Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00003653 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-47140) ON A CREDIT IN THE AMOUNT OF SDR 65.3 MILLION (US$ 100 MILLION EQUIVALENT) TO THE REPUBLIC OF KENYA FOR THE MUNICIPAL PROGRAM ( P066488 ) November 29, 2017 Social, Urban, Rural And Resilience Global Practice Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective November 24, 2017) Currency Unit = Kenya Shillings Ksh 103.25 = US$1 US$1.41085 = SDR 1 FISCAL YEAR July 1 - June 30 Regional Vice President: Makhtar Diop Country Director: Diarietou Gaye Senior Global Practice Director: Ede Jorge Ijjasz-Vasquez Practice Manager: Bernice K. Van Bronkhorst Task Team Leader(s): Abdu Muwonge, Sheila W. Kamunyori ICR Main Contributor: Wendy Schreiber Ayres ABBREVIATIONS AND ACRONYMS AFD Agence Française de Développement APL Adaptable Program Loan CPS Country Partnership Strategy CIP Capital Investment Plan ESIA Environmental and Social Impact Assessment EMP Environment Management Plan ESMF Environment and Social Management Framework IDA International Development Association IDeP Integrated development plans ISUDP Integrated strategic urban development plan KENAO Kenya National Audit Office KISIP Kenya Informal Settlements Improvement Program KMP Kenya Municipal Program KUSP Kenya Urban Support Program LAIFOMS Local Authority Integrated Financial Operations Management System M&E Monitoring and evaluation MoLG Ministry of Local Government MLHUD Ministry of Housing and Urban Development MTIHUD Ministry of Transport, Infrastructure, Housing, and Urban Development NaMSIP Nairobi Metropolitan Services Improvement Program NUDP National Urban Development Policy O&M Operations and maintenance PAD Project Appraisal Document PDO Project Development Objective RAP Resettlement Action Plan RPF Resettlement Policy Framework Sida Swedish International Development Cooperation Agency TABLE OF CONTENTS DATA SHEET ....................................................................... ERROR! BOOKMARK NOT DEFINED. I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 6 A. CONTEXT AT APPRAISAL .........................................................................................................6 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) .....................................10 II. OUTCOME .................................................................................................................... 12 A. RELEVANCE OF PDOs ............................................................................................................12 B. ACHIEVEMENT OF PDOs (EFFICACY) ......................................................................................13 C. EFFICIENCY ...........................................................................................................................17 D. JUSTIFICATION OF OVERALL OUTCOME RATING ....................................................................21 E. OTHER OUTCOMES AND IMPACTS (IF ANY)....................................Error! Bookmark not defined. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 22 A. KEY FACTORS DURING PREPARATION ...................................................................................22 B. KEY FACTORS DURING IMPLEMENTATION .............................................................................23 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 26 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................26 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE .....................................................27 C. BANK PERFORMANCE ...........................................................................................................28 D. RISK TO DEVELOPMENT OUTCOME .......................................................................................30 V. LESSONS AND RECOMMENDATIONS ............................................................................. 30 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 33 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 44 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 46 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 47 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 52 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 62 The World Bank Municipal Program ( P066488 ) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P066488 MUNICIPAL PROGRAM ( P066488 ) Country Financing Instrument Kenya Adaptable Program Loan Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Ministry of Transport, Infrastructure, Housing and Urban National Treasury Development Project Development Objective (PDO) Original PDO The overall development objective of the Program and of phase 1 and is to strengthen local governance and improve service delivery in selected municipalities. Revised PDO The proposed new PDO is “to improve planning and delivery of infrastructure services in urban areas in selected counties.” Page 1 of 62 The World Bank Municipal Program ( P066488 ) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 100,000,000 99,999,894 95,951,460 IDA-47140 11,962,156 11,962,156 11,962,156 TF-17423 Total 111,962,156 111,962,050 107,913,616 Non-World Bank Financing Borrower 10,000,000 0 0 FRANCE: French Agency for 0 0 0 Development SWEDEN: Swedish Intl. Dev. 13,660,000 0 0 Cooperation Agency (SIDA) Total 23,660,000 0 0 Total Project Cost 135,622,156 111,962,050 107,913,616 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 04-May-2010 28-Jun-2010 16-Sep-2013 30-Aug-2015 31-May-2017 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 09-Mar-2015 59.83 Change in Implementing Agency Change in Project Development Objectives Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Change in Financing Plan Reallocation between Disbursement Categories Change in Disbursements Arrangements Change in Institutional Arrangements Change in Procurement Change in Implementation Schedule Page 2 of 62 The World Bank Municipal Program ( P066488 ) KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 21-Mar-2011 Satisfactory Satisfactory 5.32 02 21-Sep-2011 Moderately Satisfactory Moderately Satisfactory 5.32 03 06-May-2012 Moderately Satisfactory Moderately Satisfactory 5.32 Moderately 04 17-Nov-2012 Moderately Unsatisfactory 5.32 Unsatisfactory Moderately 05 22-Jun-2013 Moderately Unsatisfactory 5.32 Unsatisfactory 06 09-Dec-2013 Moderately Satisfactory Moderately Satisfactory 19.95 07 18-Jun-2014 Moderately Satisfactory Moderately Satisfactory 29.43 08 24-Dec-2014 Moderately Satisfactory Moderately Satisfactory 39.44 09 18-Jun-2015 Moderately Satisfactory Moderately Satisfactory 52.34 10 26-Dec-2015 Moderately Satisfactory Moderately Satisfactory 64.98 11 29-Jun-2016 Moderately Satisfactory Moderately Satisfactory 95.53 12 22-Dec-2016 Moderately Satisfactory Moderately Satisfactory 95.53 13 27-Jun-2017 Moderately Satisfactory Moderately Satisfactory 95.95 SECTORS AND THEMES Sectors Major Sector/Sector (%) Public Administration 100 Central Government (Central Agencies) 3 Sub-National Government 22 Page 3 of 62 The World Bank Municipal Program ( P066488 ) Transportation 100 Other Transportation 25 Water, Sanitation and Waste Management 100 Waste Management 15 Other Water Supply, Sanitation and Waste 35 Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Finance 4 Finance for Development 4 Housing Finance 4 Public Sector Management 7 Public Finance Management 2 Public Expenditure Management 2 Public Administration 5 Transparency, Accountability and Good 2 Governance Municipal Institution Building 3 Urban and Rural Development 90 Urban Development 90 Urban Infrastructure and Service Delivery 86 Urban Planning 4 ADM STAFF Role At Approval At ICR Regional Vice President: Obiageli Katryn Ezekwesili Makhtar Diop Country Director: Johannes C.M. Zutt Diarietou Gaye Senior Global Practice Director: Inger Andersen Ede Jorge Ijjasz-Vasquez Practice Manager: Junaid Kamal Ahmad Bernice K. Van Bronkhorst Page 4 of 62 The World Bank Municipal Program ( P066488 ) Abdu Muwonge, Sheila W. Task Team Leader(s): Sumila Gulyani Kamunyori ICR Contributing Author: Wendy Schreiber Ayres Page 5 of 62 The World Bank Municipal Program ( P066488 ) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL National and sector context 1. In the decade before the Kenya Municipal Program (KMP) was approved in May 2010, Kenya had been experiencing strong, but uneven growth, with an average growth rate of 3.7 percent. However, growth slowed significantly during 2009–10, due to the 2008 post-election violence, the global economic crisis and a severe drought in 2009, which negatively impacted trade flows and receipts from tourism, remittances, and foreign direct investment. Growth slowed to 1.7 percent in 2008, the lowest rate since 2002 and substantially below the population growth rate of 2.9 percent. Growth was expected to recover slightly to 2.5 in 2009 and 3.5 percent in 2010. 2. Economic growth had been accompanied by rapid urbanization, leading to growing gaps in service provision. In 1999 about 35 percent of the Kenyan population was residing in urban areas and the total urban population was estimated to be about 10 million people. Kenya’s five largest cities (Nairobi, Mombasa, Kisumu, Nakuru, and Eldoret) accounted for approximately a third of the urban population. Urban areas continued growing rapidly. At the time the project was prepared, it was estimated that 45 percent of Kenya’s population or 16.5 million people would be living in urban areas by 2015, and that 54 percent of the population or 23.6 million people would be by 2030. But urban services were not keeping pace with urban population growth, with demand for services far outstripping supply in most urban areas. Authorities were unable to keep pace with the growing demand for services because of inadequate financing for capital investments; insufficient capacity for planning, operating, and maintaining urban infrastructure and services; and institutional fragmentation. 3. The central government of Kenya recognized that the quality of life in cities could not be improved without strong performance of the level of government that is closest to citizens. It had demonstrated its commitment to improving performance of its urban centers through a variety of broad local government reforms. These included: (a) the 1996 launch of the Kenya Local Government Reform Program, which provided support for improvement of urban project management, finances, and human resources; (b) the roll out to 65 urban governments of the local authority integrated financial operations management system, designed to improve financial controls and fiscal discipline; (c) enactment of the local authorities transfer act, which transferred 5 percent of national income tax revenues in the form of block grants to local governments; (d) establishment of service charters and performance contracts and introduction of incentives to improve performance by offering additional funding to local governments that met specific conditions of transparency and good governance; and (e) introduction of participatory planning through the local authority service delivery action plan process. By the time the KMP was being designed, the government’s initiatives to strengthen urban governance had been rolled out to 65 urban local authorities. Rationale for World Bank involvement 4. The Bank was uniquely placed to support Kenya’s efforts to strengthen municipalities. First, it had developed considerable knowledge of what works and what does not through its support for urban and local government programs in eastern and southern Africa (including Tanzania, Uganda, Ethiopia, Mozambique) and in other regions, which it could draw on in designing support for Kenya. Second, it had undertaken significant analytical work that provided a sound understanding of the relationships between the central and local authorities and of the strengths and weaknesses in capacities of individual municipalities. Third, through its leadership of the development partner group Page 6 of 62 The World Bank Municipal Program ( P066488 ) on urban development, local government, and decentralization, the Bank was able to bring major donors to provide support through a single framework. Indeed, two major supporters of urban development—the Swedish International Development Cooperation Agency (Sida) and the Agence Française de Développement (AFD)—had agreed to jointly prepare and co-finance the proposed KMP. Finally, the Bank brought considerable financial resources to the effort, which when combined with those of other development partners, had the potential of making a big difference in the performance of municipalities. Recognizing these strengths, the government invited the Bank to take the lead in promoting urban development. 5. The KMP was the Bank’s first engagement in the urban sector in Kenya for many years. It was envisaged as the first in a series of programs that would support urban development. The other two programs were the Kenya Informal Settlements Improvement Program (KISIP), with Ministry of Housing as lead agency, and the Nairobi Metropolitan Services Improvement Program (NaMSIP), with the Ministry of Nairobi Metropolitan Development as the lead agency. Together, the three programs comprised a strategy for engaging in a systematic transformation of urban governments in the country. The KMP would address institutional constraints—municipal capacity for budgeting, financial management, and participatory planning—and, simultaneously, support investments to improve infrastructure and local service delivery. KISIP would focus on improving living conditions in informal settlements by enhancing security of tenure and investing in basic infrastructure. NaMSIP would help to strengthen the newly created metropolitan institutions and improve infrastructure and service delivery in the Nairobi metro area, the country’s largest and economically most important urban conurbation. The AFD and Sida strongly endorsed this strategy, and agreed to partner with the Bank to jointly prepare and co-finance at least the first two of the three programs. Contribution to higher-level objectives 6. The proposed KMP would contribute to the goals of the government’s Vision 2030 and Medium-term Plan. Specifically, it would assist the government to create livable cities that contribute to the nation’s economic growth. The government’s Medium-term Plan, which presented the first five-year program to implement the Vision 2030, named decentralization as a key reform to improve governance and to promote growth with equity. The KMP would contribute to the achievement of the goals by supporting the creation of capacity for improved urban planning and development, financial management, and delivery of services at both the central government and local levels. The longer-term outcome was expected to be a higher quality of life and a more attractive investment climate in Kenya’s major cities, strengthening their capacity to contribute to the country’s economic growth and development. 7. The KMP was an integral element of the Country Partnership Strategy that was discussed by the World Bank’s Board of Directors on April 20, 2010. This CPS (52521-KE) emphasized the themes of growth, equity, and environment, with a special emphasis on governance. The KMP contributed to the improved governance, growth, and environmental management objectives. It contributed to the governance agenda by supporting the emergence of more capable and accountable local governments. It contributed to the growth agenda by investing in infrastructure required to improve the productivity and competitiveness of cities, and by supporting infrastructure planning and improvement of institutional arrangements for service delivery. The KMP supported improved environmental stewardship through investments in stormwater drainage, solid waste management, and disaster management (facilities, equipment, and institutional strengthening). Page 7 of 62 The World Bank Municipal Program ( P066488 ) Theory of Change (Results Chain) 8. The theory of change implicit as outlined in the PAD is below: Activities Outputs PDO/Outcomes Long-term outcomes • Annual internal audit is Strengthened executed and submitted to institutional Kenya National Audit Office framework for urban Strengthen by the deadline. management and local • Municipalities prepare and governance: governance implement revenue • Own-source enhancement plans. revenues rise. Enhanced competitiveness of • Municipalities prepare • Strategic urban cities capital investment plan in a plans guide participatory manner. development More inclusive service delivery • Municipalities prepare structure plans and landuse Livable cities that contribute to guidelines. the nation’s economic growth. • Kilometers of roads Increased coverage of constructed. selected infrastructure • Kilometers of drainage and services Improve service systems constructed. (breakdown by service delivery in • Kilometers of pedestrian type and city): selected and bicycle paths • People with access municipalities constructed. to infrastructure • Number of street and and services security lights erected and increases. operational. • Fire trucks distributed and operating. Critical assumptions: Local contractors with sufficient capacity Financial support from donors Local governments with commitment and capacity to manage and develop cities Original Project Development Objectives (PDOs) 9. The Project Development Objective (PDO) was to strengthen local governance and improve service delivery in selected municipalities. This was to be achieved through institutional reforms, capacity building, and investment in infrastructure. Page 8 of 62 The World Bank Municipal Program ( P066488 ) Key Expected Outcomes and Outcome Indicators 10. The Project Appraisal Document (PAD) specified six key performance indicators for the municipalities. These were: Strengthen local governance Financial management • Municipalities that are successfully producing statutory annual accounts using the Local Authority Integrated Financial Operations Management System (LAIFOMS) (number). • Audited municipalities that receive unqualified audit opinions (number). Planning • Municipalities with council-approved capital investment plans that are based on their strategic urban development plan (number). Revenue collection • Municipalities whose locally-generated revenues rise in line with the targets specified in realistic revenue enhancement plans that are based on revenue potential analyses (number). Improve service delivery in selected municipalities Urban infrastructure • Direct project beneficiaries (number), of which female (percent). • Infrastructure constructed that is maintained and operational (percent). 