 10.473 0.467 3.969 6.971 10.940 68% C. Services 0.371 2.369 2.740 0.179 0.371 2.548 2.919 18% D. Operating Expenses 0.000 0.430 0.430 0.154 0.000 0.584 0.584 3% E. Miscellaneous 0.000 0.032 0.032 0.000 0.000 0.032 0.032 1%

Total Project cost 5.572 9.663 15.235 0.800 5.572 10.463 16.035 100%