Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No.: 16382

IMPLEMENTATION COMPLETION REPORT

GOVERNMENT OF MALAWI

MALAWI INFRASTRUCTURE PROJECT(Credit 2069-MAI)

March 18, 1997

Water, Urban and Energy 1Eastern and Southern Africa

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

Currency Unit = Malawi Kwacha (MK)US$1.00 = MK 2.60 (October 1988)US$1.00 = MK 2.73 (1989)US$1.00 = MK 15.38 (March, 1996)

FISCAL YEAR

April I to March 31

WEIGHTS AND MEASURES

I imperial gallon (Zg) =1.2 US gallons = 4.55 liters (1)

I cubic meter (m/3) = 220 Ig = 264.2 US gallonsI liter per capita per day (I cd) =0.2642 US gallons per capita per dayI million imperial gallons per day

(Igd) =4,546 m/3/dayI meter(m) 3.28 feet (ft)I millimeter (mm) 0.039 inch (in)I kilometer(Km) = 0.62 mile (mi)I square kilometer (kM2) = 0.386 square mile (sq thi)

247 acres (ac)

ABBREVIATIONS AND ACRONYMS

AfDB =African Development BankBUMMAS =Buildings Maintenance Management SystemCBM = Community Based Management (of water supplies)DANIDA =Danish Intemational Development AgencyDCA = Development Credit AgreementDEVPOL =Statement of Development Policies and Strategies (1986/87-95/96)DRAMP =District Road Improvement and Maintenance ProgramDWSF = District Water Supply FundEDF European Development FundEIA =Environmental Impact AssessmentERR =Economic Rate of RetumEU =European UnionFRG =Federal Republic of Germany (later Republic of Germany)GOM = Government of MalawiGTZ = Gesellschafl far Technische ZusammenarbeitH1DM =Highway Design ModelICR Implementation Completion ReportIFMIS = Integrated Financial Management Information SystemJICA = Japan International Cooperation AgencyKfW Kreditanstalt for WiederaufbauMIP = Malawi lnfrastructure ProjectMIS = Management [nformation SystemMOWS = Ministry of Works and SuppliesMIWD = Ministry of Irrigation and Water Development

NWDP = National Water Development ProjectNTC =Northem Transport Corridor ProjectODA = Overseas Development AgencyPSIP =Public Sector Investment ProgramPVHO =Plant and Vehicle Hlire OrganisationROMARP =Road Maintenance and Rehabilitation ProjectSAR =Staff Appraisal ReportSADC =Southem Africa Development CouncilSATCC = Southern Africa Trade Cooperation ConferenceTA =Technical AssistanceUK =United KingdomUNCDF =United Nations Capital Development FundUNDP = United Nations Development ProgramUNICEF =United Nations Children's FundUSAID =United States Agency for Intemational DevelopmentVLOM =Village Level Operation and Maintenance (of rural water supplies)

Vice President: Callisto Madavo

Country Director: Barbara Kafka

Task Manager: John Shepherd

ICR prepared By: John Kandulu

MALAWI FOR OFFICIAL USE ONLY

INFRASTRUCTURE PROJECT(CREDIT 2069-MAI)

IMPLEMENTATION COMPLETION REPORT

CONTENTS

PREFACE

EVALUATION SUMMARY ...................................................... iA. Introduction ...................................................... iB. Statement/Evaluation of Project Objectives and Benefits ....................................................... iC. Achievement of Project Objectives ...................................................... iiiD. Summary of Findings, Future Operations, and Key Lessons Learned ..............................................vE. Key Lessons ...................................................... vi

PART 1: PROJECT IMPLEMENTATION ASSESSMENT ....................................................... 1A. Background ...................................................... 1lB. Statement and Evaluation of Project Objectives ....................................................... 2C. Project Background ....................................................... 2D. Project Description ....................................................... 4E. Achievement of Project Objectives ............................... 5G. Project Sustainability ............................ 12H.. Bank Performance ............................ 141. Borrower Performance ............................ 15J. Performance of Coflnancing Agencies ............................ 16K. Assessment of Project Outcome ............................ 16L. Economic Analysis ............................ 17M. Key Lessons Learned ............................ 18

Part II Statistical Tables

Table 1: Summary of AssessmentsTable 2: Related Bank Loans/CreditsTable 3: Project TimetableTable 4: Credit Disbursements: Cumulative Estimated and ActualTable 5: Key Indicators for Project ImplementationTable 6: Summary of Progress of Co-financed ComponentsTable 7: Studies Included in ProjectTable 8: Project Financing PlanTable 9: Economic Costs and BenefitsTable 10: Status of Legal CovenantsTable II: Bank Resources: Missions

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

Annexes: I Completion Mission Aide-Memoire2 Borrower Contribution to the ICR3 Performance on Cofinanced Components4 Performance of AfDF/ADB Financed Components5 Management Improvement Component: Training Sub-Component

Map: IBRD 21225

MALAWI

INFRASTRUCTURE PROJECT(CREDIT 2069-MAI)

PREFACE

1. This is the Implementation Completion Report (ICR) for theInfrastructure Project in Malawi, for which Credit 2069-MAI in the amount of SDR22.3million (US$28.8 million equivalent) was approved on November 7, 1989 and madeeffective on June 19, 1990.

2. The Credit was closed on December 31, 1995 and was fully disbursed. The finaldisbursement was transacted on April 30, 1996. Cofinancing was provided by variousmultilateral and bilateral donors as listed in Table 8, and disbursement is continuing inrelation to several of these components.

3. This ICR has been prepared by M. John Kandulu, Infrastructure Program Officer,Malawi Resident Mission (AFMMW) and reviewed by Messrs. K. John Shepherd, (TaskTeam Leader, AFTU1) and Jeffrey Racki (Technical Manager AFTU 1); and Ms. BarbaraKafka (Country Director: Angola, Zimbabwe, and Malawi). The Borrower providedcomments which have been incorporated in the report.

4. Preparations for this ICR were initiated during the Bank's final supervisionmission that took place from July 24 to August 6, 1995 and whose Aide Memoire isannexed to this report. The contents of this report are based on material in the projectfile.

MALAWI

INFRASTRUCTURE PROJECT(Credit 2069-MAI)

EVALUATION SUMMARY

A. Introduction

1. Donor support for the Malawi Infrastructure Project (MIP) was aimed, in thetransport sector, at improving the condition of trunk and rural roads in Malawi in order toreduce transport and user costs, enhance the reliability of transport outside and within thecountry, and prevent the progressive deterioration of roads caused by lack of timelymaintenance. In the water sector, the project aimed at augmenting urban and rural watersupplies to cater for a growing demand for potable water in urban centers, increasingaccess to safe water by rural communities, and strengthening the capacity of the WaterDepartment to manage national water resources and water supply services in a sustainablemanner. In public buildings, the project aimed at rehabilitating selected public buildingsto improve their utility and extend their useful lives. The MIP was cofmanced with otherbilateral and multilateral aid donors as listed in Table 8.

B. Statement/Evaluation of Project Objectives and Benefits

2. The objectives of the MIP at appraisal stage were to: i) strengthen themanagement capability of the Ministry of Works and Supplies (MOWS) throughtechnical assistance and training to effectively manage public infrastructure facilities; ii)restore and improve the physical condition of selected main and secondary roads tofacilitate the movement of traffic and lower transport costs; iii) expand the existingsystem of district roads to provide improved access for increasing numbers of ruralpeople; iv) expand potable water supply coverage in selected urban and rural areas; andv) rehabilitate high priority government hospitals, schools and other important publicbuildings to extend their useful lives, and improve the provision of public services.

3. The original project objectives were clear, realistic and directed at responding tothe country's long-termn infrastructure needs, but the size and extent of the project were,in hindsight, too ambitious, especially in view of the human and financial capacitylimitations of the implementing Ministry in particular, and the Government in general.

4. The objectives were restructured during the project's Mid-Term Review (MTR) inresponse to the country's immediate needs, primarily caused by a four-year drought thatadversely affected almost all sectors of the economy - agriculture, water, health, andeducation being the worst hit. In addition to assessing overall progress in component

- ii -

implementation, the review also re-prioritized project elements and reallocated resourcesto more important areas, primarily the provision of safe water and improvement ofadditional rural roads for the conveyance of relief items such as food and medicines, tocommunities affected by the drought. Secondly, IDA financing was re-aligned to coverpriority areas left by other co-financiers who withdrew their support in reaction toconcerns about governance. Projects such as Zomba Urban Supply including ZombaDam (KfW, DANIDA, JICA); Supply of Road Maintenance Equipment and VehiclesPhase IV (JICA); and Technical Assistance and Training for MOWS Personnel (ODAand UNDP) are cases in point.

5. Major outputs expected from the MIP before the Mid-Term Review included:

MOWS Management Improvement

* an increased capacity of the Ministry of Works and Supplies to manage itsprogram efficiently;

Roads

* about 270 km of paved roads rehabilitated and strengthened, about 300 km ofearth and gravel roads rehabilitated; about 1 15 km of earth and gravel roadsimproved to bitumen standard; and about 200 km of paved roads resealed;

* extension of the District Road Improvement and Maintenance Program (DRIMP)rural road network to three districts, about 500 km of additional roads in otherdistricts, execution of spot improvements on previously developed DRIMP roads,and support to DRIMP road maintenance through the provision of equipment,tools and a budget;

* 9 road maintenance depots constructed and furnished, and capacities of selectedexisting depots expanded;

* a national road safety program developed and implemented;

Water Supply

* Seven urban water supply schemes improved for an extended coverage;* 2,500 boreholes rehabilitated, and beneficiary communities trained in the

Community Based Management (CBM) of rural water supplies;* 13 gravity-fed piped water schemes constructed in selected rural areas;

Public Buildings

* 19 selected schools, hospitals, and other public buildings rehabilitated; and* Lilongwe and Zomba Training Centers expanded and improved.

6. Changes made to the project during the Mid-Term Review include:

amendments to the Development Credit Agreement (DCA) to support theMOWS road maintenance budget on a declining basis over a three-year

- iii -

period commencing fiscal 1993/94, as a result of government's failure tomeet its Covenant with the IDA (See also Paragraph 21 in the main report).The allocations would be pro rata to the Ministry's total expenditure on roadmaintenance, distributed as 30, 25 and 15% respectively for each of the threeyears;

* establishment of a Road Maintenance Initiative (RMI) Unit to facilitate thecreation of a Road (Maintenance) Fund, and a Roads Board to manage theFund. The Fund would augment government's allocation to the MOWSrecurrent budget for road maintenance. In addition, the Ministry requestedfinancing for a comprehensive investigation of the extent of over-loading onthe primary road network to determine the likely effect of upgrading the axleload limit from 8.2 to 10.0 tonnes per vehicle axle. This would assistgovernment to prioritize future investments in the network;

* IDA agreed to finance a detailed engineering design, an EIA, and laterconstruction of Zomba Dam and associated works for Zomba Urban WaterSupply after KfW and DANIDA withdrew support;

* improvement of the existing source for Ntcheu Urban Water Supply wouldproceed only as far as detail engineering design as the supply to the town hadmeanwhile been augmented from two high-yielding boreholes as an interimemergency intervention. Additional work requested by government duringthe MTR however was identification of a more reliable alternative source forNtcheu, and a preliminary EIA for the selected site. Savings from thiscomponent were used to finance the drilling of 72 drought relief boreholes;purchase of a drilling rig; water quality testing equipment for the CentralWater Laboratory, and supervision vehicles for the Water Department fordrought mitigation;

* institutional capacity building for the Ministry of Works was extended tocover support for the training of Architecture, Engineering, and QuantitySurveying students in British Universities, previously under ODA funding, asa result of the withdrawal of British support for the project; and

* allocation of approximately US$570,000 for the engagement of TechnicalAssistance to coordinate the work of various Consultants, and to financeminor physical works related to the Northern Transport Corridor (NTC)Project (Credit 1 879-MAI) such as fire fighting equipment and facilities;modifications to fuel pumping equipment; improvements to drainage andstructures. An additional effort in this component was extension of theCredit to finance a study to privatize Lake Malawi Transport and PortServices, as part of the restructuring of the Malawi Railways, of which it wasa sister concern.

C. Achievement of Project Objectives

7. The IDA component of the MIP achieved some of its objectives, namely:increasing the capacity of the Ministry of Works and Supplies to manage its program

- iv -

annually; extending the DRIMP roads program in additional districts (100%) andimproving existing roads in others (100%); expanding safe water coverage to selectedurban schemes and rural communities through improved urban schemes (100%) and ruralboreholes (98%). However, it fell short of achieving its targets in the construction of newDRIMP roads (39%); construction of road maintenance depots and supervisors' houses(25%); training of communities in CBM (31 %); and the rehabilitation of public buildings(35%) (Table 5). Significant project cost escalation after project appraisal due toinflation and currency floatation, withdrawal of fiscal support by major aid donors, andthe effects of a prolonged drought all adversely affected the achievement of projectobjectives. The overall performance of major components of the MIP is summarized inTable 1.

Project Sustainability

8. The extent to which the facilities improved in the project are sustained depends onthe commitment of the Government of Malawi (GOM) to the sector, and its ability tomeet recurrent expenditures adequately. So far this does not seem to be the case as theroad network and water services continue to deteriorate at an alarming rate, with somemain roads becoming impassable and bridges collapsing due to lack of maintenance.This situation is likely to be reversed if Government implements the Road MaintenanceInitiative (RMI) currently under preparation with financial support from the Bank and theEuropean Union (EU). Secondly, the impressive number of experienced seniormanagement and professional staff successfully trained using proceeds of this Credit islikely to drop significantly as more and more are being transferred to other GOMagencies, moving to the private sector and Non-Government Organizations (NGOs), ordying. (Annex 5)

9. Rural water supply services were generally not implemented in a manner likely toresult in sustainable infrastructure. Over 2,500 boreholes were rehabilitated, but severalhundred of the communities served by these boreholes were not given adequate trainingin operation and maintenance. More sustainable arrangements will be established withthe implementation of the National Water Development Project (NWDP) that wasdeclared effective on May 1, 1996, and the Bank/UNICEF promoted a collaborativeapproach to the sustainability of rural water services. However, sustainability asimplemented under the MIP is considered to be unsatisfactory.

10. Significant improvements made under the project to a few selected publicbuildings would have been sustained through the MIP-financed Building MaintenanceManagement System (BUMMAS) installed in the Buildings Department of MOWS forthe timely maintenance of the government building stock. Regrettably, this is an area thatcontinues to receive little attention and commitment from GOM, with preference going tonew construction rather than the up-keep of existing stock. Sustainability of publicbuildings is therefore highly unlikely unless the government's attitude towards themaintenance of its buildings changes radically, especially with regard to decentralizingthe maintenance of buildings to sector ministries. The Ministry of Works would then

- v -

assume advisory and oversight roles with respect to construction and major rehabilitationactivities only, as is already happening now post-MIP. The project failed to recognizethis aspect and was prepared on the basis of the status quo with unsatisfactory results.