11. A table in annex 3 of the PAD provided further information on the project’s monitoring framework, including intermediate outcome indicators, baseline and target values, and sources of information to track progress with the indicators. Components 12. The KMP comprised four components: (1) institutional strengthening; (2) participatory strategic planning for urban development; (3) investment in infrastructure and service delivery; and (4) project management, monitoring and evaluation. Component 1 supported institutional strengthening, capacity building, and policy development at the national and municipal levels to facilitate decentralization and build a capable and accountable local government system. Component 2 supported (a) preparation of strategic urban development plans—including physical structure plans and capital investment plans—developed in consultation with stakeholders; (b) community mobilization and participation in these planning processes and in other program-related initiatives; and (c) strengthening of municipal planning offices. Component 3 supported investment in infrastructure and service delivery, including roads, stormwater drainage, pedestrian and bicycle pathways, street and security lighting, markets, and disaster management and prevention facilities and equipment. Component 4 financed the management activities associated with program implementation, including establishing and operating a monitoring and evaluation (M&E) system, and preparing a follow-on project to the KMP. Page 9 of 62 The World Bank Municipal Program ( P066488 ) 13. The KMP was designed to be implemented in phases. During the first two years, the ministry would be responsible for procuring goods, consultancy services, and works for the municipalities and for managing the contracts. The KMP would strengthen capacity for local-level procurement, financial management, and implementation. It was envisaged that by year 3, some of the participating municipalities would have gained sufficient capacity in the areas of financial management, procurement, and participatory planning to qualify for a KMP municipal project account and to take responsibility for managing some project funds and procurement. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDOs and Outcome Targets 14. The project’s PDO was revised during the restructuring approved by the World Bank Board on March 11, 2015 to reflect changes in the institutional set-up of government that took place following the elections of March 4, 2013, the first under the 2010 constitution. Under Kenya’s new constitution, newly created county governments became responsible for managing Kenya’s urban areas, and urban local authorities (the former third tier of government) ceased to exist. Moreover, KMP’s implementing agency, the former Ministry of Local Authorities, was merged into a new ministry, the Ministry of Land, Housing, and Urban Development (MLHUD) that had the mandate to strengthen urban management, but not county administrations. Therefore, component 1 activities were changed to focus on strengthening urban management within the new devolved government structure in keeping with that mandate. To better reflect the government’s new institutional set-up, and the specific activities to be financed under KMP, the PDO was simplified to emphasize the project’s focus on urban planning and provision of infrastructure services. The new PDO was “to improve planning and delivery of infrastructure services in urban areas in selected counties.” 15. Intentions to support a second phase of the Adaptable Program Loan were dropped. With the establishment of the new system of government, it was clear that a follow-on urban support program would have to take a completely different design, requiring preparation of a new operation that gave counties a leading role in promoting urban development. Revised PDO Indicators 16. The results framework was substantially revised and several of the original key performance indicators were dropped to reflect what the Project would actually achieve. Component 1 indicators were adjusted to reflect outcomes and outputs of the new institutional strengthening activities. Targets for all components were added or revised to reflect the activities that the KMP would support during its implementation period, given the addition of funds from Sida (which became available only after the project became effective) and the removal of funds from AFD. The revised key performance indicators are presented below: Improve Planning • Integrated strategic urban development plans approved by the county assembly and gazetted. Improve delivery of infrastructure services in urban areas in selected counties • Direct project beneficiaries (number), of which female (percent). Page 10 of 62 The World Bank Municipal Program ( P066488 ) • People in urban areas provided with access to all-season roads within a 500-meter range under the KMP (number). • People in targeted urban areas protected from periodic flooding under the KMP (number). Revised Components 17. Most activities originally envisaged under component 1 were dropped, because the mandate to strengthen institutions of subnational governments shifted to the Ministry of Devolution and Planning and the KMP was not able to directly support activities under this ministry. Instead, a modified set of institutional strengthening activities were identified to be supported under the KMP, aimed at strengthening the county administrations’ capacity for managing the 15 urban centers benefiting from the KMP and at establishing and supporting structures of urban management. Activities added to component 1 included developing a framework for the preparation of county integrated development plans and offering training to all counties (not just the counties with KMP-supported urban centers) to help them prepare them (such plans are required for counties to receive funds from the national government). Activities dropped included: (a) strengthening of intergovernmental fiscal frameworks to enhance volume and predictability of resources transferred to municipalities, based on local performance; (b) supporting implementation of financial management information systems at the urban level; (c) establishing and implementing the annual performance assessment of participating municipalities; (d) developing revenue enhancement plans for each of the participating municipalities; (e) supporting the annual audits of municipal financial statements; and (f) establishing and operating strengthened upward and downward accountability of municipalities. Other Changes 18. The implementation arrangements changed to make the new Ministry of Land, Housing, and Urban Development the executing agency, as the former Ministry of Local Government’s Urban Development Department had been incorporated into the new ministry. The plan of providing performance grants to municipal governments to undertake investments was dropped, as urban local authorities had ceased to exist. Instead, the new ministry would implement subprojects in urban areas on behalf of KMP counties. While the restructuring allowed for the possibility of providing counties with performance grants to strengthen urban institutions and management, this was not expected during the life of the KMP, because the national government first had to develop a framework for such agreements, which would take time. 19. The financing plan was revised. Co-financing from Sida was incorporated in a revised KMP financing plan, while funding originally anticipated from the AFD was removed to reflect AFD’s decision not to co-finance the project. (AFD withdrew because negotiations with the Bank on the terms of an overall administration agreement, which would provide the framework for its KMP co-financing agreement had still not finalized by the time of the midterm review). The revised financing plan is below: Page 11 of 62 The World Bank Municipal Program ( P066488 ) Financing Plan (US$ million) Original Revised BORROWER/RECIPIENT 10.00 10.00 IDA 100.00 100.00 Swedish International Development 10.00 12.07 Cooperation (Sida) Agence Française de Développement (AFD) 45.00 0.00 Total: 165.00 122.07 20. The KMP closing date was extended by 21 months, from August 30, 2015 to May 31, 2017. This was to provide additional time for the planned activities to be completed. Rationale for Changes and Their Implication on the Original Theory of Change 21. The two-year gap between the time that the constitution took effect and the time of the restructuring was due to delays by the national government in preparing a framework for provision of performance grants to subnational governments and delays by county administrations in establishing urban administrations. The Bank and the KMP team undertook a midterm review of the KMP in September 2013, once the new county administrations had been appointed and briefed on the project, to identify and agree on the changes that were needed. Consideration was given to provide performance grants to counties to strengthen urban governance and to support a program of capacity building to strengthen urban administrations once they were established. However, by late 2014, the Ministry of Finance had still not agreed on a framework to allow for funds to be given to counties as performance-based grants. Moreover, not a single county had established an urban board. The Bank therefore proceeded with the restructuring without these elements in place. The delay in the restructuring did not disrupt project implementation, because the KMP team at the ministry continued to procure and manage all contracts for goods, consultancies, and works on behalf of counties. II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Rating: High 22. The overall objectives of the KMP were and remain highly relevant. They reflect the importance of strengthening the capacity of the urban areas and cities to effectively deliver services and infrastructure to a growing urban population. As mentioned above, the project’s objectives were consistent with those of the Government of Kenya at the time of preparation. They remain consistent with government priorities, as reflected its (a) Urban Areas and Cities Act (enacted in 2011 and amended in 2015), which requires county governments to establish structures for urban management; (b) the National Urban Development Policy, approved by the cabinet in 2016, which envisages secure, well-governed, competitive, and sustainable urban areas and cities, and aims to facilitate sustainable urbanization through good governance and the delivery of accessible, quality and efficient infrastructure and services; (c) the Devolved Government Act (enacted 2012), which lays out the roles and responsibilities of counties with respect to urban areas and cities, and (d) the 2010 Constitution of Kenya, which establishes a devolved system of government. Page 12 of 62 The World Bank Municipal Program ( P066488 ) 23. The revised PDO is fully consistent with the Bank’s CPS for 2014–18, and its update. The CPS for Kenya (87024-KE) has three strategic results areas: (a) competitiveness and sustainability—growth to eradicate poverty, (b) protection and potential—delivering shared prosperity, and (c) consistency and equity—delivering a devolution dividend. The KMP supported the first strategic results areas. It helped to enhance the competitiveness and sustainability of Kenya’s urban areas by supporting participatory strategic and spatial planning, and financing of urban infrastructure and services. The KMP also contributed to the CPS goals related to climate change, disaster risk management, and sustainability, notably through construction of stormwater drainage systems, including in the coastal city of Mombasa. 24. The Bank implementation support was highly responsive to the massive changes in the institutional set-up of government that took place as a result of the adoption of a new constitution. One of the major aims of the new constitution was to devolve power and resources to sub-national governments. The Bank responded to the changes by formally restructuring the project, including revising the PDO to retain the relevance of the objectives, as described above. Relevance of the PDO is high. B. ACHIEVEMENT OF PDOs (EFFICACY) Rating: Substantial 25. The KMP largely achieved its objective to improve planning and delivery of infrastructure services in urban areas in selected counties. The urban areas that benefited from the project now have up-to-date integrated strategic urban development plans to guide their future expansion, and many have improved their infrastructure. All but one of the PDO outcome targets were achieved. Specifically: • Some 2.1 million residents (50 percent female) have benefited directly from the improved infrastructure and services delivered under the project. They are enjoying upgraded and new access roads and drainage systems, pedestrian and bicycle pathways, street and security lights, and new markets. 1 • Some 69,200 people in urban areas provided with access to all-season roads within a 500- meter range under the project. This is below the target of 170,000 people, because the government dropped some contracts for roads and drainage systems following the restructuring of the KMP in March 2015, due to a lack of funding that arose because of a cost over-run on a contract for Mombasa drainage (see paragraph 52 for details). • About 507,000 people in targeted urban areas protected from periodic flooding under the KMP. This is 97 percent of the target. The new drainage systems are preventing property damage and facilitating mobility in the areas covered. Of note is the impact of the piped drainage system constructed in Mombasa in a flat area with sandy soil where flooding has been significantly reduced during rainy periods. Respondents to key informant interviews undertaken for the beneficiary assessment in Mombasa completed in May 2017, stated that “Cases of flooding had reduced significantly since the completion of the construction of the storm water drains.” 2 Members of matatu SACCOS (minibus cooperatives) participating in a focus group 1 Kenya census data show that about 50 percent of residents in cities are female. 2 MTIHUD. 2017. “KMP Beneficiary Impact Assessment.” May. Page 13 of 62 The World Bank Municipal Program ( P066488 ) discussion said they had realized savings due to reduced motor vehicle repairs and disruption of business. Business owners reported increased income levels due to improved access and a much better working environment. In addition, people interviewed for the Environmental and Social Safeguards Compliance Audit in Machakos stated that areas that used to flood during the rainy season, did not do so during the April and May rains of 2017. 3 • Fourteen integrated strategic urban development plans (ISUDPs) have been completed. This is above the target of 12 set at the restructuring. Of these, 11 have been approved by the county executive committees, and three are awaiting approval. Three have been approved by the county assemblies. 4 Mombasa’s Vision 2015 includes key elements of its ISUDP. Many other county governments are using the ISUDPs to plan for future infrastructure projects, according to the beneficiary assessment. The Kenya Urban Support Program (KUSP) contains a performance standard related to effective urban planning, which is expected to encourage county and urban administrations to seek county assembly approval of the ISUDPs not yet approved. The Urban Development Department of the Ministry of Transport, Infrastructure, Housing, and Urban Development (MTIHUD), which is the implementing agency for KUSP, will provide training on and technical assistance for urban planning to further build capacity of local government in this area. Assessment of Achievement of Each Objective/Outcome 26. Most of the intermediate outcome targets were achieved. All targets for institutional strengthening were met. Targets for participatory planning were exceeded. Several targets for infrastructure were exceeded, although some were not met, as explained below. Intermediate results component 1: Institutional strengthening • A handbook for preparation of county integrated development plans with three sections: (a) institutional, (b) spatial, and (c) governance and accountability has been prepared and put to use. The aim of integrated development planning is to coordinate economic, social, environmental, legal and spatial aspects of development in a manner that meets the need and aspirations of the people. Under the County Government Act of 2012, counties are required to prepare five-year county development plans. The KMP Project Coordination Team provided extensive training to staff of nearly all counties on the topics covered in the handbook. The training was key in building capacity of counties to develop their first county integrated development plans. • A capacity assessment tool for urban boards and town committees was developed and put to use. The capacity assessment tool has been used by counties to identify their staffing and skills needs. • A model restructuring guide for establishment of urban boards and town committees has been prepared and put to use. The guide has been used by Kakamega county to establish its town committee. The handbook has been distributed to all counties and it will serve as a key reference in the 3 MTIHUD. 