Environmental Impact

11. The Project Staff Appraisal Report predicted beneficial effects on the environmentas a result of implementing the project. Construction of new DRIMP roads, andrehabilitation of existing earth roads has had beneficial effects of checking soil erosion inadjacent land, as was originally predicted, through the channelization of stormwater intoengineered drainage structures. Improved road pavements have increased access to someparts of the country during the wet season, and reduced damage to vehicles.Abandonment of the first dam site for Zomba Urban Water Supply has ensured theconservation of the unique ecosystem around the marsh on Zomba Plateau. Siting of thenew dam at the site of the existing dam is expected to have no significant adverseenvironmental impacts, and will offer a larger body of water not only for water suppliesbut also for sport fishing, camping, and other recreation. In rural areas, rehabilitation ofboreholes has afforded safe water to a large number of rural people with accompanyingpositive health consequences. It has also significantly reduced the distance that familieshave to walk to sources of safe water especially during periods of drought, thus freeing upvaluable time for other more productive socio-economic activities.

D. Summary of Findings, Future Operations, and Key Lessons Learned

12. GOM continued to face difficulties meeting budgetary requirements for adequateroad maintenance, and failed to take full advantage of IDA's commitment to reimburse,on a declining scale up to December 31,1995, a proportion of its expenditure on roadmaintenance. The ability of MOWS to effectively implement road development projectsand manage a sustainable national road network was compromised as a result. Secondly,withdrawal of donor commitment for some components early in the project, continueduse of an inefficient force account on capital works, and the inability of national small-scale contractors to satisfy contract obligations, all had negative impact on projectimplementation.

13. MOWS has, through the project, installed Management Information Systems tofacilitate program planning, implementation, monitoring, and management decision-making. The degree to which these systems continue to function will depend to a largeextent on the ability of the concerned Ministries to retain staff trained in these areas, andto care for and protect the expensive investments made in computer hard- and softwareinstallations. So far this does not seem to be the case, as some equipment is reported tobe unserviceable or stolen, and six specially trained senior staff have since left MOWS.

- vi -

Economic Analysis

15. Table 9 is a comparison of the Economic Rates of Return at project appraisal inJune 1988 for first year components, and for IDA components at the time of preparingthis ICR (August 1996). ERRs at project closure are well above those projected atappraisal. The reasons for this are: (i) for public buildings: benefits accrued from the costof reconstruction avoided, and associated savings from annual maintenance costs, and forhospitals, increased utilization of the improved facilities; (ii) for roads: increasedutilization for the conveyance of relief items to drought areas, increased agriculturalproduction in the 1994/95 growing season, and traffic diverted from the poorlymaintained primary and secondary road system; (iii) for rural water supply: increasednumber of households per borehole, and reduced maintenance costs; and (iv) for urbanwater supply: additional water sales due to system rehabilitation reducing water losses,enabling additional demand to be met by the project.

E. Key Lessons

17. The MIP offers useful lessons for future operations in the infrastructure sector.The following are some of the more important::

a) Project cost estimates made during project appraisal should be monitoredclosely in the period leading to project implementation.

b) The ability of government both to provide counterpart funds, and to matchrecurrent expenditures with the rate of infrastructure development should beassessed and confirmed at the appraisal stage, and reassessed annually. Levelsof investment in development projects should be set and reset accordingly.

c) Frequent supervision missions with an appropriate skills mix should havebeen undertaken throughout the life of the project, especially given thecomplexity of the project and the high turnover of both Borrower and Donorstaff.

d) This multi-sectoral project, funded by many donors, was too complex anddifficult for the Borrower to satisfy each donor's requirements, to meetbudgetary requirements, and to put together the skills and specialities toimplement the project satisfactorily. The Bank's supervision budgets tends tobe allocated by project rather than by program, and the fact that MIP was infact three sector projects rolled into one large program resulted in projectsupervision being under resourced.

e) Different elements of the same component co-financed by a number of aidagencies, posed special challenges especially when agencies withdraw theirsupport for the project. Future projects should be so designed as to avoid suchcomplex and interdependent arrangements.

- vii -

f) The project's problems underscore the importance of developing sectorprojects from a clear institutional and policy framework. The Government hasresponded to this need by developing sector policies and strategies in water,transport and environment.

g) The experience of this project reinforces the argument for increasedparticipation of stakeholders and beneficiaries in the development of projects,particularly the participation of the private sector and beneficiary communitiesin provision and maintenance of infrastructure. This also ensures transparencyand accountability in the use of public resources by government.

MALAWI

INFRASTRUCTURE PROJECT(Credit 2069-MAI)

PART I: PROJECT IMPLEMENTATION ASSESSMENT

A. Background

1. Malawi is a long, narrow, land-locked country situated in the Great African RiftValley with a land area of about 94,300 km2 and a freshwater lake area of 24,200 km2(See IBRD Map No. 21225) The country is characterized by a limited resource base,poorly developed social and physical infrastructure, and low per capita incomesparticularly for rural smallholders who constitute 90 percent of the population currentlyestimated just under 11.0 million. Malawi has one of the highest population densities perkm2 of arable land in Africa, and agriculture contributes over 90% of the country'sexports. Rural development is a primary economic and social objective that inevitablyrequires improvement of road access to markets, public health facilities and other servicesfor the rural population. It also entails ensuring convenient sources of safe and easilyaccessible water supplies to rural communities.

2. Responsibility for the provision and maintenance of road infrastructure, water,and public buildings was during implementation vested in the Ministry of Works andSupplies (MOWS). (The subsequently formed Ministry of Irrigation and WaterDevelopment (MIWD) now has responsibility for the provision of district (town) watersupplies.) The Malawi Infrastructure Project (MIP) was a five-year multi-discipline andmulti-donor financed project whose primary objective was to strengthen the capability ofthe MOWS to manage the country's infrastructure, benefits of which would be realizedwithin the context of the road, water and public buildings components of theinfrastructure sector. Severe funding and expenditure constraints that faced, and continueto face, the Government of Malawi (GOM) underscore the importance of maintaining theexisting infrastructure, and of maximizing benefits through an efficient and effectiveprogram management system.

3. At the time of project appraisal, a total of 11 international bilateral andmultilateral aid donors had committed themselves to finance various parts of the project.The Government of Malawi contributed approximately 10% of the total project cost ofabout US$157.7 million. The IDA Credit amounted to SDR22.3 million (US$28.8million equivalent). The project became effective on June 19, 1990, and was closed onDecember 31, 1995.

-2 -

B. Statement and Evaluation of Project Objectives

4. The objectives of the MIP were to: i) strengthen the management capacity of theMinistry of Works and Supplies through technical assistance and training in order toeffectively carry out the construction and maintenance of public facilities; ii) restore andimprove the physical condition of selected main and secondary roads to facilitate themovement of traffic and lower transport costs; iii) expand the existing system of districtroads to provide improved access for more rural people; iv) expand potable watersupplies for selected urban schemes and rural water supplies; and v) rehabilitate selectedhigh priority government hospitals, schools and other important public buildings so thatthey contribute more efficiently and effectively to the provision of public services andextend their useful lives.

5. These objectives were clear and consonant with the Government's Statement ofDevelopment Policies and Strategies (DEVPOL) for the 1986/87-95/96 planning horizon;as well as the Bank's assistance strategy for Malawi at the time. Government's sectordevelopment strategies emphasized improvement of existing infrastructure, and extensionof coverage to rural communities to facilitate movement to socio-economic centers, andenhance the health and welfare of the rural poor. It is worth noting however that theseobjectives assumed a continuation of the national status quo characterized by a stablepolitical situation, and a sound economic environment which, in turn, meant sufficientfinancial resources to cover project local costs, as well as guarantee adequate allocationson the recurrent budget to ensure the sustainability of the facilities once improved. Themodal structure of the project lent itself to easy re-prioritization of components duringproject implementation in response to national dynamics. This assisted the Governmentto reallocate unspent project funds to more needy areas during a period of protracteddrought when government efforts were concentrated on minimizing the severe effects ofthe drought.

C. Project Background

6. A 1987 management study of MOWS established that the Ministry's managementcould and should be improved substantially, and included an action plan for achievingthat objective. Specifically, the study recommended an improved direction setting for theMinistry, better management control, a better functioning organization, development ofhuman resources, and allocation of adequate financial and material resources to carrythrough planned programs. A Management Improvement Component (MIC) largelycomprising Technical Assistance, installation of management information systems, andstaff training was therefore incorporated into the project to implement recommendationsof the study.

7. Since independence in 1964, Malawi took strides to establish a sustainableinfrastructure through ambitious externally financed projects including the World BankGroup's highly successful First Highway (Cr. 112-MAI), Second Highway (Cr. 523-MAI), Third Highway (Cr. 758-MAI), Fourth Highway (Cr. 1099-MAI), Fifth Highway

-3 -

(Credits 2363-MAI, 1423-MAI, and SF-6-MAI) Projects; and the Northern TransportCorridor Project (Cr 1879-MAI). (Credits 2363-MAI and 1879-MAI were cofinanced bythe African Development Bank (AfDB) and the European Development Fund (EDF)respectively.) The road rehabilitation and resealing components of MIP were acontinuation of work initiated under the Fifth Highway Project, and the extension of theDRIMP component to the three remaining districts was also carried over from the FifthHighway Project.

All the previous projects cited above were aimed at expanding the national road networkbut did not provide adequately for the development of a capacity in GOM to manage theinvestments sustainably. The MIP, on the other hand, provided for technical assistance tothe Roads Department to develop its capacity to plan, construct, and maintain the nationalnetwork adequately and sustainably.

8. In the water sector, the Government of Malawi has since independenceundertaken several projects with foreign aid financing to improve the supply of water andwater services to both urban and rural populations. The Bank Group has financed threewater supply projects in Malawi, namely:

* the Blantyre Water Supply Project (Credit 711-MAI, 1977, US$7.0 million) toaugment water supply to the City of Blantyre, and strengthen Blantyre WaterBoard's management and technical capabilities;Lilongwe Water Supply Engineering Project (Credit 1272-MAI, 1982, SDR3.6 million) to assist GOM and the Lilongwe Water Board formulate a longrange water supply, sewerage and sanitation program, prepare studies forwater supply extension, strengthen the Board through improvements inmanagement and training, and help GOM develop low-cost technologies forhandling sewerage and sanitation; andthe Second Lilongwe Water Supply Project (Credit 1742-MAI, 1986, US$20.0 million) aimed principally at augmenting the water supply of Lilongwethrough the construction of a dam/reservoir and to expand Lilongwe's watersupply system to cater for an increased demand.

Government's long-term target is for families to have access to safe water within 500 mof each household. The urban water supply component of MIP was aimed at expandingthe capacity of seven urban water systems and enabling them to cater for a growingdemand for potable water. Rehabilitation of rural boreholes and construction of new onessought to improve water supplies to a large number of rural people throughout thecountry, and helped reduce the time spent by families waLking long distances to fetchwater, especially in times of drought and in normal dry seasons.

9. Rehabilitation of selected public buildings was intended to improve their utilityand extend their useful lives. Except for minor emergency repairs, most of the targetedbuildings had not received adequate routine or periodic maintenance since construction.Thus their renewal was also meant to demonstrate the substantial savings that can be

-4-

gained from timely attention. It was also envisioned that long-term benefits would accruefrom the development of an on-going maintenance program that would obviate the needfor premature major rehabilitation or replacement investments.

D. Project Description

10. The Project provided financial assistance to the Government of Malawi toimplement a set of activities identified by the MOWS for management improvement andtraining as well as maintenance, rehabilitation and construction works in the roads, water,and public building sub-sectors over a five-year period commencing in fiscal 1989/90.The IDA Credit funded components of the project as described in Paragraph 11 below.The rest were cofinanced by ten (10) other multilateral and bilateral donors as describedin Section J and Annex 3.

11. IDA Credit Components comprised:

(a) MOWS Management Improvement: Implementation of a managementimprovement program for MOWS through Technical Assistance, and consultantstudies for the identification, installation and institutionalization of ManagementInformation Systems and training;

(b) Roads: (i) DRIMP Phase IV: Extension of DRIMP to five Districtscarried forward from the Fifth Highway Project (Mwanza, Blantyre andChiradzulu); rehabilitation of about 500km of additional roads in other districts;spot improvements on 350 km of existing DRIMP roads; and maintenancesupport. The first phase of DRIMP began in 1979 under the Second HighwayProject and continued under subsequent highway projects; (ii) RoadMaintenance Depots: Maintenance depots and residential houses for roadssupervisory personnel would be constructed or improved to support roadmaintenance activities; and (iii) Technical Assistance and Training forpersonnel of the Roads Department for a total of 298 person-months in roadplanning, design and construction specifically in the rural roads division and inthe soils and materials branch; for an urban roads study, and for PVHO;

(c) Water: (i) Urban Water Supply: augmentation of water supply systemsat Mponela, Mangochi, Ntcheu, Zomba, and Karonga through the expansion ofexisting schemes and construction of new intake systems, treatment facilities,storage tanks, trunk mains and distribution networks. Further, a complete re-valuation of all assets belonging to schemes in the District Water Supply Fund(DWSF) would be undertaken in order to update the Fund's asset register, and tofacilitate such future valuations; (ii) Rehabilitation of Boreholes: 500 boreholesout of a total planned 2500 were to be financed from IDA proceeds and theremainder by the UNCDF. Integrated into the rehabilitation program was theVillage Level Operation and Maintenance (VLOM) system which placesresponsibility for the sustainability of rural water supply services under usercommunities; and

(d) Public Buildings: The Buildings Department of the MOWS, with theassistance of Consultants, carried out an inspection of buildings from its inventoryand selected a total of 21 public hospitals, schools, colleges and other buildingsfor rehabilitation and improvement under the project.

12. Although all the components were identified by the Ministry of Works andSupplies during the project identification and preparation phases, some components weretransferred for execution by other Ministries notably the African Development Fund(AfDF) funded Road Safety component (Ministry of Transport and Civil Aviation), theIDA-funded Urban Roads Study (Ministry of Local Government), and the UNDPsupported Pilot Integrated Rural Transport component (Ministry of Transport and CivilAviation).

13. MOWS has, through the project, installed Management Information Systems tofacilitate program planning, implementation, monitoring, and the management decision-.making process. Computer-based programs such as the Integrated Financial ManagementInformation System (IFMIS), the Logical Framework, Water Billing Systems, FleetManagement Information System and Billing Systems for the Plant and Vehicle HireOrganization (PVHO), an enhanced Highway Design Model III (HDM III) for roadplanning, the Weigh-in-Motion traffic management model and the BuildingsMaintenance Management System (BUMMAS) for public buildings are all in use inMOWS and the Ministry of Irrigation and Water Development, as appropriate.