2017. “Environmental and Social Safeguards Compliance Audit of KMP projects.” May. 4 These include Mombasa, Nyeri, and Embu. Page 14 of 62 The World Bank Municipal Program ( P066488 ) training that is being provided by the KUSP Project Coordination Team to the county governments participating in KUSP. • A policy for transfer of assets from former local authorities to counties was developed. The now disbanded Transitional Authority was the client for the asset transfer policy, and how many counties are following the policy is not known. Intermediate results component 2: Participatory strategic urban development planning • Some 14 urban centers have capital investment plans prepared in a participatory manner. Of these 13 have been approved by the county executive committees. These are part of the ISUDPs, a PDO indicator, as noted above. These plans are expected to guide the future development of the urban areas. • Some 14 urban centers have structure plan and land use guidelines approved by the authorities. Of these 13 have been approved by the county executive committees. These are part of the ISUDPs. These plans are expected to guide the future development of the urban areas. Intermediate results component 3: Investment in infrastructure and service delivery • About 62.6 kilometers of drains were constructed or rehabilitated under the KMP. This is below the target of 90 kilometers, because the government dropped some contracts that were at an advanced stage of procurement after the restructuring because of a funding shortfall. • Some 23.74 kilometers of roads were constructed or rehabilitated under the KMP. This is below the target of 34.60 kilometers, because the government dropped some contracts that were at an advanced stage of procurement after the restructuring, because of a funding shortfall. The roads that have been constructed or upgraded have improved access to markets, services, and opportunities, and have reduced travel times for users. • Some 202.2 kilometers of non-motorized transport links were constructed or rehabilitated under the KMP. This is significantly above the target of 137.0 kilometers. The pedestrian and bicycle pathways are heavily used, according to the beneficiary assessments prepared at the end of the project. For example, in Mombasa, where 74 percent of people walk to work or study, some 15,400 people in Mombasa use the walkways every weekday. 5 6 In Thika, about 17,000 people use them every weekday, in Nakuru, 5,700 use them every weekday, and in Eldoret, about 6,000 people use them every weekday. They provide significant benefits in public health by reducing accidents between pedestrians/cyclists and motor vehicles, according to a study undertaken by an economist at the Madawalabu University in Ethiopia. 7 The facilities have also generated benefits in terms of walking/cycling comfort and speeds. 5 The figure for the proportion of people who walk to work or study is from the “Kenya State of the Cities Baseline Survey,” World Bank. 2014. 6 All use figures are from MTIHUD. 2017. “KMP Beneficiary Impact Assessment.” May. 7 Mohapatra, Dipti Ranjan, 2014. “An Economic of Feasibility of Non-Motorized Transport Facilities in Mombasa Town, Kenya.” European Academic Research, Volume II, Issue 8, November, 2014. Available at www.euacademic.org. Page 15 of 62 The World Bank Municipal Program ( P066488 ) They have also led to increases in motor vehicle speeds, which no longer have to share the road with pedestrians and cyclists. • Three markets were constructed, all of which are operating. A hawker’s market in Eldoret and two livestock markets, one in Garissa and one in Machakos, were constructed under the KMP and are operating. The number of markets constructed is below the target of five, because the government cancelled some contracts that were at an advanced stage of procurement at the time of the restructuring. The livestock market in Garissa is providing significant benefits to traders, who are earning an average of approximately Kshs. 13,300 per market day compared with an average of Kshs. 4,680 prior to construction of the market, according to the beneficiary assessment. In addition, the county is collecting revenue of Kshs. 560,000 per day, and about Kshs. 28 million per year, making the market a very important revenue generator for the county. However, the hawker’s market in Eldoret has not been fully occupied, with some potential occupants expressing concern that customers will not come to the market. • Over 1,220 street lights and 34 high-mast-security lights were installed in nine urban centers, most of which are operating. 8 This is significantly above the target of 887. The lights are providing significant benefits in terms of safety and security, and ability to conduct business after dark, according the beneficiary assessments. 9 For example, 98 percent of respondents in Nakuru, 96 percent in Kericho, and 91 percent in Kakamega said that the street lights have improved security. • Fire engines of 10,000-liter capacity were delivered to 15 urban centers. These are helping to save lives and limit property damage from fires, according to the beneficiary assessment. 10 For example, the fire engine from the KMP is the only one available for firefighting and rescue responses in Naivasha town. The fire engine has been used to respond to major fire emergences in the area, including the Karai fire accident and the site of six-seater plane crash at the Naivasha sanctuary. Due to its large capacity, the fire engine was also being used for emergency responses in neighboring counties and is the main engine used for operations along Nairobi-Nakuru Highway. In Nakuru, the fire engine responded to 29 emergencies in 2016, in Eldoret, it responded to 38, and in Kericho, it responded to 22 events. In Kakamega, the fire engine responded to 18 fire emergencies, and is also providing services to other towns, including Vihiga and Mumias. However, operating and maintaining the fire trucks is proving challenging for some municipalities, as spare parts and mechanical expertise are not available in the smaller urban centers, making it costly and time consuming to repair the truck, in the event of a breakdown. • Some 12 feasibility studies and designs prepared under KMP for future investments in urban infrastructure. These include stormwater drainage, non-motorized transport, solar lighting for public facilities, traffic lights and automation of bus parks, information technology systems and infrastructure 8 Street and security lights were installed in Mombasa, Eldoret, Kakamega, Kericho, Kericho, Nakuru, Garissa, Thika, and Machakos. 9 MTIHUD. 2017. “KMP Beneficiary Impact Assessment.” May. 10 MTIHUD. 2017. “KMP Beneficiary Impact Assessment.” May. Page 16 of 62 The World Bank Municipal Program ( P066488 ) to support municipal infrastructure assets management, markets and access roads, and bus parks. Many of the facilities are likely to be constructed under the KUSP. • Resettlement action plans (RAPs) were implemented in a satisfactory manner prior to the start of works. There were no significant issues with implementation of RAPs, as very few people were affected by the construction of the infrastructure, and most of those who were informal traders who moved temporarily to nearby locations to conduct their business. However, the social and environment compliance audit of KMP subprojects, carried out at the end of the project found a few cases of traders who had set up their stalls on public land moving voluntarily to make way for the works, without being informed of their right to compensation for temporary loss of income. The information from the social and environmental compliance audit is not detailed enough to allow a calculation of the of the percentage of RAPs that were not implemented satisfactorily prior to the start of works. The team’s assessment is that the target for this indicator was largely met. Based on the findings of the audit, strengthening of capacity for environmental and social safeguards is a focus area under the KUSP. Justification of Overall Efficacy Rating 27. The KMP largely achieved its objective to improve planning and delivery of infrastructure services in urban areas in selected counties. The urban areas that benefited from the project now have up-to-date integrated strategic urban development plans to guide their future expansion. Many urban areas have improved infrastructure services, through construction of new foot and bicycle paths, drainage systems, access roads, street and security lights, and markets. All but one of the PDO outcome targets were achieved, all intermediate outcome targets for institutional strengthening and for participatory strategic urban development planning were met, and all but three targets for investment in infrastructure and service delivery were achieved. C. EFFICIENCY Assessment of Efficiency and Rating Rating: Modest 28. Efficiency of the investments in drainage systems and non-motorized transport facilities was substantial. The PAD did not provide estimates of economic or financial rates of return of investments, because the KMP was a framework project, and the specific investments were not known at the time of project preparation. However, we now know that 88 percent of the investments in infrastructure under the KMP were in drainage systems and in non- motorized transport facilities. The results of benefit-cost analyses of the drainage system in Mombasa and of the non- motorized transport facilities in Mombasa are provided below. In addition to the quantified benefits, the project also provided significant non-quantifiable benefits, according to the beneficiary assessment and the value for money study. Drainage 29. Efficiency of the investments in the drainage systems was substantial. Some 49 percent of the KMP funds for infrastructure were spent on drainage works in four urban centers that are home 1.4 million people. 11 A cost benefit 11 These were Embu, Garissa, Machakos, and Mombasa. Page 17 of 62 The World Bank Municipal Program ( P066488 ) analysis for the drainage system in Mombasa was carried out by the World Bank team. A summary of the data used and findings is below. • Capital and maintenance costs. A total of US$25.4 million was spent to construct 33.7 kilometers of stormwater drains. The annual cost for maintenance is estimated to be 5 percent of the capital cost over a period of 25 years. • Benefits. The main benefits were reductions in number of days of work lost due to flooding. • Discount rate. A discount rate of 5 percent was used, in line with World Bank guidance. 30. The main data underlying the analysis are: (a) the construction period was two years, (b) the benefits start to flow from year three and continue for 25 years, (c) each person loses 5.625 days per year due to recurrent annual flooding (½ hour per day for 90 days) during two rainy seasons, (d) each person day of work is valued at US$5.60; (e) 300,000 people in Mombasa benefit from reductions in flooding. 31. The table below presents the net present value and internal rate of return for the drainage system in Mombasa. Table 1: Economic analysis for the drainage system in Mombasa Net present value US$70 million Drainage system in Mombasa Internal rate of return 32 percent Benefit cost ratio 2.8 32. The Mombasa drainage investments remain viable even with changes in costs and benefits (table 2). The value of the investments is affected more by a reduction in benefits than by an increase in costs. Table 2: Sensitivity analysis for drainage system in Mombasa Base case Scenario 1 Scenario 2 Scenario 3 (costs (cost up by 20%) (benefits down by up by 20% and 20%) benefits down by 20%) Net present value US$70 million US$62.2 million US$48.2 million US$40.4 million Internal rate of return 32 percent 26 percent 24 percent 19 percent Benefit cost ratio 2.8 2.0 1.9 1.3 33. Drainage systems provide significant benefits that have not been quantified. These include (a) reduced property damage (buildings, roads, furniture, appliances, household goods); (b) increased property values; (c) reduced loss of income from businesses whose hours are curtailed and access reduced; (d) improved travel times on streets that used to flood; (e) lower maintenance costs for vehicles; and (f) reduced costs of illness associated with exposure to polluted and stagnant water. The drainage systems in all urban centers are among the investments identified in drainage masterplans and are contributing to disaster risk management and urban resilience, an area of growing Page 18 of 62 The World Bank Municipal Program ( P066488 ) importance to the Bank. Together, the quantified and non-quantified investments in drainage indicate that the investments are providing significant benefits over their costs. Non-motorized transport facilities 34. Efficiency of the investments in non-motorized transport facilities was substantial. Some 39 percent of the KMP funds for infrastructure were spent on foot and bicycle paths in five cities that are home to 2 million people. 12 A cost benefit analysis for the non-motorized transport facilities in Mombasa has been carried out by an economist at the Madawalabu University in Bale Robe, Ethiopia and published in the European Academic Research Journal. 13 A summary of the data used and findings is below. • Capital and maintenance costs. A total of US$5.5 million was spent to construct 47.6 kilometers of pedestrian and bicycle paths, three footbridges, speed bumps, improved junctions, hand rails, and related works. The annual cost for maintenance is estimated to be 2 percent of the capital cost. • Benefits. The main benefits were (a) reductions in number of fatalities due to accidents involving pedestrians and vehicles, due to their separation, (b) reductions in (non-fatal) serious accidents; (b) time savings for pedestrians, who can walk faster because they no longer have to walk in the road and avoid vehicles. • Discount rate. A discount rate of 12 percent was used. 14 35. The main data underlying the analysis are: (a) the construction period was one year, (b) the benefits flow from year two to year five, (c) 13 fewer people are killed each year and there are 65 fewer serious accidents involving injuries, (d) each person not killed earns US$48,000 equivalent over his or her working life, and each injury not incurred saves US$12,000 equivalent; (e) the number of pedestrians using the new facilities is 340,700, (f) time saved per trip on foot is 10 minutes, (g) total time saved per year per pedestrian is 81 hours; (h) the value of time saved for both business and non-business trips averages US$0.23 per hour; and (i) the value of time saved rises by 7 percent per year, in line with inflation. 36. The table below presents the author’s estimates of the benefit cost ratio for the non-motorized transport facilities in Mombasa. (The author does not present a net present value or an internal rate of return.) Table 3: Economic analysis for the non-motorized transport facilities in Mombasa Intervention Benefit cost ratio Traffic calming measures (such as speed bumps and zebra crossings) 17.56 Footpaths 17.22 Cycle paths 0.74 Foot bridges 0.51 All non-motorized transport facilities in Mombasa 8.41 12 These were Eldoret, Kakamega, Mombasa, Nakuru, and Thika. 13 Mohapatra, Dipti Ranjan, 2014. “An Economic of Feasibility of Non-Motorized Transport Facilities in Mombasa Town, Kenya.” European Academic Research, Volume II, Issue 8, November, 2014. Available at www.euacademic.org. 14 The author has used a discount rate of 12 percent, rather than a discount rate of 5 percent, which the Bank recommends. If he had used a discount rate of 5 percent, the cost/benefit ratio would have been higher. Page 19 of 62 The World Bank Municipal Program ( P066488 ) 37. Using the same scenarios as in table1 above, the non-motorized transport investments remain viable even with changes in costs and benefits (table 4). The value of the investments is affected more by a reduction in benefits than by an increase in costs. Table 4: Sensitivity analysis for non-motorized transport facilities in Mombasa Base case Scenario 1 Scenario 2 (benefits Scenario 3 (costs up down by 20%) by 20% and benefits (cost up by 20%) down by 20%) Benefit cost ratio in 2014–19 8.41 8.33 6.73 6.66 38. Investments in street lighting are providing significant benefits, according to the beneficiary analysis, but have not been quantified. Participants in interviews noted that they felt a greater sense of security at night and were now walking along streets with lights, rather than taking motorized transport to their destinations. Some participants pointed out that accidents between vehicles and between vehicles and pedestrians had declined. Some mentioned that business hours had expanded and that the appearance and livability of the urban center had improved. 39. The in-depth value for money study of infrastructure carried out on investments made under the KMP concluded that all the investments in infrastructure were providing value for money. 15 The team of internal auditors visited all the sites where infrastructure was constructed under the KMP. They assessed the quality of the works, took stock of how they were being used, and interviewed both users and county officials to learn about their value. They concluded that all, aside from the under-utilized hawkers’ market in Eldoret and the livestock market in Machakos that had not yet opened, were providing value for money. 40. The procedures implemented by the MTIHUD under the KMP are likely to have resulted in adequate value for money of investments. Thus, priority investments were identified through extensive consultations with residents of the urban areas, under the local authority service delivery action plan process used prior to the introduction of the new constitution (nearly all investments had been selected prior to the introduction of the new constitution). Procurement was through international and national competitive bidding procedures to ensure value for money in procurement. Moreover, both the national and subnational governments maintain complaints handling mechanisms to allow for citizens to bring suspected cases of fraud and corruption to the attention of the authorities. Collectively, these procedures provide reasonable assurance that investments in cities are providing value for money. 