14. The MIP supported a number of ready-for-implementation studies in relation towater supply services and water resources management including the development of theNational Water Resources Management Policy and Strategies. . It also set up andequipped the Road Maintenance Initiative (RMI) Project Unit within the Ministry ofWorks and Supplies, and supported a study to rationalize (later restructure andcommercialize) the Lake Malawi Transport Services and Port Facilities.

E. Achievement of Project Objectives

15. Implementation of the MIP was dogged with delays which, arnong other problemsas will become apparent later, made it difficult for the project to achieved its objectivesfully, particularly in: i) the construction of new District Roads (39% achievement); ii)construction of road maintenance depots and staff housing (25%); iii) training ofcommunities in Community Based Maintenance of rural water facilities (31 %); and iv)in the rehabilitation of public buildings (35%). (See Table 5 and Annex 3) These delayswere largely attributed to: i) cost escalation as a result of time lapse betweenpreparation of project estimates in 1988 and declaration of credit effectiveness in June1990; ii) inadequate annual allocations to MOWS in Part I Public Sector InvestmentProgram (PSIP) development budget; iii) lack of counterpart funding from GOM for PartII of the PSIP; and iv) GOM's inability to satisfy those covenants of the credit thatimpinged on the rate at which the credit was disbursed.

- 6 -

16. Above all, the assumptions mentioned in Paragraph 5. above changed duringimplementation as donor sanctions to accelerate political change, withdrawal of co-financing agencies from the project, and a protracted drought, caused a reduction inavailable resources and budget cuts. Further, a culture of total risk aversion developed inthe civil service due to the severity of the former regime stifling initiatives, causing aconsiderable out-flux of managerial level staff, and a general drop in productivity in thepublic labor force.

17. At the time of the Mid-Term Review (MTR), it had become necessary to rescopethe project to respond to a prevailing adverse social, political, and economic environmentin the country caused mainly by: i) a prolonged drought in the region; ii) influx of overone million refugees fleeing the civil war in Mozambique after the project had alreadybeen appraised; iii) withdrawal of ODA support for Technical Assistance and fundingfor overseas students in the UK, many of whom were MOWS Architects; and iv) extraresources required for Technical Assistance (TA) to complete remaining works on theNorthern Transport Corridor Project (NTC, Credit 1879-MAI) when it became apparentthat its resources were becoming insufficient to achieve the desired results.Consequently, more emphasis was placed on the provision of potable water, access roadsfor haulage of relief items, and the improvement of hospitals in drought and refugeeconcentration areas than may have at first been envisioned. Secondly, a way had to befound to support the Ministry of Works' efforts in road maintenance as a result of GOM'sfailure to allocate sufficient funds in the road maintenance budget. The RoadMaintenance Initiative (RMI) concept was thus introduced in Malawi in 1994 to facilitatethe creation of a Road Fund to be financed from a fuel levy and road user charges andfines. The Bank was already introducing this concept elsewhere in the region withmeasurable success, and it was therefore seen as a sustainable way of financing roadmaintenance in Malawi.

18. Management Improvements and Capacity Development Component (MIC):The Ministry of Works and Supplies was, for the duration of this project, responsible forthe national road network, water supplies (except for Blantyre and Lilongwe), and plantand vehicle fleet management. The objective of the MIP was thus to strengthen themanagement of the Ministry to better manage its large multi-sectoral program. This needwas clearly brought out in a report by De Luew Cather International Ltd. in associationwith Price Waterhouse titled " A Blue Print for Management Improvement: Preparingthe Ministry of Works and Supplies to Meet the Challenges of Malawi 's Future"(January, 1988). The Management Improvement Component of MIP was thereforemodeled on the recommendations of this report and included work in the areas of

* Management Information Systems;* Financial Management Technical Assistance;* Plant and Vehicle Hire Organization (PVHO) Technical Assistance;* Executive Technical Assistance; and* Training of MOWS Management in program delivery.

-7 -

19. Implementation of this component has been satisfactory with the exception of thePVHO Technical Assistance which was terminated due to non-performance of theindividual procured under this sub-component, and the Buildings MaintenanceManagement System which was not fully realized due to complex parameters in thebuilding stock, and lack of model systems in this field. However, other informationsystems installed in the Ministry's key functional areas such as the Integrated FinancialManagement Information System (IFMIS), the Water Billing System for the DistrictWater Supply Fund, and the Logical Framework for Ministry-wide program planning andevaluation are all in active use in the Ministry.

20. Several MOWS officers received training that ranged from in-country shortcourses and workshops to undergraduate and postgraduate Degrees overseas in relevantfields. (Annex 5) Out of 31 officers who received scholarships for postgraduate studies,28 (90%) have completed their studies and are back in the country; 19 (6 1%) are inrelevant positions in the Ministry of Works and Supplies; 4 (13%) are in various positionswithin GOM or in GOM/IDA-funded Project Implementation Units (PIUs); 5 (16%) arestill studying; and 4 (13%) have joined the private sector or Non-GovernmentOrganizations (NGO). A total of 32 officers received sponsorships to attend various shortcourses within and outside the country in their fields of expertise. Of these, 25 are stillserving in MOWS or the Water Department - a 78% rate of retention. The rest (22%)have since left the Ministry either on posting within GOM, moved to international donoragencies and regional development organizations, or are deceased. The overall retentionrate in the Ministry of Works and Supplies at the time of preparing this report for theshort- and long-term training and staff development effort, including those still at school,was 80% (48 out of 60 officers). This is considered to be a satisfactory achievement,especially in the face of a severe shortage of skills in the country and the resultingscramble for experts on the market.

21. Two additional efforts in this area were: i) retention of the services of theController of Buildings, previously financed by ODA, under this component until thepost was localized in July 1995; and ii) engagement of Chief Architect TA to providesupport and training for young Architects until December 1995. At the time of the SARin 1989, there were 27 expatriates in the Ministry of Works. All these posts are nowoccupied by local staff as a result of an aggressive staff development program and anaccelerated localization program under the MIC component.

22. Roads: Successes achieved in previous DRIMP projects were replicated inDRIMP Phase IV, with the extension to the five districts carried over from the FifthHighway Project and spot improvements in 17 districts completed successfully. Fivehundred (500) kilometers of new district roads were planned to be constructed to DRIMPstandard in this project using small-scale Malawian national contractors wherever thesewere considered cost effective, and as part of government's deliberate policy ofdevelopment of national contractors. However construction of new roads in 21 districtswas delayed inordinately partly on account of lack of adequate local counterpart fundsand partly due to technical problems associated with the use of national contractors,

- 8 -

principal among which was the contractors' inability to secure Performance Bonds andworking capital. The Ministry made attempts to intensify implementation of the workstowards the end of the project in order to achieve the planned target. However, at the endof the project only 195 km of track were improved to district road standard in 19 of the 21districts.

23. Construction of Road Maintenance Depots: This component was droppedduring the MTR process and had its resources re-allocated to higher priority areas such asthe rehabilitation of rural roads and construction of rural boreholes. Work to constructnew road maintenance depots commenced early in the project but was suspended when itbecame clear that GOM counterpart funding was not forthcoming and the componentassumed a lower priority. As a result, only 8 maintenance depots and 7 residential housesfor Road Supervisors and Road Foremen were constructed to completion out of planned30 depots and 37 residential houses.

24. Road Maintenance Support: It was established during project implementationthat GOM allocations for road maintenance continued to decline over time, with theallocation for 1995/96 projected to be under 40% of the Ministry's requirements. Theselevels contravened Section 4.03 of the Development Credit Agreement (DCA). GOMtherefore sought agreement from the Bank to provide recurrent cost support on adeclining basis in line with its support for DRIMP roads. The DCA was amended suchthat the Association would finance 30% of maintenance expenditure in 1993/94, 25% in1994/95, and 15% in 1995/96 to provide an adequate and desirable level of service thatprotected the nation's road network without storing-up additional longer termrehabilitation costs. By December 1995, IDA had reimbursed GOM a total of MK7.111million for 1993/94 representing 30% of its expenditure on road maintenance, andMK6.06 million for 1994/95. The Accountant General has since claimed MK3.0 million,being 15% of the total expenditure on road maintenance to December 1995 of fiscal1995/96.

25. The Labour-intensive Mobile Pavement Repair Team (MPRT): In order tomaximize the application of the allocations as amended in the DCA, the Bank developedand proposed to GOM, during the project's mid-term review, a labor based "MobilePavement Repair Team" road maintenance approach using appropriate technologies. Themethod was "workshopped" with MOWS maintenance personnel to further develop theapproach, and a pilot was run in the Central Region of the country to test it. It wasconfirmed at the workshop and on the pilot that the method had a lot to offer to thesustainability of the road network in Malawi. The MOWS extended the MPRTthroughout the country using additional plant and equipment purchased from fundsreallocated within MIP.

26. Towards the end of the project (between September and December 1995) theProject supported the purchase of road maintenance plant and equipment consisting of 20motor cycles for supervisory staff, 2 tipper trucks, 3 farm tractors with trailers, 4 motor

9-

graders, 5 pick-up trucks (1-ton capacity), and bulk bitumen all at a total cost ofSDR983,000. These had all been delivered and put to use by project closure.

27. Road Maintenance Initiative (RMI) and the Integrated Road DevelopmentProgram (IRDP): Having appreciated the need to develop and establish a long-term andsustainable road maintenance system in close collaboration with others in the region,GOM has initiated the RMI and IRDP by employing a Road Maintenance InitiativeCoordinator initially funded from MIP and, effective January 1, 1996, by the EuropeanUnion (EU). The RMI Coordinator would, among other things, coordinate thedevelopment and passing of Legislation establishing a Road Maintenance Fund, andformation of a Road Board to oversee the utilization of the fund. Legislation has beendrafted and passing of a Bill by Parliament is expected within the 1997 calendar year.Substantial outputs from the RMI Coordinator in accordance with his TOR will form thebasis of the Bank's Road Maintenance and Rehabilitation Project (ROMARP) presentlybeing identified, as a follow-on to MIP.

28. Axle Load Study: Six main road sections on major inter-regional links wereinvestigated to determine the extent of axle loading on Malawi's primary network and thelikely effect of increasing the legal axle load limit from 8.2 tonnes to 10.0 tonnes tomatch the standard loading in the SATCC region. This was also in response to theincreasing traffic loading on the national network which far exceeds levels that werepredicted during the design phase of many of the country's major roads. Results of thestudy showed that increasing the legal axle load from 8.2 to 10.0 tonnes per axle wouldnot greatly increase the current adverse effect on the condition of most of the roadsinvestigated as most of them have deep, well designed pavements which are less sensitiveto increases in axle loading.

29. Water: Of the four urban water supply systems planned for augmentation underIDA financing, only two, namely Mangochi and Karonga, were fully implemented.Augmentation works for Mangochi Urban Water Supply involved new intake works onShire River, 2No. pressure filters with a capacity of 66m3 /hr each, construction of 1.01kmpumping main, 2 - concrete ground level storage tanks, each 400m3 capacity, and variousdistribution lines. Karonga Urban Water Supply works comprised 3 - river intake wellsand a collector well, 1.8km of raw water main, 1 - sedimentation tank (60m3/hr filtercapacity) and associated treatment equipment, a 536m3 storage tank, and 13.7km ofdistribution line. Current coverage for Karonga Water Supply is just over 16,000 out of atotal urban population of 20,000 (or 80%), while that for Mangochi is 18 ,000 out of atotal population of 27,580 (or 65%). The shortfall in coverage is expected to be cateredfor through the implementation of water supply augmentation works under the NationalWater Development Project (NWDP) by the newly formed Regional Water Boards.

30. Ntcheu, Zomba and Mponela Urban Water Supply Schemes: Because ofdelays in awarding a contract to the Consultant for Ntcheu Water Supply, and the speedwith which the Consultant proceeded, work only progressed as far as completion ofdetailed engineering studies, preparation of tender documents, and identification of new

- 10-

and more dependable sources of water for the town including a preliminary EIA for theselected alternative. Due to insufficient time available to project closure, constructionwas postponed and will now be carried out under the New Water Supply component ofthe NWDP. It was further agreed with the IDA that funds originally earmarked forconstruction works be utilized for the construction of 206 drought relief boreholesthroughout the country. Two high yielding boreholes (7 cumecs each) prospected in thearea were reticulated into the town supply as a medium-term solution for Ntcheu urbansupply. Mponela Urban Water Supply was dropped from the portfolio as the WaterDepartment had carried out improvement works using in-house (DWSF) resources.

31. Design of a new 45m high rockfill dam with a storage capacity of 330,000m3, andextension of existing treatment works and a distribution system for the Zomba UrbanWater Supply suffered from donor withdrawal as a result of the "good governance" issue.This project was high on the list of priority projects to benefit from a reallocation offunds within MIP during the MTR as a long-term drought relief intervention for the urbanpopulation in Zomba. Detailed engineering designs, preparation of tender documents,pre-qualification of Contractors, an Economic Analysis, and an EIA for the new dam sitehave been completed and adopted by the GOM. Construction of a new dam immediatelydownstream of the existing Mulunguzi Dam will be carried out under the NWDP, theoriginal site upstream of the existing site having earlier been rejected on account of anegative EIA on the ecosystem as discussed in more detail in Paragraph 35 below.

32. Rehabilitation of Boreholes: Implementation of this component suffered effectsof start-up delays and contractor procurement problems, resulting in a reduction of thetotal number of boreholes to be rehabilitated under the IDA credit from 1500 to 1450 tofit within the original funding commitment in the DCA. These boreholes were in theNorthern and Central Regions of the country. A further 1000 boreholes, cofinanced bythe UNCDF within MIP, were completed in the Southern Region. An additional 278boreholes were brought in for construction in the final eighteen months of the project toalleviate the scarcity of water in drought-stricken rural areas. At project closure, a total of2555 of the 2778 original plus feed-in boreholes were completed, i.e. a 92% success rate.A Drilling Rig and assorted water quality testing equipment for the National WaterLaboratory were also purchased as part of the drought relief intervention.

33. Formation and training of village committees in Village Level Operations andMaintenance (VLOM) at all the improved boreholes lagged far behind schedule,compromising their sustainability. A collaborative approach to VLOM in particular, andto the Community Based Maintenance of rural water, was developed by MOWS, IDAand UNICEF to reduce the backlog and accelerate future CBM and VLOM activities.This effort was promulgated to stakeholders (NGOs, the private sector and one donor) bythe Water Department through a Bank-funded workshop. It is hoped that this effort willbe implemented under the NWDP. The project also financed TA to clear the backlog ofVLOM training and by project closure only 778 of the original 1450 planned boreholecommittees had been trained; the rest were deferred to the NWDP. At the time VLOMwas included in the project as a community-based management of rural water supplies, it

was an innovative concept still in its developmental stages. MIP facilitated its furtherdevelopment and institutionalization in the Water Department.

34. The District Water Supply Fund (DWSF) Asset Valuation was completed in 1994with MIP funding to assist GOM fulfill its financial covenants stipulated in the DCA forthe sustainable operation of the fund. The valuation report contains updated replacementvalues of the assets scheme by scheme, and forms a valuable input to the BusinessPlanning process for the Regional Water Boards (RWB) being formed under the NWDP.It is important however that RWB personnel be sufficiently trained in re-valuation ofassets and the meaningful use of the information in the business development of the newBoards.

35. Public Buildings: Out of 21 public buildings identified for rehabilitation andimprovement, only 8 (eight) were completed representing a 38% success rate for thiscomponent. The main causes of this low rate of achievement were: i) cost escalation inexcess of 150% due to time lapse between the preparation of estimates and project start-up; and ii) unforeseeable additional works. The eight included: three District Hospitals;one Central (Referral) Hospital; three Secondary Schools; and a Teacher TrainingCollege. Machinga District Hospital and Chituo Housing were dropped from the originallist as they had received alternative funding - from KfW for construction of a newMachinga District Hospital, and from GOM for Chituo Housing.

36. Completion of Minor Works for the NTC: While not in the original projectdesign, US$0.57 million was set aside in 1992 for the engagement of a ProjectCoordinator to oversee the completion of remaining minor rectification tasks on the NTC.Successful completion of the NTC was critical to the removal of transport bottlenecksexperienced by the country in its import-export trade, and as an alternative route to thesea ports. By December 1995, all outstanding minor works, including TA had beencompleted satisfactorily and within budget.

37. Study for the Privatization of Lake and Port Services: A total of SDR27,030was reallocated from MIP to finance a study to privatize Lake Malawi and Port Services,formerly part of Malawi Railways. The study, which generally cites the viability of theseservices, was implemented by the Ministry of Transport and Civil Aviation, and theConsultant submitted his final report in January, 1996. The report forecasts increasingdemand for MLS passenger and cargo services but emphasizes the importance of speedand efficiency for MLS if it is to survive competition from alternative modes of transport.

38. Environmental impact: The Project Staff Appraisal Report predicted beneficialeffects on the environment as a result of implementing the project. Construction of newDRIMP roads, and rehabilitation of existing earth roads has had beneficial effects ofchecking soil erosion in adjacent land, as was originally predicted, by channelingstormwater into engineered drainage structures. Improved road pavements haveincreased access to some parts of the country during the wet season, and reduced damageto vehicles. Abandonment of the first dam site for Zomba Urban Water Supply has

- 12 -

ensured the conservation of the unique ecosystem around the marsh on Zomba Plateau.Siting of the new dam at the site of the existing dam is expected to have no significantadverse environmental impacts, and will offer a larger body of water not only for watersupplies but also for sport fishing, camping, and other recreation. In rural areas,rehabilitation of boreholes has afforded safe water to a large number of rural people withaccompanying positive health consequences. It has also significantly reduced thedistance that families have to walk to sources of safe water especially during periods ofdrought, thus freeing up valuable time for other more productive socio-economicactivities.

F. Key Factors Affecting Project Implementation

39. Factors generally within GOM control that contributed to the gap betweenactual and expected project outcome included: i) government's failure to allocatesufficient funds to Part II of the PSIP development budget (local contribution) for roadconstruction and rehabilitation; ii) the government's inability to allocate sufficient fundsin the recurrent budget to meet adequate service levels of road maintenance in compliancewith a Credit Covenant; iii) slow procurement of goods and works leading to tardyproject start-ups and failure to complete projects within time; iv) non-compliance withCredit Covenants as agreed in the project DCA (See Table 10); and v) reduced MOWstaff capacity when large numbers of staff were sent outside the country for training.

40. Factors generally not within GOM control that contributed to the gap betweenactual and expected project outcome included: i) IDA's condition not to declare theCredit effective until all donor commitments for cofmanced subprojects scheduled tobegin in the first year (1989/90) had been obtained; and until GOM had received firmcommitments from cofinanciers for second year (1990/91) subprojects; ii) withdrawal ofdonor support on govemance grounds meant that GOM had to find alternative sources offunds, or the projects deferred; iii) a long gestation period between project appraisal andstart-up; iv) adverse effects of a prolonged drought; v) adverse economic and politicalconditions that finally forced the floatation of the local currency; and vi) requisiteadditional preparatory work, such as detailed environmental impact assessments, notenvisioned at appraisal. The Bank's project processing procedures were changed in themiddle of MIP preparation to include mandatory Environmental Impact Assessments.This later resulted in longer processing and implementation of physical components thanoriginally planned (Zomba Dam and Ntcheu Urban Water Supply for instance) toaccommodate the new requirement.

G. Project Sustainability

41. Continued capability of the Ministry of Works and Supplies on the one hand, andof the Water Department on the other, to plan and manage their respective programs in anefficient and effective manner depends to a large extent on their ability to retain highlytrained staff within their employ, and to use and manage the Management InformationSystems in a beneficial and sustainable manner. There is presently a significant staff

- 13 -

turnover due to attrition to the private sector and donor-funded projects, transfers withinGOM, and loss due to natural causes. Highly sophisticated management infornationsystems currently working satisfactorily run the danger of under-utilization, or of lyingidle, if the staff that was specially trained to manage them leave the Ministry and theDepartment for whatever reason. GOM must therefore find ways and means of retainingstaff with rare skills, and of training people to succeed them, if it is to maximize benefitsfrom these expensive investments, and manage its programs efficiently and effectively.The training given under this project to the small group of specialists referred to inparagraph 17 appears to have succeeded in retaining an adequate proportion.

42. The sustainability of the national road network has been the subject ofconsiderable concern throughout the project primarily because of low budgetaryallocations for road maintenance, despite IDA contribution to annual expenditures on adeclining scale. The level of service on the national network has so far deteriorated to thepoint where most of the roads and bridges (including main roads) become impassableduring the rain season. Under 40% of the network has been maintained to a minimumlevel of service for the past four years, with the rest of the network left to deteriorateprematurely. This trend is likely to continue in the foreseeable future unless a majorintervention is introduced, such as the creation of a dedicated Road Fund, managed by aRoad Board as is currently envisaged for the proposed Road Maintenance andRehabilitation Project (ROMARP).

43. The Medium Term Expenditure Framnework (MTEF) introduced by government inthe 1996/97 financial year revenue budget isolates priority sectors for a deliberatepreferential allocation of funds to facilitate the achievement of the government'sobjective of poverty alleviation. The Ministry of Works and Supplies is among thepriority Ministries. Road maintenance enjoys MKI05.O million (62%) out of the totalMTEF allocation of MK169.0 million to the Ministry. Even so, this represents only 40%of the maintenance requirements for the national road network. The rest of the sectorsselected for MTEF are agriculture, health, education, and national security. It is thereforeimperative that passing of Legislation establishing a Road Maintenance Fund, and theformation of a Road Board to manage the fund, are accelerated in order to salvage thenetwork from further deterioration, and reduce road user costs.

44. Rural water supply services were generally not implemented in a manner likely toresult in sustainable infrastructure. Over 2,500 boreholes were rehabilitated, but severalhundred of the communities served by these boreholes were not given adequate trainingin operation and maintenance. The lessons of the past are that for adequate sustainability,the communities should participate in the planning phase, and their commitment tomaintaining the facilities should be secured before physical work at the site iscommenced. This was generally not done. The water supplies for towns were providedunder somewhat more sustainable conditions. Nevertheless, the District Water SupplyFund was consistently underfunded as many Government agencies were in arrears andremain so at the time of writing. More sustainable arrangements will be established withthe implementation of the National Water Development Project (NWDP) that was

- 14-

declared effective on May 1, 1996, and the Bank/UNICEF promoted collaborativeapproach to the sustainability of rural water services. However, sustainability asimplemented under the MIP is considered to be unsatisfactory.

45. Significant improvements made to a few selected public buildings would havebeen sustained through the MIP-financed Building Maintenance Management System(BUMMAS) installed in the Buildings Department of MOWS for the timely maintenanceof the government building stock. Regrettably, this is an area that continues to receivelittle attention and commitment from GOM, with preference going to new constructionrather than the up-keep of existing stock. Sustainability of public buildings is thereforehighly unlikely unless the government's attitude towards the maintenance of its buildingschanges radically; and more innovative structures for the maintenance of its stock, suchas decentralization and more private sector participation are tried.

H. Bank Performance

46. Identification: The MIP was identified with the MOWS as a continuation of theBank's support in the roads sector. However, agreement was reached between GOM andthe Bank during project preparation to extend the scope of the project to all the sectors inthe Ministry's program, namely water, buildings, and human resource development andtraining, for a more comprehensive coverage of the Ministry's functions. Much as thiswas desirable, it did not sufficiently take into consideration the Ministry's capacity tomanage the resulting large and complex project, as well as government's ability tofinance the local contribution through the Public Sector Investment Program (PSIP) andallocate adequate maintenance costs annually on the recurrent budget.

47. Appraisal: In 1987/88, the Ministry of Works and Supplies identified andpackaged the project components into a portfolio, drawing upon recommendations of thestudies which formed the basis for World Bank appraisal. The Bank, however, took thelead in identifying bilateral and multilateral cofinancing donors, and coordinatingdiscussions between them and GOM. The Bank's performnance was not satisfactory inforecasting project costs, and in assuming a stable political and economic enviromnentduring project implementation. Secondly, having earlier determined that theimplementing Ministry did not have enough capacity to manage its existing program andneeded to be strengthened, the Bank proceeded to appraise an expanded and complexmulti-sector project. This oversight contributed to a less satisfactory project managementcapability by the Ministry of Works and Supplies during implementation, andgovernment's inability to service the project on the PSIP and recurrent budgetsadequately.

48. Project Implementation and Supervision: The Bank changed Task Managersfour times in the course of project implementation, which sometimes delayed importantdecisions, especially during the change-over periods. In total, the Bank fielded tenmissions totaling 59.4 staff weeks throughout the implementation period, compared to47.2 staff weeks through to appraisal. In particular, there was no supervision in the roads

- 15-

area between June 1990 and February 1992 (Table 11). This level of supervision was notsatisfactory and contributed to an under-achievement of targets in road improvementprojects. Secondly, it took the Bank six months to review and complete the MTR evenafter Government had submitted to the Bank its draft MTR report within the time frameagreed with the Government. Consequently, this delayed implementation of criticalcomponents of the project aimed at averting adverse effects of the drought, and those thatsuffered withdrawal of donor support such as Zomba Urban Water Supply.

49. The MTR further recognized the changed environment in the country andGovernment's eagerness to accelerate project implementation. At this stage, the Banktransferred task management to a field officer who, backed by HQ support, successfullyapplied the approach developed at the MTR of monthly progress monitoring meetingswith the implementing agency, use of experienced local consultants, and resolution ofoutstanding matters with the Client in the field.

I. Borrower Performance

50. Preparation: GOM performance was satisfactory largely because of the largenumber of studies that preceded project preparation. One major problem worthy of note,however, was the inability of the Ministry of Works and Supplies to prepare realistic costestimates for most of the rehabilitation works, largely on account of lack of a regularlyup-dated cost database. This was exacerbated by the fact that, by their nature,rehabilitation works are often difficult to quantify and cost with a degree of accuracy.This caused significant cost escalations at the time the components were implemented,although this was later aggravated by an inclement economic environment..

51. Implementation: Although GOM's overall performance in implementing MIP isassessed as satisfactory, some aspects of implementation were deficient. These were: i)inability of GOM to secure firm donor commitments timely; ii) tardy procurement ofgoods and works; iii) inability of local contractors to mobilize Performance Bonds andInsurance for capital works; iv) use of low capacity force account for capital works; v)inadequate Part II funds in the PSIP to support construction and rehabilitation works; andvi) management capacity limitations in implementation.

52. The rate at which funds were disbursed however was satisfactory. At the time ofsubmitting GOM's pre-MTR report on September 30, 1992, SDR 7.9 million wasavailable for re-allocation to new priority areas while the MTR report in June 1993showed a total disbursement of SDR17.5 million i.e. 61% of the total Credit (SDR22.3million). GOM performance was particularly satisfactory in the ManagementImprovement Component, various Consultancies, Technical Assistance, augmentation ofurban water supplies and rehabilitation of rural boreholes, and support for the NTC.

53. During the final supervision mission in July, 1995, GOM projected that the creditwould be fully utilized by project end. As at April 30, 1996, just under SDR4.00 (SDR

- 16 -

four only) remained undisbursed. Disbursement of remaining funds identified during theMTR accelerated with improved project management mainly as a result of transferringproject supervision to the field.

54. Compliance with the legal Credit covenant in Section 4.03 of the DCA relating toadequate allocations in the Revenue Budget for road maintenance was, overall,unsatisfactory. Specifically, budgetary support for road maintenance throughout theproject remained below agreed levels. This Covenant was later dropped when agreementwas reached with the Bank to amend the DCA to include an IDA contribution of SDR2.4million towards road maintenance funding for 1993/94 to 95/96, on an exceptional basis.This was, however, subject to additional GOM allocations in the recurrent budget toachieve acceptable levels of service on the network.

Article IV of the DCA covers financial covenants relating mainly to accounting and auditrequirements for the project, and financial performance indicators concerning the DistrictWater Supply Fund (DWSF). There had been no problems with compliance with thesecovenants as the implementing Ministry maintained detailed records of all transactions,and audited DWSF Accounts regularly. However, Government debt to the DWSF inexcess of 90 days continued to remain very high to the end of the project. (Table 10)

J. Performance of Cofinancing Agencies

55. In addition to the International Development Association (IDA) and theGovernment of Malawi, the MIP was cofinanced by ten other bilateral and multilateralagencies as listed in Table 8. A condition for negotiations of the IDA Credit was thatGOM receive firm commitments from cofinancing donors for financing subprojectswhose implementation was scheduled to begin in the first year (SAR Chart 2). Donorcommitment to projects was in a number of cases slow to materialize. Instances whereneither donor would commit to a component until others committed, imposed an extranegotiation burden on the Government, often resulting in failure to secure firm funding.Consequently, IDA Credit Negotiations were delayed by nearly five months. Table 6shows progress made in the implementation of cofinanced components at the date of thisreport. A brief discussion of the performance of each cofinanced component is given inAnnex 3. Of the ten Cofinancing Agencies listed in Tables 6 and 8, two (JICA andDANIDA) withdrew completely, three (KfW, UNDP and ODA) withdrew part of theircommitment, one (EDF) suspended a component of its commitment and later resumed,and one (AfDF) was subject to delays due to its internal restructuring program. Five(EDF, USAID, AfDF, UNDP and GTZ) are supporting components which are stillcontinuing. Given the circumstances, no attempt was made to seek the comments of theCofinancing Agencies on their own performance.

K. Assessment of Project Outcome

56. The MIP was unique and particularly complex, as it cut across several subsectors,and was cofinanced by a total of eleven donors with the Bank as the lead donor, and the

- 17 -

Government of Malawi contributing to local costs. Consequently, it stretched theMinistry of Works and Supplies' resources to the limit. Tying effectiveness of the IDACredit to financing from other donors only served to delay project implementation andcontributed to cost escalation. Component costs also escalated because of progressivedeterioration of the facilities in the time leading to implementation, poor estimating, andlack of monitoring of costs during the project preparation period. All these affected theoutcome of the project to varying degrees.