41. Institutional benefits were substantial. The KMP provided technical assistance capacity building support in core areas of urban development and management. Notably, the KMP team prepared a handbook and provided training to officials from every county (not just the 14 counties with KMP-supported urban centers) to assist them in preparing county integrated development plans, a requirement to receive funds from the National Treasury. The KMP team also provided technical reviews and feedback during various stages of the preparation of the ISUDPs. They also prepared an implementation matrix for the National Urban Development Policy (NUDP), held consultations with officials 15 Ministry of Transport, Infrastructure, Housing, and Urban Development. 2016. “Value for Money Audit, Kenya Municipal Program.” August. Page 20 of 62 The World Bank Municipal Program ( P066488 ) and other stakeholders from all counties on the draft policy document, and prepared the final document, which was launched at a workshop in Nairobi in February 2016. The cabinet approved the policy in October 2016, a major achievement. The NUDP is providing the foundation for the government’s Kenya Urban Program, which the Bank is supporting under the KUSP Program for Results. In addition, the KMP team led the preparation of the government’s Kenya Urban Program, and periodically held consultations with county officials and the Council of Governors on its evolving design to ensure strong county ownership of the program. 42. Administrative efficiency was modest. All activities were completed by the revised closing date of May 31, 2017. At the time of closing, SDR 65,299,925 (US$95,951,460 equivalent) was disbursed, the full amount of the IDA Credit. In addition, US$11,962,156 of the Sida grant was disbursed, the full amount of the Sida grant. Despite the substantial efficiency of the investments in infrastructure, the project’s closing date was extended by 21 months, due in part to the time required to put into place new government structures in line with the 2010 constitution, but also to operational inefficiencies of the MTIHUD that sometimes led to lengthy delays in procurement and extensions in the closing dates of ongoing contracts. Time overruns detract from efficiency given, the opportunity cost of capital and the service fee that borrowers continue to pay on Bank loans. D. JUSTIFICATION OF OVERALL OUTCOME RATING 43. A rating of high for the relevance of the PDOs, a rating of substantial for achievement of outcomes, and a rating of modest for efficiency justify an overall outcome rating of moderately satisfactory. 44. An overall outcome rating of moderately satisfactory applies when the project is assessed on its objectives both prior to and after the restructuring. Formal approval was obtained to change the project objectives with an original Credit of US$100 million, when US$59.83 million had been disbursed. Another US$11.96 million was added at the time of the restructuring to reflect co-financing from Sida. The project originally contained two objectives: (a) to strengthen local governance, and (b) improve service delivery in selected municipalities. Of those two objectives, achievement of (a) strengthening local governance was modest across the project’s lifetime. Although three of the original PDO-level outcome targets for this objective were dropped because they were no longer relevant under the new government set-up, one was substantially exceeded (the number of urban centers preparing capital investment plans, based on their strategic urban development plans was 14 against the original target of 7). Targets for intermediate results aimed at strengthening local governance were met, as described above, under intermediate results for component 1. After the restructuring, the project contained two objectives, (c) to improve planning, and (b) improve delivery of infrastructure services in urban areas in selected counties, with (b) carried over from the original project. These two objectives were substantially achieved across the project’s lifetime, as noted above. Relevance was rated as high and efficiency as modest for the entire project. The table below provides the detailed calculations of the split rating. Page 21 of 62 The World Bank Municipal Program ( P066488 ) Table 5: Calculations for the overall outcome ratings before and after the restructuring Before restructuring After restructuring Relevance of objective High Efficacy (PDO) Substantial Substantial a Modest Modest b Substantial (objective carried over) c Substantial Efficiency Modest 1 Outcome ratings Moderately Satisfactory Moderately Satisfactory 2 Numerical value of the outcome 4 4 ratings 3 Disbursement US$59.83 million US$44.26 million 4 Share of disbursement 57% 43% 5 Weighted value of outcome 2.30 1.70 rating 6 Final outcome rating Moderately Satisfactory (2.3 + 1.7 = 4.0) III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 45. Several factors of project preparation and design positively affected implementation. The design was based on extensive analysis of urban dynamics and institutional and infrastructure gaps and on lessons learned from the Kenya Local Government Reform Program, financed in part by the European Union, that directly preceded the KMP. The design also benefited from discussions with municipal authorities that led to them to identify in consultation with residents the list of priority infrastructure investments that could be started immediately after the KMP became effective. 46. The project was thoroughly prepared. The PAD discussed alternative design elements considered and the reasons for their rejection. The document specified the risks the project would face and identified adequate mitigation measures. Procurement and financial management arrangements of both the MoLG and of selected municipal governments were thoroughly assessed and action plans prepared to mitigate risks that resources would be misused. The project was classified appropriately as environmental assessment category B (partial assessment), because the planned urban infrastructure and services were not expected to result in environmental damage or significant resettlement. All infrastructure projects for which sites would be identified during implementation were subject to review under the project’s environmental and social management framework (ESMF) and resettlement policy framework (RPF), which specified in detail procedures to be followed during the planning, design, construction, and operation phases of subprojects to identify and to mitigate potential adverse impacts. The ESMF and RPF report prepared for the project was publicly disclosed locally and through the Bank’s InfoShop prior to appraisal. The monitoring and evaluation framework was thorough, with PDO outcome and intermediate outcome indicators covering the critical results areas that the project supported. The Bank and government worked together to develop the results framework, which Page 22 of 62 The World Bank Municipal Program ( P066488 ) ensured that it reflected outcomes that all partners were committed to achieving. By the time of Board presentation, a draft operational manual had been prepared. The government had appointed a coordinator for the KMP, and a full team within the ministry to manage the implementation of the KMP. Numerous meetings and workshops had been held with municipal authorities to discuss and agree on project principles and key design parameters. An 18-month procurement plan had been agreed, containing works that could start soon after the project became effective. 47. In summary, the design was appropriate to meet the project’s objectives at the time of Board presentation. B. KEY FACTORS DURING IMPLEMENTATION 48. The major factor affecting implementation, was the putting into place the provisions of the new constitution following the elections of March 2013. The constitution completely changed the institutional set- up of government. Of special importance for the KMP, the Local Government Act (Cap 265) was repealed, and the country’s 175 local authorities ceased to exist. Their functions and sources of revenue were taken over by 47 newly-created county administrations, each headed by an elected governor. The 15 municipalities that were benefiting from the KMP then became under the management of 14 county governments. Two of these—Nairobi City County and Mombasa City County—manage jurisdictions identical to those of the former local authorities. However, the other 13 urban areas participating in the KMP no longer had structures in place to plan, manage, and govern their affairs. 49. In addition, the ministerial set-up changed. The constitution allows for a maximum of 22 ministries, down from the previous 43. This required the creation of new ministries that would take over the functions, staff, and responsibilities of the old ministries. During this process, the functions and staff of the Ministry of Local Government—KMP’s implementing agency—were assigned to two different newly-created ministries. The functions and staff of the ministry’s reforms department—formerly responsible for implementation of component 1 (institutional strengthening)—went to the Ministry of Devolution and Planning. The functions and staff of the urban development department—formerly responsible for implementation of component 2 (participatory strategic urban development planning), component 3 (investment in infrastructure and service delivery), and component 4 (project management, monitoring and evaluation)—were taken over by the new MLHUD. (The ministerial set-up was again changed in 2016, and the mandate for urban development was given to a new ministry, the MTHUD). 50. The 2010 constitution devolved many of the functions previously performed by national ministries to counties, which led to tensions between the KMP team at the ministry and the new county governments. The constitution gave the responsibilities for constructing, operating, and maintaining urban infrastructure and services to counties, leaving the ministry with a policy, regulatory, and advisory role. This changed the relationship between the national and sub-national governments, as sub-national governments became autonomous units rather than a deconcentrated unit of the national government. This change led to tensions between the ministry’s KMP team and some county governments, who wanted to take over procurement and financial management of activities supported under the KMP. 51. The profound changes in the structure of government led to significant delays in project implementation. Some of the new counties tried to stop the KMP team from procuring goods, works, and Page 23 of 62 The World Bank Municipal Program ( P066488 ) services, pointing out the counties now had the mandate to develop urban areas, not the national ministry. While they would eventually have these powers, the National Treasury was not willing to provide funds directly to counties until it had developed a framework and set of operational rules to ensure that counties used the funds properly and accounted for them. This would require considerable consultation and would take time. The Bank and government teams eventually convinced the counties to allow the KMP team to continue procuring and managing contracts on behalf of the counties, promising to do so in full collaboration with the county administrations. 52. Aspects of the project design contributed to delays in project implementation. The framework structure of the original project design meant that infrastructure works under the Project would be designed and constructed during implementation. This made the original five-year implementation period unrealistic. Combined with a slow start to project implementation and Kenya’s new institutional arrangements, project implementation was delayed by nearly two years. Ultimately, the project closing date was extended by 21 months. 53. Another factor negatively affecting implementation was a US$8.4 million over-run in the contract for Mombasa drainage, bringing the total contract amount to about US$25.4 million. This reduced funds available for other infrastructure investments, and the government then cancelled several contracts that were in advanced stages of procurement at the time of the restructuring. The contracts that were dropped included stormwater drainage works for three urban centers (Naivasha, Malindi/Watamu, and Kitui), and markets and associated access roads for Kericho, Kakamega and Naivasha. The aide memoire for the November 2015 mission notes that these contracts had been dropped and that therefore the targets in the results framework relating to drains, access roads, and markets could not be achieved. The Bank team discussed the possibility of undertaking a second restructuring to adjust the targets in the results framework, but both the country management unit and the practice management unit advised that documenting the changes in the aide memoire would be sufficient. 54. The cost over-run in the Mombasa drainage systems was due to initial poor designs prepared by the municipal government prior to the start of the KMP. During project preparation, the KMP team asked municipal governments to identify infrastructure projects for which feasibility studies and detailed designs had been prepared, so that works could start shortly after the KMP became effective. Mombasa identified a drainage project that was part of the municipality’s drainage masterplan. A contract was signed on June 15, 2012, the first contract for works to be signed under the KMP. However, once construction began it became clear that the initial design and the related cost estimates were grossly inadequate, according to a value for money study carried out by government internal auditors in 2016. 16 The supervising engineers undertook a design review, and determined that whole sections of the existing drainage would need to be replaced. They also noted that due to the flat topography, the open drain that had been planned would not be adequate to drain the area, and that an underground closed drainage system would be required. This required tunneling and the use of sheet pilings to ensure that excavation trenches did not collapse on workers, which significantly increased the cost of works. A Bank engineer visited Mombasa and reviewed the proposed amendments to the design and the contract with county and ministry officials, and a new scope was agreed. Bank procurement staff reviewed and approved the amendments to the contract. The amended contract was successfully completed on February 28, 2016. The value for money audit concluded: “Although the variation is high, it was necessary if the original objective of the project covering storm drainage, roads, and street lighting was to be achieved….. The 16 MTIHUD. 2016. “Value for Money Audit, Kenya Municipal Program.” August. Page 24 of 62 The World Bank Municipal Program ( P066488 ) technical capacity and competence, quality of work and workmanship of the contractor also deserves commendation for prudence in being able to make progress despite the challenges encountered and which were not envisaged from the initial contract. The audit team considers this project a big success given the circumstances under which this contract was procured and the current level of achievement. The original objective of storm water drainage improvement has been attained to a substantial level. This is attested by the level of satisfaction displayed by the residents who, from our interviews, expressed great support for the work done which has minimized their sufferings.” 55. An important factor positively affecting implementation was the stability and commitment of the ministry’s KMP coordination team. Through several changes in the government’s ministerial set-up and four permanent secretaries, the KMP team remained largely intact. The project has had only two coordinators, with the current coordinator in place for the past six years. All but one of the four component heads remained in their roles throughout the project life. The KMP coordination teams at the county level have for the most part also been stable. Most of the municipal engineers continued in their posts following devolution, and continued in their roles overseeing implementation of works. Most municipal planners also remained engaged as county planners in the preparation of the ISUDPs. To further minimize disruption, the KMP team held an induction workshop for the new KMP teams in the counties to explain the design and activities of the project. 56. Another factor helping implementation was the support provided to the government by the Bank’s task team. All but one of the Bank’s five task team leaders for the KMP and many members of the task team were based in Nairobi, and could provide day-to-day support to the ministry and to local government administrations to address challenges as they arose. 57. The midterm review, which was took place in September 2013, provided a comprehensive assessment of progress towards development objectives and implementation performance. The midterm review confirmed the overall relevance of the project, and recommended changes in its objectives, key performance indicators, and design to align with the new government institutional structure. It also identified implementation challenges and recommended measures for addressing them. 58. The restructuring of the project that was approved in March 2015 further supported smooth implementation. This aligned the project’s objectives and design with the new institutional structure. The restructuring also involved updating of the indicators and targets presented in the results framework to track the outcomes of the project. 59. Finally, UN Habitat helped with smooth implementation by organizing and financing key stakeholder workshops to discuss the draft ISUDPs. UN Habitat entered into a memorandum of understanding with the MTIHUD to assist with five workshops to bring stakeholders together to review and comment on draft ISUDPs. These were critical to the ensure the quality and county ownership of the final ISUDPs. UN Habitat also sponsored a competition for Kenyan and international urban planning students to create detailed designs for public spaces in the cities for which final ISUDPs had been prepared. UN Habitat brought the winning team to the Habitat III conference held in 2016 in Quito, Ecuador to showcase the designs and to further build their capacity. Page 25 of 62 The World Bank Municipal Program ( P066488 ) IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 60. The PAD included a results framework with PDO and intermediate results indicators, and with baseline values for all indicators. Target values for infrastructure were appropriately set as “to be determined,” because the investment choices of the municipal governments were not known at the time the project was presented to the Board. The six PDO outcome indicators appropriately covered the two objectives of the project (strengthen local government, and improve municipal services). The indicators were revised and targets for infrastructure added as part of the restructuring to reflect what the project would actually achieve. The new PDO indicators appropriately reflected its two objectives (urban planning and delivery of urban infrastructure services). 