57. In general, the project met its objectives only partially, albeit in their altered state,as described in more detail in Paragraph 13 above. This is mainly because the Borrowerhad to respond to adverse socio-economic and climatic environments. The Bank'sflexibility in allowing GOM to modify its priorities, however, facilitated the achievementof the some of the objectives. Much more could have been achieved in the roads sector inparticular if government contribution to the development as well as recurrent budgets ascommitted in the DCA had been forthcoming in a timely manner. Donor withdrawalfrom large capital projects resulted in more IDA-financed components in the PSIP, butthe overall impact of this withdrawal on the national infrastructure was substantial. Forinstance, several roads improved with previous donor support remained in an extremelypoor state of disrepair at project closure.

L. Economic Analysis

58. Table 9 compares the Economic Rates of Return at project appraisal in June 1988for first year components, to those of major IDA components at the time of preparing thisICR (August 1996). The same model was used in both cases. No calculation of ERR wasmade at appraisal for smaller sub-projects such as the road safety program, gravity-fedrural piped water schemes, training, and technical assistance as they were seen ascomplementing the larger project and were well justified. ERRs at project closure arewell above those projected at appraisal and range between 27% and 97% for therehabilitation of public buildings largely from benefits accrued from the cost ofreconstruction avoided, and associated savings from annual maintenance costs.Rehabilitation of hospitals, in particular, gives even higher ERRs on account of increasedutilization of the improved facilities, an unprecedented increase in the number of patientsaggravated by an influx of refugees fleeing the civil war in Mozambique, and due todiseases associated with the effects of drought such as diarrhea and malnutritionespecially in children. ERRs for DRIMP roads too are above the average 12% calculatedat appraisal, and are 38% for extension works, 26% for spot improvements, and 21% fornew roads. As in public buildings, this improvement is mostly attributed to increasedutilization for the conveyance of relief items to drought areas which were speciallytargeted; reduction in annual maintenance costs; increased agricultural production in the1994/95 growing season due to excellent rains; and due to traffic diverted from the poorlymaintained primary and secondary road system.

59. Rehabilitation and construction of boreholes give equally high ERRs (1 18% and50% respectively) mainly due to increased number of households per borehole,

- 18-

particularly in drought-hit areas; savings accrued from walking long distances to safewater points; and reduced maintenance costs as a result of the transfer of responsibilityfor the operation and maintenance of boreholes to user communities through the VLOMconcept. Improved health of communities as a result of using safe water supplies is also acontributing factor. For urban water supplies, the ERRs ranged between 13% and 17%,and are well above the 6.1% calculated at appraisal. This was due to additional watersales, made possible by reducing water losses through system rehabilitation. Thisenabled additional demand to be met by the project, which in turn resulted in improvedhealth for the users of the improved schemes.

M. Key Lessons Learned

60. By its sheer size and complexity, the MIP offers a rich ground for useful lessonsfor future operations in the infrastructure sector. The following are considered as key:

a) Project cost estimates made during project appraisal should be monitoredclosely in the period leading to project implementation. Flexibility should bebuilt into project financing to cushion the effects of cost escalations especiallyin weak economies.

b) Levels of investment in development projects should be set having regard toprojected annual Public Sector Investment Program (PSIP) sector ceilings, andthe ability of the Ministry of Finance to allocate sufficient counterpart funds toavoid deferment of components. The ability of government to match recurrentexpenditures with the rate of infrastructure development should also beassessed and confirmed at the appraisal stage, and reassessed annually.

c) Frequent supervision missions with an appropriate skills mix should havebeen undertaken throughout the life of the project to monitor project progressand ensure compliance to Credit Covenants, especially given the complexityof the project and the high turnover of staff on both the Borrower and Donorsides. Project implementation can be facilitated when task management andsupervision responsibilities are transferred to an experienced officer in thefield. In the current project, the decision to rescope the project and transfermanagement responsibilities to the field should have been reached proactively,and not wait for the midterm review.

d) Benefits accrued from implementing a complex multifarious project funded bya host of bilateral and multilateral aid donors should be traded-off againstdifficulties faced by the Borrower in satisfying each donor's requirements, itsresource base to meet budgetary requirements, and its capacity to implementthe project satisfactorily. In the case of the MIP, the multi-sectoral approachwas not a good idea because: i) it was too complex to deal with as oneprogram; ii) different skills and specialties were required to manage it in theClients organization; and to supervise water supply, roads, public buildings,

- 19 -

and capacity building components by the Bank; and iii) Bank supervisionbudgets tend to be allocated by project rather than by program, and the factthat MIP was in fact three sector projects rolled into one large program mayhave complicated project supervision.

e) Different elements of the same component co-financed by a number of aidagencies, (e.g. Zomba Dam, Treatment Works, Extension of Distribution andNew Sewerage Works for KfW, Danish International Development Agency(DANIDA), and the Japanese International Cooperation Agency (JICA)respectively) pose special challenges especially when one agency withdrawsits support for the project. Future projects should be so designed as to avoidsuch complex and interdependent arrangements;

f) Problems encountered in implementing a complex infrastructure project, andthe lessons learnt from it as cited above, underscore the importance ofdeveloping sector projects from a clear institutional framework. Developmentof long-term sector policies such as the National Water ResourcesManagement Policies and Strategies, the National Transport Policy, and theNational Environmental Action Policy guide the formulation of currentprojects. Government adopted sector policies are increasingly becoming amandatory requirement by the Government of Malawi for public sectorinvestment projects in Malawi.

g) The argument made in f) above may be extended to include the increasedinvolvement and participation of stakeholders and beneficiaries in thedevelopment of projects, particularly the participation of the private sector andbeneficiary communities in provision and maintenance of infrastructure.Creation of a Road Fund and an independent Roads Board to finance andmanage road maintenance respectively; and the Community BasedManagement (CBM) of rural and peri-urban water services are good examplesof the application of this lesson. This also ensures transparency andaccountability in the use of public resources by government.

PART II: STATISTICAL TABLES AND ANNEXES

PART II: STATISTICAL TABLES AND ANNEXES

Table 1: Summary of AssessmentsTable 2: Related Bank Loans/CreditsTable 3: Project TimetableTable 4: Credit Disbursements: Cumulative Estimated and ActualTable 5: Key Indicators for Project ImplementationTable 6: Summary of Progress of Co-financed ComponentsTable 7: Studies Included in ProjectTable 8: Project Financing PlanTable 9: Economic Costs and BenefitsTable 10: Status of Legal CovenantsTable 11: Bank Resources: Missions

Annexes: 1 Completion Mission Aide-Memoire2 Borrower Contribution to the ICR3 Performance on Cofinanced Components4 Performance of AfDF/ADB Financed Components5 Management Improvement Component: Training Sub-Component

TABLE 1: SUMMARY OF ASSESSMENTS

Assessment Parameter Substantial Partial Negligible Not Applicable

A. Achievement ofObjectives

Macropolicies xSector Policies xFinancial Objectives xInstitutional Development xPhysical Objectives xPoverty Reduction xGender Issues xOther Issues xOther Social Objectives xPublic Sector Management xPrivate Sector Management x

Likely. Unlikely, U , . 1

B. Project Sustainability x

Highly. .~~~~~~~'; .".-

C. Bank PerformanceIdentification xPreparation Assistance xAppraisal xSupervision x

.2. ."i; S ; . ,,Sfiad f r _ Dcficint D. Borrower PerformancePreparation xImplementation xCovenant Compliance xOperation x

-x Highly; ,,i % Ar+t-: 4Highly

E. Assessment of Outcome x

Note: * (See Annex 5: Management Improvement Component: Training Sub-Component)

TABLE 2: RELATED BANK LOANS/CREDITSProject ID Amount Purpose Year of Status (%

USS mill. Approval Complete)_~ =.

Preceding Operations

1. Transport Sector

3MAL-PA-002 0.50 Highway Engineering: Detailed engineering of the 1967 CompletedZomba-Lilongwe Road (290km)

3MAL-PA-005 11.50 Highway: Reconstruction, bitumen paving of the 1968 CompletedZomba-Lilongwe road. Consultants study of roadtransport licensing regulations.

3MAL-PA-013 10.00 Highway II: Construction of the Lilongwe- 1975 CompletedKasungu road (113 km). First phase of a DistrictRoad Improvement and Maintenance Program(DRIMP).

3MAL-PA-019 10.50 Highway III: Construction of Kasungu-Jenda road 1978 Completed(85km) feasibility study and detailed engineering oflenda-Mzuzu road

3MAL-PA-026 33.00 Highway IV: Construction of main Jenda-Luwawa, 1981 Completedand Mbowe-Mzuzu-Ekwendeni Road and DRIMPPhase II

3MAL-PA-035 44.9 Highway V: construction of Luwawa-Champhoyo 1984 Completedroad; DRIMP Phase III; provision of weigh bridges.

MW-PA-1634 140.75 Transport I (Northern Transport Corridor): 1987 Completedaltemative route to sea port of Dar-es-Salaam inTanzania for import/export trade

2. Water Sector

711 -MAI 7.0 Expanded water supply capacity for Blantyre; 1977 Completedstrengthening management of Blantyre WaterBoard.

1272-MAI 4.0 Formulation of long-range plan for Lilongwe Water 1982 CompletedBoard.

1 742-MAI 20.0 Expanded water supply storage water and 1986 Completeddistribution system for Lilongwe.

Following Operations

MW-PA-34489 16.2 Railways/Lake Services Restructuring Project: 1995 ActiveRevitalizing the shorter route to Nacala;restructuring commercialization and ultimatelyprivatization of Railways and Lake Services

MW-PA-1667 94.1 National Water Development Project: 1995 Activeimplementation of GOM's Water ResourcesManagement Policy and Strategies.

TABLE 3: PROJECT TIMETABLE

Steps in Project Cycle Date Planned Actual Date

Identification February, 1987 February-October 1987

Initial Executive Project Summary - January 13, 1988

Pre-Appraisal January, 1988 October 1988

Preparation February, 1988 February, 1988

Appraisal June, 1988 November, 1988

Negotiations November, 1988 April, 1989

Board Presentation January, 1989 November 7, 1989

Signing - December 14, 1989

Effectiveness April, 1989 June 19, 1990

Mid-Term Review* April, 1991 Nov. 1992-May 1993

Project Completion June 30, 1995 December 31, 1995

Date of Last Disbursement December 31, 1995 April 30, 1996

Note: * MTR commenced in November 1992, was suspended, andcompleted in May 1993 after the Borrower submitted missing data andinformation.

Source: Project File and relevant Aide Memoirs

TABLE 4: CREDIT DISBURSEMENTS

CUMULATIVE ESTIMATES AND ACTUALS

(US$ MILLION)

FY90 FY91 FY92 FY93 FY94 FY95 FY96

SAR Estimate 3.1 8.9 16.5 23.1 27.4 28.0 28.8

Actual 3.3 8.9 14.8 19.3 22.2 25.7 28.8*

Actual as % of estimate 106 98 90 84 81 92 100

Date of final April 30,disbursement 1996

Note: * = Balance of Disbursement as at April 30, 1996 was justunder SDR4.00

Source: MIP, Project Accounts Office, Ministry of Works and Supplies.

TABLE 5: Key Indicators of Project Implementation

Key Indicators Planned Actual Achievement

Physical Outputs

1. Roads

1. 1 DRIMP Phase IV Extension 3 Districts 5 Districts 167

1.2 Spot Improvement - DRIMP Roads 350km 350km 100

1.3 DRIMP New Roads 500km 195km 39

1.4 Road Maintenance Depots

1.4.1 Maintenance Depots 30 units 8 27

1.4.2 Supervisory Staff Housing 37 units 7 20

2. Water

2.1 Extension of Urban Water Supply* 4 Schemes 3 Schemes 75

2.2 Rehabilitation of Boreholes

2.2.1 Rehab. of Boreholes 2500 2450 98

2.2.2 Training of Committees 2500 778 31

2.3 Construction of New Boreholes 0 246 *

2.4 Design of Water Schemes 0 2 *

3. Public Buildings

3.1 Rehabilitation of Public Buildings 21 8 38

3.2 Lilongwe & Zomba Training Centers 2 0 0

4. Studies 0 8

Note: * Ntcheu urban water supply completed to final engineering design and preparation oftender documents, and Mponela Urban Water Supply was carried out by GOM using ownresources.

TABLE 6 - SUMMARY OF PROGRESS ON MAJOR IDA AND CO-FINANCED COMPONENTS

Cofinancin Cost /(a) Completion

Project Name / Description Agency Planned Actual Date Remarks(US$ mil.) (US$ mil.)

1. Roads1.1 Rehab. of Paved Roads

Chikwawa-Bangula (74km) AfDF 3.9 0 Delayed due to ADB restructuring and difficulties with procurement of services

Limbe-Thyolo-Mulanje-Muloza (104km) EDF 15.4 , 21.8 In progress Delayed to to donor withdrawal (govemance). ^ Cost given is Tender Value

Chilumba-Karonga (80km) EDF 6 0 Deferred pending realization of savings from L-T-M-M above.Feasibility study commenced.

Lilongwe-Salima (79 km) ODA 14.3 30.8 May' 94 Completed but with BP4.5 million in Contractor claims due to excessive earthworks1.2 Rehab. of Other Roads AfDF 7.5 On-going 153 out of planned 286 km of earth road were improved to

gravel standard using national contractors

1.3 Road Improvements AfDF 2.2Karonga-Chitipa-Nakonde-Mpulungu On-going Detail Engineering Design in progress

Mzimba-Mtangatanga 1.9 0 Deferred due to lack of funds

Bangula-Nsanje-Marka ( 74km) AfDF/IDA 0 On-going Feed-in to MIP, Detail Enginerring Design in progress

Dwangwa-Nkhata-Bay (& Bua Bridge) EDF 6.5 24.8 Aug. 1994 Cofinanced with KMW (EDF 90km, KfW 45km + Bua Bdge.)KfN 7.9 20.5

1.4 Resealing of Paved Roads AfDF 4.6 3.5Nkhota-kota-Dwangwa (58km) 1.2 1.8 Completed 1995Benga-Nkhotakota (53km) 1.1 1.7 Completed 1995

Mzuzu-Nkhata-Bay (37km) 1.3 0 DeferredMzuzu-J. Mzumara-Chiweta (68km) 1.0 0 Deferred

1.5 DRIMP Phase IV IDA 5.1 6.8 Dec. '951.6 Improvements to 8 Bridges AfDF 2.2 0.4 Two bridges completed and a third commenced. Slow progress due to cost

due to cost escalation and procurement delays for reduced number to beimproved.

1.7 Road Signs DANIDA 1.5 0 Withdrew support due to govemance issue

1.8 Maintenance Equipment JICA 5.8 0 6th Japanese Grant Aid: Withdrew on political grounds1.9 Vehicles and Equipment JICA 2.3 0 6th Japanese Grant Aid: Withdrew on political grounds1.10 Road Maintenance Depots IDA 0.7 0.3 Under achievement due to use of inefficient force account

1 11 Rural Transport Pilot Program UNDP 0.5 In-progress In progress in Min. of Transport and Civ. Aviation. Pilot truckson trial by local (rural) rural transporters

1.12 Road Safety AfDF 1.0 May, '96 Min. of Transport and Civ. Aviation - Completed

TABLE 6 - SUMMARY OF PROGRESS ON MAJOR IDA AND CO-FINANCED COMPONENTS

Cofinancin Cost /(a) CompletionProject Name / Description Agency Planned Actual Date Remarks

(US$ mil.) (US$ mil.)

1.13 Bitumen Overlay Training GTZ 1.7 In-progress Phase I completed, Phase II in progress1.14 Tech. Assist. and Training AfDF 1.3 0 Funds not made available to GOM

IDA 1.8 1.27GTZ 1.2 1991 TA in Construction Contract Mngmnt. and DRIMP Road

Maintenance Management completedODA 1.1 Dec. 1993 Contracts for OSAS TA (Highway Eng., Structural Eng.,

Architects, Quantity Surveyors, and other OSAS personnel)rendered non-renewable. Student Scholarships also withdrawnmid-term.

UNDP 0.6 0 Withdrew support1.15 Superv. of Constr. Projects AfDF 1.3 On-going

2.0 Water Supply2.1 Urban Water Supply AfDF

Mzuzu Dam 2.4 2.8 Completed in July, 1994Kasungu Dam 1.4 1.5 Completed in July, 1993Karonga and Mangochi Schemes IDA 1.8 2.3 Karonga and Mangochi urban supply works completed

KfW 8.0 0.0 Withdrew support along with DANIDA (and later JICA)2.2 Rehab. of Boreholes UNCOF 5.0 923 rural boreholes rehabilitated

IDA 4.4 4.5 Dec. '96 1401 rural boreholes rehab'd., 246 boreholes constructed763 Committees trained in CBM of boreholes /(d) (46%)

2.3 Gravity-fed Rural Schemes USAID 1.6 Technical Assistance reviewed the PHICS /(b) Program and 8schemes constructed /(c)

2.4 Tech. Assist. and Training UNDP 0.6 Dec. 96 374 Village Committees trained in CBM of rural boreholes (37%)May, '95 TA to design improved direct action shallow well pump

completed, prototype under field test2.5 Superv. of Urban Water Supplies AfDF 0.9 0.9 June, '95 Completed (Mzuzu and Kasungu)

IDA 0.9 0.52 Sept. 1995 Completed (Mangochi, Karonga and Design of Ntcheu Supply)3. Public Buildings

3.1 Rehab. of Public Buildings IDA 6.9 3.6 8 out of original 21 institutions rehabilitated to completion3.2 Training UNDP 0.4 0 Withdrew support3.3 Supervision and Design UNDP 0.8 0 Withdrew support

4. Project Preparation Finance (PPF) IDA 1.5 Fully utilized and refunded

Sources: Ministry of Works and Supplies Notes:Pmject Office, and

Ministry of rrigation and Water 1. Most donors paid their costs off-shore, hence no expenditure records in projectPlanning Section 2. (a)/ Induding contingencies but net of taxes and duties

(b)l Primary Health Intervention for Child Survival(c)t Sekwa, Usisya, Ruarwe, East Bank (Limphangwe, Maperera, Mbabzi, Livunzu),

and Namitambo Schemes(d)I Community Based Management (of rural water services)

TABLE 7: STUDIES INCLUDED IN PROJECT

Study Purpose as derined at Appraisal Status Impact of Study

1. "Malawi Lake and Port Investigate privatization and Completed Privatization andServices Privatization and commercialization options for profitable December CommercializationCommercialization Study" operations, and recommended best option 1995 of Services(KPMG Peat Marwick) for implementation

2. "Ntcheu Urban Water Detailed design for augmentation of Completed FacilitateSupply: Detailed Engineering supplies for Ntcheu Urban May 1995 construction ofStudy and EL " (Willie & augmentation worksPartners). in the NWDP

3. "Zomba Water Supply: Ready-for-construction drawings, tender Completed Preparation forDetailed Engineering Study, documents, and pre-qualification of November constructionEconomc Analysis and EU" tenderers for Dam, Treatment Works, and 1995 Contract award.(Lahmeyer International) Distribution System

4. Project Coordinator for the Trouble-shooting and coordination of Completed Facilitated projectNTC, Various Progress completion of remaining minor September completion andReports (John Ryder) rectification works on the NTC 1995 finalisation of

accounts

5. "DWSF Asset Valuation Update asset base and coordination of Completed Provides baseStudy" (COWiconsult) completion of remaining minor August information for

rectification works on the NTC 1995 Business Planningfor the newRegional WaterBoards

6. "Axle Load Study" (Centre Investigate the degree and extent of axle Completed Set minimum finefor Scientific and Industrial loading on the primary network & February of MK300/tonneResearch, RSA) implication of increasing the legal axle 1994 overload and inputs

load limit from 8.2 to 10.0 tonnes into the plannedRoad Fund underROMARP

7. "Assessment of Road Identify options available for the Completed Used as spring-Maintenance Requirements" maintenance of the national road November board for setting(Scott Wilson Kirkpatrick and network, with associated levels of 1993 levels of service andPartners) service and costs. Select and advise developing the

recommend option "Mobile PavementRepair Team"approach.

8. "Urban Roads Study" Assess urban road infrastructure Completed Preparatory input to(BCEOM/Lahmeyer condition and recommend improvements October the on-going LocalInternational Ltd.) including a Facility Maintenance and 1992 Government Dev.

Rehabilitation Information system. Project

TABLE 8: PROJECT FINANCING PLAN

Local I Foreign | Total % of Total

Source (US$) (US$) (US$)

Government of 12.7 - 12.7 8.0Malawi

IBRD/IDA 9.9 18.9 28.8 18.3

EDF 5.8 16.1 21.9 13.9

KfW 4.6 11.3 15.9 10.1

USAID 0.8 2.5 3.3 2.1

Afl)F/ADB 8.4 30.4 38.8 24.6

JICA 0.4 7.7 8.1 5.1

UNCDF 1.8 3.2 5.0 3.2

UNDP 0.7 2.7 3.4 2.1

ODA 4.0 11.4 15.4 9.8

GTZ 0.2 2.7 2.9 1.8

DANIDA** 0.9 0.6 1.5 1.0

TOTALS 50.2 107.5 157.7 100

Note: ** Withdrew support early in the project to influence political change.

TABLE 9: ECONOMIC COSTS AND BENEFITS

ECONOMIC RATE OFSECTOR COMPONENT RETURN

AtAppraisal At ICR

(SAR)

PUBLIC BUILDINGS1. Kamuzu Central Hospital - 322. Mzuzu Govt. Secondary School 29 483. Blantyre Secondary School - 514. Lilongwe Girls Secondary School 23 495. Blantyre Teachers Training College - 276. Nkhota kota District Hospital - 977. Nkhata Bay District Hospital - 728. Rumphi District Hospital - 66

ROADS *1. DRIMP IV Extension - 382. DRIMP Spot Improvement - 263. DRIMP New Roads >12 21

WATER1. Rehabilitation of 1450 Boreholes 20 1182. Construction of 246 new - 50Boreholes,Purchase of new Drilling Rig, andDrought Monitoring Equipment

6 173. Karonga Urban Water Supply 6 134. Mangochi Urban Water Supply

TABLE 10: STATUS OF LEGAL COVENANTS

Note: All legal covenants refer to the District Water Supply Fund (DWSF), and are Type 2.

DCA Status at Original Revised Covenant Description CommentsSection 07/31/95 Date Date

Submit annual audited accounts Condition in Bank documents4.01(b) C within 6 months of year end were later changed to 9 months4.05 31 Mar, 31 Mar, Total revenues to cover(a)(i) C 1992 1992 operation, maintenance and

depreciation4.05 31 Mar, 31 Mar, Positive net income after(a)(ii) C 1994 1994 operation, maintenance,

depreciation and interestexpenses

4.05 C Maintain a current ratio of not Presently CR is 1.25 mainly on(aXIii) less than 1.4 account of Creditors rising from

MK736,449 to overMK8,000,000

4.06(a) C Not incur any new debt

DWSF Study now completed but4.07 CP. I Oct. I Oct. Undertake annual revaluation of lacks some information for

1990 1994 fixed assets meaningful revaluation. WD toobtain from COW] for finalpayment.

4.08(a) NC 31 Mar, I Oct. Ensure that Ministries and1990 1994 parastatals do not have arrears Arrears continue to persist

in excess of 90 days4.08(b) C GOM to convert loan of

MK3.688 million to capitalcontribution

TABLE 11: BANK RESOURCES: MISSIONS

Stage of Date No. of Days Staff Skills Mix Status Develop Problems IdentifiedProject Cycle Persons in of Object

Field Implem

Through 02/88 4 15 PHE, SSE, STE, N/A N/A N/AAppraisal WE

09/88 8 22 PHE, SSE, Econ, N/A N/A N/AOA, TEd., STE,SFA, PO

Appraisal N/A N/A N/A N/A N/A N/A N/Athrough Boardapproval toeffectiveness

Supervision 04/90 1 15 PHE N/A N/A N/A

06/90 1 12 SSE N/A N/A GOM Senior Staff Losses

02/91 1 5 SSE I I Component cost escalation

09/91 1 5 SSE N/A N/A Donor pull out

03/92 1 8 STE 3 3 Low recurrent budgets, non-compliance with covenants

07/92 3 11 STE, SSE, Econ. 3 3 Inadequate counterpartfunds, non-compliance withcovenants, drought, donorwithdrawal

11/92 4 11 STE, TE., SE, 3 2 Inadequate counterpartEcon. funds, non-compliance with

covenants, drought, donorwithdrawal

12/93 4 13 STE, CE, PE, FA. 2 2 Low revenue budget alloc.for road maintenance

Large arrears on DWSF;07/94 4 17 STE, 2-CEs, FA. S S low revenue budget

allocation for roadmaintenance

Completion 07/95 5 11 STE, FA, SWS, Procurement delays and

PE, CE compliance with Covenants

Note: PHE = Principal Highway Engineer, SSE = Senior Sanitary Engineer, STE = SeniorTransport Economist, WE = Water Engineer, Econ. = Economist, OA = OperationsAssistant, TEd. = Technical Educator, SFA = Senior Financial Analyst, FA = FinancialAnalyst, PO = Project Officer, SWS = Senior Water Specialist, PE = Planning Engineer,CE = Civil Engineer

AIDE MEMOIRE ANNEY 1

MALAWI LNFRASTRUCTURE PROJECT (CREDIT No. 2069M.Nk)

SUPERVISION ISSION. JULY 24 TO AUGUST 4, 1995

I. INTRODUCTION

A World Bank mission consisting of ',r. Peter Pohland (Deputy ResidentRepresentative, World Bank Nalawi Resident .Miission, Tearn Leader), Mr. JohnShepherd (Water Resources Management Specialist, World Bank, WashinetonDC ), Mr. A. Chakravarti (Financial Econornist), and Mr. M. John Kandulu(Registered Enzineer), supervised the above mentioned project.

2.- M'veetings were held with the Ministries of Works and Supplies, and Irrigation andWater Development. Mr. Shepherd accompanied the INICEF ResidentRepresentative, Dr. Natalie Hahn, on July 28 on a field visit to Nsanje to review aTNICEF supported Commnunitv Based Management CBM) program andappreciate the successes and failures of the progam.

3 This is the last formal World Bank supervision mission prior to the project closingdate of December 3 1, 1995. It is not envisioned that project activities will beextended beyond this date.

4. The mission wishes to express its appreciation for the assistance and cooperationreceived from the Government of Malawi, the Ministries of Works and Supplies,and Irrigation and Water Development in particular.

Findings and Recommendations of this Akide-Memoire are those of the rmission andare subject to confirrmation bv World Bank Headquarters in Washington D.C

For the Govenment of Malawi For the World Bank

Eric H. Msolomba Peter K. Pohland(Secretary for Works and Supplies) (Task Manager)

ANNEX I

II. OBJECTIVES

6. The objectives of the rmission were as follows:

6.1 assess physical proeress, the financial position and projected expendituresup to the closing date of the Credit (December 31, 1995) for thosecomponents being funded by iDA, namely institutional capacity building,water supplies, roads and civil works;

6.2 confirm the amounts of DDA funds and Government contributions that areavailable for final reallocation to priority areas within the project;

6.3 agree on realistic implementation timetables based on 6.1 and 6.2 for theremaining period; and

6.4 discuss the format, timetable and data requirements for the ProjectImplementation Completion Report (PICR).

m. NLAJ F'JDINGS

Physical Progress and Financial Status

7. Resulting from information obtained from, and subsequent discussions with theimplementing ministries, the current allocations based on the final expenditure ofIDA component is summarized as follows:

SDR ('000) % of Total

Mlanagement Improvement 4345 19Roads 6163 27NTC Support 388 2Water Supply 7090 32BuiRiings 3250 I5PPF Advance 1064 5Unallocated 0

Total 22300 100

8. The scope, cost estimate and timetable for project components as summarized inAttachment 1. were reviewed and generally agreed between the Ministries ofWorks and Supplies, and Irrigation and Water Development on the one hand, andthe mission on the other.

ANNEX 1

9. As was the case during the previous mission, a significant amount of unallocatedfunds resulting mainly from savings in earlier projected expenditures meant thatthere is considerable scope to augment priority activities. It was emphasized bythe mission that as there were only 6 months left to the project completion date,these savings should be allocated to quick disbursing activities otherwise remainingfunds would lapse, and will not be available for use by Government.

IV. AGREEMENTS REACHED

The following discussion highlights agreements reached during the mission:

MIP Phase I Components:

10. Manpower Development: The total allocation for this component isSDRS44,000. An undisbursed balance of SDR 50,000 remained at the end of July,1995. MOWS confirmed that the remaining amount wil be fully disbursed to 13

- out of 14 students presently completing their studies, before the project completiondate. (Attachment 2) One Water Department student however (M.W. Mikuwa)will remain in college beyond December 1995. His costs will be transferred toN1!WDP at the expiry of MIP. The Ministry of Irrigation and Water Developmentis advised to put into train actions that ensure that there is a smooth transfer ofresponsibilities between the two IDA-financed projects.

11. MIP Phase II Components:

IFNUlS Extension to the Regions: The Consultant responsible for theimplementation of this component is presently on site under a new contract toimplement the additional works. MOW envisions completion before projectclosure this December.