17 However, one intermediate results indicator “the proportion of environmental management plans implemented satisfactorily” proved impossible to measure. To generate baseline data on living conditions of the 15 municipal governments participating in the KMP, the Bank in 2013 undertook a comprehensive survey of 1,400 household heads. The data generated were presented in the “Kenya State of the Cities Baseline Survey” overview report and 15 individual city reports. 18 The findings of the survey were a key input into the Bank’s Kenya Urbanization Review, completed in 2016. A follow-on survey is planned for 2018 or 2019. M&E Implementation 61. Implementation of the monitoring and evaluation system was satisfactory. A monitoring and evaluation (M&E) specialist was appointed as an integral member of the KMP team. She and the head of component 4 (project management and monitoring and evaluation) ably led the collection of data from the component heads, county governments, and other stakeholders. Quarterly project progress reports were of satisfactory quality, especially in the last two years of project implementation, as the M&E team gained experience. The M&E team regularly visited the cities benefiting from the project to document progress with works and to learn what impact the foot and bicycle paths, drainage systems, access roads, markets, and fire trucks were having. The M&E team procured three consultancies to undertake end-of-project beneficiary assessments, which were invaluable in documenting the results of the project. The Bank team reported on the functioning of the project’s M&E system in each aide memoire, noting improvements and areas requiring further strengthening. M&E Utilization 62. The monitoring information presented in the KMP progress reports formed the basis of discussions during implementation support missions. Specifically, the Bank and KMP coordination teams used the information to identify areas of particular challenge and to specify measures to address them. For example, the Bank team explored with the 17 Kenya’s subnational governments under the 2010 constitution are counties, and urban local governments no longer exist. 18 The dataset and the 16 “Kenya State of the Cities” baseline reports are available at http://microdata.worldbank.org/index.php/catalog/2796. Page 26 of 62 The World Bank Municipal Program ( P066488 ) KMP team reasons for slow implementation of works contracts, and proposed measures to speed up their implementation. Justification of Overall Rating of Quality of M&E 63. Overall, the quality of M&E was substantial. The M&E system as designed and implemented was more than sufficient to assess the achievement of the objectives and to test the links in the results chain. M&E findings were disseminated and used to inform the direction of the project. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 64. Compliance with the project’s environmental and social safeguards was moderately satisfactory. While the KMP had minimal social and environmental impacts, because works are relatively small and were carried out on existing wayleaves, there were gaps in compliance with the Bank’s safeguards policies and procedures. During the early years of implementation, the KMP coordination team did not fully understand what was required. Some ESIA’s were prepared after the design of the infrastructure, instead of before-hand, so had limited impact on the design. Moreover, the environmental and social safeguards specialists on the KMP team left their positions in 2013 and the positions were not filled for over a year. Despite these weaknesses, there were no significant issues with implementation of RAPs, as very few people were affected by the construction of the infrastructure, and those who were affected were informal traders who moved temporarily to nearby locations to conduct their business. Most environmental management plans (EMPs) prepared as part of the detailed designs for infrastructure were implemented satisfactorily. The supervising consultants monitored and reported on implementation of the EMPs in the monthly and quarterly site reports submitted to the project team to ensure that the activities specified in the works contracts were undertaken. The main shortcoming noted was lack of compliance by the contractors with occupation, health, and safety measures during construction. The Bank carried out an audit of KMP’s compliance with safeguards requirements, which did not find major shortcomings and made recommendations for improvement. Over time, compliance with safeguards requirements improved. 65. Compliance with the project’s financial management procedures was moderately satisfactory. The ministry generally complied with the Bank’s fiduciary policies, with some shortcomings. Financial management was rated moderately satisfactory during most of the project implementation period, including at closing. It was rated satisfactory in the first three Implementation Status Reports. The financial management arrangements were assessed as adequate throughout implementation. The implementing agency had adequate financial management capacity with a qualified full-time project accountant. The budgeting and accounting arrangements were assessed as adequate. The project was in compliance with the financial reporting arrangements with the quarterly interim financial reports and annual audit reports being submitted to the Bank within the stipulated timelines. The Project disbursed 100 percent of IDA/Sida funds at time of closing on May 30 2017. However, some weaknesses were noted in the funds flow, internal controls, and audit arrangements. The annual audit reports for fiscal 2016 and 2017 received qualified audit opinion. Some weaknesses were noted in the internal controls, including delays in recovery of staff advances and imprests, limited segregation of duties, and contract management challenges. These resulted in ineligible expenditures in fiscal 2015 of Kshs. 2.5 million which the KMP refunded. There were also delays in disbursement of funds. Nevertheless, at the time of Page 27 of 62 The World Bank Municipal Program ( P066488 ) project closing, these issues had been addressed. Despite some weaknesses, the financial management system for the project provided the necessary assurance that the Bank proceeds were being used for the intended purposes and that reports produced by the system could be relied upon to monitor the project. 66. Compliance with the project’s procurement procedure was moderately satisfactory. The KMP coordination had difficulty complying with the Bank’s procurement procedures, particularly in the early years of implementation, which led to delays in the execution of some activities. The Bank team intensively monitored compliance with the project’s procurement procedures and developed action plans for the ministry to improve performance. By the end of the project, the ministry’s procurement systems and arrangements were functioning reasonably well. Procurement was rated moderately satisfactory during nearly all of the project implementation period. It was rated satisfactory in only the first Implementation Status Reports, before any procurement had taken place. At project closing on May 31, 2017, major works, goods, and consultancy services contracts had been completed. In addition, payments were made for goods delivered, and works and consultancy services contracts completed before the Credit closing date, including during the four-months’ grace period. There have been some issues with proper and complete procurement and contract records keeping. Delays in contracts procurement processing and less proactivity in contracts monitoring for their timely delivery and completion have been generic challenges. The sustainability of institutional capacity in terms of continuity of functional procurement and contracts management unit, staffed by skilled personnel, may be an issue in the future. C. BANK PERFORMANCE Quality at Entry 67. The Bank’s overall performance in ensuring quality at entry was satisfactory. The Bank’s performance in identification, preparation, and appraisal was satisfactory was satisfactory. Although this was the Bank’s first urban operation in many years, the project built on the successful Kenya Local Government Reform Program, financed in part by the European Union. The design reflected lessons learned from both that project, and from Bank-financed urban and local government operations in other countries. Moreover, the design responded to government’s strategies for urban development. At the time of presentation to the Board, procedures for management of environmental and social safeguards had been agreed. A comprehensive results framework had been prepared, with indicators covering all results areas and baseline and target values, where appropriate. Arrangements for monitoring and reporting had been agreed. Appraisal of implementation arrangements was satisfactory with agreements reached on the roles and responsibilities of the MoLG and of urban local governments. The PAD specified the risks the project would face and identified adequate mitigation measures. A detailed operational risk assessment framework was not required at the time the PAD was prepared. However, the team prepared one in September 2011, noting appropriately as a key risk that “except for Nairobi and Mombasa, city administrations participating in the KMP face uncertainties of their roles and responsibilities under the new constitution, and may hesitate to implement activities until they receive some clarity.” Quality of Supervision 68. Bank performance in supervision was satisfactory. Supervision was thorough throughout the implementation of the KMP. Although the project has had five task team leaders, the transition was generally smooth, because other key Page 28 of 62 The World Bank Municipal Program ( P066488 ) members of the Bank’s KMP remained as part of the team. In addition, all but one task team leader was based in Nairobi, which enabled them to provide day-to-day support to the KMP coordination team and to the local authorities. 69. The Bank fielded some 13 implementation support missions during the project’s seven years of implementation. Missions took place two times a year. Missions lasted about two weeks each and typically comprised eight or more members, including foreign and local consultants with expertise in urban development, infrastructure engineering, integrated strategic urban planning, environmental and social safeguards, monitoring and evaluation, procurement, and financial management. An urban planner spent several months in Kenya to provide support during critical stages of the preparation of ISUDPs. An international infrastructure engineer provided in-depth support to the KMP team to determine the new scope of the Mombasa drainage contract and agree on the way forward. Representatives of Sida participated in most of the missions and provided inputs to the aide memoires. 70. The Bank proactively and flexibly worked with the government to restructure the project to reflect the changes in the government institutional set-up following the implementation of the 2010 constitution. The nearly two-year delay in seeking formal approval of the restructuring was due to delays by the national government in issuing guidance on the use of performance grants at subnational level and by the county governments in establishing institutions of urban management. The delay did not affect project implementation, as the KMP team at the ministry continued to procure and manage contracts on behalf of the counties. 71. Aide memoires were of high quality and candid, thoroughly covering all key issues and providing practical recommendations on how to address challenges. They routinely reported on progress towards the PDO outcome targets, and performance of financial management, procurement, and compliance with safeguards. Draft aide memoires were discussed with the KMP coordination team to ensure that they reflected a common understanding of both the Bank and government teams. 72. The Bank team in the implementation status reports consistently rated project performance indicators realistically. It carefully reviewed both progress towards development and implementation performance during each mission, and generally provided a justification for the ratings in the aide memoires. Justification of Overall Rating of Bank Performance Rating: Satisfactory. 73. The Bank’s overall performance was satisfactory. In lending, the Bank worked closely with the national and local government teams to design and prepare a project that built on the results achieved under the Kenya Local Government Reform Program, and drew on international experience with the urban projects. Quality at entry was satisfactory. 74. In implementation support, the Bank played a critical role in helping the government improve capacity for compliance with environmental and social safeguards and with procurement and financial management. Complying with Bank procedures in these areas was at first a challenge for the KMP coordination, which did not have previous experience implementing a Bank-financed project. Implementation support missions regularly reviewed implementation progress and progress towards the PDOs, and compliance with fiduciary, environmental, and social safeguards. The Bank responded proactively and effectively to find solutions to challenges. A rating of satisfactory for Page 29 of 62 The World Bank Municipal Program ( P066488 ) ensuring quality at entry and a rating of satisfactory for supervision justify an overall rating of satisfactory for Bank performance. D. RISK TO DEVELOPMENT OUTCOME 75. The KMP laid the foundation for future urban program in Kenya. Through the KMP, the government has developed the Kenya Urban Program, a US$1 billion program that seeks to address the urban challenges facing urban areas. The KMP also supported consultations on a key piece of legislation, the Urban Areas and Cities Act, which prescribes the institutional arrangements for the establishment and management of urban areas. The KMP also supported consultations on the National Urban Development Policy (NUDP), a policy framework that articulates how the government intends to tackle urban challenges to enable meet the Vision 2030 goals of the country. The policy has been approved by the cabinet. Finally, the KMP has supported the preparation of a follow-on US$300 million operation, the KUSP, approved in July 2017, that will support both national and county governments in addressing institutional, governance, planning and infrastructure challenges in the country. The support of the new program will help to ensure the sustainability of the infrastructure created under the KMP by offering training on asset management. It will also help to ensure that the integrated strategic urban development plans are adopted by offering incentives to do so. 76. The benefits of the ISUDPs are likely to be sustained in most urban centers for which they were prepared. Counties and urban centers recognize their importance in guiding urban development in the future and creating the attractive cities residents desire. The KUSP has two performance measures relating to urban planning, (a) urban integrated development plan submitted by the municipal administrator, and reviewed and approved by the municipal board; and (b) urban spatial plan completed and approved. Urban centers that prepared ISUDPs under the KMP will have achieved these performance standards by ensuring that their ISUDPs are approved by the relevant authorities. 77. Sustainability of the infrastructure and services financed under the KMP will depend on the counties budgeting resources to operate and maintain them. Some issues had emerged at the time the project closing with operations and maintenance. For example, stormwater drains in some places had become clogged with solid waste. Some street and high-mast lights that had been vandalized had not been repaired. And some fire engines were idled due to lack of budgetary allocations for spare parts. 