Extension of the computerized DWSF Billing System to Districts will beimplemented by the original software Consultant, under an addendum.Procurement of hardware will be effected through NCB with a local supplier undera separate agreement.

To clear compdter data management problems being faced by MWS and MIWD,the two Ministries will undertake to implement virus clean-up and hard discreformatting exercises, preferrably through private sector computer companiespaid from MIP balances.

NTC Support: This project is on-going and will be completed before the end ofthis year.

Lake Services Study: A total of SDR27,030 have been earmarked for the LakeServices Study as part of the Malawi Railways restructuring exercise. The study

ANNEX 1

will be undertaken in the Ministry of Transport and Civil Aviation and will becompleted before the NI1P project closure date.

DRIMIP New Roads and Bridges: Projected totaL expenditure on DRIMP PhaseIV to project closure is SDR290,000 (.MK6,940,084 , SDR= MX23.95) for atotal of 219.1 km of earth road to be improWved. MOWS will intensifyimplementation of the works in order not only to stay within the remaining period,but also to complete the works ahead of the rainy season. MIOWS confiums thatadequate Part II funds are available to complete the work.

Water Supply Component: Preparation of the final design and tenderdocuments for improvements to Ntcheu Water Supply has now been completed.Due to the short time left to project closure, construction will now be consideredunder the New Water Supply Projects component of the National WaterDevelopment Program (NWDP) which is scheduled for effectiveness in Octoberthis year. The balance of funds originally earmarked for these works has beenadvanced to the NWDP for the construction of 206 drought relief boreholes.Tenders have been received and are being evaluated. The Ministry will submit adetailed proposal for project supervision for the Bank's consideration.

Buildings: As at August 2, 1995, Rumphi District Hospital was 70% completedon original works and completion is scheduled for December 1995. Completion ofBank approved additional works is scheduled for second week of December. Nofurther extensions will be accepted. It is not expected that the Final Account willexceed the approved allocation of SDR215,000. Contractor is mobilizing and hasprogrammed project completion within the remaining period.

The Contractor for the rehabilitation of Nkhota-kota District Hospital is now onsite and will work on an accelerated program to complete the works within theproject deadline.

12. Road iMaintenance Support and Pilot Project

12.1 Maintenzance Support: IDA and GOM agreed to amend the DCA suchthat the Association would finance 30% of the road maintenance expenditure in1993/94, 25% in 1994/95, and 15% in 1995/96. GOM has since claimed, and hasbeen reimbursed a total of MK7. 111 million by the IDA, representing 30% of,NIK23.7 million spent on road maintenance in 1993/94 fiscal year. The AuditorGeneral is presently carrying out a financial audit of the Ministry's 1994/95revenue budget. MOWS will therefore be in a position to submit to the Bank its25% claim for Road Maintenance for reimbursement for FY1994/95 before yearend. A balance of approximately SDR842, 000 is still to be disbursed under thiscomponent. The projected expenditure breakdown for this amount is given in thetable below. Ministrv of Works and Supplies confirmed that all balances will beexpended before the project completion date. The mission emphasized that

ANNEX I

procurement under this component should be closely monitored so that there is noslippage in tendering and in the delivery of goods and services.

Road Maintenance Support: Projected Expenditure Breakdown

Item ______Quantity Rate (i'TK) Total(NM) I Motor Cvcles 20 38,500 770,0002. Tipper Truckes 2 645,000 1.290,0003. Tractors/Trailers 8 345,000 2,760,0004. Graders 2 22 515',000 5,030,0005. Pick-ups 5 200,000 1,000,0006. Bitumen (Bulk) 5,700,000

7. Refund for 1994/95 | 6,060,000

Total l *22,610,000

* As at August 17, 1995, SDR = MK23.00 (approx.), Total = SDR983,Q0

12.2 Road Nlaintenance Pilot Project: The pilot phase of a low-cost roadmaintenance method initiated by the Bank was executed between May and Junethis year and was extremely successful. The project involved pothole patching overa 200 km stretch of surfaced road between Lilongwe and the Southem RegionBorder of MI near Balaka. This was achieved within one month. SDR250,000was allocated for purchase of equipment and for the pilot run, and has been fullyutilized.

Additional funds have been allocated for an extended program n all the threeregions.

Village-Level Operation and Maintenance (VLOM) of Rural WaterSupplies

13. Formation of village committees for VLOM and training thereof for the initial1450 boreholes still lags seriously behind civil works. The situation will obviouslyworsen when the72 plus 206 boreholes under the drought relief water supplyprogram have Veen completed. Technical Assistance funded from MIP has beenengaged for the period July 1- December 31, 1995 to assist the Water Departmentclear the backlog of Community Based Management (CBM) activities, of whichVLOM is a component. The TA will submit a detailed activity program anddeliverables, acceptable to the Bank, which should include implementation of aMonitoring System for water supply and sanitation services for rural communities.

Further, implementation of future programs should preferably be preceded by anaction plan that takes into consideration the Contractor's construction program.

ANNEX 1

14. For this reason, the mission recommends a coUaborative approach to future CBMactivities of donor financed rural water supply projects. The collaboration wouldinclude such players as major aid donors, NGOs, the private sector, and relevantGovernment agencies in this area. It is however expected that Government will bethe prime mover of this effort. It will also identify a focal point for all activitiesrelated to CBM for rural water supplies.

Road Maintenance Initiative and Integrated Road DevelopmentProgram (IRDP)

15. Halaying appreciated the need to develop and establish a long-term and sustainableroad maintenance system in close collaboration with others in the region, GOMhas employed a Road Maintenance and Development Coordinator whose maintasks were outlined in the Aide Memoire for the July 18-August 5, 1994Supervision Mission.

Institutional Capacity Building and Manpower Development

16. The high rate of vacancies among professional staff continues to pervade the twoMinistries. The mission did not review the manpower skills assessment proposedduring the previous supervision mission as this has not been undertaken by MOWSand Water Department. It is recommended that this be undertaken without unduedelay taking due cognizance of the timing of the Civil Service Census componentof the Institution Development Project (IDP 2) presently being implemented byGOM.

Legal Covenants:

17. Article IV of the DCA covers the financial covenants agreed to by the Borrower.The covenants relate mainly to accounting and audit requirements for the project,and financial performance indicators concerning the District Water Supply Fund(DWSF). As has been the case before, there have been no problems withcompliance withthe covenants as the Ministry continues to maintain detailedrecords of all transactions.

18. Audited accounts for the 1993/94 financial year were submitted to the Bank lastMarch. Accounts for 1994/95 are being prepared and will be submitted within therequired nine-month deadline after the end of a financial year.

Preparation of project accounts is still being done manually. Regrettably, theproposal to engage a computer firm to computerize record keeping was not carriedout. An opportunity still exists to implement this proposal in the remaining periodusing off-shelf PC-based computer packages presently available in the country.Improved accounts data wrill be very usefil as an input into the Project

A-NNEx 1.

Implementation Completion Report The MWS will initiate this activitv withoutfurther delay

It is however expected that future projects of this nature will invariably bedesigned with improved accounting and record-keeping systems.

19. DWSF Asset Valuation: A final report has now been received fromCON'Iconsult that ircorporates Goverr.ent's comments. The repor. clearlycontains the updated replacement values of the assets scheme by sche:re, andforms a reasonable basis for revaluation under the Business Planning task of theNW%'DP. Further, the written-down values of the assets of each scheme have beenworked out presumably based on the most commonly used scheme of depreciation,i.e. by decomposing the assets into broad types, assigning lives to each type, anddepreciating by the straight line method.

However, to regularly update these valuations requires the availability of thisdecomposed information including dates of completion of construction, theeconomic lives adopted, etc. It is not quite clear that the COWIconsult reportprovides this information. It was therefore agreed that MIWD will write a strongletter to COWIconsult indicating shortfalls between the Terms of Reference andthe contents of the report, and requesting the Consultant to make good beforepayment of remaining sums can be made. The Ministry will copy the letter toMXVWS and the Bank for information.

It was also agreed that training in the use of this information would best be carriedout as an integral part of the Business Planning effort for the Rezional WaterBoards under the NWDP.

20. There has been no improvement in compliance with the financial covenants ascompared to the previous supervision mission. A summary is provided inAttachment 3. Of the eight (8) covenants, six (6) have been met adequately. Thefollowing however, are a cause for concern and call for immediate remedial action:

20.1 the current ratio has deteriorated from 2.6 in 1992/93 to 1.25 during1993/94. The major reason for this is an increase in creditors fromM2Z736\,449 to MK6,155,693 for the two fiscal years respectively.

20.2 as stated at paraeraph 19 above, the asset valuation study undertaken byCOWI does not seem to provide adequate information to permit MIWD toundertake an annual revaluation. GOM will therefore not be able tocomply with the requirements of this covenant.

ANNEX 1

20.3 arrears from Ministries to the DWSF continue to exist. At the end of1992/93, debtors totaled to MK3.360 million. This amnount increased toMK7.738 million at the end of 1993194. Major debtors continue to be theArmy, Police, Ministry of Education, and Ministry of Health. Although theDWSF is now takdng strict action to disconnect supplies to defaulters(notices to this effect have been issued in all regions), these sanctions wuillnot apply to the major institutional debtors mentioned above.

Since March 31, 1994, total debtors have decli,ed to MK3.783 million. However,the existence of these arrears still amounts to non-compliance with Section 4.08 ofthe DCA. It is time therefore that GOM took decisive action on this matter.Continued non-compliance may compromise formation of the Regional WaterBoards in the NWDP and delay its implementation.

August 9, 1995Lilongwe, Malawi

T::-',,o.-'.i3a-:~~~~~~~~~~~~~~~~~~~~-

I__________ ~~~~~~~~~~~~~ A ~.A,kANYEX2 2

LRr <2 r' A 1, C I'-33 .. _ .... . ._ . . .. . _ . 2 _ .. K..; \

- ~~INFRAS.TRU'CTURE PRO-TECT (R09I`.T?LF\IEENT'.-TION C 0)NTPLF-T1O REPOQRT

T:.a- O cu for C U !-e 7c. S ----,e 3 MYv 7C-Csf, .-o;

7 sef.O cNo . c s ;ka ;.; Clc'ne C-G

Nhet GelyeH !_ezo gove=--,,-t issues, it mav - s.:lt notekat *or o-p. .a projec -ss Si.-

.Alexa.ner Gibb and P^ an-t.s to revievv t'.e e rc. ndfeasibility s,Sy rocef- slly cos_ci n ould s;_.ir r. eaz!y1993. Funr's _-ez a-aila2^ie -- of'-c. -. k Eu7o-3-eta '4,-Qon.

7 X Te len-li: o'f;.'e Ba.,g_a-lNa-, - Ns MZ.-k roaZ P7Cojec: 's,

6 So far7'N'o 'o,-di-es '-a-'enco.^ee -cd-. is -,-rozzs; on,

These are rhe onily co,,m,n.t I '-nave.

I ~~~~~e ~ ~ ~ Y0 7B -e

L:LONc-~~~~~~,o;r 3..--

..\I;wo Nf. Ka=.malernCorPnL.is,Eior.T for M LTor REs

for: SECfRETAoRY FOR WeORK:' AND ar'PPLIES

s~~~~~. W> it soor:: ±: w;oi:i' o th9e *,;_ ;-,*,_ Ci i *t;; - Karnt ro

ANNEX-3

Performance of Cofinanced Components

1. The European Development Fund (EDF) IUS$21.9 million]: At the time ofpreparing the Staff Appraisal Report (SAR), the EDF had committed US$21.9 million forthe reconstruction of the Limbe-Thyolo-Mulanje-Muloza (80.0 km) and the Karonga-Chilumba (75.0 km) Roads in the Southern and Northern Regions respectively; and forco-financing with KfW the construction of Dwangwa-Nkhata Bay Road (90 and 42 kmrespectively, straddling the Northern and Central Regions). Although Limbe-Thyolo-Mulanje-Muloza Road was tendered at the end of December 1992, EDF suspended anyfurther work pending a significant improvement in the political governance of thecountry. The project was re-tendered in December 1994 after the country adopteddemocratic principles, and is presently under construction with completion expected inthe first half of 1998. As a result of delaying implementation by almost four years,project local costs have escalated significantly mainly on account of inflation and thefloatation of the local currency in February 1994. Karonga-Chilumba Road, nowextended to Chiweta (104 km), is currently under feasibility study.

2. As stated at Paragraph 1 above, EDF and Kreditanstalt fur Wiederaufbau(KfW) cofinanced the construction of Dwangwa-Nkhata-Bay Road (132 kim) to Class IBitumen Standard, and replacement of the single-lane Bua Bridge on the Dwangwa-Nkhota-kota stretch with a stronger two-lane concrete bridge. Contract payments weresplit between EDF and KfW 61% and 39% respectively for the road component with theEU picking up the bill for Bua Bridge. In spite of serious delays in contract mobilizationand construction start-up, this component was completed only two months behindschedule. In addition, KfW committed a US$8.0 million contribution towards theconstruction of Zomba Dam for Zomba Urban Water Supply but later withdrewcommitment in favor of completing remaining works on the Container Vessel for theNorthern Transport Corridor Project.

3. United States Agency for International Development (USAID) [US$3.3million]: USAID supported a number of capacity building efforts in the Ministry ofWorks and Supplies through its Human Resource and Institutional Development (HRID)program. These included: (i) Technical Assistance (TA) in the development andinstitutionalization of a computer-based data processing capacity (completed in January1992); (ii) TA in Curriculum Development to improve and upgrade the curricula offeredat the Ministry's Training Centers in Lilongwe, Zomba, and Blantyre (PVHO)(completed); and (iii) TA in advisory services for the Primary Health Intervention forChild Survival (PHICS) component of Gravity-fed Rural Water Supply Schemes.USAID also committed financing for the construction of 12, and rehabilitation of onegravity-fed rural water supply schemes (completed). Of these, eight new schemes were

ANNEX 3

constructed and one rehabilitated, representing a 70% achievement at the close of theMIP although work continues in the PHICS program.

4. African Development Fund (AfDF) tUS$38.8 million]: The AfDF committedthe largest component of the MIP totaling US$38.8 million, about 26% of the totalUS$151.8 million net of taxes. At the time of preparing the SAR, the fund had appraisedits road components through its Road Maintenance and Construction II (ROMAC II)program. It had also committed itself to finance two of three dam projects namelyconstruction of the new Mzuzu Dam, and raising an existing dam in Kasungu in theNorthern and Central Regions respectively. The third, Zomba Dam and associated workswas taken by KfW. Projects included in the AfDF financing plan for the roads sectorwere:

* rehabilitation of Chikwawa-Bangula (paved) road (45km);* rehabilitation of various earth and gravel roads (286 km);* improvement of Mzimba-Chikangawa earth road (25km) to a paved standard;* resealing of Benga-Nkhotakota-Dwangwa (11 lkm), Mzuzu-Nkhata Bay (37), and

Mzuzu-John Mzumara-South Rukuru-Chiweta (68 km) paved road sections;* improvements to 8 road bridges;* support to the National Road Safety program; and* technical assistance, training, and support for information management systems.