78. Several steps have been taken under the KUSP to mitigate the risk that infrastructure and services are not operated and maintained. First, the project coordination team at the ministry (the same team that implemented the KMP) will develop guidelines and manuals for operations and maintenance of various types of infrastructure and provide training and backstopping support, as part of their support under the operation. Second, counties and urban centers participating in that project will also get access to support in areas such as own-source revenue generation and financial management, which will help them to better generate and use funds for both capital investments and operations and maintenance. V. LESSONS AND RECOMMENDATIONS • Restructuring the project in response to changes in government structure is important. Page 30 of 62 The World Bank Municipal Program ( P066488 ) Shortly after the KMP was approved, the citizens of Kenya approved a new constitution which completely changed the government’s institutional set-up. This rendered some of the project’s design elements moot. Restructuring the project requires agility and the willingness to make significant changes to ensure that its objectives and design align with the new government structure and priorities. • The relationship between the national government and counties, requires careful management to ensure that counties take full ownership of infrastructure constructed on their behalf. Many counties following the implementation of the constitution stated that they did not want the national government to construct infrastructure on their behalf, asking that the funds be given to them instead. While this was not possible during the life of the KMP, the national government made great efforts to involve the county authorities at all stages of implementation of sub-projects, particularly in supervision of works and consultancy contracts, to ensure they took full ownership of the final outputs. • Urban development requires a long-term and multi-faceted approach, and the Bank is in a good position to help shape and implement the government’s strategy. The Bank worked closely with various ministries in Kenya to develop and support implementation of an overall urban strategy, which started with support of the KMP and continued with support for KISIP in 2011, NaMSIP in 2012, and KUSP in 2017. • Continuous capacity building is needed in key areas to ensure that county staff are able to deliver services. For example, the people responsible for operating and maintaining fire engines need training beyond the five days offered at the time the engines were delivered. Training should be offered every three months or so during the first year of operation, to allow the staff to become proficient in identifying and resolving challenges. In addition, county staff that were involved in the preparation of the ISUDPs require periodic training to enhance their skills with geographic information systems, developing and managing e-government services, and the like, which will be required to effectively implement the ISUDPs. • Consultancies for solid waste, market, and bus park consultancies should separate site identification from feasibility studies. The KMP financed several consultancies for feasibility studies, detailed designs, and tender documents for sanitary landfills and markets for which no specific site had been identified. These consultancies were eventually cancelled because the counties were unable to identify specific sites. In the future, such studies should be carried out only after the sites have been identified and the ownership rights established. • Focused attention on operations and maintenance is required to ensure that counties and residents take the issue seriously. Discussions on the costs of operating and maintaining infrastructure and services need to take place as part of the process in identifying projects in which to invest, so the lifetime cost of the investments is understood and budgeted for. County governments also need to sensitize residents on the appropriate use of facilities (cars should not be allowed to park on pedestrian walkways), carryout anti-littering campaigns, and engage residents in activities to keep their neighborhoods clean. With respect to procurement of vehicles, such as firetrucks, specification should include that replacement parts are widely Page 31 of 62 The World Bank Municipal Program ( P066488 ) available throughout the country. • A revised approach to identifying investments markets could result in better choices. There are many examples of government-owned markets in Kenya that are not delivering services. Often, governments choose to site markets on land that is inexpensive, and not where traders and customers want to be. Markets are also built with no detailed market analysis, business plan, or operations and maintenance plan. In the future, governments should undertake detailed analyses prior to investing in markets. They should also consider involving the private sector, especially in the operations and maintenance of markets. • Mechanisms are needed to ensure that multiple consultants undertaking similar work take a common approach. Under the KMP, multiple consulting teams would work on similar topics, but in different urban centers (for example, five consulting firms prepared ISUDPs, and three firms undertook beneficiary assessments). To ensure that the various consulting firms knew what the others were doing, the Bank encouraged the KMP team to call periodic workshops where each consulting firm would present their work to the others, and seek feedback on it. This helped with their coordination. . Page 32 of 62 The World Bank Municipal Program ( P066488 ) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: The Project Development Objective (PDO) was to strengthen local governance and improve service delivery in selected municipalities. This was to be achieved through institutional reforms, capacity bui Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 0.00 0.00 2000000.00 2100000.00 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Percentage of direct project Percentage 0.00 0.00 50.00 50.00 beneficiaries that are female 28-Sep-2009 31-May-2017 Comments (achievements against targets): The target was exceeded. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of people in urban Number 0.00 0.00 170000.00 69200.00 areas provided with access to all-season roads within a 500 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 meter range under the project Page 33 of 62 The World Bank Municipal Program ( P066488 ) Comments (achievements against targets): This indicator was added during the restructuring of the project in March 2015. The target was not achieved because the government subsequently cancelled several contracts that were in advanced stages of procurement at the time of the restructuring, when it became clear that there would be a funding shortfall. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion People in targeted urban Number 0.00 0.00 525000.00 507000.00 areas protected from periodic flooding under the 28-Sep-2009 05-May-2010 11-Mar-2016 31-May-2017 KMP (number) Comments (achievements against targets): The target was largely met. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Integrated strategic urban Number 0.00 0.00 12.00 14.00 development plans approved by the county assembly and 28-Sep-2009 05-May-2010 11-Mar-2015 25-Nov-2016 gazetted. Comments (achievements against targets): This target was added during the restructuring of the project. The target was exceeded. Some ISUDPs have been completed, and 11 have been approved by the country executive committees. Three have been approved by the county assemblies and gazette (Mombasa, Nyeri, and Embu). A.2 Intermediate Results Indicators Component: Component 1: Institutional Strengthening Page 34 of 62 The World Bank Municipal Program ( P066488 ) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Handbooks for preparation Number 0.00 0.00 1.00 1.00 of county integrated development plans with 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 three sections: (a) institutional, (b) spatial, and (c) governance and accountability. Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was achieved. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Model restructuring guide Number 0.00 0.00 1.00 1.00 for establishment of urban boards and town committees 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was achieved. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Capacity assessment tool for Number 0.00 0.00 1.00 1.00 urban boards and town committees 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Page 35 of 62 The World Bank Municipal Program ( P066488 ) Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was achieved. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Policy for transfer of assets Number 0.00 0.00 1.00 1.00 from former local authorities to counties. 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was achieved. Component: Component 2: Participatory Strategic Planning for Urban Development Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Urban centers with an Number 0.00 0.00 12.00 14.00 approved capital investment plan prepared in a 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 participatory manner Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was exceeded. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Urban centers with structure Number 0.00 0.00 12.00 14.00 plan and land use guidelines approved by the authorities. 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Page 36 of 62 The World Bank Municipal Program ( P066488 ) Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was exceeded. Component: Component 3: Investment in infrastructure and service delivery. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Street and security lights Number 0.00 0.00 887.00 1254.00 installed and operating 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was substantially exceeded. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Fire engines delivered and Number 0.00 0.00 15.00 15.00 providing services (number of urban centers benefiting) 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was met. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Feasibility studies and Number 0.00 0.00 12.00 12.00 designs prepared under KMP for future investments in 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Page 37 of 62 The World Bank Municipal Program ( P066488 ) urban infrastructure Comments (achievements against targets): This indicator was added during the restructuring. The target was met. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion RAPs are implemented in a Percentage 0.00 0.00 100.00 90.00 satisfactory manner prior to the start of works. 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Comments (achievements against targets): Resettlement action plans (RAPs) were implemented in a satisfactory manner prior to the start of works. There were no significant issues with implementation of RAPs, as very few people were affected by the construction of the infrastructure, and most of those who were informal traders who moved temporarily to nearby locations to conduct their business. However, the Social and Environment Audit of KMP subprojects, carried out at the end of the project, found a few cases of traders who had set up their stalls on public land moving voluntarily to make way for the works, without being informed of their right to compensation for temporary loss of income. The information from the social and environmental compliance audit is not detailed enough to allow a calculation of the of the percentage of RAPs that were not implemented satisfactorily prior to the start of works. The team’s assessment is that the target for this indicator was largely met. Based on the findings of the audit, strengthening of capacity for environmental and social safeguards is a focus area under the KUSP. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Drains constructed or Kilometers 0.00 0.00 90.00 52.60 rehabilitated under the KMP 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was not achieved because the government subsequently cancelled several contracts that were in advanced stages of procurement at the time of the restructuring, when it became clear that there would be a funding shortfall. Page 38 of 62 The World Bank Municipal Program ( P066488 ) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion EMPs implemented in a Percentage 0.00 0.00 100.00 100.00 satisfactory manner. 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Comments (achievements against targets): The indicator proved difficult to measure. It was expected that the Environmental and Social Safeguards Compliance Audit would generate and assess this indicator, but it did not. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Roads constructed or Kilometers 0.00 0.00 34.60 23.74 rehabilitated under the KMP 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was not achieved because the government subsequently cancelled several contracts that were in advanced stages of procurement at the time of the restructuring, when it became clear that there would be a funding shortfall. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Non-motorized transport Kilometers 0.00 0.00 137.00 202.20 links constructed or rehabilitated under the KMP 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Page 39 of 62 The World Bank Municipal Program ( P066488 ) Comments (achievements against targets): This indicator was added during the restructuring. The target was substantially exceeded. Unlinked Indicators Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Markets constructed and Number 0.00 0.00 5.00 3.00 operating 28-Sep-2009 05-May-2010 11-Mar-2015 31-May-2017 Comments (achievements against targets): This indicator was added during the restructuring of the project. The target was not achieved because the government subsequently cancelled several contracts that were in advanced stages of procurement at the time of the restructuring, when it became clear that there would be a funding shortfall. Page 40 of 62 The World Bank Municipal Program ( P066488 ) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1 To improve planning in urban areas in selected counties. 1. Integrated strategic urban development plans approved by the Outcome Indicators county assembly and gazetted (number). 1. Handbook for preparation of county integrated development plans with three sections: (a) institutional, (b) spatial, and (c) governance and accountability (number) 2. Capacity assessment tool for urban boards and town committees (number) 3. Model restructuring guide for establishment of urban boards and Intermediate Results Indicators town committees (number). 4. Policy for transfer of assets from former local authorities to counties (number) 5. Urban centers with an approved capital investment plan prepared in a participatory manner (number). 6. Urban centers with structure plan and land use guidelines approved by the authorities (number). Component 1: 1. Handbook for preparation of county integrated development plans. 2. Capacity assessment tool for urban boards and town committees. 3. Model restructuring guide for establishment of urban boards and Key Outputs by Component town committees. (linked to the achievement of the Objective/Outcome 1) 4. Policy for transfer of assets from former local authorities to counties. 5. Kenya Urban Program Paper (government’s urban program) prepared, as the basis for the Bank-supported Kenya Urban Support Program. Page 41 of 62 The World Bank Municipal Program ( P066488 ) Component 2: 6. Fourteen integrated strategic urban development plans that include capital investment plans, structure plans, and land use guidelines. 7. Strategic plan for Nairobi City County prepared and adopted by the county council. 8. National Urban Development Policy review, revisions, and preparation of implementation matrix. Objective/Outcome 2: To improve delivery of infrastructure services in urban areas in selected counties. 1. Direct project beneficiaries (Number), of which female (percent). 2. People in urban areas provided with access to all-season roads within a 500-meter range under the project (number). Outcome Indicators 3. People in targeted urban areas protected from periodic flooding under the KMP (number). 1. Drains constructed or rehabilitated under the KMP (kilometers) 2. Roads constructed or rehabilitated under the KMP (kilometers) 3. Non-motorized transport links constructed or rehabilitated under the KMP (kilometers) 4. Markets constructed and operating (number). Intermediate Results Indicators 5. Street and security lights installed and operating (number) 6. Fire engines delivered and providing services (number of urban centers benefiting). 7. Feasibility studies and designs prepared under KMP for future investments in urban infrastructure (number). 8. EMPs implemented in a satisfactory manner (percentage). Page 42 of 62 The World Bank Municipal Program ( P066488 ) 9. RAPs are implemented in a satisfactory manner prior to the start of works (percentage). Component 3: 1. Some 62.6 kilometers of drains constructed. 2. Some 23.74 kilometers of roads constructed or rehabilitated. 3. Some 202.2 kilometers of non-motorized transport links constructed or rehabilitated. 4. Three markets constructed. Key Outputs by Component 5. Some 1,254 street and security lights installed. (linked to the achievement of the Objective/Outcome 2) 6. Fifteen fire engines delivered to 15 urban centers. 7. Twelve feasibility studies and designs prepared for future investments in urban infrastructure. 8. EMPs prepared for all infrastructure works 9. RAPs prepared for all infrastructure works which involved the movement of people. 10. Sixteen operational vehicles delivered to 15 urban centers. Page 43 of 62 The World Bank Municipal Program ( P066488 ) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Supervision/ICR Abdu Muwonge, Sheila W. Kamunyori Task Team Leader(s) Dahir Elmi Warsame, Joel Buku Munyori, Tesfaye Ayele Procurement Specialist(s) Henry Amena Amuguni Financial Management Specialist Lucie Muchekehu Team Member Wendy Schreiber Ayres Team Member James N. Karuiru Team Member Dean A. Cira Team Member Abebaw Alemayehu Team Member Edward Felix Dwumfour Environmental Safeguards Specialist Roderick M. Babijes Team Member Lucy Anyango Musira Team Member Elizabeth Wairimu Karuoya Team Member Narae Choi Team Member Lilian Wambui Kahindo Social Safeguards Specialist B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY05 23.275 149,768.41 Page 44 of 62 The World Bank Municipal Program ( P066488 ) FY06 61.377 370,808.63 FY07 55.157 228,468.87 FY08 14.325 64,489.04 FY09 30.238 167,858.74 FY10 56.612 295,511.54 FY11 0 0.00 Total 240.98 1,276,905.23 Supervision/ICR FY11 17.947 99,186.82 FY12 30.918 190,674.83 FY13 7.723 87,691.49 FY14 24.285 97,812.31 FY15 24.233 91,340.98 FY16 26.750 112,113.07 FY17 28.250 138,778.66 FY18 6.825 37,996.18 Total 166.93 855,594.34 Page 45 of 62 The World Bank Municipal Program ( P066488 ) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) Component 1: Institutional 0 8.41 0 Strengthening. Component 2: Participatory strategic urban development 0 13.00 0 planning. Component 3: Investment in infrastructure and service 0 97.00 0 delivery. Component 4: Project management, monitoring 0 3.66 0 and evaluation. Total 0.00 122.07 0.00 Page 46 of 62 The World Bank Municipal Program ( P066488 ) ANNEX 4. EFFICIENCY ANALYSIS Efficiency Rating: Modest 1. Efficiency of the investments in drainage systems and non-motorized transport facilities was substantial. The PAD did not provide estimates of economic or financial rates of return of investments, because the KMP was a framework project, and the specific investments were not known at the time of project preparation. However, we now know that 88 percent of the investments in infrastructure under the KMP were in drainage systems and in non- motorized transport facilities. The results of benefit-cost analyses of the drainage system in Mombasa and of the non-motorized transport facilities in Mombasa are provided below. In addition to the quantified benefits, the project also provided significant non-quantifiable benefits, according to the beneficiary assessment and the value for money study. Drainage 2. Efficiency of the investments in the drainage systems was substantial. Some 49 percent of the KMP funds for infrastructure were spent on drainage works in four urban centers that are home 1.4 million people. 19 A cost benefit analysis for the drainage system in Mombasa was carried out by the World Bank team. A summary of the data used and findings is below. • Capital and maintenance costs. A total of US$25.4 million was spent to construct 33.7 kilometers of stormwater drains. The annual cost for maintenance is estimated to be 5 percent of the capital cost over a period of 25 years. • Benefits. The main benefits were reductions in number of days of work lost due to flooding. • Discount rate. A discount rate of 5 percent was used, in line with World Bank guidance. 3. The main data underlying the analysis are: (a) the construction period was two years, (b) the benefits start to flow from year three and continue for 25 years, (c) each person loses 5.625 days per year due to recurrent annual flooding (½ hour per day for 90 days) during two rainy seasons, (d) each person day of work is valued at US$5.60; (e) 300,000 people in Mombasa benefit from reductions in flooding. 19 These were Embu, Garissa, Machakos, and Mombasa. Page 47 of 62 The World Bank Municipal Program ( P066488 ) 4. The table below presents the net present value and internal rate of return for the drainage system in Mombasa. Table 1: Economic analysis for the drainage system in Mombasa Net present value US$70 million Drainage system in Mombasa Internal rate of return 32 percent Benefit cost ratio 2.8 5. The Mombasa drainage investments remain viable even with changes in costs and benefits (table 2). The value of the investments is affected more by a reduction in benefits than by an increase in costs. Table 2: Sensitivity analysis for drainage system in Mombasa Base case Scenario 1 Scenario 2 Scenario 3 (costs (cost up by 20%) (benefits down up by 20% and by 20%) benefits down by 20%) Net present value US$70 million US$62.2 million US$48.2 million US$40.4 million Internal rate of return 32 percent 26 percent 24 percent 19 percent Benefit cost ratio 2.8 2.0 1.9 1.3 6. Drainage systems provide significant benefits that have not been quantified. These include (a) reduced property damage (buildings, roads, furniture, appliances, household goods); (b) increased property values; (c) reduced loss of income from businesses whose hours are curtailed and access reduced; (d) improved travel times on streets that used to flood; (e) lower maintenance costs for vehicles; and (f) reduced costs of illness associated with exposure to polluted and stagnant water. The drainage systems in all urban centers are among the investments identified in drainage masterplans and are contributing to disaster risk management and urban resilience, an area of growing importance to the Bank. Together, the quantified and non-quantified investments in drainage indicate that the investments are providing significant benefits over their costs. Non-motorized transport facilities 7. Efficiency of the investments in non-motorized transport facilities was substantial. Some 39 percent of the KMP funds for infrastructure were spent on foot and bicycle paths in Page 48 of 62 The World Bank Municipal Program ( P066488 ) five cities that are home to 2 million people. 20 A cost benefit analysis for the non-motorized transport facilities in Mombasa has been carried out by an economist at the Madawalabu University in Bale Robe, Ethiopia and published in the European Academic Research Journal. 21 A summary of the data used and findings is below. • Capital and maintenance costs. A total of US$5.5 million was spent to construct 47.6 kilometers of pedestrian and bicycle paths, three footbridges, speed bumps, improved junctions, hand rails, and related works. The annual cost for maintenance is estimated to be 2 percent of the capital cost. • Benefits. The main benefits were (a) reductions in number of fatalities due to accidents involving pedestrians and vehicles, due to their separation, (b) reductions in (non-fatal) serious accidents; (b) time savings for pedestrians, who can walk faster because they no longer have to walk in the road and avoid vehicles. • Discount rate. A discount rate of 12 percent was used.22 8. The main data underlying the analysis are: (a) the construction period was one year, (b) the benefits flow from year two to year five, (c) 13 fewer people are killed each year and there are 65 fewer serious accidents involving injuries, (d) each person not killed earns US$48,000 equivalent over his or her working life, and each injury not incurred saves US$12,000 equivalent; (e) the number of pedestrians using the new facilities is 340,700, (f) time saved per trip on foot is 10 minutes, (g) total time saved per year per pedestrian is 81 hours; (h) the value of time saved for both business and non-business trips averages US$0.23 per hour; and (i) the value of time saved rises by 7 percent per year, in line with inflation. 9. The table below presents the author’s estimates of the benefit cost ratio for the non- motorized transport facilities in Mombasa. (The author does not present a net present value or an internal rate of return.) 20 These were Eldoret, Kakamega, Mombasa, Nakuru, and Thika. 21 Mohapatra, Dipti Ranjan, 2014. “An Economic of Feasibility of Non-Motorized Transport Facilities in Mombasa Town, Kenya.” European Academic Research, Volume II, Issue 8, November, 2014. Available at www.euacademic.org. 22 The author has used a discount rate of 12 percent, rather than a discount rate of 5 percent, which the Bank recommends. If he had used a discount rate of 5 percent, the cost/benefit ratio would have been higher. Page 49 of 62 The World Bank Municipal Program ( P066488 ) Table 3: Economic analysis for the non-motorized transport facilities in Mombasa Intervention Benefit cost ratio Traffic calming measures (such as speed bumps and zebra crossings) 17.56 Footpaths 17.22 Cycle paths 0.74 Foot bridges 0.51 All non-motorized transport facilities in Mombasa 8.41 10. Using the same scenarios as in table1 above, the non-motorized transport investments remain viable even with changes in costs and benefits (table 4). The value of the investments is affected more by a reduction in benefits than by an increase in costs. Table 4: Sensitivity analysis for non-motorized transport facilities in Mombasa Base case Scenario 1 Scenario 2 Scenario 3 (costs (cost up by 20%) (benefits down by up by 20% and 20%) benefits down by 20%) Benefit cost ratio in 2014–19 8.41 8.33 6.73 6.66 11. Investments in street lighting are providing significant benefits, according to the beneficiary analysis, but have not been quantified. Participants in interviews noted that they felt a greater sense of security at night and were now walking along streets with lights, rather than taking motorized transport to their destinations. Some participants pointed out that accidents between vehicles and between vehicles and pedestrians had declined. Some mentioned that business hours had expanded and that the appearance and livability of the urban center had improved. 12. The in-depth value for money study of infrastructure carried out on investments made under the KMP concluded that all the investments in infrastructure were providing value for money. 23 The team of internal auditors visited all the sites where infrastructure was constructed under the KMP. They assessed the quality of the works, took stock of how they were being used, and interviewed both users and county officials to learn about their value. They concluded that all, aside from the under-utilized hawkers’ market in Eldoret and the livestock market in Machakos that had not yet opened, were providing value for money. 13. Institutional benefits were substantial. The KMP provided technical assistance capacity building support in core areas of urban development and management. Notably, the KMP team prepared a handbook and provided training to officials from every county (not just the 14 23 MTIHUD. 2016. “Value for Money Audit, Kenya Municipal Program.” August. Page 50 of 62 The World Bank Municipal Program ( P066488 ) counties with KMP-supported urban centers) to assist them in preparing county integrated development plans, a requirement to receive funds from the National Treasury. The KMP team also provided technical reviews and feedback during various stages of the preparation of the ISUDPs. They also prepared an implementation matrix for the National Urban Development Policy (NUDP), held consultations with officials and other stakeholders from all counties on the draft policy document, and prepared the final document, which was launched at a workshop in Nairobi in February 2016. The cabinet approved the policy in October 2016, a major achievement. The NUDP is providing the foundation for the government’s Kenya Urban Program, which the Bank is supporting under the KUSP Program for Results. In addition, the KMP team led the preparation of the government’s Kenya Urban Program, and periodically held consultations with county officials and the Council of Governors on its evolving design to ensure strong county ownership of the program. 14. Administrative efficiency was modest. All activities were completed by the revised closing date of May 31, 2017. At the time of closing, SDR 65,299,925 (US$95,951,460 equivalent) was disbursed, the full amount of the IDA Credit. In addition, US$11,962,156 of the Sida grant was disbursed, the full amount of the Sida grant. Despite the substantial efficiency of the investments in infrastructure, the project’s closing date was extended by 21 months, due in part to the time required to put into place new government structures in line with the 2010 constitution, but also to operational inefficiencies of the MTIHUD that sometimes led to lengthy delays in procurement and extensions in the closing dates of ongoing contracts. Time overruns detract from efficiency given, the opportunity cost of capital and the service fee that borrowers continue to pay on Bank loans. Page 51 of 62 The World Bank Municipal Program ( P066488 ) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS 1. ASSESSMENT OF THE OPERATION’S OBJECTIVE, DESIGN, IMPLEMENTATION, AND OPERATIONAL EXPERIENCE Overall rating: Satisfactory 1. Objectives. The overall objectives of the KMP remained relevant as they reflected the importance of strengthening the capacity of the participating urban authorities to deliver effectively, services and infrastructure to the ever-growing urban population. The project’s objectives were aligned to Kenya’s Vision 2030 as captured in section 1.1(7) with contributions to its goals and the Medium – Term Plan and assisting the government to create livable cities that contribute to the nation’s economic growth. 2. The 2030 vision for housing and urbanization refers to ‘an adequately and decently- housed nation in a sustainable environment’. This was deemed achievable through: • Preparation and Implementation of Strategic Development and Investment Plans in Major Urban Areas, • Institutionalized Decentralization Policy, • Strengthening the Local Level Planning, Development Departments in Local Administrations and • Improving the Financial Management and Services Delivery Capacity at the Central Government and Local Levels. 3. The other longer-term outcome of KMP was improved higher quality of life for the citizens and creation of a more attractive investment climate in Kenya’s major cities through strengthened local capacity. 4. The KMP objective of improving planning and infrastructure services delivery in selected counties’ urban centers was achieved through these components: (a) Institutional capacity strengthening; (b) urban planning; and (c) improved infrastructure development. 5. Design. The design was and remains relevant. The overall design supported institutional strengthening of the urban centers (former municipalities) and enabled them to deliver services and infrastructure according to their mandates. This was reviewed during the restructuring to fit the new political dispensation. The results framework was also revised to include PDO indicators relevant to what the select urban centers would deliver within the county level structures. Some indicators relating to former municipalities were dropped; additional ones introduced. Bank’s core indicator “direct project beneficiaries (number), percent female” was added as a PDO-level indicator, some intermediate results shifted to reflect their position in the results chain with upwards adjustment of some targets. Page 52 of 62 The World Bank Municipal Program ( P066488 ) 6. Implementation. Implementation arrangements were relevant. Implementation was conducted through the national level; by the MTIHUD and working with the County governments. The KMP team at the national levels worked closely initially with former municipalities PCTs but with the new political dispensation, the local level PCTs changed with inclusion of some new members and removal of original members in many cases. The project’s M&E arrangements at the national levels were relevant, with monitoring and evaluation missions conducted with timely reporting on progress and decision making. However, there was little monitoring and reporting by the county PCTs. The mentioned M & E reports were rarely shared between the KMP team and the partner county governments for ownership, accountability and political support. 7. Operational experience. This experience was dominated by the procurement process. Significant delays occurred on both sides: • The borrower’s delays in reviewing expressions of interest and requests for proposals because technical personnel were not always available to conduct the reviews. • The bank’s delays in responding to corrections on matters such as terms of reference. • The borrower’s delays in reaching the point and getting the (former) Permanent Secretary to sign contracts. 8. Positive conclusions. Despite this, the World Bank country director wrote to our (new) Permanent Secretary to say “I am pleased that the project has disbursed all IDA funds and SIDA grant (and that) the project is benefitting over 2 million people: over 100% of the end of project target” (para 1). In addition, the government’s Project Completion Report confirmed that the overall delivery of KMP’s four components’ outputs measured 98 percent completion. 2. ASSESSMENT OF THE OUTCOME OF THE OPERATION AGAINST THE AGREED OBJECTIVES Rating: Satisfactory 9. Urban planning. KMP achieved its objectives to support improved planning and infrastructure services delivery in selected counties urban areas through, institutional capacity strengthening of 15 of them. In most instances, the PDO outcome targets were achieved or surpassed with reported improvement in urban planning and infrastructure services delivery. At the time of project closure, 15 Integrated Strategic Urban Development Plans, (ISUDPs) had been prepared, none had been approved by the County Assemblies, though they were already being used for urban planning. The unfortunate aspect is that KMP was responsible for delivering the ISUDPs through various consultancies. KMP was not responsible for securing these plans’ being gazetted through their county governments; one practical consequence of the new dispensation’s decentralization. 10. Infrastructure projects. A total of 19 infrastructure projects were constructed and completed in 11 partner counties’ urban areas, with beneficial service delivery attributed to Page 53 of 62 The World Bank Municipal Program ( P066488 ) storm water drainage, non-motorized transport, roads, street lights, markets, radio communication equipment. 11. Capacity building. The project helped to develop institutional capacity in the following areas: • To support the MTIHUD organizational structure, • The five-year urban integrated development plans (IDePs), • Spatial plans through trunk infrastructure provision, • County budgeting and accountability, • The National Urban Development Policy (NUDP) orientation conducted to the MTIHUD staff, County Staff (47 counties), Senators, Members of Parliament, Council of Governors and stakeholders. 12. More details of this comprehensive capacity-building work are presented in the government’s KMP Project Completion Report. 13. Technical experts were hired to provide assistance on institutional strengthening, urban planning, engineering, finance, procurement and monitoring and evaluation technical assistance for the two levels of government. IT equipment and an electronic records management system were also achieved the Ministry level. 14. The PDO outcome targets and most of the intermediate results were achieved as follows: • Project beneficiaries in 13 Counties achieved 2,100,000 against a target of 2,000,000 million, of which 50 % are female. Target achieved and surpassed though the data on actual female proportion is not vouched. • A total of 69,200 beneficiaries against target of 170,000 beneficiaries are provided with access to all seasons roads, within a range of 500 metres. This has increased road transport networks in 2 urban centres namely Eldoret and Mombasa. • The program is protecting approximately 507,000 persons against a target of 525,000 in Mombasa and other urban areas from periodic flooding. It was worth noting that more would have been achieved if all the projects that had been targeted for implementation had been done i.e. Kakamega, Naivasha and Kitui. • It was not possible to achieve the approval and gazettement of the 14 number of prepared Integrated strategic urban development plans (ISUDPs) owing to challenges beyond MTIHUD. This was clearly an over ambitious target that had failed to take into account the amount of effort required to get the approval by the respective county assemblies. The target number was 13 but with implementation of cluster 5 towns, this grew to 14 where instead of doing one in Eldoret, three were done in Turbo, Soi and Jua Kali in Uasin Gishu County. The number of completed plans and approved by County executives are 11. Most county assemblies have been Page 54 of 62 The World Bank Municipal Program ( P066488 ) sensitized on the plans and are awaiting their approval and gazettement. The plans are in various stages of approval by the county assemblies. 