5. Annex 4 shows key indicators of implementation achievement for the AfDFportfolio. In summary, although the two projects in the water supply sector, both ofwhich were implemented as first year projects, enjoyed an excellent success rate, those inthe roads sector did not. The African Development Bank underwent a major restructuringand reorganization in the course of implementing the MIP which adversely affected theflow of funds for project implementation. This delayed decisions in the procurement ofconsultants and contractors, and affected progress in the implementation of the first yearprogram as a result of delayed payments to contractors. Consequently, only four of theten earth and gravel road sections earmarked for rehabilitation were completed (40%);l 1 1km of 216 km of paved roads resealed (51%); and I out of 8 road bridgesreconstructed (13%). Mzimba-Chikangawa Road (25km) planned for improvement tobitumen standard was deferred due to insufficient funds, and the reconstruction ofChikwawa-Bangula paved road (45km) is presently at the tendering stage.

6. Implementation of the AfDF portfolio suffered for the same reasons as those citedfor IDA components above, i.e. bids far in excess of appraisal estimates compounded bythe lapse of time between project appraisal and implementation. In the case of the AfDFhowever, this was further exacerbated by an ambitious programn that may not have takeninto consideration the Fund's ability to fully finance it, and the Fund's restructuring andre-organization program that came mid-stream of project implementation.

ANNEX3

7. Japanese International Development Agency (JICA) [US$8.1 million]: JICAcommitted US$8. I million for the provision to the Government of Malawi of roadmaintenance plant, equipment and vehicles under the 6th Japanese Grant Aid package.Financing was, however, withdrawn early in 1992 to force political change in the countrytowards pluralism and the respect of human rights. It was not reinstated as was the casefor other donors.

8. United Nations Capital Development Fund [US$5.0 million] provided fundsfor the rehabilitation of 1000 boreholes in the Southern Region out of which 923 werecompleted (92%). However, only 374 (37%) village water committees were formed andtrained in Community Based Management (CBM) of rural water under UNDP financingdue to the depletion of funds.

9. United Nations Development Program [US$3.4 million] withdrew support fromthe Management Improvement Component (training sub-component) of the MIP for thesame reasons given elsewhere above. UNDP and IDA, however, co-financed TA todesign an improved direct action shallow-well hand pump, a prototype of which iscurrently undergoing field tests; and formation and training of communities in CBM asmentioned in Paragraph 60 above. The Rural Motorized Transport Scheme beingimplemented in the Ministry of Transport and Civil Aviation is on-going and pilot trucksare presently on a trial run by local (rural) transporters.

10. Overseas Development Agency (ODA, UK, US$15.4 million) granted funds tothe Government of Malawi for the reconstruction of the Lilongwe- Salima Road (80 km)within the MIP. Construction was completed and the road opened to traffic in May 1994,more than a year behind schedule. This project suffered from heavy claims by theContractor totaling 4.50 million British Pounds, 60% of which is attributed to excessiveearthworks (overhaulage of suitable material). In addition to the Lilongwe-Salima Road,ODA also supported eight (8) Engineering Technical Assistance personnel in the CivilEngineering, Quantity Surveying, Architecture, and Structural Engineering fields; andscholarships to staff in the Ministry for tertiary training in the United Kingdom. Thisfacility was withdrawn in 1992 for political reasons as mentioned above, and the IDAmanagement improvement component was utilized to cover the remaining students andextended TA personnel wherever this was deemed cost effective, especially in the Waterand Buildings programs where there was a severe shortage of trained Malawians.

11. Geselischaft fuir Technische Zusammenarbeit (GTZ) [US$2.9 million] fundedtwo Technical Assistance expatriates: one in the management of rural roads (DRIMP) andthe second in road construction contract management. Both contracts were not renewedafter termnination as national (Malawian) experts had taken over their duties afterappropriate training. GTZ also financed a Bitumen Training Production Unit (BTPU) forroad maintenance personnel in the Roads Department. Later, this training was extendedto local private sector contractors to develop their skills, and to prepare them to take on

ANNEX3

contract maintenance of bitumen roads, hitherto the territory of direct labor works. At theclosure of MIP, a total of 125 road maintenance supervisors and 20 private contractorswere trained in bitumen production, pothole patching, and premix overlays. Phase II ofthis component is continuing beyond the MIP to April, 1998.

12. Danish International Development Agency [Danida, US$1.5 million]withdrew its support for the replacement of road signs on the national road network,under the auspices of the Southern Africa Transport Coordination Council (SATCC), ongovernance issues. This component remained unfunded to project closure.

ANNEX 4

Performance of AfDF/ADB Financed Components

Key Output Indicators Planned Actuals % ofTargets Planned

ROADS:

1. Reconstruction of Chikwawa-Bangula Road 45km 0 0

2. Rehabilitation of Earth and GravelRoads:

2.1 Junction MI -Nkhoma 15km Okm 0

2.2 S73 Loop 29 29 100

2.3 Mchinji-Mkanda 36 36 100

2.4 Balaka- Junction M3 29 0 0

2.5 Msokera-Lifupa Lodge 53 0 0

2.6 Kamchocho-Banda-Euthini-Mpherembe 54 0 0

2.7 Nsande-Cape Maclear 19 19 100

2.8 Junction M3-Malindi 12 12 100

2.9 Embangweni Mission-Luwawa 25 0 0

TOTAL (Rehab. of Earth & Gravel Roads) 286 96 34%

3. Road Improvement to Paved Surface

3.1 Mzimba-Chikangawa (Mtangatanga) 25 0 0

ANNEX 4

Performance of AfDF/ADB Financed Components

4. Resealing of Paved Roads

4.1 Benga-Nkhota kota-Dwangwa 111 111 100

4.2 Mzuzu-Nkhata Bay 37 0 0

4.3 Mzuzu-J. Mzumara-S. Rukuru-Chiweta 68 0 0

5. Reconstruction of Road Bridges 8 1 12

WATER SUPPLY

6. Mzuzu Urban Water Supply Scheme 20m high earth-filldam and pumpingequipment 100

7. Kasungu Urban Water Supply Scheme Existing dam raised by4.5 m and newpumping station built 100

ANNEX 5

Management Improvement Component: Training Sub-Component

NAME OF OFFICER YEAR COURSE DURAT1ON LOCATION Status

K L. GUNDASI 92193 Post-grad ARCHITECTURE 12 MONTHS D OF JORDANSTONE COMPLETED

L J CHITSANTHI 92193 Post.grad ARCHITECTURE 12 MONTHS LEEDS POLYTECHNIC COM,PLETED

V J. CHIRWA 92/93 Post-grad ARCHITECTURE 12 MONTHS 0 OF JORDANSTONE COMPLETED

E. MACHIKA 92/93 Post-grad ARCHITECTURE 12 MONTHS DUNDEE. UK COMPLETED

SCHOLARSHIPS

T E.W NYIRENDA 94/95 M Sc (BRIDGE DESIGN) 12 MONTHS UNITED KINGDOM COMPLETED

B E NAYEJA _ 94195 M Sc (BRIDGE DESIGN) 12 MONTHS UNITED KINGDOM COMPLETED

A A MTHINI 94/95 M.Sc (BRIDGE DESIGN) 12 MONTHS UNITED KINGDOM COMPLETED

D.C C. PHIRI 94/95 M Sc. (BRIDGE DESIGN) 12 MONTHS UNITED KINGDOM COMPLETED

W CHIUME 94'95 B.Sc (BUILD MNGMNT) 12 MONTHS UNITED KINGDOM COMPLETED

F DIMU 94/95 MSc (BRIDGEDESIGN) 12MONTHS UNITEDKINGDOM COMPLETED

P KALIATI 94/95 RIBA Pt 3 12 MONTHS UNITED KINGDOM Still at School

K MUN'THALI 94'95 RIBA Pt 3 12 MONTHS UNITED KINGDOM COMPLETED

SO. NGOMA 94/95 RIBA Pt 3 12 MONTHS UNITED KINGDOM COMPLETED

C K N KUMANGIRANA 94/95 M.Sc. (COSNTR MNGMNT) 12 MONTHS UNITED KINGDOM COMPLETED

W.B. GONOWE 94/95 M.Sc. (BUILD MNGMNT) 12 MONTHS UNITED KINGDOM COMPLETED

S THONDOYA 94/95 M Sc. (ARCHITECTURE) 24 MONTHS REP OF SOUTH AFRICA COMPLETED

M W MIKULWA 94/95 M Sc (Water Resources Mngmnn) 24 MONTHS UNITED KINGDOM StIll at School

F KWAULE 95196 Water and Errtonmental Engineernng 24 MONTHS UNITED KINGDOM Still at School

H H MTHINDA 92/93 M.SC (STRUCTURES) 18 MONTHS U OF PRETORtAIRSA COMPLETED

J A MAKUNJE 92/93 M.SC. (CIVIL ENG.) 12 MONTHS U OF STELLENBOSCH/RSA COMPLETED

M J KANDULU 92/93 M SC (PROJECT MGT) 12 MONTHS LOUGHBOROUGHIUK COMPLETED

M SULUMBA 92/93 M.SC. (CONST. MGT.) 12 MONTHS HERRIOT WATTISCOTLAND COMPLETED

C.K. ZULU 92/93 M.SC (WATER ENG.) 10 MONTHS U OF DAR-ES-SALAAM/TZ COMPLETED

B KAPOTEZA 92/93 M SC (CONST MGT) 12 MONTHS U OF STELLENBOSCH/RSA COMPLETED

S M N. MAINALA 93/94 M SC. (H.R, MGT) 36 MONTHS DIST. EDUCATION/MLW ON-GOING

H KANJERE 92/93 B.SC. (ENV. ENG) 48 MONTHS SOUTH LONDON POLYNUK Still at School

S D T MATENJE 92/93 CONST. CONTRACTS & 3 MONTHS GEORGETOWN UIWASH DC. COMPLETED

PROJ. PROCUREMENT

W 0 MBVUNDULA 90/91 M SC (PROJ ANALYSIS) 12 MONTHS U OF YORKIUK COMPLETED

J J. SOMBA 90191 M SC. (CONST MGT.) 12 MONTHS LOUGHBOROUGH/UK COMPLETED

W Y MWAFULIRWA 93194 MECH ENG REGISTRATION 8 WEEKS UNITEO KINGDOM COMPLETED

P P NAMWAWA 93/94 MECH ENG REGISTRATION 8 WEEKS UNITED KINGDOM COMPLETED

SHORT COURSES

L MPANJE (Miss) , 0 COMMUN WATER SUPPLY & SAN 3 MONTHS Loughborough/UK COMPLETED

M A KAMMALERE 92193 SEMINAR RD CONST 2 WEEKS ARIZONA/USA) COMPLETED

B K MSYALI 92/93 SEMINAR RD. CONST 2 WEEKS ARIZONAMUSA) COMPLETED

C KALONGA (MISS) 92193 COMPUTER ADV MGT COURSE) 2 WEEKS CSIR/RSA) COMPLETED

0.8 KAPINGASA 92/93 COMPLETED

K. BANDA (MRS) 92S93 - COMPLETED

G D. MANGANDA 92t93 COMPLETED

O KANKHULUNGO 92t93 PROCUREMENT 2 WEEKS ESAMI COMPLETED

B M CHIRWA 92)93 COMPLETED

K L MVULA Y2/93 COMPLETED

50 OFFICERS 92/93 NEGOTIATING SKILLS 2 WEEKS TRAINING CENTRE/MALAWI COMPLETED

B D.S MHANGO 90o1 PROJECT EVALUATION 12 WEEKS U OF STRATHCLYDE/UK COMPLETED

DJ BAULENI 91/92 ARCHITECTURE 12 WEEKS LUND UNV /SWEDEN COMPLETED

N L CHAKHAME 91/92 MONITORING & EVALUATION 9 WEEKS U OF E ANGLIA/NORWICH UK COMPLETED

G B NKHWAZI 91192 SITE MANAGEMENT 12 WEEKS CROWN AGENTSJUK COMPLETED

J J SOMBA 91t92 O.S CONFERENCE 1 WEEK A.S. UNIV.ZARIA NIGERIA COMPLETED

E H MSOLOMBA EVALUATION STUDY/ COMPLETEDPAVEMENT MGT SYS HARAREIZIMBABWE

D KARA COMPLETED

VARIOUS PARTICIPANTS DISBURSEMENT WISHOPS (IDA) I DAY COMPLETED

TUTOR & 15 TRAINEES 939 CLERK OF WORKS COURSE 4 MONTHS MOW TC LILONGWE COMPLETED

VARIOUS 93'94 COMPUTER TRAINING, VARIOUS COMPLETED

MANAGEMENT & TECHNICAL

32 \. to cJodnoo

X > 5oo4 *>. ( .- > MALAWI

INFRASTRUCTURE PROJECTC CIPA

\ jt. 4P ' zrOg . D

° jg Y A R '9 N G A \y w. t SECOND. THIRD

ML3OMETERS r, 20 4 0 3 100 ' AND FWORT" FIRST YEP RTEARk PIROGRAR _P_ROGR

W.ELES 0 2T 40 6D Rood C nls

/ \ ( * >~~~~~.C hDOuibo i RehIoYloll

h TIATT . HAIRDO R r .......... ......... .. G -oo g R-

'- r N/ O RTHE2, JR N , ; -DRIMP Phor. IV

AUMPIHI -Y O~DOEW. - - Dorr~ CoroW. oo

roh Io,o ToII ........ R-d,o b.,,-&d

-12j oI , ., Sleone,mRole

Eeboc.ee A' .,~ .:\

*'b\HJ R )ooobo ) . -.. *4u' w NAoTod CgdlodpI Cnsi rulZ3 A M, B I A !C° t N IAghomphog / y........ ..... Rwd bI Ado ErOon

RS jJ J N. II C8p.Se

< Id,OIRkOIO ~ ~ ~ ~ ~ I11d.

hOArDI S M i S L Z A I)I . ; E

M. h~~~~~~~~~~~~~~~~~~~~~~a

FJ 2 K A S)t ) N G U >/ " )U ...................................A..N.. \ 1-

rH nsungu << ) s ! \ M O Z A M B I Q U E .O

COOg 0I1 rI d IhpL.d ,1 ,. 1 _

H Iatofta N G HAXI J I X D 0 , C I U 4\4 j8, \ | I

) j\' ) tt~~V M A N G TA .eoA

M BIQU2L1<o8 ^vA

/ A0

rAZ.nYAJ bU6a R.UP/LA¢F \ \F A K ANTCHEU, L FI_UndC o uJE

rlk ~ ~ ~ ~ j A LA 5r saa >bse \ \I

1o= ths tiv>wrlw¢awe 1.l Irse \< j < rr ;} a0wy % seit~~~~~~~~~~~~~~~~~~~36

IMAGING

Report No.; 16382Type: ICR