15. Only three out of 15 targets were not achieved. Four targets were surpassed some with a big margin. The intermediate results are as follows: Intermediate result 1: Markets constructed and operating • Target partially achieved. Eldoret hawker’s market, Garissa livestock, and Machakos livestock markets have been completed and are operational. Garissa market is fully operational benefitting approximately 163,789 beneficiaries reported enhanced trade/ incomes. Feasibility studies and designs for Nyeri, Thika, Naivasha, Machakos, Kericho and Kakamega are ready. • However, upon further review of them budget, funds were not available to implement them. The two markets not done were to be picked from the feasibility study. Intermediate result 2: Street and, security lights installed and operating • A total of 1,254 street lights and security lights have been installed and working. Target exceeded. An additional 122 lights were installed after program closure raising the figure to 1,376. • Security has been enhanced and businesses operations improved. Intermediate result 3: Handbooks for preparation of county integrated development plans with three sections: (a) institutional, (b) spatial, & (c) governance and accountability. • Target achieved (finally as one integrated handbook). Counties adopt and customize for their local circumstances. All counties, beyond the KMP ones, were trained on preparation of urban IDePs in 2013 (1. institutional) and 2014 (2. spatial and 3. accountability) according to timetable and budget and most importantly of all, through a focused allocation of personnel. This was well beyond the original 14 counties and happened with the decision from the World Bank to acknowledge the representations from non-KMP counties during the May 2013 stakeholder workshop on urban IDePs in Nairobi. Thus all 47 counties were invited to participate in all three cited training events. 24 Intermediate result 4: Fire engines delivered and providing services in 15 urban centers • Target was achieved. The engines have improved the capacity of urban areas to respond to fire and rescue emergencies in the Counties. This has led to a reduction in loss of lives and property. Intermediate result 5: Feasibility studies and designs prepared under KMP for future investments in urban infrastructure 24 A report on each of the three training events, in a ‘learning-by-doing’ format, is available from the MTIHUD if required. Page 55 of 62 The World Bank Municipal Program ( P066488 ) • Target achieved. These include feasibility studies for stormwater drainage, non-motorized transport, solar lighting for public facilities, traffic lights and automation of bus parks, information technology systems and infrastructure to support municipal infrastructure assets management, markets and access roads, and bus parks. Intermediate result 6: Model restructuring guide for establishment of urban boards and town committees • Target achieved. The guide supports the counties in establishing urban committees and boards as per statutory requirements Intermediate result 7: Capacity assessment tool for urban boards and town committees • Target achieved and was applied by County-Kakamega for urban center capacity assessment and deployed by Murang’a and Kirinyaga counties. Intermediate result 8: Policy for transfer of assets from former local authorities to counties. • Target achieved under component 1. Intermediate result 9: Urban centers with an approved capital investment plan prepared in a participatory manner. • Target achieved and surpassed. Reasons being the county government of Uashin Gishu had already contracted another firm to plan Eldoret using its own internal funds. Thus, the planning scope was replaced with three other small towns namely Turbo, Jua Kali and Soi. Intermediate result 10: EMPs implemented in a satisfactory manner. • Target achieved for all the projects. Building and civil works sub-projects underwent EIA. The resultant EMPs were implemented, supervised and monitored appropriately. All Supervising consultants were required to have environmental specialists to undertake this task. Intermediate result 11: RAPs are implemented in a satisfactory manner prior to the start of works. • RAP was envisaged in 3 out of the 19-civil works sub-projects implemented under KMP. However, during implementation a further 5 sub-projects encountered isolated issues (mainly encroachment of fences and temporary business kiosks on to public land/wayleaves) that would have triggered OP 4.12 thus requiring a RAP. In addressing these issues, no monetary compensation was paid out: instead, the cases were handled either by avoidance of affected areas through design review, or consultations and negotiations resulting to voluntary relocation and removal of structures. In some cases, such as Mombasa, Nakuru, and Eldoret non-motorized transport, there was reinstatement of affected fences. Despite the lack of implementation of RAP, alternative approaches were taken to ensure the PAPs were not adversely affected. Page 56 of 62 The World Bank Municipal Program ( P066488 ) Intermediate result 12: Drains constructed or rehabilitated under the KMP • The target was not achieved. There are feasibility studies and designs for Storm Water Drainage facilities for Naivasha, Kitui and Kakamega (had been tendered and awarded). However, upon further review of the budget, it was realized funds were not available to implement them (ultimately, caused by the AFD funding withdrawal). These feasibility studies and designs were conducted on the basis of the original KMP budget presented in the PAD of April 2010. Intermediate result 13: Urban centers with structure plan and land use guidelines approved by the authorities. • Target was surpassed. Check PDO remarks/ comments on ISUDP above. Intermediate result 14: Roads constructed or rehabilitated under the KMP • Target was not achieved. Mombasa achieved 22.4 Km and Eldoret Access Road achieved 1.34 Km linearly. For Eldoret, it was realized that in order fully utilize the potential of the hawker’s market, it was necessary to improve roads connecting it. • For Mombasa, after improving Storm Water Drainage facilities, it was found necessary to improve the adjoining access roads for ease of vehicular flow. Intermediate result 15: Non-motorized transport links constructed or rehabilitated under the KMP • Target was surpassed. In some of the contracts a revision was done on some of the contracts and it. This arose from revision of the bills of quantities on proposals on non-motorized transport facilities in some towns (Eldoret, Nakuru) and inclusion of some that had been considered in the original target (Mombasa). Efficiency Rating: Satisfactory 16. The PAD did not estimate economic or financial analyses against which the project efficiency could be measured at closing. However, UDD introduced a performance (efficiency) test in March 2013. This concerned the individual project development cycle, from inception, to completion and handover. From that date, it was presented in each quarter’s KMP report to the World Bank. The closing assessment, presented below, is taken from the government’s Project Completion Report. The conclusions, in terms of efficiency are suggested as follows. 17. ‘The program started slowly and was dominated by procurement of goods, consultancies and works. In March 2013, the first measurement of managerial progress was instigated; taking the assessment of progress beyond the strictures of procurement planning. Managerial progress therefore concerned both hard expenditure (through procurement) and soft expenditure (through training and operations). The individual and cumulative scoring framework introduced is below. Page 57 of 62 The World Bank Municipal Program ( P066488 ) Into Contract Evaluation Accepted Work procure’t signed Start of Reached (or other Complete / handed plan (or other (or other work half-way progress) over progress) progress) 10 10 10 10 10 20 20 10 10 20 30 40 50 70 90 100 KMP’s progress to 31st May 2017 was 98%, towards completion (see below). When this scoring started, in March 2013, KMP’s progress was measured at 23%. Component Jul-Sep % Oct-Dec Jan-May % change since the last % % ¼ Institutional 90 94 98 +4 Urban planning 93 94 98 +4 Infrastructure 91* 95 99 +4 M&E/management 65* 66 97 +31 KMP 85 87 98 +11 18. The judgement ‘satisfactory’ accounts for the slow start of KMP’s work towards implementation, with the resulting 21-month extension to KMP. The ministry simply did not have the experience or technical skills to manage KMP. It finally secured a technical assistance team in January 2013. The fact that all the IDA credit has been used (the disbursement rate being a key World Bank performance test), the achievement of the overall delivery at 98 percent, may offer a more lenient rating and the World Bank’s encouraging letter of May 2017 (paragraph 1 above), suggests vindication of this rating. Outcome rating: Satisfactory 19. Achievement of the objectives of the KMP is rated ‘satisfactory’ overall. The three elements that contribute to the overall outcome rating – (a) relevance of objectives, design, and implementation, (b) achievement of the development objectives, and (c) efficiency – are all rated satisfactory. This justifies an overall outcome rating of satisfactory for the operation. All the funded infrastructure projects were implemented with minor difficulties and all are accruing benefits to intended benefits. ISUDPs were prepared through very intensive participation remaining with only official approval by the Counties. Eleven feasibility studies were conducted and this will contribute to future counties’ plans and service delivery. The number of beneficiaries surpassed what had been envisaged with a good margin. All the disbursed funds were fully absorbed for the purposes they were planned for. Page 58 of 62 The World Bank Municipal Program ( P066488 ) 3. EVALUATION OF THE BORROWER’S OWN PERFORMANCE DURING THE PREPARATION AND IMPLEMENTATION OF THE OPERATION Government performance rating: Moderately Satisfactory 20. The government’s performance in implementation was moderately satisfactory. Although with a delay, MTIHUD complied with effectiveness conditions that were related to financial management, appointing qualified accountants to handle financial management issues, despite some notable staff changes. MTIHUD provided staff for training on Bank financial management and procurement procedures to all staff involved in project financial management. Further MTIHUD sensitized all the counties on all applicable Bank regulations and procedures. MTIHUD with backing of the National Treasury ensured that all funds allocated were absorbed by closure of the program. MTIHUD did well in preparing and submitting quarterly financial, general quarterly and other management progress reports. However, the National Treasury was slow in disbursing counterpart funding. The National Treasury successfully carried out a Value for Money audit of selected projects. Implementing agency rating: Moderately Satisfactory 21. The performance of MTIHUD was moderately satisfactory. The program had a very slow start evidenced by zero absorption of available funds for close to two years. The program was initiated under the Ministry of Local Government under Constitutional dispensation. Staffing levels in the PCT was low and knowledge/ understanding of the Banks regulations was inadequate and took time. Eventually, MITHUD enhanced staffing by appointing staff to PCT and ensuring staff, being transferred to other Ministries, were replaced. Implementation Financial Reports, Quarterly and other implementation reports were prepared and submitted on a timely basis. 22. County officials were involved at all levels of infrastructure project implementation. This ensured that all projects were complete by the end of the program except for one. Routine procurement and training plans were prepared and submitted for consideration. Fifteen fire engines were procured and supplied to 15 urban areas in 14 counties to assist in fire disasters and rescue operations. Combined with this, a number of fire officers drawn from benefitting urban areas were trained on the use of supplied fire engines and accompanying accessories. Fifteen pickup trucks were also procured and supplied to the same urban areas that benefitted from the fire engines, to support in general operations of the urban areas. Counties were trained on participatory preparation and implementation of Integrated Development Plans (IDePs). 23. One notable weakness was difficulties in ensuring the Integrated Strategic Urban Plans were approved and gazzetted. Although not envisaged during the planning stage of the Page 59 of 62 The World Bank Municipal Program ( P066488 ) program, the approval and gazettement was beyond the mandate of the MTIHUD. However, it was believed the new county leadership would be sensitized on the need to adopt the plans. 24. All constructed infrastructure projects were highly beneficial to intended users. However, a few cases of misuse and abuse of the facilities were noted like the illegal sewer connection to drains, use of foot and cycle paths by motorists and trading on foot and cycle paths. There was a huge challenge of maintaining open drains constructed under KMP and other government programs, largely due to poor practices for solid waste management. One foot bridge was not constructed due to lack of identification of an adequate site. 25. Despite satisfactory project performance, counterpart funding of the project was low though it improved towards end of program closure. As of June 2017, GOK contribution was US$ 5.43 million, against an appraisal commitment of US$ 10 million. Overall recipient rating: Moderately Satisfactory 26. The overall performance of the recipient was ‘moderately satisfactory’. MTIUD had effective execution of projects spread out in counties and carried out routine monitoring and evaluation missions. Notwithstanding slow release of counterpart funding and completion of few projects and feasibility studies and delayed procurement, MTIHUD performed satisfactorily. Although there were problems associated with low absorption of funds and inadequate staffing, this was corrected and led enhanced disbursement and total absorption. However, because of the very slow start and the resulting time extension, the overall rating of ‘moderately satisfactory’ stands. 4. DESCRIPTION OF THE PROPOSED ARRANGEMENTS FOR FUTURE OPERATION OF THE PROJECT. 36. There is no ‘future operation of the project’. The anticipated second phase of KMP was quashed by the World Bank in 2015. There were three good reasons. First, the bank recognized that the limited geographical scope of KMP no longer served the purpose of a post-dispensation (new constitution) environment. Secondly, this was reinforced by the bank’s welcomed decision in 2013, during a stakeholder workshop on KMP’s approach to integrated development plans (urban IDePs), to allow KMP to extend its capacity-building remit to all counties - not just the original 14 – in the light of demand from the non-eligible counties at that event. Finally, all recognized that the post-dispensation environment was an opportunity to prepare a new programmer to support the urbanization process in Kenya, in a more explicit performance- based format; KMP being formulated pre-dispensation. 37. The new Kenya Urban Support Program (KUSP) was developed over a two-year period from 2015, in the light of the KMP mid-term review (including its post-dispensation restructuring), and its formalization of the decision not to proceed with a second phase of KMP. Page 60 of 62 The World Bank Municipal Program ( P066488 ) It was developed, first as an overarching Kenya Urban Programme (KenUP) – with an ambition for US$1bn in urban development; secondly as the World Bank contribution – its Support to KenUP (S2KenUP), now KUSP. It is a hybrid, with window 1 (national government) as direct procurement through WB systems and windows 2 and 3 (county governments) as a Program- for-Results model, with procurement through Government of Kenya processes. There is an initial IDA allocation of US$300 million: window 1 at US$30.3, window 2 at US$22.2 and window 3 at US$247.5. The direct programming implications are to ensure that the significant portion of the new KUSP investment is devoted to urban infrastructure. 38. The World Bank board approved the KUSP project appraisal document (PAD) on 26th July 2017. Its development objective is to support the establishment and strengthening of urban institutions and systems to deliver improved infrastructure and services in municipalities and cities in participating counties in Kenya. The new operation will provide USD 300 million, through an IDA credit to national government. Transfers to county government will be by grant, subject to satisfying minimum condition and performance standards. Page 61 of 62 The World Bank Municipal Program ( P066488 ) ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) Project documents Project Information Documents. Project Appraisal Document, April 5, 2010. Kenya Country Assistance Strategy, March 23, 2010. Financing Agreement, May 20, 2010. Restructuring Paper, February 16, 2015. Midterm Review, November 14, 2013. Country Partnership Strategy, May 13, 2014. Aide memoires. Implementation Support Reports, 13 total from March 2011 to June 2017. Quarterly and annual progress reports prepared by the KMP coordination team. Financial audits. Beneficiary assessments. Environment and Social Safeguards Audits. Kenya State of the Cities Baseline Survey, March 2014. Borrower Implementation Completion and Results Report. Page 62 of 62